Mail Stop 3561
August 10, 2005
Via US Mail and Facsimile
Mr. Sam L. Henry
Chief Financial Officer
Elamex, S.A. DE C.V.
1800 Northwestern Drive
El Paso, TX 79912
Re: Elamex, S.A. DE C.V.
Form 10-K for the fiscal year ended December 31,
2004
Form 10-Q for the quarterly period ended March 31,
2005
File No. 000-27992
Dear Mr. Henry:
We have reviewed the above referenced filings and have the
following comments. We have limited our review to only your
financial statements and related disclosures and do not intend to
expand our review to other portions of your document. 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 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.
Form 10-K for the fiscal year ended December 31, 2004
Financial Statements
Consolidated Statements of Operations and Comprehensive Loss, page
24
1. We note the equity in losses of unconsolidated affiliates shown
here as well as the net losses for Qualcore disclosed in Note 1.
Please tell us what consideration you gave to providing separate
audited financial statements of subsidiaries not consolidated as
set
forth in Rule 3-09 of Regulation S-X. In your response, please
show
us how you determined the subsidiaries were not significant.
Note 1. Organization and Basis of Presentation, page 28
2. Notwithstanding the above comment, please provide audited
summarized information as to assets, liabilities and results of
operations of Qualcore or tell us why the information is not
required
to be audited. Reference is made to APB 18 and Rule 4-08(g) of
Regulation S-X.
3. We note you have a 50.1% investment in Qualcore that you
account
for under the equity method. We also note Qualcore is jointly
managed by both you and GE de Mexico which owns the remaining
interest in this joint venture company. Please explain to us how
you
determined you do not have a controlling financial interest in
Qualcore. Include in your response the form of your 50.1%
interest
and the pertinent factors you considered in determining the
accounting for your interest under the equity method.
Note 10. Stockholders` Equity, page 38
4. We note the issuance of common stock that may be redeemed at
the
option of the holder. We also note that management believes the
stock is permanent capital because from an economic standpoint, a
stockholder would not exercise the option to redeem the stock.
Rule
5-02.28 of Regulation S-X requires securities with redemption
features that are not solely within the control of the issuer to
be
classified outside of permanent equity. Redeemable stock may
still
be presented in the mezzanine for instruments not within the scope
of
SFAS 150. Please tell us what consideration you gave to Rule 5-
02.28
and EITF D-98 or revise. Further, please clarify if the carrying
amount has not been adjusted to its redemption amount because it
is
not probable that the security will become redeemable; please
expand
your disclosure accordingly.
Please send us your response to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter keying your responses to our
comments
and provide any requested supplemental information. Please file
your
response letter 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 filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 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.
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 filing or in
response to our comments on your filing.
You may contact Donna Di Silvio at (202) 551-3202 or, in her
absence, the undersigned at (202) 551-3841 with any other
questions.
Sincerely,
Michael Moran
Branch Chief
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Mr. Sam L. Henry
Elamex, S.A. DE C.V.
August 10, 2005
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