Question
Sent: Wednesday, October 21, 2009 5:46 PM
To: Verne, B. Michael
Subject: Item 5Questions
Hi Mike,
We're preparing anHSR filing for a client, "Company A," and some questions have come upas to whether or not the company's revenues are appropriately classified underNAICS manufacturing codes and the extent to which revenues attributable togoods manufactured outside the U.S. are reported under Item 5.
Company A isincorporated in and has its headquarters in the U.S. and does all of itsproduct design, marketing and management of the manufacturing of its goods fromits U.S. headquarters. However, it does not manufacture any of its products butrather out sources the manufacturing to third parties located outside the U.S. The entire manufacturing process takes place outside the U.S. and the finished goodsare shipped back to the U.S. ready to sell -no other assembly or processingoccurs once the they arrive back in the U.S. Company A sells its products tocustomers of varying sizes, but also sells directly to consumers through itsown retail stores located in the U.S. and outside the U.S. The following arethe specific questions we need answered:
1.The Item 5 tip sheet indicates that goods of foreign manufacture are neverreported under manufacturing codes in Item 5. As all of Company A's goods areof foreign manufacture, revenues derived from sales of these goods must bereported under the relevant wholesale NAICS code for the goods in question,correct?
2.Company A's products are shipped to its customers and its own stores fromCompany A's two distribution centers located in the U.S. Are all revenuesderived from sales of goods shipped from these U.S. distribution centersreported in Item 5 regardless of the location of the customer to whom they arebeing shipped, or are only those sales to U.S. customers reported in Item 5?
3.Some of Company A's larger customers pick up their shipments of Company's Agoods up at the port of entry and once the shipment clears customs, title tothe goods passes to the customer. The revenues derived from these sales arereported under the relevant wholesale NAICS code for the goods in question,correct?
4.With respect to Company A's retail sales from its own stores, only the sales ofstores located in the U.S. should be reported in Item 5, correct?