<PAGE>
SOUTHERN OHIO COAL COMPANY
QUARTERLY REPORT PER REQUIREMENTS
OF HOLDING COMPANY ACT RELEASE NO. 21178
BY MONTH, FOR THE QUARTER ENDED JUNE 30, 1996
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, 1996
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
April 30, May 31, June 30, June 30,
1996 1996 1996 1996
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Parent . . . . . . . . . $23,135 $24,292 $17,074 $64,501
COST OF OPERATION . . . . . . . . . 20,947 22,179 15,386 58,512
OPERATING INCOME. . . . . . . . . . 2,188 2,113 1,688 5,989
INTEREST CHARGES. . . . . . . . . . 528 445 440 1,413
OPERATING INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . . 1,660 1,668 1,248 4,576
FEDERAL INCOME TAXES ON OPERATIONS. 932 876 498 2,306
NET INCOME FROM OPERATIONS. . . . . 728 792 750 2,270
NONOPERATING INCOME . . . . . . . . 136 72 114 322
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 JUNE 30, 1996
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
April 30, May 31, June 30, June 30,
1996 1996 1996 1996
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Parent . . . . . . . . . $23,135 $24,292 $17,074 $64,501
COST OF OPERATION (including
Depreciation, Depletion and
Amortization of Mining Plant
of $1,449,000 in April,
$1,662,000 in May and
$1,340,000 in June) . . . . . . . 20,947 22,179 15,386 58,512
OPERATING INCOME. . . . . . . . . . 2,188 2,113 1,688 5,989
NONOPERATING INCOME . . . . . . . . 119 55 99 273
INCOME BEFORE INTEREST CHARGES. . . 2,307 2,168 1,787 6,262
INTEREST CHARGES. . . . . . . . . . 511 428 425 1,364
INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . . 1,796 1,740 1,362 4,898
FEDERAL INCOME TAXES ON OPERATIONS. 932 876 498 2,306
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, 1996
<CAPTION>
Three
Months
Month Ended Ended
April 30, May 31, June 30, June 30,
1996 1996 1996 1996
(in thousands)
<S> <C> <C> <C> <C>
NONOPERATING INCOME AND DEDUCTIONS:
Nonoperating Income -
Interest Income . . . . . . . . . . $274 $275 $ 274 $ 823
Nonoperating Deductions:
Shutdown Costs. . . . . . . . . . . 310 338 338 986
Tax Credit. . . . . . . . . . . . . (53) (80) (79) (212)
Net Nonoperating Income . . . . . . . 17 17 15 49
Interest Charges. . . . . . . . . . . 17 17 15 49
MARTINKA NET INCOME . . . . . . . . . $ - $ - $ - $ -
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<TABLE>
SOUTHERN OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED JUNE 30, 1996
(UNAUDITED)
<CAPTION>
April 30, May 31, June 30,
1996 1996 1996
(in thousands)
<S> <C> <C> <C>
ASSETS
MINING PLANT:
Mining Plant in Service . . . . . . . . . . . . $370,990 $371,026 $370,961
Construction Work in Progress . . . . . . . . . 96 24 16
Total Mining Plant . . . . . . . . . . . 371,086 371,050 370,977
Accumulated Depreciation and Amortization . . . 189,738 191,598 193,679
NET MINING PLANT . . . . . . . . . . . . 181,348 179,452 177,298
OTHER PROPERTY AND INVESTMENTS. . . . . . . . . . 63,262 63,545 62,385
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . 21,596 32,110 34,969
Accounts Receivable:
General . . . . . . . . . . . . . . . . . . . 3,703 4,193 5,035
Insurance . . . . . . . . . . . . . . . . . . 13,079 13,079 13,079
Affiliated Companies. . . . . . . . . . . . . 15,307 13,128 10,132
Coal. . . . . . . . . . . . . . . . . . . . . . 724 1,194 1,226
Materials and Supplies. . . . . . . . . . . . . 9,594 9,733 9,797
Other . . . . . . . . . . . . . . . . . . . . . 5,227 4,648 4,141
TOTAL CURRENT ASSETS . . . . . . . . . . 69,230 78,085 78,379
REGULATORY ASSETS . . . . . . . . . . . . . . . . 58,626 57,495 55,867
DEFERRED CHARGES. . . . . . . . . . . . . . . . . 4,270 4,298 4,053
TOTAL. . . . . . . . . . . . . . . . . $376,736 $382,875 $377,982
</TABLE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED JUNE 30, 1996
(UNAUDITED)
<CAPTION>
April 30, May 31, June 30,
1996 1996 1996
(in thousands)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
SHAREHOLDER'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 . . . . . . . . . . . . . . . 24,063 24,927 23,199
TOTAL SHAREHOLDER'S EQUITY . . . . . . . 136,757 137,621 135,893
LONG-TERM DEBT - Notes Payable to Banks . . . . . 61,681 61,681 61,681
OTHER NONCURRENT LIABILITIES:
Obligations Under Capital Leases. . . . . . . . 23,116 22,952 22,305
Operating Reserves. . . . . . . . . . . . . . . 41,076 41,607 41,572
TOTAL OTHER NONCURRENT LIABILITIES . . . 64,192 64,559 63,877
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . 20,000 20,000 20,000
Short-term Debt - Notes Payable to Parent. . . . 3,500 3,500 3,000
Accounts Payable:
General . . . . . . . . . . . . . . . . . . . 4,931 5,832 5,332
Affiliated Companies. . . . . . . . . . . . . 2,450 2,381 1,106
Taxes Accrued . . . . . . . . . . . . . . . . . 3,220 4,059 2,352
Interest Accrued. . . . . . . . . . . . . . . . 1,255 1,714 1,904
Accrued Vacation Pay. . . . . . . . . . . . . . 3,085 3,124 3,066
Workers' Compensation Claims. . . . . . . . . . 8,797 8,675 9,074
Obligations Under Capital Leases. . . . . . . . 10,583 10,379 10,083
Other . . . . . . . . . . . . . . . . . . . . . 3,757 2,703 4,326
TOTAL CURRENT LIABILITIES. . . . . . . . 61,578 62,367 60,243
DEFERRED CREDITS. . . . . . . . . . . . . . . . . 52,528 56,647 56,288
TOTAL. . . . . . . . . . . . . . . . . $376,736 $382,875 $377,982
</TABLE>
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SOUTHERN OHIO COAL COMPANY
STATEMENTS OF RETAINED EARNINGS
BY MONTH, FOR THE QUARTER ENDED JUNE 30, 1996
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
April 30, May 31, June 30, June 30,
1996 1996 1996 1996
(in thousands)
<S> <C> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD. . $23,199 $24,063 $24,927 $23,199
NET INCOME. . . . . . . . . . . . 864 864 864 2,592
CASH DIVIDENDS DECLARED . . . . . - - 2,592 2,592
BALANCE AT END OF PERIOD. . . . . $24,063 $24,927 $23,199 $23,199
</TABLE>
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SOUTHERN OHIO COAL COMPANY
STATEMENTS OF COST OF COMMERCIAL COAL SOLD AND SHIPPED
BY MONTH, FOR THE QUARTER ENDED JUNE 30, 1996
<CAPTION>
April May June
1996 1996 1996
(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 . . . . . . . . . . . . . . . . . . . 511 428 425
Less: Nonoperating Income . . . . . . . . . . . . . . . . . 119 55 99
L. Applied Cost-of-Capital Billing Adder - Meigs Division:
1. Current Month. . . . . . . . . . . . . . . . . . . . . . $ 1,256 $ 1,237 $ 1,190
2. Year-to-Date . . . . . . . . . . . . . . . . . . . . . . $ 4,946 $ 6,183 $ 7,373
II. Monthly Coal Billing Calculation - Meigs Division:
A. Total Operating Expenses (b). . . . . . . . . . . . . . . . . $ 21,879 $ 23,055 $ 15,884
B. Add: Monthly Cost-of-Capital Billing Adder as Applied
per L. 1. of Section I. . . . . . . . . . . . . . . . . . . 1,256 1,237 1,190
C. Cost Applicable to Current Month Coal Billings (c). . . . . . $ 23,135 $ 24,292 $ 17,074
D. Coal Sold and Shipped in Current Month (in tons)(c) . . . . . 655,378 713,627 481,370
E. Average Price per Ton (in dollars) (C/D)(c) . . . . . . . . . $35.30 $34.04 $35.47
(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 On Operations" 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, 1996
<CAPTION>
April 30, May 31, June 30,
1996 1996 1996
(in thousands)
<S> <C> <C> <C>
Operating Reserves:
Accrued Pensions. . . . . . . . . . . . . . . . $ 3,977 $ 3,994 $ 4,013
Accrued Postretirement Benefits Other
Than Pensions . . . . . . . . . . . . . . . . 22,798 23,222 23,713
Workers' Compensation . . . . . . . . . . . . . 9,229 9,319 8,774
Postemployment Benefits . . . . . . . . . . . . 4,649 4,649 4,649
Public Liability Insurance. . . . . . . . . . . 173 173 173
Martinka Litigation Provision . . . . . . . . . 250 250 250
Total Operating Reserves. . . . . . . . . . $41,076 $41,607 $41,572
Deferred Credits:
Income Taxes. . . . . . . . . . . . . . . . . . $51,292 $50,421 $50,048
Mining Cost Normalization . . . . . . . . . . . 59 5,019 5,064
Postemployment Benefits . . . . . . . . . . . . 1,139 1,139 1,139
Other . . . . . . . . . . . . . . . . . . . . . 38 68 37
Total Deferred Credits. . . . . . . . . . . $52,528 $56,647 $56,288
</TABLE>
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SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING CAPITAL IMPROVEMENTS
FOR THE QUARTER ENDED JUNE 30, 1996
There were no significant changes with regard to the Company's mining
plant during the quarter.
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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, 1996
<CAPTION>
April 30, 1996 May 31, 1996 June 30, 1996
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. . . . . . . . . $ 7,386 $ - $ 7,386 $ 7,386 $ - $ 7,386 $ 7,386 $ - $ 7,386
Mining Structures
and Equipment. . . . . . . . 225,516 137,571 87,945 225,606 138,532 87,074 225,563 140,016 85,547
Coal Interests
(net of depletion) . . . . . 3,939 - 3,939 3,885 - 3,885 3,863 - 3,863
Mine Development Costs . . . . 134,149 52,167 81,982 134,149 53,066 81,083 134,149 53,663 80,486
Total Mining Plant in
Service. . . . . . . . . $370,990 $189,738 $181,252 $371,026 $191,598 $179,428 $370,961 $193,679 $177,282
</TABLE>
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SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING OPERATIONS
FOR THE QUARTER ENDED JUNE 30, 1996
There were no significant changes with regard to the Company's operations
during the quarter.
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<TABLE>
SOUTHERN OHIO COAL COMPANY
STATEMENTS OF COST OF OPERATION
BY MONTH, FOR THE QUARTER ENDED JUNE 30, 1996
<CAPTION>
Three
Months
April May June Ended
1996 1996 1996 6/30/96
(in thousands)
<S> <C> <C> <C> <C>
Direct Labor-UMW* . . . . . . . . . . . . . . . . $ 397 $ 435 $ 374 $ 1,206
Indirect Labor-UMW* . . . . . . . . . . . . . . . 1,737 1,763 1,586 5,086
Benefits-UMW* . . . . . . . . . . . . . . . . . . 1,614 1,661 1,099 4,374
Salaries and Benefits-Nonunion. . . . . . . . . . 1,610 1,649 1,462 4,721
Operating Supplies. . . . . . . . . . . . . . . . 1,176 1,355 1,144 3,675
Repair Parts and Materials. . . . . . . . . . . . 1,894 2,375 2,000 6,269
Electricity and Other Utilities . . . . . . . . . 634 611 521 1,766
Outside Services-Maintenance, Haulage
and Reclamation . . . . . . . . . . . . . . . . 963 1,384 1,226 3,573
Taxes Other Than Federal Income Taxes** . . . . . 990 1,002 733 2,725
Rental of Equipment . . . . . . . . . . . . . . . 1,393 1,371 1,369 4,133
Depreciation, Depletion and Amortization. . . . . 1,449 1,662 1,340 4,451
Mining Cost Normalization***. . . . . . . . . . . 2,008 4,960 45 7,013
Other Production Costs. . . . . . . . . . . . . . 2,402 2,421 2,519 7,342
Subtotal. . . . . . . . . . . . . . . . . . . . . 18,267 22,649 15,418 56,334
Transfers of Production Costs (to)/from
Coal Inventory. . . . . . . . . . . . . . . . . 2,680 (470) (32) 2,178
Total . . . . . . . . . . . . . . . . . $20,947 $22,179 $15,386 $58,512
* 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>
