SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
Current Report Pursuant
to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): May 23, 1994
IDB COMMUNICATIONS GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-14972 93-0933098
(Commission (I.R.S. Employer
File No.) Identification No.)
10525 West Washington Boulevard, Culver City, California
(Address of Principal Executive Offices)
90232-1922
(Zip Code)
(213) 870-9000
(Registrant's Telephone Number, Including Area Code)
Item 5. Other Events.
On June 13, 1994, Deloitte & Touche ("Deloitte") provided
IDB Communications Group, Inc. (the "Registrant") with Deloitte's
response to the Registrant's Current Report on Form 8-K (the
"Form 8-K") filed with the Securities and Exchange Commission
(the "SEC") on May 31, 1994. In Deloitte's response filed as
Exhibit 16.1 hereto (the "Deloitte letter"), Deloitte confirmed
that the unresolved items of concern to Deloitte were limited to
the first quarter of 1994. Deloitte did not limit or withdraw
any report issued with respect to the Registrant's financial
statements audited by Deloitte for any of the ten fiscal years
ended December 31, 1993 or any consent provided by Deloitte with
respect to any of the six registration statements filed with the
SEC by the Registrant in 1993 or the registration statement filed
with the SEC by the Registrant in the first quarter of 1994.
Deloitte acknowledged in its response that Deloitte submitted its
resignation to the Registrant at a time when Deloitte's disputes
with the Registrant were unresolved and subject to continuing
discussion between Deloitte and the Registrant. As noted in the
Form 8-K, the Registrant was prepared to delay filing of its
Form 10-Q in an effort to satisfy Deloitte, but was unable to
advise Deloitte of its willingness to delay the filing before
Deloitte submitted its resignation to the Registrant. On the
morning of Monday, May 23, 1994, prior to Deloitte's resignation,
several members of management of the Registrant attempted to
contact Deloitte to reaffirm management's commitment to continue
to work with Deloitte until it was satisfied. However, the first
contact the Registrant's management had with Deloitte on May 23,
1994 was when Deloitte called the Registrant to tender its
resignation. The Registrant subsequently filed its Form 10-Q
later that day. [See paragraph (B) of the Deloitte letter.]
Deloitte's letter does not discuss, refer to or otherwise
call into question any accounting period other than the first
quarter of 1994 and the first quarter of 1992. [See paragraph (A)
of the Deloitte letter.] Deloitte had expressed concerns, in
connection with the Registrant's first quarter 1992 financial
results, regarding the accuracy of the Registrant's internally
generated financial statements. [See paragraph (C)(3) of the
Deloitte letter.] Deloitte, however, never stated prior to its
resignation that such concerns constituted a "reportable event"
(as defined in Item 304), and subsequently issued an unqualified
audit report with respect to the 1992 fiscal year, which report
has never been modified, supplemented or rescinded. Deloitte's
letter agrees that its concerns regarding the first quarter of
1992 "were ultimately resolved to Deloitte's satisfaction."
While Deloitte in its letter indicates that it "disagrees"
with certain of the statements contained in the Form 8-K,
particularly those statements describing the substance of
disputes between the Registrant's management and Deloitte [see
paragraph (C) of the Deloitte letter], the Deloitte letter
recasts such statements, providing greater detail in certain
instances, without directly contradicting the text of the Form
8-K.
The Registrant agrees that Deloitte advised it on May 13,
1994 (the business day prior to the prescribed due date for the
Form 10-Q), that Deloitte would resign if the Registrant filed
its Form 10-Q in its then current version. [See paragraph (C)(1)
of the Deloitte letter.] In fact, on that date, Deloitte
presented the Registrant's management with three alternatives:
(1) file the Form 10-Q in its then current form, (2) file the
Form 10-Q as modified to conform to Deloitte's suggestions, or
(3) delay the filing. The third alternative, which had been
strongly recommended by Deloitte, was accepted by the
Registrant's management and agreed to that same day by the Audit
Committee of the Registrant's Board of Directors. A Form 12b-25
was filed on May 16, 1994 to delay the prescribed due date of the
Form 10-Q until May 23, 1994.
Deloitte's letter states that Deloitte needed additional
support for the Registrant's proposed $2.9 million increase in
its provision for doubtful accounts. [See paragraph (C)(1) of the
Deloitte letter.] Subsequent to the Registrant's press release of
its financial results for the first quarter of 1994 on April 26,
1994, management became aware of the bankruptcy filing of a major
customer of the Registrant. Such customer was then indebted to
the Registrant in an amount in excess of $3 million. The
bankruptcy filing of such customer constituted a Type 1
Subsequent Event that should be accounted for and reflected on
the Registrant's balance sheet as of March 31, 1994. Deloitte did
not request any supporting documents relating to the bankruptcy
of such customer prior to its resignation.
Deloitte's letter states that, at the time of Deloitte's
resignation, it informed management and the Registrant's Audit
Committee that it was "no longer willing to rely on management's
representations." [See paragraph (C)(4) of the Deloitte letter.]
Deloitte's letter, however, does not offer any reasons for such
statement. Prior to its resignation, Deloitte made no attempt to
express its concerns independently to either the outside board
members of the Audit Committee or other members of the
Registrant's management (notably, the Registrant's chief
executive officer or its general counsel).
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, in
the City of Culver City, State of California, on August 18, 1994.
IDB COMMUNICATIONS GROUP, INC.
By: /s/ Rudy Wann
_____________________________________
Rudy Wann
Vice President, Finance
and Chief Financial Officer
