<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
SAVINGS PLAN FOR
OPERATING EMPLOYEES
------------------------
(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 as 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
Schedule II: Item 27d - Schedule of
Reportable Transactions for the 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 Savings Plan for Operating Employees 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 Savings Plan for Operating Employees 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
SAVINGS PLAN FOR OPERATING EMPLOYEES
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 $4,212,658 $ -
Company Stock Fund - 3,027,645
AIM Constellation Fund 526,326 -
Templeton Foreign Fund 1,119,908 -
Stagecoach S&P 500 Stock Fund 691,980 -
Templeton Growth Fund, Ltd. - 913,940
Wells Fargo LifePath Funds:
LifePath 2000 46,300 -
LifePath 2010 56,751 -
LifePath 2020 63,325 -
LifePath 2030 43,653 -
LifePath 2040 41,854 -
State Street Bank and Trust Company Index Fund - 366,283
Stable Value Fund 1,286,331 -
State Street Bank and Trust Company Selection Fund - 1,016,443
Investments, at cost which approximates fair value (note 4):
Loan Fund 483,401 237,930
---------- ----------
Total investments 8,572,487 5,562,241
Contributions receivable from employees and employer 69,027 -
Cash and cash equivalents - 111,740
Accrued interest receivable - 7,989
Due from Bay State Gas Company Employee Savings Plan - 162,390
-------------------------
Net Assets Available for Plan Benefits $8,641,514 $5,844,360
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
Page 6 of 18
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1995
<TABLE>
<CAPTION>
Plan Interest
Templeton in Company AIM LifePath LifePath LifePath
Selection Index Growth Stock Constellation 2000 2010 2020
Fund Fund Fund Master Trust Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest $ 17,609 $ - $ 50 $ - $ 17,129 $ - $ - $ -
Dividends - - - - - - - -
Net appreciation
(depreciation)
in the fair value of
investments - 36,104 38,752 - (3,698) 2,068 2,880 3,906
Plan interest in
Company Stock
Master Trust
investment income - - - 600,970 - - - -
---------- ------------- ------------- ------------- ----------- ------- -------- ---------
Total investment
income 17,609 36,104 38,802 600,970 13,431 2,068 2,880 3,906
Contributions:
Employee 44,528 18,493 67,254 352,809 160,257 20,527 34,023 24,581
Employer 13,871 4,672 16,376 70,160 36,280 3,803 7,701 4,751
---------- ------------- ------------- -------------- ---------- -------- -------- ---------
Total contributions 58,399 23,165 83,630 422,969 196,537 24,330 41,724 29,332
Total additions 76,008 59,269 122,432 1,023,939 209,968 26,398 44,604 33,238
---------- ------------- ------------- -------------- ---------- -------- -------- ---------
Benefits Paid (278) - - (49,812) (2,418) - (348) -
Administrative Fees - - - (458) (106) - (3) (16)
Transfers between
funds (1,118,090) (373,897) (995,518) 3,259,754 330,032 21,151 14,623 31,817
---------- ------------- ------------- ------------- ---------- -------- -------- ---------
Net increase
(decrease) (1,042,360) (314,628) (873,086) 4,233,423 537,476 47,549 58,876 65,039
Net Assets Available
for Plan Benefits
Beginning of year 1,042,360 314,628 873,086 - - - - -
End of year $ - $ - $ - $ 4,233,423 $ 537,476 $ 47,549 $ 58,876 $ 65,039
============ ========== =========== ============ ========== ========= ======== =========
</TABLE>
<TABLE>
<CAPTION>
LifePath LifePath Templeton Stagecoach Stable Company
2030 2040 Foreign S&P 500 Value Stock Loan
Fund Fund Fund Stock Fund Fund Fund Fund Total
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest $ - $ - $ 68,272 $ 18,905 $ 58,317 $ 32 $ 29,987 $ 210,301
Dividends - - - - - 47,639 - 47,639
Net appreciation
(depreciation)
in the fair value of
investments 2,714 3,147 28,247 87,118 - 83,414 - 284,652
Plan interest in
Company Stock
Master Trust
investment income - - - - - - - 600,970
---------- --------- ------------- ------------ ------------- ----------- ------------ ------------
Total investment
income 2,714 3,147 96,519 106,023 58,317 131,085 29,987 1,143,562
Contributions:
Employee 18,071 22,034 169,213 120,657 198,345 160,994 - 1,411,786
Employer 3,939 4,323 39,805 27,995 67,418 36,703 - 337,797
---------- --------- ------------- ------------ ------------- ----------- ------------ ------------
Total contributions 22,010 26,357 209,018 148,652 265,763 197,697 - 1,749,583
Total additions 24,724 29,504 305,537 254,675 324,080 328,782 29,987 2,893,145
---------- --------- ------------- ------------ ------------- ----------- ------------ ------------
Benefits Paid - - (2,466) (894) (26,466) (6,920) (5,419) (95,021)
Administrative Fees (7) (13) (159) (60) (148) - - (970)
Transfers between
funds 20,453 13,945 827,289 446,483 999,273 (3,670,469) 193,154 -
---------- --------- ------------- ------------ ------------- ----------- ------------ ------------
Net increase
(decrease) 45,170 43,436 1,130,201 700,204 1,296,739 (3,348,607) 217,722 2,797,154
Net Assets Available
for Plan Benefits
Beginning of year - - - - - 3,348,607 265,679 5,844,360
End of year $ 45,170 $ 43,436 $ 1,130,201 $ 700,204 $ 1,296,739 $ - $ 483,401 $ 8,641,514
======== ======== =========== ========= =========== =========== ========= ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 7
Page 7 of 18
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1994
<TABLE>
<CAPTION>
Templeton Company
Selection Index Growth Fund Stock Loan
Fund Fund Ltd. Fund Fund Total
---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Interest $ 59,914 $ 26 $ 380 $ 256 $ 10,668 $ 71,244
Dividends -- -- 81,999 162,298 -- 244,297
Net appreciation (depreciation) in
the fair value of investments -- 6,368 (90,424) (451,681) -- (535,737)
----------- --------- --------- ----------- --------- -----------
Total investment income (loss) 59,914 6,394 (8,045) (289,127) 10,668 (220,196)
----------- --------- --------- ----------- --------- -----------
Contributions:
Employee 147,847 66,580 210,162 635,022 -- 1,059,611
Employer 62,592 17,557 53,601 154,448 -- 288,198
Transfers in from other plans 439,676 133,279 217,870 613,872 112,786 1,517,483
----------- --------- --------- ----------- --------- -----------
Total contributions 650,115 217,416 481,633 1,403,342 112,786 2,865,292
----------- --------- --------- ----------- --------- -----------
Total additions 710,029 223,810 473,588 1,114,215 123,454 2,645,096
----------- --------- --------- ----------- --------- -----------
Benefits paid (18,512) (4,096) (7,973) (30,515) -- (61,096)
Transfers between funds (80,053) (26,014) 122,919 (73,112) 56,260 --
----------- --------- --------- ----------- --------- -----------
Net increase 611,464 193,700 588,534 1,010,588 179,714 2,584,000
Net Assets Available for Plan
Benefits
Beginning of year 430,896 120,928 284,552 2,338,019 85,965 3,260,360
----------- --------- --------- ----------- --------- -----------
End of year $ 1,042,360 $ 314,628 $ 873,086 $ 3,348,607 $ 265,679 $ 5,844,360
=========== ========= ========= =========== ========= ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 8
Page 8 of 18
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1993
<TABLE>
<CAPTION>
Templeton Company
Selection Index Growth Fund Stock Loan
Fund Fund Ltd. Fund Fund Total
---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Interest $ 24,456 $ 68 $ 330 $ 144 $ 2,703 $ 27,701
Dividends -- -- 14,894 101,124 -- 116,018
Net appreciation in the fair
value of investments -- 7,916 27,686 223,362 -- 258,964
----------- --------- ----------- ----------- --------- -----------
Total investment income 24,456 7,984 42,910 324,630 2,703 402,683
----------- --------- ----------- ----------- --------- -----------
Contributions:
Employee 108,182 37,343 75,269 493,672 -- 714,466
Employer 88,239 10,652 23,066 99,732 -- 221,689
----------- --------- ----------- ----------- --------- -----------
Total contributions 196,421 47,995 98,335 593,404 -- 936,155
----------- --------- ----------- ----------- --------- -----------
Total additions 220,877 55,979 141,245 918,034 2,703 1,338,838
----------- --------- ----------- ----------- --------- -----------
Benefits paid (3,075) (1,327) (7,484) (77,310) (734) (89,930)
Transfers between funds (72,246) 3,850 60,938 (54,752) 62,210 --
----------- --------- ----------- ----------- --------- -----------
Net increase 145,556 58,502 194,699 785,972 64,179 1,248,908
Net Assets Available for Plan
Benefits
Beginning of year 285,340 62,426 89,853 1,552,047 21,786 2,011,452
----------- --------- ----------- ----------- --------- -----------
End of year $ 430,896 $ 120,928 $ 284,552 $ 2,338,019 $ 85,965 $ 3,260,360
=========== ========= =========== =========== ========= ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 9
Page 9 of 18
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
Notes to Financial Statements
December 31, 1995, 1994 and 1993
1) Description of Plan
(a) General
The Bay State Gas Company Savings Plan For Operating Employees
("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
All employees of the Company and its wholly-owned
subsidiaries, Northern Utilities, Inc. and Granite State Gas
Transmission, Inc. who are covered by a collective bargaining
agreement between the Company and any union that specifically
provides for participation in the Plan are eligible 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
SAVINGS PLAN FOR OPERATING EMPLOYEES
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 $1,141,822.
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 of three or
more individuals selected by the Board of
<PAGE> 11
Page 11 of 18
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
Notes to Financial Statements
December 31, 1995, 1994 and 1993
(a) Administration (continued)
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. All other expenses of the Plan are
paid by the Company.
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 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
SAVINGS PLAN FOR OPERATING EMPLOYEES
Notes to Financial Statements
(Continued)
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 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 189
LifePath 2000 Fund 21
LifePath 2010 Fund 42
LifePath 2020 Fund 37
LifePath 2030 Fund 32
LifePath 2040 Fund 30
Templeton Foreign Fund 249
S&P 500 Stock - Stagecoach Fund 200
Stable Value Fund 262
Company Stock Master Trust 394
</TABLE>
<PAGE> 13
Page 13 of 18
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
Notes to Financial Statements
December 31, 1995, 1994 and 1993
Each fund, with the exception of the LifePath Funds, represented more
than five percent of Net Assets Available for Plan Benefits at December
31, 1995. Each fund, with the exception of the Loan Fund, represented
more than five percent of Net Assets Available for Plan Benefits at
December 31, 1994.
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 Employee Savings Plan. 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
22%. 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
Net 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>
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 a salary reduction agreement, thereby reducing
their compensation by 1% to 15% of their annual eligible
compensation. This compensation reduction is limited to a
maximum amount of $9,240 per year in 1995 (indexed annually
from $7,000 commencing on January 1, 1987). A participant's
eligible
<PAGE> 14
Page 14 of 18
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
Notes to Financial Statements
December 31, 1995, 1994 and 1993
6) Contributions (continued)
(a) Participant Contributions (continued)
compensation for any given year consists of straight time
wages, including shift differentials, Saturday/Sunday
premiums, compensation paid at an alternate rate to an
employee other than a salesperson and 75% of sales commissions
paid or accrued. All overtime, bonuses, supplementary
compensation payments, deferred compensation, retirement
benefits and other forms of nonrecurring compensation are
excluded.
(b) Company Contributions
The Company makes contributions to the Plan in accordance with
the terms of contracts negotiated with the various unions
representing Company employees. For certain employees, the
Company makes no contribution. For other employees the Company
makes contributions equal to 2.5% to 3.5% of eligible
compensation.
(c) Vesting
Employee and employer contributions vest immediately.
7) Withdrawals and Distributions
(a) Withdrawals
Contributions can be withdrawn in the event of financial
hardship or the attainment of 59 1/2 years of age.
(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. The $50,000
limitation is reduced by the
<PAGE> 15
Page 15 of 18
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
Notes to Financial Statements
December 31, 1995, 1994 and 1993
7) Withdrawals and Distributions (continued)
(b) Borrowings (continued)
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 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 all loans 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 not to exceed
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 the 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.
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).
<PAGE> 16
Page 16 of 18
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
Notes to Financial Statements
December 31, 1995, 1994 and 1993
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.
<PAGE> 17
Page 17 of 18
Schedule I
Bay State Gas Company Savings Plan for Operating Employees
Item 27(a)
Schedule of Assets Held for Investment Purposes
December 31, 1995
<TABLE>
<CAPTION>
Identity of Issue Description of Investment Cost Current Value
(a) (b) (c) (d) (e)
--- ----------------- ------------------------- ---- -------------
<S> <C> <C> <C> <C>
* Company Stock Master Trust
Master Trust; 379,861 units $3,618,638 $4,212,658
Stable Value Fund Pooled Fund; 123,940 shares 1,286,331 1,286,331
AIM Constellation Fund Mutual Fund; 23,382 shares 532,097 526,326
Templeton Foreign Fund Mutual Fund; 121,994 shares 1,104,945 1,119,908
Stagecoach S&P 500 Stock Fund Mutual Fund; 51,487 shares 606,022 691,980
* LifePath 2000 Fund Collective Trust Fund; 4,065 shares 44,285 46,300
* LifePath 2010 Fund Collective Trust Fund; 4,753 shares 53,938 56,751
* LifePath 2020 Fund Collective Trust Fund; 5,132 shares 59,504 63,325
* LifePath 2030 Fund Collective Trust Fund; 3,459 shares 40,960 43,653
* LifePath 2040 Fund Collective Trust Fund; 3,237 shares 38,750 41,854
* Loan Fund Participant loans; 5.80% - 10.00% 483,401 483,401
---------- ----------
Total assets held for investment purposes $7,868,871 $8,572,487
========== ==========
</TABLE>
* Party in interest
<PAGE> 18
Page 18 of 18
Schedule II
Bay State Gas Company
Savings Plan for Operating Employees
Form 5500, Item 27(d)
Schedule of Reportable Transactions
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Identity of party Description Purchase Selling Lease Expense
involved of asset price price rental Incurred
(a) (b) (c) (d) (e) (f)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AIM Constellation Fund Mutual Fund - purchase 575,431 -- -- --
Templeton Foreign Fund Mutual Fund - purchase 1,298,895 -- -- --
Stagecoach S&P 500 Stock Fund Mutual Fund - purchase 616,342 -- -- --
Stable Value Fund Pooled Fund - purchase 1,333,767 -- -- --
Company Stock Master Trust* Master Trust - purchase 4,057,086 -- -- --
- sale -- 445,396 -- --
State Street Bank Selection Fund* Pooled Fund - sale -- 1,181,792 -- --
State Street Bank Index Fund* Pooled Fund - sale -- 369,116 -- --
Templeton Growth Fund Mutual Fund - sale -- 963,031 -- --
Company Stock Fund* Company Stock -purchase 293,766 -- -- --
-sale -- 3,622,483 -- --
<CAPTION>
Current Value
Identity of party Cost of of asset on Net gain
involved asset transaction or (loss)
(a) (g) date (i)
(h)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
AIM Constellation Fund 575,431 575,431 --
Templeton Foreign Fund 1,298,895 1,298,895 --
Stagecoach S&P 500 Stock Fund 616,342 616,342 --
Stable Value Fund 1,333,767 1,333,767 --
Company Stock Master Trust* 4,057,086 4,057,086 --
438,448 445,396 6,948
State Street Bank Selection Fund* 1,181,792 1,181,792 --
State Street Bank Index Fund* 274,799 369,116 94,317
Templeton Growth Fund 931,845 963,031 31,186
Company Stock Fund* 293,766 293,766 --
3,322,993 3,622,483 299,490
</TABLE>
*Party in interest.
