-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wl9mXqoQ9+8lRY9namMroluIoL192viEFDtaJNikZBRzb93oB2aDMnONbGGRZwjE fL4UWoYGkL8Qvlyv0sOpEg== 0000074818-99-000014.txt : 19990816 0000074818-99-000014.hdr.sgml : 19990816 ACCESSION NUMBER: 0000074818-99-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORBIT INTERNATIONAL CORP CENTRAL INDEX KEY: 0000074818 STANDARD INDUSTRIAL CLASSIFICATION: WOMEN'S, MISSES', AND JUNIORS OUTERWEAR [2330] IRS NUMBER: 111826363 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-03936 FILM NUMBER: 99686474 BUSINESS ADDRESS: STREET 1: 80 CABOT CT CITY: HAUPPAUGE STATE: NY ZIP: 11788 BUSINESS PHONE: 5164358300 MAIL ADDRESS: STREET 1: ORBIT INTERNETIONAL CORP STREET 2: 80 CABOT COURT CITY: HAUPPAUGE STATE: NY ZIP: 11788 FORMER COMPANY: FORMER CONFORMED NAME: ORBIT INSTRUMENT CORP DATE OF NAME CHANGE: 19911015 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended to Commission file number 0-3936 Orbit International Corp. (Exact name of registrant as specified in its charter) Delaware ID # 11-1826363 (State or other jurisdiction (I.R.S. Employer Identification incorporation or organization) Number) 80 Cabot Court, Hauppauge, New York 11788 (Address of principal executive offices (Zip Code) (516) 435-8300 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 month (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes X No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: June 30, 1999. 6,078,000 ORBIT INTERNATIONAL CORP. The financial information herein is unaudited. However, in the opinion of management, such information reflects all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods being reported. Additionally, it should be noted that the accompanying condensed financial statements do not purport to contain complete disclosures in conformity with generally accepted accounting principles. The results of operations for the six months ended June 30, 1999 are not necessarily indicative of the results of operations for the full fiscal year ending December 31, 1999. The consolidated balance sheet as of December 31, 1998 was condensed from the audited consolidated balance sheet appearing in the 1998 annual report on Form 10-K. These condensed consolidated statements should be read in conjunction with the Company's financial statements for the fiscal year ended December 31, 1998. PART I - FINANCIAL INFORMATION ITEM - I ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 1999 1998 (unaudited) ASSETS Current assets: Cash and cash equivalents............... $ 2,103,000 $ 438,000 Investments in marketable securities.... 1,150,000 3,230,000 Accounts receivable (less allowance for doubtful accounts)..................... 1,981,000 2,345,000 Inventories ............................ 6,060,000 7,089,000 Restricted investments, related to discontinued operations................ - 26,000 Assets held for sale, net............... 68,000 80,000 Other current assets.................... 98,000 140,000 Deferred tax assets..................... 276,000 276,000 Total current assets.................. 11,736,000 13,624,000 Property, plant and equipment - at cost less accumulated depreciation and amortization........................... 2,195,000 2,267,000 Excess of cost over the fair value of assets acquired....................... 1,107,000 1,155,000 Investments in marketable securities.... 379,000 517,000 Other assets............................ 671,000 658,000 Deferred tax assets..................... 924,000 924,000 TOTAL ASSETS............................ $17,012,000 $19,145,000 See accompanying notes. ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (continued) June 30, December 31, 1999 1998 (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term obligations.. $ 738,000 $ 593,000 Accounts payable.......................... 1,107,000 1,189,000 Accrued expenses.......................... 1,076,000 2,432,000 Customer advances......................... - 785,000 Accounts payable, accrued expenses and reserves applicable to discontinued operations..... 554,000 669,000 Due to factor............................. - 15,000 Total current liabilities............... 3,475,000 5,683,000 Long-term obligations...................... 3,940,000 3,881,000 Accounts payable, accrued expenses and reserves applicable to discontinued operations,less current portion.... 405,000 522,000 Total liabilities....................... 7,820,000 10,086,000 STOCKHOLDERS' EQUITY Common stock - $.10 par value.............. 912,000 912,000 Additional paid-in capital................. 23,557,000 23,555,000 Accumulated deficit........................ (5,410,000) (5,596,000) Deferred compensation...................... - (19,000) Accumulated other comprehensive income..... (17,000) 9,000 19,042,000 18,861,000 Treasury stock, at cost.................... (9,850,000) (9,802,000) Total stockholders' equity................ 9,192,000 9,059,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,012,000 $19,145,000 See accompanying notes. ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Six Months Ended Three Months Ended June 30, June 30, 1999 1998 1999 1998 Net sales........... $ 7,018,000 $ 8,520,000 $ 3,609,000 $ 4,235,000 Cost of sales....... 4,286,000 4,881,000 2,229,000 2,372,000 Gross profit........ 2,732,000 3,639,000 1,380,000 1,863,000 Selling, general and administrative expenses........... 2,546,000 2,724,000 1,192,000 1,407,000 Class action litigation settlement......... - 500,000 - 500,000 Interest expense.... 163,000 184,000 82,000 89,000 Investment and other income, net.. ( 163,000) ( 200,000) ( 98,000) ( 93,000) Income (loss) before income tax benefit. 186,000 431,000 204,000 (40,000) Income tax benefit.. - 1,150,000 - 1,150,000 NET INCOME.......... $ 186,000 $ 1,581,000 $ 204,000 $1,110,000 Net income per common share: Basic............. $ .03 $ .26 $ .03 $ .18 Diluted........... $ .03 $ .22 $ .03 $ .16 See accompanying notes. ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended June 30, 1999 1998 Cash flows from operating activities: Net income.................................. $ 186,000 $1,581,000 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization............. 82,000 68,000 Amortization of goodwill.................. 48,000 48,000 Compensatory issuance of stock and options 19,000 39,000 Change in value of marketable securities................................ (26,000) 2,000 Deferred tax assets....................... - (1,150,000) Changes in operating assets and liabilities: Accounts receivable......................... 364,000 586,000 Inventories................................. 1,029,000 (856,000) Other current assets........................ 42,000 (30,000) Accounts payable............................ (82,000) 80,000 Accrued expenses............................ (356,000) 311,000 Customer advances........................... (785,000) 1,459,000 Assets held for sale,net.................... 12,000 168,000 Accounts payable, accrued expenses and and reserves applicable to discontinued operations.................... (232,000) (303,000) Other assets................................ (23,000) ( 92,000) Payment for settlement of class action litigation................................. (1,000,000) - - Net cash (used in) provided by operating activities...................... (722,000) 1,911,000 Cash flows from investing activities: Purchases of property, plant and equipment.. - (35,000) Purchases of marketable securities.......... (1,767,000) (3,013,000) Proceeds from sales of marketable securities 4,011,000 2,649,000 Net cash provided by (used in) investing activities...................... 2,244,000 (399,000) (continued) ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (continued) Six Months Ended June 30, 1999 1998 Cash flows from financing activities: Decrease in due to factor................... (15,000) (228,000) Repayments of long-term debt................ (296,000) (752,000) Proceeds from long-term debt................ 500,000 79,000 Proceeds from exercise of stock options..... 2,000 18,000 Purchase of treasury stock.................. (48,000) - - Net cash provided by (used in) financing activities.................................. 143,000 (883,000) NET INCREASE IN CASH AND CASH EQUIVALENTS................................. 1,665,000 629,000 Cash and cash equivalents - January 1........ 438,000 1,096,000 CASH AND CASH EQUIVALENTS - June 30.......... $2,103,000 $ 1,725,000 Supplemental cash flow information: Cash paid for: Interest.............................. $163,000 $ 184,000 Taxes................................. $ - $ 13,000 See accompanying notes. ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (NOTE 1) - Income Per Share: The following table sets forth the computation of basic and diluted income per common share: Six Months Ended Three Months Ended June 30, June 30, 1999 1998 1999 1998 Denominator: Denominator for basic income per share - weighted-average common shares 6,077,000 6,143,000 6,078,000 6,150,000 Effect of dilutive securities: Employee and directors stock options 70,000 770,000 50,000 735,000 Warrants 74,000 189,000 47,000 185,000 Unearned stock award 0 58,000 0 56,000 Denominator for diluted income per share - weighted-average common shares and assumed conversion 6,221,000 7,160,000 6,175,000 7,126,000 The numerator for basic and diluted income per share for the six and three months ended June 30, 1999 and June 30, 1998 is the net income for each period. (NOTE 2) - Cost of Sales: For interim periods, the Company estimates its inventory and related gross profit. (continued) ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) (NOTE 3) - Inventories: Inventories consist of the following: June 30, December 31, 1999 1998 Raw materials.............. $ 2,275,000 $ 2,609,000 Work-in-process............ 3,785,000 4,480,000 TOTAL $ 6,060,000 $ 7,089,000 (NOTE 4) - Available-For-Sale Securities: The following is a summary of available-for-sale securities: June 30, 1999 Estimated Fair Cost Value U.S. Treasury bills......................... $ 931,000 $ 931,000 Corporate debt securities .................. 615,000 598,000 ___________ ___________ Balance of securities portfolio............. $ 1,546,000 $ 1,529,000 The amortized cost and estimated fair value of and marketable debt securities at June 30, 1999 by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to repay obligations without prepayment penalties. June 30, 1999 Estimated Fair Cost Value Due in one year or less.................... $ 1,156,000 $ 1,150,000 Due after one year through three years..... 101,000 99,000 Due after three years...................... 289,000 280,000 $ 1,546,000 $ 1,529,000 (continued) ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) (NOTE 5) - Business Segments: The Company operates through two business segments. Its Electronics Segment, through the Orbit Instrument Division, is engaged in the design, manufacture and sale of customized electronic components and subsystems. Its Power Units Segment, through the Behlman Electronics, Inc. subsidiary, is engaged in the design, manufacture and sale of distortion free commercial power units, power conversion devices and electronic devices for measurement and display. The Company's reportable segments are business units that offer different products. The reportable segments are each managed separately as they manufacture and distribute distinct products with different production processes. The following is the Company's business segment information for the six and three month periods ended June 30, 1999 and 1998. Six Months Ended Three Months Ended June 30, June 30, 1999 1998 1999 1998 Net sales: Electronics........ $ 4,202,000 $ 5,512,000 $ 1,916,000 $2,804,000 Power Units........ Domestic......... 2,402,000 2,588,000 1,425,000 1,170,000 Foreign.......... 424,000 483,000 270,000 303,000 Intercompany sale (10,000) (63,000) (2,000) (42,000) Total Power Units... 2,816,000 3,008,000 1,693,000 1,431,000 Total $ 7,018,000 $ 8,520,000 $ 3,609,000 $4,235,000 Income (loss) from operations: Electronics......... $ 829,000 $ 1,453,000 $ 301,000 $ 816,000 Power Units......... (235,000) (109,000) 37,000 (133,000) General corporate expenses not allocated (a)........ (408,000) (929,000) (150,000) (727,000) Interest expense....... (163,000) (184,000) (82,000) (89,000) Investment and other income............... 163,000 200,000 98,000 93,000 Income (loss) before income taxes. $ 186,000 $ 431,000 $ 204,000 $ (40,000) (a) Includes $500,000 for the class action securities litigation settlement for the six and three months ended June 30, 1998, respectively. ITEM - II ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS Results of Operations Three month period ended June 30, 1999 v. June 30, 1998 The Company currently operates in two industry segments. Its Orbit Instrument Division is engaged in the design and manufacture of electronic components and subsystems (the "Electronics Segment"). Its Behlman subsidiary is engaged in the design and manufacture of commercial power units (the "Power Units Segment"). Consolidated net sales for the three month period ended June 30, 1999 decreased to $3,609,000 from $4,235,000 for the three month period ended June 30, 1998 principally due to decreased sales from the Electronics Segment which were partially offset by increased sales from the Power Units Segment. Gross profit, as a percentage of sales, for the three month period ended June 30, 1999 decreased to 38.2.% from 44.0% for the three month period ended June 30, 1998 due to lower gross profits realized by both of the Company's segments due to product mix for the Power Units Segment and certain costs of the Electronics Segment that did not decrease despite the reduction in sales for the period. Selling, general and administrative expenses for the three month period ended June 30, 1999 decreased to $1,192,000 from $1,407,000 for the three month period ended June 30, 1998 principally due to several cost cutting initiatives taken by the Company during the first quarter of 1999. Selling, general and administrative expenses, as a percentage of sales, for the three month period ended June 30, 1999 decreased slightly to 33.0% from 33.2% for the comparable period in 1998. In July, 1998, the Company reached a settlement with respect to the USA Classic class action securities litigation subject to an executed "Stipulation of Settlement" by each of the parties and approval of such by the court. The Company's portion of the settlement was $1,000,000 of which $500,000 had been previously accrued. Accordingly, the Company recorded an additional charge of $500,000 during the three months ended June 30, 1998. Interest expense for the three month period ended June 30, 1999 decreased to $82,000 from $89,000 for the three month period ended June 30, 1998 due to a lower interest rate on amounts borrowed during the period. Investment and other income for the three month period ended June 30, 1999 slightly increased slightly to $98,000 from $93,000 for the three month period ended June 30, 1998. In connection with the resolution of the USA Classic class action securities litigation in the prior period and its related uncertainties and the consistent earnings from its continuing operations, pursuant to Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", the Company reduced its valuation allowance against its existing deferred tax assets by $1,150,000 during the three months ended June 30, 1998. Net income for the three month period ended June 30, 1999 decreased to $204,000 from $1,110,000 for the three month period ended June 30, 1998. Exclusive of the impact of the income tax benefit and the settlement of the class action litigation, net income for the three month period ended June 30, 1999 decreased to $204,000 from $460,000 for the same period last year principally due to the reduction in revenues. Six month period ended June 30, 1999 v. June 30, 1998 Consolidated net sales for the six month period ended June 30, 1999 decreased to $7,018,000 from $8,520,000 for the six month period ended June 30, 1998 principally due to decreased sales from both the Electronics Segment and the Power Units Segment. Gross profit, as a percentage of sales, for the six month period ended June 30, 1999 decreased to 38.9% from 42.7% for the six month period ended June 30, 1998 due to lower gross profits realized by both the Electronics Segment and the Power Units Segment due to certain costs that did not decrease despite the reduction in sales for the period. Selling, general and administrative expenses for the six month period ended June 30, 1999 decreased to $2,546,000 from $2,724,000 for the six month period ended June 30 1998 principally due to several cost cutting initiatives taken by the Company during the first quarter of 1999. Selling, general and administrative expenses, as a percentage of sales, for the six months ended June 30, 1999 increased to 36.3% from 32.0% for the comparable period in 1998 principally due to decreased sales during the current period. In July, 1998, the Company reached a settlement with respect to the USA Classic class action securities litigation subject to an executed "Stipulation of Settlement" by each of the parties and approval of such by the court. The Company's portion of the settlement was $1,000,000 of which $500,000 had been previously accrued. Accordingly, the Company recorded an additional charge of $500,000 during the six months ended June 30, 1998. Interest expense for the six month period ended June 30, 1999 decreased to $163,000 from $184,000 for the six month period ended June 30, 1998 due to a lower interest rate on amounts borrowed during the period. Investment and other income for the six month period ended June 30, 1999 decreased to $163,000 from $200,000 for the six month period ended June 30, 1998 principally due to a decrease in funds available for investment in the current period. In connection with the resolution of the USA Classic class action securities litigation in the prior period and its related uncertainties and the consistent earnings from its continuing operations, pursuant to Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", the Company reduced its valuation allowance against its existing deferred tax assets by $1,150,000 during the six months ended June 30, 1998. Net income for the six month period ended June 30, 1999 decreased to $186,000 from $1,581,000 for the six month period ended June 30, 1998. Exclusive of the impact of the income tax benefit and the settlement of the class action litigation, net income for the six month period ended June 30, 1999 decreased to $186,00 from $931,000 for the same period last year principally due to the reduction in revenues. Liquidity, Capital Resources and Inflation: Working capital increased to $8,261,000 at June 30, 1999 compared to $7,941,000 at December 31, 1998. The ratio of current assets to current liabilities increased to 3.4 to 1 at June 30, 1999 from 2.4 to 1 at December 31, 1998. Net cash flows used in operations for the six months ended June 30, 1999 was approximately $722,000, primarily attributable to the payment related to the settlement of the class action litigation and a decrease in accrued expenses and customer advances which was partially offset by a decrease in accounts receivable and inventories. Cash flows provided by investing activities for the six months ended June 30, 1999 was approximately $2,244,000, due to the net sales of marketable securities. Cash flows provided by financing activities was approximately $143,000, primarily attributable to proceeds of debt which was partially offset by repayments of debt and treasury share repurchases. All operations of the discontinued apparel companies have been terminated. All losses and obligations of these apparel operations have been provided for, and accordingly, the Company does not anticipate using any significant portion of its resources towards these discontinued apparel operations. In August 1998, the Company closed on a new $4,000,000 credit facility with a new lender secured by real property and other assets of the Company. The Company used $3,500,000 of the proceeds to replace its existing asset based lending arrangement and the remaining $500,000 was borrowed in January, 1999 to partially fund a class action securities litigation settlement of $1,000,000. In September 1998, the Company's Board of Directors authorized a stock repurchase program for the repurchase of up to 250,000 shares of its common stock in the open market or in privately negotiated transactions. Through August 3, 1999, the Company repurchased approximately 157,000 shares at an average price of $1.67 per share. The Company has not made any repurchases since the first quarter of 1999 in order for it to remain in compliance with financial covenants related to its existing credit facility. The Company's existing capital resources, including its bank credit facilities, and its cash flow from operations are expected to be adequate to cover the Company's cash requirements for the foreseeable future. Inflation has not materially impacted the operations of the Company. Certain Material Trends Despite continued profitability in 1998, and through the first two quarters of 1999, the Company continues to face a very difficult business environment with continuing pressure on the Company's prices for its sole source sales and a general reduction in the level of funding for the defense sector. The Company continues to pursue many business opportunities, including programs in which it has long participated but, due to industry-wide funding and pricing pressures, the Company has encountered delays in the awards of these contracts. The delay in receiving these awards will shift a portion of shipments anticipated for 1999 into 2000. Consequently, the Company projects that the revenue of the Company's Electronics Segment in 1999 will not match the levels recorded in 1998. The Company continues to seek new contracts which require incurring up-front design, engineering, prototype and preproduction costs. While the Company attempts to negotiate contract awards for reimbursement of product development, there is no assurance that sufficient monies will be set aside by its customers, including the U. S. Government, for such effort. In addition, even if the U. S. Government agrees to reimburse development costs, there is still a significant risk of cost overrun which may not be reimbursable. Furthermore, once the Company has completed the design and preproduction stage, there is no assurance that funding will be provided for future production. The Company is heavily dependent upon military spending, particularly the Department of the Navy, as a source of revenues and income. The United States Navy fleet has been significantly reduced in the past several years thereby impacting the procurement of equipment. Any further reductions in the level of military spending by the United States Government and/or further reductions to the United States fleet could have a negative impact on the Company's future revenues and earnings. In addition, due to major consolidations in the defense industry, it has become more difficult to avoid dependence on certain customers for revenue and income. Behlman's line of commercial products gives the Company some diversity and the Orbit Instrument Division is beginning to introduce certain of its products into commercial and foreign markets. The Company retained OEM Capital Corp (OEM), an investment banking firm specializing in the electronics, communications and computer industries, to assist the Company in identifying viable acquisition opportunities. Although the Company is committed to enhancing its sales and profitability through strategic acquisitions as well as through internal growth, there is no guarantee that OEM will present acquisition candidates that will ultimately result in a transaction for the Company. Year 2000 In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company notes that certain statements contained in the following discussion concerning the change over to the year 2000 are forward-looking in nature and are subject to many risks and uncertainties. These forward-looking statements include such matters as the Company's projected state of readiness, the Company's projected cost of remediation, the expected date of completion of remediation and the expected contingency plans associated with any worst case scenarios. Such statements also constitute Year 2000 Readiness Disclosure within the meaning of the Year 2000 Information and Readiness Disclosure Act. The Year 2000 issue is the result of computer programs using two digits rather than four to define the applicable year. Such software may recognize a date using 00 as the year 1900 rather than the year 2000. This could result in system failures or miscalculations leading to disruptions in the Company's activities and operations. The Company has developed a plan to modify its information technology systems to recognize the Year 2000, including the purchase of a new manufacturing software package, and is converting its critical data processing systems. The Company expects the project to cost between approximately $100,000 and $150,000. This estimate includes the price of new software and internal costs but excludes the costs to upgrade and replace systems in the normal course of business as well as potential costs for outside consultants to assist the Company in the implementation of a new software package. The Company does not expect this project to have a material effect on its operations in 1999. The Company has also initiated discussions with its significant suppliers, large customers and financial institutions to ensure that these parties have appropriate plans to remediate Year 2000 issues where their systems interface with Company systems or otherwise impact its operations. However, the Company is currently uncertain as to the impact on its operations, liquidity and financial conditions should these organizations fail to properly remediate their computer systems. While the Company intends to use diligent efforts and care to implement the plan set forth above and to take any other necessary steps with regard to its information technology systems to prepare for the Year 2000, there is no assurance that such steps will effectively accomplish such goal. Furthermore, any failure on the part of the Company's primary suppliers, service providers and customers to adapt their respective information technology systems to recognize the Year 2000 could adversely impact the Company. Furthermore, the United States Government has been a significant customer of the Company for many years. There have recently been several press reports concerning whether certain departments of the United States Government will be Year 2000 compliant on a timely basis. To the extent problems are identified, the Company will implement corrective procedures where necessary to avoid any adverse effect on the Company's cash flow and financial condition. The failure to correct a material Year 2000 problem could result in an interruption or failure of certain important business operations. The failure of the Company's sales and billing systems could result in the Company's inability to timely post and record sales revenue and expenses. In addition, the aging of the Company's accounts payable would be inaccurate. The Company has prepared contingency plans for certain critical applications and it working on plans for others. These contingency plans involve, among other actions, manual workarounds, and protective cash management procedures. The financial impact of any or all of the above worst-case scenarios has not been and cannot be estimated by the Company due to the numerous uncertainties and variables associated with such scenarios. Management believes, however, that its Year 2000 program will significantly reduce the Company's risks associated with the change over to the year 2000. Forward Looking Statements Statements in this Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this document as well as statements made in press releases and oral statements that may be made by the Company or by officers, directors or employees of the Company acting on the Company's behalf that are not statements of historical or current fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes", "belief", "expects", "intends", "anticipates" or "plans" to be uncertain and forward-looking. 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 reports and registration statements filed with the Securities and Exchange Commission. 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. ORBIT INTERNATIONAL CORP. Registrant Dated: August 12, 1999 /s/ Dennis Sunshine Dennis Sunshine, President, Chief Executive officer and Director Dated: August 12, 1999 /s/ Mitchell Binder Mitchell Binder, Vice President- Finance, Chief Financial Officer and Director PART II OTHER INFORMATION Item 4. Submission of matters to a vote of security holders. An Annual Meeting of Stockholders of the Company was held on July 9, 1999. The holders of 6,077,593 shares of Common Stock of the Company were entitled to vote at the meeting, the holders of 5,820,984 shares of Common Stock, or approximately 96% of shares entitled to vote at the meeting, were represented by proxy. The following action took place: 1. The stockholders voted for the election of each of the following persons nominated to serve as a director of the Company until the next annual meeting and until his successor is elected and qualified: Dennis Sunshine by 5,746,131 votes for and 76,844 against, Bruce Reissman by 5,746,131 votes for and 76,844 against, Mitchell Binder by 5,746,331 votes for and 76,644 against, John Molloy by 5,746,331 votes for and 76,644 against, Stanley Morris by 5,746,331 votes for and 76,644 against and Marc Pfefferle by 5,746,331 for and 76,644 against. 2. The stockholders voted 5,764,297 for and 54,056 against the resolution relating to the notification of Ernst & Young LLP as the independent auditors and accountants for the Company for the year ended December 31, 1998 (4,622 votes abstained). Item 6. Exhibits and reports on Form 8-K (a) Exhibits. None 4 EX-27 2
5 6-MOS JUN-30-1999 JUN-30-1999 2,103,000 1,150,000 2,147,000 (166,000) 6,060,000 11,736,000 4,636,000 (2,441,000) 17,012,000 3,475,000 3,940,000 0 0 912,000 8,280,000 17,012,000 7,018,000 7,018,000 4,286,000 4,286,000 2,546,000 0 163,000 186,000 0 186,000 0 0 0 186,000 .03 .03
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