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, 2000
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, 2000 and 1999 4
Statement of Changes in Net Assets Available
for Benefits for the Year Ended December 31, 2000 5
Notes to Financial Statements 6-10
Financial Statement Schedules (As Required By The
Employee Retirement Income Security Act of 1974):
Schedule I - Schedule of Assets Held for Investment
Purposes At End of Year December 31, 2000 11
Schedule II - Schedule of Nonexempt Transactions 12
At End of Year December 31, 2000
(b) Exhibit 23 - Consent of Independent Public Accountants
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, 2000 and
1999, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2000. 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 the
schedules 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, 2000, and 1999, and the changes in net assets available for
benefits for the year ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States.
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 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 schedules have been subjected to the auditing procedures applied in
our 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 25, 2001
Cinergy Corp. Union Employees' 401(k) Plan
Statements of Net Assets Available for Benefits
As of December 31, 2000 and 1999
December 31,
2000 1999
---- ----
ASSETS
Investments, at fair value (see Notes 4 and 5) $100,692,504 $81,569,031
Employer's contribution receivable 1,247,167 1,181,527
--------- ---------
Net assets available for benefits $101,939,671 $82,750,558
============ ===========
See accompanying notes to financial statements.
Cinergy Corp. Union Employees' 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2000
Additions:
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of
investments (see Notes 4 and 5) $ 7,979,024
Interest and dividends 5,260,414
---------
13,239,438
Contributions:
Participant 6,195,011
Employer 3,086,500
Rollover 10,240
------
9,291,751
---------
Total additions 22,531,189
Deductions:
Benefits paid to participants (2,699,110)
----------
Total deductions (2,699,110)
----------
Net increase prior to transfers 19,832,079
Interplan transfers (642,966)
--------
Net assets available for benefits: 19,189,113
Beginning of year 82,750,558
----------
End of year $101,939,671
============
See accompanying notes to financial statements.
Cinergy Corp. Union Employees'
401(k) Plan
Notes to Financial Statements
December 31, 2000 and 1999
(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 Document 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.
(b) Contributions--Under the Plan, participants may contribute up to 15%
of annual pretax compensation, as defined in the Plan Document. In
addition, a participant may make after-tax contributions to the Plan
which, when combined with pretax contributions, may not exceed 15% of
compensation. 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 Cinergy Corp. Common Stock.
The Company matches 60% of the first 5% of compensation contributed by
each participant. An additional incentive match of up to 40% of the
first 5% of compensation 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
compensation. All employer contributions are invested by the trustee
in Cinergy Corp. Common Stock. The employer contributions must remain
in Cinergy Corp. Common Stock 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.
(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 plus1/2% 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 accounting principles generally accepted in the United
States 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 beginning with the 1999 financial statements.
(4) Non-participant Directed Net Assets-
Information about the net assets and the significant components of the
changes in net assets relating to non-participant directed balances is as
follows:
December 31,
2000 1999
---- ----
Net assets:
Cinergy Corp. Common Stock $28,317,718 $17,102,622
=========== ===========
Year Ended
December 31, 2000
-----------------
Changes in net assets:
Contributions $3,086,499
Dividends 1,294,900
Net appreciation 8,504,068
Benefits paid to participants (405,106)
Transfers to participant-directed investments (1,128,362)
Interplan transfers (136,903)
--------
$11,215,096
===========
(5) Investments-
The following investments exceed 5% of net assets available for benefits as
of December 31, 2000 and 1999:
2000 1999
---- ----
Fidelity Magellan Fund $26,990,547 $28,284,311
Fidelity Equity Income Fund 13,049,853 12,770,736
Fidelity Retirement Money Market Fund 6,528,109 5,385,442
Cinergy Corp. Common Stock 40,361,619 25,417,031
During 2000, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
(depreciated) in value by $7,979,024 as follows:
Mutual funds $ (4,876,273)
Common stock 12,855,297
----------
$ 7,979,024
============
(6) Federal Income Tax Status-
The Internal Revenue Service has determined and informed the Plan by letter
dated June 26, 2000, 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,
2000 1999
---- ----
Net assets per financial statements $101,939,671 $82,750,558
Amounts allocated to withdrawing participants - (15,492)
------- -------
Net assets per Form 5500 $101,939,671 $82,735,066
============ ===========
The following is a reconciliation of benefits paid to participants per the
financial statements to Form 5500: Year Ended December 31, 2000 Benefits
paid to participants per the financial statements $2,699,110 Add: amounts
allocated to withdrawing participants at December 31, 2000 - Less: amounts
allocated to withdrawing participants at December 31, 1999 (15,492)
Benefits paid to participants per Form 5500 $2,683,618
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 Plan 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.
(10) Plan Changes
The following changes were made to the Plan during the Plan year and became
effective January 1, 2000:
o Newly hired employees of Cinergy Corp. are automatically enrolled
(passive enrollment) as of their employment date. Unless the
enrollment is waived, a before tax contribution of 1% will be withheld
from the employee's base and overtime compensation beginning with the
first pay. The contributions made to the plan on the employee's behalf
will be invested in one or more funds selected in accordance with
procedures established by the Plan Administrator.
o Certain other definitions and procedural aspects of the Plan were
changed, including the definition of a change in control of the
Company and procedural aspects of participant loan repayments and the
Plan's acquisition of Cinergy Corp. Common Stock.
Effective January 1, 2001 the Plan was further amended to increase the 1%
pre-tax contribution for automatic enrollment to 3%.
(11) Prohibited Transactions
During 2000, certain participants in the Plan failed to pay back their
participant loan balances within the five-year limit required by the
Department of Labor (Plan provisions specify 54 month repayment). The
attached schedule of non-exempt transactions provides a detail of these
prohibited transactions.
Schedule I
Cinergy Corp. Union Employees'
401(k) Plan
EIN: 31-1385023
Plan Number: 101
Schedule 4i--Schedule of Assets Held for Investment Purposes
At End of Year December 31, 2000
Identity of Issuer, Borrower, Description of Investment, Including Maturity Date, Rate of Current
Lessor, or Similar Party Interest, Collateral and Par or Maturity Value Cost Value
------------------------ ---------------------------------------------- ---- -----
* Cinergy Corp. Common Stock $30,097,360 $40,361,619
* Fidelity Investments Magellan Fund 22,820,686 26,990,547
* Fidelity Investments Equity Income Fund 11,692,002 13,049,853
* Fidelity Investments U.S. Bond Index Fund 1,013,018 1,019,782
* Fidelity Investments Low-Priced Stock Fund 809,399 786,661
* Fidelity Investments Diversified International Stock Fund 1,104,639 1,136,495
* Fidelity Investments Freedom Income Fund 126,840 127,919
* Fidelity Investments Freedom 2000 Fund 636,332 604,456
* Fidelity Investments Freedom 2010 Fund 1,820,293 1,828,185
* Fidelity Investments Freedom 2020 Fund 664,323 632,505
* Fidelity Investments Freedom 2030 Fund 390,413 380,432
Franklin Investments Small Capital Growth Fund 2,015,255 1,678,547
* Fidelity Investments Blue Chip Fund 1,914,759 1,706,651
* Fidelity Investments Spartan U.S. Equity Index Fund 519,082 490,730
* Fidelity Investments Retirement Money Market Fund 6,528,109 6,528,109
* Various plan participants Participant loans (interest rates ranging from 6.85-10.50%) 3,370,013 3,370,013
--------- ---------
Total assets held for investment purposes $85,522,523 $100,692,504
=========== ============
* Denotes a party-in-interest
Schedule II
Cinergy Corp. Union Employees'
401(k) Plan
EIN: 31-1385023
Plan Number: 101
Schedule 4d--Schedule of Nonexempt Transactions
At End of Year December 31, 2000
Relationship to plan, Description of transactions including maturity date,
Identity of party employer or other rate of interest collateral,
involved party-in-interest par or maturity value Current value
-------- ----------------- --------------------- -------------
Participant A Employee 11/14/1994 10/09/1998 6.85% 242.97
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 25, 2001
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by reference of our report dated June 25, 2001 included in the
Annual Report on Form 11-K for the year ended December 31, 2000 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 25, 2001
