SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
Commission File Number 1-11377
A. Full title of the Plan:
THE CINCINNATI GAS & ELECTRIC COMPANY
SAVINGS INCENTIVE PLAN
B. Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
Cinergy Corp.
139 East Fourth Street
Cincinnati, Ohio 45202 - 4003
<PAGE>
THE CG&E COMPANY SAVINGS INCENTIVE PLAN
FINANCIAL STATEMENTS AND EXHIBITS
Page No.
(a) Financial Statements
Report of Independent Public Accountants 3
Statement of Net Assets Available for Benefits, with
Fund Information, as of December 31, 1997 4
Statement of Net Assets Available for Benefits, with
Fund Information, as of December 31, 1996 5
Statement of Changes in Net Assets Available for Benefits,
with Fund Information, for the Year Ended December 31, 1997 6
Notes to Financial Statements 7-10
Financial Statement Schedules (As Required By The Employee
Retirement Income Security Act)
Schedule I - Schedule of Assets Held for Investment
Purposes-December 31, 1997 11
Schedule II - Schedule of Reportable Transactions for
the year ended December 31, 1997 12
(b) Exhibit
23) Consent of Independent Public Accountants
<PAGE>
Report of Independent Public Accountants
To the Plan Administrator of The Cincinnati Gas & Electric Company Savings
Incentive Plan:
We have audited the accompanying statements of net assets available for
benefits, with fund information, of THE CINCINNATI GAS & ELECTRIC COMPANY
SAVINGS INCENTIVE PLAN as of December 31, 1997 and 1996, and the related
statement of changes in net assets available for benefits, with fund
information, for the year ended December 31, 1997. These financial statements
and the schedules referred to below are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits, with fund
information, of the Plan as of December 31, 1997 and 1996, and the changes in
net assets available for benefits, with fund information, for the year ended
December 31, 1997 in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules (Schedules I
and II) are presented for the purpose of additional analysis and are not a
required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The fund information in the statements of net assets available for
benefits and the statement of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the net
assets available for benefits and changes in net assets available for benefits
of each fund. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
June 22, 1998
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY SAVINGS INCENTIVE PLAN
Statement of Net Assets Available for Benefits, with Fund Information
As of December 31, 1997
Participant Directed
<S> <C> <C> <C> <C> <C> <C> <C>
Fidelity Fidelity
Fidelity Low- Fidelity Retirement
Fidelity Equity- Fidelity Priced Diversified Money Cinergy
Magellan Income Intermediate Stock International Market Common
Fund Fund Bond Fund Fund Fund Fund Stock Fund
ASSETS
Investments, at fair value:
Shares of registered investment
companies $ 8,344,841 $16,571,031 $1,643,579 $1,384,880 $ 405,471 $3,080,090 $ -
Common Stock - - - - - - 99,868,069
Participant Loans - - - - - - -
Total Investments 8,344,841 16,571,031 1,643,579 1,384,880 405,471 3,080,090 99,868,069
Receivables:
Employer's Contribution - - - - - - -
Participants' Contribution 34,370 40,040 5,541 6,955 2,338 14,069 431,927
Total receivables 34,370 40,040 5,541 6,955 2,338 14,069 431,927
Net assets available for benefits $ 8,379,211 $16,611,071 $1,649,120 $1,391,835 $ 407,809 $3,094,159 $100,299,996
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY SAVINGS INCENTIVE PLAN
Statement of Net Assets Available for Benefits, with Fund Information (Continued)
As of December 31, 1997
<S> <C> <C> <C>
Non-
Participant Participant
Directed Directed
Cinergy
Participant Common
Loan Fund Stock Fund Total
ASSETS
Investments, at fair value:
Shares of registered investment
companies $ - $ - $ 31,429,892
Common Stock - 51,579,542 151,447,611
Participant Loans 7,312,212 - 7,312,212
Total Investments 7,312,212 51,579,542 190,189,715
Receivables:
Employer's Contribution - 96,050 96,050
Participants' Contribution - - 535,240
Total receivables - 96,050 631,290
Net assets available for benefits $7,312,212 $51,675,592 $190,821,005
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY SAVINGS INCENTIVE PLAN
Statement of Net Assets Available for Benefits, with Fund Information
As of December 31, 1996
Non-
Participant
Participant Directed Directed
<S> <C> <C> <C> <C> <C> <C> <C>
Fidelity
Fidelity Retirement
Fidelity Equity- Fidelity Money Cinergy Cinergy
Magellan Income Intermediate Market Common Participant Common
Fund Fund Bond Fund Fund Stock Fund Loan Fund Stock Fund
ASSETS
Investments, at fair value:
Shares of registered investment
companies $ 4,198,665 $11,395,092 $1,428,486 $5,874,739 $ - $ - $ -
Common Stock - - - - 100,039,222 - 45,212,499
Participant Loans - - - - - 6,244,939 -
Total Investments 4,198,665 11,395,092 1,428,486 5,874,739 100,039,222 6,244,939 45,212,499
Receivables:
Employer's Contribution - - - - - - 1,059,033
Participants' Contribution 13,166 16,301 2,848 8,675 108,368 - -
Total receivables 13,166 16,301 2,848 8,675 108,368 - 1,059,033
Net assets available for benefits $ 4,211,831 $11,411,393 $1,431,334 $5,883,414 $100,147,590 $6,244,939 $ 46,271,532
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY SAVINGS INCENTIVE PLAN
Statement of Net Assets Available for Benefits, with Fund Information (Continued)
As of December 31, 1996
<S> <C>
Total
ASSETS
Investments, at fair value:
Shares of registered investment
companies $ 22,896,982
Common Stock 145,251,721
Participant Loans 6,244,939
Total Investments 174,393,642
Receivables:
Employer's Contribution 1,059,033
Participants' Contribution 149,358
Total receivables 1,208,391
Net assets available for benefits $175,602,033
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY SAVINGS INCENTIVE PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information
For the Year Ended December 31, 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Participant Directed
Fidelity Fidelity
Fidelity Low- Fidelity Retirement
Fidelity Equity- Fidelity Priced Diversified Money Cinergy
Magellan Income Intermediate Stock International Market Common
Fund Fund Bond Fund Fund Fund Fund Stock Fund
Additions to net assets:
Investments income:
Net appreciation
(depreceition) in fair
value of investments $ 784,511 $ 2,720,315 $ 14,847 $ (25,312) $ (17,952) $ - $ 14,290,256
Interest - - - - - - -
Dividends 449,813 846,366 86,292 42,150 12,545 162,698 4,763,214
1,234,324 3,566,681 101,139 16,838 (5,407) 162,698 19,053,470
Contributions:
Participants' 749,792 952,609 142,235 50,378 20,261 422,114 5,790,234
Employer's - - - - - - -
749,792 952,609 142,235 50,378 20,261 422,114 5,790,234
Total Additions 1,984,116 4,519,290 243,374 67,216 14,854 584,812 24,843,704
Deductions from net
assets:
Benefits paid to
participants 760,186 1,737,446 214,551 - - 9,012,087 15,047,441
Total Deductions 760,186 1,737,446 214,551 - - 9,012,087 15,047,441
Net increase/(decrease)
prior to transfers 1,223,930 2,781,844 28,823 67,216 14,854 (8,427,275) 9,796,263
Interfund transfers 2,367,520 1,779,118 151,021 1,277,147 386,025 5,580,862 (10,687,274)
Interplan transfers 575,930 638,716 37,942 47,472 6,930 57,158 1,043,417
Net increase (decrease) 4,167,380 5,199,678 217,786 1,391,835 407,809 (2,789,255) 152,406
Net assets available for
benefits:
Beginning of year 4,211,831 11,411,393 1,431,334 - - 5,883,414 100,147,590
End of year $ 8,379,211 $16,611,071 $1,649,120 $1,391,835 $ 407,809 $ 3,094,159 $100,299,996
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CINCINNATI GAS & ELECTRIC COMPANY SAVINGS INCENTIVE PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information
For the Year Ended December 31, 1997
Non-
Participant
Participant Directed
<S> <C> <C> <C>
Cinergy
Participant Common
Loan Fund Stock Fund Total
Additions to net assets:
Investments income:
Net appreciation
(depreceition) in fair
value of investments $ - $ 7,214,609 $ 24,981,274
Interest 514,732 - 514,732
Dividends - 2,304,790 8,667,868
514,732 9,519,399 34,163,874
Contributions:
Participants' - - 8,127,623
Employer's - 2,763,528 2,763,528
- 2,763,528 10,891,151
Total Additions 514,732 12,282,927 45,055,025
Deductions from net
assets:
Benefits paid to
participants 415,881 5,724,706 32,912,298
Total Deductions 415,881 5,724,706 32,912,298
Net increase/(decrease)
prior to transfers 98,851 6,558,221 12,142,727
Interfund transfers 958,149 (1,812,568) -
Interplan transfers 10,273 658,407 3,076,245
Net increase (decrease) 1,067,273 5,404,060 15,218,972
Net assets available for
benefits:
Beginning of year 6,244,939 46,271,532 175,602,033
End of year $ 7,312,212 $51,675,592 $190,821,005
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
SAVINGS INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS
(1) Description of The Cincinnati Gas & Electric Company Savings Incentive Plan
(SIP or the Plan) - The following is a brief description of the Plan.
Participants should refer to the Plan Document and the related Trust
Agreement, including the defined terms, for more complete information of
the Plan's provisions. The Plan is a defined contribution plan covering all
weekly or hourly paid employees of The Cincinnati Gas & Electric Company
(CG&E), a subsidiary of Cinergy Corp., the employees of Union Light, Heat
and Power Company, and Lawrenceburg Gas Company. The Plan is administered
by the CG&E Benefits Committee and trusteed by Fidelity Management Trust
Company. The administrative expenses are paid by CG&E. The Plan is subject
to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
Under the Plan, participants may contribute up to 15% of annual pretax
compensation, as defined in the Plan. In addition, a participant may make
optional contributions to the Plan which, when combined with salary
deferrals, may not exceed 15% of base pay. Salary deferrals and optional
contributions are subject to certain limitations. The salary deferrals and
optional contributions are invested by the trustee, as directed by each
participant, in one or more investment funds, including the Cinergy Common
Stock Fund.
The participant's employer contributes 60% of the first 5% of base pay
contributed by each participant. An additional incentive match of up to 40%
of the first 5% of base pay that a participant contributes may be
contributed at the discretion of the employer's board of directors. For
those employees who do not contribute to the Plan, the employers contribute
an incentive match assuming the participant contributed 1% of base pay. All
employer contributions must be invested by the trustee in the Cinergy
Common Stock Fund. The employer contributions must remain in the Cinergy
Common Stock Fund until the participant reaches age 50 and are shown on the
statement of net assets available for benefits as "Non-Participant
Directed" funds until the employee elects to transfer the funds to another
investment option. Participants are immediately vested in all contributions
and earnings thereon.
Participants are generally eligible to receive distributions of assets from
the Plan upon termination of employment (including retirement), death, or
disability. Distributions are paid in a lump sum for vested benefits of
$3,500 or less. Distributions are paid in a lump sum or up to ten annual
installments (at the election of the participant) for vested benefits
greater than $3,500. Active participants are also eligible to apply to the
Plan administrator for "hardship" withdrawals from their salary deferral
account in accordance with Plan provisions.
Subject to certain limitations, employees may apply for loans from their
salary deferral account balances. Such loans are reflected in the
Participant Loan Fund in the accompanying financial statements. Interest on
the loans is set at the prime rate plus 1/2% at the time of borrowing and
are secured by the balance in the participant's account. Loans are repaid
within 54 months through regular payroll deductions.
(2) Significant Accounting Policies - The financial statements of the Plan are
prepared under the accrual method of accounting. Investments are stated at
fair value. Shares of registered investment companies are valued at quoted
market prices which represent the net asset value of shares held by the
Plan at year-end. Cinergy common stock is valued at its quoted market
price. Participant loans are valued at cost, which approximates market.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on
the ex- dividend date. Benefits are recorded when paid.
Transfers of assets between the SIP and the CG&E Deferred Compensation and
Investment Plan occur as a result of changes in employee status between the
weekly and hourly paid classification and the executive, supervisory,
administrative, and professional classification. Such transfers are
reflected as interplan transfers in the statement of changes in net assets
available for benefits.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Plan Committee to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
(3) Investment Options
The investment options of the Plan are as follows:
Participant contributions - Upon enrollment or re-enrollment, participants
direct that their contributions, including any rollover contributions, be
invested in one or more of the following investment options:
* Fidelity Magellan Fund
The Fidelity Magellan Fund invests mainly in equity securities of
domestic, foreign, and multinational issuers of all sizes that offer
potential for growth with the principal purpose of seeking maximum
appreciation in value.
* Fidelity Equity-Income Fund
The Fidelity Equity-Income Fund invests mainly in income producing
equity securities with the principal purpose of earning reasonable
income while considering the potential for capital appreciation.
* Fidelity Intermediate Bond Fund
The Fidelity Intermediate Bond Fund invests mainly in income producing
equity securities with the principal purpose of a moderate risk level
and yield potential.
* Fidelity Low-Priced Stock Fund
The Fidelity Low-Priced Stock Fund invests primarily in the stocks of
companies that the fund manager considers undervalued or out of favor
with other investors and that could offer the possibility for
significant growth with the principal purpose of seeking out stocks of
smaller companies with per share prices of $25 or less.
* Fidelity Diversified International Fund
The Fidelity Diversified International Fund invests primarily in
stocks of companies located outside the U.S. that are included in the
Morgan Stanley EAFE(R) index with the principal purpose of seeking out
stocks that are undervalued compared to industry norms in their
countries.
* Fidelity Retirement Money Market Fund
The Fidelity Retirement Money Market Fund invests in high quality
money market instruments including certificates of deposit, commercial
paper, short-term corporate and U.S. Government obligations and
bankers' acceptance issued by major banks . The purpose of the Fund is
to seek high money market yields while maintaining preservation of
capital.
* Cinergy Common Stock Fund
The Cinergy Common Stock Fund invests in common stock of Cinergy
Corp.
(4) Federal Income Tax Status - The Internal Revenue Service has determined and
informed the Plan by letter dated January 1995, that the Plan is designed
in accordance with applicable sections of the Internal Revenue Code (IRC).
The Plan has been amended since receiving the determination letter.
However, the Plan administrator and the Plan's legal counsel believe that
the Plan is designed and is currently being operated in compliance with the
applicable provisions of the IRC.
(5) Investments - A participant may elect or change investment funds and/or the
percentages in which contributions will be allocated at any time.
The following investments exceed 5% of total net assets available for
benefits at December 31, 1997 and 1996:
1997 1996
Cinergy Common Stock Fund $151,447,611 $145,251,721
Fidelity Equity-Income Fund 16,571,031 11,395,092
(6) Reconciliation of Financial Statements to Form 5500--The following is a
reconciliation of Net Assets Available for Benefits per the financial
statements to the Form 5500:
December 31,
1997 1996
Net Assets per financial statements $190,821,005 $175,602,033
Amounts allocated to withdrawing participants (315,945) (6,474)
Net assets per Form 5500 $190,505,060 $175,595,559
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
Year Ended
December 31,
1997
Benefits paid to participants per financial statements $32,912,298
Add: Amounts allocated to withdrawing participants
at December 31, 1997 315,945
Less: Amounts allocated to withdrawing participants
at December 31, 1996 (6,474)
Benefits paid to participants per Form 5500 $ 33,221,769
Amounts allocated to withdrawing participants are recorded on the Form 5500
for distributions that have been processed and approved for payment prior
to December 31 but not yet paid as of that date
(7) Plan Termination - Although it has not expressed any intent to do so, CG&E
has the right under the Plan to discontinue its contributions at any time
and to terminate the Plan subject to the provisions of ERISA.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
THE CINCINNATI GAS & ELECTRIC COMPANY
SAVINGS INCENTIVE PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1997
<S> <C> <C> <C>
Identity of Issuer, Borrower, Description of Investment, Including Maturity Date,
Lessor, or Similar Party Rate of Interest, Collateral, and Par or Maturity Value Cost Current Value
* Cinergy Corp. Common Stock $ 83,204,574 $151,447,611
* Fidelity Investments Magellan Fund 7,524,375 8,344,841
* Fidelity Investments Equity Income Fund 12,690,962 16,571,031
* Fidelity Investments Intermediate Bond Fund 1,654,960 1,643,579
* Fidelity Investments Low-Priced Stock Fund 1,411,152 1,384,880
* Fidelity Investments Diversified International Stock Fund 423,667 405,471
* Fidelity Investments Retirement Money Market Fund 3,080,090 3,080,090
* Various plan participants Participant loans (interest rates ranging from 5.25-9%) 7,312,212 7,312,212
Total assets held for
investment purposes $117,301,992 $190,189,715
<FN>
* Denotes a party-in-interest
</FN>
</TABLE>
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<TABLE>
<CAPTION>
SCHEDULE II
THE CINCINNATI GAS & ELECTRIC COMPANY
SAVINGS INCENTIVE PLAN
Sponsor EIN: 31-0240030
Administration EIN: 31-1070386
Plan Number: 002
Item 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1997
<S> <C> <C> <C> <C> <C>
Total Total
Number of Number of Purchase Selling Price Net Gain
Identity of Securities Purchases Sales Price (A) (A) on Sales
Cinergy Corp. Common 253 249 $23,898,826 $39,199,099 $16,421,165
Stock Fund
Fidelity Equity-Income Fund 227 176 6,276,448 3,820,825 730,278
Fidelity Retirement Money
Market Fund 187 172 9,768,940 12,563,590 -
<FN>
(A) The current value of all assets acquired or disposed of, at the time of
the acquisition or disposition, is equal to the purchase price or selling
price, respectively.
</FN>
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Committee has duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE CINCINNATI GAS & ELECTRIC COMPANY
SAVINGS INCENTIVE PLAN
(Name of Plan)
By /s/JERRY W. LIGGETT
Jerry W. Liggett
Plan Administrator
June 22, 1998
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 22, 1998 included in the Annual Report on
Form 11-K for the year ended December 31, 1997 of The Cincinnati Gas & Electric
Company Savings Incentive Plan, into Cinergy Corp.'s previously filed
Registration Statement File No. 33-55293.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio
June 22, 1998
