UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ To ____________
Commission file number 2-44764
BALTEK CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-2646117
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
10 Fairway Court, P.O. Box 195, Northvale, NJ 07647
(Address of principal executive offices)
(Zip Code)
(201) 767-1400
(Registrant's telephone number, including area code)
(Former name, former address and formal fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ____
Common shares of stock outstanding as of August 9, 2001: 2,456,822 shares
BALTEK CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
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Page
PART I. FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of June 30, 2001 and
December 31, 2000.................................................1
Consolidated Statements of Income and Retained Earnings for the
Three and Six Months Ended June 30, 2001 and 2000.................2
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2001 and 2000......................................3
Notes to Consolidated Financial Statements...........................4
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................7
PART II. OTHER INFORMATION:
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...............................10
SIGNATURES..............................................................11
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, except per share data)
--------------------------------------------------------------------------------
June 30, December 31,
ASSETS 2001 2000
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 455 $ 1,338
Accounts receivable, net 10,881 10,370
Inventories 19,465 20,421
Prepaid expenses 531 539
Other 2,484 1,779
-------- --------
Total current assets 33,816 34,447
PROPERTY, PLANT AND EQUIPMENT, Net 13,317 13,062
TIMBER AND TIMBERLANDS 9,487 9,073
OTHER ASSETS 852 949
-------- --------
TOTAL ASSETS $ 57,472 $ 57,531
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 11,080 $ 10,605
Accounts payable 3,904 3,863
Income tax payable -- 143
Accrued salaries, wages and bonuses payable 464 1,190
Accrued expenses and other liabilities 1,959 1,494
Current portion of long-term debt 46 44
Current portion of obligation under capital lease 320 465
-------- --------
Total current liabilities 17,773 17,804
OBLIGATION UNDER CAPITAL LEASE -- 82
LONG-TERM DEBT 35 46
UNION EMPLOYEE TERMINATION BENEFITS 172 121
-------- --------
Total liabilities 17,980 18,053
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par; 5,000,000 shares authorized and unissued -- --
Common stock, $1.00 par; 10,000,000 shares authorized,
2,523,261 issued 2,523 2,523
Additional paid-in capital 2,157 2,157
Retained earnings 35,362 34,798
Accumulated other comprehensive loss (45) --
Treasury stock, at cost: 66,439 shares (505) --
-------- --------
Total stockholders' equity 39,492 39,478
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 57,472 $ 57,531
======== ========
See notes to consolidated financial statements.
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BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
(Dollars in Thousands, except per share data)
--------------------------------------------------------------------------------
Three Months Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
NET SALES $ 21,488 $ 23,911 $ 42,639 $ 45,136
COST OF PRODUCTS SOLD 16,930 18,732 33,278 34,948
SELLING , GENERAL AND
ADMINISTRATIVE EXPENSES 3,813 3,655 7,808 7,205
----------- ----------- ----------- -----------
Operating income 745 1,524 1,553 2,983
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (242) (236) (502) (440)
Foreign exchange loss (161) (100) (159) (234)
Other, net 5 1 4 5
----------- ----------- ----------- -----------
Total (398) (335) (657) (669)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 347 1,189 896 2,314
INCOME TAX PROVISION 129 381 332 741
----------- ----------- ----------- -----------
NET INCOME 218 808 564 1,573
RETAINED EARNINGS, BEGINNING OF
PERIOD 35,144 32,681 34,798 31,916
----------- ----------- ----------- -----------
RETAINED EARNINGS, END OF PERIOD $ 35,362 $ 33,489 $ 35,362 $ 33,489
=========== =========== =========== ===========
AVERAGE SHARES OUTSTANDING 2,456,822 2,523,261 2,480,314 2,523,261
=========== =========== =========== ===========
EARNINGS PER COMMON SHARE, BASIC
and DILUTED $ 0.09 $ 0.32 $ 0.23 $ 0.62
=========== =========== =========== ===========
See notes to consolidated financial statements.
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BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
--------------------------------------------------------------------------------
Six Months
Ended June 30,
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 564 $ 1,573
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,319 1,669
Foreign exchange loss 159 234
Changes in assets and liabilities, net of the effect of
foreign currency translation:
Accounts receivable (543) (1,827)
Income taxes (233) (348)
Inventories 956 711
Prepaid expenses and other current assets (692) 425
Other assets 100 33
Accounts payable and accrued expenses (22) (676)
Other 51 2
------- -------
Net cash provided by operating activities 1,659 1,796
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net acquisitions of property, plant and equipment (1,246) (592)
Increase in timber and timberlands (719) (286)
------- -------
Net cash used in investing activities (1,965) (878)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes payable, net 475 193
Payments of long-term debt (28) (187)
Principal payments under capital lease (233) (207)
Purchase of treasury stock (505) --
------- -------
Net cash used in financing activities (291) (201)
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (286) (225)
------- -------
NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS (883) 492
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,338 967
------- -------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 455 $ 1,459
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 425 $ 415
======= =======
Income taxes $ 665 $ 1,025
======= =======
See notes to consolidated financial statements.
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BALTEK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The information included in the accompanying interim financial statements
is unaudited. In the opinion of management, all adjustments, consisting of
normal recurring accruals necessary for a fair presentation of the results
of operations, financial position and cash flows for the interim periods
presented, have been reflected herein. The results of operations for the
interim periods are not necessarily indicative of the results to be
expected for the entire year. The statements should be read in conjunction
with the accounting policies and notes to consolidated financial
statements included in the Company's 2000 Annual Report on Form 10-K.
2. INVENTORIES
Inventories are summarized as follows (amounts in thousands):
June 30, December 31,
2001 2000
Raw materials $ 5,883 $ 5,314
Work-in-process 3,668 3,273
Finished goods 9,914 11,834
--------- --------
$ 19,465 $ 20,421
========= ========
3. NOTES PAYABLE
As of June 30, 2001 and March 31, 2001, the Company was in violation of
one of the financial covenants contained in its domestic loan agreement,
but was and continues to be current with all of its scheduled payments
required by the loan agreement. In August 2001, the Company received a
waiver from the bank for the first and second quarters of 2001. At the
same time, the bank amended the covenant requirement for the third quarter
of 2001. The Company was in compliance with all other financial and
non-financial covenants as of June 30, 2001.
4. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended by SFAS 137, Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133, and SFAS No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities - an amendment of
FASB Statement No. 133 (collectively "SFAS 133"). SFAS 133 requires that
an entity recognize all derivatives as either assets or liabilities
measured at fair value and establishes criteria for designation and
effectiveness of hedging relationships. For derivatives designated as fair
value hedges, the changes in the fair value of both the derivative
instrument and the hedged item are recorded in earnings. For derivatives
designated as cash flow hedges, the effective portions of changes in fair
value of the derivative are reported in other comprehensive income ("OCI")
and are subsequently reclassified into earnings when the hedged item
affects earnings. Changes in fair value of derivative instruments not
designated as hedging instruments and ineffective portions of hedges are
recognized in earnings in
- 4 -
the current period. Adoption of the new accounting standards resulted in a
change to current assets and liabilities of $35,000 and $51,000,
respectively, and a one time cumulative after-tax reduction in OCI of
approximately $16,000.
The Company is exposed to fluctuations in foreign currency exchange rates,
interest rates and raw material prices. To manage certain of these
exposures, the Company uses derivative instruments including interest rate
swaps and forward contracts. Derivative instruments used by the Company
are considered risk management tools and are not used for trading or
speculative purposes.
All relationships between hedging instruments and hedged items, as well as
its risk management objective and strategy for undertaking various hedge
transactions are formally documented. The Company formally assesses the
effectiveness of its hedging relationships both at the hedge inception and
on at least a quarterly basis in accordance with its risk management
policy.
The Company purchases certain raw materials in currencies other than the
U.S. dollar. To reduce currency exchange risk on these firm purchase
commitments the Company enters into foreign currency forward contracts.
The forward contracts are designated as fair value hedges of the firm
commitments and do not extend beyond 24 months. The gains and losses on
those derivative instruments are reported in cost of products sold and
largely offset gains and losses on the purchase commitments. The amount of
ineffectiveness recorded in net income for the three and six months ended
June 30, 2001 was not material. Currently, the Company does not hold any
derivative contracts that hedge its net investments in foreign operations
but may consider such strategies in the future.
The Company utilizes interest rate swaps to hedge the Company's exposure
to movement in rates. At June 30, 2001, the Company had a one year and a
two year interest rate swap that converted $2 million and $4 million of
outstanding borrowings from a floating to a fixed rate. The swaps resulted
in fixed rates of 6.0% and 6.50%. The swaps expire on June 1, 2002 and
2003. The interest rate swaps are designated as cash flow hedges of the
variability of the forecasted interest payments. The effective portion of
the change in fair value of the interest rate swaps was recorded in OCI.
The ineffectiveness relating to the hedges was not material for the three
and six months ended June 30, 2001. Amounts accumulated in OCI are
reclassified into earnings when interest expense on the borrowings is
recorded. Of the amount recorded in accumulated OCI $45,000 is expected to
be reclassified to interest expense during the next 12 months.
5. COMPREHENSIVE INCOME
Total comprehensive income (loss) for the six months ended June 30, 2001
was as follows (amounts in thousands):
Net income $ 564
Other comprehensive income (loss):
Transition adjustment on derivatives (16)
Net change--derivatives (29)
----------
(45)
----------
Total comprehensive income $ 519
==========
- 5 -
The change in accumulated other comprehensive loss for the six months
ended June 30, 2001 is as follows (amounts in thousands):
Balance, January 1, 2001 $ 16
Change in fair value of interest rate swaps 29
------
Balance, June 30, 2001 $ 45
======
6. SEGMENT INFORMATION
The Company and its subsidiaries operate in two segments, as a
manufacturer and supplier of core materials to various composite
industries, and in the seafood business as a shrimp producer and seafood
importer. The segments are managed and reported separately because of the
difference in products they produce and markets they serve. The Company
evaluates performance based on operating income, i.e. results of
operations before interest, income taxes and foreign exchange gains and
losses. There are no intersegment sales.
Information about the Company's operations by segment for the three and
six months ended June 30, 2001 and 2000 is as follows (amounts in
thousands):
Three Months Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
Net Sales to unaffiliated customers
Core materials segment $ 15,400 $ 16,385 $ 30,227 $ 32,445
Seafood segment 6,088 7,526 12,412 12,691
-------- -------- -------- --------
Total net sales $ 21,488 $ 23,911 $ 42,639 $ 45,136
======== ======== ======== ========
Operating Income
Core materials segment $ 1,193 $ 1,841 $ 2,589 $ 3,511
Seafood segment (448) (317) (1,036) (528)
-------- -------- -------- --------
Total operating income $ 745 $ 1,524 $ 1,553 $ 2,983
======== ======== ======== ========
7. NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board ("FASB"), issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations" and No. 142, "Goodwill and Other Intangible Assets".
Statement No. 141 requires that all business combinations initiated after
June 30, 2001, be accounted for using the purchase method of accounting.
In addition, it further clarifies the criteria for recognition of
intangible assets separately from goodwill. Satement No. 142 establishes
new standards for goodwill acquired in a business combination and
eliminates the amortization of goodwill over its estimated useful life.
Rather, goodwill will now be tested for impairment annually, or more
frequently if circumstances indicate potential impairment, by applying a
fair value based test. The Company expects to adopt this statement during
the first quarter of fiscal 2002. Management does not believe that the
adoption of these standards will have a material impact on the Company's
financial position or results of operations.
- 6 -
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
The primary sources of liquidity historically have been and are expected to
continue to be cash flow generated from operations and available borrowings
under short-term lines of credit. The Company increased its borrowing capacity
under its domestic line of credit to $16.5 million in January 2001. The Company
also continues to have lines of credit in Ecuador and Europe totaling
approximately $4.7 million. Borrowing requirements increased in 2001 as a result
of the Company's working capital requirements and lower cash generated from
operations. Capital expenditures are expected to be funded by a combination of
cash generated from operations and outside financing, if necessary.
The Company's financial position remains strong. At June 30, 2001, the Company
had working capital of $16.0 million compared to $16.6 million at December 31,
2000. The Company believes cash flows from operations and funds available under
its existing domestic and foreign credit facilities will be adequate to meet the
Company's needs during 2001.
Results of Operations for the Three and Six Months
Ended June 30, 2001 and 2000
Total sales decreased 10 % and 6 %, respectively, during the three and six-month
periods ended June 30, 2001 as compared to the same period in 2000.
Core material sales were $15,400,000 and $16,385,000 for the three months ended
June 30, 2001 and 2000, respectively, and $30,227,000 and $32,445,000 for the
six months ended June 30, 2001 and 2000, respectively. Domestic sales were lower
in the three and six-month periods ended June 30, 2001 compared to the same
periods in 2000. This reduction was partly offset by a strong increase in sales
in Europe. The reduction in domestic sales was primarily due to lower demand
from the Company's largest end user group, the boating industry. It is now
expected that retail sales in the domestic marine market may be down as much as
15 percent to 20 percent for the year. The Company therefore expects domestic
sales to continue to be lower than 2000 levels for the remainder of the year.
The increase in Europe sales resulted from higher shipments to manufacturers of
windmill blades. On a worldwide basis volume (measured by boardfeet shipped) of
the Company's balsa products was approximately the same in 2001 compared to
2000. This was partially offset by the impact of a stronger U.S. dollar relative
to certain foreign currencies, particularly the Euro.
Many of the Company's end user markets, including boating, are highly cyclical.
Demand within those industries is dependent upon, among other factors,
discretionary income, inflation, interest rates and consumer confidence.
Fluctuating interest rates and other changes in economic conditions make it
difficult to forecast short or long range trends.
Seafood sales were $6,088,000 and $7,526,000 for the three months ended June 30,
2001 and 2000, respectively, and $12,412,000 and $12,691,000 for the six months
ended June 30, 2001 and 2000, respectively. Sales of seafood products from the
Company's import business were lower in the second quarter of 2001 compared to
the second quarter of 2000 because of lower demand at the retail and consumer
level for seafood products. Sales of shrimp in the first six months of 2001 were
lower than the comparable period in 2000 and continue to be significantly below
historical levels.
The overall gross margin as a percentage of sales for the six months ended June
30 decreased in 2001 as compared to 2000. The typical margin in the seafood
import business is lower than the Company's historical margins realized as a
core materials producer/distributor and shrimp producer. The overall margin is
therefore determined not only by the margins in each segment but by the mix of
seafood and
- 7 -
materials. The margin for the Company's core products remained approximately the
same in 2001 as compared to last year. The margins from seafood sales decreased
in the six months ended June 30, 2001 as compared to the period ended June 30,
2000 because of the continuing effects of the White Spot virus and a decline in
commodity selling prices for many seafood products. The White Spot virus
continued to affect the shrimp farms negatively, resulting in significantly
lower production and revenues compared to historical levels. The Company is
taking all possible steps to mitigate the effect of this disease on its farms,
but no definitive determination can be made as to its longevity and effect on
shrimp prices in the marketplace. A downturn in the entire seafood industry
during the first quarter of 2001 negatively affected prices for many seafood
products. This reduced margins in the import business during the first quarter
of 2001. Prices in the industry began to stabilize during the second quarter and
margins consequently improved.
Selling, general and administrative expenses as a percentage of sales increased
in the six months of 2001 as compared to 2000. Certain of the expenses contained
in SG&A are fixed in nature, and combined with lower materials segment revenues,
caused the increase in the SG&A percentage. The seafood import business has a
lower percentage of SG&A expenses to revenues as compared to the Company's
materials segment. The overall percentage is therefore influenced by the amount
of SG&A in each segment and the relationship of each segment's revenues and SG&A
to aggregate amounts.
Sales and expenses were affected in all periods by the different exchange rates
applied in remeasuring the books of accounts of the Company's foreign
subsidiaries.
Interest expense increased in the first six months of 2001 as compared to 2000.
The average borrowings were higher in 2001 compared to 2000. The interest rates
on U.S. dollar loans in Ecuador were lower and rates in the U.S. were slightly
lower in 2001 compared to 2000. In both periods interest rates on dollar
denominated loans in Ecuador were significantly higher than rates available to
the Company in the U.S. The level of borrowing in all periods is related to the
Company's working capital needs and cash flows generated from operations.
The Company had a foreign exchange loss of $159,000 and $234,000 for the
six-month periods ended June 30, 2001 and 2000, respectively. Translation gains
and losses are mainly caused by the relationship of the U.S. dollar to the
foreign currencies in the countries where the Company operates, and arise when
remeasuring foreign currency balance sheets into U.S. dollars. The Company
utilizes foreign exchange contracts to hedge certain inventory purchases. The
Company does not enter into foreign currency transactions for speculative
purposes. Management is unable to forecast the impact of translation gains or
losses on future periods due to the unpredictability in the fluctuation of
foreign exchange.
The provision for income taxes was at the rate of 37% and 32% of pre-tax
earnings for the three and six months ended June 30, 2001 and 2000,
respectively.
Derivative Financial Instruments and Hedging Activities
Effective January 1, 2001, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended by SFAS 137, Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133,
and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain
Hedging Activities - an amendment of FASB Statement No. 133 (collectively "SFAS
133"). SFAS 133 requires that an entity recognize all derivatives as either
assets or liabilities measured at fair value and establishes criteria for
designation and effectiveness of hedging relationships. For derivatives
designated as fair value hedges, the changes in the fair value of both the
derivative instrument and the hedged item are recorded in earnings. For
derivatives designated as cash flow hedges, the effective portions of changes in
fair value of the derivative are reported in other comprehensive income ("OCI")
and are subsequently reclassified into earnings when the hedged item affects
earnings. Changes in fair value of derivative instruments not designated as
hedging instruments and ineffective portions of hedges are recognized in
earnings in the current period. Adoption of the new accounting standards
resulted in a
- 8 -
change to current assets and liabilities of $35,000 and $51,000,
respectively, and a one time cumulative after-tax reduction in OCI of
approximately $16,000.
The Company is exposed to fluctuations in foreign currency exchange rates,
interest rates and raw material prices. To manage certain of these exposures,
the Company uses derivative instruments including interest rate swaps and
forward contracts. Derivative instruments used by the Company are considered
risk management tools and are not used for trading or speculative purposes.
All relationships between hedging instruments and hedged items, as well as its
risk management objective and strategy for undertaking various hedge
transactions are formally documented. The Company formally assesses the
effectiveness of its hedging relationships both at the hedge inception and on at
least a quarterly basis in accordance with its risk management policy.
The company purchases certain raw materials in currencies other than the U.S.
dollar. The Company enters into foreign currency forward contracts to reduce
currency exchange risk on these firm purchase commitments. The forward contracts
are designated as fair value hedges of these firm commitments and do not extend
beyond 24 months. The gains and losses on those derivative instruments are
reported in cost of products sold and largely offset gains and losses on the
purchase commitments. The amount of ineffectiveness recorded in net income for
the three and six months ended June 30, 2001 was not material. Currently, the
Company does not hold any derivative contracts that hedge its net investments in
foreign operations but may consider such strategies in the future.
The Company utilizes interest rate swaps to hedge the Company's exposure to
movement in rates. At June 30, 2001, the Company had a one year and a two year
interest rate swap that converted $2 million and $4 million of outstanding
borrowings from a floating to a fixed rate. The swaps resulted in fixed rates of
6.0% and 6.50%. The swaps expire on June 1, 2002 and 2003. The interest rate
swaps are designated as cash flow hedges of the variability of the forecasted
interest payments. The effective portion of the change in fair value of the
interest rate swaps was recorded in OCI. The ineffectiveness relating to the
hedges was not material for the three and six months ended June 30, 2001.
Amounts accumulated in OCI are reclassified into earnings when interest expense
on the borrowings is recorded. Of the amount recorded in accumulated OCI $45,000
is expected to be reclassified to interest expense during the next 12 months.
NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board ("FASB"), issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations" and No. 142, "Goodwill and Other Intangible Assets". Statement No.
141 requires that all business combinations initiated after June 30, 2001, be
accounted for using the purchase method of accounting. In addition, it further
clarifies the criteria for recognition of intangible assets separately from
goodwill. Satement No. 142 establishes new standards for goodwill acquired in a
business combination and eliminates the amortization of goodwill over its
estimated useful life. Rather, goodwill will now be tested for impairment
annually, or more frequently if circumstances indicate potential impairment, by
applying a fair value based test. The Company expects to adopt this statement
during the first quarter of fiscal 2002. Management does not believe that the
adoption of these standards will have a material impact on the Company's
financial position or results of operations.
* * * * *
Forward Looking Statements - Cautionary Factors
The foregoing discussion and analysis contains forward-looking statements
regarding the Company. Because such statements include risks and uncertainties,
actual results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially include, but are not limited to, economic conditions in the United
States, Europe and Ecuador that affect relative interest rates, foreign exchange
rates and other costs and prices related to the Company's business.
- 9 -
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a vote of Security Holders
On May 24, 2001, the Company conducted its annual meeting of
shareholders. Of the 2,523,261 shares of the Company's common stock
entitled to vote at the meeting, 2,304,787 shares were present at
the meeting in person or by proxy.
The seven people designated by the Company's board of directors as
nominees for director were elected, with voting as follows:
Nominee Votes For Votes Withheld
------- --------- --------------
Jacques Kohn 2,286,441 18,346
Jean Kohn 2,286,441 18,346
Henri-Armand Kohn 2,286,441 18,346
Margot W. Kohn 2,286,441 18,346
William F. Nicklin 2,286,441 18,346
Bernard J. Wald 2,286,441 18,346
Benson J. Zeikowitz 2,286,441 18,346
Stockholders voted to ratify the appointment of Deloitte & Touche
LLP as the independent auditors for the Company for the year ending
December 31, 2001. There were 2,298,733 shares voted in favor of
ratification, 6,054 votes against and no abstentions.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits:
11. An exhibit showing the computation of per-share earnings is
omitted because the computation can be clearly determined from
the material contained in this Quarterly Report on Form 10-Q.
(B) Reports on Form 8-K:
No report has been filed during the quarter ended June 30, 2001.
- 10 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BALTEK CORPORATION
(Registrant)
Date: August 13, 2001 /s/ Jacques Kohn
--------------------------------------
Jacques Kohn
President
Date: August 13, 2001 /s/ Ronald Tassello
--------------------------------------
Ronald Tassello
Chief Financial Officer and Treasurer
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