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, 1997 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 (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 March 31, 1997 was
2,617,584.
PART I - FINANCIAL INFORMATION
BALANCE SHEETS (UNAUDITED)
MLX CORP.
<TABLE>
March 31 December 31
1997 1996
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . $35,985 $37,927
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . 22 46
------- -------
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . 36,007 37,973
EQUIPMENT AND OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . 3 4
TAX ESCROW FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . 1,472 1,454
------- -------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $37,482 $39,431
======= =======
LIABILITES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued compensation and benefits. . . . . . . . . . . . . . $ 121 $ 103
Other accrued liabilities and expenses . . . . . . . . . . . 335 280
Accrued taxes. . . . . . . . . . . . . . . . . . . . . . . . 262 286
------- -------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . 718 669
OTHER LONG-TERM LIABILITIES. . . . . . . . . . . . . . . . . . . . . 2,008 1,998
SHAREHOLDERS' EQUITY
Common stock, $.01 par value - authorized 38,500,000
shares; 2,618,000 shares outstanding in 1997 and 1996. . 26 26
Capital in excess of par value. . . . . . . . . . . . . . . . 73,165 73,165
Retained earnings deficit . . . . . . . . . . . . . . . . . . (38,435) (36,427)
------- -------
TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . . . 34,756 36,764
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY . . . . . . . . . . . . . $37,482 $39,431
======= =======
</TABLE>
Dollars in thousands
See notes to financial statements
STATEMENTS OF OPERATIONS (UNAUDITED)
MLX CORP.
<TABLE>
For the Quarter Ended
March 31
1997 1996
<S> <C> <C>
NET SALES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ --
General and administrative expenses. . . . . . . . . . . . . . (242) (280)
Stock Appreciation Rights compensation . . . . . . . . . . . . (2,225) --
------- -------
OPERATING LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,467) (280)
Interest income. . . . . . . . . . . . . . . . . . . . . . . . 459 460
------- -------
EARNINGS (LOSS) BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . (2,008) 180
PROVISION FOR INCOME TAXES:
Federal income taxes due and payable. . . . . . . . . . . . . -- (3)
Charge in lieu of federal income taxes. . . . . . . . . . . . -- (61)
------- -------
NET EARNINGS (LOSS) . . . . . . . . . . . . . . . . . . . . . . . . . $(2,008) $ 116
======= =======
EARNINGS (LOSS) PER SHARE . . . . . . . . . . . . . . . . . . . . . . $ (0.76) $ 0.04
======= =======
AVERAGE OUTSTANDING COMMON SHARES AND DILUTIVE OPTIONS . . . . . . . 2,644 2,737
======= =======
</TABLE>
Dollars in thousands, except per share data
See notes to financial statements
STATEMENTS OF CASH FLOWS (UNAUDITED)
MLX CORP.
<TABLE>
For the Quarter Ended
March 31
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . $(2,008) $ 116
Adjustments to reconcile net earnings (loss) to net cash (used in)
provided by operating activities:
Charge in lieu of federal income taxes. . . . . . . . . . -- 61
Change in operating assets and liabilities:
Prepaid expenses. . . . . . . . . . . . . . . . . . . . 24 47
Accrued expenses and other. . . . . . . . . . . . . . . 60 43
------- -------
Net cash (used in) provided by operating activities . . . . . . . . . (1,924) 267
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in escrow funds for warranties and taxes. . . . . . . (18) (66)
------- -------
Net cash used in investing activities. . . . . . . . . . . . . . . . . (18) (66)
------- -------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . (1,942) 201
Cash and cash equivalents at January 1 . . . . . . . . . . . . . . . . 37,927 32,903
------- -------
CASH AND CASH EQUIVALENTS AT MARCH 31. . . . . . . . . . . . . . . . . $35,985 $33,104
======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Federal taxes paid on income . . . . . . . . . . . . . . . . . . . $ 2 $ --
</TABLE>
Dollars in thousands
See notes to financial statements
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MLX CORP.
The 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 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, 1996.
In the opinion of the Registrant, the accompanying financial
statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position
as of March 31, 1997 and December 31, 1996 and the results of
operations and cash flows for the three months ended March 31, 1997
and 1996.
NOTE A - INCOME TAXES
At January 1, 1997, the Registrant had available net operating loss
carryforwards of approximately $275 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 statement of operations for the three
months ended March 31, 1996 is not accruable or payable. The following
table illustrates the effect of this pro forma charge on the Company's
earnings and earnings per share for the respective periods (in
thousands, except per share data).
<TABLE>
Quarter Ended March 31
1997 1996
<S> <C> <C>
Net earnings (loss) . . . . . . . . . . . . . . . . $(2,008) $ 116
Charge in lieu of federal income
taxes which is not accruable or payable . . . . -- 61
------- -----
Total earnings (loss) . . . . . . . . . . . . . . . $(2,008) $ 177
======= =====
Total earnings (loss) per share . . . . . . . . . . $ (0.76) $0.06
======= =====
</TABLE>
NOTE B - STOCK APPRECIATION RIGHTS COMPENSATION
On February 12, 1997, the Registrant's Board of Directors approved the
conversion of all the common stock options held by its former Chief
Executive Officer to Stock Appreciation Rights (SARs) and all such
SARs were exercised as of that date. The resulting liability under
this agreement amounted to $2.2 million and was disbursed in Feburary
1997. The compensation expense from this transaction is reported in
the accompanying statement of operations for the three months ended
March 31, 1997. After this event, the Company's employees have
outstanding options to purchase 50,000 shares of common stock.
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 Registrant only.
Since the divestitute of S.K. Wellman subsidiary on June 30, 1995, 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. The Company is 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.
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 (the "Act"). This
belief has been supported in part by the Company's compliance with the
safe harbor provisions of Rule 3a-2 under the Act, compliance with
which effectively excepted the Company from the definition of an
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 Act, the Company has prepared and submitted
an application to the Securities and Exchange Commission requesting an
exemption from most substantive provisions of the Act until December
31, 1997. If such application is denied and/or the Company is
otherwise deemed to be an investment company, the Company will be
required to register under the Act and will 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 March 31, 1997, the Registrant had
working capital of $35.3 million, consisting principally of cash and
short-term investments of $36.0 million, and estimated short-term
obligations for income taxes, transaction expenses and compensation of
$0.7 million. The Company's short-term investments at March 31, 1997
consisted principally of repurchase arrangements collateralized by
U.S. Treasury and federal agency obligations.
In connection with the sale of Wellman in 1995, the Company funded an
escrow fund amounting to $1.3 million relating to certain estimated
income tax obligations arising from the sale.
The Company's common stock is quoted on the OTC Electronic Bulletin
Board under the trading symbol "MLXR."
The Registrant believes that its current financial resources are
adequate to meet its projected operating needs in 1997.
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.
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: May 2, 1997 MLX Corp
(Registrant)
BY: /s/ THOMAS C. WAGGONER
Thomas C. Waggoner
Chief Executive Officer and
President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 35,985
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 36,007
<PP&E> 3
<DEPRECIATION> 0
<TOTAL-ASSETS> 37,482
<CURRENT-LIABILITIES> 718
<BONDS> 0
0
0
<COMMON> 26
<OTHER-SE> 34,730
<TOTAL-LIABILITY-AND-EQUITY> 37,482
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 2,467
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,008)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,008)
<EPS-PRIMARY> (0.76)
<EPS-DILUTED> (0.76)
</TABLE>
