Via Facsimile and U.S. Mail
Mail Stop 6010
June 1, 2005
Mr. Dennis J. Curtin
Senior Vice President, Chief Financial Officer
E-Z-EM, Inc.
1111 Marcus Avenue
Lake Success, NY 11042
Re: E-Z-EM, Inc.
Form 10-K for the fiscal year ended May 29, 2004
File No. 001-11479
Dear Mr. Curtin:
We have reviewed your filing and have the following
comments.
We have limited our review of the above referenced filing to only
those issues addressed. In our comments, we ask you to provide us
with supplemental information so we may better understand your
disclosure. Please provide us the supplemental information
requested
within 10 business days of the date of this letter or tell us when
you will provide a response prior to the expiration of the 10-day
period. Please furnish a letter with your supplemental responses
that keys your responses to our comments. Detailed letters
greatly
facilitate our review. Please file your letter on EDGAR under the
form type label CORRESP. Please understand that we may have
additional comments after reviewing your amendment and responses
to
our 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.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations - Segment Overview, page 31
1. We note, from your existing disclosure in MD&A and Notes to
Consolidated Financial Statements, that you have a provision for
rebates and that you accept returns. Please provide us the
following:
a) Tell us if you have a reserve for product returns. If you do
not
have a reserve for them, provide us with an analysis showing why
the
reserve is not necessary.
b) Tell us the nature and amount of each accrual (e.g. rebates
provision, product returns and any other significant discounts and
allowances) at the balance sheet date and the effect that could
result from using other reasonably likely assumptions than what
you
used to arrive at each accrual, such as a range of reasonably
likely
amounts or other type of sensitivity analysis.
c) Tell us the factors that you consider in estimating each
accrual
such as historical return of products, levels of inventory in the
distribution channel, estimated remaining shelf life, price
changes
from competitors and introductions of new products.
d) To the extent that information you consider in c) is
quantifiable,
provide us both quantitative and qualitative information and
discuss
to what extent information is from external sources (e.g., end-
customer demand, third-party market research data comparing
wholesaler inventory levels to end-customer demand). For example,
in
discussing your estimate of product that may be returned, consider
discussing, preferably by product and in tabular format, the total
amount of product (in sales dollars) that could be potentially be
returned as of the balance sheet date and disaggregated by
expiration
period. if any.
e) If applicable, discuss any shipments to distributors made as a
result of incentives and/or in excess of your distributors`
ordinary
course of business inventory level. Discuss your revenue
recognition
policy for such shipments.
f) Provide us with a roll forward of the liability for each
estimate
for each period presented showing the following:
* Beginning balance,
* Current provision related to sales made in current period,
* Current provision related to sales made in prior periods,
* Actual returns or credits in current period related to sales
made
in current period,
* Actual returns or credits in current period related to sales
made
in prior periods, and
* Ending balance.
g) Where there are significant fluctuations in your accrual amount
from period to period, discuss the amount of and reason for
fluctuations for each type of reduction of gross revenue including
the effect that changes in your estimates of these items had on
your
revenues and operations.
h) Tell us why you have not provided the above information in your
MD&A to provide investors information about these critical
accounting
estimates.
Notes to Consolidated Financial Statements
Note D - Plant Closing and Operational Restructuring, page 82
2. Please tell us how the recognition of the $1,771,000 liability
as
of May 29, 2004 associated with severance costs met all of the
criteria in paragraph 8 of FAS 146.
Note I - Income Taxes, page 85
3. We note, from your disclosures, that the valuation allowance
represents more than half of your gross deferred tax assets, net
of
gross deferred tax liabilities. As you appear to have had
positive
earnings before income taxes in each of the three years presented
in
your statements of operations, please tell us why your valuation
allowance is appropriate under GAAP, including, but not limited
to,
paragraphs 20, 21 and 25 of FAS 109.
Note S - Quarterly Results of Operations (Unaudited), page 104
4. Please tell us what circumstances are causing the first quarter
net sales of each year including 2005 to be consistently lower
than
the fourth quarter net sales of the preceding year.
* * * *
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 Christine Allen, Staff Accountant, at (202)
551-3652 or Oscar Young, Senior Staff Accountant, at (202) 551-
3622
if you have questions regarding the comments. In this regard, do
not
hesitate to contact me, at (202) 942-1803.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief
Accountant
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Mr. Dennis J. Curtin
E-Z-EM, Inc.
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