<PAGE> 1
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): JANUARY 24, 1997
PHYSICIANS CLINICAL LABORATORY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-20678 68-0280528
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
2495 NATOMAS PARK DRIVE, SACRAMENTO, CALIFORNIA 95833
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (916) 648-3500
NOT APPLICABLE
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 4. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANTS.
On January 2, 1997, the Registrant's Board of Directors voted to accept the
proposal of the independent certified public accounting firm of Ernst & Young
LLP to audit the consolidated financial statements of the Registrant for the
year ending February 28, 1997. Accordingly, the engagement of Arthur Andersen
LLP as the Registrant's independent auditors was discontinued effective
January 17, 1997.
The reports of Arthur Andersen LLP on the Registrant's consolidated financial
statements for the fiscal years ended February 29, 1996 and February 28, 1995
did not contain an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to audit scope or accounting principles. However, the
reports of Arthur Andersen LLP dated June 28, 1996 and July 31, 1995 on the
Registrant's consolidated financial statements for the fiscal years ended
February 29, 1996 and February 28, 1995 included an explanatory paragraph with
respect to the Registrant's ability to continue as a going concern.
On several occasions during both the fiscal years ended February 29, 1996 and
February 28, 1995, Arthur Andersen LLP disagreed with the Registrant's initial
determination of the amounts of reserves to be provided for contractual
allowances on the Registrant's financial statements for the applicable annual or
quarterly period, and on each such occasion, Arthur Andersen LLP discussed such
disagreement with the Registrant's Board of Directors (the "Board") and the
Audit Committee thereof (the "Audit Committee"); however, on each such occasion,
after discussions between personnel of the Registrant responsible for
presentation of its financial statements and personnel of Arthur Andersen LLP
responsible for rendering its report, the Registrant ultimately recorded
additional reserves and the problem was resolved to the satisfaction of Arthur
Andersen LLP. The Registrant has authorized Arthur Andersen LLP to respond
fully to the inquiries of Ernst & Young LLP concerning the subject matter of any
of such disagreements. Other than the foregoing, since March 1, 1994, the
Registrant has not had any disagreements with Arthur Andersen LLP on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedures, which disagreement(s), if not resolved to the
satisfaction of Arthur Andersen LLP, would have caused Arthur Andersen to make
reference to the subject matter of the disagreement in connection with its
reports on the financial statements of the Registrant.
In connection with Arthur Andersen LLP's report on the Registrant's consolidated
financial statements for the fiscal year ended February 28, 1995, Arthur
Andersen LLP issued a letter to the Registrant and to the Audit Committee giving
notice of Arthur Andersen LLP's belief that the Registrant's internal controls
over both the accounting for revenue and contractual allowances were inadequate,
and that, in the opinion of Arthur Andersen LLP, such inadequacies were material
weaknesses. Following the issuance of such letter, Arthur Andersen LLP informed
the Audit Committee that these internal control weaknesses continued to exist.
The Registrant has authorized Arthur Andersen LLP to respond fully to the
inquiries of Ernst & Young LLP concerning the subject matter of such letter.
Other than the foregoing, there were no reportable events (as defined in
Regulation S-K Item 304(a)(1)(v)) during the two fiscal years ended February 29,
1996 and February 28, 1995 and the subsequent interim period prior to January
17, 1997.
2
<PAGE> 3
During the two fiscal years ended February 29, 1996 and February 28, 1995 and
the subsequent interim period prior to January 17, 1997, neither the Registrant
nor anyone on its behalf has consulted with Ernst & Young LLP regarding (i)
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 Registrant's financial statements, and neither a written report
nor oral advice was provided to the Registrant that Ernst & Young LLP concluded
was an important factor considered by the Registrant in reaching a decision as
to the accounting, auditing or financial reporting issue, or (ii) any matter
that was either the subject of a disagreement with Arthur Andersen LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, or a reportable event (as defined in Regulation S-K
Item 304(a)(1)(v)).
The Registrant requested Arthur Andersen LLP to furnish it with a letter
addressed to the Securities and Exchange Commission stating whether or not
Arthur Andersen LLP agrees with the above statements, which letter is attached
as Exhibit 16.1.
3
<PAGE> 4
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
16.1 Letter pursuant to Regulation S-K Item
304(a)(3) to the Securities and Exchange
Commission from Arthur Andersen LLP, dated
January 24, 1997.
4
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Company has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHYSICIANS CLINICAL LABORATORY, INC.
By: /s/ RICHARD M. BROOKS
---------------------------------
Richard M. Brooks
Senior Vice President and
Chief Financial Officer
Dated: January 24, 1997
5
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Number
- ------- ------
<S> <C> <C>
16.1 Letter pursuant to Regulation S-K Item 304(a)(3)
to the Securities and Exchange Commission from
Arthur Andersen LLP, dated January 24, 1997.
</TABLE>
6
<PAGE> 1
EXHIBIT 16.1
[LETTERHEAD OF ARTHUR ANDERSEN]
January 24, 1997
Office of the Chief Accountant
Securities and Exchange Commission
450 5th St NW
Washington DC 20549
We have read Item 4 included in the attached Form 8-K dated January 24, 1997 of
Physicians Clinical Laboratory, Inc. filed with the Securities and Exchange
Commission and are in agreement with the statements contained herein.
Very truly yours,
/s/ ARTHUR ANDERSEN LLP
- -------------------------------
Attachment
