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 MARCH 31, 2002, OR
[ ] 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 1-14120
BLONDER TONGUE LABORATORIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 52-1611421
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
ONE JAKE BROWN ROAD, OLD BRIDGE, NEW JERSEY 08857
- ------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 679-4000
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 months (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
----- -----
Number of shares of common stock, par value $.001, outstanding as of May 11,
2002: 7,613,331
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
March 31, December 31,
2002 2001
-------------- ---------------
(unaudited)
ASSETS (NOTE 4)
Current assets:
Cash............................................................... $ 393 $ 942
Accounts receivable, net of allowance for doubtful
accounts of $1,923 and $1,833, respectively........................ 6,249 8,564
Inventories, net (Note 3).......................................... 30,214 30,216
Other current assets .............................................. 716 932
Deferred income taxes.............................................. 1,779 1,746
-------------- ---------------
Total current assets........................................... 39,351 42,400
Property, plant and equipment, net of accumulated
depreciation and amortization....................................... 6,842 7,137
Patents, net............................................................ 3,347 3,454
Goodwill, net........................................................... - 10,760
Other assets............................................................ 763 585
Deferred income taxes................................................... 4,006 50
-------------- ---------------
$54,309 $64,386
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (Note 4)......................... $ 2,691 $ 2,917
Accounts payable................................................... 5,285 6,672
Accrued compensation............................................... 898 867
Accrued benefit liability.......................................... 270 270
Other accrued expenses............................................. 124 218
Income taxes....................................................... 427 202
-------------- ---------------
Total current liabilities...................................... 9,695 11,146
-------------- ---------------
Long-term debt (Note 4)................................................. 11,355 13,278
Commitments and contingencies........................................... - -
Stockholders' equity:
Preferred stock, $.001 par value; authorized 5,000 shares;
no shares outstanding ............................................. - -
Common stock, $.001 par value; authorized 25,000 shares,
8,444 shares issued 8 8
Paid-in capital.................................................... 24,143 24,143
Retained earnings.................................................. 15,745 22,448
Accumulated other comprehensive loss............................... (351) (351)
Treasury stock at cost, 831 shares................................. (6,286) (6,286)
-------------- ---------------
Total stockholders' equity..................................... 33,259 39,962
-------------- ---------------
$54,309 $64,386
============== ===============
See accompanying notes to consolidated financial statements.
2
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
March 31,
--------------------------------------
2002 2001
---------------- ----------------
Net sales....................................................... $10,890 $10,745
Cost of goods sold.............................................. 7,574 7,099
---------------- ----------------
Gross profit................................................ 3,316 3,646
---------------- ----------------
Operating expenses:
Selling..................................................... 1,118 1,461
General and administrative.................................. 1,197 1,563
Research and development.................................... 497 529
---------------- ----------------
2,812 3,553
---------------- ----------------
Earnings from operations........................................ 504 93
---------------- ----------------
Other expense:
Interest expense............................................ (211) (404)
---------------- ----------------
(211) (404)
---------------- ----------------
Earnings (loss) before income taxes............................. 293 (311)
Provision (benefit) for income taxes............................ 110 (104)
---------------- ----------------
Earnings (loss) before cumulative effect........................ 183 (207)
Cumulative effect of change in accounting
principle, net of tax (Note 2) ............................ 6,886 -
---------------- ----------------
Net loss ....................................................... $(6,703) $ (207)
================ ================
Basic earnings (loss) per share before cumulative effect........ $ 0.02 $ (0.03)
Cumulative effect of change in accounting principle,
net of tax ................................................ (0.90) -
---------------- ----------------
Basic loss per share............................................ $ (0.88) $ (0.03)
================ ================
Basic weighted average shares outstanding....................... 7,613 7,613
================ ================
Diluted earnings (loss) per share before cumulative effect...... $ 0.02 $ (0.03)
Cumulative effect of change in accounting principle,
net of tax ................................................ (0.90) -
---------------- ----------------
Diluted loss per share.......................................... $ (0.88) $ (0.03)
================ ================
Diluted weighted average shares outstanding..................... 7,650 7,625
================ ================
See accompanying notes to consolidated financial statements.
3
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended
March 31,
-------------------------------------
2002 2001
--------------- ----------------
Cash Flows From Operating Activities:
Net loss...................................................... $ (6,703) $ (207)
Adjustments to reconcile net earnings to cash
provided by (used in) operating activities:
Cumulative effect........................................... 6,886 -
Depreciation................................................ 324 357
Amortization................................................ 107 411
Provision for doubtful accounts............................. 90 90
Deferred income taxes....................................... (115) 108
Changes in operating assets and liabilities:
Accounts receivable....................................... 2,225 934
Inventories............................................... 2 (986)
Other current assets...................................... 216 1,847
Other assets.............................................. (178) -
Income taxes.............................................. 225 (830)
Accounts payable and accrued expenses..................... (1,450) (2,069)
--------------- ----------------
Net cash provided by (used in) operating activities..... 1,629 (345)
--------------- ----------------
Cash Flows From Investing Activities:
Capital expenditures.......................................... (29) (80)
--------------- ----------------
Net cash used in investing activities................... (29) (80)
Cash Flows From Financing Activities:
Net borrowings under revolving line of credit................. - 1,300
Borrowings of long-term debt.................................. 14,954 -
Repayments of long-term debt.................................. (17,103) (1,081)
--------------- ----------------
Net cash provided by (used in) financing activities..... (2,149) 219
--------------- ----------------
Net increase (decrease) in cash.................................... (549) (206)
Cash, beginning of period.......................................... 942 363
--------------- ----------------
Cash, end of period................................................ $ 393 $ 157
=============== ================
Supplemental Cash Flow Information:
Cash paid for interest........................................ $ 243 $ 408
Cash paid for income taxes.................................... - 618
=============== ================
See accompanying notes to consolidated financial statements.
4
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
NOTE 1 - COMPANY AND BASIS OF PRESENTATION
Blonder Tongue Laboratories, Inc. (the "COMPANY") is a designer,
manufacturer and supplier of electronics and systems equipment for the cable
television industry, primarily throughout the United States. The consolidated
financial statements include the accounts of Blonder Tongue Laboratories, Inc.
and subsidiaries. Significant intercompany accounts and transactions have been
eliminated in consolidation.
The results for the first quarter of 2002 are not necessarily
indicative of the results to be expected for the full fiscal year and have not
been audited. In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments, consisting only of
normal recurring accruals, necessary for a fair statement of the results of
operations for the period presented and the consolidated balance sheet at March
31, 2002. Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the SEC rules and
regulations. These financial statements should be read in conjunction with the
financial statements and notes thereto that were included in the Company's
latest annual report on Form 10-K for the year ended December 31, 2001.
NOTE 2 - EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("FAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." FAS 133 was adopted by the
Company on January 1, 2001. FAS 133 requires that all derivative instruments be
recorded on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of the hedge
transaction and the type of hedge transaction. At March 31, 2002 the Company did
not have any derivative financial instruments. The adoption of this
pronouncement did not have a material effect on the Company's financial position
or results of operations.
In July 2001, the FASB issued FAS No. 141, "Business Combinations" and
No. 142, "Goodwill and Other Intangible Assets." FAS 141 requires the use of the
purchase method of accounting and prohibits the use of the pooling-of-interests
method of accounting for business combinations initiated after June 30, 2001.
FAS 142 addresses financial accounting and reporting for acquired goodwill and
other intangible assets. FAS 142 requires, among other things, that companies no
longer amortize goodwill, but instead test goodwill for impairment at least
annually. FAS 142 was adopted by the Company on January 1, 2002. The adoption of
this pronouncement resulted in the Company recording a $6,886 one-time, non-cash
charge to reduce the carrying value of its goodwill. Such charge is
non-operational in nature and is reflected as a cumulative effect of a change in
accounting principle. The Company's previous business combinations were
accounted for using the purchase method.
If FAS 142 had been in effect in 2001, the Company's earnings would
have been improved because of reduced amortization, as described below:
Net Loss Basic Net Earnings Per Share Diluted Net Earnings Per Share
-------- ---------------------------- ------------------------------
Reported Net Loss $(207) $(0.03) $(0.03)
Add Amortization, Net of Tax 156 0.02 0.02
----- ------ ------
Adjusted Net Loss $( 51) $(0.01) $(0.01)
===== ====== ======
The Company continues to amortize its patents over their estimated useful lives
with no significant residual value. Amortization expense for intangible assets
excluding goodwill was $107 and $169 for the three month period ending
5
March 31, 2002 and 2001, respectively. Intangibles amortization is projected to
be approximately $400 to $500 per year for the next five years.
In August 2001, the FASB issued FAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." The new guidance resolves
significant implementation issues related to FAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
FAS 144 supersedes FAS 121, but it retains its fundamental provisions. It also
amends Accounting Research Bulletin No. 51, Consolidated Financial Statements,
to eliminate the exception to consolidate a subsidiary for which control is
likely to be temporary. FAS 144 retains the requirement of FAS 121 to recognize
an impairment loss only if the carrying amount of a long-lived asset within the
scope of FAS 144 is not recoverable from its undiscounted cash flows and exceeds
its fair value.
FAS 144 is effective for fiscal years beginning after December 15,
2001, and interim periods within those fiscal years, with early application
encouraged. The provisions of FAS 144 generally are to be applied prospectively.
The adoption of FAS 144 did not have a material impact on the Company's
financial position or results of operations.
NOTE 3 - INVENTORIES
Inventories net of reserves are summarized as follows:
March 31, Dec. 31,
2002 2001
-------------- -------------
Raw Materials......................... $13,336 $13,071
Work in process....................... 2,064 2,797
Finished Goods........................ 14,814 14,348
-------------- -------------
$30,214 $30,216
============== =============
NOTE 4 - DEBT
On March 20, 2002 the Company executed a credit agreement with
Commerce Bank, N.A. for a $19,500 credit facility, comprised of (i) a $7,000
revolving line of credit under which funds may be borrowed at LIBOR, plus a
margin ranging from 1.75% to 2.50%, in each case depending on the calculation of
certain financial covenants, with a floor of 5% through March 19, 2003 (5% at
March 31, 2002), (ii) a $9,000 term loan which bears interest at a rate of 6.75%
through September 30, 2002, and thereafter at a fixed rate ranging from 6.50% to
7.25% to reset quarterly depending on the calculation of certain financial
covenants (6.75% at March 31, 2002) and (iii) a $3,500 mortgage loan bearing
interest at 7.5%. Borrowings under the revolving line of credit are limited to
certain percentages of eligible accounts receivable and inventory, as defined in
the credit agreement. The credit facility is collateralized by a security
interest in all of the Company's assets. The agreement also contains
restrictions that require the Company to maintain certain financial ratios as
well as restrictions on the payment of cash dividends. The maturity date of the
new line of credit with Commerce Bank is March 20, 2004. The term loan requires
equal monthly principal payments of $187 and matures on April 1, 2006. The
mortgage loan requires equal monthly principal payments of $19 and matures on
April 1, 2017. The mortgage loan is callable after five years at the lender's
option.
Upon execution of the credit agreement with Commerce Bank, $14,954 was
advanced to the Company, of which $14,827 was used to pay all unpaid principal
and accrued interest under the Company's prior line of credit and term loans
with First Union National Bank ("First Union").
At March 31, 2002, there was $754, $9,000 and $3,500 outstanding under
the revolving line of credit, term loan and mortgage loan, respectively.
Prior to March 20, 2002, the Company had a $5,500,000 revolving line
of credit with First Union on which funds could be borrowed at either the bank's
base rate plus a margin ranging from 0% to .625%, or
6
LIBOR, plus a margin ranging from 1.50% to 2.625%, in each case depending upon
the calculation of certain financial covenants. The agreement contained
restrictions that required the Company to maintain certain financial ratios as
well as restrictions on the payment of dividends. The Company also had, prior to
March 20, 2002, two outstanding term loans with First Union which accrued
interest at a variable interest rate.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
In addition to historical information, this Quarterly Report contains
forward-looking statements relating to such matters as anticipated financial
performance, business prospects, technological developments, new products,
research and development activities and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, the Company
notes that a variety of factors could cause the Company's actual results and
experience to differ materially from the anticipated results or other
expectations expressed in the Company's forward-looking statements. The risks
and uncertainties that may affect the operation, performance, development and
results of the Company's business include, but are not limited to, those matters
discussed herein in the section entitled Item 2 - Management's Discussion and
Analysis of Financial Condition and Results of Operations. The words "believe",
"expect", "anticipate", "project" and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect management's analysis only as of
the date hereof. The Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that arise after
the date hereof. Readers should carefully review the risk factors described in
other documents the Company files from time to time with the Securities and
Exchange Commission, including without limitation, the Company's Annual Report
on Form 10-K for the year ended December 31, 2001 (See Item 10 - Business; Item
3 - Legal Proceedings; and Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations).
First three months of 2002 Compared with first three months of 2001
Net Sales. Net sales increased $145,000 or 1.3% to $10,890,000 in the
first three months of 2002 from $10,745,000 in the first three months of 2001.
The increase is attributed to sales of the Motorola QAM decoder, which was
introduced in the fourth quarter of 2001, offset by a reduction in interdiction
sales. Net sales included approximately $1,014,000 of interdiction equipment for
the first three months of 2002 compared to approximately $2,879,000 for the
first three months of 2001.
Cost of Goods Sold. Cost of goods sold increased to $7,574,000 for the
first three months of 2002 from $7,099,000 for the first three months of 2001
and also increased as a percentage of sales to 69.6% from 66.1%. The increase as
a percentage of sales was caused primarily by a higher portion of sales during
the period being comprised of lower margin product, including the Motorola QAM
decoder, which was introduced in the fourth quarter of 2001.
Selling Expenses. Selling expenses decreased to $1,118,000 for the
first three months of 2002 from $1,461,000 in the first three months of 2001 and
decreased as a percentage of sales to 10.3% for the first three months of 2002
from 13.6% for the first three months of 2001. This $343,000 decrease is
primarily attributable to a decrease in wages, fringe benefits, and commissions
due to a reduction in headcount, along with a reduction in telecommunications
and travel expenses achieved through implementation of expense control programs.
General and Administrative Expenses. General and administrative
expenses decreased to $1,197,000 for the first three months of 2002 from
$1,563,000 for the first three months of 2001 and decreased as a percentage of
sales to 11.0% for the first three months of 2002 from 14.5% for the first three
months of 2001. The $366,000 decrease can be primarily attributed to a reduction
in amortization expense due to the adoption of FAS 142 which required the
Company to discontinue amortizing goodwill as well as a reduction in
professional fees.
Research and Development Expenses. Research and development expenses
decreased to $497,000 in the first three months of 2002 from $529,000 in the
first three months of 2001, primarily due to a decrease in
7
licensing fees. Research and development expenses, as a percentage of sales,
decreased to 4.6% in the first three months of 2002 from 4.9% in the first three
months of 2001.
Operating Income. Operating income increased to $504,000 for the first
three months of 2002 from $93,000 for the first three months of 2001.
Interest and Other Expenses. Other expense decreased to $211,000 in
the first three months of 2002 from $404,000 in the first three months of 2001.
These expenses consisted entirely of interest expense. The decrease is the
result of lower average borrowing and lower average interest rates.
Income Taxes. The provision for income taxes for the first three
months of 2002 increased to $110,000 from a benefit of $104,000 for the first
three months of 2001 as a result of an increase in taxable income.
Cumulative effect. During the first three months of 2002, the Company
implemented FAS 142, which resulted in the write off of $10,760,000 of the net
book value of goodwill, offset by the future tax benefit thereof in the amount
of $3,874,000. The net cumulative effect of this change in accounting principles
was a one-time non-recurring $6,886,000 charge against earnings in the first
three months of 2002.
LIQUIDITY AND CAPITAL RESOURCES
The Company's net cash provided by operating activities for the
three-month period ended March 31, 2002 was $1,629,000, compared to net cash
used in operating activities for the three-month period ended March 31, 2001,
which was $345,000, primarily due to a decrease in accounts receivable offset by
a decrease in accounts payable and accrued expenses.
Cash used in investing activities was $29,000, which was attributable
to capital expenditures for new equipment. The Company anticipates additional
capital expenditures during calendar year 2002 aggregating approximately
$100,000, which will be used for the purchase of automated assembly and test
equipment.
Cash used in financing activities was $2,149,000 for the first three
months of 2002 primarily comprised of $14,954,000 of borrowings offset by
$17,103,000 of repayments of long term debt.
On March 20, 2002 the Company executed a credit agreement with
Commerce Bank, N.A. for a $19,500,000 credit facility, comprised of (i) a
$7,000,000 revolving line of credit under which funds may be borrowed at LIBOR,
plus a margin ranging from 1.75% to 2.50%, in each case depending on the
calculation of certain financial covenants, with a floor of 5% through March 19,
2003 (5% at March 31, 2002), (ii) a $9,000,000 term loan which bears interest at
a rate of 6.75% through September 30, 2002, and thereafter at a fixed rate
ranging from 6.50% to 7.25% to reset quarterly depending on the calculation of
certain financial covenants (6.75% at March 31, 2002) and (iii) a $3,500,000
mortgage loan bearing interest at 7.5%. Borrowings under the revolving line of
credit are limited to certain percentages of eligible accounts receivable and
inventory, as defined in the credit agreement. The credit facility is
collateralized by a security interest in all of the Company's assets. The
agreement also contains restrictions that require the Company to maintain
certain financial ratios as well as restrictions on the payment of cash
dividends. The maturity date of the new line of credit with Commerce Bank is
March 20, 2004. The term loan requires equal monthly principal payments of
$187,000 and matures on April 1, 2006. The mortgage loan requires equal monthly
principal payments of $19,000 and matures on April 1, 2017. The mortgage loan is
callable after five years at the lender's option.
Upon execution of the credit agreement with Commerce Bank, $14,954,000
was advanced to the Company, of which $14,827,000 was used to pay all unpaid
principal and accrued interest under the Company's prior line of credit and term
loans with First Union National Bank ("First Union").
At March 31, 2002, there was $754,000, $9,000,000 and $3,500,000
outstanding under the revolving line of credit, term loan and mortgage loan,
respectively.
Prior to March 20, 2002, the Company had a $5,500,000 revolving line
of credit with First Union on which funds could be borrowed at either the bank's
base rate plus a margin ranging from 0% to .625%, or
8
LIBOR, plus a margin ranging from 1.50% to 2.625%, in each case depending upon
the calculation of certain financial covenants. The agreement contained
restrictions that required the Company to maintain certain financial ratios as
well as restrictions on the payment of dividends. The Company also had, prior to
March 20, 2002, two outstanding term loans with First Union which accrued
interest at a variable interest rate.
The Company currently anticipates that the cash generated from
operations, existing cash balances and amounts available under its existing or a
replacement line of credit, will be sufficient to satisfy its foreseeable
working capital needs.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("FAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." FAS 133 was adopted by the
Company on January 1, 2001. FAS 133 requires that all derivative instruments be
recorded on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of the hedge
transaction and the type of hedge transaction. At March 31, 2002 the Company did
not have any derivative financial instruments. The adoption of this
pronouncement did not have a material effect on the Company's financial position
or results of operations.
In July 2001, the FASB issued FAS No. 141, "Business Combinations" and
No. 142, "Goodwill and Other Intangible Assets." FAS 141 requires the use of the
purchase method of accounting and prohibits the use of the pooling-of-interests
method of accounting for business combinations initiated after June 30, 2001.
FAS 142 addresses financial accounting and reporting for acquired goodwill and
other intangible assets. FAS 142 requires, among other things, that companies no
longer amortize goodwill, but instead test goodwill for impairment at least
annually. FAS 142 was adopted by the Company on January 1, 2002. The adoption of
this pronouncement resulted in the Company recording a $6,886,000 one-time,
non-cash charge to reduce the carrying value of its goodwill. Such charge is
non-operational in nature and is reflected as a cumulative effect of a change in
accounting principle. The Company's previous business combinations were
accounted for using the purchase method.
If FAS 142 had been in effect in 2001, the Company's earnings would
have been improved because of reduced amortization, as described below:
Net Loss Basic Net Earnings Per Share Diluted Net Earnings Per Share
-------- ---------------------------- ------------------------------
Reported Net Loss $(207,000) $(0.03) $(0.03)
Add Amortization, Net of Tax 156,000 0.02 0.02
--------- ------ ------
Adjusted Net Loss $( 51,000) $(0.01) $(0.01)
========= ====== ======
The Company continues to amortize its patents over their estimated useful lives
with no significant residual value. Amortization expense for intangible assets
excluding goodwill was $107,000 and $169,000 for the three month period ending
March 31, 2002 and 2001, respectively. Intangibles amortization is projected to
be approximately $400,000 to $500,000 per year for the next five years.
In August 2001, the FASB issued FAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." The new guidance resolves
significant implementation issues related to FAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
FAS 144 supersedes FAS 121, but it retains its fundamental provisions. It also
amends Accounting Research Bulletin No. 51, Consolidated Financial Statements,
to eliminate the exception to consolidate a subsidiary for which control is
likely to be temporary. FAS 144 retains the requirement of FAS 121 to recognize
an impairment loss only if the carrying amount of a long-lived asset within the
scope of FAS 144 is not recoverable from its undiscounted cash flows and exceeds
its fair value.
FAS 144 is effective for fiscal years beginning after December 15,
2001, and interim periods within those fiscal years, with early application
encouraged. The provisions of FAS 144 generally are to be applied
9
prospectively. The adoption of FAS 144 did not have a material impact on the
Company's financial position or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The market risk inherent in the Company's financial instruments and
positions represents the potential loss arising from adverse changes in interest
rates. At March 31, 2002 and 2001 the principal amount of the Company's
aggregate outstanding variable rate indebtedness was $753,913 and $17,481,116,
respectively. A hypothetical 1% adverse change in interest rates would have had
an annualized unfavorable impact of approximately $377 and $13,859,
respectively, on the Company's earnings and cash flows based upon these
quarter-end debt levels. At March 31, 2002, the Company did not have any
derivative financial investments.
10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to certain proceedings incidental to the
ordinary course of its business, none of which, in the current opinion of
management, is likely to have a material adverse effect on the Company's
business, financial condition, or results of operations.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
first quarter ended March 31, 2002 through the solicitation of proxies or
otherwise.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits are listed in the Exhibit Index appearing at page 13
herein.
(b) No reports on Form 8-K were filed in the quarter ended March 31, 2002.
11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BLONDER TONGUE LABORATORIES, INC.
Date: May 15, 2002 By: /s/ James A. Luksch
------------------------------------------
James A. Luksch
President and Chief Executive Officer
By: /s/ Eric Skolnik
------------------------------------------
Eric Skolnik
Vice President and Chief Financial Officer
(Principal Financial Officer)
12
EXHIBIT INDEX
Exhibit # Description Location
--------- ----------- --------
3.1 Restated Certificate of Incorporation of Blonder Incorporated by reference from Exhibit 3.1
Tongue Laboratories, Inc. to S-1 Registration Statement No. 33-98070
originally filed October 12, 1995, as
amended.
3.2 Restated Bylaws of Blonder Tongue Laboratories, Incorporated by reference from Exhibit 3.2
Inc. to S-1 Registration Statement No. 33-98070
originally filed October 12, 1995, as
amended.
10.1 Loan and Security Agreement dated March 20, 2002 Filed herewith.
between Blonder Tongue Laboratories, Inc. and
Commerce Bank, N.A.
10.2 Revolving Credit Note dated March 20, 2002 by Filed herewith.
Blonder Tongue Laboratories, Inc. in favor of
Commerce Bank, N.A.
10.3 Term Loan A Note dated March 20, 2002 by Blonder Filed herewith.
Tongue Laboratories, Inc. in favor of Commerce
Bank, N.A.
10.4 Term Loan B note dated March 20, 2002 by Blonder Filed herewith.
Tongue Laboratories, Inc. in favor of Commerce
Bank, N.A
10.5 Mortgage, Security Agreement and Fixture Filing Filed herewith.
dated March 20, 2002, between Blonder Tongue
Laboratories, Inc. and Commerce Bank, N.A.
10.6 Assignment of Rents and Leases made by Blonder Filed herewith.
Tongue Laboratories, Inc. in favor of Commerce
Bank, N.A.
10.7 Patent Security Agreement dated March 20, 2002 by Filed herewith
Blonder Tongue Laboratories, Inc. in favor of
Commerce Bank, N.A.
10.8 Trademark Security Agreement dated March 20, 2002 Filed herewith
by Blonder Tongue Laboratories, Inc. in favor of
Commerce Bank, N.A.
10.9 Surety Agreement dated March 20, 2002 by Blonder Filed herewith
Tongue Investment Company in favor of Commerce
Bank, N.A.
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