May 4, 2005
Mr. Rufus Decker
Accounting Branch Chief
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Scott's Liquid Gold-Inc.
Form 10-K for the fiscal year ended December 31, 2004
Schedule 14A filed on April 5, 2005
File No. 1-13458
Dear Mr. Decker:
This letter responds to the comments of the staff of the
Securities and Exchange Commission in its letter dated April 21,
2005 with respect to the Form 10-K Report and Schedule 14A listed
above. The text of the staff's comments is set forth below in bold
followed in each case by the response.
Comment applicable to your overall filing
1. Where a comment below requests additional disclosures or other
revisions to be made, please show us in your supplemental response
what the revisions will look like.
Response: We have followed this approach in responding to
the comments.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2004
Note 5. Income Taxes, page 33
2. We note your response to prior comment 4. We remind you
that paragraph 42 of SFAS 109 states that it is not appropriate
to offset deferred tax liabilities and assets attributable to
different tax-paying components or to different tax jurisdictions.
It is not clear how your current presentation and accounting of
deferred income taxes complies with this guidance. Please provide
us with a tax analysis for each tax jurisdiction including Colorado
and United States federal. Each tax analysis should include the
deferred tax assets, deferred tax liabilities, and valuation
allowance recorded for each tax jurisdiction as well as the
May 4, 2005 components of each of these amounts. Please also
provide us with a detailed explanation for each tax jurisdiction
as to how you determined a full valuation allowance was not
necessary for your deferred tax assets at December 31, 2004,
December 31, 2003, and December 31, 2002.
Response: With respect to different tax jurisdictions, the
Company has filing obligations to the U.S. Government and five
states. With respect to state obligations, Colorado is the primary
state with an apportionment factor exceeding 99.8% rendering all
other state jurisdictions immaterial for purposes of deferred tax
assets and liabilities analysis and disclosure. Attached, please
find our analysis of each significant tax jurisdiction at
December 31, 2004, December 31, 2003, and December 31, 2002.
As regards tax-paying components, the Company reports on a
consolidated basis for both federal and Colorado purposes. The
deferred tax assets for each of the United States and Colorado
are in an amount that can be used to offset the deferred tax
liabilities of that jurisdiction, resulting in the equivalent
of a full valuation allowance for the deferred tax assets of
all such jurisdictions.
In performing the analysis, we determined that certain
reclassifications in the balance sheet relating to the
presentation of deferred taxes could be made. We will
incorporate such reclassifications in future filings.
SCHEDULE 14A FILED ON APRIL 5, 2005
3. Please describe in future filings the nature of the services
provided by your principal accountant in exchange for the fees
included under the caption "All other fees." Refer to
Item 9(e)(4) of Schedule 14A.
Response: In future filings we will describe the nature of
the services provided by our principal accountant under the caption
"All other fees".
If you have any questions or comments regarding the
foregoing, please contact Mark R. Levy (303-295-8073) or Amy
Bowler (303-295-8337) at Holland & Hart LLP, our attorneys.
Thank you.
Very truly yours,
SCOTT'S LIQUID GOLD-INC.
By: /s/ Jeffry B. Johnson
Jeffry B. Johnson
Treasurer and Chief Financial Officer
Scott's Liquid Gold-Inc.
Attachment to Response 2., Breakdown of Note 5.
Form 10-K for the Year Ended December 31, 2004
Note 5. Income Taxes, page 33
2004
-------------------------------------
Federal Colorado Combined
----------- ----------- -----------
- -------------------
Trade receivables $ 28,200 $ 2,600 $ 30,800
Inventories 94,800 8,600 103,400
Accrued insurance 19,900 1,800 21,700
Accrued vacation 240,800 21,600 262,400
Accrued payroll 24,800 2,300 27,100
Other 9,700 900 10,600
Net operating loss
carryforwards 915,900 272,000 1,187,900
R&D Tax credit
carryforwards - - -
Contribution
carryforwards - - -
----------- ----------- -----------
Total deferred
tax assets 1,334,100 309,800 1,643,900
Valuation allowance (288,200) (215,700) (503,900)
----------- ----------- -----------
1,045,900 94,100 1,140,000
=========== =========== ===========
Deferred tax
liabilities:
- ------------
Accelerated
depreciation (1,045,900) (94,100) (1,140,000)
----------- ----------- -----------
Net deferred
tax assets $ - $ - $ -
=========== =========== ===========
2003
---------------------------------
Federal Colorado Combined
----------- ----------- -----------
Deferred tax assets:
- -------------------
Trade receivables $ 27,900 $ 2,500 $ 30,400
122,800 11,000 133,800
Accrued insurance 16,800 1,500 18,300
Accrued vacation 231,500 20,800 252,300
Accrued payroll 71,600 6,400 78,000
Other 11,200 1,000 12,200
Net operating loss
carryforwards 641,800 237,600 879,400
R&D Tax credit
carryforwards - - -
Contribution
carryforwards - - -
----------- ----------- -----------
Total deferred
tax assets 1,123,600 280,800 1,404,400
Valuation allowance (38,200) (183,200) (221,400)
----------- ----------- -----------
1,085,400 97,600 1,183,000
=========== =========== ===========
Deferred tax
liabilities:
- ------------
Accelerated
depreciation (1,085,400) (97,600) (1,183,000)
------------ ----------- -----------
Net deferred
tax assets $ - $ - $ -
=========== =========== ===========
2002
-------------------------------------
Federal Colorado Combined
----------- ----------- -----------
Deferred tax assets:
- -------------------
Trade receivables $ 35,700 $ 3,200 $ 38,900
Inventories 136,500 12,300 148,800
Accrued insurance 40,800 3,700 44,500
Accrued vacation 210,700 18,900 229,600
Accrued payroll 121,400 10,900 132,300
Other 11,900 1,100 13,000
Net operating loss
carryforwards 581,800 231,800 813,600
R&D Tax credit
carryforwards - - -
Contribution
carryforwards - - -
----------- ----------- -----------
Total deferred
tax assets 1,138,800 281,900 1,420,700
Valuation allowance (14,300) (180,800) (195,100)
----------- ----------- -----------
1,124,500 101,100 1,225,600
---------- ----------- -----------
Deferred tax
liabilities:
- ------------
Accelerated
depreciation (1,124,500) (101,100) (1,225,600)
------------ ----------- -----------
Net deferred
tax assets $ - $ - $ -
=========== =========== ===========