SIMPSON THACHER & BARTLETT LLP
425 LEXINGTON AVENUE
NEW YORK, N.Y. 10017-3954
(212) 455-2000
FACSIMILE (212) 455-2502
DIRECT DIAL NUMBER E-MAIL ADDRESS
212-455-3189 ETOLLEY@STBLAW.COM
January 23, 2006
VIA DHL AND EDGAR
Re: Dresser-Rand Group Inc. - Registration
Statement on Form S-4
Eduardo Aleman
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Mail Stop 6010
Washington, DC 20549
Dear Mr. Aleman:
On behalf of Dresser-Rand Group Inc. (the "Company") and
Dresser-Rand Company, Dresser-Rand LLC, Dresser-Rand Power LLC, Dresser-Rand
Global Services L.L.C. and D-R Steam LLC (the "Guarantors" and, together with
the Company, the "Registrants"), we are hereby transmitting for filing a
Registration Statement on Form S-4 (the "S-4 Registration Statement").
As mentioned in the letter dated May 16, 2005 from Edward P. Tolley
III to Mr. Eduardo Aleman at the Securities and Exchange Commission (the
"Commission") withdrawing the registration statement on Form S-4 (File No.
333-122757), we are also responding to those remaining comments set forth in the
comment letter of the staff of the Commission (the "Staff") dated March 11, 2005
(the "comment letter") relating to the Form S-4 that were not previously
addressed during the Staff's review of the Company's Registration Statement on
Form S-1, File No.: 333-124963 (the "S-1 Registration Statement"). The
Registrant cleared all the non-S-4 specific comments in connection with the S-1
and are hereby responding to the remaining 20 comments that are S-4 specific.
Securities and Exchange Commission
January 23, 2006
Page 2
The filing fee for the attached S-4 Registration Statement in the
amount of $39,590.00 was previously paid in connection with the Form S-4
initially filed with the Commission on February 11, 2005 and which was withdrawn
on May 16, 2005.
The Registrants are registering the exchange offer on the S-4
Registration Statement in reliance on the position of the Securities and
Exchange Commission (the "Commission") enunciated in Exxon Capital Holdings
Corporation, available May 13, 1988 ("Exxon Capital"), Morgan Stanley & Co.,
Incorporated, available June 5, 1991, regarding resales and Shearman & Sterling,
available July 2, 1993 (with respect to the participation of broker-dealers.)
The Registrants have further authorized us to include the following
representations to the Staff of the Commission:
The Registrants have not entered into any arrangement or understanding
with any person to distribute the Exchange Notes and, to the best of each
of the Registrants' information and belief without independent
investigation, each person participating in the exchange offers is
acquiring the Exchange Notes in its ordinary course of business and is not
engaged in, does not intend to engage in, and has no arrangement or
understanding with any person to participate in the distribution of the
Exchange Notes. In this regard, the Registrants will disclose to each
person participating in the exchange offers that if such person is
participating in the exchange offers for the purpose of distributing the
Exchange Notes, such person (i) could not rely on the staff position
enunciated in Exxon Capital or interpretive letters to similar effect and
(ii) must comply with registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction. Each
Registrant acknowledges that such a secondary resale transaction by such
person participating in the exchange offers for the purpose of
distributing the Exchange Notes should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 of Regulation S-K.
No broker-dealer has entered into any arrangement or understanding with
the Registrants or an affiliate of the Registrants to distribute the
Exchange Notes. The Registrants will disclose to each person participating
in the exchange offers (through the exchange offer prospectus) that any
broker-dealer who receives the exchange notes for its own account pursuant
to the applicable exchange offer may be a statutory underwriter and must
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of those exchange notes. The Registrants will
also include in the letter of transmittal to be executed by each holder
participating in the exchange offers that each broker-dealer that receives
the Exchange Notes for its own account pursuant to the applicable exchange
offer must acknowledge that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of those
Exchange Notes and that by so acknowledging and delivering a prospectus,
the broker-dealer will not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act.
Securities and Exchange Commission
January 23, 2006
Page 3
For your convenience, the numbered paragraphs of this letter
correspond to the numbered paragraphs of the comment letter. Page references in
the text of this letter correspond to the pages of the S-4 Registration
Statement.
FORM S-4
1. Disclose on the prospectus cover page the guarantees that you have
registered.
The Registrants have revised the disclosure on the prospectus cover page
to add the registered guarantees in response to the Staff's comment.
MARKET AND INDUSTRY DATA - PAGE ii
2. We note your disclosure that you believe the estimates cited throughout
the prospectus to be reliable as of the respective date of each report.
Please update the prospectus to disclose whether you know or have reason
to believe that the estimates are no longer reliable as of the date of the
prospectus. If you question the accuracy or completeness of estimates made
by third parties or you know, or have reason to believe, the estimates are
no longer reliable, you should omit them from the prospectus as investors
are entitled to rely on statements made in the prospectus.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
3. Please tell us whether the cited sources:
- make their reports publicly available,
- received compensation from you for preparation of the
statistics,
- prepared the statistics for use in the registration statement,
or
- have consented to your use of their statistics in your
document.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
PROSPECTUS SUMMARY - PAGE 1
4. Please supplementally tell us the basis for your belief that the company
has the "largest installed base in the world" of the classes of equipment
it manufactures.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
Securities and Exchange Commission
January 23, 2006
Page 4
5. If you elect to highlight your competitive strengths and strategy in your
summary, provide equally prominent and descriptive disclosure of
competitive weaknesses and risks.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
6. Under the subheading "The Exchange Notes" please disclose, if true, that
the old notes represent the only currently outstanding senior subordinated
indebtedness of the issuer, and that the exchange notes will be equal in
priority with any old notes that are not exchanged in the exchange offer,
The Registrants have added the requested disclosure on page 11 in response
to the Staff's comment.
7. Please provide us a complete list of countries in which you operate and
have customers.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement.
VISIBILITY - PAGE 5
8. If you elect to include this information in your summary, you should
clarify and balance the disclosure with a summary of cancellation rights
and any adverse experience with cancellation.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
PROCEDURES FOR TENDERING - PAGE 9
9. We note from the first bullet point that affiliates might be participating
in the offer. Tell us the extent of affiliate participation in the
transaction.
The Registrants have no reason to believe that affiliates will be
participating in the offer. The Registrants have removed the reference to
affiliate participation from the last bullet on page 7 in response to the
Staff's comment.
SUMMARY HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA - PAGE 15
10. We note your disclosures of "Adjustments to expenses due to change in
ownership" and "Unusual and other items included in EBITDA" in the Summary
Historical and Pro Forma Combined Financial Data. The nature and intended
purpose and use of these adjustments is not clear and these amounts could
be confusing to investors.
Securities and Exchange Commission
January 23, 2006
Page 5
Please revise your disclosure to remove these amounts. In addition, tell
us how the adjustments due to change in ownership are reflected in the pro
forma financial information on pages 40-45.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
11. In footnote (6) you note a deficiency on a pro forma basis of $32.4
million for the year ended December 31, 2003. Please note that this
deficiency does not agree to the corresponding amount presented on Exhibit
12.1: Computation of Ratio of Earnings to Fixed Charges. Please revise or
advise us of the reason for the difference.
The Registrants inform the Staff that the deficiency on a pro forma basis
for the year ended December 31, 2003 should have been $33.3 million to
agree with the corresponding amount presented on Exhibit 12.1. The
Registrants have also revised the disclosure on page 14 and Exhibit 12.1
to replace the pro forma numbers for the year ended December 31, 2003 with
pro forma numbers for the year ended December 31, 2004.
RISK FACTORS - PAGE 20
RISKS RELATED TO THE EXCHANGE NOTES - PAGE 20
12. Add a risk factor highlighting the risk that the company may be unable to
purchase the notes upon the occurrence of a "change of control" event as
specified in "Description of the Notes" on page 114 and that note holders
may not be repaid in full.
The Registrants have expanded the disclosure on page 24 in response to the
Staff's comment by adding the requested risk factor entitled "The issuer
may be unable to purchase the exchange notes upon a change of control."
13. Please add a risk factor to explain the risks created by the legal
limitations on the ability of beneficial owners to exercise the rights of
note holders under the Global Note.
The Registrants have expanded the disclosure on page 24 in response to the
Staff's comment by adding the requested risk factor entitled "Because the
exchange notes are registered in the name of a single registered holder,
beneficial owners of notes held in book-entry form may have difficulties
exercising their rights as noteholders."
THE ISSUER AND CERTAIN OF THE GUARANTORS ARE HOLDING COMPANIES ... - PAGE 21
14. In an appropriate section of your document, quantify the amount of cash
that the subsidiaries currently could distribute to the note issuer after
considering all
Securities and Exchange Commission
January 23, 2006
Page 6
applicable transfer constraints. Also demonstrate the issuer's ability to
satisfy obligations under the note given the current cash available and
priority of the notes.
The Registrants have revised the disclosure on page 70 to indicate that
the Registrants are not currently aware of any restrictions on the ability
of the subsidiaries to distribute cash to the issuer. The Registrants
believe that the covenant compliance section on page 71, showing a fixed
charge coverage ratio of 3.8:1, demonstrates the issuer's ability to
satisfy obligations under the notes and its other obligations, regardless
of priority, in response to the Staff's comment.
THE GUARANTEES MAY NOT BE ENFORCEABLE - PAGE 23
15. Please reconcile this risk factor with your obligation under Regulation
S-K Item 601(b)(5) to file an opinion regarding whether the guarantees are
binding obligations. If counsel cannot opine on this matter, please say so
explicitly, and explain why counsel cannot opine.
The Registrants respectfully submit to the Staff that counsel's Exhibit 5
opinion is already reconciled with the referenced risk factor. Counsel's
opinion currently covers the binding nature of the guarantees but
qualifies the opinion in the next succeeding paragraph by reference to the
effects of fraudulent conveyance laws (among other equitable remedies)
relating to or affecting creditors' rights generally. As the Staff can
appreciate, and has appreciated in countless debt offerings and their
related Exhibit 5 opinions, a court of equity has the power to invoke
these kinds of laws and remedies. It is for this reason that issuers
include risk factors like the referenced risk factor and issuers' counsels
are compelled to add such a qualification whenever an enforceability
opinion is rendered. As the Staff also is aware, counsel would be unable
to opine as to enforceability of the guarantees in the absence of the
existing qualifications.
16. We note references to the future tense in the last paragraph. Please
confirm that the guarantees will be outstanding upon the issuance of the
exchange notes.
The Registrants confirm that the guarantees will be outstanding upon the
issuance of the exchange notes. The Registrants have revised the
disclosure on page 23 in response to the Staff's comment.
RISKS RELATED TO OUR BUSINESS - PAGE 25
WE HAVE IDENTIFIED MATERIAL WEAKNESSES IN OUR INTERNAL CONTROLS ... - PAGE 25
17. In an appropriate section of your document, disclose in greater detail the
nature of each of the material weaknesses and reportable conditions
identified in your disclosure. In this regard, disclose the specific steps
that the company has taken to remediate each of the material weaknesses.
Securities and Exchange Commission
January 23, 2006
Page 7
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
FAILURE TO MAINTAIN A SAFETY PERFORMANCE THAT IS ACCEPTABLE TO OUR CLIENTS
.... - PAGE 29
18. With a view toward disclosure of past non-compliance, please tell us
supplementally whether within the past two years the company has been
removed from a client's approved suppliers database for failing to meet
the client's safety performance requirements.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement.
THE TRANSACTIONS - PAGE 34
19. Revise the introductory language to clarify, if true, that you have
included all material disclosure. Also note that you may not qualify your
disclosure by reference to any agreement not filed as an exhibit;
therefore, please disclose that the agreements related to the
qualification are filed as exhibits.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
THE ACQUISITION
20. We note that as part of the equity purchase agreement with Ingersoll-Rand,
Ingersoll-Rand was to deliver to Dresser-Rand Holdings, by February 18,
2005, various estimate statements to determine the post-closing purchase
price adjustment. Please update us supplementally, and if necessary revise
to disclose, whether the post-purchase price adjustments have been
determined.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
CORPORATE STRUCTURE
21. Please include an organizational chart illustrating the structure of
Dresser-Rand Group, Inc. and its affiliated companies. The chart should
include the jurisdiction of incorporation for each entity, identify the
guarantors and identify which subsidiaries are operating companies.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
Securities and Exchange Commission
January 23, 2006
Page 8
THE EQUITY PURCHASE AGREEMENT - PAGE 34
22. Describe and quantify the amount of matters subject to dispute mentioned
in the last paragraph.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
CAPITALIZATION - PAGE 39
23. Please revise to remove the caption relating to cash and cash equivalents
from your presentation of capitalization.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
UNAUDITED PRO FORMA FINANCIAL INFORMATION - PAGE 40
UNAUDITED PRO FORMA COMBINED BALANCE SHEET - PAGE 43
24. We note that more than $425 million of the purchase price was allocated to
goodwill. Please revise to disclose details of the valuation methodology
and significant assumptions used to allocate the purchase price to the
acquired assets and liabilities, including goodwill and each of the
identifiable intangible assets. In addition, disclosure should be provided
here and in the financial statements of the factors that contributed to
the purchase price that resulted in the recognition of significant amounts
of goodwill as required by paragraph 51.b. of SFAS 141.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
25. We note that in management's preliminary assessment of fair value of
identifiable intangible assets trade names, trademarks and customer
relationships were assigned lives of 40 years. Please disclose the
valuation methodology and significant assumptions and clarify the basis
for the useful lives of each of the identifiable intangible assets.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
26. Please revise to clarify how the adjustments in Notes (2)(c) and (d) on
page 41 were determined. If these amounts are net of several adjustments
separately disclose each of the pro forma adjustments on the face of the
pro forma statements of operations or
Securities and Exchange Commission
January 23, 2006
Page 9
in the footnotes. In addition, disclose details of how the interest
expense on letters of credit was determined in Note (2)(f) on page 42.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
27. Disclose how the fair value of the assets and liabilities acquired was
determined. In addition, provide more details of the significant
estimates, assumptions and methodologies used to determine management's
preliminary assessment of the fair values of identifiable intangible
assets. Please reconcile the amount of these assets of $487,253 in the
last paragraph on page 44 with the amount in the table.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
28. Revise to disclose details of the other liabilities assumed in Note (2)(a)
on page 44. In addition, clarify in Note 2(f) how the amount of the
accumulated benefit obligation was determined.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
29. Please tell us whether there are any significant additional costs from the
Transition Services Agreement, Supply Agreement or any other agreements
discussed on page 91 and indicate how any additional estimated costs are
reflected in the pro forma information.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement.
SELECTED HISTORICAL COMBINED FINANCIAL INFORMATION - PAGE 46
30. Please revise the headers of the selected historical combined financial
information to clearly distinguish the data derived from audited financial
statements from the data derived from unaudited financial statements.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
31. We note from page 18 that you have unusual and other items affecting your
net income. If material, please revise to describe or cross-reference to a
discussion of significant matters that affect the comparability of the
financial data presented. Refer to Instruction 2 to Item 301 of Regulation
S-K.
Securities and Exchange Commission
January 23, 2006
Page 10
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - PAGE 49
32. Please revise to provide the disclosure required by Item 305 of Regulation
S-K.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
RESULTS OF OPERATIONS - PAGE 52
33. If material, when citing more than one factor in explaining a change in a
financial statement line item, the amounts of the individual factors cited
should be separately quantified, analyzed and discussed unless it is
impractical to do so. For example, you discuss that cost of goods sold as
a percentage of revenue decreased by 10.5% due to three factors. Quantify
the portion or the decrease due to each factor and provide an analysis and
discussion where necessary.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
34. Revise your disclosure to provide a complete discussion and analysis,
avoiding vague references such as "legal issue," "the impact of
geopolitical factors," "improved operating efficiencies," "productivity
initiative," "price realization," "buyouts," "revamps" and "force majeure
event."
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
NINE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2003 - PAGE 52
35. Please revise to provide more details of the reasons for the significant
decrease in new units revenue and discuss whether this is a trend. Please
quantify and discuss each significant factor that contributed to the
decrease.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement, as
applicable, for the updated periods presented.
Securities and Exchange Commission
January 23, 2006
Page 11
36. Disclose more details of the reversal of the reserve for a legal issue and
the one-time items discussed on page 53. In addition, provide details of
the reserve for obsolete and slow moving inventory and indicate whether
these items will be discarded or sold. The impact of the sale of any of
these items should be discussed in Management's Discussion and Analysis in
future periods.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement, as
applicable, for the updated periods presented.
37. Please revise to provide more details of why there has not been a
significant change in aftermarket parts and services revenues, including a
quantified discussion of sales price and volume, if appropriate, and
whether the revenue trend is indicative of future expected trends.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement, as
applicable, for the updated periods presented.
38. Expand the carryover paragraph on the top of page 54 to clarify how the
revenue from your aftermarket segment could affect the profit for your new
units segment.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement, as
applicable, for the updated periods presented.
YEAR ENDED DECEMBER 31, 2003 COMPARED TO THE YEAR ENDED DECEMBER 31, 2002 - PAGE
54
39. We note your disclosure that cost of goods sold as a percentage of
revenues increased partially due to costs incurred related to
restructuring initiatives in 2003. Please revise to quantify the
restructuring costs, to include a description of each of the exit
activities, to disclose the specific facts and circumstances leading to
each activity, and to clarify details of how each of the charges was
determined. In addition, the estimated or actual completion date of each
of the activities should also be indicated.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
40. Please revise Management's Discussion and Analysis to make quantified
disclosure about anticipated and actual cost savings derived from your
restructuring efforts during the periods presented. Your disclosures
should fully conform to the guidance
Securities and Exchange Commission
January 23, 2006
Page 12
set forth in the Question under "Disclosures" to SAB Topic 5-P. Refer to
the next to last paragraph in the referenced Question.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
LIQUIDITY AND CAPITAL RESOURCES - PAGE 59
41. We note your belief that cash flow from operations, available cash and
available borrowings under the new senior secured credit facility will be
adequate to meet liquidity needs for the next twelve months. Please revise
to also discuss liquidity on a long-term basis beyond twelve months.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
42. Please disclose details of the reasons for the significant changes in
balance sheet amounts each period. For example, the significant decrease
in inventories and increase in loans due from affiliates should be
addressed.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
GENERAL
43. Please disclose details of the reasons for the significant changes in
balance sheet amounts each period. For example, the significant decrease
in inventories and increase in loans due from affiliates should be
addressed.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
COVENANT COMPLIANCE - PAGE 60
44. Please revise your disclosures to discuss the actual or reasonably likely
effects of compliance or non-compliance with the covenants on your
financial condition and liquidity. Refer to Question 10 of "Frequently
Asked Questions Regarding the Use of Non-GAAP Financial Measures"
available on our Web site at www.sec.gov.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
Securities and Exchange Commission
January 23, 2006
Page 13
INDUSTRY OVERVIEW - PAGE 65
45. Disclose when the Clean Air Act was passed and why it is currently driving
increased use of compression.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
BUSINESS - PAGE 69
46. Please revise to disclose what percentage of your alliance-based approach
business is attributable to typical alliances where the company is either
the exclusive or preferred supplier of equipment and aftermarket parts and
services.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
47. We note your disclosure on page 68 that the demand for rotating equipment
solutions is tied primarily to cyclical oil and gas consumption. If
material, please revise to address the extent to which the business of
either of your segments is seasonal.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
48. Refer to the table on page 74. Please provide the three-year revenue
history by product category required by Regulation S-K Item 101(c)(1)(i).
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
PROPERTIES AND FACILITIES - PAGE 80
49. We note that you have nine "major" manufacturing plants outside the United
States, including in China. Please provide the disclosure required by Item
102 of Regulation S-K for your China plant or tell us why you believe such
disclosure is not required.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
Securities and Exchange Commission
January 23, 2006
Page 14
ENVIRONMENTAL AND GOVERNMENTAL REGULATION - PAGE 80
50. We note that from time to time the company receives notices from
governmental agencies contending that it is potentially liable for a
portion of the investigation and remediation costs and damages at third
party waste disposal sites. Please tell us supplementally whether you have
received any such notices for which Ingersoll-Rand will not be responsible
under the terms of the equity purchase agreement. Also confirm that no
proceedings or contemplated proceedings are required to be disclosed under
the guidelines of instruction 5 to Item 103 of Regulation S-K.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
MANAGEMENT - PAGE 82
DIRECTOR COMPENSATION - PAGE 84
51. Revise to describe any standard arrangements pursuant to which the
company's directors are compensated. This should include the amount of
compensation paid to each member of the board of directors, and any
additional amount payable for committee participation or special
assignments.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
EXECUTIVE COMPENSATION - PAGE 85
52. Please add compensation disclosure for the fiscal year just completed.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
EMPLOYMENT AGREEMENTS - PAGE 87
53. Please expand the discussion of the company's October 27, 2004 employment
agreement with Mr. Volpe to include the information required by Item
402(h)(2) of Regulation S-K.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
Securities and Exchange Commission
January 23, 2006
Page 15
DRESSER-RAND HOLDINGS - PAGE 87
54. Clarify the amounts that the directors and named executive officers
purchased and indicate the amount of profits or other proceeds they will
receive for each purchased interest will receive. Disclose any
restrictions on the ability of affiliates to receive distributions for the
units before the obligations under the notes are satisfied. Also, include
a discussion of the portion of your business that is conducted through the
entities those directors and officers purchased.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS - PAGE 90
55. Identify the individuals who beneficially own the shares held by the
entities named in the table.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
RELATED-PARTY TRANSACTIONS - PAGE 91
56. Clarify the relationship to you of the entities named in this section. For
example, we note reference to Dresser-Rand SA and Dresser, Inc.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
LICENSE AGREEMENT - PAGE 91
57. Please clarify the portion of your business derived from the intellectual
property licensed to Ingersoll-Rand.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
DRESSER NAME - PAGE 91
58. Please clarify why Dresser, Inc. had the rights to the Dresser name.
Didn't Dresser Industries Inc. have rights to the name?
Securities and Exchange Commission
January 23, 2006
Page 16
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
59. Clarify when you paid the $5 million.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
THE EXCHANGE OFFER - PAGE 96
EXPIRATION DATE; EXTENSIONS, AMENDMENTS - PAGE 98
60. We note your reservation of the right to amend the terms of the offer.
Please revise to indicate that, in the event of a material change in the
offer, including the waiver of a material condition, you will extend the
offer period if necessary so that at least five business days remain in
the offer following notice of the material change.
The Registrants have revised the disclosure on page 119 in response to the
Staff's comment.
61. Please confirm supplementally that the offer will be open for at least 20
full business days to ensure compliance with Rule 14e-1(a). Further,
please confirm that the expiration date will be included in the final
prospectus disseminated to security holders and filed pursuant to the
applicable provisions of Rule 424.
The Registrants confirm that the offer will be open for at least 20 full
business days, and that the expiration date will be included in the final
prospectus disseminated to security holders and filed pursuant to Rule
424.
62. We note that the "expiration date" as used in the prospectus means 12:00
a.m. midnight, but the "expiration date" as used in the exhibits, like the
Letter of Transmittal, indicates that the exchange offer will expire at
5:00 p.m. As represented in the exhibits the offer could be open for less
than 20 full business days due to the 5:00 p.m. expiration time instead of
an expiration time of midnight on what ultimately may be the twentieth
business day following commencement. See Question and Answer Eight in
Exchange Act Release No. 16623 (March 5, 1980). Please confirm that the
offer will be open at least through midnight on the twentieth business
day. See Rule 14d-1(g)(3). Reconcile the exhibits to the disclosure in the
prospectus.
The Registrants have revised the prospectus and exhibits to conform the
expiration date to 4:00 p.m. in response to the Staff's comment. In
accordance with Rule 14d-1(g)(3), the Registrants confirm that the offer
will be open at least through midnight on the 20th business day (i.e., the
21st business day).
Securities and Exchange Commission
January 23, 2006
Page 17
63. Refer to the last paragraph under this subcaption. Please advise us as to
how oral notice of any extension is reasonably calculated to reach
registered holders of the outstanding notes or otherwise satisfies the
requirements of Rule 14e-1(d).
The Registrants have revised the disclosure on page 119 in response to the
Staff's comment.
ACCEPTANCE OF THE EXCHANGE NOTES - PAGE 100
64. Please reconcile the first sentence of this section with your obligation
under rule 14(e)-l(c) to issue the new notes promptly after expiration of
the offer.
The Registrants respectfully advise the Staff that the prospectus provides
for prompt issuance of the new notes after the expiration of the offer.
CONSEQUENCES OF FAILURE TO EXCHANGE - PAGE 105
65. Tell us about the transfer restrictions mentioned in the second paragraph.
Also tell us the basis for your belief that you can include such
disclosure in your document by reference to a private offering memorandum.
The Registrants have revised the disclosure on page 126 in response to the
Staff's comment.
NO PERSONAL LIABILITY - PAGE 132
66. Tell us why the waiver is required. Absent the waiver, why would liability
exist? Also:
- analyze whether this "consideration for the issuance of the
notes" is consistent with the Exxon Capital line of no-action
letters, and
- disclose in this section the Commission's position on
indemnification as stated in Regulation S-K Item 512(h).
The Registrants inform the Staff that they do not believe the waiver is a
requirement in debt securities offerings and that absent the waiver they
do not believe liability would necessarily exist. However, they believe
such a waiver is a customary provision included in such offerings to
emphasize that such other parties are not obligors on, or guarantors of,
the notes.
The Registrants have revised the disclosure on page 153 in response to the
second bullet of the Staff's comment to add a brief reference to the
Commission's position on indemnification as stated in Regulation S-K
512(h), which is also included in the Undertakings section of Part II of
the S-4 Registration Statement.
With regard to the first bullet of the Staff's comment, the Registrants
respectfully inform the Staff that they believe that because the waiver is
such a minor provision in
Securities and Exchange Commission
January 23, 2006
Page 18
the indenture, that its inclusion or exclusion has no bearing on the Exxon
Capital line of no-action letters.
AMENDMENT - PAGE 134
67. Clarify what you mean in paragraph (1) by the phrase "whose Holders must
consent to an amendment, supplement or waiver." What is the purpose of the
clause? In what circumstances can you reduce the principal amount?
The Registrants respectfully advise the Staff that the phrase "whose
Holders must consent to an amendment, supplement or waiver" is a provision
commonly found in indentures meaning that the applicable voting threshold
of bondholders required to provide consents for an amendment, supplement
or waiver cannot be reduced except with the consent of the Company and
each bondholder affected.
WHERE YOU CAN FIND MORE INFORMATION - PAGE 164
68. Clarify who the Parent Guarantor and Celanese are.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
FINANCIAL STATEMENTS - PAGE F-1
GENERAL
69. Please update the financial statements as required by Rule 3-12 of
Regulation S-X.
The Registrants have updated the financial statements, and will continue
to update them as necessary, to comply with Rule 3-12 of Regulation S-X at
the effective date of the S-4 Registration Statement.
70. Include an updated accountant's consent with all amendments to the filing.
The Registrants have included, and will include, an updated accountant's
consent with all amendments to the filing.
71. We note that the debentures being registered and exchanged are liabilities
of the Dresser-Rand Group Inc. Please explain supplementally why the
financial statements presented are those of Dresser-Rand Company.
Additionally, explain the relationship between the Dresser-Rand Group Inc.
and the Dresser-Rand Company.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement.
72. Please revise to include the selected quarterly financial data required by
Item 302 of Regulation S-K.
Securities and Exchange Commission
January 23, 2006
Page 19
The Registrants have revised the disclosure on page 50 in response to the
Staff's comment.
COMBINED STATEMENT OF INCOME - PAGE F-3
73. The disclosures on page F-10 appear to indicate that you generate revenues
from both the sale of products and the provision of services. If the
products and service revenues are material please revise to comply with
Rules 5-03(b)(1) and (2) of Regulation S-X by separately presenting
revenues from sale of products, revenues from services, cost of sales and
cost of services.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
COMBINED STATEMENT OF CASH FLOWS - PAGE F-5
74. We note from page 18 that you recorded a $3.3 million obsolete and slow
moving inventory adjustment during the year ended December 31, 2003.
Please explain supplementally why this is not presented as an adjustment
to arrive at net cash provided by operating activities in the combined
statement of cash flows.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement.
NOTE 1. BUSINESS ACTIVITIES AND BASIS OF PRESENTATION - PAGE F-8
75. Disclose more details of the expense allocations each period, including
the amounts allocated and the significant assumptions and methodologies
used in the allocations.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - PAGE F-8
INTANGIBLE ASSETS - PAGE F-9
76. Please revise to disclose when the annual goodwill impairment test was
performed and the number of reporting units used in the impairment test in
accordance with FAS 142.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
Securities and Exchange Commission
January 23, 2006
Page 20
REVENUE RECOGNITION - PAGE F-10
77. We note from page 52 that you purchase equipment on behalf of your
customers. Please revise to disclose your revenue recognition policy for
sales of this type of equipment, including whether you recognize the
revenue on the gross or net basis. Supplementally tell us the accounting
literature you relied upon and why your accounting policy is in accordance
with GAAP.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
NOTE 5. RESTRUCTURING - PAGE F-13
78. Please revise to disclose for each reportable segment, the total amount of
costs expected to be incurred in connection with the restructuring, the
amount incurred in the period, and the cumulative amount incurred to date,
net of any adjustments to the liability.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
79. The disclosures on page 18 appear to indicate that you recorded
restructuring charges of $11,696,000 during 2003. Please revise to
disclose the following:
a. the nature of the charges and how these amounts were
determined;
b. the facts and circumstances leading to the expected activity
and the expected completion date;
c. for each major type of cost associated with the activity
disclose the total amount expected to be incurred, the amount
incurred in the period, the cumulative amount incurred to date
and a reconciliation of the beginning and ending liability
balances; and
d. the line item(s) in the combined statement of income in which
the costs are aggregated.
Refer to the guidance set forth in the Question under "Disclosures" to SAB
Topic 5-P and SFAS 146.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement and the requested
disclosure has been added to the S-4 Registration Statement.
Securities and Exchange Commission
January 23, 2006
Page 21
NOTE 7. INTANGIBLE ASSETS AND GOODWILL - PAGE F-14
80. We note that you have indefinite-lived intangible assets for trademarks of
$34,935,000 as of December 31, 2003. Please tell us in detail about the
nature of your trademarks. Explain to us why you believe that these
intangible assets have indefinite lives. Please be specific in your
response.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement.
NOTE 19. SEGMENT INFORMATION - PAGE F-27
81. We note that the geographic information has been separated into five
components, North America, Latin America, Europe, Asia-Pacific and Middle
East, Africa. Please confirm supplementally that no revenues or assets
attributed to any individual foreign country are material. If material,
please revise to disclose separately. Refer to SFAS 131 paragraph 38.
The Company has previously responded to this comment in connection with
the Staff's review of the S-1 Registration Statement.
NOTE 21. SUPPLEMENTAL COMBINING CONDENSED FINANCIAL INFORMATION - PAGE F-29
82. Please revise to disclose that the guarantees are full and unconditional,
joint and several and that each of the subsidiary guarantors are 100%
owned or provide separate financial statements for each guarantor as
required by Rule 3-10(f) of Regulation S-X.
The Registrants have revised the disclosure on pages F-45 and F-67 in
response to the Staff's comment.
83. Revise the discussion on page F-29 to clarify which subsidiaries are
guarantors and which are Non-guarantors.
The Registrants have revised the disclosure on pages F-45 and F-67 in
response to the Staff's comment.
SIGNATURES
84. Tell us who performs functions similar to a board of directors for each
issuer of the guarantees.
The Registrants inform the Staff that the Company's board of directors
performs the functions similar to a board of directors of each of the
Guarantors for the following reasons: (i) the Company is the sole member
of each of Dresser-Rand LLC, Dresser-Rand Power LLC and D-R Steam LLC,
(ii) the Company is a partner and sole member of the only other partner
(Dresser-Rand LLC) of Dresser-Rand Company and
Securities and Exchange Commission
January 23, 2006
Page 22
(iii) Dresser-Rand Company (discussed in (ii)) is the sole member of
Dresser-Rand Global Services, L.L.C.
* * * * * * *
Please call me (212-455-3189) or Lori E. Scher (212-455-2447) of my firm
if you wish to discuss our responses to the comment letter.
Very truly yours,
/s/ Edward P. Tolley III
-------------------------
Edward P. Tolley III