Mail Stop 0510
June 9, 2005
Mr. David S. Graziosi
Chief Financial Officer
Resolution Performance Products LLC
1600 Smith Street, Suite 2400
Houston, TX 77002
RE: Form 10-K for the fiscal year ended December 31, 2004
File No. 333-75172
Dear Mr. Graziosi:
We have reviewed these filings and have the following
comments.
If you disagree with a comment, 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 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.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2004
General
1. Where a comment below requests additional disclosures or other
revisions to be made, please show us in your supplemental response
what the revisions will look like. These revisions should be
included in your future filings.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
Comparison of 2004 results to 2003, page 22
2. Please discuss in greater detail the business reasons for the
changes between periods in operating expenses and selling, general
and administrative expenses. In doing so, please disclose the
amount
of each significant change in line items between periods and the
business reasons for it. In circumstances where there is more
than
one business reason for the change, attempt to quantify the
incremental impact of each individual business reason discussed on
the overall change in the line item. For example, in regards to
operating expenses, please individually quantify the amount of the
increase that is due to higher maintenance costs, increased
turnaround activity and foreign currency impact. Please show us
what
your revised MD&A for 2004 as compared to 2003 will look like.
See
Item 303(a)(3) of Regulation S-K and Financial Reporting
Codification
501.04.
Financial Statements
3. Please tell us why your allowance for doubtful accounts
decreased
from 2003, given the fact that your gross receivables balance
increased approximately 47%.
Consolidated Statements of Owner`s Deficit, page 74
4. Please disclose for all periods presented the income tax
provisions for each classification of other comprehensive income.
See paragraph 25 of SFAS 130.
Note 2 - Significant Accounting Policies
Revenue Recognition, page 77
5. You state on page 8 that your distributors are compensated
through
a discount from the list price for products purchased, and that
you
also offer volume discounts. Please disclose in a footnote
separately for each type of arrangement you have with your
resellers
a description of the arrangement and your accounting policy for
it,
including the statement of operations line item that each type of
arrangement is included in. For each expense line item that
includes
these types of arrangements, please disclose the related amounts
included in that line item. For each type of arrangement treated
as
an expense rather than as a reduction of revenues, please tell us
how
this type of arrangement meets the requirements in EITF 01-9.
Please
also discuss in MD&A any significant estimates resulting from
these
arrangements.
Note 12 - Contingencies and Other Matters, page 95
6. Please confirm there is not a reasonable possibility that a
loss
exceeding amounts already recognized may have been incurred and
the
amount of that additional loss is material. If there is a
reasonable
possibility, please disclose the estimated additional loss, or
range
of loss, or state that such an estimate cannot be made as required
by
paragraph 10 of SFAS 5. Refer to SAB Topic 5:Y as well.
Note 13 - Leases and Other Commitments, page 96
7. Please disclose how you account for (a) step rent provisions
and
escalation clauses and (b) capital improvement funding and other
lease concessions, which may be present in your leases. Paragraph
5.n. of SFAS 13, as amended by SFAS 29, discusses how lease
payments
that depend on an existing index or rate, such as the consumer
price
index or the prime interest rate, should also be included in your
minimum lease payments. If, as we assume, they are taken into
account in computing your minimum lease payments and the minimum
lease payments are recognized on a straight-line basis over the
minimum lease term, the note should so state. If our assumption
is
incorrect, please tell us how your accounting complies with SFAS
13
and FTB 88-1.
* * * *
Please respond to these comments within 10 business days, or
tell us when you will provide us with a response. Please provide
us
with a response letter that keys your responses to our comments
and
provides any requested information. Detailed letters greatly
facilitate our review. Please file your supplemental response on
EDGAR as a correspondence file. 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 required under the
Securities Exchange Act of 1934 and 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 their 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 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.
If you have any questions regarding these comments, please
direct them to Jeffrey Gordon, Staff Accountant, at (202) 551-3866
or, in his absence, to the undersigned at (202) 551-3769.
Sincerely,
Rufus Decker
Accounting Branch Chief
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Mr. David S. Graziosi
Resolution Performance Products LLC
June 9, 2005
Page 1 of 4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0510
DIVISION OF
CORPORATION FINANCE