|
Previous: CHURCHILL DOWNS INC, 10-Q, 1999-11-15 |
Next: INVESCO CAPITAL MANAGEMENT INC, 13F-HR, 1999-11-15 |
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, 1999
OR
/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number |
Registrant, State of Incorporation, Address, and Telephone Number |
I.R.S. Employer Identification No. |
||
---|---|---|---|---|
1-11377 | CINERGY CORP. (A Delaware Corporation) 139 East Fourth Street Cincinnati, Ohio 45202 (513) 287-2644 |
31-1385023 | ||
1-1232 | THE CINCINNATI GAS & ELECTRIC COMPANY (An Ohio Corporation) 139 East Fourth Street Cincinnati, Ohio 45202 (513) 287-2644 |
31-0240030 | ||
1-3543 | PSI ENERGY, INC. (An Indiana Corporation) 1000 East Main Street Plainfield, Indiana 46168 (317) 839-9611 |
35-0594457 | ||
2-7793 | THE UNION LIGHT, HEAT AND POWER COMPANY (A Kentucky Corporation) 139 East Fourth Street Cincinnati, Ohio 45202 (513) 287-2644 |
31-0473080 |
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 the 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, 1999, shares of Common Stock outstanding for each registrant were as listed:
Company |
Shares |
|
---|---|---|
Cinergy Corp., par value $.01 per share | 158,917,227 | |
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 |
Item Number |
|
Page Number |
||
---|---|---|---|---|
Glossary of Terms | 3 | |||
PART I. FINANCIAL INFORMATION |
||||
1 |
|
Financial Statements |
|
|
Cinergy Corp | ||||
Consolidated Balance Sheets | 7 | |||
Consolidated Statements of Income | 9 | |||
Consolidated Statements of Changes in Common Stock Equity | 10 | |||
Consolidated Statements of Cash Flows | 12 | |||
|
|
The Cincinnati Gas & Electric Company |
|
|
Consolidated Balance Sheets | 14 | |||
Consolidated Statements of Income and Comprehensive Income | 16 | |||
Consolidated Statements of Cash Flows | 17 | |||
|
|
PSI Energy, Inc. |
|
|
Consolidated Balance Sheets | 19 | |||
Consolidated Statements of Income and Comprehensive Income | 21 | |||
Consolidated Statements of Cash Flows | 22 | |||
|
|
The Union Light, Heat and Power Company |
|
|
Balance Sheets | 24 | |||
Statements of Income | 26 | |||
Statements of Cash Flows | 27 | |||
|
|
Notes to Financial Statements |
|
28 |
2 |
|
Management's Discussion and Analysis of Financial Condition and Results of Operations |
|
|
Financial Condition | 38 | |||
Capital Resources and Requirements | 43 | |||
Results of Operations for the Quarter Ended September 30, 1999 | 46 | |||
Results of Operations for the Nine Months Ended September 30, 1999 | 50 | |||
Results of Operations for ULH&P for the Nine Months Ended September 30, 1999 |
54 | |||
3 |
|
Quantitative and Qualitative Disclosures About Market Risk |
|
54 |
PART II. OTHER INFORMATION |
||||
1 |
|
Legal Proceedings |
|
55 |
6 |
|
Exhibits and Reports on Form 8-K |
|
55 |
|
|
Signatures |
|
56 |
The following abbreviations or acronyms used in the text of this combined Form 10-Q are defined below:
TERM |
DEFINITION |
|
---|---|---|
1998 Form 10-K | Combined 1998 Annual Report on Form 10-K filed separately by Cinergy, CG&E, PSI, and ULH&P | |
Avon Energy | Avon Energy Partners Holdings, an Unlimited Liability Company and its wholly-owned subsidiary Avon Energy Partners PLC, a Limited Liability Company | |
BACT | Best Available Control Technology | |
Beckjord | CG&E's W.C. Beckjord Generating Station (steam electric generating plant) | |
CAA | Clean Air Act | |
Cayuga | PSI's Cayuga Generating Station (steam electric generating plant) | |
CC&T | Cinergy Capital & Trading, Inc. (a subsidiary of Investments) | |
CERCLA | Comprehensive Environmental Response, Compensation and Liability Act | |
CG&E | The Cincinnati Gas & Electric Company (a subsidiary of Cinergy) | |
CIBU | Cinergy Investments Business Unit | |
Cinergy or Company | Cinergy Corp. | |
CM&T | Cinergy Marketing & Trading, LLC (a subsidiary of CC&T), formerly Producers Energy Marketing, LLC (ProEnergy), which is engaged in the marketing of natural gas | |
Committed Lines | A line of credit providing short-term loans on a committed basis | |
Court of Appeals | U.S. Circuit Court of Appeals for the District of Columbia | |
Destec | Destec Energy, Inc. | |
DOE | United States Department of Energy | |
Dynegy | Dynegy Inc. | |
ECBU | Energy Commodities Business Unit | |
EDBU | Energy Delivery Business Unit | |
EITF Issue 98-10 | Emerging Issues Task Force Issue No. 98-10, Accounting for Contracts Involved in Energy Trading and Risk Management Activities | |
EPA | United States Environmental Protection Agency | |
EPS | Earnings per share | |
FASB | Financial Accounting Standards Board | |
Gallagher | PSI's R.A. Gallagher Generating Station (steam electric generating plant) | |
Gibson | PSI's Gibson Generating Station (steam electric generating plant) | |
Global Resources | Cinergy Global Resources, Inc. (a subsidiary of Cinergy) | |
GPU | GPU Inc. | |
House | U.S. House of Representatives | |
IBU | International Business Unit | |
ICR | Mercury Information Collection Request | |
IDEM | Indiana Department of Environmental Management | |
IGC | Indiana Gas Company, Inc., formerly Indiana Gas and Water Company, Inc. | |
Investments | Cinergy Investments, Inc. (a subsidiary of Cinergy) | |
IT | Information Technology | |
IURC | Indiana Utility Regulatory Commission | |
JUMPS(sm) | Junior Maturing Principal Securities | |
KWh | Kilowatt-hour | |
mcf | Thousand cubic feet | |
MGP | Manufactured gas plant | |
Midlands | Midlands Electricity plc, a United Kingdom regional electric company (a wholly-owned subsidiary of Avon Energy) | |
Midwest ISO | Midwest Independent System Operator | |
N/A | Not applicable | |
NERC | North American Electric Reliability Council | |
NIPSCO | Northern Indiana Public Service Company | |
NOx | Nitrogen oxide | |
NSPS | New Source Performance Standards | |
NSR | New Source Review | |
PSD | Prevention of Significant Deterioration | |
PSI | PSI Energy, Inc. (a subsidiary of Cinergy) | |
PUCO | Public Utilities Commission of Ohio | |
PUHCA | Public Utility Holding Company Act of 1935 | |
SEC | United States Securities and Exchange Commission | |
Senate | U.S. Senate | |
September 1996 Order | An IURC order issued in September 1996 on PSI's retail rate proceeding | |
SIP | State Implementation Plan | |
SO2 | Sulfur dioxide | |
Statement 131 | Statement of Financial Accounting Standards No. 131, Disclosures About Segments of an Enterprise and Related Information | |
Statement 133 | Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities | |
Statement 137 | Statement of Financial Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging ActivitiesDeferral of the Effective Date of FASB Statement 133 | |
UCC | The Indiana Office of the Utility Consumer Counselor | |
ULH&P | The Union Light, Heat and Power Company (a wholly-owned subsidiary of CG&E) | |
Uncommitted | A line of credit providing short-term loans on an | |
Lines | uncommitted basis | |
U.S. | United States | |
Wabash River | PSI's Wabash River Generating Station (steam electric generating plant) | |
WVPA | Wabash Valley Power Association, Inc. | |
Zimmer | CG&E's William H. Zimmer Generating Station (steam electric generating plant) |
CINERGY CORP.
CONSOLIDATED BALANCE SHEETS
ASSETS
|
September 30 1999 |
December 31 1998 |
||||
---|---|---|---|---|---|---|
|
(unaudited) |
|
||||
|
(dollars in thousands) |
|||||
Current Assets | ||||||
Cash and temporary cash investments | $ | 57,486 | $ | 100,154 | ||
Restricted deposits | 1,425 | 3,587 | ||||
Notes receivable | 290 | 64 | ||||
Accounts receivable less accumulated provision for doubtful accounts of $31,057 at September 30, 1999, and $25,622 at December 31, 1998 | 761,768 | 580,305 | ||||
Materials, supplies, and fuelat average cost | 208,931 | 202,747 | ||||
Energy risk management assets | 135,817 | 283,924 | ||||
Prepayments and other | 75,208 | 74,849 | ||||
1,240,925 | 1,245,630 | |||||
Utility PlantOriginal Cost | ||||||
In service | ||||||
Electric | 9,330,180 | 9,222,261 | ||||
Gas | 811,552 | 786,188 | ||||
Common | 170,772 | 186,364 | ||||
10,312,504 | 10,194,813 | |||||
Accumulated depreciation | 4,206,192 | 4,040,247 | ||||
6,106,312 | 6,154,566 | |||||
Construction work in progress | 266,981 | 189,883 | ||||
Total utility plant | 6,373,293 | 6,344,449 | ||||
Other Assets | ||||||
Regulatory assets | 1,128,957 | 970,767 | ||||
Investments in unconsolidated subsidiaries | 309,578 | 574,401 | ||||
Energy risk management assets | 21,507 | 73,662 | ||||
Other | 460,227 | 478,472 | ||||
1,920,269 | 2,097,302 | |||||
$ | 9,534,487 | $ | 9,687,381 |
The accompanying notes as they relate to Cinergy Corp. are an integral part of these
consolidated financial statements.
LIABILITIES AND SHAREHOLDERS' EQUITY
|
September 30 1999 |
December 31 1998 |
|||||
---|---|---|---|---|---|---|---|
|
(unaudited) |
|
|||||
|
(dollars in thousands) |
||||||
Current Liabilities | |||||||
Accounts payable | $ | 935,430 | $ | 668,860 | |||
Accrued taxes | 248,441 | 228,347 | |||||
Accrued interest | 37,813 | 51,679 | |||||
Notes payable and other short-term obligations | 363,780 | 903,700 | |||||
Long-term debt due within one year | 31,822 | 136,000 | |||||
Energy risk management liabilities | 123,885 | 398,538 | |||||
Other | 81,854 | 93,376 | |||||
1,823,025 | 2,480,500 | ||||||
Non-Current Liabilities | |||||||
Long-term debt | 2,723,483 | 2,604,467 | |||||
Deferred income taxes | 1,141,312 | 1,091,075 | |||||
Unamortized investment tax credits | 149,629 | 156,757 | |||||
Accrued pension and other postretirement benefit costs | 346,994 | 315,147 | |||||
Energy risk management liabilities | 130,188 | 107,194 | |||||
Other | 488,892 | 298,370 | |||||
4,980,498 | 4,573,010 | ||||||
Total liabilities | 6,803,523 | 7,053,510 | |||||
Cumulative Preferred Stock of Subsidiaries | |||||||
Not subject to mandatory redemption | 92,597 | 92,640 | |||||
Common Stock Equity | |||||||
Common stock$.01 par value; authorized shares600,000,000; outstanding shares158,917,210 at September 30, 1999, and 158,664,532 at December 31, 1998 | 1,589 | 1,587 | |||||
Paid-in capital | 1,605,674 | 1,595,237 | |||||
Retained earnings | 1,038,660 | 945,214 | |||||
Accumulated other comprehensive loss | (7,556 | ) | (807 | ) | |||
Total common stock equity | 2,638,367 | 2,541,231 | |||||
$ | 9,534,487 | $ | 9,687,381 |
CINERGY CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
|
Quarter Ended September 30 |
Year to Date September 30 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
1999 |
1998 |
1999 |
1998 |
|||||||||
|
(in thousands, except per share amounts) |
||||||||||||
Operating Revenues | |||||||||||||
Electric | $ | 1,396,837 | $ | 1,602,211 | $ | 3,307,462 | $ | 3,782,857 | |||||
Gas | 375,837 | 359,830 | 1,125,812 | 686,923 | |||||||||
Other | 9,524 | 14,670 | 26,602 | 23,101 | |||||||||
1,782,198 | 1,976,711 | 4,459,876 | 4,492,881 | ||||||||||
Operating Expenses | |||||||||||||
Fuel and purchased and exchanged power | 891,351 | 1,070,753 | 1,775,586 | 2,318,624 | |||||||||
Gas purchased | 349,259 | 324,145 | 977,174 | 544,488 | |||||||||
Other operation and maintenance | 245,330 | 226,315 | 726,310 | 746,392 | |||||||||
Depreciation and amortization | 88,734 | 81,585 | 263,412 | 242,271 | |||||||||
Taxes other than income taxes | 70,077 | 69,346 | 208,688 | 208,125 | |||||||||
1,644,751 | 1,772,144 | 3,951,170 | 4,059,900 | ||||||||||
Operating Income | 137,447 | 204,567 | 508,706 | 432,981 | |||||||||
Other Income and (Deductions) | |||||||||||||
Equity in earnings of unconsolidated subsidiaries | 372 | 11,421 | 58,076 | 32,992 | |||||||||
Gain on sale of investment in unconsolidated subsidiary |
99,272 | | 99,272 | | |||||||||
Miscellaneousnet | 8,729 | (115 | ) | (2,965 | ) | (11,850 | ) | ||||||
Interest expense | (56,404 | ) | (60,950 | ) | (177,957 | ) | (181,510 | ) | |||||
51,969 | (49,644 | ) | (23,574 | ) | (160,368 | ) | |||||||
Income Before Taxes | 189,416 | 154,923 | 485,132 | 272,613 | |||||||||
Income Taxes | 66,489 | 44,127 | 173,173 | 77,891 | |||||||||
Preferred Dividend Requirements of Subsidiaries | 1,364 | 1,365 | 4,093 | 5,153 | |||||||||
Net Income | $ | 121,563 | $ | 109,431 | $ | 307,866 | $ | 189,569 | |||||
Earnings Per Common Share | |||||||||||||
Basic | $ | 0.77 | $ | 0.69 | $ | 1.94 | $ | 1.20 | |||||
Assuming dilution | $ | 0.76 | $ | 0.69 | $ | 1.93 | $ | 1.20 | |||||
Dividends Declared Per Common Share | $ | 0.45 | $ | 0.45 | $ | 1.35 | $ | 1.35 | |||||
Average Common Shares Outstanding | |||||||||||||
Basic | 158,907 | 158,539 | 158,844 | 158,110 | |||||||||
Common stock options | 329 | 606 | 386 | 694 | |||||||||
Contingently issuable common stock | 25 | 104 | 25 | 113 | |||||||||
Assuming dilution | 159,261 | 159,249 | 159,255 | 158,917 |
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
CINERGY CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(dollars in thousands)
(unaudited)
|
Common Stock |
Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Total Comprehensive Income (Loss) |
Total Common Stock Equity |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended September 30, 1999 | |||||||||||||||||||
Balance at July 1, 1999 | $ | 1,589 | $ | 1,602,608 | $ | 988,598 | $ | (10,359 | ) | $ | 2,582,436 | ||||||||
Comprehensive income | |||||||||||||||||||
Net income | 121,563 | $ | 121,563 | 121,563 | |||||||||||||||
Other comprehensive income, net of tax | |||||||||||||||||||
Foreign currency translation adjustment | 3,774 | 3,774 | |||||||||||||||||
Minimum pension liability adjustment | 85 | 85 | |||||||||||||||||
Unrealized loss on grantor trust | (819 | ) | (819 | ) | |||||||||||||||
Unrealized loss on securities available for sale | (237 | ) | (237 | ) | |||||||||||||||
Other comprehensive income total | 2,803 | 2,803 | |||||||||||||||||
Comprehensive income total | $ | 124,366 | |||||||||||||||||
Issuance of 31,043 shares of common stocknet | 2,216 | 2,216 | |||||||||||||||||
Treasury shares reissued | 850 | 850 | |||||||||||||||||
Dividends on common stock (see page 9 for per share amounts) | (71,499 | ) | (71,499 | ) | |||||||||||||||
Other | (2 | ) | (2 | ) | |||||||||||||||
Balance at September 30, 1999 | $ | 1,589 | $ | 1,605,674 | $ | 1,038,660 | $ | (7,556 | ) | $ | 2,638,367 | ||||||||
Quarter Ended September 30, 1998 | |||||||||||||||||||
Balance at July 1, 1998 | $ | 1,585 | $ | 1,599,435 | $ | 905,556 | $ | (3,330 | ) | $ | 2,503,246 | ||||||||
Comprehensive income | |||||||||||||||||||
Net income | 109,431 | $ | 109,431 | 109,431 | |||||||||||||||
Other comprehensive income, net of tax | |||||||||||||||||||
Foreign currency translation adjustment | (329 | ) | (329 | ) | |||||||||||||||
Other comprehensive income (loss) total | (329 | ) | (329 | ) | |||||||||||||||
Comprehensive income total | $ | 109,102 | |||||||||||||||||
Issuance of 12,423 shares of common stocknet | 225 | 225 | |||||||||||||||||
Treasury shares purchased | (1 | ) | (1,536 | ) | (1,537 | ) | |||||||||||||
Treasury shares reissued | 1 | 2,637 | 2,638 | ||||||||||||||||
Dividends on common stock (see page 9 for per share amounts) | (71,340 | ) | (71,340 | ) | |||||||||||||||
Other | 15 | 15 | |||||||||||||||||
Balance at September 30, 1998 | $ | 1,585 | $ | 1,600,776 | $ | 943,647 | $ | (3,659 | ) | $ | 2,542,349 |
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
CINERGY CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY (CONTINUED)
(dollars in thousands)
(unaudited)
|
Common Stock |
Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Total Comprehensive Income |
Total Common Stock Equity |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nine Months Ended September 30, 1999 | |||||||||||||||||||
Balance at January 1, 1999 | $ | 1,587 | $ | 1,595,237 | $ | 945,214 | $ | (807 | ) | $ | 2,541,231 | ||||||||
Comprehensive income | |||||||||||||||||||
Net income | 307,866 | $ | 307,866 | 307,866 | |||||||||||||||
Other comprehensive income, net of tax | |||||||||||||||||||
Foreign currency translation adjustment | (6,258 | ) | (6,258 | ) | |||||||||||||||
Minimum pension liability adjustment | 85 | 85 | |||||||||||||||||
Unrealized loss on grantor trust | (339 | ) | (339 | ) | |||||||||||||||
Unrealized loss on securities available for sale | (237 | ) | (237 | ) | |||||||||||||||
Other comprehensive income (loss) total | (6,749 | ) | (6,749 | ) | |||||||||||||||
Comprehensive income total | $ | 301,117 | |||||||||||||||||
Issuance of 252,678 shares of common stocknet | 2 | 6,493 | 6,495 | ||||||||||||||||
Treasury shares purchased | (233 | ) | (233 | ) | |||||||||||||||
Treasury shares reissued | 4,177 | 4,177 | |||||||||||||||||
Dividends on common stock (see page 9 for per share amounts) | (214,413 | ) | (214,413 | ) | |||||||||||||||
Other | (7 | ) | (7 | ) | |||||||||||||||
Balance at September 30, 1999 | $ | 1,589 | $ | 1,605,674 | $ | 1,038,660 | $ | (7,556 | ) | $ | 2,638,367 | ||||||||
Nine Months Ended September 30, 1998 | |||||||||||||||||||
Balance at January 1, 1998 | $ | 1,577 | $ | 1,573,064 | $ | 967,420 | $ | (2,861 | ) | $ | 2,539,200 | ||||||||
Comprehensive income | |||||||||||||||||||
Net income | 189,569 | $ | 189,569 | 189,569 | |||||||||||||||
Other comprehensive income, net of tax | |||||||||||||||||||
Foreign currency translation adjustment | (747 | ) | (747 | ) | |||||||||||||||
Minimum pension liability adjustment | (51 | ) | (51 | ) | |||||||||||||||
Other comprehensive income (loss) total | (798 | ) | (798 | ) | |||||||||||||||
Comprehensive income total | $ | 188,771 | |||||||||||||||||
Issuance of 803,043 shares of common stocknet | 8 | 27,018 | 27,026 | ||||||||||||||||
Treasury shares purchased | (3 | ) | (6,468 | ) | (6,471 | ) | |||||||||||||
Treasury shares reissued | 3 | 7,115 | 7,118 | ||||||||||||||||
Dividends on common stock (see page 9 for per share amounts) | (213,340 | ) | (213,340 | ) | |||||||||||||||
Other | 47 | (2 | ) | 45 | |||||||||||||||
Balance at September 30, 1998 | $ | 1,585 | $ | 1,600,776 | $ | 943,647 | $ | (3,659 | ) | $ | 2,542,349 |
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
CINERGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
Year to Date September 30 |
||||||
---|---|---|---|---|---|---|---|
|
1999 |
1998 |
|||||
|
(in thousands) |
||||||
Operating Activities | |||||||
Net income | $ | 307,866 | $ | 189,569 | |||
Items providing (using) cash currently: | |||||||
Depreciation and amortization | 263,412 | 240,780 | |||||
WVPA settlement | | 80,000 | |||||
Deferred income taxes and investment tax creditsnet | 4,283 | (79,350 | ) | ||||
Equity in earnings of unconsolidated subsidiaries | (46,059 | ) | (32,992 | ) | |||
Gain on sale of investment in unconsolidated subsidiary | (99,272 | ) | | ||||
Allowance for equity funds used during construction | (2,841 | ) | (793 | ) | |||
Regulatory assetsnet | (221,470 | ) | 57,122 | ||||
Changes in current assets and current liabilities | |||||||
Restricted deposits | 2,162 | 788 | |||||
Accounts and notes receivable, net of reserves on receivables sold | (187,136 | ) | (298,792 | ) | |||
Materials, supplies, and fuel | (6,184 | ) | (20,037 | ) | |||
Accounts payable | 266,570 | 293,435 | |||||
Accrued taxes and interest | 6,228 | 21,717 | |||||
Energy risk managementnet | (51,397 | ) | 148,146 | ||||
Other itemsnet | 263,840 | (53,688 | ) | ||||
Net cash provided by operating activities | 500,002 | 545,905 | |||||
Financing Activities |
|
|
|
|
|
|
|
Issuance of common stock | 6,495 | 515 | |||||
Issuance of long-term debt | 541,915 | 373,041 | |||||
Retirement of preferred stock of subsidiaries | (34 | ) | (85,292 | ) | |||
Redemption of long-term debt | (528,900 | ) | (333,745 | ) | |||
Change in short-term debt | (539,920 | ) | 61,642 | ||||
Dividends on common stock | (214,413 | ) | (212,730 | ) | |||
Net cash used in financing activities | (734,857 | ) | (196,569 | ) | |||
Investing Activities |
|
|
|
|
|
|
|
Construction expenditures (less allowance for equity funds used during construction) | (262,719 | ) | (238,364 | ) | |||
Acquisition of businesses (net of cash acquired) | | (63,412 | ) | ||||
Investments in unconsolidated subsidiaries | (235,363 | ) | (22,044 | ) | |||
Sale of investment in unconsolidated subsidiary | 690,269 | | |||||
Net cash provided by (used in) investing activities | 192,187 | (323,820 | ) | ||||
Net increase (decrease) in cash and temporary cash investments |
|
|
(42,668 |
) |
|
25,516 |
|
Cash and temporary cash investments at beginning of period |
|
|
100,154 |
|
|
53,310 |
|
Cash and temporary cash investments at end of period |
|
$ |
57,486 |
|
$ |
78,826 |
|
The accompanying notes as they relate to Cinergy Corp. are an integral part of these
consolidated financial statements.
THE CINCINNATI GAS &
ELECTRIC COMPANY
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
|
September 30 |
December 31 |
||||
---|---|---|---|---|---|---|
|
1999 |
1998 |
||||
|
(unaudited) |
|
||||
|
(dollars in thousands) |
|||||
Current Assets | ||||||
Cash and temporary cash investments | $ | 14,380 | $ | 26,989 | ||
Restricted deposits | 1,172 | 1,173 | ||||
Notes receivable from affiliated companies | | 84,358 | ||||
Accounts receivable less accumulated provision for doubtful accounts of $18,470 at September 30, 1999, and $17,607 at December 31, 1998 | 240,508 | 205,060 | ||||
Accounts receivable from affiliated companies | 41,614 | 22,635 | ||||
Materials, supplies, and fuelat average cost | 109,427 | 115,294 | ||||
Energy risk management assets | 67,909 | 141,962 | ||||
Prepayments and other | 32,386 | 40,158 | ||||
507,396 | 637,629 | |||||
Utility PlantOriginal Cost | ||||||
In service | ||||||
Electric | 4,855,304 | 4,806,958 | ||||
Gas | 811,552 | 786,188 | ||||
Common | 170,772 | 186,364 | ||||
5,837,628 | 5,779,510 | |||||
Accumulated depreciation | 2,246,188 | 2,147,298 | ||||
3,591,440 | 3,632,212 | |||||
Construction work in progress | 153,986 | 119,993 | ||||
Total utility plant | 3,745,426 | 3,752,205 | ||||
Other Assets | ||||||
Regulatory assets | 594,096 | 627,035 | ||||
Energy risk management assets | 10,753 | 36,831 | ||||
Other | 106,790 | 100,061 | ||||
711,639 | 763,927 | |||||
$ | 4,964,461 | $ | 5,153,761 |
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral
part of these consolidated financial statements.
LIABILITIES AND SHAREHOLDER'S EQUITY
|
September 30 |
December 31 |
|||||
---|---|---|---|---|---|---|---|
|
1999 |
1998 |
|||||
|
(unaudited) |
|
|||||
|
(dollars in thousands) |
||||||
Current Liabilities | |||||||
Accounts payable | $ | 302,793 | $ | 282,743 | |||
Accounts payable to affiliated companies | 64,506 | 13,166 | |||||
Accrued taxes | 105,617 | 151,455 | |||||
Accrued interest | 10,699 | 20,571 | |||||
Long-term debt due within one year | | 130,000 | |||||
Notes payable and other short-term obligations | 204,000 | 189,283 | |||||
Notes payable to affiliated companies | 110,790 | 17,020 | |||||
Energy risk management liabilities | 61,942 | 199,269 | |||||
Other | 23,996 | 26,422 | |||||
884,343 | 1,029,929 | ||||||
Non-Current Liabilities | |||||||
Long-term debt | 1,205,830 | 1,219,778 | |||||
Deferred income taxes | 778,080 | 771,145 | |||||
Unamortized investment tax credits | 106,177 | 110,801 | |||||
Accrued pension and other postretirement benefit costs | 153,017 | 146,361 | |||||
Energy risk management liabilities | 65,094 | 53,597 | |||||
Other | 114,617 | 134,990 | |||||
2,422,815 | 2,436,672 | ||||||
Total liabilities | 3,307,158 | 3,466,601 | |||||
Cumulative Preferred Stock | |||||||
Not subject to mandatory redemption | 20,686 | 20,717 | |||||
Common Stock Equity | |||||||
Common stock$8.50 par value; authorized shares120,000,000; outstanding shares 89,663,086 at September 30, 1999, and December 31, 1998 | 762,136 | 762,136 | |||||
Paid-in capital | 553,931 | 553,926 | |||||
Retained earnings | 321,674 | 351,505 | |||||
Accumulated other comprehensive loss | (1,124 | ) | (1,124 | ) | |||
Total common stock equity | 1,636,617 | 1,666,443 | |||||
$ | 4,964,461 | $ | 5,153,761 |
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited)
|
Quarter Ended September 30 |
Year To Date September 30 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
1999 |
1998 |
1999 |
1998 |
|||||||||
|
|
(in thousands) |
|
||||||||||
Operating Revenues | |||||||||||||
Electric | $ | 699,981 | $ | 827,387 | $ | 1,658,604 | $ | 1,960,334 | |||||
Gas | 38,510 | 56,505 | 255,855 | 280,437 | |||||||||
738,491 | 883,892 | 1,914,459 | 2,240,771 | ||||||||||
Operating Expenses | |||||||||||||
Fuel and purchased and exchanged power | 411,132 | 518,393 | 826,258 | 1,162,004 | |||||||||
Gas purchased | 14,254 | 21,539 | 113,560 | 139,784 | |||||||||
Other operation and maintenance | 103,150 | 96,193 | 311,527 | 302,764 | |||||||||
Depreciation and amortization | 51,395 | 47,267 | 152,691 | 142,877 | |||||||||
Taxes other than income taxes | 54,201 | 54,089 | 163,184 | 162,484 | |||||||||
634,132 | 737,481 | 1,567,220 | 1,909,913 | ||||||||||
Operating Income | 104,359 | 146,411 | 347,239 | 330,858 | |||||||||
Other Income and (Deductions) | |||||||||||||
Miscellaneousnet | (287 | ) | 511 | (911 | ) | (2,349 | ) | ||||||
Interest expense | (25,090 | ) | (25,072 | ) | (74,068 | ) | (77,034 | ) | |||||
(25,377 | ) | (24,561 | ) | (74,979 | ) | (79,383 | ) | ||||||
Income Before Taxes | 78,982 | 121,850 | 272,260 | 251,475 | |||||||||
Income Taxes | 30,830 | 43,178 | 104,949 | 88,925 | |||||||||
Net Income | $ | 48,152 | $ | 78,672 | $ | 167,311 | $ | 162,550 | |||||
Preferred Dividend Requirement | 213 | 214 | 641 | 644 | |||||||||
Net Income Applicable to Common Stock | $ | 47,939 | $ | 78,458 | $ | 166,670 | $ | 161,906 | |||||
Other Comprehensive Income (Loss), Net Of Tax | | | | (155 | ) | ||||||||
Comprehensive Income | $ | 47,939 | $ | 78,458 | $ | 166,670 | $ | 161,751 |
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part
of these consolidated financial statements.
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
Year to Date September 30 |
||||||
---|---|---|---|---|---|---|---|
|
1999 |
1998 |
|||||
|
(in thousands) |
||||||
Operating Activities | |||||||
Net income | $ | 167,311 | $ | 162,550 | |||
Items providing (using) cash currently: | |||||||
Depreciation and amortization | 152,691 | 142,877 | |||||
Deferred income taxes and investment tax creditsnet | 9,151 | (11,592 | ) | ||||
Allowance for equity funds used during construction | (2,083 | ) | (770 | ) | |||
Regulatory assetsnet | 10,343 | 23,716 | |||||
Changes in current assets and current liabilities | |||||||
Accounts and notes receivable, net of reserves on receivables sold | 24,555 | (232,865 | ) | ||||
Materials, supplies, and fuel | 5,867 | 1,121 | |||||
Accounts payable | 71,390 | 174,055 | |||||
Accrued taxes and interest | (55,710 | ) | 22,822 | ||||
Energy risk managementnet | (25,699 | ) | 74,073 | ||||
Other itemsnet | (7,274 | ) | (35,778 | ) | |||
Net cash provided by operating activities | 350,542 | 320,209 | |||||
Financing Activities | |||||||
Issuance of long-term debt | 19,818 | 223,020 | |||||
Retirement of preferred stock | (26 | ) | (45 | ) | |||
Redemption of long-term debt | (164,264 | ) | (220,409 | ) | |||
Change in short-term debt | 108,487 | (62,230 | ) | ||||
Dividends on preferred stock | (642 | ) | (645 | ) | |||
Dividends on common stock | (196,500 | ) | (132,245 | ) | |||
Net cash used in financing activities | (233,127 | ) | (192,554 | ) | |||
Investing Activities | |||||||
Construction expenditures (less allowance for equity funds used during construction) | (130,024 | ) | (123,683 | ) | |||
Net cash used in investing activities | (130,024 | ) | (123,683 | ) | |||
Net increase (decrease) in cash and temporary cash investments | (12,609 | ) | 3,972 | ||||
Cash and temporary cash investments at beginning of period | 26,989 | 2,349 | |||||
Cash and temporary cash investments at end of period | $ | 14,380 | $ | 6,321 |
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part
of these consolidated financial statements.
PSI ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
|
September 30 1999 |
December 31 1998 |
||||
---|---|---|---|---|---|---|
|
(unaudited) |
|
||||
|
(dollars in thousands) |
|||||
Current Assets | ||||||
Cash and temporary cash investments | $ | 1,875 | $ | 18,788 | ||
Restricted deposits | 253 | 2,414 | ||||
Notes receivable from affiliated companies | 109,891 | 17,097 | ||||
Accounts receivable less accumulated provision for doubtful accounts of $12,502 at September 30, 1999, and $7,893 at December 31, 1998 | 338,200 | 225,449 | ||||
Accounts receivable from affiliated companies | 39,225 | 384 | ||||
Materials, supplies, and fuelat average cost | 96,124 | 80,445 | ||||
Energy risk management assets | 67,908 | 141,962 | ||||
Prepayments and other | 34,931 | 31,461 | ||||
688,407 | 518,000 | |||||
Electric Utility PlantOriginal Cost |
|
|
|
|
|
|
In service | 4,474,876 | 4,415,303 | ||||
Accumulated depreciation | 1,960,004 | 1,892,949 | ||||
2,514,872 | 2,522,354 | |||||
Construction work in progress | 112,995 | 69,891 | ||||
Total electric utility plant | 2,627,867 | 2,592,245 | ||||
Other Assets |
|
|
|
|
|
|
Regulatory assets | 534,861 | 343,731 | ||||
Energy risk management assets | 10,754 | 36,831 | ||||
Other | 90,556 | 93,012 | ||||
Total other assets | 636,171 | 473,574 | ||||
|
|
$ |
3,952,445 |
|
$ |
3,583,819 |
The accompanying notes as they relate to PSI Energy, Inc. are an integral part
of these consolidated financial statements.
LIABILITIES AND SHAREHOLDER'S EQUITY
|
September 30 1999 |
December 31 1998 |
|||||
---|---|---|---|---|---|---|---|
|
(unaudited) |
|
|||||
|
(dollars in thousands) |
||||||
Current Liabilities | |||||||
Accounts payable | $ | 310,404 | $ | 217,959 | |||
Accounts payable to affiliated companies | 12,845 | 30,145 | |||||
Accrued taxes | 116,950 | 58,901 | |||||
Accrued interest | 15,302 | 28,335 | |||||
Notes payable and other short-term obligations | 94,609 | 173,162 | |||||
Notes payable to affiliated companies | 285,253 | 102,946 | |||||
Long-term debt due within one year | 31,822 | 6,000 | |||||
Energy risk management liabilities | 61,943 | 199,269 | |||||
Other | 2,036 | 2,227 | |||||
931,164 | 818,944 | ||||||
Non-Current Liabilities |
|
|
|
|
|
|
|
Long-term debt | 968,305 | 1,025,659 | |||||
Deferred income taxes | 373,483 | 364,049 | |||||
Unamortized investment tax credits | 43,452 | 45,956 | |||||
Accrued pension and other postretirement benefit costs | 124,823 | 112,387 | |||||
Energy risk management liabilities | 65,094 | 53,597 | |||||
Other | 339,173 | 115,656 | |||||
1,914,330 | 1,717,304 | ||||||
Total liabilities |
|
|
2,845,494 |
|
|
2,536,248 |
|
Cumulative Preferred Stock |
|
|
|
|
|
|
|
Not subject to mandatory redemption | 71,911 | 71,923 | |||||
Common Stock Equity |
|
|
|
|
|
|
|
Common stockwithout par value; $0.01 stated value; authorized shares60,000,000; outstanding shares53,913,701 at September 30, 1999, and December 31, 1998 | 539 | 539 | |||||
Paid-in capital | 410,742 | 410,739 | |||||
Retained earnings | 624,593 | 564,865 | |||||
Accumulated other comprehensive loss | (834 | ) | (495 | ) | |||
Total common stock equity | 1,035,040 | 975,648 | |||||
|
|
$ |
3,952,445 |
|
$ |
3,583,819 |
|
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited)
|
Quarter Ended September 30 |
Year To Date September 30 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
1999 |
1998 |
1999 |
1998 |
|||||||||
|
(in thousands) |
||||||||||||
Operating Revenues | |||||||||||||
Electric | $ | 707,193 | $ | 807,181 | $ | 1,653,144 | $ | 1,910,836 | |||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel and purchased and exchanged power | 495,015 | 584,415 | 967,099 | 1,242,253 | |||||||||
Other operation and maintenance | 115,254 | 110,051 | 345,734 | 400,431 | |||||||||
Depreciation and amortization | 34,025 | 32,688 | 101,889 | 97,433 | |||||||||
Taxes other than income taxes | 15,427 | 14,882 | 44,184 | 44,356 | |||||||||
659,721 | 742,036 | 1,458,906 | 1,784,473 | ||||||||||
Operating Income |
|
|
47,472 |
|
|
65,145 |
|
|
194,238 |
|
|
126,363 |
|
Other Income and (Deductions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneousnet | (1,794 | ) | (315 | ) | (1,096 | ) | 1,616 | ||||||
Interest expense | (19,620 | ) | (21,975 | ) | (61,480 | ) | (67,771 | ) | |||||
(21,414 | ) | (22,290 | ) | (62,576 | ) | (66,155 | ) | ||||||
Income Before Taxes |
|
|
26,058 |
|
|
42,855 |
|
|
131,662 |
|
|
60,208 |
|
Income Taxes |
|
|
10,400 |
|
|
16,063 |
|
|
50,583 |
|
|
21,106 |
|
Net Income |
|
$ |
15,658 |
|
$ |
26,792 |
|
$ |
81,079 |
|
$ |
39,102 |
|
Preferred Dividend Requirement |
|
|
1,150 |
|
|
1,151 |
|
|
3,451 |
|
|
4,509 |
|
Net Income Applicable to Common Stock |
|
$ |
14,508 |
|
$ |
25,641 |
|
$ |
77,628 |
|
$ |
34,593 |
|
Other Comprehensive Income (Loss), Net of Tax |
|
|
(819 |
) |
|
|
|
|
(339 |
) |
|
944 |
|
Comprehensive Income |
|
$ |
13,689 |
|
$ |
25,641 |
|
$ |
77,289 |
|
$ |
35,537 |
|
The accompanying notes as they relate to PSI Energy, Inc. are an integral part
of these consolidated financial statements.
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
Year To Date September 30 |
||||||
---|---|---|---|---|---|---|---|
|
1999 |
1998 |
|||||
|
(in thousands) |
||||||
Operating Activities |
|
|
|
|
|
|
|
Net income | $ | 81,079 | $ | 39,102 | |||
Items providing (using) cash currently: | |||||||
Depreciation and amortization | 101,889 | 97,433 | |||||
WVPA settlement | | 80,000 | |||||
Deferred income taxes and investment tax creditsnet | 10,707 | (44,433 | ) | ||||
Allowance for equity funds used during construction | (758 | ) | (23 | ) | |||
Regulatory assetsnet | (231,813 | ) | 33,406 | ||||
Changes in current assets and current liabilities | |||||||
Restricted deposits | 2,161 | 787 | |||||
Accounts and notes receivable, net of reserves on receivables sold | (244,456 | ) | (158,099 | ) | |||
Materials, supplies, and fuel | (15,679 | ) | (19,543 | ) | |||
Accounts payable | 75,145 | 135,816 | |||||
Accrued taxes and interest | 45,016 | (2,249 | ) | ||||
Energy risk managementnet | (25,698 | ) | 74,073 | ||||
Other itemsnet | 263,850 | (61,079 | ) | ||||
Net cash provided by operating activities | 61,443 | 175,191 | |||||
Financing Activities |
|
|
|
|
|
|
|
Issuance of long-term debt | 323,593 | 150,021 | |||||
Retirement of preferred stock | (8 | ) | (85,247 | ) | |||
Redemption of long-term debt | (355,192 | ) | (113,336 | ) | |||
Change in short-term debt | 103,754 | 73,946 | |||||
Dividends on preferred stock | (3,451 | ) | (5,037 | ) | |||
Dividends on common stock | (17,900 | ) | (81,800 | ) | |||
Net cash provided by (used in) financing activities | 50,796 | (61,453 | ) | ||||
Investing Activities |
|
|
|
|
|
|
|
Construction expenditures (less allowance for equity funds used during construction) | (129,152 | ) | (101,419 | ) | |||
Net cash used in investing activities | (129,152 | ) | (101,419 | ) | |||
Net increase (decrease) in cash and temporary cash investments |
|
|
(16,913 |
) |
|
12,319 |
|
Cash and temporary cash investments at beginning of period |
|
|
18,788 |
|
|
18,169 |
|
Cash and temporary cash investments at end of period |
|
$ |
1,875 |
|
$ |
30,488 |
|
The accompanying notes as they relate to PSI Energy, Inc. are an integral part
of these consolidated financial statements.
THE UNION LIGHT, HEAT
AND POWER COMPANY
THE UNION LIGHT, HEAT AND POWER COMPANY
BALANCE SHEETS
ASSETS
|
September 30 1999 |
December 31 1998 |
||||
---|---|---|---|---|---|---|
|
(unaudited) |
|
||||
|
(dollars in thousands) |
|||||
Current Assets | ||||||
Cash and temporary cash investments | $ | 5,733 | $ | 3,244 | ||
Accounts receivable less accumulated provision for doubtful accounts of $1,228 at September 30, 1999, and $1,248 at December 31, 1998 | 4,688 | 14,125 | ||||
Accounts receivable from affiliated companies | 1,493 | 666 | ||||
Materials, supplies, and fuelat average cost | 9,230 | 8,269 | ||||
Prepayments and other | 390 | 308 | ||||
21,534 | 26,612 | |||||
Utility PlantOriginal Cost | ||||||
In service | ||||||
Electric | 241,005 | 232,222 | ||||
Gas | 170,482 | 164,040 | ||||
Common | 20,410 | 18,908 | ||||
431,897 | 415,170 | |||||
Accumulated depreciation | 152,061 | 143,386 | ||||
279,836 | 271,784 | |||||
Construction work in progress | 11,545 | 11,444 | ||||
Total utility plant | 291,381 | 283,228 | ||||
Other Assets | ||||||
Regulatory assets | 10,723 | 10,978 | ||||
Other | 5,733 | 3,767 | ||||
16,456 | 14,745 | |||||
$ | 329,371 | $ | 324,585 |
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial statements.
THE UNION LIGHT, HEAT AND POWER COMPANY
BALANCE SHEETS (Continued)
LIABILITIES AND SHAREHOLDER'S EQUITY
|
September 30 1999 |
December 31 1998 |
||||
---|---|---|---|---|---|---|
|
(unaudited) |
|
||||
|
(dollars in thousands) |
|||||
Current Liabilities | ||||||
Accounts payable | $ | 5,350 | $ | 5,903 | ||
Accounts payable to affiliated companies | 18,075 | 14,986 | ||||
Accrued taxes | 2,230 | 3,216 | ||||
Accrued interest | 1,327 | 1,959 | ||||
Long-term debt due within one year | | 20,000 | ||||
Notes payable to affiliated companies | 30,167 | 31,817 | ||||
Other | 3,961 | 4,247 | ||||
61,110 | 82,128 | |||||
Non-Current Liabilities | ||||||
Long-term debt | 74,549 | 54,553 | ||||
Deferred income taxes | 24,526 | 26,134 | ||||
Unamortized investment tax credits | 4,029 | 4,238 | ||||
Accrued pension and other postretirement benefit costs | 12,206 | 11,678 | ||||
Amounts due to customersincome taxes | 9,841 | 8,959 | ||||
Other | 10,195 | 8,077 | ||||
135,346 | 113,639 | |||||
Total liabilities | 196,456 | 195,767 | ||||
Common Stock Equity | ||||||
Common stock$15.00 par value; authorized shares1,000,000; outstanding shares585,333 at September 30, 1999, and December 31, 1998 | 8,780 | 8,780 | ||||
Paid-in capital | 19,525 | 19,525 | ||||
Retained earnings | 104,610 | 100,513 | ||||
Total common stock equity | 132,915 | 128,818 | ||||
$ | 329,371 | $ | 324,585 |
THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF INCOME
(unaudited)
|
Quarter Ended September 30 |
Year To Date September 30 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
1999 |
1998 |
1999 |
1998 |
|||||||||
|
(in thousands) |
||||||||||||
Operating Revenues | |||||||||||||
Electric | $ | 63,041 | $ | 56,368 | $ | 160,781 | $ | 144,903 | |||||
Gas | 6,242 | 7,077 | 48,326 | 44,183 | |||||||||
69,283 | 63,445 | 209,107 | 189,086 | ||||||||||
Operating Expenses | |||||||||||||
Electricity purchased from parent company for resale | 49,166 | 41,827 | 122,756 | 110,338 | |||||||||
Gas purchased | 2,229 | 2,691 | 23,112 | 23,211 | |||||||||
Other operation and maintenance | 8,720 | 8,987 | 27,595 | 27,319 | |||||||||
Depreciation | 3,906 | 3,296 | 10,983 | 9,737 | |||||||||
Taxes other than income taxes | 1,024 | 1,024 | 3,134 | 3,058 | |||||||||
65,045 | 57,825 | 187,580 | 173,663 | ||||||||||
Operating Income | 4,238 | 5,620 | 21,527 | 15,423 | |||||||||
Other Income and (Deductions) | |||||||||||||
Miscellaneousnet | (464 | ) | (175 | ) | (1,153 | ) | (1,051 | ) | |||||
Interest | (1,437 | ) | (1,244 | ) | (4,432 | ) | (3,328 | ) | |||||
(1,901 | ) | (1,419 | ) | (5,585 | ) | (4,379 | ) | ||||||
Income Before Taxes | 2,337 | 4,201 | 15,942 | 11,044 | |||||||||
Income Taxes | 1,226 | 1,696 | 6,869 | 4,418 | |||||||||
Net Income |
|
$ |
1,111 |
|
$ |
2,505 |
|
$ |
9,073 |
|
$ |
6,626 |
|
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial statements.
THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF CASH FLOWS
(unaudited)
|
Year to Date September 30 |
||||||
---|---|---|---|---|---|---|---|
|
1999 |
1998 |
|||||
|
(in thousands) |
||||||
Operating Activities | |||||||
Net income | $ | 9,073 | $ | 6,626 | |||
Items providing (using) cash currently: | |||||||
Depreciation | 10,983 | 9,737 | |||||
Deferred income taxes and investment tax creditsnet | (936 | ) | 1,763 | ||||
Allowance for equity funds used during construction | (43 | ) | (150 | ) | |||
Regulatory assets | 103 | (31 | ) | ||||
Changes in current assets and current liabilities | |||||||
Accounts and notes receivable, net of reserves on receivables sold | 6,770 | 3,515 | |||||
Materials, supplies, and fuel | (961 | ) | (3,580 | ) | |||
Accounts payable | 2,536 | (6,992 | ) | ||||
Accrued taxes and interest | (1,618 | ) | (4,107 | ) | |||
Other itemsnet | 2,425 | (330 | ) | ||||
Net cash provided by operating activities | 28,332 | 6,451 | |||||
Financing Activities | |||||||
Issuance of long-term debt | 19,818 | 20,127 | |||||
Redemption of long-term debt | (20,000 | ) | (10,118 | ) | |||
Change in short-term debt | (1,650 | ) | 16,257 | ||||
Dividends on common stock | (4,975 | ) | (4,975 | ) | |||
Net cash provided by (used in) financing activities | (6,807 | ) | 21,291 | ||||
Investing Activities | |||||||
Construction expenditures (less allowance for equity funds used during construction) | (19,036 | ) | (25,486 | ) | |||
Net cash used in investing activities | (19,036 | ) | (25,486 | ) | |||
Net increase in cash and temporary cash investments | 2,489 | 2,256 | |||||
Cash and temporary cash investments at beginning of period | 3,244 | 546 | |||||
Cash and temporary cash investments at end of period | $ | 5,733 | $ | 2,802 |
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial statements.
Cinergy, CG&E, PSI, and ULH&P
Certain amounts in the 1998 Financial Statements have been reclassified to conform to the 1999 presentation.
Cinergy
Cinergy and CG&E
On July 27, 1999, CG&E redeemed early a $23 million principal amount of its 7.20% First Mortgage Bonds, due October 1, 2023, at a redemption price of 96.75%.
Cinergy and PSI
Also on April 30, 1999, PSI issued $97 million principal amount of its 6.52% Senior Notes due 2009 in exchange for a like principal amount of outstanding 7.25% JUMPS(sm) due 2028.
The Secured Medium-term Notes and JUMPS(sm) received by PSI in the exchange transactions described above have been cancelled.
On August 12, 1999, PSI redeemed early a $7 million principal amount of its 7.125% First Mortgage Bonds, Series AAA, due February 1, 2024, at a redemption price of 95%.
CG&E and ULH&P
Cinergy, CG&E, and PSI
Although physical transactions are entered with the intent and ability to settle the contract with company-owned generation, it is likely that, from time to time, due to numerous factors such as generating station outages, native load requirements, and weather, power used to settle the physical transactions will be required to be purchased on the open market. Depending on the factors giving rise to these open market purchases, the cost of such purchases could be in excess of the associated revenues. Such losses, which could be material, will be recognized as the power is delivered. Reference is made to the Form 8-K filed on August 10, 1999, which describes the earnings impact of extreme weather experienced in July 1999.
Prior to December 31, 1998, the transactions now included in the trading portfolio were accounted for and valued at the aggregate lower of cost or market. Under this method, only the net value of the entire portfolio was recorded as a liability in the Consolidated Balance Sheets.
Because of the volatility currently experienced in the power markets, and the factors discussed above pertaining to both the physical and trading activities, volatility in future earnings (losses) from period to period in the ECBU is likely.
Cinergy's ECBU also physically markets natural gas and trades natural gas and other energy-related products. All of these operations are accounted for using the mark-to-market method of accounting. Revenues and costs from physical marketing are recorded gross in the Consolidated Statements of Income as contracts are settled due to the exchanging of title to the natural gas throughout the earnings process. All non-physical transactions are recorded net in the Consolidated Statements of Income. Energy risk management assets and liabilities and gross margins from these trading activities currently are not significant.
Cinergy, CG&E, and PSI
Cinergy and its subsidiaries utilize foreign exchange forward contracts and currency swaps to hedge certain net investments in foreign operations. Accordingly, any translation gains or losses related to the foreign exchange forward contracts or the principal exchange on the currency swap are recorded in "Accumulated other comprehensive loss," which is a separate component of common stock equity. Aggregate translation losses related to these instruments are reflected in "Current Liabilities" in the Consolidated Balance Sheets. In connection with the sale of its interest in Avon Energy (see Note 14), Cinergy terminated the hedging contracts related to its investment in July 1999. Additionally, during the second quarter of 1999, the Company settled the forward exchange contracts related to its net investments in its Czech Republic subsidiary. The settlement costs were not material. After closing out these contracts, the remaining foreign exchange hedging contracts are not significant.
Interest rate swaps are accounted for under the accrual method. Accordingly, gains and losses based on any interest differential between fixed-rate and floating-rate interest amounts, calculated on agreed upon notional principal amounts, are recognized in the Consolidated Statements of Income as a component of interest expense as realized over the life of the agreement.
Cinergy, CG&E, PSI, and ULH&P
Cinergy and PSI
Coal tar residues, related hydrocarbons, and various metals associated with MGP sites have been found at former MGP sites in Indiana, including at least 21 MGP sites which PSI or its predecessors previously owned. PSI acquired four of the sites from NIPSCO in 1931 and at the same time it sold NIPSCO the sites located in Goshen and Warsaw, Indiana. In 1945, PSI sold 19 of these sites (including the four it acquired from NIPSCO) to Indiana Gas and Water Company, Inc. (now IGC). One of the 19 sites, located in Rochester, Indiana, was later sold by IGC to NIPSCO.
IGC and NIPSCO both made claims against PSI, contending that PSI is a Potentially Responsible Party under the CERCLA with respect to the 21 MGP sites, and therefore legally responsible for the costs of investigating and remediating these sites. Moreover, in August 1997, NIPSCO filed suit against PSI in federal court, claiming, pursuant to CERCLA, recovery from PSI of NIPSCO's past and future costs of investigating and remediating MGP related contamination at the Goshen MGP site.
In November 1998, NIPSCO, IGC, and PSI entered into a Site Participation and Cost Sharing Agreement by which they settled allocation of CERCLA liability for past and future costs, among the three companies, at seven MGP sites in Indiana. Pursuant to this agreement, NIPSCO's lawsuit against PSI was dismissed. The parties have assigned one of the parties lead responsibility for managing further investigation and remediation activities at each of the sites. Similar agreements were reached between IGC and PSI which allocate CERCLA liability at 14 MGP sites with which NIPSCO had no involvement. These agreements conclude all CERCLA and similar claims between the three companies relative to MGP sites. Pursuant to the agreements and applicable laws, the parties are continuing to investigate and remediate the sites as appropriate. Investigation and cleanup of some of the sites is subject to oversight by the IDEM.
PSI has placed its insurance carriers on notice of IGC's, NIPSCO's, and the IDEM's claims related to MGP sites. In April 1998, PSI filed suit in Hendricks County Circuit Court against its general liability insurance carriers seeking, among other matters, a declaratory judgment that its insurance carriers are obligated to defend MGP claims against PSI or pay PSI's costs of defense and to indemnify PSI for its costs of investigating, preventing, mitigating, and remediating damage to property and paying claims associated with MGP sites.
The case was moved to the Hendricks Superior Court 1 on a motion for change of judge. The Hendricks Superior Court 1 has set the case for trial beginning on September 11, 2000, and ordered the parties to meet certain deadlines for discovery proceedings based upon this trial date. PSI cannot predict the outcome of this litigation.
Based upon the work performed to date, PSI has accrued costs for the sites related to investigation, remediation, and groundwater monitoring. Estimated costs of certain remedial activities are accrued when such costs are probable and reasonably estimable. PSI does not believe it can provide an estimate of the reasonably possible total remediation costs for any site prior to completion of a remedial investigation/feasibility study and the development of some sense of the timing for the implementation of the potential remedial alternatives, to the extent such remediation may be required. Accordingly, the total costs that may be incurred in connection with the remediation of all sites, to the extent remediation is necessary, cannot be determined at this time. These future costs at the 21 Indiana MGP sites, based on information currently available, are not material to Cinergy's financial condition or results of operations. However, as further investigation and remediation activities are undertaken at these sites, the potential liability for the 21 MGP sites could be material to Cinergy's and PSI's financial condition or results of operations.
Cinergy, CG&E, and ULH&P
CG&E and its utility subsidiaries are aware of potential sites where MGP activities have occurred at some time in the past. None of these sites is known to present a risk to the environment. CG&E and its utility subsidiaries have undertaken preliminary site assessments to obtain more information about some of these MGP sites.
Cinergy, CG&E, PSI, and ULH&P
The Company has not yet quantified the impacts of adopting Statement 133 on its consolidated financial statements. However, accounting prescribed under Statement 133 could increase volatility in earnings and other comprehensive income.
Cinergy
Cinergy
Pro forma information is presented below:
|
Quarter Ended September 30, 1999 |
Nine Months Ended September 30, 1999 |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Net Income |
Earnings Per Share |
Net Income |
Earnings Per Share |
||||||||
|
(in millions, except for earnings per share basic) |
|||||||||||
|
(unaudited) |
|||||||||||
Cinergy | $ | 122 | $ | 0.77 | $ | 308 | $ | 1.94 | ||||
Pro forma adjustments: | ||||||||||||
Equity in earnings of Avon Energy | | (58 | ) | |||||||||
Gain on sale of investment in Avon Energy | (99 | ) | (99 | ) | ||||||||
Interest expense | | 19 | ||||||||||
Income taxes | 31 | 46 | ||||||||||
Pro forma result | $ | 54 | $ | 0.34 | $ | 216 | $ | 1.36 |
Cinergy and PSI
During the third quarter of 1998, PSI reached an agreement with Dynegy to purchase the remainder of its 25-year contract for coal gasification services. The settlement agreement specifies a purchase price of $247 million.
In anticipation of the buyout, PSI and the UCC came to a settlement agreement with respect to the proper ratemaking treatment of the buyout fee and other buyout implementation costs, in June 1999. The agreement provides for PSI's retail electric rates to be decreased to eliminate jurisdictional costs associated with the gasification services agreement. Additionally, the agreement allows PSI to recover the retail electric jurisdictional portion of the buyout fee and the associated buyout implementation costs through its rates with carrying costs on unrecovered amounts, over an eighteen-year period. In September 1999, the IURC approved the settlement agreement. In September 1999, PSI recorded a regulatory asset to reflect the buyout fee and the associated buyout implementation costs. In October 1999, PSI issued $265 million in debentures due in 2007 to fund the buyout of the remaining term of the contract and for the estimated cost of the plant modifications. For further discussion on these debentures, see Note 7.
Cinergy, CG&E, PSI, and ULH&P
The ECBU operates and maintains, exclusive of certain jointly-owned plant, all of the Company's domestic electric generation facilities. In addition to the production of electric power, all energy risk management, marketing, and proprietary arbitrage trading, with the exception of electric and gas retail sales, is conducted through the ECBU. Revenues from external customers are derived from the ECBU's marketing, trading, and risk management activities. Intersegment revenues are derived from the sale of electric power to the EDBU.
The EDBU plans, constructs, operates, and maintains the Company's transmission and distribution systems and provides gas and electric energy to end users. Revenues from customers other than end users are primarily derived from the transmission of electric power through the Company's transmission system.
The CIBU manages the development, sales, and marketing of domestic, non-regulated retail energy and energy-related products and services. Most of the CIBU's revenues are derived from the sales of these products and services to external, end-use customers. In addition, some of the CIBU's activities are conducted through joint-venture affiliates, including the construction and sale or lease of cogeneration and trigeneration facilities to large commercial/industrial customers and energy management services to third parties.
The IBU directs and manages all of the Company's international business holdings and domestic renewable assets, which include wholly-owned subsidiaries and equity investments. Revenues and equity earnings from unconsolidated companies are primarily derived from energy-related businesses.
Transfer pricing for sales of electric energy and sales of electric and gas transmission and distribution services between the ECBU and EDBU are derived from the operating utilities' retail and wholesale rate structures.
Financial results by business unit for the quarters ended September 30, 1999, and 1998, are as follows:
|
1999 |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Cinergy Business Units |
|
|
|
||||||||||||||||||||
|
All Other (1) |
Reconciling Eliminations (2) |
|
|||||||||||||||||||||
|
ECBU |
EDBU |
CIBU |
IBU |
Total |
Consolidated |
||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Operating Revenues | ||||||||||||||||||||||||
External Customers | $ | 878,291 | $ | 880,987 | $ | 12,892 | $ | 10,028 | $ | 1,782,198 | $ | | $ | | $ | 1,782,198 | ||||||||
Intersegment Revenues | 548,908 | | | | 548,908 | | (548,908 | ) | | |||||||||||||||
Segment Profit (Loss) Before Taxes | 9,434 | 84,016 | (2,492 | ) | 92,202 | 183,160 | 6,256 | | 189,416 |
|
1998 |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Cinergy Business Units |
|
|
|
||||||||||||||||||||
|
All Other (1) |
Reconciling Eliminations (2) |
|
|||||||||||||||||||||
|
ECBU |
EDBU |
CIBU |
IBU |
Total |
Consolidated |
||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Operating Revenues | ||||||||||||||||||||||||
External Customers | $ | 1,143,295 | $ | 819,037 | $ | 12,435 | $ | 1,944 | $ | 1,976,711 | $ | | $ | | $ | 1,976,711 | ||||||||
Intersegment Revenues | 496,356 | | | | 496,356 | | (496,356 | ) | | |||||||||||||||
Segment Profit (Loss) Before Taxes | 84,714 | 80,830 | (3,236 | ) | (4,056 | ) | 158,252 | (3,329 | ) | | 154,923 |
Financial results by business unit for the nine months ended September 30, 1999, and 1998, are as follows:
|
1999 |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Cinergy Business Units |
|
|
|
||||||||||||||||||||
|
All Other (1) |
Reconciling Eliminations (2) |
|
|||||||||||||||||||||
|
ECBU |
EDBU |
CIBU |
IBU |
Total |
Consolidated |
||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Operating Revenues | ||||||||||||||||||||||||
External Customers | $ | 1,923,931 | $ | 2,456,546 | $ | 41,176 | $ | 38,223 | $ | 4,459,876 | $ | | $ | | $ | 4,459,876 | ||||||||
Intersegment Revenues | 1,429,222 | | | | 1,429,222 | | (1,429,222 | ) | | |||||||||||||||
Segment Profit (Loss) Before Taxes | 138,509 | 233,904 | (10,156 | ) | 121,711 | 483,968 | $ | 1,164 | | 485,132 |
|
1998 |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Cinergy Business Units |
|
|
|
||||||||||||||||||||
|
All Other (1) |
Reconciling Eliminations (2) |
|
|||||||||||||||||||||
|
ECBU |
EDBU |
CIBU |
IBU |
Total |
Consolidated |
||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Operating Revenues | ||||||||||||||||||||||||
External Customers | $ | 2,112,753 | $ | 2,340,566 | $ | 36,843 | $ | 2,719 | $ | 4,492,881 | $ | | $ | | $ | 4,492,881 | ||||||||
Intersegment Revenues | 1,364,627 | | | | 1,364,627 | | (1,364,627 | ) | | |||||||||||||||
Segment Profit (Loss) Before Taxes | 126,621 | 182,433 | (10,908 | ) | (8,981 | ) | 289,165 | (16,552 | ) | | 272,613 |
Total segment assets at September 30, 1999, and December 31, 1998, are as follows:
|
Cinergy Business Units |
|
|
|
||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
All Other (1) |
Reconciling Eliminations (2) |
|
|||||||||||||||||||||
|
ECBU |
EDBU |
CIBU |
IBU |
Total |
Consolidated |
||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Total Segment Assets at September 30, 1999 | $ | 5,067,555 | $ | 4,053,292 | $ | 70,444 | $ | 303,500 | $ | 9,494,791 | $ | 39,696 | $ | | $ | 9,534,487 | ||||||||
Total Segment Assets at December 31, 1998 | $ | 4,863,014 | $ | 3,987,055 | $ | 42,107 | $ | 751,861 | $ | 9,644,037 | $ | 43,344 | $ | | $ | 9,687,381 |
Cinergy, CG&E, and PSI
On November 3, 1999, the EPA sued Cinergy, CG&E, and PSI in the U.S. District Court for the Southern District of Indiana. The suit alleges that Cinergy and CG&E violated the CAA by conducting various repairs and maintenance activities at Beckjord during the 1980's and early 1990's without a PSD permit and without installing BACT to reduce emissions from the plant. It further alleges that Cinergy and PSI conducted maintenance and repair work at Cayuga during the 1980's and 1990's without obtaining a PSD permit or installing BACT. In addition, with respect to units 1 and 2 at Cayuga, the EPA also alleges that Cinergy and PSI failed to comply with the NSPS. The suit seeks (1) injunctive relief to require Cinergy, CG&E, and/or PSI to install pollution control technology on each of the units which is the subject of the suit, and (2) civil penalties in amounts of up to $25,000 per day for each violation occurring on or before January 30, 1997, and $27,500 per day for each violation after January 30, 1997. Cinergy, CG&E, and PSI believe that the allegations in the complaint are without merit and plan to defend the suit in court. At this time, it is not possible to determine the likelihood that the EPA will prevail on its claims or the magnitude of the potential liability.
Also on November 3, 1999, the EPA filed a notice of violation against Cinergy, CG&E, and PSI alleging that they modified certain power plants without obtaining NSR permits. Specifically, it alleges that Cinergy and PSI modified Cayuga, Wabash River, and Gallagher in violation of the NSR regulations of the CAA and the related state laws and regulations. It also alleges violations of the NSR program by Cinergy and CG&E at Beckjord. The notice of violation indicates that the EPA may issue an administrative penalty order or file a civil action seeking injunctive relief and civil penalties of up to $27,500 per day for each violation. By a letter accompanying the complaint described in the previous paragraph, the Department of Justice has informed Cinergy, CG&E, and PSI that upon the expiration of the thirty day waiting period, it will amend its complaint to add the violations contained in the notice to its civil complaint. Cinergy, CG&E, and PSI believe the allegations in the notice of violation are without merit. At this time, it is not possible to determine the likelihood that the EPA will prevail on its claims or the magnitude of the potential liability.
Cinergy and CG&E have been informed by Columbus Southern Power Company, a subsidiary of American Electric Power Company, the operator of Conesville Station, that on November 3, 1999, U.S. EPA issued a notice of violation alleging violations of the Clean Air Act. Conesville Unit 4 is owned by CSP, The Dayton Power and Light Company, and CG&E. The notice of violation indicates that the EPA may issue an administrative penalty order or file a civil action seeking injunctive relief and civil penalties of up to $27,500 per day for each violation. Cinergy and CG&E believe the allegations in the notice of violation are without merit. At this time, it is not possible to determine the likelihood that the EPA will prevail on its claims or the magnitude of the potential liability.
Cinergy and CG&E
The legislation provides Ohio electric utilities with an opportunity to recover PUCO approved transition costs. Transition costs are recovered through payment of a frozen unbundled generation rate by customers who do not switch generation suppliers and through payment of a non-bypassable transition charge by customers who switch generation suppliers. Transition costs can include generation-related regulatory assets, above-market generation costs, employee severance and retraining costs and other costs. The Company must file a transition plan with the PUCO by January 3, 2000 and the PUCO is required to issue a transition order no later than October 31, 2000.
As discussed in Note 1(f) of the Notes to Consolidated Financial Statements in the December 31, 1998 Form 10-K, the Company defers as regulatory assets the amount of probable future revenue associated with deferred costs to be recovered from customers through the ratemaking process. At September 30, 1999, the amount of regulatory assets recorded in the accompanying financial statements relating to CG&E's generation is approximately $400 million before related tax effects. Whether the Company will have any additional transition costs related to an economic impairment of its generating assets is dependent on several factors, including the future market price of electricity. CG&E intends to seek recovery in its transition plan filing of all generation-related regulatory assets and any other transition costs which may be identified. The Company is currently unable to predict the outcome of the regulatory process and its impact on the results of operation, cash flows and financial position. As a result, the Company will continue to apply Statement 71 until the regulatory process is completed.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cinergy, CG&E, PSI, and ULH&P
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION Matters discussed in this section reflect and elucidate Cinergy's corporate vision of the future and, as a part of that, outline goals and aspirations, as well as specific projections. These goals and projections are considered forward-looking statements and are based on management's beliefs, as well as certain assumptions made by management. Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. In addition to any assumptions and other factors that are referred to specifically in connection with these statements, other factors that could cause actual results to differ materially from those indicated in any forward-looking statements include, among others: factors generally affecting operations, such as unusual weather conditions, unscheduled generation outages; unusual maintenance or repairs, unanticipated changes in fuel costs, environmental incidents, or system constraints; legislative and regulatory initiatives regarding deregulation and restructuring of the industry; increased competition in the electric and gas utility environment; challenges related to Year 2000 readiness; regulatory factors; changes in accounting principles or policies; adverse political, legal, or economic conditions; changing market conditions; success of efforts to invest in and develop new opportunities in non-traditional business; availability or cost of capital; employee workforce factors; legal and regulatory delays and other obstacles associated with mergers, acquisitions, and investments in joint ventures; costs and effects of legal and administrative proceedings; changes in legislative requirements; and other risks. The SEC's rules do not require forward-looking statements to be revised or updated, and Cinergy does not intend to do so.
FINANCIAL CONDITION
Recent Developments
Cinergy
Acquisitions During the first nine months of 1999, Cinergy invested an additional $235 million in domestic and international unconsolidated subsidiaries.
On September 30, 1999, Cinergy (through a CC&T subsidiary) formed a partnership with Duke Energy North America LLC. This partnership will jointly own three wholesale generating facilities with total capacity of approximately 1,400 megawatts. These facilities will be natural gas-fired peaking stations with commercial operation anticipated for the summer of 2000.
Dispositions See Note 14 of the "Notes to Financial Statements" in "Part I. Financial Information."
Power Supply Business The Company continues to consider a number of strategies to address the electricity market volatility during the industry restructuring. In November 1999, the Company's board of directors unanimously determined to remain in the supply segment of the electric industry as it moves to a competitive environment.
PSI
Securities Ratings Changes In October, Fitch IBCA changed their ratings for the following PSI securities: Secured Debt to A- from A, Senior Unsecured Debt to BBB+ from A-, Junior Unsecured Debt to BBB from BBB+, and Preferred Stock to BBB from BBB+.
Competitive Pressures
Cinergy, CG&E, PSI, and ULH&P
Federal The Clinton Administration has introduced a billthe Comprehensive Electricity Competition Actthat would grant all retail customers of electricity the right to choose their electricity supplier beginning January 1, 2003. The legislation would allow a state regulatory authority to opt out of the retail competition system if the authority conducted a public proceeding and determined that the electric customers of that state would be better served by a monopoly system or an alternative retail competition plan. A "compromise bipartisan" deregulation bill introduced on May 26, 1999 by Representatives Largent (R-Ok.) and Markey (D-Mass.) included similar mandate and opt out provisions with an effective date of January 1, 2002.
Both the House and the Senate continue to hold hearings on electric restructuring to see if consensus legislation can be developed, but it is uncertain whether federal retail customer choice legislation will be passed by this Congress.
Ohio See Note 19 of the "Notes to Financial Statements" in "Part I. Financial Information."
Indiana As discussed in the 1998 Form 10-K, electric restructuring legislation supported by a group of large industrial customers was introduced into the Indiana legislature in January 1999. This legislation did not pass in the 1999 session of the Indiana General Assembly, which ended in April 1999. Cinergy anticipates that electric restructuring legislation will again be introduced in the "short session" in Indiana in 2000.
Kentucky Throughout 1999, a task force convened by the Kentucky legislature has been meeting to study the issue of electric restructuring. The legislature next meets in January 2000, and it is not certain whether an electric restructuring bill will be introduced at that time.
Regulatory Matters
Cinergy and PSI
Coal Gasification Contract Buyout Costs See Note 15 of the "Notes to Financial Statements" in "Part I. Financial Information."
Cinergy and CG&E
PUCO OrderCG&E's Gas Rate Order As discussed in the 1998 Form 10-K, in April 1997, CG&E filed a notice of appeal with the Supreme Court of Ohio challenging the disallowance of information systems costs and imputation of certain revenues by the PUCO when it approved an overall average increase in CG&E's gas revenues in December 1996. On July 7, 1999, the Supreme Court issued a ruling on the appeal supporting the PUCO's decision to exclude a portion of the development costs of the information systems from the rate based calculation. However, the Supreme Court ruled in favor of CG&E on the imputed revenue appeal, deciding the PUCO acted unlawfully in imputing certain revenues. The ruling resulted in a revision in rates generating a $3 million increase in annual revenues for CG&E, which represents less than a one percentage increase in retail rates. The recovery of these costs began in the third quarter of 1999.
Other Matters
Midwest ISO In July of 1999, the Midwest ISO named Matthew Cordaro as the first President and Chief Executive Officer of the organization. In addition to Dr. Cordaro, the organization recently added Jim Torgeson as its Chief Financial Officer. The Midwest ISO is expected to begin operations in June of 2001 and recently filed with the Federal Energy Regulatory Commission an appendix which once approved, would allow independent transmission companies to exist under the Midwest ISO.
Two additional companies have agreed to join the Midwest ISO as transmission ownersNorthern States Power and Alliant Energy. The addition of these two companies expands the total of transmission owners participating in the Midwest ISO to fourteen. This expansion increases the coverage of the Midwest ISO to include over 69,000 miles of transmission lines extending into portions of 16 states, and includes approximately $8.5 billion in transmission investment forming the largest ISO in the country.
Repeal of the PUHCA As discussed in the 1998 Form 10-K, in February 1999, S. 313, a bill to repeal significant portions of PUHCA, was introduced in the Senate. The bill is currently awaiting action by the full Senate. In June 1999, H.R. 2363, a bill to repeal PUHCA, was introduced in the House as a companion bill to S. 313. H.R. 2363 is currently awaiting action by the House Commerce Committee.
While it is uncertain whether these bills will be enacted into law, Cinergy continues to support the repeal of this act either as part of comprehensive reform of the electric industry or as separate legislation.
Environmental Issues
Cinergy, CG&E, and PSI
Ozone Transport Rulemaking As discussed in the 1998 Form 10-K, in October 1998, the EPA finalized its ozone transport rule, also known as the NOX SIP Call. It applies to 22 states in the eastern half of the U.S., including the three states in which Cinergy's electric utilities operate, and also proposes a model nitrogen oxide (NOX) emission allowance trading program. The trading program would allow Cinergy to buy NOX emission allowances from, or sell NOX emission allowances to, other companies as necessary. The rule recommends that states reduce NOX emissions from primarily industrial and utility sources to a certain level by May 2003. The EPA gave the affected states until September 30, 1999, to incorporate NOX reductions with a trading program into their SIPs (defined as a state's plan for implementing emissions reductions to address air quality concerns). If the states fail to revise their SIPs accordingly, the EPA has proposed to implement a federal plan to accomplish NOX reductions by May 2003. The EPA must approve all SIPs.
Ohio, Indiana, a number of other states, and various industry groups (some of which Cinergy is a member) filed legal challenges to the NOX SIP Call in late 1998. Ohio and Indiana have also preliminarily indicated that they will seek fewer NOX reductions from the utility sector than the EPA has recommended. On May 25, 1999, the Court of Appeals granted the petitioners' request for a deferral of the rule and indefinitely suspended the September 30 filing deadline, pending further review by the Court of Appeals. The Court of Appeals heard arguments on the case on November 9, 1999 and is expected to make a decision in early 2000.
In February 1998, the northeast states filed petitions seeking the EPA's assistance in reducing ozone in the eastern U.S. under Section 126 of the CAA. Section 126 petitions allow a state to claim that another state is contributing to its air quality problem and request that the EPA require that upwind state to reduce its emissions. On April 30, 1999, the EPA found that the Midwest stationary sources (including all of Cinergy's facilities) named in the petitions are significantly contributing to ozone problems in the northeast for both the one- and eight-hour ozone standards (health standards for ozone levels for a one- and eight-hour time period). The EPA has stated that the Section 126 petitions and the NOX SIP Call requirements should be coordinated. As with the NOX SIP Call, various industry groups filed legal challenges to the Section 126 petition findings.
Based on a court decision regarding ambient (outside) air standards (discussed below) and the May 25 court decision (previously discussed), in mid-June the EPA (1) requested and was granted a deferral of the Section 126 rules, and (2) modified and re-proposed the Section 126 petitions rulemaking to only address the one-hour ozone standard. The petitions are limited to 12 states instead of the original 22 states. Indiana, Kentucky, and Ohio must still meet the same NOX emissions requirements. The EPA has scheduled a new rulemaking to be complete by November 1999.
Ambient Air Standards and Regional Haze As discussed in the 1998 Form 10-K, during 1997, the EPA revised the National Ambient Air Quality Standards for ozone and fine particulate matter and proposed rules for regional haze. Fine particulate matter refers to very small solid or liquid particles in the air. Regional haze involves fine particulate matter that impairs visibility in national parks. It was anticipated that utility NOX reductions called for in the EPA's final NOX SIP Call would (1) fully address the one-hour ozone standard and the new eight-hour ozone standard, and (2) partially address fine particulate matter and regional haze concerns. With the recent challenges to the NOX SIP Call and the eight-hour ozone standard (discussed below), it is unclear to what extent additional NOX reductions would be required of utilities.
On May 14, 1999, the Court of Appeals ruled that both the new eight-hour ozone standard and the fine particulate matter standard were found questionable and were determined to be unenforceable by the EPA. In June, the EPA appealed the decision. On October 29, 1999, the full Court of Appeals rejected the EPA's request for reconsideration. It is likely that the EPA will appeal to the U.S. Supreme Court. Cinergy currently cannot determine the outcome of the appeals process and the effects on future emissions reduction requirements.
The EPA published the final regional haze rule on July 1, 1999. This rule establishes planning and emission reduction timelines for states to use to improve visibility in national parks throughout the U.S. The ultimate effect of the new regional haze rule could be requirements for (1) newer and cleaner technologies and additional controls on conventional particulates, and (2) reductions in SO2 and NOX emissions from utility sources. If more utility emissions reductions are required, the compliance cost could be significant. Cinergy currently cannot determine the outcome or effects of the states' determination.
Air Toxics As discussed in the 1998 Form 10-K, in November 1998, the EPA finalized its ICR. The ICR requires all generating units to provide detailed information about coal use and mercury content. The EPA has selected about 100 generating units for one-time stack sampling, including Cinergy's Gibson Unit No. 3 and the Wabash River Repowering Project. The EPA is planning to make its regulatory determination on the need for additional regulation by the fourth quarter of 2000. If more air toxics regulations are issued, the compliance cost could be significant. Cinergy currently cannot predict the outcome or effects of the EPA's determination.
NSR The CAA's NSR provisions require that a company obtain a pre-construction permit if it plans to build a new stationary source of pollution or make a major modification to an existing facility. In July 1998, the EPA requested comments on proposed revisions to the NSR rules that would change NSR applicability by eliminating exemptions contained in the current regulation. Cinergy believes that if these changes are finalized, it will be significantly harder to maintain its facilities without triggering the NSR permitting requirements.
See Note 18 of the "Notes to Financial Statements" in "Part I. Financial Information" for a discussion of the lawsuit filed by the EPA as it relates to NSR issues.
On September 15, 1999, the Attorney General of the State of New York issued a letter notifying Cinergy and CG&E of its intent to sue under the citizens suit provisions of the CAA. On November 3, 1999, the Attorney General of the State of Connecticut issued a letter notifying Cinergy and CG&E of its intent to sue under the citizens suit provisions of the CAA. New York and Connecticut allege that Cinergy and CG&E violated the CAA by constructing and continuing to operate a major modification of Beckjord without obtaining the required NSR pre-construction permits. Under the CAA, New York and Connecticut may not file a lawsuit against Cinergy or CG&E until at least sixty days after providing notice of the intent to sue.
MGP Sites See Note 11 of the "Notes to Financial Statements" in "Part I. Financial Information."
Accounting Issues
Cinergy, CG&E, PSI, and ULH&P
New Accounting Standards See Note 12 of the "Notes to Financial Statements" in "Part I. Financial Information."
Market Risk Sensitive Instruments and Positions
Cinergy, CG&E, and PSI
Energy Commodities Sensitivity The Company markets and trades electricity, natural gas, and other energy-related products. The Company utilizes over-the-counter forward and option contracts for the purchase and sale of electricity and also trades exchange-traded futures contracts. See Notes 9 and 10 of the "Notes to Financial Statements" in "Part I. Financial Information" for the Company's accounting policies for certain derivative instruments. The Company's market risks have not changed materially from the market risks reported in the 1998 Form 10-K.
Cinergy
Exchange Rate Sensitivity The Company utilizes foreign exchange forward contracts and currency swaps to hedge certain of its net investments in foreign operations. As part of the sale of the investment in Avon Energy, Cinergy eliminated the hedges related to the Midlands investment in July 1999. Additionally, the Company eliminated the forward exchange contracts related to its investment in the Czech Republic. See Notes 9 and 10 of the "Notes to Financial Statements" in "Part I. Financial Information" for the Company's accounting policies for certain derivative instruments.
Cinergy, CG&E, PSI, and ULH&P
Interest Rate Sensitivity The Company's net exposure to changes in interest rates primarily consists of debt instruments with floating interest rates that are benchmarked to various market indices. To manage the Company's exposure to fluctuations in interest rates and to lower funding costs, the Company evaluates the use of, and has entered into, interest rate swaps. See Notes 9 and 10 of the "Notes to Financial Statements" in "Part I. Financial Information" for the Company's accounting policies for certain derivative instruments. The Company's market risks have not changed materially from the market risks reported in the 1998 Form 10-K.
CAPITAL RESOURCES AND REQUIREMENTS
Cinergy, CG&E, PSI, and ULH&P
Long-term Debt For information regarding recent issuances and redemptions of long-term debt securities, see Notes 2, 3, 4, 5, 6, 7, and 8 of the "Notes to Financial Statements" in "Part I. Financial Information."
As of September 30, 1999, CG&E, PSI, and ULH&P have remaining state regulatory authority for long-term debt issuance of $200 million, $30 million, and $30 million, respectively.
Cinergy, CG&E, PSI, and ULH&P
Short-term Debt Obligations representing notes payable and other short-term obligations (excluding notes payable to affiliated companies) were as follows:
Cinergy
|
September 30, 1999 |
|||||
---|---|---|---|---|---|---|
|
Established Lines |
Outstanding |
||||
|
(in millions) |
|||||
Cinergy | ||||||
Committed lines | ||||||
Revolving lines | $ | 600 | $ | | ||
Uncommitted lines | 45 | 5 | ||||
Utility Subsidiaries | ||||||
Committed lines | 195 | | ||||
Uncommitted lines | 380 | 32 | ||||
Pollution control notes | 267 | 267 | ||||
Non-utility subsidiaries | ||||||
Revolving lines | 165 | 14 | ||||
Short-term debt | 46 | 46 | ||||
Total | $ | 1,698 | $ | 364 |
CG&E
|
September 30, 1999 |
|||||
---|---|---|---|---|---|---|
|
Established Lines |
Outstanding |
||||
|
(in millions) |
|||||
Committed lines | $ | 65 | $ | | ||
Uncommitted lines | 185 | 20 | ||||
Pollution control notes | 184 | 184 | ||||
Total | $ | 434 | $ | 204 |
PSI
|
September 30, 1999 |
|||||
---|---|---|---|---|---|---|
|
Established Lines |
Outstanding |
||||
|
(in millions) |
|||||
Committed lines | $ | 130 | $ | | ||
Uncommitted lines | 195 | 12 | ||||
Pollution control notes | 83 | 83 | ||||
Total | $ | 408 | $ | 95 |
Cinergy, CG&E, and PSI
Cinergy's committed lines are comprised of two revolving lines. The established revolving lines also provide credit support for Cinergy's commercial paper program, which is limited to a maximum principal amount of $400 million. Cinergy did not issue commercial paper during the third quarter of 1999.
The established committed lines for CG&E and PSI also provide credit support for certain uncommitted lines, which are limited to a maximum principal amount of $75 million each. At September 30, 1999, $12 million was designated as credit support for PSI's uncommitted lines. CG&E and PSI also have the capacity to issue commercial paper that must be supported by committed lines of the respective company. Neither CG&E nor PSI issued commercial paper during the third quarter of 1999.
Both CG&E and PSI have issued variable rate pollution control notes. Holders of these pollution control notes have the right to put their notes to the issuing company for redemption on any business day. Accordingly, these issuances are reflected in the Consolidated Balance Sheets as "Notes payable and other short-term obligations."
Cinergy
Global Resources established a $100 million revolving credit agreement in 1998, which expired August 29, 1999, and was not extended or replaced.
During mid-July, Cinergy's acquisition line was paid off due to the sale of Cinergy's 50% ownership interest in Avon Energy. (See Note 14 of the "Notes to Financial Statements" in "Part I. Financial Information.")
Cinergy, CG&E, PSI, and ULH&P
Year 2000 The Year 2000 issue generally exists because many computer systems and applications, including those embedded in equipment and facilities, use two-digit rather than four-digit date fields to designate an applicable year. As a result, the systems and applications may not properly recognize dates including and beyond the year 2000 or accurately process data in which such dates are included, potentially causing data miscalculations and inaccuracies or operational malfunctions and failures, which could materially affect a business's financial condition, results of operations, and cash flows.
Cinergy has established a centrally managed, company-wide initiative, known as the Cinergy Year 2000 Readiness Program, to identify, evaluate, and address Year 2000 issues. The Cinergy Year 2000 Readiness Program, which began in the fourth quarter of 1996, is generally focused on three elements that are integral to this initiative: (1) business continuity, (2) risk management, and (3) regulatory compliance. Business continuity includes providing reliable electric and gas supply and service in a safe and cost-effective manner. This element encompasses mission-critical generation, transmission, and distribution systems and related infrastructure, as well as operational and financial IT systems and applications, end-user computing resources, and building systems (such as security, elevator, and heating and cooling systems). Risk management includes a review of the Year 2000 readiness efforts of Cinergy's critical suppliers, key customers and other principal business partners, and, as appropriate, the development of joint business support, contingency plans, and the inclusion of Year 2000 concerns as a regular part of the due diligence process in any new business venture. Regulatory compliance includes communications with regulatory agencies, other utilities, and various industry groups. While this initiative is broad in scope, it has been structured to identify and prioritize efforts for mission-critical electric and gas systems and services and key business partners.
Under the Cinergy Year 2000 Readiness Program, Cinergy achieved a target date of June 30, 1999, for the remediation and testing of its mission-critical generation, transmission, and distribution systems, components, and applications (gas and electric). An innovative remediation and testing effort, which Cinergy also completed on June 30, 1999, involved resetting the clocks on all of the generation units it operates in Ohio, Indiana, and Kentucky so that they are now operating as if it were already January 1, 2000. Cinergy's experience has been that those units have continued to operate without any material adverse result relating to a Year 2000 issue. Cinergy will continue to monitor its mission-critical systems, components and applications for the remainder of the year to maintain their Year 2000 readiness status.
Cinergy has also reviewed its existing contingency and business continuity plans and modified them in light of the Year 2000 issue. Contingency planning to maintain and restore service in the event of natural and other disasters (including software- and hardware-related problems) has been part of Cinergy's standard operation for many years, and Cinergy is working to leverage this experience in the review of existing plans to address Year 2000-related challenges. These reviews have assessed the potential for business disruption in various scenarios, including the most reasonably likely worst-case scenario, and to provide for key operational back up, recovery, and restoration alternatives.
Cinergy cannot guarantee that third parties on whom it depends for essential goods and services (those where the interruption of the supply of such goods and services could lead to issues involving the safety of employees, customers, or the public; the continued reliable delivery of gas and/or electricity; and the ability to comply with applicable laws or regulations) will convert their mission-critical systems, components, and applications in a timely manner. Failure or delay by any of these third parties could significantly disrupt business. However, to address this issue, Cinergy has established a supplier compliance program, and is working with its critical suppliers in an effort to minimize such risks.
In addition, Cinergy is coordinating its findings and other issues with other utilities and various industry groups via the Electric Power Research Institute Year 2000 Embedded Systems Project and the Year 2000 Readiness Assessment Program of the NERC, acting at the request of the DOE. The DOE has asked NERC to report on the integrity of the transmission system for North America and to coordinate and assess the preparation of the electric systems in North America for the Year 2000. NERC submitted its initial quarterly status report and coordination plan to the DOE in September 1998, and a second quarterly status report for the fourth quarter of 1998 was submitted on January 11, 1999. A third quarterly status report for the first quarter of 1999 was submitted on April 30, 1999. A fourth and final quarterly status report for the second quarter of 1999 was submitted to the DOE by NERC on August 3, 1999, in which Cinergy was listed as a "Y2k Ready" organization.
Cinergy participated in the NERC-sponsored national preparedness drill on September 8 and 9, 1999. The goal of this drill was to rehearse, under simulated conditions, key portions of our administrative, operating, communications, and contingency plans for the transition into the Year 2000.
Three major objectives were identified:
Cinergy was successful in meeting these objectives.
Cinergy currently estimates that the total cost for the inventory, assessment, remediation, testing, and upgrading of its systems as a result of the Year 2000 effort is approximately $13 million. Approximately $12.5 million in expenses have been incurred through September 30, 1999, for such things as external labor, for hardware and software upgrades, and for Cinergy employees who are dedicated full-time to the Cinergy Year 2000 Readiness Program. The timing of these expenses may vary and is not necessarily indicative of readiness efforts or progress to date. Cinergy anticipates that a portion of its Year 2000 expenses will not be incremental costs, but rather, will represent the redeployment of existing IT resources. Since its formation, Cinergy has incurred, and will continue to incur, significant capital improvement costs related to planned system upgrades or replacements required in the normal course of business. These costs have not been accelerated as a result of the Year 2000 issue.
The above information is based on Cinergy's current best estimates, which were derived using numerous assumptions of future events, including the availability and future costs of certain technological and other resources, third-party modification actions, and other factors. Given the complexity of these issues and possible unidentified risks, actual results may vary materially from those anticipated and discussed above. Specific factors that might cause such differences include, among others; the ability to locate and correct all affected computer code, the timing and success of remedial efforts of third-party suppliers, and similar uncertainties.
The above information is a Year 2000 Readiness Disclosure pursuant to the Federal Year 2000 Information and Readiness Disclosure Act.
Cinergy
Other Commitments At September 30, 1999, Cinergy had issued $337 million in guarantees primarily related to the energy marketing and trading activities of its subsidiaries and affiliates. In addition, Cinergy had guaranteed $308 million of the debt securities of its subsidiaries and affiliates.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 1999
The format of the following Results of Operations discussions has been changed from the format of prior periods. Unlike prior reports, the Results of Operations discussions for Cinergy, CG&E, and PSI are combined within this section. The Results of Operations discussion for ULH&P is presented only for the nine months ended September 30, 1999, in accordance with General Instruction H(2)(a).
Key Results Indicators
Cinergy, CG&E, and PSI
Electric and gas margins and net income for Cinergy, CG&E, and PSI for the quarters ended September 30, 1999, and 1998 are as follows:
|
Cinergy |
CG&E |
PSI |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
1999 |
1998 |
1999 |
1998 |
1999 |
1998 |
||||||||||||
|
(in thousands) |
|||||||||||||||||
Electric gross margin | $ | 505,486 | $ | 531,458 | $ | 288,849 | $ | 308,994 | $ | 212,178 | $ | 222,766 | ||||||
Gas gross margin | 26,578 | 35,685 | 24,256 | 34,966 | | | ||||||||||||
Net income | 121,563 | 109,431 | 48,152 | 78,672 | 15,658 | 26,792 |
Cinergy's diluted EPS increased to $0.76 for the third quarter of 1999, up more than 10 percent over results of $0.69 per share in the third quarter of 1998. The contribution to earnings of the Company's international operations increased $0.36 per share in the third quarter compared with the same period a year ago, primarily the result of the sale of the Company's share of Midlands, as discussed in Note 14.
Earnings from regulated operations decreased $0.27 per share in the third quarter of 1999 compared with a year earlier. The decrease is primarily due to the results of the supply business and more normal operations and maintenance expenses following significant cost reductions in 1998, offset somewhat by growth in the service territory. Third quarter results for the supply business were down $0.36 per share from the same period in 1998. This is primarily attributable to the extreme weather conditions experienced in July 1999. Reference is made to the Form 8-K filed August 10, 1999, which describes the earnings impact of extreme weather experienced in July 1999.
Cinergy's electric margins were positively impacted by $12 million or $0.07 EPS (EPS is net of fuel and income taxes) during the quarter, as compared to 1998, as a result of a change in estimate of PSI's utility services delivered but unbilled at month end.
The explanations below follow the line items on the Statements of Income for Cinergy, CG&E, and PSI, which begin on page 9. However, only the line items that varied significantly from prior periods are discussed in these sections.
Operating Revenues
Cinergy, CG&E and PSI
Electric Operating Revenues The components of electric operating revenues for Cinergy, CG&E, and PSI for the quarters ended September 30, 1999 and 1998 were as follows:
|
Cinergy(1) |
CG&E |
PSI |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
1999 |
1998 |
% Change |
1999 |
1998 |
% Change |
1999 |
1998 |
% Change |
||||||||||||||||
|
(in millions) |
||||||||||||||||||||||||
Retail | $ | 799 | $ | 713 | 12 | % | $ | 426 | $ | 397 | 7 | % | $ | 374 | $ | 315 | 19 | % | |||||||
Wholesale | 564 | 873 | (35 | ) | 269 | 425 | (37 | ) | 322 | 481 | (33 | ) | |||||||||||||
Other | 34 | 16 | 113 | 5 | 5 | | 11 | 11 | | ||||||||||||||||
Total | $ | 1,397 | $ | 1,602 | (13 | )% | $ | 700 | $ | 827 | (15 | )% | $ | 707 | $ | 807 | (12 | )% |
The decrease in electric operating revenues for Cinergy, CG&E and PSI for the quarter ended September 30, 1999, compared to 1998, was primarily caused by decreased volumes on non-firm power wholesale transactions related to energy marketing and trading operations. Partially offsetting the decline was an increase in the average price per KWh for non-firm power customers, higher firm power KWh sales, and higher retail KWh sales resulting from growth in the average number of residential and commercial customers.
Cinergy's electric margins were positively impacted by $12 million or $0.07 EPS (EPS is net of fuel and income taxes) during the quarter, as compared to 1998, as a result of a change in estimate of PSI's utility services delivered but unbilled at month end. Also contributing to the increase for Cinergy was increased international operations.
Cinergy and CG&E
Gas Operating Revenues Gas operating revenues for Cinergy for the quarters ended September 30, 1999, and 1998 are as follows:
|
Cinergy(1) |
||||||||
---|---|---|---|---|---|---|---|---|---|
|
Quarter Ended September 30 |
||||||||
|
1999 |
1998 |
% Change |
||||||
|
(in millions) |
||||||||
Wholesale | $ | 327 | $ | 296 | 10 | % | |||
Retail | 41 | 55 | (25 | ) | |||||
Transportation | 8 | 8 | | ||||||
Other | | 1 | (100 | ) | |||||
Total | $ | 376 | $ | 360 | 4 | % |
The increase in gas operating revenues for Cinergy for the quarter ended September 30, 1999, when compared to 1998, was primarily due to an increase in the wholesale gas operating revenues of CM&T resulting from an increase in the average price received per mcf sold.
Partially offsetting the increase for Cinergy was the decrease in CG&E's gas operating revenues for the quarter ended September 30, 1999, when compared to 1998. This decrease was primarily due to an adjustment to estimated line losses used in the calculation of unbilled revenues. Also contributing to the decline in revenues for CG&E was a decrease in the number of retail customers resulting from the November 1997 implementation of the customer choice program in Ohio. CG&E accounts for the majority of Cinergy's retail, transportation, and other gas operating revenues.
Cinergy
Other Revenues The decrease in other revenues for Cinergy for the quarter ended September 30, 1999, when compared to 1998, was primarily due to development fees associated with new initiatives by certain of Cinergy's non-regulated entities that were collected in 1998.
Cinergy, CG&E, and PSI
Operating Expenses
Operating expenses for Cinergy, CG&E, and PSI for the quarters ended September 30, 1999 and 1998 were as follows:
|
Cinergy(1) |
CG&E |
PSI |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
1999 |
1998 |
% Change |
1999 |
1998 |
% Change |
1999 |
1998 |
% Change |
||||||||||||||||
|
(in millions) |
||||||||||||||||||||||||
Fuel | $ | 200 | $ | 206 | (3 | )% | $ | 91 | $ | 93 | (2 | )% | $ | 100 | $ | 113 | (12 | )% | |||||||
Purchased and exchanged power | 691 | 865 | (20 | ) | 320 | 426 | (25 | ) | 395 | 471 | (16 | ) | |||||||||||||
Gas purchased | 349 | 324 | 8 | 14 | 22 | (36 | ) | n/a | n/a | | |||||||||||||||
Other operation | 207 | 176 | 18 | 81 | 73 | 11 | 99 | 83 | 19 | ||||||||||||||||
Maintenance | 39 | 50 | (22 | ) | 22 | 23 | (4 | ) | 17 | 27 | (37 | ) | |||||||||||||
Depreciation and amortization | 89 | 82 | 9 | 52 | 47 | 11 | 34 | 33 | 3 | ||||||||||||||||
Taxes other than income taxes | 70 | 69 | 1 | 54 | 54 | | 15 | 15 | | ||||||||||||||||
Total | $ | 1,645 | $ | 1,772 | (7 | )% | $ | 634 | $ | 737 | (14 | )% | $ | 660 | $ | 742 | (11 | )% |
Fuel The following table details the changes in fuel expense for the quarters ended September 30, 1999 and 1998:
|
Cinergy(1) |
CG&E |
PSI |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
|
(in millions) |
|||||||||
Fuel expense-September 30, 1998 | $ | 206 | $ | 93 | $ | 113 | ||||
Increase (Decrease) due to changes in: |
|
|
|
|
|
|
|
|
|
|
Price of fuel | 7 | 5 | 2 | |||||||
Deferred fuel cost | (28 | ) | (9 | ) | (19 | ) | ||||
KWh generation | 6 | 2 | 4 | |||||||
Other | 9 | | | |||||||
Fuel expense September 30, 1999 | $ | 200 | $ | 91 | $ | 100 |
Purchased and Exchanged Power The decrease in purchased and exchanged power expense for Cinergy, CG&E and PSI for the quarter ended September 30, 1999, compared to 1998, was primarily because of decreased purchases of non-firm power wholesale transactions as a result of a decline in sales volume in the energy marketing and trading operations. This decrease was offset partially by the extreme weather conditions experienced in July 1999. Reference is made to the Form 8-K filed on August 10, 1999, which describes the earnings impact of extreme weather experienced in July 1999.
Gas Purchased The increase in gas purchased expense for Cinergy for the quarter ended September 30, 1999, as compared to 1998, was primarily because of an increase in the gas purchased expenses of CM&T. Partially offsetting the increase for Cinergy was a decline in purchased gas expense for CG&E, reflecting a decrease in the volume of gas purchased due to the loss of retail customers and a lower average cost per mcf of gas purchased.
Other Operation The increase in other operation expense for CG&E for the quarter ended September 30, 1999, when compared to 1998, was primarily due to an increase in computer hardware leasing expense and a bad debt write-off related to the energy marketing and trading business.
The increase in other operation expense for PSI for the quarter ended September 30, 1999, when compared to 1998, was primarily due to an increase in the variable portion of base monthly fees related to the coal gasification services contract with Dynegy.
The increase in other operation expense for Cinergy for the quarter ended September 30, 1999, when compared to 1998, was primarily due to the reasons outlined in the CG&E and PSI discussions above.
Maintenance The decrease in maintenance expense for Cinergy and PSI for the quarter ended September 30, 1999, in comparison to 1998, was primarily due to a reduction in maintenance costs associated with generating station repairs.
Depreciation and Amortization The increase in depreciation and amortization expense for Cinergy and CG&E for the quarter ended September 30, 1999, when compared to 1998, was primarily due to additions to depreciable plant. Also contributing to the change for Cinergy and CG&E was an increased amortization of phase-in deferral expense, which reflects the PUCO-ordered phase-in plan for Zimmer.
Other Income and Deductions
Equity in Earnings of Unconsolidated Subsidiaries The decrease in equity in earnings of unconsolidated subsidiaries for Cinergy for the quarter ended September 30, 1999, was primarily driven by the July 1999 sale of Cinergy's 50% interest in Midlands. (See Note 14 of the "Notes to Financial Statements" in "Part I. Financial Information" for a discussion of the sale of Cinergy's 50% investment in Avon Energy.)
MiscellaneousNet The increase in miscellaneousnet for Cinergy of $9 million for the quarter ended September 30, 1999, was primarily the result of transactions related to the sale of Midlands.
Miscellaneousnet decreased for CG&E ($1 million) and PSI ($2 million) for the quarter ended September 30, 1999 compared to 1998. The CG&E decrease was primarily the result of a decrease in interest income from a decrease in the balance of short-term loans to affiliated companies through Cinergy's money pool arrangement. The PSI decrease is primarily the result of a decrease in interest income and adjustments recorded related to certain transactions.
Interest Interest expense decreased for Cinergy ($5 million) for the quarter ended September 30, 1999. This decrease was primarily the result of a decrease in interest on short-term obligations resulting from a reduction in average short-term borrowings and lower short-term interest rates. The decrease was partially offset by an increase in interest expense on long-term debt resulting from an increase in the amount of long-term debt outstanding.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
The format of the following Results of Operations discussions has been changed from the format of prior periods. Unlike prior reports, the Results of Operations discussions for Cinergy, CG&E, and PSI are combined within this section. The Results of Operations discussion for ULH&P is presented only for the nine months ended September 30, 1999, in accordance with General Instructions H(2)(a).
Key Results Indicators
Cinergy, CG&E, and PSI
Electric and gas margins and net income for Cinergy, CG&E, and PSI for the nine months ended September 30, 1999, and 1998 were as follows:
|
Cinergy |
CG&E |
PSI |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
1999 |
1998 |
1999 |
1998 |
1999 |
1998 |
||||||||||||
|
(in thousands) |
|||||||||||||||||
Electric gross margin | $ | 1,531,876 | $ | 1,464,233 | $ | 832,346 | $ | 798,330 | $ | 686,045 | $ | 668,583 | ||||||
Gas gross margin | 148,638 | 142,435 | 142,295 | 140,653 | | | ||||||||||||
Net income | 307,866 | 189,569 | 167,311 | 162,550 | 81,079 | 39,102 |
Cinergy's diluted EPS increased to $1.93 for the nine months ended September 30, 1999, compared to $1.20 per share for the comparable period in 1998. During this same time period, the contribution to earnings of the company's international operations was $0.43 per share. This was primarily the result of the sale of the company's share of Midlands. Earnings from regulated operations, including the supply business, increased $0.32 per share during the nine months ended September 30, 1999. This increase includes the impact of the extreme weather conditions experienced in July 1999. Reference is made to the Form 8-K filed on August 10, 1999, which describes the earnings impact of extreme weather experienced in July 1999.
Cinergy's electric margins were positively impacted by $12 million or $0.07 EPS (EPS is net of fuel and income taxes) during the quarter, as compared to 1998, as a result of a change in estimate of PSI's utility services delivered but unbilled at month end.
The explanations below follow the line items on the Statements of Income for Cinergy, CG&E and PSI, which begin on page 9. However, only the line items that varied significantly from prior periods are discussed in these sections.
Operating Revenues
Cinergy, CG&E and PSI
Electric Operating Revenues Electric operating revenues for Cinergy, CG&E, and PSI for the nine months ended September 30, 1999 and 1998 were as follows:
|
Cinergy(1) |
CG&E |
PSI |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
1999 |
1998 |
% Change |
1999 |
1998 |
% Change |
1999 |
1998 |
% Change |
||||||||||||||||
|
(in millions) |
||||||||||||||||||||||||
Retail | $ | 2,098 | $ | 1,955 | 7 | % | $ | 1,129 | $ | 1,075 | 5 | % | $ | 970 | $ | 880 | 10 | % | |||||||
Wholesale | 1,115 | 1,790 | (38 | ) | 515 | 873 | (41 | ) | 653 | 1,003 | (35 | ) | |||||||||||||
Other | 94 | 38 | 147 | 15 | 12 | 25 | 30 | 28 | 7 | ||||||||||||||||
Total | $ | 3,307 | $ | 3,783 | (13 | )% | $ | 1,659 | $ | 1,960 | (15 | )% | $ | 1,653 | $ | 1,911 | (14 | )% |
The decrease in electric operating revenues for Cinergy, CG&E, and PSI for the nine months ended September 30, 1999, compared to 1998, was primarily caused by decreased volumes on non-firm power wholesale transactions related to energy marketing and trading operations. Partially offsetting the decline was an increase in the average price per KWh for non-firm power customers, higher firm power KWh sales, and higher retail KWh sales resulting from growth in the average number of residential and commercial customers.
Cinergy's electric margins were positively impacted by $12 million or $0.07 EPS (EPS is net of fuel and income taxes) for the nine months ended September 30, 1999, as compared to 1998, as a result of a change in estimate of PSI's utility services delivered but unbilled at month end. Also contributing to the increase for Cinergy was increased international operations.
Cinergy and CG&E
Gas Operating Revenues Gas operating revenues for Cinergy and CG&E for the nine months ended September 30, 1999, and 1998 were as follows:
|
Cinergy(1) |
||||||||
---|---|---|---|---|---|---|---|---|---|
|
Nine Months Ended September 30 |
||||||||
|
1999 |
1998 |
% Change |
||||||
|
(in millions) |
||||||||
Wholesale | $ | 837 | $ | 380 | 120 | % | |||
Retail | 248 | 276 | (10 | ) | |||||
Transportation | 38 | 28 | 36 | ||||||
Other | 3 | 3 | | ||||||
Total | $ | 1,126 | $ | 687 | 64 | % |
The increase in gas operating revenues for Cinergy for the nine months ended September 30, 1999, when compared to 1998, was primarily due to the gas operating revenues of CM&T, which was acquired in June 1998.
Partially offsetting the increase for Cinergy was the decrease in CG&E's gas operating revenues for the nine months ended September 30, 1999, when compared to 1998. This decrease was partially due to an adjustment to estimated line losses used in the calculation of unbilled revenues. Also contributing to the decrease in CG&E's gas operating revenues was a lower average cost per mcf of gas purchased which was passed on to end users, a decrease in the number of retail customers resulting from the November 1997 implementation of the customer choice program in Ohio, and a decrease in transportation mcf volumes resulting from the loss of a large industrial customer during late 1998. CG&E accounts for the majority of Cinergy's retail, transportation, and other gas operating revenues.
Cinergy
Other Revenues The increase in other revenues for the nine months ended September 30, 1999, when compared to 1998, for Cinergy was primarily the result of increases in sales and new initiatives by certain of Cinergy's non-regulated entities.
Cinergy, CG&E, and PSI
Operating Expenses
Operating expenses for Cinergy, CG&E, and PSI for the nine months ended September 30, 1999 and 1998 were as follows:
|
Cinergy(1) |
CG&E |
PSI |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
1999 |
1998 |
% Change |
1999 |
1998 |
% Change |
1999 |
1998 |
% Change |
||||||||||||||||
|
(in millions) |
||||||||||||||||||||||||
Fuel | $ | 584 | $ | 542 | 8 | % | $ | 253 | $ | 258 | (2 | )% | $ | 311 | $ | 284 | 10 | % | |||||||
Purchased and exchanged power | 1,192 | 1,777 | (33 | ) | 573 | 904 | (37 | ) | 656 | 959 | (32 | ) | |||||||||||||
Gas purchased | 977 | 544 | 80 | 114 | 140 | (19 | ) | n/a | n/a | | |||||||||||||||
Other operation | 573 | 602 | (5 | ) | 235 | 232 | 1 | 269 | 326 | (17 | ) | ||||||||||||||
Maintenance | 153 | 145 | 6 | 76 | 71 | 7 | 77 | 74 | 4 | ||||||||||||||||
Depreciation and amortization | 263 | 242 | 9 | 153 | 143 | 7 | 102 | 97 | 5 | ||||||||||||||||
Taxes other than income taxes | 209 | 208 | | 163 | 162 | 1 | 44 | 44 | | ||||||||||||||||
Total | $ | 3,951 | $ | 4,060 | (3 | )% | $ | 1,567 | $ | 1,910 | (18 | )% | $ | 1,459 | $ | 1,784 | (18 | )% |
Fuel The following table details the changes in fuel expense for the nine months ended September 30, 1999 and 1998:
|
Cinergy(1) |
CG&E |
PSI |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
|
(in millions) |
|||||||||
Fuel expenseSeptember 30, 1998 | $ | 542 | $ | 258 | $ | 284 | ||||
Increase (Decrease) due to changes in: |
|
|
|
|
|
|
|
|
|
|
Price of fuel | 6 | 7 | (1 | ) | ||||||
Deferred fuel cost | (8 | ) | (21 | ) | 13 | |||||
KWh generation | 24 | 9 | 15 | |||||||
Other | 20 | | | |||||||
Fuel expense September 30, 1999 | $ | 584 | $ | 253 | $ | 311 |
Purchased and Exchanged Power The decrease in purchased and exchanged power expense for Cinergy, CG&E and PSI for the nine months ended September 30, 1999, compared to 1998, was primarily because of decreased purchases of non-firm power wholesale transactions as a result of a decline in sales volume in the energy marketing and trading operations. This decrease was offset partially by the extreme weather conditions experienced in July 1999. Reference is made to the Form 8-K filed on August 10, 1999, which describes the earnings impact of extreme weather experienced in July 1999.
Gas Purchased The increase in gas purchased expense for Cinergy for the nine months ended September 30, 1999, when compared to 1998, was primarily due to an increase in the gas purchased expense of CM&T. Partially offsetting the increase for Cinergy was a decline in purchased gas expense for CG&E, reflecting a lower average cost per mcf of gas purchased.
Other Operation The decrease in other operation expense for PSI for the nine months ended September 30, 1999, when compared to 1998, was primarily due to the one-time charge of $80 million recorded during the second quarter of 1998 reflecting the implementation of a 1989 settlement of a dispute with the WVPA. Partially offsetting the decrease was the increase in the variable portion of the base monthly fees related to the coal gasification services contract with Dynegy.
The decrease in other operation expense for Cinergy for the nine months ended September 30, 1999, when compared to 1998, was primarily due to the reasons outlined in the PSI discussion above. Partially offsetting the decrease for Cinergy was an increase in expenses associated with existing and new initiatives by certain of Cinergy's consolidated non-regulated businesses.
Maintenance The increase in maintenance expense for CG&E for the nine months ended September 30, 1999, when compared to 1998, was primarily due to maintenance outages, an increase in the cost of generating station repair parts, and an overall increase in required maintenance at all of CG&E's generating stations.
The increase in maintenance expense for Cinergy for the nine months ended September 30, 1999, when compared to 1998, was partially due to the reasons outlined in the CG&E discussion above. Also contributing to the change for Cinergy was an increase in PSI's maintenance expense primarily caused by generating station repair costs and planned maintenance outages.
Depreciation and Amortization The increase in depreciation and amortization expense for Cinergy, CG&E, and PSI for the nine months ended September 30, 1999, when compared to 1998, was primarily due to additions to depreciable plant. Also contributing to the change for Cinergy and CG&E was an increased amortization of phase-in deferral expense, which reflects the PUCO-ordered phase-in plan for Zimmer.
Other Income and Deductions
Equity in Earnings of Unconsolidated Subsidiaries For the nine months ended September 30, 1999, equity in earnings of unconsolidated subsidiaries increased $25 million for Cinergy, as compared to the same period of 1998. The increase was primarily driven by the increase in the earnings of Avon Energy for the period prior to the sale of the investment. (See Note 14 of the "Notes to Financial Statements" in "Part I. Financial Information" for a discussion of the sale of Cinergy's 50% interest in Avon Energy.)
MiscellaneousNet Miscellaneousnet increased $9 million for Cinergy during the nine months ended September 30, 1999, compared to the same period of 1998. The Cinergy increase was primarily the result of transactions related to the sale of Midlands.
Miscellaneousnet for PSI decreased $2 million for the nine months ended September 30, 1999, compared to the same period of 1998. This decrease was primarily the result of a decrease in interest income and a decrease in the level of expenses associated with the sales of accounts receivable.
Interest Interest expense decreased $4 million for Cinergy for the nine months ended September 30, 1999, compared to the same period of 1998. This decrease is primarily the result of a decrease in interest on short-term obligations resulting from a reduction in average short-term borrowings and lower short-term interest rates. This decrease was partially offset by an increase in interest expense on long-term debt resulting from an increase in the amount of long-term debt outstanding.
Preferred Dividend Requirements of Subsidiaries
Cinergy's preferred dividend requirements of subsidiaries decreased $1 million (21%) for the nine months ended September 30, 1999, as compared to the same period of 1998. This decrease was primarily attributable to PSI's redemption of all outstanding shares of its 7.44% Series Cumulative Preferred Stock on March 1, 1998.
Preferred Dividend Requirement
PSI's preferred dividend requirement decreased $1 million (23%) for the nine months ended September 30, 1999 as compared to the same period of 1998. This decrease was primarily attributable to PSI's redemption of all outstanding shares of its 7.44% Series Cumulative Preferred Stock on March 1, 1998.
ULH&P
RESULTS OF OPERATIONS FOR ULH&P FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
The format of the following Results of Operations discussions has been changed from the format of prior periods. Unlike prior reports, the Results of Operations discussion for ULH&P is presented only for the nine months ended September 30, 1999, in accordance with General Instructions H(2)(a).
Electric and gas margins and net income for ULH&P for the nine months ended September 30, 1999, and 1998 are as follows:
|
ULH&P |
|||||
---|---|---|---|---|---|---|
|
1999 |
1998 |
||||
|
(in thousands) |
|||||
Electric gross margin | $ | 38,025 | $ | 34,565 | ||
Gas gross margin | 25,214 | 20,972 | ||||
Net income | 9,073 | 6,626 |
The increase in electric operating revenues for the nine months ended September 30, 1999, compared to 1998, was primarily attributable to higher retail KWh sales resulting from growth in the average number of residential and commercial customers. A higher volume purchased from CG&E caused the associated change in electricity purchased from parent company for resale.
The increase in gas operating revenues for the nine months ended September 30, 1999, when compared to 1998, was primarily caused by an increase in retail mcf volumes sold and used per customer and an increase in the average price per mcf recovered from retail customers.
The increase in depreciation for the nine months ended September 30, 1999, as compared to 1998 was primarily due to additions to depreciable plant. The interest expense increase for the nine months ended September 30, 1999, as compared to 1998 was primarily due to the issuance of $40 million of debt during the fourth quarter of 1998 and the third quarter of 1999.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Cinergy, CG&E, PSI, and ULH&P
Reference is made to the "Market Risk Sensitive Instruments and Positions" section in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" in "Part I. Financial Information" and Notes 9 and 10 of the "Notes to Financial Statements" in "Part I. Financial Information."
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Cinergy, CG&E, and PSI
Manufactured Gas Plant Sites
See Note 11 of the "Notes to Financial Statements" in "Part I. Financial Information."
Cinergy, CG&E, and PSI
New Source Review
See Note 18 of the "Notes to Financial Statements" in "Part I. Financial Information."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit Designation |
Nature of Exhibit |
|
---|---|---|
Cinergy and PSI | ||
4-A | #Seventh Supplemental Indenture dated as of October 20, 1999, between PSI and Fifth Third Bank as Trustee. (Exhibit to PSI's September 30, 1999 Form 10-Q, in File No. 1-3543.) | |
Cinergy and ULH&P |
|
|
4-B | #Fourth Supplemental Indenture dated as of September 17, 1999, between ULH&P and Fifth Third Bank as Trustee. (Exhibit to ULH&P's September 30, 1999 Form 10-Q, in File No. 2-7793.) | |
Cinergy |
|
|
10-A | First Amendment to First Amended and Restated Employment Agreement dated September 1, 1999, between Cinergy, Cinergy Services, CG&E, and PSI and Larry E. Thomas. (Exhibit to Cinergy's September 30, 1999 Form 10-Q, in File No. 1-11377.) | |
10-B |
|
First Amendment to First Amended and Restated Employment Agreement dated September 1, 1999, between Cinergy, Cinergy Services, CG&E, and PSI and Charles J. Winger. (Exhibit to Cinergy's September 30, 1999 Form 10-Q, in File No. 1-11377.) |
Cinergy, CG&E, PSI, and ULH&P |
||
27 | Financial Data Schedules (included in electronic submission only) |
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 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 15, 1999 |
|
/s/ BERNARD F. ROBERTS |
Bernard F. Roberts Duly Authorized Officer and Chief Accounting Officer |
TABLE OF CONTENTS
GLOSSARY OF TERMS
CINERGY CORP.
AND SUBSIDIARY COMPANIES
THE CINCINNATI GAS & ELECTRIC COMPANY
AND SUBSIDIARY COMPANIES
PSI ENERGY, INC.
AND SUBSIDIARY COMPANY
THE UNION LIGHT, HEAT AND POWER COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
|