VSE Corporation
2550 Huntington Avenue
Alexandria, VA 22303
August 23, 2007
VIA EDGAR, FACSIMILE AND FEDERAL EXPRESS
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John Cash
Accounting Branch Chief
Division of Corporation Finance
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549-7010
Re: VSE Corporation
Form 10-K for the fiscal year ended December 31, 2006 filed March 5, 2007
Form 10-Q for the fiscal quarter ended June 30, 2007 filed August 1, 2007
Form 8-K filed June 8, 2007
Dear Mr. Cash:
This letter responds to your letter dated July 27, 2007 which provided the
staff's comments on the subject filings. For your convenience, the comments are
reproduced below followed by our responses.
Form 10-K for the Fiscal Year Ended December 31, 2006
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Management's Discussion and Analysis, page 16
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Results of Operations - Segment Operating Results, page 27
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1. In note 15 to the financial statements you state that "the company
evaluates segment performance based on consolidated revenues and
profits and losses from operations before income taxes." However, in
your discussion of segment operating results, you analyze your results
down to the gross profit line and exclude a discussion of the changes
in selling, general & administrative expenses and interest income or
expense. In this regard, please revise future filing to include a
discussion of the line items that comprise your segments profits and
losses from operations before income taxes.
Response: VSE's Form 10-Q for the quarter ended June 30, 2007 filed August 1,
2007, included a discussion of the line items that comprise our segment
profits from operations before income taxes. All future filings will also
include this discussion.
Item 9A - Controls and Procedures, page 55
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2. We note that your disclosure controls and procedures are "effective."
However, your disclosure does not provide the full definition of
"disclosure controls and procedures" as defined in Exchange Act Rule
13a-15(e). Please confirm to us that your disclosure controls and
procedures are also effective with respect to controls and procedures
designed to ensure that information required to be disclosed by you in
the reports that you file or submit under the Act are accumulated and
communicated to your management, including your principal executive and
principal financial officers, or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosure.
In addition, please revise your future filing to state the full
definition of disclosure controls and procedures. Alternatively, you
may simply state that your disclosure controls and procedures are
effective or ineffective. This comment also applies to Item 4 of your
Form 10-Q for the interim period ended March 31, 2007.
Response: For the Form 10-K for the fiscal year ended December 31, 2006 and the
Form 10-Q for the quarter ended March 31, 2007, our disclosure controls and
procedures are effective with respect to controls and procedures designed to
ensure that information required to be disclosed by VSE in the reports that we
file or submit under the Exchange Act are accumulated and communicated to our
management, including our principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure. VSE's
Form 10-Q for the quarter ended June 30, 2007 filed August 1, 2007, includes the
full definition of "disclosure controls and procedures" as defined in Exchange
Act Rule 13a-15(e). Our future Forms 10-K and 10-Q filings will include the
full definition of "disclosure controls and procedures" as defined in Exchange
Act Rule 13a-15(e).
Exhibit 31 - Section 302 Certifications
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3. We note the following changes to the content of your section 302
certifications:
* the introduction which identifies the certifying individual,
includes that individual's title, which is not required as the
certifying officer is signing the certificate in a personal capacity;
and
* paragraphs 2, 3, 4, and 5 replace the word "report" with "annual
report" (or "quarterly report" in the case of your Form 10-Q for the
Fiscal Quarter Ended March 31, 2007).
In your future annual and quarterly filings, please provide your
certifications using the exact language as provided in Item 601(b)(31)(i)
of regulation S-K.
Response: The section 302 certifications of our Form 10-Q for the quarter ended
June 30, 2007 filed August 1, 2007, included the exact language as provided in
Item 601(b)(31)(i) of regulation S-K. The titles of the certifying officers
have been removed from the certification. Paragraphs 2, 3, 4 and 5 have the
word "report" instead of "quarterly report."
The section 302 certifications for our future Forms 10-K and 10-Q filings will
include the exact language as provided in Item 601(b)(31)(i) of Regulation S-K.
Form 8-K Filed June 8, 2007
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4. Please demonstrate to us how you determined that the audited financial
statements and pro forma financial statements were not required to be filed
under Item 9.01 of Form 8-K for your acquisition on June 4, 2007 of
Integrated Concepts and Research Corporation.
Response: After additional review, we have reconfirmed that financial statements
and pro forma financial statements are not required under Item 9.01 of Form 8-K
for our acquisition on June 4, 2007 of Integrated Concepts and Research
Corporation ("ICRC"). Our conclusion and related disclosure in our Form 8-K
filed on June 8, 2007 that such financial statements were not required was based
on the financial statements of ICRC for its fiscal year ended March 31, 2007.
Such analysis reflects that the acquisition of ICRC did not satisfy any of the
three conditions that would require the filing of financial statements. ICRC's
pretax income from continuing operations of $2.363 million for the fiscal year
ended March 31, 2007 is less than 20% of VSE's pretax income of $12.489 million
for the fiscal year ended December 31, 2006. VSE's investment in ICRC of $17.343
million is less than 20% of VSE's total assets of $98.535 million as of
December 31, 2006. ICRC's total assets of $8.859 million as of March 31, 2007
are less than 20% of VSE's total assets of $98.535 million as of December 31,
2006.
VSE understands and acknowledges that:
* the company is responsible for the adequacy and accuracy of the
disclosure in its filings;
* staff comments or changes to the disclosures made 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.
If you have any questions about the above responses, please call me at
703-329-4263.
Sincerely,
VSE Corporation
/s/ Thomas R. Loftus
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Thomas R. Loftus
Executive Vice President and
Chief Financial Officer