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): April 28, 1998
Nematron Corporation
(Exact name of registrant as specified in its charter)
Michigan
(State or other jurisdiction of incorporation)
0-21142 38-2483796
(Commission File Number) (IRS Employer Identification No.)
5840 Interface Drive, Ann Arbor, Michigan 48103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (734) 214-2000
Not Applicable
(Former name or former address, if changed since last report)
Item 5. OTHER EVENTS.
On April 28, 1998, Nematron Corporation issued a press release
announcing that it has identified potential material adjustments to the
Company's financial statements for the years ended September 30, 1996 and
1997 relating to one significant contract, and that, as a result of the
potential adjustments, its independent auditors had issued a letter
notifying the Company that its auditors' reports on Nematron's financial
statements as of September 30, 1997 and September 30, 1996, and for each of
the two years then ended, should no longer be relied upon. The press
release and the letter from Nematron's independent auditors referred to
therein are attached hereto as Exhibits 99.1 and 99.2, respectively, and are
incorporated herein by reference.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99.1 Press Release, dated April 28, 1998
Exhibit 99.2 Letter from KPMG Peat Marwick LLP, dated April 28, 1998
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.
April 28, 1998 NEMATRON CORPORATION
/s/ David P. Gienapp
By: David P. Gienapp
Executive Vice President
Finance
Exhibit 99.1
NEMATRON NEWS RELEASE
FOR IMMEDIATE RELEASE
NEMATRON ANNOUNCES POTENTIAL REPORTING ADJUSTMENTS
ANN ARBOR, MI, April 28, 1998, (NASDAQ:NEMA): Nematron Corporation today
announced that it has identified potential material adjustments to the
Company's financial statements for the years ended September 30, 1996 and
1997 relating to one significant contract.
"The potential adjustments arise out of the accounting treatment of one
major contract," said Frank G. Logan, III, Chairman and CEO. "The timing
and amount of the potential adjustment is not yet certain, however, since
this issue is limited to the accounting for one contract, we are comfortable
that the adjustment should not exceed $1.5 million in the aggregate. The
maximum amount in question totals less than 4% of revenue for the time frame
involved and if there are no offsets to the maximum amount, the net effect
of adjustments would be less than a 15% increase in the reported losses
during the last two fiscal years. Additionally, we feel that there may be
other favorable adjustments that may partially offset this amount."
Logan also said that, as a result of the potential adjustments, KPMG Peat
Marwick LLP has notified the Company that its auditors' reports on the
Company's consolidated financial statements as of September 30, 1997, and
September 30, 1996, and for each of the two years then ended should no
longer be relied upon.
Nematron is already in active discussions with several major auditing firms
to select new independent auditors and expects to announce its selection
soon. The selected firm will also assist the Company in determining the
appropriate accounting treatment with respect to this contract. KPMG Peat
Marwick LLP is resigning as independent auditors for the Company.
The discussion in this news release includes forward-looking statements
based on current management expectations, including the timing and amount of
the potential adjustments to the Company's financial statements and the
percentage by which the Company's reported losses for the past two fiscal
years could increase. Factors that could cause the adjustments and
percentage to differ from the estimates include the revenues attributable to
the contract, the time periods during which such revenues accrued and the
availability of offsetting adjustments or any additional factors described
in the Company's reports filed with the Securities and Exchange Commission.
Nematron designs and manufactures PC-based industrial automation products
that include software for direct machine control, process visualization and
data acquisition. In addition, the Company produces related hardware
products that leverage or support its software. Nematron products cover a
broad spectrum from low-end operator interface to Windows NT control
software, including OpenControl', Paragon', PowerVIEW', AutoNet' and
FloPro'. For additional information about Nematron, visit Nematron's web
site at http://www.nematron.com.
For details, contact:
Frank G. Logan, III
Chairman and CEO
Nematron Corporation
Phone: (734) 214-2078
Exhibit 99.2
April 28, 1998
Audit Committee
Nematron Corporation
5840 Interface Drive
Ann Arbor, MI 48103
Gentlemen:
We have examined the consolidated balance sheet of Nematron Corporation
("Nematron") as of September 30, 1997 and the related consolidated
statements of operations, stockholder's equity and cash flows for each of
the years in the two-year period ended September 30, 1997 and issued our
auditor's report thereon dated December 12, 1997 (the "1997 auditors'
report").
Further, on December 13, 1996, we issued our auditors' report (the "1996
auditors' report") on the consolidated balance sheet of Nematron Corporation
as of September 30, 1996 and the related consolidated statements of income,
stockholders' equity and cash flows for each of the years in the two-year
period ended September 30, 1996.
On April 28, 1998, Nematron announced that "it has identified potential
material adjustments to the Company's financial statements for the years
ended September 30, 1996 and 1997 relating to one significant contract."
In light of the Company's announcement, raising questions relating to the
Company's financial statements, we cannot continue to be associated with
such financial statements and, accordingly, KPMG Peat Marwick LLP hereby
advises you that our 1997 and 1996 auditors' reports on the consolidated
financial statements as of September 30, 1997 and 1996 and for each of the
years in the two-year period ended September 30, 1997 (the "financial
statements") should no longer be relied on.
We request that you advise those persons who have received a copy of KPMG
Peat Marwick LLP's 1997 and 1996 auditors' report on Nematron Corporation's
Financial Statements and whom you believe are relying on, or who are likely
to rely on, the Financial Statements and the accompanying 1997 and 1996
auditors' report of our notification to you that the 1997 and 1996 auditors'
report should no longer be relied upon. Further, we request you to
determine, together with your legal counsel, the disclosures(s) which should
be made to the Securities and Exchange Commission and any other regulatory
body having jurisdiction over Nematron. Finally, we would expect to be
simultaneously supplied with copies of any notifications which you make
pursuant to the requests set forth in this paragraph.
Very truly yours,
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
