0711001 Informal Interpretation

From: (redacted)

Sent:Thursday, November 01, 2007 3:53 PM

To: Verne, B. Michael

Subject:Item 5

Mike:

Basedon prior conversations, I understand that the PNO takes the view that products manufacturedin Mexico in a macquilladora should be reported in Item 5 as if the manufacturingoperation took place in the U.S. Does this mean that all revenues derived from themanufacture of products in a macquilladora plant, regardless of the location ofthe customer to whom the product is shipped, should be reported in Item 5.

Specifically,in the fact pattern we face, a not insignificant portion of the productsmanufactured in Mexico are shipped directly a Canadian subsidiary of thereporting person which in turn sells the products to customers in Canada. Ifone follows the logic that all products produced in a macquilladora are viewedas derived from operations conducted withinthe U.S. then all revenues derived bythe macquilladora should be reported in Item 5. But is this right?