SEC Comment Letter for EGL INC (CIK 0001001718) — Dec 13, 2005
EGL INC (CIK 0001001718)
Date: Dec. 13, 2005 · CIK: 0001001718 · Accession: 0000000000-05-061931
AI Filing Summary & Sentiment
File numbers found in text: 000-27288
Letter
December 13, 2005 Via US Mail and Facsimile Elijio V. Serrano Chief Financial Officer EGL, Inc. 15350 Vickery Drive Houston, TX 77032
Re: EGL, Inc. Form 10-K for the year ended December 31, 2004 Commission File Number: 000-27288
Dear Mr. Serrano:
We have reviewed your December 2, 2005 response letter and have the following comment. Where expanded or revised disclosu re is requested, you may comply with this comment in future filings. If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary. We also ask you to provide us with supplemental information so we may better understa nd your disclosure. Please be as detailed as necessary in your explanation. We look forward to working with you in these respects and welcome any questions you may have about any aspects of our review.
* * * * * * * * * * *
Note 1 – Organization, Basis of Presen tation and Significant Accounting Policies
Revenue Recognition, page F-14 We note your response to our prior comment #4. Y ou assert the EITF concluded in 91-9 that four of five methods of account ing for freight services are ac ceptable. However, EITF 91-9 solely states the Task Force reached a cons ensus that Method 1 was no longer an acceptable method and a change from method 1 to method 2 would not be appropriate because revenue is recognized in advance of performance and liabilit ies are recognized before they are incurred. You also assert that the AcSEC concluded that the use of any of the ot her identified accounting methods would not result in a material differenc e in reported net income. However, EITF 91-9 actually states the proposed Audit and Accountin g Guide was not issued by the AICPA because AcSEC believed that the use of any of the other iden tified methods (i.e., methods other than 3 and 5) would not result in a mate rial difference in reported net income. It appears AcSEC did
Mr. Elijio V . Serrano EGL, Inc. December 13, 2005 Page 2
not object to the other identified methods b ecause they presumed they would not differ materially from methods 3 and 5. Method 2 re sults in revenue recognition prior to the performance of service. We do not object to use of this method if it does not materially impact your financial statements as compared to the methods that recognize revenues when service is complete or as service is provided and which were tentatively concluded as acceptable by the AcSEC in the EITF. This is consistent with the guidance in paragraph 83(b) of CONS 6, which states revenues are not recognized until earned, a nd SAB Topic 13(A)(1), which states the staff believes that revenue generally is earned when delivery has occurred or services have been rendered. We reissue our prior co mment. Please expand disclosure in the financial statements to provide management’s representa tion that the use of method 2 over a preferable method has not materially impacted the historical financial statements on both a quarterly and annual basis. This disclosure is consistent with disclosures that have been made by other transportation providers using method 2. In the alternative, if material , we believe you should change to a preferable method. Please revise accordingly.
* * * * * * * * * * *
As appropriate, please respond to this commen t within 10 business da ys or tell us when you will provide us with a response. If an am endment is required, you may wish to provide us with marked copies of the amendment to exped ite our review. Please understand that we may have additional comments af ter reviewing your amendment and response to our comment.
We urge all persons who are responsible fo r the accuracy and adequ acy of the disclosure in the filing reviewed by the staff to be certain that they have provided all information investors require for an informed decision. Since the comp any and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the acc uracy and adequacy of the disclosures they have made.
In connection with responding to our comme nts, please provide, in writing, a statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclo sure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federa l securities laws of the United States.
In addition, please be advi sed that the Division of Enforcement has access to all information you provide to the staff of the Divisi on of Corporation Finance in our review of your filing or in response to our comments on your filing.
You may contact Amy Gedde s at 202-551-3304 or Lynw ood Shenk at 202-551-3380 if
Mr. Elijio V . Serrano EGL, Inc. December 13, 2005 Page 3
you have questions or me at 202-551-3211 with any concerns as I supervised the review of your filing.
S i n c e r e l y ,
David R. Humphrey B r a n c h C h i e f
Show Raw Text
December 13, 2005
Via US Mail and Facsimile
Elijio V. Serrano
Chief Financial Officer
EGL, Inc.
15350 Vickery Drive
Houston, TX 77032
Re: EGL, Inc.
Form 10-K for the year ended December 31, 2004
Commission File Number: 000-27288
Dear Mr. Serrano:
We have reviewed your December 2, 2005 response letter and have the following
comment. Where expanded or revised disclosu re is requested, you may comply with this
comment in future filings. If you disagree, we will consider your explanation as to why our
comment is inapplicable or a revision is unnecessary. We also ask you to provide us with
supplemental information so we may better understa nd your disclosure. Please be as detailed as
necessary in your explanation. We look forward to working with you in these respects and
welcome any questions you may have about any aspects of our review.
* * * * * * * * * * *
Note 1 – Organization, Basis of Presen tation and Significant Accounting Policies
Revenue Recognition, page F-14
We note your response to our prior comment #4. Y ou assert the EITF concluded in 91-9 that
four of five methods of account ing for freight services are ac ceptable. However, EITF 91-9
solely states the Task Force reached a cons ensus that Method 1 was no longer an acceptable
method and a change from method 1 to method 2 would not be appropriate because revenue is
recognized in advance of performance and liabilit ies are recognized before they are incurred.
You also assert that the AcSEC concluded that the use of any of the ot her identified accounting
methods would not result in a material differenc e in reported net income. However, EITF 91-9
actually states the proposed Audit and Accountin g Guide was not issued by the AICPA because
AcSEC believed that the use of any of the other iden tified methods (i.e., methods other than 3
and 5) would not result in a mate rial difference in reported net income. It appears AcSEC did
Mr. Elijio V . Serrano
EGL, Inc.
December 13, 2005
Page 2
not object to the other identified methods b ecause they presumed they would not differ
materially from methods 3 and 5. Method 2 re sults in revenue recognition prior to the
performance of service. We do not object to use of this method if it does not materially impact
your financial statements as compared to the methods that recognize revenues when service is
complete or as service is provided and which were tentatively concluded as acceptable by the
AcSEC in the EITF. This is consistent with the guidance in paragraph 83(b) of CONS 6, which
states revenues are not recognized until earned, a nd SAB Topic 13(A)(1), which states the staff
believes that revenue generally is earned when delivery has occurred or services have been rendered. We reissue our prior co mment. Please expand disclosure in the financial statements to
provide management’s representa tion that the use of method 2 over a preferable method has not
materially impacted the historical financial statements on both a quarterly and annual basis. This
disclosure is consistent with disclosures that have been made by other transportation providers
using method 2. In the alternative, if material , we believe you should change to a preferable
method. Please revise accordingly.
* * * * * * * * * * *
As appropriate, please respond to this commen t within 10 business da ys or tell us when
you will provide us with a response. If an am endment is required, you may wish to provide us
with marked copies of the amendment to exped ite our review. Please understand that we may
have additional comments af ter reviewing your amendment and response to our comment.
We urge all persons who are responsible fo r the accuracy and adequ acy of the disclosure
in the filing reviewed by the staff to be certain that they have provided all information investors
require for an informed decision. Since the comp any and its management are in possession of all
facts relating to a company’s disclosure, they are responsible for the acc uracy and adequacy of
the disclosures they have made.
In connection with responding to our comme nts, please provide, in writing, a statement
from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclo sure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federa l securities laws of the United States.
In addition, please be advi sed that the Division of Enforcement has access to all
information you provide to the staff of the Divisi on of Corporation Finance in our review of your
filing or in response to our comments on your filing.
You may contact Amy Gedde s at 202-551-3304 or Lynw ood Shenk at 202-551-3380 if
Mr. Elijio V . Serrano
EGL, Inc.
December 13, 2005
Page 3
you have questions or me at 202-551-3211 with any concerns as I supervised the review of your
filing.
S i n c e r e l y ,
David R. Humphrey
B r a n c h C h i e f