Sometimes a calculation to determine the applicability of the Hart-Scott-Rodino Act to a transaction involves the conversion of a foreign currency to dollars. For instance, currency conversions can be key in determining the acquisition price of a transaction or the application of an exemption under Sections 802.50 or 802.51. When converting from foreign currency to dollars, use the Interbank Exchange Rate and follow these general guidelines:
For an Annual Statement of Income: Use the average exchange rate for the year reported.
- For example, if the company reports on a calendar year basis, the conversion of its 2007 revenue to dollars would be based on the average exchange rate from January 1 to December 31, 2007. If the company has a fiscal year that ends in March, the conversion of its 2007 revenue to dollars would be based on the average exchange rate from April 1, 2007 to March 31, 2008.
For a Regularly Prepared Balance Sheet: Use the exchange rate in effect for the date on the balance sheet.
- A balance sheet typically represents a point in time that pre-dates the preparation and release of the balance sheet. For instance, the balance sheet for September 30 might be prepared in October or November. So, the exchange rate for a balance sheet dated September 30, 2008, is the rate for September 30, 2008, not the date that the balance sheet was prepared or released.
For a Pro Forma Balance Sheet: Use the exchange rate for the date the pro forma balance sheet is created.
- For example, the exchange rate for a pro forma balance sheet created on June 30, 2008, is the rate for June 30, 2008.
For the Acquisition Price: Use the exchange rate for the date of closing.
- Even though the closing date will typically be in the future, if the exchange rate is relatively stable and can be estimated for the closing date, use an estimate and the acquisition price is considered determined. If the exchange rate is fluctuating such that it cannot be reasonably estimated for the closing date, the acquisition price is considered undetermined.
For a Fair Market Value: Use the exchange rate for the date the fair market valuation is calculated.
For a Market Price: Use the daily exchange rate for each relevant day under §801.10(c)(1)(i), (ii) or (iii) to ascertain the lowest closing quotation or lowest closing bid price.