SecProbe.io

CORRESP
1
filename1.htm

    May
      10,
      2007

    VIA
      FACSIMILE: 202-772-9368

    Mr.
      Ernest Greene

    Staff
      Accountant

    Division
      of Corporation Finance

    United
      States Securities and Exchange Commission

    Washington,
      DC 20549-7010

    RE:
       DXP
      Enterprises, Inc.

    Form
      10-K
      for Fiscal Year Ended December 31, 2006

    File
      No.
      0-21513

    Dear
      Mr.
      Greene:

    I
      have
      reviewed the comments contained in your letter to me dated April 23, 2007.
      My
      responses are keyed to your comments.

    DXP
      Enterprises, Inc. (“DXP”) acknowledges that:

          ·

            DXP
              is responsible for the adequacy and accuracy of the disclosure in our
              filings;

          ·

            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

          ·

            DXP
              may not assert staff comments as a defense in any proceeding initiated
              by
              the Commission or any person under the federal securities laws of the
              United States.

    Financial
      Statements

    Report
      of Independent Registered Public Accounting Firm

          2.

            I
              confirm that our auditors conducted their audits in accordance with
              “standards” of the Public Company Accounting Oversight Board (United
              States) instead of “auditing” standards. In future filings our auditors
              will revise all three of their reports
              accordingly.

    Consolidated
      Statement of Cash Flows

          3.

            “Payments
              for employee taxes related to exercise of stock options” in the amount of
              $3,906,000 recorded as cash flows from financing activities in 2005
              represents cash remitted by DXP to the IRS for required federal employee
              withholding and the employee portion of Medicare tax due by the employee
              on the compensation recognized by our CEO upon completing a cashless
              option exercise. All of these amounts were included on the employee’s W-2
              as withheld from the employeee’s paycheck and remitted to the IRS. DXP
              withheld, from the cashless exercise, shares valued at the amount of
              the
              employee taxes remitted by DXP. The withholding of shares by DXP is
              comparable to a purchase of treasury stock and is therefore recorded
              under
              cash flows from operating activities.

              3.

              Acquisitions

    4. At
      December 31, 2006, $16,964,000 and $6,464,000 (net of $538,000 of amortization)
      of our total purchase price for acquisitions completed in fiscal 2005 and 2006
      were allocated to goodwill and other intangibles, respectively. Both of these
      amounts are disclosed on the face of the December 31, 2006 balance sheet
      contained in our 2006 Form 10-K. Of the amounts allocated to other intangibles,
      $3,568,000 was allocated to vendor agreements and $2,896,000 was allocated
      to
      customer relationships. DXP will disclose these amounts separately in future
      filings. The weighted average useful life for the vendor agreements and the
      customer relationships was 20 years and 10.5 years, respectively. DXP will
      separately disclose the useful lives of other intangibles in future filings.

    5. Based
      upon the results of the final allocations which have been completed for DXP
      acquisitions, I estimate that $1,840,000 will be allocated to other intangible
      assets related to the 2006 acquisitions. Assuming a weighted average seven
      year
      life of these intangible assets, the December 31, 2006 accumulated amortization
      for these intangible assets would have been $108,000 if the intangible assets
      had been recorded at the date of acquisition. In the future, I will attempt
      to
      allocate between goodwill and other intangible assets as part of the initial
      preliminary allocation process.

              4.

              Inventories

    6. DXP
      does
      not value similar types of inventory using both LIFO and FIFO. The inventory
      valued using FIFO consists primarily of used equipment, work in process and
      products used as parts to fabricate, repair and remanufacture customer specific
      pump packages. Inventories of products held in stock for resale to customers
      are
      valued using LIFO.

          9.

            Commitments
              and Contingencies

          7.

            Based
              on the facts and circumstances, DXP does not believe that additional
              losses exceeding $20 million are reasonably possible in this matter.

    12.     Segment
      Data

          8.

            DXP
              does not have any operations outside of the United States of America
              (“USA”). DXP does not have sales personnel operating outside of the USA.
              Some of our customers have shipped the products we sold to them to
              locations outside the USA. However, DXP rarely ships products to locations
              outside the USA. DXP does not own any long-lived assets located outside
              of
              the United States of America. I do not believe DXP is required to provide
              enterprise-wide disclosures in accordance with paragraphs 36 through
              38 of
              SFAS 131.

    Item
      15. Exhibits, Financial Statement Schedules

          9.

            In
              future filings, DXP will file all applicable exhibits as actual exhibits
              to our filing.

    Please
      contact me at 713-996-4897 if you have any questions regarding this letter
      or to
      confirm that the staff will have no further comments on our filing.

    Sincerely,

    /s/Mac
      McConnell
Mac
      McConnell

    Senior
      Vice President & CFO