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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 June 30, 1994
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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
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MIDLAND ENTERPRISES INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 04-2284434
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400-580 BUILDING, CINCINNATI, OHIO 45202
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 513-721-4000
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NONE
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(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
---- ----
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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.
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FORM 10-Q
Page 2
ITEM 1.
FINANCIAL STATEMENTS
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Company or group of companies for which report is filed:
Midland Enterprises Inc. And Subsidiaries ("Midland")
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<TABLE>
<CAPTION>
Consolidated Statements of Earnings (000 Omitted)
- ----------------------------------- For the For the
Three Months Ended Six Months Ended
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June 30, June 30, June 30, June 30,
1994 1993 1994 1993
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<S> <C> <C> <C> <C>
Operating Revenues $ 68,986 $ 66,746 $127,152 $132,596
-------- -------- -------- --------
Operating Costs and Expenses:
Operating expenses $ 46,012 $ 44,240 $ 86,106 $ 87,445
Depreciation and amortization 5,647 6,287 11,317 12,575
Selling, general and
administrative expenses 2,670 2,085 5,198 4,846
Overhead allocation from
Parent 711 711 1,422 1,422
Taxes, other than income 4,075 3,611 8,213 7,409
-------- -------- -------- --------
$ 59,115 $ 56,934 $112,256 $113,697
-------- -------- -------- --------
Operating Earnings $ 9,871 $ 9,812 $ 14,896 $ 18,899
-------- -------- -------- --------
Other Income (Expense):
Interest income from Parent $ 577 $ 566 $ 1,108 $ 1,130
Interest income other 11 6 18 14
Gain on sale of barge facility
including $851,000 of curtailment gains 2,300 - 2,300 -
Gain (loss) on sale of assets
and other, net 58 26 55 14
-------- -------- -------- --------
$ 2,946 $ 598 $ 3,481 $ 1,158
-------- -------- -------- --------
Interest Expense:
Long-term debt $ 3,885 $ 3,988 $ 7,782 $ 7,988
Other, including amortization
of debt expense 43 32 69 63
Interest capitalized during
construction - (153) (38) (294)
-------- -------- -------- --------
$ 3,928 $ 3,867 $ 7,813 $ 7,757
-------- -------- -------- --------
Earnings before income taxes $ 8,889 $ 6,543 $ 10,564 $ 12,300
Provision for income taxes 3,170 2,291 3,699 4,318
-------- -------- -------- --------
Net Earnings $ 5,719 $ 4,252 $ 6,865 $ 7,982
======== ======== ======== ========
<FN>
The accompanying notes are an integral
part of these financial statements.
</TABLE>
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<TABLE>
FORM 10-Q
PAGE 3
Midland Enterprises Inc. And Subsidiaries
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Consolidated Balance Sheets
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<CAPTION>
(000 Omitted)
---------------------------------------------------
June 30, Dec. 31, June 30,
1994 1993 1993
--------- --------- ---------
<S> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 5,088 $ 88 $ 91
Receivables -
Trade, net 28,003 22,714 23,093
Parent 65,205 56,952 37,457
Other 1,380 2,995 299
Materials, supplies & fuel 9,068 12,965 15,244
Prepaid expenses 2,124 1,676 2,503
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Total current assets $ 110,868 $ 97,390 $ 78,687
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Property and Equipment, at cost $ 582,724 $ 605,147 $ 623,708
Less-Accumulated Depreciation 284,797 288,500 291,881
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Net property and equipment $ 297,927 $ 316,647 $ 331,827
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Other Assets:
Deferred pension charges $ 11,075 $ 10,729 $ 9,987
Other 5,068 5,330 5,545
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Total other assets $ 16,143 $ 16,059 $ 15,532
--------- --------- ---------
Total Assets $ 424,938 $ 430,096 $ 426,046
========= ========= =========
<FN>
The accompanying notes are an integral
part of these financial statements.
</TABLE>
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<TABLE>
FORM 10-Q
Page 4
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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<CAPTION>
(000 Omitted)
----------------------------------------------------
June 30, Dec. 31, June 30,
1994 1993 1993
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<S> <C> <C> <C>
Liabilities and Stockholder's Equity
Current Liabilities:
Current portion of
long-term debt $ 5,415 $ 5,871 $ 5,727
Accounts Payable -
Trade 9,792 12,622 10,052
Parent 2,523 349 1,940
Income taxes payable 590 3,324 324
Accrued expenses 11,759 10,449 11,164
Other current liabilities 16,573 16,097 14,259
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Total current liabilities $ 46,652 $ 48,712 $ 43,466
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Long-Term Debt $ 155,184 $ 157,594 $ 160,598
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Other Liabilities:
Deferred income taxes $ 57,323 $ 57,899 $ 57,555
Unamortized investment
tax credits 4,465 5,192 5,609
Post-retirement health care 8,849 9,306 9,398
Other reserves 860 1,504 1,426
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Total other liabilities $ 71,497 $ 73,901 $ 73,988
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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 99,085 97,369 95,474
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Total stockholder's equity $ 151,605 $ 149,889 $ 147,994
--------- --------- ---------
Total liabilities and
stockholder's equity $ 424,938 $ 430,096 $ 426,046
========= ========= =========
<FN>
The accompanying notes are an integral
part of these financial statements.
</TABLE>
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<TABLE>
FORM 10-Q
Page 5
Midland Enterprises Inc. and Subsidiaries
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Consolidated Statements of Cash Flows
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<CAPTION>
(000 Omitted)
For the Six Months Ended
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June 30, June 30,
1994 1993
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<S> <C> <C>
Cash Flows From Operating Activities:
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Net earnings $ 6,866 $ 7,982
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 11,318 12,575
Deferred and current income taxes (3,310) (352)
Net (gain) loss on sale of assets (2,672) (36)
Other changes in assets and liabilities:
Trade and other receivables (3,674) 2,894
Materials, supplies & fuel 3,897 229
Accounts payable (656) (356)
Accrued expenses and other current
liabilities 1,786 2,025
Other (2,693) $ (1,836)
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Net Cash Provided by
Operating Activities $ 10,862 $ 23,125
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Cash Flows from Investing Activities:
- ------------------------------------
Capital expenditures $ (1,643) $ ( 8,018)
(Increase) decrease in Parent receivable ( 8,253) ( 6,348)
Proceeds from asset dispositions 12,083 126
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Net Cash Provided by (Used in) Financing
Activities $ 2,187 $ (14,240)
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Cash Flows from Financing Activities:
- ------------------------------------
Issuance of long-term debt $ - $ -
Repayment of long-term debt (2,899) ( 2,898)
Cash dividends paid to Parent (5,150) (5,986)
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Net Cash Provided by (Used in)
Financing Activities $ (8,049) $ (8,884)
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Net Increase (Decrease) in Cash and
Cash Equivalents $ 5,000 $ 1
Cash and Cash Equivalents at Beginning
of Period 88 90
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Cash and Cash Equivalents at End of Period $ 5,088 $ 91
========= =========
Supplemental Disclosures of Cash
- --------------------------------
Flow Information:
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Cash paid during the period for:
Interest, net of amounts capitalized $ 7,782 $ 7,625
Income taxes $ 4,634 $ 4,634
<FN>
The accompanying notes are an integral
part of these financial statements.
</TABLE>
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FORM 10-Q
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MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
Notes to Financial Statements
June 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.
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FORM 10-Q
Page 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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& RESULTS OF OPERATIONS
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Results of Operations
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Significant increases in towing of domestic spot and export coal, aggregates,
ores and tramp barges resulted in second quarter tonmiles increasing 8% over
the same period in 1993, with a corresponding 3% increase in revenues. Despite
reduced volume from a long-term contract with Gulf Power Company, which is in
litigation, utility coal tonnage increased 3% in the second quarter as 1993
tonnage was reduced by an extended plant outage of a major customer. Total
coal tonnage increased 12% in the second quarter from the comparable period in
1993, primarily reflecting the increased spot coal shipments. Excluding the
results of Midland's liquid barge business, which was sold in December 1993,
second quarter tonmiles improved 13% over 1993 with revenues up 8%. Contract
rate reductions, which were granted in exchange for term extensions and other
rights, as well as lower spot rates partially offset the volume gains.
For the first six months, tonmile production rose 1% while revenues declined
4%, as compared to the same period in 1993 due to reduced contract coal volume,
rate reductions, the aforementioned sale of the liquid barge business, and
extremely poor operating conditions which limited production in the first
quarter of 1994. Although coal tonnage under long-term contracts declined 8%,
total coal tonnage increased 2% for the first six months of 1994 due to the
increased spot coal shipments. Revenues for 1994 were comparable to 1993 after
excluding the liquid business which generated $5.7 million of revenue in the
first six months of 1993.
Operating earnings for the second quarter and first six months of 1994 were
negatively impacted by the reduced utility contract coal volume and lower rates
as previously discussed. Earnings were also reduced in the first four months of
1994 by significantly higher operating costs as compared to 1993, resulting
from extended periods of winter ice, high water and flooding, that
significantly reduced operational efficiency. In addition, second quarter 1993
administrative expenses included a $600,000 gain on the settlement of pension
obligations. As a result, operating earnings increased by 1% for the second
quarter but were 21% lower for the first six months of 1994 versus 1993.
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. Including this gain, net
earnings for the second quarter increased 35% from the same period in 1993.
Net earnings for the first six months declined 14% as compared to last year.
Liquidity and Capital Resources
- -------------------------------
Capital expenditures, debt repayments and dividends to Parent were funded from
cash provided by operating activities in the first six months of 1994. In
addition, the increase in advances to Parent reflected proceeds from the sale
of assets.
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FORM 10-Q
Page 8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(B) Reports on Form 8-K
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There were no reports on Form 8-K filed in the second quarter of 1994.
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FORM 10-Q
Page 9
SIGNATURE
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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
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R. L. Doettling
Senior Vice President
Finance and Administration
Principal Financial Officer
and Duly Authorized Officer
Date: August 2, 1994
