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, 1996
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. 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
Page No.
Financial Statements
Report of Independent Public Accountants
Statements of Financial Condition as of
December 31, 1996 and 1995
Statements of Income and Other Changes in Plan Equity
for the Years Ended December 31, 1996, 1995, and 1994
Notes to Financial Statements
Financial Statement Schedules:
Schedules I, II, and III are not applicable
Signatures
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, 1996 and 1995, and the statements
of income and other changes in plan equity for each of the three
years in the period ended December 31, 1996. 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, 1996 and 1995, and the results of
its operations and changes in plan equity for each of the three
years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
March 25, 1997.
CINERGY CORP. EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
STATEMENTS OF FINANCIAL CONDITION
December 31
1996 1995
Cash (Purchase Savings Accounts) (Note C) $9 270 029 $5 128 737
Plan Equity $9 270 029 $5 128 737
<FN>
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
1996 1995 1994
Interest income (Purchase
Savings Accounts) (Note C) $ 390 381 $ 158 164 $ 24 426
Contributions from participants
(Note C) 4 618 713 4 835 158 1 327 538
Purchases of common stock,
terminations, and
withdrawals (Note E) (867 802) (232 653) (2 674 994)
Income and other changes in Plan
equity for the period 4 141 292 4 760 669 (1 323 030)
Plan equity at beginning of the
period 5 128 737 368 068 1 691 098
Plan equity at end of the period $9 270 029 $5 128 737 $ 368 068
<FN>
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 (Common Stock) subsequently 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., (PSI) 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. The assets of the Plan are commingled with
the assets of Cinergy and its subsidiaries. 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, at the participant's discretion, after-tax 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 participant's 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 or
the Company at a rate at least equal to the rate a bank would pay
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, including any interest earned
over the 26-month offering period, 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 5%. 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 second offering under the PSI Plan allowed for the purchase
of PSI's 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 in November 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 conversion ratio 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
PSI Energy, Inc. employees and February 1, 1995, for The
Cincinnati Gas & Electric Company employees, was $21.7312. The
initial offering is deemed to have commenced on the first day of
the third offering period under the PSI Plan and ended on
December 31, 1996. The accumulated balance at December 31, 1996
was $9,270,029. This balance was used by the participants to
purchase, subsequent to December 31, 1996, a total of 414,284
shares of Common Stock with the remaining $267,141 distributed in
cash.
The second offering under the Plan commenced on January 1, 1997,
and will end on February 28, 1999. The purchase price for this
offering period has been established at $31.825 per share.
The number of employees enrolled in the Plan at December 31,
1996, 1995, and 1994, were 2,399, 2,698, and 1,065, respectively.
Employees of The Cincinnati Gas & Electric Company became
eligible for participation in the Plan in February 1995.
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 Internal Revenue Code of 1986, as
amended (Code). Amounts withheld from a participant's
compensation for deposit in 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 further described
herein.
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 upon disposition and the purchase price plus the amount
of ordinary income is a capital gain or loss.
Note E - Purchases of Common Stock, Terminations, and Withdrawals
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.
There were no outstanding termination requests at the end of
1996, 1995, or 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. Terminations have
increased in 1996 as a result of voluntary early retirement and
severance programs offered by the Company.
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 12 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 as amended, 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 eligible shares.
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 AND
SAVINGS PLAN
(The Plan)
Date: March 25, 1997
Van P. Smith
(Chairman, Compensation
Committee)
Exhibit 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to
the incorporation 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,
March 25, 1997