Mail Stop 6010
January 3, 2006
Paul E. Berger, M.D.
President and Chief Executive Officer
NightHawk Radiology Holdings, Inc.
250 Northwest Boulevard, Suite 202
Coeur d`Alene, Idaho 83814
Re: NightHawk Radiology Holdings, Inc.
Registration Statement on Form S-1, Amendment 3
Filed December 22, 2005
File No. 333-128820
Dear Dr. Berger:
We have reviewed your filing 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 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 S-1
NightHawk Radiology Holdings Inc. and Subsidiaries Financial
Statements
Note 1. The Company, page F-9
Recapitalization, page F-9
1. Please refer to your responses to prior comment 50 in your
letter
dated November 8, 2005 and comment 18 in your letter dated
November
25, 2005. To assist us in understanding your responses and the
information obtained during our conference call with Doug Barton,
Deloitte & Touche National Office, San Francisco, on December 22,
2005, please address the following as it relates to your EITF 88-
16
analogy:
a. Please confirm the structure of the Board of Managers for
Nighthawk
Radiology Services LLC ("LLC"). Specifically state the number of
seats on the Board of Managers and who appoints each Manager.
b. We note in your response to prior comment 18 that under Section
4
of the LLC Agreement a Manager can be removed from the Board for
cause. Please tell us how the term "cause" is defined in the LLC
Agreement.
c. Please confirm that the voting interests of LLC reside only
with
the Board of Managers and that the percentage ownership of
membership
units is only indicative of economic interests. Additionally,
please
confirm that no LLC votes or decisions are made based on economic
interests.
d. We note that the Managers of LLC had the authority to conduct
and
manage the usual, customary and ordinary course of business of the
LLC
subject to any exceptions or limitations provided for in the LLC
Agreement. Please identify the exceptions and limitations
specified
in the LLC Agreement. Please explain to us why these exceptions
and
limitations do not, in your analogy to EITF 88-16, represent a
legal
or external restriction on the Management subset of the NEWCO
control
group`s "ability to exercise the normal rights and privileges
associated with voting control." Please refer to the definition
of
"unilateral control" in EITF 88-16.
e. Please confirm the structure of the Board of Directors for
Nighthawk Radiology Holdings, Inc. ("Holdings"). Specifically
state
the number of directors on the Board, who can appoint a director,
how
long each director serves, and any conditions that exist for the
removal of a director from the Board.
f. Please clarify if the voting interest in Holdings is based on
fully-diluted ownership interest in Holdings or based on the Board
of
Directors.
g. In your response to the above questions please refer us to the
specific section(s) of the applicable agreements and provide us
with a
copy of the agreements.
2. Please clarify the following information as it relates to your
recapitalization transaction:
a. Your response to prior comment 50 suggests that Managers
contributed a 34 percent ownership interest in the LLC for
approximately 21 million shares of Holdings` common stock. Yet
after
the redemption of membership units of one member on January 2,
2004 it
appears that Managers contributed a 35.6 percent interest in the
LLC.
Please clarify whether Managers contributed a 34 percent interest
or a
35.6 percent interest in the LLC.
b. Please refer to your response to prior comment 18. Please
confirm
that the redeemable convertible preferred stock issued to Summit
Partners is convertible before it can be redeemed.
c. Your response to prior comment 50 suggests that Summit Partners
purchased Radiology Associates of Northern Idaho`s ("RANI")
ownership
interest in LLC. Please confirm that Holdings purchased RANI`s
interest in the LLC or advise us further. Tell us how NRS
Corporation`s ownership interest in the LLC disclosed on page F-9
relates to RANI`s ownership interest in the LLC.
d. Please explain to us why RANI`s economic interest was
disproportionate to its voting interest, i.e. representation on
the
LLC`s Board of Managers.
e. Your response to prior comment 50 states that "Based on
management`s analysis, there have never been any voting agreements
among any of the members of the limited liability company or
shareholders of Holdings with respect to the day-to-day operations
of
the Company." Please confirm that there were no voting agreements
among the members of the LLC or shareholders of Holdings regarding
any
non day-to-day or other infrequent operational matters.
* * *
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 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 Todd Sherman at (202) 551-3665 or Donald
Abbott
at (202) 551-3608 if you have questions regarding comments on the
financial statements and related matters. Please contact Greg
Belliston at (202) 551-3861 or me at (202) 551-3715 with any other
questions.
Sincerely,
Jeffrey Riedler
Assistant Director
cc: Patrick J. Schultheis, Esq.
Mark J. Handfelt, Esq.
Mark A. Callon, Esq.
Wilson Sonsini Goodrich & Rosati Professional Corporation
701 Fifth Avenue, Suite 5100
Seattle, Washington 98104
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Paul E. Berger, M.D.
NightHawk Radiology Holdings, Inc.
January 3, 2006
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