<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 1996
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 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:
August 13, 1996. 6,186,000
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 to 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, 1996 are
not necessarily indicative of the results of operations for the full
fiscal year ending December 31, 1996.
The consolidated balance sheet as of December 31, 1995 was condensed
from the audited consolidated balance sheet appearing in the 1995 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, 1995.
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1996 1995
(unaudited)
A S S E T S
Current assets:
Cash and cash equivalents.............. $ 2,582,000 $ 2,274,000
Investment in marketable
securities (Note 5)................... 606,000 7,495,000
Accounts receivable - net of
estimated doubtful accounts........... 2,356,000 854,000
Inventories - at lower of cost (first
in, first out) or market (Notes 2 and
3).................................... 6,919,000 13,124,000
Other current assets................... 152,000 1,669,000
Assets held for sale including
restricted investments in marketable
securities (Notes 5 and 6)............ 10,912,000
Total current assets................ 23,527,000 25,416,000
Property, plant and equipment - at cost
less accumulated depreciation and
amortization........................... 2,336,000 3,069,000
Excess of cost over the fair value of
assets acquired - less accumulated
amortization........................... 1,053,000 834,000
Restricted investment in marketable
securities (Note 5).................... 7,567,000
Investment in marketable
securities (Note 5).................... 1,127,000 795,000
Other assets............................. 377,000 347,000
T O T A L .......................... $ 28,420,000 $ 38,028,000
Attention is directed to the accompanying notes to
condensed consolidated financial statements.
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(continued)
June 30, December 31,
1996 1995
(unaudited)
L I A B I L I T I E S
Current liabilities:
Current portion of long-term obligations $ 934,000 $ 2,292,000
Accounts payable........................ 1,013,000 3,860,000
Accrued expenses........................ 2,779,000 4,090,000
Due to factor........................... 15,294,000
Liabilities associated with assets held
for sale including amounts due to
factor (Note 6)....................... 13,670,000
Total current liabilities.......... 18,396,000 25,536,000
Long-term liabilities associated with
assets held for sale (Note 6)........... 4,095,000
Long-term obligations (less current
portion above).......................... 1,511,000 1,097,000
Other liabilities......................... 2,077,000
Total liabilities.................... 24,002,000 28,710,000
STOCKHOLDERS' EQUITY
Capital stock - authorized 25,000,000
shares $.10 par value; issued 9,071,000
shares at June 30, 1996 and 8,771,000 at
December 31, 1995, respectively........ 907,000 877,000
Additional paid-in capital .............. 23,518,000 23,285,000
(Deficit)................................ (10,188,000) (4,026,000)
Unrealized holding (loss) in marketable
securities (Note 5).................... (18,000)
Less treasury stock ( 2,885,000 shares at
June 30, 1996 and December 31, 1995,
respectively) at cost ................. (9,588,000) (9,588,000)
Unearned portion of performance shares... (213,000)
Foreign currency translation adjustment.. (1,230,000)
Total stockholders' equity.......... 4,418,000 9,318,000
T O T A L........................... $ 28,420,000 $ 38,028,000
Attention is directed to the accompanying notes to
condensed consolidated financial statements.
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net sales............... $ 7,770,000 $ 8,175,000 $ 4,889,000 $ 4,069,000
Cost of sales (Note 2).. 4,376,000 4,956,000 2,597,000 2,667,000
Gross profit (Note 2)... 3,394,000 3,219,000 2,292,000 1,402,000
Other (income), costs
and expenses:
Selling, general and
administrative....... 2,653,000 2,195,000 1,343,000 852,000
Interest.............. 24,000 130,000 3,000 50,000
Investment and other
(income ) (Note 5)... (1,122,000) (1,812,000) ( 122,000) (420,000)
1,555,000 513,000 1,224,000 482,000
Earnings from continuing
operations before taxes
on income.... ......... 1,839,000 2,706,000 1,068,000 920,000
Taxes on income.........
Earnings from continuing
operations............. 1,839,000 2,706,000 1,068,000 920,000
(Loss) from discontinued
operations (Note 6).... (4,200,000) (5,152,000) (2,659,000) (3,053,000)
(Loss) from disposal of
discontinued operations
(Note 6)............... (3,801,000) (3,801,000)
(8,001,000) (5,152,000) (6,460,000) (3,053,000)
NET (LOSS).............. $(6,162,000) $(2,446,000) $(5,392,000) $(2,133,000)
EARNINGS(LOSS)PER SHARE
(Note 1):
Earnings from
continuing operations $ .31 $ .46 $ .18 $ .16
(Loss) from
discontinued operations (1.34) (.88) (1.07) (.52)
NET (LOSS)............. $ (1.03) $ (.42) $ (.89) $ (.36)
</TABLE>
Attention is directed to the accompanying notes to
condensed consolidated financial statements.
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net (loss)................................... $(6,162,000) $(2,446,000)
Adjustments to reconcile net (loss) to net
cash provided by (used in) operating
activities:
Depreciation and amortization............... 59,000 184,000
Amortization of goodwill.................... 51,000 326,000
Write-off of goodwill....................... 805,000
Write-off of foreign currency translation... 1,230,000
Provision for doubtful accounts............. 102,000
Compensatory issuance of stock and options.. 20,000 263,000
Gain on sale of fixed assets................ (80,000)
Imputed interest on Acquisition Note........ 142,000
Change in value of marketable trading
securities................................. (18,000) (222,000)
Purchases of marketable trading
securities................................. (17,157,000)
Proceeds of sales of marketable trading
securities................................. 17,395,000
Disposal of discontinued operations......... 2,996,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable. (2,234,000) 1,380,000
(Increase) decrease in inventory........... 652,000 (6,431,000)
Decrease in other current assets........... 1,079,000 78,000
Increase in accounts payable............... 730,000 1,024,000
Increase (decrease) in accrued expenses.... (161,000) 1,721,000
Change in assets held for sale............. 1,731,000
Decrease in other long term obligations.... (312,000)
(Increase) in other assets................. (121,000) (234,000)
Net cash provided by (used in) operating
activities.............................. 345,000 (3,955,000)
</TABLE>
(continued)
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from investing activities:
Purchase of net assets of acquired company... (3,750,000)
Acquisitions of fixed assets................. (96,000) (282,000)
Proceeds of from sale of fixed assets........ 217,000
Purchase of marketable securities............ (12,805,000)
Proceeds of sales of marketable securities... 22,645,000
Net cash provided by (used in) investing
activities................................. 5,994,000 (65,000)
Cash flows from financing activities:
Proceeds from issuance of performance shares 30,000
Net advances from factor.................. 7,890,000
Net payments to factor.................... (5,902,000)
Proceeds from debt........................ 2,000,000 393,000
Repayments of debt........................ (2,159,000) (2,463,000)
Purchase of treasury stock................ (68,000)
Net cash provided by (used in) financing
activities............................... (6,031,000) 5,752,000
Effect of exchange rate changes on cash... (3,000)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................ 308,000 (1,729,000)
Cash and cash equivalents - January 1....... 2,274,000 815,000
CASH AND CASH EQUIVALENTS - June 30 ........ $ 2,582,000 $ 2,544,000
</TABLE>
(continued)
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
(unaudited)
Supplemental disclosures of cash flow information:
Six Months Ended
June 30,
1996 1995
Cash paid for:
Interest........................ $ 938,000 $1,200,000
Income taxes.................... 4,000
Supplemental schedule of noncash and financing activities:
[1] In February 1996, the Company acquired the operating assets
and business of Behlman Electronics, Inc. The fair value of the net
assets as of the date of acquisition is presented below:
Inventory $2,560,000
Property, plant and equipment 115,000
Excess of cost over the fair
of assets acquired 1,075,000
$3,750,000
Attention is directed to the accompanying notes to
condensed consolidated financial statements.
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(NOTE 1) - (Loss) Per Share:
(Loss) per share are based on the weighted average number of
common and common equivalent shares (where appropriate) outstanding
during each period. The average number of shares and equivalent
shares outstanding for the six month periods ended June 30, 1996 and
1995 are as follows:
Six Months Ended Three Months Ended
June 30, June 30,
1996 1995 1996 1995
Primary 5,960,000 5,886,000 5,998,000 5,886,000
Fully Diluted 5,970,000 5,886,000 6,020,000 5,886,000
(NOTE 2) - Cost of Sales:
For interim periods, the Company estimates its inventory and
related gross profit based on management's estimates of costs
associated with units sold.
(NOTE 3) - Inventories:
Inventories are comprised of the following:
June 30, December 31,
1996 1995
Raw Materials................ $ 2,316,000 $ 1,594,000
Work-in-process.............. 4,603,000 4,756,000
Finished goods............... 6,774,000
T O T A L....... $ 6,919,000 $ 13,124,000
(NOTE 4) - Acquisition:
On February 6, 1996, the Company, through a wholly-owned
subsidiary acquired certain assets subject to certain liabilities of
Astrosystems, Inc. and Behlman Electronics, Inc. ("Behlman"). The
assets are primarily used in the business of manufacturing and
selling various power supply and power source products.
(continued)
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(continued)
The purchase price for the assets, which includes inventory,
equipment and other physical property, was $3,750,000, subject to a
final valuation of said assets as of the closing date. The
transaction was partially financed pursuant to a bridge loan in the
amount of $500,000 from the Company's primary lender which was
replaced by a term loan and revolving credit facility. The term loan
is secured with a mortgage on the Company's corporate facility.
Had the acquisition been made on January 1, 1995 (unaudited)
proforma sales, loss and loss per share from continuing operations
would have been $14,267,000, $2,698,000 and $.46 per share
respectively, for the six month period ended June 30, 1995.
(NOTE 5) - Available-For-Sale Securities:
On December 31, 1995 the Company transferred its marketable
securities to the available for sale category of investments.
Available-for-sale securities are carried at fair value, with the net
unrealized gains and losses, net of income taxes, reported as a
separate component of stockholders' equity. The cost of marketable
securities was determined by the specific identification method.
Interest earned on securities classified as available-for-sale are
included in investment and other income in the accompanying financial
statements.
Under the terms of certain credit facilities, the Company's
investment portfolio and certain cash balances must be maintained at
a minimum collateral value. On June 30, 1996, this collateral
requirement amounted to approximately $4,282,000 of marketable
securities and $2,000 of cash and cash equivalents.
The following is a summary of available-for-sale securities as
of June 30, 1996:
Cost or Estimated Gross Gross
Amortized Fair Unrealized Unrealized
Cost Value Gains (Losses)
U.S. Treasury bills,
maturing June 1997.... $3,969,000 $3,969,000 $ $
(continued)
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(continued)
<TABLE>
<CAPTION>
Cost or Estimated Gross Gross
Amortized Fair Unrealized Unrealized
Cost Value Gains (Losses)
<S> <C> <C> <C> <C>
Debt securities issued
by other government
agencies, maturing
June 1997............. 572,000 576,000 4,000
Total maturing
within 1 year.... 4,541,000 4,545,000 4,000
Debt securities issued
by other government
agencies, maturing
July 1997 to June 2002 344,000 343,000 (1,000)
Corporate debt
securities, maturing
July 1997 to June 2002 506,000 497,000 (9,000)
Total maturing
after 1 year
through 5 years.. 850,000 840,000 (10,000)
Corporate debt
securities, maturing
July 2002 to June 2007 307,000 306,000 (1,000)
Total maturing
after 5 years
through 10 years. 307,000 306,000 (1,000)
Corporate debt
securities, maturing
June 2007 and thereafter 335,000 324,000 (11,000)
Total maturing
after 10 years... 335,000 324,000 (11,000)
Total maturing
after 1 year..... 1,492,000 1,470,000 (22,000)
Total marketable
securities....... $6,033,000 6,015,000 $ 4,000 $(22,000)
Less amounts included in
assets held for sale.. (4,282,000)
Less non-current
marketable securities. (1,127,000)
Total current marketable
securities....... $ 606,000
</TABLE>
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(continued)
(Note 6) - Discontinued Operations:
On August 6, 1996, the Board of Directors of the Company adopted
a plan to sell its apparel segments. The plan of disposal
anticipates a sale of these segments by the end of 1996. The Company
estimated the loss on the discontinuance of the segments to be
approximately $8,000,000, including approximately $3,800,000 of
estimated losses on the disposal of the segments. Such costs include
monies owed pursuant to operating lease agreements, professional fees
and other contractual obligations. Accordingly, the historical
results for the apparel segments have been classified as discontinued
operations for all periods presented in the consolidated statements
of operations. Sales of the apparel segments were $7,736,000 and
$11,301,000 for the six month periods ended June 30, 1996 and June
30, 1995, respectively. At June 30, 1996, the assets of the segments
to be sold consist primarily of inventories, property, plant and
equipment and investment in marketable securities securing the
Company's guarantees under the segments' financing arrangements.
Liabilities of the segments to be sold consist of monies due to the
segments' lenders, accounts payable, accrued expenses and other
obligations. The consolidated balance sheet at December 31, 1995 has
not been restated.
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity, Capital Resources and Inflation:
Working capital increased by $5,251,000 to $5,131,000 during the
six month period ended June 30, 1996 from the year ended December 31,
1995 principally due to approximately $7,567,000 of long term restricted
assets which were used either to reduce amounts owed under certain
lending facilities or reclassified to short term due to the Company's
adoption of a plan to sell its apparel segments. The increase in working
capital was offset by a net loss of approximately $2,361,000 incurred
by the Company during the six month period (exclusive of $3,801,000 of
reserves taken on an expected loss on the disposal of the apparel
segment)and to approximately $1,075,000 related to the acquisition of
Behlman which was allocated to goodwill. The Company's working capital
ratio at June 30, 1996 was 1.3 to 1 compared to 1.0 to 1 at December 31,
1995.
Under the Company's factoring arrangements related to the
discontinued apparel segments, the Company has pledged marketable
securities or provided standby letters of credit as security for its
guarantees under these arrangements. As of June 30, 1996, the Company
had pledged approximately $1,434,000 in marketable securities and
provided $3,000,000 in standby letters of credit (see Certain Material
Trends). Between January and August, 1996 the Company used
approximately $7,130,000 of marketable securities to reduce the amount
owed under two of the facilities.
In February 1996, the Company, through a wholly owned subsidiary,
purchased from Astrosystems, Inc. substantially all of the assets of its
wholly owned subsidiary, Behlman and substantially all of the assets of
its Military Electronics Division. The purchase price of $3,750,000 was
substantially funded by the Company's cash and a $500,000 bridge loan
from BNY Financial Corporation ("BNY"). In June, 1996, the Company
completed a $2,000,000 Term Loan and $2,000,000 Revolving Credit
facility with BNY. The proceeds were used to pay off the bridge loan
and to provide working capital for the Company's Electronic Segment.
The Term Loan is payable in 36 monthly installments and bears interest
at prime plus 1.50%. The Revolving Credit facility bears interest at
prime plus 1.0%.
In March 1996, the Company entered into an agreement with the
sellers of East/West whereby the purchase price for the assets under the
asset purchase agreement dated July 1993 (the "Asset Purchase
Agreement") was reduced from $15,000,000 to $8,850,000 plus other
consideration. Accordingly, the $8,000,000 promissory note to the
sellers was reduced to $1,850,000. The amended note is payable as
follows: (i) $500,000 paid upon the execution of the agreement, (ii)
two $250,000 installments due July 1, 1996 and January 1, 1997,
respectively and (iii) $850,000 payable in quarterly installments over
a five year period commencing March 31, 2002.
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
Results of Operations:
Six Month period ended June 30, 1996 v. June 30, 1995.
In August, 1996, the Company adopted a plan to sell its apparel
segments. The plan of disposal anticipates a sale of these segments by
the end of 1996. The Company estimated the loss on the disposal of the
apparel segments to the expected disposal date to be approximately
$3,801,000 and charged 1996 operations with such amount. Such costs
include monies owed pursuant to operating lease arrangements ,
professional fees and other contractual obligations. The plan of
disposal of the Company's apparel operations leaves the Company with
solely its Electronics Segment which consists of the Orbit Instrument
division and the new Behlman subsidiary.
Consolidated net sales for the six month period ended June 30, 1996
decreased to $7,770,000 from $8,175,000 from the comparable period of
the prior year due to a decrease in the number of units shipped by the
Orbit Instrument division and despite $2,593,000 of revenues recorded
by the Company's new Behlman subsidiary which was acquired in February,
1996.
The net loss for the six month period ended June 30, 1996 increased
to $6,162,000 from $2,446,000 from the comparable period of the prior
year due principally to the estimated loss of $3,801,000 resulting from
reserves taken on an expected loss on the disposal of its apparel
segments. Sales from the discontinued apparel operations for the six
months ended June 30, 1996 were $7,736,000 compared to $11,301,000 from
the comparable period of the prior year. Loss from discontinued
operations for the six months ended June 30, 1996 was $4,200,000
compared to $5,152,000 from the prior period.
Net earnings from continuing operations for the six month period
ended June 30, 1996 decreased to $1,821,000 from $2,706,000 from the
comparable period of the prior year due principally to lower sales by
the Orbit Instrument division, higher investment and other income in the
prior year due to interest earned on higher cash balances and higher
selling, general and administration costs incurred in the current period
due to expenses incurred by the Company's new Behlman subsidiary.
Gross profit, as a percentage of sales for the six months ended
June 30, 1996 increased to 43.7% from 39.4% from the comparable period
of the prior year due to greater efficiencies resulting from the Behlman
acquisition.
Selling, general and administrative expenses for the six months
ended June 30, 1996 increased to $2,653,000 from $2,195,000 principally
due to selling, general and administrative expenses incurred by the
Company's new Behlman subsidiary. Selling, general and administrative
expenses, as a percentage of sales increased to 34.1% from 26.9% due to
the aforementioned reason and lower sales incurred at the Orbit
Instrument division.
Interest expense for the period decreased to $24,000 from $130,000
in the prior period due to a reduction in the average amounts owed
during the period.
Investment and other income for the six months ended June 30, 1996
decreased to $1,122,000 from $1,812,000 from the prior period due to
$869,000 of insurance proceeds received by the Company in the prior
period resulting from the death of the Company's former chief executive
officer net of accrued costs to the officers estate, interest earned on
higher cash balances in the prior period and offset by the realization
of approximately $800,000 representing the final payment of royalty
income received from Orbit Semiconductor, Inc. pursuant to a Stock
Purchase Agreement signed in November 1991.
The Company did not record any tax benefit on the current pre-tax
loss because of the uncertainty of future realization.
Three month period ended June 30, 1996 v. June 30, 1995.
Consolidated net sales for the three month period ended June 30,
1996 increased to $4,889,000 from $4,069,000 from the comparable period
of the prior year due principally to sales generated by the Company's
new Behlman subsidiary and despite less sales recorded by the Orbit
Instrument division.
The net loss for the three month period ended June 30, 1996
increased to $5,392,000 from $2,133,000 from the comparable period of
the prior year due principally to the estimated loss of $3,801,000
resulting from reserves taken on an expected loss on the disposal of its
apparel segments. Sales from discontinued apparel operations for the
three months ended June 30, 1996 were $3,420,000 compared to $4,519,000
from the comparable period of the prior year. Loss from discontinued
operations for the three months ended June 30, 1996 was $2,659,000
compared to $3,053,000 from the prior period.
Net earnings from continuing operations for the three months ended
June 30, 1996 increased to $1,068,000 from $920,000 from the comparable
period of the prior year due principally to earnings from the Company's
new Behlman subsidiary, increased earnings from the Orbit Instrument
division (despite lower sales) and despite higher investment and other
income from the prior year.
Gross profit, as a percentage of sales for the three months ended
June 30, 1996 increased to 46.9% from 34.5% from the comparable period
of the prior year due to greater efficiencies resulting from the
completed transition of the Behlman operation into the Company's
facility.
Selling, general and administrative expenses for the three months
ended June 30, 1996 increased to $1,343,000 from $852,000 and increased
as a percentage of sales to 27.5% from 20.9% due to selling, general and
administrative expenses incurred by the Company's new Behlman
subsidiary.
Interest expense for the three months ended June 30, 1996 decreased
to $3,000 from $50,000 in the prior period due to a reduction in amounts
owed during the period.
Investment and other income for the three months ended June 30,
1996 decreased to $122,000 from $420,000 from the prior period due to
interest earned on higher cash balances in the prior period.
The Company did not record any tax benefit on the current pre-tax
loss because of the uncertainty of future realization.
Certain Material Trends
Despite continued profitability in 1996, the Company's Electronic
Segment continues to face a 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.
Based on current delivery schedules and the acquisition of Behlman,
however, revenues for the Electronics Segment should increase from those
levels recorded in the prior year although there can be no assurance
that such increased revenues will actually be sustained.
The Company's Electronic Segment continues to seek new contracts
which require up-front design, engineering, prototype and preproduction
costs. While the Segment attempts to negotiate contract awards for
reimbursement of product development there is no assurance that
sufficient monies will be set aside by the government for such effort.
In addition, even if the 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 Electronic Segment is heavily dependent upon military spending
as a source of revenues and income. World events have led the
government of the United States to reevaluate the level of military
spending necessary for national security. Any significant reductions
in the level of military spending by the Federal Government could have
a negative impact on the Electronics Segment's future revenues and
earnings. The acquisition of Behlman, however, has given the Company
some diversity with its commercial products subsidiary which is not
affected by fluctuations in military spending.
In August, 1996, the Company adopted a plan to sell its apparel
segments. The plan of disposal anticipates a sale of these segments by
the end of 1996. As part of its divestiture plan, the Company is
seeking buyers to assume its guarantees under various lending
arrangements and thereby relieving certain marketable securities and
standby letters of credit pledged to secure such guarantees. However,
there is no assurance that the sales will be completed by the end of
1996 or the Company will be successful in relieving its guarantees under
its lending arrangements.
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 14, 1996 /s/ Dennis Sunshine
Dennis Sunshine, President, Chief
Executive Officer and Director
Dated: August 14, 1996 /s/ Mitchell Binder
Mitchell Binder,Vice President-
Finance, Chief Financial Officer
and Director
PART II
OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits. None
(b) Reports on Form 8-K. An Item 5 Form 8-K dated
August 8, 1996 was filed by the Company to announce
that it has entered into a letter of intent for the
sale of its East/West Division and announced its
plan to sell its Canadian Apparel Segment.
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