<PAGE>
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, 1994
OR
[ ] Transition report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the transition period from _____ to _____
Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification No.
1-9130 CENTERIOR ENERGY CORPORATION 34-1479083
(An Ohio Corporation)
6200 Oak Tree Boulevard
Independence, Ohio 44131
Telephone (216) 447-3100
1-2323 THE CLEVELAND ELECTRIC 34-0150020
ILLUMINATING COMPANY
(An Ohio Corporation)
55 Public Square
Cleveland, Ohio 44113
Telephone (216) 622-9800
1-3583 THE TOLEDO EDISON COMPANY 34-4375005
(An Ohio Corporation)
300 Madison Avenue
Toledo, Ohio 43652
Telephone (419) 249-5000
Indicate by check mark whether each of the registrants (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 registrants were required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days.
Yes X No
On May 5, 1994, there were 147,929,555 shares of Centerior Energy
Corporation Common Stock outstanding. Centerior Energy Corporation is the
sole holder of the 79,590,689 shares and 39,133,887 shares of common stock
of The Cleveland Electric Illuminating Company and The Toledo Edison
Company, respectively, outstanding on that date.
This combined Form 10-Q is separately filed by Centerior Energy Corporation
("Centerior Energy"), The Cleveland Electric Illuminating Company
("Cleveland Electric") and The Toledo Edison Company ("Toledo Edison").
Centerior Energy, Cleveland Electric and Toledo Edison are sometimes
referred to collectively as the "Companies". Cleveland Electric and Toledo
Edison are sometimes collectively referred to as the "Operating Companies".
Information contained herein relating to any individual registrant is filed
by such registrant on its behalf. No registrant makes any representation as
to information relating to any other registrant, except that information
relating to either or both of the Operating Companies is also attributed to
Centerior Energy.
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Centerior Energy Corporation and Subsidiaries
The Cleveland Electric Illuminating Company and Subsidiaries
The Toledo Edison Company
Notes to Financial Statements 1
Centerior Energy Corporation and Subsidiaries
Income Statement 4
Balance Sheet 5
Cash Flows 6
Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
The Cleveland Electric Illuminating Company and Subsidiaries
Income Statement 10
Balance Sheet 11
Cash Flows 12
Management's Discussion and Analysis of Financial 13
Condition and Results of Operations
The Toledo Edison Company
Income Statement 16
Balance Sheet 17
Cash Flows 18
Management's Discussion and Analysis of Financial 19
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders 22
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 24
Signatures 25
-i-
<PAGE>
CENTERIOR ENERGY CORPORATION AND SUBSIDIARIES,
THE CLEVELAND ELECTRIC ILLUMINATING COMPANY AND SUBSIDIARIES,
AND THE TOLEDO EDISON COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) Interim Financial Statements
Centerior Energy Corporation (Centerior Energy) is a holding company of
Centerior Service Company (Service Company) and two electric utilities, The
Cleveland Electric Illuminating Company (Cleveland Electric) and The Toledo
Edison Company (Toledo Edison). These two utilities are referred to collec-
tively herein as the "Operating Companies". Centerior Energy, Cleveland
Electric and Toledo Edison are referred to collectively herein as the
"Companies".
Each comparative income statement and balance sheet and the related statement
of cash flows have been prepared from the records of each of the Companies
without audit by independent public accountants. In the opinion of manage-
ment, all adjustments necessary for a fair statement of financial position at
March 31, 1994 and results of operations for the three months ended March 31,
1994 and 1993 have been included. All such adjustments were normal recurring
adjustments, except for those related to the adoption of the new accounting
standard discussed in Note 2.
These financial statements and notes should be read in conjunction with the
financial statements and notes included in the Companies' combined Annual
Report on Form 10-K for the year ended December 31, 1993 (1993 Form 10-K).
These interim period financial results are not necessarily indicative of
results for a 12-month period.
(2) New Accounting Standard
Effective January 1, 1994, the Companies adopted the new accounting standard
for certain investments in debt and equity securities (SFAS 115). SFAS 115
addresses the accounting and reporting for investments in equity securities
that have readily determinable fair values and for all investments in debt
securities. The adoption of SFAS 115 did not materially affect the financial
positions or first quarter 1994 results of operations of the Companies.
(3) Equity Distribution Restrictions
The Operating Companies can make cash available for the funding of Centerior
Energy's common stock dividends by paying dividends on their respective common
stock, which are held solely by Centerior Energy. Federal law prohibits the
Operating Companies from paying dividends out of capital accounts. However,
the Operating Companies may pay preferred and common stock dividends out of
appropriated retained earnings and current earnings. At March 31, 1994,
Cleveland Electric and Toledo Edison had $139.6 million and $56 million,
respectively, of appropriated retained earnings for the payment of dividends.
However, Toledo Edison is prohibited from paying a common stock dividend by a
provision in its mortgage.
<PAGE>
(4) Common Stock Dividends
Dividends per common share declared by Centerior Energy during the three
months ended March 31, 1994 and 1993 were as follows:
1994 1993
Paid February 15 $.20 $.40
Paid May 15 .20 .40
Common stock dividends declared by Cleveland Electric during the three months
ended March 31, 1994 and 1993 were as follows:
1994 1993
(millions)
Paid in February $18.6 $46.7
Toledo Edison did not declare any common stock dividends during the three
months ended March 31, 1994 and 1993.
(5) Financing Activity
During the three months ended March 31, 1994, the Operating Companies retired
debt and preferred stock as follows:
Cleveland Electric
Mandatory redemptions consisted of $15 million of Serial Preferred Stock,
$9.125 Series N and $1.1 million of bank loans and other long-term debt.
Toledo Edison
Mandatory redemptions consisted of $3.2 million of unsecured notes, bank loans
and other long-term debt.
(6) Long-Term Debt and Other Borrowing Arrangements
As discussed in Centerior Energy's Note 11(e) and the Operating Companies'
respective Note 11(d) in the Notes to the Financial Statements for 1993 in the
1993 Form 10-K, certain unsecured debt agreements contain covenants relating
to capitalization, fixed charge coverage ratios and secured financings. The
write-offs recorded at December 31, 1993 caused Centerior Energy and the
Operating Companies to violate certain of those covenants. The affected
creditors have waived those violations in exchange for commitments to provide
them with a second mortgage security interest on the Operating Companies'
property and other considerations. The Companies expect to complete this
process in the second quarter of 1994. The Companies will provide the same
security interest to certain other creditors because their agreements require
equal treatment. The Companies expect to provide second mortgage collateral
for $219 million of unsecured debt ($47 million for Cleveland Electric and
$172 million for Toledo Edison), $228 million of bank letters of credit and a
$205 million revolving credit facility. The bank letters of credit and
revolving credit facility are joint and several obligations of the Operating
Companies.
<PAGE>
(7) Commitments and Contingencies
Various legal actions, claims and regulatory proceedings covering several
matters are pending against the Companies. See "Item 3. Legal Proceedings"
in the 1993 Form 10-K.
<PAGE>
<TABLE>
CENTERIOR ENERGY CORPORATION AND SUBSIDIARIES
INCOME STATEMENT
(Unaudited)
(Thousands, Except Per Share Amounts)
<CAPTION>
Three Months Ended
March 31,
---------------------
1994 1993
-------- --------
<S> <C> <C>
OPERATING REVENUES $ 587,567 $ 598,082
OPERATING EXPENSES
Fuel and Purchased Power 115,353 123,876
Other Operation and Maintenance 186,818 200,629
Depreciation and Amortization 68,314 65,959
Taxes, Other Than Federal Income Taxes 83,008 83,077
Deferred Operating Expenses, Net (14,851) (16,800)
Federal Income Taxes 20,282 19,021
-------- --------
Total Operating Expenses 458,924 475,762
-------- --------
OPERATING INCOME 128,643 122,320
NONOPERATING INCOME
Allowance for Equity Funds Used During Construction 842 1,348
Other Income and Deductions, Net 2,555 1,629
Deferred Carrying Charges 9,917 13,849
Federal Income Taxes - Credit (Expense) (1,263) 386
-------- --------
Total Nonoperating Income 12,051 17,212
-------- --------
INCOME BEFORE INTEREST CHARGES 140,694 139,532
INTEREST CHARGES
Long-term Debt 88,347 87,027
Short-term Debt 1,466 2,211
Allowance for Borrowed Funds Used During Construction (782) (1,020)
-------- --------
Net Interest Charges 89,031 88,218
-------- --------
INCOME AFTER INTEREST CHARGES 51,663 51,314
Preferred Dividend Requirements of Subsidiaries 16,660 16,097
-------- --------
NET INCOME $ 35,003 $ 35,217
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 147,446 143,364
======== ========
EARNINGS PER COMMON SHARE $ .24 $ .25
======== ========
<FN>
The accompanying notes to financial statements as they relate to Centerior Energy
are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
CENTERIOR ENERGY CORPORATION AND SUBSIDIARIES
BALANCE SHEET
(Thousands)
<CAPTION>
March 31, December 31,
1994 1993
(Unaudited)
----------- -----------
<S> <C> <C>
ASSETS
PROPERTY, PLANT AND EQUIPMENT
Utility Plant In Service $ 9,529,622 $ 9,571,124
Accumulated Depreciation and Amortization (2,619,867) (2,677,368)
----------- -----------
6,909,755 6,893,756
Construction Work In Progress 140,793 180,931
----------- -----------
7,050,548 7,074,687
Nuclear Fuel, Net of Amortization 327,641 344,642
Other Property, Less Accumulated Depreciation 29,436 40,808
----------- -----------
7,407,625 7,460,137
CURRENT ASSETS
Cash and Temporary Cash Investments 183,458 225,253
Amounts Due from Customers and Others, Net 244,586 220,500
Unbilled Revenues 109,844 123,844
Materials and Supplies, at Average Cost 138,639 135,511
Fossil Fuel Inventory, at Average Cost 27,221 32,159
Taxes Applicable to Succeeding Years 214,163 249,544
Other 11,470 6,235
----------- -----------
929,381 993,046
DEFERRED CHARGES AND OTHER ASSETS
Amounts Due from Customers for Future Federal Income Taxes 986,207 968,267
Unamortized Loss from Beaver Valley Unit 2 Sale 104,067 105,190
Unamortized Loss on Reacquired Debt 90,106 92,385
Carrying Charges and Operating Expenses 886,347 861,660
Nuclear Plant Decommissioning Trusts 61,597 55,682
Other 170,717 173,463
----------- -----------
2,299,041 2,256,647
----------- -----------
$ 10,636,047 $ 10,709,830
=========== ===========
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common Stock Equity $ 1,771,108 $ 1,785,122
Preferred Stock
With Mandatory Redemption Provisions 298,575 313,575
Without Mandatory Redemption Provisions 450,871 450,871
Long-Term Debt 4,013,905 4,018,554
----------- -----------
6,534,459 6,568,122
OTHER NONCURRENT LIABILITIES
Nuclear Fuel Lease Obligations 254,954 253,666
Other 192,924 195,377
----------- -----------
447,878 449,043
CURRENT LIABILITIES
Current Portion of Long-Term Debt and Preferred Stock 127,685 127,253
Current Portion of Lease Obligations 101,687 111,490
Accounts Payable 159,611 188,409
Accrued Taxes 309,103 377,887
Accrued Interest 99,747 87,394
Dividends Declared 50,165 15,795
Other 60,508 57,399
----------- -----------
908,506 965,627
DEFERRED CREDITS
Unamortized Investment Tax Credits 316,674 329,290
Accumulated Deferred Federal Income Taxes 1,617,140 1,578,955
Unamortized Gain from Bruce Mansfield Plant Sale 544,706 551,268
Accumulated Deferred Rents for Bruce Mansfield Plant
and Beaver Valley Unit 2 131,855 127,661
Other 134,829 139,864
----------- -----------
2,745,204 2,727,038
COMMITMENTS AND CONTINGENCIES (Note 7)
----------- -----------
$ 10,636,047 $ 10,709,830
=========== ===========
<FN>
The accompanying notes to financial statements as they relate to Centerior Energy are an
integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
CENTERIOR ENERGY CORPORATION AND SUBSIDIARIES
CASH FLOWS
(Unaudited)
(Thousands)
<CAPTION>
Three Months Ended
March 31,
--------------------
1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $35,003 $35,217
-------- --------
Adjustments to Reconcile Net Income
to Cash from Operating Activities:
Depreciation and Amortization 68,314 65,959
Deferred Federal Income Taxes 12,980 11,308
Unbilled Revenues 14,000 10,000
Deferred Fuel (3,265) 2,585
Deferred Carrying Charges (9,917) (13,849)
Leased Nuclear Fuel Amortization 28,954 16,686
Deferred Operating Expenses, Net (14,851) (16,800)
Allowance for Equity Funds Used During Construction (842) (1,348)
Changes in Amounts Due from Customers and Others, Net (24,086) (4,333)
Changes in Inventories 1,810 17,622
Changes in Accounts Payable (28,798) (18,508)
Changes in Working Capital Affecting Operations (23,176) (22,472)
Other Noncash Items 6,348 2,088
------- -------
Total Adjustments 27,471 48,938
------- -------
Net Cash from Operating Activities 62,474 84,155
CASH FLOWS FROM FINANCING ACTIVITIES
Bank Loans, Commercial Paper and Other Short-Term Debt -- (7,501)
Debt Issues:
First Mortgage Bonds -- 200,200
Secured Medium-Term Notes -- 128,000
Common Stock Issues 9,988 18,348
Reacquired Common Stock -- 249
Maturities, Redemptions and Sinking Funds (19,322) (237,807)
Nuclear Fuel Lease Obligations (20,122) (35,943)
Common Stock Dividends Paid (29,432) (57,184)
Premiums, Discounts and Expenses -- (4,499)
------- -------
Net Cash from Financing Activities (58,888) 3,863
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Applied to Construction (37,843) (45,309)
Interest Capitalized as Allowance for Borrowed Funds Used
During Construction (782) (1,020)
Other Cash Received (Applied) (6,756) 1,284
------- -------
Net Cash from Investing Activities (45,381) (45,045)
------- -------
NET CHANGE IN CASH AND TEMPORARY CASH INVESTMENTS (41,795) 42,973
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 225,253 92,949
------- -------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $183,458 $135,922
======= =======
Other Payment Information:
Interest (net of amounts capitalized) $64,000 $60,000
Federal Income Taxes -- 6,000
<FN>
The accompanying notes to financial statements as they relate to Centerior Energy are an integral
part of this statement.
</TABLE>
<PAGE>
CENTERIOR ENERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
Reference is made to "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in Item 7 of the 1993 Form
10-K. The information under "Capital Resources and Liquidity" remains un-
changed with the following exceptions:
During the first quarter of 1994, the Operating Companies redeemed various
securities as discussed in Note 5.
In the second quarter of 1994, Cleveland Electric and Toledo Edison expect to
issue $46.1 million and $30.5 million, respectively, of first mortgage bonds
as collateral security for the sale by a public authority of equal principal
amounts of tax-exempt bonds. The proceeds from the sales of the public
authority's bonds will be used to refund equal principal amounts of the
authority's tax-exempt bonds that were issued in 1988 and have been
continuously remarketed on a floating rate basis. Each new series of bonds
will be issued at a fixed rate of interest for the remaining term to July 1,
2023.
Centerior Energy expects to raise about $35 million in 1994 from the sale of
authorized but unissued common stock under certain of its employee and share
owner stock purchase plans.
Additional first mortgage bonds may be issued by the Operating Companies under
their respective mortgages on the basis of property additions, cash or refund-
able first mortgage bonds. Under their respective mortgages, each Operating
Company may issue first mortgage bonds on the basis of property additions and,
under certain circumstances, refundable bonds only if the applicable interest
coverage test is met. At March 31, 1994, Cleveland Electric and Toledo Edison
would have been permitted to issue approximately $139 million and $323 million
of additional first mortgage bonds, respectively. After the fourth quarter of
1994, Cleveland Electric's ability to issue first mortgage bonds is expected
to increase substantially when its interest coverage ratio will no longer be
affected by the write-offs recorded at December 31, 1993.
Results of Operations
Factors contributing to the 1.8% decrease in first quarter 1994 operating
revenues are shown as follows:
Factors Millions
Sales Volume and Mix $ 24.6
Wholesale Revenues (7.7)
Fuel Cost Recovery Revenues (15.5)
Base Rates and Miscellaneous Revenues (11.9)
Total $(10.5)
<PAGE>
Percentage changes between 1994 and 1993 first quarter billed electric
kilowatt-hour sales are summarized as follows:
Customer Categories % Change
Residential 5.0%
Commercial 5.1
Industrial 4.9
Other (4.2)
Total 4.1
First quarter 1994 total kilowatt-hour sales increased as a result of
increased economic activity and weather-related demand. Industrial sales
increased on the strength of increased sales to large automotive
manufacturers, large steel industry customers and the broad-based, smaller
industrial customer group. Residential and commercial sales increased as a
result of colder weather in the first quarter of 1994 than in the first
quarter of 1993, which increased heating-related demand. Other sales
decreased as lower wholesale sales were partially offset by higher sales to
public authorities.
The decreases in first quarter 1994 wholesale sales and revenues were
attributable to the expiration of a wholesale power agreement, softer market
conditions and limited power availability for bulk power transactions because
of generating plant outages.
The decrease in first quarter 1994 fuel cost recovery revenues included in
customer bills resulted from decreases in the fuel cost recovery factors used
by the Operating Companies to calculate these revenues. The weighted averages
of the fuel cost recovery factors used for the first quarter of 1994 decreased
about 19% and 2% for Cleveland Electric and Toledo Edison, respectively,
compared to those used in the 1993 first quarter.
The decrease in first quarter 1994 base rates and miscellaneous revenues was
primarily attributable to three factors: lower base rate revenues in 1994
from certain large industrial customers under economic incentive contracts;
lower base rate revenues in 1994 from certain large commercial customers as a
result of lower tariff rates based on changes in their load characteristics;
and a disproportionate increase in kilowatt-hour sales to residential
customers in 1994 at lower incremental rates under the declining rate
schedules based on usage.
First quarter operating expenses in 1994 decreased 3.5% from the 1993 amount.
Other operation and maintenance expenses decreased primarily as a result of
cost reduction measures, including the work force reduction in 1993. Fuel and
purchased power expenses decreased because of lower fuel expense, including
less amortization of previously deferred fuel costs than the amount amortized
in 1993. A change in the system generation mix (more nuclear generation and
less coal-fired generation in the 1994 first quarter than in the 1993 period)
accounted for a large part of the lower fuel expense for the first quarter of
1994. Depreciation and amortization expense increased because of higher
nuclear plant decommissioning expense accruals related to revisions in the
<PAGE>
cost estimates in 1993. A decrease in deferred operating expenses resulted
primarily from the cessation in 1994 of deferrals related to the rate phase-in
plans for the investments in Perry Nuclear Power Plant Unit 1 and Beaver
Valley Power Station Unit 2 under a 1989 rate agreement for the Operating
Companies. Federal income taxes increased as a result of higher pretax
operating income.
First quarter credits for carrying charges in 1994 decreased from the 1993
amount primarily because of the cessation in 1994 of accruals related to the
phase-in plans. The first quarter federal income tax provision for non-
operating income in 1994 increased from the 1993 amount because the expense
increase resulting from a lower tax allocation of interest charges to non-
operating activities exceeded the decrease related to the lower carrying
charge credits.
First quarter net income in 1994 decreased $0.2 million, or 0.6%, from the
1993 amount. Quarterly earnings per common share decreased $.01 per share, or
4%.
<PAGE>
<TABLE>
THE CLEVELAND ELECTRIC ILLUMINATING COMPANY AND SUBSIDIARIES
INCOME STATEMENT
(Unaudited)
(Thousands)
<CAPTION>
Three Months Ended
March 31,
---------------------
1994 1993
-------- --------
<S> <C> <C>
OPERATING REVENUES $ 407,855 $ 421,107
OPERATING EXPENSES
Fuel and Purchased Power (1) 99,939 112,540
Other Operation and Maintenance 112,052 118,804
Depreciation and Amortization 47,992 46,460
Taxes, Other Than Federal Income Taxes 59,085 58,963
Deferred Operating Expenses, Net (9,719) (9,872)
Federal Income Taxes 12,994 12,102
-------- --------
Total Operating Expenses 322,343 338,997
-------- --------
OPERATING INCOME 85,512 82,110
NONOPERATING INCOME
Allowance for Equity Funds Used During Construction 630 1,024
Other Income and Deductions, Net 1,899 2,005
Deferred Carrying Charges 6,237 7,648
Federal Income Taxes - Credit (Expense) (1,056) 138
-------- --------
Total Nonoperating Income 7,710 10,815
-------- --------
INCOME BEFORE INTEREST CHARGES 93,222 92,925
INTEREST CHARGES
Long-term Debt 60,433 59,994
Short-term Debt 626 1,007
Allowance for Borrowed Funds Used During Construction (744) (813)
-------- --------
Net Interest Charges 60,315 60,188
-------- --------
NET INCOME 32,907 32,737
Preferred Dividend Requirements 11,502 10,181
-------- --------
EARNINGS AVAILABLE FOR COMMON STOCK $ 21,405 $ 22,556
======== ========
(1) Includes purchased power expense for
purchases from Toledo Edison. $ 29,669 $ 30,418
<FN>
The accompanying notes to financial statements as they relate to Cleveland Electric
are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
THE CLEVELAND ELECTRIC ILLUMINATING COMPANY AND SUBSIDIARIES
BALANCE SHEET
(Thousands)
<CAPTION>
March 31, December 31,
1994 1993
(Unaudited)
----------- -----------
<S> <C> <C>
ASSETS
PROPERTY, PLANT AND EQUIPMENT
Utility Plant In Service $ 6,685,254 $ 6,734,130
Accumulated Depreciation and Amortization (1,816,016) (1,889,584)
----------- -----------
4,869,238 4,844,546
Construction Work In Progress 107,477 141,422
----------- -----------
4,976,715 4,985,968
Nuclear Fuel, Net of Amortization 193,459 202,200
Other Property, Less Accumulated Depreciation 29,848 41,041
----------- -----------
5,200,022 5,229,209
CURRENT ASSETS
Cash and Temporary Cash Investments 14,604 77,374
Amounts Due from Customers and Others, Net 172,383 155,899
Amounts Due from Affiliates 10,047 5,399
Unbilled Revenues 89,000 99,000
Materials and Supplies, at Average Cost 92,732 92,659
Fossil Fuel Inventory, at Average Cost 15,397 20,188
Taxes Applicable to Succeeding Years 153,043 178,577
Other 3,664 2,967
----------- -----------
550,870 632,063
DEFERRED CHARGES AND OTHER ASSETS
Amounts Due from Customers for Future Federal Income Taxes 598,392 586,494
Unamortized Loss on Reacquired Debt 59,186 60,293
Carrying Charges and Operating Expenses 534,550 518,613
Nuclear Plant Decommissioning Trusts 33,114 29,955
Other 96,561 102,546
----------- -----------
1,321,803 1,297,901
----------- -----------
$ 7,072,695 $ 7,159,173
=========== ===========
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common Stock Equity $ 1,054,266 $ 1,039,947
Preferred Stock
With Mandatory Redemption Provisions 270,225 285,225
Without Mandatory Redemption Provisions 240,871 240,871
Long-Term Debt 2,792,437 2,793,162
----------- -----------
4,357,799 4,359,205
OTHER NONCURRENT LIABILITIES
Nuclear Fuel Lease Obligations 152,119 150,775
Other 95,596 96,352
----------- -----------
247,715 247,127
CURRENT LIABILITIES
Current Portion of Long-Term Debt and Preferred Stock 70,057 70,394
Current Portion of Lease Obligations 57,439 62,610
Accounts Payable 94,503 122,385
Accounts Payable to Affiliates 54,299 60,956
Accrued Taxes 257,333 304,621
Accrued Interest 70,225 60,376
Dividends Declared 7,533 19,258
Other 34,159 32,632
----------- -----------
645,548 733,232
DEFERRED CREDITS
Unamortized Investment Tax Credits 224,508 235,293
Accumulated Deferred Federal Income Taxes 1,129,950 1,104,859
Unamortized Gain from Bruce Mansfield Plant Sale 339,120 343,183
Accumulated Deferred Rents for Bruce Mansfield Plant 77,902 77,304
Other 50,153 58,970
----------- -----------
1,821,633 1,819,609
COMMITMENTS AND CONTINGENCIES (Note 7)
----------- -----------
$ 7,072,695 $ 7,159,173
=========== ===========
<FN>
The accompanying notes to financial statements as they relate to Cleveland Electric are an
integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
THE CLEVELAND ELECTRIC ILLUMINATING COMPANY AND SUBSIDIARIES
CASH FLOWS
(Unaudited)
(Thousands)
<CAPTION>
Three Months Ended
March 31,
--------------------
1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $32,907 $32,737
-------- --------
Adjustments to Reconcile Net Income
to Cash from Operating Activities:
Depreciation and Amortization 47,992 46,460
Deferred Federal Income Taxes 5,885 5,700
Unbilled Revenues 10,000 9,000
Deferred Fuel (5,616) 7,530
Deferred Carrying Charges (6,237) (7,648)
Leased Nuclear Fuel Amortization 16,053 9,254
Deferred Operating Expenses, Net (9,719) (9,872)
Allowance for Equity Funds Used During Construction (630) (1,024)
Changes in Amounts Due from Customers and Others, Net (16,484) (2,167)
Changes in Inventories 4,718 7,011
Changes in Accounts Payable (27,882) (34,741)
Changes in Working Capital Affecting Operations (22,380) 2,375
Other Noncash Items 968 (1,123)
------- -------
Total Adjustments (3,332) 30,755
------- -------
Net Cash from Operating Activities 29,575 63,492
CASH FLOWS FROM FINANCING ACTIVITIES
Bank Loans, Commercial Paper and Other Short-Term Debt -- 10,001
Notes Payable to Affiliates -- 7,000
Debt Issues:
First Mortgage Bonds -- 180,000
Secured Medium-Term Notes -- 35,000
Maturities, Redemptions and Sinking Funds (16,138) (188,637)
Nuclear Fuel Lease Obligations (11,140) (20,110)
Dividends Paid (30,328) (56,705)
Premiums, Discounts and Expenses -- (3,617)
------- -------
Net Cash from Financing Activities (57,606) (37,068)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Applied to Construction (30,366) (36,311)
Interest Capitalized as Allowance for Borrowed Funds Used
During Construction (744) (813)
Other Cash Applied (3,629) (542)
------- -------
Net Cash from Investing Activities (34,739) (37,666)
------- -------
NET CHANGE IN CASH AND TEMPORARY CASH INVESTMENTS (62,770) (11,242)
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 77,374 33,524
------- -------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $14,604 $22,282
======= =======
Other Payment Information:
Interest (net of amounts capitalized) $43,000 $38,000
Federal Income Taxes -- 4,700
<FN>
The accompanying notes to financial statements as they relate to Cleveland Electric are an integral
part of this statement.
</TABLE>
<PAGE>
THE CLEVELAND ELECTRIC ILLUMINATING COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
Reference is made to "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in Item 7 of the 1993 Form
10-K. The information under "Capital Resources and Liquidity" remains
unchanged with the following exceptions:
During the first quarter of 1994, Cleveland Electric redeemed various
securities as discussed in Note 5.
In the second quarter of 1994, Cleveland Electric expects to issue $46.1
million of first mortgage bonds as collateral security for the sale by a
public authority of an equal principal amount of tax-exempt bonds. The
proceeds from the sale of the public authority's bonds will be used to refund
$46.1 million of the authority's tax-exempt bonds that were issued in 1988 and
have been continuously remarketed on a floating rate basis. The new series of
bonds will be issued at a fixed rate of interest for the remaining term to
July 1, 2023.
Additional first mortgage bonds may be issued by Cleveland Electric under its
mortgage on the basis of property additions, cash or refundable first mortgage
bonds. Under its mortgage, Cleveland Electric may issue first mortgage bonds
on the basis of property additions and, under certain circumstances, refund-
able bonds only if the applicable interest coverage test is met. At March 31,
1994, Cleveland Electric would have been permitted to issue approximately
$139 million of additional first mortgage bonds. After the fourth quarter of
1994, Cleveland Electric's ability to issue first mortgage bonds is expected
to increase substantially when its interest coverage ratio will no longer be
affected by the write-offs recorded at December 31, 1993.
Results of Operations
Factors contributing to the 3.1% decrease in first quarter 1994 operating
revenues are shown as follows:
Factors Millions
Sales Volume and Mix $ 15.6
Wholesale Revenues (9.2)
Fuel Cost Recovery Revenues (14.7)
Base Rates and Miscellaneous Revenues (5.0)
Total $(13.3)
<PAGE>
Percentage changes between 1994 and 1993 first quarter billed electric
kilowatt-hour sales are summarized as follows:
Customer Categories % Change
Residential 4.3%
Commercial 4.5
Industrial 3.3
Other (25.6)
Total 1.3
First quarter 1994 total kilowatt-hour sales increased as a result of weather-
related demand and increased economic activity. Residential and commercial
sales increased as a result of colder weather in the first quarter of 1994
than in the first quarter of 1993, which increased heating-related demand.
Industrial sales increased on the strength of increased sales to large
automotive manufacturers and steel industry customers. Other sales decreased
as lower wholesale sales were partially offset by higher sales to public
authorities.
The decreases in first quarter 1994 wholesale sales and revenues were
attributable to the expiration of a wholesale power agreement, softer market
conditions and limited power availability for bulk power transactions because
of generating plant outages.
The decrease in fuel cost recovery revenues included in customer bills
resulted from a 19% decrease in the weighted average of the fuel cost recovery
factors used in the first quarter of 1994 to calculate these revenues compared
to the 1993 first quarter average.
The decrease in first quarter 1994 base rates and miscellaneous revenues was
primarily attributable to three factors: lower base rate revenues in 1994
from certain large industrial customers under economic incentive contracts;
lower base rate revenues in 1994 from certain large commercial customers as a
result of lower tariff rates based on changes in their load characteristics;
and a disproportionate increase in kilowatt-hour sales to residential
customers in 1994 at lower incremental rates under the declining rate schedule
based on usage.
First quarter operating expenses in 1994 decreased 4.9% from the 1993 amount.
Lower fuel and purchased power expenses resulted primarily from less
amortization of previously deferred fuel costs than the amount amortized in
1993. Other operation and maintenance expenses decreased primarily as a
result of cost reduction measures, including the work force reduction in 1993.
Depreciation and amortization expense increased because of higher nuclear
plant decommissioning expense accruals related to revisions in the cost
estimates in 1993. Federal income taxes increased as a result of higher
pretax operating income.
First quarter credits for carrying charges in 1994 decreased from the 1993
amount primarily because of the cessation in 1994 of accruals related to the
rate phase-in plan for the investments in Perry Nuclear Power Plant Unit 1 and
<PAGE>
Beaver Valley Power Station Unit 2 under a 1989 rate agreement. The first
quarter federal income tax provision for nonoperating income in 1994 increased
from the 1993 amount because the expense increase resulting from a lower tax
allocation of interest charges to nonoperating activities exceeded the
decrease related to the lower carrying charge credits.
First quarter preferred dividend requirements in 1994 increased from the 1993
amount primarily because of the new issue of preferred stock in 1993.
First quarter earnings available for common stock in 1994 decreased $1
million, or 5.1%, from the 1993 amount.
<PAGE>
<TABLE>
THE TOLEDO EDISON COMPANY
INCOME STATEMENT
(Unaudited)
(Thousands)
<CAPTION>
Three Months Ended
March 31,
---------------------
1994 1993
-------- --------
<S> <C> <C>
OPERATING REVENUES (1) $ 216,572 $ 214,815
OPERATING EXPENSES
Fuel and Purchased Power 45,673 42,583
Other Operation and Maintenance 81,583 89,330
Depreciation and Amortization 20,322 19,500
Taxes, Other Than Federal Income Taxes 23,748 23,995
Deferred Operating Expenses, Net (5,133) (6,928)
Federal Income Taxes 7,371 6,976
-------- --------
Total Operating Expenses 173,564 175,456
-------- --------
OPERATING INCOME 43,008 39,359
NONOPERATING INCOME
Allowance for Equity Funds Used During Construction 213 324
Other Income and Deductions, Net 468 273
Deferred Carrying Charges 3,680 6,200
Federal Income Taxes - Credit (Expense) (26) 421
-------- --------
Total Nonoperating Income 4,335 7,218
-------- --------
INCOME BEFORE INTEREST CHARGES 47,343 46,577
INTEREST CHARGES
Long-term Debt 27,913 27,033
Short-term Debt 892 1,443
Allowance for Borrowed Funds Used During Construction (38) (207)
-------- --------
Net Interest Charges 28,767 28,269
-------- --------
NET INCOME 18,576 18,308
Preferred Dividend Requirements 5,158 5,915
-------- --------
EARNINGS AVAILABLE FOR COMMON STOCK $ 13,418 $ 12,393
======== ========
(1) Includes revenues from bulk power sales
to Cleveland Electric. $ 29,669 $ 30,418
<FN>
The accompanying notes to financial statements as they relate to Toledo Edison
are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
THE TOLEDO EDISON COMPANY
BALANCE SHEET
(Thousands)
<CAPTION>
March 31, December 31,
1994 1993
(Unaudited)
----------- -----------
<S> <C> <C>
ASSETS
PROPERTY, PLANT AND EQUIPMENT
Utility Plant In Service $ 2,844,368 $ 2,836,993
Accumulated Depreciation and Amortization (803,852) (787,784)
----------- -----------
2,040,516 2,049,209
Construction Work In Progress 33,316 39,509
----------- -----------
2,073,832 2,088,718
Nuclear Fuel, Net of Amortization 134,182 142,442
Other Property, Less Accumulated Depreciation (412) (234)
----------- -----------
2,207,602 2,230,926
CURRENT ASSETS
Cash and Temporary Cash Investments 102,746 82,042
Amounts Due from Customers and Others, Net 68,486 62,979
Amounts Due from Affiliates 14,067 15,682
Unbilled Revenues 20,844 24,844
Materials and Supplies, at Average Cost 45,907 42,852
Fossil Fuel Inventory, at Average Cost 11,824 11,971
Taxes Applicable to Succeeding Years 61,120 70,966
Other 266 2,284
----------- -----------
325,260 313,620
DEFERRED CHARGES AND OTHER ASSETS
Amounts Due from Customers for Future Federal Income Taxes 387,772 381,729
Unamortized Loss from Beaver Valley Unit 2 Sale 104,067 105,190
Unamortized Loss on Reacquired Debt 30,920 32,093
Carrying Charges and Operating Expenses 351,796 343,046
Nuclear Plant Decommissioning Trusts 28,484 25,727
Other 73,542 77,523
----------- -----------
976,581 965,308
----------- -----------
$ 3,509,443 $ 3,509,854
=========== ===========
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common Stock Equity $ 636,112 $ 622,375
Preferred Stock
With Mandatory Redemption Provisions 28,350 28,350
Without Mandatory Redemption Provisions 210,000 210,000
Long-Term Debt 1,221,468 1,225,392
----------- -----------
2,095,930 2,086,117
OTHER NONCURRENT LIABILITIES
Nuclear Fuel Lease Obligations 102,836 102,891
Other 80,841 82,757
----------- -----------
183,677 185,648
CURRENT LIABILITIES
Current Portion of Long-Term Debt and Preferred Stock 57,629 56,859
Current Portion of Lease Obligations 44,248 48,880
Accounts Payable 53,875 63,384
Accounts Payable to Affiliates 31,383 26,608
Accrued Taxes 67,702 89,574
Accrued Interest 29,583 27,022
Other 21,430 16,948
----------- -----------
305,850 329,275
DEFERRED CREDITS
Unamortized Investment Tax Credits 92,166 93,997
Accumulated Deferred Federal Income Taxes 484,856 471,471
Unamortized Gain from Bruce Mansfield Plant Sale 205,586 208,085
Accumulated Deferred Rents for Bruce Mansfield Plant
and Beaver Valley Unit 2 53,953 50,357
Other 87,425 84,904
----------- -----------
923,986 908,814
COMMITMENTS AND CONTINGENCIES (Note 7)
----------- -----------
$ 3,509,443 $ 3,509,854
=========== ===========
<FN>
The accompanying notes to financial statements as they relate to Toledo Edison are an
integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
THE TOLEDO EDISON COMPANY
CASH FLOWS
(Unaudited)
(Thousands)
<CAPTION>
Three Months Ended
March 31,
--------------------
1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $18,576 $18,308
------- -------
Adjustments to Reconcile Net Income
to Cash from Operating Activities:
Depreciation and Amortization 20,322 19,500
Deferred Federal Income Taxes 7,387 5,519
Unbilled Revenues 4,000 1,000
Deferred Fuel 2,351 (4,945)
Deferred Carrying Charges (3,680) (6,200)
Leased Nuclear Fuel Amortization 12,901 7,432
Deferred Operating Expenses, Net (5,133) (6,928)
Allowance for Equity Funds Used During Construction (213) (324)
Changes in Amounts Due from Customers and Others, Net (5,507) (1,547)
Changes in Inventories (2,908) 10,611
Changes in Accounts Payable (9,509) 7,659
Changes in Working Capital Affecting Operations 3,425 (26,002)
Other Noncash Items 5,380 3,211
------ ------
Total Adjustments 28,816 8,986
------ ------
Net Cash from Operating Activities 47,392 27,294
CASH FLOWS FROM FINANCING ACTIVITIES
Bank Loans, Commercial Paper and Other Short-Term Debt -- (17,502)
Debt Issues:
First Mortgage Bonds -- 20,200
Secured Medium-Term Notes -- 93,000
Maturities, Redemptions and Sinking Funds (3,184) (49,170)
Nuclear Fuel Lease Obligations (8,982) (15,833)
Dividends Paid (152) (5,939)
Premiums, Discounts and Expenses -- (882)
------- ------
Net Cash from Financing Activities (12,318) 23,874
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Applied to Construction (7,477) (8,998)
Interest Capitalized as Allowance for Borrowed Funds Used
During Construction (38) (207)
Loans to Affiliates -- (18,000)
Other Cash Received (Applied) (6,855) 5,943
------ ------
Net Cash from Investing Activities (14,370) (21,262)
------ ------
NET CHANGE IN CASH AND TEMPORARY CASH INVESTMENTS 20,704 29,906
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 82,042 15,731
------- -------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $102,746 $45,637
======= =======
Other Payment Information:
Interest (net of amounts capitalized) $21,000 $22,000
Federal Income Taxes -- 1,800
<FN>
The accompanying notes to financial statements as they relate to Toledo Edison are an integral
part of this statement.
</TABLE>
<PAGE>
THE TOLEDO EDISON COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
Reference is made to "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in Item 7 of the 1993 Form
10-K. The information under "Capital Resources and Liquidity" remains
unchanged with the following exceptions:
During the first quarter of 1994, Toledo Edison redeemed various securities as
discussed in Note 5.
In the second quarter of 1994, Toledo Edison expects to issue $30.5 million of
first mortgage bonds as collateral security for the sale by a public authority
of an equal principal amount of tax-exempt bonds. The proceeds from the sale
of the public authority's bonds will be used to refund $30.5 million of the
authority's tax-exempt bonds that were issued in 1988 and have been
continuously remarketed on a floating rate basis. The new series of bonds
will be issued at a fixed rate of interest for the remaining term to July 1,
2023.
Additional first mortgage bonds may be issued by Toledo Edison under its
mortgage on the basis of property additions, cash or refundable first mortgage
bonds. Under its mortgage, Toledo Edison may issue first mortgage bonds on
the basis of property additions and, under certain circumstances, refundable
bonds only if the applicable interest coverage test is met. At March 31,
1994, Toledo Edison would have been permitted to issue approximately $323
million of additional first mortgage bonds.
Results of Operations
Factors contributing to the 0.8% increase in first quarter 1994 operating
revenues are shown as follows:
Factors Millions
Sales Volume and Mix $ 9.0
Wholesale Revenues 0.5
Base Rates and Miscellaneous Revenues (6.9)
Fuel Cost Recovery Revenues (0.8)
Total $ 1.8
<PAGE>
Percentage changes between 1994 and 1993 first quarter billed electric
kilowatt-hour sales are summarized as follows:
Customer Categories % Change
Residential 6.6%
Commercial 6.9
Industrial 8.4
Other 17.3
Total 10.1
First quarter 1994 total kilowatt-hour sales increased as a result of
increased wholesale sales (included in the "Other" category), increased
economic activity and weather-related demand. Industrial sales increased on
the strength of increased sales to large automotive manufacturers and the
broad-based, smaller industrial customer group. Residential and commercial
sales increased as a result of colder weather in the first quarter of 1994
than in the first quarter of 1993, which increased heating-related demand.
The decrease in first quarter 1994 base rates and miscellaneous revenues was
primarily attributable to three factors: lower base rate revenues in 1994
from certain large industrial customers under economic incentive contracts;
lower base rate revenues in 1994 from certain large commercial customers as a
result of lower tariff rates based on changes in their load characteristics;
and a disproportionate increase in kilowatt-hour sales to residential
customers in 1994 at lower incremental rates under the declining rate schedule
based on usage.
The decrease in fuel cost recovery revenues included in customer bills
resulted from a 2% decrease in the weighted average of the fuel cost recovery
factors used in the first quarter of 1994 to calculate these revenues compared
to the 1993 first quarter average.
First quarter operating expenses in 1994 decreased 1.1% from the 1993 amount.
Other operation and maintenance expenses decreased primarily as a result of
cost reduction measures, including the work force reduction in 1993. Higher
fuel and purchased power expenses resulted primarily from increased
amortization of previously deferred fuel costs than the amount amortized in
1993. Depreciation and amortization expense increased because of higher
nuclear plant decommissioning expense accruals related to revisions in the
cost estimates in 1993. A decrease in deferred operating expenses resulted
from the cessation in 1994 of deferrals related to the rate phase-in plan for
the investments in Perry Nuclear Power Plant Unit 1 and Beaver Valley Power
Station Unit 2 under a 1989 rate agreement and less deferrals under the Rate
Stabilization Program in the first quarter of 1994. Federal income taxes
increased as a result of higher pretax operating income.
First quarter credits for carrying charges in 1994 decreased from the 1993
amount primarily because of the cessation in 1994 of accruals related to the
phase-in plan. The first quarter federal income tax provision for non-
operating income in 1994 increased from the 1993 amount because the expense
<PAGE>
increase resulting from a lower tax allocation of interest charges to non-
operating activities exceeded the decrease related to the lower carrying
charge credits.
First quarter preferred dividend requirements in 1994 decreased from the 1993
amount because of the retirement of preferred stock in 1993.
First quarter earnings available for common stock in 1994 increased $1
million, or 8.3%, from the 1993 amount.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
1. Centerior Energy
a. Centerior Energy's Annual Meeting of share owners was held on
April 26, 1994.
b. Proxies for the Annual Meeting were solicited pursuant to
Regulation 14 under the Securities Exchange Act of 1934. There
was no solicitation in opposition to management's nominees for
directors as listed in the proxy statement dated March 23, 1994,
and all such nominees were elected.
c. Five matters were submitted to share owners for a vote at the
Annual Meeting.
Issue 1 was the election of 12 directors of Centerior Energy.
The vote on this issue was as follows:
Broker
Nominee For Withheld Non-Vote
R. P. Anderson 91,467,251 6,062,438 22,446,350
A. C. Bersticker 91,485,281 6,044,408 22,446,350
L. Carter 91,441,479 6,088,210 22,446,350
T. A. Commes 90,851,749 6,677,940 22,446,350
W. R. Embry 91,266,849 6,262,840 22,446,350
R. J. Farling 91,404,621 6,125,068 22,446,350
G. H. Kaull 91,607,769 5,921,920 22,446,350
R. A. Miller 91,313,524 6,216,165 22,446,350
F. E. Mosier 91,526,326 6,003,363 22,446,350
Sr. M. M. Reinhard 91,161,218 6,368,471 22,446,350
R. C. Savage 91,445,158 6,084,531 22,446,350
W. J. Williams 91,491,285 6,038,404 22,446,350
Issue 2 was the ratification of the appointment by the Board of
Directors of Arthur Andersen & Co. as the independent
accountants of Centerior Energy, Cleveland Electric and
Toledo Edison for 1994. The vote on this issue was as follows:
Broker
For Against Abstain Non-Vote
93,897,566 2,172,892 1,459,231 22,446,350
Issue 3 was a share owner proposal recommending that a salary
ceiling be instituted such that no senior executive officer or
director of Centerior Energy receive a combined salary and other
compensation which is more than one hundred and fifty percent
of the salary provided to the President of the United States.
The vote on this issue was as follows:
- 22 -
<PAGE>
Broker
For Against Abstain Non-Vote
26,174,707 52,588,695 2,947,868 38,355,769
Issue 4 was a share owner proposal to cut by ten percent the
salaries of, and all the incentives received by, the chief
executive officer and all directors of Centerior Energy
effective immediately upon approval of the proposal. The vote
on this issue was as follows:
Broker
For Against Abstain Non-Vote
27,064,568 51,763,516 2,883,186 38,355,769
Issue 5 was a share owner proposal that no expenditure or
investment by Centerior Energy of one million dollars or more
could be made without the approval of the holders of a majority
of the common shares issued and outstanding unless such
expenditure or investment would constitute "ordinary business"
as that term is used in Rule 14a-8(c)(7) of the Securities and
Exchange Commission, and that all such "ordinary business"
expenditures or investments of one million dollars or more
shall be reported by the board of directors to the share
holders at least quarterly. The vote on this issue was as
follows:
Broker
For Against Abstain Non-Vote
19,888,995 57,825,026 3,997,249 38,355,769
2. Cleveland Electric
a. In lieu of an Annual Meeting, Cleveland Electric's sole share
owner, Centerior Energy (the sole share owner of all 79,590,689
outstanding shares of Cleveland Electric common stock), elected
directors of Cleveland Electric through a Written Action of Sole
Share Owner on April 26, 1994.
b. The directors elected pursuant to the Written Action were:
Robert J. Farling
Murray R. Edelman
Fred J. Lange, Jr.
c. No other matters were addressed in the Written Action in lieu of
an Annual Meeting.
3. Toledo Edison
a. In lieu of an Annual Meeting, Toledo Edison's sole share owner,
Centerior Energy (the sole share owner of all 39,133,887
outstanding
- 23 -
<PAGE>
shares of Toledo Edison common stock), elected directors of
Toledo Edison through a Written Action of Sole Share Owner on
April 26, 1994.
b. The directors elected pursuant to the Written Action were:
Robert J. Farling
Murray R. Edelman
Fred J. Lange, Jr.
c. No other matters were addressed in the Written Action in lieu of
an Annual Meeting.
Item 5. Other Information
1. Potential Downgrading of Certain Securities of the Operating Companies
On May 9, 1994, Moody's Investors Service, Inc. announced that it had
placed the credit ratings of certain securities of Cleveland Electric
and Toledo Edison under review for possible downgrade. Moody's
indicated that the ratings for the following securities were being
reviewed: preferred stock of both Operating Companies, Toledo Edison
debentures and secured lease obligation bonds issued by CTC Beaver
Valley Funding Corporation, Beaver Valley II Funding Corporation and CTC
Mansfield Funding Corporation which are secured by rental payments made
by Cleveland Electric and Toledo Edison.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None.
b. Reports on Form 8-K
During the quarter ended March 31, 1994, Centerior Energy, Cleveland
Electric and Toledo Edison each filed the following Current Report on
Form 8-K:
A Form 8-K dated December 22, 1993 was filed on January 4, 1994 to
report, under "Item 5. Other Events", on the following: 1. Cleveland
Electric and Toledo Edison Securities Downgraded (Moody's Investors
Service, Inc. and Standard & Poor's Corporation lowered their ratings on
the Operating Companies' debt and preferred stock) and 2. Strategic
Plan, Dividends and Write-offs (Centerior Energy's Board of Directors
approved a new strategic plan to strengthen the Companies' financial and
competitive condition, reduced Centerior Energy's quarterly common stock
dividend by one-half and authorized the write-off of $1.02 billion,
after taxes, in assets).
- 24 -
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The person signing this report on
behalf of each such registrant is also signing in his capacity as each
registrant's Principal Financial Officer.
CENTERIOR ENERGY CORPORATION
(Registrant)
THE CLEVELAND ELECTRIC
ILLUMINATING COMPANY
(Registrant)
THE TOLEDO EDISON COMPANY
(Registrant)
By: PAUL G. BUSBY
Paul G. Busby, Controller and Chief
Accounting Officer of each Registrant
Date: May 12, 1994
- 25 -
