SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-12
BLONDER TONGUE LABORATORIES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
______________________________________________________________________
2. Aggregate number of securities to which transaction applies:
______________________________________________________________________
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________________________________________
4. Proposed maximum aggregate value of transaction:
______________________________________________________________________
5. Total fee paid:
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[ ] Fee paid previously with preliminary materials:____________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1. Amount Previously Paid:
______________________________________________________________________
2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
______________________________________________________________________
4. Date Filed:
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BLONDER TONGUE LABORATORIES, INC.
One Jake Brown Road
Old Bridge, New Jersey 08857
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 11, 2004
__________________
To Our Stockholders:
The 2004 Annual Meeting of Stockholders of Blonder Tongue
Laboratories, Inc. (the "Company") will be held at the Hyatt Regency New
Brunswick, 2 Albany Street, New Brunswick, New Jersey 08901, on May 11, 2004,
beginning at 10:00 a.m., local time, for the following purposes:
1. To elect two Directors constituting Class III of the Board of
Directors to serve until the 2007 Annual Meeting of Stockholders or
until their successors have been elected and qualified;
2. To ratify the appointment of BDO Seidman, LLP, certified public
accountants, as the Company's independent auditors for the year ending
December 31, 2004; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof. In their discretion, the Proxies
are authorized to vote upon such other business as may properly come
before the Annual Meeting or any adjournments thereof.
A proxy, if properly executed and received in time for the voting,
will be voted in the manner directed therein. If no direction is made, such
proxy will be voted FOR all proposals therein.
The Board of Directors has fixed the close of business on March 19,
2004 as the record date for determining stockholders entitled to notice of the
meeting and to vote at such meeting or any adjournments thereof, and only
stockholders of record at the close of business on March 19, 2004, are entitled
to notice of and to vote at such meeting or any adjournments thereof.
Your attention is directed to the attached Proxy Statement for further
information regarding each proposal to be made.
You are cordially invited to attend the meeting. Whether or not you
plan to attend, you are urged to complete, date and sign the enclosed proxy and
return it promptly. If you receive more than one form of proxy, it is an
indication that your shares are registered in more than one account, and each
such proxy must be completed and returned if you wish to vote all of your shares
eligible to be voted at the meeting.
By Order of the Board of Directors
Robert J. Palle, Jr., President, Chief
Operating Officer and Secretary
April 9, 2004
_________________
PLEASE COMPLETE AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING AND DESIRE TO
VOTE IN PERSON AT THE MEETING, YOUR PROXY WILL BE RETURNED TO YOU UPON WRITTEN
NOTICE TO THE SECRETARY OF THE COMPANY REVOKING YOUR PROXY.
BLONDER TONGUE LABORATORIES, INC.
One Jake Brown Road
Old Bridge, New Jersey 08857
PROXY STATEMENT FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MAY 11, 2004
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Blonder Tongue Laboratories,
Inc., a Delaware corporation (the "Company"), to be voted at the 2004 Annual
Meeting of Stockholders of the Company (the "Annual Meeting") to be held at the
Hyatt Regency New Brunswick, 2 Albany Street, New Brunswick, New Jersey 08901 on
May 11, 2004, at 10:00 a.m., local time, and at any adjournment or adjournments
thereof.
All proxies delivered pursuant to this solicitation are revocable at
any time before they are exercised, by written notice to the Secretary of the
Company or by delivering a later dated proxy. Attendance at the Annual Meeting
will not, without delivery of the written notice described in the immediately
preceding sentence, constitute revocation of a proxy. The mailing address of the
principal executive offices of the Company is One Jake Brown Road, Old Bridge,
New Jersey 08857. The Company's telephone number is (732) 679-4000. This Proxy
Statement and the enclosed form of proxy will be mailed to each stockholder on
or about April 9, 2004, together with the Annual Report on Form 10-K for the
year ended December 31, 2003.
All properly executed proxies delivered pursuant to this solicitation
and not revoked will be voted at the Annual Meeting in accordance with the
directions given. Regarding the election of Directors to serve until the 2007
Annual Meeting of Stockholders, in voting by proxy, stockholders may vote in
favor of all nominees or withhold their votes as to all nominees or withhold
their votes as to specific nominees. With respect to any other proposals to be
voted upon, stockholders may vote in favor of a proposal, against a proposal or
may abstain from voting. Stockholders should specify their choices on the
enclosed form of proxy. If no specific instructions are given with respect to
the matters to be acted upon, the shares represented by a signed proxy will be
voted FOR the election of all nominees, and FOR the proposal to ratify the
appointment of BDO Seidman, LLP as independent auditors for the fiscal year
ending December 31, 2004. Directors will be elected by a plurality of the votes
cast by the holders of the shares of Common Stock voting in person or by proxy
at the Annual Meeting. Thus, abstentions will have no effect on the vote for
election of Directors. Approval of any other matters to come before the Annual
Meeting will require the affirmative vote of the holders of a majority of the
shares of Common Stock of the Company present in person or by proxy at the
Annual Meeting. Abstentions are deemed present for quorum purposes and entitled
to vote and, therefore, will have the effect of a vote against any matter other
than the election of Directors. Broker non-votes occur when a broker or other
nominee holding shares for a beneficial owner does not vote on a proposal
because the beneficial owner has not provided voting instructions and the broker
does not have discretionary authority to vote shares on the matter. Broker
non-votes are not considered to be shares "entitled to vote" (other than for
quorum purposes), will not be included in vote totals and will have no effect on
the outcome of any matters to be voted upon at the Annual Meeting.
Management is not aware at the date hereof of any matter to be
presented at the Annual Meeting other than the election of Directors and the
other proposals described in the attached Notice of Annual Meeting of
Stockholders. If any other matter is properly presented, the persons named in
the proxy will vote thereon according to their best judgement.
The expense of soliciting proxies for the Annual Meeting, including
the cost of preparing, assembling and mailing the notice, proxy and Proxy
Statement, will be paid by the Company. The solicitation will be made by use of
the mails, through brokers and banking institutions, and by officers and regular
employees of the Company. Proxies may be solicited by personal interview, mail,
telephone or facsimile transmission.
Only owners of record of the common stock, $.001 par value per share,
of the Company ("Common Stock") at the close of business on March 19, 2004 (the
"Record Date"), are entitled to notice of and to
vote at the Annual Meeting or any adjournments or postponements thereof. Each
owner of record on the Record Date is entitled to one vote for each share of
Common Stock of the Company so held. There is no cumulative voting. On the
Record Date, there were 8,002,406 shares of Common Stock issued, outstanding and
entitled to vote.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Company's Certificate of Incorporation, as amended, provides that
the Board shall consist of between five and eleven members, as determined from
time to time by the Board, divided into three classes as nearly equal in number
as possible. The size of the Board has currently been set at eight. The term of
the current Class I Directors expires at the 2005 Annual Meeting, the term of
the current Class II Directors expires at the 2006 Annual Meeting and the term
of the current Class III Directors expires at the 2004 Annual Meeting. The
successors to each class of Directors whose terms expire at an Annual Meeting
will be elected to hold office for a term expiring at the Annual Meeting of
Stockholders held in the third year following the year of their election.
The Directors whose terms will expire at the 2004 Annual Meeting of
Stockholders are Robert B. Mayer and James F. Williams, both of whom have been
recommended for nomination by the Nominating Committee and nominated by the
Board to stand for reelection as Directors at the 2004 Annual Meeting of
Stockholders, to hold office until the 2007 Annual Meeting of Stockholders and
until their successors are elected and qualified. Messrs. Mayer and Williams
have consented to serve for the new terms, if elected.
Recommendation of the Board of Directors Concerning the Election of Directors
The Board of Directors of the Company recommends a vote FOR Robert B.
Mayer and James F. Williams as Class III Directors to hold office until the 2007
Annual Meeting of Stockholders and until their successors are elected and
qualified. Proxies received by the Board of Directors will be so voted unless
stockholders specify in their proxy a contrary choice.
DIRECTORS AND EXECUTIVE OFFICERS
Nominee and Continuing Directors
The following table sets forth the names and certain information about
each of the nominees for election as a Director of the Company and the
continuing Directors of the Company:
Director
Name Age Since
---- --- -----
Nominees for a three-year term expiring in 2007
(Class III Directors):
Robert B. Mayer(1)(2).................................72 1995
James F. Williams(1)(3)...............................46 1993
Directors not standing for election this year whose terms
expire in 2005 (Class I Directors):
John E. Dwight........................................68 1995
Robert E. Heaton(4) (5) (6)...........................74 1998
James A. Luksch.......................................73 1988
-------------
(1) Since December, 1995, a member of the Audit Committee of the Board of
Directors.
(2) Since December, 1995, a member of the Compensation Committee of the Board
of Directors.
(3) Since September, 1997, a member of the Compensation Committee of the Board
of Directors.
(4) Since May, 1998, a member of the Compensation Committee of the Board of
Directors.
(5) Since June, 2000, a member of the Audit Committee of the Board of
Directors.
(6) Since February, 2004, a member of the Nominating Committee of the Board of
Directors.
2
Directors not standing for election this year whose terms expire in 2006 (Class
II Directors):
Robert J. Palle, Jr...................................58 1993
Gary P. Scharmett(1)..................................48 1997
James H. Williams.....................................72 1988
-------------
(1) Since February, 2004, a member of the Nominating Committee of the Board of
Directors.
Set forth below is a brief summary of the recent business experience
and background of each nominee, continuing Director and executive officer:
John E. Dwight has been a Director of the Company since December 14,
1995. He was a Senior Vice President of the Company from September, 1997 through
December, 2000. Mr. Dwight currently serves as Assistant to the President of the
Company. From 1992 until September, 1997, Mr. Dwight served as President of Film
Microelectronics, Inc., a designer and manufacturer of microelectronic products.
Robert E. Heaton has been a Director of the Company since March, 1998.
He also presently serves on the Board of Directors of Calstrip Steel Corp. and
Wheeling-Pittsburgh Steel Corp. From April, 1993 through April, 1995, Mr. Heaton
served as Vice Chairman of the Stainless Steel Group of Lukens, Inc. From April,
1981, through April, 1993, Mr. Heaton was President and Chief Executive Officer
of Washington Steel Corporation until it was acquired by Lukens, Inc. Mr. Heaton
is a past Chairman of the Specialty Steel Industry of North America.
James A. Luksch has been the Chief Executive Officer and a Director of
the Company since November, 1988. He became Chairman of the Board in November,
1994. He also served as President of the Company from November, 1988 until May,
2003.
Robert B. Mayer has been a Director of the Company since December 14,
1995. From 1966 to 1991, he served in various executive positions, including
Director and Regional President of Norstar Bank, N.A. (formerly known as Liberty
National Bank & Trust Co.), a member of Fleet Financial Group. Mr. Mayer has
from time to time served as a part-time instructor at State University of New
York at Buffalo and is currently a Director of People, Inc. and a member of the
Loan Committee, Erie County Regional Industrial Development Corporation.
Robert J. Palle, Jr. has been the President of the Company since May,
2003 and the Chief Operating Officer and Secretary of the Company since April,
1989. He became a Director of the Company in September, 1993. He also served as
Executive Vice President from April, 1989 until May, 2003 and as Interim
Treasurer from March through April, 2001.
Gary P. Scharmett has been a Director of the Company since December,
1997. Since January, 1989, Mr. Scharmett has been a partner in the law firm of
Stradley, Ronon, Stevens & Young, LLP, the Company's outside counsel, and served
on the Board of Directors of that firm from January 2001 until December 2003.
James F. Williams has been a Director of the Company since September,
1993. He has also served as the President and a Director of Ontario Consolidated
Leasing, Inc., a heavy equipment leasing company, since March, 1997. Since
April, 1996, Mr. Williams has also been the Chairman of the Board and Chief
Executive Officer of Integrated Waste Services, Inc. Mr. Williams is the nephew
of Mr. James H. Williams.
James H. Williams has been a Director of the Company since November,
1988, and served as Chairman of the Board of the Company from November, 1988
until November, 1994. He presently serves as a consultant to the Company under a
written agreement.
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Other Executive Officers
Eric S. Skolnik, 39, has served as Senior Vice President of the
Company since May, 2003 and as Chief Financial Officer, Treasurer and Assistant
Secretary of the Company since May, 2001. He served as Interim Chief Financial
Officer of the Company from January, 2001 through April, 2001. He was hired by
the Company in May, 2000, as Corporate Controller. From 1994 until May, 2000,
Mr. Skolnik worked as a certified public accountant with BDO Seidman, LLP, the
Company's independent auditors.
Norman A. Westcott, 63, has served as Senior Vice President -
Operational Services of the Company since October, 1999 and was a Vice President
of the Company from July, 1994 until October, 1999. Mr. Westcott is responsible
for material purchasing and production.
Allen Horvath, 52, has served as Vice President - Manufacturing of the
Company since May, 2003. Mr. Horvath served as the Manufacturing Manager for the
Company from 1998 until May 2003. Since 1976 Mr. Horvath has served the Company
in several management positions in the areas of Production Testing, Engineering,
Quality Control and Manufacturing. Mr. Horvath is responsible for the Company's
manufacturing activities.
Kant Mistry, 63, has served as Vice President - Engineering of the
Company since May, 2003 and as Chief Technical Officer of the Company since
July, 2000. From October, 1990 to July, 2000 Mr. Mistry served as the Chief
Engineer of the Company.
Emily M. Nikoo, 38, has served as Vice President - Marketing and
Technical Services of the Company since February, 2004. She was hired by the
Company in March, 1995 as a product manager and has held several supervisory and
management positions with the Company. From 1994 until March, 1995, Ms. Nikoo
was the Vice President of Electronic Systems Advanced Technology, and from 1987
to 1994 she worked as an electrical engineering and project manager for Lockheed
Martin Corporation in its space systems business segment. Ms. Nikoo is the
daughter of James A. Luksch.
Director Independence
The Board of Directors has considered the independence of the
Company's directors pursuant to Section 121A of the Rules of the American Stock
Exchange. Based on this consideration, the Board has determined that Robert B.
Mayer, James F. Williams, Robert E. Heaton and Gary P. Scharmett are independent
pursuant to Section 121A.
Meetings of the Board of Directors; Committees
During the year ended December 31, 2003, there were 10 meetings of the
Company's Board of Directors and each Director attended (either in person or via
teleconference) at least 75% of the meetings held. The Board of Directors has
three standing committees: the Compensation Committee, the Nominating Committee
and the Audit Committee.
Compensation Committee. The Compensation Committee is currently
comprised of Robert B. Mayer, Robert E. Heaton and James F. Williams, all of
whom are non-employee Directors. The Compensation Committee is responsible to
determine compensation for the Company's executive officers and to administer
the Company's stock option plans, except for the Amended and Restated 1996
Director Option Plan. This committee held 2 meetings during 2003, all of which
were attended (either in person or via teleconference) by each committee member.
Nominating Committee. The Nominating Committee was created in
February, 2004 and is currently comprised of Robert E. Heaton and Gary P.
Scharmett. The members of the Nominating Committee are independent, as
independence for nominating committee members is defined in the American Stock
Exchange listing standards. The Nominating Committee is responsible for
considering and making recommendations to the Board of Directors concerning the
appropriate size of the Board and nominees to stand for election or fill
vacancies on the Board. In particular, the Nominating Committee will identify,
recruit, consider and recommend candidates to
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fill positions on the Board in accordance with its criteria for Board membership
(as such criteria is generally described below). In searching for qualified
Director candidates to nominate for election at an annual meeting of
stockholders, the Nominating Committee will initially consider nominating the
current Directors whose terms are expiring and shall consider their past
performance on the Board, along with the criteria for Board membership, in
determining whether to nominate them for re-election. In connection with
nominations for elections at annual meetings or to fill vacancies in the Board,
the Nominating Committee may solicit the current members of the Board to
identify qualified candidates through their business and other organizational
networks and may also retain director search firms as it determines necessary in
its own discretion. The Nominating Committee would then consider the potential
pool of Director candidates derived from the foregoing process, select the top
candidates to fill the number of openings based on their qualifications, the
Board's needs (including the need for independent Directors) and the criteria
for Board membership. The Nominating Committee will then conduct a thorough
investigation of the proposed candidates' backgrounds to ensure there is no past
history that would disqualify the candidate from serving as a Director of the
Company. Those candidates that are selected and pass the background
investigation will be recommended to the full Board for nomination.
The criteria for a nominee to the Board includes, among other things:
o The highest personal and professional ethics, strength of
character, integrity and values;
o Experience as a senior manager, chief operating officer or
chief executive officer of a relatively complex organization
or, if in a professional or scientific capacity, be
accustomed to dealing with complex problems, or otherwise
shall have obtained and excelled in a position of
leadership;
o Education, experience, intelligence, independence, fairness,
reasoning ability, practical wisdom, and vision to exercise
sound, mature judgments on a macro and entrepreneurial basis
on matters which relate to the current and long-term
objectives of the Company;
o Competence and willingness to learn the Company's business,
and the breadth of viewpoint and experience necessary for an
understanding of the diverse and sometimes conflicting
interests of stockholders and other constituencies;
o The nominee should be of such an age at the time of election
to assure a minimum of three years of service as a director,
and should be free and willing to attend regularly scheduled
meetings of the Board of Directors and its committees over a
sustained period and otherwise be able to contribute a
reasonable amount of time to the affairs of the Company and
its affiliates;
o The stature and capability to represent the Company before
the public, stockholders, and other various individuals and
groups that affect the Company; and
o Willingness to appraise objectively the performance of
management in the interest of the stockholders and question
management's assumptions when inquiry is appropriate.
While the Nominating Committee does not have a formal charter, the
Board adopted guidelines addressing the purpose and responsibilities of the
Nominating Committee in connection with it formation, which guidelines include
procedures for recruiting, considering and recommending nominees to the Board
and criteria for Board membership. Although the Nominating Committee will not
consider any director candidates recommended by stockholders, the Board believes
this is appropriate as the Company's certificate of incorporation and bylaws
permit stockholders to directly nominate persons for election as Directors by
following the procedures set forth therein.
Audit Committee. The Audit Committee is currently comprised of James
F. Williams, Robert B. Mayer and Robert E. Heaton, all of whom are non-employee
Directors. The Audit Committee is responsible to, among other things, select,
retain or terminate the engagement of independent auditors, review the plans and
results of the audit engagement with the independent auditors, discuss with the
independent auditors all accounting policies
5
and practices to be used and alternative treatments of financial information
discussed with management, evaluate and pre-approve audit and non-audit services
provided by the independent auditors, review the independence of the independent
auditors, assure the regular rotation of the audit partners, consider the range
of audit and non-audit fees, review and discuss types of financial and earnings
information released to any party, review with the appropriate parties the
certifications required for the quarterly reports on Form 10-Q and annual
reports on Form 10-K, and review the adequacy of the Company's internal
accounting controls. This committee held 6 meetings during 2003, all of which
were attended (either in person or via teleconference) by each committee member.
The members of the Audit Committee are independent, as "independence"
for audit committee members is defined in the American Stock Exchange listing
standards. The Company's Board of Directors has determined that a member of the
Audit Committee, James F. Williams, qualifies as an "audit committee financial
expert" as defined in Section 401(h) of Regulation S-K promulgated by the
Securities Exchange Commission. He is also "independent," as such term is
defined in Item 7(d)(3)(iv)(A) of Schedule 14A under the Securities Exchange Act
of 1934, as amended. The Board of Directors adopted a written charter for the
Audit Committee in June, 2000, which was amended by the Board of Directors in
March, 2003 and March, 2004. The Audit Committee reviews and reassesses the
charter for adequacy on an annual basis. A copy of the Audit Committee's current
charter, as amended, is attached to this Proxy Statement as Exhibit A.
Board Policies Regarding Communications With the Board of Directors and
Attendance at Annual Meetings
The Board of Directors maintains a process for stockholders to
communicate with the Board of Directors. Stockholders wishing to communicate
with the Board of Directors, or any individual member(s) of the Board of
Directors, can send a written communication to the attention of the Board of
Directors (or specific individual director(s), if applicable) at the following
address: c/o Corporate Secretary, One Jake Brown Road, Old Bridge, New Jersey
08857. Any such communication must state the number of shares beneficially owned
by the stockholder making the communication. The Corporate Secretary will
forward such communication to the full Board of Directors or to any individual
director or directors to whom the communication is directed unless the
communication is unduly hostile, threatening, illegal or similarly
inappropriate, in which case the Corporate Secretary has the authority to
discard the communication or take appropriate legal action regarding the
communication.
While the Company does not have a formal written policy regarding
Board member attendance at its Annual Meeting, the Company actively encourages
its directors to attend the Annual Meeting of Stockholders. All eight directors
attended the Company's 2003 Annual Meeting of Stockholders.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors has:
o reviewed and discussed the audited financial statements for the
fiscal year ended December 31, 2003 with the Company's
management;
o discussed with the Company's independent auditors the matters
required to be discussed by Statement on Accounting Standards No.
61, as the same was in effect on the date of the Company's
financial statements;
o received the written disclosures and the letter from the
Company's independent auditors required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit
Committees), as the same was in effect on the date of the
Company's financial statements; and
o discussed with the Company's independent auditors their
independence from the Company and its management.
6
Management is responsible for the preparation, presentation and
integrity of the Company's financial statements, the financial reporting
process, accounting principles and internal controls and procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
The Company's independent auditors are responsible for performing an independent
audit of the financial statements in accordance with generally accepted auditing
standards and issuing a report thereon. The Audit Committee's responsibility is
to monitor and oversee these processes. The Audit Committee has relied, without
independent verification, on the information provided to it and on the
representations of management and the independent auditors that the financial
statements have been prepared in conformity with generally accepted accounting
principles.
Based on the review and discussions referred to in the items above,
the Audit Committee recommended to the Board of Directors that the audited
financial statements for the fiscal year ended December 31, 2003 be included in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2003.
The Audit Committee
James F. Williams, Chairman
Robert B. Mayer
Robert E. Heaton
Directors' Compensation
Prior to July 1, 2003 during the 2003 fiscal year, each non-employee
Director of the Company (other than James H. Williams) was paid a retainer at
the annual rate of $15,000, payable quarterly, a fee of $1,000 for each Board
meeting attended in person ($500 if attendance was telephonic) and a fee of $600
for each committee meeting attended in person ($300 if attendance was telephonic
or if attending on the same date as a Board meeting). Effective July 1, 2003,
the Directors volunteered to temporarily reduce all Directors' fees by 10% such
that each non-employee Director of the Company (other than James H. Williams) is
currently paid a retainer at the annual rate of $13,500, payable quarterly, a
fee of $900 for each Board meeting attended in person ($450 if attendance was
telephonic) and a fee of $540 for each committee meeting attended in person
($270 if attendance was telephonic or if attending on the same date as a Board
meeting). This temporary reduction in compensation was voluntarily made by the
directors in reaction to Messrs. Luksch's and Palle's voluntary reduction in
their executive compensation that took effect in May, 2003. Each Director is
also reimbursed for certain travel, lodging and related expenses incurred in
connection with attendance at Board and committee meetings. During calendar year
2003, Messrs. Luksch, Palle and Dwight did not receive any separate compensation
for serving on the Board of Directors or any committees thereof.
Effective January 1, 2000, the Company enacted a new policy requiring
each of the Company's Directors to maintain an investment in the Company's
Common Stock during his or her entire tenure as a Director equal to at least
$25,000, calculated by taking the greater of (i) the amount paid for such stock
by the Director and (ii) the highest fair market value of such stock.
Non-employee directors of the Company are encouraged to purchase Company Common
Stock equal to or exceeding one year's annual retainer during any three-year
period until they meet this requirement.
In May, 1998, the stockholders of the Company approved the adoption of
the Company's Amended and Restated 1996 Director Option Plan, as further amended
by approval of the stockholder in May, 2003 (the "1996 Plan"). The 1996 Plan is
administered by the Board of Directors. Under the 1996 Plan, Directors who are
not currently employed by the Company or any subsidiary of the Company and who
have not been so employed within the past six months are eligible to receive
options from time to time to purchase a number of shares of Common Stock as
determined by the Board; provided, however, that no Director may be granted
options to purchase more than 5,000 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 1996 Plan will generally be exercisable
over the term of the option, as determined by the Board; however, no option
granted under the 1996 Plan may have a term of greater than ten years from the
date of grant. A maximum of 200,000 shares may be awarded under the 1996 Plan
which expires January 2, 2006.
7
On June 12, 2003, each of the Company's non-employee Directors other
than James H. Williams was granted an option under the 1996 Plan to purchase
5,000 shares of Common Stock at an exercise price of $2.05 per share. The
options vest on the first anniversary of the date of grant.
The Company is party to a consulting and non-competition agreement
with James H. Williams for the purpose of obtaining advice and counseling from
Mr. Williams concerning strategic planning and financial and business matters.
Under this agreement, as amended, Mr. Williams is obligated to make himself
available to the Company for up to 25 hours per month, in addition to time spent
attending to his duties as a member of the Board of Directors of the Company.
Prior to July 1, 2003 during the 2003 fiscal year, Mr. Williams was paid at the
rate of $168,525 per year for his services under this agreement, subject to
adjustment on a basis consistent with adjustments to compensation for the
Company's senior management. Effective July 1, 2003, Mr. Williams' pay was
voluntarily reduced by 10% to $151,672.56 per year, consistent with similar
reductions in annual compensation paid to Messrs. Luksch and Palle. The
agreement provides a cap of $200,000 on payments to be made thereunder during
any calendar year. The initial term of this agreement expires on December 31,
2004 and automatically renews thereafter for successive one year terms (subject
to termination at the end of any renewal term on at least 90 days' notice).
Payments to Mr. Williams under this consulting agreement are in lieu of any
other payments in connection with his services as a Director or committee
member, other than the reimbursement of certain travel, lodging and related
expenses incurred in connection with attendance at Board and committee meetings.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers, and persons who own more than ten
percent of the Common Stock, to file with the Securities and Exchange Commission
(the "Commission") and the American Stock Exchange, initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, Directors and greater than ten percent stockholders
(collectively, "Reporting Persons") are additionally required to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations of the
Reporting Persons that no other reports were required with respect to fiscal
year 2003, all Section 16(a) filing requirements applicable to the Reporting
Persons were complied with on a timely basis in fiscal year 2003, except that
(i) the Form 4 for Robert J. Palle, Jr. filed on December 4, 2000 to report his
purchase of Common Stock mistakenly did not include his purchase of 2,500 shares
on November 28, 2000 and 390 shares on November 29, 2000; accordingly, an
Amended Form 4 was filed on April 28, 2003, (ii) the Form 3 for each of Allen
Horvath and Kant Mistry was filed 5 days late on May 23, 2003; and (iii) James
A. Luksch did not timely file a Form 5 to report his gift of 5,486 shares of
Common Stock to his spouse on December 25, 2003, which Form 5 was filed on April
5, 2004.
8
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock as of March 1, 2004 by (i)
each person who is known by the Company to beneficially own more than five
percent of the Company's Common Stock, (ii) each of the Company's Directors,
including nominee Directors, (iii) each of the executive officers named in the
Summary Compensation Table and (iv) all executive officers and Directors as a
group. Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to all shares beneficially owned,
subject to community property laws where applicable.
Name and Address of Amount and Nature of Percent of Class
Beneficial Owner(1)(2) Beneficial Ownership (1) Beneficially Owned
---------------------- ------------------------ ------------------
James A. Luksch................................. 1,395,192 (3) 17.54%
Robert J. Palle, Jr............................. 1,194,323 (4) 15.01%
Norman A. Westcott.............................. 92,506 (5) 1.15%
Kant Mistry..................................... 62,258 (6) *
Eric S. Skolnik................................. 27,917 (7) *
John E. Dwight.................................. 92,667 (8) 1.16%
James H. Williams............................... 1,528,854 (9) 19.22%
James F. Williams............................... 91,173 (9) 1.14%
Gary P. Scharmett............................... 38,300 (10) *
Robert B. Mayer................................. 27,000 (11) *
Robert E. Heaton................................ 25,000 (12) *
All Directors and executive officers as a
group (13 persons) ............................. 4,680,248 55.40%
Blonder Tongue Telephone, LLC(13)............... 500,000 (14) 6.29%
Resource Investment Group, LLC
Blonder Tongue Laboratories, Inc.
H. Tyler Bell
Douglas Bell
FMR Corp. ...................................... 511,500 (15) 6.40%
82 Devonshire Street
Boston, Massachusetts 02109
--------------
* Less than 1%
(1) Beneficial ownership as of March 1, 2004 for each person includes shares
subject to options held by such person (but not held by any other person)
which are exercisable within 60 days after such date. Beneficial ownership
is determined in accordance with the rules of the Commission and generally
includes voting or investment power with respect to securities, which
voting or investment power may be further described in the footnotes below.
This table contains information furnished to the Company by the respective
stockholders or contained in filings made with the Commission.
(2) Unless otherwise indicated, the address for each beneficial owner is c/o
Blonder Tongue Laboratories, Inc., One Jake Brown Road, Old Bridge, NJ
08857.
(3) Includes 10,928 shares of Common Stock owned of record by two trusts of
which Mr. Luksch is the trustee, 9 shares of Common Stock owned of record
by an estate of which Mr. Luksch is the executor and 89,286 shares of
Common Stock held of record by Mr. Luksch's spouse, as to which Mr. Luksch
expressly disclaims beneficial ownership.
(4) Includes 200,000 shares owned of record by a limited liability company of
which Mr. Palle and his wife are the sole members.
(5) Includes 80,700 shares of Common Stock underlying options granted by the
Company.
(6) Includes 2,000 shares of Common Stock held jointly by Mr. Mistry and his
spouse, 952 shares of Common Stock held jointly by Mr. Mistry's spouse and
child, 951 shares of Common Stock held jointly by Mr. Mistry's spouse and
child, and 58,355 shares of Common Stock underlying options granted by the
Company.
(7) Includes 27,677 shares of Common Stock underlying options granted by the
Company.
(8) Includes 66,667 shares of Common Stock underlying options granted by the
Company.
(9) James H. Williams has granted to James F. Williams the option to purchase
52,173 shares of Company Common Stock which he owns. These shares are
included in the beneficial ownership of both Directors.
9
Beneficial ownership for James F. Williams also includes 24,000 shares
of Common Stock underlying options granted by the Company.
(10) Includes 32,000 shares of Common Stock underlying options granted by the
Company.
(11) Includes 24,000 shares of Common Stock underlying options granted by the
Company, 500 shares of Common Stock held of record by Mr. Mayer's adult
son, as to which Mr. Mayer expressly disclaims beneficial ownership, and
200 shares of Common Stock held of record by Mr. Mayer's spouse.
(12) Includes 22,000 shares of Common Stock underlying options granted by the
Company.
(13) The address for the Company is set forth in footnote 2 above, and the
address for Blonder Tongue Telephone, LLC, Resource Investment Group, LLC,
H. Tyler Bell and Douglas Bell is c/o Williamstown Pavilion & Business
Park, 1809 North Black Horse Pike, Suite B3, Williamstown, New Jersey
08094.
(14) The Company issued 500,000 shares of Common Stock to Blonder Tongue
Telephone, LLC ("BTT") in connection with forming its telephony venture.
While economic ownership of BTT is split 50% each by the Company and
Resource Investment Group, LLC ("RIG"), any investment decision with regard
to these 500,000 shares of Common Stock must be made unanimously by the
Company and RIG. H. Tyler Bell shares voting power over such shares with
the members of BTT in his capacity as the General Manager of BTT. RIG is
wholly-owned by Douglas Bell, who is also the Manager of RIG. As such,
Douglas Bell may also be deemed to be an indirect beneficial owner of the
500,000 shares of Common Stock. Of the 500,000 shares, one-half (250,000
shares) have been pledged to the Company as collateral to secure BTT's
obligation to repay the $1,167,000 cash component of the purchase price to
the Company. See "Certain Relationships and Related Transactions" beginning
on page 14 for more details.
(15) Based on a Schedule 13G filed by FMR Corp. ("FMR") with the Securities and
Exchange Commission on February 17, 2004. The Schedule 13G discloses that
the 511,500 shares of Common Stock are held directly by Fidelity Low Priced
Stock Fund, that each of FMR and Edward C. Johnson, 3rd, Chairman of FMR,
have the sole power to dispose of the 511,500 shares of Common Stock, and
that sole power to vote or direct the voting of the 511,500 shares of
Common Stock is held by the Fidelity Funds' Board of Trustees.
10
EXECUTIVE COMPENSATION
Summary
The following table sets forth certain summary information concerning
compensation paid or accrued for services rendered to the Company in all
capacities for the year ended December 31, 2003 and the two prior fiscal years
with respect to the Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company who served as executive
officers during 2003 and whose salary plus bonus during 2003 exceeded $100,000.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------- ------------
Securities
Name and Underlying All Other
Principal Position Year Salary ($) Bonus($) Options(#) Compensation($)(1)
------------------ ---- ---------- -------- ---------- ------------------
James A. Luksch........................ 2003 345,697 0 --- 10,637
Chairman of the Board and Chief 2002 341,000 0 --- 11,416
Executive Officer 2001 341,000 (2) 0 --- 8,856
Robert J. Palle, Jr.................... 2003 266,950 0 --- 16,714
President, Chief Operating Officer and 2002 266,000 0 --- 17,135
Secretary 2001 266,000 (3) 0 --- 12,358
Norman A. Westcott..................... 2003 137,961 0 --- 5,829
Senior Vice President - Operational 2002 130,000 0 25,000 5,630
Services 2001 129,331 0 12,000 5,015
Eric S. Skolnik........................ 2003 118,461 0 --- 4,035
Senior Vice President, Chief Financial 2002 110,000 0 25,000 3,749
Officer and Treasurer 2001 104,146 0 8,000 3,345
Kant Mistry........................... 2003 139,000 0 --- 4,737
Vice President - Engineering and Chief 2002 139,000 0 20,000 4,737
Technical Officer 2001 135,423 0 10,000 4,614
------------------
(1) Represents reimbursement of life insurance premiums, matching contributions
paid by the Company under its 401(k) plan and costs of preparation of
individual tax returns. Amounts paid in 2003 for life insurance were
$1,412, $1,089, $563, $481 and $567; matching contributions under the
Company's 401(k) plan were $6,000, $6,000, $4,016, $3,554 and $4,170; and
amounts paid for preparation of tax returns were $3,225, $9,625, $1,250, $0
and $0 for Messrs. Luksch, Palle, Westcott, Skolnik, and Mistry,
respectively. Amounts paid in 2002 for life insurance were $1,391, $1,085,
$530, $449 and $567; matching contributions under the Company's 401(k) plan
were $5,500, $5,500, $3,900, $3,300 and $4,710; and amounts paid for
preparation of tax returns were $4,525, $10,550, $1,200, $0 and $0 for
Messrs. Luksch, Palle, Westcott, Skolnik, and Mistry, respectively. Amounts
paid in 2001 for life insurance were $1,236, $258, $396, $54 and $551;
matching contributions under the Company's 401(k) plan were $5,250, $5,250,
$3,519, $3,300 and $4,063; and amounts paid for preparation of tax returns
were $2,370, $12,850, $1,100, $0 and $0 for Messrs. Luksch, Palle,
Westcott, Skolnik and Mistry, respectively.
(2) Mr. Luksch's accrued annual salary for the period ending December 31, 2001
was $341,000, however, due to timing issues the actual cash paid for the
period ending December 31, 2001 was $325,000. The unpaid balance was paid
to Mr. Luksch during 2002.
(3) Mr. Palle's accrued annual salary for the period ending December 31, 2001
was $266,000, however, due to timing issues the actual cash paid for the
period ending December 31, 2001 was $253,000. The unpaid balance was paid
to Mr. Palle during 2002.
11
Option Exercises and Holdings
The following table provides information with respect to the named
executive officers concerning the exercise of options during fiscal year 2003
and unexercised options held as of December 31, 2003.
Aggregated Option Exercises in 2003
and Option Values as of December 31, 2003
Shares Number of Securities Underlying Value of Unexercised
Acquired Value Unexercised Options at In-the-Money Options at
on Exercise(#) Realized($) December 31, 2003(#) December 31, 2003($)(1)
-------------- ----------- -------------------- -----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
James A. Luksch......... --- --- --- --- --- ---
Robert J. Palle, Jr..... --- --- --- --- --- ---
Norman A. Westcott...... --- --- 68,367 20,666 2,640 1,320
Eric S. Skolnik......... --- --- 16,668 19,332 1,760 880
Kant Mistry............. --- --- 48,356 16,666 2,200 1,100
----------
(1) These columns represent the difference on December 31, 2003 between the
closing market price of the Company's Common Stock and the option exercise
price.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors currently
consists of James F. Williams, Robert B. Mayer and Robert E. Heaton. No member
of the Compensation Committee was an officer or employee of the Company during
fiscal year 2003. None of the executive officers of the Company has served on
the board of directors, the compensation committee or any other board committee
performing equivalent functions of any other entity, any of whose officers
served either on the Board of Directors or the Compensation Committee of the
Company.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION POLICIES
General
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The objective of the Company
in setting executive compensation has been to attract, retain and motivate
qualified executives to manage the Company's business and affairs so as to
foster sales and earnings growth, achieve significant current profits and
maximize stockholder value. Executive compensation in the aggregate is made up
principally of annual base salary, bonus, and awards of stock options under the
Company's 1995 Long Term Incentive Plan.
Generally, annual salary adjustments and bonuses for executive
officers other than Messrs. Luksch and Palle have been established by Mr. Luksch
with the concurrence of the Compensation Committee. The annual salary
adjustments and bonuses for Messrs. Luksch and Palle are determined by the
Compensation Committee, subject to Board approval. An annual performance
evaluation of each executive officer is conducted, upon which a salary
adjustment is determined. The performance evaluation focuses on the executive's
performance during the past year of the responsibilities of his position, the
executive's improvement in areas where any deficiencies may have been noted in
the past, and the executive's achievement of any specific goals and objectives
which may have been established for such executive, including achievement of
budget objectives. The Company's overall profit for the fiscal year and the
executive's individual contribution to that profit are also considered. As is
typical for most corporations, the assessment of individual performance
contributions is in most cases subjective and not conditioned upon the
achievement of any specific, pre-determined performance targets.
In February, 1997, the Compensation Committee implemented the
Executive Officer Bonus Plan ("Executive Bonus Plan"). The Compensation
Committee believes that a combination of base salary, cash bonus awards under
the Executive Bonus Plan and the award of stock options and/or restricted stock
awards will support the short-term and long-term strategic objectives of the
Company and will reward individual performance and the value created for
stockholders. Cash bonus awards under the Executive Bonus Plan are paid to
officers during a
12
particular fiscal year based upon and relating to the financial performance of
the Company during the prior fiscal year. During the first quarter of each
fiscal year of the Company, the Compensation Committee designates which of the
Company's executive officers are to participate in the Executive Bonus Plan for
that year. Also during the first quarter, the Compensation Committee establishes
one or more objective performance goals for each participant, together with a
maximum dollar bonus opportunity for the participant and a formula to determine
bonus payments based on the achievement of the goal(s). In no event may the
bonus for any participant exceed 100% of such participant's base salary.
The performance goals are expressed in terms of (a) one or more
corporate or divisional earnings-based measures (which may be based on net
income, operating income, cash flows, or any combination thereof) and/or (b) one
or more corporate or divisional sales-based measures. Each such goal may be
expressed on an absolute and/or relative basis, may employ comparisons with past
performance of the Company (including one or more divisions) and/or the current
or past performance of other companies, and in the case of earnings-based
measures, may employ comparisons to capital, stockholders' equity and shares
outstanding. Performance goals need not be uniform among participants.
After the Company's financial results for a fiscal year have been
determined, the Compensation Committee certifies the level of performance goal
attainment and the potential bonus payment for each participant. The
Compensation Committee has full authority to reduce the amount that would
otherwise be payable to any participant for a fiscal year.
For 2003, bonuses under the Executive Bonus Plan were only to be
awarded if the Company's diluted earnings per share in 2003 were at least equal
to 120% of its average annual diluted earnings per share for calendar years
2000, 2001 and 2002. This threshold requirement for the payment of bonuses was
not met for fiscal 2003, therefore no bonuses were awarded under the Executive
Bonus Plan. Other than Mr. Mistry who became an executive officer in May, 2003,
each of the named executive officers in the Summary Compensation Table herein
was eligible to participate in the Executive Bonus Plan during 2003. If awarded,
bonuses earned during the 2003 fiscal year under the Executive Bonus Plan
(included as bonuses earned during 2003 in the Summary Compensation Table herein
but payable in 2004) were to be based on a percentage of each recipient's annual
salary for 2003 equal to the percentage increase in the Company's diluted
earnings per share for fiscal 2003 over the average annual diluted earnings per
share for calendar years 2000, 2001 and 2002, multiplied by a multiplier between
1.0 and 1.5 determined on an individual basis by the Compensation Committee,
subject to a maximum amount equal to 100% of such recipient's 2003 base annual
salary.
Compensation of the Chief Executive Officer
Mr. Luksch has been Chief Executive Officer of the Company since it
commenced operations in 1988 and served as President of the Company from such
date until May, 2003. His compensation includes the same elements and
performance measures as the compensation of the Company's other executive
officers.
Mr. Luksch's annual salary, which had been $341,000 since January
2001, was increased to $365,000 effective January 1, 2003. This increase was
based on Mr. Luksch's leadership and efforts over the prior two years (2001 and
2002) that enabled the Company to remain profitable despite a difficult
marketplace and his vision in seeking additional sources of revenue in a down
market. The amount of the new salary was determined following an analysis of the
range of compensation paid to chief executive officers of similar-sized
manufacturing companies located in the Northeastern United States. Mr. Luksch's
compensation, as adjusted, fell within the middle of the range. On May 8, 2003,
Mr. Luksch advised the Board that he and Mr. Palle intended to voluntarily
implement a temporary 10% wage reduction upon themselves in an effort to
personally participate in the Company's cost reduction program. This reduction
became effective May 17, 2003 and remains in place at the present time.
Accordingly, Mr. Luksch's current annual salary is $328,500. Mr. Luksch received
no bonus and no stock options during fiscal year 2003. The Committee believes
that Mr. Luksch's overall compensation is fair and reasonable. This assessment
is a subjective determination and is not quantitatively related to the Company's
performance.
The Compensation Committee
Robert B. Mayer, Chairman
Robert E. Heaton
James F. Williams
13
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total return during the period
from December 31, 1998 to December 31, 2003, for the Company's Common Stock, the
AMEX Market Value Index and the Dow Jones Electrical Components & Equipment
Industry Group Index. This graph assumes the investment of $100 in the Company's
Common Stock, the stock in the companies presented in the AMEX Market Value
Index and the stock in the companies comprising the Dow Jones Electrical
Components & Equipment Industry Group Index on January 1, 1999 and the
reinvestment of all dividends.
[Line graph appears here depicting the cumulative total shareholder return of
$100 invested in the Common Stock of the Company as compared to $100 invested in
the AMEX Market Value Index and the Dow Jones Electrical Components & Equipment
Industry Group Index. Line graph begins at December 31, 1998 and plots the
cumulative return at December 31, 1999, 2000, 2001, 2002 and 2003. The plot
points are provided below.]
--------------------------------------------------------------------------------
12/31/1998 12/31/1999 12/31/2000 12/31/2001 12/31/2002 12/31/2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BDR 100.00 75.47 47.17 55.70 24.15 48.45
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AMEX 100.00 131.94 122.38 113.91 93.10 126.03
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
DJEI 100.00 145.82 89.37 62.85 37.25 60.85
--------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Chief Executive Officer's daughter, Emily Nikoo, was the director
of marketing during 2003 and was elected as the Vice President - Marketing and
Technical Services by the Board of Directors on February 3, 2004. In addition,
Ms. Nikoo heads the Company's task force for the promotion of its interdiction
product line. The annual compensation for Ms. Nikoo in 2003 was $125,221. Nezam
Nikoo, Ms. Nikoo's husband and the Chief Executive Officer's son-in-law, is
Chief Digital Engineer of the Company. The annual compensation for Mr. Nikoo in
2003 was $118,562.
One of the Company's directors, Gary P. Scharmett, is a partner at the
law firm of Stradley, Ronon, Stevens & Young, LLP, which serves as the Company's
outside counsel. Mr. Scharmett also served on the Board of Directors of that
firm from January 2001 until December 2003.
As of February 29, 2004, James A. Luksch, Chief Executive Officer and
a Director of the Company, was indebted to the Company in the amount of
$200,872, for which no interest has been charged. This indebtedness arose from a
series of cash advances to Mr. Luksch, the latest of which was advanced in
February, 2002. The largest aggregate amount of indebtedness during the 2003
fiscal year was $200,872.
14
Robert J. Palle, Jr., President and a Director of the Company, lent
the Company 100% of the purchase price of certain used equipment purchased by
the Company in October through November of 2003. The equipment was purchased at
a substantial discount to market price and the Company has sold and will resell
the equipment. While the aggregate cost to purchase all of the equipment was
approximately $950,000, the maximum amount of indebtedness outstanding to Mr.
Palle at any one time during the 2003 fiscal year was $810,000. At March 1,
2004, the remaining outstanding balance due to Mr. Palle was $546,791. Mr. Palle
made the loan to the Company on a non-recourse basis, secured solely by a
security interest in the equipment purchased by the Company and the proceeds
resulting from the sale of the equipment. In consideration for the extension of
credit on a non-recourse basis, Mr. Palle will receive from the Company interest
on the outstanding balance at the margin interest rate he incurs for borrowing
the funds from his lenders (approximately 4.756% as of March 1, 2004) plus 25%
of the gross profit derived from the Company's resale of such equipment, which
amounts will not be paid to Mr. Palle until the outstanding balance of the
indebtedness has been paid in full. During 2003, accrued interest on the loan
payable to Mr. Palle was $4,531, and the share of gross profit payable to Mr.
Palle was $38,721.
In March, 2003, the Company entered into a series of agreements,
pursuant to which the Company acquired a 20% minority interest in NetLinc
Communications, LLC ("NetLinc") and a 35% minority interest in Blonder Tongue
Telephone, LLC ("BTT"). During September, 2003, the parties restructured the
terms of their business arrangement which included increasing Blonder Tongue's
economic ownership in NetLinc from 20% to 50% and in BTT from 35% to 50%, all at
no additional cost to Blonder Tongue. The cash portion of the purchase price in
the venture was decreased from $3,500,000 to $1,167,000, and was paid in full by
the Company to BTT in October, 2003. As the non-cash component of the purchase
price, the Company issued 500,000 shares of Common Stock to BTT, resulting in
BTT becoming the owner of greater than 5% of the outstanding Common Stock of the
Company. One-half of such Common Stock (250,000 shares) has been pledged to the
Company as collateral to secure BTT's obligation to repay the $1,167,000 cash
component of the purchase price to the Company. Under the restructured
arrangement, the Company pays certain future royalties to NetLinc and BTT upon
the sale of telephony products. During 2003, the total accrued royalties to
NetLinc and BTT were $14,400 and $21,541, respectively, which will be paid to
them by the Company in 2004. In addition, during 2003 the Company paid certain
expenses of BTT totaling approximately $95,334. Through this telephony venture,
BTT offers primary voice service to MDUs and the Company offers for sale a line
of telephony equipment to complement the voice service. In addition to receiving
incremental revenues and profits associated with its direct sales of the
telephony products, the Company expects to receive a portion of BTT's net income
derived from voice-service revenues through its 50% stake in BTT.
PROPOSAL NO. 2 - RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Audit Committee has selected BDO Seidman, LLP to serve as
independent auditors of the Company for the fiscal year ending December 31,
2004. BDO Seidman, LLP was the Company's independent auditors for the fiscal
year ended December 31, 2003 and is considered by management of the Company to
be well qualified. The Company has been advised by that firm that neither it nor
any member thereof has any financial interest, direct or indirect in the Company
or any of its subsidiaries, in any capacity. One or more representatives of BDO
Seidman, LLP is expected to be present at this year's Annual Meeting of
Stockholders with an opportunity to make a statement if he or she desires to do
so and to answer appropriate questions with respect to that firm's examination
of the Company's financial statements and records for the fiscal year ended
December 31, 2003.
Although the submission of the appointment of BDO Seidman, LLP is not
required by the By-Laws of the Company, the Board is submitting it to the
stockholders to ascertain their views. If the stockholders do not ratify the
appointment, the Audit Committee will not be bound to seek other independent
auditors for 2004, but the selection of other independent auditors will be
considered in future years.
Audit and Other Fees Paid to Independent Auditors
The following table presents fees billed by BDO Seidman, LLP for
professional services rendered in fiscal years ended December 31, 2002 and
December 31, 2003.
15
Services Rendered Fiscal 2003 Fiscal 2002
----------------- ----------- -----------
Audit Fees $ 178,075 $ 163,325
Audit-Related Fees $ 22,500 $ 24,385
Tax Fees $ 65,815 $ 101,200
All Other Fees $ -- $ 2,160
Audit Fees
The audit fees are billed for professional services rendered for the
audit of the Company's annual financial statements, the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q, consents to
incorporate audited financial statements into registration statements related to
the Company's employee benefit plans, and assistance with earnings announcements
on Form 8-K.
Audit-Related Fees
The audit-related fees for fiscal years 2002 and 2003 consisted
principally of audits of the Company's pension and 401(k) plans and in 2002
responding to a comment letter from the Commission and the implementation of FAS
144.
Tax Fees
Tax fees for fiscal years 2002 and 2003 consisted principally of
preparing the Company's U.S. federal and state income tax returns, preparing tax
returns for certain executive officers of the Company and assisting the Company
in responding to audits by the U.S. Internal Revenue Service.
All Other Fees
Aggregate fees for all other services (other than audit services,
audit-related services and tax services) in fiscal year 2002 consisted
principally of fees for advice on an acquisition.
The Audit Committee has reviewed the non-audit services currently
provided by the Company's independent auditors and has considered whether the
provision of such services is compatible with maintaining the independence of
such independent auditors. Based on such review and consideration, the Audit
Committee has determined that the provision of such non-audit services is
compatible with maintaining the independence of the independent auditors.
Pre-Approval Policy for Services by Independent Auditors
The Audit Committee has implemented pre-approval policies and
procedures for the engagement of the Company's independent auditors for both
audit and permissible non-audit services. Under these policies and procedures,
all services provided by the independent auditors must either (i) be approved by
the Audit Committee prior to the commencement of the services, (ii) relate to
assisting the Company with tax audits and appeals before a taxing authority or
be services associated with periodic reports or registration statements filed by
the Company with the Commission, all of which services are pre-approved by the
Audit Commmittee, or (iii) be a de minimis non-audit service (as described in
Rule 2-01(c)(7)(C) of Regulation S-X) that does not have to be pre-approved as
long as management promptly notifies the Audit Committee of such service and the
Audit Committee approves it prior to the service being completed. Within these
parameters, the Audit Committee annually approves the scope and fees payable for
the year end audit, statutory audits and employee benefit plans to be performed
by the independent auditors for the next fiscal year. The Audit Committee has
also delegated pre-approval authority for permissible non-audit services to the
Chairman of the Audit Committee. Any approvals of non-audit services made by the
Chairman of the Audit Committee are then reported by him at the next Audit
Committee meeting. Since May 6, 2003, the effective date of the Commission's
rules requiring Audit Committee pre-approval of all audit and non-audit services
performed by a company's independent auditors, 100% of the services provided by
BDO Seidman, LLP have been approved in accordance with the Company's
pre-approval policies and procedures.
16
Recommendation of the Board Concerning the Ratification of Appointment of
Independent Auditors
The Board of Directors of the Company recommends that stockholders
vote FOR the ratification of the appointment of BDO Seidman, LLP as the
Company's independent auditors for the 2004 fiscal year. Proxies received by the
Board of Directors will be so voted unless stockholders specify in their proxies
a contrary choice.
OTHER BUSINESS
Management knows of no other matters that will be presented at the
Annual Meeting of Stockholders. However, if any other matter properly comes
before the meeting, or any adjournment or postponement thereof, it is intended
that proxies in the accompanying form will be voted in accordance with the
judgment of the persons named therein.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be included in the Company's proxy
statement for presentation at the 2005 Annual Meeting of Stockholders pursuant
to Rule 14a-8 of the Securities Exchange Act of 1934, as amended, must be
received by the Company's Chief Financial Officer at One Jake Brown Road, Old
Bridge, New Jersey 08857 on or before December 11, 2004, to be eligible for
inclusion in such proxy statement.
If notice of a stockholder proposal intended to be presented at the
2005 Annual Meeting of Stockholders is not received by the Company on or before
February 24, 2005 (whether or not the stockholder wishes the proposal to be
included in the proxy statement for such annual meeting), the Company (through
management proxy holders) may exercise discretionary voting authority on such
proposal when and if the proposal is raised at the annual meeting without any
reference to the matter in the proxy statement.
FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2003 ACCOMPANIES THIS PROXY STATEMENT. THE COMPANY WILL
FURNISH TO EACH PERSON WHOSE PROXY IS BEING SOLICITED, UPON WRITTEN REQUEST, ANY
EXHIBIT DESCRIBED IN THE LIST ACCOMPANYING THE FORM 10-K, UPON THE PAYMENT, IN
ADVANCE, OF REASONABLE FEES RELATED TO THE COMPANY'S FURNISHING SUCH EXHIBIT(S).
REQUESTS FOR COPIES OF SUCH EXHIBIT(S) SHOULD BE DIRECTED TO ERIC SKOLNIK, CHIEF
FINANCIAL OFFICER, AT THE COMPANY'S PRINCIPAL ADDRESS AS SHOWN ON THE COVER PAGE
OF THIS PROXY STATEMENT.
By Order of the Board of Directors
James A. Luksch
Chairman of the Board and
Chief Executive Officer
Date: April 9, 2004
Old Bridge, New Jersey
17
EXHIBIT A
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BLONDER TONGUE LABORATORIES, INC.
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing: (i) the financial
reports and other financial information provided by the Company to any
governmental body or the public; (ii) the Company's systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board have established and may establish from time to time; (iii) the
Company's auditing, accounting and financial reporting practices generally; and
(iv) all potential conflict of interest situations, including those arising from
any related-party transactions. Consistent with this function, the Audit
Committee should encourage continuous improvement of, and should foster
adherence to, the Company's policies, procedures and practices at all levels.
The Audit Committee's primary duties and responsibilities are to:
o Serve as an independent and objective party to oversee and monitor the
accounting and financial reporting processes, internal control system,
and the audit of the financial statements of the Company.
o Analyze and approve conflict of interest transactions and investigate
any violations of the Company's Code of Ethics and complaints
regarding accounting or auditing matters.
o Appoint, compensate, retain and oversee the work of the independent
auditors employed for the purpose of preparing or issuing an audit
report with respect to the Company or preparing other audit, review or
attest services for the Company, and also review and appraise the
qualifications and performance of the Company's independent auditors
and internal auditing department.
o Provide an open avenue of communication among the independent
auditors, financial and senior management, the internal auditing
department and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by being
authorized and directed to do the following:
(a) To directly appoint, compensate, retain, evaluate, terminate and
oversee the work of the independent auditors employed for the purpose
of preparing or issuing an audit report with respect to the Company or
preparing other audit, review or attest services for the Company; such
independent auditors shall be duly registered with the Public
Accounting Oversight Board and shall be instructed to report directly
to the Audit Committee. In connection therewith, the Audit Committee
shall annually (i) receive, evaluate and discuss with the independent
auditors a formal written report from them setting forth all
consulting or other relationships with the Company, which shall
include specific representations and discussions as to their
objectivity and independence as required by Independence Standards
Board Statement No. 1, and (ii) take, or recommend that the full Board
take, appropriate action to oversee the independence of the
independent auditors;
A-1
(b) To meet with the Company's independent auditors, including private
meetings as necessary, (i) to review the arrangements for and scope of
the annual audit and any special audits; (ii) to discuss any matters
of concern relating to the Company's financial statements, including
any adjustments to such statements recommended by the auditors, or
other results of said audit(s); (iii) to consider the independent
auditors' comments with respect to the Company's financial policies,
procedures and internal accounting controls and management's responses
thereto; and (iv) to review the form of opinion the independent
auditors propose to render to the Board of Directors and shareholders;
(c) To review as a committee, with management and the independent
auditors, the audited financial statements to be included in the
Company's Annual Report on Form 10-K to be filed with the Securities
and Exchange Commission (including disclosures made in the
"Management's Discussion and Analysis" portion of the Form 10-K), and
the matters required to be discussed by Statement of Auditing
Standards ("SAS") No. 61 and SAS No. 90;
(d) To review as a committee, or through the Audit Committee chairman,
with the independent auditors, the Company's interim financial results
to be included in the Company's quarterly reports on Form 10-Q to be
filed with the Securities and Exchange Commission (including
disclosures made in the "Management's Discussion and Analysis" portion
of the Form 10-Q), and the matters required to be discussed by SAS No.
61 and SAS No. 90;
(e) To consider the effect upon the Company of any changes in accounting
principles or practices proposed by management or the independent
auditors;
(f) To review the fees charged by the independent auditors for audit and
non-audit services;
(g) To report its activities to the full Board of Directors on a regular
basis and to make such recommendations with respect to the above and
other matters as the Audit Committee may deem necessary or
appropriate;
(h) To act as a liaison between the Company's independent auditors and the
full Board of Directors;
(i) To review, evaluate and pre-approve any non-audit services the
independent auditors may perform for the Company (except where such
prior approval is not required for services described in pre-approval
policies and procedures and for certain de minimis non-audit
services), and, to the extent required by applicable regulations,
disclose such approved non-audit services in reports to stockholders
and periodic reports filed with the Securities and Exchange
Commission. In connection therewith, the Audit Committee shall have
the authority to establish pre-approval policies and procedures for
the engagement of the independent auditors to provide audit and
permissible non-audit services;
(j) As required by law, the Audit Committee shall assure the regular
rotation of the lead, concurring and other audit partners, and
consider whether there should be a regular rotation of the independent
auditors;
(k) To review and discuss with the independent auditors all necessary
accounting policies and practices to be used, all alternative
treatments of financial information within generally accepted
accounting principles that have been discussed with management and the
risks of using such alternative treatments, and other material written
communications between the independent auditors and management;
(l) To review and discuss the types of presentation and information to be
included in earnings press releases, and any additional financial
information and earning guidance generally provided to analysts and
rating agencies;
A-2
(m) To review and discuss the form and content of the certification
documents for the quarterly reports on Form 10-Q and the annual report
on Form 10-K with the general auditor, the independent auditors, the
chief financial officer and the chief executive officer;
(n) To prepare, review and approve the annual proxy disclosure regarding
the activities and report of the Audit Committee for the year;
(o) To establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, as well as for the
confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters;
(p) To receive, investigate and recommend an appropriate response to the
receipt of written correspondence from an attorney representing the
Company that reports pursuant to Section 307 of the Sarbanes-Oxley Act
that they have become aware of evidence of a material violation of
securities laws or a material breach of fiduciary duty by the Company
or any of its directors, officers, employees or agents;
(q) To perform all duties delegated to it under the Company's Code of
Ethics and pursuant to paragraphs (o) and (p) above (including any
procedures adopted pursuant such paragraphs), including without
limitation, the review and approval of potential conflict of interest
situations and investigation of accounting and auditing complaints;
and
(r) To receive appropriate funding from the Company, as determined by the
Audit Committee, for payment of: (i) compensation to any independent
auditors engaged for the purpose of preparing or issuing an audit
report or performing other audit, review or attest services for the
Company; and (ii) compensation to any advisers employed by the Audit
Committee under Article IV below; and (iii) ordinary administrative
expenses of the Audit Committee that are necessary or appropriate in
carrying out its duties.
II. COMPOSITION
The Audit Committee shall consist of three or more Directors as determined by
the Board, and shall be comprised solely of independent directors, as such term
is defined in Section 121 and Section 803 of the Rules of the American Stock
Exchange, LLC ("AMEX"), except as otherwise set forth in such Rules, and subject
to the effective dates and any transition periods contained in such Rules. Each
member of the Audit Committee shall also meet the criteria for independence set
forth in Section 10A(m)(3) of the Securities Exchange Act of 1934 ("Act") and
Rule 10A-3 thereunder, subject to any exceptions therein.
All members of the Audit Committee shall be able to read and understand
fundamental financial statements, including the Company's balance sheet, income
statement, and cash flow statement. In addition, at least one member of the
Audit Committee shall have accounting or related financial management expertise
such that he or she is deemed to have "financial sophistication" (as defined by
Rule 121 of AMEX). These requirements are intended to satisfy the Act and AMEX
Rules relating to the composition of Audit Committees, and shall be construed
accordingly.
The members of the Audit Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Audit Committee may designate a Chair by majority vote of the full Audit
Committee membership.
III. MEETINGS
The Audit Committee shall meet on a regular basis, at least quarterly, and is
empowered to hold special meetings as circumstances require. The Audit Committee
shall meet at least annually with management, the Chief Financial Officer of the
Company and the independent accountants in separate sessions to discuss any
matters that the Audit Committee or each of these groups believe should be
discussed privately. Meetings may be by teleconference.
A-3
IV. RESOURCES
The Audit Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to retain special
counsel and other experts or consultants at the expense of the Company.
V. AUTHORITY OF AUDIT COMMITTEE; DELEGATION
In addition to all other responsibilities and authority granted to the Audit
Committee pursuant to this Audit Committee Charter, the Audit Committee shall
have all responsibilities and authority required by Rule 10A-3 of the Securities
Exchange Act of 1934, as amended. Any responsibility or authority of the Audit
Committee, including, but not limited to, the authority to pre-approve all
permitted non-audit services, may be delegated to one or more members of the
Audit Committee.
VI. ANNUAL CHARTER REVIEW
The Audit Committee shall review this Charter at least annually and recommend
any changes to the full Board of Directors.
A-4
BLONDER TONGUE LABORATORIES, INC.
One Jake Brown Road
Old Bridge, NJ 08857
PROXY CARD FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The Undersigned hereby appoints James A. Luksch and Robert J. Palle, Jr.,
and either of them (with full power to act alone), as Proxies of the
undersigned, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on this Proxy Card, all
shares of Common Stock of Blonder Tongue Laboratories, Inc. (the "Company") held
of record by the undersigned on the record date of March 19, 2004, at the Annual
Meeting of Stockholders to be held on May 11, 2004 and at any postponements or
adjournments thereof, all as in accordance with the Notice of Annual Meeting of
Stockholders and Proxy Statement furnished with this Proxy.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
Annual Meeting of Stockholders of
BLONDER TONGUE LABORATORIES, INC.
May 11, 2004
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" FOR THE ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS
SHOWN HERE [X]
-------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. Election of three Class III 2. Proposal to ratify the [ ] [ ] [ ]
Directors to hold office until appointment of BDO Seidman,
the 2007 Annual Meeting of LLP as independent auditors
Stockholders or until their for the fiscal year ending
successors have been elected December 31, 2004.
and qualified.
[ ] FOR ALL NOMINEES NOMINEES In their discretion, the Proxies
[ ] Robert B. Mayer are authorized to vote upon such
[ ] WITHHOLD AUTHORITY [ ] James F. Williams other matters as may properly come
FOR ALL NOMINEES before the meeting and at any
postponements or adjournments
[ ] FOR ALL EXCEPT thereof.
(See instructions below)
This proxy when properly executed
will be voted in the manner
directed by the stockholder. If no
direction is made on this Proxy
Card, this Proxy will be voted FOR
the election of all nominees to
serve as Class III Directors, FOR
proposal 2 and in accordance with
the instructions of the Board of
Directors on all other matters
which may properly come before the
meeting.
INSTRUCTION: To withhold authority to vote for
any individual nominee(s), mark "FOR ALL EXCEPT" PLEASE MARK, SIGN, DATE AND RETURN
and fill in the circle next to each nominee THIS PROXY CARD PROMPTLY USING THE
you wish to withhold, as shown here: [X] ENCLOSED ENVELOPE.
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To change the address on your account, [ ]
please check the box at right and
indicate your new address in the address
space above. Please note that changes to
the registered name(s) on the account
may not be submitted via this method.
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Signature of Stockholder ________________ Date ________ Signature of Stockholder ________________ Date ________
Note: Please sign exactly as your name appears on this proxy. When shares are held jointly, each holder
should sign. When signing as executor, adminstrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign in full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in partnership name by
authorized person.