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SOUTHERN OHIO COAL COMPANY
QUARTERLY REPORT PER REQUIREMENTS
OF HOLDING COMPANY ACT RELEASE NO. 26573
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
CONTENTS
Page
Statements of Income and Retained Earnings 1
Balance Sheets 2-3
Information Concerning Mine Operations and
Capital Improvements 4
Calculation of Cost of Capital and
Statement of Cost of Commercial Coal Sold and Shipped 5
Statement of Cost of Operation 6
Analysis of Mining Plant in Service 7
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SOUTHERN OHIO COAL COMPANY
STATEMENT OF INCOME
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(in thousands)
OPERATING REVENUES - Sales to Parent $55,096
COST OF OPERATION 52,709
OPERATING INCOME 2,387
INTEREST CHARGES 1,098
OPERATING INCOME BEFORE FEDERAL INCOME TAXES 1,289
FEDERAL INCOME TAXES ON OPERATIONS 217
NET INCOME FROM OPERATIONS 1,072
NONOPERATING LOSS (665)
NET INCOME $ 407
STATEMENT OF RETAINED EARNINGS
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(in thousands)
BALANCE AT BEGINNING OF PERIOD $23,699
NET INCOME 407
CASH DIVIDENDS DECLARED 771
BALANCE AT END OF PERIOD $23,335
The common stock of the Company is wholly owned by Ohio Power Company.
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SOUTHERN OHIO COAL COMPANY
BALANCE SHEET
(UNAUDITED)
September 30,
1997
(in thousands)
ASSETS
MINING PLANT:
Mining Plant in Service $380,916
Construction Work in Progress 806
Total Mining Plant 381,722
Accumulated Depreciation and Amortization 214,124
NET MINING PLANT 167,598
OTHER PROPERTY AND INVESTMENTS 62,254
CURRENT ASSETS:
Cash and Cash Equivalents 22,468
Accounts Receivable:
General 5,254
Insurance 13,011
Affiliated Companies 11,984
Coal 544
Materials and Supplies 9,995
Other 439
TOTAL CURRENT ASSETS 63,695
REGULATORY ASSETS 46,632
DEFERRED CHARGES 4,841
TOTAL $345,020
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SOUTHERN OHIO COAL COMPANY
BALANCE SHEET
(UNAUDITED)
September 30,
1997
(in thousands)
CAPITALIZATION AND LIABILITIES
SHAREHOLDER'S EQUITY:
Common Stock - Par Value $1:
Authorized and Outstanding - 5,000 Shares $ 5
Premium on Common Stock 9,996
Other Paid-in Capital 34,693
Retained Earnings 23,335
TOTAL SHAREHOLDER'S EQUITY 68,029
LONG-TERM DEBT:
Notes Payable 45,000
Finance Obligations 37,675
TOTAL LONG-TERM DEBT 82,675
OTHER NONCURRENT LIABILITIES:
Obligations Under Capital Leases 34,172
Operating Reserves 57,998
TOTAL OTHER NONCURRENT LIABILITIES 92,170
CURRENT LIABILITIES:
Long-term Debt Due Within One Year 26,689
Accounts Payable:
General 3,485
Affiliated Companies 2,797
Taxes Accrued 1,490
Accrued Vacation Pay 3,096
Workers' Compensation Claims 9,417
Accrued Rent 4,194
Obligations Under Capital Leases 13,300
Other 4,610
TOTAL CURRENT LIABILITIES 69,078
DEFERRED INCOME TAXES 30,731
DEFERRED CREDITS 2,337
TOTAL $345,020
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SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING MINE OPERATIONS AND CAPITAL IMPROVEMENTS
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
There were no significant changes with regard to the Company's
operations and mining plant during the quarter.
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<TABLE> SOUTHERN OHIO COAL COMPANY
CALCULATION OF COST OF CAPITAL AND STATEMENT OF COST OF COMMERCIAL COAL SOLD AND SHIPPED
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
(in thousands, except as noted)
<CAPTION>
July through
September
1997
<S> <C>
I. Calculation of Cost-of-Capital Compensation:
A. Equity Investment at Beginning of Period:
Common Stock $ 5
Premium on Common Stock 9,996
Other Paid-in Capital 34,693
44,694
B. Rate of Return Allowable per HCAR No. 26573, 10.29% per annum, 2.5725% per quarter .025725
C. Earnings Allowable on Equity Investment
1. Current Quarter $ 1,150
2. Year-to-Date $ 6,268
D. Net Income per Statement of Income (a) $ 407
Add: Interest Charges 1,098
Less: Nonoperating Loss (665)
E. Applied Cost-of-Capital Billing Adder:
1. Current Quarter $ 2,170
2. Year-to-Date $ 7,574
II. Coal Billing Calculation - Meigs Division:
A. Total Operating Expenses (b) $ 52,926
B. Add: Cost-of-Capital Billing Adder as Applied per E. 1. of Section I 2,170
C. Cost Applicable to Current Quarter Coal Billings to Ohio Power $ 55,096
D. Coal Sold and Shipped in Current Quarter to Ohio Power (in tons) 1,635,883
E. Average Price per Ton to Ohio Power (in dollars) (C/D) $ 33.68
(a) The Company sold its Martinka mining division and most of the Martinka related coal reserves to an
unaffiliated company. No return on equity investment associated with these operations has been billed
since the division ceased mining coal effective July 1, 1992. All results associated with the Martinka
division since then are billed to the Parent Company, Ohio Power Company, eliminating any earnings
effect to the Company.
(b) As represented by "Cost of Operation" plus "Federal Income Taxes On Operations" reported in Statement
of Income.
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SOUTHERN OHIO COAL COMPANY
STATEMENT OF COST OF OPERATION
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
(in thousands)
Direct Labor-UMW* $ 1,646
Indirect Labor-UMW* 5,535
Benefits-UMW* 3,321
Salaries and Benefits-Nonunion 4,720
Operating Supplies 2,996
Repair Parts and Materials 6,518
Electricity and Other Utilities 1,677
Outside Services-Maintenance, Haulage and Reclamation 3,535
Taxes Other Than Federal Income Taxes** 2,999
Rental of Equipment 6,607
Depreciation, Depletion and Amortization 5,507
Mining Cost Normalization*** 697
Reclamation 1,936
Other Production Costs 4,437
Subtotal 52,131
Transfers of Production Costs (to)/from Coal Inventory 578
Total $52,709
* United Mine Workers of America.
** Excludes FICA, Federal Unemployment and State Unemployment.
These costs are reflected in employee benefits.
*** Represents the deferral/accrual required to establish a selling
price based on forecasted results for the remainder of the year.
The amount of mining cost normalization is established on an
"overall" company basis(i.e., not itemized) and is eliminated by
year-end.
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SOUTHERN OHIO COAL COMPANY
ANALYSIS OF MINING PLANT IN SERVICE
AND RELATED ACCUMULATED PROVISIONS FOR
DEPRECIATION AND AMORTIZATION
September 30, 1997
Net
Gross Accumulated Carrying
Cost Provisions Amount
(in thousands)
Description
Surface Lands $ 7,412 $ - $ 7,412
Mining Structures and Equipment 235,967 145,784 90,183
Coal Interests (net of depletion) 3,388 - 3,388
Mine Development Costs 134,149 68,340 65,809
Total Mining Plant
in Service $380,916 $214,124 $166,792
