corresp
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1095 Avenue of the Americas
New York, NY 10036-6797
+1 212 698 3500 Main
+1 212 698 3599 Fax
www.dechert.com |
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BONNIE A. BARSAMIAN |
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bonnie.barsamian@dechert.com
(212) 698-3520 Direct
(212) 698-0459 Fax |
January 12, 2010
Via EDGAR Correspondence and Federal Express
Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549-4631
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Attn: |
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Terence O’Brien, Accounting Branch Chief
Jenn Do, Staff Accountant
Al Pavot, Staff Accountant
Edward M. Kelly, Senior Counsel
Dietrich A. King, Staff Attorney |
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Re: |
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H&E Equipment Services, Inc.
• Form 10-K for the year ended December 31, 2008 filed March 4, 2009
• Definitive Proxy Statement on Schedule 14A filed April 20, 2009
• Form 10-Q for the quarter ended September 30, 2009 filed November 4, 2009
File No. 0-51759 |
Ladies and Gentlemen:
On behalf of H&E Equipment Services, Inc. (the “Company”), we are responding to the
questions and comments raised by the staff (the “Staff”) of the Securities and Exchange
Commission (the “Commission”) in a letter to Ms. Leslie S. Magee dated December 10, 2009.
For your convenience, the Staff’s comments are reprinted in this letter in bold, followed by the
applicable responses.
US Austin Boston Charlotte Hartford New York Newport Beach Philadelphia Princeton San
Francisco Silicon Valley Washington DC EUROPE Brussels London Luxembourg Moscow Munich
Paris ASIA Beijing Hong Kong
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January 12, 2010
Securities and Exchange Commission
Page 2 |
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2008
Risk Factors, page 12
Our senior secured credit facility and the indenture governing our senior unsecured notes
contain covenants that limit our ability to finance future operations or capital needs, or to
engage in other business activities, page 13
1. |
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In future filings containing risk factor disclosure of this type, please disclose whether you
are in compliance with the applicable covenants. |
Response:
In future filings, the Company will include the requested disclosure.
Critical Accounting Policies and Estimates, page 35
2. |
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We note the $15.9 million goodwill impairment charge recorded as of December 31, 2008. For
those reporting units whose estimated fair value is not substantially in excess of the
carrying value and to the extent that goodwill for these reporting units, either individually
or in the aggregate, could materially impact your operating results, please provide the
following disclosures for each of these reporting units in future filings: |
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Identify the report unit(s). |
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The percentage by which fair value exceeds the carrying value as of the most
recent step-one test. |
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The amount of goodwill. |
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A description of the assumptions that drive the estimated fair value. |
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A discussion of the uncertainty associated with the key assumptions. For
example, to the extent that you have included assumptions in your discounted cash
flow model that materially deviates from your historical results, please include a
discussion of these assumptions. |
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A discussion of any potential events and/or circumstances that could have a
negative effect to the estimated fair value. |
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January 12, 2010
Securities and Exchange Commission
Page 3 |
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If you have determined that the estimated fair value substantially exceeds the carrying value
for all of your reporting units, please disclose this determination in future filings. Please
refer to Item 303 of Regulation S-K and Sections 216 and 501.14 of the Financial Reporting
Codification for guidance. Please provide us with the disclosures you intend to include in
future filings. |
Response:
The Company responds to the Staff comment as follows:
The $15.9 million impairment charge related to two 100% impairment charges for our New Equipment
Sales and Service Revenues reporting units. On October 1, 2008, our annual impairment testing
date, the estimated fair value for our four remaining reporting units substantially exceeded their
respective carrying values. Since our annual impairment testing date in 2008, and pursuant to ASC
350-20-35, we did not experience any indicators of impairment nor did we conduct any additional
goodwill impairment testing through our third quarter ended September 30, 2009.
We note the Staff’s comments and in our 2009 Form 10-K we will, as appropriate, provide the
disclosures requested. For the information of the Staff, our disclosure under “Critical Accounting
Policies and Estimates” in our 2009 Form 10-K will substantially mirror, as appropriate for the
fiscal 2009 reporting period, the below discussion drafted in the context of our year ended
December 31, 2008:
Critical Accounting Policies and Estimates
Goodwill. We have made acquisitions in the past that included the recognition of goodwill.
Pursuant to ASC Topic 350, Intangibles-Goodwill and Other, we record as goodwill the
excess of the consideration transferred plus the fair value of any non-controlling interest
in the acquiree at the acquisition date over the fair values of the identifiable net assets
acquired. Goodwill is tested for impairment annually or more frequently if triggering
events occur or other impairment indicators arise which might impair recoverability.
Impairment of goodwill is evaluated at the reporting unit level. A reporting unit is
defined as an operating segment (i.e. before aggregation or combination), or one level
below an operating
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January 12, 2010
Securities and Exchange Commission
Page 4 |
segment (i.e. a component). A component of an operating segment is a reporting unit if the
component constitutes a business for which discrete financial information is available and
segment management regularly reviews the operating results of that component. Pursuant to
ASC Topic 350 and ASC Topic 280, Segment Reporting, and other relevant guidance, we have
identified two components within our Rental operating segment (Rental Component 1 and
Rental Component 2) and have determined that each of our other operating segments (New
Equipment, Used Equipment, Parts and Service) represent a reporting unit, resulting in six
total reporting units.
We review goodwill for impairment utilizing a two-step process. The first step of the
impairment test is to determine whether the fair value of our goodwill reporting units is
greater than their carrying value. If so, there is no indication of impairment and a second
step is not performed. However, if the fair value of a reporting unit is less than its
carrying value, then a second step is performed whereby we determine the implied fair value
of goodwill, which is compared to its carrying value, to measure the amount of impairment,
if any.
For purposes of performing step one of the impairment test for goodwill, we estimate the
fair value of our reporting units using a discounted cash flow analysis and/or by applying
various market multiples. The principal factors used in the discounted cash flow analysis
are our internal projected results of operations, weighted average cost of capital (“WACC”)
and terminal value assumptions.
Our internal projected results of operations serve as key inputs for developing our cash
flow projections for a planning period of twelve years. Beyond this period, we also
determine an assumed long-term growth rate representing the expected rate at which a
reporting unit’s earnings stream is expected grow. These rates are used to calculate the
terminal value of our reporting units and are added to the cash flows projected during the
twelve year planning period. In connection with our fourth quarter 2008 goodwill impairment
testing, we utilized a long-term growth rate of three percent, which we believe is
reasonable. The WACC is an estimate of the overall after-tax rate of return required by
equity and debt holders of a business enterprise and represents the expected cost of new
capital likely to be used by market participants. The WACC is used to discount our combined
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January 12, 2010
Securities and Exchange Commission
Page 5 |
future cash flows. In connection with our 2008 goodwill impairment testing, we
utilized a WACC of between 12.0% to 16.5%, which we believe is reasonable.
During the fourth quarter of 2008, and as further discussed in note 2 to our consolidated
financial statements, we recognized an aggregate non-cash goodwill impairment charge of
$15.9 million. The $15.9 million impairment charge related to two of our six reporting
units. Specifically, we recorded an $8.8 million impairment charge to our New Equipment
Sales reporting unit and a $7.1 million impairment charge related to our Service Revenues
reporting unit. Both impairment charges represented a 100% write down of the pre-impairment
charge carrying value for each reporting unit. As of December 31, 2008, our remaining
goodwill was comprised of the following carrying values of four reporting units (amounts in
thousands):
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Carrying |
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Value at |
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Reporting Unit |
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12/31/08 |
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Equipment Rentals Component 1 |
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8,972 |
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Equipment Rentals Component 2 |
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20,427 |
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Used Equipment Sales |
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6,712 |
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Parts Sales |
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6,880 |
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Total Goodwill |
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$ |
42,991 |
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As of our most recent goodwill impairment test, the estimated fair value of our four
reporting units exceeded its carrying value by the following respective percentages:
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January 12, 2010
Securities and Exchange Commission
Page 6 |
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% Excess of |
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Estimated |
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Fair Value |
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over Carrying |
Reporting Unit |
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Value |
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Equipment Rentals
Component 1 |
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25.7 |
% |
Equipment Rentals
Component 2 |
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28.1 |
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Used Equipment Sales |
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135.2 |
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Parts Sales |
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54.5 |
% |
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Total |
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32.3 |
% |
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The inputs and variables used in determining the fair value of a reporting unit require
management to make certain assumptions regarding the impact of operating and macroeconomic
changes as well as estimates of future cash flows. Our estimates regarding future cash
flows are based on historical experience and projections of future operating performance,
including revenues, margins, and operating expenses. These estimates involve risk and are
inherently uncertain. Changes in our estimates and assumptions could materially affect the
determination of fair value and/or the amount of goodwill impairment to be recognized.
However, we believe that our estimates and assumptions are reasonable and represent our
most likely future operating results based upon current information available. Future
deterioration in the macroeconomic environment, adverse changes within our industry,
further deterioration in our common stock price, downward revisions to our projected cash
flows based on new information or other factors, some of which are beyond our ability to
control, could result in a future impairment charge that could materially impact our future
results of operations and financial position in the reporting period identified.
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January 12, 2010
Securities and Exchange Commission
Page 7 |
Liquidity and Capital Resources, page 49
Senior Secured Credit Facility, page 50
3. |
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In future filings, please provide a materially complete discussion and analysis of the
financial covenants in your credit facility and address whether you are in compliance with
them. |
Response:
In future filings, the Company will include the requested disclosure.
4. |
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In future filings, please include a materially complete description of your senior unsecured
notes. |
Response:
In future filings, the Company will include the requested disclosure.
Disclosure Controls and Procedures, page 99
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We note the disclosure in the second paragraph that H&E Equipment Services’ principal
executive officer and principal financial officer have concluded that its disclosure controls
and procedures are effective “to provide reasonable assurance that material information...is
recorded, processed, summarized and reported within the time periods specified in the SEC
rules and forms.” This description does not conform fully to the definition in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act because it does not indicate that H&E Equipment Services’
principal executive officer and principal financial officer have concluded that its disclosure
controls and procedures are effective in ensuring that information required to be disclosed is
accumulated and communicated to management, including the principal executive and financial
officers, as appropriate, to allow timely decisions regarding required disclosure. Please
revise in future filings. Alternatively, you may simply state that your certifying officers
concluded |
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January 12, 2010
Securities and Exchange Commission
Page 8 |
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on the applicable dates that your disclosure controls and procedures were effective. |
Response:
In future filings, the Company will revise such disclosure to state that the certifying officers
concluded on the applicable dates that the Company’s disclosure controls and procedures were
effective.
Exhibits 31.1 and 31.2
6. |
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We note that the certifying individuals included their titles in the introductory sentence of
the certifications required by Item 601(b)(31) of Regulation S-K and that the titles of the
certifying individuals were included also in the introductory sentence of the certifications
required by Item 601(b)(31) of Regulation S-K in exhibits 31.1 and 31.2 to the September 30,
2009 10-Q. In future filings, please do not include their titles in the introductory sentence
of the certifications required by Item 601(b)(31) of Regulation S-K. |
Response:
In future filings, the Company will not include the titles of the certifying officers in the
introductory sentence of the certifications required by Item 601(b)(31) of Regulation S-K.
DEFINITIVE PROXY STATEMENT FOR 2009 ANNUAL MEETING
Compensation Discussion and Analysis, page 19
General
7. |
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We note your disclosure that in setting compensation for 2008 the committee “review[ed] market
data for comparable equipment companies” and took into account the report provided by your
compensation consultant. With a |
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January 12, 2010
Securities and Exchange Commission
Page 9 |
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view towards future disclosure, please provide us more information about how the committee used
surveys and other comparative compensation data in connection with its 2008 compensation
decisions for your named executive officers. |
Response:
When determining base salaries for the Company’s CEO, COO and CFO, the Compensation Committee of
the Company’s Board of Directors (the “Committee”) reviewed compensation data from seven
equipment companies as identified in CD&A on page 20 of the Company’s proxy statement. The
Committee used this information only in a general sense to gauge the range of base salary levels of
executive officers at the identified peer group companies in order to confirm the reasonableness of
the base salaries of the Company’s CEO, COO and CFO. As noted in the CD&A, the Committee did not
use this data to establish or maintain any specific percentiles for compensating the Company’s
executive officers.
The Committee also retained a compensation consultant to perform a competitive pay assessment of
the Company’s CEO, COO and CFO compensation. As described in CD&A, this report provided competitive
market data for 13 equipment companies as identified in CD&A on page 20. The Committee set base
salaries for the NEOs prior to receipt of this report and did not rely on this report in setting
2008 salaries. The report confirmed that the base salaries of the CEO, COO and CFO were below
general industry norms and base salaries at the companies identified. The Committee determined
that it would seek over time to make the compensation of the CEO, COO and CFO more competitive, but
did not change the previously determined base salaries. In considering 2008 bonuses and equity
awards for the CEO, COO and CFO, the Committee took into account the Report in a general sense to
note that the Company’s NEOs were under compensated relative to their peers.
Base Salaries, page 21
Consideration of 2008 Base Salaries, page 21
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We note your disclosure that the committee made its base salary determinations for 2008
based, in part, upon performance. With a view |
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January 12, 2010
Securities and Exchange Commission
Page 10 |
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towards future disclosure, for each named
executive officer please provide us a reasonably detailed summary of any individual,
corporate, business unit, or other relevant performance that the committee considered in
connection with its 2008 base salary decisions for your named executive officers. |
Response:
The Committee set 2008 base salaries for the NEOs at the end of 2007, and took into consideration
the Company’s overall strong financial performance in recent years. In making its 2008 base salary
decisions, the Committee credited the NEOs collectively as a management team in helping the Company
achieve these results, rather than identifying any individual performance metrics for any of the
NEOs.
Annual Bonuses, page 21
Consideration of 2008 Annual Bonus, page 21
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We note your statement on page 22 that the “Company does not publicly disclose specific
internal income or operation objectives due to the competitive nature of its industry.” For
future filings, please note that if a performance target is material to an understanding of
your compensation policies and decisions for your named executive officers, when, for example,
you have paid incentive compensation based on the achievement of performance targets, we
believe that target should be disclosed. The only basis for withholding the disclosure of such
a target is contained in Instruction 4 to Item 402(b) of Regulation S-K. Please refer to
Instruction 4 to Item 402(b) of Regulation S-K and Question 118.04 of the Compliance and
Disclosure Interpretations of the staff of the Division of Corporation Finance concerning Item
402 of Regulation S-K, which can be found on our website. Please note that generalized
concerns about competitive conditions within an industry typically do not support a claim for
substantial competitive harm under the applicable legal standards. |
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January 12, 2010
Securities and Exchange Commission
Page 11 |
Response:
We note the Staff’s comments above. Also, for the information of the Staff, in light of the
challenging global economic conditions, no bonuses are expected to be paid to the NEOs for 2009 and
accordingly, no performance targets are being utilized for 2009 incentive compensation.
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We note your statement on page 22 that the “Committee determined, in its discretion, that in
light of the Company’s solid performance despite the economic downturn, the contributions of
executive management to that performance and the fact that base salaries were below market,
bonuses should be paid to Mr. Engquist, Ms. Magee and Mr. Barber.” With a view towards future
disclosure, please provide us a materially complete description and analysis of the
performance and contributions the committee considered in deciding to award bonuses to Mr.
Engquist, Ms. Magee, and Mr. Barber for 2008. For example, for each named executive officer,
please describe the individual contributions that the committee considered. In addition, with
a view towards future disclosure, please provide us a materially complete description and
analysis of how the committee determined the specific dollars amounts of the bonuses paid to
your named executive officers for 2008. |
Response:
In deciding to award bonuses for 2008 to the CEO, COO and CFO, the Committee considered the strong
financial performance of the Company despite the economic downturn and its impact on the Company’s
business. As noted in the CD&A, 2008 guidelines for ROGNA and EPS levels were set at the end of
2007 and the Committee felt that such guidelines were not realistic aspirational benchmarks in
light of the effects of the rapid deterioration of the global economy. The Company achieved solid
financial results in 2008, such as generating strong cash flow, reducing capital expenditures,
reducing debt and implementing workforce reductions, and the Committee believed that the NEOs
should receive bonus compensation. The Committee did not identify any individual performance
metrics or specific individual contributions for any of the NEOs, but considered the NEOs’ overall
performance crediting them collectively as a
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January 12, 2010
Securities and Exchange Commission
Page 12 |
management team in helping the Company achieve these results in the face of very challenging
conditions. In awarding bonuses to the CEO, COO and CFO, the Committee also took into account the
need to provide sufficient incentives to retain and continue to motivate them in achieving
successful results, particularly in a difficult economic environment.
In determining the specific dollar amounts of the bonuses paid to the NEOs, the Committee looked at
the actual ROGNA and EPS levels achieved, and the ROGNA and EPS guidelines. While the Committee
firmly believed that the bonus guidelines were not realistic or appropriate aspirational benchmarks
in light of the economic downturn and its impact on the Company’s business, the Committee also
recognized that 2008 bonuses should be lower than the bonuses paid in 2007 since the Company’s
financial performance, although solid, was relatively lower than in 2007. 2008 ROGNA was
approximately 30% less than 2007 ROGNA so the ROGNA related portion of the bonus reflected this
percentage reduction. For the EPS related portion of the bonus the Committee looked at the 2007
EPS related bonus awards and reduced them by approximately 35-50%.
Long-Term Incentives, page 23
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We note your statement on page 23 that “[w]hether grants are made and the type and size of
any grants are based upon Company and individual performance, position held, years of service,
level of experience and potential of future contribution to the Company’s success.” With a
view towards future disclosure, please provide us a materially complete description and
analysis of the factors, including but not limited to company and individual performance, that
the committee considered in making its long-term incentive award decisions for your named
executive officers for 2008. In addition, with a view towards future disclosure, please
provide us a materially complete description and analysis of how the committee determined the
size of the long term incentive awards made to your named executive officers for 2008. |
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January 12, 2010
Securities and Exchange Commission
Page 13 |
Response:
In making its long-term incentive award decisions for the NEOs in 2008, the Committee considered
the Company’s achievement of solid financial results in 2008 in the face of challenging economic
conditions, and credited the NEOs collectively as a management team in helping the Company achieve
these results in a difficult economic environment. The Committee also considered that long-term
incentive compensation for the NEOs was below market, and the Committee felt that equity incentive
awards are an important and desirable component of executive compensation in order to more closely
align the long-term interests of stockholders and executives.
The Committee determined the size of the long-term incentive awards based on a determined
percentage of each NEO’s base salary, and awarded shares of restricted stock that had a fair market
value on the date of grant that approximated such amount. The Committee had established maximums
for restricted stock grants to the CEO, COO and CFO of 47.5%, 38% and 38% of their respective base
salaries. The Committee determined to make a restricted stock grant to the CEO that would be
approximately 35% of the restricted stock grant maximum established for the CEO. The Committee
determined to make a restricted stock grant to each of the COO and CFO that would be approximately
50% of their respective restricted stock grant maximums.
Summary Compensation Table, page 25
12. |
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In future filings, for values disclosed in the stock awards and option awards columns please
include a footnote disclosing all assumptions made in the valuation. You may provide the
assumptions by reference to a discussion of the assumptions in your financial statements,
footnotes to the financial statements, or discussion in the Management’s Discussion and
Analysis disclosure. Please refer to the Instructions to Item 402(c)(2)(v) and (vi) of
Regulation S-K. |
Response:
For the information of the Staff, there were no assumptions in the valuation of the stock awards.
As disclosed in footnote (3) to the Summary Compensation Table, the fair value
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January 12, 2010
Securities and Exchange Commission
Page 14 |
of all the awards is equal to the market price of our common stock on the date of grant. Since all
stock awards were in the form of restricted stock and as also disclosed, all the stock awards vest
over a three year period, the amount of compensation expense reflected in the “Stock Awards” column
of the Summary Compensation Table is simply the number of restricted shares of our common stock
granted multiplied by the closing price on the date of grant and expensed pro rata over the three
year vesting period for the applicable fiscal year. The Company also disclosed that the amounts in
the Summary Compensation Table do not reflect estimated forfeitures and that there were no
restricted stock award forfeitures for the fiscal periods presented. Accordingly, the Company
complied with the Instructions to Item 402(c)(2)(v) of Regulation S-K (please be advised that Item
402(c)(2)(vi) of Regulation S-K was not applicable as there were no awards of options). In future
filings, to the extent there are any assumptions made in the valuation, the Company will include
appropriate disclosure.
FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2009
(6) Closed Branch Facility Charges, page 13
13. |
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We note your disclosure that during the nine months ended September 30, 2009, you closed or
consolidated four branches. Section 501.12.b.3 of the Financial Reporting Codification and
Item 303(a)(3)(ii) of Regulation S-K requires the disclosure of known trends, uncertainties or
other factors that
will result in, or are reasonably likely to result in, any material impairment charges in
future periods. Such disclosure should identify the negative factors that may impact asset
recoverability. In future filings please disclose in MD&A the carrying value of the assets
associated with branches under consideration for potential closure, so readers can
understand the assets at risk. |
Response:
For the information of the Staff, the carrying values of a branch’s assets are substantially
comprised of rental fleet, and new and used equipment inventories. As disclosed in footnote (6) to
the Company’s condensed consolidated financial statements, branches with unfavorable long-term
prospects are closed and the rental fleet and new and used
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January 12, 2010
Securities and Exchange Commission
Page 15 |
equipment inventories at those branches are deployed to other branches within the Company’s
geographic footprint where demand is higher. Thus, impairment considerations pursuant to ASC 360,
Property, Plant, and Equipment, generally only relate to the remaining long lived assets at branch
locations, which consist primarily of unamortized leasehold improvements and the remaining carrying
value of machinery and equipment.
When a branch is closed, the Company also recognizes exit costs pursuant to ASC 420, Exit or
Disposal Cost Obligations, which include, but are not limited to, the following: (a) one-time
termination benefits; (b) contract termination costs, including costs that will continue to be
incurred under operating leases that have no future economic benefit; and (c) other associated
costs. These exit costs typically consist of the remaining operating lease obligation related to
the property upon which our branch is located.
The Company continuously monitors and identifies branch facilities with revenues and operating
margins that consistently fall below Company performance standards, as disclosed in footnote (6).
Once identified, the Company continues to monitor these branches to determine if operating
performance can be improved through various
initiatives, including strategic and marketing initiatives, among others, or if the performance is
attributable to economic factors unique to the particular market with unfavorable long-term
prospects. As stated above, branches with unfavorable long-term prospects are closed. As of the
filing of the Company’s September 30, 2009 Form 10-Q, the Company had not identified other branches
for closure.
In future filings the Company will include more robust disclosure related to branches deemed to
have a more than likely probability of closing when the associated costs pursuant to ASC 360 and
ASC 420 are expected to be material.
Management’s Discussion and Analysis, page 20
14. |
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We note that quarterly gross profit percentage has decreased steadily the past five quarters
ending September 30, 2009, and annual gross profit percentage has decreased steadily the last
three years ending December 31, 2008. In your December 31, 2009 Form 10-K, please address this
downward trend. Disclose whether this trend is expected to continue and the specific |
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January 12, 2010
Securities and Exchange Commission
Page 16
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competitive and business factors that constrain management’s ability to reverse this trend. |
Response:
The Company responds to the Staff comment as follows:
Our discussion of comparative gross profit percentages in MD&A of our Form 10-Q for the quarterly
period ended September 30, 2009, does indicate the factors related to the various specific
period-to-period gross profit percentage declines. Further, on page 29 of
our September 30, 2009 Form 10-Q under the heading, “Results of Operations”, we also state the
following: “The revenue and gross margin period-to-period comparisons below have been negatively
impacted in the current year by lower customer demand resulting from several factors, including:
(i) the decline in construction and industrial activities; (ii) the current macroeconomic downturn;
and (iii) unfavorable credit markets affecting end-user access to capital. Continued weakness or
further deterioration in the non-residential construction and industrial sectors could have a
material adverse effect on our financial position, results of operations and cash flows in the
future. We continue to proactively respond to the economic slowdown through various operational
and strategic measures, including closing underperforming branches and redeploying rental fleet
assets to existing branches with higher demand or opening branches in new markets where demand is
higher; minimizing capital expenditures; reducing headcount; implementing cost reduction measures
throughout the Company; and using the excess cash flow resulting from our planned reduction in
capital expenditures to repay outstanding debt.”
We note the Staff’s comment that we did not discuss in our third quarter 2009 Form 10-Q the gross
margin percentage declines in terms of a trend. While this decline was largely being driven by the
factors discussed in the above paragraph, it is difficult to forecast or predict with any specific
certainty whether it is expected to continue or when any, all or some combination thereof, of the
competitive and business factors that impact our business will result in either (i) a further
deterioration in our gross margins, (ii) a decrease in the rate of gross margin decline, (iii) a
stabilization of our gross margins, or (iv) an improvement in gross margins. In our December 31,
2009 Form 10-K, we will address the downward trend in gross margins, as appropriate, while
providing appropriate context on the specific competitive and business factors that constrain
management’s ability to reverse the trend.
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January 12, 2010
Securities and Exchange Commission
Page 17
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15. |
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We note the statements that: |
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“The risks described in our Annual Report on Form 10-K are not the only risks
facing our Company.” |
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“Additional risks and uncertainties not currently known to us or that we
currently deem to be immaterial also may materially adversely affect our business,
financial condition and/or operating results.” |
Since H&E Equipment Services is required to disclose all risks that it believes are material at
this time, please delete these statements in future filings.
Response:
In future filings, the Company will revise the disclosure as requested.
* * * *
The Company makes the requested acknowledgements contained in the Staff’s letter.
If you have any questions regarding this letter, please contact the undersigned at 212.698.3520 or
Leslie Magee, Chief Financial Officer of the Company, at 225.298.5261.
Very truly yours,
/s/ Bonnie A. Barsamian
Bonnie A. Barsamian
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Leslie S. Magee
Scott Bozzell
Sara Bucholtz |