<PAGE>
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, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 333-69437
PG&E ENERGY SERVICES RETIREMENT PLAN
345 California Street, 32nd Floor
San Francisco, California 94105
(Full title of the plan and the address of the plan, if different from that
of the issuer named below)
PG&E Corporation
One Market, Spear Tower
Suite 2400
San Francisco, California 94105
(Name of issuer of the securities held pursuant to the Plan of its
principal executive office)
<PAGE>
REQUIRED INFORMATION
1. The Statement of Net Assets Available for Benefits as of December 31, 1997
and 1996 and the Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1997, together with supplemental schedules
and the report of Arthur Andersen LLP, independent accountants, are
contained in Exhibit 1 to this Annual Report.
2. The Consent of Arthur Andersen LLP, independent accountants, is contained
in Exhibit 2 to this Annual Report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
PG&E ENERGY SERVICES RETIREMENT
PLAN
December 21, 1998 By: /s/ GAY WESTFALL
---------------------------------------
Gay Westfall, Vice President of Human
Resources, Plan Administrator
<PAGE>
EXHIBIT 1
PG&E ENERGY SERVICES RETIREMENT PLAN
FINANCIAL STATEMENTS AND SCHEDULES
AS OF DECEMBER 31, 1997 AND 1996 TOGETHER WITH AUDITORS' REPORT
FINANCIAL STATEMENTS AND SCHEDULES
PG&E ENERGY SERVICES RETIREMENT PLAN
DECEMBER 31, 1997 AND 1996
TABLE OF CONTENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits - December 31, 1997 and 1996
Statement of Changes in Net Assets Available for Benefits for the Year Ended
December 31, 1997
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
SCHEDULES SUPPORTING FINANCIAL STATEMENTS:
Schedule I - Item 27a - Schedule of Assets Held for Investment Purposes -
December 31, 1997
Schedule II - Item 27d - Schedule of Reportable Transactions for the
Year Ended December 31, 1997
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the
PG&E Energy Services Retirement Plan:
We have audited the accompanying statements of net assets available for benefits
of the PG&E Energy Services Retirement Plan (formerly PG&E Enterprises 401(k)
Retirement Plan) as of December 31, 1997 and 1996, and the related statement of
changes in net assets available for benefits for the year ended December 31,
1997. 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 schedules 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
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, 1997 and 1996, and the changes in its net assets available for
benefits for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules as listed in
the Table of Contents are presented for purposes of additional analysis and are
not a required part of the basic financial statements but are 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 fund information in the statements of net assets available for
benefits and the statement of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the net
assets available for plan benefits and changes in net assets available for plan
benefits of each fund. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in the 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
San Francisco, California,
December 4, 1998
<PAGE>
PG&E ENERGY SERVICES RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Fund Information
------------------------------------------------------------------------
International
Federal Short-Term 500 Value
Wellington Portfolio Bond Portfolio Portfolio
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS: Investments, at fair value $2,041,236 $1,038,482 $833,048 $2,798,955 $778,441
LIABILITIES 0 0 0 0 0
------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $2,041,236 $1,038,482 $833,048 $2,798,955 $778,441
========================================================================
</TABLE>
<TABLE>
<CAPTION>
Fund Information
------------------------------------------------------------------
Equity U.S. Index
Income Growth Extended Participant Total
Fund Portfolio Market Loans All Funds
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS: Investments, at fair value $751,459 $1,528,183 $699,369 $93,579 $10,562,752
LIABILITIES 0 0 0 0 0
------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $751,459 $1,528,183 $699,369 $93,579 $10,562,752
==================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
PG&E ENERGY SERVICES RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Fund Information
------------------------------------------------------------------------
Short-Term International
Federal Corporate 500 Value
Wellington Portfolio Bond Portfolio Portfolio
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value $1,744,266 $ 896,036 $663,777 $1,770,638 $699,094
Employer contributions receivable 0 374,176 0 0 0
Total assets 1,744,266 1,270,212 663,777 1,770,638 699,094
LIABILITIES 0 12,992 0 0 0
NET ASSETS AVAILABLE FOR BENEFITS $1,744,266 $1,257,220 $663,777 $1,770,638 $699,094
========================================================================
<CAPTION>
Fund Information
--------------------------------------------------------------
Equity U.S. Index
Income Growth Extended Participant Total
Fund Portfolio Market Loans All Funds
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value $718,168 $965,170 $229,426 $27,741 $7,714,316
Employer contributions receivable 0 0 0 0 374,176
Total assets 718,168 965,170 229,426 27,741 8,088,492
LIABILITIES 0 0 0 0 12,992
NET ASSETS AVAILABLE FOR BENEFITS $718,168 $965,170 $229,426 $27,741 $8,075,500
==============================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fund Information
------------------------------------------------------------------------
International
Federal Short-Term 500 Value
Wellington Portfolio Bond Portfolio Portfolio
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONTRIBUTIONS:
Employer $ 127,740 $ 115,478 $ 75,201 $ 264,817 $ 115,717
Employer 98,892 19,834 46,540 199,495 89,906
Rollover contributions 171,372 206,149 231,583 155,016 137,121
---------------------------------------------------------------------
Total contributions 398,004 341,461 353,324 619,328 342,744
INVESTMENT EARNINGS 169,857 47,477 39,465 59,943 112,645
NET REALIZED GAINS (LOSSES) 55,889 0 (198) 77,324 1,543
NET UNREALIZED APPRECIATION (DEPRECIATION) IN FAIR
VALUE OF INVESTMENTS 160,449 0 3,885 478,242 (152,689)
--------------------------------------------------------------------
Total additions 784,199 388,938 396,476 1,234,837 304,243
--------------------------------------------------------------------
BENEFITS PAID: Participants (356,583) (650,870) (34,415) (375,347) (142,484)
--------------------------------------------------------------------
TRANSFERS, net (121,333) 58,659 (169,552) 166,977 (67,986)
LOANS GRANTED (10,599) (19,387) (26,432) (11,932) (15,234)
LOAN REPAYMENTS 1,286 3,922 3,194 13,782 808
--------------------------------------------------------------------
Net transfers (130,646) 43,194 (192,790) 168,827 (82,412)
--------------------------------------------------------------------
Net increase (decrease) 296,970 (218,738) 169,271 1,028,317 79,347
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 1,744,266 1,257,220 663,777 1,770,638 699,094
-------------------------------------------------------------------
End of year 2,041,236 $1,038,482 $ 833,048 $2,798,955 $ 778,441
=====================================================================
<CAPTION>
Fund Information
--------------------------------------------------------------
Equity U.S. Index
Income Growth Extended Participant Total
Fund Portfolio Market Loans All Funds
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONTRIBUTIONS:
Employer $ 68,279 $ 226,274 $ 148,014 $ 0 $ 1,141,520
Employer 53,649 159,907 95,177 0 763,400
Rollover contributions 7,230 24,953 128,360 0 1,061,784
-------------------------------------------------------------------
Total contributions 129,158 411,134 371,551 0 2,966,704
INVESTMENT EARNINGS 50,476 64,275 45,265 5,247 594,650
NET REALIZED GAINS (LOSSES) 31,506 47,814 19,885 0 233,763
NET UNREALIZED APPRECIATION (DEPRECIATION) IN FAIR
VALUE OF INVESTMENTS 107,247 175,532 25,428 0 798,094
--------------------------------------------------------------------
Total additions 318,387 698,755 462,129 5,247 4,593,211
--------------------------------------------------------------------
BENEFITS PAID: Participants (256,259) (265,830) (24,171) 0 (2,105,959)
-------------------------------------------------------------------
TRANSFERS, net (25,583) 129,212 29,606 0 0
LOANS GRANTED (3,604) (10,758) (11,723) 109,669 0
LOAN REPAYMENTS 350 11,634 14,102 (49,078) 0
-------------------------------------------------------------------
Net transfers (28,837) 130,088 31,985 60,591 0
-------------------------------------------------------------------
Net increase (decrease) 33,291 563,013 469,943 65,838 2,487,252
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 718,168 965,170 229,426 27,741 8,075,500
-------------------------------------------------------------------
End of year $ 751,459 $1,528,183 $699,369 $ 93,579 $10,562,752
===================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
PG&E ENERGY SERVICES RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. DESCRIPTION OF PLAN:
The PG&E Energy Services Retirement Plan (formerly PG&E Enterprises 401(k)
Retirement Plan) (the Plan) was established on January 1, 1990.
The Plan is a defined contribution plan covering substantially all full-time
employees of PG&E Energy Services Corporation (the Company) and its wholly owned
subsidiaries. Employees are eligible to contribute to the Plan on the first of
the month following their date of hire. The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's
assets are held by Vanguard Fiduciary Trust Company (Vanguard), the trustee of
the Plan.
The following description provides only general information. Reference should
be made to the plan agreement for a more complete description of the Plan's
provisions.
CONTRIBUTIONS
Each participant may voluntarily contribute from 1 percent to 7 percent of
his/her pretax base salary. The Company will match 100 percent of the first 5
percent of these contributions. In addition, the Company will automatically
contribute 5 percent of the participant's pretax base salary, without regard to
the participant's contributions (the employee need not make any voluntary
contributions to be eligible for this automatic contribution). A participant
may also elect to contribute up to 5 percent of his or her after-tax base
salary.
A participant may roll over into the Plan any amounts from another tax-qualified
retirement plan or IRA with the permission of the Administrative Committee of
the Plan.
Participant and Company contributions are subject to certain maximum allowable
limitations mandated by the Internal Revenue Code Section 415. A participant's
voluntary pretax 401(k) contributions may not exceed $9,500 in 1997. The
combination of participant voluntary pretax, after-tax and Company contributions
may not exceed the lesser of $30,000 or 25 percent of earned income.
VESTING
Participants are 100 percent vested immediately upon participation.
Benefits
A participant will be entitled to payment of the balance in his/her account upon
termination his/her employment or attainment of age 65. Vanguard will
automatically disburse balances of $3,500 or less to participants without
written authorization. If a participant's account balance is greater than
$3,500, distribution will be made upon written request, but in any event,
distribution will start when the participant reaches age 70- 1/2 .
Distributions may be taken in lump-sum payments or in periodic installments over
a period not to exceed the life expectancy of the participant.
-5-
<PAGE>
PLAN TERMINATION
Although the Company has not expressed any intent to do so, it has the right to
terminate the Plan subject to the provisions of ERISA. In the event of the
Plan's termination, participants will receive full payment of the balance in
their accounts. No plan assets may revert to the Company.
TAX STATUS
The Plan is intended to qualify under Section 401(a) of the Internal Revenue
Code (the IRC), and the Internal Revenue Service has issued a favorable
determination letter, dated March 1, 1993, ruling that the Plan was designed in
accordance with applicable IRC requirements as of the date of its letter. The
Plan has been amended since receiving the determination letter. However,
management believes that the Plan is currently designed and operated in
accordance with applicable IRC requirements. As a result, the Plan has not
provided for federal income taxes.
2. SUMMARY OF ACCOUNTING POLICIES:
The accompanying financial statements have been prepared based upon generally
accepted accounting principles. 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 disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of additions and deductions
during the reporting period. Actual results could differ from those estimates.
Investments are valued at fair value based upon redemption value as reported by
the trustee. Realized gains and losses are computed using the average cost
method based upon beginning of the year fair values. Unrealized appreciation
and depreciation is computed based upon the change in the fair value of
securities.
Participant loans are valued at book value, which approximates fair value.
3. INVESTMENTS:
The Plan invests all of its assets with The Vanguard Group--a family of no-load
mutual funds. Participants may elect to have all of their voluntary, matching
and automatic contributions invested in a single investment fund or in any
combination of funds available in the Plan. The following investment funds are
available to the participants:
. VANGUARD/WELLINGTON FUND--This fund is designed to fulfill three
investment objectives: conservation of capital, reasonable current income
and profits without undue risks.
. VANGUARD MONEY MARKET RESERVES FEDERAL PORTFOLIO--This fund is a money
market account that seeks the maximum current income that is consistent
with preservation of capital and liquidity.
. VANGUARD FIXED INCOME SECURITIES FUND SHORT-TERM CORPORATE PORTFOLIO--This
fund is designed to provide investors with a method of consistently
capturing the return of the U.S. bond market.
. VANGUARD INDEX TRUST 500 PORTFOLIO--This fund attempts to provide
investment results that parallel the performance of the Standard & Poor's
500 Composite Stock Index.
-6-
<PAGE>
. VANGUARD INTERNATIONAL VALUE PORTFOLIO--This fund seeks maximum long-term
returns consistent with reasonable risk by investing in a portfolio of
international stocks.
. VANGUARD EQUITY INCOME FUND--This fund seeks a high level of current
income by investing primarily in equity securities with above-average
dividend yields and with reasonable capital appreciation.
. VANGUARD U.S. GROWTH PORTFOLIO--This fund seeks to provide long-term
capital appreciation by investing in common stocks of companies with
above-average growth potential.
. VANGUARD INDEX TRUST EXTENDED MARKET PORTFOLIO--This fund seeks to provide
investment results that parallel the performance of the unmanaged Wilshire
4500 Index.
Each investment fund is managed by The Vanguard Group, which has discretionary
investment authority over the funds. The Company has no authority over how each
fund is managed or invested.
Participants may also borrow from their vested account balances in accordance
with plan guidelines.
-7-
<PAGE>
PG&E ENERGY SERVICES RETIREMENT PLAN
EIN: 94-3016129
PLAN NUMBER: 001
LINE 27A--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
(e)
(b) (c) (d) Current
(a) Identity Description of Investment Cost Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
* The Vanguard Group 69,311 shares of Vanguard/Wellington Fund
$1,668,842 $ 2,041,236
* The Vanguard Group 1,038,482 shares of Vanguard Money Market
Reserves Federal Portfolio 1,038,482 1,038,482
* The Vanguard Group 77,063 shares of Vanguard Fixed Income
Securities Fund Short-Term Corporate
Portfolio 827,739 833,048
* The Vanguard Group 31,075 shares of Vanguard Index Trust 500
Portfolio 1,947,249 2,798,955
* The Vanguard Group 34,383 shares of Vanguard International Valve
Portfolio 984,876 778,441
* The Vanguard Group 33,562 shares of Vanguard Equity Income Fund
547,107 751,459
* The Vanguard Group 53,247 shares of Vanguard U.S. Growth
Portfolio 1,186,673 1,528,183
* The Vanguard Group 22,743 shares of Vanguard Index Trust
Extended Market Portfolio 663,610 699,369
* Participant Loans Interest ranging from 6.34 percent to 7.25
percent 93,579 93,579
---------------------------
Total $8,958,157 $10,562,752
===========================
</TABLE>
* A party in interest as defined by ERISA.
-8-
<PAGE>
PG&E ENERGY SERVICES RETIREMENT PLAN
EIN: 94-3016129
PLAN NUMBER: 001
LINE 27D--SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
(c) (d) (e)
(a) (b) Numbr of Purchase Selling Lease
Identity Description of Asset Transactions Price Price Rental
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
* The Vanguard Group Vanguard/Wellington Fund Purchases 58 $ 791,825 $ 0 $0
Sales 50 0 711,193 0
* The Vanguard Group Vanguard Money Market Reserves Purchases 89 913,764 0 0
Federal Portfolio Sales 39 0 771,319 0
* The Vanguard Group Vanguard Short-Term Bond Purchases 76 523,868 0 0
Sales 26 0 358,285 0
* The Vanguard Group Vanguard Index Trust 500 Portfolio Purchases 67 1,066,865 0 0
Sales 28 0 594,114 0
* The Vanguard Group Vanguard International Value Purchases 55 561,237 0 0
Portfolio Sales 33 0 330,744 0
* The Vanguard Group Vanguard U.S. Growth Portfolio Purchases 56 863,179 0 0
Sales 28 0 523,511 0
* The Vanguard Group Vanguard Index Trust Extended Purchases 58 626,231 0 0
Market Sales 13 0 198,944 0
<CAPTION>
(h)
(f) Current
Expense (g) Value on (i)
(a) (b) Incurred with Cost Transaction Net Gain
Identity Description of Asset Transaction of Asset Date or Loss
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
* The Vanguard Group Vanguard/Wellington Fund Purchases $ 0 $ 791,825 $ 791,825 $ 0
Sales 0 575,072 711,193 136,121
* The Vanguard Group Vanguard Money Market Reserves Purchases 0 913,764 913,764 0
Federal Portfolio Sales 0 771,319 771,319 0
* The Vanguard Group Vanguard Short-Term Bond Purchases 0 523,868 523,868 0
Sales 0 358,266 358,285 19
* The Vanguard Group Vanguard Index Trust 500 Portfolio Purchases 0 1,066,865 1,066,865 0
Sales 0 405,077 594,114 189,037
* The Vanguard Group Vanguard International Value Purchases 0 561,237 561,237 0
Portfolio Sales 0 349,792 330,744 (19,048)
* The Vanguard Group Vanguard U.S. Growth Portfolio Purchases 0 863,179 863,179 0
Sales 0 410,789 523,512 112,723
* The Vanguard Group Vanguard Index Trust Extended Purchases 0 626,231 626,231 0
Market Sales 0 170,567 198,944 28,377
</TABLE>
* A party in interest as defined by ERISA.
-9-
<PAGE>
[LETTERHEAD OF ARTHUR ANDERSEN LLP]
EXHIBIT 2
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 PG&E Corporation's previously filed
Registration Statement File Nos. 333-69437.
ARTHUR ANDERSEN LLP
San Francisco, California
December 21, 1998
