Mail Stop 4561
September 19, 2005
Mr. Charles L. McNew
Chief Executive Officer
Halifax Corporation
5250 Cherokee Avenue
Alexandria, VA 22312
Re: Halifax Corporation
Form 10-K for the Fiscal Year Ended March 31, 2005
Form 10-Q for the Fiscal Quarter Ended June
30,
2005
File No. 001-08964
Dear Mr. McNew:
We have reviewed the above referenced filings and have
the
following comments. Please note that we have limited our review
to
the matters addressed in the comments below. We may ask you to
provide us with supplemental information so we may better
understand
your disclosure. Please be as detailed as necessary in your
explanation. After reviewing this information, we may 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 March 31, 2005
Note 1. Significant Accounting Policies and Business Activity
Accounts Receivable, page 43
1. We note that you transfer receivables to a third party in
connection with equipment leased to end users. Tell us the nature
of
the equipment that is being leased to end users and whether this
leased equipment is included as a deliverable in your sales
arrangements. If so, clarify how you account for this leased
equipment in accordance with SFAS 13. Specifically, tell us how
you
classify this leased equipment pursuant to the criteria in
paragraphs
6 through 8 of SFAS 13. Further, tell us your consideration of
the
disclosure requirements of paragraph 23 of SFAS 13 for your lease
arrangements.
2. We note that you record the transfer of receivables as sales
based
on the provisions of SFAS 140. Tell us the consideration that you
receive in exchange for the transferred receivables. Further,
tell
us your consideration of paragraph 9 of SFAS 140 when determining
that you have surrendered control of the transferred receivables.
Revenue Recognition, page 44
3. We note that you provide seat management contracts that involve
delivery and installation of new equipment combined with multi-
year
service agreements. We further note that revenue related to the
delivery and installation of equipment on these and certain other
contracts are recognized upon the completion of both delivery and
installation activities. As these activities are combined with
multi-year service agreements, explain how you determined that the
delivery and installation of equipment represents the culmination
of
a separate earnings event. Tell us your consideration of SAB
Topic
13, Section A.3.f when making this determination. As part of your
response, tell us,
* The nature of the equipment that is delivered and installed;
* Whether the delivery and installation of equipment are initial
setup activities for the multi-year service agreements or separate
deliverables;
* Whether the equipment is delivered and installed only to allow
the
provision of future service or the equipment provides benefit to
your
customers outside the service agreements;
* Whether you sell the delivered equipment separately? (i.e.
without
your service agreement).
Note 6. Long-Term Debt, page 50
4. We note that you have classified your revolving credit
agreement
as long-term debt as of March 31, 2004 and 2005. We further note
your disclosure on page 37 of your Form 10-K for the fiscal year
ended March 31, 2004, which states that your revolving credit
agreement contains a subjective acceleration clause. Tell us
whether
your revolving credit agreement contains this clause as of March
31,
2005. If so, indicate whether the agreement also requires a lock-
box
arrangement. That is, tell us how you consider EITF 95-22 in
determining the proper classification for this liability.
Further,
if classification as long-term is proper, tell us your
consideration
of FASB Technical Bulletin No. 79-3 to determine the appropriate
classification of the revolving credit agreement and disclosure of
the subjective acceleration clause.
*****
As appropriate, please amend your filing and respond to these
comments within 10 business days or tell us when you will provide
us
with a response. Please submit all correspondence and
supplemental
materials on EDGAR as required by Rule 101 of Regulation S-T. You
may wish to provide us with marked copies of any amendment to
expedite our review. Please furnish a cover letter with any
amendment that keys your responses to our comment and provides any
requested information. Detailed cover letters greatly facilitate
our
review. Please understand that we may have additional comments
after
reviewing any amendment and your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. 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 filing;
* 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.
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 Christopher White, Staff Accountant, at (202)
551-3461 or me at (202) 551-3488 if you have any questions
regarding
our comments on the financial statements and related matters.
Sincerely,
Stephen Krikorian
Accounting Branch Chief
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Mr. Charles L. McNew
Halifax Corporation
September 19, 2005
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