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): July 21, 1999
SIGNAL APPAREL COMPANY, INC.
(Exact name of Registrant as specified in its charter)
Indiana 1-2782 62-0641635
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
34 Englehard Avenue, Avenel, New Jersey 07001
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (732) 382-2882
200 Manufacturers Road, Chattanooga, Tennessee 37405
(Former name or former address, if changed since last report.)
Item 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
(a) On July 21, 1999, Arthur Andersen LLP ("Andersen"), resigned as the
independent public accountants and auditors of Signal Apparel Company,
Inc. (the "Registrant"). The Registrant is currently in the process of
selecting an independent public accountant as a successor to Andersen.
During the Registrant's latest two fiscal years and the subsequent
period through July 21, 1999, the date on which Andersen resigned as
the Registrant's independent public accountants and auditors, there
were no disagreements between the Registrant and Andersen on any
matter relating to accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which if not
resolved to Andersen's satisfaction would have caused it to make
reference to the subject matter of such disagreement in connection
with its reports. Andersen's reports on the Registrant's financial
statements for the fiscal years ended December 31, 1997 and 1998 were
modified when issued with respect to an explanatory paragraph
describing a going concern issue; however, such reports did not
otherwise contain any adverse opinions or disclaimers of opinion, nor
were such reports modified as to audit scope, accounting principles,
or other uncertainty.
On July 16, 1999, Andersen issued a memorandum on internal control
structure relating to the year ended December 31, 1998. That
memorandum described certain deficiencies in internal control relating
to: (i) communications between accounting and executive management;
(ii) missing source documentation; (iii) general ledger closing
procedures; and (iv) account reconciliations.
The deficiencies noted in the Andersen memorandum resulted, in large
part, from the move of the Registrant's Corporate Headquarters from
Chattanooga, Tennessee to Avenel, New Jersey in the period from
December 1998 through January 1999. A near-complete turnover in
accounting personnel occurred during this period in addition to the
disruption in the Registrant's management information and financial
reporting systems that resulted from this move.
Prior to the receipt of the Andersen Memorandum, the Registrant
engaged the services of GDL Management Services Division of Mahoney
Cohen and Company, C.P.A., P.C. to upgrade the Registrant's accounting
function. This engagement has been expanded to address specifically
the issues raised by the Andersen Memorandum.
In response to the Andersen Memorandum, the Registrant has taken steps
to:
1. Implement more thorough policies and procedures to ensure more
complete and timely communications between its accounting department
and management regarding any activities having significant financial
implications so that such activities will be appropriately reflected
in the Registrant's books and records;
2. Update and publish its formal policies and procedures with respect to
document retention and storage in order to facilitate distribution to
appropriate accounting personnel; and
3. Update and publish its formal month-end closing procedures and account
reconciliation procedures to reduce to a reasonably low level the
possibility that the absence or weakness of such procedures might
result in inaccuracies in the Registrant's financial statements.
Additionally, the Registrant has addressed staffing issues in order to
improve the supervision and review of accounting matters generally.
The Registrant has authorized Andersen to respond fully to the
inquiries of the Registrant's successor accountant. The Registrant has
provided Andersen with a copy of the disclosures contained in this
Form 8-K, and has requested that Andersen furnish the Registrant with
a letter addressed to the Securities and Exchange Commission stating
whether it agrees with the statements made by the Registrant therein.
Item 7. EXHIBITS.
Exhibit 16 Letter from Arthur Andersen LLP to the Securities and Exchange
Commission concerning its termination as the Registrant's principal
accountant.
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.
Date: July 28, 1999 SIGNAL APPAREL COMPANY, INC.
By: /s/ Robert J. Powell
----------------------------
Robert J. Powell
Vice President,
General Counsel & Secretary