<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
NOVEMBER 21, 1995
-----------------
FERROFLUIDICS CORPORATION
-------------------------
(Exact name of registrant as specified in charter)
MASSACHUSETTS 0-10734 02-0275185
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
40 SIMON STREET, NASHUA, NEW HAMPSHIRE 03061
---------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (603) 883-9800
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There are 10 pages in this Report, including exhibits.
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Item 4. Changes in Registrant's Certifying Accountant
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On November 21, 1995, the Company terminated the appointment of Coopers &
Lybrand LLP as independent accountants for the Company. The decision not to
renew the engagement of Coopers & Lybrand LLP followed a determination by
management and the Audit Committee, approved by the Board of Directors, that it
was in the interest of the Company to periodically review the relationship
between the Company and its independent accounting firm with respect to
services provided and fees charged. For the fiscal year ended June 30, 1995
and several years prior thereto Coopers & Lybrand LLP had examined and reported
upon the Company's financial statements and had served as the Company's
independent accountants. The Company has not yet engaged an independent
accounting firm to perform the audit for the fiscal year ending June 30, 1996,
but has received proposals from certain accounting firms and expects to make a
decision shortly.
In connection with the audits of the two fiscal years ended June 30, 1994
("fiscal 1994") and June 30, 1995 ("fiscal 1995"), and during the subsequent
interim period through November 21, 1995, there were no disagreements with
Coopers & Lybrand LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to their satisfaction would have caused them
to make reference in connection with their opinion to the subject matter of the
disagreement.
The audit reports of Coopers & Lybrand LLP on the consolidated financial
statements of the Company for fiscal 1994 and fiscal 1995 did not contain any
adverse opinion or disclaimer of opinion, nor were they qualified or modified
as to uncertainty, audit scope, or accounting principles, except as follows.
In the Report of Independent Accountants furnished to the Company by Coopers &
Lybrand LLP on January 26, 1994, in connection with the audit for the fiscal
year ended June 30, 1993 ("fiscal 1993"), Coopers & Lybrand LLP stated, among
other things, that based upon their understanding of the underlying
circumstances leading to the departure of the Company's former chief executive
officer and chief financial officer subsequent to June 30, 1993, Coopers &
Lybrand LLP could not rely on those individuals' representations nor could
Coopers & Lybrand LLP be certain that they had been provided with all
appropriate documentation relevant to the transactions which such individuals
had initiated or for which they were responsible, and accordingly, that the
scope of Coopers & Lybrand LLP's work was not sufficient to enable them to
express, and they did not express, an opinion on the consolidated statements of
operations, stockholders' equity and cash flows for any of the three years in
the period ended June 30, 1993. The Report of Independent Accountants
furnished to the Company by Coopers & Lybrand LLP on each of October 20, 1994
and August 31, 1995, in connection with the audits for fiscal 1994 and fiscal
1995, respectively, contains similar disclosure as to the inability of Coopers
& Lybrand LLP to express an opinion on the consolidated statements of
operations, stockholders' equity and cash flows for the years ended June 30,
1993 and June 30, 1992 in the case of the October 20, 1994 report, and June 30,
1993 in the case of the August 31, 1995 report.
2
<PAGE> 3
The inability of Coopers & Lybrand LLP to express an opinion in connection
with certain financial statements of the Company and to rely upon the
representations of former management relates only to fiscal 1993, and, as
stated by Coopers & Lybrand LLP in their audit reports, resulted from
the circumstances which led to the departure of the former chief executive
officer and the former chief financial officer from the Company during fiscal
1994. Prior to the rendering by Coopers & Lybrand LLP of their audit report
for fiscal 1993, certain members of the Board of Directors and the new
management of the Company discussed with Coopers & Lybrand LLP the nature and
scope of such audit report. The Company has authorized Coopers & Lybrand LLP
to respond fully to the inquiries of the Company's successor accountants
concerning the subject matter of the fiscal 1993 audit report.
In a letter dated August 9, 1994 (the "August 1994 Letter"), Coopers &
Lybrand LLP noted that certain elements of the Company's internal control
structure under prior management which were previously communicated to the
Company did not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation to the financial
statements being audited may occur and not be detected within a timely period
by employees in the normal course of performing their assigned functions.
Certain members of the Board of Directors and the new management of the Company
have discussed with Coopers & Lybrand LLP the matters identified in the August
1994 Letter, and, subsequent to receiving the August 1994 Letter, the Company
believes that it has taken such actions as were necessary to cure any potential
material weaknesses in its internal accounting control structure which may have
resulted from actions taken by prior management. The Company has authorized
Coopers & Lybrand LLP to respond fully to the inquiries of the Company's
successor accountants concerning the subject matter of the August 1994 Letter.
As noted below, the Report of Independent Accountants furnished to the Company
by Coopers & Lybrand LLP on August 31, 1995, in connection with the audit for
fiscal 1995, does not contain any adverse opinion or disclaimer of opinion, or
qualification or modification as to uncertainty, audit scope, or accounting
principles with respect to the financial statements for fiscal 1995 or fiscal
1994. Except as provided above, Coopers & Lybrand LLP has not advised the
Company of any inability to rely upon management's representations nor have
there been any other reportable events of the type required to be disclosed
pursuant to the applicable regulations of the Securities and Exchange
Commission.
Additionally, in the Report of Independent Accountants furnished to the
Company by Coopers & Lybrand LLP on October 20, 1994, in connection with the
audit for fiscal 1994, Coopers & Lybrand LLP stated, among other things, that
because of the inherent uncertainty associated with the valuations of foreign
privately held entities, the estimated fair value reflected in the financial
statements of a $3,669,000 investment by the Company in a foreign entity may
differ from the value that would be determined by negotiation between parties
in a sales transaction, and the difference could be material. As a result of a
violation at that time of a covenant contained in the Company's 1986 Industrial
Revenue Bond, Coopers & Lybrand LLP also stated in its fiscal 1994 audit report
that the financial statements had been prepared assuming that the Company would
continue as a going concern; that if the Company were unable to resolve this
violation it could result in a default under the Company's 1986 Industrial
Revenue Bond and the Company's domestic credit facility which, in turn, could
result in the acceleration of all amounts due under these debt obligations;
that the situation raised substantial doubt about the Company's ability to
continue as a going concern; that in recognition of the situation all amounts
due under these debt obligations were classified as
3
<PAGE> 4
current liabilities in the financial statements; and that the financial
statements did not include any other adjustments that might result from the
outcome of this uncertainty.
The Report of Independent Accountants furnished to the Company by Coopers
& Lybrand LLP on August 31, 1995, in connection with the audit for fiscal 1995,
does not contain any adverse opinion or disclaimer of opinion, or qualification
or modification as to uncertainty, audit scope, or accounting principles with
respect to the financial statements for fiscal 1995 or fiscal 1994.
Item 7. Financial Information, PRO FORMA Financial Information and Exhibits.
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<TABLE>
<CAPTION>
Exhibit No Description
---------- -----------
<S> <C>
16.1 Letter from Coopers & Lybrand LLP
</TABLE>
4
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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.
FERROFLUIDICS CORPORATION
Date: December 8, 1995 By: /s/ Paul F. Avery, Jr.
--------------------------
Paul F. Avery, Jr.
Chief Executive Officer
5
<PAGE> 1
EXHIBIT 16.1
COOPERS | Two Wall Street | telephone (603) 669-2200
& LYBRAND | P.O. Box 5080 |
| Manchester, New Hampshire | facsimile (603) 624-8351
| 03108 |
December 8, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read the statements made by Ferrofluidics Corporation (copy attached),
which we understand were filed with the Commission, pursuant to Item 4 of Form
8-K, as part of the Company's Form 8-K/A report for November 21, 1995. We agree
with the statements concerning our Firm in that Form.
Very truly yours,
/s/ Coopers & Lybrand L.L.P.
- ------------------------------
Coopers & Lybrand L.L.P.
<PAGE> 2
Item 4. Changes in Registrant's Certifying Accountant
- ------------------------------------------------------
On November 21, 1995, the Company terminated the appointment of Coopers &
Lybrand LLP as independent accountants for the Company. The decision not to
renew the engagement of Coopers & Lybrand LLP followed a determination by
management and the Audit Committee, approved by the Board of Directors, that it
was in the interest of the Company to periodically review the relationship
between the Company and its independent accounting firm with respect to
services provided and fees charged. For the fiscal year ended June 30, 1995
and several years prior thereto Coopers & Lybrand LLP had examined and reported
upon the Company's financial statements and had served as the Company's
independent accountants. The Company has not yet engaged an independent
accounting firm to perform the audit for the fiscal year ending June 30, 1996,
but has received proposals from certain accounting firms and expects to make a
decision shortly.
In connection with the audits of the two fiscal years ended June 30, 1994
("fiscal 1994") and June 30, 1995 ("fiscal 1995"), and during the subsequent
interim period through November 21, 1995, there were no disagreements with
Coopers & Lybrand LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to their satisfaction would have caused them
to make reference in connection with their opinion to the subject matter of the
disagreement.
The audit reports of Coopers & Lybrand LLP on the consolidated financial
statements of the Company for fiscal 1994 and fiscal 1995 did not contain any
adverse opinion or disclaimer of opinion, nor were they qualified or modified
as to uncertainty, audit scope, or accounting principles, except as follows.
In the Report of Independent Accountants furnished to the Company by Coopers &
Lybrand LLP on January 26, 1994, in connection with the audit for the fiscal
year ended June 30, 1993 ("fiscal 1993"), Coopers & Lybrand LLP stated, among
other things, that based upon their understanding of the underlying
circumstances leading to the departure of the Company's former chief executive
officer and chief financial officer subsequent to June 30, 1993, Coopers &
Lybrand LLP could not rely on those individuals' representations nor could
Coopers & Lybrand LLP be certain that they had been provided with all
appropriate documentation relevant to the transactions which such individuals
had initiated or for which they were responsible, and accordingly, that the
scope of Coopers & Lybrand LLP's work was not sufficient to enable them to
express, and they did not express, an opinion on the consolidated statements of
operations, stockholders' equity and cash flows for any of the three years in
the period ended June 30, 1993. The Report of Independent Accountants
furnished to the Company by Coopers & Lybrand LLP on each of October 20, 1994
and August 31, 1995, in connection with the audits for fiscal 1994 and fiscal
1995, respectively, contains similar disclosure as to the inability of Coopers
& Lybrand LLP to express an opinion on the consolidated statements of
operations, stockholders' equity and cash flows for the years ended June 30,
1993 and June 30, 1992 in the case of the October 20, 1994 report, and June 30,
1993 in the case of the August 31, 1995 report.
<PAGE> 3
The inability of Coopers & Lybrand LLP to express an opinion in connection
with certain financial statements of the Company and to rely upon the
representations of former management relates only to fiscal 1993, and, as
stated by Coopers & Lybrand LLP in their audit reports, resulted from
the circumstances which led to the departure of the former chief executive
officer and the former chief financial officer from the Company during fiscal
1994. Prior to the rendering by Coopers & Lybrand LLP of their audit report
for fiscal 1993, certain members of the Board of Directors and the new
management of the Company discussed with Coopers & Lybrand LLP the nature and
scope of such audit report. The Company has authorized Coopers & Lybrand LLP
to respond fully to the inquiries of the Company's successor accountants
concerning the subject matter of the fiscal 1993 audit report.
In a letter dated August 9, 1994 (the "August 1994 Letter"), Coopers &
Lybrand LLP noted that certain elements of the Company's internal control
structure under prior management which were previously communicated to the
Company did not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation to the financial
statements being audited may occur and not be detected within a timely period
by employees in the normal course of performing their assigned functions.
Certain members of the Board of Directors and the new management of the Company
have discussed with Coopers & Lybrand LLP the matters identified in the August
1994 Letter, and, subsequent to receiving the August 1994 Letter, the Company
believes that it has taken such actions as were necessary to cure any potential
material weaknesses in its internal accounting control structure which may have
resulted from actions taken by prior management. The Company has authorized
Coopers & Lybrand LLP to respond fully to the inquiries of the Company's
successor accountants concerning the subject matter of the August 1994 Letter.
As noted below, the Report of Independent Accountants furnished to the Company
by Coopers & Lybrand LLP on August 31, 1995, in connection with the audit for
fiscal 1995, does not contain any adverse opinion or disclaimer of opinion, or
qualification or modification as to uncertainty, audit scope, or accounting
principles with respect to the financial statements for fiscal 1995 or fiscal
1994. Except as provided above, Coopers & Lybrand LLP has not advised the
Company of any inability to rely upon management's representations nor have
there been any other reportable events of the type required to be disclosed
pursuant to the applicable regulations of the Securities and Exchange
Commission.
Additionally, in the Report of Independent Accountants furnished to the
Company by Coopers & Lybrand LLP on October 20, 1994, in connection with the
audit for fiscal 1994, Coopers & Lybrand LLP stated, among other things, that
because of the inherent uncertainty associated with the valuations of foreign
privately held entities, the estimated fair value reflected in the financial
statements of a $3,669,000 investment by the Company in a foreign entity may
differ from the value that would be determined by negotiation between parties
in a sales transaction, and the difference could be material. As a result of a
violation at that time of a covenant contained in the Company's 1986 Industrial
Revenue Bond, Coopers & Lybrand LLP also stated in its fiscal 1994 audit report
that the financial statements had been prepared assuming that the Company would
continue as a going concern; that if the Company were unable to resolve this
violation it could result in a default under the Company's 1986 Industrial
Revenue Bond and the Company's domestic credit facility which, in turn, could
result in the acceleration of all amounts due under these debt obligations;
that the situation raised substantial doubt about the Company's ability to
continue as a going concern; that in recognition of the situation all amounts
due under these debt obligations were classified as
<PAGE> 4
current liabilities in the financial statements; and that the financial
statements did not include any other adjustments that might result from the
outcome of this uncertainty.
The Report of Independent Accountants furnished to the Company by Coopers
& Lybrand LLP on August 31, 1995, in connection with the audit for fiscal 1995,
does not contain any adverse opinion or disclaimer of opinion, or qualification
or modification as to uncertainty, audit scope, or accounting principles with
respect to the financial statements for fiscal 1995 or fiscal 1994.
