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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 (Date of earliest event reported): October 29, 1999
ORBITAL SCIENCES CORPORATION
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<S> <C> <C>
Delaware 0-18287 06-1209561
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(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
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21700 Atlantic Boulevard
Dulles, Virginia 20166
(703) 406-5000
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(Address of principal executive offices) (Zip Code)
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ITEM 5. OTHER EVENTS.
On October 29, 1999, Orbital Sciences Corporation ("Orbital)
announced that, based on the recommendation of its independent auditors, it
would change its previously audited accounting treatment primarily with respect
to its investment in its affiliate, Orbital Imaging Corporation. A press release
relating to such announcement is attached hereto as Exhibit 99.1.
KPMG LLP, Orbital's previous auditors, informed Orbital in a letter
dated October 28, 1999 that KPMG's previously issued audit report dated February
16, 1999, except as to Note 12 which is as of March 18, 1999, should no longer
be relied upon. A copy of KPMG's letter is attached hereto as Exhibit 99.2. On
October 29, 1999, Orbital responded to KPMG's letter. A copy of Orbital's
response letter is attached hereto as Exhibit 99.3.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits:
99.1 Press Release dated October 29, 1999
99.2 Letter from KPMG LLP to Orbital Sciences
Corporation dated October 28, 1999
99.3 Letter from Orbital Sciences Corporation to
KPMG LLP dated October 29, 1999.
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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 hereunto duly authorized.
ORBITAL SCIENCES CORPORATION
Date: November 1, 1999 By: /s/ Jeffrey V. Pirone
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Jeffrey V. Pirone
Executive Vice President and
Chief Financial Officer
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Exhibit Index
99.1 Press Release dated October 29, 1999.
99.2 Letter from KPMG LLP to Orbital Sciences Corporation dated October 28,
1999.
99.3 Letter from Orbital Sciences Corporation to KPMG LLP dated October 29,
1999.
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EXHIBIT 99.1
For Immediate Release For More Information Contact:
Barron Beneski (703) 406-5000
[email protected]
ORBITAL ANNOUNCES RESTATEMENT OF FINANCIAL RESULTS
(Dulles, Virginia 29 October 1999) - Orbital Sciences Corporation (NYSE: ORB)
today announced that, based on the recommendation of its independent auditors,
the company will change its previously audited accounting treatment primarily
with respect to its investment in its affiliate, Orbital Imaging Corporation
("ORBIMAGE"), one of its emerging satellite services businesses.
Orbital's previous auditors, KPMG LLP ("KPMG"), reviewed and approved the
company's prior accounting treatment and concluded that the company's financial
statements were fairly presented in accordance with generally accepted
accounting principles. In preparation for the 1999 audit, the company's current
independent auditors questioned the ORBIMAGE treatment. KPMG has informed the
company that KPMG has now changed its position with respect to this treatment,
that the company's financial statements should be restated for fiscal years
ended December 31, 1997 and 1998 to reflect certain of the accounting treatments
recommended by the new auditors, and that KPMG's earlier opinions should no
longer be relied upon.
Orbital is in the process of quantifying the effect of the ORBIMAGE accounting
changes, and at this time the company believes that it will restate previously
reported financial results from 1997 through the second quarter of 1999. At this
time, the company believes that the change in ORBIMAGE accounting should not
impact reported revenues, operating income, EBITDA or cash flows, but instead
should increase "equity in losses of affiliates" and related interest expense by
approximately $60,000,000 in the aggregate for 1997 through the second quarter
of 1999. Neither KPMG nor the company's current auditors has reviewed the
company's estimate.
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ORBITAL ANNOUNCES RESTATEMENT OF FINANCIAL RESULTS
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In addition, the company's current auditors have questions arising out of the
valuation of the company's subsidiary, Magellan Corporation. KPMG has not yet
expressed its views with respect to these questions and the effect of a change,
if any, in accounting on the matter relating to Magellan has not yet been
determined.
Orbital is a space and information systems company that designs, manufactures,
operates and markets a broad range of affordable space infrastructure systems,
satellite access products and satellite services, including satellites and other
space systems, launch vehicles, electronics and sensors, satellite ground
systems and software, satellite-based navigation and communications products,
and satellite-delivered communications, Earth imaging and other information
services.
NOTE: "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. Certain "forward-looking statements" contained in this release involve
unknown risks and uncertainties that may cause the actual results, performance
or achievements of the company to be materially different from any future
results, performance or achievements, expressed or implied by such
forward-looking statements. In particular, statements containing objectives,
goals, targets and expectations are not projections of future performance. In
addition, factors such as general economic and business conditions, product
performance, market acceptance of products, services and technologies, consumer
demand, dependence upon long-term contracts with commercial and government
customers and timely and accurate assessment of "Year 2000" issues may impact
the company's revenues, expenses and profit from period to period. These factors
and others related to the company's business are described in further detail in
the company's SEC filings, including its Form 10-K and Forms 10-Q.
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EXHIBIT 99.2
[Letterhead of KPMG LLP]
BY HAND DELIVERY
October 28, 1999
Board of Directors
Orbital Sciences Corporation
21700 Atlantic Blvd.
Dulles, VA 20166
Gentlemen:
We have examined the consolidated financial statements of Orbital Sciences
Corporation (the "Company") as of December 31, 1998 and December 31, 1997 and
for the each of the years then ended (the "Financial Statements") and issued our
auditors' report thereon dated February 16, 1999, except as to note 12, which is
as of March 18, 1999 (the "Report").
In light of recent developments at the Company subsequent to the issuance of the
Report, which raise questions relating to the Company's Financial Statements, we
cannot continue to be associated with those Financial Statements. Accordingly,
KPMG LLP hereby advises you that our Report on the Company's Financial
Statements should no longer be relied upon.
We request that you promptly advise those persons who have received a copy of
the Report, and whom you believe are relying on the Financial Statements and the
related Report, or who are likely to rely upon the Financial Statements and the
related Report, of our notification to you that the Financial Statements and the
Report should no longer be relied upon. Further, we ask you to determine,
together with your legal counsel, the disclosures which the Company should make
to the United States Securities and Exchange Commission and any other regulatory
body having jurisdiction over the Company. We request that you promptly supply
us with copies of any notifications you make pursuant to the request set forth
in this paragraph.
Very truly yours,
KPMG LLP
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October 29, 1999
KPMG LLP
1676 International Drive
McLean, VA 22102
Attention: David P. Milligan, Partner
Dear Members of the Firm:
We received your letter of October 28 concerning your previous audit
reports on the company's financial statements for December 31, 1997 and 1998.
This morning the company made an announcement containing the notification
requested in your letter, a copy of which is attached.
We look forward to working with you to expedite the process you have
informed us would be followed, including the submission to you of restated
financial statements for the years ended December 31, 1997 and 1998, and your
completion of the procedures leading to your issuance of an audit report on
those financial statements as restated. We will soon be submitting to you for
your review our best estimate of the restated items. We request that you
complete your examination and resulting report as quickly as possible.
Sincerely,
Jeffrey V. Pirone
Executive Vice President and
Chief Financial Officer
Attachment
