Mail Stop 03-08
April 18, 2005
By U.S. Mail
Mr. John W. Feray
Chief Accounting Officer
Haggar Corp.
11511 Luna Road
Dallas, Texas 75234
RE: Haggar Corp.
Form 10-K for the Fiscal Year Ended September 30, 2004
Filed December 10, 2004
Form 10-Q for the Quarter Ended December 31, 2004
Filed February 9, 2005
Form 8-K Filed on February 9, 2005
File No. 0-20850
Dear Mr. Feray:
We have reviewed your filings 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. Where indicated, we think you should revise your
disclosures in future filings in response to these comments. If
you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a 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
filings.
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 September 30, 2004
General
1. Where a comment below requests additional disclosures or other
revisions to be made, these revisions should be included in your
future filings, as applicable.
Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations
Overview, page 20
2. Please consider revising the overview section to discuss the
most
important matters that you focus on when evaluating financial
condition and operating performance of the business. Also discuss
the relevant economic and industry-wide factors and key
performance
indicators used to manage the business. Refer to SEC Release No.
33-
8350 for further guidance.
Results of Operations, page 22
3. Please expand your discussion of the changes in financial
statement line items to indicate whether the changes represent
trends
expected to continue into the future. For example, you should
discuss whether you expect the trend in rising gross margins to
continue into the future and why or why not. Also discuss any
other
known trends, demands, commitments, events or uncertainties that
will, or are reasonably likely to, have a material effect on
financial condition and/or operating performance. Refer to SEC
Release No. 33-8350 and Item 303(a) of Regulation S-K.
Financial Statements
Notes to Financial Statements
1. Operations and Significant Accounting Policies, page 39
General
4. Please disclose the types of expenses that you include in the
cost
of goods sold line item and the types of expenses that you include
in
the selling, general and administrative expenses line item. In
doing
so, please disclose specifically whether you include inbound
freight
charges, purchasing and receiving costs, inspection costs,
warehousing costs, internal transfer costs and the other costs of
your distribution network in cost of goods sold. If you currently
exclude a significant portion of these costs from cost of goods
sold,
please provide cautionary disclosure in MD&A that your gross
margins
may not be comparable to others, since some entities include the
costs related to their distribution network in cost of goods sold
and
others like you exclude all or a portion of them from gross
margin,
including them instead in a line item such as selling, general and
administrative expenses. To the extent the excluded costs are
material to your operating results, quantify these amounts in
MD&A.
If you determine that these amounts are immaterial for disclosure,
please supplementally provide us with your qualitative and
quantitative assessment of materiality for all periods presented.
Revenue Recognition, page 40
5. Please clarify your disclosure to indicate what you mean when
you
say that revenues are "generally" recognized upon transfer of
title
and risk of ownership to customers. Also expand your disclosure
to
specifically address your revenue recognition policy for wholesale
sales and for royalty income generated by your licensing segment.
6. Please revise your disclosure to describe the nature and terms
of
the various retailer promotions and incentives that you offer,
such
as volume discounts, cooperative advertising arrangements, buydown
programs and slotting fee arrangements. Also clarify your
disclosure
to state how you accrue for the amounts owed under these
arrangements
and how your accrual policy is consistent with the terms of the
various arrangements. We believe this disclosure is particularly
important in light of the material weakness in internal controls
over
customer allowance reserves that you identified in the first
quarter
of fiscal year 2005. Please show us supplementally how your
revised
revenue recognition policy disclosure will read.
13. Segment Reporting, page 54
7. For each period presented please disclose the amount of
revenues
attributed to domestic operations and to foreign operations. Also
disclose the amount of long-lived assets located in the US and in
foreign countries. If revenues and/or long-lived assets
attributed
to an individual foreign country are material, those revenues
and/or
long-lived assets should be disclosed separately. Refer to
paragraph
38 of SFAS 131.
8. Based on your Item 1. Business disclosures, we note that you
sell
several different product lines. Please revise your filings to
provide the revenue disclosures by product group discussed in
paragraph 37 of SFAS 131. In particular, it appears that revenue
disclosures for each period presented for the following product
lines
may be applicable:
- - Men`s premium Haggar branded apparel products
- - Men`s premium licensed apparel products
- - Men`s moderately priced trademarked/private label lines
- - Women`s Haggar branded products
- - Women`s trademarked products
If you believe that other product categories are more
appropriate, please advise.
Schedule II - Valuation and Qualifying Accounts, page 58
9. Please revise this schedule to include the activity in your
sales
returns and allowances. Alternatively, you may provide such
disclosure in the notes to the financial statements or MD&A.
Additionally, to the extent that the changes in the reserves are
material to an understanding of your results of operations or
financial condition, revise your MD&A accordingly. Refer to Rules
5-
04 and 12-09 of Regulation S-X for guidance. Supplementally
provide
us with a roll-forward of the activity in this reserve account for
each period presented.
Item 9A. Controls and Procedures, page 59
10. In light of the material weakness you have identified in your
internal controls over financial reporting, which you indicate
won`t
be fully remedied until March 2005, please explain to us on a
supplemental basis how the certifying officers were able to
conclude
that the disclosure controls and procedures were effective over
the
preparation of these financial statements.
11. You state that your management evaluated the effectiveness of
your disclosure controls and procedures, as defined in Exchange
Act
Rule 13a-15(e). However, your principal executive and financial
officers only concluded that your disclosure controls and
procedures
were ineffective in "timely alerting them to material information
required to be disclosed in the periodic reports the Company files
or
submits under the Securities Exchange Act of 1934." In future
filings, please also state, whether the same officers concluded
the
controls and procedures were effective or ineffective in
"ensur[ing]
that information required to be disclosed by an issuer in the
reports
that it files or submits under the Act is 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 decisions
regarding
required disclosure." See Exchange Act Rule 13a-15(e).
Exhibits 31(a) and 31(b), pages 75 and 76
12. Please confirm that the inclusion of your CEO and CAO`s titles
was not intended to limit the capacity in which such individuals
provided the certifications. In the future, eliminate reference
to
the CEO and CAO`s titles in the introductory paragraph of the
certifications to conform to the format provided in Item
601(b)(31)
of Regulation S-K. Also refer to Question 11 of the Staff`s
Frequently Asked Questions regarding the Sarbanes-Oxley Act of
2002
issued in November 2002 and available on our website at
www.sec.gov.
Form 10-Q for the Quarter Ended December 31, 2004
Item 2. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations, page 12
Comparison of Three Months Ended December 31, 2004 to Three Months
Ended December 31, 2003, page 14
Net Sales
13. Please tell us more about and revise future filings to clarify
the circumstances surrounding the assumption of your United
Kingdom
operations by a third party in October 2004. Also discuss how
this
impacted not only the historical periods presented, but also how
you
expect this to impact your operations going forward.
Item 4. Controls and Procedures, page 21
14. We note that you identified two additional control
deficiencies
which constitute material weaknesses in your internal controls.
Please tell us the impact, if any, of each of the identified
control
deficiencies on your historical financial statements for the
interim
period ended December 31, 2004 and the three years ended September
30, 2004. Please also tell us in more detail about the nature of
the
material weaknesses, how they were identified, and the steps you
took
to compensate for these deficiencies which allowed you to conclude
that your disclosure controls and procedures were effective over
the
preparation of the interim financial statements.
Form 8-K Filed on February 9, 2005
15. Please refer to Item 2.02 of Form 8-K and to the extent you
present in future filings diluted earnings per share adjusted for
one-time costs, please identify the measure as a non-GAAP measure
and
disclose why the non-GAAP measure is useful to investors and why
management uses it. Additionally, as required by Regulation G,
please reconcile, preferably in tabular form, adjusted diluted
earning per share to diluted earnings per share as reported.
* * * *
As appropriate, 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. Detailed
response
letters greatly facilitate our review. Please file your response
letter on EDGAR. Please understand that we may have additional
comments after reviewing your responses to our comments.
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 filing;
* staff comments or changes to disclosure in response to staff
comments 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 filings or
in
response to our comments on your filings.
If you have any questions regarding these comments,
please
direct them to Staff Accountant Yong Kim at (202) 942-2904. In
her
absence, direct your questions to Robyn Manuel at (202) 942-7786.
Any other questions regarding disclosures issues may be directed
to
me at (202) 942-2905.
Sincerely,
George F. Ohsiek, Jr.
Branch Chief
??
??
??
??
Mr. Feray
Haggar Corp.
Page 2