SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-K/A
AMENDMENT TO APPLICATION OR REPORT
FILED PURSUANT TO SECTION 12, 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
CENTRAL MAINE POWER COMPANY
(Exact name of registrant as specified in charter)
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K for
the fiscal year ended December 31, 1996, as set forth in the pages attached
hereto.
Pursuant to Rule 15d-21 of the Securities Exchange Act of 1934, this amendment
is being made to add the information, financial statements, and exhibits
required by Form 11-K with respect to the CENTRAL MAINE POWER COMPANY EMPLOYEE
SAVINGS AND INVESTMENT PLAN FOR NON-UNION EMPLOYEES and to the CENTRAL MAINE
POWER COMPANY EMPLOYEE SAVINGS AND INVESTMENT PLAN FOR UNION EMPLOYEES, as
Exhibits 99-1 and 99-2, respectively.
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this amendment to be signed on its behalf
by the undersigned, thereunto duly authorized.
CENTRAL MAINE POWER COMPANY
By
Michael W. Caron, Comptroller
Exhibit 99-1
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal years ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [ NO FEE REQUIRED]
For the transition period from to
Commission file number
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
CENTRAL MAINE POWER COMPANY
EMPLOYEE SAVINGS AND INVESTMENT PLAN
FOR NON-UNION EMPLOYEES
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
CENTRAL MAINE POWER COMPANY
83 EDISON DRIVE
AUGUSTA, MAINE 04336
Central Maine Power Company
Form 11-K - Year 1996
Central Maine Power Company
Employee Savings and Investment Plan
For Non-Union Employees
REQUIRED INFORMATION
The following financial statements shall be furnished for the plan:
Page No.
(a) Financial Statements
Report of Independent Public Accountants F-1
Statements of Net Asset Available for Benefits F-2
Statements of Changes in Net Assets Available for Benefits F-3, F-4
Notes to Financial Statements F-5 through F-14
Supplemental Schedules:
I - Item 27a Schedule of Assets Held for Investment S-1 through S-3
Purposes at December 31, 1996
II - Item 27d Schedule of Reportable Transactions for S-4
the Year Ended December 31, 1996
(b) Exhibits
Consent of Independent Public Accountants E-1
Signature E-2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Central Maine Power Company:
We have audited the accompanying statements of net assets available for
benefits of the CENTRAL MAINE POWER COMPANY EMPLOYEE SAVINGS AND INVESTMENT
PLAN FOR NON-UNION EMPLOYEES as of December 31, 1996 and 1995, and the related
statement of changes in net assets available for benefits for the year ended
December 31, 1996. 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 benefits of the Central
Maine Power Company Employee Savings and Investment Plan for Non-Union
Employees as of December 31, 1996 and 1995, and the changes in net assets
available for benefits for the year then ended December 31, 1996, in
conformity with generally accepted accounting principles.
Our audits were performed 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 for the year ended December 31, 1996.
COOPERS & LYBRAND L.L.P.
Portland, Maine
June 27, 1997
Central Maine Power Company
Form 11-K - Year 1996
Central Maine Power Company
Employee Savings and Investment Plan
For Non-Union Employees
Statements of Net Assets Available for Benefits
As of December 31,
1996 1995
Investments at Fair Value:
Retirement Government Money Market Portfolio $ 2,750,941 $ 1,556,811
Fidelity Balanced Fund 4,061,299 3,682,567
Fidelity Magellan Fund 11,798,410 10,338,585
Equity Index Fund 12,601,965 8,058,434
Fixed Income Contract Portfolio 7,894,044 11,216,739
Fidelity Intermediate Bond Fund 335,442 151,692
Asset Manager Income Fund 842,100 306,660
Asset Manager Fund 1,453,144 719,237
Asset Manager Growth Fund 2,247,616 811,315
Central Maine Power Company Stock Fund 7,749,641 10,453,820
Loans Due from Participants 1,579,071 1,617,336
Total Investments 53,313,673 48,913,196
Receivables:
Dividends on Company Stock 140,405 161,993
Participants' Contributions - 106,702
Employer's Contributions - 58,543
Total Receivables 140,405 327,238
Net Assets Available for Benefits
$53,454,078 $49,240,434
The accompanying notes are an integral part of these financial statements.
Central Maine Power Company
Employee Savings and Investment Plan
For Non-Union Employees
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
<TABLE>
Retirement
Government Fixed
Money Fidelity Fidelity Income Fidelity
Market Balanced Magellan Equity Contract Intermediate
Portfolio Fund Fund Index Fund Portfolio Bond Fund Subtotal
Additions:
Investment Income
Net Appreciation
<S> <C> <C> <C> <C> <C> <C>
on Fair Market Value $ $ 157,894 $ (581,004)$ 1,891,943 $ 201,432 $ (6,795)$ 1,663,470
Dividend on Company Stock - - - - - - -
Interest and Dividends 93,161 180,871 1,835,533 301,078 370,095 15,171 2,795,909
Interest on Loans 9,663 13,157 45,043 22,068 7,035 1,348 98,314
Contributions
Participants' 207,118 431,694 1,205,623 678,757 90,290 34,488 2,647,970
Employer's 1,112 2,222 7,445 2,496 1,123 206 14,604
Other 133 1,426 13,278 384 2,233 - 17,454
Total Additions 311,187 787,264 2,525,918 2,896,726 672,208 44,418 7,237,721
Deductions:
Benefits Paid to Participants (242,611) (242,769) (967,910) (537,207) (1,196,825) (511) (3,187,833)
Loan Repayments 103,361 93,100 265,213 131,422 38,102 7,547 638,745
Loan Withdrawals (52,352) (77,115) (316,457) (159,442) (82,809) (2,741) (690,916)
Other - - - - - - -
Net Increase Prior to Transfer 119,585 560,480 1,506,764 2,331,499 (569,324) 48,713 3,997,717
Interplan Transfers (144) (592) 17,603 1,458 24,594 - 42,919
Interfund Transfers 1,074,689 (181,156) (64,542) 2,210,574 (2,777,965) 135,037 396,637
Net Increase (Decrease) 1,194,130 378,732 1,459,825 4,543,531 (3,322,695) 183,751 4,437,273
Net Assets Available for Benefits:
Beginning of Year 1,556,811 3,682,567 10,338,585 8,058,434 11,216,739 151,692 35,004,828
End of Year $ 2,750,941 $ 4,061,299 $ 11,798,410 $ 12,601,965 $ 7,894,044 $ 335,442 $ 39,442,101
</TABLE>
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
<TABLE>
Asset Asset Central Maine
Manager Asset Manager Power Company Loans Due
Income Manager Growth Stock from
Fund Fund Fund Fund Participants Other Total
Additions:
Investment Income
Net Appreciation
<S> <C> <C> <C> <C> <C> <C>
on Fair Market Value $ (98) $ 36,995 $ 80,926 $ (1,442,650) $ - $ - $ 338,643
Dividend on Company Stock - - - 590,628 - (21,588) 569,040
Interest and Dividends 38,926 109,586 186,672 687 - - 3,131,780
Interest on Loans 1,720 2,250 3,418 7,296 - - 112,998
Contributions
Participants' 34,108 102,634 188,987 117,379 - (106,702) 2,984,376
Employer's 131 1,028 2,277 1,047,352 - (58,543) 1,006,849
Other - - - - - - 17,454
Total Additions 74,787 252,493 462,280 320,692 - (186,833) 8,161,140
Deductions:
Benefits Paid to Participants (6,322) (13,113) (96,276) (577,006) (122,646) - (4,003,196)
Loan Repayments 9,126 16,614 24,334 37,806 (726,625) - -
Loan Withdrawals (8,712) (10,540) (25,378) (70,800) 806,346 - -
Other - - - - (50) - (50)
Net Increase Prior to Transfer 68,879 245,454 364,960 (289,308) (42,975) (186,833) 4,157,894
Interplan Transfers - - 803 7,318 4,710 - 55,750
Interfund Transfers 466,561 488,453 1,070,538 (2,422,189) - - -
Net Increase (Decrease) 535,440 733,907 1,436,301 (2,704,189) (38,265) (186,833) 4,213,644
Net Assets Available for Benefits:
Beginning of Year 306,660 719,237 811,315 10,453,820 1,617,336 327,238 49,240,434
End of Year $ 842,100 $1,453,144 $2,247,616 $ 7,749,641 $ 1,579,071 $ 140,405 $ 53,454,078
</TABLE>
The accompanying notes are an integral part of these financial statements.
Central Maine Power Company
Form 11-K - Year 1996
Central Maine Power Company
Employee Savings and Investment Plan
For Non-Union Employees
Notes to Financial Statements
December 31, 1996
1. Description of the Plan
The Central Maine Power Company Employee Savings and Investment
Plan for Non-Union Employees ("the Plan" or "the Non-Union Plan")
was adopted by the Board of Directors of Central Maine Power
Company ("the Company") on February 19, 1981. Certain pertinent
features of the Plan, as amended, are discussed below.
a. Eligibility of Participants
Each employee of the Company, and of The Union Water-Power
Company, MaineCom, Telesmart, CMP International Consultants and
Aroostook Valley Electric Company, its wholly-owned subsidiaries,
who is not in a unit of employees covered by a collective
bargaining agreement is eligible to join the Plan after
completing one year of service during which the employee has
worked at least 1,000 hours.
b. Elective Contributions by Participants
Each participant elects a salary reduction percentage to be
contributed by the Company on their behalf. Participants may
elect to have the Company contribute from 2% to 15% (in multiples
of 1%) of their basic compensation to the Plan through a salary
reduction agreement.
c. Matching Contributions by the Company
The Company and its subsidiaries contribute to the Plan an amount
equal to 60% of the first 5% of the salary reduction amount
contributed on behalf of each participant, provided, however,
that the total contribution that the Company is obligated to make
for any year does not exceed the maximum amount deductible from
the Company's gross income under applicable provisions of the
Internal Revenue Code. In 1996 and 1995, these provisions limited
the annual employee contribution excluded from taxable income to
the lesser of 25% of total compensation or approximately $9,500
and $9,200, respectively. Employee contributions for employees
who are defined as "highly compensated" by the Internal Revenue
Service may be further limited in order to pass nondiscrimination
tests. The Company's matching contribution may be made from time
to time during each year and shall be paid in full as of the date
the Company files its federal income tax return for that year.
d. Vesting
Participants are 100% vested in their account balances. Each
participant's account consists of their contributions and any
rollover money, the matching Company contribution and any net
earnings thereon.
e. Investment Options
All contributions made under the Plan are commingled in a
common/collective trust that also contains the assets of one
other employee savings and investment plan of the Company and its
affiliated companies. As of December 31, 1996, the contributions
were invested by the Trustee, Fidelity Management Trust Company,
based upon participant election in one or more of ten Funds.
Contributions to all Funds may be invested temporarily in
short-term investments prior to purchase of primary Fund
securities.
The Funds consist of:
Retirement Government Money Market Portfolio - An income fund
comprised of short-term, high-quality debt obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities.
Fidelity Balanced Fund - A diversified fund comprised of
high-yielding securities, including common stocks and bonds.
Fidelity Magellan Fund - A fund comprised primarily of common
stock and securities convertible into common stock seeking
capital appreciation.
Equity Fund - The Fidelity U.S. Equity Index Fund comprised of
common stock which attempts to duplicate the composition of the
Standard & Poor's Daily Stock Price Index of 500 Common Stocks
during the current year. The fund presents a passive approach for
investing in a diversified portfolio of common stocks.
Fixed Income Contract Portfolio - A fixed-income fund comprised
of investments yielding a fixed rate of return, as selected by
the Trustee, issued mainly by insurance companies and banks. This
fund was phased-out and no longer accepts contributions as of
March 1996.
Central Maine Power Company Stock Fund - A fund comprised of the
common shares of the Company.
Asset Manager Income Fund - A fund emphasizing investment in
bonds and short-term instruments for income and price stability,
but allows some investment in stocks for their potential to grow
and keep pace with inflation.
Asset Manager Fund - A fund allocating its assets among and
across domestic and foreign stocks, bonds and short-term
instruments of U.S. and foreign issuers, including those in
emerging markets.
Asset Manager Growth Fund - This fund seeks to maximize a total
return over the long term; the Fund allocates its assets among
three principal asset classes: stocks, bonds and short-term
instruments. However, it may invest in many types of domestic and
foreign securities.
Fidelity Intermediate Bond Fund - A fund that seeks high current
income by investing in domestic and foreign investment-grade
securities with intermediate maturities and good credit quality.
Upon enrollment, participants elect the Fund or Funds in which to
invest their contributions. The percentage of such contributions
invested in a particular Fund must be a multiple of 1%.
Participants may change the investment of their future
contributions (in multiples of 1% of such contributions) or
transfer a portion from one Fund to another. Changes and
transfers may be made at any time.
All Company contributions are initially invested in the Central
Maine Power Company Stock Fund. Dividends, interest and other
distributions received on the assets held in each Fund shall be
reinvested in the respective Fund. Participants may transfer all
or a portion of the Company contributions made on their behalf
out of the CMP Company Stock Fund.
f. Withdrawals and Distributions
A participant may elect to make a regular withdrawal of up to
100% of the value of their contributions made prior to July 1,
1983, and earnings thereon, (but not less than $500 unless the
value of such participant's contributions and earnings thereon
total less than $500, in which case such total may be withdrawn)
after approval by the Employee Savings and Investment Plan
Committee. Only one regular withdrawal may be made in any year.
Withdrawals with respect to contributions made subsequent to July
1, 1983 may be made only for reasons of hardship. With the
consent of the Company's Employee Savings and Investment Plan
Committee, a participant may elect to make a hardship withdrawal,
as determined in accordance with the Plan provisions, of up to
100% their account.
Distributions from the Funds occurring as a result of termination
of employment, death, retirement or permanent disability are made
no later than 60 days after the end of the Plan year, unless
under certain circumstances retiring or disabled participants
elect otherwise.
g. Participant Loans
Participants may, in general, borrow in the aggregate not more
than 50% of their account balances, subject to a maximum loan of
$50,000. Loans bear interest at a rate equal to the current rate
of interest being charged by the Central Maine Power Company
Employees Federal Credit Union for loans secured by share account
balances. Interest rates on loans outstanding at year end range
from 7.25% to 14.28%. The maximum term of the loans is generally
five years, with borrowed funds being repaid through payroll
deductions.
h. Expenses
All expenses of administration of the Plan, including Trustee's
and record keeper's fees, are paid by Central Maine Power
Company.
2. Summary of Significant Accounting Policies
a. Basis of Accounting
The financial statements of the Plan are prepared under the
accrual method of accounting.
b. Use of Estimates
The preparation of the Plan's financial statements in conformity
with generally accepted accounting principles requires the plan
administrator to make significant estimates and assumptions that
affect the reported amounts of net assets available for benefits
at the date of the financial statements and the changes in net
assets available for benefits during the reporting period and,
when applicable, disclosure of contingent assets and liabilities
at the date of the financial statements. Actual results could
differ from those estimates.
c. Risks and Uncertainties
The Plan provides for various investment options in any
combination of stocks, fixed income securities, mutual funds, and
other investment securities. Investment securities are exposed to
various risks, such as interest rate, market and credit risks.
Due to the level of risk associated with certain investment
securities, it is at least reasonably possible that changes in
values of investment securities will occur in the near term and
that such changes could materially affect participants' account
balances and the amounts reported in the statement of net assets
available for benefits and the statement of changes in net assets
available for benefits.
d. Investment Valuation and Income Recognition
The Plan's investments are stated at fair value, except for its
investment contract fund, which is valued at contract value (Note
3). Shares of registered investment companies are valued at
quoted market prices which represent the net asset value of
shares held by the Plan at year end. Participant loans are
valued 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.
e. Reclassification of Prior Year Balances
Certain prior year balances have been reclassed to conform with
current year presentation.
3. Investment Contracts with Insurance Companies
Executive Life
At December 31, 1996, Fidelity held a fixed income contract with
Executive Life Insurance Company ("Executive Life") with a
contract value of approximately $175,000. The Non-Union Plan
holds approximately $125,000 of the Executive Life contract.
On April 11, 1991, the State of California insurance regulators
placed Executive Life under conservatorship. The regulators
stated Executive Life would continue to pay monthly annuities,
but placed a moratorium on policy surrenders and loans. The
Conservation Court of California approved the sale of Executive
Life to an investor group - Altus Finance (Altus) and Mutuelle
Assurance Artisanale deFrance (Mutuelle). Under this
rehabilitation agreement, Altus agreed to pay $3.25 billion for
the Executive Life high risk bonds while Mutuelle agreed to
infuse $300 million in capital.
Together, the agreement formed a new company, Aurora National
Life Assurance Company.
This rehabilitation plan was appealed on several points to the
California Court of Appeal and subsequently remanded to the
Superior Court to be corrected. On August 13, 1993, the Los
Angeles Superior Court approved a modified
rehabilitation/liquidation plan for Executive Life. The modified
plan became effective September 3, 1993. Under the terms of the
modified rehabilitation plan, contract holders were given a
choice to either opt-in or opt-out of a 5-year fixed income
contract with Aurora National Life Assurance Company, the
successor to Executive Life.
Both options meant some loss of original investment to
participants, and both were clouded by continuing litigation and
complicated by a variety of "holdback" amounts. Under opt-in,
participants would receive an initial restructured value of 77%
with some potential to realize 86%. Under opt-out, participants
would receive an initial restructured value of 56% (assuming
favorable resolution of pending litigation) with some potential
for eventually realizing a total of 84%. The Company retained
Townshend & Schupp, an insurance research and consulting firm, to
assist in analyzing the potential value of the options. After
review of all the relevant facts and the advice of Townshend &
Schupp, the Company selected the opt-out approach.
During 1993, the Plan recorded a reserve of $250,000 reflecting a
reduction in the value of the Executive Life contract to the 84%
level associated with their opt-out selection. The reserve was
reduced to $201,432 in 1995, which represented the remaining
balance. As discussed further below, the Company and other
parties continue to pursue alternatives in order to protect and
enhance the ultimate recovery levels of the Executive Life
Contract.
A number of uncertainties regarding the final settlement of
Executive Life issues existed during 1994 and into the first
quarter of 1995, including pending litigation and the impact of
carrying out the remaining steps of the modified rehabilitation
plan. Three subsequent legal challenges existed: one to the
general modified rehabilitation plan, one to the transfer of
Executive Life's high-yield bonds to its successor, and another
to the priority system for dealing with Executive Life contract
holders' claims. After the California Court of Appeals issued a
decision in February 1995 asserting the priority status of
Executive Life contracts held in pension Guaranteed Insurance
Contracts and the period for further appeals expired in
August 1995, settlement agreements were signed by claimants in
late August. The stipulation provided for release of the holdback
funds in the fall of 1995 to contract holders who "opted-out,"
with subsequent distributions from the remainder of the trust as
assets are liquidated.
On October 26, 1995 the Plan received a distribution of $1.9
million or 87.5% of the original frozen assets. On May 27, 1996
the Plan received a second distribution of $110 thousand or 4.8%,
bringing the total to 92.3%. A third distribution of 6.9% was
received on May 8, 1997 bringing the total recovery to 99.2% of
the original contract. Further distributions are expected
as conditions for liquidating assets improve. Full recovery of
the original investment is expected. As a result, the Plan has
reduced the reserve to zero for the remaining outstanding value
of the contract.
On November 1, 1995, Fidelity Management Trust Company was named
successor trustee for the Executive Life contract formerly held
in trust by State Street Bank. As successor trustee, Fidelity
assumed responsibility for the October 1995 distribution, as well
as all future distributions, to individual participant accounts.
The March 1995 agreement between State Street Bank and the
Company remains unchanged. As previously reported, the Company
and its affiliates filed suit against State Street Bank in June
1994, seeking damages for losses arising out of the Bank's
purchase and management of the Executive Life contract. The
parties agreed to dismiss the suit under an agreement whose terms
remain confidential. It is expected that along with resolution of
the rehabilitation proceedings, this settlement will result in
greater than 100% recovery of the original Executive Life
contract.
Requests from Plan participants for payments or transfers of
funds from the Fixed Income Fund will continue to be processed,
but the shares associated with the remaining Executive Life
contract continue to be temporarily frozen.
Confederation Life
At December 31, 1996, Fidelity held a fixed income contract with
Confederation Life Insurance Company (Confederation Life) with a
contract value of approximately $3.2 million. The Non-Union Plan
holds approximately $2.2 million of the Confederation Life
contract.
On August 11, 1994, Canada's Office of the Superintendent of
Financial Institutions took over the Confederation Life Insurance
Company. On August 12, 1994, the State of Michigan (Confederation
Life's port of entry) filed suit to seize the Confederation
Life's assets.
In response to these regulatory actions, the Association of
Confederation Life contractors (ACLIC) was formed. The ACLIC
membership includes persons that hold or have an interest in
Guaranteed Investment Contracts issued by Confederation Life.
Fidelity is actively participating in the ACLIC to represent and
protect the interests of the Company.
In November 1995, Confederation Life in Rehabilitation offered
contract holders the option of receiving .75% of frozen values
each year, pending outcome of the rehabilitation plan. The
Plan received a 1.5% payout in March 1996, .75% each for 1994
1995. Payments were distributed to participants' accounts
according to their current investment elections.
In April 1996, ACLIC's analysis of the draft plan of
rehabilitation indicated recoveries would be in the range of
101-112% for US policy holders. A final plan of rehabilitation
was filed in Michigan courts in August 1996 and hearings
scheduled beginning October 1996. The Plan became final and
unappealable on November 13, 1996. It provides five different
payment options for GIC holders:
A. Simple liquidation
B. Liquidation with loan enhancement
C. Cash out
D. Liquidation with extra loan enhancement for contracts with
at least 10% guaranty coverage
E. Separate account GIC
Option D is not applicable since Massachusetts, where the trustee
is domiciled, is not a guaranty state and Option E was deemed
inappropriate due to CMP's decision to close the Fixed Income
Fund.
The Company has notified Fidelity, and Fidelity has acknowledged,
its fiduciary obligations regarding its purchase of the
Confederation Life contract. In addition, the Company, as of the
close of business on August 16, 1994, segregated approximately $3
million of the Plan's Fixed Income Fund for the common/collective
trust and placed hold on all transactions with regard to that
amount. This action was taken to ensure that all Plan
participants invested in the Fixed Income Fund at the time of
seizure by Canadian and Michigan authorities are treated equally.
In March 1997 CMP selected the immediate cash-out (option C)
based on Fidelity's financial analysis of expected returns. The
immediate return of more than 100% of principal outweighed the
uncertainty of only marginally higher returns over the next four
years.
On April 25, 1997 and May 31, 1997 the Plan received the final
two payments constituting 105% of the original contract.
Together with the 1.5% interim distribution in March 1996, the
total recovery is 106.5%. This is a full and final recovery of
the contract.
4. Related Party Transactions
Certain Plan investment options are shares of mutual funds
managed by the Trustee and Company common stock. Therefore,
these transactions qualify as party-in-interest transactions.
5. Investments
The following investments represent 5% or more of the total net
assets available for plan benefits at December 31, 1996:
Description Amount
Fidelity Retirement Government Money Market Portfolio $ 2,750,941
Fidelity Balanced Fund* 4,061,299
Fidelity Magellan Fund* 11,798,410
Equity Fund* 12,601,965
Fixed Income Contract Portfolio 7,894,044
Central Maine Power Company Stock Fund* 7,749,641
*Represents a party-in-interest to the Plan.
6. 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.
7. Federal Income Taxes
The Internal Revenue Service (IRS) has issued a favorable
determination letter with respect to the Plan's tax-exempt status
under Sections 401(a) and 401(k) of the Internal Revenue Code.
Therefore, no income taxes have been provided for in the
accompanying financial statements.
Elective contributions to the Plan made by the Company on behalf
of employees are not subject to federal income taxes currently,
as long as these contributions are below the maximum level
derived in accordance with Section 401(k) regulations.
Contributions and earnings thereon will, in general, be taxable
upon distribution, although rules providing for additional
deferral may apply with respect to certain distributions of
Company stock.
Central Maine Power Company
Form 11-K - Year 1996
Schedule I
Page 1 of 3
Central Maine Power Company
Employee Savings and Investment Plan
For Non-Union Employees (B)
Item 27a - Schedule of Assets Held for Investment Purposes
At December 31, 1996
<TABLE>
Market/
Name of Issuer Contract
Fund and Title of Issue Units (A) Cost Value
<S> <C> <C> <C>
Retirement Government Money Market Fund 3,480,379 $ 3,480,079 $ 3,480,379
Fidelity Balanced Fund* 444,981 5,844,034 6,265,328
Fidelity Magellan Fund* 227,277 17,369,975 18,329,931
Equity Fund* 681,152 13,476,214 18,357,048
Asset Manager Income Fund* 92,938 1,067,305 1,079,015
Asset Manager Fund* 122,564 1,930,411 2,018,627
Asset Manager Growth Fund* 197,016 3,054,191 3,221,206
Fidelity Intermediate Bond Fund* 40,976 415,341 413,037
Fixed Income
Sun Life Insurance of America (1994 Contracts)
Contract rate 7.50%
Maturity date 12/31/98 732,854 732,854 732,854
First Allmerica (1992 Contracts)
Contract rate 5.80%
Maturity date 06/30/97 589,804 589,804 589,804
Lincoln National (1992 Contracts)
Contract rate 5.94%
Maturity date 08/01/97 1,023,608 1,023,608 1,023,608
Life of Virginia (1993 Contracts)
Contract rate 6.50%
Maturity date 06/30/97 1,404,819 1,404,819 1,404,819
Peoples Security Life (1993 Contracts)
Contract rate 5.41%
Maturity date 06/30/97 261,882 261,882 261,882
Confederation Life Insurance Company (1993
Contracts) 3,202,530 3,202,530 3,202,530
(See Note 3 to Financial Statements)
</TABLE>
*Parties in interest to the plan.
Central Maine Power Company
Form 11-K - Year 1996
Schedule I
Page 2 of 3
Central Maine Power Company
Employee Savings and Investment Plan
For Non-Union Employees (B)
Item 27a - Schedule of Assets Held for Investment Purposes
At December 31, 1996
<TABLE>
Market/
Name of Issuer Contract
Fund and Title of Issue Units (A) Cost Value
Fixed Income (continued)
Executive Life Insurance Company (1989 Contact)
<S> <C> <C> <C> <C>
(See Note 3 to Financial Statements) 193,349 193,349 193,349
Fidelity-Short-term Investment Fund (at par
value)*
Contract rate 5.34% 3,568,754 3,568,754 3,568,754
Total Fixed Income Fund 10,977,600 10,977,600
Central Maine Power Company Stock
Central Maine Power Company Stock*
Shares 1,057,981 $13,860,059 $12,299,029
Fidelity U.S. Government Reserve Pool (at par
value)* 365,404 365,404 365,404
Total CMP Stock Fund 14,225,463 12,664,433
Total Investments All Funds
Participant Loans, (interest rates range
from 7.25% to 14.28%, maturity dates
are generally within 5 years) 2,716,490 2,716,490
Grand Total 74,557,103 79,523,094
</TABLE>
*Parties in interest to the plan.
**Includes a receivable of $18,539.
Central Maine Power Company
Form 11-K - Year 1996
Schedule I
Page 3 of 3
Central Maine Power Company
Employee Savings and Investment Plan
For Non-Union Employees
Notes to Schedule I - Investments
"Units," except for shares of Company stock, indicates each Fund's share of
the total units associated with pooled funds, which are accumulations of
investments from numerous entities, including the Plan.
The investments of the Central Maine Power Company Employee Savings and
Investment Plan for Non-Union Employees are commingled in a common/collective
trust with the investments of one other employee savings and investment plan
maintained by the Company and its affiliates. Schedule I presents the
consolidated investments of both plans. This Plan's share of the pooled
investments is as follows:
Market/Contract
Cost Value
Retirement Government Money Market Portfolio $ 2,750,941 $ 2,750,941
Fidelity Balanced Fund* 3,782,998 4,061,299
Fidelity Magellan Fund* 11,162,210 11,798,410
Equity Fund* 9,203,621 12,601,965
Fixed Income Contract Portfolio 7,894,044 7,894,044
Fidelity Intermediate Bond Fund* 337,422 335,442
Asset Manager Income Fund* 833,216 842,100
Asset Manager Fund* 1,380,214 1,453,144
Asset Manager Growth Fund* 2,123,252 2,247,616
Central Maine Power Company Stock* 8,704,870 7,749,641
*Parties in interest to the plan.
Central Maine Power Company
Employee Savings and Investment Plan
For Non-Union Employees
Items 27d Schedule of Reportable Transactions
For the Year Ended December 31, 1996
<TABLE>
No. of No. of Current
Trans. Purchase Trans. Selling Cost of Net
Description of Asset Purchased Price Sold Price Asset Gain/(Loss)
<S> <C> <C> <C> <C> <C> <C>
Fidelity Balanced Fund* 187 1,497,069 124 1,275,639 1,248,327 27,312
Fidelity Magellan Fund* 220 6,495,175 126 4,471,950 4,314,005 157,945
Equity Fund* 220 6,260,628 102 3,610,498 3,176,738 433,760
Retirement Government Money
Market Portfolio 203 14,999,175 150 13,804,901 13,804,901 0
Fixed Income Contract Portfolio
(Schedule I) 80 6,831,816 281 11,539,460 11,539,460 0
Central Maine Power Company
Stock Fund:
CMP Common
Stock* 232 9,753,564 211 10,975,342 11,984,574 (1,009,232)
Fidelity U.S.
Government Reserve
Pool* 232 14,232,445 211 13,934,939 13,934,939 0
</TABLE>
*Parties in interest to the plan.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report, included in this Form 11-K, into the Company's previously filed
Registration Statement on Form S-8 (File No. 33-44754).
COOPERS & LYBRAND L.L.P.
Portland, Maine
June 30, 1997
Central Maine Power Company
Form 11-K - Year 1996
Central Maine Power Company
Employee Savings and Investment Plan
For Non-Union Employees
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Trustee (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.
Central Maine Power Company Employee
Savings and Investment Plan for
Non-Union Employees
(Name of Plan)
D. E. Marsh, Chief Financial Officer,
Member, Employee Savings and
Investment Plan Committee,
Central Maine Power Company
Date: June 30, 1997
Exhibit 99-2
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal years ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [ NO FEE REQUIRED]
For the transition period from to
Commission file number
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
CENTRAL MAINE POWER COMPANY
EMPLOYEE SAVINGS AND INVESTMENT PLAN
FOR UNION EMPLOYEES
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
CENTRAL MAINE POWER COMPANY
83 EDISON DRIVE
AUGUSTA, MAINE 04336
Central Maine Power Company
Form 11-K - Year 1996
Central Maine Power Company
Employee Savings and Investment Plan
For Union Employees
REQUIRED INFORMATION
The following financial statements shall be furnished for the plan:
Page No.
(a) Financial Statements
Report of Independent Public Accountants F-1
Statements of Net Assets Available for Benefits F-2
Statement of Changes in Net Assets Available for Benefits F-3, F-4
Notes to Financial Statements F-5 through F-13
Supplemental Schedules:
I - Item 27a Schedule of Assets Held for Investment S-1 through S-3
Purposes at December 31, 1996
II - Item 27d Schedule of Reportable Transactions for S-4
the Year Ended December 31, 1996
(b) Exhibits
Consent of Independent Public Accountants E-1
Signature E-2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Central Maine Power Company:
We have audited the accompanying statements of net assets available for
benefits of the CENTRAL MAINE POWER COMPANY EMPLOYEE SAVINGS AND INVESTMENT PLAN
FOR UNION EMPLOYEES as of December 31, 1996 and 1995, and the related statement
of changes in net assets available for benefits for the year ended December 31,
1996. 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, financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Central
Maine Power Company Employee Savings and Investment Plan for Union Employees as
of December 31, 1996 and 1995, and the changes in net assets available for
benefits for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
Our audits were performed 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 for the year ended December 31, 1996.
COOPERS & LYBRAND L.L.P.
Portland, Maine
June 27, 1997
Central Maine Power Company
Form 11-K - Year 1996
Central Maine Power Company
Employee Savings and Investment Plan
For Union Employees
Statements of Net Assets Available for Benefits
As of December 31,
1996 1995
Investments at Fair Value:
Retirement Government Money Market Portfolio $ 728,398 $ 424,292
Fidelity Balanced Fund 2,202,251 1,478,972
Fidelity Magellan Fund 6,531,521 4,710,856
Equity Index Fund 5,753,277 3,307,889
Fixed Income Contract Portfolio 3,342,300 5,800,197
Fidelity Intermediate Bond Fund 77,595 25,611
Asset Manager Income Fund 236,915 88,798
Asset Manager Fund 565,483 114,690
Asset Manager Growth Fund 973,590 248,893
Central Maine Power Company Stock Fund 4,914,792 5,932,170
Loans Due from Participants 1,137,419 1,122,924
Total Investments 26,463,541 23,255,292
Receivables:
Dividends on Company Stock 89,045 91,942
Participants' Contributions - 62,648
Employer's Contributions - 29,954
Total Receivables 89,045 184,544
Net Assets Available for Benefits
$26,552,586 $23,439,836
The accompanying notes are an integral part of these financial statements.
Central Maine Power Company
Employee Savings and Investment Plan
For Union Employees
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
<TABLE>
Retirement Fixed Income Fidelity
Government Money Fidelity Fidelity Equity Contract Intermediate
Market Portfolio Balanced Magellan Fund Index Fund Portfolio Bond Fund Subtotal
Additions:
Investment Income
Net Appreciation
<S> <C> <C> <C> <C> <C> <C>
on Fair Market Value $ $ 90,539 $ (253,050) $ 803,412 $ 83,465 $ (3,796) $ 720,570
Dividend on Company Stock - - - - - - -
Interest and Dividends 33,131 92,597 924,190 130,611 160,403 4,204 1,345,136
Interest on Loans 7,104 9,504 34,075 17,473 4,059 880 73,095
Contributions
Participants' 129,254 255,170 667,178 435,557 68,641 27,022 1,582,822
Employer's 482 1,361 3,412 1,196 127 7,242
664
Total Additions 169,971 449,171 1,375,805 1,388,249 317,232 28,437 3,728,865
Deductions:
Benefits Paid to Participants (166,813) (5,122) (115,026) (109,607) (428,043) (459) (825,070)
Loan Repayments 39,756 59,617 221,292 101,841 21,501 7,898 451,905
Loan Withdrawals (18,279) (57,230) (233,450) (139,075) (71,498) (1,542) (521,074)
Other - - - - (1,039) - (1,039)
Net Increase Prior to Transfer 24,635 446,436 1,248,621 1,241,408 (161,847) 34,334 2,833,587
Interplan Transfers 144 592 (17,603) (1,458) (24,594) - (42,919)
Interfund Transfers 279,327 276,251 589,647 1,205,438 (2,271,456) 17,650 96,857
Net Increase (Decrease) 304,106 723,279 1,820,665 2,445,388 (2,457,897) 51,984 2,887,525
Net Assets Available for Benefits:
Beginning of Year 424,292 1,478,972 4,710,856 3,307,889 5,800,197 25,611 15,747,817
End of Year $ 728,398 $2,202,251 $6,531,521 $5,753,277 $ 3,342,300 $ 77,595 $18,635,342
</TABLE>
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
<TABLE>
Asset Manager Central Maine Loans Due
Income Asset Manager Asset Manager Power Company from
Fund Fund Growth Fund Stock Fund Participants Other Total
Additions:
Investment Income
Net Appreciation
<S> <C> <C> <C> <C> <C> <C>
on Fair Market Value $ 29 $ 9,539 $ 26,709 $ (910,973) $ - $ - $ (154,126)
Dividend on Company Stock - - - 374,576 - (2,897) 371,679
Interest and Dividends 15,588 41,420 80,171 - - - 1,482,315
Interest on Loans 1,133 1,361 2,712 4,170 - - 82,471
Contributions
Participants' 26,774 47,484 99,758 117,633 - (62,648) 1,811,823
Employer's 139 390 1,293 661,616 - (29,954) 640,726
Total Additions 43,663 100,194 210,643 247,022 - (95,499) 4,234,888
Deductions:
Benefits Paid to Participants - (2,345) (6,501) (161,645) (69,788) - (1,065,349)
Loan Repayments 12,071 11,281 17,351 27,057 (519,665) - -
Loan Withdrawals (14,010) (5,641) (20,544) (47,389) 608,658 - -
Other - - - - - - (1,039)
Net Increase Prior to Transfer 41,724 103,489 200,949 (65,045) 19,205 (95,499) 3,168,500
Interplan Transfers - - (803) (7,318) (4,710) - (55,750)
Interfund Transfers 106,393 347,304 524,551 (1,075,105) - - -
Net Increase (Decrease) 148,117 450,793 724,697 (1,017,378) 14,495 (95,499) 3,112,750
Net Assets Available for Benefits:
Beginning of Year 88,798 114,690 248,893 5,932,170 1,122,924 184,544 23,439,836
End of Year $ 236,915 $565,483 $ 973,590 $ 4,914,792 $ 1,137,419 $ 89,045 $ 26,552,586
</TABLE>
The accompanying notes are an integral part of these financial statements.
Central Maine Power Company
Form 11-K - Year 1996
Central Maine Power Company
Employee Savings and Investment Plan
For Union Employees
Notes to Financial Statements
December 31, 1996
1. Description of the Plan
The Central Maine Power Company Employee Savings and Investment Plan
for Union Employees ("the Plan" or "the Union Plan") was adopted by the
Board of Directors of Central Maine Power Company ("the Company") on
November 15, 1984 and became effective January 1, 1985. Certain pertinent
features of the Plan, as amended, are discussed below.
a. Eligibility of Participants
Each employee of the Company who is in a unit of employees covered by a
collective bargaining agreement is eligible to join the Plan after
completing one year of service during which the employee has worked at
least 1,000 hours.
b. Elective Contributions by Participants
Each participant elects a salary reduction percentage to be contributed by
the Company on their behalf. Participants may elect to have the Company
contribute from 2% to 15% (in multiples of 1%) of their basic compensation
to the Plan through a salary reduction agreement.
c. Matching Contributions by the Company
The Company contributes to the Plan an amount equal to 60% of the first 5%
of the salary reduction amount contributed on behalf of each participant.
Effective June 1, 1997, the Company match will be as follows: 60% of the
first 5% plus 50% of the next 2% for a total match of 4% on a 7% salary
reduction amount. However, that the total contribution that the Company is
obligated to make for any year does not exceed the maximum amount
deductible from the Company's gross income under applicable provisions of
the Internal Revenue Code. In 1996 and 1995 these provisions limited the
annual employee contribution excluded from taxable income to the lesser of
25% of total compensation or approximately $9,500 and $9,200, respectively.
The Company's matching contribution may be made from time to time during
each year and shall be paid in full as of the date the Company files its
federal income tax return for that year.
d. Vesting
Participants are 100% vested in their account balances. Each participant's
account consists of their contributions and any rollover money, the
matching Company contribution and any net earnings thereon.
e. Investment Options
All contributions made under the plan are commingled in a common/collective
trust that also contains the assets of one other employee savings and
investment plan of the Company and its affiliated companies. As of December
31, 1996 the contributions were invested by the Trustee, Fidelity
Management Trust Company, based upon participant election in one or more of
ten Funds. Contributions to all Funds may be invested temporarily in
short-term investments prior to purchase of primary Fund securities.
The Funds consist of:
Retirement Government Money Market Portfolio - An income fund comprised of
short-term, high-quality debt obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
Fidelity Balanced Fund - A diversified fund comprised of high-yielding
securities, including common stocks and bonds.
Fidelity Magellan Fund - A fund comprised primarily of common stock and
securities convertible into common stock seeking capital appreciation.
Equity Fund - The Fidelity U.S. Equity Index Fund comprised of common
stock, which attempts to duplicate the composition of the Standard & Poor's
Daily Stock Price Index of 500 Common Stocks during the current year. The
fund presents a possible approach for investing in a diversified portfolio
of common stocks.
Fixed Income Contract Portfolio - A fixed-income fund comprised of
investments yielding a fixed rate of return, as selected by the Trustee,
issued mainly by insurance companies and banks. This fund was phased-out
and no longer accepts contributions as of March, 1996.
Central Maine Power Company Stock Fund - A fund comprised of the common
shares of the Company.
Asset Manager Income Fund - A fund emphasizing investment in bonds and
short-term instruments for income and price stability, but allows some
investment in stocks for their potential to grow and keep pace with
inflation.
Asset Manager Fund - A fund allocating its assets among and across domestic
and foreign stocks, bonds and short-term instruments of U.S. and foreign
issuers, including those in emerging markets.
Asset Manager Growth Fund - This fund seeks to maximize a total return over
the long term; the Fund allocates its assets among three principal asset
classes: stocks, bonds and short-term instruments. However, it may invest
in may types of domestic and foreign securities..
Fidelity Intermediate Bond Fund - A fund that seeks high current income by
investing in domestic and foreign investment-grade securities with
intermediate maturities and good credit quality.
Upon enrollment, participants elect the Fund or Funds in which to invest
their contributions. The percentage of such contributions invested in a
particular Fund must be a multiple of 1%. Participants may change the
investment of their future contributions (in multiples of 1% of such
contributions) or transfer a portion from one Fund to another. Changes and
transfers can be made at any time.
All Company contributions are initially invested in the Central Maine Power
Company Stock Fund. Dividends, interest and other distributions received on
the assets held in each Fund shall be reinvested in the respective Fund.
Participants may transfer all or a portion of the Company contributions
made on their behalf out of the CMP Company Stock Fund.
f. Withdrawals and Distributions
A participant may elect to make a regular withdrawal of up to 100% of the
value of their contributions made prior to July 1, 1985, and earnings
thereon, (but not less than $500 unless the value of such participant's
contributions and earnings thereon total less than $500, in which case such
total may be withdrawn) after approval by the Employee Savings and
Investment Plan Committee. Only one regular withdrawal may be made in any
year.
Withdrawals with respect to contributions made subsequent to July 1, 1985
may be made only for reasons of hardship. With the consent of the Company's
Employee Savings and Investment Plan Committee, a participant may elect to
make a hardship withdrawal, as determined in accordance with the Plan
provisions, of up to 100% their account.
Distributions made from the Funds occur as a result of termination of
employment, death, retirement or permanent disability no later than 60 days
after the end of the Plan year, unless under certain circumstances retiring
or disabled participants elect otherwise.
g. Participant Loans
Participants may, in general, borrow in the aggregate not more than 50% of
their account balances, subject to a maximum loan of $50,000. Loans bear
interest at a rate equal to the current rate of interest being charged by
the Central Maine Power Company Employees Federal Credit Union for loans
secured by share account balances. Interest rates on loans outstanding at
year end range from 7.25% to 14.28%. The maximum term of the loans is
generally five years, with borrowed funds being repaid through payroll
deductions.
h. Expenses
All expenses of administration of the Plan, including Trustee's and record
keeper's fees, are paid by Central Maine Power Company.
2. Summary of Significant Accounting Policies
a. Basis of Accounting
The financial statements of the Plan are prepared under the accrual method
of accounting.
b. Use of Estimates
The preparation of the Plan's financial statements in conformity with
generally accepted accounting principles requires the plan administrator to
make significant estimates and assumptions that affect the reported amounts
of net assets available for benefits at the date of the financial
statements and the changes in net assets available for benefits during the
reporting period and, when applicable, disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results could
differ from those estimates.
c. Risks and Uncertainties
The Plan provides for various investment options in any combination of
stocks, fixed income securities, mutual funds, and other investment
securities. Investment securities are exposed to various risks, such as
interest rate, market and credit risks. Due to the level of risk associated
with certain investment securities, it is at least reasonably possible that
changes in values of investment securities will occur in the near term and
that such changes could materially affect participants' account balances
and the amounts reported in the statement of net assets available for
benefits and the statement of changes in net assets available for benefits.
d. Investment Valuation and Income Recognition
The Plan's investments are stated at fair value, except for its investment
contract fund, which is valued at contract value (Note 3). Shares of
registered investment companies are valued at quoted market prices which
represent the net asset value of shares held by the Plan at year end.
Participant loans are valued 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.
e. Reclassification of Prior Year Balances
Certain prior year balances have been reclassed to conform with current
year presentation.
3. Investment Contracts with Insurance Companies
Executive Life
At December 31, 1996 Fidelity held a fixed income contract with Executive
Life Insurance Company (Executive Life) with a contract value of
approximately $175,000. The Union Plan holds approximately $50,000 of the
Executive Life contract.
On April 11, 1991 the State of California insurance regulators placed
Executive Life under conservatorship. The regulators stated Executive Life
would continue to pay monthly annuities, but placed a moratorium on policy
surrenders and loans. The Conservation Court of California approved the
sale of Executive Life to an investor group - Altus Finance (Altus) and
Mutuelle Assurance Artisanale de France (Mutuelle). Under this
rehabilitation agreement, Altus agreed to pay $3.25 billion for the
Executive Life high risk bonds while Mutuelle agreed to infuse $300 million
in capital.
Together, the agreement formed new company, Aurora National Life Assurance
Company.
This rehabilitation plan was appealed on several points to the California
Court of Appeal and subsequently remanded to the Superior Court to be
corrected. On August 13, 1993, the Los Angeles Superior Court approved a
modified rehabilitation/liquidation plan for Executive Life. The modified
plan became effective September 3, 1993. Under the terms of the modified
rehabilitation plan, contract holders were given a choice to either opt-in
or opt-out of a 5-year fixed income contract with Aurora National Life
Assurance Company, the successor to Executive Life.
Both options meant some loss of original investment to participants, and
both were clouded by continuing litigation and complicated by a variety of
"holdback" amounts. Under opt-in, participants would receive an initial
restructured value of 77% with some potential to realize 86%. Under
opt-out, participants would receive an initial restructured value of 56%
(assuming favorable resolution of pending litigation) with some potential
for eventually realizing a total of 84%. The Company retained Townshend &
Schupp, an insurance research and consulting firm, to assist in analyzing
the potential value of the options. After review of all the relevant facts
and the advice of Townshend & Schupp the Company selected the opt-out
approach.
During 1993, the Plan recorded a reserve of $100,000 reflecting a reduction
in the value of the Executive Life contract to the 84% level associated
with their opt-out selection. The reserve was reduced to $83,465 in 1995
which represented the balance. As discussed further below, the Company and
other parties continue to pursue alternatives in order to protect and
enhance the ultimate recovery levels of the Executive Life Contract.
A number of uncertainties regarding the final settlement of Executive Life
issues existed during 1994 and into the first quarter of 1995, including
pending litigation and the impact of carrying out the remaining steps of
the modified rehabilitation plan. Three subsequent legal challenges
existed: one to the general modified rehabilitation plan, one to the
transfer of Executive Life's high-yield bonds to its successor, and another
to the priority system for dealing with Executive Life contract holders'
claims. After the California Court of Appeals issued a decision in February
1995 asserting the priority status of Executive Life contracts held in
pension Guaranteed Insurance Contracts and the period for further appeals
expired in August 1995, settlement agreements were signed by claimants in
late August. The stipulation provided for release of the holdback funds in
the fall of 1995 to contract holders who "opted out," with subsequent
distributions from the remainder of the trust as assets are liquidated.
On October 26, 1995 the Plan received a distribution of $1.9 million or
87.5% of the original frozen asset. On May 27, 1996 the Plan received a
second distribution of $110 thousand or 4.8% bringing the total received to
date of 92.3%. A third distribution of 6.9% was received on May 8, 1997
bringing the total recovery to 99.2% of the original contract. Further
distributions are expected as conditions for liquidating assets improve.
Full recovery of the original investment is expected. As a result, the
Plan has reduced the reserve to zero for the remaining outstanding value
of the contract.
On November 1, 1995, Fidelity Management Trust Company was named successor
trustee for the Executive Life contract formerly held in trust by State
Street Bank. As successor trustee, Fidelity assumed responsibility for the
October 1995 distribution, as well as all future distributions, to
individual participant accounts. The March 1995 agreement between State
Street Bank and the Company remains unchanged. As previously reported, the
Company and its affiliates filed suit against State Street Bank in June
1994, seeking damages for losses arising out of the Bank's purchase and
management of the Executive Life contract. The parties agreed to dismiss
the suit under an agreement whose terms remain confidential. It is expected
that along with resolution of the rehabilitation proceedings, this
settlement will result in greater than 100% recovery of the original
Executive Life contract.
Requests from Plan participants for payments or transfers of funds from the
Fixed Income Fund will continue to be processed but the shares associated
with the remaining Executive Life contract continue to be temporarily
frozen.
Confederation Life
At December 31, 1995, Fidelity held a fixed income contract with
Confederation Life Insurance Company (Confederation Life) with a contract
value of approximately $3.2 million. The Union Plan holds approximately $1
million of the Confederation Life contract.
On August 11, 1994, Canada's Office of the Superintendent of Financial
Institutions took over the Confederation Life Insurance Company. On August
12, 1994, the State of Michigan (Confederation Life's port of entry) filed
suit to seize the Confederation Life's assets.
In response to these regulatory actions, the Association of Confederation
Life contractors (ACLIC) was formed. The ACLIC membership includes persons
that hold or have an interest in Guaranteed Investment Contracts issued by
Confederation Life. Fidelity is actively participating in the ACLIC to
represent and protect the interests of the Company.
In November 1995, Confederation Life in Rehabilitation offered contract
holders the option of receiving .75% of frozen values each year, pending
outcome of the rehabilitation plan. The Plan received a 1.5% payout in
March 1996, .75% each for 1994 and 1995. Payments were distributed to
participants' accounts according to their current investment elections.
In April 1996, ACLIC's analysis of the draft plan of rehabilitation
indicated recoveries would be in the range of 101-112% for US policy
holders. A final plan of rehabilitation was filed in Michigan courts in
August 1996 and hearings scheduled beginning October 1996. The Plan became
final and unappealable on November 13, 1996. It provides five different
payment options for GIC holders:
A. Simple liquidation
B. Liquidation with loan enhancement
C. Cash out
D. Liquidation with extra loan enhancement for contracts with at
least 10% guaranty coverage
E. Separate account GIC
Option D is not applicable since Massachusetts, where the trustee is
domiciled, is not a guaranty state and Option E was deemed inappropriate
due to CMP's decision to close the Fixed Income Fund.
The Company has notified Fidelity, and Fidelity has acknowledged, its
fiduciary obligations regarding its purchase of the Confederation Life
contract. In addition, the Company, as of the close of business on August
16, 1994, segregated approximately $3 million of the Plan's Fixed Income
Fund for the common/collective trust and placed hold on all transactions
with regard to that amount. This action was taken to ensure that all Plan
participants invested in the Fixed Income Fund at the time of seizure by
Canadian and Michigan authorities are treated equally.
In March 1997 CMP selected the immediate cash-out (option C) based on
Fidelity's financial analysis of expected returns. The immediate return
of more than 100% of principal outweighed the uncertainty of only
marginally higher returns over the next four years.
On April 25, 1997 and May 31, 1997 the Plan received the final two
payments constituting 105% of the original contract. Together with the
1.5% interim distribution in March 1996, the total recovery is 106.5%.
This is a full and final recovery of the contract.
4. Related Party Transactions
Certain Plan investment options are shares of mutual funds managed by the
Trustee and Company common stock. Therefore, these transactions qualify as
party-in-interest transactions.
5. Investments
The following investments represent 5% or more of the total net assets
available for plan benefits at December 31, 1996:
Description Amount
Fidelity Balanced Fund* $2,202,251
Fidelity Magellan Fund* 6,531,521
Equity Fund* 5,753,277
Fixed Income Contract Portfolio 3,342,300
Central Maine Power Company Stock Fund* 4,914,792
*Represents a party-in-interest to the Plan.
6. 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.
7. Federal Income Taxes
The Internal Revenue Service (IRS) has issued a favorable determination
letter with respect to the Plan's tax-exempt status under Section 401(a)
and 401(k) of the Internal Revenue Code. Therefore, no income taxes have
been provided for in the accompanying financial statements.
Elective contributions to the Plan made by the Company on behalf of
employees are not subject to federal income taxes currently, as long as
these contributions are below the maximum level derived in accordance with
Section 401(k) regulations. Contributions and earnings thereon will, in
general, be taxable upon distribution, although rules providing for
additional deferral may apply with respect to certain distributions of
Company stock.
Central Maine Power Company
Form 11-K - Year 1996
Schedule I
Page 3 of 3
Central Maine Power Company
Employee Savings and Investment Plan
For Union Employees
Item 27a - Schedule of Assets Held for Investment Purposes
At December 31, 1996
<TABLE>
Market/
Name of Issuer Contract
Fund and Title of Issue Units (A) Cost Value
<S> <C> <C> <C>
Retirement Government Money Market Fund 3,480,379 $ 3,480,079 $ 3,480,379
Fidelity Balanced Fund* 444,981 5,844,034 6,265,328
Fidelity Magellan Fund* 227,277 17,369,975 18,329,931
Equity Fund* 681,152 13,476,214 18,357,048
Asset Manager Income Fund* 92,938 1,067,305 1,079,015
Asset Manager Fund* 122,564 1,930,411 2,018,627
Asset Manager Growth Fund* 197,016 3,054,191 3,221,206
Fidelity Intermediate Bond Fund* 40,976 415,341 413,037
Fixed Income
Sun Life Insurance of America (1994 Contracts)
Contract rate 7.50%
Maturity date 12/31/98 732,854 732,854 732,854
First Allmerica (1992 Contracts)
Contract rate 5.80%
Maturity date 06/30/97 589,804 589,804 589,804
Lincoln National (1992 Contracts)
Contract rate 5.94%
Maturity date 08/01/97 1,023,608 1,023,608 1,023,608
Life of Virginia (1993 Contracts)
Contract rate 6.50%
Maturity date 06/30/97 1,404,819 1,404,819 1,404,819
Peoples Security Life (1993 Contracts)
Contract rate 5.41%
Maturity date 06/30/97 261,882 261,882 261,882
Confederation Life Insurance Company (1993
Contracts) 3,202,530 3,202,530 3,202,530
(See Note 3 to Financial Statements)
</TABLE>
*Parties in interest to the plan.
Item 27a - Schedule of Assets Held for Investment Purposes
At December 31, 1996
<TABLE>
Market/
Name of Issuer Contract
Fund and Title of Issue Units (A) Cost Value
Fixed Income (continued)
Executive Life Insurance Company (1989 Contact)
(See Note 3 to Financial Statements)
<S> <C> <C> <C>
193,349 193,349 193,349
Fidelity-Short-term Investment Fund (at par
value)*
Contract rate 5.34% 3,568,754 3,568,754 3,568,754
Total Fixed Income Fund 10,977,600 10,977,600
Central Maine Power Company Stock
Central Maine Power Company Stock*
Shares 1,057,981 $13,860,059 $12,299,029
Fidelity U.S. Government Reserve Pool (at par
value)* 365,404 365,404 365,404
Total CMP Stock Fund 14,225,463 12,664,433
Total Investments All Funds
Participant Loans, (interest rates
range from 7.25% to 14.28%,
Maturity dates are generally
within 5 years) 2,716,490 2,716,490
Grand Total 74,557,103 79,523,094
</TABLE>
*Parties in interest to the plan.
Notes to Schedule I - Investments
"Units" except for shares of Company stock, indicates each Fund's share of
the total units associated with pooled funds, which are accumulations of
investments from numerous entities, including the Plan.
The investments of the Central Maine Power Company Employee Savings and
Investment Plan for Union Employees are commingled in a common/collective trust
with the investments of one other employee savings and investment plan
maintained by the Company and its affiliates. Schedule I presents the
consolidated investments of both plans. This Plan's share of the pooled
investments is as follows:
Market/Contract
Cost Value
Retirement Government Money Market Portfolio $ 728,398 $ 728,398
Fidelity Balanced Fund* 2,059,297 2,202,251
Fidelity Magellan Fund* 6,207,765 6,531,521
Equity Fund* 4,271,466 5,753,277
Fixed Income Contract Portfolio 3,342,300 3,342,300
Fidelity Intermediate Bond Fund* 77,919 77,595
Asset Manager Income Fund* 234,089 236,915
Asset Manager Fund* 550,197 565,483
Asset Manager Growth Fund* 930,939 973,590
Central Maine Power Company Stock* 5,520,593 4,914,792
*Parties in interest to the plan.
Central Maine Power Company
Employee Savings and Investment Plan
For Union Employees
Items 27d Schedule of Reportable Transactions
For the Year Ended December 31, 1996
<TABLE>
No. of No. of Current
Trans. Purchase Trans. Selling Cost of Net
Description of Asset Purchased Price Sold Price Asset Gain/(Loss)
<S> <C> <C> <C> <C> <C> <C>
Fidelity Magellan Fund* 176 $3,451,845 90 $1,360,526 $1,306,551 $ 53,975
Equity Fund* 166 2,355,408 60 711,974 616,069 95,905
Retirement Government Money
Market Portfolio 115 1,217,708 67 913,746 913,746 0
Fixed Income Contract Portfolio
(Schedule I) 79 2,918,603 276 4,834,078 4,834,078 0
Central Maine Power Company
Stock Fund:
CMP Common
Stock* 170 1,394,824 153 1,018,781 1,112,462 (93,681)
Fidelity U.S.
Government Reserve
Pool* 170 1,032,359 153 1,293,504 1,293,504 0
</TABLE>
*Parties in interest to the plan
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report, included in this Form 11-K, into the Company's previously filed
registration Statement on Form S-8 (Filed No. 33-44754).
COOPERS & LYBRAND L.L.P.
Portland, Maine
June 30, 1997
Central Maine Power Company
Form 11-K - Year 1996
Central Maine Power Company
Employee Savings and Investment Plan
For Union Employees
SIGNATURE
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.
Central Maine Power Company
Employee Savings and Investment Plan for
Union Employees
(Name of Plan)
Date: June 30, 1997 D. E. Marsh, Chief Financial Officer,
Member, Employee Savings and
Investment Plan Committee,
Central Maine Power Company
