THE BROOKLYN UNION GAS COMPANY
EMPLOYEE SAVINGS PLANS FOR
NON-BARGAINING EMPLOYEES, LOCAL 101 BARGAINING EMPLOYEES
AND LOCAL 3 BARGAINING EMPLOYEES
FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1993 AND 1992
TOGETHER WITH AUDITORS' REPORTS
THE BROOKLYN UNION GAS COMPANY
EMPLOYEE SAVINGS PLANS FOR NON-BARGAINING EMPLOYEES,
LOCAL 101 BARGAINING EMPLOYEES AND LOCAL 3 BARGAINING EMPLOYEES
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1993 AND 1992
Note (1) - Description of Plans
(a) General
The following description of The Brooklyn Union Gas Company
(the "Company") Employee Savings Plans provides only general
information. The financial statements included herein reflect the
combined and individual statements of the Brooklyn Union Gas
Company Employee Savings Plans for Non-Bargaining Employees, Local
3 Bargaining Employees and Local 101 Bargaining Employees
(collectively referred to herein as the "Plans"). Participants
should refer to the Summary Plan Descriptions for a more complete
discussion of the Plans' provisions.
The Plans were approved by the shareholders of the Company at
the annual meeting of shareholders on February 3, 1983. The Plans
provide for eligible employees of the Company and its wholly-owned
subsidiaries to become participants ("Members") of the Plans with
an opportunity to acquire shares of the Company's Common Stock
($.33 1/3 par value) ("Company Common Stock") at a 10% discount and
a mechanism through which they can save and invest part of their
income on a tax-deferred basis. In addition to Company Common
Stock, Members may invest in other investment options
(collectively, the "Funds").
The Plans were established pursuant to Sections 401(a) and
401(k) of the Internal Revenue Code of 1954, as amended (the
"Code") and provide for salary reduction contributions under
Section 401(k) of the Code. In general, plans established pursuant
to Section 401(k) of the Code permit eligible employees to defer
current Federal and, subject to applicable laws, state and local
income taxes on the portion of their compensation contributed to
the Plans. The amounts so elected by Members are contributed to
the Plans by the Company through payroll deductions.
The Plans are defined contribution plans and are subject to
Title I of the Employee Retirement Income Security Act of 1974
("ERISA") but not Title IV because they are "individual account
plans". The protective provisions of Title IV, which relate to
insuring pension benefits by the Pension Benefit Guarantee
Corporation, are not applicable to individual account plans.
(1)
Every non-bargaining employee of the Company is eligible to
become a participant in the applicable Plan when he or she has
completed 90 days of service. Every bargaining employee is
represented by a labor organization which negotiates provisions for
participation as contained in the applicable labor agreements, and
eligibility is attained after one year of service.
(b) Termination of the Plans
Although it has not expressed any intent to do so, the Board
of Directors may terminate the Plans or completely discontinue
contributions under the Plans for any reason at any time. In the
case of termination of the Plans, the total amount in each affected
Member's account would be distributed to the Member.
(c) Contributions Under the Plans
Company Contributions
Brooklyn Union employees are eligible to receive a 10%
discount towards the purchase of Company Common Stock. In October
1993, Members began receiving additional contributions on money
invested in the Company Common Stock Fund as follows: for all non-
bargaining employees, the Company will match 50% of the first 3% of
employee contributions to the fund, and for all bargaining
employees, the Company will match one-third of the first $14.40 per
week of employee contributions to the fund. Additionally, the 10%
purchase discount applies to all shares purchased through this
match.
Employee Contributions
Deferred Salary Contributions: All Members of the Plans may
elect to have their compensation reduced by not less than 1% and no
more than 15% (in multiples of 1%), not to exceed the limitation
imposed by Section 402(g) of the Code, and contributed to the
applicable Plan on the Members' behalf by the Company ("Deferred
Salary Contributions"). Deferred Salary Contributions reduce the
amount of the Members' salary subject to current Federal income tax
and, subject to applicable laws, state and local income taxes.
Such contributions are subject to Social Security taxes.
Rollover Contributions: If a Member of a Plan receives a lump
sum distribution from a qualified pension, savings or profit
sharing plan of a previous employer, a "rollover" contribution by
the Member of the taxable amount of the lump sum distribution may
be made to the applicable Plan.
(2)
All contributions under the Plans are held in a trust fund
with trustees who are appointed by the Board of Directors and are
Members of the Employee Savings Plan Committee (the "Committee").
The Plans make available the Funds in which Members may invest;
such Funds may be changed from time to time through the addition or
deletion of one or more investment options. All contributions made
to Members' accounts are fully and immediately vested in the
applicable Plan.
(d) Loans to Members
The Plans permit Members to borrow from the Plans, subject to
the approval by the Committee under uniform rules and regulations.
The amount which may be borrowed depends on the value of the
Member's account. The Member's account serves as collateral for
the loan and Members are charged interest at the prime rate at the
beginning of the calendar quarter plus one percentage point.
(e) Amendments to the Plans
There were no amendments to the Plan during 1993.
(f) Trustees
Robert R. Wieczorek, Wallace P. Parker, and Lenore F. Puleo,
members of the Committee, act as trustees (the "Trustees") under
the Plans to receive and hold Company Common Stock and the
investment of contributions in the other funds as described herein
and in the Plans. Pursuant to a trust document executed by the
Trustees, the Trustees are subject to the same fiduciary
responsibility to the Plans' Members as an independent trustee.
The Company Common Stock is held by the Trustees in a nominee
name, ESP Co. One of the Plans' two available guaranteed
investment contract funds is held by New York Life and all other
funds are held by the Vanguard Group, a "Mutual Fund Company".
(g) Investments Exceeding 5% of Net Assets
As of December 31, 1993 and 1992 all securities held by the
Brooklyn Union Gas Company Employee Savings Plan for Non-Bargaining
Employees, Local 101 Bargaining Employees and Local 3 Bargaining
Employees are in excess of 5% of net assets for each of the Plans.
(3)
Note (2) - Summary of Significant Accounting Policies
(a) General
The financial statements have been prepared on the accrual
basis of accounting and investments in securities reflect market or
redemption values, as appropriate.
Market values are determined based on published quotations.
The value of guaranteed investment contracts are based on
information supplied to the Trustees by one or more insurers and
the Vanguard Group, which approximate fair market value.
Market appreciation (depreciation) on securities is realized
when the investments are sold. Net gains and losses from
securities transactions are computed using the average cost method.
The realized and unrealized appreciation and depreciation
calculation methodology is based on the revalued cost of assets
instead of historical cost. The revalued cost is the market value
of an asset at the beginning of the Plan year or at the time of
purchase during the year. Interest and dividends on investments
are accrued by the Plans when earned and credited to the Members'
accounts upon receipt.
(b) Investment of Funds
At the direction of the Members, Plan assets are invested in
Company Common Stock, the New York Life Guaranteed Investment
Contract and/or one or more of eight other funds from the Vanguard
Group, namely: Vanguard Fixed Income Securities Fund - Short-Term
Portfolio, Windsor Fund, Vanguard Money Market Trust Fund - Federal
Portfolio, Vanguard Money Market Trust Fund - Prime Portfolio, The
Vanguard Investment Contract Trust, Wellington Fund, Explorer Fund
and The Wellesley Income Fund.
The Vanguard Group is jointly owned by associated member of
investment funds. The Vanguard Group furnishes, at cost, corporate
management, administrative and shareholder accounting services to
the member funds (the "Group"). Vanguard Group also provides all
marketing and distribution services to the open-end funds in the
Group pursuant to an order issued by the Securities and Exchange
Commission on February 25, 1981. Each fund in the Group bears a
share of the net costs of operations which are allocated among
members of the Group.
(c) Administrative Expenses
All expenses for the administration of the Plans are paid by
the Company.
(4)
Note (3) - Tax Considerations
Upon origination of the Plans, the Company received
determination letters in which the Internal Revenue Service ("IRS")
stated that the Plans, as then designed, were in compliance with
Section 401(a) and Section 401(k) of the Code. The Plans have been
amended since receiving the determination letters. However, the
Plans' management believes the Plans are currently designed and
being operated in compliance with the applicable requirements of
the Code. Therefore, they believe the Plans are qualified and that
the related trust continues to be tax-exempt as of December 31,
1993.
(5)
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Employee Savings Plan Committee of
The Brooklyn Union Gas Company Employee
Savings Plan for Local 3 Bargaining Employees:
We have audited the accompanying statements of net assets available
for benefits of The Brooklyn Union Gas Company Employees Savings
Plan for Local 3 Bargaining Employees (the "Plan") as of December
31, 1993 and 1992, and the related statement of changes in net
assets available for benefits for the year ended December 31, 1993.
These financial statements and 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 misstatements. 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, 1993 and 1992, and the
changes in net assets available for benefits for the year ended
December 31, 1993 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 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 supplemental
schedules have been subjected to the auditing procedures applied in
the audit 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 & CO.
s/ARTHUR ANDERSEN & CO.
New York, New York
June 27, 1994
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Employee Savings Plan Committee of
The Brooklyn Union Gas Company Employee
Savings Plan for Local 101 Bargaining Employees:
We have audited the accompanying statements of net assets available
for benefits of The Brooklyn Union Gas Company Employees Savings
Plan for Local 101 Bargaining Employees (the "Plan") as of December
31, 1993 and 1992, and the related statement of changes in net
assets available for benefits for the year ended December 31, 1993.
These financial statements and 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 misstatements. 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, 1993 and 1992, and the
changes in net assets available for benefits for the year ended
December 31, 1993 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 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 supplemental
schedules have been subjected to the auditing procedures applied in
the audit 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 & CO.
s/ARTHUR ANDERSEN & CO.
New York, New York
June 27, 1994
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Employee Savings Plan Committee of
The Brooklyn Union Gas Company Employee
Savings Plan for Non-Bargaining Employees:
We have audited the accompanying statements of net assets available
for benefits of The Brooklyn Union Gas Company Employees Savings
Plan for Non-Bargaining Employees (the "Plan") as of December 31,
1993 and 1992, and the related statement of changes in net assets
available for benefits for the year ended December 31, 1993. These
financial statements and 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 misstatements. 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, 1993 and 1992, and the
changes in net assets available for benefits for the year ended
December 31, 1993 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 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 supplemental
schedules have been subjected to the auditing procedures applied in
the audit 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 & CO.
s/ARTHUR ANDERSEN & CO.
New York, New York
June 27, 1994
SIGNATURES
The plan. Pursuant to the requirements of the Securities Exchange
Act of 1934, the trustees have duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
Date: June 27, 1994 Employees Savings Plan of
The Brooklyn Union Gas Company
s/Robert R. Wieczorek
______________________________
Robert R. Wieczorek
Vice President, Treasurer &
Asst. Secretary
(FINANCIAL SCHEDULES FILED UNDER COVER OF FORM SE)
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports dated June 27, 1994, included in The
Brooklyn Union Gas Company Employee Savings Plan for Non-Bargaining
Employees, Union Local 101 Employees and Union Local 3 Employees
Form 11-K, into The Brooklyn Union Gas Company's previously filed
Form S-8 Registration Statement No. 33-32856.
s/ARTHUR ANDERSEN & CO.
ARTHUR ANDERSEN & CO.
