SEC Trends & Developments - Spring 2012 - Latest Comments from the Commission

“Latest Comments from the Commission” intends to highlight quotes from recent SEC comment letters. For a complete listing of SEC comment letters and registrants' response, please visit the commission's website at  

Commitments and Contingencies - Litigation

We note your additional proposed revisions for Note x in response to our prior comment. Please further clarify such disclosure to address the determination of estimates on “reasonably possible” losses as specifically worded in ASC [Accounting Standards Codification] 450. In this regard, please revise your proposed disclosure to state, if true, that for many proceedings the company is currently unable to estimate the reasonably possible loss or a range of reasonably possible losses as proceedings are in the early stages, etc. Further, revise your disclosure with respect to the limited number of proceedings for which the company was able to estimate the reasonably possible loss or range of reasonably possible losses, to state, if true, that such estimates were immaterial.

We note your disclosure on page xx about the aggregate range of possible losses in excess of the accrued liability (if any) related to those matters where an estimate is possible. You have provided quantified information about the range of reasonably possible losses for a “limited number” of the matters disclosed in Note 11 and in the prior commitments and contingencies disclosures. While useful, we believe additional information to put this disclosure in context would further enhance the understandability of this information. Please consider providing additional disclosure for the matters for which you are unable to provide an estimate of reasonably possible losses in excess of the accrued liability, if any. Alternatively, information can be provided for those matters where a range of reasonably possible losses has been estimated. The objective would be to allow a reader to determine those cases for which an estimate has been made and those for which an estimate cannot be made.

Management's Discussion and Analysis of Financial Condition and Results of Operations - General

Please discuss the materiality of your contacts with [countries which are U.S.-designated state sponsors of terrorism] described in response to the foregoing comment and whether those contacts constitute a material investment risk for your security holders. You should address materiality in quantitative terms, including the approximate dollar amounts of any associated revenues, assets, and liabilities for the last three fiscal years and subsequent interim period. Also, address materiality in terms of qualitative factors that a reasonable investor would deem important in making an investment decision, including the potential impact of corporate activities upon a company's reputation and share value. Various state and municipal governments, universities, and other investors have proposed or adopted divestment or similar initiatives regarding investment in companies that do business with U.S.-designated state sponsors of terrorism. Your materiality analysis should address the potential impact of the investor sentiment evidenced by such actions directed toward companies that have operations associated with such countries.

Goodwill and Intangible Assets

We note that your annual goodwill impairment test as of June 30, 2011 and interim test as of September 30, 2011 did not result in any goodwill impairment for your reporting unit. Please provide us with the following as it relates to your reporting unit's goodwill impairment testing:

  1. Tell us whether you made any changes to your impairment testing methodology during 2011 other than updating assumptions to reflect the current market environment;
  2. Discuss the changes made to your discount and growth rate assumptions during 2011;
  3. Describe the primary factors that resulted in the significant increase in the reporting unit's fair value as a percentage of carrying value from xx% at June 30, 2011 to xx% at September 30, 2011;
  4. Provide more details about the stress testing that you performed during the third quarter 2011; and
  5. Provide us with your step two analysis as of June 30, 2011 and September 30, 2011.

SEC Trends & Developments - Spring 2012 Issue 

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