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. Union 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. UNION 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. Union 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>
Fidelity Fidelity Fidelity
Fidelity Equity- Asset Fidelity Fidelity Diversified
Magellan Income Manager U.S. Bond Low-Priced International
Fund Fund Fund Index Fund Stock Fund Fund
ASSETS
Investments, at fair
value:
Shares of registered
investment companies $13,562,482 $8,262,065 $3,364,616 $550,494 $375,042 $205,951
Common stock - - - - - -
Participant loans - - - - - -
Total investments 13,562,482 8,262,065 3,364,616 550,494 375,042 205,951
Receivables:
Employer's
contribution - - - - - -
Participants'
contributions 71,400 42,024 17,923 3,953 5,001 2,141
Total receivables 71,400 42,024 17,923 3,953 5,001 2,141
Net assets available
for benefits $13,633,882 $8,304,089 $3,382,539 $554,447 $380,043 $208,092
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI Energy, Inc. Union 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> <C> <C>
Non-
Participant
Participant Directed Directed
Fidelity
Retirement
Money Cinergy Cinergy
Market Common Participant Common
Fund Stock Fund Loan Fund Stock Fund Total
ASSETS
Investments, at fair
value:
Shares of registered
investment companies $4,774,242 $ - $ - $ - $31,094,892
Common stock - 14,534,109 - 17,147,871 31,681,980
Participant loans - - 2,490,292 - 2,490,292
Total investments 4,774,242 14,534,109 2,490,292 17,147,871 65,267,164
Receivables:
Employer's
contribution - - - 62,736 62,736
Participants'
contributions 22,832 213,208 - - 378,482
Total receivables 22,832 213,208 - 62,736 441,218
Net assets available
for benefits $4,797,074 $14,747,317 $2,490,292 $17,210,607 $65,708,382
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI Energy, Inc. Union 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>
Fidelity
Fidelity Fidelity Retirement
Fidelity Equity- Asset Fidelity Money
Magellan Income Manager U.S. Bond Market
Fund Fund Fund Index Fund Fund
ASSETS
Investments, at fair value:
Shares of registered investment
companies $9,893,011 $5,550,284 $2,486,637 $411,730 $4,575,631
Common Stock - - - - -
Participant Loans - - - - -
Total investments 9,893,011 5,550,284 2,486,637 411,730 4,575,631
Receivables:
Employer's Contribution - - - - -
Participants' Contributions 65,642 33,864 17,889 3,854 20,435
Total receivables 65,642 33,864 17,889 3,854 20,435
Net assets available for benefits $9,958,653 $5,584,148 $2,504,526 $415,584 $4,596,066
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI Energy, Inc. Union Employees' 401(k) Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information (Continued)
As of December 31, 1996
Non-
Participant
Participant Directed Directed
<S> <C> <C> <C> <C>
Cinergy Cinergy
Common Participant Common
Stock Fund Loan Fund Stock Fund Total
ASSETS
Investments, at fair value:
Shares of registered investment
companies $ - $ - $ - $22,917,293
Common Stock 12,197,142 - 12,851,674 25,048,816
Participant Loans - 1,819,836 - 1,819,836
Total investments 12,197,142 1,819,836 12,851,674 49,785,945
Receivables:
Employer's Contribution - - 638,714 638,714
Participants' Contributions 23,617 - - 165,301
Total receivables 23,617 - 638,714 804,015
Net assets available for benefits $12,220,759 $1,819,836 $13,490,388 $50,589,960
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI Energy, Inc. Union 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>
Fidelity
Fidelity Fidelity Low- Fidelity
Fidelity Equity- Asset Fidelity Priced Diversified
Magellan Income Manager U.S. Bond Stock International
Fund Fund Fund Index Fund Fund Fund
Additions to net
assets:
Investment income:
Net appreciation
(depreciation) in fair
value of investments $1,873,609 $1,364,710 $ 291,975 $10,993 $(2,091) $(9,630)
Interest - - - - - -
Dividends 854,909 436,829 287,220 32,303 15,494 6,331
2,728,518 1,801,539 579,195 43,296 13,403 (3,299)
Contributions:
Participants' 1,882,034 1,081,412 493,399 101,510 41,003 21,358
Employer's - - - - - -
1,882,034 1,081,412 493,399 101,510 41,003 21,358
Total Additions 4,610,552 2,882,951 1,072,594 144,806 54,406 18,059
Deductions from net
assets:
Benefits paid to
participants 356,262 451,895 153,162 10,632 35 -
Total Deductions 356,262 451,895 153,162 10,632 35 -
Net increase/
(decrease) prior to
transfers 4,254,290 2,431,056 919,432 134,174 54,371 18,059
Interfund transfers (587,492) 267,971 (35,805) 5,373 325,672 190,033
Interplan transfers 8,431 20,914 (5,614) (684) - -
Net increase/
(decrease) 3,675,229 2,719,941 878,013 138,863 380,043 208,092
Net assets available
for benefits:
Beginning of year 9,958,653 5,584,148 2,504,526 415,584 - -
End of year $13,633,882 $8,304,089 $3,382,539 $554,447 $380,043 $208,092
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI Energy, Inc. Union 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> <C> <C>
Non-
Participant
Participant Directed Directed
Fidelity
Retirement
Money Cinergy Cinergy
Market Common Participant Common
Fund Stock Fund Loan Fund Stock Fund Total
Additions to net
assets:
Investment income:
Net appreciation
(depreciation) in fair
value of investments $ - $1,987,343 $ - $2,258,821 $ 7,775,730
Interest - 170,597 - 170,597
Dividends 252,217 659,110 - 740,256 3,284,669
252,217 2,646,453 170,597 2,999,077 11,230,996
Contributions:
Participants' 651,880 861,719 - - 5,134,315
Employer's - - - 1,479,272 1,479,272
651,880 861,719 - 1,479,272 6,613,587
Total Additions 904,097 3,508,172 170,597 4,478,349 17,844,588
Deductions from net
assets:
Benefits paid to
participants 471,976 722,826 76,577 491,750 2,735,115
Total Deductions 471,976 722,826 76,577 491,750 2,735,115
Net increase/
(decrease) prior to
transfers 432,121 2,785,346 94,020 3,986,599 15,109,468
Interfund transfers (255,096) (211,634) 579,265 (278,287) -
Interplan transfers 23,983 (47,154) (2,829) 11,907 8,954
Net increase/
(decrease) 201,008 2,526,558 670,456 3,720,219 15,118,422
Net assets available
for benefits:
Beginning of year 4,596,066 12,220,759 1,819,836 13,490,388 50,589,960
End of year $4,797,074 $14,747,317 $2,490,292 $17,210,607 $65,708,382
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
PSI ENERGY, INC.
UNION EMPLOYEES' 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(1) Plan Description-- The PSI Energy, Inc. Union Employees' 401(k) Savings
Plan (Plan) is a defined contribution plan covering 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 PSI Benefits
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.
Reference should be made to the Plan document for a more complete
description of the Plan's provisions.
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 employer contributes
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.
<PAGE>
(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 Plan and the PSI Energy, Inc. Employees'
401(k) Savings Plan occur as a result of changes in employee status between
the union classification and the exempt and non-exempt classifications.
Such transfers are reflected as interplan transfers on the statement of
changes in net assets available for benefits.
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) 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 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.
- 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
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.
(4) Federal Income Tax Status--The Internal Revenue Service has determined and
informed the Plan by letter dated November 14, 1995, that the Plan and
related trust are 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 is being operated in compliance
with the applicable provisions of the IRC.
(5) Investments--A participant may elect or change investment funds and/or the
contribution allocation percentages among funds at any time.
The following investments exceed 5% of total net assets available for
benefits at December 31, 1997 and 1996:
1997 1996
Fidelity Magellan Fund $13,562,482 $9,893,011
Fidelity Equity-Income Fund 8,262,065 5,550,284
Fidelity Asset Manager Fund 3,364,616 *
Fidelity Retirement Money Market Fund 4,774,242 4,575,631
Cinergy Common Stock 31,681,980 25,048,816
* Less than 5%
(6) Plan Termination--Although it has not expressed any intent to do so, PSI
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.
UNION EMPLOYEES' 401(k) SAVINGS 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 $20,024,991 $31,681,980
* Fidelity Investments Magellan Fund 11,015,208 13,562,482
* Fidelity Investments Equity-Income Fund 6,043,360 8,262,065
* Fidelity Investments Asset Manager Fund 2,950,634 3,364,616
* Fidelity Investments U.S. Bond Index Fund 542,384 550,494
* Fidelity Investments Low-Priced Stock Fund 377,116 375,042
* Fidelity Investments Diversified International Stock Fund 215,459 205,951
* Fidelity Investments Retirement Money Market Fund 4,774,242 4,774,242
* Various plan participants Participant loans (interest rates ranging
from 5.25-9%) 2,490,292 2,490,292
Total assets held for investment
purposes $48,433,686 $65,267,164
<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.
UNION EMPLOYEES' 401(K) SAVINGS PLAN
EIN: 35-0594457
Plan Number: 101
Item 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1997
<S> <C> <C> <C> <C>
Total Total
Number of Number of Purchase Selling Price Net Gain on
Identity of Securities Purchases Sales Price (A) (A) Sales
Cinergy Corp. Common Stock 180 155 $5,108,709 $2,518,797 $736,544
Fund
Fidelity Magellan Fund 194 154 3,793,446 2,007,605 303,923
Fidelity Equity-Income 179 128 2,665,971 1,325,571 323,299
Fidelity Asset Manager 115 68 1,069,433 483,363 58,646
Fidelity Retirement Money 139 127 1,455,585 1,256,974 -
Market Fund
<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.
Date: June 22, 1998
PSI ENERGY, INC. UNION EMPLOYEES' 401(k) SAVINGS PLAN
(The Plan)
/s/Jerry W. Liggett
(Jerry W. Liggett,
Plan Administrator)
<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. Union 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
