<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended July 1, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 014699
-------------
MARIETTA CORPORATION
(Exact name of registrant as specified in its charter)
New York 16-1074992
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
37 Huntington Street, Cortland, New York 13045
---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(607) 753-6746
------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
------------------------------------------------
(Former name, former address, and former fiscal year
if changed since last report)
Indicate by check mark whether the registrant (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
------- --------
As of August 1, 1995 there were outstanding 3,596,049 shares of the
registrant's Common Stock, par value $.01 per share.
<PAGE>
MARIETTA CORPORATION
--------------------
FORM 10-Q
INDEX
-----
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Statements of Operations
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MARIETTA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $18,498,429 $18,722,682 $49,181,859 $50,146,989
Cost of sales 14,841,710 13,124,352 38,029,412 36,112,435
----------- ----------- ----------- -----------
Gross profit 3,656,719 5,598,330 11,152,447 14,034,554
Selling, general, and
administrative expenses 4,511,051 3,907,151 11,814,680 11,162,691
----------- ----------- ----------- -----------
Operating income (loss) (854,332) 1,691,179 (662,233) 2,871,863
Other income (expense), net 115,554 (443,013) 258,140 (261,683)
----------- ----------- ----------- -----------
Income (loss) before income
taxes and cumulative effect
of a change in accounting
principle (738,778) 1,248,166 (404,093) 2,610,180
Income tax provision (benefit) (281,654) 462,592 (119,049) 1,021,315
----------- ----------- ----------- -----------
Income (loss) before
cumulative effect of a
change in accounting
principle (457,124) 785,574 (285,044) 1,588,865
Cumulative effect of a
change in accounting for
income taxes - - - 336,596
----------- ----------- ----------- -----------
Net income (loss) ($457,124) $785,574 ($285,044) $1,925,461
=========== =========== =========== ===========
Earnings (loss) per share:
Earnings (loss) before
cumulative effect of a
change in accounting
principle ($0.13) $0.22 ($0.08) $0.45
Cumulative effect of a
change in accounting for
income taxes - - - 0.09
----------- ----------- ----------- -----------
Earnings (loss) per share ($0.13) $0.22 ($0.08) $0.54
=========== =========== =========== ===========
Weighted average shares
and common shares
equivalents 3,613,813 3,587,859 3,607,710 3,581,815
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
MARIETTA CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS July 1, October 1,
1995 1994
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,407,978 $ 7,476,101
Accounts receivable, net 10,294,022 10,074,495
Inventories 14,828,223 11,926,566
Refundable income taxes 842,829 341,735
Other current assets 252,018 770,475
Deferred tax asset 481,805 467,083
----------- -----------
Total current assets 30,106,875 31,056,455
Property, plant and equipment, net 23,486,499 22,187,484
Restricted cash 2,600,000 2,300,000
Marketable securities 2,426,508 2,219,823
Excess of cost over net assets
acquired, net 3,230,131 3,327,901
Other assets 394,810 744,773
----------- -----------
Total assets $62,244,823 $61,836,436
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,367,843 $ 2,754,613
Accrued payroll 1,362,408 1,512,467
Accrued rebates 464,200 445,226
Accrued expenses 1,258,998 818,880
Current maturities of long-term debt 381,621 361,894
Income taxes payable 17,489 21,602
----------- -----------
Total current liabilities 6,852,559 5,914,682
Long-term debt, less current maturities 6,517,205 6,851,034
Convertible subordinated note 276,960 273,720
Deferred tax liability 2,538,250 2,522,406
----------- -----------
Total liabilities 16,184,974 15,561,842
----------- -----------
Shareholders' equity:
Preferred stock, $0.01 par value,
authorized 1,000,000 shares
Common stock, $0.01 par value,
authorized 10,000,000 shares,
issued 4,010,908 and 4,005,717
shares 40,109 40,057
Additional paid-in capital 36,762,049 36,768,483
Common stock notes receivable (607,500) (607,500)
Treasury stock, at cost (3,877,333) (3,923,993)
Retained earnings 14,524,448 14,750,930
Equity adjustment from foreign
currency translation (904,834) (753,383)
Marketable securities net unrealized
holding gain 122,910 -
----------- -----------
Total shareholders' equity 46,059,849 46,274,594
----------- -----------
Total liabilities and shareholder' equity $62,244,823 $61,836,436
=========== ===========
</TABLE>
See accompanying note to condensed, consolidated financial statements.
<PAGE>
MARIETTA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
July 1, July 2,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($ 285,044) $1,925,461
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Cumulative effect of a change in accounting
for income taxes 0 (336,596)
Depreciation and amortization 2,479,341 2,585,102
Provision for loss on accounts receivable 171,579 129,252
Provision for inventory obsolescence 482,579 498,503
Deferred compensation 0 97,140
Deferred income taxes 1,121 (564,091)
Loss on sale of equipment 18,783 8,120
Restricted cash (300,000) (300,000)
Other assets 186,722 (358,022)
Stock bonuses 61,040 74,610
Changes in working capital:
Accounts receivable (426,649) (1,295,596)
Inventories (3,358,441) (1,436,703)
Other current assets 516,550 585,972
Accounts payable and accrued expenses 927,080 (905,272)
Income taxes (504,714) 209,588
---------- ----------
Net cash provided by (used in) operating
activities (30,053) 917,468
---------- ----------
Cash flows from investing activities:
Capital expenditures (3,564,457) (2,008,948)
Sales (purchases) of marketable securities (83,775) 216,175
---------- ----------
Net cash used in investing activities (3,648,232) (1,792,773)
---------- ----------
Cash flows from financing activities:
Payments on long-term debt (314,103) (367,300)
Employee stock purchase plan 35,039 34,938
Purchase of treasury stock (55,800) 0
Payment of common stock note receivable 0 279,450
---------- ----------
Net cash used in financing activities (334,864) (52,912)
---------- ----------
Effect of foreign currency translation (54,974) 15,034
---------- ----------
Net decrease in cash and cash equivalents (4,068,123) (913,183)
Cash and cash equivalents, beginning of period 7,476,101 8,844,276
---------- ----------
Cash and cash equivalents, end of period $3,407,978 $7,931,093
========== ==========
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest $ 358,267 $ 334,442
Income taxes 466,168 1,047,107
</TABLE>
See accompanying notes to condensed, consolidated financial statements.
<PAGE>
MARIETTA CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The statements for the periods ended July 1, 1995 and July 2, 1994 are
unaudited. In the opinion of the Company the statements include all adjustments
necessary for a fair presentation of the results for the periods. The results
of operations for the period ended July 1, 1995 are not necessarily indicative
of the results of operations to be expected for the year ending September 30,
1995.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these financial statements be read in
conjunction with the audited financial statements and notes thereto for the year
ended October 1, 1994 included in the Company's Annual Report.
Note 2. Inventories
Inventories are stated at lower of cost or market. Cost is determined on the
first-in, first-out method. Inventories consisted of the following:
<TABLE>
<CAPTION>
July 1, October 1,
1995 1994
----------- -----------
<S> <C> <C>
Raw materials and $ 5,759,198 $ 4,082,839
supplies
Finished goods 9,064,025 7,843,727
----------- -----------
$14,823,223 $11,926,566
=========== ===========
</TABLE>
Note 3. Legal Proceedings
As previously reported, as a result of an embezzlement of funds by a former
financial officer and of other financial irregularities in Marietta's financial
statements discovered by the Company during 1991, the Securities and Exchange
Commission and the United States Attorney were each conducting independent
investigations. The investigation by the United States Attorney is concluded;
however, the investigation by the Securities and Exchange Commission is
continuing.
As previously reported, an action has been commenced by a former owner of
Marietta American, Inc. (formerly American Soap Company, Inc.), and by
California Soap, Inc. and two of its shareholders. This complaint alleges,
among other things, misrepresentations and omissions in connection with the
Company's acquisition of Marietta American, Inc., misrepresentations in and
omissions from various financial and other statements made by the Company,
breaches of contract and other violations of federal and state laws. This
action seeks an unspecified amount of damages. No assurance can be given as to
the outcome of this action, which could have a material adverse effect on the
Company.
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
---------------------
Quarter ended July 1, 1995 compared with the quarter ended July 2, 1994
-----------------------------------------------------------------------
Net sales decreased in the quarter ended July 1, 1995 by 1.2% to $18,498,000
from $18,723,000 in the prior year's third quarter. The decrease of $225,000
consisted of a decrease of approximately $1,498,000 in custom packaging sales
partially offset by an increase of approximately $1,273,000 in guest amenity
sales. Custom packaging sales continued to be affected by delays in receiving
customer-supplied materials which in turn caused delays in shipment of finished
products by Marietta.
For the third quarter of fiscal 1995 the Company's gross profit decreased to
19.8% of sales from 29.9% during the same period of fiscal 1994. Material costs
for guest amenities increased significantly in the third quarter of fiscal 1995
as compared to 1994. This increase was primarily attributable to higher than
anticipated component costs for tallow, corrugate, bottles and packaging film.
In order to offset the resulting decline in gross profit, a price increase will
become effective on August 15, 1995. The continued delays in receiving
customer-supplied materials for custom packaging caused delays in shipment of
finished products and resulted in reduced overhead absorption. In addition,
changes in the product mix negatively impacted gross profits.
Selling, general and administrative expenses, as a percentage of sales,
increased to 24.4% in the current quarter from 20.9% in the third quarter of
fiscal 1994. During the third quarter of 1995 the Company expensed $375,000 in
respect of the fee to Goldman, Sachs & Co. in connection with its retention as
the Company's financial advisor. In addition, legal charges increased $284,000
over the prior year's quarter, primarily in connection with the matters relating
to the unsolicited proposal to acquire the Company made by Dickstein Partners.
Other income (expense), net represents the netting of interest expense,
investment income and other miscellaneous income and expense. For the third
quarter of fiscal 1995 interest and other miscellaneous expense was $146,000
compared to $118,000 in the third quarter of fiscal 1994. This increase was due
to slightly higher interest rates and to an increase in miscellaneous expenses.
Investment income was $186,000 in the third quarter of fiscal 1995 as compared
to $117,000 in 1994. This increase was due to higher rates of return and to a
gain of $21,000 on the sale of marketable securities. Other miscellaneous
income, which is primarily profit on the sale of inventory components was
approximately $76,000 in 1995 compared to $30,000 in the third quarter of 1994.
The effective tax benefit for federal, state and foreign income taxes was 38.1%
in the third quarter of fiscal 1995 while the effective tax rate was 37.1% in
the third quarter of fiscal 1994.
Nine months ended July 1, 1995 compared with the nine months ended July 2, 1994
-------------------------------------------------------------------------------
Net sales for the nine months ended July 1, 1995 decreased by 1.9% to
$49,182,000 from $50,147,000 in the prior year. The decrease of $965,000
consisted of a decrease in custom packaging sales of $3,447,000 partially offset
by an increase in guest amenity sales of $2,482,000. Custom packaging sales
continue to be affected by delays in receiving customer-supplied materials which
in turn caused a delay in shipment of finished products by Marietta.
In the first nine months of fiscal 1995 the Company's gross profit decreased to
22.7% of sales from 28.0% during the same period of fiscal 1994. Higher
material costs and changes in product mix in the second and third quarters of
fiscal 1995 negatively impacted gross margins. In addition, during the second
quarter of fiscal 1995 the Company experienced a mechanical breakdown of certain
of its soap manufacturing equipment which caused an interruption in its ability
to manufacture soap. This necessitated the purchase of soap
<PAGE>
chips (the raw materials used in making soap bars) on the open market at higher
costs to the Company. Also, the lower than anticipated custom packaging sales
continued to result in a reduced capability to cover fixed overhead costs.
Selling, general and administrative expense, as a percent of sales, increased to
24.0% of sales in the first nine months of 1995 from 22.3% in the same period
during 1994. During 1995 the Company expensed $625,000 in respect of the fee to
Goldman, Sachs & Co. in connection with its retention as the Company's financial
advisor. The Company also reversed $310,000 of legal expenses which previously
had been accrued in connection with defense costs incurred by the Company's
former Chief Executive Officer. In addition, legal charges increased $505,000
over the prior year. This increase was attributable primarily to the matters
relating to the unsolicited proposal to acquire the Company made by Dickstein
Partners.
For the first nine months of 1995 interest and other expense was $465,000
compared to $333,000 in the same period last year. This increase was due to an
increase in rates over last year. Investment income was $521,000 in the first
nine months of fiscal 1995 as compared to $378,000 in 1994. This increase was
due to higher rates of return on both restricted cash and Canadian funds
combined with larger invested balances in these areas. Other miscellaneous
income of approximately $203,000 in the first nine months of fiscal 1995 was
comparable to miscellaneous income of approximately $165,000 in the same period
during 1994.
Marietta's effective tax benefit for federal, state and foreign income taxes was
29.5% in the first nine months of 1995 compared to an effective tax rate of
39.1% for 1994. Both were impacted by state and provincial francise/equity
taxes.
Liquidity and Capital Resources
-------------------------------
The Company's working capital decreased to $23,254,000 at July 1, 1995 from
$25,142,000 at October 1, 1994. Cash used by operating activities for the first
nine months of 1995 was $30,000 compared to $917,000 being provided by operating
activities for the first nine months of 1994. The decrease in cash provided by
operating activities was primarily the result of the net loss and a significant
increase in inventories partially offset by an increase in accounts payable and
accrued expenses. The increase of cash used in investing activities in 1995 as
compared to 1994 was caused primarily by an increase in capital expenditures.
The Company has a $12,000,000 Revolving Credit Facility, all of which was
available as of July 1, 1995. The revolving credit portion of the facility
expires in October 1996, and thereafter the outstanding balance is payable in
equal quarterly installments over a four year period. Borrowings under the
facility bear interest at the prime rate or, if elected by the Company, at an
interest rate 1.1% above the LIBOR rate.
Management believes that the Company is in sound financial condition as
evidenced by its total shareholders' equity of $46,060,000 versus its long-term
debt of $7,176,000. Management believes that its current assets plus funds
provided by operations and the Company's existing line of credit and debt
capacity will be adequate to meet its anticipated capital and short-term needs.
Management also believes that inflation has not had a material effect on its
business.
Shareholders' equity was affected by a reduction in the Canadian exchange rate
and an increase in the fair value of certain long-term securities. The Company
experienced a decline in the equity adjustment from foreign currency translation
of $151,000 as a result of a reduction in the Canadian exchange rate from 74.49%
at October 1, 1994 to 72.87% at July 1, 1995, offset by an increase in
shareholders' equity of $123,000 due to the increase in fair value of certain
long-term marketable securities.
In fiscal 1995 the Company anticipates making expenditures for capital
improvements aggregating approximately $6,000,000. To date, during fiscal 1995
the Company has authorized expenditures of approximately $5,790,000.
<PAGE>
The Company is unable to determine the impact upon the Company's financial
condition of an adverse determination, if any, in any action, proceeding or
investigation arising out of the events discussed in Note 3 of the Notes to
Financial Statements.
Seasonality
-----------
The Company's guest amenity business is subject to some fluctuation in results
reflecting the seasonal nature of the travel and lodging industry. As a
consequence the revenues from the Company's guest amenity business in its third
and fourth fiscal quarters tend to be slightly higher than during the rest of
the year.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No.
-----------
10.1 Agreement dated June 13, 1995 by and between
Marietta Corporation and Stephen D. Tannen with regard to
SAR Units
10.2 Amendment to Employment Agreement dated May 31, 1995
by and between Marietta Corporation and Ronald C. DeMeo
27 Financial Data Schedule
(b) None.
<PAGE>
SIGNATURES
Pursuant to 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.
MARIETTA CORPORATION
Date: August 9, 1995
By: /s/ Stephen D. Tannen
-----------------
Stephen D. Tannen
President and Chief Executive Officer
By: /s/ Philip A. Shager
----------------
Philip A. Shager
Chief Accounting Officer and Treasurer
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Filed
Exhibit Herewith
No. Description Page No.
------- ----------- ---------
<S> <C> <C>
10.1 Agreement dated June 13, 1995 by and between 13
Marietta Corporation and Stephen D. Tannen with
regard to SAR Units
10.2 Amendment to Employment Agreement dated 15
May 31, 1995 by and between Marietta Corporation
and Ronald C. DeMeo
27 Financial Data Schedule 19
</TABLE>
<PAGE>
EXHIBIT 10.1
MARIETTA CORPORATION
AGREEMENT
AGREEMENT made as of June 13, 1995, by and between Marietta Corporation, a
New York corporation having offices at 37 Huntington Street, Cortland, New York
13045 (the "Company"), and Stephen D. Tannen, residing at 52 Beverly Drive,
Bernardsville, New Jersey 07924 (the "Executive").
W I T N E S S E T H:
-------------------
WHEREAS, in order to (i) induce the Executive to accept the Company's
offer to serve as its President and Chief Executive Officer and (ii) provide the
Executive an added incentive to advance the interests of the Company, the
Company had previously agreed to grant to the Executive pursuant to Stock Option
Agreements, each dated December 6, 1994, options to acquire 90,000 shares of the
Company's common stock, par value $.01 per share (the "Common Stock"), at a
purchase price of $7.00 per share (the "Options");
WHEREAS, pursuant to Cash Bonus Agreements, each dated January 26, 1995
(the "Cash Bonus Agreements"), the Executive and the Company had further agreed
that in the event the shareholders of the Company did not approve the grant of
the Options, the Executive would receive from the Company stock appreciation
rights units ("SAR Units") providing him with substantially the economic
equivalent of the Options; and
WHEREAS, the Executive and the Stock Option Committee have now determined
to terminate the Options and that the grant of the SAR Units pursuant to the
Cash Bonus Agreements shall be and become effective immediately.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and the Executive hereby
agree as follows:
1. The Company and the Executive hereby agree that the Options are hereby
terminated and shall be of no further force or effect.
2. Notwithstanding anything to the contrary contained in the Cash Bonus
Agreements, the Company and the Executive hereby agree that the SAR Units
granted to the Executive pursuant to the Cash Bonus Agreements are hereby
effective immediately and that the Executive shall be entitled to all of the
rights in and to the SAR Units in accordance with the Cash Bonus Agreements.
<PAGE>
3. Except as otherwise modified by this Agreement, the Cash Bonus
Agreements shall continue in full force and effect in accordance with their
terms.
4. Any communication or notice required or permitted to be given pursuant
to this Agreement shall be in writing, and mailed by registered or certified
mail, sent by overnight courier or delivered by hand, if to the Company, to the
attention of the Chairman of the Board at the Company's principal place of
business; and, if to the Executive, to his then current residence as it appears
on the records of the Company.
5. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS TO BE MADE AND PERFORMED ENTIRELY THEREIN WITHOUT
REFERENCE TO CONFLICT OF LAWS PRINCIPLES.
6. (a) The headings contained in this Agreement are for convenience of
reference only and in no way define, limit or describe the scope or intent of
this Agreement or in any way affect this Agreement.
(b) This Agreement may be executed in two or more counterparts each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
7. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
IN WITNESS WHEREOF, the Company and the Executive have caused this
Agreement to be executed as of the day and year first above written.
MARIETTA CORPORATION
By:_________/s/______________
Name:
Title:
___________/s/_______________
Stephen D. Tannen
<PAGE>
EXHIBIT 10.2
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
FIRST AMENDMENT, dated as of May 31, 1995, by and between MARIETTA
CORPORATION, a New York corporation having its principal offices at 37
Huntington Street, Cortland, New York 13045 ("Marietta"), and RONALD C. DEMEO,
--------
residing at 2 Southern Slope Terrace, Morristown, New Jersey 07960 (the
"Employee").
---------
W I T N E S S E T H:
-------------------
WHEREAS, the parties desire to amend the Employment Agreement, dated as of
June 1, 1992 (the "Employment Agreement"), by and between Marietta and the
--------------------
Employee.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. All terms used herein, and not otherwise defined herein, shall have
the same meanings as such terms have in the Employment Agreement.
2. Section 1(c) of the Employment Agreement is hereby amended by deleting
the first sentence of such section and substituting the following therefor:
"(c) The term of the Employee's employment hereunder shall commence
on the date hereof and shall terminate on September 30, 1996 (the
"Expiration Date"), unless sooner terminated as hereinafter provided."
----------------
<PAGE>
3. Section 3(a) of the Employment Agreement is hereby amended by deleting
the word "and" at the end of clause (iii), by substituting a semicolon for the
period at the end of clause (iv) and adding clauses (v) and (vi) immediately
following clause (iv):
"(v) One Hundred Fifteen Thousand ($115,000) Dollars for the period
June 1, 1995 through May 31, 1996; and
(vi) One Hundred Twenty Thousand ($120,000) Dollars for the period
June 1, 1996 through September 30, 1996."
4. Section 6(b) of the Employment Agreement is hereby amended by deleting
such section in its entirety and substituting the following therefor:
"(b) Notwithstanding any other provision of this Agreement,
Employee's employment under this Agreement may be terminated at the option
of Employee prior to the Expiration Date in the event of (i) any attempt by
Marietta to terminate Employee's employment for any reason not expressly
set forth in Section 6(a), or (ii) any other material breach by Marietta of
the terms hereof which breach continues uncured for a period of 30 days
after written notice thereof from Employee to Marietta."
5. Section 8 of the Employment Agreement is hereby amended by inserting
the following preamble prior to Section 8(a):
"8. Severance Benefit. In addition to all other amounts due
-----------------
hereunder, Marietta agrees to pay to the Employee, upon the terms and
conditions set forth in this Section 8, the applicable severance benefit
set forth below. The payment of any severance benefit under any of clauses
(a), (b) or (c) of this Section 8 shall preclude payment pursuant to any
other such clause."
6. Section 8(a) of the Employment Agreement is hereby amended by deleting
such section in its entirety and substituting the following therefor:
"(a) If, immediately upon a Change in Control (as hereinafter
defined):
<PAGE>
(i) this Agreement is terminated other than pursuant to Section
6(a) hereof; or
(ii) the Employee is not offered a position as an employee which
is substantially equivalent to his position as an employee prior to
such Change in Control and which is at a location within 25 miles of
the location in Parsippany, New Jersey where he performed his duties
hereunder prior to such Change in Control, and the Employee, in his
sole and absolute discretion, elects to terminate this Agreement;
then, in either such event, Marietta agrees to pay to the Employee a
severance bonus equal to the Severance Amount (as hereinafter defined)
times the number of full or partial years that the Employee has been
employed by Marietta. For purposes of this Section 8, the term "Severance
---------
Amount" shall mean the quotient obtained by dividing two times the
------
Employee's Base Salary in effect at the time of calculation of the
Severance Amount by 12. Nothing contained in this Agreement shall be
construed to entitle the Employee to receive any Severance Amount pursuant
to this Section 8(a), nor shall Employee have any rights under this
Agreement, by reason of the Employee's failure to be nominated or elected
to serve as a member of the Board of Directors of Marietta."
7. Section 8(c) of the Employment Agreement is hereby amended by deleting
such section in its entirety and substituting the following therefor:
"(c) In the event that Employee's employment is terminated because
Marietta does not offer to renew this Agreement for a period of three years
on the same terms and conditions (or terms and conditions more favorable to
the Employee) upon its expiration on the Expiration Date (or upon the
expiration of any renewal or extension of Employee's employment pursuant to
this Agreement) Marietta agrees to pay to the Employee a severance bonus
equal to the Severance Amount times the number of full or partial years
that the Employee has been employed by Marietta."
<PAGE>
8. Section 13 of the Employment Agreement is hereby amended by deleting
the address of the Employee set forth therein and substituting therefor the
following:
"Mr. Ronald C. DeMeo
2 Southern Slope Terrace
Morristown, New Jersey 07960"
9. The parties agree that in all respects, except as expressly modified
hereby, the Employment Agreement shall remain in full force and effect.
10. This Amendment shall be governed by and construed in accordance with
the laws of the State of New York without reference to conflict of laws
principles.
11. This Amendment may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
MARIETTA CORPORATION
By:_________/s/__________________
Stephen D. Tannen, President
and Chief Executive Officer
__________/s/____________________
RONALD C. DEMEO
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENT.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1995
<PERIOD-START> APR-02-1995 OCT-02-1994
<PERIOD-END> JUL-01-1995 JUL-01-1995
<CASH> 3,407,978 3,407,978
<SECURITIES> 0 0
<RECEIVABLES> 10,294,022 10,294,022
<ALLOWANCES> 0 0
<INVENTORY> 14,828,223 14,828,223
<CURRENT-ASSETS> 30,106,875 30,106,875
<PP&E> 23,486,499 23,486,499
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 62,244,823 62,244,823
<CURRENT-LIABILITIES> 6,852,559 6,852,559
<BONDS> 6,794,165 6,794,165
<COMMON> 40,109 40,109
0 0
0 0
<OTHER-SE> 46,019,740 46,019,740
<TOTAL-LIABILITY-AND-EQUITY> 62,244,823 62,244,823
<SALES> 18,498,429 49,181,859
<TOTAL-REVENUES> 18,498,429 49,181,859
<CGS> 14,841,710 38,029,412
<TOTAL-COSTS> 14,841,710 38,029,412
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 53,976 130,097
<INTEREST-EXPENSE> 116,578 365,401
<INCOME-PRETAX> (738,778) (404,093)
<INCOME-TAX> (281,654) (119,049)
<INCOME-CONTINUING> (457,124) (285,044)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (457,124) (285,044)
<EPS-PRIMARY> (0.13) (0.08)
<EPS-DILUTED> (0.13) (0.08)
</TABLE>
