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
For the Fiscal Year Ended December 31, 1999
Commission File No. 0-1392
CENTRAL COAL & COKE CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware 44-0196290
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
127 West 10th Street, Suite 666, Kansas City, Missouri 64105
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(Address of Principal Executive Offices) (Zip Code)
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Registrant's telephone number, including area code: 816/842-2430
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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)
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(Title of Class)
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securitie
Exchange Act of 1934 during the preceding 12 months (or for such shorter
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. [ ]
The aggregate market value of the voting stock held by nonaffiliates
of the registrant (103,066 shares), as of March 16,2000 was $3,478,478.
The number of shares outstanding of the issuer's only class of common stock
as of March 16, 2000, is as follows:
Common Stock ($1.00 Par Value) . . . . . . 255,551
(This figure does not include 121,137 shares of treasury stock)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to security holders for fiscal year
ended December 31, 1999, captioned "Selected Consolidated Financial Data,"
"Management's Discussion & Analysis of Financial Condition & 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, 2000, relative to the
Annual Meeting of Stockholders to be held on April 19, 2000. (Part III)
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PART I
ITEM 1. BUSINESS
(a) General Development of Business. The general development
of the registrant's current one business segment, the Energy Business
Segment is described in the narrative description of the business
contained in Section 1(c) hereafter. The registrant historically
has been involved in that business segment. The registrant operated
in a second business segment, the Retail Food Business Segment which
was discontinued in 1998. The development of that business segment
is described more fully in Management's Discussion & Analysis of
Financial Condition & Results of Operations set forth in Item 7 of
this report. Sales and profitability of that segment were disappointing
and by September 1, 1998, all remaining active operations were
disposed of. For more detail on the results of this discontinued
operation see the accompanying financial statements and Note 9 thereto.
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 other than the acquisition of 97,231
shares of treasury stock in connection with the settlement of
disputes described more fully in Item 3 hereof. There has been no
material change in the mode of conducting the business of the
registrant, other than the change of a majority of Directors in
1999 as described in Item 3.
(b) Financial Information about Industry Segments. During
the year 1999, the registrant had one reportable segment which is
identified as the Energy Business Segment. For the years prior to
1999 there was a second reportable segment, the Retail Food Business
Segment, which was
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discontinued in 1998. See Note 9 to the accompanying financial
statements for more detail as to the discontinuance of the Retail
Food Business Segment and financial information with respect thereto.
There were no separate segments of the registrant prior to 1993.
(c) Narrative Description of Business. The one current
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 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 1995 the registrant sold
approximately 4.41 acres of surface land in Macon County, Missouri
generating a gain of $2,141.58 and 40 additional acres
of timber rights were sold for $8,900, and in 1997 the registrant
sold approximately 88.17 acres of surface land in that county for
a gain of $37,309.50, and in 1998 sold approximately 196 acres of
surface land in that county for a gain of $85,421.31, and in 1999
sold approximately 26 acres of surface land for a gain of $19,282.38.
In 1998 the registrant sold approximately 41 acres of surface land in
Sebastian County, Arkansas, for a gain of $19,923, in 1997 had sold
1.75 acres of surface land in that county for a gain of $800, in 1996
had sold 7.25 acres of surface land in that county for a gain of
$6,050, and in 1995 had sold 103 acres of surface land in that county
for a gain of $56,768. Also sold in 1996 was 45 acres of real property
in Pittsburg County, Oklahoma for $31,500, and in 1999 the registrant
sold approximately 35 acres of surface land in that county for a gain
of $24,207. In addition, in 1997 the registrant sold a waiver of
surface rights on 7.21 acres of its Walker County, Texas property
for $2,500. The properties owned at the end of the fiscal year
are described in Item 2.
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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, but was undertaken to enhance the value of its real
property and in furtherance of its concept of social responsibility.
Some additional reforestation on its properties in Arkansas took place
in 1997 on which the registrant spent approximately $1,100 during that
year. There was no additional reforestation expense in 1998 or 1999.
The financial impact upon the registrant, both in terms of short-term
expenditures and future income should not be material.
Another business activity of registrant consists of the ownership
and management of its investment portfolio of marketable securities and
United States government and agency 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.
Other than the fast food bagel and delicatessen business as a part
of the discontinued operation 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.
No business of any industry activity of the registrant is or may
be seasonal.
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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 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.
Royal Oil Company of Corpus Christi, Texas ("Royal Oil") is the
lessee of a number of oil and gas leases covering properties of the
registrant located in San Jacinto County,
Texas. During 1999 Royal Oil paid to the registrant royalties on
production under those leases aggregating approximately $244,000
which exceeds ten percent of the registrant's consolidated revenue.
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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.
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.
As to business intended to be done by the registrant, it has,
during the last five years, investigated several new business
opportunities, both in the Energy Business Segment and in other
reportable business segments. After review of those new business
opportunities, they were
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either rejected as not suitable for the registrant at the present
time or taken off the market. Management of the registrant continues
to seek out and investigate such new business opportunities
or expansion of existing leasing activities which could result
in a more productive deployment of the registrant's assets in an
effort to increase earnings.
The total number of persons employed by the registrant itself,
as of the end of the fiscal year, was 2.
(d) Financial Information about Geographic Areas. 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, which were due to expire January 1, 2000, unless extended.
These properties are currently being evaluated by the appropriate
United States government agency to determine what portion of the
acreage was in fact extended by production as of that date and
what portion did expire. In later parts of this Item 2 references
are made to the ownership of "minerals." The registrant is the
owner of all
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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 1,658 acres in
fee simple, of minerals underlying approximately 16,447 additional
acres, and of a number of town lots in three small towns, all in
Sebastian County, Arkansas, having sold approximately 103 acres of
surface in 1995, 7.25 acres in 1996, 1.75 acres in 1997, and 41
acres in 1998.
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 30 acres
of the registrant's Arkansas properties are currently being leased
under a coal lease. Another 586 acres were leased in 1993 under two
separate oil and gas leases (both to the same lessee) for 5-year
terms, one of which expired in 1998 without any production, but the
other of which commenced production during that year. In 1997 another
120 acres were leased for a 3-year term. Production commenced on
this lease during 1999. In 1998 another 250 acres were leased under
three separate oil and gas leases, each for a 3 year term.
Production commenced on all three leases during 1999.
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, one of
which expired in 1997 with no production, one of
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which expired in 1999 with no production, and one of which
commenced production in 1998. An additional 1,483.31 acres were
leased in 1996 in one oil and gas lease for a term of five years.
As yet there is no production under this lease. In addition,
registrant has fractional royalty interests in 13 small producing
gas wells which are located on an approximately 7,040 acre tract
of which registrant owns 2,192 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 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 mineralswere 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 continued to retain 4,017 of such acres, while
production continues. The reservation was extended for an additional
five-year term which ended January 1, 2000. As discussed in Item 2(a)
above, the property is currently being
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evaluated to determine what portion thereof the registrant
is entitled to retain by production, and what portion thereof has
expired.
In addition to the wells still under production from the
earlier leases, in 1997 one additional lease was made on 241.73
acres of registrant's Walker County, Texas property, and a producing
well was drilled on this property during 1999.
The registrant's mineral interests in its remaining
acreages of approximately 7,788.55 acres in Texas are reservations
of perpetual mineral rights. In the case of approximately 7,600 of
those 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, the entire
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, which the lessee has exercised in
January 1998, upon payment of approximately $194,000 to the registrant.
The lessee originally paid a bonus of approximately $311,000 in
connection with the initial term of this lease. There was no production
under this lease, and therefore it expired in January, 2000, and this
acreage is now open for lease.
(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
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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 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.
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The registrant leased approximately 9,339 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, and one well
was drilled but it turned out to be a "dry hole," and there was no
production. This property is currently available for lease and if
there is no further attempted production by December, 2006, the
registrant's rights in this property will expire.
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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 1,350 acres in fee
simple (having sold approximately 35 acres of surface land located
in Pittsburg County, Oklahoma during 1999), and approximately 13,546
additional acres of underlying minerals. A substantial part
of such 13,546 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 47 acres in fee simple,
(having sold 4 acres of surface land in 1995, approximately 88
acres of surface land in 1997, approximately 196 acres of surface
land in 1998, and approximately 26 acres of surface land in 1999)
and of the minerals underlying 6,147 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 previously rented the surface of
portions of its lands in Missouri, largely for agricultural purposes,
under leases of not to exceed one year, but no such leases are in
effect at this time.
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(6) RETAIL FOOD BUSINESS SEGMENT LEASES.
The operations of the fast food bagel and delicatessen
facilities constituting the Retail Food Business
Segment had previously been carried out from leased premises.
This business segment was discontinued in 1998 as described above
and all leases were either assigned to other unrelated parties
or terminated.
(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 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.
ITEM 3. LEGAL PROCEEDINGS
(a) The 1999 annual meeting of Stockholders of the
registrant was held April 21, 1999 pursuant to notice duly sent
to the Stockholders as required by law. Management had solicited
proxies pursuant to Regulation 14A of the Securities Exchange Act of
1934 to elect a slate of the incumbent Directors consisting of
eonard Noah, Gary J. Pennington, Beekman Winthrop, Phelps M. Wood,
and Ernest N. Yarnevich, Jr.
At the meeting Stockholders present in person and by proxy
elected an alternative slate of Directors consisting of Ray A. Infantino,
Patrick J. Moran, Phelps C. Wood, Phelps M. Wood, and James R. Ukropina.
The shares voted for the alternative slate of Directors
totaled 171,270 shares, except for Phelps M. Wood who received votes
of 327,063 shares as he received votes cast in
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favor of the incumbent slate nominated by management as well as
the alternative slate, while votes cast in favor of the incumbent
slate nominated by management were 155,792 shares for Messrs, Noah,
Pennington and Yarnevich and 155,793 shares for Mr. Winthrop.
Cumulative voting was not permitted.
At the meeting of the newly elected Board of Directors
following the Stockholders meeting, the Bylaws of the registrant
were amended to increase the number of Directors to seven (7). By
motion unanimously adopted, Bruce L. Franke and Beekman Winthrop
were offered seats on the Board of Directors. Mr. Franke accepted
and Mr. Winthrop expressed his desire to consider the matter further
and notify the Board of his acceptance or rejection of the offer by
the end of May.
On May 14, 1999, Beekman Winthrop, together with a few
other Stockholders, filed a lawsuit in state court in Delaware
challenging the results of the election of Directors. The action
styled Winthrop, et al v. Central Coal & Coke Corporation,
et al, C.A. No. 17162, was pending in the Court of Chancery for the
State of Delaware in and for New Castle County. The registrant and
all newly elected Directors were named as defendants, and the
plaintiffs asked the court to invalidate the election of the new
Board. Subsequently, on May 28, 1999 Mr. Winthrop advised the
registrant that he declined the invitation to become a Director.
Discovery in the lawsuit proceeded, and a trial was
scheduled for August 3, 1999. On July 29, 1999 the record owners
of 179,009 shares of common stock of the registrant (a majority of
the outstanding shares) executed written consents which were
delivered to the registrant on July 29, 1999. Pursuant to the
consents, Phelps M. Wood, Phelps C. Wood, Bruce
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L. Franke, Ray A. Infantino, Patrick J. Moran and James R. Ukropina
were elected Directors of the registrant, confirming the results
of the election held at the Annual Meeting on April 21, 1999.
The action taken by the written consents was done pursuant to Section
228 of the Delaware General Corporation Law.
Subsequently, on August 5, 1999, the Court issued its Order
of' Dismissal, dismissing the lawsuit with prejudice, but retaining
jurisdiction for purposes of entertaining any application for
attorneys' fees and/or court costs. Legal counsel for the defendants
and the plaintiffs commenced and continued settlement discussions
involving the possible purchase by the registrant of the stock in the
registrant owned by the plaintiffs and the resolution of all pending
disputes. On or about November 2, 1999 the plaintiffs filed a Motion
for Costs and Attorney Fees in the Action requesting the Court to
grant their motion in the amount of' $106,956.65 The registrant and
the other defendants contested the motion by filing briefs in
opposition thereto.
The registrant was advised by its Delaware legal counsel
in early November, 1999 that another lawsuit had been filed. This new
lawsuit was filed in the United States District Court for the District
of Delaware by the same plaintiffs against the Directors of the
registrant individually and the registrant as a "Nominal Defendant."
This new lawsuit also sought the removal of the Directors of the
registrant and sought other relief against the individual Directors,
but did not otherwise appear to seek relief against the registrant
itself.
On November 23, 1999 Dudley Winthrop, one of the
plaintiffs and a Stockholder of the registrant, notified the
registrant that he intended to present a resolution for
consideration at the Annual Meeting of Stockholders to be held in
April, 2000, and requesting that it be included in the proxy
materials for that meeting. The Board of Directors of the registrant
subsequently determined to oppose the resolution and recommend
to the Stockholders that they vote against it.
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On January 28, 2000 the Vice Chancellor in the Delaware
state court action denied the plaintiffs' Motion for Costs and
Attorneys Fees.
Settlement discussions continued, and resulted in the
execution by all parties on February 29, 2000 of an Agreement of
Settlement and Release. According to the terms of this Agreement,
the registrant would purchase all shares of stock in the registrant
owned by the plaintiffs, totaling 97,231 shares for a purchase
price of $33.50 per share, or aggregate consideration of
$3,257,238.50. The Board of Directors of the registrant after
careful consideration concluded that $33.50 per share was a
fair price under the circumstances based upon a review of the
registrant's financial statements and considering the costs and
risks of continued litigation. The plaintiffs agreed not to pursue
any other rights or remedies with respect to any of the pending
litigation. Additionally, the plaintiffs agreed to standstill
provisions whereby they would not directly or indirectly acquire
any interest in the registrant in the future or participate in any
proxy solicitation or become a member of a "group" within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934 with
respect to the registrant. Additionally, the plaintiffs agreed to
withdraw the stockholder proposal submitted November 23, 1999,
described above, and to make no further proposals.
The Settlement Agreement was consummated on March 6, 2000
including the closing of the purchase of the plaintiffs' shares on
the basis described herein. As a result of the purchase of the
plaintiffs' shares, as of March 7, 2000, there were 255,551 shares
issued and outstanding.
Other than as described above, 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, and there are no material
proceedings to which any director, officer
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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.
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
(a) The information required in subsection (a) of this
item pursuant to Item 201 of Regulation S-K is set forth on
the inside back cover of the Annual Report as of December 31, 1999,
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. There have been no sales
of either registered or unregistered securities by the registrant
during the past three years.
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(b) There have been no sales of either registered or unregistered
securities by the registrant during the past three years.
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, 1999, 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 & ANALYSIS OF FINANCIAL
CONDITION & RESULTS OF OPERATIONS" in the Annual Report as of
December 31, 1999, 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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Concerning quantitative and qualitative disclosures
concerning market risk, the primary market risk exposures of the
registrant relate to changes in interest rates, changes in equity
security prices, and changes in certain commodity prices. The
registrant's exposure to market risk for changes in interest
rates relates solely to its fixed income investment portfolio
which consists of U.S. government agency securities. All such
securities are held-to-maturity and have original maturities of
less than one year. The registrant does not use derivative financial
instruments to hedge interest
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<PAGE>
rates on its fixed income investment securities. The registrant's
exposure to market risk for changes in equity security prices relates
solely to its marketable equity investment portfolio which consists
primarily of common stocks of domestic, publicly held enterprises.
The registrant periodically enters into equity option contracts on a
limited basis primarily relating to marketable equity securities
held in its investment portfolio. At December 31, 1999 the registrant
held 78 option contracts with a short position relating primarily to
marketable equity securities held by it. The fair value of option
contracts at December 31, 1999 was approximately $25,447.
The registrant's exposure to market risk for changes in commodity
prices relates to changes in the prices of coal, oil, and natural
gas and the effect thereof on its royalties and rentals relating
to coal deposits and mineral rights as discussed in more detail in
Management's Discussion & Analysis of Financial Condition &
Results of Operations set forth in Item 7 of this report.
The registrant does not use derivative commodity instruments to
hedge its commodity risk exposures.
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, 1999 and 1998;
Consolidated Statements of Earnings - Years ended December 31, 1999,
1998 and 1997;
Consolidated Statements of Comprehensive Income - Years Ended
December 31, 1999, 1998 and 1997;
Consolidated Statements of Stockholders' Equity - Years ended
December 31, 1999, 1998 and 1997.
Consolidated Statements of Cash Flows - Years ended
December 31, 1999, 1998 and 1997;
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<PAGE>
Notes to Consolidated Financial Statements
These financial statements are filed as a part of this report,
beginning on page 32 hereof, and areincorporated 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.
(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.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is set forth
on pages 2, 3 and 4 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.
In response to Item 405 of Securities and Exchange
Commission Regulation S-K, and as is disclosed in 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 sub-caption "Section 16(a) Beneficial
Ownership Reporting Compliance," which portion of said definitive
proxy statement is incorporated herein by this reference,
Mr. Phelps M. Wood as a result of an inquiry conducted by the
Securities and Exchange Commission (S.E.C.) discovered that he
had inadvertently made a number of filings late in prior years.
As part of an administrative proceeding before the S.E.C. Mr. Wood
has submitted an Offer of Settlement to the S.E.C. in which he
consents to the entry of a Cease and Desist Order (the "Order"),
without admitting or denying the matters therein in which it was
acknowledgedthat he failed to timely file a Form 3 reporting his
holdings of the registrant for a period of two weeks, failed to
file timely for periods ranging from one week to more than
nineteen years and five months twenty-three Forms 4, and failed
to file timely for periods of eleven months and two weeks and
three years and eleven months two Forms 5. If approved, the Order
would require Mr. Wood to cease
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<PAGE>
and desist from committing or causing any violations of and
committing or causing, any future violations of, Section 13(d)
and 16(a) of the Exchange Act and Rules 13d-1, 13d-2, 16-a-2
and 16a-3 promulgated thereunder. The registrant, at the time
of filing of this FORM 10-K, has reviewed the information
necessary to ascertain, and has determined that, other than as
to Mr. Phelps M. Wood's late filings described above, Item 405
disclosure is not expected to becontained 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, 3
and 4 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.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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<PAGE>
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, 3 and 4 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.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
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<PAGE>
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, 1999 and 1998
Consolidated Statements of Earnings - Years ended December 31,
1999, 1998 and 1997
Consolidated Statements of Stockholders' Equity - Years ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Comprehensive Income - Years ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows - Years ended December
31, 1999, 1998 and 1997
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.
(3)(ii)Bylaws.
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<PAGE>
(10) Material Contracts:
(i) Agreement of Settlement and Release dated February
29, 2000.
(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 19, 2000 previously filed with the
Commission.
(13) Portions of the Annual Report to security holders
for year ended December 31, 1999 captioned
"Selected Consolidated Financial Data," "Management's
Discussion & Analysis of Financial Condition
& 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.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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<PAGE>
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/ Phelps M. Wood
________________________________
Phelps M. Wood, President
Date: March 29, 2000
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<PAGE>
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/ Phelps M. Wood
________________________________
Phelps M. Wood, President
Principal Executive Officer
Date: March 29, 2000
/s/ Gary J. Pennington
________________________________
Gary J. Pennington
General Manager, Principal
Financial Officer, and
Date: March 29, 2000 Principal Accounting Officer
By /s/ Bruce L. Franke
________________________________
Bruce L Franke, Director
Date: March 29, 2000
By /s/ Ray A. Infantino
________________________________
Ray A. Infantino, Director
Date: March 29, 2000
By /s/ Patrick J. Moran
________________________________
Patrick J. Moran, Director
Date: March 29, 2000
By /s/ James R. Ukropina
________________________________
James R. Ukropina, Director
Date: March 29, 2000
By /s/ Phelps C.Wood
________________________________
Phelps C. Wood, Director
Date: March 29, 2000
By /s/ Phelps M. Wood
________________________________
Phelps M. Wood, Director
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<PAGE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Table of Contents
Page
Independent Auditors' Report 31
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 1999 and 1998 32
Consolidated Statements of Earnings - years ended December 31, 1999,
1998 and 1997 34
Consolidated Statements of Stockholders' Equity - years ended December
31, 1999, 1998 and 1997 35
Consolidated Statements of Comprehensive Income - years ended December
31, 1999, 1998 and 1997 36
Consolidated Statements of Cash Flows - years ended December 31, 1999,
1998 and 1997 37
Notes to Consolidated Financial Statements 38
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INDEPENDENT AUDITORS' REPORT
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 table of contents. 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, 1999
and 1998 and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1999, in
conformity with generally accepted accounting principles.
KPMG LLP
Kansas City, Missouri
January 14, 2000, except as to note 11,
which is as of March 6, 2000
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<PAGE>
<TABLE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Balance Sheets
December 31, 1999 and 1998
(amounts in unit dollars)
<CAPTION>
ASSETS 1999 1998
__________ __________
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,894,021 1,606,992
Accounts receivable 42,000 22,500
Securities maturing within one year,
at amortized cost (note 2) 7,469,944 7,474,053
Notes receivable, current 15,402 12,465
Income tax receivable 0 32,505
Other 10,343 4,578
__________ __________
Total current assets 9,431,710 9,153,093
Equity securities, at fair value (note 2) 1,648,832 1,220,167
Notes receivable, noncurrent 100,007 115,409
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 25,620 26,131
Equipment and leasehold improvements 1,303 6,053
__________ __________
1,669,793 1,675,054
Less accumulated depletion, depreciation
and amortization 578,225 580,636
Net coal deposits, real estate, __________ __________
equipment and leasehold improvements 1,091,568 1,094,418
__________ __________
Total assets $ 12,272,117 11,583,087
</TABLE>
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<PAGE>
<TABLE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Balance Sheets
December 31, 1999 and 1998
(amounts in unit dollars)
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses 26,062 25,967
Deferred oil lease bonus 0 97,357
Federal and state income taxes 42,011 0
__________ __________
Total current liabilities 68,073 123,324
Deferred income taxes (note 5) 408,445 188,772
Stockholders' equity:
Common stock of $1 par value; 500,000 shares
authorized, 376,688 shares issued 376,688 376,688
Additional capital 1,631,200 1,631,200
Retained earnings 9,799,931 9,591,919
Less cost of 23,905 shares in 1999 and
20,693 shares in 1998 held in treasury (716,166) (617,632)
Accumulated other comprehensive income,
net of deferred taxes of $379,049 in 1999
and $155,517 in 1998 703,946 288,816
__________ __________
Total stockholders' equity 11,795,599 11,270,991
Commitments and contingencies (notes 3 and 6)
__________ __________
Total liabilities and stockholders' equity $ 12,272,117 11,583,087
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
<TABLE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Statements of Earnings
Years ended December 31, 1999, 1998 and 1997
(amounts in unit dollars)
<CAPTION>
1999 1998 1997
_________ _________ _________
<S> <C> <C> <C>
Operating revenue:
Coal royalties (note 3) $ 97,122 97,402 99,101
Oil and gas royalties 395,262 366,505 861,829
Oil and other mineral lease rentals
and bonuses 123,491 126,266 145,495
_________ _________ _________
Total operating revenue 615,875 590,173 1,106,425
General and administrative
expenses 572,096 284,797 354,383
Operating income 43,779 305,376 752,042
Nonoperating income:
Investment income (note 2) 826,885 476,529 627,622
Gain on sales of real estate 43,489 105,345 37,365
Other 3,166 482 3,696
_________ _________ _________
Total nonoperating income 873,540 582,356 668,683
Earnings from continuing operations
before income taxes 917,319 887,732 1,420,725
Income taxes (note 5) 266,309 298,759 443,120
Earnings from continuing operations 651,010 588,973 977,605
Discontinued operations, net of income
taxes (note 9)
Loss from operations of discontinued
food operations 0 (84,420) (199,767)
Gain on disposal of food operations 0 12,866 0
_________ _________ _________
0 (71,554) (199,767)
Net earnings 651,010 517,419 777,838
Earnings per share from continuing
operations - basic and diluted $ 1.84 1.65 2.70
Loss per share from discontinued
operations - basic and diluted $ 0 (.20) (.55)
Earnings per share - basic and diluted $ 1.84 1.45 2.15
Weighted average number of shares of
common stock outstanding - basic
and diluted 354,735 356,580 361,790
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
<TABLE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1999, 1998 and 1997
(amounts in unit dollars)
<CAPTION>
Accumulated
other
Common Additional Retained Treasury comprehensive
stock capital earnings stock income Total
_______ _________ _________ _________ ________ __________
<S> <C> <C> <C> <C> <C>
Balance,
December
31, 1996 376,688 1,631,200 9,014,238 (335,389) 160,645 10,847,382
Net earnings 0 0 777,838 0 0 777,838
Cash dividends
($1.50 per
share) 0 0 (539,278) 0 0 (539,278)
Purchase of
8,771 shares
of common
stock for
treasury 0 0 0 (263,643) 0 (263,643)
Net unrealized
appreciation
on investments
available-for-
sale 0 0 0 0 69,793 69,793
Balance,
December
31, 1997 376,688 1,631,200 9,252,798 (599,032) 230,438 10,892,092
Net earnings 0 0 517,419 0 0 517,419
Cash dividends
($.50 per
share) 0 0 (178,298) 0 0 (178,298)
Purchase of
600 shares
of common
stock for
treasury 0 0 0 (18,600) 0 (18,600)
Net unrealized
appreciation
on investments
available-for-
sale 0 0 0 0 58,378 58,378
Balance,
December
31, 1998 376,688 1,631,200 9,591,919 (617,632) 288,816 11,270,991
Net earnings 0 0 651,010 0 0 651,010
Cash dividends
($1.25 per
share) 0 0 (442,988) 0 0 (442,998)
Purchase of
3,212 shares
of common
stock for
treasury 0 0 0 (98,534) 0 (98,534)
Net unrealized
appreciation
on investments
available-for-
sale 0 0 0 0 415,130 415,130
Balance,
December
31, 1999 376,688 1,631,200 9,799,931 (716,166) 703,946 11,795,599
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
<TABLE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Statements of Comprehensive Income
Years ended December 31, 1999, 1998 and 1997
(amounts in unit dollars)
<CAPTION>
1999 1998 1997
___________ ___________ ___________
<S> <C> <C> <C>
Net earnings $ 651,010 517,419 777,838
___________ ___________ ___________
Other comprehensive income:
Realized gains and unrealized
appreciation on investments 1,011,444 88,649 268,174
Income taxes (354,006) (31,027) (93,861)
Realized gains and
unrealized appreciation on
investments, net 657,438 57,622 174,313
___________ ___________ ___________
Less:
Realized investment(gains)
losses included in net
earnings (372,782) 1,164 (160,800)
Income taxes 130,474 (408) 56,280
____________ ___________ ___________
(242,308) 756 (104,520)
415,130 58,378 69,793
Comprehensive income $ 1,066,140 575,797 847,631
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
<TABLE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Consolidated Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997
(amounts in unit dollars)
<CAPTION>
1999 1998 1997
___________ ___________ ___________
<S> <C> <C> <C>
Cash flows from operating
activities:
Net earnings $ 651,010 517,419 777,838
Adjustments to reconcile net
earnings to net cash provided by
(used in)operating activities:
Depletion, depreciation
and amortization 2,339 2,343 65,213
Asset impairment charge 0 0 158,309
Gain on disposal of food
Operations 0 (19,494) 0
Gain on sales of real estate (43,489) (105,345) (37,365)
Loss (gain) on sales of equity
securities (372,782) 1,164 (160,800)
Amortization of premiums and
discounts of securities, net (375,264) (404,007) (403,754)
Deferred income taxes (3,499) 87,497 (56,745)
Changes in assets and
liabilities:
Accounts receivables and
other assets (25,625) (2,627) 18,553
Accounts payable and accrued
expenses 95 9,005 (9,964)
Deferred oil lease bonus (97,357) 97,357 (74,166)
Federal and state income
taxes 74,516 (59,025) 26,520
___________ ___________ ___________
Net cash provided by
(used in)operating
activities (190,056) 124,287 303,639
Cash flows from investing
activities:
Proceeds from note receivable 12,465 7,126 0
Proceeds from matured/called
investment debt securities 30,500,000 30,000,000 26,500,000
Purchases of investment debt
securities (30,120,627) (29,626,098) (26,119,958)
Proceeds from sales of land 44,000 107,330 38,118
Purchases of equity securities (188,578) (477,099) (246,601)
Proceeds from sales of equity
securities 771,357 174,378 485,188
Capital expenditures 0 0 (6,454)
___________ ___________ ___________
Net cash provided by
investing activities 1,018,617 185,637 650,293
Cash flows from financing
Activities:
Dividends paid (442,998) (178,298) (539,278)
Purchase of common stock for
treasury (98,534) (18,600) (263,643)
___________ ___________ ___________
Net cash used in financing
activities (541,532) (196,898) (802,921)
Net increase in cash
and cash equivalents 287,029 113,026 151,011
Cash and cash equivalents,
beginning of year $ 1,606,992 1,493,966 1,342,955
Cash and cash equivalents,
end of year $ 1,894,021 1,606,992 1,493,966
Income taxes paid during year $ 229,440 197,400 361,739
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(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
were engaged in the ownership and operation of a fast food
bagel/delicatessen business, as described below. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
The Company's subsidiaries operated a fast food bagel/delicatessen
business with four separate locations. A facility which previously
had been operated in an area of San Diego, California was closed in
March 1997. On July 1, 1998, the facility at State College,
Pennsylvania was closed. As of September 1, 1998, the assets of the
remaining two facilities located in Athens, Ohio and Columbus, Ohio
were sold to an unrelated third party. As a result, the Company is no
longer engaged in the food business and, accordingly, the accompanying
consolidated financial statements present the Company's food operations
as discontinued operations for all periods presented (see note 9).
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
Investments in debt and certain equity securities are classified as
either held-to-maturity securities, which are carried at amortized cost,
or available-for-sale securities, which are carried at fair value,
with unrealized gains and losses excluded from earnings and reported
in other comprehensive income.
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 net earnings and are
derived using the specific identification method for determining the
cost of securities sold.
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.
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<PAGE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
Depreciation, Depletion, and Amortization
Equipment and leasehold improvements are depreciated/amortized
using the straight-line method over their estimated useful lives
or lease terms, which range from five to seven 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).
Advertising
Costs of advertising are expensed as incurred. Amounts charged to
expense were not significant for the years ended December 31, 1999,
1998, and 1997.
Income Taxes
The Company and its subsidiaries file a consolidated federal income
tax return.
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the
consolidated 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. 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.
Stock Option Plan
The Company applies the intrinsic value-based method of accounting
prescribed by Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations
in accounting for its fixed plan stock options. As such, compensation
expense would be recorded on the date of grant only if the current
market price of the underlying stock exceeded the exercise price.
Statement of Financial Accounting Standards (SFAS) No. 123, Accounting
for Stock-Based Compensation, established accounting and disclosure
requirements using a fair value-based method of accounting for
stock-based employee compensation plans. As allowed by SFAS No. 123,
the Company has elected to continue to apply the intrinsic value-based
method of accounting described above, and has adopted the disclosure
requirements of SFAS No. 123.
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<PAGE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
Impairment of Long-lived Assets and Long-lived Assets to Be Disposed Of
Long-lived assets and certain identifiable intangible assets are
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the asset to future net cash
flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment recognized is measured by
the amount by which the carrying amount exceeds the fair value. Assets
to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell. Adoption of this statement did not
have a material impact on the Company's financial position, results
of operations, or liquidity.
During the fourth quarter of 1997, the Company performed an
impairment analysis of its long-lived assets used in its fast food
bagel/delicatessen business as a result of continuing operating
losses. In connection with this analysis, the Company recognized an
impairment charge of $158,309. In 1998, the Company disposed of its
food operations and the impairment charge was reclassified as a
component of the loss from discontinued operations (see note 9).
Earnings and Dividends Per Share
Basic earnings per share are based on the weighted average number
of common shares outstanding. Dilutive earnings per share are based
on the weighted average number of common shares and dilutive common
equivalent shares outstanding during the year.
Stock options are the only common stock equivalents, however, their
effect was not dilutive in the calculation of earnings per share for
the years ended December 31, 1999, 1998, and 1997. Dividends per
share are based on the number of shares outstanding on the dividend
dates of record.
Comprehensive Income
Comprehensive income consists of net income and net unrealized
gains (losses) on available-for-sale securities and is presented
in the consolidated statements of stockholder's equity and
comprehensive income.
Use of Estimates
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.
-40-
<PAGE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(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, 1999 and 1998 are
presented below. Substantially all equity securities
represent common stocks of domestic corporations.
<TABLE>
<CAPTION>
Gross Gross
unrealized unrealized
Amortized holding holding Fair
1999 cost gains losses value
__________________ __________ __________ __________ __________
<S> <C> <C> <C> <C>
Held-to-maturity-
U. S. government
agency securities $ 7,469,944 0 (544) 7,469,400
Available-for-sale-
Equity securities $ 565,837 1,097,631 (14,636) 1,648,832
</TABLE>
<TABLE>
<CAPTION>
1998
_________________
<S> <C> <C> <C> <C>
Held-to-maturity-
U. S. government
agency securities $ 7,474,053 2,507 0 7,476,560
Available-for-sale-
Equity securities $ 775,834 525,664 ( 81,331) 1,220,167
</TABLE>
At December 31, 1999 and 1998, all U. S. government and government agency
securities mature within one year.
Investment income consists of the following for each of the years ended
December 31
<TABLE>
<CAPTION>
1999 1998 1997
__________ __________ __________
<S> <C> <C> <C>
Interest $ 442,978 467,573 455,734
Dividends 11,125 10,120 11,088
Gross gains on sales of equity
securities 399,578 50,214 201,682
Gross losses on sales of equity
securities (26,796) (51,378) (40,882)
__________ __________ __________
$ 826,885 476,529 627,622
</TABLE>
-41-
<PAGE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(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 ten years. The agreements provide for minimum annual
royalties of $91,200. Coal deposits aggregating approximately
92,000,000 tons in place with a net carrying value of
approximately $710,000 at December 31, 1999 are not presently
leased or producing coal in commercial quantities.
(4) Mineral Rights
At December 31, 1999, the Company owns approximately 64,000 acres
of mineral rights in Missouri, Kansas, Oklahoma, Arkansas,
Louisiana, and Texas.
(5) Income Taxes
Total income taxes for the years ended December 31, 1999, 1998,
and 1997 were allocated as follows:
<TABLE>
<CAPTION>
1999 1998 1997
__________ __________ __________
<S> <C> <C> <C>
Continuing operations $ 266,309 298,759 443,120
Discontinued operations 0 (42,551) (102,909)
Stockholders' equity, for unrealized
appreciation on
equity securities 223,531 31,435 37,581
__________ __________ __________
$ 489,840 287,643 377,792
</TABLE>
The components of income tax expense from contiuning operations
are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
________ ________ ________
<S> <C> <C> <C>
Federal $ 282,434 266,143 394,081
State (16,125) 32,616 49,039
________ ________ ________
Total $ 266,309 298,759 443,120
</TABLE>
Total income tax expense for 1999, 1998, and 1997 includes deferred
income tax expense (benefit) of $(3,859), $87,497, and $(56,745),
respectively.
-42-
<PAGE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
Income tax expense relating to continuing operations has been
provided at effective rates of 29.0%, 33.7%, and 31.2% for the
years ended December 31, 1999, 1998, and 1997, respectively.
The reasons for the difference between the effective tax rates
and the corporate federal income tax rate of 34.0% are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
_____ _____ _____
<S> <C> <C> <C>
Expected statutory tax rate 34.0% 34.0% 34.0%
State income taxes, net of federal
income tax effect (1.2) 2.4 2.2
Depletion (2.3) (2.3) (3.7)
Other, net (1.5) (0.4) (1.3)
_____ _____ _____
Effective tax rate 29.0% 33.7% 31.2%
</TABLE>
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred
tax liabilities at December 31, 1999 and 1998 are presented below:
<TABLE>
<CAPTION>
Deferred tax assets: 1999 1998
________ ________
<S> <C> <C>
Writedown of coal deposits $ 45,095 45,095
Coal development costs 30,693 29,053
Land sales 12,946 12,476
Other 5,992 1,800
________ ________
94,726 88,424
Less valuation allowance (45,095) (45,095)
________ ________
Deferred tax assets 49,631 43,329
</TABLE>
<TABLE>
<CAPTION>
Deferred tax liabilities:
<S> <C> <C>
Depletion (79,027) (72,298)
Unrealized appreciation on available-
for-sale securities (379,049) (155,517)
Other 0 (4,286)
________ ________
Deferred tax liabilities (458,076) (232,101)
Net deferred tax liability $ (408,445) (188,772)
</TABLE>
-43-
<PAGE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
(6) Operating Leases
For 1998, the Company had an operating lease on a month-to-month
basis for its administrative office in Kansas City, Missouri.
In the fourth quarter of 1998, the Company entered into a five-year
operating lease for that office space, which became effective
January 1, 1999. The lease agreement includes the option to
terminate the lease after three years and provides for annual
rental payments of approximately $13,200 through 2003. In addition,
the subsidiaries of the Company had operating leases for certain retail
facilities through September 1, 1998, the date when the last two of the
four facilities were disposed of. Rent expense amounted to $13,155,
$69,763, and $118,908 for the years ended December 31, 1999, 1998,
and 1997, respectively.
(7) 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.
(8) Related Party Transaction
During February 1994, an Investment Management Agreement was
entered into between the Company and Woodwin Management, Inc. The
Company's president through April 21, 1999 was also the president,
director, and stockholder of Woodwin Management, Inc. This agreement
terminated April 23, 1999. Under this agreement, the Company had
agreed to pay a fee at an annual rate of .50% of the market value of
the assets under management. Woodwin Management, Inc. was managing the
Company's equity securities portfolio. The fee paid in 1999, 1998, and
1997 to Woodwin Management, Inc. was $1,861, $6,994, and $5,997,
respectively. In the opinion of management of the Company, the terms of
this Investment Management Agreement were reasonable and competitive.
(9) Segment/Discontinued Operations Information
The Company had operated in two segments energy and food.
On September 1, 1998, the Company sold its remaining food operations
for $135,000 and recorded a gain of $12,866 (net of applicable income
taxes of $6,628). The food operations are presented as discontinued
operations for all periods. As a result, the Company operates in only
one segment, the energy segment consists of the leasing of real
properties and mineral interests in the midwestern and southern United
States to operating leasees. The Company has no foreign revenues.
Coal royalties in 1999, 1998, and 1997 were received from two, two,
and three customers, with 92%, 92%, and 91% being received from the
largest customer, respectively. Oil and mineral lease bonuses and
rentals were received from four, nine, and six customers in 1999,
1998, and 1997, with 90%, 76%, and 51% being recognized from the
largest customer, respectively. Oil and gas royalties were received
from twelve, twelve, and four customers in 1999, 1998, and 1997,
with 62%, 92%, and 97% being received from one customer, respectively.
-44-
<PAGE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
The loss from the Company's discontinued food business is
comprised of the following for the years ended
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
_________ _________
<S> <C> <C>
Revenues $ 409,143 901,835
Cost of food sales 172,630 359,090
_________ _________
Gross margin 236,513 542,745
Food operations expense:
Salaries and wages 145,968 282,931
Occupancy expense 59,445 109,132
Asset impairment charge 0 158,309
Depreciation and
amortization expense 39,140 62,848
Utility expense 22,630 38,224
Other expenses 102,569 193,987
_________ _________
369,752 845,421
Loss from food operations
before income taxes (133,239) (302,676)
Income tax benefit 48,819 102,909
Loss from food
Operations $ (84,420) (199,767)
</TABLE>
(10) Stock Option Plan
In April 1995, the Company adopted a nonqualified stock
option plan (the Plan) pursuant to which the Company's Board
of Directors may grant stock options to directors in lieu of
cash compensation. The Plan authorizes grants of options to purchase
up to 25,000 shares of common stock. Stock options are granted with
an exercise price equal to the stock's fair market value at the
date of grant. All stock options have a term of ten years and vest
and become fully exercisable six months after the date of grant.
-45-
<PAGE>
A summary of incentive stock option activity during 1999, 1998, and
1997 is as follows:
Year Ended
1999 1998 1997
Weighted Weighted Weighted
average average average
exercise exercise exercise
Options price Options price Options price
Options outstanding,
beginning of period 10,000 $30.35 7,500 30.00 5,000 29.75
Granted 0 0 2,500 31.38 2,500 30.50
Exercised 0 0 0 0 0 0
Forfeited 8,000 30.35 0 0 0 0
----- ----- -----
Options outstanding,
end of period 2,000 30.35 10,000 30.35 7,500 30.00
Options exercisable
end of period 2,000 30.35 10,000 30.35 7,500 30.00
Exercise prices for options outstanding as of December 31, 1999 ranged
from $29.00 to $31.38.
The per share weighted average fair value of stock options granted during
1998 and 1997 was $4.17 and $2.64, respectively, on the date of grant
using the Black Scholes option-pricing model with the following weighted
average assumptions: 1999 - expected dividend yield of 6.0%, expected
volatility of 15.00%, risk-free interest rate of 5.66%, and an expected
life of five years; 1998 - expected dividend yield of 1.60%, expected
volatility of 8.0%, risk-free interest rate of 4.25%, and an expected life
of five years; 1997 - expected dividend yield of 6.0%, expected volatility
of 15.0%, risk-free interest rate of 5.66%, and an expected life of
five years.
-46-
<PAGE>
CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI
Notes to Consolidated Financial Statements
December 31, 1999, 1998, and 1997
The Company applies APB Opinion No. 25 in accounting for its
Plan and, accordingly, no compensation cost has been recognized
for its stock options in the accompanying consolidated financial
statements. Had the Company determined compensation cost based on
the fair value at the grant date for its stock options under
SFAS No. 123, the Company's net earnings and earnings per share
would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1999 1998 1997
__________ __________ __________
<S> <C> <C> <C>
Net Earnings:
As reported $ 651,010 517,419 777,838
Pro forma 646,000 511,573 773,329
Earnings per share:
Basic and diluted
as reported 1.84 1.45 2.15
Pro forma $ 1.83 1.44 2.14
</TABLE>
(11) Subsequent Event
On March 6, 2000, the Company consummated the resolution of litigation
and other disputes with a former director and other stockholders, which
arose in connection with the election of directors at the Company's
1999 Annual Meeting, pursuant to an Agreement of Settlement and Release
executed by all parties, including the Company, on February 29, 2000.
The terms of the settlement included the purchase by the Company of
all stock in the Company owned by the plaintiffs, totaling 97,231
shares for a purchase price of $33.50 per share, or aggregate
consideration of $3,257,238. The source of the funds used was
available liquid assets of the Company previously invested in
U. S. government agency obligations.
-47-
CENTRAL COAL & COKE CORPORATION
BYLAWS
(AS OF FEBRUARY 16, 2000)
OFFICES
1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware, and the name of the
registered agent in charge thereof is The Corporation
Trust Company.
2. The Corporation may also have an office in the City of
Kansas City, State of Missouri, and also offices in such other
places as the Board of Directors may from time to time appoint
or the business of the Corporation may require.
SEAL
3. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and
the words "Corporate Seal, Delaware." Said seal may be used
by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise.
STOCKHOLDERS' MEETINGS
4. Meetings of the stockholders may be held at the office
of the Corporation in Kansas City, Missouri, or at such other
place as may be stated in the call or notice of the meeting.
5. An annual meeting of stockholders shall be held on the
third Wednesday of April in each year, if not a legal holiday,
and if a legal holiday, then on the next day following, at
9:00 o'clock A. M., when they shall elect by a plurality vote,
by ballot, a Board of Directors, and transact such other business
as may properly be brought before the meeting.
6. At least one-third (1/3) of the shares issued and
outstanding, and entitled to vote at any meeting, the holders of
which are present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for
the transaction of business except as otherwise provided by
law, by the Certificate of Incorporation or by these Bylaws.
If, however, such number of shares shall not be present or
represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until the
requisite amount of voting stock shall be present. At such
adjourned meeting at which the requisite amount of voting stock
shall be represented, any business may be transacted which might
have been transacted at the meeting as originally notified.
7. At any meeting of the stockholders every stockholder
having the right to vote shall be entitled to vote in person,
or by proxy appointed by an instrument in writing subscribed
by such stockholder and bearing a date not more than three
years prior to said meeting, unless said instrument provides
for a longer period. Each stockholder shall have one vote for
each share of stock having voting power, registered in his name
on the books of the Corporation; provided, that no share of
stock shall be voted on at any meeting which shall have been
transferred on the books of the Corporation within 30 days next
preceding the day on which such meeting shall be held.
8. Written notice of the annual meeting shall be mailed to
each stockholder entitled to vote thereat at such address as
appears on the stock book of the Corporation, not less than
ten nor more than 60 days prior to the meeting.
9. A complete list of the stockholders entitled to
vote at the ensuing election, arranged in alphabetical order,
with the residence of each, and the number of voting shares
held by each shall be prepared by the Secretary and filed in
the office where the election is to be held, at least ten days
before every election, and shall at all times, during the usual
hours for business, and during the whole time of said election,
be open to the examination of any stockholder for any purpose
germane to the meeting.
10. Special meetings of the stockholders, for any purpose,
or purposes, unless otherwise prescribed by statute, may be called
by the President, and shall be called by the President or
Secretary at the request in writing of a majority of the Board
of Directors, or at the request in writing of stockholders owning
a majority in amount of the entire capital stock of the
Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the
proposed meeting.
11. Business transacted at all special meetings shall
be confined to the objects stated in the call.
12. Written notice of a special meeting of stockholders,
stating the time and place and object thereof, shall be mailed,
postage prepaid, not less than ten nor more than 60 days before
such meeting, to each stockholder entitled to vote thereat at
such address as appears on the books of the Corporation.
DIRECTORS
13. The property and business of this Corporation shall be
managed and controlled by its Board of Directors, six in number.
Directors need not be stockholders. They shall be elected at
the annual meeting of the stockholders, and each Director shall
be elected to serve until his successor shall be elected and shall
qualify, all as provided in the Certificate of Incorporation.
14. The Directors may hold their meetings and have one or
more offices outside of Delaware, in the City of Kansas City,
Missouri, or at such other places as they may from time to time
determine.
15. In addition to the powers and authorities by these
Bylaws expressly conferred upon it, the Board of Directors may
exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute or by the
Certificate of Incorporation or by these Bylaws directed or
required to be exercised or done by the stockholders.
RIGHT TO INDEMNIFICATION
16.(a) Each person who was or is made a party or is
threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or
investigative ("proceeding"), by reason of the fact that he or
she, or a person of whom he or she is the legal representative,
is or was a Director or officer of the Corporation or is or was
serving at the request of the Corporation as a Director, officer,
employee or agent of any other corporation or of a partnership,
joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a Director,
officer, employee or agent or in any other capacity while serving
as a Director, officer, employee or agent, shall be indemnified
and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended, (but, in the case of
any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification
rights than said Law permitted the Corporation to provide prior
to such amendment) against all expenses, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes
or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection
therewith; provided, however, that the Corporation shall indemnify
any such person seeking indemnity in connection with an action,
suit or proceeding (or part thereof) initiated by such person
only if such action, suit or proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. Such
right shall be a contract right and shall include the right to
be paid by the Corporation expenses incurred in defending any
such proceeding in advance of its final disposition; provided,
however, that, the payment of such expense incurred by a
Director or officer in his or her capacity as a Director or
officer (and not in any other capacity in which service was
or is rendered by such person while a Director or officer,
including, without limitation, service to an employee
benefit plan) in advance of the final disposition of such
proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such Director or officer,
to repay all amounts so advanced if it should be determined
ultimately that such Director or officer is not entitled to
be indemnified under this Section or otherwise.
(b) If a claim under paragraph (a) is not paid in full
by the Corporation within 90 days after a written claim has
been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense
of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking has been
tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the
Delaware General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or it stockholders)
to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable
standard of conduct set forth in the Delaware General
Corporation Law, or an actual determination by the Corporation
(including its Board of Directors, independent legal counsel,
or its stockholders) that the claimant had not met such applicable
standard of conduct, shall be a defense to the action or create a
presumption that claimant had not met the applicable standard of
conduct.
(c) The rights conferred on any person by paragraphs
(a) and (b) shall not be exclusive of any other right which
such person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, Bylaw, agreement,
vote of stockholders or disinterested Directors or otherwise.
(d) The Corporation may maintain insurance, at its expense,
to protect itself and any such Director, officer, employee or
agent of the Corporation or another corporation, partnership,
joint venture, trust or other enterprise against any such
expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such
expense, liability or loss under the Delaware General Corporation
Law.
COMMITTEES OF DIRECTORS
17. The Board of Directors may, by resolution or resolutions
passed by a majority of the whole Board, designate one or more
committees, each committee to consist of two or more of the
Directors of the Corporation, which, to the extent provided
in said resolution or resolutions, shall have and may exercise
the powers of the Board of Directors in the management of the
business and affairs of the Corporation, and may have power to
authorize the seal of the Corporation to be affixed to all papers
which may require it. Such committee or committees shall have
such name or names as may be determined from time to time by
resolution adopted by the Board of Directors.
18. The committees shall keep regular minutes of their
proceedings and report the same to the Board when required.
COMPENSATION OF DIRECTORS
19. Directors shall each receive a stated salary for
their services to be determined by resolution of the Board
and in addition thereto, by resolution of the Board a fixed
sum and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board;
provided that nothing herein contained shall be construed to
preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
20. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
MEETINGS OF THE BOARD
21. The newly elected Board may meet at such place and time
either within or without the State of Delaware as shall be fixed
by the vote of the stockholders at the annual meeting, for the
purpose of organization or otherwise, and no notice of such meeting
shall be necessary to the newly elected Directors in order legally
to constitute the meeting; provided, a quorum shall be present; or
they may meet at such place and time as shall be fixed by the
consent in writing of all the Directors.
22. Regular meetings of the Board may be held without notice
at such time and place either within or without the state of
Delaware as shall from time to time be determined by the Board.
23. Special meetings of the Board may be called by the
President on three days notice to each Director, either personally
or by mail or by telegram; special meetings shall be called by the
President or Secretary in like manner and on like notice on the
written request of two Directors.
24. At all meetings of the Board, three of the Directors shall
be necessary and sufficient to constitute a quorum for the
transaction of business, and the act of a majority of the Directors
present at any meeting at which there is a quorum, shall be the act
of the Board of Directors, except as may be otherwise specifically
provided by statute or by the Certificate of Incorporation or by
these Bylaws.
OFFICERS
25. The officers of the Corporation shall be chosen by the
Directors and shall be a President, Vice President, Secretary
and Treasurer. The Board of Directors may also choose additional
Vice Presidents, Assistant Secretaries and Assistant Treasurers.
Any number of offices may be held by the same person.
26. The Board of Directors, at its first meeting after each
annual meeting of stockholders shall elect the officers designated
in Section 25 above, who need not be members of the Board.
27. The Board may appoint such other officers and agents as it
shall deem necessary, who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board.
28. The salaries of all officers and agents of the Corporation
shall be fixed by the Board of Directors.
29. The officers of the Corporation shall hold office until
their successors are chosen and qualify in their stead. Any
officer elected or appointed by the Board of Directors may be
removed at any time by the affirmative vote of a majority of
the whole Board of Directors. If the office of any officer or
officers becomes vacant for any reason, the vacancy shall be
filled by the affirmative vote of a majority of the whole Board
of Directors.
THE PRESIDENT
30. The President shall be the chief executive officer of
the Corporation; he shall preside at all meetings of the
stockholders and Directors; he shall have general and active
management of the business of the Corporation, and shall see
that all orders and resolutions of the Board are carried into
effect.
31. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation.
32. He shall be ex officio a member of all standing committees
and shall have the general powers and duties of supervision and
management usually vested in the office of President of a
corporation.
VICE PRESIDENTS
33. The Vice Presidents in the order of their seniority
shall, in the absence or disability of the President, perform
the duties and exercise the powers of the President and shall
perform such other duties as the Board of Directors shall
prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
34. The Secretary shall attend all sessions of the Board
and all meetings of the stockholders and record all votes and
the minutes of all proceedings in a book to be kept for that
purpose; and shall perform like duties for the standing committee
when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board
of Directors or President, under whose supervision he shall be.
He shall keep in safe custody the seal of the Corporation, and
when authorized by the Board, affix the same to any instrument
requiring it, and when so affixed, it shall be attested by his
signature or by the signature of the Treasurer or an Assistant
Secretary.
35. The Assistant Secretaries may, in the absence or disability
of the Secretary, perform the duties and exercise the powers of
the Secretary, and shall perform such other duties as the Board
of Directors shall prescribe.
THE TREASURER AND ASSISTANT TREASURER
36. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts
of the receipts and disbursements in books belonging to the
Corporation and shall deposit all monies, and other valuable
effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors.
37. He shall disburse the funds of the Corporation as may be
ordered by the Board, taking proper vouchers for such disbursements
and shall render to the President and Directors, at the regular
meetings of the Board, or whenever they may require it, an account
of all his transactions as Treasurer and of the financial condition
of the Corporation.
38. He shall give the Corporation a bond if required by the
Board of Directors in a sum, and with one or more sureties
satisfactory to the Board, for the faithful performance of the
duties of his office, and for the restoration to the Corporation,
in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property
of whatever kind in his possession or under his control belonging
to the Corporation.
39. The Assistant Treasurers may, in the absence or disability
of the Treasurer, perform the duties and exercise the owners of
the Treasurer, and shall perform such other duties as the
Board of Directors shall prescribe.
DUTIES OF OFFICERS MAY BE DELEGATED
40. In case of the absence of any officer of the Corporation,
or for any other reason that the Board may deem sufficient, the
Board may delegate, for the time being, the powers or duties of
any of them, of such officer to any other officer, or to any
Director.
CERTIFICATES OF STOCK
41. The certificates of stock of the Corporation shall be
numbered and recorded as they are issued. They shall exhibit the
holder's name and number of shares and shall be signed by the
President or a Vice President and Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary. Any
or all of the signatures on the certificate may be a facsimile.
The designations, preferences and relative participating,
optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the
certificate which the Corporation shall issue to represent
such class or series of stock.
TRANSFERS OF STOCK
42. Transfers of stock shall be made on the records of the
Corporation only by the person named in the certificate or by
attorney, lawfully constituted in writing, and upon surrender of
the certificate therefor.
CLOSING OF TRANSFER BOOKS
43. The Board of Directors shall have power to close the
stock transfer books of the Corporation for a period not
exceeding 60 days preceding the date for payment of any
dividend or the date for the allotment of rights or the
date when any change or conversion or exchange of capital
stock shall go into effect; provided, however, that in lieu
of closing the stock transfer books as aforesaid, the Board
of Directors may fix in advance a date, not exceeding 60 days
preceding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment
of rights, or the date when any change or conversion or exchange
of capital stock shall go into effect, as a record date for the
determination of the stockholders entitled to receive payment of
any such dividend, or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion
or exchange of capital stock, and in such case such stockholders,
and only such stockholders as shall be stockholders of record on
the date so fixed, shall be entitled to receive payment of such
dividends or to receive such allotment of rights, or to exercise
such rights, as the case may be notwithstanding any transfer of
any stock on the books of the Corporation after any such record
date fixed as aforesaid.
REGISTERED STOCKHOLDERS
44. The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such share on the
part of any other person, whether or not it shall have express
or other notice thereof, save as expressly provided by the laws
of Delaware.
LOST CERTIFICATE
45. Any person claiming a certificate of stock to be lost,
stolen or destroyed shall make an affidavit or affirmation of
that fact in such manner as the Board of Directors may require,
and the Board of Directors may, in its discretion, require the
owner of the lost, stolen or destroyed certificate or his legal
representative, to give the Corporation a bond, in such sum as
it may direct, to indemnify the Corporation against any claim
that may be made against it on account of the alleged loss,
theft or destruction of any such certificate. A new
certificate of the same tenor and for the same number of
shares as the one alleged to be lost, stolen or destroyed may
be issued without requiring any bond when, in the judgment of
the Directors, it is proper so to do.
CHECKS
46. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time
to time designate.
FISCAL YEAR
47. The fiscal year shall begin the 1st day of January in
each year.
DIVIDENDS
48. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation,
if any, may be declared by the Board of Directors at any regular
or special meeting, pursuant to law. Dividends may be paid in
cash, in property, or in shares of the capital stock.
49. Before payment of any dividend there may be set aside
out of any funds of the Corporation available for dividends such
sum or sums as the Directors from time to time, in their absolute
discretion, think proper as a reserve fund to meet contingencies,
or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the
Directors shall think conducive to the interests of the
Corporation, and the Directors may abolish any such reserve in
the manner in which it was created.
DIRECTORS' ANNUAL STATEMENT
50. The Board of Directors may present at each annual
meeting a full and clear statement of the business and
condition of the Corporation.
NOTICES
51. Whenever under the provisions of these Bylaws notice is
required to be given to any Director, officer or stockholder, it
shall not be construed to mean personal notice, but such notices
may be given in writing, by mail, by depositing the same in the
post office or letter box, in a post-paid sealed wrapper,
addressed to such stockholder, officer or Director at such
address as appears on the books of the Corporation, and such
notice shall be deemed to be given at the time when the same
shall be thus mailed.
52. Any stockholder, Director, or officer may waive any
notice required to be given under these Bylaws.
AMENDMENTS
53. These Bylaws may be altered or amended or repealed by
the affirmative vote of a majority of the stock issued and
outstanding and entitled to vote thereat, at any regular or
special meeting of the stockholders, if notice of the proposed
alteration or amendment or repeal be contained in the notice of
the meeting, or by the affirmative vote of a majority of the
Board of Directors at any regular or special meeting of the Board,
if notice of the proposed alteration or amendment be contained
in the notice of the meeting.
AS AMENDED FEBRUARY 16, 2000
AGREEMENT OF SETTLEMENT AND RELEASE
AGREEMENT OF SETTLEMENT AND RELEASE dated this 29th day of
February, 2000 by and among (i) Beekman Winthrop, Phoebe Jane
Winthrop, Dudley Winthrop, Dudley Winthrop WMI Trust, Winthrop
Holdings Limited Partnership, Beekman Winthrop Birthday Trust,
Beekman Winthrop WMI Trust and William Levy (collectively, the
"Winthrop Parties") and (ii) Central Coal & Coke Corporation
(the "Company"), Phelps M. Wood, Phelps C. Wood, Patrick J. Moran,
James Ukropina, Ray Infantino and Bruce Franke (collectively, the
"Central Parties").
W I T N E S S E T H
WHEREAS, the 1999 annual meeting of stockholders of the
Company (the "Annual Meeting") was held on April 21, 1999; and
WHEREAS, following the Annual Meeting, the Winthrop Parties
initiated a lawsuit against the Central Parties in the Court of
Chancery of the State of Delaware, styled Winthrop, et al. v.
Central Coal & Coke Corp., et al., Civil Action No. 17162 (the
"Action") challenging the results of the election of directors
at the Annual Meeting; and
WHEREAS, since the Annual Meeting, the Winthrop Parties and
the Central Parties have been involved in a number of disputes and
disagreements regarding the governance, management and operations
of the Company; and
WHEREAS, the Winthrop Parties and the Central Parties wish
to resolve their disputes without resort to continued litigation
or further litigation;
NOW, THEREFORE, in consideration of the mutual promises
contained herein and for other good and valuable consideration,
the undersigned parties to this Agreement of Settlement and Release
(the "Agreement") do hereby agree and undertake to settle all of
their disputes as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Shares. Upon and subject to the
terms and conditions hereinafter set forth, the Winthrop Parties
shall sell, assign, transfer and deliver to the Company 97,231
shares of common stock, par value $1.00 per share, of the Company
(the "Shares") and the Company shall purchase and acquire all of
the Winthrop Parties' right, title and interest in and to the Shares. The
aggregate purchase price of the Shares shall be $3,257,238.50 (the "Purchase
Price").
1.2 Items Delivered. The Winthrop Parties shall cause the
record owner(s) of the Shares to transfer ownership of the Shares
to the Company. Upon transfer of the Shares to the Company, the
Company shall deliver payment of the Purchase Price in immediately
available funds by wire transfer to the attorney trust account of
Barton, Barton & Plotkin, LLP.
<PAGE>
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 Representations and Warranties of the Winthrop Parties.
The Winthrop Parties represent and warrant that (i) they are the
sole beneficial owners of the Shares, free and clear of all liens,
claims, encumbrances, restrictions on transfer or rights of third
parties of any nature whatsoever ("Liens"), (ii) neither they or
any of their affiliates or associates (as those terms are defined
in Section 4.1 of this Agreement) have any right, title or interest
in or to any shares of or options or warrants to acquire shares of
common stock, par value $1.00 per share, of the Company or any other
securities of the Company other than the 97,231 Shares described in
Section 1.1 of this Agreement, (iii) they have the unrestricted right
to sell, assign and transfer the Shares as contemplated herein, (iv)
the performance by the Winthrop Parties of their obligations
hereunder will vest in the Company title to the Shares, free and
clear of all Liens, (v) they have all requisite power and authority
to execute, deliver and perform this Agreement and to sell, assign
and transfer the Shares, (vi) this Agreement constitutes a valid and
binding obligation of the Winthrop Parties, enforceable in
accordance with its terms and (vii) no consent, approval, waiver,
authorization or filing is necessary for the execution, delivery
and performance by the Winthrop Parties of this Agreement.
Notwithstanding any provision of this Agreement to the contrary,
in the event that, whether prior to or subsequent to the Closing,
any Lien relating to the Shares shall be discovered by any party
hereto, such party shall immediately give notice thereof to the
Winthrop Parties and the Winthrop Parties shall, at their sole cost
and expense, remove or cause to be removed such Lien.
2.2 Representations and Warranties of the Central Parties.
The Central Parties represent and warrant that (i) they have all
requisite power and authority to execute, deliver and perform
this Agreement, (ii) this Agreement constitutes a valid and
binding obligation of the Central Parties, enforceable in
accordance with its terms, and (iii) no consent, approval,
waiver, authorization or filing is necessary for the execution,
delivery and performance by the Central Parties of this Agreement.
2.3 Indemnification of the Winthrop Parties. The Company's
hall defend and promptly indemnify and save the Winthrop Parties
harmless from, against, for and in respect of, and shall promptly
pay upon submission of statements therefor, any and all damages,
losses, obligations, liabilities, claims, encumbrances,
deficiencies, costs and expenses, including, without limitation,
attorneys' fees and other costs and expenses incident to any action,
investigation, claim or proceeding (all hereinafter collectively
referred to as "Losses") suffered, sustained, incurred or required
to be paid by the Winthrop Parties, or any of them, by reason of
or relating to any breach or failure of observance or performance
of any representation, warranty covenant, agreement or commitment
hereunder or relating hereto made by any of the Central Parties.
2.4 Indemnification of the Central Parties. The Winthrop
Parties shall, severally but
<PAGE>
not jointly, defend and promptly
indemnify and save the Central Parties harmless from, against,
for and in respect of and shall promptly pay upon submission of
statements therefor, any and all Losses suffered, sustained,
incurred or required to be paid by the Central Parties by reason
of any breach or failure of observance or performance of any
representation, warranty, covenant, agreement or commitment
hereunder or relating hereto made by any of the Winthrop Parties.
ARTICLE III
MUTUAL GENERAL RELEASES
3.1 Release by the Winthrop Parties. The Winthrop Parties agree
and covenant, on behalf of themselves and their respective heirs,
estates, officers, directors, partners, trustees, beneficiaries,
successors, predecessors, subsidiaries, principals and affiliates
(the "Winthrop Releasors"), to remise, release and forever
discharge, and covenant not to sue or take any steps to further
any existing litigation against, the Central Parties and their
respective heirs, estates, successors, affiliates, subsidiaries,
officers, directors, partners, trustees, beneficiaries, employees,
agents, representatives, attorneys and any other advisors or
consultants to Central Parties (collectively, the "Central
Releasees"), and each of them, from and in respect of any and
all claims and causes of action, whether based on any federal,
state or foreign law or right of action, direct, indirect or
representative in nature, foreseen or unforeseen, matured or
unmatured, known or unknown, which any of, or all, the Winthrop
Releasors have, had or may have against the Central Releasees,
or any of them, of any kind, nature or type whatsoever, up to
the date of this Agreement, except that the Winthrop Releasors do
not release the Central Releasees from any claims they may have
related to or connected in any way with the performance or
enforcement of the terms of this Agreement.
3.2 Release by the Central Parties. The Central Parties agree
and covenant, on behalf of themselves and their respective heirs,
estates, officers, directors, partners, trustees, beneficiaries,
successors, predecessors, subsidiaries, principals and affiliates
(the "Central Releasors"), to remise, release and forever discharge,
and covenant not to sue or take any steps to further any existing
litigation against, the Winthrop Parties and their respective heirs,
estates, successors, affiliates, subsidiaries, officers, directors,
partners, trustees, beneficiaries, employees, agents,
representatives, attorneys and any other advisors or consultants
to the Winthrop Parties (collectively, the "Winthrop Releasees"),
and each of them, from and in respect of any and all claims and
causes of action, whether based on any federal, state or foreign
law or right of action, direct, indirect or representative in
nature, foreseen or unforeseen, matured or unmatured, known or
unknown, which any of, or all, the Central Releasors have, had or
may have against the Winthrop Releasees, or any of them, of any
kind, nature or type whatsoever, up to the date of this Agreement,
except that the Central Releasors do not release the Winthrop
Releasees from any claims they may have related to or connected in
any way with the performance or enforcement of the terms of this
Agreement.
3.3 Releases Binding, Unconditional and Final. The parties
hereby acknowledge and agree that the releases and covenants
provided for herein shall be binding, unconditional and final upon
full execution of this Agreement.
<PAGE>
3.4 Undiscovered Facts. The parties acknowledge that they may
hereafter discover facts in addition to or different from those
which they now know or believe to be true with respect to the
subject matters of the releases and covenants contained herein,
but that it is their intention that such facts shall have no effect
on such releases or covenants; in furtherance of such intention,
they acknowledge that the releases and covenants contained herein
shall be and remain in effect notwithstanding the subsequent
discovery or existence of any such additional or different facts.
Moreover, the parties acknowledge that they have considered the
possibility that they may not now fully know the number and
magnitude of all claims which they have released hereby but agree
nonetheless to assume that risk and desire to release such unknown
claims.
3.5 The Action. The Winthrop Parties agree not to pursue any
other rights or remedies in, through or with respect to the Action,
including but not limited to appealing any aspect of the judgment
in the Action.
ARTICLE IV
STANDSTILL
4.1 From and after the date of this Agreement, the Winthrop
Parties and their respective agents, representatives, affiliates,
associates and all other persons acting in concert with or under
the control or direction of any of the Winthrop Parties shall not,
directly or indirectly: (a) acquire, enter into any option to
acquire, offer to acquire, agree to acquire, become the record,
legal or beneficial owner of or obtain any rights in respect to
any securities of the Company, by purchase, conversion, exchange
or exercise of Company securities pursuant to their terms, or take
any action in furtherance thereof; or (b) participate in any proxy
solicitation or become a member of any "group," within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934
(the "Exchange Act") or the rules and regulations of the Securities
and Exchange Commission promulgated thereunder, with respect to
the Company or any Company securities. As used herein, the
terms "affiliate" and "associate" shall have the meanings given
such terms in Rule 12b-2 of the Exchange Act, and the term
"person" shall mean any individual, partnership, corporation,
group (as defined above), syndicate, trust or any other association
or entity.
ARTICLE V
NONDISPARAGEMENT; LITIGATION; CONFIDENTIALITY
5.1 Nondisparagement; Litigation. The Winthrop Parties agree
and covenant, on behalf of themselves and their respective heirs,
estates, officers, directors, partners, trustees, beneficiaries,
successors, predecessors, subsidiaries, principals and affiliates
not to directly or indirectly disparage, criticize, or make any
negative public or private comments about any of the Central
Parties or any of their respective heirs, estates, successors,
affiliates, subsidiaries, officers, directors, partners, trustees,
beneficiaries, employees, agents, representatives, attorneys and
any other advisors or consultants to Central Parties to any person
or entity or to assist any person or entity to initiate or pursue,
directly or indirectly, any litigation, arbitration, suit, claim,
or complaint against the Central Parties or any of their respective
heirs, estates, successors, affiliates, subsidiaries, officers,
directors, partners, trustees, beneficiaries, employees, agents,
<PAGE>
representatives, attorneys and any other advisors or consultants
to Central Parties relating to any matter whatsoever, excluding,
however, any litigation, arbitration, suit, claim, or complaint
filed in connection with a breach of this Agreement. The Central
Parties agree and covenant, on behalf of themselves and their
respective heirs, estates, officers, directors, partners, trustees,
beneficiaries, successors, predecessors, subsidiaries, principals
and affiliates not to directly or indirectly disparage, criticize,
or make any negative public or private comments about the
Winthrop Parties or any of their respective heirs, estates,
successors, affiliates, subsidiaries, officers, directors,
partners, trustees, beneficiaries, employees, agents,
representatives, attorneys and any other advisors or consultants
to the Winthrop Parties or assist any person or entity to initiate
or pursue, directly or indirectly, any litigation, arbitration,
suit, claim or complaint against the Winthrop Parties or any of
their respective heirs, estates, successors, affiliates,
subsidiaries, officers, directors, partners, trustees,
beneficiaries, employees, agents, representatives, attorneys
and any other advisors or consultants to the Winthrop Parties
relating to any matters whatsoever, excluding, however, any
litigation, arbitration, suit, claim, or complaint filed in
connection with a breach of this Agreement.
5.2 Confidentiality. The parties to this Agreement shall
maintain the confidentiality of this Agreement and the terms
hereof, except to the extent necessary to comply in good faith
with applicable securities laws or regulations.
5.3 Notwithstanding Sections 5.1 and 5.2 of this Agreement,
nothing contained herein shall limit the ability of any party
to this Agreement to provide documents or information responsive
to legal process or legal proceedings, or requests from any
government or regulatory agency or authority in connection with
any formal or informal inquiry, investigation or proceeding
(a "Request"). If any party to this Agreement receives such a
Request, it shall (i) give prompt actual written notice, by hand
or facsimile transmission, and in no event later than forty-eight
hours of receipt of such Request, to all other parties to this
Agreement and (ii) shall use its best efforts to maintain the
confidentiality of such documents or information.
ARTICLE VI
MISCELLANEOUS
6.1 No Concession of Liability. This Agreement shall not in
any event be construed or deemed a concession on the part of any
of the undersigned to the truth of any allegations, claims, or
defenses made by any of the parties in the Action or otherwise,
or of any liability or wrongdoing of any of the parties.
6.2 Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof.
The representations, warranties, covenants and agreements set forth
in this Agreement constitute all the representations, warranties,
covenants and agreements of the parties hereto and upon which the
parties have relied and except as may be specifically provided
herein, no change, modification, amendment, addition or termination
of this Agreement or any part thereof shall be valid unless in
writing and signed by or on behalf of the party to be charged
therewith.
<PAGE>
6.3 Fees and Expenses of Transaction. The parties hereto shall
each bear his, her or its own expenses in connection with this
transaction.
6.4 Waivers. No waiver of the provisions hereof shall be
effective unless in writing and signed by the party to be charged
with such waiver. No waiver shall be deemed a continuing waiver or
waiver in respect of any subsequent breach or default, either of
similar or different nature, unless expressly so stated in writing.
6.5 Governing Law. This Agreement shall be governed,
interpreted and construed in accordance with the laws of the State
of Delaware applicable to contracts to be performed entirely
within that State. Should any clause, section or part of this A
greement be held or declared to be void or illegal for any reason,
all other clauses, sections or parts of this Agreement which can
be effected without such illegal clause, section or part shall
nevertheless continue in full force and effect.
6.6 Jurisdiction and Venue. Each party hereto hereby agrees
that any proceeding relating to this Agreement shall be brought
in a state court of Delaware. Each party hereto hereby consents
to personal jurisdiction in any such action brought in any such
Delaware court, consents to service of process by registered mail
made upon such party and/or such party's agent and waives any
objection to venue in any such Delaware court and a claim that
any such Delaware court is an inconvenient forum.
6.7 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns or heirs and personal representatives.
6.8 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one instrument.
6.9 Survival of Representations. All of the representations,
warranties, covenants, releases and indemnities of the parties set
forth in this Agreement will survive the transfer of the Shares to
the Company.
6.10 No Third Party Rights. The representations, warranties
and agreements of the parties contained herein are intended solely
for the benefit of the party to whom such representations,
warranties or agreements are made, shall confer no rights
hereunder, whether legal or equitable, in any other person or
entity, and no other person or entity shall be entitled to rely
thereon.
6.11 Construction. This Agreement shall not be more strictly
construed against one party than against any other merely because
it was prepared by counsel for that party, it being recognized
that, because of the arm's length negotiations, all parties have
materially and substantially contributed to the preparation, review
and final terms of this Agreement.
<PAGE>
6.12 Indemnification of Beekman Winthrop. If Beekman Winthrop
is made a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding") by
reason of the fact that he was a director or officer of the
Company or was serving at the request of the Company as a
director, officer, employee or agent of any other corporation
or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, he
shall be indemnified and held harmless by the Company to the
fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended, (but, in
the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification
rights than said Law permitted the Company to provide prior to
such amendment) against all expenses, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection
therewith; provided, however, that the Company shall indemnify
Beekman Winthrop in connection with a Proceeding (or part thereof)
initiated by him only if Proceeding (or part thereof) was
authorized by the Board of Directors of the Company. Such
right shall be a contract right and shall include the right
to be paid by the Company expenses incurred in defending any
such Proceeding in advance of its final disposition; provided,
however, that, the payment of such expense incurred by Beekman
Winthrop in advance of the final disposition of such Proceeding,
shall be made only upon delivery to the Company of an undertaking,
by or on behalf of Beekman Winthrop to repay all amounts so
advanced if it should be determined ultimately that he is not
entitled to be indemnified.
6.13 Withdrawal of Stockholder Proposal. Dudley Winthrop shall
withdraw the proposal which he has requested the Company, by letter
dated November 23, 1999, to include in its proxy materials for the
2000 annual meeting of stockholders of the Company. None of the
Winthrop Parties shall propose, initiate, facilitate or encourage
any stockholder proposals with respect to the Company.
6.14 Specific Performance; Injunctive Relief. The parties to
this Agreement agree that solely a remedy at law for breach of this
Agreement is inadequate and that any party by whom this Agreement
is enforceable shall be entitled to institute and prosecute
proceedings, either at law or in equity, to seek specific
performance of the terms and conditions of this Agreement,
to obtain injunctive relief or to obtain any other appropriate
relief or remedy. Such remedies shall, however, be cumulative
and not exclusive and shall be in addition to any other remedies
which a party may have under this Agreement or at law.
6.15 Notices. Unless otherwise provided by the terms of this
Agreement, any and all notices or other communications or
deliveries required or permitted to be given or made pursuant
to any of the provisions of this Agreement shall be deemed to
have been duly given or made for all purposes if sent by certified
or registered mail, return receipt requested and postage prepaid,
or delivered in person to the parties at the following addresses:
(i) on behalf of the Winthrop Parties, Mr. Beekman Winthrop,
5722 Benton Street, N.W., Washington, DC 20007 and (ii)
on behalf of the Central Parties, Central Coal & Coke Corporation,
Attn: Secretary, 127 W. 10th Street, Suite 666, Kansas City,
Missouri 64105, or at such
<PAGE>
other address as any party may specify by notice given to other
parties in accordance with this Section. The date of giving of
any such notice shall be (a) in the case of hand delivery, when
actually delivered to the addressee and (b) in the case of
registered or certified mail, three (3) days after mailing.
Copies of all notices shall be sent to Roger E. Barton, Esquire,
Barton, Barton & Plotkin LLP, 420 Lexington Avenue, New York,
New York 10170 and Ernest N. Yarnevich, Jr., Esquire, 600 Plaza
West Building, 4600 Madison Avenue, Kansas City, Missouri 64112.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the 29th day of February, 2000.
/s/ Beekman Winthrop
________________________
BEEKMAN WINTHROP
/s/ Phoebe Jane Winthrop
__________________________
PHOEBE JANE WINTHROP
/s/ Dudley Winthrop
___________________________
DUDLEY WINTHROP
DUDLEY WINTHROP WMI TRUST
By: /s/ Beekman Winthrop, Trustee
_________________________________
BEEKMAN WINTHROP
Trustee
WINTHROP HOLDINGS LIMITED
PARTNERSHIP
By: Woodwin Management, Inc.
General Partner
By: /s/ Beekman Winthrop, President
___________________________________
BEEKMAN WINTHROP
President
BEEKMAN WINTHROP BIRTHDAY TRUST
By: /s/ Phoebe Jane Winthrop, Trustee
_____________________________________
PHOEBE JANE WINTHROP
Trustee
<PAGE>
BEEKMAN WINTHROP WMI TRUST
By: /s/ Phoebe Jane Winthrop, Trustee
_____________________________________
PHOEBE JANE WINTHROP
TRUSTEE
/s/ William Levy
________________
WILLIAM LEVY
CENTRAL COAL & COKE CORPORATION
By: /s/ Phelps M. Wood
______________________
PHELPS M. WOOD
President
/S/PHELPS M. WOOD
______________________
Phelps M. Wood
/s/ Phelps C. Wood
_______________________
PHELPS C. WOOD
/s/ Patrick J. Moran
_______________________
PATRICK J. MORAN
/s/ James Ukropina
_______________________
JAMES UKROPINA
/s/ Ray Infantino
______________________
RAY INFANTINO
/s/ Bruce Franke
______________________
BRUCE FRANKE
[DESCRIPTION] Selected Consolidated Financial Data
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA
Years ended December 31 1999 1998 1997
_____________ _____________ _____________
<S> <C> <C> <C>
Total operating revenue $ 615,875.00 590,173.00 1,106,425.00
Net Earnings 651,010.00 517,419.00 777,838.00
Net Earnings per common share 1.84 1.45 2.15
Cash dividends per common share 1.25 .50 1.50
Total Assets $ 12,272,117.00 11,583,087.00 11,005,414.00
</TABLE>
<TABLE>
<CAPTION
Years ended December 31 1996 1995
_____________ _____________
<S> <C> <C>
Total operating revenue $ 1,159,008.00 1,871,476.00
Net Earnings 790,090.00 830,662.00
Net Earnings per common share 2.13 2.22
Cash dividends per common share 1.85 1.85
Total Assets $ 11,037,478.00 11,181,546.00
</TABLE>
<PAGE>
[DESCRIPTION] Management's Discussion and Analysis
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION
& RESULTS OF OPERATIONS
There was no significant change in the financial condition of the
Company during 1999, 1998, or 1997, and it continues very strong. The
liquidity of the Company continues to be high as is evidenced by a very
favorable ratio of current assets to current liabilities and a
significant portion of the Company's net worth being represented by
liquid assets. On March 6, 2000 the Company consummated the resolution
of litigation and other disputed with former director Beekman Winthrop
and other stockholders as described in the President's Letter contained
in this Annual Report pursuant to an agreement of Settlement and
Release executed by all parties, including the Company, on February
29, 2000. The terms of the settlement included the purchase by the
Company of all stock in the Company owned by the plaintiffs,
totaling 97,231 shares for a purchase price of $33.50 per share, or
aggregate consideration of $3,257,238.50, which the Board of Directors
of the Company after careful consideration concluded was a fair price
under the circumstances based upon a review of the Company's financial
statements and considering the costs and risks of continued litigation.
The source of the funds used was available liquid assets of the Company
previously invested in U.S. Government Agency obligations. The liquidity
of the Company was somewhat reduced by this transaction (which was
consummated after close of the fiscal year reported in the accompanying
Consolidated Financial Statements), but overall the Company continues to
enjoy very high liquidity with a continued favorable ratio of current
assets to current liabilities and a significant portion of its net
worth being represented by liquid assets.
Total operating revenue was up somewhat in 1999 over 1998
while down significantly in 1998 and 1999 from 1997. The
principal component in these changes is revenue from oil and gas royalties
which were higher in 1999 than in 1998, but still down considerably in
both years from 1997. The increase in 1999 was due to a material increase
in oil prices during the course of the year coupled with somewhat increased
production. Correspondingly,, oil prices and production were higher in
1997 than in the succeeding two years. Revenues form oil and other mineral
lease rentals and bonuses was lower in 1999 and 1998 than in 1997 because
more new leases with income recognizable in 1997 were made during 1997
than were made in subsequent two years.
With respect to non-operating income, revenue from investment income
increased significantly in 1999 over both 1998 and 1997, but with 1997 being
higher than 1998. The reason for the increase in 1999 was primarily
increased capital gains realized on sales of equities during the year,
reduced by slightly lower rated of return on temporary fixed income
investments during the year. Revenue from gain on sales of real estate
was significantly higher in 1998 than in either 1999 of 1997 because
there was substantially more surface land sold during 1998 than in 1999
or 1997.
General and administrative expenses were up significantly
in 1999 from 1998 or 1997. The increase in the current year was primarily
attributable to significant fees paid to outside service providers during
1999, particularly to financial advisers and appraisers of the Company's
real estate and mineral assets, and legal fees incurred in connection with
the litigation described in the President's Letter in this Annual Report.
Additionally, reduced state franchise tax expense in 1998 contributed to the
decrease that year.
As shown in Note 5 to the accompanying Consolidated Financial Statements
income taxes were down in 1999 from 1998, and also down considerably in 1998
from 1997. The decreases in the current years were primarily due to
decreased earnings before income taxes. The effective tax rate was lower in
1999 than in either 1998 or 1997, reflecting to a certain extent reduced
state income taxes.
The accompanying Consolidated Statement of Earnings shows a loss from
operations of discontinued food operations in 1998 and 1997, and no gain of
loss from that category in 1999. Losses from that source in the earlier
years resulted from the operations of Beekman's Deli Systems, Limited
Liability Company, a limited liability company in which the Company is a
majority member (hereinafter "Beekman's"). Beekman's operated fast food
bagel and delicatessen facilities in four different locations throughout
the country; however, sales and profitability of this operation were
disappointing, and all of the operations were terminated by
September 1, 1998, and Beekman's now has no active operations. As is
described in more detail in Note 9 to the accompanying Consolidated
Financial Statements, as a result of the operation in the first nine
months of 1998 and in 1997. losses were incurred, however since the
operations were terminated later in the year 1998, there were no
activities in 1999, and thus no income or loss during that later year.
As a result of the disposal of assets in 1998 as described above, after
recognition of the substantial earlier losses a write down of the carrying
value of the assets of this venture in 1997 for book purposes, the
Company realized a nominal gain on the sale of assets, and that gain is
reflected in the item captioned "Gain on Disposal of Food Operations"
under discontinued operations for 1998. One reason for the improvement
in net earnings in 1999 from 1998 is that the Company did not sustain
losses from this operation in 1999.
There was a substantial increase in cash and cash equivalents in
1999, 1998 and 1997 but the increase was substantially greater in 1999
than in the other two years under comparison. The most significant
component of the change between the years reflects the difference in
cash provided by investment activities, specifically differences in
the amounts of proceeds from sales of equity securities during each to
respective years, and also decreasd deferred oil lease bonuses in 1999.
he changes also reflect increased net earnings in 1999 over 1998 and
materially higher net earnings in 1997 than in either of the other
two years under comparison and greater adjustment to net earnings
from depletion from 1997 than in the other two years. Also
contributing to the changes were proceeds from the sale of the
subsidiary's operation in 1998, a decrease in the proceeds from the
sale of land in 1999, and increased dividend payments and purchases
of treasury stock in 1999 over 1998 while cash payments for the latter
two years were greater in 1997 than in either of the other two years
under comparison.
Because of the nature of the Company's business, 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 price per ton and are not affected by market changes.
Substantially increased prices could cause an increase in the amount of coal
mined, however. As is indicated in the discussion above concerning revenue
from oil and gas royalties, changes in the price of oil do have an impact on
the income of the Company, and at times it can be dramatic. The rising price
of oil contributed to increased revenue from that source while the
relatively low price of oil in 1998 contributed to reduced revenue from oil
royalties in that year compared to both 1999 and 1997 when prices were
higher.
Statement of Financial Accounting Standards No. 133, ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES,(Statement 133) was issued by
the Financial Accounting Standards Board in June, 1998. Statement 133
standardizes the accounting for derivative instruments. Under the standard
entities are required to carry all derivative instruments in the statement of
financial position at fair value. The Company must adopt Statement 133 by
July 1, 2000. On adoption, the provisions of SFAS No. 133 will not have
a material impact on its financial position or results of operations.
Concerning quantitative and qualitative disclosures concerning market
risk exposures of the Company relate to changes in interest rates, changes
in equity security prices, and changes in certain commodity prices. The
Company's exposure to market risk for changes in interest rates related solely
to its fixed income investment portfolio which consists of U.S. government
agency securities. All such securities are held-to-maturity and have
original maturities of less than one year. The Company does not use
derivative financial instruments to hedge interest rates on its fixed
income investment securities. The Company's exposure to market risk
for changes in equity security prices relates solely to its marketable
equity investment portfolio which consists primarily of common stocks
of domestic, publicly held enterprises. The Company periodically enters
into equity option contacts on a limited basis primarily relating to
marketable securities held in its investment portfolio. At December
31, 1999 the Company held 78 option contracts with a short position
relating primarily to marketable equity securities held by it. The fair
value of option contracts at December 31, 1999 was approximately $25,447.
The Company's exposure to market risk for changes in commodity prices
relates to changes in the prices of coal, oil an natural gas and the
effect thereof on its royalties and rental relating to coal deposits and
mineral rights as discussed above. The Company does not use derivative
commodity instruments to hedge its commodity risk exposure.
The Company paid cash dividends in the amount of $1.25 per share
in 1999, and fifty cents per share in 1998, and $1.50 per share in 1997.
As stated in the President's letter to this report, the Board of
Directors of the Company has reinstated the semi-annual dividend,
reflecting the traditional dividend payments of the past.
As contemplated in prior reports, the Company did not experience any
system interruptions of its operation or the operations of third parties
with which it does business affecting the Company's operations from the
commencement of the year 2000 with respect to the utilization of existing
computer application software programs and operating systems.
The Company has no specific commitment for material capital
expenditures at the present time. Management continues to actively pursue
other business opportunities which will result in a more productive
deployment of its assets and ultimately increase earnings. During the last
year the Company reviewed one possible business acquisition opportunity in
depth, but subsequently declined it as not suitable at the present time.
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 t generate more rental, bouns and royalty
income. Three new oil and gas leases were entered into in 1998 on the
Company's property in Sebastian County, Arkansas and there is currently gas
production under all three leases. Two new oil and gas leases were made
in 1999, one in Pittsburgh County, Oklahoma and another in Sebastian
County, Arkansas. Small bonuses were received at the time each was
entered into.
<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, 1998 was 400. 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>
1999
Bid Asked Dividends
Low High Low High Per Share
_____ _____ _____ _____ _________
<S> <C> <C> <C> <C> <C>
1st Quarter $ 30.25 30.25 .00 .00 $ .00
2nd Quarter 30.25 31.00 .00 .00 .50
3rd Quarter 30.25 31.50 .00 .00 .00
4th Quarter 29.00 30.50 .00 .00 .75
For Year $ 29.00 31.50 .00 .00 $ 1.25
</TABLE>
<TABLE>
<CAPTION>
1998
Bid Asked Dividends
Low High Low High Per Share
_____ _____ _____ _____ _________
<S> <C> <C> <C> <C> <C>
1st Quarter $ 31.25 31.50 .00 .00 $ .00
2nd Quarter 31.00 32.75 .00 .00 .50
3rd Quarter 30.75 31.50 .00 .00 .00
4th Quarter 30.50 31.50 .00 .00 .00
For Year $ 30.50 32.75 .00 .00 $ .50
</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, 1999.
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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1894021
<SECURITIES> 7469944
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9431710
<PP&E> 1669793
<DEPRECIATION> (578225)
<TOTAL-ASSETS> 12272117
<CURRENT-LIABILITIES> 68073
<BONDS> 0
<COMMON> 376688
0
0
<OTHER-SE> 11418911
<TOTAL-LIABILITY-AND-EQUITY> 12272117
<SALES> 0
<TOTAL-REVENUES> 615875
<CGS> 0
<TOTAL-COSTS> 572096
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 917319
<INCOME-TAX> 266309
<INCOME-CONTINUING> 651010
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 651010
<EPS-BASIC> 1.84
<EPS-DILUTED> 1.84
</TABLE>
