Acrodyne Communications, Inc.

SECURITIES EXCHANGE ACT OF 1934
Release No. 47454 / March 6, 2003

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1731 / March 6, 2003

ADMINISTRATIVE PROCEEDING
File No. 3-11055

I.

The Securities and Exchange Commission ("Commission") deems it appropriate that public cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Acrodyne Communications, Inc. ("Respondent" or "Acrodyne").

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over it and the subject matter of these proceedings, Respondent consents to the entry of this Order Instituting Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order ("Order") as set forth below.

III.

On the basis of this Order and Respondent's Offer, the Commission finds that:

1. Acrodyne, a Delaware corporation based in Cockeysville, Maryland, designs, manufactures and markets television broadcast equipment. Prior to July 2000, Acrodyne was based in Blue Bell, Pennsylvania. Acrodyne stock is registered under Section 12(g) of the Exchange Act. Until August 14, 2000, Acrodyne stock traded on the Nasdaq Small Cap Market System. It was delisted in September 2000.

2. Acrodyne materially misstated figures reported for its inventory, cost of sales, revenue, gross profit, and net loss in its financial statements for the year ended December 31, 1998; the first three quarters of 1999; the year ended December 31, 1999; and the first quarter of 2000. Acrodyne included its misleading financial results in press releases and its filings with the Commission relating to these periods.

3. Acrodyne misstated these line items in its financial statements as a result of its faulty cost accounting and improper revenue recognition. With respect to cost accounting, Acrodyne significantly understated the cost of manufacturing its products when it closed its books for a period. As a result, Acrodyne consistently overstated its inventory and understated its cost of sales in its published financial statements. Acrodyne was unable to properly value its products because of the incomplete and outdated cost data it maintained. In addition, starting in the second quarter of 1999, Acrodyne made unsupported adjustments to its cost of sales and inventory accounts to bring Acrodyne's financial statements in line with the gross margin percentage it had budgeted for the period. Acrodyne knew or acted recklessly with respect to its faulty cost accounting.

4. With respect to Acrodyne's improper revenue recognition, Acrodyne failed to verify that it had delivered its product to its customer before it recognized revenue from a transaction. As a result, Acrodyne prematurely recognized revenue from numerous transactions, including almost half of the transactions for which it recorded revenue in 1999. Acrodyne also improperly recognized revenue on two transactions in 1999 because the price Acrodyne charged its customer was not reasonably collectible or the revenue was not yet earned. Acrodyne knew or acted recklessly with respect to the improper revenue recognition.

5. As a result of the conduct described above, Acrodyne, through certain of its officers and personnel, violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in connection with the purchase or sale of securities.

6. Also as a result of the conduct described above, Acrodyne, through certain of its officers and personnel, violated Section 13(a) of the Exchange Act and Rules 13a-1, 13a-13 and 12b-20 thereunder.

7. Because Acrodyne improperly recorded its inventory, cost of sales, and revenue, its books, records and accounts did not, in reasonable detail, accurately and fairly reflect its transactions and dispositions of assets.

8. In addition, Acrodyne failed to implement internal accounting controls relating to its inventory, cost of sales, and revenue accounts which were sufficient to provide reasonable assurances that these accounts were accurately stated in accordance with generally accepted accounting principles.

9. As a result of the conduct described above, Acrodyne, through certain of its officers and personnel, violated Section 13(b)(2)(A) of the Exchange Act, which requires all reporting companies to make and keep books, records, and accounts which, in reasonable detail, accurately and fairly reflect their transactions and dispositions of their assets.

10. Lastly, as a result of the conduct described above, Acrodyne, through certain of its officers and personnel, violated Sections 13(b)(2)(B) and 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder, which require all reporting companies to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles; and prohibit persons from knowingly circumventing or knowingly failing to implement a system of internal accounting controls, knowingly falsifying any book, record or account, and directly or indirectly falsifying or causing to be falsified any book, record, or account.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions specified in Respondent's Offer.

ACCORDINGLY, IT IS HEREBY ORDERED:

A. Pursuant to Section 21C of the Exchange Act, that Respondent Acrodyne Communications, Inc., cease and desist from committing or causing any violations and any future violations of Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-13, and 13b2-1 thereunder.

By the Commission.

Jonathan G. Katz
Secretary