Cross Country, Inc.
6551 Park of Commerce Blvd., NW, Suite 200,
Boca Raton, FL 33487
May 21, 2002
Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, Northwest
Washington, DC 20509
Re: File No. S7-08-02
Dear Mr. Katz:
Cross Country, Inc. ("Cross Country" or the "Company") appreciates the opportunity to respond to the proposed rules regarding the acceleration of periodic report filing dates and disclosure concerning website access to reports. We are not opposed to the Commission's proposal to provide website access to reports; therefore, we will not address this issue further. With regard to the acceleration of periodic report filing dates, we have several specific concerns related to this issue as discussed below.
Cross Country is a publicly traded company with a market capitalization of approximately $1 billion as of May 21, 2002. The Company is a leading provider of healthcare staffing services in the United States and has an active client base of over 2,500 hospitals, pharmaceutical companies and other healthcare providers throughout all 50 states. Our core business is placing nurses and other health care professionals on travel staffing assignments at hospitals and other health care delivery organizations. In 2001, the health care staffing segment accounted for 93% of the Company's $500 million in revenue.
Revenue and expenses related to our staffing services are recognized as services are rendered by our health care professionals, using data captured in our time collection system which feeds both billing and payroll. Since payroll is paid in arrears on a bi-weekly basis, there are significant accruals related to both revenue and payroll expense at the end of each accounting period. Accounting personnel currently use actual data captured in the subsequent accounting period in order to properly calculate related accruals for both billing and payroll. This process ensures accruals are calculated on a precise and consistent basis. Due to the nature of our business and the payroll cycle, it currently takes approximately 20 days to close an accounting period. Once these accruals are recorded, accounting prepares detailed financial statements for management. A draft of the financial report is then circulated to members of management, for a comprehensive review and analysis. Additionally, due to the complexity of accounting disclosure requirements, the financial statement disclosures and management's discussion and analysis go through additional reviews by the Company's external auditors and the Board's Audit Committee.
The following illustrates the timetable we set up for closing the quarter ended March 31, 2002:
|Pay Period Used for March Accruals|
3/24 - 4/6
|Hours Collected for the 3/24-4/6 Period|
4/8 - 4/9
|Pay Date (Friday)|
|Billing Completed for the 3/24-4/6 Period|
|Draft Management Reports Prepared|
4/22 - 4/25
4/26 - 4/30
|Review by External Auditors|
5/1 - 5/3
|Audit Committee Review|
|Q1 2002 Earnings Released|
|Q1 Teleconference Call|
In order to comply with the proposed reporting deadlines, we would have had to accelerate our internal close process by using data from the 3/10 - 3/23 pay period in order to estimate the accruals for the 3/24 - 4/6 pay period. By relying on estimates rather than actual data, the accuracy of our accruals and the adequacy of our review process could be comprised.
In summary, we are concerned about the accuracy and reliability of financial information if the periodic reporting deadlines are accelerated. Our current closing timetable provides management the ability to calculate its accruals based on actual data, providing our financial statement users with the most reliable and accurate operating results. Accelerating this timetable would force our accounting personnel to rely on a number of estimates relating to our billing and payroll accruals. Not only will we have difficulty in finalizing our accruals within the shorter deadlines, management and the audit committee would have less time to review and analyze the financial results. We are concerned that our review process may be compromised with the shorter filing deadlines. We respectfully request that the Commission carefully consider these implications in analyzing its proposal.
We thank you for the opportunity to express our comments on this proposal and would be pleased to answer any questions the Commission may have.
Chief Financial Officer
Cross Country, Inc.