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'
SAVINGS INCENTIVE 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'
SAVINGS INCENTIVE PLAN
FINANCIAL STATEMENTS AND EXHIBITS
PAGE NO.
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(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
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the
Cinergy Corp. Union Employees' Savings Incentive Plan:
We have audited the accompanying statements of net assets available for benefits
of the CINERGY CORP. UNION EMPLOYEES' SAVINGS INCENTIVE 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
CINERGY CORP. UNION EMPLOYEES' SAVINGS INCENTIVE PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
1999 1998
------------ ------------
ASSETS:
Investments at fair value (See Notes 4 and 5) $167,360,381 $191,754,949
Employer's contribution receivable 1,914,099 1,370,842
------------ ------------
Net assets available for benefits $169,274,480 $193,125,791
============ ============
See accompanying notes to financial statements.
CINERGY CORP. UNION EMPLOYEES' SAVINGS INCENTIVE 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 $(40,270,884)
(See Notes 4 and 5)
Interest and dividends 12,448,748
------------
(27,822,136)
Contributions:
Participant 9,026,917
Employer 4,754,808
Rollover 101,622
------------
13,883,347
------------
Total additions (13,938,789)
DEDUCTIONS:
Deductions from net assets attributed to:
Benefits paid to participants (7,364,549)
------------
Total deductions (7,364,549)
------------
Net decrease prior to transfers (21,303,338)
Interplan transfers (2,547,973)
------------
(23,851,311)
Net assets available for benefits:
Beginning of year 193,125,791
------------
End of year $169,274,480
============
See accompanying notes to financial statements.
CINERGY CORP. UNION EMPLOYEES'
SAVINGS INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(1) PLAN DESCRIPTION-
----------------
The following description of the Cinergy Corp. Union Employees' Savings
Incentive 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 all
employees of Cinergy Corp.'s subsidiaries (collectively, the Company)
who are represented by the following collective bargaining
organizations:
* The Independent Utilities Union
* The International Brotherhood of Electrical Workers, Local 1347
* The United Steelworkers of America, Local 12049 and Local 14214
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.
The Cinergy Corp. Union Employees' Savings Incentive Plan was formerly
The Cincinnati Gas & Electric Company Savings Incentive Plan. The
Plan's name change was effective January 1, 1998.
(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 ACCOUNTS--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. The
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
percentages in which contributions will be allocated 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) PAYMENT 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 $40,068,972 $51,611,340
=========== ===========
YEAR ENDED DECEMBER 31, 1999
Changes in net assets:
Contributions $4,754,808
Dividends 2,670,276
Net appreciation (16,440,844)
Benefits paid to participants (1,064,594)
Transfers to participant-directed investments (748,420)
Interplan transfers (713,594)
------------
$(11,542,368)
============
(5) INVESTMENTS-
-----------
The following investments exceed 5% of net assets available for benefits as
of December 31, 1999 and 1998:
1999 1998
------------ ------------
Cinergy Common Stock Fund $105,435,317 $138,460,654
Fidelity Magellan Fund 21,300,150 15,024,006*
Fidelity Equity Income Fund 19,067,953 19,164,991*
* represents less than 5% of total net assets
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 $40,270,884 as follows:
Mutual funds $ 2,198,972
Common stock (42,469,856)
------------
$(40,270,884)
============
(6) FEDERAL INCOME TAX STATUS-
-------------------------
The Internal Revenue Service has determined and informed the Plan by letter
dated January 5, 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 that the Plan
is designed and is currently 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 the Form 5500:
DECEMBER 31,
----------------------------
1999 1998
------------ ------------
Net assets per the financial statements $169,274,480 $193,125,791
Amounts allocated to withdrawing participants (5,109) (162,413)
------------ ------------
Net assets per Form 5500 $169,269,371 $192,963,378
============ ============
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 $7,364,549
Add: Amounts allocated to withdrawing participants at
December 31, 1999 5,109
Less: Amounts allocated to withdrawing participants at
December 31, 1998 (162,413)
--- ---- ----------
Benefits paid to participants per Form 5500 $7,207,245
==========
Amounts allocated to withdrawing participants are recorded on 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.
SCHEDULE I
CINERGY CORP. UNION EMPLOYEES'
SAVINGS INCENTIVE PLAN
EIN: 31-0240030
PLAN NUMBER: 002
Schedule 4i- Schedule of Assets Held for Investment Purposes
At End of Year December 31, 1999
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 $133,423,123 $105,435,317
* Fidelity Investments Magellan Fund 16,603,998 21,300,150
* Fidelity Investments Equity Income Fund 16,461,456 19,067,953
* Fidelity Investments U.S. Bond Index Fund 2,165,043 2,080,560
* Fidelity Investments Low-Priced Stock Fund 1,712,063 1,575,896
* Fidelity Investments Diversified International Stock Fund 981,030 1,333,313
* Fidelity Investments Freedom Income Fund 166,797 172,672
* Fidelity Investments Freedom 2000 Fund 737,348 799,966
* Fidelity Investments Freedom 2010 Fund 977,503 1,084,545
* Fidelity Investments Freedom 2020 Fund 400,340 470,128
* Fidelity Investments Freedom 2030 Fund 323,541 377,316
Fidelity Investments Blue Chip Fund 1,005,367 1,162,637
Fidelity Investments Spartan U.S. Equity Fund 606,697 647,788
Franklin Investments Small Cap Growth Fund 597,752 735,083
* Fidelity Investments Retirement Money Market Fund 3,295,083 3,295,083
* Various plan participants Participant loans (interest rates ranging from 6.50-9.50%) 7,821,974 7,821,974
------------ ------------
Total assets held for investment purposes $187,279,115 $167,360,381
============ ============
* Denotes a party-in-interest
<FN>
See accompanying notes to financial statements.
</FN>
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'
SAVINGS INCENTIVE PLAN
----------------------
By /s/ DARLENE HUGHES
--------------
Darlene Hughes
Plan Administrator
June 26, 2000
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' Savings Incentive Plan, into Cinergy Corp.'s previously filed
Registration Statement File No. 33-55293.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio
June 26, 2000