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, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from To
Commission file number 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 10, 2002: 2,390,383 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, 2002 and December 31, 2001.....1
Consolidated Statements of Operations for the Three and Six Months
Ended June 30, 2002 and 2001............................................2
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2002 and 2001............................................3
Notes to Consolidated Financial Statements................................4
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................7
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk........11
PART II. OTHER INFORMATION:
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..................................12
SIGNATURES.................................................................13
1
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, except per share data)
June 30, December 31,
2002 2001
(Unaudited)
ASSETS
Current Assets:
Cash ............................................................ $ 1,156 $ 573
Accounts receivable, net ........................................ 8,094 6,745
Inventories ..................................................... 17,979 18,865
Prepaid expenses ................................................ 505 671
Other ........................................................... 2,604 2,244
Assets of discontinued operations offered for sale (Note 3) ..... 2,356 9,986
------- -------
Total current assets ............................................ 32,694 39,084
Property, plant and equipment, net ................................... 5,917 5,729
Timber and timberlands ............................................... 9,967 9,963
Other assets ......................................................... 1,003 1,006
------- -------
Total Assets .................................................... $ 49,581 $ 55,782
LIABILITIES ======= =======
Current Liabilities:
Notes payable ................................................... $ 8,100 $ 8,700
Accounts payable ................................................ 2,277 2,232
Income tax payable .............................................. 311 274
Accrued salaries, wages and bonuses payable ..................... 514 587
Accrued expenses and other liabilities .......................... 2,633 2,651
Current portion of long term debt ............................... 102 113
Current portion of obligation under capital lease ............... -- 82
Liabilities of discontinued operations offered for sale (Note 3) 175 224
------- -------
Total current liabilities ....................................... 14,112 14,863
Long-term debt ....................................................... 257 302
Union employee termination benefits .................................. 240 210
------- -------
Total Liabilities ............................................... 14,609 15,375
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 .................................................... 31,380 36,380
Accumulated other comprehensive loss ................................. (113) (147)
Treasury stock, at cost: 132,878 and 66,439 shares
at June 30, 2002 and December 31, 2001, respectively ............ (975) (506)
------- -------
Total Stockholders' Equity ...................................... 34,972 40,407
------- -------
Total Liabilities and Stockholders' Equity ...................... $ 49,581 $ 55,782
======= =======
See notes to consolidated financial statements
2
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands, except per share data)
Three Months Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
Net Sales ................................................................$ 16,561 $ 15,400 $ 31,753 $ 30,227
Cost of products sold .................................................... 11,666 10,592 21,816 20,223
Selling, general and administrative expense .............................. 3,862 3,615 7,578 7,415
---------- ---------- ---------- ----------
Operating income ............................................... 1,033 1,193 2,359 2,589
Other Income (Expense): ---------- ---------- ---------- ----------
Interest expense ................................................... (156) (201) (318) (398)
Foreign exchange gain (loss) ........................................ 258 (161) 212 (159)
Other, net .......................................................... 9 6 10 4
---------- ---------- ---------- ----------
Total .......................................................... 111 (356) (96) (553)
---------- ---------- ---------- ----------
Income from continuing operations before income tax...................... 1,144 837 2,263 2,036
Income tax provision ..................................................... 365 310 724 754
---------- ---------- ---------- ----------
Income from continuing operations ........................................ 779 527 1,539 1,282
Discontinued Operations (Note 3) : ---------- ---------- ---------- ----------
Loss from operations of discontinued seafood segment
(including loss on disposal of $6,000 in 2002)................... (6,387) (490) (6,792) (1,140)
Income tax benefit .................................................. (123) (181) (253) (422)
---------- ---------- ---------- ----------
Loss on discontinued operations ..................................... (6,264) (309) (6,539) (718)
---------- ---------- ---------- ----------
Net income (loss).........................................................$ (5,485) $ 218 $ (5,000) $ 564
Basic and diluted earnings (loss) per common share: ========== ========== ========== ==========
Earnings from continuing operations..................................$ 0.33 $ 0.22 $ 0.64 $ 0.52
Loss from discontinued operations................................... (2.62) (0.13) (2.73) (0.29)
---------- ---------- ---------- ----------
Net earnings (loss) .................................................$ (2.29) $ 0.09 $ (2.09) $ 0.23
========== ========== ========== ==========
Average shares outstanding................................................ 2,390,383 2,456,822 2,391,117 2,480,314
========== ========== ========== ==========
See notes to consolidated financial statements.
3
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands, except per share data)
Six Months
Ended June 30,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................................. $(5,000) $ 564
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization ................................... 1,677 1,319
Loss on disposal of discontinued operations...................... 6,000 --
Foreign exchange (gain) loss .................................... (212) 159
Changes in assets and liabilities, net of the effect of
foreign currency translation:
Accounts receivable ........................................... (145) (543)
Income taxes .................................................. 40 (233)
Inventories ................................................... 988 956
Prepaid expenses and other current assets ..................... (204) (692)
Other assets .................................................. (10) 100
Accounts payable and accrued expenses ......................... (151) (22)
Other ......................................................... 27 51
------- -------
Net cash provided by operating activities ................... 3,010 1,659
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net acquisitions of property, plant and equipment ................. (895) (1,246)
Increase in timber and timberlands ................................ (565) (719)
------- -------
Net cash used in investing activities ....................... (1,460) (1,965)
CASH FLOWS FROM FINANCING ACTIVITIES: ------- -------
(Decrease) increase in notes payable, net .......................... (600) 475
Payments of long-term debt ........................................ (56) (28)
Principal payments under capital lease ............................ (82) (233)
Purchase of treasury stock ........................................ (470) (505)
------- -------
Net cash used in financing activities ........................ (1,208) (291)
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH ............................. 241 (286)
------- -------
NET INCREASE (DECREASE) IN CASH ..................................... 583 (883)
CASH, BEGINNING OF PERIOD ........................................... 573 1,338
------- -------
CASH, END OF PERIOD ................................................. $ 1,156 $ 455
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: ======= =======
Cash paid during the period for:
Interest ........................................................ $ 314 $ 425
======= =======
Income taxes ......................................... $ 533 $ 665
======= =======
See notes to consolidated financial statements.
4
BALTEK CORPORATION and subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and pursuant to
the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes
required for complete financial statements. In the opinion of management,
all adjustments, including 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
accompanying consolidated financial statements should be read in
conjunction with the accounting policies and notes to consolidated
financial statements included in the Company's 2001 Annual Report on Form
10-K.
As discussed in Note 3, the Company has announced its intention to sell its
shrimp operations in Ecuador and has recorded a loss on disposal to reduce the
assets underlying the shrimp operations to their estimated fair value, less
costs to sell. The assets and liabilities of these operations have been
segregated and reported separately in the accompanying balance sheets. For
purposes of comparability, December 31, 2001 amounts have been reclassified to
conform with the current period presentation. The operations of the seafood
segment, including the seafood import business, have been reported as
discontinued operations in the accompanying statement of operations. The
financial results of the seafood import business have been included in the loss
from discontinued operations in the accompanying consolidated statements of
operations for the three and six month periods For purposes of comparability,
prior period amounts have been reclassified to conform with the current period
presentation.
2. INVENTORIES
Inventories are summarized as follows (amounts in thousands):
June 30, December 31,
2002 2001
Raw materials................................ $ 7,059 $ 8,901
Work-in-process.............................. 4,740 4,009
Finished goods............................... 6,180 5,955
------- -------
$17,979 $18,865
======= =======
5
3. DISCONTINUED OPERATIONS -- SEAFOOD SEGMENT
Although the Company had made progress combating the effects of the white
spot virus, production levels at the shrimp farms in Ecuador in 2002
continued to be well below optimum amounts. Generally, production yields
were approximately 30%-40% of pre-virus levels. Selling prices for shrimp
products continued to be at very low levels in 2002, due in part to a
strong supply of shrimp from Southeast Asia and the Indian Subcontinent.
The combination of the virus and depressed selling prices has had a
negative effect on financial results. The seafood segment, which included
the import business which we terminated in 2001, reported significant
operating losses in 2000, 2001 and 2002.
In June 2002, the Company therefore announced its intention to sell its
shrimp operation in Ecuador, which it expects to complete within 12 months.
Based on its evaluation of current economic and industry conditions, the
Company recorded a charge to earnings of $6 million in the quarter ended
June 30, 2002 to reduce the assets underlying the shrimp operation to their
currently estimated fair value. The charge was based on an estimate of cash
proceeds, net of costs to sell, to be realized from the sale of this
business. The amounts ultimately realized by the Company could differ
materially from the amounts assumed in arriving at the estimated loss from
disposal of the business. There were no direct tax benefits associated with
the impairment charge.
A summary of the major balance sheet components of the operations offered
for sale is as follows (amounts in thousands):
June 30, December 31,
2002 2001
---- ----
Assets:
Fixed assets $ 991 $ 7,401
Accounts receivable --- 1,115
Inventory 966 1,068
Other 399 402
------ ------
$ 2,356 $ 9,986
Liabilities: ====== ======
Accounts payable and other $ 175 $ 245
====== ======
Included in the above amounts are assets and liabilities of the seafood
import business of $1,115,000 and $21,000, respectively, at December 31,
2001.
6
Results from discontinued operations for the three and six months ended
June 30, 2002 and 2001 is as follows (amounts in thousands):
Three Months Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
Net sales ......................................$ 625 $ 6,089 $ 1,515 $ 12,412
======== ======= ========= =========
Pretax loss:
Loss from discontinued operations..............$ (387) $ (490) $ (792) $ (1,140)
Loss on disposal............................... (6,000) --- (6,000) ---
------ ------- --------- ---------
Pretax loss.....................................$ (6,387) $ (490) $ (6,792) $ (1,140)
======== ======= ========= =========
The Company has revised the financial covenant terms of its loan agreement
with its domestic bank. At June 30, 2002, the Company was in compliance
with the revised covenants.
4. COMPREHENSIVE INCOME (LOSS)
Total comprehensive income (loss) for the three and six months ended June
30, 2002 and 2001 was as follows (amounts in thousands):
Three Months Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
Net income (loss) ................................... $(5,485) $ 218 $(5,000) $564
Other comprehensive income (loss):
Cumulative effect of adopting SFAS No.133 ......... -- -- -- (16)
Change in fair value of interest rate swap ........ (8) (27) 34 (29)
------- ------- ------- ------
Total comprehensive income (loss) ................... $(5,493) $191 $(4,966) $519
======= ======= ======= ======
5. SUBSEQUENT EVENT
On August 6, 2002 President Bush signed the Trade Act of 2002 (the "Act").
The Act provided for the renewal of the Andean Trade Preference Act through
December 31, 2006. In addition to providing for duty free treatment of
balsa exported from Ecuador, the Act also provided that any duty paid
between December 4, 2001 and August 6, 2002 will be refunded. Through June
30, 2002 the Company estimates that $257,000 was paid in duty that will now
be refunded. The refund due will be recorded in the Company's third quarter
financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Discontinued Operations
Although the Company had made progress combating the effects of the white spot
virus, production levels at the shrimp farms in Ecuador in 2002 continued to be
well below optimum amounts. Generally, production yields were approximately
30%-40% of pre-virus levels. Selling prices for shrimp products continued to be
at very low levels in 2002, due in part to a strong supply of shrimp from
Southeast Asia and the Indian Subcontinent. The combination of the virus and
depressed selling prices has had a negative effect on financial results. The
seafood segment, which included the import business which we terminated in 2001,
reported significant operating losses in 2000, 2001 and 2002.
In June 2002, the Company therefore announced its intention to sell its shrimp
operation in Ecuador, which it expects to complete within 12 months. Based on
its evaluation of current economic and industry conditions, the Company recorded
a charge to earnings of $6 million in the quarter ended June 30, 2002 to reduce
the assets underlying the shrimp operation to their currently estimated fair
value. The charge was based on an estimate of cash proceeds, net of costs to
sell, to be realized from the sale of this business. The amounts ultimately
realized by the Company could differ materially from the amounts assumed in
arriving at the estimated loss from disposal of the business. There were no
direct tax benefits associated with the impairment charge.
The Company's shrimp operations incurred operating losses during the six months
ended June 30, 2002 of approximately $792,000, including depreciation of
$491,000. As a result of additional cost reduction measures recently implemented
by the Company, the operating losses are expected to decrease in the third
quarter. The Company believes that the core material operations will generate
sufficient cash flow to meet the cash requirements of the shrimp operations
until the sale of those operations is completed. Until the shrimp operations are
sold, the Company intends to limit capital expenditures to those required to
maintain critical equipment. The impairment charge recorded in the second
quarter to reduce the value of the shrimp assets to their estimated fair value
is a non-cash charge and has no effect on the Company's cash position or
liquidity. Since the shrimp operations were experiencing net cash outflows in
2002, the Company expects that its overall cash flow will improve after the
shrimp operations are sold.
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's domestic line of credit provides
for borrowings up to $16.5 million, subject to an adequate receivables and
inventory borrowing base. The Company also continues to have lines of credit in
Ecuador and Europe totaling approximately $4.7 million. In September 2001, the
Company decided to discontinue its seafood import business. Primarily as a
result of that decision, average borrowing requirements were lower in the first
six months of 2002 compared to the same period in 2001 and are expected to be
lower for all of 2002 compared to peak levels in 2001.
Typically, there is at least a five-year period between when plantation land,
already cleared and prepared, is seeded and when the balsa is harvested. Because
of the long-term period between seeding and harvest, the Company evaluates the
adequacy of its current plantation lands to meet future, longer-term demand for
its balsa products. This evaluation also considers the cost and availability of
land in 2002 and in the future. The Company will continually evaluate demand and
adjust its land purchase program to meet these projections. Long-term financing
is usually not available in Ecuador and, because of credit tightening due to the
deteriorating economic conditions in other South American countries, the Company
may not be able to finance land purchases.
7
The Company continues to invest in capital expenditures in its core materials
segment that position Baltek for long-term growth. Our plant and equipment
expenditures are intended to increase plant capacity, improve productivity and
reduce costs and give us the capability to manufacture new products. Such
expenditures have historically been financed by cash flow from operations.
Future capital expenditures, including those for machinery and equipment and
plantation lands, are expected to be funded by a combination of cash generated
from operations and outside financing, if available. In July 2002, the Company
entered into an informal agreement which commits the Company to purchase 471
hectares (approximately 1,163 acres) of plantation land for a purchase price of
approximately $920,000. The transaction is expected to be completed during the
third quarter. The Company intends to seek a long-term loan to finance the
purchase of the land. The Company has no other material commitments for capital
expenditures.
Excluding the assets and liabilities of discontinued operations, the Company had
working capital of $16.4 million at June 30, 2002 and $14.4 million at December
31, 2001. Working capital increased, reflecting higher receivables due to
improved sales and the paydown of notes payable, net of lower inventories due to
a program implemented in 2002 designed to reduce inventory levels in the U.S.
and improve turnover. The Company believes that future cash flow from operations
and funds available under its existing domestic and foreign credit facilities
will provide sufficient resources to meet the Company's needs in 2002.
Results of Operations for the Three and Six Months
Ended June 30, 2002 and 2001
Core material sales were $16,561,000 for the three months ended June 30, 2002, a
$1,161,000 increase (7.5%) from 2001 second quarter sales of $15,400,000. Sales
for the six month period ended June 30, 2002 were $31,753,000, a $1,526,000
increase (5%) from sales of $30,227,000 for the first six months of 2001.
Domestic sales of core materials were lower in the second quarter of 2002
compared to the prior period, but approximately the same for the six months
ended June 30, 2002 compared to the same period in 2001. Sales in Europe
increased in the quarter and six months ended June 30, 2002, compared to the
same period in 2001. During the second quarter we continued to see reports
within the boating industry of improving wholesale and retail sales; however we
believe the soft U.S. economy continues to negatively effect demand from the
boating industry (the Company's largest end user group). The increase in
European core material sales resulted from higher shipments to manufacturers of
windmill blades. We believe that the wind energy market will grow at about 25%
annually for the next five years and that recent technology trends in the
industry continue to favor the use of core materials, including balsa.
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.
The Company's gross profit margin as a percent of sales was 29.6% in the second
quarter of 2002, compared to 31.2% in the second quarter of 2001. For the six
month period ended June 30, 2002, the gross margin percentage was 31.3%,
compared to 33.1% for the first six months of 2001. In December 2001, the Andean
Trade Preference Act ("ATPA") expired and, as a result, products exported from
Ecuador, Bolivia, Columbia and Peru were no longer duty free. The duty rate on
balsa exported from Ecuador was 3.3%. During the first six months of 2002 the
Company paid duty on exports from Ecuador, which reduced the gross margin by
approximately 1%. On August 6, 2002 President Bush signed the Trade Act of 2002
(the "Act"). The Act provided for the renewal of the Andean Trade Preference Act
through December 31, 2006. In addition to providing for duty free treatment of
balsa exported from Ecuador, the Act also provided that any duty paid between
December 4, 2001 and August 6, 2002 will be refunded. Through June 30, 2002 the
Company estimates that $257,000 was paid in duty that will now be refunded. The
refund due will be recorded in the Company's third quarter financial statements.
The gross margin also decreased in 2002 due to a combination of higher operating
costs in Ecuador and variations in the mix of products sold.
8
Selling, general and administrative expenses ("SG&A") for the three and six
month periods ended June 30, 2002 increased approximately $247,000 and $163,000
compared to the three and six month periods ended June 30, 2001, respectively.
As a percentage of sales, SG&A were 23.3% and 23.9% for the three and six month
periods ended June 30, 2002 on higher sales, as compared to 23.5% and 24.5% in
the comparable period of 2001. SG&A in dollars increased due to various
increases and decreases in the components of SG&A. The largest increases during
the period were in selling costs in Europe and research and development expenses
in the U.S. In recognition of the relative weakness of certain of our markets in
2002, the Company continues to review all areas of costs, including SG&A, for
potential savings. But at the same time, to prepare the Company for long-term
success and to respond to activities of our competitors, we expect to increase
certain selling expenses in 2002, particularly in Europe.
Interest expense decreased in the second quarter of 2002 as compared to 2001,
from $201,000 to $156,000, and decreased for the first six months of 2002
compared to the same period in 2001, from $398,000 to $318,000. Interest rates
on dollar denominated loans in Ecuador during the first six months were
significantly higher than rates available to the Company in the U.S. To take
advantage of the lower rates, during the first quarter of 2002, the Company
shifted a portion of its borrowings from Ecuador to the U.S. The Company also
benefited from lower interest rates in the U.S. in the first six months of 2002
compared to the same period in 2001. 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 gain of $258,000 and $212,000 for the three
and six month periods ended June 30, 2002, respectively. For the three and six
month periods ended June 30, 2001, the Company had foreign exchange losses of
$161,000 and $159,000, 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 32% and 37% of pre-tax
earnings for the three and six month periods ended June 30, 2002 and 2001,
respectively.
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.
Forward Looking Statements
Certain statements in this quarterly report on Form 10-Q, the Annual Report on
Form 10-K, the Company's press releases or in reports to stockholders constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements relate to, among other things,
industries in which the Company operates, the U.S. and global economies,
earnings, cash flow and operating performance and may be indicated by words or
phrases such as "anticipates," "supports," "plans," "projects," "expects,"
"should," "forecast," "believe," "management is of the opinion" and similar
words or phrases. Forward-looking statements are subject to inherent
uncertainties and risks, including among others: changes in commodity prices for
shrimp; environmental factors affecting yields at the Company's shrimp farms and
balsa plantations; increasing price and product/service competition by domestic
and foreign competitors; fluctuations in the cost and availability of raw
materials; economic and political conditions in Ecuador; general industry trends
and growth rates, including the continued advancement in composite materials
technology and its acceptance as an alternative to conventional methods of
construction; and economic conditions as they affect demand for our customers'
products (the Company is a raw material supplier to original equipment
manufacturers and sub-tier suppliers engaged in the fabrication of composite
components and assemblies). In addition, such statements could be affected
9
by general domestic and international economic conditions, including interest
rate and currency exchange rate fluctuations. The list of factors presented here
should not be considered to be a complete list of all potential risks and
uncertainties. Unlisted factors may present significant additional obstacles to
the realization of forward-looking statements.
In light of these risks and uncertainties, actual events and results may vary
significantly from those expressed or implied by such statements. Accordingly,
forward-looking statements should not be relied upon as a prediction of actual
results and readers are cautioned not to place undue reliance on such
forward-looking statements. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
* * * * *
10
Item 3. Quantitative and Qualitative Disclosure of Market Risk
For quantitative and qualitative disclosures about market risks affecting
Baltek, see Item 7A "Quantitative and Qualitative Disclosure About Market Risk"
in Baltek's Annual Report on Form 10-K for the year ended December 31, 2001.
There have been no material changes to our exposure to market risks since
December 31, 2001.
11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 23, 2002, the Company conducted its annual meeting of
shareholders. Of the 2,390,383 shares of the Company's common stock
entitled to vote at the meeting, 2,256,276 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 2,242,212 14,064
Jean Kohn 2,199,597 56,679
Henri-Armand Kohn 2,199,097 57,179
Margot W. Kohn 2,241,712 14,564
William F. Nicklin 2,241,912 14,364
Bernard J. Wald 2,241,637 14,639
Benson J. Zeikowitz 2,202,597 53,679
Stockholders voted to ratify the appointment of Deloitte & Touche LLP
as the independent auditors for the Company for the year ending
December 31, 2002. There were 2,249,795 shares voted in favor of
ratification, 5,881 votes against and 600 abstentions.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits:
10.1.6 Fourth Amendment to Revolving Loan and Security Agreement dated
September 28, 2001 between Baltek Corporation and Crustacea
Corporation, collectively, as Borrower, and Fleet National Bank,
as Lender.
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.
99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(B) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K dated June 19, 2002,
reporting in Item 5 that it had issued a press release announcing its
intention to sell its shrimp operations in Ecuador.
12
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 14, 2002 /s/ Jacques Kohn
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Jacques Kohn
President and Chief Executive Officer
Date: August 14, 2002 /s/ Ronald Tassello
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Ronald Tassello
Chief Financial Officer and Treasurer