File No. 70-8881
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________________
AMENDMENT NO. 3
TO
FORM U-1 APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________
Cinergy Corp.
The Cincinnati Gas & Electric Company
139 East Fourth Street
Cincinnati, Ohio 45202
(Name of companies filing this statement
and addresses of principal executive offices)
Cinergy Corp.
(Name of top registered holding company parent)
William L. Sheafer
Treasurer
Cinergy Corp.
(address above)
(Name and address of agent of service)
The Commission is requested to send copies of all notices,
orders and communications in connection with this statement
to:
Jerome A. Vennemann James R. Lance
Associate General Counsel Manager - Corporate Finance
Cinergy Corp. and Financial Risk
(address above) Management
Cinergy Corp.
(address above)
William T. Baker, Jr.
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
The Application-Declaration in this proceeding, as
previously amended, is hereby further amended as follows:
1. The following section is added to the end of the text
set forth under Item 1 ("Description of Proposed
Transactions"):
"E. Statement Pursuant to Rule 54.
Under Rule 54, in determining whether to approve the
issue or 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 if the conditions 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 of the
proposed transactions, will exist.
Rule 53(a)(1): At June 30, 1996, Cinergy had invested,
directly or indirectly, an aggregate of approximately $467
million in EWGs and FUCOs (inclusive of indirect investments
through Special Purpose Subsidiaries). The average of the
consolidated retained earnings of Cinergy reported on Form
10-K or Form 10-Q, as applicable, for the four consecutive
quarters ended June 30, 1996 was $966 million. Accordingly,
based on Cinergy's "consolidated retained earnings" at June
30, 1996, and taking into account investments as of said
date, the current Rule 53 aggregate investment limitation is
approximately $16 million (i.e., 50% of "consolidated
retained earnings" - $483 million - minus "aggregate
investment" at June 30, 1996 - $467 million).
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): No more than 2% of the employees of
Cinergy's operating utility subsidiaries will, at any one
time, directly or indirectly, render services to EWGs and
FUCOs.
Rule 53(a)(4): Cinergy will simultaneously submit a
copy of this statement and of any Rule 24 certificate
hereunder, as well as a copy of Cinergy's Form U5S and
Exhibits H and I thereto, to each public utility commission
having jurisdiction over the retail rates of any Cinergy
utility subsidiary.
Rule 53(b): The provisions of Rule 53(a) are not made
inapplicable to the authorization 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): Cinergy's average consolidated retained
earnings for the four quarters ended June 30, 1996 are $966
million, versus $909 million for the four quarters ended
June 30, 1995, a difference of approximately $57 million
(representing an increase of 6.3%).
Rule 53(b)(3): For the twelve months ended June 30,
1996, Cinergy did not report operating losses attributable
to its direct and indirect investments in EWGs and FUCOs
aggregating in excess of 5% of consolidated retained
earnings."
2. The following text is added to the end of the text set
forth under Item 3 ("Applicable Statutory Provisions"):
"The Commission has previously approved registered
holding company solicitations of consents from preferred
stockholders to eliminate charter restrictions on unsecured
debt - including CG&E's 1995 proposal to remove the 20%
Provision - as well as the payment of monetary consideration
in connection with the consent of security holders to
adjustments in the rights of such holders. See, e.g.,
Alabama Power Company, 57 S.E.C. 1448 (1994), [HCAR No.
26,118]; The Cincinnati Gas and Electric Company, 60 S.E.C.
829 (1995) [HCAR No. 26,381]; and Middle South Utilities, 39
S.E.C. 629 (1987) [HCAR No. 24,482]. Under the standards of
the Act, the Commission's test in reviewing alterations of
the rights of preferred stockholders is fairness and equity.
See, e.g., Commonwealth & Southern Corporation, 25 S.E.C.
505 (1947) [HCAR No. 7337]. In the present instance, each
preferred stockholder of CG&E has available to it a range of
options in connection with the proposal to abolish the 20%
Provision, including the ability to tender his or her Shares
and (if the Proposed Amendment is adopted) receive payment
at a premium price above market. This right to tender is
analogous to an appraisal right, which is not otherwise
available under applicable Ohio corporate law for this
solicitation. In addition, Preferred Stockholders who do
not wish to participate in the Offer may retain their
Shares, vote in favor of the Proposed Amendment, and, if it
is adopted at the Special Meeting, receive a special cash
payment. This "option package" granted to each and every
CG&E preferred stockholder in connection with the proposed
transactions clearly is fair and equitable under the
circumstances."
3. The following exhibits and financial statements are
filed herewith:
(a) Exhibits:
B-1(a) Offer to Purchase and Proxy Statement
(filed in Commission File No. 1-1232 on August 20, 1996 and
hereby incorporated by reference)
B-2(a) Notice of Special Meeting (attached as
part of Exhibit B-1(a))
B-3(a) Form of Proxy (see Exhibit B-4(a))
B-4(a) Form of Letter of Transmittal and Proxy
(attached as part of Exhibit B-1(a))
F Preliminary opinion of counsel
(b) Financial Statements:
FS-1 Cinergy Consolidated Financial
Statements, dated June 30, 1996
FS-2 Cinergy Financial Statements, dated June
30, 1996
FS-3 CG&E Consolidated Financial Statements,
dated June 30, 1996
FS-4 Cinergy Consolidated Financial Data
Schedule (included as part of electronic submission only).
FS-5 Cinergy Financial Data Schedule
(included as part of electronic submission only).
FS-6 CG&E Consolidated Financial Data
Schedule (included as part of electronic submission only).
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, each of the
undersigned companies has duly caused this statement to be
signed on its behalf by the undersigned thereunto duly
authorized.
Dated: September 11, 1996
Cinergy Corp.
By: /s/ William L. Sheafer
Treasurer
The Cincinnati Gas & Electric
Company
By: /s/ William L. Sheafer
Treasurer
<PAGE>
EXHIBIT F
September 11, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Application-Declaration as amended in File No.
70-8881
Dear Sirs:
In my capacity as Associate General Counsel of Cinergy
Corp. ("Cinergy"), a Delaware corporation and registered
holding company under the Public Utility Holding Company Act
of 1935 ("Act"), I am furnishing this opinion pursuant to
the requirements of the Act as an exhibit to the Application-
Declaration as amended in File No. 70-8881 ("Application")
of Cinergy and its public utility subsidiary, The Cincinnati
Gas & Electric Company, an Ohio corporation ("CG&E"). (Any
capitalized terms used herein and not defined herein have
the respective meanings ascribed thereto in the
Application.)
As set forth in the Application, reference to which is
made for a complete description of the proposed
transactions, CG&E requests Commission authorization for
CG&E (1) to solicit proxies from the holders of its
outstanding shares of Common and Preferred Stock for use at
a special meeting of the holders thereof scheduled to occur
on or about September 18, 1996 ("Special Meeting") to
consider a proposal by CG&E to amend its Articles to abolish
a provision restricting the issuance by CG&E of unsecured
debt; (2) subject to receipt of the requisite affirmative
vote of the holders of the Common and Preferred Stock, to
amend the Articles as aforesaid ("Proposed Amendment"); and
(3) if the Proposed Amendment is adopted at the Special
Meeting, and subject to various other conditions, to make a
special cash payment to each holder of Preferred Stock who
voted any shares thereof in favor of the Proposed Amendment.
In addition, Cinergy proposes in the Application to acquire
shares of Preferred Stock pursuant to, and subject to the
conditions of, a concurrent cash tender offer ("Offer").
In connection with this opinion, I have reviewed or
caused to be reviewed the Application and such other
documents and records as I deemed relevant and
necessarynecessary or appropriate in order to give this
opinion.
In the event that the proposed transactions are
consummated in accordance with the Application and any other
requirements of applicable law, I am of the opinion that:
(a) CG&E will be validly incorporated and duly
existing under the laws of the State of Ohio.
(b) Cinergy will legally acquire any shares of
Preferred Stock acquired by it pursuant to the Offer.
(c) The consummation by CG&E and Cinergy of the
proposed transactions will not violate the legal rights of
the Preferred Stockholders.
(d) All laws of the States of Ohio and Delaware
applicable to the participation by CG&E and Cinergy,
respectively, in the proposed transactions will have been
complied with.
I am a member of the Ohio Bar and express no opinion as
to the laws of any jurisdiction other than those of the
State of Ohio and the General Corporation Law of the State
of Delaware. To the extent that the opinions stated above
address matters subject to the General Corporation Law of
the State of Ohio or the General Corporation Law of the
State of Delaware, I have relied upon an opinion of even
date herewith of Taft, Stettinius & Hollister. I hereby
consent to the filing of this opinion as an exhibit to the
Application.
Very truly yours,
/s/Jerome A. Vennemann
Associate General
Senior Counsel
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
CINERGY CORP.
CONSOLIDATED
AS OF JUNE 30, 1996
(Unaudited)
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
TWELVE MONTHS ENDED JUNE 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(in thousands, except per share amounts)
<S> <C> <C> <C>
OPERATING REVENUES
Electric $2,706,643 - $2,706,643
Gas 443,941 - 443,941
3,150,584 - 3,150,584
OPERATING EXPENSES
Fuel used in electric production 716,908 - 716,908
Gas purchased 222,350 - 222,350
Purchased and exchanged power 88,748 - 88,748
Other operation 574,820 - 574,820
Maintenance 186,003 - 186,003
Depreciation 278,880 - 278,880
Amortization of phase-in deferrals 13,617 - 13,617
Post-in-service deferred operating
expenses - net (2,138) - (2,138)
Income taxes 225,214 - 225,214
Taxes other than income taxes 260,393 - 260,393
2,564,795 - 2,564,795
OPERATING INCOME 585,789 - 585,789
OTHER INCOME AND EXPENSES - NET
Allowance for equity funds used during
construction 927 - 927
Post-in-service carrying costs 1,442 - 1,442
Phase-in deferred return 8,455 - 8,455
Income taxes 9,060 2,045 11,105
Other - net (11,052) (600) (11,652)
8,832 1,445 10,277
INCOME BEFORE INTEREST AND OTHER CHARGES 594,621 1,445 596,066
INTEREST AND OTHER CHARGES
Interest on long-term debt 204,567 - 204,567
Other interest 17,890 5,843 23,733
Allowance for borrowed funds used
during construction (6,548) - (6,548)
Preferred dividend requirements of
subsidiaries 26,985 (6,949) 20,036
242,894 (1,106) 241,788
NET INCOME $351,727 $2,551 $354,278
AVERAGE COMMON SHARES OUTSTANDING 157,448 157,448
EARNINGS PER COMMON SHARE $2.23 $2.25
DIVIDENDS DECLARED PER COMMON SHARE $1.72
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED BALANCE SHEET
AT JUNE 30, 1996
ASSETS
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
UTILITY PLANT - ORIGINAL COST
In service
Electric $8,690,023 - $8,690,023
Gas 693,032 - 693,032
Common 185,749 - 185,749
9,568,804 - 9,568,804
Accumulated depreciation 3,475,410 - 3,475,410
6,093,394 - 6,093,394
Construction work in progress 148,826 - 148,826
Total utility plant 6,242,220 - 6,242,220
CURRENT ASSETS
Cash and temporary cash investments 61,326 6,349 67,675
Restricted deposits 1,675 - 1,675
Accounts receivable less accumulated
provision of $12,492 for doubtful accounts 141,125 - 141,125
Materials, supplies and fuel
- at average cost
Fuel for use in electric production 107,082 - 107,082
Gas stored for current use 24,237 - 24,237
Other materials and supplies 85,477 - 85,477
Property taxes applicable to subsequent year 58,411 - 58,411
Prepayments and other 42,851 - 42,851
522,184 6,349 528,533
OTHER ASSETS
Regulatory Assets
Amounts due from customers - income taxes 382,974 382,974
Post-in-service carrying costs and
deferred operating expenses 187,967 - 187,967
Phase-in deferred return and depreciation 97,776 - 97,776
Deferred demand-side management costs 128,610 - 128,610
Deferred merger costs 81,093 - 81,093
Unamortized costs of reacquiring debt 73,457 - 73,457
Other 68,561 - 68,561
Investment in Avon Energy 457,567 - 457,567
Other 188,979 - 188,979
1,666,984 - 1,666,984
$8,431,388 $6,349 $8,437,737
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED BALANCE SHEET
AT JUNE 30, 1996
CAPITALIZATION AND LIABILITIES
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
COMMON STOCK EQUITY
Common stock - $.01 par value;
Authorized shares - 600,000,000
Outstanding shares - 157,679,129 $1,577 - $1,577
Paid-in capital 1,594,920 - 1,594,920
Retained earnings 981,003 (3,689) 977,314
Cumulative foreign translation adjustment (567) - (567)
Total common stock equity 2,576,933 (3,689) 2,573,244
CUMULATIVE PREFERRED STOCK OF SUBSIDIARIES
Not subject to mandatory redemption 213,090 (20,000) 193,090
Subject to mandatory redemption 160,000 (80,000) 80,000
LONG-TERM DEBT 2,523,300 - 2,523,300
Total capitalization 5,473,323 (103,689) 5,369,634
CURRENT LIABILITIES
Long-term debt due within one year 50,400 - 50,400
Notes payable 573,500 106,240 679,740
Accounts payable 257,952 - 257,952
Litigation settlement 80,000 - 80,000
Accrued taxes 245,277 (2,045) 243,232
Accrued interest 57,743 5,843 63,586
Other 57,785 - 57,785
1,322,657 110,038 1,432,695
OTHER LIABILITIES
Deferred income taxes 1,119,325 - 1,119,325
Unamortized investment tax credits 180,387 - 180,387
Accrued pension and other postretirement
benefit costs 211,103 - 211,103
Other 124,593 - 124,593
1,635,408 - 1,635,408
$8,431,388 $6,349 $8,437,737
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED JUNE 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
BALANCE JULY 1, 1995 $900,094 - $900,094
Net income 351,727 2,551 354,278
Dividends on common stock (270,559) - (270,559)
Other (259) (6,240) (6,499)
BALANCE JUNE 30, 1996 $981,003 ($3,689) $977,314
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
Pro Forma Consolidated Journal Entries to Give Effect to the
Proposed Special Cash Payment on and Offer to Purchase Shares of
Preferred Stock of The Cincinnati Gas & Electric Company (CG&E)
<S> <C> <C>
Entry No. 1
Cumulative preferred stock, not subject to mandatory redemption $20,000,000
Cumulative preferred stock, subject to mandatory redemption 80,000,000
Retained Earnings 6,240,000
Notes Payable $106,240,000
To record the capital contribution from Cinergy of tendered preferred stock to CG&E in accordance with the
following assumptions:
Shares Par Value Price Total Gain
Series of Preferred Tendered* Tendered Per Share** Paid (Loss)
4.000% Series, $100 Par Value 135,000 $13,500,000 $66.00 $8,910,000 $4,590,000
4.750% Series, $100 Par Value 65,000 6,500,000 82.00 5,330,000 1,170,000
7.375% Series, $100 Par Value 400,000 40,000,000 112.00 44,800,000 (4,800,000)
7.875% Series, $100 Par Value 400,000 40,000,000 118.00 47,200,000 (7,200,000)
Total $100,000,000 $106,240,000 ($6,240,000)
* Represents 50% of total shares outstanding for each series, the projected success rate.
** Prices include tender fees to be paid to dealer managers.
Entry No. 2
Interest expense $5,843,200
Accrued interest $5,843,200
To record interest on debt issued to purchase preferred stock of CG&E ($106,240,000 @ 5.5%)
Entry No. 3
Accrued taxes $2,045,120
Income taxes $2,045,120
To record the reduction in income tax expense due to interest on debt issued to purchase preferred
stock of CG&E ($5,843,200 @ 35%)
Entry No. 4
Cash $6,948,750
Preferred dividend requirement $6,948,750
To reflect the reduction in CG&E's annual dividend requirement from retiring preferred stock as follows:
Shares Dividend
Series of Preferred Retired Requirement
4.000% Series, $100 Par Value 135,000 $540,000
4.750% Series, $100 Par Value 65,000 308,750
7.375% Series, $100 Par Value 400,000 2,950,000
7.875% Series, $100 Par Value 400,000 3,150,000
Total 1,000,000 $6,948,750
Entry No. 5
Other - net $600,000
Cash $600,000
To record the consent fee paid to non-tendering preferred shareholders voting in favor of the proposed
amendment (1,000,000 shares not tendered x 60% in favor x $1.00/share consent fee).
</TABLE>
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
CINERGY CORP.
AS OF JUNE 30, 1996
(Unaudited)
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA STATEMENT OF INCOME
TWELVE MONTHS ENDED JUNE 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(in thousands, except per share amounts)
<S> <C> <C> <C>
OTHER INCOME AND EXPENSES - NET
Equity in earnings of subsidiaries $355,457 $6,349 $361,806
Income taxes (credit) 2,004 2,045 4,049
Other - net (1,870) - (1,870)
355,591 8,394 363,985
INCOME BEFORE INTEREST AND OTHER CHARGES 355,591 8,394 363,985
INTEREST 3,864 5,843 9,707
NET INCOME $351,727 $2,551 $354,278
AVERAGE COMMON SHARES OUTSTANDING 157,448 157,448
EARNINGS PER COMMON SHARE $2.23 $2.25
DIVIDENDS DECLARED PER COMMON SHARE $1.72
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA BALANCE SHEET
AT JUNE 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and temporary cash investments $8,847 - $8,847
Accounts receivable 47 - 47
Accounts receivable from affiliated
companies 7,455 - 7,455
16,349 - 16,349
OTHER ASSETS
Investment in subsidiaries 3,045,644 106,349 3,151,993
Other 1,655 - 1,655
3,047,299 106,349 3,153,648
$3,063,648 $106,349 $3,169,997
CAPITALIZATION AND LIABILITIES
COMMON STOCK EQUITY
Common stock - $.01 par value;
Authorized shares - 600,000,000
Outstanding shares - 157,679,129 $1,577 - $1,577
Paid-in capital 1,594,920 - 1,594,920
Retained earnings 981,003 (3,689) 977,314
Cumulative foreign translation adjustment (567) - (567)
Total common stock equity 2,576,933 (3,689) 2,573,244
LONG-TERM DEBT - - -
Total capitalization 2,576,933 (3,689) 2,573,244
CURRENT LIABILITIES
Notes payable 474,000 106,240 580,240
Accounts payable 234 - 234
Accounts payable to affiliated companies 12,741 - 12,741
Accrued taxes (1,046) (2,045) (3,091)
Accrued interest 1,043 5,843 6,886
486,972 110,038 597,010
OTHER LIABILITIES
Deferred income taxes (258) - (258)
Other 1 - 1
(257) - (257)
$3,063,648 $106,349 $3,169,997
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED JUNE 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
BALANCE JULY 1, 1995 $900,094 - $900,094
Net income 351,727 2,551 354,278
Dividends on common stock (270,559) - (270,559)
Other (259) (6,240) (6,499)
BALANCE JUNE 30, 1996 $981,003 ($3,689) $977,314
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
Pro Forma Journal Entries to Give Effect to the
Proposed Offer to Purchase Shares of Preferred Stock
of The Cincinnati Gas & Electric Company (CG&E)
<S> <C> <C
Entry No. 1
Investment in subsidiaries $100,000,000
Retained Earnings 6,240,000
Notes Payable $106,240,000
To record the purchase of tendered preferred stock of and subsequent capital contribution of the
shares to CG&E, in accordance with the following assumptions:
Shares Par Value Price Total Gain
Series of Preferred Tendered* Tendered Per Share** Paid (Loss)
4.000% Series, $100 Par Value 135,000 $13,500,000 $66.00 $8,910,000 $4,590,000
4.750% Series, $100 Par Value 65,000 6,500,000 82.00 5,330,000 1,170,000
7.375% Series, $100 Par Value 400,000 40,000,000 112.00 44,800,000 (4,800,000)
7.875% Series, $100 Par Value 400,000 40,000,000 118.00 47,200,000 (7,200,000)
Total $100,000,000 $106,240,000 ($6,240,000)
* Represents 50% of total shares outstanding for each series, the projected success rate.
** Prices include tender fees to be paid to dealer managers.
Entry No. 2
Interest expense $5,843,200
Accrued Interest $5,843,200
To record interest on debt issued to purchase preferred stock of CG&E ($106,240,000 @ 5.5%)
Entry No. 3
Accrued taxes $2,045,120
Income taxes $2,045,120
To record the reduction in income tax expense due to interest on debt issued to purchase preferred
stock of CG&E ($5,843,200 @ 35%)
Entry No. 4
Investment in subsidiaries $6,348,750
Equity in earnings of subsidiaries $6,348,750
To reflect the impact in Cinergy's financial statements of the pro forma adjustments to CG&E's financial
statements due to the transaction.
</TABLE>
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED
AS OF JUNE 30, 1996
(Unaudited)
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
TWELVE MONTHS ENDED JUNE 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(in thousands, except per share amounts)
<S> <C> <C> <C>
OPERATING REVENUES
Electric $1,497,581 - $1,497,581
Gas 443,942 - 443,942
1,941,523 - 1,941,523
OPERATING EXPENSES
Fuel used in electric production 343,374 - 343,374
Gas purchased 222,350 - 222,350
Purchased and exchanged power 57,449 - 57,449
Other operation 325,878 - 325,878
Maintenance 95,610 - 95,610
Depreciation 159,997 - 159,997
Amortization of phase-in deferrals 13,617 - 13,617
Amortization of post-in-service deferred
operating expenses - net 3,290 - 3,290
Income taxes 143,050 - 143,050
Taxes other than income taxes 207,606 - 207,606
1,572,221 - 1,572,221
OPERATING INCOME 369,302 - 369,302
OTHER INCOME AND EXPENSES - NET
Allowance for equity funds used during
construction 1,761 - 1,761
Phase-in deferred return 8,455 - 8,455
Income taxes 5,240 - 5,240
Other - net (774) (600) (1,374)
14,682 (600) 14,082
INCOME BEFORE INTEREST AND OTHER CHARGES 383,984 (600) 383,384
INTEREST AND OTHER CHARGES
Interest on long-term debt 135,821 - 135,821
Other interest 2,183 - 2,183
Allowance for borrowed funds used
during construction (3,759) - (3,759)
134,245 - 134,245
NET INCOME 249,739 (600) 249,139
Preferred dividend requirement 13,897 (6,949) 6,948
NET INCOME APPLICABLE TO COMMON STOCK $235,842 $6,349 $242,191
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
PRO FORMA CONSOLIDATED BALANCE SHEET
AT JUNE 30, 1996
ASSETS
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
UTILITY PLANT - ORIGINAL COST
In service
Electric $4,604,245 - $4,604,245
Gas 693,032 - 693,032
Common 184,477 - 184,477
5,481,754 - 5,481,754
Accumulated depreciation 1,802,626 - 1,802,626
3,679,128 - 3,679,128
Construction work in progress 77,271 - 77,271
Total utility plant 3,756,399 - 3,756,399
CURRENT ASSETS
Cash and temporary cash investments 31,855 6,349 38,204
Restricted deposits 1,170 - 1,170
Notes receivable from affiliated companies 105,741 - 105,741
Accounts receivable less accumulated
provision of $11,988 for doubtful accounts 75,488 - 75,488
Accounts receivable from affiliated companies 13,511 - 13,511
Materials, supplies and fuel
- at average cost
Fuel for use in electric production 30,169 - 30,169
Gas stored for current use 24,237 - 24,237
Other materials and supplies 51,862 - 51,862
Property taxes applicable to subsequent year 58,411 - 58,411
Prepayments and other 39,303 - 39,303
431,747 6,349 438,096
OTHER ASSETS
Regulatory Assets
Amounts due from customers - income taxes 350,555 - 350,555
Post-in-service carrying costs and
deferred operating expenses 144,903 - 144,903
Phase-in deferred return and depreciation 97,776 - 97,776
Deferred demand-side management costs 25,264 - 25,264
Deferred merger costs 19,482 - 19,482
Unamortized costs of reacquiring debt 40,243 - 40,243
Other 31,252 - 31,252
Other 87,059 - 87,059
796,534 - 796,534
$4,984,680 $6,349 $4,991,029
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
PRO FORMA CONSOLIDATED BALANCE SHEET
AT JUNE 30, 1996
CAPITALIZATION AND LIABILITIES
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
COMMON STOCK EQUITY
Common stock - $8.50 par value;
Authorized shares - 120,000,000
Outstanding shares - 89,663,086 $762,136 - $762,136
Paid-in capital 339,099 106,240 445,339
Retained earnings 464,351 109 464,460
Total common stock equity 1,565,586 106,349 1,671,935
CUMULATIVE PREFERRED STOCK OF SUBSIDIARIES
Not subject to mandatory redemption 40,000 (20,000) 20,000
Subject to mandatory redemption 160,000 (80,000) 80,000
LONG-TERM DEBT 1,694,627 - 1,694,627
Total capitalization 3,460,213 6,349 3,466,562
CURRENT LIABILITIES
Accounts payable 139,793 - 139,793
Accounts payable to affiliated companies 7,668 - 7,668
Accrued taxes 180,019 - 180,019
Accrued interest 32,144 - 32,144
Other 41,594 - 41,594
401,218 - 401,218
OTHER LIABILITIES
Deferred income taxes 782,088 - 782,088
Unamortized investment tax credits 125,834 - 125,834
Accrued pension and other postretirement
benefit costs 143,941 - 143,941
Other 71,386 - 71,386
1,123,249 - 1,123,249
$4,984,680 $6,349 $4,991,029
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
PRO FORMA CONSOLIDATED STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED JUNE 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
BALANCE JULY 1, 1995 $427,623 - $427,623
Net income 249,739 (600) 249,139
Dividends on common stock (199,111) - (199,111)
Dividends on preferred stock (13,897) 6,949 (6,948)
Other (3) (6,240) (6,243)
BALANCE JUNE 30, 1996 $464,351 $109 $464,460
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY
Pro Forma Consolidated Journal Entries to Give Effect to the
Proposed Special Cash Payment on and Capital Contribution from Cinergy Corp. (Cinergy) of
Preferred Stock of The Cincinnati Gas & Electric Company (CG&E)
<S> <C> <C>
Entry No. 1
Cumulative preferred stock, not subject to mandatory redemption $20,000,000
Cumulative preferred stock, subject to mandatory redemption 80,000,000
Retained earnings 6,240,000
Paid-in capital $106,240,000
To record the premium paid on the redemption of preferred stock by Cinergy for the benefit of CG&E and to
record the capital contribution from Cinergy of tendered preferred stock, in accordance with the
following assumptions:
Shares Par Value Price Total Gain
Series of Preferred Tendered* Tendered Per Share** Paid (Loss)
4.000% Series, $100 Par Value 135,000 $13,500,000 $66.00 $8,910,000 $4,590,000
4.750% Series, $100 Par Value 65,000 6,500,000 82.00 5,330,000 1,170,000
7.375% Series, $100 Par Value 400,000 40,000,000 112.00 44,800,000 (4,800,000)
7.875% Series, $100 Par Value 400,000 40,000,000 118.00 47,200,000 (7,200,000)
Total $100,000,000 $106,240,000 ($6,240,000)
* Represents 50% of total shares outstanding for each series, the projected success rate.
** Prices include tender fees to be paid to dealer managers.
Entry No. 2
Cash $6,948,750
Preferred dividend requirement $6,948,750
To reflect the reduction in CG&E's annual dividend requirement from retiring preferred stock as follows:
Shares Dividend
Series of Preferred Retired Requirement
4.000% Series, $100 Par Value 135,000 $540,000
4.750% Series, $100 Par Value 65,000 308,750
7.375% Series, $100 Par Value 400,000 2,950,000
7.875% Series, $100 Par Value 400,000 3,150,000
Total 1,000,000 $6,948,750
Entry No. 3
Other - net $600,000
Cash $600,000
To record the consent fee paid to non-tendering preferred shareholders voting in favor of the proposed
amendment (1,000,000 shares not tendered x 60% in favor x $1.00/share consent fee).
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEETS AND STATEMENTS OF INCOME 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
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JUL-01-1995 JUL-01-1995
<PERIOD-END> JUN-30-1996 JUN-30-1996
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 6,242,220 6,242,220
<OTHER-PROPERTY-AND-INVEST> 457,567 457,567
<TOTAL-CURRENT-ASSETS> 522,184 528,533
<TOTAL-DEFERRED-CHARGES> 1,020,438 1,020,438
<OTHER-ASSETS> 188,979 188,979
<TOTAL-ASSETS> 8,431,388 8,437,737
<COMMON> 1,577 1,577
<CAPITAL-SURPLUS-PAID-IN> 1,594,920 1,594,920
<RETAINED-EARNINGS> 980,436 976,747
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,576,933 2,573,244
160,000 80,000
213,090 193,090
<LONG-TERM-DEBT-NET> 2,523,300 2,523,300
<SHORT-TERM-NOTES> 573,500 679,740
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 50,400 50,400
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,334,165 2,337,963
<TOT-CAPITALIZATION-AND-LIAB> 8,431,388 8,437,737
<GROSS-OPERATING-REVENUE> 3,150,584 3,150,584
<INCOME-TAX-EXPENSE> 225,214 225,214
<OTHER-OPERATING-EXPENSES> 2,339,581 2,339,581
<TOTAL-OPERATING-EXPENSES> 2,564,795 2,564,795
<OPERATING-INCOME-LOSS> 585,789 585,789
<OTHER-INCOME-NET> 8,832 10,277
<INCOME-BEFORE-INTEREST-EXPEN> 594,621 596,066
<TOTAL-INTEREST-EXPENSE> 215,909 221,752
<NET-INCOME> 378,712 374,314
26,985 20,036
<EARNINGS-AVAILABLE-FOR-COMM> 351,727 354,278
<COMMON-STOCK-DIVIDENDS> 270,559 270,559
<TOTAL-INTEREST-ON-BONDS> 204,567 204,567
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 2.23 2.25
<EPS-DILUTED> 2.23 2.25
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEETS AND STATEMENTS OF INCOME AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000899652
<NAME> CINERGY CORP.
<SUBSIDIARY>
<NUMBER> 1
<NAME> CINERGY CORP.
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JUL-01-1995 JUL-01-1995
<PERIOD-END> JUN-30-1996 JUN-30-1996
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 0 0
<OTHER-PROPERTY-AND-INVEST> 3,045,644 3,151,993
<TOTAL-CURRENT-ASSETS> 16,349 16,349
<TOTAL-DEFERRED-CHARGES> 0 0
<OTHER-ASSETS> 1,655 1,655
<TOTAL-ASSETS> 3,063,648 3,169,997
<COMMON> 1,577 1,577
<CAPITAL-SURPLUS-PAID-IN> 1,594,920 1,594,920
<RETAINED-EARNINGS> 980,436 976,747
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,576,933 2,573,244
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 474,000 580,240
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 12,715 16,513
<TOT-CAPITALIZATION-AND-LIAB> 3,063,648 3,169,997
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> 0 0
<OTHER-OPERATING-EXPENSES> 0 0
<TOTAL-OPERATING-EXPENSES> 0 0
<OPERATING-INCOME-LOSS> 0 0
<OTHER-INCOME-NET> 355,591 363,985
<INCOME-BEFORE-INTEREST-EXPEN> 355,591 363,985
<TOTAL-INTEREST-EXPENSE> 3,864 9,707
<NET-INCOME> 351,727 354,278
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 351,727 354,278
<COMMON-STOCK-DIVIDENDS> 270,559 270,559
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 2.23 2.25
<EPS-DILUTED> 2.23 2.25
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEETS AND STATEMENTS OF INCOME AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000899652
<NAME> CINERGY CORP.
<SUBSIDIARY>
<NUMBER> 5
<NAME> THE CINCINNATI GAS & ELECTRIC CO. (CONSOLIDATED)
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JUL-01-1995 JUL-01-1995
<PERIOD-END> JUN-30-1996 JUN-30-1996
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 3,756,399 3,756,399
<OTHER-PROPERTY-AND-INVEST> 0 0
<TOTAL-CURRENT-ASSETS> 431,747 438,096
<TOTAL-DEFERRED-CHARGES> 709,475 709,475
<OTHER-ASSETS> 87,059 87,059
<TOTAL-ASSETS> 4,984,680 4,991,029
<COMMON> 762,136 762,136
<CAPITAL-SURPLUS-PAID-IN> 339,099 445,339
<RETAINED-EARNINGS> 464,351 464,460
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,565,586 1,671,935
160,000 80,000
40,000 20,000
<LONG-TERM-DEBT-NET> 1,694,627 1,694,627
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,524,467 1,524,467
<TOT-CAPITALIZATION-AND-LIAB> 4,984,680 4,991,029
<GROSS-OPERATING-REVENUE> 1,941,523 1,941,523
<INCOME-TAX-EXPENSE> 143,050 143,050
<OTHER-OPERATING-EXPENSES> 1,429,171 1,429,171
<TOTAL-OPERATING-EXPENSES> 1,572,221 1,572,221
<OPERATING-INCOME-LOSS> 369,302 369,302
<OTHER-INCOME-NET> 14,682 14,082
<INCOME-BEFORE-INTEREST-EXPEN> 383,984 383,384
<TOTAL-INTEREST-EXPENSE> 134,245 134,245
<NET-INCOME> 249,739 249,139
13,897 6,948
<EARNINGS-AVAILABLE-FOR-COMM> 235,842 242,191
<COMMON-STOCK-DIVIDENDS> 199,111 199,111
<TOTAL-INTEREST-ON-BONDS> 135,821 135,821
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0.00 0.00
<EPS-DILUTED> 0.00 0.00
