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 June 30, 1995
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 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 July 31, 1995. 3,439,275 shares.
<PAGE> 2
<TABLE>
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
June 30 December 31
1995 1994
------------ -----------
ASSETS
------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 17,844 $ 30,656
Receivables 28,094 25,213
Inventories and other current assets 18,993 25,275
Deferred income taxes 1,632 1,632
------------ -----------
Total Current Assets 66,563 82,776
Other Assets
Investments in marketable securities 41,167 46,838
Funding for:
Workers' compensation benefits 16,753 19,521
Mine closing reserves 9,368 8,956
Deferred income taxes 7,881 7,211
Miscellaneous 14,575 15,523
------------ -----------
89,744 98,049
Property, plant, and equipment 453,259 404,962
and amortization 183,245 174,793
------------ -----------
270,014 230,169
------------ -----------
$ 426,321 $ 410,994
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $ 9,762 $ 19,140
Accrued liabilities 15,552 11,484
Current maturities of long-term debt 9,028 2,007
------------ -----------
Total Current Liabilities 34,342 32,631
Other Liabilities and Long-Term Debt
Workers' compensation benefits 42,349 39,965
Mine closing reserves 20,615 19,818
Other postretirement benefits 25,242 20,586
Deferred income taxes 6,471 4,542
Miscellaneous 9,889 10,309
Long-term debt (less current maturities) 86,320 75,693
------------ -----------
190,886 170,913
<PAGE> 3
Shareholders' Equity
Common stock issued, 3,989,121 shares 59,837 59,837
Capital in excess of stated value 133,161 133,170
Retained earnings 35,986 42,360
------------ -----------
228,984 235,367
Less treasury stock at cost - 549,846 and
550,346 shares 27,891 27,917
------------ -----------
201,093 207,450
------------ -----------
$ 426,321 $ 410,994
============ ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 4
<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 Six Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Production Tonnage 1,071 1,378 2,053 2,779
=========== =========== ========== ===========
Sales Tonnage 1,259 1,526 2,439 2,964
=========== =========== ========== ===========
Sales $ 49,928 $ 55,243 94,461 107,717
Other Income:
Interest and dividends 938 677 1,849 1,404
Net investment gains 302 (141) 648 276
Miscellaneous 879 615 1,487 1,279
----------- ----------- ---------- -----------
52,047 56,394 98,445 110,676
Costs and Expenses:
Cost of Sales 50,522 49,264 95,223 96,559
Depreciation, depletion,
and amortization 2,726 3,005 5,021 5,853
Selling, general,
and administrative 1,581 1,818 3,252 3,728
Interest 848 488 1,748 924
Miscellaneous 292 218 617 643
----------- ----------- ---------- -----------
55,969 54,793 105,861 107,707
----------- ----------- ---------- -----------
(Loss) Income Before
Income Taxes (3,922) 1,601 (7,416) 2,969
Income Taxes (942) 299 (1,519) 1,101
----------- ----------- ---------- -----------
Net (Loss) Income $ (2,980) $ 1,302 $ ( 5,897) $ 1,868
=========== =========== ========== ===========
Net (Loss) Income Per Share $ (.86) $ .38 $ (1.71) $ .54
=========== =========== ========== ===========
Average shares outstanding
used in the computation
of per share amounts 3,439,275 3,438,775 3,439,209 3,438,723
Shares issued and outstanding
at June 30 3,439,275 3,438,775 3,439,275 3,438,775
Cash dividends declared
per share $ .15 $ .30 $ .45 $ .60
</TABLE>
<PAGE> 5
See accompanying notes to consolidated condensed financial statements.
<PAGE> 6
<TABLE>
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASHFLOWS
(Dollars in thousands)
<CAPTION>
Six Months Ended
June 30
-----------------------
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ (5,897) $ 1,868
Adjustments for non-cash items 4,383 9,474
Changes in certain assets and liabilities
(using) or providing cash 11,184 (5,839)
--------- ---------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 9,670 5,503
--------- ---------
INVESTING ACTIVITIES
Proceeds from investment activity 19,121 17,375
Acquisition of investments (11,253) (6,609)
Acquisition and development of
property, plant, and equipment (44,845) (27,262)
Proceeds from sale of property, plant, and
equipment 441 523
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (36,536) (15,973)
--------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings 69,025 95,238
Payments on borrowings (51,377) (83,294)
Cash dividends paid (3,611) (4,126)
Treasury stock issued 17 19
--------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 14,054 7,837
--------- ---------
(DECREASE) IN CASH AND CASH
EQUIVALENTS (12,812) (2,633)
Cash and cash equivalents at beginning of year 30,656 22,737
--------- ---------
CASH AND CASH EQUIVALENTS AT JUNE 30 $ 17,844 $ 20,104
========= =========
<PAGE> 7
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid (net of capitalized interest) $ 1,783 $ 634
========= =========
Income taxes paid (tax refunds received) $ 380 $ (185)
========= =========
See accompanying notes to consolidated condensed financial statements.
<PAGE> 8
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 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 six month period ended June
30, 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.
Note B
------
In July 1995, the Keystone Coal Mining Corporation lenders
and the lenders to the Eighty-Four Mining Company project
separately amended a portion of the respective loan agreements in
order to reset several of the loan covenants for future periods.
In addition, these lenders waived the applicability of certain
covenants for the period ended June 30, 1995.
<PAGE> 9
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL POSITION
June 30, 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 Company's operating results for the second quarter
reflect the continued poor performance of two of the Company's
subsidiaries, Keystone Coal Mining Corporation and Helvetia Coal
Company.
Keystone sales tonnage was approximately 125,000 tons and
345,000 tons lower for the three and six months ended June 30,
1995, respectively, than in similar periods of 1994. Keystone's
tonnage sold was limited by problems experienced in conjunction
with major modifications to its coal cleaning plant in 1994 which
resulted in a substantial buildup of unprocessed inventories.
Further modifications to the coal cleaning plant were undertaken
during the second quarter and successfully completed on July 15,
1995. As a result of better cleaning plant performance while the
most recent modifications were in process and the effect of
idling production at Keystone's deep mines from March 11 through
mid-April, Keystone's unprocessed coal inventories declined by
155,000 tons and are expected to return to normal levels by the
fourth quarter.
Keystone's production for the three and six months ended
June 30, 1995 was 175,000 tons and 482,000 tons lower,
respectively, than 1994's production for the same periods. In
addition to the aforementioned idling of its mines in 1995,
Keystone has experienced poor geological conditions at several
mines and an overall decline in productivity. These factors
resulted in a pretax loss at Keystone of $4.8 million in the
second quarter and $9.5 million for the six months ended June 30,
1995. Keystone's revenue, while determined under a cost-plus
pricing mechanism, is subject to a price cap which has been
applicable in 1995.
Helvetia, in 1995, is operating under a new base price long-
term coal sales agreement which replaced the previous cost-plus
agreement. Two of Helvetia's mines were closed late in 1994 and
a new mine completed development in the second quarter of this
year. Helvetia sales tonnage was 11% and 19% lower for the
second quarter and first half of 1995, respectively, than in the
prior year, while production tonnage was 30% lower than 1994
amounts for both the second quarter and year to date. Helvetia's
<PAGE> 10
other operating mine has experienced poor geological conditions
and unacceptable productivity levels which have resulted in this
subsidiary recording a pretax loss of $1.7 million for the six
months ended June 30, 1995.
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 half of
1994.
The decrease in depreciation, depletion, and amortization in
1995 was primarily due to the decline in tons produced and the
inclusion in 1994 of the accelerated write-off of assets
associated with the two Helvetia mines closed late in that year.
Selling, general, and administrative expenses were lower in
1995 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 in 1995 are
lower than would normally be expected due to higher income tax
provisions being recorded for the Eighty-Four Mining Company
subsidiary.
Management continues to address the need for substantial
improvements in productivity and reduction in overall operating
costs at Keystone's and Helvetia's mines. In this regard,
Helvetia and Keystone each added a continuous haulage unit to
their operations during the current quarter and another unit is
scheduled to be operational at one of Keystone's mines in the
third quarter. Discussions with Keystone's customers to explore
appropriate revisions to Keystone's long-term coal sales
agreement continue. As previously reported, 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.
<PAGE> 11
The Company has granted an option to a third party for the
sale of two tracts of surface land totalling approximately 400
acres, each of which includes a sizeable coal refuse pile. This
option expires on November 30, 1995. The Company would have a
significant profit from the sale of these properties if the
option is exercised, which would have a positive effect on the
Company's results of operations for the year.
Liquidity and Capital Resources
-------------------------------
The decrease in the Company's working capital to $32
million at June 30, 1995 was principally due to the
classification as a current liability of $8.1 million in
borrowings under Keystone's line of credit due March 31, 1996.
As of June 30, 1995, Keystone had $5.3 million available to
borrow under its financing agreements and Eighty-Four Mining
Company had borrowed $21 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
1995 operating results, the Company reduced its quarterly
dividend payable June 1, 1995 from $.30 per share to $.15 per
share. A similar dividend was declared on July 27, 1995 payable
September 1, 1995. This rate will be reviewed as the year
progresses.
<PAGE> 12
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
PART II: OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders.
(a) Registrant's Annual Meeting of Shareholders was held on
May 2, 1995. Of the 3,439,275 shares eligible to vote,
3,183,073 shares were represented in person or by proxy
at the meeting.
(c) Messrs. Columbus O'D. Iselin, Jr., David H. Davis, John
L. Schroder, Jr., and Thomas W. Garges, Jr. were re-
elected as Class B Directors of Registrant. A summary
of votes for each Class B Director is as follows:
Columbus O'D. Iselin, Jr.
FOR 3,144,838
WITHHELD 38,235
David H. Davis
FOR 3,141,833
WITHHELD 41,240
John L. Schroder, Jr.
FOR 3,167,005
WITHHELD 16,068
Thomas W. Garges, Jr.
FOR 3,168,368
WITHHELD 14,705
Ernst & Young, independent public accountants, was selected
as Registrant's auditor for 1995. A summary of votes for,
against, and abstentions is as follows:
FOR 3,179,620
AGAINST 2,965
ABSTAIN 488
<PAGE> 13
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: August 14, 1995
<PAGE> 14
EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 17,844
<SECURITIES> 0
<RECEIVABLES> 28,094
<ALLOWANCES> 0
<INVENTORY> 8,529
<CURRENT-ASSETS> 66,563
<PP&E> 453,259
<DEPRECIATION> 183,245
<TOTAL-ASSETS> 426,321
<CURRENT-LIABILITIES> 34,342
<BONDS> 95,348
<COMMON> 59,837
0
0
<OTHER-SE> 141,256
<TOTAL-LIABILITY-AND-EQUITY> 426,321
<SALES> 94,461
<TOTAL-REVENUES> 98,445
<CGS> 95,223
<TOTAL-COSTS> 95,223
<OTHER-EXPENSES> 8,890
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,748
<INCOME-PRETAX> (7,416)
<INCOME-TAX> (1,519)
<INCOME-CONTINUING> (5,897)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,897)
<EPS-PRIMARY> (1.71)
<EPS-DILUTED> (1.71)
</TABLE>
