May 11, 2005
David G. Fiore
President and Chief Executive Officer
AAC Group Holding Corp.
7211 Circle S Road
Austin, Texas 78745
Re: AAC Group Holding Corp.
Amended Form S-4 filed May 3, 2005
Form 10-Q for the quarter ended February 26, 2005
File No. 333-121479
Dear Mr. Fiore:
We have reviewed your filings and have the following
comments.
Where indicated, we think you should revise your documents 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 S-4/A
Business, page 57
1. We note your response to comment 4. You have not provided
sufficient support for your statements of leadership as referenced
in
the first bullet point in comment 4 and the third, fifth, and
sixth
bullet points in our previous comment 29. We do note the revision
in
the registration statement on page 62 regarding the statement
referenced in the fifth bullet point in our previous comment 29.
However, you have not provided sufficient support for your belief
that you are a technology leader. Please revise or provide
additional support. Further, we note the support for the
statements
listed in bullet points to comment 4. It is unclear from the
supplemental information provided how you believe you are the
largest
provider of college class rings. Please provide additional
information to support your statements of leadership referenced in
bullet points 4-7 to comment 4 or revise.
Consolidated Financial Statements and Notes to Consolidated
Financial
Statements
Note 12: Commitments and Contingencies, page F-26
2. We note your response to our previous comment 5 relating to the
arbitration request against your subsidiary, CBI. The disclosure
that you cite in your response only addresses the arbitration
proceedings. Our prior comment specifically requests that you
revise
your disclosure concerning the lawsuit filed in federal district
court, which appears to be separate from the arbitration. Your
current disclosure states that, "The district court claim seeks
injunctive and monetary relief." Please revise your disclosure to
state that the amount of monetary relief sought in the district
court
action is also unspecified, if true.
3. We note your response to our previous comment 6. We note from
your comment that you recently settled the lawsuit disclosed on
page
F-51. However, it does not appear that you revised your
disclosure
with respect to the settlement on the Frederick Goldman, Inc.
case.
Therefore, please disclose the update as to the status of the
litigation or tell us why you do not believe that it would be
necessary to modify your disclosure.
Note 17: Business Segments, page F-35
4. We note your response to our previous comment 7. Based upon
the
internal reports that you have provided to us, it appears as if
your
company has more than two reportable segments. For example, we
note
that you regularly produce discrete financial information for your
school yearbook operations. We also note that your description of
business indicates that yearbooks are produced in separate
facilities. Your description of sales and marketing indicate that
there is a separate yearbook sales force of 200 independent
representatives.
* Please tell us why you believe that it is appropriate to include
the Taylor yearbook operations with your jewelry and other
operations
that comprise the Scholastic Products segment.
* Please tell us why you believe that it is appropriate to
aggregate
ECI and other Affinity publishing operations with other assorted
jewelry operations to create the Recognition and Affinity
reportable
segment.
* We note that there is included in your reports a caption called
Graphics which is part of the CBI column in your three and six
month
income statements (See exhibit I). Please tell us more about
these
operations and why they are included as part of the Scholastic
segment.
* Please provide us with additional operating information
concerning
your Scholastic Ring operations. For example, please tell us
whether
Balfour rings are all produced in the same facility or if there
are
different production processes for college and high school rings.
We
also note that, aside from your on campus sales of Balfour rings,
you
also sell rings through retail channels. Please tell us whether
there are significant differences in the production and
distribution
of retail rings compared to on campus rings.
* We note that you include graduation products with class rings
and
yearbooks to create the Scholastic segment. Please tell us why
you
believe that it is appropriate to include your graduation products
business with class rings and yearbooks in your Scholastic
products
segment.
Form 10-Q for the quarter ended February 26, 2005
5. Please revise your disclosure to identify "any changes," not
only
"significant" changes, that have materially affected, or are
reasonably likely to materially affect, your internal controls and
procedures over financial reporting. Please revise your
disclosure
here, in your Form 10-K for the fiscal year ended August 28, 2004,
in
your Form 10-Q for the quarter ended November 27, 2004, and in
future
filings. See Item 308(c) of Regulation S-K.
Exhibits 31.1 and 31.2
6. Please eliminate your reference to the officers` titles in the
first sentence of your certifications. The certifications should
be
identical to the certification set forth in Item 601(b)(31) of
Regulation S-K. Please make the appropriate revisions in the
certifications filed with the Form 10-K for the fiscal year ended
August 28, 2004 and the Form 10-Q for the quarter ended November
27,
2004.
****
As appropriate, please amend your documents in response to
these
comments. You may wish to provide us with marked copies of the
documents to expedite our review. Please furnish a letter with
your
amendments that keys your responses to our comments and provides
any
requested supplemental information. Detailed letters greatly
facilitate our review. Please understand that we may have
additional
comments after reviewing your amendments and responses to our
comments.
You may contact Dave Irving at (202) 551-3321 or Mike Moran,
Accounting Branch Chief, at (202) 551-3841 if you have questions
regarding comments on the financial statements and related
matters.
Please direct any other questions to Howard M. Baik at (202) 551-
3317
or to Ellie Quarles, Special Counsel, at (202) 551-3238.
Sincerely,
H. Christopher Owings
Assistant Director
cc (via fax): Joel F. Freedman, Esq.
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David G. Fiore
AAC Group Holding Corp.
May 11, 2005
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