May 14, 2009
U.S. Securities and Exchange Commission BY EDGAR
100 F Street, N.E.
Washington, DC 20549
Attention: Mr. Kevin Woody
Accounting Branch Chief
Re: Oakridge Holdings, Inc.
Form 10-KSB for the Fiscal Year Ended June 30, 2008
Filed September 29, 2008
Form 10-Q for the Quarterly Period Ended September 30, 2008
Filed November 12, 2008
Form 10-Q for the Quarterly Period Ended December 31, 2008
Filed February 17, 2009
Definitive Proxy Statement
Filed October 27, 2008
File No. 000-01937
Ladies and Gentlemen:
On behalf of Oakridge Holdings, Inc. ("Oakridge" or the "Company"), I am pleased
to submit this response to the comments of the Staff on the above-referenced
filings, as set forth in Mr. Woody's letter to me dated April 30, 2009. For
convenience, the Staff's numbered comments are set forth below, followed by
Oakridge's responses.
Oakridge hereby represents that (i) it is responsible for the adequacy and
accuracy of the disclosure in the filing, (ii) Staff comments or changes to
disclosure in response to Staff comments in the filings reviewed by the Staff do
not foreclose the Securities and Exchange Commission from taking any action with
respect to the filing and (iii) Oakridge may not assert Staff comments as a
defense in any proceeding initiated by the Securities and Exchange Commission or
any person under the federal securities laws of the United States.
FORM 10-KSB FOR THE YEAR ENDED JUNE 30, 2008
FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
AVIATION GROUND SUPPORT EQUIPMENT
1. COMMENT: We note your response to our prior comment three. Please revise
your revenue recognition policy footnote for consistency with the information
provided in your responses to our comments regarding revenue recognition. Your
policy footnote should address, but should not be limited to, that based on the
nature of the contracts with the US Government, you do not have the ability to
make reasonably dependable estimates and that the US Government does not have
the right to take over the work in process.
RESPONSE: The Company will amend this filing so that its revenue recognition
policy footnote relating to aviation ground support equipment will read as
follows:
Revenue is recognized when the risks and rewards of ownership transfer to
customers, which is generally at the time of shipment or upon customer
inspection and approval of the equipment.
The Company has a contract to supply equipment to the US Government which
includes specific phases to which dollar amounts were assigned. The Company
will recognize revenue on the completed contract method because (i) the Company
is not able to make reasonably dependable estimates of the percentage of work
completed on the contract due to the unique nature of the contract; (ii) the US
Government does not have the right to take possession of the work in process;
(iii) the deliverables resulting from specific phases provide no value to the US
Government without delivery of the specific piece of equipment; and (iv) the
Company does not have the ability to require progress payments for the work in
process.
GENERAL
2. COMMENT: Please tell us whether management intends to file an Item 4.02 Form
8-K. To the extent management does not intend to file an Item 4.02 Form 8-K,
please tell us management's basis for their conclusion.
RESPONSE: The Company's management does not intend to file an Item 4.02 Form
8-K because management believes that no such filing is required. Item 4.02
requires disclosure if the Company's board of directors, a committee of the
board, or an authorized officer concludes that Company's previously issued
financial statements should no longer be relied upon or if the Company is
advised by, or receives notice from, its independent accountant that disclosure
should be made to prevent future reliance on previously issued financial
statements.
The Company's officers and directors believe that the Company's previously
issued financial statements can be relied upon despite changes to certain of
those statements that will be made in an amended filing.
The Company's previously issued consolidated statements of operations can be
relied upon because those statements will not change in connection with the
Company's responses to the Commission's comments.
The Company's officers and directors believe that the previously issued
consolidated balance sheets can be relied upon because the changes to those
statements that will be made in response to the Commission's comments will
involve only a change to the presentation of the Company's non-controlling trust
interests in preneed trust investments, but will not affect any amount on the
face of the balance sheets. The Company's directors and officers believe that
this change in presentation, which will move the value for the non-controlling
trust interests in preneed trust investments from the mezzanine section of the
consolidated balance sheets to long-term liabilities, is not material to
understanding the Company's financial position. Because the Company's directors
and officers believe that the change in presentation is not material to
understanding the Company's financial position, they believe the Company's
previously issued consolidated balance sheets can be relied upon.
The Company's officers and directors believe that the previously issued
consolidated statements of cash flows can be relied upon because the changes to
those statements that will be made in response to the Commission's comments will
involve only a change to the presentation of certain amounts on those
statements, but will not change the value of the Company's cash and cash
equivalents at the beginning or end of any period. The Company's officers and
directors believe that the movement of certain cash flow amounts among different
activities in the consolidated statements of cash flows is not material to
understanding the Company's financial position given that the value of cash and
cash equivalents at the beginning and end of each period, which is most
important to understanding the Company's liquidity position, will remain the
same. Because the Company's officers and directors believe that the changes
that will be made to the previously issued statements of cash flows are not
material to understanding the Company's financial position, those statements can
be relied upon.
Finally, the Company's independent accountant has not advised the Company that
disclosure should be made or action should be taken to prevent future reliance
on the Company's previously issued audit report or previously issued financial
statements. Given the lack of any indication from the Company's independent
accountant that the Company should takes steps to prevent future reliance on the
Company's previously issued financial statements, and given that the Company's
officers and directors believe that none of the changes to be made to the
Company's previously issued financial statements is material to understanding
the Company's financial position, the Company's management does not believe that
an Item 4.02 Form 8-K is necessary.
3. COMMENT: Please tell us whether management has reconsidered the
effectiveness of your disclosure controls and procedures as of June 30, 2008 in
light of the restatement. In addition, please confirm to us that you plan to
address this reconsideration and the related conclusions in the filings that
contain your restated financial statements. To the extent you have determined
that your disclosure controls and procedures were effective as of June 30, 2008
even though you were required to restate, please explain why and what corrective
action that has been/will be taken and also disclose this in your amended
filing.
RESPONSE: The Company's management has reconsidered the effectiveness of its
disclosure controls and procedures as of June 30, 2008 in light of the changes
to be made to its previously issued financial statements. The Company will
address this reconsideration and the related conclusions in its amended filings.
The Company's management has determined that the Company's disclosure controls
and procedures were effective as of June 30, 2008 because the changes to be made
to the Company's previously issued financial statements relate only to changes
in presentation of certain amounts on those statements and one footnote, but do
not involve any changes to recognition or measurement of amounts. Management
also believes that the Company's disclosure controls and procedures were
effective as of June 30, 2008 because management was aware of all material
information relating the classification of amounts on the financial statements
that will be reclassified, and management accounted for that information in a
manner that management believed was a reasonable application of U.S. generally
accepted accounting principles in consultation with the Company's independent
accountant. Because the Company's management believes that the changes to be
made to the Company's previously issued financial statements are not material to
understanding the Company's financial position and because the Company's
management was aware of all material information relating the amounts that are
the subject of the reclassifications to be made, management believes that the
Company's disclosure controls and procedures were effective as of June 30, 2008.
In an effort to avoid any restatements in the future, the Company plans to
continue to train and educate its staff as to applicable accounting principles,
including those cited by the Commission in its current review of the Company's
filings, and to utilize the oversight of its independent accountant to improve
the Company's disclosure controls and procedures. The Company also has
reassigned the duties previously performed by the former chief financial officer
of one of its subsidiaries in an effort to improve the Company's disclosure
controls and procedures. The Company will disclose these steps in an amended
filing.
4. COMMENT: Please tell us whether your auditors intend to update their audit
opinion to discuss the restatement.
RESPONSE: The Company's auditors have advised management that the auditors do
not intend to update their audit opinion to discuss the changes to be made to
the Company's previously issued financial statements because the auditors view
the changes as immaterial to understanding the Company's financial position for
the reasons discussed above.
5. COMMENT: Please tell us whether you intend to include the applicable
disclosures outlined by paragraph 26 of SFAS 154.
RESPONSE: Paragraph 26 of SFAS 154 provides disclosures that are to be included
when an entity restates its financial statements to correct an error. An error
can result from "... an error in recognition, measurement, presentation, or
disclosure in financial statements ..." according to paragraph 2 of SFAS 154.
Immediately following paragraph 27 of SFAS 154, the standard indicates, "The
provisions of this statement need not be applied to immaterial items."
The Commission has requested revisions in the presentation of the financial
statements included in the Company's Form 10-KSB for the fiscal year ended June
30, 2008. The Commission indicated the non-controlling interest in perpetual
care and trust investments should be presented as a liability in the
consolidated balance sheet. Second, the Commission requested that the revenue
recognition policy footnote include additional information. And third, the
Commission requested reclassification of trust cash flows to the operating
section of the statement of cash flows.
The Company will make the requested changes in an amended Form 10-KSB for the
fiscal year ended June 30, 2008. The Company has evaluated each of the
requested changes and has determined that the changes are not material to the
consolidated financial statements taken as a whole. Therefore, the Company
believes SFAS 154 is not applicable to the financial statements included as part
of the above referenced Form 10-KSB.
However, the Company recognizes that because the financial statements will
include changes from the originally filed financial statements, disclosure of
the changes may be necessary to avoid confusion by readers of the financial
statements.
As a result, the Company will include the following disclosure in the financial
statements to be included in an amended Form 10-KSB for the fiscal year ended
June 30, 2008:
Certain reclassifications were noted subsequent to the issuance of the
consolidated financial statements. Accordingly, these consolidated financial
statements reflect the reclassifications as of June 30, 2008 and 2007, and for
the years then ended. Long-term liabilities were increased by the non-
controlling interest in the perpetual care and trust investments which were
previously presented in the mezzanine section of the consolidated balance
sheets. In addition, cash flows from the perpetual care and trust investments,
which were previously presented as investing activities, are now presented as
operating activities within the consolidated statements of cash flows.
If we can facilitate the Staff's review of this letter, or if the Staff has any
questions on any of the information set forth herein, please telephone me at
(651) 454-5112. My fax number is (651) 454-5143.
Sincerely,
/s/ Robert C. Harvey
Robert C. Harvey
President and Chief Executive Officer