<PAGE>
SOUTHERN OHIO COAL COMPANY
QUARTERLY REPORT PER REQUIREMENTS
OF HOLDING COMPANY ACT RELEASE NO. 21178
BY MONTH, FOR THE QUARTER ENDED SEPTEMBER 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
<PAGE>
<TABLE>
SOUTHERN OHIO COAL COMPANY
TOTAL COMPANY
STATEMENTS OF INCOME
BY MONTH, FOR THE QUARTER ENDED SEPTEMBER 30, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
July 31, August 31, September 30, September 30,
1994 1994 1994 1994
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Parent . . . . . . . . $13,453 $22,147 $18,821 $54,421
COST OF OPERATION . . . . . . . . 11,564 20,110 16,550 48,224
OPERATING INCOME. . . . . . . . . 1,889 2,037 2,271 6,197
NONOPERATING INCOME (LOSS). . . . 74 (37) (279) (242)
INCOME BEFORE INTEREST CHARGES. . 1,963 2,000 1,992 5,955
INTEREST CHARGES. . . . . . . . . 462 485 490 1,437
INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . 1,501 1,515 1,502 4,518
FEDERAL INCOME TAXES
ON OPERATIONS . . . . . . . . . 637 651 638 1,926
NET INCOME. . . . . . . . . . . . $ 864 $ 864 $ 864 $ 2,592
The common stock of the Company is
wholly owned by Ohio Power Company.
</TABLE>
<PAGE>
<TABLE>
SOUTHERN OHIO COAL COMPANY
MEIGS DIVISION
STATEMENTS OF INCOME
BY MONTH, FOR THE QUARTER ENDED SEPTEMBER 30, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
July 31, August 31, September 30, September 30,
1994 1994 1994 1994
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Parent . . . . . . . . $13,453 $22,147 $18,821 $54,421
COST OF OPERATION (including
Depreciation, Depletion and
Amortization of Mining Plant
of $932,000 in July,
$1,049,000 in August and
$1,003,000 in September). . . . 11,564 20,110 16,550 48,224
OPERATING INCOME. . . . . . . . . 1,889 2,037 2,271 6,197
NONOPERATING INCOME (LOSS). . . . 34 (78) (320) (364)
INCOME BEFORE INTEREST CHARGES. . 1,923 1,959 1,951 5,833
INTEREST CHARGES. . . . . . . . . 422 444 449 1,315
INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . 1,501 1,515 1,502 4,518
FEDERAL INCOME TAXES
ON OPERATIONS . . . . . . . . . 637 651 638 1,926
MEIGS NET INCOME. . . . . . . . . $ 864 $ 864 $ 864 $ 2,592
</TABLE>
<PAGE>
<TABLE>
SOUTHERN OHIO COAL COMPANY
MARTINKA DIVISION
STATEMENTS OF INCOME
BY MONTH, FOR THE QUARTER ENDED SEPTEMBER 30, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
July 31, August 31, September 30, September 30,
1994 1994 1994 1994
(in thousands)
<S> <C> <C> <C> <C>
NONOPERATING INCOME AND DEDUCTIONS:
Nonoperating Income -
Interest Income . . . . . . . . . $308 $306 $305 $ 919
Nonoperating Deductions:
Shutdown Costs. . . . . . . . . . 335 332 331 998
Tax Credit. . . . . . . . . . . . (67) (67) (67) (201)
Net Nonoperating Income . . . . . . 40 41 41 122
Interest Charges. . . . . . . . . . 40 41 41 122
MARTINKA NET INCOME . . . . . . . . $ - $ - $ - $ -
</TABLE>
<PAGE>
<TABLE>
SOUTHERN OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED SEPTEMBER 30, 1994
(UNAUDITED)
<CAPTION>
July 31, August 31, September 30,
1994 1994 1994
(in thousands)
<S> <C> <C> <C>
ASSETS
MINING PLANT:
Mining Plant in Service . . . . . . . . . . . $411,888 $412,167 $415,200
Construction Work in Progress . . . . . . . . 2,912 2,897 378
Total Mining Plant . . . . . . . . . . 414,800 415,064 415,578
Accumulated Depreciation and Amortization . . 195,162 196,967 198,593
NET MINING PLANT . . . . . . . . . . . 219,638 218,097 216,985
OTHER PROPERTY AND INVESTMENTS. . . . . . . . . 67,618 67,905 66,812
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . 2,779 2,340 3,357
Accounts Receivable:
General . . . . . . . . . . . . . . . . . . 3,958 4,214 4,813
Insurance . . . . . . . . . . . . . . . . . 13,079 13,079 13,079
Affiliated Companies. . . . . . . . . . . . 163 552 3,154
Coal. . . . . . . . . . . . . . . . . . . . . 548 1,048 1,389
Materials and Supplies. . . . . . . . . . . . 9,544 9,773 9,479
Other . . . . . . . . . . . . . . . . . . . . 3,076 2,991 2,709
TOTAL CURRENT ASSETS . . . . . . . . . 33,147 33,997 37,980
REGULATORY ASSETS:
Amounts Due From Customers For Future
Federal Income Taxes. . . . . . . . . . . . 58,290 57,979 57,670
Other . . . . . . . . . . . . . . . . . . . . 32,933 27,323 22,892
TOTAL REGULATORY ASSETS. . . . . . . . 91,223 85,302 80,562
TOTAL. . . . . . . . . . . . . . . . $411,626 $405,301 $402,339
</TABLE>
<PAGE>
<TABLE>
SOUTHERN OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED SEPTEMBER 30, 1994
(UNAUDITED)
<CAPTION>
July 31, August 31, September 30,
1994 1994 1994
(in thousands)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
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 . . . . . . . . . . . . . . . 36,481 37,345 38,209
TOTAL SHAREOWNER'S EQUITY. . . . . . . . 149,175 150,039 150,903
LONG-TERM DEBT - Notes Payable to Banks . . . . . 90,000 90,000 90,000
OTHER NONCURRENT LIABILITIES:
Obligations Under Capital Leases. . . . . . . . 25,995 25,525 25,456
Operating Reserves. . . . . . . . . . . . . . . 15,927 15,601 15,674
TOTAL OTHER NONCURRENT LIABILITIES . . . 41,922 41,126 41,130
CURRENT LIABILITIES:
Accounts Payable:
General . . . . . . . . . . . . . . . . . . . 2,649 3,231 2,908
Affiliated Companies. . . . . . . . . . . . . 930 1,203 1,825
Taxes Accrued . . . . . . . . . . . . . . . . . 2,734 3,979 560
Interest Accrued. . . . . . . . . . . . . . . . 941 487 824
Accrued Vacation Pay. . . . . . . . . . . . . . 2,693 2,757 2,769
Workers' Compensation Claims. . . . . . . . . . 9,411 9,937 9,972
Accrued Other Postretirement Benefits . . . . . 11,297 11,918 12,142
Obligations Under Capital Leases. . . . . . . . 11,597 11,489 11,365
Other . . . . . . . . . . . . . . . . . . . . . 7,852 7,955 7,485
TOTAL CURRENT LIABILITIES. . . . . . . . 50,104 52,956 49,850
DEFERRED CREDITS. . . . . . . . . . . . . . . . . 80,425 71,180 70,456
TOTAL. . . . . . . . . . . . . . . . . $411,626 $405,301 $402,339
</TABLE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
STATEMENTS OF RETAINED EARNINGS
BY MONTH, FOR THE QUARTER ENDED SEPTEMBER 30, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
July 31, August 31, September 30, September 30,
1994 1994 1994 1994
(in thousands)
<S> <C> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD. . $35,617 $36,481 $37,345 $35,617
NET INCOME. . . . . . . . . . . . 864 864 864 2,592
CASH DIVIDENDS DECLARED . . . . . - - - -
BALANCE AT END OF PERIOD. . . . . $36,481 $37,345 $38,209 $38,209
</TABLE>
<PAGE>
<TABLE>
SOUTHERN OHIO COAL COMPANY
STATEMENTS OF COST OF COMMERCIAL COAL SOLD AND SHIPPED
BY MONTH, FOR THE QUARTER ENDED SEPTEMBER 30, 1994
<CAPTION>
July August September
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 . . . . . . . . . . . . . . . . . . . . . . $ 4,606 $ 5,264 $ 5,922
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 . . . . . . . . . . . . . . . . . . . . . . $ 1,848 $ 2,112 $ 2,376
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 . . . . . . . . . . . . . . . . . . . . . . $ 1,680 $ 1,920 $ 2,160
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.). . . . . . . . . . . . $ 8,134 $ 9,296 $ 10,458
K. Net Income per Statements of Income - Meigs Division (a). . . $ 864 $ 864 $ 864
Add: Interest Charges . . . . . . . . . . . . . . . . . . . 422 444 449
Less: Nonoperating Income (Loss). . . . . . . . . . . . . . 34 (78) (320)
L. Applied Cost-of-Capital Billing Adder - Meigs Division:
1. Current Month. . . . . . . . . . . . . . . . . . . . . . $ 1,252 $ 1,386 $ 1,633
2. Year-to-Date . . . . . . . . . . . . . . . . . . . . . . $ 11,088 $ 12,474 $ 14,107
II. Monthly Coal Billing Calculation - Meigs Division:
A. Total Operating Expenses (b). . . . . . . . . . . . . . . . . $ 12,201 $ 20,761 $ 17,188
B. Add: Monthly Cost-of-Capital Billing Adder as Applied
per L. 1. of Section I. . . . . . . . . . . . . . . . . . . 1,252 1,386 1,633
C. Cost Applicable to Current Month Coal Billings (c). . . . . . $ 13,453 $ 22,147 $ 18,821
D. Coal Sold and Shipped in Current Month (in tons)(c) . . . . . 285,869 440,132 380,848
E. Average Price per Ton (in dollars) (C/D)(c) . . . . . . . . . $47.06 $50.32 $49.42
(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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<TABLE>
SOUTHERN OHIO COAL COMPANY
ANALYSIS OF OPERATING RESERVES AND DEFERRED CREDITS
BY MONTH-END, FOR THE QUARTER ENDED SEPTEMBER 30, 1994
<CAPTION>
July 31, August 31, September 30,
1994 1994 1994
(in thousands)
<S> <C> <C> <C>
Operating Reserves:
Workers' Compensation . . . . . . . . . . . . . $ 9,507 $ 8,992 $ 9,057
Postemployment Benefits . . . . . . . . . . . . 5,647 5,647 5,647
Public Liability Insurance. . . . . . . . . . . 61 251 259
Tunnel Settlement . . . . . . . . . . . . . . . 350 350 350
Martinka Litigation Provision . . . . . . . . . 362 361 361
Total Operating Reserves. . . . . . . . . . $15,927 $15,601 $15,674
Deferred Credits:
Federal Income Taxes. . . . . . . . . . . . . . $70,813 $70,148 $69,431
Receipts from Parent for Future Coal Deliveries 8,557 - -
Postemployment Benefits . . . . . . . . . . . . 1,042 1,029 1,021
Other . . . . . . . . . . . . . . . . . . . . . 13 3 4
Total Deferred Credits. . . . . . . . . . . $80,425 $71,180 $70,456
</TABLE>
<PAGE>
SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING CAPITAL IMPROVEMENTS
FOR THE QUARTER ENDED SEPTEMBER 30, 1994
See "Information Concerning Operations" with regard to Meigs No. 31 mine.
<PAGE>
<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 SEPTEMBER 30, 1994
<CAPTION>
July 31, 1994 August 31, 1994 September 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)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Description
Surface Lands. . . . . . . . . $ 7,251 $ - $ 7,251 $ 7,251 $ - $ 7,251 $ 7,287 $ - $ 7,287
Mining Structures
and Equipment. . . . . . . . 266,153 151,250 114,903 266,446 152,781 113,665 269,454 154,172 115,282
Coal Interests
(net of depletion) . . . . . 4,335 - 4,335 4,321 - 4,321 4,310 - 4,310
Mine Development Costs . . . . 134,149 43,912 90,237 134,149 44,186 89,963 134,149 44,421 89,728
Total Mining Plant in
Service. . . . . . . . . $411,888 $195,162 $216,726 $412,167 $196,967 $215,200 $415,200 $198,593 $216,607
</TABLE>
<PAGE>
SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING OPERATIONS
FOR THE QUARTER ENDED SEPTEMBER 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 the Company's Meigs 31 mine. On
October 11, 1994, the U.S. Supreme Court declined to review the U.S. Court
of Appeals decision. The Company is currently negotiating a resolution of
federal claims.
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.
<PAGE>
<TABLE>
SOUTHERN OHIO COAL COMPANY
STATEMENTS OF COST OF OPERATION
BY MONTH, FOR THE QUARTER ENDED SEPTEMBER 30, 1994
<CAPTION>
Three
Months
July August September Ended
1994 1994 1994 9/30/94
(in thousands)
<S> <C> <C> <C> <C>
Direct Labor-UMW* . . . . . . . . . . . . . . . . $ 465 $ 473 $ 442 $ 1,380
Indirect Labor-UMW* . . . . . . . . . . . . . . . 1,335 1,493 1,513 4,341
Benefits-UMW* . . . . . . . . . . . . . . . . . . 1,781 2,190 1,419 5,390
Salaries and Benefits-Nonunion. . . . . . . . . . 1,576 1,648 1,562 4,786
Operating Supplies. . . . . . . . . . . . . . . . 845 1,093 852 2,790
Repair Parts and Materials. . . . . . . . . . . . 1,467 1,459 1,810 4,736
Electricity and Other Utilities . . . . . . . . . 439 511 477 1,427
Outside Services-Maintenance, Haulage
and Reclamation . . . . . . . . . . . . . . . . 1,085 1,877 1,032 3,994
Taxes Other Than Federal Income Taxes** . . . . . 492 672 601 1,765
Rental of Equipment . . . . . . . . . . . . . . . 1,452 1,457 1,451 4,360
Depreciation, Depletion and Amortization. . . . . 932 1,049 1,003 2,984
Mining Cost Normalization***. . . . . . . . . . . (1,442) 5,234 3,676 7,468
Other Production Costs. . . . . . . . . . . . . . 655 1,454 1,053 3,162
Subtotal. . . . . . . . . . . . . . . . . . . . . 11,082 20,610 16,891 48,583
Transfers of Production Costs (to)/from
Coal Inventory. . . . . . . . . . . . . . . . . 482 (500) (341) (359)
Total . . . . . . . . . . . . . . . . . $11,564 $20,110 $16,550 $48,224
* 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>
