<PAGE>
WINDSOR COAL COMPANY
Page
CONTENTS
Statements of Income and Statements of Retained Earnings . . . . . 1
Statements of Cash Flows . . . . . . . . . . . 2
Balance Sheets . . . . . . . . . . . . . . 3-4
Notes to Financial Statements . . . . . . . . . . 5-11
<PAGE>
<PAGE>
<TABLE>
WINDSOR COAL COMPANY
STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Year Ended December 31,
1996 1995 1994
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . . . $57,615 $49,453 $52,821
OPERATING EXPENSES (including depreciation, depletion
and amortization of mining plant of $4,789,000 in
1996, $2,424,000 in 1995 and $1,413,000 in 1994) . . 55,931 47,343 50,590
OPERATING INCOME . . . . . . . . . . . . . . . . . . . 1,684 2,110 2,231
NONOPERATING INCOME. . . . . . . . . . . . . . . . . . 93 71 71
INCOME BEFORE INTEREST CHARGES . . . . . . . . . . . . 1,777 2,181 2,302
INTEREST CHARGES (including $14,000 in 1996, $13,000
in 1995 and $34,000 in 1994 on long-term debt to
Parent Company). . . . . . . . . . . . . . . . . . . 14 13 85
INCOME BEFORE FEDERAL INCOME TAXES . . . . . . . . . . 1,763 2,168 2,217
FEDERAL INCOME TAXES . . . . . . . . . . . . . . . . . 400 805 854
NET INCOME . . . . . . . . . . . . . . . . . . . . . . $ 1,363 $ 1,363 $ 1,363
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Year Ended December 31,
1996 1995 1994
(in thousands)
<S> <C> <C> <C>
RETAINED EARNINGS JANUARY 1. . . . . . . . . . . . . . $ 245 $1,383 $ 700
NET INCOME . . . . . . . . . . . . . . . . . . . . . . 1,363 1,363 1,363
CASH DIVIDENDS DECLARED. . . . . . . . . . . . . . . . 340 2,501 680
RETAINED EARNINGS DECEMBER 31. . . . . . . . . . . . . $ 1,268 $ 245 $1,383
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
WINDSOR COAL COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Year Ended December 31,
1996 1995 1994
(in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . $ 1,363 $ 1,363 $ 1,363
Adjustments for Noncash Items:
Depreciation, Depletion and Amortization . . . . 4,790 2,424 1,413
Deferred Income Taxes. . . . . . . . . . . . . . (3,545) (1,874) (1,414)
Accrued Other Postretirement Benefits. . . . . . 1,231 1,538 2,267
Accrued Rent and Royalty . . . . . . . . . . . . 2,131 2,268 -
Reclamation Reserve. . . . . . . . . . . . . . . 1,343 - -
Changes in Certain Current Assets and Liabilities:
Accounts Receivable. . . . . . . . . . . . . . . (1,972) (5,370) 2,824
Coal, Materials and Supplies . . . . . . . . . . (17) 463 (214)
Accounts Payable . . . . . . . . . . . . . . . . (813) 1,671 (275)
Other (net). . . . . . . . . . . . . . . . . . . . 385 713 670
Net Cash Flows From Operating Activities . . 4,896 3,196 6,634
INVESTING ACTIVITIES:
Construction Expenditures. . . . . . . . . . . . . (68) (145) (488)
Proceeds from Sales of Property. . . . . . . . . . 5 - 3
Net Cash Flows Used For Investing Activities (63) (145) (485)
FINANCING ACTIVITIES:
Issuance of Long-term Debt . . . . . . . . . . . . - 137 3,301
Retirement of Long-term Debt . . . . . . . . . . . (569) (626) (8,778)
Change in Short-term Debt (net). . . . . . . . . . - (66) (2,185)
Dividends Paid . . . . . . . . . . . . . . . . . . (340) (2,501) (680)
Net Cash Flows Used For Financing Activities (909) (3,056) (8,342)
Net Increase (Decrease) in Cash and Cash Equivalents 3,924 (5) (2,193)
Cash and Cash Equivalents January 1. . . . . . . . . 13 18 2,211
Cash and Cash Equivalents December 31. . . . . . . . $ 3,937 $ 13 $ 18
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
WINDSOR COAL COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
December 31,
1996 1995
(in thousands)
<S> <C> <C>
ASSETS
MINING PLANT:
Surface Lands . . . . . . . . . . . . . . . . . . . . . . . . . $ 634 $ 638
Mining Structures and Equipment . . . . . . . . . . . . . . . . 47,839 52,862
Coal Interests (net of depletion) . . . . . . . . . . . . . . . 1,544 2,021
Mine Development Costs. . . . . . . . . . . . . . . . . . . . . 10,041 10,041
Construction Work in Progress . . . . . . . . . . . . . . . . . 189 121
Total Mining Plant. . . . . . . . . . . . . . . . . . . 60,247 65,683
Accumulated Depreciation and Amortization . . . . . . . . . . . 30,854 30,316
NET MINING PLANT. . . . . . . . . . . . . . . . . . . . 29,393 35,367
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . 3,937 13
Accounts Receivable - General . . . . . . . . . . . . . . . . . 3,847 535
Accounts Receivable - Affiliated Companies. . . . . . . . . . . 4,465 5,805
Coal - at average cost. . . . . . . . . . . . . . . . . . . . . 18 97
Materials and Supplies - at average cost. . . . . . . . . . . . 3,947 3,851
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266 240
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . 16,480 10,541
REGULATORY ASSETS . . . . . . . . . . . . . . . . . . . . . . . . 784 731
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . 581 -
DEFERRED CHARGES. . . . . . . . . . . . . . . . . . . . . . . . . 391 371
TOTAL . . . . . . . . . . . . . . . . . . . . . . . $47,629 $47,010
See Notes to Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
WINDSOR COAL COMPANY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
December 31,
1996 1995
(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 . . . . . . . . . . . . . . . . . . . . . . . 1,268 245
TOTAL SHAREOWNER'S EQUITY . . . . . . . . . . . . . . . 12,144 11,121
LONG-TERM DEBT. . . . . . . . . . . . . . . . . . . . . . . . . . 7,935 8,505
OTHER NONCURRENT LIABILITIES:
Obligations Under Capital Leases. . . . . . . . . . . . . . . . 1,459 2,057
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,630 10,658
TOTAL OTHER NONCURRENT LIABILITIES. . . . . . . . . . . 16,089 12,715
CURRENT LIABILITIES:
Long-term Debt Due Within One Year. . . . . . . . . . . . . . . 570 570
Accounts Payable - General. . . . . . . . . . . . . . . . . . . 1,587 2,619
Accounts Payable - Affiliated Companies . . . . . . . . . . . . 690 471
Workers' Compensation . . . . . . . . . . . . . . . . . . . . . 2,959 2,133
Obligations Under Capital Leases. . . . . . . . . . . . . . . . 848 965
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,577 1,755
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . 8,231 8,513
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . - 3,499
REGULATORY LIABILITIES:
Amounts Due To Parent Company For Future Income Tax Benefits. . 2,953 2,418
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277 239
TOTAL REGULATORY LIABILITIES. . . . . . . . . . . . . . 3,230 2,657
CONTINGENCIES (Note 2)
TOTAL .. . . . . . . . . . . . . . . . . . . . . . . $47,629 $47,010
See Notes to Financial Statements.
</TABLE>
<PAGE>
<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 (deferred expenses) and regulatory liabilities
(deferred income) 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 substantially all 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 1996, 1995 and 1994 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.
<PAGE>
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, deferred income taxes are recorded with
related regulatory assets and liabilities 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 1996, 1995 or 1994.
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. Reclamation costs are recorded and billed to OPCo in
accordance with the coal supply agreement.
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 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 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, unaccrued 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 $283,000 in 1996, $241,000 in 1995 and
$303,000 in 1994. As of June 30, 1996, the UMWA actuary estimates that the
Company's share of the UMWA pension plans unfunded vested liabilities was
approximately $4.4 million. In the event the Company ceases or significantly
reduces mining operations or contributions to the UMWA pension 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 the net pension cost of the AEP
System pension plan was $119,000, $83,000 and $201,000 for the years ended
December 31, 1996, 1995 and 1994, 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. The Company's annual contributions totaled
$76,000 in 1996, $72,000 in 1995 and $85,000 in 1994.
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.
Postretirement benefits other than pensions (OPEB) are provided for
retired employees under an AEP System plan. Substantially all employees are
eligible for postretirement health care and life insurance if they retire
from active service after reaching age 55 and have at least 10 service years.
OPEB costs are determined by the application of AEP System actuarial
assumptions to each company's employee complement. The annual accrued costs,
which includes the recognition of one-twentieth of the prior service
transition obligation, was $1.9 million in 1996, $2.2 million in 1995 and
$2.9 million in 1994. The funding policy for AEP's OPEB plan is to make
contributions to an external Voluntary Employees Beneficiary Association
trust fund for all non-UMWA employees equal to the incremental OPEB costs
(i.e., the amount that the total postretirement benefits cost under SFAS 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions,"
exceeds the pay-as-you-go amount). Contributions were $119,000 in 1996,
$140,000 in 1995 and $202,000 in 1994.
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 $98,000
in 1996, $247,000 in 1995 and $289,000 in 1994.
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 had a fund
deficit so it was 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 utilized in accordance with the Energy Act were $579,000 in 1996,
$664,000 in 1995 and $426,000 in 1994 to reimburse the Company for benefits
paid. In addition, the amounts of Black Lung surplus utilized reflect
$101,000 in 1996, $176,000 in 1995 and $426,000 in 1994 reallocated from the
surplus Black Lung trust fund of other System member companies. The
Company's share of the Black Lung Trust funds surplus at December 31, 1996
was a surplus of $841,000 and at December 31, 1995 and 1994 was a
deficit of $297,000 and $166,000, respectively.
6. FEDERAL INCOME TAXES:
The details of federal income taxes are as follows:
Year Ended December 31,
1996 1995 1994
(in thousands)
Current (net). . . . . . . . . . . . . . . . . $ 3,945 $ 2,679 $ 2,268
Deferred (net) . . . . . . . . . . . . . . . . (3,545) (1,874) (1,414)
Total Federal Income Taxes . . . . . . . . . . $ 400 $ 805 $ 854
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.
The following tables show the elements of the net deferred tax
liability and the significant temporary differences giving rise to such
deferrals:
December 31,
1996 1995
(in thousands)
Deferred Tax Assets. . . . . . . . . . . . . . . . . . . $ 8,745 $ 7,224
Deferred Tax Liabilities . . . . . . . . . . . . . . . . (8,164) (10,723)
Net Deferred Tax Assets (Liabilities). . . . . . . . . $ 581 $ (3,499)
Property Related Temporary Differences . . . . . . . . . $(6,273) $(7,694)
Amounts Due To Parent Company
For Future Federal Income Taxes. . . . . . . . . . . . 1,239 1,350
Self-Insurance Reserves. . . . . . . . . . . . . . . . . 1,083 1,112
Accrued Postretirement Expenses. . . . . . . . . . . . . 2,547 2,074
Accrued Leased Asset Book Rent Expense . . . . . . . . . 651 491
Accrued Book Royalty Expense . . . . . . . . . . . . . . 889 302
Accrued Mine Reclamation Expense . . . . . . . . . . . . 470 -
Deferred State Income Taxes. . . . . . . . . . . . . . . (588) (1,459)
All Other (net). . . . . . . . . . . . . . . . . . . . . 563 325
Total Net Deferred Tax Assets (Liabilities). . . . . . $ 581 $(3,499)
7. SUPPLEMENTARY CASH FLOW INFORMATION:
Year Ended December 31,
1996 1995 1994
(in thousands)
Cash was paid for:
Interest . . . . . . . . . . . . . . $ 13 $ 13 $ 266
Income Taxes . . . . . . . . . . . . 5,306 3,201 3,132
Noncash acquisitions under capital
leases were . . . . 291 84 582
8. LEASES:
Leases of property, plant and equipment are for periods of 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.
Lease rentals for both operating and capital leases are generally
charged to operating expenses. The components of rental cost are as follows:
Year Ended December 31,
1996 1995 1994
(in thousands)
Operating Leases . . . . . . . . . . . . . . . . .$ 943 $ 953 $ 887
Amortization of Capital Leases . . . . . . . . . . 883 2,023 2,051
Interest on Capital Leases . . . . . . . . . . . . 155 289 430
Total Rental Costs . . . . . . . . . . . $1,981 $3,265 $3,368
<PAGE>
Properties under capital leases and related obligations recorded on
the Balance Sheets are as follows:
December 31,
1996 1995
(in thousands)
Mining Plant. . . . . . . . . . . . . . . . $ 6,928 $11,917
Accumulated Amortization.. . . . . . . . . 4,621 8,895
Net Property under Capital Leases . . $ 2,307 $ 3,022
Capital Lease Obligations:
Noncurrent Liability. . . . . . . . . . $1,459 $ 2,057
Liability Due Within One Year . . . . . 848 965
Total Capital Lease Obligations . . $2,307 $ 3,022
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, 1996:
Non-
Cancelable
Capital Operating
Leases Leases
(in thousands)
1997. . . . . . . . . . . . . . . . . . . . . . $ 961 $397
1998. . . . . . . . . . . . . . . . . . . . . . 760 -
1999. . . . . . . . . . . . . . . . . . . . . . 382 -
2000. . . . . . . . . . . . . . . . . . . . . . 164 -
2001. . . . . . . . . . . . . . . . . . . . . . 18 -
Later Years . . . . . . . . . . . . . .. . . . . 32 -
Total Future Minimum Lease Rentals. . .. . . . . 2,317 $397
Less Estimated Interest Element Included Therein. 10
Estimated Present Value of
Future Minimum Lease Rentals . . . . . . . . $2,307
9. LONG-TERM DEBT AND SHORT-TERM DEBT:
Long-term debt was outstanding as follows:
December 31,
1996 1995
(in thousands)
Advances from Parent - 6% open account . . . . . . . $ 225 $ 225
Finance Obligations. . . . . . . . . . . . . . . . . 8,280 8,850
8,505 9,075
Less Portion Due Within One Year . . . . . .. . . . . 570 570
Total . . . . . . . . . . . . . . . . . . . . $7,935 $8,505
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 1997 through 2001 and $5,430,000 in
later years.
