File No. 70-8727
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________________
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM U-1 APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________
PSI Energy, Inc.
1000 East Main Street
Plainfield, Indiana 46168
(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)
Applicant requests that the Commission send copies of all notices, orders
and communications in connection herewith to:
John M. Mutz Jerome A. Vennemann
President Associate General Counsel
PSI Energy, Inc. Cinergy Corp.
(address above) (address above)
Item 1. Description of Proposed Transactions
A. Background: 1995 Order Authorizing Participation in Appliance
Sales Program
By order dated November 21, 1995 in this file (Rel. No. 35-26412)
("1995 Order"), the Commission authorized PSI Energy, Inc. ("PSI"), an
Indiana corporation and an electric utility subsidiary of Cinergy Corp.
("Cinergy"), a registered holding company under the Public Utility Holding
Company Act of 1935, as amended ("Act"), to enter into a business venture
with H. H. Gregg ("Gregg"), a retail vendor of household electronic
appliances and related consumer goods, through December 31, 1996, involving
an appliance sales program ("Pilot Program").
Pursuant to the 1995 Order:
1. PSI was authorized to market Gregg's electronic goods and
appliances at retail, on a best-efforts, consignment basis, to PSI's
customers at a limited number of its local offices (not more than five)./1/
The Pilot Program contemplated that when sales were made, Gregg would
deliver the product and bill PSI the wholesale price paid by Gregg for
the product.
2. In connection with the Pilot Program, PSI was also authorized to
sell extended service warranties covering any items purchased. PSI would
either purchase the warranties from Gregg at a wholesale price and resell
them to customers, or sell its own warranty and contract with Gregg to
provide any of the related warranty work.
3. Further, the Pilot Program contemplated that PSI might arrange
customer financing through a bank or other financial institution for which
PSI would receive a fee of up to 2% of the purchase price involved.
The 1995 Order noted that PSI might seek to extend the Pilot Program
depending on its success.
B. Pilot Program Implementation
PSI has been conducting the Pilot Program through four of its local
offices, redesigned to accommodate floor and rack displays. The offices
are located in Bedford, Connersville, Greencastle, and Huntington, Indiana.
Two stores, Greencastle and Huntington, began operations in mid-December
1995; the other two, Bedford and Connersville, in mid-January 1996. In
connection with marketing Gregg's electronic goods and appliances, PSI has
also been marketing to customers Gregg's extended service warranties. In
addition, as contemplated in the 1995 Order, PSI has arranged (i.e.,
brokered) customer financing with third-party financial institutions in
exchange for a fee from the third-party financier.
The interim financial results of the Pilot Program have not met PSI's
expectations, with revenues less than and expenses more than original
estimates. PSI believes that a principal reason why revenues to date have
not matched expectations is because of local competition with other
appliances and home electronics dealers. Advertising expenses were higher
than anticipated partly due to the rush to open stores in time for the 1995
Christmas shopping season. Since April of this year, the advertising
strategy has been modified, and monthly advertising expenses have fallen
back into line with original estimates. In addition, as described in
greater detail in Item 4, PSI entered into a settlement agreement with the
Indiana Office of Utility Consumer Counselor providing, among other things,
that 20% of the gross margins from all sales revenues to which PSI is
entitled as a result of its participation in the Pilot Program will be
allocated to PSI's retail electric customers through PSI's quarterly fuel
adjustment clause. Finally, initial non-recurring start-up costs also
exceeded estimates.
C. Requested Authorization
As set forth in greater detail below, PSI requests authorization to
continue the Pilot Program with certain minor modifications for an
additional year in order to advance the program goals for which
authorization for the Pilot Program was originally sought. Specifically,
PSI continues to believe that the energy industry is transforming into a
competitive industry, and that marketing appliances and electronic goods
(whether in collaboration with H. H. Gregg or some other third-party vendor
or by PSI on its own) to PSI's retail customers, on the limited basis
currently in effect, will provide incremental benefits to PSI in this
emerging environment by among other things:
* promoting a company brand-name identity, thereby facilitating the
eventual marketing to customers by PSI or its associate companies
of other energy-related and demand-side management products;
* more fully utilizing existing employees and offices to hold down
costs; and
* strengthening ties to customers.
Although thus far costs of the Pilot Program have exceeded estimates,
PSI believes, as noted, that many of these costs are non-recurring start-up
costs (e.g., local office redesign, employee training, acquisition of
point-of-sale software). PSI believes that the investments it has made and
the hands-on experience it has gained will benefit it significantly as it
continues with the program, including in the approaching Christmas holiday
shopping season. If PSI must terminate the Pilot Program by year-end 1996,
it will be forced as a practical matter to begin deactivating its sales
efforts some weeks before that date and thereby forgo the full
opportunities presented by the year-end holiday shopping season. To
further contain 1997 program costs, Gregg has proposed certain program
modifications, including increased price discounts, advertising support,
and increased Gregg staff support and training for store personnel, that
will increase the potential profitability of the program.
For these reasons, PSI requests Commission authorization to continue
the Pilot Program for an additional 12 months (through December 31, 1997).
The renewed pilot program would be subject to the same terms and conditions
contained in the 1995 Order except that:
1. PSI may continue to conduct the program in collaboration with
Gregg; alternatively, PSI may conduct the program on its own or in
collaboration with other appliances or home electronics vendors./2/ In any
event, PSI, whether on its own or together with third-party vendors, would
market household appliances and other consumer electronic goods (including
marketing extended service warranties and arranging for customer financing
from third-party financial institutions) from not more than five of PSI's
local offices.
2. PSI further requests authorization to market extended service
warranties to Indiana customers, covering the cost of repairs for their
household appliances/electronic goods, whether or not purchased from PSI as
part of the extended program.
3. Based on its experience to date, PSI may wish to use the full-time
equivalent of up to five employees (out of the approximately 2,230
employees of PSI at September 30, 1996) to carry out the program (an
increase from the previously authorized three to four "FTE" employee
usage)./3/
D. Rule 54 Statement
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 EWG or a 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 September 30, 1996, Cinergy had invested, directly
or indirectly, an aggregate of approximately $482 million in EWGs and
FUCOs. 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 September 30, 1996 will be approximately $979 million.
Accordingly, based on Cinergy's "consolidated retained earnings" at
September 30, 1996, and taking into account investments as of said date,
Cinergy had free Rule 53 investment capacity of approximately $8 million
(i.e., 50% of "consolidated retained earnings" approximately $490 million
minus "aggregate investment" at September 30, 1996 $482 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 September 30, 1996 are approximately $979 million,
versus approximately $908 million for the four quarters ended September 30,
1995, a difference of $71 million (representing an increase of 8%).
Rule 53(b)(3): For the twelve months ended September 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.
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses ("Fees") to be incurred, directly
or indirectly, by PSI or any associate company thereof in connection with
the pilot program described herein are estimated as follows:
Fees of Cinergy Services, Inc. $2,000
Out-of-pocket expenses (primarily
advertising and sales) $82,000
Gross margin allocable to PSI
retail electric customers $82,000
Employee labor expense $167,000
Fees of Reid & Priest LLP $2,000
TOTAL $335,000
Item 3. Applicable Statutory Provisions.
Sections 9(a) and 10 and Rule 54 are or may be applicable to the
proposed transactions.
Rule 48(a) may apply to, and exempt in whole or in part, bank
financing arranged by PSI in respect of the proposed customer appliances
purchases.
Under the Commission's pending proposed Rule 58 (Rel. No. 35-26313,
June 20, 1995), the Commission has proposed to exempt from Sections 9(a)
and 10 appliance sales activities similar to those proposed herein if
carried out by an "energy-related company" and if certain other conditions
are met.
Item 4. Regulatory Approval.
No state or federal regulatory agency other than the Commission
under the Act has jurisdiction over the proposed transaction. However, the
Indiana Utility Regulatory Commission has continuing jurisdiction over
PSI's rates and charges for retail electric utility service, and thus will
have authority to review both the expenses and revenues associated with the
proposed transaction in the context of its jurisdiction over PSI's retail
rates and charges for retail electric service.
In connection with the original Pilot Program, PSI entered into a
settlement agreement with the Indiana Office of Utility Consumer Counselor
("OCC"). Among other things, the settlement agreement provides that: (1)
20% of the gross margins from all sales revenues to which PSI is entitled
as a result of its participation in the Pilot Program will be flowed to
PSI's customers through the quarterly fuel adjustment clause; (2) PSI will
not discontinue any customer utility service due to non-payment of a
contract entered into through the Pilot Program; (3) PSI will not combine
ads for the Pilot Program with any other utility program or service; (4)
PSI will record all advertising expenses for the Pilot Program in separate
accounts and such expenses shall not be eligible for recovery in rates; (5)
PSI will record employee wages and benefits associated with the Pilot
Program in below-the-line accounts; (6) the total number of employees
working in the participating local offices will not be increased to
accommodate the Pilot Program; (7) PSI will record all carrying charges
associated with the Pilot Program in below-the-line accounts; (8) separate
insurance will be carried for the Pilot Program and the cost of that
insurance will be recorded below-the-line; (9) PSI will hold ratepayers
harmless from any injuries, claims, judgments and settlements which may
arise as a result of the program; and (10) the OCC will have continuous
access to all books and records related to the Pilot Program. PSI
anticipates
that this settlement agreement, with appropriate minor modifications, will
be extended to cover the proposed one-year extension of the Pilot Program.
Item 5. Procedure.
PSI requests that the Commission issue and publish in the Federal
Register not later than November 22, 1996 the requisite notice under Rule
23 with respect to the filing of this Application and the transactions
proposed herein. PSI further requests that such notice specify a date not
later than December 16, 1996 as the date after which the Commission may
issue an order granting this Application.
PSI 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 order; and requests that there be no waiting period between
the issuance of the Commission's order and its effectiveness.
Item 6. Exhibits and Financial Statements.
(a) Exhibits:
A Not applicable.
B Not applicable
C Not applicable.
D Not applicable.
E Not applicable.
F-1 Preliminary opinion of counsel (to be filed by
amendment).
G Form of Federal Register notice
(b) Financial Statements:
FS-1 PSI Consolidated Financial Statements, dated September
30, 1996
FS-2 Cinergy Consolidated Financial Statements, dated
September 30, 1996
FS-3 PSI Financial Data Schedule (included as part of
electronic submission only)
FS-4 Cinergy Financial Data Schedule (included as part of
electronic submission only)
Item 7. Information as to Environmental Effects.
(a) The Commission's action in this matter will not constitute
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 document to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: November 5, 1996
PSI Energy, Inc.
By: /s/ William L. Sheafer
Treasurer
<PAGE>
Endnotes
/1/ PSI provides retail electric service to approximately two million
customers in 69 of Indiana's 92 counties, including the cities of
Bloomington, Columbus, Kokomo, Lafayette, New Albany and Terre Haute.
/2/ PSI will not acquire any ownership interest in Gregg or such other
third-party vendors; nor would PSI establish any new subsidiaries to
implement the extended program.
/3/ As before, PSI will not hire any new employees for the purpose of
implementing the extended program.
EXHIBIT G
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35-________)
Filings Under the Public Utility Holding Company Act of 1935 ("Act")
November 22, 1996
Notice is hereby given that the following filing(s) has/have been made
with the Commission pursuant to provisions of the Act and rules promulgated
thereunder. All interested persons are referred to the application(s)
and/or declaration(s) for complete statements of the proposed
transaction(s) summarized below. The application(s) and/or declaration(s)
and any amendment(s) thereto is/are available for public inspection through
the Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing
by December 16, 1996, to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on the relevant applicant and/or
declarant at the address specified below. Proof of service (by affidavit
or, in case of an attorney at law, by certificate) should be filed with the
request. Any request for hearing shall identify specifically the issues of
fact or law that are disputed. A person who so requests will be notified
of any hearing, if ordered, and will receive a copy of any notice or order
issued in the matter. After said date, the application(s) and/or
declaration(s), as filed or amended, may be granted and/or permitted to
become effective.
PSI Energy, Inc. 70-8727
Notice of Proposal to Extend Authorization to Participate in Appliance
Sales Program
PSI Energy, Inc. ("PSI"), Plainfield, Indiana, an electric utility
subsidiary of Cinergy Corp., a registered holding company ("Cinergy"), has
filed a post-effective amendment to its application under Sections 9(a) and
10 of the Act and Rules 48(a) and 54 thereunder.
By order dated November 21, 1995 in this file (Rel. No. 35-26412)
("1995 Order"), the Commission authorized PSI to enter into a business
venture with H. H. Gregg ("Gregg"), a retail vendor of household electronic
appliances and related consumer goods, through December 31, 1996, involving
an appliance sales program ("Pilot Program"). Pursuant to the 1995 Order,
PSI was authorized to market Gregg's electronic goods and appliances at
retail, on a best-efforts, consignment basis, to PSI's customers at a
limited number of its local offices. PSI was also authorized to sell
extended service warranties covering any items purchased. Further, the
Pilot Program contemplated that PSI might arrange customer financing
through a bank or other financial institution for a fee.
As contemplated by the 1995 Order, PSI has been conducting the Pilot
Program through four of its local offices, in Bedford, Connersville,
Greencastle, and Huntington, Indiana. PSI has also been marketing to
customers Gregg's extended service warranties. In addition, as
contemplated in the 1995 Order, PSI has arranged (i.e., brokered) customer
financing with third-party financial institutions in exchange for a fee
from the third-party financier.
The interim financial results of the Pilot Program have not met PSI's
expectations, with revenues less than and expenses more than original
estimates. PSI states that a principal reason why revenues to date have
not matched expectations is because of local competition with other
appliances and home electronics dealers. PSI states that advertising
expenses were higher than anticipated partly due to the rush to open stores
in time for the 1995 Christmas shopping season, but states that, since
April of this year, the advertising strategy has been modified, and monthly
advertising expenses have fallen back into line with original estimates.
In addition, PSI entered into a settlement agreement with the Indiana
Office of Utility Consumer Counselor providing, among other things, that
20% of the gross margins from all sales revenues to which PSI is entitled
as a result of its participation in the Pilot Program will be allocated to
PSI's retail electric customers through PSI's quarterly fuel adjustment
clause. Finally, initial non-recurring start-up costs also exceeded
estimates.
As set forth below, PSI requests authorization to continue the Pilot
Program with certain minor modifications for an additional year in order to
advance the program goals for which authorization for the Pilot Program was
originally sought. Specifically, PSI states that it continues to believe
that the energy industry is transforming into a competitive industry, and
that marketing appliances and electronic goods (whether in collaboration
with Gregg or some other third-party vendor or by PSI on its own) to PSI's
retail customers, on the limited basis currently in effect, will provide
incremental benefits to PSI in this emerging environment by among other
things (1) promoting a company brand-name identity, thereby facilitating
the eventual marketing to customers by PSI or its associate companies of
other energy-related and demand-side management products; (2) more fully
utilizing existing employees and offices to hold down costs; and (3)
strengthening ties to customers.
PSI states that although interim costs of the Pilot Program have
exceeded estimates, many of these costs are non-recurring start-up costs
(e.g., local office redesign, employee training, acquisition of point-of-
sale software). According to PSI, the investments it has made and the
hands-on experience it has gained will benefit it significantly in the
extended Pilot Program. To further contain 1997 program costs, PSI states
that Gregg has proposed certain program modifications, including increased
price discounts, advertising support, and increased Gregg staff support and
training for store personnel, that will increase the potential
profitability of the program.
For these reasons, PSI requests Commission authorization to continue
the Pilot Program for an additional 12 months (through December 31, 1997).
The renewed pilot program would be subject to the same terms and conditions
contained in the 1995 Order except that:
PSI may continue to conduct the program in collaboration with Gregg;
alternatively, PSI may conduct the program on its own or in
collaboration with other appliances or home electronics vendors./1/
In any event, PSI, whether on its own or together with third-party
vendors, would market household appliances and other consumer
electronic goods (including marketing extended service warranties
and arranging for customer financing from third-party financial
institutions) from not more than five of PSI's local offices.
PSI further requests authorization to market extended service
warranties to Indiana customers, covering the cost of repairs for
their household appliances/electronic goods, whether or not
purchased from PSI as part of the extended program.
Based on its experience to date, PSI may wish to use the full-time
equivalent of up to five employees (out of the approximately 2230
employees of PSI at September 30, 1996) to carry out the program
(an increase from the present three to four "FTE" employee
usage)./2/
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
Endnotes
/1/ PSI will not acquire any ownership interest in Gregg or such other
third-party vendors; nor would PSI establish any new subsidiaries to
implement the extended program.
/2/ PSI would not hire any new employees for the purpose of implementing
the extended program.
FINANCIAL STATEMENTS
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
CINERGY CORP.
CONSOLIDATED
AS OF SEPTEMBER 30, 1996
(Unaudited)
Pages 1 through 6
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
TWELVE MONTHS ENDED SEPTEMBER 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(in thousands, except per share amounts)
<S> <C> <C> <C>
OPERATING REVENUES
Electric $2,699,657 $82 $2,699,739
Gas 451,137 451,137
3,150,794 82 3,150,876
OPERATING EXPENSES
Fuel used in electric production 710,556 710,556
Gas purchased 226,328 226,328
Purchased and exchanged power 110,083 110,083
Other operation 572,376 (167) 572,209
Maintenance 192,055 192,055
Depreciation 281,011 281,011
Amortization of phase-in deferrals 13,607 13,607
Post-in-service deferred operating
expenses - net (2,997) (2,997)
Income taxes 220,718 94 220,812
Taxes other than income taxes 259,562 259,562
2,583,299 (73) 2,583,226
OPERATING INCOME 567,495 155 567,650
OTHER INCOME AND EXPENSES - NET
Allowance for equity funds used during
construction 2,444 2,444
Post-in-service carrying costs 1,231 1,231
Phase-in deferred return 8,413 8,413
Income taxes 9,371 9,371
Other - net (7,642) 45 (7,597)
13,817 45 13,862
INCOME BEFORE INTEREST AND OTHER CHARGES 581,312 200 581,512
INTEREST AND OTHER CHARGES
Interest on long-term debt 196,935 196,935
Other interest 22,803 22,803
Allowance for borrowed funds used
during construction (5,976) (5,976)
Preferred dividend requirements of
subsidiaries 26,710 26,710
240,472 - 240,472
NET INCOME $340,840 $200 $341,040
Costs of reacquisition of preferred
stock of subsidiary (18,175) (18,175)
NET INCOME APPLICABLE TO COMMON STOCK $322,665 $322,865
AVERAGE COMMON SHARES OUTSTANDING 157,633 157,633
EARNINGS PER COMMON SHARE
NET INCOME $2.17 $2.17
Costs of reacquisition of preferred
stock of subsidiary (0.12) (0.12)
NET INCOME APPLICABLE TO COMMON STOCK $2.05 $2.05
DIVIDENDS DECLARED PER COMMON SHARE $1.72
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED BALANCE SHEET
AT SEPTEMBER 30, 1996
ASSETS
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
UTILITY PLANT - ORIGINAL COST
In service
Electric $8,741,872 $8,741,872
Gas 699,566 699,566
Common 185,339 185,339
9,626,777 - 9,626,777
Accumulated depreciation 3,537,840 3,537,840
6,088,937 - 6,088,937
Construction work in progress 164,553 164,553
Total utility plant 6,253,490 - 6,253,490
CURRENT ASSETS
Cash and temporary cash investments 28,622 200 28,822
Restricted deposits 1,720 1,720
Accounts receivable less accumulated
provision of $12,415,000 105,568 105,568
Materials, supplies and fuel
- at average cost
Fuel for use in electric production 81,654 81,654
Gas stored for current use 37,215 37,215
Other materials and supplies 86,584 86,584
Property taxes applicable to subsequent year 29,206 29,206
Prepayments and other 26,299 26,299
396,868 200 397,068
OTHER ASSETS
Regulatory assets
Amounts due from customers - income taxes 380,519 380,519
Post-in-service carrying costs and
deferred operating expenses 188,370 188,370
Phase-in deferred return and depreciation 96,469 96,469
Coal contract buyout costs 137,686 137,686
Deferred demand-side management costs 134,832 134,832
Deferred merger costs 96,339 96,339
Unamortized costs of reacquiring debt 71,921 71,921
Other 95,393 95,393
Investment in Avon Energy Holdings 512,747 512,747
Other 233,927 233,927
1,948,203 - 1,948,203
$8,598,561 $200 $8,598,761
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED BALANCE SHEET
AT SEPTEMBER 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 Actual $1,577 1,577
Paid-in capital 1,592,393 1,592,393
Retained earnings 993,039 200 993,239
Cumulative foreign currency translation adjust (584) (584)
Total common stock equity 2,586,425 200 2,586,625
CUMULATIVE PREFERRED STOCK OF SUBSIDIARIES
Not subject to mandatory redemption 194,235 194,235
LONG-TERM DEBT 2,383,827 2,383,827
Total capitalization 5,164,487 200 5,164,687
CURRENT LIABILITIES
Long-term debt due within one year 140,400 140,400
Notes payable 817,454 817,454
Accounts payable 262,180 262,180
Litigation settlement 80,000 80,000
Accrued taxes 227,728 227,728
Accrued interest 46,269 46,269
Other 60,082 60,082
1,634,113 - 1,634,113
OTHER LIABILITIES
Deferred income taxes 1,120,145 1,120,145
Unamortized investment tax credits 177,959 177,959
Accrued pension and other postretirement
benefit costs 205,112 205,112
Other 296,745 296,745
1,799,961 - 1,799,961
$8,598,561 $200 $8,598,761
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED SEPTEMBER 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
BALANCE OCTOBER 1, 1995 $941,652 $941,652
Net income 340,840 200 341,040
Dividends on common stock (271,002) (271,002)
Costs of reacquisition of preferred stock
of subsidiary (18,175) (18,175)
Other (276) (276)
BALANCE SEPTEMBER 30, 1996 $993,039 $200 $993,239
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
Pro Forma Consolidated Journal Entries to Give Effect to the
Sale of $1,579,500 worth of appliances and electronics
<S> <C> <C>
Entry No. 1
Cash and temporary cash investments $1,579,500
Revenue - merchandising $1,579,500
To record the sale of appliances and electronics.
Entry No. 2
Gross receipts tax - other $4,739
Cash and temporary cash investments $4,739
To record Indiana gross receipts tax of .3% on the sale of appliances and electronics.
Entry No. 3
Cost - merchandising $1,170,000
Cash and temporary cash investments $1,170,000
To record the cost of appliances and electronics sold.
Entry No. 4
Cost - merchandising $82,000
Cash and temporary cash investments $82,000
To record out-of-pocket expenses (primarily sales and advertising) asssociated with the
sale of appliances and electronics.
Entry No. 5
Revenue - merchandising $81,900
Other revenue - electric $81,900
To record gross margin allocable to electric utility jurisdiction.
Entry No. 6
Cost - merchandising $167,000
Other operation - electric $167,000
To record labor expenses allocable to the sale of appliances and electronics.
Entry No. 7
Federal income tax - electric $83,113
State income tax - electric 11,201
Federal income tax - other 24,770
State income tax - other 3,537
Cash and temporary cash investments $122,621
<FN>
To record income taxes on the sale of appliances and electronics at effective rates of
33.425% for Federal income taxes and 4.5% for Indiana income taxes.
</TABLE>
FINANCIAL STATEMENTS
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
PSI ENERGY, INC.
CONSOLIDATED
AS OF SEPTEMBER 30, 1996
(Unaudited)
Pages 1 through 6
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
TWELVE MONTHS ENDED SEPTEMBER 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES
Non-affiliated companies $1,254,130 $82 1,254,212
Affiliated companies 27,679 27,679
$1,281,809 82 $1,281,891
OPERATING EXPENSES
Fuel 368,834 368,834
Purchased and exchanged power
Non-affiliated companies 79,116 79,116
Affiliated companies 41,347 41,347
Other operation 249,597 (167) 249,430
Maintenance 92,595 92,595
Depreciation 120,528 120,528
Post-in-service deferred operating
expenses - net (6,250) (6,250)
Income taxes 75,763 94 75,857
Taxes other than income taxes 52,493 52,493
1,074,023 (73) 1,073,950
OPERATING INCOME 207,786 155 207,941
OTHER INCOME AND EXPENSES - NET
Allowance for equity funds used during
construction 594 594
Post-in-service carrying costs 1,231 1,231
Income taxes (3,142) (3,142)
Other - net (17) 45 28
(1,334) 45 (1,289)
INCOME BEFORE INTEREST 206,452 200 206,652
INTEREST
Interest on long-term debt 67,317 67,317
Other interest 14,172 14,172
Allowance for borrowed funds used
during construction (2,298) (2,298)
79,191 79,191
NET INCOME 127,261 200 127,461
PREFERRED DIVIDEND REQUIREMENT 12,813 12,813
NET INCOME APPLICABLE TO COMMON STOCK $114,448 $200 $114,648
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AT SEPTEMBER 30, 1996
ASSETS
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
ELECTRIC UTILITY PLANT - ORIGINAL COST
In service 4,117,737 4,117,737
Accumulated depreciation 1,698,969 1,698,969
2,418,768 - 2,418,768
Construction work in progress 76,999 76,999
Total utility plant 2,495,767 - 2,495,767
CURRENT ASSETS
Cash and temporary cash investments 14,202 200 14,402
Restricted deposits 549 549
Notes receivable from affiliated companies 1,400 1,400
Accounts receivable less accumulated
provision of $202,000 53,121 53,121
Accounts receivable from affiliated companies 2,499 2,499
Materials, supplies and fuel
- at average cost
Fuel 53,018 53,018
Other materials and supplies 32,779 32,779
Prepayments and other 2,871 2,871
160,439 200 160,639
OTHER ASSETS
Regulatory assets
Amounts due from customers - income taxes 32,849 32,849
Post-in-service carrying costs and
deferred operating expenses 45,172 45,172
Coal contract buyout costs 137,686 137,686
Deferred demand-side management costs 105,204 105,204
Deferred merger costs 77,633 77,633
Unamortized costs of reacquiring debt 32,583 32,583
Other 69,910 69,910
Other 128,178 128,178
629,215 - 629,215
$3,285,421 $200 $3,285,621
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AT SEPTEMBER 30, 1996
CAPITALIZATION AND LIABILITIES
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
COMMON STOCK EQUITY
Common stock - without par value;
$.01 stated value;
Authorized shares - 60,000,000
Outstanding shares -53,913,701 Actual $539 $539
Paid-in capital 402,945 402,945
Accumulated earnings subsequent to
November 30, 1986, quasi-reorganization 627,354 200 627,554
Total common stock equity 1,030,838 200 1,031,038
CUMULATIVE PREFERRED STOCK
Not subject to mandatory redemption 173,090 173,090
LONG-TERM DEBT 818,959 818,959
Total capitalization 2,022,887 200 2,023,087
CURRENT LIABILITIES
Long-term debt due within one year 10,400 10,400
Notes payable 209,354 209,354
Notes payable to affiliated companies 52,677 52,677
Accounts payable 128,455 128,455
Accounts payable to affiliated companies 5,420 5,420
Litigation settlement 80,000 80,000
Accrued taxes 65,419 65,419
Accrued interest 12,661 12,661
Other 16,246 16,246
580,632 - 580,632
OTHER LIABILITIES
Deferred income taxes 347,227 347,227
Unamortized investment tax credits 53,652 53,652
Accrued pension and other postretirement
benefit costs 62,487 62,487
Other 218,536 218,536
681,902 - 681,902
$3,285,421 $200 $3,285,621
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
PRO FORMA CONSOLIDATED STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED SEPTEMBER 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
BALANCE OCTOBER 1, 1995 $595,803 $595,803
Net income 127,261 200 127,461
Dividends on preferred stock (12,905) (12,905)
Dividends on common stock (82,363) (82,363)
Other (442) (442)
BALANCE SEPTEMBER 30, 1996 $627,354 $200 $627,554
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
Pro Forma Consolidated Journal Entries to Give Effect to the
Sale of $1,579,500 worth of appliances and electronics
<S> <C> <C>
Entry No. 1
Cash and temporary cash investments $1,579,500
Revenue - merchandising $1,579,500
To record the sale of appliances and electronics.
Entry No. 2
Gross receipts tax - other $4,739
Cash and temporary cash investments $4,739
To record Indiana gross receipts tax of .3% on the sale of appliances and electronics.
Entry No. 3
Cost - merchandising $1,170,000
Cash and temporary cash investments $1,170,000
To record the cost of appliances and electronics sold.
Entry No. 4
Cost - merchandising $82,000
Cash and temporary cash investments $82,000
To record out-of-pocket expenses (primarily sales and advertising) asssociated with the
sale of appliances and electronics.
Entry No. 5
Revenue - merchandising $81,900
Other revenue - electric $81,900
To record gross margin allocable to electric utility jurisdiction.
Entry No. 6
Cost - merchandising $167,000
Other operation - electric $167,000
To record labor expenses allocable to the sale of appliances and electronics.
Entry No. 7
Federal income tax - electric $83,113
State income tax - electric 11,201
Federal income tax - other 24,770
State income tax - other 3,537
Cash and temporary cash investments $122,621
<FN>
To record income taxes on the sale of appliances and electronics at effective rates of
35% for Federal income taxes and 2.925% for Indiana income taxes.
</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> 3
<NAME> PSI ENERGY, INC. (CONSOLIDATED)
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> OCT-01-1995 OCT-01-1995
<PERIOD-END> SEP-30-1996 SEP-30-1996
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 2,495,767 2,495,767
<OTHER-PROPERTY-AND-INVEST> 0 0
<TOTAL-CURRENT-ASSETS> 160,439 160,639
<TOTAL-DEFERRED-CHARGES> 501,037 501,037
<OTHER-ASSETS> 128,178 128,178
<TOTAL-ASSETS> 3,285,421 3,285,621
<COMMON> 539 539
<CAPITAL-SURPLUS-PAID-IN> 402,945 402,945
<RETAINED-EARNINGS> 627,354 627,554
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,030,838 1,031,038
0 0
173,090 173,090
<LONG-TERM-DEBT-NET> 818,959 818,959
<SHORT-TERM-NOTES> 262,031 262,031
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 10,400 10,400
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 990,103 990,103
<TOT-CAPITALIZATION-AND-LIAB> 3,285,421 3,285,621
<GROSS-OPERATING-REVENUE> 1,281,809 1,281,891
<INCOME-TAX-EXPENSE> 75,763 75,857
<OTHER-OPERATING-EXPENSES> 998,260 998,093
<TOTAL-OPERATING-EXPENSES> 1,074,023 1,073,950
<OPERATING-INCOME-LOSS> 207,786 207,941
<OTHER-INCOME-NET> (1,334) (1,289)
<INCOME-BEFORE-INTEREST-EXPEN> 206,452 206,652
<TOTAL-INTEREST-EXPENSE> 79,191 79,191
<NET-INCOME> 127,261 127,461
12,813 12,813
<EARNINGS-AVAILABLE-FOR-COMM> 114,448 114,648
<COMMON-STOCK-DIVIDENDS> 82,363 82,363
<TOTAL-INTEREST-ON-BONDS> 67,317 67,317
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0.00 0.00
<EPS-DILUTED> 0.00 0.00
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> OCT-01-1995 OCT-01-1995
<PERIOD-END> SEP-30-1996 SEP-30-1996
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 6,253,490 6,253,490
<OTHER-PROPERTY-AND-INVEST> 0 0
<TOTAL-CURRENT-ASSETS> 396,868 397,068
<TOTAL-DEFERRED-CHARGES> 1,201,529 1,201,529
<OTHER-ASSETS> 746,674 746,674
<TOTAL-ASSETS> 8,598,561 8,598,761
<COMMON> 1,577 1,577
<CAPITAL-SURPLUS-PAID-IN> 1,592,393 1,592,393
<RETAINED-EARNINGS> 992,455 992,655
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,586,425 2,586,625
0 0
194,235 194,235
<LONG-TERM-DEBT-NET> 2,383,827 2,383,827
<SHORT-TERM-NOTES> 817,454 817,454
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 140,400 140,400
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,476,220 2,476,220
<TOT-CAPITALIZATION-AND-LIAB> 8,598,561 8,598,761
<GROSS-OPERATING-REVENUE> 3,150,794 3,150,876
<INCOME-TAX-EXPENSE> 220,718 220,812
<OTHER-OPERATING-EXPENSES> 2,362,581 2,362,414
<TOTAL-OPERATING-EXPENSES> 2,583,299 2,583,226
<OPERATING-INCOME-LOSS> 567,495 567,650
<OTHER-INCOME-NET> 13,817 13,862
<INCOME-BEFORE-INTEREST-EXPEN> 581,312 581,512
<TOTAL-INTEREST-EXPENSE> 213,762 213,762
<NET-INCOME> 367,550 367,750
44,885 44,885
<EARNINGS-AVAILABLE-FOR-COMM> 322,665 322,865
<COMMON-STOCK-DIVIDENDS> 271,002 271,002
<TOTAL-INTEREST-ON-BONDS> 196,935 196,935
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 2.05 2.05
<EPS-DILUTED> 2.05 2.05
