Cinergy Reports First Quarter Earnings.Business & Energy Editors CINCINNATI--(BUSINESS WIRE)--April 25, 2002 Cinergy Cinergy Corp. was an energy company based in Cincinnati, Ohio. Cinergy was created on October 24, 1994, from the merger of the Cincinnati Gas & Electric Company (CG&E) with PSI Energy and later included Union Light, Heat & Power (ULH&P) as well. Corp. (NYSE NYSE See: New York Stock Exchange :CIN CIN cervical intraepithelial neoplasia. Cervical intraepithelial neoplasia (CIN) A term used to categorize degrees of dysplasia arising in the epithelium, or outer layer, of the cervix. ) today reported first quarter 2002 earnings of $0.58 per share on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, compared with earnings of $0.75 per share on a diluted basis in the first quarter 2001. First quarter results include a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charge of $0.02 per share for unrecoverable costs from a gas distribution rate order. The quarter ended with Cinergy's common stock price closing at $35.75, a new 52-week high. Results for the first quarter 2002 from the Regulated reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. Operations segment were $0.44 per share, compared with $0.51 per share a year earlier. Gross margins from regulated sales were down $0.05 per share mainly attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the mild winter and the economy. Regulated service territory heating degree-days were more than ten percent lower than the same period last year causing retail gas sales to decrease by almost six percent. The economy appears to be slowly improving, but industrial electric sales for the quarter were still down 1.3 percent from last year. In addition, the business segment took a one-time charge of $0.02 per share related to unrecoverable costs related to the ULH&P gas distribution rate order. Energy Merchant segment earnings were $0.17 per share for the quarter compared with $0.27 in the same period in 2001. Gross margins were down $0.03 per share from existing contracts with retail regulated franchises due to the weather and the economy. Origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real , marketing and trading gross margins were down only $0.03 per share even though quarterly average on-peak electricity power prices at the "into Cinergy" trading hub were 45 percent lower and natural gas commodity prices were 63 percent lower than in the first quarter of 2001. In the first quarter, the company continued efforts to strengthen its balance sheet with a common stock offering of 6.5 million shares. This offering raised over $200 million and was used to reduce short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. . The increase in shares lowered first quarter earnings per share by $0.02 compared with 2001. On April 19th, Moody's Moody's Corporation (NYSE: MCO) is the holding company for Moody's Investors Service which performs financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized ratings scale. Investor Service removed the company from credit watch, assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. an outlook of stable, and reaffirmed the current credit ratings of Cinergy Corp. and its subsidiaries. As part of its on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" cost control program, the company offered a voluntary early retirement program to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 280 employees. Actual results will depend on the number of employees accepting the offer and will be reflected in second quarter results. In March, Cinergy received Federal Energy Regulatory Commission The Federal Energy Regulatory Commission (FERC) is the United States federal agency with jurisdiction over electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates. approval to jointly dispatch A dispatch or dispatches can refer to:
regulated - controlled or governed according to rule or principle or law; "well regulated industries"; "houses with regulated temperature" 2. generation. The approval allowed the company to drop its plan to transfer its CG&E generation to a separate unregulated affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. . Cinergy's Northern Kentucky Kentucky, state, United States Kentucky (kəntŭk`ē, kĭn–), one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R. affiliate, The Union Light, Heat and Power Co., received approval from the Kentucky Public Service Commission to increase rates for natural gas service by $2.8 million. The order included a provision allowing the company to increase rates annually to reflect the costs of a program to upgrade the ULH&P gas system. In March, Cinergy's Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). affiliate, PSI Energy, filed testimony Oral evidence offered by a competent witness under oath, which is used to establish some fact or set of facts. Testimony is distinguishable from evidence that is acquired through the use of written sources, such as documents. testimony n. in support of a certificate of need with the Indiana Utility Regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. Commission (IURC IURC Indiana Utility Regulatory Commission ) to add up to 800 megawatts of capacity to its generating fleet. The filing proposed moving two operational gas-fired gas-fired adj → de gas gas-fired adj → au gaz gas-fired adj (heater etc) → Gas- peaking plants from its unregulated affiliates to PSI. PSI also filed a petition petition Written instrument directed to an individual, government official, legislative body, or court in order to seek redress of grievances or to request a favour. with the IURC to extend a rate tracker for recovery of purchased power costs, expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. this year, to 2006. Cinergy Corp. has a balanced, integrated portfolio consisting of two core businesses: Regulated Operations and Energy Merchant. Cinergy owns regulated delivery operations in Ohio, Indiana, and Kentucky that serve 1.5 million electric customers and about 500,000 gas customers. In addition, its Indiana regulated operations own 6,000 megawatts of generation. Cinergy's Energy Merchant business is a Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians leader in low-cost generation owning 7,000 megawatts of capacity with a profitable balance of stable existing customer portfolios, new customer origination, marketing and trading, and industrial-site cogeneration cogeneration In power systems, use of steam for both power generation and heating. High-temperature, high-pressure steam from a boiler and superheater first passes through a turbine to produce power. . The "into Cinergy" power-trading hub is the most liquid trading hub in the nation. Statements made in this release that convey convey v. to transfer title (official ownership) to real property (or an interest in real property) from one (grantor) to another (grantee) by a written deed (or an equivalent document such as a judgment of distribution which conveys real property from an estate). the company's or management's intentions, expectations or predictions of the future are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . The company's actual results could differ materially from those projected in the forward-looking statements, and there can be no assurance that estimates of future results will be achieved. Please refer to the company's SEC filings for additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements. Following are summaries of Cinergy's unaudited consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: financial information for the first quarter 2002.
CINERGY CORP.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Period Ended March 31, 2002
(unaudited)
(in thousands, except per share amounts)
----------------------------------------------------------------------
Quarter Ended
2002 2001
----------- -----------
Operating Revenues
Electric $1,283,424 $1,893,458
Gas 903,261 1,813,822
Other 17,078 18,022
----------- -----------
2,203,763 3,725,302
Operating Expenses
Fuel used in electric production 209,458 199,928
Gas purchased 823,077 1,710,610
Purchased and exchanged power 518,089 1,164,726
Other operation 208,984 205,137
Maintenance 56,467 44,353
Depreciation 99,484 88,564
Taxes other than income taxes 72,422 63,092
----------- -----------
1,987,981 3,476,410
Operating Income 215,782 248,892
Other Income and (Expenses) - Net
Allowance for equity funds
used during construction 2,850 1,143
Equity in earnings of
unconsolidated subsidiaries 4,867 (1,239)
Other - net (3,897) (5,837)
----------- -----------
3,820 (5,933)
Interest and Other Charges
Interest on long-term debt 59,167 48,606
Other interest 7,046 18,925
Allowance for borrowed funds
used during construction (4,585) (3,981)
----------- -----------
61,628 63,550
Preferred Trust
Preferred dividend requirement
of subsidiary trust 5,913 -
Income Before Taxes 152,061 179,409
Income Taxes 55,475 58,304
Preferred dividend requirements
of subsidiaries 858 858
----------- -----------
Net Income $95,728 $120,247
Other comprehensive income, net of tax (2,259) (4,461)
----------- -----------
Comprehensive Income $93,469 $115,786
Average Common Shares Outstanding 164,295 158,989
Earnings Per Common Share
Net Income $0.58 $0.76
Earnings Per Common Share - Assuming Dilution
Net Income $0.58 $0.75
Dividends Declared Per Common Share $0.45 $0.45
Note: Prior year's data has been reclassified to conform with current
year's presentation.
CINERGY CORP.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
----------------------------------------------------------------------
March 31 December 31
2002 2001
------------ ------------
ASSETS
Current Assets
Cash and temporary cash investments $96,318 $111,067
Restricted deposits 8,783 8,055
Notes receivable 134,208 31,173
Accounts receivable less accumulated
provision for doubtful accounts of
$13,958 at March 31, 2002, and
$35,580 at December 31, 2001 1,010,542 1,123,214
Materials, supplies and
fuel - at average cost 218,605 240,812
Prepayments and other 105,412 110,311
Energy risk management current assets 313,359 449,397
------------ ------------
Total current assets 1,887,227 2,074,029
Property, Plant, and Equipment - at Cost
Utility plant in service 8,159,770 8,089,961
Construction work in progress 518,409 464,560
------------ ------------
Total utility plant 8,678,179 8,554,521
Non-regulated property, plant, and equipment 4,566,393 4,527,994
Accumulated depreciation 4,920,796 4,845,620
------------ ------------
Net property, plant, and equipment 8,323,776 8,236,895
Other Assets
Regulatory assets 1,001,867 1,015,863
Investments in unconsolidated subsidiaries 341,736 339,059
Energy risk management non-current assets 159,615 134,445
Other investments 175,905 164,155
Other 274,290 335,367
------------ ------------
Total other assets 1,953,413 1,988,889
Total Assets $12,164,416 $12,299,813
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $999,529 $1,029,173
Accrued taxes 230,310 195,976
Accrued interest 72,156 56,216
Notes payable and other
short-term obligations 949,151 1,155,786
Long-term debt due within one year 125,589 148,431
Energy risk management current liabilities 267,618 429,794
Other 119,233 127,375
------------ ------------
Total current liabilities 2,763,586 3,142,751
Non-current Liabilities
Long-term debt 3,585,452 3,596,730
Deferred income taxes 1,310,015 1,301,407
Unamortized investment tax credits 125,110 127,385
Accrued pension and other
post-retirement benefit costs 438,704 438,962
Energy risk management
non-current liabilities 136,922 135,619
Other 252,204 246,340
------------ ------------
Total non-current liabilities 5,848,407 5,846,443
Total Liabilities 8,611,993 8,989,194
Preferred Trust Securities
Company obligated mandatorily redeemable
preferred trust securities of subsidiary
holding solely debt securities
of the company 306,785 306,327
Cumulative Preferred Stock of Subsidiaries
Not subject to mandatory redemption 62,830 62,833
Common Stock Equity
Common stock - $0.01 par value;
authorized shares - 600,000,000;
outstanding shares - 166,826,096 at
March 31, 2002, and 159,402,839 at
December 31, 2001 1,669 1,594
Paid-in capital 1,839,338 1,619,659
Retained earnings 1,360,989 1,337,135
Accumulated other comprehensive income (19,188) (16,929)
------------ ------------
Total common stock equity 3,182,808 2,941,459
Total Liabilities and Equity $12,164,416 $12,299,813
CINERGY CORP.
BUSINESS SEGMENT SUMMARY INFORMATION
For the Quarter Ended March 31
(unaudited)
(dollars in thousands, except per share amounts)
----------------------------------------------------------------------
2002 2001
---- ----
Energy Merchant
---------------
Earnings Before Interest and Taxes (EBIT) $ 71,343 $ 87,652
Net Income $ 28,342 $ 43,129
Earnings Per Share - diluted $ 0.17 $ 0.27
Electricity Trading Volumes (Mwhs) 70,464,250 60,725,473
Physical and Financial
Gas Trading Volumes (Bcf/d) 58.9 35.2
Regulated Operations
--------------------
Earnings Before Interest and Taxes (EBIT) $ 152,712 $ 159,299
Net Income $ 72,797 $ 81,916
Earnings Per Share - diluted $ 0.44 $ 0.51
Electric Retail MWH Sales and Transportation 12,368,434 12,582,247
Gas Retail MCF Sales and Transportation 37,111,564 39,423,884
Electric Customers (End of Period) 1,518,104 1,507,090
Gas Customers (End of Period) 499,591 497,190
Power Technology & Infrastructure Services
------------------------------------------
Earnings Before Interest and Taxes (EBIT) $ (4,453) $ (3,992)
Net Income $ (5,411) $ (4,798)
Earnings Per Share - diluted $ (0.03) $ (0.03)
2001 has been reclassified to reflect all international results in
Energy Merchant.
CINERGY CORP.
BUSINESS SEGMENT EARNINGS ANALYSIS SUMMARY
For the Quarter Ended March 31, 2002
(unaudited)
----------------------------------------------------------------------
Energy Merchant
---------------
Earnings Per Share - diluted - 2001 $ 0.27
Origination, marketing and trading gross margins (0.03)
Reduced gross margins from PPAs (0.03)
Fuel costs 0.03
Increased interest, depreciation, and property taxes (0.04)
Other - net (0.03)
Earnings Per Share - diluted - 2002 $ 0.17
Regulated Operations
--------------------
Earnings Per Share - diluted - 2001 $ 0.51
Reduced gross margins (0.05)
Write-off of unrecoverable costs (0.02)
Earnings Per Share - diluted - 2002 $ 0.44
Power Technology & Infrastructure Services
------------------------------------------
Earnings Per Share - diluted - 2001 $ (0.03)
Operating results of investments 0.02
Mark-to-market valuation of technology investments (0.02)
Earnings Per Share - diluted - 2002 $ (0.03)
2001 has been reclassified to reflect all international results in
Energy Merchant.
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