Mail Stop 3561
February 15, 2006
Ms. Kathleen Mason
Chief Executive Officer
Tuesday Morning Corporation
6250 LBJ Freeway
Dallas, TX 75240
Re: Tuesday Morning Corporation
Form 10-K for the Fiscal Year Ended December 31, 2004
Filed March 9, 2005
File No. 0-19658
Dear Ms. Mason:
We have reviewed your response letter filed on January 18,
2006
to our comment letter dated December 30, 2005 and have the
following
comments. Where indicated, we think you should revise your
document
in response to these comments. If you disagree, we will consider
your explanation as to why our comment is inapplicable or a
revision
is unnecessary. Please provide a written response to our
comments.
Please be as detailed as necessary in your explanation. In some
of
our comments, we may ask you to provide us with information so we
may
better understand your disclosure. After reviewing this
information,
we may raise additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2004
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations, page 22
1. We have reviewed your response to comment 3 in our letter dated
December 30, 2005. Although we agree that presenting percentage
changes for certain measures can provide more meaningful
information
to the reader than disclosing dollar amounts representing the
changes, we believe that the presentation of changes in dollars
supplements the percentage change figures and assists in
satisfying
the three principal objectives of MD&A, as noted in SEC Release
No.
33-8350:
* to provide a narrative explanation of a company`s financial
statements that enables investors to see the company through the
eyes
of management;
* to enhance the overall financial disclosure and provide the
context
within which financial information should be analyzed; and
* to provide information about the quality of, and potential
variability of, a company`s earnings and cash flow, so that
investors
can ascertain the likelihood that past performance is indicative
of
future performance.
We believe that the presentation of changes in dollars is
consistent
with the above objectives, can be achieved without disclosing
sensitive information, and can only enhance the clarity of your
disclosures. For example, while we expect that most selling costs
track closely with changes in sales, we assume that general and
administrative costs, such as corporate office overhead, are
effectively fixed within certain ranges of sales volume.
Therefore,
we believe it would be meaningful to discuss the nature and amount
of
the dollar changes in such costs, if material, and the specific
factors driving those changes.
2. We have reviewed your response to comment 4 in our letter dated
December 30, 2005, noting that you did not indicate why you
believe
you are permitted to present the per-share impact of material
and/or
infrequently occurring items in your filings. Please remove these
non-GAAP measures from future filings if you are unable to justify
why such non-GAAP measures are allowable.
Report of Independent Registered Public Accounting Firm, page F-2
3. We have reviewed your response to comment 6 in our letter dated
December 30, 2005. While we acknowledge the opinion states that
the
audit of your internal controls over financial reporting were
conducted in accordance with the standards of the PCAOB, this
language was inappropriately excluded from the second paragraph of
the opinion when discussing the audit of your financial
statements.
Therefore, please file a revised audit report that refers to the
standards as opposed to "auditing standards" of the PCAOB. The
amendment should set forth the entire text of Item 15 and the
certifications required by Rule 13a-14(a) and Rule 13a-14(b) of
the
Exchange Act.
Form 8-K filed July 21, 2005
4. We have reviewed your response to comment 8 in our letter dated
December 30, 2005. While you indicate that you will refrain from
presenting non-GAAP financial measures unless they are accompanied
by
the disclosures requested by our comment, we note that your Form
8-K
filed on January 5, 2006 excludes our requested disclosures.
Since
you disclose diluted earnings per share excluding the lease
accounting charge, we expect that your disclosures would include
the
items requested by our prior comment. Please confirm that you
will
provide such disclosures going forward when you disclose these
non-
GAAP financial measures in your Forms 8-K.
As appropriate, please amend your filing and respond to
these comments within 10 business days or tell us when you will
provide us with a response. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed
response
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
You may contact Andrew Blume (Staff Accountant) at (202)
551-
3254 if you have questions regarding the comments on the financial
statements and related matters. Please contact me at (202) 551-
3716
with any other questions.
Sincerely,
William Choi
Accounting Branch
Chief
Ms. Kathleen Mason
Tuesday Morning Corporation
February 15, 2006
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