February 20, 2020
Anthony M. Jabbour
Chief Executive Officer
Star Intermediate I, Inc.
103 John F. Kennedy Parkway
Short Hills, New Jersey 07078
Re: Star Intermediate I, Inc.
Draft Registration Statement on Form S-1
Submitted on January 24, 2020
CIK No. 0001799208
Dear Mr. Jabbour :
We have reviewed your 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
either submitting
an amended draft registration statement or publicly filing your 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 draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form S-1
Non-GAAP Financial Measures, page 16
1. We refer to adjustments made to arrive at non-GAAP measures that exclude
the effects or
purchase accounting including but not limited to deferred revenue,
incremental
amortization and other incremental or reduced expenses. Please tell us
in more detail why
management believes that performance measures excluding the effects of
purchase
accounting is useful to an investor. Please tell us how you considered
Question 100.04 of
the Non-GAAP Compliance and Disclosure Interpretations and Rule 100(b)
of Regulation
G.
2. We note that your calculation of EBITDA contains adjustments for items
other than
interest, taxes, depreciation and amortization. Please revise to ensure
that measures
Anthony M. Jabbour
FirstName LastNameAnthony M. Jabbour
Star Intermediate I, Inc.
Comapany NameStar Intermediate I, Inc.
February 20, 2020
Page 2
February 20, 2020 Page 2
FirstName LastName
calculated differently from EBITDA are not characterized as EBITDA.
Reference is
made to Question 103.01 of the Division's Compliance and Disclosure
Interpretations for
Non-GAAP Financial Measures.
Risk Factors, page 21
3. Please tell us what consideration you have given to providing
disclosure regarding the
risks you may face due to the realignment of your management and
operating
infrastructure. In this regard, we note your disclosure on pages 3 and
100 that as a result of
the realignment approximately 95% of executives and 65% of members of
the broader
leadership team are new or in a new role.
4. Please discuss the potential effect that cash and cash equivalents
held by your foreign
subsidiaries could have on your company's liquidity, if any. In this
regard, we note your
disclosure on page 87 that $41.2 million of your $100.6 million cash
and cash equivalents
are held in your China and India operations and that you intend to
reinvest indefinitely all
earnings form your China and India subsidiaries.
5. Please tell us what consideration you have given to providing risk
factor disclosure
regarding the potential effect in your cash and liquidity position if
you are unable to
redeem all your Series A Preferred Stock with the net proceeds of this
offering. In this
regard, we note your disclosure that "[t]he Preferred Equity is
entitled to cumulative
dividend[s]" and that "[u]npaid dividends are accumulated and
compounded quarterly
regardless of whether they are declared."
Use of Proceeds, page 45
6. Please specify the amount of Cumulative Series A Preferred Stock that
you will redeem
using the net proceeds of the offering.
Unaudited Pro Forma Condensed Combined Financial Data, page 54
7. Please revise to present historical primary and fully diluted per
share data based on net
income and primary and fully diluted pro forma per share data based on
net income
together with the number of shares used to compute such per share
data. Refer to Rule
11-02(b)(7) or Regulation S-X.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 66
8. When there are more than one causes to explain a fluctuation from
period to period, please
revise your discussion to quantify each cause. Refer to paragraph
(a)(3) of Item 303 of
Regulation S-K.
Anthony M. Jabbour
FirstName LastNameAnthony M. Jabbour
Star Intermediate I, Inc.
Comapany NameStar Intermediate I, Inc.
February 20, 2020
February 20, 2020 Page 3
Page 3
FirstName LastName
Other Income (Expense), Net, page 78
9. Please revise to discuss the Predecessor settlement charge of $85.8
million in the period
from January 1, 2019 to February 7, 2019.
Critical Accounting Policies and Estimates, page 92
10. Estimates used to determine share-based compensation are often
considered critical by
companies going public. In particular, estimating the fair value of
the underlying shares
can be highly complex and subjective because the shares are not
publicly traded. Please
tell us your consideration of providing critical accounting policy
disclosure to include:
the methods that management used to determine the fair value of your
shares and the
nature of the material assumptions involved;
the extent to which the estimates are considered highly complex and
subjective; and
the estimates will not be necessary to determine the fair value of
new awards once the
underlying shares begin trading.
Business, page 98
11. In order to better understand your client contracts, please disclose
the material terms of
such contracts and how the contracts vary between the Finance & Risk
Solutions and
Sales & Marketing segments. Please ensure that your disclosure
includes the length of
such contracts (ex: annual or multi-year), renewal terms, pricing
terms and termination
provisions. Please also quantify, to the extent possible, the
percentage of your client
contracts that are fixed price subscription contracts versus per-item
priced contracts.
12. In an appropriate place in this section, please disclose the
percentage of your clients that
have contracts for only one solution versus the percentage that have
contracts for multiple
solutions.
13. We note your disclosure that "[y]our Sales & Marketing solutions
combine firmographic,
personal contact, intent and non-traditional, or alternative, data."
Please explain what you
mean by "non-traditional" or "alternative" data.
Our Transformation, page 99
14. You state on page 100 that the number of multi-year contracts
increased by 88% during
the nine months ended September 30, 2019. Please disclose the percent
of contracts that
are multi-year contracts so that investors can better understand the
significance of the
increase in multi-year contracts.
Our Market Opportunity, page 103
15. It appears that you view your market opportunity in terms of a total
addressable market
(``TAM ). Please further discuss the nature of your TAM to provide
additional context
for investors. For example, define the markets included in your TAM,
and explain how
you define "big data and analytics software."
Anthony M. Jabbour
Star Intermediate I, Inc.
February 20, 2020
Page 4
Our Solutions, page 104
16. You present case studies of clients that have utilized your services.
Please confirm that the
clients have consented to these statements and to their case studies
being used in your
registration statement. Please also disclose the time periods covered
by the case studies.
Our Competitive Strengths, page 108
17. Please discuss how you define "revenue retention rate" as discussed
here and throughout
your registration statement.
Unaudited Condensed Consolidated Financial Statements of Star Intermediate I,
Inc.
Note 5. Notes Payable and Indebtedness, page F-15
18. Reference is made to your discussion of retired Predecessor debt on
page F-18. Please tell
us whether an expense was recorded for the make-whole payment in the
Predecessor or
Successor periods and if not, your basis for not recording an expense.
In addition, tell us
if any other expenses relating to liabilities recorded as part of the
acquisition were
excluded from the predecessor or successor income statements and your
basis for such
treatment.
Note 16. Segment Information, page F-39
19. We note that your presentation of segment revenue contemplates
deferred revenue
purchase accounting adjustments. Please tell us how this presentation
complies with ASC
280-10-50.
General
20. Please define terms at first use. For example, define the terms
"Paydex score" and "MAP."
You may contact Ta Tanisha Meadows, Staff Accountant, at 202-551-3322
or Adam
Phippen, Staff Accountant, at 202-551-3336, if you have questions regarding
comments on the
financial statements and related matters. Please contact Jennifer L pez, Staff
Attorney, at 202-
551-3792 or Erin Jaskot, Legal Branch Chief, at 202-551-3442 with any other
questions.
FirstName LastNameAnthony M. Jabbour Sincerely,
Comapany NameStar Intermediate I, Inc.
Division of
Corporation Finance
February 20, 2020 Page 4 Office of Trade
& Services
FirstName LastName