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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): December 12, 1997
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MCII HOLDINGS (USA), INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE 333-08871 86-0830781
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
10 EAST GOLF ROAD, DES PLAINES, ILLINOIS 60016
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(Address of principal executive offices) (Zip Code)
(847) 299-9900
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
Exhibit Index Appears at Page 5
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MCII HOLDINGS (USA), INC.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On December 12, 1997, Price Waterhouse LLP ("Price Waterhouse")
informed the Registrant that it would decline to stand for re-election as the
Registrant's independent accountants effective with the audit of the
Registrant's financial statements for the year ended December 31, 1997. The
Registrant has commenced discussions with other independent accountants in
order to engage a firm to conduct the audit of its financial statements for the
year ended December 31, 1997.
Price Waterhouse was first engaged as independent accountants to report
on the Registrant's financial statements for the year ended December 31, 1996.
Price Waterhouse's report on the 1996 financial statements did not contain an
adverse opinion or a disclaimer of opinion, and was not qualified or modified
as to uncertainty, audit scope or accounting principles.
During the year ended December 31, 1996 and the subsequent interim
period preceding Price Waterhouse's determination not to stand for re-election,
there were no disagreements with Price Waterhouse on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Price
Waterhouse, would have caused Price Waterhouse to make reference to the subject
matter of the disagreements in connection with its report.
During the year ended December 31, 1996 and the subsequent interim
period preceding Price Waterhouse's determination not to stand for re-election,
Price Waterhouse did not advise the Registrant that the internal controls
necessary for the Registrant to develop reliable financial statements do not
exist. However, on October 28, 1997 Price Waterhouse issued a letter to the
Registrant that identified a reportable condition under the standards
established by the American Institute of Certified Public Accountants (the
"AICPA"). The AICPA defines reportable conditions as matters coming to the
auditor's attention that should be communicated to the audit committee because
they represent significant deficiencies in the design or operation of internal
control, which could adversely affect the organization's ability to record,
process, summarize, and report financial data consistent with the assertions of
management in the financial statements.
Specifically, Price Waterhouse noted issues related to the turnover of
key financial personnel concurrent with the relocation of the Registrant's U.S.
corporate office from Phoenix to Des Plaines, Illinois in early 1997 and
further turnover in 1997 that Price Waterhouse characterized as a deterioration
in the Registrant's financial control and reporting infrastructure giving rise
to a reportable condition. Price Waterhouse recommended that the Registrant
take immediate steps to identify the additional personnel and capabilities
necessary to strengthen the Registrant's financial and reporting controls and
put in place the appropriate infrastructure, including the hiring of a chief
accounting officer at a vice president level. The Registrant is currently in
the process of implementing staff changes that it believes will prevent the
recurrence of such conditions.
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The Registrant has requested that Price Waterhouse furnish it with a
letter addressed to the Securities and Exchange Commission stating whether or
not it agrees with the above statements. A copy of such letter, dated December
19, 1997, is filed as Exhibit 16 to this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
The Exhibits listed on the accompanying Exhibit Index are filed
as a part of this Report and are incorporated herein by
reference.
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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 by the
undersigned thereunto duly authorized.
MCII HOLDINGS (USA), INC.,
a Delaware corporation
Date: December 19, 1997 By: /s/ Guillermo Kareh Aarun
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Name: Guillermo Kareh Aarun
Title: Director, Chief Executive Corporate
Officer and Secretary
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INDEX TO EXHIBITS
Exhibit No. Description
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16 Letter re Change in Certifying Accountant
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EXHIBIT 16
[Letterhead of Price Waterhouse LLP]
December 19, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
MCII Holdings (USA), Inc.
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We have read Item 4 of MCII Holdings (USA), Inc.'s Form 8-K dated December 12,
1997 and are in agreement with the statements contained in Item 4 therein,
except for the last sentence of the first paragraph and the last sentence of
the fifth paragraph as to which we have no basis to agree or disagree.
Yours very truly,
/s/ Price Waterhouse LLP
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