Consolidated Manufacturing, Inc., M. P. Long Living Trust, Merl Philip Long, Trustee, Tax Matters Person - Page 9

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          reinspected the non-bin salvage yard cores, inspected the bin               
          salvage yard cores, and removed any unwanted components of such             
          cores.  As a result of the inspection process at Bishop Engine's            
          place of business, Bishop Engine determined that 15 to 20 percent           
          of the non-bin salvage yard cores and approximately 80 percent of           
          the bin salvage yard cores which it had purchased were not in               
          rebuildable condition.  Bishop Engine sold the salvage yard cores           
          that did not pass inspection at its place of business as scrap              
          metal and offered the balance of its salvage yard cores that did            
          pass such inspection for sale to, inter alia, automobile parts              
          remanufacturers.                                                            
               Bishop Engine determined the amounts to charge automobile              
          parts remanufacturers for the various types of core supplier                
          cores that it offered for sale to them by taking account of the             
          amounts being charged by its competitors for those types of core            
          supplier cores and market factors relating to supply and demand.            
          Whenever Consolidated purchased core supplier cores from Bishop             
          Engine, it paid the amounts that Bishop Engine was charging for             
          those cores.                                                                
               Bishop Engine and the other core suppliers from which                  
          Consolidated purchased core supplier cores guaranteed those cores           
          to be in rebuildable condition (core supplier guarantee).  If               
          Consolidated discovered during the remanufacturing process that a           
          core supplier core had to be scrapped because it was not in                 
          rebuildable condition, that core was removed from that process              




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Last modified: May 25, 2011