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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): SEPTEMBER 29, 1999
FIRSTPLUS FINANCIAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
NEVADA 0-27750 75-2561085
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(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification No.)
1600 VICEROY, 8TH FLOOR DALLAS TEXAS 75235
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 599-6400
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
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(a)(1)(i) On September 29, 1999, Ernst & Young LLP ("E&Y") resigned as
principal accountant and delivered a letter to FIRSTPLUS
Financial Group, Inc. (the "Company") informing the Company
of the immediate cessation of the client-auditor relationship
between the Company and E&Y.
(a)(1)(ii) E&Y's report on the financial statements for the fiscal year
ended September 30, 1997 did not contain an adverse opinion or
a disclaimer of opinion, nor was such report qualified as to
uncertainty, audit scope or accounting principles. No report
has been issued for the three-month transition period ended
December 31, 1997 or the fiscal year ended December 31, 1998.
The Company previously announced that it would implement new
accounting guidance regarding the valuation of its retained
interests from securitization transactions provided by the
Financial Accounting Standards Board ("FASB") and the
Securities and Exchange Commission ("SEC"). As reported in the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998, the FASB issued a draft Special Report ("A
Guide to Implementation of Statement 125 on Accounting for
Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, Questions and Answers, Second
Edition") which was finalized during December 1998. In this
Special Report, the FASB concluded that the "cash-out" method
of valuing retained interests should be used to estimate fair
value. The SEC Staff announced on December 8, 1998 that the
change to the "cash-out" method should be made by restatement.
Based on this guidance, the Company must revise its
methodology for estimating the fair value of I/O Strips and
Receivable from Trusts assets to the "cash-out" method from
the previously used "cash-in" method.
As previously disclosed, the Company is required to restate
its financial statements for each of the fiscal years in the
three-year period ended September 30, 1997, the three-month
transition period ended December 31, 1997, and the first three
quarters of the fiscal year ended December 31, 1998.
As a result of limited resources and other issues, the Company
has been unable to complete the previously announced
restatement nor the preparation of its financial statements
for the fiscal year ended December 31, 1998 or any subsequent
period. As such, the Company has not yet filed its Annual
Report on Form 10-K or its Quarterly Reports on Form 10-Q for
the first two quarters of fiscal 1999. The Company is
currently unable to make an assessment as to when it will be
able to file its delinquent filings or any of its future
filings. It is expected that the impact of the restatement
will be material to the results of all prior periods.
Accordingly, previously issued financial results for the
periods indicated as affected by the restatement above should
not be relied upon.
(a)(1)(iii) The Company is currently searching for a successor accounting
firm but has not yet engaged any firm.
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(a)(1)(iv) During the Company's two most recent fiscal years and the
interim period preceding E&Y's resignation, there were no
disagreements with E&Y on matters of accounting principles or
practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if they were not resolved to
the satisfaction of E&Y, would have caused E&Y to make
reference to the subject matters of the disagreements in
connection with its reports, except as described below.
(A) During the quarter ended December 31, 1997 and
extending through the quarter ended March 31, 1998,
extreme market uncertainties resulted in a
re-evaluation of the Company's residual assets for the
three months ended December 31, 1997. This
re-evaluation resulted in a restatement of the
Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1997. Prior to the restatement of
the Quarterly Report on Form 10-Q for quarter ended
December 31, 1997 and the filing of the Quarterly
Report on Form 10-Q for the quarter ended March 31,
1998, management and E&Y had a disagreement concerning
the selection of an appropriate discount rate for
properly valuing the residual assets. The disagreement
was resolved prior to filing the Company's Quarterly
Report on Form 10-Q/A for the quarter ended December
31, 1997 and Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998.
(B) The Board of Directors discussed the subject matter of
the disagreement with representatives of E&Y.
(C) The Company has authorized the former accountant to
respond fully to the inquiries of any successor
accountant concerning the subject matter of the
disagreement.
(a)(3) The Company has provided E&Y with a copy of the disclosures it
is making in this report, and the Company has requested that
E&Y furnish it with a letter addressed to the Commission
stating whether it agrees with the statements made by the
Company herein, and if not, stating the respects in which it
does not agree. The Company has filed E&Y's letter as an
exhibit to this report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not Applicable.
(B) PRO FORMA FINANCIAL INFORMATION.
Not Applicable.
(C) EXHIBITS.
The following exhibits are furnished in accordance with Item 601 of
Regulation S-K.
99.1 Letter from Ernst & Young LLP
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf of the
undersigned hereunto duly authorized.
FIRSTPLUS FINANCIAL GROUP, INC.
Date: October 6, 1999 By: /s/ Daniel T. Phillips
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Name: Daniel T. Phillips
Title: Chairman of the Board and
Chief Executive Officer
October 5, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Gentlemen:
We have read Item 4 of Form 8-K dated October 5, 1999 of FIRSTPLUS Financial
Group, Inc. and are in agreement with the statements contained in the first,
second, third and fourth paragraphs on page two and the first and second
paragraphs on page three therein. We have no basis to agree or disagree with
other statements of the registrant contained therein.
ERNST & YOUNG LLP
