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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission File Number 0-22583
 ORBIT/FR, Inc.
 (Exact Name of Registrant as Specified in its Charter)
 DELAWARE
    
    23-2874370(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)506 Prudential Road, Horsham, PA
    
    19044(Address of principal executive offices)
    
    (Zip Code)
 (215) 674-5100
(Registrants telephone number, including area code)
 Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 Yes o No þ




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ORBIT/FR, Inc.
 Index
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Consolidated Financial StatementsCondensed Consolidated Balance SheetsMarch 31, 2010
(Unaudited) and December 31, 2009
    
    
    3Condensed Consolidated Statements of OperationsThree months
ended March 31, 2010 and 2009 (Unaudited)
    
    
    4Condensed Consolidated Statements of Cash FlowsThree months
ended March 31, 2010 and 2009 (Unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements
(Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosure of Market Risk
    
    
    13Item 4T. Controls and procedures
    
    
    14PART II. Other InformationItem 1. Legal Proceedings
    
    
    15Item 1A. Risk Factors
    
    
    15Item 6. Exhibits
    
    
    15Signatures
    
    
    16Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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ORBIT/FR, Inc.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
 March 31,
    
    
    December 31,2010
    
    
    2009UnauditedASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,844
    
    
    $
    1,622Accounts receivable, less allowance of $67
    
    
    6,249
    
    
    
    9,207Inventory
    
    
    3,048
    
    
    
    2,681Costs and estimated earnings in excess of billings
on uncompleted contracts
    
    
    2,136
    
    
    
    1,668Income tax refunds receivable
    
    
    443
    
    
    
    542Deferred income taxes
    
    
    1,180
    
    
    
    835Other
    
    
    395
    
    
    
    277Total current assets
    
    
    17,295
    
    
    
    16,832Property and equipment, net
    
    
    2,068
    
    
    
    2,093Deferred income taxes
    
    
    541
    
    
    
    887Cost in excess of net assets acquired
    
    
    301
    
    
    
    301Total assets
    
    $
    20,205
    
    
    $
    20,113LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,954
    
    
    $
    3,946Accounts payableparent company
    
    
    1,613
    
    
    
    1,482Accrued expenses
    
    
    3,478
    
    
    
    3,355Short term bank financing
    
    
    
    
    
    
    250Customer advances
    
    
    17
    
    
    
    13Billings in excess of costs and estimated earnings
on uncompleted contracts
    
    
    4,641
    
    
    
    2,813Total liabilities, all current
    
    
    11,703
    
    
    
    11,859Stockholders equity:Preferred stock: $.01 par value:Authorized shares2,000,000
Issued and outstanding sharesnone
    
    
    
    
    
    
    Common stock: $.01 par value:Authorized shares10,000,000
Issued shares6,084,473
    
    
    61
    
    
    
    61Additional paid-in capital
    
    
    16,470
    
    
    
    16,460Accumulated deficit
    
    
    (7,710
    )
    
    
    (8,024
    )Accumulated other comprehensive (loss)
 foreign translation adjustment
    
    
    (76
    )
    
    
    Treasury stock82,700 shares
    
    
    (243
    )
    
    
    (243
    )Total stockholders equity
    
    
    8,502
    
    
    
    8,254Total liabilities and stockholders equity
    
    $
    20,205
    
    
    $
    20,113
   3




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ORBIT/FR, Inc.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share data)
 Three Months EndedMarch 31,2010
    
    
    2009Contract revenues
    
    $
    7,322
    
    
    $
    6,350Cost of revenues
    
    
    4,874
    
    
    
    4,460Gross profit
    
    
    2,448
    
    
    
    1,890Operating expenses:General and administrative:
    
    
    752
    
    
    
    569Sales and marketing:
    
    
    733
    
    
    
    913Sales, marketing, general and administrative  MVG
    
    
    400
    
    
    
    Research and development
    
    
    253
    
    
    
    335Total operating expenses
    
    
    2,138
    
    
    
    1,817Operating income
    
    
    310
    
    
    
    73Other income (loss), net
    
    
    4
    
    
    
    (21
    )Income before income taxes
    
    
    314
    
    
    
    52Income tax expense (benefit)
    
    
    
    
    
    
    Net income
    
    
    314
    
    
    
    52Other comprehensive (loss)  foreign translation adjustment
    
    
    (76
    )
    
    
    Total comprehensive income
    
    $
    238
    
    
    $
    52Basic net income per share
    
    $
    0.05
    
    
    $
    0.01Diluted net income per share
    
    $
    0.05
    
    
    $
    0.01Weighted average number
basic common shares
    
    
    6,001,773
    
    
    
    6,001,573Weighted average number
diluted common shares
    
    
    6,001,773
    
    
    
    6,001,573
   4




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ORBIT/FR, Inc.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
 Three Months EndedMarch 31,2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    314
    
    
    $
    52Adjustments to reconcile net income to net cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    113
    
    
    
    73Stock based compensation
    
    
    10
    
    
    
    27Changes in operating assets and liabilities:Accounts receivable
    
    
    2,894
    
    
    
    1,596Inventory
    
    
    (374
    )
    
    
    (27
    )Costs and estimated earnings in excess of billings
on uncompleted contracts
    
    
    (479
    )
    
    
    (1,619
    )Income tax refunds receivable
    
    
    100
    
    
    
    26Other current assets
    
    
    (120
    )
    
    
    6Accounts payable and accrued expenses
    
    
    (1,854
    )
    
    
    131Accounts payableparent company
    
    
    116
    
    
    
    29Customer advances
    
    
    6
    
    
    
    1,009Billings in excess of costs and estimated earnings
on uncompleted contracts
    
    
    1,866
    
    
    
    9Net cash provided by operating activities
    
    
    2,592
    
    
    
    1,312Cash flows from investing activities:Purchase of property and equipment
    
    
    (98
    )
    
    
    (9
    )Net cash (used in) investing activities
    
    
    (98
    )
    
    
    (9
    )Cash flows from financing activities:Repayment of short-term notes payable
    
    
    (250
    )
    
    
    (1,307
    )Net cash (used in) financing activities
    
    
    (250
    )
    
    
    (1,307
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (22
    )
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    2,222
    
    
    
    (4
    )Cash and cash equivalents at beginning of period
    
    
    1,622
    
    
    
    1,521Cash and cash equivalents at end of period
    
    $
    3,844
    
    
    $
    1,517Supplemental disclosures of cash flow information:Cash paid during the period for income taxes
    
    $
    103
    
    
    $
    Cash paid during the period for interest
    
    $
    
    
    
    $
    5
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ORBIT/FR, Inc.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2010
(Amounts in thousands, except share and per share data)
 1. Ownership and Basis of Presentation
  2. Summary of Significant Accounting Policies
 Interim Financial Information
   6




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ORBIT/FR, Inc.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2010
(Amounts in thousands, except share and per share data)
 3. Inventory
  Parts and components
    
    $
    2,530Work- in- process
    
    
    518Total
    
    $
    3,048
 4. Property and Equipment
  Lab and computer equipment
    
    $
    2,393Office equipment
    
    
    812Transportation equipment
    
    
    45Furniture and fixtures
    
    
    12Fixed assets in progress
    
    
    125Leasehold improvements
    
    
    645Total
    
    
    4,032Less accumulated depreciation
    
    
    1,964Property and equipment, net
    
    $
    2,068
  7




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ORBIT/FR, Inc.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2010
(Amounts in thousands, except share and per share data)
 5. Accrued Expenses
  Contract costs
    
    $
    57Compensation
    
    
    1,637Commissions
    
    
    488Royalties
    
    
    58Warranty
    
    
    544Deferred revenue
    
    
    264Other accruals
    
    
    430Total
    
    $
    3,478
 6. Long-Term Contracts
  Accumulated expenditures on uncompleted contracts
    
    $
    36,040Estimated earnings thereon
    
    
    10,547Total
    
    
    46,587Less: Applicable progress billings
    
    
    49,092Total
    
    $
    (2,505
    )
  Costs and estimated earnings on uncompleted
contracts in excess of billings
    
    $
    2,136Billings on uncompleted contracts in excess of
costs and estimated earnings
    
    
    (4,641
    )Total
    
    $
    (2,505
    )
  8




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ORBIT/FR, Inc.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2010
(Amounts in thousands, except share and per share data)
 7. Related Party Transactions
  8. Segment and Geographic Information
  Three months ended March 31, 2010
    
    North America
    
    
    Europe
    
    
    Asia
    
    
    TotalRevenues from unaffiliated customers
    
    $
    2,816
    
    
    $
    2,839
    
    
    $
    1,667
    
    
    $
    7,322Cost of revenues from unaffiliated customers
    
    
    1,754
    
    
    
    1,939
    
    
    
    1,181
    
    
    
    4,874Gross profit from unaffiliated customers
    
    $
    1,062
    
    
    $
    900
    
    
    $
    486
    
    
    $
    2,448
 Three months ended March 31, 2009
    
    North America
    
    
    Europe
    
    
    Asia
    
    
    TotalRevenues from unaffiliated customers
    
    $
    3,150
    
    
    $
    687
    
    
    $
    2,513
    
    
    $
    6,350Cost of revenues from unaffiliated customers
    
    
    2,095
    
    
    
    586
    
    
    
    1,779
    
    
    
    4,460Gross profit from unaffiliated customers
    
    $
    1,055
    
    
    $
    101
    
    
    $
    734
    
    
    $
    1,890
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward Looking Statements
  Critical Accounting Policies
 Revenue and Cost Recognition
  Accounts Receivable
   10




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Results of Operations
  Three Months Ended March 31,2010
    
    
    2009(Unaudited)
    
    
    (Unaudited)Revenues
    
    
    100.0
    %
    
    
    100.0
    %Gross profit
    
    
    33.4
    
    
    
    29.8General and
administrative
    
    
    10.2
    
    
    
    9.0Sales and marketing
    
    
    10.0
    
    
    
    14.4Research and development
    
    
    3.5
    
    
    
    5.3Sales, marketing, general and
administrative expenses  MVG
    
    
    5.5
    
    
    
    Operating income
    
    
    4.2
    
    
    
    1.1Income before income taxes
    
    
    4.2
    
    
    
    0.8Net income
    
    
    4.2
    
    
    
    0.8
 Three months ended March 31, 2010 compared to three months ended March 31, 2009.
 Revenues.
 Cost of revenues.
 General and administrative expense.
  11




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Sales and marketing expenses.
 Sales, marketing general and administrative-Microwave Vision Group.
 Research and development expenses.
 Other -income (loss), net.
 Income taxes.
 Earnings per share
  12




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Liquidity and Capital Resources
     Inflation and Seasonality
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   13




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Item 4T. Controls and Procedures
 (a)
    
    Evaluation of disclosure controls and procedures. The Companys disclosure controls and
procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) are
designed to ensure that information required to be disclosed by us in the reports that are
filed or submitted under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms. These disclosure controls and procedures include controls and
procedures designed to ensure that information required to be disclosed under the
Securities Exchange Act of 1934 is accumulated and communicated to our management on a
timely basis to allow decisions regarding required disclosure. The Company evaluated the
effectiveness of the design and operation of our disclosure controls and procedures as of
March 31, 2010. Based on this evaluation, the Companys Chief Executive Officer and Chief
Financial Officer concluded that as of March 31, 2010, these controls and procedures were
effective.
 (b)
    
    Change in Internal Control. There have been no changes in internal control over
financial reporting identified in connection with the foregoing evaluation that occurred
during the Companys fiscal quarter ended March 31, 2010 that have materially affected, or
are reasonably likely to materially affect, the Companys internal control over financial
reporting.
  14




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 6. Exhibits
 31.1
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002, Per Iversen, President and Chief Executive Officer.31.2
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002, Relland Winand, Chief Financial Officer.32.1
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Per Iversen,
President and Chief Executive Officer.32.2
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Relland Winand, Chief
Financial Officer.
  15




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ORBIT/FR, Inc.
 
 SIGNATURES
  Orbit/FR, Inc.RegistrantDate: May 17, 2010/s/ Per IversenPresident and Chief Executive OfficerDate: May 17, 2010/s/ Relland WinandChief Financial Officer
  16