SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
(RULE 13e-100)
TRANSACTION STATEMENT UNDER SECTION 13(e) OF
THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 13e-3 THEREUNDER
RULE 13E-3 TRANSACTION STATEMENT
UNDER SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
MARLTON TECHNOLOGIES, INC.
(Name of the Issuer)
MARLTON TECHNOLOGIES, INC.
(Name of Persons Filing Statement)
COMMON STOCK, NO PAR VALUE
(Title of Class of Securities)
571263102
(CUSIP Number of Class of Securities)
Alan I. Goldberg, Esq. Robert B. Murphy, Esq.
Marlton Technologies, Inc. Pepper Hamilton LLP
2828 Charter Road 600 Fourteenth Street, N.W.
Philadelphia, PA 19154 Washington, D.C. 20005-2004
(215) 676 - 6900 (202) 220-1200
-----------------------------------------------------------------------------
(Name, Address and Telephone Number of Person(s)
Authorized to Receive Notices and Communications
on Behalf of Persons Filing Statement)
This statement is filed in connection with (check the appropriate box):
a. [x] The filing of solicitation materials or an information statement subject
to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange
Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [x]
Check the following box if the filing is a final amendment reporting the results
of the transaction:
Calculation of Filing Fee
--------------------------------------------------------------------------------
$1,562,500 $183.91
Transaction Valuation* Amount of Filing Fee
--------------------------------------------------------------------------------
-----------------------------
* The amount of the filing fee, calculated in accordance with Exchange Act
Rule 0-11, equals 1/50 of one percent of the value of the securities to be
purchased.
[x] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $183.91
Form or Registration No.: Schedule 14A
Filing Party: Marlton Technologies, Inc.
Date Filed: September 28, 2005
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL AND A CRIMINAL OFFENSE.
- 2 -
INTRODUCTION
Marlton Technologies, Inc., a Pennsylvania Corporation,
("Marlton" or the "Company") is filing this Amendment No. 1 to Rule 13e-3
Transaction Statement on Schedule 13E-3 with the Securities and Exchange
Commission (the "SEC") under Section 13(e) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and Rule 13e-3 promulgated thereunder.
Marlton has scheduled a Special Meeting of Marlton Shareholders (the "Special
Meeting") for December 19, 2005 for the purpose of seeking shareholder approval
to effect a 1 for 5,000 reverse stock split of the Marlton's Common Stock.
Shareholders who own fewer than 5,000 shares on the effective date of the
reverse stock split will receive a cash payment in exchange for the cancellation
of their shares. Shareholders holding more than 5,000 shares on the effective
date will remain Marlton shareholders holding whole shares and will receive cash
in lieu of any fractional shares.
The reverse stock split represents the first step in the
Marlton's plan to terminate its public reporting obligations under the Exchange
Act. Following the reverse stock split, Marlton will possess fewer than 300
shareholders of record and would consequently be eligible to deregister its
Common Stock from under the Exchange Act.
Marlton has filed with the SEC a preliminary proxy statement
(the "Proxy Statement"), including exhibits, pursuant to Regulation 14A under
the Exchange Act, which will notify Marlton shareholders of the Special Meeting.
The cross reference below is being supplied pursuant to
General Instruction F to Schedule 13E-3 and shows the location in the Proxy
Statement of the information required to be included in response to the items of
this Amendment No. 1 to Schedule 13E-3. The information set forth in the Proxy
Statement, including all schedules, exhibits, appendices and annexes thereto, is
hereby expressly incorporated herein by reference and the responses to each item
in this Amendment No. 1 to Schedule 13E-3 are qualified in their entirety by the
information contained in the Proxy Statement and the schedules, exhibits,
appendices and annexes thereto. As of the date hereof, the Proxy Statement is in
preliminary form and is subject to amendment and completion. This Amendment No.
1 to Schedule 13E-3 will be further amended to reflect such amendment or
completion of the Proxy Statement.
- 3 -
Item 1. SUMMARY TERM SHEET.
The information set forth in the sections of the Proxy
Statement entitled "SUMMARY TERM SHEET" and "QUESTIONS AND ANSWERS ABOUT THE
SPECIAL MEETING AND THE REVERSE SPLIT" is incorporated herein by reference.
Item 2. SUBJECT COMPANY INFORMATION.
(a) NAME AND ADDRESS.
The name of the subject company is Marlton Technologies, Inc.
Marlton is a Pennsylvania corporation with its principal executive office
located at 2828 Charter Road, Philadelphia, Pennsylvania 19154, telephone number
(215) 676-6900.
(b) SECURITIES.
The subject class of equity securities is Marlton's Common
Stock, without par value. Marlton counted 12,939,696 shares outstanding on
September 26, 2005.
(c) TRADING MARKET AND PRICE.
The information set forth in the section of the Proxy
Statement entitled "Market Information for Our Common Stock" is incorporated
herein by reference.
(d) DIVIDENDS.
The information set forth in the section of the Proxy
Statement entitled "THE COMPANY - Dividend Policy" is incorporated herein by
reference.
(e) PRIOR PUBLIC OFFERINGS.
Marlton has made no underwritten public offering of the Common
Stock for cash during the past three years.
(f) PRIOR STOCK PURCHASES.
None.
Item 3. IDENTITY AND BACKGROUND OF FILING PERSONS.
(a) NAME AND ADDRESS.
Marlton is the filing person and the subject company.
Marlton's address and telephone number are provided in Item 2(a) above.
Marlton's executive officers and directors are set forth below.
- 4 -
Executive Officers
Robert B. Ginsburg Chief Executive Officer and President
Alan I. Goldberg General Counsel and Corporate Secretary
Stephen P. Rolf Chief Financial Officer and Treasurer
Board of Directors
Jeffrey K. Harrow Chairman of the Board of Directors
Scott J. Tarte Vice Chairman of the Board of Directors
A.J. Agarwal Director
Washburn Oberwager Director
Richard Vague Director
The address of each executive officer and director of Marlton
is c/o Marlton Technologies, Inc., 2828 Charter Road, Philadelphia, Pennsylvania
19154.
(b) BUSINESS AND BACKGROUND OF ENTITIES.
Not applicable.
(c) BUSINESS AND BACKGROUND OF NATURAL PERSONS.
The information set forth in the section of the Proxy
Statement entitled "THE COMPANY - Directors and Executive Officers" is
incorporated herein by reference.
Item 4. TERMS OF THE TRANSACTION.
(a) MATERIAL TERMS.
The information set forth in the sections of the Proxy
Statement entitled "SUMMARY TERM SHEET," "QUESTIONS AND ANSWERS ABOUT THE
SPECIAL MEETING AND THE REVERSE SPLIT" and "SPECIAL FACTORS" is incorporated
herein by reference.
(c) DIFFERENT TERMS.
The information set forth in the sections of the Proxy
Statement entitled "SPECIAL FACTORS - Effects on Shareholders with Fewer Than
5,000 Shares of Common Stock," "SPECIAL FACTORS - Effects on Shareholders with
5,000 or More Shares of Common Stock," "SPECIAL FACTORS - Fairness of the
Reverse Split" and "SPECIAL FACTORS - Federal Income Tax Consequences" is
incorporated herein by reference.
(d) APPRAISAL RIGHTS.
The information set forth in the section of the Proxy
Statement entitled "SPECIAL FACTORS -Appraisal and Dissenters' Rights" is
incorporated herein by reference.
- 5 -
(e) PROVISIONS FOR UNAFFILIATED SECURITY HOLDERS.
The Company has made no provisions in connection with the
Merger to grant unaffiliated security holders access to the corporate files of
the Company or to obtain counsel or appraisal services at the expense of the
Company. The information set forth in the section of the Proxy Statement
entitled "SPECIAL FACTORS - Fairness of the Reverse Split" is incorporated
herein by reference.
(f) ELIGIBILITY FOR LISTING OR TRADING.
The information set forth in the sections of the Proxy
Statement entitled "SUMMARY TERM SHEET" and "SPECIAL FACTORS -Disadvantages of
the Proposal" is incorporated herein by reference.
Item 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(a) TRANSACTIONS.
The information set forth in the section of the Proxy
Statement entitled "THE COMPANY - Certain Relationships and Related Transactions
with Affiliates" is incorporated herein by reference.
(b) SIGNIFICANT CORPORATE EVENTS.
The information set forth in the section of the Proxy
Statement entitled "THE COMPANY - Recent Developments" is incorporated herein by
reference.
(c) NEGOTIATIONS OR CONTACTS.
None.
(e) AGREEMENTS INVOLVING THE SUBJECT COMPANY'S
SECURITIES.
The information set forth in the sections of the Proxy
Statement entitled "THE COMPANY - Certain Relationships and Related Transactions
with Affiliates" and "THE COMPANY - Stockholders' Agreement" is incorporated
herein by reference.
Item 6. Purposes of the Transaction and Plans or Proposals.
(b) USE OF SECURITIES ACQUIRED.
The shares of Common Stock acquired in connection with the
reverse stock split will be retired.
(c) (1)-(8) PLANS.
The information set forth in the sections of the Proxy
Statement entitled "PROPOSAL NO.1 - TO EFFECT A REVERSE STOCK SPLIT," and
"SPECIAL FACTORS - Purpose and Advantages of the Reverse Split" is incorporated
herein by reference.
- 6 -
Item 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS IN A GOING-PRIVATE
TRANSACTION.
(a) PURPOSES.
The information set forth in the section of the Proxy
Statement entitled "SPECIAL FACTORS - Purpose and Advantages of the Reverse
Split" is incorporated herein by reference.
(b) ALTERNATIVES.
The information set forth in the section of the Proxy
Statement entitled "SPECIAL FACTORS - Alternatives to the Reverse Split" is
incorporated herein by reference.
(c) REASONS.
The information set forth in the sections of the Proxy
Statement entitled "PROPOSAL NO.1 - TO EFFECT A REVERSE STOCK SPLIT" and
"SPECIAL FACTORS - Purpose and Advantages of the Reverse Split" is incorporated
herein by reference.
(d) EFFECTS.
The information set forth in the sections of the Proxy
Statement entitled "SPECIAL FACTORS - Effects on Shareholders with Fewer Than
5,000 Shares of Common Stock," "SPECIAL FACTORS - Effects on Shareholders with
5,000 or More Shares of Common Stock," and "SPECIAL FACTORS - Federal Income Tax
Consequences" is incorporated herein by reference.
Item 8. FAIRNESS OF THE GOING-PRIVATE TRANSACTION.
(a) FAIRNESS.
The information set forth in the section of the Proxy
Statement entitled "SPECIAL FACTORS - Fairness of the Reverse Split" is
incorporated herein by reference.
(b) FACTORS CONSIDERED IN DETERMINING FAIRNESS.
The information set forth in the section of the Proxy
Statement entitled "SPECIAL FACTORS - Fairness of the Reverse Stock Split" is
incorporated herein by reference.
(c) APPROVAL OF SECURITY HOLDER
The information set forth in the section of the Proxy
Statement entitled "SPECIAL FACTORS - Fairness of the Reverse Stock Split" is
incorporated herein by reference.
- 7 -
(d) UNAFFILIATED REPRESENTATIVE.
The information set forth in the section of the Proxy
Statement entitled "SPECIAL FACTORS - Fairness of the Reverse Stock Split" is
incorporated herein by reference.
(e) APPROVAL OF DIRECTORS.
The information set forth in the sections of the Proxy
Statement entitled "SPECIAL FACTORS - Fairness of the Reverse Stock Split" and
"SPECIAL FACTORS - Recommendation of the Board" is incorporated herein by
reference.
(f) OTHER OFFERS.
None.
Item 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.
(a) REPORT, OPINION OR APPRAISAL.
The information set forth in the sections of the Proxy
Statement entitled "SPECIAL FACTORS - Fairness of the Reverse Stock Split" and
"SPECIAL FACTORS - Opinion of Mufson Howe Hunter & Partners LLC" is incorporated
herein by reference.
(b) PREPARER AND SUMMARY OF THE REPORT, OPINION OR
APPRAISAL.
The information set forth in the section of the Proxy
Statement entitled "SPECIAL FACTORS - Opinion of Mufson Howe Hunter & Partners
LLC" is incorporated herein by reference.
(c) AVAILABILITY OF DOCUMENTS.
The information set forth in the section of the Proxy
Statement entitled "SPECIAL FACTORS - Opinion of Mufson Howe Hunter & Partners
LLC" is incorporated herein by reference.
Item 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) SOURCE OF FUNDS.
The information set forth in the section of the Proxy
Statement entitled "SPECIAL FACTORS - Costs of the Transaction and Source of
Funds" is incorporated herein by reference.
(b) CONDITIONS.
The information set forth in the section of the Proxy
Statement entitled "SPECIAL FACTORS - Costs of the Transaction and Source of
Funds" is incorporated herein by reference.
- 8 -
(c) EXPENSES.
The information set forth in the section of the Proxy
Statement entitled "SPECIAL FACTORS - Costs of the Transaction and Source of
Funds" is incorporated herein by reference.
(d) BORROWED FUNDS.
The information set forth in the section of the Proxy
Statement entitled "SPECIAL FACTORS - Costs of the Transaction and Source of
Funds" is incorporated herein by reference.
Item 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) SECURITIES OWNERSHIP.
The information set forth in the section of the Proxy
Statement entitled "THE COMPANY - Security Ownership of Certain Beneficial
Owners and Management" is incorporated herein by reference.
(b) SECURITIES TRANSACTIONS.
None.
Item 12. THE SOLICITATION OR RECOMMENDATION.
(d) INTENT TO TENDER OR VOTE IN A GOING-PRIVATE
TRANSACTION.
The information set forth in the sections of the Proxy
Statement entitled "SUMMARY TERM SHEET", "SPECIAL FACTORS - Fairness of the
Reverse Stock Split" and "SPECIAL FACTORS - Recommendation of the Board" is
incorporated herein by reference.
(e) RECOMMENDATIONS OF OTHERS.
The information set forth in the sections of the Proxy
Statement entitled "SPECIAL FACTORS - Fairness of the Reverse Stock Split" and
"SPECIAL FACTORS - Recommendation of the Board" is incorporated herein by
reference.
Item 13. FINANCIAL STATEMENTS.
(a) FINANCIAL INFORMATION.
The information set forth in the section of the Proxy
Statement entitled "THE COMPANY - Financial Statements and Other Information" is
incorporated herein by reference.
(b) PRO FORMA INFORMATION.
Not applicable.
- 9 -
Item 14. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.
(a) SOLICITATIONS OR RECOMMENDATIONS.
The information set forth in the sections of the Proxy
Statement entitled "OTHER MATTERS - Proxy Solicitation" and "SPECIAL FACTORS -
Cost of the Transaction and Source of Funds" is incorporated herein by
reference.
(b) EMPLOYEES AND CORPORATE ASSETS.
The information set forth in the sections of the Proxy
Statement entitled "OTHER MATTERS - Proxy Solicitation" and "SPECIAL FACTORS -
Cost of the Transaction and Source of Funds" is incorporated herein by
reference.
Item 15. ADDITIONAL INFORMATION.
(b) OTHER MATERIAL INFORMATION.
All of the information set forth in the Proxy Statement and
each Exhibit attached thereto is incorporated herein by reference.
Item 16. EXHIBITS.
(a) Preliminary Proxy Statement and Form of Proxy for the
Special Meeting of Shareholders of Marlton
Technologies, Inc*
(b) (1) Loan Facility with Bank of America, N.A.**
(2) Commitment Letter Signed by Scott Tarte and
Jeffrey Harrow attached as Exhibit A to this
statement.
(c) (1) Fairness Opinion of Mufson Howe Hunter &
Partners LLC*
(2) Fairness Opinion Presentation by Mufson Howe
Hunter & Partners LLC to the Marlton Special
Committee attached as Exhibit B to this
statement.
(d) Stockholders' Agreement***
(f) Not Applicable - Appraisal Rights Unavailable
(g) None
* Incorporated herein by reference to Marlton's preliminary
Proxy Statement on Schedule 14A filed with the Securities and Exchange
Commission on September 28, 2005.
** Incorporated herein by reference to Exhibit 10.40 of
Marlton's Annual Report on Form 10-K for the year ended December 31, 2004, filed
with the Securities and Exchange Commission on March 30, 2005.
*** Incorporated herein by reference to Exhibit 10.5 of
Marlton's definitive Proxy Statement on Schedule 14A filed with the Securities
and Exchange Commission on September 27, 2001.
- 10 -
SIGNATURE
After due inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information set forth in this Amendment is
true, complete and correct.
Dated: September 29, 2005
MARLTON TECHNOLOGIES, INC.
By: /s/ Jeffrey K. Harrow
---------------------------
Jeffrey K. Harrow
Chairman
- 11 -
EXHIBIT A
Commitment Letter Signed by Scott Tarte and Jeffrey Harrow
- 12 -
MARLTON
TECHNOLOGIES, INC.
[LOGO]
September 22, 2005
Board of Directors
Marlton Technologies, Inc.
2828 Charter Road
Philadelphia, PA 19154
Gentlemen:
The Board of Directors of Marlton has been considering a reverse stock
split of Marlton's Common Stock in order to relieve Marlton of the substantial
and increasing expense of remaining a Securities and Exchange Commission
reporting company.
Marlton estimates that an aggregate of $1,600,000 would be paid to its
shareholders to complete the reverse stock split if approved. Funding for the
transaction is anticipated to be provided under Marlton's existing revolving
credit facility, subject to the approval of the lender and availability under
the borrowing formula. In the event that the credit facility is insufficient to
fund these payments, the undersigned have agreed to loan sufficient funds to
Marlton to complete the reverse split, at the same interest rate and with the
same security (although subordinated to Marlton's credit facility) as the credit
facility and repayable as soon as Marlton has availability under its revolving
credit facility borrowing formula.
Sincerely,
/s/ Jeffrey Harrow
-----------------------------
Jeffrey Harrow
/s/ Scott Tarte
-----------------------------
Scott Tarte
- 13 -
EXHIBIT B
Fairness Opinion Presentation by Mufson Howe Hunter & Partners LLC to the
Marlton Special Committee
- 14 -
Special Committee Presentation
Fairness Opinion
September 19, 2005
Michael J. Mufson
Managing Director
215.399.5410
mmufson@mhhco.com
Michael J. Howe
Managing Director
215.399.5413
mhowe@mhhco.com
James T. Hunter
Managing Director
215.399.5404
jhunter@mhhco.com
Anthony Lopez-Ona
Director
215.399.5405
alopezona@mhhco.com
David C. Parke
Director
215.399.5409
dparke@mhhco.com
1600 Market Street, 16th Floor Philadelphia, PA 19103 www.mhhco.com
Table of Contents
I.
Company Overview
II.
Proposal Review
III.
MHH Analyses and Valuation
IV.
Conclusion
1
I. Company Overview
Marlton Technologies Overview
Marlton Technologies, Inc. (AMEX: MTY)
2828 Charter Road, Philadelphia, PA 19154
Phone: 215.676.6900; Fax: 215.664.6900
www.sparksonline.com
Business Description:
Marlton Technologies, Inc. engages in the design, production, and sale of exhibits and environments for trade
shows, museums, theme parks, themed interiors, arenas, corporate lobbies, and retail
stores primarily in the United
States. The company manages custom trade show projects from concept through final construction, employing
graphics and exhibit designers. It provides trade show exhibit services, including coordination, refurbishing,
shipping,
storage, and marketing literature distribution. Marlton Technologies also provides a range of
computerized designs and graphics; produces themed exhibits for educational and entertainment venues, such as
museums and theme parks; and supplies custom
store fixtures, showcases, and point of purchase displays for
retailers. In addition, the company maintains an inventory of exhibits that it rents to customers; represents
domestic clients who desire to exhibit at international trade shows; and designs,
markets, and produces point of
purchase displays. It offers its products and services to clients in industry, government, entertainment, and
commercial establishments.
Industry: Trade Show Booth Designers and Builders/Graphic Design
Current Stock Price: $1.39 52-week High/Low: $0.58-$1.48
Shares Outstanding: 12.94mm
Average Trading Volume (90-day): 8,295
3
Trade Show Designers and Builders Industry
North American conventions and events market was valued at $16 billion in 2003, with the
market for exhibit design and production being equal to approximately $1.5 billion in 2002.
Industry traditionally has had a slow growth rate, which makes it difficult for such businesses
to grow unless they resort to mergers and acquisitions to grow and remain competitive.
The industry is highly correlated with the economic condition in the U.S., as the number of
trade shows and exhibitions decrease with an economic slowdown. The industry was
significantly affected
by the economic recession in 2001, but its revenues have improved as
the economy has picked up.
The industry’s growth rate and business forecasts are usually very difficult to predict, as
majority of the customers budget for tradeshows and exhibits on a short-term basis.
Exhibit design and production industry are highly seasonal.
There is a very limited number of public comparables in the industry, which makes it difficult
to value such businesses, using comparable public company multiples.
4
Recent Stock Performance and Key Developments
Price History
0.06
0.26
0.46
0.66
0.86
1.06
1.26
1.46
Marlton Technologies Inc. (AMEX:MTY)
Marlton Technologies Inc. (AMEX:MTY) - Key Developments
Q1'02 sales
decreased by 20% to
$16.8mm vs. Q1'01
Q2'02 sales
decreased by 3.3% to
$21.4mm vs. Q2'01
Q3'02 sales
decreased by 10.9%
to $15.2mm vs. Q3'01
Q2'03 sales decreased
by 7% to $19.9mm vs.
Q2'02
PricewaterhouseCoopers
is replaced by McGalrey
and Pullen as indepen.
public accountant
MTY signs new loan
and security agreement
with GE Capital
Results for 2003
show sales decreased
by 7.9% vs. FY2002
FY2004 sales
increased by 10% vs.
FY2003
QQ3'04 sales
increased by 33% to
$16.8mm vs. Q3'03
Q2'05 sales increased
by 27% to $26mm vs.
Q2'04
Q1'05 sales increased
by 1.5% to $18.8mm
vs. Q1'04
Volume
-
20,000
40,000
60,000
80,000
100,000
5
Common Stock Capitalization Table
Common Stock Analysis for Marlton Technologies, Inc.
as of June 31, 2005
Common
Shares
Options &
Warrants (1)
Total shares
% of Total
Pro-Forma
Adjust. For
Transaction
Total Shares
Post
Transaction
% of Total
Post
Transaction
Directors and Executive Managers
Scott J. Tarte
2,073,648
2,125,000
4,198,648
19%
-
4,198,648
20%
Jeffrey K. Harrow
1,937,484
2,125,000
4,062,484
18%
-
4,062,484
20%
Robert B. Ginsburg
1,209,507
1,630,021
2,839,528
13%
-
2,839,528
14%
Alan I. Goldberg
609,050
896,221
1,505,271
7%
-
1,505,271
7%
A.J. Agarwal
-
100,000
100,000
0.5%
-
100,000
0%
Richard Vague
-
100,000
100,000
0.5%
-
100,000
0%
Washburn Oberwager
-
100,000
100,000
0.5%
-
100,000
0%
Stephen P. Rolf
1,000
120,000
121,000
0.5%
-
121,000
0.6%
-
Total Directors & Executive Managers
5,830,689
7,196,242
13,026,931
59%
-
13,026,931
63%
Other
-
1,870,000
1,870,000
8%
-
1,870,000
9%
Identified Investors
Lawrence Schan
990,550
-
990,550
5%
-
990,550
5%
Stanley D. Ginsburg
815,467
-
815,467
4%
-
815,467
4%
Ira Ingerman
774,367
-
774,367
4%
-
774,367
4%
Lombard Associates
785,226
-
785,226
4%
-
785,226
4%
Total Identified Investors
3,365,610
-
3,365,610
15%
-
3,365,610
16%
-
Public Float
3,743,397
-
3,743,397
17%
(1,250,000)
2,493,397
12%
Total Fully Diluted Shares Outstanding
12,939,696
9,066,242
22,005,938
100%
(1,250,000)
20,755,938
100%
(1) Options & Warrants
Shares
Exercise Price
Expiration Date
Proceeds
Warrants
5,300,000
$0.500
Nov-2011
$2,650,000
In the money options
50,000
$0.320
$16,000
1,646,242
$0.500
$823,121
100,000
$0.600
$60,000
250,000
$0.825
$206,250
100,000
$0.830
$83,000
500,000
$0.980
$490,000
Total
2,646,242
$0.634
Out of the money options
1,000,000
$1.310
1,310,000.00
100,000
$1.480
148,000.00
20,000
$2.000
40,000.00
Total
1,120,000
$1.338
Total options & warrants
9,066,242
$4,328,371
Total options & warrants in the money
7,946,242
$0.545
Total fully-diluted (in the money)
20,885,938
6
Marlton Technologies Historical Income Statement
(in thousands)
2000
2001
2002
2003
2004
Net sales
92,533
$
76,972
$
71,182
$
65,587
$
71,943
$
Growth %
na
-17%
-8%
-8%
10%
Cost of sales
72,208
59,917
57,027
51,203
56,524
Growth %
na
-17%
-5%
-10%
10%
Gross profit
20,325
17,055
14,155
14,384
15,419
Gross Margin
22%
22%
20%
22%
21%
SG&A expenses
20,265
17,170
15,287
15,175
14,304
% of sales
22%
22%
21%
23%
20%
Relocation costs
-
-
-
-
-
20,265
17,170
15,287
15,175
14,304
Operating profit (loss)
60
(115)
(1,132)
(791)
1,115
Add: Amortization and Depreciation
-
-
-
-
-
EBITDA
60
(115)
(1,132)
(791)
1,115
% of sales
0%
0%
-2%
-1%
2%
Other income (expense):
Interest income
91
134
42
21
-
Interest expense
(1,433)
(1,220)
(382)
(236)
(510)
Income (loss) from investment in affiliates, net
-
-
(1,156)
(265)
72
Write-down of investment in affiliate
-
-
-
-
-
Restructuring charges
-
-
-
(1,364)
-
Other income/(expense)
(91)
(397)
-
-
-
Minority interest
-
-
-
-
-
(1,433)
(1,483)
(1,496)
(1,844)
(438)
Income before income taxes
(1,373)
(1,598)
(2,628)
(2,635)
677
Provision for (Benefit from) income taxes
(267)
(462)
4,786
(434)
-
Net income (loss) before accounting change
(1,106)
(1,136)
(7,414)
(2,201)
677
Cumulative effect of accounting change
-
-
(12,385)
-
-
Net income (loss) after accounting change
(1,106)
$
(1,136)
$
(19,799)
$
(2,201)
$
677
$
Growth %
na
3%
1643%
-89%
-131%
Historical Data for the Year Ended December 31
7
Forecasted Income Statements
(in thousands)
2005(1)
2006
2007
2008
2009
Net sales
$88,476
$93,576
$98,536
$103,758
$109,257
Growth %
na
5.8%
5.3%
5.3%
5.3%
Cost of sales
$67,522
70,376
74,106
78,034
82,170
Growth %
na
4.2%
5.3%
5.3%
5.3%
Gross profit
20,954
23,200
24,429
25,724
27,087
Gross Margin
23.7%
24.8%
24.8%
24.8%
24.8%
SG&A expenses
18,950
19,464
20,298
21,167
22,070
% of sales
21.4%
20.8%
20.6%
20.4%
20.2%
Relocation costs
(496)
-
-
-
-
18,454
19,464
20,299
21,167
22,070
Operating profit
2,500
3,736
4,131
4,557
5,017
Other income (expense):
Interest income
-
-
31
57
86
Interest expense
(738)
(552)
(375)
-
-
Income (loss) from investment in affiliates, net
140
60
-
-
-
Write-down of investment in affiliate
-
-
-
-
-
Other income/(expense)- stock options
-
(180)
-
-
-
Minority interest
-
-
-
-
-
(598)
(672)
(344)
57
57
Income before income taxes
1,902
3,064
3,787
4,614
5,074
Creation (usage) of deferred tax asset
910
(910)
-
-
-
Provision for (Benefit from) income taxes
-
303
1,515
1,846
2,030
Net income (loss)
$2,812
$1,851
$2,272
$2,768
$3,045
Growth %
-34%
23%
22%
10%
Fully-taxed income
$1,141
$1,838
$2,272
$2,768
$3,045
Weighted average shares
17,347
17,347
17,347
17,347
17,347
Earnings per share
$0.07
$0.11
$0.13
$0.16
$0.18
EBITDA Calculation
Add: Amortization and Depreciation
2,042
1,673
1,668
1,663
1,658
EBITDA
$4,542
$5,409
$5,799
$6,220
$6,675
% of sales
5.1%
5.8%
5.9%
6.0%
6.1%
(1) See Pro-forma Analysis for more detail
Year Ended December 31, 2005
8
Forecasted Balance Sheets Statements
(in thousands)
2005
2006
2007
2008
2009
Assets
Cash and cash equivalents
195
$
206
$
217
$
228
$
240
$
Accoutns receivable, net of allowance
11,742
12,418
13,077
13,770
14,499
Inventories
8,575
8,937
9,411
9,910
10,435
Prepaids and other current assets
916
847
872
897
922
Total Current Assets
21,427
22,409
23,576
24,805
26,097
Property and equipment
3,083
2,878
3,031
3,192
3,361
Rental assets
2,823
2,986
3,144
3,311
3,486
Goodwil
2,751
2,762
2,762
2,762
2,762
Other assets
4,721
4,105
3,553
3,001
2,495
Deferred tax asset
910
-
-
-
-
Notes receivable
122
97
-
-
-
Total Assets
35,837
$
35,237
$
36,066
$
37,070
$
38,200
$
Liabilities & Equity
Current portion of long-term debt
1,033
$
137
$
137
$
137
$
-
$
Accounts payable and accured current liab.
13,211
13,796
14,511
15,262
16,052
Total Current Liabilities
14,244
13,933
14,648
15,399
16,052
Long-term debt
9,442
8,000
6,301
4,262
1,985
Other long-term liabilities
1,648
1,225
767
289
-
Total Liabilities
25,334
23,158
21,716
19,951
18,037
-
-
-
-
-
Stock warrants
1,528
1,242
1,242
1,242
1,242
Additional paid-in capital
32,998
32,998
32,998
32,998
32,998
Accumulated deficit
(23,875)
(22,025)
(19,753)
(16,984)
(13,940)
10,651
12,215
14,487
17,256
20,300
Less: cost of 5,000 treasury shares
(148)
(137)
(137)
(137)
(137)
Total Stockholders equity
10,503
12,078
14,350
17,119
20,163
Total Liabilities & Stockholders equity
35,837
$
35,237
$
36,066
$
37,070
$
38,200
$
(1) Source: Balance Sheet Forecast 2005 & 2006
At December 31,
9
Marlton Technologies Pro-Forma 2005
(in thousands)
Actual
January -
July (1)
Projected
August -
December
Net sales
50,949
$
33,027
$
83,976
$
4,500
$
-
$
88,476
$
Cost of sales
39,172
25,335
64,507
3,015
-
67,522
Gross profit
11,777
7,692
19,469
1,485
-
20,954
$
SG&A expenses
9,441
7,357
17,294
1,256
400
18,950
Relocation costs
496
-
-
-
(496)
(496)
Total expenses
9,937
7,357
17,294
229
-
18,454
Operating profit
1,840
335
2,175
-
-
2,500
Interest income (expense )
(438)
(300)
(738)
-
-
(738)
Income (loss) from investment in affiliates, net
90
50
140
-
-
140
Total
(348)
(250)
(598)
-
-
(598)
Income before income taxes
1,492
85
1,577
-
-
1,902
Provision for (Benefit from) income taxes
-
910
910
-
-
910
Net income (loss)
1,492
$
85
$
1,577
$
2,812
$
Add: Amortization and Depreciation
1,060
829
1,889
153
-
2,042
EBITDA
2,900
1,164
4,064
-
-
4,542
(1) Source: 2005 Consolidated Actual vs. Budget by Month
(2) Pro-forma adjustments for Showtime Enterprises for January, February, March 2005
(3) Pro-forma adjustments for consolidation and non-recurring costs in connection to Showtime Enterprises acquisition
Pro-forma
2005
Total
Pro-forma
adjust.
Showtime
sales and
COGS (2)
Pro-forma
adjust. non-
recurring
costs (3)
10
Marlton Technologies vs. GDP Quarterly Growth
Quarterly Growth
-30%
-20%
-10%
0%
10%
20%
30%
40%
0%
1%
2%
3%
4%
5%
6%
MTY
GDP (ex. Inflation)
Marlton’s growth is tied closely to the overall economic growth
Typically 1% change in GDP results in a 7% change in MTY’s growth
This analysis is factored into our assumptions of Beta
11
II. Proposal Review
Marlton Technologies Reverse Stock Split Proposal
Marlton Technologies, Inc. (“Marlton” or the “Company”) will undertake a reverse stock
split transaction to reduce its number of record shareholders below 300 and thereby cease
to
be subject to SEC reporting requirements
Reverse Split of 1-for-5,000 existing shares held by a shareholder, with odd lot shares
(whether from shareholders holding less than 5,000 shares or holding an uneven multiple of
5,000 shares)
being redeemed by Marlton
Based on recent shareholder of record and a non-objecting beneficial owner lists,
approximately 1,250,000 shares would be redeemed, consisting of 1,050,000 shares from
shareholders holding
less than 5,000 shares, and 200,000 shares from odd-lots held by
shareholders with more than 5,000 shares
13
Marlton Technologies Reverse Stock Split Proposal
Such a transaction would reduce Marlton’s total record and beneficial shareholders from
approximately 1,700 to approximately 125-150
A price of $1.15 to $1.30 per share is proposed by the Company
Subject to Marlton’s election to proceed and review of the detailed terms of the transaction,
Bank of America has indicated its preliminary approval to allow this transaction to be
funded
through its revolving credit facility, to the extent Marlton has availability under its
borrowing formula. Currently, Marlton has approximately $7,000,000 of such availability,
and believes it will have at least $3,000,000 of such availability
at year end. To the extent
of any deficit between such Bank of America availability and the required share redemption
amount, Jeffrey Harrow and Scott Tarte have agreed to loan Marlton an amount equal to
such deficit, at the same interest
rate charged by Bank of America and repayable at such
time as Marlton has availability under the Bank of America facility
(continued)
14
Cost of Being Public for Marlton Technologies
The primary purpose of the transaction is
to eliminate the ever increasing expenses
associated with being public
Company estimates the annual costs of
complying with the disclosure and
reporting requirements under the
Exchange Act and the new requirements
of the Sarbanes-Oxley Act of 2002 to be
equal to approximately $353,000, plus the
one-time cost of $150,000 for SOX
compliance
The Company expects to eliminate most of
these costs as a result of the reverse stock
split transaction
The transaction expenses are estimated to
be equal to $321,000, not including the
amount to be paid for fractional and odd
lot shares. This means the payback is less
than
one year.
Initial SOX 404 Compliance
150,000
$
Estimated Annual Public Company Expense
Esimated SOX 404 Compliance
50,000
AMEX Listing Fee
20,000
Incremental Audit Fees
60,000
Incremental D&O Insurance
25,000
Transfer Agent Fees
10,000
Printing & Distribution Costs
15,000
10Q Accounting Costs
13,000
Incremental Legal Expense
50,000
Incremental Board & Committee Fees
10,000
Incremental Internal Accounting/Legal Costs
100,000
353,000
$
Estimated Transaction Expenses
Legal, Accounting & Financial Advisor
300,000
$
Special Meeting, Printing & Distribution
10,000
SEC Filing Fees & Press Releases
1,000
Tranfser Agent Fees
10,000
Special Committee Fees
NA
321,000
$
Source: Management
15
III. Analyses and Valuation
Historical Premiums for Publicly-Traded Business Services Companies
Premiums Analysis
Premiums paid for business services companies
(compared to market prices) have generally
declined over the last five years, in part due to the
rise in overall valuations and decreased “survival
risk”
One-month premiums in YTD 2005 (so far) are
the lowest of the decade, at 25.0% over the
month-prior price, but one-week premiums are
slightly higher than 2004 at 22.9%
Larger transactions represent an increasing
portion of all transactions, with only 19% of
software transactions this year are under $100
million in valuation, compared to 50%+ in 2001-
2002
When applying premiums to MTY’s share prices,
we looked at both recent trading prices as well as
the company’s 3-month VWAP
Premiums for reverse-split transactions in the last
six months are similar, with a median (see detail
on next page)
1-month premiums
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
2000
2001
2002
2003
2004
2005
All Deals
Greater than $100mm
Less than $100mm
1-week premiums
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
2000
2001
2002
2003
2004
2005
All Deals
Greater than $100mm
Less than $100mm
17
Recent Comparable Transactions
Transaction Details
Announ.
Date
Company Name
Ticker
Primary Industry
Mkt Cap
($mm)
Transaction
Size
Method
Tender
Limit
Offer
Price
52-wk
high
16-Jul-05
News Communications,
Inc
NCOM
Media
$8.42
$55,000
Reverse Split
1-for-100
$1.10
$1.05
5%
80.3%
--
08-Jul-05
JB Oxford Holdings Inc.
JBOH
Capital Markets
$6.30
$450,000
Reverse Split
1-for-100
$2.96
$4.24
-30%
60.0%
24.9%
16-Jun-05
Liberate Technologies
LBRT
Internet Software and
Services
$21.85
$4,000,000
Reverse/
Forward Split
1-for-
250000
$0.20
$2.61
-92%
11.1%
-31.0%
21-Jun-05
American Education
AEDU
Software
$8.20
$457,500
Reverse/
Forward Split
1-for-2000
$0.50
$0.75
-33%
6.4%
40.1%
10-Jun-05
McRae Industries
MRI.B
Textiles, Apparel and
Luxury Goods
$35.44
$800,000
Reverse/
Forward Split
1-for-200
$14.25
$14.05
1%
22.0%
23.9%
24-May-05
FFD Financial Corp
FFDF
Thrifts and Mortgage
Finance
$17.85
$1,482,000
Reverse/
Forward Split
1-for-350
$19.00
$18.39
3%
24.1%
26.7%
19-May-05
Wellsford Real
Properties
WRP
Real Estate
$123.79
$1,000,000
Reverse/
Forward Split
1-for-100
$20.50
$19.40
6%
43.1%
22.8%
16-May-05
Community Investor
Bancorp
CIBI
Thrifts and Mortgage
Finance
$14.61
$602,280
Reverse/
Forward Split
1-for-300
$15.00
$16.00
-6%
17.3%
13.2%
10-May-05
Refocus Group Inc.
RFCG
Healthcare Equipment
and Supplies
$7.89
$97,120
Reverse/
Forward Split
1-for-2000
$0.35
$0.44
-20%
52.2%
52.2%
05-May-05
Pioneer Oil & Gas
PIOL
Oil and Gas
$10.96
$600,000
Reverse/
Forward Split
1-for-2000
$1.50
$2.00
-25%
3.4%
10.3%
19-Apr-05
Color Imaging
CIMG
Computers and
Peripherals
$11.43
$300,000
Reverse/
Forward Split
1-for-1500
1-for-2500
1-for-5000
$1.10
$0.95
16%
134.0%
41.0%
Offer
Price/
52 week
high
Offer
Price/
30 day
price
Offer
Price/
5 day
price
18
Recent Comparable Transactions
Transaction Details (continued)
Announ.
Date
Company Name
Ticker
Primary Industry
Mkt Cap
($mm)
Transaction
Size
Method
Tender
Limit
Offer
Price
52-wk
high
04-Mar-05
United Systems
Technology
USTI
Software
$3.93
$463,758
Reverse/
Forward Split
1-for-10000
$0.08
$0.09
-11%
33.3%
31.1%
19-Apr-05
Synbiotics Corp
SBIO
Healthcare Equipment
and Supplies
$2.37
$137,353
Reverse/
Forward Split
1-for-2000
$0.13
$0.22
-41%
30.0%
36.8%
11-Mar-05
Lynch Interactive Corp.
LIC
Diversified
Telecommunication
Services
$71.96
$352,000
Reverse Split
1-for-100
$32.00
$36.50
-12%
22.4%
33.9%
07-Apr-05
Kaiser group Holdings,
Inc
KGHI
Construction and
Engineering
$64.92
$251,000
Reverse Split
1-for-20
$33.00
$41.00
-20%
18.4%
3.1%
22-Mar-05
Mercury Air Group
MAX
Specialty Retail
$10.39
$770,452
Reverse/
Forward Split
1-for-501
$4.00
$9.00
-56%
19.4%
14.9%
16-Mar-05
Northeast Indiana
Bancorp
NIDB
Thrifts and Mortgage
Finance
$24.71
$1,057,101
Reverse/
Forward Split
1-for-125
$23.50
$23.20
1%
12.9%
13.5%
Mean
$26.18
$757,386
-19%
35%
22%
Median
$11.43
$463,758
-12%
22%
24%
Offer
Price/
52 week
high
Offer
Price/
30 day
price
Offer
Price/
5 day
price
19
Historical EBITDA Multiples for Publicly-Traded Business Services
Companies
Business Services Multiples Analysis
M&A valuations have trended upward in recent years, with a median of 12.4x EV/EBITDA to
date in 2005 compared to 10.6x in 2004 and 7.8x in 2003
Micro-cap companies tend to have multiples 1.5-2.0x below market medians
Business Services M&A Valuations
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
2001
2002
2003
2004
2005
All Transactions
Under $100mm Value
20
Comparable Company Analysis
We identified certain publicly-traded companies whose businesses we determined were
comparable with that of Marlton
Based on the uniqueness of the Company, we found that the number of such companies was
fairly limited
In addition, few of these companies had published estimates of operating results, which
would have been helpful when analyzing multiples based on future performance of Marlton
We focused our analysis on multiples of enterprise value to EBITDA
Revenue multiples did not apply given the different mix of Marlton’s business
EPS estimates did not apply given several companies were not profitable
We determined that Viad Corp. was the most comparable of the companies, and we looked
at Viad’s EBITDA multiples in addition to looking at median multiples for the group
21
Comparable Company Analysis
Financial & Valuation Data/ Tradeshow Design Services
Stock
% of 52-
Week
Equity
Firm
Company Name
Price
High
High
Low
Value
Value
2004
LTM
2005
2006
2004
LTM
2005
2006
2004
LTM
2005
2006
Marlton Technologies Inc. (MTY)
1.49
$
96%
1.56
$
0.58
$
30.2
$
40.8
$
34.6x
32.6x
22.6x
14.1x
0.6x
0.5x
0.5x
0.4x
13.3x
9.6x
9.0x
7.5x
Viad Corp. (VVI)
28.81
$
90%
32.18
$
20.45
$
644.0
$
545.7
$
NM
NM
21.8x
19.2x
0.7x
0.6x
NA
NA
8.8x
7.4x
NA
NA
GL events
26.01
$
98%
26.49
$
16.39
$
356.9
$
409.8
$
55.2x
55.2x
NA
NA
1.2x
1.2x
NA
NA
13.2x
13.2x
NA
NA
Ambassadors International Inc. (AMIE)
14.01
$
87%
16.11
$
12.00
$
145.8
$
47.4
$
NM
NM
41.2x
35.0x
2.5x
1.9x
1.6x
1.4x
NM
12.6x
11.9x
8.5x
CoActive Marketing Group Inc.
2.96
$
64%
4.64
$
2.06
$
18.5
$
23.0
$
93.1x
31.5x
NA
NA
0.3x
0.3x
NA
NA
11.3x
7.4x
NA
NA
Mean
87%
74.1x
43.3x
31.5x
27.1x
1.2x
1.0x
1.6x
1.4x
11.1x
10.2x
11.9x
8.5x
Median
90%
74.1x
43.3x
31.5x
27.1x
0.9x
0.9x
1.6x
1.4x
11.3x
10.0x
11.9x
8.5x
$ in millions except per share data
Source: Capital IQ
Stock Price
52- Week
P / E Ratio
Firm Value / Revenue
Firm Value / EBITDA
22
Comparable Company Analysis
Income Statement Data/ Tradeshow Design Services
Company Name
Revenue
EBITDA
EBITDA
Margin
EPS
Revenue
EBITDA
EBITDA
Margin
EPS
Revenue
EBITDA
EBITDA
Margin
EPS
Marlton Technologies Inc. (MTY)
$ 71.9
$ 3.1
4.2%
$ 0.04
$ 88.5
$ 4.5
5.1%
$ 0.07
$ 93.6
$ 5.4
5.8%
$ 0.11
Viad Corp. (VVI)
$ 785.7
$ 62.2
7.9%
$ (2.68)
NA
NA
NA
$ 1.32
NA
NA
NA
$ 1.50
GL events
$ 355.5
$ 31.0
8.7%
$ 0.47
NA
NA
NA
NA
NA
NA
NA
NA
Ambassadors International Inc. (AMIE)
$ 18.7
$ 1.4
7.5%
$ (0.20)
$ 29.2
$ 4.0
13.7%
$ 0.34
$ 33.1
$ 5.6
16.9%
$ 0.40
CoActive Marketing Group Inc.
$ 78.0
$ 2.0
2.6%
$ 0.03
NA
NA
NA
NA
NA
NA
NA
NA
Mean
6.7%
13.7%
16.9%
Median
7.7%
13.7%
16.9%
$ in millions except per share data
Source: Capital IQ
Calendar 2004 Actual
Calendar 2005 Estimates
Calendar 2006 Estimates
23
Comparable Company Analysis
Margins & Returns/ Tradeshow Design Services
Company Name
Revenue
Gross
EBITDA
EBIT
Net
Income
Empls.
Rev. /
Empl.
(thous)
NI Margin
X
Asset
Turnover X
Leverage =
Return on
Equity
Return
on
Assets
Return
on
Capital
Marlton Technologies Inc. (MTY)
$ 77.6
21.5%
4.1%
2.1%
1.0%
313
$ 248.1
1.0%
2.0x
4.1x
8.3%
2.9%
5.1%
Viad Corp. (VVI)
$ 847.3
7.5%
8.7%
5.8%
-5.8%
3,025
$ 280.1
-6.1%
NA
1.7x
-13.3%
4.3%
7.5%
GL events
$ 355.5
59.7%
8.7%
2.0%
1.9%
2,130
$ 166.9
1.9%
0.9x
3.8x
5.5%
1.2%
1.9%
Ambassadors International Inc. (AMIE)
$ 25.5
83.3%
14.7%
10.2%
-1.6%
129
$ 198.0
-1.6%
0.2x
1.3x
-0.4%
1.2%
1.5%
CoActive Marketing Group Inc.
$ 86.4
13.6%
3.6%
2.4%
0.7%
1,793
$ 48.2
0.7%
2.0x
2.7x
3.7%
3.1%
6.2%
Mean
41.0%
8.9%
5.1%
-1.2%
$ 173.3
-1.3%
1.0x
2.4x
-1.1%
2.5%
4.3%
Median
36.6%
8.7%
4.1%
-0.5%
$ 182.5
-0.5%
0.9x
2.2x
1.7%
2.2%
4.0%
$ in millions except per share data
Dupont Formula
LTM Margins
Source: Capital IQ
24
Comparable Company Analysis
Balance Sheet/ Tradeshow Design Services
Company Name
Total Cash
+ Equiv.
Total
Assets
Total Debt
Total
Equity
Net
Working
Capital (*)
NWC /
Revenue
Cash /
Revenue
Debt /
Capital
Debt / LTM
EBITDA
Days
Acc.
Rec.
Days
Acc.
Pay.
Conv.
Cycle
Capital in
Business (**)
Capital
Intensity
(***)
Marlton Technologies Inc. (MTY)
$ 0.1
$ 37.9
$ 10.7
$ 10.2
$ 8.7
11.2%
0.2%
51.2%
2.5x
72
43
71
$ 14.5
18.7%
Viad Corp. (VVI)
$ 120.3
$ 670.5
$ 18.1
$ 371.8
$ 67.0
7.9%
14.2%
4.6%
0.2x
30
20
26
$ 88.1
10.4%
GL events
$ 15.9
$ 409.0
$ 123.7
$ 128.3
$ 52.1
14.7%
4.5%
48.4%
4.0x
95
140
-12
$ 115.3
32.4%
Ambassadors International Inc. (AMIE)
$ 17.3
$ 138.0
$ -
$ 110.6
$ 76.0
297.4%
67.8%
NM
NM
221
143
78
$ 59.3
232.2%
CoActive Marketing Group Inc.
$ 0.7
$ 44.0
$ 4.6
$ 16.8
$ (8.3)
-9.6%
0.8%
20.7%
1.5x
60
30
30
$ (4.8)
-5.5%
Mean
77.6%
21.8%
24.6%
1.9x
$ 64.5
67.4%
Median
11.3%
9.3%
20.7%
1.5x
$ 73.7
21.4%
(*) Total Current Assets - Non Interest Bearing Current Liabilities (NIBCLs)
(**) Net Working Capital - Cash + Net PP&E
(***) Capital in Business over Revenues
$ in millions except per share data
Capitalization Data
Source: Capital IQ
25
Comparable M&A Transactions
($ in millions)
Date
Target
Target Business Description
Acquiror
Firm Value
Revenue
EBITDA
Firm Val. / Rev
Firm Val. /
EBITDA
5-Apr-05
Sandrew Metronome Sverige
Commercial art and graphic design company
Atlantic Film AB, S/S Fladen
AB, Triangelfilm AB
$7.9
NA
-$4
NA
NA
29-Mar-05
MediaNation Inc
Operates as an advertising company, providing
varios graphic design services
JCDecaux Pearl & Dean Ltd.
$42.7
$57
$7
0.8x
6.2x
15-Mar-05
Showtime Enterprises Inc.
Provides design, brand communications, and
marketing services
Sparks Ehibits & Environments
$7.5
$9
NA
0.8x
NA
11-Mar-05
Expo-Volga EMG, LLC
Organizes exhibitions in Samara, Russia
Expomedia Group plc
$1.5
$1.7
NA
0.9x
NA
23-Feb-05
Harrison Cowley North
Engages in planning, budgeting, management,
delivery, and post event evaluation of
conferences, seminars, and product launches.
Harrison Cowley
$7.4
$3.7
NA
2.0x
NA
11-Aug-04
Americam
Video production, editing, duplication and
graphic design firm.
ISACSOFT Inc.
$1.5
$1
NA
1.5x
NA
20-May-04
Genlyte Thomas Group LLC
Manufactures lighting fixtures and controls for
commercial, industrial, and residential markets
Genlyte Group Inc.
$1,075.0
$1,077
$129
1.0x
8.3x
18-Nov-02
Vari-Lite, Inc.
Designs and manufactures automated lighting
products for entertainment industry
Genlyte Thomas Group LLC
$11.8
$13
-$11
0.9x
NM
17-Jan-01
Sloane Group
Manufactures furniture and display systems
Manmon Group
$22.0
$55
$2
0.4x
11.0x
18-Jul-00
Willey Brothers, Inc
Provides point-of-sale business solutions
Brand Partners
$30.0
$44
$4
0.7x
7.5x
3-May-00
Cunningham Graphics
International, Inc.
Provided various graphic communications
services to different industries.
Automatic Data Processing
$188
$111
$18
1.7x
10.4x
3-Aug-99
Market Place Media, Inc.
Offers market research, integrated media
planning, complete graphics services, media
placement & event execution.
CTN Media Group Inc.
$30
$30
NA
1.0x
NA
Mean
1.1x
8.7x
Median
0.9x
8.3x
Median - Firm Value below $100mm
0.9x
7.5x
Implied Transaction Multiples
Target Financials
26
Valuation Analysis – Cost of Capital
Unlevered Cost of Capital Analysis for Marlton Technologies
$ in 000s except per share data
Peer Group Betas
Market Assumptions
Levered
Net Debt-to
Unlevered
5-yr Beta (1)
Market Cap.
Beta
(1)
Implied Risk-Free Rate (10-Year Treasury, 9/8//05)
4.2%
Viad Corp.
0.70
-16%
0.84
Risk Premium for Common Stocks (2)
7.6%
GL events
1.42
11%
1.28
Micro-Cap Company Size Premium (2)
9.8%
Ambassadors International Inc.
0.59
-68%
1.84
Le Public Systeme SA
NA
-12%
NA
Levered Cost of Equity for Comparables (3)
13.6%
CoActive Marketing Group Inc.
NA
15%
NA
Unlevered Cost of Equity for Comparables
10.5%
Penton Media Inc.
NA
2031%
NA
Stock Price Date for Comparables
16-Sep-05
Median
0.70
-1%
1.28
SIC Code
Levered Beta
Unlevered Beta
7389 - Business Services
1.24
0.83
Unleveraged
Beta
Risk-Free
Risk-Premium
Cost of Capital
0.85
4.2%
16.3%
20.5%
0.95
4.2%
17.0%
21.2%
1.05
4.2%
17.8%
22.0%
1.15
4.2%
18.5%
22.7%
1.25
4.2%
19.3%
23.5%
(1) Levered Betas provided by Capital IQ. Bu = Bl / [1 + (1 - tax rate) x (debt/equity ratio)]. Assumes an average tax rate of 40.0%.
(2) Source: Ibbotson Associates.
(3) Cost of equity = risk-free rate + (Bl x risk premium for common stocks).
Assumptions for the Company
27
Valuation Analysis – Discounted Cash Flows
Enterprise Value Method Discounted Cash Flow Analysis for Marlton Technologies
Dollars in thousands, except per share data
Historical
2006-2009
2005 (1)
2006
2007
2008
2009
CAGR
Revenue (1)
$35,127
$93,576
$98,536
$103,758
$109,257
5.3%
EBITDA
1,584
5,409
5,799
6,220
6,675
7.3%
Less: Depreciation & Amortization
(829)
(1,673)
(1,668)
(1,663)
(1,658)
EBIT
755
3,736
4,131
4,557
5,017
Less: Taxes
(302)
(1,494)
(1,652)
(1,823)
(2,007)
Tax-effected EBIT
453
2,241
2,478
2,734
3,010
Plus: Depreciation & Amortization
829
1,673
1,668
1,663
1,658
Less: Capital Expenditures
(601)
(1,015)
(1,427)
(1,438)
(1,497)
Less: Changes in Working Capital (a)
1,642
(397)
(453)
(477)
(503)
Less: Decrease in long term liabilities
(42)
(423)
(458)
(478)
(289)
Free Cash Flow to the Firm (FCFF)
$2,281
$2,080
$1,809
$2,004
$2,380
Tax Rate
40%
40%
40%
40%
40%
Projected
Fiscal Year Ended December 31,
28
Valuation Analysis – Discounted Cash Flows
(Contd.)
Enterprise Value Method Discounted Cash Flow Analysis for Marlton Technologies
Dollars in thousands, except per share data
Discounted
PV of
PV of Terminal Value as a
Cash Flows
+
Utilized
+
Tax Benefit
+
Multiple of 2009 Adjusted EBITDA
=
Enterprise Value
Discount Rate
(2005 - 2009)
Tax Losses
of Debt
6.0x
7.0x
8.0x
6.0x
7.0x
8.0x
20.5%
$7,527
$1,031
$413
$21,203
$24,737
$28,271
$30,174
$33,708
$37,241
21.2%
$7,449
$1,027
$411
$20,753
$24,211
$27,670
$29,640
$33,098
$36,557
22.0%
$7,374
$1,023
$408
$20,314
$23,700
$27,085
$29,120
$32,505
$35,891
22.7%
$7,300
$1,019
$406
$19,887
$23,202
$26,517
$28,613
$31,928
$35,242
23.5%
$7,228
$1,016
$404
$19,472
$22,718
$25,963
$28,120
$31,366
$34,611
Proceeds from
Net Debt
Warrants and
Total Equity Value
Equity Value Per Diluted Share
Discount Rate
-
7/31/2005
+
Options
=
6.0x
7.0x
8.0x
6.0x
7.0x
8.0x
20.5%
$11,632
$4,328
$22,870
$26,404
$29,938
$1.09
$1.26
$1.43
21.2%
$11,632
$4,328
$22,336
$25,795
$29,253
$1.07
$1.24
$1.40
22.0%
$11,632
$4,328
$21,816
$25,201
$28,587
$1.04
$1.21
$1.37
22.7%
$11,632
$4,328
$21,309
$24,624
$27,939
$1.02
$1.18
$1.34
23.5%
$11,632
$4,328
$20,816
$24,062
$27,307
$1.00
$1.15
$1.31
29
Marlton Technologies Volume-Price Analysis
We analyzed the stock price and trading volume of the Company’s stock throughout the last six
months. During this period the stock has traded at a high of $1.49 per share and a low of $0.71
per
share.
Volume weighted average price during the last 3-month period was equal to $1.0645 per share, and
was equal to $1.0706 per share during the last 6 months.
In Volume at a Price Analysis we observe that 51% of the volume traded in the past 3 months has
occurred at a price levels below the price $1.10 per share.
Additionally, approximately 49% of the trading volume in the past 6 months has happened at prices
below the price of $1.00
per share.
Volume at a Price
20%
17%
13%
15%
12%
23%
4%
12%
17%
9%
9%
16%
19%
22%
8%
6%
0%
5%
10%
15%
20%
25%
$0.70-0.80
$0.80-0.90
$0.90-1.00
$1.00-1.10
$1.10-1.20
$1.20-1.30
$1.30-1.40
$1.40-1.50
Last 3 months
Last 6 months
30
IV. Conclusion
Summary of Indicated Values
Premiums Paid Analysis
M&A Transactions: Based on 5-Day VWAP
Recent
Median
Indicated
Price
Premium
Low
High
Value
Low
High
1.394
$
25.1%
14.6%
34.0%
1.74
$
1.60
$
1.87
$
1.394
$
22.3%
13.0%
32.3%
1.70
$
1.58
$
1.84
$
M&A Transactions: Based on 3-Month VWAP
1.064
$
25.1%
14.6%
34.0%
1.33
$
1.22
$
1.43
$
1.064
$
22.3%
13.0%
32.3%
1.30
$
1.20
$
1.41
$
Reverse Split Transactions: Based on 5-Day VWAP
Recent
Median
Indicated
Price
Premium
Low
High
Value
Low
High
1.394
$
22.4%
18.7%
32.2%
1.71
$
1.65
$
1.84
$
1.394
$
23.0%
14.4%
32.1%
1.71
$
1.59
$
1.84
$
Reverse Split Transactions: Based on 3-Month VWAP
1.064
$
22.4%
18.7%
32.2%
1.30
$
1.26
$
1.41
$
1.064
$
23.0%
14.4%
32.1%
1.31
$
1.22
$
1.41
$
(1) 33-67% percentile (middle-third of all transactions)
Range of Indicated Values
Range of Indicated Values
Relevant Range (1)
Relevant Range (1)
32
Summary of Indicated Values
Business Services M&A Revenue Multiples
Marlton
LTM
Median
Indicated
LTM
Date
Grouping
Multiple
Low
High
Value
Low
High
4,248
$
All Business Services since 2003
8.1x
7.4x
10.4x
1.36
$
1.21
$
1.81
$
4,542
$
All Business Services since 2003
8.1x
7.4x
10.4x
1.47
$
1.32
$
1.95
$
4,248
$
Under $100mm value since 2003
7.4x
6.0x
10.9x
1.22
$
0.94
$
1.90
$
4,542
$
Under $100mm value since 2003
7.4x
6.0x
10.9x
1.32
$
1.03
$
2.04
$
4,248
$
Under $50mm value since 2003
6.3x
5.5x
8.1x
1.00
$
0.84
$
1.36
$
4,542
$
Under $50mm value since 2003
6.3x
5.5x
8.1x
1.09
$
0.92
$
1.47
$
(1) 33-67% percentile (middle-third of all transactions)
Range of Indicated Values
Relevant Range (1)
33
Summary of Indicated Values
Comparable Company Analysis
Enterprise Value to EBITDA
Marlton
Median
Indicated
LTM
Timeframe
Multiple
Low
High
Value
Low
High
All companies
4,248
$
LTM - Ending 9/30/2005
10.0x
7.4x
12.6x
1.73
$
1.22
$
2.23
$
4,542
$
LTM - Ending 12/31/2005
10.0x
7.4x
12.6x
1.86
$
1.32
$
2.40
$
ViadCorp.
4,248
$
LTM - Ending 9/30/2005
7.4x
#N/A
#N/A
1.23
$
#N/A
#N/A
4,542
$
LTM - Ending 12/31/2005
7.4x
#N/A
#N/A
1.33
$
#N/A
#N/A
Relevant Range
Range of Indicated Values
34
Summary of Indicated Values
Comparable Mergers and Acquisitions
Enterprise Value to EBITDA
Marlton
Median
Indicated
LTM
Grouping
Multiple
Low
High
Value
Low
High
All transactions
4,248
$
LTM - Ending 9/30/2005
8.3x
7.5x
10.4x
1.40
$
1.23
$
1.80
$
4,542
$
LTM - Ending 12/31/2005
8.3x
7.5x
10.4x
1.51
$
1.34
$
1.94
$
Under $100 million
4,248
$
LTM - Ending 9/30/2005
7.5x
6.2x
11.0x
1.23
$
0.98
$
1.92
$
4,542
$
LTM - Ending 12/31/2005
7.5x
6.2x
11.0x
1.34
$
1.06
$
2.07
$
Range of Indicated Values
Relevant Range
35
Summary of Indicated Values
Discounted Cash Flow Analysis
Discount
Rate
6.0x
7.0x
8.0x
6.0x
7.0x
8.0x
20.5%
30,174
$
33,708
$
37,241
$
1.09
$
1.26
$
1.43
$
21.2%
29,640
$
33,098
$
36,557
$
1.07
$
1.24
$
1.40
$
22.0%
29,120
$
32,505
$
35,891
$
1.04
$
1.21
$
1.37
$
22.7%
28,613
$
31,928
$
35,242
$
1.02
$
1.18
$
1.34
$
23.5%
28,120
$
31,366
$
34,611
$
1.00
$
1.15
$
1.31
$
Enterprise Value
Per Share Value
Terminal Multiple
Terminal Multiple
36
Summary of Indicated Valuations
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
Premiums
Paid
Business
Services M&A
Comparable
Company
Comparable
M&A
DCF
Consensus
Valuation Analysis - Overview
Based on our review of the various valuation indicators, we estimate a “fair range” of values for Marlton to be $1.23
to $1.56 per share
The proposed range of $1.15 to $1.30 partially overlaps the bottom end of this range
Offer range
37