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 March 31, 1997
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 March 31, 1997
$1 par value; 365,366 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 [ ]
<PAGE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets - March 31, 1997 and
December 31, 1996
Consolidated Statements of Earnings and Retained Earnings
- Three months ended March 31, 1997 and 1996
Consolidated Statements of Cash Flows - Three months
ended March 31, 1997 and 1996
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
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Balance Sheets
March 31, 1997 and December 31, 1996
(Unaudited)
(amounts in unit dollars)
<CAPTION>
ASSETS 1997 1996
__________ __________
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,661,214 1,342,955
Accounts receivable 0 22,500
Securities maturing within one year,
at amortized cost (note 2) (fair value
$7,403,300 and $7,420,525 at March 31, 1997
and December 31, 1996) 7,406,846 7,420,236
Income tax receivable 0 8,697
Other 51,723 56,238
__________ __________
Total current assets 9,119,783 8,850,626
Equity securities, at fair value (note 2) 810,882 799,210
Coal deposits, real estate, equipment
and leasehold improvements:
Coal deposits 1,602,882 1,602,882
Mineral rights 39,988 39,988
Surface land 28,852 28,868
Equipment and leasehold improvements 436,230 436,230
__________ __________
2,107,952 2,107,968
Less accumulated depletion and depreciation 738,281 720,326
Net coal deposits, real estate, __________ __________
equipment and leasehold improvements 1,369,671 1,387,642
__________ __________
$ 11,300,336 11,037,478
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses $ 48,061 26,926
Deferred oil lease bonus 37,083 74,166
Federal and state income taxes 66,658 0
Dividend Payable (note 4) 182,683 0
__________ __________
Total current liabilities 334,485 101,092
Deferred income taxes 85,662 89,004
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 9,053,251 9,014,238
__________ __________
11,061,139 11,022,126
Less cost of 11,332 shares held in treasury 335,389 335,389
Net unrealized appreciation of investments
available for sale, net of deferred taxes
of $83,159 and $86,501 at March 31, 1997
and December 31, 1996 154,439 160,645
__________ __________
Total stockholders' equity 10,880,189 10,847,382
__________ __________
$ 11,300,336 11,037,478
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Statements of Earnings
Three months ended March 31, 1997 and 1996
(Unaudited)
(amounts in unit dollars)
<CAPTION>
1997 1996
__________ __________
<S> <C> <C>
Operating revenue:
Coal royalties $ 1,565 1,969
Oil and gas royalties 307,709 187,745
Oil and other mineral lease rentals
and bonuses 80,196 69,735
Food sales 258,996 290,135
__________ __________
Total operating revenue 648,466 549,584
Operating expenses:
Cost of food sales 103,793 121,493
Food operations 209,061 184,444
General and administrative expenses 131,701 129,023
__________ __________
Total operating expenses 444,555 434,960
Operating income 203,911 114,624
Nonoperating income:
Investment income 123,747 152,755
Gain on sale of real estate 785 785
Other 46 43
__________ __________
Total nonoperating income 124,578 153,583
Earnings before income taxes 328,489 268,207
Income taxes 106,792 93,016
__________ __________
Net earnings 221,697 175,191
Retained earnings at beginning of period 9,014,238 8,910,623
Deduct cash dividends declared of $.25 per
share in 1996 and 1995 (182,684) (92,929)
__________ __________
Retained earnings at end of period $ 9,053,251 8,992,885
Earnings per share $ .61 .47
Weighted average number of shares of
common stock outstanding 365,366 372,936
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Statements of Cash Flows
Three months ended March 31, 1997 and 1996
(Unaudited)
(amounts in unit dollars)
<CAPTION>
1997 1996
__________ __________
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 221,697 175,191
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depletion and depreciation 17,956 15,976
Amortization of premiums and
discounts of securities, net (97,135) (96,692)
Deferred income taxes 0 16
Gain on sale of real estate (785) (785)
Gain on sale of equity securities (12,364) (25,497)
Changes in assets and liabilities:
Accounts receivable 22,500 22,500
Accrued interest receivable
and other assets 13,212 8,776
Deferred oil lease bonus (37,083) 78,750
Accounts payable and accrued expenses 21,135 (3,547)
Federal and state income taxes 66,658 (63,062)
__________ __________
Total adjustments (5,906) (63,565)
Net cash provided by operating activities 215,791 111,626
Cash flows from investing activities:
Capital Expenditures 0 (1,467)
Proceeds from matured/called investment
debt securities 7,500,000 1,500,000
Purchases of investment debt securities (7,389,475) (1,465,232)
Proceeds from sale of land 800 799
Purchases of equity securities (68,811) (115,203)
Proceeds from sales of equity
securities 59,954 187,499
__________ __________
Net cash used in investing activities 102,468 106,396
Cash flows from financing activities - purchase
of treasury stock 0 (64,481)
Net increase in cash and cash equivalents 318,259 153,541
Cash and cash equivalents,
beginning of period 1,342,955 755,422
Cash and cash equivalents,
end of period $ 1,661,214 908,963
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
March 31, 1997
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 March 31, 1997,
and the results of operations and cash flows for the three months ended
March 31, 1997 and 1996.
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 March 31, 1997
and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Gross Gross
unrealized unrealized
Amortized holding holding Fair
March 31, 1997 cost gains losses value
__________________ __________ __________ __________ __________
<S> <C> <C> <C> <C>
Held-to-maturity:
U. S. government
securities $ 7,406,846 0 (3,546) 7,403,300
Available-for-sale:
Equity securities $ 573,284 265,275 (27,677) 810,882
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
_________________
<S> <C> <C> <C> <C>
Held-to-maturity:
U. S. government
securities $ 7,420,236 333 (44) 7,420,525
Available-for-sale:
Equity securities $ 552,064 255,193 (8,047) 799,210
</TABLE>
<PAGE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
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>
Three months
ended March 31,
1997 1996
__________ __________
<S> <C> <C>
Salaries and wages $ 82,802 76,922
Occupancy expense 37,338 22,395
Depreciation expense 15,135 13,150
Utility expense 8,725 9,607
Other expenses 65,061 62,370
__________ __________
$ 209,061 184,444
Note (4) Dividends
During the quarter ended March 31, 1997 the Company's Board
of Directors declared a $.50 dividend per share which is payable
May 1, 1997.
<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 quarter of 1997 from the end of the last fiscal year, and it
continues very strong. The liquidity of the Registrant continues to be high.
Revenue from oil and gas royalties increased almost 64% in the first quarter
of 1997 over the first quarter of 1996 due to greater production and somewhat
higher oil prices. Revenue from oil and other mineral lease rentals and
bonuses was up approximately 15% in the first quarter of 1997 from the first
quarter of 1996. One component of revenue from this source is lease rentals
and the amount of that component was approximately the same in the first
quarter of 1996 as in the first quarter of 1997. However, the balance of
revenue from this source is from lease bonuses, and as explained in Note 1 to
the accompanying consolidated financial statements, these bonuses are
deferred and taken into income over future periods. Differences in the
amounts of the bonuses actually received during the respective quarters, and
the timing differences of recognizing these amounts as income, accounts for
the difference in these components in the two periods under comparison.
Revenue from food sales shows a modest decrease in the first quarter of 1997
from the first quarter of 1996. Revenue from this source results from the
operation of Beckman's Deli Systems, Limited Liability Company, a limited
liability company in which the Registrant is a majority member (hereinafter
"Beekman's"). At the beginning of 1996, there were three fast food bagel and
delicatessen facilities in operation (Athens, Ohio, Columbus, Ohio and State
College, Pennsylvania). A fourth facility was opened in May of 1996 in an
area of San Diego, California known as Pacific Beach, however, this facility
was closed at the end of March 1997 because of disappointing sales. Overall,
sales from the facilities fell somewhat during the first quarter of 1997
compared to the first quarter of 1996, and this accounts for the reduction in
revenue from this category.
Revenue from investment income was approximately 19% lower in the first
quarter of 1997 compared to the first quarter of 1996 due primarily to a
somewhat reduced rate of return on investments during the current period.
Included in operating expenses are cost of food sales and food operations.
Cost of food sales was down somewhat in the first quarter of 1997 from the
first quarter of 1996 as this is directly related to food sales made which,
as explained above, was down somewhat in that current quarter from the prior
quarter under comparison. However, expenses characterized as food operations
actually increased in the first quarter of 1997 over the first quarter of
1996. These are expenses not directly tied to sales, and were higher in the
current period because there were four facilities in operation during the
current quarter and only three facilities in operation during the prior
quarter under comparison.
As discussed in recent quarters, last year legislation was passed increasing
the federal minimum wage. Beekman's employs a number of workers at the
prevailing minimum wage, and thus is experiencing somewhat increased labor
expenses. However, this increase in minimum wage has not been in effect long
enough for Beekman's to determine its overall effect on net income from this
operation.
Income taxes were somewhat higher for the first quarter of 1997 than in the
first quarter of 1996 as a result of increased earnings before income taxes.
<PAGE>
2
In February 1997, that Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share," which revises the calculation and presentation
provisions of Accounting Principles Board Opinion 15 and related
interpretations. Statement No. 128 is effective for the Registrant's fiscal
year ending December 31, 1997. Retroactive application will be required.
The Registrant believes the adoption of Statement No. 128 will not have a
significant effect on its reported earnings per share.
Cash flows provided by operating activities increased in the first quarter of
1997 over the first quarter of 1996. This increase was attributable to
higher net earnings in first quarter of 1997 and an increase in liabilities
for accounts payable and income taxes payable partially offset by a decrease
in liabilities for deferred oil lease bonuses. Additionally, cash flows were
reduced in the first quarter of 1996 because of purchases of treasury stock,
while there were no such purchases of treasury stock during the first quarter
of 1997.
The Board of Directors declared a dividend of 50 cents per share payable on
May 1, 1997.
The Registrant has no specific commitment for material capital expenditures
at the present time. Previously, it had been anticipated that an expansion
of the fast food and bagel delicatessen business conducted by Beekman's could
create the need for additional capital, however, since overall profitability
of that operation has not been achieved, the Registrant is not currently
planning on following through with expansions of that business. 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 is reflected in the accompanying consolidated
financial statements and is discussed above, aggressive pursuit of
development of increased royalty and bonus and rental income from oil and gas
properties has resulted in increased revenue during 1997. Management
continues to aggressively pursue development of such income from its real
property and mineral interests, in order to further increase earnings.
<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: May 15, 1997
By: Gary J. Pennington
(Signature)
Gary J. Pennington,
Assistant Secretary-
General Manager, Principal
Financial and Accounting Officer
Date: May 15, 1997
By: Leonard L. Noah
(Signature)
Leonard L. Noah,
Vice President, Treasurer
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1661214
<SECURITIES> 7406846
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9119783
<PP&E> 2107952
<DEPRECIATION> 738281
<TOTAL-ASSETS> 11300336
<CURRENT-LIABILITIES> 334485
<BONDS> 0
<COMMON> 376688
0
0
<OTHER-SE> 10503501
<TOTAL-LIABILITY-AND-EQUITY> 11300336
<SALES> 258996
<TOTAL-REVENUES> 648466
<CGS> 103793
<TOTAL-COSTS> 444555
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 328489
<INCOME-TAX> 106792
<INCOME-CONTINUING> 221697
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 221697
<EPS-PRIMARY> 0.61
<EPS-DILUTED> 0.61
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