35-CERT 1 cocsec.txt 35-CERT CENTRAL OHIO COAL COMPANY QUARTERLY REPORT PER REQUIREMENTS OF HOLDING COMPANY ACT RELEASE NO. 26573 FOR THE QUARTER ENDED DECEMBER 31, 2000 CONTENTS Page Statements of Income and Retained Earnings 1 Balance Sheets 2-3 Information Concerning Mine Operations and Capital Improvements 4 Calculation of Cost of Capital and Statement of Cost of Commercial Coal Sold and Shipped 5 Statement of Cost of Operation 6 Analysis of Mining Plant in Service 7 Construction Expenditure Budget 8 CENTRAL OHIO COAL COMPANY STATEMENT OF INCOME FOR THE QUARTER ENDED DECEMBER 31, 2000 (UNAUDITED) (in thousands) OPERATING REVENUES $25,757 COST OF OPERATION 11,165 OPERATING INCOME 14,592 NONOPERATING INCOME 1,047 INCOME BEFORE INTEREST CHARGES 15,639 INTEREST CHARGES 3,192 INCOME BEFORE FEDERAL INCOME TAXES 12,447 FEDERAL INCOME TAXES ON OPERATIONS 12,446 NET INCOME $ 1 STATEMENT OF RETAINED EARNINGS FOR THE QUARTER ENDED DECEMBER 31, 2000 (UNAUDITED) (in thousands) BALANCE AT BEGINNING OF PERIOD $2 NET INCOME 1 BALANCE AT END OF PERIOD $3 The common stock of the Company is wholly owned by Ohio Power Company. CENTRAL OHIO COAL COMPANY BALANCE SHEET (UNAUDITED) December 31, 2000 (in thousands) ASSETS MINING PLANT: Mining Plant in Service $ 50,416 Accumulated Depreciation and Amortization 49,778 NET MINING PLANT 638 OTHER PROPERTY AND INVESTMENTS 1,487 CURRENT ASSETS: Cash and Cash Equivalents 204 Accounts Receivable: General 161 Affiliated Companies 24,286 Advances to Affiliates 43,022 Coal 193 Materials and Supplies 6,170 Prepayments 79 TOTAL CURRENT ASSETS 74,115 DEFERRED INCOME TAXES 54,338 DEFERRED CHARGES 687 TOTAL $131,265 CENTRAL OHIO COAL COMPANY BALANCE SHEET (UNAUDITED) December 31, 2000 (in thousands) CAPITALIZATION AND LIABILITIES SHAREHOLDER'S EQUITY: Common Stock - Par Value $0.10: Authorized - 100,000 Shares Outstanding - 69,000 Shares $ 7 Retained Earnings 3 TOTAL SHAREHOLDER'S EQUITY 10 OTHER NONCURRENT LIABILITIES: Accrued Postretirement Benefits Other Than Pensions 54,320 Accrued Reclamation Costs 34,128 Mine Closure 1,259 Other Operating Reserves 20,027 TOTAL OTHER NONCURRENT LIABILITIES 109,734 CURRENT LIABILITIES: Accounts Payable: General 1,443 Affiliated Companies 1,041 Taxes Accrued 7,502 Accrued Reclamation Costs 4,700 Accrued Vacation Pay 557 Workers' Compensation Claims 1,047 Other 3,346 TOTAL CURRENT LIABILITIES 19,636 DEFERRED CREDITS 1,885 TOTAL $131,265 CENTRAL OHIO COAL COMPANY INFORMATION CONCERNING MINE OPERATIONS AND CAPITAL IMPROVEMENTS FOR THE QUARTER ENDED DECEMBER 31, 2000 Litigation On February 20, 2001, the U.S. District Court for the Southern District of Ohio ruled against the Company in its suit against the United States over deductibility of interest claimed by the Company in its consolidated federal income tax return related to its COLI program. The Company had filed suit to resolve the IRS's assertion that interest deductions for the Company's COLI program should not be allowed. In 1998 and 1999 the Company paid the disputed taxes and interest attributable to COLI interest deductions for taxable years 1991-98 to avoid the potential assessment by the IRS of additional interest on the contested tax. The payments were included in other property and investments pending the resolution of this matter. As a result of the U.S. District Court's decision to deny the COLI interest deductions, the Company expensed and recovered from Ohio Power Company (OPCo) all of its costs under terms of the coal supply agreement. The Company plans to appeal the decision. Money Pool On June 15, 2000, the Company became a participant in the American Electric Power (AEP) System Money Pool (Money Pool). The Money Pool is a mechanism structured to meet the short-term cash requirements of the participants with AEP Company, Inc. acting as the primary borrower on behalf of the Money Pool. The Company's affiliates that are U.S. domestic electric utility operating companies and coal-mining companies are the primary participants in the Money Pool. The operation of the Money Pool is designed to match on a daily basis the available cash and borrowing requirements of the participants. Participants with excess cash loan funds to the Money Pool reducing the amount of external funds AEP Company, Inc. needs to borrow to meet the short-term cash requirements of other participants with advances from the Money Pool. AEP Company, Inc. borrows the funds needed on a daily basis to meet the net cash requirements of the Money Pool participants. A weighted average daily interest rate which is calculated based on the outstanding short-term debt borrowings made by AEP Company, Inc. is applied to each Money Pool participant's daily outstanding investment or debt position to determine interest income or interest expense. Interest income is included in nonoperating income, and interest expense is included in interest charges. At December 31, 2000 the Company was a net investor in the Money Pool and reports its investment in the Money Pool as Advances to Affiliates on the Balance Sheet. Mine Closed The Company closed the Muskingum Mine and efforts are underway to reclaim the property. Ongoing efforts continue to sell the shutdown Muskingum mine along with the Meigs and Windsor mines. CENTRAL OHIO COAL COMPANY CALCULATION OF COST OF CAPITAL AND STATEMENT OF COST OF COMMERCIAL COAL SOLD AND SHIPPED FOR THE QUARTER ENDED DECEMBER 31, 2000 (in thousands, except as noted)
October through December 2000 I. Calculation of Cost-of-Capital Compensation: A. Equity Investment at Beginning of Period: Common Stock $ 7 B. Rate of Return Allowable per HCAR No. 26573: 10.27% per annum, 2.5675% per quarter .025675 C. Earnings Allowable on Equity Investment 1. Current Quarter $ - 2. Year-to-Date $ - D. Net Income per Statement of Income $ 1 Add: Interest Charges 3,192 Less: Nonoperating Income 1,047 E. Applied Cost-of-Capital Billing Adder: 1. Current Quarter $ 2,146 2. Year-to-Date $ (43) II. Coal Billing Calculation: A. Total Operating Expenses (a) $ 23,611 B. Add: Cost-of-Capital Billing Adder as Applied per E. 1. of Section I 2,146 C. Cost Applicable to Current Quarter Coal Billings $ 25,757 D. Coal Sold and Shipped in Current Quarter to Ohio Power (in tons) 291,840 E. Average Price per Ton to Ohio Power (in dollars) (C/D) $88.26 (a) As represented by ?Cost of Operation" plus ?Federal Income Taxes" reported in Statements of Income.
CENTRAL OHIO COAL COMPANY STATEMENT OF COST OF OPERATION FOR THE QUARTER ENDED DECEMBER 31, 2000 (in thousands) Direct Labor-UMW* $ 378 Indirect Labor-UMW* 1,312 Benefits-UMW* 1,976 Salaries and Benefits-Nonunion 715 Operating Supplies 1,326 Repair Parts and Materials 851 Electricity and Other Utilities 598 Outside Services-Maintenance, Haulage and Reclamation 624 Taxes Other Than Federal Income Taxes** 1,106 Rental of Equipment 13 Mining Cost Normalization*** (620) Reclamation (1,609) Other Production Costs 4,000 Subtotal 10,670 Transfers of Production Costs (to)/from Coal Inventory 495 Total $11,165 * United Mine Workers of America. ** Excludes FICA, Federal Unemployment and State Unemployment Taxes. These costs are reflected in benefits. *** Represents the deferral/accrual required to establish a monthly selling price based on forecasted results for the year. The amount of mining cost normalization is established on an "overall" company basis(i.e., not itemized) and any deferral is eliminated by year-end. CENTRAL OHIO COAL COMPANY ANALYSIS OF MINING PLANT IN SERVICE AND RELATED ACCUMULATED PROVISIONS FOR DEPRECIATION AND AMORTIZATION December 31, 2000 Net Gross Accumulated Carrying Cost Provisions Amount (in thousands) Description Surface Lands $ 324 $ - $324 Mining Structures and Equipment 47,800 47,486 314 Leasehold Improvements 2,292 2,292 - Total Mining Plant in Service $50,416 $49,778 $638 CENTRAL OHIO COAL COMPANY CONSTRUCTION EXPENDITURE BUDGET - 2001 The Company has no construction expenditures planned for 2001.