<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(AMENDMENT NO. 1)
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)
<TABLE>
<CAPTION>
<S> <C> <C>
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)
</TABLE>
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.)
<PAGE> 2
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
-2-
<PAGE> 3
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
-3-
<PAGE> 4
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. E&Y's
letter responsive thereto is attached hereto as Exhibit 16.1.
Item 7. Exhibits
16.1 Letter from Ernst & Young LLP, dated May 11, 2000.
-4-
<PAGE> 5
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 16, 2000 By: /s/ Michael Joffred
------------------------------------------
Name: Michael Joffred
Title: Chief Financial Officer
-5-
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
Item No. Description
- -------- -----------
<S> <C>
16.1 E&Y letter.
</TABLE>
-6-
<PAGE> 1
Exhibit 16.1
[Ernst & Young LLP Letterhead]
May 11, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read Item 4 of Form 8-K dated May 10, 2000, of Graham-Field Health
Products, Inc. and are in agreement with the statements contained in the second
sentence of paragraph one, paragraphs two and four, the first, second, third and
fifth sentences of the fifth paragraph, the last sentence of the sixth
paragraph, and the eighth paragraph thereof. We have no basis to agree or
disagree with other statements of the registrant contained therein.
Regarding the registrant's statement concerning the lack of internal control to
prepare financial statements, included in the fifth paragraph on page one
therein, we had considered such matter in determining the nature, timing and
extent of procedures performed in our audit of the registrant's 1998 financial
statements.
Very truly yours
/s/ Ernst & Young LLP
