UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number	Registrant, State of Incorporation, Address and Telephone Number	I.R.S. Employer Identification No.

1-11377	CINERGY CORP.	31-1385023
	(A Delaware Corporation) 139 East Fourth Street Cincinnati, Ohio 45202 (513) 421-9500

1-1232	THE CINCINNATI GAS & ELECTRIC COMPANY	31-0240030
	(An Ohio Corporation) 139 East Fourth Street Cincinnati, Ohio 45202 (513) 421-9500

1-3543	PSI ENERGY, INC.	35-0594457
	(An Indiana Corporation) 1000 East Main Street Plainfield, Indiana 46168 (513) 421-9500

2-7793	THE UNION LIGHT, HEAT AND POWER COMPANY	31-0473080
	(A Kentucky Corporation) 139 East Fourth Street Cincinnati, Ohio 45202 (513) 421-9500

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

Yes ý No o

Indicate by check mark whether each registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Cinergy Corp.	Yes ý	No o
The Cincinnati Gas & Electric Company	Yes o	No ý
PSI Energy, Inc.	Yes o	No ý
The Union Light, Heat and Power Company	Yes o	No ý

This combined Form 10-Q is separately filed by Cinergy Corp., The Cincinnati Gas & Electric Company, PSI Energy, Inc., and The Union Light, Heat and Power Company. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants.

The Union Light, Heat and Power Company meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing its company specific information with the reduced disclosure format specified in General Instruction H(2) of Form 10-Q.

As of July 31, 2004, shares of common stock outstanding for each registrant were as listed:

Registrant	Description	Shares

Cinergy Corp.	Par value $.01 per share	180,577,342

The Cincinnati Gas & Electric Company	Par value $8.50 per share	89,663,086

PSI Energy, Inc.	Without par value, stated value $.01 per share	53,913,701

The Union Light, Heat and Power Company	Par value $15.00 per share	585,333

TABLE OF CONTENTS

Item Number
		PART I FINANCIAL INFORMATION

1		Financial Statements
		*Cinergy Corp.*
		Condensed Consolidated Statements of Income
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Statements of Changes in Common Stock Equity
		Condensed Consolidated Statements of Cash Flows

		*The Cincinnati Gas & Electric Company*
		Condensed Consolidated Statements of Income and Comprehensive Income
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Statements of Cash Flows

		*PSI Energy, Inc.*
		Condensed Consolidated Statements of Income and Comprehensive Income
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Statements of Cash Flows

		*The Union Light, Heat and Power Company*
		Condensed Statements of Income
		Condensed Balance Sheets
		Condensed Statements of Cash Flows

		Notes to Condensed Financial Statements

		Cautionary Statements Regarding Forward-Looking Information

2		Management’s Discussion and Analysis of Financial Condition and Results of Operations
		Introduction
		Organization
		Liquidity and Capital Resources
		2004 Quarterly Results of Operations - Historical
		2004 Year to Date Results of Operations - Historical
		Results of Operations - Future

3		Quantitative and Qualitative Disclosures About Market Risk

4		Controls and Procedures

		PART II OTHER INFORMATION

1		Legal Proceedings

2		Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

6		Exhibits and Reports on Form 8-K

		Signatures

CINERGY CORP.

AND SUBSIDIARY COMPANIES

CINERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Quarter Ended June 30		Year to Date June 30
	2004	2003	2004		2003
	*(in thousands, except per share amounts)*
	*(unaudited)*
Operating Revenues
Electric	$892,266	$769,258	$1,770,394		$1,592,316
Gas	108,082	114,932	458,928		513,845
Other	53,389	49,733	113,073		95,719
Total Operating Revenues	1,053,737	933,923	2,342,395		2,201,880


Operating Expenses
Fuel and purchased power	293,719	240,470	580,633		510,335
Gas purchased	47,420	53,319	270,936		289,314
Operation and maintenance	396,457	334,073	771,731		662,127
Depreciation	114,331	101,018	219,188		201,623
Taxes other than income taxes	65,072	66,958	147,319		144,707
Total Operating Expenses	916,999	795,838	1,989,807		1,808,106


Operating Income	136,738	138,085	352,588		393,774


Equity in Earnings of Unconsolidated Subsidiaries	7,331	6,104	10,079		6,696
Miscellaneous Income (Expense) – Net	5,033	7,767	(10,475	)	15,382
Interest Expense	70,276	60,537	137,671		119,829
Preferred Dividend Requirement of Subsidiary Trust	—	5,970	—		11,940
Preferred Dividend Requirements of Subsidiaries	858	858	1,716		1,716


Income Before Taxes	77,968	84,591	212,805		282,367


Income Taxes	19,464	8,983	51,286		66,966


Income Before Discontinued Operations and Cumulative Effect of Changes in Accounting Principles	58,504	75,608	161,519		215,401


Discontinued operations, net of tax	—	9,045	—		8,875
Cumulative effect of changes in accounting principles, net of tax (Note 1(c)(ii))	—	—	—		26,462
Net Income	$58,504	$84,653	$161,519		$250,738


Average Common Shares Outstanding	180,236	176,645	179,749		175,025


Earnings Per Common Share – Basic (Note 10)
Income before discontinued operations and cumulative effect of changes in accounting principles	$0.33	$0.42	$0.90		$1.23
Discontinued operations, net of tax	—	0.05	—		0.05
Cumulative effect of changes in accounting principles, net of tax	—	—	—		0.15
Net income	$0.33	$0.47	$0.90		$1.43


Earnings Per Common Share – Assuming Dilution (Note 10)
Income before discontinued operations and cumulative effect of changes in accounting principles	$0.32	$0.42	$0.89		$1.22
Discontinued operations, net of tax	—	0.05	—		0.05
Cumulative effect of changes in accounting principles, net of tax	—	—	—		0.15
Net income	$0.32	$0.47	$0.89		$1.42


Dividends Declared Per Common Share	$0.47	$0.46	$0.94		$0.92

The accompanying notes as they relate to Cinergy Corp. are an integral part of these condensed consolidated financial statements.

CINERGY CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

	June 30 2004		December 31 2003
	*(dollars in thousands)*
	*(unaudited)*

Current Assets
Cash and cash equivalents	$	173,818	$	169,120
Restricted deposits	88,498		92,813
Notes receivable, current	125,177		189,854
Accounts receivable less accumulated provision for doubtful accounts of $7,506 at June 30, 2004, and $7,884 at December 31, 2003	719,700		1,074,518
Fuel, emission allowances, and supplies	401,310		357,625
Energy risk management current assets	425,196		305,058
Prepayments and other	84,578		53,609
Total Current Assets	2,018,277		2,242,597


Property, Plant, and Equipment – at Cost
Utility plant in service	9,986,311		9,732,123
Construction work in progress	244,831		275,459
Total Utility Plant	10,231,142		10,007,582
Non-regulated property, plant, and equipment	4,587,951		4,527,943
Accumulated depreciation	5,069,030		4,908,019
Net Property, Plant, and Equipment	9,750,063		9,627,506


Other Assets
Regulatory assets	1,001,148		1,012,151
Investments in unconsolidated subsidiaries	509,453		494,520
Energy risk management non-current assets	137,944		97,334
Notes receivable, non-current	204,053		213,853
Other investments	140,514		184,044
Goodwill and other intangible assets	61,463		45,349
Other	167,854		197,351
Total Other Assets	2,222,429		2,244,602


Assets of Discontinued Operations	—		4,501

Total Assets	$	13,990,769	$	14,119,206

The accompanying notes as they relate to Cinergy Corp. are an integral part of these condensed consolidated financial statements.

CINERGY CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS’ EQUITY

	June 30 2004			December 31 2003
	*(dollars in thousands)*
	*(unaudited)*

Current Liabilities
Accounts payable	$	1,026,920		$	1,240,423
Accrued taxes	174,120			217,993
Accrued interest	67,892			68,952
Notes payable and other short-term obligations (Note 4)	496,337			351,412
Long-term debt due within one year	670,764			839,103
Energy risk management current liabilities	384,024			296,122
Other	110,822			107,438
Total Current Liabilities	2,930,879			3,121,443


Non-Current Liabilities
Long-term debt (Note 3)	3,986,191			4,131,909
Deferred income taxes	1,609,726			1,557,981
Unamortized investment tax credits	104,357			108,884
Accrued pension and other postretirement benefit costs	698,260			662,834
Accrued cost of removal	510,555			490,856
Energy risk management non-current liabilities	114,038			64,861
Other	223,944			205,344
Total Non-Current Liabilities	7,247,071			7,222,669


Liabilities of Discontinued Operations	—			11,594

Commitments and Contingencies (Note 6)

Total Liabilities	10,177,950			10,355,706


Cumulative Preferred Stock of Subsidiaries
Not subject to mandatory redemption	62,818			62,818


Common Stock Equity (Note 2)
Common stock - $.01 par value; authorized shares – 600,000,000; issued shares – 180,446,792 at June 30, 2004, and 178,438,369 at December 31, 2003; outstanding shares – 180,323,246 at June 30, 2004, and 178,336,854 at December 31, 2003	1,804			1,784
Paid-in capital	2,248,084			2,195,985
Retained earnings	1,543,883			1,551,003
Treasury shares at cost – 123,546 shares at June 30, 2004, and 101,515 shares at December 31, 2003	(3,966		)	(3,255		)
Accumulated other comprehensive loss	(39,804		)	(44,835		)
Total Common Stock Equity	3,750,001			3,700,682


Total Liabilities and Shareholders’ Equity	$	13,990,769		$	14,119,206

The accompanying notes as they relate to Cinergy Corp. are an integral part of these condensed consolidated financial statements.

CINERGY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY

	Common Stock		Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Common Stock Equity
	*(dollars in thousands)*
	*(unaudited)*

Quarter Ended June 30, 2004

Balance at April 1, 2004 (179,544,917 shares)	$	1,797	$	2,220,748		$	1,569,995		$	(3,862	)	$	(43,369	)	$	3,745,309
Comprehensive income:
Net income						58,504									58,504
Other comprehensive income (loss), net of tax effect of $(2,176)
Foreign currency translation adjustment												446			446
Unrealized loss on investment trusts												(259		)	(259		)
Cash flow hedges												3,378			3,378
Total comprehensive income															62,069

Issuance of common stock – net (781,507 shares)	7		25,129												25,136
Treasury shares purchased (3,178 shares)									(104		)				(104		)
Dividends on common stock ($0.47 per share)						(84,558		)							(84,558		)
Other			2,207			(58		)							2,149

Ending balance at June 30, 2004 (180,323,246 shares)	$	1,804	$	2,248,084		$	1,543,883		$	(3,966	)	$	(39,804	)	$	3,750,001


Quarter Ended June 30, 2003

Balance at April 1, 2003 (175,876,919 shares)	$	1,759	$	2,116,222		$	1,491,861		$	—		$	(29,013	)	$	3,580,829
Comprehensive income:
Net income						84,653									84,653
Other comprehensive income (loss), net of tax effect of $(2,284)
Foreign currency translation adjustment, net of reclassification adjustments of $6,134 (net of tax)												3,963			3,963
Unrealized gain on investment trusts												3,370			3,370
Cash flow hedges												(2,743		)	(2,743		)
Total comprehensive income															89,243

Issuance of common stock – net (1,070,199 shares)	10		25,459						—						25,469
Dividends on common stock ($0.46 per share)						(80,992		)							(80,992		)
Other			(5,713		)	(20		)							(5,733		)

Ending balance at June 30, 2003 (176,947,118 shares)	$	1,769	$	2,135,968		$	1,495,502		$	—		$	(24,423	)	$	3,608,816

The accompanying notes as they relate to Cinergy Corp. are an integral part of these condensed consolidated financial statements.

CINERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY

(Continued)

	Common Stock		Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Common Stock Equity
	*(dollars in thousands)*
	*(unaudited)*

Year to Date June 30, 2004

Balance at January 1, 2004 (178,336,854 shares)	$	1,784	$	2,195,985		$	1,551,003		$	(3,255	)	$	(44,835	)	$	3,700,682
Comprehensive income:
Net income						161,519									161,519
Other comprehensive income, net of tax effect of $(3,090)
Foreign currency translation adjustment												1,432			1,432
Unrealized gain on investment trusts												496			496
Cash flow hedges												3,103			3,103
Total comprehensive income															166,550

Issuance of common stock – net (2,008,423 shares)	20		46,211												46,231
Treasury shares purchased (22,031 shares)									(711		)				(711		)
Dividends on common stock ($0.94 per share)						(168,545		)							(168,545		)
Other			5,888			(94		)							5,794

Ending balance at June 30, 2004 (180,323,246 shares)	$	1,804	$	2,248,084		$	1,543,883		$	(3,966	)	$	(39,804	)	$	3,750,001


Year to Date June 30, 2003

Balance at January 1, 2003 (168,663,115 shares)	$	1,687	$	1,918,136		$	1,403,453		$	—		$	(29,800	)	$	3,293,476
Comprehensive income:
Net income						250,738									250,738
Other comprehensive income (loss), net of tax effect of $(2,558)
Foreign currency translation adjustment, net of reclassification adjustments of $6,134 (net of tax)												6,054			6,054
Unrealized gain on investment trusts												2,518			2,518
Cash flow hedges												(3,195		)	(3,195		)
Total comprehensive income															256,115

Issuance of common stock – net (8,284,003 shares)	82		219,355						—						219,437
Dividends on common stock ($0.92 per share)						(158,677		)							(158,677		)
Other			(1,523		)	(12		)							(1,535		)

Ending balance at June 30, 2003 (176,947,118 shares)	$	1,769	$	2,135,968		$	1,495,502		$	—		$	(24,423	)	$	3,608,816

The accompanying notes as they relate to Cinergy Corp. are an integral part of these condensed consolidated financial statements.

CINERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year to Date June 30
	2004			2003
	*(dollars in thousands)*
	*(unaudited)*
Cash Flows from Continuing Operations
Operating Activities
Net income	$	161,519		$	250,738
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	219,188			201,623
Income of discontinued operations, net of tax	—			(8,875		)
Loss on impairment or disposal of investments	29,362			—
Cumulative effect of changes in accounting principles, net of tax	—			(26,462		)
Change in net position of energy risk management activities	(23,669		)	12,421
Deferred income taxes and investment tax credits - net	41,938			24,315
Equity in earnings of unconsolidated subsidiaries	(10,079		)	(6,696		)
Allowance for equity funds used during construction	(976		)	(6,191		)
Regulatory assets deferrals	(36,205		)	(32,571		)
Regulatory assets amortization	48,302			52,000
Accrued pension and other postretirement benefit costs	35,426			34,755
Deferred costs under gas cost recovery mechanism	21,311			(36,422		)
Cost of removal	(9,118		)	(7,098		)
Changes in current assets and current liabilities:
Restricted deposits	(5,918		)	(517		)
Accounts and notes receivable	420,693			169,107
Fuel, emission allowances, and supplies	(44,545		)	(4,414		)
Prepayments	(31,762		)	(17,642		)
Accounts payable	(213,787		)	(209,005		)
Accrued taxes and interest	(44,933		)	(59,226		)
Other assets	10,828			(4,735		)
Other liabilities	28,788			57,715
Net cash provided by operating activities	596,363			382,820

Financing Activities
Change in short-term debt	137,832			(258,714		)
Issuance of long-term debt	—			291,198
Redemption of long-term debt	(319,511		)	(127,896		)
Issuance of common stock	46,231			219,437
Dividends on common stock	(168,545		)	(158,677		)
Net cash used in financing activities	(303,993		)	(34,652		)

Investing Activities
Construction expenditures (less allowance for equity funds used during construction)	(309,699		)	(327,424		)
Proceeds from notes receivable	8,559			—
Acquisitions and other investments	(11,350		)	(23,092		)
Proceeds from disposition of subsidiaries and investments	14,405			51,252
Withdrawal of restricted cash held on deposit	10,413			—
Net cash used in investing activities	(287,672		)	(299,264		)

Net increase in cash and cash equivalents from continuing operations	4,698			48,904
Cash and cash equivalents from continuing operations at beginning of period	169,120			200,112
Cash and cash equivalents from continuing operations at end of period	$	173,818		$	249,016

Cash Flows from Discontinued Operations
Operating activities	$	(7,093	)	$	(7,108	)
Financing activities	7,093			(13,863		)
Investing activities	—			—
Net decrease in cash and cash equivalents from discontinued operations	—			(20,971		)
Cash and cash equivalents from discontinued operations at beginning of period	—			20,971
Cash and cash equivalents from discontinued operations at end of period	$	—		—

Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest (net of amount capitalized)	$	139,868		$	117,496
Income taxes	$	32,123		$	96,696

The accompanying notes as they relate to Cinergy Corp. are an integral part of these condensed consolidated financial statements.

THE CINCINNATI GAS & ELECTRIC COMPANY

AND SUBSIDIARY COMPANIES

THE CINCINNATI GAS & ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

	Quarter Ended June 30					Year to Date June 30
	2004		2003			2004		2003
	*(dollars in thousands)*
	*(unaudited)*

Operating Revenues
Electric	$	455,276	$	397,455		$	892,883	$	826,019
Gas	90,651		85,311			418,303		360,587
Total Operating Revenues	545,927		482,766			1,311,186		1,186,606


Operating Expenses
Fuel and purchased power	137,999		106,267			270,791		236,821
Gas purchased	47,418		48,086			270,935		219,851
Operation and maintenance	159,284		125,932			315,659		260,690
Depreciation	45,477		50,313			89,863		99,577
Taxes other than income taxes	49,305		49,739			113,500		110,257
Total Operating Expenses	439,483		380,337			1,060,748		927,196


Operating Income	106,444		102,429			250,438		259,410


Miscellaneous Income – Net	3,189		6,899			6,043		13,483
Interest Expense	22,415		29,424			44,851		55,267


Income Before Taxes	87,218		79,904			211,630		217,626


Income Taxes	31,909		28,985			78,866		80,409


Income Before Cumulative Effect of Changes in Accounting Principles	55,309		50,919			132,764		137,217


Cumulative effect of changes in accounting principles, net of tax (Note 1(c)(ii))	—		—			—		30,938

Net Income	$	55,309	$	50,919		$	132,764	$	168,155

Preferred Dividend Requirement	212		212			423		423

Net Income Applicable to Common Stock	$	55,097	$	50,707		$	132,341	$	167,732


Net Income	$	55,309	$	50,919		$	132,764	$	168,155

Other Comprehensive Income (Loss), Net of Tax	3,207		(2,721		)	2,883		(3,027		)

Comprehensive Income	$	58,516	$	48,198		$	135,647	$	165,128

The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these condensed consolidated financial statements.

THE CINCINNATI GAS & ELECTRIC COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

	June 30 2004		December 31 2003
	*(dollars in thousands)*
	*(unaudited)*

Current Assets
Cash and cash equivalents	$	8,850	$	15,842
Restricted deposits	137		137
Notes receivable from affiliated companies	55,464		110,149
Accounts receivable less accumulated provision for doubtful accounts of $1,273 at June 30, 2004, and $1,602 at December 31, 2003	99,558		107,733
Accounts receivable from affiliated companies	29,789		58,406
Fuel, emission allowances, and supplies	166,053		135,948
Energy risk management current assets	155,876		72,830
Prepayments and other	22,490		15,049
Total Current Assets	538,217		516,094


Property, Plant, and Equipment – at Cost
Utility plant in service
Electric	2,215,001		2,155,457
Gas	1,146,542		1,104,797
Common	290,750		288,394
Total Utility Plant In Service	3,652,293		3,548,648
Construction work in progress	61,522		71,947
Total Utility Plant	3,713,815		3,620,595
Non-regulated property, plant, and equipment	3,613,834		3,576,187
Accumulated depreciation	2,688,118		2,625,568
Net Property, Plant, and Equipment	4,639,531		4,571,214


Other Assets
Regulatory assets	579,652		594,764
Energy risk management non-current assets	58,338		36,583
Other	75,168		90,824
Total Other Assets	713,158		722,171


Total Assets	$	5,890,906	$	5,809,479

The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these condensed consolidated financial statements.

THE CINCINNATI GAS & ELECTRIC COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS’ EQUITY

	June 30 2004			December 31 2003
	*(dollars in thousands)*
	*(unaudited)*

Current Liabilities
Accounts payable	$	252,591		$	217,652
Accounts payable to affiliated companies	46,355			136,470
Accrued taxes	171,743			146,216
Accrued interest	19,039			21,572
Notes payable and other short-term obligations (Note 4)	112,100			112,100
Notes payable to affiliated companies (Note 4)	126,768			49,126
Long-term debt due within one year	150,000			110,000
Energy risk management current liabilities	133,900			77,791
Other	35,568			32,319
Total Current Liabilities	1,048,064			903,246


Non-Current Liabilities
Long-term debt (Note 3)	1,309,432			1,458,807
Deferred income taxes	1,007,697			985,481
Unamortized investment tax credits	76,216			79,186
Accrued pension and other postretirement benefit costs	226,031			219,393
Accrued cost of removal	160,654			155,336
Energy risk management non-current liabilities	37,077			11,665
Other	74,371			69,687
Total Non-Current Liabilities	2,891,478			2,979,555


Commitments and Contingencies (Note 6)

Total Liabilities	3,939,542			3,882,801


Cumulative Preferred Stock
Not subject to mandatory redemption	20,485			20,485


Common Stock Equity
Common stock – $8.50 par value; authorized shares – 120,000,000; outstanding shares – 89,663,086 at June 30, 2004 and December 31, 2003	762,136			762,136
Paid-in capital	586,528			586,528
Retained earnings	611,796			589,993
Accumulated other comprehensive loss	(29,581		)	(32,464		)
Total Common Stock Equity	1,930,879			1,906,193


Total Liabilities and Shareholders’ Equity	$	5,890,906		$	5,809,479

The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these condensed consolidated financial statements.

THE CINCINNATI GAS & ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year to Date June 30
	2004			2003
	*(dollars in thousands)*
	*(unaudited)*

Operating Activities
Net income	$	132,764		$	168,155
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	89,863			99,577
Deferred income taxes and investment tax credits – net	16,294			12,144
Cumulative effect of changes in accounting principles, net of tax	—			(30,938		)
Change in net position of energy risk management activities	(23,280		)	1,161
Allowance for equity funds used during construction	(719		)	(1,841		)
Regulatory assets deferrals	(13,753		)	(12,725		)
Regulatory assets amortization	27,022			19,654
Accrued pension and other postretirement benefit costs	6,638			6,876
Deferred costs under gas cost recovery mechanism	21,311			(36,422		)
Cost of removal	(3,774		)	—
Changes in current assets and current liabilities:
Restricted deposits	—			34
Accounts and notes receivable	88,007			131,511
Fuel, emission allowances, and supplies	(30,965		)	(7,714		)
Prepayments	(7,544		)	(7,962		)
Accounts payable	(55,176		)	(138,911		)
Accrued taxes and interest	22,994			9,926
Other assets	1,858			6,930
Other liabilities	10,081			(5,635		)

Net cash provided by operating activities	281,621			213,820

Financing Activities
Change in short-term debt, including net affiliate notes	81,112			(90,887		)
Issuance of long-term debt	—			256,198
Redemption of long-term debt	(110,000		)	(100,000		)
Dividends on preferred stock	(423		)	(423		)
Dividends on common stock	(110,538		)	(110,182		)

Net cash used in financing activities	(139,849		)	(45,294		)

Investing Activities
Construction expenditures (less allowance for equity funds used during construction)	(148,762		)	(150,672		)
Other investments	(2		)	2

Net cash used in investing activities	(148,764		)	(150,670		)

Net increase (decrease) in cash and cash equivalents	(6,992		)	17,856

Cash and cash equivalents at beginning of period	15,842			45,336

Cash and cash equivalents at end of period	$	8,850		$	63,192


Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest (net of amount capitalized)	$	45,345		$	30,010
Income taxes	$	11,264		$	37,155

The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these condensed consolidated financial statements.

PSI ENERGY, INC.

AND SUBSIDIARY COMPANY

PSI ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

	Quarter Ended June 30					Year to Date June 30
	2004			2003		2004		2003
	*(dollars in thousands)*
	*(unaudited)*

Operating Revenues
Electric	$	414,444		$	361,385	$	830,723	$	773,073


Operating Expenses
Fuel and purchased power	139,600			121,998		276,396		288,870
Operation and maintenance	138,291			127,020		265,202		242,298
Depreciation	55,059			40,735		103,890		80,416
Taxes other than income taxes	14,121			16,150		30,533		32,032
Total Operating Expenses	347,071			305,903		676,021		643,616


Operating Income	67,373			55,482		154,702		129,457


Miscellaneous Income – Net	3,017			5,411		3,564		7,569
Interest Expense	21,701			22,174		41,625		42,427


Income Before Taxes	48,689			38,719		116,641		94,599


Income Taxes	23,243			15,640		50,389		37,299


Income Before Cumulative Effect of a Change in Accounting Principle	25,446			23,079		66,252		57,300


Cumulative effect of a change in accounting principle, net of tax (Note 1(c)(ii))	—			—		—		(494		)

Net Income	$	25,446		$	23,079	$	66,252	$	56,806

Preferred Dividend Requirement	646			646		1,293		1,293

Net Income Applicable to Common Stock	$	24,800		$	22,433	$	64,959	$	55,513


Net Income	$	25,446		$	23,079	$	66,252	$	56,806

Other Comprehensive Income (Loss), Net of Tax	(118		)	2,954		366		2,324

Comprehensive Income	$	25,328		$	26,033	$	66,618	$	59,130

The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these condensed consolidated financial statements.

PSI ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

	June 30 2004		December 31 2003
	*(dollars in thousands)*
	*(unaudited)*

Current Assets
Cash and cash equivalents	$	24,695	$	6,565
Restricted deposits	88,180		92,675
Notes receivable from affiliated companies	51,011		65,715
Accounts receivable less accumulated provision for doubtful accounts of $408 at June 30, 2004, and $1,110 at December 31, 2003	37,966		37,194
Accounts receivable from affiliated companies	7,273		459
Fuel, emission allowances, and supplies	145,529		149,392
Energy risk management current assets	6,714		7,959
Prepayments and other	4,642		5,303
Total Current Assets	366,010		365,262


Property, Plant, and Equipment – at Cost
Utility plant in service	6,334,018		6,183,475
Construction work in progress	183,309		203,512
Total Utility Plant	6,517,327		6,386,987
Accumulated depreciation	2,211,926		2,133,235
Net Property, Plant, and Equipment	4,305,401		4,253,752


Other Assets
Regulatory assets	421,496		417,387
Energy risk management non-current assets	3,348		7,061
Other investments	68,763		66,803
Other	31,552		29,372
Total Other Assets	525,159		520,623


Total Assets	$	5,196,570	$	5,139,637

The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these condensed consolidated financial statements.

PSI ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS’ EQUITY

	June 30 2004			December 31 2003
	*(dollars in thousands)*
	*(unaudited)*

Current Liabilities
Accounts payable	$	54,354		$	58,286
Accounts payable to affiliated companies	32,170			69,746
Accrued taxes	63,760			69,419
Accrued interest	29,595			26,615
Notes payable and other short-term obligations (Note 4)	80,500			80,500
Notes payable to affiliated companies (Note 4)	218,783			188,446
Long-term debt due within one year	1,100			—
Energy risk management current liabilities	15,631			14,744
Other	24,642			25,636
Total Current Liabilities	520,535			533,392


Non-Current Liabilities
Long-term debt	1,719,673			1,720,476
Deferred income taxes	610,801			573,946
Unamortized investment tax credits	28,141			29,698
Accrued pension and other postretirement benefit costs	203,596			193,336
Accrued cost of removal	349,901			335,520
Energy risk management non-current liabilities	1,664			2,796
Other	79,289			74,958
Total Non-Current Liabilities	2,993,065			2,930,730


Commitments and Contingencies (Note 6)

Total Liabilities	3,513,600			3,464,122


Cumulative Preferred Stock
Not subject to mandatory redemption	42,333			42,333


Common Stock Equity
Common stock – without par value; $.01 stated value; authorized shares – 60,000,000; outstanding shares – 53,913,701 at June 30, 2004, and December 31, 2003	539			539
Paid-in capital	627,274			627,274
Retained earnings	1,025,879			1,018,790
Accumulated other comprehensive loss	(13,055		)	(13,421		)
Total Common Stock Equity	1,640,637			1,633,182


Total Liabilities and Shareholders’ Equity	$	5,196,570		$	5,139,637

The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these condensed consolidated financial statements.

PSI ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year to Date June 30
	2004			2003
	*(dollars in thousands)*
	*(unaudited)*

Operating Activities
Net income	$	66,252		$	56,806
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	103,890			80,416
Cumulative effect of a change in accounting principle, net of tax	—			494
Deferred income taxes and investment tax credits – net	35,052			(937		)
Change in net position of energy risk management activities	4,713			635
Allowance for equity funds used during construction	(257		)	(4,350		)
Regulatory assets deferrals	(22,452		)	(19,846		)
Regulatory assets amortization	21,280			32,346
Accrued pension and other postretirement benefit costs	10,260			7,480
Cost of removal	(5,344		)	(7,098		)
Changes in current assets and current liabilities:
Restricted deposits	(5,918		)	(551		)
Accounts and notes receivable	7,118			28,201
Fuel, emission allowances, and supplies	3,863			2,702
Prepayments	(32		)	(406		)
Accounts payable	(41,508		)	(136,320		)
Accrued taxes and interest	(2,679		)	491
Other assets	177			(2,353		)
Other liabilities	4,080			(1,755		)

Net cash provided by operating activities	178,495			35,955

UNION LIGHT HEAT & POWER CO 10-Q