Mail Stop 0306
May 6, 2005
By U.S. Mail and facsimile to (631) 845-3896
Mr. Jerry Kieliszak
Chief Financial Officer
Chyron Corporation
5 Hub Drive
Melville, NY 11747
RE: Chyron Corporation
Form 10-K for the fiscal year ended December 31, 2004
File No. 000-24511
Dear Mr. Jerry Kieliszak:
We have reviewed your filing 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
document
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 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 year ended December 31, 2004
Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations - Page 16
Liquidity and Capital Resources - Page 19
1. With respect to the line of credit, disclose available
borrowings
as measured by the criteria set forth in the agreement. For
instance, based on eligible receivables and your compliance with
covenants, as of December 31, 2004, how much of the $2.5 million
was
available. Apply in future filings.
2. As a related matter, make more specific disclosure about debt
covenants and your compliance therewith. More specifically
identify
and discuss financial covenants and any other significant non-
financial covenants. We see in an 8-K dated February 24, 2005 that
a
covenant requires you to maintain positive tangible net worth.
Was a
similar covenant in effect at December 31, 2004? Were you in
compliance with that covenant? If not, what was the impact on your
borrowing rights? If you have received waivers from the lender,
that
fact should be disclosed, including disclosure about the terms and
conditions of that waiver. Apply the disclosure guidance in future
filings. Also show us how you intend to apply this comment.
Financial Statements
Note 1 - Summary of Significant Accounting Policies
Revenue Recognition - Page 50
3. We note the general criteria you apply for product revenue
recognition purposes. We also see that you sell products through
dealers, independent representatives, system integrators and
OEM`s.
Tell us more about the terms of sales through these channels. Do
you
recognize revenue when you ship product to dealers, independent
representatives, system integrators and OEM`s or when these
parties
resell products to their customers? Show us how you apply the
disclosed criteria for transactions with these parties and
demonstrate to us that your revenue practices are appropriate for
transactions with these parties. Be sure to address the
considerations that drive the timing of revenue.
4. Expand to clarify why it is appropriate to recognize license
fees
at inception. Address the nature and extent of post contract
deliverables or obligations and how those matters impact the
timing
of revenue. This disclosure may alternatively appear under
Critical
Accounting Policies, at your option. Apply in future filings.
5. You state that product revenue is recognized when title passes.
You also indicate that the costs of any unfulfilled obligations
that
affect customer acceptance are accrued when revenue is recognized.
Please expand to clarify the nature of the "obligations" to which
you
refer. Also expand to clarify why it is appropriate to recognize
revenue before these obligations are satisfied. This disclosure
may
alternatively appear under Critical Accounting Policies, at your
option. Apply in future filings.
6. Provide more explanation about when you apply percentage of
completion accounting. Clarify the nature of the underlying
arrangements and make disclosure sufficient so that it is clear
that
you apply that accounting in appropriate situations. Also address
how you estimate expected costs, how you evaluate those estimates
on
an on-going basis and how contract losses are identified. This
disclosure may alternatively appear under Critical Accounting
Policies, at your option. Apply in future filings.
7. In future filings, more specifically identify the circumstances
when you apply multiple element accounting. Clarify the nature of
the vendor specific objective evidence fair value you consider in
applying that accounting. Also, clarify the factors you evaluate
in
determining that the functionality of delivered elements is not
dependent on undelivered elements and clarify the factors you
consider in assessing whether delivery of the delivered element is
the culmination of the earnings process. This disclosure may
alternatively appear under Critical Accounting Policies, at your
option.
Note 14 - Benefit Plans - Page 63
8. We see the continuing and persistent shortfall between the
actual
and expected return on pension assets. Future filings should
include
more detail about how you establish the expected rate of return on
plan assets, including specific statements about why you believe
the
rate of expected return is reasonable and achievable.
9. We also see the significance of the unfunded liability to your
total liabilities. Future filings should present expanded detail
about cash flow requirements of the plan, including how you intend
to
fund those requirements.
Note 15 - Commitments and Contingencies - Page 65
10. We see the fourth quarter adjustment for warranties. Tell us
why
the timing of that adjustment is appropriate. Identify when the
product line became obsolete. Please be detailed and specific in
supporting the timing.
11. As a related matter, the warranty adjustment appears material
to
your fourth quarter earnings in that it appears you may have
reported
a loss for the quarter absent that adjustment. In future filings,
the quarterly data disclosure should describe or refer to a
description of any unusual or infrequently occurring items
recognized
in each quarter as well as the aggregate effect and nature of any
year-end or other adjustments that are material to the results of
that quarter. See Item 302(a)(3) of Regulation S-K for guidance.
12. In future filings please provide the warranty liability roll-
forward specified by FIN 45.
* * * *
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 with your response 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 Patrick Enunwaonye, Staff Accountant, at
(202)
824-5529 or me, at (202) 942-2862 if you have questions regarding
comments on the financial
statements and related matters. In this regard, do not hesitate to
contact Brian Cascio, Accounting Branch Chief , at (202) 942-1791
with any other concerns.
Sincerely,
Gary Todd
Review Accountant
??
??
??
??
Mr. Jerry Kieliszak
Chyron Corporation.
May 6, 2005
Page 1