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, 1997
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, 1997, shares of Common Stock outstanding for each registrant
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 . . . . . . . . . . . . . 6
Consolidated Statements of Income . . . . . . . . . . 8
Consolidated Statements of Changes in Common9
Stock Equity. . . . . . . . . . . . . . . . . . . . 9
Consolidated Statements of Cash Flows . . . . . . . . 10
Results of Operations . . . . . . . . . . . . . . . . 11
The Cincinnati Gas & Electric Company
Consolidated Balance Sheets . . . . . . . . . . . . . 19
Consolidated Statements of Income . . . . . . . . . . 21
Consolidated Statements of Cash Flows . . . . . . . . 22
Results of Operations . . . . . . . . . . . . . . . . 23
PSI Energy, Inc.
Consolidated Balance Sheets . . . . . . . . . . . . . 27
Consolidated Statements of Income . . . . . . . . . . 29
Consolidated Statements of Cash Flows . . . . . . . . 30
Results of Operations . . . . . . . . . . . . . . . . 31
The Union Light, Heat and Power Company
Balance Sheets. . . . . . . . . . . . . . . . . . . . 34
Statements of Income. . . . . . . . . . . . . . . . . 36
Statements of Cash Flows. . . . . . . . . . . . . . . 37
Results of Operations . . . . . . . . . . . . . . . . 38
Notes to Financial Statements . . . . . . . . . . . . . 40
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . 42
PART II. OTHER INFORMATION
1 Legal Proceedings . . . . . . . . . . . . . . . . . . . 43
4 Submission of Matters to a Vote of Security Holders . . 43
6 Exhibits and Reports on Form 8-K. . . . . . . . . . . . 44
Signature . . . . . . . . . . . . . . . . . . . . . . . 46
<PAGE>
GLOSSARY OF TERMS
The following abbreviations or acronyms used in the text of this combined Form
10-Q are defined below:
TERM DEFINITION_________________________
1996 Form Combined 1996 Annual Report on Form 10-K filed separately by
10-K Cinergy, CG&E, PSI, and ULH&P
AEP American Electric Power Company, Inc.
Avon Energy Avon Energy Partners Holdings, an Unlimited Liability
Company and its wholly-owned subsidiary Avon Energy
Partners PLC, a Limited Liability Company
Beckjord CG&E's W. C. Beckjord Station
CG&E The Cincinnati Gas & Electric Company (a subsidiary of
Cinergy)
Cinergy or Cinergy Corp.
Company
Cinergy UK Cinergy UK, Inc., formerly M.E. Holdings, Inc., (a
subsidiary of Cinergy Investments, Inc.) which holds
Cinergy's 50% investment in Avon Energy
Clean Coal A joint arrangement by PSI and Destec Energy, Inc. for a
Project 262-megawatt clean coal power generating facility located
at Wabash River Generating Station
Coal Supply An agreement to purchase coal from Eagle Coal Company
Agreement
December 1996 A PUCO order issued in December 1996 on CG&E's gas rate
Order proceeding
December 1996 An Indiana Utility Regulatory Commission order issued in
DSM Order December 1996 on PSI's DSM proceeding
DSM Demand-side management
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
Gibson PSI's Gibson Generating Station
KPSC Kentucky Public Service Commission
kwh Kilowatt-hour
M&R Fund Maintenance and Replacement Fund
Mcf Thousand cubic feet
Merger Order The FERC's order approving the merger of CG&E and PSI
Resources, Inc. to form Cinergy
<PAGE>
GLOSSARY OF TERMS (Continued)
TERM DEFINITION_________________________
Miami Fort CG&E's Miami Fort Generating Station
Midlands Midlands Electricity plc
Opinion 15 Accounting Principles Board Opinion 15, Earnings Per Share
PSI PSI Energy, Inc. (a subsidiary of Cinergy)
PUCO Public Utilities Commission of Ohio
PUHCA Public Utility Holding Company Act of 1935
S&P Standard & Poor's
September 1996 An Indiana Utility Regulatory Commission order issued in
Order September 1996 on PSI's retail rate proceeding
Statement 128 Statement of Financial Accounting Standards No. 128,
Earnings Per Share
ULH&P The Union Light, Heat and Power Company (a wholly-owned
subsidiary of CG&E)
Woodsdale CG&E's Woodsdale Generating Station
Zimmer CG&E's William H. Zimmer Generating Station
<PAGE>
CINERGY CORP.
AND SUBSIDIARY COMPANIES
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
March 31 December 31
1997 1996
(dollars in thousands)
<S> <C> <C>
Utility Plant - Original Cost
In service
Electric $8,858,361 $8,809,786
Gas 720,227 713,829
Common 185,302 185,255
9,763,890 9,708,870
Accumulated depreciation 3,650,395 3,591,858
6,113,495 6,117,012
Construction work in progress 160,687 172,614
Total utility plant 6,274,182 6,289,626
Current Assets
Cash and temporary cash investments 15,294 19,327
Restricted deposits 1,723 1,721
Accounts receivable less accumulated provision for
doubtful accounts of $11,315 at March 31, 1997,
and $10,618 at December 31, 1996 206,113 199,361
Materials, supplies, and fuel - at average cost
Fuel for use in electric production 66,666 71,730
Gas stored for current use 11,030 32,951
Other materials and supplies 76,578 80,292
Property taxes applicable to subsequent year 92,685 123,580
Prepayments and other 41,730 37,049
511,819 566,011
Other Assets
Regulatory assets
Amounts due from customers - income taxes 375,914 377,194
Post-in-service carrying costs and deferred
operating expenses 184,423 186,396
Phase-in deferred return and depreciation 93,794 95,163
Coal contract buyout costs 134,378 138,171
Deferred demand-side management costs 127,860 134,742
Deferred merger costs 92,444 93,999
Unamortized costs of reacquiring debt 69,474 70,518
Other 63,315 72,483
Investment in unconsolidated subsidiary 593,099 592,660
Other 240,406 231,551
1,975,107 1,992,877
$8,761,108 $8,848,514
<FN>
The accompanying notes as they relate to Cinergy Corp. are an integral part of
these consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CAPITALIZATION AND LIABILITIES
March 31 December 31
1997 1996
(dollars in thousands)
<S> <C> <C>
Common Stock Equity
Common stock - $.01 par value; authorized
shares - 600,000,000; outstanding shares -
157,679,129 at March 31, 1997, and
December 31, 1996 $ 1,577 $ 1,577
Paid-in capital 1,579,934 1,590,735
Retained earnings 1,035,390 992,273
Cumulative foreign currency translation
adjustment (1,166) (131)
Total common stock equity 2,615,735 2,584,454
Cumulative Preferred Stock of Subsidiaries
Not subject to mandatory redemption 194,195 194,232
Long-term Debt 2,375,694 2,534,978
Total capitalization 5,185,624 5,313,664
Current Liabilities
Long-term debt due within one year 274,000 140,000
Notes payable 705,177 713,617
Accounts payable 244,686 305,420
Accrued taxes 341,339 323,059
Accrued interest 58,827 55,590
Other 85,880 114,653
1,709,909 1,652,339
Other Liabilities
Deferred income taxes 1,139,112 1,146,263
Unamortized investment tax credits 173,517 175,935
Accrued pension and other postretirement
benefit costs 271,882 263,319
Other 281,064 296,994
1,865,575 1,882,511
$8,761,108 $8,848,514
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Twelve Months Ended
March 31 March 31
1997 1996 1997 1996
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Operating Revenues
Electric $ 817,914 $ 684,840 $2,901,780 $2,664,953
Gas 212,266 199,155 487,145 434,796
1,030,180 883,995 3,388,925 3,099,749
Operating Expenses
Fuel used in electric production 175,746 191,452 697,544 722,297
Gas purchased 123,968 93,225 279,859 204,982
Purchased and exchanged power 160,592 27,621 291,809 69,587
Other operation 163,412 146,134 615,712 549,985
Maintenance 45,854 43,642 196,120 181,500
Depreciation 71,556 70,195 284,124 276,498
Amortization of phase-in deferrals 3,371 3,400 13,569 12,491
Amortization of post-in-service
deferred operating expenses - net 1,091 (843) 425 (1,339)
Income taxes 63,919 73,983 208,205 232,893
Taxes other than income taxes 68,372 65,737 260,450 257,322
877,881 714,546 2,847,817 2,506,216
Operating Income 152,299 169,449 541,108 593,533
Other Income and Expenses - Net
Allowance for equity funds used
during construction 191 351 1,065 1,361
Post-in-service carrying costs - 343 880 961
Phase-in deferred return 2,002 2,093 8,281 8,496
Equity in earnings of
unconsolidated subsidiary 26,500 - 51,930 -
Income taxes 791 3,218 17,109 9,482
Other - net (2,627) (7,676) (35,415) (9,676)
26,857 (1,671) 43,850 10,624
Income Before Interest and Other
Charges 179,156 167,778 584,958 604,157
Interest and Other Charges
Interest on long-term debt 49,275 49,135 190,757 207,985
Other interest 13,867 2,871 42,165 18,386
Allowance for borrowed funds
used during construction (1,342) (1,138) (6,387) (6,892)
Preferred dividend requirements of
subsidiaries 3,239 6,769 19,650 28,965
65,039 57,637 246,185 248,444
Net Income $ 114,117 $ 110,141 $ 338,773 $ 355,713
Costs of Reacquisition of Preferred
Stock of Subsidiary - - (18,391) - __
Net Income Applicable to Common
Stock $ 114,117 $ 110,141 $ 320,382 $ 355,713
Average Common Shares Outstanding 157,679 157,675 157,679 157,113
Earnings Per Common Share
Net income $.72 $.70 $2.14 $2.27
Costs of reacquisition of
preferred stock of subsidiary - - (.12) -__
Net income applicable to common
stock $.72 $.70 $2.02 $2.27
Dividends Declared Per Common Share $.45 $.43 $1.76 $1.72
<FN>
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
</FN>
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Cumulative
Foreign
Currency
Common Paid-in Retained Translation Total Common
Stock Capital Earnings Adjustment Stock Equity
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Quarter Ended March 31, 1997
Balance January 1, 1997 $1,577 $1,590,735 $ 992,273 $ (131) $2,584,454
Net income 114,117 114,117
Dividends on common stock (see
page 8 for per share amounts) (71,000) (71,000)
Translation adjustments (1,035) (1,035)
Other (10,801) (10,801)
Balance March 31, 1997 $1,577 $1,579,934 $1,035,390 $(1,166) $2,615,735
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
Twelve Months Ended March 31, 1997
Balance April 1, 1996 $1,577 $1,595,435 $ 992,558 $ - $2,589,570
Net income 338,773 338,773
Dividends on common stock (see page
8 for per share amounts) (277,559) (277,559)
Translation adjustments (1,166) (1,166)
Costs of reacquisition of preferred
stock of subsidiary (18,391) (18,391)
Other (15,501) 9 (15,492)
Balance March 31, 1997 $1,577 $1,579,934 $1,035,390 $(1,166) $2,615,735
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
<FN>
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Year to Date Twelve Months Ended
March 31 March 31
1997 1996 1997 1996
(in thousands)
<S> <C> <C> <C> <C>
Operating Activities
Net income $ 114,117 $ 110,141 $ 338,773 $ 355,713
Items providing (using) cash currently:
Depreciation 71,556 70,195 284,124 276,498
Deferred income taxes and investment tax
credits - net (6,889) 16,978 24,045 43,620
Allowance for equity funds used during
construction (191) (351) (1,065) (1,361)
Regulatory assets - net 9,608 9,961 (73) 11,933
Changes in current assets and current
liabilities
Restricted deposits (2) (24) (336) (1,074)
Accounts receivable, net of reserves on
receivables sold (8,498) 143,778 (19,527) 51,886
Materials, supplies, and fuel 30,699 29,169 45,535 63,553
Accounts payable (60,734) 12,675 (36,128) 94,809
Litigation settlement - - (80,000) -
Accrued taxes and interest 21,517 (7,203) 34,189 12,208
Other items - net (16,844) (16,003) 11,575 (17,210)
Net cash provided by operating activities 154,339 369,316 601,112 890,575
Financing Activities
Issuance of common stock - 311 - 42,623
Issuance of long-term debt 35,000 - 209,817 344,280
Funds on deposit from issuance of long-term debt - 973 - 5,231
Retirement of preferred stock of subsidiaries (25) (5) (212,507) (93,471)
Redemption of long-term debt (61,880) (150,289) (148,774) (461,605)
Change in short-term debt (8,440) (69,500) 608,877 (133,801)
Dividends on common stock (71,000) (67,799) (277,559) (269,836)
Net cash provided by (used in)
financing activities (106,345) (286,309) 179,854 (566,579)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (58,909) (49,760) (332,162) (296,451)
Deferred demand-side management costs - net 6,882 (737) 2,277 (17,061)
Investment in unconsolidated subsidiary - - (503,349) -
Sale of investment in Argentine utility - - - 19,799
Net cash used in investing activities (52,027) (50,497) (833,234) (293,713)
Net increase (decrease) in cash and
temporary cash investments (4,033) 32,510 (52,268) 30,283
Cash and temporary cash investments at
beginning of period 19,327 35,052 67,562 37,279
Cash and temporary cash investments at
end of period $ 15,294 $ 67,562 $ 15,294 $ 67,562
<FN>
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>
CINERGY CORP.
Below is information concerning the consolidated results of operations for
Cinergy for the quarter and twelve months ended March 31, 1997. For
information concerning the results of operations for each of the other
registrants for the same quarter, 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, 1997
Kwh Sales
Kwh sales increased 35.8% for the quarter ended March 31, 1997, from the
comparable period of last year primarily reflecting increased activity in
Cinergy's power marketing and trading operations which led to higher non-firm
power sales for resale. Also contributing to the higher kwh sales levels was
an increase in industrial sales primarily reflecting growth in the primary
metals sector. These increases were partially offset by decreased residential
and commercial sales for the first quarter of 1997, as compared to the same
period last year, as a result of mild weather.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the first quarter of 1997
decreased 8.4%, as compared to the same period in 1996. Decreased residential
and commercial sales reflecting mild weather during the first quarter of 1997,
were slightly offset by an increase in the number of customers and higher gas
transportation volumes which reflect the continued trend of industrial
customers purchasing gas directly from suppliers, using transportation
services provided by Cinergy.
Operating Revenues
Electric Operating Revenues
Electric operating revenues for the quarter ended March 31, 1997, increased
$133 million (19%), as compared to the same period last year, primarily as a
result of the increased activity in Cinergy's power marketing and trading
operations previously discussed. Also contributing to the increase was the
effect of PSI's 7.6% ($76 million annually) retail rate increase approved in
the September 1996 Order. These increases were partially offset by declines
in kwh sales to residential and commercial customers as a result of mild
weather and the operation of CG&E's fuel adjustment clauses.
An analysis of electric operating revenues is shown below:
Quarter
Ended March 31
(in millions)
Electric operating revenues - March 31, 1996 $685
Increase (Decrease) due to change in:
Price per kwh
Retail 2
Sales for resale
Firm power obligations 1
Non-firm power transactions 19
Total change in price per kwh 22
Kwh sales
Retail (4)
Sales for resale
Non-firm power transactions 115
Total change in kwh sales 111
Electric operating revenues - March 31, 1997 $818
Gas Operating Revenues
The increasing trend of industrial customers purchasing gas directly from
producers and utilizing Cinergy facilities to transport the gas continues to
put downward pressure on gas operating revenues. When Cinergy sells gas, the
sales price reflects the cost of gas purchased by Cinergy to support the sale
plus the costs to deliver the gas. When gas is transported, Cinergy does not
incur any purchased gas costs but delivers gas the customer has purchased from
other sources. Since providing transportation services does not necessitate
recovery of gas purchased costs, the revenue per Mcf transported is less than
the revenue per Mcf sold. As a result, a higher relative volume of gas
transported to gas sold translates into lower gas operating revenues.
Gas operating revenues increased $13 million (7%) in the first quarter of
1997, when compared to the same period last year. Contributing to the
increase was CG&E's December 1996 Order approving an overall average increase
in gas revenues for CG&E of 2.5% ($9 million annually) and the operation of
fuel adjustment clauses reflecting a higher cost of gas purchased. These
increases were partially offset by the effect on residential and commercial
gas sales of the mild weather during the first quarter of 1997.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs, Cinergy's largest operating expense, decreased $16
million (8%), as compared to the same period last year.
An analysis of these fuel costs is shown below:
Quarter
Ended March 31
(in millions)
Fuel expense - March 31, 1996 $192
Decrease due to change in:
Price of fuel (15)
Kwh generation (1)
Fuel expense - March 31, 1997 $176
Gas Purchased
Gas purchased for the quarter ended March 31, 1997, increased $31 million
(33%), when compared to the same period last year, reflecting a higher average
cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power increased $133 million for the quarter ended
March 31, 1997, when compared to the same period last year, primarily
reflecting increased purchases of non-firm power for resale to others as a
result of increased activity in Cinergy's power marketing and trading
operations.
Other Operation
The $17 million (12%) increase in other operation expenses for the first
quarter of 1997, as compared to the same period of 1996, is primarily due to
increased production expenses associated with the Clean Coal Project and
increases related to the amortization of deferred DSM expenses, deferred
merger costs, and deferred postretirement benefit costs, all of which are
being recovered in revenues pursuant to either the September 1996 Order or the
December 1996 DSM Order.
Maintenance
For the three months ended March 31, 1997, maintenance expenses increased $2
million (5%), when compared to the three months ended March 31, 1996. This
increase is primarily due to scheduled outages at Beckjord and Miami Fort and
a forced outage at Zimmer.
Amortization of Post-in-service Deferred Operating Expenses - Net
Amortization of post-in-service deferred operating expenses - net reflects the
amortization and related recovery in rates of various deferrals of
depreciation, operation and maintenance expenses (exclusive of fuel costs),
and property taxes on certain generating units and other utility plant from
the in-service date until the related plant was reflected in retail rates.
Other Income and Expenses - Net
Other - net
The change in other - net of $5 million (66%) for the three months ended March
31, 1997, from the same period of 1996, is primarily due to an increase in
carrying costs related to the Coal Supply Agreement and PSI's deferred DSM
costs. A higher level of expenses associated with CG&E's and ULH&P's sales of
accounts receivables partially offset this increase.
Interest and Other Charges
Other Interest
Other interest increased $11 million for the first quarter of 1997, as
compared to the same period last year, primarily reflecting interest expense
on short-term borrowings used to fund Cinergy's investment in Avon Energy.
(See Note 5 of the "Notes to Financial Statements" in "Part I. Financial
Information.")
Preferred Dividend Requirements of Subsidiaries
Preferred dividend requirements of subsidiaries decreased $4 million (52%) for
the quarter ended March 31, 1997, as compared to the same period of 1996.
This decrease is primarily attributable to the reaquisition of approximately
90% of the outstanding preferred stock of CG&E, pursuant to Cinergy's tender
offer.
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED MARCH 31, 1997
Kwh Sales
Kwh sales increased 17.2% for the twelve months ended March 31, 1997, from the
comparable period of last year, primarily reflecting increased activity in
Cinergy's power marketing and trading operations which led to higher non-firm
power sales for resale. Also contributing to the higher kwh sales levels was
an increase in industrial sales primarily reflecting growth in the primary
metals sector. These increases were partially offset by declines in
residential and commercial sales attributable to a return to more normal
weather in the third quarter of 1996 as compared to 1995, and mild weather for
the first quarter of 1997, as compared to the same period last year, offset
slightly by increases in the average number of residential and commercial
customers.
Mcf Sales and Transportation
Mcf gas sales and transportation for the twelve months ended March 31, 1997,
remained relatively unchanged as compared to the same period in 1996. Colder
than normal weather during the first quarter of 1996 combined with mild
weather during the first quarter of 1997 caused a decrease in residential and
commercial sales. Higher gas transportation volumes which reflect the
continued trend of industrial customers purchasing gas directly from
suppliers, using transportation services provided by Cinergy and increases in
the number of customers substantially offset this decrease.
Operating Revenues
Electric Operating Revenues
Compared to the same period last year, electric operating revenues for the
twelve months ended March 31, 1997, increased $237 million (9%), reflecting
increased kwh sales and PSI's 7.6% retail rate increase, as previously
discussed. This increase was partially offset by the operation of CG&E's fuel
adjustment clauses reflecting a lower average cost of fuel used in electric
production and a decrease in ULH&P's electric rates reflecting a reduction in
the cost of electricity purchased from CG&E.
An analysis of electric operating revenues is shown below:
Twelve Months
Ended March 31
(in millions)
Electric operating revenues - March 31, 1996 $2 665
Increase due to change in:
Price per kwh
Retail 7
Sales for resale
Firm power obligations 3
Non-firm power transactions 15
Total change in price per kwh 25
Kwh sales
Retail 10
Sales for resale
Firm power obligations 4
Non-firm power transactions 194
Total change in kwh sales 208
Other 4
Electric operating revenues - March 31, 1997 $2 902
Gas Operating Revenues
For a discussion of the continued trend of downward pressure on gas operating
revenues from increased transportation services, refer to the discussion under
the caption "Gas Operating Revenues" for Cinergy in "Results of Operations for
the Quarter Ended March 31, 1997."
Gas operating revenues increased $52 million (12%) for the twelve months ended
March 31, 1997, when compared to the same period last year. Contributing to
the increase was the December 1996 Order approving an overall average increase
in gas revenues for CG&E of 2.5% ($9 million annually) and the operation of
fuel adjustment clauses reflecting a higher cost of gas purchased. These
increases were partially offset by the effect of colder than normal weather
during the first quarter of 1996 and the mild weather during the first quarter
of 1997 on residential and commercial gas sales.
Operating Expenses
Gas Purchased
Gas purchased for the twelve months ended March 31, 1997, increased $75
million (37%) when compared to the same period last year. This increase
reflects a higher average cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power increased $222 million for the twelve months
ended March 31, 1997, when compared to the same period of last year,
primarily reflecting increased purchases of non-firm power for resale to
others as a result of increased activity in Cinergy's power marketing and
trading operations.
Other Operation
Other operation increased $66 million (12%) for the twelve months ended March
31, 1997, as compared to the same period last year, primarily due to charges
of $35 million for voluntary early retirement and severance programs and
charges totaling $6 million related to the December 1996 Order. In addition,
expenses associated with the Clean Coal Project, which are being recovered in
revenues pursuant to the September 1996 Order, contributed to the increase, as
well as, an increase related to amortization of DSM expenses, which are being
recovered in revenues pursuant to the December 1996 DSM Order.
Maintenance
Maintenance increased $15 million (8%) for the twelve months ended March 31,
1997, as compared to the twelve months ended March 31, 1996, primarily due to
increased production maintenance expenses associated with the Clean Coal
Project, which are being recovered in revenues pursuant to the September 1996
Order.
Amortization of Phase-in Deferrals
Amortization of phase-in deferrals reflects the PUCO-ordered phase-in plan for
Zimmer.
Amortization of Post-in-service Deferred Operating Expenses - Net
Amortization of post-in-service deferred operating expenses - net reflects the
amortization and related recovery in rates of various deferrals of
depreciation, operation and maintenance expenses (exclusive of fuel costs),
and property taxes on certain generating units and other utility plant from
the in-service date until the related plant was reflected in retail rates.
Other Income and Expenses - Net
Other - net
The change in other - net of $26 million for the twelve months ended March 31,
1997, as compared to the same period last year is primarily due to charges of
$14 million associated with the December 1996 Order and expenses associated
with the sales of accounts receivable for CG&E and ULH&P.
Interest and Other Charges
Interest on Long-term Debt
Interest on long-term debt decreased $17 million (8%) for the twelve months
ended March 31, 1997, from the same period of 1996 primarily due to the
redemption of approximately $175 million of long-term debt by CG&E and ULH&P
during the period from December 1995 through May 1996.
Other Interest
Other interest increased $24 million for the twelve months ended March 31,
1997, as compared to the same period last year, primarily reflecting interest
expense on short-term borrowings used to fund Cinergy's investment in Avon
Energy. (See Note 5 of the "Notes to Financial Statements" in "Part I.
Financial Information.")
Preferred Dividend Requirements of Subsidiaries
The decrease in preferred dividend requirements of subsidiaries of $9 million
(32%) for the twelve months ended March 31, 1997, from the same period of 1996
is primarily attributable to the reacquisition of approximately 90% of the
outstanding preferred stock of CG&E, pursuant to Cinergy's tender offer.
Costs of Reacquisition of Preferred Stock of Subsidiary
Costs of reacquisition of preferred stock of subsidiary represents the
difference between the par value of preferred stock of CG&E tendered pursuant
to Cinergy's tender offer in September of 1996 and the purchase price paid
(including tender fees paid to dealer managers) by Cinergy for these shares.
<PAGE>
THE CINCINNATI GAS &
ELECTRIC COMPANY
AND SUBSIDIARY COMPANIES
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
March 31 December 31
1997 1996
(dollars in thousands)
<S> <C> <C>
Utility Plant - Original Cost
In service
Electric $4,653,785 $4,631,605
Gas 720,227 713,829
Common 185,302 185,255
5,559,314 5,530,689
Accumulated depreciation 1,904,820 1,868,579
3,654,494 3,662,110
Construction work in progress 94,112 95,984
Total utility plant 3,748,606 3,758,094
Current Assets
Cash and temporary cash investments 2,364 5,120
Restricted deposits 1,172 1,171
Notes receivable from affiliated companies 99,975 31,740
Accounts receivable less accumulated provision
for doubtful accounts of $9,974 at March 31, 1997,
and $9,178 at December 31, 1996 93,485 117,912
Accounts receivable from affiliated companies 1,168 2,453
Materials, supplies, and fuel - at average cost
Fuel for use in electric production 28,927 29,865
Gas stored for current use 11,030 32,951
Other materials and supplies 46,995 52,023
Property taxes applicable to subsequent year 92,685 123,580
Prepayments and other 37,459 32,433
415,260 429,248
Other Assets
Regulatory assets
Amounts due from customers - income taxes 341,982 344,126
Post-in-service carrying costs and deferred
operating expenses 139,787 141,492
Deferred merger costs 17,475 17,709
Deferred demand-side management costs 34,302 33,534
Phase-in deferred return and depreciation 93,794 95,163
Unamortized costs of reacquiring debt 37,913 38,439
Other 13,384 19,545
Other 92,624 89,908
771,261 779,916
$4,935,127 $4,967,258
<FN>
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CAPITALIZATION AND LIABILITIES
March 31 December 31
1997 1996
(dollars in thousands)
<S> <C> <C>
Common Stock Equity
Common stock - $8.50 par value;
authorized shares - 120,000,000;
outstanding shares - 89,663,086 at March 31, 1997,
and December 31, 1996 $ 762,136 $ 762,136
Paid-in capital 534,542 536,276
Retained earnings 271,302 247,403
Total common stock equity 1,567,980 1,545,815
Cumulative Preferred Stock
Not subject to mandatory redemption 21,110 21,146
Long-term Debt 1,405,536 1,565,108
Total capitalization 2,994,626 3,132,069
Current Liabilities
Long-term debt due within one year 274,000 130,000
Notes payable 49,600 30,488
Notes payable to affiliated companies 6,973 103
Accounts payable 127,260 166,064
Accounts payable to affiliated companies 32,608 12,726
Accrued taxes 227,150 267,841
Accrued interest 32,159 30,570
Other 28,041 32,191
777,791 669,983
Other Liabilities
Deferred income taxes 768,520 767,085
Unamortized investment tax credits 121,632 123,185
Accrued pension and other postretirement benefit costs 169,214 165,282
Other 103,344 109,654
1,162,710 1,165,206
$4,935,127 $4,967,258
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended
March 31
1997 1996
(in thousands)
<S> <C> <C>
Operating Revenues
Electric
Non-affiliated companies $ 395,625 $ 363,344
Affiliated companies 6,075 12,285
Gas
Non-affiliated companies 212,266 199,155
Affiliated companies 1 -___
613,967 574,784
Operating Expenses
Fuel used in electric production 70,239 97,107
Gas purchased 123,968 93,225
Purchased and exchanged power
Non-affiliated companies 70,862 6,433
Affiliated companies 1,572 6,736
Other operation 79,275 79,580
Maintenance 27,336 20,979
Depreciation 40,404 39,987
Amortization of phase-in deferrals 3,371 3,400
Amortization of post-in-service deferred
operating expenses 823 823
Income taxes 43,800 54,890
Taxes other than income taxes 53,514 51,569
515,164 454,729
Operating Income 98,803 120,055
Other Income and Expenses - Net
Allowance for equity funds used during
construction 119 351
Phase-in deferred return 2,002 2,093
Income taxes 3,006 1,681
Other - net (4,775) (686)
352 3,439
Income Before Interest 99,155 123,494
Interest
Interest on long-term debt 30,045 32,100
Other interest 1,696 462
Allowance for borrowed funds used during
construction (909) (823)
30,832 31,739
Net Income $ 68,323 $ 91,755
Preferred Dividend Requirement 219 3,474
Net Income Applicable to Common Stock $ 68,104 $ 88,281
<FN>
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
</FN>
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Year to Date
March 31
1997 1996
(in thousands)
<S> <C> <C>
Operating Activities
Net income $ 68,323 $ 91,755
Items providing (using) cash currently:
Depreciation 40,404 39,987
Deferred income taxes and investment tax
credits - net 2,929 19,368
Allowance for equity funds used during
construction (119) (351)
Regulatory assets - net 8,587 7,165
Changes in current assets and current
liabilities
Restricted deposits (1) (24)
Accounts and notes receivable, net of
reserves on receivables sold (44,863) 111,135
Materials, supplies, and fuel 27,887 20,965
Accounts payable (18,922) 6,797
Accrued taxes and interest (39,102) (25,133)
Other items - net 16,951 (6,590)
Net cash provided by operating activities 62,074 265,074
Financing Activities
Retirement of preferred stock (24) -
Redemption of long-term debt (16,180) (150,289)
Change in short-term debt 25,982 -
Dividends on preferred stock (219) (3,474)
Dividends on common stock (42,600) (41,995)
Net cash used in financing activities (33,041) (195,758)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (31,021) (23,693)
Deferred demand-side management costs - net (768) (4,268)
Net cash used in investing activities (31,789) (27,961)
Net increase (decrease) in cash and
temporary cash investments (2,756) 41,355
Cash and temporary cash investments at
beginning of period 5,120 6,612
Cash and temporary cash investments at
end of period $ 2,364 $ 47,967
<FN>
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
</FN>
</TABLE>
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1997
Kwh Sales
Kwh sales for the quarter ended March 31, 1997, increased 31.1%, as compared
to the first quarter of 1996, primarily due to higher non-firm power sales for
resale resulting from increased activity in Cinergy's power marketing and
trading operations. Mild weather during the first quarter of 1997 resulted in
decreased residential and commercial sales. These decreases were partially
offset by increased industrial sales reflecting growth in the primary metals
sector.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the first quarter of 1997
decreased 8.4%, as compared to the same period in 1996. Decreased residential
and commercial sales reflecting mild weather during the first quarter of 1997
were slightly offset by an increase in the number of customers and higher gas
transportation volumes which reflect the continued trend of industrial
customers purchasing gas directly from suppliers, using transportation
services provided by CG&E.
Operating Revenues
Electric Operating Revenues
Electric operating revenues increased $26 million (7%) for the quarter ended
March 31, 1997, from the comparable period of 1996. This increase, primarily
due to higher non-firm power sales for resale, was offset, in part, by lower
residential and commercial sales, as previously discussed, and the operation
of fuel adjustment clauses reflecting a lower average cost per kwh.
An analysis of electric operating revenues is shown below:
Quarter
Ended March 31
(in millions)
Electric operating revenues - March 31, 1996 $376
Increase (Decrease) due to change in:
Price per kwh
Retail (20)
Sales for resale
Non-firm power transactions 8
Total change in price per kwh (12)
Kwh sales
Retail (9)
Sales for resale
Non-firm power transactions 47
Total change in kwh sales 38
Electric operating revenues - March 31, 1997 $402
Gas Operating Revenues
The increasing trend of industrial customers purchasing gas directly from
producers and utilizing CG&E facilities to transport the gas continues to put
downward pressure on gas operating revenues. When CG&E sells gas, the sales
price reflects the cost of gas purchased by CG&E to support the sale plus the
costs to deliver the gas. When gas is transported, CG&E does not incur any
purchased gas costs but delivers gas the customer has purchased from other
sources. Since providing transportation services does not necessitate
recovery of gas purchased costs, the revenue per Mcf transported is less than
the revenue per Mcf sold. As a result, a higher relative volume of gas
transported to gas sold translates into lower gas operating revenues.
Gas operating revenues increased $13 million (7%) in the first quarter of
1997, when compared to the same period last year. Contributing to the
increase was the December 1996 Order approving an overall average increase in
gas revenues for CG&E of 2.5% ($9 million annually) and the operation of fuel
adjustment clauses reflecting a higher cost of gas purchased. These increases
were partially offset by the effect on residential and commercial gas sales of
the mild weather during the first quarter of 1997.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs decreased $27 million (28%) for the quarter ended March
31, 1997, as compared to the same period last year.
An analysis of these fuel costs is shown below:
Quarter
Ended March 31
(in millions)
Fuel expense - March 31, 1996 $97
Decrease due to change in:
Price of fuel (23)
Kwh generation (4)
Fuel expense - March 31, 1997 $70
Gas Purchased
Gas purchased for the quarter ended March 31, 1997, increased $31 million
(33%), when compared to the same period last year, reflecting a higher average
cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power for the quarter ended March 31, 1997, increased
$59 million over the comparable period of 1996, reflecting increased purchases
of non-firm power for resale to others as a result of increased activity in
Cinergy's power marketing and trading operations.
Maintenance
The $6 million (30%) increase in maintenance expenses for the first quarter of
1997, as compared to the same period of 1996, is primarily due to scheduled
outages at Beckjord and Miami Fort and a forced outage at Zimmer.
Other Income and Expenses - Net
Other - net
The change in other - net of $4 million in the first quarter of 1997, as
compared to the first quarter of 1996, is due, in part, to increased expenses
associated with CG&E's and ULH&P's sales of accounts receivables.
Interest
Interest on Long-term Debt
Interest on long-term debt decreased $2 million (6%) for the quarter ended
March 31, 1997, as compared to the same period of 1996, primarily due to the
redemption of $177.5 million of long-term debt during the period from January
1996 through March 1997.
Other Interest
The $1 million increase in other interest for the first quarter of 1997, as
compared to the first quarter of 1996, is primarily due to increased interest
expense on short-term borrowings used to fund the acquisition of approximately
90% of the outstanding preferred stock of CG&E and interest expense related to
a sale-leaseback agreement CG&E entered into in November 1996 for certain
equipment at Woodsdale.
Preferred Dividend Requirement
The preferred dividend requirement decreased $3 million for the first quarter
of 1997, as compared to the same period in 1996. This decrease is primarily
attributable to the reacquisition of approximately 90% of the outstanding
preferred stock of CG&E, pursuant to Cinergy's tender offer.
<PAGE>
PSI ENERGY, INC.
AND SUBSIDIARY COMPANIES
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
March 31 December 31
1997 1996
(dollars in thousands)
<S> <C> <C>
Electric Utility Plant - Original Cost
In service $4,204,576 $4,178,181
Accumulated depreciation 1,745,575 1,723,279
2,459,001 2,454,902
Construction work in progress 66,575 76,630
Total electric utility plant 2,525,576 2,531,532
Current Assets
Cash and temporary cash investments 2,375 2,911
Restricted deposits 551 550
Notes receivable 236 299
Notes receivable from affiliated companies 14,507 3
Accounts receivable less accumulated provision
for doubtful accounts of $1,121 at March 31, 1997,
and $1,269 at December 31, 1996 107,672 73,990
Accounts receivable from affiliated companies 8,380 4,016
Materials, supplies, and fuel - at average cost
Fuel 37,739 41,865
Other materials and supplies 29,582 28,268
Prepayments and other 3,149 3,184
204,191 155,086
Other Assets
Regulatory assets
Amounts due from customers - income taxes 33,932 33,068
Post-in-service carrying costs and deferred
operating expenses 44,636 44,904
Coal contract buyout costs 134,378 138,171
Deferred merger costs 74,969 76,290
Deferred demand-side management costs 93,558 101,208
Unamortized costs of reacquiring debt 31,561 32,079
Other 49,931 52,938
Other 127,564 129,667
590,529 608,325
$3,320,296 $3,294,943
<FN>
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CAPITALIZATION AND LIABILITIES
March 31 December 31
1997 1996
(dollars in thousands)
<S> <C> <C>
Common Stock Equity
Common stock - without par value; $.01 stated value;
authorized shares - 60,000,000; outstanding shares
- 53,913,701 at March 31, 1997, and December 31, 1996 $ 539 $ 539
Paid-in capital 401,007 402,947
Retained earnings 627,966 626,089
Total common stock equity 1,029,512 1,029,575
Cumulative Preferred Stock
Not subject to mandatory redemption 173,085 173,086
Long-term Debt 970,158 969,870
Total capitalization 2,172,755 2,172,531
Current Liabilities
Long-term debt due within one year - 10,000
Notes payable 102,577 147,129
Notes payable to affiliated companies 87,943 13,186
Accounts payable 100,866 114,330
Accounts payable to affiliated companies 6,493 12,850
Accrued taxes 110,539 73,206
Accrued interest 25,909 24,045
Other 17,069 17,107
451,396 411,853
Other Liabilities
Deferred income taxes 364,905 372,997
Unamortized investment tax credits 51,885 52,750
Accrued pension and other postretirement benefit costs 102,668 98,037
Other 176,687 186,775
696,145 710,559
$3,320,296 $3,294,943
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended
March 31
1997 1996
(in thousands)
<S> <C> <C>
Operating Revenues
Non-affiliated companies $ 422,289 $ 321,496
Affiliated companies 1,566 6,799
423,855 328,295
Operating Expenses
Fuel 105,507 94,345
Purchased and exchanged power
Non-affiliated companies 89,730 21,188
Affiliated companies 6,069 12,348
Other operation 83,709 66,551
Maintenance 18,518 22,663
Depreciation 31,152 30,208
Amortization of post-in-service
deferred operating expenses - net 268 (1,666)
Income taxes 20,225 18,883
Taxes other than income taxes 14,857 14,168
370,035 278,688
Operating Income 53,820 49,607
Other Income and Expenses - Net
Allowance for equity funds used during
construction 72 -
Post-in-service carrying costs - 343
Income taxes (603) 760
Other - net 3,263 (3,658)
2,732 (2,555)
Income Before Interest 56,552 47,052
Interest
Interest on long-term debt 19,230 17,035
Other interest 4,457 3,468
Allowance for borrowed funds used during
construction (433) (315)
23,254 20,188
Net Income $ 33,298 $ 26,864
Preferred Dividend Requirement 3,020 3,295
Net Income Applicable to Common Stock $ 30,278 $ 23,569
<FN>
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Year to Date
March 31
1997 1996
(in thousands)
<S> <C> <C>
Operating Activities
Net income $ 33,298 $ 26,864
Items providing (using) cash currently:
Depreciation 31,152 30,208
Deferred income taxes and investment tax
credits - net (9,820) (1,926)
Allowance for equity funds used during
construction (72) -
Regulatory assets - net 1,021 2,796
Changes in current assets and current
liabilities
Restricted deposits (1) -
Accounts and notes receivable, net of
reserves on receivables sold (51,892) (7,674)
Materials, supplies, and fuel 2,812 8,176
Accounts payable (19,821) (1,692)
Accrued taxes and interest 39,197 18,594
Other items - net (104) 239
Net cash provided by operating activities 25,770 75,585
Financing Activities
Issuance of long-term debt 35,000 -
Funds on deposit from issuance of long-term debt - 973
Retirement of preferred stock (1) (5)
Redemption of long-term debt (45,700) -
Change in short-term debt 30,205 (31,766)
Dividends on preferred stock (3,020) (3,294)
Dividends on common stock (28,400) (25,887)
Net cash used in financing activities (11,916) (59,979)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (22,040) (26,067)
Deferred demand-side management costs - net 7,650 3,531
Net cash used in investing activities (14,390) (22,536)
Net decrease in cash and temporary cash
investments (536) (6,930)
Cash and temporary cash investments at
beginning of period 2,911 15,522
Cash and temporary cash investments at
end of period $ 2,375 $ 8,592
<FN>
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
</FN>
<PAGE>
</TABLE>
PSI ENERGY, INC.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1997
Kwh Sales
Kwh sales for the first quarter of 1997 increased 31.9%, as compared to the
same period last year, primarily due to higher non-firm power sales for resale
resulting from increased activity in Cinergy's power marketing and trading
operations. Partially offsetting this increase was the effects of mild
weather during the first quarter of 1997. An increase in industrial sales
primarily reflects growth in the transportation equipment, bituminous coal
mining, and primary metals sectors.
Operating Revenues
Operating revenues increased $96 million (29%) for the quarter ended March 31,
1997, when compared to the same period last year, reflecting, in part, the
increased activity in Cinergy's power marketing and trading operations
previously discussed. Also contributing to the increase was the effect of a
7.6% ($76 million annually) retail rate increase approved in the September
1996 Order. Partially offsetting these increases were the previously
mentioned effects of weather.
An analysis of operating revenues is shown below:
Quarter
Ended March 31
(in millions)
Operating revenues - March 31, 1996 $328
Increase due to change in:
Price per kwh
Retail 24
Sales for resale
Firm power obligations 2
Non-firm power transactions 8
Total change in price per kwh 34
Kwh sales
Retail 2
Sales for resale
Non-firm power transactions 59
Total change in kwh sales 61
Other 1
Operating revenues - March 31, 1997 $424
Operating Expenses
Fuel
Fuel costs, PSI's largest operating expense, increased $11 million (12%) for
the first quarter of 1997, as compared to the same period last year.
An analysis of fuel costs is shown below:
Quarter
Ended March 31
(in millions)
Fuel expense - March 31, 1996 $ 94
Increase due to change in:
Price of fuel 8
Kwh generation 3
Fuel expense - March 31, 1997 $105
Purchased and Exchanged Power
For the quarter ended March 31, 1997, purchased and exchanged power increased
$62 million, as compared to the same period last year, due primarily to
increased purchases of non-firm power for resale to others as a result of
increased activity in Cinergy's power marketing and trading operations.
Other Operation
Other operation expenses increased $17 million (26%) for the quarter ended
March 31, 1997, as compared to the same period last year. This increase is
primarily due to increased production expenses associated with the Clean Coal
Project and increases related to the amortization of deferred DSM expenses,
deferred merger costs, and deferred postretirement benefit costs, all of which
are being recovered in revenues pursuant to either the September 1996 Order or
the December 1996 DSM Order.
Maintenance
The $4 million (18%) decrease in maintenance expenses for the first quarter of
1997, as compared to the same period of 1996, is primarily associated with
production facilities.
Amortization of Post-in-service Deferred Operating Expenses - Net
Amortization of post-in-service deferred operating expenses - net reflects the
amortization and related recovery in rates of depreciation deferred on certain
major projects, primarily environmental in nature, from the in-service date
until the related projects are reflected in retail rates.
Other Income and Expenses - Net
Other - net
The change of $7 million for other - net for the quarter ended March 31, 1997,
as compared to the same period of 1996, is primarily attributable to an
increase in carrying costs related to the Coal Supply Agreement and deferred
DSM costs.
Interest
Interest on Long-term Debt
Interest on long-term debt increased $2 million (13%) for the first quarter of
1997, as compared to the first quarter of 1996, primarily due to the net
issuance of approximately $150 million of long-term debt during the fourth
quarter of 1996.
<PAGE>
THE UNION LIGHT, HEAT AND POWER COMPANY
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
BALANCE SHEETS
(unaudited)
ASSETS
March 31 December 31
1997 1996
(dollars in thousands)
<S> <C> <C>
Utility Plant - Original Cost
In service
Electric $197,712 $195,053
Gas 149,560 148,203
Common 19,293 19,285
366,565 362,541
Accumulated depreciation 125,237 122,310
241,328 240,231
Construction work in progress 8,687 9,050
Total utility plant 250,015 249,281
Current Assets
Cash and temporary cash investments 2,067 1,197
Notes receivable from affiliated companies 100 100
Accounts receivable less accumulated
provision for doubtful accounts of
$1,222 at March 31, 1997, and $1,024 at
December 31, 1996 5,198 12,763
Accounts receivable from affiliated
companies 1,153 620
Materials, supplies, and fuel - at average
cost
Gas stored for current use 2,573 6,351
Other materials and supplies 767 716
Property taxes applicable to subsequent
year 1,950 2,600
Prepayments and other 228 370
Total current assets 14,036 24,717
Other Assets
Regulatory assets
Deferred merger costs 5,218 5,218
Unamortized costs of reacquiring debt 3,718 3,764
Other 2,366 2,357
Other 6,630 5,146
17,932 16,485
$281,983 $290,483
<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
</FN>
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
BALANCE SHEETS
(unaudited)
CAPITALIZATION AND LIABILITIES
March 31 December 31
1997 1996
(dollars in thousands)
<S> <C> <C>
Common Stock Equity
Common stock - $15.00 par value;
authorized shares - 1,000,000;
outstanding shares - 585,333 at March 31, 1997,
and December 31, 1996 $ 8,780 $ 8,780
Paid-in capital 18,683 18,839
Retained earnings 99,051 92,484
Total common stock equity 126,514 120,103
Long-term Debt 44,630 44,617
Total capitalization 171,144 164,720
Current Liabilities
Notes payable to affiliated companies 18,926 30,649
Accounts payable 6,498 12,018
Accounts payable to affiliated companies 12,152 16,771
Accrued taxes 7,267 1,014
Accrued interest 902 1,284
Other 4,259 5,248
50,004 66,984
Other Liabilities
Deferred income taxes 32,289 33,463
Unamortized investment tax credits 4,727 4,797
Accrued pension and other postretirement benefit costs 13,261 12,983
Income taxes refundable through rates 6,028 5,121
Other 4,530 2,415
60,835 58,779
$281,983 $290,483
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF INCOME
(unaudited)
Quarter Ended
March 31
1997 1996
(in thousands)
<S> <C> <C>
Operating Revenues
Electric
Non-affiliated companies $ 48,580 $ 52,333
Gas
Non-affiliated companies 33,963 34,006
Affiliated companies 121 52
82,664 86,391
Operating Expenses
Electricity purchased from parent company for resale 35,129 37,600
Gas purchased 20,449 18,998
Other operation 8,534 9,247
Maintenance 1,563 1,166
Depreciation 3,070 2,907
Income taxes 4,742 5,511
Taxes other than income taxes 1,099 1,071
74,586 76,500
Operating Income 8,078 9,891
Other Income and Expenses - Net
Allowance for equity funds used during
construction (4) (21)
Income taxes 92 (4)
Other - net (447) (219)
(359) (244)
Income Before Interest 7,719 9,647
Interest
Interest on long-term debt 881 1,294
Other interest 301 107
Allowance for borrowed funds used during
construction (30) (10)
1,152 1,391
Net Income $ 6,567 $ 8,256
<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF CASH FLOWS
(unaudited)
Year to Date
March 31
1997 1996
(in thousands)
<S> <C> <C>
Operating Activities
Net income $ 6,567 $ 8,256
Items providing (using) cash currently:
Depreciation 3,070 2,907
Deferred income taxes and investment tax (338) 2,682
credits - net
Allowance for equity funds used during 4 21
construction
Regulatory assets (9) (21)
Changes in current assets and current
liabilities
Accounts and notes receivable, net of
reserves on receivables sold 6,016 15,823
Materials, supplies, and fuel 3,727 2,159
Accounts payable (10,139) (7,375)
Accrued taxes and interest 5,871 3,099
Other items - net 1,810 (643)
Net cash provided by operating
activities 16,579 26,908
Financing Activities
Redemption of long-term debt - (16,032)
Change in short-term debt (11,723) - __
Net cash used in financing activities (11,723) (16,032)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (3,986) (3,637)
Net cash used in investing activities (3,986) (3,637)
Net increase in cash and temporary cash
investments 870 7,239
Cash and temporary cash investments at
beginning of period 1,197 1,750
Cash and temporary cash investments at
end of period $ 2,067 $ 8,989
<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
</FN>
</TABLE>
<PAGE>
THE UNION LIGHT, HEAT AND POWER COMPANY
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1997
Kwh Sales
Kwh sales for the quarter ended March 31, 1997, decreased 6.1% from the
comparable period of 1996. The mild weather in the first quarter of 1997
resulted in a decline in residential and commercial sales. This decrease was
partially offset by an increase in industrial sales in the manufacturing
sector and an increase in the average number of customers in all customer
classes.
Mcf Sales and Transportation
For the first quarter of 1997, Mcf gas sales volumes decreased 15.7%, while
Mcf transportation volumes increased 24.8%, when compared to the same period
in 1996. Decreased residential and commercial sales reflecting mild weather
during the first quarter of 1997 were slightly offset by an increase in the
number of customers. The higher level of gas transportation volumes reflects
the continued trend of customers purchasing gas directly from suppliers, using
transportation services provided by ULH&P.
Operating Revenues
Electric Operating Revenues
Electric operating revenues decreased $3.8 million (7%) for the quarter ended
March 31, 1997, from the comparable period of 1996. This decrease primarily
reflects the previously discussed decline in kwh sales. Also, in July 1996,
the KPSC issued an order authorizing a decrease in electric rates of
approximately $1.8 million annually to reflect a reduction in the cost of
electricity purchased from CG&E.
Gas Operating Revenues
The increasing trend of industrial customers purchasing gas directly from
producers and utilizing ULH&P facilities to transport the gas continues to put
downward pressure on gas operating revenues. When ULH&P sells gas, the sales
price reflects the cost of gas purchased by ULH&P to support the sale plus the
costs to deliver the gas. When gas is transported, ULH&P does not incur any
purchased gas costs, but delivers gas the customer has purchased from other
sources. Since providing transportation services does not necessitate
recovery of gas purchased costs, the revenue per Mcf transported is less than
the revenue per Mcf sold. As a result, a higher relative volume of gas
transported to gas sold translates into lower gas operating revenues.
Gas operating revenues remained relatively constant in the first quarter of
1997, when compared to the same period of last year. Increases primarily
attributable to the operation of the fuel adjustment clause reflecting an
increase in the cost of gas purchased were offset by the weather-related
decrease in Mcf volumes.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased decreased $2.5 million (7%) for the quarter ended March
31, 1997, as compared to the same period last year. This decrease reflects
the aforementioned reduction in the cost of electricity and lower volumes
purchased from CG&E.
Gas Purchased
Gas purchased for the quarter increased $1.5 million (8%) from the first
quarter of last year, reflecting a 22.4% increase in the average cost per Mcf
purchased which was partially offset by a 14.8% decrease in volume.
Other Operation
The $.7 million (8%) decrease in other operation expenses for the first
quarter of 1997, as compared to the same period of 1996, is due to a number of
factors, including decreases in administrative and general and distribution
expenses.
Maintenance
The $.4 million (34%) increase in maintenance expenses for the first quarter
of 1997, as compared to the same period of 1996, is primarily due to increased
maintenance expenses associated with gas and electric distribution facilities.
Depreciation
Depreciation expense increased $.2 million (6%) for the quarter ended March
31, 1997, over the comparable period of last year. This increase primarily
reflects additions to gas and electric utility plant.
Other Income and Expenses - Net
Other - net
The change in other - net of $.2 million for the quarter ended March 31, 1997,
as compared to the same period of 1996, is primarily attributable to expenses
associated with the sales of accounts receivables.
Interest
Interest on Long-term Debt
Interest on long-term debt decreased $.4 million (32%) for the quarter ended
March 31, 1997, as compared to the same period of 1996, primarily due to the
redemption of $25 million of long-term debt during the period from February
1996 through May 1996.
Other Interest
Other interest charges increased $.2 million for the quarter ended March 31,
1997, as compared to the same period of 1996, primarily due to increased
short-term borrowings.
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 1996 Form 10-K of the
registrants. Certain amounts in the 1996 Financial Statements have been
reclassified to conform to the 1997 presentation.
Cinergy and CG&E
2. In March 1997, CG&E retired $16 million principal amount of its
8.95% Series First Mortgage Bonds, due December 15, 2021. In April 1997,
CG&E redeemed the remaining $84 million principal amount of such bonds at
a price of 100% through the M&R Fund provisions of its first mortgage
bond indenture. CG&E also redeemed, in April 1997, the entire $60
million principal amount of its 8 1/8% Series First Mortgage Bonds, due
August 1, 2003, at a redemption price of 100.72% through the M&R Fund.
Cinergy and PSI
3. In February 1997, the City of Princeton, Indiana, loaned the
proceeds from the sale of its $35 million Pollution Control Revenue
Refunding Bonds, 1997 Series, to PSI. Proceeds from the issuance were
used to refund, in March 1997, the outstanding $35 million City of
Princeton, Indiana, 7.60% Pollution Control Revenue Refunding Bonds, 1987
Series, which previously refunded the City of Princeton, Indiana, 12.75%
Pollution Control Revenue Bonds 1982 Series B, which were issued to
finance PSI's portion of the costs of acquiring and constructing PSI's
undivided interest in certain pollution control and solid waste disposal
facilities at Gibson.
The 1997 Series bonds bear interest at a variable rate and will
mature April 1, 2022, subject to redemption prior to maturity. Pursuant
to the loan agreement between PSI and Princeton, PSI will make loan
payments sufficient to pay, when due, principal and interest on the 1997
Series bonds.
Cinergy, CG&E, PSI, and ULH&P
4. In February 1997, the FASB issued Statement 128, which is effective
December 31, 1997, for Cinergy. Statement 128 replaces the calculation
and disclosure of primary and fully diluted earnings per share under
Opinion 15 with basic and diluted earnings per share. Statement 128 also
requires certain disclosures regarding the determination of earnings per
share amounts presented in the accompanying income statements that were
not previously required under Opinion 15. Earnings per share presented
in the accompanying income statements has been computed in accordance
with the provisions of Opinion 15. Earnings per share for the quarter
and twelve months ended March 31, 1997, determined in accordance with the
provisions of Statement 128, would not have been significantly different
from amounts shown.
Cinergy
5. Cinergy accounts for its 50% investment in Avon Energy, which owns
100% of Midlands, using the equity method of accounting. Avon Energy
acquired Midlands during the second and third quarters of 1996, with
substantially all of the Midlands' common stock being acquired during the
second quarter. Accordingly, Midlands' results are fully reflected in
the quarter ended March 31, 1997, while the historical results for the
twelve months ended March 31, 1997, include equity income from Midlands
for approximately 10 months. Had Avon Energy acquired Midlands on April
1, 1996, Cinergy's pro forma results for the twelve months ended March
31, 1997, would not have been significantly different from its reported
results.
On May 1, 1997, general elections were held in Great Britain which
resulted in the Labour Party gaining control of the government. As
previously disclosed in Cinergy's 1996 Form 10-K, at the time of
Cinergy's acquisition, through Avon Energy, of a 50% interest in
Midlands, the Labour Party was calling for a windfall profits levy
against certain businesses which had previously been owned and operated
by the government, of which Midlands would most likely be included.
With the election of the Labour Party, the likelihood of the windfall
profits levy occurring is almost certain.
The manner in which the levy will be calculated and paid, as well as the
actual companies to which it will be applied, remains unclear. As a
result, no liability for the levy has been recorded by either Midlands
or Avon Energy as of March 31, 1997. With the Labour Party now
elected, sufficient information to determine the form of the levy,
quantify the amount, and determine the appropriate accounting treatment
should most likely be available during the second quarter of 1997.
Estimates of the total amount to be raised by the levy, made by members
of the British press and financial community, have ranged from 3 billion
to 5 billion pounds sterling (approximately $5 billion to $9 billion).
These same estimates have indicated Midlands' apportionment to be in the
range of 60 million to 210 million pounds sterling (approximately $100
million to $350 million), depending on the manner in which the levy is
calculated and which companies are included in the levy.
Cinergy and CG&E
6. As discussed in the 1996 Form 10-K, the PUCO issued its December
1996 Order approving an overall average increase in gas revenues for CG&E
of 2.5% ($9.3 million annually). The PUCO disallowed certain of CG&E's
requests, including the requested working capital allowance, recovery of
certain capitalized information systems development costs, and certain
merger-related costs. These disallowances resulted in a pretax charge to
earnings during the fourth quarter of $20 million ($15 million net of
taxes or 10 cents per share). CG&E's request for a rehearing on the
disallowed information systems costs and other aspects of the order was
denied.
On April 14, 1997, CG&E filed a notice of appeal with the Supreme Court
of Ohio challenging the disallowance of information systems costs and
the exclusion of certain imputed revenues. Cinergy and CG&E cannot
predict what action the Supreme Court of Ohio may take with respect to
this appeal.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Recent Developments
Cinergy
Securities Ratings On May 5, 1997, S&P assigned a corporate credit rating to
Cinergy of BBB+. Concurrently, S&P assigned a BBB+ rating to Cinergy's $600
million credit facility. In assigning these ratings, S&P stated, "The credit
evaluation of Cinergy is based on the favorable business position of PSI and
CG&E, further potential merger cost savings and benefits, as well as healthy
cash flow measurements and modest capital spending requirements." Also, S&P
indicated the ratings are reflective of, among other things, Cinergy's
excellent operation of domestic coal-fired equipment, its relatively low
rates, and a well-positioned gas operation.
Regulatory Matters
Cinergy and CG&E
CG&E's Gas Rate Proceeding See Note 6 of the "Notes to Financial Statements"
in "Part I. Financial Information."
Accounting Issues
Cinergy, CG&E, PSI, and ULH&P
New Accounting Standards See Note 4 of the "Notes to Financial Statements" in
"Part I. Financial Information."
CAPITAL RESOURCES
Cinergy, CG&E, and PSI
Long-term Debt For information regarding recent securities issuances and
redemptions, see Notes 2 and 3 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 $245
CG&E & Subsidiaries 438 80 65
PSI 400 200 179
ULH&P 35 - -
Additionally, Cinergy's $600 million credit facility, which expires in May
2001, has $66 million unused as of March 31, 1997.
In addition, Cinergy UK's $40 million non-recourse credit agreement has $19
million outstanding as of March 31, 1997.
RESULTS OF OPERATIONS
Cinergy, CG&E, PSI, and ULH&P
Reference is made to "ITEM 1. FINANCIAL STATEMENTS" in "PART I. FINANCIAL
INFORMATION."
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Cinergy, CG&E, and PSI
Merger Litigation In March 1997, the United States Court of Appeals for the
District of Columbia Circuit Court denied AEP's petition for review of the
FERC's Merger Order. AEP had objected to the Merger Order alleging that the
post-merger operations of Cinergy would require the use of AEP's transmission
facilities on a continuous basis without compensation. AEP argued that the
FERC, in issuing the Merger Order, did not adequately evaluate the impact on
AEP or whether the need to use AEP's transmission facilities would interfere
with Cinergy achieving merger benefits. In addition, AEP claimed that the
FERC failed to evaluate the extent to which the merged facilities' operations
would be consistent with the integrated public utility concept of the PUHCA.
Cinergy, CG&E, and PSI cannot predict whether AEP will appeal this decision to
the United States Supreme Court, and if appealed, the outcome of such appeal.
Additionally, see Note 6 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 17, 1997,
in Cincinnati, Ohio.
(c) At the meeting, six Class III directors were elected to the board of
Cinergy to serve three-year terms, expiring in 2000, as set forth
below:
Votes Votes
Class III For Withheld
Michael G. Browning 135,034,136 3,840,569
Phillip R. Cox 135,184,191 3,690,514
Kenneth M. Duberstein 135,091,109 3,783,596
James E. Rogers 134,709,947 4,164,758
John J. Schiff, Jr. 135,197,970 3,676,735
Oliver W. Waddell 135,138,778 3,735,927
Additionally, a shareholder proposal was defeated. Such proposal, if
adopted, would have abolished the Annual Incentive Plan and the Long-term
Incentive Compensation Plan for the respective eligible employees, and
replaced said plans with an incentive award that would have been tied
proportionately to the price of Cinergy's common stock at the end of the
year. There were 100,917,186 common shares voted against the proposal,
16,492,160 voted for the proposal, 6,756,956 abstentions, and 14,708,403
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 16, 1997.
(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
PSI
(a) The annual meeting of shareholders of PSI was held in Cincinnati, Ohio
on April 17, 1997.
(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 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
Exhibit
Designation Nature of Exhibit
PSI
3-a By-laws of PSI, as amended on December 17,
1996.
Cinergy, CG&E, PSI, and ULH&P
27 Financial Data Schedules (included in
electronic submission only).
Cinergy, CG&E, PSI, and ULH&P
(b) The following report on Form 8-K was filed during the quarter
or prior to the filing of this Form 10-Q for the quarter ended
March 31, 1997.
Date of Report Item Filed_____________________
January 10, 1997 Item 5. Cautionary statements
for purposes of the "Safe Harbor" provisions of the
Private Securities Litigation Reform Act of 1995.
(Exhibit to Cinergy's Form 8-K/A filed January 10, 1997,
in File No. 1-11377.)
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, 1997 Charles J. Winger __
Duly Authorized Officer
and
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED
STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<PERIOD-TYPE> 3-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 6,274,182
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 511,819
<TOTAL-DEFERRED-CHARGES> 1,141,602
<OTHER-ASSETS> 833,505
<TOTAL-ASSETS> 8,761,108
<COMMON> 1,577
<CAPITAL-SURPLUS-PAID-IN> 1,579,934
<RETAINED-EARNINGS> 1,034,224
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,615,735
0
194,195
<LONG-TERM-DEBT-NET> 2,375,694
<SHORT-TERM-NOTES> 705,177
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 274,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,596,307
<TOT-CAPITALIZATION-AND-LIAB> 8,761,108
<GROSS-OPERATING-REVENUE> 1,030,180
<INCOME-TAX-EXPENSE> 63,919
<OTHER-OPERATING-EXPENSES> 813,962
<TOTAL-OPERATING-EXPENSES> 877,881
<OPERATING-INCOME-LOSS> 152,299
<OTHER-INCOME-NET> 26,857
<INCOME-BEFORE-INTEREST-EXPEN> 179,156
<TOTAL-INTEREST-EXPENSE> 61,800
<NET-INCOME> 117,356
3,239
<EARNINGS-AVAILABLE-FOR-COMM> 114,117
<COMMON-STOCK-DIVIDENDS> 71,000
<TOTAL-INTEREST-ON-BONDS> 49,275
<CASH-FLOW-OPERATIONS> 154,339
<EPS-PRIMARY> 0.72
<EPS-DILUTED> 0.72
BY-LAWS
OF
PSI ENERGY, INC.
__________
ARTICLE I
OFFICES
SECTION 1. The principal office of PSI Energy, Inc. shall
be at 1000 East Main Street, in the town of Plainfield, county of
Hendricks and state of Indiana; and the corporation may have such
other offices at such other places as the board of directors may
from time to time designate, or as the business of the
corporation may require.
ARTICLE II
SEAL
SECTION 1. The corporate seal shall be circular in form and
shall have inscribed thereon the words "PSI ENERGY, INC.-
CORPORATE SEAL-INDIANA.''
ARTICLE III
SHAREHOLDERS' MEETINGS
SECTION 1. Any meeting of the shareholders may be held at
the office of the corporation in the town of Plainfield, Indiana,
or at such other place within or outside the state of Indiana
through the use of any means of communication by which all
shareholders participating may simultaneously hear each other at
the meeting. The place and manner of the meeting shall be
specified in the notice of such meeting, or if such meeting is
held upon waiver of notice, specified in the waiver of notice
signed by all of the shareholders.
SECTION 2. Except as otherwise directed by the board of
directors, all annual meetings of shareholders shall be held at
10:00 A.M. on the third Wednesday of April of each year if not a
legal holiday, and if a legal holiday, then on the next
succeeding day not a legal holiday, for the purpose of electing
directors and for the transaction of such other business as may
legally come before the meeting. The business to be transacted
at any annual meeting may be transacted at any special meeting
called for that purpose.
SECTION 3. Written or printed notice of the annual meeting,
stating the place, manner, day and hour of the meeting, shall be
delivered or mailed by the secretary or an assistant secretary to
each shareholder of record entitled to vote at such meeting, at
such address as appears on the records of the corporation, at
least ten days, but not more than sixty days, before the date of
the meeting.
SECTION 4. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute,
shall be held if called by the chairman, the president, an
executive vice president or a vice president, by the board of
directors, or by the shareholders holding of record such number
of the outstanding shares of the corporation as represents not
less than one-fourth of the aggregate number of votes that would
be voted at such meeting if there were voted thereat all the
outstanding shares entitled to vote on the business proposed to
be transacted thereat. All requests for special meetings of
shareholders shall state the time, manner, place and purpose
thereof. Only business within the purpose stated in such request
shall be conducted at such meeting.
SECTION 5. Written or printed notice of all special
meetings of shareholders, stating (i) the place, manner, day and
hour of the meeting, and (ii) the purpose or purposes for which
such meeting is called, shall be delivered or mailed by the
secretary or by the officers or persons calling the meeting to
each shareholder of record entitled to vote at such meeting at
such address as appears on the records of the corporation, at
least ten days before the date of such meeting.
SECTION 6. Notice of any meeting of shareholders may be
waived in writing by any shareholder if the waiver sets forth in
reasonable detail the purpose or purposes for which the meeting
is called and the time and place thereof. Attendance at any
meeting in person or by proxy shall constitute a waiver of notice
of such meeting.
SECTION 7. At any meeting of the shareholders, the holders
of record (present in person or represented by proxy) of such
number of the outstanding shares of the corporation as represents
a majority of the aggregate number of votes that would be voted
at such meeting if there were voted thereat all the outstanding
shares entitled to vote at such meeting, shall be requisite to
constitute a quorum for the election of directors or for the
transaction of other business, unless otherwise provided by law.
If, however, the holders of such majority shall not be present or
represented at any meeting of the shareholders of the
corporation, the shareholders entitled to vote thereat, present
in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than
announcement at the meeting, until the holders of such majority
shall be present or represented. At such adjourned meeting at
which the holders of such majority shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
SECTION 8. Every shareholder shall have the right at every
shareholders' meeting to one vote for each share of stock
standing in his name on the books of the corporation, except as
otherwise provided by law or by the amended articles of
consolidation and except that no shares shall be voted at any
meeting upon which any installment is due and unpaid, or which
belongs to the corporation, or which shall have been transferred
on the books of the corporation within such number of days, not
exceeding seventy, next preceding the date of such meeting as the
board of directors shall determine, or, in the absence of such
determination, within ten days next preceding the date of such
meeting. At any adjourned meeting of shareholders, the board of
directors shall fix a record date for shareholders entitled to
vote at such adjourned meeting which must be a new date if the
meeting is adjourned for more than one hundred twenty days.
Voting for directors and, upon the demand of any
shareholder, voting upon any other question shall be by ballot.
On any vote by ballot, each ballot voted shall be signed either
by the shareholder voting the same, or, if the proxy of such
shareholder is on file with the secretary and
unrevoked, by the duly appointed agent or attorney of such
shareholder. The ballot of each shareholder voting shall be
deemed to be a vote of all the shares owned of record by such
shareholder and entitled to be voted on the matter unless such
shareholder or his duly appointed agent or attorney shall
designate on such ballot that a lesser number of shares are
voted. A plurality vote shall be sufficient to elect any
director.
SECTION 9. The secretary shall make, or cause the agent
having charge of the stock transfer books of the corporation to
make, at least five days before each election of directors, a
complete list of the shareholders entitled by the amended
articles of consolidation to vote at such election, arranged in
alphabetical order, with the address and number of shares so
entitled to vote held by each, which list shall be on file at the
principal office of the corporation and subject to inspection by
any shareholder within the usual business hours during said five
days. Such list shall be produced and kept open at the time and
place of election and subject to the inspection of any
shareholder or shareholder's agent or attorney authorized in
writing during the holding of such election. The original stock
register or transfer book, or the duplicate thereof kept in the
state of Indiana, shall be the only evidence as to who are the
shareholders entitled to examine such list or the stock ledger or
transfer book or to vote at any meeting of the shareholders.
SECTION 10. A shareholder may vote either in person or by
proxy executed in writing by the shareholder or a duly authorized
agent or attorney in fact. No proxy shall be valid after eleven
months from the date of its execution, unless a longer time is
expressly provided therein.
SECTION 11. The secretary, who may call on any officer or
officers of the corporation for assistance, shall make all
necessary and appropriate arrangements for the meetings of the
shareholders, receive all proxies, and ascertain and report by
certificate to each meeting of the shareholders the number of
shares present in person or by proxy and entitled to vote at such
meeting. In the absence of the secretary, an assistant secretary
shall perform said duties. The certificate report of the
secretary or an assistant secretary as to the regularity of such
proxies and as to the number of shares present in person or by
proxy and entitled to vote at such meeting shall be received as
prima facie evidence of the number of shares, which are present
in person and by proxy and entitled to vote, for the purpose of
establishing the presence of a quorum at such meeting, for the
purpose of organizing such meeting, and for all other purposes.
SECTION 12. The chief executive officer, when present and
available, shall preside at or chair the meetings of the
shareholders; however, the chief executive officer may designate
any other person to serve as chair of such meetings. In the
event of the absence of such designation and the absence or
unavailability of the chief executive officer, the chairman of
the board, if present and available, may so preside, or if the
chairman is not present or available, the vice chairman of the
board, if present and available, may so preside, or if the vice
chairman is not present or available, the president, if present
and available, may so preside. In the event of the absence or
unavailability of each such officer, and the absence of proper
designation by the chief executive officer for a person to serve
as presiding officer and, thus, chair any meeting of the
shareholders, the meeting shall choose a presiding officer to
chair such meeting.
SECTION 13. At each meeting of the shareholders, (i) the
proxies shall be received and taken in charge by three
inspectors, (ii) where voting is to be by ballot on any question,
the polls shall be opened and closed and the ballots shall be
taken in charge by such inspectors, and (iii) all questions
touching the qualification of voters, the validity of proxies and
the acceptance or rejection of votes shall be decided by such
three inspectors or a majority thereof. Such inspectors may be
appointed by the board of directors before such meeting, or, if
no such appointment shall have been made, then by the presiding
officer at such meeting. In the event for any reason any of the
inspectors previously appointed shall fail to attend such
meeting, or being present will not or cannot act in such
capacity, then an inspector or inspectors in place of such
inspector or inspectors failing to attend or not acting shall be
appointed by the presiding officer.
SECTION 14. The order of business at each annual meeting of
the shareholders, and, as far as applicable, at each special
meeting of the shareholders, shall be established by the
secretary or an assistant secretary, in consultation with the
chief executive officer, and presented to the person serving as
chair of the meeting at or prior to such meeting.
SECTION 15. The chairman shall have the right and authority
to prescribe such rules, regulations and procedures and to do all
such acts and things as are necessary or desirable
for the proper conduct of meetings of the shareholders,
including, without limitation, the establishment of procedures
for the maintenance of order, safety, limitations on the time
allotted to questions or comments on the affairs of the
corporation, restrictions on entry to such meeting of the
shareholders after the time prescribed for the commencement
thereof, and the opening and closing of the voting polls.
SECTION 16. The annual meeting of shareholders shall be
held at such time as is provided in Section 2 of this Article for
the purpose of electing directors and for the transaction of only
such other business as is properly brought before the meeting in
accordance with these by-laws. To be properly brought before the
annual meeting, business must be either (a) specified in the
notice of the annual meeting (or any supplement thereto) given by
or at the direction of the board, (b) otherwise properly brought
before the annual meeting by or at the direction of the board, or
(c) otherwise properly brought before the annual meeting by a
shareholder. In addition to any other applicable requirements,
for business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice
thereof in writing to the secretary of the corporation. To be
timely, a shareholder's notice must be delivered to or mailed and
received at the principal executive offices of the corporation,
not less than fifty days nor more than seventy-five days prior to
the annual meeting; provided, however, that in the event that
less than sixty-five days' notice or prior public disclosure of
the date of the annual meeting is given or made to shareholders,
notice by the shareholder to be timely must be so received not
later than the close of business on the fifteenth day following
the date on which such notice of the date of the annual meeting
was mailed or such public disclosure was made, whichever first
occurs. A shareholder's notice to the secretary shall set forth
as to each matter the shareholder proposes to bring before the
annual meeting, (i) a brief description of the business desired
to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and
record address of the shareholder proposing such business, (iii)
the class and number of shares of the corporation which are
beneficially owned by the shareholder, and (iv) any material
interest of the shareholder in such business.
Notwithstanding anything in the by-laws to the contrary, no
business shall be conducted at the annual meeting except in
accordance with the procedures set forth in this Article III,
provided, however, that nothing in this Article III shall be
deemed to preclude discussion by any shareholder of any business
properly brought before the annual meeting.
The chairman of an annual meeting shall, if the facts
warrant, determine and declare to the annual meeting that
business was not properly brought before the annual meeting in
accordance with the provisions of this Article III, and if he
should so determine, he shall so declare to the annual meeting,
and any such business not properly brought before the annual
meeting shall not be transacted.
SECTION 17. Only persons who are nominated in accordance
with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the board of
the corporation at the annual meeting may be made at the annual
meeting of shareholders by or at the direction of the board of
directors, by any nominating committee or person appointed by the
board, or by any shareholder of the corporation, entitled to vote
for the election of directors at the annual meeting, who complies
with the notice procedures set forth in this Article III. Such
nominations, other than those made by or at the direction of the
board, shall be made pursuant to timely notice in writing to the
secretary of the corporation. To be timely, a shareholder's
notice shall be delivered to or mailed and received at the
principal executive offices of the corporation not less than
fifty days nor more than seventy-five days prior to the annual
meeting; provided, however, that in the event that less than
sixty-five days' notice or prior public disclosure of the date of
the annual meeting is given or made to shareholders, notice to
the secretary shall set forth (a) as to each person whom the
shareholder proposes to nominate for election or reelection as a
director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or
employment of the person, (iii) the class and number of shares of
capital stock of the corporation which are beneficially owned by
the person, (iv) a written statement that the person is willing
to serve as a director filed with the secretary at least five (5)
days prior to the date of the annual meeting and (v) any other
information relating to the person that is required to be
disclosed in solicitations for proxies for election of directors
pursuant to Rule 14a under the Securities Exchange Act of 1934,
as amended; and (b) as to the shareholder giving the notice (i)
the name and record address of the shareholder, and (ii) the
class and number of shares of capital stock of the corporation
which are beneficially owned by the shareholder. The corporation
may require any proposed nominee to furnish such other
information as may reasonably be required by the corporation to
determine the eligibility of such proposed nominee to serve as
director of the corporation. No person shall be eligible for
election as a director of the corporation unless nominated in
accordance with the procedures set forth herein.
The chairman of the annual meeting shall, if the facts
warrant, determine and declare to the annual meeting that a
nomination was not made in accordance with the foregoing
procedure, and if he should so determine, he shall so declare to
the annual meeting, and the defective nomination shall be
disregarded.
SECTION 18. An annual meeting of shareholders may be
adjourned or postponed to a different time or place, and notice
of the new date, time or place need not be given if such
adjournment or postponement is announced at the annual meeting
before adjournment.
ARTICLE IV
BOARD OF DIRECTORS
SECTION 1. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of this
corporation managed under the direction of, a board of not less
than one (1) nor more than seven (7) directors. The directors
shall be elected by the shareholders at each annual meeting of
the shareholders. Each director shall be elected for a term of
one year and shall hold office until his successor is chosen and
qualified. Any vacancy occurring in the board of directors
caused by death, resignation, increase in number of directors or
otherwise, may be filled by a majority vote of the remaining
members of the board of directors until the next annual meeting
of the shareholders. No person shall be eligible for election,
reelection or appointment as a member of the board of directors
if the time of such election, reelection or appointment is a date
subsequent to the end of the calendar year in which such person
attained the age of seventy (70) years. No person shall remain a
director after reaching the age of seventy (70) years; provided,
however, that such director shall continue as a director until
January 1 of the year following the year in which the director
reached the age of seventy (70) years. Subject to the provisions
of the preceding paragraphs, any and all of the directors may
only be removed for cause. The directors shall receive such
reasonable compensation as shall from time to time be provided
for by resolution of the board of directors or a committee
thereof.
SECTION 2. In addition to the powers and authority by these
by-laws expressly conferred upon it, the board of directors may
do all such lawful acts and things as are not by the laws of the
state of Indiana, by the amended articles of consolidation of the
corporation, or by these by-laws directed or required to be
exercised or done by the shareholders of the corporation.
SECTION 3. A meeting of the directors, to be known as the
annual meeting of the board of directors, shall be held at the
principal office of the corporation at such time and date as the
board of directors may determine, or at such other place, within
or without the state of Indiana, and at such other time as shall
be fixed by the shareholders at their annual meeting, or as shall
be fixed by the consent in writing of all of such newly elected
directors, for the election of officers and for the transaction
of such other business as may properly come before the meeting.
No notice of such annual meeting shall be necessary or required
in order legally to constitute the meeting if a majority of the
newly elected directors shall be present. If a majority shall
not be present at such meeting, those present shall adjourn the
meeting to a specified time and place, and the secretary or an
assistant secretary shall at once notify each of the newly
elected directors of the time and place of holding such adjourned
annual meeting.
SECTION 4. Regular meetings of the board of directors or
any committee thereof may be held at stated times, or from time
to time, and at such place, either within or without the state of
Indiana, as the board of directors or any committee may
determine, without call and without notice. Any or all members
of the board of directors or a committee thereof may participate
in any meeting of the board or committee by any means of a
communication by which all persons participating in the meeting
can simultaneously communicate with each other, and participation
in this manner constitutes presence in person at the meeting.
SECTION 5. Special meetings of the board of directors may
be called at any time, or from time to time, by the chairman, the
president, an executive vice president or a vice president by
causing the secretary or an assistant secretary to give to each
director, either personally or by telephone, mail or telegraph,
at least two days' notice of the time and place of such meeting.
Special meetings of the board of directors shall be called by the
chairman, the president, an executive vice president or a vice
president in like manner and on like notice at the written
request of at least two directors. Special meetings of the board
of directors may be held at the principal office of the
corporation or at such other place, within or without the state
of Indiana, as shall be specified in the notice of the meeting,
or, if held upon waiver of notice, as shall be specified in such
waiver.
SECTION 6. Any meeting of the board of directors or any
committee thereof, wheresoever held, at which all of the members
are present, shall be as valid as if held pursuant to proper
notice, and in case a meeting shall be held without notice when
all are not present but the absent directors shall have signed a
waiver of notice of such meeting, whether before or after the
time stated in said waiver, or shall thereafter sign the minutes
of the meeting, the same shall be as valid and binding as though
called upon due notice.
SECTION 7. The board of directors may take any action
pursuant to these by-laws without a meeting if the action is
taken by all members of the board. The action shall be evidenced
by one or more written consents describing the action taken,
signed by each director and included in the minutes or filed with
the corporate records reflecting the action taken. Action taken
without a meeting shall be effective when the last director signs
the consent, unless the consent specifies a different prior or
subsequent effective date.
SECTION 8. At all meetings of the board of directors, a
majority of the members of the board of directors shall be
necessary to constitute a quorum for the transaction of any
business except the filling of vacancies, but a less number may
adjourn the meeting from time to time until a quorum is present.
The act of a majority of the board of directors present at a
meeting at which a quorum is present shall be the act of the
board of directors, unless the act of a greater number is
required by law or by the amended articles of consolidation or by
the by-laws.
SECTION 9. The board of directors may, by resolution
adopted by a majority of the members of the board of directors,
designate two or more of their number to constitute a committee
of the board of directors. The board of directors shall form an
executive committee, which committee shall have and exercise all
of the authority of the board of directors in the management of
the corporation to the fullest extent permitted by the laws of
the state of Indiana, including the power to declare dividends
and distributions from time to time within guidelines to be
established by the board of directors. Neither such guidelines
nor the powers granted to the executive committee hereby may be
amended in any way by the board of directors, and the members of
the executive committee appointed by the board of directors may
not be changed by the board of directors, without the affirmative
vote of 75% of the directors then in office, rounded upwards.
ARTICLE V
OFFICERS
SECTION 1. The officers of the corporation shall consist of
a chairman of the board, a chief executive officer, a president,
a secretary, a treasurer, a comptroller and may consist of a vice
chairman, one or more vice presidents, one or more assistant
secretaries, one or more assistant treasurers, or one or more
assistant comptrollers. If deemed advisable by the board of
directors, any two or more offices may be held by the same
person, except that the duties of the chairman, the vice
chairman, the chief executive officer, or the president shall not
be performed by the same person who performs the duties of
secretary.
SECTION 2. The officers of the corporation hereinabove
provided for shall be elected by the board of directors at its
annual meeting and shall hold office for one year and/or until
their respective successors shall have been duly elected and
shall have qualified.
SECTION 3. The board of directors may, from time to time,
elect or appoint such other officers and agents as it shall deem
necessary, who shall hold their respective offices for such terms
and shall exercise such powers and perform such duties as may be
prescribed from time to time by the by-laws, or as in absence of
provision in the by-laws in respect thereto may be prescribed
from time to time by the board of directors.
SECTION 4. Any vacancy among the officers or agents of the
corporation, duly elected or appointed by the board of directors
shall be filled for the unexpired term by the board of directors.
Any officer or agent elected or appointed by the board of
directors, may be removed at any time, with or without cause, by
the affirmative vote of a majority of the whole board of
directors.
SECTION 5. In the case of the absence, disability, death,
resignation or removal from office of any officer of the
corporation, or for any other reason that the board of directors
shall deem sufficient, the board of directors may delegate, for
the time being, the powers and/or duties, or any of them, of such
officer to any other officer or to any director.
SECTION 6. The chairman of the board shall be a director
and shall preside at all meetings of the board of directors and,
in the absence or inability to act of the chief executive
officer, meetings of shareholders and shall, subject to the
board's direction and control, be the board's representative and
medium of communication, and shall perform such other duties as
may from time to time be assigned to the chairman of the board by
the board of directors. The chairman of the board shall direct
the long-term strategic planning process of the corporation and
shall also lend his or her expertise to such other officers as
may be requested from time to time by such officers. The
chairman shall be a member of the executive committee.
SECTION 7. The vice chairman of the board, if there be one,
shall be a director and shall preside at meetings of the board of
directors in the absence or inability to act of the chairman of
the board or meetings of shareholders in the absence or inability
to act of the chief executive officer and the chairman of the
board. The vice chairman shall perform such other duties as may
from time to time be assigned to him or her by the board of
directors. The vice chairman shall be a member of the executive
committee.
SECTION 8. The chief executive officer shall be a director
and shall preside at all meetings of the shareholders, and, in
the absence or inability to act of the chairman of the board and
the vice chairman, at all meetings of the board of directors.
The chief executive officer shall submit a report of the
operations of the corporation for the fiscal year to the
shareholders at their annual meeting and from time to time shall
report to the board of directors all matters within his or her
knowledge which the interests of the corporation may require be
brought to their notice. The chief executive officer shall be
the chairman of the executive committee and ex officio a member
of all standing committees.
SECTION 9. The president shall, subject to the control of
the board of directors, the executive committee, the chairman,
the vice chairman, and the chief executive officer, have general
supervision over the management and direction of the affairs of
the corporation, and supervision of all departments and of all
officers of the corporation. The president shall, subject to the
other provisions of these by-laws, have such other powers and
perform such other duties as usually devolve upon the president
of a corporation, and such further duties as may be prescribed by
the board of directors, the executive committee, the chairman,
the vice chairman, or the chief executive officer. The president
shall report to the chief executive officer. In the absence or
incapacity of the chairman, vice chairman or chief executive
officer, the president may preside at
meetings of the board of directors and/or meetings of the
shareholders. In case of the absence, disability, death,
resignation or removal from office of the president, the powers
and duties of the president shall, for the time being, devolve
upon and be exercised by a vice president, unless otherwise
ordered by the board of directors, the executive committee, the
chairman, the vice chairman, or the chief executive officer.
SECTION 10. Each of the vice presidents shall have such
powers and duties as may be prescribed by the board of directors
or the executive committee, or be delegated by the chairman, the
vice chairman, the chief executive officer, or the president. In
the absence or incapacity of the president, the vice president
designated by the board of directors or executive committee,
chairman, vice chairman, chief executive officer, or president
shall exercise the powers and duties of the president.
SECTION 11. The secretary shall have the custody and care
of the corporate seal, records, minutes and stock books of the
corporation and shall be responsible for authentication of such
records. The secretary shall attend the meetings of the board of
directors and of the shareholders and duly record, prepare and
keep the minutes of their proceedings in a book or books to be
kept for that purpose. The secretary shall give or cause to be
given notice of all meetings of the shareholders and the board of
directors when such notice shall be required. The secretary shall
file and take charge of all papers and documents belonging to the
corporation and shall have such other powers and duties as are
incident to the office of secretary of a corporation, subject at
all times to the direction and control of the board of directors,
the executive committee, the chairman, the vice chairman, the
chief executive officer, and the president. In case of the
absence, disability, death, resignation or removal from office of
the secretary, the powers and duties of the secretary shall, for
the time being, devolve upon and be exercised by an assistant
secretary, unless otherwise ordered by the board of directors,
the executive committee, the chairman, the vice chairman, the
chief executive officer, or the president.
SECTION 12. Each of the assistant secretaries (if assistant
secretaries be elected or appointed by the board of directors)
shall assist the secretary in his or her duties and shall have
such other powers and duties as may be prescribed by the board of
directors or the executive committee, or be delegated by the
chairman, the vice chairman, the chief executive officer, or the
president. In case of the absence, disability, death,
resignation or removal from office of the secretary, the powers
and duties shall, for the time being, devolve upon such one of
the assistant secretaries as the board of directors, the
executive committee, the chairman, the vice chairman, the chief
executive officer, the president or the secretary may designate,
or, if there be but one assistant secretary, then upon such
assistant secretary; and he or she shall thereupon, during such
period, exercise and perform all of the powers and duties of the
secretary, except as may be otherwise provided by the board of
directors, the executive committee, the chairman, the vice
chairman, the chief executive officer, or the president.
SECTION 13. The treasurer shall have charge of, and be
responsible for, the collection, receipt, custody and
disbursement of the funds of the corporation, and shall have the
custody also of all securities belonging to the corporation. The
treasurer shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation. The
treasurer shall disburse the funds of the corporation as may be
ordered by the board of directors or the executive committee,
taking proper receipts or making proper vouchers for such
disbursements and shall preserve the same at all times during his
or her term of office. When necessary or proper, the treasurer
shall endorse on behalf of the corporation all checks, notes or
other obligations payable to the corporation or coming into his
or her possession for or on behalf of the corporation and shall
deposit the funds arising therefrom together with all other funds
and valuable effects of the corporation coming into his or her
possession in the name and to the credit of the corporation in
such depositories as the board of directors or the executive
committee from time to time, by resolution, shall direct. The
treasurer shall have such other powers and duties as are incident
to the office of treasurer of a corporation, subject at all times
to the direction and control of the board of directors, the
executive committee, the chairman, the vice chairman, the chief
executive
officer, and the president.
The treasurer shall render to the chairman, the vice
chairman, the chief executive officer, the president, the
executive committee, and the board of directors, at meetings of
the board of directors or the executive committee, or whenever
the same shall be required, an account of all
transactions as treasurer and of the financial condition of the
corporation. The treasurer shall give the corporation a bond, if
required by the board of directors or the executive committee, in
such an amount and with such surety or sureties as may be ordered
by the board of directors or the executive committee, for the
faithful performance of the duties of the office and for the
restoration to the corporation, in case of death, resignation,
retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the
possession or under the control of the treasurer and belonging to
the corporation.
In case of the absence, disability, death, resignation or
removal from office of the treasurer, the powers and duties of
the treasurer shall, for the time being, devolve upon and be
exercised by an assistant treasurer, unless otherwise ordered by
the board of directors, the executive committee, the chairman,
the vice chairman, the chief executive officer, or the president.
SECTION 14. Each of the assistant treasurers (if assistant
treasurers be elected or appointed by the board of directors)
shall assist the treasurer in his or her duties, and shall have
such other powers and duties as may be prescribed by the board of
directors or the executive committee, or be delegated by the
chairman, the vice chairman, the chief executive officer, or the
president. In case of the absence, disability, death,
resignation or removal from office of the treasurer, the powers
and duties shall, for the time being, devolve upon such one of
the assistant treasurers as the board of directors, the executive
committee, the chairman, the vice chairman, the chief executive
officer, the president or the treasurer may designate, or, if
there be but one assistant treasurer, then upon such assistant
treasurer; and he or she shall thereupon, during such period,
exercise and perform all of the powers and duties of the
treasurer, except as may be otherwise provided by the board of
directors, the executive committee, the chairman, the vice
chairman, the chief executive officer, or the president. Each or
any assistant treasurer shall likewise give the corporation a
bond, if required by the board of directors, in such amount and
with such surety or sureties as may be ordered by the board of
directors.
SECTION 15. The comptroller shall have control over all
accounts and records of the corporation pertaining to moneys,
properties, materials and supplies. The comptroller shall have
executive direction of the bookkeeping and accounting departments
and shall have general supervision over the records in all other
departments pertaining to moneys, properties, materials and
supplies. The comptroller shall have such other powers and
duties as are incident to the office of comptroller of a
corporation, subject at all times to the direction and control of
the board of directors, the executive committee, the chairman,
the vice chairman, the chief executive officer, and the
president. In case of the absence, disability, death,
resignation or removal from office of the comptroller, the powers
and duties of the comptroller shall, if an assistant comptroller
has been elected by the board of directors or the executive
committee, for the time being, devolve upon and be exercised by
an assistant comptroller, unless otherwise ordered by the board
of directors, the executive committee, the chairman, the vice
chairman, the chief executive officer, or the president.
SECTION 16. Each of the assistant comptrollers (if
assistant comptrollers be elected or appointed by the board of
directors) shall assist the comptroller in his or her duties, and
shall have such other powers and duties as may be prescribed by
the board of directors or the executive committee, or be
delegated by the chairman, the vice chairman, the chief executive
officer, or the president. In case of the absence, disability,
death, resignation or removal from office of the comptroller, the
powers and duties shall, for the time being, devolve upon such
one of the assistant comptrollers as the board of directors, the
executive committee, the chairman, the vice chairman, the chief
executive officer, the president or the comptroller may
designate, or, if there be but one assistant comptroller, then
upon such assistant comptroller; and he or she shall thereupon,
during such period, exercise and perform all of the powers and
duties of the comptroller, except as may be otherwise provided by
the board of directors, the executive committee, the chairman,
the vice chairman, the chief executive officer, or the president.
ARTICLE VI
CERTIFICATES FOR SHARES
SECTION 1. Each certificate for shares of stock of the
corporation shall be in such form, consistent with law, as shall
be approved by the board of directors, shall be numbered
consecutively as issued, shall state the name of the registered
holder, the number of shares represented thereby, and such other
matters and things as are required by law or by the amended
articles of consolidation to be stated in such certificate. Each
such certificate shall be signed by the chairman, the chief
executive officer, the president, or a vice president, and the
secretary or an assistant secretary; and may have affixed thereto
the seal of the corporation. In any case where the seal of the
corporation is affixed to such a certificate, such seal may be a
facsimile, engraved or printed. In any case where such a
certificate is also signed by a transfer agent and a registrar or
either of them, the respective signatures of the chairman, the
chief executive officer, the president, or a vice president, and
of the secretary or an assistant secretary thereon may be
facsimiles, engraved or printed.
The board of directors or the finance committee may, by
resolution duly adopted, authorize the issue of some or all of
the shares of any or all classes or series of stock of the
corporation without certificates.
SECTION 2. Shares of stock of the corporation shall be
entered in the books of the corporation as they are issued, and
shall be transferable on the books of the corporation by the
holder thereof in person, or by his, her or its attorney duly
authorized thereto in writing, upon the surrender of the
outstanding certificate therefor properly endorsed.
SECTION 3. The corporation and its officers shall be
entitled to treat the holder of record of any share or shares of
stock of the corporation as the holder in fact thereof, and
accordingly shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of
any other person or persons, whether or not it shall have express
or other notice thereof, save as expressly provided by the laws
of Indiana, or except as in the amended articles of consolidation
or in these by-laws provided to the contrary.
SECTION 4. Shares of the capital stock of the corporation
may be issued and disposed of by the corporation from time to
time for such consideration as may be fixed from time to time by
resolution of the board of directors.
SECTION 5. The purchase price of all stock subscribed or
purchased shall be paid as from time to time determined by
resolution of the board of directors, either wholly or partly in
money, labor or property. Said payments shall be made within
such time and in such installments or upon such terms as the
board of directors may from time to time determine and direct.
SECTION 6. Before the corporation shall issue, in place of
any certificate of stock in the corporation claimed to have been
mislaid, lost, stolen or destroyed (such a certificate being
hereinafter referred to as a "Lost Certificate''), a new
certificate or certificates to replace the Lost Certificate, the
person seeking the issue of such new certificate or certificates
shall make affidavit or affirmation of the fact of such
mislaying, loss, theft or destruction, shall furnish such, if
any, other proof of ownership, interest, and disappearance of the
Lost Certificate as the corporation or any transfer agent for it
shall require, and shall at the option of the corporation in
each such case either:
(i) give the corporation either a bond of indemnity with one
or more sureties satisfactory to the board of directors of
the corporation or a sole obligor indemnity bond executed by
a corporation then authorized to transact the business of
indemnity and suretyship in the state of Illinois or the
state of New York and satisfactory to said board which
surety or sole obligor bond shall be in form and substance
satisfactory to said board and shall be (as said board may
direct in any case) either (a) an "open penalty bond'' or
(b) a bond having a fixed maximum amount of liability
specified therein which amount shall be such amount as said
board may direct that is not in excess of twice the par
value of the shares represented by the Lost Certificate if
such shares have a par value, or of twice the market value
of such shares at the date replacement of the Lost
Certificate is requested if the shares represented by such
Lost Certificate be shares without par value, or
(ii) if there is then in force and effect a Blanket Lost
Original Instruments Bond which appertains to such Lost
Certificate, protects the corporation from liability growing
out of the issue of a new stock certificate or certificates
in lieu of such Lost Certificate and has been executed and
delivered by a corporation then authorized to transact the
business of indemnity and suretyship in the state of
Illinois or the state of New York, furnish the corporation
or one of its transfer agents with such instruments or
information as are required in order that the indemnity
provisions of such bond will apply to the new stock
certificate or certificates issued in lieu of such Lost
Certificate.
When the aforesaid conditions shall have been satisfied, a
new stock certificate or certificates of the same tenor and for
the same total number of shares as the Lost Certificate shall be
issued by the corporation in the name of the record owner of the
Lost Certificate.
SECTION 7. Every shareholder shall furnish the secretary
with an address to which notices of meetings and all other
notices may be served upon him or mailed to him, and in default
thereof notices may be addressed to him at his last known address
or at the office of the corporation at Plainfield, Indiana.
ARTICLE VII
CORPORATE BOOKS
SECTION 1. Except as hereinafter or by the amended articles
of consolidation or by law otherwise provided, the books and
records of the corporation may be kept at such place or places,
within or without the state of Indiana, as the board of directors
may from time to time by resolution determine.
SECTION 2. The original or duplicate stock register or
transfer book, or, in case a stock registrar or transfer agent
shall be employed by the corporation either within or without the
state of Indiana, a complete and accurate shareholders' list,
alphabetically arranged, giving the names and addresses of all
shareholders, the number and classes of shares held by each and
the time each became the record owner of his shares, shall be
kept at the principal office of the corporation in the state of
Indiana.
SECTION 3.
(a) A shareholder or his agent or attorney, if authorized
in writing, may inspect and copy, during regular
business hours at the principal office of the
corporation, any of the following records of the
corporation if the shareholder meets the requirements
of subsection (b) and gives the corporation written
notice of the shareholder's demand at least five (5)
business days before the date on which the shareholder
wishes to inspect and copy:
(1) excerpts from minutes of any meeting of the board
of directors, records of any action of a committee
of the board of directors while acting in place of
the board of directors on behalf of the
corporation, minutes of any meeting of the
shareholders, and records of action taken by the
shareholders or board of directors without a
meeting;
(2) accounting records of the corporation; and
(3) the record of shareholders.
(b) A shareholder may inspect and copy the records
identified in subsection (a) only if:
(1) the shareholder's demand is made in good faith and
for a proper purpose;
(2) the shareholder describes with reasonable
particularity the shareholder's purpose and the
records the shareholder desires to inspect; and
(3) the records are directly connected with the
shareholder's purpose.
SECTION 4. The stock transfer books of the corporation may
from time to time be closed by order of the board of directors
for any lawful purpose, and for such periods consistent with law,
but not exceeding seventy days at any one time, as the board of
directors may deem advisable. In lieu of closing the stock
transfer books as aforesaid, the board of directors may, in its
discretion, fix in advance a date not exceeding seventy days (or
such lesser number of days as may in any case be the maximum
number allowed under any applicable statute) next preceding the
date of any meeting of shareholders or the date for the payment
of any dividend or the date for the allotment of rights or the
date when any change or conversion or exchange of capital stock
shall go into effect, as the record date for the determination of
the shareholders entitled to notice of and to vote at any such
meeting or entitled to receive any such dividend or to any such
allotment of rights or to exercise the rights in respect of any
such change, conversion or exchange of capital stock; and, in
such case, only such shareholders as shall be shareholders of
record on the date so fixed shall be entitled to notice of and to
vote at such meeting or to receive such payment of dividend or to
receive such allotment of rights or to exercise such rights as
the case may be, notwithstanding any transfer of stock on the
books of the corporation after such record date fixed as
aforesaid.
SECTION 5. All books and records of the corporation shall
be kept and maintained in such manner and for such periods as
required by statute.
ARTICLE VIII
CHECKS, DRAFTS AND WRITTEN INSTRUMENTS-
STOCK OWNED IN OTHER CORPORATIONS
SECTION 1. All mortgage bonds and all debentures of the
corporation shall, unless otherwise directed by the board of
directors or unless otherwise required by law, be signed by the
chairman, the chief executive officer, the president, a vice
president or the treasurer, and the secretary or an assistant
secretary of the corporation, and may have affixed thereto the
seal of the corporation or a facsimile thereof: provided,
however, that in any case where there appears on such bond or
debenture a Trustee's Certificate, which states in substance that
the bond or debenture is one of the bonds or debentures issued
under the indenture or supplemental indenture described therein
and which is manually signed by an authorized officer of such
trustee, the signatures of the aforementioned authorized officers
of the corporation on such bond or debenture may be a facsimile
signature, engraved or printed; and provided, further, that in
case of the issue by the corporation of a bond or debenture with
an interest coupon or coupons attached thereto such interest
coupon or coupons shall be signed by the treasurer or an
assistant treasurer of the corporation and such signature may be
a facsimile signature, engraved or printed.
SECTION 2. Except as provided in the immediately succeeding
sentence of this Section 2, all checks, drafts, notes, demands or
orders for the payment of money of the corporation shall be
signed by one or more of such officers or other employees of this
corporation and the signature of any such officer or other
employee may be a facsimile signature, all as the board of
directors shall at any time and from time to time by resolution
or resolutions specify; provided, however, that in the cases of
drafts not exceeding $3,000 for any one such draft, used by this
corporation, the board of directors may empower the chairman, the
chief executive officer, the president, and the vice presidents,
or any of them, to designate in writing the one or more officers
or other employees authorized to sign such drafts. To the extent
that the board of directors may by resolution or resolutions
authorize from time to time the signature of this corporation, on
checks of this corporation which are used solely for the purpose
of transferring funds from the account of this corporation in any
bank or trust company to the account of this corporation in any
other bank or trust company, may be only the printed name of this
corporation.
SECTION 3. Except as otherwise provided by these by-laws,
(i) all deeds and mortgages made by this corporation shall be
executed in its name by the chairman, the chief executive
officer, the president, a vice president or the treasurer and
shall be attested by the secretary or an assistant secretary, and
such secretary or assistant secretary shall affix the corporate
seal thereto, and (ii) all other written agreements to which this
corporation shall be a party shall be executed in its name by the
chairman, the chief executive officer, the president, a vice
president or the treasurer, and may be (but need not be) attested
by the secretary or an assistant secretary who may affix the
corporate seal thereto. Notwithstanding the immediately
preceding sentence of this Section 3, written agreements of this
corporation (other than deeds and mortgages made by this
corporation), which pertain to the routine operations of this
corporation and are regularly being made in the ordinary course
of carrying on such operations, may be executed for and on behalf
of this corporation by any officer or officers of this
corporation, or by any other agent or agents of this corporation,
to the extent that such person or persons may, from time to time,
be so authorized to act by either resolution of the board of
directors or by written authorization of an officer of this
corporation who has been authorized by resolution of the board of
directors to execute such written authorization.
SECTION 4. Subject always to the further orders and
directions of the board of directors, any share or shares of
stock issued by any corporation and owned by this corporation
(including reacquired shares of stock of this corporation) may,
for sale or transfer, be endorsed in the name of this corporation
by the chairman, the chief executive officer, the president, a
vice president or the treasurer of this corporation, and said
endorsement shall be duly attested by the secretary or an
assistant secretary of this corporation either with or without
affixing thereto the corporate seal.
SECTION 5. Subject always to the further orders and
directions of the board of directors, any share or shares of
stock issued by any other corporation and owned or controlled by
this corporation may be voted at any shareholders' meeting of
such other corporation by the chairman of this corporation, or in
his or her absence by the chief executive officer of this
corporation, or in his or her absence by the president of this
corporation, or in the absence of any of such officers by any
vice president or by the treasurer of this corporation.
Whenever, in the judgment of the chairman, the chief executive
officer, the president, a vice president or the treasurer of this
corporation, it is desirable for this corporation to execute a
proxy or give a shareholder's consent in respect of any share or
shares of stock issued by any other corporation and owned by this
corporation, such proxy or consent shall be executed in the name
of this corporation by the chairman, the chief executive officer,
the president, a vice president or the treasurer of this
corporation, and shall be attested by the secretary or an
assistant secretary of this corporation under the corporate seal.
Any person or persons designated in the manner above stated as
the proxy or proxies of this corporation shall have full right,
power and authority to vote the share or shares of stock issued
by such other corporation and owned by this corporation the same
as such share or shares might be voted by this corporation.
ARTICLE IX
DIVIDENDS
SECTION 1. Dividends upon the capital stock of the
corporation, when earned, may be declared by the board of
directors at any annual, regular or special meeting or by any
committee thereof. Such dividends may be paid in cash, in
property or in shares of the capital stock of the corporation, in
the case of shares with par value at par, and in the case of
shares without par value at such price as may be fixed by the
board of directors.
SECTION 2. Before payment of any dividend or before making
any distribution of profits, there may be set aside out of the
surplus or net profits of the corporation such sum or sums as the
board of directors from time to time, in their absolute
discretion, may deem proper, as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for working
capital, or for such other purpose as the board of directors
shall think conducive to the interests of the corporation.
ARTICLE X
FISCAL YEAR
SECTION 1. The fiscal year of the corporation shall cover a
twelve-month period commencing on the first day of such month as
the board of directors shall, by resolution, provide.
ARTICLE XI
AMENDMENTS
SECTION 1. These by-laws may be altered, amended or
repealed, in whole or in part, and new by-laws may be adopted, at
any annual, regular or special meeting of the shareholders of the
corporation or at any annual, regular or special meeting of the
board of directors of the corporation by the affirmative vote of
a majority of the board of directors; provided, however, that the
board of directors of the corporation may not unilaterally amend
any by-laws which were amended by the affirmative vote of the
shareholders of the corporation within the preceding twenty-four
months.
