<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q/A-1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
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 1-9993
ASHLAND COAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 61-0880012
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2205 FIFTH STREET ROAD, HUNTINGTON, WEST VIRGINIA 25701
(Address of principal executive offices) (Zip Code)
P.O. BOX 6300, HUNTINGTON, WEST VIRGINIA 25771
(Mailing Address) (Zip Code)
Registrant's telephone number, including area code (304)526-3333
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 __
---
At April 28, 1997, there were 13,520,952 shares of registrant's common stock
outstanding.
================================================================================
1
<PAGE>
PART 1 - FINANCIAL INFORMATION
- ------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- -------------------------------------------------------------------------------
OF OPERATIONS
- -------------
Reference is made to the "Contingencies," "Certain Risk Factors" and "Factors
Routinely Affecting Results of Operations" sections below in this Management's
Discussion and Analysis for discussion of important factors that could cause
actual results to differ from the projections, expectations, and other
nonhistorical information contained herein.
Results of Operations
Quarter Ended March 31, 1997, Compared
to Quarter Ended March 31, 1996
Net income for the quarter ended March 31, 1997, was $12.3 million, compared to
net income of $1.5 million for the quarter ended March 31, 1996.
Gross profit on coal sales (selling price less cost of sales) on a per-ton basis
increased significantly in the current quarter from the low level experienced in
the quarter ended March 31, 1996, in spite of a 4% decline in average selling
price. Average cost per ton was reduced by nearly 12% and sales volume increased
22%, to 6.4 million tons. The lower average selling price reflects the lower
prices obtained on the additional tonnage sold. Average cost per ton in the 1996
quarter was adversely affected by $3.1 million of charges related to the
Company's restructuring program, by the effects of severe winter weather on
production at the Company's large surface mines in West Virginia, and by
localized unfavorable geologic conditions at one of those surface mines. Costs
were favorably affected in the current quarter by operational changes
implemented during 1996, primarily the relocation of a large dragline from the
Hobet 07 complex to the Dal-Tex complex. That relocation and other factors
permitted the increase in production that made the increase in sales volume
possible. Because the Company's fixed costs did not increase significantly from
the 1996 quarter and because fixed costs are a significant part of the Company's
total costs, the additional production in the current quarter was achieved at a
low incremental cost. In addition, costs were reduced in the quarter ended March
31, 1997, by a reduction of approximately $1.4 million in the estimate of the
Company's liability for postmining reclamation and mine closure.
Operating revenues declined slightly because of changes in several categories.
Included in operating revenues in the quarter ended March 31, 1996, was a $1.1
million payment received for an agreed reduction of 1996 deliveries under a
sales contract.
Operating expenses increased $1.6 million principally because of a charge of
$2.1 million in the current quarter related to an idled processing facility.
Selling, general, and administrative expenses declined $.7 million largely
because of restructuring charges of $.7 million recorded in the quarter ended
March 31, 1996. Interest expense decreased $.8 million because of lower average
debt levels.
Income tax expense rose $2.6 million from a near-zero level for the quarter
ended March 31, 1996. That increase reflects both higher profitability and a
higher estimated effective tax rate for 1997. The estimated effective tax rate
for 1997 reflects higher projected profitability coupled with the effects of
percentage depletion. The effective tax rate is sensitive to changes in
profitability because of the effects of percentage depletion.
Balance Sheets
The balance of trade accounts receivable at March 31, 1997, was $11.9 million
greater than the balance at December 31, 1996, primarily because of a higher
level of sales in March 1997 than in December 1996. The actual level of trade
receivables at any date is dependent upon the specific customer accounts active
at that date and the payment terms for those accounts. Currently, the balance of
trade receivables represents approximately five weeks of sales. All significant
customer accounts are being paid within credit terms.
2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS--CONTINUED
The noncurrent balance of prepaid royalties increased $12.4 million from the
balance at December 31, 1996. This increase reflects an annual royalty payment
of $16 million due at the end of March 1997. The amount of the payment was
included in accounts payable at March 31, 1997, and was primarily responsible
for the increase of $14.7 million in accounts payable.
Outlook
Ashland Coal and Arch have signed a definitive agreement to merge the two
companies in a tax-free reorganization, which will be accounted for as a
purchase by Arch. After the merger, Ashland Coal and Arch stockholders will hold
approximately 48 percent and 52 percent of the combined company, respectively.
Consummation of the merger, which is subject to approval by Ashland Coal's
stockholders, is expected to occur about June 30, 1997.
Increased production at Hobet 21 and Dal-Tex will permit the Company to increase
its sales volume significantly in 1997 from the 1996 level. The move of the
dragline at the Hobet 21 complex across the Mud River was completed early in
January 1997. This move, to an area with lower overburden ratios than those
experienced during most of 1996, is anticipated to result in higher production
at a lower cost per ton, but the move did not have a significant effect on the
first quarter because of start-up problems in the new area, which have now been
resolved. The overland conveyor system at the complex is being extended and
upgraded at a cost of $10.5 million. The work is expected to be completed in the
third quarter of 1997, and to reduce costs.
As a result of dragline operations at Dal-Tex, Dal-Tex production has been
increased significantly and cost per ton has been significantly reduced. The
Company expects somewhat higher costs at Dal-Tex and at the Mingo Logan complex
over the remainder of 1997, but expects that those increases will be offset by
cost reductions at Hobet 21. The Company's expectations for continued high
production levels and low costs at Dal-Tex and for increased production and
lower cost per ton at Hobet 21 assume timely completion of improvements, no
unanticipated labor or transportation disruptions, or major equipment problems,
and the absence of certain other operational, geologic, and weather-related
factors that can adversely affect production. See "Factors Routinely Affecting
Results of Operations" below.
In addition to the operational improvements at Hobet 21 and Dal-Tex, 1997
results should reflect the full benefit of the operational restructuring that
occurred in 1996.
Ashland Coal anticipates that its effective tax rate for 1997 will approximate
17%, reflecting the Company's level of profitability and the level of percentage
depletion. The Company currently expects to be able to continue to recognize all
of the alternative minimum tax credits it generates.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share (SFAS 128). The
Company is required to adopt SFAS 128 on December 31, 1997, and at that time
will present recomputed earnings per share (EPS) for all prior periods using the
methodology specified by SFAS 128. Although the company has not yet determined
the full effect of SFAS 128, it believes that basic EPS as computed under SFAS
128 will be somewhat greater that primary EPS as computed under the prior
accounting rules. Basic EPS excludes the dilutive effect of common stock
equivalents (such as stock options awarded to the Company's employees), but
primary EPS includes that effect. In addition, the Company's convertible
preferred stock will be less dilutive under SFAS 128 than under the prior rules.
The Company also believes that diluted EPS computed in accordance with SFAS 128
will be slightly higher than fully diluted EPS as computed under the prior
accounting rules.
Prices for Company coal sold in the spot market in the first quarter of 1997
were higher than such prices in the last quarter of 1996. However, because of
its level of spot and contract commitments for the balance of 1997, the Company
does not expect that changes in spot prices during the balance of 1997 would
have a material effect on the Company's results of operations.
3
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS--CONTINUED
The National Bituminous Coal Wage Agreement of 1993 (Wage Agreement), which
covers the employees of Hobet Mining, Inc. (Hobet) represented by the United
Mine Workers of America (UMWA), provided for wage increases totaling $1.30 per
hour over the first three years, changes in the health care plan intended to
reduce costs, and improvements in work rules. Wage levels and certain benefits
under the Wage Agreement have since been renegotiated, but the additional costs
to the Company arising from this renegotiation are not significant.
CSX Corporation (CSX) and Norfolk Southern Corporation (NS) are major railroads
in the eastern United States which together transport most of the coal sold by
the Company. CSX and NS have agreed to acquire Conrail Inc. (Conrail), another
major railroad, whose primary service area is the Northeastern United States,
and to divide Conrail's assets between them. Costs of the reconstituted CSX and
NS may be somewhat lower than the costs of those railroads prior to the
acquisition. If lower costs are realized and freight rates are lowered as a
consequence, the coal of some producers could become less costly on a delivered
basis and therefore gain a competitive advantage in some markets. It is not
possible to predict with certainty the effects of the proposed combination on
interregional competition and, specifically, on the Company.
Liquidity and Capital Resources
The following is a summary of cash provided by or used in each of the indicated
types of activities during the three months ended March 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------ ------
(In thousands)
<S> <C> <C>
Cash provided by (used in)
Operating activities
Before changes in operating assets and liabilities................... $ 38,322 $ 22,346
Changes in operating assets and liabilities.......................... (7,570) 3,593
------- -----
30,752 25,939
Investing activities.................................................. (11,111) (15,971)
Financing activities.................................................. (9,079) (10,681)
------- -----
Increase (decrease) in cash and cash equivalents........................ $ 10,562 $ (713)
= ====== = =====
</TABLE>
Cash provided by operating activities before changes in operating assets and
liabilities increased in the three months ended March 31, 1997, from the level
in the same period of 1996 primarily because of a higher gross profit per ton of
coal sold and higher sales volume. Those changes stemmed from the cost
reductions and productivity increases described above. Cash used for changes in
operating assets and liabilities in 1997 resulted primarily from an increase in
trade accounts receivable because of a higher level of sales in the 1997
quarter, particularly in March, than in the comparable period in 1996. Cash
provided by changes in operating assets and liabilities in 1996 reflects a
reduction in trade accounts receivable and normal increases in operational
liabilities partially offset by an increase in inventories.
The decrease in cash used in investing activities from the first quarter to 1996
to the first quarter of 1997 resulted from both lower purchases of property,
plant, and equipment and lower advances on prepaid royalties, which declined
$3.6 million and $1.9 million, respectively. Those decreases were partially
offset by somewhat lower proceeds from the sale of property, plant, and
equipment in the 1997 quarter than in the 1996 quarter.
Cash used in financing activities declined $1.6 million principally because $1.4
million was used to repurchase some of the Company's stock in the 1996 quarter,
but no stock was repurchased in 1997.
The Company's capital expenditures in the three months ended March 31, 1997,
were $10.9 million. Ashland Coal has budgeted capital expenditures of
approximately $45 million for the remainder of 1997.
On January 29, 1993, mining equipment valued at approximately $64 million being
used by Hobet was sold and leased back under an operating lease for a three-year
term. In May 1995, the Company completed the negotiation of a two-year extension
of that lease for most of the equipment. The equipment not included in the
extension was repurchased by the
4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS--CONTINUED
Company in January 1996. The portion of the equipment included in the two-year
extension may be repurchased at the Company's option in January 1998 for
approximately $28 million. Ashland Coal anticipates that such purchase, if it
should occur, would be funded under the Company's revolving credit agreement or
lines of credit.
Ashland Coal has a revolving credit agreement with a group of banks that
provides for borrowings of up to $500 million until the agreement's termination
in 1999. At March 31, 1997, the Company had borrowings of $15 million under this
agreement. At March 31, 1997, the Company also had $152.9 million of
indebtedness under senior unsecured notes maturing in 1997 through 2006. Ashland
Coal periodically establishes uncommitted lines of credit with banks. These
agreements generally provide for short-term borrowings at market rates. At March
31, 1997, there were $165 million of such agreements in effect with no
borrowings outstanding. The Company expects to make payments on its indebtedness
over the next 12 months totaling approximately $41 million from cash flow
generated by operations. The Company expects that a payment of $25 million due
on a senior note in September 1997 will be made from funds borrowed under the
revolving credit agreement or bank lines of credit or both. Some of those
borrowings are expected to be repaid during 1997.
Ashland Coal believes that over the next 12 months cash balances at March 31,
1997, and cash flow generated by operating activities will be adequate to fund
anticipated capital expenditures and to reduce debt as discussed above. Over the
longer term, Ashland Coal believes that cash flow from operations will be
adequate to fund anticipated capital expenditures, to reduce the level of
long-term borrowings, and to pay other commitments when due.
Contingencies
Under the 1997 Surface Mining Control and Reclamation Act, a mine operator is
responsible for postmining reclamation on every mine for at least five years
after the mine is closed. Ashland Coal performs a substantial amount of
reclamation of disturbed acreage as an integral part of its normal mining
process. All such costs are expensed as incurred. The remaining costs of
reclamation are estimated and accrued as mining progresses. In addition, the
Company accrues the costs of removal at the conclusion of mining of roads,
preparation plants, and other facilities and other costs (collectively, closing
costs) over the lives of the various mines. Closing costs, in the aggregate, are
estimated to be approximately $33 million. The accrual for reclamation and
closing costs, which is included in other long-term liabilities and in accrued
expenses, was $12.7 million and $13.2 million at March 31, 1997, and December
31, 1996, respectively.
Ashland Coal is a party to numerous claims and lawsuits such as personal injury
claims, claims for property damage, and claims by lessors, that are typical of
the sorts of claims encountered in the coal industry and to claims related to
labor and employment of the sort encountered by employers in general. The
Company provides for costs related to contingencies when a loss is probable and
the amount is reasonably determinable. The Company estimates that its probable
aggregate loss as a result of such claims is $1.8 million (included in other
long-term liabilities) and believes that probable insurance recoveries of $.5
million (included in other assets) related to these claims will be realized. The
Company estimates that its reasonably possible aggregate losses from all
currently pending litigation could be as much as $3.5 million (before tax) in
excess of the probable loss previously recognized. However, the Company believes
it is probable that substantially all of such losses, if any occur, will be
insured. After conferring with counsel, it is the opinion of management that the
ultimate resolution of these claims, to the extent not previously provided for,
will not have a material adverse effect on the consolidated financial condition,
results of operations, or liquidity of the Company.
Certain Risk Factors
Credit risk - Ashland Coal markets its coal principally to electric utilities in
the United States and Europe. Most electric utilities with whom the Company
conducts business are stable, well-capitalized entities with favorable credit
ratings. Deregulation in the electric utility industry may adversely affect the
creditworthiness of some utilities. Generally, credit is extended based on the
evaluation of the customer's financial condition, and collateral is not
required. Historically, credit losses have been minimal.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS--CONTINUED
Price risk - Selling prices for Ashland Coal's products are determined by long-
term contracts and the spot market. Selling prices in many of Ashland Coal's
long-term contracts are adjusted for changes in certain price indices and labor
costs, including wage rates and benefits under the Wage Agreement or any
successor agreement. Some of the long-term contracts permit adjustment in
contract price for changes in market conditions. Falling market prices raise the
price risk under these contracts. Some of the long-term contracts also provide
for price adjustment if certain federal and state levies on coal mining and
processing are changed or if new laws, rules, or regulations are enacted that
change the cost of mining, processing, or transporting the coal under those
contracts. Spot prices fluctuate primarily because of changes in coal demand and
supply. Demand for coal in the short term is primarily driven by changes in
demand for electricity in the general areas serviced by the utilities purchasing
the Company's coal. Demand for electricity in turn depends on the level of
economic activity and other factors such as prolonged temperature extremes. The
supply of coal in the spot market has historically been most affected by excess
productive capacity in the industry and short-term disruptions, frequently
labor-related. The coal industry is highly competitive, and Ashland Coal
competes with a large number of other coal producers. Factors such as the
availability of sulfur dioxide emissions allowances issued by the Environmental
Protection Agency, utility deregulation, and new clean air regulations have had,
or will have, the effect of further intensifying competition between producers
in the eastern United States and producers in other regions, including other
countries. Producers in some of those regions, because of geological conditions,
local labor costs, or access to inexpensive transportation modes, are able to
produce and deliver coal into some markets at a lower cost than the Company.
These competitive factors have an impact on the Company's pricing.
Ashland Coal's operating subsidiaries purchase substantial amounts of power,
fuel, and supplies, generally under purchase orders at current market prices or
purchase agreements of relatively short duration.
The employees of Hobet are covered by the Wage Agreement, which provides for
certain wage rates and benefits. Employees of other operating subsidiaries are
not covered by a union contract but are compensated at rates representative of
prevailing wage rates in the local area. Among factors influencing such wage
rates is the Wage Agreement.
Although the Company cannot predict changes in its costs of production and coal
prices with certainty, Ashland Coal believes that in the current economic
environment of low to moderate inflation, the price adjustment provisions in its
long-term contracts will largely offset changes in the costs of providing coal
under those contracts, except for those costs related to changes in
productivity. In the event of a disruption of supply, the Company might,
depending on the level of its sales commitments, benefit from higher spot prices
if its own mines were not affected by the disruption.
Interest-rate risk - Ashland Coal has significant debt and lease obligations
which are linked to short-term interest rates. If interest rates rise, Ashland
Coal's costs relative to those obligations would also rise. For example, the
Company estimates that currently a 1% increase in short-term interest rates
would reduce income before income taxes by approximately $1.1 million per year.
Because an increase in interest rates is usually an outgrowth of a higher level
of economic activity and because increased economic activity would likely lead
to a higher demand for electricity and consequently to higher spot prices for
coal, Ashland Coal believes that the negative effects of higher interest rates
on Ashland Coal's earnings could be partially offset, depending on the level of
its sales commitments at the time, by higher spot prices. Additionally, the
Company has the capability to fix its interest rates on borrowings under its
revolving credit agreement for periods up to 12 months and from time to time
utilizes certain types of derivative securities to manage its interest-rate
risk. Either extending the term of short-term borrowings at fixed rates or using
derivatives may reduce the adverse impact of increases in interest rates upon
Ashland Coal.
The Company enters into interest-rate swap agreements to modify the interest
characteristics of its outstanding debt. At March 31, 1997, the Company had
entered into interest-rate swap agreements having a total notional value of $50
million. These swap amounts were used to convert fixed-rate debt to a variable
rate. Under these agreements, the Company receives a weighted average fixed rate
of 6.66% and was paying a weighted average variable rate at March 31, 1997, of
5.67%. The average remaining life on these swaps at March 31, 1997, was
approximately 52 months. During the first quarter of 1997, interest rates rose,
and the Company chose to increase its exposure to variable interest rates by
selling
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS--CONTINUED
$25 million of reverse swap agreements that had been in place. A gain totaling
$.2 million was realized on the sale. The terms and amounts of the swaps
coincide with the stated maturities of the fixed-rate debt obligations being
converted. The variable rates are adjusted using six months LIBOR. The
Company's exposure to large interest-rate fluctuations on its variable rate debt
has been mitigated through the purchase of short-term interest-rate caps
totaling $10 million as of March 31, 1997.
Reliance on and Terms of Long-Term Coal Supply Contracts - The Company sells a
substantial portion of its coal production pursuant to long-term supply
contracts, which will significantly affect the stability and profitability of
operations. Most of the long-term supply contracts currently in effect allow the
Company to sell coal at a higher price than the price at which such coal could
be sold in the spot market. The loss of long-term contracts, whether as a result
of expiration, termination, suspension of performance or otherwise, could have a
material adverse effect on the Company's results of operations and business.
Such effect would be particularly adverse with respect to the loss of long-term
contracts that permit the Company to sell coal at prices significantly higher
than current market prices. The Company is currently a party to one such
contract which expires in 2003 and provides for the delivery of approximately
1.3 million tons of low-sulfur coal annually.
The Company's long-term coal supply contracts price adjustment provisions, which
permit a periodic increase or decrease in the contract price to reflect
increases and decreases in production costs, changes in specified price indices
or items such as taxes or royalties, and contain price reopener provisions,
which provide for an upward or downward adjustment in the contract price based
on market factors. The contracts also typically include stringent minimum and
maximum coal quality specification and penalty or termination provisions for
failure to meet such specifications, as well as force majeure provisions
allowing suspension of performance or termination by the parties during the
duration of certain events beyond the control of the affected party, including
changes in or the effectiveness of legislation or regulations affecting such
party. If the parties to any long-term contracts with the Company were to
modify, suspend or terminate those contracts, the Company could be adversely
affected to the extent that it is unable to find alternative customers for the
effected coal production at the same level of profitability.
From time to time, disputes with customers may arise under long-term contracts
relating to, among other things, coal quality, pricing and quantity and
applicability of certain contract terms. The Company may thus become involved in
arbitration and legal proceedings regarding its long-term contracts. There can
be no assurance that the Company will be able to resolve such disputes in a
satisfactory manner.
Factors Routinely Affecting Results of Operations
The Company's customers frequently combine various qualities of coal, nuclear,
natural gas and other energy sources in their generating operations, and,
accordingly, their demand for coal of the kind produced by the Company varies
depending on price and transportation, regulatory, and other factors.
The Company's profitability will be substantially dependent upon its ability to
mine its reserves at competitive costs and to replace depleted reserves with new
reserves that can be mined at competitive costs. There can be no assurance that
replacement reserves will be available when required or whether such
replacement reserves can be mined at costs comparable to the depleting mines.
Exhaustion of reserves at particular mines can also have an adverse effect on
operating results that is disproportionate to the percentage of overall
production represented by the production of such mines.
The Company's coal production and sales are subject to a variety of operational,
geological, transportation, and weather-related factors that routinely cause
production to fluctuate. Operational factors affecting production include
anticipated and unanticipated events. For example, at Mingo Logan's longwall
mine, the longwall equipment must be dismantled and moved to a new area of the
mine whenever the coal reserves in a segment of the mine--called a panel--are
exhausted. The size of a panel varies, and therefore, the frequency of moves can
also vary. Unanticipated events, such as the unavailability of essential
equipment because of breakdown of unscheduled maintenance, could adversely
affect production.
Permits are sometimes delayed by unanticipated regulatory requests or processing
delays. Timely completion of improvement projects and equipment relocations
depend to a large degree on availability of labor and equipment, timely
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS--CONTINUED
issuance of permits, and the weather. Sales can be adversely affected by
fluctuations in production and by transportation delays arising from equipment
unavailability and weather-related events, such as flooding.
Geologic conditions within mines are not uniform. Overburden ratios at the
surface mines vary, as do roof and floor conditions and seam thickness in
underground mines. These variations can be either positive or negative for
production. Weather conditions can also have a significant effect on the
Company's production, depending on the severity and duration of the condition.
For example, extremely cold weather combined with substantial snow and ice
accumulations may impede surface operations directly and all operations
indirectly by making it difficult for workers and suppliers to reach the mine
sites.
The results of the third quarter of each year are frequently adversely affected
by lower production and resultant higher costs because of scheduled vacation
periods at the West Virginia mines. In addition, costs are typically somewhat
higher during vacation periods because of maintenance activity carried on during
those periods. These adverse effects on the third quarter may make the third
quarter not comparable to the other quarters and not indicative of results to be
expected for the full year.
Hobet is a party to the Wage Agreement. From time to time in the past, strikes
and work stoppages have adversely affected production at Hobet's mining
complexes. Any future strike or work stoppage that affected either of the Hobet
21 or Dal-Tex complexes for a prolonged period would have a significant adverse
effect on the Company's results of operations.
Any one or a combination of changes in demand; fluctuations in selling prices;
routine operational, geologic, transportation and weather-related factors;
unexpected regulatory changes or results of litigation; or labor disruptions may
occur at times or in a manner that causes current and projected results of
operations to deviate from projections and expectations. Any event disrupting
substantially all production at any of the Hobet 21, Dal-Tex or Mingo Logan
complexes for a prolonged period would have a significant adverse effect on the
Company's current and projected results of operations. The effect of such a
disruption at Mingo Logan would be particularly severe because of the high
volume of coal produced at that complex and the relatively high contribution to
operating income by the sale of each ton of that coal. Decreases in production
from anticipated levels usually lead to increased mining costs and decreased net
income.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ASHLAND COAL, INC.
----------------------
(Registrant)
Date: 5/29/97 /s/ Marc R. Solochek
----------------------
Marc R. Solochek
Senior Vice President and Chief
Financial Officer - (Principal
Financial Officer)
Date: 5/29/97 /s/ Roy F. Layman
-----------------
Roy F. Layman
Administrative Vice President
and Secretary
9
