SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): October 20, 1998
THE KUSHNER-LOCKE COMPANY
(Exact name of registrant as specified in its charter)
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California 0-17295 95-4079057
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
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11601 Wilshire Boulevard, 21st Floor, Los Angeles, California 90025
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 481-2000
No Change
(Former name or former address, if changed since last report.)
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Item 4. Changes in Registrant's Certifying Accountant
On October 20, 1998, the Company selected PricewaterhouseCoopers LLP ("PWC")
to audit the consolidated financial statements of The Kushner-Locke Company
(the "Company") for the fiscal year ended September 30, 1998. The Company's
prior fiscal year end financial statements were audited by KPMG Peat Marwick
LLP ("KPMG"). The decision to change auditors was approved by the Audit
Committee of the Board of Directors. PWC acts as independent accountants for
the Company's majority-owned subsidiary 800-U.S. Search and the change to PWC
as the Company's independent accountants will centralize review of related
financial statements.
During the two most recent fiscal years, and any subsequent interim period
prior to October 20, 1998, the Company believes that there were no
disagreements with KPMG 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 KPMG, would have caused
them to make reference to the subject matter of the disagreements in
connection with their report. KPMG's report on the financial statements of
the Company for each of the past two fiscal years did not contain any adverse
opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles.
During the two most recent fiscal years, and any subsequent interim period
prior to October 20, 1998, the Company believes that there was no disagreement
or difference of opinion with KPMG regarding any "reportable event" as that
term is defined in Item 304(a)(1)(v) of Regulation S-K. In its report to the
Board of Directors of the Company in connection with its audit of the fiscal
year ended September 30, 1997 financial statements of the Company, KPMG
advised the Company as to the existence of certain reportable conditions in
the Company's system of internal control which KPMG believes are reportable
events. These reportable conditions related to (1) improving communication
among the finance department and senior management regarding the accounting
for several 1997 projects, (2) improving tracking of distributions due to the
Company from third parties on certain projects and (3) improving estimates of
certain information utilized in preparation of and adjustments to the
Company's financial statements. The Company's consolidated financial
statements for the fiscal year ended September 30, 1997 reflected any
adjustments the Company and KPMG deemed necessary with respect to the
foregoing. The Company believes that such reportable conditions have either
been corrected to the extent practicable or that they relate to procedures
which, in accordance with the recommendations of KPMG in the above referenced
report, the Company is in the process of implementing corrections to such
items. The Board of Directors of the Company discussed the above reportable
conditions with representatives of KPMG following receipt of such advice from
KPMG.
The Company has provided KPMG with a copy of the disclosures it is making in
response to Item 304(a) of Regulation S-K, and has requested that KPMG furnish
the Company with a letter addressed to the Commission stating whether it
agrees with the statements made by the Company. Such letter is attached
hereto as exhibit 16. In addition, the Company has authorized KPMG to respond
fully to the inquiries of PWC concerning the subject matter described in the
foregoing paragraphs.
During the two most recent fiscal years and through October 20, 1998, the
Company (or anyone on the Company's behalf) did not consult PWC in
connection with the Company's financial statements regarding either the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements or any matter that was the subject of any
reportable event as described above.
Item 7. Exhibits
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Exhibit No. Description
16 Letter of KPMG Peat Marwick LLP re: change in certifying
accountant
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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.
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THE KUSHNER-LOCKE COMPANY
Date: October 27, 1998
By: /s/ PETER LOCKE
Peter Locke
Co-Chairman of the Board and
Co-Chief Executive Officer
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EXHIBIT 16
Securities and Exchange Commission
Washington, D.C. 20549
October 27, 1998
Ladies and Gentlemen:
We were previously principal accountants for The Kushner-Locke Company and,
under the date of December 26, 1997, we reported on the consolidated financial
statements of The Kushner-Locke Company and subsidiaries as of and for the
years ended September 30, 1997 and 1996. On October 20, 1998, our appointment
as principal accountants was terminated. We have read The Kushner-Locke
Company's statements included under Item 4 of its Form 8-K dated October 20,
1998, and we agree with such statements except we are not in a position to
agree or disagree with the following: (1) the statements in paragraph one of
Item 4 regarding the selection of PricewaterhouseCoopers LLP, their services
as independent accountants for 800-U.S. Search, the stated reason for the
change in principal accountants or the approval of such change by the Audit
Committee of the Board of Directors, (2) the statement in paragraph three of
Item 4 that "The Company believes that such reportable conditions have either
been corrected to the extent practicable or that they relate to procedures
which, in accordance with the recommendations of KPMG in the above referenced
report, the Company is in the process of implementing corrections to such
items." and (3) the statement in paragraph five of Item 4 that
PricewaterhouseCoopers was not consulted regarding the application of
accounting principles to a specified transaction or the type of opinion that
might be rendered on The Kushner-Locke Company's financial statements or on
any matter that was the subject of any reportable event.
Very truly yours,
/s/ KPMG PEAT MARWICK LLP
