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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 30, 1999
AMERICAN BANKNOTE CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
1-3410 13-0460520
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(Commission File Number) (I.R.S. Employer Identification No.)
410 PARK AVENUE, NEW YORK, N.Y. 10022-4407
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(Address of Principal Executive Office) (Zip Code)
(212) 593-5700
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(Registrant's Telephone Number, Including Area Code)
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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.
On December 30, 1999, the firm of Deloitte & Touche LLP ("D&T")
orally advised the Registrant and the Chairman of the Registrant's Audit
Committee that D&T was resigning as the Registrant's independent
accountant. D&T will remain as the independent accountant for certain of
the Registrant's foreign subsidiaries. D&T orally advised the Registrant
that, in view of the status of the investigation being conducted for a
special committee formed by the Board of Directors (the "Special
Committee") into the potential revenue recognition issues at the
Registrant's former subsidiary, American Bank Note Holographics
("Holographics"), D&T was unable to conclude whether or not it could rely
on management's representations. D&T confirmed by letter dated December
30, 1999 that the client-auditor relationship between D&T and the
Registrant had ceased and did not give any reason for its resignation in
that letter.
The Registrant's Board of Directors formed the Special Committee in
early February 1999 as a result of the revenue recognition issues
disclosed by Holographics. On January 19, 1999 Holographics announced
that its Audit Committee had retained special legal counsel and D&T, its
auditors, to investigate certain transactions during the second and third
quarters of 1998 which resulted in the inappropriate recognition of
revenue during those quarters. On January 25, 1999 Holographics announced
that, based upon "currently available information," it expected that its
revenues for 1998 would be substantially lower than its revenues for 1997
and that its interim financial statements in 1998 would be restated. In
addition, Holographics announced that it believed that its net income for
1997 and 1996 had been overstated and that its financial statements as of
December 31, 1997 and 1996 and for the three-year period ended on December
31, 1997 and the related report of Holographics' independent accountants
should no longer be relied upon. (D&T audited those financial statements
of Holographics.) On February 1, 1999, Holographics announced that,
"based upon currently available information," its net income for the
fiscal year ended December 31, 1997 may have been overstated by in excess
of 50% and that its Audit Committee's special investigation into revenue
recognition practices was "progressing."
In response to Holographics' January 19, 1999 press release, the
Registrant announced on January 19, 1999 that, "based upon currently
available information, the Holographics restatement will result in" a
restatement of financial statements for its second and third quarters of
1998 to reflect a decrease in revenues and operating income for the second
quarter of 1998 and an increase in the gain on sale of Holographics that
the Registrant reported in the third quarter of 1998. In response to
Holographics' January 25, 1999 press release, the Registrant announced on
January 25, 1999 that its financial statements as of December 31, 1997 and
1996 and for the three-year period ended on December 31, 1997 and the
related report of its independent accountants should no longer be relied
upon. In response to Holographics' February 1, 1999 press release, the
Registrant announced the formation of the Special Committee to "supervise
the Board's consideration of the potential revenue recognition issues
being investigated by [Holographics'] Audit Committee," the retention of
special counsel to advise the Special Committee and the retention of
PricewaterhouseCoopers LLP to assist the special counsel.
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On December 22, 1999, Holographics filed its annual report on Form
10-K for the fiscal year ended December 31, 1998, which included financial
statements as of December 31, 1998 and for the fiscal year then ended and
restated financial statements as of December 31, 1997 and for the two-year
period ended December 31, 1997 that were audited by D&T. In a meeting
with D&T on December 29, 1999, the Special Committee's special counsel
advised D&T that, in order to complete fully its consideration of the
revenue recognition issues at Holographics, the Special Committee's
special counsel needed to review Holographics' restated financial
statements and the bases for the restated numbers and to interview certain
persons previously employed at Holographics. The Registrant requested
access to financial information relating to the restated financial
statements for review by the Special Committee's special counsel but, as
of D&T's resignation on December 30, 1999, had not received such
information. The Special Committee's special counsel had also requested
the opportunity to interview the former employees, but, as of D&T's
resignation on December 30, 1999, the former employees had not consented
to such interviews.
As stated in the Registrant's January 25, 1999 press release, D&T's
report on the Registrant's consolidated financial statements as of
December 31, 1997 and 1996 and for the three-year period ended December
31, 1997 should not be relied upon as a result of the revenue recognition
issues described in that press release as well as the other press releases
issued by the Registrant. D&T's report on the Registrant's consolidated
financial statements as of December 31, 1997 and 1996 and for the three-
year period ended December 31, 1997 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.
In connection with the audits of the Registrant's consolidated
financial statements for the fiscal years ended December 31, 1997 and
1996, and during the subsequent period since the completion of the audit
for the Registrant's fiscal year ended December 31, 1997, there were no
disagreements with D&T on matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which, if
not resolved to the satisfaction of D&T, would have caused D&T to make
reference to the matter in their report other than a disagreement relating
to the scope of D&T's audit of the manufacture and delivery of holograms
accounting for sales of approximately $6.9 million to one customer. In
order to furnish holograms required by a supply agreement with that
customer, Holographics had subcontracted with a third party the
manufacture of such holograms. This disagreement was resolved to D&T's
satisfaction prior to the issuance of the Registrant's 1997 financial
statements. D&T reported the disagreement to the chairman of the
Registrant's Audit Committee on March 9, 1998.
In or about May 1999, D&T advised the Chairman of the Registrant's
Audit Committee that D&T had concerns relating to a $1.5 million
consulting fee that one of the Registrant's subsidiaries had agreed to pay
a consultant in connection with certain foreign printing projects.
Thereafter, the Audit Committee directed the special counsel assisting the
Special Committee with the Holographics revenue recognition issues to
investigate this matter.
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The Registrant is in the process of engaging new independent
accountants to audit the Registrant's financial statements. The Registrant
has authorized D&T to respond fully to any successor independent
accounting firm regarding any matters relating to D&T's audit of the
Registrant's financial statements, the disagreement with the Registrant,
or any other matter.
Item 7. Financial Statements and Exhibits
(c) The following exhibits are filed with this report:
Exhibit Number Description
16.1* Letter of D&T dated _____, 2000
* To be filed by amendment.
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.
AMERICAN BANKNOTE CORPORATION
By: s/Patrick J. Gentile
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Patrick J. Gentile
Senior Vice President Finance
Date: January 7, 2000
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