Pillowtex Auditor Quits Over 'Unresolved' Questions
By Brent Felgner -- Home Textiles Today, 10/11/2004
New York— KPMG has resigned as Pillowtex Corp.'s independent auditor citing reliability issues surrounding its FY 2002 financial statements, according to a filing Thursday with the Securities and Exchange Commission.
In the SEC Form 8-K, Pillowtex said KPMG resigned Aug. 16, without completing its audit for the fiscal year ended Jan. 3, 2004. “KPMG advised (Pillowtex) that information came to its attention during the Registrant's fiscal year ended Jan. 3, 2004, that if further investigated may materially impact the fairness or reliability of certain of its previously issued audit reports relating to the Registrant's financial statements for the related prior periods,” the filing stated.
It specified the questions were related to the previously announced internal review of FY '02 that, among other things, examined Pillowtex's accounting for trade allowances, including discounts, rebates and co-op advertising. No further investigation was undertaken and the issue had not been resolved to KPMG's satisfaction prior to its resignation, the company reported.
The defunct mill filed for bankruptcy and began liquidating in July 2003. Pillowtex's audit committee ordered a reviewed of the FY '02 results in May 2003, at the time purportedly raising the final deal breaker to a proposed buyout by Springs Industries. Pillowtex said then that the review might unearth additional issues.
