<PAGE>
CENTRAL OHIO COAL COMPANY
QUARTERLY REPORT PER REQUIREMENTS
OF HOLDING COMPANY ACT RELEASE NO. 22770
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1994
CONTENTS
Page
Statements of Income 1
Balance Sheets 2-3
Statements of Retained Earnings 4
Statements of Cost of Commercial Coal Sold and Shipped 5
Analysis of Operating Reserves and Deferred Credits 6
Information Concerning Capital Improvements 7
Analysis of Mining Plant in Service 8
Information Concerning Operations 9-10
Statements of Cost of Operation 11
Schedule of Changes in Coal Inventory 12
Construction Expenditure Budget - 1995 13
<PAGE>
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<TABLE>
CENTRAL OHIO COAL COMPANY
STATEMENTS OF INCOME
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
October 31, November 30, December 31, December 31,
1994 1994 1994 1994
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Parent . . . . . . . . $9,737 $1,469 $4,426 $15,632
COST OF OPERATION (including
Depreciation, Depletion and
Amortization of Mining Plant of
$149,000 in October and $140,000
in November and $145,000
in December). . . . . . . . . . 9,627 1,251 4,301 15,179
OPERATING INCOME. . . . . . . . . 110 218 125 453
NONOPERATING INCOME . . . . . . . 57 59 126 242
INCOME BEFORE INTEREST CHARGES. . 167 277 251 695
INTEREST CHARGES -
to Parent Company . . . . . . . 4 4 5 13
INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . 163 273 246 682
FEDERAL INCOME TAX
EXPENSE (CREDIT). . . . . . . . (58) 52 24 18
NET INCOME. . . . . . . . . . . . $ 221 $ 221 $ 222 $ 664
The common stock of the Company is
wholly owned by Ohio Power Company.
</TABLE>
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<TABLE>
CENTRAL OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED DECEMBER 31, 1994
(UNAUDITED)
<CAPTION>
October 31, November 30, December 31,
1994 1994 1994
(in thousands)
<S> <C> <C> <C>
ASSETS
MINING PLANT:
Mining Plant in Service . . . . . . . . . . . . $73,611 $73,769 $73,885
Construction Work in Progress . . . . . . . . . 671 319 179
Total Mining Plant . . . . . . . . . . . 74,282 74,088 74,064
Accumulated Depreciation and Amortization . . . 45,287 45,530 45,809
NET MINING PLANT . . . . . . . . . . . . 28,995 28,558 28,255
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . 7,641 11,857 6,025
Accounts Receivable:
General . . . . . . . . . . . . . . . . . . . 599 392 535
Affiliated Companies. . . . . . . . . . . . . 4,825 126 1,210
Coal. . . . . . . . . . . . . . . . . . . . . . 608 158 413
Materials and Supplies. . . . . . . . . . . . . 7,299 7,349 7,307
Other . . . . . . . . . . . . . . . . . . . . . 1,677 1,454 1,228
TOTAL CURRENT ASSETS . . . . . . . . . . 22,649 21,336 16,718
DEFERRED FEDERAL INCOME TAXES . . . . . . . . . . 15,062 15,116 15,474
REGULATORY ASSETS:
Amounts Due From Customer For Future
Federal Income Taxes. . . . . . . . . . . . . 3,727 3,732 3,547
Other . . . . . . . . . . . . . . . . . . . . . 923 920 1,017
TOTAL REGULATORY ASSETS. . . . . . . . . 4,650 4,652 4,564
DEFERRED CHARGES. . . . . . . . . . . . . . . . . 5,562 6,767 7,399
TOTAL. . . . . . . . . . . . . . . . . $76,918 $76,429 $72,410
</TABLE>
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<PAGE>
<TABLE>
CENTRAL OHIO COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED DECEMBER 31, 1994
(UNAUDITED)
<CAPTION>
October 31, November 30, December 31,
1994 1994 1994
(in thousands)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
SHAREOWNER'S EQUITY:
Common Stock - Par Value $100:
Authorized - 100,000 Shares
Outstanding - 69,000 Shares . . . . . . . . . $ 6,900 $ 6,900 $ 6,900
Paid-in Capital . . . . . . . . . . . . . . . . 13,069 13,069 13,069
Retained Earnings . . . . . . . . . . . . . . . 569 790 348
TOTAL SHAREOWNER'S EQUITY. . . . . . . . 20,538 20,759 20,317
LONG-TERM DEBT:
Advances from Parent Company. . . . . . . . . . 1,500 1,500 1,500
Finance Obligation. . . . . . . . . . . . . . . 504 487 478
TOTAL LONG-TERM DEBT . . . . . . . . . . 2,004 1,987 1,978
OTHER NONCURRENT LIABILITIES:
Obligations Under Capital Leases. . . . . . . . 7,712 7,800 7,914
Operating Reserves. . . . . . . . . . . . . . . 16,502 17,462 16,072
TOTAL OTHER NONCURRENT LIABILITIES . . . 24,214 25,262 23,986
CURRENT LIABILITIES:
Long-term Debt Due Within One Year. . . . . . . 101 101 101
Accounts Payable:
General . . . . . . . . . . . . . . . . . . . 1,232 1,563 1,549
Affiliated Companies. . . . . . . . . . . . . 575 724 485
Taxes Accrued . . . . . . . . . . . . . . . . . 2,443 2,421 1,447
Accrued Reclamation Costs . . . . . . . . . . . 6,560 5,862 7,616
Accrued Vacation Pay. . . . . . . . . . . . . . 1,004 1,026 798
Workers' Compensation Claims. . . . . . . . . . 1,391 1,379 1,403
Obligations Under Capital Leases. . . . . . . . 3,996 3,669 3,344
Other . . . . . . . . . . . . . . . . . . . . . 2,882 2,927 2,063
TOTAL CURRENT LIABILITIES. . . . . . . . 20,184 19,672 18,806
DEFERRED CREDITS. . . . . . . . . . . . . . . . . 9,978 8,749 7,323
TOTAL. . . . . . . . . . . . . . . . . $76,918 $76,429 $72,410
/TABLE
<PAGE>
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<TABLE>
CENTRAL OHIO COAL COMPANY
STATEMENTS OF RETAINED EARNINGS
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
October 31, November 30, December 31, December 31,
1994 1994 1994 1994
(in thousands)
<S> <C> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD. . $348 $569 $790 $348
NET INCOME. . . . . . . . . . . . 221 221 222 664
CASH DIVIDENDS DECLARED . . . . . - - 664 664
BALANCE AT END OF PERIOD. . . . . $569 $790 $348 $348
</TABLE>
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<TABLE>
CENTRAL OHIO COAL COMPANY
STATEMENTS OF COST OF COMMERCIAL COAL SOLD AND SHIPPED
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1994
<CAPTION>
October November December
1994 1994 1994
(in thousands, except as noted)
<S> <C> <C> <C>
I. Calculation of Cost-of-Capital Compensation:
A. Equity Investment at Beginning of Month:
Common Stock. . . . . . . . . . . . . . . . . . . . . . . . $ 6,900 $ 6,900 $ 6,900
Paid-in Capital (excluding item D and item G) . . . . . . . 450 450 450
7,350 7,350 7,350
B. Rate of Return Allowable per HCAR No. 22770:
14.34% per annum, 1.195% per month. . . . . . . . . . . . . .01195 .01195 .01195
C. Earnings Allowable: (re investment in item A)
1. Current Month. . . . . . . . . . . . . . . . . . . . . . $ 88 $ 88 $ 88
2. Year-to-Date . . . . . . . . . . . . . . . . . . . . . . $ 880 $ 968 $ 1,056
D. Equity Investment - January 1983 (Preparation Plant). . . . . $ 6,431 $ 6,431 $ 6,431
E. Rate of Return Allowable per HCAR No. 22770:
13.01% per annum, 1.0842% per month . . . . . . . . . . . . .010842 .010842 .010842
F. Earnings Allowable: (re investment in item D)
1. Current Month. . . . . . . . . . . . . . . . . . . . . . $ 70 $ 70 $ 70
2. Year-to-Date . . . . . . . . . . . . . . . . . . . . . . $ 700 $ 770 $ 840
G. Equity Investment - January 1983 (Other Assets) . . . . . . . $ 6,188 $ 6,188 $ 6,188
H. Rate of Return Allowable per HCAR No. 22770:
12.37% per annum, 1.0308% per month . . . . . . . . . . . . .010308 .010308 .010308
I. Earnings Allowable: (re investment in item G)
1. Current Month. . . . . . . . . . . . . . . . . . . . . . $ 63 $ 63 $ 64
2. Year-to-Date . . . . . . . . . . . . . . . . . . . . . . $ 633 $ 696 $ 760
J. Total Earnings Allowable:
1. Current Month (C.1. + F.1. + I.1.) . . . . . . . . . . . $ 221 $ 221 $ 222
2. Year-to-Date (C.2. + F.2. + I.2.). . . . . . . . . . . . $ 2,213 $ 2,434 $ 2,656
K. Net Income per Statements of Income . . . . . . . . . . . . . $ 221 $ 221 $ 222
Add: Interest Charges . . . . . . . . . . . . . . . . . . . 4 4 5
Less: Nonoperating Income . . . . . . . . . . . . . . . . . 57 59 126
L. Applied Cost-of-Capital Billing Adder:
1. Current Month. . . . . . . . . . . . . . . . . . . . . . $ 168 $ 166 $ 101
2. Year-to-Date . . . . . . . . . . . . . . . . . . . . . . $ 1,193 $ 1,359 $ 1,460
II. Monthly Billing Calculation:
A. Total Operating Expenses (a). . . . . . . . . . . . . . . . . $ 9,569 $ 1,303 $ 4,325
B. Add: Monthly Cost-of-Capital Billing
Adder as Applied per L. 1. of Section I . . . . . . . . . . 168 166 101
C. Cost Applicable to Current Month Coal Billings (b). . . . . . $ 9,737 $ 1,469 $ 4,426
D. Coal Sold and Shipped in Current Month (in tons)(b) . . . . . 116,520 33,763 96,151
E. Average Price per Ton (in dollars) (C/D)(b) . . . . . . . . . $83.57 $43.52 $46.03
(a) As represented by "Cost of Operation" plus "Federal Income Taxes" reported in Statements of Income.
(b) Sales were to the Parent Company - Ohio Power Company for the Muskingum River Plant.
/TABLE
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<TABLE>
CENTRAL OHIO COAL COMPANY
ANALYSIS OF OPERATING RESERVES AND DEFERRED CREDITS
BY MONTH-END, FOR THE QUARTER ENDED DECEMBER 31, 1994
<CAPTION>
October 31, November 30, December 31,
1994 1994 1994
(in thousands)
<S> <C> <C> <C>
Operating Reserves:
Accrued Reclamation Costs . . . . . . . . . . . $ 8,810 $ 9,438 $ 7,757
Public Liability Insurance. . . . . . . . . . . 15 15 14
Workers' Compensation . . . . . . . . . . . . . 209 279 311
Accrued Postretirement Benefits
Other Than Pensions . . . . . . . . . . . . . 6,451 6,713 6,973
Postemployment Benefits . . . . . . . . . . . . 1,017 1,017 1,017
Total Operating Reserves. . . . . . . . . . $16,502 $17,462 $16,072
Deferred Credits:
Gain on Sale and Leaseback of Plant . . . . . . $7,410 $7,361 $7,312
Mining Cost Normalization . . . . . . . . . . . 2,568 - -
Receipts from Parent for Future Coal Deliveries - 1,377 -
Other . . . . . . . . . . . . . . . . . . . . . - 11 11
Total Deferred Credits. . . . . . . . . . . $9,978 $8,749 $7,323
</TABLE>
<PAGE>
<PAGE>
CENTRAL OHIO COAL COMPANY
INFORMATION CONCERNING CAPITAL IMPROVEMENTS
FOR THE QUARTER ENDED DECEMBER 31, 1994
There were no significant changes with regard to the Company's mining
plant during the quarter.
<PAGE>
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<TABLE>
CENTRAL OHIO COAL COMPANY
ANALYSIS OF MINING PLANT IN SERVICE
AND RELATED ACCUMULATED PROVISIONS FOR
DEPRECIATION AND AMORTIZATION
BY MONTH-END, FOR THE QUARTER ENDED DECEMBER 31, 1994
<CAPTION>
October 31, 1994 November 30, 1994 December 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. . . . . . . $ 324 $ - $ 324 $ 324 $ - $ 324 $ 324 $ - $ 324
Mining Structures
and Equipment. . . . . . 61,238 43,255 17,983 61,399 43,494 17,905 61,524 43,770 17,754
Coal Interests
(net of depletion) . . . 9,757 - 9,757 9,754 - 9,754 9,745 - 9,745
Mine Development Costs . . 2,292 2,032 260 2,292 2,036 256 2,292 2,039 253
Total Mining Plant in
Service. . . . . . . $73,611 $45,287 $28,324 $73,769 $45,530 $28,239 $73,885 $45,809 $28,076
</TABLE>
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<PAGE>
CENTRAL OHIO COAL COMPANY
INFORMATION CONCERNING OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 1994
Recovery of Coal Costs
The Clean Air Act Amendments of 1990 (CAAA) require significant
reductions in sulfur dioxide and nitrogen oxides emitted from Ohio Power
Company's (OPCo's) generating plants. In November 1992 the Public
Utilities Commission of Ohio (PUCO) approved OPCo's compliance plan setting
forth compliance measures for affected generating units, including
switching Muskingum River Plant unit 5 to low sulfur coal from unaffiliated
sources beginning in 1995 and tentatively employing fuel switching for units 1
through 4 in the year 2000. The Company supplies the Muskingum River Plant.
In February 1995 OPCo and certain other parties to a base rate proceeding
entered into a Settlement Agreement to resolve, among other issues, the pending
base rate case and the current electric fuel component (EFC) proceeding. Under
the terms of the Settlement Agreement the EFC rate is fixed at 1.465 cents per
kwh from June 1995 through November 1998; OPCo is provided with the opportunity
to recover its Ohio jurisdictional share of the investment in and the
liabilities and the future shut-down costs of its affiliated mining operations
including the Company's Muskingum mine as well as any fuel costs incurred above
the fixed rate; and OPCo may proceed with its CAAA compliance plan as filed
with the PUCO. The Settlement Agreement was approved by PUCO on
March 23, 1995.
Under the terms of a 1992 stipulation agreement the cost of coal burned
at OPCo's Gavin Plant beginning December 1, 1994 is subject to a 15-year pre-
determined price of $1.575 per million Btu's with quarterly escalation
adjustments. As discussed above the February 1995 Settlement Agreement fixes
the EFC factor at 1.465 cents per kwh for the period June 1, 1995 through Novem
- -ber30, 1998. The predetermined Gavin Plant agreement, in conjunction with the
above-referenced Settlement Agreement, provides OPCo with an opportunity to
recover its investment in and the liabilities and closing costs of its affiliat
- -ed mining operations attributable to its Ohio jurisdiction including the
Company's Muskingum mine as well as any operating losses incurred under the
fixed EFC factor to the extent the actual cost of coal burned at the Gavin
Plant is below the predetermined price.
Based on the estimated future cost of coal supplied to the Gavin Plant
management believes that OPCo will recover the PUCO jurisdictional portion of
the cost of the Muskingum mining operations including eventual mine closure
liabilities under the terms of the Settlement Agreement. In the event OPCo does
not recover its costs, the Company would still recover from OPCo all of its
costs of mining operations under the terms of the coal supply agreement.
As a result of clean air compliance efforts at the Muskingum River Plant,
it may be necessary to shutdown the Company's mining operations in 1999 or
earlier. If the predetermined price limitations are not adequate to recover
mining cost from PUCO jurisdictional fuel clause customers the mines could close
even sooner. The cost of a shutdown would be substantial and would include not
only any possible loss on disposition of assets but also employee benefits,
lease commitments, reclamation and other shutdown costs. If a shutdown
should become necessary, results of operations are not expected to be
affected since shutdown costs are recoverable from OPCo under the coal
supply agreement.
<PAGE>
Production Curtailment
In connection with its strip-mining operations, the Company in the past
deferred, as an element of inventory, costs of removing overburden. Such
deferrals ceased in November 1994 since the Company is presently operating only
one pit and has a minimum haulback yardage percentage, accordingly, in November
1994 business the Company closed its Coal in Process inventory account.
Due to the high inventory at the Muskingum River Plant the Company
temporarily idled coal production at its mine on November 14, 1994. The mine
resumed production on December 5. The mine was idled again on December 24, 1994
and resumed production on January 2, 1995. Land reclamation activities,
preventive maintenance and administrative work continued during the idlings.
<PAGE>
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<TABLE>
CENTRAL OHIO COAL COMPANY
STATEMENTS OF COST OF OPERATION
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1994
<CAPTION>
Three
Months
October November December Ended
1994 1994 1994 12/31/94
(in thousands)
<S> <C> <C> <C> <C>
Direct Labor-UMW* . . . . . . . . . . . . . . . . $ 63 $ 23 $ 59 $ 145
Indirect Labor-UMW* . . . . . . . . . . . . . . . 527 350 433 1,310
Benefits-UMW* . . . . . . . . . . . . . . . . . . 589 639 750 1,978
Salaries and Benefits-Nonunion. . . . . . . . . . 540 722 349 1,611
Operating Supplies. . . . . . . . . . . . . . . . 511 511 408 1,430
Repair Parts and Materials. . . . . . . . . . . . 462 463 396 1,321
Electricity and Other Utilities . . . . . . . . . 293 238 206 737
Outside Services-Maintenance, Haulage
and Reclamation . . . . . . . . . . . . . . . . 195 409 213 817
Taxes Other Than Income Taxes** . . . . . . . . . 149 106 149 404
Rental of Equipment . . . . . . . . . . . . . . . 860 860 866 2,586
Depreciation, Depletion and Amortization. . . . . 149 140 145 434
Coal Contractor Billings. . . . . . . . . . . . . 79 - - 79
Mining Cost Normalization***. . . . . . . . . . . 5,269 (2,568) - 2,701
Reclamation Cost - Net. . . . . . . . . . . . . . (470) (70) 72 (468)
Loss on Disposition of Mining Assets. . . . . . . - (1,200) 197 (1,003)
Other Production Costs. . . . . . . . . . . . . . 343 178 313 834
Subtotal. . . . . . . . . . . . . . . . . . . . . 9,559 801 4,556 14,916
Transfers of Production Costs (to)/from
Coal Inventory. . . . . . . . . . . . . . . . . 68 450 (255) 263
Total . . . . . . . . . . . . . . . . . $9,627 $ 1,251 $4,301 $15,179
* 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>
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<TABLE>
CENTRAL OHIO COAL COMPANY
SCHEDULE OF CHANGES IN COAL INVENTORY
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1994
<CAPTION>
October November December
1994 1994 1994
(in thousands)
<S> <C> <C> <C>
Coal Stockpile:*
Ending Inventory. . . . . . . . . . . . . . . $ 299 $ 158 $413
Beginning Inventory . . . . . . . . . . . . . 120 299 158
Increase (Decrease) in Coal
Stockpile Inventory . . . . . . . . . . . . $ 179 $(141) $255
Coal in Process:**
Ending Inventory. . . . . . . . . . . . . . . $ 309 $ - $ -
Beginning Inventory . . . . . . . . . . . . . 556 309 -
Decrease in Coal in Process Inventory . . . . $(247) $(309) $ -
* The production level of coal has been greater than the demand for coal at Muskingum
River Plant, which has created a raw coal stockpile.
** In connection with its strip-mining operations, the Company in the past deferred, as
an element of inventory, costs of removing overburden. Such deferrals ceased in
November 1994 since the Company is presently operating only one pit and has a minimum
haulback yardage percentage, accordingly, in November 1994 business the Company closed
its Coal in Process inventory account.
</TABLE>
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<TABLE>
CENTRAL OHIO COAL COMPANY
CONSTRUCTION EXPENDITURE BUDGET - 1995*
<CAPTION>
Description Budgeted Amount
<S> <C>
Upgrade and Construction of Roadway - Horse Run Reserves $650
Mine Plant Blanket 125
Total $775
* This budget does not include any possible lease transactions.
</TABLE>
