January 9, 2020
B. Judd Hartman
General Counsel
PPD, Inc.
929 North Front Street
Wilmington, North Carolina 28401
Re: PPD, Inc.
Amendment No. 1 to Draft Registration Statement on Form S-1
Submitted December 20, 2019
CIK No. 0001793294
Dear Mr. Hartman:
We have reviewed your amended draft registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested information
and submitting an
amended registration statement on EDGAR. If you do not believe our comments
apply to your
facts and circumstances or do not believe an amendment is appropriate, please
tell us why in
your response.
After reviewing the information you provide in response to these comments
and your
amended registration statement, we may have additional comments.
Amendment No. 1 to Draft Registration Statement Filed December 20, 2019
Summary Consolidated Financial Information, page 13
1. We note your response to comment 2. Please provide us with the types of
items
comprising the other credit agreement adjustments on page 17. Because
Credit Adjusted
EBITDA removes the effect on net income due to certain accounting
pronouncements and
you state that you are presenting Credit Adjusted EBITDA as a performance
measure,
such a measure appears to be a tailored Non-GAAP financial measure that
could
violate Rule 100(b) of Regulation G. Therefore, we believe you should
omit this measure
from the presentation. Refer to Compliance and Disclosure Interpretations
on Non-GAAP
Financial Measures (updated April 4, 2018), Question 100.04.
B. Judd Hartman
FirstName LastNameB. Judd Hartman
PPD, Inc.
Comapany2020
January 9, NamePPD, Inc.
Page 2
January 9, 2020 Page 2
FirstName LastName
2. We note your response to comment 3. Referencing footnote (c) on page
18, cash-based
compensation under the Long-Term Incentive Plan is a normal, recurring
cash operating
expense of the company and should not be included as an adjustment to
calculate
Adjusted EBITDA or Adjusted Net Income. Please remove this adjustment
for all periods
presented. Refer to Rule 100(b) of Regulation G and Compliance and
Disclosure
Interpretations on Non-GAAP Financial Measures (revised April 4,
2018), Question
100.01.
3. We note your response to comment 3. Referencing footnote (c) on page
18, please
provide us with a breakdown of the amount of long-term incentive
compensation under
the LTIP versus the amount related to the special cash bonus
compensation paid to option
holders for each period presented. Please reconcile the amount of the
adjustment related
to the special cash bonus to compensation expense disclosed in Note 4
for fiscal years
2016 and 2017 resulting from the November 2016 declaration and payment
of a special
cash dividend to option holders (Special Cash Bonuses). If possible,
please quantify the
portion of the Special Cash Bonus Compensation adjustment that was
paid in cash and the
portion that is non-cash.
Consolidated Statements of Stockholders' Deficit and Redeemable NonControlling
Interest, page
F-8
4. We have read your response to comment number 11 regarding
recapitalization transaction
costs. We note your references to SAB Topics 1.B [sic] and 5.T [sic]
as well as
Deloitte's A Roadmap to Accounting for Business Combinations, Section
6.7.1
Transaction Costs in a Recapitalization. It appears the cited
references relate to fact
patterns in which expenses are incurred by new investors on behalf of
new investors. In
those cases, we agree that such expenses would not be reflected as an
expense of the
company and a contribution of capital pursuant to SAB Topics 1:B and
5:T. However, the
referenced transaction costs represent expenses incurred by the
company that benefit new
investors. Because such expenses were incurred by the company, we are
unclear the basis
for excluding company incurred expenses that have no future benefit
from the
determination of company net income. Please revise or advise of your
accounting
basis supporting the direct charge to accumulated deficit of company
incurred transaction
costs.
Recapitalization Investment Portfolio Liability, page F-23
5. We have read your response to comment no 13. We note your reference to
the definition
of contingent consideration provided in the ASC Master Glossary and
your
acknowledgment that it was written in the context of business
combination transactions in
which guidance for contingent consideration is provided in ASC 805.
You further state
that you believe it would be appropriate to analogize to the
accounting alternatives
acceptable in practice for contingent consideration associated with
asset acquisitions even
though this transaction was not an asset acquisition. In this regard,
you provide your
B. Judd Hartman
PPD, Inc.
January 9, 2020
Page 3
assessment of the different accounting frameworks utilized in practice
yet it is unclear
when such practices emerged or which view represents predominant
practice. Please
provide a summary of your research regarding the number of participants
adopting
View A or B and whether such accounting was adopted after the issuance of
SFAS 141R.
Lastly, you imply that the liability associated with the Investment
Portfolio meets the
criteria in ASC 450-20-25-2, however the accounting for subsequent
changes in the
liability recorded under ASC 450 would be reflected as an expense in the
statement of
income as opposed to a direct entry to accumulated deficit. Given your
preceding
analogies to ASC 450 and 805 as well as your adoption of the fair value
option for such
underlying investments, please explain why the subsequent accounting for
changes in the
liability was not classified via analogy to ASC 805-30-35-1.b.
Note 7. Other Investments, page F-39
6. We note your responses to comments 13 and 14 regarding the
Recapitalization Investment
Portfolio. Your response indicates that "...one could infer that the
ultimate settlement of
the Recapitalization Investment Portfolio Liability would be triggered by
distributions
received from, or the disposal of, investments in Auven and venBio, the
fair value of the
investments accrues to the Pre-Closing Shareholders." Please provide
disclosure in this
footnote to describe how you are economically impacted by the Additional
Recapitalization Consideration as well as identification of the specific
investments that
give rise to the economic impact.
You may contact Robert Shapiro at (202) 551-3273 or Jim Allegretto at
(202) 551-3849
if you have questions regarding comments on the financial statements and
related
matters. Please contact Daniel Morris at (202) 551-3314 or Mara Ransom at (202)
551-3264
with any other questions.
Sincerely,
FirstName LastNameB. Judd Hartman
Division of
Corporation Finance
Comapany NamePPD, Inc.
Office of Trade &
Services
January 9, 2020 Page 3
cc: William Brentani, Esq.
FirstName LastName