SEC Company Response from SGL CARBON AKTIENGESELLSCHAFT (CIK 0001015111) — Dec 12, 2005
SGL CARBON AKTIENGESELLSCHAFT (CIK 0001015111)
Date: Dec. 12, 2005 · CIK: 0001015111 · Accession: 0001157523-05-010736
AI Filing Summary & Sentiment
Referenced dates: September 14, 2005, September 14, 2005
Letter
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [SGL CARBON LOGO] Page 1 of 7 SGL CARBON AG o P.O.Box 5020 o 65040 Wiesbaden Head Office United States Chief Financial Officer Securities and Exchange Commission Lynn A. Dicker Sten Daugaard Division of Corporation Finance Phone +49 611 6029-215 450 Fifth Street, N.W. Fax +49 611 6029-201 Washington, DC 20549-6010 sten.daugaard@sglcarbon.de USA
Dear Ms. Dicker, dear Ms. Tillan:
This letter is in response to the comment letter, dated November 23, 2005, of the Staff of the Securities and Exchange Commission (the "Commission") with respect to the Company's annual report on Form 20-F for the year ended December 31, 2004.
This letter contains our supplemental responses to your comments. For your convenience, we have followed the format of your letter and have included each of your comments as a preface to each of our responses.
We understand that you may have additional questions upon review of our responses or may request supplemental information. We welcome any questions you may have regarding our responses and look forward to working with you to enhance our disclosure in future filings with the Commission.
Note 1. Summary of Accounting Policies, page F-8 ------------------------------------------------
Consolidation methods, page F-8 -------------------------------
1. We note your response to comment two in our letter dated September 14, 2005. Please provide us with a comprehensive analysis in accordance with SAB Topic 99, under both IFRS and US GAAP, supporting your statement that the impact of not consolidating these subsidiaries is not material. Your analysis should include a comparison of all the major balance sheet and statement of operations captions.
Response SGL:
As an initial step in assessing materiality in accordance with SAB Topic 99, SGL used percentages as a numerical threshold in analyzing each major balance sheet and statement of operations caption including the individual amounts, totals and subtotals. The percentages noted reflect the impact of not consolidating certain SGL subsidiaries as a percentage of reported 20-F balances by major balance sheet and statement of operations captions. As noted in our response
Chairman of supervisory board: SGL CARBON AG Max Dietrich Kley Head Office
Executive committee: Rheingaustrasse 182 Robert J. Koehler 65203 Wiesbaden/Germany Theodore H. Breyer Phone +49 611 6029-0 Sten Daugaard Fax +49 611 6029-101 Dr. Hariolf Kottmann www.sglcarbon.com
Corporate domicile: Wiesbaden Registration court Wiesbaden HRB 9448
<PAGE>
[SGL CARBON LOGO] Page 2 of 7
to question 2, the carrying value of the investments has been historically reported as a component of other non-current assets.
In updating our initial response to the Staff's letter dated September 14, 2005, we reviewed the accounts prepared in local GAAP and adjusted these for unaudited IFRS adjustments. The IFRS figures below also reflect the US GAAP numbers (i.e. no reconciling items necessary). As a result, the net income (-loss) reported in our letter from November 14, 2005 changed from Euro -299 thousand to Euro -427 thousand in 2004 and from Euro -2,859 thousand to Euro 204 thousand in 2003. The adjustment for 2003 reflects to the capitalization of deferred tax assets in one affiliate and the adjusting of useful lives of fixed assets in another affiliate.
The following is an analysis by line item showing the percentage impact of the aggregate effect the consolidation of the non-consolidated companies would have on the consolidated group financial statements: <TABLE> <CAPTION>
---------------------------------------------------------------------------------------------------- 2004 Total Consolidated Percentage non-consoli-dated companies companies ---------------------------------------------------------------------------------------------------- TEuro TEuro ---------------------------------------------------------------------------------------------------- <S> <C> <C> <C> Fixed Assets 12,270 430,300 2.85% ---------------------------------------------------------------------------------------------------- Other non current assets -17,572 29,900 -58.77% ---------------------------------------------------------------------------------------------------- Inventories 10,179 248,000 4.10% ---------------------------------------------------------------------------------------------------- Trade receivables 2,369 183,900 1.29% ---------------------------------------------------------------------------------------------------- Other assets 1,992 358,900 0.56% ---------------------------------------------------------------------------------------------------- Assets held for sale 7,687 63,800 12.05% ---------------------------------------------------------------------------------------------------- Total Assets 16,925 1,314,800 1.29% ---------------------------------------------------------------------------------------------------- Equity -3,365 281,700 -1.19% ---------------------------------------------------------------------------------------------------- Minority Interests 991 200 495.50% ---------------------------------------------------------------------------------------------------- Provisions 1,100 301,100 0.37% ---------------------------------------------------------------------------------------------------- Bank liabilities 11,199 416,400 2.69% ---------------------------------------------------------------------------------------------------- Trade liabilities 3,314 91,400 3.63% ---------------------------------------------------------------------------------------------------- Other liabilities -994 160,200 -0.62% ---------------------------------------------------------------------------------------------------- Liabilities held for sale 4,680 63,800 7.34% ---------------------------------------------------------------------------------------------------- Total Equity & Liabilities 16,925 1,314,800 1.29% ---------------------------------------------------------------------------------------------------- Sales 23,572 926,200 2.54% ---------------------------------------------------------------------------------------------------- Cost of Sales -17,222 -663,400 2.60% ---------------------------------------------------------------------------------------------------- Gross Profit 6,350 262,800 2.42% ---------------------------------------------------------------------------------------------------- Other Selling, RD & Admin Exp. -6,191 -197,300 3.14% ---------------------------------------------------------------------------------------------------- Operating Profit 159 65,500 0.24% ---------------------------------------------------------------------------------------------------- Financial Expenses 673 -60,500 -1.11% ---------------------------------------------------------------------------------------------------- Earnings Before Taxes (EBT) 832 5,000 16.63% ---------------------------------------------------------------------------------------------------- Income Tax Expense -690 -1,200 57.49% ---------------------------------------------------------------------------------------------------- Discontinued Operations -569 -85,500 0.67% ---------------------------------------------------------------------------------------------------- Net Income -427 -81,700 0.52% ---------------------------------------------------------------------------------------------------- </TABLE>
All captions that are impacted by an amount below 5% were regarded as immaterial for the purpose of this initial step but are included in our analysis and review of qualitative impacts.
Impact on Minority Interest, EBT and Income Tax Expense In 2004, while Minorities Interest, EBT and Income Tax Expense were impacted by more than 5%, the absolute individual impact was deemed immaterial.
<PAGE>
[SGL CARBON LOGO] Page 3 of 7
Impact on Other non-current assets The impact on Other non-current assets reflects the impact of the technical consolidation of the net assets of the non-consolidated subsidiaries previously held at cost for a total of Euro 17.6 million and historically reported as component of Other non-current asset. While this is a significant impact to Other non-current assets, the impact to current, non-current and total assets was not considered material.
Impact on Subtotals and Totals Subtotals and totals in the balance sheet including total assets, equity and total liabilities reflected impacts of less than 1.30%. The only subtotals and totals in the income statement greater than 5% were EBT, in absolute terms Euro 831 thousand, and income tax expense, in absolute terms Euro -690 thousand. Given the small size of these absolute amounts, we regard these impacts as immaterial. In addition, since SGL has historically fluctuated between income and losses from year to year with 2004 near break-even, the Company believes that income before taxes from continuing operations (EBT) may not be the most appropriate basis for evaluating quantitative materiality. We believe a more appropriate measure that should be considered in evaluating materiality is EBITDA, which reflects an overstatement of approximately 1.03% and this was not considered material.
<TABLE> <CAPTION>
--------------------------------------------------------------------------------------------------------- 2003 Total Consolidated Percentage non-consoli-dated companies companies --------------------------------------------------------------------------------------------------------- TEuro TEuro --------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> Fixed assets 10,207 507,500 2.01% --------------------------------------------------------------------------------------------------------- Other non current assets -14,456 28,700 -50.37% --------------------------------------------------------------------------------------------------------- Inventories 16,404 258,000 6.36% --------------------------------------------------------------------------------------------------------- Trade receivables -8,914 221,300 -4.03% --------------------------------------------------------------------------------------------------------- Other assets 10,925 231,400 4.72% --------------------------------------------------------------------------------------------------------- Total Assets 14,166 1,246,900 1.14% --------------------------------------------------------------------------------------------------------- Equity -5,894 116,600 -5.05% --------------------------------------------------------------------------------------------------------- Minority Interests 1,927 300
Show Raw Text
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
Corresp
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
Response to November 23, 2005 Comment Letter regarding Form 20-F
SGL CARBON Aktiengesellschaft
(Name of registrant)
Rheingaustrasse 182
65203 Wiesbaden
Germany
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F:
Form 20-F X Form 40-F
-------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the SEC
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes No X
----- ---
If "Yes" is marked, indicate the file number assigned to the registrant in
connection with Rule 12g3-2(b): N/A
<PAGE>
Exhibit Index
-------------
1. Letter to SEC 12-12-05
<PAGE>
EXHIBIT
-------
[SGL CARBON LOGO]
Page 1 of 7
SGL CARBON AG o P.O.Box 5020 o 65040 Wiesbaden
Head Office
United States Chief Financial Officer
Securities and Exchange Commission
Lynn A. Dicker Sten Daugaard
Division of Corporation Finance Phone +49 611 6029-215
450 Fifth Street, N.W. Fax +49 611 6029-201
Washington, DC 20549-6010 sten.daugaard@sglcarbon.de
USA
Dear Ms. Dicker, dear Ms. Tillan:
This letter is in response to the comment letter, dated November 23, 2005, of
the Staff of the Securities and Exchange Commission (the "Commission") with
respect to the Company's annual report on Form 20-F for the year ended December
31, 2004.
This letter contains our supplemental responses to your comments. For your
convenience, we have followed the format of your letter and have included each
of your comments as a preface to each of our responses.
We understand that you may have additional questions upon review of our
responses or may request supplemental information. We welcome any questions you
may have regarding our responses and look forward to working with you to enhance
our disclosure in future filings with the Commission.
Note 1. Summary of Accounting Policies, page F-8
------------------------------------------------
Consolidation methods, page F-8
-------------------------------
1. We note your response to comment two in our letter dated September 14,
2005. Please provide us with a comprehensive analysis in accordance
with SAB Topic 99, under both IFRS and US GAAP, supporting your
statement that the impact of not consolidating these subsidiaries is
not material. Your analysis should include a comparison of all the
major balance sheet and statement of operations captions.
Response SGL:
As an initial step in assessing materiality in accordance with SAB Topic 99, SGL
used percentages as a numerical threshold in analyzing each major balance sheet
and statement of operations caption including the individual amounts, totals and
subtotals. The percentages noted reflect the impact of not consolidating certain
SGL subsidiaries as a percentage of reported 20-F balances by major balance
sheet and statement of operations captions. As noted in our response
Chairman of supervisory board: SGL CARBON AG
Max Dietrich Kley Head Office
Executive committee: Rheingaustrasse 182
Robert J. Koehler 65203 Wiesbaden/Germany
Theodore H. Breyer Phone +49 611 6029-0
Sten Daugaard Fax +49 611 6029-101
Dr. Hariolf Kottmann www.sglcarbon.com
Corporate domicile: Wiesbaden
Registration court Wiesbaden
HRB 9448
<PAGE>
[SGL CARBON LOGO]
Page 2 of 7
to question 2, the carrying value of the investments has been historically
reported as a component of other non-current assets.
In updating our initial response to the Staff's letter dated September 14,
2005, we reviewed the accounts prepared in local GAAP and adjusted these for
unaudited IFRS adjustments. The IFRS figures below also reflect the US GAAP
numbers (i.e. no reconciling items necessary). As a result, the net income
(-loss) reported in our letter from November 14, 2005 changed from Euro -299
thousand to Euro -427 thousand in 2004 and from Euro -2,859 thousand to Euro 204
thousand in 2003. The adjustment for 2003 reflects to the capitalization of
deferred tax assets in one affiliate and the adjusting of useful lives of fixed
assets in another affiliate.
The following is an analysis by line item showing the percentage impact of the
aggregate effect the consolidation of the non-consolidated companies would have
on the consolidated group financial statements:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
2004 Total Consolidated Percentage
non-consoli-dated companies
companies
----------------------------------------------------------------------------------------------------
TEuro TEuro
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed Assets 12,270 430,300 2.85%
----------------------------------------------------------------------------------------------------
Other non current assets -17,572 29,900 -58.77%
----------------------------------------------------------------------------------------------------
Inventories 10,179 248,000 4.10%
----------------------------------------------------------------------------------------------------
Trade receivables 2,369 183,900 1.29%
----------------------------------------------------------------------------------------------------
Other assets 1,992 358,900 0.56%
----------------------------------------------------------------------------------------------------
Assets held for sale 7,687 63,800 12.05%
----------------------------------------------------------------------------------------------------
Total Assets 16,925 1,314,800 1.29%
----------------------------------------------------------------------------------------------------
Equity -3,365 281,700 -1.19%
----------------------------------------------------------------------------------------------------
Minority Interests 991 200 495.50%
----------------------------------------------------------------------------------------------------
Provisions 1,100 301,100 0.37%
----------------------------------------------------------------------------------------------------
Bank liabilities 11,199 416,400 2.69%
----------------------------------------------------------------------------------------------------
Trade liabilities 3,314 91,400 3.63%
----------------------------------------------------------------------------------------------------
Other liabilities -994 160,200 -0.62%
----------------------------------------------------------------------------------------------------
Liabilities held for sale 4,680 63,800 7.34%
----------------------------------------------------------------------------------------------------
Total Equity & Liabilities 16,925 1,314,800 1.29%
----------------------------------------------------------------------------------------------------
Sales 23,572 926,200 2.54%
----------------------------------------------------------------------------------------------------
Cost of Sales -17,222 -663,400 2.60%
----------------------------------------------------------------------------------------------------
Gross Profit 6,350 262,800 2.42%
----------------------------------------------------------------------------------------------------
Other Selling, RD & Admin Exp. -6,191 -197,300 3.14%
----------------------------------------------------------------------------------------------------
Operating Profit 159 65,500 0.24%
----------------------------------------------------------------------------------------------------
Financial Expenses 673 -60,500 -1.11%
----------------------------------------------------------------------------------------------------
Earnings Before Taxes (EBT) 832 5,000 16.63%
----------------------------------------------------------------------------------------------------
Income Tax Expense -690 -1,200 57.49%
----------------------------------------------------------------------------------------------------
Discontinued Operations -569 -85,500 0.67%
----------------------------------------------------------------------------------------------------
Net Income -427 -81,700 0.52%
----------------------------------------------------------------------------------------------------
</TABLE>
All captions that are impacted by an amount below 5% were regarded as immaterial
for the purpose of this initial step but are included in our analysis and review
of qualitative impacts.
Impact on Minority Interest, EBT and Income Tax Expense
In 2004, while Minorities Interest, EBT and Income Tax Expense were impacted by
more than 5%, the absolute individual impact was deemed immaterial.
<PAGE>
[SGL CARBON LOGO]
Page 3 of 7
Impact on Other non-current assets
The impact on Other non-current assets reflects the impact of the technical
consolidation of the net assets of the non-consolidated subsidiaries previously
held at cost for a total of Euro 17.6 million and historically reported as
component of Other non-current asset. While this is a significant impact to
Other non-current assets, the impact to current, non-current and total assets
was not considered material.
Impact on Subtotals and Totals
Subtotals and totals in the balance sheet including total assets, equity and
total liabilities reflected impacts of less than 1.30%. The only subtotals and
totals in the income statement greater than 5% were EBT, in absolute terms Euro
831 thousand, and income tax expense, in absolute terms Euro -690 thousand.
Given the small size of these absolute amounts, we regard these impacts as
immaterial. In addition, since SGL has historically fluctuated between income
and losses from year to year with 2004 near break-even, the Company believes
that income before taxes from continuing operations (EBT) may not be the most
appropriate basis for evaluating quantitative materiality. We believe a more
appropriate measure that should be considered in evaluating materiality is
EBITDA, which reflects an overstatement of approximately 1.03% and this was not
considered material.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
2003 Total Consolidated Percentage
non-consoli-dated companies
companies
---------------------------------------------------------------------------------------------------------
TEuro TEuro
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed assets 10,207 507,500 2.01%
---------------------------------------------------------------------------------------------------------
Other non current assets -14,456 28,700 -50.37%
---------------------------------------------------------------------------------------------------------
Inventories 16,404 258,000 6.36%
---------------------------------------------------------------------------------------------------------
Trade receivables -8,914 221,300 -4.03%
---------------------------------------------------------------------------------------------------------
Other assets 10,925 231,400 4.72%
---------------------------------------------------------------------------------------------------------
Total Assets 14,166 1,246,900 1.14%
---------------------------------------------------------------------------------------------------------
Equity -5,894 116,600 -5.05%
---------------------------------------------------------------------------------------------------------
Minority Interests 1,927 300