<PAGE>
SOUTHERN OHIO COAL COMPANY
QUARTERLY REPORT PER REQUIREMENTS
OF HOLDING COMPANY ACT RELEASE NO. 21178
BY MONTH, FOR THE QUARTER ENDED JUNE 30, 1994
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
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<TABLE>
SOUTHERN OHIO COAL COMPANY
TOTAL COMPANY
STATEMENTS OF INCOME
BY MONTH, FOR THE QUARTER ENDED JUNE 30, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
April 30, May 31, June 30, June 30,
1994 1994 1994 1994
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Parent . . . . . . . . . $16,239 $15,612 $20,824 $52,675
COST OF OPERATION . . . . . . . . . 14,299 13,712 16,628 44,639
OPERATING INCOME. . . . . . . . . . 1,940 1,900 4,196 8,036
NONOPERATING INCOME (LOSS). . . . . 73 73 (2,205) (2,059)
INCOME BEFORE INTEREST CHARGES. . . 2,013 1,973 1,991 5,977
INTEREST CHARGES. . . . . . . . . . 459 462 460 1,381
INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . . 1,554 1,511 1,531 4,596
FEDERAL INCOME TAXES ON OPERATIONS. 690 647 667 2,004
NET INCOME. . . . . . . . . . . . . $ 864 $ 864 $ 864 $ 2,592
The common stock of the Company is
wholly owned by Ohio Power Company.
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SOUTHERN OHIO COAL COMPANY
MEIGS DIVISION
STATEMENTS OF INCOME
BY MONTH, FOR THE QUARTER ENDED JUNE 30, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
April 30, May 31, June 30, June 30,
1994 1994 1994 1994
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Parent . . . . . . . . . $16,239 $15,612 $20,824 $52,675
COST OF OPERATION (including
Depreciation, Depletion and
Amortization of Mining Plant
of $970,000 in April,
$973,000 in May and
$1,060,000 in June) . . . . . . . 14,299 13,712 16,628 44,639
OPERATING INCOME. . . . . . . . . . 1,940 1,900 4,196 8,036
NONOPERATING INCOME (LOSS). . . . . 32 32 (2,245) (2,181)
INCOME BEFORE INTEREST CHARGES. . . 1,972 1,932 1,951 5,855
INTEREST CHARGES. . . . . . . . . . 418 421 420 1,259
INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . . 1,554 1,511 1,531 4,596
FEDERAL INCOME TAXES ON OPERATIONS. 690 647 667 2,004
MEIGS NET INCOME. . . . . . . . . . $ 864 $ 864 $ 864 $ 2,592
</TABLE>
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SOUTHERN OHIO COAL COMPANY
MARTINKA DIVISION
STATEMENTS OF INCOME
BY MONTH, FOR THE QUARTER ENDED JUNE 30, 1994
<CAPTION>
Three
Months
Month Ended Ended
April 30, May 31, June 30, June 30,
1994 1994 1994 1994
(in thousands)
NONOPERATING INCOME AND DEDUCTIONS:
<S> <C> <C> <C> <C>
Nonoperating Income -
Interest Income . . . . . . . . . . $306 $306 $307 $ 919
Nonoperating Deductions:
Shutdown Costs. . . . . . . . . . . 303 332 334 969
Tax Credit. . . . . . . . . . . . . (38) (67) (67) (172)
Net Nonoperating Income . . . . . . . 41 41 40 122
Interest Charges. . . . . . . . . . . 41 41 40 122
MARTINKA NET INCOME . . . . . . . . . $ - $ - $ - $ -
</TABLE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED JUNE 30, 1994
(UNAUDITED)
<CAPTION>
April 30, May 31, June 30,
1994 1994 1994
(in thousands)
ASSETS
<S> <C> <C> <C>
MINING PLANT:
Mining Plant in Service . . . . . . . . . . . . $413,710 $414,308 $411,414
Construction Work in Progress . . . . . . . . . 2,597 2,747 2,720
Total Mining Plant . . . . . . . . . . . 416,307 417,055 414,134
Accumulated Depreciation and Amortization . . . 189,643 191,622 193,255
NET MINING PLANT . . . . . . . . . . . . 226,664 225,433 220,879
OTHER PROPERTY AND INVESTMENTS. . . . . . . . . . 68,140 68,434 67,326
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . 1,478 1,829 2,742
Accounts Receivable:
General . . . . . . . . . . . . . . . . . . . 4,487 4,364 3,951
Insurance . . . . . . . . . . . . . . . . . . 14,579 13,079 13,079
Affiliated Companies. . . . . . . . . . . . . 1,250 451 461
Coal. . . . . . . . . . . . . . . . . . . . . . 469 352 1,030
Materials and Supplies. . . . . . . . . . . . . 9,782 9,566 9,499
Other . . . . . . . . . . . . . . . . . . . . . 4,239 3,820 3,426
TOTAL CURRENT ASSETS . . . . . . . . . . 36,284 33,461 34,188
REGULATORY ASSETS:
Amounts Due From Customers For Future
Federal Income Taxes. . . . . . . . . . . . . 59,265 58,940 58,588
Other . . . . . . . . . . . . . . . . . . . . . 34,042 36,547 31,094
TOTAL REGULATORY ASSETS. . . . . . . . . 93,307 95,487 89,682
TOTAL. . . . . . . . . . . . . . . . . $424,395 $422,815 $412,075
</TABLE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED JUNE 30, 1994
(UNAUDITED)
<CAPTION>
April 30, May 31, June 30,
1994 1994 1994
(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 35,617
TOTAL SHAREOWNER'S EQUITY. . . . . . . . 146,583 147,447 148,311
LONG-TERM DEBT - Notes Payable to Banks . . . . . 90,000 90,000 90,000
OTHER NONCURRENT LIABILITIES:
Obligations Under Capital Leases. . . . . . . . 29,806 29,066 26,394
Operating Reserves. . . . . . . . . . . . . . . 16,129 15,472 15,739
TOTAL OTHER NONCURRENT LIABILITIES . . . 45,935 44,538 42,133
CURRENT LIABILITIES:
Accounts Payable:
General . . . . . . . . . . . . . . . . . . . 3,180 3,080 3,684
Affiliated Companies. . . . . . . . . . . . . 1,938 1,034 1,000
Taxes Accrued . . . . . . . . . . . . . . . . . 1,673 2,995 1,903
Interest Accrued. . . . . . . . . . . . . . . . 1,277 1,694 2,051
Accrued Vacation Pay. . . . . . . . . . . . . . 2,827 2,865 2,772
Workers' Compensation Claims. . . . . . . . . . 9,780 9,815 9,478
Accrued Other Postretirement Benefits . . . . . 9,435 10,056 10,677
Obligations Under Capital Leases. . . . . . . . 12,161 12,493 11,699
Other . . . . . . . . . . . . . . . . . . . . . 7,481 10,427 7,440
TOTAL CURRENT LIABILITIES. . . . . . . . 49,752 54,459 50,704
DEFERRED CREDITS. . . . . . . . . . . . . . . . . 92,125 86,371 80,927
TOTAL. . . . . . . . . . . . . . . . . $424,395 $422,815 $412,075
</TABLE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
STATEMENTS OF RETAINED EARNINGS
BY MONTH, FOR THE QUARTER ENDED JUNE 30, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
April 30, May 31, June 30, June 30,
1994 1994 1994 1994
(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
BALANCE AT END OF PERIOD. . . . . $33,889 $34,753 $35,617 $35,617
</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 JUNE 30, 1994
<CAPTION>
April May June
1994 1994 1994
(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 . . . . . . . . . . . . . . . . . . . . . . $ 2,632 $ 3,290 $ 3,948
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 . . . . . . . . . . . . . . . . . . . . . . $ 1,056 $ 1,320 $ 1,584
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 . . . . . . . . . . . . . . . . . . . . . . $ 960 $ 1,200 $ 1,440
J. Total Earnings Allowable:
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.). . . . . . . . . . . . $ 4,648 $ 5,810 $ 6,972
K. Net Income per Statements of Income - Meigs Division (a). . . $ 864 $ 864 $ 864
Add: Interest Charges . . . . . . . . . . . . . . . . . . . 418 421 420
Less: Nonoperating Income (Loss). . . . . . . . . . . . . . 32 32 (2,245)
L. Applied Cost-of-Capital Billing Adder - Meigs Division:
1. Current Month. . . . . . . . . . . . . . . . . . . . . . $ 1,250 $ 1,253 $ 3,529
2. Year-to-Date . . . . . . . . . . . . . . . . . . . . . . $ 5,054 $ 6,307 $ 9,836
II. Monthly Coal Billing Calculation - Meigs Division:
A. Total Operating Expenses (b). . . . . . . . . . . . . . . . . $ 14,989 $ 14,359 $ 17,295
B. Add: Monthly Cost-of-Capital Billing Adder as Applied
per L. 1. of Section I. . . . . . . . . . . . . . . . . . . 1,250 1,253 3,529
C. Cost Applicable to Current Month Coal Billings (c). . . . . . $ 16,239 $ 15,612 $ 20,824
D. Coal Sold and Shipped in Current Month (in tons)(c) . . . . . 352,551 337,903 451,865
E. Average Price per Ton (in dollars) (C/D)(c) . . . . . . . . . $46.06 $46.20 $46.08
(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 - Meigs Division.
(c) Sales were to the Parent Company - Ohio Power Company for the Gavin Plant.
/TABLE
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SOUTHERN OHIO COAL COMPANY
ANALYSIS OF OPERATING RESERVES AND DEFERRED CREDITS
BY MONTH-END, FOR THE QUARTER ENDED JUNE 30, 1994
<CAPTION>
April 30, May 31, June 30,
1994 1994 1994
(in thousands)
<S> <C> <C> <C>
Operating Reserves:
Workers' Compensation . . . . . . . . . . . . . $ 8,838 $ 8,972 $ 9,278
Postemployment Benefits . . . . . . . . . . . . 6,432 5,647 5,647
Public Liability Insurance. . . . . . . . . . . 61 61 61
Tunnel Settlement . . . . . . . . . . . . . . . 350 350 350
Martinka Litigation Provision . . . . . . . . . 448 442 403
Total Operating Reserves. . . . . . . . . . $16,129 $15,472 $15,739
Deferred Credits:
Federal Income Taxes. . . . . . . . . . . . . . $73,157 $72,220 $71,476
Receipts from Parent for Future Coal Deliveries 17,339 12,881 8,015
Postemployment Benefits . . . . . . . . . . . . 1,129 1,129 1,069
Other . . . . . . . . . . . . . . . . . . . . . 500 141 367
Total Deferred Credits. . . . . . . . . . . $92,125 $86,371 $80,927
</TABLE>
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SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING CAPITAL IMPROVEMENTS
FOR THE QUARTER ENDED JUNE 30, 1994
See "Information Concerning Operations" with regard to Meigs No. 31 mine.
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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 JUNE 30, 1994
<CAPTION>
April 30, 1994 May 31, 1994 June 30, 1994
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. . . . . . . . 267,943 146,376 121,567 268,551 148,155 120,396 265,671 149,504 116,167
Coal Interests
(net of depletion) . . . . . 4,367 - 4,367 4,357 - 4,357 4,343 - 4,343
Mine Development Costs . . . . 134,149 43,267 90,882 134,149 43,467 90,682 134,149 43,751 90,398
Total Mining Plant in
Service. . . . . . . . . $413,710 $189,643 $224,067 $414,308 $191,622 $222,686 $411,414 $193,255 $218,159
</TABLE>
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SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING OPERATIONS
FOR THE QUARTER ENDED JUNE 30, 1994
As described in Note 3 of the 1993 annual report and in prior quarterly
reports, the Company has been involved in litigation concerning the pumping of
water from its Meigs 31 mine.
In April 1994 the U.S. Court of Appeals for the Sixth Circuit reversed
the judgement of the U.S. District Court for the Southern District of Ohio
which had granted a preliminary injunction to the Company preventing the
United States Environmental Protection Agency (Federal EPA) and the Federal
Office of Surface Mining, Reclamation and Enforcement (OSM) from interfering
with the removal of water from Meigs 31 mine. The Company sought and received
a stay of the Court of Appeals' mandate and on July 15, 1994 filed a petition
with the U.S. Supreme Court for a writ of certiorari seeking a review of the
Court of Appeals Order.
As a result of the West Virginia Division of Environmental Protection
proposing to fine the Company for alleged violations from the release of mine
water into the Ohio River, the Company filed an action on June 1, 1994 in the
U.S. District Court for the Southern District of West Virginia seeking a
determination that the state of West Virginia has no jurisdiction to impose
penalties with respect to the Meigs mine water discharges. On July 27, 1994
West Virginia filed an answer to the Company's complaint disputing the
Company's entitlement to a declaratory judgement and asserting a counterclaim
seeking an award of $2.55 million in civil penalties, reimbursement of
monitoring costs and compensation for unspecified natural resources damage.
The cost of returning the mine to service including the cost of the resolution
of the aforementioned litigation and environmental mitigation will be
recovered through insurance or from Ohio Power Company under the terms of the
coal supply agreement.
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SOUTHERN OHIO COAL COMPANY
STATEMENTS OF COST OF OPERATION
BY MONTH, FOR THE QUARTER ENDED JUNE 30, 1994
<CAPTION>
Three
Months
April May June Ended
1994 1994 1994 6/30/94
(in thousands)
<S> <C> <C> <C> <C>
Direct Labor-UMW* . . . . . . . . . . . . . . . . $ 428 $ 501 $ 539 $ 1,468
Indirect Labor-UMW* . . . . . . . . . . . . . . . 1,578 1,540 1,572 4,690
Benefits-UMW* . . . . . . . . . . . . . . . . . . 1,786 2,001 1,747 5,534
Salaries and Benefits-Nonunion. . . . . . . . . . 1,746 1,611 1,557 4,914
Operating Supplies. . . . . . . . . . . . . . . . 1,128 1,033 1,140 3,301
Repair Parts and Materials. . . . . . . . . . . . 1,969 2,093 1,711 5,773
Electricity and Other Utilities . . . . . . . . . 546 532 512 1,590
Outside Services-Maintenance, Haulage
and Reclamation . . . . . . . . . . . . . . . . 2,019 1,620 791 4,430
Taxes Other Than Federal Income Taxes** . . . . . 572 556 691 1,819
Rental of Equipment . . . . . . . . . . . . . . . 1,516 1,468 1,471 4,455
Depreciation, Depletion and Amortization. . . . . 970 973 1,060 3,003
Mining Cost Normalization***. . . . . . . . . . . (1,567) (1,609) 2,699 (477)
Other Production Costs. . . . . . . . . . . . . . 864 1,276 1,816 3,956
Subtotal. . . . . . . . . . . . . . . . . . . . . 13,555 13,595 17,306 44,456
Transfers of Production Costs (to)/from
Coal Inventory. . . . . . . . . . . . . . . . . 744 117 (678) 183
Total . . . . . . . . . . . . . . . . . $14,299 $13,712 $16,628 $44,639
* 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>
