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 June 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address, and Telephone Number Identification No.
1-11377 CINERGY CORP. 31-1385023
(A Delaware Corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000
1-1232 THE CINCINNATI GAS & ELECTRIC COMPANY 31-0240030
(An Ohio Corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000
1-3543 PSI ENERGY, INC. 35-0594457
(An Indiana Corporation)
1000 East Main Street
Plainfield, Indiana 46168
(317) 839-9611
2-7793 THE UNION LIGHT, HEAT AND POWER COMPANY 31-0473080
(A Kentucky Corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No
This combined Form 10-Q is separately filed by Cinergy Corp., The Cincinnati
Gas & Electric Company, PSI Energy, Inc., and The Union Light, Heat and Power
Company. Information contained herein relating to any individual registrant
is filed by such registrant on its own behalf. Each registrant makes no
representation as to information relating to the other registrants.
The Union Light, Heat and Power Company meets the conditions set forth in
General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing its
company specific information with the reduced disclosure format.
As of July 31, 1995, shares of Common Stock outstanding for each company were
as listed:
<TABLE>
<CAPTION>
Company Shares
<S> <C>
Cinergy Corp., par value $.01 per share 156,648,694
The Cincinnati Gas & Electric Company, par value $8.50 per share 89,663,086
PSI Energy, Inc., without par value, stated value $.01 per share 53,913,701
The Union Light, Heat and Power Company, par value $15.00 per share 585,333
</TABLE>
<PAGE>
TABLE OF CONTENTS
Item
Number
Glossary of Terms
PART I. FINANCIAL INFORMATION
1 Financial Statements
Cinergy Corp.
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Common
Stock Equity
Consolidated Statements of Cash Flows
Results of Operations
The Cincinnati Gas & Electric Company
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Common
Stock Equity
Consolidated Statements of Cash Flows
Results of Operations
PSI Energy, Inc.
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Common
Stock Equity
Consolidated Statements of Cash Flows
Results of Operations
The Union Light, Heat and Power Company
Balance Sheets
Statements of Income
Statements of Changes in Common Stock Equity
Statements of Cash Flows
Results of Operations
Notes to Financial Statements
2 Management`s Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
1 Legal Proceedings
2 Changes in Securities
6 Exhibits and Reports on Form 8-K
Signatures
<PAGE>
GLOSSARY OF TERMS
The following abbreviations or acronyms used in the text of this combined 10-Q
are defined below:
TERM DEFINITION
AFUDC Allowance for funds used during construction
Articles Amended Articles of Incorporation
August 1993 A Public Utilities Commission of Ohio order issued in
Order August 1993
Cayuga Cayuga Generating Station
CERCLA Comprehensive Environmental Response, Compensation and
Liability Act
CG&E The Cincinnati Gas & Electric Company (a subsidiary of
Cinergy Corp.)
CG&E`s 1994 CG&E`s 1994 Annual Report on Form 10-K (Commission File
Form 10-K Number 1-1232)
Cinergy Cinergy Corp.
Cinergy`s 1994 Cinergy`s 1994 Annual Report on Form 10-K, as amended
Form 10-K (Commission File Number 1-11377)
Clean Coal Wabash River Clean Coal Project
Project
CWIP Construction work in progress
Cyprus Amax Cyprus Amax Minerals Company and Amax Coal Company,
collectively
DCR Duff & Phelps Credit Rating Co.
DSM Demand-side Management
FASB Financial Accounting Standards Board
February 1995 An Indiana Utility Regulatory Commission order issued in
Order February 1995
FERC Federal Energy Regulatory Commission
Gibson Gibson Generating Station
IDEM Indiana Department of Environmental Management
IGC Indiana Gas Company
IPALCO IPALCO Enterprises, Inc.
IURC Indiana Utility Regulatory Commission
KPSC Kentucky Public Service Commission
kwh Kilowatt-hour
Lawrenceburg Lawrenceburg Gas Company (a wholly-owned subsidiary of CG&E)
May 1992 Order A Public Utility Commission of Ohio order issued in May
1992
Mcf Thousand cubic feet
MEGA-NOPR FERC Notice of Proposed Rulemaking on Open Access issued on
March 29, 1995
MGP Manufactured Gas Plant
NIPSCO Northern Indiana Public Service Company
PRP Potentially Responsible Party
PSI PSI Energy, Inc. (a subsidiary of Cinergy)
PSI`s 1994 PSI`s 1994 Annual Report on Form 10-K (Commission File
Form 10-K Number 1-3543)
PUCO Public Utilities Commission of Ohio
PUHCA Public Utility Holding Company Act of 1935
S&P Standard & Poor`s
SEC Securities and Exchange Commission
SFAS 121 Statement of Financial Accounting Standards No. 121,
`Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of`
ULH&P The Union Light, Heat and Power Company (a wholly-owned
subsidiary of CG&E)
ULH&P`s Form ULH&P`s 1994 Annual Report on Form 10-K (Commission File
10-K Number 2-7793)
Woodsdale Woodsdale Generating Station
Zimmer William H. Zimmer Generating Station
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
<S> <C> <C>
Utility Plant - original cost
In service
Electric $8 393 518 $8 292 625
Gas 664 536 645 602
Common 184 750 185 718
9 242 804 9 123 945
Accumulated depreciation 3 262 715 3 163 802
5 980 089 5 960 143
Construction work in progress 241 987 238 750
Total utility plant 6 222 076 6 198 893
Current Assets
Cash and temporary cash investments 25 206 71 880
Restricted deposits 4 646 11 288
Accounts receivable less accumulated
provision of $10,212,000 at June 30, 1995
and $9,716,000 at December 31, 1994 for
doubtful accounts 251 888 299 509
Materials, supplies, and fuel - at average cost
Fuel for use in electric production 160 363 156 028
Gas stored for current use 21 187 31 284
Other materials and supplies 93 722 92 880
Property taxes applicable to subsequent year 134 729 112 420
Prepayments and other 46 947 36 416
738 688 811 705
Other Assets
Regulatory assets
Post-in-service carrying costs and deferred
operating expenses 188 061 185 280
Phase-in deferred return and depreciation 105 211 100 943
Deferred demand-side management costs 114 768 104 127
Amounts due from customers - income taxes 393 859 408 514
Deferred merger costs 50 067 49 658
Unamortized costs of reacquiring debt 71 778 70 424
Other 81 665 86 017
Other 141 581 134 281
1 146 990 1 139 244
$8 107 754 $8 149 842
<FN>
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CAPITALIZATION AND LIABILITIES
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
<S> <C> <C>
Common Stock Equity
Common stock - $.01 par value;
authorized shares - 600,000,000;
outstanding shares - 156,567,331
at June 30, 1995 and 155,198,038
at December 31, 1994 $ 1 566 $ 1 552
Paid-in capital 1 570 873 1 535 658
Retained earnings 900 094 877 061
Total common stock equity 2 472 533 2 414 271
Cumulative Preferred Stock of Subsidiaries
Not subject to mandatory redemption 227 915 267 929
Subject to mandatory redemption 160 000 210 000
Long-term Debt 2 652 382 2 715 269
Total capitalization 5 512 830 5 607 469
Current Liabilities
Long-term debt and preferred stock
of subsidiaries due within one year 150 400 60 400
Notes payable 244 000 228 900
Accounts payable 184 400 266 467
Refund due to customers 15 796 15 482
Litigation settlement 80 000 80 000
Accrued taxes 261 787 258 041
Accrued interest 56 740 58 504
Other 39 544 36 610
1 032 667 1 004 404
Other Liabilities
Deferred income taxes 1 074 724 1 071 104
Unamortized investment tax credits 190 804 195 878
Accrued pension and other postretirement
benefit costs 153 753 133 578
Other 142 976 137 409
1 562 257 1 537 969
$8 107 754 $8 149 842
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Electric $611 394 $600 736 $1 245 643 $1 222 686 $2 478 494 $2 481 085
Gas 56 975 61 565 232 186 290 716 383 868 497 774
668 369 662 301 1 477 829 1 513 402 2 862 362 2 978 859
Operating Expenses
Fuel used in electric production 169 194 167 561 355 103 344 347 723 749 718 736
Gas purchased 22 587 31 021 117 080 173 046 192 327 293 123
Purchased and exchanged power 11 641 15 443 17 307 35 234 31 155 56 074
Other operation 126 816 125 576 246 704 243 350 567 004 484 177
Maintenance 43 661 49 176 87 983 95 178 193 764 195 473
Depreciation 68 215 72 822 141 671 145 023 291 043 288 214
Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 -
Post-in-service deferred operating
expenses - net ( 65) (1 520) (2 069) (2 977) (5 090) (7 969)
Phase-in deferred depreciation - ( 848) - (2 161) - (5 379)
Taxes
Federal and state income 40 371 34 340 102 841 96 071 158 951 193 438
State, local and other 63 858 61 982 127 905 124 740 247 216 238 746
548 551 555 553 1 196 798 1 251 851 2 402 392 2 454 633
Operating Income 119 818 106 748 281 031 261 551 459 970 524 226
Other Income and Expenses - Net
Allowance for equity funds used during
construction 931 801 1 885 4 331 3 755 11 894
Post-in-service carrying costs 13 2 105 2 581 4 306 8 055 12 780
Phase-in deferred return 2 134 3 837 4 268 11 458 8 161 26 294
Write-off of a portion of Zimmer
Station - - - - - (234 844)
Income taxes
Related to write-off of a portion
of Zimmer Station - - - - - 12 085
Other 2 162 2 060 3 207 4 162 9 654 19 904
Other - net (1 105) (2 509) ( 691) (7 526) (21 609) (38 583)
4 135 6 294 11 250 16 731 8 016 (190 470)
Income Before Interest and Other Charges 123 953 113 042 292 281 278 282 467 986 333 756
Interest and Other Charges
Interest on long-term debt 51 439 53 853 106 500 110 000 215 748 223 334
Other interest 5 817 4 515 11 128 7 859 23 639 11 822
Allowance for borrowed funds used
during construction (1 986) (2 896) (4 297) (6 087) (10 542) (11 560)
Preferred dividend requirements of
subsidiaries 8 657 8 657 17 314 18 243 34 630 38 232
63 927 64 129 130 645 130 015 263 475 261 828
Net Income $ 60 026 $ 48 913 $ 161 636 $ 148 267 $ 204 511 $ 71 928
Average Common Shares Outstanding 156 333 146 476 156 009 146 119 152 331 145 432
Earnings Per Common Share $.39 $.33 $1.04 $1.01 $1.33 $.49
Dividends Declared Per Common Share $.43 $.38 $.86 $.76 $1.60 $1.50
<FN>
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Retained Total Common
Stock Capital Earnings Stock Equity
(dollars in thousands)
<S> <C> <C> <C> <C>
Quarter Ended June 30, 1995
Balance April 1, 1995 $1 559 $1 553 478 $ 911 857 $2 466 894
Net income 60 026 60 026
Issuance of 646,854 shares of
common stock 7 16 133 16 140
Common stock issuance expenses (5) (5)
Dividends on common stock (67 078) (67 078)
Other 1 267 (4 711) (3 444)
Balance June 30, 1995 $1 566 $1 570 873 $ 900 094 $2 472 533
Quarter Ended June 30, 1994
Balance April 1, 1994 $1 460 $1 329 588 $ 951 553 $2 282 601
Net income 48 913 48 913
Issuance of 685,909 shares of
common stock 6 14 879 14 885
Common stock issuance expenses (3) (3)
Dividends on common stock (55 854) (55 854)
Other 559 (953) (394)
Balance June 30, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148
Six Months Ended June 30, 1995
Balance January 1, 1995 $1 552 $1 535 658 $ 877 061 $2 414 271
Net income 161 636 161 636
Issuance of 1,369,293 shares of
common stock 14 34 137 34 151
Common stock issuance expenses (189) (189)
Dividends on common stock (133 892) (133 892)
Other 1 267 (4 711) (3 444)
Balance June 30, 1995 $1 566 $1 570 873 $ 900 094 $2 472 533
Six Months Ended June 30, 1994
Balance January 1, 1994 $1 453 $1 312 426 $ 907 802 $2 221 681
Net income 148 267 148 267
Issuance of 1,409,097 shares of
common stock 13 32 070 32 083
Common stock issuance expenses (26) (26)
Dividends on common stock (111 457) (111 457)
Other 553 (953) (400)
Balance June 30, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148
Twelve Months Ended June 30, 1995
Balance July 1, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148
Net income 204 511 204 511
Issuance of 9,790,238 shares of
common stock 100 229 949 230 049
Common stock issuance expenses (5 388) (5 388)
Dividends on common stock (243 797) (243 797)
Other 1 289 (4 279) (2 990)
Balance June 30, 1995 $1 566 $1 570 873 $ 900 094 $2 472 533
Twelve Months Ended June 30, 1994
Balance July 1, 1993 $1 442 $1 285 766 $1 090 529 $2 377 737
Net income 71 928 71 928
Issuance of 2,547,425 shares of
common stock 24 60 503 60 527
Common stock issuance expenses (144) (144)
Dividends on common stock (217 921) (217 921)
Other (1 102) (877) (1 979)
Balance June 30, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148
<FN>
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Operating Activities
Net income $ 60 026 $ 48 913 $ 161 636 $ 148 267 $ 204 511 $ 71 928
Items providing (using) cash currently:
Depreciation 68 215 72 822 141 671 145 023 291 043 288 214
Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 -
Deferred income taxes and investment tax
credits - net (13 353) 19 975 (11 584) 28 566 (9 224) 56 375
Allowance for equity funds used during
construction (931) (801) (1 885) (4 331) (3 755) (11 894)
Regulatory assets
Post-in-service and phase-in cost
deferrals (2 142) (8 310) (8 815) (20 902) (2 203) (52 422)
Deferred merger costs (2 810) (4 177) (2 569) (13 691) (11 219) (21 388)
Other 1 695 6 540 6 278 8 343 (5 585) 7 342
Write-off of a portion of Zimmer Station - - - - - 234 844
Changes in current assets and current
liabilities
Restricted deposits (1) (82) 14 (126) 10 186 (278)
Accounts receivable 27 370 58 214 47 621 34 025 54 146 (24 626)
Materials, supplies, and fuel (11 910) (45 435) 4 920 (25 610) (15 419) (14 661)
Accounts payable (1 605) 17 903 (82 067) (45 694) (44 564) 42 397
Refund due to customers 195 (9 740) 314 (44 224) (21 812) (112 392)
Advance under accounts receivable
purchase agreement - - - (49 940) - -
Accrued taxes and interest (35 242) (50 940) 1 982 (15 961) 23 696 37 077
Other items - net (774) 12 194 9 887 33 388 60 877 53 718
Net cash provided by (used in)
operating activities 91 006 117 076 269 676 177 133 532 951 554 234
Financing Activities
Issuance of common stock 16 135 14 882 33 962 32 057 224 661 60 383
Issuance of preferred stock of subsidiaries - - - - - 59 475
Issuance of long-term debt 149 025 - 149 025 361 025 208 935 821 041
Funds on deposit from issuance of long-term
debt 899 3 224 6 628 12 401 22 124 34 123
Retirement of preferred stock of
subsidiaries (7) (40 406) (7) (40 410) (23) (100 517)
Redemption of long-term debt (129 734) - (217 251) (313 247) (217 686) (815 569)
Change in short-term debt 13 899 72 944 15 100 141 999 (75 713) 184 736
Dividends on common stock (67 078) (55 854) (133 892) (111 457) (243 797) (217 921)
Net cash provided by (used in)
financing activities (16 861) (5 210) (146 435) 82 368 (81 499) 25 751
Investing Activities
Construction expenditures (less allowance
for equity funds used during
construction) (82 350) (121 054) (160 564) (210 050) (430 199) (508 344)
Deferred demand-side management costs (3 868) (10 374) (9 351) (18 216) (38 403) (40 698)
Net cash provided by (used in)
investing activities (86 218) (131 428) (169 915) (228 266) (468 602) (549 042)
Net increase (decrease) in cash and
temporary cash investments (12 073) (19 562) (46 674) 31 235 (17 150) 30 943
Cash and temporary cash investments at
beginning of period 37 279 61 918 71 880 11 121 42 356 11 413
Cash and temporary cash investments at
end of period $ 25 206 $ 42 356 $ 25 206 $ 42 356 $ 25 206 $ 42 356
<FN>
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
CINERGY CORP.
Below is information concerning the consolidated results of operations for
Cinergy for the quarter, six months, and twelve months ended June 30, 1995.
For information concerning the results of operations for each of the other
registrants, see the discussion under the heading RESULTS OF OPERATIONS
following the financial statements of each company.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the quarter ended June 30, 1995, decreased 2.3% as compared to
the same period last year. Decreased non-firm power sales for resale and
reduced sales to domestic customers as a result of the milder weather
conditions experienced during the period accounted for most of the decline.
Higher sales by both CG&E and PSI to industrial customers, which reflected
growth in the primary metals and chemicals sectors, partially offset these
decreases.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the second quarter of 1995
increased 8.5% as compared to the second quarter of 1994, reflecting higher
sales to domestic customers attributable to an increase in the average number
of customers. In addition, the continuing trend of industrial customers
electing to purchase directly from suppliers created a significant increase in
demand for transportation services. The increased transportation volume,
primarily in the primary metals, transportation equipment, and food products
sectors, more than offset the decline in industrial sales volumes.
Revenues
Electric Operating Revenues
Electric operating revenues for the quarter ended June 30, 1995, increased $10
million (1.8%) as compared to the same period last year. This increase
primarily resulted from PSI`s 4.3% retail rate increase approved in the
February 1995 Order and a 1.9% rate increase for carrying costs on CWIP
property which was approved by the IURC on March 9, 1995. Also contributing
to the increase was the operation of fuel adjustment clauses reflecting
increases in the average cost per kwh generated. The previously discussed
decrease in kwh sales partially offset these price-related increases.
An analysis of electric operating revenues is shown below:
Quarter
Ended June 30
(in millions)
Electric operating revenues - June 30, 1994 $601
Increase (Decrease) due to change in:
Price per kwh
Retail 17
Sales for resale
Non-firm power transactions (1)
Total change in price per kwh 16
Kwh sales
Retail 1
Sales for resale
Firm power obligations (1)
Non-firm power transactions (6)
Total change in kwh sales (6)
Electric operating revenues - June 30, 1995 $611
Gas Operating Revenues
Gas operating revenues declined $5 million (7.5%) in the second quarter of
1995 when compared to the same period last year. This decline was primarily
the result of a decrease in total retail sales volumes and the operation of
fuel adjustment clauses reflecting a lower average cost of gas purchased. An
increase in the relative volume of gas transported to gas sold, as previously
discussed, also contributed to the decrease. Providing transportation
services does not necessitate the recovery of gas purchased costs.
Consequently, the revenue per Mcf transported is below the revenue per Mcf
sold.
Operating Expenses
Gas Purchased
Gas purchased for the quarter declined $8 million (27.2%) when compared to the
same period last year. This decrease was attributable to a 9.9% decline in
volumes purchased and a 19.2% lower average cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power decreased $4 million (24.6%) for the second
quarter when compared to the same period last year. Although kwh purchases
increased slightly, the price decreased significantly due to the availability
of lower cost power from third parties.
Maintenance
The decrease in maintenance expense of $6 million (11.2%) for the second
quarter of 1995 as compared to the same period last year was primarily due to
improved scheduling of routine maintenance on generating units. Lower
maintenance costs on gas and electric distribution facilities also contributed
to the decline.
Depreciation
Depreciation expense decreased $5 million (6.3%) for the quarter ended June
30, 1995, as compared to the same period last year. This decrease primarily
reflected the adoption of lower depreciation rates for PSI effective in March
1995, pursuant to the February 1995 Order. This decrease was partially offset
by additions to utility plant in service.
Amortization of Phase-in Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from CG&E`s three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated by the May 1992 Order.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales decreased 3.1% for the six months ended June 30, 1995, when compared
to the same period last year. This decline primarily reflects a decrease in
short-term sales to other utilities. A slight decrease in retail sales
resulted from lower domestic sales due to milder weather conditions.
Partially offsetting these decreases were increased industrial sales resulting
from growth in the primary metals and chemicals sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the six months ended June 30,
1995, remained relatively constant when compared to the same period of 1994.
Decreases in domestic and commercial sales volumes were attributable to milder
weather conditions. A decrease in industrial sales was attributable to the
trend of industrial customers electing to purchase directly from suppliers,
creating additional demand for transportation services. This increased demand
for transportation services more than offset the decrease in industrial sales
volumes and resulted from growth in the primary metals, transportation
equipment, and food products sectors.
Revenues
Electric Operating Revenues
As compared to the same period last year, electric operating revenues
increased $23 million (1.9%) primarily as a result of CG&E`s retail electric
rate increase which became effective May 1994, PSI`s electric rate increases
which became effective February 1995 and March 1995, and the operation of fuel
adjustment clauses reflecting increases in the average cost per kwh generated.
Reduced non-firm power sales for resale, as previously discussed, partially
offset these increases.
An analysis of electric operating revenues is shown below:
Six Months
Ended June 30
(in millions)
Electric operating revenues - June 30, 1994 $1 223
Increase (Decrease) due to change in:
Price per kwh
Retail 41
Sales for resale
Non-firm power transactions (1)
Total change in price per kwh 40
Kwh sales
Retail (1)
Sales for resale
Firm power obligations (5)
Non-firm power transactions (12)
Total change in kwh sales (18)
Other 1
Electric operating revenues - June 30, 1995 $1 246
Gas Operating Revenues
Gas operating revenues declined $59 million (20.1%) in the first six months of
1995 when compared to the same period last year. This decrease reflects the
decline in total retail volumes sold and the operation of fuel adjustment
clauses reflecting a lower average cost of gas purchased. An increase in the
relative volume of gas transported to gas sold also contributed to the
decrease. Providing transportation services does not necessitate the recovery
of gas purchased costs. Consequently, the revenue per Mcf transported is
below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs, Cinergy`s largest operating expense, increased $11
million (3.1%) for the six months ended June 30, 1995, when compared to the
same period last year.
An analysis of these fuel costs is shown below:
Six Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $344
Increase (Decrease) due to change in:
Price of fuel 12
Kwh generation (1)
Fuel expense - June 30, 1995 $355
Gas Purchased
Gas purchased for the six month period ended June 30, 1995, decreased $56
million (32.3%) when compared to the same period last year. This decrease was
attributable to a 12.9% decline in volumes purchased and a 22.3% lower average
cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power decreased $18 million (50.9%) for the six months
ended June 30, 1995, when compared to the same period last year, as the
coordination of CG&E`s and PSI`s electric dispatch systems enabled Cinergy to
service more of its native load with its own generating units.
Maintenance
The decrease in maintenance of $7 million (7.6%) for the six months ended June
30, 1995, as compared to the same period last year was primarily due to
improved scheduling of routine maintenance on generating units. Lower
maintenance costs on gas and electric distribution facilities also contributed
to the decline.
Amortization of Phase-in Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from CG&E`s three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated by the May 1992 Order.
Other Income and Expenses - Net
Phase-in Deferred Return
Phase-in deferred return decreased $7 million (62.8%) for the first six months
of 1995 from the comparable period of 1994 as a result of implementing the
final increase of the three-year rate phase-in plan in May 1994.
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales declined 3.3% for the twelve months ended June 30, 1995, when
compared to the same period last year. This decline primarily reflects a
decrease in short-term sales to other utilities. A decrease in retail sales
resulted from lower domestic sales due to milder weather conditions.
Partially offsetting these decreases were increased industrial sales resulting
from growth in the primary metals and chemicals sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended June 30,
1995, decreased 3.7% when compared to the same period of 1994. Decreases in
domestic and commercial sales volumes were attributable to milder weather
conditions. A decrease in industrial sales was attributable to the trend of
industrial customers electing to purchase directly from suppliers, creating
additional demand for transportation services. This increased demand for
transportation more than offset the decrease in industrial sales volumes and
resulted from growth in the primary metals, food products, chemicals, and
paper products sectors.
Revenues
Electric Operating Revenues
Compared to the same period last year, electric operating revenues decreased
$3 million (.1%) as the previously discussed decline in kwh sales was
partially offset by a number of rate increases.
An analysis of electric operating revenues is shown below:
Twelve Months
Ended June 30
(in millions)
Electric operating revenues - June 30, 1994 $2 481
Increase (Decrease) due to change in:
Price per kwh
Retail 47
Sales for resale
Firm power obligations 2
Non-firm power transactions (4)
Total change in price per kwh 45
Kwh sales
Retail (19)
Sales for resale
Firm power obligations (9)
Non-firm power transactions (22)
Total change in kwh sales (50)
Other 2
Electric operating revenues - June 30, 1995 $2 478
Gas Operating Revenues
Gas operating revenues declined $114 million (22.9%) for the twelve months
ended June 30, 1995, when compared to the same period last year. This
decrease was primarily the result of decreases in sales volumes and fuel
adjustment clauses reflecting a decline in the average cost of gas purchased.
An increase in the relative volume of gas transported to gas sold also
contributed to the decrease. Providing transportation services does not
necessitate the recovery of gas purchased costs. Consequently, the revenue
per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs, Cinergy`s largest operating expense, increased $5 million
(.7%) for the twelve months ended June 30, 1995, when compared to the same
period last year.
An analysis of these fuel costs is shown below:
Twelve Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $719
Increase (Decrease) due to change in:
Price of fuel 11
Kwh generation (6)
Fuel expense - June 30, 1995 $724
Gas Purchased
Gas purchased for the twelve months ended June 30, 1995, decreased $101
million (34.4%) when compared to the same period last year. This decrease was
attributable to a 16.6% decline in volumes purchased and a 21.3% lower average
cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power decreased $25 million (44.4%) for the twelve
months ended June 30, 1995, when compared to the same period last year, as the
coordination of CG&E`s and PSI`s electric dispatch systems enabled Cinergy to
service more of its native load through its own generating units.
Other Operation
Other operation expenses for the twelve months ended June 30, 1995, increased
$83 million (17.1%) as compared to the same period in 1994. The primary
factor contributing to this increase was charges of approximately $62 million
for merger-related costs and other expenditures which cannot be recovered from
customers under the merger savings sharing mechanisms authorized by
regulators. The inclusion of postretirement benefits in rates on an accrual
basis, an increase in the level of ongoing DSM expenses, and the amortization
of deferred DSM costs, all of which were authorized in the February 1995
Order, also contributed to the increase. The increase was partially offset by
reductions in administrative and general expenses and the May 1994 write-off
of previously deferred litigation expenses.
Amortization of Phase-in Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from CG&E`s three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated by the May 1992 Order.
Phase-in Deferred Depreciation
Phase-in deferred depreciation resulted from the three-year rate phase-in plan
for Zimmer included in the May 1992 Order. The change of $5 million for
phase-in deferred depreciation for the twelve months ended June 30, 1995,
versus the same period of 1994, reflects discontinuance of the deferral of
depreciation when the final increase of the phase-in plan became effective in
May 1994.
State, Local and Other Taxes
State, local and other taxes increased $8 million (3.5%) over the same period
of 1994 primarily due to increased property taxes resulting from higher
property tax rates.
Other Income and Expenses - Net
Allowance for Equity Funds Used During Construction
The equity component of AFUDC decreased $8 million (68.4%) for the twelve
month period ended June 30, 1995, as compared to the same period last year.
This decrease was due primarily to an increase in borrowings of short-term
debt which resulted in a decrease in the equity component of the AFUDC
rate. In addition, a scrubber at Gibson was placed in service in September
1994, which resulted in a large decrease in CWIP for the period.
Post-in-service Carrying Costs
Post-in-service carrying costs decreased $5 million (37.0%) for the twelve
months ended June 30, 1995, when compared to the same period last year.
Accrual of carrying costs on the first five units of Woodsdale ceased after
the August 1993 Order which reflected Woodsdale in retail electric rates.
Additional environmental compliance projects completed by PSI which qualified,
under IURC authority, for continued accrual of the debt component of AFUDC
(post-in-service carrying costs) partially offset this decrease.
Phase-in Deferred Return
Phase-in deferred return decreased $18 million (69.0%) for the twelve month
period ended June 30, 1995, from the comparable period of 1994, as a result of
implementing the final increase of the three-year rate phase-in plan in May
1994.
Write-off of a Portion of Zimmer
In November 1993, CG&E wrote off Zimmer costs disallowed from rates in the May
1992 Order.
Other - net
Other - net is comprised of miscellaneous income and deduction items.
The increase of $17 million (44.0%) is primarily due to the write-off in late
1993 and early 1994 of $22 million incurred in defense of the IPALCO takeover
attempt.
Interest and Other Charges
Interest on Long-term Debt
Interest on long-term debt decreased $8 million (3.4%) for the twelve
months ended June 30, 1995, as compared to the same period in 1994.
Cinergy refinanced $215 million and $305 million of long-term debt in 1995
and 1994, respectively.
Other Interest
Other interest increased $12 million over the same period last year. The
increase was driven primarily by higher interest rates and an increase in the
average short-term debt outstanding
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
<S> <C> <C>
Utility Plant - original cost
In service
Electric $4 530 815 $4 502 840
Gas 664 536 645 602
Common 184 750 185 718
5 380 101 5 334 160
Accumulated depreciation 1 665 213 1 613 505
3 714 888 3 720 655
Construction work in progress 74 400 74 989
Total utility plant 3 789 288 3 795 644
Current Assets
Cash and temporary cash investments 3 500 52 516
Restricted deposits 100 98
Accounts receivable less accumulated
provision of $9,053,000 at June 30, 1995
and $8,999,000 at December 31, 1994 for
doubtful accounts 217 774 269 020
Materials, supplies, and fuel - at average
cost
Fuel for use in electric production 40 555 42 167
Gas stored for current use 21 187 31 284
Other materials and supplies 58 150 57 864
Property taxes applicable to subsequent
year 134 729 112 420
Prepayments and other 42 206 31 327
518 201 596 696
Other Assets
Regulatory assets
Post-in-service carrying costs and
deferred operating expenses 151 727 155 138
Phase-in deferred return and
depreciation 105 211 100 943
Deferred demand-side management costs 14 246 10 002
Amounts due from customers -
income taxes 366 924 381 380
Deferred merger costs 12 437 12 013
Unamortized costs of reacquiring debt 36 041 33 426
Other 49 893 55 987
Other 49 969 40 436
786 448 789 325
$5 093 937 $5 181 665
<FN>
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CAPITALIZATION AND LIABILITIES
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
<S> <C> <C>
Common Stock Equity
Common stock - $8.50 par value; authorized
shares - 120,000,000; outstanding shares -
89,663,086 at June 30, 1995 and
December 31, 1994 $ 762 136 $ 762 136
Paid-in capital 339 135 337 874
Retained earnings 427 623 432 962
Total common stock equity 1 528 894 1 532 972
Cumulative Preferred Stock
Not subject to mandatory redemption 40 000 80 000
Subject to mandatory redemption 160 000 210 000
Long-term Debt 1 774 404 1 837 757
Total capitalization 3 503 298 3 660 729
Current Liabilities
Preferred stock due within one year 90 000 -
Notes payable 13 500 14 500
Accounts payable 85 830 120 817
Accrued taxes 234 609 227 651
Accrued interest 30 572 31 902
Other 35 709 32 658
490 220 427 528
Other Liabilities
Deferred income taxes 744 678 747 060
Unamortized investment tax credits 132 440 135 417
Accrued pension and other postretirement
benefit costs 110 947 102 254
Other 112 354 108 677
1 100 419 1 093 408
$5 093 937 $5 181 665
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
(in thousands)
Operating Revenues
Electric $336 523 $329 675 $686 479 $663 065 $1 369 201 $1 346 801
Gas 56 975 61 565 232 186 290 716 383 868 497 774
393 498 391 240 918 665 953 781 1 753 069 1 844 575
Operating Expenses
Fuel used in electric production 84 464 79 548 168 537 161 429 332 578 342 781
Gas purchased 22 587 31 021 117 080 173 046 192 327 293 123
Purchased and exchanged power 10 912 4 217 21 417 11 531 30 818 17 731
Other operation 65 801 68 818 134 723 137 453 333 300 277 792
Maintenance 21 446 26 860 44 979 52 802 98 987 110 055
Depreciation 39 687 39 051 79 224 77 820 158 080 155 407
Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 -
Post-in-service deferred operating
expenses - net 822 822 1 645 1 645 3 290 785
Phase-in deferred depreciation - ( 848) - (2 161) - (5 379)
Taxes
Federal and state income 24 217 22 225 67 563 64 669 107 022 119 764
State, local and other 50 331 49 204 100 987 99 137 199 231 189 940
322 540 320 918 738 428 777 371 1 457 906 1 501 999
Operating Income 70 958 70 322 180 237 176 410 295 163 342 576
Other Income and Expenses - Net
Allowance for equity funds used during
construction 281 434 877 892 1 956 1 696
Post-in-service carrying costs - - - - - 4 072
Phase-in deferred return 2 134 3 837 4 268 11 458 8 161 26 294
Write-off of a portion of Zimmer
Station - - - - - (234 844)
Income taxes -
Related to write-off of a portion
of Zimmer Station - - - - - 12 085
Other 1 620 1 677 2 827 3 533 5 913 9 937
Other - net ( 560) 119 405 134 (6 455) (7 474)
3 475 6 067 8 377 16 017 9 575 (188 234)
Income Before Interest 74 433 76 389 188 614 192 427 304 738 154 342
Interest
Interest on long-term debt 33 490 36 755 70 601 76 378 144 609 155 338
Other interest 1 421 821 2 247 1 702 3 376 2 989
Allowance for borrowed funds used
during construction ( 900) ( 653) (1 880) (1 310) (3 547) (2 589)
34 011 36 923 70 968 76 770 144 438 155 738
Net Income (Loss) 40 422 39 466 117 646 115 657 160 300 (1 396)
Preferred Dividend Requirement 5 362 5 362 10 724 11 652 21 449 24 233
Net Income (Loss) on Common Shares $ 35 060 $ 34 104 $106 922 $104 005 $ 138 851 $ (25 629)
<FN>
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Retained Total Common
Stock Capital Earnings Stock Equity
(dollars in thousands)
<S> <C> <C> <C> <C>
Quarter Ended June 30, 1995
Balance April 1, 1995 $762 136 $337 874 $ 453 174 $1 553 184
Net income 40 422 40 422
Dividends on preferred stock (5 362) (5 362)
Dividends on common stock (55 900) (55 900)
Other 1 261 (4 711) (3 450)
Balance June 30, 1995 $762 136 $339 135 $ 427 623 $1 528 894
Quarter Ended June 30, 1994
Balance April 1, 1994 $752 236 $321 593 $ 488 513 $1 562 342
Net income 39 466 39 466
Issuance of 570,296 shares of
common stock 4 848 7 565 12 413
Common stock issuance expenses 1 1
Dividends on preferred stock (5 362) (5 362)
Dividends on common stock (38 100) (38 100)
Other 553 (953) (400)
Balance June 30, 1994 $757 084 $329 712 $ 483 564 $1 570 360
Six Months Ended June 30, 1995
Balance January 1, 1995 $762 136 $337 874 $ 432 962 $1 532 972
Net income 117 646 117 646
Dividends on preferred stock (10 724) (10 724)
Dividends on common stock (107 550) (107 550)
Other 1 261 (4 711) (3 450)
Balance June 30, 1995 $762 136 $339 135 $ 427 623 $1,528 894
Six Months Ended June 30, 1994
Balance January 1, 1994 $748 528 $314 218 $ 456 511 $1 519 257
Net income 115 657 115 657
Issuance of 1,006,582 shares of
common stock 8 556 14 949 23 505
Common stock issuance expenses (8) (8)
Dividends on preferred stock (11 652) (11 652)
Dividends on common stock (75 999) (75 999)
Other 553 (953) (400)
Balance June 30, 1994 $757 084 $329 712 $ 483 564 $1 570 360
Twelve Months Ended June 30, 1995
Balance July 1, 1994 $757 084 $329 712 $ 483 564 $1 570 360
Net income 160 300 160 300
Issuance of 594,421 shares of
common stock 5 052 8 193 13 245
Common stock issuance expenses (31) (31)
Dividends on preferred stock (21 449) (21 449)
Dividends on common stock (190 521) (190 521)
Other 1 261 (4 271) (3 010)
Balance June 30, 1995 $762 136 $339 135 $ 427 623 $1 528 894
Twelve Months Ended June 30, 1994
Balance July 1, 1993 $741 765 $299 290 $ 660 110 $1 701 165
Net income (loss) (1 396) (1 396)
Issuance of 1,802,242 shares of
common stock 15 319 29 883 45 202
Common stock issuance expenses (14) (14)
Dividends on preferred stock (24 233) (24 233)
Dividends on common stock (149 964) (149 964)
Other 553 (953) (400)
Balance June 30, 1994 $757 084 $329 712 $ 483 564 $1 570 360
<FN>
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Operating Activities
Net income $ 40 422 $ 39 466 $ 117 646 $ 115 657 $ 160 300 $ (1 396)
Items providing (using) cash currently:
Depreciation 39 687 39 051 79 224 77 820 158 080 155 407
Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 -
Deferred income taxes and investment tax
credits - net (13 903) 11 918 (15 959) 12 570 (14 849) 21 239
Allowance for equity funds used during
construction (281) (434) (877) (892) (1 956) (1 696)
Regulatory assets
Post-in-service and phase-in cost
deferrals (1 312) (3 863) (2 623) (11 974) (4 871) (34 960)
Deferred merger costs (320) (2 143) (424) (6 513) 7 048 (9 475)
Other 1 494 1 110 6 094 3 796 (5 593) 6 059
Write-off of a portion of Zimmer Station - - - - - 234 844
Changes in current assets and current
liabilities
Restricted deposits (1) (49) (2) 24 (4) 67
Accounts receivable 34 818 63 043 51 246 54 430 39 961 (2 122)
Materials, supplies, and fuel (7 444) (12 940) 11 423 30 208 2 417 21 618
Accounts payable (4 443) 6 389 (34 987) (24 853) (18 227) 16 157
Accrued taxes and interest (21 734) (44 619) 5 628 (20 531) 34 370 1 765
Other items - net (16 244) 6 339 (6 263) 15 688 55 417 44 681
Net cash provided by (used in)
operating activities 53 012 103 268 212 399 245 430 414 366 452 188
Financing Activities
Issuance of common stock - 12 414 - 23 497 13 214 45 188
Issuance of long-term debt 149 025 - 149 025 311 957 149 025 608 957
Retirement of preferred stock - (40 400) - (40 400) - (40 400)
Redemption of long-term debt (129 734) - (217 196) (313 247) (217 471) (607 689)
Change in short-term debt 12 500 (8 000) (1 000) (25 500) 8 000 (46 080)
Dividends on preferred stock (5 362) (6 290) (10 724) (12 580) (20 521) (25 160)
Dividends on common stock (55 900) (38 100) (107 550) (75 999) (190 521) (149 964)
Net cash provided by (used in)
financing activities (29 471) (80 376) (187 445) (132 272) (258 274) (215 148)
Investing Activities
Construction expenditures (less allowance
for equity funds used during
construction) (33 999) (44 055) (69 726) (79 011) (180 669) (197 180)
Deferred demand-side management costs (2 105) (1 279) (4 244) (2 702) (7 938) (4 502)
Net cash provided by (used in)
investing activities (36 104) (45 334) (73 970) (81 713) (188 607) (201 682)
Net increase (decrease) in cash and
temporary cash investments (12 563) (22 442) (49 016) 31 445 (32 515) 35 358
Cash and temporary cash investments at
beginning of period 16 063 58 457 52 516 4 570 36 015 657
Cash and temporary cash investments at
end of period $ 3 500 $ 36 015 $ 3 500 $ 36 015 $ 3 500 $ 36 015
<FN>
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the quarter ended June 30, 1995, increased 9.9% over the same
period of 1994, due in large part to non-firm power sales for resale
reflecting increased third party short-term power sales to other utilities.
Also contributing to the higher total kwh sales levels were increased sales to
commercial and industrial customers. Higher commercial sales resulted from an
increase in the average number of commercial customers. The increased
industrial sales primarily reflect growth in the primary metals and chemical
sectors. A slight decrease in retail kwh sales was attributable to lower
domestic sales due to milder weather conditions.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the second quarter of 1995
increased 8.5% as compared to the second quarter of 1994, reflecting higher
sales to domestic customers attributable to an increase in the average number
of customers. In addition, the continuing trend of industrial customers
electing to purchase directly from suppliers created a significant increase in
demand for transportation services. The increased transportation volume,
primarily in the primary metals, transportation equipment, and food products
sectors, more than offset a decline in industrial sales volumes.
Revenues
Electric Operating Revenues
Electric operating revenues increased $7 million (2.1%) for the quarter ended
June 30, 1995, over the comparable period of 1994. This increase primarily
reflects the higher kwh sales associated with non-firm power sales for resale.
An analysis of electric operating revenues is shown below:
Quarter
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $330
Increase (Decrease) due to change in:
Price per kwh
Retail (3)
Sales for resale
Non-firm power transactions (1)
Total change in price per kwh (4)
Kwh sales
Retail (1)
Sales for resale
Non-firm power transactions 12
Total change in kwh sales 11
Operating revenues - June 30, 1995. $337
Gas Operating Revenues
Gas operating revenues declined $5 million (7.5%) in the second quarter of
1995 when compared to the same period last year. This decline was primarily
the result of a decrease in total retail sales volumes and the operation of
fuel adjustment clauses reflecting a lower average cost of gas purchased. An
increase in the relative volume of gas transported to gas sold, as previously
discussed, also contributed to the decrease. Providing transportation
services does not necessitate the recovery of gas purchased costs by CG&E.
Consequently, the revenue per Mcf transported is below the revenue per Mcf
sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs increased $4 million (6.2%) for the quarter as compared to
last year.
An analysis of these fuel costs is shown below:
Quarter
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $80
Increase (Decrease) due to change in:
Price of fuel 1
Kwh generation 3
Fuel expense - June 30, 1995 $84
Gas Purchased
Gas purchased for the quarter declined $8 million (27.2%) when compared to the
same period last year. This decrease was attributable to a 9.9% decline in
volumes purchased and a 19.2% lower average cost per Mcf of gas purchased.
Purchased & Exchange Power
Purchased and exchanged power for the quarter ended June 30, 1995, increased
$7 million over the comparable period of 1994. This primarily reflects
increased third party power sales to other utilities.
Other Operation
Other operation expense decreased $3 million (4.4%) for the quarter ended June
30, 1995, as compared to the same period last year due to several factors,
including reductions in administrative and general expenses. In addition,
lower gas and electric distribution expenses contributed to the decrease.
Maintenance
The decrease in maintenance expense of $5 million (20.2%) for the second
quarter of 1995 as compared to the same period last year was primarily due to
improved scheduling of routine maintenance on generating units. Lower
maintenance costs on gas and electric distribution facilities also contributed
to the decline.
Amortization of Phase-In Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from the three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated in the May 1992 Order.
Interest
Interest charges decreased $3 million (7.9%) for the quarter ended June 30,
1995, from the same period of 1994. This decrease was due to a reduction in
interest on long-term debt resulting from the refinancing of $215 million
principal amount of first mortgage bonds, during 1995.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the six months ended June 30, 1995, increased 8.2% over the same
period of 1994, due in large part to increases in non-firm power sales for
resale reflecting third party short-term power sales to other utilities. Also
contributing to the higher total kwh sales levels were increased sales to
commercial and industrial customers. Higher commercial sales resulted from an
increase in the average number of commercial customers. The increased
industrial sales primarily reflects growth in the primary metals and chemical
sectors. A slight decrease in retail kwh sales was attributable to lower
domestic sales due to milder weather conditions.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the six months ended June 30,
1995, remained relatively constant when compared to the same period of 1994.
Decreases in domestic and commercial sales volumes were attributable to milder
weather conditions. A decrease in industrial sales was attributable to the
trend of industrial customers electing to purchase directly from suppliers,
creating additional demand for transportation services. This increased demand
for transportation more than offset the decrease in industrial sales volumes
and resulted from growth in the primary metals, transportation equipment, and
food products sectors.
Revenues
Electric Operating Revenues
Electric operating revenues increased $23 million (3.5%) for the six months
ended June 30, 1995, over the comparable period of 1994. This increase
primarily reflects the higher kwh sales associated with non-firm power sales
for resale to other utilities and the retail electric rate increase which
became effective May 1994.
An analysis of electric operating revenues is shown below:
Six Months
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $663
Increase (Decrease) due to change in:
Price per kwh
Retail 4
Sales for resale
Firm power obligations 1
Non-firm power transactions (1)
Total change in price per kwh 4
Kwh sales
Retail (4)
Sales for resale
Non-firm power transactions 24
Total change in kwh sales 20
Other (1)
Operating revenues - June 30, 1995. $686
Gas Operating Revenues
Gas operating revenues declined $59 million (20.1%) in the first six months of
1995 when compared to the same period last year. This decrease reflects the
decline in total retail volumes sold and the operation of fuel adjustment
clauses reflecting a lower average cost of gas purchased. An increase in the
relative volume of gas transported to gas sold also contributed to the
decrease. Providing transportation services does not necessitate the recovery
of gas purchased costs. Consequently, the revenue per Mcf transported is
below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs increased $8 million (4.4%) for the first six months of
1995 as compared to last year.
An analysis of these fuel costs is shown below:
Six Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $161
Increase (Decrease) due to change in:
Price of fuel (1)
Kwh generation 9
Fuel expense - June 30, 1995 $169
Gas Purchased
Gas purchased for the first six months ended June 30, 1995, decreased $56
million (32.3%) when compared to the same period last year. This decrease was
attributable to a 12.9% decline in volumes purchased and a 22.3% lower average
cost per Mcf of gas purchased.
Purchased and Exchange Power
Purchased and exchanged power for the six months ended June 30, 1995,
increased $10 million (85.7%) over the comparable period of 1994. This
primarily reflects increased third party power sales to other utilities.
Other Operation
Other operation expenses decreased $3 million (2.0%) for the six months ended
June 30, 1995, as compared to the same period last year due to several
factors, including reductions in administrative and general expenses. In
addition, a decrease in gas and electric distribution expenses contributed to
the decrease.
Maintenance
The decrease in maintenance expense of $8 million (14.8%) for the six month
period ended June 30, 1995, as compared to the same period last year was
primarily due to improved scheduling of routine maintenance on generating
units. Lower maintenance costs on gas and electric distribution facilities
also contributed to the decline.
Depreciation
Depreciation expense increased $1 million (1.8%) for the six month period
ended June 30, 1995, as compared to the same period last year. This increase
primarily reflects additions to gas utility plant in service.
Amortization of Phase-In Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from the three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated in the May 1992 Order.
Other Income And Expenses - Net
Phase-in Deferred Return
Phase-in deferred return decreased $7 million (62.8%) for the first six months
of 1995 from the comparable period of 1994, as a result of implementing the
final increase of the three-year rate phase-in plan in May 1994.
Interest
Interest decreased $6 million (7.6%) for the six months ended June 30, 1995,
from the same period of 1994. This decrease was due to a reduction in
interest on long-term debt resulting from the refinancing of $215 million
principal amount of first mortgage bonds, during 1995.
Preferred Dividend Requirement
The decrease in CG&E`s preferred dividend requirement of $1 million (8.0%)
for the six months ended June 30, 1995, from the same period of 1994 was
attributable to the early redemption on April 1, 1994 of 400,000 shares of
$100 par value cumulative preferred stock (9.28% Series).
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the twelve months ended June 30, 1995, increased 1.7% when
compared to the same period of 1994. This increase was primarily attributable
to an increase in non-firm power sales for resale reflecting third party
short-term power sales to other utilities. In addition, industrial sales
increased due, in large part, to growth in the primary metals and chemicals
sectors. Part of this increase was offset by a reduction in domestic sales
volume attributable to milder weather conditions.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended June 30,
1995, decreased 3.7% when compared to the same period of 1994. Decreases in
domestic and commercial sales volumes were attributable to milder weather
conditions. A decrease in industrial sales was attributable to the trend of
industrial customers electing to purchase directly from suppliers, creating
additional demand for transportation services. This increased demand for
transportation more than offset the decrease in industrial sales volumes and
resulted from growth in the primary metals, food products, chemicals, and
paper products sectors.
Revenues
Electric Operating Revenues
Electric operating revenues increased $22 million (1.7%) for the twelve months
ended June 30, 1995, over the comparable period of 1994. This increase
primarily reflects two electric retail rate increases granted by the PUCO. An
increase in May 1994 was related to the phase-in plan included in the May 1992
Order and the second increase was effective in August 1993 pursuant to the
August 1993 Order. Also contributing to the increase were the higher kwh
sales associated with non-firm power sales for resale to other utilities.
An analysis of electric operating revenues is shown below:
Twelve Months
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $1 347
Increase (Decrease) due to change in:
Price per kwh
Retail 22
Sales for Resale
Firm power obligations 1
Non-firm power transactions 1
Total change in price per kwh 24
Kwh sales
Retail (15)
Sales for Resale
Firm power obligations -
Non-firm power transactions 14
Total change in kwh sales (1)
Other (1)
Operating revenues - June 30, 1995. $1 369
Gas Operating Revenues
Gas operating revenues declined $114 million (22.9%) for the twelve months
ended June 30, 1995, when compared to the same period last year. This
decrease was primarily the result of decreases in sales volumes and fuel
adjustment clauses reflecting a decline in the average cost of gas purchased.
An increase in the relative volume of gas transported to gas sold also
contributed to the decrease. Providing transportation services does not
necessitate the recovery of gas purchased costs. Consequently, the revenue
per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs decreased $10 million (3.0%) for the twelve months ended
as compared to last year.
An analysis of these fuel costs is shown below:
Twelve Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $343
Increase (Decrease) due to change in:
Price of fuel (8)
kwh generation (2)
Fuel expense - June 30, 1995 $333
Gas Purchased
Gas purchased for the twelve months ended June 30, 1995, decreased $101
million (34.4%) when compared to the same period last year. This decrease was
attributable to a 16.6% decline in volumes purchased and a 21.3% lower average
cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power for the twelve months ended June 30, 1995,
increased $13 million (73.8%) over the comparable period of 1994. This
primarily reflects increased third party power sales to other utilities.
Other Operation
Other operation expenses increased $56 million (20%) for the twelve months
ended June 30, 1995, as compared to the same period last year due to several
factors. The primary factor contributing to this increase was charges of
approximately $52 million for merger-related costs and other expenditures
which cannot be recovered from customers under the merger savings sharing
mechanisms authorized by regulators.
Maintenance
The decrease in maintenance expense of $11 million (10%) for the twelve months
ended June 30, 1995, as compared to the same period last year, was primarily
due to improved scheduling of routine maintenance on generating units. Also
contributing to the decrease was lower maintenance costs on gas and electric
distribution facilities.
Depreciation
Depreciation expense increased $3 million (1.7%) for the twelve months ended
June 30, 1995, as compared to the same period last year. This increase
primarily reflects additions to gas utility plant in service.
Amortization of Phase-In Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from the three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated by the May 1992 Order.
Phase-in Deferred Depreciation
Phase-in deferred depreciation resulted from the three-year rate phase-in plan
for Zimmer included in the May 1992 Order. The change of $5 million for
phase-in deferred depreciation for the twelve months ended June 30, 1995,
versus the same period of 1994, reflects discontinuance of the deferral of
depreciation when the final increase of the three-year rate phase-in plan
became effective in May 1994.
State, Local and Other Taxes
State, local and other taxes increased $9 million (4.9%) for the twelve months
ended June 30, 1995, over the comparable period of 1994, primarily due to
increased property taxes resulting from higher property tax rates.
Other Income And Expenses - Net
Phase-in Deferred Return
Phase-in deferred return decreased $18 million (69.0%) for the twelve months
ended June 30, 1995, from the comparable period of 1994, as a result of
implementing the final increase of the three-year rate phase-in plan in May
1994.
Write-off of a Portion of Zimmer
In November 1993, CG&E wrote off Zimmer costs disallowed from rates in the May
1992 Order.
Interest
Interest charges decreased $11 million (7.3%) for the twelve months ended June
30, 1995, from the same period of 1994. The decrease was due to a reduction
in interest on long-term debt resulting from the refinancing of $215 and $305
million principal amount of long-term debt, during 1995 and 1994,
respectively.
Preferred Dividend Requirement
The decrease of CG&E`s preferred dividend requirement of $3 million (11.5%)
for the twelve months ended June 30, 1995, from the same period of 1994 was
attributable to the early redemption on April 1, 1994 of 400,000 shares of
$100 par value cumulative preferred stock (9.28% Series).
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
<S> <C> <C>
Electric Utility Plant - original cost
In service $3 862 703 $3 789 785
Accumulated depreciation 1 597 502 1 550 297
2 265 201 2 239 488
Construction work in progress 167 587 163 761
Total electric utility plant 2 432 788 2 403 249
Current Assets
Cash and temporary cash investments 5 106 6 341
Restricted deposits 4 546 11 190
Accounts receivable less accumulated provision
of $957,000 at June 30, 1995 and $440,000 at
December 31, 1995 for doubtful accounts 48 112 36 061
Materials, supplies, and fuel - at average cost
Fuel 119 808 113 861
Other materials and supplies 30 195 29 363
Prepayments and other 4 543 4 758
212 310 201 574
Other Assets
Regulatory assets
Post-in-service carrying costs and deferred
depreciation 36 334 30 142
Deferred demand-side management costs 100 522 94 125
Amounts due from customers - income taxes 26 935 27 134
Deferred merger costs 37 630 37 645
Unamortized costs of reacquiring debt 35 737 36 998
Other 31 772 30 030
Other 84 452 84 027
353 382 340 101
$2 998 480 $2 944 924
<FN>
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CAPITALIZATION AND LIABILITIES
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
<S> <C> <C>
Common Stock Equity
Common stock - without par value; $.01 stated value;
authorized shares - 60,000,000; outstanding shares -
53,913,701 at June 30, 1995 and December 31, 1994 $ 539 $ 539
Paid-in capital 389 316 389 309
Accumulated earnings subsequent to November 30, 1986,
quasi-reorganization 549 202 493 103
Total common stock equity 939 057 882 951
Cumulative Preferred Stock
Not subject to mandatory redemption 187 915 187 929
Long-term Debt 877 978 877 512
Total capitalization 2 004 950 1 948 392
Current Liabilities
Long-term debt due within one year 60 400 60 400
Notes payable 209 500 193 573
Accounts payable 106 800 142 775
Refund due to customers 15 796 15 482
Litigation settlement 80 000 80 000
Accrued taxes 27 876 30 784
Accrued interest 26 012 25 685
Other 3 085 3 202
529 469 551 901
Other Liabilities
Deferred income taxes 332 962 324 738
Unamortized investment tax credits 58 364 60 461
Accrued pension and other postretirement benefit costs 42 806 31 324
Other 29 929 28 108
464 061 444 631
$2 998 480 $2 944 924
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues $289 743 $271 652 $588 791 $560 287 $1 142 016 $1 132 947
Operating Expenses
Fuel used in electric production 84 730 88 013 186 566 182 918 391 171 375 955
Purchased and exchanged power 17 971 13 566 29 670 28 226 42 844 45 205
Other operation 57 944 54 119 105 759 100 615 218 266 195 666
Maintenance 22 215 22 316 43 004 42 376 94 777 85 418
Depreciation 28 528 33 771 62 447 67 203 132 963 132 807
Post-in-service deferred operating
expenses - net ( 887) (2 342) (3 714) (4 622) (8 380) (8 754)
Taxes
Federal and state income 16 482 12 347 35 655 32 701 53 320 75 659
State, local and other 13 407 12 689 26 699 25 471 47 563 48 576
240 390 234 479 486 086 474 888 972 524 950 532
Operating Income 49 353 37 173 102 705 85 399 169 492 182 415
Other Income and Expenses - Net
Allowance for equity funds used during
construction 650 367 1 008 3 439 1 799 10 198
Post-in-service carrying costs 13 2 105 2 581 4 306 8 055 8 708
Income taxes 349 136 46 323 (1 589) 2 071
Other - net ( 384) (2 748) (2 296) (5 515) (4 674) (9 269)
628 ( 140) 1 339 2 553 3 591 11 708
Income Before Interest 49 981 37 033 104 044 87 952 173 083 194 123
Interest
Interest on long-term debt 17 949 17 098 35 899 33 622 71 139 67 996
Other interest 3 896 3 286 7 873 5 382 17 783 7 427
Allowance for borrowed funds used during
construction (1 086) (2 243) (2 417) (4 777) (6 995) (8 971)
20 759 18 141 41 355 34 227 81 927 66 452
Net Income 29 222 18 892 62 689 53 725 91 156 127 671
Preferred Dividend Requirement 3 295 3 295 6 590 6 591 13 181 13 999
Net Income on Common Shares $ 25 927 $ 15 597 $ 56 099 $ 47 134 $ 77 975 $ 113 672
<FN>
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Accumulated Total Common
Stock Capital Earnings Stock Equity
(dollars in thousands)
<S> <C> <C> <C> <C>
Quarter Ended June 30, 1995
Balance April 1, 1995 $539 $389 309 $523 275 $913 123
Net income 29 222 29 222
Dividends on preferred stock (3 295) (3 295)
Other 7 7
Balance June 30, 1995 $539 $389 316 $549 202 $939 057
Quarter Ended June 30, 1994
Balance April 1, 1994 $539 $229 282 $498 809 $728 630
Net income 18 892 18 892
Dividends on preferred stock (3 295) (3 295)
Dividends on common stock (16 622) (16 622)
Other 5 5
Balance June 30, 1994 $539 $229 287 $497 784 $727 610
Six Months Ended June 30, 1995
Balance January 1, 1995 $539 $389 309 $493 103 $882 951
Net income 62 689 62 689
Dividends on preferred stock (6 590) (6 590)
Other 7 7
Balance June 30, 1995 $539 $389 316 $549 202 $939 057
Six Months Ended June 30, 1994
Balance January 1, 1994 $539 $229 288 $483 242 $713 069
Net income 53 725 53 725
Dividends on preferred stock (6 591) (6 591)
Dividends on common stock (32 592) (32 592)
Other (1) (1)
Balance June 30, 1994 $539 $229 287 $497 784 $727 610
Twelve Months Ended June 30, 1995
Balance July 1, 1994 $539 $229 287 $497 784 $727 610
Net income 91 156 91 156
Dividends on preferred stock (13 181) (13 181)
Dividends on common stock (26 550) (26 550)
Capital contribution from parent company 159 999 159 999
Other 30 (7) 23
Balance June 30, 1995 $539 $389 316 $549 202 $939 057
Twelve Months Ended June 30, 1994
Balance July 1, 1993 $539 $230 936 $448 476 $679 951
Net income 127 671 127 671
Dividends on preferred stock (14 081) (14 081)
Dividends on common stock (64 358) (64 358)
Other (1 649) 76 (1 573)
Balance June 30, 1994 $539 $229 287 $497 784 $727 610
<FN>
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Operating Activities
Net income $ 29 222 $ 18 892 $ 62 689 $ 53 725 $ 91 156 $ 127 671
Items providing (using) cash currently:
Depreciation 28 528 33 771 62 447 67 203 132 963 132 807
Deferred income taxes and investment tax
credits - net 1 087 12 760 6 597 20 703 10 021 35 002
Allowance for equity funds used during
construction (650) (367) (1 008) (3 439) (1 799) (10 198)
Regulatory assets
Post-in-service carrying costs and deferred
operating expenses (830) (4 447) (6 192) (8 928) (16 332) (17 462)
Deferred merger costs (2 490) (2 034) (2 145) (7 178) (18 267) (11 913)
Other 201 5 430 184 4 547 8 1 283
Changes in current assets and current
liabilities
Restricted deposits - (81) 16 (150) 10 190 (345)
Accounts receivable (14 278) (5 352) (12 051) (19 478) 23 (24 202)
Income tax refunds - 5 500 - 25 100 3 800 14 200
Materials, supplies, and fuel (4 535) (32 205) (6 779) (55 350) (18 126) (35 663)
Accounts payable 7 138 11 294 (35 975) (20 925) (16 368) 25 879
Refund due to customers 195 (9 740) 314 (44 224) (21 812) (112 392)
Advance under accounts receivable
purchase agreement - - - (49 940) - -
Accrued taxes and interest (13 311) (10 468) (2 581) 1 571 (7 080) 31 171
Other items - net 15 146 2 616 13 291 (4 824) 13 143 (3 434)
Net cash provided by (used in)
operating activities 45 423 25 569 78 807 (41 587) 161 520 152 404
Financing Activities
Issuance of preferred stock - - - - - 59 475
Issuance of long-term debt - - - 49 068 59 910 212 084
Funds on deposit from issuance of
long-term debt 899 3 224 6 628 12 401 22 124 34 123
Retirement of preferred stock (7) (6) (7) (10) (23) (60 117)
Redemption of long-term debt - - (55) - (215) (207 880)
Change in short-term debt 1 399 79 744 15 927 166 299 (83 500) 233 199
Dividends on preferred stock (3 295) (3 295) (6 590) (6 591) (13 181) (14 081)
Dividends on common stock - (16 622) - (32 592) (26 550) (64 358)
Contribution from parent company - - - - 159 999 7
Net cash provided by (used in)
financing activities (1 004) 63 045 15 903 188 575 118 564 192 452
Investing Activities
Utility plant additions (49 001) (77 366) (91 846) (134 478) (251 329) (321 362)
Allowance for equity funds used
during construction 650 367 1 008 3 439 1 799 10 198
Deferred demand-side management costs (1 763) (9 095) (5 107) (15 514) (30 465) (36 196)
Net cash provided by (used in)
investing activities (50 114) (86 094) (95 945) (146 553) (279 995) (347 360)
Net increase (decrease) in cash and
temporary cash investments (5 695) 2 520 (1 235) 435 89 (2 504)
Cash and temporary cash investments at
beginning of period 10 801 2 497 6 341 4 582 5 017 7 521
Cash and temporary cash investments at
end of period $ 5 106 $ 5 017 $ 5 106 $ 5 017 $ 5 106 $ 5 017
<FN>
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
PSI ENERGY, INC.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the quarter ended June 30, 1995, decreased 2.5% when compared
to the same period last year. This decrease primarily reflects a decline
in short-term sales to other utilities. In addition, milder weather in the
period led to a decrease in domestic and commercial sales. These decreases
were partially offset by increased industrial sales which reflected growth
in the primary metals sector.
Operating Revenues
Total operating revenues increased $18 million (6.7%) in the second quarter
of 1995 as compared to the same period last year. This increase primarily
reflects the 4.3% retail rate increase approved in the February 1995 Order
and a 1.9% rate increase for carrying costs on CWIP property which was
approved by the IURC on March 9, 1995. In addition, the operation of fuel
clause adjustment factors reflecting a higher average cost of kwh generated
during the period led to an increase in operating revenues. These
increases were partially offset by the decreased kwh sales previously
discussed.
An analysis of operating revenues is shown below:
Quarter
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $272
Increase (Decrease) due to change in:
Price per kwh
Retail 21
Sales for resale
Firm power obligations (1)
Non-firm power transactions 1
Total change in price per kwh 21
Kwh sales
Retail 2
Sales for resale
Firm power obligations (1)
Non-firm power transactions (4)
Total change in kwh sales (3)
Operating revenues - June 30, 1995 $290
Operating Expenses
Fuel Used in Electric Production
Fuel costs, PSI`s largest operating expense, decreased $3 million (3.7%)
for the quarter as compared to the same period last year.
An analysis of fuel costs is shown below:
Quarter
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $88
Increase (Decrease) due to change in:
Price of fuel 3
Kwh generation (6)
Fuel expense - June 30, 1995 $85
Purchased and Exchanged Power
For the quarter ended June 30, 1995, purchased and exchanged power
increased $4 million (32.5%) as compared to the same period last year,
reflecting increased purchases of power to meet PSI`s own load. This
increase was partially offset by a decline in third party short-term power
sales to other utilities.
Other Operation
Other operation expenses for the quarter ended June 30, 1995, increased $4
million (7.1%) as compared to the same period last year. This increase was
primarily due to the inclusion of postretirement benefits in rates on a
accrual basis, an increase in the level of ongoing DSM expenses, and the
amortization of deferred DSM costs, all of which were authorized in the
February 1995 Order. Partially offsetting the increase was the May 1994
write-off of previously deferred litigation expenses.
Depreciation
Depreciation expense decreased $5 million (15.5%) for the quarter ended
June 30, 1995, as compared to the same period last year. This decrease
primarily reflects the adoption of lower depreciation rates effective in
March 1995 pursuant to the February 1995 Order. The decrease was partially
offset by additions to utility plant in service.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995
Kwh Sales
For the six months ended June 30, 1995, kwh sales decreased 5.1% when
compared to the same period last year. The decrease primarily reflects a
decline in short-term sales to other utilities. In addition, milder
weather in the period led to a decrease in domestic and commercial sales.
Increased industrial sales reflecting growth in the primary metals sector
partially offset the decrease.
Operating Revenues
Total operating revenues increased $29 million (5.1%) for the six months
ended June 30, 1995, when compared to the same period last year. This
increase primarily reflects the 4.3% retail rate increase and 1.9% rate
increase for carrying costs on CWIP property as previously discussed. In
addition, changes in fuel clause adjustment factors reflecting increases in
the average cost of kwh generated led to an increase in operating revenues
during the period. These increases were partially offset by the decrease
in kwh sales.
An analysis of operating revenues is shown below:
Six Months
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $ 560
Increase (Decrease) due to change in:
Price per kwh
Retail 38
Sales for resale
Non-firm power transactions 5
Total change in price per kwh 43
Kwh sales
Retail 2
Sales for resale
Firm power obligations (5)
Non-firm power transactions (13)
Total change in kwh sales (16)
Other 2
Operating revenues - June 30, 1995 $ 589
Operating Expenses
Fuel Used in Electric Production
Fuel costs for the six months ended June 30, 1995, increased $4 million
(2.0%) when compared to the same period last year.
An analysis of fuel costs is shown below:
Six Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $183
Increase (Decrease) due to change in:
Price of fuel 13
Kwh generation (9)
Fuel expense - June 30, 1995 $187
Other Operation
Other operation expenses increased $5 million (5.1%) for the six months
ended June 30, 1995, as compared to the same period last year. This
increase was primarily the result of the inclusion of postretirement
benefits in rates on an accrual basis, an increase in the level of ongoing
DSM expenses, and the amortization of deferred DSM costs, all of which were
authorized in the February 1995 Order. Partially offsetting the increase
was the May 1994 write-off of previously deferred litigation expenses.
Depreciation
Depreciation expense for the six months ended June 30, 1995, decreased $5
million (7.1%) when compared to the same period last year. This decrease,
which was primarily driven by the adoption of lower depreciation rates
effective March 1995 pursuant the February 1995 Order, was partially offset
by additions to utility plant in service.
RESULTS OF OPERATIONS FOR TWELVE MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the twelve months ended June 30, 1995, decreased 2.6% when
compared to the same period last year. The decrease primarily reflects the
milder weather conditions experienced in the period as compared to the same
period last year. In addition, short-term sales to other utilities also
decreased during the period. These decreases were partially offset by an
increase in industrial sales reflecting growth in the primary metals and
transportation equipment sectors.
Operating Revenues
Total operating revenues increased $9 million (.8%) for the twelve months
ended June 30, 1995, as compared to the same period last year. This
increase was driven by the 4.3% retail rate increase and the 1.9% rate
increase for carrying costs on CWIP property as previously discussed. In
addition, the operation of fuel clause adjustment factors reflecting
increases in the average cost of kwh generated led to an increase in
operating revenues for the period. These increases were partially offset
by lower sales due to the milder weather conditions.
An analysis of operating revenues is shown below:
Twelve Months
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $1 133
Increase (Decrease) due to change in:
Price per kwh
Retail 26
Sales for resale
Firm power obligations 1
Non-firm power transactions 2
Total change in price per kwh 29
Kwh sales
Retail (5)
Sales for resale
Firm power obligations (9)
Non-firm power transactions (7)
Total change in kwh sales (21)
Other 1
Operating revenues - June 30, 1995 $1 142
Operating Expenses
Fuel Used in Electric Production
Fuel costs for the twelve months ended June 30, 1995, increased $15 million
(4.0%) as compared to the same period last year.
An analysis of fuel costs is shown below:
Twelve Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $376
Increase (Decrease) due to change in:
Price of fuel 19
Kwh generation (4)
Fuel expense - June 30, 1995 $391
Purchased and Exchanged Power
For the twelve months ended June 30, 1995, purchased and exchanged power
decreased $2 million (5.2%) when compared to the same period last year.
The decrease primarily resulted from a decline in third party short-term
power sales to other utilities.
Other Operation
Other operation expenses for the twelve months ended June 30, 1995,
increased $23 million (11.6%) as compared to the same period last year.
This increase reflects the inclusion of postretirement benefits in rates on
an accrual basis, an increase in the level of ongoing DSM expenses, and the
amortization of deferred DSM costs, all of which were authorized in the
February 1995 Order. In addition, charges for severance benefits to former
officers of approximately $10 million were expensed in December 1994.
These increases were partially offset by the May 1994 write-off of
previously deferred litigation expenses.
Maintenance
Maintenance expenses for the twelve months ended June 30, 1995, as compared
to the same period last year increased $9 million (11.0%). This increase
was primarily driven by increased maintenance on a number of generating
units.
Other Income and Expenses - Net
Allowance for Equity Funds Used During Construction
The equity component of AFUDC decreased $8 million (82.4%) for the twelve
month period ended June 30, 1995, as compared to the same period last year.
This decrease was due primarily to an increase in borrowings of short-term
debt which resulted in a decrease in the equity component of the AFUDC
rate. In addition, a scrubber at Gibson was placed in service in September
1994 which resulted in a large decrease in CWIP for the period.
Interest
Other Interest
Other interest increased $10 million over the same period last year. The
increase was driven primarily by higher interest rates and an increase in the
average short-term debt outstanding.
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
BALANCE SHEETS
ASSETS
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
<S> <C> <C>
Utility Plant - original cost
In service
Electric $184 035 $179 098
Gas 137 949 134 103
Common 19 082 19 122
341 066 332 323
Accumulated depreciation 107 847 104 113
233 219 228 210
Construction work in progress 7 266 8 638
Total utility plant 240 485 236 848
Current Assets
Cash and temporary cash investments 3 248 1 071
Accounts receivable less accumulated
provision of $863,000 at June 30, 1995,
and $457,000 at December 31, 1995,
for doubtful accounts 25 801 33 892
Materials, supplies, and fuel - at average cost
Gas stored for current use 4 268 6 216
Other materials and supplies 1 270 1 406
Property taxes applicable to subsequent year 2 258 2 200
Prepayments and other 520 593
37 365 45 378
Other Assets
Regulatory assets
Deferred merger costs 1 785 1 785
Unamortized costs of reacquiring debt 971 -
Other 2 633 2 718
Other 542 399
5 931 4 902
$283 781 $287 128
<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
CAPITALIZATION AND LIABILITIES
June 30 December 31
1995 1994
(unaudited)
<S> <C> <C>
Common Stock Equity
Common stock - $15.00 par value; authorized
shares - 1,000,000; outstanding shares - 585,333
at June 30, 1995 and December 31, 1994 $ 8 780 $ 8 780
Paid-in capital 18 839 18 839
Retained earnings 80 002 74 203
Total common stock equity 107 621 101 822
Long-term Debt 74 438 89 238
Total capitalization 182 059 191 060
Current Liabilities
Notes payable 13 500 14 500
Accounts payable 22 895 21 655
Accrued taxes 5 126 2 876
Accrued interest 2 032 2 123
Other 4 605 4 123
48 158 45 277
Other Liabilities
Deferred income taxes 22 120 23 226
Unamortized investment tax credits 5 222 5 364
Accrued pension and other postretirement benefit costs 11 399 10 356
Income taxes refundable through rates 5 188 4 282
Other 9 635 7 563
53 564 50 791
$283 781 $287 128
</TABLE>
<PAGE>
<TABLE>
<CAPTION
THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF INCOME
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Electric $ 47 823 $43 736 $ 87 382 $ 88 926 $176 020 $181 006
Gas 9 372 9 587 39 875 46 387 65 459 78 964
57 195 53 323 127 257 135 313 241 479 259 970
Operating Expenses
Electricity purchased from parent
company for resale 36 936 32 552 66 975 68 107 133 755 138 310
Gas purchased 4 156 4 800 21 716 27 209 35 015 45 007
Other operation 7 258 7 721 15 053 15 341 32 001 31 349
Maintenance 984 1 489 2 137 2 742 4 868 6 268
Depreciation 2 871 2 633 5 646 5 249 11 041 10 592
Taxes
Federal and state income 873 446 3 961 4 227 5 076 6 381
State, local and other 971 990 1 979 2 015 3 966 3 712
54 049 50 631 117 467 124 890 225 722 241 619
Operating Income 3 146 2 692 9 790 10 423 15 757 18 351
Other Income And Expenses - Net
Allowance for equity funds used
during construction 67 13 56 11 123 32
Income taxes (34) 14 (38) 44 (26) 79
Other - net 71 (34) 67 335 (32) 49
104 (7) 85 390 65 160
Income Before Interest 3 250 2 685 9 875 10 813 15 822 18 511
Interest
Interest on long-term debt 1 914 2 039 3 953 4 082 8 032 8 159
Other interest 54 64 219 217 397 487
Allowance for borrowed funds used
during construction (31) (45) (96) (75) (204) (143)
1 937 2 058 4 076 4 224 8 225 8 503
Net Income $ 1 313 $ 627 $ 5 799 $ 6 589 $ 7 597 $ 10 008
<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Retained Total Common
Stock Capital Earnings Stock Equity
(in thousands)
<S> <C> <C> <C> <C>
Quarter Ended June 30, 1995
Balance April 1, 1995 $8 780 $18 839 $78 689 $106 308
Net income 1 313 1 313
Balance June 30, 1995 $8 780 $18 839 $80 002 $107 621
Quarter Ended June 30, 1994
Balance April 1, 1994 $8 780 $18 839 $75 289 $102 908
Net income 627 627
Balance June 30, 1994 $8 780 $18 839 $75 916 $103 535
Six Months Ended June 30, 1995
Balance January 1, 1995 $8 780 $18 839 $74 203 $101 822
Net income 5 799 5 799
Balance June 30, 1995 $8 780 $18 839 $80 002 $107 621
Six Months Ended June 30, 1994
Balance January 1, 1994 $8 780 $18 839 $69 327 $ 96 946
Net income 6 589 6 589
Balance June 30, 1994 $8 780 $18 839 $75 916 $103 535
Twelve Months Ended June 30, 1995
Balance July 1, 1994 $8 780 $18 839 $75 916 $103 535
Net income 7 597 7 597
Dividends on common stock (3 511) (3 511)
Balance June 30, 1995 $8 780 $18 839 $80 002 $107 621
Twelve Months Ended June 30, 1994
Balance July 1, 1993 $8 780 $18 839 $68 835 $ 96 454
Net income 10 008 10 008
Dividends on common stock (2 927) (2 927)
Balance June 30, 1994 $8 780 $18 839 $75 916 $103 535
<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF CASH FLOWS
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Operating Activities
Net income $ 1 313 $ 627 $ 5 799 $ 6 589 $ 7 597 $ 10 008
Items providing (using) cash currently:
Depreciation 2 871 2 633 5 646 5 249 11 041 10 592
Deferred income taxes and investment tax
credits - net 506 1 111 (342) 210 1 490 1 168
Allowance for equity funds used during
construction (67) (13) (56) (11) (123) (32)
Regulatory assets
Deferred merger costs - - - - (1 785) -
Other 43 43 85 85 170 201
Changes in current assets and current
liabilities
Accounts receivable 2 996 9 983 8 091 8 385 8 507 (1 778)
Materials, supplies, and fuel (1 391) (2 220) 2 084 2 410 717 476
Accounts payable 5 248 539 1 240 (3 922) 2 785 2 132
Accrued taxes and interest (1 634) (1 453) 2 159 3 604 1 862 (178)
Other items - net (409) (54) 3 973 3 588 3 165 5 506
Net cash provided by (used in)
operating activities 9 476 11 196 28 679 26 187 35 426 28 095
Financing Activities
Redemption of long-term debt (15 734) - (15 734) - (15 734) (6 500)
Change in short-term debt 12 500 (8 000) (1 000) (19 500) 8 000 2 000
Dividends on common stock - - - - (3 511) (2 927)
Net cash provided by (used in)
financing activities (3 234) (8 000) (16 734) (19 500) (11 245) (7 427)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (4 535) (4 458) (9 768) (8 494) (21 603) (21 716)
Net cash provided by (used in)
investing activities (4 535) (4 458) (9 768) (8 494) (21 603) (21 716)
Net increase (decrease) in cash and
temporary cash investments 1 707 (1 262) 2 177 (1 807) 2 578 (1 048)
Cash and temporary cash investments at
beginning of period 1 541 1 932 1 071 2 477 670 1 718
Cash and temporary cash investments at
end of period $ 3 248 $ 670 $ 3 248 $ 670 $ 3 248 $ 670
<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
</TABLE>
<PAGE>
THE UNION LIGHT, HEAT AND POWER COMPANY
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995
Kwh Sales
Kwh sales increased for the quarter ended June 30, 1995, as a result of
increased sales to commercial and industrial customers. The increase in
commercial sales partly resulted from an increase in the average number of
customers. The increased industrial sales reflect growth in the primary
metals and paper and allied products sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the second quarter of 1995
increased 9.3% as compared to the second quarter of 1994, reflecting higher
sales to domestic customers attributable to an increase in the average number
of customers. In addition, the continuing trend of industrial customers
electing to purchase directly from suppliers created an increase in demand for
transportation services. The increased transportation volumes were primarily
due to growth in the primary metals, paper and allied products, and food
products sectors.
Revenues
Electric Operating Revenues
Electric operating revenues increased $4.1 million (9.3%) for the quarter
ended June 30, 1995, over the comparable period of 1994. This increase
primarily reflects the previously discussed increases in kwh sales.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased expense, ULH&P`s largest operating expense, increased
$4.4 million (13.5%) for the quarter as compared to the same period last year.
An analysis of these costs is shown below:
Quarter
Ended June 30
(in thousands)
Electricity purchased expense - June 30, 1994 $32 552
Increase (Decrease) due to change in:
Price of electricity (2 944)
Kwh purchased 7 328
Electricity purchased expense - June 30, 1995 $36 936
Gas Purchased
Gas purchased for the quarter decreased $.6 million (13.4%) when compared to
the same period last year. This decrease was attributable to a 16.1% decline
in the average cost per Mcf purchased which was partially offset by an
increase of 3.2% in volumes purchased.
Other Operation
Other operation expense decreased $.5 million (6.0%) for the quarter ended
June 30, 1995, as compared to the same period last year due to several
factors, including reductions in administrative and general expenses and
decreased gas and electric distribution expenses.
Maintenance
The decrease in maintenance expense of $.5 million (33.9%) for the second
quarter of 1995 as compared to the same period last year was primarily due to
lower maintenance costs on gas and electric distribution facilities.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the six months ended June 30, 1995, increased 1.5% over the same
period of 1994, primarily as a result of increased commercial and industrial
sales volumes. A decline in domestic sales volumes due to milder weather
partially offset the increase. The higher commercial sales resulted from an
increase in the average number of customers. The increased industrial sales
reflect continued growth in the primary metals sector.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the six months ended June 30,
1995, decreased 2.6% as compared to the same period of 1994, as a result of
decreased sales volumes to domestic, commercial and industrial customers.
Milder weather contributed to the decrease in domestic and commercial sales.
A decrease in industrial sales was attributable to the trend of industrial
customers electing to purchase directly from suppliers, creating additional
demand for transportation services provided by ULH&P. The significant increase
in transportation volumes more than offset the decline in industrial sales,
and was primarily attributable to growth in the paper and allied products and
primary metals sectors.
Revenues
Electric Operating Revenues
Electric operating revenues decreased $1.5 million (1.7%) for the six months
ended June 30, 1995, over the comparable period of 1994. This decrease was
due to the operation of fuel adjustment clauses reflecting a lower average
cost of electricity purchased.
Gas Operating Revenues
Gas operating revenues declined $6.5 million (14.0%) in the first six months
of 1995 when compared to the same period last year. This decrease was the
result of the previously discussed decline in total volumes sold and the
operation of fuel adjustment clauses reflecting a decline in the average cost
of gas purchased. An increase in the relative volume of gas transported to
gas sold, also contributed to the decrease. Providing transportation services
does not necessitate the recovery of gas purchased costs. Consequently, the
revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased expense, ULH&P`s largest expense, decreased $1.1 million
(1.7%) for the first six months of 1995 as compared to last year.
An analysis of these costs is shown below:
Six Months
Ended June 30
(in thousands)
Electricity purchased expense - June 30, 1994 $68 107
Increase (Decrease) due to change in:
Price of electricity (5 561)
Kwh purchased 4 429
Electricity purchased expense - June 30, 1995 $66 975
Gas Purchased
Gas purchased expense for the first six months decreased $5.5 million (20.2%)
when compared to the same period last year. The decrease was attributable to
a 7.9% decline in volumes purchased and a 13.3% decrease in the average cost
per Mcf of gas purchased.
Maintenance
The decrease in maintenance expense of $.6 million (22.1%) for the six months
ended June 30, 1995, as compared the same period last year was due primarily
to lower maintenance costs on gas and electric distribution facilities.
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the twelve months ended June 30, 1995, remained relatively
constant when compared to the same period of 1994, increasing only .9%. A
decline in domestic sales volumes due to milder weather was offset by
increases in commercial and industrial sales. The higher commercial sales
resulted from an increase in the average number of customers. The increased
industrial sales reflect growth in the primary metals and paper and allied
products sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended June 30,
1995, decreased 6.8% when compared to the same period of 1994, as a result of
lower domestic, commercial, and industrial sales. Milder weather contributed
to the decrease in domestic and commercial sales, while industrial sales
decreased as customers elected to purchase directly from suppliers, creating
additional demand for transportation services provided by ULH&P. The increase
in transportation volumes more than offset the lower industrial sales, and was
primarily attributable to growth in the primary metals, paper and allied
products, and food products sectors.
Revenues
Electric Operating Revenues
Electric operating revenues decreased $5.0 million (2.8%) for the twelve
months ended June 30, 1995, over the comparable period of 1994. This decrease
was attributable to the operation of adjustment clauses reflecting a decline
in the average cost of electricity purchased.
Gas Operating Revenues
Gas operating revenues declined $13.5 million (17.1%) for the twelve months
ended June 30, 1995, when compared to the same period last year. This
decrease was the result of the aforementioned decline in volumes sold and
transported and the operation of fuel adjustment clauses reflecting a lower
average cost of gas purchased. An increase in the relative volume of gas
transported to gas sold, also contributed to the decrease. Providing
transportation services does not necessitate the recovery of gas purchased
costs. Consequently, the revenue per Mcf transported is below the revenue per
Mcf sold.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased expense, ULH&P`s largest expense, decreased $4.6 million
(3.3%) for the twelve months ended June 30, 1995, as compared to last year.
An analysis of these costs is shown below:
Twelve Months
Ended June 30
(in thousands)
Electricity purchased expense - June 30, 1994 $138,310
Increase (Decrease) due to change in:
Price of electricity (9,333)
Kwh purchased 4,778
Electricity purchased expense - June 30, 1995 $133,755
Gas Purchased
Gas purchased expense for the twelve months ended June 30, 1995, decreased
$10.0 million (22.2%) when compared to the same period last year. This
decrease was attributable to an 11.3% decline in volumes purchased and a 12.3%
decrease in the average cost per Mcf of gas purchased.
Other Operation
Other operation expenses increased $.6 million (2.1%) for the twelve months
ended June 30, 1995, as compared to the same period last year, primarily due
to recognition of nonrecurring charges for merger-related costs and other
costs ULH&P does not expect to recover from customers, and increased electric
and gas distribution expenses.
Maintenance
The decrease in maintenance expense of $1.4 million (22.3%) for the twelve
months ended June 30, 1995, as compared the same period last year was due
primarily to lower maintenance costs on gas and electric distribution
facilities.
NOTES TO FINANCIAL STATEMENTS
Cinergy, CG&E, PSI, and ULH&P
1. These Financial Statements reflect all adjustments (which include only
normal, recurring adjustments) necessary in the opinion of these companies for
a fair presentation of the interim results. These statements should be read
in conjunction with the financial statements and the notes thereto included in
each registrant`s Annual Report on Form 10-K for the year ended December 31,
1994. Certain amounts in the 1994 Financial Statements have been reclassified
to conform to the 1995 presentation.
Cinergy and PSI
2. As discussed in Cinergy`s and PSI`s 1994 Forms 10-K, in July 1994, PSI
filed a petition with the IURC for a retail rate increase. On May 15, 1995,
PSI filed testimony with the IURC supporting a 12.8% ($127.9 million) rate
increase request. Major components of the increase include, among other
things, the costs of the Clean Coal Project and a scrubber at Gibson. An
order is anticipated in the second quarter of 1996. PSI cannot predict what
action the IURC may take with respect to this proposed rate increase.
Cinergy and CG&E
3. On July 17, 1995, CG&E filed a request with the PUCO to begin settlement
discussions on a gas rate increase with intervenors who have participated in
previous rate applications and represent the various classes of gas customers
served by CG&E. The proposed increase, estimated to be $25 million, is
expected to increase annual revenues approximately 7%. The proposed increase,
to be effective in late 1996, is requested, in part, to recover capital
investment made since the last gas rate increase in 1993. Also, the request
includes a proposal to initiate a pilot program that would allow residential
customers to choose their gas supplier and have CG&E transport the gas for
them. A full rate application is expected to be filed with the PUCO on
December 1, 1995. CG&E cannot predict the outcome of these settlement
discussions nor what actions the PUCO may take with respect to the proposed
rate increase.
Cinergy, CG&E, PSI, and ULH&P
4. In March 1995, the FASB issued SFAS 121 which will be effective for
Cinergy in January 1996. The new accounting standard requires impairment
losses on long-lived assets be recognized when an asset`s book value exceeds
its expected future cash flows. Based on the regulatory environment in which
Cinergy currently operates, SFAS 121 is not expected to have an adverse impact
on financial condition or results of operations upon adoption. However, this
conclusion may change in the future as deregulation, competitive factors, and
potential restructuring influence the electric utility industry.
Cinergy and CG&E
5. All outstanding shares of CG&E`s Cumulative Preferred Stock, 7.44%
Series and 9.15% Series, totaling $90 million, were redeemed at a per share
price of $101 and $106.10, respectively, on July 1, 1995.
Cinergy and CG&E
6. (a) As previously discussed in CG&E`s 1994 Form 10-K, CG&E redeemed $59
million principal amount of its 9.70% first mortgage bonds (due June 15, 2019)
on April 30, 1995, and $55 million principal amount of its 10 1/8% first
mortgage bonds (due May 1, 2020) on May 1, 1995. Additionally, $41 million
principal amount of the 9.70% first mortgage bonds and $45 million principal
amount of the 10 1/8% first mortgage bonds were retired on March 31, 1995.
Cinergy, CG&E, and ULH&P
(b) ULH&P redeemed $5 million principal amount of its 10.25% first
mortgage bonds (due June 1, 2020) at par with cash deposited in the
Maintenance and Replacement Fund, and the remaining amount of such bonds at
the redemption price of 107.34% on June 1, 1995.
On September 1, 1995, ULH&P will redeem all of its 9.70% Series first mortgage
bonds due 2019 at a redemption price of 106.51%.
Cinergy and CG&E
7. (a) CG&E received authority from the SEC in May 1995, for a shelf
registration statement which permits CG&E to sell up to $500 million of
unsecured debt securities. The PUCO has authorized CG&E, through March 31,
1996, to issue $500 million of first mortgage bonds, secured medium-term
notes, unsecured debt, or any combination thereof. CG&E issued $150 million
of 6.90% debentures due June 1, 2025 on June 14, 1995. Additionally, on July
6, 1995, CG&E issued $100 million in junior subordinated deferrable interest
debentures, due June 30, 2025, which carry an interest rate of 8.28%. CG&E
also has PUCO authority through July 19, 1996, to borrow from the Ohio Air
Quality Development Authority up to $84 million from the issuance of pollution
control revenue refunding bonds.
Cinergy, CG&E, and ULH&P
(b) The SEC authorized ULH&P`s shelf registration statement, permitting it
to sell up to $55 million of unsecured debt securities. The KPSC authorized
ULH&P to issue up to $55 million of first mortgage bonds, unsecured debt, or a
combination of both through March 31, 1997. ULH&P issued $15 million of 7.65%
debentures, due July 15, 2025 on July 25, 1995.
Cinergy, CG&E, PSI, and ULH&P
8. The operating subsidiary companies of Cinergy have the following short-
term debt authorizations and lines of credits:
Committed Unused
Authorized Lines Lines
Cinergy & Subsidiaries $783 $343 $186
CG&E & Subsidiaries 435 112 98
PSI 338 230 86
ULH&P 35 30 17
Additionally, Cinergy has a $100 million credit facility, which expires
September 27, 1997, of which $79 million remained unused at June 30, 1995.
Cinergy and PSI
9. (a) Coal tar residues and other substances associated with MGP sites have
been found at former MGP sites in Indiana, including, but not limited to,
several sites previously owned by PSI. PSI has identified at least 21 MGP
sites which it previously owned, including 19 it sold in 1945 to Indiana Gas
and Water Company, Inc. (now IGC). IGC has informed PSI of the basis for its
position that PSI, as a PRP under the CERCLA, should contribute to IGC`s
response costs related to investigating and remediating contamination at MGP
sites which PSI sold to IGC.
In February 1995, PSI received notification from NIPSCO alleging PSI is a PRP
under the CERCLA with respect to contamination associated with MGP sites
previously owned and/or operated by both PSI and NIPSCO (or their
predecessors). The notification included seven sites, five of which PSI
acquired from NIPSCO and subsequently sold to IGC.
PSI has placed its insurance carriers on notice of IGC`s and NIPSCO`s claims.
On May 3, 1995, the IURC denied IGC`s request for recovery of costs incurred
in complying with Federal, state, and local environmental regulations related
to MGP sites in which IGC has an interest, including sites acquired from PSI.
IGC has announced it will appeal this decision, which IGC contends is contrary
to decisions made by other state utility commissions with respect to this
issue. In light of this decision, PSI is evaluating its options with respect
to rate recovery of any MGP site-related costs it may incur.
At this time, PSI is unable to predict the nature, extent, and costs of, or
PSI`s responsibility for, any future environmental investigations and
remediations which may be required at MGP sites owned or previously owned by
PSI; however, any costs that ultimately are incurred may be material.
Cinergy and CG&E
(b) Lawrenceburg also has an MGP site which is under investigation to
determine a remediation strategy. Lawrenceburg had applied to have the site
included in the IDEM`s voluntary cleanup program. On May 22, 1995,
Lawrenceburg and the IDEM reached an agreement to include the Lawrenceburg MGP
site in such voluntary cleanup program. A proposed remediation plan will be
submitted in the near future.
Cinergy and CG&E
10. On August 9, 1995, CG&E filed a Declaration on Form U-1 with the SEC
under the PUHCA seeking authorization to solicit proxies from the holders of
preferred stock and from Cinergy as the holder of all outstanding shares of
common stock for a special meeting of shareholders to be held in the fall of
1995 for the purpose of proposing to amend CG&E`s Articles. The proposed
amendment would, if adopted, eliminate a restriction on the amount of
unsecured debt that CG&E can issue, or, in the alternative, if such proposal
is not adopted, proposing to amend such Articles by suspending, for a ten year
period, the restriction on the amount of unsecured debt CG&E can issue. CG&E
is also requesting that the SEC authorize such amendment to CG&E`s Articles.
<PAGE>
MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Senior Security Ratings
Cinergy, CG&E, PSI, and ULH&P
In July 1995, S&P Ratings Group raised its ratings of Cinergy`s operating
units` senior secured debt to A- from BBB+, removing the companies from the
financial agency`s credit watch. The companies had been on watch since
October 31, 1994. S&P also raised the ratings of the senior unsecured debt
and preferred stock from BBB to BBB+. The ratings group indicated these
actions are a result of lower combined power production costs, reduced
operation and maintenance expenses, and deferral of capital expenditures
brought about as a result of the merger.
In addition, in August 1995, DCR raised Cinergy`s operating units` credit
ratings. The ratings of CG&E`s first mortgage bonds and collateralized
pollution control revenue bonds were raised to A- from BBB+ while the ratings
of CG&E`s debentures were raised to BBB+ from BBB. PSI`s first mortgage bonds
and medium term notes were upgraded to A- from BBB+. The preferred stock
ratings of both companies were reaffirmed at BBB. ULH&P`s first mortgage
bonds were assigned a new rating of A-. DCR stated the merger will result in
lower new capacity needs and electric production costs and enhanced
transmission capabilities.
Regulatory Matters
Cinergy, CG&E, PSI, and ULH&P
PUHCA Reform
On June 20, 1995, after a year-long review of its continuing regulation of
public utility holding companies under the PUHCA, the SEC endorsed
recommendations for reform of the PUHCA. The recommendations call for repeal
and, pending repeal, significant administrative reform of the 60 year old
statute. While the report offers three alternative approaches to repeal and
legislative reform, the report`s preferred option is repeal coupled with a
transition period of one year or longer and a transfer of certain consumer-
protection provisions of PUHCA to the FERC. The report further recommends
that, pending consideration of legislative options, the SEC take prompt
administrative action, by rulemaking and on a case-by-case basis, to modernize
and simplify regulation under PUHCA, with particular reference to financing
transactions, diversification into nonutility businesses, utility mergers and
acquisitions and PUHCA`s `integration` standards. In the latter regard, the
report recommends a changed interpretation of PUHCA to permit registered
holding companies to own combination electric and gas utility companies
provided the affected states agree. Subsequent to the report`s issuance, the
SEC adopted rule changes exempting various types of financing transactions by
utility and nonutility subsidiaries of registered holding companies. The SEC
also proposed a rule that would exempt investments by registered systems in
specified `energy-related companies` subject to certain conditions.
Cinergy and PSI
PSI`s July 1994 Retail Rate Petition
As discussed in Cinergy`s and PSI`s 1994 Forms 10-K, in July 1994, PSI filed a
petition with the IURC for a retail rate increase. On May 15, 1995, PSI filed
testimony with the IURC supporting a 12.8% ($127.9 million) rate increase
request. Major components of the increase include, among other things, the
costs of the Clean Coal Project and a scrubber at Gibson. An order is
anticipated in the second quarter of 1996. Assuming this petition is
satisfactorily addressed by the IURC, Cinergy`s objective is to manage costs
in order to delay the need for additional rate relief by PSI. PSI cannot
predict what action the IURC may take with respect to this proposed rate
increase.
Cinergy and CG&E
CG&E Rate Matters
On July 17, 1995, CG&E filed a request with the PUCO to begin settlement
discussions on a gas rate increase involving intervenors who have participated
in previous rate applications and represent the various classes of gas
customers served by CG&E. The proposed increase, estimated to be $25 million,
is expected to increase annual revenues approximately 7%. The proposed
increase, anticipated to be effective in late 1996, is requested, in part, to
recover capital investment made since the last gas rate increase in 1993.
Also, the request includes a proposal to initiate a pilot program that would
allow residential customers to choose their gas supplier and have CG&E
transport the gas for them. A full rate application is expected to be filed
with the PUCO on December 1, 1995. CG&E cannot predict the outcome of these
settlement discussions nor what actions the PUCO may take with respect to the
proposed rate increase.
Cinergy, CG&E, PSI, and ULH&P
MEGA-NOPR
On March 29, 1995, the FERC issued a MEGA-NOPR on Open Access, which is
another step in the transition towards potentially full-scale competition in
the electric utility industry. The MEGA-NOPR is essentially the electric
industry`s equivalent of the FERC`s Order 636 applicable to the natural gas
industry. The MEGA-NOPR as proposed would, among other things, provide for
mandatory filing of open access/comparability transmission tariffs, provide
for functional unbundling of all services, require utilities to use the
tariffs for their own bulk power transactions, establish an electronic
bulletin board, and establish a contract-based approach to stranded costs.
Cinergy filed comments on June 6, 1995, in response to the FERC`s MEGA-NOPR on
Open Access. In the filing, Cinergy reaffirmed support for FERC`s authority
to order utilities owning transmission systems to provide open access at rates
and terms comparable to their own. On August 7, 1995, Cinergy filed
additional comments concerning the transmission pricing aspects of the MEGA-
NOPR. A final order could be issued by the end of 1995.
Environmental Issues
Cinergy, CG&E, and PSI
Manufactured Gas Plants
Coal tar residues and other substances associated with MGP sites have been
found at former MGP sites in Indiana, including, but not limited to, several
sites previously owned by PSI. PSI has identified at least 21 MGP sites which
it previously owned, including 19 it sold in 1945 to Indiana Gas and Water
Company, Inc. (now IGC). IGC has informed PSI of the basis for its position
that PSI, as a PRP under the CERCLA, should contribute to IGC`s response costs
related to investigating and remediating contamination at MGP sites which PSI
sold to IGC.
In February 1995, PSI received notification from NIPSCO alleging PSI is a PRP
under the CERCLA with respect to contamination associated with MGP sites
previously owned and/or operated by both PSI and NIPSCO (or their
predecessors). The notification included seven sites, five of which PSI
acquired from NIPSCO and subsequently sold to IGC.
PSI has placed its insurance carriers on notice of IGC`s and NIPSCO`s claims.
On May 3, 1995, the IURC denied IGC`s request for recovery of costs incurred
in complying with Federal, state, and local environmental regulations related
to MGP sites in which IGC has an interest, including sites acquired from PSI.
IGC has announced it will appeal this decision, which IGC contends is contrary
to decisions made by other state utility commissions with respect to this
issue. In light of this decision, PSI is evaluating its options with respect
to rate recovery of any MGP site-related costs it may incur.
At this time, PSI is unable to predict the nature, extent, and costs of, or
PSI`s responsibility for, any future environmental investigations and
remediations which may be required at MGP sites owned or previously owned by
PSI; however, any costs that ultimately are incurred may be material.
Lawrenceburg also has an MGP site which is under investigation to determine a
remediation strategy. Lawrenceburg had applied to have the site included in
the IDEM`s voluntary cleanup program. On May 22, 1995, Lawrenceburg and the
IDEM reached an agreement to include the Lawrenceburg MGP site in such
voluntary cleanup program. A proposed remediation plan will be submitted in
the near future.
Accounting Issues
Cinergy, CG&E, PSI, and ULH&P
New Accounting Standard
In March 1995, the FASB issued SFAS 121 which will be effective for Cinergy in
January 1996. The new accounting standard requires impairment losses on long-
lived assets be recognized when an asset`s book value exceeds its expected
future cash flows. Based on the regulatory environment in which Cinergy
currently operates, SFAS 121 is not expected to have an adverse impact on
financial condition or results of operations upon adoption. However, this
conclusion may change in the future as deregulation, competitive factors, and
potential restructuring influence the electric utility industry.
CAPITAL REQUIREMENTS
Cinergy and CG&E
On August 9, 1995, CG&E filed a Declaration on Form U-1 with the SEC under the
PUHCA, seeking authorization to solicit proxies form the holders of preferred
stock and from Cinergy as the holder of all outstanding shares of common stock
for a special meeting of shareholders to be held in the fall of 1995 for the
purpose of proposing to amend CG&E`s Articles. The proposed amendment would,
if adopted, eliminate a restriction on the amount of unsecured debt that CG&E
can issue, or, in the alternative, if such proposal is not adopted, proposing
to amend such articles by suspending, for a ten year period, the restriction
on the amount of unsecured debt CG&E can issue. CG&E is also requesting that
the SEC authorize such amendment to CG&E`s Articles.
Cinergy, CG&E, and ULH&P
During May and July 1995, CG&E and ULH&P, issued $265 million of debt (see
Note 7 of the `Notes to Financial Statements`).
CAPITAL RESOURCES
Cinergy, CG&E, and ULH&P
Long-term Debt
See Note 7 of the `Notes to Financial Statements`.
Cinergy, CG&E, PSI, and ULH&P
Short-term Debt
See Note 8 of the `Notes to Financial Statements`.
RESULTS OF OPERATIONS
Cinergy, CG&E, PSI, and ULH&P
Reference is made to `PART I. Financial Information` - `ITEM 1. FINANCIAL
STATEMENTS.`
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Cinergy and PSI
As discussed in Cinergy and PSI Forms 10-K, PSI has been arbitration for
several years with Cyprus Amax regarding various disputes, including
disputes related to price, tonnage, and coal quality arising out of a long-
term contract for the supply of 3.6 million tons of coal per year from the
Wabash Mine to Gibson. On August 9, 1995, PSI and Cyprus Amax executed a
Settlement Agreement, which fully resolves all outstanding disputes, and a
new coal supply agreement, which replaces the old contract. The new
contract requires a reduction in the price effective July 1, 1995, followed
by further price reductions through 1999. Beginning in the year 2000, the
price will be adjusted each year based upon market conditions. The new
contract also extends the term for deliveries from Wabash Mine.
Also, see Notes 2, 3, and 9 of the `Notes to Financial Statements` in `Part
I - Financial Information`.
ITEM 2. CHANGES IN SECURITIES
Cinergy and CG&E
On July 6, 1995, CG&E issued $100 million principal amount of 8.28% Junior
Subordinated Deferrable Interest Debentures due June 30, 2025. CG&E has
the right, under the applicable indenture, to extend the interest payment
period from time to time on the debentures to a period not exceeding 20
consecutive quarters and not extending beyond the maturity date. In the
event that this right is exercised, CG&E may not declare or pay dividends
on, or purchase, acquire, or make a liquidation payment with respect to,
any of its capital stock, or make any guarantee payments with respect to
the foregoing. It is believed that the extension of an interest payment
period on the debentures is unlikely.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Copies of the documents listed below which are identified with an
asterisk (*) have heretofore been filed with the SEC and are incorporated
herein by reference and made a part hereof. Exhibits not so identified are
filed herewith.
Exhibit
Designation Nature of Exhibit
PSI
3-a Amended Articles of Consolidation of PSI, as
amended to April 20, 1995.
ULH&P
3-b By-laws of ULH&P as amended, adopted by
shareholders June 16, 1995.
Cinergy
4-a *Original Indenture (Unsecured Debt Securities)
between CG&E and The Fifth Third Bank dated as
of May 15, 1995. (Exhibit to CG&E Form 8-A dated
July 24, 1995, file number 1-1232.)
Cinergy and CG&E
4-b First Supplemental Indenture between CG&E and
The Fifth Third Bank dated as of June 1, 1995.
Cinergy
4-c *Second Supplemental Indenture between CG&E and
The Fifth Third Bank dated as of June 30, 1995.
(Exhibit to CG&E Form 8-A dated July 24, 1995,
file number 1-1232.)
Cinergy, CG&E and ULH&P
4-d Original Indenture (Unsecured Debt Securities)
between ULH&P and The Fifth Third Bank dated as
of July 1, 1995.
4-e First Supplemental Indenture between ULH&P and
The Fifth Third Bank dated as of July 15, 1995.
Cinergy, CG&E, PSI, and ULH&P
27 Financial Data Schedules (included in
electronic submission only).
Cinergy, CG&E, PSI, and ULH&P
(b) No reports on Form 8-K were filed during the quarter ended June 30,
1995.
<PAGE>
SIGNATURES
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although Cinergy, CG&E, PSI, and ULH&P believe that the
disclosures are adequate to make the information presented not misleading. In
the opinion of Cinergy, CG&E, PSI, and ULH&P, these statements reflect all
adjustments (which include only normal, recurring adjustments) necessary to
reflect the results of operations for the respective periods. The unaudited
statements are subject to such adjustments as the annual audit by independent
public accountants may disclose to be necessary.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrants have duly caused this report to be signed by an
officer and the chief accounting officer on their behalf by the undersigned
thereunto duly authorized.
CINERGY CORP.
THE CINCINNATI GAS & ELECTRIC COMPANY
PSI ENERGY, INC.
THE UNION LIGHT, HEAT AND POWER COMPANY
Registrants
Date: August 10, 1995 /S/ J. Wayne Leonard
J. Wayne Leonard
Duly Authorized Officer
Date: August 10, 1995 /S/ Charles J. Winger
Charles J. Winger
Chief Accounting Officer
AMENDED
ARTICLES OF CONSOLIDATION
OF
PSI ENERGY, INC.
AS AMENDED TO April 20, 1995
(ORIGINALLY EFFECTIVE SEPTEMBER 6, 1941)
AND PROVISIONS OF
3-1/2% CUMULATIVE PREFERRED STOCK,
4.32% CUMULATIVE PREFERRED STOCK,
4.16% CUMULATIVE PREFERRED STOCK,
7.15% CUMULATIVE PREFERRED STOCK,
7.44% CUMULATIVE PREFERRED STOCK,
6-7/8% CUMULATIVE PREFERRED STOCK.
<PAGE>
EXPLANATORY NOTE
Neither the footnotes nor the Table of Contents herein appear in the original
Articles of Consolidation, the amendments thereto or the Amended Articles of
Consolidation and are no part thereof, being here added solely for the
convenience of the reader.
In this Explanatory Note, the footnotes and the Table of Contents, the
following corporations, person, instruments, securities and statute are
referred to by the following abbreviated designations:
PSI Energy, Inc., successor to
Public Service Company of Indiana, Inc. Corporation
Public Service Company of Indiana Service Company
Central Indiana Power Company Central
Northern Indiana Power Company Northern
Terre Haute Electric Company, Inc. Terre Haute
Dresser Power Corporation Dresser
Service Company, Central, Northern, Constituent Corporations
Terre Haute and Dresser, collectively
The Indiana General Corporation Act or Corporation Act
The Indiana Business Corporation Law
Articles of Consolidation of the Corporation Original Charter
effective September 6, 1941, prior to any
amendments thereto
Original Charter as amended to date Charter
Articles of Amendment effective September 6, 1945 Amendment
1945 to the Original Charter
Articles of Amendment effective November 1, 1948 Amendment
1948 to the Original Charter as amended
Notice of Change of Principal Office and Address Notice of Change of
of Resident Agent, effective February 1, 1951 Principal Office
Articles of Amendment effective April 9, 1951 1951 Amendment
to the Original Charter as amended
Statement of Reduction of the Authorized 1952 Stock Reduction
Cumulative Preferred Stock of the New Statement
Corporation, effective January 25, 1952
Articles of Amendment effective April 9, 1952 1952 Amendment
to the Original Charter as amended
Statement of Reduction of the Authorized Preferred 1953 Stock Reduction
Cumulative Stock of the New Corporation, Statement
effective January 23, 1953
Articles of Amendment effective April 9, 1953 1953 Amendment
to the Original Charter as amended
Articles of Amendment effective June 25, 1954 1954 Amendment
to the Original Charter as amended
Statement of Reduction of the Authorized Cumulative 1954 Stock Reduction
Preferred Stock of the New Corporation, effective Statement
August 12, 1954
Articles of Amendment effective April 4, 1955 1955 Amendment
to the Original Charter as amended
Statement of Increase of Unissued Preferred 1958 Stock Increase
Shares effective April 30, 1958 Statement
Articles of Amendment effective April 2, 1962 1962 Amendment
to the Original Charter as amended
Statement of Increase of Unissued Preferred 1962 Stock Increase
Shares effective July 2, 1962 Statement
Articles of Amendment effective October 16, 1968 Amendment
1968 to the Original Charter as amended
Articles of Amendment effective May 22, 1970 1970 Amendment
to the Original Charter as amended
Articles of Amendment effective April 27, 1972 1972 Amendment
to the Original Charter as amended
Articles of Amendment effective April 11, 1973 1973 Amendment
to the Original Charter as amended
Articles of Amendment effective May 1, 1975 1975 Amendment
to the Original Charter as amended
Amended Articles of Consolidation effective 1976 Amended Articles
April 5, 1976amended Original Charter entirely
Articles of Amendment effective April 2, 1979 1979 Amendment
to the amended Articles of Consolidation
Articles of Amendment effective April 7, 1980 1980 Amendment
to the amended Articles of Consolidation
Articles of Amendment effective April 19, 1988 1988 Amendment
to the amended Articles of Consolidation
Articles of Amendment effective April 20, 1990
to the amended Articles of Consolidation 1990 Amendment
Articles of Amendment effective May 13, 1992
to the amended Articles of Consolidation 1992 Amendment
Articles of Amendment effective March 19, 1993
to the amended Articles of Consolidation March 1993 Amendment
Articles of Amendment effective October 21, 1993
to the amended Articles of Consolidation October 1993 Amendment
Articles of Amendment effective May 11, 1994
to the amended Articles of Consolidation 1994 Amendment
<PAGE>
The Corporation was created on September 6, 1941 by a consolidation, under the
Corporation Act, of Service Company, Central, Northern, Terre Haute and
Dresser. All of the Constituent Corporations, except Dresser, were Indiana
corporations that had been reorganized under the Corporation Act. Dresser was
an Indiana corporation organized under the Corporation Act.
The Corporation had its principal office in Marion County, Indiana, at all
times prior to February 1, 1951, and on and after said date has had its
principal office in Hendricks County, Indiana.
The respective dates on which duly executed counterparts of the Original
Charter, the Amendments, the Stock Reduction Statements, the Stock Increase
Statements, the Notice of Change of Principal Office, and the 1976 Amended
Articles were filed with, and approved by, the Secretary of State of Indiana,
and also the respective dates on which said approved instruments were filed
for record in the offices of the recorders of the respective counties in which
the Corporation has had its principal office, are as follows:
<PAGE>
<TABLE>
<CAPTION>
Date Filed with
And Approved by County
Secretary of In Which Date
Instrument State of Indiana Recorded Recorded
<S> <C> <C> <C>
Original Charter September 6, 1941 Marion* September 6, 1941
Hendricks September 8, 1941
1945 Amendment September 6, 1945 Marion* September 6, 1945
Hendricks September 7, 1945
1948 Amendment November 1, 1948 Marion* November 1, 1948
Hendricks November 3, 1948
Notice of Change January 26, 1951 Marion February 1, 1951
of Principal Office Hendricks January 31, 1951
1951 Amendment April 9, 1951 Hendricks April 9, 1951
1952 Stock Reduction January 25, 1952 Hendricks January 25, 1952
Statement
1952 Amendment April 9, 1952 Hendricks April 9, 1952
1953 Stock Reduction January 23, 1953 Hendricks January 24, 1953
Statement
1953 Amendment April 9, 1953 Hendricks April 9, 1953
1954 Amendment June 25, 1954 Hendricks June 25, 1954
1954 Stock Reduction August 12, 1954 Hendricks August 12, 1954
Statement
1955 Amendment April 4, 1955 Hendricks April 4, 1955
1958 Stock Increase April 30, 1958 Hendricks May 21, 1958
Statement
1962 Amendment April 2, 1962 Hendricks April 2, 1962
<FN>
*The Original Charter, the 1945 Amendment and the 1948 Amendment were also
filed, pursuant to the provisions of the Corporation Act, in the other
counties in the State of Indiana in which the Corporation owned real estate.
Under the Corporation Act, subsequent charter amendments of the Corporation
were filed for record only in the recorders office in the county in which the
Corporation has its principal office.
</TABLE
</TABLE>
<TABLE>
<CAPTION>
Date Filed with
And Approved by County
Secretary of In Which Date
Instrument State of Indiana Recorded Recorded
<S> <C> <C> <C>
1962 Stock Increase July 2, 1962 Hendricks July 2, 1962
Statement
1968 Amendment October 16, 1968 Hendricks October 16, 1968
1970 Amendment May 22, 1970 Hendricks May 22, 1970
1972 Amendment April 27, 1972 Hendricks April 27, 1972
1973 Amendment April 11, 1973 Hendricks April 11, 1973
1975 Amendment May 1, 1975 Hendricks May 1, 1975
1976 Amended April 5, 1976 Hendricks April 5, 1976
Articles
1979 Amendment April 2, 1979 Hendricks April 2, 1979
1980 Amendment April 7, 1980 Hendricks April 7, 1980
1988 Amendment April 19, 1988 Hendricks April 19, 1988
1990 Amendment April 20, 1990 Not required by statute
1992 Amendment May 13, 1992 Not required by statute
March 1993 March 19, 1993 Not required by statute
Amendment
October 1993 October 21, 1993 Not required by statute
Amendment
1994 Amendment May 11, 1994 Not required by statute
<FN>
As required under the Corporation Act, upon the creation of each new series of
its Cumulative Preferred Stock, the Corporation filed with the Secretary of
State of Indiana a certificate as to resolutions of the board of directors of
the Corporation determining and stating the designation, relative rights,
preferences, qualifications, limitations and restrictions of such series. The
provisions of these resolutions which appertain to the series of Cumulative
Preferred Stock now outstanding are included in the appendices to this volume.
Following are the respective dates on which such certificates were filed with
and approved by the Secretary of State of Indiana and were filed for record in
the offices of the recorders of the respective counties in which the
Corporation has had its principal office:
</TABLE>
<TABLE>
<CAPTION>
Date Filed with
And Approved by County
Secretary of In Which Date
Certificate As To: State of Indiana Recorded Recorded
<S> <C> <C> <C>
3-1/2% Cumulative May 10, 1946 Marion May 10, 1946
Preferred Stock Hendricks April 17, 1952
($100 par value)
*4.64% Cumulative December 6, 1949 Marion December 6, 1949
Preferred Stock Hendricks April 17, 1952
($100 par value)
4.32% Cumulative June 18, 1952 Hendricks June 18, 1952
Preferred Stock
($25 par value)
*4.90% Cumulative June 3, 1953 Hendricks June 3, 1953
Preferred Stock
($25 par value)
4.16% Cumulative July 1, 1954 Hendricks July 1, 1954
Preferred Stock
($25 par value)
*4.20% Cumulative April 5, 1955 Hendricks April 5, 1955
Preferred Stock
($100 par value)
*4.80% Cumulative September 15, 1958 Hendricks September 15, 1958
Preferred Stock
($100 par value)
7.15% Cumulative January 4, 1973 Hendricks January 4, 1973
Preferred Stock
($100 par value)
*9.44% Cumulative July 8, 1975 Hendricks July 9, 1975
Preferred Stock
($100 par value)
*8.52% Cumulative August 16, 1976 Hendricks August 17, 1976
Preferred Stock
($100 par value)
*8.38% Cumulative February 9, 1978 Hendricks February 10, 1978
Preferred Stock
($100 par value)
*8.96% Cumulative April 2, 1979 Hendricks April 3, 1979
Preferred Stock
($100 par value)
*9.60% Cumulative January 25, 1980 Hendricks January 25, 1980
Preferred Stock
($100 par value)
*13.25% Cumulative December 22, 1981 Hendricks December 22, 1981
Preferred Stock
($100 par value)
7.44% Cumulative March 19, 1993 Not required by statute
Preferred Stock
($25 par value)
6-7/8% Cumulative October 21, 1993 Not required by statute
Preferred Stock
($100 par value)
<FN>
* None of the shares of the 4.64%, 4.20%, 4.80%, 9.44%, 9.60%, 13.25%, 8.52%,
8.38% and 8.96% Cumulative Preferred Stock ($100 par value) are now
outstanding, having been reacquired by the Corporation, either through
conversion into its Common Stock or through redemption, and cancelled. None of
the shares of the 4.90% Cumulative Preferred Stock ($25 par value) are now
outstanding, having been reacquired by the Corporation through redemption and
cancelled.
</TABLE>
<PAGE>
TABLE OF CONTENTS
Charter
Name of Corporation
Statements Required In All Amended Articles Of Incorporation By The Provisions
Of The Indiana Business Corporation Law
A. Name
B. Purposes for which formed
C. Term of existence
D. Principal office
Name and address of Resident Agent
E. Number of shares of authorized capital stock
F. Classes, designations, rights, preferences, etc. of capital stock
(I) Classes of stock
(II) Designations, rights (other than voting), preferences, etc.
of stock
(A) Cumulative Preferred Stock
Authority of board of directors in respect of:
(I) Creation and designation of series, and of number
of shares
(ii) Dividend rate
(iii) Dividend payment dates
(iv) Redemption provisions
(v) Sinking Fund provisions
(vi) Conversion provisions
(vii) Liquidation rights
(viii) Other rights (other than voting rights) not in
conflict with Charter
General provisions applicable to all series:
(i) Dividend preference
(ii) Liquidation preferences
(iii) Redemption provisions
(B) Preference Stock
Authority of board of directors in respect of:
(i) Creation and designation of series and of number
of shares
(ii) Dividend rate
(iii) Quarterly dividend payment dates
(iv) Redemption provisions
(v) Sinking Fund provisions
(vi) Conversion provision
(vii) Liquidation provision
(viii) Other rights (other than voting rights) not in
conflict with Charter
General provisions applicable to all series:
(i) Dividend preference subordinate
(ii) Liquidation provisions subordinate
(iii) Redemption provision
(C) Common Stock
(i) Definitions:
(a) Dividends on shares of the Common Stock
(b) Common Stock Equity
(c) Total Capitalization
(d) Gross Operating Revenues of the Corporation
(e) Net Earnings of the Corporation Available
for the Payment of Interest Charges
(f) Net Income of the Corporation
Available for Dividends on the Common Stock
(ii) Payment of dividends on the Common Stock
(iii) Common Stock dividend limitations
based on amount of Common Stock Equity
(D) Scrip
Issues in connection with consolidation
Subsequent issues
G. Voting rights of shareholders
(I) Voting rights of Cumulative Preferred Stock
(i) General provisions
(ii) Consent of holders of two-thirds of Cumulative
Preferred Stock necessary before:
(a) Creating or issuing senior class of shares
(b) Issuing shares of a senior or parity class
unless specified earnings and Common Stock
Equity conditions exist
(c) Amending Charter to affect Cumulative
Preferred Stock adversely
Consent not required if redemption of
Cumulative Preferred Stock provided for
(iii) Consent of holders of majority of Cumulative
Preferred Stock necessary before merger,
consolidation or sale of substantially all
assets
Consent not required if redemption of all
Cumulative Preferred Stock provided for
(iv) Special voting rights of Cumulative Preferred
Stock in event of defaults in dividend payments
thereon
(v) Effect of such defaults on existing directorships
(vi) Effect of curing of such defaults
(vii) Effect of lack of quorum of holders of Cumulative
Preferred Stock at shareholders meetings to
elect directors after such defaults
(viii) Specifying, after such defaults, of acting
directors to be replaced
(ix) All series of Cumulative Preferred Stock to vote
as a class D Exceptions
(II) Voting rights of Preference Stock
(i) General provisions
(ii) Consent of two-thirds of Preference Stock
necessary before:
(a) Creation of issuing senior class of shares
(b) Amending Charter to affect Preference Stock
adversely
Consent not required if redemption of
Preference Stock provided for
(iii) Consent of holders of majority of Preference Stock
necessary before merger, consolidation of sale
of substantially all assets
Consent not required if redemption of all
Preference Stock provided for
(iv) Special voting rights of Preference Stock in event
of default in dividend payments thereon
(v) Effect of such defaults on existing directorships
(vi) Effect of curing of such defaults
(vii) Effect of lack of quorum of holders of Preference
Stock at shareholders meetings to elect
directors after such defaults
(viii) Specifying, after such defaults, of acting
directors to be replaced
(ix) All series of Preference Stock to vote as a class
N Exceptions
(III) Voting rights of Common Stock
(IV) Scrip to have no voting rights
H. Paid-in Capital
I. Number of directors
J. Names and addresses of board of directors
K. Names and addresses of President and Secretary of Corporation
L. Miscellaneous provisions
(I) Consideration to be received for shares of stock issued
(II) To whom shares of stock may be issued and sold
(III) Reliance by directors on books of account, etc
(IV) Places of holding of shareholders and directors meetings
and of keeping of corporate records
(V) Bylaws
(VI) Indemnification of directors
(VII) Corporation not required to recognize equitable rights in its
stock
(VIII) Powers of board of directors in respect of working
capital, etc
(IX) Inspection of corporate records by shareholders
(X) General grant of power to board of directors
(XI) Increase or decrease of authorized capital stock Amendments
to Charter
(XII) Shareholders preemptive rights
(XIII) Three for two split-up of Common Stock (1976)
(XIV) Limitation on age of directors
(XV) Amended Articles supersede existing Charter
SUBDIVISION B
MANNER OF AND VOTE FOR ADOPTION OF CHARTER
IN WITNESS CLAUSE TO CHARTER
SIGNATURES AND ACKNOWLEDGMENTS ON CHARTER
APPENDIX A. 3-1/2% CUMULATIVE PREFERRED STOCK SERIES
APPENDIX B. 4.32% CUMULATIVE PREFERRED STOCK SERIES
APPENDIX C. 4.16% CUMULATIVE PREFERRED STOCK SERIES
APPENDIX D. 7.15% CUMULATIVE PREFERRED STOCK SERIES
APPENDIX E. 9.44% CUMULATIVE PREFERRED STOCK SERIES
APPENDIX F. 8.52% CUMULATIVE PREFERRED STOCK SERIES
APPENDIX G. 8.38% CUMULATIVE PREFERRED STOCK SERIES
APPENDIX H. 8.96% CUMULATIVE PREFERRED STOCK SERIES
APPENDIX I. 9.60% CUMULATIVE PREFERRED STOCK SERIES
APPENDIX J. 13.25% CUMULATIVE PREFERRED STOCK SERIES
APPENDIX K. 7.44% CUMULATIVE PREFERRED STOCK SERIES
APPENDIX L. 6-7/8% CUMULATIVE PREFERRED STOCK SERIES
<PAGE>
AMENDED ARTICLES OF CONSOLIDATION
OF
PSI ENERGY, INC.
The undersigned officers of PSI Energy, Inc. (hereinafter referred to as the
`Corporation`) existing pursuant to the provisions of The Indiana Business
Corporation Law, as amended (hereinafter referred to as the `Act`), desiring
to give notice of corporate action effectuating certain amendments of its
Articles of Consolidation by the adoption of new Amended Articles of
Consolidation to supersede and take the place of its heretofore existing
Amended Articles of Consolidation, certify the following facts:
SUBDIVISION A
Text of the Amended Articles
The exact text of the Amended Articles of Consolidation of the Corporation
(hereinafter referred to as the `Amended Articles`), now is as follows:
AMENDED ARTICLES OF CONSOLIDATION
OF
PSI ENERGY, INC.
A CORPORATION
With respect to the Corporation, all of the statements required by `The
Indiana Business Corporation Law,` as amended, to be set forth in the Amended
Articles of Consolidation follow:
A. The name of the Corporation shall be:
PSI ENERGY, INC.
B. The purpose or purposes for which it is formed are as follows:
(i) To manufacture, produce, transmit, distribute, purchase and
sell,furnish and supply, or otherwise dispose of as a public utility or
otherwise, electricity, gas, water , heat, and any other commodities or
services now or hereafter furnished or supplied by public utilities; to
engage, as a common carrier or otherwise, in transporting persons and
property; and to manufacture, produce, purchase, sell, furnish and supply ice.
(ii) To acquire (by purchase, exchange, lease, hire or otherwise), own,
hold, develop, operate, sell, lease, assign, transfer, convey, exchange,
mortgage, pledge, or otherwise dispose of, or encumber, and to aid and
subscribe toward the acquisition, development or improvement of, or to turn to
account, and convey, real and personal property, of every class and
description, and rights and privileges therein, in the State of Indiana or
elsewhere.
(iii) To manufacture, assemble, buy, lease, rent or otherwise acquire,
sell, exchange, mortgage, lease or otherwise dispose of, store, repair,
operate, export, import and generally deal in and with, machines, and
machinery, as well as apparatus, equipment, devices and appliances of every
kind and description, and all the parts, supplies and accessories therefor,
and to promote, operate and manage for others all of the foregoing, or any of
them.
(iv) To conduct, engage in and carry on, the business of manufacturing,
producing, assembling, buying or otherwise acquiring, selling or otherwise
disposing of, exporting, importing, leasing (either as lessee or lessor) and
generally dealing and trading in goods, wares, merchandise, devices and
commodities of every class and description, either as principal or agent or in
any other capacity, or upon commission, consignment or otherwise, and to
promote, operate and manage for others all of the foregoing, or any of them.
(v) To subscribe or cause to be subscribed for, and to purchase or
otherwise acquire, hold for investment, sell, assign, transfer, mortgage,
pledge, exchange, distribute, or otherwise dispose of, the whole or any part
of the shares, bonds, coupons, mortgages, deeds of trust, debentures,
securities, obligations, notes and other evidences of indebtedness of and/or
interests in any private corporation or public corporation, stock company or
association now or hereafter existing, whether created by or under the laws of
the State of Indiana or under the laws of any other state, country or
government; and of any government or body politic, domestic or foreign, and of
any agency or subdivision thereof; and while owner of any of said shares or
bonds or other property, to exercise all the rights, powers and privileges of
ownership of every kind and description, to exercise the right to vote
thereon, and to designate some person or persons for that purpose from time to
time to the same extent as natural persons might or could do.
(vi) To buy, lease, or otherwise acquire, so far as may be permitted by
law, the whole or any part of the business, goodwill and assets of any person,
firm, association or corporation (either foreign or domestic), suitable,
convenient, advantageous or necessary for the business of the Corporation; and
generally, as principal or agent, to institute, enter into, carry on, assist,
promote and participate in financial, commercial, mercantile and other
business, works, contracts, undertakings and operations.
(vii) To purchase or otherwise acquire, lease, assign, mortgage, pledge or
otherwise dispose of trade names, trademarks, concessions, inventions,
devices, formulae, improvements, processes of any nature whatsoever,
copyrights and letters patent of the United States and of foreign countries,
and to accept and grant licenses thereunder.
(viii) To have and to exercise all the powers conferred by the laws of
Indiana upon corporations formed under The Indiana General Corporation Act and
all amendments made thereto from time to time and all subsequent laws of the
State of Indiana.
C. The period during which it is to continue as a corporation is perpetual.
D. *The post office address of its principal office is 1000 East Main
Street, Plainfield, Hendricks County, Indiana.
**The name and post office address of its resident agent in charge of such
office is Cheryl M. Foley, 1000 East Main Street, Plainfield, Hendricks
County, Indiana.
E. ***The total number of shares into which its authorized capital stock is
to be divided is seventy-five million (75,000,000) consisting of shares as
follows:
5,000,000 shares with the par value of $100.00 per share, 5,000,000 shares
with the par value of $25.00 per share, and 65,000,000 shares without par
value.
F. *(If the shares are to be divided into classes or kinds, the designation
of the different classes, the number and par value, if any, of the shares of
each class, and either (a) a statement of the relative rights, preferences,
limitations and restrictions of each class, or (b) a provision expressly
vesting authority in the board of directors, subject to such restrictions as
may be provided, to determine the relative rights, preferences, limitations
and restrictions (other than voting rights) of each class by resolution or
resolutions adopted prior to the issuance of any of the shares of such class;
and, if the shares of any class are to be issuable in series, descriptions of
the several series, and either (a) a statement of the relative rights,
preferences, limitations and restrictions of each series, or (b) a provision
expressly vesting authority in the board of directors, subject to such
restrictions as may be provided, to determine the relative rights,
preferences, limitations and restrictions (other than voting rights) of each
series by resolution or resolutions adopted prior to the issuance of any of
the shares of such series.)
***Notice of change of Principal Office
***Effective July 14, 1992, the designated resident agent was changed from Jon
D. Noland to Cheryl M. Foley
***Amended several times
*Indicate here:
(I)
The total authorized capital stock of the Corporation shall consist of the
following designated three classes and the following respective number of
shares in each class, to wit:
(i) a class of stock comprising the Cumulative Preferred Stock and
consisting of five million (5,000,000) shares with the par value of $100.00
per share and five million (5,000,000) shares with the par value of $25.00 per
share,
(ii) a class of stock comprising the Preference Stock and consisting of
five million (5,000,000) shares without par value, and
(iii) a class of stock comprising the Common Stock and consisting of sixty
million (60,000,000) shares without par value.
(II)
The designations, relative rights, preferences, qualifications, limitations
and restrictions (other than voting rights) which shall attach to said
Cumulative Preferred Stock, Preference Stock and Common Stock, respectively,
shall be as hereinafter provided, to wit:
(A) CUMULATIVE PREFERRED STOCK
The Corporation shall have the right to issue the Cumulative Preferred Stock
in series, each of which series shall have such designation and such relative
rights, preferences, qualifications, limitations and restrictions as are
stated or expressed in these Amended Articles of Consolidation, and, to the
extent permitted by these Amended Articles of Consolidation, as are determined
and stated by the board of directors in and by the resolution or resolutions
authorizing the issue of shares of such series. All shares of the Cumulative
Preferred Stock shall be of equal rank and shall be identical, except in
respect of the par value thereof which may be either $100.00 per share or
$25.00 per share, and in respect of the particulars that may be fixed by the
board of directors as hereinafter in this Division F(II)(A) provided, and in
respect of the voting rights which shall be as provided for in Division G(I)
hereof; and each share of each series shall be identical in all respects with
the other shares of such series, except as to the dates from which dividends
thereon shall be cumulative. Shares of Cumulative Preferred Stock shall be
issued only as fully paid and nonassessable shares.
Grant of Authority to Board of Directors:
Authority is hereby expressly granted to the board of directors to authorize
the issue of shares of Cumulative Preferred Stock in one or more series, and
to determine and state, by the resolution or resolutions authorizing the issue
of each series of Cumulative Preferred Stock, the designation of such series
and the relative rights (other than voting rights), preferences,
qualifications, limitations and restrictions of such series, in respect of the
matters set forth in the following subparagraphs designated (i) to (viii),
both inclusive:
(i) The designation of the series and the number of shares which shall
constitute such series, which number may be varied from time to time by like
action of the board of directors.
(ii) *The rate of dividends payable on shares of such series, or the method
or methods by which such rate shall be determined, and the date from which
dividends on all shares of such series issued prior to the record date for the
first dividend on shares of such series shall be cumulative.
*1992 Amendment
(iii) *The dates on which dividends, if declared, shall be payable.
(iv) **The price or prices per share at which the shares of such series
shall be redeemable.
(v) Whether or not the shares of such series shall be entitled to the
benefits of a sinking fund to be applied to the purchase or redemption of
shares of such series, and if such sinking fund is to be established, the
terms and provisions governing the operation thereof. Installments for any
such sinking fund may be made payable in priority to any dividends upon any
stock of the Corporation which is junior to the Cumulative Preferred Stock
with respect to preference as to dividends or assets (such stock being herein
commonly referred to as `junior to` or `ranking junior to` the Cumulative
Preferred Stock).
(vi) *Whether or not the shares of such series shall be made convertible
into or exchangeable for shares of any other class or for any other series of
the same class of shares of the Corporation, or for any other Securities of
the Corporation, and if made convertible or exchangeable, the conversion price
or prices, or the rates of exchange, and the adjustments, if any, at which
such conversion or exchange may be made.
(vii) The amount payable on shares of such series in the event of any
dissolution, liquidation or winding up of the affairs of the Corporation,
which amount may differ in the case of a voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation.
(viii) Any other rights (other than voting rights), preferences,
qualifications, limitations and restrictions in respect of shares of such
series, which are not in conflict with the rights (other than voting rights),
preferences, qualifications, limitations and restrictions expressly provided
in this Division F(II)(A).
General Provisions:
The following provisions shall apply to all the Cumulative Preferred Stock of
the Corporation irrespective of series:
(i) The record holders of the Cumulative Preferred Stock of each series, in
preference to the holders of any class of stock ranking junior to the
Cumulative Preferred Stock, shall be entitled to receive, when and as declared
by the board of directors, cash dividends in lawful money of the United States
at the rate fixed for such series, and no more. Such dividends shall be paid
to shareholders of record on the respective dates, not exceeding twenty (20)
days prior to such payment dates, fixed by the board of directors for such
purpose. Such dividends shall be cumulative, in the case of shares of each
particular series:
(a) if issued prior to the record date for the first dividend on shares of
such series, then from the date fixed for the purpose by the board of
directors as provided in this Division F(II)(A),
(b) if issued during the period commencing immediately after the record
date for a dividend on shares of such series and terminating at the close of
the payment date for such dividend, then from such dividend payment date, and
(c) *otherwise from the dividend payment date next preceding the date of
issue of such shares.
*1992 Amendment
**Amended by the 1973 and 1992 Amendments
No dividend shall be paid upon, or declared or set apart for payment upon, any
share of Cumulative Preferred Stock of any series for any quarterly dividend
period unless at the same time a like proportionate dividend for the same
quarterly dividend period, ratably in proportion to the respective annual
dividend rates fixed therefor, shall be paid upon, or declared and set apart
for payment up on, all shares of Cumulative Preferred Stock of all series then
issued and outstanding and entitled to receive such dividend. In no event, so
long as any shares of Cumulative Preferred Stock shall be outstanding, shall
any dividend, whether in cash or property, be paid or declared, or shall any
distribution be made on any class of stock of the Corporation ranking junior
to the Cumulative Preferred Stock, or shall any shares of any such junior
stock be purchased, redeemed or otherwise acquired for value by the
Corporation, unless all dividends on the Cumulative Preferred Stock of all
series for all past quarterly dividend periods and for the current dividend
period shall have been paid or declared and a sum sufficient for the payment
thereof set apart for payment. The provisions of the immediately preceding
sentence shall not, however, apply to a dividend with respect to any such
junior stock, payable in any class of stock ranking junior to the Cumulative
Preferred Stock, or to the acquisition of shares of any such junior stock in
exchange for, or through application of the proceeds of the sale of, shares of
any such junior stock. Subject to the foregoing and to the provisions of
Division F(II)(C), and to any further limitations prescribed in accordance
with the provisions of subdivision (viii) under `Grant of Authority to Board
of Directors` in this Division F(II)(A), the board of directors may declare,
out of any funds legally available therefor, dividends upon the then
outstanding shares of any class of stock ranking junior to the Cumulative
Preferred Stock, and no holders of shares of Cumulative Preferred Stock of any
series shall be entitled to share therein.
(ii) *In the event of any dissolution, liquidation or winding up of the
affairs of the Corporation, then, before any distribution or payment shall be
made to the holders of any class of stock ranking junior to the Cumulative
Preferred Stock, the holders of the Cumulative Preferred Stock shall be
entitled to be paid in full the respective amounts fixed in accordance with
the provisions of subdivision (vii) under `Grant of Authority to Board of
Directors` in this Division F(II)(A), together with a sum, in the case of each
share, equal to accrued and unpaid dividends thereon (whether or not earned or
declared) to the date of final distribution. If such payment shall have been
made in full to the holders of the Cumulative Preferred Stock, or moneys made
available for such payment in full, the remaining assets and funds of the
Corporation shall be distributed among the holders of the classes of stock
ranking junior to the Cumulative Preferred Stock, according to their
respective rights and preferences and in each case according to their
respective shares. If, upon any dissolution, liquidation or winding up of the
affairs of the Corporation, the assets available are not sufficient to pay in
full the amounts so payable to the holders of all outstanding shares of
Cumulative Preferred Stock, the holders of all series of Cumulative Preferred
Stock shall share ratably in any distribution of assets in proportion to the
full amounts to which they would otherwise be respectively entitled. A
consolidation, merger or reorganization of the Corporation with any other
corporation or corporations, or a reorganization of the Corporation alone, or
a sale of all or substantially all of the assets of the Corporation, shall not
be considered a dissolution, liquidation or winding up of the Corporation
within the meaning of these provisions.
(iii) *The Cumulative Preferred Stock of any series may be redeemed, as a
whole or in part, at the option of the Corporation by vote of its board of
directors, at any time or from time to time, at the applicable redemption
price for such series fixed in accordance with the provisions of subdivision
(iv) under `Grant of Authority to Board of Directors` in this Division F
(II)(A), together with an amount (hereinafter referred to as `accrued
dividends to the redemption date`) in the case of each share, equal to accrued
and unpaid dividends whereon (whether or not earned or declared) to the date
fixed for redemption. If less than all the outstanding shares of Cumulative
Preferred Stock of any series are to be redeemed, the shares to be redeemed
shall be determined by lot in such manner as the board of directors may
prescribe. Notice of every redemption of Cumulative Preferred Stock shall
specify (a) the date of redemption, (b) the designation of the series of
Cumulative Preferred Stock to be redeemed, (c) if less than all the
outstanding Cumulative Preferred Stock of such series is called for
redemption, appropriate specifications of the shares to be redeemed as
determined by the board of directors, (d) the place of redemption of such
series, and (e) the redemption price of the shares to be redeemed. Copies of
such notice shall be mailed, addressed to the holders of record of the shares
to be redeemed at their respective addresses as they shall appear on the stock
books of the Corporation (but no failure to mail such notice or any defect
therein or in the mailing thereof
*1992 Amendment
shall affect the validity of the proceedings for such redemption) and such
notice shall also be published once each week for at least two successive
weeks (in each case on any business day of the week) in one daily newspaper
printed in the English language and published and of general circulation in
the City of Chicago, Illinois, and in one daily newspaper printed in the
English language and published and of general circulation in the Borough of
Manhattan, the City of New York, State of New York, the first publication in
each such newspaper and such mailing to be at least thirty (30) days and not
more than sixty (60) days prior to the date fixed for redemption. If notice of
redemption shall have been duly published and if, on or before the redemption
date specified in the notice, all funds necessary for the redemption shall
have been deposited in trust with a bank or trust company of the character
described in the immediately succeeding sentence and designated in the notice
of redemption, for the pro rata benefit of the holders of the shares so called
for redemption, so as to be and continue to be available therefor, then, from
and after the date of redemption so designated, notwithstanding that any
certificate for shares of Cumulative Preferred Stock so called for redemption
shall not have been surrendered for cancellation, the shares represented
thereby shall no longer be deemed outstanding, the dividends thereon shall
cease to accumulate, and all rights with respect to the shares of Cumulative
Preferred Stock so called for redemption shall forthwith on the redemption
date cease and terminate, except only the right of the holders thereof to
receive the redemption price of the shares so redeemed, including accrued
dividends to the redemption date, but without interest. The Corporation may
also, at any time prior to the redemption date specified in the notice of
redemption, deposit in trust, for the account of the holders of the Cumulative
Preferred Stock to be redeemed, with a bank or trust company in good standing,
organized under the laws of the United States of America or of the State of
Illinois, doing business in the City of Chicago, Illinois, having capital,
surplus and undivided profits aggregating at least two million dollars
($2,000,000), designated in the notice of redemption, all funds necessary for
the redemption, and deliver irrevocable written instructions authorizing such
bank or trust company, on behalf and at the expense of the Corporation, to
cause notice of redemption to be duly mailed and publication of the notice to
be made as herein provided promptly upon receipt of such irrevocable
instructions. Thereupon, notwithstanding that any certificate for shares of
Cumulative Preferred Stock so called for redemption shall not have been
surrendered for cancellation, all shares of Cumulative Preferred Stock with
respect to which the deposit shall have been made shall no longer be deemed to
be outstanding, and all rights with respect to such shares of Cumulative
Preferred Stock shall forthwith, upon such deposit in trust accompanied by
irrevocable instructions as provided above, cease and terminate except only
the right of the holders thereof to receive from such bank or trust company,
at any time after the time of the deposit, the redemption price, including
accrued dividends to the redemption date, but without interest, of the shares
so to be redeemed, and the right to exercise, on or before the date fixed for
redemption, privileges of conversion or exchange, if any, not theretofore
expiring. Any moneys deposited by the
Corporation pursuant to this paragraph (iii) which shall not be required for
the redemption because of the exercise of any such right of conversion or
exchange subsequent to the date of the deposit shall be repaid to the
Corporation forthwith. Any other moneys deposited by the Corporation pursuant
to this paragraph (iii) and unclaimed at the end of six years from the date
fixed for redemption shall be repaid to the Corporation upon its request
expressed in a resolution of its board of directors, after which repayment the
holders of the shares so called for redemption shall look only to the
Corporation for the payment thereof.
(B) *PREFERENCE STOCK
So long as any shares of Cumulative Preferred Stock are outstanding, the
Preference Stock shall be junior and subordinate in all respects to the
Cumulative Preferred Stock.
*Added by 1976 Amended Articles
The Corporation shall have the right to issue the Preference Stock in series,
each of which series shall have such designation and such relative rights,
preferences, qualifications, limitations and restrictions as are stated or
expressed in these Amended Articles of Consolidation, and, to the extent
permitted by these Amended Articles of Consolidation, as are determined and
stated by the board of directors in and by the resolution or resolutions
authorizing the issue of shares of such series. All shares of the Preference
Stock shall be of equal rank and shall be identical, except in respect of the
particulars that may be fixed by the board of directors as hereinafter in this
Division F(II)(B) provided, and in respect of the voting rights which shall be
as provided for in Division G(II) hereof; and each share of each series shall
be identical in all respects with the other shares of such series, except as
to the dates from which dividends thereon shall be cumulative. Shares of
Preference Stock shall be issued only as fully paid and nonassessable shares.
Grant of Authority to Board of Directors:
Authority is hereby expressly granted to the board of directors to authorize
the issue of shares of Preference Stock in one or more series, and to
determine and state, by the resolution or resolutions authorizing the issue of
each series of Preference Stock, the designation of such series and the
relative rights (other than voting rights), preferences, qualifications,
limitations and restrictions of such series, in respect of the matters set
forth in the following subparagraph designated (i) to (viii), both inclusive:
(i) The designation of the series and the number of shares which shall
constitute such series, which number may be varied from time to time by like
action of the board of directors.
(ii) The annual rate of dividends payable on shares of such series and the
date from which dividends on all shares of such series issued prior to the
record date for the first dividend on shares of such series shall be
cumulative.
(iii) The dates on which dividends, if declared, shall be payable, which
shall be quarterly.
(iv) The price or prices per share at which the shares of such series shall
be redeemable plus accrued dividends to the date of redemption.
(v) Whether or not the shares of such series shall be entitled to the
benefits of a sinking fund to be applied to the purchase or redemption of
shares of such series, and if such sinking fund is to be established, the
terms and provisions governing the operation thereof. Installments for any
such sinking fund may be made payable in priority to any dividends upon any
stock of the Corporation which is junior to the Preference Stock with respect
to preference as to dividends or assets (such stock being herein commonly
referred to as `junior to` or `ranking junior to` the Preference Stock).
(vi) Whether or not the shares of such series shall be made convertible
into or exchangeable for shares of any other class or of any other series of
the same class of shares of the Corporation, and if made convertible or
exchangeable, the conversion price or prices, or the rates of exchange, and
the adjustments, if any, at which such conversion or exchange may be made.
(vii) The amount payable on shares of such series in the event of any
dissolution, liquidation or winding up of the affairs of the Corporation,
which amount may differ in the case of a voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation.
(viii) Any other rights (other than voting rights), preferences,
qualifications, limitations and restrictions in respect of shares of such
series, which are not in conflict with the rights (other than voting rights),
preferences, qualifications, limitations and restrictions expressly provided
in this Division F(II)(B).
General Provisions:
The following provisions shall apply to all the Preference Stock of the
Corporation irrespective of series:
(i) The record holders of the Preference Stock of each series, in
preference to the holders of any class of stock ranking junior to the
Preference Stock, shall, subject to the provisions of Division F(II)(A)
hereof, be entitled to receive, when and as declared by the board of
directors, cash dividends in lawful money of the United States at the rate
fixed for such series, and no more. Such dividends shall be paid to
shareholders of record on the respective dates, not exceeding twenty (20) days
prior to such payment dates, fixed by the board of directors for such purpose.
Such dividends shall be cumulative in the case of shares of each particular
series:
(a) if issued prior to the record date for the first dividend on shares of
such series, then from the date fixed for the purpose by the board of
directors as provided in this Division F(II)(B),
(b) if issued during the period commencing immediately after the record
date for a dividend on shares of such series and terminating at the close of
the payment date for such dividend, then from such dividend payment date, and
(c) otherwise from the quarterly dividend payment date next preceding the
date of issue of such shares.
No dividend shall be paid upon, or declared or set apart for payment upon, any
share of Preference Stock of any series for any quarterly dividend period
unless at the same time a like proportionate dividend for the same quarterly
dividend period, ratably in proportion to the respective annual dividend rates
fixed therefor, shall be paid upon, or declared and set apart for payment
upon, all shares of Preference Stock of all series then issued and outstanding
and entitled to receive such dividend. In no event, so long as any shares of
Preference Stock shall be outstanding, shall any dividend, whether in cash or
property, be paid or declared, or shall any distribution be made on any class
of stock of the Corporation ranking junior to the Preference Stock, or shall
any shares of any such junior stock be purchased, redeemed or otherwise
acquired for value by the Corporation, unless all dividends on the Preference
Stock of all series for all past quarterly dividend periods and for the
current dividend period shall have been paid or declared and a sum sufficient
for the payment thereof set apart for payment. The provisions of the
immediately preceding sentence shall not, however, apply to a dividend with
respect to any such junior stock, payable in any class of stock ranking junior
to the Preference Stock, or to the acquisition of shares of any such junior
stock in exchange for, or through application of the proceeds of the sale of,
shares of any such junior stock. Subject to the foregoing and to the
provisions of Divisions F(II)(B) and F(II)(C), and to any further limitations
prescribed in accordance with the provisions of subdivision (viii) under
`Grant of Authority to Board of Directors` in this Division F(II)(B), the
board of directors may declare, out of any funds legally available therefor,
dividends upon the then outstanding shares of any class of stock ranking
junior to the Preference Stock, and no holders of shares of Preference Stock
of any series shall be entitled to share therein.
(ii) In the event of any dissolution, liquidation or winding up of the
affairs of the Corporation, then, before any distribution or payment shall be
made to the holders of any class of stock ranking junior to the Preference
Stock, the holders of the Preference Stock shall, subject to the provisions of
F(II)(A) hereof, be entitled to be paid in full the respective amounts fixed
in accordance with the provisions of subdivision (vii) under `Grant of
Authority to Board of Directors` in this Division F(II)(B), together with a
sum, in the case of each share, computed at the annual dividend rate for the
series of which the particular share is a part, from the date on which
dividends on such shares became cumulative to and including the date fixed for
such distribution or payment, less the aggregate amount of all dividends which
have theretofore been paid thereon or for which moneys for payment in full
have been set apart and remain available for payment. If such payment shall
have been made in full to the holders of the Preference Stock, or moneys made
available for such payment in full, the remaining assets and funds of the
Corporation shall be distributed among the holders of the classes of stock
ranking junior to the Preference Stock, according to their respective rights
and preferences and in each case according to their respective shares. If,
upon any dissolution, liquidation or winding up of the affairs of the
Corporation, the assets available are not sufficient to pay in full the
amounts so payable to the holders of all outstanding shares of Preference
Stock, the holders of all series of Preference Stock shall share ratably in
any distribution of assets in proportion to the full amounts to which they
would otherwise be respectively entitled. A consolidation, merger or
reorganization of the Corporation with any other corporation or corporations,
or a reorganization of the Corporation alone, or a sale of all or
substantially all of the assets of the Corporation, shall not be considered a
dissolution, liquidation or winding up of the Corporation within the meaning
of these provisions.
(iii) The Preference Stock of any series may, subject to the provisions of
F(II)(A) hereof, be redeemed, as a whole or in part, at the option of the
Corporation by vote of its board of directors, at any time or from time to
time, at the applicable redemption price for such series fixed in accordance
with the provisions of subdivision (iv) under `Grant of Authority to Board of
Directors` in this Division F(II)(B), together with an amount (hereinafter
referred to as `accrued dividends to the redemption date`) in the case of each
share, computed at the annual dividend rate for the series of which the
particular share is a part, from the date on which dividends on such share
became cumulative to and including the date of redemption, less the aggregate
amount of all dividends which have theretofore been paid thereon or for which
moneys for payment in full have been set apart and remain available for
payment. If less than all the outstanding shares of Preference Stock of any
series are to be redeemed, the shares to be redeemed shall be determined by
lot in such manner as the board of directors may prescribe. Notice of every
redemption of Preference Stock shall specify (a) the date of redemption, (b)
the designation of the series of Preference Stock to be redeemed, (c) if less
than all the outstanding Preference Stock of such series is called for
redemption, appropriate specifications of the shares to be redeemed as
determined by the board of directors, (d) the place of redemption of such
series, and (e) the redemption price of the shares to be redeemed. Copies of
such notice shall be mailed, addressed to the holders of record of the shares
to be redeemed at their respective addresses as they shall appear on the stock
books of the Corporation (but no failure to mail such notice or any defect
therein or in the mailing thereof shall affect the validity of the proceedings
for such redemption) and such notice shall also be published once each week
for at least two successive weeks (in each case on any business day of the
week) in one daily newspaper printed in the English language and published and
of general circulation in the City of Chicago, Illinois, and in one daily
newspaper
printed in the English language and published and of general circulation in
the Borough of Manhattan, the City of New York, State of New York, the first
publication in each such newspaper and such mailing to be at least thirty (30)
days and not more than sixty (60) days prior to the date fixed for redemption.
If notice of redemption shall have been duly published and if, on or before
the redemption date specified in the notice, all funds necessary for the
redemption shall have been deposited in trust with a bank or trust company of
the character described in the immediately succeeding sentence and designated
in the notice of redemption, for the pro rata benefit of the holders of the
shares so called for redemption, so as to be and continue to be available
therefor, then, from and after the date of redemption so designated,
notwithstanding that any certificate for shares of Preference Stock so called
for redemption shall not have been surrendered for cancellation, the shares
represented thereby shall no longer be deemed outstanding, the dividends
thereon shall cease to accumulate, and all rights with respect to the shares
of Preference Stock so called for redemption shall forthwith on the redemption
date cease and terminate, except only the right of the holders thereof to
receive the redemption price of the shares so redeemed, including accrued
dividends to the redemption date, but without interest. The Corporation may
also, at any time prior to the redemption date specified in the notice of
redemption, deposit in trust, for the account of the holders of the Preference
Stock to be redeemed, with a bank or trust company in good standing, organized
under the laws of the United States of America or of the State of Illinois,
doing business in the City of Chicago, Illinois, having capital, surplus and
undivided profits aggregating at least two million dollars ($2,000,000),
designated in the notice of redemption, all funds necessary for the
redemption, and deliver irrevocable written instructions authorizing such bank
or trust company, on behalf and at the expense of the Corporation, to cause
notice of redemption to be duly mailed and publication of the notice to be
made as herein provided promptly upon receipt of such irrevocable
instructions. Thereupon, notwithstanding that any certificate for shares of
Preference Stock so called for redemption shall not have been surrendered for
cancellation, all shares of Preference Stock with respect to which the
deposit, shall have been made shall no longer be deemed to be outstanding, and
all rights with respect to such shares of Preference Stock shall forthwith,
upon such deposit in trust accompanied by irrevocable instructions as provided
above, cease and terminate except only the right of the holders thereof to
receive from such bank or trust company, at any time after the time of the
deposit, the redemption price, including accrued dividends to the redemption
date, but without interest, of the shares so to be redeemed, and the right to
exercise, on or before the date fixed for redemption, privileges of conversion
or exchange, if any, not theretofore expiring. Any moneys deposited by the
Corporation pursuant to this paragraph (iii) which shall not be required for
the redemption because of the exercise of any such right of conversion or
exchange subsequent to the date of the deposit shall be repaid to the
Corporation forthwith. Any other moneys deposited by the Corporation pursuant
to this paragraph (iii) and unclaimed at the end of six years from the date
fixed for redemption shall be repaid to the Corporation upon its request
expressed in a resolution of its board of directors, after which repayment the
holders of the shares so called for redemption shall look only to the
Corporation for the payment thereof.
(C) COMMON STOCK
The shares of the Common Stock shall not be entitled to any preferences and
each share of Common Stock shall be equal to every other share of said stock
in every respect.
Dividends:
(i) For purposes of this Division F(II)(C), and Division G(I) of these
Amended Articles of Consolidation:
(a) the term `dividends on shares of the Common Stock` shall include
dividends or other distributions on or the purchase or other acquisition of
shares of the Common Stock, but shall not include dividends payable solely in
shares of the Common Stock; and
(b) the term `Common Stock Equity` shall mean the sum of the amount of the
stated value of the issued and outstanding shares of the Common Stock and the
surplus (including capital or paid-in surplus) of the Corporation, less the
amount known, or estimated if not known, to represent the excess, if any, of
recorded value over original cost of used and useful utility plant and other
property, and less any items set forth on the asset side of the balance sheet
as a result of accounting convention such as unamortized debt discount and
expense, capital stock discount and expense, and the excess, if any, of the
aggregate amount payable on involuntary dissolution, liquidation or winding up
of the Corporation upon all outstanding shares of Cumulative Preferred Stock
and Preference Stock over the aggregate stated value of such shares, unless
such amount or items so to be deducted in the determination of the Common
Stock Equity are being amortized or are provided for by reserves; and
(c) the term `Total Capitalization` shall mean the aggregate of the stated
value of the issued and outstanding shares of stock of all classes of the
Corporation and the surplus (including capital or paid-in surplus) of the
Corporation, plus the principal amount of all outstanding debt maturing more
than twelve months from the date of the determination of Total Capitalization;
and
(d) the term `Gross Operating Revenues of the Corporation` for any period
shall mean an amount determined by deducting from all revenues of the
Corporation for such period derived from the operation of the physical
properties owned by the Corporation and subject to the lien of any indenture
of mortgage or deed of trust securing mortgage bonds issued or assumed by the
Corporation, the total of all cash payments which shall have been made or
agreed to be made and for which liability shall have been incurred by the
Corporation (x) as rental for such period for any utility property not owned
by the Corporation, and (y) for the purchase during such period of electric
energy, electric capacity, and gas, manufactured, natural or mixed, from
others in the regular course of business of the Corporation.
(e) The term `Net Earnings of the Corporation Available for the Payment of
Interest Charges` for any twelve-month period shall mean an amount equal to
the sum of the operating revenues and income from investments and other
miscellaneous income for such period with respect to which the determination
of such net income is being made, less all proper deductions (including
accruals) for operating expenses for such period, including maintenance and
provision for depreciation in the actual amount thereof for such period as
shown on the books of the Corporation or an amount equal to fifteen percentum
(15) of the Gross Operating Revenues of the Corporation for such period,
whichever is greater, income and excess profits and other taxes, all as shall
be determined in accordance with such system of accounts as may be prescribed
by governmental authorities having jurisdiction in the premises or, in the
absence thereof, in accordance with sound accounting practice.
(f) The term `Net Income of the Corporation Available for Dividends on the
Common Stock` for any twelve-month period shall mean the Net Earnings of the
Corporation Available for the Payment of Interest Charges for such period,
less interest charges, amortization charges, other proper income deductions,
and dividends, paid or accrued, on all outstanding shares of stock of the
Corporation having a preference as to dividends over the Common Stock, for
such period, all as shall be determined in accordance with such system of
accounts as may be prescribed by governmental authorities having jurisdiction
in the premises or, in the absence thereof, in accordance with sound
accounting practice.
(ii) Out of any assets of the Corporation available for dividends remaining
after full cumulative dividends, for all past quarterly dividend periods and
for the current dividend period, on all stock having priority over the Common
Stock shall have been paid or declared and set apart for payment, and after
complying with all provisions in respect of any sinking fund or funds for any
shares of any series of stock having priority over the Common Stock,
installments for which are payable in priority to any dividends upon the
Common Stock, then, and not otherwise, dividends may, subject to the
limitations set forth in the immediately following paragraph (iii), be paid
upon the Common Stock but only when and as determined by the board of
directors.
(iii) So long as any shares of the Cumulative Preferred Stock and the
Preference Stock shall remain outstanding:
(a) if and so long as the Common Stock Equity at the end of the calendar
month immediately preceding the date on which a dividend on Common Stock is
declared is, or as a result of such dividend would become, less than twenty
percentum (20) of Total Capitalization, the Corporation shall not declare
dividends on the Common Stock in an amount which, together with all other
dividends on Common Stock declared within the year ending with (but including)
the date of such dividend declaration, exceeds fifty percentum (50) of the Net
Income of the Corporation Available for Dividends on the Common Stock for the
twelve full calendar months immediately preceding the month in which such
dividends are declared, and
(b) if and so long as the Common Stock Equity at the end of the calendar
month immediately preceding the date on which a dividend on Common Stock is
declared is, or as a result of such dividend would become, less than twenty-
five percentum (25) but not less than twenty percentum (20) of Total
Capitalization, the Corporation shall not declare dividends on the Common
Stock in an amount which, together with all other dividends on Common Stock
declared within the year ending with (but including) the date of such dividend
declaration, exceeds seventy-five percentum (75) of Net Income of the
Corporation Available for Dividends on the Common Stock for the twelve full
calendar months immediately preceding the month in which such dividends are
declared, and
(c) at any time when the Common Stock Equity is twenty-five percentum (25)
or more of Total Capitalization, the Corporation may not pay dividends on
shares of the Common Stock which would reduce the Common Stock Equity below
twenty-five percentum (25) of Total Capitalization: provided, however, that
even though the payment of such dividends would reduce the Common Stock Equity
below twenty-five percentum (25) of Total Capitalization, such dividends may
be declared to the extent that the same, together with all dividends on Common
Stock declared within the year ending with (but including) the date of such
dividend declaration, do not exceed seventy-five percentum (75) of the Net
Income of the Corporation Available for Dividends on the Common Stock for the
twelve full calendar months immediately preceding the month in which such
dividends are declared.
If at any time, in connection with the issuance of additional shares of (x)
the Cumulative Preferred Stock or shares of stock of any class ranking on a
parity with the Cumulative Preferred Stock as to dividends or assets, or (y)
the Preference Stock or shares of stock of any class ranking on a parity with
the Preference Stock as to dividends or assets, it becomes necessary, in order
to meet the test stated in Division G(I)(ii)(b)(2), to take into consideration
any earned surplus of the Corporation, the Corporation shall not thereafter
pay any dividends on shares of the Common Stock which would result in reducing
the Common Stock Equity to an amount less than the aggregate amount payable on
involuntary dissolution, liquidation or winding up of the Corporation on all
shares of the Cumulative Preferred Stock and on all shares of any stock
ranking prior to or on a parity with the Cumulative Preferred Stock as to
dividends or assets and on all shares of the Preference Stock and on all
shares of any stock ranking prior to or on a parity with the Preference Stock
as to dividends or assets, at the time outstanding (such stock being herein
commonly referred to, respectively, as `prior to` or `ranking prior to` or `on
a parity with` the Cumulative Preferred Stock or the Preference Stock, as the
case may be).
(D) SCRIP
The Corporation may from time to time issue scrip certificates for fractional
shares if and to the extent that in the opinion of the board of directors it
is desirable so to do. Such scrip certificates shall not confer upon the
holder thereof any right to dividends or any other rights of a shareholder of
the Corporation, but the Corporation shall in each case where scrip
certificates shall be issued by the Corporation, either with or without limit
of time as the board of directors shall fix and determine in connection with
the authorization by it of the issuance of such scrip certificates by the
Corporation, from
time to time (within such limit of time, if any, as is fixed as hereinabove
provided) issue certificates for one or more whole shares upon the surrender
of scrip certificates for fractional shares aggregating the number of whole
shares issuable in respect of the scrip certificates so surrendered: provided,
however, that the scrip certificates so surrendered shall be properly endorsed
for transfer if in registered form.
At the option of the board of directors, any scrip certificate issued by the
Corporation may also provide that, at the option of the board of directors,
there may be sold by the Corporation at public or private sale at any time on
or after any determined date, in such manner, for such amounts, and on such
terms as the board of directors may in its absolute discretion determine, the
number of shares of the Corporation in respect of which such scrip
certificates are then outstanding and thereafter the bearers of such scrip
certificates, upon surrender thereof at the office or agency of the
Corporation, shall be entitled to receive their proper proportions of the net
proceeds of such sale but without interest and on and after the date of such
sale shall be entitled to no other rights in respect of such scrip
certificates.
G. *(If the shares are to be divided into classes or kinds, a statement of
the voting rights and powers, if any, of the shares of each class, and of each
series if the shares of any class are to be issuable in series, including the
extent, if any, to which the shares of each such class and series shall be
entitled to vote on questions of merger, consolidation and the sale of all or
of substantially all of the assets of the Corporation.)
*1945, 1948, 1951 and 1952 Amendments
Indicate here:
(I)
Voting Rights of Cumulative Preferred Stock
(i) At all meetings of the shareholders of the Corporation each record
holder of Cumulative Preferred Stock having a par value of $100.00 per share
shall be entitled to one vote for each share of such stock so held by him, and
each record holder of Cumulative Preferred Stock having a par value of $25.00
per share shall be entitled to one-fourth of one full vote for each share of
such stock so held by him, all subject, however, to the following provisions
of this Division G(I).
(ii) So long as any shares of the Cumulative Preferred Stock of any series
are outstanding, the Corporation (except as otherwise provided in the last
sentence of this paragraph (ii)) shall not without, but may with, the
affirmative vote by the record holders of the Cumulative Preferred Stock
(given at an annual or special meeting) in such number of votes as is at least
two-thirds of the aggregate number of votes appertaining to the Cumulative
Preferred Stock that would be voted at such meeting if all the then
outstanding Cumulative Preferred Stock were there voted:
(a) create, authorize or issue shares of stock of any class ranking prior
to the Cumulative Preferred Stock as to dividends or assets or any securities
of any kind or class convertible into shares of stock of any class ranking
prior to the Cumulative Preferred Stock as to dividends or assets; or
(b) issue any shares of the Cumulative Preferred Stock or shares of stock
of any class ranking on a parity with the Cumulative Preferred Stock as to
dividends or assets or securities convertible into shares of the Cumulative
Preferred Stock or stock on a parity therewith, other than in exchange for or
for the purpose of effecting the retirement, by redemption or otherwise, of
not less than a like number of shares of the Cumulative Preferred Stock or
shares of stock on a parity therewith or securities convertible into not less
than a like number of such shares, as the case may be, at the time
outstanding, unless
(1) the Net Earnings of the Corporation Available for the Payment of
Interest Charges for any twelve consecutive calendar months within the fifteen
calendar months immediately preceding the month within which such additional
shares of the Cumulative Preferred Stock or shares of stock on a parity
therewith or securities convertible into such shares are proposed to be
issued, shall have been at least one and one-half times the aggregate of (x)
the dividend requirements for a twelve-month period upon all shares of the
Cumulative Preferred Stock and stock, if any, ranking prior to or on a parity
with the Cumulative Preferred Stock as to dividends or assets, to be
outstanding after the issuance of the shares or convertible securities
proposed to be issued, and (y) the interest requirements for a twelve-month
period upon all indebtedness of the Corporation to be outstanding after the
issuance of the shares or convertible securities proposed to be issued, and
(2) the Common Stock Equity shall be not less than the aggregate amount
payable on involuntary dissolution, liquidation or winding up of the
Corporation upon all shares of the Cumulative Preferred Stock and stock, if
any, ranking prior thereto or on a parity therewith, to be outstanding after
the issuance of the shares or convertible securities proposed to be issued; or
(c) amend the provisions of these Amended Articles of Consolidation so as
to affect adversely any of the preferences or other rights hereby given to the
holders of shares of the Cumulative Preferred Stock, provided, however, that
if any such amendment would be adverse to the holders of one or more, but less
than all, of the series of the Cumulative Preferred Stock at the time
outstanding, the affirmative vote hereby required shall be only the
affirmative vote by the record holders of each series so adversely affected in
such number of votes from each such series as is at least two-thirds of the
aggregate number of votes appertaining to such series that would be voted at
such meeting if all the then outstanding shares of such series were there
voted.
No such consent of the holders of the Cumulative Preferred Stock shall be
required if, at or prior to the time when such amendment, alteration or repeal
is to take effect or when the issuance of any such stock or convertible
securities is to be made, as the case may be, provision is to be made for the
redemption of all shares of Cumulative Preferred Stock at the time outstanding
or, in the case of any such amendment, alteration or repeal as to which the
consent of less than all series of the Cumulative Preferred Stock would
otherwise be required, for the redemption of all shares of the series of
Cumulative Preferred Stock the consent of which would otherwise be required.
(iii) So long as any shares of the Cumulative Preferred Stock of any series
are outstanding, the Corporation (except as otherwise provided in the last
sentence of this paragraph (iii)) shall not without, but may with, the
affirmative vote by the record holders of the Cumulative Preferred Stock
(given at an annual or special meeting) in such number of votes as is a
majority of the aggregate number of votes appertaining to the Cumulative
Preferred Stock that would be voted at such meeting if all the then
outstanding Cumulative Preferred Stock were there voted, merge or consolidate
the Corporation with or into any other corporation, merge any other
corporation into the Corporation, or sell all or substantially all of the
assets of the Corporation, unless such merger, consolidation or sale, or the
issuance or assumption of all securities to be issued or assumed in connection
therewith, shall have been ordered, approved or permitted by the Securities
and Exchange Commission under the Public Utility Holding Company Act of 1935,
or by any successor commission or other regulatory authority of the United
States having jurisdiction in the premises. No such consent of the holders of
the Cumulative Preferred Stock shall be required if, at the time of or prior
to effecting such sale, lease, conveyance, consolidation or merger, provision
is to be made for the redemption of all shares of Cumulative Preferred Stock
at the time outstanding.
(iv) *If and when dividends payable on the Cumulative Preferred Stock shall
be in default in an amount equivalent to or greater than four (4) full
quarter-yearly dividends on all shares of all series of the Cumulative
Preferred Stock then outstanding, then at the annual or a special meeting of
shareholders held as soon as practicable thereafter and each subsequent
meeting at which directors are elected, in each case held prior to such time
as all dividends in default on the Cumulative Preferred Stock shall have been
paid or declared and set aside for payment, the record holders of all shares
of the Cumulative Preferred Stock, voting separately as one class, shall elect
the smallest number of directors necessary to constitute a majority of the
full board of directors, the record holders of all shares of the Preference
Stock, voting separately as one class, shall elect two (2) members of the
board of directors, and the record holders of the Common Stock, voting
separately as a class, shall elect the remaining directors of the Corporation.
(v) The term of office of a director shall not be affected by the
occurrence of the defaults in the payment of dividends on the Cumulative
Preferred Stock above referred to, or by the rights hereinabove given the
record holders of Cumulative Preferred Stock to elect directors; and the term
of office of each director serving at such time shall continue until his
successor has been duly elected and has qualified.
(vi) If and when all dividends then in default on the Cumulative Preferred
Stock then outstanding shall be paid or declared and set aside for payment
(and such dividends shall be declared and paid out of any funds legally
available therefor as soon as reasonably practicable), the Cumulative
Preferred Stock shall thereupon be divested of the special rights with respect
to the election of directors provided in paragraph (iv) of this Division G(I)
and the voting rights of the Cumulative Preferred Stock, Preference Stock and
the Common Stock shall revert to the status existing before the occurrence of
such default; but always subject to the same provisions for vesting such
special voting rights in the Cumulative Preferred Stock in case of further
like default in dividends thereon, and the termination of such special voting
rights upon such default being remedied.
*1994 Amendment
(vii) At all meetings of shareholders held for the purpose of electing
directors during such times as the record holders of shares of the Cumulative
Preferred Stock shall, voting separately as one class, elect directors
pursuant to said paragraph (iv) of this Division G(I), the presence in person
or by proxy of the record holders of a majority of the outstanding shares of
any other class entitled to elect directors shall be required to constitute a
quorum of such class for the election of directors, and the presence in person
or by proxy of the record holders of such number of the outstanding shares of
the Cumulative Preferred Stock as represents a majority of the aggregate
voting power of the then outstanding shares of such class shall be required to
constitute a quorum of such class for the election of directors: provided,
however, that the absence of a quorum of the record holders of shares of any
such class shall not prevent the election at any such meeting or adjournment
thereof of directors by any other such class if the necessary quorum of the
record holders of shares of such class is present in person or by proxy at
such meeting; and, provided, further, that in the absence of a quorum of the
record holders of shares of any such class, a majority of those record holders
of the shares of such class who are present in person or by proxy shall have
power to adjourn, from time to time, the election of the directors to be
elected by such class without notice other than announcement at the meeting,
until the necessary quorum of record holders of the shares of such class shall
be present in person or by proxy. At any such meeting of shareholders at which
a quorum of a class is present, the votes of a majority of the voting power of
such class represented at such meeting shall be sufficient to elect the
directors to be elected by such class at such meeting.
(viii) If and in each case where such default in the payment of dividends
has occurred that the provisions of paragraph (iv) of this Division G(I) have
become applicable, then, in electing directors for the Corporation during the
time the provisions of said paragraph (iv) continue to be applicable, the
record holders of each class, in voting for the persons to be then elected
directors by it, shall (subject to the following provisions of this paragraph
(viii)) specify the names of the respective then acting directors whose places
are to be taken by the persons being presently elected directors by such
class: provided, however, that no director who was elected by any other class
of shares shall be so specified until after all of the directors who were
elected by such class as is then voting for directors (or the successors of
such directors) have been specified as persons to be succeeded. At any such
meeting held prior to the time that one class has elected its directors under
the provisions of said paragraph (iv), the holders of the Cumulative Preferred
Stock, if a quorum be present at such meeting, shall have the right and be
afforded the opportunity first to specify the names of the then acting
directors who are to be succeeded by the directors to be elected by the
holders of the Cumulative Preferred Stock under the provisions of said
paragraph (iv). Whenever a class of shares has elected the directors it is
entitled to elect under the provisions of said paragraph(iv), then thereafter
so long as the provisions of said paragraph (iv) continue to apply (a)
successors to such directors shall not be elected by any other class of
shares, and (b) the class of shares electing such directors shall not during
such time elect a successor for any director other than a director elected by
such class or his successor.
(ix) Except when some mandatory provisions of law shall be controlling and
except as otherwise provided in this Division G(I), whenever shares of two or
more series of the Cumulative Preferred Stock are outstanding, no particular
series of the Cumulative Preferred Stock shall be entitled to vote as a
separate series on any matter and all shares of the Cumulative Preferred Stock
of all series shall be deemed to constitute but one class for any purpose for
which a vote of the shareholders of the Corporation by classes may now or
hereafter be required.
(II)*
Voting Rights of Preference Stock
(i) Except when some mandatory provision of law shall be controlling and
except as otherwise provided in this Division G(II), the holders of the
Preference Stock of the Corporation shall have no voting powers and shall not
be entitled to notice of any meetings of the shareholders of the Corporation.
At all meetings of the shareholders of the Corporation at which the holders of
the Preference Stock are entitled to vote as provided in this Division G(II),
each record holder of Preference Stock shall be entitled to one vote for each
share of Preference Stock so held by him.
*Added by 1976 Amended Articles
(ii) So long as any shares of the Preference Stock of any series are
outstanding, the Corporation (except as otherwise provided in the last
sentence of this paragraph (ii)) shall not without, but may with, the
affirmative vote by the record holders of the Preference Stock (given at an
annual or special meeting) in such number of votes as is at least two-thirds
of the aggregate number of votes appertaining to the Preference Stock that
would be voted at such meeting if all the then outstanding Preference Stock
were there voted:
(a) create, authorize or issue shares of stock of any class (other than the
Cumulative Preferred Stock) ranking prior to the Preference Stock as to
dividends or assets or any securities of any kind or class (other than the
Cumulative Preferred Stock) convertible into shares of stock of any class
ranking prior to the Preference Stock as to dividends or assets; or
(b) amend the provisions of these Amended Articles of Consolidation so as
to affect adversely any of the preferences or other rights hereby given to the
holders of shares of the Preference Stock, provided, however, that if any such
amendment would be adverse to the holders of one or more, but less than all,
of the series of the Preference Stock at the time outstanding, the affirmative
vote hereby required shall be only the affirmative vote by the record holders
of each series so adversely affected in such number of votes from each such
series as is at least two-thirds of the aggregate number of votes appertaining
to such series that would be voted at such meeting if all the then outstanding
shares of such series were there voted.
No such consent of the holders of the Preference Stock shall be required if,
at or prior to the time when such amendment, alteration or repeal is to take
effect or when the issuance of any such stock or convertible securities is to
be made, as the case may be, provision is to be made for the redemption of all
shares of Preference Stock at the time outstanding or, in the case of any such
amendment, alteration or repeal as to which the consent of less than all
series of the Preference Stock would otherwise be required, for the redemption
of all shares of the series of Preference Stock the consent of which would
otherwise be required.
(iii) So long as any shares of the Preference Stock of any series are
outstanding, the Corporation (except as otherwise provided in the last
sentence of this paragraph (iii)) shall not without, but may with, the
affirmative vote by the record holders of the Preference Stock (given at an
annual or special meeting) in such number of votes as is a majority of the
aggregate number of votes appertaining to the Preference Stock that would be
voted at such meeting if all the then outstanding Preference Stock were there
voted, merge or consolidate the Corporation with or into any other
corporation, merge any other corporation into the Corporation, or sell all or
substantially all of the assets of the Corporation, unless such merger,
consolidation or sale, or the issuance or assumption of all securities to be
issued or assumed in connection therewith, shall have been ordered, approved
or permitted by the Securities and Exchange Commission under the Public
Utility Holding Company Act of 1935, or by any successor commission or other
regulatory authority of the United States having jurisdiction in the premises.
No such consent of the holders of the Preference Stock shall be required if,
at the time of or prior to effecting such sale, lease, conveyance,
consolidation or merger, provision is to be made for the redemption of all
shares of Preference Stock at the time outstanding.
(iv) If and when dividends payable on the Preference Stock shall be in
default in an amount equivalent to or greater than four (4) full quarter-
yearly dividends on all shares of all series of the Preference Stock then
outstanding, then the record holders of all shares of the Preference Stock
shall be given notice of each meeting of shareholders at which directors are
elected thereafter held prior to such time as all dividends in default on the
Preference Stock shall have been paid or declared and set aside for payment,
and the record holders of all shares of the Preference Stock, voting
separately as one class, shall elect two directors of the Corporation, and
subject to the provisions of paragraph (iv) of Division G(I) and to the
provisions of this paragraph (iv) of Division G(II), the record holders of the
Common Stock shall elect the remaining directors of the Corporation.
(v) The term of office of a director shall not be affected by the
occurrence of the defaults in the payment of dividends on the Preference Stock
above referred to, or by the rights hereinabove given the record holders of
Preference Stock to elect directors; and the term of office of each director
serving at such time shall continue until his successor has been duly elected
and has qualified.
(vi) If and when all dividends then in default on the Preference Stock then
outstanding shall be paid or declared and set aside for payment (and such
dividends shall be declared and paid out of any funds legally available
therefor as soon as reasonably practicable), the Preference Stock shall
thereupon be divested of the special rights with respect to the election of
directors provided in paragraph (iv) of this Division G(II) and the voting
rights of the Preference Stock and the Common Stock shall revert to the status
existing before the occurrence of such default; but always subject to the same
provisions for vesting such special voting rights in the Preference Stock in
case of further like default in dividends thereon, and the termination of such
special voting rights upon such default being remedied.
(vii) At all meetings of shareholders held for the purpose of electing
directors during such times as the record holders of shares of the Preference
Stock shall, voting separately as one class, elect directors pursuant to said
paragraph (iv) of this Division G(II), the presence in person or by proxy of
the record holders of a majority of the outstanding shares of the Preference
Stock shall be required to constitute a quorum of such class for the election
of directors, and the presence in person or by proxy of the record holders of
such number of the outstanding shares of any other class of stock entitled to
elect directors as represents a majority of the aggregate voting power of the
then outstanding shares of such class shall be required to constitute a quorum
of such class for the election of directors: provided, however, that the
absence of a quorum of the record holders of shares of any such class shall
not prevent the election at any such meeting or adjournment thereof of
directors by any other such class if the necessary quorum of the record
holders of shares of such class is present in person or by proxy at such
meeting; and, provided, further, that in the absence of a quorum of the record
holders of shares of any such class, a majority of those record holders of the
shares of such class who are present in person or by proxy shall have power to
adjourn, from time to time, the election of the directors to be elected by
such class without notice other than announcement at the meeting, until the
necessary quorum of record holders of the shares of such class shall be
present in person or by proxy. At any such meeting of shareholders at which a
quorum of a class is present, the votes of a majority of the voting power of
such class represented at such meeting shall be sufficient to elect the
directors to be elected by such class at such meeting.
(viii) If and in each case where such default in the payment of dividends
has occurred that the provisions of paragraph (iv) of this Division G(II) have
become applicable, then, in electing directors for the Corporation during the
time the provisions of said paragraph (iv) continue to be applicable, the
record holders of each class, in voting for the persons to be then elected
directors by it, shall (subject to the following provisions of this paragraph
(viii)) specify the names of the respective then acting directors whose places
are to be taken by the persons being presently elected directors by such
class: provided, however, that no director who was elected by any other class
of shares shall be so specified until after all of the directors who were
elected by such class as is then voting for directors (or the successors of
such directors) have been specified as persons to be succeeded. At any such
meeting held prior to the time that one class has elected its directors under
the provisions of said paragraph (iv), the holders of the Preference Stock, if
a quorum be present at such meeting, shall have the right and be afforded the
opportunity, subject to the provisions of paragraph (viii) of Division G(l),
to specify the names of the then acting directors who are to be succeeded by
the directors to be elected by the holders of the Preference Stock under the
provisions of said paragraph (iv). Whenever a class of shares has elected the
directors it is entitled to elect under the provisions of said paragraph (iv),
then thereafter so long as the provisions of said paragraph (iv) continue to
apply (a) successors to such directors shall not be elected by any other class
of shares, and (b) the class of shares electing such directors shall not
during such time elect a successor for any director other than a director
elected by such class or his successor.
(ix) Except when some mandatory provisions of law shall be controlling and
except as otherwise provided in this Division G(II), whenever shares of two or
more series of the Preference Stock are outstanding, no particular series of
the Preference Stock shall be entitled to vote as a separate series on any
matter and all shares of the Preference Stock of all series shall be deemed to
constitute but one class for any purpose for which a vote of the shareholders
of the Corporation by classes may now or hereafter be required.
(III)
Voting Rights of Common Stock
At all meetings of the shareholders of the Corporation each record holder of
Common Stock shall be entitled to one vote for each share of Common Stock held
by him, subject, however, to the provisions of Division G(l) and Division
G(ll) hereof.
(IV)
Voting Rights of Scrip
The issuance or holding of scrip shall not confer upon the holder thereof any
voting rights in the Corporation.
H. *The stated capital of the Corporation at the time of filing these
Amended Articles of Consolidation is in excess of One Thousand Dollars
($1,000).
I. **The number of directors of the Corporation shall be fixed by the
bylaws.
For the purpose of Division F(II)(A)(B) and (D) and Division L(I) and (II)
whenever the phrase `Board of Directors` is used it shall mean a quorum of the
full board of directors or a committee thereof, if a committee has been
established by the bylaws of the Corporation.
J. *The names and post office addresses of the board of directors are as
follows:
Name Address
HUGH A. BARKER, 1000 East Main Street, Plainfield, Hendricks County, Indiana.
EUGENE N. BEESLEY, 2801 North Meridian Street, Indianapolis, Marion County,
Indiana.
JOSEPH A. BINFORD, Post Office Box 499, New Albany, Floyd County, Indiana.
RICHARD H. BLACKLIDGE, 300 North Union Street, Kokomo, Howard County, Indiana.
C. H. BLANCHAR, 1000 East Main Street, Plainfield, Hendricks County, Indiana.
JOSEPH R. CLOUTIER, 900 Wabash Avenue, Terre Haute, Vigo County, Indiana.
W. J. MATTHEWS, 1000 East Main Street, Plainfield, Hendricks County, Indiana.
RICHARD B. STONER, 1000 Fifth Street, Columbus, Bartholomew County, Indiana.
BURR S. SWEZEY, JR., Lafayette National Bank, Lafayette, Tippecanoe County,
Indiana.
K. The names and post office addresses of the president and secretary of
the Corporation are as follows:
HUGH A. BARKER, President, 1000 East Main Street, Plainfield, Hendricks
County, Indiana 46168
GEORGE W. PEAK, Secretary, 1000 East Main Street, Plainfield, Hendricks
County, Indiana 46168
L. (Any other provisions, consistent with the laws of this state, for the
regulation of the business and conduct of the affairs of the Corporation, and
creating, defining, limiting or regulating the powers of the Corporation, of
the directors or of the shareholders or any class or classes of shareholders.)
**Amended by 1976 Amended Articles
**Amended by 1980 and 1990 Amendments
Indicate here:
(I)*
Subject to the provisions of Item (XIII) of this Division L of these Amended
Articles of Consolidation, the shares of Cumulative Preferred Stock and/or
Preference Stock and/or Common Stock of the Corporation may be issued, sold or
otherwise disposed of by it for such amount of consideration (whether, in case
of shares having a par value, such amount of consideration is less than, equal
to or in excess of the par value of such shares), and upon such other terms
and conditions, as the board of directors may by resolution from time to time
and at any time fix and determine in connection with the issue, sale or other
disposition thereof.
(II)**
Subject to the provisions of Item (Xlll) of this Division L of these Amended
Articles of Consolidation, any of the shares of the Corporation may be issued,
sold or otherwise disposed of by it from time to time to such persons,
corporations or other legal entities as the board of directors may determine.
(III)
A director shall be fully protected in relying in good faith upon the books of
account of the Corporation or statements prepared by any of its officials as
to the value and amount of the assets, liabilities and net profits of the
Corporation, or any of said items, or in relying in good faith upon any other
information pertinent to the existence and amount of surplus or other funds
from which dividends might properly be declared and paid.
(IV)
Subject to the limitations existing by virtue of the laws of the State of
Indiana, meetings of the share holders and the directors of the Corporation
may be held, and the books of account, records, documents and papers of the
Corporation may be kept, at any place or places within or without the State of
Indiana. Limitations on the place or places where meetings of the shareholders
or the directors of the Corporation may be held or where the books of account,
records, documents and papers of the Corporation may be kept, may be made from
time to time by the bylaws of the Corporation.
(V)****
The bylaws of the Corporation may be altered, amended or repealed, in whole or
in part, and new bylaws may be adopted, at any annual, regular or special
meeting of the shareholders of the Corporation or at any annual, regular or
special meeting of the board of directors of the Corporation by the
affirmative vote of a majority of the board of directions; provided, however,
that the board of directors of the Corporation may not unilaterally amend any
bylaws which were amended by the affirmative vote of the shareholders of the
Corporation within the preceding twenty-four months.
(VI)***
Each director or officer of the Corporation shall be indemnified by the
Corporation to the fullest extent permitted by law, as the same exists now or
in the future, against liability, expenses (including attorneys` fees),
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by
him or her in connection with the defense of any proceeding in which he or she
was or is a party or is threatened to be made a party by reason of being or
having been a director or officer of the Corporation and such right shall
inure to the benefit of his or her heirs, executors and administrators. The
right to indemnification conferred in this Section VI shall include, to the
full extent permitted by law, the right to be paid by the Corporation the
expenses incurred in defending or otherwise participating in any proceeding in
advance of its final disposition.
****1945, 1948 and 1972 Amendments and 1976 Amended Articles
****1948 and 1972 Amendments
****As amended by 1972 Amendment and further amended by the 1988 Amendment
****As amended by the 1995 Amendment
The Corporation may, to the extent authorized from time to time by the Board
of Directors, provide rights to indemnification and to the advancement of
expenses to employees and agents of the Corporation who are not directors or
officers similar to those conferred in this Section VI to directors and
officers of the Corporation.
Such right to indemnification and to the advancement of expenses conferred in
this Section VI shall not be exclusive of any other rights to which any person
may be entitled under any now or hereafter existing statute, any other
provision of these Articles, bylaw, agreement, vote of shareholders or
otherwise.
Any repeal or modification of this Section VI by the shareholders of the
Corporation shall not adversely affect any right or protection of a director,
officer, employee or agent of the Corporation existing pursuant to this
Section VI with respect to any acts or omissions occurring prior to such
repeal or modification.
(VII)
The Corporation shall be entitled to treat the person in whose name any share
or right is registered on the books of the Corporation as the owner thereof,
for all purposes, and shall not be bound to recognize any equitable or other
claim to or interest in such share or right on the part of any other person,
whether or not the Corporation shall have notice thereof.
(VIII)
The board of directors shall have power, from time to time, to fix and
determine and to vary the amount to be reserved as working capital of the
Corporation and, before the payment of any dividends or the making of any
distribution of profits, it may set aside out of the net profits of the
Corporation such sum or sums as it may from time to time in its absolute
discretion determine to be proper whether as a reserve fund to meet
contingencies or for the equalizing of dividends or for repairing or
maintaining any property of the Corporation or for an addition to corporate
surplus or for any corporate purposes that the board of directors shall think
conducive to the best interest of the Corporation, subject only to such
limitations as the bylaws of the Corporation may from time to time impose.
(IX)
Subject to any limitations provided by resolution of a majority of the
shareholders, the board of directors shall have power from time to time to
determine whether and to what extent and at what times and places and under
what conditions and regulations the accounts and books of the Corporation
(other than the stock ledger), or any of them, shall be open to the inspection
of shareholders; and no shareholder shall have any right to inspect any
account or book or document of the Corporation except as conferred by statute
or authorized by the directors or by a resolution of the shareholders.
(X)
The board of directors, in addition to the powers and authority otherwise
conferred upon it by this agreement of consolidation or conferred upon it by
statute or by the bylaws of the Corporation, is hereby empowered to exercise
all such powers as may be exercised by the Corporation; subject, however, to
the provisions of the statutes of the State of Indiana from time to time in
effect, and of this agreement of consolidation and any amendments thereto.
(XI)
The Corporation reserves the right to increase or decrease its authorized
capital stock, or any class or series thereof, and to reclassify the same, and
to amend, alter, change or repeal any provision contained in these Amended
Articles of Consolidation, or in any amendment hereto, or to add any provision
to these Amended Articles of Consolidation or to any amendment hereto, in any
manner now or hereafter prescribed or permitted by the provisions of The
Indiana Business Corporation Law or any amendment thereto, or by the
provisions of any other applicable statute of the State of Indiana; and all
rights conferred upon shareholders in these Amended Articles of Consolidation
or any amendment hereto are granted subject to this reservation.
(XII)*
None of the holders of the stock, common, preferred or preference, of the
Corporation shall be entitled as a matter of right to subscribe for, purchase
or receive additional shares of the stocks, common, preferred or preference,
of the Corporation.
(XIII)**
Upon the issuance by the Secretary of State for Indiana to the Corporation of
a certificate of amendment covering, among other things, the amendment of
these Amended Articles of Consolidation of the Corporation by the addition
thereto of this Item (XIII) (such event being hereinafter in this Item
referred to as the `Completion of the 1976 Amendment`), a `split-up` of the
then outstanding Common Stock of the Corporation shall be immediately effected
upon the basis of there being outstanding upon the Completion of the 1976
Amendment three shares of the Common Stock of the Corporation for each two
shares of Common Stock of the Corporation outstanding immediately prior to the
Completion of the 1976 Amendment; and, simultaneously with the Completion of
the 1976 Amendment, each holder of record of a share or shares of the Common
Stock of the Corporation shall, without the payment of any amount whatsoever
to the Corporation and without any act whatsoever being taken by such holder,
be and become the owner of one additional share of Common Stock of the
Corporation for each two shares of the Common Stock of the Corporation owned
of record by such holder immediately prior to the Completion of the 1976
Amendment. As promptly as practicable thereafter, the Corporation shall cause
to be issued and delivered to and in the name of each such holder of record of
a share or shares of Common Stock of the Corporation, a stock certificate or
stock certificates representing in the aggregate in each case a number of
whole shares of fully paid and nonassessable shares of the Common Stock of the
Corporation equal to one additional share of Common Stock for each two shares
of Common Stock of the Corporation owned of record by such holder immediately
prior to the Completion of the 1976 Amendment. No certificates representing
fractional shares will be issued, and in lieu thereof the Corporation shall
issue to an agent, for fractional interest holders appointed for the purpose,
a certificate or certificates representing in the aggregate a number of whole
shares of fully paid and nonassessable shares of the Common Stock of the
Corporation equal to the number of shares of Common Stock of the Corporation
to which all holders of fractional interest would be entitled upon Completion
of the 1976 Amendment if certificates representing fractional shares were
issued and shall make arrangements with such agent for the sale of such
fractional interests or for the purchase of additional fractional interests to
permit a person entitled thereto to acquire a whole share within such period
of time as may be determined by the board of directors.
(XIV)***
No person shall be eligible for election, reelection, or appointment as a
member of the board of directors if such person shall have attained the age of
seventy years in the calendar year preceding the date of such election,
reelection or appointment.
(XV)
These Amended Articles of Consolidation shall supersede and take the place of
the heretofore existing Articles of Consolidation, as amended.
***As Amended by 1945, 1972 and 1976 Amendments
***Added by 1976 Amended Articles
***As Amended by 1968 Amendments
SUBDIVISION B
The manner of the adoption and the vote by which the Amended Articles of
Consolidation were adopted was as follows:
The board of directors duly adopted resolutions proposing to the shareholders
entitled to vote thereon that the Articles of Consolidation as amended be
further amended in their entirety and that the Amended Articles of
Consolidation be adopted as filed with the Secretary of State.
The Amended Articles of Consolidation were then adopted by and received the
affirmative vote of a #majority of the shareholders entitled to vote thereon
at a meeting duly called.
IN WITNESS WHEREOF, the undersigned officers execute these Amended Articles of
Consolidation of the Corporation, and certify to the truth of the facts herein
stated, this 5th day of April, 1976.
S/Vernley R. Rehnstrom
Vernley R. Rehnstrom,
A Vice President of Public Service
Company of Indiana, Inc.
(Corporate Seal)
S/George W. Peak
George W. Peak,
Secretary of Public Service
Company of Indiana, Inc.
STATE OF INDIANA )
)SS:
COUNTY OF HENDRICKS )
I, the undersigned, a Notary Public duly commissioned to take acknowledgments
and administer oaths in the State of Indiana, certify that Vernley R.
Rehnstrom, a Vice President and George W. Peak, the Secretary, of Public
Service Company of Indiana, Inc., the officers executing the foregoing Amended
Articles of Consolidation, personally appeared before me, acknowledged the
execution thereof, and swore to the truth of the facts therein stated.
WITNESS my hand and notarial seal this 5th day of April, 1976.
(Notarial Seal) S/Doris J. Richey
(Doris J. Richey) Notary Public
My Commission Expires November 9, 1978.
This instrument was prepared by Greg K. Kimberlin, Attorney at Law, 1000 East
Main Street, Plainfield, Indiana 46168.
APPENDIX A
CREATION OF 150,000 SHARES OF 3-1/2% CUMULATIVE PREFERRED STOCK BY RESOLUTION
ADOPTED BY BOARD OF DIRECTORS OF CORPORATION ON MARCH 19, 1946 AND AMENDED ON
APRIL 26, 1946.
Designation: 3-1/2% Cumulative Preferred Stock
Par Value: $100 per share
Dividend Rate: 3-1/2% of par value per annum
Dividend Payable: March 1, June 1, September 1 and December 1
The shares of the 3-1/2% Stock shall be redeemable at $103 per share if the
redemption date is prior to March 1, 1951, $102 per share if the redemption
date is on or after March 1, 1951 and prior to March 1, 1956, $101 per share
if the redemption date is on or after March 1, 1956 and prior to March 1,
1961, and $100 per share if the redemption date is on or after March 1, 1961,
plus in the case of each share dividends computed at the annual rate of 3-1/2%
from March 1, 1946 to and including the date of redemption, less the aggregate
amount of all dividends which have theretofore been paid thereon or for which
moneys for payment in full have been set apart and remain available for
payment.
Sinking Fund: None
Conversion Rights: None
In the event of any dissolution, liquidation or winding up of this
Corporation, whether voluntary or involuntary, the record holders of the then
outstanding shares of the 3-1/2% Stock shall receive, or have set apart and
made available for payment to them, the par value of such shares, plus a sum
equal to the amount of all accumulated and unpaid dividends thereon at the
dividend rate fixed for such shares, before any assets and funds of this
Corporation may be distributed to the holders of any stock of this Corporation
ranking junior to the 3-1/2% Stock as to assets of this Corporation.
Except during such time as all dividends on the 3-1/2% Stock for all past
quarterly dividend periods and for the current dividend period have been paid,
or declared and a sum sufficient for the payment thereof set apart for
payment, this Corporation shall not call for redemption, or purchase, less
than all of the then outstanding shares of the 3-1/2% Stock.
APPENDIX B
CREATION OF 800,000 SHARES OF 4.32% CUMULATIVE PREFERRED STOCK BY RESOLUTION
ADOPTED BY BOARD OF DIRECTORS OF CORPORATION ON JUNE 16, 1952.
Designation: 4.32% Cumulative Preferred Stock
Par Value: $25 per share
Dividend Rate: 4.32% of par value per annum
Dividend Payable: March 1, June 1, September 1 and December 1
The shares of the 4.32% Stock shall be redeemable at $26 per share if the
redemption date is prior to June 1, 1957, $25.75 per share if the redemption
date is on or after June 1, 1957 and prior to June 1, 1962, $25.50 per share
if the redemption date is on or after June 1, 1962 and prior to June 1, 1967,
$25.25 per share if the redemption date is on or after June 1, 1967 and prior
to June 1, 1972, and $25 per share if the redemption date is on or after June
1, 1972, plus in the case of each share dividends computed at the annual rate
of 4.32% from June 1, 1952 to and including the date of redemption, less the
aggregate amount of all dividends which have theretofore been paid thereon or
for which moneys for payment in full have theretofore been set apart and
remain available for payment.
Sinking Fund: None
Conversion Rights: None
In the event of any dissolution, liquidation or winding up of this
Corporation, whether voluntary or involuntary, the record holders of the then
outstanding shares of the 4.32% Stock shall receive, or have set apart and
made available for payment to them, the par value of such shares, plus a sum
equal to the amount of all accumulated and unpaid dividends thereon at the
dividend rate fixed for such shares before any assets and funds of this
Corporation may be distributed to the holders of any stock of this Corporation
ranking junior to the 4.32% Stock as to assets of this Corporation.
Except during such time as all dividends on the 4.32% Stock for all past
quarterly dividend periods and for the current dividend period have been paid,
or declared and a sum sufficient for the payment thereof set apart for
payment, this Corporation shall not call for redemption, or purchase, less
than all of the then outstanding shares of the 4.32% Stock.
APPENDIX C
CREATION OF 600,000 SHARES OF 4.16% CUMULATIVE PREFERRED STOCK BY RESOLUTION
ADOPTED BY BOARD OF DIRECTORS OF CORPORATION ON JUNE 28 , 1954.
Designation: 4.16% Cumulative Preferred Stock
Par Value: $25 per share
Dividend Rate: 4.16% of par value per annum
Dividend Payable: March 1, June 1, September 1 and December 1
The shares of the 4.16% Stock shall be redeemable at $26 per share if the
redemption date is prior to June 1, 1959, at $25.75 per share if the
redemption date is on or after June 1, 1959 and prior to June 1, 1964, at
$25.50 per share if the redemption date is on or after June 1, 1964 and prior
to June 1, 1969, at $25.25 per share if the redemption date is on or after
June 1, 1969 and prior to June 1, 1974, and at $25 per share if the redemption
date is on or after June 1, 1974, plus in the case of each share dividends
computed at the annual rate of 4.16% from June 1, 1954 to and including the
date of redemption, less the aggregate amount of all dividends which have
theretofore been paid thereon or for which moneys for payment in full have
theretofore been set apart and remain available for payment.
Sinking Fund: None
Conversion Rights: None
In the event of any dissolution, liquidation or winding up of this
Corporation, whether voluntary or involuntary, the record holders of the then
outstanding shares of the 4.16% Stock shall receive, or have set apart and
made available for payment to them, the par value of such shares, plus a sum
equal to the amount of all accumulated and unpaid dividends thereon at the
dividend rate fixed for such shares, before any assets and funds of this
Corporation may be distributed to the holders of any stock of this Corporation
ranking junior to the 4.16% Stock as to assets of this Corporation.
Except during such time as all dividends on the 4.16% Stock for all past
quarterly dividend periods and for the current dividend period have been paid,
or declared and a sum sufficient for the payment thereof set apart for
payment, this Corporation shall not call for redemption, or purchase, less
than all of the then outstanding shares of the 4.16% Stock.
APPENDIX D
CREATION OF 300,000 SHARES OF 7.15% CUMULATIVE PREFERRED STOCK BY RESOLUTION
ADOPTED BY BOARD OF DIRECTORS OF CORPORATION ON JANUARY 4, 1973.
Designation: 7.15% Cumulative Preferred Stock
Par Value: $100 per share
Dividend Rate: 7.15% of par value per annum
Dividend Payable: March 1, June 1, September 1 and December 1
The shares of the 7.15% Stock shall be nonredeemable prior to March 1, 1978
but shall be redeemable on such date or thereafter at $105 per share if the
redemption date is prior to March 1, 1983, at $103 per share if the redemption
date is on or after March 1, 1983 and prior to March 1, 1988 or at $101 per
share if the redemption date is on or after March 1, 1988, plus in the case of
each share dividends computed at the annual rate of 7.15% from January 17,
1973 to and including the date of redemption, less the aggregate amount of all
dividends which have theretofore been paid thereon or for which moneys for
payment in full have theretofore been set apart and remain available for
payment.
Sinking Fund: None
Conversion Rights: None
In the event of any dissolution, liquidation or winding up of this
Corporation, whether voluntary or involuntary, the record holders of the then
outstanding shares of the 7.15% Stock shall receive, or have set apart and
made available for payment to them, the par value of such shares, plus a sum
equal to the amount of all accumulated and unpaid dividends thereon at the
dividend rate fixed for such shares, before any assets and funds of this
Corporation may be distributed to the holders of any stock of this Corporation
ranking junior to the 7.15% Stock as to assets of this Corporation.
Except during such time as all dividends on the 7.15% Stock for all past
quarterly dividend periods and for the current dividend period have been paid,
or declared and a sum sufficient for the payment thereof set apart for
payment, this Corporation shall not call for redemption, or purchase, less
than all of the then outstanding shares of the 7.15% Stock.
APPENDIX E
CREATION OF 350,000 SHARES OF 9.44% CUMULATIVE PREFERRED STOCK BY RESOLUTION
ADOPTED BY BOARD OF DIRECTORS OF CORPORATION ON JULY 8, 1975.
NOTE: The 9.44% Cumulative Preferred Stock was called for redemption on March
16, 1987.
APPENDIX F
CREATION OF 400,000 SHARES OF 8.52% CUMULATIVE PREFERRED STOCK BY RESOLUTION
ADOPTED BY BOARD OF DIRECTORS OF CORPORATION ON AUGUST 16, 1976.
NOTE: The 8.52% Cumulative Preferred Stock was called for redemption on
December 1, 1993.
APPENDIX G
CREATION OF 450,000 SHARES OF 8.38% CUMULATIVE PREFERRED STOCK BY RESOLUTION
ADOPTED BY BOARD OF DIRECTORS OF CORPORATION ON FEBRUARY 8, 1978.
NOTE: The 8.38% Cumulative Preferred Stock was called for redemption on
December 1, 1993.
APPENDIX H
CREATION OF 350,000 SHARES OF 8.96% CUMULATIVE PREFERRED STOCK BY RESOLUTION
ADOPTED BY BOARD OF DIRECTORS OF CORPORATION ON APRIL 2 , 1979.
NOTE: The 8.96% Cumulative Preferred Stock was called for redemption on
December 1, 1993.
APPENDIX I
CREATION OF 500,000 SHARES OF 9.60% CUMULATIVE PREFERRED STOCK BY RESOLUTION
ADOPTED BY BOARD OF DIRECTORS OF CORPORATION ON JANUARY 24, 1980.
NOTE: The 9.60% Cumulative Preferred Stock was called for redemption on March
16, 1987.
APPENDIX J
CREATION OF 450,000 SHARES OF 13.25% CUMULATIVE PREFERRED STOCK BY RESOLUTION
ADOPTED BY BOARD OF DIRECTORS OF CORPORATION ON DECEMBER 18, 1981.
NOTE: The 13.25% Cumulative Preferred Stock was called for redemption on
March 2, 1992.
APPENDIX K
CREATION OF 4,000,000 SHARES OF 7.44% CUMULATIVE PREFERRED STOCK BY RESOLUTION
ADOPTED BY BOARD OF DIRECTORS OF CORPORATION ON APRIL 15, 1992.
Designation: 7.44% Cumulative Preferred Stock
Par Value: $25 per share
Dividend Rate: 7.44% of par value per annum
Dividend Payable: March 1, June 1, September 1 and December 1
The shares of the 7.44% Stock may not be redeemed prior to March 1, 1998. The
7.44% Stock may be redeemed at the option of this Corporation, in whole or in
part, at any time, or from time to time, upon at least 30 days` and not more
than 90 days` notice by mail on or after March 1, 1998, upon and by paying to
the holders of the shares to be redeemed a redemption price equal to $25 per
share, plus accrued and unpaid dividends to the date fixed for redemption.
Sinking Fund: None
Conversion Rights: None
In the event of any dissolution, liquidation or winding up of the affairs of
this Corporation, whether voluntary or involuntary, the record holders of the
then outstanding shares of the 7.44% Stock shall receive, or have set apart
and made available for payment to them, the par value of such shares, plus a
sum equal to the amount of all accrued and unpaid dividends thereon, before
any assets and funds of this Corporation may be distributed to the holders of
any stock of this Corporation ranking junior to the 7.44% Stock as to the
assets of this Corporation. If the assets available are not sufficient to pay
in full the amounts so payable, the holders of all series of Cumulative
Preferred Stock shall share ratably in any distribution of assets in
proportion to the full amounts to which they would otherwise be respectively
entitled. A consolidation, merger or reorganization of this Corporation with
any other corporation or corporations, or a reorganization of this Corporation
alone, or a sale of all or substantially all of the assets of this
Corporation, shall not be considered a dissolution, liquidation or winding up
of the affairs of this Corporation for such purposes.
Except during such time as all dividends on the 7.44% Stock for all past
quarterly dividend periods and the current dividend period have been paid, or
declared and a sum sufficient for the payment thereof set apart for payment,
this Corporation shall not call for redemption, or purchase, less than all of
the then outstanding shares of the 7.44% Stock.
APPENDIX L
CREATION OF 600,000 SHARES OF 6-7/8% CUMULATIVE PREFERRED STOCK BY RESOLUTION
ADOPTED BY BOARD OF DIRECTORS OF CORPORATION ON APRIL 15, 1992.
Designation: 6-7/8% Cumulative Preferred Stock
Par Value: $100 per share
Dividend Rate: 6-7/8% of par value per annum
Dividend Payable: March 1, June 1, September 1 and December 1
The shares of the 6-7/8% Stock may not be redeemed prior to October 1, 2003.
Thereafter, the Offered Shares of the 6-7/8% Stock are redeemable at the
option of this Corporation, in whole or in part, at any time, or from time to
time, upon at least 30 days` and not more than 90 days` notice by mail, at the
redemption prices set forth below, in each case plus accrued and unpaid
dividends thereon to the date fixed for redemption:
12-month 12-month
period Redemption Price period Redemption
Price
beginning Per Share of New beginning Per Share of New
October 1, Preferred Stock October 1, Preferred Stock
2003 $103.44 2008 $101.72
2004 103.09 2009 101.38
2005 102.75 2010 101.03
2006 102.41 2011 100.69
2007 102.06 2012 100.34
2013& 100.00
thereafter
Sinking Fund: None
Conversion Rights: None
In the event of any dissolution, liquidation or winding up of the affairs of
this Corporation, whether voluntary or involuntary, the record holders of the
then outstanding shares of the 6-7/8% Stock shall receive, or have set apart
and made available for payment to them, the par value of such shares, plus a
sum equal to the amount of all accrued and unpaid dividends thereon, before
any assets and funds of this Corporation may be distributed to the holders of
any stock of this Corporation ranking junior to the 6-7/8% Stock as to the
assets of this Corporation. If the assets available are not sufficient to pay
in full the amounts so payable, the holders of all series of Cumulative
Preferred Stock shall share ratably in any distribution of assets in
proportion to the full amounts to which they would otherwise be respectively
entitled. A consolidation, merger or reorganization of this Corporation with
any other corporation or corporations, or a reorganization of this Corporation
alone, or a sale of all or substantially all of the assets of this
Corporation, shall not be considered a dissolution, liquidation or winding up
of the affairs of this Corporation for such purposes.
Except during such time as all dividends on the 6-7/8% Stock for all past
quarterly dividend periods and for the current dividend period have been paid,
or declared and a sum sufficient for the payment thereof set apart for
payment, this Corporation shall not call for redemption, or purchase, less
than all of the then outstanding shares of the 6-7/8% Stock.
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FINANCIAL STATEMENTS.
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0
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