File No. 70-_______
SECURITIES AND EXCHANGE COMMISSION
450 FIFTH STREET, N.W.
WASHINGTON, D.C. 20549
__________________________________________
FORM U-1 APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________
Cinergy Corp.
Cinergy Investments, Inc.
Cinergy Global Resources, 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
Vice President and 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 T. Baker, Jr.
Associate General Counsel Thelen, Reid & Priest LLP
Cinergy Corp. 40 West 57th Street
(address above) New York, New York 10019<PAGE>
Item 1. Description of Proposed Transactions
Cinergy Corp. ("Cinergy"), a Delaware corporation and registered
holding company under the Public Utility Holding Company Act of 1935, as
amended (the "Act"), and its direct wholly-owned nonutility subsidiaries,
Cinergy Investments, Inc., a Delaware corporation ("Cinergy Investments"),
and Cinergy Global Resources, Inc., a Delaware corporation ("Cinergy Global
Resources"), propose to establish one or more special-purpose subsidiaries
from time to time through December 31, 2003 ("Authorization Period") to
hold Cinergy's direct or indirect interests in any or all of Cinergy's
existing and future nonutility businesses (excluding certain existing
nonutility interests held by Cinergy's utility subsidiaries). Applicants
also seek authority for various related transactions over the same period.
A. Background
By order dated September 21, 1995 as supplemented by order dated
March 8, 1996, HCAR Nos. 26376 and 26486 (collectively, "Project Parent
Order"), Cinergy and Cinergy Investments were granted authority, from time
to time through December 31, 1999, (i) to acquire directly or indirectly in
one or more transactions the securities of one or more special-purpose
subsidiaries organized to engage directly or indirectly, and exclusively,
in the business of acquiring, owning and holding the securities of, and/or
providing services to, one or more foreign utility companies ("FUCOs") and
exempt wholesale generators ("EWGs" and, together with FUCOs, "Exempt
Projects"), and (ii) to invest in and issue guarantees in respect of such
special-purpose subsidiaries, provided that Cinergy's total investment
therein together with any investments in Exempt Projects did not exceed a
specified ceiling, recently increased to 100% of Cinergy's consolidated
retained earnings (see order dated March 23, 1998 in File No. 70-9011, HCAR
No. 26848 ("100% Order")).
Under the Project Parent Order, then, Cinergy has authority to form
special-purpose subsidiaries to acquire and hold interests in certain
nonutility subsidiaries -EWGs and FUCOs exclusively. The Project Parent
Order predates both the Telecommunications Act of 1996 - including the
provisions thereof amending the Act with respect to "exempt
telecommunications companies" ("ETCs") - and the Commission's adoption of
rule 58 in 1997. By virtue of these developments, any registered holding
company (1) may establish special-purpose subsidiaries without prior
Commission approval to acquire and hold interests exclusively in one or
more ETCs or exclusively in one or more "energy-related companies" (subject
to the aggregate investment limitation of rule 58), but (2) may not,
without prior Commission approval, form special-purpose subsidiaries to
acquire and hold interests in both ETCs and rule 58 companies (much less
ETCs, rule 58 companies and Exempt Projects) - even though in each case the
underlying nonutility companies may be formed or acquired without prior
Commission authorization and are otherwise entirely or substantially exempt
from Commission regulation.
The primary purpose of this filing is to expand the scope of the
authorization granted in the Project Parent Order so that, among other
things, Cinergy may organize special-purpose subsidiaries not merely to
hold interests in Exempt Projects but also to hold interests in any
combination of Exempt Projects, ETCs, rule 58 companies and/or nonutility
subsidiaries formed pursuant to specific prior or future Commission orders
(such as Cinergy Solutions, Inc.). For example, Cinergy Global Resources,
which holds Cinergy's international nonutility businesses, may determine in
a given case, based on business and other considerations, to establish a
special-purpose subsidiary exclusively to acquire and hold securities of
one or more foreign ETCs and FUCOs; likewise, Cinergy Investments, which
holds Cinergy's domestic nonutility businesses, may wish to establish a
special-purpose subsidiary exclusively to acquire and hold securities of
one or more rule 58 companies and domestic EWGs. Although in each of these
examples the underlying nonutility businesses are completely or largely
exempt from Commission jurisdiction, formation of a single intermediate
subsidiary exclusively to hold these different types of exempt businesses
requires prior Commission approval.
In more basic terms, the proposed transactions are intended to give
Cinergy greater flexibility in holding and managing its exempt and
authorized nonutility businesses, so that Cinergy may operate these
businesses in the most efficient manner. In that regard, the benefits to
Cinergy from using intermediate subsidiaries to hold its nonutility
businesses - such as optimization of tax and accounting efficiencies and
greater insulation of Cinergy and its utility subsidiaries from potential
direct losses from these investments - apply no less when the intermediate
subsidiary holds securities of a variety of different types of nonutility
companies (ETCs, rule 58 companies, Exempt Projects, etc.) than when it
holds securities of a single type./1/
The Commission has granted similar authority to The Southern
Company./2/
B. Overview of Requested Authorization
Specifically, to the extent not otherwise exempt under the Act,
Applicants request authority over the Authorization Period to organize and
hold securities of one or more special-purpose subsidiaries (each an
"Intermediate Parent") to be formed for the exclusive purpose of acquiring,
owning and holding, directly or indirectly (including through one or more
additional Intermediate Parents), securities of or interests in, and/or
providing services to, any or all of Cinergy's existing and future
nonutility associate companies (other than existing nonutility interests
held by Cinergy's utility subsidiaries), including Cinergy's interests in:
1. existing and future EWGs and FUCOs;/3/
2. special-purpose subsidiaries formed pursuant to the Project
Parent Order prior to the date of the Commission's order in
this proceeding (hereinafter "EWG/FUCO Project Parents");/4/
3. existing and future ETCs;/5/
4. existing and future rule 58 companies;/6/and/or
5. other nonutility companies (i.e., not falling within any of
the preceding categories "1" through "4"), namely, nonutility
companies in which Cinergy (i) holds an interest pursuant to
prior orders of the Commission issued in separate
proceedings,/7/or (ii) hereafter acquires (or is authorized to
retain/8/) an interest pursuant to one or more (a) orders of
the Commission issued in subsequent proceedings or (b)
exemptions from the requirement of prior Commission approval
subsequently adopted under the Act (collectively, "Authorized
Companies" and, together with the companies included in the
preceding categories "1" through "4," the "Nonutility
Companies").
Authorization is also requested for various transactions ancillary
to the formation of Intermediate Parents, including (i) issuance by Cinergy
of guarantees in respect of obligations of Intermediate Parents and
Nonutility Companies (and certain other system companies), and (ii)
declaration and payment of dividends out of capital or unearned surplus by
Intermediate Parents and Nonutility Companies, all as described below.
The authorization requested in this proceeding is intended to
supersede in its entirety the authorization granted by the Project Parent
Order, as well as certain other Commission orders now in effect, in whole
or in part, as more particularly described below./9/
Finally, a small number of Cinergy's nonutility interests are held
by Cinergy's principal utility subsidiaries, The Cincinnati Gas & Electric
Company ("CG&E") and PSI Energy, Inc. ("PSI"). These interests are
excluded from the definition of "Nonutility Companies" set forth above and
therefore Cinergy is not proposing that Intermediate Parents would acquire
and hold securities of these entities. (However, the three CG&E/PSI
nonutility subsidiaries - KO Transmission Company ("KO"), Tri-State
Improvement Company ("Tri-State") and South Construction Company, Inc.
("South Construction") - are within the scope of the provisions of this
application concerning issuance by Cinergy of guarantees and payment of
dividends out of capital or unearned surplus.)
C. Existing Nonutility Subsidiaries of Cinergy
Cinergy is an electric and gas holding company, with five direct
wholly-owned subsidiaries (see exhibit H): (1) PSI, an Indiana corporation
and electric utility company that provides retail electric service in north
central, central and southern Indiana; (2) CG&E, an Ohio corporation and
electric and gas holding company and combination utility that (together
with its utility subsidiaries) provides retail gas and electric service in
the southwestern portion of Ohio and adjacent areas of Indiana and
Kentucky;/10/(3) Cinergy Services, Inc. ("Cinergy Services"), Cinergy's
service company subsidiary that provides a variety of support services to
Cinergy's utility and nonutility subsidiaries; (4) Cinergy Investments,
which holds the great majority of Cinergy's domestic nonutility businesses;
and (5) Cinergy Global Resources, formed in May 1998, which holds all of
Cinergy's international nonutility businesses. As used herein, "Cinergy
system" refers to Cinergy and all of its direct and indirect subsidiaries.
Cinergy was created in 1994 through the merger of CG&E and PSI's
then-parent company, PSI Resources, Inc. ("PSI Resources") each of which
prior to the merger was an exempt holding company. The Commission approved
the Cinergy merger on October 21, 1994 (HCAR No. 26146) ("Merger Order"),
reserving jurisdiction for three years over Cinergy's retention of CG&E's
gas business and the nonutility interests of CG&E and PSI Resources.
Cinergy registered under the Act on October 25, 1994. Cinergy has a
pending application in File No. 70-8427 ("Merger Docket") seeking an order
releasing the jurisdiction reserved in the Merger Order.
Except for certain nonutility subsidiaries held by CG&E and
PSI,/11/ all of Cinergy's nonutility subsidiaries are held by Cinergy
Investments or Cinergy Global Resources.
The following discussion excludes inactive subsidiaries in the
process of dissolution./12/
1. Cinergy Investments and its subsidiaries
Cinergy Investments has 16 direct and indirect subsidiaries:
Cinergy Cadence, Inc. and its subsidiary, Cadence Network LLC; Cinergy
Capital & Trading, Inc. and its subsidiary, CinCap IV, LLC; Cinergy
Communications, Inc.; Cinergy Engineering, Inc.; Cinergy-Ideon, Inc.;
Cinergy Resources, Inc.; Cinergy Solutions, Inc. and its subsidiaries;
Cinergy Supply Network, Inc.; Cinergy Technology, Inc.; and Enertech
Associates, Inc.
a. Cinergy-Cadence, Inc./ Cadence Network LLC
Cinergy-Cadence, Inc. holds Cinergy's one-third equity interest in
Cadence Network LLC, a Delaware limited liability company created in the
third quarter of 1997 in a joint venture of Cinergy, New Century Energies,
Inc. and Florida Progress Corporation. Cadence Network LLC markets energy
management services and products designed to lower energy costs for retail
commercial organizations that operate in multiple locations across the
United States. Both Cinergy-Cadence, Inc. and Cadence Network LLC are rule
58 companies. For further information see Cinergy's quarterly reports on
Form U-9C-3.
b. Cinergy Capital & Trading, Inc. / CinCap IV, Inc.
Cinergy Capital & Trading, Inc. and its wholly-owned subsidiary,
CinCap IV, Inc., are energy commodity marketers. For further information
on these rule 58 companies see Cinergy's quarterly reports on Form U-9C-3.
c. Cinergy Communications, Inc.
Cinergy Communications, Inc. is an ETC.
d. Cinergy Engineering, Inc.
Cinergy Engineering, Inc. markets engineering design and technical
support services in connection with energy-related projects and proposals.
For further information on this rule 58 company see Cinergy's quarterly
reports on Form U-9C-3.
e. Cinergy Resources, Inc.
Cinergy Resources, Inc. is also an energy commodity marketer. For
further information on this rule 58 company see Cinergy's quarterly reports
on Form U-9C-3.
f. Cinergy Solutions, Inc. and subsidiaries
Cinergy Solutions, Inc. ("Cinergy Solutions") was formed pursuant
to the Commission's order dated February 7, 1997 in File No. 70-8933 (HCAR
No. 26662) ("Cinergy Solutions Order") to market an array of energy-related
products and services and to develop, acquire, own and operate certain
energy-related projects. Cinergy Solutions currently markets certain
energy-related services directly, including a financing program for
Cinergy's utility customers to assist them in purchasing energy-related
products. For more information on the activities undertaken directly by
Cinergy Solutions, see the quarterly reports filed in File No. 70-8933.
Under the terminology set forth in Item 1.B, Cinergy Solutions is an
"Authorized Company."
Cinergy Solutions has four subsidiaries, three of whom are jointly
owned with affiliates of Trigen Energy Corporation ("Trigen"), a thermal
sciences company and owner and operator of district energy systems and
cogeneration facilities throughout North America. The three subsidiaries
jointly-owned with Trigen are Trigen-Cinergy Solutions LLC (formed to do
preliminary work in connection with potential investments in cogeneration
facilities and/or district energy facilities), Trigen-Cinergy Solutions of
Cincinnati LLC (which owns and operates a chilled water system providing
service in Cincinnati, Ohio, as successor by merger to Cinergy Cooling
Corp.) and Trigen-Cinergy Solutions of Illinois L.L.C. (formed to supply
cogeneration and other energy asset management services to an industrial
facility in Illinois). For further information on these three Rule 58
companies, see Cinergy's quarterly reports on Form U-9C-3.
Cinergy Solutions' remaining subsidiary, Cinergy Business
Solutions, Inc., was formed in April 1998 to market certain energy-related
asset management services (not involving cogeneration) to commercial and
industrial customers. Cinergy Business Solutions, Inc. is a rule 58
company.
g. Cinergy Supply Network, Inc.
Presently inactive, Cinergy Supply Network, Inc. was formed in
January 1998 to broker transmission and distribution materials and provide
related services to utilities, cooperatives and municipalities and to
market locating services for underground utility facilities. Cinergy
Supply Network, Inc. is a rule 58 company.
h. Cinergy Technology, Inc.
Cinergy Technology, Inc. ("Cinergy Technology") was formed in 1991
as a subsidiary of PSI Resources under the name PSI Environmental Corp.,
but was inactive until 1995, when its name was changed to Cinergy
Technology and it began pursuing business opportunities in the United
States relating primarily to the commercialization of electrotechnologies.
Cinergy Technology is also a party to several contracts entered
into prior to the Telecommunications Act of 1996 involving the provision of
telecommunications services and products in the Cincinnati area;
negotiations are underway to have these contracts assigned to Cinergy
Communications.
Cinergy has applied to the Commission in the Merger Docket for an
order authorizing Cinergy's retention of Cinergy Technology. When that
approval issues, Cinergy Technology will be an Authorized Company.
i. Enertech Associates, Inc.
Enertech Associates, Inc. ("Enertech") was formed as a subsidiary
of CG&E in 1992 to market utility management consulting services and to
pursue investment opportunities in energy-related areas, including
demand-side management services, consulting, energy and fuel brokering,
engineering services, construction and/or operation of generation,
cogeneration, independent power production facilities, and project
development.
In the fall of 1995, Enertech was named as a defendant in a lawsuit
brought by three of its former employees. In the first quarter of 1998 the
lawsuit was settled and dismissed by the court.
Since commencement of the lawsuit, Enertech has been and continues
to remain inactive. However, given the activities from which it would
derive substantially all its revenues were it to resume its pre-litigation
business operations, Enertech is a rule 58 company.
2. Cinergy Global Resources and its subsidiaries
Cinergy Global Resources has 37 direct and indirect subsidiaries.
The direct subsidiaries, all of whom are wholly-owned, are Cinergy Global
Power, Inc., Cinergy UK, Inc., PSI Argentina, Inc. and PSI Energy
Argentina, Inc.
Cinergy Global Resources was formed in May 1998 and became the
parent company of its subsidiary companies in the following restructuring
transaction consummated on May 15, 1998. Immediately prior to the
restructuring transaction, Cinergy Global Power and its subsidiaries,
Cinergy UK and its subsidiaries, and PSI Argentina and its subsidiary were
all direct or indirect subsidiaries, as applicable, of Cinergy Investments.
Also immediately prior to the restructuring transaction, PSI Energy
Argentina (including its 1% interest in Edesur, S.A.) was a direct
wholly-owned subsidiary of PSI. On May 15, 1998, Cinergy Investments and
PSI
declared special stock dividends to Cinergy of the entities described in
the preceding sentences. Simultaneously therewith, Cinergy made a capital
contribution of the stock in these international companies to the
newly-formed Cinergy Global Resources.
The business purpose of the restructuring was to establish a clear
separation of Cinergy's domestic and international nonutility businesses to
foster improved internal tracking and external marketing of these
businesses. The reorganization also better aligns the legal entities with
Cinergy's functional business units, among which is a separate
international business unit./13/
a. Cinergy Global Power, Inc. and subsidiaries
Cinergy Global Power, Inc. ("CGP") was formed under Delaware law in
1997 to act as an "umbrella" EWG/FUCO Project Parent with respect to
numerous existing, contemplated or potential investments in Exempt
Projects.
CGP holds all the outstanding share capital of Cinergy Global Power
Services Limited, a UK company formed in 1997 (formerly MPI International
Limited) ("CGPS"), that provides project development and administrative
services with respect to Cinergy's existing and contemplated investments in
Exempt Projects. CGPS is an EWG/FUCO Project Parent.
CGP also holds all the outstanding share capital of Midlands
Hydrocarbons (Bangladesh) Limited ("MHB"), a company formed under UK law
that holds gas field exploration and development rights and is engaged in
preliminary power project developmental work in Bangladesh. MHB has a
pending application before the FERC (Docket No. EG98-82-000) requesting
determination of EWG status.
CGP likewise holds all the outstanding share capital of Cinergy
Global Hydrocarbons Pakistan, a Cayman Islands company formed in 1997
(formerly Cinergy MPI I, Inc.), that is investigating a potential Exempt
Project investment in Pakistan. Cinergy Global Hydrocarbons Pakistan is an
EWG/FUCO Project Parent.
CGP also holds all the outstanding share capital of Watercorner
Investments B.V. ("Watercorner"), a Dutch company and an EWG/FUCO Project
Parent. Watercorner in turn owns all the outstanding share capital of MPII
(Zambia) B.V. ("MPII/ Zambia"), a Dutch company and an EWG/FUCO Project
Parent, which in turn owns approximately 40% of Copperbelt Energy
Corporation plc, a Zambian FUCO. Watercorner also owns all the outstanding
share capital of Cedarwood B.V., a Dutch company and an EWG/FUCO Project
Parent, which in turn owns 50% of the equity of both EOS PAX I S.L. and EOS
PAX IIa S.L., each of which is a Spanish FUCO. Finally, Watercorner owns
all the outstanding share capital of Midlands Power International B.V., a
Dutch company and an EWG/FUCO Project Parent, which has five subsidiaries:
Sociedad Construcciones y Representaciones Industriales S.A., a Spanish
FUCO ("Crisa") and four presently inactive EWG/FUCO Project Parents:
Vendresse Limited, an Isle of Man company, Midlands Power I B.V., Midlands
Power Europe B.V. and Midlands Power Asia B.V., each a Dutch company.
Midlands Power International B.V. owns 95% of the share capital of Crisa;
its other four subsidiaries are wholly-owned.
Finally, CGP also holds the outstanding share capital of MPI II,
Inc. through MPI XV, Inc., 14 presently inactive EWG/FUCO Project Parents
incorporated under Cayman Islands law in 1997 to participate in potential
future acquisitions of Exempt Projects.
b. Cinergy UK, Inc. and subsidiaries
Cinergy UK, Inc. ("CUK") was formed in 1996 under Delaware law to
acquire and hold Cinergy's 50% ownership interest in Midlands Electricity
plc, a UK FUCO ("MEB"). CUK holds its interest in MEB through two
intermediate subsidiaries organized under English law and jointly owned on
a 50-50 basis with GPU, Inc.: Avon Energy Partners Holdings and Avon
Energy Partners plc (collectively, "Avon companies"). CUK and the Avon
companies are EWG/FUCO Project Parents.
c. PSI Energy Argentina, Inc./ Edesur, S.A.
PSI Energy Argentina, Inc. holds Cinergy Global Resources' indirect
1% ownership interest in Edesur, S.A., a FUCO that provides electric
distribution service in Buenos Aires, Argentina. PSI Energy Argentina,
Inc. is an 8% shareholder in Distrilec Inversora, S.A., which owns 51% of
the stock of Edesur. The interests in Edesur and Distrilec were originally
acquired by PSI Resources in 1992. See HCAR No. 25570, July 2, 1992.
d. PSI Argentina, Inc. and Costanera Power Corp.
PSI Argentina, Inc. and its wholly-owned subsidiary Costanera Power
Corp. were formed in 1992 to acquire and hold PSI Resources' interest in
Central Costanera, S.A., an Argentine electric generation company. See
HCAR No. 25674, November 13, 1992. Both of these entities were certified
as EWGs but later decertified following the sale to a non-affiliate of
their interest in Central Costanera in the fall of 1995. These companies
remain in existence to acquire and hold potential additional Exempt Project
investments that Cinergy may make in Argentina or elsewhere in South
America.
D. Proposed Transactions
The following lists the specific transactions for which
authorization is sought herein. In each case authorization is sought to
engage in these transactions from time to time through the Authorization
Period.
1. Formation of Intermediate Parents/ acquisition of
Nonutility Companies
As discussed earlier, the Project Parent Order grants Cinergy and
Cinergy Investments authority through December 31, 1999 to, among other
things, form and invest in EWG/FUCO Project Parents, i.e., special-purpose
subsidiaries organized to engage exclusively in the business of acquiring
and holding the securities of, and/or providing services to, EWGs and
FUCOs. Applicants request that the Commission rescind the Project Parent
Order upon entry of the Commission's order in this proceeding granting the
transactions proposed herein.
Specifically, to the extent not otherwise exempt under the Act,
Applicants request authority, from time to time through the Authorization
Period, (1) to organize, own and hold the securities of one or more
Intermediate Parents and (2) for Intermediate Parents to acquire the
securities of Nonutility Companies. Intermediate Parents will be formed
for the exclusive purpose of acquiring, owning and holding, directly or
indirectly (including through one or more additional Intermediate Parents),
securities of or interests in, and/or providing services to, Nonutility
Companies.
Any such services would include project development and
administrative services and other support services. Without further
Commission approval, Intermediate Parents will not provide services to any
associate companies other than Intermediate Parents and Nonutility
Companies. To the extent not exempt under rule 90(d)(1) or otherwise under
the Act, Applicants request an exemption pursuant to section 13(b) from the
"at cost" requirements of rules 90 and 91 with respect to the provision of
services among the Intermediate Parents and Nonutility Companies. Cinergy
Services will continue to provide services to Intermediate Parents and
Nonutility Companies pursuant to the Cinergy system nonutility service
agreement./14/
Intermediate Parents may be wholly- or partly-owned direct or
indirect subsidiaries of Cinergy, Cinergy Investments or Cinergy Global
Resources. Initial capitalization by Applicants of Intermediate Parents
will involve (1) purchases of shares of capital stock, partnership
interests, limited liability company member interests, trust certificates
or other forms of equity interests; (2) capital contributions or open
account advances without interest; and/or (3) debt financing.
Cinergy will obtain funds for initial and subsequent investments in
Intermediate Parents from available internal sources or from external
sources involving sales of short-term notes and commercial paper or
additional shares of Cinergy common stock pursuant to the Commission's
order dated January 20, 1998 in File No. 70-9071 (HCAR No. 26819) ("January
1998 Order")./15/ Cinergy Investments and Cinergy Global Resources will
obtain funds for initial and subsequent investments in Intermediate Parents
from available cash, capital contributions or loans from Cinergy, or
external borrowings or sales of capital stock.
To the extent that Applicants provide funds to Intermediate Parents
which in turn are applied to (1) investments in Exempt Projects or rule 58
companies, the amount of such funds will be included in Cinergy's
"aggregate investment" therein, as calculated in accordance with rule 53 or
rule 58, as applicable; or (2) investments in Authorized Companies, such
investments will conform to applicable rules under the Act (including rules
52 and 45(b)(4)) and applicable terms and conditions of any relevant
Commission orders./16/
Finally, to the extent not exempt under rule 43(b) or otherwise
under the Act, Applicants request authority on behalf of themselves and
Intermediate Parents and Nonutility Companies to sell to and purchase from
each other (but to or from no other associate companies) securities or
other interests in the businesses of Intermediate Parents and Nonutility
Companies.
2. Issuance by Cinergy of guarantees
Under prior Commission orders, Cinergy is authorized to issue
guarantees in certain amounts on behalf of various system companies.
Under the Project Parent Order and 100% Order, Cinergy is
authorized to issue guarantees in respect of Exempt Projects and EWG/FUCO
Project Parents capped at 100% of Cinergy's consolidated retained earnings
(together with any other amounts then included in Cinergy's "aggregate
investment" pursuant to rule 53). Under the May 1997 Order and the January
1998 Order, Cinergy is authorized to issue guarantees in respect of
specified system companies not to exceed (together with any other
then-outstanding Cinergy Debt Securities) the $2 Billion Debt Cap, and
subject,
where applicable, to the "aggregate investment" limitation of rule 58.
Finally, under the Cinergy Solutions Order, Cinergy is authorized to issue
guarantees in respect of Cinergy Solutions not to exceed $250 million at
any time outstanding.
The authorization requested below is intended to consolidate in one
file Cinergy's current, dispersed guarantee authority, effective upon
issuance of the Commission's order in this proceeding. It would also
expand the roster of Cinergy system companies on whose behalf Cinergy may
issue guarantees to include (among other system companies) Intermediate
Parents and Nonutility Companies and extend the expiration dates specified
in the prior orders to the end of the Authorization Period. The proposed
guarantee authority would not increase, however, the ceilings imposed under
the prior orders on the total amount of guarantees that Cinergy may have
issued and outstanding at one time.
a. Existing Cinergy guarantee authority
Under the Project Parent Order and the 100% Order, Cinergy may
issue guarantees on behalf of obligations of Exempt Projects and EWG/FUCO
Project Parents from time to time through December 31, 1999, provided that
Cinergy's "aggregate investment" as determined pursuant to rule 53 does not
exceed 100% of Cinergy's consolidated retained earnings ("100%
Limitation").
Under the May 1997 Order and the January 1998 Order, Cinergy is
authorized to guarantee, through December 31, 2002, obligations of (a)
certain existing Cinergy system companies (i.e., Cinergy Services, KO,
Tri-State, Cinergy Resources, Cinergy Capital & Trading, Cinergy Technology
and
Enertech Associates) and (b) future rule 58 companies in which Cinergy or
any of its subsidiaries acquires an interest, provided that (i) the total
amount of guarantees issued and outstanding at any one time may not exceed
$2 billion (together with any then-outstanding Cinergy Debt Securities) and
(ii) any guarantees of rule 58 companies are also subject to the aggregate
investment limitation of rule 58.
Finally, the Cinergy Solutions Order authorized Cinergy to
guarantee debt and other obligations of Cinergy Solutions (including any
subsidiaries of Solutions) from time to time through December 31, 2001 in a
maximum principal amount at any time outstanding not to exceed $250
million.
b. Proposed Cinergy guarantee authority
To the extent not otherwise exempt under the Act, Cinergy requests
authority from time to time through the Authorization Period to guarantee
the debt or other securities or obligations of (i) any and all existing and
future Intermediate Parents (including Cinergy Investments and Cinergy
Global Resources) and Nonutility Companies (excluding Nth Power Fund), and
(ii) Cinergy Services and the existing nonutility subsidiaries of CG&E and
PSI - KO, Tri-State and South Construction. The terms and conditions of
any guarantees would be established at arm's length based upon market
conditions.
Any guarantees issued and outstanding by Cinergy over the
Authorization Period would be subject to the $2 Billion Debt Cap, provided
further that (1) any guarantees of Exempt Projects would also be subject to
the 100% Limitation, and (2) any guarantees of rule 58 companies would also
be subject to the aggregate investment limitation of rule 58. The
foregoing notwithstanding, any Cinergy guarantees in respect of Cinergy
Solutions would remain subject to the separate $250 million ceiling
prescribed in the Cinergy Solutions Order.
3. Dividends out of capital or unearned surplus
Cinergy has existing authority for certain of its nonutility
subsidiaries to declare and pay dividends out of capital or unearned
surplus through December 31, 2002.
Cinergy proposes to expand the scope of the existing Commission
authorization to include Intermediate Parents and Nonutility Companies (as
well as the nonutility subsidiaries of CG&E and PSI) and to extend the
period covered to the end of the Authorization Period.
The proposed new authority would replace the current authority
commencing on the effective date of the Commission's order in this
proceeding.
a. Existing authority
By order dated May 22, 1997 (HCAR No. 26719), the Commission
authorized certain Cinergy nonutility subsidiaries - Cinergy Investments,
the EWG/FUCO Project Parents established in 1996 to acquire and hold
Cinergy's interest in MEB (CUK and the Avon companies) and all future
EWG/FUCO Project Parents - to pay dividends out of capital or unearned
surplus to their respective parent companies through December 31, 2002 to
the extent permitted under applicable corporate law and contractual
restrictions. Cinergy Investments was authorized to pay dividends out of
capital only to the extent that the dividend is based on (a) a
corresponding dividend paid to Cinergy Investments out of capital or
unearned surplus by an applicable EWG/FUCO Project Parent that is a direct
subsidiary of Cinergy Investments, or (b) Cinergy Investments' direct or
indirect ownership of an Exempt Project.
b. Proposed authority
To the extent not otherwise exempt under the Act, Applicants
request authorization for all of Cinergy's existing and future nonutility
subsidiaries - namely, Cinergy Investments, Cinergy Global Resources, any
and all existing and future Intermediate Parents and Nonutility Companies
(other than Nth Power Fund), and the existing nonutility subsidiaries of
CG&E and PSI (KO, Tri-State and South Construction) - to declare and pay
dividends out of capital or unearned surplus to their respective parent
companies from time to time through the Authorization Period, where
permitted under applicable corporate law and agreements with lenders or
other third parties.
Item 2. Fees, Commissions and Expenses
Applicants estimate that the fees, commissions and expenses that have
been or will be incurred, directly or indirectly, by them or their
associate companies in connection with the proposed transactions will not
exceed approximately $17,000, including fees and expenses of Thelen, Reid &
Priest of approximately $5,000.
Item 3. Applicable Statutory Provisions
Applicants believe that sections 6(a), 7, 9(a), 10, 12(b), 12(c),
13, 32, 33 and 34 of the Act and rules 43, 45, 46, 53, 54, 58, 83, 87 and
90 are or may be applicable to the proposed transactions.
Rule 54 provides that 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 FUCO, or other transactions by such
registered holding company or its subsidiaries other than with respect to
EWGs or FUCOs, the Commission shall not consider the effect of the
capitalization or earnings of any subsidiary which is an EWG or a FUCO upon
the registered holding company system if the conditions of rule 53(a), (b)
and (c) are satisfied.
At March 31, 1998, Cinergy met all the requirements of rule 53(a),
other than clause (1) (limiting "aggregate investment" to 50% of
"consolidated retained earnings"). At that date, as reported by Cinergy to
the Commission in File No. 70-9011 (see quarterly rule 24 certificate filed
May 28, 1998), Cinergy's consolidated retained earnings were approximately
$977 million and its aggregate investment approximately $546 million (or
about 56% of consolidated retained earnings).
Such incremental aggregate investment above 50% but not in excess
of 100% of consolidated retained earnings is specifically permitted by the
100% Order wherein the Commission found that Cinergy satisfied the
applicable standards of rule 53(c) (i.e., clauses (1) and (2) thereof).
The transactions proposed herein have no bearing on the analysis performed
by the Commission in the 100% Order. Among other proposed transactions,
Cinergy is merely proposing to consolidate and extend the expiration dates
of its existing authority to issue guarantees, and to issue guarantees on
behalf of additional subsidiaries. The proposed transactions will neither
raise the 100% Limitation (which applies to guarantees issued by or
otherwise recourse to Cinergy in respect of EWGs, FUCOs and EWG/FUCO
Project Parents) nor the $2 Billion Debt Cap (which applies to guarantees
issued by Cinergy in respect of other system companies). In any event,
Cinergy regularly supplies the Commission with financial information
relevant to the analysis underpinning the 100% Order (capitalization
ratios, growth in retained earnings, market-to-book ratio, etc.) via
quarterly rule 24 filings in File No. 70-9011.
With respect to the remaining conditions of rule 54, Cinergy has
complied and will continue to comply with the record-keeping requirements
of rule 53(a)(2), the limitation under rule 53(a)(3) on the use of
operating company personnel in rendering services to EWGs and FUCOs, and
the requirements of rule 53(a)(4) concerning submission of specified
filings under the Act to retail rate regulatory agencies. In addition,
none of the conditions in rule 53(b) has occurred.
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 as soon as
practicable the requisite notice under Rule 23 with respect to the filing
of this application, and that the Commission issue an order granting the
authority requested herein as soon as practicable after expiration of the
public notice period.
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.
Cinergy proposes to file quarterly certificates pursuant to Rule
24, within 60 days after the end of each calendar quarter (commencing with
the first full quarter following the Commission's order), containing the
following information as of the end of the preceding quarter:
1. A corporate chart showing Cinergy and all its subsidiary
companies, including specific identification of each new
Intermediate Parent formed during the quarter together with
the Nonutility Companies whose securities it holds directly or
indirectly.
2. Information with respect to guarantees issued by Cinergy
during the quarter (other than with respect to ETCs),
including aggregate amount outstanding and a breakdown
identifying the system companies on whose behalf Cinergy
issued the guarantees and the respective amounts thereof.
3. For Cinergy affiliates that are not Exempt Projects or
ETCs,information with respect to dividends paid out of capital
or unearned surplus, including identification of any
nonutility company declaring and paying such dividend and
amount thereof.
Item 6. Exhibits and Financial Statements
(a) Exhibits:
A Constituent instruments of future Intermediate Parents
and Nonutility Companies (to be filed as exhibits to Cinergy's Annual
Reports on Form U-5S)
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
H Cinergy system corporate chart as of June 1, 1998
(b) Financial Statements:
FS-1 Cinergy Consolidated Financial Statements, dated March
31, 1998
FS-2 Cinergy Financial Statements, dated March 31, 1998
FS-3 Cinergy Investments Consolidated Financial Statements,
dated March 31, 1998 (filed pursuant to rule 104(b) under request for
confidential treatment)
FS-4 Cinergy Consolidated Financial Data Schedule (to be
included as part of electronic submission only)
FS-5 Cinergy Financial Data Schedule (to be 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>
<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: June 18, 1998
CINERGY CORP.
By: /s/ William L. Sheafer
Vice President and Treasurer
CINERGY INVESTMENTS, INC.
By: /s/ William L. Sheafer
Vice President and Treasurer
CINERGY GLOBAL RESOURCES, INC.
By: /s/ William L. Sheafer
Vice President and Treasurer
ENDNOTES
/1/ The practical value of using intermediate subsidiaries to hold
nonutility businesses was expressly taken into account by the Commission in
adopting rule 58, which provides that an "energy-related company" is any
company that, directly or indirectly through one or more affiliates,
derives or will derive substantially all of its revenues from the
enumerated qualifying activities. As the Commission explained:
Use of an intermediate subsidiary could further insulate
the holding company and its other subsidiaries, including
utility subsidiaries, from any direct losses that could
occur with respect to rule 58 investments. At the same
time, this measure would offer greater flexibility in the
structuring of these investments. Accordingly, the rule,
as adopted, is modified to incorporate the concept of
indirect investment in energy-related companies through
project parents. (footnote omitted)
HCAR No. 26667, February 14, 1997 (text accompanying note 41).
/2/ See The Southern Company, et al., HCAR Nos. 26738, July 2, 1997, 26543,
July 17, 1996, and 26468, February 2, 1996.
/3/ As of June 1, 1998 Cinergy had interests in six FUCOs - Edesur, S.A.,
an Argentine FUCO; Midlands Electricity plc, a UK FUCO; Copperbelt Energy
Corporation plc, a Zambian FUCO; EOS PAX I S.L. and EOS PAX IIa S.L., each
a Spanish FUCO; and Sociedad Construcciones y Representaciones Industriales
S.A., a Spanish FUCO - and one EWG, Midlands Hydrocarbons (Bangladesh)
Limited, as to which an application for determination of EWG status is
pending (Docket No. EG98-82-000) before the Federal Energy Regulatory
Commission ("FERC"). See the chart filed herewith as exhibit H diagramming
the ownership structure for Cinergy and all of its direct and indirect
subsidiaries as of June 1, 1998.
/4/ As of June 1, 1998 Cinergy was the ultimate parent company of the
following EWG/FUCO Project Parents (see exhibit H): Cinergy Global
Resources, Cinergy Global Power, Inc., Cinergy Global Power Services
Limited, Cinergy Global Hydrocarbons Pakistan, Cinergy MPI II through XV,
Inc. (i.e., 14 separate companies), Watercorner Investments B.V., MPII
(Zambia) B.V., Cedarwood B.V., Midlands Power International B.V., Vendresse
Limited, Midlands Power I B.V., Midlands Power Europe B.V., Midlands Power
Asia B.V., Cinergy UK, Inc., Avon Energy Partners Holdings, Avon Energy
Partners plc, PSI Argentina, Inc., Costanera Power Corp. and PSI Energy
Argentina, Inc.
/5/ As of June 1, 1998 Cinergy had one ETC subsidiary, Cinergy
Communications, Inc. Cinergy had also formed a prospective ETC,
Cinergy-Ideon, Inc., which will shortly file an application for
determination of
ETC status with the Federal Communications Commission.
/6/ As of June 1, 1998 Cinergy had interests in the following rule 58
companies: Cinergy-Cadence, Inc., and its subsidiary, Cadence Network LLC;
Cinergy Capital & Trading, Inc. and its wholly-owned subsidiary, CinCap IV,
LLC; Cinergy Engineering, Inc.; Cinergy Resources, Inc.; the subsidiary
companies of Cinergy Solutions, Inc. (namely, Trigen-Cinergy Solutions LLC,
Trigen-Cinergy Solutions of Cincinnati LLC, Trigen-Cinergy Solutions of
Illinois L.L.C. and Cinergy Business Solutions, Inc.); Cinergy Supply
Network, Inc. and Enertech Associates, Inc.
/7/ There are three existing Authorized Companies: Cinergy Investments
(see HCAR No. 26146, October 21, 1994); Cinergy Solutions, Inc. (see HCAR
No. 26662, February 7, 1997); and Nth Power Technologies Fund I, L.P. ("Nth
Power Fund"), in which Cinergy holds a minority limited partnership
interest (see HCAR No. 26562, August 28, 1996) ("Nth Power Fund Order").
Nth Power Fund is not an affiliate or subsidiary company of Cinergy; see
HCAR No. 26562.
In 1996, pursuant to HCAR No. 26474 (February 20, 1996), Cinergy formed
Cinergy Cooling Corp. as a wholly-owned subsidiary of Cinergy Investments
to engage in the district energy business in downtown Cincinnati. In
August 1997, in connection with a joint venture with Trigen Energy
Corporation, Cinergy Cooling Corp. was merged out of existence, into a rule
58 company, Trigen-Cinergy Solutions of Cincinnati LLC, which is owned by
affiliates of the joint venture parties.
/8/ Cinergy has a pending application in File No. 70-8427 requesting
authorization to permanently retain various nonutility interests (together
with Cinergy's gas utility properties) over which the Commission reserved
jurisdiction for three years in the Commission's 1994 order authorizing the
Cinergy merger (HCAR No. 26146, October 21, 1994).
/9/ Specifically, the requested authorization would supersede in their
entirety both the Project Parent Order and Cinergy's current authorization
in File No. 70-9023 for certain nonutility subsidiaries to declare and pay
dividends out of capital or unearned surplus, HCAR No. 26719, May 22, 1997.
The requested authorization would also consolidate in one docket and
supersede Cinergy's current authorization to issue guarantees on behalf of
certain system companies, which is now dispersed among (1) the Project
Parent Order (in respect of Exempt Projects and EWG /FUCO Project Parents),
(2) HCAR No. 26723, dated May 30, 1997 in File No. 70-9015 (in respect of
Cinergy Services, Inc., certain Cinergy nonutility subsidiaries, and future
rule 58 companies in which Cinergy or its subsidiaries acquires an
interest) and (3) HCAR No. 26662, dated February 7, 1997 in File No.
70-8933 (in respect of Cinergy Solutions, Inc.). The latter two orders
would
only be partially superseded, i.e., as to the terms and conditions thereof
applicable to Cinergy guarantees.
/10/ CG&E's utility subsidiaries are The Union Light, Heat and Power
Company ("ULH&P"), Lawrenceburg Gas Company ("Lawrenceburg"), The West
Harrison Gas and Electric Company ("West Harrison") and Miami Power
Corporation ("Miami Power").
/11/ Specifically, CG&E holds all the outstanding common stock of Tri-State
and KO, and PSI holds all the outstanding common stock of South
Construction. Tri-State and South Construction hold real estate in support
of the utility businesses of CG&E and PSI, respectively. KO owns an
interest in interstate gas pipeline facilities located in Kentucky and is
regulated by the FERC under the Natural Gas Act. CG&E and PSI also own
small limited partnership interests in a number of local funds or entities,
none of which are affiliates of CG&E or PSI. For more detailed information
regarding the nonutility holdings of CG&E and PSI, see Cinergy's
post-effective amendments in the Merger Docket.
/12/ Inactive companies being dissolved are PSI Power Resource Development,
Inc., PSI Sunnyside, Inc., PSI T & D International, Inc., PSI Yacyreta,
Inc. and Cinergy International, Inc.
/13/ That allocation of domestic and international nonutility businesses
between Cinergy Investments and Cinergy Global Resources may not
necessarily continue in every respect. For example, it is possible that in
the future one or more domestic EWGs in which the Cinergy system acquires
an interest (currently Cinergy has no domestic EWGs) may be held by Cinergy
Global Resources, directly or indirectly.
/14/ See Merger Order, supra (approving original nonutility service
agreement); Cinergy Solutions Order, supra (approving amendment to
nonutility service agreement).
/15/ The January 1998 Order authorizes Cinergy to issue and sell from time
to time through December 31, 2002, subject to certain terms and conditions,
(1) short-term notes and commercial paper - together with (a) any
guarantees issued by Cinergy pursuant to authorization granted in File No.
70-9015 (HCAR No. 26723, May 30, 1997) ("May 1997 Order") and (b) any
debentures issued by Cinergy (together with Cinergy short-term notes and
commercial paper, "Cinergy Debt Securities") pursuant to authorization
being sought in File No. 70-8993 (HCAR No. 26714, May 2, 1997 (notice)) -
in an aggregate principal amount not to exceed $2 billion ("$2 Billion Debt
Cap"); and (2) up to 30 million additional shares of Cinergy common stock,
plus certain other shares of Cinergy common stock (totaling approximately
867,000) authorized, but not issued, under a prior Commission order.
/16/ See, e.g., Cinergy Solutions Order, supra (providing that Cinergy
Solutions would be initially capitalized with nominal consideration and
that thereafter, through December 31, 2001, Cinergy and Cinergy Investments
"[did] not expect" to invest more than $100 million in Cinergy Solutions
and its subsidiaries in transactions exempt from prior Commission approval
under rules 52 and 45(b)(4)); Nth Power Fund Order, supra (permitting
Cinergy to invest up to $10 million in Nth Power Fund through December 31,
2002).
Exhibit G
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- _____________)
Cinergy Corp., a registered holding company ("Cinergy"), and its
nonutility subsidiaries, Cinergy Investments, Inc. ("Cinergy Investments")
and Cinergy Global Resources, Inc. ("Cinergy Global Resources"), all at 139
East Fourth Street, Cincinnati Ohio 45202, have filed an
application-declaration under sections 6(a), 7, 9(a), 10, 12(b), 12(c), 13,
32, 33 and
34 of the Act and rules 43, 45, 46, 53, 54, 58, 83, 87 and 90 thereunder.
Applicants propose to establish one or more special-purpose
subsidiaries to hold Cinergy's direct or indirect interests in any or all
of Cinergy's existing and future nonutility businesses (excluding certain
existing nonutility interests held by Cinergy's utility subsidiaries) and
to engage in various related transactions from time to time through
December 31, 2003 ("Authorization Period").
The requested order is intended to supersede certain Commission
orders now in effect, in whole or in part./1/
Specifically, to the extent not otherwise exempt under the Act,
Applicants request authority over the Authorization Period to organize and
hold securities of one or more special-purpose subsidiaries (each an
"Intermediate Parent") to be formed for the exclusive purpose of acquiring,
owning and holding, directly or indirectly (including through one or more
additional Intermediate Parents), securities of or interests in, and/or
providing services to, any or all of Cinergy's existing and future
nonutility associate companies (other than existing nonutility interests
held by Cinergy's utility subsidiaries), including Cinergy's interests in:
1. existing and future exempt wholesale generators ("EWGs") and
foreign utility companies ("FUCOs" and, together with EWGs,
"Exempt Projects");
2. special-purpose subsidiaries formed pursuant to the Project
Parent Order prior to the date of the Commission's order in
this proceeding ("EWG/FUCO Project Parents");
3. existing and future exempt telecommunications companies
("ETCs");
4. existing and future "energy-related companies" as defined in
rule 58; and/or
5. other nonutility companies in which Cinergy (i) holds an
interest pursuant to certain prior orders of the Commission or
(ii) hereafter acquires (or is authorized to retain) an
interest pursuant to one or more (a) orders of the Commission
issued in subsequent proceedings or (b) exemptions from the
requirement of prior Commission approval subsequently adopted
under the Act (collectively, "Authorized Companies" and,
together with the companies included in the preceding
categories "1" through "4," "Nonutility Companies").
Any services provided by Intermediate Parents to other Intermediate
Parents or to Nonutility Companies would include project development and
administrative services and other support services. Without further
Commission approval, Intermediate Parents will not provide services to any
associate companies other than Intermediate Parents and Nonutility
Companies. To the extent not exempt under rule 90(d)(1) or otherwise under
the Act, Applicants request an exemption pursuant to section 13(b) from the
"at cost" requirements of rules 90 and 91 with respect to the provision of
services among the Intermediate Parents and Nonutility Companies. Cinergy
Services will continue to provide services to Intermediate Parents and
Nonutility Companies pursuant to the Cinergy system nonutility service
agreement.
Intermediate Parents may be wholly- or partly-owned direct or
indirect subsidiaries of Cinergy, Cinergy Investments or Cinergy Global
Resources. Initial capitalization by Applicants of Intermediate Parents
will involve (1) purchases of shares of capital stock, partnership
interests, limited liability company member interests, trust certificates
or other forms of equity interests; (2) capital contributions or open
account advances without interest; and/or (3) debt financing.
Cinergy will obtain funds for initial and subsequent investments in
Intermediate Parents from available internal sources or from external
sources involving sales of short-term notes and commercial paper or
additional shares of Cinergy common stock pursuant to the Commission's
order dated January 20, 1998 in File No. 70-9071 (HCAR No. 26819) ("January
1998 Order")./2/ Cinergy Investments and Cinergy Global Resources will
obtain funds for initial and subsequent investments in Intermediate Parents
from available cash, capital contributions or loans from Cinergy, or
external borrowings or sales of capital stock.
To the extent that Applicants provide funds to Intermediate Parents
which in turn are applied to (1) investments in Exempt Projects or rule 58
companies, the amount of such funds will be included in Cinergy's
"aggregate investment" therein, as calculated in accordance with rule 53 or
rule 58, as applicable; or (2) investments in Authorized Companies, such
investments will conform to applicable rules under the Act (including rules
52 and 45(b)(4)) and applicable terms and conditions of any relevant
Commission orders.
To the extent not exempt under rule 43(b) or otherwise under the
Act, Applicants request authority on behalf of themselves and Intermediate
Parents and Nonutility Companies to sell to and purchase from each other
(but to or from no other associate companies) securities or other interests
in the businesses of Intermediate Parents and Nonutility Companies.
Cinergy also proposes to issue guarantees in respect of
Intermediate Parents and Nonutility Companies and certain other
subsidiaries of Cinergy. Specifically, to the extent not otherwise exempt
under the Act, Cinergy requests authority from time to time through the
Authorization Period to guarantee the debt or other securities or
obligations of (i) any and all existing and future Intermediate Parents
(including Cinergy Investments and Cinergy Global Resources) and Nonutility
Companies (excluding Cinergy's investment in Nth Power Technologies Fund,
HCAR No. 26562, August 28, 1996), and (ii) Cinergy Services, Inc.,
Cinergy's service company subsidiary, and the existing nonutility
subsidiaries of Cinergy's utility subsidiaries, The Cincinnati Gas &
Electric Company and PSI Energy, Inc. - KO Transmission Company ("KO"),
Tri-State Improvement Company ("Tri-State") and South Construction Company,
Inc. ("South Construction"). The terms and conditions of any guarantees
would be established at arm's length based upon market conditions.
Any guarantees issued and outstanding by Cinergy over the
Authorization Period would be subject to the $2 Billion Debt Cap, provided
further that (1) any guarantees of Exempt Projects would also conform to
the aggregate investment limitation prescribed in the Commission's order
dated March 23, 1998 (HCAR No. 26848) in File No. 70-9011 ("100% Order"),
and (2) any guarantees of rule 58 companies would also conform to the
aggregate investment limitation of rule 58. The foregoing notwithstanding,
any Cinergy guarantees in respect of Cinergy Solutions, Inc. would remain
subject to the separate $250 million ceiling prescribed in the Commission's
order dated February 7, 1997 (HCAR No. 26662) in File No. 70-8933.
Finally, to the extent not otherwise exempt under the Act,
Applicants request authorization for all of Cinergy's existing and future
nonutility subsidiaries - namely, Cinergy Investments, Cinergy Global
Resources, any and all existing and future Intermediate Parents and
Nonutility Companies (other than Nth Power Technologies Fund), and KO,
Tri-State and South Construction - to declare and pay dividends out of
capital or unearned surplus to their respective parent companies from time
to time through the Authorization Period, where permitted under applicable
corporate law and agreements with lenders or other third parties.
Cinergy states that it is in compliance with all the requirements
of rule 54 other than rule 53(a). Specifically, at March 31, 1998,
Cinergy's consolidated retained earnings were approximately $977 million
and its aggregate investment approximately $546 million (or about 56% of
consolidated retained earnings). Cinergy states that this incremental
aggregate investment above 50% but not in excess of 100% of consolidated
retained earnings is specifically permitted by the 100% Order. With
respect to the remaining conditions of rule 54, Cinergy states that it has
complied and will continue to comply with the record-keeping requirements
of rule 53(a)(2), the limitation under rule 53(a)(3) on the use of
operating company personnel in rendering services to EWGs and FUCOs, and
the requirements of rule 53(a)(4) concerning submission of specified
filings under the Act to retail rate regulatory agencies. In addition,
none of the conditions in rule 53(b) has occurred.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
ENDNOTES
/1/Specifically, Applicants propose that upon issuance of the requested
order in the present proceeding the following Commission orders be
rescinded in their entirety: (1) HCAR Nos. 26376 and 26486, dated
September 21, 1995 and March 8, 1996, in File No. 70-8589 (collectively,
"Project Parent Order") and (2) HCAR No. 26719, dated May 22, 1997, in File
No. 70-9023. Applicants also request that two additional Commission orders
be rescinded in part. Specifically, HCAR No. 26723, dated May 30, 1997, in
File No. 70-9015 and HCAR No. 26662, dated February 7, 1997, in File No.
70-8933 would be superseded by the Commission's order in this proceeding to
the extent that those approvals relate to guarantees issued by Cinergy.
/2/The January 1998 Order authorizes Cinergy to issue and sell from time to
time through December 31, 2002, subject to certain terms and conditions,
(1) short-term notes and commercial paper - together with (a) any
guarantees issued by Cinergy pursuant to authorization granted in File No.
70-9015 (HCAR No. 26723, May 30, 1997) ("May 1997 Order") and (b) any
debentures issued by Cinergy (together with Cinergy short-term notes and
commercial paper, "Cinergy Debt Securities") pursuant to authorization
being sought in File No. 70-8993 (HCAR No. 26714, May 2, 1997 (notice)) -
in an aggregate principal amount not to exceed $2 billion ("$2 Billion Debt
Cap"); and (2) up to 30 million additional shares of Cinergy common stock,
plus certain other shares of Cinergy common stock (totaling approximately
867,000) authorized, but not issued, under a prior Commission order.
Exhibit H
CINERGY CORP. AND SUBSIDIARIES AS OF JUNE 1, 1998/1/
Cinergy Corp. (Delaware, 6/30/1993)
Cinergy Services, Inc. (Delaware, 2/23/1994)
The Cincinnati Gas & Electric Company (Ohio, 4/3/1837)
The Union Light, Heat and Power Company (Kentucky, 3/20/1901)
Tri-State Improvement Company (Ohio, 1/14/1964)
Lawrenceburg Gas Company (Indiana, 5/5/1868)
The West Harrison Gas and Electric Company (Indiana, 8/19/1942)
Miami Power Corporation (Indiana, 3/25/1930)
KO Transmission Company (Kentucky, 4/11/1994)
PSI Energy, Inc. (Indiana, 9/6/1941)
South Construction Company, Inc. (Indiana, 5/31/1934)
Cinergy Investments, Inc. (Delaware, 10/24/1994)
(see below)
Cinergy Global Resources, Inc. (Delaware, 5/15/1998)
(see below)
<PAGE>
CINERGY INVESTMENTS, INC. AND SUBSIDIARIES/2/
Cinergy Investments, Inc. (Delaware, 10/24/1994)
Cinergy-Cadence, Inc. (Indiana, 12/27/1989; formerly PSI Power
Resource Operations, Inc.)
Cadence Network LLC (Delaware, 9/3/1997)/3/
Cinergy Capital & Trading, Inc. (Indiana, 10/8/1992; formerly
Wholesale Power Services, Inc.)
CinCap IV, LLC (Delaware, 12/3/1997)
Cinergy Communications, Inc. (Delaware, 9/20/1996)
Cinergy Engineering, Inc. (Ohio, 3/28/1997)
Cinergy-Ideon, Inc. (Delaware, 4/23/98)
Cinergy Resources, Inc. (Delaware, 1/10/1994; formerly CG&E
Resource Marketing, Inc.)
Cinergy Solutions, Inc. (Delaware, 2/11/1997)
Cinergy Business Solutions, Inc. (Delaware, 4/6/98)
Trigen-Cinergy Solutions LLC (Delaware, 2/18/1997)/4/
Trigen-Cinergy Solutions of Cincinnati LLC (Ohio,
7/29/1997)/5/
Trigen-Cinergy Solutions of Illinois L.L.C. (Delaware,
4/17/1997)/6/
Cinergy Supply Network, Inc. (Delaware, 1/14/98)
Cinergy Technology, Inc. (Indiana, 12/12/1991; formerly PSI
Environmental Corp.)
Enertech Associates, Inc. (Ohio, 10/26/1992)/7/
<PAGE>
CINERGY GLOBAL RESOURCES, INC. AND SUBSIDIARIES/8/
Cinergy Global Resources, Inc. (Delaware, 5/15/1998)
Cinergy Global Power, Inc. (Delaware, 9/4/1997; formerly Cinergy
Investments MPI, Inc.)
Cinergy Global Power Services Limited (London, England,
8/14/1997; formerly MPI International Limited)
Cinergy Global Hydrocarbons Pakistan (Cayman Islands, 9/4/1997;
formerly Cinergy MPI I, Inc.)
Cinergy MPI II, Inc. (Cayman Islands, 9/4/1997)
Cinergy MPI III, Inc. (Cayman Islands, 9/4/1997)
Cinergy MPI IV, Inc. (Cayman Islands, 9/4/1997)
Cinergy MPI V, Inc. (Cayman Islands, 9/4/1997)
Cinergy MPI VI, Inc. (Cayman Islands, 9/4/1997)
Cinergy MPI VII, Inc. (Cayman Islands, 9/4/1997)
Cinergy MPI VIII, Inc. (Cayman Islands, 9/4/1997)
Cinergy MPI IX, Inc. (Cayman Islands, 9/4/1997)
Cinergy MPI X, Inc. (Cayman Islands, 9/4/1997)
Cinergy MPI XI, Inc. (Cayman Islands, 9/4/1997)
Cinergy MPI XII, Inc. (Cayman Islands, 9/4/1997)
Cinergy MPI XIII, Inc. (Cayman Islands, 9/4/1997)
Cinergy MPI XIV, Inc. (Cayman Islands, 9/4/1997)
Cinergy MPI XV, Inc. (Cayman Islands, 9/4/1997)
Watercorner Investments B.V. (The Netherlands, 4/7/48)
MPII (Zambia) B.V. (The Netherlands, 11/18/85; formerly
Seascope Holding B.V.)
Copperbelt Energy Corporation PLC (Republic of Zambia,
9/19/97)/9/
Cedarwood B.V. (The Netherlands, 7/7/83)
EOS PAX I S.L./10/
EOS PAX IIa S.L./11/
Midlands Power International B.V. (The Netherlands, 2/13/95)
Sociedad Construcciones y Representaciones Industriales
S.A./12/
Vendresse Limited
Midlands Power 1 B.V.
Midlands Power Europe B.V.
Midlands Power Asia B.V.
Midlands Hydrocarbons (Bangladesh) Limited (England, 6/29/93)
Cinergy UK, Inc. (Delaware, 5/1/1996)
Avon Energy Partners Holdings (London, England, 5/3/1996) /13/
Avon Energy Partners PLC (London, England, 4/30/1996)
Midlands Electricity plc (London, England)
PSI Argentina, Inc. (Indiana, 4/10/1992)
Costanera Power Corp. (Indiana, 4/10/1992)
PSI Energy Argentina, Inc. (Indiana, 6/5/1992)
ENDNOTES
/1/ Unless otherwise noted, all subsidiaries are wholly-owned. Subsidiary
status is indicated by indentation. Jurisdiction and date of formation are
included in parentheses.
/2/ Certain of Cinergy Investments' subsidiaries are not currently engaged
in active business operations.
/3/ Jointly owned with affiliates of Florida Progress Corporation and New
Century Energies, Inc. Each company has a 33-1/3% ownership interest.
/4/ Jointly-owned with Trigen Solutions, Inc. ("Trigen"), an affiliate of
Trigen Energy Corporation. Each company has a 50% ownership interest.
/5/Effective August 29, 1997, Cinergy Cooling Corp. was merged with and
into Trigen-Cinergy Solutions of Cincinnati LLC, with the latter company
being the surviving company owned 51% by Cinergy Solutions and 49% by
Trigen.
/6/ Jointly owned 49% by Cinergy Solutions and 51% by Trigen.
/7/ Formerly Power International, Inc. and, prior to that, Enertech
Associates International, Inc.
/8/ Certain of Cinergy Global Resources' subsidiaries are not currently
engaged in active business operations.
/9/ Jointly owned 40% by MPII (Zambia), 40% by National Grid Holland B.V.
and 20% by Zambia Consolidated Copper Mines Limited.
/10/ Jointly owned on a 50-50 basis with Tomen Corp. of Japan.
/11/ Jointly owned on a 50-50 basis with Tomen Corp. of Japan.
/12/ Nonaffiliates own approximately 5% of this entity.
/13/ Jointly owned with an affiliate of GPU, Inc. on a 50-50 basis.
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, STATEMENTS OF INCOME AND STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 0
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 123,888
<TOTAL-DEFERRED-CHARGES> 3,080,844
<OTHER-ASSETS> 4,595
<TOTAL-ASSETS> 3,209,327
<COMMON> 1,578
<CAPITAL-SURPLUS-PAID-IN> 1,574,080
<RETAINED-EARNINGS> 999,216
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,574,874
0
0
<LONG-TERM-DEBT-NET> 0
<SHORT-TERM-NOTES> 624,300
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 10,153
<TOT-CAPITALIZATION-AND-LIAB> 3,209,327
<GROSS-OPERATING-REVENUE> 0
<INCOME-TAX-EXPENSE> 0
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 0
<OPERATING-INCOME-LOSS> 0
<OTHER-INCOME-NET> 277,986
<INCOME-BEFORE-INTEREST-EXPEN> 277,986
<TOTAL-INTEREST-EXPENSE> 32,794
<NET-INCOME> 245,192
0
<EARNINGS-AVAILABLE-FOR-COMM> 245,192
<COMMON-STOCK-DIVIDENDS> 283,860
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 0
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED
STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 6,288,099
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 786,262
<TOTAL-DEFERRED-CHARGES> 1,647,544
<OTHER-ASSETS> 274,092
<TOTAL-ASSETS> 8,995,997
<COMMON> 1,578
<CAPITAL-SURPLUS-PAID-IN> 1,574,080
<RETAINED-EARNINGS> 999,216
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,574,874
0
92,752
<LONG-TERM-DEBT-NET> 2,032,156
<SHORT-TERM-NOTES> 1,222,795
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 145,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,928,420
<TOT-CAPITALIZATION-AND-LIAB> 8,995,997
<GROSS-OPERATING-REVENUE> 4,654,448
<INCOME-TAX-EXPENSE> 255,809
<OTHER-OPERATING-EXPENSES> 3,852,044
<TOTAL-OPERATING-EXPENSES> 4,107,853
<OPERATING-INCOME-LOSS> 546,595
<OTHER-INCOME-NET> 54,073
<INCOME-BEFORE-INTEREST-EXPEN> 600,668
<TOTAL-INTEREST-EXPENSE> 246,076
<NET-INCOME> 354,592
0
<EARNINGS-AVAILABLE-FOR-COMM> 245,192
<COMMON-STOCK-DIVIDENDS> 283,860
<TOTAL-INTEREST-ON-BONDS> 176,255
<CASH-FLOW-OPERATIONS> 780,521
<EPS-PRIMARY> 1.55
<EPS-DILUTED> 1.54
</TABLE>
FINANCIAL STATEMENTS
TWELVE MONTHS ENDED MARCH 31, 1998
(dollars in thousands)
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGON, D.C.
FORM U-1
CINERGY CORP. CONSOLIDATED
(Unaudited)
Pages 1 through 5
Note:
Pro forma adjustments are not included with the following
financial statements, since the authorization requested
herein does not involve issuance of any securities in
amounts not previously approved by the Commission based on,
among other things, pro forma financial statements
included in those proceedings (which proceedings are cited
in the text of the application-
declaration accompanying these financial statements).
<PAGE>
CINERGY CORP.
CONSOLIDATED BALANCE SHEET
AT MARCH 31, 1998
(unaudited)
(dollars in thousands)
ASSETS
Utility Plant - Original Cost
In service
Electric $9,014,797
Gas 753,311
Common 186,631
9,954,739
Accumulated depreciation 3,860,682
6,094,057
Construction work in progress 194,042
Total utility plant 6,288,099
Current Assets
Cash and temporary cash investments 58,731
Restricted deposits 2,348
Accounts receivable less accumulated provision for
doubtful accounts of $10,349 at March 31, 1998 519,396
Materials, supplies, and fuel - at average cost
Fuel for use in electric production 68,292
Gas stored for current use 12,232
Other materials and supplies 77,972
Prepayments and other 47,291
786,262
Other Assets
Regulatory assets
Amounts due from customers - income taxes 383,314
Post-in-service carrying costs and deferred
operating expenses 176,531
Coal contract buyout costs 117,964
Deferred demand-side management costs 101,958
Deferred merger costs 89,015
Phase-in deferred return and depreciation 85,960
Unamortized costs of reacquiring debt 65,941
Other 46,592
Investments in unconsolidated subsidiaries 580,269
Other 274,092
1,921,636
$8,995,997
<PAGE>
CINERGY CORP.
AT MARCH 31, 1998
(unaudited)
(dollars in thousands)
CAPITALIZATION AND LIABILITIES
Common Stock Equity
Common stock - $.01 par value; authorized
shares - 600,000,000; outstanding shares -
157,764,020 at March 31, 1998 $ 1,578
Paid-in capital 1,574,080
Retained earnings 1,002,495
Accumulated other comprehensive income (3,279)
----------
Total common stock equity 2,574,874
Cumulative Preferred Stock of Subsidiaries
Not subject to mandatory redemption 92,752
Long-term Debt 2,032,156
Total capitalization 4,699,782
Current Liabilities
Long-term debt due within one year 145,000
Notes payable and other short-term obligations 1,222,795
Accounts payable 558,021
Accrued taxes 218,251
Accrued interest 40,342
Other 98,740
----------
2,283,149
Other Liabilities
Deferred income taxes 1,233,505
Unamortized investment tax credits 163,850
Accrued pension and other postretirement
benefit costs 307,373
Other 308,338
2,013,066
$8,995,997
<PAGE>
CINERGY CORP.
CONSOLIDATED STATEMENT OF INCOME
TWELVE MONTHS ENDED
MARCH 31, 1998
(unaudited)
(in thousands, except per share amounts)
Operating Revenues
Electric $4,202,508
Gas 451,940
4,654,448
Operating Expenses
Fuel used in electric production 698,208
Gas purchased 238,801
Purchased and exchanged power 1,530,651
Other operation 637,561
Maintenance 169,683
Depreciation 290,826
Amortization of phase-in deferrals 15,651
Amortization of post-in-service
deferred operating expenses - net 4,362
Income taxes 255,809
Taxes other than income taxes 266,301
----------
4,107,853
Operating Income 546,595
Other Income and Expenses - Net
Allowance for equity funds used
during construction (72)
Phase-in deferred return 7,817
Equity in earnings of unconsolidated subsidiaries 45,746
Income taxes 48,488
Other - net (47,906)
----------
54,073
Income Before Interest and Other Charges 600,668
Interest and Other Charges
Interest on long-term debt 176,255
Other interest 64,074
Allowance for borrowed funds
used during construction (6,005)
Preferred dividend requirements of subsidiaries 11,752
246,076
Net Income Before Extraordinary Item $ 354,592
Extraordinary Item - Equity Share of
Windfall Profits Tax (Less
Applicable Income Taxes of $0) (109,400)
--------
Net Income $ 245,192
Average Common Shares Outstanding 157,706
Earnings Per Common Share
Net income before extraordinary item $ 2.24
Extraordinary item $( .69)
Net income $ 1.55
Earnings Per Common Share - Assuming Dilution
Net income before extraordinary item $ 2.23
Extraordinary item ( .69)
Net income $1.54
Dividends Declared Per Common Share $1.80
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCK EQUITY
(dollars in thousands)
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Other Total Total
Common Paid-in Retained Comprehensive Comprehensive Common Stock
Stock Capital Earnings Income Income Equity
Twelve Months Ended March 31, 1998
Balance April 1, 1997 $1,577 $1,579,934 $1,036,643 $(2,419) $2,615,735
Comprehensive income
Net income 245,192 $245,192 245,192
Other comprehensive income,
net of tax
Foreign currency translation
adjustment 273 273
Minimum pension liability
adjustment (1,133) (1,133)
--------
Other comprehensive income
total (860) (860)
--------
Comprehensive income total $244,332
Issuance of 84,891 shares of
common stock - net 1 2,355 2,356
Treasury shares purchased (5) (15,682) (15,687)
Treasury shares reissued 5 7,744 7,749
Dividends on common stock (283,860) (283,860)
Other (271) 4,520 4,249
------ ---------- ---------- ------- ----------
Balance March 31, 1998 $1,578 $1,574,080 $1,002,495 $(3,279) $2,574,874
</TABLE>
FINANCIAL STATEMENTS
TWELVE MONTHS ENDED MARCH 31, 1998
(dollars in thousands)
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGON, D.C.
FORM U-1
CINERGY CORP.
(Unaudited)
Pages 1 through 5
Note:
Pro forma adjustments are not included with the following
financial statements, since the authorization requested
herein does not involve issuance of any securities in
amounts not previously approved by the Commission based on,
among other things, pro forma financial statements
included in those proceedings (which proceedings are cited
in the text of the application-
declaration accompanying these financial statements).
<PAGE>
CINERGY CORP.
BALANCE SHEET
AT MARCH 31, 1998
(unaudited)
(dollars in thousands)
ASSETS
Current Assets
Cash and temporary cash investments $ 6,580
Notes receivable from affiliated companies 1,345
Accounts receivable - net 510
Accounts receivable from affiliated companies 107,263
Taxes receivable 5,848
Prepayments and other 2,342
----------
123,888
Other Assets
Investments in consolidated subsidiaries 3,084,285
Investments in unconsolidated subsidiaries (3,441)
Other 4,595
----------
3,085,439
$3,209,327
<PAGE>
CINERGY CORP.
BALANCE SHEET
AT MARCH 31, 1998
(unaudited)
(dollars in thousands)
CAPITALIZATION AND LIABILITIES
Common Stock Equity
Common stock - $.01 par value; authorized
shares - 600,000,000; outstanding shares -
157,764,020 at March 31, 1998 $ 1,578
Paid-in capital 1,574,080
Retained earnings 1,002,495
Accumulated other comprehensive income (3,279)
----------
Total common stock equity 2,574,874
Current Liabilities
Notes payable 624,300
Accounts payable 10,100
634,400
Other Liabilities 53
----------
$3,209,327
<PAGE>
CINERGY CORP.
STATEMENT OF INCOME
TWELVE MONTHS ENDED
MARCH 31, 1998
(unaudited)
(dollars in thousands)
Other Income and Expenses - Net
Equity in earnings of consolidated subsidiaries $286,992
Equity in earnings of unconsolidated subsidiaries (3,441)
Income taxes 7,172
Other - net (12,737)
--------
277,986
Income Before Interest 277,986
Interest 32,794
Net Income $245,192
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
STATEMENT OF CHANGES IN COMMON STOCK EQUITY
(dollars in thousands)
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Other Total Total
Common Paid-in Retained Comprehensive Comprehensive Common Stock
Stock Capital Earnings Income Income Equity
Twelve Months Ended March 31, 1998
Balance April 1, 1997 $1,577 $1,579,934 $1,036,643 $(2,419) $2,615,735
Comprehensive income
Net income 245,192 $245,192 245,192
Other comprehensive income,
net of tax
Foreign currency translation
adjustment 273 273
Minimum pension liability
adjustment (1,133) (1,133)
--------
Other comprehensive income
total (860) (860)
--------
Comprehensive income total $244,332
Issuance of 84,891 shares of
common stock - net 1 2,355 2,356
Treasury shares purchased (5) (15,682) (15,687)
Treasury shares reissued 5 7,744 7,749
Dividends on common stock (283,860) (283,860)
Other (271) 4,520 4,249
------ ---------- ---------- ------- ----------
Balance March 31, 1998 $1,578 $1,574,080 $1,002,495 $(3,279) $2,574,874
</TABLE>
