Via Facsimile and U.S. Mail
Mail Stop 03-09
March 16, 2005
Mr. Ben R. Leedle, Jr.
President and Chief Executive Officer
American Healthways, Inc.
3841 Green Hills Village Drive
Nashville, TN 37215
Re: American Healthways, Inc.
Form 10-K for the fiscal year ended August 31, 2004
File No. 0-19364
Dear Mr. Leedle:
We have reviewed your filing and have the following
comments.
We have limited our review of the above referenced filing to only
those issues addressed. Where our comments call for disclosure,
we
think you should revise your document in response to these
comments
in future filings beginning with your Form 10-K for the fiscal
year
ended August 31, 2005. In a supplemental letter, please either
confirm that you will comply with these comments in future filings
or, if you disagree, we will consider your explanation as to why
our
comments are inapplicable or a revision is unnecessary. In some
of
our comments, we ask you to provide us with supplemental
information
so we may better understand your disclosure. Please provide us
this
letter, that keys your responses to our comments, within 10
business
days of the date of this letter or tell us when you will provide a
response prior to the expiration of the 10-day period. Detailed
letters greatly facilitate our review. Please file your letter on
EDGAR under the form type label CORRESP. Please understand that
we
may have additional comments after reviewing your responses to our
comment.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the fiscal year ended 8/31/04
Management`s Discussion and Analysis
Critical Accounting Policies
Revenue Recognition, pages 22 and 23
1. In regards to the contract settlement process under a contract,
please consider expanding your disclosure to include the
following:
a. For each period presented, quantify and disclose the changes in
estimates of prior period revenue and contractual adjustments that
you recorded during the current period. For example for 2004, this
amount would represent the amount of the difference between
estimates
of revenue and contractual adjustments for services provided in
2003
and the amount of the new estimate or settlement amount that was
recorded during 2004. This should include performance-related
adjustments to revenues such as amounts recorded as revenue that
ultimately needed to be refunded, adjustments to incentive bonuses
accrued and data reconciliation differences.
b. Quantify and disclose the reasonably possible effects that a
change in estimate of these unsettled amounts as of the latest
balance sheet date could have on your financial position and
operations.
Contractual Obligations, page 30
2. We note that you have not included your interest payments
related
to long-term debt in your contractual obligations table. It would
appear that these liabilities represent your future legal
obligations. Per Item 303(a)(5) of Regulation S-K, please revise
your table to include these amounts.
Financial Statements
Note 1. Summary of Significant Accounting Policies, page 37
Revenue Recognition, page 38
3. Please tell us supplementally and clarify in the filing why you
believe your policy for recognizing revenue for performance-based
programs is appropriate under Staff Accounting Bulletins 101 and
104.
We note that a portion (up to 100%), of the fees may be refundable
to
the customer and that you recognize revenue based on your
performance
to date. Please tell us specifically if the amounts may be
refundable regardless of your performance to date.
Note 14. Segment Disclosures, page 49
4. Please tell us why you believe disclosures in SFAS 131 are not
required. Please address paragraphs 10 and 17 in your response
and
specifically tell us what information your chief operating
decision
maker receives. Also, please tell us why you believe information
required by paragraph 37 of SFAS 131 is not required.
* * * *
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require.
Since the company and its management are in possession of all
facts
relating to a company`s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging 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 in the filings reviewed by the staff do not foreclose the
Commission 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 Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Whitnie Storey, Staff Accountant, at (202) 824-
5385 or Mary Mast, Senior Accountant, at (202) 942-1858 if you
have
questions regarding the comments. In this regard, do not hesitate
to
contact me at (202) 942-1803.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief
Accountant
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Mr. Ben R. Leedle, Jr.
American Healthways, Inc.
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