SEC Company Response from REGISTER COM INC (CIK 0001091284) — Jul 22, 2005
REGISTER COM INC (CIK 0001091284)
Date: July 22, 2005 · CIK: 0001091284 · Accession: 0000950136-05-004293
AI Filing Summary & Sentiment
Referenced dates: July 11, 2005
Letter
[REGISTER.COM LETTERHEAD] July 22, 2005 VIA EDGAR CORRESPONDENCE ------------------------ Thomas Flinn, Staff Accountant Securities and Exchange Commission Division of Corporation Finance, Mail Stop 4561 100 F Street NE Washington, D.C. 20549
Re: REGISTER.COM, INC. (the "Company") Form 8-K filed June 6, 2005 File No. 0-29739
Dear Mr. Flinn:
Reference is made to the comments of the staff (the "Staff") of the Securities and Exchange Commission (the "Commission") included in the letter dated July 11, 2005 (the "Comment Letter") from Thomas Flinn to the undersigned with regard to the Company's Form 8-K filed June 6, 2005.
This letter is being submitted on behalf of the Company and reflects the Company's responses to the Staff's comments. For ease of reference, we have reproduced each of the Staff's comments just above the applicable response.
Comment No. 1
Provide us with any letter or written communication to and from the former accountants regarding any disagreements or reportable events to management or the Audit Committee.
Response to Comment No. 1
Please see Exhibits A and B attached hereto. Exhibit A is a copy of a letter from PricewaterhouseCoopers to the Company's Audit Committee, dated November 9, 2004, informing the Audit Committee of a matter that PricewaterhouseCoopers considered to be a material weakness. Exhibit B includes the relevant portions of a PowerPoint presentation delivered by PricewaterhouseCoopers to the Company's Audit Committee addressing reportable events and confirming that there were no disagreements with management.
Comment No. 2
Securities and Exchange Commission July 22, 2005 Page 2
Please provide us with a schedule of your fiscal year end fourth quarter adjustments to close the books, or adjustments recorded in connection with or as a result of the audit. Clearly explain the reason for each adjustment. For each adjustment, show us the impact on pre-tax net loss. Quantify the net effect of all adjustments on pre-tax income (loss). Also, tell us why none of the adjustments relate to prior period. Explain in detail why you believe the timing of each adjustment is appropriate.
Response to Comment No. 2
Attached as Exhibit C is a schedule of 2004 year end fourth quarter adjustments identified by the Company to close the Company's books.
Attached as Exhibit D is a schedule of adjustments to year 2004 financial statements recorded in connection with or as a result of the audit.
Attached as Exhibit E is a schedule reflecting adjustments related to the Company's financial statements for years prior to 2004. As disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2004, the Company's financial statements for years prior to 2004 were restated. The impacts of the adjustments to restate the Company's financial statements for years 2000 and 2001 were shown in Item 6 "Selected Financial Data," and the impacts of the adjustments to restate the Company's financial statements for years 2002 and 2003 were shown in Note 16 to Consolidated Financial Statements.
Each of Exhibits C, D, and E shows the impact of each adjustment on pre-tax income (loss), and the net effect of all adjustments on pre-tax income (loss). Each of the adjustments on Exhibits C, D, and E explains the calendar period to which each adjustment applies. In each case, the underlying services were performed or received, as applicable, in the calendar period indicated for each adjustment.
The Company acknowledges that:
o The Company is responsible for the adequacy and accuracy of the disclosure in the filing;
o 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
o The Company 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.
Please do not hesitate to call the undersigned at (212) 798-9273 with any questions concerning this letter.
Securities and Exchange Commission July 22, 2005 Page 3
Very truly yours,
/s/ Roni Jacobson ----------------- Roni Jacobson General Counsel and Secretary
cc: Jonathan Stern, Register.com, Inc.
(EXHIBIT A)
[PRICEWATERHOUSECOOPERS LOGO] --------------------------------------------------------------------------------
PRICEWATERHOUSECOOPERS LLP PricewaterhouseCoopers Center 300 Madison Avenue New York NY 10017 Telephone (646) 471 3000 November 9, 2004 Facsimile (813) 286 6000
Audit Committee Members Register.com Inc. 575 Eighth Avenue New York, NY 10018
Dear Committee Members:
In planning and performing our work on the financial statements of Register.com Inc. (the "Company") for the year ended December 31, 2003 auditing procedures, we considered its internal control in order to determine the purpose of expressing our opinion on the financial statements and not to provide assurance on internal control. Our consideration of internal control would not necessarily disclose all matters in internal control that might be material weaknesses under standards established by the Amercian Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. However, we noted the following matter involving internal control and its operation that we consider to be material weaknesses as defined above.
The Company does not have adequate controls and procedures in place to ensure that the financial statement impact of elections made for income tax purposes are assessed timely and that the financial statement impact of such elections are correctly reflected within the financial statements.
This letter is intended solely for the information and use of the audit committee, management, and others within the organization and is not intended to be and should not be used by anyone other than these specified parties.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
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[REGISTER.COM LETTERHEAD]
July 22, 2005
VIA EDGAR CORRESPONDENCE
------------------------
Thomas Flinn, Staff Accountant
Securities and Exchange Commission
Division of Corporation Finance, Mail Stop 4561
100 F Street NE
Washington, D.C. 20549
Re: REGISTER.COM, INC. (the "Company")
Form 8-K filed June 6, 2005
File No. 0-29739
Dear Mr. Flinn:
Reference is made to the comments of the staff (the "Staff") of the
Securities and Exchange Commission (the "Commission") included in the letter
dated July 11, 2005 (the "Comment Letter") from Thomas Flinn to the undersigned
with regard to the Company's Form 8-K filed June 6, 2005.
This letter is being submitted on behalf of the Company and reflects
the Company's responses to the Staff's comments. For ease of reference, we have
reproduced each of the Staff's comments just above the applicable response.
Comment No. 1
Provide us with any letter or written communication to and from the former
accountants regarding any disagreements or reportable events to management or
the Audit Committee.
Response to Comment No. 1
Please see Exhibits A and B attached hereto. Exhibit A is a copy of a letter
from PricewaterhouseCoopers to the Company's Audit Committee, dated November 9,
2004, informing the Audit Committee of a matter that PricewaterhouseCoopers
considered to be a material weakness. Exhibit B includes the relevant portions
of a PowerPoint presentation delivered by PricewaterhouseCoopers to the
Company's Audit Committee addressing reportable events and confirming that there
were no disagreements with management.
Comment No. 2
Securities and Exchange Commission
July 22, 2005
Page 2
Please provide us with a schedule of your fiscal year end fourth quarter
adjustments to close the books, or adjustments recorded in connection with or as
a result of the audit. Clearly explain the reason for each adjustment. For each
adjustment, show us the impact on pre-tax net loss. Quantify the net effect of
all adjustments on pre-tax income (loss). Also, tell us why none of the
adjustments relate to prior period. Explain in detail why you believe the timing
of each adjustment is appropriate.
Response to Comment No. 2
Attached as Exhibit C is a schedule of 2004 year end fourth quarter adjustments
identified by the Company to close the Company's books.
Attached as Exhibit D is a schedule of adjustments to year 2004 financial
statements recorded in connection with or as a result of the audit.
Attached as Exhibit E is a schedule reflecting adjustments related to the
Company's financial statements for years prior to 2004. As disclosed in the
Company's Annual Report on Form 10-K for the year ended December 31, 2004, the
Company's financial statements for years prior to 2004 were restated. The
impacts of the adjustments to restate the Company's financial statements for
years 2000 and 2001 were shown in Item 6 "Selected Financial Data," and the
impacts of the adjustments to restate the Company's financial statements for
years 2002 and 2003 were shown in Note 16 to Consolidated Financial Statements.
Each of Exhibits C, D, and E shows the impact of each adjustment on pre-tax
income (loss), and the net effect of all adjustments on pre-tax income (loss).
Each of the adjustments on Exhibits C, D, and E explains the calendar period to
which each adjustment applies. In each case, the underlying services were
performed or received, as applicable, in the calendar period indicated for each
adjustment.
The Company acknowledges that:
o The Company is responsible for the adequacy and accuracy of the
disclosure in the filing;
o 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
o The Company 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.
Please do not hesitate to call the undersigned at (212) 798-9273 with
any questions concerning this letter.
Securities and Exchange Commission
July 22, 2005
Page 3
Very truly yours,
/s/ Roni Jacobson
-----------------
Roni Jacobson
General Counsel and Secretary
cc: Jonathan Stern, Register.com, Inc.
(EXHIBIT A)
[PRICEWATERHOUSECOOPERS LOGO]
--------------------------------------------------------------------------------
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers Center
300 Madison Avenue
New York NY 10017
Telephone (646) 471 3000
November 9, 2004 Facsimile (813) 286 6000
Audit Committee Members
Register.com Inc.
575 Eighth Avenue
New York, NY 10018
Dear Committee Members:
In planning and performing our work on the financial statements of Register.com
Inc. (the "Company") for the year ended December 31, 2003 auditing procedures,
we considered its internal control in order to determine the purpose of
expressing our opinion on the financial statements and not to provide assurance
on internal control. Our consideration of internal control would not necessarily
disclose all matters in internal control that might be material weaknesses under
standards established by the Amercian Institute of Certified Public Accountants.
A material weakness is a condition in which the design or operation of one or
more of the internal control components does not reduce to a relatively low
level risk that misstatements caused by error or fraud in amounts that would be
material in relation to the financial statements being audited may occur and not
be detected within a timely period by employees in the normal course of
performing their assigned functions. However, we noted the following matter
involving internal control and its operation that we consider to be material
weaknesses as defined above.
The Company does not have adequate controls and procedures in place to ensure
that the financial statement impact of elections made for income tax purposes
are assessed timely and that the financial statement impact of such elections
are correctly reflected within the financial statements.
This letter is intended solely for the information and use of the audit
committee, management, and others within the organization and is not intended to
be and should not be used by anyone other than these specified parties.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
(EXHIBIT B)
Register.com, Inc.
Results of 2004 Integrated Audit
Audit Committee Presentation
April 29, 2005
This report is intended solely for the information and use of the Board of
Directors and management of the Company and is not intended to be and
should not be used by anyone other than these specified parties.
--------------------------------------------------------------------------------
2004 Significant Matters
--------------------------------------------------------------------------------
Five Material Weaknesses were Identified:
o Revenue Recognition
o Invoice and Transaction processing
o Income Taxes
o Pro Forma Stock-Based Compensation Footnote Disclosure
o System Restricted Access
PricewaterhouseCoopers LLP Page 6
Required Communications Update For Year Ended
December 31, 2004
--------------------------------------------------------------------------------
Matter to be Communicated Our Response
--------------------------------------------------------------------------------
Audit adjustments Significant audit adjustments in connection with
our audit work to date relate to:
Recorded by Management:
-----------------------
o The significance of the premature
recognition of revenue related to both
current and prior years resulted in a
restatement of prior periods
-- Full-month convention for revenue
recognition for all marketing divisions
-- Early renewals for Corporate Services
(US only) and GPN
-- Transfers in for Corporate Services (US
only) and GPN
-- Transfers out for Corporate Services
(US only) and GPN
-- Credits for Corporate Services (US
only) and GPN
o Modification in the treatment of Auction
Rate Securities.
--------------------------------------------------------------------------------
Potential effect on the Material Weaknesses as noted on page 6 has
financial statements been disclosed under Item 9A of the Form 10-K.
of any significant risks
and exposures Other significant risks and disclosures
(legal and business related) have been
disclosed in the Form 10-K.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PricewaterhouseCoopers LLP Page 8
Required Communications Update For Year Ended
December 31, 2004
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Matter to be Communicated Our Response
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Major issues discussed with There were no major issues discussed with
management prior to retention management prior to retention.
--------------------------------------------------------------------------------
Disagreements with management None.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PricewaterhouseCoopers LLP Page 9
(EXHIBIT C)
Register.com Inc.
Year end fourth quarter 2004 adjustments identified by the
Company to close the books
Amounts in thousands
<TABLE>
Impact on
pre-tax net
Financial statement line item Debit Credit income (loss)
------------------------------------------------------------------------------------------------------------------------------------
Deferred revenue $ 62
Net revenues $ 6 $ (6)
Accounts receivable $ 68
To reverse billings rendered in Q4 2004 which were determined to be incorrect due to systems error.
The error occurred in the Q4 2004, was identified in Q4 2004 and the adjustment was made in Q4 2004.
Deferred revenue $ 69
Accounts Receivable $ 75
Net revenues $ 6 $ (6)
To reverse billings for domains renewed in Q4 2004 prior to receipt of order confirmation from the
customer. The billings were rendered in Q4 04, they were identified as being incorrect in Q4 04,
and the adjustment was made in Q4 2004
Deferred revenue $ 49
Accounts receivable $ 49
To adjust accounts receivable from credit card companies at 12/31/04 as per reconciliation of general
ledger Credit Card AR account to statements from Paymentech (the company's credit card payments
processor).
General and administrative expense $ 475 $ (475)
Accounts payable and accrued expenses $ 475
To accrue 2004 year end audit fee as approved by the Audit Ctee on 12/14/04. The fees for performing
the year end 2004 audit are chargeable to expense in the 2004 financial statements.
Short term investments $ 250
Cash and cash equivalents $ 250
To reclassify a security with a maturity of more than 90 days into short term investments as of 12/31/04.
Accounts payable and accrued expenses $ 37
Cost of revenues $ 37 $ 37
To adjust cost of revenues for Q4 2004 for errors related to migration of data from old system to new
system. The data migration errors occurred in Q4 2004, they were discovered in Q4 2004, and the adjustment
was made in Q4 2004.
General and administrative expense $ 560 $ 560
Accounts payable and accrued expenses $ 560
To reduce accrued liability for 2004 bonus plan, based on actual bonuses to be paid for 2004. The
determination of actual bonuses to be paid for 2004 was made on 3/4/05, and because the 2004
financial statements had not yet been finalized by that date, it was appropriate to record this
adjustment in the 2004 financial statements.
</TABLE>
Register.com Inc.
Year end fourth quarter 2004 adjustments identified by the
Co