<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 March 31, 1997
-----------------------------------------------
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: 0-24180
-------------------------------------------------------
MTL Inc.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-3239073
- ------------------------------------------------------------------------------
(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 March 31, 1997
- ------------------------------ ----------------------------------
(Common Stock, $.01 par value) 4,528,716
<PAGE> 2
MTL INC. AND SUBSIDIARIES
INDEX
Part I Financial Information Page No.
Item 1 Financial Statements (unaudited)
Condensed consolidated balance sheets -
March 31, 1997 and December 31, 1996 3-4
Condensed consolidated statements of income -
three months ended March 31, 1997
and 1996 5
Condensed consolidated statements of cash flows -
Three months ended March 31, 1997 and 1996 6
Notes to condensed consolidated financial
statements 7
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 8-9
Part II Other Information
Item 1 Legal proceedings 10
Item 6 Exhibits
Reports on Form 8-K 10
Signatures 11
<PAGE> 3
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited) *
----------- ------------
<C> <C>
<S>
ASSETS
Current Assets
Cash $ 949 $ 695
Accounts receivable 36,238 33,893
Allowance for doubtful accounts (1,585) (1,397)
Current maturities of other receivables 1,062 1,062
Notes receivable 423 501
Inventories 678 878
Prepaid expenses 4,042 3,400
Prepaid tires 3,618 3,888
Deferred income taxes 2,827 2,748
Other 120 121
-------- --------
Total Current assets 48,372 45,789
Property, plant and equipment 185,608 181,202
Less - accumulated depreciation and
amortization (63,774) (60,300)
-------- --------
121,834 120,902
Other Assets 7,010 6,913
-------- --------
$177,216 $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>
March 31, December 31,
1997 1996
(Unaudited) *
---------- ----------
<C> <C>
<S>
Current Liabilities
Current maturities of indebtedness $ 4,115 $ 4,224
Accounts payable and accrued expenses 9,480 10,657
Independent contractors payable 6,167 4,547
Other current liabilities 4,266 3,799
Income tax payable 945 152
------- -------
Total Current liabilities 24,973 23,379
Long term debt, less current maturities 51,013 51,701
Capital lease obligations, less current
maturities 890 1,404
Other long term obligations 4,485 4,528
Deferred income taxes 24,574 23,679
Commitments and contingent liabilities
Stockholders' equity
Common stock 45 45
Other stockholders' equity 71,236 68,868
------- -------
Total stockholders' equity 71,281 68,913
------- -------
$177,216 $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>
Three months ended
March 31,
1997 1996
------ ------
<C> <C>
<S>
Operating Revenues
Transportation $62,838 $46,712
Other 4,546 4,308
-------- --------
67,384 51,020
Operating Expenses
Purchased transportation 42,478 33,144
Depreciation and amortization 3,871 2,763
Other operating expenses 16,348 10,951
-------- --------
Operating income 4,687 4,162
Interest expense, net 737 780
Other expense (10) (44)
-------- --------
Income before taxes 3,960 3,426
Income taxes 1,626 1,390
-------- --------
Net income $ 2,334 $ 2,036
======== ========
</TABLE>
Weighted average number of
shares outstanding
Primary 4,686 4,549
Fully Diluted 4,704 4,558
Net income per share
Primary $0.50 $0.45
Fully Diluted $0.50 $0.45
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>
Three months ended March 31,
1997 1996
------- ------
<C> <C>
<S>
Cash provided by (used for)
Operating activities:
Net Income $2,334 $2,036
Adjustments for non cash charges 4,686 3,928
Changes in Assets and liabilities (354) (2,070)
-------- --------
Net cash provided by operating
activities 6,666 3,894
Investing activities:
Repayment from (Advance to) investee (533) 63
Other Investments 174 0
Capital expenditures (5,011) (3,545)
Proceeds from asset dispositions 230 295
-------- --------
Net cash used for investing
activities (5,140) (3,187)
Financing activities:
Proceeds from issuance of long
term debt 0 1,000
Payment of obligations (1,291) (1,982)
Issuance of common stock - net 50 10
------- -------
Net cash (used in) provided by
financing activities (1,241) (972)
------- -------
Net Increase or decrease in cash 285 (265)
Effect of exchange rate changes on cash (31) 0
Cash, beginning of period 695 322
-------- --------
Cash, end of period $ 949 $ 57
======== ========
Cash payments for:
Interest $ 899 $ 896
Income taxes $ 95 $ 4
</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 March 31, 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 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>
Three months ended March 31,
Per share amounts 1997 1996
----- -----
<C> <C>
<S>
Primary EPS as reported $0.50 $0.45
Effect of SFAS No. 128 0.02 0.00
----- -----
Basic EPS as restated $0.52 $0.45
===== =====
Fully diluted EPS as reported $0.50 $0.45
Effect of SFAS No. 128 0.00 0.00
----- -----
Diluted EPS as restated $0.50 $0.45
===== =====
</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 three months ended March 31, 1996: $58,160,000. Net income
for the three months ended March 31, 1996: $2,055,000. Net income per share
for the three months ended March 31, 1996: $0.45.
<PAGE> 8
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
FIRST QUARTER 1997 COMPARED TO THE FIRST 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 operating results for the first quarter of 1997 have
been impacted by the acquisition of Levy Transport Ltd. ("Levy"), effective
May 1, 1996.
For the quarter ended March 31, 1997, revenues totaled $67.4 million, a 32.1%
increase over revenues of $51.0 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 March 31, 1997, operating income totaled $4.7 million,
representing a 12.6% increase compared to $4.2 million for the same period in
1996. This increase is primarily due to an increase in sales. The operating
ratio increased due to the inclusion of Levy, which has a different expense
profile than the Company's other operating subsidiaries.
Net interest decreased slightly to $737,000 in the quarter ended March 31,
1997, from $780,000 in the quarter ended March 31, 1996.
Pretax income for the quarter ended March 31, 1997, totaled $4.0 million, a
15.6% increase compared to $3.4 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 March 31, 1997, the Company's net income and earnings
per share were $2.3 million and $0.50 respectively, compared to $2.0 million
and $0.45 respectively for the same period in 1996. Weighted average shares
outstanding increased from 4,549,000 in the first quarter of 1996 to 4,686,000
in the first quarter of 1997. As of March 31, 1997, a total of 4,528,716
shares were outstanding.
<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 $6.7 million for the three
month period ending March 31, 1997, versus $3.9 million for the same period in
1996. The cash used in financing activities totaled $1.2 million during the
three month period ending March 31, 1997, compared to $1.0 million used in
financing activities during the comparable period in 1996.
Capital used for investing activities totaled $5.1 million for the three month
period ended March 31, 1997, compared to $3.2 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 1999. As of March 31, 1997, the Company has
available $35.6 million 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.
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> 10
FORM 10-Q
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
Reference is made to Item 3 on page 11 of the Company's Form 10-K for the
year ended December 31, 1996. 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
<PAGE> 11
Signatures
MTL INC.
-------------------------------------------
April 28, 1997 /S/ CHARLES J. O'BRIEN, JR.
-------------------------------------------
CHARLES J. O'BRIEN, JR., (CEO, PRESIDENT)
(DULY AUTHORIZED OFFICER)
April 28, 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> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 949
<SECURITIES> 0
<RECEIVABLES> 36238
<ALLOWANCES> 1585
<INVENTORY> 678
<CURRENT-ASSETS> 48372
<PP&E> 185608
<DEPRECIATION> 63774
<TOTAL-ASSETS> 177216
<CURRENT-LIABILITIES> 24973
<BONDS> 0
0
0
<COMMON> 45
<OTHER-SE> 71236
<TOTAL-LIABILITY-AND-EQUITY> 177216
<SALES> 67384
<TOTAL-REVENUES> 67384
<CGS> 0
<TOTAL-COSTS> 62697
<OTHER-EXPENSES> (10)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 737
<INCOME-PRETAX> 3960
<INCOME-TAX> 1626
<INCOME-CONTINUING> 2334
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2334
<EPS-PRIMARY> .50
<EPS-DILUTED> .50
</TABLE>
