UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM U-13-60
ANNUAL REPORT
For the Period
Beginning January 1, 1996 and Ending December 31, 1996
to the
U. S. SECURITIES AND EXCHANGE COMMISSION
of
Cinergy Services, Inc.
(Exact Name of Reporting Company)
A Subsidiary SERVICE COMPANY
Date of Incorporation: February 23, 1994
State or Sovereign Power under which Incorporated or Organized: Delaware
Location of Principal Executive Offices of Reporting Company: Cincinnati,
Ohio
Name, title and address of officer to whom correspondence concerning this
report should be addressed:
Charles J. Winger, Comptroller, 139 East Fourth Street,
Cincinnati, Ohio 45202
Name of Principal Holding Company Whose Subsidiaries are served by Reporting
Company:
<PAGE>
Cinergy Corp.
INSTRUCTIONS FOR USE OF FORM U-13-60
1. Time of Filing. Rule 94 provides that on or before the first day of May
in each calendar year, each mutual service company and each subsidiary
service company as to which the Commission shall have made a favorable
finding pursuant to Rule 88, and every service company whose application
for approval or declaration pursuant to Rule 88 is pending shall file with
the Commission an annual report on Form U-13-60 and in accordance with the
Instructions for that form.
2. Number of Copies. Each annual report shall be filed in duplicate. The
company should prepare and retain at least one extra copy for itself in
case correspondence with reference to the report becomes necessary.
3. Period Covered by Report. The first report filed by any company shall
cover the period from the date the Uniform System of Accounts was required
to be made effective as to that company under Rules 82 and 93 to the end
of that calendar year. Subsequent reports should cover a calendar year.
4. Report Format. Reports shall be submitted on the forms prepared by the
Commission. If the space provided on any sheet of such form is
inadequate, additional sheets may be inserted of the same size as a sheet
of the form or folded to each size.
5. Money Amounts Displayed. All money amounts required to be shown in
financial statements may be expressed in whole dollars, in thousands of
dollars or in hundred thousands of dollars, as appropriate and subject to
provisions of Regulation S-X (210.3-01(b)).
6. Deficits Displayed. Deficits and other like entries shall be indicated
by the use of either brackets or a parenthesis with corresponding
reference in footnotes. (Regulation S-X, 210.3-01(c)).
7. Major Amendments or Corrections. Any company desiring to amend or
correct a major omission or error in a report after it has been filed with
the Commission shall submit an amended report including only those pages,
schedules, and entries that are to be amended or corrected. A cover
letter shall be submitted requesting the Commission to incorporate the
amended report changes and shall be signed by a duly authorized officer of
the company.
8. Definitions. Definitions contained in Instruction 01-8 to the Uniform
System of Accounts for Mutual Service Companies and Subsidiary Service
Companies, Public Utility Holding Company Act of 1935, as amended February
2, 1979 shall be applicable to words or terms used specifically within
this Form U-13-60.
9. Organization Chart. The service company shall submit with each annual
report a copy of its current organization chart.
10. Methods of Allocation. The service company shall submit with each annual
report a listing of the currently effective methods of allocation being
used by the service company and on file with the Securities and Exchange
Commission pursuant to the Public Utility Company Holding Act of 1935.
11. Annual Statement of Compensation for Use of Capital Billed. The service
company shall submit with each annual report a copy of the annual
statement supplied to each associate company in support of the amount of
compensation for use of capital billed during the calendar year.
Annual Report of Cinergy Services, Inc.
LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS
Schedule or
Description of Schedules and Accounts Account No. Page No.
Comparative Balance Sheets - Assets Schedule I
Comparative Balance Sheets - Liabilities Schedule I
Service Company Property Schedule II
Accumulated Provision for Depreciation and
Amortization of Service Company Property Schedule III
Investments Schedule IV
Accounts Receivable from Associate Companies Schedule V
Fuel Stock Expenses Undistributed Schedule VI
Stores Expense Undistributed Schedule VII
Miscellaneous Current and Accrued Assets Schedule VIII
Miscellaneous Deferred Debits Schedule IX
Research, Development or Demonstration
Expenditures Schedule X
Proprietary Capital Schedule XI
Long-term Debt Schedule XII
Current and Accrued Liabilities Schedule XIII
Notes to Financial Statements Schedule XIV
Comparative Income Statements Schedule XV
Analysis of Billing - Associate Companies Account 457
Analysis of Billing - Nonassociate Companies Account 458
Analysis of Charges for Service - Associate
and Nonassociate Companies Schedule XVI
Schedule of Expense by Department or
Service Function Schedule XVII
Departmental Analysis of Salaries Account 920
Outside Services Employed Account 923
Employee Pensions and Benefits Account 926
General Advertising Expense Account 930.1
Miscellaneous General Expenses Account 930.2
Rents Account 931
Taxes Other Than Income Taxes Account 408
Donations Account 426.1
Other Deductions Account 426.5
Notes to Statements of Income Schedule XVIII
LISTING OF INSTRUCTIONAL FILING REQUIREMENTS
Description of Reports or Statements Page No.
Organization Chart
Methods of Allocation
Annual Statement of Compensation for Use of Capital Billed
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Years Ended December 31, 1996 and 1995
Schedule I - COMPARATIVE BALANCE SHEETS
Give balance sheet of the Company as of December 31 of the current and prior
year
REF
December 31
ACCOUNT ASSETS AND OTHER DEBITS SCHED
1996 1995
<S> <C> <C> <C>
<C>
SERVICE COMPANY PROPERTY
101 Service Company Property II $
2,063,444 $ 1,271,563
107 Construction Work in Progress II
5,255,666 -___
Total Property
7,319,110 1,271,563
108 Accumulated Provision for Depreciation and
Amortization of Service Company Property III
(183,179) (30,635)
Net Service Company Property
7,135,931 1,240,928
INVESTMENTS
123 Investments in Associate Companies IV
- - -
124 Other Investments IV
- - -___
Total Investments
- - -
CURRENT AND ACCRUED ASSETS
131 Cash
7,059,935 -
134 Special Deposits
- - -
135 Working Funds
(51,260) -
136 Temporary Cash Investments IV
- - -
141 Notes Receivable
- - -
143 Accounts Receivable V
477,496 -
144 Accumulated Provision for Uncollectible Accounts
- - -
146 Accounts Receivable from Associate Companies V
14,357,685 14,115,902
152 Fuel Stock Expenses Undistributed VI
- - -
154 Materials and Supplies
- - -
163 Stores Expense Undistributed VII
- - -
165 Prepayments
- - -
174 Miscellaneous Current and Accrued Assets VIII
- - -___
Total Current and Accrued Assets
21,843,856 14,115,902
DEFERRED DEBITS
181 Unamortized Debt Expense
- - -
184 Clearing Accounts
- - 313,390
186 Miscellaneous Deferred Debits IX
(187,036) 289,563
188 Research, Development or Demonstration Expenditures X
- - -
190 Accumulated Deferred Income Taxes
- - -___
Total Deferred Debits
(187,036) 602,953
TOTAL ASSETS AND OTHER DEBITS
$28,792,751 $15,959,783
</TABLE>
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<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Years Ended December 31, 1996 and 1995
Schedule I - COMPARATIVE BALANCE SHEET (Continued)
REF
December 31
ACCOUNT LIABILITIES AND PROPRIETARY CAPITAL SCHED
1996 1995
<S> <C> <C> <C>
<C>
PROPRIETARY CAPITAL
201 Common Stock Issued (Note 2) XI $
3 $ -
211 Miscellaneous Paid-In-Capital XI
- - -
215 Appropriated Retained Earnings XI
- - -
216 Unappropriated Retained Earnings XI
(3) (212,501)
Total Proprietary Capital
- - (212,501)
LONG-TERM DEBT
223 Advances From Associate Companies XII
- - -
224 Other Long-Term Debt XII
- - -
225 Unamortized Premium on Long-Term Debt
- - -
226 Unamortized Discount on Long-Term Debt
- - -___
Total Long-Term Debt
- - -
CURRENT AND ACCRUED LIABILITIES
231 Notes Payable
- - -
232 Accounts Payable
10,962,571 7,634,754
233 Notes Payable To Associate Companies XIII
18,489,079 -
234 Accounts Payable to Associate Companies XIII
1,840,449 8,318,363
236 Taxes Accrued
(2,567,123) -
237 Interest Accrued
- - -
238 Dividends Declared
- - -
241 Tax Collections Payable
256 -
242 Miscellaneous Current and Accrued Liabilities XIII
- - -___
Total Current and Accrued Liabilities
28,725,232 15,953,117
DEFERRED CREDITS
253 Other Deferred Credits
- - 219,167
255 Accumulated Deferred Investment Tax Credits
- - -___
Total Deferred Credits
- - 219,167
282 ACCUMULATED DEFERRED INCOME TAXES
67,519 -
TOTAL LIABILITIES AND PROPRIETARY CAPITAL
$28,792,751 $15,959,783
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
Schedule II - SERVICE COMPANY PROPERTY
BALANCE AT
RETIREMENTS OTHER BALANCE
BEGINNING
OR CHANGES AT CLOSE
ACCOUNT DESCRIPTION OF YEAR ADDITIONS
SALES (1) OF YEAR
SERVICE COMPANY PROPERTY
<S> <C> <C> <C>
<C> <C>
301 Organization $ - $ - $
- - $ - $ -
303 Miscellaneous Intangible Plant - -
- - - -
304 Land and Land Rights - -
- - - -
305 Structures and Improvements - -
- - - -
306 Leasehold Improvements - -
- - - -
307 Equipment (2) - -
- - - -
308 Office Furniture and Equipment 1,271,563 40,428
- - - 1,311,991
309 Automobiles, Other Vehicles and
Related Garage Equipment - -
- - - -
310 Aircraft and Airport Equipment - -
- - - -
311 Other Service Company Property (3) - 751,453
- - - 751,453
Sub-Total 1,271,563 791,881
- - - 2,063,444
107 Construction Work in Progress (4) - 5,255,666
- - - 5,255,666
Total $1,271,563 $6,047,547 $
- - $ - $7,319,110
<FN>
NOTES
(1) Provide an explanation of those changes considered material:
None
(2) Subaccounts are required for each class of equipment owned. The
Service
Company shall provide a listing by subaccount of equipment additions
during
the year and the balance at the close of the year:
BALANCE
AT CLOSE
Subaccount Description Additions OF YEAR
None
(3) Describe other Service Company property: Computer Software $
751,453
(4) Describe construction work in progress: Computer Software
$4,012,428
Office Furniture & Equipment
1,236,645
Other
6,593
$5,255,666
</FN>
</TABLE>
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<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
Schedule III - ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION OF
SERVICE COMPANY PROPERTY
BALANCE AT
BALANCE
BEGINNING
OTHER CHANGES AT CLOSE
ACCOUNT DESCRIPTION OF YEAR ADDITIONS
RETIREMENTS ADD (DEDUCT) (1) OF YEAR
<S> <C> <C> <C>
<C> <C> <C>
301 Organization $ - $ -
$ - $ - $ -
303 Miscellaneous Intangible Plant - -
- - - -
304 Land and Land Rights - -
- - - -
305 Structures and Improvements - -
- - - -
306 Leasehold Improvements - -
- - - -
307 Equipment - -
- - - -
308 Office Furniture and Equipment 30,635 127,496
- - - 158,131
309 Automobiles, Other Vehicles and
Related Garage Equipment - -
- - - -
310 Aircraft and Airport Equipment - -
- - - -
311 Other Service Company Property - 25,048
- - - 25,048
Total $30,635 $152,544
$ - $ - $183,179
<FN>
NOTES
(1) Provide an explanation of those changes considered material:
None
</FN>
</TABLE>
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<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
Schedule IV - INVESTMENTS
INSTRUCTIONS: Complete the following schedule concerning investments.
Under Account 124, "Other Investments", state each investment separately, with
description, including the name of issuing company, number of
shares or principal amount, etc.
Under Account 136, "Temporary Cash Investments", list each investment
separately.
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
<S> <C> <C> <C>
Account 123 - Investment in Associate Companies
None
Total $ - $ -
Account 124 - Other Investments
None
Total $ - $ -
Account 136 - Temporary Cash Investments
None
Total $ - $ -
</TABLE>
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<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the year Ended December 31, 1996
Schedule V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
INSTRUCTIONS: Complete the following schedule listing accounts receivable
from each associate company. Where the service company has
provided accommodation or convenience payments for associate
companies, a separate listing of total payment for each associate
company by subaccount should be provided.
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
<S> <C> <C>
Account 146 - Accounts Receivable
from Associate Companies:
The Cincinnati Gas & Electric Company
(CG&E) $ 2,696,165 $ -
PSI Energy, Inc. (PSI) - 7,088,383
Enertech Associates, Inc. (Formerly
Power International, Inc.) 563,053 -
Lawrenceburg Gas Company (Lawrenceburg) 53,867 41,422
KO Transmission Company 15 -
Miami Power Corporation 15,332 41
The Union Light, Heat and Power
Company (ULH&P) 9,449,721 3,036,609
West Harrison Gas and Electric
Company (WHG&E) 4,673 58
Tri-State Improvement Company 103,547 -
Cinergy Resources, Inc. 10,964 -
CGE ECK, Inc. 7,741 -
Cinergy Investments, Inc. (Investments) 481,589 -
Power Equipment Supply Co. 24,827 -
Cinergy Capital & Trading, Inc. (Formerly
Wholesale Power Services, Inc.) 109,782 -
PSI Recycling, Inc. 22,125 -
Cinergy Corp. (Cinergy) 448,460 4,191,172
PSI Argentina, Inc. 124,041 -___
Total $14,115,902 $14,357,685
</TABLE>
<TABLE>
<CAPTION>
Analysis Of Convenience Or Accommodation Payments:
<S> <C> <C>
Payments Made On Behalf Of Description Amount
CG&E Insurance Premiums $1,707,212
Lawrenceburg Insurance Premiums 17,072
ULH&P Insurance Premiums 196,287
WHG&E Insurance Premiums 17,072
PSI Insurance Premiums 3,084,663
Investments Insurance Premiums 42,787
Total $5,065,093
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the year Ended December 31, 1996
Schedule VI - FUEL STOCK EXPENSES UNDISTRIBUTED
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect
to fuel
stock expenses during the year and indicate amount attributable
to each associate company. Under the section headed "Summary"
listed below give an overall report of the fuel functions
performed by the service company.
DESCRIPTION LABOR EXPENSES
TOTAL
<S> <C> <C>
<C>
Account 152 - Fuel Stock Expenses Undistributed
None
Total $ - $ -
$ -
Summary:
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the year Ended December 31, 1996
Schedule VII - STORES EXPENSE UNDISTRIBUTED
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect
to stores
expense during the year and indicate amount attributable to each
associate company
DESCRIPTION LABOR EXPENSES
TOTAL
<S> <C> <C> <C>
<C>
Account 163 - Stores Expense Undistributed
None
Total $ - $ -
$ -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
Schedule VIII - MISCELLANEOUS CURRENT AND ACCRUED ASSETS
INSTRUCTIONS: Provide detail of items in this account. Items less than
$10,000 may be grouped, showing the number of items in each
group.
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
<S> <C> <C>
Account 174 - Miscellaneous Current
and Accrued Assets
None
Total $ - $ -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
Schedule IX- MISCELLANEOUS DEFERRED DEBITS
INSTRUCTIONS: Provide detail of items in this account. Items less than
$10,000 may be grouped by class showing the number of items in
each class.
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
<S> <C> <C>
Account 186 - Miscellaneous Deferred
Debits
MISC. (1 ITEM) $ 934 $ -
ITEMS DEFERRED PENDING INVESTIGATION 288,629 (187,036)
Total $289,563 $(187,036)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
Schedule X - RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES
INSTRUCTIONS: Provide a description of each material research, development,
or demonstration project which incurred costs by the service
corporation during the year.
DESCRIPTION AMOUNT
<S> <C>
Account 188 - Research, Development, or
Demonstration Expenditures
None
Total $ -
</TABLE>
<PAGE
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
Schedule XI - PROPRIETARY CAPITAL
NUMBER PAR OR
ACCOUNT OF SHARES STATED VALUE - OUTSTANDING CLOSE OF PERIOD -
NUMBER CLASS OF STOCK AUTHORIZED PER SHARE NO. OF SHARES TOTAL AMOUNT
<S> <C> <C> <C> <C> <C>
201 Common Stock Issued 100 $0.05 50 $3
<FN>
INSTRUCTIONS: Classify amounts in each account with brief explanation, disclosing the general nature of
transactions which gave rise to the reported amounts.
</FN>
</TABLE>
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
<S> <C> <C>
211 Miscellaneous Paid-In-Capital None
215 Appropriated Retained Earnings None
Total
<FN>
INSTRUCTIONS: Give particulars concerning net income or (loss) during the year, distinguishing between
compensation for the use of capital owed or net loss remaining from servicing nonassociates per the General
Instructions of the Uniform System of Accounts. For dividends paid during the year in cash or otherwise, provide
rate percentage, amount of dividend, date declared and date paid.
</FN>
</TABLE>
<TABLE>
<CAPTION>
BALANCE BALANCE
AT BEGINNING NET INCOME DIVIDENDS AT CLOSE
ACCOUNT DESCRIPTION OF YEAR OR (LOSS) PAID OF YEAR
<S> <C> <C> <C> <C> <C>
216 Unappropriated Retained Earnings $(212,501) $212,498 $ - $(3)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
Schedule XII - LONG-TERM DEBT
INSTRUCTIONS: Advances from associate companies should be reported separately from advances on notes and advances
on open account. Names of associate companies from which advances were received shall be shown under the class and
series of obligation column. For Account 224 - Other Long-Term Debt, provide the name of creditor company or
organization, terms of the obligation, date of maturity, interest rate, and the amount authorized and outstanding.
TERMS OF OBLIGATION BALANCE AT BALANCE
CLASS & SERIES DATE OF INTEREST AMOUNT BEGINNING (1) AT CLOSE
NAME OF CREDITOR OF OBLIGATION MATURITY RATE AUTHORIZED OF YEAR ADDITIONS DEDUCTIONS OF YEAR
<S> <C> <C> <C>
Account 223 - Advances from Associate
Companies: None
Total
Account 224 - Other Long-Term
Debt: None
Total
<FN>
NOTES:
(1) Give an explanation of deductions: None
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
Schedule XIII - CURRENT AND ACCRUED LIABILITIES
INSTRUCTIONS: Provide balance of notes and accounts payable to each associate
company. Give description and amount of miscellaneous current and accrued liabilities. Items less than $10,000 may
be grouped, showing the number of items in each group.
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
<S> <C> <C>
Account 233 - Notes Payable to
Associate Companies
CG&E $ - $18,447,192
CINERGY - 41,887
Total $ - $18,489,079
Account 234 - Accounts Payable to
Associate Companies
PSI $8,318,363 $ -
CG&E - 1,840,449
Total $8,318,363 $ 1,840,449
Account 242 - Miscellaneous Current and
Accrued Liabilities
None
</TABLE>
<PAGE>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
Schedule XIV - NOTES TO FINANCIAL STATEMENTS
Instructions: The space below is provided for important notes regarding the
financial statements, or any account thereof. Furnish particulars as to any
significant contingent assets or liabilities existing at the end of the year.
Notes relating to financial statements shown elsewhere in this report may be
indicated here by reference.
1. Summary of Significant Accounting Policies
(a) Merger Cinergy Corp. (Cinergy), a Delaware corporation and registered
holding company under the Public Utility Holding Company Act of 1935 (PUHCA),
was created in the October 1994 merger of The Cincinnati Gas & Electric
Company (CG&E) and PSI Resources, Inc. Cinergy Services, Inc. (Services) is a
wholly-owned subsidiary of Cinergy. Cinergy's other wholly-owned subsidiaries
are CG&E, PSI Energy, Inc., and Cinergy Investments, Inc. (Investments).
(b) Nature of Operations Services, a Delaware corporation, is the service
company for the Cinergy system, providing member companies with a variety of
administrative, management, and support services.
(c) Management's Use of Estimates The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities. Estimates are also required with respect to the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. (See Note 9.)
(d) Regulation Services is subject to regulation by the Securities and
Exchange Commission (SEC) under the PUHCA. Services' accounting policies
conform to generally accepted accounting principles and follow the Uniform
System of Accounts for Mutual Service Companies and Subsidiary Service
Companies prescribed by the SEC pursuant to the PUHCA.
(e) Federal and State Income Taxes Deferred tax assets and liabilities are
recognized for the expected future tax consequences of existing differences
between the financial reporting and tax reporting bases of assets and
liabilities.
(f) Service Company Property Service company property and equipment,
including any interest capitalized during construction, are recorded at cost.
(g) Depreciation Provisions for depreciation are determined by using the
straight-line method applied to the cost of depreciable plant in service. The
effective annual depreciation rates for both 1996 and 1995 were 10%. Software
is amortized over a five-year period at an annual rate of 20%.
(h) Income and Expenses Services provided to affiliated companies are
provided at cost. The costs of services are determined on a direct charge
basis to the extent practicable. Indirect costs are charged using the ratios
defined in the service agreements between Services and the client companies.
(See "Methods of Allocations.")
2. Common Stock
Services is authorized to issue 100 shares of Common Stock at a par value of
five cents ($.05) per share. During 1994, 50 shares of common stock were
issued. All of Services' outstanding common stock is held by Cinergy.
3. Notes Payable to Associate Companies
To better manage cash and working capital requirements, Cinergy's utility
subsidiaries, and Services, participate in a money pooling arrangement. Under
this money pooling arrangement, Cinergy system companies with surplus short-
term funds, whether from internal or external sources, provide short-term
loans to other system companies at rates that reflect (1) the actual costs of
the external borrowing and/or (2) the costs of the internal funds which are
set at the 30-day Federal Reserve "AA" industrial commercial paper rate. The
weighted average interest rate on money pool borrowings at December 31, 1996,
was 5.97%. The SEC's approval of the money pool, pursuant to the PUHCA,
extends through May 31, 1997. In March 1997, Cinergy's subsidiaries, which
participate in the money pooling arrangement, filed an application with the
SEC under the PUHCA requesting reauthorization of the money pool through
December 31, 2002.
4. Leases
Cinergy and its subsidiaries, including Services, have entered into operating
lease agreements covering various facilities and properties, including office
space and computer, communications, and transportation equipment. Total
rental payments on operating leases for each of the past two years were as
follows:
1996 1995
(in millions)
Cinergy and subsidiaries $31 $36
Future minimum lease payments required under operating leases with remaining,
non-cancelable lease terms in excess of one year as of December 31, 1996, are
as follows:
Cinergy and
Subsidiaries
(in millions)
Year Ended December 31
1997 $ 31
1998 23
1999 16
2000 10
2001 7
After 2001 19
$106
5. Pension Plans
The defined benefit pension plans of Cinergy's subsidiaries, of which Services
is a participant, cover substantially all employees meeting certain minimum
age and service requirements. Plan benefits are determined under a final
average pay formula with consideration of years of participation, age at
retirement, and the applicable average Social Security wage base or benefit
amount.
The funding policies of the operating subsidiaries are to contribute annually
to the plans an amount which is not less than the minimum amount required by
the Employee Retirement Income Security Act of 1974 and not more than the
maximum amount deductible for income tax purposes. Contributions applicable
to the 1996 and 1995 plan years for Cinergy's subsidiaries were $7 million and
$18 million, respectively. The plans' assets consist of investments in equity
and fixed income securities.
Cinergy's pension cost for 1996 and 1995 included the following components:
1996 1995
(in millions)
Benefits earned during the period $ 21.2 $ 18.5
Interest accrued on projected
benefit obligations 61.6 61.4
Actual (return) loss on plans' assets (75.6) (119.3)
Net amortization and deferral 17.3 61.1
Net periodic pension cost $ 24.5 $ 21.7
During 1996, Cinergy recognized an additional $61 million of accrued pension
cost in accordance with Statement of Financial Accounting Standards No. 88,
Employers' Accounting for Settlements and Curtailments of Defined Pension
Plans and for Termination Benefits. This amount represents the costs
associated with additional benefits extended in connection with a voluntary
workforce reduction programs.
1996 1995
Actuarial Assumptions:
For determination of projected benefit
obligations
Discount Rate 8.00% 7.50%
Rate of increase in future compensation 5.00 4.50
For determination of pension cost
Rate of return on plans' assets 9.00 9.00-9.50
The following table reconciles the plans' funded status with amounts recorded
in the Consolidated Financial Statements of Cinergy. Under the provisions of
Statement of Financial Accounting Standards No. 87, Employers' Accounting for
Pensions (Statement 87), certain assets and obligations of the plans are
deferred and recognized in the Consolidated Financial Statements of Cinergy in
subsequent periods.
1996 1995
Plans' Plan's Plans' Plan's
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Accumulated Benefits
Benefits Exceed Assets Benefits Exceed Assets
(in millions)
Actuarial present value
of benefits
Vested benefits $(423.1) $(241.6) $(376.9) $(227.3)
Non-vested benefits (33.5) (10.1) (35.1) (16.0)
Accumulated benefit
obligations (456.6) (251.7) (412.0) (243.3)
Effect of future
compensation
increases (121.7) (53.3) (120.3) (53.2)
Projected benefit
obligations (578.3) (305.0) (532.3) (296.5)
Plans' assets
at fair value 531.6 234.1 500.6 220.0
Projected benefit
obligations in excess
of plans' assets (46.7) (70.9) (31.7) (76.5)
Remaining balance of plans'
net assets existing at
date of initial application
of Statement 87 to be
recognized as a reduction
of pension cost in future
periods (6.7) (3.1) (7.7) (3.4)
Unrecognized net gain
resulting from experience
different from that
assumed and effects of
changes in assumptions (48.4) (28.1) (14.1) (1.3)
Prior service cost not
yet recognized in net
periodic pension cost 33.6 23.2 35.2 16.8
Accrued pension cost at
December 31 $ (68.2) $ (78.9) $ (18.3) $ (64.4
6. Other Postretirement Benefits
Cinergy's subsidiaries, including Services, provides certain health care and
life insurance benefits to retired employees and their eligible dependents.
The health care benefits include medical coverage, dental coverage, and
prescription drugs. The health care benefits provided are subject to certain
limitations, such as deductibles and co-payments. Additionally, all employees
must meet minimum age and service requirements to be eligible for these
postretirement benefits. Prior to January 1, 1997, CG&E and PSI employees
were covered under separate plans. Effective January 1, 1997, all Cinergy
active employees are eligible to receive essentially the same postretirement
health care benefits. Certain classes of employees, based on age, as well as
all retirees, have been grandfathered under benefit provisions in place prior
to January 1, 1997. Neither CG&E and its subsidiaries nor PSI currently pre-
fund their obligations for these postretirement benefits; however, PSI, in
connection with the settlement which resulted in a February 1995 Indiana
Utility Regulatory Commission (IURC) order, agreed to begin pre-funding.
Implementation of pre-funding is subject to the outcome of negotiations with
The Office of the Utility Consumer Counselor and approval by the IURC.
Postretirement benefit cost for 1996 and 1995 included the following
components:
Health Life
Care Insurance Total
(in millions)
1996
Benefits earned during the period $ 5.7 $ .1 $ 5.8
Interest accrued on Accumulated
Postretirement Benefit Obligations
(APBO) 16.5 2.2 18.7
Net amortization and deferral .3 - .3
Amortization of transition obligations 8.1 .3 8.4
Net periodic postretirement benefit cost $30.6 $2.6 $33.2
1995
Benefits earned during the period $ 4.4 $ .1 $ 4.5
Interest accrued on APBO 15.6 2.2 17.8
Amortization of transition obligations 8.1 .3 8.4
Net periodic postretirement benefit cost $28.1 $2.6 $30.7
The following table reconciles the APBO of the health care and life insurance
plans with amounts recorded in the Consolidated Financial Statements of
Cinergy. Under the provisions of Statement of Financial Accounting Standards
No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, certain obligations of the plans are deferred and recognized in the
Consolidated Financial Statements of Cinergy in the subsequent periods.
Health Life
Care Insurance Total
(in millions)
1996
Actuarial present value of benefits
Fully eligible active plan participants $ (13.7) $ (1.6) $ (15.3)
Other active plan participants (49.8) (1.5) (51.3)
Retirees and beneficiaries (118.0) (26.4) (144.4)
Projected APBO (181.5) (29.5) (211.0)
Unamortized transition obligations 75.4 .4 75.8
Unrecognized net loss (gain) resulting from
experience different from that assumed
and effects of changes in assumptions 19.5 (.5) 19.0
Accrued postretirement benefit obligations
at December 31, 1996 $ (86.6) $(29.6) $(116.2)
1995
Actuarial present value of benefits
Fully eligible active plan participants $ (11.7) $ (1.1) $ (12.8)
Other active plan participants (112.0) (2.7) (114.7)
Retirees and beneficiaries (99.2) (26.4) (125.6)
Projected APBO (222.9) (30.2) (253.1)
Unamortized transition obligations 137.1 .7 137.8
Unrecognized prior service cost (.3) - (.3)
Unrecognized net loss resulting from
experience different from that assumed
and effects of changes in assumptions 26.1 .5 26.6
Accrued postretirement benefit obligations
at December 31, 1995 $ (60.0) $(29.0) $ (89.0)
The following assumptions were used to determine the APBO:
1996 1995
Discount rate 8.00% 7.50%
Health care cost trend rate,
gradually declining to 5%
CG&E 7.00-9.00% 8.00-11.00%
PSI 7.00-9.00 8.00-10.00
Year ultimate trend rates achieved
CG&E 2004 2002
PSI 2004 2007
Increasing the health care cost trend rate by one percentage point in each
year would increase the APBO by approximately $21 million and $37 million for
1996 and 1995, respectively, and the aggregate of the service and interest
cost components of the postretirement benefit cost for each of 1996 and 1995
by approximately $4 million and $3 million, respectively.
7. Net Income (Loss)
The net loss at December 31, 1995, represents expenses not assigned at year
end. Such expenses have been properly assigned, resulting in net income at
December 31, 1996.
8. Income Taxes
Services complies with the provisions of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes (Statement 109). Statement 109
requires recognition of deferred tax assets and liabilities for the expected
future tax consequences of existing differences between the financial
reporting and tax reporting bases of assets and liabilities.
1996
Deferred Income Tax Liability
Utility plant $ 67,519
A summary of Federal and State income taxes charged (credited) to income and
the allocation of such amounts is as follows:
1996
Current Income Taxes
Federal $(63,353)
State (4,166)
Total current income taxes $(67,519)
Deferred Income Taxes
Federal
Depreciation and other utility plant-
related items $ 63,353
State
Depreciation and other utility plant-
related items 4,166
Total deferred income taxes $ 67,519
Total Income Taxes -
Services will participate in the filing of a consolidated Federal income tax
return with Cinergy for the year ended December 31, 1996. The current tax
liability is allocated among the members of the group pursuant to a tax
sharing agreement consistent with Rule 45(c) of the PUHCA.
9. Commitments and Contingencies
(a) Enertech Associates, Inc. (Enertech) Litigation On October 25, 1995, a
suit was filed in the Federal District Court for the Southern District of Ohio
by three former employees of Enertech, formerly named Power International,
Inc., a subsidiary of Investments, naming as defendants Enertech, Cinergy,
Investments, CG&E, PSI, James E. Rogers, and William J. Grealis. (Mr. Rogers
and Mr. Grealis are officers and/or directors of the foregoing companies.)
The lawsuit, which stems from the termination of employment of the three
former employees, alleges that they entered into employment contracts with
Enertech based on the opportunity to participate in potential profits from
future investments in energy projects in central and eastern Europe. The
suite alleges causes of action based upon, among other theories, breach of
contract related to the events surrounding the termination of their employment
and fraud and misrepresentation related to the level of financial support for
future projects. The suit alleges compensatory damages of $154 million based
upon assumed future success of potential future investments and punitive
damages of three times that amount. All defendants intend to defend
vigorously against the charges based upon meritorious defenses. Cinergy,
CG&E, and PSI are currently unable to predict the outcome of this litigation.
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
Schedule XV - COMPARATIVE STATEMENTS OF INCOME
December 31
ACCOUNT DESCRIPTION 1996 1995
<S> <C> <C> <C>
INCOME:
457 Services Rendered to Associate Companies $615,348,166 $190,167,376
458 Services Rendered to Nonassociate Companies - -
415 Jobbing and Contract Work 74 -
419 Other Interest Income 62,642 -___
Total Income 615,410,882 190,167,376
EXPENSES:
920 Salaries and Wages 206,699,993 88,557,249
921 Office Supplies and Expenses 61,183,041 27,797,960
922 Administrative Expenses Transferred - Credit (1,496,336) 7,320
923 Outside Services Employed 50,449,167 19,795,706
924 Property Insurance 4,331,407 433,850
925 Injuries and Damages 5,929,886 2,741,498
926 Employee Pension and Benefits 202,867,382 19,317,283
928 Regulatory Commission Expense 3,566,809 2,211,123
930.1 General Advertising Expenses 346,551 60,522
930.2 Miscellaneous General Expenses 41,260,147 16,969,753
931 Rents 20,701,478 4,663,934
932 Maintenance of Structures and Equipment 7,318,401 2,090,272
403,404 Depreciation and Amortization Expense 157,057 32,069
408 Taxes Other Than Income Taxes 11,315,084 5,697,526
409 Income Taxes (67,519) -
410 Provision for Deferred Income Taxes 67,519 -
411 Provision for Deferred Income Taxes - Credit - -
411.5 Investment Tax Credit - -
421 Miscellaneous Income or Loss (1,309) -
426.1 Donations - -
426.5 Other Deductions - -
427 Interest on Long-term Debt - -
430 Interest on Debt to Associate Companies 625,487 -
431 Other Interest Expense (55,861) 3,809
Total Expense 615,198,384 190,379,874
NET INCOME (LOSS) $ 212,498 $ (212,498)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31,1996
ANALYSIS OF BILLING
ASSOCIATE COMPANIES - ACCOUNT 457
DIRECT INDIRECT COMPENSATION
COSTS COSTS FOR USE TOTAL
CHARGED CHARGED OF CAPITAL AMOUNT
NAME OF ASSOCIATE COMPANY 457-1 457-2 457-3 BILLED
<S> <C> <C> <C> <C>
PSI Energy, Inc. $235,925,208 $39,386,636 $239,704 $275,551,548
PSI Energy Argentina, Inc. 96,728 17 - 96,745
Cinergy Investments, Inc. 1,591,210 75,494 1,530 1,668,234
Power Equipment Supply Co. (17,881) 1,619 74 (16,188)
Cinergy Capital & Trading, Inc. (Formerly
Wholesale Power Services, Inc.) 120,923 (2,513) 328 118,738
PSI Recycling, Inc. 45,077 1,450 - 46,527
PSI Argentina, Inc. 25,614 133 371 26,118
The Cincinnati Gas & Electric Company 261,775,768 45,478,106 291,440 307,545,314
Enertech Associates, Inc. (Formerly
Power International, Inc.) 1,066,855 8,866 1,669 1,077,390
Lawrenceburg Gas Company 462,964 418 137 463,519
KO Transmission Company 19,107 355 - 19,462
Miami Power Corporation 429 3 46 478
The Union Light, Heat and Power Company 20,643,496 5,757,922 28,421 26,429,839
West Harrison Gas and Electric Company 14,182 30 - 14,212
Tri-State Improvement Company 71,762 637 4,529 76,928
Cinergy Resources, Inc. 15,587 167 33 15,787
Cinergy Corp. 186,463 716 1,343 188,522
Cinergy Technology, Inc. 632,452 2,914 - 635,366
Cinergy Cooling Corp. 548,756 3,651 - 552,407
Cinergy UK, Inc. 817,678 19,542 - 837,220
TOTAL $524,042,378 $90,736,163 $569,625 $615,348,166
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31,1996
ANALYSIS OF BILLING
NONASSOCIATE COMPANIES - ACCOUNT 458
Instructions: Provide a brief description of the services rendered to each nonassociate
company.
DIRECT INDIRECT COMPENSATION EXCESS
COSTS COSTS FOR USE OR TOTAL
CHARGED CHARGED OF CAPITAL TOTAL DEFICIENCY AMOUNT
NAME OF NONASSOCIATE COMPANY 458-1 458-2 458-3 COST 458-4 BILLED
<S> <C> <C> <C> <C> <C> <C> <C>
None
TOTAL $ - $ - $ - $ - $ - $ -
</TABLE>
<PAGE
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31,1996
Schedule XVI - ANALYSIS OF CHARGES FOR SERVICE - ASSOCIATE AND NONASSOCIATE COMPANIES
INSTRUCTIONS: Total cost of service will equal for associate and nonassociate companies the total amount billed under their
separate
analysis of billing schedules.
Associate Company Charges Nonassociate Company Charge
Direct Indirect Direct Indirect
Account Description Of Items Cost Cost Total Cost Cost Total
<S> <C> <C> <C> <C> <C> <C> <C>
920 Salaries and Wages $159,820,085 $46,879,908 $206,699,993 $ - $ - $ -
921 Office Supplies and Expenses 53,243,042 7,939,998 61,183,041 -
922 Administrative Expense
Transferred - Credit (1,491,226) (5,110) (1,496,336) -
923 Outside Services Employed 38,734,768 11,714,399 50,449,167 -
924 Property Insurance 4,331,407 4,331,407 -
925 Injuries and Damages 5,927,473 2,413 5,929,886 -
926 Employee Pensions and Benefits 193,175,650 9,691,732 202,867,382 -
928 Regulatory Commission Expense 3,268,781 298,028 3,566,809 -
930.1 General Advertising Expenses 324,746 21,805 346,551 -
930.2 Miscellaneous General Expenses 38,882,517 2,377,630 41,260,147 -
931 Rents 12,190,993 8,510,485 20,701,478 -
932 Maintenance of Structures
and Equipment 6,503,051 815,350 7,318,401 -
403 Depreciation Expense 372 152,026 152,398 -
404 Amortization Expense 1,128 3,531 4,659 -
408 Taxes Other Than Income Taxes 9,212,178 2,102,906 11,315,084 -
409 Income Taxes (67,519) (67,519) -
410 Provision for Deferred Income
Taxes 67,519 67,519 -
411 Provision for Deferred Income
Taxes - Credit - -
411.5 Investment Tax Credit
421 Miscellaneous Income or Loss (1,309) (1,309) -
426.1 Donations - -
426.5 Other Deductions - -
427 Interest on Long-term Debt - -
430 Interest on Debt to Associate
Companies 625,487 625,487 -
431 Other Interest Expense (55,861) - (55,861) -
Total Expense $524,069,104 $91,129,280 $615,198,384 $ - $ - $ -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31,1996
Schedule XVI - ANALYSIS OF CHARGES FOR SERVICE - ASSOCIATE AND NONASSOCIATE COMPANIES (CONTINUED)
INSTRUCTIONS: Total cost of service will equal for associate and nonassociate companies the total amount billed under their
separate
analysis of billing schedules.
Total Charges for Service__
Direct Indirect
Account Description Of Items Cost Cost Total
<S> <C> <C> <C> <C>
920 Salaries and Wages $159,820,085 $46,879,908 $206,699,993
921 Office Supplies and Expenses 53,243,042 7,939,998 61,183,041
922 Administrative Expense
Transferred - Credit (1,491,226) (5,110) (1,496,336)
923 Outside Services Employed 38,734,768 11,714,399 50,449,167
924 Property Insurance 4,331,407 4,331,407
925 Injuries and Damages 5,927,473 2,413 5,929,886
926 Employee Pensions and Benefits 193,175,650 9,691,732 202,867,382
928 Regulatory Commission Expense 3,268,781 298,028 3,566,809
930.1 General Advertising Expenses 324,746 21,805 346,551
930.2 Miscellaneous General Expenses 38,882,517 2,377,630 41,260,147
931 Rents 12,190,993 8,510,485 20,701,478
932 Maintenance of Structures
and Equipment 6,503,051 815,350 7,318,401
403 Depreciation Expense 372 152,026 152,398
404 Amortization Expense 1,128 3,531 4,659
408 Taxes Other Than Income Taxes 9,212,178 2,102,906 11,315,084
409 Income Taxes (67,519) (67,519)
410 Provision for Deferred Income
Taxes 67,519 67,519
411 Provision for Deferred Income
Taxes - Credit -
411.5 Investment Tax Credit
421 Miscellaneous Income or Loss (1,309) (1,309)
426.1 Donations -
426.5 Other Deductions -
427 Interest on Long-term Debt -
430 Interest on Debt to Associate
Companies 625,487 625,487
431 Other Interest Expense (55,861) - (55,861)
Total Expense $524,069,104 $91,129,280 $615,198,384
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31,1996
Schedule XVII - SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION
INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General
Structure of Accounting System: Uniform System of Account(s))
--------------------------DEPARTMENT OR SERVICE FUNCTION--------------------------
TOTAL INFORMATION METERS AND
ACCOUNT DESCRIPTION OF ITEMS AMOUNT OVERHEAD SYSTEMS TRANSPORTATION
<S> <C> <C> <C> <C> <C>
920 Salaries and Wages $206,699,993 $ - $19,182,401 $ 9,087,056
921 Office Supplies and
Expenses 61,183,041 - 6,639,511 8,177,445
922 Administrative Expense
Transferred - Credit (1,496,336) - (9,592) (2,022)
923 Outside Services
Employed 50,449,167 - 3,914,946 153,291
924 Property Insurance 4,331,407 - - 513,827
925 Injuries and Damages 5,929,886 - 101 928
926 Employee Pensions and
Benefits 202,867,382 - 5,205,953 2,433,080
928 Regulatory Commission
Expense 3,566,809 - - 1,844
930.1 General Advertising
Expenses 346,551 - - -
930.2 Miscellaneous General
Expenses 41,260,147 - 822,259 1,030,876
931 Rents 20,701,478 - 15,735,625 1,520,301
932 Maintenance of Structures
and Equipment 7,318,401 - 4,565,665 2,610
403 Depreciation Expense 152,398 152,398 - -
404 Amortization Expense 4,659 - - -
408 Taxes Other Than
Income Taxes 11,315,084 - 1,296,100 730,328
409 Income Taxes (67,519) - - -
410 Provision for Deferred
Income Taxes 67,519 - - -
411 Provision for Deferred
Income Taxes - Credit - - - -
411.5 Investment Tax Credit - - - -
421 Miscellaneous Income or
Loss (1,309) - - -
426.1 Donations - - - -
426.5 Other Deductions - - - -
427 Interest on Long-term
Debt - - - -
430 Interest on Debt to
Associate Companies 625,487 - - -
431 Other Interest Expense (55,861) (55,861) - -
Total Expenses $615,198,384 $ 96,537 $57,352,969 $23,649,564
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31,1996
Schedule XVII - SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION(CONTINUED)
INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General
Structure of Accounting System: Uniform System of Account(s))
--------------------------DEPARTMENT OR SERVICE FUNCTION---------------
ELEC. SYSTEM INTERNAL ELEC. TRANS.
ACCOUNT DESCRIPTION OF ITEMS MAINTENANCE AUDITING & DISTRIBUTION ACCOUNTING
<S> <C> <C> <C> <C>
920 Salaries and Wages $1,531,587 $1,767,434 $17,531,757 $13,838,967
921 Office Supplies and
Expenses 56,330 213,977 2,381,432 940,042
922 Administrative Expense
Transferred - Credit (419) (43) (372,455) (315,850)
923 Outside Services
Employed - 5,121 131,711 1,486,328
924 Property Insurance - - - 402
925 Injuries and Damages 367 200 1,361 -
926 Employee Pensions and
Benefits 398,826 363,807 3,408,268 1,940,469
928 Regulatory Commission
Expense - - 5,020 87,849
930.1 General Advertising
Expenses - - 5,314 -
930.2 Miscellaneous General
Expenses 419 1,632 8,983 21,578
931 Rents - - - (3,014,893)
932 Maintenance of Structures
and Equipment - - - 66
403 Depreciation Expense - - - -
404 Amortization Expense - - - 4,659
408 Taxes Other Than
Income Taxes 95,018 112,166 993,665 688,650
409 Income Taxes - - - (67,519)
410 Provision for Deferred
Income Taxes - - - 67,519
411 Provision for Deferred
Income Taxes - Credit - - - -
411.5 Investment Tax Credit - - - -
421 Miscellaneous Income or
Loss - - - (1,309)
426.1 Donations - - - -
426.5 Other Deductions - - - -
427 Interest on Long-term
Debt - - - -
430 Interest on Debt to
Associate Companies - - - 625,487
431 Other Interest Expense - - - -
Total Expenses $2,082,128 $2,464,294 $24,095,056 $16,302,445
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31,1996
Schedule XVII - SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION
INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General
Structure of Accounting System: Uniform System of Account(s))
------------------------------DEPARTMENT OR SERVICE FUNCTION------
HUMAN MATERIALS MARKETING &
ACCOUNT DESCRIPTION OF ITEMS RESOURCES MANAGEMENT FACILITIES CUST. RELATIONS
<S> <C> <C> <C> <C> <C>
920 Salaries and Wages $ 30,691,092 $13,903,899 $ 5,552,266 $ 8,057,755
921 Office Supplies and
Expenses 1,331,726 1,482,789 5,692,344 7,897,697
922 Administrative Expense
Transferred - Credit (60) (2,063) (1,500) (53,209)
923 Outside Services
Employed 982,573 1,093,543 151,114 1,093,467
924 Property Insurance - 195,312 - -
925 Injuries and Damages 638,845 786 625 -
926 Employee Pension and
Benefits 165,632,129 2,963,243 1,381,820 1,519,016
928 Regulatory Commission
Expense - - - -
930.1 General Advertising
Expenses - - 638 73,888
930.2 Miscellaneous General
Expenses 50,126 459,614 601 533,497
931 Rents 9,306 12,133 1,384,201 62,837
932 Maintenance of Structures
and Equipment 13 - 2,530,977 72,474
403 Depreciation Expense - - - -
404 Amortization Expense - - - -
408 Taxes other Than Income
Taxes 784,459 874,877 419,126 481,713
409 Income Taxes - - - -
410 Provision for Deferred
Income Taxes - - - -
411 Provision for Deferred
Income Taxes - Credit - - - -
411.5 Investment Tax Credit - - - -
421 Miscellaneous Income
or Loss - - - -
426.1 Donations - - - -
426.5 Other Deductions - - - -
427 Interest on Long-term
Debt - - - -
430 Interest on Debt to
Associate Companies - - - -
431 Other Interest Expense - - - -
Total Expenses $200,120,209 $20,984,133 $17,112,212 $19,739,135
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31,1996
Schedule XVII - SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION
INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3
General Structure of Accounting System: Uniform System of Account(s))
------------------------------DEPARTMENT OR SERVICE FUNCTION---------------------------
ENVIRONMENTAL PUBLIC POWER ENG. & INVESTOR
ACCOUNT DESCRIPTION OF ITEMS AFFAIRS AFFAIRS CONSTRUCTION RELATIONS
<S> <C> <C> <C> <C> <C>
920 Salaries and Wages $2,875,699 $2,230,040 $23,818,205 $ 691,061
921 Office Supplies and
Expenses 707,059 697,738 2,601,940 349,496
922 Administrative Expense
Transferred - Credit (172) (37) (693,072) -
923 Outside Services
Employed 790,836 67,854 116,709 -
924 Property Insurance - - - -
925 Injuries and Damages 46 - 53,353 -
926 Employee Pension and
Benefits 628,264 684,769 4,262,915 129,224
928 Regulatory Commission
Expense - - 3,156 -
930.1 General Advertising
Expenses - 211,403 433 -
930.2 Miscellaneous General
Expenses 172,920 1,876,483 62,290 676,873
931 Rents 4,352 116,613 6,107 2,374
932 Maintenance of Structures
and Equipment - 32,714 7,617 -
403 Depreciation Expense - - - -
404 Amortization Expense - - - -
408 Taxes other Than Income
Taxes 175,153 145,678 1,254,849 44,546
409 Income Taxes - - - -
410 Provision for Deferred
Income Taxes - - - -
411 Provision for Deferred
Income Taxes - Credit - - - -
411.5 Investment Tax Credit - - - -
421 Miscellaneous Income
or Loss - - - -
426.1 Donations - - - -
426.5 Other Deductions - - - -
427 Interest on Long-term
Debt - - - -
430 Interest on Debt to
Associate Companies - - - -
431 Other Interest Expense - - - - _
Total Expenses $5,354,157 $6,063,255 $31,494,502 $1,893,574
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31,1996
Schedule XVII - SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION
INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of
Accounting System: Uniform System of Account(s))
------------------DEPARTMENT OR SERVICE FUNCTION-----
ACCOUNT DESCRIPTION OF ITEMS LEGAL RATES FINANCE RIGHT OF WAY
<S> <C> <C> <C> <C> <C>
920 Salaries and Wages $ 5,708,611 $1,662,677 $9,287,055 $ 4,388,046
921 Office Supplies and
Expenses 1,407,875 93,509 9,994,405 581,547
922 Administrative Expense
Transferred - Credit (203) (39) (4,554) (20,691)
923 Outside Services
Employed 3,391,419 - 3,666,125 17,056,521
924 Property Insurance - - 3,504,917 -
925 Injuries and Damages 5,477 - 5,223,783 110
926 Employee Pension and
Benefits 1,415,162 400,928 2,117,855 566,095
928 Regulatory Commission
Expense 527,450 2,941,133 - -
930.1 General Advertising
Expenses - - 54,442 433
930.2 Miscellaneous General
Expenses 1,653,854 - 15,432,665 10,343
931 Rents 382,424 43,048 1,987 3,990,205
932 Maintenance of Structures
and Equipment 3,649 - 265 468
403 Depreciation Expense - - - -
404 Amortization Expense - - - -
408 Taxes Other Than Income
Taxes 362,507 104,620 553,923 170,884
409 Income Taxes - - - -
410 Provision for Deferred
Income Taxes - - - -
411 Provision for Deferred
Income Taxes - Credit - - - -
411.5 Investment Tax Credit - - - -
421 Miscellaneous Income or
Loss - - - -
426.1 Donations - - - -
426.5 Other Deductions - - - -
427 Interest on Long-term
Debt - - - -
430 Interest on Debt to
Associate Companies - - - -
431 Other Interest Expense - - - -
Total Expenses $14,858,225 $5,245,876 $49,832,868 $26,743,961
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31,1996
Schedule XVII - SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION
INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3
General Structure of Accounting System: Uniform System of Account(s))
--------------------------DEPARTMENT OR SERVICE FUNCTION------------
POWER
ACCOUNT DESCRIPTION OF ITEMS FUELS PLANNING EXECUTIVE PLANNING
<S> <C> <C> <C> <C> <C>
920 Salaries and Wages $1,124,135 $608,575 $14,193,065 $18,968,610
921 Office Supplies and
Expenses 355,624 194,548 5,147,302 4,238,705
922 Administrative Expense
Transferred - Credit (312) - (8,051) (11,992)
923 Outside Services
Employed 32,993 66,315 14,963,155 1,285,146
924 Property Insurance - - 116,949 -
925 Injuries and Damages - - 3,222 682
926 Employee Pension and
Benefits 296,314 136,659 3,102,085 3,880,501
928 Regulatory Commission
Expense - - 184 173
930.1 General Advertising
Expenses - - - -
930.2 Miscellaneous General
Expenses 72,877 - 5,455,891 12,916,366
931 Rents 52,500 - 392,146 212
932 Maintenance of Structures
and Equipment - - 86,774 15,109
403 Depreciation Expense - - - -
404 Amortization Expense - - - -
408 Taxes Other Than Income
Taxes 83,135 42,751 725,947 1,174,989
409 Income Taxes - - - -
410 Provision for Deferred
Income Taxes - - - -
411 Provision for Deferred
Income Taxes - Credit - - - -
411.5 Investment Tax Credit - - - -
421 Miscellaneous Income or
Loss - - - -
426.1 Donations - - - -
426.5 Other Deductions - - - -
427 Interest on Long-term
Debt - - - -
430 Interest on Debt to
Associate Companies - - - -
431 Other Interest Expense - - - - _
Total Expenses $2,017,266 $1,048,848 $44,178,669 $42,468,501
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
DEPARTMENTAL ANALYSIS OF SALARIES - ACCOUNT 920
---------- DEPARTMENTAL SALARY EXPENSE ----------
NAME OF DEPARTMENT --- INCLUDED IN AMOUNTS BILLED TO -- NUMBER OF
INDICATE EACH DEPARTMENT TOTAL PARENT OTHER NON- PERSONNEL
OR SERVICE FUNCTION AMOUNT COMPANY ASSOCIATES ASSOCIATES END OF YEAR
<S> <C> <C> <C> <C> <C>
Information Systems $ 19,182,401 $ (189) $19,182,590 $ 276
Meters and Transportation 9,087,056 22 9,087,034 181
Electric System Maintenance 1,531,587 1,531,587 19
Marketing and Customer Relations 8,057,755 8,057,755 160
Electric Transmission and
Distribution Engineering
and Construction 17,531,757 1,145 17,530,612 230
Power Engineering and Construction 23,818,205 23,818,205 284
Human Resources 30,691,092 21,545 30,669,547 256
Materials Management 13,903,899 13,903,899 222
Facilities 5,552,266 5,552,266 143
Accounting 13,838,967 13,838,967 168
Power Planning 18,968,610 18,968,610 258
Public Affairs 2,230,040 2,230,040 32
Legal 5,708,611 14,306 5,694,305 78
Rates 1,662,677 1,662,677 22
Finance 9,287,055 1,444 9,285,611 110
Right of Way 4,388,046 4,388,046 45
Internal Auditing 1,767,434 1,767,434 25
Environmental Affairs 2,875,699 7,577 2,868,122 33
Fuels 1,124,135 1,124,135 16
Investor Relations 691,061 691,061 11
Planning 608,575 6 608,569 9
Executive 14,193,065 45,706 14,147,359 220
TOTAL
$206,699,993 $91,562 $206,608,431 $ 2,798
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services employed. If the aggregate amounts paid to any one payee and
included within one subaccount is less than $100,000, only the aggregate number and amount of all such payments
included within the subaccount need be shown. Provide a subtotal for each type of service.
FROM WHOM PURCHASED 1/ DESCRIPTION AMOUNT
<S> <C> <C>
Auditing Services:
Arthur Andersen LLP Audit of Cinergy and subsidiaries Consolidated
Financial Statements; audit of the financial
statements of Cinergy's or its subsidiaries
deferred compensation and stock plans; audit of
fuel cost recovery clauses; research and consultation
on various accounting and tax matters; and assistance
in the analysis and resolution of miscellaneous
accounting issues $1,106,523
Legal Services:
Baker & Daniels Regulatory and Benefits Matters 109,698
Bingham Summers Welsh &
Spilman Collective Bargaining 211,964
Gallagher, Boland, Meiburger Review and discuss service agreements and bills
and Brosnan of sale tendered by Columbia Gas and Columbia
Gulf 189,565
Jones, Day, Reavis & Pogue Litigation 120,370
Reid & Priest LLP Mortgage Matters 397,926
Skadden, Arps, Slate, Meagher
& Flom Litigation 457,234
Taft, Stettinius & Hollister Litigation 745,886
2,232,643
Tree Trimming Services:
Asplundh Tree Expert Co. Tree Trimming 6,101,696
The Davey Tree Experience Tree Trimming 2,120,074
The Gilbert Companies, Inc. Brush Clearance 252,622
Lewis Tree Service Tree Trimming 720,769
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923 (Continued)
FROM WHOM PURCHASED 1/ DESCRIPTION AMOUNT
<S> <C> <C>
Nelson Tree Service, Inc. Tree Trimming 986,465
Townsend Tree Service, Inc. Tree Trimming 4,026,264
14,207,890
Other Services
ACRT, Inc. Environmental Matters 726,358
Aerial Solutions, Inc. Aerial-helicopter side trimming 195,241
Analysts International Corp. Contract Programming 736,215
J. Aron & Company Management Consulting 262,400
Barr Devlin Associates Inc. Financial Advisory Services 621,275
Bradsworth & Associates Management Consulting 123,080
The Brattle Group Economic and Management Consulting 141,922
Christensen Associates Slide Presentation and Market Assessment 151,495
Ciber Contract Programming 297,959
Complete Business Solutions, Inc. Information Technology Consulting 269,378
CSC Consulting Information Technology Consulting-Technical
Architecture 200,436
CSC Index Reengineering Consulting 9,901,973
The Demand Management Company DSM-Peak Conservation Plan 400,664
Electric Power Research Institute Tailored Collaboration Agreement 315,500
Entex Information Services Contract Programming 139,342
Ferrell Capital Management Risk Management Services 171,891
Gilkey Electric DSM-Peak Conservation Plan 54,194
Joseph Graves Associates, Inc. Contract Programming 104,390
Howard Systems International Information Technology Consulting 283,728
HS Consulting, Inc. Information Technology Consulting 115,016
Infotech Consulting, Inc. Information Technology Consulting 425,185
Intermat Material Management Consulting -Quality
Assurance Review 298,484
International Reliability Consultants Reliability Center Study 115,955
Harold Isaacs Management Consulting 225,000
McKinsey & Company, Inc. Management Consulting - Business Unit Strategy 326,910
Darrell V. Menscer Management Consulting 136,769
Metro Information Services Information Technology Consulting 147,382
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923 (Continued)
FROM WHOM PURCHASED _1/ DESCRIPTION AMOUNT
Other Services (Continued):
<S> <C> <C>
The NorthBridge Group Industry Restructuring Consulting 883,571
People Working Cooperatively Low-income Weatherization - DSM 755,287
Pomeroy Computer Resources Contract Programming 219,074
Promark Company Executive Outplacement Counseling 163,131
J.B. Reid & Associates, Inc. Diversity Consulting 178,564
Resource Support Associates, Inc. Information Systems -Material Management System 153,200
Restructuring Associates, Inc. Reengineering Consulting 602,971
Richard's Consulting, Inc. Information Technology Consulting 176,378
SAP America, Inc. Information Technology Consulting 145,455
Software Synergy, Inc. Information Technology Consulting 249,954
Valcom Contract Programming 355,324
Wheeled Electric Power Aggregator Fees 750,000
Working in Neighborhoods, Inc. Low-income Weatherization - DSM 102,493
Other _2/ 11,270,125
32,893,669
Total Outside Services $50,440,725
<FN>
(1) All companies from which Cinergy purchased outside services were non-associated companies, unless otherwise noted.
(2) Outside services performed that did not meet the $100,000 amount are totaled in this line item.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
EMPLOYEE PENSIONS AND BENEFITS - ACCOUNT 926
INSTRUCTIONS: Provide a listing of each pension plan and benefit program
provided by the service company. Such listing should be limited to $25,000.
DESCRIPTION AMOUNT
<S> <C>
Pension $ 53,881,577
Medical/Dental insurance 118,393,404
401(k) contributions 9,879,642
Life insurance 11,522,867
Others 9,189,892
TOTAL $202,867,382
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
GENERAL ADVERTISING EXPENSES - ACCOUNT 930.1
INSTRUCTIONS: Provide a listing of the amounts included in Account 930.1,
"General Advertising Expenses", classifying the items according to the nature of the advertising and as defined in
the account definition. If a particular class includes an amount in excess of $3,000 applicable to a single payee,
show separately the name of the payee and the aggregate amount applicable thereto.
DESCRIPTION NAME OF PAYEE AMOUNT
<S> <C> <C>
Advertising Fees -
Customer Education Martin Direct $156,325
Honeywell DMC Service 16,472
Rising Sun Enterprises 15,000
Miami Systems Corp. 9,263
Eckhart & Co., Inc. 6,274
Shaughnessy-Kniep-Hawe Paper
Company 4,870
Metropolitan Printing Service,
Inc, 5,820
Company Labor 5,342
Others 62,361
Promotional Items Mrs. Alison's Cookie 13,488
Kelly Services 8,391
Belcon Services Group 5,306
Color Brite Fabrics 5,269
Ray Hamilton Company 3,432
Others 10,374
Company Labor 18,564
TOTAL $346,551
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
MISCELLANEOUS GENERAL EXPENSES - ACCOUNT 930.2
INSTRUCTIONS: Provide a listing of the amount included in Account 930.2,
"Miscellaneous General Expenses", classifying such expenses according to their nature. Payments and expenses
permitted by Section 321 (b)(2) of the Federal Election Campaign Act, as amended by Public Law 94-283 in 1976 (2
U.S.C. 441 (b) (2) shall be separately classified.
DESCRIPTION AMOUNT
<S> <C>
Sale of Accounts Receivable Fees (PSI, ULH&P, and CG&E) $12,870,929
Company Membership Fees and Dues 5,540,650
Miscellaneous Materials and Supplies Purchased 6,485,546
Customer Incentive/Rebates - Demand-side Management 2,585,294
Directors' Fees 1,506,249
Annual Report Expenses 216,859
Miscellaneous Shareholder and Trustee Expenses 394,418
Technical, General, Computer and Engineering Services 651,623
Labor, Materials and Supplies 3,916,972
Miscellaneous Stores and Transportation Expenses 5,793,785
Other Miscellaneous Items 1,297,822
TOTAL $41,260,147
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
RENTS - ACCOUNT 931
INSTRUCTIONS: Provide a listing of the amount included in Account 931,
"Rents", classifying such expenses by major groupings of property, as defined in the account definition of the
Uniform System of Accounts.
TYPE OF PROPERTY AMOUNT
<S> <C>
Computer Equipment Rent $18,951,856
Operating and Work Equipment Rent 1,521,844
Other Rent 227,778
TOTAL $20,701,478
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1995
TAXES OTHER THAN INCOME TAXES - ACCOUNT 408
INSTRUCTIONS: Provide an analysis of Account 408, "Taxes Other Than Income
Taxes". Separate the analysis into two groups (1) Other than U.S. Government taxes, and (2) U.S. Government taxes.
Specify each of the various kinds of taxes and show the amounts thereof. Provide a subtotal for each class of tax.
KIND OF TAX AMOUNT
<S> <C>
Other Than U.S. Government Taxes:
Indiana Gross Income Tax $ 980
Delaware Franchise Tax 50
Kentucky License Tax 30
Ohio Franchise Tax 50
Indiana Sales and Use Tax 294
Florida Occupational Tax 150
State Unemployment 71,176
Sub-total 72,730
U.S. Government Taxes:
Federal Excise Tax on Phone Service 11
Social Security Taxes 11,067,331
Federal Unemployment 175,012
Sub-total 11,242,354
TOTAL $11,315,084
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
DONATIONS - ACCOUNT 426.1
INSTRUCTIONS: Provide a listing of the amount included in Account 426.1,
"Donations", classifying such expenses by its purpose. The aggregate number and amount of all items of less than
$3,000 may be shown in lieu of details.
NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT
<S> <C. <C>
None
TOTAL
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
OTHER DEDUCTIONS - ACCOUNT 426.5
INSTRUCTIONS: Provide a listing of the amount included in Account 426.5,
"Other Deductions", classifying such expenses according to their nature.
DESCRIPTION NAME OF PAYEE AMOUNT
<S> <C> <C>
None
TOTAL
</TABLE>
<PAGE>
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
Schedule XVIII - NOTES TO STATEMENT OF INCOME
INSTRUCTIONS: The space below is provided for important notes regarding the
statement of income or any account thereof. Furnish particulars
as to any significant increase in services rendered or expenses
incurred during the year. Notes relating to financial statements
shown elsewhere in this report may be indicated here by
reference.
See Schedule XIV - Notes to Financial Statements
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
Schedule XIX - FINANCIAL DATA SCHEDULE
ITEM NO. CAPTION HEADING
1 Net Service Company Property $ 7,135,931
2 Total Investments -
3 Total Current and Accrued Assets 21,843,856
4 Total Deferred Debits (187,036)
5 Balancing Amount for Total Assets
and Other Debits -
6 Total Assets and Other Debits 28,792,751
7 Total Proprietary Capital -
8 Total Long-Term Debt -
9 Notes Payable -
10 Notes Payable to Associate Companies 18,489,079
11 Balancing Amount for Total Current
and Accrued Liabilities 10,236,153
12 Total Deferred Credits -
13 Accumulated Deferred Income Taxes 67,519
14 Total Liabilities and Proprietary Capital 28,792,751
15 Services Rendered to Associate Companies 615,348,166
16 Services Rendered to Nonassociate Companies -
17 Miscellaneous Income or Loss 62,716
18 Total Income 615,410,882
19 Salaries and Wages 206,699,993
20 Employee Pensions and Benefits 202,867,382
21 Balancing Amount for Total Expenses 205,631,009
22 Total Expenses 615,198,384
23 Net Income (Loss) 212,498
24 Total Expenses (Direct Costs) 343,683,265
25 Total Expenses (Indirect Costs) 271,515,119
26 Total Expenses (Total) 615,198,384
27 Number of Personnel End of Year 2,798
<TABLE>
<CAPTION>
ORGANIZATION CHART
Chairman
- - Executive
- - Internal Auditing
|
|
Vice Chairman, President, and Chief Executive Officer
- - Executive
|
<S> <C> <C> <C> <C> <C> <C>
Vice President & Vice President Vice President President, President, President,
Senior Manager, General Chief Vice President Energy Energy Energy
Human Resource Counsel and Financial and Chief of Commodities Delivery Services
Strategy Secretary Officer Staff Business Business Business
Unit Unit Unit
- Human - Legal - Information - Facilities - Fuels - Materials - Marketing
Resources - Rates Systems - Investor - Power Management and
- Finance Relations Planning - Meters and Customer
- Accounting - Public Affairs - Environmental Transportation Relations
- Planning Affairs - Electric System
- Power Maintenance
Engineering & - Electric Transmission
Construction and Distribution
Engineering and
Construction
- Right of Way
</TABLE>
[CAPTION]
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
METHODS OF ALLOCATION
The allocation of expenses not directly attributable to a particular Client
Company are based on the following factors:
1. Sales Ratio
A ratio, based on domestic firm kilowatt-hour electric sales (and/or the
equivalent cubic feet of gas sales, where applicable), excluding intra-
system sales, for the immediately preceding twelve consecutive calendar
months, the numerator of which is for a Client Company and the denominator
of which is for all domestic utility Client Companies. This ratio will be
determined annually, or at such times as may be required due to a
significant change.
2. Electric Peak Load Ratio
A ratio, based on the sum of the monthly domestic firm electric maximum
system demands for the immediately preceding twelve consecutive calendar
months, the numerator of which is for a Client Company and the denominator
of which is for all domestic utility Client Companies. This ratio will be
determined annually, or at such time as may be required due to a
significant change.
3. Number of Customers Ratio
A ratio, based on the sum of the firm domestic electric customers (and/or
gas customers where applicable) at the end of each month for the
immediately preceding twelve consecutive calendar months, the numerator of
which is for a Client Company and the denominator of which is for all
domestic utility Client Companies. This ratio will be determined
annually, or at such time as may be required due to a significant change.
4. Number of Employees Ratio
A ratio, based on the sum of the number of employees at the end of each
month for the immediately preceding twelve consecutive calendar months,
the numerator of which is for a Client Company or Service Company Function
and the denominator of which is for all Client Companies (and Cinergy
Corp.'s non-utility and non-domestic utility affiliates, where applicable)
and/or the Service Company. This ratio will be determined annually, or at
such time as may be required due to a significant change.
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
METHODS OF ALLOCATION - continued
5. Construction Expenditure Ratio
A ratio, based on construction expenditures, net of reimbursements, for
the immediately preceding twelve consecutive calendar months, the
numerator of which is for a Client Company and the denominator of which is
for all Client Companies. Separate ratios will be computed for total
construction expenditure and appropriate functional plant (i.e.,
production, transmission, distribution, and general) classifications.
This ratio will be determined annually, or at such time as may be required
due to a significant change.
6. Circuit Miles of Electric Distribution Lines Ratio
A ratio, based on installed circuit miles of domestic electric
distribution lines at the end of the immediately preceding calendar year,
the numerator of which is for a Client Company and the denominator of
which is for all domestic utility Client Companies. This ratio will be
determined annually, or at such time as may be required due to a
significant change.
7. Number of Central Processing Unit Seconds Ratio
A ratio, based on the sum of the number of central processing unit seconds
expended to execute mainframe computer software applications for the
immediately preceding twelve consecutive calendar months, the numerator of
which is for a Client Company or Service Company Function, and the
denominator of which is for all Client Companies, (and Cinergy Corp.'s
non-utility and non-domestic utility affiliates, where applicable) and/or
the Service Company. This ratio will be determined annually, or at such
time as may be required due to a significant change.
Annual Report of Cinergy Services, Inc.
For the Year Ended December 31, 1996
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED
The following annual statement was supplied to each associate company in
support of the amount of compensation for use of capital billed during 1996:
In accordance with Instruction 01-12 of the Securities and Exchange
Commission's Uniform System of Accounts for Mutual Service Companies and
Subsidiary Service Companies, Services submits the following information on
the billing of interest on borrowed funds to associated companies for the year
1996:
A. Amount of interest billed to associate companies is contained on
page 26, Analysis of Billing.
B. The basis for billing of interest to the associated companies is
based on the ratio of the total expenses charged to each associated
company, exclusive of interest, to the total expenses charged to all
associated companies, exclusive of interest during the previous year.
ANNUAL REPORT OF Cinergy Services, Inc.
SIGNATURE CLAUSE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935 and the rules and regulations of the Securities and Exchange
Commission issued thereunder, the undersigned company has duly caused
this report to be signed on its behalf by the undersigned officer
thereunto duly authorized.
Cinergy Services, Inc.
(Name of Reporting Company)
By: /s/Charles J. Winger
(Signature of Signing Officer)
Charles J. Winger, Comptroller
(Printed Name and Title of Signing Officer)
Date: April 28, 1997
