PAGE 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549-1004
Form 10-K/A AMENDMENT NO. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________ to ________________
Commission file number 1-7316
COMMONWEALTH ENERGY SYSTEM
(Exact name of registrant as specified in its Declaration of Trust)
Massachusetts 04-1662010
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Main Street, Cambridge, Massachusetts 02142-9150
(Address of principal executive offices) (Zip Code)
(617) 225 4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Shares of Beneficial New York Stock Exchange, Inc.
Interest $4 par value Boston Stock Exchange, Inc.
Pacific Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
None
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. x
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES x NO
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 15, 1994: $448,741,224
Common Shares outstanding at March 15, 1994: 10,345,619 shares
Document Incorporated by Reference Part in Form 10-K
Notice of 1994 Annual Meeting, Proxy State-
ment and 1993 Financial Information, dated
April 1, 1994 (pages as specified herein) Parts I, II and III
PAGE 2
COMMONWEALTH ENERGY SYSTEM
The undersigned registrant hereby amends the following item of its Annual
Report for 1993 on Form 10-K as set forth in the page attached hereto:
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
Exhibit 99. Additional Exhibit:
Pursuant to Rule 15(d)-21 of the Securities Exchange Act of 1934,
information, financial statements and exhibits required in Form 11-K with
respect to:
(1) Employees Savings Plan of Commonwealth Energy System and Subsidiary
Companies
Pursuant to the requirements 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.
COMMONWEALTH ENERGY SYSTEM
(Registrant)
By JOHN A. WHALEN
John A. Whalen,
Comptroller
Date: April 27, 1994
PAGE 3
INFORMATION REQUIRED BY FORM 11-K ANNUAL REPORT
For the Fiscal Year Ended December 31, 1993
A. Full title of plan:
Employees Savings Plan of Commonwealth Energy System and Subsidiary
Companies (hereinafter referred to as the "Plan").
B. Name of issuer of the securities held pursuant to the Plan and the address
of its principal executive office:
Commonwealth Energy System
One Main Street
Cambridge, Massachusetts 02142-9150
Item 1. Financial Statements and Exhibits
(a) Financial Statements and Schedules attached hereto: Page
Report of Independent Public Accountants 4
Statements of Financial Position at
December 31, 1993 and 1992 5 - 10
Statements of Income and Changes in Participants'
Equity for the Years Ended December 31, 1993,
1992 and 1991 11 - 19
Notes to Financial Statements 20 - 26
Schedule I, Investments 27 - 30
Schedule II, Allocation of Plan Assets and
Liabilities to Investment Programs Not Required
Schedule III, Allocation of Plan Income and
Changes in Plan Equity to Investment Programs Not Required
Schedule IV, Reportable Transactions 31
(b) Exhibits filed herewith:
None
PAGE 4
Report of Independent Public Accountants
To the Savings Plan Board of the
Employees Savings Plan of Commonwealth Energy System
and Subsidiary Companies:
We have audited the accompanying statements of financial position of the
EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
as of December 31, 1993 and 1992, and the related statements of income and
changes in participants' equity for each of the three years in the period
ended December 31, 1993. These financial statements and schedules referred to
below are the responsibility of the plan administrator. 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 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 financial position of the Employees Savings Plan
of Commonwealth Energy System and Subsidiary Companies as of December 31, 1993
and 1992, and its income and changes in participants' equity for each of the
three years in the period 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. Supplemental Schedules I and IV are
presented for purposes of complying with the Securities and Exchange
Commission's rules and regulations under the Securities Exchange Act of 1934
and the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974 and are
not a required part of the basic financial statements. Such 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.
ARTHUR ANDERSEN & CO.
Boston, Massachusetts,
April 15, 1994.
PAGE 5
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1993
(Page 1 of 3)
CES Vanguard
Common Share Money Market
Total Fund Reserves
INVESTMENTS, at quoted market
value (Schedule I):
Common Shares of Commonwealth
Energy System $ 76 129 967 $76 129 967 $ -
Mutual funds 105 015 523 262 203 25 986 113
181 145 490 76 392 170 25 986 113
OTHER ASSETS:
Loans to participants 8 420 027 - -
Receivables -
Loan repayments 82 532 30 533 15 797
Interest 1 182 1 182 -
Contributions 291 064 102 461 47 143
8 794 805 134 176 62 940
PARTICIPANTS' EQUITY $189 940 295 $76 526 346 $26 049 053
PAGE 6
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1993
(Page 2 of 3)
Vanguard Vanguard Vanguard
Windsor II Short-term Wellington
Fund Bond Fund Fund
INVESTMENTS, at quoted market
value (Schedule I):
Common Shares of Commonwealth
Energy System $ - $ - $ -
Mutual funds 48 605 330 6 282 019 20 502 435
48 605 330 6 282 019 20 502 435
OTHER ASSETS:
Loans to participants - - -
Receivables -
Loan repayments 20 230 2 529 12 192
Interest - - -
Contributions 79 483 10 363 46 447
99 713 12 892 58 639
PARTICIPANTS' EQUITY $48 705 043 $ 6 294 911 $20 561 074
PAGE 7
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1993
(Page 3 of 3)
Vanguard Vanguard
International Extended
Growth Market Loan
Portfolio Portfolio Fund
INVESTMENTS, at quoted market
value (Schedule I):
Common Shares of Commonwealth
Energy System $ - $ - $ -
Mutual funds 2 776 377 601 046 -
2 776 377 601 046 -
OTHER ASSETS:
Loans to participants - - 8 420 027
Receivables -
Loan repayments 1 071 180 -
Interest - - -
Contributions 3 978 1 189 -
5 049 1 369 8 420 027
PARTICIPANTS' EQUITY $ 2 781 426 $ 602 415 $ 8 420 027
The accompanying notes are an integral part of these financial statements.
PAGE 8
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1992
(Page 1 of 3)
CES Vanguard
Common Share Money Market
Total Fund Reserves
INVESTMENTS, at quoted market
value (Schedule I):
Common Shares of Commonwealth
Energy System $ 80 062 921 $80 062 921 $ -
Mutual funds 91 143 312 333 620 30 176 453
171 206 233 80 396 541 30 176 453
OTHER ASSETS:
Loans to participants 7 977 734 - -
Receivables -
Loan repayments 30 434 11 764 6 307
Interest 561 561 -
Contributions 277 501 103 560 55 076
8 286 230 115 885 61 383
PARTICIPANTS' EQUITY $179 492 463 $80 512 426 $30 237 836
PAGE 9
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1992
(Page 2 of 3)
Vanguard Vanguard Vanguard
Windsor II Short-term Wellington
Fund Bond Fund Fund
INVESTMENTS, at quoted market
value (Schedule I):
Common Shares of Commonwealth
Energy System $ - $ - $ -
Mutual funds 42 130 976 5 865 825 12 636 438
42 130 976 5 865 825 12 636 438
OTHER ASSETS:
Loans to participants - - -
Receivables -
Loan repayments 7 262 1 072 4 029
Interest - - -
Contributions 69 378 10 267 39 220
76 640 11 339 43 249
PARTICIPANTS' EQUITY $42 207 616 $ 5 877 164 $12 679 687
PAGE 10
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1992
(Page 3 of 3)
Loan
Fund
INVESTMENTS, at quoted market
value (Schedule I):
Common Shares of Commonwealth
Energy System $ -
Mutual funds -
-
OTHER ASSETS:
Loans to participants 7 977 734
Receivables -
Loan repayments -
Interest -
Contributions 7 977 734
7 977 734
PARTICIPANTS' EQUITY $ 7 977 734
The accompanying notes are an integral part of these financial statements.
PAGE 11
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1993
(Page 1 of 3)
CES Vanguard
Common Share Money Market
Total Fund Reserves
NET INVESTMENTS INCOME:
Cash dividends -
Common Shares of Commonwealth
Energy System $ 5 121 101 $ 5 121 101 $ -
Registered investment
company shares 5 286 472 10 312 875 818
Interest on loans 629 576 - -
11 037 149 5 131 413 875 818
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS 11 065 753 6 888 012 -
22 102 902 12 019 425 875 818
CONTRIBUTIONS:
Employee 8 107 135 2 713 918 1 335 111
Employer 4 245 181 1 462 206 749 377
12 352 316 4 176 124 2 084 488
DISTRIBUTIONS TO PARTICIPANTS 24 001 390 7 900 315 6 817 531
TRANSFERS BETWEEN FUNDS - (12 281 314) (331 558)
PURCHASE FEES (5 996) - -
Net change during year 10 447 832 (3 986 080) (4 188 783)
PARTICIPANTS' EQUITY,
beginning of year 179 492 463 80 512 426 30 237 836
PARTICIPANTS' EQUITY,
end of year $189 940 295 $76 526 346 $26 049 053
PAGE 12
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1993
(Page 2 of 3)
Vanguard Vanguard Vanguard
Windsor II Short-term Wellington
Fund Bond Fund Fund
NET INVESTMENTS INCOME:
Cash dividends -
Common Shares of Commonwealth
Energy System $ - $ - $ -
Registered investment
company shares 2 770 033 411 151 1 184 562
Interest on loans - - -
2 770 033 411 151 1 184 562
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS 3 046 550 9 202 936 094
5 816 583 420 353 2 120 656
CONTRIBUTIONS:
Employee 2 301 097 319 714 1 398 249
Employer 1 135 390 171 711 709 041
3 436 487 491 425 2 107 290
DISTRIBUTIONS TO PARTICIPANTS 5 384 634 1 169 334 2 517 355
TRANSFERS BETWEEN FUNDS 2 628 991 675 303 6 170 796
PURCHASE FEES - - -
Net change during year 6 497 427 417 747 7 881 387
PARTICIPANTS' EQUITY,
beginning of year 42 207 616 5 877 164 12 679 687
PARTICIPANTS' EQUITY,
end of year $ 48 705 043 $ 6 294 911 $20 561 074
PAGE 13
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1993
(Page 3 of 3)
Vanguard Vanguard
International Extended
Growth Market Loan
Portfolio Portfolio Fund
NET INVESTMENTS INCOME:
Cash dividends -
Common shares of Commonwealth
Energy System $ - $ - $ -
Registered investment
company shares 22 121 12 475 -
Interest on loans - - 629 576
22 121 12 475 629 576
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS 190 765 (4 870) -
212 886 7 605 629 576
CONTRIBUTIONS:
Employee 27 804 11 242 -
Employer 12 183 5 273 -
39 987 16 515 -
DISTRIBUTIONS TO PARTICIPANTS - - 212 221
TRANSFERS BETWEEN FUNDS 2 528 553 584 291 24 938
PURCHASE FEES - (5 996) -
Net change during year 2 781 426 602 415 442 293
PARTICIPANTS' EQUITY,
beginning of year - - 7 977 734
PARTICIPANTS' EQUITY,
end of year $ 2 781 426 $ 602 415 $ 8 420 027
The accompanying notes are an integral part of these financial statements.
PAGE 14
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1992
(Page 1 of 3)
CES Vanguard
Common Share Money Market
Total Fund Reserves
NET INVESTMENTS INCOME:
Cash dividends -
Common shares of Commonwealth
Energy System $ 5 629 229 $ 5 629 229 $ -
Registered investment
company shares 3 913 994 24 445 1 060 480
Interest on loans 627 514 - -
10 170 737 5 653 674 1 060 480
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS 9 156 891 6 545 520 -
19 327 628 12 199 194 1 060 480
CONTRIBUTIONS:
Employee 8 062 328 2 925 048 1 600 519
Employer 4 134 469 1 523 359 861 463
12 196 797 4 448 407 2 461 982
DISTRIBUTIONS TO PARTICIPANTS 8 594 499 2 749 359 2 891 671
TRANSFERS BETWEEN FUNDS - (9 427 585) 774 201
Net change during year 22 929 926 4 470 657 1 404 992
PARTICIPANTS' EQUITY,
beginning of year 156 562 537 76 041 769 28 832 844
PARTICIPANTS' EQUITY,
end of year $179 492 463 $80 512 426 $30 237 836
PAGE 15
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1992
(Page 2 of 3)
Vanguard Vanguard Vanguard
Windsor II Short-term Wellington
Fund Bond Fund Fund
NET INVESTMENTS INCOME:
Cash dividends -
Common shares of Commonwealth
Energy System $ - $ - $ -
Registered investment
company shares 1 851 631 381 080 596 358
Interest on loans - - -
1 851 631 381 080 596 358
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS 2 487 334 (70 941) 194 978
4 338 965 310 139 791 336
CONTRIBUTIONS
Employee 2 046 627 294 106 1 196 028
Employer 996 633 153 924 599 090
3 043 260 448 030 1 795 118
DISTRIBUTIONS TO PARTICIPANTS 1 854 109 294 672 657 933
TRANSFERS BETWEEN FUNDS 1 347 578 1 866 509 3 828 481
Net change during year 6 875 694 2 330 006 5 757 002
PARTICIPANTS' EQUITY,
beginning of year 35 331 922 3 547 158 6 922 685
PARTICIPANTS' EQUITY,
end of year $ 42 207 616 $ 5 877 164 $12 679 687
PAGE 16
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1992
(Page 3 of 3)
Loan
Fund
NET INVESTMENTS INCOME:
Cash dividends -
Common shares of Commonwealth
Energy System $ -
Registered investment
company shares -
Interest on loans 627 514
627 514
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS -
627 514
CONTRIBUTIONS:
Employee -
Employer -
-
DISTRIBUTIONS TO PARTICIPANTS 146 755
TRANSFERS BETWEEN FUNDS 1 610 816
Net change during year 2 091 575
PARTICIPANTS' EQUITY,
beginning of year 5 886 159
PARTICIPANTS' EQUITY,
end of year $ 7 977 734
The accompanying notes are an integral part of these financial statements.
PAGE 17
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1991
(Page 1 of 3)
CES Vanguard
Common Share Money Market
Total Fund Reserves
NET INVESTMENTS INCOME:
Cash dividends -
Common shares of Commonwealth
Energy System $ 5 557 689 $ 5 557 689 $ -
Registered investment
company shares 4 646 068 56 572 1 721 178
Interest on loans 547 180 - -
10 750 937 5 614 261 1 721 178
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS 17 784 002 11 434 407 -
28 534 939 17 048 668 1 721 178
CONTRIBUTIONS:
Employee 7 649 713 2 894 385 1 804 715
Employer 3 902 661 1 484 246 943 612
11 552 374 4 378 631 2 748 327
DISTRIBUTIONS TO PARTICIPANTS 13 773 717 5 753 278 4 800 624
TRANSFERS BETWEEN FUNDS - (4 011 536) 251 547
Net change during year 26 313 596 11 662 485 (79 572)
PARTICIPANTS' EQUITY,
beginning of year 130 248 941 64 379 284 28 912 416
PARTICIPANTS' EQUITY,
end of year $156 562 537 $76 041 769 $28 832 844
PAGE 18
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1991
(Page 2 of 3)
Vanguard Vanguard Vanguard
Windsor II Short-term Wellington
Fund Bond Fund Fund
NET INVESTMENTS INCOME:
Cash dividends -
Common shares of Commonwealth
Energy System $ - $ - $ -
Registered investment
company shares 2 337 627 167 106 363 585
Interest on loans - - -
2 337 627 167 106 363 585
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS 5 550 112 120 885 678 598
7 887 739 287 991 1 042 183
CONTRIBUTIONS:
Employee 1 750 632 243 253 956 728
Employer 855 465 135 804 483 534
2 606 097 379 057 1 440 262
DISTRIBUTIONS TO PARTICIPANTS 2 728 857 139 861 230 312
TRANSFERS BETWEEN FUNDS (54 523) 1 579 054 1 376 605
Net change during year 7 710 456 2 106 241 3 628 738
PARTICIPANTS' EQUITY,
beginning of year 27 621 466 1 440 917 3 293 947
PARTICIPANTS' EQUITY,
end of year $ 35 331 922 $ 3 547 158 $ 6 922 685
PAGE 19
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1991
(Page 3 of 3)
Loan
Fund
NET INVESTMENTS INCOME:
Cash dividends -
Commonwealth Energy System
common shares $ -
Registered investment
company shares -
Interest on loans 547 180
547 180
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS -
547 180
CONTRIBUTIONS:
Employee -
Employer -
-
DISTRIBUTIONS TO PARTICIPANTS 120 785
TRANSFERS BETWEEN FUNDS 858 853
Net change during year 1 285 248
PARTICIPANTS' EQUITY,
beginning of year 4 600 911
PARTICIPANTS' EQUITY,
end of year $ 5 886 159
The accompanying notes are an integral part of these financial statements.
PAGE 20
NOTES TO FINANCIAL STATEMENTS
(1) General
The Employees Savings Plan of Commonwealth Energy System and Subsidiary
Companies (the Plan) was originally created in 1962 by Commonwealth Energy
System (the System) and its subsidiaries for the benefit of its employees.
The Plan has been amended or restated from time to time thereafter.
At December 31, 1993, there were 2,338 participants in the Plan; of these,
2,115 were participating in the CES Common Share Fund, 1,464 in the Vanguard
Money Market Reserves Fund, 1,888 in the Vanguard Windsor II Fund, 555 in the
Vanguard Short-Term Bond Fund, 1,320 in the Vanguard Wellington Fund, 187 in
the Vanguard International Growth Portfolio, 82 in the Vanguard Extended
Market Portfolio and 1,042 in the Loan Fund. See Note 4 for additional
information on current investment options.
A three-member Savings Plan Board (the Board) has been appointed by the
Trustees of the System and by the directors of its subsidiary companies and is
responsible (except for the duties specifically vested in the Plan Trustee)
for the administration of the Plan. The Board has selected Vanguard Fiduciary
Trust Company of Valley Forge, PA to act as Trustee for the Plan. The Trustee
retains the Plan assets and provides records of Plan activity to a Plan Agent
designated by the Board.
(2) Significant Accounting Policies
Basis of Accounting
The Trustee's records are maintained on a cash basis. The accompanying
financial statements include all adjustments necessary to present the
statements on an accrual basis of accounting. Quoted market prices are used
to value the CES Common Share Fund and the various Vanguard funds. In
addition, certain prior period amounts are reclassified from time to time to
conform with the presentation used in the current year's financial statements.
Federal Income Taxes
The Plan is subject to the Employee Retirement Income Security Act of 1974
and certain provisions of the Internal Revenue Code ("IRC"). The Plan is
intended to qualify under Section 401(a) of the Code and the Internal Revenue
Service has issued a favorable determination letter ruling that the plan was
designed in accordance with applicable IRC requirements as of the date of its
letter. Management believes that the Plan is currently designed and operated
in accordance with applicable IRC requirements. As a result, the Plan has not
provided for Federal income taxes. Generally, participants are not subject to
taxes on contributions or the earned income until such time as a distribution
is made. The taxability of a distribution to a participant will depend on the
form of payment.
Expenses
Brokerage fees, commissions, stock transfer taxes and other expenses in
connection with the purchase, sale or distribution of securities for each
investment fund may be charged to such fund. Any expense of litigation may be
paid by the Trustee and charged to the entire Trust Fund or to the investment
PAGE 21
NOTES TO FINANCIAL STATEMENTS
(Continued)
fund or funds to which the litigation relates. All other expenses and charges
incurred in the administration of the Plan are paid by the participating
system companies.
Realized Gain (Loss) on Investments Sold or Distributed
Pursuant to rules issued by the Department of Labor (DOL), realized gain
(loss) was computed comparing the market value of the securities distributed
or sold with the market value of said securities at the beginning of the Plan
year. The CES Common Share Fund realized gains (losses) of $1,199,274,
$128,246 and ($76,847) on the distribution of 296,171, 145,177 and 118,591
Common Shares of Commonwealth Energy System (the System) in 1993, 1992 and
1991, respectively. A summary of realized gains (losses) on securities sold
or distributed during the three-year period ended December 31, 1993 is set
forth below:
Quoted Market Price Quoted Market Price Gain
or Proceeds Beginning of Year (Loss)
1993
CES Common Share Fund $13 823 563 $12 624 289 $1 199 274
Vanguard Money Market
Reserves 16 089 894 16 089 894 -
Vanguard Windsor II Fund 11 755 590 11 121 195 634 395
Vanguard Short-Term
Bond Fund 3 979 976 3 959 379 20 597
Vanguard Wellington Fund 4 942 133 4 740 977 201 156
Vanguard International
Growth Portfolio* 180 199 167 669 12 530
Vanguard Extended Market
Portfolio* 6 068 6 067 1
$50 777 423 $48 709 470 $2 067 953
1992
CES Common Share Fund $ 5 826 443 $ 5 698 197 $ 128 246
Vanguard Money Market
Reserves 9 740 825 9 740 825 -
Vanguard Windsor II Fund 6 016 480 5 847 939 168 541
Vanguard Short-Term
Bond Fund 2 174 410 2 191 316 (16 906)
Vanguard Wellington Fund 1 847 942 1 843 462 4 480
$25 606 100 $25 321 739 $ 284 361
1991
CES Common Share Fund $ 3 866 304 $ 3 943 151 $ (76 847)
Vanguard Money Market
Reserves 9 779 863 9 779 863 -
Vanguard Windsor II Fund 6 287 854 5 559 545 728 309
Vanguard Short-Term
Bond Fund 469 994 461 959 8 035
Vanguard Wellington Fund 881 083 828 539 52 544
$21 285 098 $20 573 057 $ 712 041
* Available to Participants since October 1, 1993
PAGE 22
NOTES TO FINANCIAL STATEMENTS
(Continued)
Unrealized Appreciation (Depreciation) of Investments
The Plan provides that the market value of each investment fund shall be
determined by the Trustee each quarter. Pursuant to the rules issued by the
DOL, unrealized appreciation (depreciation) shall equal the difference between
market value at the beginning of the Plan year and the quoted market price of
the investments at the applicable valuation date in determining the value of
each fund. The change in unrealized appreciation (depreciation) during the
years ended December 31, 1993, 1992 and 1991 is set forth below:
Unrealized
Appreciation
Beginning of Year End of Year (Depreciation)
1993
CES Common Share Fund $38 813 565 $44 502 303 $ 5 688 738
Vanguard Windsor II Fund 6 297 836 8 709 991 2 412 155
Vanguard Short-Term
Bond Fund 74 378 62 983 (11 395)
Vanguard Wellington Fund 635 925 1 370 863 734 938
Vanguard International
Growth Portfolio* - 178 235 178 235
Vanguard Extended Market
Portfolio* - (4 871) (4 871)
$45 821 704 $54 819 504 $ 8 997 800
1992
CES Common Share Fund $32 396 291 $38 813 565 $ 6 417 274
Vanguard Windsor II Fund 3 979 043 6 297 836 2 318 793
Vanguard Short-Term
Bond Fund 128 413 74 378 (54 035)
Vanguard Wellington Fund 445 427 635 925 190 498
$36 949 174 $45 821 704 $ 8 872 530
1991
CES Common Share Fund $20 885 037 $32 396 291 $11 511 254
Vanguard Windsor II Fund (842 760) 3 979 043 4 821 803
Vanguard Short-Term
Bond Fund 15 563 128 413 112 850
Vanguard Wellington Fund (180 627) 445 427 626 054
$19 877 213 $36 949 174 $17 071 961
* Available to Participants since October 1, 1993
Income Recognition
Income of the CES Common Share Fund consists primarily of dividends on the
Common Shares of the System. The allocation of each fund's earnings to a
participant's account is based upon the percent of the participant's units in
the funds. Earnings are allocated monthly.
PAGE 23
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Participating Companies and Contributions
Employees are eligible to join the Plan after one year of service.
Generally, employees electing to participate in the Plan are required to make
contributions of at least 1% but not more than 16% of their compensation as
defined in the Plan. Each participating system company contributes on behalf
of each of its participating employees an amount equal to the participant's
contributions up to a maximum of 4% of the employee's basic compensation rate.
Effective January 1, 1993, the maximum participating system company
contribution was increased to 5% for those non-bargaining employees who were
less than 40 years of age or did not have 12 years of service at that date
and, therefore, are no longer eligible for postretirement health benefits. In
April 1993, certain bargaining employees also became eligible for the 5%
system company matching contribution. The additional match has been made
available to defray the cost of postretirement benefit costs to these
employees. All employees in the Plan are participating under Section 401(k)
of the Code and are fully vested.
Effective January 1, 1993, those participants no longer eligible for
postretirement health benefits may elect, on an annual basis, to contribute up
to 40 percent of their system company matching contribution to a Retirement
Health Benefit Account (RHBA). The use of RHBA funds is limited to paying
eligible health insurance premiums.
The participating system companies and contributions for the years ended
December 31, 1993, 1992 and 1991 are summarized below:
Employee Contributions
1993 1992 1991
Cambridge Electric Light Co. $ 670 016 $ 671 768 $ 630 038
Canal Electric Co. 558 858 485 682 468 981
Commonwealth Electric Co. 3 266 376 3 481 003 3 260 930
Commonwealth Gas Co. 2 760 996 2 542 710 2 415 208
COM/Energy Services Co. 850 889 881 165 874 556
$8 107 135 $8 062 328 $7 649 713
System Company Contributions
1993 1992 1991
Cambridge Electric Light Co. $ 320 738 $ 326 744 $ 315 683
Canal Electric Co. 234 040 196 875 184 668
Commonwealth Electric Co. 1 699 786 1 808 449 1 703 220
Commonwealth Gas Co. 1 443 731 1 283 655 1 207 243
COM/Energy Services Co. 546 886 518 746 491 847
$4 245 181 $4 134 469 $3 902 661
PAGE 24
NOTES TO FINANCIAL STATEMENTS
(Continued)
(4) Investments
Participating employees must direct that contributions be invested in
one or more of the following funds subject to the qualification that not more
than 50% may be invested in the CES Common Share Fund:
CES Common
Share Fund - Consisting of Common Shares of Beneficial Interest of
Commonwealth Energy System purchased on the open market or
through the System's Dividend Reinvestment and Common Share
Purchase Plan. The System's Common Shares may also be acquired
directly from the System, if such Common Shares are made
available by the Board of Trustees of the System, based on the
fair market value at the time of acquisition. The Common Shares
are acquired with employee contributions and participating
system company contributions, dividends and interest income.
The Trustee, at its discretion, will determine the manner in
which such shares may be acquired.
Vanguard
Money Market
Reserves - A mutual fund which consists of high quality money market
instruments that mature in one year or less; such money market
instruments include negotiable certificates of deposit, bankers'
acceptances, commercial paper and short-term corporate
obligations.
Vanguard
Windsor II
Fund - A mutual fund which consists of common stocks (other than CES),
which in the opinion of the investment adviser to the Windsor II
Fund, are undervalued in the marketplace and may offer above
average income yields and below average price-earnings ratios
relative to the stock market in general.
Vanguard
Short-Term
Bond Fund - A mutual fund which consists of investment grade bonds with
maturities ranging from less than one year to four years and may
include U.S. Treasury and agency obligations, short and
intermediate-term corporate debt securities, bank obligations
(time deposits, certificates of deposit and bankers'
acceptances), commercial paper and repurchase agreements.
Vanguard
Wellington
Fund - A mutual fund which follows a "balanced investment plan" with
60%-70% of its assets invested in common stocks (other than
Common Shares of CES or the common stock of any of its
subsidiaries) and the remainder invested in fixed income
securities. The fixed income securities are held for relative
stability of income and principal while common stocks are
selected principally on the basis of capital appreciation and
income growth.
PAGE 25
NOTES TO FINANCIAL STATEMENTS
(Continued)
Vanguard
International
Growth Fund - A mutual fund which consists of a diversified group of
securities of corporations located outside the United
States. The portfolio includes common stocks of seasoned
foreign companies with the potential for capital
appreciation.
Vanguard
Extended Market
Portfolio - A mutual fund which attempts to duplicate the investment
results of the broad universe of publicly traded United
States stocks not included in the S&P 500 Index. The
Extended Market Portfolio is a market-capitalization-
weighted "benchmark portfolio" consisting of more than 4,500
regularly traded stocks that are represented by the Wilshire
4500 Index. The Portfolio will invest in a sample of stocks
in the benchmark portfolio selected on the basis of market
capitalization, industry weightings and fundamental
investment characteristics. Participants are charged a 1%
transaction fee on each purchase of shares.
(5) Party in Interest
Commonwealth Energy System is a "party in interest" as that term is
defined in Section 3.14 of the Employee Retirement Income Security Act of
1974.
Certain transactions involving the acquisition and distribution of
securities, are made at the direction of participants in the Plan who elect to
participate in the CES Common Share Fund as one of their investment options.
These transactions are reflected in the accompanying financial statements at
market value and are net of brokerage commissions relating to the acquisition
of these securities.
During the years ended December 31, 1993, 1992 and 1991, the Plan Trustee
purchased Common Shares of Commonwealth Energy System, made distributions of
Common Shares to participants and sold Common Shares to accommodate cash
distributions as follows:
Common Shares of Commonwealth Energy System
Shares Shares Sold and Distributed
Purchased Cost Shares Aggregate Value
1993 63 915 $3 031 010 296 171 $7 302 526
1992 86 700 3 314 560 145 177 3 503 717
1991 109 097 3 725 969 118 591 2 765 466
Vanguard Fiduciary Trust Company also represents a party in interest to
the Plan due to the Plan's investments in various Vanguard Funds.
PAGE 26
NOTES TO FINANCIAL STATEMENTS
(Continued)
(6) Loans to Plan Participants
Participants may request a loan from the Plan. The amount of the loan
shall not exceed the lesser of $50,000 or fifty percent (50%) of the balance
of the participant's total value in the various funds of the Plan. Effective
January 1, 1993 the minimum loan amount was reduced to $1,000 (formerly
$2,500). The interest rate on a loan is based on the prime rate at Bank of
Boston on the first day of the quarter preceding the loan request plus one
percent. Participants may choose a repayment period of one to five years. A
participant may not have more than one outstanding loan at any time.
PAGE 27
Schedule I
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
INVESTMENTS
DECEMBER 31, 1993
Market Value
Name of Issuer and Number of at End of
Title of Issue Shares or Units Cost Period
CES COMMON SHARE FUND:
Common Shares of
Beneficial Interest -
Commonwealth Energy
System* 1 646 053 $ 41 450 849 $ 76 129 967
Temporary Investments -
Vanguard Money Market
Reserves* 262 203 262 203 262 203
41 713 052 76 392 170
VANGUARD FUNDS*:
Money Market Reserves 25 986 113 25 986 113 25 986 113
Windsor II 2 852 425 41 701 321 48 605 330
Short-Term Bonds 576 332 6 265 580 6 282 019
Wellington 1 005 021 19 281 192 20 502 435
International Growth
Portfolio 205 505 2 598 141 2 776 377
Extended Market Portfolio 30 934 605 916 601 046
Total Investments $138 151 315 $181 145 490
Loans to Participants $8 420 027 $8 420 027
* Represent parties in interest to the Plan
The accompanying notes are an integral part of this schedule.
PAGE 28
Schedule I
(Continued)
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
INVESTMENTS
DECEMBER 31, 1993
Note: The CES Common Share Fund requires investment in Common Shares of
Commonwealth Energy System. However, funds are invested in Van-
guard Money Market Reserves on a short-term basis pending the
purchase of CES Common Shares or distribution to participants. The
remaining investment options require investment in the appropriate
Vanguard mutual fund for which each option is named.
Percentage of quoted market price over cost:
CES Common Share Fund 83.6%
Vanguard Money Market Reserves -
Vanguard Windsor II Fund 16.6
Vanguard Short-Term Bond Fund 0.3
Vanguard Wellington Fund 6.3
Vanguard International Growth Portfolio 6.9
Vanguard Extended Market Portfolio (0.8)
The Plan Trustee accounts for members' interests in the mutual
funds available as investment options on a unit basis. The Plan
Trustee also uses a unit basis in accounting for the CES Common
Share Fund. At December 31, 1993 the value per unit of each of the
investment options was as follows:
Investment Option Unit Value
CES Common Share Fund $18.65
Vanguard Money Market Reserves 1.00
Vanguard Windsor II Fund 17.04
Vanguard Short-Term Bond Fund 10.90
Vanguard Wellington Fund 20.40
Vanguard International Growth Portfolio 13.51
Vanguard Extended Market Portfolio 19.43
The closing market price of the System's Common Shares as listed on
the New York Stock Exchange composite transactions was $46.25,
$42.625 and $39.25 for December 31, 1993, 1992 and 1991,
respectively.
The accompanying notes are an integral part of this schedule.
PAGE 29
Schedule I
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
INVESTMENTS
DECEMBER 31, 1992
Market Value
Name of Issuer and Number of at End of
Title of Issue Shares or Units Cost Period
CES COMMON SHARE FUND:
Common Shares of
Beneficial Interest -
Commonwealth Energy
System* 1 878 309 $ 45 722 365 $ 80 062 921
Temporary Investments -
Vanguard Money Market
Reserves* 333 620 333 620 333 620
46 055 985 80 396 541
VANGUARD FUNDS*:
Money Market Reserves 30 176 453 30 176 453 30 176 453
Windsor II 2 648 081 36 713 264 42 130 976
Short-Term Bonds 539 634 5 842 426 5 865 825
Wellington 659 522 12 040 896 12 636 438
Total Investments $130 829 024 $171 206 233
Loans to Participants $7 977 734 $7 977 734
* Represent parties in interest to the Plan
The accompanying notes are an integral part of this schedule.
PAGE 30
Schedule I
(Continued)
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
INVESTMENTS
DECEMBER 31, 1992
Note: The CES Common Share Fund requires investment in Common Shares of
Commonwealth Energy System. However, funds are invested in Van-
guard Money Market Reserves on a short-term basis pending the
purchase of CES Common Shares or distribution to participants. The
remaining investment options require investment in the appropriate
Vanguard mutual fund for which each option is named.
Percentage of quoted market price over cost:
CES Common Share Fund 75.1%
Vanguard Money Market Reserves -
Vanguard Windsor II Fund 14.8
Vanguard Short-Term Bond Fund 0.4
Vanguard Wellington Fund 4.9
The Plan Trustee accounts for members' interests in the mutual
funds available as investment options on a unit basis. The Plan
Trustee also uses a unit basis in accounting for the CES Common
Share Fund. At December 31, 1992 the value per unit of each of the
investment options was as follows:
Investment Option Unit Value
CES Common Share Fund $17.23
Vanguard Money Market Reserves 1.00
Vanguard Windsor II Fund 15.91
Vanguard Short-Term Bond Fund 10.87
Vanguard Wellington Fund 19.16
The accompanying notes are an integral part of this schedule.
PAGE 31
Schedule IV
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
Number of Cost of
PURCHASES Purchases Asset
Vanguard Money Market Reserves* 221 $11 899 554
Vanguard Windsor II Fund* 220 $15 183 395
Vanguard Wellington Fund* 207 $11 872 036
Number of Proceeds Gain on
SALES Sales from Sales Sales
Vanguard Money Market Reserves* 184 $16 089 894 $ -
Vanguard Windsor II Fund* 118 $11 755 590 $ 634 395
Vanguard Wellington Fund* 93 $4 942 133 $ 201 156
* Represent parties in interest to the Plan
The accompanying notes are an integral part of this schedule.
