[King & Spalding LLP Letterhead]
Via EDGAR and Facsimile
January 6, 2006
Securities and Exchange Commission
Division of Corporation Finance
CF/AD5
100 F Street, NE
Washington, D.C. 20549-3561
Attn: Mr. Michael Fay, Accounting Branch Chief
RE: UNITED PARCEL SERVICE, INC.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2004
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2005
FORM 8-K FILED OCTOBER 25, 2005
FILE NO. 001-15451
Dear Mr. Fay:
We are providing, on behalf of United Parcel Service, Inc. ("UPS" or the
"Company"), the response of the Company to the comments of the staff of the
Securities and Exchange Commission (the "Staff") in its letter dated December
16, 2005. To assist in your review, we have included the Staff's comments and
have numbered the Company's responses to correspond with the Staff's comments.
Form 10-K: For the Year Ended December 31, 2004
Item 7. Management's Discussion and Analysis ... page 19
Critical Accounting Policies and Estimates, page 34
1. It appears that your disclosures here should provide greater insight into
the quality, sensitivity and variability regarding the factors that have or
may materially affect financial condition and operating performance. Your
disclosure should be explicit as to which of the identified factors are
most sensitive to change and have caused material differences between
estimated amounts and actual results, or the factors for which it is
reasonably possible that actual results could differ. To the extent
practicable and material, you should provide quantitative disclosure of
these factors, with an analysis of how actual results may differ from your
estimates under different assumptions and conditions. Refer to Section V of
FR-72 for further guidance. Please revise as indicated. Provide us with a
copy of your intended disclosure.
Securities and Exchange Commission
January 6, 2006
Page 2
RESPONSE TO COMMENT 1:
The Company has noted the Staff's comment and, to the extent the Company
discusses these same or substantially similar critical accounting policies and
estimates in its Annual Report on Form 10-K for 2005, the Company will expand
its disclosure as follows, subject to change based on changes in the critical
accounting policies and estimates. The additions have been highlighted by
underlining.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis of our financial condition and results of
operations are based on our consolidated financial statements, which are
prepared in accordance with accounting principles generally accepted in the
United States of America. As indicated in Note 1 to our consolidated financial
statements, the amounts of assets, liabilities, revenue, and expenses reported
in our financial statements are affected by estimates and judgments that are
necessary to comply with generally accepted accounting principles. We base our
estimates on prior experience and other assumptions that we consider reasonable
to our circumstances. Actual results could differ from our estimates, which
would affect the related amounts reported in our financial statements. While
estimates and judgments are applied in arriving at many reported amounts, we
believe that the following matters may involve a higher degree of judgment and
complexity.
Contingencies--As discussed in Note 10 to our consolidated financial
statements, we are involved in various legal proceedings and contingencies. We
have recorded liabilities for these matters in accordance with Statement of
Financial Accounting Standards No. 5, "Accounting for Contingencies" ("FAS 5").
FAS 5 requires a liability to be recorded based on our estimate of the probable
cost of the resolution of a contingency. The actual resolution of these
contingencies may differ from our estimates. If a contingency is settled for an
amount greater than our estimate, a future charge to income would result.
Likewise, if a contingency is settled for an amount that is less than our
estimate, a future credit to income would result.
The events that may impact our contingent liabilities are often unique and
generally are not predictable. At the time a contingency is identified, we
consider all relevant facts as part of our FAS 5 evaluation. We record a
liability for a loss that meets the recognition criteria of FAS 5. These
criteria require recognition of a liability when the loss is probable of
occurring and reasonably estimable. Events may arise that were not anticipated
and the outcome of a contingency may result in a loss to us that differs from
our previously estimated liability. These factors could result in a material
difference between estimated and actual operating results. Contingent losses
that meet the recognition criteria under FAS 5, excluding those related to
income taxes and self insurance which are discussed further below, were not
material to the Company's financial position as of December 31, 2004. In
addition, we have certain contingent liabilities that have not been recognized
as of December 31, 2004, because a loss is not reasonably estimable.
Goodwill Impairment-- The Financial Accounting Standards Board issued
Statement No. 142, "Goodwill and Other Intangible Assets" ("FAS 142"), in June
2001. As a result of the issuance of this standard, goodwill is no longer
amortized, but is subjected to annual impairment
Securities and Exchange Commission
January 6, 2006
Page 3
testing. Goodwill impairment testing requires that we estimate the fair value of
our goodwill and compare that estimate to the amount of goodwill recorded on our
balance sheet.
We use a discounted cash flow model (DCF model) to estimate the fair value
of our goodwill. The completion of the DCF model requires that we make a number
of significant assumptions to produce an estimate of future cash flows. These
assumptions include projections of future revenue, costs and working capital
changes. In addition, we make assumptions about the estimated cost of capital
and other relevant variables, as required, in estimating the fair value of our
reporting units. The projections that we use in our DCF model are updated
annually and will change over time based on the historical performance and
changing business conditions for each of our reporting units.
As of December 31, 2004, our recorded goodwill was $1.255 billion, of which
$1.144 billion relates to our Supply Chain and Freight segment. This segment of
our business has experienced rapid growth over the last several years, largely
due to a number of acquisitions that we have made. Because of its growth, this
segment continues to experience significant change as we integrate the acquired
companies, resulting in higher volatility in our DCF model projections than for
our other segments.
Upon adoption of FAS 142, we recorded a non-cash impairment charge of $72
million ($0.06 per diluted share), as of January 1, 2002, related to our Mail
Technologies business. The primary factor resulting in the impairment charge was
the lower than anticipated growth experienced in the expedited mail delivery
business. In conjunction with our annual test of goodwill in 2002, we recorded
an additional impairment charge of $2 million related to our Mail Technologies
business, resulting in total goodwill impairment of $74 million for 2002. Our
annual impairment tests performed in 2003 and 2004 resulted in no goodwill
impairment.
Self-Insurance Accruals--We self-insure costs associated with workers'
compensation claims, automotive liability, health and welfare, and general
business liabilities, up to certain limits. Insurance reserves are established
for estimates of the loss that we will ultimately incur on reported claims, as
well as estimates of claims that have been incurred but not yet reported.
Recorded balances are based on reserve levels determined by outside actuaries,
who incorporate historical loss experience and judgments about the present and
expected levels of cost per claim. Trends in actual experience are a significant
factor in the determination of such reserves. We believe our estimated reserves
for such claims are adequate, but actual experience in claim frequency and/or
severity could materially differ from our estimates and affect our results of
operations.
Workers compensation, automobile liability and general liability insurance
claims may take several years to completely settle. Consequently, actuarial
estimates are required to project the ultimate cost that will be incurred to
fully resolve the claims. A number of factors can affect the actual cost of a
claim, including the length of time the claim remains open, trends in health
care costs and the results of related litigation. Furthermore, claims may emerge
in future years for events that occurred in a prior year at a rate that differs
from previous actuarial projections. Changes in state legislation with respect
to workers compensation can affect the adequacy of our self-insurance accruals.
All of these factors can result in revisions to prior actuarial projections and
produce a material difference between estimated and actual operating results.
Securities and Exchange Commission
January 6, 2006
Page 4
We sponsor a number of health and welfare insurance plans for our
employees. We use estimates from third party actuaries to establish the
liabilities for these plans. These liabilities and related expenses are based on
estimates of the number of employees and eligible dependents covered under the
plans, anticipated medical usage by participants and overall trends in medical
costs and inflation. Actual results may differ from these estimates and,
therefore, produce a significant difference between estimated and actual
operating results.
Pension and Postretirement Medical Benefits--The Company's pension and
other postretirement benefit costs are calculated using various actuarial
assumptions and methodologies as prescribed by Statement of Financial Accounting
Standards No. 87, "Employers' Accounting for Pensions" and Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions." These assumptions include discount
rates, health care cost trend rates, inflation, rate of compensation increases,
expected return on plan assets, mortality rates, and other factors. Actual
results that differ from our assumptions are accumulated and amortized over
future periods and, therefore, generally affect our recognized expense and
recorded obligation in such future periods. We believe that the assumptions
utilized in recording the obligations under our plans are reasonable based on
input from our outside actuaries and other advisors and information as to
historical experience and performance. Differences in actual experience or
changes in assumptions may affect our pension and other postretirement
obligations and future expense. A 25 basis point change in the assumed discount
rate, expected return on assets, and health care cost trend rate for the pension
and postretirement benefit plans would have the following effects on the
Company's costs and obligations for the year 2004 (in millions):
[Note: The following table is the format the Company expects to use in its
critical accounting estimates disclosure in future filings.]
25 BASIS 25 BASIS
POINT INCREASE POINT DECREASE
-------------- --------------
PENSION PLANS
Discount Rate:
Effect on net periodic benefit cost
Effect on projected benefit obligation
Return on Assets:
Effect on net periodic benefit cost
POSTRETIREMENT MEDICAL PLANS
Discount Rate:
Effect on net periodic benefit cost
Effect on projected benefit obligation
Health Care Cost Trend Rate:
Effect on net periodic benefit cost
Effect on projected benefit obligation
Securities and Exchange Commission
January 6, 2006
Page 5
Financial Instruments --As discussed in Notes 2, 3, 8, and 16 to our
consolidated financial statements, and in the "Market Risk" section of this
report, we hold and issue financial instruments that contain elements of market
risk. Certain of these financial instruments are required to be recorded at fair
value. Fair values are based on listed market prices, when such prices are
available. To the extent that listed market prices are not available, fair value
is determined based on other relevant factors, including dealer price
quotations. Certain financial instruments, including over-the-counter derivative
instruments, are valued using pricing models that consider, among other factors,
contractual and market prices, correlations, time value, credit spreads, and
yield curve volatility factors. Changes in the fixed income, equity, foreign
exchange, and commodity markets will impact our estimates of fair value in the
future, potentially affecting our results of operations. A quantitative
sensitivity analysis of our exposure to changes in commodity prices, foreign
currency exchange rates, interest rates, and equity prices is presented in the
"Market Risk" section of this report.
Depreciation, Residual Value, and Impairment of Fixed Assets--As of
December 31, 2004, we had approximately $14.0 billion of net fixed assets, the
most significant category of which is aircraft. In accounting for fixed assets,
we make estimates about the expected useful lives and the expected residual
values of the assets, and the potential for impairment based on the fair values
of the assets and the cash flows generated by these assets.
In estimating the lives and expected residual values of aircraft, we have
relied upon actual experience with the same or similar aircraft types.
Subsequent revisions to these estimates could be caused by changes to our
maintenance program, changes in the utilization of the aircraft, governmental
regulations on aging aircraft, and changing market prices of new and used
aircraft of the same or similar types. We periodically evaluate these estimates
and assumptions, and adjust the estimates and assumptions as necessary.
Adjustments to the expected lives and residual values are accounted for on a
prospective basis through depreciation expense.
In accordance with the provisions of Statement of Financial Accounting
Standards No. 144 "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("FAS 144"), we review long-lived assets for impairment when
circumstances indicate the carrying amount of an asset may not be recoverable
based on the undiscounted future cash flows of the asset. If the carrying amount
of the asset is determined not to be recoverable, a write-down to fair value is
recorded. Fair values are determined based on quoted market values, discounted
cash flows, or external appraisals, as applicable. We review long-lived assets
for impairment at the individual asset or the asset group level for which the
lowest level of independent cash flows can be identified. The circumstances that
would indicate potential impairment may include, but are not limited to, a
significant change in the extent to which an asset is utilized, a significant
decrease in the market value of an asset, and operating or cash flow losses
associated with the use of the asset. In estimating cash flows, we project
future volume levels for our different air express products in all geographic
regions in which we do business. Adverse changes in these volume forecasts, or a
shortfall of our actual volume compared with our projections, could result in
our current aircraft capacity exceeding current or projected demand. This
situation would lead to an excess of a particular aircraft type, resulting in an
aircraft impairment charge or a reduction of the expected life of an aircraft
type (thus resulting in increased depreciation expense).
Securities and Exchange Commission
January 6, 2006
Page 6
In December 2003, we permanently removed from service a number of Boeing
727 and McDonnell Douglas DC-8 aircraft. As a result, we conducted an impairment
evaluation, which resulted in a $75 million impairment charge during the fourth
quarter for these aircraft (including the related engines), $69 million of which
impacted the U.S. domestic package segment and $6 million of which impacted the
international package segment.
In December 2004, we permanently removed from service a number of Boeing
727, 747 and McDonnell Douglas DC-8 aircraft. As a result of the actual and
planned retirement of these aircraft, we conducted an impairment evaluation,
which resulted in a $110 million impairment charge during the fourth quarter for
these aircraft (including the related engines and parts), $91 million of which
impacted the U.S. domestic package segment and $19 million of which impacted the
international package segment.
These charges are classified in the caption "other expenses" within other
operating expenses (see Note 13 to the consolidated financial statements). UPS
continues to operate all of its other aircraft and continues to experience
positive cash flow.
Income Taxes--We operate in numerous countries around the world and are
subject to income taxes in many jurisdictions. We estimate our annual effective
income tax rate based on statutory income tax rates in these jurisdictions and
take into consideration items that are treated differently for financial
reporting and tax purposes. The process of estimating our effective income tax
rate involves judgments related to tax planning and expectations regarding
future events, including the impact of adjustments, if any, resulting from the
resolution of audits of open tax years by the Internal Revenue Service or other
taxing authorities.
We recognize deferred tax assets for items that will generate tax
deductions or credits in future years. Realization of deferred tax assets
requires sufficient future taxable income (subject to any carry-forward
limitations) in the applicable jurisdictions. We make judgments regarding the
realizability of deferred tax assets based, in part, on estimates of future
taxable income. A valuation allowance is established for the portion, if any, of
the deferred tax assets that we conclude cannot be realized. Income tax related
contingency matters also affect our effective income tax rate. In this regard,
we make judgments related to the identification and quantification of income tax
related contingency matters.
During 2004 and 2003, the resolution of tax matters with the Internal
Revenue Service and other taxing authorities produced reductions in income tax
expense of $142 and $77 million, respectively. In 2002, we recorded a pre-tax
gain of $1.023 billion related to the settlement of a previously established tax
assessment liability, which resulted in an increase to income tax expense of
$247 million.
Securities and Exchange Commission
January 6, 2006
Page 7
Item 9A. Controls and Procedures, page 37
2. The description here and in your Form 10-Qs that disclosure controls and
procedures are effective "in all material respects" appears to be a
qualifier that they are at some standard that is less than effective. If
correct, please represent to us that, for each period at issue, your chief
executive officer and chief financial officer concluded that the disclosure
controls and procedures were effective to ensure that information required
to be disclosed in the reports filed and submitted under the Exchange Act
is recorded, processed, summarized and reported as and when required. If
incorrect, please revise your disclosure to clearly discuss the limitations
on the effectiveness conclusions and what, if any, impact this had on your
financial statements and your efforts to remediate the circumstances. In,
addition, if you are able to make the representation noted above, please
exclude this qualifying language from your future filings.
RESPONSE TO COMMENT 2:
The Company hereby represents to the Staff that, for each period at issue, the
chief executive officer and chief financial officer of the Company did conclude
that the disclosure controls and procedures were effective to ensure that
information required to be disclosed in the reports filed and submitted under
the Exchange Act is recorded, processed, summarized and reported as and when
required. UPS has noted the Staff's comment, and will exclude the phrase "in all
material respects" from its future filings.
Financial Statements, page F-1
Statements of Consolidated Cash Flows, page F-9
3. It appears that finance receivables are associated with the financial
services you provide to customers. In this regard, please explain to us why
it is appropriate to show the changes in these as an investing activity
rather than an operating activity. Your response should specifically
address your consideration of paragraph 22(a) of FAS 95 pertaining to cash
flows associated with providing services for customers.
RESPONSE TO COMMENT 3:
UPS maintains finance operations in asset-based lending, commercial lending,
receivable factoring, and equipment leasing. These operations involve lending to
both companies that are existing customers of the UPS express delivery, freight
forwarding, and logistics services, as well as companies that have no other
existing business relationship with UPS. However, these lending operations do
not finance customer use of the Company's express delivery, freight forwarding,
or logistics services, and consequently these are not long-term trade
receivables that would require classification of cash flows as operating as
required by paragraph 22(a) of FAS 95. These lending operations are undertaken
independently of our core express delivery business.
The Company's finance receivables are classified in the cash flow statement in
accordance with paragraph 16(a) of FAS 95, which indicates that cash inflows for
investing activities include "receipts from collections or sales of loans" and
paragraph 17(a), which indicates that cash
Securities and Exchange Commission
January 6, 2006
Page 8
outflows for investing activities include "disbursements for loans made by the
enterprise". Thus, the Company has classified its cash flows associated with the
origination, principal collection, and sale of finance receivables in the
investing section of the statement of cash flows.
Form 10-Q: For the Quarter Ended September 30, 2005
Item 1. Financial Statements, page 2
Notes to Unaudited Consolidated Financial Statements, page 6
Note 7. Business Acquisitions, page 10
4. It appears that the $1.029 billion in goodwill added during the year is
substantially associated with the acquisition of Overnite. Please tell us
and disclose the factors that lead to a purchase price that resulted in
recognition of goodwill in the acquisition of Overnite, in accordance with
paragraph 51(b) of FAS 141, and the amount of goodwill recognized. Give us
a breakdown of the purchase price allocation specific to this acquisition,
with separate listing of each of the intangible assets recognized.
RESPONSE TO COMMENT 4:
The Company hereby provides the Staff with the following supplemental
information.
UPS completed the acquisition of Overnite Corp. ("Overnite") in August 2005. The
purchase price paid for Overnite was greater than the fair value of the net
assets of Overnite, resulting in the recognition of goodwill, as discussed
further below, due to (1) Overnite's established ability to produce operating
income and cash flow, (2) the Company's expectation of generating additional
revenue through the ability to sell Overnite's freight services along with the
existing package delivery services of UPS, and (3) the Company's expectation of
reducing costs through economies of scale and other synergies.
The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the date of acquisition. As of November 9, 2005, the
filing date of the Form 10-Q for the quarter ended September 30, 2005, UPS was
in the process of obtaining third-party valuations of certain assets and
liabilities of Overnite. Thus, the allocation of the purchase price as of that
date was preliminary and subject to further adjustment, as was disclosed in Note
7 to the financial statements included in that Form 10-Q.
Securities and Exchange Commission
January 6, 2006
Page 9
(amounts in millions)
Cash Paid for Shares of Overnite Corp. $1,217
Acquisition-Related Fees & Costs
8
------
Total Purchase Price $1,225
======
Identifiable Assets Acquired & Liabilities Assumed:
Cash and Marketable Securities $ 21
Accounts Receivable 208
Other Current Assets 44
Property, Plant & Equipment 525
Other Assets 3
Accounts Payable (37)
Accrued Wages & Withholding (42)
Other Current Liabilities (130)
Short and Long-Term Debt (89)
Deferred Taxes, Credits & Other Liabilities (39)
Accumulated Postretirement Benefit Obligation (75)
------
Net Assets Acquired $ 389
======
Purchase Price Less Net Assets Acquired $ 836
======
In the financial statements included in the September 30, 2005 Form 10-Q, the
Company applied the entire balance of the purchase price, less the net assets
acquired, to goodwill. Subsequent to the filing of this Form 10-Q, UPS received
a draft report from the independent appraisal firm it engaged to value certain
of Overnite's tangible assets and liabilities and intangible assets. This report
identified Overnite's customer base as an intangible asset to be recognized
separately from goodwill, and the Company has not identified any other
identifiable intangible assets from the acquisition. This customer base
intangible asset was valued at $30 million. When this appraisal report is
finalized, the Company expects to have further adjustments to goodwill relating
to the valuations of this customer base intangible as well as other tangible
assets and liabilities. In accordance with FAS 141, the Company will make these
adjustments to the Overnite balance sheet effective as of the date of the
acquisition. UPS anticipates that these adjustments will be reflected, and
disclosed as appropriate, in the December 31, 2005 consolidated financial
statements.
Securities and Exchange Commission
January 6, 2006
Page 10
Item 2. Management's Discussion and Analysis ... page 17
Operating Expenses and Operating Margin, page 21
5. We noted the reported steady decrease in the operating margin percentage
for the U.S. domestic package segment for the years 2002 to 2004 and
significant increase in this percentage throughout 2005 compared to 2004.
However, we did not locate any disclosure that specifically addresses the
reason for the changes, and the changes appear to be material. Please tell
us the reason for the changes over the indicated periods. Include
disclosure that addresses material changes in the operating margin
percentage for each segment as appropriate.
RESPONSE TO COMMENT 5:
In future filings, the Company will move the table showing operating margins by
segment (on page 25 of the December 31, 2004 Form 10-K) to the section titled
"Operating Profit" (page 21 of the December 31, 2004 Form 10-K), which precedes
the discussion of operating results by segment. UPS will discuss the material
factors that cause period-to-period changes in operating expenses and revenue
and, to the extent not addressed in such discussion, operating margins, within
the respective segment discussions in the "Operating Profit" section.
With regard to the Staff's comment regarding the changes in operating margin
percentages for the domestic package segment, the Company notes that "operating
margin percentages" are computed by dividing (a) the operating profit for each
segment (which equals revenue less operating expenses) by (b) the revenue for
the segment. The Company believes that, for all periods presented, it has
appropriately discussed the material factors that contributed to changes in
revenue for each segment, and the material factors that contributed to changes
in operating expenses for each segment. While the Company has not separately
discussed the factors that contributed to the changes in "operating margin
percentages", the Company believes that each of the material factors that
contributed to the changes in operating margin has been described in the
discussions of the changes in revenues and operating expenses for each of the
segments.
Specifically, the Company would like to point out that it in its discussion of
changes in operating expenses for the Domestic Package segment, the Company has
discussed the following items, which are the most significant items that
contributed to the decline in operating margin percentages for the Domestic
Package segment from 2002 to 2004:
- The 2002 change in our vacation policy that resulted in a $175
million credit to income being taken that year, with no
corresponding credit in 2003 or 2004 (disclosed on page 22 of the
December 31, 2004 Form 10-K),
- The aircraft impairment charges of $69 million in 2003 and $91
million in 2004, with no corresponding charge in 2002 (disclosed
on page 22 of the December 31, 2004 Form 10-K),
- The lingering effect of the diversion of package volume to
competitors that started in 2002, around the time of the Teamster
contract negotiation, and continued in 2003 (first quarter 2003
package volume declined 1.2%), and
Securities and Exchange Commission
January 6, 2006
Page 11
- The $63 million pension charge related to the consolidation of
data systems used to collect and accumulate plan participant data
(disclosed on page 22 of the December 31, 2004 10-K), with no
corresponding charges in other years.
In 2005, operating margin for the Domestic Package segment increased due to
increases in revenue for the segment and reductions in operating expenses for
the segment, as follows:
- Revenue increases were primarily attributable to the 2.4% volume
growth and 2.6% revenue per piece growth;
- The modification to the managers incentive compensation plan
resulted in a reduction of expense, when compared with the prior
year-to-date period, of $218 million (disclosed on page 20 of the
September 30, 2005 10-Q); and
- The absence of the aircraft impairment and pension charges in
2005 as compared to 2004.
The Company believes that, in view of its discussions of the items that
contributed most significantly to the changes in revenues and operating expenses
in the Domestic Package segment for the periods, it has adequately described the
factors that contributed to the changes in operating margin percentages. The
Company believes that presenting a separate discussion of the factors that
contributed to changes in operating margin percentages, to the extent such
factors have already been addressed in the discussion of operating profit, would
be repetitive and would not assist in an understanding the Company's operating
results.
Form 8-K: Filed October 25, 2005
Exhibit 99.1
6. We note your disclosure of "Memo: Gross revenue, Freight services and
logistics" here and in prior Form 8-Ks furnished in regard to quarterly
earnings releases. Please tell us the purpose of this disclosure and how it
relates to other amounts disclosed in the exhibit.
RESPONSE TO COMMENT 6:
This disclosure was included as supplemental information. It provides a measure
of the size of the UPS freight services and logistics operations. The Company
will remove this disclosure in future documents filed with or furnished to the
Commission.
Securities and Exchange Commission
January 6, 2006
Page 12
In connection with responding to the Staff's comments, the Company acknowledges
that:
- the Company is responsible for the adequacy and accuracy of the
disclosure in the filings;
- Staff comments or changes to disclosure in response to Staff comments
do not foreclose the Commission from taking any action with respect to
the filings; and
- the Company may not assert Staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
Please contact the undersigned at (404) 572-4729 with any questions concerning
this letter. In addition, we request that you advise us when the staff has
completed its review of the filings.
Very truly yours,
/s/ Jeffrey M. Stein
----------------------------------------
Jeffrey M. Stein
JMS/sm
cc: Mr. Michael L. Eskew
Mr. D. Scott Davis