-----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, E668q/1dkI2IWvaXQ5pWHdMoAdfnxeVa5VFE1NZLu+Ah8CSL4l7/xOZXIe9KCieS 4yFipriEzyPWq7OCmfdA2Q== 0000950116-98-000717.txt : 19980401 0000950116-98-000717.hdr.sgml : 19980401 ACCESSION NUMBER: 0000950116-98-000717 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 19 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980331 SROS: NONE 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-K SEC ACT: SEC FILE NUMBER: 001-07708 FILM NUMBER: 98581003 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-K 1 FORM 10-K FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 Commission File Number 1-7708 MARLTON TECHNOLOGIES, INC. (Name of issuer as specified in its charter) New Jersey 22-1825970 - ----------------------- --------------------------------- (State of incorporation) (IRS Employer Identification No.) 2828 Charter Road, Suite 101, Philadelphia, Pa 19154 - ---------------------------------------------- --------- (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: (215) 676-6900 -------------- Securities registered pursuant to Section 12(b) of the Exchange Act: Title of each class: Name of each exchange: - -------------------- ----------------------- Common Stock, $.10 par value American Stock Exchange Securities registered pursuant to Section 12 (g) of the Exchange Act: None Check whether the Issuer (1) 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 periods that the Issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes__X____ No_______ Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form and no disclosure will be contained, to the best of Issuer's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K. __ Issuer's revenues for its most recent fiscal year: $48,715,828 The aggregate market value of the voting stock held by non-affiliates of the Issuer at March 25, 1998 was $23,691,580. As of March 25, 1998, there were 6,974,578 shares of Common Stock, $.10 par value, of the Issuer outstanding. DOCUMENTS INCORPORATED BY REFERENCE: The following materials contained in the following documents are hereby incorporated by reference into this Form 10-K. (i) Information from the Issuer's definitive proxy statement for the 1998 Annual Meeting of Shareholders, involving the election of directors, has been incorporated by reference in Part III - Items 10, 11, 12 and 13. (ii) Information from the Issuer's Registration Statement on Form S-8, File No. 33-3647, has been incorporated by reference in Part IV - Item 14(a)(3)(a)(i). (iii) Information from the Issuer's Supplement to Proxy Statement dated June 6, 1990 has been incorporated by reference in Part IV - Item 14(a)10(a). Exhibit Index Appears on Page 20 Page 1 of 102 PART I ITEM 1. DESCRIPTION OF BUSINESS Business Development Marlton Technologies, Inc. (the "Issuer" or "Company") was incorporated as a New Jersey corporation in 1966. The Issuer's business was related to computerized electronic telecommunication systems until 1988, when it sold substantially all of its operating assets. On August 7, 1990, the Issuer acquired the business of Sparks Exhibits Corp. ("Sparks") in Philadelphia, Pennsylvania. Sparks custom designs and manufactures sophisticated trade show exhibits, displays, architectural and museum interiors, graphics and signage, provides trade show services and designs and sells portable exhibits. During the fourth quarter of 1990, the Issuer acquired the accounts and assets of the trade show exhibit division of a competitor and also established a portable exhibits group. The Issuer subsequently formed (i) Sparks Exhibits, Inc. ("Exhibits") during July 1991 in the Atlanta, Georgia area, (ii)Sparks Exhibits, Ltd. ("Limited") during July 1992 in the San Diego, California area, and (iii) Sparks Exhibits Incorporated ("Incorporated") during December 1992 in the Orlando, Florida area, in each case by acquiring the assets of trade show exhibit manufacturing companies. During August 1993, the rights and related business assets to a panelized portable trade show exhibit owned by Limited were transferred to a 51% Issuer -owned subsidiary, Expose Display Systems , Inc. ("EDSI"), with the manufacturing and distribution facilities moved to Los Angeles, California during March 1994. During April 1996, the Issuer acquired the stock of Piper Productions, Inc. ("Piper") in Orlando, Florida, and in December 1996 the operations of Incorporated were combined into Piper. In addition to Incorporated's trade show exhibit business, Piper produces business theater, theme park attractions, themed interiors, theatrical scenery and special effects. On December 31, 1997, the Issuer acquired DMS Store Fixtures Corp. ("DMS") in King of Prussia, Pennsylvania. DMS supplies custom made fixtures and displays to national retailers, department stores and consumer products manufacturers. Currently all of the Issuer's operating revenues are derived from Sparks, Exhibits, Limited , Incorporated (collectively, the "Sparks Companies"), EDSI, Piper and DMS. Business of Issuer Products and Services: The Sparks Companies custom design and manufacture sophisticated trade show exhibits, displays, architectural and museum interiors, graphics and signage, provide trade show services, and sell portable exhibits. EDSI produces and distributes a line of panelized portable exhibits. Piper is a theatrical construction company that specializes in the manufacture of scenery for live shows, television, theme park attractions, themed interiors and themed trade show exhibits. Clients include industry, government, museum, theme park companies and commercial establishments. Graphics and industrial designers develop and manage custom design requirements from concept through final construction, employing sophisticated computer-aided 1 Business of Issuer, continued design software and hardware. Complete graphics facilities provide full in-house dark room capabilities, silk-screening, and state of the art computerized design/graphics. Electronics and audiovisual capabilities include on-staff electronic specialists, consultants, and vendor relationships which provide multi-media equipment and programs, fiber-optic technology, laser disk video interactive program production, video and computer games, simulators, and customized software and hardware applications. The Sparks Companies are full service exhibit houses, providing show service coordination, freight coordination, refurbishing, storage and marketing literature distribution. Many clients are Fortune 1000 firms, who typically contract for custom trade show exhibit projects in excess of $100,000. Additionally, a majority of these clients store their exhibits at a Sparks Company facility, where ongoing refurbishing and coordination of clients' trade show schedules are provided. The Sparks Companies also represent domestic clients who desire to exhibit at international trade shows. The Sparks Companies design such exhibits, and, through an international network of independent exhibit manufacturers, arrange for the manufacture and delivery of trade show exhibits to the desired trade show. The Sparks Companies also design and manufacture trade show exhibits for a number of United States subsidiaries of foreign corporations, for use in domestic trade shows. In 1992, Limited began to produce and distribute panelized portable exhibits known as "Expose", through a network of predominantly U.S. portable exhibit dealers, including the Sparks Companies and unaffiliated dealers. Since August 1993, EDSI has assumed responsibility for this portable exhibit production and distribution. DMS is engaged in the business of supplying custom store fixtures, showcases and point of purchase displays for retailers. DMS has expertise and capabilities to take a design from concept to installation. Engineers and designers work with the customers to develop the fixture design through computer aided design equipment and development of a prototype, if necessary. Engineering drawings are then produced and provided to a factory for production. DMS utilizes various manufacturers with whom it has developed long standing business relationships for the production of its products. These factories work closely with the DMS management team. The retail fixture industry includes outfitting new retail stores and remodeling existing stores, including specialty apparel chains, "category killer" stores, department stores, outlet stores, supermarkets, building supply stores and drug stores. Marketing and Distribution: Sales by the Sparks Companies to domestic customers for both domestic and foreign trade shows and sales by Piper and DMS to primarily domestic customers are solicited through internal marketing groups. Purchase of sophisticated exhibit and display products usually involves a substantial dollar commitment by the customer as significant expertise is required to properly meet the customer's needs. Sales personnel are required to be knowledgeable with respect to the design and manufacturing of sophisticated exhibit and display products as well as complying 2 Business of Issuer, continued with internal profitability requirements. In addition to the sales personnel, senior officers devote substantial time and effort to sales and marketing activities. EDSI's panelized portable exhibits are marketed by EDSI's minority shareholder, Abex Display Systems, Inc. ("ADSI"), to retail portable exhibit dealers by direct solicitation, media advertising and participation in trade shows for the portable exhibit industry. Manufacturing and Raw Materials: The Sparks Companies design, develop and manufacture custom trade show exhibits utilizing an in-house staff of designers, carpenters, electricians and warehousemen. Specialty items such as steel work and studio production are subcontracted. The Sparks Companies also subcontract the manufacture of exhibits for foreign trade shows. The Sparks Companies coordinate shipping, exhibit set-up and removal at the customer's trade show and, in most cases, subsequently store the exhibit for the customer. Piper's manufacturing comprises various technical and artistic disciplines. Piper employs scenic carpenters and metal workers to fabricate scenery which is painted by skilled scenic artists. DMS utilizes manufacturers with whom it has developed long standing business relationships from the early 1980's for the production of its products. Raw materials for custom, scenic and portable exhibits, store fixtures and displays, as well as subcontractor work, are readily available from various vendors. Patents, trademarks and licenses are not important to operations. The Philadelphia and King of Prussia, PA operations are the only unionized facilities, with a three-year labor contract expiring June 30, 1998 in Philadelphia, and a three year labor contract expiring November 14, 1998 in King of Prussia, PA. Portable exhibit configurations, together with graphics and signage, are typically designed by the Sparks Companies for a client. Portable exhibits are produced by EDSI, in the case of Expose, or are purchased from unrelated manufacturers for resale. Graphics and signage may be produced internally or subcontracted. Geographic distribution rights are typically granted by portable exhibit manufacturers based on annual sales volume levels. The Sparks Companies have obtained such distribution rights from their primary sources of portable exhibits, and other portable exhibit dealers have been granted such distribution rights with regard to Expose. Amounts spent by EDSI during each of the last three years on the development of new products, including the required machinery, equipment and tooling to manufacture and produce the products approximates $28,000, $325,000 and $144,000, during 1997, 1996 and 1995, respectively. Other than previously described, the Company made no material disbursements during each of the last three fiscal years for research and development activities. Seasonality of Business: Trade shows traditionally occur regularly throughout the year with the exception of the third quarter when business to business trade shows are historically at a low point. The Sparks Companies' business has also been of a seasonal nature due to the fact that trade show activities in specific industries, such as health care and telecommunications, are a function of the seasonal show schedules in such industries. DMS' business tends to be slower in the fourth and first quarters due to retailers desires not to install or plan new fixtures during their traditionally busy year end season. The Sparks Companies have embarked on a program to seek new clients and sales people with client bases in different industries to reduce the effects of the slower sales 3 Business of Issuer, continued period. Additionally, the Issuer is now offering other products and services, such as sales of scenic and themed exhibits, portable exhibits, and permanent exhibits which are less seasonal in nature. Working Capital: The Sparks Companies', Piper's, EDSI's and DMS' working capital requirements are fulfilled by funds generated through operations, bank term loans and revolving credit facilities. Working capital requirements are generally not affected by project size requirements or accelerated delivery for major customers due to general policies of progress billing on larger jobs. Additionally, the Sparks Companies, Piper, EDSI and DMS do not require continuous allotments of raw materials from suppliers and other than DMS, do not generally provide extended payment terms to customers other than lease and purchase arrangements with credit-worthy customers, not exceeding terms of three years. Significant Customers: During 1997 and 1996, no individual customer accounted for at least 10% of consolidated net sales. However, DMS annual sales have historically been significantly reliant upon two customers for a major portion of their annual revenues. The Company expects this situation to continue during 1998. Backlog: The Sparks Companies', Piper's and EDSI's backlog of orders at December 31, 1997, and 1996 was approximately $18,000,000 and $8,500,000, respectively. DMS's backlog of orders at December 31, 1997 and 1996 was approximately $5,600,000 and $7,400,000, respectively. The higher backlog level for DMS at December 31, 1996 was primarily due to an international order received but not delivered as of that date. Generally, DMS's backlog of orders are recognized as sales during the subsequent six month period. The entire current backlog relates to expected 1998 sales. The Sparks Companies, Piper, EDSI and DMS maintain a client base from which new orders are continually generated, including refurbishing of existing trade show exhibits stored in Sparks Companies' facilities. There are also a significant amount of Sparks Companies, Piper and DMS proposals outstanding with current and prospective clients. Sales for the Sparks Companies routinely occur during the period immediately preceding customer trade shows. Competition: The Sparks Companies, Piper and DMS compete with other companies offering similar products and providing similar services on the basis of price, quality, 4 Business of Issuer, continued performance and client-support services. The custom trade show exhibit, scenic and themed exhibit, permanent exhibit manufacturing market, retail store fixture and display market and portable exhibits sales market include a large number of national and regional companies, some of which have substantially greater sales and resources than the Sparks Companies, Piper and DMS. In addition to their Philadelphia, Atlanta, San Diego and Orlando manufacturing facilities, the Sparks Companies and Piper utilize their national and international affiliations and relationships to meet customers needs in other geographic areas. EDSI competes primarily with other manufacturers of portable exhibits, some of which have substantially greater operating histories, sales and resources than EDSI. Due to the lack of specific public information, the Sparks Companies', Piper's, EDSI's and DMS's competitive position is difficult to ascertain. Environmental Protection: The Sparks Companies', Piper's, EDSI's and DMS's compliance with Federal, state and local provisions regulating discharge of materials into the environment or otherwise relating to the protection of the environment has not had and is not expected to have a material effect upon their capital expenditures, earnings, and competitive position. Employees: The total number of persons employed by the Issuer is approximately 310 of which 305 are full-time employees. ITEM 2. DESCRIPTION OF PROPERTY The Issuer currently leases five primary facilities as follows: Location Square Footage Purpose Philadelphia, PA 235,000 Office, showroom, warehouse & manufacturing Austell, GA 81,000 Office, showroom, warehouse & manufacturing El Cajon, CA 80,000 Office, showroom, warehouse & manufacturing King of Prussia, PA 60,000 Office and warehouse Orlando, Florida 45,000 Office, warehouse & manufacturing The Issuer's subsidiaries also have approximately five sales offices of under 1,000 square feet each. Additionally, EDSI operates in approximately 90,000 square feet of office, showroom, warehouse and manufacturing space within the minority shareholder's North Hollywood, California facility. 5 ITEM 2. DESCRIPTION OF PROPERTY, continued The Sparks Companies' and Piper's office, showroom, warehouse and manufacturing facilities and DMS's office and warehouse facilities were all in good condition and adequate for 1997, based on normal five-day operations, and are adequate for 1998 operations, including any foreseeable internal growth. The Issuer does not anticipate any difficulty in acquiring additional space, if necessary. ITEM 3 LEGAL PROCEEDINGS The Issuer is not involved in any material pending legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The following proposals were submitted and approved at a special meeting held on December 12, 1997: (i) To approve the acquisition of DMS Store Fixtures Corp.: For: 2,929,453 Against: 57,934 Abstain: 4,484 (ii) Increase the number of authorized shares of Common Stock from 10,000,000 to 50,000,000 shares: For: 3,333,698 Against: 355,007 Abstain: 7,134 (iii) To authorize 10,000,000 shares of undesignated preferred stock: For: 3,510,091 Against: 374,194 Abstain: 20,534 PART II ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The following table shows the high and low sales prices of the Common Stock, par value $.10 per share, of the Issuer on its principal market, the American Stock Exchange: 1997 1996 ---- ---- Quarter High Low High Low ------- ---- --- ---- --- 1 4-3/16 3-3/8 2-1/2 1-1/4 2 4-7/16 3-1/4 3-1/2 1-5/8 3 7-1/8 3-3/4 5-1/4 2-5/8 4 7-3/4 5-1/2 4-11/16 3-7/16 6 ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS, continued No dividends were paid during the past two fiscal years. The Issuer currently intends to employ all available funds in the business. Future dividend policy will be determined in accordance with the financial requirements of the business. However, the Issuer's bank loan agreement provides that the Issuer may not pay dividends to its shareholders without the bank's prior consent. Unless waived, this restriction will preclude the Issuer from paying dividends. As of March 24, 1998, there were 1,106 holders of record of the Issuer's common stock. In connection with the Issuer's December 31, 1997 acquisition of DMS, the Issuer issued 2,000,000 unregistered shares of Common Stock to the sellers of DMS, 100,000 unregistered warrants to purchase shares of Common Stock to Legg Mason Wood Walker, Incorporated as a financial advisor fee, and 62,500 unregistered warrants to purchase shares of Common Stock to CoreStates Bank, N.A. as a loan commitment fee. The warrants are exercisable for a period of four years from issuance, at a price of $6.19 per share, the average closing price of Common Stock on the American Stock Exchange for the twenty trading day period prior to the acquisition. During January 1996, the Issuer issued 500,000 unregistered shares of its Common Stock to Tsubasa System Company, Ltd., the Issuers joint venture shareholder in Sparks Japan, in connection with an amendment to a distribution and licensing agreement affecting Sparks Japan. The Issuer relied upon the exemption from registration under Section 4(2) of the Securities Act of 1933, since all of those issuances were to a limited group of sophisticated parties in a private, non-underwritten transaction. 7 ITEM 6. SELECTED CONSOLIDATED FINANCIAL INFORMATION SELECTED FINANCIAL DATA As of or for the Year Ended December 31,
1997 1996 1995 1994 1993 TOTAL ASSETS $ 54,113,255 $ 22,190,615 $ 16,607,893 $ 16,144,711 $13,779,926 LONG-TERM OBLIGATIONS 12,243,312 457,440 991,894 691,676 1,055,311 OPERATIONS: Net Sales 48,715,828 38,315,600 27,671,763 24,613,216 19,172,222 Operating Profit (Loss) 2,273,976 1,345,863 739,023 525,969 (192,626) Income (Loss) before cumulative effect of accounting change and extraordinary item 2,003,316 2,340,153(2) 1,252,814 486,794 (132,618) Cumulative effect of Accounting change -- -- -- -- 1,500,000 (3) Extraordinary (loss) -- -- -- (96,000)(4) Net Income $ 2,003,316 $ 2,340,153 $ 1,252,814 $ 486,794 $ 1,271,382 BASIC PER COMMON SHARE DATA (5) Income (loss) from Operations $ .42 $ .52 $ .32 $ .13 ($ .03) Accounting change -- -- -- -- .41 Extraordinary loss -- -- -- -- (.03) Net Income $ .42 $ .52 $ .32 $ .13 $ .35 DILUTED PER COMMON SHARE DATA (5) Income (loss) from Operations $ .36 $ .45 $ .32 $ .13 ($ .03) Accounting change -- -- -- -- $ .39 Extraordinary loss -- -- -- -- ($ .03) Net Income (loss) $ .36 $ .45 $ .32 $ .13 $ .33 Cash Dividends -- -- -- -- --
(1) Includes a $180,000 gain from insurance settlement, net of income taxes. (2) Includes a $708,000 gain from contractual amendments, net of income taxes. (3) Relates to the Company's January 1, 1993 adoption of the provisions of SFAS No. 109 "Accounting for Income Taxes." (4) Relates to the extinguishment of debt. (5) During the fourth quarter of 1997, the Company adopted the provisions of SFAS 128 and, as required, has restated all prior period per common share data. Basic per common shares amounts are computed using the weighted average number of common shares outstanding during the year. Diluted per common share amounts are computed using the weighted average number of common shares outstanding during the year and dilutive potential common shares. Dilutive potential common shares consist of stock options and stock warrants and are calculated using the treasury stock method. 8 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS General Overview The Company's core business is the custom design, manufacture and sale of sophisticated trade show exhibits, displays, signage and graphics for clients in industry, government, consumer electronics, athletic goods, healthcare, telecommunications and other specialized fields. During March 1995, the Company and a Japan-based diversified manufacturing and marketing company, Tsubasa System Company Ltd. ("Tsubasa") entered into an agreement to organize a new Japanese corporation, Sparks Exhibits Japan ("SEJ"), and grant exclusive Japan distribution rights to SEJ for the Company's portable exhibits products and technology and to license the name and logo of "Sparks Exhibits" in Japan. See Note 3 of the consolidated financial statements. During April 1996, the Company acquired Piper Productions, Inc. ("Piper") of Orlando, Florida which produces business theater, theme park attractions, themed interiors, theatrical scenery and special effects. The acquisition of Piper enhanced the Company's ability to pursue exhibit opportunities within Piper's areas of expertise. See Note 2 of the consolidated financial statements. On December 31, 1997, the Company, through a wholly-owned subsidiary ("DMS"), acquired all of the partnership interests (the "Acquisition") in DMS Store Fixtures, L.P. ("L.P.") held by L.P.'s three principals and three corporate holders (the "Sellers", collectively). The aggregate consideration paid by the Company was $14,500,000 in cash and 2.25 million unregistered shares of the Company's common stock of which 250,000 shares are contingent upon DMS achieving at least $12.5 million of cumulative pre-tax earnings through December 31, 2002. The Acquisition was funded, in part, by a $13.5 million five year collateralized term loan through a bank and is accounted for as a purchase. Accordingly, the assets and liabilities of DMS were recorded at their estimated fair value as of December 31, 1997 with the difference of approximately $17.0 million including related acquisition costs recorded as goodwill and other assets. As part of the Acquisition, the Company entered into five year employment agreements with each of the three individual principals of L.P. commencing January 1, 1998. Management's aggressive growth plan, since the August 1990 acquisition of Sparks Exhibits Corp. ("Sparks"), and most recent acquisition of DMS, has resulted in the dramatic expansion of the Company's client base, the development of new business groups for expansion of its products and services, and the extension into major geographic markets in the United States and internationally. Management believes the acquisitions and the continuing development of the new business groups will position the Company to increase its revenue base and move toward its goal of becoming a leading dimensional marketing company through the continued offering of expanded products and services to a larger customer network. 9 RESULTS OF OPERATIONS 1997 As Compared with 1996 Sales Revenues for 1997 of $48.7 million exceeded 1996 revenues of $38.3 million by approximately 27%. The $10.4 million revenue increase during 1997 over 1996 revenues was attributable to sales increases from the reported business groups as follows: 1997 1996 ---- ---- Trade show exhibits group $37,387,000 $30,939,000 Permanent and scenic displays group 11,329,000 7,377,000 ------------ ------------- Total revenues $48,716,000 $38,316,000 =========== =========== The Trade show exhibits group experienced a 21% increase in its 1997 revenues compared with 1996. The increase reflects the Company's continuing program of client expansion which was experienced in all three custom trade show exhibit manufacturing facilities - Philadelphia, Atlanta and San Diego. The Rental group experienced higher 1997 revenues as compared with their 1996 revenues due to the Company's investments in their marketing efforts. Expose' Display Systems, Inc. ("EDSI"), the Company's majority-owned joint venture, experienced 53% growth in revenues during 1997 as compared with 1996 due to the increased acceptance of EDSI's product lines by Abex Display Systems, Inc.'s ("ADSI") national distribution network and the increasing impact of the 1996 introduction of EDSI's LS (laminate system) into the marketplace. Sparks' Portable sales group, a distributor of ADSI's products, experienced an expected 42% reduction in 1997 revenues as compared with 1996 revenues due to the closing of two stand-alone portable exhibit sales distribution offices during the fourth quarter of 1996. The permanent and scenic displays group experienced a 54% increase in its 1997 revenues compared with 1996. The increase was due to a dramatic increase in sales generated by Piper during the twelve months of 1997 as compared with Piper's nine months of operations during 1996. Piper was acquired by the Company on April 1, 1996. The Museum/Production group experienced a 17% decline in 1997 revenues as compared with 1996 revenues due, only, to the timing of sales. The Museums/Production group currently has approximately $5.3 million of in-process contracts. Revenues related to these contracts should be recognized predominantly during 1998. 10 Operating Profits The 27% increase in 1997 revenues as compared with 1996 revenues contributed to a 69% increase in the Company's operating profits during the respective periods. The Company maintained a relatively consistent gross profit level of 28.4% and 28.1% during the respective annual periods of 1997 and 1996. Selling, general and administrative costs, as a percentage of sales, fell by approximately 0.8% during 1997 as compared with 1996, also contributing to the higher operating profits recorded during 1997. Other Income (Expense) Other income decreased from $1,344,000 during 1996 to $349,000 during 1997. This significant decrease in other income during 1997 is attributable to the $1.2 million gain from the contract amendment recorded during 1996. Interest income increased during 1997 as compared with 1996 due to additional interest and gains from the sale of certain investments during 1997. Interest expense decreased during 1997 due to the overall reduction of the Company's long-term debt balances from 1996. Income Taxes The provision for income taxes, as a percentage of income before taxes, increased to approximately 24% during 1997 as compared with 13% during 1996. The higher 1997 rate as compared with the 1996 rate reflects a reduced benefit from the release of valuation allowances based upon the Company's expected realization of future benefits from its net operating loss and business tax credit carryforwards. Net Income During 1997, net income decreased to $2,003,000 ($.36 per diluted share) as compared with 1996 net income of $2,340,000 ($.45 per diluted share). The decrease is attributable to the $1.2 million gain from the contractual amendment which took place during 1996. Additionally, the tax provision during 1997, as a percentage of income before income taxes, increased to 24% from the 13% tax provision rate utilized during 1996, as more fully described in the "Income Taxes" section of this MD&A. Exclusive of the effects of the different tax rates used to provide for income taxes and the 1996 gain from the contractual amendment, 1997 net income per diluted common share increased approximately 65% as follows: 1997 1996 ---- ---- Income before income taxes $2,623,000 $2,690,000 Gain from contract amendment -- (1,200,000) ---------- ----------- 2,623,000 1,490,153 Tax rate, adjusted 40% 40% ---------- ------------ Tax provision, adjusted (1,049,000) (596,000) ---------- ------------ Net income, as adjusted $1,574,000 $ 894,000 ---------- ---------- Diluted shares outstanding 5,640,000 5,246,000 Net income per diluted common share, adjusted $0.28 $0.17 ===== ===== 11 Backlog: The Company's backlog of orders at December 31, 1997 was approximately $23.6 million as compared with approximately $8.5 million as of December 31, 1996. Exclusive of the $5.6 million of DMS' backlog of orders at December 31, 1997, the $9.5 million increase in backlog is attributable to new orders generated through the Museums and International groups, EDSI and Piper and from experienced account executives with established client bases in the Company's core business - Custom trade show exhibits. The entire current backlog relates to expected 1998 sales. 1996 As Compared with 1995 Sales Revenues for 1996 of $38.3 million, represents a 38.5% increase over 1995 revenues of $27.7 million. The $10.6 million increase during 1996 over 1995 revenues was attributed to sales increases from the reported business groups as follows: 1996 1995 ---- ---- Trade show exhibits group $30,939,000 $24,856,000 Permanent and scenic displays group 7,377,000 2,816,000 ----------- ----------- Total revenues $38,316,000 $27,672,000 =========== =========== The Trade show exhibits group experienced a 25% increase in its 1996 revenues as compared with its 1995 revenues due to higher sales generated by the Rental, International and Expose' groups during 1996. Additionally, the Company's core business - custom tradeshow exhibits, experienced a 17% increase in its 1996 revenues over 1995 revenues reflecting the Company's continued program of client expansion. However, the increase was only experienced in the Philadelphia and San Diego facilities where 1996 revenues exceeded those facilities' 1995 revenues by 35%. The Atlanta and Melbourne, Florida facilities experienced a decline in their core business revenues during 1996 as compared with 1995 predominantly due to less work having been transferred into those facilities by the Philadelphia location during 1996. Accordingly, management consolidated the Melbourne, Florida facility into the Orlando-based Piper Productions facility during January 1997. The Rental groups' 1996 increase was partially due to being operational for the entire year as compared with four months of operations during 1995. The International group experienced higher 1996 revenues as compared with its 1995 revenues due to their start-up growth and the Company's investments in their marketing since 1993. EDSI, the Company's majority-owned joint venture, experienced 45% growth in revenues during 1996 as compared with 1995 due to the increased acceptance of EDSI's Expose' product line by ADSI's national distribution network and the 1996 introduction of EDSI's Expose' LS (laminate system) into the marketplace. 12 Sales, continued The $4.6 million revenue increase experienced by the Permanent and scenic displays group during 1996 as compared with 1995 revenues was primarily due to the April 1996 acquisition of Piper Productions in Orlando, Florida. The Piper operations generated approximately 75% of the 1996 revenues for the Permanent and scenic displays group, the balance generated by the Museum sales group whose sales were 41% higher during 1996 than its 1995 sales level. Operating Profits The Company recorded an 82% (approximately, $600,000) increase in operating profits during 1996 as compared with 1995. The 1996 gross profit percentage decreased marginally from a 1995 gross profit percentage of 2.1% to 28.1% during 1996. This decrease was primarily due to the higher 1996 sales from the Permanent and scenic displays group which historically generate lower gross margins than the Trade show exhibits group. The 1996 selling costs, $1.7 million higher as compared with the same period during 1995, were attributed primarily to sales commissions on the higher revenues and increased sales and marketing costs in connection with the development of the Company's three-year strategic marketing plan initiated in 1997. However, as a percentage of sales, selling costs were approximately 0.5% lower during 1996 as compared with 1995. General and administrative costs, as a percentage of sales, decreased approximately 1.3% during 1996 as compared with 1995. The higher sales levels and related gross profits more than offset the increased selling and general and administrative costs, contributing to the $600,000 increase in 1996 operating profits as compared with 1995 operating profits. Operating profits related to the Expose' product during 1996 were consistent with 1995 operating profits. While there was a 45% increase in 1996 revenues over 1995 revenues, EDSI's operating profit margin decreased 2.1% in 1996 as compared with 1995. Pursuant to the July 1993 agreement with ADSI, the minority partner in EDSI, contractual cost allocations from ADSI to EDSI increased as sales from the Expose' products became a larger percentage of ADSI's overall sales to its distribution network. Accordingly, while EDSI sales increased, so did the allocated fixed, selling and administrative costs; this had a direct impact on EDSI's 1996 operating results. Additionally, EDSI incurred higher expenses during 1996 in connection with the introduction of its newest product line, Expose' LS. During the fourth quarter of 1996, management closed the two stand-alone Portable sales offices due to their consistently marginal returns and the fixed costs associated with maintaining separate showrooms away from the Company's manufacturing facilities. 13 Other Income (Expense): Other income increased by approximately $1,368,000 during 1996 as compared with 1995. This increase is attributed to the $1,200,000 gain the Company recorded during 1996 in connection with the contractual amendment more fully described in Note 4 to the consolidated statements. Net interest income improved by $124,000 during 1996 as compared with 1995 due to larger cash reserves available for investment. Other items generated a $46,000 positive swing during 1996 as compared with 1995 other items. Income Taxes: The provision for income taxes, as a percentage of income before taxes, increased to 13% during 1996. The provision incorporates federal, state and local income taxes of approximately $350,000 as compared with an income tax benefit of $538,000 during 1995. This increase was due to higher 1996 taxable income and a smaller effective tax rate benefit resulting from the release of valuation allowances. Net Income: During 1996, net income increased to $2,340,000 ($.45 per diluted share) as compared with 1995 net income of $1,253,000 ($.32 per diluted share). The dramatic increase, however, is partially attributable to the 1996 gain from the contractual amendment of $1,200,000. Exclusive of the effects of this gain, earnings per diluted share for 1996 increased 70%, or $.07 per share ($0.17 during 1996 as compared with $0.10 during 1995) as follows: 1996 1995 ---- ---- Income before income taxes $2,690,000 $ 715,000 Gain from contract amendment (1,200,000) -- ----------- ---------- 1,490,000 715,000 Tax rate, adjusted 40% 43% Tax provision,adjusted (596,000) (307,000) ----------- ---------- Net income, as adjusted $ 894,000 $ 408,000 =========== ========== Diluted shares outstanding 5,246,000 3,936,000 Net income per diluted common share, adjusted $0.17 $0.10 ====== ===== This increase included the dilutive effect of issuing 500,000 additional shares of the Company's common stock during 1996 in connection with the contract amendment (Note 4). 14 LIQUIDITY AND CAPITAL RESOURCES During 1997, the Company increased its cash reserves by $2,285,830, exclusive of the $1,529,260 of cash transferred to the Company as part of the December 31,1997 acquisition of DMS. As a result of the record sales levels achieved during 1997 and the increased backlog of orders not yet delivered as of December 31, 1997, the Company increased its accounts receivable and inventory balances by approximately $5.9 million, exclusive of the $ 4.9 million of DMS-acquired trade receivables and inventory. This increase, however, was offset by a $7.1 million increase in accounts payable and accrued expenses, net of $1.9 million of DMS-acquired accounts payable and accrued expenses. This increase in accounts payable and accrued expenses, exclusive of the DMS-related current liabilities, primarily relates to the $5.4 million increase in customer deposits collected against contracts not completed as of December 31, 1997 as compared with customer deposit balances as of December 31, 1996. Other current assets, exclusive of $558,000 acquired as part of the DMS acquisition, increased approximately $327,000 predominantly due to increases in prepaid expense balances as of December 31, 1997 as compared with December 31, 1996 balances. The Company spent approximately $1.3 million for capital assets during 1997, net of $161,000 of property and equipment acquired in the DMS acquisition. These expenditures included $391,000 for machinery, equipment, leasehold improvements, furniture, fixtures and other office equipment. Additionally, the Company invested approximately $400,000 for revenue-producing rental property and equipment and approximately $100,000 to upgrade its Computerized Assisted Design ("CAD") equipment. The Company is currently installing a new management information system ("MIS") to replace its existing computerized business system during 1998. As part of that investment, the Company expended approximately $400,000 during 1997 for hardware systems, consulting, site preparation and training toward the installation of new technology. During 1997, the Company did not borrow against its revolving credit facility to support the higher trade receivables and inventory levels, as well as the capital investments it required during the year. Additionally during 1997, the Company repaid approximately $623,000 of bank term debt and $75,000 of scheduled principal payments to various sellers of businesses acquired by the Company prior to 1997. During 1997, the Sellers of Sparks exchanged $283,877 of convertible term notes into 206,456 shares of the Company's common stock (see Note 2). The December 31, 1997 acquisition of DMS (see Note 2) by the Company significantly impacted the balance sheet ratios from a historically-comparative perspective. The addition of approximately $17.0 million of intangible assets (goodwill and other assets) and $13.5 million of new term debt related to the Acquisition greatly increased the Company's leverage ratio of debt to net worth as well as the current ratio (current assets/current liabilities). Accordingly, comparative information to December 31, 1996 ratios are not meaningful and is, therefore, not presented in this discussion. As of December 31, 1997, the Company maintained a current ratio of 1.7 to 1.0 and a debt to net worth ratio of 1.26 to 1.00. The Company was in compliance with all lending institution covenants (see Note 10) as of December 31, 1997 and no amounts were outstanding on the $6.5 million revolving credit facility. 15 OUTLOOK The record sales volume of $48.7 million greatly contributed to the higher operating profits the Company experienced during 1997. The Company expects continued sales growth from its Tradeshow exhibits group and Permanent and scenic displays group during 1998. Sales growth is expected in all four of the Company's manufacturing facilities in Philadelphia, Atlanta, San Diego and Orlando. The expected continuing expansion of the Company's Western region has created the need for a significantly larger facility in San Diego county. Accordingly, the Company is currently negotiating a lease for another sales and production facility, within the San Diego area, to be used as a low-cost producer of tradeshow and permanent exhibitry, in addition to being a major storage facility for client exhibit properties. The Company's historic overall gross profit percentages may be difficult to maintain in light of the expected increase in 1998 sales volume from the Museum and production group, the Rental group and Piper, whose historic margins fall below traditional custom exhibit margins. Additionally, the Company's core business client base of Fortune 1000 companies, as well as Pacific Rim clients, are more tightly managing their marketing budgets which could negatively impact the Company's historic custom exhibit margins. The expected higher revenues and gross profit dollars from the Trade show exhibits group and the Permanent and scenic displays group should enhance the Company's 1998 operating profits by aiding the Philadelphia, Atlanta, San Diego and Orlando facilities to generate more consistent operating efficiencies. The Company and ADSI are negotiating the exchange of the Company's 51% majority interest in EDSI, forgiveness of $1.1 million of inter-company debt plus approximately $200,000 of cash, for a 25% interest in ADSI. Should this transaction be completed, the Company's investment in ADSI will be accounted for using the equity method, with the Company no longer consolidating EDSI's revenues and expenses within its operating results. The Company will only recognize its pro-rata portion, 25%, of ADSI's operating results within its statement of operations. The Company is continuing its project of replacing existing management information systems hardware and software with state-of-the-art technology positioning the organization to effectively meet the changing environment of information processing among its clients and suppliers as well as year 2000 issues. Additionally, the new technology should increase operating efficiencies between the Company's four regional manufacturing facilities as information is processed and managed more seamlessly. The Company now maintains a formal Management Information System ("MIS") Department staffed with two experienced professionals who are responsible to guide the Company in its acquisition and utilization of new hardware and software technology. The Company believes this necessary investment in technology, approximating $1.1 million during 1997 and 1998, will assist it in minimizing the need for additional administrative personnel as its sales growth continues. Again, management is encouraged by the Company's overall performance during 1997 and realizes certain areas will continue to require additional attention and resources during 1998. While the Company's West Coast operation continues to build upon its progress from 1996 and 1997, the Company will seek additional account executives for the Western region to enhance the possibility of positive trends in sales and operating profits during 1998 and beyond. Conversely, the Atlanta operation continues to perform below expectations. While management 16 OUTLOOK, continued remains encouraged by the contributions of the Rental group in the Atlanta facility during 1997, the Company's core custom exhibits group continues to suffer from an insufficient Atlanta client base to support the fixed costs of that operation, becoming increasingly dependent upon the transfer of custom exhibit work from the Philadelphia, San Diego and Orlando facilities. The Company will continue its search for experienced sales executives with an existing base of custom exhibit clients to contribute the additional sales volume which will assist in stabilizing the Atlanta operation. Sparks Japan did not significantly impact 1997 operating margins through the limited production by EDSI of certain exhibit products for Sparks Japan clients. However, portable / modular exhibit sales in the Japan marketplace remain relatively new, requiring significant time and effort to introduce these products to Japanese exhibitors who have traditionally built and scrapped their exhibits for each trade show. Portable / modular exhibits, successfully marketed in the United States, can provide the Japanese exhibitor a large assortment of design capabilities while simultaneously offering reconfigurability and reusability for their future trade shows. Additionally, these exhibits provide the Japanese exhibitor an alternative to the environmentally-unfriendly practice of exhibit disposal. Any increase in Sparks Japan sales volume should benefit the sales volume of EDSI and ADSI since Sparks Japan features the Expose' and Exposure (ADSI's proprietary exhibit product) product lines in most of its sales efforts. The December 31, 1997 acquisition of DMS (see Note 2) has significantly impacted the Company's balance sheet as of the acquisition date and will significantly impact the Company's future results of operations. The acquisition of DMS will further expand the Company's range of exhibit and display products, contributing toward its objective of becoming a world-class leader in dimensional marketing services. The competency and experience of the DMS management group should provide the Company a firm base to expand the DMS business within an extremely fragmented industry without needing significant additions to its management structure. DMS' operating history of over 50 years and their long-term customer relationships (one of DMS' two largest customers has purchased product from DMS for over 40 years) should contribute to the Company a relatively consistent stream of revenues, cash flow and profitability, which should translate into higher shareholder value. By meeting the challenges outlined above, maintaining the highest standards for product quality and customer service, and, aggressively seeking acquisition possibilities within industries that meet management's financial and synergistic requirements, the Company will be positioned to take advantage of future opportunities. 17 YEAR 2000 DATE CONVERSIONS The Company's management information system department is currently replacing its computer systems and applications necessary to position the Company to meet the changing environment of information processing including meeting year 2000 date conversion with no material effect on customers or disruption to business operations. These actions are necessary to ensure that the systems and applications will recognize and process the year 2000 and beyond. Major areas of potential business impact have been identified and conversion efforts are underway. It is expected that the total cost of compliance over the cost of normal software and hardware upgrades/replacements will not be material to the Company's results of operations. NEW ACCOUNTING STANDARDS Effective January 1, 1998 the Company will adopt the provisions of Statement of Financial Accounting Standards ("SFAS") 130, "Reporting Comprehensive Income". SFAS 130 establishes standards for reporting and display of comprehensive income and its components in the financial statements. Reclassification of financial statements for earlier periods provided for comparative purposes is required. The Company is in the process of determining its preferred format. The adoption of SFAS 130 will not have a material impact on the Company's consolidated results of operations, financial position or cash flows. The Company will adopt the provisions of SFAS 131, "Disclosures about Segments of an Enterprise and Related Information" effective with the financial statements for the year ended December 31, 1998. SFAS 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to stockholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. Financial statement disclosures for prior periods are required to be restated. The Company is in the process of evaluating the disclosure requirements. The adoption of SFAS 131 will not have a material impact on the Company's consolidated results of operations, financial position or cash flows. FORWARD-LOOKING STATEMENTS This report contains 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 complete strategic acquisitions to enter new markets and expand existing business; continued availability of financing to provide additional sources of funding for future acquisitions, capital expenditure requirements and foreign investments; satisfying any potential year 2000 issues with no material adverse effect on operations; 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; uncertainties regarding accidents or litigation which may arise in the ordinary course of business; and the effects of, and 18 FORWARD-LOOKING STATEMENTS, continued 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. ITEM 8. FINANCIAL STATEMENTS The financial statements, together with the report of the Company's independent accountants thereon, are presented under Item 14 of this report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable 19 PART III Items 10, 11, 12 and 13 have been omitted from this report, since the Issuer will file with the Commission a definitive proxy statement, involving the election of directors, pursuant to Regulation 14A within 120 days after the close of its 1997 fiscal year. Accordingly, relevant information contained in such definitive proxy statement is incorporated herein by reference. ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K Exhibit Page -------- (a) The following documents are filed as part of this report: (1) Financial Statements and Financial Statement Schedule: (i) Financial Statements: Report of Independent Accountants 26 Consolidated Statements of Income for the years ended December 31, 1997, 1996 and 1995 27 Consolidated Balance Sheets, December 31, 1997 and 1996 28 Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 1997, 1996 and 1995 29 Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995 30 Notes to Consolidated Financial Statements 31 (ii) Financial Statements Schedule: Schedule II - Valuation and Qualifying Accounts 51a (2) Acquisition Agreement for DMS Store Fixtures. (Incorporated by reference to Issuer's Proxy Statement dated December 12, 1997 filed with the Commission.) 20 ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K, continued (3)(i)(a) Restated Certificate of Incorporation of the Issuer. (Incorporated by reference to Exhibit 4(a) to the Issuer's Registration Statement on Form S-8, File No. 33-3647, filed with the Commission.) (3)(i)(b) Certificate of Amendment to the Restated Certificate of Incorporation of the Issuer filed on June 2, 1987. (Incorporated by reference to Exhibit 3(a)(ii) to the Issuer's Annual Report on Form 10-K for the year ended December 31, 1987, filed with the Commission.) (3)(i)(c) Certificate of Amendment to the Restated Certificate of Incorporation of the Issuer filed on January 14, 1988. (Incorporated by reference to Exhibit 3(a)(iii) to the Issuer's Annual Report on Form 10-K for the year ended December 31, 1988, filed with the Commission.) (3)(i)(e) Certificate of Amendment to the Restated Certificate of Incorporation of the Issuer filed on March 31, 1997. (Incorporated by reference to Issuer's Proxy Statement dated December 12, 1997 filed with the Commission.) (3)(i)(d) Certificate of Amendment to the Restated Certificate of Incorporation of the Issuer filed on May 8, 1989. (Incorporated by reference to Exhibit 3(a)(iv) to the Issuer's Annual Report on Form 10-K for the year ended December 31, 1989, filed with the Commission.) 3(b) Amended and Restated By-laws of the Issuer. (Incorporated by reference to Exhibit 3(b) to the Issuer's Annual Report on Form 10-K for the year ended December 31, 1990, filed with the Commission.) 10(a) Agreement to Amend the International Distribution and Technology Agreement with Tsubasa System Company, Ltd. dated January 22, 1996. (Incorporated by reference to Exhibit 10(a) to the Issuer's Annual Report on Form 10-K for the year ended December 31, 1995, filed with the Commission). 10(b) Amended Agreement of Employment, dated December 11, 1992, between the Issuer and Robert B. Ginsburg. (Incorporated by reference to Exhibit 10(b) to the Issuer's Annual Report of Form 10-K for the year ended December 31, 1992 filed with the Commission). 21 ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K, continued 10(c) Amended Agreement of Employment, dated December 11. 1992, between the Issuer and Alan I. Goldberg. (Incorporated by reference to Exhibit 10(b) to the Issuer's Annual Report of Form 10-K for the year ended December 31, 1992 filed with the Commission). 10(d) Option Agreement dated November 23, 1992 with Robert B. Ginsburg. (Incorporated by reference to Exhibit 10(d) to the Issuer's Annual Report of Form 10-K for the year ended December 31, 1992 filed with the Commission.) 10(e) Option Agreement dated November 23, 1992 with Alan I. Goldberg. (Incorporated by reference to Exhibit 10(d) to the Issuer's Annual Report of Form 10-K for the year ended December 31, 1992 filed with the Commission.) 10(f) Employment and Option Agreements dated as of January 1, 1994 between the Issuer and Edmond D. Costantini, Jr. (Incorporated by reference to Item 6(a) of the Issuer's Quarterly Report of Form 10-QSB for the quarter ended September 30, 1996 filed with the Commission.) 10(g) Lease for Premises located at 2828 Charter Road, Philadelphia, PA. (Incorporated by reference to Exhibit 10(g) to the Issuer's Annual Report of Form 10-K for the year ended December 31, 1992 filed with the Commission.) 10(h) Letter Agreement dated August 7, 1995 by and among the Issuer, Donald Sparks, Stanley Ginsburg and Ira Ingerman. (Incorporated by reference to Exhibit 6(a)) to the Issuer's Quarterly Report of Form 10-QSB for the quarter ended September 30, 1995 filed with the Commission.) 10(i) Lease for Premises located at 8125 Troon Circle, Austell, GA 30001 (Incorporated by reference to Exhibit 10(i) to the Issuer's Annual Report on Form 10-K for the year ended December 31, 1993 filed with the Commission). 10(j) Lease for Premises located at 4560 36th Street, Orlando, FL 32811 (Incorporated by reference to Exhibit 10(j) to the Issuer's Annual Report on Form 10-K for the year ended December 31, 1996 filed with the Commission). 22 ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K, continued 10(k) Leases for Premises 1919 Friendship Drive, El Cajon, CA 92020 and 8787 Olive Lane, Santee, CA (Incorporated by reference to Exhibit 10(k) to the Issuer's Annual Report on Form 10-K for the year ended December 31, 1996 filed with the Commission). 10(l) Letter Amendment dated January 22, 1996 to Amended Employment Agreement with Robert B. Ginsburg (Incorporated by reference to Exhibit 10(j) to the Issuer's Annual Report on Form 10-K for the year ended December 31, 1993 filed with the Commission). 10(m) Letter Amendment dated January 22, 1996 to Amended Employment Agreement with Alan I. Goldberg (Incorporated by reference to Exhibit 10(k) to the Issuer's Annual Report on Form 10-K for the year ended December 31, 1993 filed with the Commission). 10(n) Letter Amendment dated January 2, 1997 to Amended Employment Agreement with Alan I. Goldberg 52 10(o) Letter Agreement dated January 2, 1997 to Amended Employment Agreement with Robert B. Ginsburg 53 10(p) Option Agreement dated May 23, 1997 with Robert B. Ginsburg 54 10(q) Option Agreement dated May 23, 1997 with Alan I. Goldberg 56 10(r) Amendment to Employment Agreement dated January 1, 1997 with E. D. Costantini, Jr. 58 10(s) Employment Agreement dated December 31, 1997 with Lawrence W. Schan 61 10(t) Employment Agreement dated December 31, 1997 with Ira Ingerman 72 10(u) Employment Agreement dated December 31, 1997 with Stanley Ginsburg 83 23 ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K, continued 21 Subsidiaries of the Issuer 94 23 Consent of Coopers & Lybrand L.L.P. 95 27 Financial Data Schedule for the year ended December 31, 1997 95a 27.1 Restated Financial Data Schedule for the quarter ended March 31, 1997 96 27.2 Restated Financial Data Schedule for the quarter ended June 30, 1997 97 27.3 Restated Financial Data Schedule for the quarter ended September 30, 1997 98 27.4 Restated Financial Data Schedule for the quarter ended December 31, 1996 99 27.5 Restated Financial Data Schedule for the quarter ended March 31, 1996 100 27.6 Restated Financial Data Schedule for the quarter ended June 30, 1996 101 27.7 Restated Financial Data Schedule for the quarter ended September 30, 1996 102 (b) Reports on Form 8-K No reports on Form 8-K were filed by the Issuer during the quarter ended December 31, 1997. 24 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MARLTON TECHNOLOGIES, INC. By: /s/ Robert B. Ginsburg President By: /s/ E. D. Costantini, Jr. Chief Financial Officer Dated: March 27, 1998 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Issuer and in the capacities and on the dates indicated. Signature Title Date /s/ Fred Cohen Chairman of the March 27, 1998 - ----------------------------- Board of Directors (Fred Cohen) /s/ Seymour Hernes Director March 27, 1998 - ----------------------------- (Seymour Hernes) /s/ Robert B. Ginsburg Director March 27, 1998 - ----------------------------- (Robert B. Ginsburg) /s/ Alan I.Goldberg Director March 27, 1998 - ----------------------------- (Alan I. Goldberg) /s/ William F. Hamilton Director March 27, 1998 - ----------------------------- (William F. Hamilton) 25 REPORT OF INDEPENDENT ACCOUNTANTS The Board of Directors and Shareholders Marlton Technologies, Inc.: We have audited the consolidated financial statements and the financial statement schedule of Marlton Technologies, Inc. and Subsidiaries as listed in Item 14(a)(1)(i) and (a)(1)(ii) on page 20 of this Form 10-K. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Marlton Technologies, Inc. and subsidiaries as of December 31, 1997 and 1996 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. /s/ Coopers & Lybrand L.L.P. COOPERS & LYBRAND L.L.P. 2400 Eleven Penn Center Philadelphia, Pennsylvania March 19, 1998 26 MARLTON TECHNOLOGIES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME for the years ended December 31,
1997 1996 1995 ----------------- ------------------ ------------------- Net sales $ 48,715,828 $ 38,315,600 $ 27,671,763 Cost of sales 34,876,590 27,550,933 19,693,655 ----------------- ------------------ ------------------- Gross profit 13,839,238 10,764,667 7,978,108 ----------------- ------------------ ------------------- Expenses: Selling 7,830,492 6,416,695 4,732,884 Administrative and general 3,734,770 3,002,109 2,506,201 ----------------- ------------------ ------------------- 11,565,262 9,418,804 7,239,085 ----------------- ------------------ ------------------- Operating profit 2,273,976 1,345,863 739,023 ----------------- ------------------ ------------------- Other income (expense): Interest income 353,510 209,913 109,446 Interest expense (31,552) (120,266) (142,860) Gain from contract amendment - 1,200,000 - Other, net 27,382 54,643 9,205 ----------------- ------------------ ------------------- 349,340 1,344,290 (24,209) ----------------- ------------------ ------------------- Income before income taxes 2,623,316 2,690,153 714,814 Provision (benefit) for income taxes 620,000 350,000 (538,000) ----------------- ------------------ ------------------- Net income $2,003,316 $2,340,153 $1,252,814 Net income per common share: Basic $ .42 $ .52 $ .32 Diluted $ .36 $ .45 $ .32
See notes to consolidated financial statements 27 MARLTON TECHNOLOGIES, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31,
ASSETS 1997 1996 ----------------------- ----------------------- Current: Cash and cash equivalents $ 7,115,100 $ 3,300,010 Accounts receivable, net of allowance of $266,000 and $181,000, respectively 10,444,298 5,424,080 Inventory 10,073,491 4,344,297 Prepaids and other current assets 1,337,497 452,930 Deferred income taxes 965,000 419,000 ----------------------- ----------------------- Total current assets 29,935,386 13,940,317 Property and equipment, net of accumulated depreciation and amortization 2,268,994 2,062,072 Rental assets, net of accumulated depreciation of $1,348,279 and $825,134, respectively 901,651 1,013,361 Goodwill, net of accumulated amortization of $871,546 and $734,456, respectively 19,763,768 2,962,638 Deferred income taxes 616,870 1,558,870 Other assets, net of accumulated amortization of $1,112,601 and $1,019,855, respectively 626,586 653,357 ----------------------- ----------------------- Total assets $ 54,113,255 $ 22,190,615 ======================= ======================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 1,386,117 $ 653,918 Accounts payable 4,294,971 2,586,572 Accrued expenses and other 12,235,351 4,916,511 ----------------------- ----------------------- Total current liabilities 17,916,439 8,157,001 Long-term debt, net of current portion 12,243,312 457,440 ----------------------- ----------------------- Total liabilities 30,159,751 8,614,441 ----------------------- ----------------------- 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; 6,889,444 and 4,534,592 issued, respectively 688,944 453,459 Additional paid-in capital 29,169,410 21,030,881 Accumulated deficit ( 5,793,173) ( 7,796,489) ----------------------- ----------------------- 24,065,181 13,687,851 Less cost of 5,000 treasury shares 111,677 111,677 ----------------------- ----------------------- Total stockholders' equity 23,953,504 13,576,174 ----------------------- ----------------------- Total liabilities and stockholders' equity $ 54,113,255 $ 22,190,615 ======================= =======================
See notes to consolidated financial statements. 28 MARLTON TECHNOLOGIES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY For the years ended December 31, 1997, 1996 and 1995
Additional Total Paid-in Accumulated Treasury Shareholders' Shares Amount Capital Deficit Stock Equity ------------ ------------ --------------- ---------------- -------------- ------------ Balance, December 31, 1994 3,900,225 $390,023 $20,137,473 $(11,389,456) $(111,677) $9,026,363 Issuance of shares under compensation arrangements 37,309 3,731 33,578 - - 37,309 Net income - - - 1,252,814 - 1,252,814 ------------ ------------ --------------- ---------------- -------------- ------------ Balance, December 31, 1995 3,937,534 393,754 20,171,051 (10,136,642) (111,677) 10,316,486 Issuance of shares under compensation arrangements 97,058 9,705 159,830 - - 169,535 Issuance of shares under contract amendment 500,000 50,000 700,000 - - 750,000 Net income - - - 2,340,153 - 2,340,153 ------------ ------------ --------------- ---------------- -------------- ------------ Balance, December 31, 1996 4,534,592 453,459 21,030,881 (7,796,489) (111,677) 13,576,174 Issuance of shares under compensation arrangements 148,396 14,839 391,548 - - 406,387 Issuance of shares in exchange for convertible notes 206,456 20,646 263,231 - - 283,877 Issuance of shares and warrants for acquisition 2,000,000 200,000 7,483,750 - - 7,683,750 Net income - - - 2,003,316 - 2,003,316 ------------ ------------ --------------- ---------------- -------------- ------------ Balance, December 31, 1997 6,889,444 $688,944 $29,169,410 $(5,793,173) $(111,677) $23,953,504 ============ ============ =============== ================ ============== ============
See notes to consolidated financial statements 29 MARLTON TECHNOLOGIES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS for the years ended December 31,
1997 1996 1995 --------------- ------------------ --------------------- Cash flows provided (expended) through operating activities: Net income $ 2,003,316 $ 2,340,153 $ 1,252,814 Adjustments to reconcile net income to cash provided through operating activities: Depreciation and amortization 1,569,287 1,637,424 1,110,712 (Increase) decrease in deferred taxes 396,000 171,130 (604,000) Other operating items 78,845 49,002 44,256 Change in assets and liabilities, net of effects of acquisitions: (Increase) in accounts receivable, net (2,681,217) (595,200) (258,662) (Increase) in inventory (3,215,232) (1,296,444) (147,228) (Increase) decrease in prepaids and other assets (326,714) 160,579 175,408 Increase (decrease) in accounts payable and accrued expenses and other 7,119,839 1,011,321 (817,924) --------------- ------------------ --------------------- Net cash provided through operating activities 4,944,124 3,477,965 755,379 --------------- ------------------ --------------------- Cash flows provided (expended) through investing activities: Acquisition of business, net of cash acquired (12,970,740) (75,000) - Investment in EDSI, minority partner - 115,000 - Capital expenditures (1,306,630) (1,557,899) (890,265) Disposal of capital assets 46,767 76,253 - Acquisition of intangible assets - - (50,095) --------------- ------------------ --------------------- Net cash (expended) through investing activities (14,230,603) (1,441,646) (940,360) --------------- ------------------ --------------------- Cash flows provided (expended) through financing activities: Proceeds from issuance of long-term debt 13,500,000 21,367 583,523 Principal payments on long-term debt (678,052) (658,482) (510,493) Payments against notes payable, Sellers (20,000) - (328,618) Proceeds from stock issuance - 750,000 - Proceeds from exercised stock options 299,621 122,200 - --------------- ------------------ --------------------- Net cash provided (expended) through financing activities 13,101,569 235,085 (255,586) --------------- ------------------ --------------------- Increase (decrease) in cash and cash equivalents 3,815,090 2,271,404 (440,569) Cash and cash equivalents - beginning of year 3,300,010 1,028,606 1,469,175 --------------- ------------------ --------------------- Cash and cash equivalents - end of year $ 7,115,100 $ 3,300,010 $ 1,028,606 =============== ================== =====================
See notes to consolidated financial statements. 30 NOTES TO FINANCIAL STATEMENTS 1. Summary of Accounting Policies: Basis of Presentation: The consolidated financial statements include the accounts of Marlton Technologies, Inc., its wholly-owned subsidiaries and majority owned subsidiary (the "Company"). All inter-company accounts and transactions have been eliminated. Activity included in the consolidated statements of operations consists primarily of the design, manufacture, sale and servicing of sophisticated custom and portable trade show exhibits and museum interiors and the manufacturing of panelized portable exhibits, themed interiors, theme park attractions, staging and sets. On December 31, 1997, the Company acquired the assets and liabilities of DMS Store Fixtures, L.P. ("LP") through its newly-formed, wholly-owned subsidiary DMS Store Fixtures Corp. ("DMS"), a supplier of custom store fixtures and displays to national retailers, department stores and consumer product manufacturers. Accordingly, no activity from the operations of DMS are included in the results of operations of the Company for any periods presented. However, the acquired assets and liabilities of DMS are recorded at their estimated fair value with the excess purchase price and related costs of acquisition recorded as goodwill at December 31, 1997 (see Note 2). Cash and Cash Equivalents: For purposes of the statements of cash flows, the Company considers all investments with an initial maturity of three months or less at the time of their purchase to be cash equivalents. Temporary cash investments comprise principally short-term government funds. At various times throughout the year the Company maintained cash balances in excess of FDIC limits. Inventory: Inventories are stated at the lower of cost (first-in, first-out) or market. Property and Equipment: Property and equipment are stated at cost. Depreciation is provided on the straight-line method over the estimated useful lives of the respective assets ranging primarily from 3 to 10 years. Assets and accumulated depreciation accounts are reduced for the sale or other disposition of property and the resulting gain or loss is included in income. 31 1. Summary of Accounting Policies, continued: Rental Assets: Rental assets, which include manufactured and purchased exhibit components, are stated at cost. Depreciation is recorded on a usage basis, primarily over 1 to 3 years. Long-Lived Assets The Company's policy is to record an impairment loss against long-lived assets, including property and equipment, goodwill and other intangibles in the period when it is determined that the carrying amount of such assets may not be recoverable. This determination includes evaluation of factors such as current market value, future asset utilization, business climate and future undiscounted cash flows expected to result from the use of the net assets. The excess of cost over the fair value of net assets acquired (goodwill) is amortized on a straight-line basis over periods ranging from 5 to 30 years. Customer lists, which are recorded at cost, are amortized on a straight-line basis over their estimated useful lives of 5 to 15 years and are included as components of Other Assets. Also included in Other Assets are debt issue costs, deposits relating to certain facility leases and the long-term portion of certain prepaid expenses. Revenue Recognition: Revenues on trade show exhibit sales and themed interiors and sets are recognized using the completed contract method. Revenues on permanent exhibit installations which are generally six months or longer in duration are recognized on the percentage of completion method. Progress billings are generally made throughout the production process. Progress billings which are unpaid at the balance sheet date are not recognized in the financial statements as accounts receivable. Progress billings which have been collected on or before the balance sheet date are classified as customer deposits and are included as components of Accrued expenses and other. 32 1. Summary of Accounting Policies, continued: Income Taxes The Company recognizes deferred tax assets and liabilities based upon the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are calculated based on the difference between the financial and tax bases of assets and liabilities using the currently enacted tax rates in effect during the years in which the differences are expected to reverse. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from those estimates. Concentration of Credit Risk: The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. The Company places its cash and temporary cash investments with high credit quality institutions. The Company's accounts receivable are with customers throughout the United States and international. The Company performs ongoing credit evaluations of its customers' financial condition and generally requires progress payments which mitigate its loss exposure. Two major retailers comprise the majority of DMS' customer base. While DMS is affected by the well-being of the retail industry and its major customers, management does not believe significant credit risks exist with respect to its trade receivables. Fair Value of Financial Instruments Financial instruments consist of cash and cash equivalents and long-term debt. The recorded values of cash and cash equivalents approximate their fair value due to the short maturity of these instruments. The fair value of long-term debt is estimated based on current interest rates offered to the Company for similar remaining maturities. The recorded value of these financial instruments approximate their fair value at December 31, 1997 and 1996. 33 1. Summary of Accounting Policies, continued Per Share Data Basic net income per common share is calculated using the average shares of common stock outstanding, while diluted net income per common share reflects the potential dilution that could occur if stock options were exercised. Prior periods have been restated in accordance with Statement of Financial Accounting Standards (SFAS) 128 "Earnings Per Share.". Restated diluted net income per common share amounts do not differ materially from previously reported primary net income per common share amounts. Recently Issued Accounting Standards Effective January 1, 1998 the Company will adopt the provisions of SFAS 130, "Reporting Comprehensive Income." SFAS 130 establishes standards for reporting and display of comprehensive income and its components in the financial statements. Reclassification of financial statements for earlier periods provided for comparative purposes is required. The Company is in the process of determining its preferred format. The adoption of SFAS 130 will not have a material impact on the Company's consolidated results of operations, financial position or cash flows. The Company will adopt the provisions of SFAS 131, "Disclosures about Segments of an Enterprise and Related Information" effective with the financial statements for the year ended December 31, 1998. SFAS 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to stockholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. Financial statement disclosures for prior periods are required to be restated. The Company is in the process of evaluating the disclosure requirement. The adoption of SFAS 131 will not have a material impact on the Company's consolidated results of operations, financial position or cash flows. 34 2. Acquisitions: DMS Stores Fixtures, Inc.: On December 31, 1997, the Company acquired the assets and liabilities of LP, a supplier of custom made store fixtures and displays to national retailers, department stores and consumer product manufacturers. Total consideration paid by the Company for LP, was $13.5 million in cash and an additional $1.0 million of cash held in escrow until the December 31, 1997 guaranteed net worth of $5.5 million in LP was verified and released by Company management during February 1998. Additionally, the Company issued 2 million unregistered shares of its common stock, with an additional 250,000 shares contingent upon DMS achieving at least $12.5 million in cumulative pre-tax earnings through December 31, 2002. As part of this acquisition, the Company entered into five year employment agreements with the three principals of LP, one of which, is the father of the Company's Chief Executive Officer providing minimum annual base salaries ranging from $125,000 to $250,000. One individual is eligible to receive an annual bonus up to a maximum of $250,000 per year during the term of his five year employment agreement based on the after-bonus, pre-tax earnings of DMS. The Company will maintain key man life insurance of $2.0 million on one of the individuals and a $2.0 million "second-to-die" policy on the remaining two individuals. The Company incurred fees of approximately $860,000 as part of the Acquisition, including approximately $214,000 for the value of 162,500 warrants for the Company's common stock which were issued to the Company's financial advisor and lending institution. The value of the warrants issued to the lending institution, approximating $82,000, is included as a component of Other assets and will be amortized on a straight line basis over the term of the Company's loan agreement, five years, commencing January 1, 1998. The acquisition has been accounted for using the purchase method of accounting. The excess cost, including related costs of the transaction, over the net assets acquired, amounting to approximately $16.9 million on a preliminarily allocated basis, will be amortized on a straight-line basis over a period of 30 years commencing January 1998. The following table summarizes the unaudited consolidated pro forma information assuming the acquisition occurred at the beginning of each of the following periods. The pro forma effect of the Piper acquisition is not material and, accordingly, has been excluded from the pro forma presentation. 35 2. Acquisitions, continued: 1997 1996 ---- ---- Net sales $79,796,000 $68,440,000 Operating income 4,059,000 3,527,000 Net income $ 2,816,000 $ 3,529,000 Weighted average of common shares: Basic 6,759,000 6,480,000 Diluted 7,634,000 7,246,000 Net income per common share: Basic $.42 $.54 Diluted $.37 $.49 Pro forma net income presented for 1997 and 1996 include two significant non-recurring items. Prior to LP being acquired by the Company, it charged $792,000 against its 1997 earnings for the value of stock compensation paid to certain LP employees. During 1996, the Company recorded a $1.2 million gain from a contractual amendment. Exclusive of the after-tax effect of these two significant non-recurring items during 1997 and 1996, pro forma net income for the respective period was $3,418,000 ($.45 per diluted common share) and $2,484,000 ($.34 per diluted common share). The pro forma consolidated results of operations include adjustments to give effect to amortization of goodwill, interest expense on acquisition debt and certain other adjustments, together with related income tax effects. The unaudited pro forma information is not necessarily indicative of the results of operations that would have occurred had the purchase been made at the beginning of the periods presented or the future results of the combined operations. Piper Productions, Inc.: The Company acquired 100% of the stock of Piper Productions, Inc. ("Piper") of Orlando, Florida, effective April 1, 1996. Total consideration paid for Piper, including related expenses, approximated $200,000. The Company made a cash payment of $50,000 at closing, and issued a $100,000 note bearing interest at 6% payable in 5 equal annual installments which commenced on April 1, 1997. Up to $200,000 in 36 2. Acquisitions, continued: additional consideration is payable should Piper achieve defined sales levels through 2001. The acquisition was accounted for as a purchase with the operating results of Piper included in the consolidated statement of income from the acquisition date. Accordingly, the acquired assets and liabilities have been recorded at their estimated fair values at the date of acquisition. Sparks Exhibits Corp.: In August, 1990, the Company acquired Arrow Exhibits, Inc. ("Arrow") and transferred the operations to its newly formed subsidiary, Sparks Exhibits Corp. ("Sparks"). The Agreement provided for certain additional consideration to be paid to the Sellers based on defined operating results of Sparks through December 31, 1994. During 1995 the Company paid $478,618 as additional consideration. The final cumulative contingent earn-out obligation to the Sellers of $333,972 payable in August 7, 1995 was satisfied by a cash payment of $50,095 and issuance of three two-year notes totaling $283,877 bearing interest at 8%, payable quarterly and convertible to the Company 's common stock at $1.375 per share. The Sellers converted their two-year notes into the Company's common stock during January 1997. All additional consideration paid to the Sellers has been recorded as goodwill. Expose Display Systems, Inc.: During July 1993, the Company and Abex Display Systems, Inc. ("ADSI"), entered into an agreement to organize a new California corporation, Expose Display Systems, Inc. ("EDSI"). The Company acquired 51% of EDSI with ADSI acquiring the balance. EDSI granted to ADSI exclusive worldwide distribution and marketing rights for "Expose", a portable display product, through December 2005 contingent upon ADSI meeting defined sales levels. EDSI sales, net of inter-company revenues, for 1997, 1996 and 1995 approximated $4.7 million, $3.1 million and $2.1 million, respectively. As of December 31, 1997 and 1996 $253,000 and $120,000, respectively, was owed to ADSI by EDSI. 37 3. Net Income per Common Share: Income per share amounts have been restated in accordance with SFAS 128, "Earnings Per Share." This restatement did not result in a material change between diluted per common share amounts and previously reported primary per common share amounts. The following table sets forth the computation of basic and diluted net income per common share (in thousands): 1997 1996 1995 ---- ---- ---- Net income $2,003 $2,340 $1,253 ====== ====== ====== Weighted average common shares outstanding used to compute basic net income per common share 4,765 4,480 3,930 Additional common shares to be issued assuming exercise of stock options, net of shares assumed reacquired 875 766 6 ----- ------- ------ Total shares used to compute diluted net income per common share 5,640 5,246 3,936 ===== ======= ====== Basic net income per share $.42 $.52 $.32 ==== ==== ==== Diluted net income per share $.36 $.45 $.32 ==== ==== ==== Options and warrants to purchase 190,000 shares of common stock at prices ranging from $5.00 per share to $7.00 per share were outstanding at December 31, 1997, but were not included in the computation of diluted income per common share because the option's and warrant's exercise price was greater than the average market price of the common shares. 4. Gain on Japan Transaction: The Company and Tsubasa System Company, Ltd. ("Tsubasa") a diversified manufacturing and marketing company entered into a distribution and license agreement during 1995 and jointly formed a Japanese corporation, Sparks Japan, to market portable exhibits in Japan. Sparks Japan was capitalized with $250,000, 90% owned by Tsubasa and 10% owned by the Company. In an amendment to that agreement during January 1996, the Company agreed to eliminate certain future payments from Sparks Japan and to issue to Tsubasa 500,000 unregistered shares of the Company's common stock in exchange for $3,000,000 and a commitment from the Company to provide requisite technical, operational and marketing support 38 4. Gain on Japan Transaction, continued: to the operation. The agreement also requires that the funds received by the Company are to be used only for its operating activities and to acquire companies, products and services within the exhibit industry, unless prior approval is obtained from Tsubasa. In the event that Sparks Japan does not achieve certain sales levels by December 31, 1998 and the Company's common stock is trading at less than $3.00 per share at that time, if requested by Tsubasa, the Company is required to, at its option, either repurchase the Tsubasa shares at $3.00 per share or make a cash payment per share to Tsubasa equal to the difference between the December 31, 1998 trading price and $3.00. A gain of $1,000,000 was recognized in 1996 representing the consideration received less amounts allocated to the 500,000 shares of common stock issued, the "put option" and the incremental direct costs expected to be incurred by the Company with respect to complying with certain requirements of the agreement. During the fourth quarter of 1996, management re-evaluated the put option and expected direct costs, resulting in a $200,000 increase to the recorded gain during 1996. Included in Accrued expenses and other at December 31, 1997 and 1996 are accrued contractual costs of $467,409 and $713,299, respectively. 5. Cash Flows Information: Cash paid for interest in 1997, 1996 and 1995 amounted to $28,053, $121,049, and $140,206, respectively. Cash paid for income taxes in 1997, 1996 and 1995 amounted to $61,170, $30,398 and $9,509, respectively. Cash paid for the acquisition of LP was calculated as follows: Current Assets $ 5,410,816 Property and Equipment 160,642 Goodwill and other Intangibles 16,990,432 Liabilities assumed or created (1,907,400) Common stock issued (7,683,750) ----------- Cash paid, net of cash acquired $12,970,740 =========== During 1997 the following non-cash investing and financing transactions took place: o The Company issued 2,000,000 shares of its common stock and 162,500 warrants in connection with the acquisition of LP. 39 5. Cash Flows Information, continued: o The Company issued 27,166 shares of its common stock to certain directors, employees and the Company's 401(k) plan for director fees, stock awards and defined contributions under the Company's employment benefit plan o The Company exchanged three, two year convertible notes to the Sellers of Sparks amounting to $283,877 for 206,456 shares of the Company's common stock. During 1996 the following non-cash investing and financing transactions took place: o The Company issued to the Piper seller a $100,000 note bearing interest at 6% and payable in five equal, annual installments commencing April 1, 1997. o The Company issued 35,958 shares of its common stock to certain directors, employees and the Company's 401(k) plan for director fees, stock awards and defined contributions under the Company's employment benefit plan. o During 1995 the following non-cash investing and financing transactions took place: o The Company issued to three Sellers, two-year notes amounting to $283,877 and bearing interest at 8% and payable quarterly in lieu of the final payment for additional consideration in connection with the a 1990 acquisition. 6. Inventory: Inventory at December 31, 1997 and 1996 consists of the following: 1997 1996 ---- ---- Raw materials $ 819,273 $ 775,805 Work in process 6,763,508 3,568,492 Finished goods 2,490,710 - ----------- ----------- $10,073,491 $ 4,344,297 =========== =========== 40 7. Property and Equipment and Rental Assets: Property and equipment at December 31, 1997 and 1996 consists of the following: 1997 1996 ---- ---- Manufacturing equipment and vehicles $1,510,901 $ 1,352,095 Office equipment and data processing 2,685,036 1,990,537 Leasehold improvements 1,406,548 1,265,030 Showroom exhibits and other 643,254 582,764 ---------- ------------ 6,245,739 5,190,426 Less accumulated depreciation and amortization 3,976,745 3,128,354 --------- --------- $2,268,994 $2,062,072 ========== ========== 1997 1996 ---- ---- Rental assets at December 31, 1997 and 1996 consists of the following: Rental assets $2,249,930 $1,838,495 Less accumulated depreciation 1,348,279 825,134 ----------- ---------- $ 901,651 $1,013,361 =========== ========== Depreciation expense was approximately $1,339,000, $1,123,000 and $799,000 for the years ended December 31, 1997, 1996 and 1995, respectively. 8. Intangible Assets: Amortization expense related to goodwill and other intangible assets was approximately $230,000, $514,000 and $312,000 for the years ended December 31, 1997, 1996 and 1995, respectively. 41 9. Accrued Expenses and Other: Accrued expenses and other at December 31, 1997 and 1996 consist of the following: 1997 1996 ---- ---- Accrued compensation $ 2,423,390 $1,298,682 Customer deposits 6,596,745 1,176,745 Accrued payroll, sales and business taxes 268,462 433,876 Accrued insurance costs 508,202 302,270 Accrued acquisition costs 513,207 -- Accrued contractual costs (See Note 4) 467,409 713,299 Other 1,457,936 991,639 ----------- ---------- $12,235,351 $4,916,511 =========== ========== 10. Debt Obligations: Notes Payable: The Company, in connection with the December 31, 1997 acquisition of LP, entered into a $13.5 million five-year term loan and a $6.5 million five-year revolving credit facility with a lending institution, both collateralized by all of the Company's assets. Borrowings under the term loan and revolving credit facility bear interest at rates equal to adjusted LIBOR plus applicable spreads ranging from 75 to 100 basis points. The applicable spreads are dependent upon the Company's debt to capitalization ratio, measured on a quarterly basis. A final payment is due during 2002 provided the Company has not fully repaid the term loan due to contractually-required prepayments equal to 50% of defined excess cash flow, applied in the inverse order of the installments' due date. Both the term loan and revolving credit facility include, among other things, certain financial covenants requiring the maintenance of certain minimum financial ratios and restricts the Company's ability to pay dividends. No amounts under the revolving credit facility were outstanding as of December 31, 1997. The Company is subject to an annual commitment fee of 75 basis points on the average annual unused portion of the revolving credit facility, payable in arrears, commencing January, 1999. 42 10. Debt Obligations, continued Long-term debt at December 31, 1997 and 1996 consists of the following: 1997 1996 ---- ---- Term loans payable, banks: Interest payable quarterly at adjusted LIBOR plus spreads ranging from 75 to 100 basis points, principal in equal quarterly payments commencing April 1, 1998 based on minimum annual installments of $1.350 million, $2.025 million, $2.025 million, $3.375 million and a final payment up to $4.725 million $13,500,000 -- Interest payable monthly at rates ranging from 6.85% to 8.6%, principal paid during 1997 -- $623,334 Seller Notes payable, converted into 206,456 shares of common stock during January 1997 -- 283,877 Seller Note payable, interest payable annually at 6%, principal payable in annual installments of $20,000 through April, 2001 80,000 100,000 Other 49,429 104,147 ----------- ----------- 13,629,429 1,111,358 Less current portion 1,386,117 653,918 ----------- ----------- $12,243,312 $ 457,440 =========== =========== Aggregate long-term debt maturities for the next five years are as follows: Years ended December 31, Amount ------------------------ ------ 1998 $ 1,386,117 1999 2,057,480 2000 2,058,813 2001 3,402,034 2002 4,724,985 ----------- $13,629,429 =========== 43 11. Commitments and Contingencies: The Company operates in leased office and warehouse facilities. Lease terms range from monthly commitments up to 81 months with options to renew at varying times. Certain lease agreements require the Company to pay supplemental costs of utilities, taxes, insurance and maintenance. The Company leases its DMS facility from a partnership controlled by two shareholders of the Company. The lease expires May 2001. The annual rent is $180,000. In addition, the Company is responsible for taxes, insurance and other operating expenses. As of December 31, 1997, future minimum lease commitments under non-cancelable operating leases are as follows: Year ended December 31, ----------------------- 1998 $1,652,000 1999 1,473,000 2000 1,303,000 2001 831,000 2002 791,000 2003 and thereafter 1,088,000 ---------- Total minimum lease commitments $7,138,000 ========== Rental expense, exclusive of supplemental costs was approximately $1,405,000, $1,382,000 and $1,111,000 for the years ended December 31, 1997, 1996 and 1995, respectively. Pursuant to their employment contracts, two officers may obtain shares of common stock at $1.60 per share based on a formula related to certain prior deferred compensation and accrued bonuses. As of December 31, 1997, there were 360,042 shares reserved for these arrangements. The Company is engaged in legal proceedings in the normal course of business. The Company believes that any unfavorable outcome from these suits not covered by insurance would not have a material adverse effect on the financial statements of the Company. 44 12. Warrants and Stock Options: Warrants In December 1997, the Company issued warrants to purchase 100,000 and 62,500 shares of common stock at an exercise price of $6.19 per share to the Company's financial advisor and lending institution, respectively, as part of the LP acquisition. These warrants are exercisable on or before December 31, 2001. Stock Options The Company has qualified and nonqualified stock option plans. In August 1990, the Company adopted the 1990 Incentive Plan which provides for the granting of Incentive Stock Options ("ISO") and a 1990 Nonstatutory Option Plan ("NSO") (collectively, "the 1990 Plans"). Under the 1990 Plans, 1,450,000 shares of Common Stock are authorized for issuance under options that may be granted to employees. Options are exercisable at a price not less than the market value of the shares at the date of grant in the case of ISO's, and 85% of the market value of the shares in the case of NSO's. In April 1984, the Company adopted the 1984 Incentive Stock Option Plan ("1984 Plan"). The plan provides for the granting of Incentive Stock Options to key salaried employees to purchase a maximum of 100,000 common shares at prices not less than the market value of the shares on the date the options are granted. The Company maintains a Nonqualified Stock Option Plan ("NSOP") which provides for the granting of options primarily to employees, directors and others to purchase, for a period of five years, a maximum of 65,900 common shares at prices and terms determined by a committee appointed by the Board of Directors. Options are granted at a price not less than 85% of the market value of the shares at the date of the grant. The Directors' and Consultants' Stock Option Plan ("DCSOP") provides for the granting of options to purchase up to 73,600 common shares to directors and consultants who are neither principal stockholders, nor receive salary compensation. Prices are determined as in the Nonqualified Stock Option Plan. The 1992 Director Stock Plan (as amended through July 1996)("1992 Plan"), with a total of 200,000 authorized shares, was amended in December 1994 to provide that in addition to stock awards, stock options may be granted to Directors at a price not less than market value on the date of the grant. 45 12. Warrants and Stock Options, continued The following is a summary of option transactions and exercise prices: Price Weighted Shares Per Share Average ------ --------- ------- Outstanding at December 31, 1994 1,173,245 $1.60 to $4.00 $2.02 ========= Granted 90,000 $2.00 2.00 Expired (57,783) $2.60 to $4.00 2.90 ----------- Outstanding at December 31, 1995 1,205,462 $1.60 to $2.75 1.98 ========== Granted 339,300 $2.00 to $2.88 2.42 Expired (2,540) $2.00 2.00 Exercised (61,100) $2.00 2.00 ---------- Outstanding at December 31, 1996 1,481,122 $1.60 to $2.88 2.08 ========= Granted 172,419 $3.57 to $7.00 4.02 Expired (98,427) $2.13 to $3.00 2.96 Exercised (121,230) $1.60 to $2.60 1.89 --------- Outstanding at December 31, 1997 1,433,884 $1.60 to $7.00 2.27 ========= 46 12. Warrants and Stock Options, continued The following table summarizes information concerning outstanding and exercisable options as of December 31, 1997:
Options Outstanding Options Exercisable -------------------------------------------- ---------------------------- Weighted Average Number ---------------- Number Weighted Range of Exercise of Options Remaining of Options Average Prices and Awards Life (Years) Exercise Price and Awards Exercise Price ----------------- ---------- ------------ -------------- ---------- -------------- 1990 Plans $1.60 to $2.00 854,720 3.46 $1.81 854,720 $1.81 $3.38 to $3.38 40,000 9.33 3.88 -- -- -------------- -------- ---- ------ ------- ----- Plan Totals $1.60 to $3.38 894,720 3.72 $1.88 854,720 $1.81 -------------- ------- ---- ----- ------- ----- 1984 Plan $2.00 to $3.88 47,780 1.69 $2.79 47,780 $2.79 $6.00 to $6.00 20,000 3.01 6.00 20,000 6.00 -------------- -------- ---- ------ -------- ----- Plan Totals $2.00 to $6.00 67,780 2.08 $3.74 67,780 $3.74 -------------- -------- ---- ----- -------- ----- NSOP $2.00 to $3.28 15,165 2.62 $2.44 15,165 $2.44 -------------- -------- ---- ----- -------- ----- DCSOP $2.45 to $2.45 19,000 0.46 $2.45 19,000 $2.45 -------------- -------- ---- ----- -------- ----- 1992 Plan $2.49 to $3.50 80,000 2.87 $2.33 80,000 $2.33 $4.45 to $4.45 30,000 4.45 3.57 -- -- -------------- -------- ---- ------ -------- ----- Plan Totals $2.49 to $4.45 110,000 3.30 $2.67 80,000 $2.33 -------------- ------- ---- ----- -------- ----- Other $2.00 to $3.50 234,800 3.44 $2.26 128,800 $2.22 $3.88 to $7.00 92,419 3.81 $4.51 84,919 $4.38 -------------- -------- ---- ----- -------- ----- Total Other $2.00 to $7.00 327,219 3.51 $2.89 213,719 $3.08 -------------- -------- ---- ----- -------- ----- Grand Total $1.60 to $7.00 1,433,844 3.52 $2.27 1,250,384 $2.18 ============= ========= ==== ===== ========= =====
The following is a summary of stock options exercisable at December 31, 1997, 1996 and 1995, and their respective weighted-average share prices: Weighted Average Number of Shares Exercise Price ---------------- -------------- Options exercisable December 31, 1997 1,250,384 $2.18 Options exercisable December 31, 1996 1,130,296 $2.00 Options exercisable December 31, 1995 909,513 $1.94 47 12. Warrants and Stock Options, continued The Company has adopted the disclosure -only provisions of SFAS 123, "Accounting for Stock-based Compensation." The Company will continue to apply the provisions of Accounting Principles Board Opinion 25 in accounting for its stock option plans. If the Company had elected to recognize compensation cost based on the fair value of the options granted at grant date as prescribed by SFAS 123, net income and diluted income per common share would have been reduced to the pro forma amounts as follows: Year ended December 31, 1997 1996 1995 ---- ---- ---- Net Income As reported $2,003,316 $2,340,153 $1,252,814 Pro Forma 1,747,569 2,235,544 1,224,500 Diluted Income Per Common Share As reported $.36 $.45 $.32 Pro Forma $.31 $.41 $.31 The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. Assumptions used to calculate the fair value of option grants in 1997, 1996 and 1995 include the following: Assumption 1997 1996 1995 ---------- ---- ---- ---- Dividend yield 0.0% 0.0% 0.0% Risk-free rate 6.0% 6.2% 7.2% Expected life 3-4 yrs. 4-5 yrs. 5 yrs. Expected volatility 68% 74% 79% Fair Value $2.07 $1.42 $0.69 48 13. Employee Benefit Plans: The Company maintains a defined contribution savings plan under Section 401(k) of the Internal Revenue Code which provides retirement benefits to certain employees of the Company and its wholly-owned subsidiaries who meet certain age and length of service requirements. The Company's contribution to the Plan is determined by management. Charges to income, as determined by the market value of Company stock when contributed, with respect to this Plan were approximately $55,000, $50,000 and $32,000 in 1997, 1996 and 1995, respectively. 14. Income Taxes: The components of the provision (benefit) for income taxes were as follows: 1997 1996 1995 ---- ---- ---- Current: Federal $ 99,000 $ 87,000 $ 27,000 State 125,000 91,000 39,000 Deferred: Federal 375,000 172,000 (590,000) State 21,000 - (14,000) ------ -------- ----------- $620,000 $350,000 $(538,000) ======== ======== ========== A reconciliation of the federal statutory rate to the Company's effective tax rate is as follows: 1997 1996 1995 ---- ---- ---- Federal statutory rate 34% 34% 34% State income tax, net of Federal income tax effect 4 3 2 Non-deductible expenses 3 3 7 Valuation allowance (13) (33) (114) Other, net (4) 6 (4) ---- ------- ----- 24% 13% (75%) === === ===== 49 14. Income Taxes, continued The net deferred tax asset at December 31, 1997 and 1996 comprises the following: 1997 1996 ---- ---- Net operating loss carryforwards $ 287,000 $1,441,000 General business credits 1,406,000 1,856,000 Alternative minimum tax credits 190,000 120,000 Property and equipment 249,000 228,000 Accrued expenses and compensation 387,000 200,000 Other, net 119,000 (11,000) ---------- ----------- 2,638,000 3,834,000 Valuation allowances (1,056,000) (1,856,000) ---------- ------------ Net deferred tax asset $1,582,000 $1,978,000 ========== =========== The decrease in the valuation allowance in 1996 resulted from the release of valuation allowance based on the re-evaluation of the realizability of future benefits of net operating loss carryforwards. During the fourth quarter of 1997, as a result of the acquisition of DMS, the Company reassessed its ability to utilize its general business credit carryforwards which expire primarily in 1998. Based on this reassessment, a benefit of approximately $350,000 was recognized related to release of valuation allowance and approximately $450,000 of gross deferred tax asset and valuation allowance were written off. Realization of the net deferred tax asset is dependent upon generating sufficient taxable income prior to expiration of the net operating loss carryfowards (NOL's) and general business credits. Although realization is not assured, management believes it is more likely than not that the recorded net deferred tax asset will be realized. As of December 31, 1997, the Company had federal NOL's of approximately $843,000, expiring through 2008 and general business carryforwards of approximately $1,406,000 which expire primarily in 1998. 50 15. Quarterly Financial Information (Unaudited) Summarized unaudited quarterly financial data for the years ended December 31, 1997 and 1996 are: 1997 March 31 June 30 September 30 December 31 ---- -------- ------- ------------ -------------- Net Sales 11,838 12,185 12,014 12,678 Gross Profit 3,517 3,297 3,430 3,595 Net Income 402 383 322 896 (1) Basic Net Income Per Common Share (2) .09 .08 .07 .19 Diluted Net Income Per Common Share (2) .07 .07 .06 .15 1996 Net Sales 8,578 10,288 10,243 9,207 Gross Profit 2,529 2,906 2,762 2,568 Net Income 1,014 (3) 280 164 882 (1)(4) Basic Net Income Per Common Share (2) .23 .06 .04 .19 Diluted Net Income Per Common Share (2) .22 .05 .03 .16 (1) Fourth quarter results include the release of valuation allowances based on the reevaluation of the realizability of net operating loss carryforward and general business credits. (2) During the fourth quarter of 1997, the Company adopted the provisions of SFAS 128 and, as required, has restated all prior period per common share data. (3) Includes a pre-tax gain of $1,000 from a contract amendment. See Note 4 of the consolidated financial statements. (4) Includes a pre-tax gain of $200 from a contract amendment. See Note 4 of the consolidated financial statements. 51 MARLTON TECHNOLOGIES, INC. and SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS for the years ended December 31, 1997, 1996 and 1995 (Thousands of Dollars)
Additions Additions charged charged (deductions (deductions Balance at credited) credited) Balance at beginning of to costs and to other Deductions end of year expenses accounts (b) (a) year ------------------ ---------------- ----------------- ------------ --------------- Description Year ended December 31, 1997: Allowance for doubtful accounts $181 $150 $267 $(65) $533 Deferred income tax valuation allowance $1,856 $(350) $(450) $1,056 Year ended December 31, 1996: Allowance for doubtful accounts $132 $51 $(2) $181 Deferred income tax valuation allowance $2,735 $(879) $1,856 Year ended December 31, 1995: Allowance for doubtful accounts $86 $80 $(34) $132 Deferred income tax valuation allowance $3,669 $(934) $2,735
(a) Write-off of uncollectible receivables, net of recoveries (b) Acquired in connection with DMS acquisition See notes to consolidated financial statements 51a EX-10.(N) 2 January 2, 1998 Mr. Alan I. Goldberg Marlton Technologies, Inc. 2828 Charter Road Philadelphia, PA 19154 Dear Alan: Confirming the action of the Compensation Committee and the Board of Directors at a meeting held on December 16, 1997, regarding your employment with Marlton: Effective January 1, 1998, your term of employment, salary and bonus plan is amended as set forth on the attached Schedule. Except as amended by the above, your Amended Employment Agreement dated December 11, 1992, as amended on January 22, 1996 shall remain in full force and effect in accordance with its terms. Very truly yours, Marlton Technologies, Inc. Agreed to: - ----------------------- ---------------------------- Fred Cohen, Chairman Alan I. Goldberg 52 EX-10.(O) 3 January 2, 1998 Mr. Robert B. Ginsburg Marlton Technologies, Inc. 2828 Charter Road Philadelphia, PA 19154 Dear Bob: Confirming the action of the Compensation Committee and the Board of Directors at a meeting held on December 16, 1997, regarding your employment with Marlton: Effective January 1, 1998, your term of employment, salary and bonus plan is amended as set forth on the attached Schedule. Except as amended by the above, your Amended Employment Agreement dated December 11, 1992, as amended on January 22, 1996 shall remain in full force and effect in accordance with its terms. Very truly yours, Marlton Technologies, Inc. Agreed to: - ----------------------- ---------------------------- Fred Cohen, Chairman Robert B. Ginsburg 53 EX-10.(P) 4 MARLTON TECHNOLOGIES, INC. INCENTIVE STOCK OPTION AGREEMENT THIS STOCK OPTION (the "Option") is granted this 23rd day of May, 1997, by MARLTON TECHNOLOGIES, INC., a New Jersey corporation (the "Company") to ROBERT B. GINSBURG (the "Optionee"). W I T N E S S E T H ; 1. Grant. Pursuant to the Company's 1990 Incentive Stock Option Plan (the "Plan"), the Company hereby grants to the Optionee Incentive Stock Options (the "Options") to purchase on the terms and conditions hereinafter set forth an aggregate of Twenty Thousand (20,000) shares of the Company's Common Stock, par value, $.10 per share (the "Option Shares"), at the purchase price of $3.375 per share (the "Option Price"), subject to adjustment as provided in Paragraph 5. Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings assigned to such terms in the Plan. 2. Term. This Option Agreement and Optionee's right to acquire Options vested in accordance with Paragraph 3 shall terminate at 5:00 p.m. (local Philadelphia time) on April 30, 2007, notwithstanding the earlier death, Total Disability or termination of employment of the Optionee. 3. Vesting. (a) The Options will vest (all such Options upon vesting shall constitute Accrued Installments under the Plan) on the basis of the following criteria: Options to purchase 1,667 Option Shares will vest each month (with respect to the first and last months hereunder 15 or more days of employment in a month shall be deemed a full month, and less than 15 days of employment in a month shall be deemed no employment during such month) commencing June 1, 1997 that Optionee continues in the employment of the Company, provided the aggregate of the vested Option Shares pursuant to this subparagraph does not exceed 20,000. (b) All Options will vest immediately in their entirety in the event Optionee is terminated without cause by the Company. Options will continue to vest for a period of twelve months (pro-rated for partial years) after termination of employment of Optionee due to death or Total Disability. Any such vested Options of the deceased Optionee may be exercised prior to their expiration only by the person or persons to whom the Optionee's Option rights pass by will or the laws of descent and distribution. 4. Method of Exercise and Payment. This Option may be exercised with respect to vested Option Shares from time to time, in whole or in part. When exercisable under Paragraph 3, the Option may be exercised by written notice to the Company specifying the total number of Option Shares to be exercised. The notice shall be accompanied by payment in cash or by check equal to the 54 aggregate Option Price of all Option Shares covered by such notice, or Optionee may elect to pay for some or all of the Option Shares with shares of Common Stock of the Company previously acquired and owned by Optionee at the time of exercise of this Option, in accordance with the provisions of Section 6.06(b) of the Plan. Such exercise shall be effective upon the actual receipt by the Company of such written notice and payment. 5. Adjustments. The Option Shares and the Option Price are subject to adjustment as provided in Section 6.09 of the Plan. The Option Price will also be adjusted in the event shares, or options to acquire shares, of Common Stock are issued after the date of this Option Agreement to officers or directors of the Company at a price (or, in the case of options, having an exercise price) lower than the Option Price. In such event, the Option Price will be adjusted to equal the purchase price of such shares or the exercise price of such options, as the case may be, but in no event will the Option Price be less than the Fair Market Value of shares of the Company's Common Stock on the date of this Option Agreement unless Optionee elects in writing to have this Option Agreement treated as a Non-Qualified Option under the Plan. 6. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal executive office, and any notice to be given to the Optionee shall be addressed to the Optionee at the address then appearing on the personnel records of the Company or at such other address as either party hereafter may designate in writing to the other. Any such notice shall be deemed to have been duly given when deposited in the United States mail, addressed as aforesaid, registered or certified mail, and with proper postage and registration or certification fees prepaid. 7. Tax Provision. This Option Agreement shall be interpreted and construed in a manner consistent with, and to satisfy the requirements of, the incentive stock option provisions of the Internal Revenue Code of 1986, as it may be amended from time to time (the "Code") and of the Plan. This Option Agreement is intended to satisfy the requirements of the Plan, Section 422A(b) of the Code and qualify for special tax treatment under Section 421 et seq of the Code. IN WITNESS WHEREOF, the Company has granted this Option on the day and year first above written. MARLTON TECHNOLOGIES, INC. By:_____________________________ Fred Cohen, Chairman ACCEPTED BY: _________________________________ Robert B. Ginsburg 55 EX-10.(Q) 5 MARLTON TECHNOLOGIES, INC. INCENTIVE STOCK OPTION AGREEMENT THIS STOCK OPTION (the "Option") is granted this 23rd day of May, 1997, by MARLTON TECHNOLOGIES, INC., a New Jersey corporation (the "Company") to ALAN I. GOLDBERG (the "Optionee"). W I T N E S S E T H ; 1. Grant. Pursuant to the Company's 1990 Incentive Stock Option Plan (the "Plan"), the Company hereby grants to the Optionee Incentive Stock Options (the "Options") to purchase on the terms and conditions hereinafter set forth an aggregate of Twenty Thousand (20,000) shares of the Company's Common Stock, par value, $.10 per share (the "Option Shares"), at the purchase price of $3.375 per share (the "Option Price"), subject to adjustment as provided in Paragraph 5. Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings assigned to such terms in the Plan. 2. Term. This Option Agreement and Optionee's right to acquire Options vested in accordance with Paragraph 3 shall terminate at 5:00 p.m. (local Philadelphia time) on April 30, 2007, notwithstanding the earlier death, Total Disability or termination of employment of the Optionee. 3. Vesting. (a) The Options will vest (all such Options upon vesting shall constitute Accrued Installments under the Plan) on the basis of the following criteria: Options to purchase 1,667 Option Shares will vest each month (with respect to the first and last months hereunder 15 or more days of employment in a month shall be deemed a full month, and less than 15 days of employment in a month shall be deemed no employment during such month) commencing June 1, 1997 that Optionee continues in the employment of the Company, provided the aggregate of the vested Option Shares pursuant to this subparagraph does not exceed 20,000. (b) All Options will vest immediately in their entirety in the event Optionee is terminated without cause by the Company. Options will continue to vest for a period of twelve months (pro-rated for partial years) after termination of employment of Optionee due to death or Total Disability. Any such vested Options of the deceased Optionee may be exercised prior to their expiration only by the person or persons to whom the Optionee's Option rights pass by will or the laws of descent and distribution. 4. Method of Exercise and Payment. This Option may be exercised with respect to vested Option Shares from time to time, in whole or in part. When exercisable under Paragraph 3, the Option may be exercised by written notice to the Company specifying the total number of Option Shares to be exercised. The notice shall be accompanied by payment in cash or by check equal to the 56 aggregate Option Price of all Option Shares covered by such notice, or Optionee may elect to pay for some or all of the Option Shares with shares of Common Stock of the Company previously acquired and owned by Optionee at the time of exercise of this Option, in accordance with the provisions of Section 6.06(b) of the Plan. Such exercise shall be effective upon the actual receipt by the Company of such written notice and payment. 5. Adjustments. The Option Shares and the Option Price are subject to adjustment as provided in Section 6.09 of the Plan. The Option Price will also be adjusted in the event shares, or options to acquire shares, of Common Stock are issued after the date of this Option Agreement to officers or directors of the Company at a price (or, in the case of options, having an exercise price) lower than the Option Price. In such event, the Option Price will be adjusted to equal the purchase price of such shares or the exercise price of such options, as the case may be, but in no event will the Option Price be less than the Fair Market Value of shares of the Company's Common Stock on the date of this Option Agreement unless Optionee elects in writing to have this Option Agreement treated as a Non-Qualified Option under the Plan. 6. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal executive office, and any notice to be given to the Optionee shall be addressed to the Optionee at the address then appearing on the personnel records of the Company or at such other address as either party hereafter may designate in writing to the other. Any such notice shall be deemed to have been duly given when deposited in the United States mail, addressed as aforesaid, registered or certified mail, and with proper postage and registration or certification fees prepaid. 7. Tax Provision. This Option Agreement shall be interpreted and construed in a manner consistent with, and to satisfy the requirements of, the incentive stock option provisions of the Internal Revenue Code of 1986, as it may be amended from time to time (the "Code") and of the Plan. This Option Agreement is intended to satisfy the requirements of the Plan, Section 422A(b) of the Code and qualify for special tax treatment under Section 421 et seq of the Code. IN WITNESS WHEREOF, the Company has granted this Option on the day and year first above written. MARLTON TECHNOLOGIES, INC. By:_____________________________ Fred Cohen, Chairman ACCEPTED BY: _________________________________ Alan I. Goldberg 57 EX-10.(R) 6 January 1, 1996 Mr. E. D. Costantini, Jr. Marlton Technologies, Inc. 2828 Charter Road Philadelphia, PA 19154 Dear Ed: We have agreed to amend your Employment Agreement dated January 1, 1994 between you and Marlton as follows: Your annual base salary will be $100,000. The dates in Paragraphs 2 and 3 (regarding term of employment) shall be extended in each case from December 31, 1995 to December 31, 1997. Schedule A regarding bonus shall be replaced with the attached Schedule A effective for 1995, 1996 and 1997. Upon approval by the shareholders of Marlton, you will receive options to acquire an additional 60,000 shares of Marlton Common Stock, vesting at the rate of 2,500 options shares per month commencing January 1, 1996 at an exercise price of $2.00/share. You have vested a total of 15,000 options at $2.00 per share and 7,500 options at $2.25 per share, in each case with an expiration date of 1/2/97, under an Incentive Stock Option Agreement dated January 2, 1992. The option expiration date for the 7,500 options at $2.25 is extended until 1/2/98. Except as amended by the above, the Employment Agreement shall remain in full force and effect in accordance with its terms. Very truly yours, Marlton Technologies, Inc. Agreed To: - -------------------------- ---------------------------- E. D. Costantini, Jr. Robert B. Ginsburg, President 58 E. D. Costantini, Jr. Schedule A Marlton Technologies (1) Pre-Tax Profit Base Base After Bonus Bonus Plus ---------------- ------- ---- 1995 $300,000 $30,000 5% of excess 1996 350,000 30,000 " 1997 400,000 30,000 " Sparks Portables (2) Pre-Tax Portables Profit Base Base After Bonus Bonus ------------------------ -------- $200,000 $10,000 250,000 15,000 300,000 25,000 400,000 40,000 500,000 60,000 Employee will receive an annual employment bonus related to the pre-tax consolidated profit of the business of the Company and all wholly-owned or majority owned subsidiaries of the Company, excluding extraordinary and non-recurring items and non-operating income and loss (but including interest income and expense, and capital gain and loss on investment securities). Any trade show exhibit related businesses with sales of less than $3,000,000 acquired after the Effective Date (determined on a calendar year basis in accordance with generally accepted accounting principles on a consolidated basis for such entities) will be included. Acquisitions in trade show exhibit related businesses with sales of at least $3,00,000 and all acquisitions in other industries will be handled on an individual basis. Such bonus shall be based upon the full calendar year pre-tax consolidated profits. (1) 1998 and 1999 will be based on average profit incrase from 1995 to 1997. (2) This bonus continues so long as Employee continues to have full responsibility for Portables Division. Policy for advances against annual bonus by Employee will be determined by the Company on an annual basis. 59 MARLTON TECHNOLOGIES, INC. INCENTIVE STOCK OPTION AGREEMENT (1990 STOCK OPTION PLAN) THIS STOCK OPTION (the "Option") is granted as of the 1st day of January, 1996, by MARLTON TECHNOLOGIES, INC., a New Jersey corporation (the "Company") to E. D. COSTANTINI, JR. (the "Optionee"). W I T N E S S E T H : 1. Grant. The Company hereby grants to the Optionee Stock Options (the "Options") to purchase on the terms and conditions set forth herein, an aggregate of Sixty Thousand (60,000) shares (appropriately adjusted for any subsequent stock splits, stock combinations or similar capital restructuring) of the Company's Common Stock, par value, $.10 per share (the "Option Shares"), at a purchase price per share of $2.00 (the "Option Price"). 2. Term. This Option Agreement and Optionee's right to exercise Options vested in accordance with Paragraph 3 shall terminate on the earlier of (i) December 31, 2000, or (ii) upon termination of Optionee's employment or Employment Agreement between Optionee and the Company, provided that in the event of termination due to Optionee's death or disability or termination by the Company without Cause (as therein defined), Optionee (or Optionee's spouse or estate) may exercise this Option Agreement for a period of six months following the date of termination as to Options fully vested on or before the date of termination. 3. Vesting. The Options will be vest at the rate of 2,500 Options per month over the 24 month period commencing January 1, 1996, based on the continued employment of Optionee by the Company through each such month. 4. Method of Exercise and Payment. Vested Options may be exercised from time to time, in whole or in part. When exercisable under Paragraph 3, the Option may be exercised by written notice to the Company specifying the total number of Option Shares to be exercised. The notice shall be accompanied by payment in cash or by check equal to the aggregate Option Price of all Option Shares covered by such notice. 5. Notices. Any notice to be given to the Company shall be addressed to the Company at its principal executive office, and any notice to be given to the Optionee shall be addressed to the Optionee at the address then appearing on the records of the Company or at such other address as either party hereafter may designate in writing to the other. Any such notice shall be deemed to have been duly given when deposited in the United States mail, addressed as aforesaid, registered or certified mail, and with proper postage and registration or certification fees prepaid. 6. General. This Option shall not be assignable by Optionee. This Option Agreement shall be subject to the provisions of the Company's 1990 Stock Option Plan and the provisions of Section 421, 422A(b) et. seq. of the Internal Revenue Code of 1986, as they may be amended from time to time. Stock certificates representing the Option Shares acquired shall bear any legends required by applicable state and federal securities laws. Company stock issuances are unregistered, requiring a two year holding period. IN WITNESS WHEREOF, the parties have executed this Option Agreement as of the day and year first above written. MARLTON TECHNOLOGIES, INC. Attest: ______________________________ By:____________________________ Alan I. Goldberg, Secretary Robert B. Ginsburg, President Witness: - ------------------------------ --------------------------------- Optionee: E.D. Costantini, Jr. 60 EX-10.(S) 7 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made as of this 31st day of December, 1997 by and between Lawrence Schan, a resident of the Commonwealth of Pennsylvania (the "Employee"), and DMS Store Fixtures Corp., a corporation formerly known as DMS Acquisition Corporation and organized and existing under the laws of the Commonwealth of Pennsylvania (the "Company"). WHEREAS, the Company is engaged in the business of designing, producing and marketing store fixtures and displays (the "Business"). WHEREAS, the Company desires to employ Employee and Employee desires to be employed by the Company for a period of time in the future upon the terms and conditions hereinafter set forth. WHEREAS, Employee possesses significant knowledge of the Business, which knowledge the Company and Employee both desire to be available to the Company for a period of time in the future upon the terms and conditions hereinafter set forth. WHEREAS, the execution and delivery of this Agreement by Employee in connection with the consummation of the acquisition by the Company of DMS Store Fixtures, L.P. is a material inducement to the Company's agreement to consummate such acquisition. NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, and intending to be legally bound, the parties, subject to the terms and conditions set forth herein, agree as follows: I. Employment and Term. The Company hereby employs Employee and Employee hereby accepts employment with the Company, as President and Chief Operating Officer (such position, Employee's "Position") for a period commencing on the date hereof and continuing for a period of five (5) years, subject to the provisions of Section 9 hereof (the "Term"). I. Duties. During the term of his employment, Employee shall serve the Company faithfully and to the best of his ability and shall devote his full time, attention, skill and efforts to the performance of the duties required by or appropriate for his Position. Employee agrees to assume such duties and responsibilities commensurate with his position and consistent with Employee's historic duties. Employee shall report to the Chief Executive Officer of the Company. I. Other Business Activities. During the Term, Employee will not, without the prior written consent of the Company, directly or indirectly engage in any other business activities or pursuits whatsoever, except activities in connection with any charitable or civic activities, personal investments and serving as an 61 executor, trustee or in other similar fiduciary capacity; provided, however, that such activities do not interfere with his performance of his responsibilities and obligations pursuant to this Agreement. I. Compensation. The Company shall pay Employee, and Employee hereby agrees to accept, as compensation for all services rendered hereunder and for Employee's covenant not to compete as provided for in Section 8 hereof, an initial base salary at the annual rate of Two Hundred Fifty Thousand Dollars ($250,000) (as the same may hereafter be increased, the "Base Salary"). The Base Salary shall be inclusive of all applicable income, social security and other taxes and charges which are required by law to be withheld by the Company or which are requested to be withheld by Employee, and which shall be withheld and paid in accordance with the Company's normal payroll practice for its similarly situated employees from time to time in effect. In addition to the Base Salary, the Company shall pay Employee a bonus (the "Bonus") as set forth on Schedule A. I. Benefits. Employee shall be entitled to those employee benefits which the Company from time to time generally makes available to its employees ("Benefits"). I. Confidentiality. Employee recognizes and acknowledges that the Proprietary Information (as hereinafter defined) is a valuable, special and unique asset of the Business of the Company. As a result, both during the Term and thereafter, Employee shall not, without the prior written consent of the Company, for any reason either directly or indirectly divulge to any third-party or use for his own benefit, or for any purpose other than the exclusive benefit of the Company, any confidential, proprietary, business and technical information or trade secrets of the Company or of any subsidiary or affiliate of the Company ("Proprietary Information") revealed, obtained or developed in the course of his employment with the Company. Such Proprietary Information shall include, but shall not be limited to, the intangible personal property described in Section 7(b) hereof, any information relating to methods of production and manufacture, research, computer codes or instructions (including source and object code listings, program logic algorithms, subroutines, modules or other subparts of computer programs and related documentation, including program notation), computer processing systems and techniques, concepts, layouts, flowcharts, specifications, know-how, any associated user or service manuals or other like textual materials (including any other data and materials used in performing the Employee's duties), all computer inputs and outputs (regardless of the media on which stored or located), hardware and software configurations, designs, architecture, interfaces, plans, sketches, blueprints, and any other materials prepared by the Employee in the course of, relating to or arising out of his engagement by the Company, or prepared by any other Company employee or contractor for the Company or its customers, costs, business studies, business procedures, finances, marketing data, methods, plans and efforts, the identities of customers, contractors and suppliers and prospective customers, contractors and suppliers, the terms of contracts and agreements with customers, contractors and suppliers, the Company's relationship with actual and prospective customers, contractors and suppliers and the needs and requirements of, and the Company's 62 course of dealing with, any such actual or prospective customers, contractors and suppliers, personnel information, customer and vendor credit information, and any other materials that have not been made available to the general public, provided, that nothing herein contained shall restrict Employee's ability to make such disclosures during the course of his employment as may be necessary or appropriate to the effective and efficient discharge of the duties required by or appropriate for his Position or as such disclosures may be required by law; and further provided, that nothing herein contained shall restrict Employee from divulging or using for his own benefit or for any other purpose any Proprietary Information that is readily available to the general public so long as such information did not become available to the general public as a direct or indirect result of Employee's breach of this Section 6. Failure by the Company to mark any of the Proprietary Information as confidential or proprietary shall not affect its status as Proprietary Information under the terms of this Agreement. I. Property. 1. All right, title and interest in and to Proprietary Information shall be and remain the sole and exclusive property of the Company. During the Term, Employee shall not remove from the Company's offices or premises any documents, records, notebooks, files, correspondence, reports, memoranda or similar materials of or containing Proprietary Information, or other materials or property of any kind belonging to the Company unless necessary or appropriate in accordance with the duties and responsibilities required by or appropriate for his Position and, in the event that such materials or property are removed, all of the foregoing shall be returned to their proper files or places of safekeeping as promptly as possible after the removal shall serve its specific purpose. Employee shall not make, retain, remove and/or distribute any copies of any of the foregoing for any reason whatsoever except as may be necessary in the discharge of his assigned duties and shall not divulge to any third person the nature of and/or contents of any of the foregoing or of any other oral or written information to which he may have access or with which for any reason he may become familiar, except as disclosure shall be necessary in the performance of his duties; and upon the termination of his employment with the Company, he shall leave with or return to the Company all originals and copies of the foregoing then in his possession, whether prepared by Employee or by others. a) Employee agrees that all right, title and interest in and to any innovations, designs, systems, analyses, ideas for marketing programs, and all copyrights, patents, trademarks and trade names, or similar intangible personal property which have been or are developed or created in whole or in part by Employee (1) at any time and at any place while the Employee is employed by Company and which, in the case of any or all of the foregoing, are related to and used in connection with the Business of the Company, (2) as a result of tasks assigned to Employee by the Company, or (3) from the use of premises or personal property (whether tangible or intangible) owned, leased or contracted for by the Company (collectively, the "Intellectual Property"), shall be and remain forever the sole and exclusive property of the Company. The Employee shall promptly disclose to the Company all Intellectual Property, and the Employee shall have no claim for additional compensation for the Intellectual Property. 63 a) The Employee acknowledges that all the Intellectual Property that is copyrightable shall be considered a work made for hire under United States Copyright Law. To the extent that any copyrightable Intellectual Property may not be considered a work made for hire under the applicable provisions of the United States Copyright Law, or to the extent that, notwithstanding the foregoing provisions, the Employee may retain an interest in any Intellectual Property that is not copyrightable, the Employee hereby irrevocably assigns and transfers to the Company any and all right, title, or interest that the Employee may have in the Intellectual Property under copyright, patent, trade secret and trademark law, in perpetuity or for the longest period otherwise permitted by law, without the necessity of further consideration. The Company shall be entitled to obtain and hold in its own name all copyrights, patents, trade secrets, and trademarks with respect thereto. a) Employee further agrees to reveal promptly all information relating to the same to an appropriate officer of the Company and to cooperate with the Company and execute such documents as may be necessary or appropriate (1) in the event that the Company desires to seek copyright, patent or trademark protection, or other analogous protection, thereafter relating to the Intellectual Property, and when such protection is obtained, to renew and restore the same, or (2) to defend any opposition proceedings in respect of obtaining and maintaining such copyright, patent or trademark protection, or other analogous protection. a) In the event the Company is unable after reasonable effort to secure Employee's signature on any of the documents referenced in Section 7(b)(iii) hereof, whether because of Employee's physical or mental incapacity or for any other reason whatsoever, Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Employee's agent and attorney-in-fact, to act for and in his behalf and stead to execute and file any such documents and to do all other lawfully permitted acts to further the prosecution and issuance of any such copyright, patent or trademark protection, or other analogous protection, with the same legal force and effect as if executed by Employee. I. Covenant not to Compete. The Employee shall not, during the Term and for a period of two (2) years thereafter or, if longer, for a period of five (5) years following the date hereof (such period the "Restricted Period"), do any of the following directly or indirectly without the prior written consent of the Company: 1. engage or participate in any business activity competitive with the Company's Business, or the fixture, display or custom exhibit business of any of the Company's subsidiaries or affiliates, as same are conducted during the Term with respect to any period during the Term, or upon the termination of Employee's employment hereunder; 1. become interested in (as owner, stockholder, lender, partner, co-venturer, director, officer, employee, agent, consultant or otherwise) any person, firm, 64 corporation, association or other entity engaged in any business that is competitive with the Business of the Company or the fixture, display or custom exhibit business of any subsidiary or affiliate of the Company as conducted during the Term with respect to any period during the Term, or upon the termination of Employee's employment hereunder with respect to any period thereafter, or become interested in (as owner, stockholder, lender, partner, co-venturer, director, officer, employee, agent, consultant or otherwise) any portion of the business of any person, firm, corporation, association or other entity where such portion of such business is competitive with the business of the Company or the fixture, display or custom exhibit business of any subsidiary or affiliate of the Company as conducted during the Term with respect to any period during the Term, or upon termination of Employee's employment hereunder with respect to any period thereafter. Notwithstanding the foregoing, Employee may hold not more than one percent (1%) of the outstanding securities of any class of any publicly-traded securities of a company that is engaged in activities referenced in Section 8(a) hereof; 1. solicit or call on, either directly or indirectly, any (i) customer with whom the Company shall have dealt at any time during the two (2) year period immediately preceding the termination of Employee's employment hereunder; or (ii) any supplier with whom the Company shall have dealt at any time during the two (2) year period immediately preceding the termination of Employee's employment hereunder; 1. influence or attempt to influence any supplier, customer or potential customer of the Company to terminate or modify any written or oral agreement or course of dealing with the Company; or 1. except in his capacity as an employee of the Company, influence or attempt to influence any person to either (i) terminate or modify his employment, consulting, agency, distributorship or other arrangement with the Company, or (ii) employ or retain, or arrange to have any other person or entity employ or retain, any person who has been employed or retained by the Company as an employee, consultant, agent or distributor of the Company at any time during the two (2) year period immediately preceding the termination of Employee's employment hereunder. Notwithstanding the foregoing, in the event that, at the end of the five (5) year employment period initially contemplated hereby, the Company does not offer Employee a position with the Company at a comparable compensation package, the Restricted Period shall be reduced to a period of one (1) year following the Term. 65 I. Termination. Employee's employment hereunder may be terminated during the Term upon the occurrence of any one of the events described in this Section 9. Upon termination, Employee shall be entitled only to such compensation and benefits as described in this Section 9. A. Termination for Absenteeism. 1. Regular attendance at work or conducting work is an essential element of the job for which Employee has been hired. Without limiting the Company's right to terminate Employee pursuant to Section 9.1 or 9.3 hereof, in the event that Employee is absent from work for 60 consecutive days (other than for medical reasons where Employee is reasonably expected to return to work within 120 days in which case such period shall be extended to 120 consecutive days), Employee's employment hereunder may be terminated by the Company. 1. In the event of a termination of Employee's employment hereunder pursuant to Section 9.1(a), Employee will be entitled to receive all accrued and unpaid (as of the date of such termination) Base Salary and Benefits and other forms of compensation and benefits payable or provided in accordance with the terms of any then existing compensation or benefit plan or arrangement ("Other Compensation"), including payment prescribed under and disability of life insurance plan or arrangement in which he is a participant or to which he is a party as an employee of the Company. Except as specifically set forth in this Section 9.1(b), the Company shall have no liability or obligation to Employee for compensation or benefits hereunder by reason of such termination. 66 A. Termination by Death. In the event that Employee dies during the Term, Employee's employment hereunder shall be terminated thereby and the Company shall pay to Employee's executors, legal representatives or administrators an amount equal to the accrued and unpaid portion of his Base Salary and Other Compensation for the month in which he dies. Except as specifically set forth in this Section 9.2, the Company shall have no liability or obligation hereunder to Employee's executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through him by reason of Employee's death, except that Employee's executors, legal representatives or administrators will be entitled to receive the payment prescribed under any death or disability benefits plan in which he is a participant as an employee of the Company, and to exercise any rights afforded under any compensation or benefit plan then in effect. A. Termination for Cause. 1. The Company may terminate Employee's employment hereunder at any time for "cause" upon written notice to Employee. For purposes of this Agreement, "cause" shall mean: (i) any breach by Employee of any of his obligations under Sections 6, 7 or 8 of this Agreement, (ii) material breach by Employee of Sections 2 or 3 of this Agreement which breach is not cured by Employee within thirty (30) days after receipt of written notice thereof from the Company, or (iii) other conduct of Employee involving any type of disloyalty to the Company or willful misconduct with respect to the Company, including without limitation fraud, embezzlement, theft or proven dishonesty in the course of his employment or conviction of a felony. 1. In the event of a termination of Employee's employment hereunder pursuant to Section 9.3(a), Employee shall be entitled to receive all accrued but unpaid (as of the effective date of such termination) Base Salary and Benefits. All Base Salary, Benefits and Other Compensation shall cease at the time of such termination, subject to the terms of any benefit or compensation plan then in force and applicable to Employee. Except as specifically set forth in this Section 9.3, the Company shall have no liability or obligation hereunder by reason of such termination. I. Other Agreements. Employee represents and warrants to the Company that: 1. There are no restrictions, agreements or understandings whatsoever to which Employee is a party which would prevent or make unlawful Employee's execution of this Agreement or Employee's employment hereunder, or which is or would be inconsistent or in conflict with this Agreement or Employee's employment hereunder, or would prevent, limit or impair in any way the performance by Employee of his obligations hereunder, 1. That Employee's execution of this Agreement and Employee's employment hereunder shall not constitute a breach of any contract, agreement or 67 understanding, oral or written, to which Employee is a party or by which Employee is bound, and 1. That Employee is free to execute this Agreement and to enter into the employ of the Company pursuant to the provisions set forth herein. 1. That Employee shall disclose the existence and terms of the restrictive covenants set forth in this Agreement to any employer that the Employee may work for during the term of this Agreement (which employment is not hereby authorized) or after the termination of the Employee's employment at the Company. I. Survival of Provisions. The provisions of this Agreement set forth in Sections 6, 7, 8 and 20 hereof shall survive the termination of Employee's employment hereunder. I. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and Employee and their respective successors, executors, administrators, heirs and/or permitted assigns; provided, however, that neither Employee nor the Company may make any assignments of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other parties hereto, except that, without such consent, the Company may assign this Agreement to any successor to all or substantially all of its assets and business by means of liquidation, dissolution, merger, consolidation, transfer of assets, or otherwise, provided that such successor assumes in writing all of the obligations of the Company under this Agreement. I. Notice. Any notice or communication required or permitted under this Agreement shall be made in writing and sent by certified or registered mail, return receipt requested, addressed as follows: If to Employee: Lawrence Schan 507 Fishers Road Bryn Mawr, Pennsylvania 19010 If to Company: DMS Store Fixtures Corp. 250 King Manor Drive King of Prussia, Pennsylvania 19406 Attn: Stanley Ginsburg with a required copy to: 68 Marlton Technologies, Inc. 2828 Charter Road Philadelphia, Pennsylvania 19154 Attn: Robert Ginsburg, President or to such other address as either party may from time to time duly specify by notice given to the other party in the manner specified above. I. Entire Agreement; Amendments. This Agreement contains the entire agreement and understanding of the parties hereto relating to the subject matter hereof, and merges and supersedes all prior and contemporaneous discussions, agreements and understandings of every nature between the parties hereto relating to the employment of Employee with the Company. This Agreement may not be changed or modified, except by an Agreement in writing signed by each of the parties hereto. I. Waiver. The waiver of the breach of any term or provision of this Agreement shall not operate as or be construed to be a waiver of any other or subsequent breach of this Agreement. I. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania. I. Invalidity. In case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the validity of any other provision of this Agreement, and such provision(s) shall be deemed modified to the extent necessary to make it enforceable. I. Section Headings. The section headings in this Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation. I. Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and legal holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or day which is a holiday in the Commonwealth of Pennsylvania, then such final day shall be deemed to be the next day which is not a Saturday, Sunday or legal holiday. I. Specific Enforcement; Extension of Period. 1. Employee acknowledges that the restrictions contained in Sections 6, 7, and 8 hereof are reasonable and necessary to protect the legitimate interests of the Company and its affiliates and that the Company would not have entered into this Agreement in the absence of such restrictions. Employee also acknowledges that any breach by him of Sections 6, 7, or 8 hereof will cause continuing and 69 irreparable injury to the Company for which monetary damages would not be an adequate remedy. The Employee shall not, in any action or proceeding to enforce any of the provisions of this Agreement, assert the claim or defense that an adequate remedy at law exists. In the event of such breach by Employee, the Company shall have the right to enforce the provisions of Sections 6, 7, and 8 of this Agreement by seeking injunctive or other relief in any court, and this Agreement shall not in any way limit remedies of law or in equity otherwise available to the Company. If an action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover, in addition to any other relief, reasonable attorneys' fees, costs and disbursements. In the event that the provisions of Sections 6, 7, or 8 hereof should ever be adjudicated to exceed the time, geographic, or other limitations permitted by applicable law in any applicable jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, or other limitations permitted by applicable law. 1. In the event that Employee shall be in breach of any of the restrictions contained in Section 8 hereof, then the Restricted Period shall be extended for a period of time equal to the period of time that Employee is in breach of such restriction. I. Consent to Suit. Any legal proceeding arising out of or relating to this Agreement shall be instituted in any federal or state court of general jurisdiction in Pennsylvania, and the Employee hereby consents to the personal and exclusive jurisdiction of such court and hereby waives any objection that the Employee may have to the laying of venue of any such proceeding and any claim or defense of inconvenient forum. I. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the day and year first written above. ATTEST: DMS STORE FIXTURES CORP. By:___________________ By:_____________________________ Title: Title: -------------------------------- Lawrence Schan 70 SCHEDULE A BONUS Pre-Tax Profit Bonus Plan Pre-Tax Profit After Bonus Bonus -------------- ----- $120,000 $10,000 $240,000 $20,952 $360,000 $32,856 $480,000 $45,712 $600,000 $59,521 $720,000 $74,282 $840,000 $89,996 $960,000 $106,662 $1,080,000 $124,280 $1,200,000 $142,850 $1,320,000 $162,373 $1,440,000 $182,848 $1,560,000 $204,276 $1,680,000 $226,656 $1,800,000 $250,000 Bonus is capped at $250,000. A-1 EX-10.(T) 8 SCHEDULE A BONUS Pre-Tax Profit Bonus Plan Pre-Tax Profit After Bonus Bonus -------------- ----- $120,000 $10,000 $240,000 $20,952 $360,000 $32,856 $480,000 $45,712 $600,000 $59,521 $720,000 $74,282 $840,000 $89,996 $960,000 $106,662 $1,080,000 $124,280 $1,200,000 $142,850 $1,320,000 $162,373 $1,440,000 $182,848 $1,560,000 $204,276 $1,680,000 $226,656 $1,800,000 $250,000 Bonus is capped at $250,000. 71 THIS EMPLOYMENT AGREEMENT is made as of this 31st day of December, 1997 by and between Ira Ingerman, a resident of the Commonwealth of Pennsylvania (the "Employee"), and DMS Store Fixtures Corp., a corporation formerly known as DMS Acquisition Corporation and organized and existing under the laws of the Commonwealth of Pennsylvania (the "Company"). WHEREAS, the Company is engaged in the business of designing, producing and marketing store fixtures and displays (the "Business"). WHEREAS, the Company desires to employ Employee and Employee desires to be employed by the Company for a period of time in the future upon the terms and conditions hereinafter set forth. WHEREAS, Employee possesses significant knowledge of the Business, which knowledge the Company and Employee both desire to be available to the Company for a period of time in the future upon the terms and conditions hereinafter set forth. WHEREAS, the execution and delivery of this Agreement by Employee in connection with the consummation of the acquisition by the Company of DMS Store Fixtures, L.P. is a material inducement to the Company's agreement to consummate such acquisition. NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, and intending to be legally bound, the parties, subject to the terms and conditions set forth herein, agree as follows: I. Employment and Term. The Company hereby employs Employee and Employee hereby accepts employment with the Company, as Co-Chairman and Chief Financial Officer (such position, Employee's "Position") for a period commencing on the date hereof and continuing for a period of five (5) years, subject to the provisions of Section 9 hereof (the "Term"). I. Duties. During the term of his employment, Employee shall serve the Company faithfully and to the best of his ability and shall devote such time, attention, skill and efforts to the performance of the duties required by or appropriate for his Position. Employee agrees to assume such duties and responsibilities commensurate with his position and consistent with Employee's historic duties. Employee shall report to the Chief Executive Officer of Marlton Technologies, Inc. ("Marlton"). I. Other Business Activities. During the Term, Employee will not, without the prior written consent of the Company, directly or indirectly engage in any other 72 business activities or pursuits which unreasonably interfere with his performance of his responsibilities and obligations pursuant to this Agreement. I. Compensation. The Company shall pay Employee, and Employee hereby agrees to accept, as compensation for all services rendered hereunder and for Employee's covenant not to compete as provided for in Section 8 hereof, an initial base salary at the annual rate of One Hundred Twenty-Five Thousand Dollars ($125,000) (as the same may hereafter be increased, the "Base Salary"). The Base Salary shall be inclusive of all applicable income, social security and other taxes and charges which are required by law to be withheld by the Company or which are requested to be withheld by Employee, and which shall be withheld and paid in accordance with the Company's normal payroll practice for its similarly situated employees from time to time in effect. I. Benefits. Employee shall be entitled to those employee benefits which the Company from time to time generally makes available to its employees ("Benefits"). I. Confidentiality. Employee recognizes and acknowledges that the Proprietary Information (as hereinafter defined) is a valuable, special and unique asset of the Business of the Company. As a result, both during the Term and thereafter, Employee shall not, without the prior written consent of the Company, for any reason either directly or indirectly divulge to any third-party or use for his own benefit, or for any purpose other than the exclusive benefit of the Company, any confidential, proprietary, business and technical information or trade secrets of the Company or of any subsidiary or affiliate of the Company ("Proprietary Information") revealed, obtained or developed in the course of his employment with the Company. Such Proprietary Information shall include, but shall not be limited to, the intangible personal property described in Section 7(b) hereof, any information relating to methods of production and manufacture, research, computer codes or instructions (including source and object code listings, program logic algorithms, subroutines, modules or other subparts of computer programs and related documentation, including program notation), computer processing systems and techniques, concepts, layouts, flowcharts, specifications, know-how, any associated user or service manuals or other like textual materials (including any other data and materials used in performing the Employee's duties), all computer inputs and outputs (regardless of the media on which stored or located), hardware and software configurations, designs, architecture, interfaces, plans, sketches, blueprints, and any other materials prepared by the Employee in the course of, relating to or arising out of his engagement by the Company, or prepared by any other Company employee or contractor for the Company or its customers, costs, business studies, business procedures, finances, marketing data, methods, plans and efforts, the identities of customers, contractors and suppliers and prospective customers, contractors and suppliers, the terms of contracts and agreements with customers, contractors and suppliers, the Company's relationship with actual and prospective customers, contractors and suppliers and the needs and requirements of, and the Company's course of dealing with, any such actual or prospective customers, contractors and suppliers, personnel information, customer and vendor credit information, and any other materials that have not been made available to the general public, 73 provided, that nothing herein contained shall restrict Employee's ability to make such disclosures during the course of his employment as may be necessary or appropriate to the effective and efficient discharge of the duties required by or appropriate for his Position or as such disclosures may be required by law; and further provided, that nothing herein contained shall restrict Employee from divulging or using for his own benefit or for any other purpose any Proprietary Information that is readily available to the general public so long as such information did not become available to the general public as a direct or indirect result of Employee's breach of this Section 6. Failure by the Company to mark any of the Proprietary Information as confidential or proprietary shall not affect its status as Proprietary Information under the terms of this Agreement. I. Property. 1. All right, title and interest in and to Proprietary Information shall be and remain the sole and exclusive property of the Company. During the Term, Employee shall not remove from the Company's offices or premises any documents, records, notebooks, files, correspondence, reports, memoranda or similar materials of or containing Proprietary Information, or other materials or property of any kind belonging to the Company unless necessary or appropriate in accordance with the duties and responsibilities required by or appropriate for his Position and, in the event that such materials or property are removed, all of the foregoing shall be returned to their proper files or places of safekeeping as promptly as possible after the removal shall serve its specific purpose. Employee shall not make, retain, remove and/or distribute any copies of any of the foregoing for any reason whatsoever except as may be necessary in the discharge of his assigned duties and shall not divulge to any third person the nature of and/or contents of any of the foregoing or of any other oral or written information to which he may have access or with which for any reason he may become familiar, except as disclosure shall be necessary in the performance of his duties; and upon the termination of his employment with the Company, he shall leave with or return to the Company all originals and copies of the foregoing then in his possession, whether prepared by Employee or by others. a) Employee agrees that all right, title and interest in and to any innovations, designs, systems, analyses, ideas for marketing programs, and all copyrights, patents, trademarks and trade names, or similar intangible personal property which have been or are developed or created in whole or in part by Employee (1) at any time and at any place while the Employee is employed by Company and which, in the case of any or all of the foregoing, are related to and used in connection with the Business of the Company, (2) as a result of tasks assigned to Employee by the Company, or (3) from the use of premises or personal property (whether tangible or intangible) owned, leased or contracted for by the Company (collectively, the "Intellectual Property"), shall be and remain forever the sole and exclusive property of the Company. The Employee shall promptly disclose to the Company all Intellectual Property, and the Employee shall have no claim for additional compensation for the Intellectual Property. 74 a) The Employee acknowledges that all the Intellectual Property that is copyrightable shall be considered a work made for hire under United States Copyright Law. To the extent that any copyrightable Intellectual Property may not be considered a work made for hire under the applicable provisions of the United States Copyright Law, or to the extent that, notwithstanding the foregoing provisions, the Employee may retain an interest in any Intellectual Property that is not copyrightable, the Employee hereby irrevocably assigns and transfers to the Company any and all right, title, or interest that the Employee may have in the Intellectual Property under copyright, patent, trade secret and trademark law, in perpetuity or for the longest period otherwise permitted by law, without the necessity of further consideration. The Company shall be entitled to obtain and hold in its own name all copyrights, patents, trade secrets, and trademarks with respect thereto. a) Employee further agrees to reveal promptly all information relating to the same to an appropriate officer of the Company and to cooperate with the Company and execute such documents as may be necessary or appropriate (1) in the event that the Company desires to seek copyright, patent or trademark protection, or other analogous protection, thereafter relating to the Intellectual Property, and when such protection is obtained, to renew and restore the same, or (2) to defend any opposition proceedings in respect of obtaining and maintaining such copyright, patent or trademark protection, or other analogous protection. a) In the event the Company is unable after reasonable effort to secure Employee's signature on any of the documents referenced in Section 7(b)(iii) hereof, whether because of Employee's physical or mental incapacity or for any other reason whatsoever, Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Employee's agent and attorney-in-fact, to act for and in his behalf and stead to execute and file any such documents and to do all other lawfully permitted acts to further the prosecution and issuance of any such copyright, patent or trademark protection, or other analogous protection, with the same legal force and effect as if executed by Employee. I. Covenant not to Compete. The Employee shall not, during the Term and for a period of two (2) years thereafter or, if longer, for a period of five (5) years following the date hereof (such period the "Restricted Period"), do any of the following directly or indirectly without the prior written consent of the Company: 1. engage or participate in any business activity competitive with the Company's Business, or the fixture, display or custom exhibit business of any of the Company's subsidiaries or affiliates, as same are conducted during the Term with respect to any period during the Term, or upon the termination of Employee's employment hereunder; 1. become interested in (as owner, stockholder, lender, partner, co-venturer, director, officer, employee, agent, consultant or otherwise) any person, firm, corporation, association or other entity engaged in any business that is 75 competitive with the Business of the Company or the fixture, display or custom exhibit business of any subsidiary or affiliate of the Company as conducted during the Term with respect to any period during the Term, or upon the termination of Employee's employment hereunder with respect to any period thereafter, or become interested in (as owner, stockholder, lender, partner, co-venturer, director, officer, employee, agent, consultant or otherwise) any portion of the business of any person, firm, corporation, association or other entity where such portion of such business is competitive with the business of the Company or the fixture, display or custom exhibit business of any subsidiary or affiliate of the Company as conducted during the Term with respect to any period during the Term, or upon termination of Employee's employment hereunder with respect to any period thereafter. Notwithstanding the foregoing, Employee may hold not more than one percent (1%) of the outstanding securities of any class of any publicly-traded securities of a company that is engaged in activities referenced in Section 8(a) hereof; 1. solicit or call on, either directly or indirectly, any (i) customer with whom the Company shall have dealt at any time during the two (2) year period immediately preceding the termination of Employee's employment hereunder; or (ii) any supplier with whom the Company shall have dealt at any time during the two (2) year period immediately preceding the termination of Employee's employment hereunder; 1. influence or attempt to influence any supplier, customer or potential customer of the Company to terminate or modify any written or oral agreement or course of dealing with the Company; or 1. except in his capacity as an employee of the Company, influence or attempt to influence any person to either (i) terminate or modify his employment, consulting, agency, distributorship or other arrangement with the Company, or (ii) employ or retain, or arrange to have any other person or entity employ or retain, any person who has been employed or retained by the Company as an employee, consultant, agent or distributor of the Company at any time during the two (2) year period immediately preceding the termination of Employee's employment hereunder. 76 I. Termination. Employee's employment hereunder may be terminated during the Term upon the occurrence of any one of the events described in this Section 9. Upon termination, Employee shall be entitled only to such compensation and benefits as described in this Section 9. A. Termination for Absenteeism. 1. Regular attendance at work or conducting work is an essential element of the job for which Employee has been hired. Without limiting the Company's right to terminate Employee pursuant to Section 9.1 or 9.3 hereof, in the event that Employee is absent from work for 60 consecutive days (other than for medical reasons where Employee is reasonably expected to return to work within 120 days in which case such period shall be extended to 120 consecutive days), Employee's employment hereunder may be terminated by the Company. 1. In the event of a termination of Employee's employment hereunder pursuant to Section 9.1(a), Employee will be entitled to receive all accrued and unpaid (as of the date of such termination) Base Salary and Benefits and other forms of compensation and benefits payable or provided in accordance with the terms of any then existing compensation or benefit plan or arrangement ("Other Compensation"), including payment prescribed under and disability of life insurance plan or arrangement in which he is a participant or to which he is a party as an employee of the Company. Except as specifically set forth in this Section 9.1(b), the Company shall have no liability or obligation to Employee for compensation or benefits hereunder by reason of such termination. 77 A. Termination by Death. In the event that Employee dies during the Term, Employee's employment hereunder shall be terminated thereby and the Company shall pay to Employee's executors, legal representatives or administrators an amount equal to the accrued and unpaid portion of his Base Salary and Other Compensation for the month in which he dies. Except as specifically set forth in this Section 9.2, the Company shall have no liability or obligation hereunder to Employee's executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through him by reason of Employee's death, except that Employee's executors, legal representatives or administrators will be entitled to receive the payment prescribed under any death or disability benefits plan in which he is a participant as an employee of the Company, and to exercise any rights afforded under any compensation or benefit plan then in effect. A. Termination for Cause. 1. The Company may terminate Employee's employment hereunder at any time for "cause" upon written notice to Employee. For purposes of this Agreement, "cause" shall mean: (i) any breach by Employee of any of his obligations under Sections 6, 7 or 8 of this Agreement, (ii) material breach by Employee of Sections 2 or 3 of this Agreement which breach is not cured by Employee within thirty (30) days after receipt of written notice thereof from the Company, or (iii) other conduct of Employee involving any type of disloyalty to the Company or willful misconduct with respect to the Company, including without limitation fraud, embezzlement, theft or proven dishonesty in the course of his employment or conviction of a felony. 1. In the event of a termination of Employee's employment hereunder pursuant to Section 9.3(a), Employee shall be entitled to receive all accrued but unpaid (as of the effective date of such termination) Base Salary and Benefits. All Base Salary, Benefits and Other Compensation shall cease at the time of such termination, subject to the terms of any benefit or compensation plan then in force and applicable to Employee. Except as specifically set forth in this Section 9.3, the Company shall have no liability or obligation hereunder by reason of such termination. I. Other Agreements. Employee represents and warrants to the Company that: 1. There are no restrictions, agreements or understandings whatsoever to which Employee is a party which would prevent or make unlawful Employee's execution of this Agreement or Employee's employment hereunder, or which is or would be inconsistent or in conflict with this Agreement or Employee's employment hereunder, or would prevent, limit or impair in any way the performance by Employee of his obligations hereunder, 1. That Employee's execution of this Agreement and Employee's employment hereunder shall not constitute a breach of any contract, agreement or 78 understanding, oral or written, to which Employee is a party or by which Employee is bound, and 1. That Employee is free to execute this Agreement and to enter into the employ of the Company pursuant to the provisions set forth herein. 1. That Employee shall disclose the existence and terms of the restrictive covenants set forth in this Agreement to any employer that the Employee may work for during the term of this Agreement (which employment is not hereby authorized) or after the termination of the Employee's employment at the Company. I. Survival of Provisions. The provisions of this Agreement set forth in Sections 6, 7, 8 and 20 hereof shall survive the termination of Employee's employment hereunder. I. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and Employee and their respective successors, executors, administrators, heirs and/or permitted assigns; provided, however, that neither Employee nor the Company may make any assignments of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other parties hereto, except that, without such consent, the Company may assign this Agreement to any successor to all or substantially all of its assets and business by means of liquidation, dissolution, merger, consolidation, transfer of assets, or otherwise, provided that such successor assumes in writing all of the obligations of the Company under this Agreement. I. Notice. Any notice or communication required or permitted under this Agreement shall be made in writing and sent by certified or registered mail, return receipt requested, addressed as follows: If to Employee: Ira Ingerman 1320 Centennial Road Narberth, Pennsylvania 19072 If to Company: DMS Store Fixtures, Corp. 250 King Manor Drive King of Prussia, Pennsylvania 19406 Attn: Lawrence Schan with a required copy to: 79 Marlton Technologies, Inc. 2828 Charter Road Philadelphia, Pennsylvania 19154 Attn: Robert Ginsburg, President or to such other address as either party may from time to time duly specify by notice given to the other party in the manner specified above. I. Entire Agreement; Amendments. This Agreement contains the entire agreement and understanding of the parties hereto relating to the subject matter hereof, and merges and supersedes all prior and contemporaneous discussions, agreements and understandings of every nature between the parties hereto relating to the employment of Employee with the Company. This Agreement may not be changed or modified, except by an Agreement in writing signed by each of the parties hereto. I. Waiver. The waiver of the breach of any term or provision of this Agreement shall not operate as or be construed to be a waiver of any other or subsequent breach of this Agreement. I. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania. I. Invalidity. In case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the validity of any other provision of this Agreement, and such provision(s) shall be deemed modified to the extent necessary to make it enforceable. I. Section Headings. The section headings in this Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation. I. Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and legal holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or day which is a holiday in the Commonwealth of Pennsylvania, then such final day shall be deemed to be the next day which is not a Saturday, Sunday or legal holiday. I. Specific Enforcement; Extension of Period. 1. Employee acknowledges that the restrictions contained in Sections 6, 7, and 8 hereof are reasonable and necessary to protect the legitimate interests of the Company and its affiliates and that the Company would not have entered into this Agreement in the absence of such restrictions. Employee also acknowledges that 80 any breach by him of Sections 6, 7, or 8 hereof will cause continuing and irreparable injury to the Company for which monetary damages would not be an adequate remedy. The Employee shall not, in any action or proceeding to enforce any of the provisions of this Agreement, assert the claim or defense that an adequate remedy at law exists. In the event of such breach by Employee, the Company shall have the right to enforce the provisions of Sections 6, 7, and 8 of this Agreement by seeking injunctive or other relief in any court, and this Agreement shall not in any way limit remedies of law or in equity otherwise available to the Company. If an action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover, in addition to any other relief, reasonable attorneys' fees, costs and disbursements. In the event that the provisions of Sections 6, 7, or 8 hereof should ever be adjudicated to exceed the time, geographic, or other limitations permitted by applicable law in any applicable jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, or other limitations permitted by applicable law. 1. In the event that Employee shall be in breach of any of the restrictions contained in Section 8 hereof, then the Restricted Period shall be extended for a period of time equal to the period of time that Employee is in breach of such restriction. I. Consent to Suit. Any legal proceeding arising out of or relating to this Agreement shall be instituted in any federal or state court of general jurisdiction in Pennsylvania, and the Employee hereby consents to the personal and exclusive jurisdiction of such court and hereby waives any objection that the Employee may have to the laying of venue of any such proceeding and any claim or defense of inconvenient forum. 81 I. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the day and year first written above. ATTEST: DMS STORE FIXTURES CORP. By:___________________ By:_____________________________ Title: Title: -------------------------------- Ira Ingerman 82 EX-10.(U) 9 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made as of this 31st day of December, 1997 by and between Stanley Ginsburg, a resident of the Commonwealth of Pennsylvania (the "Employee"), and DMS Store Fixtures Corp., a corporation formerly known as DMS Acquisition Corporation and organized and existing under the laws of the Commonwealth of Pennsylvania (the "Company"). WHEREAS, the Company is engaged in the business of designing, producing and marketing store fixtures and displays (the "Business"). WHEREAS, the Company desires to employ Employee and Employee desires to be employed by the Company for a period of time in the future upon the terms and conditions hereinafter set forth. WHEREAS, Employee possesses significant knowledge of the Business, which knowledge the Company and Employee both desire to be available to the Company for a period of time in the future upon the terms and conditions hereinafter set forth. WHEREAS, the execution and delivery of this Agreement by Employee in connection with the consummation of the acquisition by the Company of DMS Store Fixtures, L.P. is a material inducement to the Company's agreement to consummate such acquisition. NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, and intending to be legally bound, the parties, subject to the terms and conditions set forth herein, agree as follows: I. Employment and Term. The Company hereby employs Employee and Employee hereby accepts employment with the Company, as Co-Chairman and Chief Executive Officer (such position, Employee's "Position") for a period commencing on the date hereof and continuing for a period of five (5) years, subject to the provisions of Section 9 hereof (the "Term"). I. Duties. During the term of his employment, Employee shall serve the Company faithfully and to the best of his ability and shall devote such time, attention, skill and efforts to the performance of the duties required by or appropriate for his Position. Employee agrees to assume such duties and responsibilities commensurate with his position and consistent with Employee's historic duties. Employee shall report to the Chief Executive Officer of Marlton Technologies, Inc. ("Marlton"). I. Other Business Activities. During the Term, Employee will not, without the prior written consent of the Company, directly or indirectly engage in any other 83 business activities or pursuits which unreasonably interfere with his performance of his responsibilities and obligations pursuant to this Agreement. I. Compensation. The Company shall pay Employee, and Employee hereby agrees to accept, as compensation for all services rendered hereunder and for Employee's covenant not to compete as provided for in Section 8 hereof, an initial base salary at the annual rate of One Hundred Twenty-Five Thousand (Dollars ($125,000) (as the same may hereafter be increased, the "Base Salary"). The Base Salary shall be inclusive of all applicable income, social security and other taxes and charges which are required by law to be withheld by the Company or which are requested to be withheld by Employee, and which shall be withheld and paid in accordance with the Company's normal payroll practice for its similarly situated employees from time to time in effect. I. Benefits. Employee shall be entitled to those employee benefits which the Company from time to time generally makes available to its employees ("Benefits"). I. Confidentiality. Employee recognizes and acknowledges that the Proprietary Information (as hereinafter defined) is a valuable, special and unique asset of the Business of the Company. As a result, both during the Term and thereafter, Employee shall not, without the prior written consent of the Company, for any reason either directly or indirectly divulge to any third-party or use for his own benefit, or for any purpose other than the exclusive benefit of the Company, any confidential, proprietary, business and technical information or trade secrets of the Company or of any subsidiary or affiliate of the Company ("Proprietary Information") revealed, obtained or developed in the course of his employment with the Company. Such Proprietary Information shall include, but shall not be limited to, the intangible personal property described in Section 7(b) hereof, any information relating to methods of production and manufacture, research, computer codes or instructions (including source and object code listings, program logic algorithms, subroutines, modules or other subparts of computer programs and related documentation, including program notation), computer processing systems and techniques, concepts, layouts, flowcharts, specifications, know-how, any associated user or service manuals or other like textual materials (including any other data and materials used in performing the Employee's duties), all computer inputs and outputs (regardless of the media on which stored or located), hardware and software configurations, designs, architecture, interfaces, plans, sketches, blueprints, and any other materials prepared by the Employee in the course of, relating to or arising out of his engagement by the Company, or prepared by any other Company employee or contractor for the Company or its customers, costs, business studies, business procedures, finances, marketing data, methods, plans and efforts, the identities of customers, contractors and suppliers and prospective customers, contractors and suppliers, the terms of contracts and agreements with customers, contractors and suppliers, the Company's relationship with actual and prospective customers, 84 contractors and suppliers and the needs and requirements of, and the Company's course of dealing with, any such actual or prospective customers, contractors and suppliers, personnel information, customer and vendor credit information, and any other materials that have not been made available to the general public, provided, that nothing herein contained shall restrict Employee's ability to make such disclosures during the course of his employment as may be necessary or appropriate to the effective and efficient discharge of the duties required by or appropriate for his Position or as such disclosures may be required by law; and further provided, that nothing herein contained shall restrict Employee from divulging or using for his own benefit or for any other purpose any Proprietary Information that is readily available to the general public so long as such information did not become available to the general public as a direct or indirect result of Employee's breach of this Section 6. Failure by the Company to mark any of the Proprietary Information as confidential or proprietary shall not affect its status as Proprietary Information under the terms of this Agreement. I. Property. 1. All right, title and interest in and to Proprietary Information shall be and remain the sole and exclusive property of the Company. During the Term, Employee shall not remove from the Company's offices or premises any documents, records, notebooks, files, correspondence, reports, memoranda or similar materials of or containing Proprietary Information, or other materials or property of any kind belonging to the Company unless necessary or appropriate in accordance with the duties and responsibilities required by or appropriate for his Position and, in the event that such materials or property are removed, all of the foregoing shall be returned to their proper files or places of safekeeping as promptly as possible after the removal shall serve its specific purpose. Employee shall not make, retain, remove and/or distribute any copies of any of the foregoing for any reason whatsoever except as may be necessary in the discharge of his assigned duties and shall not divulge to any third person the nature of and/or contents of any of the foregoing or of any other oral or written information to which he may have access or with which for any reason he may become familiar, except as disclosure shall be necessary in the performance of his duties; and upon the termination of his employment with the Company, he shall leave with or return to the Company all originals and copies of the foregoing then in his possession, whether prepared by Employee or by others. a) Employee agrees that all right, title and interest in and to any innovations, designs, systems, analyses, ideas for marketing programs, and all copyrights, patents, trademarks and trade names, or similar intangible personal property which have been or are developed or created in whole or in part by Employee (1) at any time and at any place while the Employee is employed by Company and which, in the case of any or all of the foregoing, are related to and used in connection with the Business of the Company, (2) as a result of tasks assigned to Employee by the Company, or (3) from the use of premises or personal property (whether tangible or intangible) owned, leased or contracted for by the Company (collectively, the "Intellectual Property"), shall be and remain forever the sole and exclusive property of the Company. The Employee shall promptly disclose to the Company all Intellectual Property, and the Employee shall have no claim for additional compensation for the Intellectual Property. 85 a) The Employee acknowledges that all the Intellectual Property that is copyrightable shall be considered a work made for hire under United States Copyright Law. To the extent that any copyrightable Intellectual Property may not be considered a work made for hire under the applicable provisions of the United States Copyright Law, or to the extent that, notwithstanding the foregoing provisions, the Employee may retain an interest in any Intellectual Property that is not copyrightable, the Employee hereby irrevocably assigns and transfers to the Company any and all right, title, or interest that the Employee may have in the Intellectual Property under copyright, patent, trade secret and trademark law, in perpetuity or for the longest period otherwise permitted by law, without the necessity of further consideration. The Company shall be entitled to obtain and hold in its own name all copyrights, patents, trade secrets, and trademarks with respect thereto. a) Employee further agrees to reveal promptly all information relating to the same to an appropriate officer of the Company and to cooperate with the Company and execute such documents as may be necessary or appropriate (1) in the event that the Company desires to seek copyright, patent or trademark protection, or other analogous protection, thereafter relating to the Intellectual Property, and when such protection is obtained, to renew and restore the same, or (2) to defend any opposition proceedings in respect of obtaining and maintaining such copyright, patent or trademark protection, or other analogous protection. a) In the event the Company is unable after reasonable effort to secure Employee's signature on any of the documents referenced in Section 7(b)(iii) hereof, whether because of Employee's physical or mental incapacity or for any other reason whatsoever, Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Employee's agent and attorney-in-fact, to act for and in his behalf and stead to execute and file any such documents and to do all other lawfully permitted acts to further the prosecution and issuance of any such copyright, patent or trademark protection, or other analogous protection, with the same legal force and effect as if executed by Employee. I. Covenant not to Compete. The Employee shall not, during the Term and for a period of two (2) years thereafter or, if longer, for a period of five (5) years following the date hereof (such period the "Restricted Period"), do any of the following directly or indirectly without the prior written consent of the Company: 1. engage or participate in any business activity competitive with the Company's Business, or the fixture, display or custom exhibit business of any of the Company's subsidiaries or affiliates, as same are conducted during the Term with respect to any period during the Term, or upon the termination of Employee's employment; 1. become interested in (as owner, stockholder, lender, partner, co-venturer, director, officer, employee, agent, consultant or otherwise) any person, firm, corporation, association or other entity engaged in any business that is 86 competitive with the Business of the Company or the fixture, display or custom exhibit business of any subsidiary or affiliate of the Company as conducted during the Term with respect to any period during the Term, or upon the termination of Employee's employment hereunder with respect to any period thereafter, or become interested in (as owner, stockholder, lender, partner, co-venturer, director, officer, employee, agent, consultant or otherwise) any portion of the business of any person, firm, corporation, association or other entity where such portion of such business is competitive with the business of the Company or the fixture, display or custom exhibit business of any subsidiary or affiliate of the Company as conducted during the Term with respect to any period during the Term, or upon termination of Employee's employment hereunder with respect to any period thereafter. Notwithstanding the foregoing, Employee may hold not more than one percent (1%) of the outstanding securities of any class of any publicly-traded securities of a company that is engaged in activities referenced in Section 8(a) hereof; 1. solicit or call on, either directly or indirectly, any (i) customer with whom the Company shall have dealt at any time during the two (2) year period immediately preceding the termination of Employee's employment hereunder; or (ii) any supplier with whom the Company shall have dealt at any time during the two (2) year period immediately preceding the termination of Employee's employment hereunder; 1. influence or attempt to influence any supplier, customer or potential customer of the Company to terminate or modify any written or oral agreement or course of dealing with the Company; or 1. except in his capacity as an employee of the Company, influence or attempt to influence any person to either (i) terminate or modify his employment, consulting, agency, distributorship or other arrangement with the Company, or (ii) employ or retain, or arrange to have any other person or entity employ or retain, any person who has been employed or retained by the Company as an employee, consultant, agent or distributor of the Company at any time during the two (2) year period immediately preceding the termination of Employee's employment hereunder. 87 I. Termination. Employee's employment hereunder may be terminated during the Term upon the occurrence of any one of the events described in this Section 9. Upon termination, Employee shall be entitled only to such compensation and benefits as described in this Section 9. A. Termination for Absenteeism. 1. Regular attendance at work or conducting work is an essential element of the job for which Employee has been hired. Without limiting the Company's right to terminate Employee pursuant to Section 9.1 or 9.3 hereof, in the event that Employee is absent from work for 60 consecutive days (other than for medical reasons where Employee is reasonably expected to return to work within 120 days in which case such period shall be extended to 120 consecutive days), Employee's employment hereunder may be terminated by the Company. 1. In the event of a termination of Employee's employment hereunder pursuant to Section 9.1(a), Employee will be entitled to receive all accrued and unpaid (as of the date of such termination) Base Salary and Benefits and other forms of compensation and benefits payable or provided in accordance with the terms of any then existing compensation or benefit plan or arrangement ("Other Compensation"), including payment prescribed under and disability of life insurance plan or arrangement in which he is a participant or to which he is a party as an employee of the Company. Except as specifically set forth in this Section 9.1(b), the Company shall have no liability or obligation to Employee for compensation or benefits hereunder by reason of such termination. 88 A. Termination by Death. In the event that Employee dies during the Term, Employee's employment hereunder shall be terminated thereby and the Company shall pay to Employee's executors, legal representatives or administrators an amount equal to the accrued and unpaid portion of his Base Salary and Other Compensation for the month in which he dies. Except as specifically set forth in this Section 9.2, the Company shall have no liability or obligation hereunder to Employee's executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through him by reason of Employee's death, except that Employee's executors, legal representatives or administrators will be entitled to receive the payment prescribed under any death or disability benefits plan in which he is a participant as an employee of the Company, and to exercise any rights afforded under any compensation or benefit plan then in effect. A. Termination for Cause. 1. The Company may terminate Employee's employment hereunder at any time for "cause" upon written notice to Employee. For purposes of this Agreement, "cause" shall mean: (i) any breach by Employee of any of his obligations under Sections 6, 7 or 8 of this Agreement, (ii) material breach by Employee of Sections 2 or 3 of this Agreement which breach is not cured by Employee within thirty (30) days after receipt of written notice thereof from the Company, or (iii) other conduct of Employee involving any type of disloyalty to the Company or willful misconduct with respect to the Company, including without limitation fraud, embezzlement, theft or proven dishonesty in the course of his employment or conviction of a felony. 1. In the event of a termination of Employee's employment hereunder pursuant to Section 9.3(a), Employee shall be entitled to receive all accrued but unpaid (as of the effective date of such termination) Base Salary and Benefits. All Base Salary, Benefits and Other Compensation shall cease at the time of such termination, subject to the terms of any benefit or compensation plan then in force and applicable to Employee. Except as specifically set forth in this Section 9.3, the Company shall have no liability or obligation hereunder by reason of such termination. I. Other Agreements. Employee represents and warrants to the Company that: 1. There are no restrictions, agreements or understandings whatsoever to which Employee is a party which would prevent or make unlawful Employee's execution of this Agreement or Employee's employment hereunder, or which is or would be inconsistent or in conflict with this Agreement or Employee's employment hereunder, or would prevent, limit or impair in any way the performance by Employee of his obligations hereunder, 1. That Employee's execution of this Agreement and Employee's employment hereunder shall not constitute a breach of any contract, agreement or 89 understanding, oral or written, to which Employee is a party or by which Employee is bound, and 1. That Employee is free to execute this Agreement and to enter into the employ of the Company pursuant to the provisions set forth herein. 1. That Employee shall disclose the existence and terms of the restrictive covenants set forth in this Agreement to any employer that the Employee may work for during the term of this Agreement (which employment is not hereby authorized) or after the termination of the Employee's employment at the Company. I. Survival of Provisions. The provisions of this Agreement set forth in Sections 6, 7, 8 and 20 hereof shall survive the termination of Employee's employment hereunder. I. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and Employee and their respective successors, executors, administrators, heirs and/or permitted assigns; provided, however, that neither Employee nor the Company may make any assignments of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other parties hereto, except that, without such consent, the Company may assign this Agreement to any successor to all or substantially all of its assets and business by means of liquidation, dissolution, merger, consolidation, transfer of assets, or otherwise, provided that such successor assumes in writing all of the obligations of the Company under this Agreement. I. Notice. Any notice or communication required or permitted under this Agreement shall be made in writing and sent by certified or registered mail, return receipt requested, addressed as follows: If to Employee: Stanley Ginsburg 50 Belmont Avenue, #1014 Bala Cynwyd, Pennsylvania 19004 If to the Company: DMS Store Fixtures Corp. 250 King Manor Drive King of Prussia, Pennsylvania 19406 Attn: Lawrence Schan with a required copy to: 90 Marlton Technologies, Inc. 2828 Charter Road Philadelphia, Pennsylvania 19154 Attn: Robert Ginsburg, President or to such other address as either party may from time to time duly specify by notice given to the other party in the manner specified above. I. Entire Agreement; Amendments. This Agreement contains the entire agreement and understanding of the parties hereto relating to the subject matter hereof, and merges and supersedes all prior and contemporaneous discussions, agreements and understandings of every nature between the parties hereto relating to the employment of Employee with the Company. This Agreement may not be changed or modified, except by an Agreement in writing signed by each of the parties hereto. I. Waiver. The waiver of the breach of any term or provision of this Agreement shall not operate as or be construed to be a waiver of any other or subsequent breach of this Agreement. I. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania. I. Invalidity. In case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the validity of any other provision of this Agreement, and such provision(s) shall be deemed modified to the extent necessary to make it enforceable. I. Section Headings. The section headings in this Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation. I. Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and legal holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or day which is a holiday in the Commonwealth of Pennsylvania, then such final day shall be deemed to be the next day which is not a Saturday, Sunday or legal holiday. I. Specific Enforcement; Extension of Period. 1. Employee acknowledges that the restrictions contained in Sections 6, 7, and 8 hereof are reasonable and necessary to protect the legitimate interests of the Company and its affiliates and that the Company would not have entered into this Agreement in the absence of such restrictions. Employee also acknowledges that 91 any breach by him of Sections 6, 7, or 8 hereof will cause continuing and irreparable injury to the Company for which monetary damages would not be an adequate remedy. The Employee shall not, in any action or proceeding to enforce any of the provisions of this Agreement, assert the claim or defense that an adequate remedy at law exists. In the event of such breach by Employee, the Company shall have the right to enforce the provisions of Sections 6, 7, and 8 of this Agreement by seeking injunctive or other relief in any court, and this Agreement shall not in any way limit remedies of law or in equity otherwise available to the Company. If an action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover, in addition to any other relief, reasonable attorneys' fees, costs and disbursements. In the event that the provisions of Sections 6, 7, or 8 hereof should ever be adjudicated to exceed the time, geographic, or other limitations permitted by applicable law in any applicable jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, or other limitations permitted by applicable law. 1. In the event that Employee shall be in breach of any of the restrictions contained in Section 8 hereof, then the Restricted Period shall be extended for a period of time equal to the period of time that Employee is in breach of such restriction. I. Consent to Suit. Any legal proceeding arising out of or relating to this Agreement shall be instituted in any federal or state court of general jurisdiction in Pennsylvania, and the Employee hereby consents to the personal and exclusive jurisdiction of such court and hereby waives any objection that the Employee may have to the laying of venue of any such proceeding and any claim or defense of inconvenient forum. 92 I. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the day and year first written above. ATTEST: DMS STORE FIXTURES CORP. By:___________________ By:_____________________________ Title: Title: -------------------------------- Stanley Ginsburg 93 EX-21 10 Exhibit 21 Subsidiaries of the Issuer The following are the Issuer's significant subsidiaries (including state of incorporation) and percentage of ownership: 1. Sparks Exhibits Holding Corporation (Delaware) 100% 2. Sparks Exhibits Corp. (Pennsylvania) 100% 3. Sparks Exhibits, Inc. (Georgia) 100% 4. Sparks Exhibits, Ltd. (California) 100% 5. Expose' Display Systems, Inc. (California) 51% 6. Piper Productions, Inc. (Florida) 100% 7. DMS Store Fixtures Corp. (Pennsylvania) 100% 94 EX-23 11 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statement of Marlton Technologies, Inc. on Form S-8 (File No. 33-3647) of our report dated March 19, 1998, on our audits of the consolidated financial statements and financial statement schedule of Marlton Technologies, Inc. as of December 31, 1997 and 1996 and for the three years in the period ended December 31, 1997 which report is included in this Form 10-K. Coopers & Lybrand L.L.P. 2400 Eleven Penn Center Philadelphia, Pennsylvania March 27, 1998 95 EX-27 12 FDS
5 0000096988 MARLTON TECHNOLOGIES, INC. YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 7,115,100 0 10,710,298 266,000 10,073,491 29,935,386 6,245,739 3,976,745 54,113,255 17,916,439 0 0 0 29,028,354 (5,904,850) 54,113,255 48,715,828 48,715,828 34,876,590 34,876,590 0 0 (31,552) 2,623,316 (620,000) 2,003,316 0 0 0 2,003,316 0.42 0.36
EX-27.1 13 FDS
5 0000096988 MARLTON TECHNOLOGIES, INC. DOLLARS 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 1 3,957,149 0 9,271,163 216,931 3,084,473 16,898,600 5,086,959 3,142,514 24,617,810 9,871,151 0 0 0 21,703,823 (7,394,185) 24,617,810 11,838,258 11,838,258 8,321,109 8,321,109 0 0 14,592 662,304 260,000 402,304 0 0 0 402,304 0.09 0.07
EX-27.2 14 FDS
5 0000096988 MARLTON TECHNOLOGIES, INC. 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 5,549,259 0 6,418,728 242,773 5,094,091 17,813,633 5,165,308 3,322,045 25,309,049 10,482,055 0 0 0 21,824,500 7,123,138 25,309,049 24,023,099 24,023,099 17,209,149 17,209,149 0 0 28,371 1,295,028 510,000 785,028 0 0 0 785,028 .17 .14
EX-27.3 15 FDS
5 0000096988 MARLTON TECHNOLOGIES, INC. 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 5,627,644 0 7,350,532 331,231 5,702,132 19,663,780 5,718,445 3,552,969 27,157,502 11,952,404 0 0 0 21,883,694 6,801,117 27,157,502 36,037,550 36,037,550 25,793,698 25,793,698 0 0 30,157 1,831,049 724,000 1,107,049 0 0 0 1,107,049 0.23 0.19
EX-27.4 16 FDS
5 0000096988 MARLTON TECHNOLOGIES, INC. YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 3,300,010 0 5,604,744 180,664 4,344,297 13,940,317 5,190,426 3,128,354 22,190,615 8,157,001 0 21,484,340 0 0 (7,908,166) 22,190,615 38,315,600 38,315,600 27,550,933 27,550,933 0 0 120,266 2,690,153 (350,000) 2,340,153 0 0 0 2,340,153 0.52 0.45
EX-27.5 17 FDS
5 0000096988 MARLTON TECHNOLOGIES, INC. 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 4,183,820 0 6,569,769 (145,000) 2,455,631 14,304,646 5,480,446 3,052,726 21,339,342 8,315,416 0 0 0 20,914,791 (9,234,429) 21,339,342 8,578,058 8,578,058 8,135,009 8,135,009 0 0 34,710 1,443,890 430,000 1,013,890 0 0 0 1,013,890 0.23 0.22
EX-27.6 18 FDS
5 0000096988 MARLTONTECHNOLOGIES, INC. 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 3,507,667 0 7,520,171 159,465 3,889,070 16,115,126 4,923,606 2,730,115 24,128,710 10,800,818 0 0 0 21,362,238 8,954,043 24,128,710 18,865,573 18,865,573 13,340,612 13,340,612 0 0 65,253 1,844,276 550,000 1,294,276 0 0 0 1,294,276 0.29 0.26
EX-27.7 19 FDS
5 0000096988 MARLTON TECHNOLOGIES, INC. 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 3,042,781 0 6,123,860 184,382 3,950,674 14,389,465 5,071,712 2,950,190 22,342,332 8,950,932 0 0 0 21,250,561 (8,678,888) 22,342,332 29,109,018 29,109,018 20,912,287 20,912,287 0 0 94,985 2,067,754 610,000 1,457,754 0 0 0 1,457,754 0.33 0.29
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