9906005 Informal Interpretation

us-ftc-hsr-informal-interpretations-43fbca6f4ff399de8f372bfeaf0fc8899906005 Informal InterpretationGuidance

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Date
Rule
801.11(c)(2), See 7A(a)(2)(B)
Staff
Richard B. Smith
Response/Comments
6/8/99 - Advised writer that the ?special financial statement? prepared by the to-be-acquired person at the direction of the acquiring person for purposes of the proposed transaction was not regularly prepared. Under 801.11 the date of the 7/31/98 balance sheet is the beginning of the 15-month period. If closing occurs after such date, a pro forma balance sheet must be prepared. If the 7/31/99 balance sheet is issued before closing, it must be used to determine size of acquired person. Writer will confirm that acquired person did not have $100 MM in sales on its last financial statement. (MV agrees) RB Smith

Question

(redacted)

June 8, 1999

Richard B. Smith
Premerger Notification Office
Federal Trade Commission
6th and Pennsylvania Avenue, NW
Room 303
Washington, D.C. 20580

Dear Mr. Smith:

Our client, the acquiring person, has assets in excess of $100 million. The acquired person, a non-manufacturer, had assets at the end of its last fiscal year, July 31, 1998, of $8.9 million. Even for its own internal use, the acquired person prepares balance sheets only at the end of each fiscal year. Thus, the JULY 31, 1998 balance sheet is ?the last regularly prepared balance sheet? of the acquired person. The size-of-the-transaction threshold is crossed.

At the request of our client, the acquired person had an accountant prepare a special financial statement as of February 29, 1999. The balance sheet in that statement showed assets of $11.7 million. We do not believe that this was a ?regularly prepared balance sheet,? and therefore, we believe that the size-of-the-parties threshold is not crossed. See item 160 in Premerger Notification Practice Manual (ABA. 1991): ?a balance sheet prepared for purposes of a particular transaction usually is not regularly prepared.?

We would appreciate your informal opinion as to whether our analysis is correct. My direct line (redacted) Many thanks

Sincerely yours,

(redacted)

(redacted)


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