-----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, MCho7qwWfEavLXqYJlup7Vh+hr2hHq2kV+oz3qO4o2YeXh2a2ExuP0MD5/VVd7lB ZhJZ8pCS81ym9Gk6ICyCzA== 0000950114-00-000044.txt : 20000515 0000950114-00-000044.hdr.sgml : 20000515 ACCESSION NUMBER: 0000950114-00-000044 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXX INC/NV/ CENTRAL INDEX KEY: 0000089261 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 880325271 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05654 FILM NUMBER: 628447 BUSINESS ADDRESS: STREET 1: 1350 EAST FLAMINGO SUITE 689 CITY: LAS VEGAS STATE: NV ZIP: 89119 BUSINESS PHONE: 7025983223 MAIL ADDRESS: STREET 1: 1350 EAST FLAMINGO SUITE 689 CITY: LAS VEGAS STATE: NV ZIP: 89109 FORMER COMPANY: FORMER CONFORMED NAME: SFM CORP DATE OF NAME CHANGE: 19920703 10-Q 1 EXX INC. FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X Quarterly report pursuant to Section 13 or 15(d) of the Securities - ----- Exchange Act of 1934 For the quarterly period ended March 31, 2000 or -------------- _____ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____________________ to ______________________ Commission file number 1-5654 ------------------------------------------------ EXX INC - ------------------------------------------------------------------------------ (Exact Name of Registrant as Specified in Its Charter) Nevada 88-0325271 - -------------------------------------- -------------------------- (State or Other Jurisdiction of (IRS Employer Incorporation or Organization) Identification No.) 1350 East Flamingo Road, Suite 689, Las Vegas, Nevada 89119-5263 - ------------------------------------------------------------------------------ (Address or Principal Executive Offices) (Zip Code) (702) 598-3223 - ------------------------------------------------------------------------------ (Registrant's Telephone Number, Including Area Code) NONE - ------------------------------------------------------------------------------ (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 ----- ----- Number of shares of common stock outstanding as of March 31, 2000: 12,061,607 Class A Shares and 624,953 Class B Shares. - ---------- ------- 2 PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- A. BALANCE SHEETS
March 31, 2000 December 31, 1999 -------------- ----------------- (unaudited) (audited) ASSETS - ------ CURRENT ASSETS: Cash and cash equivalents $ 2,283,000 $ 2,315,000 Short-term investments 4,538,000 3,999,000 Accounts receivable, less allowances of $84,000 and $84,000 3,309,000 3,357,000 Inventories, at lower of cost or market: Raw materials 486,000 890,000 Work in process 111,000 180,000 Finished goods 2,846,000 1,921,000 ----------- ----------- 3,443,000 2,991,000 Other current assets 579,000 349,000 Refundable income taxes -- 111,000 Deferred income taxes 787,000 953,000 ----------- ----------- TOTAL CURRENT ASSETS 14,939,000 14,075,000 Property, plant and equipment, at cost: Land 41,000 41,000 Buildings and improvements 2,987,000 2,987,000 Machinery and equipment 6,559,000 6,484,000 ----------- ----------- 9,587,000 9,512,000 Less accumulated depreciation and amortization 7,255,000 7,187,000 ----------- ----------- 2,332,000 2,325,000 Long Term Investments 1,371,000 1,620,000 Other assets 171,000 375,000 ----------- ----------- TOTALS $18,813,000 $18,395,000 =========== =========== SEE NOTES TO FINANCIAL STATEMENTS 2 3 A. BALANCE SHEETS (continued) March 31, 2000 December 31, 1999 -------------- ----------------- (unaudited) (audited) LIABILITIES - ----------- CURRENT LIABILITIES: Notes payable - current portion $ 59,000 $ 59,000 Accounts payable and other current liabilities $ 3,496,000 $ 3,988,000 Income taxes payable 77,000 -- ----------- ----------- TOTAL CURRENT LIABILITIES 3,632,000 4,047,000 ----------- ----------- LONG-TERM LIABILITIES: Notes payable, less current portion 1,676,000 1,688,000 Pension liability 576,000 576,000 Deferred tax liability 561,000 646,000 ----------- ----------- 2,813,000 2,910,000 ----------- ----------- STOCKHOLDERS' EQUITY - -------------------- Preferred stock, $.01 par value; authorized 5,000,000 shares; Common stock, Class A $.01 par value, authorized 25,000,000 shares; 12,061,607 shares issued 121,000 177,000 Common stock, Class B $.01 par value, authorized 1,000,000 shares; 624,953 shares issued 6,000 9,000 Capital in excess of par value 2,670,000 3,844,000 Accumulated other comprehensive loss (220,000) (378,000) Retained earnings 9,791,000 9,019,000 Less Treasury Stock at cost: -- (1,233,000) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 12,368,000 11,438,000 ----------- ----------- TOTALS $18,813,000 $18,395,000 =========== =========== SEE NOTES TO FINANCIAL STATEMENTS
3 4 B. STATEMENTS OF INCOME
For the Three-Month Period Ended --------------------------------------- March 31, 2000 March 31, 1999 -------------- -------------- Net sales $ 5,420,000 $ 5,470,000 Cost of sales 3,258,000 3,593,000 ----------- ----------- Gross profits 2,162,000 1,877,000 Selling, general and administrative expenses 1,062,000 1,126,000 ----------- ----------- Operating income (loss) 1,100,000 751,000 Interest expense 25,000 42,000 Other income 95,000 156,000 ----------- ----------- Income before provision for income taxes 1,170,000 865,000 Provision for income taxes 398,000 294,000 ----------- ----------- Net income $ 772,000 $ 571,000 =========== =========== Net income per common share Basic $ .06 $ .04 =========== =========== Diluted $ .06 $ .04 =========== =========== Weighted average shares outstanding Basic 12,686,560 13,476,280 =========== =========== Diluted 13,788,832 13,476,280 =========== =========== SEE NOTES TO FINANCIAL STATEMENTS
4 5 C. STATEMENTS OF CASH FLOW
For the Three-Month Period Ended -------------------------------------- March 31, 2000 March 31,1999 -------------- ------------- Operating activities: Net income $ 772,000 $ 571,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and Amortization 68,000 63,000 Deferred income taxes -- -- Provision for bad debts -- 9,000 Accrued interest income (51,000) (48,000) Increase (decrease) in cash attributable to changes in assets and liabilities: Accounts receivable 48,000 (770,000) Inventories (452,000) 128,000 Other current assets (230,000) (318,000) Refundable income taxes 111,000 -- Other assets 204,000 76,000 Accounts payable and other current liabilities (492,000) 87,000 Income taxes payable 77,000 -- ---------- ---------- Net cash provided by (used in) operating activities 55,000 (202,000) ---------- ---------- Cash flows from investing activities: Purchase of property and equipment (75,000) (73,000) ---------- ---------- Net cash provided by (used in) investing activities (75,000) (73,000) ---------- ---------- Cash flows (used in) financing activities: Payments on notes payable (12,000) (12,000) Purchases of Treasury Stock -- (65,000) ---------- ---------- Net cash (used in) financing activities (12,000) (77,000) ---------- ---------- Net increase (decrease) in cash and cash equivalents (32,000) (352,000) Cash and cash equivalents beginning of period 2,315,000 3,383,000 ---------- ---------- Cash and cash equivalents, end of period $2,283,000 $3,031,000 ========== ========== SEE NOTES TO FINANCIAL STATEMENTS 5 6 C. STATEMENTS OF CASH FLOW (continued) For the Three-Month Period Ended -------------------------------------- March 31, 2000 March 31,1999 -------------- ------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash Paid during the year for: Interest $ 25,000 $ 42,000 Income taxes 16,000 203,000
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: NONE SEE NOTES TO FINANCIAL STATEMENTS 6 7 D. NOTES TO FINANCIAL STATEMENTS Note 1: The unaudited financial statements as of March 31, 2000 and 1999 - ------- reflect all adjustments which are necessary in the opinion of management for a fair presentation of the results for the periods stated. All adjustments so made are of a normal recurring nature. Certain financial information and footnote disclosure normally included in financial statements in accordance with generally accepted accounting principles have been condensed or omitted. The reader is referred to the audited consolidated financial statements and notes thereto included in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1999. Note 2: Notes Payable - ------- ------------- Notes Payable represents obligations of the Handi-Pac subsidiary as follows:
March 31, 2000 -------------- Notes Payable - SBA Loans $ 888,000 Capital Lease payable 847,000 ---------- 1,735,000 Current Portion of Long-Term Debt 59,000 ---------- $1,676,000 ==========
During the first quarter 1998, the Company opened a limited credit facility with a bank for two subsidiaries which includes a $300,000 sub-limit for direct borrowings and a $150,000 sub-limit for documentary letters of credit all secured by certain of the Company's money market funds. As of March 31, 2000, there was no other bank debt for the other subsidiaries except as noted above. Note 3: Effective March 30, 1998, options to purchase 1,900,000 shares of - ------- Class A and 100,000 shares of Class B stock were issued to the Chief Executive Officer in accordance with an agreement between the Company and the Chief Executive Officer canceling the officer's right to have the Company purchase all or any part of the shares of the Company owned by the Chief Executive Officer and/or members of his family. Please refer to footnote 12 in the 10K report for the year ended December 31, 1997. SEE NOTES TO FINANCIAL STATEMENTS 7 8 Note 4: Stock Dividend - ------- -------------- Effective March 8, 2000, the Company paid a 400% stock dividend to all shareholders of the Company's Class A and B common stock of record as of December 16, 1999. The dividend was four shares of the Company's Class A common stock for each share of Class A and/or Class B common stock owned by a shareholder. All transactions and disclosures in the consolidated financial statements, related to the Company's Class A and Class B common stock have been restated to reflect the effects of the stock dividend. In addition, at the time of this transaction, the Company retired the Treasury Stock in its possession, namely 5,591,407 Class A shares and 304,153 Class B shares. Note 5: Comprehensive Income - ------- -------------------- Comprehensive Income is as follows:
For the Three-Month Period Ended -------------------------------- March 31, 2000 March 31, 1999 -------------- -------------- Net income $772,000 $ 571,000 Unrealized gains (losses) on debt securities net of taxes: 158,000 (208,000) -------- --------- Comprehensive Income $930,000 $ 363,000 ======== =========
SEE NOTES TO FINANCIAL STATEMENTS 8 9 Note 6: The following information is reported as required for industry - ------- segment disclosure.
Three Months Ended March 31, 2000 -------------------------------------------- Mechanical Toy Equipment Consolidated --- --------- ------------ Sales $1,828,000 $3,592,000 $5,420,000 ========== ========== ========== Operating income $ 239,000 $ 995,000 $1,234,000 ========== ========== General corporate expenses 134,000 Interest expense 25,000 Interest income 87,000 Other income 8,000 ---------- Income before income taxes $1,170,000 ========== Three Months Ended March 31, 1999 -------------------------------------------- Mechanical Toy Equipment Consolidated --- --------- ------------ Sales $2,342,000 $3,128,000 $5,470,000 ========== ========== ========== Operating income $ 248,000 $ 638,000 $ 886,000 ========== ========== General corporate expenses 136,000 Interest expense 42,000 Interest income 107,000 Other income 50,000 ---------- Income before income taxes $ 865,000 ========== SEE NOTES TO FINANCIAL STATEMENTS
9 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - ------- ----------------------------------------------------------- AND RESULTS OF OPERATIONS ------------------------- The following management's discussion and analysis of results of operations and financial condition contains certain forward-looking statements which are covered under the safe harbor provisions of the Private Securities Legislation Reform Act of 1995 with respect to the Company's future financial performance. Although EXX INC believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be realized. Forward-looking statements involve known and unknown risks which may cause EXX INC's actual results and corporate developments to differ materially from those expected. Factors that could cause results and developments to differ materially from EXX INC's expectations include, without limitation, changes in manufacturing and shipment schedules, delays in completing plant construction and acquisitions, new product and technology developments, competition within each business segment, cyclicality of the markets for the products of a major segment, litigation, significant cost variances, the effects of acquisitions and divestitures, and other risks. A. Results of Operations --------------------- Sales for the first quarter of 2000 were $5,420,000 compared to $5,470,000 in 1999, a 1% decrease. The Mechanical Equipment Group had total sales of $3,592,000, which was an increase of $464,000 or 15% greater than the prior year's $3,128,000. The Toy Segment reflected a sales decrease of 22% to $1,828,000 from $2,342,000 in 1999. Gross profits for the first quarter 2000 totaled $2,162,000 compared to $1,877,000 for the comparable period in 1999. While gross profits in the Toy division declined between the periods, the Mechanical Equipment Group accounted for the net increase. Gross profits as a percentage of sales increased to 40% compared to last year's 34% because of a higher gross profit percentage earned by the Mechanical Equipment Group. The declining trend of the Toy Segment sales continues as with the industry. Management continues to face the same challenges of maintaining market share in light of increasing product and other related costs and of reviewing personnel demands and product mix and seeking new competitive items in light of these facts. First quarter sales of the Mechanical Equipment group show increased levels especially in the telecommunications area with the motor group maintaining its market share. New product acceptance remains a primary goal in competing in a limited market area. Operating income was $1,100,000 in the first quarter of 2000 compared to an operating income of $751,000 during the first quarter of 1999. The increase in operating income was due primarily to improvements in operations of the Mechanical Equipment Group. Interest expense was $25,000, compared to $42,000 the same period last year. The net income for the first quarter of 2000 was $772,000 or 6 cents per share (basic and diluted) compared to a net income of $571,000 or 4 cents per share (basic and diluted) in the comparable period of 1999. SEE NOTES TO FINANCIAL STATEMENTS 10 11 B. Liquidity and Capital Resources ------------------------------- For the three months ended March 31, 2000, the Company generated $55,000 from operating activities as compared to a use of $202,000 in the corresponding period of the preceding year. The principal reason for the increased cash flow in 2000 is the increased net income in the 2000 period. For the three months ended March 31, 2000, the Company used $75,000 for investing activities, principally for the purchase of equipment. In the corresponding period of the preceding year, the Company used $73,000 for investing activities, principally for the purchase of equipment. Cash flows totaling $12,000 used in financing activities during the three months ended March 31, 2000 was for the payment of notes payable compared to $77,000 for the three months ended March 31, 1999 which related mostly to the purchase of treasury stock. At March 31, 2000, the Company had working capital of approximately $11,307,000 and a current ratio of 4.1 to 1. In addition, as described in Notes to Financial Statements, the Registrant's Handi-Pac subsidiary has $888,000 of long-term debt outstanding with the SBA. During the first quarter 1998, the Company opened a limited credit facility with a bank for two subsidiaries which includes a $300,000 sub-limit for direct borrowings and a $150,000 sub-limit for documentary letters of credit all secured by certain of the Company's money market funds. The Registrant considers its working capital, as described above, to be more than adequate to handle its current operating capital needs. PART II. OTHER INFORMATION Not applicable. SIGNATURE 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. EXX INC By: /s/ David A. Segal -------------------------------- David A. Segal Chairman of the Board Chief Executive Officer Chief Financial Officer Date: May 12, 2000 SEE NOTES TO FINANCIAL STATEMENTS 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 2,283,000 4,538,000 3,309,000 0 3,443,000 14,939,000 9,587,000 7,255,000 18,813,000 3,632,000 0 127,000 0 0 12,241,000 18,813,000 5,420,000 0 3,258,000 1,062,000 0 0 25,000 1,170,000 398,000 0 0 0 0 772,000 .06 .06
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