UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1995
Commission File No. 0-1392
CENTRAL COAL & COKE CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware 44-0195290
__________________ __________________
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
127 West 10th Street, Suite 666, Kansas City, Missouri 64105
______________________________________________________ _____
(Address of Principal Executive Offices) (Zip Code)
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Registrant's telephone number, including area code: 816/842-2430
____________
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
___________________ ________________________
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None None
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common stock ($1 par value)
___________________________
(Title of Class)
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
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period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [ X ]
No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by nonaffiliates
of the registrant (182,031 shares), as of February 9, 1996 was
$5,551,945.50.
The number of shares outstanding of the issuer's only class of common stock
as of December 31, 1995, is as follows:
Common Stock ($1.00 Par Value) . . . . . . 373,830
(This figure does not include 2,858 shares of treasury stock)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to security holders for fiscal year
ended December 31, 1995, captioned "Selected Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Market for Registrant's Common Equity and Related
Stockholder Matters." (Part II)
Definitive Proxy Statement furnished to security holders and the
Securities and Exchange Commission on March 21, 1996, relative to the
Annual Meeting of Stockholders to be held on April 17, 1996. (Part III)
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PART I
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS. During the year 1993, the
registrant formed a new wholly-owned subsidiary corporation which was
authorized to become involved in a newly created fast food bagel and
delicatessen business located in Athens, Ohio, near the campus of Ohio
University. The business commenced operation during the fourth quarter of
1993. A second facility located in Columbus, Ohio, near the campus of Ohio
State University, opened during the third quarter of 1994. The registrant
had invested approximately $220,000 in the aggregate in this operation as
of December 31, 1994. As of December 31, 1994, the subsidiary was merged
with and into Beekman's Deli Systems, Limited Liability Company, an Ohio
limited liability company in which the registrant is a majority member and
a wholly-owned subsidiary of the registrant is the only other member, and
this business segment is now being conducted by the limited liability
company. A third facility was opened in State College, Pennsylvania in the
third quarter of 1995, and a lease was signed on a new facility located in
an area of San Diego, California known as Pacific Beach early in 1996. If
the venture continues to progress satisfactorily, it is anticipated that it
will be expanded into other locations, with at least three additional
facilities to be added in 1996. Other than the expansion of that venture,
since the beginning of the fiscal year there have been no material changes
or developments in the business done or intended to be done by registrant.
However, as described more fully in Management's Discussion and Analysis of
Financial Condition and Results of Operations described in Item 7 of this
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report, management continues to investigate other activities involving
deployment of registrant's assets in an effort to increase earnings. Since
the beginning of the fiscal year, there have been no bankruptcy,
receivership or similar proceedings with respect to the registrant; there
has been no material reclassification, merger or consolidation of the
registrant; there has been no acquisition or disposition of any material
amount of assets otherwise than in the ordinary course of business; and
there has been no material change in the mode of conducting the business of
the registrant.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. During the year
1995, the registrant had two reportable segments which are identified as
the Energy Business Segment and the Retail Food Business Segment. See
footnote 10 to the accompanying consolidated financial statements for more
detail as to these separate Business Segments and financial information
with respect thereto. There were no separate segments of the registrant
prior to 1993.
(c) NARRATIVE DESCRIPTION OF BUSINESS. One business activity of the
registrant consists of the management of its interests in real properties
and as discussed above is now identified as the Energy Business Segment.
Such real property interests have been held and managed by registrant for
lease to others for exploration for and the extraction of coal and oil and
gas and for surface use. From time to time sales of portions of such
properties have been made. During 1994 the registrant sold forty (40)
acres of surface land located in Macon County, Missouri and the timber
rights on some adjoining property which generated a gain of approximately
$33,000, and in 1995 sold approximately 4.41 additional acres of surface
land in that county generating a gain of $2,141.58 and 40 additional acres
of timber rights were sold for $8,900. In 1993 the registrant sold certain
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real property in Sebastian County, Arkansas, which generated a gain of
$211,560, and in 1995 sold an additional 103 acres of surface land in that
county for a gain of $56,768. The properties owned at the end of the
fiscal year are described in Item 2. As described more fully in Item 1(a)
above, a subsidiary of the registrant began operation in late 1993 of a
fast food bagel and delicatessen business located in Athens, Ohio, and
opened an additional facility in Columbus, Ohio in 1994, and State College,
Pennsylvania in 1995. Additionally, the registrant continues to examine
and evaluate the deployment of its assets and owned and operated
enterprises as described above. During the last four years, the registrant
reviewed at least five possible new business opportunities in addition to
the fast food bagel and delicatessen business described above, resulting in
a formal bid for one company which was not accepted, rejected another
opportunity as not suitable, and another such opportunity reviewed was
taken off the market. Also, during 1993 the registrant commenced a
voluntary program of reforestation on reclaimed open pit coal mining
property located in Arkansas and Oklahoma. The program was not federally
or state mandated, however the registrant may voluntarily decide to
undertake additional reforestation on its properties in the future.
Another business activity of registrant consists of the ownership and
management of its investment portfolio of marketable securities and United
States government obligations.
Other than as described above, the registrant produces no products nor
renders any services; however, oil, gas, and coal are extracted by lessees
from properties owned by the registrant as more fully explained in Item 2.
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Other than the fast food bagel and delicatessen business described
above, there have been no new products nor industry segments requiring the
investment of a material amount of assets of the registrant, and there have
been no public announcements nor has information otherwise become public
involving any such new products or industry segments.
Raw materials are not essential to registrant's businesses.
There are no patents, trademarks, licenses, franchises and concessions
held by registrant, other than a pending U.S. Service Mark Application for
registration of the service mark "BEEKMAN'S BAGEL" in connection with the
fast food bagel and delicatessen business described above.
No business of any industry segment of the registrant is or may be
seasonal.
The registrant has no significant practices relating to working
capital since it carries no significant amount of inventory and does not
provide extended payment terms to customers.
Bethlehem Steel Corporation was the lessee under a coal lease from
registrant for a term of 40 years commencing in June, 1969, providing for
minimum royalties of $50,000 annually for each of the first three years and
$90,000 annually for the next 36 years, together with provisions for
royalties of 22-1/2 cents per ton of coal mined and shipped against which
the minimum royalties are to be applied. On October 1, 1984, this lease
was amended to increase the royalty to the greater of $1.00 per ton or 3%
of the F.O.B. mine selling price for all coal paid for by actual royalty or
minimum royalty after that date, and Bethlehem assigned the lease to
another. A portion of the leased property was subsequently subleased to
another party, but Bethlehem continues to guarantee the total royalty
payment. A small amount of mining has been done on the lease. The loss of
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the revenues from this lease would result in a material diminution in the
income of registrant, but the registrant has no reason to believe that the
lessee has either the legal right or intention to cease making the required
payments thereunder.
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Except as discussed above, there are no customers to which sales are
made in an amount which equals ten percent or more of the registrant's
consolidated revenue.
Registrant's businesses do not have any backlog of unfilled orders.
No material portions of the businesses of registrant may be subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.
There are no competitive conditions in the businesses in the
registrant's Energy Business Segment which have a material impact on its
operations. As to the Retail Food Business Segment, competition is
vigorous in all markets as a part of the retail fast food industry, but it
is too early in the development of this business segment to be able to
evaluate any material impact on its operations.
Registrant spent no money during any of the last three fiscal years on
material company-sponsored research and development activities as
determined in accordance with generally accepted accounting principles. In
addition, registrant spent no money during such years on material customer-
sponsored research activities relating to the development of new products,
services or techniques or the improvement of existing products, services or
techniques.
Compliance with Federal, State and local provisions regulating the
discharge of materials into the environment, or otherwise relating to the
protection of the environment, will have no material effect upon the capital
expenditures, earnings and competitive position of the registrant. There
are no material estimated capital expenditures for environmental control
facilities for the remainder of the current fiscal year and the succeeding
fiscal year or for any further periods which the registrant deems material.
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The total number of persons employed by the registrant itself, as of
the end of the fiscal year, was 4. The fast food bagel and delicatessen
business described in Item 1(a) above employs approximately 85 people in
all locations in the aggregate.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
EXPORT SALES. The registrant does not engage in operations in foreign
countries, nor are portions of sales or revenues derived from customers in
foreign countries.
ITEM 2. PROPERTIES
(a) The principal physical properties of the registrant are whole or
partial interests in approximately 64,000 acres of real property located in
Arkansas, Louisiana, Texas, Kansas, Oklahoma and Missouri. Its mineral
reservation under the Sam Houston National Forest in Texas on an additional
76,000 acres expired on January 1, 1985, but was extended for a five-year
period on about 6,280 acres with producing wells, which period expired
January 1, 1990. Another 640 of these acres were lost on January 1, 1990,
and an additional 1,623 of these acres were lost on January 1, 1995,
leaving the registrant's rights in 4,017 remaining acres, now to expire
January 1, 2000, unless extended. In later parts of this Item 2 references
are made to the ownership of "minerals." The registrant is the owner of
all or part of the subsurface minerals on large portions of the properties
involved, but the only minerals of primary interest to the registrant are
coal, oil and gas.
(1) REAL PROPERTY INTERESTS IN THE STATE OF ARKANSAS.
The registrant is the owner of approximately 1,708 acres in fee
simple, of minerals underlying approximately 16,404 additional acres, and
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of a number of town lots in three small towns, all in Sebastian County,
Arkansas, having sold approximately 103 acres of surface in 1995.
Mineral interests underlying approximately 13,600 acres are under
a coal lease to the assignee of Bethlehem Steel Corporation under the coal
lease described in Item l(c). An additional 48 acres of the registrant's
Arkansas properties are currently being leased under coal leases. Another
586 acres were leased in 1993 under two separate oil and gas leases (both
to the same lessee) for 5-year terms. As yet there is no production under
either of these new leases.
Of the 13,600 acres currently under a coal lease to the assignee
of Bethlehem Steel Corporation as described in the preceding paragraph,
10,537.23 acres were leased to C.D. Exploration, Inc. in 1995 under an Oil
& Gas Lease for a term of five years, for which the lessee paid a bonus of
approximately $105,000. An additional 414 acres were leased in 1994 under
three separate oil and gas leases (two to the same lessee), one for a three
year term and the other two for five year terms. As yet there is no
production under any of these leases. In addition, registrant has
fractional royalty interests in 8 small producing gas wells which are on a
5,354 acre tract of which registrant owns 1,044 acres.
(2) REAL PROPERTY INTERESTS IN THE STATE OF TEXAS.
The registrant was the owner of practically all of the mineral
interests in approximately 90,551 acres located in the Texas counties of
San Jacinto, Walker and Montgomery, of which approximately 82,674 acres
were under a reservation (in a deed of December, 1935) which covered all
oil, gas, sulphur and other minerals on, in, under or that may be produced
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from the lands for a period commencing with the date of the deed and ending
on January 1, 1985, and provided further that if on said latter date
minerals were being produced in paying quantities then the reservation
would be extended for a five-year period as to an area of one square mile
of which the well is the center and for subsequent extensions for
additional five-year periods so long as paying operations are being
conducted on the premises. The right to prospect for and mine and remove
minerals was further limited by various requirements of the United States.
As described in Item 2(a) above, this reservation expired on January 1,
1985, and the wells then producing on such properties permitted the
registrant to retain until January 1, 1990, about 6,280 acres in the Mercy
Field, West Mercy Field and Moroil Field, and as of January 1, 1995, the
registrant continues to retain 4,017 of such acres, while production
continues. The reservation is extended for an additional five-year term
ending January 1, 2000, at the end of which this acreage will be lost if
there is no production then continuing.
The registrant's mineral interests in its remaining acreages in
Texas are reservations of perpetual mineral rights. In the case of
approximately 7,600 acres, one-thirty-second of the minerals are vested in
the owner of the surface of said properties but with the right in the
registrant to make all leases on the acreage and to keep all bonuses and
rentals received under such leases. In January, 1995, 7,788.55 acres of
these mineral interests were leased under one oil and gas lease for a term
of three years with one option to renew for an additional two years. The
lessee paid a bonus of approximately $311,000 in connection with this
lease. As yet there is no production under this lease.
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(3) REAL PROPERTY INTERESTS IN THE STATE OF LOUISIANA.
In January, 1967, the registrant sold approximately 35,000 acres
of Louisiana real property reserving mineral servitudes thereon. Under
Louisiana law the ownership of mineral servitudes not exercised through
production or drilling to a depth at which production reasonably can be
expected to be found expires by liberative prescription after a period of
such nonuser of ten years. No production or drilling occurred on
approximately 14,000 of the acres sold in 1967 within the ten-year period
and, hence, the registrant's ownership of the mineral servitudes under such
approximately 14,000 acres was extinguished as of January 26, 1977. During
1978, the registrant's ownership of the mineral servitudes under 1,243
additional acres was extinguished because production had been exhausted for
ten years. Mineral servitudes under the remaining acres sold in 1967 have
been extended by drilling or production for various periods expiring after
January 26, 1977. The registrant's rights to approximately 8,530
additional acres of these servitudes expired during 1994.
In the Hurricane Creek Field, Beauregard Parish, Louisiana, 880
acres are held by production which commenced in 1947. The leases of the
registrant in the Hurricane Creek Field provide for one-eighth gross
royalties except as to 160 acres for which the gross royalty is one-fourth.
In 1964, a Unitization Agreement covering one producing sand was executed
by various interested parties in the Hurricane Creek Field so as to permit
a secondary recovery program, and a second Unitization Agreement was
executed in March, 1994.
In the Clear Creek Field, Beauregard Parish, Louisiana,
approximately 600 acres were held under oil and gas leases by production
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which commenced in 1955 and were terminated during 1991. The registrant's
interest in this 600 acres will continue for 10 years from this date
pursuant to the Louisiana law concerning mineral servitudes as described
above. In addition, approximately 400 additional acres in Beauregard
Parish, Louisiana, are held under production pursuant to a lease, the
original term of which expired many years ago but which continues by
production.
The registrant leased approximately 9339 acres of its real
property in Vernon Parish, Louisiana, for a term of four years, pursuant to
the exercise of a geo-option made in early 1991. This lease was extended
for an additional year in 1995. As yet there is no production under this
lease, but currently a well is being drilled.
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(4) REAL PROPERTY INTERESTS IN OKLAHOMA AND KANSAS.
The registrant is the owner of interests in real property in
three counties in eastern Oklahoma and three counties in southeast Kansas,
which ownership consists of approximately 1,430 acres in fee simple, and
approximately 13,511 additional acres of underlying minerals. A
substantial part of such 13,511 acres of mineral ownership is described in
the conveyances or reservations giving rise to such ownership as "coal" or
"coal and asphaltic minerals."
The registrant in the past has also rented the surface of
portions of its lands in Kansas and Oklahoma, largely for agricultural
purposes, under leases of not to exceed one year.
(5) REAL PROPERTY INTERESTS IN THE STATE OF MISSOURI.
In Randolph and Macon Counties, Missouri, the registrant is the
owner of approximately 380 acres in fee simple (having sold 4 acres of
surface land in 1995) and of the minerals underlying 5,837 acres.
Substantially all of the mineral ownership is described in the conveyances
from which it arose as "coal" or "coal and other minerals." The properties
involved were acquired by predecessor companies for the principal purpose
of mining coal therefrom, and extensive mining was conducted thereon by the
predecessors.
The registrant has rented the surface of portions of its lands in
Missouri, largely for agricultural purposes, under leases of not to exceed
one year.
(b) The registrant does not participate in any oil and gas
operations. However, the registrant is the owner of certain properties
(fully described above in this Item), part of which are leased to outside
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interests for the production of oil and gas. The registrant receives
bonuses, rentals and royalties for the use of the land and mineral
interests leased by it.
(6) RETAIL FOOD BUSINESS SEGMENT LEASES.
The operations of the fast food bagel and delicatessen facilities
constituting the Retail Food Business Segment are carried out from premises
leased at the locations specified in Item 1(a) above. The financial
commitments for those leases are described in Note 7 to the accompanying
financial statements.
ITEM 3. LEGAL PROCEEDINGS
(a) There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business, to which the
registrant is a party or of which any of its property is the subject.
There are no material proceedings to which any director, officer of
affiliate of the registrant, any owner of record or beneficially of more
than five percent of any class of voting securities of the registrant, or
any associate of any such director, officer or security holder is a party
adverse to the registrant or has a material interest adverse to the
registrant. Further, there are no administrative or judicial proceedings
involving the registrant arising under any federal, state or local
provisions which have been enacted or adopted regulating the discharge of
materials into the environment or primarily for the purpose of protecting
the environment.
(b) There were no such material legal proceedings which were
terminated during the fourth quarter of the fiscal year covered by this
report.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders through the
solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by this item is set forth on the inside back
cover of the Annual Report as of December 31, 1995, furnished to the
stockholders of the registrant, and attached as an exhibit hereto, which
portion of the Annual Report is incorporated herein by this reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is set forth under the caption
"SELECTED CONSOLIDATED FINANCIAL DATA" in the Annual Report as of December
31, 1995, furnished to the stockholders of the registrant, and attached as
an exhibit hereto, which portion of the Annual Report is incorporated
herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is set forth under the caption
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
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OPERATIONS" in the Annual Report as of December 31, 1995, furnished to the
stockholders of the registrant, and attached as an exhibit hereto, which
portion of the Annual Report is incorporated herein by this reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements required by this item are as
follows:
Consolidated Balance Sheets as of December 31, 1995 and 1994;
Consolidated Statements of Earnings - Years ended December 31, 1995,
1994 and 1993;
Consolidated Statement of Stockholders' Equity - Years ended December
31, 1995, 1994 and 1993.
Consolidated Statements of Cash Flows - Years ended December 31, 1995,
1994 and 1993;
Notes to Consolidated Financial Statements
These financial statements are filed as a part of this report, beginning on
page 23 hereof, and are incorporated herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
(a) The only independent accountant who was engaged during the
registrant's two most recent fiscal years or any subsequent interim period
as the principal accountant to audit the registrant's financial statements
has not resigned (nor indicated it has declined to stand for re-election
after the completion of the current audit) nor was dismissed.
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(b) No new independent accountant has been engaged as the principal
accountant to audit the registrant's financial statements during the
registrant's two most recent fiscal years or any subsequent interim period.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is set forth on pages 2 and 3 of
registrant's definitive proxy statement filed with the Securities and
Exchange Commission pursuant to Schedule 14A promulgated under the
Securities Exchange Act of 1934, under the caption "ELECTION OF DIRECTORS",
which portion of said definitive proxy statement is incorporated herein by
this reference.
No disclosure is being made herein of reporting person delinquencies
in response to Item 405 of Securities and Exchange Commission regulation S-
K, and the registrant, at the time of filing of this FORM 10-K, has
reviewed the information necessary to ascertain, and has determined that,
Item 405 disclosure is not expected to be contained in this Part III of
FORM 10-K or incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is set forth on pages 2 and 3 of
registrant's definitive proxy statement filed with the Securities and
Exchange Commission pursuant to Schedule 14A promulgated under the
Securities Exchange Act of 1934, under the caption "ELECTION OF DIRECTORS",
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which portion of said definitive proxy statement is incorporated herein by
this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is set forth on pages 1, 2 and 3
of registrant's definitive proxy statement filed with the Securities and
Exchange Commission pursuant to Schedule 14A promulgated under the
Securities Exchange Act of 1934, under the captions "VOTING SECURITIES
OUTSTANDING AND VOTING RIGHTS" and "ELECTION OF DIRECTORS", which portions
of said definitive proxy statement are incorporated herein by this
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is set forth on pages 2 and 3 of
registrant's definitive proxy statement filed with the Securities and
Exchange Commission pursuant to Schedule 14A promulgated under the
Securities Exchange Act of 1934, under the caption "ELECTION OF DIRECTORS,"
which portion of said definitive proxy statement is incorporated herein by
this reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this Report:
1. Independent Auditors' Report
2. Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 1995 and 1994
Consolidated Statements of Earnings - Years ended December 31,
1995, 1994 and 1993
Consolidated Statements of Stockholders' Equity - Years ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows - Years ended December
31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
3. Consolidated Financial Statement Schedules:
All schedules are omitted as none are currently required.
4. Exhibits:
(3) (i) Certificate of Incorporation (including all
amendments to date) is incorporated herein by reference to
Exhibit (3) to the Annual Report on Form 10-K for the
registrant for the fiscal year ended December 31, 1989.
(ii) Bylaws (including all amendments to date) are
incorporated herein by reference to Exhibit 3(ii) to the
Annual Report on Form 10-K for the registrant for the
fiscal year ended December 31, 1993.
(10) Material Contracts:
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(iii)(A) Central Coal & Coke Corporation's Directors Non-
Qualified Stock Option Plan is incorporated herein by
reference to Exhibit (10)(iii)(A) to the Annual Report on
Form 10-K for the registrant for the fiscal year ended
December 31, 1994. This Plan was approved by the
registrant's stockholders at the Annual Meeting held April
19, 1995, and is discussed in the Definitive Proxy
Statement for that meeting previously filed with the
Commission and in the Definitive Proxy Statement for the
Annual Meeting of Stockholders to be held April 17, 1996
previously filed with the Commission.
(13) Portions of the Annual Report to security holders for
year ended December 31, 1995 captioned "Selected
Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
and "Market for Registrant's Common Equity and Related
Stockholder Matters."
(21) Subsidiaries of the registrant
(b) No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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
By /s/ Beekman Winthrop
________________________________
Beekman Winthrop, President
Date: March 21 , 1996
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Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By /s/ Beekman Winthrop
________________________________
Beekman Winthrop, President
Principal Executive Officer
Date: March 21 , 1996
/s/ Gary Pennington
________________________________
Gary J. Pennington
General Manager, Principal
Financial Officer, and
Date: March 21 , 1996 Principal Accounting Officer
By /s/ Leonard Noah
________________________________
Leonard Noah, Director
Date: March 21 , 1965
By /s/ Beekman Winthrop
________________________________
Beekman Winthrop, Director
Date: March 21 , 1996
By /s/ Ernest N. Yarnevich, Jr.
________________________________
Ernest N. Yarnevich, Jr., Director
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CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Index to Consolidated Financial Statements
Independent Auditors' Report
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 1995 and 1994
Consolidated Statements of Earnings - years ended December 31, 1995,
1994 and 1993
Consolidated Statements of Stockholders' Equity - years ended December
31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows - years ended December 31, 1995,
1994 and 1993
Notes to Consolidated Financial Statements
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INDEPENDENT AUDITORS' REPORT
KPMG Peat Marwick, LLP
1000 Walnut, Suite 1600
P.O. Box 13127
Kansas City, MO 64199
The Board of Directors
Central Coal & Coke Corporation
and Subsidiaries:
We have audited the consolidated financial statements of Central Coal &
Coke Corporation and subsidiaries as listed in the accompanying index.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Central
Coal & Coke Corporation and subsidiaries as of December 31, 1995 and 1994
and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1995, in conformity with
generally accepted accounting principles.
As discussed in note 1, the Company changed its method of accounting for
investment securities in 1994 to adopt the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," and changed its method of accounting for income taxes in 1993
to adopt the provisions of Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes."
KPMG Peat Marwick, LLP
Kansas City, Missouri
January 19, 1996
-24-
<PAGE> 25
<TABLE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Balance Sheets
December 31, 1995 and 1994
(amounts in unit dollars)
<CAPTION>
ASSETS 1995 1994
_________ __________
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 755,422 1,588,952
Accounts receivable 22,500 22,500
Securities maturing within one year,
at amortized cost (note 2):
Municipal bonds (fair value $40,400
in 1994) 0 40,000
U. S. government and government
agency securities (fair value
$8,352,711 in 1995; $6,172,234 in 1994) 8,337,926 6,172,887
__________ __________
8,337,926 6,212,887
Accrued interest receivable 38,724 49,283
Other 43,836 34,131
__________ ___________
Total current assets 9,198,408 7,907,753
Securities maturing beyond one year,
at amortized cost (note 2):
U. S. government and government
agency securities (fair value $1,002,813
in 1994) 0 999,751
Equity securities, at fair value (note 2) 576,749 606,969
Coal deposits, real estate, equipment
and leasehold improvements (notes 3 and 4):
Coal deposits 1,602,882 1,602,882
Mineral rights 39,988 39,988
Surface land 29,320 29,894
Equipment and leasehold improvements 379,164 144,327
__________ __________
2,051,354 1,817,091
Less accumulated depletion and depreciation 644,965 591,048
Net coal deposits, real estate, __________ __________
equipment and leasehold improvements 1,406,389 1,226,043
Deferred income taxes 0 1,164
__________ __________
$ 11,181,546 10,741,680
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses 25,534 17,321
Federal and state income taxes (note 5) 218,527 39,715
__________ __________
Total current liabilities 244,061 57,036
Deferred income taxes 38,138 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 8,910,623 8,771,546
__________ __________
10,918,511 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 $29,559 and $11,164
in 1994 54,894 (20,732)
__________ __________
Total stockholders' equity 10,899,347 10,684,644
__________ __________
$ 11,181,546 10,741,680
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
-25-
<PAGE> 26
<TABLE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Statements of Earnings
Years ended December 31, 1995, 1994 and 1993
(amounts in unit dollars)
<CAPTION>
1995 1994 1993
________ ________ ________
<S> <C> <C> <C>
Operating revenue:
Coal royalties (note 3) $ 102,779 97,303 92,700
Oil and gas royalties 460,597 474,290 437,762
Oil and other lease rentals and bonuses 437,720 114,065 155,490
Food sales 870,380 406,291 43,427
________ ________ ________
Total operating revenue 1,871,476 1,091,949 729,379
Operating expenses:
Cost of food sales 355,500 160,587 17,854
Food operations 538,004 243,263 69,619
General and administrative expenses 483,619 363,933 268,606
Writedown of coal deposits (note 3) 0 0 118,670
________ ________ ________
Total operating expenses 1,377,123 767,783 474,749
Operating income 494,353 324,166 254,630
Nonoperating income:
Investment income (note 2) 618,648 433,812 375,469
Gain on sale of real estate 68,162 32,925 211,560
Other 2,077 122 0
________ ________ ________
Total nonoperating income 688,887 466,859 587,029
Earnings before income taxes and
cumulative effect of change in
accounting principle 1,183,240 791,025 841,659
Income taxes (note 5) 352,578 321,611 367,666
Earnings before cumulative effect
of change in accounting principle 830,662 469,414 473,993
Cumulative effect of change in accounting
for income taxes (note 5) 0 0 20,000
________ ________ ________
Net earnings 830,662 469,414 453,993
Earnings per share:
Earnings before cumulative effect of
change in accounting principle $ 2.22 1.26 1.27
Cumulative effect of change in
accounting for income taxes 0 0 (0.05)
Net earnings $ 2.22 1.26 1.22
Weighted average number of
shares of common stock
outstanding 373,830 373,830 373,830
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
-26-
<PAGE> 27
<TABLE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1995, 1994 and 1993
(amounts in unit dollars)
<CAPTION>
Net
unrealized
appreciation
(depreciation)
Common Addtnal Retained Treasury available
Stock Capital Earnings Stock for sale Total
_______ _________ _________ ________ ________ __________
<S> <C> <C> <C> <C> <C>
Balance,
12/31/92 376,688 1,631,200 8,595,799 (74,058) 0 10,529,629
Net Earnings 0 0 453,933 0 0 453,993
Cash dividends
($1.00 per
share) 0 0 (373,830) 0 0 (373,830)
Balance,
12/31/93 376,688 1,631,200 8,675,962 (74,058) 0 10,609,792
Net Earnings 0 0 469,414 0 0 469,414
Cash dividends
($1.00 per
share) 0 0 (373,830) 0 0 (373,830)
Net unrealized
depreciation
on investments
available-for-
sale 0 0 0 0 (20,732) (20,732)
Balance,
12/31/94 376,688 1,631,200 8,771,546 (74,058) (20,732) 10,684,644
Net Earnings 0 0 830,662 0 0 830,662
Cash dividends
($1.00 per
share) 0 0 (691,585) 0 0 (691,585)
Net unrealized
depreciation
on investments
available-for-
sale 0 0 0 0 75,626 75,626
Balance,
12/31/95 376,688 1,631,200 8,910,623 (74,058) 54,894 10,899,347
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
-27-
<PAGE> 28
<TABLE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
(amounts in unit dollars)
<CAPTION>
1995 1994 1993
___________ ___________ ___________
<S> <C> <C> <C>
Cash flows from operating
activities:
Net earnings $ 830,662 469,414 453,993
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depletion and depreciation 55,837 22,671 3,733
Gain on sale of real estate (68,162) (32,925) (211,560)
Gain on sale of equity
securities (52,880) (26,331) 0
Amortization of premiums and
discounts of securities, net (407,477) (165,802) (32,864)
Deferred income taxes (1,421) 0 10,000
Writedown of coal deposits
(note 3) 0 0 118,670
Changes in assets and
liabilities:
Receivables and other assets (1,057) 32,777 (12,626)
Accounts payable and accrued
expenses 8,213 8,414 5,867
Federal and state income
taxes 178,812 (22,683) 11,958
___________ ___________ ___________
Net cash provided by operating
activities 542,527 285,535 347,171
Cash flows from investing
activities:
Proceeds from matured/called
investment debt securities 20,790,000 12,390,000 2,900,000
Purchases of investment debt
securities (21,507,820) (11,784,302) (7,936,872)
Proceeds from sale of land 68,737 33,500 213,660
Purchases of equity securities (120,927) (822,089) 0
Proceeds from sales of equity
securities 320,376 209,555 0
Capital expenditures (234,838) (78,932) (59,342)
___________ ___________ ___________
Net cash used in investing
activities (684,472) (52,268) (4,882,554)
Cash flows from financing
activities - dividends paid (691,585) (373,830) (373,830)
Net increase (decrease) in cash
and cash equivalents (833,530) (140,563) (4,909,213)
Cash and cash equivalents,
beginning of year $ 1,588,952 1,729,515 6,638,728
Cash and cash equivalents,
end of year $ 755,422 1,588,952 1,729,515
Income taxes paid during period $ 173,766 344,294 365,708
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
-28-
<PAGE> 29
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
December 31, 1995 and 1994
(1) Summary of Significant Accounting Policies
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of
Central Coal & Coke Corporation (the Company) and its two wholly-owned
subsidiaries. The Company's subsidiaries are engaged in the ownership
and operation of a fast food bagel/delicatessen business. This business
commenced operations in the fourth quarter of 1993. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure
of contingent assets and liabilities to prepare these consolidated
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of demand deposit accounts and a money
market deposit account. For purposes of the consolidated statements of
cash flows, the Company considers all highly liquid debt instruments
with original maturities of three months or less to be cash equivalents.
Investment Securities
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. Statement 115
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 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 until realized. The effect on the Company's consolidated
financial statements at January 1, 1994 of initially adopting Statement
115 was immaterial.
Premiums and discounts are amortized or accreted over the life of the
related held-to-maturity security as an adjustment to yield using the
effective interest method. Dividend and interest income are recognized
when earned. Realized gains and losses for securities classified as
available-for-sale are included in earnings and are derived using the
specific identification method for determining the cost of securities
sold.
-29-
<PAGE> 30
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
Coal Deposits, Real Estate, Equipment and Leasehold Improvements
Coal deposits, mineral rights and surface lands were acquired from the
trustee in bankruptcy for predecessor companies (pursuant to a plan of
reorganization approved by the federal court) and were initially
recorded at the valuations placed thereon by the receivers in bankruptcy
in 1931. Subsequent additions and all other fixed assets are stated at
cost. Maintenance and repairs are charged to expense as incurred.
Renewals and betterments which extend the useful life of the asset are
capitalized.
Depreciation and Depletion
Equipment and leasehold improvements are depreciated using the straight-
line method over their estimated useful lives or lease terms which range
from five to ten years.
Depletion of coal deposits is computed at the rate of $.025 per ton of coal
produced or purchased which approximates depletion computed on a
wasting-asset basis.
Coal, Oil and Gas Income
Coal royalties are based on a percentage of the production of land leased
from the Company or, in the case of no production, the minimum annual
royalty (see note 3). Oil and gas royalties are based on a percentage
of the production on land leased from the Company. Oil and other
mineral lease rentals and bonuses are derived from the leasing of land
and mineral rights prior to production.
Oil lease bonuses which relate to future periods are deferred and
recognized as income over the related future periods (generally one
year).
Income Taxes
The Company and its subsidiaries file a consolidated federal income tax
return.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards 109, "Accounting for Income Taxes," (Statement 109)
and has reported the cumulative effect of that change in the method of
accounting for income taxes in the 1993 consolidated statement of
earnings. Under Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. Under Statement 109, the effect on
deferred tax assets and liabilities for subsequent changes in tax rates
is recognized in income in the period that includes the tax rate change.
-30-
<PAGE> 31
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
Earnings and Dividends Per Common Share
Earnings per common share are based on the weighted average number of
common shares and dilutive common equivalent shares outstanding during
the year. Dividends per share are based on the number of shares
outstanding on the dividend dates of record.
(2) Investment Securities
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 December 31, 1995 and 1994 are
presented below. Substantially all equity securities represent common
stocks of domestic corporations.
<TABLE>
<CAPTION>
Gross Gross
unrealized unrealized
Amortized holding holding Fair
1995 cost gains losses value
__________________ __________ __________ __________ __________
<S> <C> <C> <C> <C>
Held-to-maturity:
U. S. government
securities $ 6,356,767 8,622 (340) 6,365,049
U. S. government
agency securities 1,981,159 6,905 (402) 1,987,662
__________ __________ __________ __________
$ 8,337,926 15,527 (742) 8,352,711
Available-for-sale:
Equity securities $ 492,296 111,891 (27,438) 576,749
</TABLE>
<TABLE>
<CAPTION>
1994
_________________
<S> <C> <C> <C> <C>
Held-to-maturity:
U. S. government
securities $ 6,672,731 2,435 (900) 6,674,266
U. S. government
agency securities 499,907 874 0 500,781
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>
At December 31, 1995, all U. S. government and government agency
securities mature within one year.
-31-
<PAGE> 32
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
Investment income consists of the following for each of the years in the
three-year period ended December 31, 1995:
<TABLE>
<CAPTION>
1995 1994 1993
__________ __________ __________
<S> <C> <C> <C>
Interest 545,016 395,959 375,469
Dividends 20,752 11,522 0
Gross gains on sales of equity
securities 63,764 40,251 0
Gross losses on sales of equity
securities (10,884) (13,920) 0
__________ __________ __________
618,648 433,812 375,469
</TABLE>
(3) Coal Deposits
The rights to 14,000 acres of coal deposits totaling approximately
84,000,000 tons of coal in place (of which from 50% to 90% could be
expected to be recoverable) are leased under agreements which extend for
periods of one to fourteen years. The agreements provide for minimum
annual royalties of $94,800. Coal deposits aggregating approximately
92,000,000 tons in place with a net carrying value of approximately
$710,000 at December 31, 1995 are not presently leased or producing coal
in commercial quantities.
In September 1993, the Company received an appraisal on certain of those
coal properties which are not presently leased or producing coal in
commercial quantities. Based on this appraisal, the Company recorded a
charge to operations of $118,670 in 1993 to reduce the cost of these
properties to their estimated net realizable value. The resulting
deferred tax asset relating to this writedown has been fully reserved
through establishment of a valuation allowance due to uncertainties
regarding its ultimate realization.
(4) Mineral Rights
At December 31, 1995, the Company owns approximately 64,000 acres of
mineral rights in Missouri, Kansas, Oklahoma, Arkansas, Louisiana and
Texas.
(5) Income Taxes
Effective January 1, 1993, the Company adopted Statement 109. The
cumulative effect of this accounting change at January 1, 1993 amounted
to $20,000 or $.05 per share and has been recorded as a reduction in net
earnings in the accompanying consolidated statement of earnings for the
year ended December 31, 1993.
-32-
<PAGE> 33
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
________ ________ ________
<S> <C> <C> <C>
Federal $ 382,011 268,467 320,155
State (29,433) 53,144 47,511
________ ________ ________
Total income tax expense $ 352,578 321,611 367,666
</TABLE>
Income tax expense has been provided at effective rates of 29.8%, 40.7% and
43.7% for the years ended December 31, 1995, 1994 and 1993,
respectively. The reasons for the difference between the effective tax
rates and the corporate federal income tax rates of 34.0% in 1995, 1994
and 1993 are as follows:
<TABLE>
<CAPTION>
Percentage of earnings
before income taxes
1995 1994 1993
_____ _____ _____
<S> <C> <C> <C>
Expected statutory tax rate 34.0% 34.0 34.0
Municipal bond interest (.1) (.1) (.1)
Increase in valuation allowance (note 3) 0 0 5.4
State income taxes, net of federal
income tax effect (1.6) 4.3 3.7
Other, net (2.5) 2.5 .7
_____ _____ _____
Effective tax rate 29.8% 40.7 43.7
</TABLE>
The Company's Missouri corporation income tax returns 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.
In 1995, the Company entered into a settlement agreement with the Missouri
Department of Revenue which settled all issues relating to the
examinations. As a result of this settlement, in 1995 the Company
recorded a reduction to its estimated state income tax accrual
established in prior years amounting to $75,000.
-33-
<PAGE> 34
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1995 and 1994 are presented below:
<TABLE>
<CAPTION>
Deferred tax assets: 1995 1994
________ ________
<S> <C> <C>
Organization costs $ 6,000 6,400
Writedown of coal deposits 45,095 45,095
Unrealized loss on available-for-sale
securities 0 11,164
Other 9,021 5,000
________ ________
60,116 67,659
Less valuation allowance (note 3) (45,095) (45,095)
________ ________
Deferred tax assets 15,021 22,564
</TABLE>
<TABLE>
<CAPTION>
Deferred tax liabilities:
<S> <C> <C>
Depletion and depreciation (23,600) (21,400)
Unrealized gain on available-for-sale
securities (29,559) 0
________ ________
Deferred tax liabilities (53,159) (21,400)
Net deferred tax asset (liability) $ (38,138) 1,164
</TABLE>
The future operations of the Company are expected to generate sufficient
taxable income to realize the deferred tax assets.
(6) Pension Plan
The Company sponsors a defined contribution pension plan for eligible
employees. Contributions to the plan were $1,055, $1,052 and $1,043 in
1995, 1994 and 1993, respectively. The Company is not required to make
additional contributions to the plan.
(7) Operating Leases
The Company has an operating lease on a month-to-month basis for its
administrative office space in Kansas City, Missouri. In addition, the
subsidiaries of the Company have operating leases for certain retail
facilities. Rent expense under such arrangements in the aggregate
amounted to $90,192, $47,541 and $17,142 for the years ended December
31, 1995, 1994 and 1993, respectively.
-34-
<PAGE> 35
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
A summary of minimum lease commitments, all of which relate to the food
operation, follows:
<TABLE>
<CAPTION>
Year ended
December 31,
____________
<S> <C>
1996 $ 75,592
1997 36,692
1998 24,192
1999 18,144
</TABLE>
It is expected that, in the ordinary course of business, leases will be
renewed or replaced.
(8) Disclosures About Fair Value of Financial Instruments
Cash, Cash Equivalents, Trade Receivables and Trade Payables
The carrying amount approximates fair value because of the short maturity
of these financial instruments.
Debt and Equity Securities
The fair values of debt and equity securities are based on quoted market
prices. The fair value of debt and equity securities are disclosed in
note 2.
(9) Related Party Transaction
During February 1994, an Investment Management Agreement was entered into
between the Company and Woodwin Management, Inc. The Company's
president is also the president, director and stockholder of Woodwin
Management, Inc. Under this agreement, the Company has agreed to pay a
fee at an annual rate of .50% of the market value of the assets under
management. Woodwin Management, Inc. is managing the Company's equity
securities portfolio. The fee paid in 1995 and 1994 to Woodwin
Management, Inc. was $3,625 and $1,845, respectively. In the opinion of
management of the Company, the terms of this Investment Management
Agreement are reasonable and competitive.
-35-
<PAGE> 36
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
(10) Business Segment Information
The Company operates in two business segments: energy and retail food.
The energy segment consists of the leasing of real properties and
mineral interests in the midwestern and southern United States to
operating lessees. Coal royalties in 1995 were received from three
customers, with 87% being received from one customer. Oil and mineral
leases and bonuses were received from four customers in 1995, with 71%
being received from one customer. Oil and gas royalties were received
from four customers in 1995, with 96% being received from one customer.
The retail food segment, which commenced in 1993, consists of the
operation of a fast food bagel and delicatessen business with two
locations in Ohio and one location in Pennsylvania. Business segment
information for 1995, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
Retail
1995 Energy food Total
_________ _________ __________
<S> <C> <C> <C>
Operating revenue $ 1,001,096 870,380 1,871,476
Operating income (loss) $ 995,757 (119,848) 875,909
General corporate expenses (381,556)
Investment income 618,648
Gain on sale of real estate 68,162
Other 2,077
__________
Earnings before income
taxes $ 1,183,240
Depreciation and depletion $ 2,402 53,435 55,837
Capital expenditures $ 0 234,838 234,838
Identifiable assets $ 1,156,280 338,363 1,494,643
Corporate assets 9,686,903
__________
Total assets $ 11,181,546
</TABLE>
-36-
<PAGE> 37
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
Retail
1994 Energy food Total
_________ _________ __________
<S> <C> <C> <C>
Operating revenue $ 685,658 406,291 1,091,949
Operating income (loss) $ 683,077 (69,513) 613,564
General corporate expenses (289,398)
Investment income 433,812
Gain on sale of real estate 32,925
Other 122
__________
Earnings before income
taxes $ 791,025
Depreciation and depletion $ 2,341 20,330 22,671
Capital expenditures $ 0 78,932 78,932
Identifiable assets $ 1,130,136 145,680 1,275,816
Corporate assets 9,465,864
__________
Total assets $ 10,741,680
</TABLE>
<TABLE>
<CAPTION>
Retail
1993 Energy food Total
_________ _________ __________
<S> <C> <C> <C>
Operating revenue $ 685,952 43,427 729,379
Operating income (loss) $ 562,776 (43,856) 518,920
General corporate expenses (264,290)
Investment income 375,469
Gain on sale of real estate 211,560
__________
Earnings before income
taxes $ 841,659
Depreciation and depletion $ 2,284 1,449 3,733
Capital expenditures $ 0 59,342 59,342
Identifiable assets $ 1,133,061 67,835 1,200,896
Corporate assets 9,490,201
__________
Total assets $ 10,691,097
</TABLE>
Identifiable assets are those assets used in the Company's operations in
each segment. Corporate assets are principally cash and cash
equivalents and investments in securities. The operating income of each
industry segment includes the revenue generated on transactions
involving products and services within that industry segment less
identifiable and allocated expenses.
-37-
<PAGE> 38
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
(11) Stock Option Plan
In April 1995, the Company's Board of Directors approved a nonqualified
stock option plan. The plan provides stock options to directors of the
Company in lieu of cash compensation for services provided to the
Company. A total of 25,000 shares of the Company's common stock have
been made available to the plan. Stock options are granted at a price
equal to the fair value of the Company's common stock on the date of
grant for a term of ten years. During 1995, 2,500 options were granted
with an exercise price of $29.00. At December 31, 1995, these options
were exercisable.
-38-
[DESCRIPTION] Selected Consolidated Financial Data
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA
Years ended December 31 1995 1994 1993
_____________ _____________ _____________
<S> <C> <C> <C>
Total operating revenue $ 1,871,467.00 1,091,949.00 729,379.00
Net Earnings 830,662.00 469,414.00 453,993.00
Net Earnings per common share 2.22 1.26 1.22
Cash dividends per common share 1.85 1.00 1.00
Total Assets $ 11,181,546.00 10,741,680.00 10,691,097.00
</TABLE>
<TABLE>
<CAPTION
Years ended December 31 1992 1991
_____________ _____________
<S> <C> <C>
Total operating revenue $ 525,595.00 665,527.00
Net Earnings 489,719.00 753,310.00
Net Earnings per common share 1.31 2.02
Cash dividends per common share 1.50 1.75
Total Assets $ 10,583,109.00 10,765,554.00
</TABLE>
<PAGE>
[DESCRIPTION] Management's Discussion and Analysis
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
There was no significant change in the financial condition of the
Company during 1995, 1994 or 1993, and it continues very strong. The
liquidity of the Company continues to be high.
The results of operations are summarized in the President's Letter to
the stockholders. Revenue from oil and gas royalties was down somewhat in
1995 from 1994, but was higher in 1995 and in 1994 than in 1993. The
reasons for the decrease in 1995 were lower gas prices and slightly lower
production. Revenue from this source was higher in 1995 and 1994 than 1993
due to greater production in the current periods, primarily from three
wells on the Company's Texas properties, one of which did not commence
production until 1994. Revenue from oil and oil mineral lease rentals and
bonuses increased in 1995 over 1994, but 1994 was lower than 1993. The
increase in 1995 was due primarily to three new leases entered into during
that year generating substantial bonus income, including one fairly
sizeable lease on a portion of the Company's Texas property. Also included
in revenue from this source during 1995 was substantial rental payment
received in 1995 for a lease extension entered into with respect to certain
of the Company's property in Vernon Parish, Louisiana. Fewer new leases
were entered into in 1994 than in 1993, and less land overall was under
lease and subject to rentals in 1994. As described in note 10 to the
accompanying consolidated financial statements, the above components to
results of operations are characterized as part of the Energy Business
Segment and, as is described more fully in note 10, operating income from
that segment increased substantially in 1995 over 1994 and 1993.
Included in revenue for 1995 and 1994, and to a lesser extent in 1993
was income from food sales which increased substantially in 1995 over 1994
and in 1994 over 1993. These revenues resulted from the operation of
Beekman's Deli Systems, Limited Liability Company, a limited liability
company in which the company is a majority member (hereinafter "Beekman's")
which is the successor by statutory merger to a wholly-owned subsidiary
of the Company which carried on this business activity in 1994 and 1993.
Only one fast-food bagel and delicatessen facility was in operation in
early 1994 (that being the one in Athens, Ohio), with a second facility
(located in Columbus, Ohio) being opened in the third quarter of 1994, and
a third facility (located in State College, Pennsylvania) opening in the
third quarter of 1995. The increased number of facilities in operation
primarily accounts for the increased revenue in the current periods, over
the earlier periods under comparison, with a slight increase in sales
volume of existing facilities. As discussed in the President's Letter, new
locations are under investigation and it is anticipated that four new
facilities will be opened in 1996 which should increase revenue from this
Business Segment substantially.
Revenue from investment income was higher in 1995 than in 1994 and
higher in both 1995 and 1994 than in 1993, 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 the
earlier periods under comparison. Gain on sale of real estate was higher in
1995 than in 1994, but lower in both of those years than in 1993. This
basically reflects the sale of more surface real estate in the higher
years, particularly in 1993, due to gain from the sale in that year of
substantial surface real estate in Sebastian County, Arkansas. Gain on such
sales was nonrecurring income.
Included in operating expenses 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 substantially increased amount of expenditures
in these categories in 1995 over the prior two years and in 1994 over 1993
is the same as explained above in connection with revenue from this
operation, that during 1994 there was only one facility in operation while
two facilities were in operation during all of 1995, and a third facility
was opened in the third quarter of 1995. 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. Contributing to the higher general and administrative expenses in
1995 were professional expenses in connection with the successful
resolution of disputes with the Missouri Department of Revenue regarding
state income taxes for several years, as is described in note 5 to the
consolidated financial statements. Also, in 1993 there was a nonrecurring
<PAGE>
expense recorded in the form of a write-down in the carrying value of
certain coal deposits to their estimated net realizable value based on an
independent third party appraisal received during that year which is
explained in note 3 to the accompanying consolidated financial statements.
Management continues to believe that the carrying amount of coal deposits
is recoverable through estimated future cash flows.
Income taxes were higher in 1995 over 1994 as a result of increased
earnings before income taxes. Income taxes were lower in 1994 than 1993
reflecting decreased earnings before income taxes in 1994. The effective
tax rate in 1995 was lower due to a reduction of the Company's estimated
state income tax accrual as a result of the settlement with the Missouri
Department of Revenue. See note 5 to the consolidated financial statements.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." The
cumulative effect of this account change at January 1, 1993 amounted to
$20,000 and was recorded as a reduction in net earnings in the consolidated
statement of net earnings and retained earnings for 1993. The effect of
this accounting change on 1993 net earnings, excluding the cumulative
effect at January 1, 1993, was not material. See note 5 to the consolidated
financial statements for a more detailed explanation of this accounting
change.
The Company adopted the provisions of SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" (Statement 115) on
January 1, 1994. The effect on the Company's consolidated financial
statements at January 1, 1994 of initially adopting Statement 115 was
immaterial. See notes 1 and 5 to the consolidated financial statements for
a more detailed explanation of this accounting change
Because of the nature of the Company's businesses, inflation has
little impact on its expenses. It is not anticipated that changes in the
price of coal will have much impact on the income of the Company because of
continuing low activity of coal extraction and because the Company's
existing coal leases have fixed prices per ton and are not affected by
market changes. Substantially increased prices could cause an increase in
the amount of coal mined, however. Changes in the price of oil could have a
minor impact on the income of the Company. It is too early in the
operational life of the fast food bagel and delicatessen business to be
able to predict the impact of inflation on it.
As described in the President's Letter, expansion into new locations
of the fast food bagel and delicatessen business is expected and certain
expenditures are anticipated in connection with the expansion. The capital
commitment of the Company in connection with the opening of the first two
facilities described above (Athens, Ohio and Columbus, Ohio) was
approximately $220,000 in the aggregate through the end of 1994. The
aggregate capital commitment in connection with the facility at State
College, Pennsylvania will total approximately $200,000. Other than these
capital expenditures, the Company has no specific commitments for material
capital expenditures at the present time.
In addition to the expansion of the fast-food bagel and delicatessen
business referred to above, the Company continues to actively seek and
evaluate other business opportunities which would result in a more
productive deployment of its assets and ultimately increase earnings.
Management continues to aggressively pursue development of increased income
from its oil and gas and coal properties and to attempt to lease more of
its mineral properties in order to generate more rental, bonus and royalty
income. During 1995 two significant new oil leases were entered into, one
on the Company's Walker County, Texas property and the other on its
Arkansas property, together generating an aggregate of approximately
$330,000 in bonus income, and a lease extension was entered into with
respect to property in Vernon Parish, Louisiana which generated in excess
of $90,000 in bonus and rental income in 1995. Also, a methane gas lease
was entered into with respect to certain of the Company's real property in
Sebastian County, Arkansas which generated a sizeable bonus which was
received in early 1996.
The Company generated increased cash from operating activities in 1995
as a result of higher net income. Significant expenditures of cash in 1995
were for capital expenditures, primarily the Company's new bagel facility
in State College, Pennsylvania and for dividends. The Company's dividends
per share were $1.85 in 1995 compared to $1.00 per share in 1994 and 1993.
<PAGE>
[DESCRIPTION] Market for Registrant's Common Equity
The common stock of Central Coal & Coke Corporation is traded over the
counter. The approximate number of stockholders of the Company's common
stock at December 31, 1995 was 530. The range of bid and asked quotations
and the dividends paid on such securities for each quarterly period during
the Company's two most recent years are as follows:
<TABLE>
<CAPTION>
1995
Bid Asked Dividends
Low High Low High Per Share
_____ _____ _____ _____ _________
<S> <C> <C> <C> <C> <C>
1st Quarter $ 27.00 28.50 .00 .00 $ .00
2nd Quarter 27.50 29.00 .00 .00 .25
3rd Quarter 28.00 30.00 .00 .00 .00
4th Quarter 28.00 33.00 .00 .00 1.60
For Year $ 27.00 33.00 .00 .00 $ 1.85
</TABLE>
<TABLE>
<CAPTION>
1994
Bid Asked Dividends
Low High Low High Per Share
_____ _____ _____ _____ _________
<S> <C> <C> <C> <C> <C>
1st Quarter $ 26.00 26.00 .00 .00 $ .00
2nd Quarter 26.75 27.27 .00 .00 .50
3rd Quarter 26.75 29.75 .00 .00 .00
4th Quarter 27.00 29.25 .00 .00 .50
For Year $ 26.00 29.00 .00 .00 $ 1.00
</TABLE>
Exhibit 21
Subsidiaries of the Registrant
Set forth below are the subsidiaries of the Registrant and their respective
jurisdictions of incorporation or organization, as of December 31, 1995.
The subsidiaries are included in the Consolidated Financial Statements
filed herewith.
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation
Subsidiary Or Organization
____________________________ ________________
<S> <C>
CCC Capital Corporation Missouri
Beekman's Deli Systems,
Limited Liability Company Ohio
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 755422
<SECURITIES> 8337926
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9198408
<PP&E> 2051354
<DEPRECIATION> 644965
<TOTAL-ASSETS> 11181546
<CURRENT-LIABILITIES> 244061
<BONDS> 0
<COMMON> 376688
0
0
<OTHER-SE> 10522659
<TOTAL-LIABILITY-AND-EQUITY> 11181546
<SALES> 870380
<TOTAL-REVENUES> 1871476
<CGS> 355500
<TOTAL-COSTS> 1377123
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1183240
<INCOME-TAX> 352578
<INCOME-CONTINUING> 830662
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 830662
<EPS-PRIMARY> 2.22
<EPS-DILUTED> 2.22
</TABLE>
