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, 1997
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, 1997. 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
------------------
1997 1996
---- ----
<S> <C> <C>
Production Tonnage 1,032 1,228
========= ===========
Sales Tonnage 1,374 1,509
========= ===========
Sales 51,888 55,890
Other Income:
Gain on sale of property 2,059 6,575
Interest and dividends 1,129 1,106
Net investment (losses) gains (171) 266
Miscellaneous 390 453
--------- -----------
55,295 64,290
Costs and Expenses:
Cost of sales 48,087 49,393
Depreciation, depletion, and amortization 3,469 3,254
Selling, general, and administrative 1,652 1,869
Interest 468 619
Miscellaneous 869 334
--------- -----------
54,545 55,469
--------- -----------
Income Before Income Taxes 750 8,821
Income Taxes 729 3,775
--------- -----------
Net Income $ 21 $ 5,046
========= ===========
Net Income Per Share $ .01 $ 1.47
========= ===========
<PAGE> 3
Average shares outstanding
used in the computation
of per share amounts 3,440,984 3,440,533
Shares issued and outstanding
at March 31 3,440,984 3,440,984
Cash dividends declared
per share $ .15 $ .15
</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>
March 31 December 31
1997 1996
------------ -----------
ASSETS
------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 26,176 $ 34,466
Short-term investments -- 25,000
Receivables 29,521 21,945
Inventories and other current assets 13,009 11,889
Deferred income taxes 2,903 2,093
------------ -----------
Total Current Assets 71,609 95,393
Other Assets
Investments in marketable securities 17,052 28,558
Funding for:
Workers' compensation benefits 14,281 14,229
Mine closing reserves 11,802 11,651
Deferred income taxes 9,155 8,839
Miscellaneous 18,174 16,103
------------ -----------
70,464 79,380
Property, plant, and equipment 564,476 541,544
Less allowances for depreciation, depletion,
and amortization 190,956 184,919
------------ -----------
373,520 356,625
------------ -----------
$ 515,593 $ 531,398
============ ===========
<PAGE> 5
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $ 13,212 $ 15,845
Accrued liabilities 18,368 13,398
Income taxes payable 1,185 1,367
Current maturities of long-term debt 7,809 28,236
------------ -----------
Total Current Liabilities 40,574 58,846
Other Liabilities and Long-Term Debt
Other postretirement benefits 76,221 72,346
Workers' compensation benefits 41,064 40,384
Mine closing reserves 24,268 23,929
Black lung benefits 9,509 9,231
Deferred income taxes 12,399 11,079
Miscellaneous 2,834 3,897
Long-term debt (less current maturities) 98,536 100,501
------------ -----------
264,831 261,367
Shareholders' Equity
Common stock issued, 3,989,121 shares 59,837 59,837
Capital in excess of stated value 133,125 133,125
Retained earnings 45,031 46,028
------------ -----------
237,993 238,990
Less treasury stock at cost - 548,137 shares 27,805 27,805
------------ -----------
210,188 211,185
------------ -----------
Total Liabilities & Shareholders' Equity $ 515,593 $ 531,398
============ ===========
</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
----------------------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 21 $ 5,046
Adjustments for non-cash items 2,436 (1,983)
Changes in certain assets and liabilities
(using) or providing cash (3,460) 8,422
--------- ---------
NET CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES (1,003) 11,485
--------- ---------
INVESTING ACTIVITIES
Proceeds from available-for-sale
investments 38,696 10,361
Acquisition of available-for-sale
investments (2,775) (10,826)
Acquisition and development of
property, plant, and equipment (8,560) (14,311)
Proceeds from sale of property, plant, and
equipment 2,227 7,203
--------- ---------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES 29,588 (7,573)
--------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings 69,350 35,950
Payments on borrowings (103,446) (34,255)
Debt issuance costs (2,263) --
Cash dividends paid (516) (1,032)
Treasury stock issued -- 50
--------- ---------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (36,875) 713
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (8,290) 4,625
Cash and cash equivalents at beginning of year 34,466 27,437
--------- ---------
CASH AND CASH EQUIVALENTS AT MARCH 31 $ 26,176 $ 32,062
========= =========
<PAGE> 7
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid (net of capitalized interest) $ 559 $ 656
========= =========
Income taxes paid $ 315 $ 524
========= =========
Noncash financing and investing activities--
seller financing of equipment to be leased $ 11,704 $ -0-
========= =========
</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, 1997
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. Operating
results for the three month period ended March 31, 1997 are not necessarily
indicative of the results that may be expected for the year ended
December 31, 1997. 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, 1996.
Results for the Company's subsidiary, Eighty-Four Mining Company,
other than its provision for income taxes and a portion of general and
administration expenses, are not included in the accompanying Condensed
Consolidated Statements of Income because Eighty-Four is in the development
stage.
Note B - Newly Issued Accounting Standards
- -----------------------------------------
In the first quarter of 1997, the Company adopted Statement of
Position 96-1 "Environmental Remediation Liabilities" (SOP 96-1) issued
by the Accounting Standards Committee of the American Institute of
Certified Public Accountants, the effect of adoption was not material.
In February, 1997, Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" (FASB 128), was issued which specifies the computation,
presentation, and disclosure requirements of earnings per share for interim
and annual periods ending after December 15, 1997. FASB 128 is not expected
to have a material effect on the computation and presentation of the
Company's earnings per share.
Note C - Long-Term Debt
- -----------------------
In February, Eighty-Four acquired additional longwall equipment valued
at $11.7 million for the second longwall mining system. This equipment is
scheduled to be placed in service in the third quarter of 1997 and will
be financed by a capital lease for which the Company has obtained a
commitment. The manufacturer is financing the equipment until lease
commencement. At March 31, 1997 the obligation is recorded in the Balance
Sheet as a noncurrent liability.
<PAGE> 9
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL POSITION
March 31, 1997
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, 1996:
Results of Operations
- ---------------------
The Company's two major operating subsidiaries, Keystone Coal Mining
Corporation and Helvetia Coal Company, each had lower sales volume, lower
productivity, and higher operating costs in the first quarter of 1997 when
compared to the first quarter of 1996. Keystone, which recorded pretax
income of $1.6 million in the first quarter of 1996 posted a slight loss
in the current quarter. Keystone's 1996 results benefitted from the
favorable effect of decreasing coal inventories under the pricing
provisions of its coal supply agreement. Helvetia had a pretax loss of
$1.5 million in the current quarter as compared to $400,000 in the first
quarter of 1996. A new portal facility became operational at one of
Helvetia's mines during the quarter which is forecast to have a favorable
impact on productivity and operating costs. In addition, a new operating
schedule has been implemented at Keystone's and Helvetia's mines in order
to improve operating costs.
The Company's Eighty-Four Mining Company subsidiary (Eighty-Four) is
continuing its development of Mine No. 84 for installation of a second
longwall system in the third quarter of this year. Eighty-Four's results,
other than its provision for income taxes and certain general and
administrative costs, are not included in the accompanying Consolidated
Condensed Statements of Income because it is in the development stage.
During the current quarter, Eighty-Four continued to improve continuous
miner advance rates which had been below those required for economical
longwall operations.
Pretax income continued to be enhanced from the sale of certain
nonstrategic properties resulting in gains of $2.1 million in the current
quarter compared to a gain of $6.6 million in the first quarter of 1996
from the sale of property containing two refuse piles.
The Company recorded net investment losses of $171,000 in the first
quarter of 1997 due to the sale of securities in order to provide funding
required for the Mine No. 84 project.
The increase in miscellaneous expense in 1997 reflects the write-off
of certain debt issuance costs relating to Eighty-Four's previous debt
arrangement.
<PAGE> 10
Interest expense in 1997 was lower than the prior year due to
decreased amounts borrowed by Keystone. Interest expense incurred by
Eighty-Four is being capitalized due to its being in the development
stage.
The Company's effective tax rates for 1997 and 1996 vary from the
normal expected rates due to higher income tax provisions being recorded
for Eighty-Four. The higher effective income tax rates are expected to
continue through 1997, the final year of mine development at Mine No. 84.
Liquidity and Capital Resources
- -------------------------------
Working capital at March 31, 1997 was $31 million, compared to
$37 million at December 31, 1996, and the current ratios were 1.8 to 1
and 1.6 to 1, respectively. The decrease in working capital resulted
primarily from the expenditure of internal funds, in addition to borrowed
amounts, for the development of Mine No. 84.
At March 31, 1997, the Company had invested $160 million in the
Mine No. 84 project in the form of equity and subordinated loans to
Eighty-Four and its affiliate, Lucerne Land Company. As previously
reported, Eighty-Four and Lucerne Land Company amended and restated
their credit agreements in March, 1997, which provide for: 1) a new
senior secured term loan totaling $25 million; 2) a revolving credit
note totaling $35 million, of which $25 million was borrowed at March 31;
and, 3) a working capital line of credit totaling $8 million which was
unused at March 31.
The Company is continuing to pursue the sale of nonstrategic coal
reserves and surface properties in order to improve liquidity.
<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, 1997
<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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 26,176
<SECURITIES> 0
<RECEIVABLES> 29,521
<ALLOWANCES> 0
<INVENTORY> 7,228
<CURRENT-ASSETS> 71,609
<PP&E> 564,476
<DEPRECIATION> 190,956
<TOTAL-ASSETS> 515,593
<CURRENT-LIABILITIES> 40,574
<BONDS> 98,536
<COMMON> 59,837
0
0
<OTHER-SE> 150,351
<TOTAL-LIABILITY-AND-EQUITY> 515,593
<SALES> 51,888
<TOTAL-REVENUES> 55,295
<CGS> 48,087
<TOTAL-COSTS> 48,087
<OTHER-EXPENSES> 5,990
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 468
<INCOME-PRETAX> 750
<INCOME-TAX> 729
<INCOME-CONTINUING> 21
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
