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
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