seccomment.htm
June 10,
2009
Mr. Rufus
Decker
Accounting
Branch Chief
U.S.
Securities and Exchange Commission
100 F
Street, N.E., Mail Stop 7010
Washington,
D.C. 20549
Re: Orion
Marine Group, Inc.
Form 10-K for the fiscal year ended
December 31, 2008
Form 10-Q for the period ended March
31, 2009
Schedule 14A filed on April 13,
2009
File No. 1-33891
Dear Mr.
Decker:
Orion
Marine Group, Inc., (the “Company”) hereby responds to the comments received by
facsimile on May 28, 2009 from the staff of the Division of Corporation Finance
(the “Staff”) of the Securities and Exchange Commission (the
“Commission”). For your convenience and as requested, the Company’s
responses are prefaced by the exact text of the Staff’s corresponding comment,
which in each case is set forth in bold text.
FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2008
1.
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The
file number listed on the cover page is 333-145588. Given the
fling of the Form 8-A12B on December 19, 2007, it appears that the file
number should actually be 1-33891. Please advise or revise
accordingly.
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Response: The
Company acknowledges that the appropriate file number for its filings under the
Securities Exchange Act of 1934 is 1-33891 and will revise its future filings
accordingly.
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Item 7 – Management’s
Discussion and Analysis of Financial Condition and Results of Operations,
page 31
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Critical Accounting
Policies, page 35
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2.
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In
the interest of providing readers with a better insight into management’s
judgments in accounting for goodwill and intangible assets, please
consider disclosing the following in future
filings:
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The
reporting unit level at which you test goodwill for impairment and your
basis for that determination;
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·
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A
qualitative and quantitative description of the material assumptions used
when evaluating goodwill and intangible assets for impairment and a
sensitivity analysis of those assumptions based upon reasonably likely
changes; and
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·
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If
applicable, how the assumptions and methodologies used for valuing
goodwill and intangible assets in the current year have changed since the
prior year highlighting the impact of any
changes.
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Response: In
future filings, the Company will expand its critical accounting
estimates disclosure with respect to its goodwill and intangible assets to
include the basis for its reporting unit level, qualitative and quantitative
descriptions of the material assumptions used to evaluate goodwill and
intangible assets for impairment, and our basis for its current assumptions and
methodologies.
Liquidity and Capital
Resources, page 39
3. Your
credit facility agreement contains covenants that require you to maintain
certain financial ratios, including net worth, fixed charge and leverage ratios,
among other restrictions. In future filings, please disclose here or
elsewhere in the filing the specific terms of any material debt covenants in
your debt agreements. Please also disclose the required
ratios/amounts as well as the actual ratios/amounts as of each reporting date
for any material covenants. This will allow readers to understand how
much cushion there is between the required ratios/amounts and the actual
ratios/amounts. Please also consider showing the specific
computations used to arrive at the actual ratios/amounts with corresponding
reconciliations to US GAAP amounts, if necessary. Please show us in
your supplemental response what the revision, if any, will look
like. See Sections I.D and IV.C of the SEC Interpretive Release No.
33-8350 and Question 10 of our FAQ Regarding the Use of Non-GAAP Financial
Measures dated June 13, 2003.
Response: In
future filings, the Company, in accordance with the Staff’s comments, will
expand disclosure of its required debt covenants to include the specific
financial ratios required to be maintained under the Company’s credit agreement.
By way of a supplemental response as of the date of this letter, the Company is
providing the Staff with a revision, marked to show changes, of the relevant
disclosure contained in its 2008 Annual Report on Form 10-K to demonstrate how
it proposes to modify its disclosure concerning these matters in its future
filings. Please note that the Company does not propose including the
actual ratios/amounts for each reporting date or the calculations thereof. As of
December 31, 2008, and as of the date hereof, the Company is comfortably in
compliance with such covenant ratios, and, accordingly, the Company does not
believe that disclosure of the actual ratios/amounts (or calculations thereof)
is or would be material to a reasonable investor.
Moreover,
for substantially all of its history as a public reporting company, the Company
has not relied, and does not currently rely, on debt financing to fund its
operations or working capital needs. Accordingly, access to external financing
for Company operations and working capital needs is not material, at this time,
to the Company’s financial condition or results of operations. It is for these
reasons as well that the Company does not believe that disclosure of the actual
ratios/amounts (or calculations thereof) is or would be material to a reasonable
investor
Nevertheless,
the Company will consider the materiality of such information in connection with
future disclosure for each of its periodic reports to the Commission, and, if
and when such information becomes material, the Company will disclose it in its
filings with the Commission.
Contractual Obligations,
page 42
4. In
future filings, please revise your table of contractual obligations to include
in a separate line item the estimated interest payments on your debt, instead of
including them in the same line item as long-term debt
obligations. Please also disclose in a footnote to the table any
assumptions you made to derive these amounts.
Response: The
Company will disclose estimated interest payments on its long-term debt
obligations in a separate line item in future filings and will provide in such
filings assumptions as to the derivation of those amounts.
Item 9A – Controls and
Procedures, page 43
5. We
note that your annual report on Form 10-K omits the disclosure required by Item
307 (Disclosure Controls and Procedures) of Regulation S-K. Please
amend your annual report to correct this omission. You may satisfy
this request by filing an abbreviated amendment that consists of a cover page,
an explanatory note, revised Item 9A disclosure and updated versions of the
certifications required by Sections 302 (paragraphs 1,2,4, and 5 only) and 906
of the Sarbanes-Oxley Act of 2002. We further note that your annual
report does not contain any disclosure about changes in your internal control
over financial reporting pursuant to Item 308(c) of Regulation
S-K. As you have disclosed the absence of such changes in prior
filings, please confirm to us that there have been no changes in your internal
control over financial reporting for purposes of Item 308(c) of Regulation
S-K.
Response: The
Company has amended its Item 9A disclosure and has filed an amendment to its
Annual Report on Form 10-K (the “Form 10-K/A”) via the EDGAR filing system
today. As referenced in the Form 10-K/A, the Company confirms that
there have been no changes in its internal control over financial reporting for
the fiscal quarter ended December 31, 2008, that have materially affected, or
are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
Item 15 – Exhibits and
Financial Statement Schedules, page 46
6. It
appears that that audit report on the financial statement schedule listed in the
index appearing under Item 15(2) is not signed. Similarly, it appears
that the consent filed as Exhibit 23.1 is also not signed. Please
file an amendment to correct these.
Response: The
Company has included in the Form 10-K/A the signatures of Grant Thornton LLP on
the audit report on the financial statement schedule (Item 15(2)) and the
consent filed as Exhibit 23.1. Please note that the signatures of Grant Thornton
were on the audit report at the time the Company filed its 2008 Annual Report on
Form 10-K and that Grant Thornton LLP’s signature did appear on Exhibit 23.1; it
appears possible that the signatures were deleted in the conversion process to
EDGAR.
Consolidated Financial
Statements and Supplementary Data
Note 11 – Income Taxes, page
F22
7. It
is not clear how you have met the disclosure requirements set forth in paragraph
21 of FIN 48, as illustrated in paragraph A33 of FIN 48. Please
advise or revise your disclosures in future filings accordingly.
Response: As of
December 31, 2007 and December 31, 2008, the Company did not have a liability
for unrecognized tax benefits, and did not believe that its tax positions would
change in any significant respect, due to the settlement thereof and expiration
of statutes of limitations prior to December 31, 2009. For these
reasons, a tabular reconciliation was not possible.
Should
events or circumstances change and the Company establishes a liability in
accordance with FIN 48, the appropriate disclosures as set forth in paragraph 21
of FIN 48 will be made in future filings.
SCHEDULE 14A DEFINITIVE
PROXY STATEMENT FILED ON APRIL 13, 2009
Executive Compensation, page
14
Compensation Discussion and
Analysis, page 14
Components of Executive
Compensation, page 15
Performance-Based Incentive
Compensation, page 16
8. With
a view toward future disclosure, please provide us with a materially complete
description and analysis of the individual goals applicable to each of your
named executive officers, as well as the compensation committee’s assessment of
how each officer performed with respect to those goals. In this
regard, we note your disclosure on page 17 that “certain individual goals were
not met in full.” Your description and analysis should identify both
the goals that were not fully met and the officers who did not meet those
goals.
Response: As the Company’s
General Counsel discussed with the Staff by telephone on May 29, 2009, the
Company respectfully requests an extension until June 30, 2009 to respond to
this comment. The Company needs the additional time (i) in order to more fully
assess whether such additional information may be material and whether, to the
extent material, providing such additional information could cause competitive
harm to the Company; and (ii) to closely examine Commission guidance to
insure our response is appropriate. Further, as noted in the
aforementioned telephone conversation, to the extent the Staff in willing to do
so, the Company would greatly appreciate the Staff providing any specific
Commission guidance that would help insure that the Company’s response is indeed
appropriate, and that the Company is correctly applying the confidential
treatment standards.
9. We
note your disclosure on page 17 that the compensation committee “awarded a
supplement to the bonus to certain individuals.” With a view toward
future disclosure, please provide us with a materially complete description and
analysis of the compensation committee’s decision to award bonus
supplements. In doing so, please identify the named executive
officers who received supplemental awards and quantify the amounts of the
awards. You should also address the impact, if any, that the
unsatisfied individual goals had on the committee’s decision to award the
supplements.
Response: As the Company’s
General Counsel discussed with the Staff by telephone on May 29, 2009, the
Company respectfully requests an extension until June 30, 2009 to respond to
this comment. The Company needs the additional time (i) in order to more fully
assess whether such additional information may be material and whether, to the
extent material, providing such additional information could cause competitive
harm to the Company; and (ii) to closely examine Commission guidance to insure
our response is appropriate. Further, as noted in the aforementioned telephone
conversation, to the extent the Staff in willing to do so, the Company would
greatly appreciate the Staff providing any specific Commission guidance that
would help insure that the Company’s response is indeed appropriate, and that
the Company is correctly applying the confidential treatment
standards.
Long-Term Incentive
Compensation, page 18
10. We
note your disclosure on page 18 that “[t]he Compensation Committee will
determine on an annual basis who will receive awards under the LTIP and the
limitations on those awards. The determination will be based on
factors that normally apply to a company’s decision to grant awards, i.e.,
performance and industry conditions.” With a view toward future
disclosure, please provide us with a materially complete description and
analysis of the compensation committee’s long-term incentive award
determinations for 2008. In doing so, please address how the
committee determined the number of shares underlying the option awards received
by each named executive officer in 2008.
Response: As the Company’s
General Counsel discussed with the Staff by telephone on May 29, 2009, the
Company respectfully requests an extension until June 30, 2009 to respond to
this comment. The Company needs the additional time (i) in order to more fully
assess whether such additional information may be material and whether, to the
extent material, providing such additional information could cause competitive
harm to the Company; and (ii) to closely examine Commission guidance to insure
our response is appropriate. Further, as noted in the aforementioned telephone
conversation, to the extent the Staff in willing to do so, the Company would
greatly appreciate the Staff providing any specific Commission guidance that
would help insure that the Company’s response is indeed appropriate, and that
the Company is correctly applying the confidential treatment
standards.
***
In
connection with the Company’s response to the Staff’s comments, the Company
acknowledges that:
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The
Company is responsible for the adequacy and accuracy of the disclosure in
its filings;
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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
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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.
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We hope
that our answers above appropriately respond to the Staff’s
comments. Please do not hesitate to contact me by telephone at (713)
852-6500 with any questions or comments regarding this
correspondence.
Sincerely,
/s/ Mark R.
Stauffer
Mark R.
Stauffer
Executive
Vice President and Chief Financial Officer