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):
November 18, 1998
AID AUTO STORES, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-13710
11-2254654
(State or Other Juris- (Commission File
No.) (IRS Employer
diction of Incorporation)
Identification No.)
275 Grand Boulevard, Westbury, New York
11590
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code:
(516) 338-7889
N/A
(Former Name or Former Address, if Changed Since
Last Report)<PAGE>
ITEM 5. Other Events.
On November 20, 1998, Aid Auto Stores, Inc. (the
"Company") announced that its ongoing investigation of
its prior financial statements had revealed overstatements
to its financial position as of December 31, 1997 in
addition to the previously announced overstatement by
possibly more than $4.9 million of inventory. It was also
announced that the Company's auditors, Grant Thornton
LLP, had withdrawn their audit report dated April 15,
1998 with respect to the Company's consolidated balance
sheets as of December 31, 1997 and 1996 and the related
consolidated statements of operations, stockholders' equity
and cash flows for the years ended December 31, 1997,
1996 and 1995. The letter of Grant Thornton LLP, dated
November 18, 1998, is attached hereto as Exhibit A and
incorporated herein by reference.
In addition, it was announced that the Company
had voluntarily disclosed the investigation into its
financial statements to the United States Attorneys Office
which in turn contacted the Securities and Exchange
Commission.
Such announcements are set forth in a press
release, dated November 20, 1998, a copy of which is
attached hereto as Exhibit B and incorporated herein by
reference.
ITEM 7. Financial Statements, Pro Forma
Financial Information and Exhibits
A. Letter, dated November 18, 1998, of Grant
Thornton LLP.
B. Press Release, dated November 20, 1998.
<PAGE>
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.
AID AUTO STORES, INC.
By: /s/ Philip L. Stephen
Name: Philip L. Stephen
Title: Chairman, Chief Executive
Officer and President
Date: November 23, 1998
<PAGE>
EXHIBIT A
[Letterhead of Grant Thornton LLP]
November 18, 1998
The Board of Directors
Aid Auto Stores, Inc.
275 Grand Boulevard
Westbury, NY 11590-0281
Gentlemen:
We have audited the consolidated balance sheets of Aid
Auto Stores, Inc. (Aid Auto) and Subsidiaries as of
December 31, 1997 and 1996 and the related consolidated
statements of operations, stockholders' equity and cash
flows for the years ended December 31, 1997, 1996 and
1995 (1997 Aid Auto Financial Statements). We issued
our report on the 1997 Aid Auto Financial Statements
dated April 15, 1998 (1997 Auditors' Report).
On November 9, 1998, Aid Auto announced preliminary
results of an ongoing investigation of its prior financial
statements declaring that "...inventory was overstated by
possibly more than $4.9 million from the $12.6 million
reflected on its [1997] year end financial statement as a
result of potential irregularities." In addition, Aid Auto
reported that "[t]he investigation has also revealed that
other asset categories were likely overstated in as yet
undetermined amounts."
We have not been privy to the factual basis for Aid
Auto's conclusion that inventory and other assets were
overstated. Nevertheless, in light of Aid Auto's
announcement, we cannot continue to be associated with
1997 Aid Auto Financial Statements and, accordingly,
Grant Thornton LLP hereby advises you that we are
withdrawing our 1997 Auditors' Report and that our
report can no longer be relied upon.
We request that you advise those persons who have
received a copy of Grant Thornton LLP's 1997 Auditors'
Report and who you believe are relying on, or who are
likely to rely on, the Aid Auto 1997 Financial Statements
and accompanying 1997 Auditors' Report of our
notification to you that the 1997 Auditors' Report should
no longer be relied upon. Further, we request that you
determine, together with your legal counsel, the necessary
disclosure(s) to be made to the Securities and Exchange
Commission and any other regulatory body having
jurisdiction over Aid Auto. Finally, we would expect to
be simultaneously supplied with copies of any
notifications that you make pursuant to the requests set
forth in this paragraph.
Very truly yours,
/s/ Grant Thornton LLP
GRANT THORNTON LLP<PAGE>
EXHIBIT B
FROM: AID AUTO STORES, INC.
275 Grand Boulevard
P.O. Box 281
Westbury, NY 11590
AID AUTO STORES, INC. ANNOUNCES
CONTINUING
INVESTIGATION REVEALS ADDITIONAL
OVERSTATEMENTS
OF ITS FINANCIAL POSITION; AUDITOR
WITHDRAWS
PRIOR REPORT; U.S. ATTORNEY IS
CONTACTED BY COMPANY
WESTBURY, NEW YORK, NOVEMBER 20,
1998 AID AUTO STORES, INC. (OTC BULLETIN
BOARD Symbols AIDA, AIDAW) announced today that
its ongoing investigation of its prior financial statements
has revealed overstatements to its financial position as of
December 31, 1997 in addition to the previously announced
overstatement by possibly more than $4.9 million of
inventory. In this respect, the continuing investigation has
determined that fixed assets were overstated, and accounts
payable were understated, in the aggregate by over
$2,200,000 as of December 31, 1997, as a result of
potential accounting irregularities. The overstatements of
financial position were carried forth into the reported
amounts at March 31, 1998 and June 30, 1998. Based
upon a recently completed physical inventory, it appears
that further inventory overstatements were made during
1998. Kahn Consulting, Inc., a consulting firm retained
by the Company to conduct the investigation, is continuing
to investigate the Company's financials, including with
respect to potential additional inaccuracies and the causes
of the inaccuracies.
In addition, the Company announced that its
auditors, Grant Thornton LLP, withdrew their audit report
dated April 15, 1998 with respect to the Company's
consolidated balance sheets as of December 31, 1997 and
1996 and the related consolidated statements of operations,
stockholders' equity and cash flows for the years ended
December 31, 1997, 1996 and 1995.
The Company also announced that it voluntarily
disclosed the above-discussed investigation to the United
States Attorneys Office which has in turn contacted the
Securities and Exchange Commission.
As previously reported, Aid Auto received a notice
of default under its secured loan agreement with Foothill
Capital Corp. Foothill is currently owed approximately
$7.9 million under its loan agreement. Foothill has agreed
to a forbearance through the end of business on the date of
this release of any action under the credit facility in order
to give Aid Auto the opportunity to arrange for an infusion
of working capital or the sale of the Company or its assets.
The Company is currently engaged in discussions with
several parties as to a possible transaction. Foothill has
orally indicated to the Company that the Company may
continue such discussions and that it may grant an
extension with respect to its forbearance. Unless such
extension is actually granted by Foothill, or if such efforts
to consummate a transaction are not successful in the near
future, Aid Auto may be required under the forbearance
agreement to take action to liquidate its assets, including,
possibly, a filing under the Bankruptcy Code. The
forbearance agreement with Foothill also provides that
Kahn Consulting, Inc. is appointed to act as the Company's
Chief Restructuring Officer and irrevocably authorizes and
directs Kahn to assume management responsibilities.
Safe Harbor Statement under the Private Securities
Litigation Reform Act of 1995: The statements which are
not historical factors contained in this press release are
forward looking statements that involve risks and
uncertainties, including, but not limited to, risks associated
with the Company's current financial situation, including
the forbearance of Foothill and other creditors, the ability
of the Company to obtain new capital or a buyer of the
Company or its assets and other risks detailed in the
Company's Securities and Exchange Commission filings.
