SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
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Blonder Tongue Laboratories, Inc.
(Name of Issuer)
Blonder Tongue Laboratories, Inc.
(Name of Person(s) Filing Statement)
Common Stock, Par Value $0.001 Per Share
(Title of Class of Securities)
093698-10-8
(CUSIP Number of Class of Securities)
James A. Luksch
Chairman, President and Chief Executive Officer
Blonder Tongue Laboratories, Inc.
One Jake Brown Road
Old Bridge, New Jersey 08857
(732) 679-4000
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of the Person(s) Filing Statement)
Calculation of Filing Fee
Transaction Valuation(1) Amount of Filing Fee
------------------------ --------------------
$6,000,000 $1,200
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(1) Pursuant to Rule 0-11(b)(1), the transaction valuation was calculated based
upon the maximum cash consideration which may be paid to stockholders of the
issuer in the issuer tender offer.
<PAGE>
ITEM 1. SECURITY AND ISSUER.
(a) The issuer of the securities to which this Schedule 13E-4 relates is
Blonder Tongue Laboratories, Inc., a Delaware corporation (the "Company"), and
the address of its principal executive office is One Jake Brown Road, Old
Bridge, New Jersey 08857.
(b) This Schedule 13E-4 relates to the offer by the Company to purchase up
to 750,000 shares (or such lesser number of shares as are validly tendered and
not properly withdrawn) of its common stock, par value $0.001 per share ("Common
Stock") (shares of Common Stock are hereinafter referred to as "Shares"), at
prices not greater than $8.00 nor less than $6.00 per Share, net to the seller
in cash, without interest thereon, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated May 17, 1999 (the "Offer to
Purchase"), and in the related Letter of Transmittal, which, as amended or
supplemented from time to time, together constitute the "Offer," copies of which
are attached as Exhibit (a)(1) and (a)(2), respectively, to this Schedule 13E-4.
The Offer is conditioned upon, among other things, the Company having obtained
sufficient financing to fund the purchase of Shares tendered pursuant to the
Offer and to pay all related fees and expenses. As of May 14, 1999, the Company
had issued and outstanding 8,290,803 Shares, excluding 80,600 Shares held as
treasury stock. The information set forth in "Introduction," "The Offer --
Section 1. Number of Shares; Proration" and "The Offer -- Section 11. Interests
of Directors and Executive Officers; Transactions and Arrangements Concerning
Shares" of the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in "Introduction" and "The Offer -- Section
8. Price Range of Shares" of the Offer to Purchase is incorporated herein by
reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) - (b) The information set forth in "Introduction," "The Offer --
Section 2. Purpose of the Offer; Certain Effects of the Offer" and "The Offer --
Section 9. Source and Amount of Funds" of the Offer to Purchase is incorporated
herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a) - (j) The information set forth in "Introduction," "The Offer --
Section 2. Purpose of the Offer; Certain Effects of the Offer," "The Offer --
Section 9. Source and Amount of Funds," "The Offer -- Section 11. Interests of
Directors and Executive Officers; Transactions and Arrangements Concerning
Shares" and "The Offer -- Section 12. Effects of the Offer on the Market for
Shares; Registration under the Exchange Act" of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "The Offer -- Section 11. Interests of
Directors and Executive Officers; Transactions and Arrangements Concerning
Shares" of the Offer to Purchase is incorporated herein by reference.
<PAGE>
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The information set forth in "Introduction," "The Offer -- Section 2.
Purpose of the Offer; Certain Effects of the Offer" and "The Offer -- Section
11. Interests of Directors and Executive Officers; Transactions and Arrangements
Concerning Shares" of the Offer to Purchase is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction" and "The Offer -- Section 16.
Fees and Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a) - (b) The information set forth in "The Offer -- Section 10. Certain
Information Concerning the Company" of the Offer to Purchase is incorporated
herein by reference and the information set forth on: (i) pages 25 through 47 of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, filed as Exhibit (g)(1) hereto, and (ii) pages 2 through 5 of the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1999, filed as Exhibit (g)(2) hereto, in each case, is incorporated herein by
reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in "The Offer -- Section 13. Certain Legal
Matters; Regulatory Approvals" of the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in "The Offer -- Section 12. Effects of
the Offer on the Market for Shares; Registration under the Exchange
Act" of the Offer to Purchase is incorporated herein by reference.
(d) Not Applicable.
(e) The information set forth in the Offer to Purchase and Letter of
Transmittal, copies of which are attached hereto as Exhibit (a)(1)
and (a)(2), respectively, is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Form of Offer to Purchase dated May 17, 1999.
(a)(2) Form of Letter of Transmittal (including Certification of Taxpayer
Identification Number on Substitute Form W-9).
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Form of Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
<PAGE>
(a)(6) Form of Press Release issued by the Company dated May 17, 1999.
(a)(7) Form of Letter to Shareholders of the Company dated May 17, 1999,
from James A. Luksch, Chairman, President and Chief Executive
Officer.
(a)(8) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(b)(1) Third Amended and Restated Loan Agreement dated October 29, 1997
between Blonder Tongue Laboratories, Inc. and CoreStates Bank,
N.A.(1)
(b)(2) First Amendment to Third Amended and Restated Loan Agreement dated
March 23, 1998 between Blonder Tongue Laboratories, Inc. and
CoreStates Bank, N.A.(2)
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Pages 25 through 47 of the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998.
(g)(2) Pages 2 through 5 of the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 1999.
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(1) Incorporated by reference from Exhibit 10.18 to the Company's Annual Report
on form 10-K for fiscal year ended December 31, 1997, filed March 27, 1998.
(2) Incorporated by reference from Exhibit 10.3 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 1998, filed
April 14, 1998.
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule 13E-4 is true, complete and
correct.
BLONDER TONGUE LABORATORIES, INC.
By: /s/ James A. Luksch
-----------------------------------------------
James A. Luksch
Chairman, President and Chief Executive Officer
Dated: May 17, 1999
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
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(a)(1) Form of Offer to Purchase dated May 17, 1999.
(a)(2) Form of Letter of Transmittal (including Certification of
Taxpayer Identification Number on Substitute Form W-9).
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(a)(6) Form of Press Release issued by the Company dated May 17,
1999.
(a)(7) Form of Letter to Shareholders of the Company dated May 17,
1999, from James A. Luksch, Chairman, President and Chief
Executive Officer.
(a)(8) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(b)(1) Third Amended and Restated Loan Agreement dated October 29,
1997 between Blonder Tongue Laboratories, Inc. and CoreStates
Bank, N.A.(1)
(b)(2) First Amendment to Third Amended and Restated Loan Agreement
dated March 23, 1998 between Blonder Tongue Laboratories, Inc.
and CoreStates Bank, N.A.(2)
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Pages 25 through 47 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998.
(g)(2) Pages 2 through 5 of the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 1999.
- ----------
(1) Incorporated by reference from Exhibit 10.18 to the Company's Annual Report
on form 10-K for fiscal year ended December 31, 1997, filed March 27, 1998.
(2) Incorporated by reference from Exhibit 10.3 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 1998, filed
April 14, 1998.
Blonder Tongue Laboratories, Inc.
Offer To Purchase For Cash Up To
750,000 Shares Of Its Common Stock
At A Purchase Price Not Greater Than $8.00
Nor Less Than $6.00 Per Share
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THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON TUESDAY, JUNE 15, 1999, UNLESS THE OFFER IS EXTENDED.
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Blonder Tongue Laboratories, Inc., a Delaware corporation (the "Company"),
hereby invites its stockholders to tender up to 750,000 shares of its common
stock, par value $0.001 per share ("Common Stock") (shares of Common Stock are
hereinafter referred to as "Shares"), to the Company at prices not greater than
$8.00 nor less than $6.00 per Share, net to the seller in cash, without interest
thereon, as specified by tendering stockholders, upon the terms and subject to
the conditions set forth herein and in the related Letter of Transmittal (which,
as amended or supplemented from time to time, together constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the
Offer, determine the lowest single per Share price (not greater than $8.00 nor
less than $6.00 per Share), net to the seller in cash (the "Purchase Price"),
that will allow it to purchase 750,000 Shares (or such lesser number of Shares
as are validly tendered and not properly withdrawn) pursuant to the Offer. The
Company will pay the Purchase Price for all Shares validly tendered at prices at
or below the Purchase Price and not withdrawn, upon the terms and subject to the
conditions of the Offer, including, among other things, the financing condition
and the proration and conditional tender provisions referred to herein.
Certificates representing Shares tendered at prices in excess of the Purchase
Price and not properly withdrawn and Shares not purchased because of proration
will be returned at the Company's expense. The Company reserves the right, in
its sole discretion, to purchase more than 750,000 Shares pursuant to the Offer.
See Section 15, "Extension of Offer; Termination; Amendment."
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, CONDITIONED UPON THE COMPANY HAVING OBTAINED
SUFFICIENT FINANCING TO FUND THE PURCHASE OF SHARES TENDERED IN THE OFFER AND
PAY ALL RELATED FEES AND EXPENSES. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS. See Section 7, "Certain Conditions of The Offer."
The Shares are listed and traded on the American Stock Exchange ("AMEX")
under the symbol "BDR." On May 14, 1999, the last full trading day on AMEX prior
to the commencement of the Offer, the closing per Share sales price was $6.00.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. See
Section 8, "Price Range of Shares."
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. NEITHER THE
COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO STOCKHOLDERS AS
TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES. EACH STOCKHOLDER
MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED. SEE SECTION
11 FOR INFORMATION REGARDING THE INTENTIONS OF THE COMPANY'S DIRECTORS AND
EXECUTIVE OFFICERS WITH RESPECT TO TENDERING SHARES PURSUANT TO THE OFFER.
The Dealer Manager and Information Agent for the Offer is:
Ferris, Baker Watts
Incorporated
May 17, 1999
<PAGE>
IMPORTANT
Any stockholder wishing to tender all or any part of his or her Shares
should either (a) complete and sign a Letter of Transmittal (or a manually
signed facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and either mail or deliver it with any required signature guarantee
and any other required documents to American Stock Transfer and Trust Company
(the "Depositary"), and either mail or deliver the stock certificates for such
tendered Shares to the Depositary (with all such other documents), (b) tender
such Shares pursuant to the procedure for book-entry delivery set forth in
Section 3, or (c) request a broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. Stockholders
having Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact that broker, dealer, commercial bank,
trust company or other nominee if they desire to tender their Shares. Any
stockholder who desires to tender Shares and whose certificates for such Shares
cannot be delivered to the Depositary or who cannot comply with the procedure
for book-entry transfer or whose other required documents cannot be delivered to
the Depositary, in any case, by the expiration of the Offer must tender such
Shares pursuant to the guaranteed delivery procedure set forth in Section 3.
Holders or beneficial owners of Shares under the Company's 401(k) plan who
wish to tender any of such Shares in the Offer must follow the separate
instructions and procedures described in Section 3.
TO EFFECT A VALID TENDER OF SHARES, STOCKHOLDERS MUST VALIDLY COMPLETE THE
LETTER OF TRANSMITTAL, INCLUDING THE SECTION RELATING TO THE PRICE AT WHICH THEY
ARE TENDERING SHARES.
Additional copies of this Offer to Purchase, the Letter of Transmittal and
other tender offer materials may be obtained from the Company or from Ferris,
Baker Watts, Incorporated, which is acting as information agent and dealer
manager (the "Dealer Manager"), and will be furnished at the Company's expense.
Questions and requests for assistance may be directed to the Dealer Manager at
its address and telephone number set forth on the back cover of this Offer to
Purchase. Stockholders may also contact their local broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer.
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH
THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED LETTER OF
TRANSMITTAL. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
ii
<PAGE>
TABLE OF CONTENTS
Page
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SUMMARY...................................................................... 1
INTRODUCTION................................................................. 3
THE OFFER.................................................................... 5
1. NUMBER OF SHARES; PRORATION.............................................. 5
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER....................... 7
3. PROCEDURES FOR TENDERING SHARES..........................................10
4. WITHDRAWAL RIGHTS........................................................14
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.........................15
6. CONDITIONAL TENDER OF SHARES.............................................16
7. CERTAIN CONDITIONS OF THE OFFER..........................................17
8. PRICE RANGE OF SHARES....................................................19
9. SOURCE AND AMOUNT OF FUNDS...............................................19
10. CERTAIN INFORMATION CONCERNING THE COMPANY...............................19
11. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS;
TRANSACTIONS AND ARRANGEMENTS CONCERNING SHARES........................22
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES;
REGISTRATION UNDER THE EXCHANGE ACT....................................23
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS..............................23
14. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES....................24
15. EXTENSION OF OFFER; TERMINATION; AMENDMENT...............................26
16. FEES AND EXPENSES........................................................26
17. MISCELLANEOUS............................................................27
iii
<PAGE>
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SUMMARY
This general summary is solely for the convenience of the Company's
stockholders and is qualified in its entirety by reference to the full text and
more specific details in this Offer to Purchase and the related Letter of
Transmittal.
<TABLE>
<S> <C>
Number of Shares to be Purchased ........... 750,000 Shares (or such lesser number of Shares as are validly
tendered pursuant to the Offer and not properly withdrawn).
Purchase Price ............................. The Company will, upon the terms and subject to the conditions
of the Offer, determine the lowest single per Share price (not
greater than $8.00 nor less than $6.00 per Share) net to the
seller in cash, without interest thereon, that will allow it
to purchase 750,000 Shares (or such lesser number of Shares as
are validly tendered and not properly withdrawn) pursuant to
the Offer. The Company will pay the Purchase Price for all
Shares validly tendered at prices at or below the Purchase
Price and not properly withdrawn, upon the terms and subject
to the conditions of the Offer. Each stockholder desiring to
tender Shares must specify in the Letter of Transmittal the
minimum price (not greater than $8.00 nor less than $6.00 per
Share) at which such stockholder is willing to have his or her
Shares purchased by the Company.
Conditions to the Offer .................... The Offer is conditioned upon the Company's having obtained
sufficient financing to fund the purchase of Shares tendered
in the Offer and pay all related fees and expenses, as
described in Section 2. The Offer is also subject to certain
other conditions. See Section 7, "Certain Conditions of the
Offer."
How to Tender Shares ....................... See Section 3, "Procedures for Tendering Shares." Call the
Dealer Manager or your broker for assistance.
Brokerage Commissions ...................... None for registered stockholders who tender their Shares
directly to the Depositary. Stockholders holding Shares
through brokers or banks are urged to consult their brokers or
banks to determine whether transaction costs are applicable if
stockholders tender through the brokers or banks and not
directly to the Depositary.
Stock Transfer Tax ......................... None, if payment is made to the registered holder.
Expiration and Proration Dates ............. Tuesday, June 15, 1999 at 5:00 p.m., New York City time,
unless the Offer is extended by the Company (the "Expiration
Date").
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Proration .................................. In the event that proration of tendered Shares is required,
proration for each stockholder tendering Shares, other than
Odd Lot Holders (as defined below), shall be based on the
ratio of the number of Shares tendered by such stockholder at
or below the Purchase Price (and not properly withdrawn prior
to the Expiration Date) to the total number of Shares tendered
by all stockholders, other than Odd Lot Holders, at or below
the Purchase Price (and not properly withdrawn prior to the
Expiration Date).
Odd Lots ................................... There will be no proration of Shares tendered by any
stockholder owning beneficially fewer than 100 Shares in the
aggregate (not including any Shares held pursuant to the
Company's 401(k) plan) as of the close of business on May 14,
1999 and as of the Expiration Date, who tenders all such
Shares at or below the Purchase Price prior to the Expiration
Date and who checks the "Odd Lots" box in the Letter of
Transmittal, and, if applicable, on the Notice of Guaranteed
Delivery (an "Odd Lot Holder"). See Section 1, "Number of
Shares; Proration."
Payment Date ............................... As soon as practicable after the Expiration Date.
Position of the Company and its Directors... Neither the Company nor its Board of Directors makes any
recommendation to any stockholder as to whether to tender or
refrain from tendering Shares. Stockholders must make their
own decisions whether to tender Shares and, if so, how many
Shares to tender and the price or prices at which Shares
should be tendered. See Section 11 for information regarding
the intentions of the Company's directors and executive
officers with respect to tendering Shares pursuant to the
Offer.
Withdrawal Rights .......................... Tendered Shares may be withdrawn at any time prior to the
expiration of the Offer (5:00 p.m., New York City time, on the
Expiration Date) and, unless previously purchased, may also be
withdrawn at any time after 5:00 p.m., New York City time, on
July 13, 1999. See Section 4, "Withdrawal Rights."
Tax Consequences............................ An exchange of Shares for cash pursuant to the Offer by a
stockholder will be a taxable transaction for United States
federal income tax purposes. See Section 14, "Certain United
States Federal Income Tax Consequences."
Further Developments Regarding the Offer.... Call the Dealer Manager or your broker.
</TABLE>
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<PAGE>
INTRODUCTION
Blonder Tongue Laboratories, Inc., a Delaware corporation (the "Company"),
hereby invites its stockholders to tender up to 750,000 shares of its common
stock, par value $0.001 per share ("Common Stock") (shares of Common Stock are
hereinafter referred to as "Shares"), to the Company at prices not greater than
$8.00 nor less than $6.00 per Share, net to the seller in cash, without interest
thereon, as specified by tendering stockholders, upon the terms and subject to
the conditions set forth herein and in the related Letter of Transmittal (which,
as amended or supplemented from time to time, together constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the
Offer, determine the lowest single per Share price (not greater than $8.00 nor
less than $6.00 per Share), net to the seller in cash (the "Purchase Price"),
that will allow it to purchase 750,000 Shares (or such lesser number of Shares
as are validly tendered and not properly withdrawn) pursuant to the Offer. The
Company will pay the Purchase Price for all Shares validly tendered at prices at
or below the Purchase Price and not properly withdrawn, upon the terms and
subject to the conditions of the Offer, including the financing condition and
the proration and conditional tender provisions referred to herein. Certificates
representing Shares tendered at prices in excess of the Purchase Price and not
properly withdrawn and Shares not purchased because of proration or conditional
tender will be returned at the Company's expense. The Company reserves the
right, in its sole discretion, to purchase more than 750,000 Shares pursuant to
the Offer. See Section 15, "Extension of Offer; Termination; Amendment."
The Company's obligation to purchase Shares pursuant to the Offer is
conditioned upon, among other things, the Company's obtaining sufficient
financing to fund the purchase of Shares tendered pursuant to the Offer and to
pay all related fees and expenses. See Section 2, "Purpose of the Offer; Certain
Effects of the Offer" and Section 7, "Certain Conditions of the Offer."
As described in Section 2, the Company intends to pay the Purchase Price
for the tendered Shares with proceeds obtained pursuant to either its current
Credit Agreement with First Union National Bank or an amended and restated
version of such Credit Agreement (the "Financing"). To the extent necessary or
desirable, the Company, at its sole discretion, may supplement the proceeds
obtained pursuant to the Financing with cash on hand.
THIS OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED IN THE OFFER. THE OFFER IS, HOWEVER, SUBJECT TO OTHER CONDITIONS. SEE
SECTION 7, "CERTAIN CONDITIONS OF THE OFFER."
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. NEITHER THE
COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO STOCKHOLDERS,
HOWEVER, AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES. EACH
STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED. SEE
SECTION 11 FOR INFORMATION REGARDING THE INTENTIONS OF THE COMPANY'S DIRECTORS
AND EXECUTIVE OFFICERS WITH RESPECT TO TENDERING SHARES PURSUANT TO THE OFFER.
Holders or beneficial owners of Shares under the Company's 401(k) plan
("401(k) Plan Shares") who wish to tender any of such Shares in the Offer must
follow the separate instructions and procedures described in Section 3 and
should also read the separate tax provisions applicable to participants in the
401(k) plan described in Section 3.
The Company's Board of Directors believes that the Offer is in the best
interests of the Company, based upon the Company's financial condition and
outlook and current market conditions, including recent trading prices of the
Shares. The Offer affords to those stockholders who desire liquidity an
opportunity to sell all or a portion of their Shares without the usual
transaction costs associated with open market sales. In addition, stockholders
owning fewer than 100 Shares (not including 401(k) Plan Shares) whose Shares are
purchased pursuant to the Offer and who tender directly to the Depositary will
avoid both the payment of brokerage commissions as well as any applicable odd
lot discounts payable on sale of their Shares in an open market transaction. The
Company believes that the
-3-
<PAGE>
Offer will be accretive to earnings per share (on both a basic and diluted
basis) in the Company's fiscal year ending December 31, 1999, but there can be
no assurance to that effect.
The Offer provides stockholders who are considering a sale of all or a
portion of their Shares the opportunity to determine the price or prices (not
greater than $8.00 nor less than $6.00 per Share) at which they are willing to
sell their Shares and, if any such Shares are purchased pursuant to the Offer,
to sell those Shares for cash to the Company. Stockholders who determine not to
accept the Offer will increase their proportionate interest in the Company's
equity, and thus in the Company's future earnings and assets, subject to the
Company's right to issue additional Shares and other equity securities in the
future.
Upon the terms and subject to the conditions of the Offer, if, at the
expiration of the Offer, more than 750,000 Shares (or such greater number of
Shares as the Company may elect to purchase) are validly tendered at prices at
or below the Purchase Price and not properly withdrawn, the Company will
purchase Shares validly tendered and not properly withdrawn first from all Odd
Lot Holders (as defined in Section 1) who validly tendered all their Shares at
or below the Purchase Price and who so certify in the appropriate place on the
Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery,
and then, after the purchase of all of the foregoing Shares, all Shares tendered
at or below the Purchase Price and not properly withdrawn prior to the
Expiration Date, on a pro rata basis (with appropriate adjustments to avoid
purchase of fractional Shares). See Section 1, "Number of Shares; Proration."
All certificates representing Shares not purchased pursuant to the Offer,
including Shares tendered at prices greater than the Purchase Price and not
properly withdrawn and Shares not purchased because of proration, will be
returned at the Company's expense to the stockholders who tendered such Shares.
The Purchase Price will be paid net to the tendering stockholder in cash
for all Shares purchased. Tendering stockholders who have shares registered in
their own name and who tender directly to the Depositary will not be obligated
to pay brokerage commissions, solicitation fees or, subject to Instruction 7 of
the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Company. Stockholders holding Shares through brokers or banks are urged to
consult such brokers or banks to determine whether transaction costs are
applicable if such Stockholders tender Shares through the brokers and banks and
not directly to the Depositary. ANY TENDERING STOCKHOLDER OR OTHER PAYEE,
HOWEVER, WHO FAILS TO COMPLETE, SIGN AND RETURN TO THE DEPOSITARY THE SUBSTITUTE
FORM W-9 THAT IS INCLUDED WITH THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO
REQUIRED UNITED STATES FEDERAL INCOME TAX BACKUP WITHHOLDING OF 31% OF THE GROSS
PROCEEDS PAYABLE TO SUCH STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE
SECTION 3, "PROCEDURES FOR TENDERING SHARES." The Company will pay all fees and
expenses of Ferris, Baker Watts, Incorporated, who will act as dealer manager
and information agent for the Offer (the "Dealer Manager"), and American Stock
Transfer and Trust Company, who will act as the depositary for the Offer (the
"Depositary"), incurred in connection with the Offer. See Section 16, "Fees and
Expenses."
As of May 14, 1999, the Company had issued and outstanding 8,290,803
Shares, excluding 80,600 Shares held as treasury stock, and had reserved 952,841
Shares for issuance upon exercise of outstanding stock options and warrants. The
750,000 Shares that the Company is offering to purchase pursuant to the Offer
represent approximately 9% of the issued and outstanding Shares. The Shares are
listed and traded on the American Stock Exchange ("AMEX") under the symbol
"BDR." On May 14, 1999, the last full trading day on AMEX prior to the
commencement of the Offer, the closing per Share sales price was $6.00.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE
SECTION 8, "PRICE RANGE OF SHARES."
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THE OFFER
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase 750,000 Shares or such lesser number of Shares as are validly tendered
(and not properly withdrawn in accordance with Section 4) prior to the
Expiration Date (as defined below) at prices not greater than $8.00 nor less
than $6.00 per Share. The term "Expiration Date" means 5:00 p.m., New York City
time, on Tuesday, June 15, 1999, unless and until the Company, in its sole
discretion, shall have extended the period of time during which the Offer will
remain open, in which event the term "Expiration Date" shall refer to the latest
time and date at which the Offer, as so extended by the Company, shall expire.
See Section 15, "Extension of Offer; Termination; Amendment," for a description
of the Company's right to extend, delay, terminate or amend the Offer. The
Company reserves the right, in its sole discretion, to purchase more than
750,000 Shares pursuant to the Offer. In accordance with applicable regulations
of the Securities and Exchange Commission (the "Commission"), the Company may
purchase pursuant to the Offer an additional amount of Shares not to exceed 2%
of the outstanding Shares without amending or extending the Offer. See Section
15, "Extension of Offer; Termination; Amendment." In the event of an
over-subscription of the Offer as described below, Shares tendered at or below
the Purchase Price prior to the Expiration Date will be eligible for proration,
except for Odd Lots (as defined below), as explained below. The proration period
also expires on the Expiration Date.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE COMPANY'S HAVING
OBTAINED SUFFICIENT FINANCING TO FUND THE PURCHASE OF SHARES TENDERED IN THE
OFFER AND TO PAY ALL RELATED FEES AND EXPENSES.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED IN THE OFFER. THE OFFER IS, HOWEVER, SUBJECT TO OTHER CONDITIONS. SEE
SECTION 7, "CERTAIN CONDITIONS OF THE OFFER."
In accordance with Instruction 5 of the Letter of Transmittal, stockholders
desiring to tender Shares must specify the price or prices (not greater than
$8.00 nor less than $6.00 per Share) at which they are willing to sell their
Shares to the Company. As promptly as practicable following the Expiration Date,
the Company will, in its sole discretion, determine the Purchase Price that will
allow it to purchase 750,000 Shares (or such lesser number of Shares as are
validly tendered and not properly withdrawn) pursuant to the Offer. The Company
will pay the Purchase Price, even if such Shares were tendered below the
Purchase Price, for all Shares validly tendered prior to the Expiration Date at
or below the Purchase Price and not properly withdrawn, upon the terms and
subject to the conditions of the Offer, including the financing condition and
the proration and conditional tender provisions referred to herein. All Shares
tendered and not purchased pursuant to the Offer, including Shares tendered at
prices in excess of the Purchase Price and not properly withdrawn and Shares not
purchased because of proration or conditional tender, will be returned to the
tendering stockholders at the Company's expense as promptly as practicable
following the Expiration Date. The Company reserves the right, in its sole
discretion, to purchase more than 750,000 Shares pursuant to the Offer. See
Section 15, "Extension of Offer; Termination; Amendment."
Priority of Purchases. Upon the terms and subject to the conditions of the
Offer, if more than 750,000 Shares (or such greater number of Shares as the
Company may elect to purchase pursuant to the Offer) have been validly tendered
at prices at or below the Purchase Price and not properly withdrawn, the Company
will purchase Shares validly tendered and not properly withdrawn on the basis
set forth below:
(i) all Shares tendered and not withdrawn prior to the Expiration Date
by any Odd Lot Holder (as defined below) who:
(a) tenders all Shares beneficially owned by such Odd Lot Holder
at a price at or below the Purchase Price (tenders of fewer than all
Shares owned by such stockholder will not qualify for this
preference); and
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(b) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
(ii) after purchase of all of the foregoing Shares, all Shares
conditionally tendered in accordance with Section 6 for which the condition
was satisfied, and all Shares tendered unconditionally at prices at or
below the Purchase Price and not withdrawn prior to the Expiration Date, on
a pro rata basis (with appropriate adjustments to avoid purchases of
fractional Shares) as described below; and
(iii) if necessary, Shares conditionally tendered for which the
condition was not satisfied, at or below the Purchase Price and not
withdrawn prior to the Expiration Date, selected by random lot in
accordance with Section 6.
Odd Lots. For purposes of the Offer, the term "Odd Lots" shall mean all
Shares (not including 401(k) Plan Shares) validly tendered prior to the
Expiration Date at prices at or below the Purchase Price and not properly
withdrawn by any person who owned beneficially as of the close of business on
May 14, 1999, and continues to own beneficially as of the Expiration Date, an
aggregate of fewer than 100 Shares (not including 401(k) Plan Shares), and so
certified in the appropriate place on the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery (an "Odd Lot Holder"). As set
forth above, Odd Lots will be accepted for payment before proration, if any, of
the purchase of other tendered Shares. In order to qualify for this preference,
an Odd Lot Holder must tender all such Shares in accordance with the procedures
described in Section 3. This preference is not available to partial tenders or
to beneficial holders of an aggregate of 100 or more Shares (not including
401(k) Plan Shares), even if such holders have separate accounts or certificates
representing fewer than 100 Shares. This preference is also not available for
any 401(k) Plan Shares. By accepting the Offer, an Odd Lot Holder who has Shares
registered in his or her name and who tenders directly to the Depositary would
not only avoid the payment of brokerage commissions but also would avoid any
applicable odd lot discounts in a sale of such holder's Shares. Any Odd Lot
Holder wishing to tender all of such stockholder's Shares should complete the
box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery.
The Company also reserves the right, but will not be obligated, to purchase
all Shares validly tendered and not properly withdrawn by any stockholder who
tendered all Shares owned beneficially at or below the Purchase Price and who,
as a result of proration, would then own, beneficially an aggregate of fewer
than 100 Shares (not including 401(k) Plan Shares). If the Company exercises
this right, it will increase the number of Shares that it is offering to
purchase by the number of Shares purchased through the exercise of such right.
Proration. In the event that proration of tendered Shares is required, the
Company will determine the proration factor as soon as practicable following the
Expiration Date. Proration for each stockholder tendering Shares, other than Odd
Lot Holders, shall be based on the ratio of the number of Shares tendered by
such stockholder at or below the Purchase Price (and not withdrawn) to the total
number of Shares tendered by all stockholders, other than Odd Lot Holders, at or
below the Purchase Price (and not withdrawn), subject to the conditional tender
provisions in Section 6. Because of the difficulty in determining the number of
Shares validly tendered (including Shares tendered by guaranteed delivery
procedures, as described in Section 3) and not properly withdrawn, and because
of the odd lot procedure, the Company does not expect that it will be able to
announce the final proration factor or commence payment for any Shares purchased
pursuant to the Offer until approximately seven AMEX trading days after the
Expiration Date. The preliminary results of any proration will be announced by
press release as promptly as practicable after the Expiration Date. Stockholders
may obtain such preliminary information from the Dealer Manager and may be able
to obtain such information from their brokers.
The Letter of Transmittal affords each tendering stockholder the
opportunity to designate the order of priority in which Shares tendered are to
be purchased in the event of proration. This right of designation is not
available, however, with respect to 401(k) Plan Shares. The order of purchase
may have an effect on the United States federal income tax classification of any
gain or loss on the Shares purchased. In addition, the number of Shares that the
Company will purchase from a stockholder may affect the United States federal
income tax consequences to the stockholder of such purchase and therefore may be
relevant to a stockholder's decision whether to tender Shares and whether to
tender Shares on the condition that a specified minimum number, if any, is
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purchased. See Section 6, "Conditional Tender of Shares" and Section 14,
"Certain United States Federal Income Tax Consequences."
This Offer to Purchase and the related Letter of Transmittal was mailed on
May 17, 1999 to record holders of Shares as of May 14, 1999 and will be
furnished to brokers, banks and similar persons whose names, or the names of
whose nominees, appear on the Company's stockholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS DUE TO FACTORS BEYOND
THE CONTROL OF THE COMPANY, INCLUDING THE STRENGTH OF THE NATIONAL AND REGIONAL
ECONOMIES, CAPITAL SPENDING OF THE CABLE INDUSTRY, MARKET ACCEPTANCE OF THE
COMPANY'S NEW PRODUCT OFFERINGS, THE COMPANY'S ABILITY TO RESPOND TO RAPID
CHANGES IN TECHNOLOGIES, INDUSTRY STANDARDS AND CUSTOMER NEEDS, THE COMPANY'S
DEPENDENCE UPON THIRD PARTY SUPPLIERS, THE HEALTH OF VARIOUS SEGMENTS OF THE
MARKET THAT THE COMPANY SERVES, COMPETITIVE PRICING, PRODUCT COSTS AND THE
ABILITY TO ATTRACT AND RETAIN QUALIFIED PERSONNEL. FURTHER FACTORS THAT MIGHT
CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THE MATTERS DISCUSSED
BELOW AS WELL AS THE FACTORS DESCRIBED IN THE COMPANY'S FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION.
The Offer
The Offer provides stockholders who are considering a sale of all or a
portion of their Shares with the opportunity to determine the price or prices
(not greater than $8.00 nor less than $6.00 per Share) at which they are willing
to sell their Shares and, subject to the terms and conditions of the Offer, to
sell those Shares for cash without the usual transaction costs associated with
market sales. In addition, stockholders owning fewer than 100 Shares (not
including 401(k) Plan Shares) whose Shares are registered in their own name and
who tender directly to the Depositary and whose Shares are purchased pursuant to
the Offer not only will avoid the payment of brokerage commissions but also will
avoid any applicable odd lot discounts payable on a sale of their Shares. The
Offer also allows stockholders to sell a portion of their Shares while retaining
a continuing equity interest in the Company.
The Company's Board of Directors believes that the Offer is in the best
interests of the Company. The Offer affords to those stockholders who desire
liquidity an opportunity to sell all or a portion of their Shares without the
usual transaction costs associated with open market sales. The Company believes
that the Offer will be accretive to earnings per share (on both a basic and a
diluted basis) in the Company's fiscal year ending December 31, 1999, but there
can be no assurance to that effect. Stockholders who determine not to accept the
Offer will increase their proportionate interest in the Company's equity, and
thus in the Company's future earnings and assets, subject to the Company's right
to issue additional Shares and other equity securities in the future.
The market price of the Company's Common Stock has been negatively impacted
over the last several months. The Company believes this negative impact has been
caused in part by the Company's financial results failing to meet analysts'
estimates during this period. The Company continues to believe that its primary
business initiatives represent significant business opportunities for the
Company and will eventually translate into improved financial performance of the
Company. There are, however, many uncertainties associated with realizing such
improved results of operations and financial condition, and no assurances can be
given that the Company's efforts will succeed.
The Board of Directors has determined that the Company's financial
condition and outlook and current market conditions, including recent trading
prices of the Shares, make this an attractive time to repurchase a significant
portion of the outstanding Shares. In the view of the Board of Directors, the
Offer represents an attractive investment for the Company and use of the
Company's cash generation abilities that should benefit the
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Company and its stockholders over the long term. In deciding to approve the
Offer, the Board of Directors took into account the expected financial impact of
the Offer, including the increased interest expense and financial and operating
constraints associated with the financing required to fund the Offer. The
Company's credit ratings may decrease as a result of the Offer and the related
financing. The Company believes that its cash, short-term investments and access
to credit facilities following the completion of the Offer, together with its
anticipated cash flow from operations, are adequate for its needs in the
foreseeable future.
The magnitude of the purchase of Shares in the Offer is substantial. The
Board of Directors took into account that, if the Offer were fully subscribed
and the purchase of Shares were made at the maximum per Share price, the Offer
would have the effect of reducing the outstanding Shares by approximately 9% at
an aggregate cost of approximately $6.3 million (assuming a purchase price of
$8.00 per Share) and reducing the Company's stockholders' equity from $40.9
million at March 31, 1999 to $34.6 million, on a pro forma basis. This
expenditure by the Company will be financed as described in Section 2.
From time to time, the Company has had discussions with, and has been
approached by, third parties expressing varying degrees of interest in a
possible acquisition of, investment in or a combination with the Company. In
most cases these discussions were preliminary in nature and did not result in
any proposals being recommended for a vote by the Board of Directors. During the
last six months the Company has received two unsolicited, written proposals from
third parties to acquire the Company, in each case for a value per share greater
than the then current market price and the range offered pursuant to this Offer,
but significantly less than the Board's valuation of the Company at that time.
In each case such offers were rejected or dismissed as inadequate by the Board.
In reviewing the current Offer, the Board of Directors reviewed the Company's
strategic business plans and was made aware of such previous discussions and
proposals.
Shares that the Company acquires pursuant to the Offer will become
authorized Shares held in treasury and will be available for reissuance by the
Company without further stockholder action (except as may be required by
applicable law or the rules of any securities exchange on which the Shares are
listed). Subject to applicable state laws and AMEX rules, such Shares could be
issued without stockholder approval for, among other things, acquisitions, the
raising of additional capital for use in the Company's business, repayment in
shares of certain outstanding indebtedness, share dividends or in connection
with stock option plans and other plans, or a combination thereof.
The Company may in the future purchase additional Shares on the open
market, in private transactions, through tender offers or otherwise. Any such
purchases may be on the same terms as, or on terms that are more or less
favorable to stockholders than, the terms of the Offer. However, Rule 13e-4
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), generally prohibits the Company and its affiliates from purchasing any
Shares, other than pursuant to the Offer, until at least ten business days after
the expiration or termination of the Offer. Any possible future purchases by the
Company will depend on several factors including, without limitation, the
ability of the Company to make such purchases under its financing agreements in
effect at the time, the market price of the Shares, the results of the Offer,
the Company's business and financial position and general economic and market
conditions.
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The Financing
The amount required to fund the purchase of Shares tendered in the Offer
(assuming a purchase price of $8.00 per Share) and to pay related fees and
expenses of such transactions is estimated to be approximately $6.3 million. The
Company intends to finance the purchase of Shares tendered pursuant to the
Offer, and to pay related fees and expenses, principally with proceeds obtained
pursuant to an amended and restated version of its current Credit Agreement with
First Union National Bank (the "Restated Credit Agreement"). The Company's
current Credit Agreement expires on June 30, 1999. The Company expects to enter
into the Restated Credit Agreement immediately prior to the expiration of the
Offer. To the extent necessary or desirable, the Company may supplement the
proceeds obtained pursuant to the Restated Credit Agreement with cash on hand.
The Company anticipates that borrowings under the Restated Credit Agreement
would be repaid with internally generated funds and from other sources, which
may include the proceeds of future refinancings.
The Offer is conditioned upon the acquisition of financing sufficient to
fund the purchase of Shares tendered in the Offer and payment of all related
fees and expenses (collectively, the "Transaction Costs"). If the Restated
Credit Agreement has not been executed and proceeds obtained pursuant to such
Restated Credit Agreement are not available on or prior to the initial
Expiration Date, the Company intends to either (i) extend the Expiration Date
from time to time for a period not to extend beyond June 30, 1999 until the
Restated Credit Agreement has been executed and the other conditions to the
Offer have been satisfied or waived or (ii) negotiate for the right to obtain
the funds necessary to pay the Transaction Costs through a draw on the revolving
credit facility under the Company's existing Credit Agreement. Any such draw on
the existing Credit Agreement's revolving credit facility would be repaid and
replaced with a draw on the Restated Credit Agreement when such document is
finalized and executed.
Credit Agreement and Restated Credit Agreement. The following is a summary
of the principal terms of the Company's current Credit Agreement and the
proposed Restated Credit Agreement. This summary of the current Credit Agreement
is qualified in its entirety by reference to the copy of the Credit Agreement
which was filed as Exhibit (b)(1) to the Company's Issuer Tender Offer Statement
on Schedule 13E-4 (the "Schedule 13E-4") and is incorporated herein by
reference. It should be noted that the following summary of the Restated Credit
Agreement remains subject to further negotiations and revisions among the
Company, First Union National Bank and any other lender that becomes a party to
the Restated Credit Agreement. The final version of the Restated Credit
Agreement as executed by the parties thereto may differ materially from the
descriptions set forth below.
The Company's current Credit Agreement permits the Company to borrow up to
an aggregate principal amount of $15 million under a revolving credit facility.
Amounts borrowed under the revolving credit facility bear interest at the bank's
overnight base rate ("OBR") plus a margin ranging from 0.95% to 2.45%, depending
on the calculation of certain financial ratios (7.58% at March 31, 1999). As of
March 31, 1999, the Company had $1.1 million of indebtedness outstanding under
the revolving credit facility. The Credit Agreement also permits the Company to
borrow up to an aggregate principal amount of $20 million to finance
acquisitions in accordance with the terms of an acquisition loan commitment.
Amounts borrowed under the acquisition loan commitment bear interest at OBR plus
a margin ranging from 1.25% to 2.75%, depending upon the calculation of certain
financial ratios (7.88% at March 31, 1999). As of March 31, 1999, the Company
had $19 million of indebtedness outstanding under the acquisition loan
commitment. The Credit Agreement expires on June 30, 1999.
The Company anticipates that the Restated Credit Agreement it is currently
negotiating will provide for (i) a revolving credit facility of up to $15
million bearing interest at the London interbank offered rate ("LIBOR") plus a
margin ranging from 0.75% to 2.25%, depending upon the calculation of certain
financial ratios and (ii) an acquisition loan commitment of up to $20 million
bearing interest at LIBOR plus a margin ranging from 1.05% to 2.55%, depending
upon the calculation of certain financial ratios. The Company currently
anticipates that the Transaction Costs associated with the Offer will be funded
with a draw upon the revolving credit facility under the Restated Credit
Agreement. The Company may, however, negotiate for a term loan under the
Restated Credit Agreement on which interest only will be payable for a period of
twelve months, at which time the principal balance will become payable over the
remaining term, to be used to fund the Transaction Costs associated with the
Offer. When executed, the Restated Credit Agreement and new interest rates will
be effective as of February 1, 1999.
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The Credit Agreement is and the Restated Credit Agreement will be
collateralized by a security interest in all of the Company's assets. The Credit
Agreement contains and the Restated Credit Agreement will contain
representations and warranties, covenants (including financial covenants),
events of default and other provisions customary for such financing documents.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. NEITHER THE
COMPANY NOR ITS BOARD OF DIRECTORS, HOWEVER, MAKES ANY RECOMMENDATION TO
STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. SEE SECTION 11 FOR INFORMATION REGARDING THE INTENTIONS OF THE
COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS WITH RESPECT TO TENDERING SHARES
PURSUANT TO THE OFFER.
Except as disclosed in this Offer to Purchase, the Company currently has no
plans or proposals which relate to or would result in: (a) the acquisition by
any person of additional securities of the Company or the disposition of
securities of the Company; (b) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Company or any of its
subsidiaries; (c) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries; (d) any change in the present Board of
Directors or management of the Company; (e) any material change in the present
dividend rate or policy, or indebtedness or capitalization of the Company; (f)
any other material change in the Company's corporate structure or business; (g)
any change in the Company's charter or bylaws or other actions which may impede
the acquisition of control of the Company by any person; (h) a class of equity
security of the Company being delisted from a national securities exchange or
ceasing to be authorized for quotation in an inter-dealer quotation system of a
registered national securities association; (i) a class of equity security of
the Company becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Exchange Act; or (j) the suspension of the Company's
obligation to file reports pursuant to Section 15(d) of the Exchange Act. There
can be no assurance, however, that the Company will not develop any such plan or
receive any such proposal in the future.
3. PROCEDURES FOR TENDERING SHARES.
Proper Tender of Shares. For Shares to be validly tendered pursuant to the
Offer, (a) the certificates for such Shares (or confirmation of receipt of such
Shares pursuant to the procedures for book-entry transfer set forth below),
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) including any required signature guarantees
(or an Agent's Message (as defined below) in the case of a book-entry transfer)
and any other documents required by the Letter of Transmittal, must be received
prior to 5:00 p.m., New York City time, on the Expiration Date by the Depositary
at its address set forth on the back cover of this Offer to Purchase, or (b) the
tendering stockholder must comply with the guaranteed delivery procedure set
forth below.
In accordance with Instruction 5 of the Letter of Transmittal, stockholders
desiring to tender Shares pursuant to the Offer must either (a) check the box in
the section of the Letter of Transmittal captioned "Shares Tendered at Price
Determined by Dutch Auction" or (b) check one of the boxes in the section of the
Letter of Transmittal captioned "Shares Tendered at Price Determined by
Stockholder." A stockholder who desires to maximize the chance that his or her
Shares will be purchased at the relevant Purchase Price should check the box on
the Letter of Transmittal marked "Shares Tendered at Price Determined by Dutch
Auction." Note that this election could result in such stockholder's Shares
being purchased at the minimum price of $6.00 per Share. A stockholder who
wishes to indicate a specific price (in increments of $.125) at which his or her
Shares are being tendered must check a box under the section captioned "Shares
Tendered at Price Determined by Stockholder" in the Letter of Transmittal.
Stockholders who desire to tender Shares at more than one price must complete a
separate Letter of Transmittal for each price at which Shares are tendered,
provided that the same Shares cannot be tendered (unless properly withdrawn
previously in accordance with the terms of the Offer) at more than one price. In
order to validly tender Shares, one and only one price box must be checked in
the appropriate section on each Letter of Transmittal.
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In addition, Odd Lot Holders who tender all such Shares must complete the
box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery, in order to qualify for the preferential
treatment available to Odd Lot Holders as set forth in Section 1.
Stockholders may tender Shares subject to the condition that all or none of
such Shares be purchased, or that a specified minimum number of Shares be
purchased. Any stockholder desiring to make such a conditional tender should so
indicate in the box captioned "Conditional Tender" on the Letter of Transmittal
and, if applicable, on the Notice of Guaranteed Delivery. It is the tendering
stockholder's responsibility to determine the minimum number of Shares to be
purchased. Stockholders should consult their tax advisors with respect to the
effect of proration of the Offer and the advisability of making a conditional
tender. See Sections 6 and 14.
Signature Guarantees and Method of Delivery. No signature guarantee is
required if (a) the Letter of Transmittal is signed by the registered holder(s)
of the Shares (which term, for purposes of this Section 3, shall include any
participant in The Depository Trust Company (the "Book-Entry Transfer Facility")
whose name appears on a security position listing as the owner of the Shares)
tendered therewith and such holder(s) have not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal, or (b) Shares are tendered for the
account of a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of the Securities Transfer Agents
Medallion Program or a bank, broker, dealer, credit union, savings association
or other entity which is an "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended
(each such entity being hereinafter referred to as an "Eligible Institution").
See Instruction 1 of the Letter of Transmittal. In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. If a certificate for Shares is registered in the name of a person
other than the person executing a Letter of Transmittal, or if payment is to be
made, or Shares not purchased or tendered are to be issued, to a person other
than the registered holder, then the certificate must be endorsed or accompanied
by an appropriate stock power, in either case, signed exactly as the name of the
registered holder appears on the certificate or stock power and guaranteed by an
Eligible Institution.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of
certificates for such Shares (or a timely confirmation of a book-entry transfer
of such Shares into the Depositary's account at the Book-Entry Transfer Facility
as described above), a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION
AND RISK OF THE TENDERING STOCKHOLDER, IF DELIVERY IS BY MAIL, THEN REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares for purposes of the Offer at the Book-Entry Transfer Facility
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Shares by causing the
Book-Entry Transfer Facility to transfer Shares into the Depositary's account in
accordance with the Book-Entry Transfer Facility's procedures for transfer.
Although delivery of Shares may be effected through a book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility, either: (a) a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) with any required signature guarantees, or an Agent's Message
(as defined below), and any other required documents must, in any case, be
transmitted to and received by the Depositary prior to the Expiration Date at
its address set forth on the back cover of this Offer to Purchase, or (b) the
guaranteed delivery procedure described below must be followed. The confirmation
of a book-entry transfer of Shares into the Depositary's account at the
Book-Entry Transfer Facility as described above is referred to herein as
"confirmation of a book-entry transfer." DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
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The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
confirmation of a book-entry transfer which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Shares that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Company may enforce such agreement against the participant.
Guaranteed Delivery. Stockholders wishing to tender all or any part of
their Shares but whose Share certificates are not immediately available, who
cannot deliver their Shares and all other required documents to the Depositary
or who cannot complete the procedure for delivery by book-entry transfer prior
to the Expiration Date must tender their Shares pursuant to the guaranteed
delivery procedure set forth in this Section 3. Pursuant to the guaranteed
delivery procedure: (i) such tender must be made by or through an Eligible
Institution; (ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Company (with any required
signature guarantees) must be received by the Depositary prior to the Expiration
Date; and (iii) the certificates for all physically delivered Shares in proper
form for transfer by delivery, or a confirmation of a book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered electronically, in each case together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), or an Agent's
Message, and any other documents required by this Letter of Transmittal, must be
received by the Depositary within three AMEX trading days after the date the
Depositary receives such Notice of Guaranteed Delivery.
United States Federal Income Tax Backup Withholding. Under the United
States federal income tax backup withholding rules, unless an exemption applies
under the applicable law and regulations, 31% of the gross proceeds payable to a
stockholder or other payee pursuant to the Offer must be withheld and remitted
to the United States Treasury, unless the stockholder or other payee provides
its taxpayer identification number (employer identification number or social
security number) to the Depositary and certifies that such number is correct.
Therefore, each tendering stockholder must complete and sign the Substitute Form
W-9 included as part of the Letter of Transmittal so as to provide the
information and certification necessary to avoid backup withholding, unless such
stockholder otherwise establishes to the satisfaction of the Depositary that it
is not subject to backup withholding. Certain stockholders (including, among
others, all corporations and certain foreign stockholders) are not subject to
these backup withholding requirements. To prevent possible erroneous backup
withholding, an exempt holder must enter its correct taxpayer identification
number in Part 1 of Substitute Form W-9, write "Exempt" in Part 2 of such form,
and sign and date the form. See the Guidelines for Certification of Taxpayer
Identification Number of Substitute Form W-9 enclosed with Letter of Transmittal
for additional instructions. In order for a foreign stockholder to qualify as an
exempt recipient, a foreign stockholder must submit an Internal Revenue Service
("IRS") Form W-8 or a Substitute Form W-8, signed under penalties of perjury,
attesting to that stockholder's exempt status. Such statements may be obtained
from the Depositary. See Instruction 11 of the Letter of Transmittal.
Stockholders are urged to consult their own tax advisors regarding the
application of United States federal income tax withholding.
TO PREVENT UNITED STATES FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31%
OF THE GROSS PAYMENTS MADE TO STOCKHOLDERS FOR SHARES PURCHASED PURSUANT TO THE
OFFER, EACH STOCKHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH
WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH THE STOCKHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY COMPLETING THE
SUBSTITUTE FORM W-9 INCLUDED WITH THE LETTER OF TRANSMITTAL.
For a discussion of certain United States federal income tax consequences
to tendering stockholders, see Section 14, "Certain United States Federal Income
Tax Consequences."
Withholding For Foreign Stockholders. Even if a foreign stockholder has
provided the required certification to avoid backup withholding, the Depositary
will withhold United States federal income taxes equal to 30% of the gross
payments payable to a foreign stockholder or its agent unless (a) the Depositary
determines that a reduced rate of withholding is available pursuant to a tax
treaty or that an exemption from withholding is applicable because such gross
proceeds are effectively connected with the conduct of a trade or business
within the United States or (b) the foreign stockholder establishes to the
satisfaction of the Company and the Depositary that the sale
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of Shares by such foreign stockholder pursuant to the Offer will qualify as a
"sale or exchange," rather than as a distribution taxable as a dividend, for
United States federal income tax purposes (see Section 14, "Certain United
States Federal Income Tax Consequences"). For this purpose, a foreign
stockholder is any stockholder that is not: (i) a citizen or resident of the
United States; (ii) a corporation, partnership, or other entity created or
organized in or under the laws of the United States, any State or any political
subdivision thereof; (iii) an estate the income of which is subject to United
States federal income taxation regardless of the source of such income; or (iv)
a trust the administration of which a court within the United States is able to
exercise primary supervision and all substantial decisions of which one or more
United States persons have the authority to control. In order to obtain a
reduced rate of withholding pursuant to a tax treaty, a foreign stockholder must
deliver to the Depositary before the payment a properly completed and executed
IRS Form 1001. In order to obtain an exemption from withholding on the grounds
that the gross proceeds paid pursuant to the Offer are effectively connected
with the conduct of a trade or business within the United States, a foreign
stockholder must deliver to the Depositary a properly completed and executed IRS
Form 4224. The Depositary will determine a stockholder's status as a foreign
stockholder and eligibility for a reduced rate of, or exemption from,
withholding by reference to any outstanding certificates or statements
concerning eligibility for a reduced rate of, or exemption from, withholding
(e.g., IRS Form 1001 or IRS Form 4224) unless facts and circumstances indicate
that such reliance is not warranted. A foreign stockholder may be eligible to
obtain a refund of all or a portion of any tax withheld if such stockholder
meets the "complete redemption," "substantially disproportionate" or "not
essentially equivalent to a dividend" test described in Section 14 or is
otherwise able to establish that no tax or a reduced amount of tax is due. Each
foreign stockholder is urged to consult its tax advisor regarding the
application of United States federal income tax withholding, including
eligibility for a withholding tax reduction or exemption, and the refund
procedure. See Instruction 12 of the Letter of Transmittal.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the price to be paid for Shares to be accepted and the validity,
form, eligibility (including time of receipt) and acceptance of any tender of
Shares will be determined by the Company, in its sole discretion, and its
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders of any Shares that it determines
are not in appropriate form or the acceptance for payment of or payments for
which may be unlawful. The Company also reserves the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in any tender with
respect to any particular Shares or any particular stockholder. No tender of
Shares will be deemed to have been properly made until all defects or
irregularities have been cured by the tendering stockholder or waived by the
Company. None of the Company, the Dealer Manager, the Depositary or any other
person shall be obligated to give notice of any defects or irregularities in
tenders, nor shall any of them incur any liability for failure to give any such
notice.
Tendering Stockholder's Representation and Warranty; Company's Acceptance
Constitutes an Agreement. A tender of Shares pursuant to any of the procedures
described above will constitute the tendering stockholder's acceptance of the
terms and conditions of the Offer, as well as the tendering stockholder's
representation and warranty to the Company that (a) such stockholder has a net
long position in the Shares being tendered within the meaning of Rule 14e-4
promulgated by the Commission under the Exchange Act, and (b) the tender of such
Shares complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person,
directly or indirectly, to tender Shares for such person's own account unless,
at the time of tender and at the end of the proration period or period during
which Shares are accepted by lot (including any extensions thereof), the person
so tendering (i) has a net long position equal to or greater than the amount of
(x) Shares tendered or (y) other securities convertible into or exchangeable or
exercisable for the Shares tendered and will acquire such Shares for tender by
conversion, exchange or exercise, and (ii) will deliver or cause to be delivered
such Shares in accordance with the terms of the Offer. Rule 14e-4 provides a
similar restriction applicable to the tender or guarantee of a tender on behalf
of another person. The Company's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the tendering
stockholder and the Company upon the terms and conditions of the Offer.
CERTIFICATES FOR SHARES, TOGETHER WITH A PROPERLY COMPLETED LETTER OF
TRANSMITTAL AND ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL, MUST
BE DELIVERED TO THE DEPOSITARY AND NOT TO THE COMPANY OR THE DEALER MANAGER. ANY
SUCH DOCUMENTS DELIVERED TO THE COMPANY OR THE DEALER
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MANAGER WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT BE DEEMED
TO BE VALIDLY TENDERED.
Special Instructions for Shares Held Pursuant to the Company's 401(k) and
Stock Option Plans
401(k) Plan. Participants in the Company's 401(k) plan desiring to direct
Union Bank & Trust, the trustee for the 401(k) plan, or its authorized
representative (collectively, the "Trustee"), to tender any Shares credited to
their accounts under such plan pursuant to the Offer must instruct the Trustee
to tender such Shares by properly completing, duly executing and returning to
the Trustee the Direction Form sent to such participants by the Trustee as
explained in the materials included therewith. The Trustee will aggregate all
such tenders and execute one Letter of Transmittal on behalf of all 401(k) plan
participants desiring to tender Shares credited pursuant to such plan. Delivery
of a Letter of Transmittal by a participant in the Company's 401(k) plan with
respect to any Shares credited pursuant to such plan does not constitute proper
tender of such Shares. Proper tender of any Shares credited pursuant to the
Company's 401(k) plan can only be made by the Trustee, as record owner of such
Shares. The deadline for submitting Direction Forms to the Trustee is set by the
Trustee and is earlier than the Expiration Date. If a stockholder desires to
tender non-401(k) Plan Shares as well as 401(k) Plan Shares, such stockholder
must properly complete and duly execute a Letter of Transmittal for the
non-401(k) Plan Shares and deliver such Letter of Transmittal directly to the
Depositary, as well as following the special instructions provided by the
Trustee for directing the Trustee to tender 401(k) Plan Shares. Any questions
regarding tender of 401(k) Plan Shares should be directed to the Trustee at the
number provided in the separate materials mailed by the Trustee to plan
participants.
Stock Options. The Company is not offering, as part of the Offer, to
purchase any options outstanding under any of the Company's stock option plans
and tenders of options will not be accepted. Holders of options who wish to
participate in the Offer must exercise their options by paying the applicable
exercise price and withholding taxes and then tender the Shares issued upon such
exercise in the Offer, provided that any exercise of an option and tender of
Shares is in accordance with the terms of the applicable stock option plan and
option agreement. In no event are any options to be delivered to the Depositary
in connection with a tender of Shares hereunder. An exercise of an option cannot
be revoked even if Shares received upon the exercise thereof and tendered in the
Offer are not accepted for purchase in the Offer for any reason.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless previously
accepted for payment by the Company pursuant to the Offer, may also be withdrawn
at any time after 5:00 p.m., New York City time, on July 13, 1999.
For a withdrawal to be effective, a notice of withdrawal must be in
written, telegraphic or facsimile transmission form and must be received in a
timely manner by the Depositary at its address set forth on the back cover of
this Offer to Purchase. Any such notice of withdrawal must specify the name of
the tendering stockholder, the name of the registered holder (if different from
that of the person who tendered such Shares), the number of Shares tendered and
the number of Shares to be withdrawn. If the certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the release of such certificates, the tendering stockholder must also
submit the serial numbers shown on the particular certificates for Shares to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution (except in the case of Shares tendered by an Eligible
Institution). If Shares have been tendered pursuant to the procedure for
book-entry transfer set forth in Section 3, the notice of withdrawal also must
specify the name and the number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with the
procedures of such facility. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Company, in its sole discretion, which determination shall be final and binding.
None of the Company, the Dealer Manager, the Depositary or any other person
shall be obligated to give notice of any defects or irregularities in any notice
of withdrawal nor shall any of them incur liability for failure to give any such
notice.
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<PAGE>
Withdrawals may not be rescinded and any Shares withdrawn will thereafter
be deemed not tendered for purposes of the Offer unless such withdrawn Shares
are validly re-tendered prior to the Expiration Date by again following one of
the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or
is unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain tendered Shares on behalf of the Company, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, as promptly as
practicable following the Expiration Date, the Company will: (i) determine the
lowest single Purchase Price that will allow it to purchase 750,000 Shares (or
such lesser number of Shares as are validly tendered and not properly withdrawn
prior to the Expiration Date), taking into account the number of Shares so
tendered and the prices specified by tendering stockholders; and (ii) accept for
payment and pay for (and thereby purchase) Shares validly tendered at prices at
or below the Purchase Price and not properly withdrawn prior to the Expiration
Date. For purposes of the Offer, the Company will be deemed to have accepted for
payment (and therefore purchased) Shares that are validly tendered at or below
the Purchase Price and not properly withdrawn (subject to the proration and
conditional tender provisions of the Offer) only when, as and if it gives oral
or written notice to the Depositary of its acceptance of such Shares for payment
pursuant to the Offer. In accordance with applicable regulations of the
Commission, the Company may purchase pursuant to the Offer an additional amount
of Shares not to exceed 2% of the outstanding Shares without amending or
extending the Offer. If (i) the Company increases or decreases the price to be
paid for the Shares, the Company increases the number of Shares being sought and
such increase in the number of Shares being sought exceeds 2% of the outstanding
Shares, or the Company decreases the number of Shares being sought; and (ii) the
Offering is scheduled to expire at any time earlier than the expiration of a
period ending on the tenth business day from, and including, the date that
notice of such increase or decrease is first published, sent or given in the
manner specified in Section 15, the Offer will be extended until the expiration
of such period of ten business days.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase and pay a single per Share Purchase Price for all of the Shares
accepted for payment pursuant to the Offer as soon as practicable after the
Expiration Date. In all cases, payment for Shares validly tendered and accepted
for payment pursuant to the Offer will be made promptly (subject to possible
delay in the event of proration) but only after timely receipt by the Depositary
of certificates for Shares (or of a timely confirmation of a book-entry transfer
of such Shares into the Depositary's account at the Book-Entry Transfer
Facility), a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof), or an Agent's Message, and any other
required documents.
The Company will pay for Shares purchased pursuant to the Offer by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering stockholders.
In the event of proration, the Company will determine the proration factor
and pay for those tendered Shares accepted for payment as soon as practicable
after the Expiration Date; however, the Company does not expect to be able to
announce the final results of any proration and commence payment for Shares
purchased until approximately seven AMEX trading days after the Expiration Date.
Certificates for all Shares tendered and not purchased, including all Shares
tendered at prices in excess of the Purchase Price and Shares not purchased due
to proration or conditional tender, will be returned (or, in the case of Shares
tendered by book-entry transfer, such Shares will be credited to the account
maintained with the Book-Entry Transfer Facility by the participant therein who
so delivered such Shares) to the tendering stockholder as promptly as
practicable after the Expiration Date without expense to the tendering
stockholders. Under no circumstances will interest on the Purchase Price be paid
by the Company by reason of any delay in making payment. In addition, if certain
events occur, the Company may not be obligated to purchase Shares pursuant to
the Offer. See Section 7, "Certain Conditions of the Offer."
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The Company will pay or cause to be paid all stock transfer taxes, if any,
payable on the transfer to it of Shares purchased pursuant to the Offer. If,
however, payment of the Purchase Price is to be made to, or (in the
circumstances permitted by the Offer) if unpurchased Shares are to be registered
in the name of, any person other than the registered holder(s), or if tendered
certificates are registered in the name of any person other than the person(s)
signing the Letter of Transmittal, the amount of all stock transfer taxes, if
any (whether imposed on the registered holder(s) or such other person or
otherwise), payable on account of the transfer to such person will be deducted
from the Purchase Price unless satisfactory evidence of the payment of the stock
transfer taxes, or exemption therefrom, is submitted. See Instruction 7 of the
Letter of Transmittal.
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN
AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED UNITED STATES FEDERAL INCOME TAX BACKUP
WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAID TO SUCH STOCKHOLDER OR OTHER PAYEE
PURSUANT TO THE OFFER. SEE SECTION 3, "PROCEDURES FOR TENDERING SHARES" AND
SECTION 14, "CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES" REGARDING
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES FOR FOREIGN STOCKHOLDERS.
6. CONDITIONAL TENDER OF SHARES.
Under certain circumstances set forth in Section 1, the Company may prorate
the number of Shares purchased pursuant to the Offer. As discussed in Section
14, the number of Shares to be purchased from a particular stockholder might
affect the tax consequences to such stockholder of such purchase and such
stockholder's decision whether to tender. Accordingly, a stockholder may tender
Shares subject to the condition that a specified minimum number, if any, must be
purchased, and any stockholder wishing to make such a conditional tender should
so indicate in the box captioned "Conditional Tender" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery. IT IS THE
TENDERING STOCKHOLDER'S RESPONSIBILITY TO CALCULATE SUCH MINIMUM NUMBER OF
SHARES AND EACH STOCKHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR. If
the effect of accepting tenders on a pro rata basis is to reduce the number of
Shares to be purchased from any stockholder below the minimum number so
specified, such tender will automatically be deemed withdrawn, except as
provided in the next paragraph, and Shares tendered by such stockholder will be
returned as soon as practicable after the Expiration Date.
If so many conditional tenders would be deemed withdrawn that the total
number of Shares to be purchased falls below 750,000 Shares, then, to the extent
feasible, the Company will select enough of such conditional tenders, which
would otherwise have been deemed withdrawn, to purchase such desired number of
Shares. In selecting among such conditional tenders, the Company will select by
random lot and will limit its purchase in each case to the designated minimum
number of Shares to be purchased. Conditional tenders will be selected by lot
only from stockholders who tender all of their Shares.
IN THE EVENT OF PRORATION, ANY SHARES TENDERED PURSUANT TO A CONDITIONAL
TENDER FOR WHICH THE MINIMUM REQUIREMENTS ARE NOT SATISFIED MAY NOT BE ACCEPTED
AND WILL THEREBY BE DEEMED WITHDRAWN.
7. CERTAIN CONDITIONS OF THE OFFER.
The Offer is conditioned upon the acquisition of financing sufficient to
fund the purchase of Shares tendered in the Offer and payment of all related
fees and expenses. The Offer is conditioned upon the execution of and
acquisition of loan proceeds under the Restated Credit Agreement. See Section 2,
"Purpose of the Offer; Certain Effects of the Offer." In addition,
notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment, purchase or pay for any Shares tendered, and may
terminate or amend the Offer or may postpone the acceptance for payment of, or
the purchase of and the payment for Shares tendered, subject to Rule 13e-4(f)
under the Exchange Act, if at any time on or after May 17, 1999 and prior to the
time of payment for any such Shares (whether any Shares have theretofore been
accepted for payment, purchased or paid for pursuant to the Offer) any of the
following events shall have occurred (or shall have been determined by the
Company to have
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occurred) that, in the Company's judgment (regardless of the circumstances
giving rise thereto, including any action or omission to act by the Company),
makes it inadvisable to proceed with the Offer or with such acceptance for
payment or payment:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, before any court, authority, agency or tribunal that directly
or indirectly: (i) challenges the making of the Offer, the acquisition of
some or all of the Shares pursuant to the Offer or otherwise relates in any
manner to the Offer; or (ii) in the Company's sole judgment, could
materially adversely affect the business, condition (financial or other),
income, operations or prospects of the Company and its subsidiaries, or
otherwise materially impair in any way the contemplated future conduct of
the business of the Company or any of its subsidiaries or materially impair
the contemplated benefits of the Offer to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any court or any authority, agency or tribunal
that, in the Company's sole judgment, would or might directly or
indirectly: (i) make the acceptance for payment of, or payment for, some or
all of the Shares illegal or otherwise restrict or prohibit consummation of
the Offer or otherwise relates in any manner to the Offer; (ii) delay or
restrict the ability of the Company, or render the Company unable, to
accept for payment or pay for some or all of the Shares; (iii) materially
impair the contemplated benefits of the Offer to the Company; or (iv)
materially adversely affect the business, condition (financial or other),
income, operations or prospects of the Company and its subsidiaries, taken
as a whole, or otherwise materially impair in any way the contemplated
future conduct of the business of the Company or any of its subsidiaries;
(c) there shall have occurred: (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market; (ii) the declaration of any
banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory); (iii) the commencement of a war,
armed hostilities or other international or national crisis directly or
indirectly involving the United States; (iv) any limitation (whether or not
mandatory) by any governmental, regulatory or administrative agency or
authority on, or any event that, in the Company's sole judgment, might
affect, the extension of credit by banks or other lending institutions in
the United States; (v) any significant decrease in the market price of the
Shares or in the market prices of equity securities generally or any change
in the general political, market, economic or financial conditions in the
United States or abroad that could, in the sole judgment of the Company,
have a material adverse effect on the business, condition (financial or
otherwise), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or on the trading in the Shares or on the
proposed financing for the Offer; (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or (vii) any decline in either the Dow
Jones Electrical Components & Equipment Industry Group index or the AMEX
Market Value index by an amount in excess of 10% measured from the close of
business on May 14, 1999;
(d) a tender or exchange offer with respect to some or all of the
Shares (other than the Offer), or a merger or acquisition proposal for the
Company, shall have been proposed, announced or made by another person or
shall have been publicly disclosed, or any person or group shall have filed
a Notification and Report Form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 reflecting an intent to acquire the Company or any
of the Shares, or the Company shall have learned that any person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) shall have
acquired or proposed to acquire beneficial ownership of more than 5% of the
outstanding Shares, or any new group shall have been formed that
beneficially owns more than 5% of the outstanding Shares;
(e) any change or changes shall have occurred, be pending or
threatened or be proposed, which have affected or could affect the
business, scope, condition (financial or otherwise), assets, income,
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level of indebtedness, operations, prospects, stock ownership or capital
structure of the Company or its subsidiaries which, in the Company's sole
judgment, is or may be material to the Company or its subsidiaries; or
(f) the Offer would, if consummated, result in the delisting of the
Shares from AMEX.
The foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances (including any
action or inaction by the Company) giving rise to any such condition, and may be
waived by the Company, in whole or in part, at any time and from time to time in
its sole discretion. The Company's failure at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Company concerning the events
described above will be final and binding on all parties.
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8. PRICE RANGE OF SHARES.
The Shares are listed and traded on AMEX. The following table sets forth,
for the periods indicated, the high and low closing per Share sales prices as
reported on AMEX:
High Low
-------- ---------
FISCAL 1997:
1st Quarter ...................................... $ 9 1/2 $ 6 3/8
2nd Quarter ...................................... 9 6 1/8
3rd Quarter ...................................... 17 1/2 7 11/16
4th Quarter ...................................... 18 7/16 12 5/8
FISCAL 1998:
1st Quarter ...................................... 16 1/8 12 3/8
2nd Quarter....................................... 14 1/4 9 3/8
3rd Quarter ...................................... 11 3/4 5 3/8
4th Quarter....................................... 9 1/4 5 1/4
FISCAL 1999:
1st Quarter....................................... 7 7/8 5
2nd Quarter (through May 14, 1999)................ 6 1/2 5 1/8
On May 14, 1999, the last full trading day on the AMEX prior to the
commencement of the Offer, the closing per Share sales price as reported on AMEX
was $6.00. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES.
9. SOURCE AND AMOUNT OF FUNDS.
Assuming that the Company purchases 750,000 Shares pursuant to the Offer at
a purchase price of $8.00 per Share, the Company expects the maximum amount
required to finance the Offer and the payment of related fees and expenses will
be approximately $6.3 million. The Company expects to finance such transactions
as described in Section 2. The Offer is conditioned upon, among other things,
the acquisition of financing sufficient to fund the purchase of Shares tendered
in the Offer and payment of all related fees and expenses.
10. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a designer, manufacturer and supplier of a comprehensive
line of electronics and systems equipment for both the non-franchised and
franchised cable television industry. The Company's products are used in the
acquisition, conversion, distribution and protection of television signals
transmitted via satellite, coaxial cable, terrestrial broadcast, terrestrial
multi-channel, multi-point distribution systems and low power television.
The Company was incorporated in November 1988 under the laws of the State
of Delaware as GPS Acquisition Corp. for the purpose of acquiring the business
of Blonder-Tongue Laboratories, Inc., a New Jersey corporation founded in 1950
by Ben H. Tongue and Isaac S. Blonder. Its executive offices are located at One
Jake Brown Road, Old Bridge, New Jersey 08857, telephone (732) 679-4000.
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Summary Historical Consolidated Financial Information
Set forth below is certain summary historical consolidated financial
information of the Company and its subsidiaries. The historical financial
information has been derived from the consolidated financial statements included
in the Company's Annual Report on Form 10-K for the year ended December 31, 1998
and from the unaudited consolidated financial statements included in the
Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1999, which has been prepared on a basis substantially consistent with the
audited financial statements, and reflect, in the opinion of management, all
adjustments necessary to a fair presentation of the financial position and
results of operations for such periods. The results for the three months ended
March 31, 1999 are not necessarily indicative of the results for the full year.
The information presented below should be read in conjunction with the Company's
consolidated financial statements and notes thereto. More comprehensive
financial information is included in such financial statements, and the
financial information which follows is qualified in its entirety by reference to
such financial statements, related notes and the audit report contained therein,
copies of which may be obtained as set forth below under the caption "--
Additional Information."
<TABLE>
<CAPTION>
Three Months Ended Fiscal Year Ended
--------------------------- -----------------------------
March 31, March 31, December 31, December 31,
1999 1998 1998 1997
--------- --------- ------------ ------------
(in thousands except share and per share data)
<S> <C> <C> <C> <C>
Consolidated Statement of Earnings Data
Net sales $13,756 $15,119 $70,792 $62,057
Net earnings 443 1,005 7,113 6,414
Basic earnings per share 0.05 0.12 0.86 0.78
Diluted earnings per share 0.05 0.12 0.84 0.77
Ratio of earnings to fixed charges(1) 2.6 14.5 7.9 26.8
Balance Sheet Data
Cash and cash equivalents $1,253 $410 $542 $555
Total assets 69,308 65,025 69,651 42,272
Working capital 17,732 12,526 17,049 26,055
Total debt 23,388 23,400 22,359 5,054
Stockholders' equity 40,939 35,011 40,496 31,795
Book value per share(2) $4.94 $4.21 $4.89 $3.86
</TABLE>
- ----------
(1) Computed by dividing earnings by fixed charges. "Earnings" consist of
earnings before income taxes and interest. "Fixed charges" consist of
interest costs (including capitalized interest costs).
(2) Book value per share is calculated as total stockholders' equity divided by
the number of Shares outstanding at the end of the period.
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Summary Unaudited Consolidated Pro Forma Financial Information
The following summary unaudited consolidated pro forma financial
information gives effect to the purchase of Shares pursuant to the Offer, the
Financing and the payment of related fees and expenses, based on the assumptions
described in the footnotes below, as if such transactions had occurred on the
first day of each of the periods presented, with respect to statement of
earnings data, and on December 31, 1998 and March 31, 1999, with respect to
balance sheet data. The summary unaudited consolidated pro forma financial
information should be read in conjunction with the Summary Historical
Consolidated Financial Information set forth above and does not purport to be
indicative of the results that would actually have been obtained, or results
that may be obtained in the future, or the financial condition that would have
resulted, if the purchase of the Shares pursuant to the Offer, the Financing and
the payment of related fees and expenses had been completed at the dates
indicated.
<TABLE>
<CAPTION>
Three Months Ended Fiscal Year Ended
March 31, 1999 December 31, 1998
------------------------------------- ---------------------------------------
Pro Forma(1)(2) Pro Forma(1)(2)
------------------------ ------------------------
$6.00 $8.00 $6.00 $8.00
Historical Per Share Per Share Historical Per Share Per Share
---------- --------- --------- ---------- --------- ---------
(in thousands except share and per share data)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statement of
Earnings Data
Net sales $13,756 $13,756 $13,756 $70,792 $70,792 $70,792
Net earnings 443 391 374 7,113 6,882 6,808
Basic earnings per share 0.05 0.05 0.05 0.86 0.91 0.90
Diluted earnings per share 0.05 0.05 0.05 0.84 0.89 0.88
Ratio of earnings to fixed 2.6 2.0 1.9 7.9 6.5 6.1
charges(3)
Balance Sheet Data
Cash and cash equivalents $ 1,253 $ 1,253 $ 1,253 $ 542 $ 542 $ 542
Total assets 69,308 69,308 69,308 69,651 69,651 69,651
Working capital 17,732 12,977 11,447 17,049 12,294 10,764
Total debt 23,388 28,143 29,673 22,359 27,114 28,644
Stockholders' equity 40,939 36,184 34,654 40,496 35,741 34,211
Book value per share(4) $ 4.94 $ 4.80 $ 4.60 $ 4.89 $ 4.74 $ 4.54
</TABLE>
- ----------
(1) The pro forma information assumes 750,000 Shares to be purchased at $6.00
per Share and $8.00 per Share. For the three months ended March 31, 1999,
the purchase is assumed to be financed through borrowings under the
Restated Credit Agreement. For the fiscal year ended December 31, 1998, the
purchase is assumed to be financed through borrowings under the Credit
Agreement. Interest per annum under the Credit Agreement and Restated
Credit Agreement is assumed to be 7.21% and 7.95%, respectively. Assuming
the purchase of 750,000 Shares at $8.00 per Share, each 1/4% increase or
decrease in the cost of financing would impact net earnings by $3,000 and
$11,000, respectively, for the three months ended March 31, 1999 and the
fiscal year ended December 31, 1998. The impact on basic and diluted
earnings per share was less than $.01.
(2) The pro forma information assumes expenses directly related to the Offer
and related financing expenses of approximately $0.3 million and $0.5
million in the aggregate for the three months ended March 31, 1999 and the
fiscal year ended December 31, 1998, respectively.
(3) Computed by dividing earnings by fixed charges. "Earnings" consist of
earnings before income taxes and interest. "Fixed charges" consist of
interest costs (including capitalized interest costs).
(4) Book value per Share is calculated as total stockholders' equity divided by
the number of Shares outstanding at the end of the period.
Additional Information
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is obligated to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material
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interest of such persons in transactions with the Company is required to be
disclosed in proxy statements distributed to the Company's stockholders and
filed with the Commission. Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 2120, Washington, D.C. 20549, and at
its regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and 7 World Trade Center, New York, New York 10048. Copies
of such material may also be obtained by mail, upon payment of the Commission's
customary charges, from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
also maintains a web site on the World Wide Web at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
11. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND
ARRANGEMENTS CONCERNING SHARES.
As of May 14, 1999, the Company had issued and outstanding 8,290,803 Shares
and had reserved for issuance upon exercise of outstanding stock options and
warrants 952,841 Shares. The 750,000 Shares that the Company is offering to
purchase represent approximately 9% of the Shares then issued and outstanding.
As of May 14, 1999, the Company's directors and executive officers as a group
(11 persons) beneficially owned an aggregate of 5,472,625 Shares representing
approximately 65% of the issued and outstanding Shares, assuming the exercise of
options exercisable within 60 days. If the Company purchases 750,000 Shares
pursuant to the Offer, and no director or executive officer tenders Shares
pursuant to the Offer, the Company's executive officers and directors as a group
would own beneficially approximately 71.1% of the issued and outstanding Shares
immediately after the Offer, assuming exercise of options exercisable within 60
days.
The Company's directors and executive officers are permitted to tender
their Shares to the Company pursuant to the Offer, which Shares will be accepted
and purchased on the same terms as all Shares accepted and purchased from
stockholders pursuant to the Offer. The Company has been advised that eight
directors and executive officers will not be tendering and that the following
three directors and executive officers intend to tender an aggregate of 350,000
Shares or approximately 6.4% of the total Shares beneficially owned by directors
and executive officers as a group in the following amounts (and approximate
percentages of each individual's holdings): James A. Luksch, Chairman,
President, Chief Executive Officer and Director, 75,000 Shares (3.8%); Robert J.
Palle, Jr., Executive Vice President, Chief Operating Officer and Director,
75,000 Shares (6%); and James H. Williams, Director, 200,000 Shares (9.7%). None
of the foregoing persons has indicated at what price he intends to tender
Shares. Other than as set forth in this paragraph, the Company has been advised
that no other director or executive officer of the Company intends to tender
Shares in the Offer.
Neither the Company, nor any subsidiary of the Company nor, to the best of
the Company's knowledge, any of the Company's directors or executive officers,
nor any affiliate of any of the foregoing, had any transactions involving the
Shares during the 40 business days prior to the date hereof, except that Mr.
Luksch made a gift of 5,000 of his Shares to a charitable organization during
March, 1999.
Except for: (i) outstanding options to purchase Shares granted from time to
time to certain employees (including directors and executive officers) of the
Company pursuant to the Company's stock option plans, (ii) an option granted by
James H. Williams to James F. Williams to purchase 57,173 Shares of James H.
Williams' Shares in the Company and (iii) as otherwise described herein, neither
the Company nor, to the best of the Company's knowledge, any of its affiliates,
directors or executive officers, is a party to any contract, arrangement,
understanding or relationship with any other person relating, directly or
indirectly, to the Offer with respect to any securities of the Company
including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any such securities, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies, consents or
authorizations.
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise be traded publicly and may reduce the
number of stockholders and/or the number of Shares held by
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persons or entities who are not directors, executive officers or other
affiliates of the Company. However, there will be a sufficient number of Shares
outstanding and publicly traded following consummation of the Offer to ensure a
continued trading market for the Shares and the continued listing of the
Company's securities on AMEX.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using such Shares as collateral. The Company
believes that, following the purchase of Shares pursuant to the Offer, Shares
will continue to be "margin securities" for purposes of the Federal Reserve
Board's margin regulations.
Shares the Company acquires pursuant to the Offer will be retained as
treasury stock by the Company (unless and until the Company determines to retire
such Shares) and will be available for the Company to issue without further
stockholder action (except as required by applicable law or, if retired, the
rules of any securities exchange on which Shares are listed). Subject to
applicable state laws and AMEX rules, such Shares could be issued without
stockholder approval for, among other things, acquisitions, the raising of
additional capital for use in the Company's business, repayment in shares of
certain outstanding indebtedness, share dividends or in connection with stock
option plans and other plans, or a combination thereof. The Company has no
current plans for issuance of the Shares repurchased pursuant to the Offer.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its stockholders
and the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's stockholders. Based upon the current number of
record owners of the Company's Common Stock, the Shares are currently, and will
continue to be following the purchase of Shares in the Offer, eligible for
deregistration under the Exchange Act. Notwithstanding such eligibility for
deregistration, however, the Company intends to maintain the registration of the
Shares under the Exchange Act, and to take all other actions necessary to ensure
the continued listing of the Shares on AMEX, following the purchase of Shares in
the Offer.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company is not aware of any license or regulatory permit that appears
to be material to the Company's business that might be adversely affected by the
Company's acquisition of Shares as contemplated herein or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Company as contemplated herein. Should
any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought. The Company is
unable to predict whether it may determine that it is required to delay the
acceptance for payment of or payment for Shares tendered pursuant to the
Offering pending the outcome of any such matter. There can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that the failure to obtain any such
approval or other action might not result in adverse consequences to the
Company's business. The Company's obligations under the Offer to accept for
payment and pay for Shares is subject to certain conditions. See Section 7,
"Certain Conditions of the Offer."
14. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following summary describes certain United States federal income tax
consequences relevant to the Offer. The discussion contained in this summary is
based upon the Internal Revenue Code of 1986, as amended (the "Code"), existing
and proposed United States Treasury regulations promulgated thereunder,
administrative pronouncements and judicial decisions, changes to which could
materially affect the tax consequences described herein and could be made on a
retroactive basis.
This summary discusses only Shares held as capital assets, within the
meaning of Section 1221 of the Code, and does not address all of the tax
consequences that may be relevant to particular stockholders in light of their
personal circumstances, or to certain types of stockholders (such as certain
financial institutions, dealers in securities or commodities, insurance
companies, tax-exempt organizations or persons who hold Shares as a position in
a "straddle" or as part of a "hedging" or "conversion" or "constructive sale"
transaction for United States federal
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<PAGE>
income tax purposes). In particular, the discussion of the consequences of an
exchange of Shares for cash pursuant to the Offer applies only to a United
States stockholder (herein, a "Holder"). For purposes of this summary, a "United
States stockholder" is a beneficial owner of the Shares who is (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States, any State or any
political subdivision thereof, (iii) an estate the income of which is subject to
United States federal income taxation regardless of source, or (iv) a trust the
administration of which a court within the United States is able to exercise
primary supervision and all substantial decisions of which one or more United
States persons have the authority to control. This discussion does not address
the tax consequences to foreign stockholders who will be subject to United
States federal income tax on a net basis on the proceeds of their exchange of
Shares pursuant to the Offer because such income is effectively connected with
the conduct of a trade or business within the United States. Such stockholders
are generally subject to tax in a manner similar to United States stockholders;
however, certain special rules apply. Foreign stockholders who are not subject
to United States federal income tax on a net basis should see Section 3,
"Procedures for Tendering Shares" for a discussion of the applicable United
States withholding tax rules and the potential for obtaining a refund of all or
a portion of the tax withheld. ANY SUCH STOCKHOLDER IS STRONGLY ADVISED TO
CONSULT HIS OR HER OWN TAX ADVISOR. This summary may not be applicable with
respect to Shares acquired as compensation (including Shares acquired upon the
exercise of options or which were or are subject to forfeiture restrictions).
This summary also does not address the state, local or foreign tax consequences
of participating in the Offer. EACH HOLDER OF SHARES SHOULD CONSULT SUCH
HOLDER'S TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES TO HIM OR HER OF
PARTICIPATION IN THE OFFER.
Consequences to Tendering Holders of Exchange of Shares for Cash Pursuant
to the Offer. An exchange of Shares for cash pursuant to the Offer by a Holder
will be a taxable transaction for United States federal income tax purposes. As
a consequence of the exchange, the Holder will, depending on such Holder's
particular circumstances, be treated either as recognizing gain or loss from the
disposition of the Shares or as receiving a dividend distribution from the
Company.
Under Section 302 of the Code, a Holder will recognize gain or loss on an
exchange of Shares for cash if the exchange (i) results in a "complete
termination" of all such Holder's equity interest in the Company, (ii) results
in a "substantially disproportionate" redemption with respect to such Holder or
(iii) is "not essentially equivalent to a dividend" with respect to the Holder.
In applying each of the Section 302 tests, a Holder is in general deemed to own
constructively the Shares actually owned by certain related individuals and
entities.
A Holder that exchanges all Shares actually or constructively owned by such
Holder for cash pursuant to the Offer will be regarded as having completely
terminated such Holder's equity interest in the Company. An exchange of Shares
for cash will be a "substantially disproportionate" redemption with respect to a
Holder if the percentage of the then outstanding Shares owned by such Holder
immediately after the exchange is less than 80% of the percentage of the Shares
owned by such Holder immediately before the exchange. If an exchange of Shares
for cash fails to satisfy the "substantially disproportionate" test, the Holder
may nonetheless satisfy the "not essentially equivalent to a dividend" test. A
Holder who wishes to satisfy the "not essentially equivalent to a dividend" test
is urged to consult such Holder's tax advisor because this test will be met only
if the reduction in such Holder's proportionate interest in the Company
constitutes a "meaningful reduction" given such Holder's particular facts and
circumstances. The IRS has indicated in published rulings that any reduction in
the percentage interest of a stockholder whose relative stock interest in a
publicly held corporation is minimal (an interest of less than 1% should satisfy
this requirement) and who exercises no control over corporate affairs should
constitute such a "meaningful reduction." If a Holder sells Shares to persons
other than the Company at or about the time such Holder also sells Shares to the
Company pursuant to the Offer, and the various sales effected by the Holder are
part of an overall plan to reduce or terminate such Holder's proportionate
interest in the Company, then the sales to persons other than the Company may,
for United States federal income tax purposes, be integrated with the Holder's
sale of Shares pursuant to the Offer and, if integrated, may be taken into
account in determining whether the Holder satisfies any of the three tests
described above. A Holder should consult his tax advisor regarding the treatment
of other exchanges of Shares for cash which may be integrated with such Holder's
sale of Shares to the Company pursuant to the Offer.
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<PAGE>
If a Holder is treated as recognizing gain or loss from the disposition of
Shares for cash, such gain or loss will be equal to the difference between the
amount of cash received and such Holder's tax basis in the Shares exchanged
therefor. Any such gain or loss will be capital gain or loss and will be
long-term capital gain or loss if the Holder's holding period of the Shares
exceeds one year as of the date of the exchange. Any long-term capital gain
recognized by Holders that are individuals, estates or trusts will be taxable at
a maximum rate of 20%. However, any short-term capital gain recognized by
Holders that are individuals, estates or trusts and any long-term or short-term
capital gain recognized by Holders that are corporations will be taxable at
regular income tax rates.
If a Holder is not treated under the Section 302 tests as recognizing gain
or loss on an exchange of Shares for cash, the entire amount of cash received by
such Holder in such exchange will be treated as a dividend to the extent of the
Company's current and accumulated earnings and profits, as determined for United
States federal income tax purposes. Such a dividend will be includable in the
Holder's gross income as ordinary income in its entirety, without reduction for
the Holder's tax basis of the Shares exchanged, and no loss will be recognized.
The Holder's tax basis in the Shares exchanged, however, will be added to such
Holder's tax basis in the remaining Shares that it owns. To the extent that cash
received in exchange for Shares is treated as a dividend to a corporate Holder,
(i) it will be eligible for a dividends-received deduction (subject to
applicable limitations) and (ii) it will be subject to the "extraordinary
dividend" provisions of the Code. A corporate Holder should consult its tax
advisor concerning the availability of the dividends-received deduction and the
application of the "extraordinary dividend" provisions of the Code.
The Company cannot predict whether or the extent to which the Offer will be
oversubscribed. If the Offer is oversubscribed, proration of tenders pursuant to
the Offer will cause the Company to accept fewer Shares than are tendered.
Therefore, a Holder can be given no assurance that a sufficient number of such
Holder's Shares will be purchased pursuant to the Offer to ensure that such
purchase will be treated as a sale or exchange, rather than as a dividend, for
United States federal income tax purposes pursuant to the rules discussed above.
However, see Section 6, "Conditional Tender of Shares" regarding a stockholder's
right to tender Shares subject to the condition that a specified minimum number
of such Shares must be purchased (if any are purchased).
Consequences to Stockholders who do not Tender Pursuant to the Offer.
Stockholders who do not accept the Company's Offer to tender their Shares will
not incur any tax liability as a result of the consummation of the Offer.
See Section 3, "Procedures for Tendering Shares," with respect to the
application of United States federal income tax withholding to payments made to
foreign stockholders and backup withholding.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. EACH STOCKHOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE OFFER, INCLUDING
THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
15. EXTENSION OF OFFER; TERMINATION; AMENDMENT.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 7 shall have occurred or shall be deemed by the Company to
have occurred, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and payment for, any Shares by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. The Company also expressly reserves the right, in its sole
discretion, to terminate the Offer and not accept for payment or pay for any
Shares not theretofore accepted for payment or paid for or, subject to
applicable law, to postpone payment for Shares upon the occurrence of any of the
conditions specified in Section 7 hereof by giving oral or written notice of
such termination or postponement to the Depositary and making a public
announcement thereof. The Company's reservation of the right to delay payment
for Shares which it has accepted for payment is limited by Rule 13e-4(f)(5)
promulgated under the Exchange Act, which requires that the Company must pay the
consideration offered or return the Shares tendered promptly after termination
or withdrawal of a tender offer. Subject to compliance with applicable law, the
Company further reserves the right, in its sole discretion, and regardless of
whether any of the events set forth in Section 7 shall have
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occurred or shall be deemed by the Company to have occurred, to amend the Offer
in any respect (including, without limitation, by decreasing or increasing the
consideration offered in the Offer to holders of Shares or by decreasing or
increasing the number of Shares being sought in the Offer). Amendments to the
Offer may be made at any time and from time to time effected by public
announcement thereof, such announcement, in the case of an extension, to be
issued no later than 9:00 A.M., New York City time, on the next business day
after the last previously scheduled or announced Expiration Date. Any public
announcement made pursuant to the Offer will be disseminated promptly to
stockholders in a manner reasonably designated to inform stockholders of such
change. Without limiting the manner in which the Company may choose to make a
public announcement, except as required by applicable law, the Company shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will disseminate additional information and extend the Offer to the
extent required by Rules 13e-4(d)(2), 13e-4(e)(2) and 14e-4(f)(1) promulgated
under the Exchange Act. These rules require that the minimum period during which
an offer must remain open following material changes in the terms of the Offer
or information concerning the Offer (other than a change in price or a change in
percentage of securities sought) will depend on the facts and circumstances,
including the relative materiality of such terms or information. If: (i) the
Company increases or decreases the price to be paid for Shares, the number of
Shares being sought in the Offer or the Dealer Manager's soliciting fees and, in
the event of an increase in the number of Shares being sought, such increase
exceeds 2% of the outstanding Shares; and (ii) the Offer ends on the tenth
business day from, and including, the date that such notice of an increase or
decrease is first published, sent or given in the manner specified in this
Section 15, the Offer will then be extended until the expiration of such period
of ten business days.
16. FEES AND EXPENSES.
Ferris, Baker Watts, Incorporated is acting as Dealer Manager and
information agent in connection with the Offer, for which services it will
receive customary compensation. The Company has agreed to reimburse the Dealer
Manager for its out-of-pocket expenses, including the fees and expenses of legal
counsel and other advisors, incurred in connection with its engagement, and to
indemnify the Dealer Manager and certain related persons against certain
liabilities and expenses in connection with its engagement, including certain
liabilities under the federal securities laws. In the ordinary course of
business, the Dealer Manager and its affiliates may actively trade the debt and
equity securities of the Company for their own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities. In its capacity as information agent, Ferris, Baker Watts,
Incorporated may contact stockholders by mail, telephone, telegraph and personal
interviews and may request brokers, dealers and other nominee stockholders to
forward materials relating to the Offer to beneficial owners.
The Company has retained American Stock Transfer and Trust Company to act
as Depositary in connection with the Offer. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed by
the Company for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities in connection with the Offer, including
certain liabilities under the federal securities laws.
No fees or commissions will be payable to brokers, dealers or other persons
(other than to the Dealer Manager and the Depositary as described above) for
soliciting tenders of Shares pursuant to the Offer. The Company, however, upon
request, will reimburse brokers, dealers and commercial banks for customary
mailing and handling expenses incurred by such persons in forwarding the Offer
and related materials to the beneficial owners of Shares held by any such person
as a nominee or in a fiduciary capacity. No broker, dealer, commercial bank or
trust company has been authorized to act as the agent of the Company for
purposes of the Offer (except for the Dealer Manager).
The Company will pay or cause to be paid all stock transfer taxes, if any,
on its purchase of Shares except as otherwise provided in Instruction 7 in the
Letter of Transmittal.
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17. MISCELLANEOUS.
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer is not in compliance with any valid
applicable law, the Company will make a good faith effort to comply with such
law. If, after such good faith effort, the Company cannot comply with such law,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of Shares residing in such jurisdiction. In any jurisdiction the
securities or blue sky laws of which require the Offer to be made by a licensed
broker or dealer, the Offer is being made on the Company's behalf by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission an Issuer Tender Offer
Statement on Schedule 13E-4 which contains additional information with respect
to the Offer. Such Schedule 13E-4, including the exhibits and any amendments
thereto, may be examined, and copies may be obtained, at the same places and in
the same manner as is set forth in Section 10 with respect to information
concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGER IN CONNECTION WITH
THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE DEALER
MANAGER.
BLONDER TONGUE LABORATORIES, INC.
May 17, 1999
-27-
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted from Eligible Institutions. The Letter of Transmittal and certificates
for Shares and any other required documents should be sent or delivered by each
stockholder or his or her broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER AND TRUST COMPANY
<TABLE>
<S> <C> <C> <C>
By Registered or Certified By Hand: By Overnight Delivery: By Facsimile:
Mail: American Stock Transfer and American Stock Transfer and American Stock Transfer and
American Stock Transfer and Trust Company Trust Company Trust Company
Trust Company 40 Wall Street 40 Wall Street (for Eligible Institutions
40 Wall Street 46th Floor 46th Floor only)
New York, New York New York, New York New York, New York (718) 234-5001
10005 10005 10005
</TABLE>
Confirm by Telephone: (800) 937-5449 (from outside New York)
(718) 921-8200 (from inside New York)
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal or other tender offer materials may be
directed to the Dealer Manager as set forth below. Stockholders may also contact
their local broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Dealer Manager and Information Agent for the Offer is:
Ferris, Baker Watts
Incorporated
100 Light Street
Baltimore, Maryland 21202
Contact: Steven L. Shea, Senior Vice President
Toll Free Number: (800) 247-7223
(Tan Form)
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
BLONDER TONGUE LABORATORIES, INC.
Pursuant to the Offer to Purchase Dated May 17, 1999
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON TUESDAY, JUNE 15, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
Please read this Letter of Transmittal carefully, including the
instructions on pages 9 through 13. This Letter of Transmittal should be
promptly (i) completed and signed in the space provided on page 8 and in the
Substitute Form W-9 on page 14 and (ii) hand delivered or mailed by registered
or certified mail, return receipt requested, together with the certificates
representing all shares of common stock of Blonder Tongue Laboratories, Inc.
(the "Company") you wish to tender, to American Stock Transfer and Trust Company
(the "Depositary"), at the appropriate address below. If you have any questions,
the Depositary's phone number is (800) 937-5449 (from outside New York) or (718)
921-8200 (from inside New York).
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER AND TRUST COMPANY
By Registered or Certified By Hand:
Mail: American Stock Transfer and
American Stock Transfer and Trust Company
Trust Company 40 Wall Street
40 Wall Street 46th Floor
New York, New York New York, New York
10005 10005
By Overnight Delivery: By Facsimile:
American Stock Transfer and American Stock Transfer and
Trust Company Trust Company
40 Wall Street (for Eligible Institutions
46th Floor only)
New York, New York (718) 234-5001
10005
Confirm by Telephone: (800) 937-5449 (from outside New York)
(718) 921-8200 (from inside New York)
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL
NOT CONSTITUTE A VALID DELIVERY.
Stockholders tendering Shares (other than 401(k) Plan Shares (as defined
below)) should complete the following chart:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED (See Instructions 3 and 4)
- ------------------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) (Please Shares Tendered
fill in exactly as name(s) appear(s) on certificate(s)) (Attach Additional Signed List if necessary)
- --------------------------------------------------------- --------------------------------------------------------------------------
<S> <C> <C> <C>
Total Number of
Certificate Shares Represented Number of Shares
Number(s)(1) by Tendered(2)
Certificate(1)
-------------------- -------------------- ----------------------
-------------------- -------------------- ----------------------
-------------------- -------------------- ----------------------
-------------------- -------------------- ----------------------
--------------------------------------------------------------------------
Total Shares:
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by stockholders tendering Shares by book-entry
transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares represented
by each Share certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which Shares are to be
purchased in the event of proration.(1) (Attach additional signed list if
necessary.) See Instruction 15.
1st:___ 2nd:___ 3rd:___ 4th:___ 5th:___
- --------------------------------------------------------------------------------
(1) If you do not designate an order, then in the event less than all Shares
tendered are purchased due to proration, Shares will be selected for
purchase by the Depositary. See Instruction 15.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
/ / Check here if any of the Share certificates that you own have been
lost, stolen or destroyed. See Instruction 16. Number of Shares
represented by lost, stolen or destroyed Share certificates: _______
- --------------------------------------------------------------------------------
This Letter of Transmittal is to be used only if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase) is utilized, if delivery of Shares (as defined below) is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3 of the Offer to Purchase.
Participants in the Company's 401(k) plan may not use this Letter of
Transmittal to direct the tender of their Shares held through such plan ("401(k)
Plan Shares"). Such participants must follow the instructions set forth in the
materials, and must use the Direction Form, sent to them separately by the
trustee of such plan or its authorized representative. Union Bank & Trust, the
trustee for the Company's 401(k) plan, will submit one Letter of Transmittal for
such plan on behalf of all tendering plan participants. If a holder owns Shares,
in addition to any 401(k) Plan Shares that he or she desires to tender, such
holder must submit both this Letter of Transmittal to tender the non-401(k) Plan
Shares and the Direction Form to tender the 401(k) Plan Shares.
Stockholders who cannot deliver their Shares and all other documents
required hereby to the Depositary by the Expiration Date (as defined in the
Offer to Purchase), or who cannot comply with the procedures for book-entry
transfer on a timely basis, must tender their Shares using the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. See
Instruction 2. Documents delivered to the Company will not be forwarded to the
Depositary and therefore will not be deemed validly delivered. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Depositary.
The instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.
(BOXES BELOW ARE FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:......................................
Account No.:........................................................
Transaction Code No.:...............................................
2
<PAGE>
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE
THE FOLLOWING:
Name(s) of Tendering Stockholder(s):...................................
Date of Execution of Notice of Guaranteed Delivery:....................
Name of Institution that Guaranteed Delivery:..........................
If delivery is by book-entry transfer:
Name of Tendering Institution:.........................................
Account No.:...........................................................
Transaction Code No.:..................................................
NOTE: SIGNATURES MUST BE PROVIDED ON PAGES 8 AND 14.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
3
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Blonder Tongue Laboratories, Inc., a
Delaware corporation (the "Company"), the above-described shares of its common
stock, par value $0.001 per share (shares of Common Stock are referred to herein
as "Shares"), at the price per Share indicated in this Letter of Transmittal,
net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated May 17, 1999 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer").
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the undersigned hereby
sells, assigns and transfers to or upon the order of the Company all right,
title and interest in and to all the Shares that are being tendered hereby or
orders the registration of such Shares tendered by book-entry transfer that are
purchased pursuant to the Offer to or upon the order of the Company and hereby
irrevocably constitutes and appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to (i) deliver certificates for such Shares, or
transfer ownership of such Shares on the account books maintained by the
Book-Entry Transfer Facility, together, in any such case, with all accompanying
evidences of transfer and authenticity, to or upon the order of the Company upon
receipt by the Depositary, as the undersigned's agent, of the Purchase Price (as
defined below) with respect to such Shares, (ii) present such Shares for
registration and transfer on the books of the Company and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares, all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants to the Company that the
undersigned has full power and authority to tender, sell, assign and transfer
the Shares tendered hereby and that, when and to the extent the same are
accepted for payment by the Company, the Company will acquire good, marketable
and unencumbered title thereto, free and clear of all liens, restrictions,
charges, encumbrances, conditional sales agreements or other obligations
relating to the sale or transfer thereof, and the same will not be subject to
any adverse claims. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby.
The undersigned represents and warrants to the Company that the undersigned
has read and agrees to all of the terms of the Offer. All authority herein
conferred or agreed to be conferred shall not be affected by and shall survive
the death or incapacity of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer, this
tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
Instructions of this Letter of Transmittal will constitute the undersigned's
acceptance of the terms and conditions of the Offer, as well as the
undersigned's representation and warranty to the Company that: (i) the
undersigned has a net long position in the Shares or equivalent securities being
tendered within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended and (ii) the tender of such Shares complies
with Rule 14e-4. The Company's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of the
Offer.
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine the lowest single per Share
price (not greater than $8.00 nor less than $6.00 per Share) (the "Purchase
Price"), that will allow it to purchase 750,000 Shares (or such lesser number of
Shares as are validly tendered and not withdrawn) pursuant to the Offer. The
undersigned understands that the Company will pay the Purchase Price for all
Shares validly tendered at prices at or below the Purchase Price and not
withdrawn, upon the terms and subject to the conditions of the Offer, including
the financing condition described in Section 2 of the Offer to Purchase and the
proration and conditional tender provisions. Certificates representing Shares
tendered at prices greater than the Purchase Price and not withdrawn and Shares
not purchased because of proration or conditional tender will be returned at the
Company's expense. See Section 1 of the Offer to Purchase.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may not be required to purchase any of the Shares tendered hereby or may accept
for payment fewer than all of the Shares tendered hereby.
4
<PAGE>
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the Purchase Price of any Shares purchased, and/or
return any Shares not tendered or not purchased, in the name(s) of the
undersigned (and, in the case of Shares tendered by book-entry transfer, by
credit to the account at the Book-Entry Transfer Facility). Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the Purchase Price of any Shares purchased and/or any certificates for
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Payment Instructions" and "Special
Delivery Instructions" are completed, please issue the check for the Purchase
Price of any Shares purchased and/or return any Shares not tendered or not
purchased in the name(s) of, and mail such check and/or any certificates to, the
person(s) so indicated. The undersigned recognizes that the Company has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder(s) thereof if the Company does not
accept for payment any of the Shares so tendered.
5
<PAGE>
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
(See Instruction 5)
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES.
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE, A SEPARATE LETTER OF
TRANSMITTAL FOR EACH PRICE SPECIFIED MUST BE USED.
- --------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION
/ / The undersigned wants to maximize the chance of having the Company
purchase all the Shares the undersigned is tendering (subject to the
possibility of proration). Accordingly, by checking this ONE box
INSTEAD OF ONE OF THE PRICE BOXES BELOW, the undersigned hereby tenders
Shares and is willing to accept the Purchase Price resulting from the
"Dutch Auction" tender process. This action will result in receiving a
price per Share of as low as $6.00 or as high as $8.00
- OR -
SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE, the undersigned
hereby tenders Shares at the price checked. This action could result in none of
the Shares being purchased if the Purchase Price for the Shares is less than the
price checked. A stockholder who desires to tender Shares at more than one price
must complete a separate Letter of Transmittal for each price at which Shares
are tendered. The same Shares can not be tendered at more than one price.
/ / $6.00 / / $6.750 / / $7.500
/ / $6.125 / / $6.875 / / $7.625
/ / $6.250 / / $7.000 / / $7.750
/ / $6.375 / / $7.125 / / $7.875
/ / $6.500 / / $7.250 / / $8.000
/ / $6.625 / / $7.375
================================================================================
ODD LOTS
(See Instruction 9)
This section is to be completed ONLY if Shares are being tendered by or on
behalf of a person who owns beneficially as of the close of business on May 14,
1999, and who continues to own beneficially as of the Expiration Date, an
aggregate of fewer than 100 Shares (not including any 401(k) Plan Shares held by
such stockholder). Odd lot Shares can not be conditionally tendered.
The undersigned either (check one box):
/ / owned beneficially as of the close of business on May 14, 1999, and
continues to own beneficially as of the Expiration Date, an aggregate of
fewer than 100 Shares (not including any 401(k) Plan Shares held by such
stockholder), all of which are being tendered, or
/ / is a broker, dealer, commercial bank, trust company or other nominee that
(i) is tendering, for the beneficial owners thereof, Shares with respect to
which it is the record owner, and (ii) believes, based upon representations
made to it by each such beneficial owner, that such beneficial owner owned
beneficially as of the close of business on May 14, 1999, and continues to
own beneficially as of the Expiration Date, an aggregate of fewer than 100
Shares (not including any 401(k) Plan Shares held by such stockholder) and
is tendering all of such Shares.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
CONDITIONAL TENDERS (See Instruction 10)
A tendering stockholder may condition his or her tender of Shares upon the
purchase by the Company of a specified minimum number of the Shares tendered
hereby, all as described in the Offer to Purchase. Unless at least such minimum
number of Shares is purchased by the Company pursuant to the terms of the Offer,
none of the Shares tendered hereby will be purchased. It is the tendering
stockholder's responsibility to calculate such minimum number of Shares, and
each stockholder is urged to consult his or her own tax advisor. Unless this box
has been completed and a minimum specified, the tender will be deemed
unconditional.
Minimum number of Shares that must be purchased, if any are purchased:
.................. Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 4, 6, 7 and 8)
To be completed ONLY if the check for the Purchase Price of
Shares purchased and/or certificates for Shares not tendered or
not purchased are to be issued in the name of someone other than
the undersigned.
Issue / / check and/or / / certificate(s) to:
Name:................................................
(Please print)
Address:.............................................
.....................................................
(Include Zip Code)
Taxpayer I.D. or Social Security No.:
.....................................................
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 6, 7 and 8)
To be completed ONLY if the check for the Purchase Price of
Shares purchased and/or certificates for Shares not tendered or
not purchased are to be mailed to someone other than undersigned
or to the undersigned at an address other than that shown below
the undersigned's signature(s).
Issue / / check and/or / / certificate(s) to:
Name:................................................
(Please print)
Address:.............................................
.....................................................
(Include Zip Code)
Taxpayer I.D. or Social Security No.:
.....................................................
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(to be completed by all stockholders)
Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian, attorneyinfact,
officer of a corporation, or other person acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 6.
Dated:.............................., 1999
Name(s):........................................................................
(Please print)
Capacity (Full Title):..........................................................
Address:........................................................................
................................................................................
(Include Zip Code)
Area Code and Telephone Number:.................................................
- --------------------------------------------------------------------------------
GUARANTEE OF SIGNATURES, IF REQUIRED
(See Instructions 1 and 6)
Firm Name:......................................................................
(Please print)
Authorized Signature:...........................................................
Title:..........................................................................
Address:........................................................................
(Include Zip Code)
Dated:....................., 1999
- --------------------------------------------------------------------------------
8
<PAGE>
INSTRUCTIONS
(Forming Part of the Terms and Conditions of the Offer)
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures
on this Letter of Transmittal must be guaranteed by a firm that is a recognized
member of an Eligible Institution (as defined below), unless: (i) this Letter of
Transmittal is signed by the registered holder(s) of the Shares (which term, for
purposes of this document, shall include any participant in a Book-Entry
Transfer Facility whose name appears on a security position listing as the owner
of Shares) tendered herewith and such holder(s) have not completed the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal; or (ii) such Shares are tendered
for the account of a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934,
as amended (each such entity, an "Eligible Institution"). See Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be used either if Share
certificates are to be forwarded herewith or if delivery of Shares is to be made
by book-entry transfer pursuant to the procedures set forth in Section 3 of the
Offer to Purchase. Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of all Shares delivered electronically, as well as
a properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof), or an Agent's Message (as defined below), and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the front page of this Letter of
Transmittal prior to the Expiration Date. If certificates are forwarded to the
Depositary in multiple deliveries, a properly completed and duly executed Letter
of Transmittal must accompany each such delivery.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming part of a
confirmation of a book-entry transfer which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Shares that such participant has
received and agrees to be bound by the terms of this Letter of Transmittal and
that the Company may enforce such agreement against the participant.
Stockholders whose Share certificates are not immediately available, who cannot
deliver their Shares and all other required documents to the Depositary or who
cannot complete the procedure for delivery by book-entry transfer prior to the
Expiration Date must tender their Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (i) such tender must be made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Company (with any required signature
guarantees) must be received by the Depositary prior to the Expiration Date; and
(iii) the certificates for all physically delivered Shares in proper form for
transfer by delivery, or a confirmation of a book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of all Shares delivered
electronically, in each case together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), or an Agent's Message,
and any other documents required by this Letter of Transmittal, must be received
by the Depositary within three (3) American Stock Exchange trading days after
the date the Depositary receives such Notice of Guaranteed Delivery, all as
provided in Section 3 of the Offer to Purchase.
The method of delivery of all documents, including Share certificates, the
Letter of Transmittal and any other required documents, is at the election and
risk of the tendering stockholder, and the delivery will be deemed made only
when actually received by the Depositary. If delivery is by mail, registered
mail with return receipt requested, properly insured, is recommended. In all
cases, sufficient time should be allowed to ensure timely delivery.
The Company will not accept any alternative, conditional or contingent tenders,
nor will it purchase any fractional Shares, except as expressly provided in the
Offer to Purchase. By executing this Letter of Transmittal (or facsimile
thereof), the tendering stockholder waives any right to receive any notice of
the acceptance for payment of the Shares.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate
numbers and/or the number of Shares should be listed on a separate signed
schedule and attached to this Letter of Transmittal.
9
<PAGE>
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares represented by any certificate delivered
to the Depositary are to be tendered, fill in the number of Shares that are to
be tendered in the box entitled "Number of Shares Tendered." In such case, a new
certificate for the remainder of the Shares represented by the old certificate
will be sent to the person(s) signing this Letter of Transmittal, unless
otherwise provided in the "Special Payment Instructions" or "Special Delivery
Instructions" boxes on this Letter of Transmittal, as promptly as practicable
following the expiration or termination of the Offer. All Shares represented by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to be
validly tendered by this Letter of Transmittal, the stockholder must either: (i)
check the box under "Shares Tendered at Price Determined by Dutch Auction;" or
(ii) check the box indicating the price per Share at which such stockholder is
tendering Shares under "Shares Tendered at Price Determined by Stockholder."
Only one box may be checked. If more than one box is checked or if no box is
checked, there is not a valid tender of shares. A stockholder wishing to tender
portions of such stockholder's Share holdings at different prices must complete
a separate Letter of Transmittal for each price at which such stockholder wishes
to tender each such portion of such stockholder's Shares. The same Shares cannot
be tendered (unless previously validly withdrawn as provided in Section 4 of the
Offer to Purchase) at more than one price.
6. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If this
Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signatures(s) must correspond with the name(s) as written
on the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more persons,
all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles thereof) as there are
different registrations of certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the purchase price is to be made to, or Shares
not tendered or not purchased are to be registered in the name of, any person
other than the registered holder(s), in which case the certificate(s) evidencing
the Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on such certificates. Signatures on any such certificates or stock
powers must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the registered
holder(s) of the Shares tendered hereby, certificates evidencing the Shares
tendered hereby must be endorsed or accompanied by appropriate stock powers, in
either case, signed exactly as the name(s) of the registered holder(s) appear(s)
on such certificate(s). Signature(s) on any such certificates or stock powers
must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal or any certificate or stock power is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Company of the authority of such person so to act must be submitted.
7. STOCK TRANSFER TAXES. The Company will pay or cause to be paid any stock
transfer taxes with respect to the sale and transfer of any Shares to it or its
order pursuant to the Offer. If, however, payment of the aggregate Purchase
Price is to be made to, or Shares not tendered or not purchased are to be
registered in the name of, any person other than the registered holder(s), or if
tendered Shares are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s), such other person or
otherwise) payable on account of the transfer to such person will be deducted
from the purchase price unless satisfactory evidence of the payment of such
taxes, or exemption therefrom, is submitted. See Section 5 of the Offer to
Purchase. Except as provided in this Instruction 7, it will not be necessary to
affix transfer tax stamps to the certificates representing Shares tendered
hereby.
8. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the Purchase Price
of any Shares tendered hereby is to be issued in the name of, and/or any Shares
not tendered or not purchased are to be
10
<PAGE>
returned to, a person other than the person(s) signing this Letter of
Transmittal, or if the check and/or any certificates for Shares not tendered or
not purchased are to be mailed to someone other than the person(s) signing this
Letter of Transmittal or to an address other than that shown above in the box
captioned "Description of Shares Tendered," then the boxes captioned "Special
Payment Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal should be completed. Stockholders tendering Shares by book-entry
transfer will have any Shares not accepted for payment returned by crediting the
account maintained by such stockholder at the Book-Entry Transfer Facility from
which such transfer was made.
9. ODD LOTS. As described in Section 1 of the Offer to Purchase, if fewer than
all Shares validly tendered at or below the Purchase Price and not properly
withdrawn prior to the Expiration Date are to be purchased, the Shares purchased
first will consist of all Shares tendered by any stockholder who owned
beneficially, as of the close of business on May 14, 1999, and continues to own
beneficially as of the Expiration Date, an aggregate of fewer than 100 Shares
(not including any 401(k) Plan Shares held by such stockholder) and who validly
tendered all such Shares at or below the Purchase Price (including by not
designating a purchase price as described above). Partial tenders of Shares will
not qualify for this preference and this preference will not be available unless
the box captioned "Odd Lots" in this Letter of Transmittal and the Notice of
Guaranteed Delivery, if any, is completed.
10. CONDITIONAL TENDERS. As described in Sections 1 and 6 of the Offer to
Purchase, stockholders may condition their tender on all or a minimum number of
their tendered Shares being purchased ("Conditional Tenders"). If the Company is
to purchase less than all Shares tendered before the Expiration Date and not
withdrawn, the Depositary will perform a preliminary proration, and any Shares
tendered at or below the Purchase Price pursuant to a Conditional Tender for
which the condition was not satisfied shall be deemed withdrawn, subject to
reinstatement if such Conditionally Tendered Shares are subsequently selected by
random lot for purchase subject to Sections 1 and 6 of the Offer to Purchase.
Conditional Tenders will be selected by lot only from stockholders who tender
all of their Shares. All tendered Shares shall be deemed unconditionally
tendered unless the "Conditional Tender" box is completed. The Conditional
Tender alternative is made available so that a stockholder may assure that the
purchase of Shares from the stockholder pursuant to the Offer will be treated as
a sale of such Shares by the stockholder, rather than the payment of a dividend
to the stockholder, for federal income tax purposes. Odd Lot Shares, which will
not be subject to proration, cannot be conditionally tendered. It is the
tendering stockholder's responsibility to calculate the minimum number of Shares
that must be purchased from the stockholder in order for the stockholder to
qualify for sale (rather than dividend) treatment, and each stockholder is urged
to consult his or her own tax advisor.
In the event of proration, any Shares tendered pursuant to a Conditional Tender
for which the minimum requirements are not satisfied may not be accepted and
thereby deemed withdrawn.
11. SUBSTITUTE FORM W-9 AND FORM W-8. Under the United States federal income tax
backup withholding rules, unless an exemption applies under the applicable law
and regulations, 31% of the gross proceeds payable to a stockholder or other
payee pursuant to the Offer must be withheld and remitted to the United States
Treasury, unless the stockholder or other payee provides such person's taxpayer
identification number (employer identification number or social security number)
to the Depositary and certifies that such number is correct. Therefore, each
tendering stockholder must complete and sign the Substitute Form W-9 included as
part of this Letter of Transmittal so as to provide the information and
certification necessary to avoid backup withholding, unless such stockholder
otherwise establishes to the satisfaction of the Depositary that it is not
subject to backup withholding. Certain stockholders (including, among others,
all corporations and certain foreign stockholders) are not subject to these
backup withholding requirements. To prevent possible erroneous backup
withholding, an exempt holder must enter its correct taxpayer identification
number in Part 1 of Substitute Form W-9, write "Exempt" in Part 2 of such form,
and sign and date the form. See the enclosed Guidelines for Certification of
Taxpayer Identification Number or Substitute Form W-9 for additional
instructions. In order for a foreign stockholder to qualify as an exempt
recipient, a foreign stockholder must submit an Internal Revenue Service ("IRS")
Form W-8 or a Substitute Form W-8, signed under penalties of perjury, attesting
to that stockholder's exempt status. Form W-8 may be obtained from the
Depositary.
12. WITHHOLDING ON FOREIGN STOCKHOLDERS. Even if a foreign stockholder has
provided the required certification to avoid backup withholding, the Depositary
will withhold United States federal income taxes equal to 30% of the gross
payments payable to a foreign stockholder or its agent unless (a) the Depositary
determines that a reduced rate of withholding is available pursuant to a tax
treaty or that an exemption from withholding is applicable because such gross
proceeds are effectively connected with the conduct of a trade or business in
the United States or (b) the foreign stockholder establishes to the satisfaction
of the Company and the Depositary that the sale of Shares by such foreign
stockholder pursuant to the Offer will qualify as a "sale or exchange," rather
than as a distribution taxable as a dividend, for United States federal income
tax purposes (see
11
<PAGE>
Section 14 of the Offer to Purchase). For this purpose, a foreign stockholder is
any stockholder that is not: (i) a citizen or resident of the United States;
(ii) a corporation, partnership or other entity created or organized in or under
the laws of the United States, any State or any political subdivision thereof;
(iii) an estate, the income of which is subject to United States federal income
taxation regardless of the source of such income; or (iv) a trust the
administration of which a court within the United States is able to exercise
primary supervision and all substantial decisions of which one or more United
States persons have the authority to control. In order to obtain a reduced rate
of withholding pursuant to a tax treaty, a foreign stockholder must deliver to
the Depositary a properly completed IRS Form 1001. In order to obtain an
exemption from withholding on the grounds that the gross proceeds paid pursuant
to the Offer are effectively connected with the conduct of a trade or business
within the United States, a foreign stockholder must deliver to the Depositary a
properly completed IRS Form 4224. The Depositary will determine a stockholder's
status as a foreign stockholder and eligibility for a reduced rate of, or an
exemption from, withholding by reference to outstanding certificates or
statements concerning eligibility for a reduced rate of, or exemption from,
withholding (e.g., IRS Form 1001 or IRS Form 4224) unless facts and
circumstances indicate that such reliance is not warranted. A foreign
stockholder may be eligible to obtain a refund of all or a portion of any tax
withheld if such stockholder meets the "complete redemption," "substantially
disproportionate" or "not essentially equivalent to a dividend" test described
in Section 14 of the Offer to Purchase or is otherwise able to establish that no
tax or a reduced amount of tax is due. Each foreign stockholder is urged to
consult its tax advisor regarding the application of United States federal
income tax withholding, including eligibility for a withholding tax reduction or
exemption and refund procedure.
13. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance may be directed to, or additional copies of the Offer to
Purchase, the Notice of Guaranteed Delivery and this Letter of Transmittal may
be obtained from the Dealer Manager at its address and telephone number set
forth at the end of this Letter of Transmittal. Such materials may alternatively
be obtained from your broker, dealer, commercial bank or trust company.
14. IRREGULARITIES. All questions as to the number of Shares to be accepted, the
price to be paid therefor and the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of Shares will be determined
by the Company, in its sole discretion, which determination shall be final and
binding on all parties. The Company reserves the absolute right to reject any or
all tenders it determines not to be in proper form or the acceptance of or
payment for which may, in the opinion of the Company's counsel, be unlawful. The
Company also reserves the absolute right to waive any of the conditions of the
Offer and any defect or irregularity in the tender of any particular Shares or
any particular stockholder. No tender of Shares will be deemed to be validly
made until all defects or irregularities have been cured or waived. None of the
Company, the Dealer Manager, the Depositary, the Information Agent or any other
person is or will be obligated to give notice of any defects or irregularities
in tenders, and none of them will incur any liability for failure to give any
such notice.
15. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 1 of the
Offer to Purchase, stockholders may designate the order in which their Shares
are to be purchased in the event of proration. The order of purchase may have an
effect on the United States federal income tax classification of any gain or
loss on the Shares purchased. See Sections 1 and 14 of the Offer to Purchase.
16. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES. If any Share
certificate(s) have been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box following the box captioned
"Description of Shares Tendered" and indicating the number of Shares so lost,
destroyed or stolen. The stockholder will then be instructed by the Depositary
as to the steps that must be taken in order to replace such Share
certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedure for replacing lost, destroyed or stolen Share
certificate(s) has been followed. To expedite replacement, call from outside New
York toll free: (800) 937-5449, or from inside New York: (718) 921-8200.
IMPORTANT
PARTICIPANTS IN THE COMPANY'S 401(K) PLAN MAY NOT USE THIS LETTER OF TRANSMITTAL
TO DIRECT THE TENDER OF THE SHARES ATTRIBUTABLE TO THE PARTICIPANT'S ACCOUNT BUT
MUST USE THE "DIRECTION FORM" SENT TO THEM BY THE TRUSTEE OF THE 401(K) PLAN.
PARTICIPANTS IN THE COMPANY'S 401(K) PLAN ARE URGED TO READ THE SEPARATE
"DIRECTION FORM" AND RELATED MATERIALS CAREFULLY.
THE COMPANY IS NOT OFFERING, AS PART OF THE OFFER, TO PURCHASE ANY OPTIONS
OUTSTANDING UNDER ANY OF ITS STOCK OPTION PLANS AND TENDERS OF OPTIONS WILL NOT
BE ACCEPTED. HOLDERS OF OPTIONS WHO WISH TO PARTICIPATE IN THE OFFER MUST
EXERCISE
12
<PAGE>
THEIR OPTIONS BY PAYING THE APPLICABLE EXERCISE PRICE AND WITHHOLDING TAXES AND
THEN TENDER THE SHARES ISSUED UPON SUCH EXERCISE PURSUANT TO THE OFFER. SEE
INSTRUCTION 2.
THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF), OR AN AGENT'S MESSAGE,
TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL
OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. STOCKHOLDERS ARE ENCOURAGED TO
RETURN A COMPLETED SUBSTITUTE FORM W-9 WITH THIS LETTER OF TRANSMITTAL.
13
<PAGE>
TO BE COMPLETED BY ALL TENDERING REGISTERED
HOLDERS OF SECURITIES
Payer's Name: AMERICAN STOCK TRANSFER AND TRUST COMPANY
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE FORM W-9 Part 1: PLEASE PROVIDE YOUR TIN IN THE
APPROPRIATE BOX AT RIGHT AND CERTIFY BY ...................................
SIGNING AND DATING BELOW. Social Security Number
.......................................... OR
DEPARTMENT OF THE NAME (if a joint account or you changed ...................................
TREASURY INTERNAL your name, see Guidelines) Employer Identification Number
REVENUE SERVICE
------------------------------------------
CHECK APPROPRIATE BOX:
/ / Individual/Sole Proprietor Part-2--For Payees exempt from
/ / Corporation / / Partnership backup withholding, see Instructions
/ / Other 11 and 12 above and Guidelines for
Certification of Taxpayer-Identification
.......................................... Number on Substitute Form W-9 enclosed
Payer's Request for BUSINESS NAME, if different from herewith and complete as instructed herein.
Taxpayer Identification above (See Guidelines):
Number ("TIN") and
Certification ..........................................
ADDRESS
..........................................
CITY STATE ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Part 3--CERTIFICATION--Under penalties of perjury, I certify that (i) the number
shown on this form is my correct Taxpayer Identification Number (or I am waiting
for a number to be issued to me and (ii) I am not subject to backup withholding
because: (a) I am exempt from backup withholding; or (b) I have not been
notified by the IRS that I am subject to backup withholding as a result of a
failure to report all interest or dividends; or (c) the IRS has notified me that
I am no longer subject to backup withholding.
SIGNATURE .......................................... DATE .....................
CERTIFICATION INSTRUCTIONS--You must cross out Item (ii) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return. If you are exempt
from backup withholding, check the box in Part 5 below.
- --------------------------------------------------------------------------------
Part 4--AWAITING TIN / / Part 5--EXEMPT TIN / /
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS. PLEASE REVIEW THE ENCLOSED
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 4 OF THIS SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and that I mailed or delivered an application to receive
a taxpayer identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office (or I intend to mail or deliver
an application in the near future). I understand that if I do not provide a
taxpayer identification number to the payer within 60 days, the payer is
required to withhold 31% of all reportable payments made to me thereafter until
I provide a number.
Signature ............................................ Date ...................
- --------------------------------------------------------------------------------
14
<PAGE>
The Dealer Manager and Information Agent for the Offer is:
Ferris, Baker Watts
Incorporated
100 Light Street
Baltimore, Maryland 21202
Contact: Steven L. Shea, Senior Vice President
Toll Free Number: (800) 247-7223
(Gray Form)
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
of
Blonder Tongue Laboratories, Inc.
This form, or a form substantially equivalent to this form, must be used to
accept the Offer (as defined below) if certificates for the shares of common
stock, par value $0.001 per share ("Common Stock") of Blonder Tongue
Laboratories, Inc., a Delaware corporation (the "Company"), are not immediately
available, if the procedure for book-entry transfer cannot be completed on a
timely basis, or if time will not permit all other documents required by the
Letter of Transmittal to be delivered to the Depositary (as defined below) prior
to the Expiration Date (as defined in Section 1 of the Offer to Purchase defined
below). Such form may be delivered by hand or transmitted by mail or overnight
courier, or (for Eligible Institutions only) by facsimile transmission, to the
Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER AND TRUST COMPANY
By Registered or Certified Mail: By Hand:
American Stock Transfer and American Stock Transfer and
Trust Company Trust Company
40 Wall Street 40 Wall Street
New York, New York 46th Floor
10005 New York, New York
10005
By Overnight Delivery:
American Stock Transfer and
Trust Company
40 Wall Street
46th Floor
New York, New York
10005
By Facsimile: Confirm Receipt of
American Stock Transfer and Facsimile by Telephone:
Trust Company (718) 921-8200
(for Eligible Institutions
only)
(718) 234-5001
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE COMPANY WILL NOT
BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT CONSTITUTE A VALID
DELIVERY. DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE A
VALID DELIVERY TO THE DEPOSITARY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
(as defined below) under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
The Eligible Institution which completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message and certificates for Shares to the Depositary within the time
shown herein. Failure to do so could result in a financial loss to such Eligible
Institution.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated May 17, 1999 (the "Offer to
Purchase"), and the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"), receipt of
which is hereby acknowledged, the number of shares of Common Stock ("Shares"),
of the Company listed below, pursuant to the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase.
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES.
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE, A SEPARATE LETTER OF
TRANSMITTAL FOR EACH PRICE SPECIFIED MUST BE USED.
- --------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION
/ / The undersigned wants to maximize the chance of having the Company
purchase all the Shares the undersigned is tendering (subject to the
possibility of proration). Accordingly, by checking this ONE box
INSTEAD OF ONE OF THE PRICE BOXES BELOW, the undersigned hereby tenders
Shares and is willing to accept the Purchase Price resulting from the
"Dutch Auction" tender process. This action will result in receiving a
price per Share of as low as $6.00 or as high as $8.00
- OR -
SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE, the undersigned
hereby tenders Shares at the price checked. This action could result in none of
the Shares being purchased if the Purchase Price for the Shares is less than the
price checked. A stockholder who desires to tender Shares at more than one price
must complete a separate Letter of Transmittal for each price at which Shares
are tendered. The same Shares can not be tendered at more than one price.
/ / $6.000 / / $6.750 / / $7.500
/ / $6.125 / / $6.875 / / $7.625
/ / $6.250 / / $7.000 / / $7.750
/ / $6.375 / / $7.125 / / $7.875
/ / $6.500 / / $7.250 / / $8.000
/ / $6.625 / / $7.375
- --------------------------------------------------------------------------------
-2-
<PAGE>
- --------------------------------------------------------------------------------
ODD LOTS
This section is to be completed ONLY if Shares are being tendered by or on
behalf of a person who owns beneficially as of the close of business on May 14,
1999, and who continues to own beneficially as of the Expiration Date, an
aggregate of fewer than 100 Shares (not including any Shares held pursuant to
the Company's 401(k) plan).
Odd Lot Shares can not be conditionally tendered.
The undersigned either (check one box):
/ / owned beneficially as of the close of business on May 14, 1999 and
continues to own beneficially as of the Expiration Date, an aggregate
of fewer than 100 Shares (not including any Shares held pursuant to
the Company's 401(k) plan), all of which are being tendered, or
/ / is a broker, dealer, commercial bank, trust company or other nominee
that (i) is tendering, for the beneficial owners thereof, Shares with
respect to which it is the record owner, and (ii) believes, based upon
representations made to it by each such beneficial owner, that such
beneficial owner owned beneficially as of the close of business on May
14, 1999 and continues to own beneficially as of the Expiration Date,
an aggregate of fewer than 100 Shares (not including any Shares held
pursuant to the Company's 401(k) plan) and is tendering all of such
Shares.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONDITIONAL TENDERS
A tendering stockholder may condition his or her tender of Shares upon the
purchase by the Company of a specified minimum number of the Shares tendered
hereby, all as described in the Offer to Purchase. Unless at least such minimum
number of Shares is purchased by the Company pursuant to the terms of the Offer,
none of the Shares tendered hereby will be purchased. It is the tendering
stockholder's responsibility to calculate such minimum number of Shares, and
each stockholder is urged to consult his or her own tax advisor. Unless this box
has been completed and a minimum specified, the tender will be deemed
unconditional.
Minimum number of Shares that must be purchased, if any are purchased:
................. Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
..........................................
Number of Shares
..........................................
Certificate Nos.: (if available)
..........................................
Name(s) (Please print)
..........................................
Address(es)
..........................................
City, State and Zip Code
..........................................
Area Code/Telephone Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STOCKHOLDER MUST SIGN HERE
..........................................
Signature(s)
Dated:....................................
If shares will be tendered by book-entry
transfer:
........................................
Name of Tendering Institution
........................................
Account No. at The Depository
Trust Company
- --------------------------------------------------------------------------------
-3-
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934,
as amended (each of the foregoing constituting an "Eligible Institution"),
guarantees the delivery to the Depositary of the Shares tendered hereby, in
proper form for transfer, or a confirmation that the Shares tendered hereby have
been delivered pursuant to the procedure for book-entry transfer set forth in
the Offer to Purchase into the Depositary's account at the Book-Entry Transfer
Facility, together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) and any other required
documents, all within three (3) American Stock Exchange trading days of the date
hereof.
- --------------------------------------------------------------------------------
..................................................
Name of Firm
..................................................
Address
..................................................
City, State, Zip Code
..................................................
Area Code and Telephone Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
.............................................
Authorized Signature
.. ...........................................
Name (Please Print)
.............................................
Title
Dated: ......................................
- --------------------------------------------------------------------------------
DO NOT SEND SHARE CERTIFICATES WITH THIS FORM. YOUR SHARE CERTIFICATES MUST BE
SENT WITH THE LETTER OF TRANSMITTAL.
-4-
(Green Form)
Ferris, Baker Watts
Incorporated
100 Light Street
Baltimore, Maryland 21202
Offer To Purchase For Cash
Up To 750,000 Shares Of Its Common Stock
at
A Purchase Price Not Greater Than $8.00 Nor Less Than $6.00 Per Share
of
BLONDER TONGUE LABORATORIES, INC.
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON TUESDAY, JUNE 15, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
May 17, 1999
To Brokers, Dealers, Commercial
Banks, Trust Companies and
Other Nominees:
In our capacity as Dealer Manager, we are enclosing the material listed
below relating to the offer of Blonder Tongue Laboratories, Inc., a Delaware
corporation (the "Company"), to purchase up to 750,000 shares of its common
stock, par value $0.001 per share ("Shares"), at prices not greater than $8.00
nor less than $6.00 per Share, net to the seller in cash, without interest
thereon, specified by tendering stockholders, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated May 17, 1999 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the
Offer, determine the lowest single per Share price (not greater than $8.00 nor
less than $6.00 per Share), net to the seller in cash (the "Purchase Price"),
that will allow it to purchase 750,000 Shares (or such lesser number of Shares
as are validly tendered and not properly withdrawn) pursuant to the Offer. The
Company will pay the Purchase Price for all Shares validly tendered at prices at
or below the Purchase Price and not properly withdrawn, upon the terms and
subject to the conditions of the Offer, including the financing condition and
proration and conditional tender provisions referred to below. Certificates
representing Shares tendered at prices in excess of the Purchase Price and not
properly withdrawn and Shares not purchased because of proration will be
returned at the Company's expense. The Company reserves the right, in its sole
discretion, to purchase more than 750,000 Shares pursuant to the Offer.
THIS OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS CONDITIONED UPON THE COMPANY'S HAVING OBTAINED SUFFICIENT
FINANCING TO FUND THE PURCHASE OF SHARES TENDERED IN THE OFFER AND PAY ALL
RELATED FEES AND EXPENSES. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE SECTION 7 OF THE OFFER TO PURCHASE.
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee) or who hold Shares
registered in their own names. Please bring the Offer to their attention as
promptly as possible.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. The Offer to Purchase, dated May 17, 1999.
<PAGE>
2. The Letter of Transmittal for your use and for the information of your
clients. Facsimile copies of the Letter of Transmittal may be used to
tender Shares.
3. A letter to stockholders of the Company from James A. Luksch, Chairman,
President and Chief Executive Officer.
4. The Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents cannot be delivered to the
Depositary by the Expiration Date (each as defined in the Offer to
Purchase).
5. A letter that may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with
space for obtaining such clients' instructions with regard to the Offer.
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 providing information relating to United States
federal income tax backup withholding.
7. A return envelope addressed to American Stock Transfer and Trust
Company, the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND
WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON TUESDAY, JUNE 15,
1999, UNLESS THE OFFER IS EXTENDED.
The Company will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer (other than
the Dealer Manager). The Company will, upon request, reimburse you for
reasonable and customary handling and mailing expenses incurred by you in
forwarding materials relating to the Offer to your customers. The Company will
pay all stock transfer taxes applicable to its purchase of Shares pursuant to
the Offer, subject to Instruction 7 of the Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
As described in the Offer to Purchase, if more than 750,000 Shares (or such
greater number of Shares as the Company may elect to purchase pursuant to the
Offer) have been validly tendered at prices at or below the Purchase Price and
not properly withdrawn prior to the Expiration Date (as defined in Section 1 of
the Offer to Purchase), the Company will purchase Shares validly tendered and
not properly withdrawn on the following basis: (i) all Shares tendered and not
withdrawn prior to the Expiration Date by any stockholder who owned beneficially
as of the close of business on May 14, 1999, and who continues to own
beneficially as of the Expiration Date, an aggregate of fewer than 100 Shares
(not including any Shares held pursuant to the Company's 401(k) plan) and who
validly tenders all of such Shares at or below the Purchase Price (partial
tenders will not qualify for this preference) and completes the box captioned
"Odd Lots" on the Letter of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery; and (ii) after purchase of all the foregoing Shares, all
Shares conditionally tendered in accordance with Section 6 of the Offer to
Purchase, for which the condition was satisfied, and all other Shares tendered
unconditionally, at prices at or below the Purchase Price and not withdrawn
prior to the Expiration Date, on a pro rata basis (with appropriate adjustments
to avoid purchase of fractional Shares); and (iii) if necessary, Shares
conditionally tendered for which the condition was not satisfied, at or below
the Purchase Price and not withdrawn prior to the Expiration Date, selected by
random lot in accordance with Section 6 of the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
-2-
<PAGE>
RECOMMENDATION TO STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
THEIR SHARES. EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES
AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES
SHOULD BE TENDERED. SEE SECTION 11 OF THE ENCLOSED OFFER TO PURCHASE FOR
INFORMATION REGARDING THE INTENTIONS OF THE COMPANY'S DIRECTORS AND EXECUTIVE
OFFICERS WITH RESPECT TO TENDERING SHARES PURSUANT TO THE OFFER.
Any questions or requests for assistance may be directed to us as Dealer
Manager for the Offer at our address and telephone number set forth on the first
page of this document. Additional copies of the enclosed materials may be
requested from us.
Very truly yours,
Ferris, Baker Watts, Incorporated
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE
INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE
ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
-3-
(Blue Form)
OFFER TO PURCHASE FOR CASH
Up to 750,000 Shares of its Common Stock
at
A Purchase Price Not Greater Than $8.00
Nor Less Than $6.00 Per Share
of
Blonder Tongue Laboratories, Inc.
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON TUESDAY, JUNE 15, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated May 17,
1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer")
setting forth an offer by Blonder Tongue Laboratories, Inc., a Delaware
corporation (the "Company"), to purchase up to 750,000 shares of its common
stock, par value $.001 per share ("Shares"), at prices not greater than $8.00
nor less than $6.00 per Share, net to the seller in cash, without interest
thereon, specified by tendering stockholders, upon the terms and subject to the
conditions of the Offer. Also enclosed herewith is certain other material
related to the Offer.
The Company will, upon the terms and subject to the conditions of the
Offer, determine the lowest single per Share price (not greater than $8.00 nor
less than $6.00 per Share), net to the seller in cash, without interest thereon
(the "Purchase Price"), that will allow it to purchase 750,000 Shares (or such
lesser number of Shares as are validly tendered and not properly withdrawn)
pursuant to the Offer. The Company will pay the Purchase Price for all Shares
validly tendered at prices at or below the Purchase Price and not properly
withdrawn, upon the terms and subject to the conditions of the Offer, including
the financing condition and proration and conditional tender provisions referred
to below. Certificates representing Shares tendered at prices in excess of the
Purchase Price and not properly withdrawn and Shares not purchased because of
proration will be returned at the Company's expense. The Company reserves the
right, in its sole discretion, to purchase more than 750,000 Shares pursuant to
the Offer. See Section 1 of the Offer to Purchase.
We are the holder of record of Shares held for your account. As such, a
tender of such Shares can be made only by us as the holder of record and
pursuant to your instructions. The Letter of Transmittal is furnished to you for
your information only and cannot be used by you to tender Shares held by us for
your account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the Letter of Transmittal.
Your attention is invited to the following:
1. You may tender Shares at either (i) the price determined by "Dutch
Auction" or (ii) the price determined by you (in increments of $.125), not
greater than $8.00 nor less than $6.00 per Share, as indicated in the attached
Instruction Form, net to you in cash, without interest thereon. You should mark
the box entitled "Shares Tendered at Price Determined by Dutch Auction" if you
are willing to accept the Purchase Price resulting from the "Dutch Auction"
tender process. This could result in your receiving the minimum price of $6.00
per Share.
2. The Offer is for a maximum of 750,000 Shares, constituting approximately
9% of the total Shares outstanding as of May 14, 1999. The Offer is conditioned
upon the Company's having obtained sufficient financing
<PAGE>
to fund the Offer and pay all related taxes, fees and expenses. The Offer is
subject to certain other conditions set forth in Section 7 of the Offer to
Purchase.
3. The Offer, proration period and withdrawal rights will expire at 5:00
p.m., New York City time, on Tuesday, June 15, 1999, unless the Offer is
extended. Your instructions to us should be forwarded to us in ample time to
permit us to submit a tender on your behalf.
4. As described in the Offer to Purchase, if at the expiration of the
Offer, more than 750,000 Shares (or such greater number of Shares as the Company
may elect to purchase pursuant to the Offer) have been validly tendered at
prices at or below the Purchase Price and not properly withdrawn, the Company
will purchase Shares in the following order of priority:
(i) all Shares validly tendered at or below the Purchase Price and not
withdrawn prior to the Expiration Date by any stockholder who owned
beneficially as of the close of business on May 14, 1999, and who continues
to own beneficially as of the Expiration Date, an aggregate of fewer than
100 Shares (not including any Shares held pursuant to the Company's 401(k)
plan) and who validly tenders all of such Shares (partial tenders will not
qualify for this preference) and completes the box captioned "Odd Lots" in
the Letter of Transmittal and, if applicable, the Notice of Guaranteed
Delivery;
(ii) after purchase of all the foregoing Shares, all Shares
conditionally tendered in accordance with Section 6 of the Offer to
Purchase, for which the condition was satisfied, and all other shares
tendered unconditionally, at prices or below the Purchase Price and not
withdrawn prior to the Expiration Date, on a pro rata basis (with
appropriate adjustments to avoid purchase of fractional Shares); and
(iii) if necessary, Shares conditionally tendered for which the
condition was not satisfied, at or below the Purchase Price and not
withdrawn prior to the Expiration Date, selected by random lot in
accordance with Section 6 of the Offer to Purchase. See Section 1 of the
Offer to Purchase for a discussion of proration.
5. Tendering stockholders will not be obligated to pay any brokerage
commissions or solicitation fees on the Company's purchase of Shares in the
Offer to the Dealer Manager or the Depositary (each as defined in the Offer to
Purchase). Any stock transfer taxes applicable to the purchase of Shares by the
Company pursuant to the Offer will be paid by the Company, except as otherwise
provided in Instruction 7 of the Letter of Transmittal.
6. If you wish to tender portions of your Shares at different prices, you
must complete a separate Instruction Form for each price at which you wish to
tender each portion of your Shares. We must submit separate Letters of
Transmittal on your behalf for each price you will accept.
7. If you owned beneficially as of the close of business on May 14, 1999,
and continue to own beneficially as of the Expiration Date, an aggregate of
fewer than 100 Shares (not including any Shares held pursuant to the Company's
401(k) plan) and you instruct us to tender at or below the Purchase Price on
your behalf all such Shares prior to the Expiration Date and check the box
captioned "Odd Lots" in the Instruction Form, all such Shares will be accepted
for purchase before proration, if any, of the other tendered Shares.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, NEITHER
THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO STOCKHOLDERS
AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES. EACH STOCKHOLDER
MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED. SEE SECTION
11 OF THE ENCLOSED OFFER TO PURCHASE FOR INFORMATION REGARDING THE INTENTIONS OF
THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS WITH RESPECT TO TENDERING SHARES
PURSUANT TO THE OFFER.
If you wish to have us tender any or all of your Shares held by us for your
account upon the terms and subject to the conditions set forth in the Offer to
Purchase, please so instruct us by completing, executing and
-2-
<PAGE>
returning to us the attached Instruction Form. An envelope to return your
instructions to us is enclosed. If you authorize tender of your Shares, all such
Shares will be tendered unless otherwise specified on the Instruction Form. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf by the expiration date of the Offer.
The Offer is being made to all holders of Shares. The Company is not aware
of any jurisdiction where the making of the Offer is not in compliance with
applicable law. If the Company becomes aware of any jurisdiction where the
making of the Offer is not in compliance with any valid applicable law, the
Company will make a good faith effort to comply with such law. If, after such
good faith effort, the Company cannot comply with such law, the Offer will not
be made to (nor will tenders be accepted from or on behalf of) the holders of
Shares residing in such jurisdiction. In any jurisdiction the securities or blue
sky laws of which require the Offer to be made by a licensed broker or dealer,
the Offer is being made on the Company's behalf by the Dealer Manager, or one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
-3-
<PAGE>
INSTRUCTION FORM
WITH RESPECT TO OFFER TO PURCHASE FOR CASH
UP TO 750,000 SHARES OF COMMON STOCK
AT A PURCHASE PRICE NOT GREATER THAN $8.00 NOR
LESS THAN $6.00 PER SHARE
OF
BLONDER TONGUE LABORATORIES, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated May 17, 1999, and the related Letter of Transmittal
(which, as amended or supplemented from time to time, together constitute the
"Offer"), in connection with the Offer by Blonder Tongue Laboratories, Inc. (the
"Company") to purchase up to 750,000 shares of its common stock, par value
$0.001 per share ("Shares"), at prices not greater than $8.00 nor less than
$6.00 per Share, net to the undersigned in cash, without interest thereon,
specified by the undersigned, upon the terms and subject to the terms and
conditions of the Offer.
This will instruct you to tender to the Company the number of Shares
indicated below (or, if no number is indicated below, all Shares) that are held
by you for the account of the undersigned, at the price per Share indicated
below, upon the terms and subject to the conditions of the Offer.
- --------------------------------------------------------------------------------
SHARES TENDERED
/ / By checking this box, the undersigned hereby instructs us to tender the
following number of Shares held by us for the account of the undersigned,
at the Purchase Price per Share indicated in the box entitled "Price (In
Dollars) Per Share At Which Shares Are Being Tendered":
........... Shares*
* The undersigned understands and agrees that all Shares held by us for the
account of the undersigned will be tendered if the above box is checked and
the space above is left blank.
- --------------------------------------------------------------------------------
-4-
<PAGE>
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS
CHECKED, THERE IS NO PROPER TENDER OF SHARES.
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE, A SEPARATE
LETTER OF TRANSMITTAL FOR EACH PRICE SPECIFIED MUST BE USED.
- --------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION
/ / The undersigned wants to maximize the chance of having the Company
purchase all the Shares the undersigned is tendering (subject to the
possibility of proration). Accordingly, by checking this ONE box INSTEAD
OF ONE OF THE PRICE BOXES BELOW, the undersigned hereby tenders Shares and
is willing to accept the Purchase Price resulting from the "Dutch Auction"
tender process. This action will result in receiving a price per Share of
as low as $6.00 or as high as $8.00
- OR -
SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE, the undersigned
hereby tenders Shares at the price checked. This action could result in none of
the Shares being purchased if the Purchase Price for the Shares is less than the
price checked. A stockholder who desires to tender Shares at more than one price
must complete a separate Letter of Transmittal for each price at which Shares
are tendered. The same Shares can not be tendered at more than one price.
/ / $6.000 / / $6.750 / / $7.500
/ / $6.125 / / $6.875 / / $7.625
/ / $6.250 / / $7.000 / / $7.750
/ / $6.375 / / $7.125 / / $7.875
/ / $6.500 / / $7.250 / / $8.000
/ / $6.625 / / $7.375
- --------------------------------------------------------------------------------
-5-
<PAGE>
- --------------------------------------------------------------------------------
ODD LOTS
/ / By checking this box, the undersigned represents that the undersigned owned
beneficially, as of the close of business on May 14, 1999 and continues to
own beneficially as of the Expiration Date, an aggregate of fewer than 100
Shares (not including any 401(k) Plan Shares held by such stockholder) and
is tendering all of such Shares.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONDITIONAL TENDER
A tendering stockholder may condition his or her tender of Shares upon the
purchase by the Company of a specified minimum number of the Shares tendered
hereby, all as described in the Offer to Purchase. Unless at least such minimum
number of Shares is purchased by the Company pursuant to the terms of the Offer,
none of the Shares tendered hereby will be purchased. It is the tendering
stockholder's responsibility to calculate such minimum number of Shares, and
each stockholder is urged to consult his or her own tax advisor. Unless this box
has been completed and a minimum specified, the tender will be deemed
unconditional.
Minimum number of Shares that must be purchased, if any are purchased:
........... Shares
- --------------------------------------------------------------------------------
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE ELECTION AND RISK OF THE
TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
- --------------------------------------------------------------------------------
Number of Shares to be Tendered: SIGN HERE
......... Shares* ......................................
Signature(s)
Dated: ............., 1999 Name .................................
(Please print)
Address ..............................
......................................
......................................
Social Security or Taxpayer ID No.
- ----------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
- --------------------------------------------------------------------------------
-6-
For Immediate Release: Contact: James A. Luksch
Chairman, President and
Chief Executive Officer
(732) 679-4000
Blonder Tongue Laboratories, Inc. to Commence Tender Offer For Up To
750,000 Shares Of Its Common Stock
OLD BRIDGE, NJ - May 17, 1999 - Blonder Tongue Laboratories, Inc. (AMEX: "BDR")
announced today that it will commence a "Dutch Auction" issuer tender offer to
purchase for cash up to 750,000 shares of its issued and outstanding common
stock, par value $0.001 per share. The tender offer will begin Monday, May 17,
1999, and will expire, unless extended, at 5:00 p.m., New York City time, on
Tuesday, June 15, 1999.
Terms of the tender offer, which are described more fully in the Offer to
Purchase and the Letter of Transmittal, invite the Company's stockholders to
tender up to 750,000 shares of the Company's common stock to the Company at
prices not greater than $8.00 nor less than $6.00 per share, as specified by the
tendering stockholders. The offer is subject to certain conditions, including
the Company's having obtained sufficient financing to fund the purchase of
shares tendered in the offer and pay all related fees and expenses.
The Company will determine the lowest single per share price (not greater than
$8.00 nor less than $6.00 per share) net to the seller in cash that will allow
it to purchase 750,000 shares (or such lesser number of shares as are validly
tendered and not withdrawn) pursuant to the offer. Such lowest single per share
price will be the purchase price the Company will pay for all shares validly
tendered at prices at or below such purchase price and not withdrawn. If more
than 750,000 shares are tendered, there will be a proration. Shares tendered at
prices in excess of the purchase price and shares not purchased because of
proration will be returned at the Company's expense. The Company reserves the
right, in its sole discretion, to purchase more than 750,000 shares pursuant to
the offer.
The Offer to Purchase, the Letter of Transmittal and related documents will be
mailed to stockholders of record of the Company's common stock and will also be
made available for distribution to beneficial owners of such common stock.
Neither the Company nor its Board of Directors makes any recommendation to
stockholders as to whether to tender or refrain from tendering their shares.
On May 14, 1999, the closing price of the Company's common stock was $6.00 per
share.
Ferris, Baker Watts, Incorporated will serve as the dealer manager and
information agent for the tender offer. Any questions or requests for copies of
tender offer materials may be directed to Steven L. Shea, Senior Vice President
of Ferris, Baker Watts, Incorporated at 100 Light Street, Baltimore, Maryland
21202, Phone: (800) 247-7223.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated May 17,
1999 and the related Letter of Transmittal and any amendments or supplements
thereto, and is being made to all holders of Shares. Capitalized terms not
defined in this announcement have the respective meanings ascribed to such terms
in the Offer to Purchase. The Offer is not being made to, nor will the Company
accept tenders from or on behalf of, holders of Shares in any jurisdiction in
which the making of the Offer or its acceptance would not be in compliance with
the laws of such jurisdiction. In jurisdictions whose laws require that the
Offer be made by a licensed broker or dealer, the Offer shall be deemed to be
made on the Company's behalf by Ferris, Baker Watts, Incorporated or by one or
more registered brokers or dealers licensed under to laws of such jurisdiction.
Blonder Tongue Laboratories is a designer, manufacturer, and supplier of a
comprehensive line of electronics and systems equipment for the franchised and
private cable television industries. Founded in 1950, Blonder Tongue has grown
to be one of the leaders in cable television equipment manufacturing. For more
information, please visit the Company's web site at www.blondertongue.com or
contact the Company directly at (732) 679-4000.
May 17, 1999
Dear Stockholder:
Blonder Tongue Laboratories, Inc. (the "Company") is offering to purchase
up to 750,000 shares of its common stock at a price not greater than $8.00 nor
less than $6.00 per share (the "Offer"). The Company is conducting the Offer
through a procedure commonly referred to as a "Dutch Auction." This procedure
allows you to select the price within the specified price range at which you are
willing to sell all or a portion of your shares to the Company. Also, this
procedure allows you to sell all or a portion of your shares to the Company at a
price determined by the "Dutch Auction" process.
The Company will, upon the terms and subject to the conditions of the
Offer, determine the lowest single per share price within the specified price
range (the "Purchase Price") that will allow it to buy 750,000 shares (or such
lesser number of shares as are validly tendered and not withdrawn at prices
within that range). All of the shares that are validly tendered at prices at or
below the Purchase Price and not withdrawn will, subject to possible proration
and provisions relating to the tender of "Odd Lots," be purchased for cash at
the Purchase Price, net to the selling stockholder. Shares that are tendered and
not purchased will be returned to the tendering stockholder at the Company's
expense.
The Offer is explained in detail in the enclosed Offer to Purchase and
Letter of Transmittal. If you wish to tender your shares, instructions on how to
tender shares are provided in the enclosed materials. I encourage you to read
these materials carefully before making any decision with respect to the Offer.
Neither the Company nor its Board of Directors makes any recommendation to any
stockholder whether to tender any or all shares.
If you do not wish to participate in the Offer, you do not need to take any
action.
Please note that the Offer is scheduled to expire at 5:00 p.m., New York
City time, on Tuesday, June 15, 1999, unless extended by the Company. Questions
regarding the Offer should be directed to Steven L. Shea, Senior Vice President
of Ferris, Baker Watts, Incorporated, the Information Agent and Dealer Manager
for the Offer, at 100 Light Street, Baltimore, Maryland 21202, Phone: (800)
247-7223.
Sincerely,
James A. Luksch
Chairman, President and Chief Executive Officer
(Pink Form)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Name and Identification Number to Give the
Payor -- The taxpayer identification number for an individual is the
individual's social security number. Social security numbers have nine digits
separated by two hyphens: i.e., 000-00-0000. The taxpayer identification number
for an entity is the entity's employer identification number. Employer
identification numbers have nine digits separated by only one hyphen: i.e.,
00-0000000. The table below will help determine the number to give the payor.
<TABLE>
<CAPTION>
For this type of account: Give the Name and Taxpayer Identification number of:
- ------------------------- ----------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals (joint account) The actual owner of the account or, if combined funds, any
one of the individuals(1)
3. Husband and wife (joint account) The actual owner of the account or, if joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is the only contributor, the
minor(1)
6. Account in the name of guardian or committee The ward, minor, or incompetent person(3) for a designated
ward, minor, or incompetent person
7. a. The usual revocable savings trust account The grantor-trustee(1) (grantor is also trustee)
b. So-called trust account that is not a legal The actual owner(1)
or valid trust under State law
8. Sole proprietorship account The owner(4)
9. A valid trust, estate or pension trust The legal entity (Do not furnish the identifying number of
the personal representative or trustee unless the legal
entity itself is not designated in the account title.)(5)
10. Corporate account The corporation
11. Association, club, religious, charitable, The organization
educational or other tax-exempt organization
account
12. Partnership account The partnership
13. A broker or registered nominee The broker or nominee
</TABLE>
- ------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish
such person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
<PAGE>
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
Obtaining a Number -- If you do not have a taxpayer identification number or you
do not know your number, obtain Form SS-5, Application for a Social Security
Card, or Form SS-4, Application for Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service
(the "IRS") and apply for a number. To complete the Substitute Form W-9, if you
do not have a taxpayer identification number, write "Applied For" in the space
for the taxpayer identification number in Part 1, sign and date the Form, and
give it to the requester. Generally, you will then have 60 days to obtain a
taxpayer identification number and furnish it to the requester. If the requester
does not receive your taxpayer identification number within 60 days, backup
withholding, if applicable, will begin and will continue until you furnish your
taxpayer identification number to the requester.
Payees Exempt from Backup Withholding -- Payees specifically exempted from
backup withholding on ALL broker transactions and interest and dividend payments
include the following: (i) a corporation, (ii) a financial institution, (iii) an
organization exempt from tax under section 501(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), or an individual retirement plan or a
custodial account under Section 403(b)(7), (iv) the United States or any agency
or instrumentality thereof, (v) a State, the District of Columbia, a possession
of the United States, or any subdivision or instrumentality thereof, (vi) a
foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof, (vii) an international organization or any
agency or instrumentality thereof, (viii) a dealer in securities or commodities
required to register in the U.S. or a possession of the U.S., (ix) a real estate
investment trust, (x) a common trust fund operated by a bank under section
584(a) of the Code, (xi) an entity registered at all times under the Investment
Company Act of 1940 and (xii) a foreign central bank of issue.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. ENTER YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON
THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Privacy Act Notice -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
Penalties --
(1) Penalty for Failure to Furnish Taxpayer Identification Number -- If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR
THE INTERNAL REVENUE SERVICE.
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Report of Independent Certified Public Accountants, BDO Seidman, LLP.... 26
Consolidated Balance Sheets as of December 31, 1998 and 1997............ 27
Consolidated Statements of Earnings for the Years Ended December 31,
1998, 1997 and 1996................................................... 28
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1998, 1997 and 1996...................................... 29
Consolidated Statements of Cash Flows for the Years Ended December 31,
1998, 1997 and 1996................................................... 30
Notes to Consolidated Financial Statements.............................. 31
See accompanying notes to consolidated financial statements
25
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
Blonder Tongue Laboratories, Inc.:
We have audited the accompanying consolidated balance sheets of Blonder Tongue
Laboratories, Inc. and subsidiaries as of December 31, 1998 and 1997 and the
related consolidated statements of earnings, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1998. 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Blonder
Tongue Laboratories, Inc. and subsidiaries as of December 31, 1998 and 1997, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1998 in conformity with generally accepted
accounting principles.
BDO Seidman, LLP
Woodbridge, New Jersey
February 12, 1999
See accompanying notes to consolidated financial statements
26
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
December 31,
-----------------
1998 1997
Assets (Note 4)
Current assets:
Cash................................................ $ 542 $ 555
Accounts receivable, net of allowance for doubtful
accounts of $1,201 and $607, respectively......... 15,988 13,130
Inventories (Note 2)................................ 24,540 17,875
Other current assets ............................... 597 318
Deferred income taxes (Note 13)..................... 1,445 1,054
------- -------
Total current assets............................. 43,112 32,932
Property, plant and equipment, net of accumulated
depreciation and amortization (Notes 3 and 5)....... 7,968 7,721
Patents, net (Note 11)................................. 4,115 176
Goodwill, net (Note 11)................................ 13,157 274
Other assets........................................... 1,299 1,169
------- -------
$69,651 $42,272
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Revolving line of credit (Note 4)................... $1,827 $ -
Current portion of long-term debt, including related
party debt of $1,278 in 1997 (Note 4)............. 19,494 1,866
Accounts payable.................................... 2,134 2,305
Accrued compensation................................ 1,287 1,606
Other accrued expenses.............................. 933 929
Income taxes (Note 13).............................. 388 171
------- -------
Total current liabilities........................ 26,063 6,877
------- -------
Deferred income taxes (Note 13)........................ 227 412
Long-term debt (Note 4)................................ 2,865 3,188
Commitments and contingencies (Notes 5, 6 and 7)....... - -
Stockholders' equity (Notes 9, 10, 11 and 12):
Preferred stock, $.001 par value; authorized 5,000
shares; no shares outstanding....................... - -
Common stock, $.001 par value; authorized 25,000
shares, 8,370 shares issued at December 31, 1998 and
8,273 shares issued at December 31, 1997............ 8 8
Paid-in capital..................................... 23,743 21,802
Retained earnings................................... 17,596 10,483
Treasury stock at cost, 81 shares at December 31,
1998 and 40 at December 31, 1997 (Note 9)......... (851) (498)
------- -------
Total stockholders' equity....................... 40,496 31,795
------- -------
$69,651 $42,272
======= =======
See accompanying notes to consolidated financial statements
27
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net sales ..................................... $ 70,792 $ 62,057 $ 48,862
Cost of goods sold ............................ 45,344 39,656 30,613
-------- -------- --------
Gross profit ............................... 25,448 22,401 18,249
-------- -------- --------
Operating expenses:
Selling expenses ........................... 4,823 4,964 4,780
General and administrative ................. 5,932 4,974 4,355
Research and development ................... 2,156 1,954 1,972
-------- -------- --------
12,911 11,892 11,107
-------- -------- --------
Earnings from operations ...................... 12,537 10,509 7,142
-------- -------- --------
Other income (expense):
Interest expense ........................... (1,596) (414) (658)
Other income ............................... 40 595 --
-------- -------- --------
(1,556) 181 (658)
-------- -------- --------
Earnings before income taxes
10,981 10,690 6,484
Provision for income taxes (Note 13) .......... 3,868 4,276 2,601
======== ======== --------
Net earnings ............................... $7,113 $6,414 $3,883
======== ======== ========
Basic earnings per share (Note 10) ............ $ 0.86 $ 0.78 $ 0.48
======== ======== ========
Basic weighted average shares outstanding
(Note 10) ................................... 8,292 8,227 8,144
======== ======== ========
Diluted earnings per share (Note 10) .......... $ 0.84 $ 0.77 $ 0.47
======== ======== ========
Diluted weighted average shares outstanding
(Note 10) ................................... 8,471 8,375 8,300
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
28
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Common Stock
---------------------- Paid-In Retained Treasury
Shares Amount Capital Earnings Stock Total
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 ................... 7,919 $ 8 $ 19,546 $ 186 $ -- $ 19,740
Proceeds from sale of stock ................ 182 -- 1,606 -- -- 1,606
Proceeds from exercise of
stock options ............................ 84 -- 261 -- -- 261
Issuance of common stock in
exchange for investment .................. 8 -- 86 -- -- 86
Net earnings ............................... -- -- -- 3,883 -- 3,883
-------- -------- -------- -------- -------- --------
Balance at December 31, 1996 ................. 8,193 8 21,499 4,069 -- 25,576
Proceeds from exercise of
stock options ............................ 80 -- 303 -- -- 303
Acquisition of treasury stock .............. -- -- -- -- (498) (498)
Net earnings ............................... -- -- -- 6,414 -- 6,414
-------- -------- -------- -------- -------- --------
Balance at December 31, 1997 ................. 8,273 8 21,802 10,483 (498) 31,795
Proceeds from exercise of
stock options ............................ 29 -- 166 -- -- 166
Acquisition of treasury stock .............. -- -- -- -- (353) (353)
Issuance of common stock for
acquired business ........................ 68 -- 1,000 -- -- 1,000
Issuance of warrant for
acquired business ........................ -- -- 775 -- -- 775
Net earnings ............................... -- -- -- 7,113 -- 7,113
======== ======== ======== ======== ======== ========
Balance at December 31, 1998 ................. 8,370 $ 8 $ 23,743 $ 17,596 $ (851) $ 40,496
======== ======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
29
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings ....................................................... $ 7,113 $ 6,414 $ 3,883
Adjustments to reconcile net earnings to cash
provided by (used in) operating activities:
Depreciation and amortization ................................... 2,365 1,130 1,099
Provision for doubtful accounts ................................. 598 327 135
Deferred income taxes ........................................... (576) (518) (469)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable ........................................... (3,456) (4,470) 33
Inventories ................................................... (4,147) (1,847) (2,638)
Other current assets .......................................... (279) 85 503
Other assets .................................................. (428) (10) (184)
Income taxes .................................................. 217 (452) 97
Accounts payable and accrued expenses ......................... (486) 1,631 (2,993)
-------- -------- --------
Net cash provided by (used in) operating activities .......... 921 2,290 (534)
-------- -------- --------
Cash Flows From Investing Activities:
Capital expenditures ............................................... (879) (1,424) (1,471)
Acquisition of licenses ............................................ -- (163) (492)
Acquisition of business ............................................ (19,000) -- --
-------- -------- --------
Net cash used in investing activities ........................ (19,879) (1,587) (1,963)
-------- -------- --------
Cash Flows From Financing Activities:
Net borrowings (repayments) under revolving line of credit ......... 1,827 (1,176) (1,533)
Repayments of borrowings from stockholders ......................... -- (313) --
Proceeds from long-term debt ....................................... 19,199 683 3,422
Repayments of long-term debt ....................................... (1,894) (487) (396)
Proceeds from sale of common stock ................................. -- -- 1,606
Proceeds from exercise of stock options ............................ 166 303 261
Acquisition of treasury stock ...................................... (353) (498) --
-------- -------- --------
Net cash provided by (used in) financing activities .......... 18,945 (1,488) 3,360
-------- -------- --------
Net (Decrease) Increase In Cash ....................................... (13) (785) 863
Cash, beginning of year ............................................... 555 1,340 477
-------- -------- --------
Cash, end of year ..................................................... $ 542 $ 555 $ 1,340
======== ======== ========
Supplemental Cash Flow Information:
Cash paid for interest ............................................. $ 1,261 $ 397 $ 650
Cash paid for income taxes ......................................... 4,276 5,251 2,681
======== ======== ========
Non-cash transactions:
Common stock issued for acquired business .......................... $ 1,000 $ -- $ --
Warrant issued for acquired business ............................... 775 -- --
Issuance of common stock in exchange for investment ................ -- -- 86
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
30
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Note 1 - Summary of Significant Accounting Policies
(a) Company and Basis of Presentation
Blonder Tongue Laboratories, Inc. (the "Company") is a manufacturer of
television and satellite signal distribution equipment supplied to the private
cable television and broadcast industries. The consolidated financial statements
include the accounts of Blonder Tongue Laboratories, Inc. and subsidiaries as
discussed below. Significant intercompany accounts and transactions have been
eliminated in consolidation.
(b) Inventories
Inventories are stated at the lower of cost, determined by the first-in,
first-out ("FIFO") method, or market.
(c) Property, Plant and Equipment
Property, plant and equipment are stated at cost. The Company provides for
depreciation generally on the straight-line method based upon estimated useful
lives of 3 to 5 years for office equipment, 5 to 7 years for furniture and
fixtures, 6 to 10 years for machinery and equipment, 10 to 15 years for building
improvements and 40 years for the manufacturing and administrative office
facility.
(d) Income Taxes
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." Deferred
income taxes are provided for temporary differences in the recognition of
certain income and expenses for financial and tax reporting purposes. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized.
(e) Intangible Assets
Intangible assets totaling $18,571 and $1,617 as of December 31, 1998 and
1997, respectively, consist of goodwill, prepaid licensing fees, and acquired
patent rights, and are carried at cost less accumulated amortization.
Amortization is computed utilizing the straight-line method over the estimated
useful life of the respective asset, 3 to 15 years. Accumulated amortization was
$1,985 and $724 for 1998 and 1997, respectively.
(f) Long-Lived Assets
The Company follows Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" ("SFAS 121"). SFAS 121 standardized the accounting practices for
the recognition and measurement of impairment losses on certain long-lived
assets based on non-discounted cash flows. No impairment losses have been
recorded through December 31, 1998.
(g) Statements of Cash Flows
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments with a maturity of less than three
months at purchase to be cash equivalents. The Company did not have any cash
equivalents at December 31, 1998, 1997 and 1996.
(h) Research and Development
Research and development expenditures for the Company's projects are
expensed as incurred.
31
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(i) Revenue Recognition
The Company records revenues when products are shipped. Customers do not
have a right to return products shipped.
(j) Earnings Per Share
During 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"), which
provides for the calculation of "basic" and "diluted" earnings per share. This
Statement, effective for financial statements issued for periods ended after
December 15, 1997, required restatement of all prior-period earnings per share
data presented. Basic earnings per share includes no dilution and is computed by
dividing net earnings by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflect, in periods in
which they have a dilutive effect, the effect of common shares issuable upon
exercise of stock options. All periods presented have been restated to comply
with the provisions of SFAS 128.
(k) Treasury Stock
Treasury Stock is recorded at cost. Gains and losses on disposition are
recorded as increases or decreases to additional paid-in capital with losses in
excess of previously recorded gains charged directly to retained earnings.
(l) Derivative Financial Instruments
The Company utilizes interest rate swaps to manage interest rate
exposures. The Company specifically designates interest rate swaps as hedges of
debt instruments and recognizes interest differentials as adjustments to
interest expense in the period they occur. The Company does not hold or issue
financial instruments for trading purposes.
(m) Significant Risks and Uncertainties
The preparation of 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 assets and 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.
Approximately 62% of the Company's employees are covered by a three year
collective bargaining agreement, which expires in February, 2002.
The Company estimates that Headend products accounted for approximately
70% of the Company's revenues in 1998, 80% in 1997 and 84% in 1996. Any
substantial decrease in sales of Headend products could have a material adverse
effect on the Company's results of operations and financial condition.
The Company purchases several products from sole suppliers for which
alternative sources are not available, such as the VideoCipher(R) and
DigiCipher(R) encryption systems manufactured by General Instrument Corporation,
which are standard encryption methodology employed on U.S. C-Band and Ku-Band
transponders and EchoStar digital satellite receiver decoders, which are
specifically designed to work with the DISH Network(TM) and Hughes Network
Systems digital satellite receivers for delivery of DIRECTV(TM) programming. An
inability to timely obtain sufficient quantities of these components could have
a material adverse effect on the Company's operating results. The Company does
not have a supply agreement with General Instrument Corporation or any other
supplier. The Company submits purchase orders to its suppliers on an as-needed
basis.
32
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(n) New Accounting Pronouncements
In June, 1998, SFAS 133, "Accounting for Derivative Instruments and
Hedging Activities," was issued. SFAS 133 standardizes accounting and reporting
for derivative instruments and for hedging activities. This statement is
effective in the year 2000. The Company will be reviewing this pronouncement to
determine its applicability to the Company, if any.
Note 2 - Inventories
Inventories are summarized as follows:
December 31,
--------------------
1998 1997
------- -------
Raw materials.................................. $ 9,550 $ 8,740
Work in process................................ 2,463 2,907
Finished goods................................. 12,527 6,228
------- -------
$24,540 $17,875
======= =======
Note 3 - Property, Plant and Equipment
Property, plant and equipment are summarized as follows:
December 31,
------------------
1998 1997
------- -------
Land............................................... $ 1,000 $ 1,000
Building........................................... 3,361 3,361
Machinery and equipment............................ 5,158 4,623
Furniture and fixtures............................. 395 391
Office equipment................................... 764 729
Building improvements.............................. 466 415
------- -------
11,144 10,519
Less: Accumulated depreciation and amortization... (3,176) (2,798)
------- -------
$ 7,968 $ 7,721
======= =======
Note 4 - Debt
In October, 1997, the Company executed a new $15,000 revolving line of
credit with its bank, on which funds may be borrowed at the bank's overnight
base rate ("OBR") plus a margin ranging from .95% to 2.45%, depending upon the
calculation of certain financial covenants (7.95% at December 31, 1998). As of
December 31, 1998, the Company had $1,800 outstanding under the line of credit.
The line of credit is collateralized by a security interest in all of the
Company's assets. The agreement contains restrictions that require the Company
to maintain certain financial ratios as well as restrictions on the payment of
dividends. In addition, the Company has an acquisition loan commitment which may
be drawn upon by the Company to finance acquisitions in accordance with certain
terms. The acquisition loan commitment had been $15,000 until March, 1998 when
it was increased to $20,000 to accommodate the acquisition of Scientific's
Interdiction Business (See Note 11). Funds may be borrowed under the acquisition
loan commitment at OBR plus a margin ranging from 1.25% to 2.75%, depending upon
the calculation of certain financial covenants. At December 31, 1998, there was
$19,000 outstanding under the acquisition loan commitment. The line of credit
and the acquisition loan commitment expire on June 30, 1999. The Company is
currently in negotiations to renew the line of credit and acquisition loan
commitment with interest rates based upon LIBOR plus a variable margin.
33
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The average amount outstanding on the line of credit during 1998 was $544
at a weighted average interest rate of 7.14%. The maximum outstanding under this
facility was $4,110 in 1998.
On May 24, 1996, the Company borrowed $2,800 for a ten year term secured by
a mortgage against the Company's Old Bridge Facility. The loan bears interest at
the fixed rate of 7.25% through May 1999 and may be negotiated to another fixed
rate or remain variable for the remaining seven years of the loan.
Long-term debt consists of the following:
December 31,
-----------------------
1998 1997
-------- --------
Term loan with a bank bearing interest at
prime rate less 2%, payable in quarterly
installments through June, 1998 .................. $ -- $ 143
Term loan with a bank bearing interest at
7.25%, payable in monthly installments ........... 2,318 2,505
Loan with a bank bearing interest at OBR
plus 2.75%(a) .................................... 19,000 --
Term loans with stockholders bearing
interest at prime, due December 19,
1998(b) .......................................... -- 1,278
Capital leases (Note 5) .......................... 1,041 1,128
-------- --------
22,359 5,054
Less: Current portion ........................... (19,494) (1,866)
-------- --------
$ 2,865 $ 3,188
======== ========
(a) The Company is in the final stages of negotiations of a term loan with a
bank bearing interest at LIBOR plus a variable margin ranging from 1.05% to
2.55% based on certain financial ratios. When executed, the new term loan and
interest rate will be effective as of February 1, 1999.
(b) $1,591 of the S Corporation distributions made after September 30, 1995 was
lent back to the Company by the principal stockholders on an unsecured basis for
a term of three years at an interest rate equal to the rate on the Company's
line of credit. These loan agreements with the stockholders provide for payments
of accrued interest on a monthly basis with the principal balance due in
December, 1998. In 1997, the Company made prepayments of $313 on these notes. In
January, 1998, the Company prepaid the balance due plus accrued interest in full
satisfaction of these notes.
The fair value of the debt approximates the recorded value based on the
borrowing rates currently available for loans with similar terms and maturities.
34
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Annual maturities of long-term debt at December 31, 1998 are:
1999............... $19,494
2000............... 515
2001............... 464
2002............... 315
2003............... 187
Thereafter......... 1,384
=======
$22,359
=======
Note 5 - Commitments and Contingencies
Leases
The Company leases certain factory and automotive equipment under
noncancellable operating leases expiring at various dates through December 2002.
Future minimum rental payments, required for all noncancellable leases are
as follows:
Capital Operating
------- ---------
1999 .............................................. $ 378 $ 129
2000 .............................................. 378 60
2001 .............................................. 308 26
2002 .............................................. 124 14
2003 .............................................. -- 2
------- -------
Total future minimum lease payments ............... 1,188 $ 231
======= =======
Less: amounts representing interest .............. (147)
=======
Present value of minimum lease payments ........... $ 1,041
=======
Property, plant and equipment included capitalized leases of $1,533, less
accumulated amortization of $449, at December 31, 1998, and $1,331, less
accumulated amortization of $183, at December 31, 1997.
Rent expense, net of sublease income was $12, $31 and $77 for the years
ended December 31, 1998, 1997 and 1996 respectively. Rent expense was $12, $43
and $79 for the years ended December 31, 1998, 1997 and 1996, respectively.
Litigation
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.
35
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Note 6 - Benefit Plans
Defined Contribution Plan
The Company has a defined contribution plan covering all full time
non-union employees qualified under Section 401(k) of the Internal Revenue Code,
in which the Company matches a portion of an employee's salary deferral. The
Company's contributions to this plan were $122, $59 and $54 for the years ended
December 31, 1998, 1997 and 1996, respectively.
Defined Benefit Pension Plan
Substantially all union employees who meet certain requirements of age,
length of service and hours worked per year are covered by a Company sponsored
non-contributory defined benefit pension plan. Benefits paid to retirees are
based upon age at retirement and years of credited service. Net periodic pension
cost for this plan includes the following components:
December 31,
---------------------------
Components of net periodic 1998 1997 1996
pension cost: ----- -------- -------
Service cost................. $ 118 $ 81 $ 78
Interest cost................ 64 56 49
Actual return on plan assets. (57) (90) (63)
Recognized net actuarial loss 6 42 29
----- -------- -------
Net periodic pension cost.... $ 131 $ 89 $ 93
===== ======== =======
The funded status of the plan and the amounts recorded in the Company's
consolidated balance sheets are as follows:
December 31,
----------------
1998 1997
------ -------
Change in benefit obligation:
Benefit obligation at beginning of year...... $ 862 $ 753
Service cost 118 81
Interest cost................................ 64 56
Amendment to discount rate................... 86 --
Actuarial loss............................... -- 104
Benefits paid................................ (24) (132)
------ -------
Benefit obligation at end of year............ 1,106 862
------ -------
Change in plan assets:
Fair value of plan assets at beginning
of year.................................... 762 681
Actual return on plan assets................. 57 90
Employer contribution........................ 120 123
Benefits paid................................ (24) (132)
------ -------
Fair value of plan assets at end of year..... 915 762
------ -------
Funded status................................ (191) (100)
Unrecognized net actuarial loss.............. 360 290
Unrecognized net transition liability........ (79) (89)
------ -------
Prepaid benefit cost......................... $ 90 $ 101
====== =======
36
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Key economic assumptions used in these determinations were:
December 31,
-------------
1998 1997
---- ----
Discount rate................................ 7.0% 7.5%
Expected long-term rate of return............ 7.0% 7.0%
Note 7 - Related Party Transactions
On January 1, 1995, the Company entered into a consulting and
non-competition agreement for a period of five years with a director, who is
also the largest stockholder. During this period, the director will provide
consulting services on various operational and financial issues and is currently
paid at an annual rate of $130 but in no event is such amount permitted to
exceed $150. The director also agreed to keep all Company information
confidential and will not compete directly or indirectly with the Company for
the term of the agreement and for a period of two years thereafter.
Note 8 - Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash deposits and trade
accounts receivable.
The Company maintains cash balances at several banks located in the
northeastern United States. As part of its cash management process, the Company
periodically reviews the relative credit standing of these banks.
Credit risk with respect to trade accounts receivable is concentrated with
ten of the Company's customers. These customers accounted for approximately 48%
and 64% of the Company's outstanding trade accounts receivable at December 31,
1998 and 1997, respectively. These customers are distributors of
telecommunications and private cable television components, and providers of
private cable television service. The Company performs ongoing credit
evaluations of its customers' financial condition, uses credit insurance and
requires collateral, such as letters of credit, to mitigate its credit risk. The
deterioration of the financial condition of one or more of its major customers
could adversely impact the Company's operations.
For the year ended December 31, 1998, the Company's largest customer
accounted for approximately 10% of the Company's sales. At December 31, 1998,
this customer accounted for approximately 2% of the Company's outstanding trade
accounts receivable. Management believes these amounts to be collectible. A
different customer accounted for approximately 16% of the Company's sales in
1997 while a third customer accounted for approximately 17% of the Company's
sales in 1996.
Note 9 - Stockholders' Equity
In December, 1995, the Company sold 2,200 shares of Common Stock at a price
of $9.50 per share in a public offering which generated net proceeds of
approximately $18,334. The proceeds were used to repay outstanding bank debt,
purchase the Company's manufacturing facility, make certain S Corporation
distributions and for working capital.
In January, 1996, an additional 182 shares of Common Stock were sold at a
price of $9.50 per share pursuant to the exercise of the underwriters'
over-allotment option which generated net proceeds of approximately $1,606.
37
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Stock Repurchase Program
On April 1, 1997, the Company announced that its Board of Directors
authorized management to purchase up to 100 shares of its common stock.
Purchases will be made from time to time in the open market, and it is expected
that the funding of this program will come from operating cash flow and existing
bank facilities. As of December 31, 1998, the Company had repurchased 81 shares
under this new program.
Note 10 - Earnings Per Share
Basic and diluted earnings per share for each of the three years ended
December 31, 1998, 1997 and 1996 are calculated as follows:
<TABLE>
<CAPTION>
Net Income Shares Per Share
(Numerator) (Denominator) Amount
-------------------------------------------
<S> <C> <C> <C>
For the year ended December 31, 1998:
Basic earnings per share $7,113 8,292 $0.86
Effect of assumed
conversion of employee
stock options -- 179
------ ----- -----
Diluted earnings per share $7,113 8,471 $0.84
====== ===== =====
For the year ended December 31, 1997:
Basic earnings per share $6,414 8,227 $0.78
Effect of assumed
conversion of employee -- 148
stock options
------ ----- -----
Diluted earnings per share $6,414 8,375 $0.77
====== ===== =====
For the year ended December 31, 1996:
Basic earnings per share $3,883 8,144 $0.48
Effect of assumed
conversion of employee -- 156
stock options
------ ----- -----
Diluted earnings per share $3,883 8,300 $0.47
====== ===== =====
</TABLE>
Note 11 - Acquisition
On March 26, 1998, the Company acquired all of the assets and technology
rights of the interdiction business (the "Interdiction Business") of
Scientific-Atlanta, Inc. ("Scientific") for a purchase price consisting of (i)
$19,000 in cash, (ii) 68 shares of the Company's common stock, (iii) a warrant
to purchase 150 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 current liabilities of the Interdiction Business. The
Interdiction Business generated approximately
38
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
$16,000 in revenues for the prior twelve month period. The Company believes that
Scientific's interdiction products, which have been engineered primarily to
serve the franchised cable market, will supplement the Company's VideoMask(TM)
products, which are primarily focused on the Private Cable market. In addition,
the Company expects that the technology acquired as part of the Interdiction
Business will enhance its ability to design products that meet the specific
needs of all cable providers, while improving its position in the franchised
cable market.
The acquisition has been accounted for under the purchase method of
accounting in accordance with Accounting Principles Board No. 16 with the net
assets recorded at fair market value and operations included in the financial
statements from the date of acquisition. The allocation of the purchase price
was recorded to inventory $2,518, property, plant and equipment $472, patents
$4,200 and goodwill $13,585.
The following table presents the unaudited pro forma results of operations
as though the acquisition of Scientific-Atlanta, Inc.'s Interdiction Business
occurred on January 1, 1997:
Year Ended December 31,
-----------------------
1998 1997
------- -------
Net sales $76,782 $77,833
Earnings from
operations 13,682 8,829
Net income 8,251 4,565
Basic earnings per share 1.00 0.55
Diluted earnings per share 0.97 0.55
Note 12 - Stock Option Plans
In 1994, the Company established the 1994 Incentive Stock Option Plan (the
"1994 Plan"). The 1994 Plan provides for the granting of Incentive Stock Options
to purchase shares of the Company's common stock to officers and key employees
at a price not less than the fair market value at the date of grant as
determined by the compensation committee of the Board of Directors. The maximum
number of shares available for issuance under the plan was 298. Options become
exercisable as determined by the compensation committee of the Board of
Directors at the date of grant. Options expire ten years from the date of grant.
In October, 1995, the Company's Board of Directors and stockholders
approved the 1995 Long Term Incentive Plan (the "1995 Plan"). The 1995 Plan
provides for grants of "incentive stock options" or nonqualified stock options,
and awards of restricted stock, to executives and key employees, including
officers and employee Directors. The 1995 Plan is administered by the
Compensation Committee of the Board of Directors, which determines the optionees
and the terms of the options granted under the 1995 Plan, including the exercise
price, number of shares subject to the option and the exercisability thereof, as
well as the recipients and number of shares awarded for restricted stock awards;
provided, however, that no employee may receive stock options or restricted
stock awards which would result, separately or in combination, in the
acquisition of more than 100 shares of Common Stock of the Company under the
1995 Plan. The exercise price of incentive stock options granted under the 1995
Plan must be equal to at least the fair market value of the Common Stock on the
date of grant. With respect to any optionee who owns stock representing more
than 10% of the voting power of all classes of the Company's outstanding capital
stock, the exercise price of any incentive stock option must be equal to at
least 110% of the fair market value of the Common Stock on the date of grant,
and the term of the option may not exceed five years. The term of all other
incentive stock options granted under the 1995 Plan may not exceed ten years.
The aggregate fair market value of Common Stock (determined as of the date of
the option grant) for which an incentive stock option may for the first time
become exercisable in any calendar year may not exceed $100. The exercise price
for nonqualified stock options is established by the Compensation Committee, and
may be more or less than the fair market value of the Common Stock on the date
of grant.
39
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Generally, options granted under the 1995 Plan are exercisable over the
term of the option, as provided by the Compensation Committee. Upon any merger
or consolidation, if the Company is not the surviving corporation, all
outstanding options granted shall terminate unless such options are assumed or
other options are substituted therefor by the successor corporation, or the
vesting of such shares is accelerated by the Compensation Committee.
Under the 1995 Plan awards may be made to key executive employees of
restricted stock which is forfeitable unless the employee remains in the employ
of the Company for five years and does not violate other terms of the award,
such as non-transferability. Exceptions to forfeiture are provided for the cases
of retirement at age 65 or death while in employment. No restricted shares have
been awarded under the 1995 Plan.
Stockholders have previously approved a total of 750 shares of common stock
for issuance under the 1995 Plan, as amended to date.
In December, 1995, the stockholders of the Company approved the adoption of
the Company's 1996 Director Option Plan (the "1996 Plan"). Under the 1996 Plan,
Directors who within the preceding 12 months have not been employed by the
Company and have not served as a consultant to the Company where annual
compensation exceeds $100, are eligible to receive options to purchase 0.5
shares of the Company's Common Stock for each year of service on the Board. The
exercise price for such shares is the fair market value thereof on the date of
grant (which is December 31 of each year) and the options are subject to a
one-year vesting requirement. The options become exercisable, in whole or in
part, during the second through sixth years from the date of grant. Under the
1996 Plan the grant of options is automatic to each eligible Director serving on
December 31 of any year provided the Director had served in such capacity since
June 30 of such year. A maximum of 25 shares may be awarded under the 1996 Plan
which expires January 2, 2006. The plan is administered by a committee presently
comprised of James A. Luksch and Robert J. Palle, Jr.
During October, 1997, subject to stockholder approval, the Board of
Directors amended the 1996 Plan to provide that it would be administered by the
Board of Directors rather than the 1996 Plan Committee, and that rather than
providing for annual automatic grants of options for a specified number of
shares to all non-employee Directors, the Board would have the power to grant
options to non-employee Directors at its discretion from time to time to
purchase the number of shares of Common Stock determined by the Board; provided,
however, that no Director would be permitted to receive options to purchase more
than 2 shares of Common Stock in any one calendar year.
During December, 1997, the Board of Directors adopted the Amended and
Restated 1996 Director Option Plan (the "Amended 1996 Plan") subject to
stockholder approval. The Amended 1996 Plan incorporates the amendments to the
1996 Plan the Board had approved in October, 1997, as well as certain additional
amendments, and restates the 1996 Plan as amended. Under the Amended 1996 Plan,
Directors who are not currently employed by the Company or any subsidiary of the
Company and have not been so employed within the preceding six months are
eligible to receive options from time to time to purchase the number of shares
of Common Stock determined by the Board; provided, however, that no Director is
permitted to receive options to purchase more than 5 shares of Common Stock in
any one calendar year. The exercise price for such shares is the fair market
value thereof on the date of grant, and the options vest as determined in each
case by the Board of Directors. Options granted under the Amended 1996 Plan must
be exercised within 10 years from the date of grant. A maximum of 100 shares of
Common Stock are subject to issuance under the Amended 1996 Plan. The plan will
be administered by the Board of Directors. Also subject to stockholder approval
and in keeping with the terms of the Amended 1996 Plan, in 1997 no Director
received the grant of an option to purchase 0.5 shares of Common Stock at year
end provided for in the original 1996 Plan.
In 1996, the Board of Directors granted a non-plan, non-qualified option
for 10 shares to an individual, who was not an employee or director of the
Company at the time of the grant. The option was originally exercisable at
$10.25 per share and expires in 2006. This option was repriced to $6.88 per
share on September 17, 1998.
40
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Stock Option Repricing
During the third quarter of 1998, the Compensation Committee of the Board
of Directors observed that, despite the strong financial performance of the
Company over the past several months attributable to the contributions of the
Company's employees, officers and Directors, the market price of the Company's
Common Stock had recently declined significantly due to market forces and other
outside factors. The decline in the Company's stock price caused many of its
outstanding stock options granted to employees, officers and Directors to have
exercise prices above (in many cases significantly above) the current market
price for the Common Stock. The Compensation Committee was of the view that
stock options with exercise prices well above the market value of the Company's
Common Stock do not serve any incentive function and do not serve to retain
employees of the Company. Accordingly, in an effort to ensure that the Company
continues to provide meaningful, long-term incentive compensation to and retains
its employees, officers and Directors through stock option grants, on September
4, 1998, the Compensation Committee recommended and the Board approve a
repricing (the "Repricing") of all outstanding, unexercised stock options held
by the Company's employees, officers and Directors having exercise prices
exceeding the fair market value of the Common Stock as of September 17, 1998
(the "Affected Options"), provided, that no options would be repriced if the
fair market value for the Common Stock exceeded $7.50 per share on September 17,
1998 (the "Effective Date"). The fair market value for the Common Stock as of
the Effective Date was determined by the Board to be $6.88 per share (the "New
Exercise Price"), which was the average of the high and low sales prices for the
Common Stock on the American Stock Exchange on the Effective Date.
All of the Company's optionholders were required to elect whether or not
they wished to have their Affected Options repriced as of the Effective Date.
Those who elected not to reprice their options retained their existing options
without change. Those who elected to have their Affected Options repriced had
such options cancelled as of the Effective Date, with new options (the "New
Options") being granted as of such date on the same terms and in the same
amounts except (i) all New Options have an exercise price equal to the New
Exercise Price and (ii) the New Options retained the same vesting schedule as
the options they replaced, except that (x) options which were already vested as
of the Effective Date were treated as first becoming vested on the Effective
Date and (y) in certain cases the vesting of a portion of the New Options was
delayed in order to preserve the "incentive stock option" status of such options
under the Internal Revenue Code.
Neither James A. Luksch nor Robert J. Palle, Jr. elected to reprice any of
their stock options in the Company. The Company has not conducted any other
repricings of stock options during the last ten fiscal years.
41
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Weighted- Weighted-
Average Average
1994 Exercise 1995 Exercise 1996 Weighted-Average
Plan (#) Price ($) Plan (#) Price ($) Plan (#) Exercise Price ($)
-------- --------- -------- --------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Shares under option:
Outstanding at
January 1, 1996 269 3.21 -- -- -- --
Granted 34 10.38 227 9.72 2 8.50
Exercised (84) 3.10 -- -- -- --
Canceled (6) 4.33 (2) 9.63 -- --
Outstanding at
December 31, 1996 213 4.36 225 9.72 2 8.50
Granted -- -- 254(a) 9.27 --(b) --
Exercised (67) 2.77 (12) 9.63 -- --
Canceled (5) 4.33 (33) 9.35 -- --
Outstanding at
December 31, 1997 141 5.13 434 9.49 2 8.50
Granted 6 6.88 903 7.86 49 9.41
Exercised (19) 3.23 (11) 9.63 -- --
Canceled (6) 9.38 (665) 9.74 (25) 11.90
Outstanding at
December 31, 1998 122
5.30 661 7.00 26 6.91
Options exercisable at
December 31, 1998 93 4.92 186 7.15 6 7.03
Weighted-average
fair value of
options granted
during: 1996 $ 6.36 $6.27 $ 5.53
1997 -- $5.81 --
1998 $ 4.67 $5.42 $ 4.88
</TABLE>
- ------------
(a) Does not include options to purchase an aggregate of 30 shares of common
stock which were conditionally granted by the Compensation Committee of the
Board of Directors, subject to stockholder approval of an increase in the
number of shares of common stock subject to issuance under the 1995 Plan.
(b) Does not include options to purchase an aggregate of 4 shares of common
stock which were conditionally granted by the Board of Directors, subject to
stockholder approval of the Amended 1996 Plan.
42
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The following table summarizes information about stock options outstanding
at December 31, 1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ---------------------------------------------------------------------------------------------------------------------------
Number of Weighted-
Options Average Weighted- Number Weighted-
Range of Exercise Outstanding at Remaining Average Exerciseable at Average
Prices ($) 12/31/98 Contractual Life Exercise Price ($) 12/31/98 Exercise Price ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1994 Plan:
2.57 41 5.6 years 2.57 41 2.57
4.33 47 6.0 4.33 29 4.33
6.88 6 7.9 6.88 4 6.88
10.59 28 2.6 10.59 19 10.59
--- ---
2.57 to 10.59 122 5.2 5.30 93 4.92
=== ===
1995 Plan:
6.88 640 8.1 6.88 172 6.88
10.59 21 2.6 10.59 14 10.59
--- ---
6.88 to 10.59 661 7.9 7.00 186 7.15
=== ===
1996 Plan:
6.88 25 8.5 6.88 5 6.88
8.50 1 4.0 8.50 1 8.50
--- ---
26 8.5 6.91 6 7.03
=== ===
</TABLE>
The Corporation has adopted the disclosures only provisions of SFAS 123.
Accordingly, no compensation cost has been recognized for the stock option
plans. Had compensation cost been recognized for the stock option plans been
determined based on the fair value at the date of grant consistent with the
provisions of SFAS No. 123, the Corporation's net earnings and net earnings per
share would have been reduced to the pro forma amounts indicated below:
Year Ended December 31,
---------------------------
1998 1997 1996
------ ------ ------
Net earnings - as reported $7,113 $6,414 $3,883
Net earnings - pro forma 6,851 5,957 3,686
Basic earnings per share - as reported 0.86 0.78 0.48
Basic earnings per share - pro forma 0.83 0.72 0.45
Diluted earnings per share - as reported 0.84 0.77 0.47
Diluted earnings per share - pro forma 0.81 0.71 0.44
43
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The fair market value of each option grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the following weighted
average assumptions used for grants:
Year Ended December 31,
------------------------------
1998 1997 1996
---- ---- ----
Expected volatility 61% 60% 65%
Risk-free interest rate 5.6% 6.0% 6.45%
Expected lives 8 6 6
Dividend yield none none none
Note 13 - Income Taxes
The following summarizes the provision for income taxes:
Year Ended December 31,
-----------------------------------
1998 1997 1996
------- ------- -------
Current:
Federal ............................ $ 3,844 $ 3,707 $ 2,372
State and local .................... 600 1,087 698
------- ------- -------
4,444 4,794 3,070
Deferred:
Federal ............................ (495) (399) (361)
State and local .................... (81) (119) (108)
------- ------- -------
(576) (518) (469)
------- ------- -------
Provision for income taxes ........... $ 3,868 $ 4,276 $ 2,601
======= ======= =======
The provision for income taxes on adjusted historical income differs from
the amounts computed by applying the applicable Federal statutory rates due to
the following:
Year Ended December 31,
-----------------------------
1998 1997 1996
------- ------- -------
Provision for Federal income taxes at the
statutory rate .............................. $ 3,734 $ 3,630 $ 2,205
State and local income taxes, net of Federal
benefit ..................................... 549 641 391
Research and development credits .............. -- (28) (28)
Adjustment of prior year's accruals ........... (415) -- --
Other, net .................................... -- 33 33
------- ------- -------
Provision for income taxes .................... $ 3,868 $ 4,276 $ 2,601
======= ======= =======
44
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Significant components of the Company's deferred tax assets and liabilities
are as follows:
December 31,
-----------------
1998 1997
------ ------
Deferred tax assets:
Allowance for doubtful accounts $468 $ 243
Inventory 785 658
Accrued vacation 233 179
Other 117 123
------ ------
Total deferred tax assets 1,603 1,203
------ ------
Deferred tax liabilities:
Tax accounting method (80) (165)
Depreciation (305) (396)
------ ------
Total deferred tax liabilities (385) (561)
------ ------
$1,218 $ 642
====== ======
Note 14 - Export Sales
The Company exports its products to countries in North and South America,
Europe, and Asia. The Company's export sales were approximately 2% in 1998, 3%
in 1997, and 5% in 1996. The Company's export sales were concentrated to
customers in North and South America for all periods presented.
Note 15 - Quarterly Financial Information - Unaudited
<TABLE>
<CAPTION>
1998 Quarters 1997 Quarters
------------- -------------
First Second Third Fourth First Second Third Fourth
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $15,119 $20,525 $18,929 $16,219 $14,041 $15,575 $16,965 $15,476
Gross profit 5,095 6,739 7,362 6,252 4,745 5,284 6,181 6,191
Net earnings 1,005 1,776 2,274 2,058 1,130 1,510 2,098 1,676
Basic earnings per share .12 .21 .27 .25 0.14 0.18 0.26 0.20
Diluted earnings per share .12 .21 .27 .25 0.14 0.18 0.25 0.20
</TABLE>
Note 16 - Subsequent Event
On February 3, 1999, the Company entered into an interest rate swap
agreement with a notional amount of $10,000. The swap agreement has a maturity
date of June 3, 2002 and requires the Company to make fixed rate interest
payments on the notional amount of 8.01% per annum in exchange for floating rate
payments equal to LIBOR plus 2.55%. The Company is exposed to credit risk in the
unlikely event of the nonperformance by the counterparties. Interest to be paid
or received is accrued over the life of the agreement at the net effective
interest rate for the swap and corresponding debt instrument.
45
<PAGE>
Report of Independent Certified Public Accountants
The Board of Directors and Stockholders
Blonder Tongue Laboratories, Inc.:
The audits referred to in our report dated February 12, 1999 relating to the
consolidated financial statements of Blonder Tongue Laboratories, Inc. and
subsidiaries, which is contained in Item 8 of this Form 10-K, included the audit
of the financial statement schedule listed in the accompanying index. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement schedule
based upon our audits.
In our opinion, such financial statement schedule presents fairly, in all
material respects, the information set forth therein.
BDO Seidman, LLP
Woodbridge, New Jersey
February 12, 1999
46
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
for the years ended December 31, 1998, 1997 and 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
Balance at Charged Charged
Allowance for Doubtful Beginning to to Other Deductions Balance at
Accounts of Period Expenses Accounts Write-Offs End of Period
---------------------- ---------- -------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1998: $607 $598 - ($ 4) $1,201
Year ended December 31, 1997: $280 $366 - ($39) $ 607
Year ended December 31, 1996: $205 $135 - ($60) $ 280
</TABLE>
47
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- ------------
(unaudited)
<S> <C> <C>
Assets (Note 4)
Current assets:
Cash.................................................................... $ 1,253 $ 542
Accounts receivable, net of allowance for doubtful
accounts of $1,213 and $1,201, respectively............................. 14,153 15,988
Inventories (Note 2).................................................... 25,408 24,540
Other current assets ................................................... 744 597
Deferred income taxes................................................... 1,603 1,445
------- -------
Total current assets............................................... 43,161 43,112
Property, plant and equipment, net of accumulated
depreciation and amortization........................................... 7,750 7,968
Patents, net................................................................ 4,030 4,115
Goodwill, net............................................................... 12,924 13,157
Other assets................................................................ 1,443 1,299
------- -------
$69,308 $69,651
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Revolving line of credit (Note 4)....................................... $ 1,142 $ 1,827
Current portion of long-term debt....................................... 19,496 19,494
Accounts payable........................................................ 1,538 2,134
Accrued compensation.................................................... 1,420 1,287
Other accrued expenses.................................................. 989 933
Income taxes............................................................ 844 388
------- -------
Total current liabilities.......................................... 25,429 26,063
------- -------
Deferred income taxes....................................................... 190 227
Long-term debt (Note 4)..................................................... 2,750 2,865
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, 8,370
shares issued at March 31, 1999 and December 31, 1998................... 8 8
Paid-in capital......................................................... 23,743 23,743
Retained earnings....................................................... 18,039 17,596
Treasury stock at cost, 81 shares at March 31, 1999 and
December 31, 1998....................................................... (851) (851)
------- -------
Total stockholders' equity......................................... 40,939 40,496
------- -------
$69,308 $69,651
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
------- -------
<S> <C> <C>
Net sales.................................................. $13,756 $15,119
Cost of goods sold......................................... 8,990 10,024
------- -------
Gross profit........................................... 4,766 5,095
------- -------
Operating expenses:
Selling expenses....................................... 1,405 1,312
General and administrative............................. 1,655 1,408
Research and development............................... 525 577
------- -------
3,585 3,297
------- -------
Earnings from operations................................... 1,181 1,798
------- -------
Other income (expense):
Interest expense....................................... (456) (124)
Interest income........................................ 1 1
------- -------
(455) (123)
------- -------
Earnings before income taxes............................... 726 1,675
Provision for income taxes................................. 283 670
======= =======
Net earnings........................................... $ 443 $ 1,005
======= =======
Basic earnings per share................................... $ .05 $ 0.12
======= =======
Weighted average shares outstanding........................ 8,290 8,243
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1999 1998
------- -------
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings............................................................... $ 443 $ 1,005
Adjustments to reconcile net earnings to cash
provided by operating activities:
Depreciation and amortization............................................ 550 338
Provision for doubtful accounts.......................................... 170 195
Deferred income taxes.................................................... (195) (335)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable.................................................... 1,664 (601)
Inventories............................................................ (868) (1,045)
Other current assets................................................... (147) 110
Other assets........................................................... (73) (250)
Income taxes........................................................... 456 930
Accounts payable and accrued expenses.................................. (407) 270
------ -------
Net cash provided by operating activities............................ 1,593 617
------ -------
Cash Flows From Investing Activities:
Capital expenditures....................................................... (84) (202)
Acquisition of Business.................................................... - (19,000)
------ -------
Net cash used in investing activities................................ (84) (19,202)
------ -------
Cash Flows From Financing Activities:
Net borrowings under revolving line of credit.............................. (685) 718
Proceeds from long-term debt............................................... 10 19,111
Repayments of long-term debt............................................... (123) (1,484)
Proceeds from exercise of stock options.................................... - 95
------ -------
Net cash (used in) provided by financing activities.................. (798) 18,440
------ -------
Net Increase (Decrease) In Cash................................................. 711 (145)
Cash, beginning of period....................................................... 542 555
------ -------
Cash, end of period............................................................. $1,253 $ 410
====== =======
Supplemental Cash Flow Information:
Cash paid for interest..................................................... $ 447 $ 85
Cash paid for income taxes................................................. 23 75
Schedule of noncash investing and financing activities:
Common stock issued for acquired business.................................. $ - $ 1,000
Warrants issued for acquired business...................................... - 775
====== =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
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 manufacturer of
television and satellite signal distribution equipment supplied to the private
cable television and broadcast industries. 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 1999 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, 1999. 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.
Note 2 - Effect of New Accounting Pronouncements
In June 1998, SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities," was issued. SFAS 133 standardizes accounting and reporting for
derivative instruments and for hedging activities. This statement is effective
in the year 2000. The Company will be reviewing this pronouncement to determine
its applicability to the Company, if any.
Note 3 - Inventories
Inventories are summarized as follows:
March 31, Dec. 31,
1999 1998
------- -------
Raw Materials....................... $ 7,195 $ 9,550
Work in process..................... 4,477 2,463
Finished Goods...................... 13,736 12,527
------- -------
$25,408 $24,540
======= =======
Note 4 - Line of Credit
In October, 1997, the Company executed a new $15 million revolving line of
credit with its bank, on which funds may be borrowed at the bank's overnight
base rate ("OBR") plus a margin ranging from .95% to 2.45%, depending upon the
calculation of certain financial covenants (7.58% at March 31, 1999). As of
March 31, 1999, the Company had $1,142 outstanding under the line of credit. The
line of credit is collateralized by a security interest in all of the Company's
assets. The agreement contains restrictions that require the Company to maintain
certain financial ratios as well as restrictions on the payment of dividends. In
addition, the Company has an acquisition loan commitment which may be drawn upon
by the Company to finance acquisitions in accordance with certain terms. The
acquisition loan commitment had been $15 million until March, 1998 when it was
increased to $20 million to accommodate the acquisition of Scientific's
Interdiction Business. Funds may be borrowed under the acquisition loan
commitment at OBR plus a margin ranging from 1.25% to 2.75%, depending upon the
calculation of certain financial covenants (7.88% at March 31, 1999). At March
31, 1999, there was $19 million outstanding under the acquisition loan
commitment. The line of credit and the acquisition loan commitment expire on
June 30, 1999. The Company is currently in negotiations to renew the line of
credit and acquisition loan commitment with interest rates based upon LIBOR plus
a variable margin.
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