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
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Date of Report (Date of earliest event reported): APRIL 11, 2003
INVERNESS MEDICAL INNOVATIONS, INC.
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(Exact name of registrant as specified in charter)
DELAWARE 001-16789 04-3565120
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
51 SAWYER ROAD, SUITE 200, WALTHAM, MASSACHUSETTS 02453
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(Address of Principal Executive Offices) (Zip Code)
(781) 647-3900
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(Registrant's telephone number, including area code)
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
On April 11, 2003, Ernst & Young LLP resigned as our independent auditors.
Ernst & Young LLP had served as our independent auditors since June 2002.
Neither the report of Ernst & Young LLP on our consolidated financial
statements for the fiscal year ended December 31, 2002 nor the report of
Arthur Andersen LLP on our consolidated financial statements for the fiscal
year ended December 31, 2001 contained an adverse opinion or a disclaimer of
opinion, or was qualified or modified as to uncertainty, audit scope or
accounting principles.
During 2002 and subsequently through the date of Ernst & Young LLP's
resignation, there were no disagreements with Ernst & Young LLP on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Ernst & Young LLP, would have caused it to make reference to
the subject matter of the disagreements in connection with its report on our
consolidated financial statements.
During the two most recent fiscal years there were no reportable events,
except that Ernst & Young LLP advised the Audit Committee and management that
in connection with Ernst & Young LLP's audit for the year ended December 31,
2002, it noted certain matters involving internal control that it considered
to be material weaknesses. Ernst & Young LLP has advised the Company that,
under standards established by the American Institute of Certified Public
Accountants ("AICPA"), reportable conditions involve matters that come to the
attention of auditors that relate to significant deficiencies in the design
or operation of internal controls of an organization that, in the auditors'
judgment, could adversely affect the organization's ability to record,
process, summarize, and report financial data consistent with the assertions
of management in the consolidated financial statements.
Ernst & Young LLP advised the Company that in Ernst & Young LLP's opinion the
material weaknesses were: the decentralized nature of the Company's national
and international operations, combined with insufficient corporate financial
oversight at operating locations, especially newly acquired entities,
resulted in accounting errors and the misapplication of accounting principles
generally accepted in the United States; the absence of a chief financial
officer or other individual with the appropriate experience and background to
handle accounting matters arising from the complexity of our operations; the
undue reliance on non-financial personnel to address accounting and control
issues, causing a lack of appropriate segregation of duties; the delay in
integrating acquired businesses into our uniform policies, procedures and
controls; and an ineffective and inefficient financial statement close
process. However, Ernst & Young LLP has advised the Audit Committee that
these conditions were considered in determining the nature, timing, and
extent of the procedures performed for the audit of the Company's financial
statements for the year ended
December 31, 2002, but that these conditions did not affect its report dated
February 20, 2003 with respect to these financial statements.
Our Audit Committee and management are already considering potential
enhancements to the Company's internal controls and procedures which address
the issues raised. For example, we are currently in the process of selecting
and retaining the services of an independent consulting firm to analyze,
document and assist us in testing our internal controls and procedures. Our
Audit Committee will review the reports and findings of the independent
consulting firm and discuss any recommendations that may be made by it with
management.
In addition, we have also taken steps, independent of the matters raised by
Ernst & Young LLP, to strengthen our management depth and improve operational
efficencies that will have the effect of addressing such matters. For
example, late last year we commenced a search for a chief financial officer,
and we expect to hire an experienced person with an appropriate background to
manage the diverse and complex financial issues which may arise in our
growing business. Also, we recently migrated the accounting systems at
Wampole, our most recent acquisition, onto the software platform hosted by
our Bedford, England operation.
We have furnished Ernst & Young LLP with a copy of the foregoing disclosure
and requested Ernst & Young LLP to furnish us with a letter addressed to the
Securities and Exchange Commission stating whether or not it agrees with the
foregoing statements. A copy of that letter is filed as Exhibit 16.1 to this
Form 8-K.
On April 18, 2003 the Company engaged BDO Seidman, LLP as its new independent
certified public accountants. Prior to the engagement of BDO Seidman, LLP,
the Company provided it with information concerning the matters discussed in
this report. The Company has authorized Ernst & Young LLP to fully respond to
the inquiries of BDO Seidman, LLP concerning such matters.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS.
EXHIBIT NO. DESCRIPTION
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16.1 Letter from Ernst & Young LLP to the Securities and
Exchange Commission dated April 18, 2003
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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.
INVERNESS MEDICAL INNOVATIONS, INC.
Date: April 18, 2003 By: /s/ Duane L. James
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Duane L. James
Vice President--Finance
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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16.1 Letter from Ernst & Young LLP to the Securities and Exchange
Commission dated April 18, 2003