NATUZZI S.P.A.
December 22, 2016
VIA EDGAR TRANSMISSION
Mr. John Cash
Accounting Branch Chief
Office of Manufacturing and Construction
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: Natuzzi S.p.A.
Form 20-F for the Year Ended December 31, 2015
Filed May 23, 2016
File No. 1-11854
Dear Mr. Cash:
By letter dated December 8, 2016, the staff of the Securities and Exchange Commission (the “Commission”) provided certain comments to the annual report on Form 20-F filed on May 23, 2016 (the “2015 Form 20-F”) by Natuzzi S.p.A. (the “Company”). The Company is submitting via EDGAR responses to the comments of the Commission’s staff (the “Staff”) ..
For convenience, we have reproduced in italics below the Staff’s comments and have provided the Company’s responses immediately below the comments.
Form 20-F for the Fiscal Year Ended December 31, 2015
Item 5.OperatingandFinancial ReviewandProspects,page 36
Results ofOperations, page 40
| 1. | We noteyourdisclosureand discussion of EBITand EBITDA on pages 41, 44and 48as wellas inyourForms6-Kfiled on May 31, 2016,September 23, 2016and November 17, 2016.Since theserepresent non-GAAPmeasures, pleaseenhanceyour disclosures in futurefilings toaddressthefollowing: |
| · | identifyEBITand EBITDAas non-GAAP performance measures; |
| · | reconcile EBITandEBITDA tothe most directlycomparable financial measurecalculatedand presented in accordance with GAAP(netincome/loss); |
| · | explain why management believes each non-GAAP measure provides useful informationto investors inyourForm 20-F; |
| · | state how management useseach non-GAAPmeasure inyourForm 20-F;and |
| · | eliminate the presentation ofEBIT on a per share basis(operating income per share)presented inSelectedFinancial Data. |
Pleaserefer toItem 10(e) of RegulationS-Kand the updated Complianceand DisclosureInterpretations issued on May 17, 2016.
Company Response:
Pursuant to the Staff’s request, the Company will revise future filings to identifyEBITand EBITDAas non-GAAP performance measures, reconcile EBITandEBITDA tothe most directlycomparable financial measurecalculatedand presented in accordance with GAAP(netincome/loss),explain why management believes each non-GAAP measure provides useful informationto investors inthe Company’sForm 20-F andstate any additional purposes for which management useseach non-GAAPmeasure inthe Company’sForm 20-F. In addition, the Company willeliminate from future filings the presentation ofEBIT on a per share basis(operating income per share)presented inSelectedFinancial Data.
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Item 15. Controls and Procedures,page 85
(a)Disclosure ControlsandProcedures,page 85
| 2. | We note thatyouconcludedyour disclosurecontrols and procedures wereeffectiveas of December 31, 2015.Pleaseexplain howyouconsidered the definition of disclosurecontrols and procedures provided in Rule 13a-15(e),which indicates thateffectivecontrols and procedures wouldensure that information required to be disclosedby the issuer is recorded, processed, summarizedand reportedwithinthe time periods specified inthe Commission’srules andforms.In light of thefactthatyou did not timelyfileyourForm 20-F, please morefullyexplain to us howand whyyouconcludedyour disclosurecontrolsand proceduresareeffective. |
Company Response:
The Company understands that Rule 13a-15(a) under the Securities Exchange Act of 1934 (the “Exchange Act”) requires a registrant to maintain disclosure controls and procedures designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Staff’s rules and forms. The Company also understands that such information must be accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decision regarding required disclosures. The Company works diligently to fulfill its obligations under the Exchange Act and has an excellent track record of making disclosures accurately and on a timely basis. For the reasons set forth below, the late filing of the Company’s 2015 Form 20-F, which resulted from a delay in completing the assessment of its internal control over financial reporting, was an unexpected occurrence in its long history of making disclosures accurately and on a timely basis.
The Company sets internal deadlines and processes that are specifically designed to provide the Company with reasonable assurance that the information required to be disclosed is recorded, processed, summarized and reported accurately and in a timely fashion. In 2015, the Company implemented a series of changes to enhance its internal control over financial reporting, which takes into account recent guidance, pronouncements and interpretations on internal control measures, including published inspection results of the PCAOB. These changes included (i) a further enhancement in the design of certain management review controls that relate to the process of preparing financial statements, including the related disclosures; and (ii) an increase in the number of key controls used in the Company’s assessment of the effectiveness of internal controls, in particular relating to reports and other information produced by the Company and used to prepare its financial statements. The assessment of such new controls imposed burdens on the Company’s internal control department that were greater than initially expected. As a consequence, in anticipation of the filing deadline for the 2015 20-F, the Company determined that additional time would be required for the completion of the assessment of its internal control over financial reporting. As such, the greater-than-expected burdens on the Company’s internal control department referenced above ultimately caused management to delay the filing of the 2015 20-F.
Notwithstanding the delay in filing the 2015 Form 20-F, the Company believes that its disclosure controls and procedures are effective. In evaluating the effectiveness of its disclosure controls and procedures, the Company carefully considered (i) the design of its disclosure controls and procedures in light of relevant Staff guidance, (ii) the accuracy of the information included in its 2015 Form 20-F and (iii) its long history of making accurate disclosures on a timely basis.
In the Adopting Release for Rule 13a-15 (Certification of Disclosure, SEC Release Nos. 33-8124; 34-46427, August 29, 2002), the Commission noted that Rule 13a-15 “require[s] an issuer to maintain disclosure controls and procedures to provide reasonable assurance that the issuer is able to record, process, summarize and report the information required in the issuer’s Exchange Act reports.” The Company’s disclosure controls and procedures are designed to meet this standard of reasonable assurance and, indeed, have enabled the Company to establish a long history of fulfilling its financial reporting obligations in an accurate manner and on a timely basis. The Company’s disclosure controls and procedures include, among other things, the following:
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· the Company sets and takes all reasonable steps to abide by internal deadlines for the preparation and review of all periodic reports;
· the Company endeavors to perform a series of internal processes within such deadlines that have proven in the past to be effective for the preparation of reports in an accurate and timely manner;
· the Company adjusts its internal reporting processes based on prior experience to ensure that internal and external deadlines are met in the future; and
· the Company maintains an open line of communication with its Audit Committee and its external auditor and outside counsel throughout the reporting process, designed to promote regular discussion and resolution of comments and questions on a timely basis.
As noted in Item 15(a) of the 2015 Form 20-F, the Company recognizes that “[t]here are inherent limitations to the effectiveness of any system of disclosure controls and procedures, […]. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.”
In evaluating the effectiveness of its disclosure controls and procedures as of December 31, 2015, the Company also took into particular consideration that no material changes were made to its audited financial statements included in its 2015 Form 20-F filed on May 23, 2016, compared to the unaudited financial results furnished with the Commission on Form 6-K on March 23, 2016.
As stated above, the Company has an established track record of making accurate and timely disclosures, which it would not have been able to achieve without having had the capacity to make ongoing adjustments to its internal reporting framework to reflect regulatory developments, including published inspection results of the PCAOB. Because the main reasons for the delay in filing the 2015 20-F, as stated above, were unique to the Company’s assessment of internal control over financial reporting in 2015, the Company believes that the resulting additional burden will not affect the filing of the Company’s annual report for 2016 or future filings. Based on the foregoing, the Company believes that it will be able to record, process, summarize and report the information required in its Exchange Act reports in a timely fashion.
Exhibit 13.1
| 3. | You disclose that theannual report onForm 20-F for theyearended December 31, 2014 fullycomplieswith therequirements of section 13(a) or 15(b) of theSecurities Exchange Act of 1934; however, thisForm 20-F is for theyearended December 31,2015.In future filings pleaseensureyour disclosurerefers to thecorrect period coveredbyyourannual report. |
Company Response:
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The reference to the year ended December 31, 2014 in Exhibit 13.1 was due to an inadvertent typographical error. In future filings we willensurethat the disclosurerefers to thecorrect period coveredbytheannual report.
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The Company acknowledges that it and its management are responsible for the adequacy and accuracy of their disclosures, notwithstanding any review, comments, action or absence of action by the Staff.
If you have any questions or require any additional information with respect to the above, please do not hesitate to contact me at +39 080 882 0111.
[signature page follows]
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Sincerely,
/s/ Vittorio Notarpietro
Vittorio Notarpietro
Chief Financial Officer
cc: Pietro Fioruzzi
Cleary Gottlieb Steen & Hamilton LLP
David Gottlieb
Cleary Gottlieb Steen & Hamilton LLP
Natuzzi Response Letter – Signature Page
