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 September 30, 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 Registrant, State of Incorporation, I.R.S. Employer
File Number Address, and Telephone Number Identification No.
1-11377 CINERGY CORP. 31-1385023
(A Delaware Corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000
1-1232 THE CINCINNATI GAS & ELECTRIC COMPANY 31-0240030
(An Ohio Corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000
1-3543 PSI ENERGY, INC. 35-0594457
(An Indiana Corporation)
1000 East Main Street
Plainfield, Indiana 46168
(317) 839-9611
2-7793 THE UNION LIGHT, HEAT AND POWER COMPANY 31-0473080
(A Kentucky Corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000
Indicate by check mark whether the registrants (1) have 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) have been subject to
such filing requirements for the past 90 days.
Yes X No
This combined Form 10-Q is separately filed by Cinergy Corp., The Cincinnati
Gas & Electric Company, PSI Energy, Inc., and The Union Light, Heat and Power
Company. Information contained herein relating to any individual registrant
is filed by such registrant on its own behalf. Each registrant makes no
representation as to information relating to the other registrants.
The Union Light, Heat and Power Company meets the conditions set forth in
General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing its
company specific information with the reduced disclosure format.
As of October 31, 1995, shares of Common Stock outstanding for each company
were as listed:
<TABLE>
<CAPTION>
Company
Shares
<S>
<C>
Cinergy Corp., par value $.01 per share
157,209,942
The Cincinnati Gas & Electric Company, par value $8.50 per share
89,663,086
PSI Energy, Inc., without par value, stated value $.01 per share
53,913,701
The Union Light, Heat and Power Company, par value $15.00 per share
585,333
</TABLE> TABLE OF CONTENTS
Item
Number
Glossary of Terms
PART I. FINANCIAL INFORMATION
1 Financial Statements
Cinergy Corp.
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Common
Stock Equity
Consolidated Statements of Cash Flows
Results of Operations
The Cincinnati Gas & Electric Company
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Common
Stock Equity
Consolidated Statements of Cash Flows
Results of Operations
PSI Energy, Inc.
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Common
Stock Equity
Consolidated Statements of Cash Flows
Results of Operations
The Union Light, Heat and Power Company
Balance Sheets
Statements of Income
Statements of Changes in Common Stock Equity
Statements of Cash Flows
Results of Operations
Notes to Financial Statements
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
1 Legal Proceedings
6 Exhibits and Reports on Form 8-K
Signatures
<PAGE>
GLOSSARY OF TERMS
The following abbreviations or acronyms used in the text of this combined Form
10-Q have the meanings set forth below:
TERM DEFINITION
AEP American Electric Power Company, Inc., collectively with its
utility subsidiaries
AFUDC Allowance for funds used during construction
Articles Amended Articles of Incorporation
August 1993 A Public Utilities Commission of Ohio order issued in
Order August 1993
Cayuga Cayuga Generating Station
CERCLA Comprehensive Environmental Response, Compensation and
Liability Act
CG&E The Cincinnati Gas & Electric Company (a subsidiary of
Cinergy Corp.)
CG&E's 1994 CG&E's 1994 Annual Report on Form 10-K (Commission File
Form 10-K Number 1-1232)
Cinergy Cinergy Corp.
Cinergy's 1994 Cinergy's 1994 Annual Report on Form 10-K, as amended
Form 10-K (Commission File Number 1-11377)
Cinergy Cinergy Investments, Inc. (a subsidiary of Cinergy), the
Investments holding company for Cinergy's non-utility businesses
Clean Coal A joint arrangement by PSI and Destec for a 262-mw clean
Project coal power generating facility, which is expected to be
placed in service in November 1995, located at Wabash
River.
CWIP Construction work in progress
D&P Duff & Phelps Credit Rating Co.
Destec Destec Energy, Inc.
District Court United States District Court for the Southern District of
Indiana, Indianapolis Division
DSM Demand-side management
February 1995 An Indiana Utility Regulatory Commission order issued in
Order February 1995
FERC Federal Energy Regulatory Commission
Gibson Gibson Generating Station
IDEM Indiana Department of Environmental Management
IGC Indiana Gas Company (formerly Indiana Gas and Water Company,
Inc.)
IPALCO IPALCO Enterprises, Inc.
IURC Indiana Utility Regulatory Commission
KPSC Kentucky Public Service Commission
kwh Kilowatt-hour
Lawrenceburg Lawrenceburg Gas Company (a wholly-owned subsidiary of CG&E)
May 1992 Order A Public Utility Commission of Ohio order issued in May
1992
Mcf Thousand cubic feet
Mega-Nopr This FERC Notice of Proposed Rulemaking on Open Access,
issued on March 29, 1995, is another step in the
transition towards potentially full-scale competition in
the electric utility industry. Essentially, the proposed
rule is the electric industry's equivalent of the FERC's
Order 636 which is applicable to the natural gas industry.
Merger Order The FERC's order approving the merger of CG&E and PSI to
form Cinergy.
MGP From the 1830's to the 1940's, it was common for gas to be
produced at Manufactured Gas Plants through a process that
involved the heating of coal or oil. The gas that was
released from such a process was then cleaned and stored
at the manufacturing plant for future sale or use.
mw Megawatt
NIPSCO Northern Indiana Public Service Company
Order 636 Issued in April 1992, this FERC order mandated changes to
the way local gas distribution companies purchase gas
supplies and contract for transportation and storage
services.
Power Inter- Power International, Inc. (a subsidiary of Cinergy
national Investments)
PRP Potentially Responsible Party
PSI PSI Energy, Inc. (a subsidiary of Cinergy)
PSI's 1994 PSI's 1994 Annual Report on Form 10-K (Commission File
Form 10-K Number 1-3543)
PUCO Public Utilities Commission of Ohio
PUHCA Public Utility Holding Company Act of 1935
Resources PSI Resources, Inc. (former parent company of PSI)
S&P Standard & Poor's
scrubber A chemical plant that removes sulfur dioxide from the gas
produced by burning coal
SEC Securities and Exchange Commission
SFAS 121 Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of", issued in March
1995 by the Financial Accounting Standards Board, is a new
accounting standard requiring impairment losses on long-
lived assets be recognized when an asset's book value
exceeds its expected future cash flows.
UCC Indiana Office of the Utility Consumer Counselor
ULH&P The Union Light, Heat and Power Company (a wholly-owned
subsidiary of CG&E)
ULH&P's Form ULH&P's 1994 Annual Report on Form 10-K (Commission File
10-K Number 2-7793)
Wabash River Wabash River Generating Station
Woodsdale Woodsdale Generating Station
Zimmer William H. Zimmer Generating Station
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
September 30 December
31
1995 1994
(dollars in thousands)
<S> <C> <C>
Utility Plant - original cost
In service
Electric $8 469 669 $8 292
625
Gas 672 755 645
602
Common 185 886 185
718
9 328 310 9 123
945
Accumulated depreciation 3 317 021 3 163
802
6 011 289 5 960
143
Construction work in progress 213 922 238
750
Total utility plant 6 225 211 6 198
893
Current Assets
Cash and temporary cash investments 87 443 71
880
Restricted deposits 86 596 11
288
Accounts receivable less accumulated provision
of $10,636,000 at September 30, 1995, and
$9,716,000 at December 31, 1994 for doubtful
accounts 267 475 299
509
Materials, supplies, and fuel - at average cost
Fuel for use in electric production 133 787 156
028
Gas stored for current use 29 484 31
284
Other materials and supplies 90 704 92
880
Property taxes applicable to subsequent year 136 773 112
420
Prepayments and other 30 178 36
416
862 440 811
705
Other Assets
Regulatory assets
Post-in-service carrying costs and deferred
operating expenses 187 780 185
280
Phase-in deferred return and depreciation 101 663 100
943
Deferred demand-side management costs 121 483 104
127
Amounts due from customers - income taxes 390 602 408
514
Deferred merger costs 54 900 49
658
Unamortized costs of reacquiring debt 73 766 70
424
Other 77 001 86
017
Other 149 085 134
281
1 156 280 1 139
244
$8 243 931 $8 149
842
<FN>
The accompanying notes as they relate to Cinergy are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CAPITALIZATION AND LIABILITIES
September 30
December 31
1995 1994
(dollars in thousands)
<S> <C> <C>
Common Stock Equity
Common stock - $.01 par value; authorized
shares - 600,000,000; outstanding shares -
157,139,786 at September 30, 1995, and
155,198,038 at December 31, 1994 $ 1 572 $ 1
552
Paid-in capital 1 585 470 1 535
658
Retained earnings 941 652 877
061
Total common stock equity 2 528 694 2 414
271
Cumulative Preferred Stock of Subsidiaries
Not subject to mandatory redemption 227 913 267
929
Subject to mandatory redemption 160 000 210
000
Long-term Debt 2 694 676 2 715
269
Total capitalization 5 611 283 5 607
469
Current Liabilities
Long-term debt due within one year 134 400 60
400
Notes payable 284 000 228
900
Accounts payable 173 054 266
467
Refund due to customers 12 878 15
482
Litigation settlement 80 000 80
000
Accrued taxes 292 677 258
041
Accrued interest 52 091 58
504
Other 43 156 36
610
1 072 256 1 004
404
Other Liabilities
Deferred income taxes 1 085 703 1 071
104
Unamortized investment tax credits 188 222 195
878
Accrued pension and other postretirement
benefit costs 161 675 133
578
Other 124 792 137
409
1 560 392 1 537
969
$8 243 931 $8 149
842
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED STATEMENTS OF
INCOME
(unaudited)
Quarter Ended Nine
Months Ended Twelve Months Ended
September 30
September 30 September 30
1995 1994 1995
1994 1995 1994
(in thousands,
except per share amounts)
<S> <C> <C> <C>
<C> <C> <C>
Operating Revenues
Electric $734 042 $651 354 $1 979
685 $1 874 040 $2 561 182 $2 470 522
Gas 33 591 40 481 265
777 331 197 376 978 495 690
767 633 691 835 2 245
462 2 205 237 2 938 160 2 966 212
Operating Expenses
Fuel used in electric production 190 445 195 287 545
548 539 634 718 907 712 612
Gas purchased 13 155 16 013 130
235 189 059 189 469 288 279
Purchased and exchanged power 15 685 7 494 32
992 42 728 39 346 53 809
Other operation 134 517 136 489 381
221 379 839 565 032 507 831
Maintenance 39 851 48 684 127
834 143 862 184 931 195 405
Depreciation 68 680 73 419 210
351 218 442 286 304 289 880
Amortization of phase-in deferrals 3 409 - 5
682 - 5 682 -
Post-in-service deferred operating
expenses - net (71) (1 661) (2
140) (4 638) (3 500) (6 009)
Phase-in deferred depreciation - - -
(2 161) - (3 770)
Income taxes 69 574 38 318 172
415 134 389 190 207 177 986
Taxes other than income taxes 64 449 60 033 192
354 184 773 251 632 242 069
599 694 574 076 1 796
492 1 825 927 2 428 010 2 458 092
Operating Income 167 939 117 759 448
970 379 310 510 150 508 120
Other Income and Expenses - Net
Allowance for equity funds used during
construction (1 159) 2 443
726 6 774 153 12 156
Post-in-service carrying costs 602 2 452 3
183 6 758 6 205 8 874
Phase-in deferred return 2 135 1 947 6
403 13 405 8 349 20 823
Write-off of a portion of Zimmer Station - - -
- - - (234 844)
Income taxes
Related to write-off of a portion of
Zimmer Station - - -
- - - 12 085
Other 1 988 2 234 5
195 6 396 9 408 12 159
Other - net 1 701 (3 717) 1
010 (11 243) (16 191) (24 998)
5 267 5 359 16
517 22 090 7 924 (193 745)
Income Before Interest and Other Charges 173 206 123 118 465
487 401 400 518 074 314 375
Interest and Other Charges
Interest on long-term debt 54 154 54 257 160
654 164 257 215 645 220 573
Other interest 5 392 6 042 16
520 13 901 22 989 15 879
Allowance for borrowed funds used during
construction (2 027) (3 378) (6
324) (9 465) (9 191) (12 196)
Preferred dividend requirements of
subsidiaries 6 770 8 658 24
084 26 901 32 742 37 058
64 289 65 579 194
934 195 594 262 185 261 314
Net Income $108 917 $ 57 539 $ 270
553 $ 205 806 $ 255 889 $ 53 061
Average Common Shares Outstanding 156 945 147 162 156
324 146 470 154 797 146 104
Earnings Per Common Share $.69 $.40
$1.73 $1.41 $1.62 $.36
Dividends Declared Per Common Share $.43 $.38
$1.29 $1.14 $1.65 $1.51
<FN>
The accompanying notes as they relate to Cinergy are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
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 September 30, 1995
Balance July 1, 1995 $1 566 $1 570 873 $ 900 094
$2 472 533
Net income 108 917
108 917
Issuance of 572,455 shares of common stock 6 14 597
14 603
Common stock issuance expenses (2)
(2)
Dividends on common stock (67
359) (67 359)
Other 2
2
Balance September 30, 1995 $1 572 $1 585 470 $ 941 652
$2 528 694
Quarter Ended September 30, 1994
Balance July 1, 1994 $1 466 $1 345 023 $ 943 659
$2 290 148
Net income 57 539
57 539
Issuance of 657,339 shares of common stock 7 14 546
14 553
Common stock issuance expenses (92)
(92)
Dividends on common stock (55
519) (55 519)
Balance September 30, 1994 $1 473 $1 359 477 $ 945 679
$2 306 629
Nine Months Ended September 30, 1995
Balance January 1, 1995 $1 552 $1 535 658 $ 877 061
$2 414 271
Net income 270 553
270 553
Issuance of 1,941,748 shares of common stock 20 48 734
48 754
Common stock issuance expenses (191)
(191)
Dividends on common stock (201
251) (201 251)
Other 1 269 (4
711) (3 442)
Balance September 30, 1995 $1 572 $1 585 470 $ 941 652
$2 528 694
Nine Months Ended September 30, 1994
Balance January 1, 1994 $1 453 $1 312 426 $ 907 802
$2 221 681
Net income 205 806
205 806
Issuance of 2,066,436 shares of common stock 20 46 616
46 636
Common stock issuance expenses (118)
(118)
Dividends on common stock (166
976) (166 976)
Other 553
(953) (400)
Balance September 30, 1994 $1 473 $1 359 477 $ 945 679
$2 306 629
Twelve Months Ended September 30, 1995
Balance October 1, 1994 $1 473 $1 359 477 $ 945 679
$2 306 629
Net income 255 889
255 889
Issuance of 9,705,354 shares of common stock 99 230 000
230 099
Common stock issuance expenses (5 298)
(5 298)
Dividends on common stock (255
637) (255 637)
Other 1 291 (4
279) (2 988)
Balance September 30, 1995 $1 572 $1 585 470 $ 941 652
$2 528 694
Twelve Months Ended September 30, 1994
Balance October 1, 1993 $1 446 $1 298 567 $1 114 759
$2 414 772
Net income 53 061
53 061
Issuance of 2,726,790 shares of common stock 27 62 224
62 251
Common stock issuance expenses (209)
(209)
Dividends on common stock (221
264) (221 264)
Other (1 105)
(877) (1 982)
Balance September 30, 1994 $1 473 $1 359 477 $ 945 679
$2 306 629
<FN>
The accompanying notes as they relate to Cinergy are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited)
Quarter Ended
Nine Months Ended Twelve Months Ended
September 30
September 30 September 30
1995 1994
1995 1994 1995 1994
(in thousands)
<S> <C> <C> <C>
<C> <C> <C>
Operating Activities
Net income $108 917 $ 57 539 $ 270
553 $ 205 806 $ 255 889 $ 53 061
Items providing (using) cash currently:
Depreciation 68 680 73 419 210
351 218 442 286 304 289 880
Amortization of phase-in deferrals 3 409 - 5
682 - 5 682 -
Deferred income taxes and investment tax
credits - net 39 420 1 606 27
836 30 172 28 590 27 804
Allowance for equity funds used during
construction 1 159 (2 443)
(726) (6 774) (153) (12 156)
Regulatory assets
Post-in-service and phase-in cost
deferrals (3 630) (6 882) (14
193) (29 429) (21 344) (20 683)
Deferred merger costs (6 359) (11 815) (8
928) (22 444) (8 825) (28 941)
Other 4 163 (3 537) 10
162 4 805 1 837 3 785
Write-off of a portion of Zimmer Station - - -
- - - 234 844
Changes in current assets and current
liabilities
Restricted deposits (6) 1 547
8 1 421 8 633 1 344
Accounts receivable (15 587) 40 439 32
034 74 464 (1 880) 11 123
Materials, supplies, and fuel 21 297 (16 799) 26
217 (42 409) 22 677 (48 446)
Accounts payable (11 346) (27 540) (93
413) (73 234) (28 370) (19 744)
Refund due to customers (2 918) (2 999) (2
604) (47 223) (21 731) (115 391)
Advance under accounts receivable
purchase agreement - - -
(49 940) - -
Accrued taxes and interest 26 241 (6 103) 28
223 (22 064) 56 040 10 594
Other items - net (18 610) 38 880 (6
696) 70 852 29 120 73 524
Net cash provided by (used in)
operating activities 214 830 135 312 484
506 312 445 612 469 460 598
Financing Activities
Issuance of common stock 14 601 14 461 48
563 46 518 224 801 62 042
Issuance of preferred stock of subsidiaries - - -
- - - 59 475
Issuance of long-term debt 195 255 59 910 344
280 420 935 344 280 717 935
Funds on deposit from issuance of long-term
debt (81 944) 8 810 (75
316) 21 211 (68 630) 33 039
Retirement of preferred stock of
subsidiaries (93 451) - (93
458) (40 410) (93 474) (100 516)
Redemption of long-term debt (81 302) - (298
553) (313 247) (298 988) (696 484)
Change in short-term debt 40 000 5 801 55
100 147 800 (41 514) 260 839
Dividends on common stock (67 359) (55 519) (201
251) (166 976) (255 637) (221 264)
Net cash provided by (used in)
financing activities (74 200) 33 463 (220
635) 115 831 (189 162) 115 066
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (71 379) (115 345) (231
943) (325 395) (386 233) (470 566)
Deferred demand-side management costs (7 014) (11 711) (16
365) (29 927) (33 706) (43 907)
Equity investment in Argentine utility - 32 -
32 (32) -
Net cash provided by (used in)
investing activities (78 393) (127 024) (248
308) (355 290) (419 971) (514 473)
Net increase (decrease) in cash and
temporary cash investments 62 237 41 751 15
563 72 986 3 336 61 191
Cash and temporary cash investments at
beginning of period 25 206 42 356 71
880 11 121 84 107 22 916
Cash and temporary cash investments at
end of period $ 87 443 $ 84 107 $ 87
443 $ 84 107 $ 87 443 $ 84 107
<FN>
The accompanying notes as they relate to Cinergy are an integral part of these
consolidated financial statements.
/TABLE
<PAGE>
CINERGY CORP.
Below is information concerning the consolidated results of operations for
Cinergy for the quarter, nine months, and twelve months ended September 30,
1995. For information concerning the results of operations for each of the
other registrants, see the discussion under the heading RESULTS OF OPERATIONS
following the financial statements of each company.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 1995
Kwh Sales
Kwh sales for the quarter ended September 30, 1995, increased 11.7% as
compared to the same period last year. This increase was primarily
attributable to higher kwh sales to retail customers. Increased domestic and
commercial sales were due in large part to the warmer weather during the
period. Sales to industrial customers increased due to growth primarily in
the chemicals and food products sectors. Increased non-firm power sales for
resale also contributed to the higher kwh sales levels.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the third quarter of 1995
increased 2.7% as compared to the third quarter of 1994, reflecting higher gas
transportation volumes as industrial customers continued to purchase directly
from gas suppliers, creating a significant increase in demand for
transportation services. The increased transportation volume, primarily in
the primary metals, paper products, and food products sectors, more than
offset a decline in industrial sales volumes. Also, partially offsetting the
increase in transportation volumes were decreased sales to domestic and
commercial customers.
Operating Revenues
Electric Operating Revenues
Electric operating revenues for the quarter ended September 30, 1995,
increased $83 million (12.7%) as compared to the same period last year. This
increase primarily resulted from increased kwh sales, as previously discussed.
In addition, PSI's 4.3% retail rate increase approved in the February 1995
Order and a 1.9% rate increase for carrying costs on CWIP property which was
approved by the IURC on March 9, 1995, also contributed to the increase.
An analysis of electric operating revenues is shown below:
Quarter
Ended September 30
(in millions)
Electric operating revenues - September 30, 1994 $651
Increase due to change in:
Price per kwh
Retail 6
Sales for resale
Non-firm power transactions 4
Total change in price per kwh 10
Kwh sales
Retail 62
Sales for resale
Firm power obligations 6
Non-firm power transactions 4
Total change in kwh sales 72
Other 1
Electric operating revenues - September 30, 1995 $734
Gas Operating Revenues
Gas operating revenues declined $7 million (17.0%) in the third quarter of
1995 when compared to the same period last year, primarily as a result of the
previously discussed decrease in total retail sales volumes. An increase in
the relative volume of gas transported to gas sold, as previously discussed,
also contributed to the decrease. Providing transportation services does not
necessitate the recovery of gas purchased costs by CG&E. Consequently, the
revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs, Cinergy's largest operating expense, decreased $5 million
(2.5%) for the quarter as compared to the same period of 1994.
An analysis of fuel costs is shown below:
Quarter
Ended September 30
(in millions)
Fuel expense - September 30, 1994 $195
Increase (Decrease) due to change in:
Price of fuel (24)
Kwh generation 19
Fuel expense - September 30, 1995 $190
Gas Purchased
Gas purchased for the quarter declined $3 million (17.8%) when compared to the
same period last year. This decrease was attributable to a decrease in
volumes purchased associated with the aforementioned changes in volumes sold
and transported.
Purchased and Exchanged Power
Purchased and exchanged power increased $8 million for the third quarter
when compared to the same period last year, reflecting increased purchases
due to the warmer weather conditions during the period.
Maintenance
The decrease in maintenance expense of $9 million (18.1%) for the third
quarter of 1995 as compared to the same period last year was primarily due to
improved scheduling of routine maintenance on electric generating units.
Lower maintenance costs on gas and electric distribution facilities also
contributed to the decline.
Depreciation
Depreciation expense decreased $5 million (6.5%) for the quarter ended
September 30, 1995, as compared to the same period last year. This decrease
primarily reflects the adoption of lower depreciation rates for PSI effective
in March 1995, pursuant to the February 1995 Order. The decrease was
partially offset by the effect of additions to utility plant in service.
Amortization of Phase-in Deferrals
Amortization of phase-in deferrals, which began in May 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from CG&E's three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated in the May 1992 Order.
Taxes Other than Income Taxes
Taxes other than income taxes increased $4 million (7.4%) over the same period
of 1994 primarily due to increased property taxes resulting from higher
property tax rates applicable to CG&E.
Other Income and Expenses - Net
Allowance for Equity Funds Used During Construction
The equity component of AFUDC decreased $4 million for the three months
ended September 30, 1995, as compared to the same period last year. This
decrease was due primarily to an increase in PSI's average short-term debt
outstanding. The quarter ended September 30, 1995, reflects application of
the lower rate retroactively for the year-to-date period. In addition,
PSI's scrubber at Gibson was placed in service in September 1994 which
resulted in a large decrease in the average balance of CWIP.
Other - net
Other - net increased $5 million for the quarter ended September 30, 1995,
when compared to the same period last year. This increase was due to a number
of factors, including interest associated with a refund of an overpayment of
Federal income taxes for 1987 and 1990, and an increase in carrying costs on
DSM expenses which resulted from a higher AFUDC rate used to compute carrying
costs.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
Kwh Sales
Kwh sales increased 1.8% for the nine months ended September 30, 1995, when
compared to the same period last year, attributable primarily to higher
industrial sales resulting from growth in the primary metals and chemicals
sectors. Also contributing to the increase were higher domestic and
commercial sales which were the result of warmer weather during the summer
cooling season. These increases were partially offset by a decline in non-
firm power sales for resale.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the nine months ended September
30, 1995, decreased slightly when compared to the same period of 1994.
Decreases in domestic and commercial sales volumes were attributable to milder
weather during the 1995 heating season. The decrease in industrial sales was
attributable to the trend of industrial customers electing to purchase
directly from suppliers, creating additional demand for transportation
services. The additional transportation volumes more than offset the decrease
in industrial sales and resulted from growth in the primary metals sector.
Operating Revenues
Electric Operating Revenues
As compared to the same period last year, electric operating revenues
increased $106 million (5.6%) for the nine months ended September 30, 1995.
This increase was due to higher retail sales volumes in addition to three rate
increases - CG&E's retail electric rate increase which became effective May
1994 and two PSI electric rate increases which became effective in February
1995 and March 1995, as previously discussed.
An analysis of electric operating revenues is shown below:
Nine Months
Ended September 30
(in millions)
Electric operating revenues - September 30, 1994 $1 874
Increase (Decrease) due to change in:
Price per kwh
Retail 49
Sales for resale
Non-firm power transactions 4
Total change in price per kwh 53
Kwh sales
Retail 61
Sales for resale
Non-firm power transactions (9)
Total change in kwh sales 52
Other 1
Electric operating revenues - September 30, 1995 $1 980
Gas Operating Revenues
Gas operating revenues declined $65 million (19.8%) in the first nine months
of 1995 when compared to the same period last year. This decrease reflects
the previously discussed decline in total retail volumes sold and the
operation of adjustment clauses reflecting a lower average cost of gas
purchased. An increase in the relative volume of gas transported to gas sold
also contributed to the decrease. Providing transportation services does not
necessitate the recovery of gas purchased costs. Consequently, the revenue
per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs increased $6 million (1.1%) for the nine months ended
September 30, 1995, when compared to the same period last year.
An analysis of fuel costs is shown below:
Nine Months
Ended September 30
(in millions)
Fuel expense - September 30, 1994 $540
Increase (Decrease) due to change in:
Price of fuel (11)
Kwh generation 17
Fuel expense - September 30, 1995 $546
Gas Purchased
Gas purchased for the nine months ended September 30, 1995, decreased $59
million (31.1%) when compared to the same period last year. This decrease was
attributable to a 13.5% decline in volumes purchased and a 20.3% lower average
cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power decreased $10 million (22.8%) for the nine
months ended September 30, 1995, when compared to the same period last year,
as the coordination of CG&E's and PSI's electric dispatch systems enabled
Cinergy to service more of its native load with its own generating units.
Maintenance
The decrease in maintenance of $16 million (11.1%) for the nine months ended
September 30, 1995, as compared to the same period last year was primarily due
to improved scheduling of routine maintenance on electric generating units.
Lower maintenance costs on gas and electric distribution facilities also
contributed to the decline.
Depreciation
Depreciation expense for the nine months ended September 30, 1995,
decreased $8 million (3.7%) when compared to the same period last year.
This decrease was primarily driven by the adoption of lower depreciation
rates for PSI effective in March 1995 pursuant to the February 1995 Order.
The decrease was partially offset by the effect of additions to utility
plant in service.
Amortization of Phase-in Deferrals
Amortization of phase-in deferrals, which began in May 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from CG&E's three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated in the May 1992 Order.
Taxes Other than Income Taxes
Taxes other than income taxes increased $8 million (4.1%) over the same period
of 1994 primarily due to increased property taxes resulting from higher
property tax rates applicable to CG&E.
Other Income and Expenses - Net
Allowance for Equity Funds Used During Construction
The equity component of AFUDC decreased $6 million for the nine months
ended September 30, 1995, as compared to the same period last year. As
previously discussed, this decrease was due primarily to an increase in
PSI's average short-term debt outstanding. In addition, PSI's scrubber at
Gibson was placed in service in September 1994 which resulted in a large
decrease in the average balance of CWIP.
Post-in-service Carrying Costs
Post-in-service carrying costs decreased $4 million (52.9%) for the nine
months ended September 30, 1995, from the comparable period of 1994. The
decrease was a result of discontinuing accrual of post-in-service carrying
costs on qualified environmental projects upon the inclusion in rates of
the costs of the projects per the February 1995 Order.
Phase-in Deferred Return
Phase-in deferred return decreased $7 million (52.2%) for the first nine
months of 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.
Other - net
Other - net increased $12 million for the nine months ended September 30,
1995, when compared to the same period last year. This increase was due to
a number of factors, including interest associated with a refund of an
overpayment of Federal income taxes for 1987 and 1990, an increase in
carrying costs on DSM expenses which resulted from a higher AFUDC rate used
to compute carrying costs, and increased DSM expenses to which the rate is
applied. Also contributing to the increase was the write-off during 1994
of approximately $4 million related to the defense of the IPALCO takeover
attempt.
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1995
Kwh Sales
Kwh sales increased .3% for the twelve months ended September 30, 1995, as the
increase in total retail sales was partially offset by a decline in sales for
resale. The increase in retail sales reflected higher commercial and
industrial sales. The commercial sales increase reflects a higher average
number of customers, while the industrial sales increase reflects growth in
the primary metals and chemicals sectors. Sales for resale reflected a
decrease in both firm and non-firm power sales.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended September
30, 1995, decreased 4.2% when compared to the same period of 1994. Decreases
in domestic and commercial sales volumes were attributable to milder weather
during the winter heating season. A decrease in industrial sales was
attributable to the continuing trend of industrial customers electing to
purchase directly from suppliers, creating additional demand for
transportation services. The increased transportation volumes were due, in
large part, to growth in the primary metals, food products, and paper products
sectors.
Operating Revenues
Electric Operating Revenues
Compared to the same period last year, electric operating revenues for the
twelve months ended September 30, 1995, increased $91 million (3.7%) due to a
number of rate increases and the increased kwh sales, as previously discussed.
An analysis of electric operating revenues is shown below:
Twelve Months
Ended September 30
(in millions)
Electric operating revenues - September 30, 1994 $2 470
Increase (Decrease) due to change in:
Price per kwh
Retail 51
Sales for resale
Firm power obligations 2
Non-firm power transactions 3
Total change in price per kwh 56
Kwh sales
Retail 50
Sales for resale
Firm power obligations (3)
Non-firm power transactions (14)
Total change in kwh sales 33
Other 2
Electric operating revenues - September 30, 1995 $2 561
Gas Operating Revenues
Gas operating revenues declined $119 million (23.9%) for the twelve months
ended September 30, 1995, when compared to the same period last year. This
decrease was primarily the result of decreases in sales volumes and the
operation of adjustment clauses reflecting a decline in the average cost of
gas purchased. An increase in the relative volume of gas transported to gas
sold also contributed significantly to the decrease. Providing transportation
services does not necessitate the recovery of gas purchased costs.
Consequently, the revenue per Mcf transported is below the revenue per Mcf
sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs increased $6 million (.9%) for the twelve months ended
September 30, 1995, when compared to the same period last year.
An analysis of fuel costs is shown below:
Twelve Months
Ended September 30
(in millions)
Fuel expense - September 30, 1994 $713
Increase (Decrease) due to change in:
Price of fuel (9)
Kwh generation 15
Fuel expense - September 30, 1995 $719
Gas Purchased
Gas purchased for the twelve months ended September 30, 1995, decreased $99
million (34.3%) when compared to the same period last year. This decrease was
attributable to a 17.7% decline in volumes purchased associated with the
previously discussed changes in gas sales volumes and a 20.1% lower average
cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power decreased $14 million (26.9%) for the twelve
months ended September 30, 1995, when compared to the same period last year,
as the coordination of CG&E's and PSI's electric dispatch systems enabled
Cinergy to service more of its native load through its own generating units.
Other Operation
Other operation expenses for the twelve months ended September 30, 1995,
increased $57 million (11.3%) as compared to the same period of 1994. The
primary factor contributing to this increase was charges of approximately $51
million in December 1994 for merger-related costs and other expenditures which
cannot be recovered from customers under the merger savings sharing mechanisms
authorized by regulators. In addition, the accrual of postretirement benefit
costs, the amortization of deferred postretirement benefit costs, deferred
merger costs, deferred DSM costs, and an increase in the level of ongoing DSM
expenses, all of which are being recovered in revenues pursuant to the
February 1995 Order, contributed to the increase. The period to period
comparison also reflects the write-off of expenses related to CG&E's workforce
reduction in September 1994 and the write-off of previously deferred
litigation expenses during 1994.
Maintenance
The decrease in maintenance expense of $10 million (5.4%) for the twelve
months ended September 30, 1995, as compared to the same period last year, was
primarily due to improved scheduling of routine maintenance on electric
generating units and lower maintenance costs on gas and electric distribution
facilities.
Amortization of Phase-in Deferrals
Amortization of phase-in deferrals, which began in May 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from CG&E's three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated in the May 1992 Order.
Taxes Other than Income Taxes
Taxes other than income taxes increased $10 million (4.0%) over the same
period of 1994 primarily due to increased property taxes resulting from higher
property tax rates applicable to CG&E.
Other Income and Expenses - Net
Allowance for Equity Funds Used During Construction
The equity component of AFUDC decreased $12 million for the twelve month
period ended September 30, 1995, as compared to the same period last year.
As previously discussed, this decrease was due primarily to an increase in
PSI's average short-term debt outstanding. In addition, a scrubber at
Gibson was placed in service in September 1994 which resulted in a large
decrease in the average balance of CWIP.
Phase-in Deferred Return
Phase-in deferred return decreased $12 million (59.9%) for the twelve months
ended September 30, 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
In November 1993, CG&E wrote off Zimmer costs disallowed from rates in the May
1992 Order.
Other - net
Other - net increased $9 million (35.2%) for the twelve months ended September
30, 1995, when compared to the same period last year. This increase was due
to a number of factors, including interest associated with a refund of an
overpayment of Federal income taxes for 1987 and 1990, an increase in carrying
costs on DSM expenses which resulted from a higher AFUDC rate used to compute
carrying costs, and increased DSM expenses to which the rate is applied. Also
contributing to the increase was the write-off during the twelve month period
ended September 30, 1994, of approximately $8 million related to the defense
of the IPALCO takeover attempt.
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
September 30
December 31
1995 1994
(dollars in thousands)
<S> <C> <C>
Utility Plant - original cost
In service
Electric $4 547 019 $4 502
840
Gas 672 755 645
602
Common 184 661 185
718
5 404 435 5 334
160
Accumulated depreciation 1 699 538 1 613
505
3 704 897 3 720
655
Construction work in progress 73 294 74
989
Total utility plant 3 778 191 3 795
644
Current Assets
Cash and temporary cash investments 66 545 52
516
Restricted deposits 84 101
98
Accounts receivable less accumulated
provision of $10,116,000 at September 30,
1995, and $8,999,000 at December 31, 1994
for doubtful accounts 214 887 269
020
Materials, supplies, and fuel - at average cost
Fuel for use in electric production 37 770 42
167
Gas stored for current use 29 484 31
284
Other materials and supplies 54 562 57
864
Property taxes applicable to subsequent year 136 773 112
420
Prepayments and other 26 276 31
327
650 398 596
696
Other Assets
Regulatory assets
Post-in-service carrying costs and deferred
operating expenses 150 021 155
138
Phase-in deferred return and depreciation 101 663 100
943
Deferred demand-side management costs 16 317 10
002
Amounts due from customers - income taxes 364 065 381
380
Deferred merger costs 13 588 12
013
Unamortized costs of reacquiring debt 38 660 33
426
Other 45 552 55
987
Other 57 023 40
436
786 889 789
325
$5 215 478 $5 181
665
<FN>
The accompanying notes as they relate to CG&E are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC
COMPANY
CAPITALIZATION AND LIABILITIES
September 30
December 31
1995 1994
(dollars in
thousands)
<S> <C> <C>
Common Stock Equity
Common stock - $8.50 par value; authorized shares -
120,000,000; outstanding shares - 89,663,086 at
September 30, 1995, and December 31, 1994 $ 762 136 $ 762
136
Paid-in capital 339 135 337
874
Retained earnings 437 706 432
962
Total common stock equity 1 538 977 1 532
972
Cumulative Preferred Stock
Not subject to mandatory redemption 40 000 80
000
Subject to mandatory redemption 160 000 210
000
Long-term Debt 1 866 431 1 837
757
Total capitalization 3 605 408 3 660
729
Current Liabilities
Long-term debt due within one year 84 000 -
Notes payable 26 500 14
500
Accounts payable 79 707 120
817
Accrued taxes 245 106 227
651
Accrued interest 39 561 31
902
Other 39 329 32
658
514 203 427
528
Other Liabilities
Deferred income taxes 758 243 747
060
Unamortized investment tax credits 130 907 135
417
Accrued pension and other postretirement
benefit costs 113 294 102
254
Other 93 423 108
677
1 095 867 1 093
408
$5 215 478 $5 181
665
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC
COMPANY
CONSOLIDATED STATEMENTS OF
INCOME
(unaudited)
Quarter Ended Nine
Months Ended Twelve Months Ended
September 30
September 30 September 30
1995 1994 1995
1994 1995 1994
(in
thousands)
<S> <C> <C> <C>
<C> <C> <C>
Operating Revenues
Electric $401 174 $368 470 $1 087 653
$1 031 535 $1 401 905 $1 349 198
Gas 33 591 40 481 265 777
331 197 376 978 495 690
434 765 408 951 1 353 430
1 362 732 1 778 883 1 844 888
Operating Expenses
Fuel used in electric production 84 101 91 062 252 638
252 491 325 617 337 218
Gas purchased 13 155 16 013 130 235
189 059 189 469 288 279
Purchased and exchanged power 15 094 1 781 36 511
13 312 44 131 15 477
Other operation 69 834 81 304 204 557
218 757 321 830 296 509
Maintenance 18 994 23 271 63 973
76 073 94 710 106 976
Depreciation 39 836 39 210 119 060
117 030 158 706 155 420
Amortization of phase-in deferrals 3 409 - 5 682
- - 5 682 -
Post-in-service deferred operating
expenses - net 823 823 2 468
2 468 3 290 3 302
Phase-in deferred depreciation - - -
(2 161) - (3 770)
Income taxes 40 730 27 190 108 293
91 859 120 562 115 159
Taxes other than income taxes 50 358 47 049 151 345
146 186 202 540 191 851
336 334 327 703 1 074 762
1 105 074 1 466 537 1 506 421
Operating Income 98 431 81 248 278 668
257 658 312 346 338 467
Other Income and Expenses - Net
Allowance for equity funds used during
construction 269 630 1 146
1 522 1 595 2 007
Post-in-service carrying costs - - -
- - - 18
Phase-in deferred return 2 135 1 947 6 403
13 405 8 349 20 823
Write-off of a portion of Zimmer
Station - - -
- - - (234 844)
Income taxes
Related to write-off of a portion
of Zimmer Station - - -
- - - 12 085
Other (31) 2 201 2 796
5 734 3 681 9 715
Other - net 4 446 (1 711) 4 851
(1 577) (298) (8 325)
6 819 3 067 15 196
19 084 13 327 (198 521)
Income Before Interest 105 250 84 315 293 864
276 742 325 673 139 946
Interest
Interest on long-term debt 36 507 36 974 107 108
113 352 144 142 153 282
Other interest 679 585 2 926
2 287 3 470 2 783
Allowance for borrowed funds used
during construction (894) (839) (2
774) (2 149) (3 602) (2 799)
36 292 36 720 107 260
113 490 144 010 153 266
Net Income (Loss) 68 958 47 595 186 604
163 252 181 663 (13 320)
Preferred Dividend Requirement 3 475 5 362 14 199
17 014 19 562 23 304
Net Income (Loss) on Common Shares $ 65 483 $ 42 233 $ 172 405
$ 146 238 $ 162 101 $ (36 624)
<FN>
The accompanying notes as they relate to CG&E are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
<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 September 30, 1995
Balance July 1, 1995 $762 136 $339 135 $ 427
623 $1 528 894
Net income 68
958 68 958
Dividends on preferred stock (3
475) (3 475)
Dividends on common stock (55
400) (55 400)
Balance September 30, 1995 $762 136 $339 135 $ 437
706 $1 538 977
Quarter Ended September 30, 1994
Balance July 1, 1994 $757 084 $329 712 $ 483
564 $1 570 360
Net income 47
595 47 595
Issuance of 543,089 shares of common stock 4 616 7 483
12 099
Common stock issuance expenses (30)
(30)
Dividends on preferred stock (5
362) (5 362)
Dividends on common stock (38
358) (38 358)
Balance September 30, 1994 $761 700 $337 165 $ 487
439 $1 586 304
Nine Months Ended September 30, 1995
Balance January 1, 1995 $762 136 $337 874 $ 432
962 $1 532 972
Net income 186
604 186 604
Dividends on preferred stock (14
199) (14 199)
Dividends on common stock (162
950) (162 950)
Other 1 261 (4
711) (3 450)
Balance September 30, 1995 $762 136 $339 135 $ 437
706 $1 538 977
Nine Months Ended September 30, 1994
Balance January 1, 1994 $748 528 $314 218 $ 456
511 $1 519 257
Net income 163
252 163 252
Issuance of 1,549,671 shares of common stock 13 172 22 432
35 604
Common stock issuance expenses (38)
(38)
Dividends on preferred stock (17
014) (17 014)
Dividends on common stock (114
357) (114 357)
Other 553
(953) (400)
Balance September 30, 1994 $761 700 $337 165 $ 487
439 $1 586 304
Twelve Months Ended September 30, 1995
Balance October 1, 1994 $761 700 $337 165 $ 487
439 $1 586 304
Net income 181
663 181 663
Issuance of 51,332 shares of common stock 436 710
1 146
Common stock issuance expenses (1)
(1)
Dividends on preferred stock (19
562) (19 562)
Dividends on common stock (207
563) (207 563)
Other 1 261 (4
271) (3 010)
Balance September 30, 1995 $762 136 $339 135 $ 437
706 $1 538 977
Twelve Months Ended September 30, 1994
Balance October 1, 1993 $745 063 $306 644 $ 677
093 $1 728 800
Net income (loss) (13
320) (13 320)
Issuance of 1,957,324 shares of common stock 16 637 30 006
46 643
Common stock issuance expenses (38)
(38)
Dividends on preferred stock (23
304) (23 304)
Dividends on common stock (152
077) (152 077)
Other 553
(953) (400)
Balance September 30, 1994 $761 700 $337 165 $ 487
439 $1 586 304
<FN>
The accompanying notes as they relate to CG&E are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC
COMPANY
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited)
Quarter Ended
Nine Months Ended Twelve Months Ended
September 30
September 30 September 30
1995 1994
1995 1994 1995 1994
(in thousands)
<S> <C> <C> <C>
<C> <C> <C>
Operating Activities
Net income (loss) $ 68 958 $ 47 595 $
186 604 $ 163 252 $ 181 663 $ (13 320)
Items providing (using) cash currently:
Depreciation 39 836 39 210
119 060 117 030 158 706 155 420
Amortization of phase-in deferrals 3 409 -
5 682 - 5 682 -
Deferred income taxes and investment tax
credits - net 40 556 2 766
24 597 15 336 22 941 4 568
Allowance for equity funds used during
construction (269) (630)
(1 146) (1 522) (1 595) (2 007)
Regulatory assets
Post-in-service and phase-in cost
deferrals (2 134) (1 946)
(6 402) (15 565) (8 349) (2 515)
Deferred merger costs (1 151) (10 575)
(1 575) (14 026) 13 410 (18 307)
Other 4 341 (3 415)
10 435 380 2 164 1 526
Write-off of a portion of Zimmer Station - -
- - - - 234 844
Changes in current assets and current
liabilities
Restricted deposits (1) -
(3) 24 (5) 68
Accounts receivable 2 887 23 553
54 133 77 983 19 295 7 240
Materials, supplies, and fuel (1 924) (14 343)
9 499 15 865 14 836 9 511
Accounts payable (6 123) (17 977)
(41 110) (42 830) (6 373) (10 066)
Accrued taxes and interest 19 486 16 090
25 114 (4 441) 37 766 (14 013)
Other items - net (23 448) 31 395
(28 066) 45 667 6 925 59 372
Net cash provided by (used in)
operating activities 144 423 111 723
356 822 357 153 447 066 412 321
Financing Activities
Issuance of common stock - 12 069
- - 35 566 1 145 46 605
Issuance of long-term debt 195 255 -
344 280 311 957 344 280 608 957
Funds on deposit from issuance of long-term
debt (84 000) -
(84 000) - (84 000) -
Retirement of preferred stock (93 450) -
(93 450) (40 400) (93 450) (40 400)
Redemption of long-term debt (21 302) -
(238 498) (313 247) (238 773) (601 189)
Change in short-term debt 13 000 7 000
12 000 (18 500) 14 000 (6 080)
Dividends on preferred stock (3 475) (5 362)
(14 199) (17 942) (18 634) (24 233)
Dividends on common stock (55 400) (38 358)
(162 950) (114 357) (207 563) (152 077)
Net cash provided by (used in)
financing activities (49 372) (24 651)
(236 817) (156 923) (282 995) (168 417)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (29 935) (44 015)
(99 661) (123 026) (166 589) (175 769)
Deferred demand-side management costs (2 071) (1 882)
(6 315) (4 584) (8 127) (5 419)
Net cash provided by (used in)
investing activities (32 006) (45 897)
(105 976) (127 610) (174 716) (181 188)
Net increase (decrease) in cash and
temporary cash investments 63 045 41 175
14 029 72 620 (10 645) 62 716
Cash and temporary cash investments at
beginning of period 3 500 36 015
52 516 4 570 77 190 14 474
Cash and temporary cash investments at
end of period $ 66 545 $ 77 190 $
66 545 $ 77 190 $ 66 545 $ 77 190
<FN>
The accompanying notes as they relate to CG&E are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 1995
Kwh Sales
Kwh sales for the quarter ended September 30, 1995, increased 22.1% over the
same period of 1994 due in large part to increased sales to retail customers.
Higher domestic and commercial sales resulted primarily from warmer weather.
The increased industrial sales primarily reflect growth in the chemicals and
food products sectors. Also significantly contributing to the higher total
kwh sales levels were increased non-firm power sales for resale reflecting
higher short-term power sales and sales to PSI.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the third quarter of 1995
increased 2.7% as compared to the third quarter of 1994, reflecting higher gas
transportation volumes as industrial customers continued to purchase directly
from gas suppliers, creating a significant increase in demand for
transportation services. The increased transportation volume, primarily in
the primary metals, paper products, and food products sectors, more than
offset a decline in industrial sales volumes. Also, partially offsetting the
increase in transportation volumes were decreased sales to domestic and
commercial customers.
Operating Revenues
Electric Operating Revenues
Electric operating revenues increased $33 million (8.9%) for the quarter ended
September 30, 1995, over the comparable period of 1994. This increase
reflects the higher kwh sales, as previously discussed.
An analysis of electric operating revenues is shown below:
Quarter
Ended September 30
(in millions)
Operating revenues - September 30, 1994 $368
Increase (Decrease) due to change in:
Price per kwh
Retail (9)
Sales for Resale
Non-firm power transactions (12)
Total change in price per kwh (21)
Kwh sales
Retail 34
Sales for Resale
Firm Power Obligations 1
Non-firm power transactions 19
Total change in kwh sales 54
Operating revenues - September 30, 1995 $401
Gas Operating Revenues
Gas operating revenues declined $7 million (17.0%) in the third quarter of
1995 when compared to the same period last year, primarily as a result of the
previously discussed decrease in total retail sales volumes. An increase in
the relative volume of gas transported to gas sold, as previously discussed,
also contributed to the decrease. Providing transportation services does not
necessitate the recovery of gas purchased costs by CG&E. Consequently, the
revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs decreased $7 million (7.6%) for the quarter as compared to
last year.
An analysis of fuel costs is shown below:
Quarter
Ended September 30
(in millions)
Fuel expense - September 30, 1994 $91
Increase (Decrease) due to change in:
Price of fuel (11)
Kwh generation 4
Fuel expense - September 30, 1995 $84
Gas Purchased
Gas purchased for the quarter declined $3 million (17.8%) when compared to the
same period last year. This decrease was attributable to a decrease in
volumes purchased associated with the aforementioned changes in volumes sold
and transported.
Purchased and Exchanged Power
Purchased and exchanged power for the quarter ended September 30, 1995,
increased $13 million over the comparable period of 1994. This increase
primarily reflects purchases from PSI.
Other Operation
Other operation expenses decreased $11 million (14.1%) for the quarter ended
September 30, 1995, as compared to the same period last year. The decrease
was primarily attributable to the recognition in September 1994 of costs
related to a workforce reduction program which cannot be recovered from
customers under the merger savings sharing mechanisms authorized by
regulators. Also contributing to the decrease were lower gas and electric
distribution expenses.
Maintenance
The decrease in maintenance expense of $4 million (18.4%) for the third
quarter of 1995 as compared to the same period last year was primarily due to
improved scheduling of routine maintenance on electric generating units.
Lower maintenance costs on gas and electric distribution facilities also
contributed to the decline.
Amortization of Phase-In Deferrals
Amortization of phase-in deferrals, which began in May 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from the three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated in the May 1992 Order.
Taxes Other than Income Taxes
Taxes other than income taxes increased $3 million (7.0%) over the same period
of 1994. The increase was primarily attributable to increased property taxes
resulting from higher property tax rates.
Other Income and Expenses - Net
Other - Net
Other - net increased $6 million over the same period of 1994. The increase
was primarily attributable to interest associated with a refund of an
overpayment of Federal income taxes for 1987 and 1990.
Preferred Dividend Requirement
The decrease in CG&E's preferred dividend requirement of $2 million
(35.2%) for the three months ended September 30, 1995, from the same period of
1994 was attributable to the early redemption of 400,000 and 500,000 shares of
$100 par value, Cumulative Preferred Stock, 7.44% Series and 9.15% Series,
respectively, on July 1, 1995.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
Kwh Sales
Kwh sales for the nine months ended September 30, 1995, increased 13.1% over
the same period of 1994 due in part to an increase in non-firm power sales for
resale reflecting higher short-term power sales and sales to PSI. Also
contributing to the higher total kwh sales levels were increased sales to
domestic, commercial, and industrial customers. The increase in domestic and
commercial sales was mostly due to warmer weather during the summer cooling
season. The increase in industrial sales was primarily due to growth in the
chemicals and primary metals sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the nine months ended September
30, 1995, decreased slightly when compared to the same period of 1994.
Decreases in domestic and commercial sales volumes were attributable to milder
weather during the 1995 heating season. The decrease in industrial sales was
attributable to the trend of industrial customers electing to purchase
directly from suppliers, creating additional demand for transportation
services. The additional transportation volumes more than offset the decrease
in industrial sales and resulted from growth in the primary metals sector.
Operating Revenues
Electric Operating Revenues
Electric operating revenues increased $56 million (5.4%) for the nine months
ended September 30, 1995, over the comparable period of 1994. This increase
primarily reflects the higher kwh sales discussed above and the retail
electric rate increase which became effective May 1994 pursuant to the May
1992 Order. This increase was partially offset by the operation of fuel
adjustment clauses reflecting a lower average cost of fuel used in electric
production.
An analysis of electric operating revenues is shown below:
Nine Months
Ended September 30
(in millions)
Operating revenues - September 30, 1994 $1 032
Increase (Decrease) due to change in:
Price per kwh
Retail (4)
Sales for resale
Firm power obligations 1
Non-firm power transactions (12)
Total change in price per kwh (15)
Kwh sales
Retail 29
Sales for resale
Non-firm power transactions 43
Total change in kwh sales 72
Other (1)
Operating revenues - September 30, 1995 $1 088
Gas Operating Revenues
Gas operating revenues declined $65 million (19.8%) in the first nine months
of 1995 when compared to the same period last year. This decrease reflects
the previously discussed decline in total retail volumes sold and the
operation of adjustment clauses reflecting a lower average cost of gas
purchased. An increase in the relative volume of gas transported to gas sold
also contributed to the decrease. Providing transportation services does not
necessitate the recovery of gas purchased costs. Consequently, the revenue
per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs remained relatively constant for the first nine months of
1995 as compared to the same period last year.
An analysis of fuel costs is shown below:
Nine Months
Ended September 30
(in millions)
Fuel expense - September 30, 1994 $252
Increase (Decrease) due to change in:
Price of fuel (12)
Kwh generation 13
Fuel expense - September 30, 1995 $253
Gas Purchased
Gas purchased for the nine months ended September 30, 1995, decreased $59
million (31.1%) when compared to the same period last year. This decrease was
attributable to a 13.5% decline in volumes purchased and a 20.3% lower average
cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power for the nine months ended September 30, 1995,
increased $23 million over the comparable period of 1994. This increase
primarily reflects purchases from PSI.
Other Operation
Other operation expenses decreased $14 million (6.5%) for the nine months
ended September 30, 1995, as compared to the same period last year. The
decrease was primarily attributable to the recognition of costs related to a
workforce reduction program in September 1994 which cannot be recovered from
customers under the merger savings sharing mechanisms authorized by
regulators. Also contributing to the decrease were reduced gas production
expenses and lower electric distribution expenses.
Maintenance
The decrease in maintenance expense of $12 million (15.9%) for the nine month
period ended September 30, 1995, as compared to the same period last year was
primarily due to improved scheduling of routine maintenance on generating
units. Lower maintenance costs on gas and electric distribution facilities
also contributed to the decline.
Amortization of Phase-In Deferrals
Amortization of phase-in deferrals, which began in May 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from the three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated in the May 1992 Order.
Taxes Other than Income Taxes
Taxes other than income taxes increased $5 million (3.5%) over the same period
of 1994. The increase was primarily attributable to increased property taxes
resulting from higher property tax rates.
Other Income And Expenses - Net
Phase-in Deferred Return
Phase-in deferred return decreased $7 million (52.2%) for the first nine
months of 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.
Other - Net
Other - net increased $6 million over the same period of 1994. The increase
was primarily attributable to interest associated with a refund of an
overpayment of Federal income taxes for 1987 and 1990.
Interest
Interest decreased $6 million (5.5%) for the nine months ended September 30,
1995, from the same period of 1994. This decrease was due to reductions in
interest on long-term debt resulting from the refinancing of $235 million
principal amount of first mortgage bonds during 1995.
Preferred Dividend Requirement
CG&E's preferred dividend requirement decreased $3 million (16.5%) for the
nine months ended September 30, 1995, from the same period of 1994. The
decrease was attributable to the early redemption of 400,000 shares of $100
par value, 9.28% Series Cumulative Preferred Stock in April 1994, along with
the early redemption of 400,000 and 500,000 shares of $100 par value
Cumulative Preferred Stock, 7.44% Series and 9.15% Series, respectively, on
July 1, 1995.
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1995
Kwh Sales
Kwh sales for the twelve months ended September 30, 1995, increased 9.0% when
compared to the same period of 1994 due in part to an increase in non-firm
sales for resale reflecting higher short-term power sales and sales to PSI.
In addition, industrial sales increased due, in large part, to growth in the
primary metals and chemicals sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended September
30, 1995, decreased 4.2% when compared to the same period of 1994. Decreases
in domestic and commercial sales volumes were attributable to milder weather
during the winter heating season. A decrease in industrial sales was
attributable to the continuing trend of industrial customers electing to
purchase directly from suppliers, creating additional demand for
transportation services. The increased transportation volumes were due, in
large part, to growth in the primary metals, food products, and paper products
sectors.
Operating Revenues
Electric Operating Revenues
Electric operating revenues increased $53 million (3.9%) for the twelve months
ended September 30, 1995, over the comparable period of 1994. This increase
primarily reflects the higher kwh sales, as previously discussed. Also
contributing to the increase was the May 1994 electric retail rate increase
related to the phase-in plan included in the May 1992 Order. The operation of
fuel adjustment clauses reflecting a lower average cost of fuel used in
electric production partially offset these increases.
An analysis of electric operating revenues is shown below:
Twelve Months
Ended September 30
(in millions)
Operating revenues - September 30, 1994 $1 349
Increase (Decrease) due to change in:
Price per kwh
Retail (1)
Sales for Resale
Firm power obligations 1
Non-firm power transactions (10)
Total change in price per kwh (10)
Kwh sales
Retail 27
Sales for Resale
Non-firm power transactions 37
Total change in kwh sales 64
Other (1)
Operating revenues - September 30, 1995 $1 402
Gas Operating Revenues
Gas operating revenues declined $119 million (23.9%) for the twelve months
ended September 30, 1995, when compared to the same period last year. This
decrease was primarily the result of decreases in sales volumes and the
operation of adjustment clauses reflecting a decline in the average cost of
gas purchased. An increase in the relative volume of gas transported to gas
sold also contributed significantly to the decrease. Providing transportation
services does not necessitate the recovery of gas purchased costs.
Consequently, the revenue per Mcf transported is below the revenue per Mcf
sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs decreased $11 million (3.4%) for the twelve months ended
September 30, 1995, as compared to the same period last year.
An analysis of fuel costs is shown below:
Twelve Months
Ended September 30
(in millions)
Fuel expense - September 30, 1994 $337
Increase (Decrease) due to change in:
Price of fuel (16)
Kwh generation 5
Fuel expense - September 30, 1995 $326
Gas Purchased
Gas purchased for the twelve months ended September 30, 1995, decreased $99
million (34.3%) when compared to the same period last year. This decrease was
attributable to a 17.7% decline in volumes purchased associated with the
previously discussed changes in gas sales volumes and a 20.1% lower average
cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power for the twelve months ended September 30, 1995,
increased $29 million over the comparable period of 1994. This increase
primarily reflects purchases from PSI.
Other Operation
Other operation expenses increased $25 million (8.5%) for the twelve months
ended September 30, 1995, as compared to the same period last year. The
primary factor contributing to this increase was charges of approximately $41
million in December 1994 for merger-related costs and other expenditures which
cannot be recovered from customers under the merger savings sharing mechanisms
authorized by regulators. The period to period comparison also reflects the
recognition in September 1994 of costs related to a workforce reduction
program and a decrease in gas and electric distribution expenses.
Maintenance
The decrease in maintenance expense of $12 million (11.5%) for the twelve
months ended September 30, 1995, as compared to the same period last year, was
due to a number of factors. Improved scheduling of routine maintenance on
electric generating units, lower maintenance costs on gas and electric
distribution facilities, and reduced maintenance expenditures for facilities
used in general and administrative functions all contributed to the decrease.
Amortization of Phase-In Deferrals
Amortization of phase-in deferrals, which began in May 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from the three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated in the May 1992 Order.
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 $4 million (59.9%)
for phase-in deferred depreciation for the twelve months ended September 30,
1995, versus the same period of 1994, reflects discontinuance of the deferral
of depreciation when the final increase of the three-year rate phase-in plan
became effective in May 1994.
Taxes Other than Income Taxes
Taxes other than income taxes increased $11 million (5.6%) for the twelve
months ended September 30, 1995, over the comparable period of 1994, primarily
due to increased property taxes resulting from higher property tax rates.
Other Income And Expenses - Net
Phase-in Deferred Return
Phase-in deferred return decreased $12 million for the twelve months ended
September 30, 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
In November 1993, CG&E wrote off Zimmer costs disallowed from rates in the May
1992 Order.
Other - Net
Other - net increased $8 million over the same period of 1994. The increase
was due to a number of factors, foremost of which was interest associated with
a refund of an overpayment of Federal income taxes for 1987 and 1990.
Interest
Interest charges decreased $9 million (6.0%) for the twelve months ended
September 30, 1995, from the same period of 1994. The decrease was due to
reductions in interest on long-term debt resulting from the refinancing of
$235 million principal amount of long-term debt during 1995 and $305 million
principal amount of long-term debt during the first quarter of 1994.
Preferred Dividend Requirement
CG&E's preferred dividend requirement decreased $4 million (16.1%) for the
twelve months ended September 30, 1995, compared to the same period of 1994.
The decrease was attributable to the early redemption of 400,000 shares of
$100 par value, 9.28% Series Cumulative Preferred Stock in April 1994, along
with the early redemption of 400,000 and 500,000 shares of $100 par value
Cumulative Preferred Stock, 7.44% Series and 9.15% Series, respectively, on
July 1, 1995.
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
September 30 December
31
1995 1994
(dollars in thousands)
<S> <C> <C>
Electric Utility Plant - original cost
In service $3 922 650 $3 789
785
Accumulated depreciation 1 617 483 1 550
297
2 305 167 2 239
488
Construction work in progress 140 628 163
761
Total electric utility plant 2 445 795 2 403
249
Current Assets
Cash 3 607 6
341
Restricted deposits 2 490 11
190
Accounts receivable less accumulated provision of
$369,000 at September 30, 1995, and $440,000 at
December 31, 1994 for doubtful accounts 71 503 36
061
Materials, supplies, and fuel - at average cost
Fuel for use in electric production 96 017 113
861
Other materials and supplies 30 897 29
363
Prepayments and other 3 539 4
758
208 053 201
574
Other Assets
Regulatory assets
Post-in-service carrying costs and deferred
operating expenses 37 759 30
142
Deferred demand-side management costs 105 166 94
125
Amounts due from customers - income taxes 26 537 27
134
Deferred merger costs 41 312 37
645
Unamortized costs of reacquiring debt 35 106 36
998
Other 31 449 30
030
Other 87 331 84
027
364 660 340
101
$3 018 508 $2 944
924
<FN>
The accompanying notes as they relate to PSI are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CAPITALIZATION AND LIABILITIES
September 30 December
31
1995 1994
(dollars in thousands)
<S> <C> <C>
Common Stock Equity
Common stock - without par value; $.01 stated
value; authorized shares - 60,000,000;
outstanding shares - 53,913,701
at September 30, 1995, and
December 31, 1994 $ 539 $
539
Paid-in capital 402 038 389
309
Accumulated earnings subsequent to
November 30, 1986, quasi-reorganization 595 803 493
103
Total common stock equity 998 380 882
951
Cumulative Preferred Stock
Not subject to mandatory redemption 187 913 187
929
Long-term Debt 828 245 877
512
Total capitalization 2 014 538 1 948
392
Current Liabilities
Long-term debt due within one year 50 400 60
400
Notes payable 236 500 193
573
Accounts payable 92 133 142
775
Refund due to customers 12 878 15
482
Litigation settlement 80 000 80
000
Accrued taxes 48 583 30
784
Accrued interest 12 376 25
685
Other 3 003 3
202
535 873 551
901
Other Liabilities
Deferred income taxes 331 815 324
738
Unamortized investment tax credits 57 315 60
461
Accrued pension and other postretirement
benefit costs 48 381 31
324
Other 30 586 28
108
468 097 444
631
$3 018 508 $2 944
924
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended
Nine Months Ended Twelve Months Ended
September 30
September 30 September 30
1995 1994 1995
1994 1995 1994
(in thousands)
<S> <C> <C> <C>
<C> <C> <C>
Operating Revenues $343 297 $283 569 $932
088 $843 856 $1 201 744 $1 120 332
Operating Expenses
Fuel used in electric production 106 344 104 225 292
910 287 143 393 290 375 394
Purchased and exchanged power 13 159 8 052 42
829 36 278 47 951 45 361
Other operation 61 595 51 724 167
354 152 339 228 137 199 520
Maintenance 20 857 25 413 63
861 67 789 90 221 88 429
Depreciation 28 844 34 209 91
291 101 412 127 598 134 460
Post-in-service deferred operating
expenses - net (894) (2 484) (4
608) (7 106) (6 790) (9 311)
Income taxes 29 222 11 880 64
877 44 581 70 662 65 291
Taxes other than income taxes 14 022 12 884 40
721 38 355 48 701 49 960
273 149 245 903 759
235 720 791 999 770 949 104
Operating Income 70 148 37 666 172
853 123 065 201 974 171 228
Other Income and Expenses - Net
Allowance for equity funds used during
construction (1 428) 1 813
(420) 5 252 (1 442) 10 149
Post-in-service carrying costs 602 2 452 3
183 6 758 6 205 8 856
Income taxes 705 (221)
751 102 (663) 96
Other - net 545 (1 908) (1
751) (7 423) (2 221) (9 599)
424 2 136 1
763 4 689 1 879 9 502
Income Before Interest 70 572 39 802 174
616 127 754 203 853 180 730
Interest
Interest on long-term debt 17 647 17 283 53
546 50 905 71 503 67 291
Other interest 4 162 4 820 12
035 10 202 17 125 11 304
Allowance for borrowed funds used during
construction (1 133) (2 539) (3
550) (7 316) (5 589) (9 397)
20 676 19 564 62
031 53 791 83 039 69 198
Net Income 49 896 20 238 112
585 73 963 120 814 111 532
Preferred Dividend Requirement 3 295 3 296 9
885 9 887 13 180 13 754
Net Income on Common Shares $ 46 601 $ 16 942 $102
700 $ 64 076 $ 107 634 $ 97 778
<FN>
The accompanying notes as they relate to PSI are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
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 September 30, 1995
Balance July 1, 1995 $539 $389 316 $549
202 $939 057
Net income 49
896 49 896
Dividends on preferred stock (3
295) (3 295)
Capital contribution from parent company 12 721
12 721
Other 1
1
Balance September 30, 1995 $539 $402 038 $595
803 $998 380
Quarter Ended September 30, 1994
Balance July 1, 1994 $539 $229 287 $497
784 $727 610
Net income 20
238 20 238
Dividends on preferred stock (3
295) (3 295)
Dividends on common stock (16
174) (16 174)
Balance September 30, 1994 $539 $229 287 $498
553 $728 379
Nine Months Ended September 30, 1995
Balance January 1, 1995 $539 $389 309 $493
103 $882 951
Net income 112
585 112 585
Dividends on preferred stock (9
885) (9 885)
Capital contribution from parent company 12 721
12 721
Other 8
8
Balance September 30, 1995 $539 $402 038 $595
803 $998 380
Nine Months Ended September 30, 1994
Balance January 1, 1994 $539 $229 288 $483
242 $713 069
Net income 73
963 73 963
Dividends on preferred stock (9
886) (9 886)
Dividends on common stock (48
766) (48 766)
Other (1)
(1)
Balance September 30, 1994 $539 $229 287 $498
553 $728 379
Twelve Months Ended September 30, 1995
Balance October 1, 1994 $539 $229 287 $498
553 $728 379
Net income 120
814 120 814
Dividends on preferred stock (13
181) (13 181)
Dividends on common stock (10
376) (10 376)
Capital contribution from parent company 172 720
172 720
Other 31
(7) 24
Balance September 30, 1995 $539 $402 038 $595
803 $998 380
Twelve Months Ended September 30, 1994
Balance October 1, 1993 $539 $230 945 $467
444 $698 928
Net income 111
532 111 532
Dividends on preferred stock (13
835) (13 835)
Dividends on common stock (66
664) (66 664)
Other (1 658)
76 (1 582)
Balance September 30, 1994 $539 $229 287 $498
553 $728 379
<FN>
The accompanying notes as they relate to PSI are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited)
Quarter Ended
Nine Months Ended Twelve Months Ended
September 30
September 30 September 30
1995 1994
1995 1994 1995 1994
(in thousands)
<S> <C> <C> <C>
<C> <C> <C>
Operating Activities
Net income $ 49 896 $ 20 238 $ 112
585 $ 73 963 $ 120 814 $ 111 532
Items providing (using) cash currently:
Depreciation 28 844 34 209 91
291 101 412 127 598 134 460
Deferred income taxes and investment tax
credits - net (1 255) (1 145) 5
342 19 558 9 911 23 038
Allowance for equity funds used during
construction 1 428 (1 813)
420 (5 252) 1 442 (10 149)
Regulatory assets
Post-in-service carrying costs and
deferred operating expenses (1 496) (4 936) (7
791) (13 864) (12 995) (18 168)
Deferred merger costs (5 208) (1 240) (7
353) (8 418) (22 235) (10 634)
Other (178) (122)
(273) 4 425 (327) 2 259
Changes in current assets and current
liabilities
Restricted deposits - 1 547
16 1 397 8 643 1 276
Accounts receivable (23 391) 17 202 (35
442) (2 276) (40 570) 16 166
Income tax refunds - 3 800
- - 28 900 - 10 000
Materials, supplies, and fuel 23 089 (2 403) 16
310 (57 753) 7 366 (57 449)
Accounts payable (14 667) (9 309) (50
642) (30 234) (21 726) (9 717)
Refund due to customers (2 918) (2 999) (2
604) (47 223) (21 731) (115 391)
Advance under accounts receivable
purchase agreement - -
- - (49 940) - -
Accrued taxes and interest 7 071 (21 169) 4
490 (19 598) 21 160 15 404
Other items - net 5 192 2 416 18
865 (2 408) 16 301 5 129
Net cash provided by (used in)
operating activities 66 407 34 276 145
214 (7 311) 193 651 97 756
Financing Activities
Issuance of preferred stock - -
- - - - 59 475
Issuance of long-term debt - 59 910
- - 108 978 - 108 978
Funds on deposit from issuance of long-term
debt 2 056 8 810 8
684 21 211 15 370 33 039
Retirement of preferred stock (1) -
(8) (10) (24) (60 116)
Redemption of long-term debt (60 000) - (60
055) - (60 215) (95 295)
Change in short-term debt 27 000 (1 199) 42
927 165 100 (55 301) 268 301
Dividends on preferred stock (3 295) (3 295) (9
885) (9 886) (13 181) (13 835)
Dividends on common stock - (16 174)
- - (48 766) (10 376) (66 664)
Donation of capital by Cinergy Corp. 12 721 - 12
721 - 172 720 -
Net cash provided by (used in)
financing activities (21 519) 48 052 (5
616) 236 627 48 993 233 883
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (41 444) (71 330) (132
282) (202 369) (219 644) (294 797)
Deferred demand-side management costs (4 943) (9 829) (10
050) (25 343) (25 579) (38 488)
Net cash provided by (used in)
investing activities (46 387) (81 159) (142
332) (227 712) (245 223) (333 285)
Net increase (decrease) in cash and
temporary cash investments (1 499) 1 169 (2
734) 1 604 (2 579) (1 646)
Cash and temporary cash investments at
beginning of period 5 106 5 017 6
341 4 582 6 186 7 832
Cash and temporary cash investments at
end of period $ 3 607 $ 6 186 $ 3
607 $ 6 186 $ 3 607 $ 6 186
<FN>
The accompanying notes as they relate to PSI are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
PSI ENERGY, INC.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 1995
Kwh Sales
Kwh sales for the quarter ended September 30, 1995, increased 23.5% when
compared to the same period last year due in part to non-firm power sales
for resale reflecting an increase in sales to CG&E. Higher kwh sales to
domestic and commercial customers as a result of warmer weather also
significantly contributed to this increase.
Operating Revenues
Total operating revenues increased $60 million (21.1%) in the third quarter
of 1995 as compared to the same period last year. This increase primarily
reflects the higher kwh sales, as previously discussed. The increase also
reflects a 4.3% retail rate increase approved in the February 1995 Order
and a 1.9% rate increase for carrying costs on CWIP property which was
approved by the IURC in March 1995.
An analysis of operating revenues is shown below:
Quarter
Ended September 30
(in millions)
Operating revenues - September 30, 1994 $283
Increase (Decrease) due to change in:
Price per kwh
Retail 17
Sales for resale
Non-firm power transactions (7)
Total change in price per kwh 10
Kwh sales
Retail 27
Sales for resale
Firm power obligations 5
Non-firm power transactions 18
Total change in kwh sales 50
Operating revenues - September 30, 1995 $343
Operating Expenses
Fuel Used in Electric Production
Fuel costs, PSI's largest operating expense, increased $2 million (2.0%)
for the quarter as compared to the same period last year.
An analysis of fuel costs is shown below:
Quarter
Ended September 30
(in millions)
Fuel expense - September 30, 1994 $104
Increase (Decrease) due to change in:
Price of fuel (13)
Kwh generation 15
Fuel expense - September 30, 1995 $106
Purchased and Exchanged Power
For the quarter ended September 30, 1995, purchased and exchanged power
increased $5 million (63.4%) as compared to the same period last year,
reflecting increased purchases of available low cost power.
Other Operation
Other operation expenses for the quarter ended September 30, 1995,
increased $10 million (19.1%) as compared to the same period last year.
This increase was due to a number of factors, including the accrual of
postretirement benefit costs, the amortization of deferred postretirement
benefit costs, an increase in the level of ongoing DSM expenses, and the
amortization of deferred DSM costs, all of which are being recovered in
revenues pursuant to the February 1995 Order.
Maintenance
Maintenance expenses for the quarter ended September 30, 1995, as compared
to the same period last year decreased $5 million (17.9%) primarily as a
result of reductions in maintenance costs on electric production and
distribution facilities.
Depreciation
Depreciation expense decreased $5 million (15.7%) for the quarter ended
September 30, 1995, as compared to the same period last year. This
decrease primarily reflects the adoption of lower depreciation rates
effective in March 1995 pursuant to the February 1995 Order. The decrease
was partially offset by the effect of additions to utility plant in
service.
Post-in-service Deferred Operating Expenses - Net
Post-in-service deferred operating expenses decreased $2 million (64.0%)
for the quarter ended September 30, 1995, from the comparable period of
1994 as a result of ceasing deferral of depreciation on qualified
environmental projects upon the inclusion in rates of the costs of the
projects per the February 1995 Order.
Other Income and Expenses - Net
Allowance for Equity Funds Used During Construction
The equity component of AFUDC decreased $3 million for the three months
ended September 30, 1995, as compared to the same period last year. This
decline was due primarily to an increase in the average short-term debt
outstanding. The quarter ended September 30, 1995, reflects application of
the lower rate retroactively for the year-to-date period. In addition, a
scrubber at Gibson was placed in service in September 1994 which resulted
in a large decrease in the average balance of CWIP.
Post-in-service Carrying Costs
Post-in-service carrying costs decreased $2 million (75.4%) for the quarter
ended September 30, 1995, from the comparable period of 1994 as a result of
discontinuing accrual of post-in-service carrying costs on qualified
environmental projects upon the inclusion in rates of the costs of the
projects per the February 1995 Order.
Other - net
Other - net increased $2 million for the quarter ended September 30, 1995,
when compared to the same period last year. This increase is primarily due
to an increase in carrying costs on DSM expenses which resulted from a
higher debt component of the AFUDC rate used to compute carrying costs.
Interest
Allowance for Borrowed Funds Used During Construction
The debt component of AFUDC decreased $1 million (55.4%) for the quarter
ended September 30, 1995, as compared to the same period last year. This
decrease was due primarily to a decrease in the average balance of CWIP and
was partially offset by an increase in the debt component of the AFUDC
rate.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
Kwh Sales
For the nine months ended September 30, 1995, kwh sales increased 4.1% when
compared to the same period last year primarily due to increased kwh sales
to domestic, commercial, and industrial customers. The higher domestic and
commercial sales resulted from warmer weather during the summer cooling
period and an increase in the average number of customers, while higher
industrial sales reflected growth in the primary metals and chemicals
sectors. Also contributing to the increase were higher non-firm power
sales for resale reflecting an increase in sales to CG&E . These increases
were partially offset by a decline in third party short-term power sales to
other utilities.
Operating Revenues
Total operating revenues increased $88 million (10.5%) for the nine months
ended September 30, 1995, when compared to the same period last year. This
increase primarily reflects the 4.3% retail rate increase and 1.9% rate
increase for carrying costs on CWIP property as previously discussed. The
previously discussed increase in kwh sales also contributed to the increase
in revenues.
An analysis of operating revenues is shown below:
Nine Months
Ended September 30
(in millions)
Operating revenues - September 30, 1994 $844
Increase (Decrease) due to change in:
Price per kwh
Retail 55
Sales for resale
Non-firm power transactions (1)
Total change in price per kwh 54
Kwh sales
Retail 29
Sales for resale
Non-firm power transactions 4
Total change in kwh sales 33
Other 1
Operating revenues - September 30, 1995 $932
Operating Expenses
Fuel Used in Electric Production
Fuel costs for the nine months ended September 30, 1995, increased $6
million (2.0%) when compared to the same period last year.
An analysis of fuel costs is shown below:
Nine Months
Ended September 30
(in millions)
Fuel expense - September 30, 1994 $287
Increase due to change in:
Price of fuel 1
Kwh generation 5
Fuel expense - September 30, 1995 $293
Purchased and Exchanged Power
For the nine months ended September 30, 1995, purchased and exchanged power
increased $7 million (18.1%) as compared to the same period last year,
reflecting increased purchases from CG&E and purchases of available low
cost power. This increase was partially offset by a decline in third party
short-term power sales to other utilities.
Other Operation
Other operation expenses increased $15 million (9.9%) for the nine months
ended September 30, 1995, as compared to the same period last year. This
increase was due to a number of factors, including the accrual of
postretirement benefit costs, the amortization of deferred postretirement
benefit costs, an increase in the level of ongoing DSM expenses, the
amortization of deferred DSM costs, and the amortization of merger costs,
all of which are being recovered in revenues pursuant to the February 1995
Order. The period to period comparison reflects the write-off of
previously deferred litigation expenses during 1994.
Maintenance
Maintenance expenses for the nine months ended September 30, 1995, as
compared to the same period last year decreased $4 million (5.8%) primarily
as a result of decreased electric distribution costs.
Depreciation
Depreciation expense for the nine months ended September 30, 1995,
decreased $10 million (10.0%) when compared to the same period last year.
This decrease was primarily driven by the adoption of lower depreciation
rates effective in March 1995 pursuant to the February 1995 Order. The
decrease was partially offset by the effect of additions to utility plant
in service.
Post-in-service Deferred Operating Expenses - Net
Post-in-service deferred operating expenses decreased $2 million (35.2%)
for the nine months ended September 30, 1995, from the comparable period of
1994 as a result of ceasing deferral of depreciation on qualified
environmental projects upon the inclusion in rates of the costs of the
projects per the February 1995 Order.
Other Income and Expenses - Net
Allowance for Equity Funds Used During Construction
The equity component of AFUDC decreased $6 million for the nine months
ended September 30, 1995, as compared to the same period last year. As
previously discussed, this decrease was due primarily to an increase in the
average short-term debt outstanding. In addition, a scrubber was placed in
service at Gibson in September 1994 which resulted in a large decrease in
the average balance of CWIP.
Post-in-service Carrying Costs
Post-in-service carrying costs decreased $4 million (52.9%) for the nine
months ended September 30, 1995, from the comparable period of 1994 as a
result of discontinuing accrual of post-in-service carrying costs on
qualified environmental projects upon the inclusion in rates of the costs
of the projects per the February 1995 Order.
Other - net
Other - net increased $6 million (76.4%) for the nine months ended
September 30, 1995, when compared to the same period last year. This
increase is primarily due to an increase in carrying costs on DSM expenses
which resulted from a higher AFUDC rate used to compute carrying costs and
increased DSM expenses to which the rate is applied.
Interest
Interest on Long-term Debt
Interest on long-term debt increased $3 million (5.2%) for the nine months
ended September 30, 1995, as compared to the same period in 1994. The
increase was primarily a result of the issuance of $60 million principal
amount of 5.75% Series B medium-term notes in August 1994, which matured in
August 1995.
Other Interest
Other interest increased $2 million (18.0%) over the same period last year.
The increase was driven by higher interest rates and an increase in the
average short-term debt outstanding.
Allowance for Borrowed Funds Used During Construction
The debt component of AFUDC decreased $4 million (51.5%) for the nine
months ended September 30, 1995, as compared to the same period last year.
This decrease was due primarily to a decrease in the average balance of
CWIP and was partially offset by an increase in the debt component of the
AFUDC rate.
RESULTS OF OPERATIONS FOR TWELVE MONTHS ENDED SEPTEMBER 30, 1995
Kwh Sales
Kwh sales for the twelve months ended September 30, 1995, increased 3.4%
when compared to the same period last year mostly due to non-firm power
sales for resale reflecting an increase in sales to CG&E. In addition,
increased kwh sales to industrial customers, resulting from growth in the
primary metals, transportation equipment, and chemicals sectors, also
contributed to this increase. Higher domestic and commercial sales
resulting from increases in the average number of customers were also a
factor. These increases were partially offset by a decline in short-term
power sales to other utilities.
Operating Revenues
Total operating revenues increased $82 million (7.3%) for the twelve months
ended September 30, 1995, as compared to the same period last year. This
increase was driven, in part, by the 4.3% retail rate increase and the 1.9%
rate increase for carrying costs on CWIP property as previously discussed.
Increased kwh sales, as discussed above, also contributed to the increase
in revenues.
An analysis of operating revenues is shown below:
Twelve Months
Ended September 30
(in millions)
Operating revenues - September 30, 1994 $1 120
Increase (Decrease) due to change in:
Price per kwh
Retail 53
Sales for resale
Firm power obligations 1
Non-firm power transactions (3)
Total change in price per kwh 51
Kwh sales
Retail 22
Sales for resale
Firm power obligations (3)
Non-firm power transactions 11
Total change in kwh sales 30
Other 1
Operating revenues - September 30, 1995 $1 202
Operating Expenses
Fuel Used in Electric Production
Fuel costs for the twelve months ended September 30, 1995, increased $18
million (4.8%) as compared to the same period last year.
An analysis of fuel costs is shown below:
Twelve Months
Ended September 30
(in millions)
Fuel expense - September 30, 1994 $375
Increase due to change in:
Price of fuel 7
Kwh generation 11
Fuel expense - September 30, 1995 $393
Other Operation
Other operation expenses for the twelve months ended September 30, 1995,
increased $29 million (14.3%) as compared to the same period last year.
This increase was due to a number of factors, including the accrual of
postretirement benefit costs, the amortization of deferred postretirement
benefit costs, an increase in the level of ongoing DSM expenses, the
amortization of deferred DSM costs, and the amortization of merger costs,
all of which are being recovered in revenues pursuant to the February 1995
Order. In addition, charges of approximately $10 million for severance
benefits to former officers were expensed in December 1994. The period to
period comparison also reflects the write-off of previously deferred
litigation expenses during 1994.
Depreciation
Depreciation expense for the twelve months ended September 30, 1995,
decreased $7 million (5.1%) when compared to the same period last year.
This decrease was primarily driven by the adoption of lower depreciation
rates effective in March 1995 pursuant to the February 1995 Order. The
decrease was partially offset by the effect of additions to utility plant
in service.
Other Income and Expenses - Net
Allowance for Equity Funds Used During Construction
The equity component of AFUDC decreased $12 million for the twelve month
period ended September 30, 1995, as compared to the same period last year.
As previously discussed, this decrease was due primarily to an increase in
the average short-term debt outstanding. In addition, a scrubber at Gibson
was placed in service in September 1994 which resulted in a large decrease
in the average balance of CWIP.
Other - net
Other - net increased $7 million (76.9%) for the nine months ended
September 30, 1995, when compared to the same period last year. This
increase is primarily due to an increase in carrying costs on DSM expenses
which resulted from a higher AFUDC rate used to compute carrying costs and
increased DSM expenses to which the rate is applied.
Interest
Interest on Long-term Debt
Interest on long-term debt increased $4 million (6.3%) for the twelve
months ended September 30, 1995, as compared to the same period in 1994.
The increase was primarily a result of the issuance of $60 million
principal amount 5.75% Series B medium-term notes in August 1994, which
matured in August 1995.
Other Interest
Other interest increased $6 million (51.5%) over the same period last year.
The increase was driven, in part, by higher interest rates and an increase in
the average short-term debt outstanding.
Allowance for Borrowed Funds Used During Construction
The debt component of AFUDC decreased $4 million (40.5%) for the twelve
months ended September 30, 1995, as compared to the same period last year.
This decrease was due primarily to a decrease in the average balance of
CWIP and was partially offset by an increase in the debt component of the
AFUDC rate.
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
BALANCE SHEETS
(unaudited)
ASSETS
September 30
December 31
1995
1994
(dollars in thousands)
<S> <C> <C>
Utility Plant - original cost
In service
Electric $185 701 $179
098
Gas 139 083 134
103
Common 19 121 19
122
343 905 332
323
Accumulated depreciation 110 256 104
113
233 649 228
210
Construction work in progress 8 257 8
638
Total utility plant 241 906 236
848
Current Assets
Cash 1 502 1
071
Accounts receivable less accumulated provision
of $1,140,000 at September 30, 1995, and
$457,000 at December 31, 1994, for doubtful
accounts 22 858 33
892
Materials, supplies, and fuel - at average cost
Gas stored for current use 5 774 6
216
Other materials and supplies 1 240 1
406
Property taxes applicable to subsequent year 2 287 2
200
Prepayments and other 637
593
34 298 45
378
Other Assets
Regulatory assets
Deferred merger costs 1 785 1
785
Unamortized costs of reacquiring debt 2 544
- -
Other 2 590 2
718
Other 1 689
399
8 608 4
902
$284 812 $287
128
<FN>
The accompanying notes as they relate to ULH&P are an integral part of these
financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
CAPITALIZATION AND LIABILITIES
September 30 December
31
1995 1994
(dollars in thousands)
<S> <C> <C>
Common Stock Equity
Common stock - $15.00 par value; authorized
shares - 1,000,000; outstanding shares -
585,333 at September 30, 1995 and
December 31, 1994 $ 8 780 $ 8
780
Paid-in capital 18 839 18
839
Retained earnings 80 450 74
203
Total common stock equity 108 069 101
822
Long-term Debt 69 362 89
238
Total capitalization 177 431 191
060
Current Liabilities
Notes payable 26 500 14
500
Accounts payable 21 903 21
655
Accrued taxes (1 082) 2
876
Accrued interest 2 157 2
123
Other 4 461 4
123
53 939 45
277
Other Liabilities
Deferred income taxes 24 536 23
226
Unamortized investment tax credits 5 151 5
364
Accrued pension and other postretirement
benefit costs 11 838 10
356
Income taxes refundable through rates 4 887 4
282
Other 7 030 7
563
53 442 50
791
$284 812 $287
128
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER
COMPANY
STATEMENTS OF INCOME
(unaudited)
Quarter Ended Nine Months
Ended Twelve Months Ended
September 30
September 30 September 30
1995 1994 1995
1994 1995 1994
(in
thousands)
<S> <C> <C> <C>
<C> <C> <C>
Operating Revenues
Electric $51 203 $49 354 $138 585
$138 280 $177 869 $180 019
Gas 5 995 6 678 45 870
53 065 64 776 79 185
Total operating revenues 57 198 56 032 184 455
191 345 242 645 259 204
Operating Expenses
Electricity purchased from parent
company for resale 40 750 37 289 107 725
105 396 137 216 137 031
Gas purchased 2 168 2 727 23 884
29 936 34 456 44 837
Other operation 7 428 7 764 22 481
23 105 31 665 31 435
Maintenance 903 1 424 3 040
4 166 4 347 6 216
Depreciation 2 907 2 643 8 553
7 892 11 305 10 509
Income taxes (242) 461 3 719
4 688 4 373 6 748
Taxes other than income taxes 986 930 2 965
2 945 4 022 3 660
54 900 53 238 172 367
178 128 227 384 240 436
Operating Income 2 298 2 794 12 088
13 217 15 261 18 768
Other Income And Expenses - Net
Allowance for equity funds used
during construction 22 50 78
61 95 53
Income taxes (10) (101) (48)
(57) 65 (56)
Other - net (8) 82 59
417 (122) 361
4 31 89
421 38 358
Income Before Interest 2 302 2 825 12 177
13 638 15 299 19 126
Interest
Interest on long-term debt 1 721 2 039 5 674
6 121 7 714 8 160
Other interest 157 79 376
296 475 460
Allowance for borrowed funds used
during construction (24) (59) (120)
(134) (169) (162)
1 854 2 059 5 930
6 283 8 020 8 458
Net Income $ 448 $ 766 $ 6 247
$ 7 355 $ 7 279 $ 10 668
<FN>
The accompanying notes as they relate to ULH&P are an integral part of these
financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
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 September 30, 1995
Balance July 1, 1995 $8 780 $18 839 $80
002 $107 621
Net income
448 448
Balance September 30, 1995 $8 780 $18 839 $80
450 $108 069
Quarter Ended September 30, 1994
Balance July 1, 1994 $8 780 $18 839 $75
916 $103 535
Net income
766 766
Balance September 30, 1994 $8 780 $18 839 $76
682 $104 301
Nine Months Ended September 30, 1995
Balance January 1, 1995 $8 780 $18 839 $74
203 $101 822
Net income 6
247 6 247
Balance September 30, 1995 $8 780 $18 839 $80
450 $108 069
Nine Months Ended September 30, 1994
Balance January 1, 1994 $8 780 $18 839 $69
327 $ 96 946
Net income 7
355 7 355
Balance September 30, 1994 $8 780 $18 839 $76
682 $104 301
Twelve Months Ended September 30, 1995
Balance October 1, 1994 $8 780 $18 839 $76
682 $104 301
Net income 7
279 7 279
Dividends on common stock (3
511) (3 511)
Balance September 30, 1995 $8 780 $18 839 $80
450 $108 069
Twelve Months Ended September 30, 1994
Balance October 1, 1993 $8 780 $18 839 $68
941 $ 96 560
Net income 10
668 10 668
Dividends on common stock (2
927) (2 927)
Balance September 30, 1994 $8 780 $18 839 $76
682 $104 301
<FN>
The accompanying notes as they relate to ULH&P are an integral part of these
financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER
COMPANY
STATEMENTS OF CASH
FLOWS
(unaudited)
Quarter Ended
Nine Months Ended Twelve Months Ended
September 30
September 30 September 30
1995 1994
1995 1994 1995 1994
(in thousands)
<S> <C> <C> <C>
<C> <C> <C>
Operating Activities
Net income $ 448 $ 766 $
6 247 $ 7 355 $ 7 279 $ 10 668
Items providing (using) cash currently:
Depreciation 2 907 2 643
8 553 7 892 11 305 10 509
Deferred income taxes and investment tax
credits - net 2 044 1 588
1 702 1 798 1 946 669
Allowance for equity funds used during
construction (22) (50)
(78) (61) (95) (53)
Regulatory assets
Deferred merger costs - (1 785)
- - (1 785) - (1 785)
Other 43 43
128 128 170 170
Changes in current assets and current
liabilities
Accounts receivable 2 943 3 982
11 034 12 367 7 468 2 099
Materials, supplies, and fuel (1 476) (1 974)
608 436 1 215 358
Accounts payable (992) (3 512)
248 (7 434) 5 305 (1 085)
Accrued taxes and interest (6 083) (1 868)
(3 924) 1 736 (2 353) 1 313
Other items - net (3 378) (1 097)
595 2 491 884 4 305
Net cash provided by (used in)
operating activities (3 566) (1 264)
25 113 24 923 33 124 27 168
Financing Activities
Issuance of long-term debt 14 704 -
14 704 - 14 704 -
Redemption of long-term debt (21 302) -
(37 036) - (37 036) -
Change in short-term debt 13 000 7 000
12 000 (12 500) 14 000 (6 000)
Dividends on common stock - -
- - - (3 511) (2 927)
Net cash provided by (used in)
financing activities 6 402 7 000
(10 332) (12 500) (11 843) (8 927)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (4 582) (5 070)
(14 350) (13 564) (21 115) (18 655)
Net cash provided by (used in)
investing activities (4 582) (5 070)
(14 350) (13 564) (21 115) (18 655)
Net increase (decrease) in cash and
temporary cash investment (1 746) 666
431 (1 141) 166 (414)
Cash and temporary cash investments at
beginning of period 3 248 670
1 071 2 477 1 336 1 750
Cash and temporary cash investments at
end of period $ 1 502 $ 1 336 $
1 502 $ 1 336 $ 1 502 $ 1 336
<FN>
The accompanying notes as they relate to ULH&P are an integral part of these
financial statements.
</TABLE>
<PAGE>
THE UNION LIGHT, HEAT AND POWER COMPANY
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 1995
Kwh Sales
Kwh sales increased 7.2% for the quarter ended September 30, 1995, as a result
of increased sales to domestic and commercial customers. The increase in
domestic and commercial sales resulted from warmer weather during the period
and increases in the average number of customers.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the third quarter of 1995
decreased .6% as compared to the third quarter of 1994. The decline was
attributable to decreased sales volumes to domestic, commercial, and
industrial customers. Warmer weather contributed to the decrease in domestic
and commercial sales. The decrease in industrial sales was attributable to
the trend of industrial customers electing to purchase directly from
suppliers, creating additional demand for transportation services provided by
ULH&P. The resulting significant increase in transportation volumes more than
offset the decline in industrial sales and was primarily attributable to
growth in the chemicals and paper products sectors.
Operating Revenues
Electric Operating Revenues
Electric operating revenues increased $1.8 million (3.7%) for the quarter
ended September 30, 1995, over the comparable period of 1994. This increase
reflects the previously discussed increases in kwh sales.
Gas Operating Revenues
Gas operating revenues decreased $.7 million (10.2%) for the quarter ended
September 30, 1995, over the comparable period of 1994. This decrease was the
result of the previously discussed decline in total volumes sold and the
operation of adjustment clauses reflecting a decline in the average cost of
gas purchased. An increase in the relative volume of gas transported to gas
sold also contributed to the decrease. Providing transportation services does
not necessitate the recovery of gas purchased costs. Consequently, the
revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased expense, ULH&P's largest operating expense, increased
$3.5 million (9.3%) for the quarter as compared to the same period last year.
An analysis of electricity purchased costs is shown below:
Quarter
Ended September 30
(in thousands)
Electricity purchased expense - September 30, 1994 $37 289
Increase due to change in:
Price of electricity 565
Kwh purchased 2 896
Electricity purchased expense - September 30, 1995 $40 750
Gas Purchased
Gas purchased for the quarter decreased $.6 million (20.5%) when compared to
the same period last year. This decrease was attributable to a 15.5% decline
in the average cost per Mcf purchased and a 5.9% decrease in volumes
purchased.
Other Operation
Other operation expense decreased $.3 million (4.3%) for the quarter ended
September 30, 1995, as compared to the same period last year. The decrease
was primarily attributable to decreased gas and electric distribution
expenses.
Maintenance
The decrease in maintenance expense of $.5 million (36.6%) for the third
quarter of 1995 as compared to the same period last year was primarily due to
lower maintenance costs on gas and electric distribution facilities.
Depreciation
The increase in depreciation expense of $.3 million (10.0%) for the third
quarter of 1995 as compared to the same period last year was primarily due to
additions to electric and gas plant in service.
Interest
Interest charges for the three month period ended September 30, 1995,
decreased $.2 million (10.0%) from the comparable period of 1994, primarily
due to the refinancing of $35 million of long-term debt during 1995.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
Kwh Sales
Kwh sales for the nine months ended September 30, 1995, increased 3.5% over
the same period of 1994, primarily as a result of increased commercial and
industrial sales volumes. The higher commercial sales were the result of
warmer weather during the latter part of the summer cooling season and an
increase in the average number of customers. The increased industrial sales
reflect continued growth in the paper products and primary metals sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the nine months ended September
30, 1995, decreased 2.3% as compared to the same period of 1994, as a result
of decreased sales volumes to domestic, commercial, and industrial customers.
Milder weather during the winter heating season contributed to the decrease in
domestic and commercial sales. The decrease in industrial sales was
attributable to the trend of industrial customers electing to purchase
directly from suppliers, creating additional demand for transportation
services provided by ULH&P. The resulting increase in transportation volumes
more than offset the decline in industrial sales.
Operating Revenues
Electric Operating Revenues
Electric operating revenues increased $.3 million (.2%) for the nine months
ended September 30, 1995, over the comparable period of 1994. This increase
reflects the previously discussed increases in kwh sales, the effects of which
were partially offset by decreases in fuel adjustment clauses reflecting a
decline in the average cost of electricity purchased.
An analysis of electric operating revenues is shown below:
Nine Months
Ended September 30
(in thousands)
Operating revenues - September 30, 1994 $138 280
Increase (Decrease) due to change in:
Price per kwh (4 508)
Kwh sales 4 840
Other (27)
Operating revenues - September 30, 1995 $138 585
Gas Operating Revenues
Gas operating revenues decreased $7.2 million (13.6%) in the first nine months
of 1995 when compared to the same period last year. This decrease was the
result of the previously discussed decline in total volumes sold and the
operation of adjustment clauses reflecting a decline in the average cost of
gas purchased. An increase in the relative volume of gas transported to gas
sold also contributed to the decrease. Providing transportation services does
not necessitate the recovery of gas purchased costs. Consequently, the
revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased expense increased $2.3 million (2.2%) for the first nine
months of 1995 as compared to last year.
An analysis of electricity purchased costs is shown below:
Nine Months
Ended September 30
(in thousands)
Electricity purchased expense - September 30, 1994 $105 396
Increase (Decrease) due to change in:
Price of electricity (4 995)
Kwh purchased 7 324
Electricity purchased expense - September 30, 1995 $107 725
Gas Purchased
Gas purchased expense for the first nine months decreased $6.1 million (20.2%)
when compared to the same period last year. The decrease was attributable to
a 7.7% decline in volumes purchased and a 13.5% decrease in the average cost
per Mcf of gas purchased.
Other Operation
Other operation expenses decreased $.6 million (2.7%) for the nine months
ended September 30, 1995, as compared to the same period last year. The
decrease was attributable to decreased gas and electric distribution expenses
and reduced gas production costs.
Maintenance
The decrease in maintenance expense of $1.1 million (27.0%) for the nine
months ended September 30, 1995, as compared the same period last year was due
primarily to lower maintenance costs on gas and electric distribution
facilities and reduced maintenance on facilities used for administrative and
general functions.
Depreciation
The increase in depreciation expense of $.7 million (8.4%) for the nine
months ended September 30, 1995, as compared the same period last year was
primarily due to additions to electric and gas plant in service.
Interest
Interest charges for the nine month period ended September 30, 1995, decreased
$.4 million (5.6%) from the comparable period of 1994, primarily due to the
refinancing of $35 million of long-term debt during 1995.
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1995
Kwh Sales
Kwh sales for the twelve months ended September 30, 1995, increased 2.7% when
compared to the same period of 1994. A decline in domestic sales volumes due
to milder weather during the winter heating season was more than offset by
increases in commercial and industrial sales and sales to public authorities.
The higher commercial sales and sales to public authorities resulted from
warmer weather during the summer cooling season and increases in the average
number of both customer groups. The increased industrial sales primarily
reflect growth in the primary metals sector.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended September
30, 1995, decreased 7.4% when compared to the same period of 1994, as a result
of lower domestic, commercial, and industrial sales. Milder weather during
the winter heating season contributed to the decrease in domestic and
commercial sales, while industrial sales decreased as customers elected to
purchase directly from suppliers, creating additional demand for
transportation services provided by ULH&P. The resulting increase in
transportation volumes more than offset the lower industrial sales and was
primarily due to growth in the paper products and primary metals sectors.
Operating Revenues
Electric Operating Revenues
Electric operating revenues decreased $2.2 million (1.2%) for the twelve
months ended September 30, 1995, over the comparable period of 1994. The
decrease was attributable to the operation of adjustment clauses reflecting a
decline in the average cost of electricity purchased and was partially offset
by the previously discussed increases in sales volumes.
An analysis of electric operating revenues is shown below:
Twelve Months
Ended September 30
(in thousands)
Operating revenues - September 30, 1994 $180 019
Increase (Decrease) due to change in:
Price per kwh (6 896)
Kwh sales 4 833
Other (87)
Operating revenues - September 30, 1995 $177 869
Gas Operating Revenues
Gas operating revenues declined $14.4 million (18.2%) for the twelve months
ended September 30, 1995, when compared to the same period last year. This
decrease was the result of the aforementioned decline in volumes sold and the
operation of adjustment clauses reflecting a lower average cost of gas
purchased. An increase in the relative volume of gas transported to gas sold
also contributed to the decrease. Providing transportation services does not
necessitate the recovery of gas purchased costs. Consequently, the revenue
per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased expense increased slightly for the twelve months ended
September 30, 1995, as compared to last year.
An analysis of electricity purchased costs is shown below:
Twelve Months
Ended September 30
(in thousands)
Electricity purchased expense - September 30, 1994 $137 031
Increase (Decrease) due to change in:
Price of electricity (7 151)
Kwh purchased 7 336
Electricity purchased expense - September 30, 1995 $137 216
Gas Purchased
Gas purchased expense for the twelve months ended September 30, 1995,
decreased $10.4 million (23.2%) when compared to the same period last year.
This decrease was attributable to a 12.1% decline in volumes purchased and a
12.6% decrease in the average cost per Mcf of gas purchased.
Other Operation
Other operation expenses increased $.2 million (.7%) for the twelve months
ended September 30, 1995, as compared to the same period last year, primarily
due to recognition of nonrecurring charges in December 1994 for merger-related
costs and other costs ULH&P does not expect to recover from customers. These
nonrecurring charges were partially offset by a number of items, including
decreased gas production and distribution expenses and reductions in
administrative and general expenses.
Maintenance
The decrease in maintenance expense of $1.9 million (30.1%) for the twelve
months ended September 30, 1995, as compared the same period last year was due
primarily to lower maintenance costs on gas and electric distribution
facilities.
Depreciation
The increase in depreciation expense of $.8 million (7.6%) for the twelve
months ended September 30, 1995, as compared the same period last year was
primarily due to additions to electric and gas plant in service.
Taxes Other than Income Taxes
Taxes other than income taxes increased $.4 million (9.9%) for the twelve
months ended September 30, 1995, over the same period of 1994, primarily due
to increased property taxes as a result of higher property tax rates.
Interest
Interest charges for the twelve month period ended September 30, 1995,
decreased $.4 million (5.2%) from the comparable period of 1994, primarily due
to the refinancing of $35 million of long-term debt during 1995.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Cinergy, CG&E, PSI, and ULH&P
1. These Financial Statements reflect all adjustments (which include only
normal, recurring adjustments) necessary in the opinion of these companies for
a fair presentation of the interim results. These statements should be read
in conjunction with the Financial Statements and the notes thereto included in
each registrant's 1994 Form 10-K. Certain amounts in the 1994 Financial
Statements have been reclassified to conform to the 1995 presentation.
Cinergy and PSI
2. As discussed in Cinergy's and PSI's 1994 Form 10-K, in July 1994, PSI
filed a petition with the IURC for a retail rate increase, and in May 1995,
filed testimony supporting a 12.8% ($127.9 million) annual increase. In an
October 1995 update filing with the IURC, PSI lowered its rate increase
request to 11.5% ($115.6 million) reflecting updated revenue and expense
items. Major components of the increase include, among other things, the
costs of the Clean Coal Project and a scrubber at Gibson. On November 1,
1995, the UCC filed testimony with the IURC recommending a 3.7% ($36.9
million) retail rate increase. The primary differences between PSI's case and
the UCC's filing are the requested rate of return and other expense items,
including DSM costs. An order is anticipated in the second quarter of 1996.
PSI cannot predict what action the IURC may take with respect to this proposed
rate increase.
Cinergy and CG&E
3. In July 1995, CG&E filed a request with the PUCO to begin settlement
discussions on a gas rate increase with intervenors who have participated in
previous rate applications and represent the various classes of gas customers
served by CG&E. The proposed annual increase, estimated to be $30.8 million,
would increase annual revenues approximately 8.8%. The proposed increase, to
be effective in late 1996, is being requested, in part, to recover capital
investments made since the last gas rate increase in 1993. Also, the request
includes a proposal to initiate a pilot program that would allow residential
customers to choose their gas supplier and have CG&E transport the gas for
them. A full rate application is expected to be filed with the PUCO in
December 1995. CG&E cannot predict the outcome of these settlement
discussions nor what actions the PUCO may take with respect to the proposed
rate increase.
Cinergy, CG&E, PSI, and ULH&P
4. SFAS 121, which is effective for Cinergy and its subsidiaries in January
1996, is not expected to have an adverse impact on financial condition or
results of operations upon adoption, based on the regulatory environment in
which Cinergy currently operates. However, this may change in the future as
deregulation, competitive factors, and potential restructuring influence the
electric utility industry.
Cinergy and CG&E
5. All outstanding shares of CG&E's Cumulative Preferred Stock, 7.44%
Series and 9.15% Series, totaling $90 million, were redeemed at a per share
price of $101 and $106.10, respectively, on July 1, 1995.
Cinergy and CG&E
6.(a) As previously discussed in Cinergy's and CG&E's 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.
Cinergy, CG&E, and ULH&P
(b) In June 1995, ULH&P redeemed $5 million principal amount of its 10
1/4% first mortgage bonds (due June 1, 2020) at par with cash deposited in the
Maintenance and Replacement Fund, and the remaining $10 million principal
amount of such bonds at the redemption price of 107.34%.
Additionally, on September 1, 1995, ULH&P redeemed all of its 9.70% first
mortgage bonds (due July 1, 2019) at a redemption price of 106.51%.
Cinergy and CG&E
7.(a) CG&E issued $150 million principal amount of 6.90% debentures (due
June 1, 2025) and $100 million principal amount of 8.28% junior
subordinated deferrable interest debentures (due June 30, 2025) in June and
July 1995, respectively. The proceeds from these issuances were used in
conjunction with the early redemption of preferred stock and long-term debt.
Cinergy, CG&E, and ULH&P
(b) On July 25, 1995, ULH&P issued $15 million of 7.65% debentures (due July
15, 2025). The proceeds from the issuance were used in conjunction with the
early redemption of long-term debt.
Cinergy and CG&E
(c) On September 13, 1995, CG&E issued Series A and Series B ($42 million
each series) of State of Ohio, Air Quality Development Revenue Refunding Bonds
(due September 1, 2030). The bonds were issued at a variable interest rate,
determined daily, and will continue to bear interest at such rate until
converted by CG&E to a different interest rate mode as permitted by the
respective indentures. Proceeds from the sales are being held in escrow and
will be used to redeem on December 1, 1995, $84 million of State of Ohio 10
1/8% Pollution Control Revenue Bonds, 1985 Series (due December 1, 2015) at a
redemption price of 102.5%. The amount being held in escrow is reflected in
the consolidated balance sheets as a restricted deposit.
Cinergy and PSI
8.(a) Coal tar residues, related hydrocarbons, and various metals have been
found at former MGP sites in Indiana, including, but not limited to, several
sites previously owned by PSI. PSI has identified at least 21 MGP sites which
it previously owned, including 19 it sold in 1945 to IGC. IGC has informed
PSI of the basis for its position that PSI, as a PRP under the CERCLA, should
contribute to IGC's response costs related to investigating and remediating
contamination at MGP sites which PSI sold to IGC.
In February 1995, PSI received notification from NIPSCO alleging PSI is a
PRP under the CERCLA with respect to contamination associated with MGP sites
previously owned and/or operated by both PSI and NIPSCO (or their
predecessors). The notification included seven sites, five of which PSI
acquired from NIPSCO and subsequently sold to IGC.
PSI has placed its insurance carriers on notice of IGC's and NIPSCO's
claims.
In May 1995, the IURC denied IGC's request for recovery of costs incurred
in complying with Federal, state, and local environmental regulations related
to MGP sites in which IGC has an interest, including sites acquired from PSI.
IGC has appealed this decision, which IGC contends is contrary to decisions
made by other state utility commissions with respect to this issue. In August
1995, the IURC granted PSI's motion to establish a sub-docket to PSI's pending
retail rate case in order to consider PSI's rate recovery of any MGP site-
related costs it may incur.
At this time, PSI is unable to predict the nature, extent, and costs of,
or PSI's responsibility for, any future environmental investigations and
remediations which may be required at MGP sites owned or previously owned by
PSI; however, any costs that ultimately are incurred may be material. In
addition, PSI is unable to predict, at this time, the extent to which the IURC
may allow rate recovery of such costs.
Cinergy and CG&E
(b) Lawrenceburg also has an MGP site which is under investigation to
determine a remediation strategy. Lawrenceburg had applied to have the site
included in the IDEM's voluntary cleanup program. In May 1995, Lawrenceburg
and the IDEM reached an agreement to include the Lawrenceburg MGP site in such
voluntary cleanup program. A proposed remediation plan will be submitted in
the near future. The remediation and cleanup costs for this site are not
expected to have a material impact on results of operations or financial
condition.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Senior Security Ratings
Cinergy, CG&E, PSI, and ULH&P
In July 1995, S&P Ratings Group raised its ratings of Cinergy's operating
units' senior secured debt to A- from BBB+, removing the companies from its
credit watch list. The companies had been on credit watch since October 31,
1994. S&P also raised the ratings of the operating units' senior unsecured
debt and preferred stock from BBB to BBB+. The ratings group indicated these
actions are a result of lower combined power production costs, reduced
operation and maintenance expenses, and deferral of capital expenditures
brought about as a result of the merger.
In addition, in August 1995, D&P raised Cinergy's operating units' credit
ratings. The ratings of CG&E's first mortgage bonds and collateralized
pollution control revenue bonds were raised to A- from BBB+ while the ratings
of CG&E's unsecured debentures were raised to BBB+ from BBB. PSI's first
mortgage bonds and medium term notes were upgraded to A- from BBB+. The
preferred stock ratings of both companies were reaffirmed at BBB. ULH&P's
first mortgage bonds were assigned a new rating of A-. In assigning these
ratings, D&P stated the merger will result in lower new capacity needs and
electric production costs and enhanced transmission capabilities.
Regulatory Matters
Cinergy, CG&E, PSI, and ULH&P
PUHCA Reform
In June 1995, after a year-long review of its continuing regulation of public
utility holding companies under the PUHCA, the SEC endorsed recommendations
for reform of the PUHCA. The recommendations call for repeal and, pending
repeal, significant administrative reform of the 60 year old statute. While
the report offers three alternative approaches to repeal and legislative
reform, the report's preferred option is repeal coupled with a transition
period of one year or longer and a transfer of certain consumer-protection
provisions of PUHCA to the FERC. The report further recommends that, pending
consideration of legislative options, the SEC take prompt administrative
action, by rulemaking and on a case-by-case basis, to modernize and simplify
regulation under PUHCA, with particular reference to financing transactions,
diversification into nonutility businesses, utility mergers and acquisitions
and PUHCA's "integration" standards. In the latter regard, the report
recommends a changed interpretation of PUHCA to permit registered holding
companies to own combination electric and gas utility companies provided the
affected states agree. Subsequent to the report's issuance, the SEC adopted
rule changes exempting various types of financing transactions by utility and
nonutility subsidiaries of registered holding companies. The SEC also
proposed a rule that would exempt investments by registered systems in
specified "energy-related companies" subject to certain conditions.
In October 1995, a bill was introduced in the U.S. Senate providing for the
repeal of PUHCA. The bill is pending before Congress.
Cinergy and PSI
PSI's July 1994 Retail Rate Petition
As discussed in Cinergy's and PSI's 1994 Form 10-K, in July 1994, PSI filed a
petition with the IURC for a retail rate increase, and in May 1995, filed
testimony supporting a 12.8% ($127.9 million) annual increase. In an
October 1995 update filing with the IURC, PSI lowered its rate increase
request to 11.5% ($115.6 million) reflecting updated revenue and expense
items. Major components of the increase include, among other things, the
costs of the Clean Coal Project and a scrubber at Gibson. On November 1,
1995, the UCC filed testimony with the IURC recommending a 3.7% ($36.9
million) retail rate increase. The primary differences between PSI's case and
the UCC's filing are the requested rate of return and other expense items,
including DSM costs. An order is anticipated in the second quarter of 1996.
Assuming this petition is satisfactorily addressed by the IURC, Cinergy's
objective is to manage costs in order to delay the need for additional rate
relief by PSI. PSI cannot predict what action the IURC may take with respect
to this proposed rate increase.
Cinergy and CG&E
CG&E Rate Matters
In July 1995, CG&E filed a request with the PUCO to begin settlement
discussions on a gas rate increase involving intervenors who have participated
in previous rate applications and represent the various classes of gas
customers served by CG&E. The proposed annual increase, estimated to be $30.8
million, would increase annual revenues approximately 8.8%. The proposed
increase, anticipated to be effective in late 1996, is being requested, in
part, to recover capital investments made since the last gas rate increase in
1993. Also, the request includes a proposal to initiate a pilot program that
would allow residential customers to choose their gas supplier and have CG&E
transport the gas for them. A full rate application is expected to be filed
with the PUCO in December 1995. CG&E cannot predict the outcome of these
settlement discussions nor what actions the PUCO may take with respect to the
proposed rate increase.
Cinergy, CG&E, PSI, and ULH&P
MEGA-NOPR
The FERC's MEGA-NOPR on open access 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 filed tariffs for their own bulk power transactions, establish an
electronic bulletin board, and establish a contract-based approach to stranded
costs.
Cinergy filed comments in June 1995 in response to the MEGA-NOPR. In the
filing, Cinergy reaffirmed support for FERC's authority to order utilities
owning transmission systems to provide access to other entities at rates and
terms comparable to those they provide affiliated companies. In August 1995,
Cinergy filed additional comments concerning the transmission pricing aspects
of the MEGA-NOPR. A final order is expected to be issued during the first
half of 1996.
Environmental Issues
Cinergy, CG&E, and PSI
MGP Sites
Coal tar residues, related hydrocarbons, and various metals have been found at
former MGP sites in Indiana, including, but not limited to, several sites
previously owned by PSI. PSI has identified at least 21 MGP sites which it
previously owned, including 19 it sold in 1945 to IGC. IGC has informed PSI
of the basis for its position that PSI, as a PRP under the CERCLA, should
contribute to IGC's response costs related to investigating and remediating
contamination at MGP sites which PSI sold to IGC.
In February 1995, PSI received notification from NIPSCO alleging PSI is a PRP
under the CERCLA with respect to contamination associated with MGP sites
previously owned and/or operated by both PSI and NIPSCO (or their
predecessors). The notification included seven sites, five of which PSI
acquired from NIPSCO and subsequently sold to IGC.
PSI has placed its insurance carriers on notice of IGC's and NIPSCO's claims.
In May 1995, the IURC denied IGC's request for recovery of costs incurred in
complying with Federal, state, and local environmental regulations related to
MGP sites in which IGC has an interest, including sites acquired from PSI.
IGC has appealed this decision, which IGC contends is contrary to decisions
made by other state utility commissions with respect to this issue. In August
1995, the IURC granted PSI's motion to establish a sub-docket to the pending
retail rate case in order to consider PSI's rate recovery of any MGP site-
related costs it may incur.
At this time, PSI is unable to predict the nature, extent, and costs of, or
PSI's responsibility for, any future environmental investigations and
remediations which may be required at MGP sites owned or previously owned by
PSI; however, any costs that ultimately are incurred may be material. In
addition, PSI is unable to predict, at this time, the extent to which the IURC
may allow rate recovery of such costs.
Lawrenceburg also has an MGP site which is under investigation to determine a
remediation strategy. Lawrenceburg had applied to have the site included in
the IDEM's voluntary cleanup program. In May 1995, Lawrenceburg and the IDEM
reached an agreement to include the Lawrenceburg MGP site in such voluntary
cleanup program. A proposed remediation plan will be submitted in the near
future. The remediation and cleanup costs for this site are not expected to
have a material impact on results of operations or financial condition.
Accounting Issues
Cinergy, CG&E, PSI, and ULH&P
New Accounting Standard
SFAS 121, which is effective for Cinergy and its subsidiaries in January 1996,
is not expected to have an adverse impact on financial condition or results of
operations upon adoption, based on the regulatory environment in which Cinergy
currently operates. However, this may change in the future as deregulation,
competitive factors, and potential restructuring influence the electric
utility industry.
CAPITAL REQUIREMENTS
Cinergy and PSI
New Generation
PSI's 25-year contractual agreement with Destec will commence upon commercial
operation of the Clean Coal Project. The agreement requires PSI to pay Destec
a fixed monthly fee plus certain monthly operating expenses. Over the next
five years, the fixed fee is expected to total $56 million, and the variable
fee is estimated at $95 million. As discussed in Cinergy's and PSI's 1994
Form 10-K, PSI received authorization in the February 1995 Order to defer
these costs for subsequent recovery in an IURC order associated with PSI's
July 1994 retail rate petition. Additionally, PSI's portion of the Clean Coal
Project's operating costs is estimated to be approximately $9 million,
including fuel, during the one-year demonstration period.
CAPITAL RESOURCES
Cinergy, CG&E, PSI, and ULH&P
Long-term Debt
Currently, Cinergy's utility subsidiaries have state utility commission
regulatory authority for securities issuances as follows:
CG&E $250 million
PSI 298 million
ULH&P 40 million
For information regarding recent securities redemptions and issuances, see
Notes 6 and 7 of the "Notes to Financial Statements".
Cinergy, CG&E, and PSI
Preferred Stock
Currently, PSI has IURC authority to issue up to $40 million of preferred
stock.
For information regarding recent redemptions of preferred stock by CG&E, see
Note 5 of the "Notes to Financial Statements".
Cinergy, CG&E, PSI, and ULH&P
Short-term Debt
The operating subsidiary companies of Cinergy have the following short-term
debt authorizations and lines of credit:
Committed Unused
Authorized Lines Lines
(in millions)
Cinergy & Subsidiaries $783 $343 $113
CG&E & Subsidiaries 435 112 91
PSI 338 230 2
ULH&P 35 30 9
Additionally, Cinergy has a $100 million credit facility, which expires
September 27, 1997, of which $79 million remained unused at September 30,
1995.
Cinergy and CG&E
Other
In September 1995, CG&E began soliciting proxies from the holders of preferred
stock and from Cinergy, as the holder of all outstanding shares of common
stock, for a special meeting of shareholders to be held November 20, 1995, for
the purpose of amending CG&E's Articles. The proposed amendment would, if
adopted, eliminate a restriction on the amount of unsecured debt that CG&E can
issue, or, if such proposal is not adopted, an alternate proposal, if adopted,
would amend the Articles by suspending, for a 10-year period, the restriction
on the amount of unsecured debt CG&E can issue.
RESULTS OF OPERATIONS
Cinergy, CG&E, PSI, and ULH&P
Reference is made to "ITEM 1. FINANCIAL STATEMENTS" in "PART I - Financial
Information".
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Cinergy, CG&E, and PSI
Power International Litigation
On October 25, 1995, a suit was filed in the Federal District Court for the
Southern District of Ohio by three former employees of Power International,
naming as defendants Power International, Cinergy, Cinergy Investments,
CG&E, PSI, James E. Rogers, and William J. Grealis. The lawsuit, which
stems from the termination of employment of the three former employees,
alleges that they entered into employment contracts with Power
International based on the opportunity to participate in potential profits
from future investments in energy projects in central and eastern Europe.
The suit alleges causes of action based upon, among other theories, breach
of contract related to the events surrounding the termination of their
employment and fraud and misrepresentation related to the level of
financial support for future projects. The suit alleges compensatory
damages of $154 million based upon assumed future success of potential
future investments and punitive damages of three times that amount. All
defendants intend to vigorously defend against the charges based upon
meritorious defenses. Cinergy, CG&E, and PSI are currently unable to
predict the outcome of the litigation.
Cinergy, CG&E, and PSI
Merger Litigation
In August 1995, AEP filed a petition in the United States Court of Appeals
for the District of Columbia Circuit for review of the FERC's Merger Order.
AEP has objected to the Merger Order alleging that the post-merger
operations of Cinergy would require the use of AEP's transmission
facilities on a continuous basis without compensation. AEP contends that
the FERC, in issuing the Merger Order, did not adequately evaluate the
impact on AEP or whether the need to use AEP's transmission facilities
would interfere with Cinergy achieving merger benefits. In addition, AEP
claims that the FERC failed to evaluate the extent to which the merged
facilities' operations would be consistent with the integrated public
utility concept of the PUHCA. CG&E and PSI have intervened in this action
and have filed a Motion to Dismiss. At this time, Cinergy, CG&E, and PSI
cannot predict the outcome of the appeal.
Cinergy, CG&E, and PSI
Shareholder Litigation
As previously reported in Cinergy's, CG&E's, and PSI's 1994 Form 10-K, in
March 1993, in conjunction with a proposed tender offer for Resources,
IPALCO filed suit in District Court against Resources, Cinergy, and James
E. Rogers, which was subsequently dismissed in November 1993. In March
1993 and in the weeks following, six suits with claims similar to those of
IPALCO were filed by purported shareholders of Resources. Four of the
suits were filed in District Court, and two were filed in state courts,
although one of those two was subsequently consolidated with the four in
the District Court.
In January 1994, the parties to this shareholder litigation executed a
Stipulation and Agreement of Dismissal settling and dismissing with
prejudice all of the parties' claims except for plaintiffs' petitions for
fees and expenses and defendants' right to object thereto. An agreement in
principle has been reached which contemplates that counsel for all
plaintiffs will receive from PSI a portion of the fees and expenses
claimed. The parties have provided notice to affected shareholders of a
hearing to be held on November 9, 1995, during which the order on the fees
and expenses will be considered by the District Court. Pending such order,
the agreed upon fees and expenses have been deposited into an interest-
bearing escrow account.
Cinergy, CG&E, and PSI
Also, see Notes 2, 3, and 8 of the "Notes to Financial Statements" in "Part
I - Financial Information".
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
Exhibit
Designation Nature of Exhibit
Cinergy and CG&E
4-a Loan Agreement between CG&E and the
State of Ohio Air Quality Development
Authority dated as of September 13,
1995.
Cinergy and CG&E
4-b Loan Agreement between CG&E and the
State of Ohio Air Quality Development
Authority dated as of September 13,
1995.
Cinergy, CG&E, PSI, and ULH&P
27 Financial Data Schedules (included in
electronic submission only).
Cinergy, CG&E, PSI, and ULH&P
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1995.
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 Cinergy, CG&E, PSI, and ULH&P believe that the
disclosures are adequate to make the information presented not misleading. In
the opinion of Cinergy, CG&E, PSI, and ULH&P, 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 Registrants have duly caused this report to be signed by an
officer and the chief accounting officer on their behalf by the undersigned
thereunto duly authorized.
CINERGY CORP.
The Cincinnati Gas & Electric Company
PSI Energy, Inc.
The Union Light, Heat and Power Company
Registrants
Date: November 8, 1995 /S/J. Wayne Leonard
Duly Authorized Officer
Date: November 8, 1995 /S/Charles J. Winger
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED
STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<C> <S>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<PERIOD-TYPE> 9-MOS
<BOOK-VALUE> PER-BOOK
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