SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to_______
Commission file number 1-7708
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MARLTON TECHNOLOGIES, INC.
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(Exact name of issuer as specified in its charter)
Pennsylvania 22-1825970
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(State or other jurisdiction of incorporation or organization) (IRS EmployerIdentification No.)
2828 Charter Road Philadelphia PA 19154
---------------------------------------------- ----------------------------- ----------------- --------------
(Address of principal executive offices) City State Zip
Issuer's telephone number (215) 676-6900
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Former name, former address and former fiscal year, if changed
since last report.
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
---------------------- -------------------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15 (d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by court
Yes No
---------------------- -------------------
APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding of
each of the issuer's classes of common equity as of the last practicable
date: 12,988,499
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Transitional Small Business Disclosure Form (check one):
Yes No X
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MARLTON TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands except share and per share data)
March 31, December 31,
ASSETS 2002 2001
--------- ------------
Current:
Cash and cash equivalents $ 189 $ 1,233
Accounts receivable, net of allowance
of $553 and $502, respectively 8,482 10,646
Inventories 6,312 6,598
Prepaids and other current assets 1,161 1,247
Deferred income taxes 779 779
-------- --------
Total current assets 16,923 20,503
Investment in affiliates 259 1,415
Deferred income taxes 3,796 487
Property and equipment, net of accumulated
depreciation of $8,348 and $7,976, respectively 4,594 4,847
Rental assets, net of accumulated depreciation
of $2,890 and $2,765, respectively 2,544 2,422
Goodwill, net of accumulated amortization of $4,183
at December 31, 2001 2,714 18,599
Other assets, net of accumulated amortization
of $1,202 and $1,063, respectively 253 392
Notes receivable 797 777
-------- --------
Total assets $ 31,880 $ 49,442
======== ========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Current portion of long-term debt $ 99 $ 124
Accounts payable 5,724 3,879
Accrued expenses and other current liabilities 6,051 9,628
-------- --------
Total current liabilities 11,874 13,631
-------- --------
Long-term liabilities:
Long-term debt, net of current portion 4,498 6,635
Deferred income taxes -- --
-------- --------
Total long-term liabilities 4,498 6,635
-------- --------
Total liabilities 16,372 20,266
-------- --------
Commitments and contingencies -- --
Stockholders equity:
Preferred stock, $.10 par - shares authorized
10,000,000; no shares issued or outstanding -- --
Common stock, no par value - shares authorized 50,000,000;
12,993,499 issued at March 31, 2002 and December 31, 2001 1,299 1,299
Stock warrants 742 742
Additional paid-in capital 31,652 31,652
Accumulated deficit (18,073) (4,405)
-------- --------
15,620 29,288
Less cost of 5,000 treasury shares (112) (112)
-------- --------
Total stockholders equity 15,508 29,176
-------- --------
Total liabilities and stockholders equity $ 31,880 $ 49,442
======== ========
See notes to consolidated financial statements.
2
MARLTON TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands except per share data)
For the three months ended
March 31, March 31,
2002 2001
--------- ---------
Net sales $ 16,795 $ 20,877
Cost of sales 12,631 15,728
-------- --------
Gross profit 4,164 5,149
Selling expenses 2,191 2,590
Administrative and general expenses 1,752 1,532
-------- --------
Operating profit 221 1,027
Other income (expense):
Interest and other income 28 37
Interest expense (115) (301)
Loss from investments in affiliates (1,156) (123)
-------- --------
Income before income taxes and accounting change (1,022) 640
Provision for income taxes 261 256
-------- --------
Net income (loss) before accounting change (1,283) 384
Cumulative effect of accounting change, net of tax (12,385) --
-------- --------
Net income (loss) $(13,668) $ 384
======== ========
Net income (loss) per common share:
Before accounting change:
Basic $ (.10) $ .05
======== ========
Diluted $ (.09) $ .05
======== ========
After accounting change:
Basic $ (1.05) $ .05
======== ========
Diluted $ (1.00) $ .05
======== ========
See notes to consolidated financial statements.
3
MARLTON TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
For the three months ended
March 31, March 31,
2002 2001
-------- ---------
Cash flows from operating activities:
Net income (loss) $(13,668) $ 384
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 636 794
Termination of employment agreements -- (544)
Loss from investments in affiliates 1,156 100
Cumulative effect of accounting change 12,385 --
Non-cash compensation and other operating items 191 150
Change in operating assets and liabilities:
Decrease in accounts receivable, net 2,164 850
Decrease in inventories 286 80
Decrease in prepaid and other assets 87 570
(Decrease) in accounts payable, accrued
expenses and other current liabilities (1,732) (1,856)
-------- --------
Net cash provided by operating activities 1,505 528
-------- --------
Cash flows from investing activities:
Guaranteed payments to sellers -- (18)
Capital expenditures (366) (558)
-------- --------
Net cash used in investing activities (366) (576)
-------- --------
Cash flows from financing activities:
Payments for revolving credit facility, net (2,100) --
Payments for promissory note (83) --
Principal payments for notes payable, sellers -- (55)
-------- --------
Net cash used in financing activities (2,183) (55)
-------- --------
Decrease in cash and cash equivalents (1,044) (103)
Cash and cash equivalents - beginning of period 1,233 749
-------- --------
Cash and cash equivalents - end of period $ 189 $ 646
======== ========
See notes to consolidated financial statements.
4
MARLTON TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
The consolidated financial statements included herein are unaudited and have
been prepared in accordance with generally accepted accounting principles for
interim financial reporting and Securities and Exchange Commission regulations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In the
opinion of management, the financial statements reflect all adjustments (of a
normal and recurring nature), which are necessary to present fairly the
financial position, results of operations and cash flows for the interim
periods. Operating results for the quarter are not necessarily indicative of the
results that may be expected for the full year or for future periods. These
financial statements should be read in conjunction with the Annual Report to
Shareholders and Form 10-K for the year ended December 31, 2001.
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.
2. MAJOR CUSTOMERS:
During the first quarter of 2002, one customer accounted for 15% of the
Company's total net sales. During the first quarter of 2001, no customer
accounted for over 10% of the Company's total net sales.
3. PER SHARE DATA:
The following table sets forth the computation of basic and diluted net income
per common share (in thousands except per share data):
Three months ended
March 31, 2002 March 31, 2001
-------------- --------------
Net income (loss) before accounting change $ (1,283) $ 384
========= =========
Net income (loss) after accounting change $ (13,668) $ 384
========= =========
Weighted average common
shares outstanding used to compute
basic net income per common share 12,988 7,441
Additional common shares to be issued
assuming the exercise of stock options,
net of shares assumed reacquired 731 --
--------- ---------
Total shares used to compute diluted
net income per common share 13,719 7,441
========= =========
Basic net income (loss) per share before accounting change $ (.10) $ .05
========= =========
Diluted net income (loss) per share after accounting change $ (.09) $ .05
========= =========
Basic net income (loss) after accounting change $ (1.05) $ .05
========= =========
Diluted net income (loss) after accounting change $ (1.00) $ .05
========= =========
5
MARLTON TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The increase in the weighted average number of common shares outstanding was
principally attributable to an investment transaction on November 20, 2001
whereby the Company issued 5,300,000 shares of its common stock for an aggregate
of $2,650,000.
Excluded in the computation of diluted income per common share were options and
warrants to purchase 561,103 and 2,175,064 shares of common stock, which were
outstanding at March 31, 2002 and 2001, respectively, because the option and
warrant exercise prices were greater than the average market price of the common
shares.
4. INVENTORIES:
Inventories, as of the respective dates, consists of the following (in
thousands):
March 31, 2002 December 31, 2001
-------------- -----------------
Raw materials $ 375 $ 395
Work in process 2,947 3,636
Finished goods 2,990 2,567
------- ------
$ 6,312 $6,598
======= ======
5. EMPLOYMENT AGREEMENTS:
Certain employment agreements were mutually terminated on January 23, 2001,
which reduced administrative and general expenses by $544,000 in the first
quarter of 2001.
6. INVESTMENTS IN AFFILIATES
The Company recorded an impairment loss of $1.2 million for its investment in a
portable trade show exhibit manufacturer in the first quarter of 2002. No income
tax benefit was recorded in connection with this capital loss.
During the first quarter of 2002 the Company also recorded a valuation allowance
of $191,000 against a deferred tax asset associated with a capital loss, which
resulted from the write-off of an investment in an affiliate located in the
United Kingdom. Management has concluded that the Company will most likely not
be able to generate capital gains in the next two years that would be sufficient
to realize the tax benefit from this capital loss.
7. ACCOUNTING CHANGE (ADOPTION OF SFAS NO. 142)
Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142), which
eliminates amortization of these assets and requires annual testing for
impairment. The Company's reporting units for purposes of applying the
provisions of SFAS 142 are the DMS Store Fixtures business ("DMS") and the
Sparks Exhibits & Environments businesses ("Sparks"). SFAS 142 requires a
comparison of the reporting unit's fair value, which is determined based on
discounted cash flows, to its carrying value to determine potential impairment.
If the fair value is less than the carrying value, an impairment loss is
recognized.
6
MARLTON TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table provides a reconciliation of net income and net income per
share adjusted for SFAS 142:
March 31, March 31,
2002 2001
--------- ---------
(in thousands except per share amounts)
Net income (loss) before accounting change $(1,283) $384
Add back: goodwill amortization, net of tax -- 177
--------- ---------
Adjusted net income (loss) before accounting change $(1,283) $561
Cumulative effect of accounting change, net of tax (12,385) --
--------- ---------
Adjusted net income (loss) $(13,668) $561
========= =========
Net income per share:
Basic net income (loss) per share before accounting change $(.10) $.05
Add back: goodwill amortization, net of tax -- .03
--------- ---------
Adjusted basic net income (loss) per share before accounting change $(.10) $.08
Cumulative effect of accounting change, net of tax (.95) --
--------- ---------
Adjusted basic net income (loss) per share $(1.05) $.08
======= ====
Diluted net income (loss) per share before accounting change $(.09) $.05
Add back: goodwill amortization, net of tax -- .03
--------- ---------
Adjusted diluted net income (loss) per share before accounting change $(.09) $.08
Cumulative effect of accounting change, net of tax (.91) --
--------- ---------
Adjusted diluted net income (loss) per share $(1.00) $.08
========= =========
Changes in the carrying amount of goodwill for the first quarter ended March 31,
2002 are as follows:
DMS Sparks Total
Balance at December 31, 2001 $ 15,885 $ 2,714 $ 18,599
Impairment write-down (15,885) -- (15,885)
--------- -------- --------
Balance at March 31, 2002 -- $ 2,714 $ 2,714
--------- ======= =======
The tax effect of the accounting change is approximately $3.5 million after
giving effect to the portion of the goodwill that was not deductible for tax
reporting purposes. The Company has recognized non-current deferred tax assets
of approximately $3.8 million that primarily reflect the tax effect of the
impairment of the Company's goodwill. The amount of the deferred tax asset
considered realizable could be reduced if the Company does not generate taxable
income in the near term.
8. RECENTLY ISSUED ACCOUNTING STANDARDS
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
disposal of Long-lived Assets" (SFAS 144). SFAS 144, which addresses financial
accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of, supersedes SFAS No. 121 and is effective
for fiscal years beginning after December 15, 2001. The Adoption of SFAS 144 did
not have a material impact on the Company's financial position or results of
operations.
In April 2002, the FASB issued SFAS 145, "Rescission of FASB Statement No., 4,
44 and 64 Amendment of SFAS 13 and Technical Connections". SFAS 145 rescinds
both SFAS 4, "Reporting Gains and Losses from Extinguishment of Debt" and the
amendment to SFAS 4, SFAS 64 "Extinguishments of Debt Made to Satisfy
Sinking-Fund requirements". Through this rescission, SFAS 145 eliminates the
requirement (in both SFAS 4 and SFAS 64) that gains and losses from the
extinguishments of debt be aggregated and, if material, classified as an
extraordinary item, net of the related income tax effect. The adoption of SFAS
145 is not expected to have a material effect on the Company's financial
position or results of operations.
7
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three months ended March 31, 2002 as compared with three months ended March 31,
2001
Sales
Three Months Ended
(in thousands)
March 31, 2002 March 31, 2001 % Increase
-------------- -------------- ----------
Trade show exhibits group $ 12,465 $ 16,608 (25.0)%
Permanent and scenic displays group 4,330 4,269 1.4
-------- ------- -------
Total sales $ 16,795 $ 20,877 (19.6)%
======== ======== =======
Total net sales of $16.8 million for the first quarter of 2002 decreased 19.6%
below the first quarter of 2001. This decrease was attributable to lower sales
of trade show exhibits and related services, which decreased 25% below
comparable sales for the first quarter of 2001. Lower sales of trade show
exhibits was largely the result of reductions in many customers' trade show
marketing budgets in response to a slower economy. The loss of a trade show
exhibit client also accounted for a portion of the decrease. Sales of permanent
and scenic displays for the first quarter of 2002 were essentially unchanged
from 2001 as a net result of lower scenic display sales offset by higher store
fixture and permanent museum display sales.
Operating Profit
Gross profit, as a percentage of net sales, of 24.8% for the first quarter of
2002 was essentially unchanged from the first quarter of 2001, despite the lower
sales volume. Cost reduction initiatives, including production facility
consolidation, mitigated the impact of lower sales volume.
Selling expenses for the first quarter of 2002 were $2.2 million, or 13% of net
sales, as compared with $2.6 million, or 12.4% of net sales in the same prior
year period. The higher percentage was primarily attributable to certain fixed
selling expenses such as sales office facility expenses as compared with the
lower sales volume in 2002.
Administrative and general expenses increased to $1.8 million in the first
quarter of 2002 from $1.5 million in the comparable 2001 period. Certain
employment agreements were mutually terminated in the first quarter of 2001
which reduced administrative and general expenses by $544,000 in the prior year
first quarter.
Operating profit decreased to $0.2 million in the first quarter of 2001 from
$1.0 million in the same prior year period, primarily as a result of lower sales
volume.
Other Income/(Expense)
Interest expense was reduced to $115,000 in the first quarter of 2002 from
$301,000 in the first quarter of 2001 due primarily to reduction in long-term
debt and lower interest rates.
A loss of $123,000 from investment in affiliates was incurred in the first
quarter of 2001, due in large part to losses recorded for the Company's
investment in Sparks Europe.
8
A loss of $1.2 million from investments in affiliates was recorded in the first
quarter of 2002 to write-down the Company's investment in a portable trade show
exhibit manufacturer.
Net Income/(Loss) Before Accounting Change
A net loss of $1.3 million before accounting change was incurred in the first
quarter of 2002 primarily due to the $1.2 million write down of investments in
affiliates.
Provision for Income Taxes
The Company did not recognize an income tax benefit from the $1.2 million write
down of investments in affiliates because this capital loss is not expected to
be offset by capital gains within the required statutory period. The provision
for income taxes of $261,000 recorded in the first quarter of 2002 included a
valuation allowance of $191,000 related to a 1999 capital loss incurred in
connection with the Company's investment in a United Kingdom affiliate.
Excluding the impact of these capital loss transactions, the effective income
tax rate was 40% of pre-tax profits for the first quarter of 2002 and 2001.
Cumulative Effect of Accounting Change
The Company recorded an impairment loss of $12.4 million (net of expected $3.5
million income tax benefit) in connection with adoption of Statement of
Financial Accounting Standards No. 142 (SFAS 142) discussed below under the
discussion of "Recently Issued Accounting Standards.
Backlog
The Company's backlog of orders was approximately $18 million at March 31, 2002
and at March 31, 2001.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital decreased $1.9 million to $5 million at March 31,
2002 from $6.9 million at December 31, 2001. Available cash and cash generated
from operating activities was used to reduce long-term debt by $2.1 million to
$4.5 million at March 31, 2002 from $6.6 million at December 31, 2001.
At March 31, 2002 the Company had a Revolving Credit and Security Agreement (the
"Facility") with its bank providing for borrowing capacity based on a multiple
of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA").
The Facility, which expires on January 21, 2004, is collateralized by all the
Company's assets and bears interest at rates based on the London Inter Bank
Offering Rate (LIBOR), adjusted for applicable spreads ranging from 2.0 to
2.75%. The Company is subject to an annual commitment fee on the average unused
portion of the Facility of 1/4%. The Facility includes certain financial
covenants requiring a minimum tangible net worth and maintenance of certain
financial ratios and restricts the Company's ability to pay dividends.
Borrowings under this Facility were $4.4 million at March 31, 2002.
The Company plans to amend the Facility from an EBITDA basis to an asset-based
arrangement in the second quarter of 2002. The Company's borrowing capacity
under the planned new arrangement would have been approximately $7.4 million at
March 31, 2002.
9
The Company has off-balance sheet lease commitments for several facilities under
non-cancelable operating leases. Timing of future lease commitments as well as
maturities of long-term debt are as follows:
(in thousands)
2002 2003 2004 2005 2006 After 2006
---- ---- ---- ---- ---- ----------
Lease commitments $1,518 $1,728 $1,704 $1,686 $987 $10,794
Debt maturities 62 135 4,400 -- -- --
The Company leases a facility from a partnership controlled by two shareholders
of the Company. This lease, which expires on May 14, 2019, requires minimum
annual rent of $771,000 at a fixed rate for the first 10 years, and the Company
is responsible for taxes, insurance and other operating expenses.
In connection with the DMS Store Fixtures acquisition, employment agreements
were made with two shareholders of the Company, which provided for guaranteed
minimum payments. These agreements were mutually terminated in January 2001
eliminating the guaranteed minimum payments after February 2, 2001, which
reduced administrative and general expenses by $544,000 in the first quarter of
2001.
On November 20, 2001, the Company issued 5,300,000 shares of its common stock
and warrants expiring on November 19, 2011 to purchase 5,300,000 shares of its
common stock for an aggregate of $2,650,000. The Company's shareholders at the
Annual Meeting of Shareholders held on November 7, 2001 approved this
transaction. Costs incurred in connection with this transaction were $378,000.
OUTLOOK
The Company expects sales to decrease in 2002 from 2001 levels. In view of
current economic conditions, the Company's trade show exhibit client base of
Fortune 1000 companies is expected to curtail their marketing budgets, which
would adversely impact the Company's trade show exhibit sales and profit
margins. Adversely affected Internet and technology-driven businesses,
particularly in the Western Region, have also led to a decline in trade show
exhibit sales. In addition, the events of September 11, 2001 may continue to
reduce business travel, trade show attendance and related spending. The Company
continues to explore new sales opportunities while pursuing operating efficiency
improvements and cost reduction initiatives to mitigate the impact of lower
sales volume.
RECENTLY ISSUED ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
141. "Business Combinations" (SFAS 141), which supersedes Accounting Principles
Board Opinion No. 16 "Business Combinations" (APB 16) and SFAS No. 38
"Accounting for Preacquisition Contingencies of Purchased Enterprises" (SFAS
38). It is expected that SFAS 141 will improve the transparency of the
accounting and reporting for business combinations by requiring that all
business combinations be accounted for under the purchase method. Use of the
pooling-of-interests method is no longer permitted. The Company adopted SFAS 141
in the third quarter of 2001. The adoption of SFAS 141 has not had a material
effect on the Company's financial position or results of operations.
10
In July 2001, the FASB issued SFAS No. 142 "Goodwill and Other Intangible
Assets" (SFAS 142), which supersedes APB No. 17 "Intangible Assets". SFAS 142
requires that goodwill no longer be amortized to earnings, but instead be
reviewed for impairment. It is expected that this change will provide investors
with greater transparency regarding the economic value of goodwill and its
impact on earnings. The Company adopted SFAS 142 effective January 1, 2002. This
new accounting standard requires a two-step test for operating units having
unamortized goodwill balances. The first step requires a comparison of the book
value of the net assets to the fair value of the respective operating unit. If
the fair value is determined to be less than the book value, a second step is
required to determine the impairment. This second step includes evaluation of
other intangible assets, and any shortfall of the adjusted book value below fair
value determines the amount of the goodwill impairment. Goodwill amortization
expense was $177,000 (net of a tax benefit of $50,000) in the first quarter of
2001. The impact of adopting SFAS 142 reduced net income by $12.4 million ($15.9
million goodwill write down, net of $3.5 million for a deferred tax asset from
the expected future income tax benefit) in the first quarter of 2002, identified
as a cumulative effect of an accounting change. This charge, which reduced the
carrying value of goodwill recognized in connection with the 1997 acquisition of
DMS Store Fixtures, differs from the previous accounting standard method, which
was based on undiscounted cash flows, because the new method is based on fair
value measurement estimates as of January 1, 2002.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
disposal of Long-lived Assets" (SFAS 144). SFAS 144, which addresses financial
accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of, supersedes SFAS No. 121 and is effective
for fiscal years beginning after December 15, 2001. The Adoption of SFAS 144 did
not have a material impact on the Company's financial position or results of
operations.
In April 2002, the FASB issued SFAS 145, "Rescission of FASB Statement No., 4,
44 and 64 Amendment of SFAS 13 and Technical Connections". SFAS 145 rescinds
both SFAS 4, "Reporting Gains and Losses from Extinguishment of Debt" and the
amendment to SFAS 4, SFAS 64 "Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements". Through this rescission, SFAS 145 eliminates the
requirement (in both SFAS 4 and SFAS 64) that gains and losses from the
extinguishments of debt be aggregated and, if material, classified as an
extraordinary item, net of the related income tax effect. The adoption of SFAS
145 is not expected to have a material effect on the Company's financial
position or results of operations.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. When used in this report, the
words "intends," "believes," "plans," "expects," "anticipates" and similar words
are used to identify these forward looking statements. In connection with the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, there are certain important factors that could cause the Company's actual
results to differ materially from those included in such forward-looking
statements. Some of the important factors which could cause actual results to
differ materially from those projected include, but are not limited to: the
Company's ability to continue to identify and enter new markets and expand
existing business; continued availability of financing to provide additional
sources of funding for capital expenditures, working capital and investments;
the effects of competition on products and pricing; growth and acceptance of new
product lines through the Company's sales and marketing programs; changes in
material and labor prices from suppliers; changes in customers' financial
condition; the Company's ability to attract and retain competent employees; the
Company's ability to add and retain customers; changes in sales mix; the
Company's ability to integrate and upgrade technology; uncertainties regarding
accidents or litigation which may arise; the financial impact of facilities
consolidations; the impact from the events of September 11, 2001 on business
travel, trade show attendance and related spending; and the effects of, and
changes in the economy, monetary and fiscal policies, laws and regulations,
inflation and monetary fluctuations as well as fluctuations in interest rates,
both on a national and international basis.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's revolving credit facility bears a floating rate of interest, based
on LIBOR rates, plus an applicable spread. The Company had borrowings of $4.4
million from its revolving credit facility at March 31, 2002.
Fluctuations in foreign currency exchange rates do not significantly affect the
Company's financial position and results of operations.
11
ENVIRONMENTAL
The Company believes it is in compliance with federal, state and local
provisions regulating discharge of materials into the environment or otherwise
relating to protection of the environment. The Company has not been identified
by federal or state authorities as a potentially responsible party for
environmental clean-ups at any of its sites.
LITIGATION
The Company from time to time is a defendant and counterclaimant in various
lawsuits that arise out of, and are incidental to, the conduct of its business.
The resolution of pending legal matters should not have a material effect on the
financial position of the Company.
12
PART II - OTHER INFORMATION
Responses to Items one through six are omitted since these items are either
inapplicable or the response thereto would be negative.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MARLTON TECHNOLOGIES, INC.
/s/ Robert B. Ginsburg
------------------------------------------
Robert B. Ginsburg
President and Chief Executive Officer
/s/ Stephen P. Rolf
------------------------------------------
Stephen P. Rolf
Chief Financial Officer
Dated: May 14, 2002
13