UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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 April 30, 1996, shares of Common Stock outstanding for each company were
as listed:
Company Shares
Cinergy Corp., par value $.01 per share 157,679,129
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
<PAGE>
TABLE OF CONTENTS
Item Page
Number Number
Glossary of Terms . . . . . . . . . . . . . . . . . . . 3
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 Cash Flows . . . . . . . .
Results of Operations . . . . . . . . . . . . . . . .
PSI Energy, Inc.
Consolidated Balance Sheets . . . . . . . . . . . . .
Consolidated Statements of Income . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . .
Results of Operations . . . . . . . . . . . . . . . .
The Union Light, Heat and Power Company
Balance Sheets. . . . . . . . . . . . . . . . . . . .
Statements of Income. . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . .
4 Submission of Matters to a Vote of Security Holders . .
5 Other Information . . . . . . . . . . . . . . . . . . .
6 Exhibits and Reports on Form 8-K. . . . . . . . . . . .
Signatures. . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
GLOSSARY OF TERMS
The following abbreviations or acronyms used in the text of this combined Form
10-Q are defined below:
TERM DEFINITION
1995 Form Combined 1995 Annual Report on Form 10-K filed by Cinergy as
10-K amended, CG&E, PSI, and ULH&P
AFUDC Allowance for funds used during construction
Avon Energy Avon Energy Partners PLC, a Limited Liability Company and a
subsidiary of Avon Holdings
Avon Holdings Avon Energy Partners Holdings, a joint venture between
Cinergy and GPU, organized in the United Kingdom as an
Unlimited Liability Company
CG&E The Cincinnati Gas & Electric Company (a subsidiary of
Cinergy)
Cinergy or Cinergy Corp.
Company
Clean Coal A joint arrangement by PSI and Destec Energy, Inc. for a
Project 262-mw clean coal power generating facility located at
Wabash River Generating Station, which was placed in
service in November 1995
CWIP Construction work in progress
DSM Demand-side management
FASB Financial Accounting Standards Board
February 1995 An IURC order issued in February 1995
Order
FERC Federal Energy Regulatory Commission
GPU General Public Utilities Corporation
IBEW International Brotherhood of Electrical Workers
Investments Cinergy Investments, Inc. (a subsidiary of Cinergy)
IURC Indiana Utility Regulatory Commission
kwh Kilowatt-hour
May 1992 Order A PUCO order issued in May 1992
Mcf Thousand cubic feet
M.E. Holdings M.E. Holdings, Inc. (a subsidiary of Investments)
Mega-NOPR FERC's Notice of Proposed Rulemaking Promoting Wholesale
Competition Through Open Access Non-discriminatory
Transmission Services by Public Utilities
Merger Costs Merger transaction costs and costs to achieve merger savings
<PAGE>
GLOSSARY OF TERMS (Continued)
TERM DEFINITION
Midlands Midlands Electricity plc
Money Pool Participants with surplus short-term funds, whether from
internal or external sources, provide short-term loans to
other system companies at rates that approximate the costs
of the funds in the money pool
Moody's Moody's Investors Service
mw Megawatt
NOPR FERC's Notice of Proposed Rulemaking
PSI PSI Energy, Inc. (a subsidiary of Cinergy)
PUCO Public Utilities Commission of Ohio
PUHCA Public Utility Holding Company Act of 1935
RUS Rural Utilities Service, previously called the Rural
Electrification Administration
Statement 121 Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of", issued in March
1995 by the FASB, is a new accounting standard requiring
impairment losses on long-lived assets be recognized when
an asset's book value exceeds its expected future cash
flows
the Plan The Cinergy 1996 Long-Term Incentive Compensation Plan
ULH&P The Union Light, Heat and Power Company (a wholly-owned
subsidiary of CG&E)
WVPA Wabash Valley Power Association
Zimmer William H. Zimmer Generating Station
<PAGE>
CINERGY CORP.
AND SUBSIDIARY COMPANIES
<PAGE>
CINERGY CORP.
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
March 31 December 31
1996 1995
(dollars in thousands)
Utility Plant - Original Cost
In service
Electric $8 645 996 $8 617 695
Gas 684 822 680 339
Common 184 142 184 694
9 514 960 9 482 728
Accumulated depreciation 3 417 926 3 367 432
6 097 034 6 115 296
CWIP 135 045 135 852
Total utility plant 6 232 079 6 251 148
Current Assets
Cash and temporary cash investments 67 562 35 052
Restricted deposits 1 387 2 336
Accounts receivable less accumulated
provision of $10,967 at March 31, 1996,
and $10,360 at December 31, 1995,
for doubtful accounts 191 775 371 150
Materials, supplies, and fuel - at average cost
Fuel for use in electric production 101 280 122 409
Gas stored for current use 8 556 21 493
Other materials and supplies 89 973 85 076
Property taxes applicable to subsequent year 87 617 116 822
Prepayments and other 37 632 32 347
585 782 786 685
Other Assets
Regulatory assets
Amounts due from customers - income taxes 423 611 423 493
Post-in-service carrying costs and deferred
operating expenses 188 113 187 190
Phase-in deferred return and depreciation 99 082 100 388
Deferred DSM costs 130 137 129 400
Deferred merger costs 55 309 56 824
Unamortized costs of reacquiring debt 74 532 73 904
Other 66 585 74 911
Other 185 784 136 121
1 223 153 1 182 231
$8 041 014 $8 220 064
The accompanying notes as they relate to Cinergy are an integral part of these
consolidated financial statements.
<PAGE>
CINERGY CORP.
CAPITALIZATION AND LIABILITIES
March 31 December 31
1996 1995
(dollars in thousands)
Common Stock Equity
Common stock - $.01 par value; authorized
shares - 600,000,000; outstanding shares -
157,679,129 at March 31, 1996, and 157,670,141
at December 31, 1995 $ 1 577 $ 1 577
Paid-in capital 1 595 435 1 597 050
Retained earnings 992 558 950 216
Total common stock equity 2 589 570 2 548 843
Cumulative Preferred Stock of Subsidiaries
Not subject to mandatory redemption 227 885 227 897
Subject to mandatory redemption 160 000 160 000
Long-term Debt 2 522 784 2 530 766
Total capitalization 5 500 239 5 467 506
Current Liabilities
Long-term debt due within one year 60 400 201 900
Notes payable 96 300 165 800
Accounts payable 280 814 268 139
Litigation settlement 80 000 80 000
Accrued taxes 324 170 317 185
Accrued interest 41 807 55 995
Other 53 053 57 202
936 544 1 146 221
Other Liabilities
Deferred income taxes 1 141 769 1 120 900
Unamortized investment tax credits 182 815 185 726
Accrued pension and other postretirement benefit
costs 183 272 171 771
Other 96 375 127 940
1 604 231 1 606 337
$8 041 014 $8 220 064
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Twelve Months Ended
March 31 March 31
1996 1995 1996 1995
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Operating Revenues
Electric $684 840 $632 466 $2 664 953 $2 458 673
Gas 199 155 175 211 434 796 388 458
883 995 807 677 3 099 749 2 847 131
Operating Expenses
Fuel used in electric production 191 452 185 909 722 297 722 116
Gas purchased 93 225 94 493 204 982 200 761
Purchased and exchanged power 27 621 5 666 69 587 34 957
Other operation 146 134 116 739 549 985 550 760
Maintenance 43 642 44 322 181 500 199 279
Depreciation 70 195 73 456 276 498 295 650
Amortization of phase-in deferrals 3 400 - 12 491 -
Post-in-service deferred operating
expenses - net (843) (2 004) (1 339) (6 545)
Phase-in deferred depreciation - - - (848)
Income taxes 73 983 62 519 232 893 154 215
Taxes other than income taxes 65 737 63 948 257 322 244 949
714 546 645 048 2 506 216 2 395 294
Operating Income 169 449 162 629 593 533 451 837
Other Income and Expenses - Net
Allowance for equity funds used
during construction 351 954 1 361 3 625
Post-in-service carrying costs 343 2 568 961 10 147
Phase-in deferred return 2 093 2 134 8 496 9 864
Income taxes 3 218 1 094 9 482 10 847
Other - net (7 676) (1 051) (9 676) (29 261)
(1 671) 5 699 10 624 5 222
Income Before Interest and Other Charges 167 778 168 328 604 157 457 059
Interest and Other Charges
Interest on long-term debt 49 135 55 061 207 985 218 162
Other interest 2 871 5 311 18 386 22 321
Allowance for borrowed funds used
during construction (1 138) (2 311) (6 892) (11 452)
Preferred dividend requirements of
subsidiaries 6 769 8 657 28 965 34 630
57 637 66 718 248 444 263 661
Net Income $110 141 $101 610 $ 355 713 $ 193 398
Average Common Shares Outstanding 157 675 155 682 157 113 149 873
Earnings Per Common Share $.70 $.65 $2.27 $1.27
Dividends Declared Per Common Share $.43 $.43 $1.72 $1.55
<FN>
The accompanying notes as they relate to Cinergy are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Retained Total Common
Stock Capital Earnings Stock Equity
(dollars in thousands)
<S> <C> <C> <C> <C>
Quarter Ended March 31, 1996
Balance January 1, 1996 $1 577 $1 597 050 $ 950 216 $2 548 843
Net income 110 141 110 141
Issuance of 8,988 shares of common
stock - net 311 311
Dividends on common stock (see page
8 for per share amounts) (67 799) (67 799)
Other (1 926) (1 926)
Balance March 31, 1996 $1 577 $1 595 435 $ 992 558 $2 589 570
Quarter Ended March 31, 1995
Balance January 1, 1995 $1 552 $1 535 658 $ 877 061 $2 414 271
Net income 101 610 101 610
Issuance of 722,439 shares of
common stock - net 7 18 004 18 011
Common stock issuance expenses (184) (184)
Dividends on common stock (see page
8 for per share amounts) (66 814) (66 814)
Balance March 31, 1995 $1 559 $1 553 478 $ 911 857 $2 466 894
Twelve Months Ended March 31, 1996
Balance April 1, 1995 $1 559 $1 553 478 $ 911 857 $2 466 894
Net income 355 713 355 713
Issuance of 1,758,652 shares of
common stock - net 18 42 650 42 668
Common stock issuance expenses (45) (45)
Dividends on common stock (see page
8 for per share amounts) (269 836) (269 836)
Other (648) (5 176) (5 824)
Balance March 31, 1996 $1 577 $1 595 435 $ 992 558 $2 589 570
Twelve Months Ended March 31, 1995
Balance April 1, 1994 $1 460 $1 329 588 $ 951 553 $2 282 601
Net income 193 398 193 398
Issuance of 8,829,293 shares of
common stock - net 99 228 695 228 794
Common stock issuance expenses (5 386) (5 386)
Dividends on common stock (see page
8 for per share amounts) (232 573) (232 573)
Other 581 (521) 60
Balance March 31, 1995 $1 559 $1 553 478 $ 911 857 $2 466 894
<FN>
The accompanying notes as they relate to Cinergy are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Year to Date Twelve Months Ended
March 31 March 31
1996 1995 1996 1995
(in thousands)
<S> <C> <C> <C> <C>
Operating Activities
Net income $ 110 141 $ 101 610 $ 355 713 $ 193 398
Items providing (using) cash currently
Depreciation 70 195 73 456 276 498 295 650
Deferred income taxes and investment tax
credits - net 16 978 1 769 43 620 24 104
Allowance for equity funds used during
construction (351) (954) (1 361) (3 625)
Regulatory assets - net 9 961 (946) 11 933 (38 537)
Changes in current assets and current
liabilities
Restricted deposits (24) 15 (1 074) 10 105
Accounts receivable, net of reserves on
receivables sold 143 778 20 251 51 886 84 990
Materials, supplies, and fuel 29 169 16 830 63 553 (48 944)
Accounts payable 12 675 (80 462) 94 809 (25 056)
Accrued taxes and interest (7 203) 37 224 12 208 7 998
Other items - net (16 003) 13 343 (17 210) 62 404
Net cash provided by (used in)
operating activities 369 316 182 136 890 575 562 487
Financing Activities
Issuance of common stock 311 17 827 42 623 223 408
Issuance of long-term debt - - 344 280 59 910
Funds on deposit from issuance of long-
term debt 973 5 729 5 231 24 449
Retirement of preferred stock of subsidiaries (5) - (93 471) (40 422)
Redemption of long-term debt (150 289) (87 517) (461 605) (87 952)
Change in short-term debt (69 500) 1 201 (133 801) (16 668)
Dividends on common stock (67 799) (66 814) (269 836) (232 573)
Net cash provided by (used in)
financing activities (286 309) (129 574) (566 579) (69 848)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (49 760) (78 214) (296 451) (468 903)
Deferred DSM costs - net (737) (8 949) (17 061) (48 375)
Equity investment in Argentine utility - - 19 799 -___
Net cash provided by (used in)
investing activities (50 497) (87 163) (293 713) (517 278)
Net increase (decrease) in cash and
temporary cash investments 32 510 (34 601) 30 283 (24 639)
Cash and temporary cash investments at
beginning of period 35 052 71 880 37 279 61 918
Cash and temporary cash investments at
end of period $ 67 562 $ 37 279 $ 67 562 $ 37 279
<FN>
The accompanying notes as they relate to Cinergy are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
CINERGY CORP.
Below is information concerning the consolidated results of operations for
Cinergy for the quarter and twelve months ended March 31, 1996. For
information concerning the results of operations for each of the other
registrants for the same quarter ended, see the discussion under the heading
RESULTS OF OPERATIONS following the financial statements of each company.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1996
Kwh Sales
Kwh sales for the quarter ended March 31, 1996, increased 12.7% as compared to
the same period last year. This increase was due to higher kwh sales to all
customer classes. Increased residential and commercial sales reflected colder
weather during the first quarter of 1996 and an increase in the average number
of customers. Sales to industrial customers increased due to growth in the
food products, primary metals, and chemicals sectors. Increased activity in
Cinergy's power marketing operations led to higher non-firm power sales for
resale.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the first quarter of 1996
increased 12.7% as compared to the first quarter of 1995. Colder weather
during the winter heating season and increases in the average number of
customers led to higher gas sales to residential and commercial customers.
Industrial sales decreased as customers continued to purchase gas directly
from suppliers, using transportation services provided by CG&E. The increase
in transportation volumes mainly reflects demand for gas transportation
services in the primary metals and transportation equipment sectors and in
both the non-electrical and electrical machinery sectors.
Operating Revenues
Electric Operating Revenues
Electric operating revenues for the quarter ended March 31, 1996, increased
$53 million (8.3%) as compared to the same period last year. This increase
primarily resulted from increased kwh sales, as previously discussed. In
addition, PSI's 4.3% retail rate increase approved in the February 1995 Order
and a 1.9% rate increase for carrying costs on CWIP property which was
approved by the IURC in March 1995 contributed to the increase. These
increases were partially offset by the operation of fuel adjustment clauses
reflecting a lower average cost of fuel used in electric production.
An analysis of electric operating revenues is shown below:
Quarter
Ended March 31
(in millions)
Electric operating revenues - March 31, 1995 $632
Increase (Decrease) due to change in:
Price per kwh
Retail (6)
Sales for resale
Firm power obligations (5)
Non-firm power transactions 4
Total change in price per kwh (7)
Kwh sales
Retail 41
Sales for resale
Firm power obligations 5
Non-firm power transactions 14
Total change in kwh sales 60
Electric operating revenues - March 31, 1996 $685
Gas Operating Revenues
Gas operating revenues increased $24 million (13.7%) in the first quarter of
1996 when compared to the same period last year. This increase was primarily
a result of the previously discussed changes in gas sales volumes.
Operating Expenses
Purchased and Exchanged Power
Purchased and exchanged power increased $22 million for the quarter ended
March 31, 1996, when compared to the same period last year, primarily
reflecting increased power purchases utilized in connection with increased
non-firm power sales for resale during the period.
Other Operation
Other operation expenses for the quarter ended March 31, 1996, increased $29
million (25.2%), as compared to the same period last year. This increase
reflects the amortization of deferred DSM costs, an increase in the ongoing
level of DSM expenses and higher administrative and general expenses as a
result of a number of items including the recognition by PSI of postretirement
benefit costs on an accrual basis and the amortization of deferred
postretirement benefit costs and deferred Merger Costs, both of which are
being recovered in revenues pursuant to the February 1995 Order.
Phase-in Deferred Return and Amortization of Phase-in Deferrals
Phase-in deferred return and amortization of phase-in deferrals reflect a
PUCO-ordered phase-in plan for Zimmer included in the May 1992 Order. In the
first three years of the rate phase-in plan, rates charged to customers did
not fully recover depreciation expense and return on investment. This
deficiency has been deferred and is being recovered over a seven-year period
that began in May 1995.
Other Income and Expenses - Net
Post-in-service Carrying Costs
Post-in-service carrying costs decreased $2 million (86.6%) for the first
quarter of 1996, from the comparable period of 1995 as a result of PSI's
discontinuing the accrual of post-in-service carrying costs on qualified
environmental projects upon the inclusion in rates of the costs of the
projects pursuant to the February 1995 Order.
Interest and Other Charges
Interest on Long-term Debt and Other Interest
Interest charges decreased $8 million (13.9%) for the three months ended March
31, 1996, from the same period of 1995 primarily due to the refinancing of
over $330 million of long-term debt by CG&E and ULH&P during the period from
March 1995 through November 1995 and the redemption of $151.5 million in the
first quarter of 1996. Additionally, interest on short-term debt decreased as
PSI and ULH&P borrowed funds through an internally funded Money Pool, reducing
outside borrowings at higher interest rates.
Preferred Dividend Requirements of Subsidiaries
The decrease in preferred dividend requirements of subsidiaries of $2 million
(21.8%) for the quarter ended March 31, 1996, from the same period of 1995 was
due to the early redemption in July 1995 of all 400,000 shares and 500,000
shares of CG&E's 7.44% Series and 9.15% Series $100 par value cumulative
preferred stock, respectively.
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED MARCH 31, 1996
Kwh Sales
Kwh sales increased 8.4% for the twelve months ended March 31, 1996, from the
comparable period of last year reflecting higher kwh sales to all customer
classes. Significantly contributing to the higher kwh sales were increased
sales to residential and commercial customers as a result of warmer weather
during the 1995 summer cooling season and colder weather during the fourth
quarter of 1995 and the first quarter of 1996. Additionally, the increase
reflects a higher average number of residential and commercial customers,
while industrial sales increased primarily due to growth in the primary
metals, chemicals, and food products sectors. Increased activity in Cinergy's
power marketing operations led to higher non-firm power sales for resale.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended March 31,
1996, increased 16.0% when compared to the twelve months ended March 31, 1995.
Colder weather during the 1995 winter heating season led to increases in gas
sales to residential and commercial customers. Industrial sales decreased as
customers continued the previously mentioned shift in demand toward
transportation services. This increase in Mcf transported of 17.3% was mainly
reflective of continued growth in demand for gas transportation services in
the primary metals, transportation equipment, and food products sectors.
Operating Revenues
Electric Operating Revenues
Compared to the same period last year, electric operating revenues for the
twelve months ended March 31, 1996, increased $206 million (8.4%), reflecting
increased kwh sales and PSI's rate increases, as previously discussed and
CG&E's electric rate increase which became effective in May 1994. The
aforementioned operation of fuel adjustment clauses partially offset these
increases.
An analysis of electric operating revenues is shown below:
Twelve Months
Ended March 31
(in millions)
Electric operating revenues - March 31, 1995 $2 459
Increase (Decrease) due to change in:
Price per kwh
Retail 23
Sales for resale
Firm power obligations (10)
Non-firm power transactions 11
Total change in price per kwh 24
Kwh sales
Retail 153
Sales for resale
Firm power obligations 10
Non-firm power transactions 20
Total change in kwh sales 183
Other (1)
Electric operating revenues - March 31, 1996 $2 665
Gas Operating Revenues
Gas operating revenues increased $46 million (11.9%) for the twelve months
ended March 31, 1996, when compared to the same period last year. This
increase was primarily a result of the previously discussed changes in gas
sales volumes and was partially offset by the operation of fuel adjustment
clauses reflecting a decline in the average cost of gas purchased for the
period. An increase in the relative volume of gas transported to gas sold, as
previously discussed, also served to partially offset this increase.
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
Purchased and Exchanged Power
Purchased and exchanged power increased $35 million (99.1%) for the twelve
months ended March 31, 1996, when compared to the same period of last year,
reflecting increased power purchases utilized in connection with increased
non-firm power sales for resale during the period.
Maintenance
The decrease in maintenance expense of $18 million (8.9%) for the twelve
months ended March 31, 1996, as compared to the same period of last year, was
primarily due to reduced maintenance on electric production and electric and
gas distribution facilities.
Depreciation
Depreciation expense decreased $19 million (6.5%) for the twelve months ended
March 31, 1996, as compared to the same period of last year. This decrease
primarily reflects the adoption of lower depreciation rates by PSI effective
in March 1995 pursuant to the February 1995 Order.
Phase-in Deferred Return and Amortization of Phase-in Deferrals
As previously discussed, phase-in deferred return and amortization of phase-in
deferrals reflect the PUCO-ordered phase-in plan for Zimmer included in the
May 1992 Order.
Post-in-service Deferred Operating Expenses-Net
Post-in-service deferred operating expenses decreased $5 million (79.5%) for
the twelve months ended March 31, 1996, from the comparable period of last
year as a result of PSI's ceasing deferral of depreciation on qualified
environmental projects upon the inclusion in rates of the costs of the
projects pursuant to the February 1995 Order.
Taxes Other than Income Taxes
Taxes other than income taxes increased $12 million (5.1%) over the same
period of 1995 primarily due to increased property taxes resulting from a
greater investment in taxable property and higher property tax rates.
Other Income and Expenses - Net
Post-in-service Carrying Costs
Post-in-service carrying costs decreased $9 million (90.5%) for the twelve
months ended March 31, 1996, from the comparable period of last year. This
decrease is a result of PSI's discontinuing the accrual of post-in-service
carrying costs on qualified environmental projects upon the inclusion in rates
of the costs of the projects pursuant to the February 1995 Order.
Other - net
Other - net increased $20 million (66.9%) for the twelve months ended March
31, 1996, reflecting $4 million of interest on an income tax refund related to
prior years, a $10 million gain on the sale of Cinergy's investment in an
Argentine utility, and charges of $17 million in 1994 for merger-related and
other expenditures which cannot be recovered from customers. These items were
partially offset by a number of factors, including charges associated with
winding down certain non-utility activities during 1995.
Interest and Other Charges
Interest on Long-term Debt and Other Interest
Interest charges decreased $14 million (5.9%) for the twelve months ended
March 31, 1996, from the same period of 1995 primarily due to the refinancing
of over $330 million of long-term debt by CG&E and ULH&P during the period
from March 1995 through November 1995 and the redemption of $151.5 million in
the first quarter of 1996. Additionally, interest on short-term debt
decreased as PSI and ULH&P borrowed funds through an internally funded Money
Pool, reducing outside borrowings at higher interest rates.
Preferred Dividend Requirements of Subsidiaries
The decrease in the preferred dividend requirements of subsidiaries of $6
million (16.4%) for the twelve months ended March 31, 1996, from the same
period of 1995 was primarily due to the early redemption in July 1995 of all
400,000 shares and 500,000 shares of CG&E's 7.44% Series and 9.15% Series $100
par value cumulative preferred stock, respectively.
<PAGE>
THE CINCINNATI GAS &
ELECTRIC COMPANY
AND SUBSIDIARY COMPANIES
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
March 31 December 31
1996 1995
(dollars in thousands)
Utility Plant - Original Cost
In service
Electric $4 584 216 $4 564 711
Gas 684 822 680 339
Common 182 871 183 422
5 451 909 5 428 472
Accumulated depreciation 1 766 273 1 730 232
3 685 636 3 698 240
CWIP 74 017 77 661
Total utility plant 3 759 653 3 775 901
Current Assets
Cash and temporary cash investments 47 967 6 612
Restricted deposits 1 168 1 144
Notes receivable from affiliated companies 77 872 24 715
Accounts receivable less accumulated provision
of $10,481 at March 31, 1996, and $9,615 at
December 31, 1995, for doubtful accounts 104 842 292 493
Accounts receivable from affiliated companies 16 717 17 162
Materials, supplies, and fuel - at average cost
Fuel for use in electric production 30 145 40 395
Gas stored for current use 8 556 21 493
Other materials and supplies 57 610 55 388
Property taxes applicable to subsequent year 87 617 116 822
Prepayments and other 34 828 30 572
467 322 606 796
Other Assets
Regulatory assets
Amounts due from customers - income taxes 390 783 397 155
Post-in-service carrying costs and deferred
operating expenses 147 230 148 316
Phase-in deferred return and depreciation 99 082 100 388
Deferred DSM costs 23 426 19 158
Deferred merger costs 14 403 14 538
Unamortized costs of reacquiring debt 40 687 39 428
Other 36 124 41 025
Other 79 381 54 691
831 116 814 699
$5 058 091 $5 197 396
The accompanying notes as they relate to CG&E are an integral part of these
consolidated financial statements.
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
CAPITALIZATION AND LIABILITIES
March 31 December 31
1996 1995
(dollars in thousands)
Common Stock Equity
Common stock - $8.50 par value; authorized shares
- 120,000,000; outstanding shares - 89,663,086
at March 31, 1996, and December 31, 1995 $ 762 136 $ 762 136
Paid-in capital 339 101 339 101
Retained earnings 473 512 427 226
Total common stock equity 1 574 749 1 528 463
Cumulative Preferred Stock
Not subject to mandatory redemption 40 000 40 000
Subject to mandatory redemption 160 000 160 000
Long-term Debt 1 694 391 1 702 650
Total capitalization 3 469 140 3 431 113
Current Liabilities
Long-term debt due within one year 10 000 151 500
Accounts payable 161 840 138 735
Accounts payable to affiliated companies 4 160 20 468
Accrued taxes 226 206 250 189
Accrued interest 30 149 31 299
Other 36 898 40 409
469 253 632 600
Other Liabilities
Deferred income taxes 810 257 795 385
Unamortized investment tax credits 127 361 129 372
Accrued pension and other postretirement benefit
costs 122 863 117 641
Other 59 217 91 285
1 119 698 1 133 683
$5 058 091 $5 197 396
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended
March 31
1996 1995
(in thousands)
Operating Revenues
Electric (including $12,348 and $6,949 from
affiliated companies for 1996 and 1995,
respectively) $375 629 $349 956
Gas 199 155 175 211
574 784 525 167
Operating Expenses
Fuel used in electric production 97 107 84 073
Gas purchased 93 225 94 493
Purchased and exchanged power
Non-affiliated companies 6 433 916
Affiliated companies 6 736 9 589
Other operation 79 580 68 922
Maintenance 20 979 23 533
Depreciation 39 987 39 537
Amortization of phase-in deferrals 3 400 -
Amortization of post-in-service deferred operating
expenses 823 823
Income taxes 54 890 43 346
Taxes other than income taxes 51 569 50 656
454 729 415 888
Operating Income 120 055 109 279
Other Income and Expenses - Net
Allowance for equity funds used
during construction 351 596
Phase-in deferred return 2 093 2 134
Income taxes 1 681 1 207
Other - net (686) 965
3 439 4 902
Income Before Interest 123 494 114 181
Interest
Interest on long-term debt 32 100 37 111
Other interest 462 826
Allowance for borrowed funds used
during construction (823) (980)
31 739 36 957
Net Income 91 755 77 224
Preferred Dividend Requirement 3 474 5 362
Net Income Applicable to Common Stock $ 88 281 $ 71 862
The accompanying notes as they relate to CG&E are an integral part of these
consolidated financial statements.
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Year to Date
March 31
1996 1995
(in thousands)
Operating Activities
Net income $ 91 755 $ 77 224
Items providing (using) cash currently
Depreciation 39 987 39 537
Deferred income taxes and investment
tax credits - net 19 368 (2 056)
Allowance for equity funds used
during construction (351) (596)
Regulatory assets - net 7 165 3 007
Changes in current assets and current
liabilities
Restricted deposits (24) (1)
Accounts and notes receivable, net of
reserves on receivables sold 111 135 16 428
Materials, supplies, and fuel 20 965 18 867
Accounts payable 6 797 (30 544)
Accrued taxes and interest (25 133) 27 362
Other items - net (6 590) 10 159
Net cash provided by (used in)
operating activities 265 074 159 387
Financing Activities
Redemption of long-term debt (150 289) (87 462)
Change in short-term debt - (13 500)
Dividends on preferred stock (3 474) (5 362)
Dividends on common stock (41 995) (51 650)
Net cash provided by (used in)
financing activities (195 758) (157 974)
Investing Activities
Construction expenditures (less
allowance for equity funds used
during construction) (23 693) (35 727)
Deferred DSM costs - net (4 268) (2 139)
Net cash provided by (used in)
investing activities (27 961) (37 866)
Net increase (decrease) in cash and
temporary cash investments 41 355 (36 453)
Cash and temporary cash investments at
beginning of period 6 612 52 516
Cash and temporary cash investments at
end of period $ 47 967 $ 16 063
The accompanying notes as they relate to CG&E are an integral part of these
consolidated financial statements.
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1996
Kwh Sales
Kwh sales for the quarter ended March 31, 1996, increased 13.7% over the same
period of 1995, due in large part to higher non-firm power sales for resale to
PSI. Also contributing to the total kwh sales levels were increased sales to
all retail customer classes. Higher residential and commercial sales resulted
from colder weather during the period and increases in the average number of
customers. Increased industrial sales primarily reflect growth in the primary
metals sector.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the first quarter of 1996
increased 12.7% as compared to the first quarter of 1995. Colder weather
during the winter heating season and increases in the average number of
customers led to higher gas sales to residential and commercial customers.
Industrial sales decreased as customers continued to purchase gas directly
from suppliers, using transportation services provided by CG&E. The increase
in transportation volumes mainly reflects demand for gas transportation
services in the primary metals and transportation equipment sectors and in
both the non-electrical and electrical machinery sectors.
Operating Revenues
Electric Operating Revenues
Electric operating revenues increased $26 million (7.3%) for the quarter ended
March 31, 1996, over the comparable period of 1995. This increase primarily
reflects the higher kwh sales discussed above.
An analysis of electric operating revenues is shown below:
Quarter
Ended March 31
(in millions)
Electric operating revenues - March 31, 1995 $350
Increase (Decrease) due to change in:
Price per kwh
Retail (1)
Sales for resale
Non-firm power transactions (7)
Total change in price per kwh (8)
Kwh sales
Retail 21
Sales for resale
Non-firm power transactions 13
Total change in kwh sales 34
Electric operating revenues - March 31, 1996 $376
Gas Operating Revenues
Gas operating revenues increased $24 million (13.7%) in the first quarter of
1996 when compared to the same period last year. This increase was primarily
a result of the previously discussed changes in gas sales volumes.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs increased $13 million (15.5%) for the quarter as compared
to last year.
An analysis of these fuel costs is shown below:
Quarter
Ended March 31
(in millions)
Fuel expense - March 31, 1995 $84
Increase due to change in:
Price of fuel 5
Kwh generation 8
Fuel expense - March 31, 1996 $97
Purchased and Exchanged Power
Purchased and exchanged power for the quarter ended March 31, 1996, increased
$3 million (25.4%) over the comparable period of 1995. This increase
primarily reflects increased power purchases utilized in connection with
increased non-firm power sales for resale.
Other Operation
For the three months ended March 31, 1996, other operation expenses increased
$11 million (15.5%) due to a number of factors, including higher
administrative and general expenses and increased gas distribution expenses.
Decreased electric distribution expenses partially offset these increases.
Maintenance
The $3 million (10.9%) decrease in maintenance expense for the first quarter
of 1996 as compared to the same period of 1995 is due to reduced maintenance
on electric production and distribution facilities.
Phase-in Deferred Return and Amortization of Phase-in Deferrals
Phase-in deferred return and amortization of phase-in deferrals reflect a
PUCO-ordered phase-in plan for Zimmer included in the May 1992 Order. In the
first three years of the rate phase-in plan, rates charged to customers did
not fully recover depreciation expense and return on investment. This
deficiency has been deferred and is being recovered over a seven-year period
that began in May 1995.
Interest
Interest charges decreased $5 million (14.1%) for the three months ended March
31, 1996, from the same period of 1995 primarily due to the refinancing of
over $330 million of long-term debt during the period from March 1995 through
November 1995 and the redemption of $151.5 million in the first quarter of
1996.
Preferred Dividend Requirement
The decrease in the preferred dividend requirement of $2 million (35.2%) for
the quarter ended March 31, 1996, from the same period of 1995 was due to the
early redemption in July 1995 of all 400,000 shares and 500,000 shares of
CG&E's 7.44% Series and 9.15% Series $100 par value cumulative preferred
stock, respectively.
<PAGE>
PSI ENERGY, INC.
AND SUBSIDIARY COMPANIES
<PAGE>
PSI ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
March 31 December 31
1996 1995
(dollars in thousands)
Electric Utility Plant - Original Cost
In service $4 061 780 $4 052 984
Accumulated depreciation 1 651 591 1 637 169
2 410 189 2 415 815
CWIP 60 924 58 191
Total electric utility plant 2 471 113 2 474 006
Current Assets
Cash and temporary cash investments 8 592 15 522
Restricted deposits 214 1 187
Accounts receivable less accumulated provision
of $231 at March 31, 1996, and $468 at
December 31, 1995, for doubtful accounts 79 841 73 419
Accounts receivable from affiliated companies 10 027 20 568
Materials, supplies, and fuel - at average cost
Fuel 71 135 82 014
Other materials and supplies 32 165 29 462
Prepayments and other 2 291 1 234
204 265 223 406
Other Assets
Regulatory assets
Amounts due from customers - income taxes 32 828 26 338
Post-in-service carrying costs and deferred
operating expenses 40 883 38 874
Deferred DSM costs 106 711 110 242
Deferred merger costs 40 906 42 286
Unamortized costs of reacquiring debt 33 845 34 476
Other 30 461 33 886
Other 110 103 92 056
395 737 378 158
$3 071 115 $3 075 570
The accompanying notes as they relate to PSI are an integral part of these
consolidated financial statements.
<PAGE>
PSI ENERGY, INC.
CAPITALIZATION AND LIABILITIES
March 31 December 31
1996 1995
(dollars in thousands)
Common Stock Equity
Common stock - without par value; $.01 stated
value; authorized shares - 60,000,000;
outstanding shares - 53,913,701 at
March 31, 1996, and December 31, 1995 $ 539 $ 539
Paid-in capital 403 259 403 253
Accumulated earnings subsequent to November 30,
1986, quasi-reorganization 622 958 625 275
Total common stock equity 1 026 756 1 029 067
Cumulative Preferred Stock
Not subject to mandatory redemption 187 885 187 897
Long-term Debt 828 393 828 116
Total capitalization 2 043 034 2 045 080
Current Liabilities
Long-term debt due within one year 50 400 50 400
Notes payable 92 900 165 800
Notes payable to affiliated companies 73 865 32 731
Accounts payable 110 424 116 817
Accounts payable to affiliated companies 4 701 -
Litigation settlement 80 000 80 000
Accrued taxes 97 489 65 851
Accrued interest 11 652 24 696
Other 16 155 16 000
537 586 552 295
Other Liabilities
Deferred income taxes 338 334 331 876
Unamortized investment tax credits 55 454 56 354
Accrued pension and other postretirement
benefit costs 60 409 54 130
Other 36 298 35 835
490 495 478 195
$3 071 115 $3 075 570
<PAGE>
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended
March 31
1996 1995
(in thousands)
Operating Revenues
Revenues (including $6,736 and $9,589
from affiliated companies for 1996 and 1995,
respectively) $328 295 $299 048
Operating Expenses
Fuel 94 345 101 836
Purchased and exchanged power
Non-affiliated companies 21 188 4 750
Affiliated companies 12 348 6 949
Other operation 66 551 47 815
Maintenance 22 663 20 789
Depreciation 30 208 33 919
Post-in-service deferred operating
expenses - net (1 666) (2 827)
Income taxes 18 883 19 173
Taxes other than income taxes 14 168 13 292
278 688 245 696
Operating Income 49 607 53 352
Other Income and Expenses - Net
Allowance for equity funds used
during construction - 358
Post-in-service carrying costs 343 2 568
Income taxes 760 (303)
Other - net (3 658) (1 912)
(2 555) 711
Income Before Interest 47 052 54 063
Interest
Interest on long-term debt 17 035 17 950
Other interest 3 468 3 977
Allowance for borrowed funds used
during construction (315) (1 331)
20 188 20 596
Net Income 26 864 33 467
Preferred Dividend Requirement 3 295 3 295
Net Income Applicable to Common Stock $ 23 569 $ 30 172
The accompanying notes as they relate to PSI are an integral part of these
consolidated financial statements.
<PAGE>
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Year to Date
March 31
1996 1995
(in thousands)
Operating Activities
Net income $ 26 864 $ 33 467
Items providing (using) cash currently
Depreciation 30 208 33 919
Deferred income taxes and investment
tax credits - net (1 926) 5 510
Allowance for equity funds used
during construction - (358)
Regulatory assets - net 2 796 (3 954)
Changes in current assets and current
liabilities
Restricted deposits - 16
Accounts receivable, net of reserves on
receivables sold (7 674) 2 227
Materials, supplies, and fuel 8 176 (2 244)
Accounts payable (1 692) (43 113)
Accrued taxes and interest 18 594 10 730
Other items - net 239 650
Net cash provided by (used in)
operating activities 75 585 36 850
Financing Activities
Funds on deposit from issuance of long-
term debt 973 5 729
Retirement of preferred stock (5) -
Redemption of long-term debt - (55)
Change in short-term debt (31 766) 14 528
Dividends on preferred stock (3 294) (3 295)
Dividends on common stock (25 887) -___
Net cash provided by (used in)
financing activities (59 979) 16 907
Investing Activities
Construction expenditures (less
allowance for equity funds used
during construction) (26 067) (42 487)
Deferred DSM costs - net 3 531 (6 810)
Net cash provided by (used in)
investing activities (22 536) (49 297)
Net increase (decrease) in cash and
temporary cash investments (6 930) 4 460
Cash and temporary cash investments at
beginning of period 15 522 6 341
Cash and temporary cash investments at
end of period $ 8 592 $ 10 801
The accompanying notes as they relate to PSI are an integral part of these
consolidated financial statements.
<PAGE>
PSI ENERGY, INC.
RESULT OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1996
Kwh Sales
Kwh sales for the first quarter of 1996 increased 18.2% when compared to the
same period last year. Increased activity in Cinergy's power marketing
operations led to higher non-firm power sales for resale. This increase also
reflects higher kwh sales to residential and commercial customers as a result
of colder weather in the first quarter of 1996 and an increase in the number
of residential and commercial customers. Growth in the food products, primary
metals, and chemicals sectors of industrial sales also contributed to the
increased kwh sales level.
Operating Revenues
Total operating revenues increased $29 million (9.8%) for the quarter ended
March 31, 1996, over the same period last year, reflecting the increased kwh
sales previously discussed. Also contributing to the increase was a 4.3%
retail rate increase approved in the February 1995 Order and a 1.9% rate
increase for carrying costs on CWIP property which was approved by the IURC in
March 1995. Partially offsetting these increases were the operation of fuel
adjustment clauses reflecting a lower average cost of fuel used in electric
production.
An analysis of operating revenues is shown below:
Quarter
Ended March 31
(in millions)
Operating revenues - March 31, 1995 $299
Increase (Decrease) due to change in:
Price per kwh
Retail (4)
Sales for resale
Firm power obligations (5)
Non-firm power transactions (2)
Total change in price per kwh (11)
Kwh sales
Retail 20
Sales for resale
Firm power obligations 4
Non-firm power transactions 17
Total change in kwh sales 41
Other (1)
Operating revenues - March 31, 1996 $328
Operating Expenses
Fuel
Fuel costs, PSI's largest operating expense, decreased $7 million (7.4%) for
the first quarter of 1996 as compared to the same period last year, due to a
decrease in the price of fuel. Kwh generation remained relatively unchanged
during the period.
Purchased and Exchanged Power
For the quarter ended March 31, 1996, purchased and exchanged power increased
$22 million, as compared to the same period last year, primarily reflecting
increased purchases of non-firm power for resale to other utilities and
increased purchases from CG&E as a result of the coordination of PSI's and
CG&E's electric dispatch systems.
Other Operation
Other operation expenses for the quarter ended March 31, 1996, increased $19
million (39.2%), as compared to the same period last year. This increase was
due to a number of factors, including the recognition of postretirement
benefit costs on an accrual basis, an increase in the ongoing level of DSM
expenses, and the amortization of deferred postretirement benefit costs,
deferred Merger Costs, and deferred DSM costs, all of which are being
recovered in revenues pursuant to the February 1995 Order.
Maintenance
Maintenance expenses for the first quarter of 1996, as compared to the same
period last year increased $2 million (9.0%) as a result of higher costs on
distribution facilities.
Depreciation
Depreciation expense decreased $4 million (10.9%) for the quarter ended March
31, 1996, as compared to the first quarter of last year. This decrease
primarily reflects the adoption of lower depreciation rates effective in March
1995 pursuant to the February 1995 Order.
Post-in-service Deferred Operating Expenses - Net
The change of $1 million (41.1%) in post-in-service deferred operating
expenses - net for the quarter ended March 31, 1996, when compared to the same
period last year as a result of ceasing deferral of depreciation on qualified
environmental projects upon the inclusion in rates of the costs of the
projects pursuant to the February 1995 Order.
Other Income and Expenses - Net
Post-in-service Carrying Costs
Post-in-service carrying costs decreased $2 million (86.6%) for the first
quarter of 1996, from the comparable period of 1995 as a result of
discontinuing the accrual of post-in-service carrying costs on qualified
environmental projects upon the inclusion in rates of the costs of the
projects pursuant to the February 1995 Order.
Interest
Allowance for Borrowed Funds Used During Construction
Allowance for borrowed funds used during construction decreased $1 million
(76.3%) for the first quarter of 1996, over the comparable period of 1995,
primarily as a result of the decrease in the average balance of CWIP due to
the Clean Coal Project being placed in-service. Partially offsetting this
decrease was an increase in the debt component of the AFUDC rate.
<PAGE>
THE UNION LIGHT, HEAT AND POWER COMPANY
<PAGE>
THE UNION LIGHT, HEAT AND POWER COMPANY
BALANCE SHEETS
(unaudited)
ASSETS
March 31 December 31
1996 1995
(dollars in thousands)
Utility Plant - Original Cost
In service
Electric $190 238 $188 508
Gas 141 930 140 604
Common 19 067 19 068
351 235 348 180
Accumulated depreciation 115 405 112 812
235 830 235 368
CWIP 7 848 7 863
Total utility plant 243 678 243 231
Current Assets
Cash and temporary cash investments 8 989 1 750
Accounts receivable less accumulated provision
of $1,180 at March 31, 1996, and $1,035
at December 31, 1995, for doubtful accounts 18 850 37 895
Accounts receivable from affiliated companies 30 -
Materials, supplies, and fuel - at average cost
Gas stored for current use 2 253 4 513
Other materials and supplies 1 316 1 215
Property taxes applicable to subsequent year 1 763 2 350
Prepayments and other 306 485
33 507 48 208
Other Assets
Regulatory assets
Deferred merger costs 1 785 1 785
Unamortized costs of reacquiring debt 3 417 2 526
Other 2 569 2 548
Other 4 338 1 499
12 109 8 358
$289 294 $299 797
The accompanying notes as they relate to ULH&P are an integral part of these
financial statements.
<PAGE>
THE UNION LIGHT, HEAT AND POWER COMPANY
CAPITALIZATION AND LIABILITIES
March 31 December 31
1996 1995
(dollars in thousands)
Common Stock Equity
Common stock - $15.00 par value; authorized
shares - 1,000,000; outstanding shares -
585,333 at March 31, 1996, and December 31,
1995 $ 8 780 $ 8 780
Paid-in capital 18 839 18 839
Retained earnings 91 119 82 863
Total common stock equity 118 738 110 482
Long-term Debt 44 582 54 377
Total capitalization 163 320 164 859
Current Liabilities
Long-term debt due within one year 10 000 15 000
Accounts payable 15 556 11 057
Accounts payable to affiliated companies 32 834 44 708
Accrued taxes 5 434 1 993
Accrued interest 1 207 1 549
Other 4 537 5 505
69 568 79 812
Other Liabilities
Deferred income taxes 26 330 23 728
Unamortized investment tax credits 5 009 5 079
Accrued pension and other postretirement
benefit costs 12 622 12 202
Amounts due to customers - income taxes 4 867 4 717
Other 7 578 9 400
56 406 55 126
$289 294 $299 797
<PAGE>
THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF INCOME
(unaudited)
Quarter Ended
March 31
1996 1995
(in thousands)
Operating Revenues
Electric $52 333 $39 559
Gas 34 058 30 503
86 391 70 062
Operating Expenses
Electricity purchased from parent company
for resale 37 600 30 039
Gas purchased 18 998 17 560
Other operation 9 247 7 795
Maintenance 1 166 1 153
Depreciation 2 907 2 775
Income taxes 5 511 3 088
Taxes other than income taxes 1 071 1 008
76 500 63 418
Operating Income 9 891 6 644
Other Income and Expenses - Net
Allowance for equity funds used
during construction (21) (11)
Income taxes (4) (4)
Other - net (219) (4)
(244) (19)
Income Before Interest 9 647 6 625
Interest
Interest on long-term debt 1 294 2 039
Other interest 107 165
Allowance for borrowed funds used
during construction (10) (65)
1 391 2 139
Net Income $ 8 256 $ 4 486
The accompanying notes as they relate to ULH&P are an integral part of these
financial statements.
<PAGE>
THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF CASH FLOWS
(unaudited)
Year to Date
March 31
1996 1995
(in thousands)
Operating Activities
Net income $ 8 256 $ 4 486
Items providing (using) cash currently
Depreciation 2 907 2 775
Deferred income taxes and investment
tax credits - net 2 682 (848)
Allowance for equity funds used
during construction 21 11
Regulatory assets - net (21) (1 615)
Changes in current assets and current
liabilities
Accounts receivable, net of reserves on
receivables sold 15 823 5 095
Materials, supplies, and fuel 2 159 3 475
Accounts payable (7 375) (4 008)
Accrued taxes and interest 3 099 3 793
Other items - net (643) 6 039
Net cash provided by (used in)
operating activities 26 908 19 203
Financing Activities
Redemption of long-term debt (16 032) -
Change in short-term debt - (13 500)
Net cash provided by (used in)
financing activities (16 032) (13 500)
Investing Activities
Construction expenditures (less
allowance for equity funds used
during construction) (3 637) (5 233)
Net cash provided by (used in)
investing activities (3 637) (5 233)
Net increase (decrease) in cash and
temporary cash investments 7 239 470
Cash and temporary cash investments at
beginning of period 1 750 1 071
Cash and temporary cash investments at
end of period $ 8 989 $ 1 541
The accompanying notes as they relate to ULH&P are an integral part of these
financial statements.
<PAGE>
THE UNION LIGHT, HEAT AND POWER COMPANY
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1996
Kwh Sales
Kwh sales for the quarter ended March 31, 1996, increased 28.7% from the same
period of 1995, reflecting increased sales to all retail customer classes.
Contributing significantly to this increase were higher residential and
commercial sales due to colder weather during the winter heating season and
increases in the average number of customers. Higher industrial sales reflect
growth in the food products and printing and publishing sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the first quarter of 1996
increased 15.3% as compared to the first quarter of 1995. Colder weather
during the winter heating season led to increases in gas sales to residential
and commercial customers. Industrial sales decreased as customers continued
to purchase gas directly from suppliers, using transportation services
provided by ULH&P. The increase in transportation volumes was primarily a
result of growth in the primary metals and food products sectors.
Operating Revenues
Electric Operating Revenues
Electric operating revenues increased $12.8 million (32.3%) for the quarter
ended March 31, 1996, over the comparable period of 1995. This increase
primarily reflects the previously discussed increase in kwh sales.
An analysis of electric operating revenues is shown below:
Quarter
Ended March 31
(in thousands)
Electric operating revenues - March 31, 1995 $39 559
Increase (Decrease) due to change in:
Price per kwh
Retail 1 439
Firm power sales for resale 3
Total change in price per kwh 1 442
Kwh sales
Retail 11 256
Firm power sales for resale 41
Total change in kwh sales 11 297
Other 35
Electric operating revenues - March 31, 1996 $52 333
Gas Operating Revenues
Gas operating revenues increased $3.6 million (11.7%) in the first quarter of
1996 when compared to the same period of last year. This increase was
primarily a result of the previously discussed changes in gas sales volumes.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased expense, ULH&P's largest operating expense, increased
$7.6 million (25.2%) for the quarter as compared to last year.
An analysis of electricity purchased expense is shown below:
Quarter
Ended March 31
(in thousands)
Electricity purchased expense - March 31, 1995 $30 039
Increase (Decrease) due to change in:
Price of electricity 423
Kwh purchased 7 138
Electricity purchased expense - March 31, 1996 $37 600
Gas Purchased
Gas purchased for the quarter increased $1.4 million (8.2%) from the first
quarter of last year reflecting a 13.6% increase in volumes purchased which
was partially offset by a 4.8% decline in the average cost per Mcf purchased.
Other Operation
For the three months ended March 31, 1996, other operation expenses increased
$1.5 million (18.6%) due to a number of factors, including higher
administrative and general expenses and increased gas distribution expenses.
Depreciation
Depreciation expense increased $.1 million (4.8%) for the quarter ended March
31, 1996, over the comparable period of last year. The increase primarily
reflects additions to gas and electric utility plant.
Interest
Interest charges decreased $.7 million (35.0%) for the three months ended
March 31, 1996, from the same period of 1995 primarily due to the refinancing
of $15 million and $20 million of long-term debt in June 1995 and September
1995, respectively, and the redemption of $15 million in the first quarter of
1996.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Cinergy, CG&E, PSI, and ULH&P
1. These Financial Statements reflect all adjustments (which include only
normal, recurring adjustments) necessary in the opinion of the
registrants 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 the combined 1995 Form 10-K of the
registrants. Certain amounts in the 1995 Financial Statements have been
reclassified to conform to the 1996 presentation.
Cinergy, CG&E, and ULH&P
2. On May 1, 1996, ULH&P redeemed the entire $10 million principal amount
of its 9 1/2% Series First Mortgage Bonds due December 1, 2008, at the
redemption price of 104.35%.
Cinergy and PSI
3. As discussed in Cinergy's and PSI's 1995 Form 10-K, RUS requested a
rehearing on the affirmation by the Seventh Circuit Court of Appeals of
WVPA's plan of reorganization which has been approved by the United
States Bankruptcy Court for the Southern District of Indiana and upheld
by the United States District Court for the Southern District of Indiana.
In April 1996, the Seventh Circuit Court of Appeals denied RUS' request
for rehearing. RUS' remaining option is to appeal this decision to the
U.S. Supreme Court within 90 days from the date of the Seventh Circuit
Court of Appeal's latest decision. PSI cannot predict whether RUS will
appeal this decision to the U.S. Supreme Court, and if appealed, the
outcome of such appeal.
Cinergy, CG&E, PSI, and ULH&P
4. In March 1995, the FASB issued Statement 121, which became effective in
January 1996 for Cinergy and its subsidiaries. Statement 121, which
addresses the identification and measurement of asset impairments for all
enterprises, is particularly relevant for electric utilities as a result
of the potential for deregulation of the generation segment of the
business. Statement 121 requires recognition of impairment losses on
long-lived assets when book values exceed expected future cash flows.
Based on the regulatory environment in which Cinergy's utility
subsidiaries currently operate, compliance with the provisions of
Statement 121 has not had nor is it expected to have an adverse effect on
their financial condition or results of operations. However, this
conclusion may change in the future as competitive pressures and
potential restructuring influence the electric utility industry.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Recent Developments
Cinergy
Joint Venture On May 7, 1996, Cinergy, GPU, and Midlands announced the terms
of a recommended cash offer for Midlands to be made by Avon Energy. Cinergy
and GPU each indirectly own 50% of Avon Energy. On May 13, 1996, Avon Energy
commenced the offer to acquire all of the shares of Midlands on the terms and
subject to conditions set out in an offering documents. As of May 14, 1996,
Avon Energy owns or has agreed to acquire 114.9 million of Midlands shares,
representing approximately 29% of the issued share capital of Midlands. The
total acquisition cost of Midlands is expected to be approximately (Pound
Sterling) 1.7 billion (or approximately $2.6 billion - U.S.)1 . It is
currently anticipated that the offer transaction could be completed in the
third quarter of 1996. Midlands, one of 12 regional electric companies in he
United Kingdom, is headquartered in Birmingham, England. Midlands' principal
business is the distribution of electricity to approximately 2.2 million
customers. For further information, reference is made to Cinergy's Current
Report on Form 8-K dated May 7, 1996.
Following the announcement of the potential acquisition of Midlands, three
major credit rating agencies, Duff & Phelps Credit Rating Co., Fitch Investors
Service, Inc., and Standard & Poor's, affirmed the current ratings of
Cinergy's operating subsidiaries, after their consideration of the effects of
the potential acquisition. The other major credit rating agency, Moody's
placed the credit ratings of Cinergy's operating subsidiaries, CG&E, PSI, and
ULH&P, under review for possible downgrade. Moody's indicated that its review
will focus on the likelihood of the transaction being completed and will
assess the operating strategies of the combined companies and the anticipated
benefits of the transaction. It will also focus on the financial impact the
transaction will have on Cinergy and its operating subsidiaries, including the
credit implications. Cinergy cannot predict the outcome of this review.
Cinergy and PSI
Contract Negotiations The Labor Agreement between PSI and IBEW Local 1393 was
scheduled to expire May 1, 1996. Union members voted to reject PSI's initial
offer on May 3, 1996. Although this vote authorized a strike, the union
agreed to continue working under terms of the existing contract pending the
outcome of negotiations. PSI made a revised contract offer to the union on
May 9, 1996, and the contract was extended to May 24, 1996, pending the result
of the vote of union members on the revised offer. Neither Cinergy nor PSI
can predict whether a work stoppage will occur if the revised offer is
rejected, nor the duration of such stoppage if it occurs.
________________
1Assumes an average exchange ratio of 1.51 U.S. dollars to 1.00 British Pound
Sterling for the shares purchased.
1
Regulatory Matters
Cinergy, CG&E, PSI, and ULH&P
Mega-NOPR On April 24, 1996, the FERC issued final orders relating to its
previously issued mega-NOPR. The unanimously-passed final rules contain
essentially the same provisions as the mega-NOPR. Additionally, the FERC
concurrently issued a related NOPR which proposes to establish a new system
for utilities to use in reserving capacity on their own and others'
transmission lines.
The final rules provide for mandatory filing of open access/comparability
transmission tariffs, provide for functional unbundling of all services,
require utilities to use the filed tariffs for their own bulk power
transactions, establish an electronic bulletin board for transmission
availability and pricing information, and establish a contract-based approach
to recovering any potential stranded costs as a result of customer choice at
the wholesale level. The FERC expects the rules to "accelerate competition
and bring lower prices and more choices to energy customers". The final rules
become effective in 60 days.
Accounting Issues
Cinergy, CG&E, PSI, and ULH&P
New Accounting Standard See Note 4 of the "Notes to Financial Statements" in
"Part I. Financial Information."
Capital Resources
Cinergy, CG&E, and ULH&P
Long-term Debt For information regarding recent securities redemptions, see
Note 2 of the "Notes to Financial Statements" in "Part I. Financial
Information."
Cinergy, CG&E, PSI, and ULH&P
Short-term Debt The operating subsidiary companies of Cinergy have the
following short-term debt authorizations and lines of credit:
Committed Unused
Authorized Lines__ Lines
(in millions)
Cinergy & Subsidiaries $838 $281 $215
CG&E 400 80 80
PSI 400 200 134
ULH&P 35 - -
Additionally, in connection with the tender offer to purchase Midlands,
Cinergy has established a $600 million credit facility, which expires in May
2001, of which $216 million remained unused as of May 14, 1996. This new
credit facility was established, in part, to fund the acquisition of Midlands
($460 million will be used for this purpose) with the remaining portion
available for general corporate purposes. The prior $100 million credit
facility, which would have expired in September 1997, has been terminated.
In addition, M.E. Holdings, Inc., a subsidiary of Investments, established to
hold Cinergy's 50% investment in Avon Holdings, entered into a $40 million
non-recourse credit agreement which will also be used to fund the acquisition
of Midlands.
Cinergy, CG&E, PSI, and ULH&P
Sale of Accounts Receivable As discussed in each registrant's 1995 Form 10-K,
in January 1996, CG&E, PSI, and ULH&P entered into an agreement to sell, on a
revolving basis, undivided percentage interests in certain of their accounts
receivable. Under the agreement, the companies have the authority to sell up
to an aggregate maximum of $350 million of which $237 million has been sold as
of March 31, 1996.
Other Commitments
Cinergy and PSI
WVPA Litigation See Note 3 of the "Notes to Financial Statements" in "Part I.
Financial Information."
RESULTS OF OPERATIONS
Cinergy, CG&E, PSI, and ULH&P
Reference is made to "ITEM 1. FINANCIAL STATEMENTS" in "PART I. Financial
Information."
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Cinergy and PSI
WVPA Litigation See Note 3 of the "Notes to Financial Statements" in "Part
I. Financial Information."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Cinergy
(a) The annual meeting of shareholders of Cinergy was held April 26, 1996,
in Cincinnati, Ohio.
(c) At the meeting, six Class II directors were elected to serve three
year terms, expiring in 1999, to the board of Cinergy, as set forth
below:
Votes Votes
Class II For Withheld
Melvin Perelman Ph.D. 134,013,381 3,681,371
Thomas E. Petry 134,120,798 3,573,954
Jackson H. Randolph 133,871,653 3,823,099
Philip R. Sharp Ph.D. 133,272,214 4,422,538
Van P. Smith 133,998,850 3,695,902
Dudley S. Taft 134,144,847 3,549,905
Additionally, the Plan was adopted. The Plan will provide Cinergy greater
flexibility to design long-term compensation incentives for its officers
and other key employees by rewarding long-term performance. Accordingly,
certain key employees may be granted Stock Options, Stock Appreciation
Rights, Restricted Stock, Cash Awards, Performance Shares, Performance
Awards, Dividend Equivalents, and Other Stock-Based Awards as described in
the Plan. There were 117,406,962 common shares voted for the proposal,
17,970,427 voted against the proposal, 2,316,163 abstentions, and 1,200
broker non-votes.
Also at the meeting, an amendment to the Cinergy Annual Incentive Plan was
approved. The amendment changes the maximum dollar amount of compensation
that can be paid to a "covered employee" under the plan to $1 million. The
amendment also adds "total shareholder return" as an example of objective
performance criteria which can constitute corporate goals under the plan.
There were 128,219,715 common shares voted for the amendment, 6,874,985
voted against the amendment, 2,598,852 abstentions, and 1,200 broker non-
votes.
CG&E
(a) In lieu of the annual meeting of shareholders of CG&E, resolutions
were adopted via unanimous written consent of shareholders effective
April 25, 1996.
(b) The Board of Directors as previously reported was re-elected in its
entirety (see (c) below).
(c) The following members of the Board of Directors were unanimously re-
elected at the annual meeting:
Jackson H. Randolph
James E. Rogers
William J. Grealis
Additionally, four amendments to CG&E's Regulations were adopted as
follows:
1. The date for the annual meeting of shareholders may be the business day
next preceding Cinergy's annual meeting of shareholders.
2. A new section is added allowing a written consent of shareholders in lieu
of an annual meeting.
3. A new section is added allowing actions of the Board of Directors to be
by written consent.
4. The requirement of an operations report to be submitted to the
shareholders at the annual meeting is deleted.
PSI
(a) The annual meeting of shareholders of PSI was held in Cincinnati, Ohio
on April 26, 1996.
(b) Proxies were not solicited for the annual meeting, at which the Board
of Directors was re-elected in its entirety.
(c) The following members of the Board of Directors were unanimously re-
elected at the annual meeting:
James K. Baker
Michael G. Browning
John A. Hillenbrand II
John M. Mutz
Jackson H. Randolph
James E. Rogers
Van P. Smith
ULH&P
Omitted pursuant to Instruction H(2)(b).
ITEM 5. OTHER INFORMATION
Refer to the "Recent Developments" section in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in "Part I.
Financial Information" for information concerning contract negotiations
between PSI and IBEW Local 1393 and the Cinergy Joint Venture.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
Exhibit
Designation Nature of Exhibit
CG&E
3-a Regulations of CG&E as amended, adopted April 25,
1996.
<PAGE>
Exhibit
Designation Nature of Exhibit
ULH&P
3-b By-laws of ULH&P as amended, adopted May 8, 1996.
Cinergy, CG&E, PSI, and ULH&P
27 Financial Data Schedules (included in
electronic submission only).
Cinergy
(b) The following report on Form 8-K was filed prior to the filing of this
Form 10-Q for the quarter ended March 31, 1996:
Date of Report Item Filed______________________
May 7, 1996 Item 5. Other Events
<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: May 14, 1996 J. Wayne Leonard
Duly Authorized Officer
Date: May 14, 1996 Charles J. Winger
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
"CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME AND
CONSOLIDATED " STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
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<TOTAL-NET-UTILITY-PLANT> 6,232,079
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<TOTAL-CURRENT-ASSETS> 585,782
<TOTAL-DEFERRED-CHARGES> 1,037,369
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<CAPITAL-SURPLUS-PAID-IN> 1,595,435
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<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,589,570
160,000
227,885
<LONG-TERM-DEBT-NET> 2,522,784
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<OTHER-OPERATING-EXPENSES> 640,563
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