SEC Company Response from EVERLAST WORLDWIDE INC (CIK 0000934795) — Aug 19, 2005
EVERLAST WORLDWIDE INC (CIK 0000934795)
Date: Aug. 19, 2005 · CIK: 0000934795 · Accession: 0000921895-05-001391
AI Filing Summary & Sentiment
Referenced dates: August 1, 2005, July 21, 2005, July 11, 2005, June 1, 2005, June 20, 2005
Letter
Re: RESPONSE OF EVERLAST WORLDWIDE, INC. (THE "COMPANY") COMMENT LETTER TO FORM 10-K (SEC FILE NO. 0-25918) --------------------------------------------------
sec document
OLSHAN OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
PARK AVENUE TOWER 65 EAST 55TH STREET NEW YORK, NEW YORK 10022 TELEPHONE: 212.451.2300 August 18, 2005 FACSIMILE: 212.451.2222
WWW.OLSHANLAW.COM
DIRECT DIAL: 212-451-2220 EMAIL: RFRIEDMAN@OLSHANLAW.COM
Securities and Exchange Commission Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. 20549-0404 Attention: Brian V. McAllister
Ladies and Gentlemen:
We acknowledge receipt of the letter of comment dated August 1, 2005 from the Securities and Exchange Commission (the "COMMISSION LETTER") with regards to our responses dated (i) June 20, 2005 to your comment letter dated June 1, 2005 and (ii) July 21, 2005 to your comment letter dated July 11, 2005. We have reviewed the letter with the Company and the Company's auditors and the following reflect the Company's responses to the Commission Letter. The section and page number referenced below refer to the Company's annual report on Form 10-K (the "Annual Report") filed with the Securities and Exchange Commission on March 28, 2005. The responses are numbered to coincide with the numbering of the comments in the Commission Letter.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, PAGE 7-F
1. We note your response to comment 4 in our letter dated June 1, 2005 and comment 10 in our letter dated June 20, 2005. Your responses do not sufficiently address the existence or absence of operating segments or components of an enterprise. Your reference to an inability to allocate operating expenses in your response letter dated July 21, 2005 does not preclude you from disclosing the required segment financial and descriptive information. SFAS No. 131 requires you to make judgments and allocate amounts of profit or loss or assets to operating segments on a reasonable basis" and provide a reconciliation of operating segments to consolidated balances and explanations of your allocations. Strong indicators of the existence of operating segments may include, but are not limited to the following:
NEW JERSEY OFFICE 2001 ROUTE 46 / SUITE 202 PARSIPPANY, NEW JERSEY 07054 TELEPHONE: 973.335.7400 FACSIMILED: 973.335.8018
August 18, 2005 Page 2
o Components of the enterprise engage in business activities which earn revenues and incurs expenses; o The components operating results are regularly viewed by the chief operating decision maker; o The manner the company is organized to make key operating decisions and to assess performance. Operating segments usually have segment managers directly responsible for maintaining direct communication with the chief operating decision maker to discuss operating activities, financial results, forecasts, or plans for the segments; and o The entity has discrete financial information available for the operating segment.
Please tell us why you repeatedly refer to apparel, sporting goods and licensing activities in your response letters dated June 20 and July 21, 2005 and Form 10-K. Include an explanation why you do not believe the entity has operating segments that specifically address all of the criteria in paragraphs 10- 15 of SFAS No. 131. Include in your response an organizational hierarchy for the company, an explanation of the functions or areas the company segregates within its management structure and all existing internal reports for which discrete financial information is available.
COMPANY'S RESPONSE:
The Company appreciates your assistance in helping it to comply with the applicable disclosure requirements regarding segment reporting. We have enclosed an organizational chart and a schedule of profit (loss) by proposed segments to help make a final determination.
The Company believes it has previously complied with SFAS No. 131 by using the management approach. The CEO of the Company, George Q Horowitz, is also its chief decision-maker. Mr. Horowitz does not utilize segment managers (as discussed in Paragraph 15) in order to assess performance and determine resources to be allocated. While there is a Vice President of Licensing, this position generally serves as a liaison between the Company and its licensees and does not serve to communicate results to the CEO. The men's apparel and sporting goods activities are intertwined, such that the financial information that is reported to the CEO is not communicated by division managers, but by the Company's CFO. The CEO's key assessment of performance is more by specific product, and less by apparel, sporting goods, or licensing activities. For example, if a product is not performing well, the Company may choose to license out the product so that this particular product will continue to generate revenues, albeit thru a different means.
In addition, as discussed in our previous response, the Company is concerned that there are certain products sold that could fall into either the apparel or sporting goods categories and therefore impact the Company's disclosure of apparel sales and sporting goods sales.
August 18, 2005 Page3
The Company believes that this information supports its past disclosures. If it does not, your recommendation for this disclosure will be reflected in our 2004 annual report on Form 10-K, as amended. Please refer to our segment reporting worksheet for what this disclosure would look like.
Please direct any questions or comments concerning this response to Gary J. Dailey at (212) 239-0990 or to the undersigned at (212) 451-2220.
Very truly yours,
/s/ Robert H. Friedman
Robert H. Friedman
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OLSHAN
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
PARK AVENUE TOWER
65 EAST 55TH STREET
NEW YORK, NEW YORK 10022
TELEPHONE: 212.451.2300
August 18, 2005 FACSIMILE: 212.451.2222
WWW.OLSHANLAW.COM
DIRECT DIAL: 212-451-2220
EMAIL: RFRIEDMAN@OLSHANLAW.COM
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549-0404
Attention: Brian V. McAllister
Re: RESPONSE OF EVERLAST WORLDWIDE, INC. (THE "COMPANY")
COMMENT LETTER TO FORM 10-K (SEC FILE NO. 0-25918)
--------------------------------------------------
Ladies and Gentlemen:
We acknowledge receipt of the letter of comment dated August 1, 2005
from the Securities and Exchange Commission (the "COMMISSION LETTER") with
regards to our responses dated (i) June 20, 2005 to your comment letter dated
June 1, 2005 and (ii) July 21, 2005 to your comment letter dated July 11, 2005.
We have reviewed the letter with the Company and the Company's auditors and the
following reflect the Company's responses to the Commission Letter. The section
and page number referenced below refer to the Company's annual report on Form
10-K (the "Annual Report") filed with the Securities and Exchange Commission on
March 28, 2005. The responses are numbered to coincide with the numbering of the
comments in the Commission Letter.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, PAGE 7-F
1. We note your response to comment 4 in our letter dated
June 1, 2005 and comment 10 in our letter dated June 20,
2005. Your responses do not sufficiently address the
existence or absence of operating segments or components
of an enterprise. Your reference to an inability to
allocate operating expenses in your response letter
dated July 21, 2005 does not preclude you from
disclosing the required segment financial and
descriptive information. SFAS No. 131 requires you to
make judgments and allocate amounts of profit or loss or
assets to operating segments on a reasonable basis" and
provide a reconciliation of operating segments to
consolidated balances and explanations of your
allocations. Strong indicators of the existence of
operating segments may include, but are not limited to
the following:
NEW JERSEY OFFICE
2001 ROUTE 46 / SUITE 202
PARSIPPANY, NEW JERSEY 07054
TELEPHONE: 973.335.7400
FACSIMILED: 973.335.8018
August 18, 2005
Page 2
o Components of the enterprise engage in business
activities which earn revenues and incurs
expenses;
o The components operating results are regularly
viewed by the chief operating decision maker;
o The manner the company is organized to make key
operating decisions and to assess performance.
Operating segments usually have segment managers
directly responsible for maintaining direct
communication with the chief operating decision
maker to discuss operating activities, financial
results, forecasts, or plans for the segments; and
o The entity has discrete financial information
available for the operating segment.
Please tell us why you repeatedly refer to apparel,
sporting goods and licensing activities in your response
letters dated June 20 and July 21, 2005 and Form 10-K.
Include an explanation why you do not believe the entity
has operating segments that specifically address all of
the criteria in paragraphs 10- 15 of SFAS No. 131.
Include in your response an organizational hierarchy for
the company, an explanation of the functions or areas
the company segregates within its management structure
and all existing internal reports for which discrete
financial information is available.
COMPANY'S RESPONSE:
The Company appreciates your assistance in helping it to comply with
the applicable disclosure requirements regarding segment reporting. We have
enclosed an organizational chart and a schedule of profit (loss) by proposed
segments to help make a final determination.
The Company believes it has previously complied with SFAS No. 131 by
using the management approach. The CEO of the Company, George Q Horowitz, is
also its chief decision-maker. Mr. Horowitz does not utilize segment managers
(as discussed in Paragraph 15) in order to assess performance and determine
resources to be allocated. While there is a Vice President of Licensing, this
position generally serves as a liaison between the Company and its licensees and
does not serve to communicate results to the CEO. The men's apparel and sporting
goods activities are intertwined, such that the financial information that is
reported to the CEO is not communicated by division managers, but by the
Company's CFO. The CEO's key assessment of performance is more by specific
product, and less by apparel, sporting goods, or licensing activities. For
example, if a product is not performing well, the Company may choose to license
out the product so that this particular product will continue to generate
revenues, albeit thru a different means.
In addition, as discussed in our previous response, the Company is
concerned that there are certain products sold that could fall into either the
apparel or sporting goods categories and therefore impact the Company's
disclosure of apparel sales and sporting goods sales.
August 18, 2005
Page3
The Company believes that this information supports its past
disclosures. If it does not, your recommendation for this disclosure will be
reflected in our 2004 annual report on Form 10-K, as amended. Please refer to
our segment reporting worksheet for what this disclosure would look like.
Please direct any questions or comments concerning this response to
Gary J. Dailey at (212) 239-0990 or to the undersigned at (212) 451-2220.
Very truly yours,
/s/ Robert H. Friedman
Robert H. Friedman
cc: George Horowitz
Gary J. Dailey
August 18, 2005
Page 4
Organizational Chart
Confidential Treatment Requested by Everlast Worldwide, Inc.
ID No. 81605
ID Code: RESPEX-1
August 18, 2005
Page 5
Schedule of Profit (Loss) by Segment
Confidential Treatment Requested by Everlast Worldwide, Inc.
ID Code: 81605
ID Code: RESPEX-1