– Refer to BOLD Italics for response.
Cc: Berg, Karen E.; Walsh, Kathryn
Subject: RE: Questions
Hi (Redacted)-here is our take -answers in [bold italic]
Sent: Thursday, October 20, 2011 12:55 PM
To: Verne, B. Michael
Please see the questionsbelow and let me know whether you agree with the responses. Please assume thatthe filing party owns all of the plants that are mentioned.
1. A US engine plant sellsengines to our car plant in Germany. The car plant in Germany will sell somecars (with the US-made engines) to the US and some to other countries. Also,some of these US engines are sold to third parties and some are to a US carplant.
(a)Report the sales of all the engines made in the US plant under a 10digit mfrcode (add a footnote that indicates that some of these sales are intracompanyand that some of the engines are incorporated in the cars that are made/sold inthe US).
(b)For a car sold to the US from a German plant, report the entire amount of thecar sales sold to the US under a 1 O-digit mfr code.
(c)For a car sold in Germany, do not report any of the car sales in Item
2. The Brazilian engineplant sells components to the US engine plant and the parts are used to makethe US engines.
(d)If the engine is sold to the car plant in Germany, it should be treated thesame way as the situation above. Is that correct?
[same as 1(b)]
(e)The sales of the Brazilian component parts to the US are not reported asrevenue in Item 5. [agree]
3. The Brazilian engine plant has anexport office in Miami, FL. The Brazilian plant sells an engine to the Miamioffice, who in turn sells the Engine to the car plant in Germany. None of thecars with Brazilian engines are sold back to the US. The engines neverphysically enter the US. Should any part of this product transfer be includedin the Item 5 data?
[Report the transfer from Miami to Germany as a wholesale code]
4. A US engine plant sells an engine to aUS car plant, and the car is sold in the US.
(f)The revenue of the engine plant will be eliminated (e.g., not separatelyreported) so that it isn't double counted with the revenue of the car plantsales in the US.
(g)Theengine plant should still be included in the list of subsidiaries, even thoughall of its reported revenue has been eliminated in consolidation with thereported car mfr revenue. Is this treatment correct?
5. Are there any otherthings to note or be mindful of?
[can't think of anything, but if you run into other scenarios feelfree to run them by us]