 |
Stephen
M. Davis
212.813.8804
SDavis@
goodwinprocter.com
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Goodwin
Procter LLP
Counselors
at Law
The
New York Times Building
620
Eighth Avenue
New
York, NY 10018
T:
212.813.8800
F:
212.355.3333
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VIA EDGAR AND
FEDEX
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Securities
and Exchange Commission
Division
of Corporation Finance
100
F Street, N.E.
Washington,
DC 20549
Attention: Mr.
Mark P. Shuman
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|
IntraLinks
Holdings, Inc.
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Registration
Statement on Form S-1
Filed
April 12, 2010
File
No. 333-165991
Dear Mr.
Shuman:
Amendment
No. 1 includes revisions updating certain information and in response to
the written comments received from the Staff of the Commission (the “Staff”) by letter
dated May 7, 2010 (the “Comment
Letter”). The Company’s responses to the Staff’s Comment
Letter are set forth below. For convenience, copies of Amendment
No. 1 marked to show changes from the Registration Statement filed on April
12, 2010 are also being provided to the examiners. Copies of this
letter and its attachments are being sent under separate cover to Matthew
Crispino of the Commission. The Company respectfully requests that
the Staff return to us all material supplementally provided by the Company once
the Staff has completed its review. The Staff’s comments are
reprinted below, followed by the Company’s responses. Page references
in response to the Staff’s comments correspond to the page numbers in the marked
copy of Amendment No. 1.
FORM S-1
General
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1.
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We will process your amendments
without price ranges. Since the price range you select will
affect disclosure in several sections of the filing, we will need
sufficient time to process your amendments once a price range is included
and the material information now appearing blank throughout the document
has been provided. Please understand that the effect of the
price range on disclosure throughout the document may cause us to raise
issues on areas not previously commented
on.
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Page
2
RESPONSE: The
Company acknowledges the Staff’s comment and understands that the Staff may have
additional comments and will need sufficient time to review and process an
amendment once an estimated price range is included. The Company is
also aware that it must file the pre-effective amendment prior to circulating
the prospectus. The Company will include a price range in a
subsequent amendment to the Registration Statement.
Prospectus
Summary
Overview, page
1
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2.
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It appears from your prospectus
disclosure that you intend to use a portion of the proceeds of this
offering to partially repay the debt that you incurred in connection with
the merger that you completed in 2007. Please revise the first
or second page of your summary discussion to highlight your outstanding
debt, the amount you intend to repay with proceeds from this offering, and
the portion of the funds raised from public investors you estimate will be
available to finance the expansion or improvement of your
business.
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on page 4 of Amendment No. 1. The
Company supplementally advises the Staff that, because the offering price
has not yet been determined, it is
unable to firmly estimate at this time the amount of the net proceeds
that will be available for general corporate purposes, such as to finance the
expansion or improvement of its business. However, the Company acknowledges the Staff’s
comment and will revise the disclosures in a future amendment to the
Registration Statement to the extent necessary once the estimated initial public
offering price has been determined.
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3.
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With respect to any third-party
statements in your prospectus, such as the market data attributed to
Gartner and IDC in the prospectus summary, please supplementally provide
us with support for such statements. To expedite our review,
please clearly mark each source to highlight the applicable portion or
section containing the information and cross-reference it to the
appropriate location in the prospectus. Also, supplementally
tell us whether the source of the data is publicly available and whether
you commissioned the referenced
sources.
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RESPONSE: In
response to the Staff’s comment, the Company is supplementally delivering to the
Staff via overnight courier a copy of the applicable supporting materials
relating to the industry and market data that are cited in the Registration
Statement. The Company hereby confirms that the third-party
statements cited on pages 2 and 78-80 of Amendment No. 1 are publicly available
either for a fee or paid subscription and were not prepared for the Company nor
did the Company commission or compensate any party for the preparation of the
cited reports and therefore no consents are filed as an exhibit to Amendment No.
1.
Page
3
The Offering, Page
5
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4.
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Please expand your discussion
under “Use of Proceeds” here and on page 28 to disclose the approximate
amount of proceeds that you will devote to reducing existing
indebtedness. In addition, please revise your disclosure on
page 28 to disclose the interest rate and maturity of the indebtedness to
be repaid. Refer to Item 504 of Regulation S-K and Instruction
4 thereto.
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on pages 5 and 31 of Amendment No.
1.
Summary Consolidated
Financial Data, page 6
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5.
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We note your presentation here
and throughout your filing, as well as the discussion of the results of
operations for “Combined” 2007 results in your MD&A. We
also note your disclosure that these “Combined” amounts do not include any
pro forma adjustments to give effect to the merger. Please tell
us how you concluded that this presentation was
appropriate. Please note that a supplemental presentation and
discussion based on “pro forma” financial information should be prepared
in accordance with Article 11 of Regulation S-X. In this
regard, all pro forma adjustments required by Article 11 should be
reflected in the presentation as opposed to merely combining information
for the pre- and post-merger periods. Also note that the
presentation requirements contained in Article 11 should be
provided.
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RESPONSE: In response to the Staff’s comment,
the Company has revised the presentation of its 2007 results throughout
Amendment No. 1 to include the pro forma adjustments required by Article 11 of
Regulation S-X, including pages 7-10, 36-37, 42-43, 55 and 63-66. The
unaudited pro forma consolidated statement of operations for the year ended
December 31, 2007 is based on the Company’s historical audited consolidated
statements of operations included in the Registration Statement adjusted to give
effect to the merger pursuant to which IntraLinks, Inc. became a wholly-owned
subsidiary of the Company (the “Merger”) as if the Merger had occurred on
January 1, 2007. The Company has also revised the Management’s
Discussion and Analysis of Financial Condition and Results of Operations
(“MD&A”) section to disclose the nature of each of the pro forma adjustments
to its 2007 consolidated statement of operations.
Page
4
Risk Factors, page
8
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6.
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We note your statement in the
introductory paragraph that: “The risks below are not the only ones we
face. Additional risks that we currently do not know about or
that we currently believe to be immaterial might also impair our
business.” Please revise to clarify that all material risks are
presented in this section. It is not appropriate to indicate
that additional risk factors not included in the prospectus exist or that
existing risks that management deem to be immaterial may, at a later date,
be material. All material risk factors should be described in
the prospectus and risks that are deemed to be immaterial should not be
referenced.
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on page 11 of Amendment No.
1.
Selected Consolidated
Financial Data, page 33
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7.
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Please revise to label the
Consolidated Financial Data as “Predecessor” and
“Successor.”
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RESPONSE: In response to the Staff’s comment, the
Company has revised the table within Selected Consolidated Financial Data, on
pages 37-38 of Amendment No. 1 to label each period as “Predecessor” and
“Successor” as appropriate.
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8.
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Please tell us how you
considered including pro forma earnings per share information giving
effect to the number of shares issued in this offering whose proceeds will
be used to extinguish a portion of your outstanding
debt. Please ensure that the footnotes to your pro forma
disclosures clearly support your calculations of both the numerator and
denominator used in your pro forma disclosures. We refer you to
SAB Topic 3.A by analogy and Rule 11-01(a)(8) and Rule 11-02(b)(7) of
Regulation S-X.
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RESPONSE: The Company respectfully acknowledges
the Staff’s comment and has revised the disclosure on pages 8 and 37 of
Amendment No. 1 to include
line items for “Unaudited as adjusted pro forma net loss per share- basic and
diluted” and “Shares used in computing unaudited as adjusted pro forma net loss
per share- basic and diluted”, to give effect to the additional issuance of
shares by the Company in this offering and the application of net proceeds of
this offering. The Company will complete
the pro forma earnings per share information that gives effect to the proposed
shares issued in the offering and anticipated proceeds therefrom in a future
amendment to the Registration Statement once that information is
known.
Page
5
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview, page
35
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9.
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We note that you have provided
disclosure in your results of operations discussion about the effect of
certain trends in your industry on your revenues. Please tell
us what consideration you gave to expanding your Management’s Discussion
overview to include a discussion of the most important matters on which
your management is focused in evaluating your financial condition and
operating performance in order to facilitate investors’ understanding of
the discussion and analysis of your financial statements. Refer
to Section III.A of Release No.
33-8350.
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RESPONSE: In response to the Staff’s comment, the
Company has added additional disclosure in the MD&A section on pages 39-40 and 56 of Amendment No.
1.
Key Metrics, page
36
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10.
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We note your disclosure that
“Adjusted EBITDA” permits investors to “gain an understanding of the
factors and trends affecting your ongoing cash earnings, from which
capital investments are made and debt is serviced.” It would
appear that you are trying to convey information regarding your liquidity
and cash generation. If this is intended as a liquidity
measure, please explain to us why you chose to reconcile the measure to
net income.
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RESPONSE: The Company supplementally advises the
Staff that its disclosure of Adjusted EBITDA is not intended as a liquidity
measure. Accordingly, in response to the Staff’s comment, the Company
has revised the disclosure on pages 10 and 40-41 of Amendment No.
1.
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11.
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Please revise to explain why
you believe “Adjusted EBITDA” allows investors to “make a more meaningful
comparison between [y]our core business operating results.” In this
regard, we note that you should specifically define any reference to “core
business operating results” as companies and investors may differ as to
what this term represents and how it should be
determined.
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on pages 40-41 of Amendment No.
1.
Page
6
Application of Critical
Accounting Policies
Stock-Based Compensation,
page 44
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12.
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Please tell us your proposed
IPO price, when you first initiated discussions with underwriters and when
the underwriters first communicated their estimated price range for your
stock.
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RESPONSE: The
Company advises the Staff that the offering price has not yet been determined
and, based on its discussions with the underwriters, it believes that it is
currently too difficult to firmly estimate what the proposed offering price will
ultimately be. Moreover, the Company believes that any price range
that the Company could provide the Staff at this time would be similarly subject
to an undue risk of material revision. The Company will provide the
Staff in a subsequent filing an
estimate of the range of the offering price for the shares together with the
other requested information.
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13.
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Consider revising your
disclosure to include the intrinsic value of all outstanding vested and
unvested options based on the difference between the estimated IPO price
and the exercise price of the options outstanding as of the most recent
balance sheet date included in the registration statement. In
view of the fair-value-based method of FASB ASC 718, disclosures
appropriate to fair value may be more applicable than disclosures
appropriate to intrinsic
value.
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on page 52
of Amendment No. 1. The
Company will further revise the disclosures in a future amendment to the
Registration Statement once the estimated initial public offering price has been
determined.
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14.
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We note that your disclosures
appear to attach significant meaning to the original valuations as of June
30, 2009. You appear to argue for the accuracy of these
valuations so it is unclear the amount of emphasis readers should place on
these as compared to the more recent retrospective valuations which
superseded the June 30, 2009 valuation. Please revise your
disclosures to limit your discussion of the original valuation to be more
consistent with their current function and to make it clear that you
believe the subsequent valuations are now a more appropriate measure of
fair value.
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on pages 49-51 of Amendment No.
1.
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15.
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We note your reference to a
third-party valuation firm on page 46. Please describe the
nature and extent of the third-party valuation firm’s involvement in your
determination of the fair value of your common stock. Please
see Question 141.02 of our Compliance and Disclosure Interpretations
related to Securities Act filings at http://www.sec.gov/divisions/corpfin/guidance/sasinterp.htm for
guidance.
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Page
7
RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on pages 49-50 of Amendment No.
1. The Company supplementally advises the Staff that it
engaged a third party valuation firm to provide analyses consistent with the
AICPA Practice Aid, Valuation
of Privately-Held-Company Equity Securities Issued as Compensation (the
“Practice Aid”) in connection with the Company’s June 30, 2009 and December 31,
2009 valuations. The Company relied on these valuations in
determining the fair value of its common stock in connection with the granting
of equity awards in 2009 and 2010. However, as disclosed in the
Registration Statement, the Company’s Board of Directors was ultimately
responsible for determining the fair value of its common stock for purposes of
equity awards made in 2009 and 2010. Accordingly, the Company has
removed references to the third-party valuation firm in Amendment No.
1.
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16.
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Please revise to disclose, in
greater detail, the significant factors considered and assumptions made in
determining the fair value of the underlying common stock. Your
disclosures should describe and quantify each of the significant
assumptions for each of the valuation periods and describe the basis for
those determinations. You should address the assumptions used
to determine your enterprise value (income and market approach) and the
assumptions used in your probability-weighted expected return
valuation. Your disclosures should include quantitative
information regarding your assumptions including, but not limited to,
growth rates, discount rates, market multiples, lack of marketability
discounts and any other assumptions that management believes are
material.
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on pages 49-51 of Amendment No.
1.
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17.
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Your disclosure on page 47
indicates that you reassessed the December 31, 2009 valuation during the
preparation of your financial statements based on the “current likelihood
of an initial public offering” and appears to indicate that the valuations
had the “benefit of hindsight.” Please tell us how you
concluded that it was appropriate to consider hindsight when reassessing
the December 31, 2009 valuation and tell us how you considered paragraph
86 of the AICPA Practice Aid “Valuation of Privately-Held-Company Equity
Securities Issued as
Compensation.”
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RESPONSE: The
Company advises the Staff that, as a preliminary matter, its Board of Directors
relied on contemporaneous valuations to determine the fair value of the common
stock for purposes of its 2009 equity grants. Although the June 30,
2009 valuation was not actually completed until September 2009 just prior to the
September grant date, as explained in paragraphs 87 and 88 of the Practice Aid,
“contemporaneous” does not mean the valuation date must be the same as the date
the valuation is completed or delivered. Indeed, for practical
reasons that is often not the case. The Company also determined,
consistent with paragraph 90 of the Practice Aid, that no new valuation would be
necessary for its Board of Directors to assess the fair value of the common
stock as of the October 2009 grant date.
Page
8
In
hindsight, the Company believes that it did not sufficiently take into account
the probability of this offering in connection with the valuations for the
September and October 2009 grants. Notwithstanding the Board of
Director’s reasonable determination of fair value at each grant date, the
Company determined, in connection with calculating its stock-based compensation
expenses for its audited financial statements for the year ended December 31,
2009, that a retrospective valuation for purposes of the September and October
2009 equity grants would be appropriate using a methodology that took into
account the relative probability of an initial public offering as compared to a
stay-private scenario. The Company believes this was appropriate
because the September and October 2009 grants occurred within 12 months of the
projected effective date of this offering and, as a result, the fair value of
the common stock within such period should take into account such offering even
if it could not reasonably be expected to be taken into account by the Board of
Directors at the time of the grants. Consistent with the Practice
Aid, the Company believes that it exercised care to ensure the assumptions and
estimates under the retrospective valuation reflected the business conditions
and enterprise developments that existed at the respective valuation
dates. The Company also believes that it was appropriate to use the
probability-weighted expected return valuation method to retrospectively give
proper weight to the likelihood of an initial public offering and to take into
account developments relating to such initial public offering and related
overall market recovery that would have had a material impact on value, which is
now better understood in hindsight.
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18.
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When you calculate your
estimated IPO price, please revise to discuss each significant factor
contributing to the difference between the estimated IPO price and the
fair value determined as of the date of each grant and equity related
issuance. This reconciliation should describe significant
intervening events within the company and changes in assumptions as well
as weighting and selection of valuation methodologies employed that
explain the changes in the fair value of your common stock up to the
filing of the registration
statement.
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RESPONSE: The
Company acknowledges the Staff’s comment. The Company confirms that
it will provide the requested disclosure in a subsequent amendment to the
Registration Statement.
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19.
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Tell us whether you granted any
options or restricted stock subsequent to the most recent balance sheet
date presented in the registration statement. If you have
granted options or restricted stock after this date, please revise your
disclosure to include the expected impact the additional grants will have
on your financial statements through the end of fiscal
2010. Additionally, continue to provide us with updates for all
equity related transactions subsequent to this request through the
effective date of the registration
statement.
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Page
9
RESPONSE: The
Company advises the Staff that it granted stock options to 30 employees on
February 26, 2010 to purchase an aggregate of 1,010,000 shares at an exercise
price per share of $6.76. In connection with the preparation of its
consolidated financial statements for the period ended March 31, 2010, the
Company reassessed the assumptions underlying the valuation of the stock as of
the February grant date. The Company concluded from such retrospective valuation
that the fair value of the common stock as of the February date was $9.53 per
share, and such value is reflected accordingly in the Company’s financial
statements. The Company has revised the disclosure on pages 48-51 of
Amendment No. 1 to reflect the foregoing.
The
Company also confirms that there have been no grants made subsequent to February
26, 2010 through the current date. However, the Company will continue
to update its disclosures for any subsequent grants or equity issuances in
future amendments to the Registration Statement up until the time of
effectiveness of the Registration Statement.
Results of Operations, page
51
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20.
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We note that, in your
discussion of enterprise revenue, you refer to an increase in your
installed base, larger contract values and higher renewal
levels. We also note that, in your discussion of M&A
revenue, you refer to lower transaction volumes. Please tell us
the extent to which you use these metrics as key indicators in managing
your business and indicate whether you believe that these metrics
contribute meaningfully to understanding and evaluating your
company. In addition, tell us what consideration you gave to
disclosing these metrics for the periods presented in your
MD&A. See Section III.B.1 of SEC Release No.
33-8350.
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RESPONSE: In
response to the Staff’s comment, the Company has expanded its disclosure
in the MD&A section on pages 39-40 of Amendment No. 1 to give further
insight into additional operating and financial measures that it uses to manage
the business and evaluate performance. The Company believes that the
measures disclosed in the Key Metrics subsection are the ones that management
focuses on in evaluating the Company operating performance and which would
contribute meaningfully to an investor's understanding of the Company’s
financial condition. The Company believes that its disclosure of
these indicators throughout the MD&A covers the periods presented in the
MD&A section.
Liquidity and Capital
Resources
Financing Activities, page
64
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21.
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We note your disclosure that
your First Lien Credit Agreement requires mandatory prepayments based on
“excess free cash flow.” Please revise your disclosures to
define “excess free cash flow.” You should also disclose any
known or reasonably likely cash requirements associated with the
prepayment obligations (i.e. excess free cash flows). We refer
you to Section IV of SEC Release No.
33-8350.
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on page 72 of Amendment No.
1.
Business
Our Growth Strategies, page
76
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22.
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Discuss here and in your
Management’s Discussion any costs incurred to date, as well as anticipated
costs, in connection with your growth
strategies.
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on pages 57-58, 61, 64-65 and 85 of Amendment
No. 1 to discuss various expenditures associated with its growth
strategies. The Company respectfully advises the Staff that,
because the Company has not yet committed to any specific expenditures directly
related to its growth strategies, it would be impracticable and speculative at
this time to attempt to quantify anticipated costs that it might incur in
connection with such strategies.
Our Technology, page
79
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23.
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We note that the IntraLinks
Platform is hosted in two data centers provided by SunGard Availability
Services. We further note that you have not filed any
agreements with SunGard Availability Services. Please provide
us with your analysis as to whether you are required to file any
agreements with SunGard Availability Services as exhibits to your
registration statement. Refer to Item 601(b)(10) of Regulation
S-K.
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RESPONSE: The
Company advises the Staff that it does not believe that its agreement with
SunGard Availability Services (“SunGard”) meets the disclosure requirements of
Item 601(b)(10) of Regulation S-K because (i) the Company believes that its
contract with SunGard is made in the ordinary course of the Company’s business,
(ii) the SunGard contract is not material to the Company’s financial condition
or operating results and (iii) the Company has concluded that its business is
not substantially dependent upon its contract with SunGard given that the
services provided by SunGard are generally available from a number of different
service providers and the Company believes that, if necessary, it could
transition the services provided by SunGard to another such service provider
without undue hardship. The Company also notes that it has previously
changed its hosting provider without difficulty and it believes that the market
for such services has become more competitive over time. Accordingly,
the Company respectfully advises the Staff that it believes its agreement with
SunGard does not warrant disclosure at this time pursuant to Item 601(b)(10) of
Regulation S-K.
Page
11
Our Customers, page
79
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24.
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We note the case studies
discussed on pages 80 and 81. Please supplementally advise us
of the names of the customers discussed in these case studies and tell us
whether these customers have reviewed the corresponding
disclosure. We may have further
comment.
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RESPONSE: In response to the Staff’s comment, the
Company is supplementally delivering to the Staff via overnight courier a list
of the case studies discussed on pages 88-89 of Amendment No. 1 with the name of
the respective customer discussed in each such case study. The Company confirms that each of these
customers has reviewed the corresponding disclosure.
Intellectual Property, page
83
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25.
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Please disclose the duration of
the patents you identify in this section. Refer to Item
101(c)(1)(iv).
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on page 91 of Amendment No.
1.
Management
Executive Officers, Key
Employees and Directors, page 85
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26.
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Please identify the specific
experience, qualifications, attributes or skills of Mr. Damico that
led your board of directors to conclude that he should serve as a
director. Refer to Item 401(e) of Regulation
S-K.
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on page 93 of Amendment No.
1.
Page
12
Composition of our Board of
Directors
Director Independence, page
89
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27.
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We note your statement in this
section that since you have not yet applied to have your shares listed on
a stock exchange, your board has not yet made a determination regarding
the independence of your directors. Please note that non-listed
registrants are required to provide disclosure regarding director
independence using a definition of independence of a national securities
exchange or of an inter-dealer quotation system which has requirements
that a majority of the board of directors be
independent. Please revise your prospectus
accordingly. Refer to Item 11(n) of Form S-l and Item
407(a)(1)(ii) of Regulation S-K. See also Section V.D of
Release No. 33-8732A.
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on pages 97-99 of Amendment No.
1.
Compensation Discussion and
Analysis
Annual Incentive
Compensation, page 94
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28.
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Please advise why you have not
disclosed the corporate performance targets in effect for your 2009 annual
incentive plan. If you are relying on Instruction 4 to Item
402(b) of Regulation S-K, please provide your analysis as to how
disclosure of historical financial targets would cause you competitive
harm.
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on page 103 of Amendment No. 1 to include the
specific corporate performance targets applicable for its 2009 annual incentive
plan compensation.
Certain Relationships and
Related Party Transactions
Customer Agreements, page
113
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29.
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Please tell us if you have any
contracts with TA Associates or Rho Capital Partners related to their use
of the IntraLinks platform. If so, please provide your analysis
as to whether such contracts should be filed as exhibits to your
registration statement. Refer to Item 601(b)(10)(ii)(A) of
Regulation S-K.
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RESPONSE: The
Company supplementally advises the Staff that it has contracts with both TA
Associates and Rho Capital Partners relating to their use of the IntraLinks
platform. The Company does not believe that either of these contracts
is required be filed as exhibits to the Registration Statement in reliance on
Item 601(b)(10)(ii)(A) of Regulation S-K because, even though they are contracts
to which a security holder is a party, each of these contracts has been entered
into in the ordinary course of business on an arms’-length basis and each is
immaterial in amount. In this regard, the Company refers the Staff to
the disclosure on page 121 of Amendment No.1, which sets forth the historical
amounts of its contracts with these parties.
Page
13
Market and Industry Data and
Forecasts, page 129
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30.
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We note your statements in this
section that you “have not independently verified” the third-party data in
your prospectus. Please note that if you choose to utilize
industry data in a prospectus, you adopt such information and are
responsible for the content. Accordingly, please revise the
text in this section as necessary so that you do not suggest that you
could lack a reasonable belief as to the completeness and accuracy of the
industry data you elect to include in the filing. Also, we note
the statement at the end of this section that “this prospectus may only be
used for the purposes for which it has been published.” We are
unclear as to the intent and effect of this statement. Please
clarify what you believe to be permissible and impermissible uses of this
prospectus as well as the basis for your belief that it is appropriate for
you to restrict how the prospectus may be
used.
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RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on pages 136-137 of Amendment No.
1.
Consolidated Financial
Statements
Note 1. Organization and
Description of Business, page F-9
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31.
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It appears that certain owners
of the Predecessor also have ownership in the
Successor. Provide us with an analysis that identifies the
owners and provides the related ownership percentages of both the
Predecessor and Successor and highlight any common
ownership. Indicate the shareholder(s) that controlled each
entity and support your conclusion that a change in control
occurred.
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RESPONSE: In
response to the Staff’s comment, the Company is supplementally delivering to the
Staff via overnight courier a copy of the ownership summary for the Predecessor
Company that illustrates the owners of the Predecessor Company prior to the
Merger and their respective holdings in the Successor Company after the
Merger. As set forth in the ownership summary: (1) prior to the
Merger, no owners held a controlling interest in the Company, (2) TA Associates,
Inc. did not have an interest in the Predecessor Company prior to the Merger,
(3) subsequent to the Merger, certain affiliates of TA Associates, Inc. held a
controlling interest in IntraLinks Holdings, Inc. (f/k/a- “TA Indigo Holdings
Corporation”), as a result of their acquisition of approximately 57% of the
post-merger shares, as well as representation on the Board of
Directors. As such, TA Associates, Inc.’s acquisition of a
controlling interest in the Company was accounted for as a business combination
under SFAS No. 141, Business
Combinations.
Page
14
Note 2. Summary of
Significant Accounting Policies
Comprehensive (Loss) Income,
page F-12
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32.
|
Please tell us how you
considered the requirement to disclose accumulated balances for each
classification in Other Comprehensive (Loss). Refer to ASC
220-10-45-14.
|
RESPONSE: In
response to the Staff’s comment, and in consideration of ASC 220-10-45-14, the
Company has revised the disclosure on page F-15 of Amendment No. 1 to include
accumulated balances for each classification in Other Comprehensive (Loss)
Income.
Note 8. Income Taxes, page
F-24
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33.
|
We note the tabular
presentation of the deferred tax assets and deferred tax liabilities on
page F-26. Please tell us how your disclosures comply with ASC
740-10-50-2. In this regard, we note that your current
disclosures appear to comingle deferred tax assets and
liabilities.
|
RESPONSE: In response to the Staff’s comment, and
in consideration of ASC 740-10-50-2, the Company has revised the disclosure on
page F-31 of Amendment No. 1.
|
34.
|
Given that you have a history
of pre-tax losses, please describe the specific factors that you
considered when determining that a valuation allowance against your
deferred tax assets was not required. Please describe, in
reasonable detail, the nature of the positive and negative evidence that
you considered when assessing the likelihood of realizing the deferred tax
assets and indicate how the positive and negative evidence was
weighted. Refer to ASC 740-10-30-16 through
25.
|
RESPONSE: The
Company acknowledges the presumption that a company in a cumulative net loss
position in recent years will continue to incur losses and, therefore, there is
risk that the existing deferred tax assets may not be realized and a valuation
allowance on those deferred tax assets may be necessary. The Company
advises the Staff that it has evaluated all available evidence, both positive
and negative, to determine that no valuation allowance on the deferred tax
assets is needed. According to ASC 740-10-30-18, “future realization
of the tax benefit of an existing deductible temporary difference or
carryforward ultimately depends on the existence of sufficient taxable income of
the appropriate character within the … carryforward period available under the
tax law.” The Company had deferred tax liabilities of $94.1 million
and $80.6 million as of December 31, 2008 and 2009, respectively, attributable
to a book basis in amortizable intangible assets for which there is no
corresponding tax basis. The deferred tax liability for these
intangible assets equates to taxable temporary differences of $224.5 million and
$189.6 million as of December 31, 2008 and 2009, respectively. These taxable
temporary differences are expected to reverse over the next 3 to 7 years.
According to ASC 740-10-30-18, these future reversals of taxable temporary
differences are considered sources of taxable income that will be available to
the Company to realize the net deferred tax assets which consists primarily of
net operating losses of $76.4 million and $58.1 million as of December 31, 2008
and December 31, 2009, respectively. Other positive evidence for the
future realization of the tax benefits includes that the Company has generated
positive taxable income before the net operating loss deduction during 2008 and
2009. Consequently, the Company concluded that the positive evidence
outweighed the negative evidence and it was more likely than not that the
deferred tax assets would be realized.
Page
15
Note 9. Debt and Derivative
Financial Instrument
Derivative Financial
Instrument, page F-31
|
35.
|
We refer to your disclosure
which states that the fair value of the interest swap derivative is
derived from dealer quotes and by incorporating a credit valuation
adjustment. Please describe how you determined the amount of
the credit valuation
adjustment.
|
RESPONSE: The
Company advises the Staff that the credit valuation adjustment is considered in
conjunction with the quote obtained from the financial institution, in order to
determine the fair value of the interest swap derivative. The credit
valuation adjustment represents a discount in consideration of the Company’s own
credit risk (because the interest rate swap is in a liability position), and is
based on the ask/bid price of the Company’s debt, which is privately traded in
the loan syndication market. The Company has revised the disclosure
on page F-36 of Amendment No. 1 to describe the fair value measurement of the
interest rate swap.
Item 15. Recent Sales of
Unregistered Securities
Issuances of Capital Stock,
page II-2
|
36.
|
In accordance with Item 701(d)
of Regulation S-K, please briefly state the facts as to why the
unregistered sales of securities were exempt under Section 4(2) and
Regulation D of the Securities Act of
1933.
|
RESPONSE: In response to the Staff’s comment, the
Company has revised the disclosure on page II-2 of Amendment No.
1.
* *
*
Page
16
We thank
the Staff for its courtesies. If the Staff needs any additional
information or has any further questions, please do not hesitate to contact the
undersigned at (212) 813-8804 or Edward A. King at (617) 570-1346.
/s/
Stephen M. Davis
Stephen
M. Davis
|
Edward
A. King, Esq.
|
|
|
Goodwin
Procter LLP
|
|
|
J.
Andrew Damico
|
Anthony
Plesner
Gary
Hirsch
|
|
IntraLinks Holdings,
Inc.
|
Jamie
John
|
|
Christine
Davis
|
|
|
Matthew
Crispino
|
|
|
United
States Securities and Exchange
Commission
|