<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 SECURITY
EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1997
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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.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-3239073
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(State or other jurisdiction of incorporation I.R.S. Employer
or organization) Identification No.)
- ------------------------------------------------------------------------------
(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, 1997
- ------------------------------ ----------------------------------
(Common Stock, $.01 par value) 4,544,186
<PAGE> 2
MTL INC. AND SUBSIDIARIES
INDEX
Part I Financial Information Page No.
Item 1 Financial Statements (unaudited)
Condensed consolidated balance sheets -
September 30, 1997 and December 31, 1996 3-4
Condensed consolidated statements of income -
three months and nine months ended September 30,
1997 and 1996 5
Condensed consolidated statements of cash flows -
nine months ended September 30, 1997 and 1996 6
Notes to condensed consolidated financial
statements 7-8
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 9-10
Part II Other Information
Item 5 Other Information 11
Item 6 Exhibits
Reports on Form 8-K 11
Signatures 12
<PAGE> 3
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
(Unaudited) *
----------- ------------
<C> <C>
<S>
ASSETS
Current Assets
Cash $ 612 $ 695
Accounts receivable 40,011 33,893
Allowance for doubtful accounts (1,922) (1,397)
Current maturities of other receivables 1,111 1,062
Notes receivable 392 501
Inventories 853 878
Prepaid expenses 2,152 3,400
Prepaid tires 3,783 3,888
Deferred income taxes 3,188 2,748
Other 126 121
------- -------
Total Current assets 50,306 45,789
Property, plant and equipment 203,197 181,202
Less - accumulated depreciation and
amortization (71,711) (60,300)
-------- -------
131,486 120,902
Other Assets 9,792 6,913
-------- --------
$191,584 $173,604
======== ========
</TABLE>
<PAGE> 4
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
(continued)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
(Unaudited) *
---------- ----------
<C> <C>
<S>
Current Liabilities
Current maturities of indebtedness $ 2,594 $ 4,224
Accounts payable and accrued expenses 12,139 10,657
Independent contractors payable 7,492 4,547
Other current liabilities 4,788 3,799
Income tax payable 1,129 152
------ ------
Total Current liabilities 28,142 23,379
Long term debt, less current maturities 54,630 51,701
Capital lease obligations, less current
maturities 118 1,404
Other long term obligations 4,734 4,528
Deferred income taxes 26,834 23,679
Commitments and contingent liabilities - -
Stockholders' equity
Common stock 45 45
Other stockholders' equity 77,081 68,868
------- -------
Total stockholders' equity 77,126 68,913
------- -------
$191,584 $173,604
======= =======
</TABLE>
* Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed, consolidated
financial statements.
<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,
1997 1996 1997 1996
------ ------ ------ ------
<C> <C> <C> <C>
<S>
Operating Revenues
Transportation $198,694 $159,428 $68,967 $58,352
Other 14,439 13,383 4,977 4,635
-------- -------- -------- --------
213,133 172,811 73,944 62,987
Operating Expenses
Purchased transportation 132,147 108,046 44,082 38,189
Depreciation and amortization 12,580 9,894 4,529 3,808
Other operating expenses 52,469 40,888 19,599 15,888
-------- -------- -------- --------
Operating income 15,937 13,983 5,734 5,102
Interest expense, net 2,375 2,619 820 949
Other expense (48) (102) (29) 16
-------- -------- -------- --------
Income before taxes 13,610 11,466 4,943 4,137
Income taxes 5,593 4,697 2,015 1,692
-------- -------- -------- --------
Net income $ 8,017 $ 6,769 $ 2,928 $ 2,445
======== ======== ======== ========
</TABLE>
Weighted average number of
shares outstanding
Primary 4,700 4,571 4,719 4,586
Fully Diluted 4,737 4,571 4,738 4,586
Net income per share
Primary $1.71 $1.48 $0.62 $0.53
Fully Diluted $1.69 $1.48 $0.62 $0.53
The accompanying notes are an integral part of these condensed, consolidated
financial statements.
<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,
1997 1996
------- ------
<C> <C>
<S>
Cash provided by (used for)
Operating activities:
Net Income $8,017 $ 6,769
Adjustments for non cash charges 15,296 12,442
Changes in Assets and liabilities 2,988 (3,325)
-------- --------
Net cash provided by operating
activities 26,301 15,886
Investing activities:
Repayment from (Advance to) investee 0 157
Investment in Subsidiary - net of cash (3,677) (4,602)
Capital expenditures (23,028) (10,077)
Proceeds from asset dispositions (86) 238
-------- --------
Net cash used for investing
activities (26,791) (14,284)
Financing activities:
Proceeds from issuance of long
term debt 4,328 6,000
Payment of obligations (4,264) (6,875)
Issuance of common stock - net 261 38
-------- --------
Net cash (used in) provided by
financing activities 325 (837)
-------- --------
Net Increase or decrease in cash (164) 765
Effect of exchange rate changes on cash 81 (5)
Cash, beginning of period 695 322
-------- --------
Cash, end of period $ 612 $1,082
======== ========
Cash payments for:
Interest $2,823 $2,959
Income taxes $2,051 $1,494
</TABLE>
The accompanying notes are an integral part of these condensed, consolidated
financial statements.
<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, 1996, included in the Company's
Form 10-K dated March 28, 1997.
Operating results for the quarter ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the entire fiscal year.
2. EARNINGS PER SHARE:
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No.128, "Earnings per Share" (SFAS 128). SFAS
128 establishes new standards for computing and presenting EPS. Specifically,
SFAS 128 replaces the presentation of primary EPS with a presentation of basic
EPS, requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures, and
requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.
SFAS 128 is effective for financial statements issued after December 15, 1997,
earlier application is not permitted. The effect of the adoption of SFAS 128
on the accompanying financial statements is as follows:
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
Per share amounts 1997 1996 1997 1996
------ ----- ----- -----
<C> <C> <C> <C>
<S>
Primary EPS as reported $1.71 $1.48 $0.62 $0.53
Effect of SFAS No. 128 0.06 0.02 0.03 0.01
----- ----- ----- -----
Basic EPS as restated $1.77 $1.50 $0.65 $0.54
===== ===== ===== =====
Fully diluted EPS as reported $1.69 $1.48 $0.62 $0.53
Effect of SFAS No. 128 0.02 0.00 0.00 0.00
----- ----- ----- -----
Diluted EPS as restated $1.71 $1.48 $0.62 0.53
===== ===== ===== =====
</TABLE>
3. SUPPLEMENTAL DISCLOSURE OF PRO FORMA CONSOLIDATED FINANCIAL INFORMATION:
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 Ltee.
The following disclosure gives retroactive effect to the share purchase
agreement between the Company and Les Placements Marlin Ltee as if Levy had
been owned for the entire period presented.
Revenues for the nine months ended September 30, 1996:$182,503,000. Net income
for the nine months ended September 30, 1996:$6,776,000. Net income per share
for the nine months ended September 30, 1996: $1.48.
<PAGE> 8
4. ADDITIONAL DISCLOSURE:
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No.130,"Reporting Comprehensive Income"
(SFAS 130) and No.131, "Disclosures about Segments of an Enterprise and
Related Information" (SFAS 131).
SFAS 130 requires that an enterprise (a) classify items of other comprehensive
income by their nature in a financial statement and (b) display the
accumulated balance of other comprehensive income seperately from retained
earnings and additional paid-in-capital in the equity section of a statement
of financial position. SFAS 130 is effective for financial statements for
periods beginning after December 15, 1997.
SFAS 131 requires that a public business enterprise report financial and
descriptive information about its reportable operating segments. SFAS 131 is
effective for financial statements for periods beginning after
December 15, 1997.
The effects of SFAS 130 and 131 on the company have not been considered at
this time.
<PAGE> 9
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITON AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THIRD QUARTER 1997 COMPARED TO THE THIRD QUARTER 1996
The Company's operating results are affected by 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 comparative year-to-date operating results as of the third quarter
1997 been impacted by the acquisition of Levy Transport Ltd. ("Levy"),
effective May 1, 1996.
For the quarter ended September 30, 1997, revenues totaled $73.9 million, a
17.4% increase over revenues of $63.0 million for the same period in 1996.
The Company attributes its increased revenues to the acquisition of Levy,
sustained strength in chemical industry shipments nationwide, and
continued implementation of both its affiliate and core carrier strategies.
For the quarter ended September 30,1997,operating income totaled $5.7 million,
representing a 12.4% increase compared to $5.1 million for the same period in
1996. This increase is primarily due to an increase in sales. The operating
ratio increased slightly due to an increase in company revenues, which has a
a different expense profile than the Company's affiliate operations.
Net interest decreased to $820,000 in the quarter ended September 30, 1997,
from $949,000 in the quarter ended September 30, 1996.
Pretax income for the quarter ended September 30, 1997, totaled $4.9 million,
a 19.5% increase compared to $4.1 million for the same period in 1996. Pretax
income increased primarily due to the increase in operating income year to
year.
For the quarter ended September 30, 1997, the Company's net income and
earnings per share were $2.9 million and $0.62 respectively, compared to $2.4
million and $0.53 respectively for the same period in 1996. Weighted average
shares outstanding increased from 4,586,000 in the third quarter of 1996 to
4,719,000 in the third quarter of 1997. As of September 30, 1997, a total of
4,544,186 shares were outstanding.
<PAGE> 10
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 $26.3 million for the nine
month period ending September 30, 1997, versus $15.9 million for the same
period in 1996. The cash provided by financing activities totaled $0.3
million during the nine month period ending September 30, 1997, compared to
$0.8 million used in financing activities during the comparable period in
1996.
Capital used for investing activities totaled $26.8 million for the nine month
period ended September 30, 1997, compared to $14.3 million used for the
comparable 1996 period. Capital was used primarily to acquire additional
revenue equipment to expand the Company's operations.
The Company maintains a $50,000,000 unsecured revolving credit facility with a
group of banks maturing in May of 2000. As of September 30, 1997,the Company
has $32.7 million available under this revolving credit facility. Last year
the Company closed on a $25,000,000, 10-year fixed rate private placement of
debt and a CDN $13.5 million credit facility on behalf of Levy. On July 3, of
this year the Levy credit facility was increased to CDN $23.5 million.
The Company's management believes that borrowings under these 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.
<PAGE> 11
FORM 10-Q
PART II - OTHER INFORMATION
ITEM 5. Other Information
On September 14, 1997, Montgomery Tank Lines, Inc., a wholly owned
subsidiary of MTL Inc., was involved in a product contamination incident in
connection with the unloading of liquid cargo. The extent of damage and the
relative responsibilities of each party involved are uncertain at this time.
However, management is of the opinion that in the event liability is asserted
against Montgomery Tank Lines, Inc., the company's existing insurance
coverage will adequately cover any potential damage claims that may arise
from this incident.
ITEM 6. (a) Exhibits: 27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K: None
<PAGE> 12
Signatures
MTL INC.
-------------------------------------------
October 24, 1997 /S/ CHARLES J. O'BRIEN, JR.
-------------------------------------------
CHARLES J. O'BRIEN, JR., (CEO, PRESIDENT)
(DULY AUTHORIZED OFFICER)
October 24, 1997 /S/ RICHARD J. BRANDEWIE
-------------------------------------------
RICHARD J. BRANDEWIE, (TREASURER)
(PRINCIPAL FINANCIAL OFFICER)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 612
<SECURITIES> 0
<RECEIVABLES> 40011
<ALLOWANCES> 1922
<INVENTORY> 853
<CURRENT-ASSETS> 50306
<PP&E> 203198
<DEPRECIATION> 71711
<TOTAL-ASSETS> 191584
<CURRENT-LIABILITIES> 28142
<BONDS> 0
0
0
<COMMON> 45
<OTHER-SE> 77081
<TOTAL-LIABILITY-AND-EQUITY> 191584
<SALES> 73944
<TOTAL-REVENUES> 73944
<CGS> 0
<TOTAL-COSTS> 68210
<OTHER-EXPENSES> (29)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 820
<INCOME-PRETAX> 4943
<INCOME-TAX> 2015
<INCOME-CONTINUING> 2928
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2928
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
</TABLE>
