Mail Stop 0306
April 1, 2005
Via Facsimile and U.S. Mail
Ms. Kimiko Milheim
Chief Financial Officer
Logic Devices Incorporated
395 West Java Drive
Sunnyvale, CA 94089
Re: Logic Devices Incorporated
Form 10-K for the fiscal year ended September 30, 2004
SEC File No. 0-17187
Dear Ms. Milheim:
We have reviewed your filings and have the following
comments.
We have limited our review to those issues we have addressed in
our
comments. 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 filing.
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 Fiscal Year Ended September 30, 2004
Financial Statements - Page 22
Summary of Accounting Policies - Page 29
Inventories - Page 29
1. Please respond to the following comments regarding your
inventory
policies:
(A) Please explain in more detail how and why you used $250,300
and
$1,072,800 in fiscal 2004 and 2003, respectively, of your
inventory
reserve for direct write-offs of obsolete products and excess
overhead absorbed in prior years. We note the disclosures on page
43
in Schedule II. Discuss how this complies with U.S. GAAP.
(B) Tell us and disclose in future filings the amount of excess
overhead absorbed in prior years that you are writing off
currently.
Tell us and disclose in future filings how you value inventories.
We
note your reference to standard costs on page 43. Please note that
standard costs do not comply with U.S. GAAP. Please revise or
advise
us why your current policies are in compliance with U.S. GAAP.
(C) Reconcile the amounts disclosed in the rollforward schedule
for
your inventory reserve with the disclosures on pages 17, 18, and
19.
(D) Tell us and in future filings disclose the reasons for
significant inventory reserves. We note that you recorded an
inventory reserve of $1,779,000 in 2003.
(E) Tell us and clarify in future filings why you refer to a
required
build up of raw material inventory for wafers as the reason for
the
high levels of inventories as of September 28, 2003 and September
30,
2004 when the majority of your inventory is work-in-process and
finished goods.
(F) On page 39 you state that your inventory levels may exceed one
year. However, based upon your inventory turns, it appears that
you
have approximately 2.5 years of inventory on hand. Please tell us
and
revise future filings to discuss, to the extent practicable and
based
upon your forecasted demand, how many years of inventory you have
on
hand.
(G) Please explain, given your inventory turns, how you have
established reserves for inventory by product type for amounts in
excess of 18 months of demand. We note the disclosure on page 21.
(H) Please also revise the notes to your financial statements in
future filings to explain in more detail your inventory policies,
including your policies related to reserves, due to the
significance
of this account to your balance sheet. That is, we note that
inventories represent 65% of your total assets as of September 30,
2004.
Revenue Recognition - Page 30
2. Please respond to the following comments regarding your revenue
recognition policies:
(A) We note that you generally recognize revenue upon shipment.
Please tell us and disclose in future filings why shipment is the
appropriate point for revenue recognition. Discuss how the company
considers the criteria in SAB 104.
(B) In a related matter, your disclosure indicates that the
company
"generally" recognizes revenue when products are shipped to
customers. Tell us and revise future filings to clearly indicate
when
this is not the case and the specific accounting treatment.
(C) We note that you do record an allowance for certain sales
returns. Please tell us and revise future filings to disclose the
nature of your return obligations and how you account for them and
why. That is, it should be clear from your disclosure why and when
you do record a reserve for returns and when you do not. Your
disclosure should also explain the significant terms of your
return
policies such as limits in time or amount.
(D) We note that you do not record an allowance for sales returns
because the customer must place an order of equal or greater value
at
the time of a return. Please tell us the basis for your accounting
policy. Cite the accounting literature upon which you relied.
(E) Tell us and disclose in future filings, if material, the gross
amount of sales returns recorded in each fiscal year presented
through the latest interim period.
* * * *
As appropriate, please respond to this comment within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter that keys your response 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 response to our comment.
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 Heather Tress, Staff Accountant, at (202)
824-
5263 or me at (202) 942-2861 if you have questions regarding
comments
on the financial statements and related matters. In this regard,
do
not hesitate to contact Martin James, the Senior Assistant Chief
Accountant, at (202) 942-1984.
Sincerely,
Kate Tillan
Reviewing Accountant
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Ms. Kimiko Wilheim
Logic Devices Incorporated
April 1, 2005
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