<PAGE>
Windsor Coal Company
1995 Annual Report
<PAGE>
WINDSOR 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
<PAGE>
<TABLE>
WINDSOR COAL COMPANY
STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Year Ended December 31,
1995 1994 1993
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . . . $49,453 $52,821 $57,934
OPERATING EXPENSES (including depreciation, depletion
and amortization of mining plant of $2,424,000 in
1995, $1,413,000 in 1994 and $1,565,000 in 1993) . . 47,343 50,590 55,111
OPERATING INCOME . . . . . . . . . . . . . . . . . . . 2,110 2,231 2,823
NONOPERATING INCOME. . . . . . . . . . . . . . . . . . 71 71 94
INCOME BEFORE INTEREST CHARGES . . . . . . . . . . . . 2,181 2,302 2,917
INTEREST CHARGES (including $13,000 in 1995 $34,000
in 1994 and $278,000 in 1993 on long-term debt to
Parent Company). . . . . . . . . . . . . . . . . . . 13 85 703
INCOME BEFORE FEDERAL INCOME TAXES . . . . . . . . . . 2,168 2,217 2,214
FEDERAL INCOME TAXES . . . . . . . . . . . . . . . . . 805 854 851
NET INCOME . . . . . . . . . . . . . . . . . . . . . . $ 1,363 $ 1,363 $ 1,363
</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. . . . . . . . . . . . . . $ 1,383 $ 700 $ 697
NET INCOME . . . . . . . . . . . . . . . . . . . . . . 1,363 1,363 1,363
CASH DIVIDENDS DECLARED. . . . . . . . . . . . . . . . 2,501 680 1,360
RETAINED EARNINGS DECEMBER 31. . . . . . . . . . . . . $ 245 $1,383 $ 700
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
WINDSOR COAL COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
December 31,
1995 1994
(in thousands)
<S> <C> <C>
ASSETS
MINING PLANT:
Surface Lands . . . . . . . . . . . . . . . . . . . . . . . . . $ 638 $ 638
Mining Structures and Equipment . . . . . . . . . . . . . . . . 52,862 53,448
Coal Interests (net of depletion) . . . . . . . . . . . . . . . 2,021 2,303
Mine Development Costs. . . . . . . . . . . . . . . . . . . . . 10,041 10,041
Construction Work in Progress . . . . . . . . . . . . . . . . . 121 415
Total Mining Plant. . . . . . . . . . . . . . . . . . . 65,683 66,845
Accumulated Depreciation and Amortization . . . . . . . . . . . 30,316 26,665
NET MINING PLANT. . . . . . . . . . . . . . . . . . . . 35,367 40,180
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . 13 18
Accounts Receivable - General . . . . . . . . . . . . . . . . . 535 155
Accounts Receivable - Affiliated Companies. . . . . . . . . . . 5,805 815
Coal - at average cost. . . . . . . . . . . . . . . . . . . . . 97 390
Materials and Supplies - at average cost. . . . . . . . . . . . 3,851 4,021
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 241
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . 10,541 5,640
REGULATORY ASSETS . . . . . . . . . . . . . . . . . . . . . . . . 731 655
DEFERRED CHARGES. . . . . . . . . . . . . . . . . . . . . . . . . 371 494
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . $47,010 $46,969
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
WINDSOR COAL COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
December 31,
1995 1994
(in thousands)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
SHAREOWNER'S EQUITY:
Common Stock - Par Value $100:
Authorized - 5,000 Shares
Outstanding - 4,064 Shares. . . . . . . . . . . . . . . . . . $ 406 $ 406
Paid-in Capital . . . . . . . . . . . . . . . . . . . . . . . . 10,470 10,470
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . 245 1,383
TOTAL SHAREOWNER'S EQUITY . . . . . . . . . . . . . . . 11,121 12,259
LONG-TERM DEBT. . . . . . . . . . . . . . . . . . . . . . . . . . 8,505 8,994
OTHER NONCURRENT LIABILITIES:
Obligations Under Capital Leases. . . . . . . . . . . . . . . . 2,057 2,876
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,658 6,505
TOTAL OTHER NONCURRENT LIABILITIES. . . . . . . . . . . 12,715 9,381
CURRENT LIABILITIES:
Long-term Debt Due Within One Year. . . . . . . . . . . . . . . 570 570
Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . - 66
Accounts Payable - General. . . . . . . . . . . . . . . . . . . 2,619 786
Accounts Payable - Affiliated Companies . . . . . . . . . . . . 471 633
Workers' Compensation . . . . . . . . . . . . . . . . . . . . . 2,133 2,290
Obligations Under Capital Leases. . . . . . . . . . . . . . . . 965 2,079
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,755 1,918
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . 8,513 8,342
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . 3,499 5,456
REGULATORY LIABILITIES:
Amounts Due To Parent Company For Future Income Tax Benefits. . 2,418 2,336
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 201
TOTAL REGULATORY LIABILITIES. . . . . . . . . . . . . . 2,657 2,537
CONTINGENCIES (Note 2)
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . $47,010 $46,969
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
WINDSOR 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 . . . . . . . . . . . . . . . . . . . . $ 1,363 $ 1,363 $ 1,363
Adjustments for Noncash Items:
Depreciation, Depletion and Amortization . . . . 2,424 1,413 1,565
Deferred Income Taxes. . . . . . . . . . . . . . (1,874) (1,414) (1,010)
Accrued Other Postretirement Benefits. . . . . . 1,538 2,267 2,121
Accrued Rent and Royalty . . . . . . . . . . . . 2,268 - -
Changes in Certain Current Assets and Liabilities:
Accounts Receivable. . . . . . . . . . . . . . . (5,370) 2,824 (467)
Coal, Materials and Supplies . . . . . . . . . . 463 (214) (601)
Accounts Payable . . . . . . . . . . . . . . . . 1,671 (275) 486
Other (net). . . . . . . . . . . . . . . . . . . . 713 670 1,171
Net Cash Flows From Operating Activities . . 3,196 6,634 4,628
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . (145) (488) (2,435)
Proceeds from Sales of Property. . . . . . . . . . - 3 99
Net Cash Flows Used For
Investing Activities . . . . . . . . . . . (145) (485) (2,336)
FINANCING ACTIVITIES:
Issuance of Long-term Debt . . . . . . . . . . . . 137 3,301 -
Retirement of Long-term Debt . . . . . . . . . . . (626) (8,778) (397)
Change in Short-term Debt (net). . . . . . . . . . (66) (2,185) 2,251
Receipts from (Payments to) Parent Company for
Future Coal Deliveries . . . . . . . . . . . . . - - (609)
Dividends Paid . . . . . . . . . . . . . . . . . . (2,501) (680) (1,360)
Net Cash Flows Used For Financing Activities (3,056) (8,342) (115)
Net Increase (Decrease) in Cash and Cash Equivalents (5) (2,193) 2,177
Cash and Cash Equivalents January 1. . . . . . . . . 18 2,211 34
Cash and Cash Equivalents December 31. . . . . . . . $ 13 $ 18 $ 2,211
See Notes to Financial Statements.
</TABLE>
<PAGE>
WINDSOR COAL COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES:
Organization and Regulation. Windsor Coal Company (the Company or WCCo), 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 underground mining operations
in West Virginia on properties owned or leased by OPCo or the Company. Coal
is mined and sold to generating units wholly owned by OPCo and jointly owned
by OPCo and an unaffiliated company at prices regulated by the Securities and
Exchange Commission (SEC) under the Public Utility Holding Company Act of
1935 (1935 Act). The prices billed 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. The
majority of the Company s coal production is shipped to OPCo s Cardinal
Plant.
Basis of Accounting. As a cost-based rate-regulated entity, WCCo'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 Certains 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 by use of the straight-line
method for mining structures and equipment and by use of the units-of-
production method for coal interests 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, depletion 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
invest-ments 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. A
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 based on
known events and claims.
Reclamation. The Surface Mining and Reclamation Act of 1977 established
minimum standards for the final closure of mines after their coal resources
are exhausted. This would include, among other things, sealing the portals
at underground mines and the removal or covering of refuse piles and water
settling ponds. The Company expenses reclamation costs as incurred.
Reclassifications. Certain prior-period amounts were reclassified to conform
with current-period presentation.
2. CONTINGENCIES:
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 oxide emissions from OPCo's
generating plants with the Phase I effective January 1, 1995 and Phase II
effective January 1, 2000. OPCo s Phase I compliance efforts did not impact
the Company. To meet Phase II compliance, tentative plans propose switching
Cardinal Plant Unit 1, which is supplied by the Company, to lower sulfur coal
from unaffiliated sources in 2001.
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 shutdown costs of the Windsor 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 Windsor mining
operations including eventual mine closure liabilities attributable to its
PUCO jurisdiction.
It may be necessary in the future to shut down the Windsor mining
operations if for some unforeseen reason the predetermined price is not
adequate to recover the Windsor 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 WCCo.
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 regulation 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 $241,000 in 1995, $303,000 in 1994 and
$360,000 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 $5.4 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
was $83,000, $201,000 and $177,000 for the years ended December 31, 1995,
1994 and 1993, 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 $72,000 in 1995, $85,000 in 1994 and
$94,000 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 $2.2 million, $2.9 million and $2.8 million, respectively.
As a result of SFAS 106, a Voluntary Employees Beneficiary
Association (VEBA) trust fund for all non-UMWA employees was established.
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 is
funded by amounts billed to OPCo. Contributions to the VEBA trust fund were
$140,000 in 1995, $202,000 in 1994 and $192,000 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 $247,000
in 1995, $289,000 in 1994 and $347,000 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
deficit so it is able to acquire surplus fund transfers from other AEP System
Companies that are members of the fund and have a surplus. The Company pays
cash for the amount transferred. The amounts of Black Lung surplus applied
in accordance with the Energy Act to reimburse the Company for benefits paid
were $664,000 in 1995, $426,000 in 1994 and $655,000 in 1993 of which
$176,000 in 1995, $426,000 in 1994 and $133,000 in 1993 was reallocated from
the surplus Black Lung trust fund of other System member companies. As a
member of the AEP System s excess Black Lung Trust fund, the Company had a
deficit balance of $297,000 and $166,000 at December 31, 1995 and 1994,
respectively, and a surplus balance of $29,000 at December 31, 1993.
<PAGE>
6. FEDERAL INCOME TAXES:
The details of federal income taxes are as follows:
Year Ended December 31,
1995 1994 1993
(in thousands)
Current (net) . . . . . . . . . . . . . . . . . .$ 2,679 $ 2,268 $ 1,861
Deferred (net). . . . . . . . . . . . . . . . . . (1,874) (1,414) (1,010)
Total Federal Income Taxes. . . . . . . . . . . .$ 805 $ 854 $ 851
Federal income taxes as reported are different from pre-tax book
income multiplied by the statutory tax rate predominantly due to the practice
of flow-through accounting for book/tax differences associated with self
insurance reserves.
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
liability and the significant temporary differences that gave rise to it:
December 31,
1995 1994
(in thousands)
Deferred Tax Assets. . . . . . . . . . . . . . $ 7,224 $ 5,130
Deferred Tax Liabilities . . . . . . . . . . . (10,723) (10,586)
Net Deferred Tax Liabilities . . . . . . . . $ (3,499) $ (5,456)
Property Related Temporary Differences . . . . $ (7,694) $(8,168)
Amounts Due To Parent Company
For Future Federal Income Taxes. . . . . . . 1,350 1,328
Self-Insurance Reserves. . . . . . . . . . . . 1,112 1,029
Accrued Postretirement Expenses. . . . . . . . 2,074 1,574
Deferred State Income Taxes. . . . . . . . . . (1,459) (1,459)
All Other (net). . . . . . . . . . . . . . . . 1,118 240
Total Net Deferred Tax Liabilities . . . . . $ (3,499) $(5,456)
7. SUPPLEMENTARY CASH FLOW INFORMATION:
Year Ended December 31,
1995 1994 1993
(in thousands)
Cash was paid for:
Interest . . . . . . . . . . . . . . . . . .$ 13 $ 266 $ 703
Income Taxes . . . . . . . . . . . . . . . . 3,201 3,132 2,221
Noncash acquisitions under capital leases were 84 582 1,020
8. LEASES:
Leases of property, plant and equipment are for periods up to 20
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 . . . . . . . . . . . . . . . . . . $ 953 $ 887 $ 895
Amortization of Capital Leases . . . . . . . . . . . 2,023 2,051 2,539
Interest on Capital Leases . . . . . . . . . . . . . 289 430 612
Total Rental Costs . . . . . . . . . . . . . $3,265 $3,368 $4,046
Properties under capital leases and related obligations recorded on
the Balance Sheets are as follows:
December 31,
1995 1994
(in thousands)
Mining Plant. . . . . . . . . . . . . . . . . . . . . . . $11,917 $12,957
Accumulated Amortization. . . . . . . . . . . . . . . . . 8,895 8,002
Net Property under Capital Leases . . . . . . . . . . $ 3,022 $ 4,955
Capital Lease Obligations:
Noncurrent Liability. . . . . . . . . . . . . . . . . $ 2,057 $ 2,876
Liability Due Within One Year . . . . . . . . . . . . 965 2,079
Total Capital Lease Obligations . . . . . . . . . $ 3,022 $ 4,955
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. . . . . . . . . . . . . . . . . . . . . . . . . $1,375 $ 530
1997. . . . . . . . . . . . . . . . . . . . . . . . . 906 397
1998. . . . . . . . . . . . . . . . . . . . . . . . . 706 -
1999. . . . . . . . . . . . . . . . . . . . . . . . . 305 -
2000. . . . . . . . . . . . . . . . . . . . . . . . . 108 -
Later Years . . . . . . . . . . . . . . . . . . . . . 50 -
Total Future Minimum Lease Rentals. . . . . . . . . . 3,450 $ 927
Less Estimated Interest Element Included Therein. . . 428
Estimated Present Value of Future Minimum Lease Rentals $3,022
<PAGE>
9. LONG-TERM DEBT AND SHORT-TERM DEBT:
Long-term debt was outstanding as follows:
December 31,
1995 1994
(in thousands)
Advances from Parent - 6% open account . . . . . . . . . .$ 225 $ 225
Finance Obligations. . . . . . . . . . . . . . . . . . . . 8,850 9,339
9,075 9,564
Less Portion Due Within One Year . . . . . . . . . . . . . 570 570
Total . . . . . . . . . . . . . . . . . . . . . . . .$8,505 $ 8,994
Finance obligations were entered into for the West Liberty portal in
1989, the Long's Run Ventilation facility in 1992 and the Short Creek Acid
Mine Drainage facility in 1994 through sale and leaseback transactions. The
term on these obligations is 20 years (Long's Run is for 10 years with a 10
year renewal) with a bargain purchase option at expiration of the agreements.
In accordance with SFAS 98, the transactions did not qualify as a sale and
leaseback for accounting purposes. Future minimum payments under these
agreements are $570,000 per year for 1996 through 2000 and $6,000,000 in
later years.
