Room 4561
June 17, 2005
Robert L. Howard-Anderson
President and Chief Executive Officer
Occam Networks, Inc.
77 Robin Hill Road
Santa Barbara, CA 93117
Re: Occam Networks, Inc.
Registration Statement on Form S-1
Filed May 19, 2005
File No. 333-125061
Form 10-K for the year ended December 31, 2004
File No. 0-30741
Dear Mr. Carl:
We have limited our review of the above-referenced Form S-1
registration statement to the terms of the rights offering and to
your pending confidential treatment application. We also
conducted a
limited review of your financial statements in your Form 10-K
relating to revenue recognition matters and have the following
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 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 welcome any questions you may have about our comments or on any
other aspect of our review and look forward to working with you.
Feel free to call us at the telephone numbers listed at the end of
this letter.
General
1. We are in receipt of your request for confidential treatment of
Exhibits 10.67, 10.69 and 10.70 filed in the December 31, 2004
Form
10-K. We will provide comments on the confidential treatment
request, if any, in a separate letter. Please note that the
confidential treatment request must be processed before
effectiveness
of the registration statement.
Cover Page
2. Please ensure that you refer to the separate resale
distribution.
Similarly, the cover page to the resale prospectus should contain
a
corresponding reference to this rights offering.
3. Your disclosure indicates that there is no minimum subscription
requirement for the offering to proceed yet in calculating the
estimated net proceeds, you are assuming the exercise of all of
the
subscription rights. What is the basis for this assumption since
it
appears that there can be no assurances that any of the rights
will
be sold? Please replace the phrase "assuming the exercise of all
subscription rights" in the second paragraph with language
referring
to the maximum number of shares and offering proceeds, and state
that
there is no assurance that all or any of those securities will be
sold.
Questions and Answers About the Rights Offering
Will the issuance of the Series A-2 preferred stock affect my
common
stock in any other ways?
4. The table on page 2 provides examples of the effect of the
preferred liquidation preference and participation rights on
distributions among Occam stockholders. Please tell us the basis
for
setting the starting range at $20 million even as an illustrative
example. In this regard, we note that the balance sheet indicates
a
net capital in the range of $7 million.
How will Occam use the proceeds of the rights offering?
5. We note your statement on page 3 that you do not currently have
"any budgeted uses for any portion of the proceeds" of the
offering,
if any. Please be advised that to the extent you have made
preliminary decisions about how to allocate any proceeds generated
by
the rights offering, you should state the approximate amount to be
used for any such purposes identified.
How did Occam determine the purchase price for the Series A-2
preferred stock?
6. Your disclosure states on page 3 that "an outside financial
advisor" participated on behalf of Occam in the negotiations and
deliberations in setting the purchase price and terms of the
Series
A-2 preferred stock. This statement is ambiguous as to what the
role
of the outside financial advisor was in this regard. Disclose the
company`s views concerning the significance to investors in the
rights offering of the participation of the financial advisor in
the
negotiations and deliberations. We may have further comment.
Form 10-K for the Year Ended December 31, 2004
Notes to Financial Statements
Note 2. Summary of Significant Accounting Policies
Warranty, page F-11
7. We note that you warranty your products for periods up to five
years and record an estimate of warranty costs when revenue is
recognized. Describe the impact the yield problems and unusually
high repair costs on certain new products during 2004 had on your
ability to make reasonable estimates of the amount of your
warranty
liability. Tell us what information you relied upon to make
estimates in light of the 2004 problems. Additionally, tell us
how
these problems impacted revenue recognition. See paragraph 25 of
SFAS No. 5.
Revenue Recognition, page F-11
8. It appears that your arrangements contain multiple deliverables
including hardware, software, training, post-sales technical
support
and maintenance, however, your disclosure does not address how you
account for each of these deliverables. Indicate how you identify
deliverables and how you allocate the fee to each deliverable.
Indicate how you determine fair value (i.e., VSOE) for each
deliverable. In this regard, tell us what consideration you gave
to
disclosing these policies within your footnotes. See SAB Topic 13
(B)(1).
9. You state that you recognize revenue once services have been
rendered. Please clarify and disclose the nature and type of
services to which you are referring including the authoritative
literature relied upon to support your accounting. In addition,
you
disclose that you provide customer support and software
maintenance
for one year at no cost. Clearly indicate how you have accounted
for
revenue earned from services provided at no cost including
references
to authoritative literature. See paragraph 59 of SOP 97-2 or SAB
Topic 13 (a)(3)(c), as appropriate. That is, your disclosure
should
indicate how you assign revenue to those services and how that
revenue is recognized. Also, indicate whether you offer extended
warranty programs that would be subject to FTB 90-1.
10. We note that you entered into manufacturing and technology
licensing agreements with Tellabs Petaluma (Tellabs) in March
2005.
Tell us your revenue recognition policy on sales made through
Tellabs. Indicate how you confirm that an end-user has purchased
your product and the product has been shipped. Describe the type
of
evidence obtained from Tellabs and the timeliness of this
evidence.
Tell us what consideration you gave to including any of the
foregoing
revenue recognition policies in your notes to financial
statements.
11. Tell us whether there are any rights of return held by the
end-
user. If so, tell us how your accounting complies with paragraph
6
of SFAS 48. Tell us what consideration you gave to disclosing
these
rights within your revenue recognition policy footnote.
As appropriate, please amend your filing and respond to the
comments relating to the Form 10-K within 10 business days or tell
us
when you will provide us with a response. You may with 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 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.
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 this action 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 a 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 Rule 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.
Any questions should be directed to Maryse Mills-Apenteng at
(202) 551-3457 or, in her absence, the undersigned at (202) 551-
3462.
If you still require further assistance, you may contact Barbara
C.
Jacobs, Assistant Director, at (202)-551-3730.
Sincerely,
Mark P. Shuman
Branch Chief - Legal
cc: Via facsimile: 650-493-9300
Lance E. Brady, Esq.
Wilson Sonsini Goodrich & Rosati, PC
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Robert L. Howard-Anderson
Occam Networks, Inc.
June 17, 2005
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