Item 5 (a), (b), (c) - Some general observations on reporting revenues:

Revenues derived from sales by a foreign entity to a foreign customer are not reported in item 5.

Revenues derived from sales by a foreign entity of goods directly to customers in the U.S. (ie. the order is placed with the foreign entity and title and risk of loss for the product sold passes to the U.S. customer outside of the U.S.) are not reported in item 5.

Revenues derived from sales by a foreign manufacturing entity which are made through a U.S. establishment included within the same person as the foreign entity are reported as wholesale revenues in item 5. Goods of foreign manufacture are never reported under manufacturing codes in item 5.

Note that there is a different standard between what is reported in item 5 and what constitutes sales into the U.S. in §§ 802.50 and 802.51. Revenues generated from direct sales into the U.S. are included in determining whether the threshold in §§ 802.50 and 802.51 has been met, but are not included in item 5.

All revenues derived from sales by a U.S. entity regardless of the location of the customer are reported in item 5. Revenues of a U.S. manufacturer are not reported under a wholesale code unless the sale is made from a distribution facility which is separate from the manufacturing facility. In this case, revenues would be reported for both the manufacturing and wholesaling of the product. Thus if a manufacturer has wholesaling operations at its manufacturing facility, it would report all of its revenues under the manufacturing NAICS code.

Intra-company sales are included in item 5 even though this could result in double counting. The reason for this is that this is consistent with the way that revenues are reported to Bureau of Census on an establishment basis.

The instructions for item 5 require that persons filing notification include revenues for the base year derived by all entities included within the person filing notification at the time the filing is prepared (even if such entities have become included within the person since the base year). This is also true of the most recent year. If the entity acquired since the base year derived revenues from manufacturing, those manufacturing NAICS codes are not reflected in item 5(b)(ii) as products added. If an entity has been divested since the base year (either by loss of a controlling interest or sale of substantially all of the assets of that entity), no information is provided for that entity anywhere in item 5.

If an entity commenced operations after the base year it would report no revenues for the base year unless it subsequently acquired another entity which derived revenues in the base year. In this situation only the revenues of the acquired entity would be reported for the base year. If the entity is engaged in manufacturing, it would report all of its current lines of business as products added in 5(b)(ii), and would report all of its revenues including those of the acquired entity for the most recent year.

Also, if a product line has been added since the end of the most recent year and has derived revenues since the end of the most recent year, it should be reported as a product added in 5(b)(ii), but is not reported in item 5(b)(iii). See Int # 316, Premerger Notification Practice Manual (1991 ed.).

If assets have been acquired since the base year which do not constitute an entity or substantially all of the assets of an entity, financial information for those assets is often not available. In this situation, the revenues attributable to those assets need not be reported for the base year. If the assets produce manufactured products, information should be provided under products added at the 10-digit NAICS code level in item 5(b)(ii) if possible. Similarly, if assets not constituting an entity have been acquired since the end of the most recent year, revenues attributable to those assets need not included in the base year or the most recent year, if the information is not available. If the information is available for the base year, it should be included.

If establishments that do not constitute an entity have been acquired since the end of the most recent year, it is not necessary to supply revenue information for item 5, however, persons filing notification should be encouraged to voluntarily supply information relating to those establishments in item 7(a) and 7(c).

"Establishment" = a physical location such as a manufacturing plant, warehouse or sales office.

Questions:

1) Meats-R-Us, Inc. manufactures prepared meat products in the U.S. which it distributes from its plant to customers worldwide. It exported 20% of its total sales of $100 MM in the base year. It would report its revenues in item 5(a) as:

(a) $100 MM under NAICS code 422470 (Meat and Meat Product Wholesalers).
(b) $100 MM under NAICS code 311613 (Rendering and Meat Byproduct Processing)
(c) $80 MM under NAICS code 311613.
(d) $80 MM under NAICS code 311613 and $20 MM under NAICS code 422470.  

2) Sparco Ltd. is an English manufacturer of porcelain spark plugs with only two customers. In the base year it sold $40 MM in products to ItalyCo, an Italian corporation, and $10 MM to TillerCo, a U.S. manufacturer of garden tillers. These sales were made directly to the customers from Sparco's manufacturing facility. Two years after the base year, Sparco established a U.S. distribution facility through which it subsequently sold all of its products to U.S. customers. In 1998, Sparco sold $200 MM in products to ItalyCo and $50 MM to TillerCo. Sparco would report its revenues for the base year as:

(a) $50 MM under NAICS code 327113 (Porcelain Electrical Supply Manufacturing).
(b) $40 MM under NAICS code 421690 (Other Electronic Parts and Equipment Wholesalers ) and $10 MM under NAICS code 327113.
(c) $10 MM under NAICS code 421690.
(d) No item 5(a) revenues  

It would report its revenues for the most recent year as:

(a) $250 MM under NAICS code 421690.
(b) $200 MM under NAICS code 3271130 and $50 MM under NAICS code 421690.
(c) $50 MM under NAICS code 421690
(d) No item 5(b)(iii) or 5(c) revenues  

(3) Newco was incorporated in three years after the base year and is a manufacturer. Four years after the base year it acquired 100% of the voting securities of Oldco, also a manufacturer which was incorporated in 1952. Newco is now filing for another acquisition. In item 5(a) Newco should report:

(a) No revenues
(b) Newco's revenues for base year +3 plus Oldco's revenues for the base year
(c) Oldco's revenues for the base year
(d) Both Newco's and Oldco's revenues for base year +3.  

For item 5(b)(ii) Newco should report:

(a) Nothing
(b) All 10-digit product codes which Oldco manufactured at the time Newco acquired Oldco should be shown as products added in base year +4.
(c) All 10-digit product codes currently manufactured by Newco should be shown as products added in base year +3 or later.
(d) All products currently manufactured by Newco should be shown as added in base year +3 and all products currently manufactured by Oldco should be shown as added in base year +4.  

(4) ACORP, which was incorporated one year after the base year, is filing for an acquisition in which it will report revenues for the most recently completed calendar year as the most recent year. Six months after the end of that year, ACORP acquired 100% of the voting securities of BCORP, a manufacturing company. BCORP was incorporated in 1990. In item 5(b)(i), ACORP should report:

(a) No revenues
(b) Only revenues of BCORP generated in the base year.
(c) BCORP's base year revenues plus ACORP's revenues from the year it was incorporated.
(d) Only ACORP's revenues from the year it was incorporated.  

In item 5(b)(ii), under products added, ACORP should report:
(a) Nothing
(b) Products currently manufactured by both ACORP and BCORP
(c) Only products currently manufactured by ACORP.
(d) Only products currently manufactured by BCORP.  

In item 5(b)(iii), ACORP should report:
(a) Nothing
(b) Revenues derived by both ACORP and BCORP in the most recent year.
(c) Only revenues derived by ACORP in the most recent year.
(d) I am tired of this exercise and ready quit.

BONUS QUESTION:

A was incorporated in BASE+2. B was incorporated in BASE. A acquired B in MOST RECENT+1. The following summarizes revenues by product line for A and B through MOST RECENT:

Company A:

PRODUCT	BASE	BASE+1	BASE+2	BASE+3	BASE+4	BASE+5	MOST RECENT
Drive Shafts 3363501528			20 MM	30 MM	40 MM	60 MM	80 MM
Catalytic Converters 3363993107					30 MM	40 MM	50 MM

Company B:

PRODUCT	BASE	BASE+1	BASE+2	BASE+3	BASE+4	BASE+5	MOST RECENT
Ball Joints 3363301511	10 MM	20 MM	30 MM	40 MM	50 MM	60 MM	80 MM
Brake Drums 3363401416		10MM	20 MM	25 MM	30 MM	40 MM	50 MM

A is filing for another acquisition. Complete the item 5(a), 5(b)(i), 5(b)(ii) and 5(b)(iii) information for this filing.

Find answers here.