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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 23, 2001
EXX INC.
(Exact name of registrant as specified in its charter)
NEVADA 001-0654 880325271
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
organization) Number)
1350 EAST FLAMINGO ROAD, SUITE 689
LAS VEGAS, NEVADA 89119-5263
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 598-3223
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 23, 2001, EXX INC. ("EXX") entered into Stock Purchase
Agreements with each of Jerry D. Campbell, James D. Cirar, Shirley E.
Gofrank, William A. Lawson and Richard A. Smith, each directors of Newcor,
Inc. ("Newcor"), pursuant to which EXX purchased 206,283, 5,827, 271,271,
124,704 and 71,909 shares of common stock of Newcor, respectively, for a
purchase price of $2.00 per share in cash. In addition, EXX purchased from
Mr. Lawson $500,000 principal amount of Newcor's 9.875% Senior Subordinated
Notes Due 2008 (the "Notes") for a purchase price of $271,250 in cash and
paid to Mr. Lawson the accrued interest on the Notes of $19,073.63. The
consideration for these purchases was determined through arms'-length
negotiations between the parties.
Simultaneously, EXX purchased 24,000 shares of common stock of
Newcor from David A. Segal, Chairman and Chief Executive Officer of EXX, for
$2.00 per share. The consideration paid to Mr. Segal was the same price per
share as that paid to the other directors of Newcor.
As a result of these purchases, EXX owns approximately 31% of the
common stock of Newcor. The consideration for these purchases was paid by
EXX out of working capital.
Prior to the above-mentioned transactions, each of Mr. Campbell,
Mr. Cirar, Ms. Gofrank, Mr. Lawson and Mr. Smith served as directors of
Newcor, along with Mr. Segal. Following these transactions, each of Mr.
Campbell, Mr. Cirar, Ms. Gofrank, Mr. Lawson, Mr. Smith and a sixth
director, Jack R. Lousma, resigned from the Board of Directors of Newcor. In
place of the resigning directors, Jerry Fishman, Norman Perlmutter and
Frederic Remington, each directors of EXX, were appointed as directors of
Newcor. Simultaneously, the number of directors constituting the Board of
Directors of Newcor was reduced to six directors.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements. The financial statements of Newcor,
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including the Report of Independent Accountants thereon and the notes
thereto, included on pages F-1 to F-28 of Newcor's Annual Report on Form
10-K for the year ended December 31, 2000, are hereby incorporated herein by
reference.
(b) Pro forma financial information:
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The following unaudited pro forma condensed consolidated
financial statements are based on the historical financial statements of EXX
which give effect to the following:
o the acquisition of 679,994 shares of common stock of
Newcor from former directors of Newcor;
o the acquisition of 24,000 shares of common stock of
Newcor from David A. Segal, the Chairman and Chief
Executive Officer of EXX; and
o the acquisition of $500,000 principal amount of
Newcor's 9.875% Senior Subordinated Notes Due 2008 from
William A. Lawson.
The above transactions increase EXX's investment in Newcor
to 31.2% requiring the equity method of accounting to be used. The unaudited
consolidated balance sheet gives effect to the events described above as if
they occurred as of March 31, 2001 and the unaudited pro forma condensed
consolidated statements of operations give effect to the events as if they
occurred as of the first day of each of the periods presented.
The pro forma adjustments are based upon available
information and certain assumptions that management believes are reasonable.
The pro forma financial statements do not purport to represent what EXX's
results of operations or financial condition would actually have been had
the events described above in fact occurred on such dates or project EXX's
results of operations or financial condition for any future period or date.
EXX INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2001
EXX INC. PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
ASSETS
Current assets
Cash and cash equivalents................................. $ 7,962,000 (A) $ (1,679,000) $ 6,283,000
Short-term investments.................................... 602,000 602,000
Accounts receivable, net.................................. 3,154,000 3,154,000
Inventories............................................... 2,994,000 2,994,000
Other current assets...................................... 295,000 295,000
Deferred tax asset........................................ 594,000 (A) (153,000) 441,000
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Total current assets................................... 15,601,000 (1,832,000) 13,769,000
Property and equipment, net................................... 1,964,000 1,964,000
Long-term investments......................................... 1,010,000 (A) 1,679,000
(A) 451,000 3,140,000
Other assets.................................................. 427,000 427,000
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$ 19,002,000 $ 298,000 $ 19,300,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable current portion............................. $ 63,000 $ - $ 63,000
Accounts payable and other current liabilities............ 3,504,000 3,504,000
Income taxes payable...................................... 49,000 49,000
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Total current liabilities.............................. 3,616,000 - 3,616,000
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Long-term liabilities
Notes payable, less current portion....................... 1,609,000 1,609,000
Pension liability and other postretirement benefits....... 473,000 473,000
Deferred tax liability.................................... 380,000 380,000
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Total liabilities...................................... 6,078,000 - 6,078,000
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Stockholders' equity
Preferred stock........................................... - -
Common stock.............................................. 127,000 127,000
Capital in excess of par value............................ 2,670,000 2,670,000
Accumulated comprehensive income.......................... (638,000) (A) 298,000 (340,000)
Retained earnings......................................... 11,082,000 11,082,000
Treasury stock............................................ (317,000) (317,000)
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Total stockholders' equity............................. 12,924,000 298,000 13,222,000
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$ 19,002,000 $ 298,000 $ 19,300,000
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See notes to the unaudited pro forma condensed consolidated financial statements.
EXX INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001
EXX INC. PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
Net sales..................................................... $ 4,978,000 $ - $ 4,978,000
Cost of sales................................................. 3,464,000 3,464,000
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Gross profit.................................................. 1,514,000 - 1,514,000
Selling, general and
administrative expenses................................... 989,000 989,000
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Operating income.............................................. 525,000 - 525,000
Equity in loss of subsidiary.................................. (B) (1,087,000) (1,087,000)
Other income.................................................. 67,000 (C) 7,000
(C) 12,000 86,000
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Income (loss) before income taxes............................. 592,000 (1,068,000) (476,000)
Income taxes.................................................. 201,000 (D) 6,000 207,000
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Net income (loss)............................................. $ 391,000 $ (1,074,000) $ (683,000)
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Net income (loss) per common share
Basic..................................................... $ 0.03 $ (0.06)
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Diluted................................................... $ 0.03 $ (0.06)
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Weighted average shares outstanding
Basic..................................................... 12,255,000 12,255,000
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Diluted................................................... 12,311,000 12,255,000
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See notes to the unaudited pro forma condensed consolidated financial statements.
EXX INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2000
EXX INC. PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
Net sales..................................................... $ 19,163,000 $ - $ 19,163,000
Cost of sales................................................. 11,824,000 11,824,000
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Gross profit.................................................. 7,339,000 - 7,339,000
Selling, general and
administrative expenses................................... 5,212,000 5,212,000
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Operating income.............................................. 2,127,000 - 2,127,000
Equity in loss of subsidiary.................................. (B) (2,054,000) (2,054,000)
Other income.................................................. 400,000 (C) 27,000
(C) 49,000 476,000
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Income (loss) before income taxes............................. 2,527,000 (1,978,000) 549,000
Income taxes.................................................. 855,000 (D) 26,000 881,000
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Net income (loss)............................................. $ 1,672,000 $ (2,004,000) $ (332,000)
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Net income (loss) per common share
Basic..................................................... $ 0.13 $ (0.03)
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Diluted................................................... $ 0.13 $ (0.03)
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Weighted average shares outstanding
Basic..................................................... 12,616,000 12,616,000
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Diluted................................................... 13,052,000 12,616,000
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See notes to the unaudited pro forma condensed consolidated financial statements.
EXX INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - The unaudited pro forma condensed consolidated financial
statements give effect to the acquisition of 679,994 shares of
Newcor from former directors of Newcor and the purchase of 24,000
shares of Newcor from David A. Segal, the Chairman and Chief
Executive Officer of EXX, at a purchase price of $2.00 per share
and the purchase of $500,000 principal amount of Newcor's 9.875%
Senior Subordinated Notes Due 2008 for $271,250 on July 23, 2001.
The purchase of the above shares increased EXX's investment in
Newcor to 31.2%, requiring EXX to use the equity method of
accounting and reverse the market value adjustment previously
recorded on EXX's investment in Newcor and the related
comprehensive income and deferred income taxes.
NOTE B - Newcor incurred losses of $6,582,000 and $3,929,000 for
the year ended December 31, 2000 and the three months ended
March 31, 2001, respectively. EXX's 31.2% equity in these
losses would have amounted to $2,054,000 and $1,226,000 for the
year ended December 31, 2000 and the three months ended March 31,
2001, respectively, if the transactions had occurred on the first
day of such periods. The equity in the loss included in the pro
forma condensed consolidated statement of operations for the
three months ended March 31, 2001 was reduced by approximately
$139,000, the amount by which the cumulative losses exceed
EXX's $3,140,000 investment in Newcor.
NOTE C - Interest income of $49,000 and $12,000 and amortization of
bond discount of $27,000 and $7,000 were recorded in the pro
forma condensed consolidated statement of operations for the
year ended December 31, 2000 and the three months ended March
31, 2001, respectively.
NOTE D - Income taxes in the pro forma condensed consolidated
statements of operations have been adjusted to reflect the tax
effect of the pro forma adjustments relating to debt discount
and interest income using the EXX's effective rate of 34%.
(c) Exhibits. See Exhibit Index.
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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.
Dated: August 6, 2001
EXX INC.
By: /s/ David A. Segal
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Name: David A. Segal
Title: Chairman and Chief Executive Officer
EXHIBIT INDEX
Exhibit No. Description
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2.1 Form of Stock Purchase Agreement, dated July 23,
2001, filed as Exhibit 99(c) to Newcor's Current
Report on Form 8-K dated July 31, 2001, is hereby
incorporated herein by reference.
99.1 Press Release dated July 23, 2001.
99.2 Pages F-1 to F-28 of Newcor's Annual Report on Form 10-K
for the year ended December 31, 2000 is hereby
incorporated herein by reference.
99.3 Part I of Newcor's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2001 is hereby incorporated
herein by reference.