<PAGE>
CENTRAL OHIO COAL COMPANY
QUARTERLY REPORT PER REQUIREMENTS
OF HOLDING COMPANY ACT RELEASE NO. 26573
FOR THE QUARTER ENDED MARCH 31, 2000
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
Calculation of Allowed Cost of Capital -
Effective April 1, 2000 8
<PAGE>
<PAGE>
CENTRAL OHIO COAL COMPANY
STATEMENT OF INCOME
FOR THE QUARTER ENDED MARCH 31, 2000
(UNAUDITED)
(in thousands)
OPERATING REVENUES $5,067
COST OF OPERATION 5,637
OPERATING LOSS (570)
NONOPERATING INCOME 691
INCOME BEFORE INTEREST CHARGES 121
INTEREST CHARGES 5
INCOME BEFORE FEDERAL INCOME TAXES 116
FEDERAL INCOME TAXES 116
NET INCOME $ -
STATEMENT OF RETAINED EARNINGS
FOR THE QUARTER ENDED MARCH 31, 2000
(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)
March 31,
2000
(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 13,078
CURRENT ASSETS:
Cash and Cash Equivalents 38,318
Accounts Receivable:
General 930
Affiliated Companies 7,660
Coal 1,034
Materials and Supplies 6,311
Prepayments 77
TOTAL CURRENT ASSETS 54,330
DEFERRED INCOME TAXES 54,751
DEFERRED CHARGES 729
TOTAL $123,526
<PAGE>
<PAGE>
CENTRAL OHIO COAL COMPANY
BALANCE SHEET
(UNAUDITED)
March 31,
2000
(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 48,308
Accrued Reclamation Costs 38,260
Mine Closure 1,493
Other Operating Reserves 23,031
TOTAL OTHER NONCURRENT LIABILITIES 111,092
CURRENT LIABILITIES:
Accounts Payable:
General 1,575
Affiliated Companies 360
Accrued Reclamation Costs 5,966
Accrued Vacation Pay 472
Workers' Compensation Claims 561
Other 1,224
TOTAL CURRENT LIABILITIES 10,158
REGULATORY LIABILITIES 2,242
DEFERRED CREDITS 25
TOTAL $123,526
<PAGE>
<PAGE>
CENTRAL OHIO COAL COMPANY
INFORMATION CONCERNING MINE OPERATIONS AND CAPITAL IMPROVEMENTS
FOR THE QUARTER ENDED MARCH 31, 2000
Litigation
As discussed in Note 2 of the Notes to Financial Statements in
the 1999 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 March
31, 2000 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.
<PAGE>
<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 MARCH 31, 2000
(in thousands, except as noted)
<CAPTION> January through
March
2000
<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: (re investment in item A)
1. Current Quarter $ -
2. Year-to-Date $ -
D. Net Income per Statement of Income $ -
Add: Interest Charges 5
Less: Nonoperating Income 691
E. Applied Cost-of-Capital Billing Adder:
1. Current Quarter $ (686)
2. Year-to-Date $ (686)
II. Coal Billing Calculation:
A. Total Operating Expenses (a) $ 5,753
B. Add: Cost-of-Capital Billing Adder as Applied per E. 1. of Section I (686)
C. Cost Applicable to Current Quarter Coal Billings $ 5,067
D. Coal Sold and Shipped in Current Quarter to Ohio Power (in tons) 260,488
E. Average Price per Ton to Ohio Power (in dollars) (C/D) $19.45
(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 MARCH 31, 2000
(in thousands)
Direct Labor-UMW* $ 281
Indirect Labor-UMW* 1,116
Benefits-UMW* 1,737
Salaries and Benefits-Nonunion 938
Operating Supplies 1,029
Repair Parts and Materials 476
Electricity and Other Utilities 557
Outside Services-Maintenance, Haulage and Reclamation 538
Taxes Other Than Federal Income Taxes** 330
Rental of Equipment 6
Mining Cost Normalization*** (375)
Reclamation (1,941)
Other Production Costs 447
Subtotal 5,139
Transfers of Production Costs (to)/from Coal Inventory 498
Total $ 5,637
* United Mine Workers of America.
** Excludes FICA, Federal Unemployment and State Unemployment Taxes.
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>
CENTRAL OHIO COAL COMPANY
ANALYSIS OF MINING PLANT IN SERVICE
AND RELATED ACCUMULATED PROVISIONS FOR
DEPRECIATION AND AMORTIZATION
March 31, 2000
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>
OHIO POWER COMPANY'S (OPCo's) ACTIVE COAL MINES
CENTRAL OHIO COAL COMPANY; SOUTHERN OHIO COAL - MEIGS;
AND WINDSOR COAL COMPANY
ALLOWED AFTER-TAX COMPOSITE COST-OF-CAPITAL IS 10.27%
EFFECTIVE 4-1-00
THE 10.27% IS OPCo's WEIGHTED AVERAGE COST-OF-CAPITAL AND WAS
CALCULATED AS FOLLOWS:
CAPITALIZATION AFTER-TAX
@12/31/99 PERCENT EFFECTIVE WEIGHTED
COMPONENT (000) OF TOTAL COST RATE OF RETURN
Long-term Debt $1,077,200(a) 43.67% 7.19%(c) 3.14%
Preferred Stock 25,787 1.05% 4.88%(c) 0.05%
Common Stock 1,363,572(b) 55.28% 12.81%(d) 7.08%
Total $2,466,559 100.00% 10.27%*
Authorization: HCAR 35-26573 dated 9-13-96
(SEC File No. 70-8611).
(a) Includes long-term debt due in one year and is net of
unamortized debt premium and discount, unamortized debt
expense and unamortized loss on reacquired debt.
(b) Common equity includes premium on preferred stock and
excludes undistributed subsidiary earnings.
(c) Embedded cost at 12/31/99.
(d) No more than the rate allowed by the PUCO in a retail rate
proceeding involving OPCo and settled in 1995.
* Rate will be applied for billing purposes to the twelve
month period commencing April 1, 2000.