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ASHLAND COAL REPORTS EARNINGS FOR FOURTH QUARTER OF 1992 AND YEAR

 HUNTINGTON, W.Va., Jan. 25 /PRNewswire/ -- Ashland Coal, Inc. (NYSE: ACI) reported today that it earned $12.4 million, or $.64 a share on a fully diluted basis, for the fourth quarter ended Dec. 31, 1992.
 This compares to net income of $11.5 million, or $.67 a share, for the same quarter last year. Revenues for the fourth quarter were $163.6 million, as compared to $111.7 million in the fourth quarter of 1991.
 For the year ended Dec. 31, 1992, Ashland Coal had net income of $35.7 million or $1.88 a share, compared to net income of $38.6 million or $2.22 a share in 1991. Revenues were $579.7 million in 1992, compared to $444.0 million in 1991.
 "Fourth quarter revenues and operating income were up due to the addition of Dal-Tex Coal Corporation, which we acquired in April of 1992, and higher production at Mingo Logan Coal Company's Mountaineer Mine," explained William C. Payne, chairman, president and chief executive officer. "Higher volumes from these operations offset lower margins in the quarter."
 Average selling price per ton was lower primarily due to lower-priced Dal-Tex contract and export shipments. Average cost per ton was down slightly as lower Dal-Tex costs more than offset increases at some of Ashland Coal's other subsidiaries.
 Interest expense increased $4.1 million over last year's fourth quarter, reflecting the higher level of debt resulting from the Dal-Tex acquisition and the development expenditures at Mingo Logan. In addition, during the fourth quarter of 1992 construction was completed and capitalization of interest ceased at Mingo Logan. The effective income tax rate for 1992 continued to drop in the fourth quarter, necessitating a year-end adjustment which resulted in a tax benefit for the quarter. As noted in the past, Ashland Coal's effective tax rate has dropped as depletion for tax purposes has grown at a faster pace than profitability.
 With respect to operations at Mingo Logan, Payne noted, "Mingo Logan's longwall equipment has completed its first quarter of operation. Early equipment problems have been substantially resolved. At the current time, however, the longwall is operating in the area of the mine having the least favorable geologic conditions and production reflects this fact. We expect that by early February the longwall face will have advanced into an area having more favorable mining conditions. Our high expectations for the Mountaineer Mine are unchanged."
 As previously reported, a raw coal silo at Mingo Logan's Black Bear Preparation Plant collapsed on Nov. 16, 1992, interrupting operations at the Mountaineer Mine and the flow of coal to the preparation plant. A temporary conveyer system was installed and operations resumed a week later. Construction of a replacement silo and associated conveyors is in process and normal operation of the raw coal silo system is expected by the end of March. It is expected that insurance will respond to the collapse and reconstruction of the silo system. The silo failure is not material to Ashland Coal's earnings.
 "Full-year results for 1992 were affected by our acquisition of Dal-Tex in April," explained Payne. "The addition of Dal-Tex's 4.2 million tons of production coupled with the more than one million ton increase in production from the Mountaineer Mine overcame lower margins."
 Lower margins resulted from selling prices under the Dal-Tex sales agreements that were lower than pre-Dal-Tex average selling prices and from higher costs at other subsidiaries, which costs were substantially offset by Dal-Tex's lower cost structure. The other major factor influencing operating income was amortization of the value attributed to one of Dal-Tex's sales contracts. The resultant operating income of $58.0 million compares to $56.4 million for 1991.
 As the result of higher interest expense related to the acquisition of Dal-Tex and completion of development at Mingo Logan, income before income taxes of $37.4 million was $9.9 million less than 1991's $47.3 million. Net income of $35.7 million as compared to 1991's $38.6 million reflects a decrease in Ashland Coal's effective tax rate from 18.4 percent to 4.5 percent. Earnings per share reflect the issuance of an additional 1,950,000 shares of common stock in connection with the acquisition of Dal-Tex.
 As of Dec. 31, approximately $64 million of equipment reflected on Ashland Coal's balance sheet was the subject of negotiation for a sale-leaseback. The proceeds from this sale-leaseback transaction will be used to reduce Ashland Coal's debt. This lease will be accounted for as an operating lease, and in anticipation of this transaction, such equipment and debt are classified as current in the Dec. 31 balance sheet. This transaction is expected to close within the next week. The transaction will give Ashland Coal needed liquidity under its revolving credit agreement with little impact on its financial results.
 "As we look ahead," Payne continued, "the U.M.W.A. national wage contract expires on Feb. 1, 1993. Hobet Mining, Inc. and two Dal-Tex subsidiaries are parties to this contract. Negotiations for a new contract between the U.M.W.A. and the Bituminous Coal Operators Association are taking place, but at this date the parties have not agreed upon a new contract. If there is no agreement by Feb. 1, there may be a strike against some or all of the U.M.W.A. mines. Despite the imminence of the U.M.W.A. contract expiration, there has been little pre-strike buying and coal market prices remain weak. At the same time, demand for U.S. exports of steam coal is expected to be off substantially in 1993. This may result in increased coal supply entering the domestic market. On a positive note, we are encouraged by the reports of increased economic activity in the U.S."
 Ashland Coal, Inc. is engaged in the mining, processing and sale of low-sulfur coal, and markets its coal principally to electric utilities in the eastern United States and into the export markets.
 Dal-Tex Coal Corporation, Mingo Logan Coal Company, Coal-Mac, Inc. and Hobet Mining, Inc. are independent operating subsidiaries of Ashland Coal, Inc.
 ASHLAND COAL, INC. AND SUBSIDIARIES
 Condensed Consolidated Balance Sheets
 (In thousands)
 Dec. 31, 1992 Dec. 31, 1991
 Assets (Unaudited)
 Current Assets
 Cash and cash equivalents $37,609 $8,214
 Accounts and notes receivable 75,249 48,493
 Inventories 24,458 20,394
 Prepaid royalties 8,947 3,284
 Assets subject to sale and leaseback
 agreement 64,182 --
 Other current assets 1,001 842
 211,446 81,227
 Other Assets
 Prepaid royalties 60,372 60,240
 Coal supply agreements 59,889 43,259
 Notes receivable and other assets 25,108 5,090
 145,369 108,589
 Property, Plant and Equipment
 Cost 806,596 494,281
 Less accumulated depreciation, depletion
 and amortization 170,079 137,262
 636,517 357,019
 993,332 546,835
 Liabilities and Stockholders' Equity
 Current Liabilities
 Accounts payable 34,618 31,490
 Accrued expenses 28,408 21,269
 Income taxes payable 395 4,594
 Deferred income taxes 5,434 952
 Current portion of long-term debt 105,025 24
 173,880 58,329
 Long-term debt 317,958 181,066
 Accrued postretirement benefits 20,243 --
 Accrued black lung benefits 14,014 8,863
 Other long-term liabilities 19,782 15,492
 Deferred income taxes 121,677 45,942
 Deferred gain on sale and leaseback
 of asset 3,482 3,822
 Convertible Class C preferred stock
 (subject to redemption) 34,021 32,741
 Stockholders' Equity
 Convertible Class B preferred stock 33,050 33,050
 Common stock 136 116
 Paid-in capital 104,398 43,523
 Retained earnings 150,691 123,891
 288,275 200,580
 993,332 546,835
 ASHLAND COAL, INC. AND SUBSIDIARIES
 Condensed Consolidated Statements of Income
 (In thousands, except per share data)
 Periods Ended Three Months Year
 Dec. 31 1992 1991 1992 1991
 (unaudited)(unaudited)(unaudited)
 Revenues
 Coal sales $159,455 $107,427 $563,932 $430,301
 Operating revenues 4,130 4,315 15,792 13,688
 163,585 111,742 579,724 443,989
 Costs and Expenses
 Cost of coal sold 133,630 86,674 478,286 353,990
 Operating expenses 3,746 2,637 11,502 10,247
 Selling, general and
 administrative expenses 9,042 6,584 31,959 23,374
 146,418 95,895 521,747 387,611
 Operating income 17,167 15,847 57,977 56,378
 Other Income (Expense)
 Interest income 521 305 1,240 804
 Interest expense (6,703) (2,575) (21,781) (9,862)
 Income bef. income taxes 10,985 13,577 37,436 47,320
 Income tax exp. (benefit) (1,424) 2,052 1,697 8,700
 Net income 12,409 11,525 35,739 38,620
 Earnings per common share
 Primary $.69 $.72 $2.01 $2.40
 Fully diluted $.64 $.67 $1.88 $2.22
 Weighted average shares outstanding
 Primary 17,137 15,214 16,668 15,155
 Fully diluted 18,575 16,671 18,115 16,655
 Interest capitalized $520 $2,239 $4,911 $6,497
 Operating Information
 (In thousands of tons)
 Periods Ended Three Months Year
 Dec. 31 1992 1991 1992 1991
 Coal Sales
 Domestic contract 2,934 1,884 10,237 7,102
 Domestic spot 1,674 936 4,903 3,452
 Export 748 643 3,931 3,751
 5,356 3,463 19,071 14,305
 Coal Sources
 Hobet Mining, Inc.(A) 1,282 1,349 5,121 5,308
 Coal-Mac, Inc.(A) 488 590 2,194 2,922
 Dal-Tex Coal Corp.(A) 1,379 -- 4,157 --
 Mingo Logan Coal
 Company(A) 1,536 1,121 5,247 3,935
 Purchases 681 514 2,031 2,006
 Other, including inventory
 change (10) (111) 321 134
 5,356 3,463 19,071 14,305
 (A) Independent operating subsidiary of Ashland Coal, Inc.
 -0- 1/25/93
 /CONTACT: David Todd of Ashland Coal, 304-526-3755/
 (ACI)


CO: Ashland Coal, Inc. ST: West Virginia IN: MNG SU: ERN

DM-DT -- PG003 -- 8245 01/25/93 08:05 EST
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