-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JhVjfmORsGGQlgDSQXbSS6T3QB38u1BeC34jIKH8WbMfTuFtqdfkXQ8m0DpavyeF 6buGrAdcigiBMxLZJv+Ffw== 0000950115-98-001085.txt : 19980602 0000950115-98-001085.hdr.sgml : 19980602 ACCESSION NUMBER: 0000950115-98-001085 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980325 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980601 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLONDER TONGUE LABORATORIES INC CENTRAL INDEX KEY: 0001000683 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 521611421 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-14120 FILM NUMBER: 98640507 BUSINESS ADDRESS: STREET 1: ONE JAKE BROWN RD STREET 2: PO BOX 1000 CITY: OLD BRIDGE STATE: NJ ZIP: 08857 BUSINESS PHONE: 9086794000 MAIL ADDRESS: STREET 1: ONE JAKE BROWN ROAD CITY: OLD BRIDGE STATE: NJ ZIP: 08857 8-K/A 1 2 7 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 25, 1998 -------------- Blonder Tongue Laboratories, Inc. ---------------------------------------------------- (Exact Name of registrant as specified in its charter) Delaware 1-14120 52-1611421 ------------------------------ ---------------------- ----------------------------------- (State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.) incorporation)
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 -------------- Not Applicable ----------------------------------------------------------- (Former name or former address, if changed since last report) Item 2. Acquisition of Assets. As previously disclosed in the Current Report on Form 8-K of Blonder Tongue Laboratories, Inc. (the "Company") filed with the Securities and Exchange Commission on April 1, 1998, during March, 1998, the Company acquired all of the assets and technology rights of the interdiction business of Scientific-Atlanta, Inc. (the "Business Unit") for a purchase price consisting of (i) $19 million in cash, (ii) 67,889 shares of the Company's common stock, (iii) a warrant to purchase 150,000 additional shares of the Company's common stock at an exercise price of $14.25 per share and (iv) assumption by the Company of certain obligations under executory contracts with vendors and customers and certain warranty obligations and other current liabilities of the Business Unit. The closing occurred on March 25, 1998 rather than March 26, 1998 as indicated in the Form 8-K filed on April 1, 1998. The Company is filing this Form 8-K/A in order to provide the audited financial statements of the Business Unit as well as the pro forma financial statements of the Company required by Regulation S-X and unavailable at the time of the original filing. Item 7. Financial Statements and Exhibits. (a) Financial Statements of Business Acquired The following audited financial statements of the Business Unit are filed as a part of this Report: 1. Report of Independent Public Accountants 2. Financial Statements a. Balance Sheets - June 27, 1997 and June 28, 1996 b. Statements of Operations for the years ended June 27, 1997 and June 28, 1996 c. Statements of Cash Flows for the years ended June 27, 1997 and June 28, 1996 3. Notes to Financial Statements -2- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Scientific-Atlanta, Inc.: We have audited the accompanying balance sheets of INTERDICTION BUSINESS UNIT (a business unit of Scientific-Atlanta, Inc.) as of June 27, 1997 and June 28, 1996 and the related statements of operations, and cash flows for the years ended June 27, 1997 and June 28, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Interdiction Business Unit (a business unit of Scientific-Atlanta, Inc.) as of June 27, 1997 and June 28, 1996 and the results of its operations and its cash flows for the years ended June 27, 1997 and June 28, 1996 in conformity with generally accepted accounting principles. ARTHUR ANDERSEN, LLP Atlanta, Georgia May 7, 1998 -3- INTERDICTION BUSINESS UNIT (A Business Unit of Scientific-Atlanta, Inc.) BALANCE SHEETS JUNE 27, 1997 AND JUNE 28, 1996 ASSETS 1997 1996 ---- ---- (In Thousands) CURRENT ASSETS: Accounts receivable, less allowances for doubtful accounts of $43 and $224 in 1997 and 1996, respectively $3,000 $4,480 Inventories 5,240 2,963 ------ ------ Total current assets 8,240 7,443 ------ ------ MACHINERY AND EQUIPMENT, at cost 2,057 1,940 Less accumulated depreciation and amortization 1,397 1,093 ------ ------ 660 847 ------ ------ PATENTS, NET 774 651 ------ ------ $9,674 $8,941 ====== ====== LIABILITIES AND BUSINESS UNIT EQUITY CURRENT LIABILITIES: Accounts payable $3,092 $1,413 Accrued liabilities 324 603 ------ ------ Total current liabilities 3,416 2,016 Other liabilities 135 281 ------ ------ Total liabilities 3,551 2,297 ------ ------ CONTINGENCIES (Note 5) 6,123 6,644 ------ ------ BUSINESS UNIT EQUITY $9,674 $8,941 ====== ====== The accompanying notes are an integral part of these balance sheets. -4- INTERDICTION BUSINESS UNIT (A Business Unit of Scientific-Atlanta, Inc.) STATEMENTS OF OPERATIONS FOR THE YEARS ENDED JUNE 27, 1997 AND JUNE 28, 1996 1997 1996 ---- ---- (In Thousands) SALES $ 8,139 $ 15,565 -------- -------- COSTS AND EXPENSES: Costs of sales 7,169 10,490 Sales and administrative 1,906 877 Research and development 1,673 703 Interest expense 0 5 -------- -------- Total costs and expenses 10,748 12,075 -------- -------- EARNINGS (LOSS) BEFORE INCOME TAXES (2,609) 3,490 PROVISION FOR INCOME TAXES 0 0 -------- -------- NET EARNINGS (LOSS) $ (2,609) $ 3,490 ======== ======== The accompanying notes are an integral part of these statements. -5- INTERDICTION BUSINESS UNIT (A Business Unit of Scientific-Atlanta, Inc.) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 27, 1997 AND JUNE 28, 1996
1997 1996 ---- ---- (In Thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) earnings $(2,609) $ 3,490 Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities: Depreciation and amortization 368 415 Changes in operating assets and liabilities: Accounts receivable 1,480 (2,361) Inventories (2,277) (1,221) Patents (186) (160) Accounts payable and accrued liabilities 1,400 92 Other liabilities (146) 95 ------- ------- Net cash (used in) provided by operating activities (1,970) 350 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of machinery and equipment (118) (198) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Advances from (to) Parent 2,088 (152) ------- ------- Net cash provided by (used in) financing activities 2,088 (152) ------- ------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 0 0 CASH AND CASH EQUIVALENTS, beginning of period 0 0 ------- ------- CASH AND CASH EQUIVALENTS, end of period $ 0 $ 0 ======= =======
The accompanying notes are an integral part of these statements. -6- INTERDICTION BUSINESS UNIT (A Business Unit of Scientific-Atlanta, Inc.) NOTES TO FINANCIAL STATEMENTS JUNE 27, 1997 AND JUNE 28, 1996 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business The Interdiction Business Unit ("the Company") is an operating business unit of Scientific-Atlanta, Inc. ("SA" or "the Parent"). The Company is not a separate legal entity and accordingly has no authorized or outstanding capital stock. The Company manufactures interdiction devices which are installed outside subscribers' homes and deliver uniform service to cable-ready TV sets. Interdiction devices allow cable operators to remotely change the service level, activate service, or terminate service without sending a technician to the subscriber. Basis of Presentation These special purpose financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") and present the financial position and results of operations of the Company as if such unit had operated as a separate corporate entity unaffiliated with SA. The results of operations include direct charges for expenses such as facilities and telephone expenses and indirect charges for other common expenses and corporate expenses. Common expenses include, but are not limited to, shared factories and functional services such as purchasing, human resources, financial services, and legal services, which are charged based on management's estimate of effort expended to support the business unit. In addition, a fringe rate, which is applied to labor, is used to charge business units the costs of employee benefit plans, such as a defined benefit retirement plan, 401-k plan, health insurance, disability insurance, and employer taxes related to compensation. Corporate expenses are allocated to business units based on the ratio of business unit's sales to consolidated sales. Management believes the charges and allocations are based on practical and reasonable methods. However, these financial statements are not necessarily indicative of the results of operations which would have occurred if the Interdiction Business Unit had been an independent company. Amounts owed to SA by the Company have been included as a component of business unit equity as these advances do not have any scheduled maturity dates and are not expected to be settled upon the sale of the Company by SA (see Note 6). -7- Use of Estimates The preparation of the accompanying financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The estimates made by management primarily relate to receivable and inventory reserves, and certain accrued liabilities, principally relating to warranty and service provisions and compensation. Revenue Recognition The Company recognizes revenue upon the shipment of products. Research and Development Expenditures Research and development costs are expensed as incurred. Depreciation, Maintenance, and Repairs Depreciation is provided using principally the straight-line method over the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred. Renewals and betterments are capitalized. The cost and accumulated depreciation of property retired or otherwise disposed of are removed from the respective accounts, and the gains or losses, thereon, are included in the consolidated statement of earnings. Warranty Costs The Company accrues warranty costs at the time of sale. Expenses related to unusual product warranty problems and product defects are recorded in the period the problem is identified. Cash and Cash Equivalents SA provides a centralized cash management function; accordingly the Company does not maintain separate cash accounts and its cash disbursements and collections are settled by SA. Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable. A significant portion of the Company's revenue is derived from a limited number of customers. For 1997 and 1996, four customers individually accounted for more than 10% of the Company's revenue and in aggregate accounted for 68% and 76% of the Company's revenues, respectively. The Company typically does not require collateral or security from its customers. The amount of loss should customers fail to pay the receivables is limited to the notional amount of such receivables. -8- Fair Value of Financial Instruments The book values of trade accounts receivable and trade accounts payable approximate their fair values principally because of the short-term maturities of these instruments. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market. Cost includes materials, direct labor, and manufacturing overhead. Market is defined principally as net realizable value. Inventories include purchased and manufactured components in various stages of assembly as presented in the following table: 1997 1996 ---- ---- (In Thousands) Raw materials and work-in-process $2,973 $ 661 Finished goods 2,267 2,302 ------ ------ Total inventory $5,240 $2,963 ====== ====== 2. ACCRUED LIABILITIES Accrued liabilities consist of the following: 1997 1996 ---- ---- (In Thousands) Warranty and service $ 75 $183 Common liabilities 249 420 ---- ---- $324 $603 ==== ==== Common liabilities consist primarily of accruals for compensation and employee benefits, such as vacation, health and disability insurance and retirement plans, which are made on a company-wide basis for domestic employees. These liabilities are not specifically identifiable to a business unit. Business units are supported by shared factories and functional services such as purchasing, human resources, financial services and legal services. Common liabilities have been allocated based on a ratio of the Company's sales to total sales generated by the domestic operations of SA. Management has determined that such allocation is a practical and reasonable method of allocation. However, these financial statements are not necessarily indicative of the financial position which would have occurred if the Company had been an independent company. -9- 3. OTHER LIABILITIES Other liabilities consist of common liabilities for accrued benefits and retirement plans and are allocated using the methodology described in Note 2. 4. INCOME TAXES For the years ended June 27, 1997 and June 28, 1996, Interdiction's results were included in the federal and state income tax returns for Scientific Atlanta, Inc. For the purpose of these financial statements, the income tax provision has been determined on a basis as if Interdiction was a separate taxpayer. Due to the history of losses incurred by Interdiction, the net deferred tax asset resulting from temporary differences is not considered probable of realization and therefore is offset in all periods presented by a valuation allowance. 5. CONTINGENCIES The Company is a party to various legal proceedings arising in the ordinary course of business. In management's opinion, the outcome of these proceedings will not have a material adverse effect on the Company's financial position or results of operations. 6. SUBSEQUENT EVENTS On March 1, 1998, SA signed a definitive agreement to sell the inventory, manufacturing assets, and patents of the Interdiction Business Unit to Blonder Tongue Laboratories, Inc. (Blonder Tongue) for $19 million in cash, Blonder Tongue stock valued at $1 million and an option to acquire additional shares of Blonder Tongue stock. The sale was effective at the close of business on March 24, 1998. -10- (b) Pro Forma Financial Information The following unaudited pro forma financial statements of the Company are filed as a part of this Report: Blonder Tongue Laboratories, Inc. Pro Forma Unaudited Condensed Financial Information The accompanying pro forma unaudited condensed statements of operations are based upon the historical consolidated financial statements of Blonder Tongue Laboratories Inc. ("Blonder") and the Interdiction Business Unit (a business unit of Scientific-Atlanta, Inc.) ("Interdiction") adjusted to give effect to the Interdiction acquisition accounted for as a purchase, as if the acquisition had occurred at January 1, 1997. The pro forma statements of operations are not necessarily indicative of the results that would have been obtained if the acquisition had occurred on the dates indicated or for any future period or date. The pro forma adjustments give effect to available information and assumptions that the Company believes are reasonable. The pro forma condensed financial information should be read in conjunction with the Company's historical consolidated financial statements and notes thereto and the historical consolidated financial statements of Interdiction and the notes thereto.
Forma Unaudited Condensed Statements of Operations (Dollars in thousands, except per share amounts) --------------------------------------------------- Year Ended December 31, 1997 --------------------------------------------------- Blonder Interdiction Acquisition Pro Forma -------- ------------ ----------- --------- Net sales $ 62,057 $ 15,776 $ -- $ 77,833 Cost of sales 39,656 12,690 $ -- 52,346 -------- -------- ------- -------- Gross profit 22,401 3,086 -- 25,487 -------- -------- ------- -------- Selling, general and administrative 9,938 2,100 1,175 (a) 13,213 Research and development 1,954 1,491 -- 3,445 -------- -------- ------- -------- 11,892 3,591 1,175 16,658 -------- -------- ------- -------- Earnings from operations 10,509 (505) (1,175) 8,829 -------- -------- ------- -------- Other income (expense) Interest expense (414) -- (1,568)(b) (1,982) Other income 595 -- -- 595 -------- -------- ------- -------- 181 -- (1,568) (1,387) -------- -------- ------- -------- Earnings before income taxes 10,690 (505) (2,743) 7,442 -------- -------- ------- -------- Provision for income taxes 4,276 -- (1,299)(c) 2,977 -------- -------- ------- -------- Net earnings $ 6,414 $ (505) $(1,444) $ 4,465 -------- -------- ------- -------- Basic earnings per share $ 0.78 $ 0.54 -------- -------- Basic weighted average shares outstanding 8,227 68 8,295 -------- ------- -------- Diluted earnings per share $ 0.77 $ 0.53 Diluted weighted average shares outstanding 8,375 68 8,443 -------- ------- --------
-11-
------------------------------------------------- Quarter ended March 31, 1998 ------------------------------------------------- Acquisition Blonder Interdiction Adjustments Pro Forma ------- ------------ ----------- --------- Net sales $15,119 $5,990 $ -- $21,109 Cost of sales $10,024 4,250 -- 14,274 ------- ------ -------- ------ Gross profit 5,095 1,740 -- 6,835 ------- ------ -------- ------ Selling, general and administrative 2,720 271 294(a) 3,285 Research and development 577 324 -- 901 ------- ------ -------- ------ 3,297 595 294 4,186 ------- ------ -------- ------ Earnings from operations 1,798 1,145 (294) 2,649 ------- ------ -------- ------ Other income (expense) Interest expense (124) (7) (392)(b) (523) Other income 1 -- -- 1 ------- ------ -------- ------ (123) (7) (392) (522) ------- ------ -------- ------ Earnings before income taxes 1,675 1,138 (686) 2,127 ------- ------ -------- ------ Provision for income taxes 670 -- 181(c) 851 ------- ------ -------- ------ Net earnings $ 1,005 $1,138 $ (867) $1,276 ------- ------ -------- ------ Basic earnings per share $ 0.12 $ 0.15 ------- ------ Basic weighted average shares outstanding 8,245 68 8,313 ------- -------- ------ Diluted earnings per share $ 0.12 $ 0.15 ------- ------ Diluted weighted average shares outstanding 8,505 68 8,573 ------- -------- ------
Adjustments to reflect the acquisition as if it had occurred as of January 1, 1997 are as follows:
Year ended Quarter ended December March 31, 31, 1997 1998 ----------- -------------- a -- Adjustment to reflect amortization of intangibles acquired and goodwill of $17.6 million over an average life of 15 years $1,175 $294 b -- Adjustment to reflect interest expense on $19 million of debt used to finance the acquisition at 8.25% $1,568 $392 c -- Adjustment to reflect taxes at the Company's effective tax rate of 40%
-12- SIGNATURE 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 hereunto duly authorized. BLONDER TONGUE LABORATORIES, INC. By: /s/ James A. Luksch ------------------------------ James A. Luksch President Date: June 1, 1998 -13- -----END PRIVACY-ENHANCED MESSAGE-----