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): February 29, 2000
ENGINEERING ANIMATION, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 000-27670 42-1323712
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
2321 North Loop Drive
Ames, Iowa 50010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (515) 296-9908
None
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(Former name or former address, if changed since last report.)
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Item 4. Changes in Registrant's Certifying Accountant.
Ernst & Young LLP ("E&Y") served as the independent auditor engaged as
our principal accountants since 1991. After consultation with the Securities and
Exchange Commission (SEC), E&Y has determined that, as a result of certain
bookkeeping work performed by E&Y at three of our European subsidiaries, it
could not meet the strict, SEC enforced technical requirements for auditor
independence. Effective March 1, 2000, we have retained KPMG LLP ("KPMG") as our
principal accountants to replace E&Y, who resigned as of February 29, 2000. Our
audit committee and board of directors approved the change of accountants from
E&Y to KPMG.
The audit reports of E&Y on our consolidated financial statements for
the fiscal years ending December 31, 1997 and 1998 did not contain any adverse
opinion or disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope, or accounting principles.
In connection with the audits of the fiscal years ending December 31,
1997 and 1998 and the subsequent interim periods, we had no disagreements with
E&Y on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreements, if not
resolved to their satisfaction, would have caused E&Y to make reference in
connection with their opinion to the subject matter of the disagreement. In
addition, during that time there were no reportable events (as defined in Item
304(a)(1)(v) of Regulation S-K).
During the fiscal years ending December 31, 1997, 1998 and 1999, and
the subsequent interim period, we did not consult with KPMG regarding the
application of generally accepted accounting principles to a specific
transaction, either proposed or completed, or the type of audit opinion that
might be rendered on our consolidated financial statements. Since there were no
disagreements or reportable events, we did not consult KPMG in respect to these
matters during that time.
We provided E&Y with a copy of this report prior to filing it with the
SEC. We requested that E&Y furnish us with a letter to the SEC stating whether
E&Y agrees with the above statements. E&Y's letter dated March 3, 2000 is
attached as Exhibit 16.1.
Item 5. Other Events
On March 1, 2000, we issued a press release discussing the change in
principal accountants described in Item 4 above. That press release is attached
as Exhibit 99.1.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements and Exhibits.
Not Applicable.
(b) Exhibits.
The exhibits listed in the accompanying Exhibit Index are filed as part
of this Current Report on Form 8-K.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENGINEERING ANIMATION, INC.
Date: March 3, 2000 By:/s/ Michael K. O'Gara
Michael K. O'Gara
Vice President of Finance and
Chief Financial Officer
<PAGE>
ENGINEERING ANIMATION, INC.
EXHIBIT INDEX TO FORM 8-K REPORT
Exhibit Description
16.1 Letter from Ernst & Young LLP dated March 3, 2000 regarding
change in certifying accountant.
99.1 Press Release dated March 1, 2000 discussing change in
principal accountants.
EXHIBIT 16.1 TO FORM 8-K
March 3, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Gentlemen:
We have read Item 4 of Form 8-K dated March 3, 2000, of Engineering Animation,
Inc. and are in agreement with the statements contained in the first three
paragraphs and the fifth paragraph on page 2 therein. We have no basis to agree
or disagree with other statements of the registrant contained therein.
Very truly yours,
/s/ Ernst & Young LLP
FOR IMMEDIATE RELEASE CONTACT:
Maribeth Waldman
(515) 296-6560
[email protected]
EAI SELECTS KPMG LLP AS ITS AUDITORS
Ames, Iowa -- (March 1, 2000) -- Engineering Animation Inc. (Nasdaq: EAII),
announced the selection of KPMG LLP as its auditors, effective today. EAI's
previous auditors, Ernst & Young LLP, discovered it could not meet a Securities
and Exchange Commission technical requirement for auditing independence.
The SEC prohibits an auditor from providing bookkeeping services to foreign
divisions or subsidiaries of domestic audit clients for fees in excess of 1% of
the client's total audit fee. E&Y provided bookkeeping services for three of
EAI's European subsidiaries and received fees in excess of the requirement,
therefore impairing their independence and requiring E&Y to resign.
"We are disappointed that E&Y found itself in the position of having to resign
as our auditors due to an independence violation," stated Matthew Rizai, EAI CEO
and chairman of the board. "We are pleased that KPMG is fully engaged. The KPMG
staff has initiated their work on site and is working diligently to expedite the
audit process."
E&Y have provided auditing services to EAI each fiscal year since 1990. EAI's
1999 financials will be audited by KPMG.
About EAI
Engineering Animation, Inc. is the leader in Internet-enabled visual process
management, collaboration, analysis and communication solutions for extended
manufacturing enterprises. EAI's VisEPM(TM) solutions, which include
e-Vis.com(TM) (www.e-vis.com) and Open Enterprise Visualization, help
manufacturing companies drive down costs while improving business practices,
efficiency, quality and time-to-market. The Company maintains its corporate
headquarters and technology center in Ames, Iowa and has offices worldwide.
For more information, visit EAI at www.eai.com or call (515) 296-9908.
