UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-1232
THE CINCINNATI GAS & ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
OHIO 31-0240030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
139 East Fourth Street
Cincinnati, Ohio 45202
(Address of principal executive offices)
Registrant`s telephone number: (513) 381-2000
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- ----
As of April 30, 1995, 89,663,086 shares of Common Stock, par value $8.50 per
share, were outstanding, all of which were held by CINergy Corp.
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
TABLE OF CONTENTS
Item
Number
PART I. FINANCIAL INFORMATION
1 Consolidated Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Income (Loss)
Consolidated Statements of Changes in Common
Stock Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
4 Submission of Matters to a Vote of Security Holders
6 Exhibits and Reports on Form 8-K
Signatures
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<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31 December 31
1995 1994
(unaudited)
(dollars in thousands)
<S> <C> <C>
Utility Plant - original cost
In service
Electric. . . . . . . . . . . . . . . . . $4 518 906 $4 502 840
Gas . . . . . . . . . . . . . . . . . . . 654 905 645 602
Common. . . . . . . . . . . . . . . . . . 185 812 185 718
5 359 623 5 334 160
Accumulated depreciation. . . . . . . . . . 1 641 508 1 613 505
3 718 115 3 720 655
Construction work in progress . . . . . . . 74 993 74 989
Total utility plant . . . . . . . . . . 3 793 108 3 795 644
Current Assets
Cash and temporary cash investments . . . . 16 063 52 516
Restricted deposits . . . . . . . . . . . . 99 98
Accounts receivable less accumulated
provision of $10,348,000 at March 31,
1995 and $8,999,000 at December 31, 1994
for doubtful accounts . . . . . . . . . . 252 592 269 020
Materials, supplies, and fuel - at average
cost
Fuel for use in electric production . . 43 183 42 167
Gas stored for current use. . . . . . . 12 166 31 284
Other materials and supplies. . . . . . 57 099 57 864
Property taxes applicable to subsequent
year. . . . . . . . . . . . . . . . . . . 114 465 112 420
Prepayments and other . . . . . . . . . . . 36 151 31 327
531 818 596 696
Other Assets
Regulatory assets
Post-in-service carrying costs and
deferred operating expenses . . . . . . 153 433 155 138
Phase-in deferred return and
depreciation. . . . . . . . . . . . . . 103 076 100 943
Deferred demand-side management costs . . 12 141 10 002
Amounts due from customers - income
taxes . . . . . . . . . . . . . . . . . 370 293 381 380
Deferred merger costs . . . . . . . . . . 16 721 12 013
Unamortized costs of reacquiring debt . . 34 841 33 426
Other . . . . . . . . . . . . . . . . . . 43 243 55 987
Other . . . . . . . . . . . . . . . . . . . 46 724 40 436
780 472 789 325
$5 105 398 $5 181 665
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CAPITALIZATION AND LIABILITIES
March 31 December 31
1995 1994
(unaudited)
(dollars in thousands)
<C> <C> <C>
Common Stock Equity
Common stock - $8.50 par value;
authorized shares - 120,000,000;
outstanding shares - 89,663,086 at
March 31, 1995 and December 31, 1994. . . . . $ 762 136 $ 762 136
Paid-in capital . . . . . . . . . . . . . . . . 337 874 337 874
Retained earnings . . . . . . . . . . . . . . . 453 174 432 962
Total common stock equity . . . . . . . . . 1 553 184 1 532 972
Cumulative Preferred Stock
Not subject to mandatory redemption . . . . . . 80 000 80 000
Subject to mandatory redemption . . . . . . . . 210 000 210 000
Long-term Debt. . . . . . . . . . . . . . . . . . 1 638 860 1 837 757
Total capitalization. . . . . . . . . . . . 3 482 044 3 660 729
Current Liabilities
Long-term debt due within one year. . . . . . . 114 000 -
Notes payable . . . . . . . . . . . . . . . . . 1 000 14 500
Accounts payable. . . . . . . . . . . . . . . . 90 273 120 817
Accrued taxes . . . . . . . . . . . . . . . . . 248 672 227 651
Accrued interest. . . . . . . . . . . . . . . . 38 243 31 902
Other . . . . . . . . . . . . . . . . . . . . . 38 035 32 658
530 223 427 528
Other Liabilities
Deferred income taxes . . . . . . . . . . . . . 734 844 747 060
Unamortized investment tax credits . . . . . . 133 894 135 417
Accrued pension and other postretirement
benefit costs . . . . . . . . . . . . . . . . 106 591 102 254
Other . . . . . . . . . . . . . . . . . . . . . 117 802 108 677
1 093 131 1 093 408
$5 105 398 $5 181 665
</TABLE>
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<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(unaudited)
Quarter Ended Twelve Months Ended
March 31 March 31
1995 1994 1995 1994
(in thousands)
<S> <C> <C> <C> <C>
Operating Revenues
Electric . . . . . . . . . . . . . . . . . . . . . . . . $349 956 $333 390 $1 362 353 $1 315 002
Gas. . . . . . . . . . . . . . . . . . . . . . . . . . . 175 211 229 151 388 458 505 804
525 167 562 541 1 750 811 1 820 806
Operating Expenses
Fuel used in electric production . . . . . . . . . . . . 84 073 81 881 327 662 335 552
Gas purchased. . . . . . . . . . . . . . . . . . . . . . 94 493 142 025 200 761 300 399
Purchased and exchanged power. . . . . . . . . . . . . . 10 505 7 314 24 123 21 369
Other operation. . . . . . . . . . . . . . . . . . . . . 68 922 68 635 336 317 266 486
Maintenance. . . . . . . . . . . . . . . . . . . . . . . 23 533 25 942 104 401 113 731
Depreciation . . . . . . . . . . . . . . . . . . . . . . 39 537 38 769 157 444 153 664
Post-in-service deferred operating expenses - net. . . . 823 823 3 290 (2 894)
Phase-in deferred depreciation . . . . . . . . . . . . . - (1 313) (848) (6 662)
Income taxes . . . . . . . . . . . . . . . . . . . . . . 43 346 42 444 105 030 117 197
Taxes other than income taxes. . . . . . . . . . . . . . 50 656 49 933 198 104 186 059
415 888 456 453 1 456 284 1 484 901
Operating Income . . . . . . . . . . . . . . . . . . . . . 109 279 106 088 294 527 335 905
Other Income and Expenses - Net
Allowance for equity funds used during construction. . . 596 458 2 109 2 638
Post-in-service carrying costs . . . . . . . . . . . . . - - - 8 100
Phase-in deferred return . . . . . . . . . . . . . . . . 2 134 7 621 9 864 31 290
Write-off of a portion of Zimmer Station . . . . . . . . - - - (234 844)
Income taxes
Related to the write-off of a portion of
Zimmer Station . . . . . . . . . . . . . . . . . . . - - - 12 085
Other. . . . . . . . . . . . . . . . . . . . . . . . . 1 207 1 856 5 970 9 914
Other - net. . . . . . . . . . . . . . . . . . . . . . . 965 15 (5 776) (9 013)
4 902 9 950 12 167 (179 830)
Income Before Interest . . . . . . . . . . . . . . . . . . 114 181 116 038 306 694 156 075
Interest
Interest on long-term debt . . . . . . . . . . . . . . . 37 111 39 623 147 874 157 594
Other interest . . . . . . . . . . . . . . . . . . . . . 826 881 2 776 2 576
Allowance for borrowed funds used during construction. . (980) (657) (3 300) (3 161)
36 957 39 847 147 350 157 009
Net Income (Loss). . . . . . . . . . . . . . . . . . . . . 77 224 76 191 159 344 (934)
Preferred Dividend Requirement . . . . . . . . . . . . . . 5 362 6 290 21 449 25 160
Net Income (Loss) Applicable To Common Stock . . . . . . . $ 71 862 $ 69 901 $ 137 895 $ (26 094)
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Retained Total Common
Stock Capital Earnings Stock Equity
(dollars in thousands)
<S> <C> <C> <C> <C>
Quarter Ended March 31, 1995
Balance January 1, 1995. . . . . . . . . . $762 136 $337 874 $ 432 962 $1 532 972
Net income . . . . . . . . . . . . . . . . 77 224 77 224
Dividends on preferred stock . . . . . . . (5 362) (5 362)
Dividends on common stock. . . . . . . . . (51 650) (51 650)
Balance March 31, 1995 . . . . . . . . . . $762 136 $337 874 $ 453 174 $1 553 184
Quarter Ended March 31, 1994
Balance January 1, 1994. . . . . . . . . . $748 528 $314 218 $ 456 511 $1 519 257
Net income . . . . . . . . . . . . . . . . 76 191 76 191
Issuance of 436,286 shares of
common stock . . . . . . . . . . . . . . 3 708 7 384 11 092
Common stock issuance expense. . . . . . . (9) (9)
Dividends on preferred stock . . . . . . . (6 290) (6 290)
Dividends on common stock. . . . . . . . . (37 899) (37 899)
Balance March 31, 1994 . . . . . . . . . . $752 236 $321 593 $ 488 513 $1 562 342
Twelve Months Ended March 31, 1995
Balance April 1, 1994. . . . . . . . . . . $752 236 $321 593 $ 488 513 $1 562 342
Net income . . . . . . . . . . . . . . . . 159 344 159 344
Issuance of 1,164,717 shares of
common stock . . . . . . . . . . . . . . 9 900 15 758 25 658
Common stock issuance expense. . . . . . . (30) (30)
Dividends on preferred stock . . . . . . . (21 449) (21 449)
Dividends on common stock. . . . . . . . . (172 721) (172 721)
Other. . . . . . . . . . . . . . . . . . . 553 (513) 40
Balance March 31, 1995 . . . . . . . . . . $762 136 $337 874 $ 453 174 $1 553 184
Twelve Months Ended March 31, 1994
Balance April 1, 1993. . . . . . . . . . . $738 147 $292 043 $ 662 545 $1 692 735
Net income . . . . . . . . . . . . . . . . (934) (934)
Issuance of 1,657,590 shares of
common stock . . . . . . . . . . . . . . 14 089 29 566 43 655
Common stock issuance expense. . . . . . . (16) (16)
Dividends on preferred stock . . . . . . . (25 160) (25 160)
Dividends on common stock. . . . . . . . . (147 938) (147 938)
Balance March 31, 1994 . . . . . . . . . . $752 236 $321 593 $ 488 513 $1 562 342
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Quarter Ended Twelve Months Ended
March 31 March 31
1995 1994 1995 1994
(in thousands)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) . . . . . . . . . . . . . . . . . $ 77 224 $ 76 191 $ 159 344 $ (934)
Items providing (using) cash currently:
Depreciation. . . . . . . . . . . . . . . . . . . 39 537 38 769 157 444 153 664
Deferred income taxes and investment tax
credits - net . . . . . . . . . . . . . . . . . (2 056) 652 10 972 33 772
Allowance for equity funds used during
construction. . . . . . . . . . . . . . . . . . (596) (458) (2 109) (2 638)
Deferred gas and electric fuel costs - net. . . . 6 984 7 604 (10 891) (7 469)
Regulatory assets
Post-in-service and phase-in cost deferrals . . (1 311) (8 111) (7 422) (48 946)
Deferred merger costs . . . . . . . . . . . . . (4 709) (4 370) 620 (11 722)
Other . . . . . . . . . . . . . . . . . . . . . 9 205 2 686 (1 372) 5 779
Write-off of a portion of Zimmer Station. . . . . - - - 234 844
Changes in current assets and current
liabilities
Restricted deposits . . . . . . . . . . . . . (1) 25 (4) 136
Accounts receivable . . . . . . . . . . . . . 16 428 (8 613) 68 186 (28 654)
Materials, supplies, and fuel . . . . . . . . 18 867 43 148 (3 079) 20 012
Accounts payable. . . . . . . . . . . . . . . (30 544) (31 242) (7 395) (6 242)
Accrued taxes and interest. . . . . . . . . . 27 362 24 088 11 485 8 983
Other items - net . . . . . . . . . . . . . . . . 2 997 1 793 88 843 20 462
Net cash provided by (used in)
operating activities. . . . . . . . . . . . 159 387 142 162 464 622 371 047
FINANCING ACTIVITIES
Issuance of common stock. . . . . . . . . . . . . . - 11 083 25 628 43 639
Issuance of long-term debt. . . . . . . . . . . . . - 311 957 - 608 957
Retirement of preferred stock . . . . . . . . . . . - - (40 400) -
Redemption of long-term debt. . . . . . . . . . . . (87 462) (313 247) (87 737) (607 689)
Change in short-term debt . . . . . . . . . . . . . (13 500) (17 500) (12 500) 9 425
Dividends on preferred stock. . . . . . . . . . . . (5 362) (6 290) (21 449) (25 160)
Dividends on common stock . . . . . . . . . . . . . (51 650) (37 899) (172 721) (147 938)
Net cash provided by (used in)
financing activities. . . . . . . . . . . . (157 974) (51 896) (309 179) (118 766)
INVESTING ACTIVITIES
Construction expenditures (less allowance for
equity funds used during construction). . . . . . (35 727) (34 956) (190 725) (197 513)
Deferred demand-side management costs . . . . . . . (2 139) (1 423) (7 112) (4 380)
Net cash provided by (used in)
investing activities. . . . . . . . . . . . (37 866) (36 379) (197 837) (201 893)
Net increase (decrease) in cash and
temporary cash investments. . . . . . . . . . . . . (36 453) 53 887 (42 394) 50 388
Cash and temporary cash investments at
beginning of period . . . . . . . . . . . . . . . . 52 516 4 570 58 457 8 069
Cash and temporary cash investments at
end of period . . . . . . . . . . . . . . . . . . . $ 16 063 $ 58 457 $ 16 063 $ 58 457
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. These Consolidated Financial Statements reflect all adjustments (which
include only normal, recurring adjustments) necessary in the opinion of
The Cincinnati Gas & Electric Company (CG&E), a subsidiary of CINergy
Corp., for a fair presentation of the interim results. These statements
should be read in conjunction with CG&E`s 1994 Annual Report on Form 10-K
(1994 Form 10-K) (Commission File Number 1-1232). Certain amounts in the
1994 Consolidated Financial Statements have been reclassified to conform
to the 1995 presentation.
2. As previously discussed in the 1994 Form 10-K, CG&E redeemed $59 million
principal amount of its 9.70% first mortgage bonds (due June 15, 2019) on
April 30, 1995, and $55 million principal amount of its 10 1/8% first
mortgage bonds (due May 1, 2020) on May 1, 1995. Additionally, $41
million principal amount of the 9.70% first mortgage bonds and $45 million
principal amount of the 10 1/8% first mortgage bonds were retired on March
31, 1995.
The Union Light, Heat and Power Company (ULH&P), a subsidiary of CG&E,
announced its intention to redeem $5 million principal amount of its
10.25% first mortgage bonds (due June 1, 2020) at par with cash deposited
in the Maintenance and Replacement Fund, and to redeem the remaining
amount of such bonds at the redemption price of 107.34% on June 1, 1995.
3. CG&E and ULH&P filed registration statements with the Securities and
Exchange Commission (SEC) under the Securities Act of 1933, which became
effective on May 3, 1995, with respect to the issuance of up to $500
million and $55 million, respectively, of unsecured debt. Approval has
been received from the Public Utilities Commission of Ohio and the SEC
under the Public Utility Holding Company Act of 1935 (PUHCA), with respect
to the unsecured debt to be issued by CG&E. Applications are pending
before the Kentucky Public Service Commission and the SEC under PUHCA with
respect to the unsecured debt to be issued by ULH&P.
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Regulatory Matters
On March 29, 1995, the Federal Energy Regulatory Commission (FERC) issued a
Notice of Proposed Rulemaking (MEGA-NOPR) on Open Access, which is another step
in the transition towards potentially full-scale competition in the electric
utility industry. The MEGA-NOPR is essentially the electric industry`s
equivalent of the FERC`s Order 636 applicable to the natural gas industry. The
MEGA-NOPR as proposed would, among other things, provide for mandatory filing
of open access/comparability transmission tariffs, provide for functional
unbundling of all services, require utilities to use the tariffs for their own
bulk power transactions, establish an electronic bulletin board, and establish
a contract-based approach to stranded costs. A final order could be issued by
the end of 1995. CINergy Corp., the parent company of The Cincinnati Gas &
Electric Company (CG&E or Company), is currently evaluating its position with
respect to the provisions of the MEGA-NOPR and the potential effects upon the
Company if ultimately adopted.
CAPITAL REQUIREMENTS
As previously discussed in the 1994 Annual Report on Form 10-K, CG&E redeemed
$59 million principal amount of its 9.70% first mortgage bonds (due June 15,
2019) on April 30, 1995, and $55 million principal amount of its 10 1/8% first
mortgage bonds (due May 1, 2020) on May 1, 1995. Additionally, $41 million
principal amount of the 9.70% first mortgage bonds and $45 million principal
amount of the 10 1/8% first mortgage bonds were retired on March 31, 1995.
The Union Light, Heat and Power Company (ULH&P), a subsidiary of CG&E,
announced its intention to redeem $5 million principal amount of its 10.25%
first mortgage bonds (due June 1, 2020) at par with cash deposited in the
Maintenance and Replacement Fund, and to redeem the remaining amount of such
bonds at the redemption price of 107.34% on June 1, 1995.
CAPITAL RESOURCES
CG&E and ULH&P filed registration statements with the Securities and Exchange
Commission (SEC) under the Securities Act of 1933, which became effective on
May 3, 1995, with respect to the issuance of up to $500 million and $55
million, respectively, of unsecured debt. Approval has been received from the
Public Utilities Commission of Ohio (PUCO) and the SEC under the Public Utility
Holding Company Act of 1935 (PUHCA), with respect to the unsecured debt to be
issued by CG&E. Applications are pending before the Kentucky Public Service
Commission and the SEC under PUHCA with respect to the unsecured debt to be
issued by ULH&P.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1995
Kilowatt-hour Sales
Kilowatt-hour (kwh) sales for the quarter ended March 31, 1995, increased 6.6%
over the same period of 1994, due in large part to non-firm power sales for
resale reflecting third party short-term power sales to other utilities. Also
contributing to the total kwh sales levels were increased retail sales to
commercial and industrial customers. Higher commercial sales resulted from an
increase in the average number of commercial customers. Increased industrial
sales reflect growth in the primary metals and chemicals sectors. A decrease
in domestic sales volumes resulted from the milder weather experienced during
the first quarter of 1995 and led to a decrease in total retail sales.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the first quarter of 1995
decreased 4.3% as compared to the first quarter of 1994. Warmer weather during
the winter heating season led to decreases in gas sales to domestic and
commercial customers. These decreases were partially offset by increases in
the average number of both domestic and commercial customers. Industrial sales
decreased as customers continued to purchase gas directly from suppliers, using
transportation services provided by the Company. The increase in these
transportation volumes, which was over twice the decrease in industrial sales,
was primarily as a result of growth in the primary metals, paper products, and
chemicals sectors.
Revenues
Electric Operating Revenues
Electric operating revenues increased $17 million (5.0%) for the quarter ended
March 31, 1995, over the comparable period of 1994. This increase primarily
reflects the higher kwh sales associated with non-firm power sales for resale
to other utilities. Also contributing to the increase was the implementation
in May 1994 of the final increase of a three-year retail rate phase-in plan
that was ordered by the PUCO in May 1992 (May 1992 Order).
An analysis of electric operating revenues is shown below:
Quarter
Ended March 31
(in millions)
Operating revenues - March 31, 1994 $333
Increase (Decrease) due to change in:
Price per kwh
Retail 7
Sales for Resale
Non-firm power transactions 3
Total change in price per kwh 10
Kwh sales
Retail (3)
Sales for Resale
Non-firm power transactions 10
Total change in kwh sales 7
Operating revenues - March 31, 1995 $350
Gas Operating Revenues
Gas operating revenues declined $54 million (23.5%) in the first quarter of
1995 when compared to the same period last year. This decrease was primarily a
result of the previously mentioned changes in gas sales volumes and the
operation of fuel adjustment clauses reflecting a decline in the average cost
of gas purchased for the period. In addition, an increase in the relative
volume of gas transported to gas sold, as previously discussed, contributed to
the decrease. Providing transportation services does not necessitate the
recovery of gas purchased costs by the Company. Consequently, the revenue per
Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs increased $2 million (2.7%) for the quarter as compared to
last year. An analysis of these fuel costs is shown below:
Quarter
Ended March 31
(in millions)
Fuel expense - March 31, 1994 $82
Increase (Decrease) due to change in:
Price of fuel (3)
Kwh generation 5
Fuel expense - March 31, 1995 $84
Gas Purchased
Gas purchased for the quarter decreased $48 million (33.5%) when compared to
the same period last year mainly reflecting decreases in the average cost per
Mcf of gas purchased of 22.9% and in volumes purchased of 13.7%.
Purchased and Exchanged Power
Purchased and exchanged power for the quarter ended March 31, 1995, increased
$3 million (43.6%) over the comparable period of 1994. This increase primarily
reflects power received from other utilities in connection with increased non-
firm power sales for resale.
Maintenance
The $2 million (9.3%) decrease in maintenance expense for the first quarter of
1995 as compared to the same period of 1994 is due to reduced maintenance on
electric generating units, electric distribution facilities, and gas production
facilities.
Other Income and Expenses - Net
Phase-in Deferred Return
Phase-in deferred return decreased $5 million (72.0%) for the quarter ended
1995 from the comparable period of 1994 as a result of implementing the final
increase of a three-year rate phase-in plan, as previously mentioned.
Interest
Interest charges decreased $3 million (7.3%) for the three months ended March
31, 1995, from the same period of 1994 primarily due to the refinancing of $305
million of long-term debt during the first quarter of 1994.
Preferred Dividend Requirement
The decrease in CG&E`s preferred dividend requirement of $.9 million (14.8%)
for the quarter ended March 31, 1995, from the same period of 1994 was due to
the early redemption on April 1, 1994, of 400,000 shares of $100 par value
cumulative preferred stock (9.28% Series).
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED MARCH 31, 1995
Kilowatt-hour Sales
Kwh sales for the twelve months ended March 31, 1995, remained virtually
unchanged, increasing .1% over the same period of 1994. An increase in non-
firm power sales for resale associated with power sales to other utilities more
than offset a small decline in retail sales attributable to milder weather
during the first quarter of 1995 and the second half of 1994. An increase in
the average number of domestic customers partially offset a decline in domestic
sales, whereas commercial sales increased due to an increase in the average
number of customers. Increased industrial sales resulted from growth in the
primary metals, chemicals, and non-electrical machinery sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended March 31,
1995, decreased 6.2% when compared to the twelve months ended March 31, 1994.
Warmer weather during the winter heating season led to decreases in gas sales
to domestic and commercial customers. The decreased sales to domestic and
commercial customers were partially offset by an increase in the average number
of both domestic and commercial customers. Industrial sales decreased as
industrial customers continued the previously mentioned shift in demand toward
transportation services. This increase in Mcf transported was nearly three
times the decrease in industrial sales, primarily as a result of growth in the
primary metals, food products, and chemicals sectors.
Revenues
Electric Operating Revenues
Electric operating revenues increased $47 million (3.6%) for the twelve months
ended March 31, 1995, over the same period last year. This increase primarily
reflects three electric retail rate increases granted by the PUCO. Increases
in May 1993 and May 1994 were related to the phase-in plan included in the May
1992 Order and the third increase was effective in August 1993 pursuant to a
PUCO order (August 1993 Order). The previously discussed increase in non-firm
power sales for resale also contributed to the increase.
An analysis of electric operating revenues is shown below:
Twelve Months
Ended March 31
(in millions)
Operating revenues - March 31, 1994 $1 315
Increase (Decrease) due to change in:
Price per kwh
Retail 44
Sales for resale
Non-firm power transactions 5
Total change in price per kwh 49
Kwh sales
Retail (4)
Sales for resale
Non-firm power transactions 2
Total change in kwh sales (2)
Operating revenues - March 31, 1995 $1 362
Gas Operating Revenues
Gas operating revenues declined $117 million (23.2%) for the twelve months
ended March 31, 1995, when compared to the same period last year. This
decrease was primarily a result of the previously mentioned changes in gas
sales volumes and the operation of fuel adjustment clauses reflecting a decline
in the average cost of gas purchased for the period. In addition, an increase
in relative volume of gas transported to gas sold, as previously discussed,
contributed to the decrease. Providing transportation services does not
necessitate the recovery of gas purchased costs by the Company. Consequently,
the revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs, the Company's largest annual operating expense, decreased
$8 million (2.4%) for the twelve month period as compared to last year. An
analysis of these fuel costs is shown below:
Twelve Months
Ended March 31
(in millions)
Fuel expense - March 31, 1994 $336
Increase (Decrease) due to change in:
Price of fuel (9)
Kwh generation 1
Fuel expense - March 31, 1995 $328
Gas Purchased
Gas purchased for the twelve month period ended March 31, 1995, decreased $100
million (33.2%) from the same period last year mainly reflecting decreases in
the average cost per Mcf of gas purchased of 20.5% and in volumes purchased of
15.9%.
Purchased and Exchanged Power
Purchased and exchanged power for the twelve month period ended March 31, 1995,
increased $3 million (12.9%) over the comparable period of 1994. This increase
primarily reflects power received from other utilities in connection with
increased non-firm power sales for resale.
Other Operation
Increased other operation expenses of $70 million (26.2%) for the twelve months
ended March 31, 1995, over the same period of 1994 were due to a number of
factors. The primary factor contributing to the increase was the recognition
of $52 million of nonrecurring charges for merger-related costs and other
expenditures which the Company does not expect to recover from customers due to
various rate settlements. Additionally, increased electric production,
transmission, and distribution expenses contributed to the increase.
Maintenance
The $9 million (8.2%) decrease in maintenance expenses for the twelve months
ended March 31, 1995, as compared to the same period of 1994 was due to
decreased maintenance on electric generating units, electric distribution
facilities, and gas production facilities.
Depreciation
Depreciation expense increased $4 million (2.5%) for the twelve month period
ended March 31, 1995, over the comparable period ended March 31, 1994. This
increase primarily reflects additions to wholly-owned electric utility plant
and gas utility plant. Also, a full year's amortization of deferred post-in-
service carrying costs on the Wm. H. Zimmer (Zimmer) and Woodsdale (Woodsdale)
Generating Stations added to the increase. CG&E began amortizing these costs
over the estimated useful life of the applicable generating station in
accordance with the August 1993 Order.
Post-in-service Deferred Operating Expenses - Net
The $6 million increase in post-in-service deferred operating expenses for the
twelve months ended March 31, 1995, from the comparable period of 1994,
resulted from ceasing the deferral and commencing the amortization of deferred
operating expenses associated with the first five units of Woodsdale in August
1993. CG&E had deferred depreciation, operation and maintenance expenses
(exclusive of fuel costs), and property taxes related to these five units from
the time the units began commercial operation until the effective date of new
rates authorized by the August 1993 Order. The deferred expenses are being
amortized over a period of 10 years.
Phase-in Deferred Depreciation
Phase-in deferred depreciation resulted from the three-year rate phase-in plan
for Zimmer included in the May 1992 Order. The change of $6 million for phase-
in deferred depreciation for the twelve months ended March 31, 1995, as
compared to the same period of 1994 reflects discontinuance of the deferral of
depreciation when the final increase of the phase-in plan became effective in
May 1994.
Taxes Other than Income Taxes
Taxes other than income taxes for the twelve month period ended March 31, 1995,
increased $12 million (6.5%) over the same period of 1994 primarily due to
increased excise taxes. Also contributing to this increase were increased
property taxes resulting from a greater investment in taxable property and
higher property tax rates.
Other Income and Expenses - Net
Post-in-service Carrying Costs
Post-in-service carrying costs decreased $8 million for the twelve month period
ended March 31, 1995. Accrual of carrying costs on the first five units of
Woodsdale ceased after the August 1993 Order which reflected Woodsdale in
retail electric rates.
Phase-in Deferred Return
Phase-in deferred return decreased $21 million (68.5%) for the twelve months
ended March 31, 1995, from the comparable period of 1994 as a result of
implementing the final increase of the three-year rate phase-in plan in May
1994.
Write-off of a Portion of Zimmer Station
In November 1993, CG&E wrote off Zimmer costs disallowed from rates in the May
1992 Order.
Interest
Interest charges decreased $10 million (6.2%) for the twelve months ended March
31, 1995, from the same period of 1994 primarily due to the refinancing of $305
million of long-term debt during the first quarter of 1994.
Preferred Dividend Requirement
The decrease in CG&E's preferred dividend requirement of $4 million (14.7%) for
the twelve months ended March 31, 1995, from the same period of 1994 was due to
the early redemption on April 1, 1994, of 400,000 shares of $100 par value
cumulative preferred stock (9.28% Series).
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of shareholders of The Cincinnati Gas & Electric
Company was held effective April 20, 1995.
(b) Proxies were not solicited for the annual meeting, at which the Board of
Directors was re-elected in its entirety.
(c) The following were unanimously re-elected at the annual meeting:
Jackson H. Randolph
James E. Rogers
George H. Stinson
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is filed herewith:
Exhibit
Designation Nature of Exhibit
27 Financial Data Schedule (included in electronic
submission only).
(b) No reports on Form 8-K were filed during the quarter ended March 31, 1995.
<PAGE>
SIGNATURES
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
The Cincinnati Gas & Electric Company (CG&E) believes that the disclosures are
adequate to make the information presented not misleading. In the opinion of
CG&E, these statements reflect all adjustments (which include only normal,
recurring adjustments) necessary to reflect the results of operations for the
respective periods. The unaudited statements are subject to such adjustments
as the annual audit by independent public accountants may disclose to be
necessary.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed by an
officer and the principal accounting officer on its behalf by the undersigned
thereunto duly authorized.
THE CINCINNATI GAS & ELECTRIC COMPANY
-------------------------------------
Registrant
J. WAYNE LEONARD
-----------------------------------------
Date: May 11, 1995 J. Wayne Leonard
Group Vice President and
Chief Financial Officer
CHARLES J. WINGER
-----------------------------------------
Date: May 11, 1995 Charles J. Winger
Comptroller, and Principal
Accounting Officer
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