|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous: SENSORMATIC ELECTRONICS CORP, 8-K, 1999-08-12 |
Next: SIERRA PACIFIC POWER CO, 10-Q, 1999-08-12 |
<PAGE>
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 June 30, 1999 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 June 30, 1999:
1,912,359 Class A Shares and 624,953 Class B Shares.
- --------- -------
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------ --------------------
<TABLE>
<CAPTION>
A. Balance Sheets
ASSETS June 30, 1999 December 31, 1998
------ ------------- -----------------
(unaudited) (audited)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 4,466,000 $ 3,383,000
Short term investments 3,105,000 3,510,000
Accounts receivable, less
allowances of $183,000
and $208,000 2,523,000 2,315,000
Inventories, at lower of cost or market:
Raw materials 381,000 1,089,000
Work in process 63,000 219,000
Finished goods 2,868,000 2,244,000
------------------- ------------------
3,312,000 3,552,000
Other current assets 519,000 276,000
Refundable income taxes - -
Deferred income taxes 911,000 740,000
------------------- ------------------
TOTAL CURRENT ASSETS 14,836,000 13,776,000
Property, plant and equipment, at cost:
Land 47,000 41,000
Buildings and improvements 3,032,000 2,961,000
Machinery and equipment 6,408,000 6,358,000
------------------- ------------------
9,487,000 9,360,000
Less accumulated depreciation
and amortization 7,095,000 6,974,000
------------------- ------------------
2,392,000 2,386,000
Other assets 245,000 278,000
------------------- ------------------
TOTALS $ 17,473,000 $ 16,440,000
=================== ==================
</TABLE>
See Notes to Financial Statements
2
<PAGE>
<TABLE>
<CAPTION>
A. Balance Sheets (continued)
LIABILITIES June 30, 1999 December 31, 1998
----------- ------------- -----------------
(unaudited) (audited)
CURRENT LIABILITIES:
<S> <C> <C>
Notes Payable - Current Portion $ 49,000 $ 49,000
Accounts payable and other
current liabilities 4,128,000 4,333,000
Income Taxes Payable 537,000 285,000
------------------- ------------------
TOTAL CURRENT LIABILITIES 4,714,000 4,667,000
------------------- ------------------
LONG-TERM LIABILITIES:
Notes Payable, less Current Portion 1,721,000 1,745,000
Pension Liability 424,000 424,000
Deferred Tax Liability 323,000 323,000
------------------- ------------------
2,468,000 2,492,000
------------------- ------------------
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
Accumulated other comprehensive loss (538,000) (206,000)
Retained earnings 8,032,000 6,574,000
Less treasury stock at cost:
874,959 and 836,859 shares of
Class A Common stock &
304,153 and 285,553 shares of
Class B Common stock, respectively (1,233,000) (1,117,000)
------------------- ------------------
TOTAL STOCKHOLDERS' EQUITY 10,291,000 9,281,000
------------------- ------------------
TOTALS $ 17,473,000 $ 16,440,000
=================== ==================
</TABLE>
See Notes to Financial Statements
3
<PAGE>
B. Statements of Income
<TABLE>
<CAPTION>
For the Three-Month Period Ended For the Six-Month Period Ended
----------------------------------- -----------------------------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
----------------------------------- -----------------------------------
<S> <C> <C> <C> <C>
Net sales $ 6,063,000 $ 5,197,000 $ 11,533,000 $ 10,852,000
Cost of sales 3,332,000 3,663,000 6,925,000 7,626,000
------------------ ------------------ -------------- ---------------
Gross profit 2,731,000 1,534,000 4,608,000 3,226,000
Selling, general and
administrative expenses 1,512,000 1,279,000 2,638,000 2,972,000
------------------ ------------------ -------------- ---------------
Operating income 1,219,000 255,000 1,970,000 254,000
Interest expense 24,000 36,000 66,000 69,000
Other income 149,000 (16,000) 305,000 222,000
------------------ ------------------- -------------- ---------------
Income before provision
for income taxes 1,344,000 203,000 2,209,000 407,000
Provision for income taxes 457,000 69,000 751,000 138,000
------------------ ------------------ -------------- --------------
Net income $ 887,000 $ 134,000 $ 1,458,000 $ 269,000
================== ================== =============== ==============
Basic and diluted
Income per common share: $ .35 $ .05 $ .57 $ .10
================== ================== ============== ==============
</TABLE>
See Notes to Financial Statements
4
<PAGE>
C. Statements of Cash Flow
<TABLE>
<CAPTION>
For the Six-Month Period Ended
------------------------------
June 30, 1999 June 30, 1998
------------- -------------
<S> <C> <C>
Operating activities:
Net income $ 1,458,000 $ 269,000
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and Amortization 132,000 205,000
Provision for bad debts (25,000) 23,000
Accrued Interest Income (98,000) -
Increase (decrease) in cash attributable to changes in assets and liabilities:
Accounts receivable (183,000) 237,000
Inventories 240,000 (400,000)
Other current assets (243,000) 182,000
Other assets 33,000 249,000
Accounts payable and other
current liabilities 47,000 (136,000)
------------------- ------------------
Net cash provided by operating activities 1,361,000 629,000
------------------- -----------------
Cash flows from investing activities:
Purchase of property and equipment (138,000) (41,000)
-------------------- ------------------
Net cash provided by (used in) investing activities (138,000) (41,000)
-------------------- ------------------
Cash flows (from) financing activities:
Payments on notes payable (24,000) (68,000)
Purchases of Treasury Stock (116,000) -
-------------------- -----------------
Net cash (from) financing activities (140,000) (68,000)
-------------------- -----------------
Net increase (decrease) in cash and cash equivalents 1,083,000 520,000
Cash and cash equivalents
beginning of period 3,383,000 3,654,000
------------------- -----------------
Cash and cash equivalents,
end of period $ 4,466,000 $ 4,174,000
=================== =================
</TABLE>
See Notes to Financial Statements
5
<PAGE>
C. Statements of Cash Flow (continued)
<TABLE>
<CAPTION>
For the Six-Month Period Ended
------------------------------
June 30, 1999 June 30, 1998
------------- -------------
<S> <C> <C>
Supplemental disclosure of cash flow information:
Cash Paid during the year for:
Interest $ 66,000 $ 53,000
Income taxes 792,000 ---
</TABLE>
Supplemental schedule of non-cash investing and financing activities:
NONE
See Notes to Financial Statements
6
<PAGE>
D. Notes to Financial Statements
Note 1: The unaudited financial statements as of June 30, 1999 and 1998 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, 1998.
Note 2: Notes Payable
- -------
Notes Payable represents obligations of the Handi-Pac subsidiary as
follows:
June 30, 1999
-------------
Notes Payable - SBA Loans $ 916,000
Capital Lease payable 854,000
------------
1,770,000
Current Portion of Long-Term Debt 49,000
------------
$ 1,721,000
============
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 June 30, 1999, there was no other bank debt for the other
subsidiaries except as noted above.
Note 3: Computation of income per common share for the comparative three month
- -------
and six month periods ended June 30, 1999 and June 30, 1998, was based on
2,548,395 and 2,695,256 common shares and 2,561,550 and 2,695,256 common shares
outstanding, being the average number of shares outstanding during the
respective periods.
Note 4: Effective March 30, 1998, options to purchase 300,000 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
<PAGE>
Note 5: Comprehensive Income
- ------- --------------------
Comprehensive Income is as follows:
<TABLE>
<CAPTION>
For the Three-Month Period Ended For the Six-Month Period Ended
----------------------------------- ------------------------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
----------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
Net income $ 887,000 $ 134,000 $ 1,458,000 $ 269,000
Unrealized losses on debt
securities net of taxes: (124,000) - (332,000) -
---------------- ------------ -------------- ----------
Comprehensive Income $ 763,000 $ 134,000 $ 1,126,000 $ 269,000
================= ============ ============== ==========
</TABLE>
Note 6: The following information is reported as required for industry
- -------
segment disclosure.
<TABLE>
<CAPTION>
Three Months Ended June 30, 1999
--------------------------------
Mechanical
Toys Equipment Consolidated
---- --------- ------------
<S> <C> <C> <C>
Sales $ 1,591,000 $ 4,472,000 $ 6,063,000
================== ================== =================
Operating income $ 91,000 $ 1,464,000 $ 1,555,000
================== ==================
General corporate expenses 335,000
Interest expense 24,000
Interest income 111,000
Other income 37,000
-----------------
Income before income taxes $ 1,344,000
=================
<CAPTION>
Six Months Ended June 30, 1999
------------------------------
Mechanical
Toys Equipment Consolidated
---- --------- ------------
<S> <C> <C> <C>
Sales $ 3,933,000 $ 7,600,000 $ 11,533,000
================== ================== =================
Operating income $ 339,000 $ 2,102,000 $ 2,441,000
================== ==================
General corporate expenses 471,000
Interest expense 66,000
Interest income 218,000
Other income 87,000
-----------------
Income before income taxes $ 2,209,000
=================
</TABLE>
See Notes to Financial Statements
8
<PAGE>
Note 6 - Con't
- --------------
<TABLE>
<CAPTION>
Three Months Ended June 30, 1998
--------------------------------
Mechanical
Toys Equipment Consolidated
---- --------- ------------
<S> <C> <C> <C>
Sales $ 2,373,000 $ 2,680,000 $ 5,053,000
================== ================== =================
Operating income $ 116,000 $ 559,000 $ 675,000
================== ==================
General corporate expenses 384,000
Interest expense 36,000
Interest income 61,000
Other income (113,000)
-----------------
Income before income taxes $ 203,000
=================
<CAPTION>
Six Months Ended June 30, 1998
------------------------------
Mechanical
Toys Equipment Consolidated
---- --------- ------------
<S> <C> <C> <C>
Sales $ 5,588,000 $ 5,265,000 $ 10,853,000
================== ================== =================
Operating income $ 229,000 $ 552,000 $ 781,000
================== ==================
General corporate expenses 527,000
Interest expense 69,000
Interest income 160,000
Other income 62,000
-----------------
Income before income taxes $ 407,000
=================
</TABLE>
See Notes to Financial Statements
9
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations
---------------------
A. Results of Operations
---------------------
Sales for the second quarter of 1999 were $6,063,000 compared to
$5,197,000 in 1998. For the six month period, 1999 sales were $11,533,000
compared to $10,852,000 in 1998, a 6% increase. The Toy segment's second quarter
sales totaled $1,591,000 compared to $2,373,000 in 1998, while the six month
1999 sales totaled $3,933,000 compared to $5,588,000 in 1998. The Mechanical
equipment group's second quarter sales totaled $4,472,000 compared to $3,128,000
in 1998, while the six month sales totaled $7,600,000 compared to $5,265,000 in
1998.
Gross profit for the second quarter 1999 totaled $2,731,000
compared to $1,534,000 in 1998. For the six month period, 1999 gross profit was
$4,608,000 compared to $3,226,000 in 1998. While gross profit in the toy
division continued to decline for the three and six month periods, the
Mechanical Equipment Group, primarily the TX Group, accounted for the overall
increase in gross profit.
Second quarter toy division sales reflect the lackluster market
and lack of productive licenses. The industry remains in a slump continuing to
challenge management to find new answers and approaches in the current
environment.
Second quarter Mechanical Equipment sales continue to reflect a
surge in sales in the TX Group which was due primarily to meeting customer needs
in resolving Y2K problems relating to their installed equipment base. While
these sales are a welcome addition, no prediction can be made at this time as to
the continuation of such sales in future periods.
Operating income was $1,219,000 for the second quarter 1999
compared to operating income of $255,000 in 1998. For the six months, operating
income was $1,970,000 compared to operating income of $254,000 in 1998.
Interest expense was $24,000 for the second quarter 1999 compared
to $36,000 in the same period last year. For the six months, interest expense
was $66,000 compared to $69,000 for 1998.
The net income for the second quarter of 1999 was $887,000 or 35
cents per share compared to net income of $134,000 or 5 cents per share (basic
and diluted) in the comparable period of 1998. On a six months basis, the net
income was $1,458,000 or 57 cents per share compared to net income of $269,000
or 10 cents per share (basic and diluted) for the 1998 period.
See Notes to Financial Statements
10
<PAGE>
B. Liquidity and Capital Resources
-------------------------------
For the six months ended June 30, 1999, the Company was provided
with $1,361,000 from operating activities as compared to $629,000 in the
corresponding period of the preceding year. For the six months ended June 30,
1999, the Company used $138,000 for investing activities, principally for the
purchase of equipment. In the corresponding period of the preceding year, the
Company used $41,000 for investing activities, principally for the purchase of
equipment. Cash flows from financing activities during the six months ended June
30, 1999 of $140,000 relate principally to the purchase of Treasury Stock as
compared to $68,000 in the prior period ended June 30, 1998 which related to
note repayments.
At June 30, 1999, the Company had working capital of approximately
$10,122,000 and a current ratio of 3.1 to 1. In addition, as described in Notes
to Financial Statements, the Registrant's Handi-Pac subsidiary has $916,000 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
ITEM 4. Submission of Matters to a Vote of Security Holders.
- ------- ----------------------------------------------------
(a) The Annual Meeting of Shareholders was held on May 26, 1999.
(b) (1) The proposal to re-elect the one Class A director was passed by a vote
of 1,872,159 shares in favor and 13,106 shares abstaining.
(2) The proposal to re-elect the three Class B directors was passed by a
vote of 592,894 shares in favor and 5,294 shares abstaining.
(3) There were no other proposals brought up at this meeting.
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: August 12, 1999
See Notes to Financial Statements
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
EXX INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 4,466,000
<SECURITIES> 3,105,000
<RECEIVABLES> 2,523,000
<ALLOWANCES> 0
<INVENTORY> 3,312,000
<CURRENT-ASSETS> 14,836,000
<PP&E> 9,487,000
<DEPRECIATION> 7,095,000
<TOTAL-ASSETS> 17,473,000
<CURRENT-LIABILITIES> 4,714,000
<BONDS> 0
0
0
<COMMON> 37,000
<OTHER-SE> 10,254,000
<TOTAL-LIABILITY-AND-EQUITY> 17,473,000
<SALES> 11,533,000
<TOTAL-REVENUES> 0
<CGS> 6,925,000
<TOTAL-COSTS> 2,638,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 66,000
<INCOME-PRETAX> 2,209,000
<INCOME-TAX> 751,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,458,000
<EPS-BASIC> .57
<EPS-DILUTED> .57
</TABLE>
|
|