January
13, 2010
Ms. Linda
Cvrkel
Branch
Chief
Division
of Corporation Finance
United
States Securities and Exchange Commission
100 F
Street, N.E.
Washington,
D.C. 20549
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RE:
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Dorman
Products, Inc. (the “Company”)
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Form 10-K
for the fiscal year ended December 27, 2008
Filed
March 6, 2009
File No.
000-18914
Definitive
Proxy Statement on Schedule 14A
Filed
April 9, 2009
File No.
000-18914
Dear Ms.
Cvrkel:
Enclosed are our responses to your
letter, dated December 29, 2009 (the “Comment Letter”). In order to
facilitate your review, we have included the Staff’s comment followed by our
response below, as well as a copy of the Comment Letter.
Form 10-K for the fiscal
year ended December 27, 2008
Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations, page
12
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1.
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We
note your discussion of current economic conditions that have affected
your business, including a slowdown of global economic activity,
instability in the financial markets, increased operating costs, lower
demand for your products, and consolidation in the automotive
aftermarket. In future filings, please revise your “Risk
Factors” section to include a discussion of the risks associated with
these economic conditions, if applicable, as well as all other material
risks to your business.
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Response:
We will
revise Item 1A, “Risk Factors” in future filings to include a discussion of the
risks associated with identified economic conditions, if applicable, as well as
all other known material risks to our business.
NEW
PRODUCTS. NEW SOLUTIONS. NEW OPPORTUNITIES.
3400 East
Walnut Street • P.O. Box
1800 • Colmar, PA 18915-1800 • Phone:
1-215-712-5132 • Fax:
215-997-6031
Ms. Linda
Cvrkel
January
13, 2010
Page of
2 of 5
Notes to the Financial
Statements
General
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2.
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We
note from your disclosure in Note 1 that warranty expense has continued to
increase over the last three years. We also note that in your
letter dated April 16, 2008, responding to SEC Staff comments on the Form
10-K for the year ended December 31, 2007, you indicated that the notes to
the financial statements in future filings would be revised to include the
reconciliations of changes in liabilities for product warranties, as
required by paragraph 14b of FIN No. 45. However, this
disclosure does not appear to be in the notes to the financial statements
in the Form 10-K for the year ended December 31, 2008. As
previously requested, please revise future filings to include these
required disclosures.
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Response:
The notes
to the Company’s financial statements in future filings will be revised to
include the reconciliations of changes in liabilities for product warranties
required by paragraph 14b of FIN No. 45.
Note 11. Capital
Stock
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3.
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We
note from your disclosure that the expected life assumption used in the
Black-Scholes model was calculated using the simplified method prescribed
by SAB No. 107. However, we also note that SAB 107 indicates
that more detailed information about exercise behavior will, over time,
become readily available to companies and as such, the Staff does not
expect that such a simplified method would be used for share option grants
once more detailed information becomes available. Please
explain to us why you believe it is appropriate to continue to use the
simplified method for your expected life assumption for the year ended
December 31 [27], 2008 and also through the quarter ended September 30,
2009. As part of your response, please tell us when you expect
to end the use of the simplified method for this
assumption.
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Response:
In the
past, the Company has used the simplified method to calculate the expected life
of stock options used in the Black-Scholes model due to a lack of sufficient
historical exercise data. With respect to stock options issued in the
4th
quarter of 2009 and beyond, the Company will estimate the expected life of stock
options based upon data now available when we prepare our financial statements
for the year ended December 26, 2009.
NEW
PRODUCTS. NEW SOLUTIONS. NEW OPPORTUNITIES.
3400 East
Walnut Street • P.O. Box
1800 • Colmar, PA 18915-1800 • Phone:
1-215-712-5132 • Fax:
215-997-6031
Ms. Linda
Cvrkel
January
13, 2010
Page of
3 of 5
Supplementary Financial
Information
Quarterly Results of
Operations (Unaudited), page 35
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4.
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We
note that in regards to our prior review of the Company’s Form 10-K for
the year ended December 31, 2007, you responded in a letter dated April
16, 2008 that you would revise your section on quarterly results of
operations to discuss or cross-reference to a discussion of any material
or unusual changes that impacted the results of operations for the
quarters presented. In light of the fact that your disclosure
in your 2008 10-K includes quarters during the year ended December 31,
2007 in which you incurred goodwill impairment charges, we would expect
that a discussion or cross-reference to a discussion of these types of
unusual events would have been made. Please confirm that you
will revise future fillings
accordingly.
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Response:
The
Company hereby confirms that in future filings the section addressing quarterly
results of operations will discuss or cross-reference to a discussion of
material or unusual changes that impacted the results of operations of quarters
presented.
Definitive Proxy Statement
on Schedule 14A
Executive Bonus Plan, page
9
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5.
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We
note that no amounts were earned under your Executive Bonus Plan for
fiscal 2008. In light of the fact that you did not meet your
earnings targets, please disclose the basis for awarding discretionary
bonuses to your executives. Disclose, for example, the material
factors you considered in determining that based on each executive
officer’s “contribution, responsibility, and performance,” discretionary
bonuses were earned.
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Response:
Factors
the Company’s Compensation Committee considered in determining the amount of any
discretionary bonus payable under the Executive Bonus Plan for fiscal 2008
include the Company’s overall performance in light of then-current economic
conditions, the executive’s contribution to the Company’s annual and long-term
strategic objectives including maximizing shareholder value, the quality of the
executive’s work, and the general success of the Company as may be measured in
ways different from the performance criteria identified in the Executive Bonus
Plan. In fiscal 2008, the Company’s executive officers made
substantial progress in implementing the Company’s long term strategic
objectives under very difficult economic conditions then present in the
automotive parts business and the economy in general. The Company’s
future filings will be revised to include this information, as
applicable.
NEW
PRODUCTS. NEW SOLUTIONS. NEW OPPORTUNITIES.
3400 East
Walnut Street • P.O. Box
1800 • Colmar, PA 18915-1800 • Phone:
1-215-712-5132 • Fax:
215-997-6031
Ms. Linda
Cvrkel
January
13, 2010
Page of
4 of 5
The Process of Establishing
Executive Compensation, page 12
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6.
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We
note that you use benchmarking as a factor in setting executive
compensation levels. Please identify the companies against
which you benchmark. Refer to Item 402(b)(xiv) of Regulation
S-K.
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Response:
The
Company does periodically acquire reports of senior management compensation at
companies that offer products similar to ours although the Company did not
acquire such a report in connection with the fiscal 2008 executive compensation
process. Our most recent benchmarking report, acquired for fiscal
2007, included the following companies: Keystone Automotive
Industries, Lojack Corp., Proliance International, Inc., Standard Motor
Products, Inc., Tenneco Inc., and United Components Inc. The
Company’s future filings will be revised to identify the companies against which
we benchmark, if any.
Company
Certification
The
Company hereby acknowledges that:
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·
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The
Company is responsible for the adequacy and accuracy of the disclosures in
its filings;
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·
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Staff
comments or changes to disclosures in response to staff comments do not
foreclose the Commission from taking any action with respect to the
filing; and
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·
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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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Kindly
acknowledge receipt of this letter by time and date stamping the attached
duplicate copy of this letter and returning it to me in the self addressed
stamped envelope provided. If you or any other member of the Staff
have any questions or would like to discuss these matters at greater length,
please do not hesitate to contact me at (215) 712-5132 or, in my absence, Thomas
Knoblauch, at (215) 712-5222.
NEW
PRODUCTS. NEW SOLUTIONS. NEW OPPORTUNITIES.
3400 East
Walnut Street • P.O. Box
1800 • Colmar, PA 18915-1800 • Phone:
1-215-712-5132 • Fax:
215-997-6031
Ms. Linda
Cvrkel
January
13, 2010
Page of
5 of 5
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Sincerely,
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/s/
Mathias J. Barton
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Mathias
J. Barton
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Chief
Financial Officer
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cc: Ms.
Claire Erlanger, Division of Corporation Finance
Thomas Knoblauch, Esq., Vice President
– General Counsel
Jane Storero, Esq., Blank Rome,
LLP
John Walker, KPMG, LLP
NEW
PRODUCTS. NEW SOLUTIONS. NEW OPPORTUNITIES.
3400 East
Walnut Street • P.O. Box
1800 • Colmar, PA 18915-1800 • Phone:
1-215-712-5132 • Fax: 215-997-6031