-----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, DeRcb+rHGztMoihnRIEkirocbKiizd0nQyFQIBXeSKKuaNbjP8QHmePo0h/uvwHK C3rjKRpdBXTNJKVZs3Awjg== 0000907098-96-000099.txt : 19961108 0000907098-96-000099.hdr.sgml : 19961108 ACCESSION NUMBER: 0000907098-96-000099 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961107 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MLX CORP /GA CENTRAL INDEX KEY: 0000064247 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 380811650 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13198 FILM NUMBER: 96655754 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 Commission File Number SEPTEMBER 30, 1996 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, 1996 was 2,617,584. PART I - FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) MLX Corp. September 30 December 31 1996 1995 Assets Current assets: Cash and cash equivalents. . $33,466 $32,903 Prepaid expenses . . . . . . 41 103 Escrow funds . . . . . . . . 4,267 4,113 Total current assets. . 37,774 37,119 Equipment and other assets. . . 4 5 Tax escrow funds. . . . . . . . 1,436 1,385 Total assets. . . . . . . . . . $39,214 $38,509
- 2 - CONSOLIDATED BALANCE SHEETS (UNAUDITED) MLX Corp. September 30 December 31 1996 1995 Liabilities and shareholders' equity Current liabilities: Accrued compensation and benefits. . . . . . . . . . . . . $ 73 $ 75 Other accrued liabilities and expenses . . . . . . . . . . 393 310 Accrued taxes. . . . . . . . . . . . . . . . . . . . . . . 280 289 Total current liabilities . . . . . . . . . . . . 746 674 Other long-term liabilities. . . . . . . . . . . . . . . . . . . . 1,987 1,957 Shareholders' equity: Common stock, $.01 par value - authorized 38,500,000 shares; 2,618,000 shares outstanding (2,607,000 shares in 1995). . . . . . 26 26 Capital in excess of par value . . . . . . . . . . . . . . 73,067 72,841 Retained earnings deficit. . . . . . . . . . . . . . . . . (36,612) (36,989) Total shareholders' equity. . . . . . . . . . . . 36,481 35,878 Total liabilities and shareholders' equity . . . . . . . . . . . . $ 39,214 $ 38,509
Dollars in thousands See notes to consolidated financial statements - 3 - CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) MLX Corp. For the Nine Months Ended September 30 1996 1995 Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ -- General and administrative expenses. . . . . . . . . . . . . . . . . . . . . (806) (740) Operating loss from continuing operations. . . . . . . . . . . . . . . . . . . . . . (806) (740) Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,396 561 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (115) Earnings (loss) before income taxes, discontinued operations and extraordinary item. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590 (294) Provision for income taxes: Federal income taxes due and payable . . . . . . . . . . . . . . . . . . . . (12) (9) (Charge in lieu of federal income taxes) federal income tax benefit. . . . . (201) 100 Earnings (loss) from continuing operations before extraordinary item . . . . . . . . 377 (203) Discontinued operations: Earnings from operations (net of income tax of $1,928) . . . . . . . . . . . -- 2,507 Gain on disposal of business (net of income tax of $13,311). . . . . . . . . -- 18,086 Earnings from discontinued operations. . . . . . . . . . . . . . . . . . . . . . . . -- 20,593 Extraordinary gain on early retirement of debt (net of income tax of $140) . . . . . -- 272 Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377 20,662 Dividends and accretion on preferred stock . . . . . . . . . . . . . . . . . -- (652) Earnings applicable to common stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 377 $20,010 Earnings per share: Earnings (loss) from continuing operations (net of dividends and accretion on preferred stock) . . . . . . . . . . . . $ 0.14 $ (0.32) Discontinued operations: Earnings from operations. . . . . . . . . . . . . . . . . . . . . . . . . . -- 0.94 Gain on disposal of business. . . . . . . . . . . . . . . . . . . . . . . . -- 6.80 Extraordinary gain on early retirement of debt . . . . . . . . . . . . . . . -- 0.10 Earnings applicable to common stock . . . . . . . . . . . . . . . . . . . . . $ 0.14 $ 7.52 Average outstanding common shares and dilutive options. . . . . . . . . . . . . . . . 2,751 2,659
In thousands, except per share data See notes to consolidated financial statements - 4 - CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) MLX Corp. For the Quarter Ended September 30 1996 1995 Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ -- General and administrative expenses. . . . . . . . . . . . . . . . (270) (277) Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (270) (277) Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . 472 543 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . -- -- Earnings before income taxes . . . . . . . . . . . . . . . . . . . . . . . 202 266 Provision for income taxes: Federal income taxes due and payable . . . . . . . . . . . . . . . (5) (9) Charge in lieu of federal income taxes . . . . . . . . . . . . . . (69) (90) Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 128 $ 167 Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.05 $ 0.06 Average outstanding common shares and dilutive options. . . . . . . . . . . 2,761 2,717
In thousands, except per share data See notes to consolidated financial statements - 5 - CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) MLX Corp. For the Nine Months Ended September 30 1996 1995 Cash flows from operating activities: Earnings from continuing operations (including extraordinary gain on early retirement of debt). . . . . . . . . . . . . . . . . . . . . . . . . $ 377 $ 69 Adjustments to reconcile earnings from continuing operations to net cash provided by (used in) operating activities from continuing operations: Extraordinary gain on early retirement of debt . . . . . . . . . . . . . . . . . -- (412) Charge in lieu of federal income taxes . . . . . . . . . . . . . . . . . . . . . 201 40 Change in operating assets and liabilities of continuing operations: Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 (270) Accrued expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . 103 (1,468) Net cash provided by (used in) operating activities from continuing operations. . . . 743 (2,041) Net cash provided by operating activities from discontinued operations. . . . . . . . -- 3,875 Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . . . . . . 743 1,834 Cash flows from investing activities: Proceeds from sale of S.K. Wellman . . . . . . . . . . . . . . . . . . . . . . . . . -- 49,177 Redemption of Series A Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . -- (7,920) Increase in escrow funds for warranties and taxes . . . . . . . . . . . . . . . . . . (205) (5,424) Investing cash flows from discontinued operations . . . . . . . . . . . . . . . . . . -- (1,437) Net cash (used in) provided by investing activities. . . . . . . . . . . . . . . . . . . (205) 34,396 Cash flows from financing activities: Payments of dividends on Series A Preferred Stock. . . . . . . . . . . . . . . . . . . -- (747) Repayment of debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (2,076) Stock options exercised. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 177 Financing cash flows from discontinued operations. . . . . . . . . . . . . . . . . . . -- (1,740) Net cash provided by (used in) financing activities. . . . . . . . . . . . . . . . . . . 25 (4,386) Net increase in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . 563 31,844 Cash and cash equivalents on January 1 . . . . . . . . . . . . . . . . . . . . . . . . . 32,903 1,087 Cash and cash equivalents on September 30. . . . . . . . . . . . . . . . . . . . . . . . $33,466 $ 32,931 Supplemental cash flow disclosure: Federal taxes paid on income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32 $ 1,216 Interest paid on debt obligations . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ 817
Dollars in thousands See notes to consolidated financial statements - 6 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MLX Corp. 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, 1995. 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, 1996 and December 31, 1995 and the results of operations for the quarters and nine months ended September 30, 1996 and 1995 and cash flows for the nine months ended September 30, 1996 and 1995. Note A - Income Taxes At January 1, 1996, the Registrant had available net operating loss carry forwards of approximately $299 million which are available to offset future taxable income for federal income tax purposes. Accordingly, the Company has a federal tax liability only for Alternative Minimum Tax amounts and the charge in lieu of federal income taxes included in the statements of income for the quarters and nine months ended September 30, 1996 and 1995 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 September 30 Nine Months Ended September 30 1996 1995 1996 1995 Earnings applicable to common shareholders. . . . . . . . . . . . . . . $ 128 $ 167 $ 377 $20,010 Charge in lieu of federal income taxes which is not accruable or payable . 69 90 201 11,243 Total earnings applicable to common stock . . . $ 197 $ 257 $ 578 $31,253 Total earnings per share. . . . . . . . . . . . $0.07 $0.09 $0.21 $ 11.75
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 was disbursed to the Company on October 1, 1996 and accordingly has been classified as a current asset. 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 and has been classified as a long-term asset. 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 which was reported in the second quarter of 1995. Income taxes were provided for this gain as follows (in thousands): Federal and state income taxes due and payable. . . . . . $ 3,291 Pro-forma charge in lieu of federal income taxes. . . . . 10,020 $13,311
- 7 - The operating results of the discontinued S.K. Wellman operations included in the Company's Consolidated Statement of Income for the nine months ended September 30, 1995 were as follows (in thousands): Net sales. . . . . . . . . . . . . . . . . . . . . . . $34,916 Income from operations before taxes. . . . . . . . . . $ 4,435 Income taxes . . . . . . . . . . . . . . . . . . . . . 1,928 Income from discontinued operations. . . . . . . . . . $ 2,507
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 nine months ended September 30, 1995 are excluded from earnings/(loss) from operations. 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 has invested the proceeds of the Wellman transaction in short-term repurchase instruments managed by selected commercial banks. Since the divestiture of Wellman, the Company has been actively engaged in pursuing the acquisition of new businesses where purchase valuations are attractive but no binding agreements have been entered into providing for any such acquisitions. Operations: The general and administrative expenses of the Registrant are incurred for acquisition search, compensation, occupancy, shareholder costs (such as printing, distribution and stock transfer fees) and legal and professional matters. In connection with the sale of S.K. Wellman on June 30, 1995, the Company repaid its principal and interest obligations under the Variable Rate Subordinated Notes and Zero Coupon Bonds and redeemed its Series A Preferred Stock along with unpaid dividends resulting in no interest expense or preferred dividends in the quarter and nine months ended September 30, 1996. The Company considers its business to be that of seeking to acquire an operating business that meets its financial acquisition criteria. Accordingly, the Company believes that it is not an investment company as defined by the Investment Company Act of 1940. This belief has been supported in part by the Company's compliance with the safe harbor provisions of Rule 3a-2 under the Investment Company Act, compliance with which effectively excepted the Company from the definition of investment company for a one year period ended June 30, 1996. Given the termination of this safe harbor period, the Company's inability to control the timing of any acquisition and the uncertainty of the Company's status under the Investment Company Act, the Company has prepared and submitted an application to the Securities and Exchange Commission requesting an exemption from most substantive provisions of the Investment Company Act until June 30, 1997. If such application is denied and/or the Company is otherwise deemed to be an investment company, the Company would be required to register under that Investment Company Act and would thereafter be subject to regulation thereunder, which would add complexity to the Company's pursuit of its acquisition strategy, add to the administrative expenses of the Company and fundamentally alter the presentation of the Company's financial statements. Liquidity and Capital Resources: At September 30, 1996, the Registrant had working capital of $37.0 million, consisting principally of cash and short-term investments of $33.5 million, escrow funds totaling $4.3 million and estimated short-term obligations for income taxes, transaction expenses and compensation of $0.8 million. The Company's short-term investments at September 30, 1996 consisted principally of repurchase arrangements collateralized by U.S. Treasury and federal agency obligations. Interest income for the quarter ended September 30, 1996 was less than interest income for the comparable quarter in 1995 due to lower rates on the Company's investments. Interest income for the nine months ended September 30, 1996 exceeded interest income for the nine months ended September 30, 1995 because the 1995 period includes two quarters which preceded the sale of Wellman and the availability of the cash proceeds from that sale. 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. On October 1, 1996, the escrow fund balance of $4.3 million was disbursed to MLX. 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. - 8 - The Company was advised by NASDAQ on February 5, 1996 that it failed to comply with Section 3(a)3 of Schedule D of the NASD By-Laws by not having an operating business activity. A temporary exception was granted on that date permitting the Registrant's common shares to remain listed on the NASDAQ National Market until June 30, 1996. On July 2, 1996, the Registrant's shares were delisted and accepted for quotation on the OTC Bulletin Board. The Registrant believes that its current financial resources are adequate to meet its projected operating needs in 1996. PART II - OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities None. Item 3. Default 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. - 9 - 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 1, 1996 MLX Corp BY: /s/THOMAS C. WAGGONER Thomas C. Waggoner Chief Executive Officer and President - 10 - EX-27 2
5 1,000 9-MOS DEC-31-1995 SEP-30-1996 33,466 0 0 0 0 37,774 4 0 39,214 746 0 0 0 26 36,455 36,481 0 0 0 806 0 0 0 590 313 377 0 0 0 377 0.14 0.14
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