As filed with the Securities and Exchange Commission on August 9, 1995
File No. 70-____
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________________
FORM U-1 DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________
The Cincinnati Gas & Electric Company
139 East Fourth Street
Cincinnati, Ohio 45202
(Name of company filing this statement
and address of principal executive offices)
CINergy Corp.
(Name of top registered holding company parent)
William L. Sheafer
Treasurer
CINergy Corp.
139 East Fourth Street
Cincinnati, Ohio 45202
(Name and address of agent of service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Declaration to:
Cheryl M. Foley James R. Lance
Vice President, General Counsel Manager -- Corporate Finance
and Corporate Secretary CINergy Corp.
CINergy Corp. 139 East Fourth Street
139 East Fourth Street Cincinnati, Ohio 45202
Cincinnati, Ohio 45202
<PAGE>
Item 1. Description of Proposed Transactions.
A. Summary of Requested Authorizations.
The Cincinnati Gas & Electric Company ("CG&E"), a wholly-owned
utility subsidiary of CINergy Corp. ("CINergy"), a registered holding
company under the Public Utility Holding Company Act of 1935 (the "Act"),
proposes to submit to the holders of its outstanding capital stock, at a
special meeting to be held on or about November 16, 1995 (the "Special
Meeting"), a proposal and an alternative proposal to amend CG&E's Amended
Articles of Incorporation (the "Articles") with respect to a limitation on
the issuance of unsecured debt securities, as described below. In
connection therewith, CG&E also proposes to solicit proxies from the
holders of its capital stock and to pay the fees of a professional proxy
solicitor.
B. Proposals to Amend Articles With Respect to Unsecured
Indebtedness.
CG&E has outstanding 89,663,086 shares of common stock, $8.50 par
value per share, all of which is held by CINergy. CG&E's outstanding
preferred stock, all of which is publicly held, consists of two million
shares of cumulative preferred stock, par value $100 per share (the
Preferred Stock"), issued in four series.
The Articles as currently in effect provide that, without the consent
of the holders of not less than a majority of the total number of shares
of Preferred Stock of all series then outstanding, CG&E shall not issue or
assume any securities representing unsecured debt (other than for purposes
of refunding outstanding unsecured indebtedness or redeeming or otherwise
retiring outstanding shares of stock ranking prior to the Preferred Stock
with respect to the payment of dividends or upon the dissolution,
liquidation or winding up of CG&E) if, immediately after such issue or
assumption, the total outstanding principal amount of all securities
representing unsecured debt would exceed 20% of the aggregate of (1) the
total principal amount of all then-outstanding secured debt of CG&E, and
(2) the capital and surplus of CG&E, as stated on CG&E's books (the "20%
Limitation").
CG&E proposes to submit to the holders of the outstanding shares of
Preferred Stock of all series, and to CINergy, as the sole holder of all
the outstanding shares of CG&E common stock, for consideration and action
at the Special Meeting, a proposal to amend the Articles to eliminate the
20% Limitation (the "Proposal"). Approval of the Proposal requires the
affirmative vote of the holders of not less than two-thirds of the total
number of shares of Preferred Stock of all four series, voting together as
one class, and an affirmative two-thirds vote from CINergy as the sole
common stock holder. CINergy has informed CG&E that it will vote in favor
of the Proposal (and, if necessary, the alternative proposal described
below).
In the event the Proposal fails to receive the requisite affirmative
vote, CG&E proposes to seek approval at the Special Meeting of an
alternative proposal amending the Articles to authorize CG&E to issue or
assume unsecured debt securities in excess of the 20% Limitation through
December 1, 2005 (the "Alternative Proposal"). Approval of the
Alternative Proposal requires the same affirmative vote as the Proposal.
CG&E believes that adoption of the Proposal (or, as appropriate, the
Alternative Proposal) is critical to maximizing its financial flexibility
and minimizing its financing costs.
1. Financial Flexibility. Although historically CG&E's debt
financing generally has been accomplished through the issuance of long-
term first mortgage bonds and only a modest amount of short-term debt,
CG&E believes that in the long-run the various types of unsecured debt
products will grow in importance as an option in financing its
construction program and in refinancing high-cost first mortgage bonds.
The availability and flexibility of unsecured debt is necessary to take
full advantage of changing conditions in securities markets. In addition,
although CG&E's earnings currently are sufficient to meet the earnings
coverage tests that must be satisfied before issuing additional first
mortgage bonds and preferred stock, there have been periods, including
virtually all of 1994, when, because of its inability to meet the earnings
coverage test in the Articles, CG&E was unable to issue any additional
preferred stock. Given CG&E's desire to continue to rely on unsecured
debt up to the maximum currently permissible under the Articles, a similar
inability to issue preferred stock in the future would limit CG&E s
financing options to either additional first mortgage bonds (assuming that
the applicable earnings coverage test could be met) or additional common
stock.
As noted, CG&E's use of short-term debt is subject to the 20%
Limitation. CG&E believes that the prudent use of short-term debt is
vital to effective financial management of its business. Not only is
short-term debt virtually always the least expensive form of capital, it
also provides flexibility in meeting seasonal fluctuations in cash
requirements, acts as a bridge between issues of permanent capital, and
can be used when unfavorable conditions prevail in the market for long-
term capital.
Moreover, inasmuch as the 20% Limitation constrains CG&E s
flexibility in planning and financing its business activities, CG&E
believes that ultimately it will be at a competitive disadvantage if such
limitation is not removed. The industry's new competitive options -- such
as power marketers, independent power producers, and cogenerators --
generally are not subject to similar financing restrictions in their
organizational documents. Many other utilities with charter restrictions
the same as or similar to the 20% Limitation, including utility
subsidiaries of registered holding companies, have solicited or are
soliciting the same or similar amendments from their shareholders./1/
Indeed, CG&E's associate utility company, PSI Energy, Inc. ("PSI"), has no
comparable provision in its charter.
2. Lower Costs. As stated above, CG&E's short-term debt issuances
typically represent the lowest-cost form of financing. Although short-
term debt inherently subjects the borrower to potentially greater
interest-rate volatility, the cost of short-term debt almost never exceeds
that of permanent capital. The 1994 merger of CG&E and PSI Resources,
Inc. that created CINergy (the "Merger") resulted in a combined system
that is larger and financially stronger than either company would have
been on a stand-alone basis. This in turn has prompted CG&E to reassess
its historically modest use of short-term debt. By increasing its use of
short-term debt, CG&E may be able to lower its cost structure even
further, thereby making its energy products more competitive, increasing
earnings and reducing its business risks. But with the 20% Limitation in
place, at the same time as CG&E seeks to rely increasingly on unsecured
debt, the availability and concomitant benefits of short-term debt would
be hampered.
With the above benefits in mind, CG&E this year sought and received
approval from the Public Utilities Commission of Ohio (order dated May 4,
1995 in Case No. 95-358-GE-AIS) to increase the maximum amount of short-
term debt it is permitted to have outstanding at any one time from $200
million to $400 million. However, under the 20% Limitation, CG&E
estimates that it would have only approximately $150 million of short-term
debt capacity, based on estimated capitalization as of December 31, 1995.
Drafts of the notice of the Special Meeting, the related proxy
statement and form of proxy are included as Exhibits B-1, B-2 and B-3,
respectively. A more detailed statement of the proposals and of the
supporting reasons is set forth in the draft proxy statement, to which
reference is hereby made.
C. Solicitation of Proxies.
CG&E has determined to retain the services of Morrow & Co., Inc.
("Morrow"), a professional proxy solicitor, to assist in the solicitation
of proxies from the holders of the Preferred Stock, and requests authority
to pay Morrow a fee not to exceed approximately $8500, plus reimbursement
of out-of-pocket expenses estimated not to exceed approximately $5000.
As set forth in Item 5, in order to give CG&E adequate time to
solicit proxies in advance of the Special Meeting -- particularly in light
of the super-majority voting requirement for adoption of the proposals --
CG&E requests that the Commission issue an order by not later than October
2, 1995 permitting it to solicit proxies as proposed herein.
D. Statement Pursuant to Rule 54.
Under Rule 54, in determining whether to approve the issue and sale
of a security by a registered holding company for purposes other than the
acquisition of an exempt wholesale generator ("EWG") or a foreign utility
company ("FUCO"), or other transactions by such registered holding company
or its subsidiaries other than with respect to EWGs and FUCOs, the
Commission shall not consider the effect of the capitalization or earnings
of any subsidiary which is an EWG or a FUCO upon the registered holding
company system if the conditions set forth in Rule 53(a), (b) and (c) are
satisfied. As set forth below, all applicable conditions of Rule 53(a)
are and, upon consummation of the proposed transactions, will be
satisfied, and none of the conditions specified in Rule 53(b) exists or,
as a result thereof, will exist. The following discussion assumes the
CINergy system's existence for the dates and periods in question.
Four CINergy companies are EWGs or FUCOs: PSI Argentina, Inc. ("PSI
Argentina"), Costanera Power Corporation ("Costanera") and E P EDEGEL,
Inc. ("EDEGEL") are EWGs, and PSI Energy Argentina, Inc. ("Energy
Argentina") is a FUCO. For further information with respect to such
entities, reference is made to the Application-Declaration in File No. 70-
8589.
Rule 53(a)(1): The average of CINergy's pro forma consolidated
retained earnings for the four consecutive quarters ended June 30, 1995
was $909 million, and CINergy's aggregate investment in EWGs and FUCOs at
June 30, 1995 was approximately $20 million, or approximately 2% of
consolidated retained earnings.
Rule 53(a)(2): CINergy maintains books and records enabling it to
identify investments in and earnings from each EWG and FUCO in which it
directly or indirectly holds an interest. At present, CINergy does not
hold any interest in a domestic EWG; Rule 53(a)(2)(i) is therefore
inapplicable.
In accordance with Rule 53(a)(2)(ii), the books and records and
financial statements of each foreign EWG and FUCO which is a majority-
owned subsidiary company of CINergy are kept in conformity with and
prepared according to U.S. generally accepted accounting principles
("GAAP"). CINergy will provide the Commission access to such books and
records and financial statements, or copies thereof, in English, as the
Commission may request.
In accordance with Rule 53(a)(2)(iii), for each foreign EWG and FUCO
in which CINergy directly or indirectly owns 50% or less of the voting
securities, CINergy will proceed in good faith, to the extent reasonable
under the circumstances, to cause each such entity's books and records to
be kept in conformity with, and the financial statements of each such
entity to be prepared according to, GAAP. If such books and records are
maintained, or such financial statements are prepared, according to a
comprehensive body of accounting principles other than GAAP, CINergy will,
upon request of the Commission, describe and quantify each material
variation from GAAP in the accounting principles, practices and methods
used to maintain such books and records and each material variation from
GAAP in the balance sheet line items and net income reported in such
financial statements, as the case may be. In addition, CINergy will
proceed in good faith, to the extent reasonable under the circumstances,
to cause access by the Commission to such books and records and financial
statements, or copies thereof, in English, as the Commission may request,
and in any event will make available to the Commission any such books and
records that are available to CINergy.
Rule 53(a)(3): Less than two percent of the total number of
employees of CINergy's utility subsidiaries render services, at any one
time, to Costanera, PSI Argentina, EDEGEL and Energy Argentina. Such
services have heretofore been rendered, in part, by employees of PSI in
accordance with the Commission's order in PSI Resources, Inc., et al.,
Rel. No. 35-25674, 52 SEC Docket 2533, 2534-35 (Nov. 13, 1992), and by
employees of CG&E in accordance with business practices established prior
to the Merger and the registration of CINergy as a holding company under
the Act. Pursuant to the Commission's October 1994 order in File No. 70-
8427 authorizing the Merger and related transactions (Rel. No. 35-26146),
CINergy Services is authorized to provide administrative, management and
other support services to utility and nonutility associate companies,
including those that are EWGs or FUCOs.
Rule 53(a)(4): CINergy is concurrently submitting a copy of this
Declaration, and will submit copies of any Rule 24 certificates hereunder,
as well as a copy of Item 9 of CINergy's Form U5S and Exhibits H and I
thereto, to each of the public service commissions having jurisdiction
over the retail rates of CINergy's operating utility subsidiaries at the
time such documents are filed with the Commission.
Rule 53(b): The provisions of Rule 53(a) are not made inapplicable
to the authorizations herein requested by reason of the provisions of Rule
53(b).
Rule 53(b)(1): Neither CINergy nor any subsidiary thereof is the
subject of any pending bankruptcy or similar proceeding.
Rule 53(b)(2): Average consolidated retained earnings for the four
quarters ended June 30, 1995 equaled $909 million, versus $979 million for
the four quarters ended June 30, 1994, a difference of approximately $70
million or 7%. Accordingly, the restriction set forth in this provision
of the Rule is inapplicable.
Rule 53(b)(3): For the twelve months ended June 30, 1995, CINergy
had net income of approximately $910,000 attributable to its direct and
indirect investments in EWGs and FUCOs.
Rule 53(c): Inasmuch as Rule 53(c) applies only if an applicant is
unable to satisfy the requirements of Rule 53(a) and (b), it is
inapplicable here.
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses to be incurred, directly or
indirectly, by CG&E or any associate company thereof in connection with
the proposed transactions are estimated as follows:
U-1 filing fee. . . . . . . . . . . . . . . . $ 2,000
Printing. . . . . . . . . . . . . . . . . . . 15,000
Postage and handling. . . . . . . . . . . . . 5,600
Fees and expenses of Morrow . . . . . . . . . 13,500
Fees of CINergy Services, Inc.. . . . . . . . 60,000
TOTAL . . . . . . . . . . . . . . . . . . . . $96,100
Item 3. Applicable Statutory Provisions.
Sections 6(a), 7 and 12(e) of the Act and Rules 54, 62 and 65 are or
may be applicable to the proposed transactions.
Item 4. Regulatory Approval.
No state or federal regulatory agency other than the Commission under
the Act has jurisdiction over the proposed transactions.
Item 5. Procedure.
In order to afford CG&E adequate time for the solicitation of proxies
in advance of the Special Meeting to be held on or about November 16,
1995, particularly in light of the super-majority (66-2/3%) approval
requirement for the proposals, CG&E requests that the Commission issue and
publish not later than October 2, 1995 an order under Rule 62(d)
permitting the solicitation of proxies proposed herein, together with the
requisite notice under Rule 23 with respect to the filing of this
Declaration. CG&E further requests that such notice and order specify a
date not later than October 27, 1995 as the date after which the
Commission may issue an order permitting this Declaration to become
effective with respect to the balance of the transactions proposed herein,
and that the Commission issue such order not later than October 30, 1995.
CG&E waives a recommended decision by a hearing officer or other
responsible officer of the Commission; consents that the Staff of the
Division of Investment Management may assist in the preparation of the
Commission's orders; and requests that there be no waiting period between
the issuance of the Commission's orders and their effectiveness.
Item 6. Exhibits and Financial Statements.
(a) Exhibits:
A-1 Amended Articles of Incorporation of CG&E effective
January 24, 1994 (filed as an exhibit to CG&E's 1993 Form
10-K in File No. 1-1232 and hereby incorporated by
reference).
A-2 Regulations of CG&E as amended, adopted June 16, 1995
(filed as an exhibit to CG&E's Form 8-A, dated July 24,
1995, in File No. 1-1232 and hereby incorporated by
reference).
B-1 Draft of notice of special meeting of stockholders.
B-2 Draft of proxy statement.
B-3 Draft of form of proxy for special meeting.
C Not applicable.
D Not applicable.
E Not applicable.
F Opinion of counsel.
G Form of notice and order permitting the solicitation of
proxies.
(b) Financial Statements:
FS-1 CG&E Consolidated Balance Sheet at June 30, 1995.
FS-2 CG&E Consolidated Statement of Income for the Twelve
Months Ended June 30, 1995.
FS-3 CG&E Consolidated Statement of Changes in Retained
Earnings for the Twelve Months Ended June 30, 1995.
FS-4 CINergy Consolidated Balance Sheet at June 30, 1995.
FS-5 CINergy Consolidated Statement of Income for the
Twelve Months Ended June 30, 1995.
FS-6 CINergy Consolidated Statement of Changes in Retained
Earnings for the Twelve Months Ended June 30, 1995.
FS-7 Financial Data Schedule of CG&E (included in
electronic submission only).
FS-8 Financial Data Schedule of CINergy (included in
electronic submission only).
Item 7. Information as to Environmental Effects.
(a) In light of the transactions proposed in this Declaration,
the Commission's action in this matter will not constitute any major
federal action significantly affecting the quality of the human
environment.
(b) No other federal agency has prepared or is preparing an
environmental impact statement with regard to the proposed transactions.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the undersigned company has
duly caused this Declaration to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: August 9, 1995
The Cincinnati Gas & Electric Company
By: /s/ William L. Sheafer
---------------------------------
Treasurer
<PAGE>
ENDNOTES
/1/ See, e.g., Blackstone Valley Electric Company, Rel. No. 35-26320
(June 28, 1995); Alabama Power Company, Rel. No. 35-26118 (Sept. 7, 1994).
Exhibit B-1
DRAFT
THE CINCINNATI GAS & ELECTRIC COMPANY
139 East Fourth Street
Cincinnati, Ohio 45202
__________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON _____________, 1995
To the Shareholders Of
The Cincinnati Gas & Electric Company:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of The
Cincinnati Gas & Electric Company ("CG&E") will be held at its principal
offices, 139 East Fourth Street, Cincinnati, Ohio, on _____________,
_______________, 1995 at _____ a.m. , eastern time, for the purposes of:
(1) removing from the Amended Articles of Incorporation ARTICLE FOURTH,
Clause 6-A(b), limiting CG&E's ability to issue unsecured
indebtedness;
(2) in the event Proposal (1)is not adopted, amending ARTICLE FOURTH,
Clause 6-A(b), to authorize CG&E to issue or assume unsecured
indebtedness in excess of 20% of CG&E's secured indebtedness, plus
capital and surplus, until December 1, 2005;
and transacting such other business as may legally come before the meeting.
Only shareholders of record at the close of business on _________,
___________, 1995, will be entitled to vote at the meeting and at any
adjournment thereof. Shareholders, whether or not they now expect to be
present at the meeting, are requested to mark, date and sign the enclosed
proxy, and return it promptly. An addressed envelope, on which no postage
stamp is necessary if mailed in the United States, is enclosed for use in
returning the proxy. A shareholder executing and delivering the enclosed
proxy has the power to revoke it at any time before the authority granted by
the proxy is exercised.
THE CINCINNATI GAS & ELECTRIC COMPANY
BY CHERYL M. FOLEY, SECRETARY
Dated: _____________, 1995
Exhibit B-2
DRAFT
THE CINCINNATI GAS & ELECTRIC COMPANY
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000
PROXY STATEMENT
Introduction
This Proxy Statement is first being mailed on or about __________, 1995
to the shareholders of The Cincinnati Gas & Electric Company, an Ohio
corporation ("CG&E"), in connection with the solicitation of proxies by the
Board of Directors (the "Board") of CG&E for use at the Special Meeting of
Shareholders to be held on ___________, 1995, or any adjournment or
postponement of such meeting (the "Special Meeting").
Effective October 24, 1994, the business combination (the "Merger") of
CG&E and PSI Energy, Inc., an Indiana corporation ("PSI Energy"), was
consummated and Cinergy Corp., a Delaware corporation ("Cinergy"), became the
holding company for CG&E and PSI Energy. Pursuant to the Merger, the former
common stock holders of CG&E and PSI Resources, Inc. became holders of common
stock of Cinergy. CG&E is an operating utility primarily engaged in
providing electric and gas service in the southwestern portion of Ohio and,
through its principal subsidiary, The Union Light, Heat and Power Company,
in adjacent areas in Kentucky. PSI Energy is an operating utility primarily
engaged in providing electric service in north central, central, and southern
Indiana. Cinergy also owns all the common stock of Cinergy Services, Inc.
("Cinergy Services") and Cinergy Investments, Inc. ("Cinergy Investments").
Cinergy Services provides management, financial, administrative, engineering,
legal and other services to Cinergy, CG&E, PSI Energy, Cinergy Investments
and subsidiaries thereof. Cinergy conducts its non-utility businesses
through Cinergy Investments and its subsidiaries.
As a result of the Merger, Cinergy became the owner of all outstanding
shares of CG&E's common stock. Issued and outstanding shares of CG&E's
cumulative preferred stock have voting rights under certain circumstances.
Voting Securities, Rights and Procedures
Only holders of record of CG&E's voting securities at the close of
business on ________________, 1995 (the "Record Date") will be entitled to
vote at the Special Meeting. The outstanding voting securities of CG&E are
divided into two classes: common stock and cumulative preferred stock. The
class of cumulative preferred stock has been further issued in four series with
the record holders of all shares of the cumulative preferred stock voting
together as one class. The shares outstanding as of the Record Date, and the
vote to which each share is entitled, are as follows:
Class Shares Outstanding Votes Per Share
------- -------------------- -----------------
Common Stock (Par Value 89,663,086 1 vote
$8.50 per share)
Cumulative Preferred 2,000,000 1 vote
Stock (Par Value $100
per share)
The affirmative vote of the holders of two-thirds of the outstanding
shares of each of CG&E's (i) common stock and (ii) cumulative preferred
stock, all series voting together as one class, is required to approve each
of the proposals to be presented at the Special Meeting. Abstentions and
broker non-votes will have the effect of votes against each proposal. Cinergy
has advised CG&E that it intends to vote all of the outstanding shares of
common stock of CG&E in favor of Proposal 1, and, if necessary, Proposal 2.
Votes at the Special Meeting will be tabulated preliminarily by Cinergy
Services acting as transfer agent for CG&E. Inspectors of Election, duly
appointed by the presiding officer of the Special Meeting, will definitively
count and tabulate the votes and determine and announce the results at the
meeting. CG&E has no established procedure for confidential voting. There
are no rights of appraisal in connection with the proposals to be presented
at the Special Meeting.
Proxies
The enclosed proxy is solicited by CG&E"s Board, which recommends voting
FOR both items. All shares of CG&E's common stock will be voted in
accordance with the Board's recommendations. Shares of CG&E's cumulative
preferred stock represented by properly executed proxies received at or prior
to the Special Meeting will be voted in accordance with the instructions
thereon. If no instructions are indicated, duly executed proxies will be
voted in accordance with the recommendations of the Board. It is not
anticipated that any other matters will be brought before the Special
Meeting. However, the enclosed proxy gives discretionary authority to the
proxy holders named therein should any other matters be presented at the
Special Meeting, and it is the intention of the proxy holders to act on any
other matters in accordance with their best judgment.
Execution of a proxy will not prevent a shareholder from attending the
Special Meeting and voting in person. Any shareholder giving a proxy may
revoke it at any time before it is voted by delivering to the Secretary of
CG&E written notice of revocation bearing a later date than the proxy, by
delivering a duly executed proxy bearing a later date or by voting in person
at the Special Meeting.
CG&E will bear the cost of the solicitation of proxies by the Board.
CG&E has engaged Morrow & Co., Inc. to assist in the solicitation of proxies
for a fee estimated to be $8,500 plus reimbursement of reasonable out-of-
pocket expenses. Proxies will be solicited by mail. In addition, officers
and employees of Cinergy and/or its subsidiaries and/or CG&E may solicit
proxies personally or by telephone; such persons will receive no additional
compensation for these services.
CG&E has requested that brokerage houses and other custodians, nominees
and fiduciaries forward solicitation materials to the beneficial owners of
shares of CG&E's cumulative preferred stock held of record by such persons
and will reimburse such brokers and other fiduciaries for their reasonable
out-of-pocket expenses incurred in connection therewith.
The solicitation of proxies has been approved by the Securities and
Exchange Commission (the "SEC") under the Public Utility Holding Company Act
of 1935, as amended, (the "1935 Act"). The Proposals [have been/must be]
approved by the SEC under the 1935 Act [, and CG&E's application for such
approval is pending.]
Security Ownership of Certain Beneficial Owners and Management
As noted above, Cinergy owns all the outstanding common stock of CG&E.
The only two holders of record known by management of CG&E to be
beneficial owners of more than 5% of any series of CG&E's cumulative
preferred class of stock as of the Record Date are set forth in the following
table.
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class
------------------- ----------------------- --------
U.S. Leasing International, 247,500 shares 12.38%
Inc.
733 Front Street
San Francisco, California
94111
Household Finance 105,000 shares 5.25%
Corporation
2700 Sanders Road
Prospect Heights, Illinois
60070
CG&E's directors and executive officers do not
beneficially own any shares of any series of CG&E s
cumulative preferred stock as of the Record Date. The
beneficial ownership of Cinergy's common stock held by each
director, as well as directors and executive officers as a
group, as of the Record Date, is set forth in the following
table:
Amount and Nature
Name of Beneficial Owner (1) of Beneficial Ownership
------------------------ -----------------------
Jackson H. Randolph ______________ shares
James E. Rogers ______________ shares (2)
George H. Stinson ______________ shares
Directors and executive
officers as a group ______________ shares (3)
________________
(1) No individual beneficially owns more than 0.___% of the
outstanding shares of common stock of Cinergy.
(2) Includes _____ shares which Mr. Rogers has the right to
acquire within 60 days pursuant to the exercise of stock
options.
(3) Includes _____ shares which respective director and/or
executive officer individually has the right to acquire
within 60 days pursuant to the exercise of stock options.
Business to Come Before the Special Meeting
The following proposals are the only items of business
expected to be presented at the Special Meeting:
PROPOSAL 1: To remove from the Amended Articles of
Incorporation (the "Articles") ARTICLE FOURTH, Clause 6-A(b),
limiting CG&E's ability to issue unsecured indebtedness; and
PROPOSAL 2: In the event Proposal 1 is not adopted, to amend
ARTICLE FOURTH, Clause 6-A(b), to authorize CG&E to issue or
assume unsecured indebtedness in excess of 20% of CG&E s
secured indebtedness, plus capital and surplus, until
December 1, 2005.
Explanation of Proposals
PROPOSAL 1: Without the consent of the holders of CG&E s
preferred stock, the Articles currently prohibit the issuance
or assumption of any unsecured notes, debentures or other
securities representing unsecured indebtedness (other than
for the purpose of refunding outstanding unsecured
indebtedness or for the redemption or retirement of
outstanding shares of stock ranking prior to the preferred
stock with respect to the payment of dividends or upon the
dissolution, liquidation or winding up of CG&E) if,
immediately after such issuance or assumption, the total
outstanding principal amount of all securities representing
unsecured debt (including unsecured securities then to be
issued or assumed) would exceed 20% of the aggregate of (1)
the total principal amount of all outstanding secured debt of
CG&E at the time of such issuance or assumption, and (2) the
capital and surplus of CG&E, as stated on CG&E's books. For
reasons more fully discussed in Reasons for Proposals
below, this proposal, if adopted, would eliminate this
restriction from the Articles.
PROPOSAL 2: In the event that Proposal 1 above is not
adopted, CG&E proposes that the Articles be amended to allow
CG&E to issue and assume securities representing unsecured
indebtedness in excess of 20% through December 1, 2005,
without an additional vote of preferred shares.
Specifically, ARTICLE FOURTH, Clause 6-A(b) would be amended
to read in its entirety as follows:
Clause 6-A.
* * * *
"(b) Issue any unsecured notes,
debentures or other securities
representing unsecured indebtedness,
or assume any such unsecured
securities, for purposes other than
the refunding of outstanding unsecured
indebtedness theretofore incurred or
assumed by the Company or the
redemption or other retirement of
outstanding shares of stock ranking
prior to the Cumulative Preferred
Stock with respect to the payment of
dividends or upon the dissolution,
liquidation or winding up of the
Company, whether voluntary or
involuntary, if, immediately after
such issue or assumption, the total
principal amount of all unsecured
notes, debentures or other securities
representing unsecured indebtedness
issued or assumed by the Company and
then outstanding (including unsecured
securities then to be issued or
assumed) would exceed 20% of the
aggregate of (i) the total principal
amount of all bonds and other
securities representing secured
indebtedness issued or assumed by the
Company and then to be outstanding,
and (ii) the capital and surplus of
the Company as then to be stated on
the books of account of the Company;
[provided, however, that the above-
stated limitation shall not be
applicable for the period beginning
December 1, 1995, to and including
December 1, 2005;] or",
with the text of the amendment set forth in brackets.
Reasons for Proposals
As you are probably aware, recent regulatory,
legislative, and market developments point toward a more
competitive future in the electric and gas utility industry.
We share in that view and believe that increased competition
is not only a foregone conclusion, but that the next several
years are likely to be dynamic and potentially trying times
in our industry.
As competition intensifies, flexibility and cost
leadership will be even more crucial to success in the
future. And given that the electric and gas industry is
extremely capital intensive, controlling and minimizing
financing costs are essential ingredients to operating
effectively in the new competitive environment. It is,
therefore, for those two reasons, flexibility and cost
leadership, that you are being asked to vote in favor of the
above proposals.
CG&E believes that adoption of Proposal 1 is key to
meeting the objectives of flexibility and cost leadership.
Proposal 1, if adopted, would eliminate the current provision
of CG&E's Articles that limits the total amount of CG&E' s
unsecured indebtedness to 20% of the total amount of CG&E's
secured indebtedness, plus capital and surplus.
Historically, CG&E's debt financing generally has been
accomplished through the issuance of long-term first mortgage
bonds and a modest amount of short-term debt. First mortgage
bonds represent secured indebtedness because they place a
first priority lien on substantially all of CG&E's assets.
The First Mortgage Indenture between CG&E and its bondholders
contains certain restrictive covenants with respect to, among
other things, the disposition of assets and the ability to
issue additional first mortgage bonds. Short-term debt,
usually the lowest cost debt available to CG&E, represents
one type of unsecured indebtedness.
Inasmuch as the 20% restriction contained in the
Articles limits CG&E's flexibility in planning and financing
its business activities, CG&E believes it ultimately will be
at a competitive disadvantage if the restriction is not
eliminated. The industry's new competitive options, power
marketers, independent power producers, and cogenerating
facilities generally are not subject to the type of financing
restrictions the Articles impose on CG&E. Other utilities,
with the same or similar charter restrictions, have or are
soliciting the same or similar amendments from their
shareholders. Even CG&E's Indiana affiliate, PSI Energy, has
no comparable provision in its articles. And although CG&E s
current low-cost structure has been instrumental in
undercutting the ability of the other power options to lure
away our large bulk power customers, we must continue to
explore new ways of reducing costs and enhancing flexibility.
CG&E believes that the adoption of Proposal 1 will be in the
best long-term competitive interests of shareholders by
enhancing its ability to meet the two objectives described
below.
Financial Flexibility
CG&E believes that in the long run, various types of
unsecured debt products will grow in importance as an option
in financing its construction program and refinancing high-
cost mortgage bonds. The availability and flexibility of
unsecured debt is necessary to take full advantage of
changing conditions in securities markets. CG&E intends to
continue to rely on unsecured debt up to the 20% maximum
currently allowable under the Articles. In addition,
although CG&E's earnings currently are sufficient to meet the
earnings coverage tests that must be satisfied before issuing
additional first mortgage bonds and preferred stock, there
have been periods, including virtually all of the year 1994,
when, because of its inability to meet the Articles test,
CG&E was unable to issue any additional preferred stock. A
similar inability to issue preferred stock in the future
combined with the inability to issue additional unsecured
debt, would limit CG&E's financing options to either
additional first mortgage bonds (assuming that earnings
coverage test could be met) or additional common stock.
CG&E's use of unsecured short-term debt is subject to
the 20% provision contained in the Articles. CG&E believes
that the prudent use of such debt is vital to effective
financial management of the business. Not only is unsecured
short-term debt virtually always the least expensive form of
capital, it also provides flexibility in meeting seasonal
fluctuations in cash requirements, acts as a bridge between
issues of permanent capital, and can be used when unfavorable
conditions prevail in the market for long-term capital.
With these benefits in mind, CG&E this year sought and
received the approval of the Public Utilities Commission of
Ohio to increase the maximum amount of short-term debt it is
permitted to have outstanding from $200 million to $400
million. However, because of the 20% restriction of the
Articles, CG&E is estimated to be permitted to have only $150
million of short-term debt capacity available, based on
capitalization estimated as of December 31, 1995. Beyond
that, the amount of short-term debt available to CG&E will
continue to decline as additional unsecured long-and
short-term debt is issued.
Lower Costs
As previously mentioned, CG&E's short-term debt
issuances represent the lowest-cost form of financing. The
Merger has resulted in a combined company that is larger and
financially stronger than either CG&E or PSI Energy would
have been on a stand-alone basis. This has allowed CG&E to
reassess its historically modest use of short-term debt. By
increasing its use of short-term debt, CG&E may be able to lower
its cost structure even further, thereby making its product more
competitive, increasing earnings and reducing its business
risks. But with the Articles 20% restriction in place, and
as CG&E increasingly relies on unsecured debt, the
availability and concomitant benefits of short-term debt
diminish. And although short-term debt, by its nature,
exposes the borrower to potentially more volatility in
interest rates, it should be noted that the cost of short-
term debt almost never exceeds the cost of permanent capital.
It is for all the above reasons that CG&E's Board
believes the best long-term interests of shareholders are
served by, and encourages shareholders to vote FOR, the
adoption of Proposal 1.
Finally, Proposal 2 will be considered only if Proposal
1 is not approved. Proposal 2 is in all respects identical
to Proposal 1 in financial effect and economic benefit to
CG&E and its shareholders, except that it would permit the
issuance of unsecured debt in excess of the Articles
existing limitation for a period of ten years only. CG&E's
Board urges shareholders to vote in favor of Proposal 1
instead, so that the expense of conducting another proxy
solicitation and holding another meeting and vote of
shareholders to further extend the authorization granted,
if Proposal 2 is adopted, can be avoided.
Financial and Other Information
The financial statements of CG&E and related information
included in its Annual Report on Form 10-K for the year ended
December 31, 1994, and its Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1995, and June 30, 1995, each as
filed with the SEC, are hereby incorporated by reference.
CG&E will provide without charge, upon the written or oral
request of any person (including any beneficial owner) to
whom this Proxy Statement is delivered, a copy of such
information (excluding certain exhibits). Such requests for
information should be directed to CG&E's principal offices at
139 East Fourth Street, Cincinnati, Ohio 45202, Attention:
Corporate Secretary; telephone (513) 381-2000.
Relationship with Independent Public Accountants
Upon recommendation of the Audit Committee of Cinergy s
board of directors, this board employed on January 25, 1995
Arthur Andersen LLP as independent public accountants for
Cinergy and its subsidiaries, including CG&E, for the year
1995. Representatives of Arthur Andersen LLP are expected to
be present at the Special Meeting with the opportunity to
make a statement if they desire to do so, and will be
available to respond to appropriate questions.
By Order of the Board of Directors
CHERYL M. FOLEY
Secretary
Cincinnati, Ohio
______________, 1995
Exhibit B-3
DRAFT
PROXY The Cincinnati Gas & Electric Company PROXY
The undersigned hereby appoints Jackson H. Randolph, James E. Rogers,
and George H. Stinson, or any of them, as proxies, each with the power to
appoint his substitute, and hereby authorizes them to represent and to
vote as designated hereon and in their discretion with respect to any
other business properly brought before the Special Meeting, all the shares
of cumulative preferred stock of The Cincinnati Gas & Electric Company
("CG&E") which the undersigned is entitled to vote at the Special Meeting
of Shareholders to be held on , 1995 or any adjournment(s) or
postponement(s) thereof.
This proxy is solicited on behalf of the Board of Directors. This
proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder(s). If no direction is made, the proxy
will be voted FOR Item 1 and FOR Item 2.
Indicate your vote by an (X). The Board of Directors recommends
voting FOR Item 1 and FOR Item 2.
Item
1. Removing from the Amended Articles of Incorporation ARTICLE FOURTH,
Clause 6-A(b), limiting CG&E's ability to issue unsecured
indebtedness.
( ) FOR ( ) AGAINST ( ) ABSTAIN
2. In the event Proposal 1 is not adopted, amending ARTICLE FOURTH,
Clause 6-A(b), to authorize CG&E to issue or assume unsecured
indebtedness in excess of 20% of CG&E's secured indebtedness, plus
capital and surplus, until December 1, 2005.
( ) FOR ( ) AGAINST ( ) ABSTAIN
(Continued and to be signed and dated on the reverse side and returned
promptly in the enclosed envelope.)
<PAGE>
Shares represented by all properly executed proxies will be voted in
accordance with instructions appearing on the proxy. IN THE ABSENCE OF
SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS, AND IN THE DISCRETION
OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS THAT MAY PROPERLY
COME BEFORE THE SPECIAL MEETING.
Please check box if
you plan to attend ( )
the Special Meeting.
Signature(s):_____________________________________________
Dated___________, 1995
Please sign exactly as name(s) appear on this proxy, and date this proxy.
If joint account, each joint owner should sign. If signing for a
corporation or partnership or as agent, attorney or fiduciary, indicate
the capacity in which you are signing.
EXHIBIT F
The Cincinnati Gas & Electric Company
Legal Department
139 East Fourth Street
Cincinnati, Ohio 45202
August 9, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
Reference is made to the Form U-1 Declaration of The
Cincinnati Gas & Electric Company ("CG&E") filed with the
Commission concurrently herewith under the Public Utility
Holding Company Act of 1935 requesting authorization for
CG&E (1) to amend its Amended Articles of Incorporation
(the "Articles") to eliminate or, as an alternative, to
suspend through December 1, 2005 a provision therein
restricting the ability of CG&E to issue unsecured debt,
and (2) in connection with such proposals, to solicit
proxies from the holders of its capital stock, including
its outstanding series of cumulative preferred stock, par
value $100 per share (the "Preferred Stock"), all as more
fully described in the Declaration. I have acted as
counsel to CG&E in connection with the transactions
proposed in the Declaration and, having examined such
records as I deemed necessary to express the opinions
hereinafter set forth, hereby advise you that I am of the
opinion that:
(a) CG&E is a corporation duly organized and validly
existing under the laws of the State of Ohio.
(b) In the event that the proposed transactions are
consummated in accordance with the terms of the
Declaration, including any amendment thereto, and the
related orders to be issued by the Commission:
(1) all State laws applicable to the
proposed transactions by CG&E will have been
complied with;
(2) the Preferred Stock will remain validly
issued, fully paid and nonassessable, and the
holders thereof will continue to be entitled to
their relative rights and privileges as set forth
in the Articles, except that CG&E will have
authority to issue securities representing
unsecured debt in accordance with the proposals
relating thereto described in the Declaration;
(3) The consummation of the proposed
transactions by CG&E will not violate the legal
rights of the holders of any securities issued by
CG&E or any associate company thereof.
I am a member of the Ohio Bar and do not hold myself
out as an expert on the laws of any other state.
I hereby give my consent to the filing of this opinion
as an exhibit to the Declaration.
Very truly yours,
/s/ Jerome A. Vennemann
EXHIBIT G
The Cincinnati Gas & Electric Company 70-
Notice of Proposal to Amend Articles; Order Authorizing
Proxy Solicitation
The Cincinnati Gas & Electric Company ("CG&E"), a
wholly-owned utility subsidiary of CINergy Corp.
("CINergy"), a registered holding company, has filed a
declaration under Sections 6(a), 7 and 12(e) of the Act and
Rules 62 and 65 thereunder.
CG&E's amended articles of incorporation (the
Articles") currently provide that, without the consent of
the holders of not less than a majority of the total number
of shares of preferred stock of all series then
outstanding, CG&E shall not issue or assume any securities
representing unsecured debt (other than for purposes of
refunding outstanding unsecured indebtedness or redeeming
or otherwise retiring outstanding shares of stock ranking
prior to the preferred stock with respect to the payment of
dividends or upon the dissolution, liquidation or winding
up of CG&E) if, immediately after such issue or assumption,
the total outstanding principal amount of all securities
representing unsecured debt would exceed 20% of the
aggregate of (1) the total principal amount of all then-
outstanding secured debt of CG&E, and (2) the capital and
surplus of CG&E, as stated on CG&E's books (the "20%
Limitation").
CG&E proposes to submit to the holders of the
outstanding shares of preferred stock of all series, and to
CINergy, as the sole holder of all the outstanding shares
of CG&E common stock, a proposal (the "Proposal") to amend
the Articles to eliminate the 20% Limitation. Approval of
the Proposal requires the affirmative vote of the holders
of not less than two-thirds of the total number of shares
of preferred stock of all four series, voting together as
one class, and an affirmative two-thirds vote from CINergy
as the sole common stock holder. CINergy has informed CG&E
that it will vote in favor of the Proposal (and, if
necessary, the alternative proposal described below).
In the event the Proposal fails to receive the
requisite affirmative vote, CG&E proposes to seek approval
of an alternative proposal amending the Articles to
authorize CG&E to issue or assume securities representing
unsecured indebtedness in excess of the 20% Limitation
through December 1, 2005. Approval of the alternative
proposal requires the same affirmative vote as the
Proposal.
CG&E proposes to submit the above proposals for
consideration and action at a special meeting of
stockholders planned to be held on or about November 16,
1995 and, in connection therewith, to solicit proxies from
the holders of its capital stock. CG&E requests that the
effectiveness of its declaration with respect to the
solicitation of proxies for voting by its stockholders on
the above proposals be permitted to become effective
forthwith pursuant to Rule 62(d).
It appearing to the Commission that CG&E's declaration
regarding the proposed solicitation of proxies should be
permitted to become effective forthwith, pursuant to Rule
62(d):
IT IS ORDERED, that the declaration regarding the
proposed solicitation of proxies be, and it hereby is,
permitted to become effective forthwith pursuant to Rule 62
and subject to the terms and conditions prescribed in Rule
24 under the Act.
For the Commission, by the Division of Investment
Management, pursuant to delegated authority.
<TABLE>
<CAPTION>
Exhibit FS-1
Financial Statements
Page 1 of 2
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1995
ASSETS
(dollars in
thousands)
<S> <C>
UTILITY PLANT - ORIGINAL COST
In service
Electric $ 4,530,815
Gas 664,536
Common 184,750
------------
5,380,101
Accumulated depreciation 1,665,213
------------
3,714,888
Construction work in progress 74,400
------------
Total utility plant 3,789,288
------------
CURRENT ASSETS
Cash and temporary cash investments 3,500
Restricted deposits 100
Accounts receivable - net 217,774
Materials, supplies and fuel --
at average cost
Fuel for use in electric production 40,555
Gas stored for current use 21,187
Other materials and supplies 58,150
Property taxes applicable to subsequent year 134,729
Prepayments and other 42,206
------------
518,201
------------
OTHER ASSETS
Regulatory Assets
Post-in-service carrying costs and deferred
operating expenses 151,727
Phase-in deferred return and depreciation 105,211
Deferred demand-side management costs 14,246
Amounts due from customers -- income taxes 366,924
Deferred merger costs 12,437
Unamortized costs of reacquiring debt 36,041
Other 49,893
Other 49,969
------------
786,448
------------
$ 5,093,937
============
<FN>
Pro forma adjustments are not applicable for this filing.
</TABLE>
<TABLE>
<CAPTION>
Exhibit FS-1
Financial Statements
Page 2 of 2
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1995
CAPITALIZATION AND LIABILITIES
(dollars in
thousands)
<S> <C>
COMMON STOCK EQUITY
Common stock - $8.50 par value;
Authorized shares - 120,000,000
Outstanding shares - 89,663,086 $ 762,136
Paid-in capital 339,135
Retained earnings 427,623
------------
Total common stock equity 1,528,894
CUMULATIVE PREFERRED STOCK
Not subject to mandatory redemption 40,000
Subject to mandatory redemption 160,000
LONG-TERM DEBT 1,774,404
------------
Total capitalization 3,503,298
------------
CURRENT LIABILITIES
Preferred stock due within one year 90,000
Notes payable 13,500
Accounts payable 85,830
Accrued taxes 234,609
Accrued interest 30,572
Other 35,709
------------
490,220
------------
OTHER LIABILITIES
Deferred income taxes 744,678
Unamortized investment tax credits 132,440
Accrued pension and other
postretirement benefit costs 110,947
Other 112,354
------------
1,100,419
------------
$ 5,093,937
============
<FN>
Pro forma adjustments are not applicable for this filing.
</TABLE>
<TABLE>
<CAPTION>
Exhibit FS-2
Financial Statements
Page 1 of 1
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENT OF INCOME
TWELVE MONTHS ENDED JUNE 30, 1995
(in thousands)
<S> <C>
OPERATING REVENUES
Electric $ 1,369,201
Gas 383,868
------------
1,753,069
------------
OPERATING EXPENSES
Fuel used in electric production 332,578
Gas purchased 192,327
Purchased and exchanged power 30,818
Other operation 333,300
Maintenance 98,987
Depreciation 158,080
Amortization of phase-in deferrals 2,273
Post-in-service deferred
operating expenses -- net 3,290
Income taxes 107,022
Taxes other than income taxes 199,231
------------
1,457,906
------------
OPERATING INCOME 295,163
------------
OTHER INCOME AND EXPENSES - NET
Allowance for equity funds
used during construction 1,956
Phase-in deferred return 8,161
Income taxes 5,913
Other - net (6,455)
------------
9,575
------------
INCOME BEFORE INTEREST 304,738
------------
INTEREST
Interest on long-term debt 144,609
Other interest 3,376
Allowance for borrowed funds used during
construction (3,547)
------------
144,438
------------
NET INCOME 160,300
PREFERRED DIVIDEND REQUIREMENT 21,449
------------
NET INCOME APPLICABLE TO COMMON STOCK $ 138,851
============
<FN>
Pro forma adjustments are not applicable for this filing.
</TABLE>
<TABLE>
<CAPTION>
Exhibit FS-3
Financial Statements
Page 1 of 1
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED JUNE 30, 1995
Actual
------------
(dollars in
thousands)
<S> <C>
Balance July 1, 1994 $ 483,564
Net income 160,300
Dividends on preferred stock (21,449)
Dividends on common stock (190,521)
Other (4,271)
------------
Balance June 30, 1995 $ 427,623
============
<FN>
Pro forma adjustments are not applicable for this filing.
</TABLE>
<TABLE>
<CAPTION>
Exhibit FS-4
Financial Statements
Page 1 of 2
CINERGY CORP.
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1995
ASSETS
(dollars in
thousands)
<S> <C>
UTILITY PLANT - ORIGINAL COST
In service
Electric $ 8,393,518
Gas 664,536
Common 184,750
------------
9,242,804
Accumulated depreciation 3,262,715
------------
5,980,089
Construction work in progress 241,987
------------
Total utility plant 6,222,076
------------
CURRENT ASSETS
Cash and temporary cash investments 25,206
Restricted deposits 4,646
Accounts receivable - net 251,888
Materials, supplies and
fuel, at average cost
Fuel for use in electric production 160,363
Gas stored for current use 21,187
Other materials and supplies 93,722
Property taxes applicable to subsequent year 134,729
Prepayments and other 46,947
------------
738,688
------------
OTHER ASSETS
Regulatory Assets
Post-in-service carrying costs and deferred
operating expenses 188,061
Phase-in deferred return and depreciation 105,211
Deferred demand-side management costs 114,768
Amounts due from customers -- income taxes 393,859
Deferred merger costs 50,067
Unamortized costs of reacquiring debt 71,778
Other 81,665
Other 141,581
------------
1,146,990
------------
$ 8,107,754
============
<FN>
Pro forma adjustments are not applicable for this filing.
</TABLE>
<TABLE>
<CAPTION>
Exhibit FS-4
Financial Statements
Page 2 of 2
CINERGY CORP.
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1995
CAPITALIZATION AND LIABILITIES
(dollars in
thousands)
<S> <C>
COMMON STOCK EQUITY
Common stock - $.01 par value;
Authorized shares - 600,000,000
Outstanding shares - 156,567,331 $ 1,566
Paid-in capital 1,570,873
Retained earnings 900,094
------------
Total common stock equity 2,472,533
CUMULATIVE PREFERRED STOCK OF SUBSIDIARIES
Not subject to mandatory redemption 227,915
Subject to mandatory redemption 160,000
LONG-TERM DEBT 2,652,382
------------
Total capitalization 5,512,830
------------
CURRENT LIABILITIES
Long-term debt and preferred stock
due within one year 150,400
Notes payable 244,000
Accounts payable 184,400
Refund due to customers 15,796
Litigation settlement 80,000
Accrued taxes 261,787
Accrued interest 56,740
Other 39,544
------------
1,032,667
------------
OTHER LIABILITIES
Deferred income taxes 1,074,724
Unamortized investment tax credits 190,804
Accrued pension and other
postretirement benefit costs 153,753
Other 142,976
------------
1,562,257
------------
$ 8,107,754
============
<FN>
Pro forma adjustments are not applicable for this filing.
</TABLE>
<TABLE>
<CAPTION>
Exhibit FS-5
Financial Statements
Page 1 of 1
CINERGY CORP.
CONSOLIDATED STATEMENT OF INCOME
TWELVE MONTHS ENDED JUNE 30, 1995
(in thousands,
except per share
amounts)
<S> <C>
OPERATING REVENUES
Electric $ 2,478,494
Gas 383,868
------------
2,862,362
------------
OPERATING EXPENSES
Fuel used in electric production 723,749
Gas purchased 192,327
Purchased and exchanged power 31,155
Other operation 567,004
Maintenance 193,764
Depreciation 291,043
Amortization of phase-in deferrals 2,273
Post-in-service deferred
operating expenses -- net (5,090)
Income taxes 158,951
Taxes other than income taxes 247,216
------------
2,402,392
------------
OPERATING INCOME 459,970
------------
OTHER INCOME AND EXPENSES - NET
Allowance for equity funds
used during construction 3,755
Post-in-service carrying costs 8,055
Phase-in deferred return 8,161
Income taxes 9,654
Other - net (21,609)
------------
8,016
------------
INCOME BEFORE INTEREST AND OTHER CHARGES 467,986
------------
INTEREST AND OTHER CHARGES
Interest on long-term debt 215,748
Other interest 23,639
Allowance for borrowed funds used during
construction (10,542)
Preferred dividend requirements
of subsidiaries 34,630
------------
263,475
------------
NET INCOME $ 204,511
============
AVERAGE COMMON SHARES OUTSTANDING 152,331
EARNINGS PER COMMON SHARE $ 1.33
DIVIDENDS DECLARED PER COMMON SHARE $ 1.60
<FN>
Pro forma adjustments are not applicable for this filing.
</TABLE>
<TABLE>
<CAPTION>
Exhibit FS-6
Financial Statements
Page 1 of 1
CINERGY CORP.
CONSOLIDATED STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED JUNE 30, 1995
(dollars in
thousands)
<S> <C>
Balance July 31, 1994 $ 943,659
Net income 204,511
Dividends on common stock (243,797)
Other (4,279)
------------
Balance June 30, 1995 $ 900,094
============
<FN>
Pro forma adjustments are not applicable for this filing.
</TABLE>
[ARTICLE] OPUR1
[LEGEND]
THIS SCHEDULE IS EXHIBIT FS-7 AND CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF
INCOME OF THE CINCINNATI GAS & ELECTRIC COMPANY AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
[CIK] 0000899652
[NAME] CINERGY CORP.
[SUBSIDIARY]
[NAME] THE CINCINNATI GAS & ELECTRIC COMPANY (CONSOLIDATED)
[NUMBER] 5
[MULTIPLIER] 1,000
[TEXT]
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] JUN-30-1995
[PERIOD-START] JUL-01-1994
[PERIOD-END] JUN-30-1995
[BOOK-VALUE] PER-BOOK
[TOTAL-NET-UTILITY-PLANT] 3,789,288
[OTHER-PROPERTY-AND-INVEST] 0
[TOTAL-CURRENT-ASSETS] 518,201
[TOTAL-DEFERRED-CHARGES] 736,479
[OTHER-ASSETS] 49,969
[TOTAL-ASSETS] 5,093,937
[COMMON] 762,136
[CAPITAL-SURPLUS-PAID-IN] 339,135
[RETAINED-EARNINGS] 427,623
[TOTAL-COMMON-STOCKHOLDERS-EQ] 1,528,894
[PREFERRED-MANDATORY] 160,000
[PREFERRED] 40,000
[LONG-TERM-DEBT-NET] 1,774,404
[SHORT-TERM-NOTES] 13,500
[LONG-TERM-NOTES-PAYABLE] 0
[COMMERCIAL-PAPER-OBLIGATIONS] 0
[LONG-TERM-DEBT-CURRENT-PORT] 0
[PREFERRED-STOCK-CURRENT] 90,000
[CAPITAL-LEASE-OBLIGATIONS] 0
[LEASES-CURRENT] 0
[OTHER-ITEMS-CAPITAL-AND-LIAB] 1,487,139
[TOT-CAPITALIZATION-AND-LIAB] 5,093,937
[GROSS-OPERATING-REVENUE] 1,753,069
[INCOME-TAX-EXPENSE] 107,022
[OTHER-OPERATING-EXPENSES] 1,350,884
[TOTAL-OPERATING-EXPENSES] 1,457,906
[OPERATING-INCOME-LOSS] 295,163
[OTHER-INCOME-NET] 9,575
[INCOME-BEFORE-INTEREST-EXPEN] 304,738
[TOTAL-INTEREST-EXPENSE] 144,438
[NET-INCOME] 160,300
[PREFERRED-STOCK-DIVIDENDS] 21,449
[EARNINGS-AVAILABLE-FOR-COMM] 138,851
[COMMON-STOCK-DIVIDENDS] 190,521
[TOTAL-INTEREST-ON-BONDS] 144,609
[CASH-FLOW-OPERATIONS] 0
[EPS-PRIMARY] 0
[EPS-DILUTED] 0
</TABLE>
[ARTICLE] OPUR1
[LEGEND]
THIS SCHEDULE IS EXHIBIT FS-8 AND CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF
INCOME OF CINERGY CORP. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
[/LEGEND]
[CIK] 0000899652
[NAME] CINERGY CORP.
[SUBSIDIARY]
[NUMBER] 0
[NAME] CINERGY CORP. (CONSOLIDATED)
[MULTIPLIER] 1,000
[TEXT]
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] JUN-30-1995
[PERIOD-START] JUL-01-1994
[PERIOD-END] JUN-30-1995
[BOOK-VALUE] PER-BOOK
[TOTAL-NET-UTILITY-PLANT] 6,222,076
[OTHER-PROPERTY-AND-INVEST] 0
[TOTAL-CURRENT-ASSETS] 738,688
[TOTAL-DEFERRED-CHARGES] 1,005,409
[OTHER-ASSETS] 141,581
[TOTAL-ASSETS] 8,107,754
[COMMON] 1,566
[CAPITAL-SURPLUS-PAID-IN] 1,570,873
[RETAINED-EARNINGS] 900,094
[TOTAL-COMMON-STOCKHOLDERS-EQ] 2,472,533
[PREFERRED-MANDATORY] 160,000
[PREFERRED] 227,915
[LONG-TERM-DEBT-NET] 2,652,382
[SHORT-TERM-NOTES] 244,000
[LONG-TERM-NOTES-PAYABLE] 0
[COMMERCIAL-PAPER-OBLIGATIONS] 0
[LONG-TERM-DEBT-CURRENT-PORT] 60,400
[PREFERRED-STOCK-CURRENT] 90,000
[CAPITAL-LEASE-OBLIGATIONS] 0
[LEASES-CURRENT] 0
[OTHER-ITEMS-CAPITAL-AND-LIAB] 2,200,524
[TOT-CAPITALIZATION-AND-LIAB] 8,107,754
[GROSS-OPERATING-REVENUE] 2,862,362
[INCOME-TAX-EXPENSE] 158,951
[OTHER-OPERATING-EXPENSES] 2,243,441
[TOTAL-OPERATING-EXPENSES] 2,402,392
[OPERATING-INCOME-LOSS] 459,970
[OTHER-INCOME-NET] 8,016
[INCOME-BEFORE-INTEREST-EXPEN] 467,986
[TOTAL-INTEREST-EXPENSE] 228,845
[NET-INCOME] 239,141
[PREFERRED-STOCK-DIVIDENDS] 34,630
[EARNINGS-AVAILABLE-FOR-COMM] 204,511
[COMMON-STOCK-DIVIDENDS] 243,797
[TOTAL-INTEREST-ON-BONDS] 215,748
[CASH-FLOW-OPERATIONS] 0
[EPS-PRIMARY] 1.33
[EPS-DILUTED] 1.33
</TABLE>
