<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 0-7181
ROCHESTER & PITTSBURGH COAL COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 25-0761480
(State or other jurisdiction of (I.R.S. Employer Iden-
incorporation or organization) tification No.)
655 Church Street, Indiana, Pennsylvania 15701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 412/349-5800
Not Applicable
(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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of
shares outstanding of each of the issuer's classes of common stock,
as of April 30, 1995. 3,439,275 shares.
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<TABLE>
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Amounts in thousands, except for outstanding shares and per share amounts)
<CAPTION>
Three Months Ended
March 31
------------------------------
1995 1994
---- ----
<C> <S> <S>
Production Tonnage 982 1,401
=========== ===========
Sales Tonnage 1,127 1,438
=========== ===========
Sales $ 44,533 $ 52,474
Other Income:
Interest and dividends 911 727
Net investment gains 346 417
Miscellaneous 608 665
----------- -----------
46,398 54,283
Costs and Expenses:
Cost of sales 44,701 47,295
Depreciation, depletion, and amortization 2,295 2,848
Selling, general, and administrative 1,671 1,910
Interest 900 436
Miscellaneous 325 426
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49,892 52,915
----------- -----------
(Loss) Income Before Income Taxes (3,494) 1,368
Income Taxes (577) 802
------------ -----------
Net (Loss) Income $ (2,917) 566
============ ===========
Net (Loss) Income Per Share $ (.85) $ .16
============ ===========
Average shares outstanding used in the
computation of per share amounts 3,439,142 3,438,669
Shares issued and outstanding at March 31 3,439,275 3,438,775
Cash dividends declared per share $ .30 $ .30
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 3
<TABLE>
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
March 31 December 31
1995 1994
------------ -----------
ASSETS
------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 16,421 $ 30,656
Receivables 28,608 25,213
Inventories and other current assets 24,846 25,275
Deferred income taxes 1,632 1,632
------------ -----------
Total Current Assets 71,507 82,776
Other Assets
Investments in marketable securities 42,941 46,838
Funding for:
Workers' compensation benefits 19,403 19,521
Mine closing reserves 9,190 8,956
Deferred income taxes 6,896 7,211
Miscellaneous 14,926 15,523
------------ -----------
93,356 98,049
Property, plant, and equipment 426,400 404,962
Less allowances for depreciation, depletion,
and amortization 178,747 174,793
------------ -----------
247,653 230,169
------------ -----------
$ 412,516 $ 410,994
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $ 11,028 $ 19,140
Accrued liabilities 13,834 11,484
Current maturities of long-term debt 12,683 2,007
------------ -----------
Total Current Liabilities 37,545 32,631
Other Liabilities and Long-Term Debt
Workers' compensation benefits 40,894 39,965
Mine closing reserves 20,205 19,818
Other postretirement benefits 23,171 20,586
Deferred income taxes 5,513 4,542
Miscellaneous 9,756 10,309
Long-term debt (less current maturities) 71,480 75,693
------------ -----------
171,019 170,913
<PAGE> 4
Shareholders' Equity
Common stock issued, 3,989,121 shares 59,836 59,837
Capital in excess of stated value 133,162 133,170
Retained earnings 38,845 42,360
------------ -----------
231,843 235,367
Less treasury stock at cost - 549,846 and
550,346 shares 27,891 27,917
------------ -----------
203,952 207,450
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$ 412,516 $ 410,994
============ ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 5
<TABLE>
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
Three Months Ended
March 31
------------------------
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ (2,917) $ 566
Adjustments for non-cash items 2,721 3,388
Changes in certain assets and liabilities
(using) or providing cash (2,854) (5,941)
--------- ---------
NET CASH USED IN OPERATING
ACTIVITIES (3,050) (1,987)
--------- ---------
INVESTING ACTIVITIES
Proceeds from investment activity 11,173 9,295
Acquisition of investments (6,280) (1,515)
Acquisition and development of
property, plant, and equipment (19,702) (13,481)
Proceeds from sale of property, plant, and
equipment 164 165
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (14,645) (5,536)
--------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings 8,725 39,925
Payments on borrowings (2,187) (38,583)
Cash dividends paid (3,095) (3,095)
Treasury stock issued 17 19
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NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 3,460 (1,734)
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(DECREASE) IN CASH AND CASH
EQUIVALENTS (14,235) (9,257)
Cash and cash equivalents at beginning of year 30,656 22,737
--------- ---------
CASH AND CASH EQUIVALENTS AT MARCH 31 $ 16,421 $ 13,480
========= =========
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid (net of capitalized interest) $ 1,172 $ 305
========= =========
Income taxes paid (tax refunds received) $ 135 $ (455)
========= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 7
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1995
Note A - Basis for Presentation
- -------------------------------
The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Certain
accounts in the consolidated condensed financial statements for
prior years have been reclassified to conform to the statement
presentation for the current year. These reclassifications have no
effect on net income. Operating results for the three month period
ended March 31, 1995 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1995. For
further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report on
Form 10K for the year ended December 31, 1994.
<PAGE> 8
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL POSITION
March 31, 1995
The following is Management's discussion and analysis of
certain significant factors which have affected the Company's (1)
earnings during the periods included in the accompanying
Consolidated Condensed Statements of Income and (2) financial
position since December 31, 1994:
Results of Operations
- ---------------------
The first quarter of 1995 was a difficult one for the
Company. Certain operating problems experienced in 1994 at the
Company's Keystone Coal Mining Corporation subsidiary have
continued in 1995. Another subsidiary, Helvetia Coal Company,
commenced deliveries under a new base price, long-term coal sales
agreement which replaced the previous cost-plus agreement.
Production and sales tonnages for the current quarter were 30% and
22%, respectively, lower than in the first quarter of 1994.
Keystone tonnage sold has been limited by problems
experienced in conjunction with major modifications made to its
coal cleaning plant in 1994 and which resulted in a substantial
buildup of unprocessed coal inventories. These cleaning plant
operating problems are due in part to deterioration in raw coal
quality attributable to a greater portion of Keystone production
coming from thinner coal seams than in the past. Further
modifications to the cleaning plant are presently in process and
are due to be completed early in the third quarter. As a result,
Keystone sales tonnage was approximately 220,000 tons lower in the
current quarter than in the first quarter of 1994 while its
production was approximately 300,000 tons lower in the current
quarter than in the first quarter of 1994 which, as previously
reported, was adversely impacted by weather and other operating
difficulties. Keystone's operating costs in the first quarter
exceeded by $4.7 million its sales revenue which, while determined
under a cost-plus pricing mechanism, is subject to a maximum price
cap. This pretax loss was the result of the cleaning plant
problems, poor geological conditions at several mines, an overall
decline in productivity, and costs incurred in conjunction with the
curtailment of production for a five-week period beginning March
11, 1995 in order to reduce the inventory of unprocessed coal.
While the cleaning plant modifications are underway,
Keystone management is addressing the need for substantial
improvements in productivity and reductions in overall operating
costs. In this regard, recent discussions with Keystone's customer
have preliminarily explored appropriate revisions to Keystone's
long-term coal sales agreement to both reduce the selling price for
<PAGE> 9
the coal and restore Keystone to acceptable levels of
profitability. Resolution of these preliminary discussions may
involve reductions in the annual rate of future coal deliveries
from Keystone's mines and the conversion from a cost-plus pricing
mechanism to a base price plus escalation agreement.
Helvetia's production and sales tonnages were
approximately 150,000 tons and 180,000 tons, respectively, lower
than 1994 levels. As previously reported, Helvetia closed its
Lucerne #8 and Lucerne #9 mines in the fourth quarter of 1994 due
to the depletion of reserves. A new mine is nearing completion of
development. Because productivity at Helvetia's other deep mine
was not at anticipated levels, Helvetia sustained an operating
loss for the quarter.
Development of the Company's Eighty-Four Mining Company
subsidiary mine is progressing with the first longwall mining
system scheduled to be in operation during the third quarter of
this year. The mine will continue to be in the development stage
until 1997 when a second longwall mining system is scheduled to be
operational at which time the mine will be at its expected capacity
of 6.6 million annual tons. Eighty-Four Mining Company's results,
other than its provision for income taxes, are not included in the
accompanying Consolidated Condensed Statements of Income since it
is in the development stage.
The increase in interest and dividend income in 1995 is
due to a combination of higher amounts invested and an increase in
interest rates from those in effect during the first quarter of
1994.
The decrease in depreciation, depletion, and amortization
in the first quarter of 1995 was primarily due to the decline in
tons produced.
Selling, general, and administrative expenses were lower
in the current quarter due to a reduction in costs and an increase
in the allocation of these expenses to Eighty-Four Mining Company.
Interest expense was higher in 1995 than in 1994 due to
higher prime interest rates and increased amounts borrowed to
finance the buildup of Keystone's coal inventories. Interest
expense incurred by the Company's Eighty-Four Mining Company
subsidiary is being capitalized due to it being in the development
stage.
The Company's credit provisions for income taxes is lower
than would normally be expected due to higher income tax provisions
being recorded for the Eighty-Four Mining Company subsidiary.
<PAGE> 10
Liquidity and Capital Resources
- -------------------------------
The decrease in the Company's working capital to $34
million at March 31, 1995 was principally due to the classification
as a current liability of $11.5 million in borrowings under
Keystone's line of credit due March 31, 1996. As of March 31,
1995, Keystone had $3.8 million available to borrow under its
financing agreements and Eighty-Four Mining Company had borrowed $6
million of the $50 million available under its revolving credit
agreement. Helvetia has utilized internally generated funds for
development of its new mine and construction of its new coal
preparation plant. In view of the first quarter operating results
and continuing problems with Keystone's operations, the Company
reduced its quarterly dividend payable June 1, 1995 from $.30 per
share to $.15 per share. This rate will be reviewed as the year
progresses.
<PAGE > 11
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.
ROCHESTER & PITTSBURGH COAL COMPANY
THOMAS W. GARGES, JR.
Thomas W. Garges, Jr.
President and Chief Executive Officer
GEORGE M. EVANS
George M. Evans
Vice President and Treasurer
Date: May 15, 1995
<PAGE> 12
EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 16,421
<SECURITIES> 0
<RECEIVABLES> 28,608
<ALLOWANCES> 0
<INVENTORY> 15,094
<CURRENT-ASSETS> 71,507
<PP&E> 426,400
<DEPRECIATION> 178,747
<TOTAL-ASSETS> 412,516
<CURRENT-LIABILITIES> 37,545
<BONDS> 71,480
<COMMON> 59,836
0
0
<OTHER-SE> 144,116
<TOTAL-LIABILITY-AND-EQUITY> 412,516
<SALES> 44,533
<TOTAL-REVENUES> 46,398
<CGS> 44,701
<TOTAL-COSTS> 44,701
<OTHER-EXPENSES> 4,291
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 900
<INCOME-PRETAX> (3,494)
<INCOME-TAX> (577)
<INCOME-CONTINUING> (2,917)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,917)
<EPS-PRIMARY> (0.85)
<EPS-DILUTED> (0.85)
</TABLE>
