File No. 70-____
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________________
FORM U-1 APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________
Cinergy Corp.
Cinergy Investments, Inc.
Cinergy Services, Inc.
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)
Applicants request that the Commission send copies of all notices, orders and
communications in connection herewith to:
Jerome A. Vennemann William J. Grealis
Associate General Counsel President
Cinergy Corp. Cinergy Investments, Inc.
(address above). (address above)
William T. Baker, Jr.
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
<PAGE>
Item 1. Description of Proposed Transactions
A. Requested Authorizations
Cinergy Corp. ("Cinergy"), a registered holding company under the Public
Utility Holding Company Act of 1935, as amended ("Act"), and Cinergy's
wholly-owned nonutility holding company subsidiary, Cinergy Investments, Inc.
("Investments"), request Commission authorization to incorporate and provide
guaranties in an aggregate amount at any one time outstanding not to exceed $250
million through December 31, 2001 in respect of a new wholly-owned nonutility
subsidiary, expected to be named Cinergy Solutions, Inc. ("Solutions"), which
will market a comprehensive array of energy-related products and services
exclusively to non-associates, including industrial, commercial, governmental,
institutional and residential customers and utility companies. Solutions will
offer an integrated package of "value-added" energy-related products and
services to enable customers to reduce energy costs, improve energy efficiency
and increase productivity.
Applicants request authorization for Solutions to conduct its proposed
business activities directly through Solutions, indirectly through one or more
wholly-owned direct or indirect subsidiaries of Solutions, and indirectly
through one or more direct or indirect subsidiaries of Solutions jointly-owned
with one or more joint venture non-associates - in each case solely to implement
the lines of proposed business activities itemized below.
In connection with the formation of Solutions and its contemplated business
activities, Cinergy's wholly-owned service company subsidiary, Cinergy Services,
Inc. ("Cinergy Services"), requests authorization to provide an expanded range
of support services to Cinergy Solutions (including any subsidiaries thereof) as
well as any other system nonutility companies, pursuant to an amendment to the
existing Cinergy system nonutility service agreement.
B. Background
In order to retain existing and attract new customers as the U. S. energy
markets transform into an increasingly integrated and competitive national
market, Cinergy must compete with other players in the industry (traditional
vertically integrated utilities and new entrants such as power marketers, energy
services companies and owners/operators of independent power production
facilities) in terms of both price/quality of the basic energy commodity and
value-added energy services and products. For much of 1996 Cinergy's efforts in
the latter regard have focused on meeting with or conducting surveys of its
existing commercial, industrial and residential retail and wholesale customers
to gain a detailed understanding of the types of energy-related services and
products those customers have been requesting or would value to advance their
business objectives. At the same time, as part of this systematic assessment,
Cinergy has been mindful of efforts by competitors to deploy so-called "one-stop
retail energy shops."
Solutions is the culmination of these extensive preliminary investigations.
Solutions will meet the demands of the marketplace for customized, innovative
and wide-ranging energy services and products, while affording Cinergy and its
investors an important new source of revenues and opportunity for growth and
profits. Solutions is a keystone in Cinergy's strategy to compete successfully
in the changing energy industry.
C. Proposed Business Activities
Applicants propose that Solutions engage initially in the business
activities described below. Such services/products will be marketed exclusively
to non-associates - commercial/industrial customers (including governmental,
institutional and utility companies) and residential customers - on a local,
regional, nationwide and, as opportunities develop, international basis. The
services would be priced based on competitive market rates.
Without limitation of the foregoing, if the Commission ultimately adopts
proposed Rule 58 (see Rel. No. 35-26313, June 20, 1995), Solutions may also
engage in additional types of business activities of an "energy-related company"
to the extent encompassed by and subject to the limitations of that potential
rule.
1. Energy Management Services
As one of its principal business activities, Solutions will offer a complete
menu of energy management and efficiency services and related consulting
services, often on a turnkey basis. These activities (collectively, "Energy
Management Services") may also entail the marketing, installation, operation and
maintenance of various products and services designed to implement the solutions
recommended in the course of providing these services. Solutions will market
Energy Management Services primarily to commercial/industrial customers, but
also on a smaller scale to residential customers.
Specifically, Energy Management Services will include the following
activities: (1) identification (through energy audits or otherwise) of energy
and other resource (water, labor, maintenance, materials, etc.) cost reduction
or efficiency opportunities; (2) design of facility and process modifications or
enhancements to realize such opportunities; (3) management, or direct
construction and installation, of energy conservation or efficiency equipment;
(4) training of client personnel in the operation of equipment; (5) maintenance
of energy systems; (6) design, management or direct construction and
installation of new and retrofit heating, ventilating, and air conditioning
("HVAC"), electrical and power systems, motors, pumps, lighting, water and
plumbing systems, and related structures, to realize energy and other resource
efficiency goals or to otherwise meet a customer's energy-related needs; (7)
system commissioning (i.e., monitoring the operation of an installed system to
ensure that it meets design specifications); (8) reporting of system results;
(9) design of energy conservation programs; (10) implementation of energy
conservation programs; (11) provision of conditioned power services (i.e.,
services designed to prevent, control or mitigate adverse effects of power
disturbances on a customer's electrical system to ensure the level of power
quality required by the customer, particularly with respect to sensitive
electronic equipment); and (12) other similar or related activities.
2. Asset Management Services
Another principal business activity of Solutions will involve the provision
of comprehensive asset management services ("Asset Management Services"), on a
turnkey basis or otherwise, in respect of energy-related systems, facilities and
equipment (e.g., electric utility systems and assets, including distribution
systems and substations; transmission facilities; electric generation
facilities, including standby generation facilities and self-generation
facilities; boilers; chillers, i.e., refrigeration and coolant equipment; HVAC;
and lighting systems) located on or adjacent to premises of commercial/
industrial customers and used by such customers in connection with their
business activities. Likewise, these services would be marketed to other owners
of utility assets or systems such as municipalities and electric cooperatives.
Additionally, these services would be marketed to developers, owners and
operators of non-associate independent power production facilities ("IPPs"),
including both qualifying and non-qualifying cogeneration or small power
production facilities within the meaning of the Public Utility Regulatory
Policies Act of 1978 (such qualifying facilities, "QFs") and exempt wholesale
generators ("EWGs") and foreign utility companies ("FUCOs") within the meaning
of the Act, as well as to developers, owners and operators of non-associate
district thermal energy systems, i.e., energy systems consisting of central
production plants that distribute steam, hot water and/or chilled water through
underground pipes to customer buildings./1/ Specifically, Asset Management
Services will include development; engineering; design; construction and
construction management; pre-operational start-up testing and commissioning;
long-term operations and maintenance, including system overhaul; load control
and network control; fuel procurement, transportation and storage; fly-ash and
other waste disposal; management and supervision; technical, training and
administrative support; and any other managerial or technical services required
to operate, maintain and manage energy-related assets physically associated with
customer premises or to operate, maintain and manage municipality - or
cooperative-owned systems, IPPs and district thermal energy systems.
Without obtaining the prior approval of the Commission in a separate filing,
Solutions will not undertake any Asset Management Service if, as a result
thereof, Solutions would become a "public utility company" within the meaning of
the Act.
3. Consulting Services
Applicants also contemplate that Solutions will market to non-associates,
primarily commercial/industrial customers, general technical consulting services
with respect to energy-related matters ("Consulting Services"). Specifically,
the Consulting Services will include technical and consulting services involving
technology assessments, power factor correction and harmonics mitigation
analysis, commercialization of electro-technologies, meter reading and repair,
rate schedule analysis and design, environmental services, engineering services,
billing services including conjunctive billing, summary billing for customers
with multiple locations and bill auditing, risk management services,
communications systems, information systems/data processing, system planning,
strategic planning, finance, feasibility studies, and other similar or related
services.
4. Project Development and Ownership
Another important aspect of Solutions' business will consist of acquiring,
owning and operating "Projects," i.e.: (a) QFs, (b) district thermal energy
systems, and (c) potentially other energy-related systems, together in each case
with ancillary facilities and equipment, including thermal energy utilization
facilities, fuel procurement, transportation and storage facilities, waste
disposal equipment, and similar assets or equipment.
Applicants request authorization herein for Solutions to conduct preliminary
Project development activities ("Project Development"). Such activities will
include Project due diligence and design review; market studies; site
inspection; preparation of bid proposals (including posting of bid bonds, cash
deposits and the like); applications for required permits or regulatory
approvals; acquisitions of site options and options on other necessary rights;
negotiation and execution of contractual commitments with owners of existing
facilities, equipment vendors, construction firms, power purchasers, thermal
"host" users, fuel suppliers and other Project contractors; negotiation of
financing commitments with lenders and equity co-investors; and such other
preliminary development activities as may be required or prudent in preparation
for the acquisition, operation or financing of a Project.
Solutions will not acquire directly or indirectly interests in any Projecs
without obtaining the prior approval of the Commission in a separate filing,
unless otherwise exempted under the Act.
5. Consumer Services
Solutions would also market a panoply of energy-related services and
products ("Consumer Services") exclusively to residential and small commercial
customers. Consumer Services will include (1) Service lines repair/extended
warranties - repair of underground utility service lines owned by and located on
the customer's property and extended service warranties covering the cost of
such repairs; (2) Surge protection - meter-based and plug-in equipment to
protect customer household appliances and electronic equipment from power
surges, including due to lightning; (3) Appliances merchandising/repair/extended
warranties - marketing of HVAC and other energy-related household appliances
and, in connection therewith or separately, marketing of appliance inspection
and repair services and extended service warranties covering the cost of
repairing customers' appliances; (4) Utility bill insurance - utility bill
payment protection, for a monthly fee for a specified number of months, in the
event the customer becomes unemployed, disabled or dies; (5) Gas pilot lighting
- - lighting of pilot lights for customers; and (6) other similar or related
services.
6. Customer Financing
Solutions also would furnish its own or broker non-associate third-party
financing to commercial/industrial and residential customers, both to support
sales to customers of goods and services included within Energy Management
Services, Asset Management Services and Consumer Services and in connection with
sales of energy-related equipment where the customer is not otherwise purchasing
goods and services promoted by Solutions. For example, as an integral part of
its Asset Management Services, Solutions may assist a large industrial customer
in upgrading that customer's existing electric substation located on its
premises by, among other things, helping the customer obtain necessary
financing, either through Solutions directly or through a bank, leasing company
or other financial institution arranged by Solutions. Solutions also may
provide or broker financing in circumstances where the customer is not otherwise
purchasing Solutions products or services - for example, to a residential
customer that purchases a heat pump from an HVAC dealer, but purchases no Energy
Management Services or Consumer Services.
Customer financing will take the form of direct loans, installment
purchases, operating or finance lease arrangements (including sublease
arrangements) and loan guarantees. Interest on loans and imputed interest on
lease payments will be based on prevailing market rates. The obligations will
have terms of one to thirty years and will be secured or unsecured. Solutions
also may assign obligations acquired from customers to banks, leasing companies
or other financial institutions, with or without recourse.
7. Wholly-Owned Subsidiaries; Third-Party Alliances
Solutions may undertake certain of the proposed business activities on its
own, either directly or through one or more wholly-owned direct or indirect
subsidiaries of Solutions, formed as corporations, partnerships, limited
liability companies or other legal entities. The decision in particular cases
whether to conduct specific business activities directly through Solutions or
indirectly through one or more wholly-owned subsidiaries of Solutions will hinge
on applicable business, legal, tax, accounting and strategic considerations.
In addition, to mitigate risk or access skills and relationships that
Solutions may require, Applicants expect that Solutions will pursue proposed
business activities in certain instances through alliances with non-associates.
Certain of these alliances may be relatively informal, not involving the
formation of any new entities. Others may encompass formal joint ventures,
possibly involving the formation of one or more wholly- or partly-owned
subsidiaries of Solutions.
Applicants request authorization for Solutions to form any such wholly-or
partly-owned subsidiaries for the exclusive purpose of implementing its proposed
business activities as previously described. Applicants do not at this time
request authorization for Solutions to acquire securities of any third-party
with whom it may ally.
D. Incorporation of Solutions; Guaranties by Cinergy and Investments
In connection with its formation and initial capitalization under Delaware
law, Solutions is expected to issue and sell up to 100 shares of no par value
common stock to Investments for nominal cash consideration (not to exceed
$1,000).
Thereafter, from time to time through December 31, 2001, Cinergy and
Investments expect to invest not more than $100 million in Solutions (including
any subsidiaries of Solutions), either by acquiring securities of Solutions or
making cash capital contributions to Solutions, in exempt transactions pursuant
to Rules 52 and 45(b)(4)./2/
As detailed below, Cinergy and Investments request authority through
December 31, 2001 to guarantee debt and other obligations of Solutions
(including any subsidiaries of Solutions) incurred in the ordinary course of
business in a maximum principal amount at any one time outstanding not to exceed
$250 million.
*Debt financing of Solutions proposed to be guaranteed by Cinergy or
Investments (a) will not exceed a term of 15 years, and (b) will bear interest
(1) at a floating rate not in excess of 200 basis points over the prime rate,
London Interbank Offered Rate or other appropriate index in effect from time to
time, or (2) at a fixed rate not in excess of 250 basis points above the yield
at the time of issuance of U.S. Treasury obligations of a comparable maturity.
Any commitment and other fees on the debt will not exceed 75 basis points per
annum on the total amount of debt financing.
*Other obligations incurred by Solutions in the ordinary course of business
as to which Cinergy and Investments propose to guarantee or otherwise act as
indemnitor or surety are expected often to involve Solutions' obligation to
perform under contracts with customers to which it is a party. "Guarantees"
issued by Cinergy or Investments in these circumstances may take the form of
procuring bid bonds and the like or guaranteeing Solutions' performance or other
similar direct or indirect guarantees of Solutions' contractual or other
obligations. Applicants anticipate that these parent company "backstops" will
be required to establish Solutions' financial credibility to certain customers
as a prerequisite to obtaining the customer's business and/or on the most
favorable terms.
Cinergy will not seek recovery through higher rates to customers of
Cinergy's utility subsidiaries in order to compensate it or Investments for any
potential losses they may sustain, or inadequate returns they may realize,
resulting from investments in Solutions or guarantees of Solutions' debt or
other obligations.
E. Employee Arrangements; Expanded Range of Services under Existing
Nonutility Service Agreement
Initially, Solutions is expected to have limited full-time staff, primarily
executive, management, and administrative personnel. Applicants expect that
Solutions will make extensive use of outside contractors and consultants in
performing its proposed business activities.
Applicants propose that Cinergy Services render an expanded range of support
services to Solutions (including any subsidiaries thereof) and the other system
nonutility companies. Pursuant to the Cinergy system Nonutility Service
Agreement ("NUSA") authorized by the Commission in its 1994 order approving the
merger that created Cinergy and certain ancillary transactions including the
formation of Cinergy Services,/3/ Cinergy Services may provide certain services,
primarily administrative and management-type services, to Cinergy's nonutility
subsidiaries, priced at cost for the domestic nonutility subsidiaries, as
determined pursuant to Rule 90 under the Act, and at fair market value for
certain foreign subsidiaries of Cinergy,/4/ and otherwise in accordance with
applicable rules and regulations promulgated by the Commission pursuant to
Section 13(b) of the Act. Specifically, the services that Cinergy Services may
currently render to its nonutility associates/5/ are as follows: (1)
information systems, (2) transportation, (3) human resources, (4) facilities,
(5) accounting, (6) public affairs, (7) legal, (8) finance, (9) internal audit,
(10) investor relations, (11) planning and (12) executive. By contrast, under
the Cinergy system Utility Service Agreement ("USA"), also approved in the
Commission's 1994 merger order and pursuant to which Cinergy Services renders
services at cost to Cinergy's utility subsidiaries,/6/ a much broader range of
services are made available. In addition to the same 12 services made available
to the client companies under the NUSA, the following additional services may be
provided by Cinergy Services to the utility subsidiaries: (1) electric system
maintenance, (2) marketing and customer relations, (3) electric transmission and
distribution engineering and construction, (4) power engineering and
construction, (5) materials management, (6) power planning, (7) rates, (8)
rights of way, (9) environmental affairs and (10) fuels./7/
Applicants request Commission authorization for Cinergy Services to provide
certain additional services under the NUSA, priced in accordance with the
Commission's 1994 merger order and otherwise rendered in conformance with
Section 13(b) of the Act and the applicable rules and regulations thereunder.
The proposed additional services are in general very similar to those additional
services under the USA (enumerated above) that are not currently available under
the NUSA. They are intended to accommodate the scope of Solutions' proposed
business activities as well as that of the Cinergy system's other nonutility
subsidiaries. Specifically, the proposed additional services (collectively,
"Additional NUSA Services") are as follows: (1) energy-related facility
maintenance, (2) engineering and construction, (3) marketing and customer
relations, (4) materials management, (5) fuels, (6) environmental affairs, (7)
rates, (8) rights of way and (9) energy-related system operations./8/ Reference
is made to Exhibit B for a more detailed description of the Additional NUSA
Services. As set forth therein, the Additional NUSA Services would be
implemented by means of a restatement of existing Appendix A to the NUSA (which
lists and describes the currently available services under the NUSA).
Applicants do not otherwise in any respect propose to amend the NUSA.
As noted, the Additional NUSA Services are roughly parallel to the
additional functions already made available to Cinergy's utility subsidiaries
under the USA. Consequently, Applicants do not anticipate a need to add any new
employees to Cinergy Services solely to implement the Additional NUSA Services.
Applicants hereby represent that the provision of the Additional NUSA Services
will not impair Cinergy Services' ability to provide the full range of services
that it currently provides to the system utility companies under the USA. All
costs associated with Cinergy Services personnel rendering any Additional NUSA
Services (including compensation, benefits and overhead) will be fully
reimbursed by Solutions and other system nonutility companies that request and
receive such services in accordance with Section 13(b) of the Act and the
applicable rules and regulations thereunder, including Rules 90 and 91.
F. Reporting Obligations
Applicants propose that Solutions be subject to the periodic reporting
requirements set forth below:
*Solutions will file an annual report under Rule 24 of the Act setting forth
the following information for the preceding calendar year: (1) a narrative
report of business activities undertaken by Solutions, including the formation
of any subsidiaries thereof and any joint ventures with third parties; and (2) a
description of any services received by Solutions or its subsidiaries from
Cinergy Services and the aggregate dollar value thereof.
*Solutions will file the following unaudited and other information within 45
days after the end of each calendar quarter for the preceding calendar quarter:
(1) a statement of income; (2) a balance sheet; (3) a cash flow statement; and
(4) a summary of any Cinergy or Investments' guarantees of Solutions' or its
subsidiaries' then-outstanding debt or other obligations, including the
aggregate amount thereof.
G. 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 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.
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses ("Fees") to be incurred, directly or
indirectly, by Applicants or any associate companies thereof in connection with
the proposed transactions are estimated as follows:
U-1 filing fee................$2,000
Fees of Cinergy Services......$15,000
Fees of Reid & Priest.........$15,000
TOTAL.........................$32,000
Item 3. Applicable Statutory Provisions.
Applicants consider that Sections 6(a), 7, 9(a), 10, 12(b) and 13(b) of the
Act and Rules 45, 52, 54, 90 and 91 thereunder are or may be applicable to the
proposed transactions.
In addition to the provisions cited, certain of the transactions proposed
herein are, or may be, exempted from the Commission's approval requirements
under the Act in whole or in part pursuant to certain other existing provisions
thereof or rules thereunder (such as Section 9(c)(3) and Rule 40(a)(4)) or
proposed rules (such as proposed Rule 58). The filing of this
Application-Declaration is not intended in any way to limit the availability of
any of these existing or proposed exemptions.
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.
Applicants request that the Commission issue and publish not later than
October 31, 1996 the requisite notice under Rule 23 with respect to the filing
of this Application-Declaration. Applicants further request that such notice
specify a date not later than November 25, 1996 as the date after which the
Commission may issue an order granting and permitting to become effective this
Application-Declaration.
Applicants waive a recommended decision by a hearing officer or other
responsible officer of the Commission; consent that the Staff of the Division of
Investment Management may assist in the preparation of the Commission's order;
and request 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-1 Form of certificate of incorporation of Solutions (to be filed by
amendment)
A-2 Form of by-laws of Solutions (to be filed by amendment)
A-3 Form of common stock certificate of Solutions (to be filed by
amendment)
B Form of restated Appendix A to NUSA (to be filed by amendment)
C Not applicable
D Not applicable
E Not applicable
F Preliminary opinion of counsel (to be filed by amendment)
G Form of Federal Register notice
(b) Financial Statements:
FS-1 Cinergy Consolidated Financial Statements, dated June 30, 1996
FS-2 Cinergy Financial Statements, dated June 30, 1996
FS-3 Investments Consolidated Financial Statements, dated June 30, 1996
FS-4 Cinergy Services Financial Statements, dated June 30, 1996
FS-5 Cinergy Consolidated Financial Data Schedule (included as part of
electronic submission only)
FS-6 Cinergy Financial Data Schedule (included as part of electronic
submission only)
FS-7 Investments Financial Data Schedule (included as part of electronic
submission only)
FS-8 Cinergy Services 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 companies have duly
caused this statement to be signed on their behalf by the undersigned thereunto
duly authorized.
Dated: October 15, 1996
CINERGY CORP.
By: /s/ William L. Sheafer
Treasurer
CINERGY INVESTMENTS, INC.
By: /s/ William L. Sheafer
Treasurer
CINERGY SERVICES, INC.
By: /s/ William L. Sheafer
Treasurer
<PAGE>
ENDNOTES
/1/ In February 1996, Cinergy formed a nonutility subsidiary, Cinergy Cooling
Corp., to engage in the district thermal energy business in Cincinnati. Cinergy
Cooling Corp. will construct, own and operate a district thermal energy plant
and a network of underground distribution pipes in downtown Cincinnati that will
provide chilled and possibly heated water to large commercial/governmental
buildings in the downtown area for their space cooling/heating needs. As of the
fall of 1996, Cinergy Cooling Corp. was in the preliminary stages of its
business operations, having begun construction of its district energy system.
For more information with respect to Cinergy Cooling Corp. and district thermal
energy systems generally, reference is made to Rel. No. 35-26474, February 20,
1996, and to the Application-Declaration as amended and Rule 24 certificates in
File No. 70-8767.
/2/ Under Rule 52, Solutions' (and its subsidiaries') issuances of additional
securities (common and preferred stock and any debt securities) to
non-associates, as well as any issuances thereof to and acquisitions by
associate companies, for the purpose of financing Solutions' existing business
are exempt from prior Commission approval under the Act (provided that, with
respect to any debt security issued by Solutions to any associate company, the
interest rate and maturity date thereof are designed to parallel the effective
cost of capital of the lending associate company). Rule 45(b)(4) exempts from
prior Commission approval capital contributions (and non-interest bearing
open-account advances) by any associate company to Solutions. Additional
investments by Cinergy and Investments in Solutions and any subsidiary thereof
would be funded (1) as to Cinergy, through sales of commercial paper and
short-term notes to banks and other financial institutions (see File No.
70-8521, Rel. No. 35-26488, March 12, 1996) and/or through internally generated
funds; and (2) as to Investments, through capital contributions, loans, and/or
open-account advances from Cinergy (pursuant to Rules 45(b)(4) and 52) and/or
internally generated funds.
/3/ See Rel. No. 35-26146, October 21, 1994. A conformed copy of the NUSA was
filed with the Commission on January 10, 1995 as an exhibit to the Rule 24
certificate in File No. 70-8427.
/4/ I.e., subsidiaries that do not derive any material part of their income
from sources within the United States and are not public-utility companies
operating within the United States. See Section 13(b)(1) of the Act and Rule 83
thereunder.
/5/ Currently, Cinergy has relatively few active nonutility subsidiaries. In
1995 and in the first nine months of 1996, Cinergy disposed of a number of
nonutility subsidiaries in existence at the time of the 1994 merger through
asset or stock sales to non-associates. Cinergy's currently active domestic
nonutility subsidiaries are (1) TriState Improvement Company, which is engaged
in the business of acquiring and holding real property for substations, electric
and gas rights of way and other functions connected to the utility business of
The Cincinnati Gas & Electric Company ("CG&E") and its utility subsidiaries, The
Union Light, Heat and Power Company, Lawrenceburg Gas Company, Miami Power
Corporation and The West Harrison Gas and Electric Company; (2) KO Transmission
Company, which holds an interest in an interstate natural gas pipeline, acquired
in the summer of 1996 pursuant to a settlement agreement between CG&E and the
Columbia Gas System; (3) Cinergy Resources, Inc. (formerly CG&E Resource
Marketing, Inc.), which is engaged in the gas marketing business; (4) Cinergy
Technology, Inc. (formerly PSI Environmental Corp.), which pursues investment
opportunities in technology and other energy-related areas and engages in fuel
brokering; and (5) Cinergy Cooling Corp. Cinergy has interests in two active
foreign subsidiaries, each a FUCO: Midlands Electricity plc and PSI Energy
Argentina, Inc.
/6/ Cinergy's utility subsidiaries are CG&E and its utility subsidiaries, which
among other things provide retail gas and electric service to customers in
portions of Ohio, Kentucky and Indiana, and PSI Energy, Inc., which among other
things provides retail electric service to portions of Indiana.
/7/ In addition, the USA expands the transportation function (which is also in
the NUSA) to include utility meter work.
/8/ In addition, the existing transportation function would be broadened to
include meter work.
Exhibit G
Cinergy Corp. et al.
Notice of Proposal to Establish, Finance and Engage in Service Transactions with
respect to New Nonutility Energy Services Subsidiary
Cinergy Corp. ("Cinergy"), a registered holding company, its wholly-owned
nonutility holding company subsidiary, Cinergy Investments, Inc.
("Investments"), and Cinergy's wholly-owned service company subsidiary, Cinergy
Services, Inc. ("Cinergy Services"), each of 139 East Fourth Street, Cincinnati,
Ohio 45202, have filed an application-declaration under Sections 6(a), 7, 9(a),
10, 12(b) and 13(b) of the Act and Rules 40(a)(4), 45, 52, 54, 90 and 91
thereunder.
1. Introduction
Cinergy and Investments request authorization to incorporate and provide
guaranties in respect of a new wholly-owned nonutility subsidiary, expected to
be named Cinergy Solutions, Inc. ("Solutions"), which will market a wide variety
of energy-related products and services exclusively to nonassociate
commercial/industrial customers (including governmental, institutional and
utility companies) and residential customers. Applicants state that Solutions
will offer an integrated package of "value-added" energy-related products and
services to enable customers to reduce energy costs, improve energy efficiency
and increase productivity. Applicants request authorization for Solutions to
conduct its proposed business activities directly through Solutions, through
wholly-owned subsidiaries of Solutions, and through subsidiaries of Solutions
jointly-owned with joint venture nonassociates. Finally, in connection with the
formation of Solutions and its contemplated business activities, Cinergy
Services requests authorization to provide an expanded range of support services
to Cinergy Solutions (including any subsidiary thereof) and other system
nonutility companies pursuant to an amendment to the existing Cinergy system
nonutility service agreement ("NUSA").
2. Proposed Business Activities
Applicants request authorization for Solutions to engage in the initial
business activities summarized below. Such services/products will be marketed
to nonassociates on a local, regional, nationwide and, as opportunities develop,
international basis. The services would be priced based on competitive market
rates.
In the first place, Solutions intends to offer a complete menu of energy
management and efficiency services and related consulting services, often on a
turnkey basis. These activities (collectively, "Energy Management Services")
may also entail the marketing, installation, operation and maintenance of
various products and services designed to implement the solutions recommended in
the course of providing these services. Solutions will market Energy Management
Services primarily to commercial/industrial customers, but also on a smaller
scale to residential customers. Energy Management Services will include (1)
identification (through energy audits or otherwise) of energy and other resource
(water, labor, maintenance, materials, etc.) cost reduction or efficiency
opportunities; (2) design of facility and process modifications or enhancements
to realize such opportunities; (3) management, or direct construction and
installation, of energy conservation or efficiency equipment; (4) training of
client personnel in the operation of equipment; (5) maintenance of energy
systems; (6) design, management or direct construction and installation of new
and retrofit heating, ventillating, and air conditioning ("HVAC"), electrical
and power systems, motors, pumps, lighting, water and plumbing systems, and
related structures, to realize energy and other resource efficiency goals or to
otherwise meet a customer's energy-related needs; (7) system commissioning
(i.e., monitoring the operation of an installed system to ensure that it meets
design specifications); (8) reporting of system results; (9) design of energy
conservation programs; (10) implementation of energy conservation programs; (11)
provision of conditioned power services (i.e., services designed to prevent,
control or mitigate adverse effects of power disturbances on a customer's
electrical system to ensure the level of power quality required by the customer,
particularly with respect to sensitive electronic equipment); and (12) other
similar or related activities.
Second, Solutions will market comprehensive asset management services
("Asset Management Services"), on a turnkey basis or otherwise, in respect of
energy-related systems, facilities and equipment (e.g., electric utility systems
and assets, including distribution systems and substations; transmission
facilities; electric generation facilities, including standby generation
facilities and self-generation facilities; boilers; chillers, i.e.,
refrigeration and coolant equipment; HVAC; and lighting systems) located on or
adjacent to premises of commercial/ industrial customers and used by such
customers in connection with their business activities. Likewise, these
services would be marketed to other owners of utility assets or systems such as
municipalities and electric cooperatives. Additionally, these services would be
marketed to developers, owners and operators of non-associate independent power
production facilities ("IPPs"), including both qualifying and non-qualifying
cogeneration or small power production facilities within the meaning of the
Public Utility Regulatory Policies Act of 1978 (such qualifying facilities,
"QFs") and exempt wholesale generators ("EWGs") and foreign utility companies
("FUCOs") within the meaning of the Act, as well as to developers, owners and
operators of non-associate district thermal energy systems, i.e., energy systems
consisting of central production plants that distribute steam, hot water and/or
chilled water through underground pipes to customer buildings. In particular,
Asset Management Services will include development; engineering; design;
construction and construction management; pre-operational start-up testing and
commissioning; long-term operations and maintenance, including system overhaul;
load control and network control; fuel procurement, transportation and storage;
fly-ash and other waste disposal; management and supervision; technical,
training and administrative support; and any other managerial or technical
services required to operate, maintain and manage energy-related assets
physically associated with customer premises or to operate, maintain and manage
municipality- or electric cooperative-owned utility systems, IPPs and district
thermal energy systems. Without obtaining the prior approval of the Commission
in a separate filing, Solutions will not undertake any Asset Management Service
if, as a result thereof, Solutions would become a "public utility company"
within the meaning of the Act.
Third, Solutions proposes to market to nonassociates, primarily
commercial/industrial customers, general technical consulting services with
respect to energy-related matters ("Consulting Services"). Specifically, the
Consulting Services will include technical and consulting services involving
technology assessments, power factor correction and harmonics mitigation
analysis, commercialization of electro-technologies, meter reading and repair,
rate schedule analysis and design, environmental services, engineering services,
billing services including conjunctive billing, summary billing for customers
with multiple locations and bill auditing, risk management services,
communications systems, information systems/data processing, system planning,
strategic planning, finance, feasibility studies, and other similar or related
services.
Fourth, applicants state that Solutions would acquire, own and operate
"Projects," i.e.: (a) QFs, (b) district thermal energy systems, and (c)
potentially other energy-related systems, together in each case with ancillary
facilities and equipment, including thermal energy utilization facilities, fuel
procurement, transportation and storage facilities, waste disposal equipment,
and similar assets or equipment. Applicants request authorization in the
instant proceeding for Solutions to conduct preliminary Project development
activities ("Project Development"). Such activities will include Project due
diligence and design review; market studies; site inspection; preparation of bid
proposals (including posting of bid bonds, cash deposits and the like);
applications for required permits or regulatory approvals; acquisitions of site
options and options on other necessary rights; negotiation and execution of
contractual commitments with owners of existing facilities, equipment vendors,
construction firms, power purchasers, thermal "host" users, fuel suppliers and
other Project contractors; negotiation of financing commitments with lenders and
equity co-investors; and such other preliminary development activities as may be
required or prudent in preparation for the acquisition, operation or financing
of a Project. Applicants state that Solutions will not acquire, directly or
indirectly, interests in any Projects without obtaining the prior approval of
the Commission in a separate filing, unless otherwise exempted under the Act.
Fifth, Solutions would market energy-related services and products
("Consumer Services") exclusively to residential and small commercial customers:
(1) Service lines repair/extended warranties - repair of underground utility
service lines owned by and located on the customer's property and extended
service warranties covering the cost of such repairs; (2) Surge protection -
meter-based and plug-in equipment to protect customer household appliances and
electronic equipment from power surges, including due to lightning; (3)
Appliances merchandising/repair/extended warranties - marketing of HVAC and
other energy-related household appliances and, in connection therewith or
separately, marketing of appliance inspection and repair services and extended
service warranties covering the cost of repairing customers' appliances; (4)
Utility bill insurance - utility bill payment protection, for a monthly fee for
a specified number of months, in the event the customer becomes unemployed,
disabled or dies; (5) Gas pilot lighting - lighting of pilot lights for
customers; and (6) other similar or related services.
Sixth, Applicants propose that Solutions furnish its own or broker
nonassociate third-party financing to commercial/industrial and residential
customers, both to support sales to customers of goods and services included
within Energy Management Services, Asset Management Services and Consumer
Services and in connection with sales of energy-related equipment where the
customer is not otherwise purchasing goods and services promoted by Solutions.
Customer financing will take the form of direct loans, installment purchases,
operating or finance lease arrangements (including sublease arrangements) and
loan guarantees. Interest on loans and imputed interest on lease payments will
be based on prevailing market rates. The obligations will have terms of one to
thirty years and will be secured or unsecured. Solutions also may assign
obligations acquired from customers to banks, leasing companies or other
financial institutions, with or without recourse.
Applicants request authorization for Solutions to undertake the proposed
business activities on its own, either directly or through one or more
wholly-owned direct or indirect subsidiaries of Solutions, formed as
corporations, partnerships, limited liability companies or other legal entities.
Applicants state that the decision in particular cases whether to conduct
specific business activities directly through Solutions or indirectly through
one or more wholly-owned subsidiaries of Solutions will hinge on applicable
business, legal, tax, accounting and strategic considerations. In addition, to
mitigate risk or access skills and relationships that Solutions may require,
Applicants expect that Solutions will pursue proposed business activities in
certain instances through alliances with nonassociates. Certain of these
alliances may be relatively informal, not involving the formation of any new
entities. Others may encompass formal joint ventures, possibly involving the
formation of one or more wholly- or partly-owned subsidiaries of Solutions.
Applicants also request authorization for Solutions to form any such joint
venture subsidiaries, as in the preceding case solely for the purpose of
implementing Solutions' proposed business activities. Applicants state that
they do not at this time request authorization for Solutions to acquire
securities of any third-party with whom it may ally.
3. Incorporation; Guaranties
In connection with its incorporation and initial capitalization under
Delaware law, Solutions is expected to issue and sell up to 100 shares of no par
value common stock to Investments for nominal cash consideration (not to exceed
$1,000).
Cinergy and Investments do not expect to invest more than $100 million in
Solutions (including any subsidiaries of Solutions) through December 31, 2001,
either by acquiring securities of Solutions or making cash capital contributions
to Solutions, in exempt transactions pursuant to Rules 52 and 45(b)(4).
Cinergy and Investments request authority through December 31, 2001 to
guarantee debt and other obligations of Solutions (including any subsidiaries of
Solutions) incurred in the ordinary course of business in a maximum principal
amount at any one time outstanding not to exceed $250 million. Debt financing
of Solutions proposed to be guaranteed by Cinergy or Investments (a) will not
exceed a term of 15 years, and (b) will bear interest (1) at a floating rate not
in excess of 200 basis points over the prime rate, London Interbank Offered Rate
or other appropriate index in effect from time to time, or (2) t at a fixed rate
not in excess of 250 basis points above the yield at the time of issuance of
U.S. Treasury obligations of a comparable maturity. Any commitment and other
fees on the debt will not exceed 75 basis points per annum on the total amount
of debt financing. Other obligations incurred by Solutions in the ordinary
course of its business as to which Cinergy and Investments propose to guarantee
or otherwise act as indemnitor or surety are expected often to involve
Solutions' obligation to perform under contracts with customers to which it is a
party. "Guarantees" issued by Cinergy or Investments in these circumstances may
take the form of procuring bid bonds and the like or guaranteeing Solutions'
performance or other similar direct or indirect guarantees of Solutions'
contractual or other obligations. Applicants anticipate that these parent
company "backstops" will be required to establish Solutions' financial
credibility to certain customers as a prerequisite to obtaining the customer's
business and/or on the most favorable terms.
Cinergy states that it will not seek recovery through higher rates to
customers of Cinergy's utility subsidiaries in order to compensate it or
Investments for any potential losses they may sustain, or inadequate returns
they may realize, resulting from investments in Solutions or guarantees of
Solutions' debt or other obligations.
4. Staffing; Service Arrangements
Initially, Solutions is expected to have limited full-time staff, primarily
executive, management, and administrative personnel. Applicants expect that
Solutions will make extensive use of outside contractors and consultants in
performing its proposed business activities.
Applicants propose that Cinergy Services render an expanded range of support
services to Solutions (including any subsidiaries thereof) and the other Cinergy
system nonutility companies. Pursuant to the NUSA, which was authorized by the
Commission in its 1994 order approving the merger that created Cinergy and
certain ancillary transactions including the formation of Cinergy Services,/1/
Cinergy Services may provide certain services, primarily administrative and
management-type services, to Cinergy's nonutility subsidiaries, priced at cost
for the domestic nonutility subsidiaries, as determined pursuant to Rule 90
under the Act, and at fair market value for certain foreign subsidiaries of
Cinergy pursuant to Section 13(b)(1) and Rule 83, and otherwise in accordance
with applicable rules and regulations promulgated by the Commission pursuant to
Section 13(b) of the Act. Specifically, the services that Cinergy Services may
currently render to its nonutility associates/2/ are as follows: (1)
information systems, (2) transportation, (3) human resources, (4) facilities,
(5) accounting, (6) public affairs, (7) legal, (8) finance, (9) internal audit,
(10) investor relations, (11) planning and (12) executive. Under the Cinergy
system Utility Service Agreement ("USA"), also approved in the Commission's 1994
merger order and pursuant to which Cinergy Services renders services at cost to
Cinergy's utility subsidiaries,/3/ a much broader range of services are made
available. In addition to the same 12 services made available to the client
companies under the NUSA, the following additional services may be provided by
Cinergy Services to the utility subsidiaries: (1) electric system maintenance,
(2) marketing and customer relations, (3) electric transmission and distribution
engineering and construction, (4) power engineering and construction, (5)
materials management, (6) power planning, (7) rates, (8) rights of way, (9)
environmental affairs and (10) fuels./4/
Applicants request authorization for Cinergy Services to provide certain
additional services under the NUSA, priced in accordance with the Commission's
1994 merger order and otherwise rendered in conformance with Section 13(b) of
the Act and the applicable rules and regulations thereunder. Applicants state
that the proposed additional services are in general very similar to those
additional services under the USA (enumerated above) that are not currently
available under the NUSA and that the proposed additional services are intended
to accommodate the scope of Solutions' proposed business activities as well as
that of the Cinergy system's other nonutility subsidiaries. Specifically, the
proposed additional services (collectively, "Additional NUSA Services") are as
follows: (1) energy-related facility maintenance, (2) engineering and
construction, (3) marketing and customer relations, (4) materials management,
(5) fuels, (6) environmental affairs, (7) rates, (8) rights of way and (9)
energy-related system operations./5/ Applicants state that the Additional NUSA
Services would be implemented by means of a restatement of existing Appendix A
to the NUSA (which lists and describes the currently available services under
the NUSA). Applicants do not otherwise in any respect propose to amend the
NUSA.
As noted, applicants state that the Additional NUSA Services are roughly
parallel to the additional functions already made available to Cinergy's utility
subsidiaries under the USA. Consequently, applicants do not anticipate a need
to add any new employees to Cinergy Services solely to implement the Additional
NUSA Services. Applicants represent that the provision of the Additional NUSA
Services will not impair Cinergy Services' ability to provide the full range of
services that it currently provides to the system utility companies under the
USA. All costs associated with Cinergy Services personnel rendering any
Additional NUSA Services (including compensation, benefits and overhead) will be
fully reimbursed by Solutions and other system companies that request and
receive such services in accordance with Section 13(b) of the Act and the
applicable rules and regulations thereunder, including Rules 90 and 91.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
<PAGE>
ENDNOTES
/1/ Rel. No. 35-26146, October 21, 1994.
/2/ Cinergy states that it has relatively few active nonutility subsidiaries.
In 1995 and in the first nine months of 1996, Cinergy states that it has
disposed of a number of nonutility subsidiaries in existence at the time of the
1994 merger through asset or stock sales to nonassociates. Cinergy's currently
active domestic nonutility subsidiaries are (1) TriState Improvement Company,
which is engaged in the business of acquiring and holding real property for
substations, electric and gas rights of way and other functions connected to the
utility business of The Cincinnati Gas & Electric Company ("CG&E") and its
utility subsidiaries, The Union Light, Heat and Power Company, Lawrenceburg Gas
Company, Miami Power Corporation and The West Harrison Gas and Electric Company;
(2) KO Transmission Company, which holds an interest in an interstate natural
gas pipeline, acquired in the summer of 1996 pursuant to a settlement agreement
between CG&E and the Columbia Gas System; (3) Cinergy Resources, Inc. (formerly
CG&E Resource Marketing, Inc.), which is engaged in the gas marketing business;
(4) Cinergy Technology, Inc. (formerly PSI Environmental Corp.), which pursues
investment opportunities in technology and other energy-related areas and
engages in fuel brokering; and (5) Cinergy Cooling Corp., a company engaged in
the preliminary stages of a district thermal energy business in downtown
Cincinnati (see Rel. No. 35-26474, February 20, 1996). Cinergy has interests in
two active foreign subsidiaries, each a FUCO: Midlands Electricity plc and PSI
Energy Argentina, Inc.
/3/ Cinergy's utility subsidiaries are CG&E and its utility subsidiaries, which
among other things provide retail gas and electric service to customers in
portions of Ohio, Kentucky and Indiana, and PSI Energy, Inc., which among other
things provides retail electric service to portions of Indiana.
/4/ In addition, the USA expands the transportation function (which is also int
he NUSA) to include utility meter work.
/5/ In addition, the existing transportation function in the NUSA would be
broadened to include meter work.
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
CINERGY CORP.
CONSOLIDATED
AS OF JUNE 30, 1996
(Unaudited)
Pages 1 through 6
<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 7,350 16,410
Other - net (11,052) - (11,052)
8,832 7,350 16,182
INCOME BEFORE INTEREST AND OTHER CHARGES 594,621 7,350 601,971
INTEREST AND OTHER CHARGES
Interest on long-term debt 204,567 - 204,567
Other interest 17,890 21,000 38,890
Allowance for borrowed funds used
during construction (6,548) - (6,548)
Preferred dividend requirements of
subsidiaries 26,985 - 26,985
242,894 21,000 263,894
NET INCOME $351,727 ($13,650) $338,077
AVERAGE COMMON SHARES OUTSTANDING 157,448 157,448
EARNINGS PER COMMON SHARE $2.23 $2.15
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 - 61,326
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 - 522,184
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 188,979 350,000 538,979
1,666,984 350,000 2,016,984
$8,431,388 $350,000 $8,781,388
</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 (13,650) 967,353
Cumulative foreign translation adjustment (567) - (567)
Total common stock equity 2,576,933 (13,650) 2,563,283
CUMULATIVE PREFERRED STOCK OF SUBSIDIARIES
Not subject to mandatory redemption 213,090 - 213,090
Subject to mandatory redemption 160,000 - 160,000
LONG-TERM DEBT 2,523,300 - 2,523,300
Total capitalization 5,473,323 (13,650) 5,459,673
CURRENT LIABILITIES
Long-term debt due within one year 50,400 - 50,400
Notes payable 573,500 350,000 923,500
Accounts payable 257,952 - 257,952
Litigation settlement 80,000 - 80,000
Accrued taxes 245,277 (7,350) 237,927
Accrued interest 57,743 21,000 78,743
Other 57,785 - 57,785
1,322,657 363,650 1,686,307
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 $350,000 $8,781,388
</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 (13,650) 338,077
Dividends on common stock (270,559) - (270,559)
Other (259) - (259)
BALANCE JUNE 30, 1996 $981,003 ($13,650) $967,353
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
Pro Forma Consolidated Journal Entries to Give Effect to Cinergy
Corp.'s Proposed Investment of $100 Million in a Wholly-Owned
Nonutility Subsidiary of Cinergy Investments, Inc., Cinergy Solutions, Inc.*
<S> <C> <C>
Entry No. 1
Other Assets **
Notes Payable $350,000,000
To record issuance of notes payable by Cinergy Corp. ($100,000,000) and Cinergy Solutions, Inc.
($250,000,000) and to record corresponding consolidated assets of Cinergy Solutions, Inc.
Entry No. 2
Interest expense **
Accrued interest $21,000,000
To record interest on notes payable issued to finance/purchase investment in Cinergy Solutions, Inc.
($350,000,000 @ 6.0%)
Entry No. 3
Accrued taxes **
Income taxes $7,350,000
To record reduction in income tax expense due to interest on notes payable issued to finance/purchas
investment in Cinergy Solutions, Inc. ($21,000,000 @ 35%)
</TABLE>
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
CINERGY CORP.
AS OF JUNE 30, 1996
(Unaudited)
Pages 1 through 5
<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 ($9,750) $345,707
Income taxes (credit) 2,004 2,100 $4,104
Other - net (1,870) - ($1,870)
355,591 (7,650) $347,941
INCOME BEFORE INTEREST AND OTHER CHARGES 355,591 (7,650) $347,941
INTEREST 3,864 6,000 $9,864
NET INCOME $351,727 ($13,650) $338,077
AVERAGE COMMON SHARES OUTSTANDING 157,448 157,448
EARNINGS PER COMMON SHARE $2.23 $2.15
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)
ASSETS
<S> <C> <C> <C>
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 90,250 3,135,894
Other 1,655 - 1,655
3,047,299 90,250 3,137,549
$3,063,648 $90,250 $3,153,898
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 (13,650) 967,353
Cumulative foreign translation adjustment (567) - (567)
Total common stock equity 2,576,933 (13,650) 2,563,283
LONG-TERM DEBT - - -
Total capitalization 2,576,933 (13,650) 2,563,283
CURRENT LIABILITIES
Notes payable 474,000 100,000 574,000
Accounts payable 234 - 234
Accounts payable to affiliated companies 12,741 - 12,741
Accrued taxes (1,046) (2,100) (3,146)
Accrued interest 1,043 6,000 7,043
486,972 103,900 590,872
OTHER LIABILITIES
Deferred income taxes (258) - (258)
Other 1 - 1
(257) - (257)
$3,063,648 $90,250 $3,153,898
</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 (13,650) 338,077
Dividends on common stock (270,559) - (270,559)
Other (259) - (259)
BALANCE JUNE 30, 1996 $981,003 ($13,650) $967,353
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
Pro Forma Journal Entries to Give Effect to Cinergy Corp.'s
Proposed Investment of $100 Million in a Wholly-Owned Nonutility
Subsidiary of Cinergy Investments, Inc., Cinergy Solutions, Inc.*
<S> <C> <C>
Entry No. 1
Investment in subsidiaries **
Notes Payable $100,000,000
To record issuance of notes payable used to finance investment in Cinergy Solutions, Inc.
and to record corresponding investment in Cinergy Solutions, Inc.
Entry No. 2
Interest expense **
Accrued Interest $6,000,000
To record interest on notes payable issued to purchase investment in Cinergy Solutions, Inc.
($100,000,000 @ 6.0%)
Entry No. 3
Accrued taxes **
Income taxes $2,100,000
To record reduction in income tax expense due to interest on notes payable issued to purchase
investment in Cinergy Solutions, Inc. ($6,000,000 @ 35%)
Entry No. 4
Equity in earnings of subsidiaries **
Investment in subsidiaries $9,750,000
To record the net effect of Cinergy Investment Inc.'s pro forma journal entries involving interest
and income tax expense on Cinergy Corporation
</TABLE>
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
CINERGY INVESTMENTS, INC.
AS OF JUNE 30, 1996
(Unaudited)
Pages 1 through 5
<PAGE>
<TABLE>
<CAPTION>
CINERGY INVESTMENTS, INC.
PRO FORMA STATEMENT OF INCOME
TWELVE MONTHS ENDED JUNE 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
OTHER INCOME AND EXPENSES - NET
Income taxes (credit) $2,132 $5,250 $7,382
Other - net (647) - (647)
1,485 5,250 6,735
INCOME BEFORE INTEREST AND OTHER CHARGES 1,485 5,250 6,735
INTEREST 961 15,000 15,961
NET INCOME $524 ($9,750) ($9,226)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY INVESTMENTS, INC.
PRO FORMA BALANCE SHEET
AT JUNE 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS
Cash and temporary cash investments $13,533 - $13,533
Accounts receivable 3,716 - 3,716
Accounts receivable from affiliated
companies 21,482 - 21,482
Materials, supplies, and fuel - at average cost
Other materials and supplies 233 - 233
Prepayments and other 496 - 496
39,460 - 39,460
OTHER ASSETS
Investment in Avon Energy Holdings 457,567 - 457,567
Other (5,504) 350,000 344,496
452,063 350,000 802,063
$491,523 $350,000 $841,523
CAPITALIZATION AND LIABILITIES
COMMON STOCK EQUITY
Common stock - - -
Paid-in capital 457,887 100,000 557,887
Retained earnings 8,495 (9,750) (1,255)
Total common stock equity 466,382 90,250 556,632
LONG-TERM DEBT - - -
Total capitalization 466,382 90,250 556,632
CURRENT LIABILITIES
Notes Payable - 250,000 250,000
Accounts payable 2,234 - 2,234
Accounts payable to affiliated companies 28,730 - 28,730
Accrued taxes (807) (5,250) (6,057)
Accrued interest - 15,000 15,000
30,157 259,750 289,907
OTHER LIABILITIES
Deferred income taxes (5,562) - (5,562)
Other 546 - 546
(5,016) - (5,016)
$491,523 $350,000 $841,523
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY INVESTMENTS, INC.
PRO FORMA STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED JUNE 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
BALANCE JULY 1, 1995 ($2,412) - ($2,412)
Net income 524 (9,750) (9,226)
Cumulative foreign currency translation adjust 10,383 - 10,383
BALANCE JUNE 30, 1996 $8,495 ($9,750) ($1,255)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY INVESTMENTS, INC.
Pro Forma Consolidated Journal Entries to Give Effect to Cinergy
Corp.'s Proposed Investment of $100 Million in a Wholly-Owned
Nonutility Subsidiary of Cinergy Investments, Inc., Cinergy Solutions, Inc.*
<S> <C> <C>
Entry No. 1
Other Assets **
Paid -In Capital $100,000,000
To record capital contribution by Cinergy Corp. used to finance investment in Cinergy Solutions, Inc
and to record corresponding consolidated assets of Cinergy Solutions, Inc.
Entry No. 2
Other Assets **
Notes Payable $250,000,000
To record issuance of notes payable by Cinergy Solutions, Inc. and to record corresponding
consolidated assets of Cinergy Solutions, Inc.
Entry No. 3
Interest expense **
Accrued interest $15,000,000
To record interest on notes payable issued by Cinergy Solutions, Inc.
($250,000,000 @ 6.0%)
Entry No. 4
Accrued taxes **
Income taxes $5,250,000
To record reduction in income tax expense due to interest on notes payable issued by
Cinergy Solutions, Inc. ($15,000,000 @ 35%)
</TABLE>
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
CINERGY SERVICES, INC.
AS OF JUNE 30, 1996
(Unaudited)
Pages 1 through 6
<PAGE>
<TABLE>
<CAPTION>
CINERGY SERVICES, INC.
PRO FORMA STATEMENT OF INCOME
TWELVE MONTHS ENDED JUNE 30, 1996
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES
Electric $469,355 - $469,355
Gas - - -
469,355 - 469,355
OPERATING EXPENSES
Other operation 458,736 - 458,736
Depreciation 98 - 98
Taxes
Federal and state income 624 - 624
State, local and other 10,651 - 10,651
470,109 - 470,109
OPERATING INCOME (754) - (754)
OTHER INCOME AND EXPENSES - NET
Other - net (18) - (18)
(18) - (18)
INCOME BEFORE INTEREST AND OTHER CHARGES (772) - (772)
INTEREST AND OTHER CHARGES
Other interest 219 - 219
219 - 219
NET INCOME ($991) - ($991)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY SERVICES, INC.
PRO FORMA 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 - - -
Gas - - -
Common 1,272 - 1,272
1,272 - 1,272
Accumulated depreciation 94 - 94
1,178 - 1,178
Construction work in progress 709 - 709
Total utility plant 1,887 - 1,887
CURRENT ASSETS
Cash and temporary cash investments 593 - 593
Accounts receivable - net 1,329 - 1,329
Accounts receivable from affiliated companies 19,566 - 19,566
21,488 - 21,488
OTHER ASSETS
Other 377 - 377
377 - 377
$23,752 - $23,752
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY SERVICES, INC.
PRO FORMA 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 - - -
Paid-in capital - - -
Retained earnings (1,044) - (1,044)
Total common stock equity (1,044) - (1,044)
CURRENT LIABILITIES
Notes payable to associated companies 17,333 - 17,333
Accounts payable 6,381 - 6,381
Accrued taxes 1,903 - 1,903
25,617 - 25,617
OTHER LIABILITIES
Deferred income taxes (1,278) - (1,278)
Other 457 - 457
(821) - (821)
$23,752 - $23,752
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY SERVICES, INC.
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 ($53) - ($53)
Net income (991) - (991)
BALANCE JUNE 30, 1996 ($1,044) - ($1,044)
</TABLE>
<PAGE>
CINERGY SERVICES, INC.
Pro Forma Consolidated Journal Entries to Give Effect to Cinergy
Corp.'s Proposed Investment of $100 Million in a Wholly-Owned
Nonutility Subsidiary of Cinergy Investments, Inc., Cinergy Solutions, Inc.*
<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> 0 0
<TOTAL-CURRENT-ASSETS> 522,184 522,184
<TOTAL-DEFERRED-CHARGES> 1,020,438 1,020,438
<OTHER-ASSETS> 646,546 996,546
<TOTAL-ASSETS> 8,431,388 8,781,388
<COMMON> 1,577 1,577
<CAPITAL-SURPLUS-PAID-IN> 1,594,920 1,594,920
<RETAINED-EARNINGS> 980,436 966,786
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,576,933 2,563,283
160,000 160,000
213,090 213,090
<LONG-TERM-DEBT-NET> 2,523,300 2,523,300
<SHORT-TERM-NOTES> 573,500 923,500
<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 2,347,815
<TOT-CAPITALIZATION-AND-LIAB> 8,431,388 8,781,388
<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 16,182
<INCOME-BEFORE-INTEREST-EXPEN> 594,621 601,971
<TOTAL-INTEREST-EXPENSE> 242,894 263,894
<NET-INCOME> 351,727 338,077
26,985 26,985
<EARNINGS-AVAILABLE-FOR-COMM> 324,742 311,092
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 204,567 204,567
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 2.23 2.15
<EPS-DILUTED> 2.23 2.15
<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> 0 0
<TOTAL-CURRENT-ASSETS> 16,349 16,349
<TOTAL-DEFERRED-CHARGES> 0 0
<OTHER-ASSETS> 3,047,299 3,137,549
<TOTAL-ASSETS> 3,063,648 3,153,898
<COMMON> 1,577 1,577
<CAPITAL-SURPLUS-PAID-IN> 1,594,920 1,594,920
<RETAINED-EARNINGS> 980,436 966,786
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,576,933 2,563,283
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 474,000 574,000
<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 16,615
<TOT-CAPITALIZATION-AND-LIAB> 3,063,648 3,153,898
<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> 355,591 347,941
<INCOME-BEFORE-INTEREST-EXPEN> 355,591 347,941
<TOTAL-INTEREST-EXPENSE> 3,864 9,864
<NET-INCOME> 351,727 338,077
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 351,727 338,077
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 2 2
<EPS-DILUTED> 2 2
<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> 13
<NAME> CINERGY INVESTMENTS, 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> 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> 0 0
<TOTAL-CURRENT-ASSETS> 39,460 39,460
<TOTAL-DEFERRED-CHARGES> 0 0
<OTHER-ASSETS> 452,063 802,063
<TOTAL-ASSETS> 491,523 841,523
<COMMON> 0 0
<CAPITAL-SURPLUS-PAID-IN> 457,887 557,887
<RETAINED-EARNINGS> 8,495 (1,255)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 466,382 556,632
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 0 250,000
<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> 25,141 34,891
<TOT-CAPITALIZATION-AND-LIAB> 491,523 841,523
<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> 1,485 6,735
<INCOME-BEFORE-INTEREST-EXPEN> 1,485 6,735
<TOTAL-INTEREST-EXPENSE> 961 15,961
<NET-INCOME> 524 (9,226)
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 524 (9,226)
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
<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> 2
<NAME> CINERGY SERVICES, INC.
<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> 1,887 1,887
<OTHER-PROPERTY-AND-INVEST> 0 0
<TOTAL-CURRENT-ASSETS> 21,488 21,488
<TOTAL-DEFERRED-CHARGES> 0 0
<OTHER-ASSETS> 377 377
<TOTAL-ASSETS> 23,752 23,752
<COMMON> 0 0
<CAPITAL-SURPLUS-PAID-IN> 0 0
<RETAINED-EARNINGS> (1,044) (1,044)
<TOTAL-COMMON-STOCKHOLDERS-EQ> (1,044) (1,044)
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 17,333 17,333
<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> 7,463 7,463
<TOT-CAPITALIZATION-AND-LIAB> 23,752 23,752
<GROSS-OPERATING-REVENUE> 469,355 469,355
<INCOME-TAX-EXPENSE> 0 0
<OTHER-OPERATING-EXPENSES> 470,109 470,109
<TOTAL-OPERATING-EXPENSES> 470,109 470,109
<OPERATING-INCOME-LOSS> (754) (754)
<OTHER-INCOME-NET> (18) (18)
<INCOME-BEFORE-INTEREST-EXPEN> (772) (772)
<TOTAL-INTEREST-EXPENSE> 219 219
<NET-INCOME> (991) (991)
0 0
<EARNINGS-AVAILABLE-FOR-COMM> (991) (991)
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
