Cinergy reports record earnings for 2001

CINCINNATI, Ohio, Jan. 24, 2002 — Cinergy Corp. today reported 2001 record earnings of $2.75 per share on a diluted basis, compared with earnings of $2.50 per share on a diluted basis in 2000 after previously reported one-time charges of $0.11 per share.

In the fourth quarter 2001, Cinergy reported earnings of $0.69 per share compared with $0.58 per share in the same quarter 2000 after a previously reported one-time charge of $0.06 per share.

The increase in quarterly earnings reflects continued strength in the company’s energy merchant operations and on-going cost containment efforts across the company, offsetting lower regulated gross margins from mild weather and the economic recession.

Revenues for the fourth quarter 2001 were $2.3 billion, bringing the annual total in 2001 to $12.9 billion compared with $8.4 billion in 2000.

“We have worked hard to overcome the effects of mild weather throughout the year and the recession, which reduced industrial sales,” said James E. Rogers, chairman, president and chief executive officer of Cinergy. “Our balanced portfolio provides flexibility and cushions the impact of changing economic and market conditions. While the energy sector was buffeted by several high profile situations, our performance during the year helped us weather the turbulence and deliver consistent results.”

“In December, we completed a very successful sale of more than $300 million in mandatorily convertible securities, a significant step in strengthening our balance sheet,” Rogers said. “With our stronger balance sheet in 2002, we are focused on several new regulatory initiatives and on continued growth of our energy merchant business.”

Other accomplishments during the year included:
* Successful implementation of the Ohio competition transition plan
* Extension of the purchased power tracker in Indiana through 2002
* Doubling of earnings from customer-led originated transactions
* Operations meeting a new retail customer peak load of 11,094 megawatts
* Filing gas distribution rate cases in Ohio and Kentucky to recover capital expended for network expansions and improvements
* Indiana Utility Regulatory Commission approval to repower the company’s Noblesville power plant, adding an incremental 200 megawatts
* Filing a certificate of need to transfer 700 megawatts of unregulated power to Indiana to serve growing customer demand
For the fourth quarter of 2001, net income was $110.6 million, compared with $92.1 million in the fourth quarter a year ago, including a previously reported one-time charge. For the 12 months ended December 31, 2001, net income was $442.3 million, compared with net income of $399.5 million for the comparable period in 2000, including previously reported one-time charges.

Energy Merchant segment earnings were $0.42 per share for the quarter compared with $.12 in the same period in 2000. Origination, marketing and trading gross margins were up $0.19 per share over the fourth quarter 2000, for a total increase of $0.46 per share for the year. Both the quarterly and annual increases were led primarily by growth in the segment’s customer origination and gas trading operations.

In addition, Cinergy Solutions, the segment’s cogeneration business, added $0.01 per share in the quarter and $0.07 per share for the year.

Results for the quarter from the Regulated Operations segment were $0.29 per share, compared with $0.49 a year earlier. Gross margins from regulated sales were down $0.15 per share primarily reflecting the mild weather and the economic recession, which led to a six percent decline in electricity sales and transportation and a 25 percent decline in gas sales and transportation.

Results from the Power Technology and Infrastructure Services segment were up $0.01 from the same quarter a year ago and down $0.04 from the prior year due to interest on new investments and lower results from portfolio companies.

Cinergy Corp. has a balanced, integrated portfolio consisting of two core businesses: energy merchant and regulated operations. Its energy merchant business is a Midwest leader in low-cost generation owning 7,000 megawatts of capacity with a profitable balance of stable existing customer portfolios, new customer origination, marketing and trading, and industrial-site cogeneration.

The “into Cinergy” power-trading hub is the most liquid trading hub in the nation. Cinergy also owns regulated delivery operations in Ohio, Indiana, and Kentucky that serve 1.5 million electric customers and about 500,000 gas customers. In addition, its Indiana regulated operations own 6,000 megawatts of generation.

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