June 9, 2006
Mr. Lee E. Beckelman
Chief Financial Officer, Hanover Compressor Co.
12001 North Houston Rosslyn
Houston, TX 77086
Re: Hanover Compressor Company;
Hanover Compression Limited Partnership;
Hanover Equipment Trust 2001A;
Hanover Equipment Trust 2001B
Form 10-K for the fiscal year ended December 31, 2005
File Nos. 1-13071; 1-31934; 333-75814; 333-75818
Dear Mr. Beckelman:
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 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.
General
1. Where appropriate, please address the following comments as
they
relate to the Hanover Compression LP, Hanover Equipment Trust
2001A
and Hanover Equipment Trust 2001B filings.
Item 9A. Controls and Procedures, page 59
2. We note your disclosure that your "principal executive officer
and
principal financial officer believe that [your] disclosure
controls
and procedures were effective to ensure that material information
was
accumulated and communicated to [your] management, including
[your]
principal executive officer and principal financial officer, as
appropriate to assure that the information has been properly
recorded,
processed, summarized and reported and to allow timely decisions
regarding disclosure." We note that this is a condensed
definition as
defined by Rule 13a-15(e) and 15d-15(e). In future filings,
please
fully disclose the definitions of controls and procedures, or
alternatively, you may simply state that your controls and
procedures
are effective.
Consolidated Statements of Cash Flows, page F-6
3. Please tell us where you are classifying the proceeds from your
sale of used leasing equipment.
Note 1 - The Company, Business and Significant Accounting
Policies,
page F-9
4. We note your discussion, both here and on page 7, of your run-
time
guarantees. Please tell us how you have accounted for these run-
time
guarantees and, if these are effectively warranties of your
equipment,
what consideration you have given to providing the warranty
disclosures as indicated in paragraph 14 of FIN 45.
Note 1 - Revenue Recognition, page F-10
5. We read that you account for revenues from compressor,
production
and processing equipment fabrication using the percentage-of-
completion method. Please help us to understand how you
determined
that the percentage-of-completion method was appropriate. In this
regard, please explain to us your rights and the rights of the
buyer
while this equipment is in-progress. Refer to paragraph 22 of SOP
81-
1. Also tell us how you determined that this method was
appropriate
for equipment that takes less than a year to produce. We note
your
statement that these projects take between three and thirty-six
months.
Note 11 - Debt, page F-23
9.0% Senior notes due 2014 and 8.625% Senior notes due 2010, page
F-26
6. Please provide the appropriate disclosures as required by Rule
3-
10(e) of Regulation S-X or tell us why you believe these
disclosures
are not required.
4.75% Convertible Senior Notes due 2014, page F-26
4.75% Convertible Senior Notes due 2008, page F-27
7.25% Convertible Subordinated Notes due 2029, page F-28
7. We note that all of the above mentioned notes are convertible
at
fixed prices subject to adjustments in certain events. Please
tell us
what these events are and what consideration you have given to
SFAS
133 and EITF 00-19 regarding the possibility of embedded
derivatives.
Hanover Compression Limited Partnership
8. In future filings please use Commission file number 1-31934 on
the
cover of your Hanover Compression Limited Partnership filings.
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. Please provide us with a supplemental response
letter that keys your responses to our comments and provides any
requested supplemental information. Detailed letters greatly
facilitate our review. Please file your supplemental 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 and
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.
If you have any questions regarding these comments, please direct
them
to Mindy Hooker, Staff Accountant, at (202) 551-3732, Jennifer
Thompson, Staff Accountant, at (202)551-3737 or to the undersigned
at
(202) 551-3768.
Sincerely,
John Cash
Branch Chief
Mr. Lee E. Beckelman
Hanover Compressor Co.
June 9, 2006
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE