Form 1O-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or
15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended June 30, 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 June 30, 1997
$1 par value; 363,333 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 - June 30, 1997 and
December 31, 1996
Consolidated Statements of Earnings and Retained Earnings
- Six and three months ended June 30, 1997 and 1996
Consolidated Statements of Cash Flows - Six months
ended June 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
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CENTRAL COAL & COKE CORPORATION
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996
(Unaudited)
(amounts in unit dollars)
<CAPTION>
ASSETS 1997 1996
__________ __________
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,462,544 1,342,955
Accounts receivable 0 22,500
Securities maturing within one year,
at amortized cost (note 2) (fair value
$7,451,640 and $7,420,525 at June 30, 1997
and December 31, 1996) 7,453,101 7,420,236
Income tax receivable 0 8,697
Other 105,753 56,238
__________ __________
Total current assets 9,021,398 8,850,626
Equity securities, at fair value (note 2) 876,617 799,210
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 754,275 720,326
Net coal deposits, real estate, __________ __________
equipment and leasehold improvements 1,353,677 1,387,642
__________ __________
$ 11,251,692 11,037,478
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses $ 42,064 26,926
Deferred oil lease bonus 0 74,166
__________ __________
Total current liabilities 42,064 101,092
Deferred income taxes 126,914 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 9,230,590 9,014,238
__________ __________
11,238,478 11,022,126
Less cost of 13,022 shares in 1997 and
11,332 shares held in treasury in 1996 386,814 335,389
Net unrealized appreciation of investments
available-for-sale, net of deferred taxes
of $124,411 and $86,501 at June 30, 1997
and December 31, 1996 231,050 160,645
__________ __________
Total stockholders' equity 11,082,714 10,847,382
__________ __________
$ 11,251,692 11,037,478
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CENTRAL COAL & COKE CORPORATION
Consolidated Statements of Earnings and Retained Earnings
Six months ended June 30, 1997 and 1996 and
three months ended June 30, 1997 and 1996
(Unaudited)
(amounts in unit dollars)
<CAPTION>
Six months ended Three months ended
June 30, June 30,
1997 1996 1997 1996
_________ _________ _________ _________
<S> <C> <C> <C> <C>
Operating revenue:
Coal royalties $ 27,421 26,672 25,856 24,793
Oil and gas royalties 492,974 383,611 185,265 195,866
Oil and other mineral lease
rentals and bonuses 117,279 142,681 37,083 72,946
Food sales 497,539 572,404 238,543 282,269
_________ _________ _________ _________
Total operating revenue 1,135,213 1,125,458 486,747 575,874
Operating expenses:
Cost of food sales 203,195 235,813 99,402 114,320
Food operations 380,335 411,824 171,274 227,380
General and administrative
expenses 216,246 247,398 84,545 118,375
_________ _________ _________ _________
Total operating expenses 799,776 895,035 355,221 460,075
Operating income 335,437 230,423 131,526 115,799
Nonoperating income:
Investment income 257,082 327,570 133,335 174,815
Gain on sale of real estate 785 5,725 0 4,940
Other 2,561 120 2,515 77
_________ _________ _________ _________
Total nonoperating income 260,428 333,415 135,850 179,832
Earnings before income
taxes 595,865 563,838 267,376 295,631
Income taxes 196,829 200,877 90,037 107,861
_________ _________ _________ _________
Net earnings 399,036 362,961 177,339 187,770
Retained earnings at
beginning of period 9,014,238 8,910,623 9,053,251 8,992,885
Deduct cash dividends declared
of $.50 per share in 1997
and $.25 per share 1996 (182,684) (92,929) 0 0
_________ _________ _________ _________
Retained earnings at end
of period $ 9,230,590 9,180,655 9,230,590 9,180,655
Earnings per share $ 1.09 .97 .48 .51
Weighted average number
of shares of common
stock outstanding 365,056 372,326 364,750 371,716
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CENTRAL COAL & COKE CORPORATION
Consolidated Statements of Cash Flows
Six months ended June 30, 1997 and 1996
(Unaudited)
(amounts in unit dollars)
<CAPTION>
1997 1996
__________ __________
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 399,036 362,961
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depletion and depreciation 33,949 32,123
Amortization of premiums and
discounts of securities, net (197,587) (192,339)
Deferred income taxes 0 16
Gain on sale of real estate (785) (5,725)
Gain on sale of equity securities (28,596) (76,800)
Changes in assets and liabilities:
Accounts receivable 22,500 22,500
Income taxes receivable and
other assets (40,818) (15,836)
Deferred oil lease bonus (74,166) 52,500
Accounts payable and accrued expenses 15,138 13,806
Federal and state income taxes 0 (183,632)
__________ __________
Total adjustments (270,365) (353,387)
Net cash provided by operating activities 128,671 9,574
Cash flows from investing activities:
Capital expenditures 0 (69,081)
Proceeds from matured/called investment
debt securities 11,500,000 7,500,000
Purchases of investment debt securities (11,335,278) (7,305,143)
Proceeds from sale of real estate 801 5,796
Purchases of equity securities (89,672) (273,662)
Proceeds from sales of equity
securities 149,176 311,435
__________ __________
Net cash provided by (used in)
investing activities 225,027 169,345
Cash flows from financing activities:
Purchase of treasury stock (51,425) (64,481)
Payment of dividends (182,684) (92,929)
__________ __________
Net cash used in financing activities (234,109) (157,410)
Net increase (decrease) in cash and
cash equivalents 119,589 21,509
Cash and cash equivalents,
beginning of period 1,342,955 755,422
Cash and cash equivalents,
end of period $ 1,462,544 776,931
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CENTRAL COAL & COKE CORPORATION
Notes to Consolidated Financial Statements
June 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 June 30, 1997,
and the results of operations and cash flows for the three months ended
June 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 June 30, 1997
and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Gross Gross
unrealized unrealized
Amortized holding holding Fair
June 30, 1997 cost gains losses value
__________________ __________ __________ __________ __________
<S> <C> <C> <C> <C>
Held-to-maturity:
U. S. government
securities $ 7,453,101 0 (1,461) 7,451,640
Available-for-sale:
Equity securities $ 521,156 384,633 (29,172) 876,617
</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>
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 six months and three
months ended June 30, 1997 and 1996:
<TABLE>
<CAPTION>
Six months Three months
ended June 30, ended June 30,
1997 1996 1997 1996
__________ __________ __________ __________
<S> <C> <C> <C> <C>
Salaries and wages $ 156,855 165,704 74,053 88,782
Occupancy expense 60,403 57,624 23,065 35,229
Depreciation expense 27,723 25,905 12,588 12,755
Utility expense 18,153 20,965 9,428 11,358
Other expenses 117,201 141,626 52,140 79,256
__________ __________ __________ __________
$ 380,335 411,824 171,274 227,380
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
There was no significant change in the financial condition of the
Registrant during the first six months of 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 28% in the
first six months of 1997 over the first six months of 1996 due to
greater production and somewhat higher oil prices in the first
quarter of 1997. Revenue from that source was down slightly in the
second quarter of 1997 from the second quarter of 1996 due to
somewhat lower production in that quarter and slightly reduced oil
prices. Revenue from oil and other mineral lease rentals and bonuses
was down approximately 18% in the first six months of 1997 from the
first six months of 1996 and also down for the second quarter of 1997
from the second quarter of 1996. One component of revenue from this
source is bonuses on new mineral leases made, and this was down in
the current period because no new leases were made in 1997 while some
bonus income on new leases was received during the first six months
of 1996. Also, less in the aggregate was under lease during the
current periods and, thus, rental income payment were less in the
1997 periods than in the 1996 periods under comparison.
Revenue from food sales decreased in the first six months of 1997
from the first six months of 1996 and also in the second quarter of
1997 from the second 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 second quarter of 1997 (three facilities) than in the second
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 six months of 1997
compared to the first six months of 1996, and this also contributed
to the reduction from this source.
Revenue from investment income was lower in the first six months of
1997 compared to the first six months of 1996 and also in the second
quarter of 1997 compared to the second quarter of 1996. In both
cases, this was due primarily to a somewhat reduced 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 second
quarter of 1997 from the second quarter of 1996, and the
corresponding year-to-date periods, due to certain nonrecurring sales
of real estate which occurred in the corresponding quarters of 1996
with reduced comparable sales in the corresponding periods of 1997.
Included in operating expenses are cost of food sales and food
operations. Cost of food sales was down in the second quarter of
1997 from the second 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 was also down in the current periods from the
corresponding periods in 1996, primarily because of fewer facilities
being in operation during the current periods. General and
administrative expenses were down in the first six months of 1997
from the six months of 1996 and in the second quarter of 1997 from
the second 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 operations.
Income taxes were somewhat lower in the second quarter of 1997 than
the second quarter of 1996 as a result of decreased 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 in the first six months of 1997 over the first
six months of 1996. This increase was attributable primarily to
higher net earnings in the first six months of 1997, lower income tax
payments and reduced capital expenditures, partially offset by a
decrease in liabilities for deferred oil lease bonuses and increased
dividend payments.
In April, the Board of Directors declared a dividend of 50 cents per
share which was paid 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 purse 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: August 14, 1997
By: Gary J. Pennington
(Signature)
Gary J. Pennington,
Assistant Secretary-
General Manager, Principal
Financial and Accounting Officer
Date: August 14, 1997
By: Leonard L. Noah
(Signature)
Leonard L. Noah,
Vice President, Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1462544
<SECURITIES> 7453101
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9021398
<PP&E> 2107952
<DEPRECIATION> 754275
<TOTAL-ASSETS> 11251692
<CURRENT-LIABILITIES> 42064
<BONDS> 0
<COMMON> 376688
0
0
<OTHER-SE> 10706026
<TOTAL-LIABILITY-AND-EQUITY> 11251692
<SALES> 497539
<TOTAL-REVENUES> 1135213
<CGS> 203195
<TOTAL-COSTS> 799776
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 595865
<INCOME-TAX> 196829
<INCOME-CONTINUING> 399036
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 399036
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.09
</TABLE>
