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 30.1994
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
404)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, 1994 was 2,537,550.
<PAGE>
PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MLX Corp. and Subsidiaries
<TABLE>
September 30 December 31
1994 1993
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 950 $ 985
Accounts receivable, net 9,311 8,357
Inventories:
Raw materials and
work-in-process 7,334 6,151
Manufactured goods 2,315 2,298
Total inventories 9,649 8,449
Prepaid expenses 657 583
Total Current Assets 20,567 18,374
Property, Plant & Equipment, net 12,512 12,064
Intangible Assets, net 2,381 2,785
Other Assets 518 538
TOTAL ASSETS $35,978 $33,761
</TABLE>
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MLX Corp. and Subsidiaries
<TABLE>
September 30 December 31
1994 1993
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable $ 3,849 $ 3,362
Accrued compensation and
benefits 2,634 2,809
Other accrued liabilities
and expenses 2,002 1,969
Accrued taxes 560 553
Dividends payable on Series
A Preferred Stock 211 638
Current portion of debt 1,766 53
Total Current Liabilities 11,022 9,384
Long-Term Debt 12,255 14,792
Other Long-Term Liabilities 2,395 2,261
Shareholders' Equity
Preferred stock, no par
value - authorized 1,500,000
shares, none outstanding - -
Preferred stock, Series A,
$30 par value - authorized
500,000 shares, 264,000 shares
outstanding 7,191 6,981
Common stock, $.01 par
value - authorized 38,500,000
shares, 2,538,000 shares
outstanding 25 25
Capital in excess of par value 61,482 60,551
Retained earnings deficit
since December 31,1984 (57,257) (58,836)
11,441 8,721
Less other equity adjustments (1,135) (1,397)
Total Shareholders' Equity 10,306 7,324
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $35,978 $33,761
</TABLE>
Dollars in thousands
See notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
MLX Corp. and Subsidiaries
<TABLE>
For the Quarter Ended
September 30
1994 1993
<S> <C> <C>
Net Sales $14,940 $13,892
Costs and Expenses:
Costs of products sold 11,950 10,415
Selling, general and
administrative expenses 1,778 1,703
Amortization of goodwill
and organization costs 56 57
13,784 12,175
Operating Earnings 1,156 1,717
Other Income(Expense):
Interest expense (404) (470)
Other income(expense) 199 13
Earnings before Income Taxes 951 1,260
Provision for Income Taxes:
Federal income taxes due and payable (20) (60)
Charge in lieu of federal income taxes (229) (331)
Foreign, state and local income taxes (209) (197)
Net Earnings 493 672
Dividends and accretion on preferred
stock (250) (242)
Earnings applicable to common stock $ 243 $ 430
Earnings per Share Applicable to Common
Stock $0.09 $0.16
Average Outstanding Common Shares
and Dilutive Options 2,632 2,635
</TABLE>
Dollars in thousands (except per share data)
See notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
MLX Corp. and Subsidiaries
<TABLE>
For the Nine Months Ended
September 30
1994 1993
<S> <C> <C>
Net Sales $45,340 $42,463
Costs and Expenses:
Costs of products sold 34,915 32,382
Selling, general and
administrative expenses 5,439 5,208
Amortization of goodwill
and organization costs 170 168
40,524 37,758
Operating Earnings 4,816 4,705
Other Income(Expense):
Interest expense (1,189) (1,670)
Other income (expense) 336 (58)
Earnings before Income Taxes 3,963 2,977
Provision for Income Taxes:
Federal income taxes due and
payable (80) (80)
Charge in lieu of federal income
taxes (941) (772)
Foreign, state and local income
taxes (610) (485)
Earnings before Extraordinary Item 2,332 1,640
Extraordinary gain on early
retirement of debt (net of
charge in lieu of federal
income taxes of $1,869) 0 3,627
Net Earnings 2,332 5,267
Dividends and accretion on
preferred stock (745) (661)
Earnings applicable to common stock $1,587 $4,606
Earnings per Share:
Earnings before extraordinary item
(net of dividends and
accretion on preferred stock) $0.60 $0.37
Extraordinary gain on early
retirement of debt 0.00 1.38
Earnings applicable to common stock $0.60 $1.75
Average Outstanding Common Shares
and Dilutive Options 2,624 2,636
</TABLE>
Dollars in thousands (except per share data)
See notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
MLX Corp. and Subsidiaries
<TABLE>
For the Nine Months Ended
September 30
1994 1993
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $2,332 $5,268
Adjustments to reconcile earnings
to net cash provided by
(used in) operating activities:
Extraordinary gain on early
retirement of debt 0 (5,495)
Charge in lieu of federal
income taxes 941 2,640
Depreciation and amortization 1,745 1,827
Change in operating assets and
liabilities:
Accounts receivable (954) (170)
Inventories and prepaid
expenses (1,274) 33
Accounts payable and
accrued expenses (75) 1,089
Other (236) (557)
Net cash provided by operating
activities 2,479 4,635
Cash Flows From Investing Activities:
Purchase of property, plant and
equipment (1,639) (1,106)
Net cash provided by (used in)
investing activities (1,639) (1,106)
Cash Flows From Financing Activities:
Net proceeds under revolving credit
agreement (875) 9,524
Repayments of subordinated debt - (5,611)
Repayments of industrial revenue
bonds - (6,800)
Payment of transaction expenses - (928)
Net cash provided by (used in)
financing activities (875) (3,815)
Net increase (decrease) in cash and
cash equivalents (35) (286)
Cash and cash equivalents at January 1 985 667
Cash and cash equivalents at
September 30 $950 $381
Supplemental Cash Flow Disclosure:
Federal taxes paid on income $92 -
Interest paid on debt obligations $1,022 $1,078
</TABLE>
Dollars in thousands
See notes to consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MIX Corp. and Subsidianes
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 Fonn 10-K for the
year ended December 31, 1993.
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 finanical position as of September 30, 1994 and
December 31, 1993, and the results of operations and cash flows
for the quarters and nine months ended September 30,
1994 and 1993.
Note A - Income Taxes
At January 1, 1994, the Registrant had available net operating
loss carry forwards of approximately $339 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, 1993 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).
<TABLE>
Quarter Ended September 30 Nine Months Ended September 30
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Earnings applicable to common shareholders $243 $430 $1,587 $4,606
Charge in lieu of federal income taxes
which are not accruable or payable 229 331 941 2,641
Total $472 $761 $2,528 $7,247
Total Earnings per share $0.18 $0.29 $0.96 $2.75
</TABLE>
The Company adopted Statement of Financial Standards No. 109,
"Accounting for Income Taxes," during the quarter
ended March 31, 1993. The adoption of Statement 109 did not
have a material impact on the Company's financial
position or results of operations.
Note B - Reverse Stock Split
On Jume 2, 1993, the stockholders of the Company authorized a
reverse stock split whereby each 10 common shares
owned prior to the reverse stock split became one common share.
The reverse stock split was implemented on June 25,
1993 and fractional common shares (approximately 62,000 common
shares) were or will be repurchased for $1.00 per
share. Weighted average shares outstanding and earnings per
share have been restated to reflect the reverse stock split.
Note C - Exchanged Shares
Effective December 31, 1992, the Company exchanged shares of
its Series A Preferred Stock with an approximate fair
value of $5.1 million (face value of $6.0 million) for Zero
Coupon Bonds with a carrying value of $7.7 million and a
portion of the M[,X Senior Term Loan with a carrying value of
$3.1 million. In addition, senior term loan with a carrying
value of $2.6 million was replaced with a note for $2.5 million
(since repaid). The resulting gain on early extinguishment
of debt of $4.1 million was recorded as of December 31, 1992.
During the quarter ended June 30, 1993, the Company exchanged
shares of its Series A Preferred Stock with an
approximate fair value of $1.6 million and 1993 Variable Rate
Notes with an approximate fair value of $1.4 million for
Zero Coupon Bonds with a carrying value of $8.5 million. The
resulting gain on early retirement of debt of $3.6 million
was recorded in the quarter ended June 30, 1993.
The Series A Preferred Stock issued in these exchanges was
initially recorded at its estimated fair value and is being
increased to the redemption price of $30 per share during the
period from date of issuance until Jatmary 1, 1999
(commencement of maximum annual dividend rate). The annual
accretion, based on the interest method, is charged to
additional paid in capital.
Note D - Post Retirement Benefit Obligations
The Company provides a fixed non-contributory benefit toward
post retirement health care for certain of its U.S.
subsidiary's union employees. In 1993 the Company adopted FASB
Statement No. 106, "Employer's Accounting for Post
Retirement Benefits Other than Pensions," to account for this
obligation. The Company has elected to recognize the
obligation on a prospective basis and will amortize the
transition obligation (approximately $540 thousand at January
1, 1993) for prior service costs at the time of adoption of the
standard into general and administrative expense over a 20 year
period. The weighted average discount rate used in determining
the accumulated post retirement benefit obligation was
7%.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Seasonality: Sales of the Registrant's Subsidiary, S.K.
Wellman, are generally not seasonal in nature, however, due to
the extended holiday shutdowns of its major customers, Wellman
does experience a modest reduction in sales volume during
the third quarter for its European operations, and during the
fourth quarter for both its North American and European
operations.
Operations: For the nine months ended September 30, 1994, net
sales and operating earnings were $45.3 million and
$4.8 million, respectively. Comparatively, the Registrant
recorded net sales of $42.5 million and operating earnings of
$4.7 million for the nine months ended September 30, 1993. The
increase in sales over the prior year was due to higher
demand by domestic original equipment manufacturers and
overseas customers of the Registrant's Italian facility. These
increases were offset partially by lower sales of U.S. Military
items and the military component of export sales.
Sales for the third quarter of 1994 were $14.9 million, up $1.0
million or 7.5% from the third quarter of 1993. Operating
earnings amounted to $1.2 million for the quarter ended
September 30, 1994 compared to $1.7 million (a decrease of
33%) for the comparable prior year quarter.
Gross margins for the first nine months of 1994 were 23.0%
compared to 23.7% in 1993. This decrease is the result of
unattractive margin performance in the third quarter (20% in
the quarter ended September 30, 1994 versus 25.0% in the
comparable quarter in 1993). This downturn in margin
performance is due to higher raw material prices, shifts in
product mix away from high margin items, strategic price
concessions and production inefficiencies stemming from the use
of outside contractors.
Selling, general and administrative expenses were $1.8 million
in the third quarter of 1994 compared to $1.7 million for
the third quarter of 1993. This increase is due generally to
higher selling expenses stemming from new product
initiatives. For the nine months ended September 30, 1994, such
expenses totaled $5.4 million as compared to $5.2
million in the prior year.
Interest expense for the quarter and nine months ended
September 30, 1994 was $404 thousand and $1.2 million,
respectively, compared to $470 thousand and $1.7 million for
the comparable periods in 1993. This reduction was the
result of lower borrowing levels and the revised capital
structure resulting from the exchanges referred to in Note C of
the Notes to the Consolidated Financial Statements.
Liquidity and Capital Resources: At September 30, 1994 the
Registrant's consolidated working capital amounted to
$9.5 million compared to $9.0 million at December 31, 1993. The
1994 working capital balance includes the effect of
higher planned inventory levels, higher trade receivables due
to increasing sales and the current classification of the
Italian Seller Note ($1.7 million) due in April 1995.
The registrant is involved in negotiations with the existing
lender at S.K. Wellman seeking to expand the capital
expenditures line, permit the payoff of the Italian seller note
at its maturity, increase the permitted level of capital
expenditures and adjust the borrowing rates.
The registrant had available unused revolving lines of credit
of an additional $2.9 million at September 30, 1994. The
Registrant believes that its current financial resources and
anticipated cash flows from operations are adequate to meet its
projected operating needs.
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) Exhibits:
#27 - Financial Data Schedule
(b) Reports: NONE
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 hereunto duly
authorized.
Date: November 4. 1994 MLX Corp.
(Registrant)
By: /s/ BRIAN R. ESHER By: /s/ THOMAS C. WAGGONER
Brian R. Esher Thomas C. Waggoner
Chief Executive Officer Chief Financial Officer
(Duly Authorized Officer) (Principal Financial
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 950
<SECURITIES> 0
<RECEIVABLES> 9,329
<ALLOWANCES> 18
<INVENTORY> 9,649
<CURRENT-ASSETS> 20,567
<PP&E> 26,585
<DEPRECIATION> 14,073
<TOTAL-ASSETS> 35,978
<CURRENT-LIABILITIES> 11,022
<BONDS> 12,255
<COMMON> 25
0
7,191
<OTHER-SE> 3,090
<TOTAL-LIABILITY-AND-EQUITY> 35,978
<SALES> 45,340
<TOTAL-REVENUES> 45,340
<CGS> 34,915
<TOTAL-COSTS> 34,915
<OTHER-EXPENSES> 5,609
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,189
<INCOME-PRETAX> 3,963
<INCOME-TAX> 1,661
<INCOME-CONTINUING> 2,332
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,332
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.60
</TABLE>
