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:
PSI ENERGY, INC. UNION EMPLOYEES' 401(k) SAVINGS 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>
PSI Energy, Inc.
Union Employees' 401(k) Savings 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 PSI Energy, Inc. Employees' 401(k) Savings
Plan:
We have audited the accompanying statements of net assets available for
benefits, with fund information, of the PSI ENERGY, INC. EMPLOYEES' 401(k)
SAVINGS 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>
PSI ENERGY, INC. EMPLOYEES' 401(k) SAVINGS 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> <C>
Fidelity
Fidelity Fidelity Fidelity Retirement
Fidelity Equity- Asset Fidelity Diversified Fidelity Money Cinergy
Magellan Income Manager U.S. Bond International Low-Priced Market Common
Fund Fund Fund Index Fund Fund Stock Fund Fund Stock Fund
ASSETS
Investments, at fair value:
Shares of registered investment
companies $ 54,552,571 $61,145,074 $6,594,866 $5,840,588 $ 1,570,120 $ 4,121,952 $12,218,642 $ -
Common stock - - - - - - - 95,595,584
Participant loans - - - - - - - -
Total investments 54,552,571 61,145,074 6,594,866 5,840,588 1,570,120 4,121,952 12,218,642 95,595,584
Receivables:
Employer's contribution - - - - - - - -
Participants' contributions 17,647 10,046 4,978 932 229 539 5,608 50,047
Total receivables 17,647 10,046 4,978 932 229 539 5,608 50,047
Net assets available for
benefits $ 54,570,218 $61,155,120 $6,599,844 $5,841,520 $ 1,570,349 $ 4,122,491 $12,224,250 $ 95,645,631
</TABLE>
<TABLE>
<CAPTION>
PSI ENERGY, INC. EMPLOYEES' 401(k) SAVINGS 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 $ - $ - $ 146,043,813
Common stock - 75,638,528 171,234,112
Participant loans 6,707,503 - 6,707,503
Total investments 6,707,503 75,638,528 323,985,428
Receivables:
Employer's contribution - 17,437 17,437
Participants' contributions - - 90,026
Total receivables - 17,437 107,463
Net assets available for
benefits $ 6,707,503 $75,655,965 $ 324,092,891
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC. EMPLOYEES' 401(k) SAVINGS PLAN
Statement of Net Assets Available for Benefits, with Fund Information
As of December 31, 1996
Participant Directed
<S> <C> <C> <C> <C> <C> <C> <C>
Fidelity
Fidelity Fidelity Retirement
Fidelity Equity- Asset Fidelity Money Cinergy
Magellan Income Manager U.S. Bond Market Common Participant
Fund Fund Fund Index Fund Fund Stock Fund Loan Fund
ASSETS
Investments, at fair value:
Shares of registered
investment companies $ 27,839,227 $16,625,507 $4,928,175 $1,556,733 $ 8,179,162 $ - $ -
Common stock - - - - - 21,172,802 -
Participant loans - - - - - - 2,279,221
Total investments 27,839,227 16,625,507 4,928,175 1,556,733 8,179,162 21,172,802 2,279,221
Receivables:
Employer's contribution - - - - - - -
Participants' contribution 17,655 8,051 6,501 872 5,614 3,359 -
Total receivables 17,655 8,051 6,501 872 5,614 3,359 -
Net assets available for
benefits $27,856,882 $16,633,558 $4,934,676 $1,557,605 $ 8,184,776 $ 21,176,161 $ 2,279,221
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC. EMPLOYEES' 401(k) SAVINGS PLAN
Statement of Net Assets Available for Benefits, with Fund Information (Continued)
As of December 31, 1996
Non-
Participant
Directed
<S> <C> <C>
Common
Stock Fund Total
ASSETS
Investments, at fair value:
Shares of registered investment
companies $ - $ 59,128,804
Common stock 20,787,626 41,960,428
Participant loans - 2,279,221
Total investments 20,787,626 103,368,453
Receivables:
Employer's contribution 863,809 863,809
Participants' contribution - 42,052
Total receivables 863,809 905,861
Net assets available for benefits $ 21,651,435 $ 104,274,314
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC. EMPLOYEES' 401(k) SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information
For the Year Ended December 31, 1997
Participant Directed
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity
Fidelity Fidelity Fidelity Retirement
Fidelity Equity- Asset Fidelity Fidelity Diversified Money Cinergy
Magellan Income Manager U.S. Bond Low-Priced International Market Common
Fund Fund Fund Index Fund Stock Fund Fund Fund Stock Fund
Additions to net assets:
Investment income:
Net appreciation (depreciation)
in fair value of
investments $ 5,131,584 $ 3,946,908 $ 589,209 $ 40,462 $ (2,986) $ (40,969) $ - $ 3,548,146
Interest - - - - - - - -
Dividends 2,265,998 1,261,656 566,218 121,207 54,942 23,322 451,614 1,122,018
7,397,582 5,208,564 1,155,427 161,669 51,956 (17,647) 451,614 4,670,164
Contributions:
Participants' 2,890,556 1,901,171 661,555 176,395 74,448 43,175 618,442 603,547
Employer's - - - - - - 3,716 -
Rollovers 74,093 97,563 30,716 28,890 15,416 22,124 20,624 28,513
2,964,649 1,998,734 692,271 205,285 89,864 65,299 642,782 632,060
Total Additions 10,362,231 7,207,298 1,847,698 366,954 141,820 47,652 1,094,396 5,302,224
Deductions from net assets:
Benefits paid to participants 1,116,493 1,134,428 248,679 125,511 - - 789,650 1,012,493
Total Deductions 1,116,493 1,134,428 248,679 125,511 - - 789,650 1,012,493
Net increase/(decrease) prior
to transfers 9,245,738 6,072,870 1,599,019 241,443 141,820 47,652 304,746 4,289,731
Transfer in of CG&E Plan
(Note 1) 19,012,211 37,425,255 - 3,697,125 2,732,380 901,011 3,824,538 70,599,548
Interfund transfers (1,544,726) 983,329 60,535 133,663 1,249,206 622,889 (71,055) (1,237,930)
Interplan transfers 113 40,108 5,614 211,684 (915) (1,203) (18,755) 818,121
Net increase (decrease) 26,713,336 44,521,562 1,665,168 4,283,915 4,122,491 1,570,349 4,039,474 74,469,470
Net assets available for benefits:
Beginning of year 27,856,882 16,633,558 4,934,676 1,557,605 - - 8,184,776 21,176,161
End of year $ 54,570,218 $61,155,120 $6,599,844 $5,841,520 $ 4,122,491 $ 1,570,349 $12,224,250 $95,645,631
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC. EMPLOYEES' 401(k) SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information(Continued)
For the Year Ended December 31, 1997
<S> <C> <C> <C>
Non-
Participant Participant
Directed Directed
Cinergy
Participant Common
Loan Fund Stock Fund Total
Additions to net assets:
Investment income:
Net appreciation (depreciation)
in fair value of
investment $ - $ 3,590,386 $ 16,802,740
Interest 206,592 - 206,592
Dividends - 1,189,567 7,056,542
206,592 4,779,953 24,065,874
Contributions:
Participants' - - 6,969,289
Employer's - 2,532,295 2,536,011
Rollovers - - 317,939
- 2,532,295 9,823,239
Total Additions 206,592 7,312,248 33,889,113
Deductions from net assets:
Benefits paid to participants 48,510 737,915 5,213,679
Total Deductions 48,510 737,915 5,213,679
Net increase/(decrease) prior
to transfers 158,082 6,574,333 28,675,434
Transfer in of CG&E Plan
(Note 1) 3,719,820 48,379,870 190,291,758
Interfund transfers 543,499 (739,410) -
Interplan transfers 6,881 (210,263) 851,385
Net increase (decrease) 4,428,282 54,004,530 219,818,577
Net assets available for benefits:
Beginning of year 2,279,221 21,651,435 104,274,314
End of year $ 6,707,503 $75,655,965 $ 324,092,891
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
PSI ENERGY, INC. EMPLOYEES' 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(1) Plan Description--The PSI Energy, Inc. Employees' 401(k) Savings Plan
(Plan) is a defined contribution plan covering non-union employees of PSI
Energy, Inc. (PSI)(a subsidiary of Cinergy Corp) who meet minimum age and
service requirements. The Plan is administered by the CG&E and PSI Benefits
Administration Committee and trusteed by the Fidelity Management Trust
Company. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). The administrative expenses of the
Plan are paid by PSI. Further details of the Plan are provided in the
Summary Plan Description which has been distributed to all Plan
participants.
Effective December 31, 1997, the assets of the CG&E Deferred Compensation
and Investment Plan's assets were merged into the PSI Energy, Inc.
Employees' 401(k) Savings Plan. CG&E and PSI are both subsidiaries of
Cinergy Corp. Investments options previously available to the participants
of the plan will remain available except that the Fidelity Intermediate
Bond Fund has been replaced with the Fidelity U.S. Bond Index Fund.
Effective January 1, 1998, the PSI Energy, Inc. Employees' 401(k) Savings
Plan's name will be changed to the Cinergy Employees' 401(k) Savings Plan.
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 2% of base pay. All
employer contributions must be invested by the trustee in the Cinergy
Common Stock Fund until the Participant reaches age 50 and are shown on the
statement of net assets available for benefits and statement of changes in
net assets available for benefits as "Non-Participant Directed" funds until
the participant 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 of five 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. The loans
are secured by the balance in the participant's account and bear interest
at the prime rate plus 1/2%, and are repaid within 54 months through
regular payroll deductions.
<PAGE>
(2) Significant Accounting Policies--The financial statements of the Plan are
prepared on an accrual basis.
Investments of the Plan 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 Plan and the PSI Energy, Inc. Union
Employees' 401(k) Savings Plan occur as a result of a change in employee
status between the union classification and the exempt and non-exempt
classification.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management 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) Investments--A participant may elect or change investment funds and/or the
percentages in which contributions will be allocated at any time.
The fair value of individual investments that represent 5% or more the
Plan's total net assets as of December 31, 1997 and 1996 are as follows:
1997 1996
Fidelity Magellan Fund $54,552,571 $27,839,227
Fidelity Equity-Income fund 61,145,074 16,625,507
Fidelity Retirement Money Market 12,218,642 8,179,162
Cinergy Corp. Common Stock 171,234,112 41,960,428
(4) Investment Options-
The investment options of the Plan are as follows:
Participant contributions - Upon enrollment or re-enrollment, participants
shall 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 Asset Manager Fund
The Fidelity Asset Manager Fund invests in equities, bonds
and short-term instruments or mutual funds, both domestic
and foreign with the principal purpose of seeking high total
return while reducing risk over the long term.
- Fidelity U.S. Bond Index Fund
The Fidelity U.S. Bond Index Fund invests in securities that
include obligations of the U.S. Treasury, U.S. Agencies,
corporations, mortgage-backed obligations, and U.S.
dollar-denominated obligations of foreign governments with
the principal purpose of seeking current income consistent
with the preservation of capital.
- 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 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 the 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 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' acceptances 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.
(5) Federal Income Tax Status--The plan received a determination letter dated
November 14, 1995 verifying 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 the Plan is designed and
being operated in compliance with the applicable requirements of the IRC.
(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 $324,092,891 $104,274,314
Amounts allocated to withdrawing participants (33,857) (219,094)
Net assets per Form 5500 $324,059,034 $104,055,220
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 $5,213,679
Add: Amounts allocated to withdrawing participants
at December 31, 1997 33,857
Less: Amounts allocated to withdrawing participants
at December 31, 1996 (219,094)
Benefits paid to participants per Form 5500 $ 5,028,442
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) Subsequent Event--Effective January 1, 1998, the PSI Energy, Inc. (PSI)
Employees' 401(k) Savings Plan changed its name to the Cinergy Employees'
401(k) Savings Plan (Cinergy Plan) and the net assets of the Cincinnati Gas
& Electric Company's (CG&E) Deferred Compensation and Investment Plan were
merged into the Cinergy Plan. CG&E and PSI are both subsidiaries of Cinergy
Corp. All investment options previously available to the participants of
the Plan will remain available under the Cinergy Plan.
(8) Plan Termination--Although it has not expressed any intent to do so, the
Plan sponsor 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
PSI ENERGY, INC. EMPLOYEES' 401(K) SAVINGS PLAN
ITEM 27a--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1997
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
<S> <C> <C> <C>
* Cinergy Corp. Common Stock $ 94,836,040 $ 171,234,112
* Fidelity Investments Magellan Fund 46,677,264 54,552,571
* Fidelity Investments Equity-Income Fund 54,076,453 61,145,074
* Fidelity Investments Asset Manager Fund 5,744,125 6,594,866
* Fidelity Investments U.S. Bond Index Fund 5,815,689 5,840,588
* Fidelity Investments Diversified International Stock Fund 1,610,388 1,570,120
* Fidelity Investments Low-Priced Stock Fund 4,125,832 4,121,952
* Fidelity Investments Retirement Money Market Fund 12,218,642 12,218,642
* Various plan participants Participant loans (interest rates ranging from 5.25-9%) 6,707,503 6,707,503
Total assets held for investment purposes $ 231,811,936 $ 323,985,428
<FN>
* Denotes a party-in-interest
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
PSI ENERGY, INC.
EMPLOYEES' 401(k) SAVINGS PLAN
EIN: 35-0594457
Plan Number: 002
Item 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1997
<S> <C> <C> <C> <C> <C>
Total Total
Identity of Number of Number Purchase Selling Net Gain
Securities Purchases of Sales Price (A) Price (A) on Sales
Cinergy
Common Stock
Fund 209 186 $8,164,474 $4,829,242 $1,546,260
Fidelity Magellan
Fund 207 174 9,438,937 4,242,407 862,612
Fidelity Equity-Income
Fund 210 164 15,888,123 2,570,146 613,606
Fidelity Retirement
Money Market Fund 173 156 3,260,690 3,019,942 -
<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.
PSI ENERGY, INC. UNION EMPLOYEES' 401(k)
SAVINGS PLAN
(The Plan)
By /s/ 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 PSI
Energy, Inc. Employees' 401(k) Savings Plan, into Cinergy Corp.'s previously
filed Registration Statement File No. 33-56067.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio
June 22, 1998
