-----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, F6wn66/TUVgrUJIZdVF9i/1/Cp7IMeNPBQu9voptRY+DON65zy0DudQzE+2G2NyP sMRdM05UvGKOiEizTgAIlw== 0000950130-95-002339.txt : 19951109 0000950130-95-002339.hdr.sgml : 19951109 ACCESSION NUMBER: 0000950130-95-002339 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951108 SROS: AMEX 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: 1934 Act SEC FILE NUMBER: 001-05654 FILM NUMBER: 95588397 BUSINESS ADDRESS: STREET 1: 3900 PARADISE ROAD SUITE 109 CITY: LAS VEGAS STATE: NV ZIP: 89109 BUSINESS PHONE: 7027378811 MAIL ADDRESS: STREET 1: 3900 PARADISE RD STREET 2: SUITE 109 CITY: LAS VEGAS STATE: NV ZIP: 89109 FORMER COMPANY: FORMER CONFORMED NAME: SFM CORP DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 September 30, 1995 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, NV 89119-5263 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (702) 598-3223 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) 3900 Paradise Road, Suite 109, Las Vegas, Nevada 89109 - -------------------------------------------------------------------------------- (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 September 30, 1995: 2,031,042 Class A Shares and 677,014 Class B Shares. - --------- -------- PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- A. Balance Sheets
ASSETS September 30, 1995 December 31, 1994 - ------ ------------------- ------------------ (unaudited) (audited) CURRENT ASSETS: Cash and cash equivalents $ 2,624,000 $ 5,640,000 Short term investments 2,479,000 3,256,000 Accounts receivable, net of allowance for doubtful accounts of $2,182,000 and $3,029,000 1,485,000 1,560,000 Inventories, at lower of cost or market: Raw materials 655,000 729,000 Work in process 54,000 174,000 Finished goods 3,415,000 2,883,000 --------- --------- 4,124,000 3,786,000 Note receivable - current 145,000 73,000 Other current assets 1,387,000 399,000 Deferred income taxes 1,170,000 1,477,000 ---------- ---------- TOTAL CURRENT ASSETS 13,414,000 16,191,000 Property, plant and equipment, at cost: Land 35,000 35,000 Buildings and improvements 1,151,000 1,151,000 Machinery and equipment 5,134,000 4,703,000 --------- --------- 6,320,000 5,889,000 Less accumulated depreciation and amortization (5,401,000) (5,179,000) ----------- ----------- 919,000 710,000 Notes receivable - net of current maturities 466,000 620,000 Other assets 366,000 119,000 ----------- ----------- TOTALS $15,165,000 $17,640,000 =========== ===========
See Notes to Financial Statements 2 A. Balance Sheets (continued)
LIABILITIES September 30, 1995 December 31, 1994 - ----------- ------------------- ------------------ (unaudited) (audited) CURRENT LIABILITIES: Accounts payable $1,506,000 $1,752,000 Accrued expenses 2,451,000 3,812,000 Note payable officer 351,000 351,000 Income taxes payable 98,000 2,942,000 ---------- ---------- TOTAL CURRENT LIABILITIES 4,406,000 8,857,000 Deferred income 148,000 117,000 Deferred income taxes 203,000 203,000 ---------- ---------- TOTAL LIABILITIES $4,757,000 $9,177,000 STOCKHOLDERS' EQUITY - -------------------- Preferred stock, $.01 par value; Authorized 5,000,000 shares; Common stock, Class A $.01 par value, Authorized 25,000,000 shares; 2,787,318 shares issued 28,000 28,000 Common stock, Class B $.01 par value, Authorized 1,000,000 shares; 929,106 shares issued 9,000 9,000 Capital in excess of par value 3,993,000 3,993,000 Retained earnings 7,275,000 5,330,000 Less treasury stock at cost: 756,276 shares of Class A Common stock & 252,092 shares of Class B Common stock (897,000) (897,000) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 10,408,000 8,463,000 ---------- --------- TOTALS $15,165,000 $17,640,000 ============ ===========
See Notes to Financial Statements 3 B. Statements of Income
For the Three-Month Period Ended For the Nine-Month Period Ended -------------------------------- ------------------------------- Sept.30, 1995 Sept.30, 1994 Sept.30, 1995 Sept.30, 1994 ------------- ------------- ------------- ------------- Net sales $7,761,000 $14,015,000 $24,170,000 $31,664,000 Cost of sales 4,933,000 10,524,000 14,951,000 23,946,000 ---------- ----------- ----------- ----------- Gross profit 2,828,000 3,491,000 9,219,000 7,718,000 Selling, general and administrative expenses 2,023,000 2,081,000 6,560,000 5,399,000 ---------- ----------- ----------- ----------- Operating profit 805,000 1,410,000 2,659,000 2,319,000 Interest expense --- 7,000 --- 20,000 Other income 101,000 29,000 302,000 86,000 ---------- ----------- ----------- ----------- Income before provision for income taxes 906,000 1,432,000 2,961,000 2,385,000 Provision for income taxes 335,000 572,000 1,017,000 954,000 ---------- ----------- ----------- ----------- Net income $ 571,000 $ 860,000 $ 1,944,000 $ 1,431,000 ========== =========== ============ ============ Income per common share: $ .21 $ .32 (a) $ .72 $ .53(a) ====== ====== ====== =====
(a)Reflects the reorganization of SFM Corporation into EXX INC and the four for one stock split effective October 21, 1994. See Notes to Financial Statements 4 C. Statements of Cash Flow
For the Nine-Month Period Ended --------------------------------- Sept. 30, 1995 Sept. 30, 1994 ---------------- --------------- Operating activities: Net income $ 1,944,000 $ 1,431,000 Adjustments to reconcile net income to net cash provided by(used in)operating activities: Depreciation and amortization 223,000 231,000 Provision for losses on accounts receivable 60,000 2,689,000 Changes in operating assets and liabilities: Deferred income 31,000 (38,000) Short-term investments 717,000 --- Accounts receivable 75,000 (7,174,000) Inventories (338,000) (964,000) Note receivable - current (72,000) (20,000) Other current assets (988,000) (304,000) Deferred income taxes 307,000 --- Note receivable 154,000 67,000 Other assets (247,000) 54,000 Accounts payable (246,000) 3,226,000 Accrued expenses (1,361,000) 1,184,000 Income taxes payable (2,844,000) 759,000 Customer deposits --- (13,000) Deferred income taxes --- --- ----------- ----------- Net cash provided by (used in) operating activities (2,585,000) 1,128,000 ----------- ----------- Investing activities: Purchase of property, plant and equipment (431,000) (488,000) ----------- ----------- Net cash provided by (used in) investing activities (431,000) (488,000) ----------- ----------- Financing activities: Net borrowings (repayments) under line of credit agreement --- --- (Repayments) of other long-term borrowings --- --- ----------- ----------- Net cash provided by (used in) financing activities --- --- ----------- ----------- Net increase (decrease) in cash and cash equivalents (3,016,000) 640,000 Cash and cash equivalents, beginning of period 5,640,000 1,303,000 ----------- ----------- Cash and cash equivalents, end of period $ 2,624,000 $ 1,943,000 =========== ===========
See Notes to Financial Statements 5 C. Statements of Cash Flow (continued)
For the Nine-Month Period Ended ------------------------------- Sept. 30, 1995 Sept. 30, 1994 -------------- -------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash Paid during the year for: Interest --- 20,000 Income taxes 3,807,000 200,000
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: NONE See Notes to Financial Statements 6 D. Notes to Financial Statements Note 1: The unaudited financial statements as of September 30, 1995 and for - ------ the comparative three and nine months ending 1995 and 1994 reflect all adjustments which are in the opinion of management necessary 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, 1994. Note 2: In October 1994, the stockholders of SFM Corporation (SFM) approved - ------- a plan of reorganization whereby SFM was merged on a tax-free basis into a subsidiary of EXX INC. Simultaneous with this merger, each share of common stock of SFM was converted into three shares of EXX INC Class A common stock and one share of EXX INC Class B common stock. The EXX INC stock is substantially identical to the former SFM stock in rights and privileges, except that the stockholders of the outstanding shares of Class B common stock have the right to elect two-thirds or the next rounded number of Directors in excess of two-thirds if the number of Directors is not divisible by three and the stockholders of the outstanding shares of the Class A common stock have the right to elect the remaining Directors of the Company. This merger has been accounted for in a manner similar to a pooling of interests. Note 3: Note Payable - ------ ------------ As of September 30, 1995 there was no bank debt. Under the terms of a revolving credit agreement, as amended and extended to February 29, 1996, a bank provides the Company with a line of credit and a letter of credit facility for loans and/or letters of credit aggregating up to $5,000,000 at a rate of 3/4 of 1% over prime. The line of credit is collateralized by substantially all of the Company's trade accounts receivable, inventories and property and equipment. The loan agreement imposes various restrictions on the Company including the maintenance of minimum net worth of $4,000,000 at the end of any quarter, and limitations on: capital expenditures, loans and advances, future borrowings, payment of dividends, and a limit on the purchase of common stock for the treasury. In addition to any other limitations imposed by the loan agreement covenants, no cash dividend may be paid unless the Company has had net income aggregating at least $400,000 during the four calendar quarters immediately preceding the date of payment, and the aggregate dividends paid over any four calendar quarters may not exceed 40% of the net income for that period. At September 30, 1995, there were no financial or ratio restrictions on the Company's capital. The company expects the current revolving credit agreement to be renewed on substantially the same terms and conditions. Note 4: Computation of income per common share for the comparative three - ------ and nine month periods ended September 30, 1995 and September 30, 1994, was based on 2,708,056 common shares and 2,708,056 common shares outstanding, being the average number of shares outstanding during the respective periods adjusted for the stock split effective in October 1994. See Note 2. 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and - ------ --------------------------------------------------------------- Results of Operations -------------------- A. Results of Operations --------------------- Sales for the third quarter of 1995 were $7,761,000 compared to $14,015,000 in 1994, a $6,254,000 decrease. The Toy Segment reflected a sales decrease of $5,986,000 to $5,795,000 from $11,781,000 in 1994. The Mechanical Equipment Group had a sales decrease of $268,000 to $1,966,000 from $2,234,000 in the comparative 1994 period. The substantial reduction in third quarter 1995 Toy Segment sales compared to third quarter 1994 Toy Segment sales, was attributable to reduced sales of licensed goods - most particularly the Mighty Morphin Power Rangers line of products which had reached a level of market maturity. It should be kept in mind, however, that the third quarter of 1994 had the greatest sales for any single quarter in the history of our Toy Segment. The third quarter results of the Mechanical Equipment Group reflect the addition of the TX Technology business as of the end of April 1994. The Howell Motors division had a decline in summer orders and deliveries reducing third quarter sales in comparision to the prior year's sales. Management considers this a temporary decline and anticipates sales returning to normal levels in the forth quarter of 1995. Operating profit was $805,000 compared to $1,410,000 for the comparable third quarter of 1994. The higher profit margin for the third quarter of 1995 compared to the prior year's third quarter was in part due to certain start up and acquistion costs relating to acquisitions in the first half of 1994 as well as accruals for possible markdown allowances and returns. Due to favorable sell through of products, certain markdown and return accruals were reduced in the third quarter of 1995, favorably impacting current sales and profits in the Toy Segment. If current trends continue, management anticipates additional reductions in accruals in later quarters, which in turn will favorably impact sales and earnings in those future quarters. Interest expense decreased to - 0 - from $7,000 during the same period in the prior year. There was no bank debt in the third quarter 1995. Net income after income taxes for the third quarter 1995 was $571,000 or 21 cents per share, compared to net income of $860,000 or 32 cents per share in the third quarter of 1994. On October 21, 1994, after stockholder and Board of Directors approval, SFM was merged and became a wholly owned subsidiary of EXX INC a holding company organized to acquire all the outstanding stock of SFM and each of its Subsidiaries. The quarterly per share results are adjusted for the stock split which is explained and referenced in Note 2 to the financial statements. In April, 1994, TX Systems Inc., a newly formed subsidiary of SFM, acquired the operating assets and businesses of TX Technologies, Inc. and TX Software, Inc. These companies were engaged in the Cable Pressurization and Monitoring Systems business. In February, 1994 Hi-Flier Inc., a newly formed subsidiary of SFM, purchased the assets of Hi-Flier Manufacturing Co., a leader in the kite business for more than seventy years. 8 B. Liquidity and Capital Resources ------------------------------- At September 30, 1995 the Registrant had working capital of approximately $9,008,000 and a current ratio of 3.04 to 1. In addition, as described in Notes to Financial Statements, the Registrant has a Credit Agreement with a bank, expiring February 29, 1996, pursuant to which the bank will provide a line of credit and letters of credit aggregating $5,000,000 at an interest rate of 3/4 of 1% above prime. At September 30, 1995, there were no outstanding borrowings under this facility. The Registrant considers its working capital, coupled with the line of credit, as described above, to be more than adequate to handle its current operating capital needs. PART II. OTHER INFORMATION Not applicable. 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 and Chief Executive Officer Date: November 8, 1995 9 EX-27 2 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1995 JUL-01-1995 SEP-30-1995 2,624,000 2,479,000 1,485,000 0 4,124,000 13,414,000 6,320,000 5,401,000 15,165,000 4,406,000 0 37,000 0 0 10,371,000 15,165,000 7,761,000 0 4,933,000 2,023,000 0 0 0 906,000 335,000 0 0 0 0 571,000 .21 0
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