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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 21, 1995
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FERROFLUIDICS CORPORATION
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(Exact name of registrant as specified in charter)
MASSACHUSETTS 0-10734 02-0275185
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(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
40 SIMON STREET, NASHUA, NEW HAMPSHIRE 03061
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (603) 883-9800
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There are 4 pages in this Report, including exhibits.
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Item 4. Changes in Registrant's Certifying Accountant
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On November 21, 1995, the Company terminated the appointment of
Coopers & Lybrand LLP as independent accountants for the Company. The decision
not to renew the engagement of Coopers & Lybrand LLP followed a determination
by management and the Audit Committee, approved by the Board of Directors, that
it was in the interest of the Company to periodically review the relationship
between the Company and its independent accounting firm with respect to
services provided and fees charged. For the fiscal year ended June 30, 1995
and several years prior thereto Coopers & Lybrand LLP had examined and reported
upon the Company's financial statements and had served as the Company's
independent accountants. The Company has not yet engaged an independent
accounting firm to perform the audit for the fiscal year ending June 30, 1996,
but has received proposals from certain accounting firms and expects to make a
decision shortly.
In connection with the audits of the two fiscal years ended June 30,
1994 ("fiscal 1994") and June 30, 1995 ("fiscal 1995"), and during the
subsequent interim period through November 21, 1995, there were no
disagreements with Coopers & Lybrand LLP on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements if not resolved to the their satisfaction would have caused
them to make reference in connection with their opinion to the subject matter
of the disagreement.
The audit reports of Coopers & Lybrand LLP on the consolidated
financial statements of the Company for fiscal 1994 and fiscal 1995 did not
contain any adverse opinion or disclaimer of opinion, nor were they qualified
or modified as to uncertainty, audit scope, or accounting principles, except as
follows. In the Report of Independent Accountants furnished to the Company by
Coopers & Lybrand LLP on January 26, 1994, in connection with the audit for the
fiscal year ended June 30, 1993 ("fiscal 1993"), Coopers & Lybrand LLP stated,
among other things, that based upon their understanding of the underlying
circumstances leading to the departure of the Company's former chief executive
officer and chief financial officer subsequent to June 30, 1993, Coopers &
Lybrand LLP could not rely on those individuals' representations nor could
Coopers & Lybrand LLP be certain that they had been provided with all
appropriate documentation relevant to the transactions which such individuals
had initiated or for which they were responsible, and accordingly, that the
scope of Coopers & Lybrand LLP's work was not sufficient to enable them to
express, and they did not express, an opinion on the consolidated statements of
operations, stockholders' equity and cash flows for any of the three years in
the period ended June 30, 1993. The Report of Independent Accountants
furnished to the Company by Coopers & Lybrand LLP on each of October 20, 1994
and August 31, 1995, in connection with the audits for fiscal 1994 and fiscal
1995, respectively, contains similar disclosure as to the inability of Coopers
& Lybrand LLP to express an opinion on the consolidated statements of
operations, stockholders' equity and cash flows for the years ended June 30,
1993 and June 30, 1992 in the case of the October 20, 1994 report, and June 30,
1993 in the case of the August 31, 1995 report.
The inability of Coopers & Lybrand LLP to express an opinion in
connection with certain financial statements of the Company and to rely upon
the representations of former
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management relates only to fiscal 1993, and, as stated by Coopers & Lybrand LLP
in their audit reports, resulted from the circumstances which led to the
departure of the former chief executive officer and the former chief financial
officer from the Company during fiscal 1994. Prior to the rendering by Coopers
& Lybrand LLP of their audit report for fiscal 1993, certain members of the
Board of Directors and the new management of the Company discussed with Coopers
& Lybrand LLP the nature and scope of such audit report. The Company has
authorized Coopers & Lybrand LLP to respond fully to the inquiries of the
Company's successor accountants concerning the subject matter of the fiscal
1993 audit report. Except as provided above, Coopers & Lybrand LLP has not
advised the Company of any inability to rely upon management's representations
nor have there been any other reportable events of the type required to be
disclosed pursuant to the applicable regulations of the Securities and Exchange
Commission.
Additionally, in the Report of Independent Accountants furnished to
the Company by Coopers & Lybrand LLP on October 20, 1994, in connection with
the audit for fiscal 1994, Coopers & Lybrand LLP stated, among other things,
that because of the inherent uncertainty associated with the valuations of
foreign privately held entities, the estimated fair value reflected in the
financial statements of a $3,669,000 investment by the Company in a foreign
entity may differ from the value that would be determined by negotiation
between parties in a sales transaction, and the difference could be material.
As a result of a violation at that time of a covenant contained in the
Company's 1986 Industrial Revenue Bond, Coopers & Lybrand LLP also stated in
its fiscal 1994 audit report that the financial statements had been prepared
assuming that the Company would continue as a going concern; that if the
Company were unable to resolve this violation it could result in a default
under the Company's 1986 Industrial Revenue Bond and the Company's domestic
credit facility which, in turn, could result in the acceleration of all amounts
due under these debt obligations; that the situation raised substantial doubt
about the Company's ability to continue as a going concern; that in recognition
of the situation all amounts due under these debt obligations were classified
as current liabilities in the financial statements; and that the financial
statements did not include any other adjustments that might result from the
outcome of this uncertainty.
The Report of Independent Accountants furnished to the Company by
Coopers & Lybrand LLP on August 31, 1995, in connection with the audit for
fiscal 1995, does not contain any adverse opinion or disclaimer of opinion, or
qualification or modification as to uncertainty, audit scope, or accounting
principles with respect to the financial statements for fiscal 1995 or fiscal
1994.
Item 7. Financial Information, PRO FORMA Financial Information and Exhibits.
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Exhibit No Description
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16.1 Letter from Coopers & Lybrand LLP*
<FN>
* To be filed by amendment.
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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.
FERROFLUIDICS CORPORATION
Date: November 27, 1995 By: /s/ Paul F. Avery, Jr.
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Paul F. Avery, Jr.
Chief Executive Officer