SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 15, 1999
Cinergy Corp.
(Exact name of registrant as specified in its charter)
Delaware 1-11377 31-1385023
(State of (Commission (IRS Employer
incorporation) File Number) Identification No.)
139 East Fourth Street, Cincinnati,
OH 45202 (Address of principal executive
offices) (Zip Code)
Registrant's telephone number, including area code: (513) 287-2644
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TABLE OF CONTENTS
Item Page
Number Number
2 Aquisition or Disposition of Assets
7 Financial Statements and Exhibits
Cinergy Corp.
Consolidated Pro Forma Balance Sheets at March 31, 1999
Consolidated Pro Forma Statement of Income for the
Quarter ended March 31, 1999 . . . . . . . . . . . .
Consolidated Pro Forma Statement of Income for the
Year ended December 31, 1998 . .. . . . . . . . . . . .
Pro Forma Adjustment Entries . .... . . . . . . . . . . .
Signature
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
As previously reported, Cinergy Corp. ("Cinergy") and GPU, Inc. ("GPU") entered
into an agreement for GPU to buy Cinergy's 50% stake in Avon Energy Partners
Holdings ("Avon"), which indirectly owns Midlands Electricity plc. Avon was
formed in 1996 along with its wholly owned subsidiary, Avon Energy Partners plc,
for the purpose of acquiring all the outstanding ordinary shares of Midlands
Electricity plc ("Midlands"). Midlands is headquartered in Worcester, England
and is one of 12 regional electricity companies in England and Wales. Midlands
distributes electricity to 2.2 million customers in a 5,000-square-mile
franchise service area that includes Birmingham, the U.K.'s second largest city.
Midlands owns and operates approximately 40,000 miles of overhead and
underground circuit. Cinergy's stake in Avon was held by Cinergy UK, Inc.
("Cinergy UK").
On July 15, 1999, the transaction was completed using a capital reduction
agreement. Under the agreement, Avon cancelled all shares of its capital stock
held by Cinergy UK in return for a payment of 452,500,000 pounds sterling UK
(approximately $705 million) to Cinergy UK, a net cash transaction of
approximately $600 million after income taxes. After the completion of the
transaction, GPU indirectly holds all of the capital stock in Avon. Cinergy
Global Resources, Inc., a direct subsidiary of Cinergy Corp., retained Midlands'
gas trading operation.
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ITEM 7. FINANCIAL STATEMENTS
CINERGY CORP.
CONSOLIDATED BALANCE SHEETS
As of March 31, 1999
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C> <C>
Pro Forma
Actual Adjustments Pro Forma
Current Assets
Cash and temporary cash investments $ 92,652 $ 705,000 (1) $ 163,652
(20,000)(2)
(14,000)(3)
(600,000)(7)
Restricted deposits 3,641 3,641
Notes receivable 59 59
Accounts receivable less accumulated
provision
for doubtful accounts of $31,355
at March
31, 1999, and $25,622 at December
31, 1998 397,686 397,686
Materials, supplies, and fuel - at
average cost 180,969 180,969
Prepayments and other 73,692 73,692
Energy risk management assets 703,278 703,278
----------- ---------- -----------
1,451,977 71,000 1,522,977
Utility Plant - Original Cost
In service
Electric 9,248,374 9,248,374
Gas 794,785 794,785
Common 197,299 197,299
----------- -----------
10,240,458 10,240,458
Accumulated depreciation 4,100,406 4,100,406
----------- -----------
6,140,052 6,140,052
Construction work in progress 209,461 209,461
----------- -----------
Total utility plant 6,349,513 6,349,513
Other Assets
Regulatory assets 940,386 940,386
Investments in unconsolidated
subsidiaries 645,250 (583,000)(1) 62,250
Other 459,022 459,022
----------- ---------- -----------
2,044,658 (583,000) 1,461,658
$ 9,846,148 $(512,000) $ 9,334,148
</TABLE>
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<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED BALANCE SHEETS
As of March 31, 1999
(unaudited)
(dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C> <C>
Pro Forma
Actual Adjustments Pro Forma
Current Liabilities
Accounts payable $ 433,732 $ 3,000 (4) $ 436,732
Accrued taxes 240,179 32,000 (6) 272,179
Accrued interest 40,878 (4,000)(2) 22,878
(14,000)(3)
Notes payable and other short-term
obligations 1,052,811 (600,000)(7) 452,811
Long-term debt due within one year 25,959 25,959
Energy risk management liabilities 828,424 828,424
Other 86,814 86,814
---------- ---------- ----------
2,708,797 (583,000) 2,125,797
Non-Current Liabilities
Long-term debt 2,605,657 2,605,657
Deferred income taxes 1,100,473 1,100,473
Unamortized investment tax credits 154,381 154,381
Accrued pension and other
postretirement benefit costs 323,949 323,949
Other 268,042 268,042
---------- ----------
4,452,502 4,452,502
Total liabilities 7,161,299 (583,000) 6,578,299
Cumulative Preferred Stock of
Subsidiaries not subject to mandatory
redemption 92,616 92,616
Common Stock Equity
Common stock - $.01 par value;
authorized shares - 600,000,000;
outstanding shares - 158,779,900
at March 31, 1999, and 158,664,532
at December 31, 1998 1,588 1,588
Paid-in capital 1,598,884 1,598,884
Retained earnings 1,001,034 68,000 1,069,034
Accumulated other comprehensive loss (9,273) 3,000 (5) (6,273)
Total common stock equity 2,592,233 71,000 2,663,233
---------- ---------- ----------
$9,846,148 $(512,000) $9,334,148
</TABLE>
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<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED PRO FORMA STATEMENT OF INCOME
For the Quarter Ended March 31, 1999
(unaudited)
(dollars in thousands, except per share amounts)
<S> <C> <C> <C>
Pro Forma
Actual Adjustments Pro Forma
Operating Revenues
Electric $ 968,532 $ 968,532
Gas 421,308 421,308
Other 12,439 12,439
---------- ----------
1,402,279 1,402,279
Operating Expenses
Fuel and purchased and exchanged
power 433,169 433,169
Gas purchased 334,402 334,402
Other operation and maintenance 244,548 244,548
Depreciation and amortization 86,477 86,477
Taxes other than income taxes 69,534 69,534
---------- ----------
1,168,130 1,168,130
Operating Income 234,149 234,149
Equity in Earnings of Unconsolidated
Subsidiaries 44,682 $(45,000)(1) (318)
Other Income and (Expenses) - Net (11,886) (11,886)
Interest 60,772 (3,000)(2) 49,772
---------- (8,000)(2) ----------
Income Before Taxes 206,173 (34,000) 172,173
Income Taxes 77,564 (15,000)(1) 66,564
1,000 (2)
3,000 (3)
Preferred Dividend Requirements
of Subsidiaries 1,364 1,364
---------- ----------
Net Income $ 127,245 $(23,000) $ 104,245
Average Common Shares Outstanding 158,746 158,746
Earnings Per Common Share
Net income $0.80 $0.66
Earnings Per Common Share - Assuming
Dilution net income $0.80 $0.66
Dividends Declared Per Common Share $0.45 $0.45
</TABLE>
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<TABLE>
<CAPTION>
CINERGY CORP.
CONSOLIDATED PRO FORMA STATEMENT OF INCOME
For the Year Ended December 31, 1998
(unaudited)
(dollars in thousands, except per share amounts)
<S> <C> <C> <C>
Pro Forma
Actual Adjustments Pro Forma
Operating Revenues
Electric $4,747,235 $4,747,235
Gas 1,060,664 1,060,664
Other 68,395 68,395
---------- ----------
5,876,294 5,876,294
Operating Expenses
Fuel and purchased and exchanged
power 2,846,323 2,846,323
Gas purchased 857,010 857,010
Other operation and maintenance 1,006,382 1,006,382
Depreciation and amortization 325,515 325,515
Taxes other than income taxes 274,635 274,635
---------- ----------
5,309,865 5,309,865
Operating Income 566,429 566,429
Equity in Earnings of Unconsolidated
Subsidiaries 51,484 $(57,000)(1) (5,516)
Other Income and (Expenses) - Net 10,346 10,346
Interest 243,587 (10,000)(2) 199,587
---------- ---------- ----------
(34,000)(3)
Income Before Taxes 384,672 (13,000) 371,672
Income Taxes 117,187 (10,000)(1) 122,187
3,000 (2)
12,000 (3)
Preferred Dividend Requirements
of Subsidiaries 6,517 6,517
---------- ---------- ----------
Net Income Before Extraordinary Item $ 260,968 $ (18,000) $ 242,968
Average Common Shares Outstanding 158,238 158,238
Earnings Per Common Share $1.65 $1.54
Earnings Per Common Share - Assuming
Dilution $1.65 $1.54
Dividends Declared Per Common Share $1.80 $1.80
</TABLE>
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<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA ADJUSTMENT ENTRIES RELATED TO ITEM 2
FOR THE CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1999
(dollars in millions)
<S> <C> <C>
Entry 1
Cash and Temporary Cash Investments 705
Investments in Unconsolidated Subsidiaries 583
Other Income and Expense 122
To reflect the cash received for the transaction
Entry 2
Other Income and Expense 16
Accrued Interest 4
Cash and Temporary Cash Investments 20
To reflect the additional costs and reflect the closing of the associated
currency swap
Entry 3
Accrued Interest 14
Cash and Temporary Cash Investments 14
To reflect the closing of the notional amount of the swap
Entry 4
Other Income and Expense 3
Accounts Payable 3
To reflect expenses related to the sales transaction
Entry 5
Accrued Interest 3
Accumulated Other Comprehensive loss 3
To eliminate the currency translation amounts associated with the transaction
Entry 6
Income Taxes 32
Accrued Taxes 32
To reflect the tax effect of the transaction
Entry 7
Notes Payable and Other Short-Term Obligations 600
Cash and Temporary Cash Investments 600
To reflect the use of the proceeds from the transaction
</TABLE>
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<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA ADJUSTMENT ENTRIES RELATED TO ITEM 2
FOR THE CONSOLIDATED INCOME STATEMENT FOR THE QUARTER ENDED MARCH 31, 1999
(dollars in millions)
<S> <C> <C>
Entry 1
Equity in Earnings of Unconsolidated Subsidieries 45
Accrued Taxes 15
Income Taxes 15
Investments in Unconsolidated Subsidieries 45
To reflect the direct earnings impact of the transaction
Entry 2
Accrued Interest 3
Income Taxes 1
Interest Expense 3
Accrued Taxes 1
To reflect the impact of the removal of the interest rate swap
Entry 3
Accrued Interest 8
Income Taxes 3
Interest Expense 8
Accrued Taxes 3
To reflect the decrease in associated interest expense related to the
transaction
</TABLE>
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<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA ADJUSTMENT ENTRIES RELATED TO ITEM 2
FOR THE CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 1998
<S> <C> <C>
Entry 1
Equity in Earnings of Unconsolidated Subsidieries 57
Accrued Taxes 10
Income Taxes 10
Investments in Unconsolidated Subsidieries 57
To reflect the direct earnings impact of the transaction
Entry 2
Accrued Interest 10
Income Taxes 3
Interest Expense 10
Accrued Taxes 3
To reflect the impact of the removal of the interest rate swap
Entry 3
Accrued Interest 34
Income Taxes 12
Interest Expense 34
Accrued Taxes 12
To reflect the decrease in associated interest expense related to the
transaction
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Cinergy Corp._________
(Registrant)
Date: July 29, 1999 By: /s/ Bernard F. Roberts
--------------------------------
Bernard F. Roberts
Vice President and Comptroller
(Signature)
