<PAGE> 1
================================================================================
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): April 22, 1999
------------------------
ORBITAL SCIENCES CORPORATION
<TABLE>
<S> <C> <C>
DELAWARE 0-18287 06-1209561
(State of incorporation) (Commission File Number) (I.R.S. Employer I.D.
No.)
</TABLE>
21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
(703) 406-5000
(Address and telephone number
of principal executive offices)
================================================================================
<PAGE> 2
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On April 22, 1999, Orbital Sciences Corporation (the "Company"), at the
direction of the Audit and Finance Committee of the Board of Directors, notified
KPMG LLP ("KPMG") that the Company had determined to change auditors. The
Company has selected a major international independent auditing firm, subject
to the firm's completion of its pre-acceptance procedures, to audit the
Company's consolidated financial statements for the year ending December 31,
1999 and to consult with the Company with respect to its quarterly financial
statements. The Company's prior year end consolidated financial statements were
audited by KPMG. The Company has not restricted KPMG from responding fully to
the inquiries of the successor auditor with respect to any matters.
KPMG's report on the consolidated financial statements of the Company for
each of the past two fiscal years did not contain any adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope or accounting principles. During the year ended December 31, 1997, there
were no disagreements with KPMG 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 KPMG, would have caused
KPMG to make reference to the subject matter of the disagreements in connection
with its report.
In connection with the audit of the Company's consolidated financial
statements for the year ended December 31, 1998, KPMG proposed adjustments to
the Company's previously issued quarterly financial statements for the first
three quarters of 1998 and to the results for the fourth quarter as initially
prepared by the Company. The proposed adjustments were based on KPMG's
interpretation of specific accounting standards. While the Company believed that
its own interpretation and application of accounting standards had been
reasonable under the circumstances, after discussion with KPMG and the Audit and
Finance Committee, the Company determined to restate its previously issued
quarterly financial statements in the manner recommended by KPMG and as more
fully described in the Company's Forms 10-Q/A for each of the fiscal quarters
ended March 31, June 30 and September 30, 1998. The Company also agreed to
adjust the results for the fourth quarter primarily with respect to long-term
contract accounting and equity method accounting in the manner recommended by
KPMG.
Subject to the foregoing, for the year ended December 31, 1998, there were
no disagreements with KPMG 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 KPMG, would have caused
KPMG to make reference to the subject matter of the disagreements in connection
with its report.
On April 14, 1999, KPMG advised the Company by letter that KPMG believed
that there were material weaknesses in the Company's system of internal controls
relating to the manner of recording adjustments to financial information
submitted by subsidiaries and operating divisions of the Company. In particular,
KPMG cited:
- - adjustments made in the first and second quarters of 1998 to capitalize
certain product enhancement costs at the Company's subsidiary, Magellan
Corporation, which appeared to KPMG to have been made outside Magellan's
system of internal accounting controls and
<PAGE> 3
which were not recorded in its general ledger and were not included in
closing consolidating entries for such quarters;
- - an adjustment made in the third quarter of 1998 to increase revenue
recognized pursuant to a contract at the Company's subsidiary, MacDonald,
Dettwiler and Associates Ltd., which was not reflected in its general ledger
and not included in closing consolidating entries for the third quarter; and
- - corporate adjustments made in closing consolidating entries to certain
long-term contract accounting at the Company's operating divisions, which had
the effect of increasing revenues and profits on some of these contracts and
which KPMG believed did not properly consider all the information used by the
operating divisions.
In its letter, KPMG further advised the Company that KPMG's report on the
Company's 1998 consolidated financial statements was not affected by the
material weakness conditions that it believes existed, and that KPMG considered
such material weaknesses in determining the nature, timing and extent of its
audit tests.
Prior to the receipt of KPMG's letter, the Company and the Audit and
Finance Committee had discussions with KPMG indicating disagreement with KPMG's
conclusions and had expressed to KPMG the Company's view that the adjustments in
question were properly recorded by the Company after appropriate consultation
with the subsidiaries and operating divisions involved.
The Company has requested KPMG to issue a letter to the SEC stating
whether it agrees with the above statements. The Company will file such letter
as an amendment to this Current Report on Form 8-K.
The Company has been informed that the auditor-client relationship between
the Company's affiliates, ORBCOMM Global, L.P. and Orbital Imaging Corporation,
and KPMG has also been terminated, and that such affiliates expect to file Forms
8-K with respect to the terminations.
2
<PAGE> 4
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: April 28, 1999 By: /s/ Jeffrey V. Pirone
--------------------------------
Jeffrey V. Pirone
Executive Vice President and
Chief Financial Officer
3
