Mail Stop 0407
April 8, 2005
Via U.S. Mail and Fax (781) 904-5605
Ms. Karen Walker
Vice President and Chief Financial Officer
Boston Communications Group, Inc.
55 Middlesex Turnpike
Bedford, MA 01730
RE: Boston Communications Group, Inc.
Form 10-K for the fiscal year ended December 31, 2004
Filed March 16, 2005
File No. 0-28432
Dear Ms. Walker:
We have reviewed the above referenced filing and have the
following comments. We have limited our review to only your
financial statements and related disclosures and will make no
further
review of your documents. As such, all persons who are
responsible
for the adequacy and accuracy of the disclosure are urged to be
certain that they have included all information required pursuant
to
the Securities Exchange Act of 1934. Please address the following
comments in future filings. If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a future
revision is unnecessary. Please be as detailed as necessary in
your
explanation. In some of our comments, we may ask you to provide
us
with supplemental information so we may better understand your
disclosure. After reviewing this information, we may or may not
raise additional comments.
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.
Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations
Gross Margin, page 20
1. Revise to delete your discussion of gross margin since the
amount
is exclusive of depreciation and amortization. Otherwise, revise
to
comply with SAB Topic 11:B by allocating depreciation and
amortization to your gross margins.
Critical Accounting Policies and Estimates, page 24
2. We note your statement that the timing of certain expenses,
such
as commissions and bonuses, is based on revenue recognition. Tell
us
your accounting policy regarding measurement and recognition of
revenue-based cost accruals.
Consolidated Statements of Income, page 37
3. We note on pages 22 and 43-44 that depreciation and
amortization
expense include amounts related to your Bedford, Massachusetts
facility and amortization of intangible assets and software
development costs for internal use. Please revise your footnote
in
the consolidated statements of income to separately disclose the
amount of depreciation excluded from cost of revenues.
2. Summary of Significant Accounting Policies
Cash, Cash Equivalents and Short-Term Investments, page 41
4. We note that you classify your short-term investments as
current
assets and that you have significant purchase and sale activity of
these short-term investments. We also note that you view your
portfolio as available for use in your current operations. Tell
us
why you believe your investments should be classified as
available-
for-sale rather than trading.
Impairment of Long-Lived Assets, page 43
5. Tell us more about your impairment assessment as of December
31,
2004. Tell us if you considered potential customer loss as an
event
or circumstance that required you to test long-lived assets for
recoverability. Tell us how you considered the loss of revenues
from
Verizon and Cingular in your estimates of future cash flows.
Refer
to paragraphs 8 and 16-21 of SFAS 144.
Goodwill and Other Intangibles, page 44
6. We note that you determined the annual impairment test of
goodwill
utilizing the enterprise-wide approach based on the aggregate
market
value of your common stock. Tell us the stock price used and how
it
was determined. Considering the range of your stock price in
2004,
tell us how you determined the stock price was the best evidence
of
your fair value. Refer to paragraph 23 of SFAS 142. Additionally,
tell us how you considered the impact of the migration of Verizon
and
Cingular`s subscribers away from your platform in your selection
of
the appropriate fair value measurement or methodology.
8. Commitments and Contingencies
Indemnifications, page 55
7. We note your statement that you believe your "internal
development
processes and other policies and practices limit (your) exposure
related to the indemnification provisions" of your customer
agreements. Please reconcile this assertion with your statement
that
the $250 million sought by Freedom Wireless would exceed your
ability
to pay.
11. Segment Reporting and Discontinued Operations, page 56
8. We note that historically your reportable segments under SFAS
131
consisted of Billing and Transaction Processing Services, Roaming
Services and Prepaid Systems. Addressing paragraph 30 of SFAS 142
and EITF D-101, tell us how you determined your reporting units
and
tell us what those reporting units are. Additionally:
* Please identify the reporting unit(s) to which you assigned
goodwill. Refer to paragraphs 19 and 34 of SFAS 142.
* Further, tell us the operating segments that you aggregate into
your reportable segments.
Your response should address your historical accounting treatment
and
prospective accounting treatment.
9. Please provide the disclosures required in paragraph 37 of SFAS
131.
* * * *
Please respond to these comments within 10 business days or
tell us when you will provide us with a response. Please furnish
a
letter that keys your responses to our comments and provides any
requested supplemental information. Please file your response
letter
on EDGAR.
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
for
an informed decision. 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 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.
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 filings or
in
response to our comments on your filings.
You may contact Kathryn Jacobson, Staff Accountant, at (202)
824-5332 or Kyle Moffatt, Accountant Branch Chief, at (202) 942-
1829
if you have questions regarding comments on the financial
statements
and related matters. Please contact me at (202) 942-1990 with any
other questions.
Sincerely,
Larry Spirgel
Assistant Director
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Ms. Karen Walker
Boston Communications Group Inc.
April 8, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE