Cinergy Reports Strong Fourth Quarter Earnings, Contributing to Solid 2005 Results; Webcast of Analyst Conference Call Scheduled Today for 9:00 a.m. EST on Cinergy.com.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. -- 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 net income for the fourth quarter of 2005 of $190 million, or $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 net income of $146 million, or $0.79 per share on a diluted basis for the fourth quarter of 2004. Full year 2005 net income was $490 million, or $2.46 per share on a diluted basis, compared with net income of $401 million, or $2.18 per share on a diluted basis in 2004. Excluding the impacts of certain adjustments described below, adjusted earnings for the fourth quarter of 2005 were $0.77 per share, compared with $0.71 per share for the fourth quarter of 2004. Adjusted earnings for the full year 2005 were $2.81 per share, compared to $2.42 per share in 2004. "We're we're Contraction of we are. we're we are very pleased to end the year on a high note," 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 and chief executive officer. "Strong demand growth, even in the face of rising prices, and solid performance from our commercial power and gas businesses were two important factors behind the quarter's results. I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in also proud that we were able to maintain our 2005 ongoing operating and maintenance costs at 2004 levels." Other factors that led to the solid performance in 2005 include: --Constructive 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. recovery of the increased costs to generate and deliver reliable service to our customers; --Strong results from our optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. group, which capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. on rising fuel and 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. allowance prices without compromising the company's future needs; and --Favorable weather. 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: statements of income for the quarters and years ended December December: see month. 31, 2005 and 2004, and unaudited consolidated balance sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. as of December 31, 2005 and December 31, 2004 can be found in Schedules 1 and 2, respectively, of this release. Earnings Adjustments Cinergy uses adjusted earnings internally for analysis of performance and for reporting results to the Board of Directors to provide a more meaningful representation of Cinergy's fundamental earnings power. The company also uses adjusted earnings when communicating its earnings outlook to analysts and investors. Reported earnings for the fourth quarter of 2005 were negatively impacted by ($0.01) per share in connection with a change in accounting principle relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc certain asset retirement obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. . The quarter's earnings also reflected the benefit of $0.24 per share resulting from the recognition of a net mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. gain on gas, fuel and power contracts that hedge our gas storage and generation portfolios. These contracts, which are economic hedges, do not meet the accounting requirements to qualify for accrual accounting Accrual Accounting An accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions happen. Notes: . Fourth quarter 2005 reported earnings were reduced by ($0.05) per share for 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 payments and certain costs incurred in connection with the proposed merger with Duke Energy announced in May 2005. During the quarter, Cinergy completed the sale of a wholly-owned international subsidiary engaged in the generation and sale of heat and electricity, and recorded an impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge taken in connection with steps to monetize Monetize 1. To convert into money. 2. To convert from securities into currency that can be used to purchase goods and services. Notes: For example, you'll often hear Internet marketers talk about "monetizing website visitors. an investment in a North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. energy service business. These investments have been presented as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. in Cinergy's consolidated statements of income. While these events did not impact the fourth quarter of 2005 results, the full year results include a net contribution of $0.01 per share for discontinued operations. In 2004, reported earnings were impacted in the fourth quarter by net gains from mark-to-market adjustments of $0.06 per share and by a net contribution of $0.02 per share for certain asset sales, impairment write-downs and other charges. Reconciliations of the items above, which are included in reported earnings as determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) but excluded from adjusted earnings, can be found in Schedules 3 and 4 of this release. Business Segment Results 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. Businesses segment reported adjusted earnings of $0.40 per share in the fourth quarter of 2005 compared with adjusted earnings of $0.45 per share in the same period of 2004. The decrease in earnings was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to increased amortization of our Ohio regulatory transition charge and higher depreciation, taxes other than income taxes and financing costs. Increased retail sales partially offset the decrease. Fourth quarter adjusted earnings from the Commercial Businesses segment were $0.39 per share in 2005 compared with adjusted earnings of $0.27 per share from a year earlier. The increase in earnings was primarily due to higher margins realized through price increases on existing long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. power agreements and through power and gas trading activities. The Power Technology and Infrastructure Services segment reported an adjusted ($0.02) per share loss for the fourth quarter of 2005, as compared to an adjusted ($0.01) per share loss from the prior year. Complete details of fourth quarter and full year 2005 results compared to 2004 can be found in Schedules 5 through 8 of this release. Other Activities In the fourth quarter, the Duke/Cinergy merger was approved by state regulatory commissions in Ohio, 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. and South Carolina South Carolina, state of the SE United States. It is bordered by North Carolina (N), the Atlantic Ocean (SE), and Georgia (SW). Facts and Figures Area, 31,055 sq mi (80,432 sq km). Pop. (2000) 4,012,012, a 15. , as well as the 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. . Agreements have been reached with certain intervening in·ter·vene intr.v. in·ter·vened, in·ter·ven·ing, in·ter·venes 1. To come, appear, or lie between two things: You can't see the lake from there because the house intervenes. 2. parties in 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). and North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. , and votes by shareholders of both companies are expected in March 2006. The merger is expected to close in the first half of 2006. In December, 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 approved the first electric distribution base rate increase for The Cincinnati Gas & Electric Co. in more than 10 years. The increase of $51.5 million, or approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. four percent, in annual revenues took effect in January January: see month. 2006. The Kentucky Public Service Commission approved an increase of $8.1 million in The Union Light, Heat and Power Co.'s base rates for natural gas distribution service. Approximately $4.5 million of the approved increase reflects revenue which had already been recovered through a tracking mechanism. The KPSC KPSC Kentucky Public Service Commission KPSC Karnataka Public Service Commission also renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. the tracking mechanism for costs associated with the accelerated gas main replacement program. PSI Energy Inc. reached a settlement with the Indiana Office of Utility Consumer Counselor
emissions npl → Emissionen pl in response to new federal environmental rules to improve air quality. PSI is seeking Indiana Utility Regulatory Commission approval of the settlement and expects a commission decision in the first half of 2006. Cinergy Corp. has a balanced, integrated portfolio consisting of two core businesses: regulated operations and commercial businesses. Cinergy's regulated public utilities in Ohio, Indiana, and Kentucky serve 1.5 million electric customers and about 500,000 gas customers. In addition, its regulated operations own 8,100 megawatts of generation. Cinergy's competitive commercial businesses have 5,200 megawatts of generating capacity with a profitable balance of stable existing customer portfolios, new customer 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, 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. . Cinergy's integrated businesses make it 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 providing both low-cost generation and reliable electric and gas service. 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. This document includes statements that do not directly or exclusively relate to historical facts. Such statements are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include statements regarding benefits of the proposed mergers and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). transactions, integration plans and expected synergies, anticipated future financial operating performance and results, including estimates of growth. These statements are based on the current expectations of management of Duke Energy and Cinergy. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this document. For example, (1) the companies may be unable to obtain shareholder approvals required for the transaction; (2) the companies may be unable to obtain regulatory approvals required for the transaction, or required regulatory approvals may delay the transaction or result in the imposition The printing of pages on a single sheet of paper in a particular order so that they come out in the correct sequence when cut and folded. of conditions that could have a material adverse effect on the combined company or cause the companies to abandon abandon v. to intentionally and permanently give up, surrender, leave, desert, or relinquish all interest or ownership in property, a home or other premises, a right of way, and even a spouse, family, or children. the transaction; (3) conditions to the closing of the transaction may not be satisfied; (4) problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected; (5) the combined company may be unable to achieve cost-cutting synergies or it may take longer than expected to achieve those synergies; (6) the transaction may involve unexpected costs or unexpected liabilities, or the effects of purchase accounting may be different from the companies' expectations; (7) the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; (8) the businesses of the companies may suffer as a result of uncertainty surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the transaction; (9) the industry may be subject to future regulatory or legislative actions that could adversely affect the companies; and (10) the companies may be adversely affected by other economic, business and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. competitive factors. Additional factors that may affect the future results of Duke Energy and Cinergy are set forth in their respective filings with the Securities and Exchange Commission ("SEC"), which are available at www.duke-energy.com/investors and www.cinergy.com/investors, respectively. Duke Energy and Cinergy undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additional Information and Where to Find It In connection with the proposed transaction, a registration statement of Duke Energy Holding Corp. (Registration No. 333-126318), which includes a preliminary prospectus Preliminary Prospectus A first draft registration statement filed by a firm prior to proceeding with an initial public offering of securities. The document, filed with the Securities & Exchange Commission, is intended to provide pertinent information to prospective shareholders and a preliminary joint proxy statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. of Duke Energy and Cinergy, and other materials have been filed with the SEC and are publicly available. WE URGE URGE Uniform Rating of Generating Equipment INVESTORS TO READ THE DEFINITIVE JOINT PROXY See proxy server. (networking) proxy - A process that accepts requests for some service and passes them on to the real server. A proxy may run on dedicated hardware or may be purely software. STATEMENT-PROSPECTUS WHEN IT BECOMES AVAILABLE AND THESE OTHER MATERIALS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT DUKE ENERGY, CINERGY, DUKE ENERGY HOLDING CORP. AND THE PROPOSED TRANSACTION. Investors will be able to obtain free copies of the joint proxy statement-prospectus as well as other filed documents containing information about Duke Energy and Cinergy at http://www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. , the SEC's Web site. Free copies of Duke Energy's SEC filings are also available on Duke Energy's Web site at http://www.duke-energy.com/investors/, and free copies of Cinergy's SEC filings are also available on Cinergy's Web site at http://www.cinergy.com. Participants in the Solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual Duke Energy, Cinergy and their respective executive officers and directors may be deemed, under SEC rules, to be participants in the solicitation of proxies from Duke Energy's or Cinergy's stockholders with respect to the proposed transaction. Information regarding the officers and directors of Duke Energy is included in its definitive proxy statement for its 2005 annual meeting filed with the SEC on March 31, 2005. Information regarding the officers and directors of Cinergy is included in its definitive proxy statement for its 2005 annual meeting filed with the SEC on March 28, 2005. More detailed information regarding the identity of potential participants, and their direct or indirect interests, by securities, holdings or otherwise, will be set forth in the registration statement and proxy statement and other materials to be filed with the SEC in connection with the proposed transaction.
CINERGY CORP. Schedule 1
CONSOLIDATED STATEMENTS OF INCOME
For the Periods Ended December 31, 2005 and 2004
(unaudited)
(dollars in thousands, except per share amounts)
----------------------------------------------------------------------
Quarter Ended Year To Date
---------------------- -----------------------
2005 2004 2005 2004
----------- ---------- ----------- -----------
Operating Revenues
Electric $1,118,974 $849,260 $4,070,972 $3,510,525
Gas 340,013 259,090 816,781 783,316
Other 169,724 94,741 522,095 333,988
----------- ---------- ----------- -----------
Total Operating Revenues 1,628,711 1,203,091 5,409,848 4,627,829
Operating Expenses
Fuel, emission
allowances and
purchased power 466,654 307,528 1,535,088 1,233,311
Gas purchased 218,555 137,359 513,690 428,087
Costs of fuel resold 145,664 77,450 443,132 280,891
Operation and
maintenance 349,670 304,333 1,348,554 1,230,618
Depreciation 129,780 124,810 510,438 453,765
Taxes other than
income taxes 62,894 49,625 272,009 253,934
----------- ---------- ----------- -----------
Total Operating Expenses 1,373,217 1,001,105 4,622,911 3,880,606
Operating Income 255,494 201,986 786,937 747,223
Equity in Earnings of
Unconsolidated
Subsidiaries 8,571 30,154 33,777 48,249
Miscellaneous Income
(Expense) - Net 16,968 7,695 51,001 (3,577)
Interest Expense 73,733 65,659 283,353 275,000
Preferred Dividend
Requirement of
Subsidiary Trust - - - -
Preferred Dividend
Requirements of
Subsidiaries 324 858 2,643 3,432
----------- ---------- ----------- -----------
Income Before Taxes 206,976 173,318 585,719 513,463
Income Taxes 15,137 26,860 95,597 103,064
----------- ---------- ----------- -----------
Income Before
Discontinued Operations
and Cumulative Effect
of Changes in Accounting
Principles 191,839 146,458 490,122 410,399
Discontinued
operations, net of
tax 858 (32) 2,575 (9,531)
Cumulative effect of
changes in accounting
principles, net of
tax (3,044) - (3,044) -
----------- ---------- ----------- -----------
Net Income $189,653 $146,426 $489,653 $400,868
Average Common Shares
Outstanding - Basic 199,557 183,455 198,199 180,965
Earnings Per Common
Share - Basic
Income before discontinued
operations and cumulative
effect of changes in
accounting principles $0.96 $0.81 $2.47 $2.27
Discontinued
operations, net of
tax 0.00 - 0.01 (0.05)
Cumulative effect
of changes in
accounting
principles, net of
tax (0.01) - (0.01) -
----------- ---------- ----------- -----------
Net Income $0.95 $0.81 $2.47 $2.22
Average Common Shares
Outstanding - Diluted 200,324 186,369 199,172 183,531
Earnings Per Common
Share - Diluted
Income before
discontinued
operations and
cumulative effect of
changes in accounting
principles $0.96 $0.79 $2.46 $2.23
Discontinued
operations, net of
tax 0.00 - 0.01 (0.05)
Cumulative effect
of changes in
accounting
principles, net of
tax (0.01) - (0.01) -
----------- ---------- ----------- -----------
Net Income $0.95 $0.79 $2.46 $2.18
Cash Dividends Declared
Per Common Share - $0.47 $1.92 $1.88
Note: Prior year data has been reclassified to conform with current
year presentation.
CINERGY CORP. Schedule 2
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
----------------------------------------------------------------------
December 31 December 31
2005 2004
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $146,056 $162,526
Notes receivable, current 287,502 214,513
Accounts receivable less
accumulated provision for
doubtful accounts of $4,767 at
December 31, 2005, and $5,059
at December 31, 2004 1,415,209 1,036,119
Fuel, emission allowances, and
supplies 589,152 442,951
Energy risk management current
assets 991,252 381,146
Prepayments and other 408,975 173,203
------------ ------------
Total current assets 3,838,146 2,410,458
Property, Plant, and Equipment - at
Cost
Utility plant in service 10,714,000 10,076,468
Construction work in progress 501,294 333,687
------------ ------------
Total utility plant 11,215,294 10,410,155
Non-regulated property, plant,
and equipment 4,775,570 4,549,128
Accumulated depreciation 5,477,782 5,147,556
------------ ------------
Net property, plant, and
equipment 10,513,082 9,811,727
Other Assets
Regulatory assets 1,069,854 1,030,333
Investments in unconsolidated
subsidiaries 479,466 513,675
Energy risk management non-
current assets 306,959 138,787
Notes receivable, non-current 171,325 193,857
Other investments 128,150 125,367
Goodwill and intangible assets 169,081 118,619
Restricted funds held in trust 301,800 358,006
Other 185,062 117,870
------------ ------------
Total other assets 2,811,697 2,596,514
Assets of Discontinued Operations 34,215 163,618
Total Assets $17,197,140 $14,982,317
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $1,922,867 $1,344,780
Accrued taxes 219,469 217,106
Accrued interest 64,725 54,473
Notes payable and other short-
term obligations 923,600 948,327
Long-term debt due within one
year 352,589 219,967
Energy risk management current
liabilities 1,010,585 310,741
Other 193,323 168,734
------------ ------------
Total current liabilities 4,687,158 3,264,128
Non-current Liabilities
Long-term debt 4,393,442 4,227,475
Deferred income taxes 1,523,070 1,587,557
Unamortized investment tax
credits 90,852 99,723
Accrued pension and other
postretirement benefit costs 729,221 688,277
Regulatory liabilities 546,047 557,419
Energy risk management non-
current liabilities 338,514 127,340
Other 250,822 219,439
------------ ------------
Total non-current
liabilities 7,871,968 7,507,230
Liabilities of Discontinued
Operations 28,876 32,219
Total Liabilities 12,588,002 10,803,577
Cumulative Preferred Stock of
Subsidiaries
Not subject to mandatory
redemption 31,743 62,818
Common Stock Equity
Common stock - $0.01 par value;
authorized shares - 600,000,000;
issued shares - 199,707,338 at
December 31, 2005 and 187,653,506
at December 31, 2004; outstanding
shares - 199,565,684 at
December 31, 2005 and 187,524,229
at December 31, 2004 1,997 1,877
Paid-in capital 2,982,625 2,559,715
Retained earnings 1,721,716 1,613,340
Treasury shares at cost -
141,654 at December 31, 2005,
and 129,277 shares at December
31, 2004 (4,823) (4,336)
Accumulated other comprehensive
income (loss) (124,120) (54,674)
------------ ------------
Total common stock equity 4,577,395 4,115,922
Total Liabilities and
Shareholders' Equity $17,197,140 $14,982,317
Note: Prior year data has been reclassified to conform with current
year presentation.
Schedule 3
CINERGY CORP.
RECONCILIATION OF GAAP EPS TO ADJUSTED EPS - 2005
(unaudited)
----------------------------------------------------------------------
----------------------------------------------------------------------
Q1 Q2 Q3 Q4 Total
----------------------------------------------------------------------
Regulated Businesses
----------------------------------------------------------------------
EPS As Reported $0.39 $0.24 $0.46 $0.36 $1.45
Special Items:
Merger and Severance
Costs - 0.03 0.02 0.04 0.09
----------------------------------------------------------------------
EPS Adjusted $0.39 $0.27 $0.48 $0.40 $1.54
----------------------------------------------------------------------
----------------------------------------------------------------------
Commercial Businesses
----------------------------------------------------------------------
EPS As Reported $0.23 $0.02 $0.20 $0.61 $1.06
Discontinued Operations (0.01) (0.01) 0.01 - (0.01)
Cumulative Effect of a
Change in Accounting
Principle - - - 0.01 0.01
Special Items:
Merger and Severance
Costs - 0.03 0.02 0.01 0.06
Mark-to-Market Effect
on Asset Hedges(1) 0.12 0.04 0.27 (0.24) 0.19
----------------------------------------------------------------------
EPS Adjusted $0.34 $0.08 $0.50 $0.39 $1.31
----------------------------------------------------------------------
----------------------------------------------------------------------
Power Technology &
Infrastructure Services
----------------------------------------------------------------------
EPS As Reported $(0.02) $(0.01) $- $(0.02) $(0.05)
Special Items:
Merger and Severance
Costs - 0.01 - - 0.01
----------------------------------------------------------------------
EPS Adjusted $(0.02) $- $- $(0.02) $(0.04)
----------------------------------------------------------------------
----------------------------------------------------------------------
Cinergy Corp.
----------------------------------------------------------------------
EPS As Reported $0.60 $0.25 $0.66 $0.95 $2.46
Discontinued Operations (0.01) (0.01) 0.01 - (0.01)
Cumulative Effect of a
Change in Accounting
Principle - - - 0.01 0.01
Special Items 0.12 0.11 0.31 (0.19) 0.35
----------------------------------------------------------------------
EPS Adjusted $0.71 $0.35 $0.98 $0.77 $2.81
----------------------------------------------------------------------
(1) Represents the mark-to-market impact of contracts used in
Cinergy's economic hedging of its excess unregulated generation
portfolio and its natural gas storage portfolio. The economic value of
these portfolios is subject to market fluctuations and, as such, the
hedging process involves both purchases and sales. Because these
generation assets and gas storage contracts are accounted for under
the accrual method of accounting, the Company believes that excluding
the impact of mark-to-market changes from reported earnings better
matches the contract with the settlement period of the position it is
hedging. These amounts will be recognized through adjusted earnings
when the contracts ultimately settle.
Approximately 75% of the remaining mark-to-market value of these
contracts is expected to settle in the first quarter of 2006.
Schedule 4
CINERGY CORP.
RECONCILIATION OF GAAP EPS TO ADJUSTED EPS - 2004
(unaudited)
----------------------------------------------------------------------
----------------------------------------------------------------------
Q1 Q2 Q3 Q4 Total
----------------------------------------------------------------------
Regulated Businesses
----------------------------------------------------------------------
EPS As Reported $0.44 $0.19 $0.32 $0.45 $1.40
Special Items:
CIN-10 Implementation
Costs and Other
Charges - 0.03 - - 0.03
----------------------------------------------------------------------
EPS Adjusted $0.44 $0.22 $0.32 $0.45 $1.43
----------------------------------------------------------------------
----------------------------------------------------------------------
Commercial Businesses
----------------------------------------------------------------------
EPS As Reported $0.25 $0.17 $0.24 $0.29 $0.95
Discontinued Operations (0.01) 0.03 0.03 - 0.05
Special Items:
CIN-10 Implementation
Costs and Other
Charges - 0.01 0.01 0.04 0.06
Mark-to-Market Effect
on Asset Hedges(1) (0.05) 0.02 0.07 (0.06) (0.02)
----------------------------------------------------------------------
EPS Adjusted $0.19 $0.23 $0.35 $0.27 $1.04
----------------------------------------------------------------------
----------------------------------------------------------------------
Power Technology &
Infrastructure Services
----------------------------------------------------------------------
EPS As Reported $(0.12) $(0.04) $(0.06) $0.05 $(0.17)
Special Items:
Asset Sales,
Impairment Write-
downs and
Other Charges - Net 0.11 0.02 0.05 (0.06) 0.12
----------------------------------------------------------------------
EPS Adjusted $(0.01) $(0.02) $(0.01) $(0.01) $(0.05)
----------------------------------------------------------------------
----------------------------------------------------------------------
Cinergy Corp.
----------------------------------------------------------------------
EPS As Reported $0.57 $0.32 $0.50 $0.79 $2.18
Discontinued Operations (0.01) 0.03 0.03 - 0.05
Special Items 0.06 0.08 0.13 (0.08) 0.19
----------------------------------------------------------------------
EPS Adjusted $0.62 $0.43 $0.66 $0.71 $2.42
----------------------------------------------------------------------
For 2004, the Regulated and Commercial segments have each been
restated from prior presentations to reflect the reclassification of
PSI's off-system sales from the Commercial Businesses to the Regulated
Businesses.
(1) Represents the mark-to-market impact of contracts used in
Cinergy's economic hedging of its excess unregulated generation
portfolio and its natural gas storage portfolio. The economic value of
these portfolios is subject to market fluctuations and, as such, the
hedging process involves both purchases and sales. Because these
generation assets and gas storage contracts are accounted for under
the accrual method of accounting, the Company believes that excluding
the impact of mark-to-market changes from reported earnings better
matches the contract with the settlement period of the position it is
hedging. These amounts will be recognized through adjusted earnings
when the contracts ultimately settle. This adjustment was not
reflected as a special item when 2004 results were reported.
Schedule 5
CINERGY CORP.
BUSINESS SEGMENT SUMMARY INFORMATION
For the Quarter Ended December 31
(unaudited)
(dollars in thousands, except per share amounts)
----------------------------------------------------------------------
2005 2004
---- ----
Regulated Businesses
--------------------
Net Income $72,656 $84,830
Earnings Per Share - diluted $0.36 $0.45
Operational Statistics:
Electric Retail MWh Sales and
Transportation 13,195,097 12,546,022
Gas Retail Mcf Sales and
Transportation 27,659,249 26,195,228
Electric Customers (End of Period) 1,580,299 1,566,693
Gas Customers (End of Period) 513,723 511,123
Commercial Businesses
---------------------
Net Income $119,706 $52,519
Earnings Per Share - diluted $0.61 $0.29
Operational Statistics:
Electricity Trading Volumes (MWhs) 45,634,940 48,780,860
Physical and Financial Gas Trading
(Bcf/d) 34.2 53.9
Power Technology & Infrastructure Services
------------------------------------------
Net Income $(2,709) $9,078
Earnings Per Share - diluted $(0.02) $0.05
For 2004, the Regulated and Commercial segments have each been
restated from prior presentations to reflect the reclassification of
PSI's off-system sales from the Commercial Businesses to the Regulated
Businesses.
Schedule 6
CINERGY CORP.
BUSINESS SEGMENT EARNINGS DRIVER ANALYSIS
For the Quarter Ended December 31, 2005
(unaudited)
----------------------------------------------------------------------
Regulated Businesses
--------------------
Earnings Per Share - diluted - 2004
(Adjusted(1)) $0.45
Weather 0.02
Electric and gas sales volumes 0.07
Price Increases 0.02
Regulatory deferrals 0.02
Regulatory transition charge amortization (0.06)
Operation and maintenance (0.02)
Depreciation (0.02)
Taxes other than income taxes (0.05)
Financing and dilution (0.04)
Other - net 0.01
----------
Earnings Per Share - diluted - 2005
(Adjusted(1)) $0.40
==========
Commercial Businesses
---------------------
Earnings Per Share - diluted - 2004
(Adjusted(1)) $0.27
Electric sales volumes 0.02
Price increases 0.10
Fuel costs (0.03)
Power marketing, trading and origination 0.03
Gas marketing, trading and origination 0.02
Financing and dilution (0.05)
Other - net 0.03
----------
Earnings Per Share - diluted - 2005
(Adjusted(1)) $0.39
==========
Power Technology & Infrastructure Services
------------------------------------------
Earnings Per Share - diluted - 2004
(Adjusted(1)) ($0.01)
Results of investments (0.01)
----------
Earnings Per Share - diluted - 2005
(Adjusted(1)) ($0.02)
==========
For 2004, the Regulated and Commercial segments have each been
restated from prior presentations to reflect the reclassification of
PSI's off-system sales from the Commercial Businesses to the Regulated
Businesses.
(1) See Schedules 3 and 4 for a reconciliation to the most comparable
GAAP measure.
Schedule 7
CINERGY CORP.
BUSINESS SEGMENT SUMMARY INFORMATION
For the Year Ended December 31
(unaudited)
(dollars in thousands, except per share amounts)
----------------------------------------------------------------------
2005 2004
---- ----
Regulated Businesses
--------------------
Net Income $289,046 $258,049
Earnings Per Share - diluted $1.45 $1.40
Operational Statistics:
Electric Retail MWh Sales and
Transportation 54,553,124 52,655,549
Gas Retail Mcf Sales and
Transportation 88,705,134 91,012,963
Electric Customers (End of Period) 1,580,299 1,566,693
Gas Customers (End of Period) 513,723 511,123
Commercial Businesses
---------------------
Net Income $209,981 $173,896
Earnings Per Share - diluted $1.06 $0.95
Operational Statistics:
Electricity Trading Volumes (MWhs) 196,657,188 185,148,553
Physical and Financial Gas Trading
(Bcf/d) 43.0 51.6
Power Technology & Infrastructure Services
------------------------------------------
Net Income $(9,374) $(31,077)
Earnings Per Share - diluted $(0.05) $(0.17)
For 2004, the Regulated and Commercial segments have each been
restated from prior presentations to reflect the reclassification of
PSI's off-system sales from the Commercial Businesses to the Regulated
Businesses.
Schedule 8
CINERGY CORP.
BUSINESS SEGMENT EARNINGS DRIVER ANALYSIS
For the Year Ended December 31, 2005
(unaudited)
----------------------------------------------------------------------
Regulated Businesses
--------------------
Earnings Per Share - diluted - 2004
(Adjusted(1)) $1.43
Weather 0.16
Electric and gas sales volumes 0.10
Price increases 0.25
Other margins 0.02
Regulatory deferrals 0.08
Regulatory transition charge amortization (0.15)
Operation and maintenance (0.07)
Depreciation (0.12)
Taxes other than income taxes (0.05)
Financing and dilution (0.17)
Other - net 0.06
Earnings Per Share - diluted - 2005
(Adjusted(1)) $1.54
==========
Commercial Businesses
---------------------
Earnings Per Share - diluted - 2004
(Adjusted(1)) $1.04
Weather 0.03
Electric sales volumes 0.04
Price increases 0.20
Fuel costs (0.12)
Optimization activities 0.28
Operation and maintenance (0.03)
Power marketing, trading and origination 0.03
Gas marketing, trading and origination (0.06)
Financing and dilution (0.07)
Other - net (0.03)
Earnings Per Share - diluted - 2005
(Adjusted(1)) $1.31
==========
Power Technology & Infrastructure Services
------------------------------------------
Earnings Per Share - diluted - 2004
(Adjusted(1)) ($0.05)
Results of investments 0.01
----------
Earnings Per Share - diluted - 2005
(Adjusted(1)) ($0.04)
==========
For 2004, the Regulated and Commercial segments have each been
restated from prior presentations to reflect the reclassification of
PSI's off-system sales from the Commercial Businesses to the Regulated
Businesses.
(1) See Schedules 3 and 4 for a reconciliation to the most comparable
GAAP measure.
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