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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
U.S. GENERATING COMPANY 401(K) PROFIT-SHARING PLAN
FOR BARGAINING UNIT EMPLOYEES
7500 Old Georgetown Road
Suite 1300
Bethesda, Maryland 20814-6161
(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, Ca 94105
(Name of issuer of the securities held pursuant to the Plan of its
principal executive office)
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REQUIRED INFORMATION
1. The Statement of Net Assets Available for Plan Benefits as of September
30, 1998 and the Statement of Changes in Net Assets Available for Plan
Benefits for the period from September 1, 1998 (inception) through
September 30, 1998, 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.
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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.
U.S. GENERATING COMPANY 401(k)
PROFIT-SHARING PLAN FOR
BARGAINING UNIT EMPLOYEES
December 21, 1998 By: U.S. GENERATING COMPANY, as
Plan Administrator
By: /s/ STEPHEN A. HERMAN
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Stephen A. Herman
Senior Vice President and General Counsel
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Exhibit 1
U.S. Generating Company 401(k) Profit-Sharing Plan for Collectively Bargained
Employees
Financial Statements
As of September 30, 1998
Together With Auditors' Report
U.S. Generating Company 401(k) Profit-Sharing Plan for Collectively Bargained
Employees
Table of Contents
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PAGE
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
As of September 30, 1998 3
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the Period from September 1, 1998 (Inception) Through September 30, 1998 4
NOTES TO FINANCIAL STATEMENTS
As of September 30, 1998 5
SCHEDULE I -- ITEM 27(A) SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
As of September 30, 1998 *
SCHEDULE II -- ITEM 27(D) SCHEDULE OF REPORTABLE TRANSACTIONS
For the Period from September 1, 1998 (Inception) Through September 30, 1998 *
SCHEDULE III -- PARTY-IN-INTEREST TRANSACTIONS
For the Period from September 1, 1998 (Inception) Through September 30, 1998 *
SCHEDULE IV -- OBLIGATIONS IN DEFAULT
As of September 30, 1998 *
SCHEDULE V -- LEASES IN DEFAULT
As of September 30, 1998 *
* Schedules omitted because there were no such transactions, obligations, or leases in default.
</TABLE>
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Report of Independent Public Accountants
*
To the Administrative Committee of
U.S. Generating Company 401(k) Profit-Sharing Plan for Collectively Bargained
Employees:
We have audited the accompanying statement of net assets available for benefits
of U.S. Generating Company 401(k) Profit-Sharing Plan for Collectively Bargained
Employees (the "Plan") as of September 30, 1998, and the related statement of
changes in net assets available for benefits from September 1, 1998 (inception)
through September 30, 1998. These financial statements are the responsibility
of the Plan's Administrative Committee. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides 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
September 30, 1998, and the changes in its net assets available for benefits
from September 1, 1998 (inception) through September 30, 1998, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Washington, D.C.
December 18, 1998
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U.S. Generating Company 401(k) Profit-Sharing Plan for Collectively Bargained
Employees
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF SEPTEMBER 30, 1998
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1998
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Contributions Receivable:
Participant-Directed $ 85,792
Employer 50,397
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NET ASSETS AVAILABLE FOR BENEFITS $136,189
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The accompanying notes are an integral part of this statement.
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<TABLE>
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U.S. GENERATING COMPANY 401(k) PROFIT-SHARING PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE PERIOD FROM SEPTEMBER 1, 1998 (INCEPTION) THROUGH SEPTEMBER 30, 1998
Participant Directed
- ------------------------------------------------------------------------------------------------------------------------------------
CIGNA
Actively CIGNA
CIGNA Managed Stock
Guaranteed Fixed Founders Market Founders
Vanguard Income Income Balanced Index Growth
Funds Fund Account Account Account Account
-------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Contributions--
Participants $ - $ - $ - $ - $ - $ -
Employer - - - - - -
-------- --------- --------- --------- --------- ----------
Net assets
available for
benefits:
Beginning of year - - - - - -
-------- --------- --------- --------- --------- ----------
End of year $ - $ - $ - $ - $ - $ -
======== ========= ========= ========= ========= ==========
Fidelity
Growth & PBHG AIM Templeton
Income Growth Constellation Foreign Participant
Account Account Account Account Loan Other Total
--------- ------- ------------- --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions:
Contributions--
Participants $ - $ - $ - $ - $ - $ 85,792 $ 85,792
Employer - - - - - 50,397 50,397
-------- --------- --------- --------- --------- ---------- ------------
Net assets
available for
benefits:
Beginning of year - - - - - - -
-------- --------- --------- --------- --------- ---------- -----------
End of year $ - $ - $ - $ - $ - $136,189 $136,189
======== ========= ========= ========= ========= ========== ===========
The accompanying notes are an integral part of this statement.
</TABLE>
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U.S. GENERATING COMPANY 401(k) PROFIT-SHARING PLAN FOR
COLLECTIVELY BARGAINED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1998
1. DESCRIPTION OF THE PLAN:
The following description of the U.S. Generating Company (the "Company") 401(k)
Profit-Sharing Plan for Collectively Bargained Employees (the "Plan") provides
only general information. Participants should refer to the Plan agreement for a
more complete description of the Plan's provisions.
GENERAL
The Company acquired certain assets of New England Energy Services ("NEES") on
September 1, 1998. The Plan was established by the Company on September 1,
1998, to provide retirement, death, and disability benefits for eligible union
employees transferred to the Company's payroll as a result of this transaction.
The Plan is a defined contribution plan covering all employees of the Company
that are covered by a collective bargaining agreement that specifically provides
for their participation in the Plan. It is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA").
PLAN PARTICIPATION
New employees hired after September 1, 1998 are eligible for participation in
the Plan on their employment commencement date. Former employees of NEES were
eligible for participation in the Plan on September 1, 1998 (see vesting
paragraph for discussion of years of service earned).
CONTRIBUTIONS
Participants may make tax-deferred cash contributions of up to 10 percent of
pre-tax annual compensation, and up to 5 percent of after-tax compensation, as
defined in the Plan. Participants may also contribute amounts representing
distributions from other qualified defined benefit or contribution plans. The
Company matches pre-tax employee contributions up to 5 percent of each
employee's base compensation. Contributions are subject to certain Internal
Revenue Service ("IRS") limitations.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution and
an allocation of the Company's contribution and Plan earnings. Allocations are
based on participant earnings as defined in the Plan agreement. Forfeited
balances or terminated participants' nonvested accounts are used to reduce
future Company contributions.
VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company's contributions and earnings thereon is based
on years of continuous service. Participants vest according to the following
schedule:
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YEARS OF SERVICE % Vested
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Less than 2 years 0%
2 years, but less than 3 years 40%
3 years, but less than 4 years 60%
4 years, but less than 5 years 80%
Five or more years 100%
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The years of service earned by eligible union employees while working at NEES
are included in determining years of service under this Plan.
INVESTMENT OPTIONS
Investment options as of September 30, 1998 included the following:
* CIGNA GUARANTEED INCOME FUND -- This fund is designed to preserve capital and
produce attractive fixed income returns through investments primarily in high
quality, fixed income instruments such as intermediate-term bonds and
commercial mortgages.
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* CIGNA ACTIVELY MANAGED FIXED INCOME ACCOUNT -- This account is designed to
outperform benchmark and comparable actively managed funds over full market
cycles through investments primarily in high quality corporate and Government
fixed income securities.
* FOUNDERS BALANCED FUND -- This CIGNA separate account invests solely in the
Founders Balanced Fund. The objective of this fund is to provide the investor
with a combination of growth, income, and capital preservation through
investments in stocks, bonds, and short-term investments.
* FIDELITY GROWTH & INCOME FUND -- This CIGNA separate account invests solely
in the Fidelity Growth & Income Portfolio. The objective of this portfolio is
to seek a high total return through a combination of capital appreciation and
current income by primarily investing in equity securities of companies
currently paying dividends.
* CIGNA STOCK MARKET INDEX ACCOUNT -- This account is designed to provide long-
term growth of capital and income through investments in stocks in the S&P
500 Index.
* FOUNDERS GROWTH FUND -- This CIGNA separate account invests solely in the
Founders Growth Fund. The objective of this fund is to provide long-term
growth of capital primarily through investments in domestic common stocks of
companies with strong performance records, solid market positions, reasonable
financial strength, and continuous operating records of at least three years.
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* PBHG GROWTH FUND -- This CIGNA separate account invests solely in the PBHG
Growth Fund. The objective of this fund is to provide capital appreciation
through investments in common stocks and convertible stocks of small- and
medium-sized growth companies that trade in the United States or Canada on
registered exchanges or in the over-the-counter market.
* AIM CONSTELLATION FUND -- This CIGNA separate account invests solely in the
AIM Constellation Fund. The objective of this fund is to provide capital
appreciation through investments in common stocks, with emphasis on medium-
sized and smaller emerging growth companies.
* TEMPLETON FOREIGN FUND -- This CIGNA separate account invests solely in the
Templeton Foreign Fund. The objective of this fund is to provide long-term
capital growth through a flexible policy of investing in stocks and, to a
lesser extent, debt obligations of companies and governments outside the
United States.
PARTICIPANT LOANS
Participants may borrow from vested funds credited to their individual accounts.
The amount borrowed, when added to any outstanding loans that the participant
may have under the Company's retirement plan, cannot exceed the lesser of 50
percent of the participant's total vested account balance, or $50,000 reduced by
the participant's highest outstanding loan balance for the year. In no event
can the participant borrow more than $50,000. Loans for the purchase of a
residence are for a period up to 15 years; all other loans are for a period not
exceeding 5 years. All loans bear interest at a rate comparable with the prime
rate. Loans are secured by 50 percent of the value of the employee's account.
PLAN ADMINISTRATION
An administrative committee consisting of five employees of the Company oversees
the Plan. The administrative committee is responsible for reviewing the books
and records of the Plan and for serving as liaison between Plan participants and
the trustee. All funds in the Plan are held in trust by CIGNA. Funds allocated
to CIGNA are invested in a combination of equity and fixed-income investments.
RETIREMENTS AND TERMINATIONS
In the case of normal retirement, retirement due to permanent disability, or
termination of employment, a participant's benefits shall be paid in the form of
a lump-sum distribution or in monthly, quarterly, or annual installment
payments, not to exceed the life expectancy of the participant or designated
beneficiary. However, participants in the Plan prior to January 1, 1995, may
elect a single life annuity (if not married) or a qualified joint and survivor
annuity (if married). If a participant dies before retirement, the beneficiary
will receive the value of the participant's vested account balance in a lump-sum
distribution or in monthly, quarterly, or annual installment payments, not to
exceed the life expectancy of the beneficiary.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The financial statements of the Plan have been prepared using the accrual method
of accounting. 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CONTRIBUTIONS RECEIVABLE
Contributions receivable are the amounts due, as of the financial statement
date, to the plan from the Company and participants for completed pay-periods.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair market value as certified by the
trustee, except for its investment contract which is valued at contract value
(Note 3).
Purchases and sales of securities are recorded on the trade date. Interest
income is recorded on the accrual basis. Dividends are recorded on the ex-
dividend date.
ADMINISTRATIVE EXPENSES
Except to the extent paid by the Company, administrative expenses of the Plan
are paid out of the Plan's assets and charged against each participant's account
in the same proportion as the participant's account bears to the total balance
of all participant accounts.
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PAYMENT OF BENEFITS
Benefit payments are recorded when paid.
3. INVESTMENTS:
CIGNA, the Plan's trustee, is responsible for maintaining and investing Plan
assets, as directed by participants.
4. 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. In the event of Plan termination,
participants will become 100 percent vested in their accounts.
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5. TAX STATUS:
The Company has not yet solicited or received documentation from the IRS stating
that the Plan and related trust are designed in accordance with applicable
sections of the Internal Revenue Code ("IRC"). However, the Plan administrator
and the Plan's tax counsel believe that the Plan is designed and is currently
being operated in compliance with the applicable requirements of the IRC. The
Plan administrator plans to solicit the IRS determination letter by December 31,
1998.
6. SUBSEQUENT EVENTS:
As of November 30, 1998, the Plan had 389 participants, and the fair market
value of investments in the Plan was $3,873,051. This investment balance
includes employer and participant-directed contributions and participant-
directed rollovers from the previous NEES 401(k) plan.
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[ARTHUR ANDERSEN LLP LETTERHEAD]
EXHIBIT 2
CONSENT
As independent public accountants, we hereby consent to the incorporation of our
reports included in this form 11-K, into PG&E Corporation's previously filed
Registration Statement File Nos. 333-69437.
ARTHUR ANDERSEN LLP
Washington, D.C.
December 21, 1998
