-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UOLNQSi3u9dOJJTS5fnCpZLGWqBzV9WrKV3hGIIgEtJxbYu5yAl5sxMR6+WmQTB6 5fkWXiKdgW9avq8s/2+Bmg== 0000899652-96-000102.txt : 19960502 0000899652-96-000102.hdr.sgml : 19960502 ACCESSION NUMBER: 0000899652-96-000102 CONFORMED SUBMISSION TYPE: U-13-60 PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960501 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CINERGY CORP CENTRAL INDEX KEY: 0000899652 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 311385023 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-13-60 SEC ACT: 1935 Act SEC FILE NUMBER: 049-00123 FILM NUMBER: 96554594 BUSINESS ADDRESS: STREET 1: 139 E FOURTH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5133812000 MAIL ADDRESS: STREET 1: 139 E FOURTH STREET CITY: CINCINATI STATE: OH ZIP: 45202 U-13-60 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM U-13-60 ANNUAL REPORT For the Period Beginning January 1, 1995 and Ending December 31, 1995 to the U. S. SECURITIES AND EXCHANGE COMMISSION of Cinergy Services, Inc. (Exact Name of Reporting Company) A Subsidiary SERVICE COMPANY Date of Incorporation: February 23, 1994 State or Sovereign Power under which Incorporated or Organized: Delaware Location of Principal Executive Offices of Reporting Company: Cincinnati, Ohio Name, title and address of officer to whom correspondence concerning this report should be addressed: Charles J. Winger, Comptroller, 139 East Fourth Street, Cincinnati, Ohio 45202 Name of Principal Holding Company Whose Subsidiaries are served by Reporting Company: Cinergy Corp. INSTRUCTIONS FOR USE OF FORM U-13-60 1. Time of Filing. Rule 94 provides than on or before the first day of May in each calendar year, each mutual service company and each sub- sidiary service company as to which the Commission shall have made a favorable finding pursuant to Rule 88, and every service company whose application for approval or declaration pursuant to Rule 88 is pending shall file with the Commission an annual report on Form U-13-60 and in accordance with the Instructions for that form. 2. Number of Copies. Each annual report shall be filed in duplicate. The company should prepare and retain at least one extra copy for itself in case correspondence with reference to the report becomes necessary. 3. Period Covered by Report. The first report filed by any company shall cover the period from the date the Uniform System of Accounts was required to be made effective as to that company under Rules 82 and 93 to the end of that calendar year. Subsequent reports should cover a calendar year. 4. Report Format. Reports shall be submitted on the forms prepared by the Commission. If the space provided on any sheet of such form is inadequate, additional sheets may be inserted of the same size as a sheet of the form or folded to each size. 5. Money Amounts Displayed. All money amounts required to be shown in financial statements may be expressed in whole dollars, in thousands of dollars or in hundred thousands of dollars, as appropriate and subject to provisions of Regulation S-X (210.3-01(b)). 6. Deficits Displayed. Deficits and other like entries shall be indi- cated by the use of either brackets or a parenthesis with correspon- ding reference in footnotes. (Regulation S-X, 210.3-01(c)). 7. Major Amendments or Corrections. Any company desiring to amend or correct a major omission or error in a report after it has been filed with the Commission shall submit an amended report including only those pages, schedules, and entries that are to be amended or corrected. A cover letter shall be submitted requesting the Commission to incorporate the amended report changes and shall be signed by a duly authorized officer of the company. 8. Definitions. Definitions contained in Instruction 01-8 to the Uni- form System of Accounts for Mutual Service Companies and Subsidiary Service Companies, Public Utility Holding Company Act of 1935, as amended February 2, 1979 shall be applicable to words or terms used specifically within this Form U-13-60. 9. Organization Chart. The service company shall submit with each annual report a copy of its current organization chart. 10. Methods of Allocation. The service company shall submit with each annual report a listing of the currently effective methods of allo- cation being used by the service company and on file with the Securities and Exchange Commission pursuant to the Public Utility Company Holding Act of 1935. 11. Annual Statement of Compensation for Use of Capital Billed. The service company shall submit with each annual report a copy of the annual statement supplied to each associate company in support of the amount of compensation for use of capital billed during the calendar year. Annual Report of Cinergy Services, Inc. LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS Schedule or Description of Schedules and Accounts Account No. Glossary of Terms Comparative Balance Sheet - Assets Schedule I Comparative Balance Sheet - Liabilities Schedule I Service Company Property Schedule II Accumulated Provision for Depreciation and Amortization of Service Company Property Schedule III Investments Schedule IV Accounts Receivable from Associate Companies Schedule V Fuel Stock Expenses Undistributed Schedule VI Stores Expense Undistributed Schedule VII Miscellaneous Current and Accrued Assets Schedule VIII Miscellaneous Deferred Debits Schedule IX Research, Development or Demonstration Expenditures Schedule X Proprietary Capital Schedule XI Long-term Debt Schedule XII Current and Accrued Liabilities Schedule XIII Notes to Financial Statements Schedule XIV Comparative Income Statement Schedule XV Analysis of Billing - Associate Companies Account 457 Analysis of Billing - Nonassociate Companies Account 458 Analysis of Charges for Service - Associate and Nonassociate Companies Schedule XVI Schedule of Expense by Department or Service Function Schedule XVII Departmental Analysis of Salaries Account 920 Outside Services Employed Account 923 Employee Pensions and Benefits Account 926 General Advertising Expense Account 930.1 Miscellaneous General Expenses Account 930.2 Rents Account 931 Taxes Other Than Income Taxes Account 408 Donations Account 426.1 Other Deductions Account 426.5 Notes to Statement of Income Schedule XVIII LISTING OF INSTRUCTIONAL FILING REQUIREMENTS Description of Reports or Statements Organization Chart Methods of Allocation Annual Statement of Compensation for Use of Capital Billed GLOSSARY OF TERMS The following commonly used abbreviations or acronyms used in the text of this report are defined below: Term Definition APBO Accumulated Postretirement Benefit Obligation Cinergy Cinergy Corp. Cinergy Services Cinergy Services, Inc. CG&E The Cincinnati Gas & Electric Company (a subsidiary of Cinergy) February 1995 Order An Indiana Utility Regulatory Commission order issued in February 1995 PSI PSI Energy, Inc. (a subsidiary of Cinergy) PUHCA Public Utility Holding Company Act of 1935 Resources PSI Resources, Inc., PSI's previous parent holding company SEC The Securities and Exchange Commission Service Agreement An agreement between Cinergy Services and Cinergy client companies detailing services to be provided by Cinergy Services and the method of compensation Statement 87 Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions" Statement 106 Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Post- retirement Benefits Other Than Pensions" Statement 109 Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ULH&P The Union Light, Heat and Power Company (a wholly-owned subsidiary of CG&E)
Annual Report of Cinergy Services, Inc. For the Years Ended December 31, 1995 and 1994 Schedule I - COMPARATIVE BALANCE SHEET Give balance sheet of the Company as of December 31 of the current and prior year REF December 31 ACCOUNT ASSETS AND OTHER DEBITS SCHED 1995 1994 SERVICE COMPANY PROPERTY 101 Service Company Property II $1,271,563 - 107 Construction Work in Progress II - - Total Property 1,271,563 - 108 Accumulated Provision for Depreciation and Amortization of Service Company Property III (30,635) - Net Service Company Property 1,240,928 - INVESTMENTS 123 Investments in Associate Companies IV - - 124 Other Investments IV - - Total Investments - - CURRENT AND ACCRUED ASSETS 131 Cash - - 134 Special Deposits - - 135 Working Funds - - 136 Temporary Cash Investments IV - - 141 Notes Receivable - - 143 Accounts Receivable V - - 144 Accumulated Provision for Uncollectible Accounts - - 146 Accounts Receivable from Associate Companies V 14,115,902 748,916 152 Fuel Stock Expenses Undistributed VI - - 154 Materials and Supplies - - 163 Stores Expense Undistributed VII - - 165 Prepayments - - 174 Miscellaneous Current and Accrued Assets VIII - - Total Current and Accrued Assets 14,115,902 748,916 DEFERRED DEBITS 181 Unamortized Debt Expense - - 184 Clearing Accounts 313,390 - 186 Miscellaneous Deferred Debits IX 289,563 1,186 188 Research, Development or Demonstration Expenditures X - - 190 Accumulated Deferred Income Taxes - - Total Deferred Debits 602,953 1,186 TOTAL ASSETS AND OTHER DEBITS $15,959,783 $750,102 PROPRIETARY CAPITAL 201 Common Stock Issued (Note 2) XI - - 211 Miscellaneous Paid-In-Capital XI - - 215 Appropriated Retained Earnings XI - - 216 Unappropriated Retained Earnings XI (212,501) (3) Total Proprietary Capital (212,501) (3) LONG-TERM DEBT 223 Advances from Associate Companies XII - - 224 Other Long-Term Debt XII - - 225 Unamortized Premium on Long-Term Debt - - 226 Unamortized Discount on Long-Term Debt - - Total Long-Term Debt - - CURRENT AND ACCRUED LIABILITIES 231 Notes Payable - - 232 Accounts Payable 7,634,754 130,922 233 Notes Payable to Associate Companies XIII - - 234 Accounts Payable to Associate Companies XIII 8,318,363 619,183 236 Taxes Accrued - - 237 Interest Accrued - - 238 Dividends Declared - - 241 Tax Collections Payable - - 242 Miscellaneous Current and Accrued Liabilities XIII - - Total Current and Accrued Liabilities 15,953,117 750,105 DEFERRED CREDITS 253 Other Deferred Credits 219,167 - 255 Accumulated Deferred Investment Tax Credits - - Total Deferred Credits 219,167 - 282 ACCUMULATED DEFERRED INCOME TAXES - - TOTAL LIABILITIES AND PROPRIETARY CAPITAL $15,959,783 $750,102
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule II - SERVICE COMPANY PROPERTY BALANCE AT RETIREMENTS OTHER BALANCE BEGINNING OR CHANGES AT CLOSE ACCOUNT DESCRIPTION OF YEAR ADDITIONS SALES (1) OF YEAR SERVICE COMPANY PROPERTY 301 Organization - - - - - 303 Miscellaneous Intangible Plant - - - - - 304 Land and Land Rights - - - - - 305 Structures and Improvements - - - - - 306 Leasehold Improvements - - - - - 307 Equipment (2) - - - - - 308 Office Furniture and Equipment - 1,271,563 - - 1,271,563 309 Automobiles, Other Vehicles and Related Garage Equipment - - - - - 310 Aircraft and Airport Equipment - - - - - 311 Other Service Company Property (3) - - - - - Sub-Total - 1,271,563 - - 1,271,563 107 Construction Work In Progress (4) - - - - - Total - $1,271,563 - - $1,271,563 NOTES (1) Provide an explanation of those changes considered material: None (2) Subaccounts are required for each class of equipment owned. The Service Company shall provide a listing by subaccount of equipment additions during the year and the balance at the close of the year: BALANCE AT CLOSE Subaccount Description Additions OF YEAR None (3) Describe other Service Company property: None (4) Describe construction work in progress: None
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule III - ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION OF SERVICE COMPANY PROPERTY BALANCE AT BALANCE BEGINNING OTHER CHANGES AT CLOSE ACCOUNT DESCRIPTION OF YEAR ADDITIONS RETIREMENTS ADD (DEDUCT)(1) OF YEAR 301 Organization - - - - - 303 Miscellaneous Intangible Plant - - - - - 304 Land and Land Rights - - - - - 305 Structures and Improvements - - - - - 306 Leasehold Improvements - - - - - 307 Equipment - - - - - 308 Office Furniture and Equipment - 30,635 - - 30,635 309 Automobiles, Other Vehicles and Related Garage Equipment - - - - - 310 Aircraft and Airport Equipment - - - - - 311 Other Service Company Property - - - - - Total - $30,635 - - $30,635 NOTES (1) Provide an explanation of those changes considered material: None
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule IV - INVESTMENTS INSTRUCTIONS: Complete the following schedule concerning investments. Under Account 124, "Other Investments", state each investment separately, with description, including the name of issuing company, number of shares or principal amount, etc. Under Account 136, "Temporary Cash Investments", list each investment separately. DESCRIPTION BALANCE AT BALANCE AT BEGINNING CLOSE OF YEAR OF YEAR Account 123 - Investment in Associate Companies None Total - - Account 124 - Other Investments None Total - - Account 136 - Temporary Cash Investments None Total - -
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES INSTRUCTIONS: Complete the following schedule listing accounts receivable from each associate company. Where the service company has provided accommodation or convenience payments for associate companies, a separate listing of total payments for each associate company by subaccount should be provided. BALANCE AT BALANCE AT DESCRIPTION BEGINNING OF YEAR CLOSE OF YEAR Account 146 - Accounts Receivable from Associate Companies: CG&E $628,919 $2,696,165 POWER INTERNATIONAL, INC. - 563,053 LAWRENCEBURG GAS COMPANY 6,357 53,867 KO TRANSMISSION COMPANY - 15 MIAMI POWER CORPORATION - 15,332 ULH&P 112,837 9,449,721 WEST HARRISON GAS AND ELECTRIC COMPANY 803 4,673 TRI-STATE IMPROVEMENT COMPANY - 103,547 CINERGY RESOURCES, INC. - 10,964 CGE ECK, INC. - 7,741 CINERGY INVESTMENTS, INC. - 481,589 POWER EQUIPMENT SUPPLY CO. - 24,827 WHOLESALE POWER SERVICES, INC. - 109,782 PSI RECYCLING, INC. - 22,125 CINERGY - 448,460 PSI ARGENTINA, INC. - 124,041 Total $748,916 $14,115,902 Analysis of Convenience or Accommodation Payments: None
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule VI - FUEL STOCK EXPENSES UNDISTRIBUTED INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to fuel stock expenses during the year and indicate amount attributable to each associate company. Under the section headed "Summary" listed below give an overall report of the fuel functions performed by the service company. DESCRIPTION LABOR EXPENSES TOTAL Account 152 - Fuel Stock Expenses Undistributed None Total - - - Summary:
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule VII - STORES EXPENSE UNDISTRIBUTED INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to stores expense during the year and indicate amount attributable to each associate company. DESCRIPTION LABOR EXPENSES TOTAL Account 163 - Stores Expense Undistributed None Total - - -
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule VIII - MISCELLANEOUS CURRENT AND ACCRUED ASSETS INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000 may be grouped, showing the number of items in each group. BALANCE AT BALANCE AT DESCRIPTION BEGINNING OF YEAR CLOSE OF YEAR Account 174 - Miscellaneous Current and Accrued Assets None Total - -
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule IX - MISCELLANEOUS DEFERRED DEBITS INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000 may be grouped by class showing the number of items in each class. BALANCE AT BALANCE AT DESCRIPTION BEGINNING OF YEAR CLOSE OF YEAR Account 186 - Miscellaneous Deferred Debits MISCELLANEOUS (1 ITEM) - $934 ITEMS DEFERRED PENDING INVESTIGATION 1,186 288,629 Total $1,186 $289,563
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule X - RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES INSTRUCTIONS: Provide a description of each material research, development, or demonstration project which incurred costs by the service corporation during the year. DESCRIPTION AMOUNT Account 188 - Research, Development, or Demonstration Expenditures None Total -
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule XI - PROPRIETARY CAPITAL NUMBER PAR OR ACCOUNT OF SHARES STATED VALUE - OUTSTANDING CLOSE OF PERIOD - NUMBER CLASS OF STOCK AUTHORIZED PER SHARE NO. OF SHARES TOTAL AMOUNT 201 Common Stock Issued 100 $0.05 50 -
INSTRUCTIONS: Classify amounts in each account with brief explanation, disclosing the general nature of transactions which gave rise to the reported amounts. DESCRIPTION AMOUNT 211 Miscellaneous Paid-In-Capital None 215 Appropriated Retained Earnings None Total
INSTRUCTIONS: Give particulars concerning net income or (loss) during the year, distinguishing between compensation for the use of capital owed or net loss remaining from servicing nonassociates per the General Instructions of the Uniform System of Accounts. For dividends paid during the year in cash or otherwise, provide rate percentage, amount of dividend, date declared and date paid. BALANCE BALANCE AT BEGINNING NET INCOME DIVIDENDS AT CLOSE ACCOUNT DESCRIPTION OF YEAR OR (LOSS) PAID OF YEAR 216 Unappropriated Retained Earnings ($3) (212,498) - ($212,501)
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule XII - LONG-TERM DEBT INSTRUCTIONS: Advances from associate companies should be reported separately from advances on notes and advances on open account. Names of associate companies from which advances were received shall be shown under the class and series of obligation column. For Account 224 - Other Long- Term Debt, provide the name of creditor company or organization, terms of the obligation, date of maturity, interest rate, and the amount authorized and outstanding. TERMS OF OBLIGATION BALANCE AT CLASS & SERIES DATE OF INTEREST AMOUNT BEGINNING NAME OF CREDITOR OF OBLIGATION MATURIT RATE AUTHORIZED OF YEAR ADDITIONS Account 223 - Advances from Associate Companies: None Total Account 224 - Other Long-Term Debt: None Total NOTES: (1) Give an explanation of deductions: None
(CONTINUED) Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule XII - LONG-TERM DEBT INSTRUCTIONS: Advances from associate companies should be reported separately from advances on notes and advances on open account. Names of associate companies from which advances were received shall be shown under the class and series of obligation column. For Account 224 - Other Long- Term Debt, provide the name of creditor company or organization, terms of the obligation, date of maturity, interest rate, and the amount authorized and outstanding. BALANCE (1) AT CLOSE NAME OF CREDITOR DEDUCTIONS OF YEAR Account 223 - Advances from Associate Companies: Total Account 224 - Other Long-Term Debt: Total NOTES: (1) Give an explanation of deductions: None
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule XIII - CURRENT AND ACCRUED LIABILITIES Instructions: Provide balance of notes and accounts payable to each associate company. Give description and amount of miscellaneous current and accrued liabilities. Items less than $10,000 may be grouped, showing the number of items in each group. BALANCE AT BALANCE AT DESCRIPTION BEGINNING OF YEAR CLOSE OF YEAR Account 233 - Notes Payable to Associate Companies None Total - - Account 234 - Accounts Payable to Associate Companies PSI $619,183 $8,318,363 Total $619,183 $8,318,363 Account 242 - Miscellaneous Current and Accrued Liabilities None Total - -
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule XIV - NOTES TO FINANCIAL STATEMENTS Instructions: The space below is provided for important notes regarding the financial statements, or any account thereof. Furnish particulars as to any significant contingent assets or liabilities existing at the end of the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference. 1. Summary of Significant Accounting Policies (a) Merger - Cinergy, a registered holding company under the PUHCA, was created in the October 1994 merger of CG&E and Resources. Cinergy Services is a wholly-owned subsidiary of Cinergy. Cinergy's other wholly-owned subsidiaries are CG&E, PSI, and Cinergy Investments, Inc. (b) Nature of Operations - Cinergy Services, a Delaware corporation, is the service company for the Cinergy system, providing member companies with a variety of administrative, management, and support services. (c) Management's Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates are also required with respect to the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (See Note 9) (d) Regulation - Cinergy Services is subject to regulation by the SEC under the PUHCA. Cinergy Services' accounting policies conform to generally accepted accounting principles and follow the Uniform System of Accounts for Mutual Service Companies and Subsidiary Service Companies prescribed by the SEC pursuant to the PUHCA. (e) Federal and State Income Taxes - Deferred tax assets and liabilities are recognized for the expected future tax consequences of existing differences between the financial reporting and tax reporting bases of assets and liabilities. Cinergy Services had no deferred tax assets or liabilities at year end. (f) Service Company Property - Service company property is stated at the original cost of the purchased property. (g) Depreciation - Provisions for depreciation are determined by using the straight-line method applied to the cost of depreciable plant in service. The rates are based on CG&E's latest depreciation study of the estimated service lives and net cost of removal of properties. (h) Income and Expenses - Services provided to affiliated companies are provided at cost. The costs of services are determined on a direct charge basis to the extent practicable. Indirect costs are charged using the ratios defined in the Service Agreement. (See "Methods of Allocations".) 2. Common Stock Cinergy Services is authorized to issue 100 shares of Common Stock at a par value of five cents ($.05) per share. During 1994, 50 shares of common stock were issued. All of Cinergy Services' outstanding common stock is held by Cinergy. 3. Notes Payable To better manage cash and working capital requirements, Cinergy's subsidiaries, including Cinergy Services, participate in a money pooling arrangement. Under the money pool, participants with surplus short-term funds, whether from internal sources, bank loans, or commercial paper sales, provide short-term loans to other system companies at rates that approximate the costs of the funds in the money pool. The SEC's approval, pursuant to the PUHCA, of the money pool extends through May 31, 1997. At December 31, 1995, Cinergy Services had no notes payable outstanding. 4. Leases Cinergy and its subsidiaries, including Cinergy Services, have entered into operating lease agreements covering various facilities and properties, including office space and computer, communications, and transportation equipment. Total rental payments on operating leases for each of the past two years were as follows: 1995 1994 (in millions) Cinergy and subsidiaries $36 $36 Future minimum lease payments required under operating leases with remaining, non-cancelable lease terms in excess of one year as of December 31, 1995, are as follows: Cinergy and Subsidiaries 1996 $28 1997 22 1998 14 1999 7 2000 5 After 2000 20 $96 5. Pension Plans The defined benefit pension plans of Cinergy's subsidiaries, of which Cinergy Services is a participant, cover substantially all employees meeting certain minimum age and service requirements. Plan benefits are determined under a final average pay formula with consideration of years of participation, age at retirement, and the applicable average Social Security wage base or benefit amount. The funding policies of the operating subsidiaries are to contribute annually to the plans an amount which is not less than the minimum amount required by the Employee Retirement Income Security Act of 1974 and not more than the maximum amount deductible for income tax purposes. Contributions applicable to the 1995 and 1994 plan years for Cinergy's subsidiaries were $15.4 million and $3.5 million, respectively. The plans' assets consist of investments in equity and fixed income securities. Cinergy's pension cost for 1995 and 1994 included the following components: 1995 1994 (in millions) Benefits earned during the period $ 18.5 $ 19.4 Interest accrued on projected benefit obligations 61.4 54.9 Actual (return) loss on plans' assets (119.3) 8.0 Net amortization and deferral 61.1 (66.3) Net periodic pension cost $ 21.7 $ 16.0 During 1994, CG&E recognized and additional $15.6 million of accrued pension cost in accordance with Statement of Financial Accounting Standards No. 88, Employers' Accounting for Settlements and Curtailments of Defined Pension Plans and for Termination Benefits. This amount represents the cost associated with additional benefits extended in connection with a voluntary workforce reduction program. 1995 1994 Actuarial Assumptions: For determination of projected benefit obligations Discount rate 7.50% 8.50% Rate of increase in future compensation PSI 4.50 5.50 CG&E and subsidiaries 4.50 5.50 For determination of pension cost Rate of return on plans' assets PSI 9.00 9.00 CG&E and subsidiaries 9.50 9.50 The following table reconciles the plans' funded status with amounts recorded in the Consolidated Financial Statements of Cinergy. Under the provisions of Statement 87, certain assets and obligations of the plans are deferred and recognized in the Consolidated Financial Statements of Cinergy in subsequent periods.
1995 1994 Plans' Plan's Plans' Plan's Assets Exceed Accumulated Assets Exceed Accumulated Accumulated Benefits Accumulated Benefits Benefits Exceed Assets Benefits Exceed Assets (in millions) Actuarial present value of benefits Vested benefits $(376.9) $(227.3) $(320.7) $(206.5) Non-vested benefits (35.1) (16.0) (25.5) (11.0) Accumulated benefit obligations (412.0) (243.3) (346.2) (217.5) Effect of future compensation increases (120.3) (53.2) (120.3) (52.2) Projected benefit obligations (532.3) (296.5) (466.5) (269.7) Plans' assets at fair value 500.6 220.0 438.4 198.7 Projected benefit obligations in excess of plans' assets (31.7) (76.5) (28.1) (71.0) Remaining balance of plans' net assets existing at date of initial application of Statement 87 to be recognized as a reduction of pension cost in future periods (7.7) (3.4) (8.6) (3.8) Unrecognized net gain resulting from experience different from that assumed and effects of changes in assumptions (14.1) (1.3) (7.9) (1.9) Prior service cost not yet recognized in net periodic pension cost 35.2 16.8 38.1 18.2 Accrued pension cost at December 31 $ (18.3) $ (64.4) $ (6.5) $ (58.5)
6. Other Postretirement Benefits Cinergy's subsidiaries, including Cinergy Services, provides certain health care and life insurance benefits to retired employees and their eligible dependents. The health care benefits include medical coverage and prescription drugs. Additionally, PSI provides dental benefits. PSI employees must meet minimum age and service requirements to be eligible for these postretirement benefits. All CG&E retirees are eligible to receive health care benefits, while life insurance is provided to retirees who participated in the plans and earned the right to postretirement life insurance benefits prior to January 1, 1991. The health care and dental benefits provided are subject to certain limitations, such as deductibles and co-payments. Neither CG&E nor PSI currently pre-funds its obligations for these postretirement benefits; however, PSI, in connection with the settlement which resulted in the February 1995 Order, agreed to begin pre-funding. Postretirement benefit cost for 1995 and 1994 included the following components: Health Life Care Insurance Total (in millions) 1995 Benefits earned during the period $ 4.4 $ .1 $ 4.5 Interest accrued on APBO 15.6 2.2 17.8 Amortization of transition obligations 8.1 .3 8.4 Net periodic postretirement benefit cost $28.1 $2.6 $30.7 1994 Benefits earned during the period $ 5.2 $ .2 $ 5.4 Interest accrued on APBO 13.8 2.2 16.0 Net amortization and deferral .1 - .1 Amortization of transition obligations 8.1 .3 8.4 Net periodic postretirement benefit cost $27.2 $2.7 $29.9 The following table reconciles the APBO of the health care and life insurance plans with amounts recorded in the Consolidated Financial Statements of Cinergy. Under the provisions of Statement 106, certain obligations of the plans are deferred and recognized in the Consolidated Financial Statements of Cinergy in subsequent periods. Health Life Care Insurance Total (in millions) 1995 Actuarial present value of benefits Fully eligible active plan participants $ (11.7) $ (1.1) $ (12.8) Other active plan participants (112.0) (2.7) (114.7) Retirees and beneficiaries (99.2) (26.4) (125.6) Projected APBO (222.9) (30.2) (253.1) Unamortized transition obligations 137.1 .7 137.8 Unrecognized prior service cost (.3) - (.3) Unrecognized net loss resulting from experience different from that assumed and effects of changes in assumptions 26.1 .5 26.6 Accrued postretirement benefit obligations at December 31, 1995 $ (60.0) $(29.0) $ (89.0) 1994 Actuarial present value of benefits Fully eligible active plan participants $ (11.4) $ (.9) $ (12.3) Other active plan participants (84.3) (2.3) (86.6) Retirees and beneficiaries (92.0) (23.5) (115.5) Projected APBO (187.7) (26.7) (214.4) Unamortized transition obligations 145.2 1.0 146.2 Unrecognized net (gain) loss resulting from experience different from that assumed and effects of changes in assumptions 2.2 (2.6) (.4) Accrued postretirement benefit obligations at December 31, 1994 $ (40.3) $(28.3) $ (68.6) The following assumptions were used to determine the APBO: 1995 1994 Discount rate 7.50% 8.50% Health care cost trend rate, gradually declining to 5% CG&E 8.00-11.00% 9.00-12.00% PSI 8.00-10.00 8.00-12.00 Year ultimate trend rates achieved CG&E 2002 2002 PSI 2007 2007 Increasing the health care cost trend rate by one percentage point in each year would increase the APBO by approximately $37 million and $27 million for 1995 and 1994, respectively, and the aggregate of the service and interest cost components of the postretirement benefit cost for each of 1995 and 1994 by approximately $3.4 million and $3.7 million, respectively. The majority of CG&E's and its subsidiaries' postretirement benefit costs are subject to PUCO jurisdiction. The PUCO has authorized CG&E to recover these costs on an accrual basis. Prior to the recovery of these health care costs in customers' rates on an accrual basis, the PUCO authorized CG&E to defer for future recovery the difference between postretirement benefit costs determined in accordance with the provisions of Statement 106 and the costs determined in accordance with CG&E's previous accounting practice. CG&E's deferrals totaled $4 million as of December 31, 1995. CG&E is requesting authorization for recovery of the gas portion of these costs in its current gas rate proceeding. CG&E will request authorization to begin recovering the electric portion of these costs in its next retail rate proceeding. In accordance with the February 1995 Order, PSI is recovering the cost of postretirement benefits other than pensions on an accrual basis. Prior to the recovery of these costs in customers' rates on an accrual basis, the difference between postretirement benefit costs determined in accordance with the provisions of Statement 106 and the costs determined in accordance with PSI's previous accounting practice was deferred for future recovery. PSI's deferrals totaled $21 million as of December 31, 1995. Commencing in February 1995, approximately $6 million of costs deferred for the period January 1, 1993, through July 31, 1993, are being recovered over a five-year period. Recovery over a five-year period of the remaining deferrals is being requested in PSI's current retail rate proceeding. 7. Net Loss The net loss at December 31, 1995 and 1994, represents expenses not assigned at year end. Such expenses are properly assigned in the succeeding year. 8. Income Taxes Cinergy Services complies with the provisions of Statement 109. Statement 109 requires recognition of deferred tax assets and liabilities for the expected future tax consequences of existing differences between the financial reporting and tax reporting bases of assets and liabilities. Cinergy Services has no deferred tax assets or liabilities at year-end. Cinergy Services provides administrative, management and support services to all other Cinergy companies. Its revenues and/or expenses are allocated to the other affiliates and, therefore, Cinergy Services had no stand alone taxable income. Cinergy Services will participate in the filing of a consolidated Federal income tax return with Cinergy for the year ended December 31, 1995. The current tax liability is allocated among the members of the group pursuant to a tax sharing agreement consistent with Rule 45(c) of the PUHCA. 9. Commitments and Contingencies (a) 1996 Voluntary Workforce Reduction Program - In January 1996, Cinergy announced a voluntary workforce reduction program which provides enhanced retirement and/or severance benefits to eligible employees. There are 840 employees who meet certain age and service requirements and are potentially eligible for enhanced retirement benefits under this program. Eligible employees who do not meet age and service requirements would receive severance benefits upon resignation from their employment. Program costs will not be known until after the participation election period ends on May 15, 1996. Cinergy intends to classify these costs as costs to achieve merger savings which, consistent with the merger savings sharing mechanisms previously approved by regulators, will result in the portion of these costs allocable to Ohio electric jurisdictional customers (approximately 38%) being charged to earnings in the second quarter of 1996, and the remaining costs allocable to other jurisdictions being deferred for future recovery through rates as an offset against merger savings. A significant portion of these benefits will be eligible for funding from qualified retirement plan assets. (b) Power International Litigation - On October 25, 1995, a suit was filed in the Federal District Court for the Southern District of Ohio by three former employees of Power International, a subsidiary of Investments, naming as defendants Power International, Cinergy, Cinergy Investments, CG&E, PSI, James E. Rogers, and William J. Grealis. (Mr. Rogers and Mr. Grealis are officers and/or directors of the foregoing companies.) The lawsuit, which stems from the termination of employment of the three former employees, alleges that they entered into employment contracts with Power International based on the opportunity to participate in potential profits from future investments in energy projects in central and eastern Europe. The suit alleges causes of action based upon, among other theories, breach of contract related to the events surrounding the termination of their employment and fraud and misrepresentation related to the level of financial support for future projects. The suit alleges compensatory damages of $154 million based upon assumed future success of potential future investments and punitive damages of three times that amount. All defendants intend to defend vigorously against the charges based upon meritorious defenses. Cinergy, CG&E, and PSI are currently unable to predict the outcome of this litigation.
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule XV - COMPARATIVE STATEMENTS OF INCOME December 31 ACCOUNT DESCRIPTION 1995 1994 INCOME: 457 Services Rendered to Associate Companies $190,167,376 $1,724,031 458 Services Rendered to Nonassociate Companies - - 421 Miscellaneous Income or Loss - - Total Income 190,167,376 1,724,031 EXPENSES: 920 Salaries and Wages 88,557,249 480,385 921 Office Supplies and Expenses 27,797,960 837,766 922 Administrative Expenses Transferred - Credit 7,320 - 923 Outside Services Employed 19,795,706 60,731 924 Property Insurance 433,850 - 925 Injuries and Damages 2,741,498 1,344 926 Employee Pension and Benefits 19,317,283 83,661 928 Regulatory Commission Expense 2,211,123 - 930.1 General Advertising Expenses 60,522 - 930.2 Miscellaneous General Expenses 16,969,753 223,688 931 Rents 4,663,934 - 932 Maintenance of Structures and Equipment 2,090,272 - 403, 404 Depreciation and Amortization Expense 32,069 36,459 408 Taxes Other Than Income Taxes 5,697,526 - 409 Income Taxes - - 410 Provision for Deferred Income Taxes - - 411 Provision for Deferred Income Taxes - Credit - - 411.5 Investment Tax Credit - - 421 Miscellaneous Income or Loss - - 426.1 Donations - - 426.5 Other Deductions - - 427 Interest on Long-term Debt - - 430 Interest on Debt to Associate Companies - - 431 Other Interest Expense 3,809 - Total Expense 190,379,874 1,724,034 NET LOSS ($212,498) ($3)
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 ANALYSIS OF BILLING ASSOCIATE COMPANIES - ACCOUNT 457 DIRECT INDIRECT COMPENSATION COSTS COSTS FOR USE TOTAL CHARGED CHARGED OF CAPITAL AMOUNT NAME OF ASSOCIATE COMPANY 457-1 457-2 457-3 BILLED PSI $64,279,959 $15,744,306 - $80,024,265 PSI ENERGY ARGENTINA, INC. 25 - - 25 CINERGY INVESTMENTS, INC. 469,154 12,239 - 481,393 POWER EQUIPMENT SUPPLY CO. 24,639 142 - 24,781 WHOLESALE POWER SERVICES, INC. 100,031 9,751 - 109,782 PSI RECYCLING, INC. 21,059 598 - 21,657 PSI ARGENTINA, INC. 123,926 34 - 123,960 CG&E 81,015,971 16,276,349 - 97,292,320 POWER INTERNATIONAL, INC. 555,644 1,556 - 557,200 LAWRENCEBURG GAS COMPANY 43,456 2,329 - 45,785 KO TRANSMISSION COMPANY 15 - - 15 MIAMI POWER CORPORATION 15,332 - - 15,332 ULH&P 7,924,614 1,563,650 - 9,488,264 WEST HARRISON GAS AND ELECTRIC COMPANY 3,847 23 - 3,870 TRI-STATE IMPROVEMENT COMPANY 1,511,602 - - 1,511,602 CINERGY RESOURCES, INC. 10,927 37 - 10,964 CGE ECK 7,741 - - 7,741 CINERGY 448,228 192 - 448,420 TOTAL $156,556,170 $33,611,206 - $190,167,376
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 ANALYSIS OF BILLING NONASSOCIATE COMPANIES - ACCOUNT 458 Instructions: Provide a brief description of the services rendered to each nonassociate company. DIRECT INDIRECT COMPENSATION EXCESS COSTS COSTS FOR USE OR TOTAL CHARGED CHARGED OF CAPITAL TOTAL DEFICIENCY AMOUNT NAME OF NONASSOCIATE COMPANY 458-1 458-2 458-3 COST 458-4 BILLED None TOTAL - - - - - -
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule XVI - ANALYSIS OF CHARGES FOR SERVICE - ASSOCIATE AND NONASSOCIATE COMPANIES INSTRUCTIONS: Total cost of service will equal for associate and nonassociate companies the total amount billed under their separate analysis of billing schedules. DIRECT INDIRECT ACCOUNT DESCRIPTION OF ITEMS COST COST TOTAL ASSOCIATE COMPANY CHARGES 920 Salaries and Wages $53,400,952 $35,156,297 $88,557,249 921 Office Supplies & Expenses 14,633,848 13,164,112 27,797,960 922 Administrative Expenses Transferred - Credit 7,320 - 7,320 923 Outside Services Employed 11,880,290 7,915,416 19,795,706 924 Property Insurance 339,264 94,586 433,850 925 Injuries & Damages 2,656,644 84,854 2,741,498 926 Employee Pension & Benefits 11,251,358 8,065,925 19,317,283 928 Regulatory Commission Expense 1,490,803 720,320 2,211,123 930.1 General Advertising Expenses 34,869 25,653 60,522 930.2 Miscellaneous General Expenses 14,693,333 2,276,420 16,969,753 931 Rents 2,315,590 2,348,344 4,663,934 932 Maintenance of Structures and Equipment 1,819,269 271,003 2,090,272 403 Depreciation & Amortization - 32,069 32,069 408 Taxes, Other Than Income Taxes 3,555,383 2,142,143 5,697,526 409 Income Taxes - 410 Provision for Deferred Income Taxes - 411 Provision for Deferred Income Taxes - Credit - 411.5 Investment Tax Credit - 421 Miscellaneous Income or Loss - 426.1 Donations - 426.5 Other Deductions - 427 Interest on Long-term Debt - 431 Other Interest Expense - 3,809 3,809 Total Expenses $118,078,923 $72,300,951 $190,379,874 Compensation for Use of Equity Capital - - - 430 Interest on Debt to Associate Companies - - - Total Cost of Service $118,078,923 $72,300,951 $190,379,874 NON-ASSOC COMPANY CHARGES 920 Salaries and Wages - - - 921 Office Supplies & Expenses - 922 Administrative Expenses Transferred - Credit - 923 Outside Services Employed - 924 Property Insurance - 925 Injuries & Damages - 926 Employee Pension & Benefits - 928 Regulatory Commission Expense - 930.1 General Advertising Expenses - 930.2 Miscellaneous General Expenses - 931 Rents - 932 Maintenance of Structures and Equipment - 403 Depreciation & Amortization - 408 Taxes, Other Than Income Taxes - 409 Income Taxes - 410 Provision for Deferred Income Taxes - 411 Provision for Deferred Income Taxes - Credit - 411.5 Investment Tax Credit - 421 Miscellaneous Income or Loss 426.1 Donations - 426.5 Other Deductions - 427 Interest on Long-term Debt - 431 Other Interest Expense - - - Total Expenses - - - Compensation for Use of Equity Capital - - - 430 Interest on Debt to Associate Companies - - - Total Cost of Service - - - TOTAL CHARGES FOR SERVICE 920 Salaries and Wages $53,400,952 $35,156,297 $88,557,249 921 Office Supplies & Expenses 14,633,848 13,164,112 27,797,960 922 Administrative Expenses Transferred - Credit 7,320 - 7,320 923 Outside Services Employed 11,880,290 7,915,416 19,795,706 924 Property Insurance 339,264 94,586 433,850 925 Injuries & Damages 2,656,644 84,854 2,741,498 926 Employee Pension & Benefits 11,251,358 8,065,925 19,317,283 928 Regulatory Commission Expense 1,490,803 720,320 2,211,123 930.1 General Advertising Expenses 34,869 25,653 60,522 930.2 Miscellaneous General Expenses 14,693,333 2,276,420 16,969,753 931 Rents 2,315,590 2,348,344 4,663,934 932 Maintenance of Structures and Equipment 1,819,269 271,003 2,090,272 403 Depreciation & Amortization - 32,069 32,069 408 Taxes, Other Than Income Taxes 3,555,383 2,142,143 5,697,526 409 Income Taxes - - - 410 Provision for Deferred Income Taxes - - - 411 Provision for Deferred Income Taxes - Credit - - - 411.5 Investment Tax Credit - - - 421 Miscellaneous Income or Loss 426.1 Donations - - - 426.5 Other Deductions - - - 427 Interest on Long-term Debt - - - 431 Other Interest Expense - 3,809 3,809 Total Expenses $118,078,923 $72,300,951 $190,379,874 Compensation for Use of Equity Capital - - - 430 Interest on Debt to Associate Companies - - - Total Cost of Service $118,078,923 $72,300,951 $190,379,874
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule XVII - SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Account(s)) TOTAL INFORMATION METERS AND ELEC. SYSTEM ACCOUNT DESCRIPTION OF ITEMS AMOUNT OVERHEAD SYSTEMS TRANSPORTATION MAINTENANCE 920 Salaries and Wages $88,557,249 - $8,135,118 $6,906,178 - 921 Office Supplies and Expenses 27,797,960 - 3,830,130 1,566,999 2,000 922 Administrative Expense Transferred - Credit 7,320 - - - - 923 Outside Services Employed 19,795,706 - 1,049,817 1,297 - 924 Property Insurance 433,850 - - 181,998 - 925 Injuries and Damages 2,741,498 - 21,075 27,658 - 926 Employee Pensions and Benefits 19,317,283 - 2,073,725 1,019,602 244 928 Regulatory Commission Expense 2,211,123 - - 8 - 930.1 General Advertising Expenses 60,522 - - - - 930.2 Miscellaneous General Expenses 16,969,753 4,880 742,873 909,183 - 931 Rents 4,663,934 - 1,735,206 967 - 932 Maintenance of Structures and Equipment 2,090,272 - 823,095 2,726 403 Depreciation and Amortization Expense 32,069 32,069 - - - 408 Taxes Other Than Income Taxes 5,697,526 - 629,181 401,106 2 409 Income Taxes - - - - - 410 Provision for Deferred Income Taxes - - - - - 411 Provision for Deferred Income Taxes - Credit - - - - - 411.5 Investment Tax Credit - - - - - 421 Miscellaneous Income or Loss - - - - - 426.1 Donations - - - - - 426.5 Other Deductions - - - - - 427 Interest on Long-term Debt - - - - - 430 Interest on Debt to Associate Companies - - - - - 431 Other Interest Expense 3,809 3,809 - - - Total Expenses $190,379,874 $40,758 $19,040,220 $11,017,722 $2,246
(CONTINUED) Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule XVII - SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Account(s)) INTERNAL ELEC. TRANS. HUMAN MATERIALS ACCOUNT DESCRIPTION OF ITEMS AUDITING & DISTRIBUTION ACCOUNTING RESOURCES MANAGEMENT 920 Salaries and Wages $1,141,838 $7,165,573 $4,868,292 $10,423,658 $6,969,345 921 Office Supplies and Expenses 117,966 744,286 5,295,292 1,171,351 670,512 922 Administrative Expense Transferred - Credit - - - - 7,320 923 Outside Services Employed - 327,569 1,474,246 70,251 574,152 924 Property Insurance - - - - 153,327 925 Injuries and Damages 3,795 20,072 11,574 844,256 14,611 926 Employee Pensions and Benefits 220,926 1,516,646 992,228 3,133,211 1,241,494 928 Regulatory Commission Expense - - - - 16 930.1 General Advertising Expenses - - - - - 930.2 Miscellaneous General Expenses - 265,320 3,403 113,419 258,806 931 Rents - 5,228 14,311 9,241 5,981 932 Maintenance of Structures and Equipment - 980 - 9,472 173 403 Depreciation and Amortization Expense - - - - - 408 Taxes Other Than Income Taxes 84,298 517,013 369,429 301,571 407,749 409 Income Taxes - - - - - 410 Provision for Deferred Income Taxes - - - - - 411 Provision for Deferred Income Taxes - Credit - - - - - 411.5 Investment Tax Credit - - - - - 421 Miscellaneous Income or Loss - - - - - 426.1 Donations - - - - - 426.5 Other Deductions - - - - - 427 Interest on Long-term Debt - - - - - 430 Interest on Debt to Associate Companies - - - - - 431 Other Interest Expense - - - - - Total Expenses $1,568,823 $10,562,687 $13,028,775 $16,076,430 $10,303,486
(CONTINUED) Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule XVII - SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Account(s)) MARKETING & ENVIRONMENTAL PUBLIC POWER ENG. & ACCOUNT DESCRIPTION OF ITEMS FACILITIES CUST. RELATIONS AFFAIRS AFFAIRS CONSTRUCTION 920 Salaries and Wages $2,978,454 $8,133,954 $1,209,592 $852,134 $10,250,179 921 Office Supplies and Expenses 1,079,276 4,615,151 529,503 206,460 2,320,379 922 Administrative Expense Transferred - Credit - - - - - 923 Outside Services Employed 86,817 931,775 215,255 109,467 879,234 924 Property Insurance - - - - - 925 Injuries and Damages 13,990 13,024 3,214 1,372 37,008 926 Employee Pensions and Benefits 803,650 1,176,507 267,832 392,915 2,036,404 928 Regulatory Commission Expense - - - - - 930.1 General Advertising Expenses - 388 - 45,597 - 930.2 Miscellaneous General Expenses 362,278 2,472,181 199,669 941,308 5,965,218 931 Rents 339,992 48,830 60 25,253 13,561 932 Maintenance of Structures and Equipment 1,141,818 24,660 1,291 5,106 22,491 403 Depreciation and Amortization Expense - - - - - 408 Taxes Other Than Income Taxes 259,445 389,461 89,593 80,674 736,945 409 Income Taxes - - - - - 410 Provision for Deferred Income Taxes - - - - - 411 Provision for Deferred Income Taxes - Credit - - - - - 411.5 Investment Tax Credit - - - - - 421 Miscellaneous Income or Loss - - - - - 426.1 Donations - - - - - 426.5 Other Deductions - - - - - 427 Interest on Long-term Debt - - - - - 430 Interest on Debt to Associate Companies - - - - - 431 Other Interest Expense - - - - - Total Expenses $7,065,720 $17,805,931 $2,516,009 $2,660,286 $22,261,419
(CONTINUED) Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule XVII - SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Account(s)) INVESTOR ACCOUNT DESCRIPTION OF ITEMS RELATIONS LEGAL RATES FINANCE RIGHT OF WAY 920 Salaries and Wages $328,136 $3,394,235 $864,107 $2,208,662 $1,524,490 921 Office Supplies and Expenses 47,831 2,070,858 26,104 280,968 144,078 922 Administrative Expense Transferred - Credit - - - - - 923 Outside Services Employed 375 3,254,442 - 207,921 4,952,971 924 Property Insurance - - - 98,525 - 925 Injuries and Damages 1,640 1,680,876 1,482 10,095 5,026 926 Employee Pensions and Benefits 45,470 907,224 213,791 623,007 250,203 928 Regulatory Commission Expense - 881,964 1,329,135 - - 930.1 General Advertising Expenses - 14,488 - - - 930.2 Miscellaneous General Expenses 917,250 482,383 460 101,101 1,767,123 931 Rents 1,529 109,533 3,377 7,952 19,247 932 Maintenance of Structures and Equipment - 10,383 - 264 11,393 403 Depreciation and Amortization Expense - - - - - 408 Taxes Other Than Income Taxes 24,322 265,369 63,981 166,589 98,154 409 Income Taxes - - - - - 410 Provision for Deferred Income Taxes - - - - - 411 Provision for Deferred Income Taxes - Credit - - - - - 411.5 Investment Tax Credit - - - - - 421 Miscellaneous Income or Loss - - - - - 426.1 Donations - - - - - 426.5 Other Deductions - - - - - 427 Interest on Long-term Debt - - - - - 430 Interest on Debt to Associate Companies - - - - - 431 Other Interest Expense - - - - - Total Expenses $1,366,553 $13,071,755 $2,502,437 $3,705,084 $8,772,685
(CONTINUED) Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule XVII - SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Account(s)) POWER ACCOUNT DESCRIPTION OF ITEMS FUELS PLANNING EXECUTIVE PLANNING 920 Salaries and Wages $621,786 $578,105 $4,877,956 $5,125,457 921 Office Supplies and Expenses 128,563 114,438 1,970,178 865,637 922 Administrative Expense Transferred - Credit - - - - 923 Outside Services Employed 36,835 204 5,251,149 371,929 924 Property Insurance - - - - 925 Injuries and Damages 1,499 2,098 14,366 12,767 926 Employee Pensions and Benefits 135,508 102,199 1,018,049 1,146,448 928 Regulatory Commission Expense - - - - 930.1 General Advertising Expenses - - - 49 930.2 Miscellaneous General Expenses 946 - 1,411,939 50,013 931 Rents 428 1,478,509 844,729 932 Maintenance of Structures and Equipment 93 - 29,152 7,175 403 Depreciation and Amortization Expense - - - - 408 Taxes Other Than Income Taxes 45,647 42,791 349,156 375,050 409 Income Taxes - - - - 410 Provision for Deferred Income Taxes - - - - 411 Provision for Deferred Income Taxes - Credit - - - - 411.5 Investment Tax Credit - - - - 421 Miscellaneous Income or Loss - - - - 426.1 Donations - - - - 426.5 Other Deductions - - - - 427 Interest on Long-term Debt - - - - 430 Interest on Debt to Associate Companies - - - - 431 Other Interest Expense - - - - Total Expenses $971,305 $839,835 $16,400,454 $8,799,254
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 DEPARTMENTAL ANALYSIS OF SALARIES - ACCOUNT 920 ----------- DEPARTMENTAL SALARY EXPENSE ----------- NAME OF DEPARTMENT ---- INCLUDED IN AMOUNTS BILLED TO NUMBER OF INDICATE EACH DEPARTMENT TOTAL PARENT OTHER NON- PERSONNEL OR SERVICE FUNCTION AMOUNT COMPANY ASSOCIATES ASSOCIATES END OF YEAR Information Systems $8,135,118 $ $8,135,118 322 Meters and Transportation 6,906,178 6,906,178 307 Electric System Maintenance - - - Marketing and Customer Relations 8,133,954 8,133,954 190 Electric Transmission and Distribution Engineering and Construction 7,165,573 7,165,573 232 Power Engineering and Construction 10,250,179 10,250,179 333 Human Resources 10,423,658 10,423,658 116 Materials Management 6,969,345 6,969,345 256 Facilities 2,978,454 2,978,454 165 Accounting 4,868,292 36 4,868,256 167 Power Planning 5,125,457 5,125,457 209 Public Affairs 852,134 852,134 34 Legal 3,394,235 16,891 3,377,344 71 Rates 864,107 864,107 23 Finance 2,208,662 9,123 2,199,539 47 Right of Way 1,524,490 1,524,490 54 Internal Auditing 1,141,838 1,141,838 28 Environmental Affairs 1,209,592 1,209,592 36 Fuels 621,786 621,786 8 Investor Relations 328,136 328,136 13 Planning 578,105 578,105 10 Executive 4,877,956 35,165 4,842,791 118 TOTAL $88,557,249 $61,215 $88,496,034 $ 2,739
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 OUTSIDE SERVICES EMPLOYED - ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by subaccount of outside services employed. If the aggregate amounts paid to any one payee and included within one sub- account is less than $25,000, only the aggregate number and amount of all such payments included within the subaccount need by shown. Provide a subtotal for each type of service. RELATIONSHIP A" - ASSOC. FROM WHOM PURCHASED ADDRESS "NA" - NONASSOC AMOUNT AUDITING SERVICES: Arthur Andersen LLP Indianapolis, IN 46204 NA $900,009 Arthur Andersen LLP Cincinnati, OH 45264 NA 101,375 TOTAL AUDITING SERVICES 1,001,384 ENGINEERING SERVICES: ABB Power T&D Company, Inc. Cary, NC 27511 NA 73,000 Babcock & Wilcox Co. Cincinnati, OH 45246 NA 27,500 BHE Environmental, Inc. Cincinnati, OH 45241 NA 29,445 Burns & McDonnell Kansas City, MO 64141 NA 30,154 Danes & Moore Cincinnati, OH 45203 NA 41,075 Fuller, Hossbarger, Scott & May Engineering Cincinnati, OH 45246 NA 31,938 H.C. Nutting Company Cincinnati, OH 45226 NA 49,909 Sargent & Lundy Engineers Chicago, IL 60603 NA 522,634 Stone & Webster Engineering Cherry Hill, NJ 08034 NA 135,000 Others (3) NA 51,279 TOTAL ENGINEERING SERVICES 991,934 LEGAL SERVICES: Akin, Gump, Strauss, Hauer & Feld Washington, DC 20036 NA 554,336 Baker & Daniels Indianapolis, IN 46204 NA 32,168 Barnes & Thornburg Indianapolis, IN 46204 NA 59,332 Bingham, Summers, Welsh, & Spilman Indianapolis, IN 46204 NA 152,859 Fulbright & Jaworski Washington, DC 20004 NA 92,686 Fuller & Henry Cincinnati, OH 45246 NA 28,692 Gallagher, Boland Neiburger & Brosnan Washington, DC 20005 NA 115,347 Shaw, Pittman, Potts & Trowber Washington, DC 20037 NA 51,565 Skadden, Arps, Slate, Meagher & Flom Washington, DC 20005 NA 408,955 Squire, Sanders, & Dempsey Cleveland, OH 44114 NA 177,481 Taft, Stettinius & Hollister Cincinnati, OH 45202 NA 190,497 Others (15) NA 112,805 TOTAL LEGAL SERVICES 1,976,723 TREE TRIMMING SERVICES: Asplundh Tree Expert Co. Milford, OH 45150 NA $2,177,102 Halter Tree Service, Inc. Vincennes, IN 47951 NA 34,325 Henkels & McCoy, Inc. Blue Bell, PA 19422 NA 64,430 Nelson Tree Service, Inc. Dayton, OH 45439 NA 1,212,839 Townsend Tree Service, Inc. Muncie, IN 47308 NA 1,080,101 TOTAL TREE TRIMMING SERVICES 4,568,797 OTHER SERVICES: Analysts International Corp. Detroit, MI 48277 NA 207,211 Applied Integration Services Milford, OH 45150 NA 56,286 Chicago Consulting Actuaries Chicago, IL 60661 NA 25,393 Cincinnati Art Museum Cincinnati, OH 45202 NA 28,188 City of Hamilton Hamilton, OH 45011 NA 74,861 Complete Business Solutions Detroit, MI 48277 NA 195,232 Consulting Center, Inc. Cincinnati, OH 45248 NA 50,475 Convergent Group - UGC Englewood, CO 80111 NA 36,275 Coopers & Lybrand Pittsburgh, PA 15264 NA 52,414 CSC Consulting Charlotte, NC 28290 NA 63,088 CSC Index Charlotte, NC 28290 NA 1,875,446 Dayton Power & Light Dayton, OH 45401 NA 139,121 Dickstein, Sharpiro & Morin LLP Washington, DC 20037 NA 38,629 East Central Area Reliability Canton, OH 44702 NA 108,154 Electric Power Research Institute Charlotte, NC 28260 NA 89,250 Energy Investments, Inc. Boston, MA 02110 NA 29,900 Energy Systems Associates Pittsburgh, PA 15222 NA 25,588 Energy Ventures Analysis, Inc. Arlington, VA 22209 NA 37,875 Escalation Consultants, Inc. Gaithersburg, MD 20879 NA 75,955 Ethicon Endo-Surgery Cincinnati, OH 45242 NA 47,125 Federal Energy Regulatory Commission Chicago, IL 60673 NA 241,457 Fifth Third Bank Cincinnati, OH 45202 NA 199,627 Finanacial Accounting Institute Tenafly, NJ 07670 NA 25,359 Forbes, Forbes & Associates Cleveland, OH 44113 NA 25,200 Groundwater Technology, Inc. Dallas, TX 75284 NA 36,202 Heidrick & Strubbles, Inc. Chicago, IL 60675 NA 81,698 Hillenbrand Mitsch Design Indianapolis, IN 46268 NA $37,353 Infotech Consulting, Inc. Plainfield, IN 46168 NA 238,021 Institute of Advanced Mfg. Cincinnati, OH 45216 NA 55,123 Intergraph Corporation Mason, OH 45040 NA 46,576 Harold Isaacs Columbus, OH 47201 NA 50,000 Joseph Graves & Assoc., Inc. Indianapolis, IN 46280 NA 37,590 JVR Consulting Services, Inc. Corona Del Mar, CA 92625 NA 31,651 Maciel, Norman & Associados Buenos Aries, Argentina NA 59,987 Marston & Marston, Inc. St. Louis, MO 63141 NA 202,801 McKinsey & Co., Inc. Washington, DC 20004 NA 626,100 Darrell V. Menscer Myrtle Beach, SC 29575 NA 52,604 Miami Systems Corp. Cincinnati, OH 45242 NA 90,491 Moody's Investors Service Atlanta, GA 30368 NA 41,250 The NorthBridge Group Waltham, MA 02154 NA 275,003 Ohio Edison Akron, OH 44308 NA 49,732 Origin Technology in Business Columbus, OH 43271 NA 66,569 Owen Specialty Services Fenton, MI 48430 NA 151,339 People Working Cooperatively Cincinnati, OH 45237 NA 290,129 PNC Bank Ohio, N.A. Cincinnati, OH 45203 NA 102,113 Pomeroy Computer Resources Cincinnati, OH 45203 NA 40,319 Price Waterhouse LLP Pittsburgh, PA 15264 NA 42,755 Professional Computer Consultants Dayton, OH 45405 NA 56,313 Professional Data Resource, Inc. Cincinnati, OH 45263 NA 50,903 Resource Support Associates Denver, CO 80217 NA 94,701 Restructuring Associates, Inc. Washington, DC 20036 NA 288,250 Rockdale Temple Cincinnati, OH 45236 NA 27,000 Sap America, Inc. Pittsburgh, PA 15264 NA 155,913 Scott Madden & Associates, Inc. Raleigh, NC 27608 NA 137,632 Software Consulting Partners Media, PA 19063 NA 135,958 Software Synergy, Inc. Indianapolis, IN 46250 NA 108,072 Standard & Poor's Corporation Philadelphia, PA 19170 NA 54,900 Total Results, Inc. Scottsdale, AZ 85261 NA 65,904 Twenty-First Strategies McLean, VA 22101 NA 26,447 Warren Steele & Associates Hillsboro, OH 45133 NA 32,883 Working in Neighborhoods, Inc. Cincinnati, OH 45223 NA 36,876 Others (415) NA 3,531,601 TOTAL OTHER SERVICES 11,256,868 TOTAL OUTSIDE SERVICES $19,795,706
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 EMPLOYEE PENSIONS AND BENEFITS - ACCOUNT 926 INSTRUCTIONS: Provide a listing of each pension plan and benefit program provided by the service company. Such listing should be limited to $25,000. DESCRIPTION AMOUNT Pension $3,255,057 Medical/Dental insurance 12,393,795 401(k)contributions 2,538,677 Life insurance 782,066 Others (5) 347,688 TOTAL $19,317,283
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 GENERAL ADVERTISING EXPENSES - ACCOUNT 930.1 INSTRUCTIONS: Provide a listing of the amounts included in Account 930.1, "General Advertising Expenses", classifying the items according to the nature of the advertising and as defined in the account definition. If a particular class includes an amount in excess of $3,000 applicable to a single payee, show separately the name of the payee and the aggregate amount applicable thereto. DESCRIPTION NAME OF PAYEE AMOUNT Advertising Agency Fees - Customer Education Nielsen Printing $12,189 Sportsprint Promotions 6,000 Others (44) 22,516 Promotional Items Aladdin Sales & Marketing 15,872 Chef's Choice Catering 3,945 TOTAL $60,522
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 MISCELLANEOUS GENERAL EXPENSES - ACCOUNT 930.2 INSTRUCTIONS: Provide a listing of the amount included in Account 930.2, "Miscellaneous General Expenses", classifying such expenses according to their nature. Payments and expenses permitted by Section 321 (b)(2) of the Federal Election Campaign Act, as amended by Public Law 94-283 in 1976 (2 U.S.C. 441 (b)(2) shall be separately classified. DESCRIPTION AMOUNT Company Membership Fees and Dues $1,017,513 Miscellaneous Materials and Supplies Purchase 6,701,007 Customer Incentive/Rebates - Demand-side Mana 2,140,275 Directors' Fees 239,888 Annual Report Expenses 261,211 Miscellaneous Shareholder and Trustee Expense 65,671 Technical, General, Computer and Engineering 1,126,628 Respondent's Labor, Materials and Supplies 2,985,348 Miscellaneous Stores and Transportation Expen 759,583 Other Miscellaneous Items 1,672,629 TOTAL $16,969,753
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 RENTS - ACCOUNT 931 INSTRUCTIONS: Provide a listing of the amount included in Account 931, "Rents", classifying such expenses by major groupings of property, as defined in the account definition of the Uniform System of Accounts. TYPE OF PROPERTY AMOUNT Computer Equipment Rent $3,104,903 Operating and Work Equipment Rent 418,859 Accounting and Office Equipment Rent 951,906 Other Rent 188,266 TOTAL $4,663,934
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 TAXES OTHER THAN INCOME TAXES - ACCOUNT 408 INSTRUCTIONS: Provide an analysis of Account 408, "Taxes Other Than Income Taxes". Separate the analysis into two groups (1)Other than U.S. Government taxes, and (2)U.S Govern- ment taxes. Specify each of the various kinds of taxes and show the amounts thereof. Provide a subtotal for each class of tax. KIND OF TAX AMOUNT Other Than U.S. Government Taxes: Sales & Use Tax $14,749 State Unemployment 83,223 Sub-total 97,972 U.S. Government Taxes: Federal Excise Tax on Phone Service 11,050 Social Security Taxes 5,546,892 Federal Unemployment 41,612 Sub-total 5,599,554 TOTAL $5,697,526
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 DONATIONS - ACCOUNT 426.1 INSTRUCTIONS: Provide a listing of the amount included in Account 426.1, "Donations" classifying such expenses by its purpose. The aggregate number and amount of all items of less than $3,000 may be shown in lieu of detail NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT None TOTAL
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 OTHER DEDUCTIONS - ACCOUNT 426.5 INSTRUCTIONS: Provide a listing of the amount included in Account 426.5, "Other Deductions", classifying such expenses according to their nature. DESCRIPTION NAME OF PAYEE AMOUNT None TOTAL
Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 Schedule XVIII - NOTES TO STATEMENT OF INCOME INSTRUCTIONS: The space below is provided for important notes regarding the statement of income or any account thereof. Furnish particulars as to any significant increase in services rendered or expenses incurred during the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference. See Schedule XIV - Notes to Financial Statements Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 ORGANIZATION CHART Chairman - Executive - Internal Auditing | | Vice Chairman and Chief Executive Officer - Executive | | _______________________________________________________________ | | | | | | Senior Manager, Vice-President, General General Manager, Human Resource Strategy Counsel and Secretary Corporate Communication & Investor Relations - - Human Resources - Legal - Rates - Investor Relations - Public Affairs Chairman - Executive - Internal Auditing | | Vice Chairman and Chief Executive Officer - Executive | | _______________________________________________ | | | | Group Vice-President and Group Vice-President, Chief Financial Officer Chief Transformation Officer - - Information Systems - Materials Management - - Finance - Facilities - - Accounting - Environmental Affairs - - Planning - Marketing & Customer Relations - Meters and Transportation - Power Engineering & Construction - Electric Transmission & Distribution Engineering and Construction - Electric System Maintenance - Right of Way - Power Planning - Fuels Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 METHODS OF ALLOCATION The allocation of expenses not directly attributable to a particular Client Company are based on the following factors: 1. Sales Ratio A ratio, based on domestic firm kilowatt-hour electric sales (and/or the equivalent cubic feet of gas sales, where applicable), excluding intra-system sales, for the immediately preceding twelve consecutive calendar months, the numerator of which is for a Client Company and the denominator of which is for all domestic utility Client Companies. This ratio will be determined annually, or at such times as may be required due a significant change. 2. Electric Peak Load Ratio A ratio, based on the sum of the monthly domestic firm electric maximum system demands for the immediately preceding twelve consecutive calendar months, the numerator of which is for a Client Company and the denominator of which is for all domestic utility Client Companies. This ratio will be determined annually, or at such time as may be required due to a significant change. 3. Number of Customers Ratio A ratio, based on the sum of the firm domestic electric customers (and/or gas customers where applicable) at the end of each month for the immediately preceding twelve consecutive calendar months, the numerator of which is for a Client Company and the denominator of which is for all domestic utility Client Companies. This ratio will be determined annually, or at such time as may be required due to a significant change. 4. Number of Employees Ratio A ratio, based on the sum of the number of employees at the end of each month for the immediately preceding twelve consecutive calendar months, the numerator of which is for a Client Company or Service Company Function and the denominator of which is for all Client Companies (and Cinergy Corp.'s non- utility and non-domestic utility affiliates, where applicable) and/or the Service Company. This ratio will be determined annually, or at such time as may be required due to a significant change. 5. Construction Expenditure Ratio A ratio, based on construction expenditures, net of reimbursements, for the immediately preceding twelve consecutive calendar months, the numerator of which is for a Client Company and the denominator of which is for all Client Companies. Separate ratios will be computed for total construction expenditures and appropriate functional plant (i.e. production, transmission, distribution, and general) classifications. This ratio will be determined annually, or at such time as may be required due to a significant change. 6. Circuit Miles of Electric Distribution Lines Ratio A ratio, based on installed circuit miles of domestic electric distribution lines at the end of the immediately preceding calendar year, the numerator of which is for a Client Company and the denominator of which is for all domestic utility Client Companies. This ratio will be determined annually, or at such time as may be required due to a significant change. 7. Number of Central Processing Unit Seconds Ratio A ratio, based on the sum of the number of central processing unit seconds expended to execute mainframe computer software applications for the immediately preceding twelve consecutive calendar months, the numerator of which is for a Client Company or Service Company Function, and the denominator of which is for all Client Companies, (and Cinergy Corp.'s non-utility and non-domestic utility affiliates, where applicable) and/or the Service Company. This ratio will be determined annually, or at such time as may be required due to a significant change. Annual Report of Cinergy Services, Inc. For the Year Ended December 31, 1995 ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED None ANNUAL REPORT OF Cinergy Services, Inc. SIGNATURE CLAUSE Pursuant to the requirements of the Public Utility Holding Company Act of 1935 and the rules and regulations of the Securities and Exchange Commission issued thereunder, the undersigned company has duly caused this report to be signed on its behalf by the undersigned officer thereunto duly authorized. Cinergy Services, Inc. (Name of Reporting Company) By: /S/ Charles J. Winger (Signature of Signing Officer) Charles J. Winger, Comptroller (Printed Name and Title of Signing Officer) Date: April 30, 1996 EX-27 2
OPUR2 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM U-13-60 OF CINERGY SERVICES, INC., AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH DOCUMENT. 0000899652 CINERGY CORP. 2 CINERGY SERVICES, INC. 1000 YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 PER-BOOK 1,240,928 0 14,115,902 602,953 0 15,959,783 (212,501) 0 0 0 15,953,117 219,167 0 15,959,783 190,167,376 0 0 190,167,376 88,557,249 19,317,283 82,505,342 190,379,874 (212,498) 118,078,923 72,300,951 190,379,874 2,739 -----END PRIVACY-ENHANCED MESSAGE-----