<PAGE>
SOUTHERN OHIO COAL COMPANY
QUARTERLY REPORT PER REQUIREMENTS
OF HOLDING COMPANY ACT RELEASE NO. 21178
BY MONTH, FOR THE QUARTER ENDED MARCH 31, 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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SOUTHERN OHIO COAL COMPANY
TOTAL COMPANY
STATEMENTS OF INCOME
BY MONTH, FOR THE QUARTER ENDED MARCH 31, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
January 31, February 28, March 31, March 31,
1994 1994 1994 1994
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Parent . . . . . . . . . $7,741 $3,484 $12,812 $24,037
COST OF OPERATION . . . . . . . . . 5,878 1,658 11,036 18,572
OPERATING INCOME. . . . . . . . . . 1,863 1,826 1,776 5,465
NONOPERATING INCOME . . . . . . . . 83 58 99 240
INCOME BEFORE INTEREST CHARGES. . . 1,946 1,884 1,875 5,705
INTEREST CHARGES. . . . . . . . . . 519 464 469 1,452
INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . . 1,427 1,420 1,406 4,253
FEDERAL INCOME TAXES ON OPERATIONS. 563 556 542 1,661
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 MARCH 31, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
January 31, February 28, March 31, March 31,
1994 1994 1994 1994
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Parent . . . . . . . . . $7,741 $3,484 $12,812 $24,037
COST OF OPERATION (including
Depreciation, Depletion and
Amortization of Mining Plant
of $759,000 in January,
$711,000 in February and
$940,000 in March). . . . . . . . 5,878 1,658 11,036 18,572
OPERATING INCOME. . . . . . . . . . 1,863 1,826 1,776 5,465
NONOPERATING INCOME . . . . . . . . 45 17 58 120
INCOME BEFORE INTEREST CHARGES. . . 1,908 1,843 1,834 5,585
INTEREST CHARGES. . . . . . . . . . 481 423 428 1,332
INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . . 1,427 1,420 1,406 4,253
FEDERAL INCOME TAXES ON OPERATIONS. 563 556 542 1,661
MEIGS 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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SOUTHERN OHIO COAL COMPANY
MARTINKA DIVISION
STATEMENTS OF INCOME
BY MONTH, FOR THE QUARTER ENDED MARCH 31, 1994
<CAPTION>
Three
Months
Month Ended Ended
January 31, February 28, March 31, March 31,
1994 1994 1994 1994
(in thousands)
NONOPERATING INCOME AND DEDUCTIONS:
<S> <C> <C> <C> <C>
Nonoperating Income -
Interest Income . . . . . . . . . . $312 $308 $305 $ 925
Nonoperating Deductions:
Shutdown Costs. . . . . . . . . . . 369 363 360 1,092
Tax Credit. . . . . . . . . . . . . (95) (96) (96) (287)
Net Nonoperating Income . . . . . . . 38 41 41 120
Interest Charges. . . . . . . . . . . 38 41 41 120
MARTINKA NET INCOME . . . . . . . . . $ - $ - $ - $ -
</TABLE>
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SOUTHERN OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED MARCH 31, 1994
(UNAUDITED)
<CAPTION>
January 31, February 28, March 31,
1994 1994 1994
(in thousands)
ASSETS
<S> <C> <C> <C>
MINING PLANT:
Mining Plant in Service . . . . . . . . . . . . $412,866 $411,667 $411,376
Construction Work in Progress . . . . . . . . . 2,841 2,861 2,930
Total Mining Plant . . . . . . . . . . . 415,707 414,528 414,306
Accumulated Depreciation and Amortization . . . 186,517 186,262 187,840
NET MINING PLANT . . . . . . . . . . . . 229,190 228,266 226,466
OTHER PROPERTY AND INVESTMENTS. . . . . . . . . . 68,745 69,046 67,931
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . 2,231 376 1,439
Accounts Receivable:
General . . . . . . . . . . . . . . . . . . . 3,771 3,863 4,467
Insurance . . . . . . . . . . . . . . . . . . 15,829 15,829 15,829
Affiliated Companies. . . . . . . . . . . . . 84 472 708
Coal. . . . . . . . . . . . . . . . . . . . . . 892 2,179 1,213
Materials and Supplies. . . . . . . . . . . . . 9,898 9,901 9,896
Other . . . . . . . . . . . . . . . . . . . . . 940 4,975 4,600
TOTAL CURRENT ASSETS . . . . . . . . . . 33,645 37,595 38,152
REGULATORY ASSETS:
Amounts Due From Customer For Future
Federal Income Taxes. . . . . . . . . . . . . 60,227 59,956 59,573
Other . . . . . . . . . . . . . . . . . . . . . 10,771 20,617 33,572
TOTAL REGULATORY ASSETS. . . . . . . . . 70,998 80,573 93,145
TOTAL. . . . . . . . . . . . . . . . . $402,578 $415,480 $425,694
</TABLE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED MARCH 31, 1994
(UNAUDITED)
<CAPTION>
January 31, February 28, March 31,
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 33,025
TOTAL SHAREOWNER'S EQUITY. . . . . . . . 146,583 147,447 145,719
LONG-TERM DEBT - Notes Payable to Banks . . . . . 90,000 90,000 90,000
OTHER NONCURRENT LIABILITIES:
Obligations Under Capital Leases. . . . . . . . 29,933 29,622 28,678
Operating Reserves. . . . . . . . . . . . . . . 10,604 10,789 15,992
TOTAL OTHER NONCURRENT LIABILITIES . . . 40,537 40,411 44,670
CURRENT LIABILITIES:
Accounts Payable:
General . . . . . . . . . . . . . . . . . . . 2,881 2,962 3,550
Affiliated Companies. . . . . . . . . . . . . 1,052 1,540 1,079
Taxes Accrued . . . . . . . . . . . . . . . . . 2,268 2,527 3,708
Accrued Vacation Pay. . . . . . . . . . . . . . 2,307 2,526 2,737
Worker's Compensation Claims. . . . . . . . . . 8,262 8,101 9,878
Accrued Other Postretirement Benefits . . . . . 7,731 8,133 8,784
Obligations Under Capital Leases. . . . . . . . 11,687 11,774 11,788
Other . . . . . . . . . . . . . . . . . . . . . 6,388 8,486 7,864
TOTAL CURRENT LIABILITIES. . . . . . . . 42,576 46,049 49,388
DEFERRED CREDITS. . . . . . . . . . . . . . . . . 82,882 91,573 95,917
TOTAL. . . . . . . . . . . . . . . . . $402,578 $415,480 $425,694
</TABLE>
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SOUTHERN OHIO COAL COMPANY
STATEMENTS OF RETAINED EARNINGS
BY MONTH, FOR THE QUARTER ENDED MARCH 31, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
January 31, February 28, March 31, March 31,
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
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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SOUTHERN OHIO COAL COMPANY
STATEMENTS OF COST OF COMMERCIAL COAL SOLD AND SHIPPED
BY MONTH, FOR THE QUARTER ENDED MARCH 31, 1994
<CAPTION>
January February March
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 . . . . . . . . . . . . . . . . . . . . . . $ 658 $ 1,316 $ 1,974
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 . . . . . . . . . . . . . . . . . . . . . . $ 264 $ 528 $ 792
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 . . . . . . . . . . . . . . . . . . . . . . $ 240 $ 480 $ 720
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.). . . . . . . . . . . . $ 1,162 $ 2,324 $ 3,486
K. Net Income per Statements of Income . . . . . . . . . . . . . $ 864 $ 864 $ 864
Add: Interest Charges . . . . . . . . . . . . . . . . . . . 481 423 428
Less: Nonoperating Income . . . . . . . . . . . . . . . . . 45 17 58
L. Applied Cost-of-Capital Billing Adder:
1. Current Month. . . . . . . . . . . . . . . . . . . . . . $ 1,300 $ 1,270 $ 1,234
2. Year-to-Date . . . . . . . . . . . . . . . . . . . . . . $ 1,300 $ 2,570 $ 3,804
II. Monthly Coal Billing Calculation - Meigs Division:
A. Total Operating Expenses (b). . . . . . . . . . . . . . . . . $ 6,441 $ 2,214 $ 11,578
B. Add: Monthly Cost-of-Capital Billing Adder as Applied
per L. 1. of Section I. . . . . . . . . . . . . . . . . . . 1,300 1,270 1,234
C. Cost Applicable to Current Month Coal Billings (c). . . . . . $ 7,741 $ 3,484 $ 12,812
D. Coal Sold and Shipped in Current Month (in tons)(c) . . . . . 195,389 85,338 298,948
E. Average Price per Ton (in dollars) (C/D)(c) . . . . . . . . . $39.62 $40.82 $42.86
(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
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SOUTHERN OHIO COAL COMPANY
ANALYSIS OF OPERATING RESERVES AND DEFERRED CREDITS
BY MONTH-END, FOR THE QUARTER ENDED MARCH 31, 1994
<CAPTION>
January 31, February 28, March 31,
1994 1994 1994
(in thousands)
<S> <C> <C> <C>
Operating Reserves:
Workers' Compensation . . . . . . . . . . . . . $ 9,686 $ 9,875 $ 8,700
Postemployment Benefits . . . . . . . . . . . . - - 6,432
Public Liability Insurance. . . . . . . . . . . 61 61 62
Tunnel Settlement . . . . . . . . . . . . . . . 400 400 350
Martinka Litigation Provision . . . . . . . . . 457 453 448
Total Operating Reserves. . . . . . . . . . $10,604 $10,789 $15,992
Deferred Credits:
Federal Income Taxes. . . . . . . . . . . . . . $75,298 $74,952 $73,986
Receipts from Parent for Future Coal Deliveries 7,584 16,615 20,794
Postemployment Benefits . . . . . . . . . . . . - - 1,130
Other . . . . . . . . . . . . . . . . . . . . . - 6 7
Total Deferred Credits. . . . . . . . . . . $82,882 $91,573 $95,917
</TABLE>
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SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING CAPITAL IMPROVEMENTS
FOR THE QUARTER ENDED MARCH 31, 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 MARCH 31, 1994
<CAPTION>
January 31, 1994 February 28, 1994 March 31, 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. . . . . . . . 267,077 143,683 123,394 265,882 143,348 122,534 265,599 144,769 120,830
Coal Interests
(net of depletion) . . . . . 4,389 - 4,389 4,385 - 4,385 4,377 - 4,377
Mine Development Costs . . . . 134,149 42,834 91,315 134,149 42,914 91,235 134,149 43,071 91,078
Total Mining Plant in
Service. . . . . . . . . $412,866 $186,517 $226,349 $411,667 $186,262 $225,405 $411,376 $187,840 $223,536
</TABLE>
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SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1994
As described in Note 3 of the 1993 annual report and prior quarterly
reports, the Company has been involved in litigation concerning the pumping of
water from its Meigs 31 mine.
On April 8, 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 from interfering with
the removal of water from Meigs 31 mine. The Court of Appeals remanded the
case to the District Court with instructions to dismiss it for lack of
jurisdiction. On April 22, 1994 SOCCo filed a request for rehearing with the
U.S. Sixth Circuit.
Pumping has removed most of the water that inundated the mine. Meigs 31
mine returned to service in February 1994. 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 OPCo
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 MARCH 31, 1994
<CAPTION>
Three
Months
January February March Ended
1994 1994 1994 3/31/94
(in thousands)
<S> <C> <C> <C> <C>
Direct Labor-UMW* . . . . . . . . . . . . . . . . $ 243 $ 223 $ 322 $ 788
Indirect Labor-UMW* . . . . . . . . . . . . . . . 1,619 1,682 2,003 5,304
Benefits-UMW* . . . . . . . . . . . . . . . . . . 2,357 1,742 2,183 6,282
Salaries and Benefits-Nonunion. . . . . . . . . . 1,734 1,599 1,804 5,137
Operating Supplies. . . . . . . . . . . . . . . . 685 919 1,499 3,103
Repair Parts and Materials. . . . . . . . . . . . 1,631 1,813 2,659 6,103
Electricity and Other Utilities . . . . . . . . . 503 447 568 1,518
Outside Services-Maintenance, Haulage
and Reclamation . . . . . . . . . . . . . . . . 404 727 1,958 3,089
Taxes Other Than Income Taxes** . . . . . . . . . 393 280 507 1,180
Rental of Equipment . . . . . . . . . . . . . . . 1,507 1,399 1,457 4,363
Depreciation, Depletion and Amortization. . . . . 759 711 940 2,410
Mining Cost Normalization***. . . . . . . . . . . (6,422) (10,132) (7,446) (24,000)
Other Production Costs. . . . . . . . . . . . . . 799 1,535 1,616 3,950
Subtotal. . . . . . . . . . . . . . . . . . . . . 6,212 2,945 10,070 19,227
Transfers of Production Costs (to)/from
Coal Inventory. . . . . . . . . . . . . . . . . (334) (1,287) 966 (655)
Total . . . . . . . . . . . . . . . . . $ 5,878 $ 1,658 $11,036 $ 18,572
* 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>
