<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 March 31, 1996
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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.)
300 PIKE STREET, 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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(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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MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(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 1995 filed on Form 10-K
are adequate to make the information presented not misleading.
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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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CONSOLIDATED STATEMENTS OF INCOME
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<TABLE>
<CAPTION>
(000 OMITTED)
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FOR THE THREE MONTHS ENDED
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MARCH 31, MARCH 31,
1996 1995
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<S> <C> <C>
Operating Revenues $75,879 $72,727
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Operating Costs and Expenses:
Operating Expenses 48,297 43,973
Depreciation and amortization 5,562 5,716
Selling, general & administrative expenses 2,814 2,447
Overhead allocation from Parent 750 675
Taxes, other than income 4,445 4,616
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61,868 57,427
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Operating Earnings 14,011 15,300
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Other Income:
Interest income from Parent 870 1,049
Interest income other 344 76
Gain (Loss) on sale of assets
and other, net (17) 2
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1,197 1,127
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Interest Expense:
Long-term debt 3,575 3,703
Other, including amortization of
debt expense 95 28
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3,670 3,731
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Earnings before income taxes 11,538 12,696
Provision for Income taxes 4,161 4,563
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Net Earnings $7,377 $8,133
========= ========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
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FORM 10-Q
PAGE 3
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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<TABLE>
<CAPTION>
(000 OMITTED)
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MARCH 31, DEC. 31, MARCH 31,
1996 1995 1995
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<S> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 26,553 $ 25,728 $ 15,002
Receivables -
Trade, net 22,710 25,030 23,927
Parent 64,192 60,358 67,333
Other 6,063 5,044 1,126
Materials, supplies & fuel 8,059 7,977 7,678
Prepaid expenses 1,232 1,637 1,419
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Total current assets 128,809 125,774 116,485
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Property and Equipment, at cost 595,839 588,857 581,620
Less-Accumulated depreciation 309,715 306,415 298,497
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Net property and equipment 286,124 282,442 283,123
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Other Assets:
Deferred pension charges 12,801 12,794 12,052
Other 4,650 5,002 5,574
--------- -------- ---------
Total other assets 17,451 17,796 17,626
--------- -------- ---------
Total assets $432,384 $426,012 $417,234
========= ======== =========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
<PAGE> 5
FORM 10-Q
PAGE 4
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
- ---------------------------
<TABLE>
<CAPTION>
(000 OMITTED)
-----------------------------------------
MARCH 31, DEC. 31, MARCH 31,
1996 1995 1995
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<S> <C> <C> <C>
Liabilities and Stockholder's Equity
Current Liabilities:
Current portion of long-term debt $ 3,703 $ 3,684 $ 3,426
Accounts Payable Trade 13,203 17,516 10,772
Reserve for insurance claims 16,292 13,037 9,335
Income taxes payable 5,757 1,451 4,957
Accrued expenses 16,585 13,983 13,507
Other current liabilities 11,400 10,983 7,038
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Total current liabilities 66,940 60,654 49,035
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Long-Term Debt 143,421 144,903 147,849
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Other Liabilities:
Deferred income taxes 53,882 54,268 55,242
Unamortized investment
tax credits 3,382 3,524 4,009
Post-retirement health care 8,790 8,726 8,743
Coal miners retiree health care 3,650 3,700 0
Other reserves 1,569 1,331 1,418
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Total other liabilities 71,273 71,549 69,412
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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 98,230 96,386 98,418
-------- -------- --------
Total stockholder's equity 150,750 148,906 150,938
-------- -------- --------
Total liabilities and
stockholder's equity $432,384 $426,012 $417,234
======== ======== ========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
<PAGE> 6
FORM 10-Q
PAGE 5
MIDLAND ENTERPRISES INC. AND SUBSIDIARIES ("MIDLAND")
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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<TABLE>
<CAPTION>
(000 OMITTED)
--------------------------
FOR THE THREE MONTHS ENDED
MARCH 31 MARCH 31,
1996 1995
--------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
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Net earnings $ 7,377 $ 8,133
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 5,562 5,716
Deferred and current income taxes 3,920 4,637
Net (gain) loss on sale of assets 1 (13)
Other changes in assets and liabilities:
Trade and other receivables 2,320 247
Materials, supplies & fuel (82) 621
Accounts payable (4,313) (933)
Accrued expenses and other current liabilitie 6,224 4,746
Other (461) 1,097
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Net Cash Provided by
Operating Activities 20,548 24,251
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Cash Flows from Investing Activities:
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Capital expenditures (9,756) (880)
Increase in Parent receivable (3,834) (5,467)
Proceeds from asset dispositions 882 13
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Net Cash Used by
Investing Activities (12,708) (6,334)
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Cash Flows from Financing Activities:
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Repayment of long-term debt (1,482) (903)
Cash dividends paid to Parent (5,533) (6,100)
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Net Cash Used in
Financing Activities (7,015) (7,003)
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Net Increase in Cash and Cash Equivalents 825 10,914
Cash and Cash Equivalents at Beginning of Period 25,728 4,088
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Cash and Cash Equivalents at End of Period $26,553 $15,002
======= ========
Supplemental Disclosures of Cash Flow Information:
- --------------------------------------------------
Cash paid during the period for:
Interest, net of amounts capitalized $ 724 $ 813
Income taxes $ 371 $ (75)
</TABLE>
The accompanying notes are an integral
part of these financial statements.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
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Improved transportation rates, particularly for non-coal commodities, increased
first quarter revenues 4% over the comparable period in 1995 despite slightly
lower ton miles. Severe winter weather, with blizzard conditions on the Ohio
River and icing on the Illinois Waterway early in the quarter followed by
flooding on the Ohio River and its tributaries, caused major disruptions to
river navigation resulting in substantially higher operating costs, damage to
equipment, and loss of productivity. As a result, operating earnings declined
8% as compared to 1995, when operating conditions were unseasonably good and
Midland reported record first quarter earnings.
Despite strong demand, total ton miles declined 2% due to the operating
limitations imposed by the severe weather discussed above. While coal ton
miles increased 5% on the strength of increased long haul shipments of export
coal to the gulf, coal tonnage actually declined 5% from 1995 levels.
Non-coal shipments were also impacted, particularly grain and stone, with
associated tonnage and ton miles down 8% and 6% respectively from first quarter
1995. Rising fuel prices, increased maintenance costs, and accidents
associated with the severe weather contributed to the higher operating costs.
As a result of the lower operating earnings discussed above, Midland's net
earnings for the first quarter of 1996 declined 9% as compared to last year.
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LIQUIDITY AND CAPITAL RESOURCES
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Capital expenditures, debt repayments, and dividends and advances to parent
were funded from cash provided by operating activities in the first quarter of
1996. For 1996, planned capital expenditures are estimated at $50 million,
the majority of which pertains to purchase commitments for new dry cargo
barges. These purchases will be funded with cash provided from operations and
from the receivable with parent.
<PAGE> 9
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
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There were no reports on Form 8-K filed in the first quarter of 1996.
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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
SENIOR VICE PRESIDENT
FINANCE AND ADMINISTRATION
PRINCIPAL FINANCIAL OFFICER
AND DULY AUTHORIZED OFFICER
DATE: APRIL 30, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 26,553
<SECURITIES> 0
<RECEIVABLES> 93,650
<ALLOWANCES> 685
<INVENTORY> 8,059
<CURRENT-ASSETS> 128,809
<PP&E> 595,839
<DEPRECIATION> 309,715
<TOTAL-ASSETS> 432,384
<CURRENT-LIABILITIES> 66,940
<BONDS> 143,421
<COMMON> 1
0
0
<OTHER-SE> 150,750
<TOTAL-LIABILITY-AND-EQUITY> 432,384
<SALES> 0
<TOTAL-REVENUES> 75,879
<CGS> 0
<TOTAL-COSTS> 58,133
<OTHER-EXPENSES> 2,538
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,670
<INCOME-PRETAX> 11,538
<INCOME-TAX> 4,161
<INCOME-CONTINUING> 7,377
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,377
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
