<PAGE> 1 UNITED STATES
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 September 30, 1996
or
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 0-24180
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MTL Inc.
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(Exact name of registrant as specified in its charter)
FLORIDA 59-3239073
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3108 CENTRAL DRIVE, PLANT CITY, FLORIDA 33567
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(Address of principal executive offices) (Zip Code)
(813) 754-4725
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(Registrant's telephone number, including area code)
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(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 [X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. [ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE USERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at September 30, 1996
- -------------------------------- ---------------------------------------
(Common Stock, $.01 par value) 4,522,975
<PAGE> 2
MTL INC. AND SUBSIDIARIES
INDEX
Part I Financial Information Page No.
Item 1 Financial Statements (unaudited)
Condensed consolidated balance sheets -
September 30, 1996 and December 31, 1995 1-2
Condensed consolidated statements of income -
three months and nine months ended September 30,
1996 and 1995 3
Condensed consolidated statements of cash flows -
nine months ended September 30, 1996 and 1995 4
Notes to condensed consolidated financial statements 5
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations
Management's discussion and analysis of financial
condition and results of operations 6-7
Part II Other Information
Item 1 Legal proceedings 8
Item 6 Exhibits -
Reports on Form 8-K 8
Signatures 8
<PAGE> 3
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
1996 1995
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(Unaudited) *
<S> <C> <C>
Current Assets
Cash $ 1,082 $ 322
Accounts receivable 33,289 24,579
Allowance for doubtful accounts (1,310) (1,019)
Current maturities of other receivables 781 970
Notes receivable 591 202
Inventories 653 457
Prepaid expenses 2,705 1,616
Prepaid tires 3,395 3,258
Income tax receivable 0 492
Deferred income taxes 3,016 2,737
Other 121 193
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Total Current assets 44,323 33,807
Property, Plant and Equipment 175,305 156,785
Less-accumulated depreciation and amortization (57,778) (48,885)
--------- ---------
117,527 107,900
Other Assets 8,444 4,033
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$170,294 $145,740
========= ==========
</TABLE>
-1-
<PAGE> 4
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1996 1995
------------- -----------
(Unaudited) *
<S> <C> <C>
Current Liabilities
Current maturities of indebtedness $ 10,737 $ 6,373
Accounts payable and accrued expenses 8,954 7,609
Independent contractors payable 5,755 2,899
Other current liabilities 3,325 3,858
Income tax payable 235 0
--------- ----------
Total Current liabilities 29,006 20,739
Long term debt, less current maturities 45,722 40,236
Capital lease obligations, less current maturities 685 2,235
Other long term obligations 4,808 3,622
Deferred income taxes 23,192 18,850
Commitments and contingent liabilities
Stockholders' Equity
Common Stock 45 45
Other stockholders' equity 66,836 60,013
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Total stockholders' equity 66,881 60,058
--------- ---------
$170,294 $145,740
========= =========
</TABLE>
* Condensed from audited financial statements.
The accompanying notes are an integral part of these
condensed financial statements.
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<PAGE> 5
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
1996 1995 1996 1995
-------- --------- -------- -------
<S> <C> <C> <C> <C>
Operating Revenues
Transportation $159,428 $129,673 $58,352 $43,581
Other 13,383 12,499 4,635 4,290
-------- -------- ------- -------
172,811 142,172 62,987 47,871
-------- -------- ------- -------
Operating Expenses
Purchased transportation 108,046 89,864 38,189 30,226
Depreciation and amortization 9,894 7,396 3,808 2,620
Other operating expenses 40,888 32,298 15,888 10,654
-------- -------- ------- -------
Operating income 13,983 12,614 5,102 4,371
Interest expense, net 2,619 2,596 949 893
Other expense (102) (12) 16 (18)
-------- -------- ------- -------
Income before taxes 11,466 10,030 4,137 3,496
Income taxes 4,697 4,106 1,692 1,448
-------- -------- ------- -------
Net income $ 6,769 $ 5,924 $ 2,445 $ 2,048
======== ======== ======= =======
Weighted average number of
shares outstanding 4,571 4,541 4,586 4,546
Net income per share $1.48 $1.30 $0.53 $0.45
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
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<PAGE> 6
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine months ended September 30,
1996 1995
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<S> <C> <C>
Cash provided by (used for)
Operating activities:
Net Income $ 6,769 $ 5,924
Adjustments for non cash charges 12,442 8,795
Changes in assets and liabilities (3,325) (1,057)
--------- ---------
Net cash provided by operating activities 15,886 13,662
Investing activities:
Repayment from (Advance to) investee 157 9
Investment in Subsidiary (4,602) 0
Capital expenditures (10,077) (20,540)
Proceeds from asset dispositions 238 1,650
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Net cash used for investing activities (14,284) (18,881)
Financing activities:
Proceeds from issuance of long term debt 6,000 14,442
Payment of obligations (6,875) (9,597)
Issuance of common stock - net 38 2
--------- ---------
Net cash (used in) provided by financing
activities (837) 4,847
Net increase in cash 765 (372)
Effect of exchange rate changes on cash (5) (0)
Cash, beginning of period 322 723
--------- ---------
Cash, end of period $ 1,082 $ 351
========= =========
Cash payments for:
Interest $ 2,956 $ 2,640
Income taxes $ 1,494 $ 2,622
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
-4-
<PAGE> 7 FORM 10-Q
Item 1. Financial Statements
MTL INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying unaudited condensed, consolidated financial statements of
MTL Inc. (the "Company") have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. For further information, refer to the
consolidated financial statements and notes thereto for the year ended
December 31, 1995 included in the Company's Form 10-K dated March 27, 1996.
Operating results for the quarter ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the entire
fiscal year.
2. ACQUISITION:
On June 11, 1996 the Company acquired all the outstanding stock of Levy
Transport Ltd. ("Levy"), a Quebec-based tank truck carrier, from Les
Placements Marlin Lt'ee.
Levy services the chemical, petroleum and glass industries with a fleet of
over 400 trucks and tank trailers. The Company intends to continue
providing these services and expand upon existing customer relationships by
increasing fleet size in these markets. The purchase price of $5,148,745 was
financed with borrowings from the Company's unsecured line of credit with a
bank. The terms of the agreement stipulated $4,416,949 be paid in cash at
the time of the closing and a promissory note in the amount of $365,898
be executed. Additionally, $365,898 is held in escrow as security for the
Company in the event any unanticipated claim is asserted. The purchase price
was determined based upon the fair market value of the net assets acquired.
The transaction was accounted for as a purchase with goodwill in the amount
of $1,616,000 recorded. The Company is amortizing the goodwill over 15 years
using the straight line method.
The Company granted an option to purchase 100,000 shares of the Company's
common stock to the president of Levy in connection with an employment
agreement executed at the Levy closing.
3. SUPPLEMENTAL DISCLOSURE OF PRO FORMA CONSOLIDATED FINANCIAL
INFORMATION:
The following disclosure gives retroactive effect to the share purchase
agreement between the Company and Les Placements Marlin Lt'ee as if Levy
had been owned for the entire period presented.
Revenues for the nine months ended September 30, 1996 and 1995: $182,503,000
and $161,823,000, respectively. Net income for the nine months ended
September 30, 1996 and 1995: $6,776,000 and $5,903,000 respectively. Net
income per share for the nine months ended September 30, 1996 and 1995:
$1.48 and $1.30 respectively.
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<PAGE> 8
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THIRD QUARTER 1996 COMPARED TO THE THIRD QUARTER 1995
The Company's operating results are affected by the shipments for the bulk
chemical industry. Shipments of chemical products are in turn affected by
many other industries, including consumer and industrial products, automotive,
paint and coatings, and paper, and tend to vary with changing economic
conditions. The Company also participates in the shipment of bulk food
products through its food-grade division. The volume of food products and
certain other consumer products tends to be subject to fewer fluctuations due
to swings in economic activity.
All of the operating results for the third quarter of 1996 have been impacted
by the acquisition of Levy Transport Ltd. ("Levy") effective May 1, 1996.
For the quarter ended September 30, 1996, revenues totaled $63.0 million, a
31.6% increase over revenues of $47.9 million for the same period in 1995.
Excluding Levy revenues and the Company's Canadian revenue for 1995 now
handled by Levy, the Company's revenues would have been $54.2 million which
represents an increase of approximately 15.5% over the comparable period last
year. The Company attributes its increased revenues to continued strength
in chemical industry shipments nationwide, as well as MTL's success in
implementing its private carriage conversion strategy.
For the quarter ended September 30, 1996, operating income totaled $5.1
million, representing a 16.7% increase compared to $4.4 million for the same
period in 1995. This increase is primarily due to the increase in revenues.
The Company's operating ratio for the quarter was 91.9%, compared to 90.9%
for the comparable quarter in the prior year.
Net interest increased slightly to $949,000 in the quarter ended September 30,
1996, from $893,000 in the quarter ended September 30, 1995.
Pretax income for the quarter ended September 30, 1996, totaled $4.1 million,
an 18.3% increase compared to $3.5 million for the same period in 1995.
Pretax income increased primarily due to the increase in operating income
year to year.
For the quarter ended September 30, 1996, the Company's net income and
earnings per share were $2.4 million and $0.53 respectively, compared to
$2.0 million and $0.45 respectively for the same period in 1995. Weighted
average shares outstanding increased from 4,546,000 in the third quarter of
1995 to 4,586,000 in the third quarter of 1996. As of September 30, 1996, a
total of 4,522,975 shares were outstanding.
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<PAGE> 9
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
Liquidity and Capital Resources
The Company's primary sources of liquidity are funds provided by operations
and borrowings under various credit arrangements with financial institutions.
Net cash provided by operating activities totaled $15.9 million for the nine
month period ending September 30, 1996, versus $13.7 million for the same
period in 1995. The cash used in financing activities totaled $0.8 million
during the nine month period ending September 30, 1996, compared to $4.8
million provided by financing activities during the comparable period in 1995.
This difference is attributable to a reduction in proceeds from the issuance
of long term debt.
Capital used for investing activities totaled $14.3 million for the nine
month period ended September 30, 1996, compared to $18.9 million used for
the comparable 1995 period. Capital was used primarily to purchase Levy and
acquire additional revenue equipment to expand the Company's operations.
In February of 1996, the Company closed on a $25,000,000 ten-year fixed rate,
unsecured private placement of debt which was used to pay down the Company's
unsecured revolving credit facility. Additionally, the Company maintains a
$50,000,000 unsecured revolving credit facility with a group of banks
maturing in May of 1999. As of September 30, 1996, the Company has available
$34.0 million under this revolving credit facility. In September 1996, the
Company closed on a $10,000,000 unsecured credit facility for use in Canada
by Levy.
The Company's management believes that borrowings under the loan agreements,
together with available cash and internally generated funds, will be
sufficient to fund MTL's continued growth and meet its working capital
requirements for the foreseeable future.
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<PAGE> 10
FORM 10-Q
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
Reference is made to Item 3 on page 10 of the Company's Form 10-K
for the year ended December 31, 1995. There have been no material
changes in the Company's legal proceedings since this filing.
ITEM 6. (a) Exhibits:
27 Financial Data Schedule (For SEC Use Only)
(b) Reports on Form 8-K: 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 thereunto duly authorized.
MTL INC.
----------------------------------------
(Registrant)
October 30, 1996 /S/ CHARLES J. O'BRIEN, JR.
- --------------------------------- -----------------------------------------
CHARLES J. O'BRIEN, JR., (CEO, PRESIDENT)
(DULY AUTHORIZED OFFICER)
October 30, 1996 /S/ RICHARD J. BRANDEWIE
- --------------------------------- -----------------------------------------
RICHARD J. BRANDEWIE, (TREASURER)
(PRINCIPAL FINANCIAL OFFICER)
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,082
<SECURITIES> 0
<RECEIVABLES> 33,289
<ALLOWANCES> 1,310
<INVENTORY> 653
<CURRENT-ASSETS> 44,323
<PP&E> 175,305
<DEPRECIATION> 57,778
<TOTAL-ASSETS> 170,294
<CURRENT-LIABILITIES> 29,006
<BONDS> 0
0
0
<COMMON> 45
<OTHER-SE> 66,836
<TOTAL-LIABILITY-AND-EQUITY> 170,294
<SALES> 62,987
<TOTAL-REVENUES> 62,987
<CGS> 0
<TOTAL-COSTS> 57,885
<OTHER-EXPENSES> 16
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 949
<INCOME-PRETAX> 4,137
<INCOME-TAX> 1,692
<INCOME-CONTINUING> 2,445
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,445
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.53
</TABLE>
