UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to ___________
-------------------
COMMISSION FILE NUMBER 1-11377
CINERGY CORP. UNION EMPLOYEES' 401(K) PLAN
(Full title of the plan)
CINERGY CORP.
(Name of issuer of the securities held pursuant to the plan)
139 EAST FOURTH STREET
CINCINNATI, OHIO 45202
(Address of principal executive offices)
CINERGY CORP. UNION EMPLOYEES'
401(K) PLAN
FINANCIAL STATEMENTS AND EXHIBITS
PAGE NO.
(a) Financial Statements
Report of Independent Public Accountants 3
Statements of Net Assets Available for Benefits
as of December 31, 1999 and 1998 4
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1999 5
Notes to Financial Statements 6-10
Financial Statement Schedules (As Required By The Employee
Retirement Income Security Act):
Schedule I - Schedule of Assets Held for Investment Purposes-
at End of Year December 31, 1999 11
(b) Exhibit 23 - Consent of Independent Public Accountants
<PAGE>
Report of Independent Public Accountants
To the Plan Administrator of the
Cinergy Corp. Union Employees' 401(k) Plan:
We have audited the accompanying statements of net assets available for benefits
of the CINERGY CORP. UNION EMPLOYEES' 401(k) PLAN as of December 31, 1999 and
1998, and the related statement of changes in net assets available for benefits
for the year ended December 31, 1999. These financial statements and the
schedule referred to below are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements and the
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 of the Plan as of
December 31, 1999, and 1998, and the changes in net assets available for
benefits for the year ended December 31, 1999 in conformity with accounting
principles generally accepted in the United States.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule (Schedule I) is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements but is 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 supplemental schedule
has been subjected to the auditing procedures applied in our audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio
June 26, 2000
<PAGE>
Cinergy Corp. Union Employees' 401(k) Plan
Statements of Net Assets Available for Benefits
as of December 31, 1999 and 1998
DECEMBER 31,
1999 1998
----------- -----------
ASSETS
Investments, at fair value (see Notes 4 and 5) $81,569,031 $76,277,035
Employer's contribution 1,181,527 820,135
----------- -----------
Net assets available for benefits $82,750,558 $77,097,170
=========== ===========
See accompanying notes to financial statements.
<PAGE>
Cinergy Corp. Union Employees' 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1999
Additions:
Additions to net assets attributed to:
Investment income:
Net depreciation in fair value of investments
(see Notes 4 and 5) $ (6,744,558)
Interest and dividends 6,114,075
------------
(630,483)
Contributions:
Participant 5,724,806
Employer 2,930,370
Rollover 81,374
------------
8,736,550
------------
Total additions 8,106,067
Deductions:
Deductions from net assets attributed to:
Benefits paid to participants 1,538,145
-----------
Total deductions 1,538,145
-----------
Net increase prior to transfers 6,567,922
Interplan transfers (914,534)
-----------
Net assets available for benefits: 5,653,388
Beginning of year 77,097,170
-----------
End of year $82,750,558
===========
See accompanying notes to financial statements.
<PAGE>
Cinergy Corp. Union Employees'
401(k) Plan
Notes to Financial Statements
December 31, 1999 and 1998
(1) PLAN DESCRIPTION-
----------------
The following description of the Cinergy Corp. Union Employees' 401(k) Plan
(the Plan) provides only general information. Participants should refer to
the Plan Agreement for a more complete description of the Plan's
provisions.
(a) GENERAL--The Plan is a defined contribution plan covering union
employees of Cinergy Corp.'s subsidiaries (collectively, the Company)
represented by the International Brotherhood of Electrical Workers,
Local 1393. The Plan is administered by the Cinergy 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 the Company. Reference should be made to the Plan document for a
more complete description of the Plan's provisions.
Effective January 1, 1998, the Plan's name was changed from the PSI
Energy, Inc. Union Employees' 401(k) Savings Plan to the Cinergy Corp.
Union Employees' 401(k) Plan.
(b) CONTRIBUTIONS--Under the Plan, participants may contribute up to 15%
of annual pretax compensation, as defined in the Plan. In addition, a
participant may make after-tax contributions to the Plan which, when
combined with pretax contributions, may not exceed 15% of base pay.
Pretax and after-tax contributions are subject to certain limitations.
The pretax and after-tax contributions are invested by the trustee, as
directed by each participant, in one or more investment funds,
including the Cinergy Common Stock Fund.
The Company matches 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 Company's board of directors. For those
employees who do not contribute to the Plan, the Company contributes
an incentive match assuming the employee contributed 1% of base pay.
All employer contributions are 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 in Note 4 as "Non-participant Directed" funds until the employee
elects to transfer the funds to another investment option.
(c) VESTING--Participants are immediately vested in all contributions and
earnings thereon.
(d) PARTICIPANT ACCOUNT--Each participant's account is credited with the
participant's contribution and allocation of the Company's
contribution and Plan earnings. Allocations are based on the
participant's account balance or contribution percentage as defined in
the Plan document. The benefit to which a participant is entitled is
the benefit that can be provided from the participant's vested
account.
(e) PAYMENT OF BENEFITS--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 $5,000 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 $5,000. Active
participants are also eligible to apply to the Plan administrator for
"hardship" withdrawals from their pretax account in accordance with
Plan provisions.
(f) PARTICIPANT LOANS--Subject to certain limitations, participants may
apply for loans from their pretax account balances. Interest on the
loans is set at the prime rate plus 1/2% at the time of borrowing, and
the loans are secured by the balance in the participant's account.
Loans are to be repaid within 54 months through regular payroll
deductions.
(2) SIGNIFICANT ACCOUNTING POLICIES-
-------------------------------
(a) BASIS OF ACCOUNTING--The financial statements of the Plan are prepared
under the accrual method of accounting.
(b) INVESTMENT VALUATION AND INCOME RECOGNITION--Investments are stated at
fair value. Shares of registered investment companies are valued at
quoted redemption 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 fair value.
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.
Transfers of assets between the Plan and the Cinergy Corp. Non-Union
Employees' 401(k) 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.
A participant may elect or change investment funds and/or the
contribution allocation percentages among funds at any time.
(c) USE OF ESTIMATES--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 changes therein, and disclosure
of contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
----------------
(d) PAYMENTS OF BENEFITS--Benefits are recorded when paid.
(3) ACCOUNTING CHANGE-
-----------------
The Accounting Standards Executive Committee issued Statement of Position
99-3, "Accounting for and Reporting of Certain Defined Contribution Plan
Investments and Other Disclosure Matters" (SOP 99-3), which eliminates the
requirement for a defined contribution plan to disclose
participant-directed investment programs. As required by SOP 99-3, the Plan
adopted SOP 99-3 for the 1999 financial statements and reclassified certain
amounts in the 1998 financial statements to eliminate the
participant-directed fund investment program disclosures.
(4) NON-PARTICIPANT DIRECTED INVESTMENTS-
------------------------------------
Information about the net assets and the significant components of the
changes in net assets relating to the non-participant directed investments
is as follows:
December 31,
-----------------------------
1999 1998
------------ -----------
Net assets:
Cinergy common stock $17,102,622 $18,491,060
=========== ===========
YEAR ENDED
DECEMBER 31,
1999
-----------
Changes in net assets:
Contributions $ 2,930,370
Dividends 1,091,899
Net appreciation (4,355,652)
Benefits paid to participants (296,576)
Transfers to participant-directed investments (517,881)
Interplan transfers (240,598)
------------
$ (1,388,438)
============
(5) INVESTMENTS-
-----------
The following investments exceed 5% of net assets available for benefits as
of December 31, 1999 and 1998:
1999 1998
----------- -----------
Fidelity Magellan Fund $28,284,311 $20,834,043
Fidelity Equity-Income Fund 12,770,736 12,994,357
Fidelity Retirement Money Market Fund 5,385,442 5,220,732
Cinergy Common Stock 25,417,031 30,991,910
During 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value by $6,744,558 as follows:
Mutual funds $ 3,173,846
Common stock (9,918,404)
-----------
$(6,744,558)
===========
(6) 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.
(7) RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500-
---------------------------------------------------
The following is a reconciliation of net assets available for benefits per
the financial statements to Form 5500:
DECEMBER 31,
-----------------------------
1999 1998
----------- -----------
Net assets per financial statements $82,750,558 $77,097,170
Amounts allocated to withdrawing participants (15,492) -
----------- -----------
Net assets per Form 5500 $82,735,066 $77,097,170
=========== ===========
The following is a reconciliation of benefits paid to participants per the
financial statements to Form 5500:
YEAR ENDED
DECEMBER 31,
1999
------------
Benefits paid to participants per the financial statements $1,538,145
Add: amounts allocated to withdrawing participants at
December 31, 1999 15,492
Less: amounts allocated to withdrawing participants at
December 31, 1998 -
----------
Benefits paid to participants per Form 5500 $1,553,637
==========
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.
(8) PLAN TERMINATION-
----------------
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA.
(9) RELATED PARTY TRANSACTIONS-
--------------------------
Certain Plan investments are shares of mutual funds managed by Fidelity
Investments. Fidelity Investments is the Trustee as defined by the Plan and
therefore, these transactions qualify as party-in-interest transactions.
The Cinergy Corp. Common Stock Fund holds common stock of the plan
administrator as defined by the Plan and therefore, these transactions
qualify as party-in-interest transactions. Finally, the Participant Loan
Fund holds loans from participants in the Plan and therefore, these
transactions qualify as party-in-interest transactions.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
Cinergy Corp. Union Employees'
401(k) Plan
EIN: 35-0594457
Plan Number: 101
Schedule 4i--Schedule of Assets Held for Investment Purposes
At End of Year December 31, 1999
<S> <C> <C> <C>
Identity of Issuer, Borrower, Description of Investment, Including Maturity Date, Current
Lessor, or Similar Party Rate of Interest, Collateral and Par or Maturity Value Cost Value
----------------------------- ------------------------------------------------------ ----------- -----------
* Cinergy Corp. Common Stock $33,538,525 $25,417,031
* Fidelity Investments Magellan Fund 19,658,271 28,284,311
* Fidelity Investments Equity Income Fund 11,338,485 12,770,736
* Fidelity Investments U.S. Bond Index Fund 859,960 822,084
* Fidelity Investments Low-Priced Stock Fund 691,610 643,334
* Fidelity Investments Diversified International Stock Fund 658,808 864,672
* Fidelity Investments Freedom Income Fund 137,666 141,184
* Fidelity Investments Freedom 2000 Fund 467,009 491,322
* Fidelity Investments Freedom 2010 Fund 1,534,492 1,698,505
* Fidelity Investments Freedom 2020 Fund 384,111 432,892
* Fidelity Investments Freedom 2030 Fund 203,452 245,483
Franklin Investments Small Capital Growth Fund 233,587 322,942
* Fidelity Investments Blue Chip Fund 516,134 582,910
* Fidelity Investments Spartan U.S. Equity Index Fund 282,450 300,595
* Fidelity Investments Retirement Money Market Fund 5,385,442 5,385,442
* Various plan participants Participant loans (interest rates ranging from 5.25-9%) 3,165,588 3,165,588
----------- -----------
Total assets held for investment purposes $79,055,590 $81,569,031
=========== ===========
* Denotes a party-in-interest
<FN>
See accompanying notes to financial statements.
</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.
CINERGY CORP. UNION EMPLOYEES'
401(K) PLAN
-----------
By /s/ DARLENE HUGHES
--------------
Darlene Hughes
Plan Administrator
June 26, 2000
<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 26, 2000 included in the Annual Report on
Form 11-K for the year ended December 31, 1999 of the Cinergy Corp. Union
Employees' 401(k) Plan, into Cinergy Corp.'s previously filed Registration
Statement File No. 33-56067.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio
June 26, 2000
