<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Quarter Ended September 30, 1994
------------------
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________________ to _________________
Commission File Number 2-39895
-------
MIDLAND ENTERPRISES INC.
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 04-2284434
- - -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400-580 BUILDING, CINCINNATI, OHIO 45202
- - -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 513-721-4000
--------------------------
NONE
- - -------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities 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
---- ----
- - -------------------------------------------------------------------------------
The number of shares of common stock of Midland Enterprises Inc. outstanding
as of the date of this report was 15 1/2, all held by Eastern Enterprises.
Registrant meets the conditions set forth in general instructions H(1) (a) and
(b) of Form 10-Q and is therefore filing this form with the reduced disclosure
format.
<PAGE> 2
<TABLE>
FORM 10-Q
Page 2
ITEM 1.
FINANCIAL STATEMENTS
- - --------------------
Company or group of companies for which report is filed:
Midland Enterprises Inc. And Subsidiaries ("Midland")
- - -----------------------------------------------------
<CAPTION>
Consolidated Statements of Earnings
- - -----------------------------------
(000 Omitted)
----------------------------------------
For the For the
Three Months Ended Nine Months Ended
------------------- ------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating Revenues $ 67,108 $ 56,427 $194,260 $189,023
-------- -------- -------- --------
Operating Costs and Expenses:
Operating expenses $ 45,057 $ 38,400 $131,163 $125,845
Depreciation and amortization 5,686 6,296 17,003 18,871
Selling, general and
administrative expenses 2,740 2,963 7,938 7,809
Overhead allocation from
Parent 711 711 2,133 2,133
Taxes, other than income 3,657 3,048 11,870 10,457
-------- -------- -------- --------
$ 57,851 $ 51,418 $170,107 $165,115
-------- -------- -------- --------
Operating earnings $ 9,257 $ 5,009 $ 24,153 $ 23,908
-------- -------- -------- --------
Other Income (Expense):
Interest income from Parent $ 826 $ 575 $ 1,934 $ 1,705
Interest income other 52 5 70 19
Gain on sale of barge facility
Including $851,000 of curtailment gains - - 2,300 -
Gain (loss) on sale of assets
and other, net 56 91 111 105
-------- -------- -------- --------
$ 934 $ 671 $ 4,415 $ 1,829
-------- -------- -------- --------
Interest Expense:
Long-term debt $ 3,848 $ 3,951 $ 11,630 $ 11,939
Other, including amortization
of debt expense 486 21 555 84
Interest capitalized during
construction - (161) (38) (455)
-------- -------- -------- --------
$ 4,334 $ 3,811 $ 12,147 $ 11,568
-------- -------- -------- --------
Earnings before income taxes $ 5,857 $ 1,869 $ 16,421 $ 14,169
Provision for income taxes 2,104 2,432 5,803 6,750
-------- -------- -------- --------
Net Earnings $ 3,753 $ (563) $ 10,618 $ 7,419
======== ======== ======== ========
<FN>
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<PAGE> 3
<TABLE>
FORM 10-Q
Page 3
Midland Enterprises Inc. And Subsidiaries
- - -----------------------------------------
Consolidated Balance Sheets
- - ---------------------------
<CAPTION>
(000 Omitted)
---------------------------------------------------
Sept. 30, Dec. 31, Sept. 30,
1994 1993 1993
--------- --------- ---------
<S> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 7,084 $ 88 $ 88
Receivables -
Trade, net 23,132 22,714 21,076
Parent 64,991 56,952 44,061
Other 552 2,995 373
Materials, supplies & fuel 9,728 12,965 14,038
Prepaid expenses 3,974 1,676 2,810
--------- --------- ---------
Total current assets $ 109,461 $ 97,390 $ 82,446
--------- --------- ---------
Property and Equipment, at cost $ 582,414 $ 605,147 $ 623,619
Less-Accumulated depreciation 289,285 288,500 295,278
--------- --------- ---------
Net property and equipment $ 293,129 $ 316,647 $ 328,341
--------- --------- ---------
Other Assets:
Deferred pension charges $ 11,076 $ 10,729 $ 11,253
Other 4,924 5,330 4,297
--------- --------- ---------
Total other assets $ 16,000 $ 16,059 $ 15,550
--------- --------- ---------
Total assets $ 418,590 $ 430,096 $ 426,337
========= ========= =========
<FN>
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<PAGE> 4
<TABLE>
FORM 10-Q
Page 4
Midland Enterprises Inc. and Subsidiaries
- - -----------------------------------------
Consolidated Balance Sheets
- - ---------------------------
<CAPTION>
(000 Omitted)
----------------------------------------------------
Sept. 30, Dec. 31, Sept. 30,
1994 1993 1993
--------- --------- ----------
<S> <C> <C> <C>
Liabilities and Stockholder's Equity
Current Liabilities:
Current portion of
long-term debt $ 4,510 $ 5,871 $ 5,798
Accounts Payable -
Trade 10,106 12,622 9,090
Parent 14 349 141
Income taxes payable 476 3,324 110
Accrued expenses 13,647 10,449 14,003
Other current liabilities 15,305 16,097 14,500
--------- --------- ---------
Total current liabilities $ 44,058 $ 48,712 $ 43,642
--------- --------- ---------
Long-Term Debt $ 153,884 $ 157,594 $ 159,104
--------- --------- ---------
Other Liabilities:
Deferred income taxes $ 54,199 $ 57,899 $ 59,883
Unamortized investment
tax credits 4,312 5,192 5,422
Post-retirement health care 8,710 9,306 9,375
Other reserves 883 1,504 1,481
--------- --------- ---------
Total other liabilities $ 68,104 $ 73,901 $ 76,161
--------- --------- ---------
Stockholder's Equity:
Common stock, $100 par value -
Authorized - 1,000 shares
Shares issued & outstanding -
15 1/2 shares $ 1 $ 1 $ 1
Capital in excess of par value 52,519 52,519 52,519
Retained earnings 100,024 97,369 94,910
--------- --------- ---------
Total stockholder's equity $ 152,544 $ 149,889 $ 147,430
--------- --------- ---------
Total liabilities and
stockholder's equity $ 418,590 $ 430,096 $ 426,337
========= ========= =========
<FN>
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<PAGE> 5
<TABLE>
FORM 10-Q
Page 5
Midland Enterprises Inc. and Subsidiaries
- - -----------------------------------------
<CAPTION>
Consolidated Statements of Cash Flows
- - -------------------------------------
(000 Omitted)
For the Nine Months Ended
-------------------------
Sept. 30, Sept. 30,
1994 1993
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
- - -------------------------------------
Net earnings $ 10,618 $ 7,419
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 17,003 18,871
Deferred and current income taxes (6,548) 1,762
Net (gain) loss on sale of assets (2,672) (37)
Other changes in assets and liabilities:
Trade and other receivables 2,025 4,836
Materials, supplies & fuel 3,237 1,435
Accounts payable (2,851) (3,117)
Accrued expenses and other current
liabilities 2,406 5,105
Other (4,500) $ (1,488)
--------- ---------
Net Cash Provided by
Operating Activities $ 18,718 $ 34,786
--------- ---------
Cash Flows from Investing Activities:
- - ------------------------------------
Capital expenditures $ (2,683) $ (11,640)
(Increase) decrease in Parent receivable ( 8,039) (12,952)
Proceeds from asset dispositions 12,083 130
--------- ---------
Net Cash Provided by (Used in) Investing
Activities $ 1,361 $ (24,462)
--------- ---------
Cash Flows from Financing Activities:
- - ------------------------------------
Issuance of long-term debt $ - $ -
Repayment of long-term debt (5,120) ( 4,339)
Cash dividends paid to Parent (7,963) (5,987)
--------- ---------
Net Cash Provided by (Used in)
Financing Activities $ (13,083) $ (10,326)
--------- ---------
Net Increase (Decrease) in Cash and
Cash Equivalents $ 6,996 $ (2)
Cash and Cash Equivalents at Beginning
of Period 88 90
--------- ---------
Cash and Cash Equivalents at End of Period $ 7,084 $ 88
========= =========
Supplemental Disclosures of Cash
- - --------------------------------
Flow Information:
- - ------------------
Cash paid during the period for:
Interest, net of amounts capitalized $ 8,687 $ 8,516
Income taxes $ 11,767 $ 4,953
<FN>
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<PAGE> 6
FORM 10-Q
Page 6
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
Notes to Financial Statements
September 30, 1994
(1) ACCOUNTING POLICIES
It is Midland's opinion that the financial information contained in this
report reflects all adjustments necessary to present a fair statement of the
results for the periods reported, but such results are not necessarily
indicative of results to be expected for the year, due to the somewhat seasonal
nature of Midland's operations. All such adjustments were of a normal,
recurring nature. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted in this Form 10-Q pursuant
to the rules and regulations of the Securities and Exchange Commission.
However, the disclosures herein when read with the annual report for 1993 filed
on Form 10-K are adequate to make the information presented not misleading.
<PAGE> 7
FORM 10-Q
Page 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
& RESULTS OF OPERATIONS
------------------------
Results of Operations
- - ---------------------
Revenues for the third quarter of 1994 increased 19% as a result of more
favorable operating and market conditions. Ton miles were 30% above the same
period in 1993 due to increased shipments of coal, aggregates, ores and towing
of tramp barges. Third quarter 1993 activity was negatively impacted by
the United Mine Workers (UMW) strike, disruptions due to flooding on the upper
Mississippi River system, and the cessation of coal shipments under a long-term
contract with Gulf Power Company. Regarding the latter, Midland favorably
resolved its contractual dispute with Gulf Power Company early in the third
quarter, resulting in amendment of the contract and resumption of shipments
during the quarter. For the first nine months of 1994, revenues increased 3%,
with ton miles up 9% compared to 1993, reflecting the increased third quarter
activity, partially offset by rate reductions and lower production experienced
earlier in the year as well as the absence of the liquid barge business, which
was sold in December 1993. The liquid business generated revenues of $3.1
million and $8.8 million in the third quarter and first nine months of 1993,
respectively, and accounted for approximately 5% of Midland's ton mile volume.
Coal tonnage increased 32% in the third quarter from the comparable period in
1993, primarily reflecting increased demand for utility coal under long-term
contracts as well as the 1993 UMW strike. For the first nine months, coal
tonnage increased 11% reflecting the strong third quarter results, partially
offset by weaker demand earlier in the year and the loss of tonnage associated
with the disputed contract. Non-coal tonnage increased 11% and 12% for the
third quarter and first nine months of 1994, respectively, compared to the same
periods last year, reflecting increased demand for shipments of aggregates,
steel, scrap, ores and other dry cargoes.
Operating earnings for the third quarter of 1994 increased 85% over the same
period in 1993 due to the significant volume gains discussed above, reduced
operating expenses from ongoing cost reduction and productivity improvement
programs, as well as the absence of increased costs associated with
inefficiencies caused by the UMW strike and Mississippi River flooding that
occurred in the third quarter of 1993. Operating earnings for the first nine
months of 1994 increased 1% above the comparable period in 1993 as the improved
third quarter results were largely offset by contractual and market rate
reductions granted earlier in the year, some in exchange for term extensions
and other rights, by the reduction of Gulf Power Company tonnage prior to the
settlement, and by the absence of earnings from the liquid barge business. In
addition, during the first four months of 1994, winter ice and flooding reduced
efficiency and significantly increased operating costs.
During the second quarter of 1994, Midland recorded a pre-tax gain of $2.3
million in "Other Income" as a result of the sale of its Port Allen barge
construction and repair facility in Louisiana.
The provision for income taxes for the third quarter of 1993 included
approximately $1.7 million to reflect the additional deferred tax requirements
resulting from the increase in the statutory Federal tax rate from 34% to 35%,
effective January 1, 1993. As a result, Midland recorded a small net loss for
the third quarter of 1993. Third quarter 1994 after tax earnings increased
$4.3 million over 1993 third quarter results reflecting the increased operating
earnings previously discussed and the absence of the tax rate adjustment.
After tax earnings for the first nine months of 1994 increased 43% from the
same period in 1993.
Liquidity and Capital Resources
- - -------------------------------
Capital expenditures, debt repayments and dividends to Parent were funded from
cash provided by operating activities in the first nine months of 1994. In
addition, the increase in advances to Parent reflected the proceeds from the
sale of assets.
<PAGE> 8
FORM 10-Q
Page 8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibit 27 Financial Data Schedule
----------
(b) Reports on Form 8-K
-------------------
There were no reports on Form 8-K filed in the third quarter of 1994.
<PAGE> 9
FORM 10-Q
Page 9
SIGNATURE
---------
It is Midland's opinion that the financial information contained in this
report reflects all normal, recurring adjustments necessary for a fair
statement of results for the period reported, but such results are not
necessarily indicative of results to be expected for the year, due to the
seasonal nature of Midland's operations. All accounting policies have been
applied in a manner consistent with prior periods. Such financial information
is subject to year end adjustments and annual audit by independent public
accountants.
Pursuant to the requirements of the Securities Exchange Act of 1934,
Midland has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MIDLAND ENTERPRISES INC.
BY: R. L. Doettling
------------------------
R. L. Doettling
Senior Vice President
Finance and Administration
Principal Financial Officer
and Duly Authorized Officer
Date: October 31, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from the consolidated
statement of earnings and the consolidated balance sheets and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<CASH> 7,084
<SECURITIES> 0
<RECEIVABLES> 89,133
<ALLOWANCES> 458
<INVENTORY> 9,728
<CURRENT-ASSETS> 109,461
<PP&E> 582,414
<DEPRECIATION> 289,285
<TOTAL-ASSETS> 418,590
<CURRENT-LIABILITIES> 44,058
<BONDS> 153,884
<COMMON> 1
0
0
<OTHER-SE> 152,543
<TOTAL-LIABILITY-AND-EQUITY> 418,590
<SALES> 0
<TOTAL-REVENUES> 194,260
<CGS> 0
<TOTAL-COSTS> 159,651
<OTHER-EXPENSES> 6,006
<LOSS-PROVISION> 35
<INTEREST-EXPENSE> 12,147
<INCOME-PRETAX> 16,421
<INCOME-TAX> 5,803
<INCOME-CONTINUING> 10,618
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,618
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
