Question
February 12, 1993
VIA FACSIMILE
Mr. Vic Cohen
Pre-Merger Notification Office
H-303
Federal Trade Commission
Washington, D.C. 20580
Re: Application of Hart-Scott-Rodino Act
Dear Mr. Cohen:
This letter follows our recent conversation with respect to the possible application of Hart-Scott-Rodino Antitrust Improvement Act of 1976 (the Act) to a proposed merger of Merger Company, a wholly-owned, newly formed subsidiary of Parent Company, a publicly traded corporation, with Target Company, a privately held corporation. The Act requires parties intending to merge or make acquisitions of voting securities or assets to provide the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice with information regarding their operations and the proposed transactions if the parties and the proposed transactions satisfy certain minimal jurisdictional thresholds. The purpose of our telephone conversation was to determine the appropriate financial statements of the Parent Company for purposes [of] determining whether these thresholds have been met.
The unaudited financial statements of Target Company for the year ended December 31, 1992 reflect total operating revenues in excess of $100,000,000 and total assets in excess of $25,000,000. We are advised that this is the most recent regularly prepared financial statement available for Target Company.
With respect to the most recent regularly prepared financial statements for Parent Company and its subsidiaries, we have examined Parent Companys Securities and Exchange Commission (SEC) quarterly report on Form 10-Q for the quarterly period ended October 31, 1992 which reflects total assets of less than $10,000,000. We have been informed by Parent Companys management that Parent Company does not now, and has not in the past, regularly prepared monthly financial statements (sic). Parent Companys only regularly prepared financial statements are its quarterly financial statements as filed with the SEC. Parent Company is in the process of implementing a new computer-assisted accounting system which is not, as yet, fully functional but which will allow the Company to prepare monthly financial statements. Parent Companys internal accounting staff prepared a trial balance sheet for the period ended November 30, 1992, which contained a number of inaccuracies and has not been circulated to the Board of Directors or the officers of the Company. No other financial statements subsequent to the October 31, 1992 quarterly financial statements have been prepared.
Based on the facts presented, you advised in our telephone conversation the relevant financial statements for purposes of a determination of the size of the Parent Company under the Act are its financial statements for the quarter ended October 31, 1992. We request that you confirm to us that your position is correct based upon the facts we have presented.
Thank you for your assistance. Should you have any questions with respect to this matter, please let me know.
Very truly yours,
(redacted)
cc: (redacted)