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, 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 September 30, 1997
$1 par value; 356,595 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
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets - September 30, 1997 and
December 31, 1996
Consolidated Statements of Earnings and Retained Earnings
- Nine and three months ended September 30, 1997 and 1996
Consolidated Statements of Cash Flows - Nine months
ended September 30, 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
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<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CENTRAL COAL & COKE CORPORATION
Consolidated Balance Sheets
September 30, 1997 and December 31, 1996
(Unaudited)
(amounts in unit dollars)
<CAPTION>
ASSETS 1997 1996
__________ __________
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,788,805 1,342,955
Accounts receivable 0 22,500
Securities maturing within one year,
at amortized cost (note 2) (fair value
$7,429,200 and $7,420,525 at September 30,
1997 and December 31, 1996) 7,429,876 7,420,236
Income tax receivable 0 8,697
Other 55,010 56,238
__________ __________
Total current assets 9,273,691 8,850,626
Equity securities, at fair value (note 2) 765,801 799,210
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 442,684 436,230
__________ __________
2,114,406 2,107,968
Less accumulated depletion and depreciation 768,973 720,326
Net coal deposits, real estate, __________ __________
equipment and leasehold improvements 1,345,433 1,387,642
__________ __________
$ 11,384,925 11,037,478
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses $ 54,072 26,926
Deferred oil lease bonus 0 74,166
Dividend payable (note 4) 356,595 0
Federal and state income taxes 65,811 0
__________ __________
Total current liabilities 476,478 101,092
Deferred income taxes 133,133 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 9,123,861 9,014,238
__________ __________
11,131,749 11,022,126
Less cost of 20,093 shares in 1997 and
11,332 shares held in treasury in 1996 599,033 335,389
Net unrealized appreciation of investments
available-for-sale, net of deferred taxes
of $130,630 and $86,501 at September 30,
1997 and December 31, 1996 242,598 160,645
__________ __________
Total stockholders' equity 10,775,314 10,847,382
__________ __________
$ 11,384,925 11,037,478
<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, 1997 and 1996 and
three months ended September 30, 1997 and 1996
(Unaudited)
(amounts in unit dollars)
<CAPTION>
Nine months Three months
ended September 30, ended September 30,
1997 1996 1997 1996
_________ _________ _________ _________
<S> <C> <C> <C> <C>
Operating revenue:
Coal royalties $ 51,506 50,905 24,085 24,143
Oil and gas royalties 685,014 592,658 192,040 209,047
Oil and other mineral lease
rentals and bonuses 127,816 216,551 10,537 73,870
Food sales 676,745 825,683 179,206 253,279
_________ _________ _________ _________
Total operating revenue 1,541,081 1,685,797 405,868 560,339
Operating expenses:
Cost of food sales 272,288 339,502 69,093 103,689
Food operations 536,152 630,996 155,817 219,172
General and administrative
expenses 265,561 316,491 49,315 69,093
_________ _________ _________ _________
Total operating expenses 1,074,001 1,286,989 274,225 391,954
Operating income 467,080 398,808 131,643 168,385
Nonoperating income:
Investment income 509,046 461,616 251,964 134,046
Gain on sale of real estate 785 5,970 0 245
Other 2,976 2,259 415 2,139
_________ _________ _________ _________
Total nonoperating income 512,807 469,845 252,379 136,430
Earnings before income
taxes 979,887 868,653 384,022 304,815
Income taxes 330,985 329,571 134,156 128,694
_________ _________ _________ _________
Net earnings 648,902 539,082 249,866 176,121
Retained earnings at
beginning of period 9,014,237 8,910,623 9,230,590 9,180,655
Deduct cash dividends declared
of $1.50 per share in 1997
and $1.85 per share 1996 (539,278) (686,475) (356,595) (593,546)
_________ _________ _________ _________
Retained earnings at end
of period $ 9,123,861 8,763,230 9,123,861 8,763,230
Earnings per share $ 1.79 1.45 0.69 0.47
Weighted average number
of shares of common
stock outstanding 363,514 371,875 360,481 370,982
<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, 1997 and 1996
(Unaudited)
(amounts in unit dollars)
<CAPTION>
1997 1996
__________ __________
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 648,902 539,082
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depletion and depreciation 48,647 56,754
Amortization of premiums and
discounts of securities, net (300,407) (292,979)
Deferred income taxes 0 16
Gain on sale of real estate (785) (5,970)
Gain on sale of equity securities (161,458) (90,076)
Changes in assets and liabilities:
Accounts receivable 22,500 22,500
Income taxes receivable
and other assets 9,925 15,469
Deferred oil lease bonus (74,166) 137,498
Accounts payable and accrued expenses 27,146 26,703
Federal and state income taxes 65,811 (151,403)
__________ __________
Total adjustments (362,787) (281,488)
Net cash provided by operating activities 286,115 257,594
Cash flows from investing activities:
Capital expenditures (6,454) (69,951)
Proceeds from matured/called investment
debt securities 19,000,000 10,000,000
Purchases of investment debt securities (18,709,233) (8,785,769)
Proceeds from sale of land 801 6,045
Purchases of equity securities (104,356) (444,047)
Proceeds from sales of equity
securities 425,304 357,747
__________ __________
Net cash provided by (used in)
investing activities 606,062 1,064,025
Cash flows from financing activities:
Purchase of treasury stock (263,644) (87,731)
Payment of dividends (182,683) (92,929)
__________ __________
Net cash used in financing activities (446,327) (180,660)
Net increase in cash and cash equivalents 445,850 1,140,959
Cash and cash equivalents,
beginning of period 1,342,955 755,422
Cash and cash equivalents,
end of period $ 1,788,805 1,896,381
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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CENTRAL COAL & COKE CORPORATION
Notes to Consolidated Financial Statements
September 30, 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 September 30,
1997, and the results of operations and cash flows for the periods
ended September 30, 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 September 30,
1997 and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Gross Gross
unrealized unrealized
Amortized holding holding Fair
September 30, 1997 cost gains losses value
__________________ __________ __________ __________ __________
<S> <C> <C> <C> <C>
Held-to-maturity:
U. S. government
securities $ 7,429,876 0 (676) 7,429,200
Available-for-sale:
Equity securities $ 392,572 379,729 (6,500) 765,801
</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>
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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, 1997 and 1996:
<TABLE>
<CAPTION>
Nine months Three months
ended September 30, ended September 30,
1997 1996 1997 1996
__________ __________ __________ __________
<S> <C> <C> <C> <C>
Salaries and wages $ 212,846 249,306 55,991 83,602
Occupancy expense 84,720 95,898 24,317 38,274
Depreciation expense 39,037 47,152 11,314 21,247
Utility expense 29,080 31,212 10,927 10,247
Other expenses 170,469 207,428 53,268 65,802
__________ __________ __________ __________
$ 536,152 630,996 155,817 219,172
Note (4) Dividends
During the quarter ended September 30, 1997, the Company's Board
of Directors declared a $1.00 dividend per share which is payable
November 1, 1997.
</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 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 approximately 16% in the first
nine months of 1997 over the first nine months of 1996 due to greater
production and somewhat higher oil prices in the early part of 1997.
Revenue from that source was down slightly in the third quarter of 1997 from
the third quarter of 1996 due to lower production in the current quarter and
slightly reduced prices. Revenue from oil and other mineral lease rentals
and bonuses was down materially in the first nine months of 1997 from the
first nine moths of 1996 and also down for the third quarter of 1997 from
the third quarter of 1996. One component of revenue from this source is
bonuses on new mineral leases made, and this was down in the current periods
because of fewer new leases being made. Also, less property in the
aggregate was under lease during the current periods, and thus rental income
payments were less in the 1997 periods than in the 1996 periods under
comparison.
Revenue from food sales decreased in the first nine months of 1997 from the
first nine months of 1996 and also in the third quarter of 1997 from the
third quarter of 1996. Revenue from this source 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"). 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.
Thus, fewer facilities were in operation during the third quarter of 1997
(three facilities) than in the third quarter of 1996 (four facilities),
partially accounting for the reduced sales revenue. In addition, sales from
the existing facilities did fall somewhat during the first nine months of
1997 compared to the first nine months of 1996, and this also contributed to
the reduction from this source.
Revenue from investment income was higher in the first nine months of 1997
compared to the first nine months of 1996 and also in the third quarter of
1997 compared to the third quarter of 1996. In both cases, this was due to
capital gains realized on sale of equity securities in the current quarter,
partially offset by a slightly lower rate of return on temporary fixed
income investments during the current periods under comparison.
Revenue from gains on sales of real estate was down in the first nine months
of 1997 from the first nine months of 1996 due to certain nonrecurring sales
of real estate which occurred in 1996, with reduced comparable sales for the
corresponding periods of 1997.
Included in operating expenses are costs of food sales and food operations.
Cost of food sales was down in the third quarter of 1997 from the third
quarter of 1996 and also in the corresponding year-to-date periods. Cost of
food sales is directly related to food sales made which, as explained above,
was down somewhat in the current periods under comparison. Expenses
categorized as food operations were also down in the current periods from
the corresponding periods of 1996, primarily because of fewer facilities
being in operation during the current periods. General and administrative
expenses were down in the first nine months of 1997 from the first nine
months of 1996, and in the third quarter of 1997 from the third quarter of
1996 due to reduced payments to outside service providers.
<PAGE>
2
As has been discussed in previous quarters, legislation was passed last year
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 which has been partially offset by price increases which
results in a nominal overall impact on results of operation.
Income taxes were slightly greater in the first nine months of 1997 than the
first nine months of 1996 as a result of increased earnings before income
taxes.
In February 1997, the 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 increased both in the first nine months of 1997 and in the first
nine months of 1996 but the increase was greater in the first nine months of
1996. This was due primarily to somewhat higher net earnings in the first
nine months of 1997, lower income tax payments and reduced capital
expenditures, and increased proceeds from the sale of equity securities in
the current year, offset by a decrease in liabilities for deferred oil lease
bonuses and increased dividend payments and payments for the purchase of
treasury stock.
In September, the Board of Directors declared a dividend of $1.00 per share
payable on November 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 income from oil and gas properties has
resulted in increased royalty 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: November 14, 1997
By: Gary J. Pennington
(Signature)
Gary J. Pennington,
Assistant Secretary-
General Manager, Principal
Financial and Accounting Officer
Date: November 14, 1997
By: Leonard L. Noah
(Signature)
Leonard L. Noah,
Vice President, Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1788805
<SECURITIES> 7429876
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9273691
<PP&E> 2114406
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<COMMON> 376688
0
0
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