SecProbe.io

CORRESP
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Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019-6064

August 3, 2005

Securities and Exchange
Commission

Station Place

100 F Street, N.E.

Washington, D.C. 20549

Williams Scotsman International, Inc.

Response to SEC
Comment Letter dated July 28, 2005

Ladies and Gentlemen:

On behalf of Williams Scotsman International, Inc.,
a Delaware corporation (the “Company”), we submit this letter in response to
comments received from the Staff of the Commission (the “Staff”) in a letter
from Pamela A. Long, dated July 28, 2005 (the “Comment Letter”). The
discussion below is presented in the order of the numbered comments in the
Comment Letter. Certain capitalized terms set forth in this letter are used as
defined in the Registration Statement on Form S-1 of the Company as
originally filed with the Securities and Exchange Commission (the “Commission”)
on April 29, 2005 and amended on June 10, 2005 and July 8, 2005.
In addition, the Company is providing certain supplemental materials to the
Staff in response to the comments. The Company
respectfully requests that the materials so provided separately to the Staff be
treated as supplemental information under Rule 418 under the Securities
Act and be returned by the Staff upon completion of its review.

The Company’s responses to
the Staff’s comments are as follows:

Note 2(h).   Goodwill

1.                We
appreciate the additional information you have provided. We note your
conclusion that your branch offices do not constitute businesses. This
conclusion appears to be inconsistent with other companies in your industry. Tell
us how your business structure is different from other rental companies. Please
provide us additional information regarding the specific transactions that
resulted in you recording most of your goodwill. Also, please provide us your
allocation of goodwill to each operating segment and explain the basis for the
allocation. In addition, notwithstanding these questions, we do recognize that
EITF D-101 focuses on a qualitative assessment of economic factors. However,
we would like to better understand the underlying reasons for the variations in
the gross margins of your branch offices in order to determine what, if any,
impact such reasons may have on our understanding of other economic factors. Therefore,
please explain the reasons for the variations and provide us your internal
reports related to the branch offices.

Response to Comment
1

Industry Information

The Company believes that its business structure is
not significantly different from other national competitors in the modular
space industry. The Company believes that its regional structure is consistent
with the way its other direct competitors go to market. The Company believes
its competitors utilize branch locations, which include sales force personnel
and a delivery and service area. These individual branches communicate with one
another and corporate through management
information systems that allow the branches to enter and access data through
portals.

 1

The
Company has based this on knowledge of the industry as well as published
information regarding its competitors. The Company is unaware of any
competitors operating in its industry that use a fundamentally different
distribution process.

Goodwill

Approximately
93% of the Company’s goodwill balance at December 31, 2004 was derived
from two acquisitions. The Company purchased Space Master International, Inc.
in September 1998 with 12,800 units, for which the Company recorded
goodwill of approximately $158 million. The Space Master units were located
throughout the United States with approximately 81% of the units located in the
southeast and southwest portions of United States. In February 1999, the
Company acquired Evergreen Mobile Company with 2,000 units, for which the
Company recorded goodwill of approximately $14 million. The Evergreen units
were primarily located in the Pacific Northwest region of the United States. The
Company has provided the Staff an allocation of goodwill to each operating
segment supplementally. Goodwill was allocated ratably based on the book value
at the acquisition date of units the Company acquired by region. The Company
has allocated goodwill using this method because it concluded that the book
value of rental units in a particular region is the best indicator of the
relative fair value of the business by region. Rental units in a particular
geographic region are the best indicator of the net cash flows generated from
the customer base within the region.

Reporting
Units

The
Company believes that its branches do not meet the definition of a reporting
unit. As the Company has discussed with the Staff previously, paragraph 30 of
SFAS No. 142 indicates that:

“A
reporting unit is an operating segment or one level below an operating segment
(referred to as a component). A component of an operating segment is a
reporting unit if the component constitutes a business for which discrete
financial information is available and segment
management regularly reviews the operating results of that component.”

Based
upon the information previously provided to the Staff, the Company believes
that a branch does not constitute a business. In addition, the Company has
indicated that segment management, defined as one level below the Chief
Operating Decision Maker, does not review branch level information. The Company’s
structure is as follows:

As the Company previously indicated,
the Chief Operating Decision Maker (CODM), the Company’s CEO, manages the
business through geographic operating segments rather than through individual
branches because the operating results of large geographic regions are more
representative of the Company’s operating success. The Company’s U.S. Field
Manager reports directly to the CODM. The

 2

Company
has regional managers responsible for branch administration of their respective
regions who report directly to the U.S. Field Manager. Branch managers do not
have regular contact with the U.S. Field Manager to discuss operating
activities, financial results, forecasts or plans for the regional operating
segment. Further, the U.S. Field Manager relies on regional financial results
when assessing the operating performance of the regions, not branch operating
results.

No branch in the Company accounted
for more than 5% and branches average 1.2% of the Company’s total revenues on
average. Accordingly, the Company does not compile internal reporting or
analytical information summarizing branch operating results that is utilized in
assessing the general reasons for variations in gross margins between branch
offices. The Company has provided supplementally copies of the internal reports
utilized by the U.S. Field Manager when assessing performance at the regional
level. Regional managers and branch managers receive a corresponding report for
their respective region/branch. These managers will then utilize this
information to manage their respective regions/branches accordingly.

The Company continues to believe
that its annual goodwill impairment test should not be completed at 85 branch
components. This conclusion is based on a comprehensive review of the
accounting pronouncements promulgated to address goodwill impairment testing as
applied to the Company’s specific facts and circumstances. In order to assist
the Staff in further understanding the Company’s position, the Company believes
the following summarization may be helpful.

Statement 142 includes the following
guidance for determining reporting units:

“A reporting unit is an operating
segment or one level below an operating segment (referred to as a component). A
component of an operating segment is a reporting unit if the component
constitutes a business for which discrete financial information is available
and segment management regularly reviews the operating results of that
component.”

In its letter dated July 21,
2005, the Company described why it did not believe its branches met the
definition of a business in accordance with EITF 98-3, including a
company-specific analysis addressing the characteristics of a business as
outlined in EITF 98-3. In the Staff’s Comment Letter, the Staff indicated
that this conclusion differs from others in the Company’s industry, while
offering no specifics. The Staff asked the Company to tell them how its
business structure is different from other rental companies. The Company does
not have the ability to determine from public filings how its competitors have
applied EITF 98-3 to their goodwill impairment test. However, the
Company does know that its two most comparable competitors have branch
structures and have indicated in public filings that those branches are
economically similar. The Company asks that the Staff consider its
company-specific discussion of why its branches are not a business under EITF 98-3.

Segment management, as defined in
paragraph 14 of Statement 131, is either a level below or the same level as the
chief operating decision maker. According to Statement 131, a segment manager
is “directly accountable to and maintains regular contact with the chief
operating decision maker to discuss operating activities, financial results,
forecasts, or plans for the segment.”
The approach used in Statement 142 to determine reporting units is
similar to the one used to determine operating segments in Statement 131;
however, Statement 142 focuses on how operating segments are managed rather
than how the entity as a whole is managed. The approach in Statement 142 is
consistent with the FASB’s intent that reporting units should reflect the way
an entity manages its operations. As the Company indicated in its letter of July 21,
2005, and as more fully discussed above, the Company’s segment manager as
defined by Statement 131 is the Manager of U.S. Field. Regional managers
are not segment managers under the FASB’s definition because they are not
directly accountable to or maintain regular contact with the Company’s CODM. The
Manager of U.S. Field does not routinely review branch reports to assess
segment operating performance or plans for the Company’s regional segments. Using
the managerial approach prescribed by Statement 131 and EITF D-101, the
Company’s branches are accordingly not reporting units.

 3

Even if the Staff does not agree
with the Company’s conclusion that its branches are not businesses, nor agree
with the Company’s analysis of what constitutes a level below the CODM,
Statement 142, provides that two or more components of an operating segment
should be aggregated and deemed a single reporting unit if the components have
similar economic characteristics. The Company believes that its branches
clearly have similar economic characteristics. In addition to the
characteristics specified in Statement 131, EITF D-101 provides four
additional characteristics indicating the economic similarity of components. The
Company provided to the Staff an analysis of each of these characteristics and
why they all indicated that the Company’s branches are economically similar,
despite the fact that it is not necessary that each of the characteristics be
present to draw such a conclusion. The Staff appears to be concerned that
branches may have differing gross margins. The Company believes that this
quantitative analysis is less relevant than the qualitative analysis prescribed
by EITF D-101. Management recognizes that these variances will naturally
occur when an enterprise is bifurcated into minute components representing on
average 1.2% of revenue and have a differing mix of lease and sales
transactions in any given period.

The FASB
Staff has noted that “how an entity manages its operations and how an acquired
entity is integrated with the acquiring entity are key to determining the
reporting units of the entity.”  The
Company has already discussed above how it manages its operations. The majority
of the Company’s goodwill was recorded upon the acquisition of Space Master in
1998.  The Company closed most of the
26 branches of Space Master that existed at the acquisition date within a
short period of time after the acquisition date, integrating those acquired
operations within its existing regional structure. This demonstrates
conclusively that the Company’s goodwill is not recovered from the operations
of a particular branch, but rather from cash flows generated within the Company’s
regional operating structure. The Company further supported this concept when
it advised the Staff in its letter of July 21, 2005 that the Company’s
rental fleet moves frequently from branch to branch to support its customer’s
needs.

Note 2(q).   Business Segment

2.                We have reviewed the additional information you have
provided and we note that the Mid-Atlantic region has consistently higher gross
margins while the Central Northwest region has consistently lower gross margins.
As a result of these dissimilar economic characteristics, it appears to us that
it may not be appropriate to aggregate your geographic regions into one
reportable segment. In addition, in regard to your concern that you redefine
your operating segments, it appears to us that complying with paragraph 34 of
SFAS 131 should alleviate potential investor confusion.

Response
to Comment 2

Segment Reporting

The Company has concluded that its
operating segments are economically similar and may be aggregated in accordance
with Statement 131. The Company acknowledges that some differences in margin
exist between its operating segments, but it does not believe that these
differences distinguish in any fashion how its CODM allocates resources or
manages the business. How the Company segments its business is controlled
solely by how many competent regional managers the Company has developed to
manage the business. Supporting this fact, as the Company has stated in
previous communications, is that the Company continually changes its regional
reporting structure. In the past 10 years, the Company has changed this
structure eight times. The Company believes its ability to make these changes
so frequently based on changes in personnel is supportive of its conclusions
that its operating segments are economically similar. The Company further
believes that changing segments so often will create investor confusion
regarding an investor’s ability to understand continuous change in its
geographical reporting structure. The Company believes its competitors operate
in a similar manner and has provided information supplementally regarding the
Company’s belief.

 4

Based on
the detailed analysis in its previous response letter to the Staff, the Company’s
management, audit committee and auditors have concluded and continue to believe
that it is appropriate to aggregate the Company’s regions into one reporting
segment under Statement 131.

Note 11.   Assets Held for Sale

3.                Based on the information you have provided us, we
note that your costs to refurbish a unit are substantial relative to the unit’s
historical cost. This appears to indicate that the residual value of a unit may
be lower than your current estimate. In addition, although the impairment
charge you recorded in 2003 took place under distressed conditions, the
magnitude and nature of the charge also may indicate that your current estimate
of residual value is high. Please provide us the following information so that
we may better understand the nature of your refurbishments as well as the
impact on your financial statements:

·       a
description of the specific improvements made to a unit that is refurbished

·       the
average book value and age of units under an arrangement versus idle units at
each balance sheet date

·       the
average selling price, book value and age of refurbished units sold in each
period presented

·       the
average selling price and book va