UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 July 31, 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 . . . . . . . . . . . . . . . . . . .
PART I. FINANCIAL INFORMATION
1 Financial Statements
Cinergy Corp.
Consolidated Balance Sheets . . . . . . . . . . . . .
Consolidated Statements of Income . . . . . . . . . .
Consolidated Statements of Changes in Common
Stock Equity. . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . .
Results of Operations . . . . . . . . . . . . . . . .
The Cincinnati Gas & Electric Company
Consolidated Balance Sheets . . . . . . . . . . . . .
Consolidated Statements of Income . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . .
Results of Operations . . . . . . . . . . . . . . . .
PSI Energy, Inc.
Consolidated Balance Sheets . . . . . . . . . . . . .
Consolidated Statements of Income . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . .
Results of Operations . . . . . . . . . . . . . . . .
The Union Light, Heat and Power Company
Balance Sheets. . . . . . . . . . . . . . . . . . . .
Statements of Income. . . . . . . . . . . . . . . . .
Statements of Cash Flows. . . . . . . . . . . . . . .
Results of Operations . . . . . . . . . . . . . . . .
Notes to Financial Statements . . . . . . . . . . . . .
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . .
PART II. OTHER INFORMATION
1 Legal Proceedings . . . . . . . . . . . . . . . . . . .
4 Submission of Matters to a Vote of Security Holders . .
6 Exhibits and Reports on Form 8-K. . . . . . . . . . . .
Signature . . . . . . . . . . . . . . . . . . . . . . .
<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
CAC Citizens Action Coalition of Indiana, Inc.
Capital & Cinergy Capital & Trading, Inc., an affiliate of Cinergy
Trading
CERCLA Comprehensive Environmental Response, Compensation and
Liability Act
CG&E The Cincinnati Gas & Electric Company (a subsidiary of
Cinergy)
Cinergy, CIN, Cinergy Corp.
or Company
Cinergy UK Cinergy UK, Inc. (a subsidiary of Investments)
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
D&P Duff & Phelps Credit Rating Co.
December 1996 A PUCO order issued in December 1996 on CG&E's gas rate
Order proceeding
December 1996 An IURC order issued in December 1996 on PSI's DSM
DSM Order proceeding
DSM Demand-side management
EPA U.S. Environmental Protection Agency
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
Fitch Fitch Investors Service, Inc.
GEP Greenwich Energy Partners L.P.
Gibson PSI's Gibson Generating Station
<PAGE>
GLOSSARY OF TERMS (Continued)
TERM DEFINITION_________________________
IGC Indiana Gas Company, Inc.
Investments Cinergy Investments, Inc. (a subsidiary of Cinergy)
IURC Indiana Utility Regulatory Commission
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
MGP Manufactured Gas Plant
Miami Fort CG&E's Miami Fort Generating Station
Midlands Midlands Electricity plc
Moody's Moody's Investors Service
NAAQS National Ambient Air Quality Standards
NIPSCO Northern Indiana Public Service Company
NOx Nitrogen Oxide
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
SEC Securities and Exchange Commission
September 1996 An IURC order issued in September 1996 on PSI's retail rate
Order proceeding
SIP State Implementation Plan
Statement 128 Statement of Financial Accounting Standards No. 128,
Earnings Per Share
UCC The Indiana Office of the Utility Consumer Counselor
ULH&P The Union Light, Heat and Power Company (a wholly-owned
subsidiary of CG&E)
Zimmer CG&E's William H. Zimmer Generating Station
<PAGE>
CINERGY CORP.
AND SUBSIDIARY COMPANIES
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
June 30 December 31
1997 1996
(dollars in thousands)
<S> <C> <C>
Utility Plant - Original Cost
In service
Electric $8,901,932 $8,809,786
Gas 729,805 713,829
Common 185,177 185,255
9,816,914 9,708,870
Accumulated depreciation 3,698,764 3,591,858
6,118,150 6,117,012
Construction work in progress 161,279 172,614
Total utility plant 6,279,429 6,289,626
Current Assets
Cash and temporary cash investments 26,364 19,327
Restricted deposits 1,945 1,721
Notes receivable 204 321
Accounts receivable less accumulated provision
for doubtful accounts of $11,965 at June 30, 1997,
and $10,618 at December 31, 1996 171,574 199,040
Materials, supplies, and fuel - at average cost
Fuel for use in electric production 62,508 71,730
Gas stored for current use 24,989 32,951
Other materials and supplies 76,496 80,292
Property taxes applicable to subsequent year 61,790 123,580
Prepayments and other 50,135 37,049
476,005 566,011
Other Assets
Regulatory assets
Amounts due from customers - income taxes 372,240 377,194
Post-in-service carrying costs and deferred
operating expenses 182,450 186,396
Coal contract buyout costs 128,943 138,171
Deferred merger costs 93,193 93,999
Deferred demand-side management costs 121,544 134,742
Phase-in deferred return and depreciation 92,426 95,163
Unamortized costs of reacquiring debt 69,336 70,518
Other 63,268 72,483
Investment in unconsolidated subsidiary 615,736 592,660
Other 268,760 231,551
2,007,896 1,992,877
$8,763,330 $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
June 30 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 June 30, 1997, and
December 31, 1996 $ 1,577 $ 1,577
Paid-in capital 1,570,533 1,590,735
Retained earnings 1,019,957 992,273
Cumulative foreign currency translation adjustment (720) (131)
Total common stock equity 2,591,347 2,584,454
Cumulative Preferred Stock of Subsidiaries
Not subject to mandatory redemption 194,048 194,232
Long-term Debt 2,133,475 2,326,378
Total capitalization 4,918,870 5,105,064
Current Liabilities
Long-term debt due within one year 130,000 140,000
Notes payable and other short-term obligations 1,104,859 922,217
Accounts payable 312,445 305,420
Accrued taxes 268,322 323,059
Accrued interest 58,085 55,590
Other 87,361 114,653
1,961,072 1,860,939
Other Liabilities
Deferred income taxes 1,152,896 1,146,263
Unamortized investment tax credits 171,106 175,935
Accrued pension and other postretirement
benefit costs 280,149 263,319
Other 279,237 296,994
1,883,388 1,882,511
$8,763,330 $8,848,514
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Year to Date Twelve Months Ended
June 30 June 30 June 30
1997 1996 1997 1996 1997 1996
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Electric $790,576 $650,714 $1,608,490 $1,335,554 $3,041,642 $2,706,643
Gas 74,757 66,120 287,023 265,275 495,782 443,941
865,333 716,834 1,895,513 1,600,829 3,537,424 3,150,584
Operating Expenses
Fuel used in electric production 134,602 163,805 310,348 355,257 668,341 716,908
Gas purchased 35,826 39,955 159,794 133,180 275,730 222,350
Purchased and exchanged power 195,364 30,802 355,956 58,423 456,371 88,748
Other operation 158,488 148,626 321,900 294,760 625,574 574,820
Maintenance 51,201 48,164 97,055 91,806 199,157 186,003
Depreciation 72,171 70,597 143,727 140,792 285,698 278,880
Amortization of phase-in deferrals 3,370 3,399 6,741 6,799 13,540 13,617
Amortization of post-in-service
deferred operating expenses 1,090 (864) 2,181 (1,707) 2,379 (2,138)
Income taxes 39,937 33,020 103,856 107,003 215,122 225,214
Taxes other than income taxes 67,841 66,809 136,213 132,546 261,482 260,393
759,890 604,313 1,637,771 1,318,859 3,003,394 2,564,795
Operating Income 105,443 112,521 257,742 281,970 534,030 585,789
Other Income and Expenses - Net
Allowance for equity funds used
during construction 180 497 371 848 748 927
Post-in-service carrying costs - 494 - 837 386 1,442
Phase-in deferred return 2,002 2,093 4,004 4,186 8,190 8,455
Equity in earnings of
unconsolidated subsidiary 12,180 2,433 38,680 2,433 61,677 2,433
Income taxes 3,653 2,329 4,444 5,547 18,433 9,321
Other - net (8,080) (5,950) (10,707) (13,626) (37,545) (13,746)
9,935 1,896 36,792 225 51,889 8,832
Income Before Interest and Other
Charges 115,378 114,417 294,534 282,195 585,919 594,621
Interest and Other Charges
Interest on long-term debt 44,977 48,021 94,252 97,156 187,713 204,567
Other interest 13,430 5,321 27,297 8,192 50,274 17,890
Allowance for borrowed funds used
during construction (1,754) (1,642) (3,096) (2,780) (6,499) (6,548)
Preferred dividend requirements
of subsidiaries 3,236 6,677 6,475 13,446 16,209 26,985
59,889 58,377 124,928 116,014 247,697 242,894
Net Income $ 55,489 $ 56,040 $ 169,606 $ 166,181 $ 338,222 $ 351,727
Costs of Reacquisition of Preferred
Stock of Subsidiary - - - - (18,391) -___
Net Income Applicable to Common Stock $ 55,489 $ 56,040 $ 169,606 $ 166,181 $ 319,831 $ 351,727
Average Common Shares Outstanding 157,679 157,679 157,679 157,677 157,679 157,448
Earnings Per Common Share
Net income $ 0.35 $ 0.35 $ 1.07 $ 1.05 $ 2.14 $ 2.23
Costs of reacquisition of preferred
stock of subsidiary - - - - (0.12) -___
Net income applicable to common
stock $ 0.35 $ 0.35 $ 1.07 $ 1.05 $ 2.02 $ 2.23
Dividends Declared Per Common Share $ 0.45 $ 0.43 $ 0.90 $ 0.86 $ 1.78 $ 1.72
<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 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 June 30, 1997
Balance April 1, 1997 $1,577 $1,579,934 $1,035,390 $(1,166) $2,615,735
Net income 55,489 55,489
Dividends on common stock (See page
8 for per share amounts) (70,910) (70,910)
Translation adjustments 446 446
Other (9,401) (12) (9,413)
Balance June 30, 1997 $1,577 $1,570,533 $1,019,957 $ (720) $2,591,347
Quarter Ended June 30, 1996
Balance April 1, 1996 $1,577 $1,595,435 $ 992,558 $ - $2,589,570
Net income 56,040 56,040
Dividends on common stock (See page
8 for per share amounts) (67,801) (67,801)
Translation adjustments (567) (567)
Other (515) 206 (309)
Balance June 30, 1996 $1,577 $1,594,920 $ 981,003 $ (567) $2,576,933
Six Months Ended June 30, 1997
Balance January 1, 1997 $1,577 $1,590,735 $ 992,273 $ (131) $2,584,454
Net income 169,606 169,606
Dividends on common stock (See page
8 for per share amounts) (141,910) (141,910)
Translation adjustments (589) (589)
Other (20,202) (12) (20,214)
Balance June 30, 1997 $1,577 $1,570,533 $1,019,957 $ (720) $2,591,347
Six Months Ended June 30, 1996
Balance January 1, 1996 $1,577 $1,597,050 $ 950,216 $ - $2,548,843
Net income 166,181 166,181
Issuance of 8,988 shares of common
stock - net 311 311
Dividends on common stock (See page
8 for per share amounts) (135,600) (135,600)
Translation adjustments (567) (567)
Other (2,441) 206 (2,235)
Balance June 30, 1996 $1,577 $1,594,920 $ 981,003 $ (567) $2,576,933
Twelve Months Ended June 30, 1997
Balance July 1, 1996 $1,577 $1,594,920 $ 981,003 $ (567) $2,576,933
Net income 338,222 338,222
Dividends on common stock (See page
8 for per share amounts) (280,668) (280,668)
Translation adjustments (153) (153)
Costs of reacquisition of preferred
stock of subsidiary (18,391) (18,391)
Other (24,387) (209) (24,596)
Balance June 30, 1997 $1,577 $1,570,533 $1,019,957 $ (720) $2,591,347
Twelve Months Ended June 30, 1996
Balance July 1, 1995 $1,566 $1,570,873 $ 900,094 $ - $2,472,533
Net income 351,727 351,727
Issuance of 1,111,798 shares of common
stock - net 11 26,517 26,528
Common stock issuance expenses (40) (40)
Dividends on common stock (See page
8 for per share amounts) (270,559) (270,559)
Translation adjustments (567) (567)
Other (2,430) (259) (2,689)
Balance June 30, 1996 $1,577 $1,594,920 $ 981,003 $ (567) $2,576,933
<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
June 30 June 30
1997 1996 1997 1996
(in thousands)
<S> <C> <C> <C> <C>
Operating Activities
Net income $ 169,606 $ 166,181 $ 338,222 $ 351,727
Items providing (using) cash currently:
Depreciation 143,727 140,792 285,698 278,880
Deferred income taxes and investment tax
credits - net 8,146 32,783 23,275 72,778
Equity in unconsolidated subsidiary (38,680) (2,433) (61,677) (2,433)
Allowance for equity funds used during
construction (371) (848) (748) (927)
Regulatory assets - net 38,881 21,019 57,144 43,086
Changes in current assets and current
liabilities
Restricted deposits (224) (312) (270) (1,361)
Accounts and notes receivable, net of
reserves on receivables sold 25,529 195,707 (37,429) 76,445
Materials, supplies, and fuel 20,980 12,182 52,803 58,476
Accounts payable 7,025 (10,187) 54,493 73,552
Litigation settlement - - (80,000) -
Accrued taxes and interest (52,242) (70,160) 23,387 (15,507)
Other items - net (5,491) 44,389 (12,034) 45,139
Net cash provided by operating
activities 316,886 529,113 642,864 979,855
Financing Activities
Issuance of common stock - 311 - 26,488
Issuance of long-term debt - - 150,217 111,255
Funds on deposit from issuance of long-term debt - 973 - 4,332
Retirement of preferred stock of subsidiaries (114) (15,114) (197,487) (108,573)
Redemption of long-term debt (206,312) (161,120) (282,375) (342,702)
Change in short-term debt 182,642 407,700 347,359 413,500
Dividends on common stock (141,910) (135,600) (280,668) (270,559)
Net cash provided by (used in)
financing activities (165,694) 97,150 (262,954) (166,259)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (133,372) (125,785) (330,600) (290,126)
Deferred demand-side management costs (10,783) (17,206) (37,921) (50,151)
Investment in unconsolidated subsidiary - (456,998) (46,351) (456,998)
Sale of investment in Argentine utility - - - 19,799
Net cash used in investing activities (144,155) (599,989) (414,872) (777,476)
Net increase (decrease) in cash and
temporary cash investments 7,037 26,274 (34,962) 36,120
Cash and temporary cash investments at
beginning of period 19,327 35,052 61,326 25,206
Cash and temporary cash investments at
end of period $ 26,364 $ 61,326 $ 26,364 $ 61,326
<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, six months, and twelve months ended June 30, 1997.
For information concerning the results of operations for each of the other
registrants for the same quarter and six months ended, see the discussion
under the heading RESULTS OF OPERATIONS following the financial statements of
each company.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1997
Kwh Sales
Kwh sales increased 65.5% for the quarter ended June 30, 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 food
products and primary metals sectors. These increases were partially offset by
decreased residential and commercial sales for the quarter ended June 30,
1997, as compared to the same period last year, as a result of mild weather.
Operating Revenues
Electric Operating Revenues
Electric operating revenues for the quarter ended June 30, 1997, increased
$140 million (21%), 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 were the
effects of the December 1996 DSM Order and a 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 reflecting a lower average cost per kwh.
An analysis of electric operating revenues is shown below:
Quarter
Ended June 30
(in millions)
Electric operating revenues - June 30, 1996 $651
Increase (Decrease) due to change in:
Price per kwh
Retail 3
Sales for resale
Firm power obligations (9)
Non-firm power transactions (15)
Total change in price per kwh (21)
Kwh sales
Retail (18)
Sales for resale
Firm power obligations 1
Non-firm power transactions 178
Total change in kwh sales 161
Electric operating revenues - June 30, 1997 $791
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 $9 million (13%) in the second 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 a gas
cost recovery mechanism reflecting a higher average cost per Mcf of gas
purchased. These increases were partially offset by the aforementioned trend
toward increased transportation services.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs decreased $29 million (18%), as compared to the same
period last year.
An analysis of these fuel costs is shown below:
Quarter
Ended June 30
(in millions)
Fuel expense - June 30, 1996 $164
Decrease due to change in:
Price of fuel (1)
Deferred fuel cost (27)
Kwh generation (1)
Fuel expense - June 30, 1997 $135
Purchased and Exchanged Power
Purchased and exchanged power increased $165 million for the quarter ended
June 30, 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
Other operation expenses for the quarter ended June 30, 1997, increased $10
million (7%), as compared to the same period of 1996. This increase is due to
expenses of approximately $19 million for PSI, primarily associated with the
Clean Coal Project, 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. This increase was partially offset by a decrease in
CG&E's other operation expenses of approximately $9 million. This decline is
due to charges in the second quarter of 1996 for early retirement and
severance programs.
Maintenance
For the quarter ended June 30, 1997, maintenance expenses increased $3 million
(6%), when compared to the quarter ended June 30, 1996. This increase is
primarily due to scheduled outages at Gibson.
Amortization of Post-in-service Deferred Operating Expenses
Amortization of post-in-service deferred operating expenses 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
Equity in Earnings of Unconsolidated Subsidiary
The increase in equity in earnings of unconsolidated subsidiary of $10 million
for the quarter ended June 30, 1997, represents the effect of the investment
in Midlands for a full quarter in 1997. Midlands was purchased during the
second quarter of 1996.
Other - net
The change in other - net of $2 million (36%) for the three months ended June
30, 1997, from the same period of 1996, is primarily due to a higher level of
expenses associated with CG&E's and ULH&P's sales of accounts receivables
during the second quarter of 1997.
Interest and Other Charges
Interest on Long-term Debt
Interest on long-term debt decreased $3 million (6%) for the quarter ended
June 30, 1997, as compared to the same period last year, primarily reflecting
the net redemption of approximately $80 million of long-term debt by CG&E,
PSI, and ULH&P during the period from May 1996 through April 1997.
Other Interest
Other interest increased $8 million for the quarter ended June 30, 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 $3 million (52%) for
the quarter ended June 30, 1997, as compared to the same period of 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
during the third quarter of 1996.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997
Kwh Sales
Kwh sales increased 50.1% for the six months ended June 30, 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 food
products and primary metals sectors. These increases were partially offset by
decreased residential and commercial sales for the first six months of 1997,
as compared to the same period last year, as a result of mild weather.
Mcf Sales and Transportation
Mcf gas sales for the six months ended June 30, 1997, decreased 12.2%, while
Mcf transportation volumes increased 7.6%, when compared to the same period in
1996. Decreased Mcf sales reflect, in part, cold weather during the first
quarter of 1996, as compared to the mild weather during the same period of
1997, and were partially offset by an increase in residential and commercial
customers. Industrial sales declined and gas transportation volumes increased
as customers continued the trend of purchasing gas directly from suppliers,
using transportation services provided by Cinergy.
Operating Revenues
Electric Operating Revenues
Electric operating revenues for the six months ended June 30, 1997, increased
$272 million (20%), 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 were the
effects of the December 1996 DSM Order and a 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 previously discussed, and the operation of CG&E's fuel adjustment
clauses.
An analysis of electric operating revenues is shown below:
Six Months
Ended June 30
(in millions)
Electric operating revenues - June 30, 1996 $1 336
Increase (Decrease) due to change in:
Price per kwh
Retail 5
Sales for resale
Firm power obligations (7)
Total change in price per kwh (2)
Kwh sales
Retail (23)
Sales for resale
Firm power obligations 1
Non-firm power transactions 296
Total change in kwh sales 274
Electric operating revenues - June 30, 1997 $1 608
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 June 30, 1997."
Gas operating revenues increased $22 million (8%) for the six months ended
June 30, 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 a
gas cost recovery mechanism reflecting a higher average cost per Mcf of gas
purchased. These increases were partially offset by the previously discussed
changes in gas sales volumes.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs decreased $45 million (13%), as compared to the same
period last year.
An analysis of these fuel costs is shown below:
Six Months
Ended June 30
(in millions)
Fuel expense - June 30, 1996 $355
Decrease due to change in:
Price of fuel (6)
Deferred fuel cost (37)
Kwh generation (2)
Fuel expense - June 30, 1997 $310
Gas Purchased
Gas purchased for the six months ended June 30, 1997, increased $27 million
(20%) when compared to the same period last year, reflecting an increase in
the average cost per Mcf purchased which was partially offset by a decrease in
volume.
Purchased and Exchanged Power
Purchased and exchanged power increased $298 million for the six months
ended June 30, 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
Other operation expenses for the first six months of 1997 increased by $27
million (9%), as compared to the same period of 1996. This increase is
primarily due to higher other operation expenses of PSI relating to the Clean
Coal Project, 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. This increase was partially offset by a decrease in CG&E's other
operation expenses of approximately $10 million. This decline is due to
charges in the second quarter of 1996 for early retirement and severance
programs.
Maintenance
For the six months ended June 30, 1997, maintenance expenses increased $5
million (6%), when compared to the six months ended June 30, 1996. This
increase is primarily due to scheduled outages at Gibson, Beckjord, and Miami
Fort and a forced outage at Zimmer.
Amortization of Post-in-service Deferred Operating Expenses
Amortization of post-in-service deferred operating expenses 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
Equity in Earnings of Unconsolidated Subsidiary
The increase in equity in earnings of unconsolidated subsidiary of $36 million
for the six months ended June 30, 1997, represents the effect of the
investment in Midlands for a full six months in 1997. Midlands was purchased
during the second quarter of 1996.
Other - net
The change in other - net of $3 million (21%) for the six months ended June
30, 1997, from the same period of 1996, is primarily due to an increase in
carrying costs related to the Coal Supply Agreement, Clean Coal Project, and
PSI's deferred DSM costs. These increases were partially offset by a higher
level of expenses associated with CG&E's and ULH&P's sales of accounts
receivables during the first six months of 1997.
Interest and Other Charges
Other Interest
Other interest increased $19 million for the first six months 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 $7 million (52%) for
the six months ended June 30, 1997, as compared to the same period of 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 during the third quarter of 1996.
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 1997
Kwh Sales
Kwh sales increased 30.2% for the twelve months ended June 30, 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 food
products and primary metals sectors. 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 six months 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 for the twelve months ended June 30, 1997, decreased 10.5% while
Mcf transportation volumes increased 11.6%, when compared to the same period
in 1996. Decreased Mcf sales reflect, in part, cold weather during the first
quarter of 1996, as compared to the same period of 1997, and were partially
offset by an increase in residential and commercial customers. Industrial
sales declined and gas transportation volumes increased as customers continued
the trend of purchasing gas directly from suppliers, using transportation
services provided by Cinergy.
Operating Revenues
Electric Operating Revenues
Compared to the same period last year, electric operating revenues for the
twelve months ended June 30, 1997, increased $335 million (12%), reflecting
increased kwh sales and the effects of the December 1996 DSM Order and the
7.6% retail rate increase approved in the September 1996 Order. 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 June 30
(in millions)
Electric operating revenues - June 30, 1996 $2 707
Increase (Decrease) due to change in:
Price per kwh
Retail 17
Sales for resale
Firm power obligations (10)
Non-firm power transactions (11)
Total change in price per kwh (4)
Kwh sales
Retail (36)
Sales for resale
Firm power obligations 2
Non-firm power transactions 369
Total change in kwh sales 335
Other 4
Electric operating revenues - June 30, 1997 $3 042
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 June 30, 1997."
Gas operating revenues increased $52 million (12%) for the twelve months ended
June 30, 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 a
gas cost recovery mechanism reflecting a higher average cost per Mcf of gas
purchased. These increases were partially offset by the previously discussed
changes in gas sales volumes.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs decreased $49 million (7%), as compared to the same period
last year.
An analysis of these fuel costs is shown below:
Twelve Months
Ended June 30
(in millions)
Fuel expense - June 30, 1996 $717
Increase (Decrease) due to change in:
Price of fuel (39)
Deferred fuel cost 4
Kwh generation (14)
Fuel expense - June 30, 1997 $668
Gas Purchased
Gas purchased for the twelve months ended June 30, 1997, increased $53 million
(24%) when compared to the same period last year, reflecting an increase in
the average cost per Mcf purchased which was partially offset by a decrease in
volume.
Purchased and Exchanged Power
Purchased and exchanged power increased $368 million for the twelve months
ended June 30, 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 $51 million (9%) for the twelve months ended June
30, 1997, as compared to the same period last year, primarily due to expenses
associated with the Clean Coal Project and increases related to the
amortization of DSM deferred expenses, which are being recovered in revenues
pursuant to the September 1996 Order and the December 1996 DSM Order. In
addition, charges for disallowances associated with the December 1996 Order
contributed to the increased level of expenses.
Maintenance
Maintenance increased $13 million (7%) for the twelve months ended June 30,
1997, as compared to the twelve months ended June 30, 1996, primarily due to
planned outages at Gibson, Zimmer, Beckjord, and Miami Fort and a forced
outage at Gibson.
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
Amortization of post-in-service deferred operating expenses 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
Equity in Earnings of Unconsolidated Subsidiary
The increase in equity in earnings of unconsolidated subsidiary of $59 million
for the twelve months ended June 30, 1997, represents the effect of the
investment in Midlands for a full twelve months in 1997. Midlands was
purchased during the second quarter of 1996.
Other - net
The change in other - net of $24 million for the twelve months ended June 30,
1997, as compared to the same period last year is primarily due to charges of
$14 million associated with the December 1996 Order and increased expenses
associated with the sales of accounts receivable for PSI, CG&E, and ULH&P,
partially offset by an increase in carrying costs related to the Coal Supply
Agreement, Clean Coal Project, and PSI's deferred DSM costs.
Interest and Other Charges
Interest on Long-term Debt
Interest on long-term debt decreased $17 million (8%) for the twelve months
ended June 30, 1997, from the same period of 1996, primarily due to net
redemption of approximately $245 million long-term debt by CG&E, PSI, and
ULH&P during the period from October 1995 through April 1997.
Other Interest
Other interest increased $32 million for the twelve months ended June 30,
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 $11 million
(40%) for the twelve months ended June 30, 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 during
the third quarter of 1996.
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
June 30 December 31
1997 1996
(dollars in thousands)
<C> <C> <C>
Utility Plant - Original Cost
In service
Electric $4,678,491 $4,631,605
Gas 729,805 713,829
Common 185,177 185,255
5,593,473 5,530,689
Accumulated depreciation 1,941,506 1,868,579
3,651,967 3,662,110
Construction work in progress 92,613 95,984
Total utility plant 3,744,580 3,758,094
Current Assets
Cash and temporary cash investments 9,709 5,120
Restricted deposits 1,173 1,171
Notes receivable from affiliated companies 7,217 31,740
Accounts receivable less accumulated
provision for doubtful accounts of $10,517
at June 30, 1997, and $9,178 at
December 31, 1996 71,150 117,912
Accounts receivable from affiliated
companies 26,823 2,453
Materials, supplies, and fuel - at average cost
Fuel for use in electric production 31,178 29,865
Gas stored for current use 24,989 32,951
Other materials and supplies 48,243 52,023
Property taxes applicable to subsequent year 61,790 123,580
Prepayments and other 44,093 32,433
326,365 429,248
Other Assets
Regulatory assets
Amounts due from customers - income taxes 337,444 344,126
Post-in-service carrying costs and
deferred operating expenses 138,081 141,492
Deferred merger costs 17,209 17,709
Deferred demand-side management costs 35,842 33,534
Phase-in deferred return and depreciation 92,426 95,163
Unamortized costs of reacquiring debt 38,393 38,439
Other 11,817 19,545
Other 98,302 89,908
769,514 779,916
$4,840,459 $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
June 30 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 June 30, 1997, and
December 31, 1996 $ 762,136 $ 762,136
Paid-in capital 534,588 536,276
Retained earnings 265,912 247,403
Total common stock equity 1,562,636 1,545,815
Cumulative Preferred Stock
Not subject to mandatory redemption 20,975 21,146
Long-term Debt 1,222,606 1,381,108
Total capitalization 2,806,217 2,948,069
Current Liabilities
Long-term debt due within one year 130,000 130,000
Notes payable and other short-term
obligations 288,100 214,488
Notes payable to affiliated companies 13,889 103
Accounts payable 165,286 166,064
Accounts payable to affiliated companies 9,151 12,726
Accrued taxes 202,956 267,841
Accrued interest 30,863 30,570
Other 24,832 32,191
865,077 853,983
Other Liabilities
Deferred income taxes 777,185 767,085
Unamortized investment tax credits 120,086 123,185
Accrued pension and other postretirement
benefit costs 173,003 165,282
Other 98,891 109,654
1,169,165 1,165,206
$4,840,459 $4,967,258
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Year to Date
June 30 June 30
1997 1996 1997 1996
(in thousands)
<S> <C> <C> <C> <C>
Operating Revenues
Electric
Non-affiliated companies $404,117 $363,238 $ 799,742 $ 726,582
Affiliated companies 7,785 7,970 13,860 20,255
Gas
Non-affiliated companies 74,757 66,120 287,023 265,275
Affiliated companies 1 1 2 1
486,660 437,329 1,100,627 1,012,113
Operating Expenses
Fuel used in electric production 60,358 87,451 130,597 184,558
Gas purchased 35,826 39,955 159,794 133,180
Purchased and exchanged power
Non-affiliated companies 93,909 7,233 164,771 13,666
Affiliated companies 3,065 2,019 4,637 8,755
Other operation 79,897 89,147 159,172 168,727
Maintenance 23,957 24,922 51,293 45,901
Depreciation 40,878 40,248 81,282 80,235
Amortization of phase-in deferrals 3,370 3,399 6,741 6,799
Amortization of post-in-service
deferred operating expenses 822 822 1,645 1,645
Income taxes 27,037 19,337 70,837 74,227
Taxes other than income taxes 52,507 53,344 106,021 104,913
421,626 367,877 936,790 822,606
Operating Income 65,034 69,452 163,837 189,507
Other Income and Expenses - Net
Allowance for equity funds used
during construction 87 497 206 848
Phase-in deferred return 2,002 2,093 4,004 4,186
Income taxes 3,730 1,799 6,736 3,480
Other - net (4,261) (3,904) (9,036) (4,590)
1,558 485 1,910 3,924
Income Before Interest 66,592 69,937 165,747 193,431
Interest
Interest on long-term debt 27,831 30,988 57,876 63,088
Other interest 2,562 482 4,258 944
Allowance for borrowed funds
used during construction (1,231) (962) (2,140) (1,785)
29,162 30,508 59,994 62,247
Net Income $ 37,430 $ 39,429 $ 105,753 $ 131,184
Preferred Dividend Requirement 217 3,474 436 6,948
Net Income Applicable to Common
Stock $ 37,213 $ 35,955 $ 105,317 $ 124,236
<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
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Year to Date
June 30
1997 1996
(in thousands)
<S> <C> <C>
Operating Activities
Net income $ 105,753 $ 131,184
Items providing (using) cash currently:
Depreciation 81,282 80,235
Deferred income taxes and investment tax
credits - net 15,055 29,939
Allowance for equity funds used during
construction (206) (848)
Regulatory assets - net 15,011 15,351
Changes in current assets and current
liabilities
Restricted deposits (2) (26)
Accounts and notes receivable, net of
reserves on receivables sold 45,703 117,341
Materials, supplies, and fuel 10,429 11,008
Accounts payable (4,353) (11,742)
Accrued taxes and interest (64,592) (69,325)
Other items - net 32,145 44,276
Net cash provided by operating
activities 236,225 347,393
Financing Activities
Retirement of preferred stock (113) -
Redemption of long-term debt (160,612) (161,120)
Change in short-term debt 87,398 -
Dividends on preferred stock (438) (6,948)
Dividends on common stock (85,200) (87,111)
Net cash used in financing
activities (158,965) (255,179)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (67,963) (58,465)
Deferred demand-side management costs (4,708) (8,506)
Net cash used in investing
activities (72,671) (66,971)
Net increase in cash and temporary cash
investments 4,589 25,243
Cash and temporary cash investments at
beginning of period 5,120 6,612
Cash and temporary cash investments at
end of period $ 9,709 $ 31,855
<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 JUNE 30, 1997
Kwh Sales
Kwh sales for the quarter ended June 30, 1997, increased 60.5%, as compared to
the second 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 second quarter of 1997 resulted
in decreased residential and commercial sales. These decreases were partially
offset by an increase in the number of residential and commercial customers
and increased industrial sales primarily reflecting growth in the food
products sector.
Operating Revenues
Electric Operating Revenues
Electric operating revenues increased $41 million (11%) for the quarter ended
June 30, 1997, from the comparable period of 1996. This increase, primarily a
result of the increased activity in Cinergy's power marketing and trading
operations, 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 June 30
(in millions)
Electric operating revenues - June 30, 1996 $371
Increase (Decrease) due to change in:
Price per kwh
Retail (19)
Sales for resale
Non-firm power transactions 6
Total change in price per kwh (13)
Kwh sales
Retail (20)
Sales for resale
Non-firm power transactions 74
Total change in kwh sales 54
Electric operating revenues - June 30, 1997 $412
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 $9 million (13%) in the second 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 a gas
cost recovery mechanism reflecting a higher average cost per Mcf of gas
purchased. These increases were partially offset by the aforementioned trend
toward increased transportation services.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs decreased $27 million (31%) for the quarter ended June 30,
1997, as compared to the same period last year.
An analysis of these fuel costs is shown below:
Quarter
Ended June 30
(in millions)
Fuel expense - June 30, 1996 $87
Increase (Decrease) due to change in:
Price of fuel 3
Deferred fuel cost (28)
Kwh generation (2)
Fuel expense - June 30, 1997 $60
Purchased and Exchanged Power
Purchased and exchanged power for the quarter ended June 30, 1997, increased
$88 million over the comparable period of 1996, 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 expenses decreased $9 million (10%) for the quarter ended June
30, 1997, as compared to the same period of 1996. This decrease is primarily
due to charges in the second quarter of 1996 for early retirement and
severance programs.
Interest
Interest on Long-term Debt
Interest on long-term debt decreased $3 million (10%) for the quarter ended
June 30, 1997, as compared to the same period of 1996, primarily due to the
redemption of $170 million of long-term debt during the period from May 1996
through April 1997.
Other Interest
The $2 million increase in other interest for the second quarter of 1997, as
compared to the second 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 during the third quarter of
1996 and the redemption of first mortgage bonds.
Preferred Dividend Requirement
The preferred dividend requirement decreased $3 million for the second 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 during the third
quarter of 1996.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997
Kwh Sales
Kwh sales for the six months ended June 30, 1997, increased 45.5%, as compared
to the six months ended June 30, 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 six months ended
June 30, 1997 resulted in decreased residential and commercial sales. These
decreases were partially offset by an increase in the number of residential
and commercial customers and increased industrial sales primarily reflecting
growth in the food products and primary metals sectors.
Mcf Sales and Transportation
Mcf gas sales for the six months ended June 30, 1997, decreased 12.2%, while
Mcf transportation volumes increased 7.6%, when compared to the same period in
1996. Decreased Mcf sales reflect, in part, cold weather during the first
quarter of 1996, as compared to the mild weather during the same period of
1997, and were partially offset by an increase in residential and commercial
customers. Industrial sales declined and gas transportation volumes increased
as customers continued the trend of purchasing gas directly from suppliers,
using transportation services provided by CG&E.
Operating Revenues
Electric Operating Revenues
Electric operating revenues increased $67 million (9%) for the six months
ended June 30, 1997, from the comparable period of 1996. This increase,
primarily a result of the increased activity in Cinergy's power marketing and
trading operations, 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:
Six Months
Ended June 30
(in millions)
Electric operating revenues - June 30, 1996 $747
Increase (Decrease) due to change in:
Price per kwh
Retail (40)
Sales for resale
Non-firm power transactions 11
Total change in price per kwh (29)
Kwh sales
Retail (29)
Sales for resale
Non-firm power transactions 125
Total change in kwh sales 96
Electric operating revenues - June 30, 1997 $814
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 CG&E in "Results of Operations for
the Quarter Ended June 30, 1997."
Gas operating revenues increased $22 million (8%) for the six months ended
June 30, 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 a
gas cost recovery mechanism reflecting a higher average cost per Mcf of gas
purchased. These increases were partially offset by the previously discussed
changes in gas sales volumes.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs decreased $54 million (29%) for the six months ended June
30, 1997, as compared to the same period last year.
An analysis of these fuel costs is shown below:
Six Months
Ended June 30
(in millions)
Fuel expense - June 30, 1996 $185
Decrease due to change in:
Deferred fuel cost (48)
Kwh generation (6)
Fuel expense - June 30, 1997 $131
Gas Purchased
Gas purchased for the six months ended June 30, 1997, increased $27 million
(20%) when compared to the same period last year, reflecting an increase in
the average cost per Mcf purchased which was partially offset by a decrease in
volume.
Purchased and Exchanged Power
Purchased and exchanged power for the six months ended June 30, 1997,
increased $147 million over the comparable period of 1996, 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 expenses decreased $10 million (6%) for the six months ended
June 30, 1997, as compared to the same period of 1996, due to charges in the
second quarter of 1996 for early retirement and severance programs.
Maintenance
The $5 million (12%) increase in maintenance expenses for the six months ended
June 30, 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 half of 1997, as compared
to the same period of 1996, is due, in part, to a higher level of expenses
associated with CG&E's and ULH&P's sales of accounts receivables and a
decrease in interest revenue related to a decrease in the balance of short-
term loans to affiliated companies through Cinergy's money pool arrangement.
Interest
Interest on Long-term Debt
Interest on long-term debt decreased $5 million (8%) for the six months ended
June 30, 1997, as compared to the same period of 1996, primarily due to the
redemption of $301.5 million of long-term debt during the period from February
1996 through April 1997.
Other Interest
The $3 million increase in other interest for the first half of 1997, as
compared to the first half 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 during the third quarter of
1996 and the redemption of first mortgage bonds.
Preferred Dividend Requirement
The preferred dividend requirement decreased $7 million for the first half 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 during the third
quarter of 1996.
<PAGE>
PSI ENERGY, INC.
AND SUBSIDIARY COMPANIES
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
June 30 December 31
1997 1996
(dollars in thousands)
<S> <C> <C>
Electric Utility Plant - Original Cost
In service $4,223,441 $4,178,181
Accumulated depreciation 1,757,258 1,723,279
2,466,183 2,454,902
Construction work in progress 68,666 76,630
Total electric utility plant 2,534,849 2,531,532
Current Assets
Cash and temporary cash investments 9,243 2,911
Restricted deposits 772 550
Notes receivable 180 299
Notes receivable from affiliated companies 27,509 3
Accounts receivable less accumulated
provision for doubtful accounts of $1,227
at June 30, 1997, and $1,269 at
December 31, 1996 95,521 73,990
Accounts receivable from affiliated companies 8,168 4,016
Materials, supplies, and fuel - at average cost
Fuel 31,329 41,865
Other materials and supplies 28,252 28,268
Prepayments and other 5,246 3,184
206,220 155,086
Other Assets
Regulatory assets
Amounts due from customers - income taxes 34,796 33,068
Post-in-service carrying costs and
deferred operating expenses 44,369 44,904
Coal contract buyout costs 128,943 138,171
Deferred merger costs 75,984 76,290
Deferred demand-side management costs 85,702 101,208
Unamortized costs of reacquiring debt 30,943 32,079
Other 51,451 52,938
Other 135,495 129,667
587,683 608,325
$3,328,752 $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
June 30 December 31
1997 1996
(dollars in thousands)
<S> <C> <C>
Common Stock Equity
Common stock - without par value; $0.01
stated value; authorized shares -
60,000,000; outstanding shares - 53,913,701
at June 30, 1997, and December 31, 1996 $ 539 $ 539
Paid-in capital 401,013 402,947
Retained earnings 619,278 626,089
Total common stock equity 1,020,830 1,029,575
Cumulative Preferred Stock
Not subject to mandatory redemption 173,073 173,086
Long-term Debt 910,869 945,270
Total capitalization 2,104,772 2,147,931
Current Liabilities
Long-term debt due within one year - 10,000
Notes payable and other short-term obligations 258,759 171,729
Notes payable to affiliated companies - 13,186
Accounts payable 133,226 114,330
Accounts payable to affiliated companies 26,199 12,850
Accrued taxes 59,678 73,206
Accrued interest 26,238 24,045
Other 12,454 17,107
516,554 436,453
Other Liabilities
Deferred income taxes 369,538 372,997
Unamortized investment tax credits 51,020 52,750
Accrued pension and other postretirement
benefit costs 107,146 98,037
Other 179,722 186,775
707,426 710,559
$3,328,752 $3,294,943
<FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Year to Date
June 30 June 30
1997 1996 1997 1996
(in thousands)
<S> <C> <C> <C> <C>
Operating Revenues
Non-affiliated companies $386,459 $287,476 $808,748 $608,972
Affiliated companies 3,079 2,036 4,645 8,835
389,538 289,512 813,393 617,807
Operating Expenses
Fuel 74,244 76,354 179,751 170,699
Purchased and exchanged power
Non-affiliated companies 101,455 23,569 191,185 44,757
Affiliated companies 7,799 7,987 13,868 20,335
Other operation 78,078 59,458 161,787 126,009
Maintenance 27,244 23,242 45,762 45,905
Depreciation 31,293 30,349 62,445 60,557
Amortization of post-in-service
deferred operating expenses 268 (1,686) 536 (3,352)
Income taxes 13,067 13,269 33,292 32,152
Taxes other than income taxes 15,323 13,464 30,180 27,632
348,771 246,006 718,806 524,694
Operating Income 40,767 43,506 94,587 93,113
Other Income and Expenses - Net
Allowance for equity funds used
during construction 93 - 165 -
Post-in-service carrying costs - 494 - 837
Income taxes (241) (1,654) (844) (894)
Other - net 810 1,798 4,073 (1,860)
662 638 3,394 (1,917)
Income Before Interest 41,429 44,144 97,981 91,196
Interest
Interest on long-term debt 17,146 17,033 36,376 34,068
Other interest 2,075 3,128 6,532 6,596
Allowance for borrowed funds
used during construction (523) (680) (956) (995)
18,698 19,481 41,952 39,669
Net Income $ 22,731 $ 24,663 $ 56,029 $ 51,527
Preferred Dividend Requirement 3,019 3,203 6,039 6,498
Net Income Applicable to Common
Stock $ 19,712 $ 21,460 $ 49,990 $ 45,029
<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
June 30
1997 1996
(in thousands)
<S> <C> <C>
Operating Activities
Net income $ 56,029 $ 51,527
Items providing (using) cash currently:
Depreciation 62,445 60,557
Deferred income taxes and investment tax
credits - net (6,916) 4,078
Allowance for equity funds used during
construction (165) -
Regulatory assets - net 23,870 5,668
Changes in current assets and current
liabilities
Restricted deposits (222) (291)
Accounts and notes receivable, net of
reserves on receivables sold (53,912) 19,775
Materials, supplies, and fuel 10,552 1,181
Accounts payable 32,245 5,553
Accrued taxes and interest (11,335) (783)
Other items - net (5,168) 4,647
Net cash provided by operating
activities 107,423 151,912
Financing Activities
Funds on deposit from issuance of long-term debt - 973
Retirement of preferred stock (1) (15,114)
Redemption of long-term debt (45,700) -
Change in short-term debt 73,844 (10,624)
Dividends on preferred stock (6,039) (6,589)
Dividends on common stock (56,800) (54,052)
Net cash used in financing activities (34,696) (85,406)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (60,320) (66,830)
Deferred demand-side management costs (6,075) (8,700)
Net cash used in investing activities (66,395) (75,530)
Net increase (decrease) in cash and
temporary cash investments 6,332 (9,024)
Cash and temporary cash investments at
beginning of period 2,911 15,522
Cash and temporary cash investments at
end of period $ 9,243 $ 6,498
<FN>
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>
PSI ENERGY, INC.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1997
Kwh Sales
Kwh sales for the second quarter of 1997 increased 55.1%, 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. Also contributing to the higher kwh sales levels was an increase
in industrial sales primarily reflecting growth in the primary metals sector.
Partially offsetting these increases were the effects of mild weather during
the second quarter of 1997.
Operating Revenues
Operating revenues increased $100 million (35%) for the quarter ended June 30,
1997, when compared to the same period last year, reflecting, in part,
increased activity in Cinergy's power marketing and trading operations
previously discussed. Also contributing to the increase were the effects of
the December 1996 DSM Order and 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 June 30
(in millions)
Operating revenues - June 30, 1996 $290
Increase (Decrease) due to change in:
Price per kwh
Retail 25
Sales for resale
Firm power obligations (9)
Non-firm power transactions 14
Total change in price per kwh 30
Kwh sales
Retail (1)
Sales for resale
Firm power obligations 1
Non-firm power transactions 69
Total change in kwh sales 69
Other 1
Operating revenues - June 30, 1997 $390
Operating Expenses
Fuel
Fuel costs decreased $2 million (3%) for the second quarter of 1997, as
compared to the same period last year.
An analysis of fuel costs is shown below:
Quarter
Ended June 30
(in millions)
Fuel expense - June 30, 1996 $76
Increase (Decrease) due to change in:
Price of fuel (3)
Kwh generation 1
Fuel expense - June 30, 1997 $74
Purchased and Exchanged Power
For the quarter ended June 30, 1997, purchased and exchanged power increased
$78 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 $19 million (31%) for the quarter ended
June 30, 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 (17%) increase in maintenance expenses for the second quarter
of 1997, as compared to the same period of 1996, is primarily due to scheduled
outages at Gibson.
Amortization of Post-in-service Deferred Operating Expenses
Amortization of post-in-service deferred operating expenses 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.
Taxes Other Than Income Taxes
The $2 million (14%) increase in taxes other than income taxes for the second
quarter of 1997, as compared to the same period last year, is primarily due to
an increase in the Indiana gross revenues tax.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997
Kwh Sales
For the six months ended June 30, 1997, kwh sales increased 43.0% when
compared to the same period last year primarily due to 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
was an increase in industrial sales primarily reflecting growth in the
primary metals sector. Partially offsetting these increases were the
effects of mild weather during the period.
Operating Revenues
Total operating revenues increased $195 million (32%) for the six months
ended June 30, 1997, when compared to the same period last year. This
increase primarily reflects the increase in kwh sales previously discussed.
Also contributing to the increase were the effects of the December 1996 DSM
Order and 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:
Six Months
Ended June 30
(in millions)
Operating revenues - June 30, 1996 $618
Increase (Decrease) due to change in:
Price per kwh
Retail 49
Sales for resale
Firm power obligations (7)
Non-firm power transactions 18
Total change in price per kwh 60
Kwh sales
Retail 1
Sales for resale
Firm power obligations 1
Non-firm power transactions 132
Total change in kwh sales 134
Other 1
Operating revenues - June 30, 1997 $813
Operating Expenses
Fuel
Fuel costs for the six months ended June 30, 1997, increased $9 million
(5%) when compared to the same period last year.
An analysis of fuel costs is shown below:
Six Months
Ended June 30
(in millions)
Fuel expense - June 30, 1996 $171
Increase (Decrease) due to change in:
Price of fuel (6)
Deferred fuel cost 11
Kwh generation 4
Fuel expense - June 30, 1997 $180
Purchased and Exchanged Power
For the six months ended June 30, 1997, purchased and exchanged power
increased $140 million, as 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
Other operation expenses increased $36 million (28%) for the six months ended
June 30, 1997, as compared to the same period last year. This increase was
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.
Amortization of Post-in-service Deferred Operating Expenses
Amortization of post-in-service deferred operating expenses 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.
Taxes Other Than Income Taxes
The $3 million (9%) increase in taxes other than income taxes for the six
months ended June 30, 1997, as compared to the same period last year, is
primarily due to an increase in the Indiana gross revenues tax.
Other Income and Expenses - Net
Other - net
The change of $6 million for other - net for the six months ended June 30,
1997, as compared to the same period of 1996, is primarily attributable to an
increase in carrying costs related to the Coal Supply Agreement, Clean Coal
Project, and deferred DSM costs.
Interest
Interest on Long-term Debt
Interest on long-term debt increased $2 million (7%) for the six month period
ended June 30, 1997, as compared to the same period of 1996. The increase was
primarily due to net issuance of approximately $100 million of long-term debt
during the third and fourth quarters of 1996.
<PAGE>
THE UNION LIGHT, HEAT AND POWER COMPANY
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT & POWER COMPANY
BALANCE SHEETS
(unaudited)
ASSETS
June 30 December 31
1997 1996
(dollars in thousands)
<S> <C> <C>
Utility Plant - Original Cost
In service
Electric $200,505 $195,053
Gas 150,775 148,203
Common 19,233 19,285
370,513 362,541
Accumulated depreciation 128,072 122,310
242,441 240,231
Construction work in progress 8,742 9,050
Total utility plant 251,183 249,281
Current Assets
Cash and temporary cash investments 4,544 1,197
Notes receivable from affiliated companies - 100
Accounts receivable less accumulated provision
for doubtful accounts of $1,314 at
June 30, 1997, and $1,024 at December 31, 1996 6,320 12,763
Accounts receivable from affiliated companies 375 620
Materials, supplies, and fuel - at average cost
Gas stored for current use 4,773 6,351
Other materials and supplies 690 716
Property taxes applicable to subsequent year 1,300 2,600
Prepayments and other 493 370
18,495 24,717
Other Assets
Regulatory assets
Deferred merger costs 5,218 5,218
Unamortized costs of reacquiring debt 3,673 3,764
Other 2,425 2,357
Other 6,238 5,146
17,554 16,485
$287,232 $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>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT & POWER COMPANY
CAPITALIZATION AND LIABILITIES
June 30 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 June 30, 1997, and December 31, 1996 $ 8,780 $ 8,780
Paid-in capital 18,683 18,839
Retained earnings 94,787 92,484
Total common stock equity 122,250 120,103
Long-term Debt 44,643 44,617
Total capitalization 166,893 164,720
Current Liabilities
Notes payable to affiliated companies 20,928 30,649
Accounts payable 6,419 12,018
Accounts payable to affiliated companies 20,493 16,771
Accrued taxes 3,078 1,014
Accrued interest 1,341 1,284
Other 3,964 5,248
56,223 66,984
Other Liabilities
Deferred income taxes 32,674 33,463
Unamortized investment tax credits 4,657 4,797
Accrued pension and other postretirement benefit
costs 13,522 12,983
Amounts due to customers - income taxes 6,488 5,121
Other 6,775 2,415
64,116 58,779
$287,232 $290,483
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT & POWER COMPANY
STATEMENTS OF INCOME
(unaudited)
Quarter Ended Year to Date
June 30 June 30
1997 1996 1997 1996
(in thousands)
<S> <C> <C> <C> <C>
Operating Revenues
Electric $47,314 $42,933 $ 95,894 $ 95,266
Gas
Non-affiliated companies 10,825 11,061 44,788 45,067
Affiliated companies 69 15 190 67
58,208 54,009 140,872 140,400
Operating Expenses
Electricity purchased from parent
company for resale 34,626 31,887 69,755 69,487
Gas purchased 6,555 5,125 27,004 24,123
Other operation 8,203 7,149 16,737 16,396
Maintenance 1,496 1,186 3,059 2,352
Depreciation 3,111 2,967 6,181 5,874
Income taxes 903 1,246 5,645 6,757
Taxes other than income taxes 1,115 1,035 2,214 2,106
56,009 50,595 130,595 127,095
Operating Income 2,199 3,414 10,277 13,305
Other Income and Expenses - Net
Allowance for equity funds used
during construction 27 - 23 (21)
Income taxes 206 31 298 27
Other - net (514) (424) (961) (643)
(281) (393) (640) (637)
Income Before Interest 1,918 3,021 9,637 12,668
Interest
Interest on long-term debt 881 960 1,762 2,254
Other interest 333 159 634 266
Allowance for borrowed funds
used during construction (7) (54) (37) (64)
1,207 1,065 2,359 2,456
Net Income $ 711 $ 1,956 $ 7,278 $ 10,212
<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
June 30
1997 1996
(in thousands)
<S> <C> <C>
Operating Activities
Net income $ 7,278 $ 10,212
Items providing (using) cash currently:
Depreciation 6,181 5,874
Deferred income taxes and investment tax
credits - net 438 6,782
Allowance for equity funds used during
construction (23) 21
Regulatory assets - net (68) 22
Changes in current assets and current
liabilities
Accounts and notes receivable, net of
reserves on receivables sold 6,513 30,029
Materials, supplies, and fuel 1,604 (301)
Accounts payable (1,877) (24,344)
Accrued taxes and interest 2,121 210
Other items - net 4,634 (302)
Net cash provided by operating
activities 26,801 28,203
Financing Activities
Redemption of long-term debt - (26,863)
Change in short-term debt (9,721) 5,558
Dividends on common stock (4,975) -___
Net cash used in financing
activities (14,696) (21,305)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (8,758) (7,960)
Net cash used in investing
activities (8,758) (7,960)
Net increase (decrease) in cash and
temporary cash investment 3,347 (1,062)
Cash and temporary cash investments at
beginning of period 1,197 1,750
Cash and temporary cash investments at
end of period $ 4,544 $ 688
<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>
THE UNION LIGHT, HEAT AND POWER COMPANY
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1997
Operating Revenues
Electric Operating Revenues
Electric operating revenues increased $4.4 million (10.2%) for the quarter
ended June 30, 1997, from the comparable period of 1996. This increase is
partially attributable to the accrual in June 1996 of the retroactive portion
of an order issued by the KPSC authorizing a decrease in electric rates 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 during the second quarter
of 1997, when compared to the same period of last year. Decreases primarily
attributable to the aforementioned trend toward increased transportation
services were substantially offset by the operation of a gas cost recovery
mechanism, reflecting an increase in the average cost per Mcf of gas
purchased.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased increased $2.7 million (8.6%) for the quarter ended
June 30, 1997, as compared to the same period last year. This increase is
primarily attributable to the accrual in June 1996 of the retroactive portion
of an order issued by the KPSC as previously discussed.
Gas Purchased
Gas purchased for the quarter ended June 30, 1997, increased $1.4 million
(27.9%) from the second quarter of last year, reflecting an increase in the
average cost per Mcf purchased which was partially offset by a decrease in
volume.
Other Operation
The $1.1 million (14.7%) increase in other operation expenses for the second
quarter of 1997, as compared to the same period of 1996, is primarily due to
higher administrative and general expenses. Partially offsetting this
increase were lower electric and gas distribution expenses.
Maintenance
The $.3 million (26.1%) increase in maintenance expenses for the second
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.
Other Income and Expenses - Net
Other - net
The change in other - net of $.1 million for the quarter ended June 30, 1997,
as compared to the same period of 1996, is partially attributable to a higher
level of expenses associated with the sales of accounts receivables.
Interest
Interest on Long-term Debt
Interest on long-term debt decreased $.1 million (8.2%) for the quarter ended
June 30, 1997, as compared to the same period of 1996, primarily due to the
redemption of $10 million of long-term debt in May 1996.
Other Interest
Other interest charges increased $.2 million for the quarter ended June 30,
1997, as compared to the same period of 1996, primarily due to increased
short-term borrowings. This increase was partially offset by interest charges
recorded in 1996 on customer rate refunds.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997
Kwh Sales
Kwh sales for the six months ended June 30, 1997, remained relatively
constant, as compared to the six months ended June 30, 1996. Mild weather
during the six months ended June 30, 1997, resulted in decreased residential
and commercial sales. These decreases were partially offset by an increase in
the number of residential and commercial customers.
Mcf Sales and Transportation
For the six months ended June 30, 1997, Mcf gas sales volumes decreased 14.2%
while Mcf transportation volumes increased 23.3%, as compared to the same
period in 1996. Decreased Mcf sales reflect, in part, cold weather during the
first quarter of 1996, as compared to the mild weather during the same period
of 1997, and were slightly offset by an increase in the number of residential
customers. Industrial sales declined and gas transportation volumes increased
as customers continued the trend of purchasing gas directly from suppliers,
using transportation services provided by ULH&P.
Operating Revenues
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 ULH&P in "Results of Operations for
the Quarter Ended June 30, 1997."
Gas operating revenues remained relatively constant for the six months ended
June 30, 1997, when compared to the same period of last year. Increases
primarily attributable to the operation of a gas cost recovery mechanism,
reflecting an increase in the average cost per Mcf of gas purchased, were
offset by the effect of the aforementioned trend toward increased
transportation services and the weather-related decrease in Mcf sales volumes.
Operating Expenses
Gas Purchased
Gas purchased for the six months ended June 30, 1997, increased $2.9 million
(11.9%), as compared to the same period in 1996. This increase reflects an
increase in the average cost per Mcf purchased, partially offset by a decrease
in volume.
Maintenance
The $.7 million (30.1%) increase in maintenance expenses for the six months
ended June 30, 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 $.3 million (5.2%) for the six months ended
June 30, 1997, over the comparable period of last year. The increase
primarily reflects additions to gas and electric utility plant.
Other Income and Expenses - Net
Other - net
The change of $.3 million for other - net for the six months ended June 30,
1997, as compared to the same period of 1996, is primarily attributed to a
higher level of expenses associated with the sales of accounts receivables.
Interest
Interest on Long-Term Debt
Interest charges decreased $.5 million (21.8%) for the six months ended June
30, 1997, from the same period of 1996, primarily due to the redemption of $25
million of long-term debt during the period from February 1996 to May 1996.
Other Interest
Other interest charges increased $.4 million for the six months ended June 30,
1997, as compared to the same period of 1996, primarily due to increased
short-term borrowings. This increase was partially offset by interest charges
recorded in 1996 on customer rate refunds.
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
On July 31, 1997, PSI gave notice of its intention to redeem on
September 1, 1997, all outstanding shares of its 7.15% Series Cumulative
Preferred Stock at a redemption price of $101 per share.
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 Refunding Revenue 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 were issued in an initial daily rate mode 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.
Holders of the 1997 Series and the 1996 Series bonds have the right to
put their bonds on any business day. Accordingly, these issuances are
reflected in the Consolidated Balance Sheets as "Notes payable and other
short-term obligations".
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,
year to date, and twelve months ended June 30, 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, year to date, and twelve months ended June 30, 1997.
On July 2, 1997, the government in the United Kingdom announced a
windfall profits tax to be levied against a limited number of British
companies, including Midlands. The tax was enacted into law during the
third quarter and as a result, Midlands will record a charge of 134
million pounds sterling (of which Cinergy's share, based on the exchange
rate in effect at the time of enactment is $109 million or $.69 per
share) in the third quarter of 1997.
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 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.
Cinergy, CG&E, and PSI
7. Cinergy and its subsidiaries use derivative financial instruments to
hedge exposures to foreign currency exchange rates, lower funding costs
and reduce exposures to fluctuations in interest rates. Instruments used
as hedges must be designated as a hedge at the inception of the contract
and must be effective at reducing the risk associated with the exposure
being hedged. Accordingly, changes in market values of designated hedge
instruments must be highly correlated with changes in market values of
the underlying hedged items at inception of the hedge and over the life
of the hedge contract.
Cinergy uses a currency swap to hedge exposures to fluctuations in
foreign currency exchange rates. The currency swap is accounted for as a
hedge of Cinergy's pound sterling denominated net investment in Avon
Energy. Accordingly, any translation gains or losses on the currency
swap are recorded in the cumulative foreign currency translation
adjustment which is a separate component of common stock equity and the
estimated fair value of the currency swap is reflected in "Other
Liabilities - Other" in the Consolidated Balance Sheets.
Cinergy and its subsidiaries enter into interest rate swap agreements to
lower funding costs and manage exposures to fluctuations in interest
rates. Interest rate swaps are accounted for under the accrual method.
Accordingly, gains and losses based on any interest differential between
fixed-rate and floating-rate interest amounts, calculated on agreed upon
notional principal amounts are recognized in the Consolidated Statements
of Income as a component of interest expense as realized over the life of
the agreement.
Cinergy actively markets and trades physical contracts for the purchase
and sale of electricity. The majority of these physical contracts are
fixed-price forward purchase and sales contracts, which require physical
delivery of electricity. Therefore, the revenues, costs, and the
associated receivables and payables are recognized on the accrual basis
of accounting in the Consolidated Financial Statements. Cinergy also
enters into option contracts which, to the extent options are exercised,
are also settled via physical delivery of electricity. Option premiums
are deferred and included in the Consolidated Balance Sheets and
amortized to "Operating Revenues - Electric" or "Purchased and exchanged
power" in the Consolidated Statements of Income over the term of the
option contract. The use of these types of derivative commodity
instruments allows Cinergy to manage and hedge its contractual
commitments, reduce its exposure relative to the volatility of cash
market prices, and take advantage of selected arbitrage opportunities.
Option contracts and derivative commodity instruments requiring
settlement in cash are used on a limited basis and the impacts of such
instruments are not significant to Cinergy's Consolidated Financial
Statements.
During June 1997, Capital & Trading acquired the assets of GEP. Capital
& Trading specializes in energy risk management, marketing, and
proprietary arbitrage trading. Capital & Trading actively trades
derivative commodity instruments including futures, forwards, swaps, and
options. Capital & Trading accounts for these derivatives at fair value
with unrealized gains and losses reflected in its statement of
operations. At June 30, 1997, the operations of Capital & Trading were
not significant to the Consolidated Financial Statements of Cinergy.
Cinergy, CG&E, PSI, and ULH&P
8. As discussed in the 1996 Form 10-K, in March 1997, Cinergy's utility
subsidiaries, including CG&E, PSI, and ULH&P and other Cinergy system
companies, which participate in the money pooling arrangement, filed an
application with the SEC under the PUHCA requesting authorization of the
money pool through December 31, 2002. In May 1997, the SEC issued an
order authorizing Cinergy's utility subsidiaries and other Cinergy system
companies continued use of the money pool and granting other financing
transactions for which the companies requested approval, in each case,
through December 31, 2002.
Cinergy and PSI
9. As discussed in the 1996 Form 10-K, the UCC and the CAC filed a Joint
Petition for the Reconsideration and Rehearing of the September 1996
Order with the IURC in October of 1996.
A settlement agreement was filed May 27, 1997, with the IURC
regarding the petition for rehearing and/or reconsideration filed by the
UCC and the CAC in PSI's latest rate order dated October 2, 1996.
The settlement agreement reduces the original rate increase by $2.1
million (.2%). Major provisions of the settlement agreement include PSI
increasing annual amortization of certain regulatory assets by $4.1
million, the reflection of an August 31, 1995 cut-off date for costs to
achieve merger savings with amounts subsequent to that date and prior to
October 31, 1996 being deferred for subsequent recovery (reduces rates
$.9 million annually), and PSI reducing its jurisdictional revenues by $1
million annually in addition to the $.9 million reduction related to
costs to achieve merger savings. The settlement agreement was received
into evidence by the IURC at a hearing held on August 12, 1997. No party
at the hearing opposed the settlement agreement. Cinergy and PSI cannot
predict what action the IURC may take with respect to the settlement
agreement.
Cinergy, CG&E, and ULH&P
10. As discussed in the 1996 Form 10-K, under the PUHCA, the divestiture of
CG&E's gas operations may be required. In its order approving the
merger, the SEC reserved judgment over Cinergy's ownership of its gas
operations for a period of three years. Recently, under substantially
similar circumstances, the SEC issued an order permitting another
electric registered holding company to retain gas operations comparable
in size to those of CG&E. Cinergy believes it has a justifiable basis
for retention of its gas operations and will continue its pursuit of SEC
approval.
Cinergy and PSI
11. As discussed in the 1996 Form 10-K, IGC and PSI had entered into
negotiations regarding IGC's claim that PSI should contribute to IGC's
response costs related to investigating and remediating contamination at
18 of the 19 MGP sites which PSI sold to IGC.
In August 1997, PSI reached an agreement with IGC settling IGC's claims
against PSI pursuant to CERCLA and other laws for contribution to IGC's
past and future response costs involving 13 MGP sites conveyed by PSI to
IGC in 1945. The agreement with IGC calls for sharing past and future
response costs equally (50/50) at the 13 sites. Further, the parties
must jointly approve future management of the sites and the decisions to
spend additional funds. The settlement does not address five sites PSI
acquired from NIPSCO and subsequently sold to IGC (including the
Lafayette site). Resolution of liability on these five sites will
require further negotiations among all three companies. Moreover, the
agreement does not address NIPSCO's claims against PSI relative to two
other MGP sites. Based on information received to date, PSI's potential
exposure to probable and reasonably estimable liabilities associated with
various MGP sites, including the 13 sites which are the subject of the
agreement with IGC, would not be material to its financial condition or
results of operations. However, further investigation and remediation
activities at these sites may indicate that the potential liability for
MGP sites could be material.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Recent Developments
Cinergy
Securities Ratings During the second quarter of 1997, S&P, D&P, and Fitch
assigned a BBB+ rating to Cinergy and Moody's assigned a Baa2 rating to
Cinergy. These ratings are not assigned to specific issues of long-term debt,
rather they are indicative corporate ratings. In assigning the rating, Fitch
stated, "The ratings primarily reflect the credit strength and favorable
competitive position of CIN's two domestic operating companies, which are the
principal source of the parent company's cash flow."
Cinergy, CG&E, PSI and ULH&P
Ambient Air Standards The EPA has recently revised the NAAQS for ozone and
fine particulate matter. The new ozone standard is more stringent than the
existing standard and will cause more areas across the nation to be classified
as non-attainment. The standards are expected to force significant reductions
in NOx emissions from many sources. The EPA has specifically stated that
electric utility generating facilities are targeted for NOx reductions. The
total level of NOx reductions will depend upon the outcome of the SIP revision
process for meeting the new ozone NAAQS, and other EPA NOx reduction
initiatives. Cinergy estimates that the capital costs for additional NOx
controls at its facilities could be as high as $400 million over the next ten
years depending upon the level of reductions.
The impact of the particulate standards cannot be determined at this time.
The EPA estimates it will take up to five years to collect sufficient ambient
air monitoring data. The states will then determine the sources of these
particulates and develop a reduction strategy. The ultimate effect of the new
standard could be requirements for newer and cleaner technologies and
additional controls on conventional particulates and/or reductions in sulfur
dioxide and NOx emissions from utility sources. Since these studies and
determinations have not been made, Cinergy cannot predict the outcome or
effect of the new particulate standards on its operations.
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."
Cinergy and CG&E
CG&E's Customer Choice Pilot On July 2, 1997, the PUCO approved
implementation of a pilot program which will allow residential customers to
choose their gas supplier and have CG&E transport the gas for them effective
November 1, 1997. The pilot extends to residential customers the choice that
has been available for several years to large volume commercial and industrial
customers.
Cinergy, CG&E, and ULH&P
Potential Divestiture of Gas Operations Under the PUHCA, the divestiture of
CG&E's gas operations may be required. In its order approving the merger, the
SEC reserved judgment over Cinergy's ownership of its gas operations for a
period of three years. Recently, under substantially similar circumstances,
the SEC issued an order permitting another electric registered holding company
to retain gas operations comparable in size to those of CG&E. Cinergy
believes it has a justifiable basis for retention of its gas operations and
will continue its pursuit of SEC approval.
Cinergy and PSI
PSI's Retail Rate Proceeding See Note 9 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, PSI, and ULH&P
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."
On June 19, 1997, CG&E received from the PUCO authorization through June 1998
to, among other things: 1) issue and sell up to $400 million of debt
securities; and 2) enter into $200 million of capital lease obligations.
In addition, on June 17, 1997, the KPSC authorized ULH&P to, among other
things, issue and sell through September 1999, up to $50 million of long-term
debt.
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 $853 $280 $175
CG&E & Subsidiaries 453 80 45
PSI 400 200 130
ULH&P 50 - -
Additionally, during the second quarter, Cinergy amended its $600 million
credit facility. The original credit facility was comprised of two
components, a $100 million general commitment and a $500 million acquisition
commitment. The $100 million commitment was replaced with a new $200 million
revolving credit agreement and the $500 million acquisition agreement was
amended. Both components of the facility expire in May 2001, and have $157
million unused as of June 30, 1997.
Cinergy UK's $40 million non-recourse credit agreement has $15 million
outstanding as of June 30, 1997.
Lastly, as discussed in Note 5 of the "Notes to Financial Statements" in "Part
I. Financial Information," a windfall profits tax is to be levied against
Midlands. This tax will be paid in two equal installments due December 1,
1997 and 1998. Cinergy anticipates that Midlands and/or Avon Energy will
borrow the funds to finance the tax payments.
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 denied AEP's petition for review of the FERC's
Merger Order. AEP had objected to the Merger Order alleging that, among other
things, the post-merger operations of Cinergy would require the use of AEP's
transmission facilities on a continuous basis without compensation. AEP has
elected not to pursue an appeal of the lower court decision to the United
States Supreme Court.
Additionally, see Notes 6 and 9 of the "Notes to Financial Statements" in
"Part I. Financial Information."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
Exhibit
Designation Nature of Exhibit
Cinergy, CG&E, PSI, and ULH&P
27 Financial Data Schedules (included in
electronic submission only).
Cinergy, CG&E, PSI, and ULH&P
(b) No reports on Form 8-K were filed during the quarter.
SIGNATURES
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although Cinergy, CG&E, PSI, and ULH&P believe that the
disclosures are adequate to make the information presented not misleading. In
the opinion of Cinergy, CG&E, PSI, and ULH&P, these statements reflect all
adjustments (which include only normal, recurring adjustments) necessary to
reflect the results of operations for the respective periods. The unaudited
statements are subject to such adjustments as the annual audit by independent
public accountants may disclose to be necessary.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrants have duly caused this report to be signed by an
officer and the chief accounting officer on their behalf by the undersigned
thereunto duly authorized.
CINERGY CORP.
THE CINCINNATI GAS & ELECTRIC COMPANY
PSI ENERGY, INC.
THE UNION LIGHT, HEAT AND POWER COMPANY
Registrants
Date: August 13, 1997 John P. Steffen __
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> JUN-30-1997
<PERIOD-TYPE> 6-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 6,279,429
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 476,005
<TOTAL-DEFERRED-CHARGES> 1,123,400
<OTHER-ASSETS> 884,496
<TOTAL-ASSETS> 8,763,330
<COMMON> 1,577
<CAPITAL-SURPLUS-PAID-IN> 1,570,533
<RETAINED-EARNINGS> 1,019,237
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,591,347
0
194,048
<LONG-TERM-DEBT-NET> 2,133,475
<SHORT-TERM-NOTES> 1,104,859
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 130,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,609,601
<TOT-CAPITALIZATION-AND-LIAB> 8,763,330
<GROSS-OPERATING-REVENUE> 1,895,513
<INCOME-TAX-EXPENSE> 103,856
<OTHER-OPERATING-EXPENSES> 1,533,915
<TOTAL-OPERATING-EXPENSES> 1,637,771
<OPERATING-INCOME-LOSS> 257,742
<OTHER-INCOME-NET> 36,792
<INCOME-BEFORE-INTEREST-EXPEN> 294,534
<TOTAL-INTEREST-EXPENSE> 118,453
<NET-INCOME> 176,081
6,475
<EARNINGS-AVAILABLE-FOR-COMM> 169,606
<COMMON-STOCK-DIVIDENDS> 141,910
<TOTAL-INTEREST-ON-BONDS> 94,252
<CASH-FLOW-OPERATIONS> 316,886
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
