-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ULpvky//s66sjwPSFf7hYjeMPTNmt3APKcywAQdja2TefSGOW+ITIxUJ2y0glkwu ihwPK53D7ufKuWmFE3dYLA== 0000907098-95-000029.txt : 19951108 0000907098-95-000029.hdr.sgml : 19951108 ACCESSION NUMBER: 0000907098-95-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951107 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MLX CORP /MI CENTRAL INDEX KEY: 0000064247 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-HARDWARE & PLUMBING & HEATING EQUIPMENT & SUPPLIES [5070] IRS NUMBER: 380811650 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13198 FILM NUMBER: 95587706 BUSINESS ADDRESS: STREET 1: 1000 CENTER PLACE CITY: NORCROSS STATE: GA ZIP: 30093 BUSINESS PHONE: 4047980677 MAIL ADDRESS: STREET 1: 1000 CENTER PLACE CITY: NORCROSS STATE: GA ZIP: 30093 FORMER COMPANY: FORMER CONFORMED NAME: MCLOUTH STEEL CORP DATE OF NAME CHANGE: 19850212 10-Q 1 CONFORMED SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Quarter ended September 30, 1995 Commission File Number I-4795 MLX CORP. (Exact name of registrant as specified in its charter) Georgia 38-0811650 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1000 Center Place, Norcross, Georgia 30093 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (770) 798-0677 Indicate by check mark whether the Registrant (1) has filed all reports to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes XX No__ The number of shares outstanding of the Registrant's Common Stock, par value $.01, as of the close of business on September 30, 1995 was 2,607,384. PART I - FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) MLX Corp. and Subsidiaries September 30 December 31 1995 1994 ASSETS Current Assets Cash and cash equivalents...... $ 162 $ 640 Short-term investments......... 32,769 - Prepaid expenses............... 156 - Total Current Assets. 33,087 640 Equipment, net.......................... 6 1 Escrow Funds............................ 5,424 - Net Assets Held for Disposal............ - 13,232 Other Assets............................ - 1 TOTAL ASSETS............................ $38,517 $13,874 CONSOLIDATED BALANCE SHEETS (UNAUDITED) MLX Corp. and Subsidiaries September 30 December 31 1995 1994 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable....................................................................... $ 166 $ 14 Accrued compensation and benefits...................................................... 38 201 Other accrued liabilities and expenses................................................. 127 207 Accrued taxes.......................................................................... 590 47 Dividends payable on Series A Preferred Stock.......................................... - 212 Total Current Liabilities ......................................................... 921 681 Long-Term Debt............................................................................ - 2,464 Other Long-Term Liabilities............................................................... 1,947 - Shareholders' Equity Preferred stock, Series A, $30 par value - authorized 500,000 shares, none outstanding in 1995 and 264,000 shares outstanding in 1994............... - 7,265 Common stock, $.01 par value - authorized 38,500,000 shares, 2,607,000 shares outstanding in 1995 and 2,540,000 shares outstanding in 1994.............................................................. 26 25 Capital in excess of par value........................................................ 72,758 61,874 Retained earnings deficit since December 31, 1984..................................... (37,135) (57,147) 35,649 12,017 Less other equity adjustments ........................................................ - (1,288) Total Shareholders' Equity....................................................... 35,649 10,729 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................................................ $38,517 $13,874
Dollars in thousands See notes to consolidated financial statements CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) MLX Corp. and Subsidiaries For the Quarter Ended September 30 1995 1994 Net Sales .................................................................................... $ - $ - Costs and Expenses: Costs of products sold ........................................................... - - General and administrative expenses .............................................. 277 127 Operating Loss................................................................................ (277) (127) Other expense .................................................................... - (25) Interest income .................................................................. 543 3 Earnings (Loss) Before Income Taxes and Discontinued Operations............................... 266 (149) Provision for Income Taxes: Federal income taxes due and payable ............................................. (9) - Federal income tax benefit (Charge in lieu of federal income taxes)............... (90) 51 Earnings (Loss) Before Discontinued Operations and Extraordinary Item......................... 167 (98) Earnings from Discontinued Operations (net of tax of $508).................................... - 591 Net Earnings ................................................................................. 167 493 Dividends and accretion on preferred stock........................................ - (250) Earnings Applicable to Common Stock........................................................... $ 167 $ 243 Earnings per Share: Earnings (Loss) from continuing operations (net of dividends and accretion on preferred stock).................................................. $ 0.06 $(0.13) Earnings from discontinued operations............................................... - 0.22 Earnings applicable to common stock................................................. $ 0.06 $ 0.09 Average Outstanding Common Shares and Dilutive Options ....................................... 2,717 2,632
Dollars in thousands (except per share data) See notes to consolidated financial statements CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) MLX Corp. and Subsidiaries For the Nine Months Ended September 30 1995 1994 Net Sales .................................................................................... $ - $ - Costs and Expenses: Costs of products sold............................................................ - - General and administrative expenses............................................... 740 649 Operating Loss................................................................................ (740) (649) Other expense..................................................................... (115) (119) Interest income................................................................... 561 10 Earnings (Loss) Before Income Taxes, Discontinued Operations and Extraordinary Item........... (294) (758) Provision for Income Taxes: Federal income taxes due and payable.............................................. (9) - Federal income tax benefit (Charge in lieu of federal income taxes)............... 100 258 Earnings (Loss) Before Discontinued Operations and Extraordinary Item......................... (203) (500) Discontinued Operations: Earnings from operations (net of tax of $1,928 in 1995 and $1,889 in 1994)........ 2,507 2,832 Gain on disposal of business (net of tax of $13,311).............................. 18,086 - Earnings from Discontinued Operations......................................................... 20,593 2,832 Extraordinary Gain on Early Retirement of Debt (net of tax of $140)........................... 272 - Net Earnings ................................................................................. 20,662 2,332 Dividends and accretion on preferred stock........................................ (652) (745) Earnings Applicable to Common Stock........................................................... $20,010 $1,587 Earnings per Share: Earnings (Loss) from continuing operations (net of dividends and accretion on preferred stock)................................................. $ (0.32) $(0.48) Discontinued operations: Earnings from operations...................................................... 0.94 1.08 Gain on disposal of business.................................................. 6.80 - Extraordinary gain on early retirement of debt.................................... 0.10 - Earnings applicable to common stock............................................... $ 7.52 $ 0.60 Average Outstanding Common Shares and Dilutive Options ....................................... 2,659 2,624
Dollars in thousands (except per share data) See notes to consolidated financial statements CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED) MLX Corp. and Subsidiaries For the Nine Months Ended September 30 1995 1994 Cash Flows From Operating Activities: Earnings (loss) from continuing operations (net of extraordinary gain on early retirement of debt) ..........................................................$ 69 $ (500) Adjustments to reconcile earnings (loss) to net cash provided by operating activities: Extraordinary gain on early retirement of debt.................................... (412) - Charge in lieu of federal income taxes (Federal income tax benefit)............... 40 (258) Depreciation...................................................................... 1 10 Change in operating assets and liabilities of continuing operations: Accounts payable and accrued expenses............................................. (1,629) (163) Other............................................................................. (351) 4 Net cash used in operating activities from continuing operations........................ (2,282) (870) Net cash provided by operating activities from discontinued operations.................. 3,102 4,353 Net cash provided by operating activities .............................................. 820 3,483 Cash Flows From Investing Activities: Proceeds from sale of business.......................................................... 49,177 - Redemption of Series A Preferred Stock.................................................. (7,920) - Increase in escrow fund for warranties and taxes........................................ (5,424) - Investing cash flows from discontinued operations....................................... (1,437) (1,639) Net cash provided by (used in) investing activities ............................................ 34,396 (1,639) Cash Flows From Financing Activities: Payments of dividends on Series A Preferred Stock....................................... (506) (1,000) Repayment of debt....................................................................... (2,076) - Receipts from stock option purchases.................................................... 177 - Financing cash flows from discontinued operations....................................... (967) (875) Net cash used in financing activities .......................................................... (3,372) (1,875) Net increase (decrease) in cash and cash equivalents ........................................... 31,844 (31) Cash and cash equivalents at January 1 ......................................................... 1,087 985 Cash and Cash Equivalents at September 30.......................................................$32,931 $ 954 Supplemental Cash Flow Disclosure: Taxes paid on income ....................................................................$ 1,216 $ 353 Interest paid on debt obligations .......................................................$ 817 $1,022
Dollars in thousands See notes to consolidated financial statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MLX Corp. and Subsidiaries The Consolidated Financial Statements have been prepared by the Registrant without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to those rules and regulations. These financial statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994. In the opinion of the Registrant, the accompanying Consolidated Financial Statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of September 30, 1995 and December 31, 1994, and the results of operations for the quarters and nine months ended September 30, 1995 and 1994 and cash flows for the nine months ended September 30, 1995 and 1994. Note A - Income Taxes At January 1, 1995, the Registrant had available net operating loss carry forwards of approximately $337 million which are available to offset future taxable income for federal income tax purposes. Accordingly, the Company has federal tax liability only for Alternative Minimum Tax amounts and the charge in lieu of federal income taxes included in the statements of operations for the quarters and nine months ended September 30, 1995 and 1994 is not accruable or payable. The following table illustrates the effect of this pro forma charge on the Company's earnings applicable to common stock and earnings per share for the respective periods (in thousands, except per share data). Quarter Ended Nine Months Ended September 30 September 30 1995 1994 1995 1994 Earnings applicable to common shareholders $ 167 $243 $20,010 $1,587 Charge in lieu of federal income taxes which is not accruable or payable 90 229 11,243 941 Total $ 257 $ 472 $31,253 $2,528 Total Earnings per share $0.09 $0.18 $ 11.75 $ 0.96 Note B - Sale of S.K. Wellman Subsidiary On June 30, 1995 the Company completed the sale of its S.K. Wellman subsidiary for a purchase price of $60 million, which included certain amounts related to the repayment or assumption of debt and capital leases by the purchaser. The cash proceeds received by the Company pursuant to the transaction, less purchase price adjustments and estimated expenses, amounted to $48.9 million. In connection with the sale of the S.K. Wellman subsidiary, the Company repaid its principal and interest obligations under the Subordinated Variable Rate Notes and Zero Coupon Bonds and redeemed its Series A Preferred Stock along with unpaid dividends. The net proceeds to the Company from the transaction after such repayments were $38.5 million. A portion of these proceeds was used by the Company to fund an escrow account of $4 million to partially collateralize its indemnification obligations in the purchase and sale agreement. This escrow fund is expected to exist for a period of 15 months. The Company's maximum liability under the indemnification provisions in the agreement is $5 million. An additional escrow fund amounting to $1,250,000 was established at June 30, 1995 (and adjusted to $1,347,000 in August 1995) relating to certain estimated income tax obligations arising from the sale. Other Long-Term Liabilities include taxes related to this escrow fund which are estimated to be due after one year. The transaction resulted in a gain of $31.4 million. Income taxes were provided for this gain as follows (in 000's) Federal and State Income Taxes Due and Payable $ 3,291 Pro-Forma Charge in Lieu of Federal Income Taxes 10,020 $13,311 The consolidated financial statements for the quarter and nine months ended September 30, 1994 and the balance sheet at December 31, 1994 have been restated to report the results of operations, balance sheet and statement of cash flow for S.K. Wellman as a discontinued operation in accordance with APB Opinion 30. The operating results of the discontinued S.K. Wellman operations for the quarter and nine months ended September 30, 1995 and 1994 were as follows (in 000's) Quarter Ended Nine Months Ended Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1995 Sept. 30, 1994 Net Sales $ - $14,940 $34,916 $45,340 Income from operations before income taxes $ - $ 1,099 $ 4,435 $ 4,721 Income taxes - 508 1,928 1,889 Income from discontinued operation $ - $ 591 $ 2,507 $ 2,832
Note C - Gain on Early Retirement of Debt In connection with the sale of the S.K. Wellman subsidiary (see Note B), the Company retired Zero Coupon Bonds and Variable Rate Subordinated Notes with a carrying value of $2.5 million for cash payments totaling $2.1 million. The resulting net gain on early retirement of debt (net of a pro-forma charge in lieu of federal income taxes of $140,000) has been reported as an extraordinary item. Also on June 30, 1995 the Company redeemed all its outstanding shares of Series A Preferred Stock for cash payments totaling $7.9 million, the contractual redemption value. The difference between this redemption amount and the carrying value of $7.4 million was charged to Capital in Excess of Par Value. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Basis of Discussion: The accompanying financial statements report the financial condition and results of operations of the S.K. Wellman subsidiary as a discontinued operation. Accordingly the results of operations of Wellman for the periods presented are excluded from earnings/(loss) from operations. The gain on the disposal of the Wellman subsidiary is reported as a gain from the disposal of a discontinued business. The discussion below addresses the operations and financial condition of the Registrant only. After the disposal of Wellman, the Registrant has no recurring revenues or operating subsidiaries. In the short-term, the Company intends to invest the proceeds of the Wellman transaction in investment grade short-term marketable debt securities. Courses of action being considered for the future by the Company include (a) utilizing a portion of the proceeds to support the issuance of a series of structured preferred securities and (b) pursuing the acquisition of new businesses. No agreements have been entered into with respect to either of these courses of action. Operations: The general and administrative expenses of the Registrant are incurred for compensation, occupancy, shareholder costs (such as printing, distribution and stock transfer fees) and legal and professional matters. The sale of the Wellman subsidiary is not expected to materially alter the level of these expenses incurred by the Registrant. In connection with the disposal of Wellman, the Company's Zero Coupon Bonds and Variable Rate Subordinated Notes with a carrying value of $2.5 million were repaid with cash payments amounting to $2.1 million as of June 30, 1995. The net gain resulting from this early retirement of debt is reported in the nine months ended September 30, 1995 as an extraordinary item. No such repayment occurred in 1994. Dividends and accretion on Series A Preferred Stock (redeemed on June 30, 1995) for the nine months ended September 30, 1995 and nine months ended September 30, 1994 were effected by the increasing rate formula of the preferred stock and the rise in prime rate on which such formula was based as well as the length of the periods outstanding. Liquidity and Capital Resources: At September 30, 1995 the Registrant had working capital of $32.2 million, consisting principally of cash and short-term investments of $32.9 million and estimated short-term obligations for income taxes, transaction expenses and compensation of $0.9 million. The Company's short-term investments at September 30, 1995 consisted principally of overnight repurchase arrangements collateralized by U.S. Treasury and federal agency obligations. In connection with the sale of Wellman, the Company funded an escrow fund with a cash payment of $4 million to partially collateralize the indemnification obligations of the Registrant in the purchase and sale agreement. The Company's maximum liability under such indemnity provisions is $5 million. An additional escrow fund amounting to $1,250,000 was established at June 30, 1995 (adjusted to $1,347,000 in August 1995) relating to certain estimated income tax obligations arising from the sale. The Registrant believes that its current financial resources are adequate to meet its projected operating needs in 1995. PART II - OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 27* - Financial Data Schedule (b) Reports on Form 8-K: None * Filed with this report. SIGNATURES Pursuant to the requirements of Securities Exchange Act of 1934, the Registrant has duly caused the Report to be signed on its behalf by the undersigned hereunto duly authorized. Date: November 3, 1995 MLX Corp. (Registrant) By: /s/ BRIAN R. ESHER By: /s/ THOMAS C. WAGGONER Brian R. Esher Thomas C. Waggoner Chairman and Chief Executive Officer President & Chief Financial (Duly Authorized Officer) Officer (Principal Financial Officer) EX-27 2
5 ART 5 FDS FOR 3RD QUARTER 10-Q 1,000 9-MOS DEC-31-1995 SEP-30-1995 32,931 0 0 0 0 33,087 6 0 38,517 921 0 25 0 0 35,624 38,517 0 0 0 740 115 0 0 (294) 91 (203) 20,593 272 0 20,662 7.52 7.52
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