-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dwh+vcXDv8Ea/Z1/wcS8/KgZt76rPkg8INzB8zTJpMjQwidAKcmFus9lYBNEMWhL AmyiyjNoAMSjo/ScxSg4Eg== 0000950116-01-500685.txt : 20010815 0000950116-01-500685.hdr.sgml : 20010815 ACCESSION NUMBER: 0000950116-01-500685 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARLTON TECHNOLOGIES INC CENTRAL INDEX KEY: 0000096988 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 221825970 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07708 FILM NUMBER: 1712428 BUSINESS ADDRESS: STREET 1: 2828 CHARTER RD STE 101 CITY: PHILADELPHIA STATE: PA ZIP: 19154 BUSINESS PHONE: 2156766900 MAIL ADDRESS: STREET 1: 2828 CHARTER RD CITY: PHILADELPHIA STATE: PA ZIP: 19154 FORMER COMPANY: FORMER CONFORMED NAME: TELESCIENCES INC DATE OF NAME CHANGE: 19880201 10-Q 1 ten-q.txt 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q 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 1-7708 ------ MARLTON TECHNOLOGIES, INC. ----------------------------------------------- (Exact name of issuer as specified in its charter) New Jersey 22-1825970 - -------------------------------- ------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 2828 Charter Road Philadelphia PA 19154 - ---------------------------------------------------- --------------------------- (Address of principal executive offices) City State Zip Issuer's telephone number (215) 676-6900 -------------- Former name, former address and former fiscal year, if changed since last report. Check whether the issuer (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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by court Yes No ---------------------- ------------------- APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding of each of the issuer's classes of common equity as of the last practicable date 7,618,449 Transitional Small Business Disclosure Form (check one): Yes No X ----------------- ------------------ MARLTON TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands except share data)
June 30, December 31, ASSETS 2001 2000 ------- ------------ Current: Cash and cash equivalents $ 1,214 $ 749 Accounts receivable, net of allowance of $408 and $836, respectively 18,148 20,891 Inventory 7,414 8,918 Prepaids and other current assets 2,457 3,314 Deferred income taxes 724 724 ------- ------------ Total current assets 29,957 34,596 Investment in affiliates 1,733 1,813 Property and equipment, net of accumulated depreciation of $7,320 and $6,623, respectively 5,068 5,135 Rental assets, net of accumulated depreciation of $2,710 and $2,417, respectively 2,126 2,088 Goodwill, net of accumulated amortization of $3,754 and $3,353, respectively 19,028 19,429 Other assets, net of accumulated amortization of $993 and $1,196, respectively 586 766 ------- ------------ Total assets $58,498 $ 63,827 ======= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 33 $ 56 Accounts payable 4,309 6,230 Accrued expenses and other 10,286 12,940 ------- ------------ Total current liabilities 14,628 19,226 ------- ------------ Long-term debt, net of current portion 15,034 16,067 Other long-term liabilities - 289 Deferred income taxes 339 339 ------- ------------ Total liabilities 30,001 35,921 ------- ------------ Commitments and contingencies Stockholders' equity: Preferred stock, $.10 par - shares authorized 10,000,000; no shares issued or outstanding Common stock, $.10 par - shares authorized - - 50,000,000; 7,618,499 and 7,428,429 issued, respectively 762 743 Additional paid-in capital 30,628 30,544 Accumulated deficit (2,781) (3,269) ------- ------------ 28,609 28,018 Less cost of 5,000 treasury shares (112) (112) ------- ------------ Total stockholders' equity 28,497 27,906 ------- ------------ Total liabilities and stockholders' equity $58,498 $ 63,827 ======= ============
See notes to consolidated financial statements. 2 MARLTON TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (In thousands except per share data)
For the three months ended For the six months ended June 30, 2001 June 30, 2000 June 30, 2001 June 30, 2000 ------------- -------------- ------------- ------------- Sales $ 22,150 $ 24,790 $ 43,027 $ 49,842 Cost of sales 16,978 19,237 32,706 37,853 ------------- -------------- ------------- ------------- Gross profit 5,172 5,553 10,321 11,989 ------------- -------------- ------------- ------------- Expenses: Selling 2,694 2,644 5,284 5,569 Administrative and general 2,046 2,120 3,578 4,229 ------------- -------------- ------------- ------------- 4,740 4,764 8,862 9,798 ------------- -------------- ------------- ------------- Operating profit 432 789 1,459 2,191 ------------- -------------- ------------- ------------- Other income (expense): Interest income and other income 34 6 71 41 Interest (expense) (336) (367) (637) (646) Income (loss) from investments in affiliates, net 43 (23) (80) 4 ------------- -------------- ------------- ------------- (259) (384) (646) (601) ------------- -------------- ------------- ------------- Income before provision for income taxes 173 405 813 1,590 Provision for income taxes 69 195 325 764 ------------- -------------- ------------- ------------- Net income $ 104 $ 210 $ 488 $ 826 ============= ============== ============= ============= Income per common share: Basic $.01 $.03 $.07 $.11 Diluted $.01 $.03 $.07 $.11
See notes to consolidated financial statements. 3 MARLTON TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2001 (In thousands except share data)
Common Stock Additional Total ------------------ Paid-in Accumulated Treasury Stockholders' Shares Amount Capital Deficit Stock Equity --------- ------ ------- ------- ----- ------------ Balance at December 31, 2000 7,428,429 $ 743 $30,544 $(3,269) $(112) $ 27,906 Issuance of shares under compensation arrangements 190,070 19 84 - - 103 Net income for the six months ended June 30, 2001 - - - 488 - 488 --------- ------ ------- ------- ----- ------------ Balance at June 30, 2001 7,618,499 $ 762 $30,628 $(2,781) $(112) $ 28,497 ========= ====== ======= ======= ===== ============
See notes to consolidated financial statements. 4 MARLTON TECHNOLOGIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (In thousands)
For the six months ended June 30, 2001 2000 -------------------- -------------------- Cash flows from operating activities: Net income $ 488 $ 826 Adjustments to reconcile net income to cash used in operating activities: Depreciation and amortization 1,529 1,329 Equity in income of affiliates 80 (50) Other items (68) 5 Change in assets and liabilities: (Increase) decrease in accounts receivable, net 2,743 (8,490) (Increase) decrease in inventory 1,504 210 (Increase) decrease in prepaid and other assets 857 69 Increase (decrease) in accounts payable, accrued expenses and other (4,575) 1,479 -------------------- -------------------- Net cash provided by (used in) operating activities 2,558 (4,622) -------------------- -------------------- Cash flows from investing activities: Guaranteed payments to sellers (18) (131) Capital expenditures (960) (1,234) -------------------- -------------------- Net cash used in investing activities (978) (1,365) -------------------- -------------------- Cash flows from financing activities: Payments for loan origination fees (60) (432) Net borrowings from revolving credit facility - 6,415 Principal payments on revolving credit facility (1,055) - -------------------- -------------------- Net cash (used in) provided by financing activities (1,115) 5,983 -------------------- -------------------- Increase / (decrease) in cash and cash equivalents 465 (4) Cash and cash equivalents - beginning of period 749 836 -------------------- -------------------- Cash and cash equivalents - end of period $ 1,214 $ 832 ==================== ==================== Supplemental cash flow information: Non-cash financing activity: Issuance of common stock for revolving credit facility - $ 100 ==================== ====================
See notes to consolidated financial statements. 5 MARLTON TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The consolidated financial statements included herein are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Securities and Exchange Commission regulations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments (of a normal and recurring nature) which are necessary to present fairly the financial position, results of operations and cash flows for the interim periods. These financial statements should be read in conjunction with the Annual Report to Shareholders and Form 10-K for the year ended December 31, 2000. 2. PER SHARE DATA The following table sets forth the computation of basic and diluted net income per common share (in thousands except per share data):
Three months ended Six months ended ---------------------- ---------------------- June 30, June 30, June 30, June 30, -------- -------- -------- -------- 2001 2000 2001 2000 ------ ------ ------ ------ Net income $ 104 $ 210 $ 488 $ 826 ====== ====== ====== ====== Weighted average common shares outstanding used to compute basic net income per common share 7,499 7,366 7,470 7,360 Additional common shares to be issued assuming the exercise of stock options, net of shares assumed reacquired -- -- -- 235 ------ ------ ------ ------ Total shares used to compute diluted net income per common share 7,499 7,366 7,470 7,595 ====== ====== ====== ====== Basic net income per share $.01 $.03 $.07 $.11 ==== ==== ==== ==== Diluted net income per share $.01 $.03 $.07 $.11 ==== ==== ==== ====
Options and warrants to purchase 2,113,000 and 930,000 shares of common stock were outstanding at June 30, 2001 and 2000, respectively, but were excluded in the computation of diluted net income per share because the option and warrant exercise prices were greater than the average market price of the common shares. 3. INVENTORY Inventory consists of the following (in thousands):
June 30, 2001 December 31, 2000 ------------- ----------------- Raw materials $ 560 $ 252 Work-in-process 2,311 4,718 Finished goods 4,543 3,948 ------ ------ $7,414 $8,918 ====== ======
6 4. RECENTLY ISSUED ACCOUNTING STANDARDS In July 2001, the FASB issued SFAS No. 141. "Business Combinations" (SFAS 141), which supercedes Accounting Principles Board Opinion No. 16 "Business Combinations" (APB 16) and SFAS No. 38 "Accounting for Preacquisition Contingencies of Purchased Enterprises" (SFAS 38). It is expected that SFAS 141 will improve the transparency of the accounting and reporting for business combinations by requiring that all business combinations be accounted for under the purchase method. Use of the pooling-of-interests method is no longer permitted. The Company will adopt SFAS 141 in the third quarter of 2001. The adoption of SFAS 141 is not expected to have a material effect on the Company's financial position or results of operations. In July 2001, the FASB issued SFAS No. 142 "Goodwill and Other Intangible Assets" (SFAS 142), which supercedes APB No. 17 "Intangible Assets". SFAS 142 requires that goodwill no longer be amortized to earnings, but instead be reviewed for impairment. It is expected that this change will provide investors with greater transparency regarding the economic value of goodwill and its impact on earnings. The Company will adopt SFAS 142 effective January 1, 2002. The Company recognized $0.4 million of goodwill amortization expense for each of the six month periods ended June 30, 2000 and 2001. These amounts are disclosed for informational purposes only and are not necessarily reflective of future reductions to amortization expense. The impact of adopting SFAS 142 has not yet been determined. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales - -----
Three months ended (in thousands) % Increase/ June 30, 2001 June 30, 2000 (Decrease) ------------- ------------- ---------- Trade show exhibits group $15,190 $16,571 (8.3)% Permanent and scenic displays group 6,960 8,219 (15.3)% ------- ------- ------- Total sales $22,150 $24,790 (10.6)% ======= ======= ======= Six months ended (in thousands) % Increase/ June 30, 2001 June 30, 2000 (Decrease) ------------- ------------- ---------- Trade show exhibits group $31,798 $34,469 (7.7)% Permanent and scenic displays group 11,229 15,373 (27.0)% ------- ------- ------- Total sales $43,027 $49,842 (13.7)% ======= ======= =======
Total sales decreased $2.6 million, or 10.6%, in the second quarter of 2001 and $6.8 million, or 13.7%, in the first half of 2001 as compared with the same periods of 2000. Lower trade show exhibit sales in the second quarter of 2001 were due in large part to reductions in some of the marketing trade show budgets of the Company's clients as a result of a generally slower economy. The decrease in trade show exhibit sales for the first six months of 2001 was attributable to this economic factor as well as to lower sales of temporary business theater exhibits previously produced at the Company's San Francisco area operation. This manufacturing operation was consolidated with the Company's San Diego area operation during the fourth quarter of 2000. The decrease in sales of permanent and scenic displays was principally attributable to lower sales of store fixtures and for Sparks scenic displays. The store fixture decrease was primarily due to lower sales to national retail customers experiencing slower new store growth. The decrease in sales of scenic displays was largely the result of lower sales of permanent themed displays previously manufactured at the Company's Orlando, Florida operation. This manufacturing operation was consolidated with the Company's Atlanta, Georgia production facility during the second quarter of 2001. Operating Profit - ---------------- Operating profit decreased to $0.4 million in the second quarter of 2001 from $0.8 million in the same period of 2000 and to $1.5 million in the first half of 2001 from $2.2 million in the first half of 2000. These decreases were principally attributable to lower sales volume and to relocation of the Company's Orlando, Florida operation, which incurred losses of $0.4 million in the second quarter and $0.6 million in the first half of 2001. Included in these losses were costs of approximately $0.3 million incurred in connection with this relocation, which is expected to eliminate operating losses for this operation. The gross profit margin percentage was essentially unchanged in the first half of 2001 and improved to 23.3% of sales in the second quarter of 2001 from 22.4% in the comparable period of 2000, despite the Orlando, Florida relocation costs. Selling expenses increased to 12.2% of sales in the second quarter and first half of 2001 from 10.7% in the second quarter of 2000 and 11.2% in the first six months of 2000. This percentage increase was due in large part to investments in additional sales resources, particularly at the Company's Western Region operations. Total selling expenses were reduced $0.3 million in the first half of 2001 from those incurred in the first half of 2000. Administrative and general expenses decreased $0.6 million in the first half of 2001 from the same prior year period primarily due to the mutual termination of certain employment agreements as well as cost reduction initiatives executed by management in the first half of 2001. 8 Income Taxes - ------------ The provision for income taxes, as a percentage of pre-tax income, decreased to 40% in 2001 from 48% in 2000 largely as a result of non-taxable income in the first quarter of 2001 offset by non-deductible goodwill amortization. Backlog - ------- The Company's backlog of orders decreased to approximately $16 million at June 30, 2001 from $24 million at June 30, 2000. This decrease was primarily due to lower orders for store fixtures and from a permanent/scenic display customer that became insolvent during the second half of 2000. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital of $15.3 million at June 30, 2001 was essentially unchanged from December 31, 2000. A $2.7 million decrease in accounts receivable, a $1.5 million inventory reduction and a $0.9 million decrease in prepaids and other current assets were offset by a $4.6 million reduction in current liabilities. Cash of $2.6 million generated from operations in the first half of 2001 was used for capital additions of $0.9 million and debt reduction of $1.1 million. The Company had borrowings of $15 million at June 30, 2001 under its $25 million revolving credit facility as compared with $16 million at December 31, 2000. RECENTLY ISSUED ACCOUNTING STANDARDS In July 2001, the FASB issued SFAS No. 141. "Business Combinations" (SFAS 141), which supercedes Accounting Principles Board Opinion No. 16 "Business Combinations" (APB 16) and SFAS No. 38 "Accounting for Preacquisition Contingencies of Purchased Enterprises" (SFAS 38). It is expected that SFAS 141 will improve the transparency of the accounting and reporting for business combinations by requiring that all business combinations be accounted for under the purchase method. Use of the pooling-of-interests method is no longer permitted. The Company will adopt SFAS 141 in the third quarter of 2001. The adoption of SFAS 141 is not expected to have a material effect on the Company's financial position or results of operations. In July 2001, the FASB issued SFAS No. 142 "Goodwill and Other Intangible Assets" (SFAS 142), which supercedes APB No. 17 "Intangible Assets". SFAS 142 requires that goodwill no longer be amortized to earnings, but instead be reviewed for impairment. It is expected that this change will provide investors with greater transparency regarding the economic value of goodwill and its impact on earnings. The Company will adopt SFAS 142 effective January 1, 2002. The Company recognized $0.4 million of goodwill amortization expense for each of the six month periods ended June 30, 2000 and 2001. These amounts are disclosed for informational purposes only and are not necessarily reflective of future reductions to amortization expense. The impact of adopting SFAS 142 has not yet been determined. OUTLOOK The Company expects sales of trade show exhibits to be relatively unchanged and sales of permanent/scenic displays to decrease in the last six months of 2001 as compared with the same prior year period. In view of current economic conditions, the trade show exhibit client base of Fortune 1000 companies is expected to tightly manage their marketing budgets, which may impact the Company's trade show exhibit sales and profit margins. Adversely affected internet and technology-driven businesses, particularly in the Western Region, have also inhibited trade show exhibit sales. The Company continues to explore new business development opportunities while pursuing operating efficiency improvements and cost reduction initiatives. 9 FORWARD-LOOKING STATEMENTS This report contains forward-looking statements. When used in this report, the words "intends," "believes," "plans," "expects," "anticipates" and similar words are used to identify these forward looking statements. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, there are certain important factors that could cause the Company's actual results to differ materially from those included in such forward-looking statements. Some of the important factors which could cause actual results to differ materially from those projected include, but are not limited to: the Company's ability to continue to identify and enter new markets and expand existing business; continued availability of financing to provide additional sources of funding for capital expenditure requirements, working capital and investments; the effects of competition on products and pricing; growth and acceptance of new product lines through the Company's sales and marketing programs; changes in material prices from suppliers; changes in customers' financial condition; the Company's ability to attract and retain competent employees; the Company's ability to add and retain customers; changes in sales mix; the Company's ability to integrate and upgrade technology; uncertainties regarding accidents or litigation which may arise; the financial impact of facilities consolidations; and the effects of, and changes in the economy, monetary and fiscal policies, laws and regulations, inflation and monetary fluctuations as well as fluctuations in interest rates, both on a national and international basis. 10 ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's revolving credit facility bears a floating rate of interest, based on LIBOR rates, plus an applicable spread. The Company had borrowings of $15 million from its $25 million revolving credit facility at June 30, 2001. Fluctuations in foreign currency exchange rates do not significantly affect the Company's financial position and results of operations. ENVIRONMENTAL The Company believes it is in compliance with federal, state and local provisions regulating discharge of materials into the environment or otherwise relating to protection of the environment. The Company has not been identified by federal or state authorities as a potentially responsible party for environmental clean-ups at any of its sites. LITIGATION The Company from time to time is a defendant and counterclaimant in various lawsuits that arise out of, and are incidental to, the conduct of its business. The resolution of pending legal matters should not have a material effect on the financial position of the Company. 11 PART II - OTHER INFORMATION Responses to Items one through five are omitted since these items are either inapplicable or the response thereto would be negative. ITEM 6. (a) Exhibits -------- Not Applicable (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed by the Company during the period covered by this report on Form 10-Q SIGNATURES - ---------- In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MARLTON TECHNOLOGIES, INC. /s/ Robert B. Ginsburg - ---------------------- Robert B. Ginsburg President and Chief Executive Officer /s/ Stephen P. Rolf - ------------------- Stephen P. Rolf Chief Financial Officer Dated August 14, 2001 12 -----END PRIVACY-ENHANCED MESSAGE-----