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 June 30, 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 July 31, 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 Six Months Ended
June 30 June 30
------------------- ------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Production Tonnage 1,178 1,071 2,406 2,053
=========== =========== ========= ===========
Sales Tonnage 1,481 1,259 2,990 2,439
=========== =========== ========= ===========
Sales $ 52,997 $ 49,928 108,887 94,461
Other Income:
Gain on sale of property -- -- 6,575 --
Interest and dividends 1,104 938 2,210 1,849
Net investment gains 390 302 656 648
Miscellaneous 509 879 962 1,487
----------- ----------- --------- -----------
55,000 52,047 119,290 98,445
Costs and Expenses:
Cost of sales 46,678 50,522 96,071 95,223
Depreciation, depletion,
and amortization 2,957 2,726 6,211 5,021
Selling, general,
and administrative 1,677 1,581 3,546 3,252
Interest 575 848 1,194 1,748
Miscellaneous 376 292 710 617
----------- ----------- --------- -----------
52,263 55,969 107,732 105,861
----------- ----------- --------- -----------
Income (Loss) Before
Income Taxes 2,737 (3,922) 11,558 (7,416)
Provision (Credit) for
Income Taxes 1,168 (942) 4,943 (1,519)
----------- ----------- --------- -----------
Net Income (Loss) $ 1,569 $ (2,980) $ 6,615 $ (5,897)
=========== =========== ========= ===========
Net Income (Loss) Per Share $ .45 $ (.86) $ 1.92 $ (1.71)
=========== =========== ========= ===========
<PAGE> 3
Average shares outstanding
used in the computation
of per share amounts 3,440,984 3,439,275 3,440,759 3,439,209
Shares issued and outstanding
at June 30 3,440,984 3,439,275 3,440,984 3,439,275
Cash dividends declared
per share $ .15 $ .15 $ .30 $ .45
</TABLE>
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>
June 30 December 31
1996 1995
------------ -----------
ASSETS
------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 36,937 $ 27,437
Short-term investments 37 2,645
Receivables 27,455 29,576
Inventories and other current assets 8,292 13,746
Deferred income taxes 2,166 2,166
------------ -----------
Total Current Assets 74,887 75,570
Other Assets
Investments in marketable securities 46,545 33,454
Funding for:
Workers' compensation benefits 14,965 16,915
Mine closing reserves 10,251 10,271
Other postretirement benefits -- 10,956
Deferred income taxes 7,499 7,712
Miscellaneous 16,334 14,166
------------ -----------
95,594 93,474
Property, plant, and equipment 539,636 511,625
Less allowances for depreciation, depletion,
and amortization 194,028 189,262
------------ -----------
345,608 322,363
------------ -----------
$ 516,089 $ 491,407
============ ===========
<PAGE> 5
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $ 14,130 $ 15,325
Accrued liabilities 19,313 15,762
Current maturities of long-term debt 2,513 2,514
------------ -----------
Total Current Liabilities 35,956 33,601
Other Liabilities and Long-Term Debt
Workers' compensation benefits 41,890 40,292
Mine closing reserves 23,711 23,153
Other postretirement benefits 55,304 46,458
Black lung benefits 11,902 11,348
Deferred income taxes 10,833 8,169
Miscellaneous 5,953 4,488
Long-term debt (less current maturities) 123,219 120,784
------------ -----------
272,812 254,692
Shareholders' Equity
Common stock issued, 3,989,121 shares 59,837 59,837
Capital in excess of stated value 133,125 133,162
Retained earnings 42,164 38,007
------------ -----------
235,126 231,006
Less treasury stock at cost - 548,137 and
549,846 shares 27,805 27,892
------------ -----------
207,321 203,114
------------ -----------
Total Liabilities & Shareholders' Equity $ 516,089 $ 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>
Six Months Ended
June 30
----------------------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 6,615 $ (5,897)
Adjustments for non-cash items 2,062 4,383
Changes in certain assets and liabilities
(using) or providing cash 16,642 11,184
--------- ---------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 25,319 9,670
--------- ---------
INVESTING ACTIVITIES
Proceeds from investment activity 20,889 19,121
Acquisition of investments (14,587) (11,253)
Acquisition and development of
property, plant, and equipment (27,862) (44,845)
Proceeds from sale of property, plant, and
equipment 7,312 441
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (14,248) (36,536)
--------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings 61,650 69,025
Payments on borrowings (61,723) (51,377)
Cash dividends paid (1,548) (3,611)
Treasury stock issued 50 17
--------- ---------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (1,571) 14,054
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 9,500 (12,812)
Cash and cash equivalents at beginning of year 27,437 30,656
--------- ---------
CASH AND CASH EQUIVALENTS AT JUNE 30 $ 36,937 $ 17,844
========= =========
<PAGE> 7
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid (net of capitalized interest) $ 988 $ 1,783
========= =========
Income taxes paid (tax refunds received) $ (1,999) $ 380
========= =========
Noncash financing and investing activities--
Capital leases $ 2,507 $ -0-
========= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 8
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 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 six month period ended June 30, 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.
Certain accounts previously reflected in the consolidated Balance
Sheets as "funding for other postretirement benefits" have been included in
"investments in marketable securities" at June 30, 1996. Until such funding
is deposited into restricted plan assets, it is available for general
corporate cash requirements.
<PAGE> 9
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL POSITION
June 30, 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
- ---------------------
In the second quarter of 1996, the Company's subsidiaries,
Keystone Coal Mining Corporation (Keystone) and Helvetia Coal Company
(Helvetia), continued to record better results than in the
corresponding quarter of 1995. As previously reported, in 1995 the
Keystone operations were adversely impacted by problems encountered
with major modifications to its coal cleaning plant, poor geological
conditions, and low productivity at several of its mines. Keystone
closed three of its low productivity mines at the end of 1995 and each
of its remaining three mines have had productivity improvements from the
prior year. Keystone's current results have also benefitted from the
favorable effect of decreasing coal inventories under the pricing
provisions of its coal supply agreement and its ability to purchase coal
from third party suppliers for delivery to its customers. For the quarter
and six months ended June 30, 1996, Keystone's income before taxes was
$1.0 million and $2.7 million, respectively, as compared to losses of
$4.8 million and $9.5 million, respectively, for the corresponding
periods in 1995. Helvetia's Marshall Run mine, which was in the
development stage through May 1995, continued to perform well in the
second quarter of 1996. As a result, Helvetia recorded a pretax loss of
approximately $350,000 for the six months ended June 30, 1996 as compared
to a loss of $1.7 million for the first six months of 1995.
Development of Eighty-Four Mining Company's mine is continuing.
In the second quarter, increased development costs were incurred due to
localized geological conditions encountered near the end of a longwall
panel. These conditions caused a short delay in relocating the longwall
to the principal area of the mine where it commenced operations in late
July. The mine is expected to be fully operational in the second quarter
of 1997 when a second longwall mining unit is installed. Emphasis is being
placed on increasing production of continuous mining sections which are
preparing for future longwall mining in order to minimize or eliminate
delays in moving the longwall. Eighty-Four's results, other than its
provision for income taxes, are not included in the accompanying
Consolidated Condensed Statements of Income because it is in the
development stage.
The results of operations for the six months ended June 30, 1996,
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.
<PAGE> 10
Interest and dividend income increased due to higher amounts invested.
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 and positive cash flow from operations.
Interest expense incurred by Eighty-Four is being capitalized due to the
mine being in development.
Depreciation, depletion, and amortization increased in the first six
months of 1996 compared to the first half of 1995 due to higher production
levels in 1996 and the inclusion of depreciation expense for Helvetia's
Marshall Run mine, which was in development through May, 1995.
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 effective income tax rates are expected to continue
through 1996.
Liquidity and Capital Resources
- -------------------------------
Working capital at June 30, 1996 was $39 million compared to
$42 million at December 31, 1995 and the current ratios were 2.1 to 1
and 2.25 to 1, respectively.
At June 30, 1996, $19.8 million was available under Keystone's credit
facilities and $3 million remained to be borrowed under Eighty-Four's
$85 million credit facility. Operating projections indicate the need for
approximately $25 million in additional funding to complete development of
Mine No. 84. The Company will utilize internally generated funds in order
to meet a portion of these requirements and Eighty-Four plans to secure
additional permanent financing for the balance. A second longwall system,
to be delivered and operational in 1997, will be leased.
<PAGE> 11
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 7, 1996. Of the 3,440,984 shares eligible to vote,
3,075,422 shares were represented in person or by proxy
at the meeting.
(c) Messrs. O'Donnell Iselin II and Thomas M. Hyndman, Jr.
were re-elected as Class C Directors of Registrant. A
summary of votes for each Class C Director is as follows:
O'Donnell Iselin II
FOR 3,061,469
WITHHELD 13,953
Thomas M. Hyndman, Jr.
FOR 3,056,844
WITHHELD 18,578
Ernst & Young LLP, independent public accountants, was
selected as Registrant's auditor for 1996. A summary of
votes for, against, and abstentions is as follows:
FOR 3,072,430
AGAINST 2,003
ABSTAIN 989
<PAGE> 12
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, 1996
<PAGE> 13
EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 36,937
<SECURITIES> 37
<RECEIVABLES> 27,455
<ALLOWANCES> 0
<INVENTORY> 5,459
<CURRENT-ASSETS> 74,887
<PP&E> 539,636
<DEPRECIATION> 194,028
<TOTAL-ASSETS> 516,089
<CURRENT-LIABILITIES> 35,956
<BONDS> 123,219
<COMMON> 59,837
0
0
<OTHER-SE> 147,484
<TOTAL-LIABILITY-AND-EQUITY> 516,089
<SALES> 108,887
<TOTAL-REVENUES> 119,290
<CGS> 96,071
<TOTAL-COSTS> 96,071
<OTHER-EXPENSES> 10,467
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,194
<INCOME-PRETAX> 11,558
<INCOME-TAX> 4,943
<INCOME-CONTINUING> 6,615
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,615
<EPS-PRIMARY> 1.92
<EPS-DILUTED> 1.92
</TABLE>
