Mail Stop 0306
January 27, 2005
VIA U.S. MAIL AND FAX (805) 532-1851
Mr. Kirk A. Waldron
Senior Vice President and Chief Financial Officer
SMTEK International, Inc.
200 Science Drive
Moorpark, California 93021
Re: SMTEK International, Inc.
Form 10-K for the year ended June 25, 2004
Dear Mr. Waldron:
We have reviewed your filings and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and will make no further review of your
documents. Where indicated, we think you should revise your
documents
in future filings in response to these comments. If you disagree,
we
will consider your explanation as to why our comment is
inapplicable
or a revision is unnecessary. Please be as detailed as necessary
in
your explanation. In some of our comments, we may ask you to
provide
us with supplemental information so we may better understand your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments 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 the year ended June 25, 2004
Item 9A. Controls and Procedures - Page 26
1. We note your disclosure that your "principal executive officer
and
principal financial officer have concluded that our disclosure
controls and procedures are effective to ensure that information
required to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in [the] Securities and
Exchange Commission rules and forms." Revise in future filings to
clarify, if true, that your officers concluded that your
disclosure
controls and procedures are also effective to ensure that
information
required to be disclosed in the reports that you file or submit
under
the Exchange Act is accumulated and communicated to your
management,
including your chief executive officer and chief financial
officer,
to allow timely decisions regarding required disclosure. See
Exchange
Act Rule 13a-15(e).
Note 1. Summary of Significant Accounting Policies
Revenue Recognition, page F-10
2. Tell us and expand your revenue recognition policy in future
filings to address the following:
* Explain whether any of your product sales include installation,
price protection agreements, or other post shipment obligations,
and
* Provide details of whether the revenue arrangements have
multiple
deliverables and the impact of EITF 00-21.
* Please explain the company`s return policy and how you account
for
returns.
Note 2. Acquisition of the Assets of Century Electronics
Manufacturing, Inc., page F-13
3. In the summary of the assets acquired and liabilities assumed
in
the acquisition you include approximately $500,000 of liabilities
assumed. We are confused since the first paragraph of that same
footnote specifically states you did not assume any liabilities in
the transaction. Please clarify.
4. We also noted you state the aggregate purchase price is $3.2
million. Please tell us how this compares to the purchase price of
$916,000 as listed in the table?
5. Lastly, we noted that you purchased certain equipment and
machinery for approximately $1.4 million and inventory for
approximately $900,000 for a total of $2.3 million. However, in
the
table presented the assets acquired total approximately $1.4
million.
Please reconcile.
Note 5. Restructuring Costs, page F-16
6. Supplementally provide us with a description of your exit
activity, including the facts and circumstances leading to the
restructuring and the expected completion date. Disclose such
information until the period in which the activity is complete,
see
paragraph 20 of SFAS 146. In addition, we noted your statement,
"As
previously noted, the (Poway) facility is currently vacant,"
included
in the Risk Factors. How does this impact management`s estimate of
the restructuring costs and the expected completion date given the
fact that an accrual of only $590,000 remains?
* * * *
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please file
your cover letter on EDGAR. Please understand that we may have
additional comments after reviewing your responses to our
comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require.
Since the company and its management are in possession of all
facts
relating to a company`s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
? the company is responsible for the adequacy and accuracy of
the
disclosure in the filings;
? staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff 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.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Julie Sherman, Staff Accountant, at (202)
824-
5506 or me at (202) 942-2813 if you have questions. In this
regard,
do not hesitate to contact Martin James, the Senior Assistant
Chief
Accountant, at (202) 942-1984.
Sincerely,
Daniel Gordon
Branch Chief
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Mr. Kirk A. Waldron
SMTEK International, Inc.
January 27, 2005
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