SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended July 31, 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 No. 1-8061
FREQUENCY ELECTRONICS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 11-1986657
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
55 CHARLES LINDBERGH BLVD., MITCHEL FIELD, N.Y. 11553
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 516-794-4500
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 __
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of Registrant's Common Stock, par value $1.00
as of September 6, 2002 - 8,343,013
Page 1 of 15
Frequency Electronics, Inc. and Subsidiaries
INDEX
Part I. Financial Information: Page No.
Item 1 - Financial Statements:
Condensed Consolidated Balance Sheets -
July 31, 2002 and April 30, 2002 3-4
Condensed Consolidated Statements of Operations
Three Months Ended July 31, 2002 and 2001 5
Condensed Consolidated Statements of Cash Flows
Three Months Ended July 31, 2002 and 2001 6
Notes to Condensed Consolidated Financial Statements 7-9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
Item 3 - Quantitative and Qualitative Disclosures
about Market Risk 12
Part II. Other Information:
Item 1 - Legal Proceedings 13
Item 6 - Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit 15
Frequency Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
July 31, April 30,
2002 2002
---- ----
(UNAUDITED) (NOTE A)
(In thousands)
ASSETS:
Current assets:
Cash and cash equivalents $ 4,334 $ 5,383
Marketable securities 29,789 30,848
Accounts receivable, net of
allowance for doubtful accounts
of $124 10,758 11,725
Inventories 21,580 19,601
Deferred income taxes 4,165 3,645
Prepaid expenses and other 2,275 2,678
------- -------
Total current assets 72,901 73,880
Property, plant and equipment, at cost,
less accumulated depreciation and
amortization 11,460 11,361
Deferred income taxes 134 280
Goodwill 5,631 4,938
Other assets 5,603 5,552
------- -------
Total assets $95,729 $96,011
======= =======
See accompanying notes to condensed consolidated
financial statements.
Frequency Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Continued)
July 31, April 30,
2002 2002
---- ----
(UNAUDITED) (NOTE A)
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable - trade $ 2,328 $ 2,359
Accrued liabilities and other 3,896 5,290
------- -------
Total current liabilities 6,224 7,649
Deferred compensation 6,588 6,496
Other liabilities 11,318 11,300
------- -------
Total liabilities 24,130 25,445
------- -------
Minority interest in subsidiary 216 224
Stockholders' equity:
Preferred stock - $1.00 par value -0- -0-
Common stock - $1.00 par value 9,164 9,164
Additional paid-in capital 43,152 43,077
Retained earnings 20,450 20,939
------- -------
72,766 73,180
Common stock reacquired and held in treasury
-at cost, 831,505 shares at July 31, 2002
and 830,074 shares at April 30, 2002 (2,841) (2,806)
Other stockholders' equity (116) (116)
Accumulated other comprehensive income 1,574 84
------- -------
Total stockholders' equity 71,383 70,342
------- -------
Total liabilities and stockholders' equity $95,729 $96,011
======= =======
See accompanying notes to condensed consolidated
financial statements.
Frequency Electronics, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three Months Ended July 31,
(Unaudited)
2002 2001
---- ----
(In thousands except per share data)
Net sales $ 6,828 $11,070
Cost of sales 4,773 7,000
------- -------
Gross margin 2,055 4,070
Selling and administrative expenses 2,053 2,215
Research and development expense 983 1,113
------- -------
Operating (loss) profit (981) 742
Other income (expense):
Investment income 355 517
Interest expense (72) (78)
Other income (expense), net 7 1
------- -------
(Loss) Income before minority interest and
provision for income taxes (691) 1,182
Minority interest in loss of
consolidated subsidiary (10) (8)
------- -------
(Loss) Income before provision
for income taxes (681) 1,190
(Benefit) Provision for income tax (192) 370
------- -------
Net (loss) income $ (489) $ 820
======= =======
Net (loss) income per common share
Basic $ (0.06) $ 0.10
======= ======
Diluted $ (0.06) $ 0.10
======= ======
Average shares outstanding
Basic 8,373,567 8,332,557
========= =========
Diluted 8,373,567 8,551,214
========= =========
See accompanying notes to condensed consolidated
financial statements.
Frequency Electronics, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Three Months Ended July 31,
(Unaudited)
2002 2001
---- ----
(In thousands)
Cash flows from operating activities:
Net (loss) income $ (489) $ 820
Non-cash charges to earnings 827 323
Insurance reimbursement - 3,000
Net changes in assets and liabilities (635) (2,516)
------- -------
Net cash (used in) provided by operating activities (297) 1,627
Cash flows from investing activities:
Sale (Purchase) of marketable securities -net 463 1,448
Other - net (239) (741)
------- -------
Net cash provided by investing activities 224 707
Cash flows from financing activities:
Dividends paid (833) (829)
Other - net (306) (543)
------- -------
Net cash used in financing activities (1,139) (1,372)
------- -------
Net (decrease) increase in cash and cash equivalents
before effect of exchange rate changes (1,212) 962
Effect of exchange rate changes on cash
and cash equivalents 163 (40)
------- -------
Net (decrease) increase in cash and cash equivalents (1,049) 922
Cash at beginning of period 5,383 2,121
------- -------
Cash at end of period $ 4,334 $ 3,043
======= =======
See accompanying notes to condensed consolidated
financial statements.
Frequency Electronics, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE A - CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management of the Company, the accompanying unaudited
condensed consolidated interim financial statements reflect all adjustments
(which include only normal recurring adjustments) necessary to present fairly,
in all material respects, the consolidated financial position of the Company as
of July 31, 2002 and the results of its operations and cash flows for the three
months ended July 31, 2002 and 2001. The April 30, 2002 condensed consolidated
balance sheet was derived from audited financial statements. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. It is suggested that these condensed consolidated financial statements
be read in conjunction with the financial statements and notes thereto included
in the Company's April 30, 2002 Annual Report to Stockholders. The results of
operations for such interim periods are not necessarily indicative of the
operating results for the full year.
NOTE B - EARNINGS PER SHARE
Reconciliation of the weighted average shares outstanding for basic and
diluted Earnings Per Share are as follows:
Three months ended July 31,
2002 2001
---- ----
Basic EPS Shares outstanding
(weighted average) 8,373,567 8,332,557
Effect of Dilutive Securities *** 218,657
--------- ---------
Diluted EPS Shares outstanding 8,373,567 8,551,214
========= =========
*** Dilutive securities are excluded for the three month period ended
July 31, 2002 since the inclusion of such shares would be antidilutive due
to the net loss for the quarter then ended.
Options to purchase 85,000 shares of common stock were outstanding during
the three months ended July 31, 2001, but were not included in the computation
of diluted earnings per share. Since the exercise price of these options was
greater than the average market price of the Company's common shares during the
period, their inclusion in the computation would have been antidilutive.
Consequently, these options are excluded from the computation of earnings per
share.
NOTE C - ACCOUNTS RECEIVABLE
Accounts receivable at July 31, 2002 and April 30, 2002 include costs and
estimated earnings in excess of billings on uncompleted contracts accounted for
on the percentage of completion basis of approximately $1,840,000 and
$2,027,000, respectively. Such amounts represent revenue recognized on long-term
contracts that had not been billed at the balance sheet dates. Such amounts are
billed pursuant to contract terms.
NOTE D - INVENTORIES
Inventories, which are reported net of reserves of $3,286,000 and
$2,941,000 at July 31, 2002 and April 30, 2002, respectively, consist of the
following:
July 31, 2002 April 30, 2002
------------- --------------
(In thousands)
Raw materials and Component parts $ 8,701 $ 8,946
Work in progress and Finished goods 12,879 10,655
------- -------
$21,580 $19,601
======= =======
Frequency Electronics, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE E - -COMPREHENSIVE INCOME
For the three months ended July 31, 2002 and 2001, total comprehensive
income was $1,001,000 and $7,000, respectively.
NOTE F - SEGMENT INFORMATION
The Company operates under three reportable segments:
1. Commercial communications - consists principally of time and frequency
control products used in two principal markets- commercial
communication satellites and terrestrial cellular telephone or other
ground-based telecommunication stations.
2. U.S. Government - consists of time and frequency control products used
for national defense or space-related programs.
3. Gillam-FEI - the products of the Company's Belgian subsidiary consist
primarily of wireline synchronization and network monitoring systems.
The table below presents information about reported segments with
reconciliation of segment amounts to consolidated amounts as reported in the
statement of operations or the balance sheet for each of the periods (in
thousands):
Three months ended July 31,
2002 2001
---- ----
Net sales:
Commercial Communications $ 3,177 $ 8,191
U.S. Government 1,815 983
Gillam-FEI 1,944 2,100
less intercompany sales (108) (204)
------- -------
Consolidated Sales $ 6,828 $11,070
======= =======
Operating (loss) profit:
Commercial Communications $ (933) $ 1,258
U.S. Government 379 213
Gillam-FEI (284) (383)
Corporate (143) (346)
------- -------
Consolidated Operating (Loss) Profit $ (981) $ 742
======= =======
As of As of
July 31, 2002 April 30, 2002
Identifiable assets:
Commercial Communications $21,031 $21,101
U.S. Government 3,793 3,176
Gillam-FEI 19,326 17,956
less intercompany balances (1,117) (1,575)
Corporate 52,696 55,353
------- -------
Consolidated Identifiable Assets $95,729 $96,011
======= =======
NOTE G. Recently Issued Accounting Pronouncements
In July 2002, the FASB issued Statement No. 146 ("SFAS No. 146),
"Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146
addresses significant issues regarding the recognition, measurement, and
reporting of costs that are associated with exit and disposal activities,
including restructuring activities that are currently accounted for pursuant to
the guidance that the Emerging Issues Task Force ("EITF") has set forth in EITF
Issue No. 94-3, "Liability Recognition for
Frequency Electronics, Inc. and Subsidiaries
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." SFAS No.146 revises the
accounting for certain lease termination costs and employee termination
benefits, which are generally recognized in connection with restructuring
activities. The provisions of SFAS No.146 are effective for exit or disposal
activities that are initiated after December 31, 2002. The Company does not
anticipate that the adoption of SFAS No. 146 will have a material impact on its
consolidated financial statements
Item 2
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Critical Accounting Policies and Estimates
The Company's significant accounting policies are described in Note 1 to the
consolidated financial statements included in the Company's April 30, 2002
Annual Report to Stockholders. The Company believes its most critical accounting
policies to be the recognition of revenue and costs on production contracts and
the valuation of inventory.
Revenue Recognition
Revenues under larger, long-term contracts, generally defined as orders in
excess of $100,000, are reported in operating results using the percentage of
completion method. For U.S. Government and other fixed-price contracts that
require initial design and development of the product, revenue is recognized on
the cost-to-cost method. Under this method, revenue is recorded based upon the
ratio that incurred costs bear to total estimated contract costs with related
cost of sales recorded as the costs are incurred. Each month management reviews
estimated contract costs. The effect of any change in the estimated gross margin
percentage for a contract is reflected in revenues in the period in which the
change is known. Provisions for anticipated losses on contracts are made in the
period in which they become determinable.
On production-type contracts, revenue is recorded as units are delivered with
the related cost of sales recognized on each shipment based upon a percentage of
estimated final contract costs. Changes in job performance may result in
revisions to costs and income and are recognized in the period in which
revisions are determined to be required. Provisions for anticipated losses on
contracts are made in the period in which they become determinable.
For contracts in the Company's Gillam-FEI segment, and smaller contracts or
orders in the other business segments, sales of products and services to
customers are reported in operating results based upon shipment of the product
or performance of the services pursuant to contractual terms. When payment is
contingent upon customer acceptance of the installed system, revenue is deferred
until such acceptance is received.
Contract Costs
Contract costs include all direct material, direct labor costs, manufacturing
overhead and other direct costs related to contract performance. Selling,
general and administrative costs are charged to expense as incurred.
Inventory
In accordance with industry practice, inventoried costs contain amounts relating
to contracts and programs with long production cycles, a portion of which will
not be realized within one year. Inventory reserves are established for
slow-moving and obsolete items and are based upon management's experience and
expectations for future business. Any changes in reserves arising from revised
expectations are reflected in cost of sales in the period the revision is made.
Frequency Electronics, Inc. and Subsidiaries
(continued)
Recently Issued Accounting Pronouncements
In July 2002, the FASB issued Statement No. 146 ("SFAS No. 146), "Accounting for
Costs Associated with Exit or Disposal Activities." SFAS No. 146 addresses
significant issues regarding the recognition, measurement, and reporting of
costs that are associated with exit and disposal activities, including
restructuring activities that are currently accounted for pursuant to the
guidance that the Emerging Issues Task Force ("EITF") has set forth in EITF
Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." SFAS No.146 revises the accounting for certain lease
termination costs and employee termination benefits, which are generally
recognized in connection with restructuring activities. The provisions of SFAS
No.146 are effective for exit or disposal activities that are initiated after
December 31, 2002. The Company does not anticipate that the adoption of SFAS No.
146 will have a material impact on its consolidated financial statements.
RESULTS OF OPERATIONS
The table below sets forth for the respective first quarters of fiscal years
2003 and 2002 the percentage of consolidated net sales represented by certain
items in the Company's consolidated statements of operations:
Three months ended
July 31,
2002 2001
---- ----
Net sales
Commercial Communications 46.2% 72.1%
U.S. Government 26.6 8.9
Gillam-FEI 27.2 19.0
----- -----
100.0 100.0
Cost of sales 69.9 63.2
----- -----
Gross margin 30.1 36.8
Selling and administrative expenses 30.1 20.0
Research and development expenses 14.4 10.1
----- -----
Operating (loss) profit (14.4) 6.7
Other income (expense)- net 4.2 4.0
----- -----
Pretax (loss) income (10.2) 10.7
(Benefit) Provision for income taxes (2.9) 3.3
----- -----
Net (loss) income (7.3)% 7.4%
===== =====
For the three months ended July 31, 2002, operating profit decreased by $1.7
million over the comparable period of fiscal year 2002 and net earnings
decreased by $1.3 million. These results reflect the continuing impact of the
slowdown in the telecommunications industry over the past several quarters. In
addition, first quarter 2003 sales were reduced by approximately $1.1 million as
a result of the Company's agreement to accommodate certain wireless
infrastructure customers with a limited quantity of rubidium timing units ("seed
stock"). Although these seed stock units are in the possession of the customers,
they remain in the inventory of the Company. The seed stock units are intended
for refurbishment or upgrades of wireless networks and are immediately available
to the commercial communications customers. Revenue from the seed stock
inventory will be recognized as the units are employed by the customers during
the balance of fiscal 2003. Excluding the effects of this arrangement, fiscal
2003 revenues decreased by 28% from the first quarter of fiscal 2002. On a
segment by segment basis, commercial communications revenues declined by 47%
(excluding the seed stock effect), Gillam-FEI revenues were lower by 7% but US
Government revenues increased by 85%.
Frequency Electronics, Inc. and Subsidiaries
(Continued)
First quarter gross margin rates declined from 37% in fiscal 2002 to 30% in
fiscal 2003. For the period ended July 31, 2002, margins on commercial
communications revenues were 28% as compared to 40% for U.S. Government programs
and 23% for Gillam-FEI. During the quarter ended July 31, 2001, gross margins
were 41% on commercial communications sales, 37% on U.S. Government programs and
22% on Gillam-FEI sales. If the seed stock transactions had not occurred during
the fiscal 2003 quarter, gross margin for the commercial communications segment
would have been 30%. The commercial communications margins were also impacted by
the reduced level of business and additional reserves for slow moving inventory.
Margins on U.S. Government contracts are within the Company's expectations given
the current mix of production and long-term contracts. Gillam-FEI margins, which
are historically lower than that of the U.S.-based segments, were impacted by
two projects on which no margin was realized during the quarter ended July 31,
2002. Excluding those sales, Gillam-FEI margins would have been 28% for the
first quarter of fiscal 2003. With the present mix of orders and recent contract
bookings, the Company expects its profit margins to improve during the remainder
of fiscal 2003.
Selling and administrative costs for the quarter ended July 31, 2002, decreased
by $162,000 (7%) over the three months ended July 31, 2001. The principle causes
of the decrease are reduced personnel costs, including incentive compensation
programs, and lower legal and other professional fees. These reductions were
partially offset by increased sales and marketing costs to support the Company's
European office which was established during the third quarter of fiscal 2002
and a 7% increase in selling and administrative expenses at Gillam-FEI. However,
most of Gillam-FEI's increase is attributable to the 5% average increase in the
value of the euro to the dollar during the fiscal 2003 quarter. Although
aggregate selling and administrative expenses were lower in the fiscal 2003
quarter compared to the prior year, the Company's 20% of revenues target was
exceeded due to the decline in revenues during the period ended July 31, 2002.
The Company has taken steps to further reduce its selling and administrative
expenses in absolute terms and expects to reduce the ratio of costs to sales
during the rest of the fiscal year.
Research and development costs in the fiscal 2003 quarter decreased by $130,000
(12%) over the comparable three-month period ended July 31, 2001. The decrease
is primarily attributable to the stage of development on various projects. The
Company targets research and development spending at approximately 10% of sales
but the rate of spending can increase or decrease from quarter to quarter as new
projects are identified and others are concluded. The Company will continue to
devote significant resources to develop new products and enhance existing
products for the commercial communications market. During this fiscal year, the
Company intends to introduce Gillam-FEI's wireline synchronization product to
the U.S market as well as to the rest of the world. In addition, the Company
continues to improve its manufacturing processes and is developing
next-generation products in support of the cellular network infrastructure
markets. Internally generated cash and cash reserves are adequate to fund this
development effort.
Net nonoperating income and expense decreased by $150,000 (34%) in the three
months ended July 31, 2002 from the comparable fiscal 2002 quarter. Investment
income declined by $162,000 (31%) as a result of lower interest rates on
marketable securities and $120,000 in net realized losses on certain marketable
securities. Interest expense decreased by $6,000 (8%) while other income
(expense) increased by $6,000 during the fiscal 2003 quarter compared to the
same period of fiscal 2002. Other income (expense), net, consists principally of
certain non-recurring transactions and is generally not significant to net
income.
LIQUIDITY AND CAPITAL RESOURCES
The Company's balance sheet continues to reflect a strong working capital
position of $66.7 million at July 31, 2002 which is comparable to working
capital at April 30, 2002. Included in working capital at July 31, 2002 is $34.1
million of cash, cash equivalents and marketable securities, including $11.7
million of REIT units which are convertible to Reckson Associates Realty Corp.
common stock.
Frequency Electronics, Inc. and Subsidiaries
(Continued)
Net cash used in operating activities for the three months ended July 31, 2002,
was $297,000 compared to $1.6 million provided by operations in the comparable
fiscal 2002 quarter. In the fiscal 2002 period, the Company received $3.0
million for reimbursement of certain legal expenses covered under directors' and
officers' liability insurance. This inflow was partially offset by payments
against certain accrued expenses, including income taxes payable of $2.0
million. The Company anticipates that it will generate positive cash flow from
operating activities for the full fiscal year.
Net cash provided by investing activities for the three months ended July 31,
2002, was $224,000. Approximately $463,000 was obtained from the sale or
redemption of certain marketable securities. These inflows were offset by the
acquisition of capital equipment for approximately $231,000. The Company may
continue to acquire or sell marketable securities as dictated by its investment
strategies as well as by the cash requirements for its development activities.
The Company will continue to acquire more efficient equipment to automate its
production process and expand its capacity. The Company intends to spend less
than $2 million on capital equipment during fiscal 2003. Internally generated
cash will be adequate to acquire this capital equipment.
Net cash used in financing activities for the three months ended July 31, 2002,
was $1.1 million compared to $1.4 million for the comparable fiscal 2002
quarter. Included in both fiscal quarters is payment of the Company's semiannual
dividend in the aggregate amount of $833,000 and $829,000, respectively. In
addition, during the fiscal 2003 quarter the Company made scheduled debt
payments of $246,000 and acquired additional shares of stock for treasury at a
cost of $60,000.
At July 31, 2002, the Company's backlog amounted to approximately $33 million
compared to the approximately $31 million backlog at April 30, 2002.
Approximately 57% of the backlog represents orders for the commercial
communications segment, 20% for the Gillam-FEI segment and 23% for the U.S.
Government segment. Of this backlog, approximately 65% is realizable during
fiscal 2003.
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
The Company is exposed to market risk related to changes in interest rates and
market values of securities, including participation units in the Reckson
Operating Partnership, L.P. The Company's investments in fixed income and equity
securities were $17.2 million and $12.6 million, respectively, at July 31, 2002.
The investments are carried at fair value with changes in unrealized gains and
losses recorded as adjustments to stockholders' equity. The fair value of
investments in marketable securities is generally based on quoted market prices.
Typically, the fair market value of investments in fixed interest rate debt
securities will increase as interest rates fall and decrease as interest rates
rise. Based on the Company's overall interest rate exposure at July 31, 2002, a
10% change in market interest rates would not have a material effect on the fair
value of the Company's fixed income securities or results of operations
(investment income).
Foreign Currency Risk
The Company is subject to foreign currency translation risk. The Company does
not have any near-term intentions to repatriate invested cash in any of its
foreign-based subsidiaries. For this reason, the Company does not intend to
initiate any exchange rate hedging strategies which could be used to mitigate
the effects of foreign currency fluctuations. The effects of foreign currency
rate fluctuations will be recorded in the equity section of the balance sheet as
a component of other comprehensive income. As of July 31, 2002, the amount
related to foreign currency exchange rates is a $1,883,000 unrealized gain. The
results of operations of foreign subsidiaries, when translated into US dollars,
will reflect the average rates of exchange for the periods presented. As a
result, similar results in local currency can vary significantly upon
translation into US dollars if exchange rates fluctuate significantly from one
period to the next.
Frequency Electronics, Inc. and Subsidiaries
(Continued)
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995:
The statements in this quarterly report on Form 10Q regarding future earnings
and operations and other statements relating to the future constitute
"forward-looking" statements pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
inherently involve risks and uncertainties that could cause actual results to
differ materially from the forward-looking statements. Factors that would cause
or contribute to such differences include, but are not limited to, continued
acceptance of the Company's products in the marketplace, competitive factors,
new products and technological changes, product prices and raw material costs,
dependence upon third-party vendors, competitive developments, changes in
manufacturing and transportation costs, changes in contractual terms, the
availability of capital, and other risks detailed in the Company's periodic
report filings with the Securities and Exchange Commission. By making these
forward-looking statements, the Company undertakes no obligation to update these
statements for revisions or changes after the date of this report.
PART II
ITEM 1 - Legal Proceedings
A judgment dated September 3, 2002, has been entered by the United States
District Court for the Eastern District of New York in connection with its
dismissal of the Muller Qui Tam Action. With this action, the Court has
dismissed all remaining litigation against the Company and its President/CEO
originating approximately ten years ago.
The judgment is based on the Court's decision on the merits in favor of
Frequency Electronics, Inc. and its CEO, Martin B. Bloch, dated August 23, 2002.
The judgment preserves all of FEI's rights to recover costs and its causes of
action against the plaintiff and third party defendants.
For a further discussion of the Muller Qui Tam Action, reference is made to Form
10-K for the fiscal year ended April 30, 2002, filed by Registrant under Section
13 of the Securities Exchange Act of 1934, which is on file at the Securities
and Exchange Commission.
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits: A. Certification Pursuant to 18 U.S.C. Section 1350 Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Registrant's Form 8-K, dated April 30, 2002, containing disclosure under
Item 5 thereof (arbitration settlement), was filed with the Securities and
Exchange Commission on May 6, 2002.
(c) Registrant's Form 8-K, dated August 22, 2002, containing disclosure under
Item 5 thereof (dismissal of qui tam action), was filed with the Securities
and Exchange Commission on September 3, 2002.
..
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.
FREQUENCY ELECTRONICS, INC.
(Registrant)
Date: September 16, 2002 BY /s/ Joseph P. Franklin
----------------------
Joseph P. Franklin
Chairman of the Board of Directors
Date: September 16, 2002 BY /s/ Alan Miller
----------------------
Alan Miller
Chief Financial Officer
and Controller
Exhibit A
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Certification of CEO
- --------------------
In connection with the Quarterly Report of Frequency Electronics, Inc. (the
"Company") on Form 10-Q for the period ended July 31, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Martin
B. Bloch, Chief Executive Officer of the Company, certify, pursuant to Section
18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) and
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
/s/ Martin B. Bloch September 16, 2002
--------------------
Martin B. Bloch
Chief Executive Officer
Certification of CFO
- --------------------
In connection with the Quarterly Report of Frequency Electronics, Inc. (the
"Company") on Form 10-Q for the period ended July 31, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Alan L.
Miller, Chief Financial Officer of the Company, certify, pursuant to Section 18
U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) and
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
/s/ Alan L. Miller September 16, 2002
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Alan L. Miller
Chief Financial Officer