FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-1232
THE CINCINNATI GAS & ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
OHIO 31-0240030
(State of incorporation) (I.R.S. Employer Identification No.)
139 EAST FOURTH STREET, CINCINNATI, OHIO 45202
(Address of principal executive offices) (Zip Code)
513-381-2000
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
----- -----
Common Shares, Par Value $8.50 Per Share
89,663,086 Shares Outstanding as of October 31, 1994,
all of which are held by CINergy Corp.
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
and Subsidiary Companies
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
1994 1993 1994 1993 1994 1993
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Electric........................................... $368,470 $366,073 $1,031,535 $ 964,781 $1,349,198 $1,246,005
Gas................................................ 40,481 42,565 331,197 304,804 495,690 443,985
-------- -------- ---------- ---------- ---------- ----------
Total operating revenues......................... 408,951 408,638 1,362,732 1,269,585 1,844,888 1,689,990
-------- -------- ---------- ---------- ---------- ----------
OPERATING EXPENSES
Gas purchased...................................... 16,013 20,857 189,059 181,617 288,279 267,835
Fuel used in electric production................... 91,062 96,626 252,491 248,552 337,218 324,100
Other operation.................................... 83,085 66,621 232,069 199,949 311,986 263,322
Maintenance........................................ 23,271 26,351 76,073 77,954 106,976 107,401
Provision for depreciation......................... 39,211 39,197 117,030 113,671 155,420 150,480
Post-in-service deferred operating expenses--net... 823 (1,694) 2,468 (7,305) 3,302 (9,330)
Phase-in deferred depreciation..................... -- (1,609) (2,161) (6,915) (3,770) (10,090)
Taxes other than income taxes...................... 47,049 45,138 146,186 137,702 191,851 180,589
Income taxes....................................... 24,489 12,341 77,241 51,197 95,053 66,011
Deferred income taxes--net......................... 2,701 19,454 14,618 34,473 20,106 42,286
-------- -------- ---------- ---------- ---------- ----------
Total operating expenses......................... 327,704 323,282 1,105,074 1,030,895 1,506,421 1,382,604
-------- -------- ---------- ---------- ---------- ----------
OPERATING INCOME..................................... 81,247 85,356 257,658 238,690 338,467 307,386
-------- -------- ---------- ---------- ---------- ----------
OTHER INCOME AND DEDUCTIONS
Allowance for other funds used during construction. 631 320 1,522 2,669 2,007 3,370
Post-in-service carrying costs..................... -- 4,053 -- 12,082 18 14,701
Phase-in deferred return........................... 1,946 7,418 13,405 27,916 20,823 37,894
Write-off of a portion of Zimmer Station........... -- -- -- -- (234,844) --
Income taxes--credit
Related to the write-off of a portion of Zimmer
Station.......................................... -- -- -- -- 12,085 --
Other............................................. 2,202 2,425 5,734 5,425 9,715 9,291
Other--net......................................... (1,711) (860) (1,577) (2,803) (8,325) (2,908)
-------- -------- ---------- ---------- ---------- ----------
Total other income and deductions................ 3,068 13,356 19,084 45,289 (198,521) 62,348
-------- -------- ---------- ---------- ---------- ----------
INCOME BEFORE INTEREST CHARGES....................... 84,315 98,712 276,742 283,979 139,946 369,734
-------- -------- ---------- ---------- ---------- ----------
INTEREST CHARGES
Interest on long-term debt......................... 35,609 38,223 109,600 114,686 148,606 154,154
Other interest..................................... 585 790 2,287 1,953 2,783 2,581
Amortization of debt discount, premium and other... 1,365 809 3,752 2,428 4,676 3,795
Allowance for borrowed funds used during
construction--credit.............................. (839) (629) (2,149) (2,936) (2,799) (3,706)
-------- -------- ---------- ---------- ---------- ----------
Net interest charges............................. 36,720 39,193 113,490 116,131 153,266 156,824
-------- -------- ---------- ---------- ---------- ----------
NET INCOME (LOSS).................................... 47,595 59,519 163,252 167,848 (13,320) 212,910
Preferred dividends................................ 5,362 6,291 17,014 18,870 23,304 25,160
-------- -------- ---------- ---------- ---------- ----------
EARNINGS (LOSS) ON COMMON SHARES..................... $ 42,233 $ 53,228 $ 146,238 $ 148,978 $ (36,624) $ 187,750
======== ======== ========== ========== ========== ==========
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (000).................................. 89,466 87,539 88,909 87,135 88,666 86,914
EARNINGS (LOSS) PER COMMON SHARE..................... $ 0.47 $ 0.61 $ 1.64 $ 1.71 $ (0.41) $ 2.16
DIVIDENDS DECLARED PER COMMON SHARE.................. $ 0.43 $.41 1/2 $ 1.29 $ 1.24-1/2 $ 1.72 $ 1.65-5/6
</TABLE>
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
and Subsidiary Companies
Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
- ---------------------
Electric operating revenues increased $67 million and
$103 million for the nine and twelve month periods ended
September 30, 1994, respectively, over the comparable periods of
1993, due to rate increases which became effective in May 1993,
August 1993 and May 1994.
Gas operating revenues increased $26 million and $52 million
for the nine and twelve month periods ended September 30, 1994,
respectively, over the comparable periods of 1993, due to the
operation of adjustment clauses reflecting increases in the
average cost of gas purchased, to rate increases which became
effective in April and August 1993 and to increases in total
volumes sold and transported of 4.4% and 5.2%.
Gas purchased expense decreased $5 million for the three
month period ended September 30, 1994, from the comparable period
of 1993, due to a 20.5% decrease in the average cost per Mcf
purchased and to a 3.4% decrease in volumes purchased. Gas
purchased expense increased $7 million and $20 million for the
nine and twelve month periods ended September 30, 1994,
respectively, over the comparable periods of 1993, due to
increases in the average cost per Mcf purchased of 1.1% and 4.1%
and to increases in volumes purchased of 3.0% and 3.4%.
Fuel used in electric production decreased $6 million for
the three month period ended September 30, 1994, from the
comparable period of 1993, due to a 2.4% decrease in the cost of
fuel per kwh generated and to a 3.5% decrease in the amount of
electricity generated. Fuel used in electric production
increased $13 million for the twelve month period ended
September 30, 1994, over the comparable period of 1993, due to an
increase in the amount of electricity generated of 5.3%.
Other operation expense increased $16 million, $32 million
and $49 million for the three, nine and twelve month periods
ended September 30, 1994, respectively, over the comparable
periods of 1993, due to a number of factors, including voluntary
early retirement program costs expensed in September 1994, the
adoption of an accounting standard involving postretirement
benefits and increased demand side management costs. Also
contributing to the increases in other operation expense for the
nine and twelve month periods were increases in gas production
and electric production and distribution expenses. For a
discussion on the voluntary early retirement program, see "Future
Outlook" herein.
<PAGE>
Maintenance expense decreased $3 million for the three
month period ended September 30, 1994, from the comparable period
of 1993, primarily due to decreased maintenance on electric
generating units and gas and electric distribution facilities.
Post-in-service deferred operating expenses (net) increased
$3 million, $10 million and $13 million for the three, nine and
twelve month periods ended September 30, 1994, respectively,
because CG&E is amortizing previously deferred amounts of
depreciation, operation and maintenance expenses (exclusive of
fuel costs), and property taxes related to Woodsdale Station and
Zimmer Station in accordance with orders of The Public Utilities
Commission of Ohio (PUCO). CG&E had been deferring these costs
until they were reflected in rates and ceased deferrals in August
1993 on Woodsdale and May 1992 on Zimmer. CG&E is amortizing the
deferred expenses over 10-year periods.
Phase-in deferred depreciation was $2 million and $4 million
for the nine and twelve month periods ended September 30, 1994,
respectively, as a result of a PUCO ordered phase-in plan, in
which rates charged to customers in the early years of the plan
are less than that required to fully recover the depreciation
expenses related to Zimmer Station (see "Future Outlook" herein).
Taxes other than income taxes increased $8 million and
$11 million for the nine and twelve month periods ended
September 30, 1994, respectively, over the comparable periods of
1993, primarily due to higher public utilities gross receipts
taxes resulting from increased revenues and to increased property
taxes resulting from a greater investment in taxable property
(including Woodsdale Station) and higher property tax rates.
Post-in-service carrying costs decreased $4 million,
$12 million and $15 million for the three, nine and twelve month
periods ended September 30, 1994, respectively, from the
comparable periods of 1993, as a result of discontinuing the
accrual of carrying costs on the first five units of Woodsdale
Station after the August 1993 effective date of new rates which
reflect Woodsdale Station.
Phase-in deferred return was $2 million, $13 million and
$21 million for the three, nine and twelve month periods ended
September 30, 1994, respectively, as a result of the PUCO ordered
phase-in plan, in which rates charged to customers in the early
years of the plan will be less than that required to provide the
authorized return on investment (see "Future Outlook" herein).
In November 1993, CG&E wrote off costs associated with
Zimmer Station of approximately $223 million, net of taxes. The
write-off represents amounts disallowed from rate base by the
PUCO in its May 1992 rate order. CG&E had appealed the rate
order to the Supreme Court of Ohio; however, in November 1993,
the Supreme Court upheld the PUCO on the issue of the
disallowance, ruling that the PUCO properly excluded costs
<PAGE>
related to nuclear fuel, nuclear wind-down activities and AFC
from CG&E's rate base.
Other (net) decreased $5 million for the twelve month period
ended September 30, 1994 due to a number of factors, including
costs incurred in 1993 associated with IPALCO Enterprises, Inc.'s
intervention in the Merger between CG&E and PSI Resources.
Interest on long-term debt decreased $5 million and
$6 million for the nine and twelve month periods ended
September 30, 1994, primarily due to refinancing of first
mortgage bonds and pollution control revenue bonds at lower rates
in November 1993, February 1994 and March 1994.
FUTURE OUTLOOK
- --------------
Merger Consummation
- -------------------
On October 24, 1994, pursuant to an Amended and Restated
Agreement and Plan of Reorganization dated as of December 11,
1992, as subsequently amended and restated, PSI Resources, Inc.
(Resources), an Indiana corporation, merged with and into CINergy
Corp. (CINergy), a Delaware corporation and registered holding
company under the Public Utility Holding Company Act of 1935
(PUHCA), and a subsidiary of CINergy merged with and into CG&E,
an Ohio corporation (collectively, the "Merger") in a transaction
accounted for as a pooling of interests. Following the Merger,
CG&E and PSI Energy, Inc. (Energy), an Indiana corporation,
became subsidiaries of CINergy. Prior to the Merger, Energy was
a wholly owned subsidiary of Resources.
Each outstanding share of Resources common stock and CG&E
common stock was exchanged for 1.023 shares and one share,
respectively, of CINergy common stock, resulting in the issuance
of approximately 148 million shares of CINergy common stock, par
value $.01 per share. The outstanding preferred stock and debt
securities of Energy and CG&E were not affected by the Merger.
In its order approving the Merger dated October 21, 1994,
the Securities and Exchange Commission (SEC) decided to reserve
judgment for up to three years on whether CINergy can retain its
gas operations and the non-utility businesses of CG&E and
Energy. At the end of the three-year period, CINergy must file
with the SEC seeking a decision on the gas divestiture and non-
utility business issues, if these issues do not become moot
before that time.
Originally, CG&E and Resources were to be merged into
CINergy as an Ohio corporation. Under this structure CG&E and
Resources would have become operating divisions of CINergy,
ceasing to exist as separate corporations, and CINergy would not
have been subject to the restrictions imposed by PUHCA. However,
<PAGE>
The Indiana Utility Regulatory Commission (IURC) dismissed
Resources' application for approval of the transfer of its
license or property to a non-Indiana corporation. The IURC's
decision was appealed, and on October 18, 1994, the Indiana Court
of Appeals reversed the IURC's decision. This decision by the
Indiana Court of Appeals did not alter the consummation of the
Merger establishing CINergy as a registered holding company.
The companies have estimated the nominal dollar value of
savings from the Merger to be approximately $1.5 billion,
computed on a revenue requirements basis, over the 10-year period
from 1994 through 2003. The Merger is expected to yield several
types of benefits which lower revenue requirements. These
benefits include capital expenditure savings, production cost
savings, labor cost savings, administrative and general savings,
and cost-of-capital savings.
The companies currently anticipate that the estimated Merger
savings will be apportioned approximately equally between CG&E
and Energy. With respect to the allocation of Merger savings
between CG&E's ratepayers and CINergy's shareholders, as part of
a settlement agreement with the PUCO, CG&E is permitted to retain
all electric non-fuel savings from the Merger until 1999. The
agreement also calls for CG&E to amortize its share of Merger
transaction costs and costs to achieve Merger savings allocable
to PUCO electric jurisdictional customers (estimated to be $17
million and $18 million, respectively) by January 1, 1999. In
the third quarter of 1994, CG&E expensed $11 million representing
the PUCO electric jurisdictional portion of its voluntary early
retirement plan (VERP) costs. The remaining $6.4 million of VERP
costs have been deferred for future recovery through rates. CG&E
intends to amortize the PUCO electric jurisdictional portion of
Merger transaction costs as recovered through the regulatory
process in accordance with the agreement with the PUCO, and to
continue deferring the non-PUCO electric jurisdictional portion
of Merger transaction costs and future costs to achieve Merger
savings (estimated to be $14 million including the $6.4 million
mentioned above) for future recovery.
Unless otherwise noted, the following discussion pertains
solely to CG&E and its subsidiary companies.
Liquidity and Capital Resources
- -------------------------------
The construction expenditures for CG&E and its subsidiaries
for the first nine months of 1994 were approximately $125 million
(including $4 million of AFC) and are expected to be $192 million
for the year 1994. Over the next five years, 1994-1998,
construction expenditures are expected to be $1,343 million
(including AFC of $54 million). These estimates are under
continuing review and subject to adjustment. During the five
year period, a total of $142 million will be required for the
redemption of long-term debt and cumulative preferred stock at
<PAGE>
maturity or in compliance with mandatory redemption requirements.
CG&E contemplates future debt and equity financings in the
capital markets. Short-term indebtedness will be used to
supplement internal sources of funds for the interim financing of
the construction program. CG&E may continue to sell additional
securities, from time to time, beyond what is needed for capital
requirements to allow the early refinancing of existing
securities.
Under the terms of CG&E's first mortgage indenture, at
September 30, 1994, CG&E would have been able to issue
approximately $880 million of additional first mortgage bonds.
As a result of the write-off of a portion of Zimmer Station
in November 1993, CG&E will have inadequate coverage to meet the
requirements of its articles of incorporation for issuing
additional shares of preferred stock until late December 1994.
CG&E has a $200 million bank revolving credit agreement that
will expire in September 1996. The agreement provides a back-up
source of funds for CG&E's commercial paper program. CG&E has
not made any borrowings under this agreement.
CG&E and its subsidiaries had lines of credit at
September 30, 1994, of $123 million, of which $111 million
remained unused. CG&E and its subsidiaries are currently
authorized to have a maximum of $235 million of short-term notes
outstanding.
Rate Matters
- ------------
Over the past two years, CG&E has received a number of
electric and gas rate increases that will positively impact
future earnings. The primary reasons for the electric rate
increases were recovery of CG&E's investment in Zimmer Station,
Woodsdale Station and other facilities used to serve customers.
The gas rate increases reflect investments in new and replacement
gas mains and facilities. As part of an August 1993 stipulation,
CG&E has agreed not to increase gas base rates prior to June 1,
1995, excluding rate filings made under certain circumstances,
such as to address financial emergencies.
In August 1993, the PUCO approved a stipulation authorizing
CG&E to increase annual electric revenues by $41.1 million and
increase annual gas revenues by $19.1 million. In May 1992, the
PUCO authorized CG&E to increase electric revenues by
$116.4 million to be phased in over a three-year period through
annual increases beginning each May of $37.8 million in 1992,
$38.8 million in 1993 and $39.8 million in 1994.
In response to an appeal by CG&E of the PUCO's May 1992 rate
order, the Supreme Court of Ohio ruled, in November 1993, that
<PAGE>
the PUCO did not have authority to order the phased-in rate
increase, and remanded the case to the PUCO to set rates that
provide the gross annual revenues determined in accordance with
Ohio statutes. The Court also said the PUCO must provide a
mechanism which allows CG&E to recover costs being deferred under
the phase-in plan through the date of the order on remand. At
September 30, 1994, CG&E had deferred $83 million of costs, net
of taxes, related to the phase-in plan.
In April 1994, the PUCO approved a settlement agreement
among CG&E, the PUCO Staff, and other interested parties
addressing the November 1993 ruling by the Court. As part of the
settlement, CG&E agreed not to seek early implementation of the
third phase of the authorized rate increase, which means the
$39.8 million increase became effective in May 1994 as originally
scheduled. CG&E also agreed that it would not seek accelerated
recovery of deferrals related to the phase-in plan. These
deferrals will be recovered over the remaining seven-year period
contemplated in the May 1992 PUCO order. In addition, CG&E
agreed to a moratorium on increases in base electric rates until
January 1, 1999 (except under certain circumstances), and, in
return, received authorization to retain all electric non-fuel
Merger savings until 1999.
In May 1994, CG&E's Kentucky subsidiary, The Union Light,
Heat and Power Company (ULH&P) agreed with the Kentucky Public
Service Commission (KPSC) to an electric rate moratorium
commencing after ULH&P's next retail rate case and extending to
January 1, 2000. The KPSC also required CG&E and ULH&P to agree
that, for 12 months from consummation of the Merger, no filings
will be made to adjust CG&E's base purchase power rate and
ULH&P's base electric rates.
Voluntary Workforce Reduction
- -----------------------------
CG&E and its subsidiaries recently completed a voluntary
early retirement program (VERP) for eligible management,
supervisory, administrative and professional employees. Of the
approximately 160 employees who were eligible to participate in
the program, 115 employees accepted the offer, resulting in a
pre-tax cost of approximately $17.4 million. This cost is
included in the costs to achieve Merger savings previously
discussed. In the third quarter of 1994, CG&E expensed
$11.0 million representing the PUCO electric jurisdictional
portion of its VERP costs. The remaining $6.4 million of VERP
costs have been deferred for future recovery through rates.
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
and Subsidiary Companies
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended Twelve Months Ended
September 30 September 30
1994 1993 1994 1993
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Cash Flows From Operations:
Net Income (Loss)..................................... $ 163,252 $ 167,848 $ (13,320) $ 212,910
---------- ---------- ---------- ----------
Adjustments to reconcile net income to net cash:
Deferred gas and electric fuel costs--net......... (13,716) (2,183) (7,619) (8,994)
Depreciation...................................... 117,030 113,671 155,420 150,480
Post-in-service deferred operating expenses--net.. 2,468 (7,305) 3,302 (9,330)
Phase-in deferred depreciation.................... (2,161) (6,915) (3,770) (10,090)
Allowance for other funds used during
construction................................... (1,522) (2,669) (2,007) (3,370)
Post-in-service carrying costs.................... -- (12,082) (18) (14,701)
Phase-in deferred return.......................... (13,405) (27,916) (20,823) (37,894)
Deferred income taxes and investment tax
credits--net................................... 15,336 34,403 16,653 45,961
Write-off of a portion of Zimmer Station.......... -- -- 234,844 --
Deferred income taxes and investment tax credits
related to write-off of a portion of
Zimmer Station................................. -- -- (12,085) --
Other--net........................................ 37,733 (2,093) 59,237 (1,894)
Change in current assets and liabilities:
Receivables and unbilled revenues.............. 77,983 32,703 7,240 (22,281)
Materials and supplies......................... 15,865 9,921 9,511 4,771
Other current assets........................... 1,532 (5,248) 2,237 (12,979)
Accounts payable and other current liabilities. (47,864) (5,361) (21,939) 33,609
---------- ---------- ---------- ----------
Total adjustments........................... 189,279 118,926 420,183 113,288
---------- ---------- ---------- ----------
Net cash provided by operations............. 352,531 286,774 406,863 326,198
---------- ---------- ---------- ----------
Cash Flows From Investing:
Construction expenditures (less allowance for other
funds used during construction)..................... (123,026) (145,975) (175,769) (203,817)
---------- ---------- ---------- ----------
Cash Flows From Financing:
Common stock proceeds................................. 35,604 32,947 46,643 44,302
Long-term debt proceeds............................... 311,957 -- 608,957 12,590
Retirement of long-term debt and cumulative
preferred stock..................................... (353,647) (6,513) (641,589) (384,479)
Net short-term borrowings............................. (18,500) (27,920) (6,080) (2,419)
Dividends paid on common shares....................... (114,357) (108,221) (152,076) (143,772)
Dividends paid on preferred shares.................... (17,942) (18,870) (24,233) (26,242)
---------- ---------- ---------- ----------
Net cash provided by (used in)
financing activities..................... (156,885) (128,577) (168,378) (500,020)
---------- ---------- ---------- ----------
Net increase (decrease) in cash and
temporary cash investments............... 72,620 12,222 62,716 (377,639)
Cash and temporary cash investments--beginning
of period............................................. 4,570 2,252 14,474 392,113
---------- ---------- ---------- ----------
Cash and temporary cash investments--end of period....... $ 77,190 $ 14,474 $ 77,190 $ 14,474
========== ========== ========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest (net of allowance for borrowed funds
used during construction)........................... $ 97,522 $ 92,396 $ 156,992 $ 160,005
Income taxes.......................................... $ 74,681 $ 30,252 $ 98,214 $ 35,672
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
and Subsidiary Companies
CONSOLIDATED BALANCE SHEET
ASSETS
September 30 December 31
1994 1993
(Thousands of Dollars)
<S> <C> <C>
UTILITY PLANT
In service............................................ $5,294,105 $5,188,602
Less--Accumulated provisions for depreciation......... 1,569,273 1,472,313
---------- ----------
3,724,832 3,716,289
Construction work in progress......................... 65,984 69,351
---------- ----------
3,790,816 3,785,640
---------- ----------
CURRENT ASSETS
Cash.................................................. 6,347 4,570
Short-term investments................................ 70,843 --
Accounts receivable--net.............................. 176,578 206,210
Accrued unbilled revenues............................. 57,604 105,955
Materials and supplies................................ 136,652 152,517
Prepayments........................................... 19,393 29,053
Other................................................. 115,671 107,543
---------- ----------
583,088 605,848
---------- ----------
OTHER ASSETS
Post-in-service carrying costs and deferred operating
expenses............................................ 149,747 154,636
Phase-in deferred return and depreciation............. 98,996 83,431
Amounts due from customers-income taxes............... 379,085 387,748
Other................................................. 153,286 126,220
---------- ----------
781,114 752,035
---------- ----------
$5,155,018 $5,143,523
========== ==========
LIABILITIES
CAPITALIZATION
Common shares......................................... $ 761,700 $ 748,528
Additional paid-in capital............................ 337,165 314,218
Retained earnings..................................... 487,439 456,511
Preferred shares--
Not subject to mandatory redemption................. 80,000 120,000
Subject to mandatory redemption..................... 210,000 210,000
Long-term debt........................................ 1,837,776 1,829,061
---------- ----------
3,714,080 3,678,318
---------- ----------
CURRENT LIABILITIES
Notes payable......................................... 12,500 31,013
Accounts payable...................................... 80,718 122,620
Dividends payable on preferred shares ................ 5,362 6,290
Accrued taxes......................................... 205,563 222,219
Accrued interest on debt.............................. 41,338 29,123
Other................................................. 27,975 29,496
---------- ----------
373,456 440,761
---------- ----------
DEFERRED CREDITS AND OTHER
Deferred income taxes................................. 744,934 733,224
Investment tax credits................................ 136,985 141,520
Accrued pension cost.................................. 63,604 41,826
Other................................................. 121,959 107,874
---------- ----------
1,067,482 1,024,444
---------- ----------
$5,155,018 $5,143,523
========== ==========
</TABLE>
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
and Subsidiary Companies
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accompanying information reflects, in the opinion of the
management of CG&E, all adjustments necessary to present fairly
the results for the interim periods. All such adjustments are of
a normal recurring nature. Reference should be made to CG&E's
Form 10-K for the year 1993 for additional footnote disclosure,
including a summary of significant accounting policies.
Reference is made to "Management's Discussion and Analysis
of Financial Condition and Results of Operations" herein for
information regarding CG&E's merger with PSI Resources, Inc.
(Resources) and a voluntary early retirement program. Reference
is made to "Item 5. Other Information" herein for information
regarding unaudited supplemental condensed consolidated financial
information for CG&E, Resources and CINergy.
In April 1994, The Public Utilities Commission of Ohio
(PUCO) approved a settlement agreement among CG&E, the PUCO
Staff, the Ohio Office of Consumers' Counsel (OCC) and other
intervenors addressing the November 1993 ruling by the Supreme
Court of Ohio. As part of the settlement, CG&E has agreed not to
seek early implementation of the third phase of the May 1992 rate
increase, which means the $39.8 million increase became effective
in May 1994 as originally scheduled. CG&E also agreed that it
would not seek accelerated recovery of deferrals related to the
phase-in plan. These deferrals will be recovered over the
remaining seven year period contemplated in the May 1992 PUCO
order. In addition, CG&E agreed to a moratorium on increases in
base electric rates until January 1, 1999 (except under certain
circumstances), and, in return, received authorization to retain
all electric non-fuel Merger savings until 1999.
In May 1994, CG&E's Kentucky subsidiary, The Union Light,
Heat and Power Company (ULH&P) agreed with the Kentucky Public
Service Commission (KPSC) to an electric rate moratorium
commencing after ULH&P's next retail rate case and extending to
January 1, 2000. The KPSC also required CG&E and ULH&P to agree
that, for 12 months from consummation of the Merger, no filings
will be made to adjust CG&E's base purchase power rate and
ULH&P's base electric rates.
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information.
- ------- -----------------
Unaudited Supplemental Condensed Consolidated Financial
- -------------------------------------------------------
Information:
- ------------
The following supplemental condensed consolidated financial
information combines the historical unaudited consolidated
statements of income and consolidated balance sheets of CG&E and
Resources after giving effect to the Merger. The unaudited
Supplemental Condensed Consolidated Statements of Income for the
three, nine and twelve month periods ended September 30, 1994,
give effect to the Merger as if it had occurred at October 1,
1993. The unaudited Supplemental Condensed Consolidated Balance
Sheet at September 30, 1994, gives effect to the Merger as if it
had occurred at September 30, 1994. These statements are
prepared on the basis of accounting for the Merger as a pooling
of interests. Intercompany transactions (including purchased and
exchanged power transactions) between CG&E and Resources during
the periods presented were not material and accordingly no
adjustments were made to eliminate such transactions. In
addition, the following supplemental condensed consolidated
financial information should be read in conjunction with the
historical consolidated financial statements and related notes
thereto of CG&E and Resources. The following information is not
necessarily indicative of the operating results or financial
position that would have occurred had the Merger been consummated
at the beginning of the periods, or on the date, for which the
Merger is being given effect, nor is it necessarily indicative of
future operating results or financial position.
Supplemental Condensed Consolidated Statements of Income (in
millions, except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended September 30, 1994
-------------------------------------
CG&E Resources CINergy
--------- --------- ----------
<S> <C> <C> <C>
Operating revenues.............................. $ 409 $ 283 $ 692
Operating expenses.............................. 328 247 575
--------- -------- ----------
Operating income................................ 81 36 117
Other income and deductions -- net.............. 3 3 6
Interest charges -- net......................... 37 20 57
Preferred dividend requirement.................. 5 3 8
--------- -------- ----------
Net income...................................... $ 42 $ 16 $ 58
========= ======== ==========
Average common shares outstanding (1)........... 89 56 147
Earnings per common share (1)................... $ .47 $ .27 $ .39
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1994
------------------------------------
CG&E Resources CINergy
--------- --------- ----------
<S> <C> <C> <C>
Operating revenues.............................. $ 1,363 $ 868 $ 2,231
Operating expenses.............................. 1,105 749 1,854
--------- -------- ----------
Operating income................................ 258 119 377
Other income and deductions -- net.............. 19 6 25
Interest charges -- net......................... 114 55 169
Preferred dividend requirement.................. 17 10 27
--------- -------- ----------
Net income...................................... $ 146 $ 60 $ 206
========= ======== ==========
Average common shares outstanding (1)........... 89 56 146
Earnings per common share (1)................... $ 1.64 $ 1.06 $ 1.41
</TABLE>
<TABLE>
<CAPTION>
Twelve Months Ended September 30, 1994
--------------------------------------
CG&E Resources CINergy
--------- --------- ----------
<S> <C> <C> <C>
Operating revenues.............................. $ 1,845 $ 1,149 $ 2,994
Operating expenses.............................. 1,507 985 2,492
--------- -------- ----------
Operating income................................ 338 164 502
Other income and deductions -- net.............. (199)* 11 (188)
Interest charges -- net......................... 153 71 224
Preferred dividend requirement.................. 23 14 37
--------- -------- ----------
Net income (loss)............................... $ (37) $ 90 $ 53
========= ======== ==========
Average common shares outstanding (1)........... 89 56 146
Earnings (loss) per common share (1)............ $ (.41) $ 1.60 $ .36
<FN>
*Reflects the write-off of a portion of Zimmer Station of approximately $223 million, net of taxes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Supplemental Condensed Consolidated Balance Sheet (in millions):
September 30, 1994
---------------------------------------
CG&E Resources CINergy
--------- --------- ---------
<S> <C> <C> <C>
Assets
Utility plant -- original cost
In service...................................... $ 5,294 $ 3,720 $ 9,014
Accumulated depreciation........................ 1,569 1,533 3,102
--------- --------- ---------
3,725 2,187 5,912
Construction work in progress................... 66 163 229
--------- --------- ---------
Total utility plant........................... 3,791 2,350 6,141
Current assets.................................... 583 209 792
Other assets...................................... 781 307 1,088
--------- --------- ---------
Total assets.................................. $ 5,155 $ 2,866 $ 8,021
========= ========= =========
Capitalization and Liabilities
Common stock (2).................................. $ 762 $ 1 $ 1
Paid-in capital (2)............................... 337 261 1,360
Retained earnings................................. 487 458 945
--------- --------- ---------
Total common stock equity..................... 1,586 720 2,306
Cumulative preferred stock........................ 290 188 478
Long-term debt.................................... 1,838 878 2,716
--------- --------- ---------
Total capitalization.......................... 3,714 1,786 5,500
Current liabilities............................... 373 648 1,021
Deferred income taxes............................. 745 310 1,055
Other liabilities................................. 323 122 445
--------- --------- ---------
Total capitalization and other liabilities.... $ 5,155 $ 2,866 $ 8,021
========= ========= =========
</TABLE>
Notes to Supplemental Condensed Consolidated Financial
Information:
(1) The Supplemental Condensed Consolidated Statements of Income
reflect the conversion of each share of CG&E common stock
outstanding into one share of CINergy common stock and each share
of Resources common stock outstanding into 1.023 shares of
CINergy common stock.
(2) The "Common stock" and "Paid-in capital" amounts reflected
in the Supplemental Condensed Consolidated Balance Sheet reflect
the conversion of each share of CG&E common stock outstanding
into one share of CINergy common stock ($.01 par value) and each
share of Resources common stock outstanding into 1.023 shares of
CINergy common stock ($.01 par value).
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
- ------- --------------------------------
(a) Exhibits:
27 - Financial Data Schedule
(b) Reports on Form 8-K filed:
Date of Report Items Reported
-------------- --------------
October 24, 1994 Item 1. Changes in Control of
Registrant
Item 7. Financial Statements
and Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
THE CINCINNATI GAS & ELECTRIC COMPANY
-------------------------------------
(Registrant)
Date: November 9, 1994 Daniel R. Herche
-------------------------------------
Daniel R. Herche, Controller
(Duly Authorized Officer and Chief
Accounting Officer)
(Signature)
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF THE CINCINNATI GAS & ELECTRIC
COMPANY INCLUDED IN ITS FORM 10-Q FOR THE
PERIOD ENDED SEPTEMBER 30, 1994, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,790,816
<OTHER-PROPERTY-AND-INVEST> 24,524
<TOTAL-CURRENT-ASSETS> 583,088
<TOTAL-DEFERRED-CHARGES> 756,590
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 5,155,018
<COMMON> 761,700
<CAPITAL-SURPLUS-PAID-IN> 337,165
<RETAINED-EARNINGS> 487,439
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,586,304
210,000
80,000
<LONG-TERM-DEBT-NET> 1,837,776
<SHORT-TERM-NOTES> 12,500
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,428,438
<TOT-CAPITALIZATION-AND-LIAB> 5,155,018
<GROSS-OPERATING-REVENUE> 1,362,732
<INCOME-TAX-EXPENSE> 91,859
<OTHER-OPERATING-EXPENSES> 1,013,215
<TOTAL-OPERATING-EXPENSES> 1,105,074
<OPERATING-INCOME-LOSS> 257,658
<OTHER-INCOME-NET> 19,084
<INCOME-BEFORE-INTEREST-EXPEN> 276,742
<TOTAL-INTEREST-EXPENSE> 113,490
<NET-INCOME> 163,252
17,014
<EARNINGS-AVAILABLE-FOR-COMM> 146,238
<COMMON-STOCK-DIVIDENDS> 114,357
<TOTAL-INTEREST-ON-BONDS> 137,772
<CASH-FLOW-OPERATIONS> 352,531
<EPS-PRIMARY> 1.64
<EPS-DILUTED> 1.64
</TABLE>
