SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Filed pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
August 31, 1998 (August 25, 1998)
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Date of Report (Date of earliest event reported)
PHYSICIAN COMPUTER NETWORK, INC.
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(Exact name of registrant as specified in charter)
New Jersey
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(State or other jurisdiction of incorporation)
0-19666
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(Commission File Number)
22-2485688
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(IRS Employer Identification No.)
1200 The American Road
Morris Plains, New Jersey 07950
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(Address of principal executive offices)
(973) 490-3100
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(Registrant's telephone number, including area code)
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ITEM 4. Changes in the Company's Certifying Accountant
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On August 25, 1998, Physician Computer Network, Inc. (the "Company")
dismissed KPMG Peat Marwick LLP ("KPMG") as the certifying accountant of the
Company's financial statements and KPMG confirmed that its client-auditor
relationship with the Company had ceased. The Company has engaged Arthur
Andersen LLP to conduct the audit of the Company's consolidated financial
statements. Along with Arthur Andersen LLP, the Company is moving forward
aggressively to complete the audit of its consolidated financial statements as
promptly as possible.
Pursuant to Item 304(a) of Regulation S-K, the Company reports as follows:
(i) On August 25, 1998, the Company dismissed KPMG as the independent
auditors of the Company and KPMG confirmed that its client-auditor relationship
with the Company had ceased.
(ii) KPMG's reports on the Company's consolidated financial statements
for the past two years did not contain any adverse opinion or disclaimer of
opinion and were not qualified as to uncertainty, audit scope, or accounting
principles. As described below, the auditors have withdrawn their reports with
respect to the Company's consolidated financial statements as of and for the
years ended December 31, 1996, 1995 and 1994.
(iii) The Audit Committee of the Company's Board of Directors
recommended to the Board of Directors that the Company dismiss KPMG as the
independent auditors of the Company and the Board of Directors approved of that
recommendation.
(iv) During the two most recent fiscal years and the subsequent interim
periods preceding the cessation of the client- auditor relationship, 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
KPMG to make reference thereto in its report on the financial statements for
such years. However, as previously reported, a special committee of the Board of
Directors is conducting an investigation of the circumstances surrounding
certain instances identified by KPMG of improper revenue or expense recognition,
and other matters related thereto. The results of the investigation and the
conclusions drawn therefrom, as well as the results of the audit to be conducted
by Arthur Andersen LLP, may require the Company to disagree with KPMG in the
future about those of the Company's previously reported financial statements
which were audited by KPMG, as well as financial statements for subsequent
periods.
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(v) During the two most recent fiscal years and the subsequent interim
periods preceding the cessation of the client- auditor relationship, the
following occurred:
(a) On August 17, 1998, KPMG informed the Company that (x) KPMG had
determined the existence of certain instances in which the Company had
improperly recognized items of revenue and expense during the Company's
1996 and 1995 fiscal years, (y) KPMG had determined that it could no
longer rely upon the representations previously obtained from the then
Chief Operating Officer and Chief Financial Officer of the Company
(neither of whom are currently employed by the Company) relating to all
periods contained in the 1996 annual report on Form 10-K, and (z) KPMG
had determined that it could no longer be associated with the Company's
1995 and 1994 consolidated financial statements (KPMG had previously
informed the Company that it could no longer be associated with the
Company's 1996 consolidated financial statements).
(b) KPMG, with the assistance and authorization of the Company,
significantly expanded the scope of its audit of the Company's 1997
consolidated financial statements. However, at the time of the
cessation of the client-auditor relationship, the audit of the
Company's 1997 consolidated financial statements had not been
completed.
(c) On March 25, 1998, KPMG informed the Company that, in light of,
among other things, certain facts which had come to the attention of
KPMG relating to a 1996 transaction, KPMG had determined to withdraw
KPMG's previously issued report for the Company's 1996 consolidated
financial statements. On August 17, 1998, KPMG informed the Company
that, as a result of KPMG's determination of the existence of certain
instances in which the Company had improperly recognized items of
revenue and expense during the Company's 1996 and 1995 fiscal years,
and since KPMG could no longer rely upon the representations previously
obtained from the then Chief Operating Officer and Chief Financial
Officer of the Company (neither of whom are currently employed by the
Company) relating to all periods contained in the 1996 annual report on
Form 10-K, it could no longer be associated with the Company's 1996 and
1995 (as well as the 1994) consolidated financial statements. Restated
financial statements for the Company's 1996 and 1995
fiscal years had not been completed prior to the
cessation of the client-auditor relationship.
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(vi) The Company has requested that KPMG furnish it with a letter addressed
to the Securities and Exchange Commission stating whether or not it agrees with
the above statements in accordance with Item 304(a)(3) of Regulation S-K.
As of August 28, 1998, the Company engaged Arthur Andersen LLP to conduct
an audit of its consolidated financial statements.
ITEM 5. Other Matters.
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On August 17, 1998, KPMG informed the Company of KPMG's withdrawal of
its previously issued reports on the consolidated financial statements as of and
for the years ended December 31, 1995 and 1994 and instructed the Company that
such reports should not be relied upon in the future. As reported in the
Company's Form 8-K dated April 2, 1998, KPMG had withdrawn its previously issued
report on the Company's consolidated financial statements as of and for the year
ended December 31, 1996.
As previously reported, the Company has retained and continues the
retention of Alvarez & Marsal, Inc. as management consultants. In connection
with that retention, the Board of Directors has appointed Carter Evans and
Steven Cohn, who are employees of Alvarez & Marsal, Inc., as the new President
and new Chief Financial Officer, respectively, of the Company.
The Company is currently in discussions with its lenders regarding a
modification of its existing credit facility, including an extension of the
September 30, 1998 maturity date of the Company's currently outstanding
indebtedness. No assurances can be given that the lenders will grant to the
Company any extension or modification of its existing credit facility.
ITEM 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
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No financial statements or pro forma financial information are required
to be filed as a part of this report. There are no financial exhibits filed as
part of this report.
(c) Exhibits.
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None.
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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 thereunto duly authorized.
PHYSICIAN COMPUTER NETWORK, INC.
(REGISTRANT)
Date: August 31, 1998 By:/s/ Paul Antinori
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Paul Antinori
Vice President
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