<PAGE> 1
Page 1 of 18
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
Commission file number 1 - 7479
--------------
BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN
---------------------
(Full title of the plan)
BAY STATE GAS COMPANY
300 Friberg Parkway
Westborough, Massachusetts 01581-5039
-------------------------------------
(Name and address of issuer of the securities
held pursuant to the plan)
<PAGE> 2
Page 2 of 18
Index Page No.
----- --------
(a) Signatures: 3
(b) Financial Statements:
Independent Auditors' Report 4
Statements of Net Assets Available for
Plan Benefits of December 31, 1995
and 1994 5
Statements of Changes in Net Assets
Available for Plan Benefits for the
years ended December 31, 1995, 1994
and 1993 6-8
Notes to Financial Statements 9-16
Schedule I: Item 27a - Schedule of
Assets Held for Investment Purposes 17
Schedules II: Item 27d - Schedule of
Reportable Transactions - Year Ended
December 31, 1995 18
<PAGE> 3
Page 3 of 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee administering the Plan has duly caused this annual report to be signed
by the undersigned thereunto duly authorized.
BAY STATE GAS COMPANY
BENEFITS COMMITTEE
Date: June 30, 1996 By_______________________
Charles H. Tenney III
Chairman
By______________________
Thomas W. Sherman
Committee Member
By______________________
William D. MacGillivray
Committee Member
By______________________
Jane P. Campagna
Committee Member
By______________________
Elizabeth A. Foley
Committee Member
<PAGE> 4
Page 4 of 18
Independent Auditors' Report
The Benefits Committee
Bay State Gas Company:
We have audited the accompanying statements of Net Assets Available for Plan
Benefits of the Bay State Gas Company Employee Savings Plan as of December 31,
1995 and 1994, and the related statements of Changes in Net Assets Available for
Plan Benefits for each of the years in the three-year period ended December 31,
1995. These financial statements are the responsibility of the Plan's
management. 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
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 Plan Benefits of the Bay
State Gas Company Employee Savings Plan at December 31, 1995 and 1994, and the
changes in Net Assets Available for Plan Benefits for each of the years in the
three-year period ended December 31, 1995 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 of assets held
for investment purposes and reportable transactions are presented for the
purpose 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 supplemental schedules
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.
KPMG Peat Marwick LLP
Boston, Massachusetts
June 18, 1996
<PAGE> 5
Page 5 of 18
Bay State Gas Company Employee Savings Plan
Statements of Net Assets Available for Plan Benefits
December 31, 1995 and 1994
<TABLE>
<CAPTION>
Assets
1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Investments, at fair value (note 4):
Company Stock Master Trust $15,258,822 --
Company Stock Fund -- $ 7,981,221
AIM Constellation Fund 2,001,128 --
Templeton Foreign Fund 6,504,203 --
Stagecoach S&P 500 Stock Fund 4,021,750 --
Company PAYSOP Fund -- 5,861,874
Templeton Growth Fund, Ltd. -- 6,374,217
Wells Fargo LifePath Funds:
LifePath 2000 36,737 --
LifePath 2010 363,038 --
LifePath 2020 184,413 --
LifePath 2030 93,660 --
LifePath 2040 276,609 --
State Street Bank and Trust Company
Index Fund -- 2,903,470
Stable Value Fund 7,812,999 --
State Street Bank and Trust Company
Selection Fund -- 7,749,125
Investments, at cost which approximates fair value (note 4):
Loan Fund 1,574,274 1,395,468
----------- -----------
Total investments $38,127,633 $32,265,375
Contributions receivable from employees and
employer 20,474 --
Cash and cash equivalents -- 240,043
Accrued interest receivable -- 44,153
Other receivables -- 4,882
----------- -----------
Total assets $38,148,107 $32,554,453
=========== ===========
Accrued expenses -- 14,150
Due to Bay State Gas Company Employee Savings
Plan for Operating Employees -- 162,390
----------- -----------
Total Liabilities -- 176,540
----------- -----------
Net Assets Available for Plan Benefits $38,148,107 $32,377,913
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
Page 6 of 18
Bay State Gas Company Employee Savings Plan
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1995
<TABLE>
<CAPTION>
Plan Interest
in
Templeton Company AIM LifePath LifePath
Selection Index Growth Stock Constellation 2000 2010
Fund Fund Fund Master Trust Fund Fund Fund
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Interest $ 126,204 $ -- $ 82 $ -- $ 63,544 $ -- $ --
Dividends -- -- -- -- -- -- --
Net appreciation (depreciation) in the
fair value of investments -- 279,802 259,137 -- (39,398) 1,718 10,508
Plan Interest in Company Stock Master
Trust investment income -- -- -- 2,231,119 -- -- --
-----------------------------------------------------------------------------------------
Total investment income 126,204 279,802 259,219 2,231,119 24,146 1,718 10,508
Contributions:
Employee 112,799 56,898 136,242 327,587 344,513 28,894 62,545
Employer 51,272 26,667 62,333 131,553 139,003 9,576 25,976
-----------------------------------------------------------------------------------------
Total contributions 164,071 83,565 198,575 459,140 483,516 38,470 88,521
-----------------------------------------------------------------------------------------
Total additions 290,275 363,367 457,794 2,690,259 507,662 40,188 99,029
-----------------------------------------------------------------------------------------
Benefits paid (339,425) (23,877) (450,486) (386,246) (838) (6,010) 18,778
Fees Paid (7,500) (3,000) (1,250) (3,701) (909) (15) (131)
Transfers between funds (7,808,137) (3,282,789) (6,419,651) 12,962,545 1,499,114 2,650 246,242
-----------------------------------------------------------------------------------------
Net Increase (decrease) (7,864,787) (2,946,299) (6,413,593) 15,262,857 2,005,029 36,813 363,918
Net Assets Available for Plan Benefits
Beginning of year 7,864,787 2,946,299 6,413,593 -- -- -- --
-----------------------------------------------------------------------------------------
End of year $ -- $ -- $ -- $15,262,857 $2,005,029 $36,813 $363,918
=========== ========== =========== =========== ========== ======= ========
</TABLE>
<TABLE>
<CAPTION>
Stagecoach
LifePath LifePath LifePath Templeton S&P 500 Stable
2020 2030 2040 Foreign Stock Value
Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Interest $ -- $ -- $ -- $ 417,490 $ 119,707 $ 381,729
Dividends -- -- -- -- -- --
Net appreciation (depreciation) in the
fair value of investments 9,741 5,063 20,019 212,509 629,654 --
Plan Interest in Company Stock Master
Trust investment income -- -- -- -- -- --
--------------------------------------------------------------------
Total investment income 9,741 5,063 20,019 629,999 749,361 381,729
Contributions:
Employee 62,166 43,092 40,899 282,690 162,179 266,589
Employer 27,210 12,557 17,067 125,482 64,375 109,523
--------------------------------------------------------------------
Total contributions 89,376 55,649 57,966 408,172 226,554 376,112
--------------------------------------------------------------------
Total additions 99,117 60,712 77,985 1,038,171 975,915 757,841
--------------------------------------------------------------------
Benefits paid (514) (1,143) -- (103,966) (100,318) (368,106)
Fees Paid (209) (95) (98) (2,039) (1,250) (2,913)
Transfers between funds 87,044 34,514 199,106 5,575,112 3,149,538 7,430,812
--------------------------------------------------------------------
Net Increase (decrease) 185,438 93,988 276,993 6,507,278 4,023,885 7,817,634
Net Assets Available for Plan Benefits
Beginning of year -- -- -- -- -- --
--------------------------------------------------------------------
End of year $185,438 $93,988 $276,993 $6,507,278 $4,023,885 $7,817,634
======== ======= ======== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Company
Stock Loan
Fund Fund Total
---------------------------------------
<S> <C> <C> <C>
Investment Income:
Interest $ 957 $ 116,848 $ 1,226,561
Dividends 212,155 -- 212,155
Net appreciation (depreciation) in the
fair value of investments 322,290 -- 1,711,043
Plan Interest in Company Stock Master
Trust investment income -- -- 2,231,119
---------------------------------------
Total investment income 535,402 116,848 5,380,878
Contributions:
Employee 130,412 -- 2,057,505
Employer 60,736 -- 863,330
---------------------------------------
Total contributions 191,148 -- 2,920,835
---------------------------------------
Total additions 726,550 116,848 8,301,713
---------------------------------------
Benefits paid (727,498) (15,156) (2,504,805)
Fees Paid (3,600) (4) (26,714)
Transfers between funds (13,780,941) 104,841 --
---------------------------------------
Net Increase (decrease) (13,785,489) 206,529 5,770,194
Net Assets Available for Plan Benefits
Beginning of year 13,785,489 1,367,745 32,377,913
---------------------------------------
End of year $ -- $1,574,274 $38,148,107
============ ========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 7
Page 7 of 18
Bay State Gas Company Employee Savings Plan
Statement of Changes in Net Assets
Available for Plan Benefits
Year ended December 31, 1994
<TABLE>
<CAPTION>
Templeton
Growth Company Company
Selection Index Fund Stock PAYSOP Loan
Fund Fund Ltd. Fund Fund Fund Total
---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest $ 505,443 $ 126 $ 1,881 $ 1,340 $ 65 $ 83,144 $ 591,999
Dividends -- -- 540,519 622,724 170,116 -- 1,333,359
Net appreciation (depreciation) in
the fair value of investments -- 42,626 (527,097) (1,478,062) (902,599) -- (2,865,132)
-------------------------------------------------------------------------------------
Total investment income (loss) 505,443 42,752 15,303 (853,998) (732,418) 83,144 (939,774)
-------------------------------------------------------------------------------------
Contributions:
Employee 472,331 222,333 519,766 612,186 -- -- 1,826,616
Employer 208,090 105,251 216,600 263,287 -- -- 793,228
-------------------------------------------------------------------------------------
Total contributions 680,421 327,584 736,366 875,473 -- -- 2,619,844
-------------------------------------------------------------------------------------
Total additions 1,185,864 370,336 751,669 21,475 (732,418) 83,144 1,680,070
Benefits paid (303,234) (146,830) (86,594) (216,344) (68,142) -- (821,144)
Administrative fees (37,924) (15,719) (8,495) (18,617) (12,072) -- (92,827)
Transfers between funds (295,889) (99,822) 986,830 5,271,860 (5,911,575) 48,596 --
Transfers out to other plans (439,676) (133,279) (217,870) (613,872) -- (112,786) (1,517,483)
-------------------------------------------------------------------------------------
Net increase (decrease) in plan equity 109,141 (25,314) 1,425,540 4,444,502 (6,724,207) 18,954 (751,384)
Net Assets Available for Plan Benefits:
Beginning of year 7,755,646 2,971,613 4,988,053 9,340,987 6,724,207 1,348,791 33,129,297
-------------------------------------------------------------------------------------
End of year $7,864,787 $2,946,299 $6,413,593 $13,785,489 $ -- $1,367,745 $32,377,913
========== ========== ========== =========== =========== ========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 8
Page 8 of 18
Bay State Gas Company Employee Savings Plan
Statement of Changes in Net Assets
Available for Plan Benefits
Year ended December 31, 1993
<TABLE>
<CAPTION>
Templeton
Growth Company Company
Selection Index Fund Stock PAYSOP Loan
Fund Fund Ltd. Fund Fund Fund Total
---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest $ 503,442 $ 209 $ 1,133 $ 519 $ 6 $ 78,346 $ 583,655
Dividends -- -- 352,725 418,771 322,543 -- 1,094,039
Net appreciation in the fair value of
investments -- 272,874 772,718 1,007,627 780,368 -- 2,833,587
-----------------------------------------------------------------------------------
Total investment income 503,442 273,083 1,126,576 1,426,917 1,102,917 78,346 4,511,281
-----------------------------------------------------------------------------------
Contributions:
Employee 518,563 238,927 346,554 664,002 -- 734 1,768,780
Employer 251,064 108,624 156,314 291,408 -- -- 807,410
-----------------------------------------------------------------------------------
Total contributions 769,627 347,551 502,868 955,410 -- 734 2,576,190
-----------------------------------------------------------------------------------
Total additions 1,273,069 620,634 1,629,444 2,382,327 1,102,917 79,080 7,087,471
-----------------------------------------------------------------------------------
Benefits paid (91,104) (43,861) (14,633) (103,805) (17,372) (3,946) (274,721)
Transfers between funds (186,471) (231,084) 157,273 100,323 -- 159,959 --
-----------------------------------------------------------------------------------
Net increase in plan equity 995,494 345,689 1,772,084 2,378,845 1,085,545 235,093 6,812,750
Net Assets Available for Plan Benefits:
Beginning of year 6,760,152 2,625,924 3,215,969 6,962,142 5,638,662 1,113,698 26,316,547
-----------------------------------------------------------------------------------
End of year $7,755,646 $2,971,613 $4,988,053 $9,340,987 $6,724,207 $1,348,791 $33,129,297
========== ========== ========== ========== ========== ========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 9
Page 9 of 18
BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
December 31, 1995, 1994 and 1993
1) Description of Plan
(a) General
The Bay State Gas Company Employee Savings Plan ("the Plan")
is a defined contribution payroll reduction savings plan. The
Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"). Participants should
refer to the Plan document for more complete information.
(b) Eligibility
Substantially all non-union employees of Bay State Gas Company
(the "Company") and its wholly-owned subsidiaries, Northern
Utilities, Inc. and Granite State Gas Transmission, Inc. are
eligible for participation in the Plan following the
completion of one year of service. To meet the service
requirement, an employee must complete at least 1,000 hours of
service during any twelve consecutive months commencing on
their date of employment or any anniversary of that date.
Employees may participate in the Plan until death, retirement,
or withdrawal of the entire contributed balance.
2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements have been prepared on
the accrual basis of accounting.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect certain reported
amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements. Certain
amounts of reported revenues and expenses are also affected by
these estimates and assumptions. Actual results could differ
from those estimates.
(b) Trustee
Effective April 1, 1995, Wells Fargo Bank replaced State
Street Bank as Trustee of the Plan and was granted
discretionary authority concerning purchases and sales of
investments for the Plan during that time. Plan assets are
held in safekeeping by the Trustee.
<PAGE> 10
Page 10 of 18
BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
December 31, 1995, 1994 and 1993
2) Summary of Significant Accounting Policies (continued)
(c) Investments
Investments in the AIM Constellation Fund, Stagecoach S&P 500
Stock Fund, Company Stock Fund, LifePath Funds and the
Templeton Foreign Fund are stated at market value. Market
values are based on quotations from national securities
exchanges for the various investments as of the close of
business on the last day of the year.
The fair value of the Plan's interest in the Company Stock
Master Trust (Master Trust) is based on the beginning of year
value of the Plan's interest in the trust plus actual
contributions and allocated investment income less actual
distributions and allocated administrative expenses (Note 5).
Quoted market prices are used to value investments in the
Master Trust.
GICs held in the Stable Value Fund are valued at contract
value. Contract value represents contributions made under the
contract plus interest at the contract rate. The crediting
interest rates are fixed for GICs and averaged 6.69% at
December 31, 1995. At December 31, 1995, the fair value of the
GICs is $6,933,298.
The Income Accumulation Fund is stated at market value which
is based on the fair value of its underlying securities as
follows: GICs and synthetic GICs, which are all benefit
responsive, are stated at contract value, publicly traded U.S.
government notes and bonds are stated at quoted market value
and money market securities are stated at cost which
approximates fair value.
Purchases and sales of securities are recorded on a trade-date
basis. Interest income is recorded on the accrual basis.
Dividends are recorded on the ex-dividend date.
Net appreciation (depreciation) in the fair value of
investments includes both realized and unrealized gains and
losses.
(d) Payment of benefits
Benefits are recorded when paid.
3) Plan Administration
(a) Administration
The Plan is administered by the Bay State Gas Company Benefits
Committee ("the Committee"), which is comprised
<PAGE> 11
Page 11 of 18
BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
December 31, 1995, 1994 and 1993
(a) Administration (continued)
of three or more individuals selected by the Board of
Directors of the Company. The Committee carries out the
provisions of the Plan, replies to questions and resolves
disputes arising under the Plan. Members of the Committee do
not receive compensation for service.
(b) Expenses
The Plan charges a monthly loan processing fee of $3.50 to
participants borrowing from their accounts and a $10 fee for
each participant's change of investment instructions in excess
of 10 in any calendar year. Prior to January 1, 1994, all
other administrative expenses of the Plan were paid by the
Company. Effective January 1, 1994, all such expenses are paid
by the Plan and allocated to participants' accounts.
4) Investments
All contributions are remitted to the Trustee for investment in
accordance with the instructions of the participants.
Participants may allocate their contributions (in 25% multiples) to
various investment funds. Allocation percentages, as well as investment
options among the investment funds, may be changed daily by the
participant.
The following investment funds are offered to active participants of
the Plan.
Company Stock Master Trust - Funds are invested in the Common Stock of
Bay State Gas Company.
Company Stock Fund - Funds were invested in the common stock of Bay
State Gas Company.
AIM Constellation Fund - Funds are invested principally in common
stocks with emphasis on medium-sized and smaller emerging growth
companies.
Templeton Foreign Fund - Funds are invested in stocks and debt
obligations of companies and governments outside of the United States.
Stagecoach S&P 500 Stock Fund - Funds are invested in domestic debt and
equity securities designed to approximate, as closely as practicable,
the capitalization-weighted total rate of return of the S&P 500 Index.
Templeton Growth Fund, Ltd. - Funds were invested in securities of
corporations and governments of any nation in the world.
<PAGE> 12
Page 12 of 18
BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
December 31, 1995, 1994 and 1993
Wells Fargo LifePath Funds - Funds are invested in a changing mix of
U.S. and international stocks, bonds and money market instruments. The
target dates of each fund refers to the year when investors plan to
retire or begin to withdraw portions of their investment. Each fund
accepts higher risk early on, and adjusts its asset mix to lower-risk
investments over time.
State Street Bank & Trust Company Index Fund - Funds were invested in
publicly traded common stocks of United States corporations.
Stable Value Fund - Funds are invested in a combination of guaranteed
investment contracts (GICs) and shares of the Wells Fargo Income
Accumulation Fund. The Wells Fargo Income Accumulation Fund is a pooled
stable value fund that invests in a variety of fixed-income securities
including; GIC's, synthetic GICs, publicly traded U.S. government notes
and bonds and money market securities.
State Street Bank & Trust Company Selection Fund - Funds were invested
in a pooled fund of guaranteed investment contracts ("GICs").
Loan Fund - Funds are comprised of amounts borrowed by participants
from their account balances (see note 7).
At December 31, 1995, each of the investment funds had the following
number of participating accounts:
<TABLE>
<CAPTION>
FUND NAME PARTICIPANTS
--------- ------------
<S> <C>
AIM Constellation Fund 276
LifePath 2000 Fund 17
LifePath 2010 Fund 51
LifePath 2020 Fund 68
LifePath 2030 Fund 38
LifePath 2040 Fund 47
Templeton Foreign Fund 347
S&P 500 Stock - Stagecoach Fund 297
Stable Value Fund 387
Company Stock Master Trust 512
</TABLE>
<PAGE> 13
Page 13 of 18
BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
December 31, 1995, 1994 and 1993
All funds, with the exception of the Loan Fund and the LifePath Funds,
represented more than five percent of Net Assets Available for Plan
Benefits at December 31, 1995. All funds, with the exception of the
Loan Fund, represented more than five percent of Net Assets Available
for Plan Benefits at December 31, 1994.
During August 1994, all participant account balances in the PAYSOP Fund
were transferred to the Company Stock Fund. The PAYSOP investments,
consisting entirely of Company Stock, were subsequently transferred to
the Company Stock fund on January 27, 1995.
5) Interest in Bay State Gas Company Stock Master Trust
A portion of the Plan's investments are in the Company Stock Master
Trust (Master Trust) which was established for the investment of assets
of the Plan and the Bay State Gas Company Savings Plan for Operating
Employees. Each plan has an undivided interest in the Master Trust. The
assets of the Master Trust are held by Wells Fargo Bank. At December
31, 1995, the Plan's interest in the net assets of the Master Trust was
approximately 78%. Investment income and administrative expenses
relating to the Master Trust are allocated to the individual plans
based upon average monthly balances invested by each plan. The
following table presents the fair values of investments for the Master
Trust.
<TABLE>
<CAPTION>
December 31, 1995
-----------------
<S> <C>
Bay State Gas Company Stock $19,471,480
Investment income for the Master Trust is as follows:
<CAPTION>
Year Ended
December 31, 1995
-----------------
<S> <C>
Net appreciation in fair value of Bay
State Gas Company Stock $ 2,040,202
Interest 8,424
Dividends 783,463
-----------
$ 2,832,089
===========
</TABLE>
<PAGE> 14
Page 14 of 18
BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
December 31, 1995, 1994 and 1993
6) Contributions
(a) Participant Contributions
Participants may designate a percentage of their annual
compensation to be contributed to the Plan on their behalf by
entering into the salary reduction agreement, thereby reducing
their compensation by 1% to 15% of their annual eligible
compensation. This compensation reduction was limited to a
maximum amount of $9,240 per year in 1995 (indexed annually
from $7,000 commencing January 1, 1987). In 1995, for
employees whose earnings are in excess of $66,000 (indexed
annually from $50,000 commencing January 1, 1987),
contributions are limited to 7 1/2% of their annual
compensation. Participants' salary payments will be reduced
accordingly. A participant's eligible compensation for any
given year generally consists of straight time wages, certain
supplementary compensation and 75% of sales commissions paid
or accrued. All overtime, bonuses, some supplementary
compensation payments, deferred compensation, retirement
benefits and other forms of nonrecurring compensation are
excluded.
(b) Company Contributions
Beginning October 1, 1992, for participants under the age of
45 on January 1, 1992 and all employees hired after September
1, 1990, the Company changed the amount of its contribution to
each participant's account to an amount equal to 100% of the
first 2-1/2% of the participant's eligible compensation
contributed and 50% of the next 5% of the participant's
eligible compensation contributed, provided that total Company
contributions did not exceed 5% of the participant's eligible
compensation. For all others, the Company contribution is 5%
of the participant's eligible compensation contributed.
(c) Vesting
Employer and employee contributions vest immediately.
7) Withdrawals, Borrowings, and Distributions
(a) Withdrawals
Participants may withdraw all or any portion of their
contributions made through November 1, 1983 on the last day of
any month, upon 30 days notice to the Committee. Only one
withdrawal may be made in any twelve-month period and the
withdrawal may not exceed the value of the contributions in
their account on that date.
Contributions made subsequent to November 1, 1983 may be
withdrawn in the event of financial hardship or the attainment
of 59 1/2 years of age.
<PAGE> 15
Page 15 of 18
BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
December 31, 1995, 1994 and 1993
(b) Borrowings
Participants may borrow from their accounts an amount which,
together with any outstanding loans from any other qualified
plans of the Company, does not exceed the lesser of (i)
one-half of the amounts in all of their accounts or (ii) an
amount which, when added to any other amounts borrowed under
any other plan, does not exceed $50,000. Further, effective
January 1, 1987, as a result of the Tax Reform Act of 1986,
the $50,000 limitation will be reduced by the excess (if any)
of the highest outstanding loan balance of a participant in
the preceding twelve-month period ending on the day before the
date on which the loan was made, over the outstanding balance
of loans from the plan on the date of the loan. Applications
to borrow must be adequately secured, must be for at least
$1,000 and must be repaid at a rate of interest equal to the
prime interest rate, as published in the Wall Street Journal,
at the time the loan is made, plus one percent. This interest
rate is applicable for the duration of the loan. Only two
loans may be outstanding to a participant at any time and must
be repaid within five years.
(c) Distributions
Distribution of a participant's entire account balance in the
Plan will be made upon retirement, termination of employment
or death. Distributions will be made to the participant or to
the participant's designated beneficiary in either a lump sum
payment or in periodic payments over a period not to exceed 10
years for a spousal beneficiary or over a period within 5
years in the case of a non-spousal beneficiary.
Upon the death of a Plan participant, benefits to the
participant's spouse must commence no later than April 1st
following the date the participant would have been age 70 1/2.
For any other beneficiary, death benefits must commence within
one year of the Participant's death.
Upon the retirement or termination of employment, Plan
participants (thereby becoming inactive Plan participants) may
elect to receive their share of Net Assets Available for Plan
Benefits in a lump sum or in installments over a period not to
exceed 10 years.
<PAGE> 16
Page 16 of 18
BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
December 31, 1995, 1994 and 1993
8) Income Tax Status
The Plan was amended effective April 1, 1995, and the Plan's sponsor
has applied to the Internal Revenue Service ("IRS") for a tax
determination letter. The Plan's sponsor and tax counsel feel, however,
that the Plan and the Trust established under the Plan is currently
designed and being operated in compliance with the applicable
requirements of the Internal Revenue Code ("IRC").
9) Plan Termination
(a) If the Plan is discontinued, all assets of the Plan must be
used for the exclusive benefit of participants of the Plan.
(b) The Company expects to continue the Plan indefinitely,
however, it may terminate the Plan at any time by giving
written notice to the Trustee. After termination, the Company
will make no further contributions to the Plan.
10) Reconciliation of Accompanying Financial Statements to Federal Form
5500
The following is a reconciliation of benefits paid to participants per
accompanying financial statements to Federal Form 5500:
<TABLE>
<CAPTION>
Year Ended
December 31, 1995
-----------------
<S> <C>
Benefits paid to participants per
accompanying financial statements $2,504,805
Benefits payable at December 31, 1994 per
Federal Form 5500 786,044
----------
Benefits paid per Federal Form 5500 $1,718,761
==========
</TABLE>
Benefits payable were recorded on Federal Form 5500 for benefit claims
that had been processed and approved prior to December 31, 1994 but not
yet paid as of that date. Benefits payable are not required to be
accrued at the end of each year in the accompanying financial
statements in order to conform with generally accepted accounting
principles.
<PAGE> 17
Page 17 of 18
Schedule I
Bay State Gas Company Employee Savings Plan
Item 27(a)
Schedule of Assets Held for Investment Purposes
December 31, 1995
<TABLE>
<CAPTION>
Identity of Description of Current
Issue Investment Cost Value
(a) (b) (c) (d) (e)
- --- ----------- -------------- ---- -------
<S> <C> <C> <C> <C>
* Company Stock Master Trust Master Trust; 1,375,908 Units $13,107,383 $15,258,822
Stable Value Fund Pooled Fund; 752,792 shares 7,812,999 7,812,999
AIM Constellation Fund Mutual Fund; 88,900 shares 2,043,323 2,001,128
Templeton Foreign Fund Mutual Fund; 708,519 shares 6,372,943 6,504,203
Stagecoach S&P 500 Stock Fund Mutual Fund; 299,237 shares 3,443,400 4,021,750
* LifePath 2000 Fund Collective Trust Fund; 3,225 shares 35,623 36,737
* LifePath 2010 Fund Collective Trust Fund; 30,405 shares 352,709 363,038
* LifePath 2020 Fund Collective Trust Fund; 14,944 shares 174,863 184,413
* LifePath 2030 Fund Collective Trust Fund; 7,422 shares 88,699 93,660
* LifePath 2040 Fund Collective Trust Fund; 21,393 shares 257,327 276,609
* Loan Fund Participant loans; 5.78% - 10.00% 1,574,274 1,574,274
----------- -----------
Total assets held for
investment purposes $35,263,543 $38,127,633
=========== ===========
</TABLE>
* Party in interest
<PAGE> 18
Page 18 of 18
Schedule II
BAY STATE GAS COMPANY EMPLOYEE SAVINGS PLAN
Form 5500, Item 27(d)
Schedule of Reportable Transactions
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Current Value
Identity of party Description Purchase Selling Lease Expense Cost of of asset on Net gain
involved of asset price price rental Incurred asset transaction or (loss)
(a) (b) (c) (d) (e) (f) (g) date (i)
(h)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AIM Constellation Fund Mutual Fund - purchase 2,225,560 -- -- -- 2,225,560 2,225,560 --
Templeton Foreign Fund Mutual Fund - purchase 7,486,949 -- -- -- 7,486,949 7,486,949 --
Stagecoach S&P 500 Stock Fund Mutual Fund - purchase 3,937,118 -- -- -- 3,937,118 3,937,118 --
Stable Fund Pooled Fund - purchase 8,730,703 -- -- -- 8,730,703 8,730,703 --
Company Stock Fund Master Trust* Master Trust - purchase 14,740,191 -- -- -- 14,740,191 14,740,191 --
- sale -- 1,712,487 -- -- 1,632,808 1,712,487 79,679
State Street Bank Selection Fund* Pooled Fund - sale -- 8,738,298 -- -- 8,738,298 8,738,298 --
State Street Bank Index Fund* Pooled Fund - 3,275,020 2,069,153 3,275,020 1,205,867
Templeton Growth Fund Mutual Fund - 6,726,764 6,019,486 6,726,764 707,278
Bay State Gas Company Stock Fund* Company Stock 14,051,487 10,320,171 14,051,487 3,731,316
</TABLE>
