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SEC Comment Letter Response 05142009
May 14, 2009
Via Certified Mail
Securities and Exchange Commission
100 F Street, N.E.
Mail Stop 3030
Washington, D.C. 20549-3030
Attention: Angela J. Crane
Accounting Branch Chief
Re: Hickok Incorporated
Form 10-KSB for the fiscal
year
ended September 30, 2008
Filed December 29, 2008
File No. 0-00147
Dear Ms. Crane:
Hickok Incorporated, an Ohio corporation (the "Company"), hereby
responds to the Staff's comment letter dated April 23, 2009, regarding
the above filings. The response date was extended to May 14, 2009 after
talking with Dennis Hult, Staff Accountant on April 30, 2009. The
Company's responses are numbered to correspond to the numbering of the
comments contained in the comment letter, a copy of which has been
attached to this letter.
Form
10-KSB for the Fiscal Year ended September 30, 2008
Notes to Consolidated
Financial Statements
Note 2. Summary of
Significant Accounting Policies
Income Taxes
SEC Comment #1 – In future
filings, please revise your disclosure to
explain your accounting policy as it relates to income taxes. It is not
sufficient to merely refer to the accounting standard.
1. The provision for income taxes is determined using the asset and
liability approach of accounting for income taxes. Under this approach,
deferred taxes represent the future tax consequences expected to occur
when the reported amounts of assets and liabilities are recovered or
paid. The provision for income taxes represents income taxes paid or
payable for the current year plus any change in deferred taxes during
the year. Deferred taxes result from differences between the tax basis
of assets and liabilities and their reported amounts in the
consolidated financial statements and are adjusted for changes in tax
rates and tax laws when changes are enacted. Valuation allowances are
recorded to reduce deferred tax assets when it is more likely than not
that a tax benefit will not be realized.
The Company confirms that future filings will contain information as
stated in the response set forth above.
Exhibit 31 Certifications
SEC Comment #2 – We note that
the identification of the certifying
individual at the beginning of the certification required by Exchange
Act Rule 13a-14(a) also includes the title of the certifying
individual. In future filings, the identification of the certifying
individual at the beginning of the certification should be revised so
as not to include the individual’s title.
2. The Company confirms that future filings will be revised so as not
to include the individual’s title at the beginning of the certification
required by Exchange Act Rule 13a-14(a).
Form 10-Q
for the Quarterly Period Ended December 31, 2008
Notes to Consolidated
Financial Statements
Note 8. Business Condition
SEC Comment #3 – Please expand
your footnote and MD&A disclosures
in future filings to more fully comply with the guidance set forth in
SAB Topic 5-P.4. Specifically, you should quantify the expected effects
of the expense reductions on future earnings and cash flows and
indicate the period or periods in which the effects are expected to be
recognized. You should also identify the various types of expense items
impacted, such as depreciation expense, salaries expense and other
similar items and quantify the anticipated impact upon the individual
line items of the financial statements. If cost savings are expected
to be offset by anticipated increases in other expenses or by reduced
revenues, this fact should be disclosed, as well. Revise future filings
as necessary to address our concerns.
3. In December of 2008 management took steps to reduce non-direct
product related expenses throughout the Company in response to the
economic downturn and the uncertainty in the markets the Company
serves. The steps included a substantial reduction in personnel, wage
reductions for all personnel and
expenditure restrictions in most aspects of the Company’s operations.
Management took additional steps in April 2009 and made additional
reductions in personnel throughout the Company due to the continued
decline in sales to the markets the Company serves. The expected annual
cost savings of approximately $3,080,000 takes into consideration
possible increases in other expenses that may occur. The savings are
expected to be realized in equal amounts per month with similar impact
on both future earnings and cash flows. Beginning in January 2009
through April 2009 the monthly savings are expected to be approximately
$191,000 per month. During the period of May 2009 through September
2009 the monthly savings are expected to be approximately $257,000 per
month. Major expense categories impacted are as follows:
Applicable to Manufacturing
Production Overhead (Wages)
$866,000
Product Development
785,000
Marketing and
Administration
1,429,000
Annual Total
$3,080,000
For the quarter ended December 31, 2008 the savings were immaterial.
For the quarter ended March 31, 2009 the Company achieved the savings
that were anticipated.
The Company confirms that future filings will be revised in accordance
with your comment as stated in the response set forth above.
In connection with responding to your comments the Company acknowledges
that:
the Company is responsible for the adequacy and accuracy of the
disclosures in the filings;
staff comments or changes to disclosure in response to staff comments
do not foreclose the Commission from taking any action with respect to
the filing; and
the Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
I hope the foregoing has been responsive to your comments. Accordingly,
it would be greatly appreciated if you could advise the undersigned at
(216) 541-8060 (ext. 288) at your earliest convenience if the foregoing
responses are acceptable or if any additional comments will be
forthcoming. If you have any additional comments or questions with
respect to the foregoing, please contact the undersigned.
Very truly yours,
/s/ Gregory M. Zoloty
Gregory M. Zoloty
Senior Vice President, Finance
and Chief Financial Officer