-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H4j+lNo7O2gkGKTUYuUct8ScwRyETlJ/QEnEE9qcmSdRr9qFyRzpmAle8Fewc4cK +bPwcD7Z7wTm43ao8IyNkA== 0000899652-99-000042.txt : 19990331 0000899652-99-000042.hdr.sgml : 19990331 ACCESSION NUMBER: 0000899652-99-000042 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CINERGY CORP CENTRAL INDEX KEY: 0000899652 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 311385023 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-11377 FILM NUMBER: 99577387 BUSINESS ADDRESS: STREET 1: 139 E FOURTH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5134219500 MAIL ADDRESS: STREET 1: 139 E FOURTH STREET CITY: CINCINATI STATE: OH ZIP: 45202 11-K 1 1998 11-K--DIRECTORS' DEFERRED COMP PLAN 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, 1998 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. DIRECTORS' DEFERRED COMPENSATION 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) TABLE OF CONTENTS Page No. Financial Statements Report of Independent Public Accountants 3 Statements of Financial Condition as of December 31, 1998 and 1997 4 Statements of Income and Other Changes in Plan Equity for the Years Ended December 31, 1998, 1997, and 1996 5 Notes to Financial Statements 6-8 Financial Statement Schedules: Schedules I, II, and III are not applicable Signatures 9 Exhibits 23) Consent of Independent Public Accountants REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Plan Administrator of the Cinergy Corp. Directors' Deferred Compensation Plan: We have audited the accompanying statements of financial condition of the CINERGY CORP. DIRECTORS' DEFERRED COMPENSATION PLAN as of December 31, 1998 and 1997, and the related statements of income and other changes in plan equity for each of the three years in the period ended December 31, 1998. 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, 1998 and 1997, and the results of its operations and changes in plan equity for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Cincinnati, Ohio March 29, 1999 3
CINERGY CORP. DIRECTORS' DEFERRED COMPENSATION PLAN STATEMENTS OF FINANCIAL CONDITION Totals (Note C) AS OF DECEMBER 31, 1998 ASSETS Amounts due from participating employers (Note A) $1 163 824 ========== PLAN EQUITY $1 163 824 ========== AS OF DECEMBER 31, 1997 ASSETS Amounts due from participating employers (Note A) $1 066 974 ========== PLAN EQUITY $1 066 974 ========== The accompanying notes are an integral part of these financial statements.
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CINERGY CORP. DIRECTORS' DEFERRED COMPENSATION PLAN STATEMENTS OF INCOME AND OTHER CHANGES IN PLAN EQUITY Totals (Note C) PLAN EQUITY AT DECEMBER 31, 1995 $ 489 414 Theoretical investment income (Note C) Dividends earned 31 615 Theoretical stock appreciation 53 877 Contributions from participants (Note C) 191 500 Participant withdrawals (Note E) (26 730) ---------- PLAN EQUITY AT DECEMBER 31, 1996 $ 739 676 Theoretical investment income (Note C) Dividends earned 42 629 Theoretical stock appreciation 128 128 Contributions from participants (Note C) 188 500 Participant withdrawals (Note E) (31 959) ---------- PLAN EQUITY AT DECEMBER 31, 1997 $1 066 974 Theoretical investment income (Note C) Dividends earned 52 698 Theoretical stock depreciation (115 569) Contributions from participants (Note C) 193 750 Participant withdrawals (Note E) (34 029) ---------- PLAN EQUITY AT DECEMBER 31, 1998 $1 163 824 The accompanying notes are an integral part of these financial statements.
5 CINERGY CORP. DIRECTORS' DEFERRED COMPENSATION PLAN NOTES TO FINANCIAL STATEMENTS Note A - Plan Description The Cinergy Corp. Directors' Deferred Compensation Plan the ("Plan") was established to enable non-employee directors of Cinergy Corp. ("Cinergy" or "Company") and its subsidiaries to defer the receipt of all or a portion of the compensation payable for services performed as a member of the board of directors of Cinergy or any of its subsidiaries. The Plan is not a funded plan; therefore, Cinergy and its subsidiaries have not segregated any assets to pay the contractual obligations to participants under 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 eligible Plan participants. Note B - Accounting Principles The accounts of the Plan are maintained on an accrual basis. The preparation of financial statements in conformity with generally accepted accounting principles requires the Plan Administrator to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note C - Investment Program Under the Plan, eligible participants may elect to defer all or any portion of the compensation payable for services performed as a member of the board of directors of Cinergy or its subsidiaries. Except as discussed in note F, participants accounts are 100% vested at all times. Each participant elects to have amounts deferred credited among two different accounts - a "Stock Account" and a "Cash Account" - as follows: Stock Account - A participant may elect to have any portion of deferred amounts treated as if invested in a number of shares of Cinergy Corp. Common Stock, $.01 par value ("Common Stock"). When a participant elects to have amounts treated as if invested in Common Stock, the deferred amounts are deemed to be invested in a number of theoretical shares of Common Stock determined using the market price per share existing on the date each amount would otherwise have been payable to the participant. Dividends on the theoretical shares are assumed to be reinvested into additional theoretical shares determined using the existing market price per share as and when dividends on Common Stock are paid. A total of 33,856.687 theoretical shares at a market value of $34.375 per share were allocated to participants' Stock Accounts at December 31, 1998. A total of 27,849.243 theoretical shares at a market value of $38.3125 per share were allocated to participants' Stock Accounts at December 31, 1997. 6 Cash Account - A participant may elect to have any portion of deferred amounts treated as if invested in an interest-bearing account. When a participant elects to have amounts treated as if invested in an interest-bearing account, the deferred amounts are deemed to be invested in a theoretical account on the date each amount would otherwise have been payable to the participant. Interest is accrued on and credited to the theoretical account at a rate that is equivalent to the interest rate for a one-year certificate of deposit of $100,000 as quoted in The Wall Street Journal. The rate of interest is adjusted and compounded quarterly. Upon six-month prior notice, a participant may change the amount of compensation to be deferred and the allocation of amounts among the two accounts. However, any change in allocation among the two accounts will only apply to future deferred amounts and not to existing account balances. The number of active participants in each account is provided in the following table: Cash Stock December 31 Account Account ----------- ------- ------- 1996 None 5 1997 None 5 1998 None 4 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 also is not a qualified plan under Section 401(a) of the Internal Revenue Code of 1986, as amended. The Plan is subject to Federal income taxes; however, the unfunded nature of the Plan precludes the occurrence of a taxable event arising from the Plan's operation. Amounts deferred, along with any theoretical dividends and theoretical interest accrued thereon, are not considered taxable income to a participant until distributed (see Note E). Amounts distributed from the Plan are considered compensation taxable as ordinary income in the year distributed, in an amount equal to the total of all cash and the existing fair market value of all shares of Common Stock distributed. Subsequent dispositions of shares of Common Stock received from the Plan may result in capital gains (losses) equal to the amount realized over (under) the tax basis in the shares. The tax basis is generally considered to be the amount of ordinary income recognized in conjunction with the distribution from the Plan of the shares of Common Stock. Note E - Participant Withdrawals At the participant's election, amounts deferred under the Plan, together with earnings thereon will be distributed either in a single lump sum payment or in equal annual installments of two to 10 years. At the participant's election, the single lump sum payment or the first installment payment will be payable on the first business day of the calendar year immediately following the year in which the participant either (a) ceases to be a director, or (b) attains that age 7 specified by Paragraph 203(f)(3) of the Social Security Act or its equivalent then in effect. Any additional installment(s) will be payable on the first business day of each succeeding year. All payments to be made under the Plan from a participant's Stock Account are to be made in the form of new issue shares of Common Stock or shares of Common Stock purchased on the open market, as determined by the Company, and cash in lieu of any fractional shares. All payments to be made under the Plan from a participant's Cash Account are to be paid in cash. In the event of the death of a participant, all amounts due the participant are to be distributed within 90 days of the participant's death to the designated beneficiary or to the decedent's estate in accordance with the preceding paragraph. Note F - Change in Control, Amendment, Termination, and Forfeiture In the event of a "change in control" of Cinergy, as defined in the Plan as amended, the Compensation Committee of Cinergy's Board of Directors, in its sole discretion, may elect to accelerate the distribution of all compensation deferred under the Plan. Cinergy, at any time by action of its board of directors, may alter, amend, modify, revoke, or terminate the Plan, or suspend payment of benefits under the Plan, except with respect to provisions relating to a "change in control" for a three-year period following such "change in control". Any amounts remaining in a participant's Stock Account or Cash Account will be forfeited if the participant becomes affiliated with any utility or other company in Indiana, Ohio, or Kentucky that competes with Cinergy or its subsidiaries. Amounts will also be forfeited if a participant refuses a reasonable request to become a consultant after retiring as a member of the Company's or its subsidiaries' board(s) of directors. 8 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. DIRECTORS' DEFERRED COMPENSATION PLAN (The Plan) Date: March 30, 1999 /s/ Van P. Smith Van P. Smith (Chairman, Compensation Committee) 9 EX-23 2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS Exhibit 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated March 29, 1999, included in this Form 11-K into Cinergy Corp.'s previously filed Registration Statement File No. 33-56089. ARTHUR ANDERSEN LLP Cincinnati, Ohio March 29, 1999 -----END PRIVACY-ENHANCED MESSAGE-----