SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Earliest Event Reported): October 16, 1997
Exact name of Registrant
as specified in its charter: The Diana Corporation
State or Other Jurisdiction of Incorporation: Delaware
Commission File Number: 1-5486
I.R.S. Employer Identification Number: 36-2448698
Address of Principal Executive Office: 26025 Mureau Road
Calabasas, CA 91302
Registrant's Telephone Number, Including Area Code: (818) 878-7711
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
(a) Previous independent accountants
(i) On October 15, 1997, after completion of the March 31, 1997
fiscal year audit, Price Waterhouse LLP, the Company's
former independent accountants, in a letter addressed to the
Company's Chairman and CEO with a copy to the Chief
Accountant at the SEC, confirmed that the client - auditor
relationship between The Diana Corporation and Price
Waterhouse LLP had ceased. During the third quarter of
fiscal 1997, ending on January 4, 1997, the Company
announced a restructuring plan to concentrate its resources
on one line of business (communications switching) via its
holdings in Sattel Communications LLC, and to discontinue,
from an accounting standpoint, and to divest its other
holdings. Its largest subsidiary, Atlanta Provision
Company, Inc., was sold in February 1997. The Company
subsequently moved its headquarters to Calabasas, California
from Milwaukee, Wisconsin. The remaining two discontinued
operations are to be sold before March 31, 1998. The change
in both scope and size of annual revenues (from over
$200,000,000 to approximately $10,000,000) going forward as
well as the change in management and locations (now the
former Sattel management in California) led to the cessation
of the client - auditor relationship between Price
Waterhouse LLP and the Company.
<PAGE>
(ii) The reports of Price Waterhouse LLP on the financial
statements for the past two fiscal years contained no
adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or
accounting principle, except as to the uncertainties noted
in the Report of Independent Accountants filed with the
Registrant's Form 10-K dated September 22, 1997.
(iii) The Registrant's Audit Committee members and the Company's
Chief Accounting Officer, have begun the process of
searching for a new independent accounting firm. The
Company's audit committee was not involved by Price
Waterhouse LLP regarding its decision to end the client -
auditor relationship with the Registrant.
(iv) Except as mentioned below, in connection with its audits for
the two most recent fiscal years and through October 15,
1997, there have been no disagreements with Price Waterhouse
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 Price Waterhouse LLP would have caused them
to make reference thereto in their report on the financial
statements for such years.
During the audit of the fiscal 1997 financial statements a
difference of opinion arose relating to the audit procedures
necessary with respect to certain customer sales, including
CNC. This initial disagreement was resolved to Price
Waterhouse LLP's satisfaction. The Audit Committee
discussed the subject matter of this disagreement with Price
Waterhouse LLP. The Company has authorized Price Waterhouse
LLP to respond fully to the inquiries of its successor
auditors concerning the subject matter of this disagreement.
(v) During the two most recent fiscal years and through October
15, 1997, the Registrant's management believes that there
have been no reportable events (as defined in Regulation S-K
Item 304(a)(1)(v)).
The Registrant has requested that Price Waterhouse LLP
furnish it with a letter as promptly as possible addressed
to the SEC stating whether or not it agrees with the above
statements. A copy of such letter will be filed by
amendment to this Form 8-K within two business days of
receipt.
<PAGE>
(b) New independent accountants
(i) The Registrant will file a separate current report on Form
8-K once it has engaged its new independent accountants.
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.
THE DIANA CORPORATION
(Registrant)
Date: October 23, 1997 /s/ Brian Robson
Vice President and Controller
