Exhibit 99.b
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 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number 1-11377
CINERGY CORP.
EMPLOYEE STOCK PURCHASE AND SAVINGS 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)
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Report of Independent Public Accountants
Statements of Financial Condition as of
December 31, 1994 and 1993
Statements of Income and Other Changes in Plan Equity
for the Years Ended December 31, 1994, 1993, and 1992
Notes to Financial Statements
Financial Statement Schedules:
Schedules I, II, and III are not applicable
(b) Exhibits
1) Consent of Independent Public Accountants
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of
the CINergy Corp. Employee Stock
Purchase and Savings Plan:
We have audited the accompanying statements of financial condition of the
CINERGY CORP. EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN as of December 31, 1994
and 1993, and the statements of income and other changes in plan equity for each
of the three years in the period ended December 31, 1994. These financial
statements are the responsibility of the Plan Administrator. Our responsibility
is to express an opinion on these financial statements 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 the
Plan Administrator, 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 financial position of the Plan as of December 31,
1994 and 1993, and the results of its operations and changes in plan equity for
each of the three years in the period ended December 31, 1994, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
April 14, 1995
CINERGY CORP.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
STATEMENTS OF FINANCIAL CONDITION
December 31
1994 1993
Cash (Purchase Savings Accounts)(Note C) $368 057 $1 691 098
Plan Equity $368 057 $1 691 098
The accompanying notes are an integral part of these financial statements.
CINERGY CORP.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
STATEMENTS OF INCOME AND OTHER CHANGES IN PLAN EQUITY
1994 1993 1992
Interest income (Purchase
Savings Accounts) (Note C) $ 24 426 $ 29 807 $ 71 697
Contributions from participants
(Note C) 1 327 527 1 245 118 1 462 710
Purchases of common stock,
terminations, and cash
withdrawals (Note E) (2 674 994) (58 699) (3 741 897)
Income and other changes in Plan
equity for the period (1 323 041) 1 216 226 (2 207 490)
Plan equity at beginning of the
period 1 691 098 474 872 2 682 362
Plan equity at end of the period $ 368 057 $1 691 098 $ 474 872
The accompanying notes are an integral part of these financial statements.
CINERGY CORP.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
Note A - Plan Description
On October 18, 1994, the board of directors of CINergy Corp. (CINergy or
Company) adopted, and the holders of CINergy's common stock, .01 par value
(Common Stock), approved, the CINergy Corp. Employee Stock Purchase and
Savings Plan (the Plan) for the benefit of eligible employees (see the Plan
prospectus for eligibility criteria) of CINergy and its subsidiaries. Under
the Plan, eligible employees may be granted stock options within the meaning
of Section 423 of the Internal Revenue Code of 1986 (Code), as amended, to
purchase Common Stock. In conjunction with the merger of PSI Resources,
Inc., (Resources) with and into the Company on October 24, 1994, the PSI
Resources, Inc. Employee Stock Purchase and Savings Plan (the PSI Plan) was
merged into the Plan. The PSI Plan contained provisions substantially
similar to the Plan. The administrative expenses of the Plan are paid by the
Company. Further details of the Plan are provided in the Plan prospectus
which has been distributed to all Plan participants.
Note B - Accounting Principles
The accounts of the Plan are maintained on an accrual basis. Activity and
balances related to the PSI plan are reflected in the financial statements as
though the PSI Plan has always been part of the Plan.
Note C - Investment Program
Under the Plan, funds withheld from a participant's compensation during a 26
month offering period are deposited in an interest-bearing account (Purchase
Savings Account) in the participants name, either in a bank (the Bank)
selected by the Company or in such an account maintained by the Company, as
determined by the Plan's administration committee. Interest will be paid by
the Bank at a rate at least equal to the rate the Bank pays on a regular
statement savings account or at a comparable rate if paid by the Company.
The amounts deposited in the Purchase Savings Account, plus interest paid
thereon, will equal the total dollar amount the eligible employee may apply
toward the purchase of shares of Common Stock pursuant to the Plan. At the
end of the offering period, each participant specifies the portion of the
Purchase Savings Account to be applied to the purchase of Common Stock at a
previously established purchase price. Funds not used to purchase Common
Stock are returned to the participant.
Under the Plan, the purchase price of each share of Common Stock is equal to
the fair market value of a share of Common Stock on the first date of the
offering period, less five percent. The fair market value of a share of
Common Stock is the average of the high and low sales prices of a share of
Common Stock as reported in the New York Stock Exchange Composite
Transactions published in The Wall Street Journal for such date or, if no
trading occurs on such date, the last date on which trading occurred.
The initial offering under the PSI Plan allowed eligible employees the option
to purchase Resources' common stock at $16.506 per share on August 31, 1992.
The second offering under the PSI Plan allowed for the purchase of Resources'
common stock at $18.05 per share on October 31, 1994. With respect to the
second offering, an interim distribution was completed in February 1994 as a
result of the PSI shareholder approval of the CINergy merger on November 9,
1993. The shareholder approval constituted a change in control under the
Plan (see Note F below and the Plan prospectus for further details).
Eligible employees purchased 71,188 shares of common stock at $18.05 per
share on February 2, 1994 as a result of the interim distribution. The second
offering period concluded October 31, 1994, after which the accumulated
balance of $1,308,797 was used to purchase Common Stock or distributed in
cash to participants. A total of 66,548 shares, valued at $1,174,168 were
purchased by participants with the remaining $134,629 distributed in cash.
The final option price to purchase Common Stock, adjusted for the merger at
the conversion ration of 1.023, was $17.644 per share. The initial offering
under the Plan is a continuation of the third offering period under the PSI
Plan. The share price established for this offering, which began November 1,
1994 for Energy employees and February 1, 1995 for CG&E employees, is
$21.7312. The initial offering is deemed to have commenced on the first day
of the third offering period under the PSI Plan and will end on December 31,
1996.
The number of employees enrolled in the Plan at December 31, 1994, 1993, and
1992 were 1,065, 721, and 774, respectively.
Note D - Income Tax Status
The Plan is not regarded as an "employee benefit plan" under Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (ERISA), and,
therefore, is not subject to ERISA.
The Plan is intended to qualify as an employee stock purchase plan under
Section 423 of the Code. Amounts withheld from a participant's compensation
for deposit to the participant's Purchase Savings Account are from after tax
dollars. Interest on the Purchase Savings Account is taxable to the
participant in the year earned. Dividends paid after the shares are
purchased are taxable to the participant in the year received.
Gains or losses on sales of Common Stock purchased pursuant to the Plan must
be reported to the Internal Revenue Service by the participant in the year of
sale. Gains and losses may be characterized as ordinary or capital, as
described below.
Capital losses are available for offset against any capital gains, and in
addition, any excess capital losses, whether long- or short-term, are allowed
to offset up to $3,000 of ordinary income. Excess capital losses can be
carried over to offset income in future years, subject to the same
limitations.
Section 423 of the Code imposes a holding period of two (2) years from the
commencement of the offering period and one (1) year from the date of
purchase. If the holding period is met, then the difference between the
purchase price and the lesser of the fair market value of the Common Stock
(i) on the first day of the offering period, or (ii) on the date of sale, is
taxed as ordinary income in the year the Common Stock is sold. Any remaining
gain is taxed as long-term capital gain. If the Common Stock is sold for
less than the purchase price, the participant has a long-term capital loss.
If the holding period is not met, then the difference between the purchase
price and the fair market value at the time of purchase is taxed as ordinary
income. The difference between the amount received and the purchase price
plus the amount of ordinary income is a capital gain or loss.
Note E - Purchases of Common Stock and Terminations
A participant may at any time, before the end of an offering period,
terminate participation in the Plan. Upon termination, all funds, including
interest, in the participant's Purchase Savings Account are returned to the
participant without penalty. Requests for termination received but not yet
processed by the Plan have not been included in the financial statements and
total $2,826 at December 31, 1993 and $629 at December 31, 1992. There were
no outstanding termination requests at the end of 1994.
If a participant's employment with the Company or its subsidiaries is
terminated, all funds, including interest, in the participant's Purchase
Savings Account are returned to the participant. If termination is due to
retirement, the participant may purchase all or fewer than all of the shares
of Common Stock which may be purchased with the funds then on deposit in the
participant's Purchase Savings Account within three months from the date of
retirement but not later than the last day of the offering period. Funds not
applied to purchase Common Stock are returned to the participant.
If termination is due to death, the participant's legal representative or
beneficiary may purchase all or fewer than all of the shares of Common Stock
which may be purchased with the funds then on deposit in the participant's
Purchase Savings Account within twelve months of the participant's death but
not later than the last day of the offering period. Funds not applied to
purchase Common Stock will be paid to the participant's legal representative
or beneficiary.
Note F - Change in Control, Amendment and Termination
In the event of a "change in control" of CINergy as defined in the Plan
prospectus, each participant has the right within three months from the
"change in control" or the purchase date (as defined in the Plan prospectus),
whichever is earlier, to elect to purchase all or fewer than all of the
shares the participant has the right to purchase.
CINergy, at any time by action of its board of directors may alter, amend,
modify, revoke or terminate the Plan in whole or in part, or alter or amend
any and all terms of participation in an offering made under the Plan, except
with respect to provisions related to a "change in control" of the Company
for a three year period following such "change in control".
SIGNATURES
THE PLAN. 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. EMPLOYEE STOCK PURCHASE
Date: April 24, 1995 AND SAVINGS PLAN
-------------------------------------
(The Plan)
Van P. Smith
-------------------------------------
(Van P. Smith, Chairman,
Compensation Committee)
Exhibit 99.b.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report included in this Form 11-K into
CINergy Corp.'s previously filed Registration Statement File No. 33-56091.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
April 24, 1995.