Form 1O-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or
15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended June 30, 1995
Commission File No. 0-1392
Central Coal & Coke Corporation and Subsidiaries
Incorporated in State of Delaware IRS Number: 44-0195290
127 West 10th Street, Room 666
Kansas City, Missouri 64105
Phone: 816-842-2430
Common stock outstanding as of June 30, 1995
$1 par value; 373,830 shares
The Registrant (l) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months, and (2) has been subject to such
filing requirements for the past ninety days.
Yes [X] No [ ]
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CENTRAL COAL & COKE CORPORATION
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets - June 30, 1995 and
December 31, 1994
Consolidated Statements of Earnings and Retained Earnings
- Six and three months ended June 30, 1995 and 1994
Consolidated Statements of Cash Flows - Three months
ended June 30, 1995 and 1994
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CENTRAL COAL & COKE CORPORATION
Consolidated Balance Sheets
June 30, 1995 and December 31, 1994
(Unaudited)
(amounts in unit dollars)
<CAPTION>
ASSETS 1995 1994
_________ __________
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 891,930 1,588,952
Accounts receivable 0 22,500
Securities maturing within one year,
at amortized cost (note 3):
Municipal bonds 40,000 40,000
U. S. government securities 7,370,680 6,172,887
__________ __________
7,410,680 6,212,887
Accrued interest receivable 46,235 49,283
Other 38,411 34,131
__________ ___________
Total current assets 8,387,256 7,907,753
Securities maturing beyond one year,
at amortized cost (note 3):
U. S. government and government
agency securities 999,798 999,751
Equity securities, at fair value (note 3) 673,088 606,969
Coal deposits, real estate, equipment
and leasehold improvements:
Coal deposits 1,602,882 1,602,882
Mineral rights 39,988 39,988
Surface land 29,888 29,894
Equipment and leasehold improvements 334,134 144,327
__________ __________
2,006,892 1,817,091
Less accumulated depletion and depreciation 602,642 591,048
Net coal deposits, real estate, __________ __________
equipment and leasehold improvements 1,404,250 1,226,043
Deferred income taxes 0 1,164
__________ __________
$ 11,464,392 10,741,680
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Deferred oil lease bonus $ 155,770 0
Accounts payable and accrued expenses 30,480 17,321
Federal and state income taxes 197,880 39,715
__________ __________
Total current liabilities 384,130 57,036
Deferred income taxes 40,264 0
Stockholders' equity:
Common stock of $1 par value; authorized
500,000 shares; issued 376,688 shares 376,688 376,688
Additional capital 1,631,200 1,631,200
Retained earnings 9,068,535 8,771,546
__________ __________
11,076,423 10,779,434
Less cost of 2,858 shares in treasury (74,058) (74,058)
Net unrealized appreciation (depreciation)
of investments available for sale, net of
deferred taxes of $20,264 and $(11,164) at
June 30, 1995 and December 31, 1994 37,633 (20,732)
__________ __________
Total stockholders' equity 11,039,998 10,684,644
__________ __________
$ 11,464,392 10,741,680
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
CENTRAL COAL & COKE CORPORATION
Consolidated Statements of Earnings and Retained Earnings
Six months ended June 30, 1995 and 1994 and
Three months ended June 30, 1995 and 1994
(Unaudited)
(amounts in unit dollars)
<CAPTION>
Six months Three months
ended June 30, ended June 30,
1995 1994 1995 1994
________ ________ ________ ________
<S> <C> <C> <C> <C>
Operating revenue:
Coal royalties $ 30,385 24,300 26,631 24,300
Oil and gas royalties 204,553 204,154 104,521 122,230
Oil and other mineral lease
rentals and bonuses 271,463 97,562 77,961 93,391
Food sales 399,220 169,844 193,291 74,903
________ ________ ________ ________
Total operating revenue 905,621 495,860 402,404 314,824
Operating expenses:
Cost of food sales 162,731 104,144 79,309 47,438
Food operations 220,032 111,512 112,438 53,607
General and administrative
expenses 226,467 121,718 76,262 55,484
________ ________ ________ ________
Total operating expenses 609,230 337,374 268,009 156,529
Operating income 296,391 158,486 134,395 158,295
Nonoperating income:
Investment income 299,553 251,939 157,372 127,865
Gain on sale of real estate 1,794 32,925 1,794 19,425
Other 11,937 58 9,357 14
________ ________ ________ ________
Total nonoperating income 313,284 284,922 168,523 147,304
Earnings before income
taxes 609,675 443,408 302,918 305,599
Income taxes (note 2) 219,228 173,557 104,407 118,982
________ ________ ________ ________
Net earnings 390,447 269,851 198,511 186,617
Retained earnings at beginning
of period 8,771,546 8,675,962 8,870,024 8,572,281
Deduct cash dividends declared
of $.25 per share in 1995 and
$.50 per share in 1994 (93,458) (186,915) 0 0
________ ________ ________ ________
Retained earnings at end of
period $ 9,068,535 8,758,898 9,068,535 8,758,898
Earnings per share $ 1.05 .72 .53 .50
Weighted average number of
shares of common stock
outstanding 373,830 373,830 373,830 373,830
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
CENTRAL COAL & COKE CORPORATION
Consolidated Statements of Cash Flows
Six months ended June 30, 1995 and 1994
(Unaudited)
(amounts in unit dollars)
<CAPTION>
1995 1994
_________ __________
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 390,447 269,851
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depletion and depreciation 12,550 6,789
Amortization of premiums and
discounts of securities, net (170,575) (51,952)
Gain on sale of real estate (1,794) (32,925)
Deferred income taxes 10,000 20,000
Gain on sales of equity securities (21,353) (25,265)
Changes in assets and liabilities:
Accounts receivable 22,500 22,508
Accrued interest receivable
and other assets (2,188) (52,996)
Deferred oil lease bonus 155,770 0
Accounts payable and accrued expenses 13,159 8,975
Federal and state income taxes 158,165 (9,366)
__________ __________
Total adjustments 176,234 (144,232)
Net cash provided by operating activities 566,681 155,619
Cash flows from investing activities:
Additions to equipment and leasehold
improvements (189,807) (1,217)
Proceeds from matured/called investment
debt securities 6,250,000 4,000,000
Purchases of investment debt securities (7,277,265) (3,915,789)
Proceeds from sale of real estate 1,800 33,500
Purchases of equity securities (43,661) (543,298)
Proceeds from sales of equity securities 88,688 108,461
__________ __________
Net cash used in investing activities (1,170,245) (318,343)
Cash flows from financing activities:
Payments of dividends (93,458) (186,915)
Net cash used by financing activities (93,458) (186,915)
Net decrease in cash and cash equivalents (697,022) (349,639)
Cash and cash equivalents,
beginning of period 1,588,952 1,729,515
Cash and cash equivalents,
end of period $ 891,930 1,379,876
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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CENTRAL COAL & COKE CORPORATION
Notes to Consolidated Financial Statements
March 31, 1995
Note (1) Basis of Presentation:
In the opinion of the Central Coal & Coke Corporation (the
Company), the accompanying unaudited consolidated financial statements
contain all adjustments (consisting of only normal recurring accruals)
necessary to present fairly the financial position as of June 30, 1995,
and the results of operations and cash flows for the three months ended
June 30, 1995 and 1994.
Oil Lease Bonuses
Oil lease bonuses which relate to future periods are deferred and
recognized as income over the related future periods (generally one
year).
Note (2) Income Taxes:
The Company's Missouri corporation income tax returns for the years
1985, 1986, 1987, 1989, 1990 and 1991 were examined by the Missouri
Department of Revenue, and additional taxes and interest thereon were
assessed. The Company made certain payments under protest in 1993 and
1994 in connection with the examination adjustments.
On February 3, 1995, the Company entered into a settlement
agreement with the Missouri Director of Revenue which settled all issues
relating to the examinations. The Company had adequately provided for
its tax obligations with respect to this matter.
Note (3) Securities, Common Stocks and Options:
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (Statement 115) on January 1, 1994. This
statement requires that investments in debt and certain equity
securities be classified in one of three categories: (1)held-to-
maturity securities, which are carried at amortized cost; (2)trading
securities, which are carried at fair market value, with unrealized
gains and losses included in earnings; and (3)available-for-sale
securities, which are carried at fair value, with unrealized gains and
losses excluded from earnings and reported in a separate component of
stockholders' equity, net of related income taxes. The effect on the
Company's consolidated financial statements at January 1, 1994 of
initially adopting Statement 115 was immaterial.
(Continued)
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2
CENTRAL COAL & COKE CORPORATION
Notes to Consolidated Financial Statements
The amortized cost, gross unrealized holding gains, gross
unrealized holding losses and fair value for held-to-maturity and
available-for-sale securities by major security type at June 30, 1995
and December 31, 1994 are as follows:
<TABLE>
<CAPTION>
Gross Gross
unrealized unrealized
Amortized holding holding Fair
June 30, 1995 cost gains losses value
______________ __________ __________ __________ __________
<S> <C> <C> <C> <C>
Held-to-maturity:
U. S. government
securities $ 8,370,478 31,336 (340) 8,401,474
Municipal bonds 40,000 0 0 40,000
__________ __________ __________ __________
$ 8,410,478 31,336 (340) 8,441,474
Available-for-sale:
Equity securities $ 615,191 74,250 (25,009) 673,088
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994
_________________
<S> <C> <C> <C> <C>
Held-to-maturity:
U. S. government
securities $ 7,172,638 3,309 (900) 7,175,047
Municipal bonds 40,000 400 0 40,400
__________ __________ __________ __________
$ 7,212,638 3,709 (900) 7,215,447
Available-for-sale:
Equity securities $ 638,865 21,526 (53,422) 606,969
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
There was no significant change in the financial condition of the
Registrant during the first six months of 1995 from the end of the
last fiscal year, and it continues very strong. The liquidity of
the Registrant continues to be high.
Revenue from coal royalties was up slightly in the first six months
of 1995 over the first six months of 1994 and for the second
quarter of 1995 over the second quarter of 1994 due to an increase
in production. Revenue from oil and gas royalties was down
approximately fourteen percent in the second quarter of 1995 from
the second quarter of 1994 due to somewhat lower production and
lower gas prices. Revenue from oil and other mineral lease rentals
and bonuses was up substantially in the first six months of 1995
over the first six months of 1994 due primarily to three new leases
entered into in the first quarter of 1995 generating substantial
bonus income in that quarter, including one fairly sizable lease on
a portion of the Registrant's Texas property. Also included in
revenue from this source during the first six months of 1995 was a
substantial rental payment received in the first quarter of 1995
for a lease extension entered into with respect to certain of the
Registrant's property in Vernon Parish, Louisiana. Revenue from
this source for the second quarter of 1995 was down from the
second quarter of 1994 reflecting receipt of less rentals and
bonus income during the current quarter.
Revenue from food sales increased substantially in the first six
months of 1995 over the first six months of 1994 which results from
the operation of Beekman's Deli Systems, Limited Liability Company,
a limited liability company in which the Registrant is a majority
member (hereinafter "Beekman's") which is the successor by statutory
merger to a wholly-owned subsidiary of the Registrant which carried
on this business activity in 1994. Only one fast food bagel and
delicatessen facility was in operation in early 1994 (that being the
one in Athens, Ohio), and the second facility located in Columbus,
Ohio, was not opened until the third quarter of 1994, thus
accounting for the increased revenue reflected in the 1995 periods
when both facilities were fully operational.
Revenue from investment income was higher in the first six months
of 1995 over the first six months of 1994 and in the second quarter
of 1995 compared to the second quarter of 1994 due to the overall
rate of return on investments being higher in the current periods
and a somewhat greater amount of funds being invested in the current
periods than in the earlier periods under comparison. There was
significantly more income from gain on sale of real estate during
the first six months of 1994 over the first six months of 1995 and
also in the second quarter of 1994 over the second quarter of 1995
due to more gain on occasional nonrecurring sales of real estate in
the 1994 periods. However, other revenue was significantly higher
both in the first six months of 1995 over the first six months of
1994 and in the second quarter of 1995 over the second quarter of
1994 due to revenue from a timber sale in May of 1995.
Included in operating expenses for the first six months of 1995 and
the first six months of 1994 are cost of food sales and food
operations. Both occur in connection with the fast food bagel and
delicatessen business now being conducted by Beekman's as discussed
above. The primary reason for the increased amount of expenditures
in these categories in the first six months of 1995 over the first
six months of 1994, and the second quarter of 1995 over the second
quarter of 1994 is the same as explained above in connection with
revenue from this operation, that during the 1994 periods there was
only one facility in operation while two facilities were in
operation during the current periods under comparison. Also
contributing to the increased operating expenses in the current
periods were increased payments to outside service providers in
connection with the bagel and delicatessen business.
<PAGE>
2
Income taxes were materially higher for the first six months of 1995
over the first six months of 1994 as a result of increased earnings
before income taxes.
The Registrant adopted the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (Statement 115) on January 1, 1994. The
effect on the Registrant's consolidated financial statements at
January 1, 1994 of initially adopting Statement 115 was immaterial.
See note 3 to the accompanying consolidated financial statements for
a more detailed explanation of this accounting change.
Net cash provided by operating activities was up substantially in
the first six months of 1995 over the first six months of 1994. A
contributing factor to this increase was the receipt of certain
deferred oil lease bonuses and rentals in the first quarter of 1995
but which were deferred and recognized as income over the related
future periods for income purposes.
Regarding capital commitments, in addition to the two locations of
the fast food bagel and delicatessen business currently being
operated by Beekman's, negotiations were concluded during the second
quarter of 1995 for a third facility to be located in State College,
Pennsylvania. The capital commitment of the Registrant in
connection with the first two facilities was approximately $220,000
in aggregate through the end of 1994. The aggregate capital
commitment in connection with the proposed facility at State
College, Pennsylvania could be approximately $200,000, of which
approximately $175,000 had been expended through June 30, 1995.
Other than these capital expenditures, the Registrant has no
specific commitments for material capital expenditures at the
present time. However, the Registrant continues to actively review
other business opportunities which would result in a more productive
deployment of its assets and ultimately increase earnings. As
reflected in the accompanying financial statements and discussed
above, aggressive pursuit of the development of increased royalty
and rental and bonus income from oil and gas properties has already
resulted in increased revenue in 1995. Management plans to continue
to aggressively pursue development of such income from its real
property and mineral interests.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - Attached
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K - None
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Information regarding matters submitted to a vote of security holders
during the second quarter of 1995, is submitted as follows:
(a) The annual meeting of stockholders of the Registrant was held
April 19, 1995.
(b) Directors were elected at that meeting and the five nominees
named in the Proxy Statement previously filed with the Securities and
Exchange Commission pursuant to Regulation 14A and elected at the
meeting were as follows:
Leonard Noah
S. M. Riddle
Beekman Winthrop
Phelps M. Wood
Ernest N. Yarnevich, Jr.
There were no other directors whose term of office as a Director
continued after that meeting.
(c) The following matters were voted on by the stockholders at that
meeting:
(i) A resolution to appoint the firm of KPMG Peat Marwick LLP as
independent public accountant to examine the financial statements of the
Registrant for the year ending December 31, 1995 and to perform other
appropriate accounting services was approved. The holders of 338,355
shares cast their votes in favor of the resolution, the votes of 29
shares were cast against it and the holders of 130 shares abstained.
(ii) A resolution was voted on by the stockholders approving the
"Directors' Non-Qualified Stock Option Plan" in the form previously
approved by the Board of Directors and described in the Proxy Statement
sent to stockholders and filed with the Securities and Exchange
Commission under Regulation 14A. The holders of 241,363 shares cast
their votes in favor of such proposal, the votes of 81,282 shares were
cast against it and the holders of 15,869 abstained. Thus, the
resolution was approved.
(iii) Tabulation of votes with respect to nominees for Directors
is as follows:
Votes Withhold
for authority
Leonard Noah 281,821 56,693
S. M. Riddle 281,822 56,692
Beekman Winthrop 278,755 59,759
Phelps M. Wood 278,756 59,758
Ernest N. Yarnevich, Jr. 281,655 56,859
(d) There were no solicitations subject to Rule 14a-11 and thus
there were no settlements or terms of settlements thereof.
<PAGE>
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.
CENTRAL COAL & COKE CORPORATION
(Registrant)
Date: August 14, 1995
By: Gary J. Pennington
(Signature)
Gary J. Pennington,
Assistant Secretary-
General Manager, Principal
Financial and Accounting Officer
Date: August 14, 1995
By: Leonard L. Noah
(Signature)
Leonard L. Noah,
Vice President, Treasurer
<TABLE> <S> <C>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
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