Burke Mills, Inc.
191 Sterling Street NW
Valdese, NC 28690
828 874-6341
November 29, 2005
Securities and Exchange Commission
Washington, DC
RE: Burke Mills, Inc. Commission File number 0-5680
Gentlemen:
This correspondence is a cover letter to Form 8-K/A2 filed by Burke
Mills, Inc. with the Commission. This amendment to Form 8-K is filed pursuant to
the letter of comment addressed to the undersigned by the Commission staff dated
November 17, 2005. The revisions are in response to comments number 2 and number
3. In regard to comment number 1, the letter from BDO Seidman, LLP stating
whether or not it agreed with the disclosures in the filing has been requested
but has not yet been received.
The Company acknowledges that: (a) the Company is responsible for the
adequacy and accuracy of the disclosures of the filing; (b) 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; (c) the Company
may not assert this action as a defense in any proceeding initiated by the
Commission or any person under the Federal Securities Laws of the United States.
Sincerely,
/s/ Thomas I. Nail
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Thomas I. Nail
President and COO
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 9, 2005
BURKE MILLS, INC.
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(Exact name of registrant as specified in its charter)
North Carolina
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(State or other jurisdiction of incorporation or organization)
0-5680 56-0506342
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(Commission File No.) (I.R.S. Employer Identification No.)
191 Sterling Street, N.W., Valdese, North Carolina 28690
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(Address of principal executive offices) (Zip Code)
828 874-6341
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(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[__] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[__] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[__] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[__] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Introduction
This Form 8-K/A2 amendment number two of the Form 8-K amends the Form
8-K filed by the Company dated November 8, 2005 and filed with the Commission
November 14, 2005. The date of such report was erroneously stated to be
November 8, 2005, and that date should have been November 9, 2005. This Form
8-K/A2 also amends form 8-K/A filed November 17, 2005.
SECTION 4 - Matters Related to Accountants and Financial Statements
Item 4.01
Changes in Registrant's Certifying Accountant
On October 20, 2005 a representative of BDO Seidman, LLP (Seidman), the
independent registered public accounting firm then engaged as the accountant to
audit the Company's financial statements, verbally stated to the chairman of the
Company's audit committee that Seidman would cease to serve as the Company's
independent accountant at the conclusion of its accounting services for the
third quarter of the current fiscal year of the Company because this company
engagement was not profitable for Seidman. This intention was confirmed in a
telephone conference call between a representative of Seidman and members of the
audit committee and management on October 25, 2005.
On November 14, 2005, Seidman completed its accounting services for the third
quarter of the Company's fiscal year.
Seidman's report on the financial statements of the Company for either of the
past two years did not contain an adverse opinion or a disclaimer of opinion and
was not qualified or modified as to uncertainty, audit scope or accounting
principles. During the Company's two most recent fiscal years, and in the
subsequent interim period through November 14, 2005, there have been no
disagreements with Seidman on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
During the audit of the financial statements of the Company for the fiscal year
ending January 1, 2005, Seidman advised the Company that, as explained below,
internal controls necessary for the Company to develop reliable financial
statements did not exist at that point in time. The particular disclosure
controls and procedures which were not effective arose out of an error in the
company's calculation of its deferred income taxes for the fiscal year ended
January 3, 2004 and for the first three quarters of the fiscal year ended
January 1, 2005. After advice from Seidman, the Company deemed this error to be
a material weakness, as such term is defined in PCAOB Auditing Standard No. 2.
The error arose when the Company calculated the valuation allowance (mark-down)
for the fiscal year ended January 3, 2004 based upon the gross value of deferred
tax assets which was $920,000.00. The Company, after advice from Seidman,
concluded that this calculation should be restated to calculate the valuation
allowance based on the difference between deferred tax assets and deferred tax
liabilities. Deferred tax liabilities exceeded deferred tax assets by $60,000.00
during the fiscal year ended January 3, 2004. The effect of the change was to
reduce the Company's total assets as of January 3, 2004 by $60,000.00, decrease
total liabilities by $980,000.00, increase total shareholders' equity by
$920,000.00, and decrease by $920,000.00 the Company's net loss for the fiscal
year ended January 3, 2004. As a result of such advice from Seidman, the Company
addressed the material weakness subsequent to the date of its discovery on March
29, 2005. The Company incorporates herein by reference disclosures contained in
Part 2, Item 9, on the annual report to the Securities and Exchange Commission
by the Company on Form 10-K for the fiscal year ended January 1, 2005. This
matter was disclosed in note 2 of the company's financial statements and in Item
8 and Item 9A of the Company's Form 10-K for the fiscal year ended January 1,
2005.
The audit committee of the Board of Directors of the Company was aware of the
advice from Seidman with respect to this error. The Company has authorized
Seidman to respond fully to inquiries of the Company's successor accountant
concerning the subject matter described above.
Other than as stated above, during the Company's two most recent fiscal years
and the subsequent interim period through November 14, 2005 there have been no
reportable events as defined in Section 304(a)(1)(v) of Regulation S-K.
The Company has engaged a new independent accountant which is the registered
public accounting firm of Scott McElveen L.L.P. of Columbia, SC, to audit the
Company's financial statements. On October 31, 2005, the chairman of the
company's Audit Committee signed an engagement letter with Scott McElveen L.L.P.
On November 9, 2005, the audit committee of the company formally approved the
engagement of Scott McElveen L.L.P. The date of commencement of the work of
Scott McElveen L.L.P. will be on or about December 1, 2005. The Company has not
previously consulted Scott McElveen L.L.P.
The Company has provided to Seidman a copy of the disclosures contained herein.
The Company has requested that the former accountant furnish the Company with a
letter addressed to the Securities and Exchange Commission stating whether it
agrees with the statements made by the Company herein, and, if not, stating the
respects in which it does not agree. As of the filing of this report said letter
has not been received.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: November 29, 2005 BURKE MILLS, INC.
By:/s/Thomas I. Nail
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Thomas I. Nail
President and COO