CENTRAL COAL & COKE CORP - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 1998

Commission File No. 0-1392

CENTRAL COAL & COKE CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 44-0196290
__________________ __________________
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

127 West 10th Street, Suite 666, Kansas City, Missouri 64105
______________________________________________________ _____
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: 816/842-2430
____________

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
___________________ ________________________

None None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

Common stock ($1 par value)
___________________________
(Title of Class)

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

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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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]

The aggregate market value of the voting stock held by nonaffiliates
of the registrant (155,983 shares), as of February 12, 1999 was $4,835,473.

The number of shares outstanding of the issuer's only class of common stock
as of December 31, 1998, is as follows:

Common Stock ($1.00 Par Value) . . . . . . 355,995
(This figure does not include 20,693 shares of treasury stock)

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to security holders for fiscal year
ended December 31, 1998, captioned "Selected Consolidated Financial Data,"
"Management's Discussion & Analysis of Financial Condition & Results of
Operations" and "Market for Registrant's Common Equity and Related
Stockholder Matters." (Part II)

Definitive Proxy Statement furnished to security holders and the
Securities and Exchange Commission on March 24, 1999, relative to the
Annual Meeting of Stockholders to be held on April 21, 1999. (Part III)

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PART I

ITEM 1. BUSINESS

(a) GENERAL DEVELOPMENT OF BUSINESS. During the year 1993, the
registrant formed a new wholly-owned subsidiary corporation which was
authorized to become involved in a newly created fast food bagel and
delicatessen business located in Athens, Ohio, which commenced operation
during the fourth quarter of 1993; a second facility located in Columbus,
Ohio, opened during the third quarter of 1994; a third facility was opened in
State College, Pennsylvania in the third quarter of 1995, and a fourth
facility located in an area of San Diego, California known as Pacific Beach
was opened early in 1996. As described more fully in Management's Discussion
& Analysis of Financial Condition & Results of Operations set forth in Item 7
of this report sales and profitability were disappointing and by September 1,
1998, all remaining active operations were disposed of. As of December 31,
1998, the approximate net investment in this venture was $745,214. For more
detail on the results of this discontinued operation see the accompanying
financial statements and Note 9 thereto.

In addition, management continues to investigate other activities
involving deployment of registrant's assets in an effort to increase
earnings. Since the beginning of the fiscal year, there have been no
bankruptcy, receivership or similar proceedings with respect to the
registrant; there has been no material reclassification, merger or
consolidation of the registrant; there has been no acquisition or disposition
of any material amount of assets otherwise than in the ordinary course of

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business; and there has been no material change in the mode of conducting the
business of the registrant.

(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. During the year
1998, the registrant had two reportable segments which are identified as the
Energy Business Segment and the Retail Food Business Segment, but due to the
discontinuance of the Retail Food Business Segment during 1998 as described
above, there is now only one reportable segment--the Energy Business Segment.
See Note 9 to the accompanying financial statements for more detail as to the
discontinuance of the Retail Food Business Segments and financial information
with respect thereto. There were no separate segments of the registrant
prior to 1993.

(c) NARRATIVE DESCRIPTION OF BUSINESS. One business activity of the
registrant consists of the management of its interests in real properties and
as discussed above is now identified as the Energy Business Segment. Such
real property interests have been held and managed by registrant for lease to
others for exploration and the extraction of coal and oil and gas and for
surface use. From time to time sales of portions of such properties have
been made. During 1994 the registrant sold 40 acres of surface land located
in Macon County, Missouri and the timber rights on some adjoining property
which generated a gain of approximately $33,000, and in 1995 sold
approximately 4.41 additional acres of surface land in that county generating
a gain of $2,141.58 and 40 additional acres of timber rights were sold for
$8,900, and in 1997 sold approximately 88.17 acres in that county for a gain
of $37,309.50, and in 1998 sold approximately 196 acres of surface land in
that county for a gain of $85,421.31.

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In 1998 the registrant sold approximately 41 acres of surface land in
Sebastian County, Arkansas, for a gain of $19,923, in 1997 had sold 1.75
acres of surface land in that county for a gain of $800, in 1996 had sold
7.25 acres of surface land in that county for a gain of $6,050, and in 1995
had sold 103 acres of surface land in that county for a gain of $56,768.
Also sold in 1996 was 45 acres of real property in Pittsburg County, Oklahoma
for $31,500. In addition, in 1997 the registrant sold a waiver of surface
rights on 7.21 acres of its Walker County, Texas property for $2,500. The
properties owned at the end of the fiscal year are described in Item 2.
Additionally, the registrant continues to examine and evaluate the deployment
of its assets and owned and operated enterprises as described above. During
the last five years, the registrant reviewed at least six possible new
business opportunities in addition to the fast food bagel and delicatessen
business described above, resulting in a formal bid for one company which was
not accepted, rejected two other opportunities as not suitable, and another
such opportunity reviewed was taken off the market. Also, during 1993 the
registrant commenced a voluntary program of reforestation on reclaimed open
pit coal mining property located in Arkansas and Oklahoma. The program was
not federally or state mandated, but was undertaken to enhance the value of
its real property and in furtherance of its concept of social responsibility.
Some additional reforestation on its properties in Arkansas took place in
1997 on which the registrant spent approximately $1,100 during that year.
There was no additional reforestation expense in 1998. The financial impact
upon the registrant, both in terms of short-term expenditures and future
income should not be material.

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Another business activity of registrant consists of the ownership and
management of its investment portfolio of marketable securities and United
States government and agency obligations.

Other than as described above, the registrant produces no products nor
renders any services; however, oil, gas, and coal are extracted by lessees
from properties owned by the registrant as more fully explained in Item 2.

Other than the fast food bagel and delicatessen business described
above, there have been no new products nor industry segments requiring the
investment of a material amount of assets of the registrant, and there have
been no public announcements nor has information otherwise become public
involving any such new products or industry segments.

Raw materials are not essential to registrant's businesses.

There are no patents, trademarks, licenses, franchises and concessions
held by registrant.

No business of any industry activity of the registrant is or may be
seasonal.

The registrant has no significant practices relating to working capital
since it carries no significant amount of inventory and does not provide
extended payment terms to customers.

Bethlehem Steel Corporation was the lessee under a coal lease from
registrant for a term of 40 years commencing in June, 1969, providing for
minimum royalties of $50,000 annually for each of the first three years and
$90,000 annually for the next 36 years, together with provisions for
royalties of 22-1/2 cents per ton of coal mined and shipped against which the
minimum royalties are to be applied. On October 1, 1984, this lease was

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amended to increase the royalty to the greater of $1.00 per ton or 3% of the
F.O.B. mine selling price for all coal paid for by actual royalty or minimum
royalty after that date, and Bethlehem assigned the lease to another. A
portion of the leased property was subsequently subleased to another party,
but Bethlehem continues to guarantee the total royalty payment. A small
amount of mining has been done on the lease. The loss of the revenues from
this lease would result in a material diminution in the income of registrant,
but the registrant has no reason to believe that the lessee has either the
legal right or intention to cease making the required payments thereunder.

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Except as discussed above, there are no customers to which sales are
made in an amount which equals ten percent or more of the registrant's
consolidated revenue.

Registrant's businesses do not have any backlog of unfilled orders.

No material portions of the businesses of registrant may be subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.

There are no competitive conditions in the businesses in the
registrant's Energy Business Segment which have a material impact on its
operations.

Registrant spent no money during any of the last three fiscal years on
material company-sponsored research and development activities as determined
in accordance with generally accepted accounting principles. In addition,
registrant spent no money during such years on material customer-sponsored
research activities relating to the development of new products, services or
techniques or the improvement of existing products, services or techniques.

Compliance with Federal, State and local provisions regulating the
discharge of materials into the environment, or otherwise relating to the
protection of the environment will have no material effect upon the capital
expenditures, earnings and competitive position of the registrant. There are
no material estimated capital expenditures for environmental control
facilities for the remainder of the current fiscal year and the succeeding
fiscal year or for any further periods which the registrant deems material.

The total number of persons employed by the registrant itself, as of the
end of the fiscal year, was 3.

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(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
EXPORT SALES. The registrant does not engage in operations in foreign
countries, nor are portions of sales or revenues derived from customers in
foreign countries.

ITEM 2. PROPERTIES

(a) The principal physical properties of the registrant are whole or
partial interests in approximately 64,000 acres of real property located in
Arkansas, Louisiana, Texas, Kansas, Oklahoma and Missouri. Its mineral
reservation under the Sam Houston National Forest in Texas on an additional
76,000 acres expired on January 1, 1985, but was extended for a five-year
period on about 6,280 acres with producing wells, which period expired
January 1, 1990. Another 640 of these acres were lost on January 1, 1990,
and an additional 1,623 of these acres were lost on January 1, 1995, leaving
the registrant's rights in 4,017 remaining acres, now to expire January 1,
2000, unless extended. In later parts of this Item 2 references are made to
the ownership of "minerals." The registrant is the owner of all or part of
the subsurface minerals on large portions of the properties involved, but the
only minerals of primary interest to the registrant are coal, oil and gas.

(1) REAL PROPERTY INTERESTS IN THE STATE OF ARKANSAS.

The registrant is the owner of approximately 1,658 acres in fee
simple, of minerals underlying approximately 16,447 additional acres, and of
a number of town lots in three small towns, all in Sebastian County,
Arkansas, having sold approximately 103 acres of surface in 1995, 7.25 acres
in 1996, 1.75 acres in 1997, and 41 acres in 1998.

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Mineral interests underlying approximately 13,600 acres are under a
coal lease to the assignee of Bethlehem Steel Corporation under the coal
lease described in Item l(c). An additional 48 acres of the registrant's
Arkansas properties are currently being leased under a coal lease. Another
586 acres were leased in 1993 under two separate oil and gas leases (both to
the same lessee) for 5-year terms, one of which expired in 1998 without any
production, but the other of which commenced production during that year. In
1997 another 120 acres were leased for a 3-year term. As yet there is no
production under this lease. In 1998 another 250 acres were leased under
three separate oil and gas leases, each for a 3 year term. As yet there is
no production under any of these new leases.

Of the 13,600 acres currently under a coal lease to the assignee of
Bethlehem Steel Corporation as described in the preceding paragraph,
10,537.23 acres were leased to C.D. Exploration, Inc. in 1995 under an Oil &
Gas Lease for a term of five years, for which the lessee paid a bonus of
approximately $105,000. An additional 414 acres were leased in 1994 under
three separate oil and gas leases (two to the same lessee), one for a three
year term and the other two for five year terms. An additional 1,483.31
acres were leased in 1996 in one oil and gas lease for a term of five years.
As yet there is no production under any of these leases. In addition,
registrant has fractional royalty interests in 8 small producing gas wells
which are located on a 5,354 acre tract of which registrant owns 1,044 acres.

(2) REAL PROPERTY INTERESTS IN THE STATE OF TEXAS.

The registrant was the owner of practically all of the mineral

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interests in approximately 90,551 acres located in the Texas counties of San
Jacinto, Walker and Montgomery, of which approximately 82,674 acres were
under a reservation (in a deed of December, 1935) which covered all oil, gas,
sulphur and other minerals on, in, under or that may be produced from the
lands for a period commencing with the date of the deed and ending on January
1, 1985, and provided further that if on said latter date minerals were being
produced in paying quantities then the reservation would be extended for a
five-year period as to an area of one square mile of which the well is the
center and for subsequent extensions for additional five-year periods so long
as paying operations are being conducted on the premises. The right to
prospect for and mine and remove minerals was further limited by various
requirements of the United States. As described in Item 2(a) above, this
reservation expired on January 1, 1985, and the wells then producing on such
properties permitted the registrant to retain until January 1, 1990, about
6,280 acres in the Mercy Field, West Mercy Field and Moroil Field and as of
January 1, 1995, the registrant continued to retain 4,017 of such acres,
while production continues. The reservation is extended for an additional
five-year term ending January 1, 2000, at the end of which this acreage will
be lost if there is no production then continuing.

The registrant's mineral interests in its remaining acreages in
Texas are reservations of perpetual mineral rights. In the case of
approximately 7,600 acres, one-thirty-second of the minerals are vested in
the owner of the surface of said properties but with the right in the
registrant to make all leases on the acreage and to keep all bonuses and
rentals received under such leases. In January, 1995, 7,788.55 acres of
these mineral interests were leased

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under one oil and gas lease for a term of three years with one option to
renew for an additional two years, which the lessee has exercised in January
1998, upon payment of approximately $194,000 to the registrant. The lessee
originally paid a bonus of approximately $311,000 in connection with the
initial term of this lease. As yet there is no production under this lease.
In 1997 one additional lease was made on 241.73 acres of registrant's Walker,
Texas property, and as yet there is no production on this lease.

(3) REAL PROPERTY INTERESTS IN THE STATE OF LOUISIANA.

In January, 1967, the registrant sold approximately 35,000 acres of
Louisiana real property reserving mineral servitudes thereon. Under
Louisiana law the ownership of mineral servitudes not exercised through
production or drilling to a depth at which production reasonably can be
expected to be found expires by liberative prescription after a period of
such nonuser of ten years. No production or drilling occurred on
approximately 14,000 of the acres sold in 1967 within the ten-year period
and, hence, the registrant's ownership of the mineral servitudes under such
approximately 14,000 acres was extinguished as of January 26, 1977. During
1978, the registrant's ownership of the mineral servitudes under 1,243
additional acres was extinguished because production had been exhausted for
ten years. Mineral servitudes under the remaining acres sold in 1967 have
been extended by drilling or production for various periods expiring after
January 26, 1977. The registrant's rights to approximately 8,530 additional
acres of these servitudes expired during 1994.

In the Hurricane Creek Field, Beauregard Parish, Louisiana, 880

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acres are held by production which commenced in 1947. The leases of the
registrant in the Hurricane Creek Field provide for one-eighth gross
royalties except as to 160 acres for which the gross royalty is one-fourth.
In 1964, a Unitization Agreement covering one producing sand was executed by
various interested parties in the Hurricane Creek Field so as to permit a
secondary recovery program, and a second Unitization Agreement was executed
in March, 1994.

In the Clear Creek Field, Beauregard Parish, Louisiana,
approximately 600 acres were held under oil and gas leases by production
which commenced in 1955 and were terminated during 1991. The registrant's
interest in this 600 acres will continue for 10 years from this date pursuant
to the Louisiana law concerning mineral servitudes as described above. In
addition, approximately 400 additional acres in Beauregard Parish, Louisiana,
are held under production pursuant to a lease, the original term of which
expired many years ago but which continues by production.

The registrant leased approximately 9339 acres of its real property
in Vernon Parish, Louisiana, for a term of four years, pursuant to the
exercise of a geo-option made in early 1991. This lease was extended for an
additional year in 1995, and one well was drilled but it turned out to be a
"dry hole," and there was no production. This property is currently
available for lease and if there is no further attempted production by
December, 2006, the registrant's rights in this property will expire.

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(4) REAL PROPERTY INTERESTS IN OKLAHOMA AND KANSAS.

The registrant is the owner of interests in real property in three
counties in eastern Oklahoma and three counties in southeast Kansas, which
ownership consists of approximately 1,385 acres in fee simple, and
approximately 13,511 additional acres of underlying minerals. A substantial
part of such 13,511 acres of mineral ownership is described in the
conveyances or reservations giving rise to such ownership as "coal" or "coal
and asphaltic minerals."

The registrant in the past has also rented the surface of portions
of its lands in Kansas and Oklahoma, largely for agricultural purposes, under
leases of not to exceed one year

(5) REAL PROPERTY INTERESTS IN THE STATE OF MISSOURI.

In Randolph and Macon Counties, Missouri, the registrant is the
owner of approximately 73 acres in fee simple, (having sold 4 acres of
surface land in 1995, approximately 88 acres of surface land in 1997, and
approximately 196 acres of surface land in 1998) and of the minerals
underlying 6,121 acres. Substantially all of the mineral ownership is
described in the conveyances from which it arose as "coal" or "coal and other
minerals." The properties involved were acquired by predecessor companies
for the principal purpose of mining coal therefrom, and extensive mining was
conducted thereon by the predecessors.

The registrant has previously rented the surface of portions of its
lands in Missouri, largely for agricultural purposes, under leases of not to
exceed one year, but no such leases are in effect at this time.

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(6) RETAIL FOOD BUSINESS SEGMENT LEASES.

The operations of the fast food bagel and delicatessen facilities
constituting the Retail Food Business Segment had previously been carried out
from premises leased at the locations specified in Item 1(a) above. This
business segment was discontinued in 1998 as described above and all leases
were either assigned to other unrelated parties or terminated.

(b) The registrant does not participate in any oil and gas operations.
However, the registrant is the owner of certain properties (fully described
above in this Item), part of which are leased to outside interests for the
production of oil and gas. The registrant receives bonuses, rentals and
royalties for the use of the land and mineral interests leased by it.

ITEM 3. LEGAL PROCEEDINGS

(a) There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business, to which the
registrant is a party or of which any of its property is the subject. There
are no material proceedings to which any director, officer of affiliate of
the registrant, any owner of record or beneficially of more than five percent
of any class of voting securities of the registrant, or any associate of any
such director, officer or security holder is a party adverse to the
registrant or has a material interest adverse to the registrant. Further,
there are no administrative or judicial proceedings involving the registrant
arising under any federal, state or local provisions which have been enacted
or adopted regulating the discharge of materials into the environment or
primarily for the purpose of protecting the environment.

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(b) There were no such material legal proceedings which were terminated
during the fourth quarter of the fiscal year covered by this report.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders through the solicitation
of proxies or otherwise.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

(a) The information required in subsection (a) of this item pursuant to
Item 201 of Regulation S-K is set forth on the back cover of the Annual
Report as of December 31, 1998, furnished to the stockholders of the
registrant, and attached as an exhibit hereto, which portion of the Annual
Report is incorporated herein by this reference. There have been no sales of
either registered or unregistered securities by the registrant during the
past three years.

(b) There have been no sales of either registered or unregistered
securities by the registrant during the past three years.

ITEM 6. SELECTED FINANCIAL DATA

The information required by this item is set forth under the caption

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"SELECTED CONSOLIDATED FINANCIAL DATA" in the Annual Report as of December
31, 1998, furnished to the stockholders of the registrant, and attached as an
exhibit hereto, which portion of the Annual Report is incorporated herein by
this reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The information required by this item is set forth under the caption
"MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
OPERATIONS" in the Annual Report as of December 31, 1998, furnished to the
stockholders of the registrant, and attached as an exhibit hereto, which
portion of the Annual Report is incorporated herein by this reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary market risk exposures of the registrant relate to changes in
interest rates, changes in equity security prices and changes in certain
commodity prices.

The registrant's exposure to market risk for changes in interest rates
relates solely to its fixed-income investment portfolio which consists of
U.S. government agency securities. All such securities are held-to-maturity
and have original maturities of less than one year. The registrant does not
use derivative financial instruments to hedge interest rates on its fixed-
income investment securities.

The registrant's exposure to market risk for changes in equity security
prices relates solely to its marketable equity investment portfolio which

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consists of common stocks of domestic publicly-held enterprises. The
registrant periodically enters into equity option contracts on a limited
basis relating to marketable equity securities held in its investment
portfolio. At December 31, 1998, the registrant held one option contract
with a short-position relating to a marketable equity security held by it.
The fair value of that option contract at December 31, 1998 was approximately
$3,500.

The registrant's exposure to market risk for changes in commodity prices
relates to changes in the prices of coal, oil and natural gas and the effect
thereof on its royalties and rentals relating to its coal deposits and
mineral rights as is discussed in more detail in Management's Discussion &
Analysis of Financial Condition & Results of Operations set forth in Item 7
of this report. The registrant does not use derivative commodity instruments
to hedge its commodity price risk exposures.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements required by this item are as
follows:

Consolidated Balance Sheets as of December 31, 1998 and 1997;

Consolidated Statements of Earnings - Years ended December 31, 1998,
1997 and 1996;

Consolidated Statements of Stockholders' Equity - Years ended December
31, 1998, 1997 and 1996.

Consolidated Statements of Cash Flows - Years ended December 31, 1998,
1997 and 1996;

Notes to Consolidated Financial Statements

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These financial statements are filed as a part of this report, beginning on
page 26 hereof, and are incorporated herein by this reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

(a) The only independent accountant who was engaged during the
registrant's two most recent fiscal years or any subsequent interim period as
the principal accountant to audit the registrant's financial statements has
not resigned (nor indicated it has declined to stand for re-election after
the completion of the current audit) nor was dismissed.

(b) No new independent accountant has been engaged as the principal
accountant to audit the registrant's financial statements during the
registrant's two most recent fiscal years or any subsequent interim period.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item is set forth on pages 2, 3 and 4
of registrant's definitive proxy statement filed with the Securities and
Exchange Commission pursuant to Schedule 14A promulgated under the Securities
Exchange Act of 1934, under the caption "ELECTION OF DIRECTORS", which
portion of said definitive proxy statement is incorporated herein by this
reference.

In response to Item 405 of Securities and Exchange Commission regulation
S-K, and as is disclosed in registrant's definitive proxy statement filed
with the Securities and Exchange Commission pursuant to Schedule 14A
promulgated under the Securities Exchange Act of 1934, under the caption
"ELECTION OF DIRECTORS," which portion of said definitive proxy statement is
incorporated herein by this reference, Mr. Gary J. Pennington filed his Form
3 approximately 10 days late after being appointed a Director to fill the
vacancy created by the death of Mr. S. M. Riddle. The registrant, at the
time of filing of this FORM 10-K, has reviewed the information necessary to
ascertain, and has determined that, other than as to Mr. Pennington's late
filing described above, Item 405 disclosure is not expected to be contained
in this Part III of FORM 10-K or incorporated by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is set forth on pages 2, 3 and 4
of registrant's definitive proxy statement filed with the Securities and
Exchange

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Commission pursuant to Schedule 14A promulgated under the Securities Exchange
Act of 1934, under the caption "ELECTION OF DIRECTORS", which portion of said
definitive proxy statement is incorporated herein by this reference.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is set forth on pages 1, 2 and 3
of registrant's definitive proxy statement filed with the Securities and
Exchange Commission pursuant to Schedule 14A promulgated under the Securities
Exchange Act of 1934, under the captions "VOTING SECURITIES OUTSTANDING AND
VOTING RIGHTS" and "ELECTION OF DIRECTORS", which portions of said definitive
proxy statement are incorporated herein by this reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is set forth on pages 2, 3 and 4
of registrant's definitive proxy statement filed with the Securities and
Exchange Commission pursuant to Schedule 14A promulgated under the Securities
Exchange Act of 1934, under the caption "ELECTION OF DIRECTORS," which
portion of said definitive proxy statement is incorporated herein by this
reference.

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PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as a part of this Report:

1. Independent Auditors' Report

2. Consolidated Financial Statements:

Consolidated Balance Sheets as of December 31, 1998 and 1997

Consolidated Statements of Earnings - Years ended December 31,
1998, 1997 and 1996

Consolidated Statements of Stockholders' Equity - Years ended
December 31, 1998, 1997 and 1996

Consolidated Statements of Comprehensive Income - Years ended
December 31, 1998, 1997 and 1996

Consolidated Statements of Cash Flows - Years ended December
31, 1998, 1997 and 1996

Notes to Consolidated Financial Statements

3. Consolidated Financial Statement Schedules:

All schedules are omitted as none are currently required.

4. Exhibits:

(3) (i) Certificate of Incorporation (including all
amendments to date) is incorporated herein by reference to
Exhibit (3) to the Annual Report on Form 10-K for the
registrant for the fiscal year ended December 31, 1999.
(ii) Bylaws (including all amendments to date) are
incorporated herein by reference to Exhibit 3(ii) to the
Annual Report on Form 10-K for the registrant for the
fiscal year ended December 31, 1993.

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(10) Material Contracts:

(iii)(A) Central Coal & Coke Corporation's Directors Non-
Qualified Stock Option Plan is incorporated herein by
reference to Exhibit (10)(iii)(A) to the Annual Report on
Form 10-K for the registrant for the fiscal year ended
December 31, 1995. This Plan was approved by the
registrant's stockholders at the Annual Meeting held April
19, 1996, and is discussed in the Definitive Proxy
Statement for that meeting previously filed with the
Commission and in the Definitive Proxy Statement for the
Annual Meeting of Stockholders to be held April 15, 1999
previously filed with the Commission.

(13) Portions of the Annual Report to security holders for
year ended December 31, 1998 captioned "Selected
Consolidated Financial Data," "Management's Discussion &
Analysis of Financial Condition & Results of Operations"
and "Market for Registrant's Common Equity and Related
Stockholder Matters."

(21) Subsidiaries of the registrant

(b) No reports on Form 8-K were filed during the last quarter of the
period covered by this report.

SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) 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.

CENTRAL COAL & COKE CORPORATION
_______________________________
Registrant

By /s/ Beekman Winthrop
________________________________
Beekman Winthrop, President

Date: March 22, 1999

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25

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

By /s/ Beekman Winthrop
________________________________
Beekman Winthrop, President
Principal Executive Officer
Date: March 22, 1999

/s/ Gary J. Pennington
________________________________
Gary J. Pennington
General Manager, Principal
Financial Officer, and
Date: March 22, 1999 Principal Accounting Officer

By /s/ Leonard Noah
________________________________
Leonard Noah, Director
Date: March 22, 1999

By /s/ Beekman Winthrop
________________________________
Beekman Winthrop, Director
Date: March 22, 1999

By /s/ Ernest N. Yarnevich, Jr.
________________________________
Ernest N. Yarnevich, Jr., Director

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26

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Table of Contents

Page

Independent Auditors' Report 27

Consolidated Financial Statements:

Consolidated Balance Sheets as of December 31, 1998 and 1997 28

Consolidated Statements of Earnings - years ended December 31, 1998,
1997 and 1996 30

Consolidated Statements of Stockholders' Equity - years ended December
31, 1998, 1997 and 1996 31

Consolidated Statements of Comprehensive Income - years ended December
31, 1998, 1997 and 1996 32

Consolidated Statements of Cash Flows - years ended December 31, 1998,
1997 and 1996 33

Notes to Consolidated Financial Statements 34

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27

INDEPENDENT AUDITORS' REPORT

KPMG Peat Marwick, LLP
1000 Walnut, Suite 1600
P.O. Box 13127
Kansas City, MO 64199

The Board of Directors
Central Coal & Coke Corporation
and Subsidiaries:

We have audited the consolidated financial statements of Central Coal & Coke
Corporation and subsidiaries as listed in the accompanying table of contents.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Central
Coal & Coke Corporation and subsidiaries as of December 31, 1998 and 1997
and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1998, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick, LLP

Kansas City, Missouri
January 22, 1999

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28

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Consolidated Balance Sheets

December 31, 1998 and 1997

(amounts in unit dollars)

ASSETS 1998 1997
__________ __________

Current assets:
Cash and cash equivalents $ 1,606,992 1,493,966
Accounts receivable 22,500 22,500
Securities maturing within one year,
at amortized cost (note 2)(fair value
$7,476,560 in 1998 and $7,443,950 in 1997) 7,474,053 7,443,948
Notes receivable, current 12,465 0
Income Tax Receivable 32,505 0
Other 4,578 46,382
__________ __________
Total current assets 9,153,093 9,006,796

Equity securities, at fair value (note 2) 1,220,167 828,798
Notes receivable, noncurrent 115,409 0

Coal deposits, real estate, equipment
and leasehold improvements (notes 3 and 4):
Coal deposits 1,602,882 1,602,882
Mineral rights 39,988 39,988
Surface land 26,131 28,115
Equipment and leasehold improvements 6,053 284,373
__________ __________
1,675,054 1,955,358
Less accumulated depletion, depreciation
and amortization 580,636 785,537
Net coal deposits, real estate, __________ __________
equipment and leasehold improvements 1,094,418 1,169,821
__________ __________
$ 11,583,087 11,005,414

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29

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Consolidated Balance Sheets

December 31, 1998 and 1997

(amounts in unit dollars)

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses 25,967 16,962
Deferred oil lease bonus 97,357 0
Federal and state income taxes 0 26,520
__________ __________
Total current liabilities 123,324 43,482

Deferred income taxes (note 5) 188,772 69,840

Stockholders' equity:
Common stock of $1 par value; authorized
500,000 shares; issued 376,688 shares 376,688 376,688
Additional capital 1,631,200 1,631,200
Retained earnings 9,591,919 9,252,798
Less cost of 20,693 shares in 1998 and
20,093 shares in 1997 held in treasury (617,632) (599,032)
Net unrealized appreciation of investments
available-for-sale, net of deferred taxes
of $155,517 in 1998 and $124,082 in 1997 288,816 230,438
__________ __________
Total stockholders' equity 11,270,991 10,892,092

Commitments and contingencies (notes 3 and 6)
__________ __________
$ 11,583,087 11,005,414

See accompanying notes to consolidated financial statements.

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30

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Consolidated Statements of Earnings

Years ended December 31, 1998, 1997 and 1996

(amounts in unit dollars)

1998 1997 1996
_________ _________ _________

Operating revenue:
Coal royalties (note 3) $ 97,402 99,101 97,731
Oil and gas royalties 366,505 861,829 776,732
Oil and other mineral lease rentals
and bonuses 126,266 145,495 284,545
_________ _________ _________
Total operating revenue 590,173 1,106,425 1,159,008

Nonoperating income:
Investment income (note 2) 476,529 627,622 555,674
Gain on sale of real estate 105,345 37,365 37,024
Other 482 3,696 2,273
_________ _________ _________
Total nonoperating income 582,356 668,683 594,971

Earnings from continuing operations
before income taxes 887,732 1,420,725 1,309,921

Income taxes (note 5) 298,759 443,120 403,864

Earnings from continuing operations 588,973 977,605 906,057

Discontinued operations, net of income
Taxes (note 9):
Loss from operations of discontinued
food operations (84,420) (199,767) (115,967)
Gain on disposal of food operations 12,866 0 0
_________ _________ _________
(71,554) (199,767) (115,967)

Net earnings 517,419 777,838 790,090

Earnings per share from continuing
operations - basic and diluted $ 1.65 2.70 2.44

Loss per share from discontinued
operations - basic and diluted $ (.20) (.55) (.31)

Earnings per share - basic and diluted $ 1.45 2.15 2.13

Weighted average number of shares of
common stock outstanding - basic
and diluted 356,580 361,790 371,507

See accompanying notes to consolidated financial statements.

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31

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Consolidated Statements of Stockholders' Equity

Years ended December 31, 1998, 1997 and 1996

(amounts in unit dollars)

Net
unrealized
appreciation
(depreciation)
Common Addtnal Retained Treasury available
Stock Capital Earnings Stock for sale Total
_______ _________ _________ _________ ________ __________

Balance,
12/31/95 376,688 1,631,200 8,910,623 (74,058) 54,894 10,899,347

Net Earnings 0 0 790,090 0 0 790,090
Cash dividends
($1.85 per
share) 0 0 (686,475) 0 0 (686,475)
Purchase of
8,464 shares
of common
stock for
treasury 0 0 0 (261,331) 0 (261,331)
Net unrealized
depreciation
on investments
available-for-
sale 0 0 0 0 105,751 105,751

Balance,
12/31/96 376,688 1,631,200 9,014,238 (335,389) 160,645 10,847,382

Net Earnings 0 0 777,838 0 0 777,838
Cash dividends
($1.50 per
share) 0 0 (539,278) 0 0 (539,278)
Purchase of
8,771 shares
of common
stock for
treasury 0 0 0 (263,643) 0 (263,643)
Net unrealized
depreciation
on investments
available-for-
sale 0 0 0 0 69,793 69,793

Balance,
12/31/97 376,688 1,631,200 9,252,798 (599,032) 230,438 10,892,092

Net Earnings 0 0 517,419 0 0 517,419
Cash dividends
($.50 per
share) 0 0 (178,298) 0 0 (178,298)
Purchase of
600 shares
of common
stock for
treasury 0 0 0 (18,600) 0 (18,600)
Net unrealized
depreciation
on investments
available-for-
sale 0 0 0 0 58,378 58,378

Balance,
12/31/98 376,688 1,631,200 9,591,919 (617,632) 288,816 11,270,991

See accompanying notes to consolidated financial statements.

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32

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Consolidated Statements of Comprehensive Income

Years ended December 31, 1998, 1997 and 1996

(amounts in unit dollars)

1998 1997 1996
___________ ___________ ___________

Net earnings $ 517,419 777,838 790,090
___________ ___________ ___________

Other comprehensive income:
Net unrealized appreciation
of investments during the
period, net of income taxes
of $31,027, $93,861, and
$80,179 57,622 174,313 148,903
Reclassification adjustment
for the amounts included in
net earnings, net of income
taxes of $(408), $56,280,
and $23,237 756 (104,520) (43,152)
___________ ___________ ___________

Comprehensive income 575,797 847,631 895,841

See accompanying notes to consolidated financial statements.

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33

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Consolidated Statements of Cash Flows

Years ended December 31, 1998, 1997 and 1996

(amounts in unit dollars)

1998 1997 1996
___________ ___________ ___________

Cash flows from operating
activities:
Net earnings $ 517,419 777,838 790,090

Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depletion, depreciation
and amortization 2,343 65,213 79,000
Asset impairment charge 0 158,309 0
Gain on disposal of food
Operations (19,494) 0 0
Gain on sale of real estate (105,345) (37,365) (37,024)
Loss (gain) on sale of equity
securities 1,164 (160,800) (66,389)
Write-off of leasehold
improvements 0 0 17,029
Amortization of premiums and
discounts of securities, net (404,007) (403,754) (393,869)
Deferred income taxes 87,497 (56,745) (6,076)
Changes in assets and
liabilities:
Receivables and other assets (2,627) 18,553 26,322
Accounts payable and accrued
expenses 9,005 (9,964) 1,392
Deferred oil lease bonus 97,357 (74,166) 74,166
Federal and state income
taxes (59,025) 26,520 (227,224)

___________ ___________ ___________
Net cash provided by operating
activities 124,287 303,639 257,417

Cash flows from investing
activities:
Proceeds from note receivable 7,126 0 0
Proceeds from matured/called
investment debt securities 30,000,000 26,500,000 17,500,000
Purchases of investment debt
securities (29,626,098) (26,119,958) (16,188,441)
Proceeds from sale of land 107,330 38,118 37,476
Purchases of equity securities (477,099) (246,601) (524,213)
Proceeds from sales of equity
securities 174,378 485,188 530,834
Capital expenditures 0 (6,454) (77,734)
___________ ___________ ___________
Net cash provided by
investing activities 185,637 650,293 1,277,922

Cash flows from financing
Activities:
Dividends paid (178,298) (539,278) (686,475)
Purchase of common stock for
treasury (18,600) (263,643) (261,331)
___________ ___________ ___________
Net cash used in financing
activities (196,898) (802,921) (947,806)

Net increase in cash
and cash equivalents 113,026 151,011 587,533

Cash and cash equivalents,
beginning of year $ 1,493,966 1,342,955 755,422
Cash and cash equivalents,
end of year $ 1,606,992 1,493,966 1,342,955

Income taxes paid during period $ 197,400 361,739 577,423

See accompanying notes to consolidated financial statements.

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34

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Notes to Consolidated Financial Statements

December 31, 1997 and 1996

(1) Summary of Significant Accounting Policies

Basis of Consolidation

The accompanying consolidated financial statements include the accounts of
Central Coal & Coke Corporation (the Company) and its two wholly-owned
subsidiaries. The Company's subsidiaries were engaged in the ownership and
operation of a fast food bagel/delicatessen business, as described below.
All significant intercompany accounts and transactions have been
eliminated in consolidation.

The Company's subsidiaries operated a fast food bagel/delicatessen business
with four separate locations. A facility which previously had been
operated in an area of San Diego, California, was closed in March 1997. On
July 1, 1998, the facility at State College, Pennsylvania was closed. As
of September 1, 1998, the assets of the remaining two facilities located
Athens, Ohio and Columbus, Ohio were sold to an unrelated third party. As
a result, the Company is no longer engaged in the food business and,
accordingly, the accompanying consolidated financial statements have been
reclassified to present the Company's food operations as discontinued
operations for all periods presented (see note 9).

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposit accounts and a money
market deposit account. For purposes of the consolidated statements of
cash flows, the Company considers all highly liquid debt instruments with
original maturities of three months or less to be cash equivalents.

Investment Securities

Investments in debt and certain equity securities are classified as either
held-to-maturity securities, which are carried at amortized cost, or
available-for-sale securities, which are carried at fair value, with
unrealized gains and losses excluded from earnings and reported in other
comprehensive income.

Premiums and discounts are amortized or accreted over the life of the related
held-to-maturity security as an adjustment to yield using the effective
interest method. Dividend and interest income are recognized when earned.
Realized gains and losses for securities classified as available-for-sale
are included in net earnings and are derived using the specific
identification method for determining the cost of securities sold.

Coal Deposits, Real Estate, Equipment, and Leasehold Improvements

Coal deposits, mineral rights, and surface lands were acquired from the
trustee in bankruptcy for predecessor companies (pursuant to a plan of
reorganization approved by the federal court) and were initially recorded
at the valuations placed thereon by the receivers in bankruptcy in 1931.
Subsequent additions and all other fixed assets are stated at cost.
Maintenance and repairs are charged to expense as incurred. Renewals and
betterments which extend the useful life of the asset are capitalized.

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35

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Notes to Consolidated Financial Statements

December 31, 1997 and 1996

Depreciation, Depletion, and Amortization

Equipment and leasehold improvements are depreciated/amortized using the
straight-line method over their estimated useful lives or lease terms
which range from five to seven years.

Depletion of coal deposits is computed at the rate of $.025 per ton of coal
produced or purchased which approximates depletion computed on a wasting-
asset basis.

Coal, Oil, and Gas Income

Coal royalties are based on a percentage of the production of land leased
from the Company or, in the case of no production, the minimum annual
royalty (see note 3). Oil and gas royalties are based on a percentage of
the production on land leased from the Company. Oil and other mineral
lease rentals and bonuses are derived from the leasing of land and mineral
rights prior to production.

Oil lease bonuses which relate to future periods are deferred and recognized
as income over the related future periods (generally one year).

Advertising

Costs of advertising are expensed as incurred. Amounts charged to expense
were not significant for the years ended December 31, 1998, 1997, and
1996.

Income Taxes

The Company and its subsidiaries file a consolidated federal income tax return.

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the consolidated
financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities
for subsequent changes in tax rates is recognized in income in the period
that includes the tax rate change.

Stock Option Plan

Prior to January 1, 1996, the Company accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense would be recorded on the
date of grant only if the current market price of the underlying stock
exceeded the exercise price. On January 1, 1996, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, which permits entities to recognize as expense
over the vesting period the fair value of all stock-based awards on the
date of grant. Alternatively, SFAS No. 123 also allows entities to
continue to apply the provisions of APB Opinion No. 25 and provide pro
forma net income and pro forma earnings per share disclosures for employee
stock option grants made in 1995 and future years as if the fair value-
based method defined in SFAS No. 123 had been applied. The Company has
elected to continue to apply the provisions of APB Opinion No. 25 and
provide the pro forma disclosure provisions of SFAS No. 123 (see note 10).

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36

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Notes to Consolidated Financial Statements

December 31, 1997 and 1996

Impairment of Long-lived Assets and Long-lived Assets to Be Disposed Of

Long-lived assets and certain identifiable intangible assets are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying
amount of the asset to future net cash flows expected to be generated by
the asset. If such assets are considered to be impaired, the impairment
recognized is measured by the amount by which the carrying amount exceeds
the fair value. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell. Adoption of this
statement did not have a material impact on the Company's financial
position, results of operations, or liquidity.

During the fourth quarter of 1997, the Company performed an impairment
analysis of its long-lived assets used in its fast food bagel/delicatessen
business as a result of continuing operating losses. In connection with
this analysis, the Company recognized an impairment charge of $158,309. In
1998, the Company disposed of its food operations and the impairment
charge was reclassified as a component of the loss from discontinued
operations (see note 9).

Earnings and Dividends Per Share

Basic earnings per share are based on the weighted average number of common
shares outstanding. Dilutive earnings per share are based on the weighted
average number of common shares and dilutive common equivalent shares
outstanding during the year.

Stock options are the only common stock equivalents, however, their effect
was not dilutive in the calculation of earnings per share for the years
ended December 31, 1998, 1997, and 1996. Dividends per share are based on
the number of shares outstanding on the dividend dates of record.

Comprehensive Income

On January 1, 1998, the Company adopted SFAS No. 130, Reporting Comprehensive
Income. SFAS No. 130 establishes standards for reporting and presentation
of comprehensive income and its components in a full set of financial
statements. Comprehensive income consists of net income and net unrealized
gains (losses) on available-for-sale securities and is presented in the
consolidated statements of stockholder's equity and comprehensive income.
SFAS No. 130 requires only additional disclosures in the consolidated
financial statements; it does not affect the Company's financial position
or results of operations. Prior year consolidated financial statements
have been reclassified to conform to the requirements of SFAS No. 130.

Use of Estimates

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these consolidated financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.

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37

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Notes to Consolidated Financial Statements

December 31, 1997 and 1996

(2) Investment Securities

The amortized cost, gross unrealized holding gains, gross unrealized holding
losses and fair value for held-to-maturity and available-for-sale
securities by major security type at December 31, 1998 and 1997 are
presented below. Substantially all equity securities represent common
stocks of domestic corporations.

Gross Gross
unrealized unrealized
Amortized holding holding Fair
1998 cost gains losses value
__________________ __________ __________ __________ __________

Held-to-maturity:
U. S. government
agency securities $ 7,474,053 2,507 0 7,476,560

Available-for-sale:
Equity securities $ 775,834 525,664 (81,331) 1,220,167

1997
_________________

Held-to-maturity:
U. S. government
agency securities $ 7,443,958 113 (111) 7,443,960

Available-for-sale:
Equity securities $ 474,277 388,761 (34,241) 828,798

At December 31, 1998 and 1997, all U. S. government and government agency
securities mature within one year.

Investment income consists of the following for each of the years ended
December 31:

1998 1997 1996
__________ __________ __________

Interest 467,573 455,734 477,158
Dividends 10,120 11,088 12,127
Gross gains on sales of equity
securities 50,214 201,682 133,030
Gross losses on sales of equity
securities (51,378) (40,882) (66,641)
__________ __________ __________
476,529 627,622 555,674

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38

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Notes to Consolidated Financial Statements

December 31, 1997 and 1996

(3) Coal Deposits

The rights to 14,000 acres of coal deposits totaling approximately 84,000,000
tons of coal in place (of which from 50% to 90% could be expected to be
recoverable) are leased under agreements which extend for periods of two
to twelve years. The agreements provide for minimum annual royalties of
$91,700. Coal deposits aggregating approximately 92,000,000 tons in place
with a net carrying value of approximately $710,000 at December 31, 1998
are not presently leased or producing coal in commercial quantities.

(4) Mineral Rights

At December 31, 1998, the Company owns approximately 64,000 acres of mineral
rights in Missouri, Kansas, Oklahoma, Arkansas, Louisiana, and Texas.

(5) Income Taxes

Total income taxes for the years ended December 31, 1998, 1997 and 1996 were
allocated as follows:

1998 1997 1996
__________ __________ __________

Income tax expense 298,789 443,120 403,864
Discontinued operations (42,551) (102,909) (59,741)
Stockholders' equity, for unrealized
appreciation (depreciation) on
equity securities 31,435 37,581 56,952
__________ __________ __________
287,643 377,792 401,065

The components of income tax expense are as follows:

1998 1997 1996
________ ________ ________

Federal $ 266,143 302,561 304,998
State 32,616 37,650 39,135
________ ________ ________
Total income tax expense $ 298,759 340,211 344,123

Total income tax expense for 1998, 1997 and 1996 includes deferred income tax
expense (benefit) of $87,497, $(56,745), and $(6,076), respectively.

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39

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Notes to Consolidated Financial Statements

December 31, 1997 and 1996

Income tax expense relating to continuing operations has been provided at
effective rates of 33.7%, 31.2%, and 30.8% for the years ended December
31, 1998, 1997, and 1996, respectively. The reasons for the difference
between the effective tax rates and the corporate federal income tax rate
of 34.0% are as follows:

Percentage of earnings
before income taxes
1998 1997 1996
_____ _____ _____

Expected statutory tax rate 34.0% 34.0% 34.0%
State income taxes, net of federal
income tax effect 2.4 2.2 2.3
Depletion (2.3) (3.7) (3.7)
Other, net (.4) (1.3) (1.8)
_____ _____ _____
Effective tax rate 33.7% 31.2% 30.8%

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1998 and 1997 are presented below:

Deferred tax assets: 1998 1997
________ ________

Writedown of coal deposits 45,095 45,095
Asset impairment charge 0 62,664
Coal development costs 29,053 29,053
Fixed assets 0 18,450
Land sales 12,476 13,801
Organization costs 1,800 2,485
Other nondeductible items 0 2,319
________ ________
88,424 173,867

Less valuation allowance (45,095) (45,095)
________ ________
Deferred tax assets 43,329 128,772

Deferred tax liabilities:

Depletion (72,298) (74,530)
Unrealized appreciation on available-
for-sale securities (155,517) (124,082)
Other (4,286) 0
________ ________
Deferred tax liabilities (232,101) (198,612)

Net deferred tax asset (liability) $(188,772) (69,840)

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40

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Notes to Consolidated Financial Statements

December 31, 1997 and 1996

(6) Operating Leases

For 1998, the Company had an operating lease on a month-to-month basis for
its administrative office in Kansas City, Missouri. In the fourth quarter
of 1998, the Company entered into a five-year operating lease for that
office space, which became effective January 1, 1999. The lease agreement
includes the option to terminate the lease after three years and provides
for annual rental payments of $13,182 through 2003. In addition, the
subsidiaries of the Company had operating leases for certain retail
facilities through September 1, 1998, the date when the last two of the
four facilities were disposed of. Rent expense amounted to $69,763,
$118,908, and $142,190 for the years ended December 31, 1998, 1997, and
1996, respectively.

(7) Disclosures About Fair Value of Financial Instruments

Cash, Cash Equivalents, Trade Receivables and Trade Payables

The carrying amount approximates fair value because of the short maturity of
these financial instruments.

Debt and Equity Securities

The fair values of debt and equity securities are based on quoted market
prices. The fair value of debt and equity securities are disclosed in
note 2.

(8) Related Party Transaction

During February 1994, an Investment Management Agreement was entered into
between the Company and Woodwin Management, Inc. The Company's president
is also the president, director, and stockholder of Woodwin Management,
Inc. Under this agreement, the Company has agreed to pay a fee at an
annual rate of .50% of the market value of the assets under management.
Woodwin Management, Inc. is managing the Company's equity securities
portfolio. The fee paid in 1998, 1997, and 1996 to Woodwin Management,
Inc. was $6,994, $5,997, and $4,530, respectively. In the opinion of
management of the Company, the terms of this Investment Management
Agreement are reasonable and competitive.

(9) Segment/Discontinued Operations Information

The Company has operated in two segments - energy and food. On September 1,
1998, the Company sold its remaining food operations for $135,000 and

recorded a gain of $12,866 (net of applicable income taxes of $6,628). The
food operations are presented as discontinued operations for all periods.
As a result, the Company operates in only one segment, the energy segment
consists of the leasing of real properties and mineral interests in the
midwestern and southern United States to operating leasees. The Company
has no foreign revenues. Coal royalties in 1998, 1997, and 1996 were
received from two, three, and four customers, with 92%, 91%, and 92% being
received from the largest customer, respectively. Oil and mineral lease
bonuses and rentals were received from four, nine, and six customers in
1998, 1997, and 1996, with 76%, 51%, and 38% being recognized from the
largest customer, respectively. Oil and gas royalties were received from
three, twelve, and four customers in 1998, 1997, and 1996, with 92%, 97%,
and 97% being received from one customer, respectively.

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41

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Notes to Consolidated Financial Statements

December 31, 1997 and 1996

The loss from the Company's discontinued food business is comprised of the
following for the years ended December 31, 1998, 1997, and 1996:

1998 1997 1996
_________ _________ _________

Revenues $ 409,143 901,835 1,117,793
Cost of food sales 172,630 359,090 459,803
_________ _________ _________

Gross margin 236,513 542,745 657,990

Food operations expense:
Salaries and wages 145,968 282,931 341,856
Occupancy expense 59,445 109,132 132,296
Asset impairment charge 0 158,309 0
Depreciation and
amortization expense 39,140 62,848 76,651
Utility expense 22,630 38,224 41,195
Other expenses 102,569 193,987 241,701
_________ _________ _________
369,752 845,421 833,698

Loss from food operations
before income taxes (133,239) (302,676) (175,708)

Income tax benefit 48,819 102,909 59,741

Loss from food
Operations $ (84,420) (199,767) (115,967)

(10) Stock Option Plan

In April 1995, the Company adopted a nonqualified stock option plan (the
Plan) pursuant to which the Company's Board of Directors may grant stock
options to Directors in lieu of cash compensation. The Plan authorizes
grants of options to purchase up to 25,000 shares of common stock. Stock
options are granted with an exercise price equal to the stock's fair
market value at the date of grant. All stock options have a term of ten
years and vest and become fully exercisable six months after the date of
grant.

During 1998, 2,500 options were granted with an exercise price of $31.38.
During 1997, 2,500 options were granted with an exercise price of $30.50.
During 1996, 2,500 options were granted with an exercise price of $30.50.
No options were exercised during 1998, 1997, or 1996. At December 31,
1998, there were 15,000 shares available for grant under the Plan.

The per share weighted average fair value of stock options granted during
1998, 1997, and 1996 was $4.17, $2.64, and $1.84, respectively, on the
date of grant using the Black Scholes option-pricing model with the
following weighted average assumptions: 1998 - expected dividend yield of
1.60%, expected volatility of 8.0%, risk-free interest rate of 4.25%, and
an expected life of five years; 1997 - expected dividend yield 6.0%,
expected volatility of 15.0%, risk-free interest rate of 5.66% and an
expected life of five years; 1996 - expected dividend yield 6.0%, expected
volatility of 9.0%, risk-free interest rate of 6.3%, and an expected life
of five years.

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42

CENTRAL COAL & COKE CORPORATION AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Notes to Consolidated Financial Statements

December 31, 1997 and 1996

The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock
options in the accompanying consolidated financial statements. Had the
Company determined compensation cost based on the fair value at the grant
date for its stock options under SFAS No. 123, the Company's net earnings
and earnings per share would have been reduced to the pro forma amounts
indicated below:

1998 1997 1996
__________ __________ __________

Net Earnings:
As reported $ 517,419 777,838 790,790

Pro forma 511,573 777,329 786,878

Earnings per share:
As reported 1.45 2.15 2.13

Pro forma 1.44 2.14 2.12

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