Cinergy Reports Increased First Quarter Earnings.Business Editors CINCINNATI--(BUSINESS WIRE)--April 24, 2003 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 2003 earnings of $0.95 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 $0.52 per share on a diluted basis in the first quarter 2002. Results for the first quarter 2003 included a net gain of $0.15 per share, as compared to a charge of $0.06 per share for the same period in 2002, for the cumulative effect of a change in accounting principles. Also included in the first quarter results for 2002 was a charge of $0.02 related to unrecoverable costs from a gas distribution rate order. First quarter earnings from the Energy Merchant segment were $0.55 per share in 2003 compared with $0.11 in the same period in 2002. Excluding the net gain of $0.21 per share from the required change in accounting principles, the remaining increase of $0.23 per share was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to improved marketing, trading and 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 results and better performance in the generation and supply contracts area. First quarter average wholesale electricity and gas prices were up 85 percent and 150 percent, respectively, over the same period in 2002. First quarter earnings 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 $0.43 per share in 2003 compared with $0.44 per share a year earlier. Colder than normal weather was offset by increased operating and depreciation expenses. Heating degree-days for the quarter were up 22 percent from the same quarter last year. The Power Technology and Infrastructure Services segment lost $0.03 per share, which was comparable to last year's results. New winter peak load records were set in January January: see month. for Cinergy and its operating companies operating company A business that engages in transactions with outsiders. , PSI Energy, Inc., and The Cincinnati Cincinnati (sĭnsənăt`ē, –năt`ə), city (1990 pop. 364,040), seat of Hamilton co., extreme SW Ohio, on the Ohio River opposite Newport and Covington, Ky.; inc. as a city 1819. Gas & Electric Company. Cinergy's winter peak increased 5.3 percent to 9,624 megawatts, while PSI's peak increased 6.3 percent and CG&E's increased 2.7 percent. In the first quarter, the company further strengthened its balance sheet with a common stock offering of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 5.7 million shares. The net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of about $175 million from the transaction are being used to reduce short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. . PSI filed its case-in-chief 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. at the 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). 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 seeking a rate increase of approximately 15 percent primarily reflecting the addition of peaking plants, the repowering of the Noblesville Generating Station thus increasing its capacity, capital investments to meet new emission EMISSION, med. jur. The act by which any matter whatever is thrown from the body; thus it is usual to say, emission of urine, emission of semen, &c. 2. reduction requirements for nitrogen oxides Noun 1. nitrogen oxide - any of several oxides of nitrogen formed by the action of nitric acid on oxidizable materials; present in car exhausts pollutant - waste matter that contaminates the water or air or soil and capital improvements to the transmission and distribution system. In addition to the change in accounting principles referenced earlier, the company also adopted the Emerging Issues Task Force (EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation ) Issue 02-03, under which realized and unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. and losses on most energy trading contracts are now reported "net" rather than "gross" in the income statement. This results in reductions in reported operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. , fuel and purchased power expenses and gas purchased expenses but has no effect on operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. or net income. 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 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. that serve 1.5 million electric customers and about 500,000 gas customers. In addition, its Indiana regulated operations own 7,000 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 6,300 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. This document includes 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. within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions. These forward-looking statements are identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to, unanticipated weather conditions; unscheduled unscheduled Adjective not planned or intended Adj. 1. unscheduled - not scheduled or not on a regular schedule; "an unscheduled meeting"; "the plane made an unscheduled stop at Gander for refueling" generation outages; unusual maintenance or repairs; unanticipated changes in costs; environmental incidents, including costs of compliance with existing and future environmental requirements; electric transmission or gas pipeline system constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. ; legislative and regulatory initiatives; additional competition in electric or gas markets and continued industry consolidation; financial or regulatory accounting principles; political, legal, and economic conditions and developments in the countries in which we have a presence; changing market conditions and other factors related to physical energy and financial trading activities; the performance of projects undertaken by our non-regulated businesses and the success of efforts to invest in and develop new opportunities; availability of, or cost of, capital; employee workforce factors; delays and other obstacles associated with mergers, acquisitions, and investments in joint ventures; and costs and effects of legal and administrative proceedings An administrative proceeding is a non-judicial determination of fault or guilt and may include in some cases penalties of various forms. A "Captain's Mast", held by a commanding officer of a warship is one such proceeding. , settlements, investigations, and claims. 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. The Company undertakes no obligation to update the information contained herein. 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 2003.
CINERGY CORP.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Periods Ended March 31, 2003
(unaudited)
(in thousands, except per share amounts)
----------------------------------------------------------------------
Quarter Ended
--------------------
2003 2002
---------- ---------
Operating Revenues
Electric $836,883 $779,376
Gas 398,913 190,064
Other 45,986 16,937
---------- ---------
1,281,782 986,377
Operating Expenses
Fuel used in electric production 240,279 204,122
Gas purchased 235,995 109,880
Purchased and exchanged power 39,204 25,168
Other operation 269,052 206,111
Maintenance 57,609 56,467
Depreciation 106,023 98,566
Taxes other than income taxes 77,749 72,422
---------- ---------
1,025,911 772,736
Operating Income 255,871 213,641
Other Income and (Expenses) - Net
Allowance for equity funds used during
construction 3,579 2,850
Equity in earnings of unconsolidated
subsidiaries 592 4,689
Other - net 4,796 (4,159)
---------- ---------
8,967 3,380
Interest and Other Charges
Interest on long-term debt 64,776 59,167
Other interest 1,918 6,641
Allowance for borrowed funds used during
construction (6,130) (4,585)
---------- ---------
60,564 61,223
Preferred Trust
Preferred dividend requirement of
subsidiary trust 5,970 5,913
Income Before Taxes 198,304 149,885
Income Taxes 57,823 53,777
Preferred dividend requirements of subsidiaries 858 858
---------- ---------
Income Before Discontinued Operations and
Cumulative Effect of a Change in Accounting
Principles $139,623 $95,250
Discontinued Operations, net of tax - 478
Cumulative Effect of a Change in Accounting
Principles, net of tax 26,462 (10,899)
---------- ---------
Net Income $166,085 $84,829
Other comprehensive income, net of tax 787 (2,259)
---------- ---------
Comprehensive Income $166,872 $82,570
Average Common Shares Outstanding 173,387 164,295
Earnings Per Common Share
Income Before Discontinued Operations and
Cumulative Effect of a Change in Accounting
Principles $0.81 $0.58
Discontinued Operations, net of tax - -
Cumulative Effect of a Change in Accounting
Principles, net of tax 0.15 (0.06)
---------- ---------
Net Income $0.96 $0.52
Earnings Per Common Share - Assuming Dilution
Income Before Discontinued Operations and
Cumulative Effect of a Change in Accounting
Principles $0.80 $0.58
Discontinued Operations, net of tax - -
Cumulative Effect of a Change in Accounting
Principles, net of tax 0.15 (0.06)
---------- ---------
Net Income $0.95 $0.52
Dividends Declared Per Common Share $0.46 $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
2003 2002
------------- ------------
ASSETS
Current Assets
Cash and temporary cash investments $259,159 $221,083
Restricted deposits 8,221 8,116
Notes receivable 96,884 135,873
Accounts receivable less accumulated
provision for doubtful accounts
of $12,881 at March 31, 2003,
and $16,374 at December 31, 2002 1,383,244 1,292,410
Materials, supplies and fuel - at
average cost 245,061 319,456
Prepayments and other 108,367 118,208
Energy risk management current assets 439,358 464,028
------------- ------------
Total current assets 2,540,294 2,559,174
Property, Plant, and Equipment - at Cost
Utility plant in service 9,100,552 8,641,351
Construction work in progress 508,021 469,300
------------- ------------
Total utility plant 9,608,573 9,110,651
Non-regulated property, plant, and
equipment 4,355,409 4,704,904
Accumulated depreciation 5,184,319 5,166,881
------------- ------------
Net property, plant, and equipment 8,779,663 8,648,674
Other Assets
Regulatory assets 1,016,477 1,022,696
Investments in unconsolidated
subsidiaries 427,378 417,188
Energy risk management non-current
assets 92,631 162,773
Other investments 165,130 163,851
Other 394,645 331,552
------------- ------------
Total other assets 2,096,261 2,098,060
Assets of Discontinued Operations 1,916 1,120
Total Assets $13,418,134 $13,307,028
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $1,455,370 $1,321,968
Accrued taxes 235,646 254,823
Accrued interest 60,328 64,340
Notes payable and other short-term
obligations 327,616 667,973
Long-term debt due within one year 318,949 191,454
Energy risk management current
liabilities 434,111 407,710
Other 91,450 108,056
------------- ------------
Total current liabilities 2,923,470 3,016,324
Non-current Liabilities
Long-term debt 3,977,024 4,080,768
Deferred income taxes 1,507,089 1,471,872
Unamortized investment tax credits 115,792 118,095
Accrued pension and other post-
retirement benefit costs 642,121 626,167
Energy risk management non-current
liabilities 84,805 143,991
Other 213,643 183,613
------------- ------------
Total non-current liabilities 6,540,474 6,624,506
Liabilities of Discontinued Operations 1,831 1,707
Total Liabilities 9,465,775 9,642,537
Preferred Trust Securities
Company obligated mandatorily
redeemable preferred trust securities
of subsidiary holding solely debt
securities of the company 308,702 308,187
Cumulative Preferred Stock of Subsidiaries
Not subject to mandatory redemption 62,828 62,828
Common Stock Equity
Common stock - $0.01 par value;
authorized shares - 600,000,000;
outstanding shares - 175,876,919
at March 31, 2003, and
168,663,115 at
December 31, 2002 1,759 1,687
Paid-in capital 2,116,222 1,918,136
Retained earnings 1,491,861 1,403,453
Accumulated other comprehensive income (29,013) (29,800)
------------- ------------
Total common stock equity 3,580,829 3,293,476
Total Liabilities and Equity $13,418,134 $13,307,028
CINERGY CORP.
BUSINESS SEGMENT SUMMARY INFORMATION
For the Quarter Ended March 31
(unaudited)
(dollars in thousands, except per share amounts)
2003 2002
Energy Merchant
Net Income $97,105 $16,638
Earnings Per Share -- diluted $0.55 $0.11
Electricity Trading Volumes (Mwhs) 33,397,383 21,624,202
Physical and Financial Gas Trading
Volumes (Bcf/d) 64.0 58.9
Regulated Operations
Net Income $74,069 $72,797
Earnings Per Share -- diluted $0.43 $0.44
Electric Retail MWH Sales and Transportation 13,174,580 12,368,434
Gas Retail MCF Sales and Transportation 44,842,892 37,111,564
Electric Customers (End of Period) 1,536,413 1,518,104
Gas Customers (End of Period) 507,170 499,591
Power Technology & Infrastructure Services
Net Income $(5,089) $(4,606)
Earnings Per Share -- diluted $(0.03) $(0.03)
CINERGY CORP.
BUSINESS SEGMENT EARNINGS DRIVER ANALYSIS
For the Quarter Ended March 31, 2003
(unaudited)
Energy Merchant
Earnings Per Share -- diluted -- 2002 $0.11
Marketing, trading, and origination 0.18
Generation and supply contracts 0.10
Operating and administrative expenses (0.03)
Increased financing (0.02)
Cumulative effect of a change in accounting
principles 0.21
Earnings Per Share -- diluted -- 2003 $0.55
Regulated Operations
Earnings Per Share -- diluted -- 2002 $0.44
Colder than normal weather 0.09
Other revenue 0.02
Operating and administrative expenses (0.06)
Increased financing and depreciation (0.05)
Write-off of unrecoverable costs 0.02
Other -- net (0.03)
Earnings Per Share -- diluted -- 2003 $0.43
Power Technology & Infrastructure Services
Earnings Per Share -- diluted -- 2002 $(0.03)
Operating results of investments (0.01)
Mark-to-market valuation of technology
investments 0.01
Earnings Per Share -- diluted -- 2003 $(0.03)
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