0602002 Informal Interpretation

From: (redacted)

Sent: Wednesday, February 01, 2006 1:56 PM

To: Verne, B. Michael

Cc: (redacted)

Subject:Item 5 Revenue Question

Mike

We are working with a clientwith lots of non-US revenue and struggling a bit with how to properly report itfor purposes of Item 5. We're wrestling with the statements in Rule 803.2(c)(1)("operations conducted within the United States"), Rule 803.2(d)("dollar revenues include interplant transfers") and Interpretation281 from the Premerger Notification Practice Manual ("sales of productsmanufactured by the reporting person in its own plants located outside theUnited States should not be shown as manufacturing revenues, regardless ofwhere or to whom they are sold"). Here's the situation and we'd appreciateyour guidance.

Parent is a US-based companythat will report under two separate 6-digit NAICS manufacturing codes. Parenthas dozens of US domiciled subsidiaries and non-US domiciled subsidiaries.

For the US-domiciledsubsidiaries' direct sales into the US market, that's easy - we'll report this asmanufacturing revenue.

US-domiciled subsidiariesalso have revenue based on manufactured goods which are shipped to other Parentcontrolled entities both within and outside the US for ultimate sales withinand outside the US. My inclination is to report this as manufacturingrevenue as well per 803.2(d).

There is one subsidiaryincorporated in the US but which has its sole location outside the US where itdoes manufacturing. This entity sells into both the US andnon-US markets. As this is a US incorporated subsidiary (albeit with a foreignpresence), again, my inclination is to report this as manufacturing revenue,but query whether these are "operations conducted within the United States?"

There is one subsidiaryincorporated in the US, which has its sole location outside the US but itdoes not do manufacturing. This entity is simply a reseller into non-USmarkets. Same question as above, though I think maybe I would report this asnon-manufacturing revenue?

Finally, there are manysubsidiaries which are incorporated and based outside the US whichsell only outside the US. For perspective this accounts for about 45% of theParent's worldwide revenue, Per Interpretation 281 above, my inclination hereis to report this revenue under a non-manufacturing code, but under Rule803.2(c)(1), I wonder if I can exclude it altogether as operations notconducted (MV comment - in the U.S.)