VIA FACSIMILE AND U.S. MAIL
February 10, 2006
Daniel P. Gorey
Chief Financial Officer
Quixote Corporation
35 East Wacker Drive
Chicago, Illinois 60601
RE: Form 10-K for Fiscal Year Ended June 30, 2005
Form 10-Q for Fiscal Quarter Ended September 30, 2005
File No. 1-8123
Dear Mr. Gorey:
We have reviewed your filing 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 JUNE 30, 2005
General
1. Where a comment below requests additional disclosures or other
revisions, please show us in your response what the revisions will
look like. These revisions should be included in your future
filings,
including your interim filings where appropriate.
Item 3. Legal Proceedings, Page 10
2. Because you have separated the BEDINGER V. THE MILLS CORP.
issue
from your assertion as to materiality, it is unclear whether you
are
indicating that it is reasonably possible that the injury case
could
be material. We also note no further disclosures regarding this
case.
Please provide us with a comprehensive description of the
underlying
facts, and explain your view as to merit. Tell us whether your
insurance company has accepted full responsibility. In addition,
notwithstanding your views as to merit, tell us whether it is
reasonably possible that this could have a material impact on your
financial condition, operations, or liquidity.
Liquidity and Capital Resources, page 18
Off-Balance Sheet Arrangements and Contractual Obligations, page
19
3. Please revise your table of contractual cash obligations to
include
estimated interest payments on your debt and planned funding of
pension benefit obligations. Because the table is aimed at
increasing
transparency of cash flow, we believe these payments should be
included in the table. Please also disclose any assumptions you
made
to derive these amounts. At a minimum interest payments should be
disclosed in a note to the table. Please refer to note 46 of SEC
Release 33-8350.
Financial Statements
Note 14 - Guarantees, Commitments and Contingent Liabilities, page
46
Product Warranty Liability, page 47
4. We note that you had substantial expenditures related to
product
warranty liabilities in 2005. We also note that you had a
significant
downward adjustment to the provision for the year. Please explain
the
details of these payments and the related product(s) and the
analysis
supporting the decrease in the provision. Tell us how you recorded
the
reduction in the accrual. Provide us with the amount of warranty
expenditures from 7/1/2005 through the date of your response.
Legal, page 47
5. You indicate that the amount of liability, if any, arising from
legal actions should not have a material effect on the Company`s
results of operations, financial condition or cash flows. However,
as
noted above, because you separated the BEDINGER V. THE MILLS CORP.
issue from your assertion as to materiality, on page 10, it is
unclear
whether you are including that case in your materiality assertion.
Please advise regarding this and the other information requested
above.
Note 16, Industry Segments, page 48
6. Your reportable segments are based on the similarity of
products
and are aggregations of smaller operating units. Financial
information
is regularly evaluated in determining resource allocation and
assessing performance based on operating income and other measures
of
the units. In order for us to better understand your segment
disclosures, please identify your operating segments and provide
the
operating income for each year presented. Such information should
be
derived (or directly provided) from your internal management
reports.
We realize that we asked you about this subject a little over four
years ago however we note that you have made certain acquisitions
in
the subsequent years which have impacted your operations
significantly. You may also continue to acquire other businesses,
as
noted on page 20.
Form 10-Q for the Period Ended September 30, 2005
Other Commitments, page 13
7. Please tell us more about the settlement with the Sellers of
Peek
Traffic. Specifically:
- - Tell us the underlying reasons for the claim;
- - Tell us when the issues surrounding this claim originated. In
other
words, provide us with a timeline of events;
- - Tell us the gross total legal expenses associated with this
claim;
- - Tell us the gross total cash settlement paid;
- - We note that you netted the gain in SG&A. Tell us what
consideration
you gave to this classification.
Item 4. Controls and Procedures, page 22
8. Please continue to update the progress of the remediation of
your
material control weakness. We assume that it will eventually
represent
a reportable change in internal control over financial reporting.
ITEM 1. Legal Proceedings, page 24
9. Tell us more about the complaint filed against the sellers of
UST.
Specifically:
- - Explain in better detail the underlying reasons for the claim;
- - Explain the basis for your claim amount;
- - Explain the OEM agreement and the basis for their claim against
you;
- - Describe the impact that this issue has had on your ongoing
operations;
- - Tell us whether it is reasonably possible that the claim against
you
could be material.
* * * *
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 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 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 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.
You may contact Ernest Greene, Staff Accountant, at (202)
551-
3733, or the undersigned at (202) 551-3689, if you have questions
regarding comments on the financial statements and related
matters.
Sincerely,
John Hartz
Senior Assistant
Chief Accountant
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Mr. Daniel P. Gorey
February 10, 2006
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE