35-CERT 1 soccsec.txt D:\1ST\COAL\SEC\SOCCSEC.WPD\1 SOUTHERN OHIO COAL COMPANY QUARTERLY REPORT PER REQUIREMENTS OF HOLDING COMPANY ACT RELEASE NO. 26573 FOR THE QUARTER ENDED MARCH 31, 2001 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 SOUTHERN OHIO COAL COMPANY STATEMENT OF INCOME FOR THE QUARTER ENDED MARCH 31, 2001 (UNAUDITED) (in thousands) OPERATING REVENUES $71,286 COST OF OPERATION 66,209 ------- OPERATING INCOME 5,077 INTEREST CHARGES 188 ------- OPERATING INCOME BEFORE FEDERAL INCOME TAXES 4,889 FEDERAL INCOME TAXES ON OPERATIONS 7,577 ------- NET LOSS FROM OPERATIONS (2,688) NONOPERATING INCOME 2,688 ------- NET INCOME $ - ======== STATEMENT OF RETAINED EARNINGS FOR THE QUARTER ENDED MARCH 31, 2001 (UNAUDITED) (in thousands) BALANCE AT BEGINNING OF PERIOD $26,446 NET INCOME - ------- BALANCE AT END OF PERIOD $26,446 ======= The common stock of the Company is wholly owned by Ohio Power Company. SOUTHERN OHIO COAL COMPANY BALANCE SHEET (UNAUDITED) March 31, 2001 ------------ (in thousands) ASSETS MINING PLANT: Mining Plant in Service $266,913 Accumulated Depreciation and Amortization 240,813 -------- NET MINING PLANT 26,100 -------- OTHER PROPERTY AND INVESTMENTS 50,389 -------- CURRENT ASSETS: Cash and Cash Equivalents 441 Accounts Receivable: General 4,529 Affiliated Companies 39,115 Advances to Affiliates 136,378 Coal 819 Materials and Supplies 10,301 Other 3,592 -------- TOTAL CURRENT ASSETS 195,175 -------- DEFERRED INCOME TAXES 106,868 -------- REGULATORY ASSETS 10,701 -------- DEFERRED CHARGES 1,434 -------- TOTAL $390,667 ======== SOUTHERN OHIO COAL COMPANY BALANCE SHEET (UNAUDITED) March 31, 2001 ------------ (in thousands) CAPITALIZATION AND LIABILITIES SHAREHOLDER'S EQUITY: Common Stock - Par Value $1: Authorized and Outstanding - 5,000 Shares $ 5 Premium on Common Stock 2,562 Other Paid-in Capital 26,320 Retained Earnings 26,446 -------- TOTAL SHAREHOLDER'S EQUITY 55,333 -------- OTHER NONCURRENT LIABILITIES: Obligations Under Capital Leases 3,470 Accrued Postretirement Benefits Other Than Pensions 126,014 Accrued Workers Compensation 24,847 Accelerated Leased Assets 6,386 UMWA Retiree Liability 17,956 Accrued Reclamation Costs 44,959 Operating Reserves 26,477 -------- TOTAL OTHER NONCURRENT LIABILITIES 250,109 -------- CURRENT LIABILITIES: Accounts Payable: General 3,351 Affiliated Companies 4,045 Taxes Accrued 18,975 Interest Accrued 1,552 Accrued Vacation Pay 3,271 Workers' Compensation Claims 4,579 Accrued Rent 50 Obligations Under Capital Leases 15,127 Other 26,922 -------- TOTAL CURRENT LIABILITIES 77,872 -------- DEFERED CREDITS 7,353 -------- TOTAL $390,667 ======== SOUTHERN OHIO COAL COMPANY INFORMATION CONCERNING MINE OPERATIONS AND CAPITAL IMPROVEMENTS FOR THE QUARTER ENDED MARCH 31, 2001 MINE CLOSURE AND PENDING SALE The Company closed the Meigs mine in 2001 and efforts are underway to reclaim the property. A memorandum of understanding was reached in April 2001 with an outside coal company to purchase all of the stock of the Company from Ohio Power Company. The transaction is expected to close on or about June 30, 2001. SOUTHERN OHIO COAL COMPANY CALCULATION OF COST OF CAPITAL AND STATEMENT OF COST OF COMMERCIAL COAL SOLD AND SHIPPED FOR THE QUARTER ENDED MARCH 31, 2001 (in thousands, except as noted)
January through March 2001 I. Calculation of Cost-of-Capital Compensation: ------------------------------------------- A. Investment at Beginning of Period: Common Stock $ 5 Premium on Common Stock 2,562 Other Paid-in Capital 26,320 -------- 28,887 B. Rate of Return Allowable per HCAR Nos. 26573, 10.27% per annum, 2.5675% per quarter .025675 -------- C. Earnings Allowable: (re investment in item A) 1. Current Quarter $ 742 ======== 2. Year-to-Date $ 742 ======== D. Net Income per Statement of Income (a) $ - Add: Interest Charges 188 Less: Nonoperating Income 2,688 -------- E. Applied Cost-of-Capital Billing Adder: 1. Current Quarter $ (2,500) ========- 2. Year-to-Date $ (2,500) ========- II. Coal Billing Calculation - Meigs Division: ----------------------------------------- A. Total Operating Expenses (b) $ 73,786 B. Add: Cost-of-Capital Billing Adder as Applied per E. 1. of Section I (2,500) -------- C. Cost Applicable to Current Quarter Coal Billings to Ohio Power $ 71,286 ======== D. Coal Sold and Shipped in Current Quarter to Ohio Power (in tons) 1,106,753 ========= E. Average Price per Ton to Ohio Power (in dollars) (C/D) $64.41 ====== (a) The Company sold its Martinka mining division and most of the Martinka related coal reserves to an unaffiliated company. No return on equity investment associated with these operations has been billed since the division ceased mining coal effective July 1, 1992. All results associated with the Martinka division since then are billed to the Parent Company, Ohio Power Company, eliminating any earnings effect to the Company. (b) As represented by "Cost of Operation" plus "Federal Income Taxes On Operations" reported in Statement of Income.
SOUTHERN OHIO COAL COMPANY STATEMENT OF COST OF OPERATION FOR THE QUARTER ENDED MARCH 31, 2001 (in thousands) Direct Labor-UMW* $ 1,557 Indirect Labor-UMW* 5,981 Benefits-UMW* 9,985 Salaries and Benefits-Nonunion 5,449 Operating Supplies 3,195 Repair Parts and Materials 3,587 Electricity and Other Utilities 1,910 Outside Services-Maintenance, Haulage and Reclamation 1,774 Taxes Other Than Federal Income Taxes** 2,027 Rental of Equipment 7,564 Depreciation, Depletion and Amortization 11,751 Accelerated Reclamation 6,040 Mining Cost Normalization*** (16,145) Other Production Costs 21,700 -------- Subtotal 66,375 Transfers of Production Costs (to)/from Coal Inventory (166) -------- Total $ 66,209 ======== * United Mine Workers of America. ** Excludes FICA, Federal Unemployment and State Unemployment Taxes. These costs are reflected in employee benefits. *** Represents the deferral/accrual required to establish a 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 is eliminated by year-end. SOUTHERN OHIO COAL COMPANY ANALYSIS OF MINING PLANT IN SERVICE AND RELATED ACCUMULATED PROVISIONS FOR DEPRECIATION AND AMORTIZATION March 31, 2001 ---------------------------- Net Gross Accumulated Carrying Cost Provisions Amount ----- ----------- -------- (in thousands) Description Surface Lands $ 7,570 $ - $ 7,570 Mining Structures and Equipment 125,194 106,664 18,530 Mine Development Costs 134,149 134,149 - -------- -------- ------- Total Mining Plant in Service $266,913 $240,813 $26,100 ======== ======== =======