<PAGE>
CENTRAL OHIO COAL COMPANY
QUARTERLY REPORT PER REQUIREMENTS
OF HOLDING COMPANY ACT RELEASE NO. 26573
FOR THE QUARTER ENDED DECEMBER 31, 1999
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>
CENTRAL OHIO COAL COMPANY
STATEMENT OF INCOME
FOR THE QUARTER ENDED DECEMBER 31, 1999
(UNAUDITED)
(in thousands)
OPERATING REVENUES $ 322
COST OF OPERATION 807
OPERATING LOSS (485)
NONOPERATING INCOME 876
INCOME BEFORE FEDERAL INCOME TAXES 391
FEDERAL INCOME TAXES 391
NET INCOME $ -
STATEMENT OF RETAINED EARNINGS
FOR THE QUARTER ENDED DECEMBER 31, 1999
(UNAUDITED)
(in thousands)
BALANCE AT BEGINNING OF PERIOD $2
NET INCOME -
BALANCE AT END OF PERIOD $2
The common stock of the Company is wholly owned by Ohio Power Company.
<PAGE>
<PAGE>
CENTRAL OHIO COAL COMPANY
BALANCE SHEET
(UNAUDITED)
December 31,
1999
(in thousands)
ASSETS
MINING PLANT:
Mining Plant in Service $ 50,416
Accumulated Depreciation and Amortization 49,778
NET MINING PLANT 638
OTHER PROPERTY AND INVESTMENTS 12,252
CURRENT ASSETS:
Cash and Cash Equivalents 46,556
Accounts Receivable:
General 1,014
Affiliated Companies 2,634
Coal 1,532
Materials and Supplies 6,374
Prepayments 93
TOTAL CURRENT ASSETS 58,203
DEFERRED INCOME TAXES 55,713
DEFERRED CHARGES 506
TOTAL $127,312
<PAGE>
<PAGE>
CENTRAL OHIO COAL COMPANY
BALANCE SHEET
(UNAUDITED)
December 31,
1999
(in thousands)
CAPITALIZATION AND LIABILITIES
SHAREHOLDER'S EQUITY:
Common Stock - Par Value $0.10:
Authorized - 100,000 Shares
Outstanding - 69,000 Shares $ 7
Retained Earnings 2
TOTAL SHAREHOLDER'S EQUITY 9
OTHER NONCURRENT LIABILITIES:
Accrued Postretirement Benefits Other Than Pensions 48,118
Accrued Reclamation Costs 39,113
Mine Closure 14,225
Other Operating Reserves 10,884
TOTAL OTHER NONCURRENT LIABILITIES 112,340
CURRENT LIABILITIES:
Accounts Payable:
General 1,602
Affiliated Companies 310
Taxes Accrued 665
Accrued Reclamation Costs 6,962
Accrued Vacation Pay 479
Accrued Incentive Pay 974
Workers' Compensation Claims 529
Other 793
TOTAL CURRENT LIABILITIES 12,314
DEFERRED CREDITS 2,649
TOTAL $127,312
<PAGE>
<PAGE>
CENTRAL OHIO COAL COMPANY
INFORMATION CONCERNING MINE OPERATIONS AND CAPITAL IMPROVEMENTS
FOR THE QUARTER ENDED DECEMBER 31, 1999
Litigation
As discussed in Note 2 of the Notes to Financial Statements in the
1998 Annual Report, the deductibility of certain interest deductions
related to American Electric Power's (AEP's) corporate owned life
insurance (COLI) program for taxable years 1991-1996 is under review by
the Internal Revenue Service (IRS). Adjustments have been or will be
proposed by the IRS disallowing COLI interest deductions. A
disallowance of COLI interest deductions through December 31, 1999 would
increase expenses by approximately $10.9 million (including interest).
The Company made payments of taxes and interest attributable to COLI
interest deductions for taxable years 1991-1998 to avoid the potential
assessment by the IRS of any additional above market rate interest on
the contested amount. These payments to the IRS are included on the
Balance Sheet in other property and investments pending the resolution
of this matter. The Company is seeking refunds through litigation of
all amounts paid plus interest.
In order to resolve this issue, the Company filed suit against the
United States (US) in the US District Court for the Southern District of
Ohio in March 1998. In 1999 a US Tax Court judge decided in the Winn-Dixie
Stores v. Commissioner case that a corporate taxpayer's COLI
interest deductions should be disallowed. Notwithstanding the Tax
Court's Decision in Winn-Dixie, management has made no provision for any
possible adverse earnings impact from this matter because it believes,
and has been advised by outside counsel, that it has a meritorious
position and will vigorously pursue its lawsuit. In the event the
resolution of this matter is unfavorable, the Company expects to recover
from Ohio Power Company (OPCo) all of its costs under the terms of the
coal supply agreement.
Mine Closure
In October 1999 the Company discontinued mining operations, except
for incidental coal mining available during the final reclamation
process, and reduced approximately 100 positions, which included those
represented by the United Mine Workers of America (UMWA) as well as
non-represented salaried positions. The remaining employees will finish
reclamation work and complete incidental mining activities.
<PAGE>
<TABLE>
CENTRAL OHIO COAL COMPANY
CALCULATION OF COST OF CAPITAL AND STATEMENT OF COST OF COMMERCIAL COAL SOLD AND SHIPPED
FOR THE QUARTER ENDED DECEMBER 31, 1999
(in thousands, except as noted)
<CAPTION>
October through
December
1999
<S> <C>
I. Calculation of Cost-of-Capital Compensation:
A. Equity Investment at Beginning of Period:
Common Stock $ 7
B. Rate of Return Allowable per HCAR No. 26573:
10.43% per annum, 2.6075% per quarter .026075
C. Earnings Allowable on Equity Investment
1. Current Quarter $ -
2. Year-to-Date $ -
D. Net Income per Statement of Income $ -
Add: Interest Charges -
Less: Nonoperating Income 876
E. Applied Cost-of-Capital Billing Adder:
1. Current Quarter $ (876)
2. Year-to-Date $ (3,054)
II. Coal Billing Calculation:
A. Total Operating Expenses (a) $ 1,198
B. Add: Cost-of-Capital Billing Adder as Applied per E. 1. of Section I (876)
C. Cost Applicable to Current Quarter Coal Billings 322
Less: Cost Applicable to Coal Sold to Unaffiliated Companies 102
Cost Applicable to Current Quarter Coal Billings to Ohio Power $ 220
D. Coal Sold and Shipped in Current Quarter to Ohio Power (in tons) 6,954
E. Average Price per Ton to Ohio Power (in dollars) (C/D) $31.64
(a) As represented by Cost of Operation" plus Federal Income Taxes" reported in Statements of Income.
</TABLE>
<PAGE>
<PAGE>
CENTRAL OHIO COAL COMPANY
STATEMENT OF COST OF OPERATION
FOR THE QUARTER ENDED DECEMBER 31, 1999
(in thousands)
Direct Labor-UMW* $ 137
Indirect Labor-UMW* 740
Benefits-UMW* 1,666
Salaries and Benefits-Nonunion 1,072
Operating Supplies 610
Repair Parts and Materials 236
Electricity and Other Utilities 455
Outside Services-Maintenance, Haulage and Reclamation 509
Taxes Other Than Federal Income Taxes** 126
Rental of Equipment 8
Depreciation, Depletion and Amortization 1,329
Mining Cost Normalization*** (4,207)
Reclamation (1,485)
Other Production Costs 928
Subtotal 2,124
Transfers of Production Costs (to)/from Coal Inventory (1,317)
Total $ 807
* United Mine Workers of America.
** Excludes FICA, Federal Unemployment and State Unemployment Taxes.
These costs are reflected in benefits.
*** Represents the deferral/accrual required to establish a monthly
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 any deferral is
eliminated by year-end. The $37.6 million credit represents mine
closure costs included in the normalized selling prices billed
monthly but not accrued as a liability until October 1999 when
the Board of Directors approved the closing of the Muskingum
mine.
<PAGE>
<PAGE>
CENTRAL OHIO COAL COMPANY
ANALYSIS OF MINING PLANT IN SERVICE
AND RELATED ACCUMULATED PROVISIONS FOR
DEPRECIATION AND AMORTIZATION
December 31, 1999
Net
Gross Accumulated Carrying
Cost Provisions Amount
(in thousands)
Description
Surface Lands $ 324 $ - $324
Mining Structures and Equipment 47,800 47,486 314
Leasehold Improvements 2,292 2,292 -
Total Mining Plant
in Service $50,416 $49,778 $638
<PAGE>
<PAGE>
CENTRAL OHIO COAL COMPANY
CONSTRUCTION EXPENDITURE BUDGET - 2000
The Company has no construction expenditures planned for 2000.
