<PAGE>
Central Ohio
Coal Company
1995 Annual Report
<PAGE>
CENTRAL OHIO COAL COMPANY
Page
CONTENTS
Statements of Income and Statements of Retained Earnings . . 1
Balance Sheets . . . . . . . . . . . 2-3
Statements of Cash Flows . . . . . . . . . 4
Notes to Financial Statements . . . . . . . . 5-11
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<TABLE>
CENTRAL OHIO COAL COMPANY
STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Year Ended December 31,
1995 1994 1993
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES - Sales to Parent Company . . . . . $ 52,158 $100,837 $112,770
OPERATING EXPENSES (including depreciation, depletion
and amortization of mining plant of $3,315,000 in
1995, $1,802,000 in 1994 and $2,220,000 in 1993) . . 49,638 98,813 110,785
OPERATING INCOME . . . . . . . . . . . . . . . . . . . 2,520 2,024 1,985
NONOPERATING INCOME. . . . . . . . . . . . . . . . . . 1,307 1,253 1,019
INCOME BEFORE INTEREST CHARGES . . . . . . . . . . . . 3,827 3,277 3,004
INTEREST CHARGES (including $50,000 in 1995,
$49,000 in 1994 and $50,000 in 1993 on
long-term debt to Parent Company). . . . . . . . . . 55 57 56
INCOME BEFORE FEDERAL INCOME TAXES . . . . . . . . . . 3,772 3,220 2,948
FEDERAL INCOME TAXES . . . . . . . . . . . . . . . . . 1,116 564 292
NET INCOME . . . . . . . . . . . . . . . . . . . . . . $ 2,656 $ 2,656 $ 2,656
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Year Ended December 31,
1995 1994 1993
(in thousands)
<S> <C> <C> <C>
RETAINED EARNINGS JANUARY 1. . . . . . . . . . . . . . $ 348 $ 347 $ 346
NET INCOME . . . . . . . . . . . . . . . . . . . . . . 2,656 2,656 2,656
CASH DIVIDENDS DECLARED. . . . . . . . . . . . . . . . 3,004 2,655 2,655
RETAINED EARNINGS DECEMBER 31. . . . . . . . . . . . . $ - $ 348 $ 347
See Notes to Financial Statements.
</TABLE>
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<TABLE>
CENTRAL OHIO COAL COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
December 31,
1995 1994
(in thousands)
<S> <C> <C>
ASSETS
MINING PLANT:
Surface Lands . . . . . . . . . . . . . . . . . . . . . . . . . $ 324 $ 324
Mining Structures and Equipment . . . . . . . . . . . . . . . . 64,082 61,524
Coal Interests (net of depletion) . . . . . . . . . . . . . . . 8,193 9,745
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,292 2,292
Construction Work in Progress . . . . . . . . . . . . . . . . . 2 179
Total Mining Plant. . . . . . . . . . . . . . . . . . . 74,893 74,064
Accumulated Depreciation and Amortization . . . . . . . . . . . 48,885 45,809
NET MINING PLANT. . . . . . . . . . . . . . . . . . . . 26,008 28,255
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . 12,697 6,025
Accounts Receivable:
General . . . . . . . . . . . . . . . . . . . . . . . . . . . 390 535
Affiliated Companies. . . . . . . . . . . . . . . . . . . . . 1,746 1,210
Coal - at average cost. . . . . . . . . . . . . . . . . . . . . 234 413
Materials and Supplies - at average cost. . . . . . . . . . . . 9,237 7,307
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,082 1,228
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . 25,386 16,718
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . 15,896 16,168
REGULATORY ASSETS . . . . . . . . . . . . . . . . . . . . . . . . 2,758 4,564
DEFERRED CHARGES. . . . . . . . . . . . . . . . . . . . . . . . . 360 6,705
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . $70,408 $72,410
See Notes to Financial Statements.
</TABLE>
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<TABLE>
CENTRAL OHIO COAL COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
December 31,
1995 1994
(in thousands)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
SHAREHOLDER'S EQUITY:
Common Stock - Par Value $100:
Authorized - 100,000 Shares
Outstanding - 69,000 Shares . . . . . . . . . . . . . . . . . $ 6,900 $ 6,900
Paid-in Capital . . . . . . . . . . . . . . . . . . . . . . . . 13,069 13,069
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . - 348
TOTAL SHAREHOLDER'S EQUITY. . . . . . . . . . . . . . . 19,969 20,317
LONG-TERM DEBT:
Advances from Parent Company. . . . . . . . . . . . . . . . . . 1,500 1,500
Finance Obligation. . . . . . . . . . . . . . . . . . . . . . . 390 478
TOTAL LONG-TERM DEBT. . . . . . . . . . . . . . . . . . 1,890 1,978
OTHER NONCURRENT LIABILITIES:
Obligations Under Capital Leases. . . . . . . . . . . . . . . . 8,965 7,914
Accrued Postretirement Benefits Other Than Pensions . . . . . . 9,999 6,973
Accrued Reclamation Costs . . . . . . . . . . . . . . . . . . . 5,647 7,757
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,942 2,178
TOTAL OTHER NONCURRENT LIABILITIES. . . . . . . . . . . 29,553 24,822
CURRENT LIABILITIES:
Long-term Debt Due Within One Year. . . . . . . . . . . . . . . 104 101
Accounts Payable:
General . . . . . . . . . . . . . . . . . . . . . . . . . . . 803 1,549
Affiliated Companies. . . . . . . . . . . . . . . . . . . . . 420 485
Taxes Accrued . . . . . . . . . . . . . . . . . . . . . . . . . - 1,447
Accrued Reclamation Costs . . . . . . . . . . . . . . . . . . . 4,496 7,616
Accrued Vacation Pay. . . . . . . . . . . . . . . . . . . . . . 647 798
Workers' Compensation Claims. . . . . . . . . . . . . . . . . . 1,290 1,403
Obligations Under Capital Leases. . . . . . . . . . . . . . . . 3,379 3,344
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,759 1,227
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . 12,898 17,970
DEFERRED GAIN ON SALE AND LEASEBACK OF PLANT. . . . . . . . . . . 6,097 7,312
DEFERRED CREDITS. . . . . . . . . . . . . . . . . . . . . . . . . 1 11
CONTINGENCIES (Note 2)
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . $70,408 $72,410
See Notes to Financial Statements.
</TABLE>
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<TABLE>
CENTRAL OHIO COAL COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Year Ended December 31,
1995 1994 1993
(in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . $ 2,656 $ 2,656 $ 2,656
Adjustments for Noncash Items:
Depreciation, Depletion and Amortization . . . . 3,315 1,802 2,220
Deferred Federal Income Taxes. . . . . . . . . . 1,312 (9,937) (3,620)
Accrued Other Postretirement Benefits. . . . . . 3,026 3,032 3,941
Equipment Buyout and Recovery. . . . . . . . . . 3,119 (5,920) -
Provision for Future Rent Payments . . . . . . . 2,999 - -
Changes in Certain Current Assets
and Liabilities:
Accounts Receivable. . . . . . . . . . . . . . . (391) 1,583 (94)
Coal, Materials and Supplies . . . . . . . . . . (1,751) 5,989 4,513
Accounts Payable . . . . . . . . . . . . . . . . (811) (490) 228
Taxes Accrued. . . . . . . . . . . . . . . . . . (1,447) 712 4,186
Other (net). . . . . . . . . . . . . . . . . . . . (2,162) (2,489) (1,262)
Net Cash Flows From (Used For) Operating
Activities . . . . . . . . . . . . . . . . 9,865 (3,062) 12,768
INVESTING ACTIVITIES:
Cash Used for Construction Expenditures. . . . . . (153) (1,053) (303)
Proceeds from Sales of Property. . . . . . . . . . 68 546 3,537
Net Cash Flows From (Used For)
Investing Activities . . . . . . . . . . . (85) (507) 3,234
FINANCING ACTIVITIES:
Issuance of Long-term Debt . . . . . . . . . . . . 18 604 -
Retirement of Long-term Debt . . . . . . . . . . . (104) (25) -
Change in Short-term Debt (net). . . . . . . . . . (18) 18 -
Return of Advance to Parent Company for
Future Coal Deliveries . . . . . . . . . . . . . - - (1,730)
Dividends Paid . . . . . . . . . . . . . . . . . . (3,004) (2,655) (2,655)
Net Cash Flows Used For Financing Activities (3,108) (2,058) (4,385)
Net Increase (Decrease) in Cash and Cash Equivalents 6,672 (5,627) 11,617
Cash and Cash Equivalents January 1. . . . . . . . . 6,025 11,652 35
Cash and Cash Equivalents December 31. . . . . . . . $12,697 $ 6,025 $11,652
See Notes to Financial Statements.
</TABLE>
<PAGE>
CENTRAL OHIO COAL COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES:
Organization and Regulation. Central Ohio Coal Company (the Company or
COCCo), is a wholly-owned subsidiary of Ohio Power Company (OPCo), which is a
subsidiary of American Electric Power Company, Inc. (AEP Co., Inc.), a public
utility holding company. The Company conducts surface mining operations in
southeastern Ohio to supply coal to OPCo's Muskingum River Plant. Coal is
sold to OPCo at prices regulated by the Securities and Exchange Commission
(SEC) under the Public Utility Holding Company Act of 1935 (1935 Act).
Prices billed in connection with coal sales are sufficient to recover
expenses and provide for a return on OPCo's equity investment excluding
retained earnings. The Company also has been authorized to sell coal to
unaffiliated companies with the net proceeds used to reduce the price of coal
sold to OPCo.
Basis of Accounting. As a cost-based rate-regulated entity, COCCo's
financial statements reflect the actions of regulators that result in the
recognition of revenues and expenses in different time periods than
enterprises that are not rate regulated. In accordance with Statement of
Financial Accounting Standards (SFAS) No. 71 Accounting for the Effects of
Certain Types of Regulation, regulatory assets and liabilities are recorded
to reflect the economic effects of regulation. Such deferrals are amortized
commensurate with their inclusion in billings to OPCo.
Use of Estimates. The preparation of these financial statements in
conformity with generally accepted accounting principles requires in certain
instances the use of management s estimates. Actual results could differ
from those estimates.
Coal Supply Agreement. Pursuant to a coal supply agreement with OPCo, the
Company is obligated to deliver the coal it mines to OPCo and entitled to
receive payment for all costs incurred, even under circumstances in which
such coal is not mined and/or delivered due to a natural disaster, labor
unrest or any other forced or voluntary cessation or curtailment of mining,
either temporary or permanent.
Mining Plant and Depreciation, Depletion and Amortization. Mining plant is
stated at cost and includes expenditures for mine development. Mine
development includes all costs to develop the mines in excess of amounts
realized from coal produced during the mine development period. As a
subsidiary of a regulated public utility, an allowance for funds used during
construction (AFUDC) is recorded as a noncash income item that is recovered
over the service life of mining plant through depreciation and represents a
reasonable return on funds used to finance construction projects. The
amounts of AFUDC for 1995, 1994 and 1993 were not significant.
Depreciation, depletion and amortization are provided over the
estimated useful asset lives and are calculated using the straight-line
method for mining structures and equipment and the units-of-production method
for coal rights and mine development costs. In 1995 the Company changed the
respective rates to reflect a revised mining plan. This change in estimate
had no impact on net income.
Costs of ordinary maintenance, repairs, renewals and minor
replacements of property are expensed while major additions of property,
replacements of property and betterments are capitalized. Mining plant and
related accumulated provisions for depreciation and amortization are relieved
upon disposition of the related property with any gain or loss recorded as
income or expense in the period of disposition. Such gains and losses are
included in costs billed to OPCo under the coal supply agreement.
Cash and Cash Equivalents. Cash and cash equivalents include temporary cash
investments with original maturities of three months or less.
Income Taxes. The Company follows the liability method of accounting for
income taxes as prescribed by SFAS 109, Accounting for Income Taxes. Under
the liability method, deferred income taxes are provided for all temporary
differences between book cost and tax basis of assets and liabilities which
will result in a future tax consequence. Where the flow-through method of
accounting for temporary differences is reflected in the Company's coal
billings and OPCo's fuel rates, regulatory assets and liabilities are
recorded in accordance with SFAS 71.
Black Lung Benefits and Workers' Compensation. The Company is liable under
the Federal Coal Mine Health and Safety Act of 1969 (Act), as amended, to pay
certain black lung benefits to eligible present and former employees. An
irrevocable Black Lung Benefits Trust is maintained under the Internal
Revenue Code which, based on the most recent actuarial study, is fully
funded. No accruals for Black Lung liabilities were made in 1995, 1994 or
1993.
The Company is self-insured for workers' compensation. The
estimated present value of workers' compensation claims is provided for based
on known events and claims.
Reclamation. Accruals are made for estimated costs of direct reclamation
as a result of the surface mining of coal. The accrual is for the estimated
amount necessary to restore the land and water resources affected by the
mining operations to their post mining land uses, as approved by the Ohio
Department of Natural Resources.
The Surface Mining and Reclamation Act of 1977 established minimum
standards for the final closure of mines after their coal reserves are
exhausted. This would include reclaiming the support acreage at surface
mines and the removal or covering of refuse piles and water settling ponds.
Reclamation costs associated with support operations at the Company's surface
mines are recorded as incurred.
Reclassifications. Certain prior-period amounts were reclassified to conform
with current-period presentation.
2. CONTINGENCIES:
The Company is involved in a number of legal proceedings and claims.
While management is unable to predict the outcome of litigation, it is not
expected that the resolution of these matters will have a material adverse
effect on the results of operations or financial condition.
The Company recovers all costs from OPCo under the coal supply
agreement.
3. CONTINUATION OF MINING OPERATIONS:
The Clean Air Act Amendments of 1990 (CAAA) require significant
reductions in sulfur dioxide and nitrogen oxides emitted from OPCo's
generating plants. Muskingum River Plant Unit 5 has been switched to low
sulfur coal, as part of the AEP System s least-cost compliance plan. The
plan also includes fuel switching to lower suflur coal at other AEP System
generating units, including Muskingum River Plant Units 1 through 4 in Phase
II (year 2000); nonetheless, at this point, all Phase II plans are tentative
and subject to further review.
Under settlement agreements applicable to OPCo's Public Utilities
Commission of Ohio (PUCO) jurisdiction, OPCo's recovery of fuel costs is
fixed at predetermined prices and OPCo is provided with the opportunity to
recover its Ohio jurisdictional share of its investment in and the
liabilities and future shut-down costs of the Muskingum mine to the extent
the actual cost of coal is sufficiently below the predetermined prices.
Based on the estimated future cost of coal supplies, from both affiliated and
unaffiliated sources, OPCo's management believes that OPCo will recover under
the terms of the settlement agreements the cost of the Muskingum mining
operations including eventual mine closure liabilities attributable to its
PUCO jurisdiction.
It may be necessary in the future to shut down the Muskingum mining
operations if for some unforeseen reason the predetermined price is not
adequate to recover the Muskingum mining cost from PUCO jurisdictional fuel
clause customers or if it is no longer economical due to the CAAA or
otherwise to continue mining operations. 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 would be recoverable
from OPCo under the coal supply agreement.
4. OTHER RELATED-PARTY TRANSACTIONS:
American Electric Power Service Corporation (AEPSC) provides certain
managerial and professional services to AEP System companies including COCCo.
The costs of the services are billed by AEPSC on a direct-charge basis to the
extent practicable and on reasonable bases of proration for indirect costs.
The charges for services are made at cost and include no compensation for the
use of equity capital, which is furnished to AEPSC by AEP Co., Inc. Billings
from AEPSC are capitalized or expensed depending on the nature of the
services rendered. AEPSC and its billings are subject to the regulations of
the SEC under the 1935 Act.
5. BENEFIT PLANS:
United Mine Workers of America (UMWA) Pension Plans
The Company provides UMWA pension benefits for UMWA employees
meeting eligibility requirements. Benefits are based on age at retirement
and years of service. Contributions are based on the number of hours worked,
are expensed when paid and totaled $258,000 in 1995, $315,000 in 1994 and
$480,000 in 1993. As of June 30, 1995, the UMWA actuary estimates that the
Company's share of the UMWA pension plans unfunded vested liabilities was
approximately $7.6 million. In the event the Company ceases or significantly
reduces mining operations or contributions to the UMWA pensions plans, a
withdrawal obligation may be triggered for all or a portion of its share of
the unfunded vested liability.
AEP System Pension Plan
The Company participates in the AEP pension plan, a trusteed,
noncontributory defined benefit plan covering all employees meeting
eligibility requirements, except participants in the UMWA pension plans.
Benefits are based on service years and compensation levels. Pension costs
are allocated by first charging each System company with its service cost and
then allocating the remaining pension cost in proportion to its share of the
projected benefit obligation. The funding policy is to make annual trust
fund contributions equal to the net periodic pension cost up to the maximum
amount deductible for federal income taxes, but not less than the minimum
required contribution in accordance with the Employee Retirement Income
Security Act of 1974.
The Company's share of net pension cost of the AEP System pension plan
for the years ended December 31, 1995, 1994 and 1993 was $66,000, $231,000
and $239,000, respectively.
AEP System Savings Plan
An employee savings plan is offered to non-UMWA employees which
allows participants to contribute up to 17% of their salaries into various
investment alternatives, including AEP Co., Inc. common stock. An employer
matching contribution, equaling one-half of the employees' contribution to
the plan up to a maximum of 3% of the employees' base salary, is invested in
AEP Co., Inc. common stock and totaled $93,000 in 1995, $114,000 in 1994 and
$131,000 in 1993.
Postretirement Benefits Other Than Pensions
Postretirement medical benefits for the Company s UMWA employees who
have retired or will retire after January 1, 1976 are the liability of the
Company. They are eligible for postretirement health care and life insurance
if they have at least 10 service years and are age 55 or older when
employment terminates. Non-active UMWA employees become eligible at age 55
if they have 20 service years.
The AEP System provides certain other benefits for retired
employees. Substantially all non-UMWA employees are eligible for
postretirement health care and life insurance if they have at least 10
service years and are age 55 or older when employment terminates.
SFAS 106, Employers' Accounting for Postretirement Benefits Other
Than Pensions, was adopted in January 1993 for the Company's aggregate
liability for postretirement benefits other than pensions (OPEB). SFAS 106
requires the accrual during the employee s service years of the present value
liability for OPEB costs. Costs for the accumulated postretirement benefits
earned and not recognized at adoption are being recognized, in accordance
with SFAS 106, as a transition obligation over 20 years. OPEB costs are
determined by the application of AEP System actuarial assumptions to each
company's employee complement. The Company's annual accrued OPEB costs for
1995, 1994 and 1993 for employees and retirees required by SFAS 106, which
includes the recognition of one-twentieth of the prior service transition
obligation, were $5.4 million, $5.1 million and $5.8 million, respectively.
As a result of SFAS 106, a Voluntary Employees Beneficiary
Association (VEBA) trust fund for OPEB benefits for all non-UMWA employees
was established and a corporate owned life insurance (COLI) program was
implemented to lower the net OPEB costs. The insurance policies have a
substantial cash surrender value which is recorded, net of equally
substantial policy loans, as deferred charges. Legislation was passed by
Congress which would have significantly reduced the tax benefits of a COLI
program for the future. The legislation containing this provision was vetoed
by the President. At this time it is uncertain if legislation repealing
certain tax benefits from COLI programs will be enacted. If enacted this
legislation would negatively impact the effectiveness of the COLI program as
a funding and cost reduction mechanism. The amount contributed to the VEBA
trust fund is the difference between the pay-as-you-go OPEB cost and SFAS 106
total OPEB cost. This contribution was funded by amounts billed to OPCo plus
net earnings from the COLI program. Contributions to the VEBA trust fund
were $233,000 in 1995, $341,000 in 1994 and $377,000 in 1993.
Several UMWA health plans pay the postretirement medical benefits
for the Company's UMWA retirees who retired before January 2, 1976 and their
survivors plus retirees and others whose last employer is no longer a
signatory to the UMWA contract or is no longer in business. The UMWA health
plans are funded by payments from current and former UMWA wage agreement
signatories, the 1950 UMWA Pension Plan surplus and the Abandoned Mine Land
Reclamation Fund Surplus. Required annual payments to the UMWA health funds
made by the Company were recognized as expense when paid and totaled $153,000
in 1995, $233,000 in 1994 and $342,000 in 1993.
The Energy Policy Act of 1992 (Energy Act) permits recovery of
excess Black Lung Trust funds of the AEP System to pay certain postretirement
medical benefits under one of the UMWA health plans. Reimbursement
limitations apply to the System's excess funding. The Company has a fund
surplus that it is able to transfer to other AEP System Companies that are
members of the fund and have a deficit. No transfers were made to other
companies in 1995, 1994 or 1993. In 1995 $1.6 million, in 1994 $1.1 million
and in 1993 $1.5 million of Black Lung surplus was applied in accordance with
the Energy Act to reimburse the Company for benefits paid. The Company's
share of the excess Black Lung Trust funds at December 31, 1995, 1994 and
1993 was $3.9 million, $4.7 million and $4.8 million, respectively.
<PAGE>
6. FEDERAL INCOME TAXES:
The details of Federal income taxes are as follows:
Year Ended December 31,
1995 1994 1993
(in thousands)
Current (net) . . . . . . . . . . . . . . . . . .$ (196) $10,501 $ 3,912
Deferred (net). . . . . . . . . . . . . . . . . . 1,312 (9,937) (3,620)
Total Federal Income Taxes. . . . . . . . . . . .$1,116 $ 564 $ 292
Federal income taxes as reported are different from pre-tax book
income multiplied by the statutory tax rate predominantly due to permanent
differences for corporate owned life insurance and the practice of flow-
through accounting for book/tax differences associated with certain
depreciation differences.
The Company joins in the filing of a consolidated federal income tax
return with its affiliated companies in the AEP System. The allocation of
the AEP System's current consolidated federal income tax to the System
companies is in accordance with SEC rules under the 1935 Act. These rules
permit the allocation of the benefit of current tax losses to the System
companies giving rise to them in determining their current tax expense. The
tax loss of the System parent company, AEP Co., Inc., is allocated to its
subsidiaries with taxable income. With the exception of the loss of the
parent company, the method of allocation approximates a separate return
result for each company in the consolidated group.
The AEP System has settled with the Internal Revenue Service (IRS)
all issues from the audits of the consolidated federal income tax returns for
the years prior to 1991. Returns for the years 1991 through 1993 are
presently being audited by the IRS. In the opinion of management, the final
settlement of open years will not have a material effect on results of
operations.
<PAGE>
The following tables show the elements of the net deferred tax asset
and the significant temporary differences that gave rise to it:
December 31,
1995 1994
(in thousands)
Deferred Tax Assets. . . . . . . . . . . . . $19,778 $21,128
Deferred Tax Liabilities . . . . . . . . . . (3,882) (4,960)
Net Deferred Tax Assets. . . . . . . . . . $15,896 $16,168
Property Related Temporary Differences . . . $(2,376) $(3,182)
Amounts Due From Parent Company
For Future Federal Income Taxes. . . . . . (838) (1,241)
Accrued Mine Reclamation Expense . . . . . . 3,682 5,439
Abandonment of Dragline. . . . . . . . . . . 7,191 8,825
Deferred State Income Taxes. . . . . . . . . 583 694
Deferred Book Gain - Sale/Leaseback of Plant 2,134 2,559
Accrued Postretirement Expense . . . . . . . 3,500 2,494
All Other (net). . . . . . . . . . . . . . . 2,020 580
Total Net Deferred Tax Assets. . . . . . . $15,896 $16,168
7. SUPPLEMENTARY CASH FLOW INFORMATION:
Year Ended December 31,
1995 1994 1993
(in thousands)
Cash was paid (received) for:
Interest. . . . . . . . . . . . . . . . . . $ 55 $ 57 $ 56
Income Taxes. . . . . . . . . . . . . . . . 1,858 10,167 (43)
Noncash acquisitions under capital leases. . . 4,025 7,276 1,255
<PAGE>
8. LONG-TERM DEBT:
Long-term debt was outstanding as follows:
December 31,
1995 1994
(in thousands)
Advances from Parent - 3.3% Open Account. . . . $ 1,500 $ 1,500
Finance Obligation. . . . . . . . . . . . . . . 494 579
1,994 2,079
Less Portion Due Within One Year. . . . . . . . 104 101
Total $ 1,890 $ 1,978
A finance obligation was entered into for the Mid Rail Loadout
facility in 1994 through a sale and leaseback transaction. The term of the
obligation is six years, with a bargain purchase option at the expiration of
the agreement. In accordance with SFAS 98, the transaction did not qualify
as a sale and leaseback for accounting purposes. Future minimum payments
under the agreement are $104,000 per year for 1996 through 1999 and $78,000
in 2000.
9. LEASES:
Leases of property, plant and equipment are for periods up to 30
years and require payments of related property taxes, maintenance and
operating costs. The majority of the leases have purchase or renewal options
and will be renewed or replaced by other leases as long as mining operations
continue.
<PAGE>
Lease rentals are generally charged to operating expenses. The
components of rental cost are as follows:
Year Ended December 31,
1995 1994 1993
(in thousands)
Operating Leases. . . . . . . . . . . . . . . . $ 6,060 $ 9,220 $11,620
Amortization of Capital Leases. . . . . . . . . 3,487 3,242 4,052
Interest on Capital Leases. . . . . . . . . . . 644 620 1,227
Total Rental Costs. . . . . . . . . . . . . $10,191 $13,082 $16,899
Properties under capital leases and related obligations recorded on
the balance sheets are as follows:
December 31,
1995 1994
(in thousands)
Mining Plant. . . . . . . . . . . . . . . . . . . . . $29,615 $27,135
Accumulated Provision for Amortization. . . . . . . . 17,271 15,877
Net Property under Capital Leases . . . . . . . . . $12,344 $11,258
Capital Lease Obligations:
Noncurrent Liability. . . . . . . . . . . . . . . . $ 8,965 $ 7,914
Liability Due Within One Year . . . . . . . . . . . 3,379 3,344
Total Capital Lease Obligations . . . . . . . . . $12,344 $11,258
Properties under operating leases and related obligations are not
included in the balance sheets.
<PAGE>
Future minimum lease rentals consisted of the following at December
31, 1995:
Non-
Cancelable
Capital Operating
Leases Leases
(in thousands)
1996. . . . . . . . . . . . . . . . . . . . . . . . . $ 3,888 $ 4,710
1997. . . . . . . . . . . . . . . . . . . . . . . . . 3,509 4,190
1998. . . . . . . . . . . . . . . . . . . . . . . . . 3,047 4,144
1999. . . . . . . . . . . . . . . . . . . . . . . . . 1,777 3,796
2000. . . . . . . . . . . . . . . . . . . . . . . . . 856 3,701
Later Years . . . . . . . . . . . . . . . . . . . . . 549 12,526
Total Future Minimum Lease Rentals. . . . . . . . . . 13,626 $33,067
Less Estimated Interest Element . . . . . . . . . . . 1,282
Estimated Present Value of Future Minimum Lease Rentals $12,344
