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) June 1, 2000
Matlack Systems, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-10105 51-0310173
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File number) Identification No.)
One Rollins Plaza, 2200 Concord Pike, Wilmington, Delaware 19803
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (302) 426-2700
Item 4. Changes in Registrant's Certifying Accountant.
A. On June 1, 2000, KPMG LLP resigned as the Company's independent
auditor. During the fiscal years ended September 30, 1999 and
1998 and the subsequent interim period ended June 1, 2000 that
KPMG LLP served as independent auditor, there have been no
disagreements on any matter of accounting principles or practices,
financial statement disclosures, or auditing scope or procedure,
except as noted herein.
B. KPMG LLP's report on the financial statements of the Company for
the years ending September 30, 1998 and 1999 did not contain an
adverse opinion or disclaimer of opinion, nor was it qualified or
modified as to uncertainty, scope of audit, or accounting
principles.
C. KPMG LLP had a disagreement with the Company regarding its
decision to record an impairment charge of $3,115,000 in the
second fiscal quarter of 2000 related to the Company's existing
transportation management software system, as reported in the
Company's unaudited interim financial statement on Form 10-Q for
the three- and six-month periods ended March 31, 2000. KPMG LLP
discussed this matter with the Company's Audit Committee during
two separate audit committee meetings.
KPMG LLP set forth its position in a letter dated May 26, 2000 as
follows:
"In our discussions during the review of the unaudited quarterly
data for the 2nd quarter, management represented that the ongoing
operational needs of the Company do not require continued use of
this asset. However, management also represented that the
software will continue to be used until the replacement software
is implemented in the 1st or 2nd quarter of fiscal 2001. Based on
these representations, it is our opinion that the TSA software
constitutes an asset held in use, as defined by SFAS No. 121, and
that until the TSA software ceases to be used, the Company should
continue to re-evaluate the asset's future useful life and
amortize the unamortized cost of the asset over such periods.
Further, KPMG is of the opinion that under generally accepted
accounting principles the Company's determination that the TSA
software system no longer supports the Company's operational needs
and, therefore, has no future useful service potential is
insufficient to support the write-off of the asset in the March
31, 2000 quarter."
As reported in the Company's Form 10-Q for the three- and
six-month periods ending March 31, 2000, the Company determined
that this system no longer supports the Company's operational
needs and, therefore, has no future useful service potential. The
ongoing operational needs of the Company do not require continued
use of this asset. A substantial portion of this system has never
been implemented and used operationally. As a consequence, for
accounting purposes, the Company determined in the second fiscal
quarter to treat the entire system as if it has been abandoned and
that the fair value of the asset is zero. During the second
fiscal quarter, the small portion of this transportation system
that had been implemented was determined to be unstable and,
therefore, unreliable. Information and data generated by this
system initially required and continues to require complete manual
verification. As a result of this situation, the Company has
purchased new transportation management software, which currently
is being implemented with completion expected during the first or
second quarter of fiscal 2001.
D. The Company requested KPMG LLP to furnish it a letter addressed to
the Commission stating whether it agreed with the above
statements. A copy of that letter, dated June 8, 2000, is filed
as Exhibit 16 to this Form 8-K.
E. In connection with the audit of fiscal year 1998, KPMG LLP
communicated with the Company's Audit Committee on January 28,
1999 that there were material weaknesses in connection with the
Company's internal controls. In connection with the audit of
fiscal year 1999, KPMG LLP communicated with the Company's Audit
Committee on December 22, 1999 that there were material weaknesses
in connection with the Company's internal controls. The above
weaknesses related principally to turnover of experienced and
qualified accounting personnel and inadequate documentation of
certain transactions.
F. The Audit Committee of the Company has commenced a search for new
independent accountants. The Company will authorize KPMG LLP to
respond fully to any inquiries which may be made by the successor
accountant concerning the subject matter of this filing.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit 16 Letter dated June 8, 2000 of KPMG LLP.
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 thereunto duly authorized.
Matlack Systems, Inc.
DATE: June 8, 2000 BY:/s/ Michael B.Kinnard
Michael B. Kinnard
President and
Chief Executive Officer