<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, 1995
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, 1996: $473,652,872
Common Shares outstanding at March 15, 1996: 10,764,838 shares
Document Incorporated by Reference Part in Form 10-K
Notice of 1996 Annual Meeting, Proxy State-
ment and 1995 Financial Information, dated
March 29, 1996 (pages as specified herein) Parts I, II and III
<PAGE>
<PAGE 2>
COMMONWEALTH ENERGY SYSTEM
The undersigned registrant hereby amends the following item of its Annual
Report for 1995 on Form 10-K as set forth on page 3.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
Exhibit 10. Material Agreements:
Filed herewith as Exhibit 1:
10.3.2.2 Second Amendment to the Employees Savings Plan of Commonwealth
Energy System and Subsidiary Companies, as amended and restated
January 1, 1993, effective April 1, 1996.
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 JAMES D. RAPPOLI
James D. Rappoli,
Financial Vice President
and Treasurer
Date: April 30, 1996
<PAGE>
<PAGE 3>
INFORMATION REQUIRED BY FORM 11-K ANNUAL REPORT
For the Fiscal Year Ended December 31, 1995
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, 1995 and 1994 5 - 10
Statements of Income and Changes in Participants' Equity
for the Years Ended December 31, 1995, 1994 and 1993 11 - 19
Notes to Financial Statements 20 - 29
Schedule I, Investments 30 - 31
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 32
(b) Exhibits filed herewith:
Number
in SEC
Exhibit Exhibit
Table Description Number
10 Second Amendment to the Employees Savings Plan 1
of Commonwealth Energy System and Subsidiary
Companies, as amended and restated
January 1, 1993, effective April 1, 1996.
<PAGE>
<PAGE 4>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
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, 1995 and 1994, and the related statements of income and
changes in participants' equity for each of the three years in the period
ended December 31, 1995. These financial statements and supplemental
schedules referred to below are the responsibility of the plan administrator.
Our responsibility is to express an opinion on these financial statements and
supplemental 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, 1995
and 1994, and its income and changes in participants' equity for each of the
three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Supplemental Schedules I and IV are
presented for purposes of additional analysis and are not a required part of
the basic financial statements, but are supplemental 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 Fund
Information in the statement of financial position and the statement of
changes in participants' equity is presented for purposes of additional
analysis rather than to present the financial position and changes in
participants' equity of each fund. The supplemental schedules and Fund
Information 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 LLP
Arthur Andersen LLP
Boston, Massachusetts
April 23, 1996
<PAGE>
<PAGE 5>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1995
(Page 1 of 3)
Commonwealth Vanguard
Energy System Money Market
Common Share Reserves-Prime
Total Fund Portfolio
INVESTMENTS, at quoted market
value (Schedule I):
Common Shares of
Commonwealth Energy System $ 75 692 483 $75 692 483 $ -
Mutual funds 144 116 194 - 27 312 540
219 808 677 75 692 483 27 312 540
OTHER ASSETS:
Loans to participants 8 557 638 - -
Receivables -
Proceeds from securities sold 98 820 98 820 -
Loan repayments 81 575 25 388 11 951
Interest 591 591 -
Contributions 304 417 86 546 39 883
9 043 041 211 345 51 834
TOTAL ASSETS 228 851 718 75 903 828 27 364 374
LIABILITY:
Accounts payable 164 607 164 607 -
PARTICIPANTS' EQUITY $228 687 111 $75 739 221 $27 364 374
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 6>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1995
(Page 2 of 3)
Vanguard
Fixed Income
Securities Fund-
Vanguard Short-Term Vanguard
Windsor II Corporate Wellington
Fund Portfolio Fund
INVESTMENTS, at quoted market
value (Schedule I):
Common Shares of
Commonwealth Energy System $ - $ - $ -
Mutual funds 68 643 492 5 868 083 31 149 835
68 643 492 5 868 083 31 149 835
OTHER ASSETS:
Loans to participants - - -
Receivables -
Proceeds from securities sold - - -
Loan repayments 23 513 2 506 13 122
Interest - - -
Contributions 90 782 8 814 55 539
114 295 11 320 68 661
TOTAL ASSETS 68 757 787 5 879 403 31 218 496
LIABILITY:
Accounts payable - - -
PARTICIPANTS' EQUITY $ 68 757 787 $ 5 879 403 $31 218 496
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 7>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1995
(Page 3 of 3)
Vanguard
Vanguard Index Trust-
International Extended
Growth Market Loan
Portfolio Portfolio Fund
INVESTMENTS, at quoted market
value (Schedule I):
Common Shares of
Commonwealth Energy System $ - $ - $ -
Mutual funds 7 290 725 3 851 519 -
7 290 725 3 851 519 -
OTHER ASSETS:
Loans to participants - - 8 557 638
Receivables -
Proceeds from securities sold - - -
Loan repayments 3 776 1 319 -
Interest - - -
Contributions 14 972 7 881 -
18 748 9 200 8 557 638
TOTAL ASSETS 7 309 473 3 860 719 8 557 638
LIABILITY:
Accounts payable - - -
PARTICIPANTS' EQUITY $ 7 309 473 $ 3 860 719 $ 8 557 638
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 8>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1994
(Page 1 of 3)
Commonwealth Vanguard
Energy System Money Market
Common Share Reserves-Prime
Total Fund Portfolio
INVESTMENTS, at quoted market
value:
Common Shares of
Commonwealth Energy System $ 62 506 428 $62 506 428 $ -
Mutual funds 109 695 942 157 791 26 681 528
172 202 370 62 664 219 26 681 528
OTHER ASSETS:
Loans to participants 8 661 719 - -
Receivables -
Loan repayments 93 194 28 439 22 163
Interest 4 029 2 339 1 690
Contributions 296 871 95 080 45 974
9 055 813 125 858 69 827
PARTICIPANTS' EQUITY $181 258 183 $62 790 077 $26 751 355
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 9>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1994
(Page 2 of 3)
Vanguard
Fixed Income
Securities Fund-
Vanguard Short-Term Vanguard
Windsor II Corporate Wellington
Fund Portfolio Fund
INVESTMENTS, at quoted market
value:
Common Shares of
Commonwealth Energy System $ - $ - $ -
Mutual funds 48 646 331 4 886 306 21 042 454
48 646 331 4 886 306 21 042 454
OTHER ASSETS:
Loans to participants - - -
Receivables -
Loan repayments 23 399 2 699 12 701
Interest - - -
Contributions 81 160 7 888 48 709
104 559 10 587 61 410
PARTICIPANTS' EQUITY $48 750 890 $ 4 896 893 $21 103 864
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 10>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1994
(Page 3 of 3)
Vanguard
Vanguard Index Trust-
International Extended
Growth Market Loan
Portfolio Portfolio Fund
INVESTMENTS, at quoted market
value:
Common Shares of
Commonwealth Energy System $ - $ - $ -
Mutual funds 6 625 340 1 656 192 -
6 625 340 1 656 192 -
OTHER ASSETS:
Loans to participants - - 8 661 719
Receivables -
Loan repayments 3 374 419 -
Interest - - -
Contributions 14 721 3 339 -
18 095 3 758 8 661 719
PARTICIPANTS' EQUITY $ 6 643 435 $ 1 659 950 $ 8 661 719
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 11>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1995
(Page 1 of 3)
Commonwealth Vanguard
Energy System Money Market
Common Share Reserves-Prime
Total Fund Portfolio
NET INVESTMENTS INCOME:
Cash dividends -
Common Shares of
Commonwealth Energy System$ 5 219 181 $ 5 219 181 $ -
Registered investment
company shares 7 757 823 - 1 569 762
Interest on loans 647 206 - -
13 624 210 5 219 181 1 569 762
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 36 861 646 14 531 777 -
50 485 856 19 750 958 1 569 762
CONTRIBUTIONS:
Employee 8 679 077 2 397 221 1 082 525
Employer 4 392 730 1 270 786 618 671
13 071 807 3 668 007 1 701 196
DISTRIBUTIONS TO PARTICIPANTS 16 118 786 3 733 426 6 012 404
TRANSFERS BETWEEN FUNDS - (6 736 395) 3 354 465
PURCHASE FEES (9 949) - -
NET CHANGE DURING YEAR 47 428 928 12 949 144 613 019
PARTICIPANTS' EQUITY,
Beginning of year 181 258 183 62 790 077 26 751 355
PARTICIPANTS' EQUITY,
End of year $228 687 111 $ 75 739 221 $27 364 374
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 12>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1995
(Page 2 of 3)
Vanguard
Fixed Income
Securities Fund-
Vanguard Short-term Vanguard
Windsor II Corporate Wellington
Fund Portfolio Fund
NET INVESTMENTS INCOME:
Cash dividends -
Common Shares of
Commonwealth Energy System$ - $ - $ -
Registered investment
company shares 4 014 071 352 866 1 517 817
Interest on loans - - -
4 014 071 352 866 1 517 817
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 14 943 396 316 587 5 839 233
18 957 467 669 453 7 357 050
CONTRIBUTIONS:
Employee 2 585 284 263 787 1 628 304
Employer 1 248 079 141 641 791 068
3 833 363 405 428 2 419 372
DISTRIBUTIONS TO PARTICIPANTS 3 000 179 761 498 1 916 861
TRANSFERS BETWEEN FUNDS 216 246 669 127 2 255 071
PURCHASE FEES - - -
NET CHANGE DURING YEAR 20 006 897 982 510 10 114 632
PARTICIPANTS' EQUITY,
Beginning of year 48 750 890 4 896 893 21 103 864
PARTICIPANTS' EQUITY,
End of year $ 68 757 787 $ 5 879 403 $31 218 496
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 13>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1995
(Page 3 of 3)
Vanguard
Vanguard Index Trust-
International Extended
Growth Market Loan
Portfolio Portfolio Fund
NET INVESTMENTS INCOME:
Cash dividends -
Common Shares of
Commonwealth Energy System$ - $ - $ -
Registered investment
company shares 194 489 108 818 -
Interest on loans - - 647 206
194 489 108 818 647 206
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 682 362 548 291 -
876 851 657 109 647 206
CONTRIBUTIONS:
Employee 533 713 188 243 -
Employer 238 129 84 356 -
771 842 272 599 -
DISTRIBUTIONS TO PARTICIPANTS 337 375 96 424 260 619
TRANSFERS BETWEEN FUNDS (645 280) 1 377 434 (490 668)
PURCHASE FEES - (9 949) -
NET CHANGE DURING YEAR 666 038 2 200 769 (104 081)
PARTICIPANTS' EQUITY,
Beginning of year 6 643 435 1 659 950 8 661 719
PARTICIPANTS' EQUITY,
End of year $ 7 309 473 $ 3 860 719 $ 8 557 638
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 14>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1994
(Page 1 of 3)
Commonwealth Vanguard
Energy System Money Market
Common Share Reserves-Prime
Total Fund Portfolio
NET INVESTMENTS INCOME:
Cash dividends -
Common Shares of
Commonwealth Energy System$ 4 962 431 $ 4 962 431 $ -
Registered investment
company shares 5 466 258 18 774 1 064 295
Interest on loans 608 616 - -
11 037 305 4 981 205 1 064 295
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (21 792 845) (16 553 656) -
(10 755 540) (11 572 451) 1 064 295
CONTRIBUTIONS:
Employee 8 417 407 2 540 138 1 112 452
Employer 4 302 027 1 349 700 633 952
12 719 434 3 889 838 1 746 404
DISTRIBUTIONS TO PARTICIPANTS 10 632 937 3 105 327 3 916 251
TRANSFERS BETWEEN FUNDS - (2 948 329) 1 807 854
PURCHASE FEES (13 069) - -
NET CHANGE DURING YEAR (8 682 112) (13 736 269) 702 302
PARTICIPANTS' EQUITY,
Beginning of year 189 940 295 76 526 346 26 049 053
PARTICIPANTS' EQUITY,
End of year $181 258 183 $ 62 790 077 $26 751 355
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 15>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1994
(Page 2 of 3)
Vanguard
Fixed Income
Securities Fund-
Vanguard Short-term Vanguard
Windsor II Corporate Wellington
Fund Portfolio Fund
NET INVESTMENTS INCOME:
Cash dividends -
Common Shares of
Commonwealth Energy System$ - $ - $ -
Registered investment
company shares 2 991 591 302 990 955 792
Interest on loans - - -
2 991 591 302 990 955 792
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (3 597 124) (314 911) (1 104 997)
(605 533) (11 921) (149 205)
CONTRIBUTIONS:
Employee 2 438 780 272 838 1 540 882
Employer 1 187 818 147 193 756 284
3 626 598 420 031 2 297 166
DISTRIBUTIONS TO PARTICIPANTS 1 916 160 370 461 1 111 006
TRANSFERS BETWEEN FUNDS (1 059 058) (1 435 667) (494 165)
PURCHASE FEES - - -
NET CHANGE DURING YEAR 45 847 (1 398 018) 542 790
PARTICIPANTS' EQUITY,
Beginning of year 48 705 043 6 294 911 20 561 074
PARTICIPANTS' EQUITY,
End of year $ 48 750 890 $ 4 896 893 $21 103 864
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 16>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1994
(Page 3 of 3)
Vanguard
Vanguard Index Trust-
International Extended
Growth Market Loan
Portfolio Portfolio Fund
NET INVESTMENTS INCOME:
Cash dividends -
Common Shares of
Commonwealth Energy System$ - $ - $ -
Registered investment
company shares 87 669 45 147 -
Interest on loans - - 608 616
87 669 45 147 608 616
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (147 733) (74 424) -
(60 064) (29 277) 608 616
CONTRIBUTIONS:
Employee 393 654 118 663 -
Employer 172 814 54 266 -
566 468 172 929 -
DISTRIBUTIONS TO PARTICIPANTS 36 356 19 182 158 194
TRANSFERS BETWEEN FUNDS 3 391 961 946 134 (208 730)
PURCHASE FEES - (13 069) -
NET CHANGE DURING YEAR 3 862 009 1 057 535 241 692
PARTICIPANTS' EQUITY,
Beginning of year 2 781 426 602 415 8 420 027
PARTICIPANTS' EQUITY,
End of year $ 6 643 435 $ 1 659 950 $ 8 661 719
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 17>
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)
Commonwealth Vanguard
Energy System Money Market
Common Share Reserves-Prime
Total Fund Portfolio
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
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 18>
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
Fixed Income
Securities Fund-
Vanguard Short-term Vanguard
Windsor II Corporate Wellington
Fund Portfolio 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 $20 561 074
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 19>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF INCOME AND CHANGES
IN PARTICIPANTS' EQUITY
DECEMBER 31, 1993
(Page 3 of 3)
Vanguard
Vanguard Index Trust-
International Extended
Growth Market Loan
Portfolio Portfolio Fund
NET INVESTMENTS INCOME:
Cash dividends -
Common Shares of
Commonwealth Energy System$ - $ - $ -
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>
<PAGE 20>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
(1) General Information
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 to assist employees in adopting a
regular savings program and to help employees by providing additional security
for their retirement. The Plan has been amended or restated from time to time
thereafter. The latest Plan restatement was made as of January 1, 1993.
Since January 1, 1989, Vanguard Fiduciary Trust Company of Valley Forge,
Pennsylvania, has acted as Trustee for the Plan (Plan Trustee). The Trustee
retains the Plan assets and provides records of Plan activity to a Plan Agent
designated by a three-member Savings Plan Board (the Board) that is appointed
by the Trustees of the System and by the directors of its subsidiary
companies. The Board is responsible (except for the duties specifically
vested in the Plan Trustee) for the administration of the Plan.
The term "Participant" shall be deemed to include Members, Inactive
Members or Former Members, all as defined in the Plan.
The Employers participating in the Plan consist of certain subsidiary
companies of Commonwealth Energy System, as follows: Cambridge Electric Light
Company, Canal Electric Company, Commonwealth Gas Company, COM/Energy Services
Company and Commonwealth Electric Company (Employers). The Employers are
wholly-owned by the System.
Each eligible employee, upon joining the Plan, shall specify in 1%
increments his or her contributions and the applicable Employer contributions
to be invested in each of seven separate Investment Funds (Fund(s)) that are
collectively referred to as the trust fund (Trust Fund) and are further
described in Note 4. Participants may change their Fund allocation
contribution daily by contacting Vanguard Participant Services. However, not
more than 50% of a Participant's contributions and the applicable Employer
contributions may be allocated to the System's Common Share Fund.
Effective April 1, 1996, five additional investment options have been made
available to Participants. These options include the Vanguard Explorer Fund
(which seeks long-term growth of capital by investing primarily in common
stocks of small and emerging growth companies) and the four Vanguard
LifeStrategy Funds which are designed to match the objectives and risk
tolerances of a Participant's various life stages.
The Plan is subject to provisions of the Employee Retirement Income
Security Act of 1974 (ERISA), the Retirement Equity Act of 1984, the Tax
Reform Act of 1986 and the Omnibus Budget Reconciliation Act of 1993 relating
to plans of this type.
<PAGE>
<PAGE 21>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
(2) Significant Accounting Policies
(a) Principles of Accounting
The Plan 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 System's Common Share Fund and the 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.
(b) Federal Income Taxes
The Plan is subject to certain provisions of the Internal Revenue Code
(IRC) and qualifies under Sections 401(a) and 401(k) of the Code. The
Internal Revenue Service (IRS) has issued a favorable determination letter,
applicable to Plan years beginning after January 1, 1993 and for amendments
adopted on January 15, 1993, which indicates that the Plan was designed in
accordance with applicable IRC requirements. 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.
(c) 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 Plan Trustee and charged to the Trust Fund or to the Investment
Fund or Funds to which the litigation relates. All other expenses and charges
incurred in the administration of the Plan are paid by the Employers.
(d) Realized Gain (Loss) on Investments Sold or Distributed
Pursuant to rules issued by the Department of Labor (DOL), realized gain
(loss) was computed by 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 System's Common Share Fund realized gains (losses) of
$1,027,097, ($545,138) and $1,199,274 on the distribution or sale of 207,410,
97,867 and 296,171 System Common Shares in 1995, 1994 and 1993, respectively.
<PAGE>
<PAGE 22>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
A summary of realized gains (losses) on securities sold or distributed
during the years ended December 31, 1995, 1994 and 1993 is set forth below:
Quoted
Quoted Market Price
Market Price Beginning of Gain
Investment Funds or Proceeds Year (Loss)
1995
Commonwealth Energy System
Common Shares $ 8 320 160 $ 7 293 063 $1 027 097
Vanguard Money Market Reserves-
Prime Portfolio 13 863 305 13 863 305 -
Vanguard Windsor II 8 895 459 7 758 707 1 136 752
Vanguard Fixed Income Securities Fund-
Short-Term Corporate Portfolio 1 708 442 1 664 677 43 765
Vanguard Wellington 4 213 461 3 690 865 522 596
Vanguard International Growth
Portfolio 3 897 722 3 816 016 81 706
Vanguard Index Trust-
Extended Market Portfolio 450 953 412 569 38 384
$41 349 502 $38 499 202 $2 850 300
1994
Commonwealth Energy System
Common Shares $ 3 981 245 $ 4 526 383 $ (545 138)
Vanguard Money Market Reserves-
Prime Portfolio 8 709 357 8 709 357 -
Vanguard Windsor II 6 529 551 6 624 955 (95 404)
Vanguard Fixed Income Securities Fund-
Short-Term Corporate Portfolio 2 231 660 2 287 937 (56 277)
Vanguard Wellington 4 428 748 4 544 012 (115 264)
Vanguard International Growth
Portfolio 1 382 971 1 368 400 14 571
Vanguard Index Trust-
Extended Market Portfolio 221 842 225 328 (3 486)
$27 485 374 $28 286 372 $ (800 998)
1993
Commonwealth Energy System
Common Shares $13 823 563 $12 624 289 $1 199 274
Vanguard Money Market Reserves-
Prime Portfolio 16 089 894 16 089 894 -
Vanguard Windsor II 11 755 590 11 121 195 634 395
Vanguard Fixed Income Securities Fund-
Short-Term Corporate Portfolio 3 979 976 3 959 379 20 597
Vanguard Wellington 4 942 133 4 740 977 201 156
Vanguard International Growth
Portfolio* 180 199 167 669 12 530
Vanguard Index Trust-
Extended Market Portfolio* 6 068 6 067 1
$50 777 423 $48 709 470 $2 067 953
* Available to Participants since October 1, 1993
<PAGE>
<PAGE 23>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
(e) 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, 1995, 1994 and 1993 is set forth below:
Unrealized
Beginning Appreciation
Investment Funds of Year End of Year (Depreciation)
1995
Commonwealth Energy System
Common Shares $28 493 785 $41 998 465 $ 13 504 680
Vanguard Windsor II 5 208 271 19 014 915 13 806 644
Vanguard Fixed Income
Securities Fund-Short-Term
Corporate Portfolio (195 651) 77 171 272 822
Vanguard Wellington 381 130 5 697 767 5 316 637
Vanguard International
Growth Portfolio 15 931 616 587 600 656
Vanguard Index Trust-
Extended Market Portfolio (75 809) 434 098 509 907
$33 827 657 $67 839 003 $ 34 011 346
1994
Commonwealth Energy System
Common Shares $44 502 303 $28 493 785 $(16 008 518)
Vanguard Windsor II 8 709 991 5 208 271 (3 501 720)
Vanguard Fixed Income
Securities Fund-Short-Term
Corporate Portfolio 62 983 (195 651) (258 634)
Vanguard Wellington 1 370 863 381 130 (989 733)
Vanguard International
Growth Portfolio 178 235 15 931 (162 304)
Vanguard Index Trust-
Extended Market Portfolio (4 871) (75 809) (70 938)
$54 819 504 $33 827 657 $(20 991 847)
1993
Commonwealth Energy System
Common Shares $38 813 565 $44 502 303 $ 5 688 738
Vanguard Windsor II 6 297 836 8 709 991 2 412 155
Vanguard Fixed Income
Securities Fund-Short-Term
Corporate Portfolio 74 378 62 983 (11 395)
Vanguard Wellington 635 925 1 370 863 734 938
Vanguard International
Growth Portfolio* - 178 235 178 235
Vanguard Index Trust-
Extended Market Portfolio* - (4 871) (4 871)
$45 821 704 $54 819 504 $ 8 997 800
* Available to Participants since October 1, 1993
<PAGE>
<PAGE 24>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
(f) Income Recognition
Income of the System Common Share Fund consists primarily of dividends on
its Common Shares. The allocation of each Fund's earnings to a Participant's
account is based on the percent of the Participant's units in the Funds and is
allocated daily.
(3) Participating Companies and Contributions
Employees are eligible to join the Plan upon completion of one-thousand
(1,000) hours of service in a twelve-month period and are fully vested upon
Plan entry. Generally, Participants 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. However, the maximum amount a Participant may defer
annually is $9,500 currently (as increased from time to time by the Secretary
of the Treasury in accordance with the cost of living adjustment factor
prescribed in Section 402(g)(1) of the IRC). Compensation is defined to be an
employee's authorized basic salary (including any "lump sum payment" under the
authorized basic compensation pay program), except that in the case of sales
personnel compensated in whole or in part by commissions, compensation shall
be considered to equal 90% of the average compensation earned by such employee
in the preceding four calendar quarters but not less than his authorized basic
compensation. Salary deferral contributions by employees are made to the Plan
by payroll deduction. The Employer contributes an additional amount equal to
such employee's contribution, up to a maximum of 4% of such employee's basic
compensation, as previously defined. Effective January 1, 1993, the maximum
participating Employer contribution was increased to 5% for those non-
bargaining employees who were less than forty (40) years of age or had less
than twelve (12) years of service at that date and who, therefore, are no
longer eligible for postretirement health care benefits. In April 1993,
certain bargaining employees also became eligible for the 5% Employer matching
contribution. The additional match has been made available to defray the cost
of postretirement health care benefit costs to those employees.
Effective April 1, 1996 any eligible employee may change the percentage of
his or her contribution as of January 1, April 1, July 1 or October 1 in each
calendar year (but not retroactively) by contacting Vanguard Participant
Services at least thirty (30) days prior to the beginning of any quarter.
<PAGE>
<PAGE 25>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
The participating system companies and contributions for the years ended
December 31, 1995, 1994 and 1993 are summarized below:
Employee Contributions
1995 1994 1993
Cambridge Electric Light Company $ 654 474 $ 688 568 $ 670 016
Canal Electric Company 642 435 609 812 558 858
Commonwealth Electric Company 3 687 316 3 482 617 3 266 376
Commonwealth Gas Company 2 749 403 2 759 444 2 760 996
COM/Energy Services Company 945 449 876 966 850 889
$8 679 077 $8 417 407 $8 107 135
Employer Contributions
1995 1994 1993
Cambridge Electric Light Company $ 317 289 $ 325 109 $ 320 738
Canal Electric Company 258 375 249 749 234 040
Commonwealth Electric Company 1 813 432 1 745 722 1 699 786
Commonwealth Gas Company 1 439 253 1 447 005 1 443 731
COM/Energy Services Company 564 381 534 442 546 886
$4 392 730 $4 302 027 $4 245 181
Participation by employees is voluntary and may begin on the next
succeeding January 1, April 1, July 1 or October 1, coincident with or next
following attainment of eligibility. Of the 2,325 former or current eligible
employees as of December 31, 1995, 2,277 (97.9%) members were participating in
the Plan.
At December 31, 1995, the number of Participants in each of the Plan's
seven separate Investment Funds was as follows:
Investment Fund Participants
Commonwealth Energy System Common Shares 1,945
Vanguard Money Market Reserves-Prime Portfolio 1,272
Vanguard Windsor II 1,875
Vanguard Fixed Income Securities Fund-
Short-Term Corporate Portfolio 493
Vanguard Wellington 1,388
Vanguard International Growth Portfolio 528
Vanguard Index Trust-Extended Market Portfolio 258
In addition, there were 967 Participants in the Plan's Loan Fund.
<PAGE>
<PAGE 26>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
(4) Investments
(a) Investment Funds Descriptions
The following is a description of the seven Investment Funds in which a
Participant may allocate his or her contributions and the matching Employer
contributions:
Common Shares of Commonwealth Energy System - Consists 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 Employer 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-Prime Portfolio - A mutual fund which seeks
the maximum current income that is consistent with preservation of capital and
liquidity. Value is added primarily by emphasizing specific issues and
sectors of the money market that appear to be attractively priced based upon
historical yield spread relationships. Average maturity for the Fund is
normally maintained in the range of 30-70 days, and the Fund can own no
security with a maturity longer than one year. Such money market instruments
include domestic certificates of deposit and bankers' acceptances, commercial
paper, U.S. Treasury and Government agency securities and repurchase
agreements on such securities and up to 50% of net assets can be invested in
Eurodollar certificates of deposit issued by approved U.S. banks.
Vanguard Windsor II - A mutual fund having a primary objective to provide
long-term growth of capital and income. As a secondary objective, the Fund
seeks a reasonable level of current income. The Fund is a value-oriented
growth and income fund seeking investment opportunities primarily in common
stocks that are out of favor or undervalued.
Vanguard Fixed Income Securities Fund-Short-Term Corporate Portfolio - A
mutual fund which seeks to provide a high level of current income consistent
with a two to three-year average maturity. By investing in relatively short
maturity investment-grade bonds, the Portfolio is designed to help preserve
capital.
Vanguard Wellington Fund - A mutual fund designed to pursue conservation
of capital, reasonable current income and profits without undue risk.
Conservatively structured, the Fund uses a balanced investment approach
allocating 60%-70% of net assets to equities and the remainder to fixed income
securities. The fixed income securities reduce the Fund's exposure to risks
of common stocks while common stocks are selected from dividend-paying medium
and large-capitalization stocks whose prospects are improving. The objective
is to identify these companies before their values are recognized in the
marketplace.
<PAGE>
<PAGE 27>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
Vanguard International Growth Portfolio - A mutual fund which seeks long-
term capital growth by investing in capital stocks of companies based outside
the United States that have above-average growth potential.
Vanguard Index Trust-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. Investors are
charged a .5% transaction fee (reduced from 1% on January 1, 1995) on shares
purchased that is paid directly to the Portfolio.
(b) Investment Funds Performance
The following table is the total return (including the reinvestment of all
dividends and capital gains distributions) on the Plan's Investment Funds for
the years ended December 31, 1995, 1994 and 1993. All returns are net of
expenses:
Investment Funds 1995 1994 1993
Total Return on Year-End Investment
Commonwealth Energy System
Common Shares 32.5% (15.5)% 15.6%
Vanguard Money Market Reserves-
Prime Portfolio 5.8 4.1 3.0
Vanguard Windsor II 38.8 (1.2) 13.6
Vanguard Fixed Income Securities Fund-
Short-Term Corporate Portfolio 12.7 (0.1) 7.1
Vanguard Wellington 32.9 (0.5) 13.5
Vanguard International Growth Portfolio 14.9 0.8 44.7 *
Vanguard Index Trust-
Extended Market Portfolio 33.1 (2.8) 13.4 *
* Available to Participants since October 1, 1993
(c) Investment Funds Accounts
The Savings Plan Board maintains for each Participant in the Plan, under
each Fund in which all or part of his or her contributions and the applicable
Employer contributions are invested, a separate Member Account that includes a
Pay Deferral Account for current pre-tax contributions. In addition, the
Member Account may include previous after-tax contributions. The Savings Plan
Board also maintains a separate Company Account (for each Participant) that
includes Employer contributions made on behalf of Participants. These
Accounts reflect the portion of each Participant's interest in the Investment
Fund which is attributable to the contributions to such Accounts.
The Plan permits Participants to transfer amounts between Funds on a daily
basis, subject to certain limitations.
<PAGE>
<PAGE 28>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
The Plan Trustee may, at its discretion, temporarily invest funds
designated for a particular Fund in short-term interest-bearing securities or
may retain certain amounts of cash in each Fund without interest being
credited thereon, for the purpose of more effectively timing the purchase of
investments or liquidity needs for the several Funds. All contributions are
transmitted weekly to the Plan Trustee.
A Participant's choice of contribution allocation to eligible Funds will
continue until changed by such Participant. Investment designations may be
changed once a day by contacting a Vanguard Participant Services
representative.
All interest, dividends, and other income, as well as any cash from the
sale or exchange of securities or other property produced by each of the Funds
will be reinvested in the same Fund which produced such interest, dividends
and other income.
(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 System 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, 1995, 1994 and 1993, 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:
Commonwealth Energy System Common Shares
Shares Shares Sold and Distributed
Purchased Cost Shares Aggregate Value
1995 180 473 $7 226 244 207 411 $5 706 748
1994 170 204 6 902 558 97 867 2 540 623
1993 63 915 3 031 010 296 171 7 302 526
The Plan Trustee also represents a party in interest to the Plan due to
the Plan's investments in several Vanguard Funds.
<PAGE>
<PAGE 29>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
(6) Loans to Plan Participants
Participants may request a loan from the Plan for a minimum amount of
$1,000. 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. 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.
Effective April 1, 1996, eligible Participants have the option of
securing a second loan from the Plan including requests for up to a thirty
(30) year loan to purchase a primary residence. Prior to that date,
Participants were restricted to one outstanding loan at any one time.
<PAGE>
<PAGE 30>
Schedule I
Employer Identification
Number: 04-1662010
Plan Number: 091187
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
INVESTMENTS
DECEMBER 31, 1995
Market Value
Name of Issuer and Number of at End of
Title of Issue Shares or Units Cost Period
COMMONWEALTH ENERGY SYSTEM
COMMON SHARE FUND:
Common Shares of
Beneficial Interest -
Commonwealth Energy System* 1 691 452 $ 47 332 293 $ 75 692 483
VANGUARD FUNDS*:
Money Market Reserves-
Prime Portfolio 27 312 540 27 312 540 27 312 540
Windsor II 3 322 531 52 258 184 68 643 492
Fixed Income Securities Fund-
Short-Term Corporate Portfolio 537 863 5 809 716 5 868 083
Wellington 1 275 065 25 777 228 31 149 835
International Growth Portfolio 485 401 6 686 004 7 290 725
Index Trust-
Extended Market Portfolio 160 013 3 401 777 3 851 519
Total Vanguard Funds 121 245 449 144 116 194
Total Investments $168 577 742 $219 808 677
Loans to Participants $8 557 638 $8 557 638
* Represent parties in interest to the Plan
The accompanying notes are an integral part of this schedule.
<PAGE>
<PAGE 31>
Schedule I
(Continued)
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
INVESTMENTS
DECEMBER 31, 1995
Note: The Commonwealth Energy System Common Share Fund requires investment
in Common Shares of Commonwealth Energy System. However, funds are
invested in Vanguard Money Market Reserves on a short-term basis
pending the purchase of the System's 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:
Commonwealth Energy System Common Share Fund 59.9%
Vanguard Money Market Reserves-Prime Portfolio -
Vanguard Windsor II Fund 31.4
Vanguard Fixed Income Securities Fund-
Short-Term Corporate Portfolio 1.0
Vanguard Wellington Fund 20.8
Vanguard International Growth Portfolio 9.0
Vanguard Index Trust-Extended Market Portfolio 13.2
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 Commonwealth Energy System
Common Share Fund. At December 31, 1995, the value per unit of each of
the Investment Funds (options) was as follows:
Investment Funds Unit Value
Commonwealth Energy System Common Shares $18.01
Vanguard Money Market Reserves-Prime Portfolio 1.00
Vanguard Windsor II 20.66
Vanguard Fixed Income Securities Fund-
Short-Term Corporate Portfolio 10.91
Vanguard Wellington 24.43
Vanguard International Growth Portfolio 15.02
Vanguard Index Trust-Extended Market Portfolio 24.07
The closing market price of the System's Common Shares as listed on
the New York Stock Exchange composite transactions was $44.75, $36.375
and $46.25 for December 31, 1995, 1994 and 1993, respectively.
The accompanying notes are an integral part of this schedule.
<PAGE>
<PAGE 32>
Schedule IV
Employer Identification
Number: 04-1662010
Plan Number: 091187
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
REPORTABLE TRANSACTIONS (a)
FOR THE YEAR ENDED DECEMBER 31, 1995
Number of Cost of
PURCHASES Purchases Asset
Vanguard Money Market Reserves-
Prime Portfolio (b) 207 $14 494 329
Vanguard Windsor II Fund (b) 195 13 949 205
Vanguard Wellington Fund (b) 181 8 481 587
Number of Proceeds Gain on
SALES Sales from Sales Sales
Vanguard Money Market Reserves-
Prime Portfolio (b) 199 $13 863 305 $ -
Vanguard Windsor II Fund (b) 178 8 895 459 1 136 752
Vanguard Wellington Fund (b) 145 4 213 461 522 596
(a) Fund investments with total transactions exceeding 5% of beginning Plan
assets.
(b) Represent parties in interest to the Plan
The accompanying notes are an integral part of this schedule.
<PAGE 1>
SECOND AMENDMENT TO
EMPLOYEES SAVINGS PLAN OF
COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES,
AS AMENDED AND RESTATED AS OF JANUARY 1, 1993,
EFFECTIVE AS OF APRIL 1, 1996
WHEREAS, the Employees Savings Plan of Commonwealth Energy System and Subsid-
iary Companies (the "Plan") was originally established effective September 1,
1962, amended from time to time, was restated in its entirety as of December
1, 1975, as of January 1, 1979, as of May 11, 1981, as of January 1, 1984, as
of January 1, 1985, as of January 1, 1989 and as of January 1, 1993 and was
amended by a First Amendment effective as of October 1, 1994; and
WHEREAS, Section 14.01 of the Plan gives Commonwealth Energy System ("the
System") the right to further amend said Plan;
NOW, THEREFORE, in consideration of the premises and of the covenants con-
tained herein, the System does hereby covenant and agree that the Plan shall
be amended in accordance with the following provisions effective as of April
1, 1996.
1. Section 1.01 is hereby amended by deleting the words "and to establish
the Retirement Health Benefit Account."
2. Article 2 "Definitions" is hereby amended by adding the following new
Sections 2.24, 2.25, 2.26, 2.27 and 2.28.
"Section 2.24 "Fund I" means the Investment Fund or Funds forming part of
the Trust Fund consisting of the monies which the Savings Plan Board
shall direct the Plan Trustee to invest in the interests of a fund whose
primary objective seeks long-term growth of capital by investing in
common stocks of small capitalization companies."
"Section 2.25 "Fund J" means the Investment Fund or Funds forming part of
the Trust Fund consisting of the monies which the Savings Plan Board
shall direct the Plan Trustee to invest in the interests of a fund whose
primary objective seeks to provide current income with a balanced and
diversified investment approach."
"Section 2.26 "Fund K" means the Investment Fund or Funds forming part of
the Trust Fund consisting of the monies which the Savings Plan Board
shall direct the Plan Trustee to invest in the interests of a fund whose
primary objective seeks to provide current income and low to moderate
growth of capital with a balanced and diversified investment approach."
"Section 2.27 "Fund L" means the Investment Fund or Funds forming part of
the Trust Fund consisting of the monies which the Savings Plan Board
shall direct the Plan Trustee to invest in the interests of a fund whose
primary objective seeks to provide a reasonable level of current income
and growth of capital with a balanced and diversified investment ap-
proach."
"Section 2.28 "Fund M" means the Investment Fund or Funds forming part of
the Trust Fund consisting of the monies which the Savings Plan Board
shall direct the Plan Trustee to invest in the interests of a fund whose
primary objective seeks to provide growth of capital with a balanced and
diversified investment approach."
<PAGE>
<PAGE 2>
3. Section 2.24 is hereby amended i) by deleting the words "Section 2.241
(iii)" as appears in the third line of said Section 2.24 and substituting
therein the words "Section 2.291 (iii)", and ii) by deleting the words
"Section 2.24(a)" as appears in the first line of Section 2.24 (b)(ii)
and substituting therein the words "Section 2.29(a)."
4. Section 2.241 (ii) is hereby amended i) by deleting the words "2.241
(iii)" as appears in the second line of said Section 2.241 (ii) and
substituting therein the words "Section 2.291 (iii)" and ii) by deleting
the words "2.24(a) (iii) or (iv), or Section 2.24(b) (ii)" as appears in
the eighth line of said Section 2.241 (ii) and substituting therein the
words "Section 2.229(a) (iii) or (iv), or Section 2.29(b) (ii)."
5. Article 2 is hereby amended by renumbering Sections 2.24, 2.241, 2.25,
2.26, 2.27, 2.28, 2.29, 2.30, 2.31, 2.32, 2.33, 2.34, 2.35, 2.36, 2.37,
2.38, 2.39, 2.40, 2.41, 2.42, 2.43, 2.44, 2.45, 2.46, 2.47, 2.48 and 2.49
as Sections 2.29, 2.291, 2.30, 2.31, 2.32, 2.33, 2.34, 2.35, 2.36, 2.37,
2.38, 2.39, 2.40, 2.41, 2.42, 2.43, 2.44, 2.45, 2.46, 2.47, 2.48, 2.49,
2.50, 2.51, 2.52, 2.53 and 2.54, respectively.
6. Section 2.41 is hereby amended by deleting the words "or Valuation Date"
as appears in the third line of said Section 2.41 and the word "distri-
butions" on the fourth line.
7. Section 2.54 is hereby amended by deleting the words "in the calendar
months of March, June, September and December" and substituting therein
the words "of each calendar month."
8. Article 2 "Definitions" is hereby amended by adding the following new
Section 2.55 "Valuation Notification Date" means the fifteenth (15th) day
of each calendar month prior to any Valuation Date.
9. Section 5.02 is hereby amended by adding the following words "or any
other means authorized by the Savings Plan Board" after the word "writ-
ing" as appears in the third line of said Section 5.02.
10. Section 5.03 is hereby amended by adding the following words "or any
other means authorized by the Savings Plan Board" after the word "writ-
ing" as appears in the third line of said Section 5.03.
11. Section 5.04 is hereby amended by adding the words "or any other means
authorized by the Savings Plan Board" after the word "writing" as appears
in both the third and the sixth lines of said Section 5.04.
12. Section 5.13 is hereby amended by deleting the words "(as defined in
Section 2.241 (i))" as appears in the fourth and fifth lines of said
Section 5.13 and substituting therein words "(as defined in Section 2.291
(i))."
13. Section 6.01 is hereby amended by deleting the words "who is eligible for
the Retirement Health Benefit Account in accordance with the eligibility
requirements in Section 17.02 whether or not the Member elects to con-
tribute to such account in accordance with Section 17.04" as appears in
the seventh through ninth lines of such Section 6.01 and substituting
therein the words "other than a Member who is covered by a collective
bargaining agreement that does not provide for a five percent (5%)
Participating Company match provided the Member either: (i) was under age
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forty (40) as of January 1, 1993; (ii) had less than twelve (12) full
years of employment as of January 1, 1993, or (iii) was hired on or after
January 1, 1993. Employees age forty (40) and older who have completed
twelve (12) or more full years of employment with the System as of
January 1, 1993 shall not be eligible for the Participating Companies
increase of up to a five percent (5%) match."
14. Section 6.02 is hereby amended by deleting the words "who is eligible for
the Retirement Health Benefit Account in accordance with the eligibility
requirements in Section 17.02 whether or not the Member elects to con-
tribute to such account in accordance with Section 17.04" as appears in
the sixth through ninth lines of such Section 6.02 and substituting
therein the words "other than a Member who is covered by a collective
bargaining agreement that does not provide for a five percent (5%)
Participating Company match provided the Member either: (i) was under age
forty (40) as of January 1, 1993; (ii) had less than twelve (12) full
years of employment as of January 1, 1993; or (iii) was hired on or after
January 1, 1993." Employees age forty (40) and older who have completed
twelve (12) or more full years of employment with the System as of
January 1, 1993 are not eligible for the Participating Companies' in-
crease of up to a five percent (5%) match.
15. Section 8.05 is hereby amended by adding the word "Valuation" before the
word "Notification" as appears in the eighth line of such Section 8.05.
16. Section 9.01 is hereby amended by deleting the words "(other than the
Retirement Health Benefit Account)" as appears in the fifth line of such
Section 9.01 and by deleting the last sentence of such Section 9.01 in
its entirety.
17. Section 10.01 is hereby amended by deleting the words "April 1, 1989" as
appears in the first line of such Section 10.01 and substituting the
words "April 1, 1996," and by adding the words "or loans" after the word
"loan" on the second line of such Section 10.01.
18. Section 10.02 is hereby amended: i) by adding the words "or loans" after
to the word "loan" on the first, third and fourth lines of such Section
10.02; ii) by adding the words "or balances" after the word "balance" on
the fifth line of such Section 10.02; and iii) by deleting the words
"other than the Member's Retirement Health Benefit Account established in
accordance with Article 17." as appears in the seventh and eighth lines
of such Section 10.02.
19. Section 10.04 is hereby amended by deleting the words "(other than the
Retirement Health Benefit Account)" as appears in the fourth line of such
Section 10.04, and by deleting the words "no loan shall be available from
the Retirement Health Benefit Account" as appears in the first line of
the second paragraph of such Section 10.04.
20. Section 10.05 (a) is hereby amended by adding the words "or a period of
one to thirty years if the loan is to purchase a primary residence" in
the first line of such Section 10.05(a).
21. Section 10.05 (b) is hereby amended by adding the words "or balances"
after to the word "balance" as used twice in the twelfth line of such
Section 10.05(b) and by adding the words "or loans" after and the word
"loan" on the thirteenth line of such Section 10.05(b).
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22. Section 10.05 (d) is hereby amended by deleting the words "one loan" as
appears in the first line of such Section 10.05(d) and substituting
therein the words "two loans."
23. Article 17 is hereby deleted in its entirety.
IN WITNESS WHEREOF, Commonwealth Energy System, Cambridge Electric Light
Company, Canal Electric Company, Commonwealth Gas Company, COM/Energy Services
Company and Commonwealth Electric Company have caused this Amendment No. 2 to
be duly executed in their name and on their behalf, this 26th day of February,
1996, effective as of the date set forth herein.
COMMONWEALTH ENERGY SYSTEM*
CAMBRIDGE ELECTRIC LIGHT COMPANY
CANAL ELECTRIC COMPANY
COMMONWEALTH GAS COMPANY
COM/ENERGY SERVICES COMPANY
COMMONWEALTH ELECTRIC COMPANY
By W. G. POIST
W. G. Poist
President of Commonwealth Energy System
and Chairman of its Subsidiary Companies
By M. P. SULLIVAN
M. P. Sullivan
Secretary of Commonwealth Energy System
and Clerk of its Subsidiary Companies
* The name "Commonwealth Energy System" means the trustees for the time
being (as trustees but not individually) under a declaration of Trust
dated December 31, 1926, as amended, which is hereby referred to, and a
copy of which has been filed with the Secretary of the Commonwealth of
Massachusetts. Any agreement, obligation or liability made, entered into
or incurred by or on behalf of said System binds only the trust estate,
and no shareholder, director, trustee, officer or agent assumes, or shall
be held to, any liability by reason therefore.
