<PAGE>
SOUTHERN OHIO COAL COMPANY
QUARTERLY REPORT PER REQUIREMENTS
OF HOLDING COMPANY ACT RELEASE NO. 21178
BY MONTH, FOR THE QUARTER ENDED MARCH 31, 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 MARCH 31, 1996
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
January 31, February 29, March 31, March 31,
1996 1996 1996 1996
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Parent . . . . . . . . . $21,586 $14,843 $11,601 $48,030
COST OF OPERATION . . . . . . . . . 19,598 13,131 9,856 42,585
OPERATING INCOME. . . . . . . . . . 1,988 1,712 1,745 5,445
INTEREST CHARGES. . . . . . . . . . 493 466 461 1,420
OPERATING INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . . 1,495 1,246 1,284 4,025
FEDERAL INCOME TAXES ON OPERATIONS. 747 484 524 1,755
NET INCOME FROM OPERATIONS. . . . . 748 762 760 2,270
NONOPERATING INCOME . . . . . . . . 116 102 104 322
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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SOUTHERN OHIO COAL COMPANY
MEIGS DIVISION
STATEMENTS OF INCOME
BY MONTH, FOR THE QUARTER ENDED MARCH 31, 1996
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
January 31, February 29, March 31, March 31,
1996 1996 1996 1996
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Parent . . . . . . . . . $21,586 $14,843 $11,601 $48,030
COST OF OPERATION (including
Depreciation, Depletion and
Amortization of Mining Plant
of $1,503,000 in January,
$1,275,000 in February and
$1,227,000 in March). . . . . . . 19,598 13,131 9,856 42,585
OPERATING INCOME. . . . . . . . . . 1,988 1,712 1,745 5,445
NONOPERATING INCOME . . . . . . . . 76 81 88 245
INCOME BEFORE INTEREST CHARGES. . . 2,064 1,793 1,833 5,690
INTEREST CHARGES. . . . . . . . . . 453 445 445 1,343
INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . . 1,611 1,348 1,388 4,347
FEDERAL INCOME TAXES ON OPERATIONS. 747 484 524 1,755
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 MARCH 31, 1996
<CAPTION>
Three
Months
Month Ended Ended
January 31, February 29, March 31, March 31,
1996 1996 1996 1996
(in thousands)
NONOPERATING INCOME AND DEDUCTIONS:
<S> <C> <C> <C> <C>
Nonoperating Income -
Interest Income . . . . . . . . . . $297 $274 $ 275 $ 846
Nonoperating Deductions:
Shutdown Costs. . . . . . . . . . . 338 334 470 1,142
Tax Credit. . . . . . . . . . . . . (81) (81) (211) (373)
Net Nonoperating Income . . . . . . . 40 21 16 77
Interest Charges. . . . . . . . . . . 40 21 16 77
MARTINKA NET INCOME . . . . . . . . . $ - $ - $ - $ -
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SOUTHERN OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED MARCH 31, 1996
(UNAUDITED)
<CAPTION>
January 31, February 29, March 31,
1996 1996 1996
(in thousands)
ASSETS
<S> <C> <C> <C>
MINING PLANT:
Mining Plant in Service . . . . . . . . . . . . $368,600 $370,250 $370,614
Construction Work in Progress . . . . . . . . . - 2 -
Total Mining Plant . . . . . . . . . . . 368,600 370,252 370,614
Accumulated Depreciation and Amortization . . . 184,384 185,759 187,727
NET MINING PLANT . . . . . . . . . . . . 184,216 184,493 182,887
OTHER PROPERTY AND INVESTMENTS. . . . . . . . . . 64,058 64,284 62,997
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . 21,060 26,189 24,088
Accounts Receivable:
General . . . . . . . . . . . . . . . . . . . 8,119 4,407 3,809
Insurance . . . . . . . . . . . . . . . . . . 13,079 13,079 13,079
Affiliated Companies. . . . . . . . . . . . . 7,854 6,142 5,652
Coal. . . . . . . . . . . . . . . . . . . . . . 1,399 1,541 3,404
Materials and Supplies. . . . . . . . . . . . . 9,550 9,790 9,623
Other . . . . . . . . . . . . . . . . . . . . . 989 6,200 5,841
TOTAL CURRENT ASSETS . . . . . . . . . . 62,050 67,348 65,496
REGULATORY ASSETS . . . . . . . . . . . . . . . . 60,409 60,298 62,178
DEFERRED CHARGES. . . . . . . . . . . . . . . . . 4,174 3,333 3,569
TOTAL. . . . . . . . . . . . . . . . . $374,907 $379,756 $377,127
</TABLE>
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<TABLE>
SOUTHERN OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED MARCH 31, 1996
(UNAUDITED)
<CAPTION>
January 31, February 29, March 31,
1996 1996 1996
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C> <C>
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. . . . . . . . . . 61,681 61,681 61,681
OTHER NONCURRENT LIABILITIES:
Obligations Under Capital Leases. . . . . . . . 22,420 23,791 23,446
Operating Reserves. . . . . . . . . . . . . . . 39,411 40,077 40,619
TOTAL OTHER NONCURRENT LIABILITIES . . . 61,831 63,868 64,065
CURRENT LIABILITIES:
Long-term Debt Due Within One Year. . . . . . . 20,000 20,000 20,000
Short-term Debt - Notes Payable to Parent . . . 4,000 4,000 3,500
Accounts Payable:
General . . . . . . . . . . . . . . . . . . . 5,830 6,072 5,425
Affiliated Companies. . . . . . . . . . . . . 1,240 1,084 1,889
Taxes Accrued . . . . . . . . . . . . . . . . . 2,250 3,307 4,034
Accrued Vacation Pay. . . . . . . . . . . . . . 2,657 2,870 3,034
Worker's Compensation Claims. . . . . . . . . . 9,307 9,161 8,950
Obligations Under Capital Leases. . . . . . . . 10,561 10,717 10,561
Other . . . . . . . . . . . . . . . . . . . . . 2,875 4,120 4,802
TOTAL CURRENT LIABILITIES. . . . . . . . 58,720 61,331 62,195
DEFERRED CREDITS. . . . . . . . . . . . . . . . . 55,918 55,255 53,293
TOTAL. . . . . . . . . . . . . . . . . $374,907 $379,756 $377,127
</TABLE>
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SOUTHERN OHIO COAL COMPANY
STATEMENTS OF RETAINED EARNINGS
BY MONTH, FOR THE QUARTER ENDED MARCH 31, 1996
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
January 31, February 29, March 31, March 31,
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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<TABLE>
SOUTHERN OHIO COAL COMPANY
STATEMENTS OF COST OF COMMERCIAL COAL SOLD AND SHIPPED
BY MONTH, FOR THE QUARTER ENDED MARCH 31, 1996
<CAPTION>
January February March
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 . . . . . . . . . . . . . . . . . . . . . . $ 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 . . . . . . . . . . . . . . . . . . . 453 445 445
Less: Nonoperating Income . . . . . . . . . . . . . . . . . 76 81 88
L. Applied Cost-of-Capital Billing Adder:
1. Current Month. . . . . . . . . . . . . . . . . . . . . . $ 1,241 $ 1,228 $ 1,221
2. Year-to-Date . . . . . . . . . . . . . . . . . . . . . . $ 1,241 $ 2,469 $ 3,690
II. Monthly Coal Billing Calculation - Meigs Division:
A. Total Operating Expenses (b). . . . . . . . . . . . . . . . . $ 20,345 $ 13,615 $ 10,380
B. Add: Monthly Cost-of-Capital Billing Adder as Applied
per L. 1. of Section I. . . . . . . . . . . . . . . . . . . 1,241 1,228 1,221
C. Cost Applicable to Current Month Coal Billings (c). . . . . . $ 21,586 $ 14,843 $ 11,601
D. Coal Sold and Shipped in Current Month (in tons)(c) . . . . . 625,190 421,924 329,352
E. Average Price per Ton (in dollars) (C/D)(c) . . . . . . . . . $34.53 $35.18 $35.22
(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, 1996
<CAPTION>
January 31, February 29, March 31,
1996 1996 1996
(in thousands)
<S> <C> <C> <C>
Operating Reserves:
Accrued Pensions. . . . . . . . . . . . . . . . $ 3,911 $ 3,940 $ 3,958
Accrued Postretirement Benefits
Other Than Pensions. . . . . . . . . . . . . . 21,338 21,940 22,369
Workers' Compensation . . . . . . . . . . . . . 9,031 9,075 9,170
Postemployment Benefits . . . . . . . . . . . . 4,649 4,649 4,649
Public Liability Insurance. . . . . . . . . . . 182 173 173
Tunnel Settlement . . . . . . . . . . . . . . . 300 300 300
Total Operating Reserves. . . . . . . . . . $39,411 $40,077 $40,619
Deferred Credits:
Income Taxes. . . . . . . . . . . . . . . . . . $52,104 $52,830 $52,117
Mining Costs Normalization. . . . . . . . . . . 2,541 1,244 -
Postemployment Benefits . . . . . . . . . . . . 1,139 1,139 1,139
Other . . . . . . . . . . . . . . . . . . . . . 134 42 37
Total Deferred Credits. . . . . . . . . . . $55,918 $55,255 $53,293
</TABLE>
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SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING CAPITAL IMPROVEMENTS
FOR THE QUARTER ENDED MARCH 31, 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 MARCH 31, 1996
<CAPTION>
January 31, 1996 February 29, 1996 March 31, 1996
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. . . . . . . . . $ 7,386 $ - $ 7,386 $ 7,386 $ - $ 7,386 $ 7,386 $ - $ 7,386
Mining Structures
and Equipment. . . . . . . . 223,022 133,924 89,098 224,704 134,769 89,935 225,098 136,253 88,845
Coal Interests
(net of depletion) . . . . . 4,043 - 4,043 4,011 - 4,011 3,981 - 3,981
Mine Development Costs . . . . 134,149 50,460 83,689 134,149 50,990 83,159 134,149 51,474 82,675
Total Mining Plant in
Service. . . . . . . . . $368,600 $184,384 $184,216 $370,250 $185,759 $184,491 $370,614 $187,727 $182,887
</TABLE>
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SOUTHERN OHIO COAL COMPANY
INFORMATION CONCERNING OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 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 MARCH 31, 1996
<CAPTION>
Three
Months
January February March Ended
1996 1996 1996 3/31/96
(in thousands)
<S> <C> <C> <C> <C>
Direct Labor-UMW* . . . . . . . . . . . . . . . . $ 527 $ 491 $ 552 $ 1,570
Indirect Labor-UMW* . . . . . . . . . . . . . . . 1,664 1,709 1,794 5,167
Benefits-UMW* . . . . . . . . . . . . . . . . . . 2,031 1,651 1,297 4,979
Salaries and Benefits-Nonunion. . . . . . . . . . 1,623 1,496 1,697 4,816
Operating Supplies. . . . . . . . . . . . . . . . 1,119 1,278 1,434 3,831
Repair Parts and Materials. . . . . . . . . . . . 2,209 1,879 1,910 5,998
Electricity and Other Utilities . . . . . . . . . 676 612 593 1,881
Outside Services-Maintenance, Haulage
and Reclamation . . . . . . . . . . . . . . . . 1,134 873 1,039 3,046
Taxes Other Than Income Taxes** . . . . . . . . . 900 662 564 2,126
Rental of Equipment . . . . . . . . . . . . . . . 1,412 1,351 1,340 4,103
Depreciation, Depletion and Amortization. . . . . 1,503 1,275 1,227 4,005
Mining Cost Normalization***. . . . . . . . . . . 2,541 (1,297) (3,193) (1,949)
Other Production Costs. . . . . . . . . . . . . . 1,614 1,293 1,465 4,372
Subtotal. . . . . . . . . . . . . . . . . . . . . 18,953 13,273 11,719 43,945
Transfers of Production Costs (to)/from
Coal Inventory. . . . . . . . . . . . . . . . . 645 (142) (1,863) (1,360)
Total . . . . . . . . . . . . . . . . . $19,598 $13,131 $ 9,856 $42,585
* 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>
