4
B. The 1970 Public Offering
Petitioners were privately owned before 1970 and thus were
not subject to the reporting requirements of the Securities and
Exchange Act of 1934 (the 1934 Act), ch. 404, 48 Stat. 881
(current version at 15 U.S.C. secs. 78a-78lll (1994)). The Ohio
Mattress Co. first offered its stock for public sale in February
1970. The reporting requirements of the 1934 Act have applied to
petitioners since 1970.
The 1934 Act requires petitioners to file quarterly and
annual financial reports with the Securities and Exchange
Commission (SEC). Petitioners incurred expenses of $1,808,309 in
taxable years 1989 to 1992 for professional services to comply
with reporting, filing, and disclosure requirements imposed by
the 1934 Act. Petitioners paid auditing and professional fees to
KPMG Peat Marwick, Ernst & Whinney, and Ernst & Young to
represent petitioners before the SEC’s chief accountant’s office
and to prepare SEC registration statements S-1 and S-4 relating
to public securities offerings. Petitioners incurred these
expenses to comply with section 13(a)(2) of the 1934 Act, 15
U.S.C. sec. 78m, which requires petitioners to file quarterly and
annual reports with the SEC and to have the annual reports
audited by an independent public auditor.
C. Petitioners’ Employee Benefits Plans
Before 1985, petitioners adopted various employee benefit
plans for their employees. As employee benefit plan
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Last modified: May 25, 2011