August
15, 2008
VIA
EDGAR
Mr.
Stephen G. Krikorian
Accounting
Branch Chief
Division
of Corporate Finance
U.S.
Securities and Exchange Commission
100 F
Street, N.E.
Washington,
DC 20549
cc: Tamara
Tangen, Senior Staff Accountant
Jay
Ingram, Senior Staff Attorney
Re: PDI,
Inc.
Form 10-K for the year ended
December 31, 2007
Filed March 13,
2008
Form 10-Q for the Quarterly Period Ended March 31, 2008
Filed May 9, 2008
Definitive Proxy Statement on Schedule 14A
Filed April 28, 2008
Form 8-K
Filed June 26, 2008
File No. 333-46321
Dear Mr.
Krikorian:
On behalf
of PDI, Inc. (the “Company” or “PDI”), I am writing in response to the comments
made by the staff (the “Staff”) of the Securities and Exchange Commission (the
“SEC”) in its letter dated July 3, 2008 (the “Comment Letter”) with respect to
the Company’s annual report on Form 10-K for the year ended December 31, 2007
(“Form 10-K”), the Company’s quarterly report on Form 10-Q for the period ended
March 31, 2008 (“Form 10-Q”), the Company’s Definitive Proxy Statement on
Schedule 14A (“Proxy Statement”) and the Company’s current report on Form 8-K
dated June 26, 2008.
For your
convenience, the Staff’s comments are set forth below in bold, numbered to
correspond to the comment numbers used in the Comment Letter and followed by our
responses thereto.
Form
10-K
Item 1. Business,
page 5
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1.
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Because
you appear to be substantially dependent on your customer relationships
that accounted for 37.9% of your revenue for the fiscal year, please
advise if you considered naming these customers, providing a description
of your contractual arrangements with them, and filing your agreements
with them as exhibits. See Item 601(b)(10)(ii)(B) of Regulation
S-K.
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Response:
As
disclosed in its Form 10-K, the Company’s three largest customers accounted for
approximately 13.7%, 12.9% and 11.3% of its consolidated revenues for the year
ended December 31, 2007. At the time each of these agreements was
entered into, the Company issued press releases on May 11, 2006, July 2, 2007
and March 29, 2007, respectively, announcing the entering into arrangements with
these three customers, and each of these press releases included information
regarding (i) the general size and industry of the customer (such as “a top-five
pharmaceutical company”), (ii) the term of the engagement and (iii) the
anticipated revenue to be earned from each arrangement during the term of the
engagement. In addition to this disclosure, an overview of the
material terms of the Company’s contract sales force agreements is set forth
under “Item 1 – Reporting Segments and Operating Groups” and “Item 1 – Business
– Contracts” in the Form 10-K, and the terms of the agreements with the Company’
s three largest customers are substantially consistent with these
descriptions. In light of the aforementioned disclosure set forth in
the Form 10-K and the additional information otherwise publicly available at the
time of the filing of the Form 10-K, the Company believed that including the
specific names of these customers did not provide investors with additional
material information regarding these arrangements. However, in light
of the Staff’s comment and consistent with Item 101(c)(vii) of Regulation S-K,
the Company will in the future include in its Annual Reports on Form 10-K the
name of any customer who accounted for ten percent or more of the Company’s
consolidated revenues for the fiscal year.
As noted
above, the Form 10-K and other public disclosures made by the Company provide
information regarding the material terms of the Company’s arrangements with its
customers in its sales services business segment, including its larger
customers. The Company believes, however, that it was not necessary
to file these agreements as exhibits to its Form 10-K pursuant to Item
601(b)(10) because each of these agreements was entered into in the ordinary
course of business, as evidenced by the fact that (i) each of these agreements
relate to contract sales force services provided by the Company, which has been
the Company’s core business and its primary source of revenue since its
inception and (ii) the material terms of each of these agreements are
substantially consistent with the terms set forth in the Company’s standard
contract sales force agreements. In addition, the Company is of the
view that, as of December 31, 2007, while its three largest customers
collectively accounted for a significant portion of its consolidated revenues,
the Company’s business was not “substantially dependent” on any single agreement
with any of its customers. In light of the fact that the Company’s
three largest agreements are all of similar magnitude, and no single agreement
accounted for more than 14% of the Company’s consolidated revenues for the year
ended December 31, 2007, the Company believes that its business is not
“substantially dependent” on any one of these agreements. This view
is also supported by the variable nature of the Company’s customer base for its
businesses. In particular, as disclosed in the Form 10-K, its
contract sales force agreements are generally short-term in duration and are
terminable by the customer for any reason, as evidenced by the fact that
the
composition
of the Company’s three largest customers has changed for each of the fiscal
years ended December 31, 2005, 2006 and 2007.
Item
7. Management’s Discussion and Analysis, page 36
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2.
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Please
note that purpose of this subsection is to provide investors with an
understanding of the matters with which management is concerned primarily
in evaluating PDI’s financial condition and operating
results. Notwithstanding your disclosure in the risk factors
section and in Management’s Discussion and Analysis on page 26, it appears
investors would benefit from an enhanced discussion of the ongoing and
significant loss of your key customer base and the steep decline in
revenue that you are experiencing as a result. Please enhance
your discussion to provide a balanced executive-level perspective of the
key economic or industry-wide factors relevant that are contributing to
the Company’s current economic and strategic position and provide critical
insight into the challenges, risks and opportunities that concern
management and discuss any action being taken to address
them. Please refer to SEC Release No. 33-8350 (December 29,
2003) and Item 303 of Regulation
S-K.
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Response:
The
Company has included in its Form 10-Q for the quarterly period ended June 30,
2008 an “Overview” that includes an enhanced discussion to provide the
information required by Item 303 of Regulation S-K, as interpreted by SEC
Release No. 33-8350. The Company will comply with this Staff comment in all
future filings.
Item 9A Controls and
Procedures, page 37
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3.
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We
note your statement that a “control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that
the objectives of the internal control system are met.” Please
revise to state clearly, if true, that your disclosure controls and
procedures are designed to provide reasonable assurance of achieving their
objectives and that your principal executive officer and principal
financial officer concluded that your disclosure controls and procedures
are effective at that reasonable assurance level. In the
alternative, remove the reference to the level of assurance of your
disclosure controls and procedures. Please refer to Section
II.F.4 of the Management’s Reports on Internal Controls Over Financial
Reporting and Certification of Disclosure in Exchange Act Periodic
Reports, SEC Release No 33-8238, available on our website at http://www.sec.gov/rules/final/33-8238.htm. Refer
also to the Form 10-Q for quarterly period ended March 31, 2008.
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Response:
The
Company’s Form 10-Q for the quarterly period ended June 30, 2008 deleted all
references in the second paragraph of section 9A that previously referred to the
level of assurance of our disclosure controls and procedures. The Company will
comply with this Staff comment in all future filings.
Consolidated Balance Sheet,
page F-3
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4.
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Tell
us the nature of amounts included in the accrued incentives line item and
identify the accounting literature upon which the accrual is
based.
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Response:
Included
in accrued incentives are the estimated 2007 bonus payments to field and
corporate employees to be paid in 2008. These accruals are made based
on management’s best estimate of the amount of bonus earned by field employees
in accordance with their respective program contracts and by corporate employees
under the 2007 short-term incentive plan established by the Compensation and
Management Development Committee of the Board of Directors (the “Compensation
Committee”). The accrual is based on the guidance in Accounting
Research Bulletin No.43 and FASB Concept Statement No. 6, “Elements of Financial
Statements.”
In future
filings, to avoid any confusion, the Company will label accrued employee bonuses
as “accrued salary and bonus” rather than “accrued incentives”. In
addition, the Company will reclassify accrued salaries and wages from other
current liabilities to accrued salary and bonus.
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5.
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Provide
a summary of the significant items classified in your other accrued
liabilities account. Tell us your consideration of Rule 5-02.20
of Regulation S-X in presenting other liabilities on an aggregate
basis.
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Response:
The
components of ‘Other accrued expenses’ are various items, including tax related
liabilities, deferred compensation liability, and corporate and divisional
expense accruals, none of which was in excess of 5% of total current liabilities
at December 31, 2007 and December 31, 2006. To the extent that any of
these items is in excess of 5% of total current liabilities in any future
period, the Company will state them separately in the balance sheet or in a note
thereto in the applicable filings. See the summary of these items on
Attachment A of this letter.
Notes to Consolidated
Financial Statements
Note 1 Nature of Business
and Significant Accounting Policies
Revenue Recognition and
Associated Costs. pages F-10 and F-11
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6.
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Clarify
whether revenue from incentive fees and performance based contracts
represent the same or different revenue
streams.
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Response:
Revenue
from incentive fees and performance-based contracts represent different revenue
streams.
On
certain product detailing programs, the Company receives incentive fees in
addition to its service fees for meeting certain benchmarks. For
example, assume prescriptions for a month exceeded the prescription benchmark in
the applicable agreement by 5% and the agreement specified that the Company
would receive an additional $1.50 for all details performed in that month above
its agreed upon service fee. In this example, if the Company
performed 20,000 details for the month, the Company would record $30,000 of
revenue from incentive fees in addition to its base service fee.
The
Company recognizes revenue from incentive fees in the period earned and when the
Company is reasonably assured that payment will be made. Because the
Company generally does not have access to the benchmark information (i.e., the
number of prescriptions written), there is sometimes a delay between
when
the
Company has earned the revenue and when it is recognized as the Company is not
assured payment will be made until the client provides the benchmark information
and/or confirms that the Company has met or exceeded the applicable
benchmark. However, the Company recognizes its base service fees as
the services are provided.
Under
performance based contracts, the Company only receives a fee when the
performance based parameters are achieved. For example, a contract
may set the target number of details at 10,000 details per month, with the
Company earning $5.00 per detail if it achieves at least 90% of this target and
$4.00 per detail if it achieves less than 90% of this target. Based
upon this example, 10,200 details were performed in a month, Company would
recognize $51,000 in revenue.
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7.
|
We
noted that many of your product detailing contracts allow for additional
periodic incentive fees to be earned if certain performance benchmarks are
achieved and that you recognize revenue from incentive fees in the period
earned. Tell us how you define “earned” and confirm that your
recognition of these contingent fees complies with guidance set forth in
SAB Topic 13(A)(4)(c).
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Response:
Please
see response above. Revenue from incentive fees is recognized and
recorded when the Company is reasonably assured that payment will be made, and
is typically based upon verification through calculation of achievement, third
party data or client verification. The Company follows the guidance
in SAB Topic 13(A)(4)(c), whereby the Company would recognize as revenue in any
period only its service fees until the Company has verified that the performance
benchmarks were achieved. Additionally, the Company records revenue
in a period from performance-based contracts at the lower threshold until the
higher threshold is achieved.
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8.
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With
regard to arrangements in which you receive a specific contract payment
from a customer expressly for compensation related to recruiting, hiring
and training services, tell us what consideration you have given to
whether the entire arrangement fee is subject to the guidance in EITF
00-21. In responding, identify the deliverables included in
these arrangements, how you determine that the allocation of this specific
fee to these services was appropriate, and the pattern for the recognition
of the remaining consideration received in the
arrangement.
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Response:
During
the periods presented in its Form 10-K, the Company did not have any contracts
that expressly compensated it for recruiting, hiring and training
services. The Company acknowledges that its disclosure regarding
arrangements in which the Company receives a specific contract payment from a
customer expressly for compensation related to recruiting, hiring and training
services as well as a portion of its disclosure regarding its accounting for
training expenses is outdated. Currently, the majority of the
Company’s contracts specify that training expenses are to be treated as pass
thru expenses where the Company bills the customer as these expenses are
incurred. Reimbursements received are characterized as revenue and an identical
amount is included in cost of services in the consolidated statements of
operations. In future filings, the Company will update its disclosure
for recognition of revenue and associated cost as follows:
Training
costs include the costs of training the sales representatives and managers on a
particular product detailing program so that they are qualified to properly
perform the services specified in
the
related contract. For the majority of the Company’s contracts,
training costs are reimbursable out-of-pocket expenses. For contracts
where the Company is responsible for training costs, these costs are deferred
and amortized on a straight-line basis over the shorter of the life of the
contract to which they relate or 12 months.
The
Company has considered EITF Issue No. 00-21, “Revenue Arrangements with Multiple
Deliverables” (EITF 00-21) in developing its revenue recognition
policies. For its detailing contracts, the Company believes that
there is only one deliverable – providing a sales force to detail a customer’s
product for the contract period. Recruiting, hiring and training are
an integral part of providing a sales force, not separate
deliverables. Therefore, the Company believes that its detailing
contracts only have one unit of accounting and thus the revenue recognition
principles under EITF 00-21 are not applicable. The Company believes
that it is appropriately recognizing revenue under SAB 104. SAB 104
specifically covers services transactions and provides guidance that revenue
should be recognized on a straight-line basis, unless evidence suggests that the
revenue is earned in a different pattern. For detailing contracts,
revenue is recognized on straight-line basis over the length of the
contract.
Note 2 Investment in
Marketable Securities, page F-14
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9.
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We
note that you have classified certain investments as held-to-maturity
investments. Tell us how your disclosures comply with
paragraphs 19 to 20 of SFAS 115. Explain why you do not show
contractual maturities based on investment type instead of on aggregated
basis. You discuss that the weighted average maturity of
certain investments was 17.6 months, however, you disclose that those
investments has a weighted average of 21.4 months in your March 31, 2008
Form 10-Q. Please explain why this average increase while the
amounts classified as long-term assets did not change
significantly.
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Response:
At
December 31, 2007, held-to-maturity investments totaled $14,628,044 at amortized
cost (carrying amount), $14,627,591 at cost and $14,665,561 at fair
value. With the exception of its operating bank accounts, its cash
and marketable securities are held in two separate broker
accounts. One of these accounts is held at the financial institution
that writes the Company’s letters of credit, which require the Company to
maintain in its account investments equal to or in excess of these letters of
credit. As of March 31, 2008 and December 31, 2007, the Company had
$7.1 million and $7.3 million, respectively, in letters of credit
outstanding. The Company accounts for the investments in this broker
account similar to an escrow account in that these funds are not available for
operations and, therefore, the Company classifies these investments in other
current assets or other long-term assets based on when the Company expects these
funds to be released, not based on the maturity of the underlying
investments. Funds collateralizing the letters of credit for the
Company’s existing insurance policies are classified as other current assets as
the insurance policies are negotiated and renewed annually, and funds
collateralizing the letters of credit for the Company’s facility leases are
classified as other long-term assets as these leases expire in
2016.
SFAS 115
paragraph 19 requires disclosure for securities classified as held-to-maturity
of the aggregate fair value, gross unrecognized holding gains and losses and net
carrying amount by major security type as of each date for which a statement of
financial position is presented. The net carrying amount is amortized
cost, which is disclose in Note 1, Nature of Business and Significant Accounting
Policies under Investment in Marketable Securities and Fair Value of Financial
Instruments and in Note 2, Investment in Marketable Securities, which also
discloses the net carrying amount by major security type as of each date for
which a
statement
of financial position is presented. In Note 1 and in Note 2, the
Company states that “marketable securities classified as held-to-maturity are
carried at amortized cost, which approximates fair value,” which it does and,
therefore, there are minimal unrecognized holding gains or losses. To
the extent that amortized cost no longer approximates fair value in any future
period, the Company will modify its disclosure accordingly in the applicable
filings.
SFAS 115
paragraph 20 requires disclosure about contractual maturities for debt
securities classified as available-for-sale and
held-to-maturity. Paragraph 20 also says that “maturity information
may be combined in appropriate groupings”; however, it does not specify that
this must done based on investment type. There are no debt securities
at March 31, 2008 or December 31, 2007 that are classified as
available-for-sale. Debt securities classified as held-to-maturity
are classified into two groups – short-term investments and investments
supporting the Company’s letters of credit.
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March
31,
|
December
31,
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||||||
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2008
|
2007
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||||||
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Short-term
investments:
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|||||||
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Corporate
debt securities
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$ | 9,372 | $ | 7,340 | |||
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Investments
supporting letters of credit:
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|||||||
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Cash/money
accounts
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615 | 2,390 | |||||
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US
Treasury securities
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1,498 | 1,498 | |||||
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Government
agency securities
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5,000 | 3,400 | |||||
| 7,113 | 7,288 | ||||||
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Total
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$ | 16,485 | $ | 14,628 | |||
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Short-term
investments
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$ | 9,372 | $ | 7,340 | |||
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Investments
supporting letters of credit:
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|||||||
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Other
current assets
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5,138 | 5,138 | |||||
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Other
long-term assets
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1,975 | 2,150 | |||||
| 7,113 | 7,288 | ||||||
| $ | 16,485 | $ | 14,628 | ||||
The
Company disclosed in its Form 10-Q and Form 10-K that the weighted average
maturity of short-term investments was 2.4 months and 3.5 months as of March 31,
2008 and December 31, 2007, respectively, and the weighted-average maturity for
investments supporting the Company’s letters of credit was 21.4 months and 17.6
months, as of March 31, 2008 and December 31, 2007, respectively. The
Company believes that this meets the requirements under SFAS
115. Securities supporting the Company’s letter of credit at December
31, 2007 included $2.4 million of cash. The $2.4 million of cash
represents proceeds from maturities that were not reinvested by the end of the
year. This cash is not included in the Company’s cash and cash
equivalent amount as it is required to support the Company’s letters of
credit. Since cash has no maturity, when this cash was invested in
debt securities during the first quarter, it caused the weighted average
maturity for the investments supporting letters of credit to
increase. Again, the classification between current and long-term
depends on when the Company expects the funds to be released not based on the
maturity of the underlying securities. As such there is a disconnect
between the increase in the weighted average maturity for these investments and
the decrease in the other long-term asset balance. The Company has
been consistent in its treatment of these investments supporting letters of
credit and believes that classifying based on when the funds will be released is
appropriate rather than based on maturities of the investments.
Explain
why some of the investments classified as held-to-maturity are classified as
short-term investments and some are classified as other current
assets. That is, indicate why the amounts classified within current
assets are being “split” into two captions.
Response:
Please
see response above. The securities supporting the Company’s letters
of credit are not available for operations and, therefore, are classified as
other current assets or other long-term assets.
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10.
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We
note that you sold and purchased investments during the year as is shown
on your statement of cash flows. Tell us your consideration of
the disclosure requirement of paragraph 21 of SFAS 115. Explain
why you have presented the investment activity on a net basis instead of
on a gross basis. See paragraphs 11 to 13 of SFAS
95.
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Response:
The
Company complied with this requirement in filing its Form 10-Q for the quarterly
period ended June 30, 2008, and will comply with this Staff comment in all
future filings.
Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
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11.
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We
note that the identification of the certifying individual at the beginning
of the certification required by Exchange Act Rule 13a-14(a) also includes
the title of the certifying individual. In future filings, the
identification of the certifying individual at the beginning of the
certification should be revised so as not to include the individual’s
title.
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Response:
The
Company complied with this requirement in filing its Form 10-Q for the quarterly
period ended June 30, 2008, and will comply with this Staff comment in all
future filings
Form
10-Q
Notes to Consolidated
Financial Statements
Note 2 Nature of Business
and Significant Accounting Policies
Fair Value of Financial
Instruments. page F-6
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12.
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Explain
why you do not include the fair value for the marketable securities
classified as “held-to-maturity”. See paragraph 10 of SFAS
107. Tell us the method and assumptions used to determine the
fair value of these marketable securities. We note that you
disclose in Note 7 that the adoption of SFAS 157 was limited to
available-for-sale securities. Explain why these measurements
do not apply to your fair value disclosure under SFAS 107. See
paragraphs 2 and 5 and appendix D of SFAS
157.
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Response:
Note 2
Nature of Business and Significant Accounting Policies, Fair Value of Financial
Instruments should have included the following: Marketable securities classified
as held-to-maturity are carried at amortized cost which approximates fair
value. The difference between amortized cost and fair value for
held-to-maturity investments was less than $30,000 at March 31,
2008.
The fair
value for marketable securities is based on publicly available market
prices.
The
Company acknowledges that held-to-maturity investments should be included in
Note 7 for disclosure purposes and complied with this requirement in its Form
10-Q for the quarterly period ended June 30, 2008, and will comply with this
Staff comment in all future filings.
Proxy
Statement
Compensation Discussion and
Analysis
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13.
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Please
describe in more detail the role of the Chief Executive Officer and the
Vice President of Human Resources in PDI’S compensation process and their
input during the crafting of compensation packages. You
disclose on page 13 that the CEO and the VP of Human Resources attend
Compensation Committee Meetings by invitation in order to provide
additional insight, suggestions or recommendations. Please
elaborate.
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Response:
The
Company’s Chief Executive Officer (“CEO”) and Executive Vice President, Human
Resources (“EVP of HR”) participate in the process of determining the
compensation for the Company’s senior executives. During the first
quarter of each year, a summary of current year goals for each senior executive
of the Company is presented to the Compensation Committee for review, input and
approval. The CEO and the EVP of HR work closely with each of the
Company’s senior executives to develop and refine these goals. In addition, the
Compensation Committee approves the financial targets and related level of
funding for achievement of these targets under the annual cash incentive plan
for these individuals. During the first quarter of the following
year, the CEO, with the assistance of the EVP of HR, undertakes a performance
evaluation of each senior executive based upon the goals established for each
executive during the prior year. The Compensation Committee then
meets with the CEO to discuss and review each senior executive’s performance
during the last fiscal year and the level of achievement of each senior
executive’s goals. The CEO provides the Compensation Committee with
recommendations regarding any increases in base salary, the annual cash
incentives as well as the long-term equity incentive awards to be made to each
senior executive. The Compensation Committee then makes a final
determination, in its sole discretion, regarding the compensation package of
each senior executive based on the recommendation of the CEO as well as the
Company’s results of operations compared with the previously established
financial targets under the annual cash incentive plan and any relevant
position-based executive compensation benchmarking data provided by the
Compensation Committee’s independent compensation consultant.
In its
future proxy statement, the Company will expand its disclosure on the
compensation process to include additional information regarding the role of the
CEO and EVP of HR.
Given
that it appears that you engage in some benchmarking of the compensation of your
named executive officers, we would expect to see disclosure addressing how you
target each element of compensation against the comparator
companies. Please specify how each element of compensation relates to
the data you have analyzed from comparator companies and include a discussion of
where you target each element of compensation against the peer companies and
where actual payments fall within targeted parameters.
Response:
The
Compensation Committee utilizes general industry surveys provided by its
independent compensation consultant to benchmark the Company’s executive
compensation against position-based compensation data for similarly sized
companies. The overall objective of the Compensation Committee is to
target the total compensation of the Company’s executives generally within the
median range of the survey data if the Company’s financial targets and the
executive’s annual goals are achieved during the year. Generally
speaking, each element of executive compensation is targeted as
follows: (i) base salary is targeted to be within the median range;
(ii) annual cash incentives have historically been targeted above the median
range with an effort in recent years to align this element of executive
compensation more closely within the median range; and (iii) the higher end of
the dollar ranges established for the long-term equity incentive awards have
generally been targeted within the median range. However, due to a
variety of reasons, including specific recruitment initiatives as well as an
assessment of the level and type of responsibilities associated with certain
executive positions within the Company and the specific experience, expertise
and background of particular individuals, the various elements of executive
compensation may vary considerably from the median range of the survey data for
each executive position. Therefore, each element of compensation for
the Company’s senior executives is reviewed annually and benchmarked against the
applicable compensation element derived from the survey data, and adjustments
are made as deemed advisable by the Compensation Committee in light survey data
as well as a variety of other performance related and other factors taken into
consideration by the Compensation Committee.
During
2007, the base salaries of the Company’s named executive officers (except the
CEO and the EVP of HR) were within the median range and were therefore increased
by three percent consistent with industry trends. In the case of the
CEO, the base salary was increased by four percent in order to bring the CEO’s
base salary closer to the median range of the survey data, though it still
remained closer to the 25th percentile range. In the case of the EVP
of HR, the base salary was somewhat higher than the median range and, therefore,
was not increased during 2007. With respect to annual cash incentives
for 2007, the target level established for the CEO was below the median range
while the target levels for the other named executive officers were generally
within the median range, except with respect to the EVP of HR. In the
case of the EVP of HR, the target level for 2007 was reduced from the previous
year in order to bring the level closer to the median range, although it
remained significantly above the median range. Actual annual cash
incentive payments made to these executives ranged from 40% to 90% of the
established targets, based on a variety of Company and individual
performance-related factors that were discussed in detail under “Compensation
Discussion and Analysis – Elements of Compensation – Annual Cash
Incentives”. With respect to long-term equity incentive awards for
2007, the higher end of the dollar ranges established by the Compensation
Committee for awards to the Company’s executive officers (other than the EVP of
HR) were generally within the median range for this particular element of
compensation. In the case of the EVP of HR, while the higher end of
the dollar range established for the long-term equity incentive award for 2007
was significantly greater than the median range, it represented a reduction from
the previous year in order to bring the level closer to the median
range. Long-term equity awards actually granted to these
executives
were at
the lowest end of the established ranges, based on a variety of factors that
were discussed in detail under “Compensation Discussion and Analysis – Elements
of Compensation – Long-Term Equity Incentives” and were generally below the
median range of the survey data.
In future
proxy statements, the Company will expand its disclosure consistent with the
foregoing in order to provide additional information regarding how the Company
targets each element of compensation against comparator companies.
The
Company acknowledges its responsibility for the adequacy and accuracy of the
disclosure in the filing; staff comments or changes to disclosures in response
to staff comments do not foreclose the SEC 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 SEC or any person under the federal securities laws
of the United States. The Company also understands that the Division
of Enforcement has access to all information we provide to the Staff in
connection with your review of our filings or in response to your comments on
our filings.
Please
contact me (phone: (201) 258-8451; facsimile: (201) 258-8541; email:
jesmith@pdi-inc.com) if you have any further comments or require additional
information.
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Yours
truly,
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/s/ Jeffrey E.
Smith
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Chief Executive Officer
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ATTACHMENT
A
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5.
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Provide
a summary of the significant items classified in your other accrued
liabilities account. Tell us your consideration of Rule 5-02.20
of Regulation S-X in presenting other liabilities on an aggregate
basis.
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2007
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2006
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|||||||||
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5%
of total current assets
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$ | 1,459,376 | $ | 2,227,715 | ||||||
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Accrued
auto insurance liability
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A | $ | 1,220,629 | $ | 1,367,611 | |||||
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Accrued
salaries and wages
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C | 1,183,348 | 1,475,119 | |||||||
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Accrued
workers compensation.
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A | 1,139,047 | 1,145,674 | |||||||
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Accrued
Medical Claims
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A | 508,228 | - | |||||||
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Accrued
T&E
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723,389 | 766,992 | ||||||||
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Franchise
tax payable
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650,868 | 68,000 | ||||||||
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Accrued
honoraria
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630,825 | 558,170 | ||||||||
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Unclaimed
property liability
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516,683 | 505,833 | ||||||||
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Accrued
audit and tax fees
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470,000 | 1,741,496 | ||||||||
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Deferred
compensation plan
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459,460 | 661,966 | ||||||||
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Accrued
reorganization exp
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B | 305,434 | 988,870 | |||||||
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Accrued
severance
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210,000 | 1,800,000 | ||||||||
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Accrued
settlements and legal fees
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171,662 | 275,035 | ||||||||
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Income
tax payable
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87,737 | 1,747,441 | ||||||||
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All
others
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3,706,982 | 4,275,968 | ||||||||
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Account
total
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$ | 11,984,292 | $ | 17,378,175 | ||||||
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A
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Amount
disclosed in Note 1, Self-Insurance Accruals.
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B
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Amount
disclosed in Note 14, Facilies Realignment.
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C
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In
future filings, accrued salaries and wages will be shown separately with
accrued bonus.
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See
response to question 4.
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