35-CERT 1 soccsec.txt SOUTHERN OHIO COAL COMPANY QUARTERLY REPORT PER REQUIREMENTS OF HOLDING COMPANY ACT RELEASE NO. 26573 FOR THE QUARTER ENDED JUNE 30, 2001* CONTENTS Page Statements of Income and Retained Earnings 1 Balance Sheets 2-3 Information Concerning Mine Operations and Capital Improvements 4-5 Calculation of Cost of Capital and Statement of Cost of Commercial Coal Sold and Shipped 6 Statement of Cost of Operation 7 Analysis of Mining Plant in Service 8 Calculation of Allowed Cost of Capital - Effective April 1, 2001 9 *Final Report - See Page 5 for explanation. SOUTHERN OHIO COAL COMPANY STATEMENT OF INCOME FOR THE QUARTER ENDED JUNE 30, 2001 (UNAUDITED) (in thousands) OPERATING REVENUES $70,927 COST OF OPERATION 72,844 ------- OPERATING LOSS (1,917) FEDERAL INCOME TAXES ON OPERATIONS 525 ------- NET LOSS FROM OPERATIONS (2,442) NONOPERATING INCOME 2,442 ------- NET INCOME $ - ======== STATEMENT OF RETAINED EARNINGS FOR THE QUARTER ENDED JUNE 30, 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) June 30, 2001 ------------ (in thousands) ASSETS MINING PLANT: Mining Plant in Service $188,710 Accumulated Depreciation and Amortization 181,208 -------- NET MINING PLANT 7,502 -------- OTHER PROPERTY AND INVESTMENTS 51,874 -------- CURRENT ASSETS: Cash and Cash Equivalents 130 Accounts Receivable - General 4,368 Advances to Affiliates 205,345 Coal 409 Materials and Supplies 1,017 Other 262 -------- TOTAL CURRENT ASSETS 211,531 -------- DEFERRED INCOME TAXES 112,782 -------- DEFERRED CHARGES 3,386 -------- TOTAL $387,075 ======== SOUTHERN OHIO COAL COMPANY BALANCE SHEET (UNAUDITED) June 30, 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: Accrued Postretirement Benefits Other Than Pensions 137,619 Accrued Workers Compensation 22,808 Mine Closure 12,699 UMWA Trust Liability 17,956 Accrued Reclamation Costs 45,305 Operating Reserves 13,670 -------- TOTAL OTHER NONCURRENT LIABILITIES 250,057 -------- CURRENT LIABILITIES: Accounts Payable: General 8,486 Affiliated Companies 2,162 Taxes Accrued 21,082 Interest Accrued 1,552 Accrued Vacation Pay 3,060 Workers' Compensation Claims 7,567 Postemployment Benefits 19,956 Other 7,358 -------- TOTAL CURRENT LIABILITIES 71,223 -------- REGULATORY LIABILITIES AND DEFERRED CREDITS 10,462 -------- TOTAL $387,075 ======== SOUTHERN OHIO COAL COMPANY INFORMATION CONCERNING MINE OPERATIONS AND CAPITAL IMPROVEMENTS FOR THE QUARTER ENDED JUNE 30, 2001 In July 2001, Ohio Power Company sold Southern Ohio Coal Company (SOCCo). Therefore, this will be the final report that is filed for SOCCo. SOUTHERN OHIO COAL COMPANY CALCULATION OF COST OF CAPITAL AND STATEMENT OF COST OF COMMERCIAL COAL SOLD AND SHIPPED FOR THE QUARTER ENDED JUNE 30, 2001 (in thousands, except as noted)
April through June 2001 I. Calculation of Cost-of-Capital Compensation: ------------------------------------------- A. Equity 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 No. 26573: 9.90% per annum, 2.475% per quarter .02475 -------- C. Earnings Allowable on Equity Investment 1. Current Quarter $ 715 ======== 2. Year-to-Date $ 1,457 ======== D. Net Income per Statement of Income (a) $ - Add: Interest Charges - Less: Nonoperating Income 2,442 -------- E. Applied Cost-of-Capital Billing Adder: 1. Current Quarter $ (2,442) ======== 2. Year-to-Date $ (4,942) ======== II. Coal Billing Calculation - Meigs Division: ----------------------------------------- A. Total Operating Expenses (b) $ 73,369 B. Add: Cost-of-Capital Billing Adder as Applied per E. 1. of Section I (2,442) -------- C. Cost Applicable to Current Quarter Coal Billings to Ohio Power $ 70,927 ======== D. Coal Sold and Shipped in Current Quarter to Ohio Power (in tons) 1,321,953 ========= E. Average Price per Ton to Ohio Power (in dollars) (C/D) $53.65 ====== (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 JUNE 30, 2001 (in thousands) Direct Labor-UMW* $ 1,496 Indirect Labor-UMW* 4,566 Benefits-UMW* 17,808 Salaries and Benefits-Nonunion 5,136 Operating Supplies 3,220 Repair Parts and Materials 4,438 Electricity and Other Utilities 1,763 Outside Services-Maintenance, Haulage and Reclamation 3,317 Taxes Other Than Federal Income Taxes** 1,854 Rental of Equipment 60 Depreciation, Depletion and Amortization 92 Mining Cost Normalization*** 16,145 Other Production Costs 12,539 ------- Subtotal 72,434 Transfers of Production Costs (to)/from Coal Inventory 410 ------- Total $72,844 ======= * 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 June 30, 2001 ------------------------------- Net Gross Accumulated Carrying Cost Provisions Amount -------- ----------- -------- (in thousands) Description Surface Lands $ 7,502 $ - $7,502 Mining Structures and Equipment 47,059 47,059 - Mine Development Costs 134,149 134,149 - -------- -------- ------ Total Mining Plant in Service $188,710 $181,208 $7,502 ======== ======== ====== OHIO POWER COMPANY'S (OPCo's) ACTIVE COAL MINE SOUTHERN OHIO COAL COMPANY - MEIGS ALLOWED AFTER-TAX COMPOSITE COST-OF-CAPITAL IS 9.90% EFFECTIVE 4-1-01 THE 9.90% IS OPCo's WEIGHTED AVERAGE COST-OF-CAPITAL AND WAS CALCULATED AS FOLLOWS: CAPITALIZATION AFTER-TAX @12/31/00 PERCENT EFFECTIVE WEIGHTED COMPONENT (000) OF TOTAL COST RATE OF RETURN --------- -------------- -------- --------- -------------- Long-term Debt $1,142,918(a) 48.85% 7.05%(c) 3.44% Preferred Stock 25,498 1.09% 4.94%(c) 0.05% Common Stock 1,171,077(b) 50.06% 12.81%(d) 6.41% ---------- ------ ---- Total $2,339,493 100.00% 9.90%* ========== ====== ==== Authorization: HCAR 35-26573 dated 9-13-96 (SEC File No. 70-8611). a) Includes Long-Term Debt due in one-year and is net of unamortized debt premium and discount, unamortized debt expense, and the unamortized loss on reacquired debt. b) Common Equity includes the premium on preferred stock and excludes undistributed subsidiary earnings. c) Cost at 12/31/00. d) No more than the rate allowed by the PUCO in a retail rate proceeding involving OPCo and settled in 1995. * Rate will be applied for billing purposes to the twelve months period commencing April 1, 2001.