Question
(redacted)
October 7, 1999
Michael Verne, Esq.
Federal Trade Commission
Premerger Notification Office
6th Street and Pennsylvania Avenue, NW
Washington, D.C. 20580
Re: Notification and Report Form - Size of Person Determination
Dear Mr. Verne:
I am writing to confirm the conclusions we made in our conversation this morning and to thank you for your assistance.
In our telephone conference, you answered my questions regarding whether parties to a transaction must file a Notification and Report Form ("the HSR form") if one of the persons has less than $10 million dollars in assets as stated on its most recently prepared financial statements using the income tax basis of accounting. I specifically asked whether the parties to the transaction would be required to file the HSR Form if the person described above would have more that $10 million in assets if its financial statements were prepared on the accrual basis of accounting. I explained that the person was relying on a financial statement prepared in accordance with the accounting principles normally used by the person and that the financial statements were prepared within the last 15 months. You indicated that according to Rules 801.11(b)(2), this person would not meet the size of person test and the parties to the transaction would not be required to file an HSR Form.
You further clarified that the person is allowed to rely on its financial statements despite the fact that they may not be consistent with generally accepted accounting principles (?GAAP?). You referred me to the Premerger Notification Practice Manual - Interpretation 148. The commentary therein cites the Statement of Basis and Purpose which reports that mandatory use of GAAP was rejected.
Thank you again for your assistance in this matter.
Very truly yours,
(redacted)