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EXHIBIT 18
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Xxxxxx Xxxxxxxx LLP
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One Financial Plaza
Hartford CT 06103-2699
000 000 0000
July 2, 1998
Royal Precision, Inc.
00000 Xxxxx Xxxxxx Xxxx, Xxxxx 0
Xxxxxxxxxx, Xxxxxxx 00000
Gentlemen:
This letter is written to meet the requirements of Regulation S-K calling for a
letter from a registrant's independent accountants whenever there has been a
change in accounting principle or practice.
During fiscal 1998, Royal Precision, Inc. (the Company) changed from the
Last-In-First-Out (LIFO) method of accounting for inventory to the
First-In-First-Out (FIFO) method of accounting for the Company's golf shaft
subsidiary, FM Precision Golf Manufacturing Corp. (FMP). The Company has given
retroactive effect to the change and the consolidated financial statements for
the prior year have been restated. According to the management of the Company,
this change was made since FMP previously had a debit LIFO reserve. Although the
effect of the debit reserve did not result in FMP's inventory being stated at an
amount in excess of net realizable value, it did not reflect the current
replacement cost of FMP's inventories.
A complete coordinated set of financial and reporting standards for determining
the preferability of accounting principles among acceptable alternative
principles has not been established by the accounting profession. Thus, we
cannot make an objective determination of whether the change in accounting
described in the preceding paragraph is to a preferable method. However, we have
reviewed the pertinent factors, including those related to financial reporting,
in this particular case on a subjective basis, and our opinion stated below is
based on our determination made in this manner.
We are of the opinion that the Company's change in method of accounting for
FMP's inventories is to an acceptable alternative method of accounting, which,
based upon the reasons stated for the change and our discussions with you, is
also preferable under the circumstances in this particular case. In arriving at
this opinion, we have relied on the business judgment and business planning of
your management.
Very truly yours,
/s/ XXXXXX XXXXXXXX LLP
