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 March 31, 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 March 31,
1994 was 2,535,950.
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PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MLX Corp. and Subsidiaries
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<CAPTION>
March 31 December 31
1994 1993
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents. $ 1,147 $ 985
Accounts receivable, net 9,081 8,357
Inventories:
Raw materials and work-in-process 7,103 6,151
Manufactured goods 2,578 2,298
Total inventories 9,681 8,449
Prepaid expenses 557 583
Total Current Assets 20,466 18,374
Property, Plant & Equipment, net 12,109 12,064
Intangible Assets, net 2,654 2,785
Other Assets 531 538
TOTAL ASSETS $35,760 $33,761
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CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MLX Corp. and Subsidiaries
<TABLE>
<CAPTION>
March 31 December 31
1994 1993
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 4,262 $ 3,362
Accrued compensation and benefits 1,983 2,809
Other accrued liabilities and expenses 1,934 1,969
Accrued taxes 621 553
Dividends payable on Series A
Preferred Stock 178 638
Current portion of debt 58 53
Total Current Liabilities 9,036 9,384
Long-Term Debt 15,681 14,792
Other Long-Term Liabilities 2,313 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 7,050 6,981
Common stock, $.01 par value -
authorized 38,500,000 shares,
2,536,000 shares outstanding 25 25
Capital in excess of par value 60,951 60,551
Retained earnings deficit since
December 31, 1984. (58,036) (58,836)
9,990 8,721
Less other equity adjustments (1,260) (1,397)
Total Shareholders' Equity 8,730 7,324
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 35,760 $ 33,761
<FN>
Dollars in thousands
See notes to consolidated financial statements
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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
MLX Corp. and Subsidiaries
<TABLE>
<CAPTION>
For the Quarter Ended
March 31
1994 1993
<S> <C> <C>
Net Sales $14,995 $14,428
Costs and Expenses:
Costs of products sold 11,244 11,178
Selling, general and administrative expenses 1,773 1,660
Amortization of goodwill and organization costs 57 56
13,074 12,894
Operating Earnings 1,921 1,534
Other Income (Expense):
Interest expense (382) (736)
Other income (expense) 113 (49)
Earnings before Income Taxes 1,652 749
Provision for Income Taxes:
Federal income taxes due and payable (30) 0
Charge in lieu of federal income taxes (400) (250)
Foreign, state and local income taxes (176) (124)
Net Earnings 1,046 375
Dividends and accretion on preferred stock (246) (180)
Earnings applicable to common stock $ 800 $ 195
Earnings per Share $ 0.31 $ 0.08
Average Outstanding Common Shares and Dilutive Options 2,614 2,542
<FN>
Dollars in thousands (except per share data)
See notes to consolidated financial statements
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CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
MLX Corp. and Subsidiaries
<TABLE>
<CAPTION>
For the Quarter Ended
March 31
1994 1993
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $ 1,046 $ 375
Adjustments to reconcile earnings to net cash
provided by (used in) operating activities:
Charge in lieu of federal income taxes 400 250
Depreciation and amortization 558 822
Change in operating assets and liabilities:
Accounts receivable (724) (299)
Inventories and prepaid expenses (1,206) 330
Accounts payable and accrued expenses 39 442
Other (428) (186)
Net cash provided by (used in) operating activities (315) 1,734
Cash Flows From Investing Activities:
Purchase of property, plant and equipment (372) (390)
Net cash provided by (used in) investing activities (372) (390)
Cash Flows From Financing Activities:
Net proceeds under revolving credit agreement 849 11,599
Repayments of subordinated debt - (5,840)
Repayments of industrial revenue bond - (6,800)
Payment of transaction expenses - (670)
Net cash provided by (used in) financing activities 849 (1,711)
Net increase (decrease) in cash and cash equivalents 162 (367)
Cash and cash equivalents at January 1 985 667
Cash and cash equivalents at March 31 $ 1,147 $ 300
Supplemental Cash Flow Disclosure:
Federal taxes paid on income $ 90 -
Interest paid on debt obligations $ 339 $ 396
<FN>
Dollars in thousands
See notes to consolidated financial statements
<PAGE>
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, 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 financial position as of March 31,
1994 and December 31, 1993, and the results of operations and cash flows for
the quarters ended March 31, 1994 and 1993.
Note A - Income Taxes
At January 1, 1994, the Registrant had available net operating loss
carryforwards 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 ended March 31, 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 quarter.
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<CAPTION>
(in thousands, except per share data)
March 31
1994 1993
<S> <C> <C>
Earnings applicable to common shareholders $ 800 $ 195
Charge in lieu of federal income taxes
which is not accruable or payable 400 250
Total $ 1,200 $ 445
Total Earnings per share $ .46 $ .18
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 June 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 MLX 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
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of $30 per share during the period from date of issuance until January 1, 1999
(commencement of maximum annual dividend rate). The annual accretion, based on
the interest method, will be charged to additional paid-in capital.
Note D - Postretirement Benefit Obligations
The Company provides a fixed non-contributory benefit toward postretirement
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
Postretirement 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
postretirement benefit obligation was 7%. Postretirement benefit costs for the
quarters are not significant.
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 quarter ended March 31, 1994, net sales of the Registrant
were $15.0 million and operating earnings were $1.9 million. Comparatively,
the Registrant recorded net sales of $14.4 million and operating earnings of
$1.5 million in the first three months of 1993. The increase in sales is due
to higher demand by domestic original equipment manufacturers and overseas
customers of the Registrant's Italian facility. These increases were partially
offset by lower domestic sales of aircraft components.
Gross margins for the first quarter of 1994 were 25.0% compared to 22.5% in
1993. This increase in margin percentage is due to a shift in product mix to
higher margin items such as on-road clutch components, higher unit volume and
increased efficiency and utilization in the Company's plants.
Selling, general and administrative expenses were $1.8 million in the first
quarter of 1994 compared to $1.7 million for the first quarter of 1993. This
increase of $113 thousand is due generally to higher occupancy and selling
expenses.
Interest expense for the quarter ended March 31, 1994 was $382,000 compared to
$736,000 for the comparable quarter 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 March 31, 1994, the Registrant's
consolidated working capital amounted to $11.4 million compared to $9.0
million at December 31, 1993. The 1994 working capital balance includes higher
planned inventory levels and higher trade receivables due to increasing sales.
The Registrant had available unused revolving lines of credit of an additional
$1.8 million at March 31, 1994. In addition, the Company has a capital
expenditures line with a maximum borrowing limit of $1.5 million during the
two year period ending January 15, 1995. At March 31, 1994 the Company had
borrowed an aggregate of $450 thousand under this line.
The Registrant believes that its current financial resources and anticipated
cash flows from operations are adequate to meet its projected operating needs
in 1994.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
An interpleader action was filed in the U.S. District Court for
the Northern District of Georgia on October 9, 1992 by Mr. Alfred
R. Glancy III, a director of the Company, as the custodian of the
shares of Common Stock held pursuant to the MLX Corp. Voting
Trust. Mr. Glancy requested that the court determine whether or
not the Voting Trust was effectively terminated as a result of the
actions of one of the trustees of the Voting Trust. Upon Mr.
Glancy's motion, the interpleader action was dismissed with
prejudice on March 11, 1994. The Company agreed to the termination
of the Voting Trust prior to its scheduled expiration (June 30,
1994) because the adoption of the share transfer restrictions at
the June 1993 annual meeting of shareholders obviated the need for
the Voting Trust.
On May 5, 1994, Mr. Glancy, on behalf of the trustees of the
Voting Trust, commenced the distribution of the 288,808 shares
held by the Voting Trust to their respective beneficial owners,
effectively terminating the Voting Trust. Termination of the
Voting Trust also triggered the termination of the Restricted
Transfer Trust which held 403,160 shares of Common Stock, all of
which were distributed to their beneficial owners on or about May
5, 1994.
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: NONE
(b) Reports: NONE
<PAGE>
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: May 5, 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)00000
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