Greetings, and welcome to the Blonder Tongue Laboratories 2014 Third Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, James A. Luksch, CEO for Blonder Tongue. Thank you. Mr. Luksch, you may now begin.

Welcome. Welcome to Blonder Tongue's Third Quarter 2014 Financial Recording Teleconference. Before we begin this morning with any details of performance, I'd like to preface my remarks and those made by other Blonder Tongue representatives who may be speaking today by reminding you that we will be discussing certain subjects which may contain forward-looking statements, including management's view of our prospects and evolving trends in the marketplace. As you know, the future is impossible to predict, so I caution you that actual results may differ from those that may be projected in our comments this morning. I would ask you to refer to our prior SEC filings, our Form 10-Ks for 2012 and 2013, and our Form 10-Qs from prior quarters for additional information concerning factors that could cause actual results to differ from the information discussed this morning. With me today are Blonder Tongue's President, Bob Pallé; and Eric Skolnik, our Chief Financial Officer. All of us will be available to answer any questions you may have following our presentation. As stated in our press release, the company's performance in the third quarter 2014, as in the second quarter of 2014, shows a significant improvement over the prior year. Sales are up 26% and gross margin is up more than 53%. Digital headend product sales were up 55% and analog headend products were up 40%. The digital sales were driven by our continuing additions to our product offerings and their -- and coupled with their acceptance by the market. The analog sales are attributed, as I've stated in prior calls, to the increase in market share of the shrinking market. We have broken into the retail store DTV distribution market. We have multiple evaluations of our products at cable TV MSOs such as Comcast, Time Warner, Cox, Cable One, Cablevision and Bright House. Some of these initiatives are further along than others as you would expect. In fact, we are presently shipping significant quantities of product to some of the specific cable applications. Our product strategy seems to be on course, although it needs constant tweaking based on customer input. Our sales strategy seems to be on course also as penetration of customer applications for TV encoding and distribution increased and, as stated previously, so are sales to franchise cable. We continue to upgrade our auto insertion manufacturing capability to continually lower direct labor as a percentage of sales, plus -- for how long; we don't know -- we seem to be getting the lion's share of what's left of the analog business. Product specifics that are key to our success along with applications for them will be described by Bob Pallé when he shares his thoughts with you later. As I discussed in past calls, the technology continues to move at a rapid pace with ever-increasing numbers of applications being clamored for by consumers, including watching TV on your iPad or smartphone. And of course, there's ultra-high-definition TV, or UHDTV. Pictures are being displayed in video stores throughout the country, and the pictures are gorgeous. It is never surprising in the United States that companies sell products with the technology that's not quite yet there. And then there is Google offering an alternative to the 4K systems presently being displayed in stores. It's called VP9. Now this just all adds to the confusion and probably delays adoption of a standard that could be sold universally. Present TV sets in stores are essentially all 4K technology, referred to as H.265. Blonder Tongue will be a player in the UHDTV encoder and decoder world. We will also be a player in the utilization of H.265 compression technology for the reduction of bandwidth or MPEG-2 and/or H.264 signals. None of this will be easy. The technology complexity is imposing, but we're sure we're up to the task. Again, as stated in prior teleconferences, most of the products include an ever-increasing amount of firmware and software which may require future upgrade and ToD [ph] fixing. We're selling these products with the ongoing support as part of the sale. Thus, our business model [ph] was gradually changed and [ph] be supported by a trained staff to handle the needs that the customers paid for. Products of the future will also be remotely monitored, as some are now, and have changeable settings that can be done remotely. All of these features help to lower the labor costs in the factory and in the field, and this will be an ongoing thing. In summary, I believe we advanced in engineering technology, manufacturing technology, marketing and sales expertise, and are on course with our long-term strategy. At this time, I'll turn the call over to Eric Skolnik, who will give you some more detail concerning our financial performance in the third quarter of 2014. Then Bob will provide his insight on the markets and Blonder Tongue's engineering and marketing initiatives. Subsequent to Bob's presentation, we will have a Q&A session. And now, here's Eric.

Thank you, Jim. Net sales increased $1,836,000 or 26.9% to $8,659,000 in the third 3 months of 2014 from $6,823,000 in the third 3 months of 2014 (sic) [ 2013 ]. Net earnings for the third 3 months ended September 30, 2014 were $584,000 or $0.09 per share, which compares to a net loss of $688,000 or a loss of $0.11 per share for the comparable period in 2013. The increase in net sales is primarily attributed to an increase in sales of digital video headend products and analog video headend products, offset by a decrease in sales of contract manufactured products. Sales of digital video headend products were $4,508,000 and $2,901,000. Sales of analog video headend products were $2,318,000 and $1,655,000, and sales of contract manufactured products were $82,000 and $772,000 in the third 3 months of 2014 and 2013, respectively. For the 9-month period ended September 30, net sales increased $2,377,000 or 11.5% to $23,065,000 in 2014 from $20,688,000 in 2013. Our net loss for the 9 months ended September 30, 2014 was $230,000 or a $0.04 loss per share compared to $1,830,000 or a $0.29 loss per share for the comparable period in 2013. The increase in net sales is primarily attributed to an increase in sales of digital video headend products and analog video headend products, offset by a decrease in sales of contract manufactured products. Our sales of digital video headend products were $12,034,000 and $9,309,000. Sales of analog video headend products were $5,979,000 and $4,250,000, and sales of contract manufactured products were $296,000 and $2,802,000 in the first 9 months of 2014 and 2013, respectively. Now I'd like to turn the call over to Bob Pallé. Bob?

Thanks, Jim and Eric, and good morning, to everyone. Needless to say, we are pleased with the results for the third quarter. Regardless, the general approach remains the same as it was at the time of the last call. The sales, marketing and engineering teams continue to work hard on the opportunities, many of which are substantial in the $1 million to $4 million range. It is noteworthy to report that both the number of these opportunities is increasing and several have matured into orders and shipments. The most significant of these is the retail signal distribution system commitment described in the last 2 calls. That began shipping in April. The update is that the project did complete shipping in the third quarter, and we are pleased to report that the customer has completed installation of the systems in all of the stores and is extremely pleased with the smoothness of the rollout and the performance of the systems. In the university market, updating what was stated in the last call, the sales of the HDE-8C-QAM product targeted for the market increased, and the HD encoder sales generally increased as well. The most significant update is that DIRECTV approval testing is going well, and we expect approval in this quarter, meaning Q4 2014. Significant additional sales should result in Q4 should the approval be completed as anticipated. In addition, we will by introducing in Q4 a new version of the HDE-8C-QAM with IP streaming output capability. This is for local area network distribution of the same cable-related programs that present units provide for distribution on the traditional digital RF QAM system. As a reminder, the BT HD encoder products remain the #1 choice for the university systems application as they have the highest encoding quality and performance for the price. The hospitality Free-to-Guest market status remains the same as the last call. BT's key customer, World Cinema, temporarily suspended shipments of the EdgeQAM products due to excess inventory. World Cinema is still in contention for several large hospitality opportunities that have not yet closed. These could result in increased sales in 2015 should they close as anticipated. In the CATV MSO market, the product testing and approvals processes continue with good success. As stated in the last call, these did result in sales of more than $1 million in both Q1 and Q2. This sales rate continued in Q3. In addition, we're pleased to report 2 significant developments for this market: first, the introduction of the P-E-G or PEG encoder under the Drake brand name; and second, the introduction of BT's STEP product line. The term P-E-G, or PEG, stands for public education and government channel processing application. To give a little background, the CATV MSOs are all basically committed to provide community program access to the communities that they serve. Furthermore, they generally provide at no cost to the community the signal-processing solution to prepare the programs for redistribution on the CATV system. The key piece for this is the PEG encoder. We introduced this unit at the SCTE show in October and are pleased to report that the introduction was very successful, and the company has had inquiries from all major operators and some sales already. The PEG encoder is a Drake model PEG-NE24. The PEG-NE24 won the Multichannel News Innovator Award as announced at the SCTE show. Consistent with the rest of the company's offerings, it has the highest performance-to-price ratio for this application. We have been informed by the key prospects that are actively testing the PEG encoder that the performance and the encoding quality compare favorably to units costing 5 to 10x more. Look for more announcements regarding the PEG encoder sales in the future. STEP, or S-T-E-P, stands for Scalable Encode Transcode Platform (sic) [Scalable Transcoder Encoder Platform]. The STEP product line is a significant introduction for the company. It puts BT at the forefront of encoding and transcoding quality and processing density. It is a feature-rich product line that provides encoding, transcoding, downscaling and multiple adaptive bit rate profiles in realtime. These meet the operator needs for TV everywhere. Look forward to significant announcements regarding these products in the future. As stated in the last call, in the contract manufacturing area, the GPS product-based customer reduced his orders to maintenance level. We are actively working on serious opportunities to replace this lost business. We're anticipating that we'll be able to make a positive announcement in this area in 2015. In the third quarter, BT's HD encoder customer maintained their shipments at the previous level, and these were forecasted to increase in 2015 as the September 2015 deadline nears for the LPTV broadcasters to convert from analog to digital broadcasting. Repeating what we have stated in prior calls, taking more logical time than we originally forecast increased sales, we have had some important design wins and customer commitments that resulted in the reported sales increases. The general business climate remains positive. Consequently, BT should continue to show improving sales and resulting improved financial performance in the future. And now, we would like to open the call up to the question-and-answer session.

[Operator Instructions] We just did receive a question. That's from the line of Richard Greulich of REG Capital.

Bob and Jim and Eric, just a couple of questions. Eric, the revolver and term loan due in February, can you give any insight as to progress being made at this point in terms of either renewing it with the same person or same institution or elsewhere?

We're obviously working on both. We're looking at both extensions and also replacement facilities at this time.

And is it likely the terms would be better, worse or the same?

It's kind of like a mixed bag, so we're kind of evaluating all of our opportunities. So some opportunities are -- perhaps provide us with a little more capital at a higher price, et cetera. So we're just kind of evaluating at this time.

Okay. The analog product revenue seemed to be a bit stronger. Was there anything specific behind that?

What product?

Analog products.

The analog products.

Was there any specific sale or relationship that revolved within [indiscernible]?

There were several. This is -- we don't want to keep our expectations too high on the analog product because some of these deployments are things that I think people are deploying analog because it's cheap in areas where the clientele or the people watching it don't really care about the difference. But we do know that the analog market is going to continually slide, and it has been decreasing at a much slower rate than we had anticipated, and there's some bumps and valleys in it. And I think because we were the primary and the initial supplier of the dominant form factor product that's being sold out there -- we have a lot of copiers of our product over the years, but I think that it's classic 101 tells you that as the market shrinks, a few people or one increase their market share, and so consequently, the market may be going down rapidly but not all the manufacturers' sales are going down. That's about as much as I know about it.

Okay. You mentioned -- I can't recall. I think, Jim, it was you that mentioned the specific names of Tier 1 and Tier 2 cable operators. That's the first time I think on these calls I've heard you say those names.

That was actually Bob last year. I think that we referred to the Tier 1. Tier 1s are really -- what we consider Tier 1s are Comcast, Time Warner...

Cox.

Charter, Cox. Is that it? Maybe Cablevision. And the Tier 2s are companies like Cable One...

Mediacom.

Mediacom. And then the Tier 3s are the ones that are represented by the national cable television co-op, and they vary in size from as much as a couple hundred thousand subscribers to down into the 1,000 subscribers or 500 subscribers, mostly in rural areas.

So you're mentioning some of the Tier 1 players in the call. Does that represent like your increased marketing possibilities with those companies?

Yes.

Just another quick question. So in the selling expense, you had a small royalty refund. How does that come about?

It was because of a, basically, a resetting of the royalty rate for a specific product.

I assume that's not a continuing thing.

Oh, no, no, no.

Yes, okay. Inventory seemed to have been worked down pretty well, particularly over the last 2 years. Are they at the levels where you -- given the sales levels that you're at, that that's an appropriate inventory level, do you think?

I think that we would like to continue to drive it down as much as we can, so that's what we're constantly working at.

We have -- we still have or maintaining a philosophy of trying to provide most of the products that the customers we sell to use, but we do have a program where we continually drop products that the volumes are net worth continuing. So Eric's right. And I think you will see continuing decreases in inventory unless the sales line increases rapidly.

I appreciate the detail you go into in these calls on the product opportunities and product offerings that you have. I find it -- I need to go back and relisten to the call again to get all that information soaked into my brain, but I appreciate you taking the time to do that. And I also wanted to compliment you on the videos that you have on your website with Emily and other people. I think they're very instructive.

Well, thank you.

Thank you.

Thank you.

There are no additional questions at this time. I'll turn the floor back to management for closing comments.

Well, thank you all for taking part in our teleconference, and we hope all of you have a good day.

Have a great weekend.

Have a good year, and enjoy the holidays. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.