<PAGE>
SOUTHERN OHIO COAL COMPANY
QUARTERLY REPORT PER REQUIREMENTS
OF HOLDING COMPANY ACT RELEASE NO. 26573
FOR THE QUARTER ENDED DECEMBER 31, 1996
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
Construction Expenditure Budget 8
<PAGE>
<PAGE>
SOUTHERN OHIO COAL COMPANY
STATEMENT OF INCOME
FOR THE QUARTER ENDED DECEMBER 31, 1996
(UNAUDITED)
(in thousands)
OPERATING REVENUES - Sales to Parent $61,692
COST OF OPERATION 54,748
OPERATING INCOME 6,944
INTEREST CHARGES 1,380
OPERATING INCOME BEFORE FEDERAL INCOME TAXES 5,564
FEDERAL INCOME TAXES ON OPERATIONS 3,817
NET INCOME FROM OPERATIONS 1,747
NONOPERATING INCOME 155
NET INCOME $ 1,902
STATEMENT OF RETAINED EARNINGS
FOR THE QUARTER ENDED DECEMBER 31, 1996
(UNAUDITED)
(in thousands)
BALANCE AT BEGINNING OF PERIOD $24,064
NET INCOME 1,902
CASH DIVIDENDS DECLARED 1,902
BALANCE AT END OF PERIOD $24,064
The common stock of the Company is wholly owned by Ohio Power Company.
<PAGE>
<PAGE>
SOUTHERN OHIO COAL COMPANY
BALANCE SHEET
(UNAUDITED)
December 31,
1996
(in thousands)
ASSETS
MINING PLANT:
Mining Plant in Service $363,090
Construction Work in Progress 15
Total Mining Plant 363,105
Accumulated Depreciation and Amortization 193,608
NET MINING PLANT 169,497
OTHER PROPERTY AND INVESTMENTS 61,078
CURRENT ASSETS:
Cash and Cash Equivalents 5,565
Accounts Receivable:
General 4,383
Insurance 13,011
Affiliated Companies 22,070
Coal 719
Materials and Supplies 12,254
Other 1,583
TOTAL CURRENT ASSETS 59,585
REGULATORY ASSETS 56,182
DEFERRED CHARGES 4,356
TOTAL $350,698
<PAGE>
<PAGE>
SOUTHERN OHIO COAL COMPANY
BALANCE SHEET
(UNAUDITED)
December 31,
1996
(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 81,834
Retained Earnings 24,064
TOTAL SHAREHOLDER'S EQUITY 115,899
LONG-TERM DEBT - Notes Payable to Banks 61,681
OTHER NONCURRENT LIABILITIES:
Obligations Under Capital Leases 23,123
Operating Reserves 45,823
TOTAL OTHER NONCURRENT LIABILITIES 68,946
CURRENT LIABILITIES:
Long-term Debt Due Within One Year 20,000
Short-term Debt - Notes Payable to Parent 1,500
Accounts Payable 6,970
Interest Accrued 2,011
Accrued Vacation Pay 2,861
Workers' Compensation Claims 13,711
Obligations Under Capital Leases 9,083
Other 3,850
TOTAL CURRENT LIABILITIES 59,986
DEFERRED INCOME TAXES 42,803
DEFERRED CREDITS 1,383
TOTAL $350,698
<PAGE>
<PAGE>
SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING MINE OPERATIONS AND CAPITAL IMPROVEMENTS
FOR THE QUARTER ENDED DECEMBER 31, 1996
There were no significant changes with regard to the Company's
operations and mining plant during the quarter.
In September 1996, the Company was granted permission to return to
its parent up to $68,000,000 out of capital surplus through December 31,
1998. The HCAR Release No. 26573 authorizes this return of capital. On
October 1, 1996 the Company paid $20,859,000 to its parent out of
capital surplus.
<PAGE>
<PAGE>
<TABLE> SOUTHERN OHIO COAL COMPANY
CALCULATION OF COST OF CAPITAL AND STATEMENT OF COST OF COMMERCIAL COAL SOLD AND SHIPPED
FOR THE QUARTER ENDED DECEMBER 31, 1996
(in thousands, except as noted)
<CAPTION> October through
December
1996
<S> <C>
I. Calculation of Cost-of-Capital Compensation:
A. Investment at Beginning of Period:
Common Stock $ 5
Premium on Common Stock 9,996
Other Paid-in Capital (excluding item D and item G) 50,155
60,156
B. Rate of Return Allowable per HCAR Nos. 20515 and
21008: 12.11% per annum, 3.0275% per quarter .030275
C. Earnings Allowable: (re investment in item A)
1. Current Quarter $ 1,821
2. Year-to-Date $ 7,744
D. Equity Investment for the months of June 1981, December 1981 and September 1982 $ 26,240
E. Rate of Return Allowable per HCAR Nos. 21008, 21537,
22129 and 22401: 12.04% per annum, 3.01% per quarter .0301
F. Earnings Allowable: (re investment in item D)
1. Current Quarter $ 789
2. Year-to-Date $ 3,162
G. Equity Investment for the months of March 1982, June 1982 and December 1982 $ 5,439
H. Rate of Return Allowable per HCAR Nos. 21008, 21537,
22129 and 22401: 13.58% per annum, 3.395% per quarter .03395
I. Earnings Allowable: (re investment in item G)
1. Current Quarter $ 185
2. Year-to-Date $ 2,346
J. Total Earnings Allowable:
1. Current Quarter (C.1. + F.1. + I.1.) $ 2,795
2. Year-to-Date (C.2. + F.2. + I.2.) $ 13,252
K. Net Income per Statement of Income (a) $ 1,902
Add: Interest Charges 1,380
Less: Nonoperating Income 155
L. Applied Cost-of-Capital Billing Adder:
1. Current Quarter $ 3,127
2. Year-to-Date $ 13,878
II. Coal Billing Calculation - Meigs Division:
A. Total Operating Expenses (b) $ 58,565
B. Add: Cost-of-Capital Billing Adder as Applied per L. 1. of Section I 3,127
C. Cost Applicable to Current Quarter Coal Billings to Ohio Power $ 61,692
D. Coal Sold and Shipped in Current Quarter to Ohio Power (in tons) 1,556,580
E. Average Price per Ton to Ohio Power (in dollars) (C/D) $39.63
(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.
/TABLE
<PAGE>
<PAGE>
SOUTHERN OHIO COAL COMPANY
STATEMENT OF COST OF OPERATION
FOR THE QUARTER ENDED DECEMBER 31, 1996
(in thousands)
Direct Labor-UMW* $ 1,417
Indirect Labor-UMW* 5,139
Benefits-UMW* 8,421
Salaries and Benefits-Nonunion 4,374
Operating Supplies 3,357
Repair Parts and Materials 2,842
Electricity and Other Utilities 1,859
Outside Services-Maintenance, Haulage and Reclamation 3,971
Taxes Other Than Federal Income Taxes** 2,092
Rental of Equipment 3,656
Depreciation, Depletion and Amortization 4,494
Mining Cost Normalization*** 6,077
Other Production Costs 6,526
Subtotal 54,225
Transfers of Production Costs (to)/from Coal Inventory 523
Total $54,748
* 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 year.
The amount of mining cost normalization is established on an
"overall" company basis(i.e., not itemized) and is eliminated by
year-end.
<PAGE>
<PAGE>
SOUTHERN OHIO COAL COMPANY
ANALYSIS OF MINING PLANT IN SERVICE
AND RELATED ACCUMULATED PROVISIONS FOR
DEPRECIATION AND AMORTIZATION
December 31, 1996
Net
Gross Accumulated Carrying
Cost Provisions Amount
(in thousands)
Description
Surface Lands $ 7,386 $ - $ 7,386
Mining Structures and Equipment 217,578 136,035 81,543
Coal Interests (net of depletion) 3,977 - 3,977
Mine Development Costs 134,149 57,573 76,576
Total Mining Plant
in Service $363,090 $193,608 $169,482
<PAGE>
<PAGE>
SOUTHERN OHIO COAL COMPANY
CONSTRUCTION EXPENDITURE BUDGET - 1997*
Description Budgeted Amount
(in thousands)
North Mains Return Shaft $2,931
Mine Plant and Subsidence Blanket 1,188
Water Treatment Facility 800
Mineral Rights 216
$5,135
This budget does not include any possible lease transactions.
