Sunbeam Corp. said Thursday its auditor, Arthur Andersen LLP, won’t allow its previously clean opinion of the appliance maker’s 1997 financial statements to be part of an effort to sell bonds until the company completes a review of the statements.
Sunbeam, the largest U.S. maker of small appliances such as blenders and toasters, also confirmed the U.S. Securities and Exchange Commission has begun an “informal inquiry” into its accounting practices and that it is in negotiations with banks to avert a default on $1.7 billion of loans.
Arthur Andersen’s withholding of its unqualified opinion–its support of the accuracy of Sunbeam’s financial statements–is a reversal from 10 days ago, when the company said Andersen supported it. The SEC inquiry likely prompted the change, an analyst said.
“Now that the SEC is looking at the accounting, Arthur Andersen wanted to be on the safe side,” said analyst Jeff Middleswart of David W. Tice & Associates, who rates Sunbeam as a “sell.” “Arthur Andersen is not standing by its work. The question is whether the accounting was too aggressive.”
The company’s board of directors fired Sunbeam’s chairman and chief executive, Albert Dunlap, on June 13 because of concerns about Sunbeam’s financial health. Shares of Delray Beach-based Sunbeam fell $1.56, to $10.44.
