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 September 30, 1996
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 September 30, 1996
$1 par value; 370,966 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 - September 30, 1996 and
December 31, 1995
Consolidated Statements of Earnings and Retained Earnings
- Nine and three months ended September 30, 1996 and 1995
Consolidated Statements of Cash Flows - Nine months
ended September 30, 1996 and 1995
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
September 30, 1996 and December 31, 1995
(Unaudited)
(amounts in unit dollars)
<CAPTION>
ASSETS 1996 1995
__________ ___________
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,896,381 755,422
Accounts receivable 0 22,500
Securities maturing within one year,
at amortized cost (note 2):
U. S. government securities 7,416,674 8,337,926
Accrued interest receivable 0 38,724
Other 67,091 43,836
__________ __________
Total current assets 9,380,146 9,198,408
Equity securities, at fair value (note 2) 806,349 576,749
Coal deposits, real estate, equipment
and leasehold improvements:
Coal deposits 1,602,882 1,602,882
Mineral rights 39,988 39,988
Surface land 29,245 29,320
Equipment and leasehold improvements 449,115 379,164
__________ __________
2,121,230 2,051,354
Less accumulated depletion and depreciation 701,719 644,965
Net coal deposits, real estate, __________ __________
equipment and leasehold improvements 1,419,511 1,406,389
__________ __________
$ 11,606,006 11,181,546
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Deferred oil lease bonus $ 137,498 0
Accounts payable and accrued expenses 52,237 25,534
Dividend payable (note 4) 593,546 0
Federal and state income taxes 67,124 218,527
__________ __________
Total current liabilities 850,405 244,061
Deferred income taxes 56,782 38,138
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 8,763,230 8,910,623
__________ __________
10,771,118 10,918,511
Less cost of shares in treasury, 5,722 in
1996 and 2,858 in 1995 (161,789) (74,058)
Net unrealized appreciation of investments
available-for-sale, net of deferred taxes
of $48,187 and $29,559 at September 30, 1996
and December 31, 1995 89,490 54,894
__________ __________
Total stockholders' equity 10,698,819 10,899,347
__________ __________
$ 11,606,006 11,181,546
<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
Nine months ended September 30, 1996 and 1995 and
three months ended September 30, 1996 and 1995
(Unaudited)
(amounts in unit dollars)
<CAPTION>
Nine months ended Three months ended
ended September 30, ended September 30,
1996 1995 1996 1995
_________ _________ _________ _________
<S> <C> <C> <C> <C>
Operating revenue:
Coal royalties $ 50,905 55,700 24,143 25,315
Oil and gas royalties 592,658 341,459 209,047 136,906
Oil and other mineral lease
rentals and bonuses 216,551 359,835 73,870 88,372
Food sales 825,683 597,760 253,279 198,540
_________ _________ _________ _________
Total operating revenue 1,685,797 1,354,754 560,339 449,133
Operating expenses:
Cost of food sales 339,502 243,586 103,689 80,855
Food operations 630,996 357,224 219,172 137,192
General and administrative
expenses 316,491 371,074 69,093 144,607
_________ _________ _________ _________
Total operating expenses 1,286,989 971,884 391,954 362,654
Operating income 398,808 382,870 168,385 86,479
Nonoperating income:
Investment income 461,616 454,356 134,046 154,803
Gain on sale of real estate 5,970 55,682 245 53,888
Other 2,259 12,022 2,139 85
_________ _________ _________ _________
Total nonoperating income 469,845 522,060 136,430 208,776
Earnings before income
taxes 868,653 904,930 304,815 295,255
Income taxes 329,571 333,412 128,694 114,184
_________ _________ _________ _________
Net earnings 539,082 571,518 176,121 181,071
Retained earnings at
beginning of period 8,910,623 8,771,546 9,180,655 9,068,535
Deduct cash dividends declared
of $1.85 per share in 1996
and 1995 (686,475) (691,586) (593,546) (598,128)
_________ _________ _________ _________
Retained earnings at end
of period $ 8,763,230 8,651,478 8,763,230 8,651,478
Earnings per share $ 1.45 1.53 .47 .48
Weighted average number
of shares of common
stock outstanding 371,875 373,830 370,982 373,830
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
CENTRAL COAL & COKE CORPORATION
Consolidated Statements of Cash Flows
Nine months ended September 30, 1996 and 1995
(Unaudited)
(amounts in unit dollars)
<CAPTION>
1996 1995
__________ __________
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 539,082 571,518
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depletion and depreciation 56,754 24,505
Amortization of premiums and
discounts of securities, net (292,979) (302,005)
Gain on sale of real estate (5,970) (55,682)
Deferred income taxes 16 10,000
Gain on sale of equity securities (90,076) (26,307)
Changes in assets and liabilities:
Accounts receivable 22,500 22,500
Accrued interest receivable
and other assets 15,469 1,596
Deferred oil lease bonus 137,498 77,885
Accounts payable and accrued expenses 26,703 32,710
Federal and state income taxes (151,403) 210,287
__________ __________
Total adjustments (281,488) (4,511)
Net cash provided by operating activities 257,594 567,007
Cash flows from investing activities:
Addition to equipment and leasehold
improvements (69,951) (221,511)
Proceeds from matured/called investment
debt securities 10,000,000 13,250,000
Purchases of investment debt securities (8,785,769) (14,180,807)
Proceeds from sale of real estate 6,045 56,243
Purchases of equity securities (444,047) (51,546)
Proceeds from sales of equity
securities 357,747 183,819
__________ __________
Net cash provided by (used in)
investing activities 1,064,025 (963,802)
Cash flows from financing activities:
Purchase of treasury stock (87,731) 0
Payment of dividends (92,929) (93,458)
__________ __________
Net cash used in financing activities (180,660) (93,458)
Net increase (decrease) in cash and
cash equivalents 1,140,959 (490,253)
Cash and cash equivalents,
beginning of period 755,422 1,588,952
Cash and cash equivalents,
end of period $ 1,896,381 1,098,699
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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CENTRAL COAL & COKE CORPORATION
Notes to Consolidated Financial Statements
September 30, 1996
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 September 30,
1996, and the results of operations and cash flows for the periods
ended September 30, 1996 and 1995.
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) 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 September 30,
1996 and December 31, 1995 are as follows:
<TABLE>
<CAPTION>
Gross Gross
unrealized unrealized
Amortized holding holding Fair
September 30, 1996 cost gains losses value
__________________ __________ __________ __________ __________
<S> <C> <C> <C> <C>
Held-to-maturity:
U. S. government
securities $ 7,416,674 2,536 0 7,419,210
Available-for-sale:
Equity securities $ 668,672 171,494 (33,817) 806,349
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
_________________
<S> <C> <C> <C> <C>
Held-to-maturity:
U. S. government
securities $ 8,337,926 15,527 (742) 8,352,711
Available-for-sale:
Equity securities $ 492,296 111,891 (27,438) 576,749
</TABLE>
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2
CENTRAL COAL & COKE CORPORATION
Notes to Consolidated Financial Statements
Note (3) Food Operations
Food operations of the Company's fast food bagel and delicatessen
business includes the following expenses for the nine months and three
months ended September 30, 1996 and 1995:
<TABLE>
<CAPTION>
Nine months Three months
ended September 30, ended September 30,
1996 1995 1996 1995
__________ __________ __________ __________
<S> <C> <C> <C> <C>
Salaries and wages $ 249,306 157,928 83,602 56,833
Occupancy expense 95,898 58,405 38,274 22,255
Depreciation expense 47,152 19,923 21,247 8,983
Utility expense 31,212 18,213 10,247 7,142
Other expenses 207,428 102,755 65,802 41,979
__________ __________ __________ __________
$ 630,996 357,224 219,172 137,192
Note (4) Dividends
During the quarter ended September 30, 1996, the Company's Board
of Directors declared a $1.60 dividend per share which is payable
November 1, 1996.
</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 nine months of 1996 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 down slightly in the first nine
months of 1996 from the first nine months of 1995 and in the third
quarter of 1996 from the third quarter of 1995, in both cases due to
a decrease in production.
Revenue from oil and gas royalties was up substantially in the first
nine months of 1996 over the first nine months of 1995 and in the
third quarter of 1996 over the third quarter of 1995, due primarily
to higher production and somewhat higher oil prices. Revenue from
oil and other lease rentals and bonuses was down substantially in the
first nine months of 1996 from the first nine months of 1995 and was
down somewhat in the third quarter of 1996 from the third quarter of
1995, due to fewer new leases being made in 1996. Four new leases
which paid substantial bonuses were made during the first nine months
of 1995, while only two new leases were made during the first nine
months of 1996.
Revenue from food sales shows a substantial increase in the first
nine months of 1996 over the first nine months of 1995 (over a 38%
increase) and in the third quarter of 1996 over the third quarter of
1995 (a 28% increase). This 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"). During the first six months of 1995, only two fast
food bagel and delicatessen facilities were in operation (Athens,
Ohio and Columbus, Ohio), and a third facility was opened in State
College, Pennsylvania in the third quarter of 1995. These three
facilities were fully operational during the entire first nine months
of 1996. A fourth facility was opened in May of 1996 in an area of
San Diego, California known as Pacific Beach, however, its
contribution to food sales revenue was not great during the year-to-
date period since it only commenced operations in late May.
Revenue from investment income was slightly higher in the first nine
months of 1996 over the first nine months of 1995 due to a somewhat
greater rate of return on investments during the current period even
though there was a slightly smaller amount of funds being invested in
the current period. However, revenue from investment income was
actually down (approximately 13%) in the third quarter of 1996
compared to the third quarter of 1995 due to a smaller amount of
funds being invested overall, and a somewhat reduced rate of return
on investments during the third quarter.
Revenue from gain on sale of real estate was down substantially in
the third quarter of 1996 from the third quarter of 1995 and the
corresponding year-to-date periods, due to certain nonrecurring sales
of real estate which occurred in the third quarter of 1995 with no
such comparable sales in 1996. Other income was down in the first
nine months of 1996 compared to the first nine months of 1995 because
in the second quarter of 1995 the Registrant recognized a gain from
the sale of timber on certain of its real properties which did not
recur in 1996.
Included in operating expenses are costs 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 nine months of 1996 over the first
nine months of 1995 and in the third quarter of 1996 over the third
quarter of 1995, is the same as explained above in connection
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2
with revenue from this operation, that during the 1995 periods there
were fewer facilities in operation than in the corresponding periods
in 1996. General and administrative expenses were down in the first
nine months of 1996 from the first nine months of 1995 and in the
third quarter of 1996 from the third quarter of 1995, due to reduced
payments to outside service providers.
During the third quarter of 1996, Congress passed and President
Clinton signed legislation increasing the minimum wage in two
increments. Since Beekman's employs a number of workers at the
prevailing minimum wage, an increase in labor expense is anticipated,
but at this time the Registrant is unable to predict the effect of
this increase on its net income from this operation.
Income taxes were somewhat lower for the first nine months of 1996
than for the first nine months of 1995 as a result of decreased
earnings before income taxes.
There was positive net cash provided by operating activities in the
first nine months of 1996, but not as much as in the first nine
months of 1995. This variance was attributable to substantial tax
refunds received in 1995 which increased cash flow, while in the 1996
period substantial estimated and other income tax payments were
required which decreased cash flow. There was somewhat less net
proceeds from investment debt securities in the first nine months of
1996 than in the first nine months of 1995, due to the timing of
maturities.
The Board of Directors declared a dividend of $.25 per share which
was paid on May 1, 1996 and another dividend of $1.60 per share which
was paid on November 1, 1996. This aggregates to $1.85 per share for
1996, and this is the same amount as was paid out in dividends per
share in 1995.
Regarding capital commitments, as discussed above, a fourth fast food
bagel and delicatessen business facility was opened by Beekman's
during the second quarter of 1996 in San Diego, California. The
estimated total capital commitment in connection with opening this
new facility will aggregate approximately $100,000. Although efforts
continue to locate and open additional facilities for Beekman's, at
this time there are no specific proposals for new locations. Other
than capital expenditures in connection with this operation, the
Registrant has no specific commitment for material capital
expenditures at the present time. However, the Registrant continues
to actively pursue other business opportunities which will result in
a more productive deployment of its assets and ultimately increase
earnings. As reflected in the accompanying consolidated financial
statements and as is discussed above, aggressive pursuit of
development of increased royalty income from oil and gas properties
has resulted in increased royalty revenue during 1996. Management
continues 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 - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K - None
<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: November 14, 1996
By: Gary J. Pennington
(Signature)
Gary J. Pennington,
Assistant Secretary-
General Manager, Principal
Financial and Accounting Officer
Date: November 14, 1996
By: Leonard L. Noah
(Signature)
Leonard L. Noah,
Vice President, Treasurer
<TABLE> <S> <C>
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1896381
<SECURITIES> 7416674
<RECEIVABLES> 0
<ALLOWANCES> 0
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<CURRENT-ASSETS> 9380146
<PP&E> 2121230
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0
0
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