8-K 1 resultsofoperation.txt 8-K ITEM 2.02-RESULTS OF OPERATIONS AND FINANCIAL CONDITION UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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): AUGUST 8, 2006 ORBIT INTERNATIONAL CORP. (Exact name of registrant as specified in its charter) DELAWARE 0-3936 11-1826363 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 80 CABOT COURT HAUPPAUGE, NEW YORK 11788 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 631-435-8300 NOT APPLICABLE -------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230-425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR 240.13e-4(c)) ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On August 8, 2006, Orbit International Corp. ("Orbit") issued a press release announcing its operating results for its second quarter and six months ended June 30, 2006. The press release contains a non-GAAP disclosure-Earnings before interest, taxes, depreciation and amortization, and stock based compensation (EBITDA), that management feels provides useful information in understanding the impact of certain items to Orbit's financial statements. Orbit's press release is hereby furnished as follows: [GRAPHIC OMITED] [GRAPHIC OMITED] FOR IMMEDIATE RELEASE --------------------- CONTACT or Investor Relations Counsel ------- Mitchell Binder Linda Latman, 212-836-9609 Vice President-Finance Lena Cati, 212-836-9611 631-435-8300 The Equity Group Inc. ORBIT INTERNATIONAL CORP. REPORTS SECOND QUARTER RESULTS -------------------------------------------------------- Revises 2006 Guidance --------------------- Hauppauge, New York, August 8, 2006 - Orbit International Corp. (NASDAQ:ORBT), an electronics manufacturer and supplier, today announced results for the second quarter ended June 30, 2006. The results of operations of Orbit's acquisition, Tulip Development Laboratory, Inc. and its manufacturing affiliate, TDL Manufacturing, Inc. ("Tulip") are included as of April 4, 2005, the date the transaction was consummated. SECOND QUARTER 2006 VS. SECOND QUARTER 2005 ----------------------------------------------- - Net sales declined 9.1% to $6,110,000 from $6,725,000; - Gross margin was 44.0% compared to 45.3%; - Net income was $589,000, down 28.5% compared to $824,000; - Diluted earnings per share were $.13 compared to $.18; - Earnings before interest, taxes, depreciation and amortization, and stock based compensation (EBITDA) decreased by 17.8% to $911,000 ($.20 per diluted share) compared to $1,108,000 ($.25 per diluted share); - Backlog at June 30, 2006 was approximately $10.9 million compared to $14.5 million, a year ago. This 24.8% decrease is primarily attributed to a lower backlog from the Electronics Group. FIRST HALF 2006 VS. FIRST HALF 2005 --------------------------------------- - Net sales increased 5% to $12,739,000 from $12,128,000; - Gross margin was 43.8% compared to 44.6%; - Net income was $1,281,000, down 11.8% compared to $1,453,000; - Diluted earnings per share were $.27 compared to $.34; - EBITDA increased by 7.1% to $1,927,000 ($.41 per diluted share) compared to $1,800,000 ($.42 per diluted share). In the first quarter of 2006, the Company adopted Statement of Financial Accounting Standards No. 123, (Revised 2004) - Share Based Payment, ("SFAS 123R"), which requires that share based compensation be recorded in a company's financial statements. Historically, this has been identified in the footnote disclosure to our financial statements in accordance with SFAS 123. Orbit has elected to use the modified prospective method; prior period financial results have not been revised and are not comparative to the 2006 results. Total share based compensation expense recorded in the second quarter and six months ended June 30, 2006 was $55,000 and $106,000, respectively. Also, in accordance with SFAS 123R, "unearned compensation" recorded pursuant to Accounting Principles Board ("APB") Opinion No. 25 has been reversed and is now a component of "additional paid-in capital." (more) Orbit International News Release Page 2 August 8, 2006 Dennis Sunshine, President and Chief Executive Officer noted, "As previously reported, we expected our second and third quarter 2006 net sales and profitability to be equal to or slightly less than last year's second and third quarter results, which were exceptionally strong. Specifically, during last year's first and second quarters, our Power Group was shipping significant quantities of modules in support of its FLIR program requirement, resulting in strong sales and profitability. Since the FLIR contract was completed in the second quarter of 2005, our Power Group recorded a decline in net sales and profitability in the second quarter of 2006. Net sales and profitability from our Electronics Group for the second quarter remained almost unchanged. The decline in our backlog at June 30, 2006 is principally attributable to the delay in orders for option quantity requirements and follow-on program orders for our Electronics Group which have been affected by program funding delays. We remain confident that we will receive these option quantities and follow-on orders in the future, however, the timing of their release remains uncertain." Discussing the outlook for the remainder of 2006, Sunshine continued, "We believe that the program funding delays are similar to what others in our industry have been experiencing for the past few quarters. Because of our lower backlog at June 30, 2006, and the uncertainty of the receipt of expected follow-on orders, we are anticipating weaker than expected third and fourth quarters and are revising our 2006 guidance accordingly. We are now expecting fiscal 2006 net sales to be in the range of $24.7 million to $24.9 million, EBITDA between $3,600,000 and $3,700,000, net income between $2,350,000 and $2,450,000, or between $.50 and $.53 per diluted share." Sunshine concluded, "The Company continues to pursue its strategy for accretive acquisitions and has made progress with preliminary discussions being conducted with several candidates. However, there can be no assurance that any acquisition will be consummated with any of these candidates." Mitchell Binder, Chief Financial Officer, stated, "Our Company's balance sheet remains strong. At June 30, 2006, total current assets were $19,985,000 versus total current liabilities of $3,563,000 for a 5.6 to 1 current ratio. Orbit continues to generate cash from operations thereby strengthening its financial condition. With approximately $25 million in net operating loss carryforwards, we should continue to shield profits from federal and New York State taxes and enhance future cash flow." CONFERENCE CALL ---------------- The Company will hold a conference call for investors today, August 8, 2006, at 11:00 a.m. (EDT). Interested parties may participate in the call by dialing 706-679-3204; please call in 10 minutes before the conference call is scheduled to begin and ask for the Orbit International conference call. After opening remarks, there will be a question and answer period. The conference call will also be broadcast live over the Internet. To listen to the live call, please go to www.orbitintl.com and click on the Investor Relations section. Please go to the website at least 15 minutes early to register, and download and install any necessary audio software. If you are unable to listen live, the conference call will be archived and can be accessed for approximately 90 days at Orbit's website. We suggest listeners use Microsoft Explorer as their browser. Orbit International Corp., through its Electronics Group, is involved in the manufacture of customized electronic components and subsystems for military and nonmilitary government applications through its production facilities in Hauppauge, New York and Quakertown, Pennsylvania. Its Power Group, through its Behlman Electronics, Inc. subsidiary manufactures and sells high quality commercial power units, AC power sources, frequency converters, uninterruptible power supplies and associated analytical equipment. The Behlman military division designs, manufactures and sells power units and electronic products for measurement and display. (more) Orbit International News Release Page 3 August 8, 2006 This press release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding the Company remaining confident it will receive follow-on orders in the future, should continue to shield profits from federal and New York State taxes and enhance future cash flow; and its revised guidance for 2006. These forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual future results of the Company to be materially different from such forward looking statements. Factors that might result in such differences include, without limitation, current economic conditions and military conflicts, variable market conditions and changing needs of the defense sector and the Company's customers. The forward-looking statements contained in this press release speak only as of the date hereof. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005 and its other periodic reports and its registration statement on Form S-3 containing a final prospectus dated January 11, 2006 filed with the Securities and Exchange Commission. (See Accompanying Tables) Orbit International News Release Page 4 August 8, 2006 ORBIT INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2006 2005 2006 2005 Net sales $ 6,110 $ 6,725 $12,739 $12,128 Cost of sales 3,423 3,677 7,155 6,714 ----- ------ ------ ------- Gross profit 2,687 3,048 5,584 5,414 Selling general and administrative expenses 2,055 2,166 4,201 3,935 Interest expense 112 102 228 103 Investment and other income (84) (44) (151) (77) ----- ------ ------ ------- Net income before taxes 604 824 1,306 1,453 Income tax 15 - 25 - ---- ------ ----- ------ Net income 589 824 1,281 1,453 Basic earnings per share $ 0.14 $ 0.20 $ 0.29 $ 0.38 Diluted earnings per share $ 0.13 $ 0.18 $ 0.27 $ 0.34 Weighted average number of shares outstanding: Basic 4,349 4,071 4,348 3,814 Diluted 4,627 4,458 4,667 4,253
Orbit International News Release Page 5 August 8, 2006 ORBIT INTERNATIONAL CORP. CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2006 2005 2006 2005 EBITDA Reconciliation ---------------------------------------- Net income 589 824 1,281 1,453 Interest expense 112 102 228 103 Tax expense 15 - 25 - Depreciation and amortization 140 138 287 156 Stock based compensation 55 44 106 88 ----- --------- ----- ------ EBITDA (1) $ 911 $ 1,108 $1,927 $1,800 ----- --------- ------ ------ EBITDA Per Diluted Share Reconciliation ---------------------------------------- Net income $0.13 $ 0.18 $ 0.27 $ 0.34 Interest expense 0.03 0.03 0.05 0.02 Tax expense 0.00 - 0.01 - Depreciation and amortization 0.03 0.03 0.06 0.04 Stock based compensation 0.01 0.01 0.02 0.02 ----- --------- ------ ------ EBITDA per diluted share (1) $0.20 $ 0.25 $ 0.41 $ 0.42 ----- --------- ------ ------ (1) The EBITDA table presented above is not determined in accordance with accounting principles generally accepted in the United States of America. Management uses adjusted EBITDA to evaluate the operating performance of its business. It is also used, at times, by some investors, security analysts and others to evaluate companies and make informed business decisions. EBITDA is also a useful indicator of the income generated to service debt. EBITDA is not a complete measure of an entity's profitability because it does not include costs and expenses for interest, depreciation and amortization and income taxes. EBITDA as presented herein may not be comparable to similarly named measures reported by other companies.
Orbit International News Release Page 6 August 8, 2006 ORBIT INTERNATIONAL CORP. CONSOLIDATED BALANCE SHEETS
JUNE 30, 2006 DECEMBER 31, 2005 --------------- ------------------- ASSETS (UNAUDITED) (AUDITED) Current assets Cash and cash equivalents $ 2,806,000 $ 3,933,000 Investments in marketable securities 3,486,000 1,012,000 Accounts receivable, less allowance for doubtful accounts 3,575,000 3,695,000 Inventories 9,170,000 9,055,000 Deferred tax asset 784,000 784,000 Other current assets 164,000 130,000 --------------- ------------------- Total current assets 19,985,000 18,609,000 Property and equipment, net 386,000 357,000 Goodwill 6,135,000 6,130,000 Intangible assets, net 1,421,000 1,639,000 Deferred tax asset 1,254,000 1,219,000 Other assets 562,000 1,198,000 --------------- ------------------- Total assets $ 29,743,000 $ 29,152,000 =============== =================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of long term obligations $ 1,125,000 $ 1,125,000 Accounts payable 1,111,000 857,000 Accrued expenses 1,212,000 1,447,000 Customer advances 30,000 256,000 Deferred income 85,000 85,000 --------------- ------------------- Total current liabilities 3,563,000 3,770,000 Deferred income 470,000 513,000 Long-term obligations, net of current maturities 4,716,000 5,279,000 --------------- ------------------- Total liabilities 8,749,000 9,562,000 Stockholders' Equity Common stock 458,000 457,000 Additional paid-in capital 19,415,000 20,600,000 Unearned compensation 0 (1,340,000) Accumulated other comprehensive loss (37,000) (4,000) Retained earnings (accumulated deficit) 1,158,000 (123,000) --------------- ------------------- Stockholders' equity 20,994,000 19,590,000 --------------- ------------------- Total liabilities and stockholders' equity $ 29,743,000 $ 29,152,000 =============== ===================
SIGNATURE 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. Dated: August 8, 2006 Orbit International Corp. By: /s/ Dennis Sunshine ------------------- Dennis Sunshine Chief Executive Officer and President