June 14, 2005
Mail Stop 0306
Timothy J. Donnelly
Vice President and General Counsel
DDi Corp.
1220 Simon Circle
Anaheim, California 92806
Re: DDi Corp.
Registration Statement on Form S-3
Filed May 27, 2005
File No. 333-125345
Form 10-K for Fiscal Year Ended
December 31, 2004
Filed March 16, 2005
File No. 000-30241
Dear Mr. Donnelley:
We have limited our review of your filing to those issues we
have addressed in our comments. Where indicated, we think you
should
revise your document 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 information so we may better understand
your
disclosure. After reviewing this information, we may 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 any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
1. In your Form 10-Q for the quarterly period ending March 31,
2005
you describe defaults upon senior securities under Part II Item 3.
Because of this event, it does not appear that you meet the
eligibility requirements to use Form S-3. Please provide a
detailed
legal analysis of eligibility to use Form S-3 or amend the filing
using an appropriate form for this offering.
Incorporation by Reference, page 38
Form 10-K for the year ended December 31, 2004
Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations, page 15
Fresh-Start Accounting, page 16
2. In light of your significant fresh-start goodwill and
intangible
assets, please tell us and revise future filings to disclose
whether
your actual results of operations are consistent with those
projected
in your fresh start valuation.
Quarterly Financial Information - Page 26
3. In future filings please include all the disclosures required
by
Item 302 of Regulation S-K.
Financial Statements
Consolidated Statements of Operations, page F-5
4. In future filings please break-out the material components of
"Interest expense and other expense, net" on the face of the
Consolidated Statements of Operations or in a footnote. Please
note
that interest income and interest expense should be stated as
separate line items on the face of the Consolidated Statements of
Operations. Additionally, items representing more than one
percent
of total interest income should be stated as separate line items.
Refer to Rules 5-03 and 9-04 of Regulation S-X.
Note 2 - Significant Accounting Policies
Revenue Recognition, page F-14
5. We note the general criteria you apply for product revenue
recognition purposes. We also see on page 6 that you sell products
through "electronic manufacturing service companies". Please
revise
future filings to disclose the terms of sales and revenue
recognition
through electronic manufacturing service companies. Refer to SAB
104
and FAS 48 as necessary.
6. Revise future filings to describe the nature, terms and extent
of
post shipment obligations and customer acceptance protocols. Tell
us
how these matters are considered in your revenue practices and
show
us that your application is appropriate under SAB 104. To the
extent
these considerations vary based on product, market or other
factor,
please be specific.
Note 4 - Fresh-Start Accounting, page F-24
7. We note that you recorded goodwill of $99.8 million and other
intangibles of $24.9 upon the adoption of fresh start accounting.
Tell us and expand future filings, in the footnotes and in
management`s discussion and analysis of financial condition and
results of operations, to disclose the significant assumptions
used
to determine the $95 million reorganization value, the intangible
assets value and related goodwill. Please expand to describe in
more detail disclosures about estimated revenues, operating
expenses
and cash flows and the discount rates and other significant
assumptions applied. Describe assumptions about anticipated
conditions that are expected to be different from current
conditions
and your recent operating history.
8. As a related matter, we see on pages F-14, F-24, and F-33 that
you
engaged the services of an independent third party to perform a
valuation analysis of your estimated reorganization equity value
and
intangible assets for purposes of fresh-start accounting
allocations.
Please note that references to an independent expert will require
you
to include the expert`s consent in any registration statement you
file. See Item 601(b) of Regulation S-K. In future filings, we
will
not object if you delete the reference and attribute the ultimate
responsibility of the valuation analysis to management.
Note 18 - Restructuring and Other Related Charges, page F-45
9. We see your restructuring charge disclosures. However, in
future
filings present in tabular format the roll forward of your
restructuring charges and accruals pursuant to paragraph 20(b)(2)
of
SFAS 146. The tabular analysis should be a reconciliation of the
beginning and ending liability balances showing separately the
changes during the period attributable to costs incurred and
charged
to expense, costs paid or otherwise settled, and any adjustments
to
the liability with an explanation of the reason(s).
10. As related matter, expand MD&A in future filings to present
detailed disclosures about expected and actual cost savings from
restructuring activities. Refer to the disclosure guidance from
SAB
Topic 5-P.
Note 25 - Goodwill and Intangibles, page F-50
11. Please tell us and disclose in future filings when the annual
goodwill impairment test for 2004 was performed, the results of
the
test, and the number of reporting units used in the impairment
test
in accordance with FAS 142.
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities Act
of
1933 and that they have provided all information investors require
for an informed investment 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.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
? should the Commission or the staff, acting pursuant to
delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
? the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
? the company may not assert staff comments and the declaration
of
effectiveness 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 connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Patrick Enunwaonye at (202) 551-3645 or in
his
absence, Lynn Dicker at (202) 551-3616, if you have questions
regarding comments on the financial statements and related
matters.
Please contact Jay Mumford at (202) 551-3637 or me at (202) 551-
3617
with any other questions.
Sincerely,
Russell Mancuso
Branch Chief
cc: John F. Della Grotta, Esq.
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Timothy J. Donnelly
DDi Corp.
June 14, 2005
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