-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H+S904lAd6AAp3qBIf6xuOuZk/hfOKjlfCOlm2D5KDh2qfRJx9UozGWIItrA0T6L S1Lql7vabOtadFZ0rgkm0Q== 0000950124-97-004364.txt : 19970815 0000950124-97-004364.hdr.sgml : 19970815 ACCESSION NUMBER: 0000950124-97-004364 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZEIGLER COAL HOLDING CO CENTRAL INDEX KEY: 0000925942 STANDARD INDUSTRIAL CLASSIFICATION: BITUMINOUS COAL & LIGNITE MINING [1220] IRS NUMBER: 363344449 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13298 FILM NUMBER: 97664082 BUSINESS ADDRESS: STREET 1: 50 JEROME LANE CITY: FAIRVIEW HEIGHTS STATE: IL ZIP: 62208 BUSINESS PHONE: 6183942400 MAIL ADDRESS: STREET 1: 50 JEROME LANE CITY: FAIRVIEW HEIGHTS STATE: IL ZIP: 62208 10-Q 1 10-Q DATED JUNE 30, 1997 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 1-13298 ZEIGLER COAL HOLDING COMPANY (Exact name of registrant as specified in its charter) DELAWARE 36-3344449 (State of incorporation) (I.R.S. Employer Identification No.) 50 JEROME LANE FAIRVIEW HEIGHTS, ILLINOIS 62208 (618)394-2400 (Address of principal executive (Zip Code) (Registrant's telephone offices) number, including area code) 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 report(s)), and (2) has been subject to such filing requirements for the past 90 days. [x] Yes [ ] No As of July 31, 1997, a total of 28,167,261 shares of the Registrant's common stock were outstanding. 2 PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ZEIGLER COAL HOLDING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (Amounts in thousands, except per share amounts; unaudited)
Three Months Six Months ------------------ ------------------ 1997 1996 1997 1996 -------- -------- -------- -------- Revenues: Coal sales .................................... $141,691 $174,120 $293,843 $347,043 Other revenues ................................ 41,712 8,581 54,212 16,676 -------- -------- -------- -------- Total revenues .............................. 183,403 182,701 348,055 363,719 -------- -------- -------- -------- Costs and expenses: Cost of coal sales ............................ 112,302 151,609 240,533 304,635 Other costs and expenses ...................... 43,711 5,065 54,879 10,437 Selling, general and administrative expenses .. 4,887 4,865 10,159 9,523 -------- -------- -------- -------- Total costs and expenses .................... 160,900 161,539 305,571 324,595 -------- -------- -------- -------- Operating earnings .............................. 22,503 21,162 42,484 39,124 Interest expense, net ........................... 4,526 5,875 8,637 11,652 -------- -------- -------- -------- Earnings before taxes ........................... 17,977 15,287 33,847 27,472 Taxes ........................................... 3,234 2,613 6,090 4,685 -------- -------- -------- -------- Net earnings .................................... $14,743 $12,674 $27,757 $22,787 ======== ======== ======== ======== Earnings per common share ....................... $0.52 $0.45 $0.98 $0.80 ======== ======== ======== ======== Weighted average shares outstanding ............. 28,289 28,360 28,342 28,358 ======== ======== ======== ========
See accompanying notes to consolidated financial statements. 1 3 ZEIGLER COAL HOLDING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except per share amounts)
June 30, December 31, 1997 1996 ----------- ------------ (Unaudited) * ASSETS CURRENT ASSETS: Cash and equivalents ............................................. $ 96,750 $ 108,321 Receivables: Accounts receivable, less allowances of $1,666 and $2,840 ...... 67,162 51,122 Other receivables .............................................. 4,448 3,974 ---------- ---------- Total receivables, net ....................................... 71,610 55,096 Inventories: Coal finished goods ............................................ 16,362 12,525 Coal work in process ........................................... 10,831 8,744 Mine supplies .................................................. 18,906 20,093 ---------- ---------- Total inventories ............................................ 46,099 41,362 Other current assets ............................................. 15,685 13,173 ---------- ---------- Total current assets ......................................... 230,144 217,952 ---------- ---------- PROPERTY, PLANT AND EQUIPMENT: Land and mineral rights .......................................... 626,169 627,369 Prepaid royalties ................................................ 22,154 21,705 Plant and equipment .............................................. 506,231 493,962 ---------- ---------- Total at cost ................................................ 1,154,554 1,143,036 Less - Accumulated depreciation, depletion and amortization ...... (345,515) (324,166) ---------- ---------- Property, plant and equipment, net ........................... 809,039 818,870 ---------- ---------- OTHER ASSETS ....................................................... 12,673 13,803 ---------- ---------- TOTAL ASSETS ....................................................... $1,051,856 $1,050,625 ========== ==========
* Condensed from audited financial statements. See accompanying notes to consolidated financial statements. 2 4 ZEIGLER COAL HOLDING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except per share amounts)
June 30, December 31, 1997 1996 ---------- ------------ (Unaudited) * LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ............................................... $ 49,987 $ 38,895 Dividends payable .............................................. 2,112 2,128 Taxes payable .................................................. 23,572 24,740 Accrued payroll ................................................ 20,906 23,807 Other accrued expenses ......................................... 35,146 43,452 ---------- ---------- Total current liabilities .................................. 131,723 133,022 LONG-TERM DEBT ................................................... 344,142 344,770 ACCRUED POSTRETIREMENT BENEFIT OBLIGATIONS ....................... 248,495 245,385 ACCRUED PNEUMOCONIOSIS BENEFITS .................................. 39,150 46,256 ACCRUED MINE CLOSING COSTS ....................................... 65,829 75,663 DEFERRED TAXES ................................................... 16,799 13,033 OTHER LONG-TERM LIABILITIES ...................................... 55,079 59,890 ---------- ---------- Total liabilities .......................................... 901,217 918,019 ---------- ---------- SHAREHOLDERS' EQUITY: Preferred stock - $0.01 par value per share - authorized shares, 1,000 - issued shares, none ......................... - - Common stock - $0.01 par value - authorized shares, 50,000 - issued shares, 28,410 shares and 28,377 shares ............... 284 284 Capital in excess of par value ................................. 72,673 72,191 Retained earnings .............................................. 83,630 60,131 Treasury stock ................................................. (5,948) - ---------- ---------- Total shareholders' equity ....................................... 150,639 132,606 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ....................... $1,051,856 $1,050,625 ========== ==========
* Condensed from audited financial statements. See accompanying notes to consolidated financial statements. 3 5 ZEIGLER COAL HOLDING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (Amounts in thousands; unaudited)
1997 1996 --------- -------- OPERATING ACTIVITIES: Net earnings ................................................. $ 27,757 $ 22,787 Adjustments for differences between net earnings and cash flows from operating activities: Depreciation, depletion, and amortization ................. 28,764 29,725 Other noncash items ....................................... (20,491) (4,420) Net increase in working capital .......................... (17,954) (15,402) --------- -------- Net cash provided by operating activities ............... 18,076 32,690 --------- -------- INVESTING ACTIVITIES: Additions to property, plant and equipment .................... (20,606) (13,016) Cash paid in connection with sale of Indiana assets ........... (4,000) (7,000) Proceeds from sales of property, plant and equipment .......... 5,327 2,835 --------- -------- Net cash (used in) investing activities .................... (19,279) (17,181) --------- -------- FINANCING ACTIVITIES: Payment of dividends .......................................... (4,258) (2,836) Purchase of treasury stock .................................... (5,998) - Other ......................................................... (112) 58 --------- -------- Net cash (used in) financing activities ..................... (10,368) (2,778) --------- -------- INCREASE (DECREASE) IN CASH AND EQUIVALENTS .................... (11,571) 12,731 Beginning cash and equivalents .................................. 108,321 13,119 --------- -------- ENDING CASH AND EQUIVALENTS ..................................... $ 96,750 $ 25,850 ========= ========
See accompanying notes to consolidated financial statements. 4 6 ZEIGLER COAL HOLDING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands; unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements, in the opinion of management, include all adjustments necessary for a fair presentation of the results for the interim periods presented. These adjustments include normal recurring accruals. The consolidated financial statements are presented in accordance with the requirements of Form 10-Q and, consequently, do not include all the disclosures required by generally accepted accounting principles. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 2. REDUCTIONS OF LIABILITIES The results of operations for the three and six month periods ended June 30, 1997 were significantly impacted by changes in accounting estimates of liabilities. In the quarter ended June 30, 1997, management reduced the recorded liabilities for pneumoconiosis benefits, mine closing costs, post-retirement benefits and other items by $5,725, $4,281, $1,417 and 900, respectively. The downward revisions of pneumoconiosis and post-retirement benefit estimates were based on the results of preliminary 1997 studies by the Company's independent actuaries. The lower estimate of mine closing costs reflects changes in management's plans for the reclamation of properties in Illinois and Kentucky. In the quarter ended March 31, 1997, management reduced the liabilities for mine closing costs, lost coal claims and pneumonconiosis benefits by $4,748, $2,000 and 750, respectively, primarily to account for the effects of settlements negotiated with current and former landowners. 5 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Revenues - Total revenues were $183.4 million for the quarter ended June 30, 1997 compared to $182.7 million for the same period in 1996. Coal sales declined $32.4 million, or 19%, in the second quarter of 1997 due to the 1996 closings of Old Ben Mine #24, Old Ben Mine #26, and Old Ben Mine #20, the 1996 expiration of a coal supply contract with Western Farmers Electric Cooperative, and lower sales to Shell Coal International Limited because of a contract dispute which, subsequent to June 30, 1997, has been settled by an amendment to the contract. Other revenues increased $33.1 million for the quarter ended June 30, 1997, reflecting the first full quarter of power and gas trading revenues at the Company's new energy trading and marketing subsidiary, EnerZ Corporation ("EnerZ"). Total revenues were $348.1 million for the first six months of 1997, down 4% from total revenues of $363.7 million for the first half of 1996. Coal sales decreased $53.2 million, or 15%, versus one year earlier primarily due to the mine closings, contract expiration and contract dispute described above. Other revenues were up $37.5 million during the period, primarily reflecting the January 1997 commencement of EnerZ's power and gas trading activities. Operating earnings - Operating earnings increased $1.3 million, or 6%, during the quarter ended June 30, 1997, and $3.4 million, or 9%, during the six months then ended, versus the same periods a year ago. Operating earnings for the coal segment were up $6.9 million, or 31%, in the second quarter and $10.9 million, or 26%, for the first half of the year. The $6.9 million and $10.9 million improvements reflect the impact of productivity enhancement programs, changes in estimates for mine closing, employee benefit obligations and lost coal claims, and the effects in 1996 of shipping disruptions on the Company's Carolina Power & Light Company and Georgia Power Company coal supply contracts, which more than offset the effect on operating earnings of the decline in coal revenues described above. Operating earnings for Zeigler's other segments were down a combined $5.5 million for the quarter and $6.9 million for the first half of 1997, resulting in operating losses of $2.0 million and $.8 million, respectively. The technology segment was impacted by the December 1996 expiration of Department of Energy co-funding of the clean coal demonstration plant in Wyoming. In the power segment, EnerZ had net trading losses in both periods. Operating earnings for the asset management segment were down for the quarter and year to date due to reduced sales of surplus assets, and lower throughput and higher costs at the terminals compared to 1996. A significant portion of the Company's operating income in 1997 is attributable to the reduction in certain liability reserves resulting from the reassessment of those reserves. (See "Reduction of Liabilities" above). The Company's coal mining business, without the impact of such liability reserve reductions, had operating income of approximately $33.5 million during the first six months of 1997 and $42.4 million during the first six months of 1996. It is uncertain that similar savings will continue to result after 1997 from reductions in liability reserves. The Company's ability to sustain and increase the income levels reported for the first six months of 1997 in future periods after 1997 is therefore dependent in large part on the Company's success in effecting acquisitions and investments that will enhance earnings and on the Company's coal and non-coal business segments achieving significant improvement in profit levels. FINANCIAL CONDITION A comparison of key elements of the Company's financial condition at the end of the second quarter, as compared to the end of the prior year, follows: June 30, December 31, 1997 1996 ------- ------------ Working capital (in thousands) $98,421 $84,930 Current ratio 1.75 1.64 Total debt to total capital 69.6% 72.2% Net debt to net capital 62.2% 64.1% The Company's interest coverage ratio (operating earnings, divided by interest expense) was 3.8 times for the six months ended June 30, 1997 compared to 3.4 times for the same period one year earlier. The increase in the interest coverage ratio reflects earnings growth and a reduction in interest rates. 6 8 Cash and equivalents decreased $11.6 million during the six months ended June 30, 1997. Cash flow provided by operating activities of $18.1 million and existing cash reserves were used to fund $20.6 million of capital expenditures and $6.0 million of treasury stock purchases. The Company has the financial capacity available for reinvestment in existing businesses and strategic acquisitions. In the second quarter, the Company made progress in completing a new credit facility which, when it becomes effective, will replace the Company's existing $200.0 million revolving credit facility. FORWARD LOOKING STATEMENTS Statements in this Report that are not strictly historical may be "forward-looking" statements that are subject to risks and uncertainties inherent in the Company's business. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of risks and uncertainties, including those set forth herein and in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. The Company's operations are subject to factors that can negatively or positively affect the Company's results including, without limitation, the following: weather; unexpected maintenance problems; variations in coal seam thickness, amount of overburden, rock and other natural materials; disruption of transportation services; labor problems; disputes and/or interruption of deliveries under coal contracts due to circumstances affecting the customer; permitting and other regulatory uncertainties; financing risks; legal proceedings; engineering and construction risks; regulatory changes that limit or slow the advance of deregulation in the utility marketplace; competition in the wholesale power market; interruptions and uncertainties relating to fuel supply and transportation; and other conditions. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company incorporates herein by reference the "Legal Proceedings" section beginning on page 9 of its Form 10-Q for the quarter ended March 31, 1997. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS a) The Annual Meeting of Shareholders of the Company was held on May 6, 1997. b) At the Annual Meeting of Shareholders, the following matters were submitted to a vote of the Shareholders of the Company: 1. The election of five directors to the Board of Directors to serve until the next annual meeting of shareholders or until their successors are elected and qualified: Director Votes For Votes Withheld -------- --------- -------------- Roland E. Casati 26,951,146 58,571 Robert W. Ericson 26,951,132 58,581 John F. Manley 26,951,146 58,571 Michael K. Reilly 26,951,146 58,571 Chand B. Vyas 26,951,146 58,571 7 9 2. The ratification of the appointment of Deloitte & Touche LLP as the Company's independent public auditors for the 1997 fiscal year: Votes For Votes Against Votes Withheld --------- ------------- -------------- 26,980,117 8,920 20,680 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K b) Reports on Form 8-K The Company filed no Reports on Form 8-K during the quarter ended June 30, 1997. 8 10 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 hereunto duly authorized. ZEIGLER COAL HOLDING COMPANY ---------------------------- (Registrant) August 14, 1997 /s/ Paul D. Femmer ---------------------------- Paul D. Femmer Controller (Principal Accounting Officer and duly authorized officer) 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1997 JUN-30-1997 96,750 0 71,610 1,666 46,099 230,144 1,154,554 345,515 1,051,856 131,723 344,142 0 0 284 150,355 1,051,856 293,843 348,055 240,533 250,692 54,879 0 8,637 33,847 6,090 27,757 0 0 0 27,757 .98 .98
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