SEC Comment Letter for LEVCOR INTERNATIONAL INC (CIK 0000076094) — Sep 19, 2005
LEVCOR INTERNATIONAL INC (CIK 0000076094)
Date: Sept. 19, 2005 · CIK: 0000076094 · Accession: 0000000000-05-048252
AI Filing Summary & Sentiment
Referenced dates: August 10, 2005, August 30, 2005
Letter
Mail Stop 3561 September 19, 2005 Mr. Robert A. Levinson Chairman and Chief Executive Officer Levcor International, Inc. 1065 Avenue of the Americas New York, NY 10018
RE: Levcor International, Inc. Form 10-KSB for Fiscal Year Ended December 31, 2004 Filed March 30, 2005 Form 10-Q for Fiscal Quarter Ended March 31, 2005 Filed May 16, 2005 Form 10-Q for Fiscal Quarter Ended June 30, 2005 Filed August 15, 2005 File No. 0-50186
Dear Mr. Levinson:
We have reviewed your responses contained in the letter dated August 30, 2005 and upon reviewing those responses issue the following comment.
We welcome any questions you may have about our comment or on any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Form 10-K for Fiscal Year Ended December 31, 2004
Item 6. Management`s Discussion and Analysis or Plan of Operation
Results of Operations, page 15 1. We have reviewed your response to comment 2 in our letter dated August 10, 2005. Based on the information you provided, it does not appear that your revenue recognition policy is compliant with GAAP. In particular, it appears that you recognize revenues upon shipment and title transfer, without simultaneously recording the estimated amount of returns associated with the sales. Because your customers have a right of return, the return right causes the transaction to be treated as if it is incomplete until the return right lapses, unless you can meet all of the criteria in paragraph 6 of SFAS 48 with respect to recognizing revenues at the time of sale when return rights exist. Even if you meet all of the criteria in SFAS 48, you are still required to recognize the sale net of estimated returns related to the sales. It is not sufficient to wait to recognize the returns only once you have indications from your customer regarding the potential timing and amount of returns. In fact, to the extent you are unable to reasonably predict the amount of returns at the time of sale, revenue recognition would be precluded altogether until the right of return lapses. Accordingly, please tell us how you plan to revise your financial statements and your revenue recognition policy to comply with SFAS 48 and SAB Topic 13. Also tell us in detail how the terms of your arrangements with customers support your revised policy, ensuring you address in detail whether your arrangements meet the conditions in paragraph 6 of SFAS 48 for recognition of revenue at the time of sale when return rights exist.
As a clarifying point with respect to rights of return, and to address a number of the points you made in your response, please note that unstated return rights, which are neither explicit nor documented in your sales contracts, are still considered substantive return rights under the guidance in SFAS 48 and SAB Topic 13, particularly in cases such as the one you describe where you have honored returns from a particular customer for over 30 years on an informal/non-contractual basis.
As appropriate, please amend your filings and respond to this comment within 10 business days or tell us when you will provide us with a response. Please furnish a letter that keys your response to our comment and provides any requested information. Detailed response letters greatly facilitate our review. Please file your response letter on EDGAR. Please understand that we may have additional comments after reviewing your response to our comment.
You may contact David DiGiacomo at (202) 551-3319, or in his absence, Robyn Manuel at (202) 551-3823 if you have questions regarding comments on the financial statements and related matters. Please contact me at (202) 551-3843 with any other questions.
Sincerely,
George F. Ohsiek, Jr.
Branch Chief
Show Raw Text
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Mail Stop 3561
September 19, 2005
Mr. Robert A. Levinson
Chairman and Chief Executive Officer
Levcor International, Inc.
1065 Avenue of the Americas
New York, NY 10018
RE: Levcor International, Inc.
Form 10-KSB for Fiscal Year Ended
December 31, 2004
Filed March 30, 2005
Form 10-Q for Fiscal Quarter Ended
March 31, 2005
Filed May 16, 2005
Form 10-Q for Fiscal Quarter Ended
June 30, 2005
Filed August 15, 2005
File No. 0-50186
Dear Mr. Levinson:
We have reviewed your responses contained in the letter dated
August 30, 2005 and upon reviewing those responses issue the
following comment.
We welcome any questions you may have about our comment or on
any other aspect of our review. Feel free to call us at the
telephone numbers listed at the end of this letter.
Form 10-K for Fiscal Year Ended December 31, 2004
Item 6. Management`s Discussion and Analysis or Plan of Operation
Results of Operations, page 15
1. We have reviewed your response to comment 2 in our letter dated
August 10, 2005. Based on the information you provided, it does
not
appear that your revenue recognition policy is compliant with
GAAP.
In particular, it appears that you recognize revenues upon
shipment
and title transfer, without simultaneously recording the estimated
amount of returns associated with the sales. Because your
customers
have a right of return, the return right causes the transaction to
be
treated as if it is incomplete until the return right lapses,
unless
you can meet all of the criteria in paragraph 6 of SFAS 48 with
respect to recognizing revenues at the time of sale when return
rights exist. Even if you meet all of the criteria in SFAS 48,
you
are still required to recognize the sale net of estimated returns
related to the sales. It is not sufficient to wait to recognize
the
returns only once you have indications from your customer
regarding
the potential timing and amount of returns. In fact, to the
extent
you are unable to reasonably predict the amount of returns at the
time of sale, revenue recognition would be precluded altogether
until
the right of return lapses. Accordingly, please tell us how you
plan
to revise your financial statements and your revenue recognition
policy to comply with SFAS 48 and SAB Topic 13. Also tell us in
detail how the terms of your arrangements with customers support
your
revised policy, ensuring you address in detail whether your
arrangements meet the conditions in paragraph 6 of SFAS 48 for
recognition of revenue at the time of sale when return rights
exist.
As a clarifying point with respect to rights of return, and
to
address a number of the points you made in your response, please
note
that unstated return rights, which are neither explicit nor
documented in your sales contracts, are still considered
substantive
return rights under the guidance in SFAS 48 and SAB Topic 13,
particularly in cases such as the one you describe where you have
honored returns from a particular customer for over 30 years on an
informal/non-contractual basis.
As appropriate, please amend your filings and respond to
this
comment within 10 business days or tell us when you will provide
us
with a response. Please furnish a letter that keys your response
to
our comment and provides any requested information. Detailed
response letters greatly facilitate our review. Please file your
response letter on EDGAR. Please understand that we may have
additional comments after reviewing your response to our comment.
You may contact David DiGiacomo at (202) 551-3319, or in his
absence, Robyn Manuel at (202) 551-3823 if you have questions
regarding comments on the financial statements and related
matters.
Please contact me at (202) 551-3843 with any other questions.
Sincerely,
George F. Ohsiek, Jr.
Branch Chief
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Mr. Robert A. Levinson
Levcor International, Inc.
September 19, 2005
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