Cinergy Reports Operating Earnings of $0.51 Per Share Before One-Time Charges.Business Editors CINCINNATI--(BUSINESS WIRE)--July 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. ) announced today operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for the second quarter 2002 of $0.51 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, excluding one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges totaling $0.25 per share for costs associated with a voluntary early retirement program, a separate employee severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when program and charges related to certain investments. This compares with second quarter earnings of $0.51 per share on a diluted basis in 2001. Reported earnings for the second quarter 2002 including the one-time charges were $0.26 per share on a diluted basis. The voluntary early retirement and severance programs and related costs resulted in a charge of $0.18 per share with approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 300 employees accepting the various offerings. A charge of $0.07 per share included a write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of certain investments in technology and equipment. Operating earnings before one-time charges 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. Business segment were $0.30 per share, $0.05 per share below last year. Lower gross margins and higher property taxes and depreciation accounted for the decrease. The Energy Merchant segment's operating earnings for the quarter excluding the one-time charges were $0.25 per share compared with $0.18 per share for the second quarter last year. Increased gross margins from regulated retail power purchase agreements and wholesale 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 accounted Trading Account 1. An account similar to a traditional bank account, holding cash and securities, and is administered by an investment dealer. 2. An account held at a financial institution and administered by an investment dealer that the account holder uses to employ a for the majority of the increase. Results from the Power Technology and Infrastructure Services segment prior to one-time charges were down $0.02 per share from the prior year. In the second quarter, all three credit ratings agencies, Standard & Poor's, 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. , and Fitch fitch: see polecat. , recognized the actions taken by the company to strengthen the balance sheet. The credit ratings of Cinergy Corp. were affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. and 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. a stable outlook. Cinergy continued to successfully execute on its 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. strategy, receiving approval from 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 Commission for PSI Energy, Inc. to purchase capacity for its summer 2002 reserve requirements Reserve Requirements Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers. This money must be in the bank's vaults or at the closest Federal Reserve Bank. from the Madison Madison, cities, United States Madison. 1 City (1990 pop. 12,006), seat of Jefferson co., SE Ind., on the Ohio River; settled c.1806, inc. 1838. It is a port of entry and a tobacco marketing center. and Henry County generating stations. The Energy Merchant business segment will receive a reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. payment for the capacity rights. In addition, the IURC IURC Indiana Utility Regulatory Commission approved Cinergy's permit to recover financing costs for the nitrogen oxide 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 compliance construction program at its Indiana generating stations. In Ohio, 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 Co. received approval from the Public Utilities Commission of Ohio The Public Utilities Commission of Ohio (PUCO) is an agency of Federal State of Ohio that is charged with the regulation of utility service providers such as those of electricity, natural gas, and telecommunications as well as railroad safety and intrastate hazardous to increase natural gas rates by an annual amount of $15 million. At the same time, the PUCO PUCO Public Utilities Commission of Ohio (Columbus, Ohio) PUCO Pacific University College of Optometry (Forest Grove, Oregon) also allowed the company to begin recovering the costs of an accelerated gas main replacement program through a tracking mechanism. Cinergy also announced today the appointment of Theodore Theodore. For Russian rulers thus named, use Feodor. R. Murphy, II, as senior vice president and chief risk officer. Murphy will join the company in mid-August Noun 1. mid-August - the middle part of August period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" and brings a broad knowledge of energy and financial risk products, strategies and policies. A graduate of Trinity College Trinity College, Ireland: see Dublin, Univ. of. Trinity College Private liberal arts college in Hartford, Conn., founded in 1823. It is historically affiliated with the Episcopal church, though its curriculum is nonsectarian. with a B.A. in economics, Murphy also holds an MBA MBA abbr. Master of Business Administration Noun 1. MBA - a master's degree in business Master in Business, Master in Business Administration in finance from the Columbia University Columbia University, mainly in New York City; founded 1754 as King's College by grant of King George II; first college in New York City, fifth oldest in the United States; one of the eight Ivy League institutions. Business School. During his career, he has held positions with Phibro Energy and AIG AIG addressee indicator group (US DoD) AIG American International Group, Inc AiG Answers in Genesis (religious group in defense of Scripture) AIG Artificial Intelligence Group AIG Australian Industry Group and most recently has served as vice president and chief risk officer of Enron Enron A U.S. energy-trading and utilities company that housed one of the biggest accounting frauds in history. Enron's executives employed accounting practices that falsely inflated the company's revenues, which, at the height of the scandal, made the firm become the seventh Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . Earlier in the
quarter, the company had announced the appointments of Frederick Frederick, city, United StatesFrederick, city (1990 pop. 40,148), seat of Frederick co., NW Md.; settled 1745, inc. 1817. The processing center of a fertile farm and dairying area, it makes beer, household items, optical and glass products, leather goods, J. Newton, III, as executive vice president and chief administrative officer A chief administrative officer (CAO) is responsible for administrative management of private, public or governmental corporations. The CAO is one of the highest ranking members of an organization, managing daily operations and usually reporting directly to the chief executive , and Ronald Reising as vice president of finance. "These additions continue to strengthen our leadership team, bringing new analytic an·a·lyt·ic or an·a·lyt·i·cal adj. 1. Of or relating to analysis or analytics. 2. Expert in or using analysis, especially one who thinks in a logical manner. 3. Psychoanalytic. and management capabilities to an already strong organization," said James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. E. Rogers, chairman, president and chief executive officer. "In the choppy chop·py 1 adj. chop·pi·er, chop·pi·est Having many small waves; rough: choppy seas. [From chop1. waters of the energy marketplace, our dedicated and committed management team is focused on providing value for all stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. through conservative financial management and public policy leadership." 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 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: and segmented financial information for the second quarter and first six months of 2002.
CINERGY CORP.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Periods Ended June 30, 2002
(unaudited)
(in thousands, except per share amounts)
----------------------------------------------------------------------
Quarter Ended Year To Date
------------------------- -------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
Operating Revenues
Electric $ 1,340,370 2,405,463 $ 2,623,794 $ 4,298,921
Gas 1,116,953 1,236,779 2,020,214 3,050,601
Other 22,700 22,096 39,778 40,118
----------- ----------- ----------- -----------
2,480,023 3,664,338 4,683,786 7,389,640
Operating Expenses
Fuel used in
electric
production 212,926 195,915 422,384 395,843
Gas purchased 1,076,315 1,195,668 1,899,392 2,906,278
Purchased and
exchanged power 545,747 1,681,946 1,063,836 2,846,672
Other operation 284,415 205,440 493,399 410,577
Maintenance 57,926 61,625 114,393 105,978
Depreciation 100,947 92,203 200,431 180,767
Taxes other than
income taxes 64,247 53,409 136,669 116,501
----------- ----------- ----------- -----------
2,342,523 3,486,206 4,330,504 6,962,616
Operating Income 137,500 178,132 353,282 427,024
Other Income
and (Expenses)
- Net
Allowance for
equity funds
used during
construction 4,317 2,076 7,167 3,219
Equity in
earnings of
unconsolidated
subsidiaries (159) 2,072 4,708 833
Other - net (7,417) 11,097 (11,314) 5,260
----------- ----------- ----------- -----------
(3,259) 15,245 561 9,312
Interest and
Other Charges
Interest on
long-term debt 60,428 9,525 119,595 98,131
Other interest 6,970 20,640 14,016 39,565
Allowance for
borrowed funds
used during
construction (6,155) (2,098) (10,740) (6,079)
----------- ----------- ----------- -----------
61,243 68,067 122,871 131,617
Preferred Trust
Preferred
dividend
requirement of
subsidiary trust 5,968 -- 11,881 --
Income Before
Taxes 67,030 125,310 219,091 304,719
Income Taxes 21,189 41,485 76,664 99,789
Preferred
dividend
requirements of
subsidiaries 858 858 1,716 1,716
----------- ----------- ----------- -----------
Net Income $ 44,983 $ 82,967 $ 140,711 $ 203,214
Other
comprehensive
income, net
of tax 14,401 (1,571) 12,142 (6,032)
----------- ----------- ----------- -----------
Comprehensive
Income $ 59,384 $ 81,396 $ 152,85 $ 197,182
Average Common
Shares
Outstanding 167,330 159,061 165,821 159,025
Earnings Per Common
Share
Net Income $ 0.27 $ 0.51 $ 0.85 $ 1.27
Earnings Per Common
Share - Assuming
Dilution
Net Income $ 0.26 $ 0.51 $ 0.84 $ 1.26
Dividends Declared
Per Common
Share $ 0.45 $ 0.45 $ 0.90 $ 0.90
Note: Prior year's data has been reclassified to conform with current
year's presentation.
CINERGY CORP.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
----------------------------------------------------------------------
June 30 December 31
2002 2001
---------- ------------
ASSETS
Current Assets
Cash and temporary
cash investments $ 99,777 $ 111,067
Restricted deposits 9,180 8,055
Notes receivable 137,943 31,173
Accounts receivable
less accumulated provision
for doubtful accounts of
$17,405 at June 30, 2002,
and $35,580 at December 31, 2001 1,359,795 1,123,214
Materials, supplies and fuel
- at average cost 283,358 240,812
Prepayments and other 111,150 110,311
Energy risk management
current assets 375,131 449,397
------------ ------------
Total current assets 2,376,334 2,074,029
Property, Plant, and
Equipment - at Cost
Utility plant in service 8,222,639 8,089,961
Construction work in progress 574,550 464,560
------------ ------------
Total utility plant 8,797,189 8,554,521
Non-regulated property,
plant, and equipment 4,648,959 4,527,994
Accumulated depreciation 5,002,838 4,845,620
------------ ------------
Net property, plant, and
equipment 8,443,310 8,236,895
Other Assets
Regulatory assets 1,002,608 1,015,863
Investments in unconsolidated
subsidiaries 348,455 339,059
Energy risk management
non-current assets 150,070 134,445
Other investments 173,345 164,155
Other 309,206 335,367
------------ ------------
Total other assets 1,983,684 1,988,889
Total Assets $ 12,803,328 $ 12,299,813
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 1,335,430 $ 1,029,173
Accrued taxes 205,903 195,976
Accrued interest 64,775 56,216
Notes payable and other
short-term obligations 1,091,257 1,155,786
Long-term debt due within one year 127,091 148,431
Energy risk management current
liabilities 310,136 429,794
Other 136,035 127,375
------------ ------------
Total current liabilities 3,270,627 3,142,751
Non-current Liabilities
Long-term debt 3,611,340 3,596,730
Deferred income taxes 1,338,384 1,301,407
Unamortized investment
tax credits 122,834 127,385
Accrued pension and other
post-retirement benefit costs 478,583 438,962
Energy risk management
non-current liabilities 129,137 135,619
Other 292,986 246,340
------------ ------------
Total non-current liabilities 5,973,264 5,846,443
Total Liabilities 9,243,891 8,989,194
Preferred Trust Securities
Company obligated mandatorily
redeemable preferred trust
securities of subsidiary holding
solely debt securities
of the company 307,251 306,327
Cumulative Preferred Stock
of Subsidiaries
Not subject to mandatory
redemption 62,829 62,833
Common Stock Equity
Common stock - $0.01 par value;
authorized shares - 600,000,000;
outstanding shares - 167,486,129
at June 30, 2002,
and 159,402,839 at
December 31, 2001 1,675 1,594
Paid-in capital 1,861,689 1,619,659
Retained earnings 1,330,780 1,337,135
Accumulated other
comprehensive income (4,787) (16,929)
------------ ------------
Total common stock equity 3,189,357 2,941,459
Total Liabilities and Equity $ 12,803,328 $ 12,299,813
CINERGY CORP.
BUSINESS SEGMENT SUMMARY INFORMATION
For the Quarter Ended June 30
(unaudited)
(dollars in thousands, except per share amounts)
----------------------------------------------------------------------
2002 2001
----------- -----------
Energy Merchant
---------------
Earnings Before Interest and Taxes (EBIT) $ 76,967 $ 71,515
Net Income $ 27,554 $ 30,252
Earnings Per Share - diluted $ 0.16 $ 0.18
Electricity Trading Volumes (Mwhs) 21,449,043 33,303,862
Physical and Financial Gas Trading Volumes
(Bcf/d) 56.5 49.0
Regulated Operations
--------------------
Earnings Before Interest and Taxes (EBIT) $ 69,595 $ 123,154
Net Income $ 29,141 $ 55,954
Earnings Per Share - diluted $ 0.17 $ 0.35
Electric Retail MWH Sales and Transportation 12,444,284 11,531,003
Gas Retail MCF Sales and Transportation 14,242,507 14,657,169
Electric Customers (End of Period) 1,514,694 1,512,616
Gas Customers (End of Period) 497,171 494,870
Power Technology & Infrastructure Services
------------------------------------------
Earnings Before Interest and Taxes (EBIT) $ (12,321) $ (1,292)
Net Income $ (11,712) $ (3,239)
Earnings Per Share - diluted $ (0.07) $ (0.02)
2001 has been reclassified to reflect all international results in
Energy Merchant.
Electric trading volumes revised per new FERC directive, order 2001
issued 4/25/02
CINERGY CORP.
BUSINESS SEGMENT EARNINGS ANALYSIS SUMMARY
For the Quarter Ended June 30, 2002
(unaudited)
----------------------------------------------------------------------
Energy Merchant
---------------
Earnings Per Share - diluted - 2001 $ 0.18
Origination, marketing and trading gross margins 0.05
Increased gross margins from PPAs 0.03
Fuel costs 0.01
Increased interest, depreciation, and property taxes (0.02)
Employee retirement/severance and other one-time charges (0.09)
Earnings Per Share - diluted - 2002 $ 0.16
Regulated Operations
--------------------
Earnings Per Share - diluted - 2001 $ 0.35
Reduced gross margins (0.01)
Increased property taxes (0.03)
Increased depreciation expense (0.01)
Employee retirement/severance and other one-time charges (0.13)
Earnings Per Share - diluted - 2002 $ 0.17
Power Technology & Infrastructure Services
------------------------------------------
Earnings Per Share - diluted - 2001 $ (0.02)
Operating results of investments (0.01)
Mark-to-market valuation of technology investments (0.01)
Employee retirement/severance and other one-time charges (0.03)
Earnings Per Share - diluted - 2002 $ (0.07)
2001 has been reclassified to reflect all international results in
Energy Merchant.
CINERGY CORP.
BUSINESS SEGMENT SUMMARY INFORMATION
For the Year to Date June 30
(unaudited)
(dollars in thousands, except per share amounts)
----------------------------------------------------------------------
2002 2001
----------- -----------
Energy Merchant
---------------
Earnings Before Interest and Taxes (EBIT) $ 148,310 $ 159,167
Net Income $ 55,896 $ 73,381
Earnings Per Share - diluted $ 0.33 $ 0.45
Electricity Trading Volumes (Mwhs) 43,696,525 58,530,642
Physical and Financial Gas Trading Volumes
(Bcf/d) 57.7 44.5
Regulated Operations
--------------------
Earnings Before Interest and Taxes (EBIT) $ 222,307 $ 282,453
Net Income $ 101,938 $ 137,870
Earnings Per Share - diluted $ 0.61 $ 0.86
Electric Retail MWH Sales and Transportation 24,812,718 24,113,250
Gas Retail MCF Sales and Transportation 51,354,071 54,081,053
Electric Customers (End of Period) 1,514,694 1,512,616
Gas Customers (End of Period) 497,171 494,870
Power Technology & Infrastructure Services
------------------------------------------
Earnings Before Interest and Taxes (EBIT) $ (16,774) $ (5,284)
Net Income $ (17,123) $ (8,037)
Earnings Per Share - diluted $ (0.10) $ (0.05)
2001 has been reclassified to reflect all international results in
Energy Merchant.
Electric trading volumes revised per new FERC directive, order 2001
issued 4/25/02
CINERGY CORP.
BUSINESS SEGMENT EARNINGS ANALYSIS SUMMARY
For the Year to Date June 30, 2002
(unaudited)
----------------------------------------------------------------------
Energy Merchant
---------------
Earnings Per Share - diluted - 2001 $ 0.45
Origination, marketing and trading gross margins 0.02
Fuel costs 0.04
Increased interest, depreciation, and property taxes (0.06)
Other - net (0.03)
Employee retirement/severance and other one-time charges (0.09)
Earnings Per Share - diluted - 2002 $ 0.33
Regulated Operations
--------------------
Earnings Per Share - diluted - 2001 $ 0.86
Reduced gross margins (0.06)
Write-off of unrecoverable costs (0.02)
Increased property taxes (0.03)
Increased depreciation expense (0.01)
Employee retirement/severance and other one-time charges (0.13)
Earnings Per Share - diluted - 2002 $ 0.61
Power Technology & Infrastructure Services
------------------------------------------
Earnings Per Share - diluted - 2001 $ (0.05)
Operating results of investments 0.01
Mark-to-market valuation of technology investments (0.03)
Employee retirement/severance and other one-time charges (0.03)
Earnings Per Share - diluted - 2002 $ (0.10)
2001 has been reclassified to reflect all international results in
Energy Merchant.
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