<PAGE>
SOUTHERN OHIO COAL COMPANY
QUARTERLY REPORT PER REQUIREMENTS
OF HOLDING COMPANY ACT RELEASE NO. 21178
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1993
CONTENTS
Page
Statements of Income:
Total Company 1
Meigs Division 2
Martinka Division 3
Balance Sheets 4-5
Statements of Retained Earnings 6
Statements of Cost of Commercial Coal Sold and Shipped 7
Analysis of Operating Reserves and Deferred Credits 8
Information Concerning Capital Improvements 9
Analysis of Mining Plant in Service 10
Information Concerning Operations 11
Statements of Cost of Operation 12
Construction Expenditure Budget - 1994 13
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<TABLE>
SOUTHERN OHIO COAL COMPANY
TOTAL COMPANY
STATEMENTS OF INCOME
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1993
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
October 31, November 30, December 31, December 31,
1993 1993 1993 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Parent . . . . . . . . $19,433 $13,566 $8,550 $41,549
COST OF OPERATION . . . . . . . . 17,641 11,826 7,151 36,618
OPERATING INCOME. . . . . . . . . 1,792 1,740 1,399 4,931
NONOPERATING INCOME . . . . . . . 82 27 56 165
INCOME BEFORE INTEREST CHARGES. . 1,874 1,767 1,455 5,096
INTEREST CHARGES. . . . . . . . . 563 573 564 1,700
INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . 1,311 1,194 891 3,396
FEDERAL INCOME TAXES
ON OPERATIONS . . . . . . . . . 447 330 27 804
NET INCOME. . . . . . . . . . . . $ 864 $ 864 $ 864 $ 2,592
The common stock of the Company is
wholly owned by Ohio Power Company.
</TABLE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
MEIGS DIVISION
STATEMENTS OF INCOME
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1993
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
October 31, November 30, December 31, December 31,
1993 1993 1993 1993
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Parent . . . . . . . . $19,433 $13,566 $8,550 $41,549
COST OF OPERATION (including
Depreciation, Depletion and
Amortization of Mining Plant of
$793,000 in October, $791,000
in November and $722,000
in December). . . . . . . . . . 17,641 11,826 7,151 36,618
OPERATING INCOME. . . . . . . . . 1,792 1,740 1,399 4,931
NONOPERATING INCOME (LOSS). . . . 42 (13) 16 45
INCOME BEFORE INTEREST CHARGES. . 1,834 1,727 1,415 4,976
INTEREST CHARGES. . . . . . . . . 523 533 524 1,580
INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . 1,311 1,194 891 3,396
FEDERAL INCOME TAXES
ON OPERATIONS . . . . . . . . . 447 330 27 804
MEIGS NET INCOME. . . . . . . . . $ 864 $ 864 $ 864 $ 2,592
The common stock of the Company is
wholly owned by Ohio Power Company.
</TABLE>
<PAGE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
MARTINKA DIVISION
STATEMENT OF INCOME
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1993
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
October 31, November 30, December 31, December 31,
1993 1993 1993 1993
(in thousands)
NONOPERATING INCOME AND DEDUCTIONS:
<S> <C> <C> <C> <C>
Nonoperating Income -
Interest Income . . . . . . . . . $311 $311 $ 312 $ 934
Nonoperating Deductions:
Shutdown Costs. . . . . . . . . . 366 367 515 1,248
Tax Credits . . . . . . . . . . . (95) (96) (243) (434)
Net Nonoperating Income . . . . . . 40 40 40 120
Interest Charges. . . . . . . . . . 40 40 40 120
MARTINKA NET INCOME . . . . . . . . $ - $ - $ - $ -
/TABLE
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<TABLE>
SOUTHERN OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED DECEMBER 31, 1993
(UNAUDITED)
<CAPTION>
October 31, November 30, December 31,
1993 1993 1993
(in thousands)
ASSETS
<S> <C> <C> <C>
MINING PLANT:
Mining Plant in Service . . . . . . . . . . . . $405,840 $409,296 $409,403
Construction Work in Progress . . . . . . . . . 1,877 1,900 2,673
Total Mining Plant . . . . . . . . . . 407,717 411,196 412,076
Accumulated Depreciation and Amortization . . . 181,749 183,453 185,054
NET MINING PLANT. . . . . . . . . . . . 225,968 227,743 227,022
OTHER PROPERTY AND INVESTMENTS. . . . . . . . . . 69,484 69,529 68,444
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . 831 897 2,505
Accounts Receivable:
General . . . . . . . . . . . . . . . . . . . 16,655 19,822 19,763
Affiliated Companies. . . . . . . . . . . . . 1,879 4,328 1,202
Coal. . . . . . . . . . . . . . . . . . . . . . 735 723 558
Materials and Supplies. . . . . . . . . . . . . 9,740 9,782 10,871
Other . . . . . . . . . . . . . . . . . . . . . 2,179 1,790 1,411
TOTAL CURRENT ASSETS. . . . . . . . . . 32,019 37,342 36,310
REGULATORY ASSETS:
Amounts Due From Customer For Future
Federal Income Taxes. . . . . . . . . . . . . 60,802 60,645 60,487
Other . . . . . . . . . . . . . . . . . . . . . 4,501 2,061 5,293
TOTAL REGULATORY ASSETS . . . . . . . . 65,303 62,706 65,780
TOTAL . . . . . . . . . . . . . . . . $392,774 $397,320 $397,556
</TABLE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED DECEMBER 31, 1993
(UNAUDITED)
<CAPTION>
October 31, November 30, December 31,
1993 1993 1993
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C> <C>
SHAREOWNER'S EQUITY:
Common Stock - Par Value $1:
Authorized and Outstanding - 5,000 Shares . . $ 5 $ 5 $ 5
Premium on Common Stock . . . . . . . . . . . . 9,996 9,996 9,996
Other Paid-in Capital . . . . . . . . . . . . . 102,693 102,693 102,693
Retained Earnings . . . . . . . . . . . . . . . 33,889 34,753 33,025
TOTAL SHAREOWNER'S EQUITY . . . . . . . 146,583 147,447 145,719
LONG-TERM DEBT - Notes Payable to Banks . . . . . 45,000 45,000 90,000
OTHER NONCURRENT LIABILITIES:
Obligations Under Capital Leases. . . . . . . . 26,829 28,388 27,592
Operating Reserves. . . . . . . . . . . . . . . 10,915 10,835 10,909
TOTAL OTHER NONCURRENT LIABILITIES. . . 37,744 39,223 38,501
CURRENT LIABILITIES:
Long-term Debt Due Within One Year. . . . . . . 45,000 45,000 -
Accounts Payable:
General . . . . . . . . . . . . . . . . . . . 2,419 2,395 4,872
Affiliated Companies. . . . . . . . . . . . . 1,901 1,302 2,267
Taxes Accrued . . . . . . . . . . . . . . . . . 2,318 2,571 827
Accrued Vacation Pay. . . . . . . . . . . . . . 2,800 2,665 2,483
Workers' Compensation Claims. . . . . . . . . . 8,246 8,033 7,773
Obligations Under Capital Leases. . . . . . . . 10,260 11,243 11,268
Accrued Other Postretirement Benefits . . . . . 6,131 6,557 7,144
Other . . . . . . . . . . . . . . . . . . . . . 7,635 8,582 8,610
TOTAL CURRENT LIABILITIES . . . . . . . 86,710 88,348 45,244
DEFERRED CREDITS. . . . . . . . . . . . . . . . . 76,737 77,302 78,092
TOTAL . . . . . . . . . . . . . . . . $392,774 $397,320 $397,556
</TABLE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
STATEMENTS OF RETAINED EARNINGS
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1993
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
October 31, November 30, December 31, December 31,
1993 1993 1993 1993
(in thousands)
<S> <C> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD. . $33,025 $33,889 $34,753 $33,025
NET INCOME. . . . . . . . . . . . 864 864 864 2,592
CASH DIVIDENDS DECLARED . . . . . - - 2,592 2,592
BALANCE AT END OF PERIOD. . . . . $33,889 $34,753 $33,025 $33,025
</TABLE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
STATEMENTS OF COST OF COMMERCIAL COAL SOLD AND SHIPPED
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1993
<CAPTION>
October November December
1993 1993 1993
(in thousands, except as noted)
<S> <C> <C> <C>
I. Calculation of Cost-of-Capital Compensation:
A. Investment at Beginning of Month:
Common Stock. . . . . . . . . . . . . . . . . . . . . . . . $ 5 $ 5 $ 5
Premium on Common Stock . . . . . . . . . . . . . . . . . . 9,996 9,996 9,996
Other Paid-in Capital (excluding item D and item G) . . . . 55,233 55,233 55,233
65,234 65,234 65,234
B. Rate of Return Allowable per HCAR Nos. 20515 and
21008: 12.11% per annum, 1.0092% per month. . . . . . . . . .010092 .010092 .010092
C. Earnings Allowable: (re investment in item A)
1. Current Month. . . . . . . . . . . . . . . . . . . . . . $ 658 $ 658 $ 658
2. Year-to-Date . . . . . . . . . . . . . . . . . . . . . . $ 6,580 $ 7,238 $ 7,896
D. Equity Investment for the months of June 1981,
December 1981 and September 1982. . . . . . . . . . . . . . $ 26,240 $ 26,240 $ 26,240
E. Rate of Return Allowable per HCAR Nos. 21008, 21537,
22129 and 22401: 12.04% per annum, 1.0033% per month. . . . .010033 .010033 .010033
F. Earnings Allowable: (re investment in item D)
1. Current Month . . . . . . . . . . . . . . . . . . . . . . $ 264 $ 264 $ 264
2. Year-to-Date. . . . . . . . . . . . . . . . . . . . . . . $ 2,640 $ 2,904 $ 3,168
G. Equity Investment for the months of March 1982,
June 1982 and December 1982. . . . . . . . . . . . . . . . . $ 21,220 $ 21,220 $ 21,220
H. Rate of Return Allowable per HCAR Nos. 21008, 21537,
22129 and 22401: 13.58% per annum, 1.1317% per month . . . . .011317 .011317 .011317
I. Earnings Allowable: (re investment in item G)
1. Current Month . . . . . . . . . . . . . . . . . . . . . . $ 240 $ 240 $ 240
2. Year-to-Date. . . . . . . . . . . . . . . . . . . . . . . $ 2,400 $ 2,640 $ 2,880
J. Total Earnings Allowable:(a)
1. Current Month (C.1. + F.1. + I.1.). . . . . . . . . . . . $ 1,162 $ 1,162 $ 1,162
2. Year-to-Date (C.2. + F.2. + I.2.) . . . . . . . . . . . . $ 11,620 $ 12,782 $ 13,944
K. Net Income per Statements of Income - Meigs Division (a). . . $ 864 $ 864 $ 864
Add: Interest Charges. . . . . . . . . . . . . . . . . . . . 523 533 524
Less: Nonoperating Income. . . . . . . . . . . . . . . . . . 42 (13) 16
L. Applied Cost-of-Capital Billing Adder - Meigs Division:
1. Current Month . . . . . . . . . . . . . . . . . . . . . . $ 1,345 $ 1,410 $ 1,372
2. Year-to-Date. . . . . . . . . . . . . . . . . . . . . . . $ 13,616 $ 15,026 $ 16,398
II. Monthly Coal Billing Calculation - Meigs Division:
A. Total Operating Expenses (b). . . . . . . . . . . . . . . . . $ 18,088 $ 12,156 $ 7,178
B. Add: Monthly Cost-of-Capital Billing Adder as Applied
per L. 1. of Section I. . . . . . . . . . . . . . . . . . . 1,345 1,410 1,372
C. Cost Applicable to Current Month Coal Billings (c). . . . . . $ 19,433 $ 13,566 $ 8,550
D. Coal Sold and Shipped in Current Month (in tons)(c) . . . . . 298,974 249,777 148,675
E. Average Price per Ton (in dollars) (C/D)(c) . . . . . . . . . $65.00 $54.31 $57.50
(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" reported in Statements of Income.
(c) Sales were to the Parent Company - Ohio Power Company for the Gavin Plant.
/TABLE
<PAGE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
ANALYSIS OF OPERATING RESERVES AND DEFERRED CREDITS
BY MONTH-END, FOR THE QUARTER ENDED DECEMBER 31, 1993
<CAPTION>
October 31, November 30, December 31,
1993 1993 1993
(in thousands)
<S> <C> <C> <C>
Operating Reserves:
Workers' Compensation . . . . . . . . . . . . $ 9,980 $ 9,900 $ 9,991
Public Liability Insurance. . . . . . . . . . 61 61 61
Tunnel Settlement . . . . . . . . . . . . . . 400 400 400
Martinka Litigation Settlement. . . . . . . . 474 474 457
Total Operating Reserves. . . . . . . $10,915 $10,835 $10,909
Deferred Credits:
Federal Income Taxes. . . . . . . . . . . . . $76,734 $76,605 $75,814
Mining Cost Normalization . . . . . . . . . . - 393 -
Receipts from Parent for Future
Coal Deliveries . . . . . . . . . . . . . . - - 2,276
Other . . . . . . . . . . . . . . . . . . . . 3 304 2
Total Deferred Credits. . . . . . . . $76,737 $77,302 $78,092
</TABLE>
<PAGE>
<PAGE>
SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING CAPITAL IMPROVEMENTS
FOR THE QUARTER ENDED DECEMBER 31, 1993
See "Information Concerning Operations" with regard to Meigs No. 31
mine.
<PAGE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
ANALYSIS OF MINING PLANT IN SERVICE
AND RELATED ACCUMULATED PROVISIONS FOR
DEPRECIATION AND AMORTIZATION
BY MONTH-END, FOR THE QUARTER ENDED DECEMBER 31, 1993
<CAPTION>
October 31, 1993 November 30, 1993 December 31, 1993
Net Net Net
Gross Accumulated Carrying Gross Accumulated Carrying Gross Accumulated Carrying
Cost Provisions Amount Cost Provisions Amount Cost Provisions Amount
(in thousands)
Description
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Surface Lands. . . . . . . . . $ 7,251 $ - $ 7,251 $ 7,251 $ - $ 7,251 $ 7,251 $ - $ 7,251
Mining Structures
and Equipment. . . . . . . . 260,033 139,272 120,761 263,497 140,827 122,670 263,608 142,343 121,265
Coal Interests
(net of depletion) . . . . . 4,407 - 4,407 4,399 - 4,399 4,395 - 4,395
Mine Development Costs . . . . 134,149 42,477 91,672 134,149 42,626 91,523 134,149 42,711 91,438
Total Mining Plant in
Service. . . . . . . . . $405,840 $181,749 $224,091 $409,296 $183,453 $225,843 $409,403 $185,054 $224,349
/TABLE
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SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 1993
Meigs Mine
On July 11, 1993, Meigs 31 mine, one of two underground mines owned by
the Company was inundated with water from an adjoining, sealed and abandoned
mine also owned by the Company. On July 26, 1993, the Ohio Environmental
Protection Agency (Ohio EPA) approved a plan to pump water from the mine.
The U.S. District Court for the Southern District of Ohio granted a
motion by the Company for a preliminary injunction against the Federal Office
of Surface Mining Reclamation and Enforcement (OSM) and the United States
Environmental Protection Agency (Federal EPA) preventing them from exercising
jurisdiction to issue orders to cease the pumping. In an appeal by Federal
EPA and OSM the U.S. Court of Appeals for the Sixth Circuit denied OSM's
motion for a stay of the District Court's preliminary injunction but granted
Federal EPA's motion for a stay in part which allowed Federal EPA to
investigate and make findings with respect to alleged violations of the Clean
Water Act and thereafter to exercise its enforcement authority under the Clean
Water Act if a violation was identified. Federal EPA issued an administrative
order requiring a partial cessation of pumping which was extended until
September 8, 1993. On September 8, 1993, the District Court granted the
Company's motion requesting that enforcement of the Federal EPA order be
stayed. On September 23, 1993, the Court of Appeals ruled that Federal EPA
had the right to issue the order, thereby overturning the District Court's
decision. Since September 16, 1993, the Company has processed all water
removed from the mine through its expanded treatment system and is in
compliance with the effluent limitations in its water discharge permits.
On January 3, 1994 the District Court held that the complaint filed by
the Company should not be dismissed and concluded that sufficient legal and
factual grounds existed for the court to consider the Company's claim that
Federal EPA could not override Ohio EPA's authorization for the Company to
bypass its water treatment system on an emergency basis during pumping
activities. In a separate opinion, the District Court denied Federal EPA's
request that the District Court defer consideration of the Company's motion
involving a request for a Declaration of Rights with respect to the mine water
release into area streams.
The West Virginia Division of Environmental Protection has proposed
fining the Company $1.8 million for alleged violations resulting from the
release of mine water into the Ohio River.
Pumping has removed most of the water that inundated the mine. Meigs 31
mine returned to service in February 1994. The resolution of the
aforementioned litigation and environmental mitigation costs is not expected
to have an adverse impact on results of operations or financial condition.
<PAGE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
STATEMENTS OF COST OF OPERATION
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1993
<CAPTION>
Three
Months
October November December Ended
1993 1993 1993 12/31/93
(in thousands)
<S> <C> <C> <C> <C>
Direct Labor-UMW* . . . . . . . . . . . . . . . . $ 263 $ 223 $ 296 $ 782
Indirect Labor-UMW* . . . . . . . . . . . . . . . 1,295 1,275 1,898 4,468
Benefits-UMW* . . . . . . . . . . . . . . . . . . 1,821 1,623 931 4,375
Salaries and Benefits-Nonunion. . . . . . . . . . 1,455 1,373 1,554 4,382
Operating Supplies. . . . . . . . . . . . . . . . 624 504 709 1,837
Repair Parts and Materials. . . . . . . . . . . . 1,616 513 (491) 1,638
Electricity and Other Utilities . . . . . . . . . 484 493 474 1,451
Outside Services-Maintenance, Haulage
and Reclamation . . . . . . . . . . . . . . . . 1,587 375 854 2,816
Taxes Other Than Income Taxes** . . . . . . . . . 275 427 398 1,100
Rental of Equipment . . . . . . . . . . . . . . . 1,415 1,502 1,432 4,349
Depreciation, Depletion and Amortization. . . . . 793 791 722 2,306
Mining Cost Normalization***. . . . . . . . . . . 4,844 4,418 (393) 8,869
Estimated Insurance Reimbursement
for Water Damage. . . . . . . . . . . . . . . . (2,285) (2,790) (2,791) (7,866)
Other Production Costs. . . . . . . . . . . . . . 2,145 1,087 1,393 4,625
Subtotal. . . . . . . . . . . . . . . . . . . . . 16,332 11,814 6,986 35,132
Transfers of Production Costs (to)/from
Coal Inventory. . . . . . . . . . . . . . . . . 1,309 12 165 1,486
Total . . . . . . . . . . . . . . . . . $17,641 $11,826 $ 7,151 $36,618
* 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.
</TABLE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
CONSTRUCTION EXPENDITURE BUDGET - 1994
<CAPTION>
Description Budgeted Amount*
(in thousands)
<S> <C>
Caustic Storage #31 $ 647
Subsidence 575
Meigs 2 upgrades 367
Mine Plant Blanket 228
Ventilation Shaft #31 96
Total $1,913
</TABLE>
* This budget does not include any possible lease transactions.
