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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) May 3, 2000.
GRAHAM-FIELD HEALTH PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-8801 NY 11-2578230
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
81 Spence Street, Bay Shore, New York 11706
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (631) 273-2200
400 Rabro Drive East, Hauppauge, New York 11788
(Former name or former address, if changed since last report.)
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Item 4. Changes in Registrant's Certifying Accountant.
On May 3, 2000 (the "Order Date"), the United States Bankruptcy Court
for the District of Delaware entered an order in the pending bankruptcy cases of
Graham-Field Health Products, Inc., et al. (Case No. 99-4457-MFW) (Jointly
Administered) approving the application of Graham-Field Health Products, Inc.
(the "Registrant") for the employment of Arthur Andersen LLP ("Andersen") as the
Registrant's independent accountants. On May 4, 2000, the Registrant advised its
former independent accountants, Ernst & Young LLP ("E&Y"), which had last
audited the Registrant's financial statements for the year ended December 31,
1998, of the retention of Andersen and of the simultaneous dismissal of E&Y.
Therefore, E&Y has been dismissed as the Registrant's accountants
effective on the Order Date. E&Y's report on the financial statements of the
Registrant for the year ended December 31, 1998, the last audit performed by
E&Y, did not contain an adverse opinion or a disclaimer of opinion, nor was it
qualified or modified as to uncertainty, audit scope or accounting principles
except as follows: E&Y stated that "[T]he Company has incurred significant
losses in each of the three fiscal years in the period ended December 31, 1998.
In addition, ... the Company has been named as a defendant in at least fifteen
putative class action lawsuits that have been consolidated into an amended
complaint. These conditions raise substantial doubt about the Company's ability
to continue as a going concern.... The consolidated financial statements and
financial statement schedule do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the outcome
of this uncertainty."
The Registrant's decision to change accountants was recommended by the
Audit Committee of the Board of Directors and approved by the full Board of
Directors of the Registrant.
Since December 31, 1997, there have not been any disagreements with E&Y
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 E&Y, would have caused E&Y to make a reference to the
subject matter of the disagreements in connection with its report on the
financial statements of the Registrant.
Since December 31, 1997, E&Y has not advised the Registrant of any of
the items listed in Regulation S-K, Section 229.304(a)(1)(v)(A) through (D)
except as follows: In June 1999, E&Y provided the then senior management of the
Registrant with a draft comment letter regarding internal accounting controls.
That draft letter identified a "reportable condition," and noted
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that "reportable conditions involve matters coming to [E&Y's] attention relating
to significant deficiencies in the design or operation of internal controls that
in [E&Y's] judgment could adversely affect the Company's ability to record,
process, summarize and report financial data consistent with the assertions of
management in the consolidated financial statements." At the August 16, 1999
meeting of the Board of Directors, in response to a question regarding the
status of the comment letter regarding internal accounting control posed to E&Y
representatives by an Audit Committee member, E&Y representatives stated that a
draft of such letter had been provided to senior management. The Audit
Committee of the Board of Directors of the Registrant was reconstituted in
February 2000 and consists of directors who were not members of the Board of
Directors in June 1999. Neither the former 1999 nor the current Audit Committee
of the Board of Directors nor the former 1999 nor the current Board of Directors
have discussed these items with E&Y. The current Audit Committee has discussed
these issues with Andersen. The Registrant is currently assessing its internal
control structure and will formulate a plan to implement appropriate controls.
The Registrant has authorized E&Y to respond fully to inquiries of Andersen
concerning these items.
Andersen was engaged as the Registrant's independent accountants
effective on the Order Date. Since December 31, 1997, neither the Registrant nor
any party acting on the Registrant's behalf has engaged Andersen for the type of
work described in Regulation S-K, Section 229.304(a)(2)(i) or (ii) except as
follows: In December 1998, Rogers & Wells, special counsel to the Registrant,
engaged Andersen to assist it with regard to Rogers & Wells' assignment from the
Audit Committee of the Board of Directors of the Registrant to investigate
certain alleged accounting errors and irregularities with respect to the
Registrant's reported financial results for the years ended December 31, 1996
and 1997. Such assistance included advice on certain accounting matters
described in Regulation S-K, Section 229.304(a)(2)(i) and (ii). No report of
Andersen's views on these matters was issued to the Registrant. Andersen's
advice on these matters was rendered in its entirety to Rogers & Wells. E&Y was
consulted by the Registrant regarding these accounting matters and responded to
the Registrant's inquiries.
The Registrant has asked Andersen to review the disclosure contained in
this Item and has provided Andersen the opportunity to furnish the Registrant
with a letter addressed to the Securities and Exchange Commission containing any
new information, clarification of the Registrant's expression of its views or
respects in which it does not agree with the statements made by the Registrant
herein. Andersen has declined to provide such a letter.
The Registrant has also provided E&Y with a copy of the disclosure
contained in this Item and has requested E&Y to furnish the Registrant with a
letter addressed to the Securities and Exchange Commission stating whether it
agrees with the statements made by the Registrant herein and, if not, stating
the respects in which it does not agree. As of the date of this filing, E&Y has
not provided such a letter to the Registrant.
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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 hereunto duly authorized.
GRAHAM-FIELD HEALTH PRODUCTS, INC.
Date: May 10, 2000 By: /s/ David A. Hilton
Name: David A. Hilton
Title: Chief Executive Officer
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