CINCINNATI, Ohio, Jan. 25, 2001 (BUSINESS WIRE)Cinergy Corp. (NYSE:CIN) today reported 2000 operating earnings of $2.61 per share before one-time charges totaling $.11 related to a previously announced tentative agreement with the U.S. Environmental Protection Agency and a previously reported early retirement program.
This compares with earnings of $2.53 per share in 1999, which included a $.43 per share gain from the sale of the company’s share of Midlands Electricity plc. The company also reaffirmed its earnings per share target of $2.75 for 2001.
In the fourth quarter 2000, Cinergy reported earnings of $.64 per share before a one-time charge of $.06 per share for reserves related to the tentative agreement with the U.S. EPA and several Northeast states on litigation involving its coal-fired power plants. Earnings per share for the same period in 1999 were $.60.
The increase in fourth quarter earnings reflects colder weather than a year ago and continued strength in the company’s energy merchant operations. For the year, energy margin growth and strong energy merchant results drove the increase in earnings. Revenues for the fourth quarter almost doubled, bringing the total for 2000 to $8.4 billion, compared with $5.9 billion in 1999.
“2000 was a year of significant momentum for Cinergy. We resolved a number of uncertainties facing the company through the completion of the electric restructuring transition plan in Ohio and the tentative agreement on the EPA lawsuit. In addition, we solidified our regional leadership position in our energy merchant business by increasing revenues approximately $2.2 billion while more than doubling trading volumes,” said James E. Rogers, chairman, president and chief executive officer of Cinergy. “By creating Cinergy Ventures, we focused on the future through investments in energy-related technologies that we can apply in serving customers and improving our operations.”
During the fourth quarter, the company’s business segments completed a quarterly record 50 new transactions and technology investments, bringing the total for 2000 to more than 150, a 250 percent increase from 1999. Included were new investments in companies developing advanced energy storage technologies and remote monitoring equipment for distributed generation.
The company agreed to purchase from Enron North America two generating facilities totaling 1,000 megawatts of peaking capacity in the Southeast, expanding the geographic, fuel and operating diversity of its generation portfolio. The facilities also provide capacity to serve the company’s contracts with customers in the Southeast. This purchase along with the Ohio generation will bring Cinergy’s unregulated generation portfolio to approximately 15,000 megawatts owned or operated including projects under development.
Internationally, the company formed a joint venture with Shell Gas B.V to acquire the natural gas distribution system serving Athens, Greece. Four additional investments in wind generation were made in Spain and the U.S.
Other transactions during the fourth quarter included contracts with several industrial and institutional customers for infrastructure renewal, facility management and engineering and construction. These new agreements carry a total revenue value of approximately $92 million
“As the nature of the energy industry changes, we are also revising our business model to stay ahead of the curve and to establish Cinergy as one of the future breakout companies,” Rogers said. “We are focusing on four business segments that will drive our results over the next several years and continue to pursue a target of average annual growth in earnings of seven to eight percent over the next three years.”
The new business segments include energy merchant, power technology and infrastructure services, regulated, integrated utility and regulated transmission and distribution.
Energy merchant involves power plant development, origination of wholesale gas and electric customers, commodity trading, power production and combined heat and process steam operations. Power technology and infrastructure services encompasses strategic investments in new technologies and outsourcing services for customers to improve energy systems.
The regulated, integrated utility segment refers to PSI Energy, Inc., which provides bundled commodity and distribution services in Indiana. The regulated transmission and distribution segment involves delivery services for gas and electricity to customers in Ohio and Kentucky, as well as internationally.
For the fourth quarter of 2000, net income was $92.1 million, including the one-time charge discussed above, compared with $95.8 million in the fourth quarter a year ago. For the 12 months ended December 31, 2000, net income was $399.5 million, including the one-time charges discussed above, compared with net income of $403.6 million for the comparable period in 1999.
Cinergy Corp. is one of the nation’s leading diversified energy companies, with a total enterprise value of approximately $9 billion and assets of $12 billion. Cinergy’s energy merchant segment owns or operates nearly 21,000 megawatts of electric and combined heat plant generation that is either operational or under development domestically and internationally. Cinergy also has 55,000 miles of electric and gas transmission lines in the United States and abroad and approximately 9,000 employees in nine countries. Its largest operating companies, The Cincinnati Gas & Electric Company and PSI Energy, Inc., serve about 1.5 million electric customers and about 500,000 gas customers in Indiana, Ohio and Kentucky.
Cinergy is active in U.S. power and natural gas markets and maintains a 24-hour-a-day, seven-day-a-week trading operation. The interconnections of Cinergy’s Midwestern transmission assets give it access to 37 percent of the total U.S. energy consumption. The New York Mercantile Exchange’s “Into Cinergy” hub for Midwest electricity futures trading is the most active in the United States.
In addition to its U.S. operations, Cinergy owns and operates power generation, transmission and distribution assets in the Czech Republic, Spain, the United Kingdom, Zambia, Kenya, South Africa and Estonia. Cinergy is also active in European gas and electricity markets.