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, 1996
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 April 30, 1996. 3,440,984 shares.
<PAGE> 2
<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
------------------------
1996 1995
---- ----
<S> <C> <C>
Production Tonnage 1,228 982
=========== ===========
Sales Tonnage 1,509 1,127
=========== ===========
Sales $ 55,890 $ 44,533
Other Income:
Gain on sale of property 6,575 --
Interest and dividends 1,106 911
Net investment gains 266 346
Miscellaneous 453 526
----------- -----------
64,290 46,316
Costs and Expenses:
Cost of sales 49,393 44,822
Depreciation, depletion,
and amortization 3,254 2,295
Selling, general,
and administrative 1,869 1,671
Interest 619 900
Miscellaneous 334 122
----------- -----------
55,469 49,810
----------- -----------
Income (Loss) Before Income Taxes 8,821 (3,494)
Provision (Credit) for Income Taxes 3,775 (577)
----------- -----------
Net Income (Loss) $ 5,046 $ (2,917)
=========== ===========
Net Income (Loss) Per Share $ 1.47 $ (.85)
=========== ===========
Average shares outstanding
used in the computation
of per share amounts 3,440,533 3,439,142
Shares issued and outstanding
at March 31 3,440,984 3,439,275
Cash dividends declared
per share $ .15 $ .30
</TABLE>
<PAGE> 3
See accompanying notes to consolidated condensed financial statements.
<PAGE> 4
<TABLE>
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
March 31 December 31
1996 1995
------------ -----------
ASSETS
------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 32,062 $ 27,437
Short-term investments 5,824 2,645
Receivables 31,479 29,576
Inventories and other current assets 9,064 13,746
Deferred income taxes 2,166 2,166
------------ -----------
Total Current Assets 80,595 75,570
Other Assets
Investments in marketable securities 30,467 33,454
Funding for:
Workers' compensation benefits 15,262 16,915
Mine closing reserves 10,375 10,271
Other postretirement benefits 13,853 10,956
Deferred income taxes 6,972 7,712
Miscellaneous 15,660 14,166
------------ -----------
92,589 93,474
Property, plant, and equipment 525,456 511,625
Less allowances for depreciation, depletion,
and amortization 193,085 189,262
------------ -----------
332,371 322,363
------------ -----------
$ 505,555 $ 491,407
============ ===========
<PAGE> 5
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $ 12,820 $ 15,325
Accrued liabilities 18,667 15,762
Current maturities of long-term debt 2,335 2,514
------------ -----------
Total Current Liabilities 33,822 33,601
Other Liabilities and Long-Term Debt
Workers' compensation benefits 41,189 40,292
Mine closing reserves 23,554 23,153
Other postretirement benefits 51,794 46,458
Black lung benefits 11,623 11,348
Deferred income taxes 9,083 8,169
Miscellaneous 5,012 4,488
Long-term debt (less current maturities) 122,658 120,784
------------ -----------
264,913 254,692
Shareholders' Equity
Common stock issued, 3,989,121 shares 59,837 59,837
Capital in excess of stated value 133,126 133,162
Retained earnings 41,662 38,007
------------ -----------
234,625 231,006
Less treasury stock at cost - 549,846 and
550,346 shares 27,805 27,892
------------ -----------
206,820 203,114
------------ -----------
$ 505,555 $ 491,407
============ ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 6
<TABLE>
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
Three Months Ended
March 31
-------------------------
1996 1995
---- ----
<C> <S> <S>
OPERATING ACTIVITIES
Net income (loss) $ 5,046 $ (2,917)
Adjustments for non-cash items (1,983) 2,721
Changes in certain assets and liabilities
(using) or providing cash 8,422 (2,854)
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 11,485 (3,050)
--------- ---------
INVESTING ACTIVITIES
Proceeds from investment activity 10,361 11,173
Acquisition of investments (10,826) (6,280)
Acquisition and development of
property, plant, and equipment (14,311) (19,702)
Proceeds from sale of property, plant, and
equipment 7,203 164
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (7,573) (14,645)
--------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings 35,950 8,725
Payments on borrowings (34,255) (2,187)
Cash dividends paid (1,032) (3,095)
Treasury stock issued 50 17
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 713 3,460
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 4,625 (14,235)
Cash and cash equivalents at beginning of year 27,437 30,656
--------- ---------
CASH AND CASH EQUIVALENTS AT MARCH 31 $ 32,062 $ 16,421
========= =========
<PAGE> 7
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid (net of capitalized interest) $ 656 $ 1,172
========= =========
Income taxes paid $ 524 $ 135
========= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 8
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1996
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, 1996 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1996. 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, 1995.
Note B - Newly Issued Accounting Standard
- -----------------------------------------
In the first quarter of 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of" (FASB 121), which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
The effect of adoption was not material.
<PAGE> 9
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL POSITION
March 31, 1996
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, 1995:
Results of Operations
- ---------------------
The results of operations for the first quarter were favorably affected
by the completion of the sale of two refuse piles in February, 1996, which
resulted in a gain, before taxes, of $6.575 million.
Sales and production volumes increased at the Company's Keystone Coal
Mining Corporation (Keystone) and Helvetia Coal Company (Helvetia)
subsidiaries in 1996. Keystone's sales tonnage in 1995 had been severely
impacted by problems experienced at its coal cleaning plant which resulted in
a five-week curtailment in production beginning March 11, 1995. In addition,
several of Keystone's mines experienced poor geological conditions and poor
productivity in the first quarter of 1995. The cleaning plant problems have
been resolved and Keystone's first quarter sales tonnage has increased by 26%
over last year. As previously reported, Keystone closed three of its low
productivity mines at the end of 1995 and each of its remaining three mines
have had productivity increases from the prior year. Coal is being purchased
from third party suppliers to replace the coal from the closed mines in order
to meet deliveries under Keystone's coal supply agreement. For the quarter,
Keystone's operating profit was $1.6 million as compared to a $4.7 million
loss for the three months ended March 31, 1995. In addition to the above
factors, Keystone's profit in the current quarter was enhanced due to the
favorable effect of decreasing coal inventories under the pricing provisions
of its coal supply agreement. Helvetia's productivity has also improved over
last year at each of its two mines, one of which was in the development stage
in the first quarter of 1995. Helvetia's operating loss in the current
quarter was substantially lower than that incurred in the quarterly periods in
1995 due to the aforementioned productivity improvements.
The Company's Eighty-Four Mining Company subsidiary (Eighty-Four)
experienced difficulty at its Mine No. 84 in achieving continuous mining
production necessary for timely preparation for the longwall mining system.
In the first quarter of 1996, the longwall system was delayed in moving to a
new mining section due to this problem. This delay and a similar one which
occurred in the fourth quarter of 1995 have resulted in lower tonnage and
increased development costs. Increases in the productivity of the development
sections from existing levels are necessary in order to minimize or eliminate
future delays and the corresponding impact on development costs. Eighty-
Four'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.
<PAGE> 10
The increase in interest and dividend income in 1996 was due to an
increase in the amounts invested.
The increase in depreciation, depletion, and amortization in the first
quarter of 1996 was due to additions to property, plant, and equipment and the
completion of development of the new Helvetia mine since the first quarter of
1995 and due to the increase in tons produced.
Interest expense was lower in 1996 than in 1995 due to lower interest
rates and decreased amounts borrowed by Keystone as a result of the reduction
of its coal inventories to normal levels. Interest expense incurred by
Eighty-Four is being capitalized due to its being in the development stage.
The Company's effective tax rate for 1996 and 1995 varies from the
normal expected rate due to higher income tax provisions being recorded for
Eighty-Four. The higher expected income tax rates are expected to continue
through 1996.
Liquidity and Capital Resources
- -------------------------------
Working capital at March 31, 1996 was $47 million compared to $42
million at December 31, 1995 and the current ratios were 2.4 to 1 and 2.25 to
1, respectively. The increase in working capital resulted primarily from the
proceeds from the sale of the refuse piles.
As previously reported, Keystone amended its credit agreement in March
1996 to extend the expiration date of its revolving credit agreement until
December 31, 2000. In addition, Keystone's line of credit agreement was
extended two years to March 1998 and increased by $7.5 million for a portion
of 1996. At March 31, 1996, $17.6 million was available under these credit
facilities.
As of March 31, 1996, $78.5 million had been borrowed under Eighty-
Four's $85 million credit facility. Current operating projections, taking
into account the lower production levels, indicate the need for approximately
$30 million in additional funding to complete the development. The Company
made an additional equity contribution to the Eighty-Four project of $5
million in April 1996, and plans to utilize additional internally generated
funds in order to meet requirements later in the year. Eighty-Four plans to
secure additional permanent financing later in 1996. A second longwall
system, to be delivered and operational in 1997, will be leased. In
conjunction with its guarantee of the Eighty-Four project, the Company,
Eighty-Four, and another subsidiary, Lucerne Land Company, are subject to
numerous financial covenants and restrictions. As previously reported, in
April 1996, the banks and institutional lenders agreed to certain amendments
to the note agreements relating to projected noncompliance for 1996 resulting
from less than expected productivity of mining units developing the longwall
panels.
<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, 1996
<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-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 32,062
<SECURITIES> 5,824
<RECEIVABLES> 31,479
<ALLOWANCES> 0
<INVENTORY> 4,640
<CURRENT-ASSETS> 80,595
<PP&E> 525,456
<DEPRECIATION> 193,085
<TOTAL-ASSETS> 505,555
<CURRENT-LIABILITIES> 33,822
<BONDS> 122,658
<COMMON> 59,837
0
0
<OTHER-SE> 146,983
<TOTAL-LIABILITY-AND-EQUITY> 505,555
<SALES> 55,890
<TOTAL-REVENUES> 64,290
<CGS> 49,393
<TOTAL-COSTS> 49,393
<OTHER-EXPENSES> 5,457
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 619
<INCOME-PRETAX> 8,821
<INCOME-TAX> 3,775
<INCOME-CONTINUING> 5,046
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,046
<EPS-PRIMARY> 1.47
<EPS-DILUTED> 1.47
</TABLE>
