UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C. 20549


                                    FORM 10-Q

(Mark One)
(X)   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the quarterly period ended March 31,June 30, 1995

                                        OR

( )   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from               to            

Commission          Registrant, State of Incorporation,        I.R.S. Employer
File Number             Address, and Telephone Number       Identification No.

1-11377                          CINERGY CORP.                     31-1385023
                           (A Delaware Corporation)
                            139 East Fourth Street
                            Cincinnati, Ohio 45202
                                (513) 381-2000

1-1232               THE CINCINNATI GAS & ELECTRIC COMPANY         (Exact name of registrant as specified in its charter)


		      OHIO 	  		                     31-0240030
                             (State or other jurisdiction of	            (I.R.S. Employer
	 incorporation or organization)	           Identification No.)(An Ohio Corporation)
                            139 East Fourth Street
                            Cincinnati, Ohio 45202
                                (Address of principal executive offices)
                                                            
                Registrant`s telephone number:(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 registrantregistrants (1) hashave 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 
registrant wasregistrants were required to file such reports), and (2) hashave been subject to 
such filing requirements for the past 90 days.  Yes  X   No   

-----     ----This combined Form 10-Q is separately filed by Cinergy Corp., The Cincinnati 
Gas & Electric Company, PSI Energy, Inc., and The Union Light, Heat and Power 
Company.  Information contained herein relating to any individual registrant 
is filed by such registrant on its own behalf.  Each registrant makes no 
representation as to information relating to the other registrants.

The Union Light, Heat and Power Company meets the conditions set forth in 
General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing its 
company specific information with the reduced disclosure format.

As of April 30,July 31, 1995, 89,663,086 shares of Common Stock par value $8.50 per 
share,outstanding for each company were 
outstanding, all of which were held by CINergyas listed:



Company Shares Cinergy Corp., par value $.01 per share 156,648,694 The Cincinnati Gas & Electric Company, par value $8.50 per share 89,663,086 PSI Energy, Inc., without par value, stated value $.01 per share 53,913,701 The Union Light, Heat and Power Company, par value $15.00 per share 585,333
THE CINCINNATI GAS & ELECTRIC COMPANY TABLE OF CONTENTS Item Number Glossary of Terms PART I. FINANCIAL INFORMATION 1 Consolidated Financial Statements Cinergy Corp. Consolidated Balance Sheets Consolidated Statements of Income (Loss) Consolidated Statements of Changes in Common Stock Equity Consolidated Statements of Cash Flows Results of Operations The Cincinnati Gas & Electric Company Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Changes in Common Stock Equity Consolidated Statements of Cash Flows Results of Operations PSI Energy, Inc. Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Changes in Common Stock Equity Consolidated Statements of Cash Flows Results of Operations The Union Light, Heat and Power Company Balance Sheets Statements of Income Statements of Changes in Common Stock Equity Statements of Cash Flows Results of Operations Notes to Consolidated Financial Statements 2 Management'sManagement`s Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION 4 Submission of Matters to a Vote of Security Holders1 Legal Proceedings 2 Changes in Securities 6 Exhibits and Reports on Form 8-K Signatures GLOSSARY OF TERMS The following abbreviations or acronyms used in the text of this combined 10-Q are defined below: TERM DEFINITION AFUDC Allowance for funds used during construction Articles Amended Articles of Incorporation August 1993 A Public Utilities Commission of Ohio order issued in Order August 1993 Cayuga Cayuga Generating Station CERCLA Comprehensive Environmental Response, Compensation and Liability Act CG&E The Cincinnati Gas & Electric Company (a subsidiary of Cinergy Corp.) CG&E`s 1994 CG&E`s 1994 Annual Report on Form 10-K (Commission File Form 10-K Number 1-1232) Cinergy Cinergy Corp. Cinergy`s 1994 Cinergy`s 1994 Annual Report on Form 10-K, as amended Form 10-K (Commission File Number 1-11377) Clean Coal Wabash River Clean Coal Project Project CWIP Construction work in progress Cyprus Amax Cyprus Amax Minerals Company and Amax Coal Company, collectively DCR Duff & Phelps Credit Rating Co. DSM Demand-side Management FASB Financial Accounting Standards Board February 1995 An Indiana Utility Regulatory Commission order issued in Order February 1995 FERC Federal Energy Regulatory Commission Gibson Gibson Generating Station IDEM Indiana Department of Environmental Management IGC Indiana Gas Company IPALCO IPALCO Enterprises, Inc. IURC Indiana Utility Regulatory Commission KPSC Kentucky Public Service Commission kwh Kilowatt-hour Lawrenceburg Lawrenceburg Gas Company (a wholly-owned subsidiary of CG&E) May 1992 Order A Public Utility Commission of Ohio order issued in May 1992 Mcf Thousand cubic feet MEGA-NOPR FERC Notice of Proposed Rulemaking on Open Access issued on March 29, 1995 MGP Manufactured Gas Plant NIPSCO Northern Indiana Public Service Company PRP Potentially Responsible Party PSI PSI Energy, Inc. (a subsidiary of Cinergy) PSI`s 1994 PSI`s 1994 Annual Report on Form 10-K (Commission File Form 10-K Number 1-3543) PUCO Public Utilities Commission of Ohio PUHCA Public Utility Holding Company Act of 1935 S&P Standard & Poor`s SEC Securities and Exchange Commission SFAS 121 Statement of Financial Accounting Standards No. 121, `Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of` ULH&P The Union Light, Heat and Power Company (a wholly-owned subsidiary of CG&E) ULH&P`s Form ULH&P`s 1994 Annual Report on Form 10-K (Commission File 10-K Number 2-7793) Woodsdale Woodsdale Generating Station Zimmer William H. Zimmer Generating Station
THE CINCINNATI GAS & ELECTRIC COMPANYCINERGY CORP. CONSOLIDATED BALANCE SHEETS ASSETS March 31June 30 December 31 1995 1994 (unaudited) (dollars in thousands) Utility Plant - original cost In service Electric. . . . . . . . . . . . . . . . .Electric $8 393 518 $8 292 625 Gas 664 536 645 602 Common 184 750 185 718 9 242 804 9 123 945 Accumulated depreciation 3 262 715 3 163 802 5 980 089 5 960 143 Construction work in progress 241 987 238 750 Total utility plant 6 222 076 6 198 893 Current Assets Cash and temporary cash investments 25 206 71 880 Restricted deposits 4 646 11 288 Accounts receivable less accumulated provision of $10,212,000 at June 30, 1995 and $9,716,000 at December 31, 1994 for doubtful accounts 251 888 299 509 Materials, supplies, and fuel - at average cost Fuel for use in electric production 160 363 156 028 Gas stored for current use 21 187 31 284 Other materials and supplies 93 722 92 880 Property taxes applicable to subsequent year 134 729 112 420 Prepayments and other 46 947 36 416 738 688 811 705 Other Assets Regulatory assets Post-in-service carrying costs and deferred operating expenses 188 061 185 280 Phase-in deferred return and depreciation 105 211 100 943 Deferred demand-side management costs 114 768 104 127 Amounts due from customers - income taxes 393 859 408 514 Deferred merger costs 50 067 49 658 Unamortized costs of reacquiring debt 71 778 70 424 Other 81 665 86 017 Other 141 581 134 281 1 146 990 1 139 244 $8 107 754 $8 149 842 The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
CINERGY CORP. CAPITALIZATION AND LIABILITIES June 30 December 31 1995 1994 (unaudited) (dollars in thousands) Common Stock Equity Common stock - $.01 par value; authorized shares - 600,000,000; outstanding shares - 156,567,331 at June 30, 1995 and 155,198,038 at December 31, 1994 $ 1 566 $ 1 552 Paid-in capital 1 570 873 1 535 658 Retained earnings 900 094 877 061 Total common stock equity 2 472 533 2 414 271 Cumulative Preferred Stock of Subsidiaries Not subject to mandatory redemption 227 915 267 929 Subject to mandatory redemption 160 000 210 000 Long-term Debt 2 652 382 2 715 269 Total capitalization 5 512 830 5 607 469 Current Liabilities Long-term debt and preferred stock of subsidiaries due within one year 150 400 60 400 Notes payable 244 000 228 900 Accounts payable 184 400 266 467 Refund due to customers 15 796 15 482 Litigation settlement 80 000 80 000 Accrued taxes 261 787 258 041 Accrued interest 56 740 58 504 Other 39 544 36 610 1 032 667 1 004 404 Other Liabilities Deferred income taxes 1 074 724 1 071 104 Unamortized investment tax credits 190 804 195 878 Accrued pension and other postretirement benefit costs 153 753 133 578 Other 142 976 137 409 1 562 257 1 537 969 $8 107 754 $8 149 842
CINERGY CORP. CONSOLIDATED STATEMENTS OF INCOME (unaudited) Quarter Ended Six Months Ended Twelve Months Ended June 30 June 30 June 30 1995 1994 1995 1994 1995 1994 (in thousands, except per share amounts) Operating Revenues Electric $611 394 $600 736 $1 245 643 $1 222 686 $2 478 494 $2 481 085 Gas 56 975 61 565 232 186 290 716 383 868 497 774 668 369 662 301 1 477 829 1 513 402 2 862 362 2 978 859 Operating Expenses Fuel used in electric production 169 194 167 561 355 103 344 347 723 749 718 736 Gas purchased 22 587 31 021 117 080 173 046 192 327 293 123 Purchased and exchanged power 11 641 15 443 17 307 35 234 31 155 56 074 Other operation 126 816 125 576 246 704 243 350 567 004 484 177 Maintenance 43 661 49 176 87 983 95 178 193 764 195 473 Depreciation 68 215 72 822 141 671 145 023 291 043 288 214 Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 - Post-in-service deferred operating expenses - net ( 65) (1 520) (2 069) (2 977) (5 090) (7 969) Phase-in deferred depreciation - ( 848) - (2 161) - (5 379) Taxes Federal and state income 40 371 34 340 102 841 96 071 158 951 193 438 State, local and other 63 858 61 982 127 905 124 740 247 216 238 746 548 551 555 553 1 196 798 1 251 851 2 402 392 2 454 633 Operating Income 119 818 106 748 281 031 261 551 459 970 524 226 Other Income and Expenses - Net Allowance for equity funds used during construction 931 801 1 885 4 331 3 755 11 894 Post-in-service carrying costs 13 2 105 2 581 4 306 8 055 12 780 Phase-in deferred return 2 134 3 837 4 268 11 458 8 161 26 294 Write-off of a portion of Zimmer Station - - - - - (234 844) Income taxes Related to write-off of a portion of Zimmer Station - - - - - 12 085 Other 2 162 2 060 3 207 4 162 9 654 19 904 Other - net (1 105) (2 509) ( 691) (7 526) (21 609) (38 583) 4 135 6 294 11 250 16 731 8 016 (190 470) Income Before Interest and Other Charges 123 953 113 042 292 281 278 282 467 986 333 756 Interest and Other Charges Interest on long-term debt 51 439 53 853 106 500 110 000 215 748 223 334 Other interest 5 817 4 515 11 128 7 859 23 639 11 822 Allowance for borrowed funds used during construction (1 986) (2 896) (4 297) (6 087) (10 542) (11 560) Preferred dividend requirements of subsidiaries 8 657 8 657 17 314 18 243 34 630 38 232 63 927 64 129 130 645 130 015 263 475 261 828 Net Income $ 60 026 $ 48 913 $ 161 636 $ 148 267 $ 204 511 $ 71 928 Average Common Shares Outstanding 156 333 146 476 156 009 146 119 152 331 145 432 Earnings Per Common Share $.39 $.33 $1.04 $1.01 $1.33 $.49 Dividends Declared Per Common Share $.43 $.38 $.86 $.76 $1.60 $1.50 The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
CINERGY CORP. CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY (unaudited) Common Paid-in Retained Total Common Stock Capital Earnings Stock Equity (dollars in thousands) Quarter Ended June 30, 1995 Balance April 1, 1995 $1 559 $1 553 478 $ 911 857 $2 466 894 Net income 60 026 60 026 Issuance of 646,854 shares of common stock 7 16 133 16 140 Common stock issuance expenses (5) (5) Dividends on common stock (67 078) (67 078) Other 1 267 (4 711) (3 444) Balance June 30, 1995 $1 566 $1 570 873 $ 900 094 $2 472 533 Quarter Ended June 30, 1994 Balance April 1, 1994 $1 460 $1 329 588 $ 951 553 $2 282 601 Net income 48 913 48 913 Issuance of 685,909 shares of common stock 6 14 879 14 885 Common stock issuance expenses (3) (3) Dividends on common stock (55 854) (55 854) Other 559 (953) (394) Balance June 30, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148 Six Months Ended June 30, 1995 Balance January 1, 1995 $1 552 $1 535 658 $ 877 061 $2 414 271 Net income 161 636 161 636 Issuance of 1,369,293 shares of common stock 14 34 137 34 151 Common stock issuance expenses (189) (189) Dividends on common stock (133 892) (133 892) Other 1 267 (4 711) (3 444) Balance June 30, 1995 $1 566 $1 570 873 $ 900 094 $2 472 533 Six Months Ended June 30, 1994 Balance January 1, 1994 $1 453 $1 312 426 $ 907 802 $2 221 681 Net income 148 267 148 267 Issuance of 1,409,097 shares of common stock 13 32 070 32 083 Common stock issuance expenses (26) (26) Dividends on common stock (111 457) (111 457) Other 553 (953) (400) Balance June 30, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148 Twelve Months Ended June 30, 1995 Balance July 1, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148 Net income 204 511 204 511 Issuance of 9,790,238 shares of common stock 100 229 949 230 049 Common stock issuance expenses (5 388) (5 388) Dividends on common stock (243 797) (243 797) Other 1 289 (4 279) (2 990) Balance June 30, 1995 $1 566 $1 570 873 $ 900 094 $2 472 533 Twelve Months Ended June 30, 1994 Balance July 1, 1993 $1 442 $1 285 766 $1 090 529 $2 377 737 Net income 71 928 71 928 Issuance of 2,547,425 shares of common stock 24 60 503 60 527 Common stock issuance expenses (144) (144) Dividends on common stock (217 921) (217 921) Other (1 102) (877) (1 979) Balance June 30, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148 The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
CINERGY CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Quarter Ended Six Months Ended Twelve Months Ended June 30 June 30 June 30 1995 1994 1995 1994 1995 1994 (in thousands) Operating Activities Net income $ 60 026 $ 48 913 $ 161 636 $ 148 267 $ 204 511 $ 71 928 Items providing (using) cash currently: Depreciation 68 215 72 822 141 671 145 023 291 043 288 214 Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 - Deferred income taxes and investment tax credits - net (13 353) 19 975 (11 584) 28 566 (9 224) 56 375 Allowance for equity funds used during construction (931) (801) (1 885) (4 331) (3 755) (11 894) Regulatory assets Post-in-service and phase-in cost deferrals (2 142) (8 310) (8 815) (20 902) (2 203) (52 422) Deferred merger costs (2 810) (4 177) (2 569) (13 691) (11 219) (21 388) Other 1 695 6 540 6 278 8 343 (5 585) 7 342 Write-off of a portion of Zimmer Station - - - - - 234 844 Changes in current assets and current liabilities Restricted deposits (1) (82) 14 (126) 10 186 (278) Accounts receivable 27 370 58 214 47 621 34 025 54 146 (24 626) Materials, supplies, and fuel (11 910) (45 435) 4 920 (25 610) (15 419) (14 661) Accounts payable (1 605) 17 903 (82 067) (45 694) (44 564) 42 397 Refund due to customers 195 (9 740) 314 (44 224) (21 812) (112 392) Advance under accounts receivable purchase agreement - - - (49 940) - - Accrued taxes and interest (35 242) (50 940) 1 982 (15 961) 23 696 37 077 Other items - net (774) 12 194 9 887 33 388 60 877 53 718 Net cash provided by (used in) operating activities 91 006 117 076 269 676 177 133 532 951 554 234 Financing Activities Issuance of common stock 16 135 14 882 33 962 32 057 224 661 60 383 Issuance of preferred stock of subsidiaries - - - - - 59 475 Issuance of long-term debt 149 025 - 149 025 361 025 208 935 821 041 Funds on deposit from issuance of long-term debt 899 3 224 6 628 12 401 22 124 34 123 Retirement of preferred stock of subsidiaries (7) (40 406) (7) (40 410) (23) (100 517) Redemption of long-term debt (129 734) - (217 251) (313 247) (217 686) (815 569) Change in short-term debt 13 899 72 944 15 100 141 999 (75 713) 184 736 Dividends on common stock (67 078) (55 854) (133 892) (111 457) (243 797) (217 921) Net cash provided by (used in) financing activities (16 861) (5 210) (146 435) 82 368 (81 499) 25 751 Investing Activities Construction expenditures (less allowance for equity funds used during construction) (82 350) (121 054) (160 564) (210 050) (430 199) (508 344) Deferred demand-side management costs (3 868) (10 374) (9 351) (18 216) (38 403) (40 698) Net cash provided by (used in) investing activities (86 218) (131 428) (169 915) (228 266) (468 602) (549 042) Net increase (decrease) in cash and temporary cash investments (12 073) (19 562) (46 674) 31 235 (17 150) 30 943 Cash and temporary cash investments at beginning of period 37 279 61 918 71 880 11 121 42 356 11 413 Cash and temporary cash investments at end of period $ 25 206 $ 42 356 $ 25 206 $ 42 356 $ 25 206 $ 42 356 The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
CINERGY CORP. Below is information concerning the consolidated results of operations for Cinergy for the quarter, six months, and twelve months ended June 30, 1995. For information concerning the results of operations for each of the other registrants, see the discussion under the heading RESULTS OF OPERATIONS following the financial statements of each company. RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995 Kwh Sales Kwh sales for the quarter ended June 30, 1995, decreased 2.3% as compared to the same period last year. Decreased non-firm power sales for resale and reduced sales to domestic customers as a result of the milder weather conditions experienced during the period accounted for most of the decline. Higher sales by both CG&E and PSI to industrial customers, which reflected growth in the primary metals and chemicals sectors, partially offset these decreases. Mcf Sales and Transportation Mcf gas sales and transportation volumes for the second quarter of 1995 increased 8.5% as compared to the second quarter of 1994, reflecting higher sales to domestic customers attributable to an increase in the average number of customers. In addition, the continuing trend of industrial customers electing to purchase directly from suppliers created a significant increase in demand for transportation services. The increased transportation volume, primarily in the primary metals, transportation equipment, and food products sectors, more than offset the decline in industrial sales volumes. Revenues Electric Operating Revenues Electric operating revenues for the quarter ended June 30, 1995, increased $10 million (1.8%) as compared to the same period last year. This increase primarily resulted from PSI`s 4.3% retail rate increase approved in the February 1995 Order and a 1.9% rate increase for carrying costs on CWIP property which was approved by the IURC on March 9, 1995. Also contributing to the increase was the operation of fuel adjustment clauses reflecting increases in the average cost per kwh generated. The previously discussed decrease in kwh sales partially offset these price-related increases. An analysis of electric operating revenues is shown below: Quarter Ended June 30 (in millions) Electric operating revenues - June 30, 1994 $601 Increase (Decrease) due to change in: Price per kwh Retail 17 Sales for resale Non-firm power transactions (1) Total change in price per kwh 16 Kwh sales Retail 1 Sales for resale Firm power obligations (1) Non-firm power transactions (6) Total change in kwh sales (6) Electric operating revenues - June 30, 1995 $611 Gas Operating Revenues Gas operating revenues declined $5 million (7.5%) in the second quarter of 1995 when compared to the same period last year. This decline was primarily the result of a decrease in total retail sales volumes and the operation of fuel adjustment clauses reflecting a lower average cost of gas purchased. An increase in the relative volume of gas transported to gas sold, as previously discussed, also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold. Operating Expenses Gas Purchased Gas purchased for the quarter declined $8 million (27.2%) when compared to the same period last year. This decrease was attributable to a 9.9% decline in volumes purchased and a 19.2% lower average cost per Mcf of gas purchased. Purchased and Exchanged Power Purchased and exchanged power decreased $4 million (24.6%) for the second quarter when compared to the same period last year. Although kwh purchases increased slightly, the price decreased significantly due to the availability of lower cost power from third parties. Maintenance The decrease in maintenance expense of $6 million (11.2%) for the second quarter of 1995 as compared to the same period last year was primarily due to improved scheduling of routine maintenance on generating units. Lower maintenance costs on gas and electric distribution facilities also contributed to the decline. Depreciation Depreciation expense decreased $5 million (6.3%) for the quarter ended June 30, 1995, as compared to the same period last year. This decrease primarily reflected the adoption of lower depreciation rates for PSI effective in March 1995, pursuant to the February 1995 Order. This decrease was partially offset by additions to utility plant in service. Amortization of Phase-in Deferrals Amortization of phase-in deferrals, which began in May of 1995, reflects the amortization of previously deferred depreciation and deferred return resulting from CG&E`s three-year rate phase-in plan for Zimmer included in the May 1992 Order. These deferrals will be recovered over a seven-year period as contemplated by the May 1992 Order. RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995 Kwh Sales Kwh sales decreased 3.1% for the six months ended June 30, 1995, when compared to the same period last year. This decline primarily reflects a decrease in short-term sales to other utilities. A slight decrease in retail sales resulted from lower domestic sales due to milder weather conditions. Partially offsetting these decreases were increased industrial sales resulting from growth in the primary metals and chemicals sectors. Mcf Sales and Transportation Mcf gas sales and transportation volumes for the six months ended June 30, 1995, remained relatively constant when compared to the same period of 1994. Decreases in domestic and commercial sales volumes were attributable to milder weather conditions. A decrease in industrial sales was attributable to the trend of industrial customers electing to purchase directly from suppliers, creating additional demand for transportation services. This increased demand for transportation services more than offset the decrease in industrial sales volumes and resulted from growth in the primary metals, transportation equipment, and food products sectors. Revenues Electric Operating Revenues As compared to the same period last year, electric operating revenues increased $23 million (1.9%) primarily as a result of CG&E`s retail electric rate increase which became effective May 1994, PSI`s electric rate increases which became effective February 1995 and March 1995, and the operation of fuel adjustment clauses reflecting increases in the average cost per kwh generated. Reduced non-firm power sales for resale, as previously discussed, partially offset these increases. An analysis of electric operating revenues is shown below: Six Months Ended June 30 (in millions) Electric operating revenues - June 30, 1994 $1 223 Increase (Decrease) due to change in: Price per kwh Retail 41 Sales for resale Non-firm power transactions (1) Total change in price per kwh 40 Kwh sales Retail (1) Sales for resale Firm power obligations (5) Non-firm power transactions (12) Total change in kwh sales (18) Other 1 Electric operating revenues - June 30, 1995 $1 246 Gas Operating Revenues Gas operating revenues declined $59 million (20.1%) in the first six months of 1995 when compared to the same period last year. This decrease reflects the decline in total retail volumes sold and the operation of fuel adjustment clauses reflecting a lower average cost of gas purchased. An increase in the relative volume of gas transported to gas sold also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold. Operating Expenses Fuel Used in Electric Production Electric fuel costs, Cinergy`s largest operating expense, increased $11 million (3.1%) for the six months ended June 30, 1995, when compared to the same period last year. An analysis of these fuel costs is shown below: Six Months Ended June 30 (in millions) Fuel expense - June 30, 1994 $344 Increase (Decrease) due to change in: Price of fuel 12 Kwh generation (1) Fuel expense - June 30, 1995 $355 Gas Purchased Gas purchased for the six month period ended June 30, 1995, decreased $56 million (32.3%) when compared to the same period last year. This decrease was attributable to a 12.9% decline in volumes purchased and a 22.3% lower average cost per Mcf of gas purchased. Purchased and Exchanged Power Purchased and exchanged power decreased $18 million (50.9%) for the six months ended June 30, 1995, when compared to the same period last year, as the coordination of CG&E`s and PSI`s electric dispatch systems enabled Cinergy to service more of its native load with its own generating units. Maintenance The decrease in maintenance of $7 million (7.6%) for the six months ended June 30, 1995, as compared to the same period last year was primarily due to improved scheduling of routine maintenance on generating units. Lower maintenance costs on gas and electric distribution facilities also contributed to the decline. Amortization of Phase-in Deferrals Amortization of phase-in deferrals, which began in May of 1995, reflects the amortization of previously deferred depreciation and deferred return resulting from CG&E`s three-year rate phase-in plan for Zimmer included in the May 1992 Order. These deferrals will be recovered over a seven-year period as contemplated by the May 1992 Order. Other Income and Expenses - Net Phase-in Deferred Return Phase-in deferred return decreased $7 million (62.8%) for the first six months of 1995 from the comparable period of 1994 as a result of implementing the final increase of the three-year rate phase-in plan in May 1994. RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 1995 Kwh Sales Kwh sales declined 3.3% for the twelve months ended June 30, 1995, when compared to the same period last year. This decline primarily reflects a decrease in short-term sales to other utilities. A decrease in retail sales resulted from lower domestic sales due to milder weather conditions. Partially offsetting these decreases were increased industrial sales resulting from growth in the primary metals and chemicals sectors. Mcf Sales and Transportation Mcf gas sales and transportation volumes for the twelve months ended June 30, 1995, decreased 3.7% when compared to the same period of 1994. Decreases in domestic and commercial sales volumes were attributable to milder weather conditions. A decrease in industrial sales was attributable to the trend of industrial customers electing to purchase directly from suppliers, creating additional demand for transportation services. This increased demand for transportation more than offset the decrease in industrial sales volumes and resulted from growth in the primary metals, food products, chemicals, and paper products sectors. Revenues Electric Operating Revenues Compared to the same period last year, electric operating revenues decreased $3 million (.1%) as the previously discussed decline in kwh sales was partially offset by a number of rate increases. An analysis of electric operating revenues is shown below: Twelve Months Ended June 30 (in millions) Electric operating revenues - June 30, 1994 $2 481 Increase (Decrease) due to change in: Price per kwh Retail 47 Sales for resale Firm power obligations 2 Non-firm power transactions (4) Total change in price per kwh 45 Kwh sales Retail (19) Sales for resale Firm power obligations (9) Non-firm power transactions (22) Total change in kwh sales (50) Other 2 Electric operating revenues - June 30, 1995 $2 478 Gas Operating Revenues Gas operating revenues declined $114 million (22.9%) for the twelve months ended June 30, 1995, when compared to the same period last year. This decrease was primarily the result of decreases in sales volumes and fuel adjustment clauses reflecting a decline in the average cost of gas purchased. An increase in the relative volume of gas transported to gas sold also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold. Operating Expenses Fuel Used in Electric Production Electric fuel costs, Cinergy`s largest operating expense, increased $5 million (.7%) for the twelve months ended June 30, 1995, when compared to the same period last year. An analysis of these fuel costs is shown below: Twelve Months Ended June 30 (in millions) Fuel expense - June 30, 1994 $719 Increase (Decrease) due to change in: Price of fuel 11 Kwh generation (6) Fuel expense - June 30, 1995 $724 Gas Purchased Gas purchased for the twelve months ended June 30, 1995, decreased $101 million (34.4%) when compared to the same period last year. This decrease was attributable to a 16.6% decline in volumes purchased and a 21.3% lower average cost per Mcf of gas purchased. Purchased and Exchanged Power Purchased and exchanged power decreased $25 million (44.4%) for the twelve months ended June 30, 1995, when compared to the same period last year, as the coordination of CG&E`s and PSI`s electric dispatch systems enabled Cinergy to service more of its native load through its own generating units. Other Operation Other operation expenses for the twelve months ended June 30, 1995, increased $83 million (17.1%) as compared to the same period in 1994. The primary factor contributing to this increase was charges of approximately $62 million for merger-related costs and other expenditures which cannot be recovered from customers under the merger savings sharing mechanisms authorized by regulators. The inclusion of postretirement benefits in rates on an accrual basis, an increase in the level of ongoing DSM expenses, and the amortization of deferred DSM costs, all of which were authorized in the February 1995 Order, also contributed to the increase. The increase was partially offset by reductions in administrative and general expenses and the May 1994 write-off of previously deferred litigation expenses. Amortization of Phase-in Deferrals Amortization of phase-in deferrals, which began in May of 1995, reflects the amortization of previously deferred depreciation and deferred return resulting from CG&E`s three-year rate phase-in plan for Zimmer included in the May 1992 Order. These deferrals will be recovered over a seven-year period as contemplated by the May 1992 Order. Phase-in Deferred Depreciation Phase-in deferred depreciation resulted from the three-year rate phase-in plan for Zimmer included in the May 1992 Order. The change of $5 million for phase-in deferred depreciation for the twelve months ended June 30, 1995, versus the same period of 1994, reflects discontinuance of the deferral of depreciation when the final increase of the phase-in plan became effective in May 1994. State, Local and Other Taxes State, local and other taxes increased $8 million (3.5%) over the same period of 1994 primarily due to increased property taxes resulting from higher property tax rates. Other Income and Expenses - Net Allowance for Equity Funds Used During Construction The equity component of AFUDC decreased $8 million (68.4%) for the twelve month period ended June 30, 1995, as compared to the same period last year. This decrease was due primarily to an increase in borrowings of short-term debt which resulted in a decrease in the equity component of the AFUDC rate. In addition, a scrubber at Gibson was placed in service in September 1994, which resulted in a large decrease in CWIP for the period. Post-in-service Carrying Costs Post-in-service carrying costs decreased $5 million (37.0%) for the twelve months ended June 30, 1995, when compared to the same period last year. Accrual of carrying costs on the first five units of Woodsdale ceased after the August 1993 Order which reflected Woodsdale in retail electric rates. Additional environmental compliance projects completed by PSI which qualified, under IURC authority, for continued accrual of the debt component of AFUDC (post-in-service carrying costs) partially offset this decrease. Phase-in Deferred Return Phase-in deferred return decreased $18 million (69.0%) for the twelve month period ended June 30, 1995, from the comparable period of 1994, as a result of implementing the final increase of the three-year rate phase-in plan in May 1994. Write-off of a Portion of Zimmer In November 1993, CG&E wrote off Zimmer costs disallowed from rates in the May 1992 Order. Other - net Other - net is comprised of miscellaneous income and deduction items. The increase of $17 million (44.0%) is primarily due to the write-off in late 1993 and early 1994 of $22 million incurred in defense of the IPALCO takeover attempt. Interest and Other Charges Interest on Long-term Debt Interest on long-term debt decreased $8 million (3.4%) for the twelve months ended June 30, 1995, as compared to the same period in 1994. Cinergy refinanced $215 million and $305 million of long-term debt in 1995 and 1994, respectively. Other Interest Other interest increased $12 million over the same period last year. The increase was driven primarily by higher interest rates and an increase in the average short-term debt outstanding
THE CINCINNATI GAS & ELECTRIC COMPANY CONSOLIDATED BALANCE SHEETS ASSETS June 30 December 31 1995 1994 (unaudited) (dollars in thousands) Utility Plant - original cost In service Electric $4 518 906530 815 $4 502 840 Gas . . . . . . . . . . . . . . . . . . . 654 905664 536 645 602 Common. . . . . . . . . . . . . . . . . . 185 812Common 184 750 185 718 5 359 623380 101 5 334 160 Accumulated depreciation. . . . . . . . . .depreciation 1 641 508665 213 1 613 505 3 718 115714 888 3 720 655 Construction work in progress . . . . . . . 74 993400 74 989 Total utility plant . . . . . . . . . . 3 793 108789 288 3 795 644 Current Assets Cash and temporary cash investments . . . . 16 0633 500 52 516 Restricted deposits . . . . . . . . . . . . 99100 98 Accounts receivable less accumulated provision of $10,348,000$9,053,000 at March 31,June 30, 1995 and $8,999,000 at December 31, 1994 for doubtful accounts . . . . . . . . . . 252 592217 774 269 020 Materials, supplies, and fuel - at average cost Fuel for use in electric production . . 43 18340 555 42 167 Gas stored for current use. . . . . . . 12 166use 21 187 31 284 Other materials and supplies. . . . . . 57 099supplies 58 150 57 864 Property taxes applicable to subsequent year. . . . . . . . . . . . . . . . . . . 114 465year 134 729 112 420 Prepayments and other . . . . . . . . . . . 36 15142 206 31 327 531 818518 201 596 696 Other Assets Regulatory assets Post-in-service carrying costs and deferred operating expenses . . . . . . 153 433151 727 155 138 Phase-in deferred return and depreciation. . . . . . . . . . . . . . 103 076depreciation 105 211 100 943 Deferred demand-side management costs . . 12 14114 246 10 002 Amounts due from customers - income taxes . . . . . . . . . . . . . . . . . 370 293366 924 381 380 Deferred merger costs . . . . . . . . . . 16 72112 437 12 013 Unamortized costs of reacquiring debt . . 34 84136 041 33 426 Other . . . . . . . . . . . . . . . . . . 43 24349 893 55 987 Other . . . . . . . . . . . . . . . . . . . 46 72449 969 40 436 780 472786 448 789 325 $5 105 398093 937 $5 181 665 The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated financial statements.
THE CINCINNATI GAS & ELECTRIC COMPANY CAPITALIZATION AND LIABILITIES March 31June 30 December 31 1995 1994 (unaudited) (dollars in thousands) Common Stock Equity Common stock - $8.50 par value; authorized shares - 120,000,000; outstanding shares - 89,663,086 at March 31,June 30, 1995 and December 31, 1994. . . . .1994 $ 762 136 $ 762 136 Paid-in capital . . . . . . . . . . . . . . . . 337 874339 135 337 874 Retained earnings . . . . . . . . . . . . . . . 453 174427 623 432 962 Total common stock equity . . . . . . . . . 1 553 184528 894 1 532 972 Cumulative Preferred Stock Not subject to mandatory redemption . . . . . . 8040 000 80 000 Subject to mandatory redemption . . . . . . . . 210160 000 210 000 Long-term Debt. . . . . . . . . . . . . . . . . .Debt 1 638 860774 404 1 837 757 Total capitalization. . . . . . . . . . . .capitalization 3 482 044503 298 3 660 729 Current Liabilities Long-term debtPreferred stock due within one year. . . . . . . 114year 90 000 - Notes payable . . . . . . . . . . . . . . . . . 1 00013 500 14 500 Accounts payable. . . . . . . . . . . . . . . . 90 273payable 85 830 120 817 Accrued taxes . . . . . . . . . . . . . . . . . 248 672234 609 227 651 Accrued interest. . . . . . . . . . . . . . . . 38 243interest 30 572 31 902 Other . . . . . . . . . . . . . . . . . . . . . 38 03535 709 32 658 530 223490 220 427 528 Other Liabilities Deferred income taxes . . . . . . . . . . . . . 734 844744 678 747 060 Unamortized investment tax credits . . . . . . 133 894132 440 135 417 Accrued pension and other postretirement benefit costs . . . . . . . . . . . . . . . . 106 591110 947 102 254 Other . . . . . . . . . . . . . . . . . . . . . 117 802112 354 108 677 1 093 131100 419 1 093 408 $5 105 398093 937 $5 181 665
THE CINCINNATI GAS & ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF INCOME (LOSS) (unaudited) Quarter Ended Six Months Ended Twelve Months Ended March 31 March 31June 30 June 30 June 30 1995 1994 1995 1994 (in thousands)1995 1994 (in thousands) Operating Revenues Electric . . . . . . . . . . . . . . . . . . . . . . . . $349 956 $333 390$336 523 $329 675 $686 479 $663 065 $1 362 353369 201 $1 315 002 Gas. . . . . . . . . . . . . . . . . . . . . . . . . . . 175 211 229 151 388 458 505 804 525 167 562 541346 801 Gas 56 975 61 565 232 186 290 716 383 868 497 774 393 498 391 240 918 665 953 781 1 750 811753 069 1 820 806844 575 Operating Expenses Fuel used in electric production . . . . . . . . . . . . 84 073 81 881464 79 548 168 537 161 429 332 578 342 781 Gas purchased 22 587 31 021 117 080 173 046 192 327 662 335 552 Gas purchased. . . . . . . . . . . . . . . . . . . . . . 94 493 142 025 200 761 300 399293 123 Purchased and exchanged power. . . . . . . . . . . . . .power 10 505 7 314 24 123912 4 217 21 369417 11 531 30 818 17 731 Other operation. . . . . . . . . . . . . . . . . . . . .operation 65 801 68 922 68 635 336 317 266 486 Maintenance. . . . . . . . . . . . . . . . . . . . . . . 23 533 25 942 104 401 113 731818 134 723 137 453 333 300 277 792 Maintenance 21 446 26 860 44 979 52 802 98 987 110 055 Depreciation . . . . . . . . . . . . . . . . . . . . . . 39 537 38 769 157 444 153 664687 39 051 79 224 77 820 158 080 155 407 Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 - Post-in-service deferred operating expenses - net. . . . 823 823net 822 822 1 645 1 645 3 290 (2 894)785 Phase-in deferred depreciation . . . . . . . . . . . . . - (1 313) (848) (6 662) Income taxes . . . . . . . . . . . . . . . . . . . . . . 43 346 42 444 105 030 117 197( 848) - (2 161) - (5 379) Taxes Federal and state income 24 217 22 225 67 563 64 669 107 022 119 764 State, local and other than income taxes. . . . . . . . . . . . . . 50 656331 49 933 198 104 186 059 415 888 456 453204 100 987 99 137 199 231 189 940 322 540 320 918 738 428 777 371 1 456 284457 906 1 484 901501 999 Operating Income . . . . . . . . . . . . . . . . . . . . . 109 279 106 088 294 527 335 90570 958 70 322 180 237 176 410 295 163 342 576 Other Income and Expenses - Net Allowance for equity funds used during construction. . . 596 458 2 109 2 638construction 281 434 877 892 1 956 1 696 Post-in-service carrying costs . . . . . . . . . . . . . - - - 8 100- - 4 072 Phase-in deferred return . . . . . . . . . . . . . . . . 2 134 7 621 9 864 31 2903 837 4 268 11 458 8 161 26 294 Write-off of a portion of Zimmer Station . . . . . . . .- - - - - (234 844) Income taxes - Related to the write-off of a portion of Zimmer Station . . . . . . . . . . . . . . . . . . .- - - - - 12 085 Other. . . . . . . . . . . . . . . . . . . . . . . . .Other 1 207620 1 856677 2 827 3 533 5 970913 9 914937 Other - net. . . . . . . . . . . . . . . . . . . . . . . 965 15 (5 776) (9 013) 4 902net ( 560) 119 405 134 (6 455) (7 474) 3 475 6 067 8 377 16 017 9 950 12 167 (179 830)575 (188 234) Income Before Interest . . . . . . . . . . . . . . . . . . 114 181 116 038 306 694 156 07574 433 76 389 188 614 192 427 304 738 154 342 Interest Interest on long-term debt . . . . . . . . . . . . . . . 37 111 39 623 147 874 157 59433 490 36 755 70 601 76 378 144 609 155 338 Other interest . . . . . . . . . . . . . . . . . . . . . 826 8811 421 821 2 776247 1 702 3 376 2 576989 Allowance for borrowed funds used during construction. . (980) (657)construction ( 900) ( 653) (1 880) (1 310) (3 300) (3 161)547) (2 589) 34 011 36 957 39 847 147 350 157 009923 70 968 76 770 144 438 155 738 Net Income (Loss). . . . . . . . . . . . . . . . . . . . . 77 224 76 191 159 344 (934) 40 422 39 466 117 646 115 657 160 300 (1 396) Preferred Dividend Requirement . . . . . . . . . . . . . . 5 362 6 2905 362 10 724 11 652 21 449 25 16024 233 Net Income (Loss) Applicable Toon Common Stock . . . . . . .Shares $ 71 86235 060 $ 69 90134 104 $106 922 $104 005 $ 137 895138 851 $ (26 094)(25 629) The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated financial statements.
THE CINCINNATI GAS & ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY (unaudited) Common Paid-in Retained Total Common Stock Capital Earnings Stock Equity (dollars in thousands) Quarter Ended March 31,June 30, 1995 Balance April 1, 1995 $762 136 $337 874 $ 453 174 $1 553 184 Net income 40 422 40 422 Dividends on preferred stock (5 362) (5 362) Dividends on common stock (55 900) (55 900) Other 1 261 (4 711) (3 450) Balance June 30, 1995 $762 136 $339 135 $ 427 623 $1 528 894 Quarter Ended June 30, 1994 Balance April 1, 1994 $752 236 $321 593 $ 488 513 $1 562 342 Net income 39 466 39 466 Issuance of 570,296 shares of common stock 4 848 7 565 12 413 Common stock issuance expenses 1 1 Dividends on preferred stock (5 362) (5 362) Dividends on common stock (38 100) (38 100) Other 553 (953) (400) Balance June 30, 1994 $757 084 $329 712 $ 483 564 $1 570 360 Six Months Ended June 30, 1995 Balance January 1, 1995. . . . . . . . . .1995 $762 136 $337 874 $ 432 962 $1 532 972 Net income . . . . . . . . . . . . . . . . 77 224 77 224117 646 117 646 Dividends on preferred stock . . . . . . . (5 362) (5 362)(10 724) (10 724) Dividends on common stock. . . . . . . . . (51 650) (51 650)stock (107 550) (107 550) Other 1 261 (4 711) (3 450) Balance March 31,June 30, 1995 . . . . . . . . . . $762 136 $337 874$339 135 $ 453 174 $1 553 184 Quarter427 623 $1,528 894 Six Months Ended March 31,June 30, 1994 Balance January 1, 1994. . . . . . . . . .1994 $748 528 $314 218 $ 456 511 $1 519 257 Net income . . . . . . . . . . . . . . . . 76 191 76 191115 657 115 657 Issuance of 436,2861,006,582 shares of common stock . . . . . . . . . . . . . . 3 708 7 384 11 0928 556 14 949 23 505 Common stock issuance expense. . . . . . . (9) (9)expenses (8) (8) Dividends on preferred stock . . . . . . . (6 290) (6 290)(11 652) (11 652) Dividends on common stock. . . . . . . . . (37 899) (37 899)stock (75 999) (75 999) Other 553 (953) (400) Balance March 31,June 30, 1994 . . . . . . . . . . $752 236 $321 593$757 084 $329 712 $ 488 513483 564 $1 562 342570 360 Twelve Months Ended March 31,June 30, 1995 Balance AprilJuly 1, 1994. . . . . . . . . . . $752 236 $321 5931994 $757 084 $329 712 $ 488 513483 564 $1 562 342570 360 Net income . . . . . . . . . . . . . . . . 159 344 159 344160 300 160 300 Issuance of 1,164,717594,421 shares of common stock . . . . . . . . . . . . . . 9 900 15 758 25 6585 052 8 193 13 245 Common stock issuance expense. . . . . . . (30) (30)expenses (31) (31) Dividends on preferred stock . . . . . . . (21 449) (21 449) Dividends on common stock. . . . . . . . . (172 721) (172 721) Other. . . . . . . . . . . . . . . . . . . 553 (513) 40stock (190 521) (190 521) Other 1 261 (4 271) (3 010) Balance March 31,June 30, 1995 . . . . . . . . . . $762 136 $337 874$339 135 $ 453 174427 623 $1 553 184528 894 Twelve Months Ended March 31,June 30, 1994 Balance AprilJuly 1, 1993. . . . . . . . . . . $738 147 $292 0431993 $741 765 $299 290 $ 662 545660 110 $1 692 735701 165 Net income . . . . . . . . . . . . . . . . (934) (934)(loss) (1 396) (1 396) Issuance of 1,657,5901,802,242 shares of common stock . . . . . . . . . . . . . . 14 08915 319 29 566 43 655883 45 202 Common stock issuance expense. . . . . . . (16) (16)expenses (14) (14) Dividends on preferred stock . . . . . . . (25 160) (25 160)(24 233) (24 233) Dividends on common stock. . . . . . . . . (147 938) (147 938)stock (149 964) (149 964) Other 553 (953) (400) Balance March 31,June 30, 1994 . . . . . . . . . . $752 236 $321 593$757 084 $329 712 $ 488 513483 564 $1 562 342570 360 The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated financial statements.
THE CINCINNATI GAS & ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Quarter Ended Six Months Ended Twelve Months Ended March 31 March 31June 30 June 30 June 30 1995 1994 1995 1994 1995 1994 (in thousands) OPERATING ACTIVITIES Operating Activities Net income (loss) . . . . . . . . . . . . . . . . . $ 77 22440 422 $ 76 19139 466 $ 159 344117 646 $ (934)115 657 $ 160 300 $ (1 396) Items providing (using) cash currently: Depreciation. . . . . . . . . . . . . . . . . . .Depreciation 39 537 38 769 157 444 153 664687 39 051 79 224 77 820 158 080 155 407 Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 - Deferred income taxes and investment tax credits - net . . . . . . . . . . . . . . . . . (2 056) 652 10 972 33 772(13 903) 11 918 (15 959) 12 570 (14 849) 21 239 Allowance for equity funds used during construction. . . . . . . . . . . . . . . . . . (596) (458) (2 109) (2 638) Deferred gas and electric fuel costs - net. . . . 6 984 7 604 (10 891) (7 469)construction (281) (434) (877) (892) (1 956) (1 696) Regulatory assets Post-in-service and phase-in cost deferrals . . (1 311) (8 111) (7 422) (48 946)312) (3 863) (2 623) (11 974) (4 871) (34 960) Deferred merger costs . . . . . . . . . . . . . (4 709) (4 370) 620 (11 722)(320) (2 143) (424) (6 513) 7 048 (9 475) Other . . . . . . . . . . . . . . . . . . . . . 9 205 2 686 (1 372) 5 7791 494 1 110 6 094 3 796 (5 593) 6 059 Write-off of a portion of Zimmer Station. . . . .Station - - - - - 234 844 Changes in current assets and current liabilities Restricted deposits . . . . . . . . . . . . . (1) 25(49) (2) 24 (4) 13667 Accounts receivable . . . . . . . . . . . . . 16 428 (8 613) 68 186 (28 654)34 818 63 043 51 246 54 430 39 961 (2 122) Materials, supplies, and fuel . . . . . . . . 18 867 43 148 (3 079) 20 012(7 444) (12 940) 11 423 30 208 2 417 21 618 Accounts payable. . . . . . . . . . . . . . . (30 544) (31 242) (7 395) (6 242)payable (4 443) 6 389 (34 987) (24 853) (18 227) 16 157 Accrued taxes and interest. . . . . . . . . . 27 362 24 088 11 485 8 983interest (21 734) (44 619) 5 628 (20 531) 34 370 1 765 Other items - net . . . . . . . . . . . . . . . . 2 997 1 793 88 843 20 462(16 244) 6 339 (6 263) 15 688 55 417 44 681 Net cash provided by (used in) operating activities. . . . . . . . . . . . 159 387 142 162 464 622 371 047 FINANCING ACTIVITIESactivities 53 012 103 268 212 399 245 430 414 366 452 188 Financing Activities Issuance of common stock. . . . . . . . . . . . . .stock - 11 083 25 628 43 63912 414 - 23 497 13 214 45 188 Issuance of long-term debt. . . . . . . . . . . . .debt 149 025 - 149 025 311 957 -149 025 608 957 Retirement of preferred stock . . . . . . . . . . . - - (40 400) - (40 400) - (40 400) Redemption of long-term debt. . . . . . . . . . . . (87 462)debt (129 734) - (217 196) (313 247) (87 737)(217 471) (607 689) Change in short-term debt . . . . . . . . . . . . . (1312 500 (8 000) (1 000) (25 500) (17 500) (12 500) 9 4258 000 (46 080) Dividends on preferred stock. . . . . . . . . . . .stock (5 362) (6 290) (21 449)(10 724) (12 580) (20 521) (25 160) Dividends on common stock . . . . . . . . . . . . . (51 650) (37 899) (172 721) (147 938)(55 900) (38 100) (107 550) (75 999) (190 521) (149 964) Net cash provided by (used in) financing activities. . . . . . . . . . . . (157 974) (51 896) (309 179) (118 766) INVESTING ACTIVITIESactivities (29 471) (80 376) (187 445) (132 272) (258 274) (215 148) Investing Activities Construction expenditures (less allowance for equity funds used during construction). . . . . . (35 727) (34 956) (190 725) (33 999) (44 055) (69 726) (79 011) (180 669) (197 513)180) Deferred demand-side management costs . . . . . . . (2 139)105) (1 423)279) (4 244) (2 702) (7 112)938) (4 380)502) Net cash provided by (used in) investing activities. . . . . . . . . . . . (37 866)activities (36 379) (197 837)104) (45 334) (73 970) (81 713) (188 607) (201 893)682) Net increase (decrease) in cash and temporary cash investments. . . . . . . . . . . . . (36 453) 53 887 (42 394) 50 388investments (12 563) (22 442) (49 016) 31 445 (32 515) 35 358 Cash and temporary cash investments at beginning of period . . . . . . . . . . . . . . . .16 063 58 457 52 516 4 570 58 457 8 06936 015 657 Cash and temporary cash investments at end of period . . . . . . . . . . . . . . . . . . . $ 16 0633 500 $ 58 45736 015 $ 16 0633 500 $ 58 45736 015 $ 3 500 $ 36 015 The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated financial statements.
THE CINCINNATI GAS & ELECTRIC COMPANY RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995 Kwh Sales Kwh sales for the quarter ended June 30, 1995, increased 9.9% over the same period of 1994, due in large part to non-firm power sales for resale reflecting increased third party short-term power sales to other utilities. Also contributing to the higher total kwh sales levels were increased sales to commercial and industrial customers. Higher commercial sales resulted from an increase in the average number of commercial customers. The increased industrial sales primarily reflect growth in the primary metals and chemical sectors. A slight decrease in retail kwh sales was attributable to lower domestic sales due to milder weather conditions. Mcf Sales and Transportation Mcf gas sales and transportation volumes for the second quarter of 1995 increased 8.5% as compared to the second quarter of 1994, reflecting higher sales to domestic customers attributable to an increase in the average number of customers. In addition, the continuing trend of industrial customers electing to purchase directly from suppliers created a significant increase in demand for transportation services. The increased transportation volume, primarily in the primary metals, transportation equipment, and food products sectors, more than offset a decline in industrial sales volumes. Revenues Electric Operating Revenues Electric operating revenues increased $7 million (2.1%) for the quarter ended June 30, 1995, over the comparable period of 1994. This increase primarily reflects the higher kwh sales associated with non-firm power sales for resale. An analysis of electric operating revenues is shown below: Quarter Ended June 30 (in millions) Operating revenues - June 30, 1994 $330 Increase (Decrease) due to change in: Price per kwh Retail (3) Sales for resale Non-firm power transactions (1) Total change in price per kwh (4) Kwh sales Retail (1) Sales for resale Non-firm power transactions 12 Total change in kwh sales 11 Operating revenues - June 30, 1995. $337 Gas Operating Revenues Gas operating revenues declined $5 million (7.5%) in the second quarter of 1995 when compared to the same period last year. This decline was primarily the result of a decrease in total retail sales volumes and the operation of fuel adjustment clauses reflecting a lower average cost of gas purchased. An increase in the relative volume of gas transported to gas sold, as previously discussed, also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs by CG&E. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold. Operating Expenses Fuel Used in Electric Production Electric fuel costs increased $4 million (6.2%) for the quarter as compared to last year. An analysis of these fuel costs is shown below: Quarter Ended June 30 (in millions) Fuel expense - June 30, 1994 $80 Increase (Decrease) due to change in: Price of fuel 1 Kwh generation 3 Fuel expense - June 30, 1995 $84 Gas Purchased Gas purchased for the quarter declined $8 million (27.2%) when compared to the same period last year. This decrease was attributable to a 9.9% decline in volumes purchased and a 19.2% lower average cost per Mcf of gas purchased. Purchased & Exchange Power Purchased and exchanged power for the quarter ended June 30, 1995, increased $7 million over the comparable period of 1994. This primarily reflects increased third party power sales to other utilities. Other Operation Other operation expense decreased $3 million (4.4%) for the quarter ended June 30, 1995, as compared to the same period last year due to several factors, including reductions in administrative and general expenses. In addition, lower gas and electric distribution expenses contributed to the decrease. Maintenance The decrease in maintenance expense of $5 million (20.2%) for the second quarter of 1995 as compared to the same period last year was primarily due to improved scheduling of routine maintenance on generating units. Lower maintenance costs on gas and electric distribution facilities also contributed to the decline. Amortization of Phase-In Deferrals Amortization of phase-in deferrals, which began in May of 1995, reflects the amortization of previously deferred depreciation and deferred return resulting from the three-year rate phase-in plan for Zimmer included in the May 1992 Order. These deferrals will be recovered over a seven-year period as contemplated in the May 1992 Order. Interest Interest charges decreased $3 million (7.9%) for the quarter ended June 30, 1995, from the same period of 1994. This decrease was due to a reduction in interest on long-term debt resulting from the refinancing of $215 million principal amount of first mortgage bonds, during 1995. RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995 Kwh Sales Kwh sales for the six months ended June 30, 1995, increased 8.2% over the same period of 1994, due in large part to increases in non-firm power sales for resale reflecting third party short-term power sales to other utilities. Also contributing to the higher total kwh sales levels were increased sales to commercial and industrial customers. Higher commercial sales resulted from an increase in the average number of commercial customers. The increased industrial sales primarily reflects growth in the primary metals and chemical sectors. A slight decrease in retail kwh sales was attributable to lower domestic sales due to milder weather conditions. Mcf Sales and Transportation Mcf gas sales and transportation volumes for the six months ended June 30, 1995, remained relatively constant when compared to the same period of 1994. Decreases in domestic and commercial sales volumes were attributable to milder weather conditions. A decrease in industrial sales was attributable to the trend of industrial customers electing to purchase directly from suppliers, creating additional demand for transportation services. This increased demand for transportation more than offset the decrease in industrial sales volumes and resulted from growth in the primary metals, transportation equipment, and food products sectors. Revenues Electric Operating Revenues Electric operating revenues increased $23 million (3.5%) for the six months ended June 30, 1995, over the comparable period of 1994. This increase primarily reflects the higher kwh sales associated with non-firm power sales for resale to other utilities and the retail electric rate increase which became effective May 1994. An analysis of electric operating revenues is shown below: Six Months Ended June 30 (in millions) Operating revenues - June 30, 1994 $663 Increase (Decrease) due to change in: Price per kwh Retail 4 Sales for resale Firm power obligations 1 Non-firm power transactions (1) Total change in price per kwh 4 Kwh sales Retail (4) Sales for resale Non-firm power transactions 24 Total change in kwh sales 20 Other (1) Operating revenues - June 30, 1995. $686 Gas Operating Revenues Gas operating revenues declined $59 million (20.1%) in the first six months of 1995 when compared to the same period last year. This decrease reflects the decline in total retail volumes sold and the operation of fuel adjustment clauses reflecting a lower average cost of gas purchased. An increase in the relative volume of gas transported to gas sold also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold. Operating Expenses Fuel Used in Electric Production Electric fuel costs increased $8 million (4.4%) for the first six months of 1995 as compared to last year. An analysis of these fuel costs is shown below: Six Months Ended June 30 (in millions) Fuel expense - June 30, 1994 $161 Increase (Decrease) due to change in: Price of fuel (1) Kwh generation 9 Fuel expense - June 30, 1995 $169 Gas Purchased Gas purchased for the first six months ended June 30, 1995, decreased $56 million (32.3%) when compared to the same period last year. This decrease was attributable to a 12.9% decline in volumes purchased and a 22.3% lower average cost per Mcf of gas purchased. Purchased and Exchange Power Purchased and exchanged power for the six months ended June 30, 1995, increased $10 million (85.7%) over the comparable period of 1994. This primarily reflects increased third party power sales to other utilities. Other Operation Other operation expenses decreased $3 million (2.0%) for the six months ended June 30, 1995, as compared to the same period last year due to several factors, including reductions in administrative and general expenses. In addition, a decrease in gas and electric distribution expenses contributed to the decrease. Maintenance The decrease in maintenance expense of $8 million (14.8%) for the six month period ended June 30, 1995, as compared to the same period last year was primarily due to improved scheduling of routine maintenance on generating units. Lower maintenance costs on gas and electric distribution facilities also contributed to the decline. Depreciation Depreciation expense increased $1 million (1.8%) for the six month period ended June 30, 1995, as compared to the same period last year. This increase primarily reflects additions to gas utility plant in service. Amortization of Phase-In Deferrals Amortization of phase-in deferrals, which began in May of 1995, reflects the amortization of previously deferred depreciation and deferred return resulting from the three-year rate phase-in plan for Zimmer included in the May 1992 Order. These deferrals will be recovered over a seven-year period as contemplated in the May 1992 Order. Other Income And Expenses - Net Phase-in Deferred Return Phase-in deferred return decreased $7 million (62.8%) for the first six months of 1995 from the comparable period of 1994, as a result of implementing the final increase of the three-year rate phase-in plan in May 1994. Interest Interest decreased $6 million (7.6%) for the six months ended June 30, 1995, from the same period of 1994. This decrease was due to a reduction in interest on long-term debt resulting from the refinancing of $215 million principal amount of first mortgage bonds, during 1995. Preferred Dividend Requirement The decrease in CG&E`s preferred dividend requirement of $1 million (8.0%) for the six months ended June 30, 1995, from the same period of 1994 was attributable to the early redemption on April 1, 1994 of 400,000 shares of $100 par value cumulative preferred stock (9.28% Series). RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 1995 Kwh Sales Kwh sales for the twelve months ended June 30, 1995, increased 1.7% when compared to the same period of 1994. This increase was primarily attributable to an increase in non-firm power sales for resale reflecting third party short-term power sales to other utilities. In addition, industrial sales increased due, in large part, to growth in the primary metals and chemicals sectors. Part of this increase was offset by a reduction in domestic sales volume attributable to milder weather conditions. Mcf Sales and Transportation Mcf gas sales and transportation volumes for the twelve months ended June 30, 1995, decreased 3.7% when compared to the same period of 1994. Decreases in domestic and commercial sales volumes were attributable to milder weather conditions. A decrease in industrial sales was attributable to the trend of industrial customers electing to purchase directly from suppliers, creating additional demand for transportation services. This increased demand for transportation more than offset the decrease in industrial sales volumes and resulted from growth in the primary metals, food products, chemicals, and paper products sectors. Revenues Electric Operating Revenues Electric operating revenues increased $22 million (1.7%) for the twelve months ended June 30, 1995, over the comparable period of 1994. This increase primarily reflects two electric retail rate increases granted by the PUCO. An increase in May 1994 was related to the phase-in plan included in the May 1992 Order and the second increase was effective in August 1993 pursuant to the August 1993 Order. Also contributing to the increase were the higher kwh sales associated with non-firm power sales for resale to other utilities. An analysis of electric operating revenues is shown below: Twelve Months Ended June 30 (in millions) Operating revenues - June 30, 1994 $1 347 Increase (Decrease) due to change in: Price per kwh Retail 22 Sales for Resale Firm power obligations 1 Non-firm power transactions 1 Total change in price per kwh 24 Kwh sales Retail (15) Sales for Resale Firm power obligations - Non-firm power transactions 14 Total change in kwh sales (1) Other (1) Operating revenues - June 30, 1995. $1 369 Gas Operating Revenues Gas operating revenues declined $114 million (22.9%) for the twelve months ended June 30, 1995, when compared to the same period last year. This decrease was primarily the result of decreases in sales volumes and fuel adjustment clauses reflecting a decline in the average cost of gas purchased. An increase in the relative volume of gas transported to gas sold also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold. Operating Expenses Fuel Used in Electric Production Electric fuel costs decreased $10 million (3.0%) for the twelve months ended as compared to last year. An analysis of these fuel costs is shown below: Twelve Months Ended June 30 (in millions) Fuel expense - June 30, 1994 $343 Increase (Decrease) due to change in: Price of fuel (8) kwh generation (2) Fuel expense - June 30, 1995 $333 Gas Purchased Gas purchased for the twelve months ended June 30, 1995, decreased $101 million (34.4%) when compared to the same period last year. This decrease was attributable to a 16.6% decline in volumes purchased and a 21.3% lower average cost per Mcf of gas purchased. Purchased and Exchanged Power Purchased and exchanged power for the twelve months ended June 30, 1995, increased $13 million (73.8%) over the comparable period of 1994. This primarily reflects increased third party power sales to other utilities. Other Operation Other operation expenses increased $56 million (20%) for the twelve months ended June 30, 1995, as compared to the same period last year due to several factors. The primary factor contributing to this increase was charges of approximately $52 million for merger-related costs and other expenditures which cannot be recovered from customers under the merger savings sharing mechanisms authorized by regulators. Maintenance The decrease in maintenance expense of $11 million (10%) for the twelve months ended June 30, 1995, as compared to the same period last year, was primarily due to improved scheduling of routine maintenance on generating units. Also contributing to the decrease was lower maintenance costs on gas and electric distribution facilities. Depreciation Depreciation expense increased $3 million (1.7%) for the twelve months ended June 30, 1995, as compared to the same period last year. This increase primarily reflects additions to gas utility plant in service. Amortization of Phase-In Deferrals Amortization of phase-in deferrals, which began in May of 1995, reflects the amortization of previously deferred depreciation and deferred return resulting from the three-year rate phase-in plan for Zimmer included in the May 1992 Order. These deferrals will be recovered over a seven-year period as contemplated by the May 1992 Order. Phase-in Deferred Depreciation Phase-in deferred depreciation resulted from the three-year rate phase-in plan for Zimmer included in the May 1992 Order. The change of $5 million for phase-in deferred depreciation for the twelve months ended June 30, 1995, versus the same period of 1994, reflects discontinuance of the deferral of depreciation when the final increase of the three-year rate phase-in plan became effective in May 1994. State, Local and Other Taxes State, local and other taxes increased $9 million (4.9%) for the twelve months ended June 30, 1995, over the comparable period of 1994, primarily due to increased property taxes resulting from higher property tax rates. Other Income And Expenses - Net Phase-in Deferred Return Phase-in deferred return decreased $18 million (69.0%) for the twelve months ended June 30, 1995, from the comparable period of 1994, as a result of implementing the final increase of the three-year rate phase-in plan in May 1994. Write-off of a Portion of Zimmer In November 1993, CG&E wrote off Zimmer costs disallowed from rates in the May 1992 Order. Interest Interest charges decreased $11 million (7.3%) for the twelve months ended June 30, 1995, from the same period of 1994. The decrease was due to a reduction in interest on long-term debt resulting from the refinancing of $215 and $305 million principal amount of long-term debt, during 1995 and 1994, respectively. Preferred Dividend Requirement The decrease of CG&E`s preferred dividend requirement of $3 million (11.5%) for the twelve months ended June 30, 1995, from the same period of 1994 was attributable to the early redemption on April 1, 1994 of 400,000 shares of $100 par value cumulative preferred stock (9.28% Series).
PSI ENERGY, INC. CONSOLIDATED BALANCE SHEETS ASSETS June 30 December 31 1995 1994 (unaudited) (dollars in thousands) Electric Utility Plant - original cost In service $3 862 703 $3 789 785 Accumulated depreciation 1 597 502 1 550 297 2 265 201 2 239 488 Construction work in progress 167 587 163 761 Total electric utility plant 2 432 788 2 403 249 Current Assets Cash and temporary cash investments 5 106 6 341 Restricted deposits 4 546 11 190 Accounts receivable less accumulated provision of $957,000 at June 30, 1995 and $440,000 at December 31, 1995 for doubtful accounts 48 112 36 061 Materials, supplies, and fuel - at average cost Fuel 119 808 113 861 Other materials and supplies 30 195 29 363 Prepayments and other 4 543 4 758 212 310 201 574 Other Assets Regulatory assets Post-in-service carrying costs and deferred depreciation 36 334 30 142 Deferred demand-side management costs 100 522 94 125 Amounts due from customers - income taxes 26 935 27 134 Deferred merger costs 37 630 37 645 Unamortized costs of reacquiring debt 35 737 36 998 Other 31 772 30 030 Other 84 452 84 027 353 382 340 101 $2 998 480 $2 944 924 The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
PSI ENERGY, INC. CAPITALIZATION AND LIABILITIES June 30 December 31 1995 1994 (unaudited) (dollars in thousands) Common Stock Equity Common stock - without par value; $.01 stated value; authorized shares - 60,000,000; outstanding shares - 53,913,701 at June 30, 1995 and December 31, 1994 $ 539 $ 539 Paid-in capital 389 316 389 309 Accumulated earnings subsequent to November 30, 1986, quasi-reorganization 549 202 493 103 Total common stock equity 939 057 882 951 Cumulative Preferred Stock Not subject to mandatory redemption 187 915 187 929 Long-term Debt 877 978 877 512 Total capitalization 2 004 950 1 948 392 Current Liabilities Long-term debt due within one year 60 400 60 400 Notes payable 209 500 193 573 Accounts payable 106 800 142 775 Refund due to customers 15 796 15 482 Litigation settlement 80 000 80 000 Accrued taxes 27 876 30 784 Accrued interest 26 012 25 685 Other 3 085 3 202 529 469 551 901 Other Liabilities Deferred income taxes 332 962 324 738 Unamortized investment tax credits 58 364 60 461 Accrued pension and other postretirement benefit costs 42 806 31 324 Other 29 929 28 108 464 061 444 631 $2 998 480 $2 944 924
PSI ENERGY, INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited) Quarter Ended Six Months Ended Twelve Months Ended June 30 June 30 June 30 1995 1994 1995 1994 1995 1994 (in thousands) Operating Revenues $289 743 $271 652 $588 791 $560 287 $1 142 016 $1 132 947 Operating Expenses Fuel used in electric production 84 730 88 013 186 566 182 918 391 171 375 955 Purchased and exchanged power 17 971 13 566 29 670 28 226 42 844 45 205 Other operation 57 944 54 119 105 759 100 615 218 266 195 666 Maintenance 22 215 22 316 43 004 42 376 94 777 85 418 Depreciation 28 528 33 771 62 447 67 203 132 963 132 807 Post-in-service deferred operating expenses - net ( 887) (2 342) (3 714) (4 622) (8 380) (8 754) Taxes Federal and state income 16 482 12 347 35 655 32 701 53 320 75 659 State, local and other 13 407 12 689 26 699 25 471 47 563 48 576 240 390 234 479 486 086 474 888 972 524 950 532 Operating Income 49 353 37 173 102 705 85 399 169 492 182 415 Other Income and Expenses - Net Allowance for equity funds used during construction 650 367 1 008 3 439 1 799 10 198 Post-in-service carrying costs 13 2 105 2 581 4 306 8 055 8 708 Income taxes 349 136 46 323 (1 589) 2 071 Other - net ( 384) (2 748) (2 296) (5 515) (4 674) (9 269) 628 ( 140) 1 339 2 553 3 591 11 708 Income Before Interest 49 981 37 033 104 044 87 952 173 083 194 123 Interest Interest on long-term debt 17 949 17 098 35 899 33 622 71 139 67 996 Other interest 3 896 3 286 7 873 5 382 17 783 7 427 Allowance for borrowed funds used during construction (1 086) (2 243) (2 417) (4 777) (6 995) (8 971) 20 759 18 141 41 355 34 227 81 927 66 452 Net Income 29 222 18 892 62 689 53 725 91 156 127 671 Preferred Dividend Requirement 3 295 3 295 6 590 6 591 13 181 13 999 Net Income on Common Shares $ 25 927 $ 15 597 $ 56 099 $ 47 134 $ 77 975 $ 113 672 The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
PSI ENERGY, INC. CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY (unaudited) Common Paid-in Accumulated Total Common Stock Capital Earnings Stock Equity (dollars in thousands) Quarter Ended June 30, 1995 Balance April 1, 1995 $539 $389 309 $523 275 $913 123 Net income 29 222 29 222 Dividends on preferred stock (3 295) (3 295) Other 7 7 Balance June 30, 1995 $539 $389 316 $549 202 $939 057 Quarter Ended June 30, 1994 Balance April 1, 1994 $539 $229 282 $498 809 $728 630 Net income 18 892 18 892 Dividends on preferred stock (3 295) (3 295) Dividends on common stock (16 622) (16 622) Other 5 5 Balance June 30, 1994 $539 $229 287 $497 784 $727 610 Six Months Ended June 30, 1995 Balance January 1, 1995 $539 $389 309 $493 103 $882 951 Net income 62 689 62 689 Dividends on preferred stock (6 590) (6 590) Other 7 7 Balance June 30, 1995 $539 $389 316 $549 202 $939 057 Six Months Ended June 30, 1994 Balance January 1, 1994 $539 $229 288 $483 242 $713 069 Net income 53 725 53 725 Dividends on preferred stock (6 591) (6 591) Dividends on common stock (32 592) (32 592) Other (1) (1) Balance June 30, 1994 $539 $229 287 $497 784 $727 610 Twelve Months Ended June 30, 1995 Balance July 1, 1994 $539 $229 287 $497 784 $727 610 Net income 91 156 91 156 Dividends on preferred stock (13 181) (13 181) Dividends on common stock (26 550) (26 550) Capital contribution from parent company 159 999 159 999 Other 30 (7) 23 Balance June 30, 1995 $539 $389 316 $549 202 $939 057 Twelve Months Ended June 30, 1994 Balance July 1, 1993 $539 $230 936 $448 476 $679 951 Net income 127 671 127 671 Dividends on preferred stock (14 081) (14 081) Dividends on common stock (64 358) (64 358) Other (1 649) 76 (1 573) Balance June 30, 1994 $539 $229 287 $497 784 $727 610 The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
PSI ENERGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Quarter Ended Six Months Ended Twelve Months Ended June 30 June 30 June 30 1995 1994 1995 1994 1995 1994 (in thousands) Operating Activities Net income $ 29 222 $ 18 892 $ 62 689 $ 53 725 $ 91 156 $ 127 671 Items providing (using) cash currently: Depreciation 28 528 33 771 62 447 67 203 132 963 132 807 Deferred income taxes and investment tax credits - net 1 087 12 760 6 597 20 703 10 021 35 002 Allowance for equity funds used during construction (650) (367) (1 008) (3 439) (1 799) (10 198) Regulatory assets Post-in-service carrying costs and deferred operating expenses (830) (4 447) (6 192) (8 928) (16 332) (17 462) Deferred merger costs (2 490) (2 034) (2 145) (7 178) (18 267) (11 913) Other 201 5 430 184 4 547 8 1 283 Changes in current assets and current liabilities Restricted deposits - (81) 16 (150) 10 190 (345) Accounts receivable (14 278) (5 352) (12 051) (19 478) 23 (24 202) Income tax refunds - 5 500 - 25 100 3 800 14 200 Materials, supplies, and fuel (4 535) (32 205) (6 779) (55 350) (18 126) (35 663) Accounts payable 7 138 11 294 (35 975) (20 925) (16 368) 25 879 Refund due to customers 195 (9 740) 314 (44 224) (21 812) (112 392) Advance under accounts receivable purchase agreement - - - (49 940) - - Accrued taxes and interest (13 311) (10 468) (2 581) 1 571 (7 080) 31 171 Other items - net 15 146 2 616 13 291 (4 824) 13 143 (3 434) Net cash provided by (used in) operating activities 45 423 25 569 78 807 (41 587) 161 520 152 404 Financing Activities Issuance of preferred stock - - - - - 59 475 Issuance of long-term debt - - - 49 068 59 910 212 084 Funds on deposit from issuance of long-term debt 899 3 224 6 628 12 401 22 124 34 123 Retirement of preferred stock (7) (6) (7) (10) (23) (60 117) Redemption of long-term debt - - (55) - (215) (207 880) Change in short-term debt 1 399 79 744 15 927 166 299 (83 500) 233 199 Dividends on preferred stock (3 295) (3 295) (6 590) (6 591) (13 181) (14 081) Dividends on common stock - (16 622) - (32 592) (26 550) (64 358) Contribution from parent company - - - - 159 999 7 Net cash provided by (used in) financing activities (1 004) 63 045 15 903 188 575 118 564 192 452 Investing Activities Utility plant additions (49 001) (77 366) (91 846) (134 478) (251 329) (321 362) Allowance for equity funds used during construction 650 367 1 008 3 439 1 799 10 198 Deferred demand-side management costs (1 763) (9 095) (5 107) (15 514) (30 465) (36 196) Net cash provided by (used in) investing activities (50 114) (86 094) (95 945) (146 553) (279 995) (347 360) Net increase (decrease) in cash and temporary cash investments (5 695) 2 520 (1 235) 435 89 (2 504) Cash and temporary cash investments at beginning of period 10 801 2 497 6 341 4 582 5 017 7 521 Cash and temporary cash investments at end of period $ 5 106 $ 5 017 $ 5 106 $ 5 017 $ 5 106 $ 5 017 The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
PSI ENERGY, INC. RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995 Kwh Sales Kwh sales for the quarter ended June 30, 1995, decreased 2.5% when compared to the same period last year. This decrease primarily reflects a decline in short-term sales to other utilities. In addition, milder weather in the period led to a decrease in domestic and commercial sales. These decreases were partially offset by increased industrial sales which reflected growth in the primary metals sector. Operating Revenues Total operating revenues increased $18 million (6.7%) in the second quarter of 1995 as compared to the same period last year. This increase primarily reflects the 4.3% retail rate increase approved in the February 1995 Order and a 1.9% rate increase for carrying costs on CWIP property which was approved by the IURC on March 9, 1995. In addition, the operation of fuel clause adjustment factors reflecting a higher average cost of kwh generated during the period led to an increase in operating revenues. These increases were partially offset by the decreased kwh sales previously discussed. An analysis of operating revenues is shown below: Quarter Ended June 30 (in millions) Operating revenues - June 30, 1994 $272 Increase (Decrease) due to change in: Price per kwh Retail 21 Sales for resale Firm power obligations (1) Non-firm power transactions 1 Total change in price per kwh 21 Kwh sales Retail 2 Sales for resale Firm power obligations (1) Non-firm power transactions (4) Total change in kwh sales (3) Operating revenues - June 30, 1995 $290 Operating Expenses Fuel Used in Electric Production Fuel costs, PSI`s largest operating expense, decreased $3 million (3.7%) for the quarter as compared to the same period last year. An analysis of fuel costs is shown below: Quarter Ended June 30 (in millions) Fuel expense - June 30, 1994 $88 Increase (Decrease) due to change in: Price of fuel 3 Kwh generation (6) Fuel expense - June 30, 1995 $85 Purchased and Exchanged Power For the quarter ended June 30, 1995, purchased and exchanged power increased $4 million (32.5%) as compared to the same period last year, reflecting increased purchases of power to meet PSI`s own load. This increase was partially offset by a decline in third party short-term power sales to other utilities. Other Operation Other operation expenses for the quarter ended June 30, 1995, increased $4 million (7.1%) as compared to the same period last year. This increase was primarily due to the inclusion of postretirement benefits in rates on a accrual basis, an increase in the level of ongoing DSM expenses, and the amortization of deferred DSM costs, all of which were authorized in the February 1995 Order. Partially offsetting the increase was the May 1994 write-off of previously deferred litigation expenses. Depreciation Depreciation expense decreased $5 million (15.5%) for the quarter ended June 30, 1995, as compared to the same period last year. This decrease primarily reflects the adoption of lower depreciation rates effective in March 1995 pursuant to the February 1995 Order. The decrease was partially offset by additions to utility plant in service. RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995 Kwh Sales For the six months ended June 30, 1995, kwh sales decreased 5.1% when compared to the same period last year. The decrease primarily reflects a decline in short-term sales to other utilities. In addition, milder weather in the period led to a decrease in domestic and commercial sales. Increased industrial sales reflecting growth in the primary metals sector partially offset the decrease. Operating Revenues Total operating revenues increased $29 million (5.1%) for the six months ended June 30, 1995, when compared to the same period last year. This increase primarily reflects the 4.3% retail rate increase and 1.9% rate increase for carrying costs on CWIP property as previously discussed. In addition, changes in fuel clause adjustment factors reflecting increases in the average cost of kwh generated led to an increase in operating revenues during the period. These increases were partially offset by the decrease in kwh sales. An analysis of operating revenues is shown below: Six Months Ended June 30 (in millions) Operating revenues - June 30, 1994 $ 560 Increase (Decrease) due to change in: Price per kwh Retail 38 Sales for resale Non-firm power transactions 5 Total change in price per kwh 43 Kwh sales Retail 2 Sales for resale Firm power obligations (5) Non-firm power transactions (13) Total change in kwh sales (16) Other 2 Operating revenues - June 30, 1995 $ 589 Operating Expenses Fuel Used in Electric Production Fuel costs for the six months ended June 30, 1995, increased $4 million (2.0%) when compared to the same period last year. An analysis of fuel costs is shown below: Six Months Ended June 30 (in millions) Fuel expense - June 30, 1994 $183 Increase (Decrease) due to change in: Price of fuel 13 Kwh generation (9) Fuel expense - June 30, 1995 $187 Other Operation Other operation expenses increased $5 million (5.1%) for the six months ended June 30, 1995, as compared to the same period last year. This increase was primarily the result of the inclusion of postretirement benefits in rates on an accrual basis, an increase in the level of ongoing DSM expenses, and the amortization of deferred DSM costs, all of which were authorized in the February 1995 Order. Partially offsetting the increase was the May 1994 write-off of previously deferred litigation expenses. Depreciation Depreciation expense for the six months ended June 30, 1995, decreased $5 million (7.1%) when compared to the same period last year. This decrease, which was primarily driven by the adoption of lower depreciation rates effective March 1995 pursuant the February 1995 Order, was partially offset by additions to utility plant in service. RESULTS OF OPERATIONS FOR TWELVE MONTHS ENDED JUNE 30, 1995 Kwh Sales Kwh sales for the twelve months ended June 30, 1995, decreased 2.6% when compared to the same period last year. The decrease primarily reflects the milder weather conditions experienced in the period as compared to the same period last year. In addition, short-term sales to other utilities also decreased during the period. These decreases were partially offset by an increase in industrial sales reflecting growth in the primary metals and transportation equipment sectors. Operating Revenues Total operating revenues increased $9 million (.8%) for the twelve months ended June 30, 1995, as compared to the same period last year. This increase was driven by the 4.3% retail rate increase and the 1.9% rate increase for carrying costs on CWIP property as previously discussed. In addition, the operation of fuel clause adjustment factors reflecting increases in the average cost of kwh generated led to an increase in operating revenues for the period. These increases were partially offset by lower sales due to the milder weather conditions. An analysis of operating revenues is shown below: Twelve Months Ended June 30 (in millions) Operating revenues - June 30, 1994 $1 133 Increase (Decrease) due to change in: Price per kwh Retail 26 Sales for resale Firm power obligations 1 Non-firm power transactions 2 Total change in price per kwh 29 Kwh sales Retail (5) Sales for resale Firm power obligations (9) Non-firm power transactions (7) Total change in kwh sales (21) Other 1 Operating revenues - June 30, 1995 $1 142 Operating Expenses Fuel Used in Electric Production Fuel costs for the twelve months ended June 30, 1995, increased $15 million (4.0%) as compared to the same period last year. An analysis of fuel costs is shown below: Twelve Months Ended June 30 (in millions) Fuel expense - June 30, 1994 $376 Increase (Decrease) due to change in: Price of fuel 19 Kwh generation (4) Fuel expense - June 30, 1995 $391 Purchased and Exchanged Power For the twelve months ended June 30, 1995, purchased and exchanged power decreased $2 million (5.2%) when compared to the same period last year. The decrease primarily resulted from a decline in third party short-term power sales to other utilities. Other Operation Other operation expenses for the twelve months ended June 30, 1995, increased $23 million (11.6%) as compared to the same period last year. This increase reflects the inclusion of postretirement benefits in rates on an accrual basis, an increase in the level of ongoing DSM expenses, and the amortization of deferred DSM costs, all of which were authorized in the February 1995 Order. In addition, charges for severance benefits to former officers of approximately $10 million were expensed in December 1994. These increases were partially offset by the May 1994 write-off of previously deferred litigation expenses. Maintenance Maintenance expenses for the twelve months ended June 30, 1995, as compared to the same period last year increased $9 million (11.0%). This increase was primarily driven by increased maintenance on a number of generating units. Other Income and Expenses - Net Allowance for Equity Funds Used During Construction The equity component of AFUDC decreased $8 million (82.4%) for the twelve month period ended June 30, 1995, as compared to the same period last year. This decrease was due primarily to an increase in borrowings of short-term debt which resulted in a decrease in the equity component of the AFUDC rate. In addition, a scrubber at Gibson was placed in service in September 1994 which resulted in a large decrease in CWIP for the period. Interest Other Interest Other interest increased $10 million over the same period last year. The increase was driven primarily by higher interest rates and an increase in the average short-term debt outstanding.
THE UNION LIGHT, HEAT AND POWER COMPANY BALANCE SHEETS ASSETS June 30 December 31 1995 1994 (unaudited) (dollars in thousands) Utility Plant - original cost In service Electric $184 035 $179 098 Gas 137 949 134 103 Common 19 082 19 122 341 066 332 323 Accumulated depreciation 107 847 104 113 233 219 228 210 Construction work in progress 7 266 8 638 Total utility plant 240 485 236 848 Current Assets Cash and temporary cash investments 3 248 1 071 Accounts receivable less accumulated provision of $863,000 at June 30, 1995, and $457,000 at December 31, 1995, for doubtful accounts 25 801 33 892 Materials, supplies, and fuel - at average cost Gas stored for current use 4 268 6 216 Other materials and supplies 1 270 1 406 Property taxes applicable to subsequent year 2 258 2 200 Prepayments and other 520 593 37 365 45 378 Other Assets Regulatory assets Deferred merger costs 1 785 1 785 Unamortized costs of reacquiring debt 971 - Other 2 633 2 718 Other 542 399 5 931 4 902 $283 781 $287 128 The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial statements.
THE UNION LIGHT, HEAT AND POWER COMPANY CAPITALIZATION AND LIABILITIES June 30 December 31 1995 1994 (unaudited) Common Stock Equity Common stock - $15.00 par value; authorized shares - 1,000,000; outstanding shares - 585,333 at June 30, 1995 and December 31, 1994 $ 8 780 $ 8 780 Paid-in capital 18 839 18 839 Retained earnings 80 002 74 203 Total common stock equity 107 621 101 822 Long-term Debt 74 438 89 238 Total capitalization 182 059 191 060 Current Liabilities Notes payable 13 500 14 500 Accounts payable 22 895 21 655 Accrued taxes 5 126 2 876 Accrued interest 2 032 2 123 Other 4 605 4 123 48 158 45 277 Other Liabilities Deferred income taxes 22 120 23 226 Unamortized investment tax credits 5 222 5 364 Accrued pension and other postretirement benefit costs 11 399 10 356 Income taxes refundable through rates 5 188 4 282 Other 9 635 7 563 53 564 50 791 $283 781 $287 128
Operating Revenues Electric $ 47 823 $43 736 $ 87 382 $ 88 926 $176 020 $181 006 Gas 9 372 9 587 39 875 46 387 65 459 78 964 57 195 53 323 127 257 135 313 241 479 259 970 Operating Expenses Electricity purchased from parent company for resale 36 936 32 552 66 975 68 107 133 755 138 310 Gas purchased 4 156 4 800 21 716 27 209 35 015 45 007 Other operation 7 258 7 721 15 053 15 341 32 001 31 349 Maintenance 984 1 489 2 137 2 742 4 868 6 268 Depreciation 2 871 2 633 5 646 5 249 11 041 10 592 Taxes Federal and state income 873 446 3 961 4 227 5 076 6 381 State, local and other 971 990 1 979 2 015 3 966 3 712 54 049 50 631 117 467 124 890 225 722 241 619 Operating Income 3 146 2 692 9 790 10 423 15 757 18 351 Other Income And Expenses - Net Allowance for equity funds used during construction 67 13 56 11 123 32 Income taxes (34) 14 (38) 44 (26) 79 Other - net 71 (34) 67 335 (32) 49 104 (7) 85 390 65 160 Income Before Interest 3 250 2 685 9 875 10 813 15 822 18 511 Interest Interest on long-term debt 1 914 2 039 3 953 4 082 8 032 8 159 Other interest 54 64 219 217 397 487 Allowance for borrowed funds used during construction (31) (45) (96) (75) (204) (143) 1 937 2 058 4 076 4 224 8 225 8 503 Net Income $ 1 313 $ 627 $ 5 799 $ 6 589 $ 7 597 $ 10 008 The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial statements.
THE UNION LIGHT, HEAT AND POWER COMPANY STATEMENTS OF CHANGES IN COMMON STOCK EQUITY (unaudited) Common Paid-in Retained Total Common Stock Capital Earnings Stock Equity (in thousands) Quarter Ended June 30, 1995 Balance April 1, 1995 $8 780 $18 839 $78 689 $106 308 Net income 1 313 1 313 Balance June 30, 1995 $8 780 $18 839 $80 002 $107 621 Quarter Ended June 30, 1994 Balance April 1, 1994 $8 780 $18 839 $75 289 $102 908 Net income 627 627 Balance June 30, 1994 $8 780 $18 839 $75 916 $103 535 Six Months Ended June 30, 1995 Balance January 1, 1995 $8 780 $18 839 $74 203 $101 822 Net income 5 799 5 799 Balance June 30, 1995 $8 780 $18 839 $80 002 $107 621 Six Months Ended June 30, 1994 Balance January 1, 1994 $8 780 $18 839 $69 327 $ 96 946 Net income 6 589 6 589 Balance June 30, 1994 $8 780 $18 839 $75 916 $103 535 Twelve Months Ended June 30, 1995 Balance July 1, 1994 $8 780 $18 839 $75 916 $103 535 Net income 7 597 7 597 Dividends on common stock (3 511) (3 511) Balance June 30, 1995 $8 780 $18 839 $80 002 $107 621 Twelve Months Ended June 30, 1994 Balance July 1, 1993 $8 780 $18 839 $68 835 $ 96 454 Net income 10 008 10 008 Dividends on common stock (2 927) (2 927) Balance June 30, 1994 $8 780 $18 839 $75 916 $103 535 The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial statements.
THE UNION LIGHT, HEAT AND POWER COMPANY STATEMENTS OF CASH FLOWS (unaudited) Quarter Ended Six Months Ended Twelve Months Ended June 30 June 30 June 30 1995 1994 1995 1994 1995 1994 (in thousands) Operating Activities Net income $ 1 313 $ 627 $ 5 799 $ 6 589 $ 7 597 $ 10 008 Items providing (using) cash currently: Depreciation 2 871 2 633 5 646 5 249 11 041 10 592 Deferred income taxes and investment tax credits - net 506 1 111 (342) 210 1 490 1 168 Allowance for equity funds used during construction (67) (13) (56) (11) (123) (32) Regulatory assets Deferred merger costs - - - - (1 785) - Other 43 43 85 85 170 201 Changes in current assets and current liabilities Accounts receivable 2 996 9 983 8 091 8 385 8 507 (1 778) Materials, supplies, and fuel (1 391) (2 220) 2 084 2 410 717 476 Accounts payable 5 248 539 1 240 (3 922) 2 785 2 132 Accrued taxes and interest (1 634) (1 453) 2 159 3 604 1 862 (178) Other items - net (409) (54) 3 973 3 588 3 165 5 506 Net cash provided by (used in) operating activities 9 476 11 196 28 679 26 187 35 426 28 095 Financing Activities Redemption of long-term debt (15 734) - (15 734) - (15 734) (6 500) Change in short-term debt 12 500 (8 000) (1 000) (19 500) 8 000 2 000 Dividends on common stock - - - - (3 511) (2 927) Net cash provided by (used in) financing activities (3 234) (8 000) (16 734) (19 500) (11 245) (7 427) Investing Activities Construction expenditures (less allowance for equity funds used during construction) (4 535) (4 458) (9 768) (8 494) (21 603) (21 716) Net cash provided by (used in) investing activities (4 535) (4 458) (9 768) (8 494) (21 603) (21 716) Net increase (decrease) in cash and temporary cash investments 1 707 (1 262) 2 177 (1 807) 2 578 (1 048) Cash and temporary cash investments at beginning of period 1 541 1 932 1 071 2 477 670 1 718 Cash and temporary cash investments at end of period $ 3 248 $ 670 $ 3 248 $ 670 $ 3 248 $ 670 The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial statements.
THE UNION LIGHT, HEAT AND POWER COMPANY RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995 Kwh Sales Kwh sales increased for the quarter ended June 30, 1995, as a result of increased sales to commercial and industrial customers. The increase in commercial sales partly resulted from an increase in the average number of customers. The increased industrial sales reflect growth in the primary metals and paper and allied products sectors. Mcf Sales and Transportation Mcf gas sales and transportation volumes for the second quarter of 1995 increased 9.3% as compared to the second quarter of 1994, reflecting higher sales to domestic customers attributable to an increase in the average number of customers. In addition, the continuing trend of industrial customers electing to purchase directly from suppliers created an increase in demand for transportation services. The increased transportation volumes were primarily due to growth in the primary metals, paper and allied products, and food products sectors. Revenues Electric Operating Revenues Electric operating revenues increased $4.1 million (9.3%) for the quarter ended June 30, 1995, over the comparable period of 1994. This increase primarily reflects the previously discussed increases in kwh sales. Operating Expenses Electricity Purchased from Parent Company for Resale Electricity purchased expense, ULH&P`s largest operating expense, increased $4.4 million (13.5%) for the quarter as compared to the same period last year. An analysis of these costs is shown below: Quarter Ended June 30 (in thousands) Electricity purchased expense - June 30, 1994 $32 552 Increase (Decrease) due to change in: Price of electricity (2 944) Kwh purchased 7 328 Electricity purchased expense - June 30, 1995 $36 936 Gas Purchased Gas purchased for the quarter decreased $.6 million (13.4%) when compared to the same period last year. This decrease was attributable to a 16.1% decline in the average cost per Mcf purchased which was partially offset by an increase of 3.2% in volumes purchased. Other Operation Other operation expense decreased $.5 million (6.0%) for the quarter ended June 30, 1995, as compared to the same period last year due to several factors, including reductions in administrative and general expenses and decreased gas and electric distribution expenses. Maintenance The decrease in maintenance expense of $.5 million (33.9%) for the second quarter of 1995 as compared to the same period last year was primarily due to lower maintenance costs on gas and electric distribution facilities. RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995 Kwh Sales Kwh sales for the six months ended June 30, 1995, increased 1.5% over the same period of 1994, primarily as a result of increased commercial and industrial sales volumes. A decline in domestic sales volumes due to milder weather partially offset the increase. The higher commercial sales resulted from an increase in the average number of customers. The increased industrial sales reflect continued growth in the primary metals sector. Mcf Sales and Transportation Mcf gas sales and transportation volumes for the six months ended June 30, 1995, decreased 2.6% as compared to the same period of 1994, as a result of decreased sales volumes to domestic, commercial and industrial customers. Milder weather contributed to the decrease in domestic and commercial sales. A decrease in industrial sales was attributable to the trend of industrial customers electing to purchase directly from suppliers, creating additional demand for transportation services provided by ULH&P. The significant increase in transportation volumes more than offset the decline in industrial sales, and was primarily attributable to growth in the paper and allied products and primary metals sectors. Revenues Electric Operating Revenues Electric operating revenues decreased $1.5 million (1.7%) for the six months ended June 30, 1995, over the comparable period of 1994. This decrease was due to the operation of fuel adjustment clauses reflecting a lower average cost of electricity purchased. Gas Operating Revenues Gas operating revenues declined $6.5 million (14.0%) in the first six months of 1995 when compared to the same period last year. This decrease was the result of the previously discussed decline in total volumes sold and the operation of fuel adjustment clauses reflecting a decline in the average cost of gas purchased. An increase in the relative volume of gas transported to gas sold, also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold. Operating Expenses Electricity Purchased from Parent Company for Resale Electricity purchased expense, ULH&P`s largest expense, decreased $1.1 million (1.7%) for the first six months of 1995 as compared to last year. An analysis of these costs is shown below: Six Months Ended June 30 (in thousands) Electricity purchased expense - June 30, 1994 $68 107 Increase (Decrease) due to change in: Price of electricity (5 561) Kwh purchased 4 429 Electricity purchased expense - June 30, 1995 $66 975 Gas Purchased Gas purchased expense for the first six months decreased $5.5 million (20.2%) when compared to the same period last year. The decrease was attributable to a 7.9% decline in volumes purchased and a 13.3% decrease in the average cost per Mcf of gas purchased. Maintenance The decrease in maintenance expense of $.6 million (22.1%) for the six months ended June 30, 1995, as compared the same period last year was due primarily to lower maintenance costs on gas and electric distribution facilities. RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 1995 Kwh Sales Kwh sales for the twelve months ended June 30, 1995, remained relatively constant when compared to the same period of 1994, increasing only .9%. A decline in domestic sales volumes due to milder weather was offset by increases in commercial and industrial sales. The higher commercial sales resulted from an increase in the average number of customers. The increased industrial sales reflect growth in the primary metals and paper and allied products sectors. Mcf Sales and Transportation Mcf gas sales and transportation volumes for the twelve months ended June 30, 1995, decreased 6.8% when compared to the same period of 1994, as a result of lower domestic, commercial, and industrial sales. Milder weather contributed to the decrease in domestic and commercial sales, while industrial sales decreased as customers elected to purchase directly from suppliers, creating additional demand for transportation services provided by ULH&P. The increase in transportation volumes more than offset the lower industrial sales, and was primarily attributable to growth in the primary metals, paper and allied products, and food products sectors. Revenues Electric Operating Revenues Electric operating revenues decreased $5.0 million (2.8%) for the twelve months ended June 30, 1995, over the comparable period of 1994. This decrease was attributable to the operation of adjustment clauses reflecting a decline in the average cost of electricity purchased. Gas Operating Revenues Gas operating revenues declined $13.5 million (17.1%) for the twelve months ended June 30, 1995, when compared to the same period last year. This decrease was the result of the aforementioned decline in volumes sold and transported and the operation of fuel adjustment clauses reflecting a lower average cost of gas purchased. An increase in the relative volume of gas transported to gas sold, also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold. Operating Expenses Electricity Purchased from Parent Company for Resale Electricity purchased expense, ULH&P`s largest expense, decreased $4.6 million (3.3%) for the twelve months ended June 30, 1995, as compared to last year. An analysis of these costs is shown below: Twelve Months Ended June 30 (in thousands) Electricity purchased expense - June 30, 1994 $138,310 Increase (Decrease) due to change in: Price of electricity (9,333) Kwh purchased 4,778 Electricity purchased expense - June 30, 1995 $133,755 Gas Purchased Gas purchased expense for the twelve months ended June 30, 1995, decreased $10.0 million (22.2%) when compared to the same period last year. This decrease was attributable to an 11.3% decline in volumes purchased and a 12.3% decrease in the average cost per Mcf of gas purchased. Other Operation Other operation expenses increased $.6 million (2.1%) for the twelve months ended June 30, 1995, as compared to the same period last year, primarily due to recognition of nonrecurring charges for merger-related costs and other costs ULH&P does not expect to recover from customers, and increased electric and gas distribution expenses. Maintenance The decrease in maintenance expense of $1.4 million (22.3%) for the twelve months ended June 30, 1995, as compared the same period last year was due primarily to lower maintenance costs on gas and electric distribution facilities. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Cinergy, CG&E, PSI, and ULH&P 1. These Consolidated Financial Statements reflect all adjustments (which include only normal, recurring adjustments) necessary in the opinion of The Cincinnati Gas & Electric Company (CG&E), a subsidiary of CINergy Corp.,these companies for a fair presentation of the interim results. These statements should be read in conjunction with CG&E`the financial statements and the notes thereto included in each registrant`s 1994 Annual Report on Form 10-K (1994 Form 10-K) (Commission File Number 1-1232).for the year ended December 31, 1994. Certain amounts in the 1994 Consolidated Financial Statements have been reclassified to conform to the 1995 presentation. Cinergy and PSI 2. As discussed in Cinergy`s and PSI`s 1994 Forms 10-K, in July 1994, PSI filed a petition with the IURC for a retail rate increase. On May 15, 1995, PSI filed testimony with the IURC supporting a 12.8% ($127.9 million) rate increase request. Major components of the increase include, among other things, the costs of the Clean Coal Project and a scrubber at Gibson. An order is anticipated in the second quarter of 1996. PSI cannot predict what action the IURC may take with respect to this proposed rate increase. Cinergy and CG&E 3. On July 17, 1995, CG&E filed a request with the PUCO to begin settlement discussions on a gas rate increase with intervenors who have participated in previous rate applications and represent the various classes of gas customers served by CG&E. The proposed increase, estimated to be $25 million, is expected to increase annual revenues approximately 7%. The proposed increase, to be effective in late 1996, is requested, in part, to recover capital investment made since the last gas rate increase in 1993. Also, the request includes a proposal to initiate a pilot program that would allow residential customers to choose their gas supplier and have CG&E transport the gas for them. A full rate application is expected to be filed with the PUCO on December 1, 1995. CG&E cannot predict the outcome of these settlement discussions nor what actions the PUCO may take with respect to the proposed rate increase. Cinergy, CG&E, PSI, and ULH&P 4. In March 1995, the FASB issued SFAS 121 which will be effective for Cinergy in January 1996. The new accounting standard requires impairment losses on long-lived assets be recognized when an asset`s book value exceeds its expected future cash flows. Based on the regulatory environment in which Cinergy currently operates, SFAS 121 is not expected to have an adverse impact on financial condition or results of operations upon adoption. However, this conclusion may change in the future as deregulation, competitive factors, and potential restructuring influence the electric utility industry. Cinergy and CG&E 5. All outstanding shares of CG&E`s Cumulative Preferred Stock, 7.44% Series and 9.15% Series, totaling $90 million, were redeemed at a per share price of $101 and $106.10, respectively, on July 1, 1995. Cinergy and CG&E 6. (a) As previously discussed in theCG&E`s 1994 Form 10-K, CG&E redeemed $59 million principal amount of its 9.70% first mortgage bonds (due June 15, 2019) on April 30, 1995, and $55 million principal amount of its 10 1/8% first mortgage bonds (due May 1, 2020) on May 1, 1995. Additionally, $41 million principal amount of the 9.70% first mortgage bonds and $45 million principal amount of the 10 1/8% first mortgage bonds were retired on March 31, 1995. The Union Light, HeatCinergy, CG&E, and Power Company (ULH&P), a subsidiary of CG&E, announced its intention to redeemULH&P (b) ULH&P redeemed $5 million principal amount of its 10.25% first mortgage bonds (due June 1, 2020) at par with cash deposited in the Maintenance and Replacement Fund, and to redeem the remaining amount of such bonds at the redemption price of 107.34% on June 1, 1995. 3.On September 1, 1995, ULH&P will redeem all of its 9.70% Series first mortgage bonds due 2019 at a redemption price of 106.51%. Cinergy and CG&E 7. (a) CG&E received authority from the SEC in May 1995, for a shelf registration statement which permits CG&E to sell up to $500 million of unsecured debt securities. The PUCO has authorized CG&E, through March 31, 1996, to issue $500 million of first mortgage bonds, secured medium-term notes, unsecured debt, or any combination thereof. CG&E issued $150 million of 6.90% debentures due June 1, 2025 on June 14, 1995. Additionally, on July 6, 1995, CG&E issued $100 million in junior subordinated deferrable interest debentures, due June 30, 2025, which carry an interest rate of 8.28%. CG&E also has PUCO authority through July 19, 1996, to borrow from the Ohio Air Quality Development Authority up to $84 million from the issuance of pollution control revenue refunding bonds. Cinergy, CG&E, and ULH&P filed(b) The SEC authorized ULH&P`s shelf registration statementsstatement, permitting it to sell up to $55 million of unsecured debt securities. The KPSC authorized ULH&P to issue up to $55 million of first mortgage bonds, unsecured debt, or a combination of both through March 31, 1997. ULH&P issued $15 million of 7.65% debentures, due July 15, 2025 on July 25, 1995. Cinergy, CG&E, PSI, and ULH&P 8. The operating subsidiary companies of Cinergy have the following short- term debt authorizations and lines of credits: Committed Unused Authorized Lines Lines Cinergy & Subsidiaries $783 $343 $186 CG&E & Subsidiaries 435 112 98 PSI 338 230 86 ULH&P 35 30 17 Additionally, Cinergy has a $100 million credit facility, which expires September 27, 1997, of which $79 million remained unused at June 30, 1995. Cinergy and PSI 9. (a) Coal tar residues and other substances associated with MGP sites have been found at former MGP sites in Indiana, including, but not limited to, several sites previously owned by PSI. PSI has identified at least 21 MGP sites which it previously owned, including 19 it sold in 1945 to Indiana Gas and Water Company, Inc. (now IGC). IGC has informed PSI of the Securities and Exchange Commission (SEC)basis for its position that PSI, as a PRP under the Securities ActCERCLA, should contribute to IGC`s response costs related to investigating and remediating contamination at MGP sites which PSI sold to IGC. In February 1995, PSI received notification from NIPSCO alleging PSI is a PRP under the CERCLA with respect to contamination associated with MGP sites previously owned and/or operated by both PSI and NIPSCO (or their predecessors). The notification included seven sites, five of 1933, which became effectivePSI acquired from NIPSCO and subsequently sold to IGC. PSI has placed its insurance carriers on notice of IGC`s and NIPSCO`s claims. On May 3, 1995, the IURC denied IGC`s request for recovery of costs incurred in complying with Federal, state, and local environmental regulations related to MGP sites in which IGC has an interest, including sites acquired from PSI. IGC has announced it will appeal this decision, which IGC contends is contrary to decisions made by other state utility commissions with respect to this issue. In light of this decision, PSI is evaluating its options with respect to rate recovery of any MGP site-related costs it may incur. At this time, PSI is unable to predict the issuancenature, extent, and costs of, upor PSI`s responsibility for, any future environmental investigations and remediations which may be required at MGP sites owned or previously owned by PSI; however, any costs that ultimately are incurred may be material. Cinergy and CG&E (b) Lawrenceburg also has an MGP site which is under investigation to $500 milliondetermine a remediation strategy. Lawrenceburg had applied to have the site included in the IDEM`s voluntary cleanup program. On May 22, 1995, Lawrenceburg and $55 million, respectively, of unsecured debt. Approval has been received from the Public Utilities Commission of OhioIDEM reached an agreement to include the Lawrenceburg MGP site in such voluntary cleanup program. A proposed remediation plan will be submitted in the near future. Cinergy and CG&E 10. On August 9, 1995, CG&E filed a Declaration on Form U-1 with the SEC under the Public Utility Holding Company ActPUHCA seeking authorization to solicit proxies from the holders of 1935 (PUHCA), with respectpreferred stock and from Cinergy as the holder of all outstanding shares of common stock for a special meeting of shareholders to be held in the fall of 1995 for the purpose of proposing to amend CG&E`s Articles. The proposed amendment would, if adopted, eliminate a restriction on the amount of unsecured debt that CG&E can issue, or, in the alternative, if such proposal is not adopted, proposing to be issuedamend such Articles by CG&E. Applications are pending beforesuspending, for a ten year period, the Kentucky Public Service Commission andrestriction on the amount of unsecured debt CG&E can issue. CG&E is also requesting that the SEC under PUHCA with respectauthorize such amendment to the unsecured debt to be issued by ULH&P.CG&E`s Articles. THE CINCINNATI GAS & ELECTRIC COMPANY MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITIONSenior Security Ratings Cinergy, CG&E, PSI, and ULH&P In July 1995, S&P Ratings Group raised its ratings of Cinergy`s operating units` senior secured debt to A- from BBB+, removing the companies from the financial agency`s credit watch. The companies had been on watch since October 31, 1994. S&P also raised the ratings of the senior unsecured debt and preferred stock from BBB to BBB+. The ratings group indicated these actions are a result of lower combined power production costs, reduced operation and maintenance expenses, and deferral of capital expenditures brought about as a result of the merger. In addition, in August 1995, DCR raised Cinergy`s operating units` credit ratings. The ratings of CG&E`s first mortgage bonds and collateralized pollution control revenue bonds were raised to A- from BBB+ while the ratings of CG&E`s debentures were raised to BBB+ from BBB. PSI`s first mortgage bonds and medium term notes were upgraded to A- from BBB+. The preferred stock ratings of both companies were reaffirmed at BBB. ULH&P`s first mortgage bonds were assigned a new rating of A-. DCR stated the merger will result in lower new capacity needs and electric production costs and enhanced transmission capabilities. Regulatory Matters Cinergy, CG&E, PSI, and ULH&P PUHCA Reform On June 20, 1995, after a year-long review of its continuing regulation of public utility holding companies under the PUHCA, the SEC endorsed recommendations for reform of the PUHCA. The recommendations call for repeal and, pending repeal, significant administrative reform of the 60 year old statute. While the report offers three alternative approaches to repeal and legislative reform, the report`s preferred option is repeal coupled with a transition period of one year or longer and a transfer of certain consumer- protection provisions of PUHCA to the FERC. The report further recommends that, pending consideration of legislative options, the SEC take prompt administrative action, by rulemaking and on a case-by-case basis, to modernize and simplify regulation under PUHCA, with particular reference to financing transactions, diversification into nonutility businesses, utility mergers and acquisitions and PUHCA`s `integration` standards. In the latter regard, the report recommends a changed interpretation of PUHCA to permit registered holding companies to own combination electric and gas utility companies provided the affected states agree. Subsequent to the report`s issuance, the SEC adopted rule changes exempting various types of financing transactions by utility and nonutility subsidiaries of registered holding companies. The SEC also proposed a rule that would exempt investments by registered systems in specified `energy-related companies` subject to certain conditions. Cinergy and PSI PSI`s July 1994 Retail Rate Petition As discussed in Cinergy`s and PSI`s 1994 Forms 10-K, in July 1994, PSI filed a petition with the IURC for a retail rate increase. On May 15, 1995, PSI filed testimony with the IURC supporting a 12.8% ($127.9 million) rate increase request. Major components of the increase include, among other things, the costs of the Clean Coal Project and a scrubber at Gibson. An order is anticipated in the second quarter of 1996. Assuming this petition is satisfactorily addressed by the IURC, Cinergy`s objective is to manage costs in order to delay the need for additional rate relief by PSI. PSI cannot predict what action the IURC may take with respect to this proposed rate increase. Cinergy and CG&E CG&E Rate Matters On July 17, 1995, CG&E filed a request with the PUCO to begin settlement discussions on a gas rate increase involving intervenors who have participated in previous rate applications and represent the various classes of gas customers served by CG&E. The proposed increase, estimated to be $25 million, is expected to increase annual revenues approximately 7%. The proposed increase, anticipated to be effective in late 1996, is requested, in part, to recover capital investment made since the last gas rate increase in 1993. Also, the request includes a proposal to initiate a pilot program that would allow residential customers to choose their gas supplier and have CG&E transport the gas for them. A full rate application is expected to be filed with the PUCO on December 1, 1995. CG&E cannot predict the outcome of these settlement discussions nor what actions the PUCO may take with respect to the proposed rate increase. Cinergy, CG&E, PSI, and ULH&P MEGA-NOPR On March 29, 1995, the Federal Energy Regulatory Commission (FERC)FERC issued a Notice of Proposed Rulemaking (MEGA-NOPR)MEGA-NOPR on Open Access, which is another step in the transition towards potentially full-scale competition in the electric utility industry. The MEGA-NOPR is essentially the electric industry`s equivalent of the FERC`s Order 636 applicable to the natural gas industry. The MEGA-NOPR as proposed would, among other things, provide for mandatory filing of open access/comparability transmission tariffs, provide for functional unbundling of all services, require utilities to use the tariffs for their own bulk power transactions, establish an electronic bulletin board, and establish a contract-based approach to stranded costs. Cinergy filed comments on June 6, 1995, in response to the FERC`s MEGA-NOPR on Open Access. In the filing, Cinergy reaffirmed support for FERC`s authority to order utilities owning transmission systems to provide open access at rates and terms comparable to their own. On August 7, 1995, Cinergy filed additional comments concerning the transmission pricing aspects of the MEGA- NOPR. A final order could be issued by the end of 1995. CINergy Corp.,Environmental Issues Cinergy, CG&E, and PSI Manufactured Gas Plants Coal tar residues and other substances associated with MGP sites have been found at former MGP sites in Indiana, including, but not limited to, several sites previously owned by PSI. PSI has identified at least 21 MGP sites which it previously owned, including 19 it sold in 1945 to Indiana Gas and Water Company, Inc. (now IGC). IGC has informed PSI of the parent company of The Cincinnati Gas & Electric Company (CG&E or Company),basis for its position that PSI, as a PRP under the CERCLA, should contribute to IGC`s response costs related to investigating and remediating contamination at MGP sites which PSI sold to IGC. In February 1995, PSI received notification from NIPSCO alleging PSI is currently evaluating its positiona PRP under the CERCLA with respect to contamination associated with MGP sites previously owned and/or operated by both PSI and NIPSCO (or their predecessors). The notification included seven sites, five of which PSI acquired from NIPSCO and subsequently sold to IGC. PSI has placed its insurance carriers on notice of IGC`s and NIPSCO`s claims. On May 3, 1995, the provisionsIURC denied IGC`s request for recovery of costs incurred in complying with Federal, state, and local environmental regulations related to MGP sites in which IGC has an interest, including sites acquired from PSI. IGC has announced it will appeal this decision, which IGC contends is contrary to decisions made by other state utility commissions with respect to this issue. In light of this decision, PSI is evaluating its options with respect to rate recovery of any MGP site-related costs it may incur. At this time, PSI is unable to predict the MEGA-NOPRnature, extent, and costs of, or PSI`s responsibility for, any future environmental investigations and remediations which may be required at MGP sites owned or previously owned by PSI; however, any costs that ultimately are incurred may be material. Lawrenceburg also has an MGP site which is under investigation to determine a remediation strategy. Lawrenceburg had applied to have the site included in the IDEM`s voluntary cleanup program. On May 22, 1995, Lawrenceburg and the IDEM reached an agreement to include the Lawrenceburg MGP site in such voluntary cleanup program. A proposed remediation plan will be submitted in the near future. Accounting Issues Cinergy, CG&E, PSI, and ULH&P New Accounting Standard In March 1995, the FASB issued SFAS 121 which will be effective for Cinergy in January 1996. The new accounting standard requires impairment losses on long- lived assets be recognized when an asset`s book value exceeds its expected future cash flows. Based on the regulatory environment in which Cinergy currently operates, SFAS 121 is not expected to have an adverse impact on financial condition or results of operations upon adoption. However, this conclusion may change in the future as deregulation, competitive factors, and potential effects uponrestructuring influence the Company if ultimately adopted.electric utility industry. CAPITAL REQUIREMENTS As previously discussedCinergy and CG&E On August 9, 1995, CG&E filed a Declaration on Form U-1 with the SEC under the PUHCA, seeking authorization to solicit proxies form the holders of preferred stock and from Cinergy as the holder of all outstanding shares of common stock for a special meeting of shareholders to be held in the 1994 Annual Reportfall of 1995 for the purpose of proposing to amend CG&E`s Articles. The proposed amendment would, if adopted, eliminate a restriction on Form 10-K, CG&E redeemed $59 million principalthe amount of its 9.70% first mortgage bonds (due June 15, 2019)unsecured debt that CG&E can issue, or, in the alternative, if such proposal is not adopted, proposing to amend such articles by suspending, for a ten year period, the restriction on April 30, 1995, and $55 million principalthe amount of its 10 1/8% first mortgage bonds (due May 1, 2020) on May 1, 1995. Additionally, $41 million principal amount ofunsecured debt CG&E can issue. CG&E is also requesting that the 9.70% first mortgage bonds and $45 million principal amount of the 10 1/8% first mortgage bonds were retired on March 31, 1995. The Union Light, Heat and Power Company (ULH&P), a subsidiary ofSEC authorize such amendment to CG&E, announced its intention to redeem $5 million principal amount of its 10.25% first mortgage bonds (due June 1, 2020) at par with cash deposited in the Maintenance and Replacement Fund, and to redeem the remaining amount of such bonds at the redemption price of 107.34% on June 1, 1995. CAPITAL RESOURCES&E`s Articles. Cinergy, CG&E, and ULH&P filed registration statements with the SecuritiesDuring May and Exchange Commission (SEC) under the Securities ActJuly 1995, CG&E and ULH&P, issued $265 million of 1933, which became effective on May 3, 1995, with respect to the issuance of up to $500 million and $55 million, respectively, of unsecured debt. Approval has been received from the Public Utilities Commission of Ohio (PUCO) and the SEC under the Public Utility Holding Company Act of 1935 (PUHCA), with respect to the unsecured debt to be issued by CG&E. Applications are pending before the Kentucky Public Service Commission and the SEC under PUHCA with respect to the unsecured debt to be issued by ULH&P. RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1995 Kilowatt-hour Sales Kilowatt-hour (kwh) sales for the quarter ended March 31, 1995, increased 6.6% over the same period of 1994, due in large part to non-firm power sales for resale reflecting third party short-term power sales to other utilities. Also contributing to the total kwh sales levels were increased retail sales to commercial and industrial customers. Higher commercial sales resulted from an increase in the average number of commercial customers. Increased industrial sales reflect growth in the primary metals and chemicals sectors. A decrease in domestic sales volumes resulted from the milder weather experienced during the first quarter of 1995 and led to a decrease in total retail sales. Mcf Sales and Transportation Mcf gas sales and transportation volumes for the first quarter of 1995 decreased 4.3% as compared to the first quarter of 1994. Warmer weather during the winter heating season led to decreases in gas sales to domestic and commercial customers. These decreases were partially offset by increases in the average number of both domestic and commercial customers. Industrial sales decreased as customers continued to purchase gas directly from suppliers, using transportation services provided by the Company. The increase in these transportation volumes, which was over twice the decrease in industrial sales, was primarily as a result of growth in the primary metals, paper products, and chemicals sectors. Revenues Electric Operating Revenues Electric operating revenues increased $17 million (5.0%) for the quarter ended March 31, 1995, over the comparable period of 1994. This increase primarily reflects the higher kwh sales associated with non-firm power sales for resale to other utilities. Also contributing to the increase was the implementation in May 1994(see Note 7 of the final increase of a three-year retail rate phase-in plan that was ordered by the PUCO in May 1992 (May 1992 Order)`Notes to Financial Statements`). An analysis of electric operating revenues is shown below: Quarter Ended March 31 (in millions) Operating revenues - March 31, 1994 $333 Increase (Decrease) due to change in: Price per kwh RetailCAPITAL RESOURCES Cinergy, CG&E, and ULH&P Long-term Debt See Note 7 Sales for Resale Non-firm power transactions 3 Total change in price per kwh 10 Kwh sales Retail (3) Sales for Resale Non-firm power transactions 10 Total change in kwh sales 7 Operating revenues - March 31, 1995 $350 Gas Operating Revenues Gas operating revenues declined $54 million (23.5%) in the first quarter of 1995 when compared to the same period last year. This decrease was primarily a result of the previously mentioned changes in gas sales volumes`Notes to Financial Statements`. Cinergy, CG&E, PSI, and ULH&P Short-term Debt See Note 8 of the operation of fuel adjustment clauses reflecting a decline in the average cost of gas purchased for the period. In addition, an increase in the relative volume of gas transported`Notes to gas sold, as previously discussed, contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs by the Company. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold. Operating Expenses Fuel Used in Electric Production Electric fuel costs increased $2 million (2.7%) for the quarter as compared to last year. An analysis of these fuel costs is shown below: Quarter Ended March 31 (in millions) Fuel expense - March 31, 1994 $82 Increase (Decrease) due to change in: Price of fuel (3) Kwh generation 5 Fuel expense - March 31, 1995 $84 Gas Purchased Gas purchased for the quarter decreased $48 million (33.5%) when compared to the same period last year mainly reflecting decreases in the average cost per Mcf of gas purchased of 22.9% and in volumes purchased of 13.7%. Purchased and Exchanged Power Purchased and exchanged power for the quarter ended March 31, 1995, increased $3 million (43.6%) over the comparable period of 1994. This increase primarily reflects power received from other utilities in connection with increased non- firm power sales for resale. Maintenance The $2 million (9.3%) decrease in maintenance expense for the first quarter of 1995 as compared to the same period of 1994 is due to reduced maintenance on electric generating units, electric distribution facilities, and gas production facilities. Other Income and Expenses - Net Phase-in Deferred Return Phase-in deferred return decreased $5 million (72.0%) for the quarter ended 1995 from the comparable period of 1994 as a result of implementing the final increase of a three-year rate phase-in plan, as previously mentioned. Interest Interest charges decreased $3 million (7.3%) for the three months ended March 31, 1995, from the same period of 1994 primarily due to the refinancing of $305 million of long-term debt during the first quarter of 1994. Preferred Dividend Requirement The decrease in CG&E`s preferred dividend requirement of $.9 million (14.8%) for the quarter ended March 31, 1995, from the same period of 1994 was due to the early redemption on April 1, 1994, of 400,000 shares of $100 par value cumulative preferred stock (9.28% Series)Financial Statements`. RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED MARCH 31, 1995 Kilowatt-hour Sales Kwh sales for the twelve months ended March 31, 1995, remained virtually unchanged, increasing .1% over the same period of 1994. An increase in non- firm power sales for resale associated with power salesCinergy, CG&E, PSI, and ULH&P Reference is made to other utilities more than offset a small decline in retail sales attributable to milder weather during the first quarter of 1995 and the second half of 1994. An increase in the average number of domestic customers partially offset a decline in domestic sales, whereas commercial sales increased due to an increase in the average number of customers. Increased industrial sales resulted from growth in the primary metals, chemicals, and non-electrical machinery sectors. Mcf Sales and Transportation Mcf gas sales and transportation volumes for the twelve months ended March 31, 1995, decreased 6.2% when compared to the twelve months ended March 31, 1994. Warmer weather during the winter heating season led to decreases in gas sales to domestic and commercial customers. The decreased sales to domestic and commercial customers were partially offset by an increase in the average number of both domestic and commercial customers. Industrial sales decreased as industrial customers continued the previously mentioned shift in demand toward transportation services. This increase in Mcf transported was nearly three times the decrease in industrial sales, primarily as a result of growth in the primary metals, food products, and chemicals sectors. Revenues Electric Operating Revenues Electric operating revenues increased $47 million (3.6%) for the twelve months ended March 31, 1995, over the same period last year. This increase primarily reflects three electric retail rate increases granted by the PUCO. Increases in May 1993 and May 1994 were related to the phase-in plan included in the May 1992 Order and the third increase was effective in August 1993 pursuant to a PUCO order (August 1993 Order). The previously discussed increase in non-firm power sales for resale also contributed to the increase. An analysis of electric operating revenues is shown below: Twelve Months Ended March 31 (in millions) Operating revenues`PART I. Financial Information` - March 31, 1994 $1 315 Increase (Decrease) due to change in: Price per kwh Retail 44 Sales for resale Non-firm power transactions 5 Total change in price per kwh 49 Kwh sales Retail (4) Sales for resale Non-firm power transactions 2 Total change in kwh sales (2) Operating revenues - March 31, 1995 $1 362 Gas Operating Revenues Gas operating revenues declined $117 million (23.2%) for the twelve months ended March 31, 1995, when compared to the same period last year. This decrease was primarily a result of the previously mentioned changes in gas sales volumes and the operation of fuel adjustment clauses reflecting a decline in the average cost of gas purchased for the period. In addition, an increase in relative volume of gas transported to gas sold, as previously discussed, contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs by the Company. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold. Operating Expenses Fuel Used in Electric Production Electric fuel costs, the Company's largest annual operating expense, decreased $8 million (2.4%) for the twelve month period as compared to last year. An analysis of these fuel costs is shown below: Twelve Months Ended March 31 (in millions) Fuel expense - March 31, 1994 $336 Increase (Decrease) due to change in: Price of fuel (9) Kwh generation 1 Fuel expense - March 31, 1995 $328 Gas Purchased Gas purchased for the twelve month period ended March 31, 1995, decreased $100 million (33.2%) from the same period last year mainly reflecting decreases in the average cost per Mcf of gas purchased of 20.5% and in volumes purchased of 15.9%. Purchased and Exchanged Power Purchased and exchanged power for the twelve month period ended March 31, 1995, increased $3 million (12.9%) over the comparable period of 1994. This increase primarily reflects power received from other utilities in connection with increased non-firm power sales for resale. Other Operation Increased other operation expenses of $70 million (26.2%) for the twelve months ended March 31, 1995, over the same period of 1994 were due to a number of factors. The primary factor contributing to the increase was the recognition of $52 million of nonrecurring charges for merger-related costs and other expenditures which the Company does not expect to recover from customers due to various rate settlements. Additionally, increased electric production, transmission, and distribution expenses contributed to the increase. Maintenance The $9 million (8.2%) decrease in maintenance expenses for the twelve months ended March 31, 1995, as compared to the same period of 1994 was due to decreased maintenance on electric generating units, electric distribution facilities, and gas production facilities. Depreciation Depreciation expense increased $4 million (2.5%) for the twelve month period ended March 31, 1995, over the comparable period ended March 31, 1994. This increase primarily reflects additions to wholly-owned electric utility plant and gas utility plant. Also, a full year's amortization of deferred post-in- service carrying costs on the Wm. H. Zimmer (Zimmer) and Woodsdale (Woodsdale) Generating Stations added to the increase. CG&E began amortizing these costs over the estimated useful life of the applicable generating station in accordance with the August 1993 Order. Post-in-service Deferred Operating Expenses - Net The $6 million increase in post-in-service deferred operating expenses for the twelve months ended March 31, 1995, from the comparable period of 1994, resulted from ceasing the deferral and commencing the amortization of deferred operating expenses associated with the first five units of Woodsdale in August 1993. CG&E had deferred depreciation, operation and maintenance expenses (exclusive of fuel costs), and property taxes related to these five units from the time the units began commercial operation until the effective date of new rates authorized by the August 1993 Order. The deferred expenses are being amortized over a period of 10 years. Phase-in Deferred Depreciation Phase-in deferred depreciation resulted from the three-year rate phase-in plan for Zimmer included in the May 1992 Order. The change of $6 million for phase- in deferred depreciation for the twelve months ended March 31, 1995, as compared to the same period of 1994 reflects discontinuance of the deferral of depreciation when the final increase of the phase-in plan became effective in May 1994. Taxes Other than Income Taxes Taxes other than income taxes for the twelve month period ended March 31, 1995, increased $12 million (6.5%) over the same period of 1994 primarily due to increased excise taxes. Also contributing to this increase were increased property taxes resulting from a greater investment in taxable property and higher property tax rates. Other Income and Expenses - Net Post-in-service Carrying Costs Post-in-service carrying costs decreased $8 million for the twelve month period ended March 31, 1995. Accrual of carrying costs on the first five units of Woodsdale ceased after the August 1993 Order which reflected Woodsdale in retail electric rates. Phase-in Deferred Return Phase-in deferred return decreased $21 million (68.5%) for the twelve months ended March 31, 1995, from the comparable period of 1994 as a result of implementing the final increase of the three-year rate phase-in plan in May 1994. Write-off of a Portion of Zimmer Station In November 1993, CG&E wrote off Zimmer costs disallowed from rates in the May 1992 Order. Interest Interest charges decreased $10 million (6.2%) for the twelve months ended March 31, 1995, from the same period of 1994 primarily due to the refinancing of $305 million of long-term debt during the first quarter of 1994. Preferred Dividend Requirement The decrease in CG&E's preferred dividend requirement of $4 million (14.7%) for the twelve months ended March 31, 1995, from the same period of 1994 was due to the early redemption on April 1, 1994, of 400,000 shares of $100 par value cumulative preferred stock (9.28% Series).`ITEM 1. FINANCIAL STATEMENTS.` PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The annual meeting1. LEGAL PROCEEDINGS Cinergy and PSI As discussed in Cinergy and PSI Forms 10-K, PSI has been arbitration for several years with Cyprus Amax regarding various disputes, including disputes related to price, tonnage, and coal quality arising out of shareholders of The Cincinnati Gas & Electric Company was held effective April 20, 1995. (b) Proxies were not soliciteda long- term contract for the annual meeting, atsupply of 3.6 million tons of coal per year from the Wabash Mine to Gibson. On August 9, 1995, PSI and Cyprus Amax executed a Settlement Agreement, which fully resolves all outstanding disputes, and a new coal supply agreement, which replaces the Boardold contract. The new contract requires a reduction in the price effective July 1, 1995, followed by further price reductions through 1999. Beginning in the year 2000, the price will be adjusted each year based upon market conditions. The new contract also extends the term for deliveries from Wabash Mine. Also, see Notes 2, 3, and 9 of Directors was re-electedthe `Notes to Financial Statements` in `Part I - Financial Information`. ITEM 2. CHANGES IN SECURITIES Cinergy and CG&E On July 6, 1995, CG&E issued $100 million principal amount of 8.28% Junior Subordinated Deferrable Interest Debentures due June 30, 2025. CG&E has the right, under the applicable indenture, to extend the interest payment period from time to time on the debentures to a period not exceeding 20 consecutive quarters and not extending beyond the maturity date. In the event that this right is exercised, CG&E may not declare or pay dividends on, or purchase, acquire, or make a liquidation payment with respect to, any of its entirety. (c) The following were unanimously re-elected atcapital stock, or make any guarantee payments with respect to the annual meeting: Jackson H. Randolph James E. Rogers George H. Stinsonforegoing. It is believed that the extension of an interest payment period on the debentures is unlikely. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibit isCopies of the documents listed below which are identified with an asterisk (*) have heretofore been filed herewith:with the SEC and are incorporated herein by reference and made a part hereof. Exhibits not so identified are filed herewith. Exhibit Designation Nature of Exhibit PSI 3-a Amended Articles of Consolidation of PSI, as amended to April 20, 1995. ULH&P 3-b By-laws of ULH&P as amended, adopted by shareholders June 16, 1995. Cinergy 4-a *Original Indenture (Unsecured Debt Securities) between CG&E and The Fifth Third Bank dated as of May 15, 1995. (Exhibit to CG&E Form 8-A dated July 24, 1995, file number 1-1232.) Cinergy and CG&E 4-b First Supplemental Indenture between CG&E and The Fifth Third Bank dated as of June 1, 1995. Cinergy 4-c *Second Supplemental Indenture between CG&E and The Fifth Third Bank dated as of June 30, 1995. (Exhibit to CG&E Form 8-A dated July 24, 1995, file number 1-1232.) Cinergy, CG&E and ULH&P 4-d Original Indenture (Unsecured Debt Securities) between ULH&P and The Fifth Third Bank dated as of July 1, 1995. 4-e First Supplemental Indenture between ULH&P and The Fifth Third Bank dated as of July 15, 1995. Cinergy, CG&E, PSI, and ULH&P 27 Financial Data ScheduleSchedules (included in electronic submission only). Cinergy, CG&E, PSI, and ULH&P (b) No reports on Form 8-K were filed during the quarter ended March 31,June 30, 1995. 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 The Cincinnati Gas & Electric Company (CG&E) believesCinergy, 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 Registrant hasRegistrants have duly caused this report to be signed by an officer and the principalchief accounting officer on itstheir behalf by the undersigned thereunto duly authorized. CINERGY CORP. THE CINCINNATI GAS & ELECTRIC COMPANY ------------------------------------- Registrant J. WAYNE LEONARD -----------------------------------------PSI ENERGY, INC. THE UNION LIGHT, HEAT AND POWER COMPANY Registrants Date: May 11,August 10, 1995 /S/ J. Wayne Leonard Group Vice President and Chief FinancialJ. Wayne Leonard Duly Authorized Officer CHARLES J. WINGER ----------------------------------------- Date: May 11,August 10, 1995 /S/ Charles J. Winger Comptroller, and PrincipalCharles J. Winger Chief Accounting Officer