American Apparel’s downward spiral continues as Bloomberg reports that the company has been subpoenaed by the U.S. Attorney for the SDNY over the company’s “change in accounting firms.”
If you’re just l started with Deloitte quitting as the auditors of APP late last month. At that time, Deloitte warned that the ’09 financial statements may not (read: definitely are not) reliable and that they were getting the hell out of Dov.
Former APP auditor Marcum – for reasons unbeknownst to us – went back to their old client to try and help them straighten things out. Here’s the latest from the “preliminary results” for the second quarter, while thetardy 10-Q remains elusive. These prelims (i.e. a wild stab?), that were filed today warn that things are likely to get worse before they get better:
Potential Restatement of previously issued financial statements
Effective July 22, 2010, Deloitte resigned as our independent registered public accounting firm. On July 26, 2010, we engaged Marcum as our independent registered public accounting firm. On July 28, 2010, we reported on a Form 8-K that we had been advised by Deloitte that certain information had come to Deloitte’s attention that if further investigated may materially impact the reliability of either Deloitte’s previously issued audit report or the underlying consolidated financial statements as of and for the year ended December 31, 2009 included in our Annual Report on Form 10-K for the year ended December 31, 2009. Deloitte has requested that we provide Deloitte with the additional information Deloitte believes it is necessary to review before any conclusions can be reached as to the reliability of the previously issued consolidated financial statements as of and for the year ended December 31, 2009 and auditors’ report thereon.
Depending on the outcome of this review, a restatement of our financial statements as of and for the year ended December 31, 2009 could be required. Any restatement may subject us to significant costs in the form of accounting, legal fees and similar professional fees, in addition to the substantial diversion of time and attention of our Chief Financial Officer, our other officers and directors and members of our accounting department in preparing and reviewing the restatement. Any such restatement could adversely affect our business, our ability to access the capital markets or the market price of our common stock. We might also face litigation, and there can be no assurance that any such litigation, either against us specifically or as part of a class, would not materially adversely affect our business, financial condition or the market price of our common stock.
But that’s not all! The company discusses a few more issues, “We are subject to regulatory inquiries, investigations, claims and suits. We are currently defending one wage and hour suit, one sexual harassment suit and responding to several allegations of discrimination and/or harassment that have been filed with the Equal Employment Opportunity Commission or state counterpart agencies.”
At that point, the filing finally gets to the problem du jour:
In addition, in connection with our previously disclosed change in auditors, on July 30, 2010, we received a grand jury subpoena from the United States Attorney’s Office for the Southern District of New York for the production of documents relating to the circumstances surrounding the change in our auditors. We have also received inquiries from the Securities and Exchange Commission regarding this matter. We intend to cooperate fully with these requests and any related inquiries.
If consider all that, plus the fact that the company is spending cash like Pacman Jones at a strip club and that they’re likely to be in noncompliance with a major debt covenants at September 30th, it’s no surprise that the stock is off even more than when Deloitte first quit as auditors.
American Apparel Drops After Receiving Subpoena on Change in Accountants [Bloomberg]
10-Q [SEC]
This is the way. I don’t work in public accounting anymore, but where I’m at now there’s like 30-40 friggin elderly geezers that refuse to retire probably because they just don’t want to be at home with their wives.
This is selfish and it hurts the organization. These fossils that just show up and sit in a chair all day, taking naps and shit, just to collect a paycheck and get away from their wives for 8 hours.
It’s keeping the younger employees from moving up and actually moving the organization forward. Most of these old farts don’t actually do anything anymore, stuck in the 90s, can’t use “these darned computers”, and refuse to learn how to communicate with emails and instant messaging.
Not to mention their old ass prostates are all swollen so it takes them 20 minutes to pee so I have to wait on dumb old man in the bathroom, and they’re so damn slow it takes them another 15 minutes to wash their hands (if they do at all), and shuffle their old crusty butts back to their office to take another nap. Plus they smell weird. Like beef stew and feet.
Dude, old man, JUST FRIGGIN RETIRE! NO ONE WANTS YOU HERE ANYMORE!
This is why the younger employees jump ship so often, no chance of getting promoted because great great grandpa thinks he’s “still got some juice left in the tank” and thinks he’s valuable. NO OLD MAN, YOU’RE JUST TAKING UP SPACE! YOU’RE DEAD WEIGHT! JUST LEAVE!
I think once you reach retirement age, that’s it. Out the door. Enjoy retirement old man.
Same goes for public office. So many friggin 80 year old dinosaurs on office just weighing the country down because they’re old and stupid.
Ugh, old people just suck dude.