SEC Company Response from Lee Pharmaceuticals, Inc. (RONN) (CIK 0000058411) — May 11, 2005
Lee Pharmaceuticals, Inc. (RONN) (CIK 0000058411)
Date: May 11, 2005 · CIK: 0000058411 · Accession: 0001104659-05-022633
AI Filing Summary & Sentiment
Referenced dates: April 29, 2005
Letter
United States Securities and Exchange Commission Form 10-KSB for the fiscal year ended September 30, 2004 Form 10-QSB for the quarter ended December 31, 2004 File No. 1-7335
RE:
Dear Mr. Decker:
We have received the letter dated April 29, 2005 containing the comments of the Staff of the Securities and Exchange Commission (“the Commission.”) Here are the responses of Lee Pharmaceuticals (the “Company”) to the Staff’s comments. The number of the response corresponds to the number of the Staff’s comment.
1. The Staff’s comment is noted. As appropriate, in response to the Staff’s comments below, the Company has described the proposed changes contemplated in future filings. In many cases, the specific language will depend on the circumstances at the time of filing.
2. The Company’s management and our independent auditors have reviewed the intangible assets and determined, based upon certain attributes, that management believes monthly amortization may not apply to certain product lines. A few product lines have certain attributes such as covenants not to compete. We believe these products have an indefinite life and are not subject to amortization, but should be reviewed annually for impairment if there is a triggering event (FASB 144). Other product lines not protected by covenants not to compete should be subject to amortization and, in addition, should be tested for impairment annually.
The additional research conducted by the Company included but was not limited to discussions with our prior independent auditors (who were in place during fiscal 2002 when adherence to the guidelines set forth by FASB 142 were followed) and the reasoning behind the discussion, calling the AICPA hot line for guidance and analyzing the products cash value along with the Company’s ownership of product trademarks and formulas. Based upon our review and research, we believe that some of the product lines have a definite life while others have an indefinite life.
After further review, and based on the above criteria, we have calculated the annual amortization expense pertaining to the amortizable product lines to be approximately $38,000 per year. Management does not believe that this amount would warrant a restatement of fiscal years 2004 and 2003.
3. The Company’s reduced obligation regarding the Casmalia Disposal Site (from $374,000 to $245,000, then to $113,000) was communicated to the Company by the EPA. The reduced obligation was, in part, due to the EPA’s improvements in the bidding process thereby lowering the Company’s estimated share of the cost, along with the Company’s request for a waiver due to financial hardship which was partially granted by the EPA.
On February 1, 1999, the Company received its share of the cleanup costs associated with the Casmalia Disposal Site to be $374,000. On October 7, 1999, the Company received a revised settlement offer of $245,000. Later, on June 14, 2000, the Company received a revised de minimis settlement offer of $113,000.
The Company will take into account its financial condition and potential liabilities to the EPA on all the matters described in the disclosure in determining whether to accept the offer from the EPA. We have not determined when we will respond to the EPA.
4. We do not know when these items will settle, but currently believe they will not settle in the next twelve (12) months. Accordingly, we will reclassify the amount from a short-term liability to a long-term liability.
5. The Company will include similar disclosures in its future interim filings, as appropriate.
If you have any questions regarding this matter, please contact Ronald G. Lee or the undersigned directly.
Sincerely yours,
MICHAEL L. AGRESTI
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CORRESP
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filename1.htm
May
11, 2005
Mr. Rufus Decker
Branch Chief
United States Securities and Exchange Commission
Washington, DC 20549-0510
RE:
Form 10-KSB for the fiscal year
ended September 30, 2004
Form 10-QSB for the quarter ended
December 31, 2004
File No. 1-7335
Dear Mr. Decker:
We have received the letter dated April 29, 2005
containing the comments of the Staff of the Securities and Exchange Commission
(“the Commission.”) Here are the
responses of Lee Pharmaceuticals (the “Company”) to the Staff’s comments. The number of the response corresponds to the
number of the Staff’s comment.
1. The Staff’s comment is noted. As appropriate, in response to the Staff’s
comments below, the Company has described the proposed changes contemplated in
future filings. In many cases, the
specific language will depend on the circumstances at the time of filing.
2. The Company’s management and our
independent auditors have reviewed the intangible assets and determined, based
upon certain attributes, that management believes monthly amortization may not
apply to certain product lines. A few
product lines have certain attributes such as covenants not to compete. We believe these products have an indefinite
life and are not subject to amortization, but should be reviewed annually for
impairment if there is a triggering event (FASB 144). Other product lines not protected by
covenants not to compete should be subject to amortization and, in addition,
should be tested for impairment annually.
The additional research
conducted by the Company included but was not limited to discussions with our
prior independent auditors (who were in place during fiscal 2002 when adherence
to the guidelines set forth by FASB 142 were followed) and the reasoning behind
the discussion, calling the AICPA hot line for guidance and analyzing the
products cash value along with the Company’s ownership of product trademarks
and formulas. Based upon our review and
research, we believe that some of the product lines have a definite life while
others have an indefinite life.
After further review, and
based on the above criteria, we have calculated the annual amortization expense
pertaining to the amortizable product lines to be approximately $38,000 per
year. Management does not believe that
this amount would warrant a restatement of fiscal years 2004 and 2003.
3. The Company’s reduced obligation
regarding the Casmalia Disposal Site (from $374,000 to $245,000, then to
$113,000) was communicated to the Company by the EPA. The reduced obligation was, in part, due to
the EPA’s improvements in the bidding process thereby lowering the Company’s
estimated share of the cost, along with the Company’s request for a waiver due
to financial hardship which was partially granted by the EPA.
On February 1, 1999, the Company received its share of
the cleanup costs associated with the Casmalia Disposal Site to be
$374,000. On October 7, 1999, the
Company received a revised settlement offer of $245,000. Later, on June 14, 2000, the Company received
a revised de minimis settlement
offer of $113,000.
The Company will take into account its financial
condition and potential liabilities to the EPA on all the matters described in
the disclosure in determining whether to accept the offer from the EPA. We have not determined when we will respond
to the EPA.
4. We do not know when these items will
settle, but currently believe they will not settle in the next twelve (12)
months. Accordingly, we will reclassify
the amount from a short-term liability to a long-term liability.
5. The Company will include similar disclosures in its future
interim filings, as appropriate.
If you have any questions regarding this matter, please
contact Ronald G. Lee or the undersigned directly.
Sincerely yours,
MICHAEL L. AGRESTI
Michael L. Agresti
Vice President - Finance
MLA/hb
cc:
Mr. Gus Rodriguez, Staff Accountant
United States Securities and Exchange Commission
Washington, DC 20549-0510
Mr. Ronald G. Lee, President and Chief Financial
Officer
Mr. George Brenner, CPA
Mr. Richard Boehmer, O’Melveny & Myers LLP
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