<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
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 $2 par value Pacific 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 16, 1998: $801,039,203
Common Shares outstanding at March 16, 1999: 21,540,550 shares
Document Incorporated by Reference Part in Form 10-K
None Not applicable
<PAGE>
<PAGE 2>
COMMONWEALTH ENERGY SYSTEM
The undersigned registrant hereby amends the following item of its Annual
Report for 1998 on Form 10-K as set forth on page 3.
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, report
of independent accountants, financial statements, notes to financial
statements and schedules 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, 1999
<PAGE>
<PAGE 3>
INFORMATION REQUIRED BY FORM 11-K ANNUAL REPORT
For the Fiscal Year Ended December 31, 1998
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
Index
Report of Independent Public Accountants, Financial Statements and
Schedules filed herewith:
Page
Report of Independent Public Accountants 4
Statements of Net Assets Available for Benefits,
With Fund Information, at December 31, 1998 and 1997 5 - 14
Statements of Changes in Net Assets Available for Benefits,
With Fund Information, for the Years Ended
December 31, 1998, 1997 and 1996 15 - 29
Notes to Financial Statements 30 - 39
Schedule I - Item 27a: Schedule of Investments
at December 31, 1998 40
Schedule II - Item 27d: Schedule of Reportable Transactions
for the Year Ended December 31, 1998 41
<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 net assets available for
benefits, with fund information, of the EMPLOYEES SAVINGS PLAN OF COMMONWEALTH
ENERGY SYSTEM AND SUBSIDIARY COMPANIES as of December 31, 1998 and 1997, and
the related statements of changes in net assets available for benefits, with
fund information, for each of the three years in the period ended December 31,
1998. These financial statements and the 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 net assets available for benefits, with fund
information, of the Employees Savings Plan of Commonwealth Energy System and
Subsidiary Companies as of December 31, 1998 and 1997, and its changes in net
assets available for benefits, with fund information, for each of the three
years in the period ended December 31, 1998, 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 II 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 Informa-
tion in the statement of net assets available for benefits, with fund informa-
tion, and the statement of changes in net assets available for benefits, with
fund information, is presented for purposes of additional analysis rather than
to present the net assets available for benefits and changes in net assets
available for benefits 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
Boston, Massachusetts
April 26, 1999
<PAGE>
<PAGE 5>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998
(Page 1 of 5)
FUND INFORMATION
Commonwealth Vanguard
Energy System Prime
Common Share Money Market
Total Fund Fund
Assets
Investments, at quoted market
value (Schedule I):
Common Shares of
Commonwealth Energy System $106,740,442 $106,740,442 $ -
Registered investment
company shares 225,012,503 549,978 24,473,796
Total investments 331,752,945 107,290,420 24,473,796
Other assets:
Loans to participants 8,390,564 - -
Receivables -
Contributions 136,651 32,159 11,633
Interest 3,154 3,154 -
Exchanges in 53,869 53,869 -
Total other assets 8,584,238 89,182 11,633
Total assets 340,337,183 107,379,602 24,485,429
Liability
Accounts payable 88,204 88,204 -
Net assets available for
benefits $340,248,979 $107,291,398 $24,485,429
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 NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998
(Page 2 of 5)
FUND INFORMATION
Vanguard
Vanguard Short-Term Vanguard
Windsor II Corporate Wellington
Fund Fund Fund
Assets
Investments, at quoted market
value (Schedule I):
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 119,896,169 5,165,460 49,042,170
Total investments 119,896,169 5,165,460 49,042,170
Other assets:
Loans to participants - - -
Receivables -
Contributions 46,237 2,471 27,015
Interest - - -
Exchanges in - - -
Total other assets 46,237 2,471 27,015
Total assets 119,942,406 5,167,931 49,069,185
Liability
Accounts payable - - -
Net assets available for
benefits $119,942,406 $ 5,167,931 $49,069,185
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 NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998
(Page 3 of 5)
FUND INFORMATION
Vanguard
Vanguard Extended
International Market Vanguard
Growth Index Explorer
Fund Fund Fund
Assets
Investments, at quoted market
value (Schedule I):
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 10,447,020 6,500,818 2,586,920
Total investments 10,447,020 6,500,818 2,586,920
Other assets:
Loans to participants - - -
Receivables -
Contributions 6,643 4,422 2,269
Interest - - -
Exchanges in - - -
Total other assets 6,643 4,422 2,269
Total assets 10,453,663 6,505,240 2,589,189
Liability
Accounts payable - - -
Net assets available for
benefits $ 10,453,663 $ 6,505,240 $ 2,589,189
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 NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998
(Page 4 of 5)
FUND INFORMATION
Vanguard LifeStrategy Funds-
Conservative Moderate
Income Growth Growth
Fund Fund Fund
Assets
Investments, at quoted market
value (Schedule I):
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 707,856 849,482 2,335,510
Total investments 707,856 849,482 2,335,510
Other assets:
Loans to participants - - -
Receivables -
Contributions 278 240 1,228
Interest - - -
Exchanges in - - -
Total other assets 278 240 1,228
Total assets 708,134 849,722 2,336,738
Liability
Accounts payable - - -
Net assets available for
benefits $ 708,134 $ 849,722 $ 2,336,738
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 NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998
(Page 5 of 5)
FUND INFORMATION
Vanguard
LifeStrategy
Funds-
Growth Loan
Fund Fund
Assets
Investments, at quoted market
value (Schedule I):
Common Shares of
Commonwealth Energy System $ - $ -
Registered investment
company shares 2,457,324 -
Total investments 2,457,324 -
Other assets:
Loans to participants - 8,390,564
Receivables -
Contributions 2,056 -
Interest - -
Exchanges in - -
Total other assets 2,056 8,390,564
Total assets 2,459,380 8,390,564
Liability
Accounts payable - -
Net assets available for
benefits $ 2,459,380 $ 8,390,564
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 NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
(Page 1 of 5)
FUND INFORMATION
Commonwealth Vanguard
Energy System Prime
Common Share Money Market
Total Fund Fund
Assets
Investments, at quoted market
value:
Common Shares of
Commonwealth Energy System $ 88,626,418 $88,626,418 $ -
Registered investment
company shares 210,721,055 - 25,809,453
Total investments 299,347,473 88,626,418 25,809,453
Other assets:
Loans to participants 8,939,289 - -
Receivables -
Contributions 128,326 29,668 12,629
Loan repayments 99,893 12,701 6,259
Interest 2,064 2,064 -
Exchanges in 3,037 3,037 -
Total other assets 9,172,609 47,470 18,888
Total assets 308,520,082 88,673,888 25,828,341
Liability
Accounts payable 303,986 303,986 -
Net assets available for
benefits $308,216,096 $88,369,902 $25,828,341
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 NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
(Page 2 of 5)
FUND INFORMATION
Vanguard
Vanguard Short-Term Vanguard
Windsor II Corporate Wellington
Fund Fund Fund
Assets
Investments, at quoted market
value:
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 110,334,177 5,367,919 45,097,834
Total investments 110,334,177 5,367,919 45,097,834
Other assets:
Loans to participants - - -
Receivables -
Contributions 43,755 2,384 25,318
Loan repayments 41,578 788 34,598
Interest - - -
Exchanges in - - -
Total other assets 85,333 3,172 59,916
Total assets 110,419,510 5,371,091 45,157,750
Liability
Accounts payable - - -
Net assets available for
benefits $110,419,510 $ 5,371,091 $45,157,750
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 NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
(Page 3 of 5)
FUND INFORMATION
Vanguard
Vanguard Extended
International Market Vanguard
Growth Index Explorer
Fund Fund Fund
Assets
Investments, at quoted market
value:
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 9,471,899 6,914,193 2,940,817
Total investments 9,471,899 6,914,193 2,940,817
Other assets:
Loans to participants - - -
Receivables -
Contributions 6,669 3,593 1,927
Loan repayments 2,294 841 427
Interest - - -
Exchanges in - - -
Total other assets 8,963 4,434 2,354
Total assets 9,480,862 6,918,627 2,943,171
Liability
Accounts payable - - -
Net assets available for
benefits $ 9,480,862 $ 6,918,627 $ 2,943,171
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 NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
(Page 4 of 5)
FUND INFORMATION
Vanguard LifeStrategy Funds-
Conservative Moderate
Income Growth Growth
Fund Fund Fund
Assets
Investments, at quoted market
value:
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 455,415 841,499 1,836,746
Total investments 455,415 841,499 1,836,746
Other assets:
Loans to participants - - -
Receivables -
Contributions 5 91 897
Loan repayments 5 4 125
Interest - - -
Exchanges in - - -
Total other assets 10 95 1,022
Total assets 455,425 841,594 1,837,768
Liability
Accounts payable - - -
Net assets available for
benefits $ 455,425 $ 841,594 $ 1,837,768
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 NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
(Page 5 of 5)
FUND INFORMATION
Vanguard
LifeStrategy
Funds-
Growth Loan
Fund Fund
Assets
Investments, at quoted market
value:
Common Shares of
Commonwealth Energy System $ - $ -
Registered investment
company shares 1,651,103 -
Total investments 1,651,103 -
Other assets:
Loans to participants - 8,939,289
Receivables -
Contributions 1,390 -
Loan repayments 273 -
Interest - -
Exchanges in - -
Total other assets 1,663 8,939,289
Total assets 1,652,766 8,939,289
Liability
Accounts payable - -
Net assets available for
benefits $ 1,652,766 $ 8,939,289
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 CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1998
(Page 1 of 5)
FUND INFORMATION
Commonwealth Vanguard
Energy System Prime
Common Share Money Market
Total Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ 4,189,776 $ 4,189,776 $ -
Registered investment
company shares 20,241,324 - 1,367,123
Interest on participant loans 732,423 - -
25,163,523 4,189,776 1,367,123
Net appreciation (depreciation)
in fair value of investments 26,682,017 19,225,920 -
Contributions:
Employees 8,326,452 1,669,244 583,058
Employers 3,687,825 813,575 315,139
12,014,277 2,482,819 898,197
Total additions, net 63,859,817 25,898,515 2,265,320
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries 29,715,068 5,717,564 5,162,153
Asset transfers out to other
benefit providers 2,108,545 364,173 242,754
Purchase fees 3,321 - -
Total deductions 31,826,934 6,081,737 5,404,907
Net increase (decrease) prior to
interfund transfers 32,032,883 19,816,778 (3,139,587)
Interfund transfers - (895,282) 1,796,675
Net increase (decrease) 32,032,883 18,921,496 (1,342,912)
Net assets available for benefits:
Beginning of year 308,216,096 88,369,902 25,828,341
End of year $340,248,979 $107,291,398 $24,485,429
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 CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1998
(Page 2 of 5)
FUND INFORMATION
Vanguard
Vanguard Short-Term Vanguard
Windsor II Corporate Wellington
Fund Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 12,067,238 328,114 5,435,922
Interest on participant loans - - -
12,067,328 328,114 5,435,922
Net appreciation (depreciation)
in fair value of investments 5,447,187 15,129 (66,156)
Contributions:
Employees 2,943,261 152,303 1,734,284
Employers 1,257,753 76,092 742,099
4,201,014 228,395 2,476,383
Total additions, net 21,715,439 571,638 7,846,149
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries 9,837,779 1,242,491 4,136,722
Asset transfers out to other
benefit providers 1,050,152 39,336 309,495
Purchase fees - - -
Total deductions 10,887,931 1,281,827 4,446,217
Net increase (decrease) prior to
interfund transfers 10,827,508 (710,189) 3,399,932
Interfund transfers (1,304,612 507,029 511,503
Net increase (decrease) 9,522,896 (203,160) 3,911,435
Net assets available for benefits:
Beginning of year 110,419,510 5,371,091 45,157,750
End of year $119,942,406 $ 5,167,931 $49,069,185
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 CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1998
(Page 3 of 5)
FUND INFORMATION
Vanguard Extended
International Market Vanguard
Growth Index Explorer
Fund Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 208,699 525,149 24,346
Interest on participant loans - - -
208,699 525,149 24,346
Net appreciation (depreciation)
in fair value of investments 1,366,607 (71,726) 106,283
Contributions:
Employees 485,436 350,392 170,702
Employers 201,695 133,449 62,376
687,131 483,841 233,078
Total additions, net 2,262,437 937,264 363,707
Deductions from net assets
attributed to:
Benefits paid to participants or
beneficiaries 608,342 664,830 350,589
Asset transfers out to other
benefit providers 56,825 13,882 -
Purchase fees - 3,321 -
Total deductions 665,167 682,033 350,589
Net increase (decrease) prior to
interfund transfers 1,597,270 255,231 13,118
Interfund transfers (624,469) (668,618) (367,100)
Net increase (decrease) 972,801 (413,387) (353,982)
Net assets available for benefits:
Beginning of year 9,480,862 6,918,627 2,943,171
End of year $ 10,453,663 $ 6,505,240 $ 2,589,189
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 CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1998
(Page 4 of 5)
FUND INFORMATION
Vanguard LifeStrategy Funds-
Conservative Moderate
Income Growth Growth
Fund Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 48,584 45,581 103,771
Interest on participant loans - - -
48,584 45,581 103,771
Net appreciation (depreciation)
in fair value of investments 24,478 69,480 249,320
Contributions:
Employees 17,073 16,404 71,899
Employers 3,768 3,076 28,189
20,841 19,480 100,088
Total additions, net 93,903 134,541 453,179
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries 618,050 91,963 589,563
Asset transfers out to other
benefit providers - - 329
Purchase fees - - -
Total deductions 618,050 91,963 589,892
Net increase (decrease) prior to
interfund transfers (524,147) 42,578 (136,713)
Interfund transfers 776,856 (34,450) 635,683
Net increase (decrease) 252,709 8,128 498,970
Net assets available for benefits:
Beginning of year 455,425 841,594 1,837,768
End of year $ 708,134 $ 849,722 $ 2,336,738
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 CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1998
(Page 5 of 5)
FUND INFORMATION
Vanguard
LifeStrategy
Funds-
Growth Loan
Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ - $ -
Registered investment
company shares 86,797 -
Interest on participant loans - 732,423
86,797 732,423
Net appreciation (depreciation)
in fair value of investments 315,495 -
Contributions:
Employees 132,396 -
Employers 50,614 -
183,010 -
Total additions, net 585,302 732,423
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries 418,481 276,541
Asset transfers out to other
benefit providers 31,599 -
Purchase fees - -
Total deductions 450,080 276,541
Net increase (decrease) prior to
interfund transfers 135,222 455,882
Interfund transfers 671,392 (1,004,607)
Net increase (decrease) 806,614 (548,725)
Net assets available for benefits:
Beginning of year 1,652,766 8,939,289
End of year $ 2,459,380 $ 8,390,564
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 20>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1997
(Page 1 of 5)
FUND INFORMATION
Commonwealth Vanguard
Energy System Prime
Common Share Money Market
Total Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ 4,791,915 $ 4,791,915 $ -
Registered investment
company shares 17,162,911 - 1,518,535
Interest on participant loans 820,039 - -
22,774,865 4,791,915 1,518,535
Net appreciation (depreciation)
in fair value of investments 50,188,782 26,962,004 -
Contributions:
Employees 8,727,513 1,844,576 793,610
Employers 4,172,439 963,411 429,025
12,899,952 2,807,987 1,222,635
Total additions, net 85,863,599 34,561,906 2,741,170
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries 38,166,213 6,463,039 11,399,265
Purchase fees 11,503 - -
Total deductions 38,177,716 6,463,039 11,399,265
Net increase (decrease) prior to
interfund transfers 47,685,883 28,098,867 (8,658,095)
Interfund transfers - (14,815,594) 5,914,612
Net increase (decrease) 47,685,883 13,283,273 (2,743,483)
Net assets available for benefits:
Beginning of year 260,530,213 75,086,629 28,571,824
End of year $308,216,096 $ 88,369,902 $25,828,341
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 21>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1997
(Page 2 of 5)
FUND INFORMATION
Vanguard
Vanguard Short-Term Vanguard
Windsor II Corporate Wellington
Fund Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 10,063,826 345,842 3,866,494
Interest on participant loans - - -
10,063,826 345,842 3,866,494
Net appreciation (depreciation)
in fair value of investments 17,438,941 30,754 4,616,872
Contributions:
Employees 2,951,932 186,801 1,793,160
Employers 1,350,142 96,666 818,282
4,302,074 283,467 2,611,442
Total additions, net 31,804,841 660,063 11,094,808
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries 11,275,388 1,134,527 5,474,381
Purchase fees - - -
Total deductions 11,275,388 1,134,527 5,474,381
Net increase (decrease) prior to
interfund transfers 20,529,453 (474,464) 5,620,427
Interfund transfers 3,723,709 114,613 2,438,346
Net increase (decrease) 24,253,162 (359,851) 8,058,773
Net assets available for benefits:
Beginning of year 86,166,348 5,730,942 37,098,977
End of year $110,419,510 $ 5,371,091 $45,157,750
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 22>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1997
(Page 3 of 5)
FUND INFORMATION
Vanguard
Vanguard Extended
International Market Vanguard
Growth Index Explorer
Fund Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 410,854 467,053 283,422
Interest on participant loans - - -
410,854 467,053 283,422
Net appreciation (depreciation)
in fair value of investments (96,346) 839,872 40,357
Contributions:
Employees 588,069 289,009 156,631
Employers 264,637 129,120 65,369
852,706 418,129 222,000
Total additions, net 1,167,214 1,725,054 545,779
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries 1,142,796 507,308 198,883
Purchase fees - 11,503 -
Total deductions 1,142,796 518,811 198,883
Net increase (decrease) prior to
interfund transfers 24,418 1,206,243 346,896
Interfund transfers 201,916 678,067 281,489
Net increase (decrease) 226,334 1,884,310 628,385
Net assets available for benefits:
Beginning of year 9,254,528 5,034,317 2,314,786
End of year $ 9,480,862 $ 6,918,627 $ 2,943,171
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 23>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1997
(Page 4 of 5)
FUND INFORMATION
Vanguard LifeStrategy Funds-
Conservative Moderate
Income Growth Growth
Fund Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 21,161 41,796 81,732
Interest on participant loans - - -
21,161 41,796 81,732
Net appreciation (depreciation)
in fair value of investments 25,332 47,936 151,357
Contributions:
Employees 4,166 7,215 36,734
Employers 1,921 2,716 18,573
6,087 9,931 55,307
Total additions, net 52,580 99,663 288,396
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries 13,499 18,190 87,658
Purchase fees - - -
Total deductions 13,499 18,190 87,658
Net increase (decrease) prior to
interfund transfers 39,081 81,473 200,738
Interfund transfers 151,490 580,394 947,883
Net increase (decrease) 190,571 661,867 1,148,621
Net assets available for benefits:
Beginning of year 264,854 179,727 689,147
End of year $ 455,425 $ 841,594 $ 1,837,768
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 24>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1997
(Page 5 of 5)
FUND INFORMATION
Vanguard
LifeStrategy
Funds-
Growth Loan
Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ - $ -
Registered investment
company shares 62,196 -
Interest on participant loans - 820,039
62,196 820,039
Net appreciation (depreciation)
in fair value of investments 131,703 -
Contributions:
Employees 75,610 -
Employers 32,577 -
108,187 -
Total additions, net 302,086 820,039
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries 52,688 398,591
Purchase fees - -
Total deductions 52,688 398,591
Net increase (decrease) prior to
interfund transfers 249,398 421,448
Interfund transfers 814,035 (1,030,960)
Net increase (decrease) 1,063,433 (609,512)
Net assets available for benefits:
Beginning of year 589,333 9,548,801
End of year $ 1,652,766 $ 8,939,289
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 25>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1996
(Page 1 of 5)
FUND INFORMATION
Commonwealth Vanguard
Energy System Prime
Common Share Money Market
Total Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ 5,113,157 $ 5,113,157 $ -
Registered investment
company shares 11,654,177 - 1,408,836
Interest on participant loans 675,349 - -
17,442,683 5,113,157 1,408,836
Net appreciation (depreciation)
in fair value of investments 17,828,551 3,951,273 -
Contributions:
Employees 8,294,889 1,975,041 761,184
Employers 4,053,049 1,039,431 442,636
12,347,938 3,014,472 1,203,820
Total additions, net 47,619,172 12,078,902 2,612,656
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries 15,766,572 3,979,714 4,672,998
Purchase fees 9,498 - -
Total deductions 15,776,070 3,979,714 4,672,998
Net increase (decrease) prior to
interfund transfers 31,843,102 8,099,188 (2,060,342)
Interfund transfers - (8,751,780) 3,267,792
Net increase (decrease) 31,843,102 (652,592) 1,207,450
Net assets available for benefits:
Beginning of year 228,687,111 75,739,221 27,364,374
End of year $260,530,213 $ 75,086,629 $28,571,824
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 26>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1996
(Page 2 of 5)
FUND INFORMATION
Vanguard
Vanguard Short-Term Vanguard
Windsor II Corporate Wellington
Fund Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 6,056,337 346,159 2,893,328
Interest on participant loans - - -
6,056,337 346,159 2,893,328
Net appreciation (depreciation)
in fair value of investments 10,665,917 (92,444) 2,215,457
Contributions:
Employees 2,678,605 228,352 1,688,196
Employers 1,247,197 116,897 783,045
3,925,802 345,249 2,471,241
Total additions, net 20,648,056 598,964 7,580,026
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries 3,941,035 277,681 1,872,076
Purchase fees - - -
Total deductions 3,941,035 277,681 1,872,076
Net increase (decrease) prior to
interfund transfers 16,707,021 321,283 5,707,950
Interfund transfers 701,540 (469,744) 172,531
Net increase (decrease) 17,408,561 (148,461) 5,880,481
Net assets available for benefits:
Beginning of year 68,757,787 5,879,403 31,218,496
End of year $ 86,166,348 $ 5,730,942 $37,098,977
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 27>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1996
(Page 3 of 5)
FUND INFORMATION
Vanguard
Vanguard Extended
International Market Vanguard
Growth Index Explorer
Fund Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 396,605 369,401 116,347
Interest on participant loans - - -
396,605 369,401 116,347
Net appreciation (depreciation)
in fair value of investments 787,700 345,278 (57,811)
Contributions:
Employees 569,446 277,279 85,954
Employers 255,699 119,339 36,125
825,145 396,618 122,079
Total additions, net 2,009,450 1,111,297 180,615
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries 289,952 363,550 77,579
Purchase fees - 9,498 -
Total deductions 289,952 373,048 77,579
Net increase (decrease) prior to
interfund transfers 1,719,498 738,249 103,036
Interfund transfers 225,557 435,349 2,211,750
Net increase (decrease) 1,945,055 1,173,598 2,314,786
Net assets available for benefits:
Beginning of year 7,309,473 3,860,719 -
End of year $ 9,254,528 $ 5,034,317 $ 2,314,786
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 28>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1996
(Page 4 of 5)
FUND INFORMATION
Vanguard LifeStrategy Funds-
Conservative Moderate
Income Growth Growth
Fund Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ - $ - $ -
Registered investment
company shares 10,885 8,159 26,245
Interest on participant loans - - -
10,885 8,159 26,245
Net appreciation (depreciation)
in fair value of investments (3,056) 767 (3,545)
Contributions:
Employees 800 1,867 7,950
Employers 333 645 3,681
1,133 2,512 11,631
Total additions, net 8,962 11,438 34,331
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries - - -
Purchase fees - - -
Total deductions - - -
Net increase (decrease) prior to
interfund transfers 8,962 11,438 34,331
Interfund transfers 255,892 168,289 654,816
Net increase (decrease) 264,854 179,727 689,147
Net assets available for benefits:
Beginning of year - - -
End of year $ 264,854 $ 179,727 $ 689,147
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 29>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1996
(Page 5 of 5)
FUND INFORMATION
Vanguard
LifeStrategy
Funds-
Growth Loan
Fund Fund
Assets
Additions to net assets
attributed to:
Investment income
Dividends -
Common Shares of
Commonwealth Energy System $ - $ -
Registered investment
company shares 21,875 -
Interest on participant loans - 675,349
21,875 675,349
Net appreciation (depreciation)
in fair value of investments 19,015 -
Contributions:
Employees 20,215 -
Employers 8,021 -
28,236 -
Total additions, net 69,126 675,349
Deductions from net assets
attributed to:
Benefits paid to participants
or beneficiaries 79 291,908
Purchase fees - -
Total deductions 79 291,908
Net increase (decrease) prior to
interfund transfers 69,047 383,441
Interfund transfers 520,286 607,722
Net increase (decrease) 589,333 991,163
Net assets available for benefits:
Beginning of year - 8,557,638
End of year $ 589,333 $ 9,548,801
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 30>
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 (COM/Energy) and its subsidiary companies to assist employees in
adopting a regular savings program and to help employees by providing addi-
tional security for their retirement. The Plan has been amended or restated
from time to time thereafter. The latest Plan amendments became effective
January 1, 1998 and relate to changes in eligibility requirements and allow-
ance of rollovers from other qualified plans or Individual Retirement Accounts
to the Plan.
Vanguard Fiduciary Trust Company of Valley Forge, Pennsylvania, has acted
as Trustee for the Plan (Plan Trustee) since January 1, 1989. 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 COM/Energy and by the directors of its subsidiary compa-
nies. The Board is responsible (except for the duties specifically vested in
the Plan Trustee) for the administration of the Plan.
The term "Participant" as used in this report 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, wholly-owned
subsidiary companies of COM/Energy, as follows: Cambridge Electric Light
Company, Canal Electric Company, Commonwealth Gas Company, COM/Energy Services
Company, Commonwealth Electric Company, Advanced Energy Systems, Inc. (effec-
tive December 1996), COM/Energy Marketing, Inc. (effective May 1997) and
COM/Energy Technologies, Inc. (effective September 1997) (Employers).
The electric utility industry has continued to change in response to
legislative and regulatory mandates that are aimed at lowering prices for
energy by creating a more competitive marketplace. These pressures have
resulted in an increasing trend in the electric industry to seek competitive
advantages and other benefits through business combinations. On December 5,
1998, COM/Energy and BEC Energy (BEC), headquartered in Boston, Massachusetts,
entered into an Agreement and Plan of Merger (the Merger Agreement). Pursuant
to the Merger Agreement, COM/Energy and BEC will be merged into a new holding
company to be known as NSTAR. The regulatory approval process is expected to
be completed during the second half of 1999. Upon completion of the merger,
each Common Share of COM/Energy held by the Plan in the Commonwealth Energy
System Common Share Fund will be converted into 1.05 shares of NSTAR or $44.10
in cash (subject to certain restrictions) based on elections to be made by
Participants.
On December 30, 1998, COM/Energy sold substantially all of its electric
generating facilities to affiliates of Southern Energy New England, L.L.C., an
affiliate of The Southern Company of Atlanta, Georgia (Buyer). As a result of
this sale, approximately 150 Plan Participants transferred employment to the
Buyer. The Buyer has advised the Board that it will not accept a trustee-to-
trustee transfer (within the meaning of Section 414(1) of the Internal Revenue
Code (IRC)) of all assets from the Plan attributable to these Participants,
<PAGE>
<PAGE 31>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
and thus, COM/Energy continues to maintain the accounts of these Participants.
The Plan intends to file with the Internal Revenue Service (IRS) in 1999 for a
private letter ruling on whether the Plan may distribute to these Participants
amounts attributable to their elective contributions as a result of the sale
without adversely affecting the qualified status of the Plan's cash or
deferred arrangement under Section 401(k) of the IRC and of the Plan under
section 401(a) of the IRC.
Each eligible employee, upon joining the Plan, shall specify in one
percent (1%) increments his or her contributions and the applicable Employer
contributions to be invested in each of twelve separate Investment Funds
(Fund(s)) that are collectively referred to as the Trust Fund (Trust Fund).
The Trust Fund is described in Note 4.
Participants may change their Fund allocation contribution daily by
contacting Vanguard Participant Services. However, not more than fifty
percent (50%) of a Participant's contributions and the applicable Employer
contributions may be allocated to the Commonwealth Energy System Common Share
Fund.
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, the Omnibus Budget Reconciliation Act of 1993, and the
Taxpayer Relief Act of 1997 relating to plans of this type.
(2) Significant Accounting Policies
(a) Principles of Accounting
The financial statements of the Plan are prepared under the accrual method
of accounting. Shares in Funds of the Plan Trustee are valued at quoted
market prices that represent the net asset value of shares held by the Plan at
year-end. The Commonwealth Energy System Common Share Fund is valued at its
year-end closing market price and may include uninvested cash. Participant
loans are valued at cost which approximates fair value. 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 IRC and qualifies under
Section 401(a) and 401(k) of the IRC. The IRS has issued a favorable determi-
nation 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. The Board believes
that the Plan, as amended, 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 distributions are made.
<PAGE>
<PAGE 32>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
(c) Expenses
Brokerage fees, commissions, stock transfer taxes and other expenses in
connection with the purchase, sale or distribution of securities for each 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 Fund or Funds to which
the litigation relates. Expenses and charges incurred in the administration
of the Plan are generally paid by the Employers. An administrative fee
relating to the issuance of Plan loans under the Loan Fund is paid by Plan
Participants.
(d) Net Appreciation (Depreciation) in Fair Value of Investments
The net appreciation (depreciation) in fair value of investments as
provided for in the accompanying Statements of Changes in Net Assets Available
For Benefits, With Fund Information consists of the following:
Realized Gain (Loss) on Investments Sold or Distributed Realized gain
(loss) is the difference between the selling price of a Fund investment and
the average cost of that Fund investment. The average is based on revalued
and not historical cost. Under this method, the cost of a security is equal
to its market value at the beginning of the Plan year or its acquisition cost
if acquired during the Plan year.
Unrealized Appreciation (Depreciation) of Investments The Plan provides
that the market value of each Fund shall be determined by the Plan Trustee on
the last day of each month. Unrealized appreciation (depreciation) is the
difference between the market value of a Fund investment at the beginning of
the Plan year or its acquisition cost if acquired during the Plan year.
A summary of realized gains (losses) on investments sold or distributed
and the change in unrealized appreciation (depreciation) for the years ended
December 31, 1998, 1997 and 1996 is set forth below:
Unrealized
Realized Appreciation
Investment Funds Gain (Loss) (Depreciation) Total
1998
Commonwealth Energy System
Common Share Fund $ 670,595 $18,555,325 $19,225,920
Vanguard Windsor II Fund 1,314,973 4,132,214 5,447,187
Vanguard Short-Term Corporate Fund 4,523 10,606 15,129
Vanguard Wellington Fund 343,349 (409,505) (66,156)
Vanguard International Growth Fund 207,044 1,159,563 1,366,607
Vanguard Extended Market Index Fund (58,103) (13,623) (71,726)
Vanguard Explorer Fund 24,239 82,044 106,283
Vanguard LifeStrategy Income Fund (8,099) 32,577 24,478
Vanguard LifeStrategy Conservative
Growth Fund 4,695 64,785 69,480
Vanguard LifeStrategy Moderate
Growth Fund 29,409 219,911 249,320
Vanguard LifeStrategy Growth Fund 33,283 282,212 315,495
$2,565,908 $24,116,109 $26,682,017
<PAGE>
<PAGE 33>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
Unrealized
Realized Appreciation
Investment Funds Gain (Loss) (Depreciation) Total
1997
Commonwealth Energy System
Common Share Fund $1,021,874 $25,940,130 $26,962,004
Vanguard Windsor II Fund 2,555,813 14,883,128 17,438,941
Vanguard Short-Term Corporate Fund 182 30,572 30,754
Vanguard Wellington Fund 796,997 3,819,875 4,616,872
Vanguard International Growth Fund 148,803 (245,149) (96,346)
Vanguard Extended Market Index Fund 103,366 736,506 839,872
Vanguard Explorer Fund 62,805 (22,448) 40,357
Vanguard LifeStrategy Income Fund 4,249 21,083 25,332
Vanguard LifeStrategy Conservative
Growth Fund 5,349 42,587 47,936
Vanguard LifeStrategy Moderate
Growth Fund 25,112 126,245 151,357
Vanguard LifeStrategy Growth Fund 15,555 116,148 131,703
$4,740,105 $45,448,677 $50,188,782
1996
Commonwealth Energy System
Common Share Fund $ 675,475 $ 3,275,798 $ 3,951,273
Vanguard Windsor II Fund 892,747 9,773,170 10,665,917
Vanguard Short-Term Corporate Fund (26,387) (66,057) (92,444)
Vanguard Wellington Fund 212,439 2,003,018 2,215,457
Vanguard International Growth Fund 158,799 628,901 787,700
Vanguard Extended Market Index Fund 61,829 283,449 345,278
Vanguard Explorer Fund (10,001) (47,810) (57,811)
Vanguard LifeStrategy Income Fund (396) (2,660) (3,056)
Vanguard LifeStrategy Conservative
Growth Fund 594 173 767
Vanguard LifeStrategy Moderate
Growth Fund - (3,545) (3,545)
Vanguard LifeStrategy Growth Fund 1,605 17,410 19,015
$1,966,704 $15,861,847 $17,828,551
(e) Income Recognition
Income of the Commonwealth Energy 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 percentage of the Partici-
pant's units in the Funds and is allocated daily. Purchases and sales of
investments are recorded on a trade-date basis. Interest income is accrued
when earned. Dividend income is recorded on the ex-dividend date. Capital
gain distributions are included in dividend income.
<PAGE>
<PAGE 34>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
(3) Participating Companies and Contributions
Generally, the Plan permits Participants to make contributions of at least
one percent (1%) but not more than sixteen (16%) of their compensation as
defined in the Plan. Effective January 1, 1998, the maximum amount a Partici-
pant may defer annually was increased to $10,000 from $9,500 previously. This
amount is 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 compen-
sated in whole or in part by commissions, compensation shall be considered to
equal ninety percent (90%) of the average compensation earned by such employee
in the preceding four calendar quarters but not less than each employee's
authorized basic compensation. Salary deferral contributions by employees are
made to the Plan by payroll deduction. The Employer contributes an additional
amount equal to each employee's contribution, up to a maximum of four percent
(4%) of each employee's basic compensation rate, as previously defined, and up
to five percent (5%) for those employees no longer eligible for postretirement
health benefits.
Effective January 1, 1998, any employee, except an employee who is
classified as a "temporary employee," who was not a Member of the Plan as of
December 31, 1997, is eligible to participate in the Plan on January 1, 1998.
A regular employee who is hired after December 31, 1997 will become eligible
to participate in the Plan on the first day of the second month following his
or her initial date of employment. The employer matching contribution will
not begin until the first day of the month that follows the employee's
completion of one full year of eligibility service (completion of one-thousand
(1,000) hours of service in a twelve-month period). Previously, employees
were eligible to join the Plan upon completion of their eligibility service.
A Participant is fully vested in and has a nonforfeitable right to the value
of his or her Member, Pay Deferral and Company Accounts at all times.
Any eligible employee may change his or her contribution percentage as of
the first day of any month by contacting Vanguard Participant Services by the
fifteenth day of the preceding month.
Effective January 1, 1998, an employee may file a written request with the
Board for approval of a rollover cash contribution from another qualified plan
or Individual Retirement Account to the Plan, as further discussed in "Invest-
ment Funds Accounts" below.
<PAGE>
<PAGE 35>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
The participating COM/Energy companies' Employer and Employee contribu-
tions (including $186,695 of employee-related rollovers in 1998 from other
qualified plans or distributions from conduit Individual Retirement Accounts)
for the years ended December 31, 1998, 1997 and 1996 are summarized below:
Employee Contributions
1998 1997 1996
Cambridge Electric Light Company $ 721,894 $ 654,877 $ 658,553
Canal Electric Company 661,110 661,950 684,476
Commonwealth Electric Company 3,357,604 3,693,090 3,814,155
Commonwealth Gas Company 2,709,731 2,682,350 2,134,806
COM/Energy Services Company 681,707 998,047 1,002,899
Advanced Energy Systems, Inc. 28,797 19,209 -
COM/Energy Technologies, Inc. 79,717 - -
COM/Energy Marketing, Inc. 85,892 17,990 -
$8,326,452 $8,727,513 $8,294,889
Employer Contributions
1998 1997 1996
Cambridge Electric Light Company $ 293,779 $ 302,097 $ 310,388
Canal Electric Company 243,993 256,419 260,990
Commonwealth Electric Company 1,435,294 1,672,192 1,788,366
Commonwealth Gas Company 1,312,318 1,366,255 1,108,006
COM/Energy Services Company 334,396 558,343 585,299
Advanced Energy Systems, Inc. 11,009 6,784 -
COM/Energy Technologies, Inc. 19,958 - -
COM/Energy Marketing, Inc. 37,078 10,349 -
$3,687,825 $4,172,439 $4,053,049
Participation by employees is voluntary and may begin as of the first day
of any month by notifying the respective employer in writing on or before the
fifteenth day of the preceding month coincident with or next following
eligibility. Of the 1,694 individuals eligible to participate at December 31,
1998, 1,634 (96.5%) Participants were active and fully vested in the Plan.
(4) Investments
(a) Description of Investment Funds
Effective October 27, 1998, several Vanguard fund names were simplified
or clarified and were not the result of changes in fund management, in fund
policies or objectives, in the Plan, or in the investment options under the
Plan. The following is a description of the twelve Investment Funds in which
a Participant may allocate his or her contributions and matching Employer
contributions:
Commonwealth Energy System Common Share Fund - Consists of Common Shares
of Beneficial Interest of Commonwealth Energy System purchased on the open
market with employee and Employer contributions, dividends and interest
<PAGE>
<PAGE 36>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
income. The Trustee, at its discretion, will determine the manner in which
such shares may be acquired. The Fund provides the possibility of long-term
growth through increases in the market value of the Common Shares and the
reinvestment of dividends and interest. Participants may not allocate more
than fifty percent (50%) of their contributions to this Fund.
Vanguard Prime Money Market Fund - (formerly, "Vanguard Money Market
Reserves-Prime Portfolio") A mutual fund that seeks the highest level of
income consistent with maintaining a stable share price of $1. 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 relation-
ships. The fund invests in short-term, high-quality money market instruments
issued by financial institutions, nonfinancial corporations, the U.S. govern-
ment and federal agencies. Its holdings may include certificates of deposit,
bank-guaranteed securities, corporate notes, other money market instruments,
U.S. Treasury and government agency securities and repurchase agreements on
such securities. The average maturity of the fund's holdings will be 90 days
or less.
Vanguard Windsor II Fund - A mutual fund that seeks long-term growth of
capital and income from dividends. As a secondary objective, the fund seeks a
reasonable level of current income. The fund invests in a diversified group
of out-of-favor stocks of large capitalization companies. The stocks that
comprise the fund sell at prices below the overall market average compared to
their dividend income and future return potential.
Vanguard Short-Term Corporate Fund - (formerly, "Vanguard Fixed Income
Securities Fund-Short-Term Corporate Portfolio") A mutual fund that seeks
income while maintaining a high degree of stability of principal. The fund
invests in short-term bonds, including investment-grade corporate and U.S.
Treasury securities. It maintains an average maturity of two to three years
to reduce the risk of share-price fluctuations in response to changing
interest rates.
Vanguard Wellington Fund - A mutual fund that seeks income and long-term
growth of capital without undue risk to capital. The fund's assets are
divided between common stocks and bonds, with an average of 65% of assets in
stocks and 35% in bonds. The fund invests in dividend-paying large- and mid-
capitalization stocks of well-established companies whose prospects are
improving, but whose values have yet to be recognized in the marketplace. The
objective is to identify these companies before their values are recognized in
the marketplace.
Vanguard International Growth Fund - (formerly, "Vanguard Internation-
al Growth Portfolio") A mutual fund that seeks long-term growth of capital by
investing in stocks of high-quality companies based outside the United States.
The fund invests 60% to 70% of its assets in companies with sustainable
competitive advantages and strong prospects for long-term growth. To supple-
ment these core holdings and boost its allocations to particularly attractive
markets, the fund also invests in large stocks in those markets that are
expected to have particularly strong near-term returns.
<PAGE>
<PAGE 37>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
Vanguard Extended Market Index Fund - (formerly, "Vanguard Index Trust -
Extended Market Portfolio") A mutual fund that seeks long-term growth of
capital that attempts to match the performance of the Wilshire 4500 Equity
Index, an unmanaged index consisting primarily of mid- and small-capitaliza-
tion companies. The fund invests in a large sample of stocks that matches
certain characteristics of the index such as industry weightings, market
capitalization and dividend yield. Fund transaction costs, consisting of
bid/ask spreads, commissions and market impact, are not reflected in the
performance of market indexes. To minimize tracking errors and to allocate
these costs equitably, the fund assesses a 0.25% transaction fee on shares
purchased.
Vanguard Explorer Fund - A mutual fund that seeks long-term growth of
capital by investing in a diversified group of small-company stocks with
prospects for above-average growth.
Vanguard LifeStrategy Funds - Consists of four funds that attempt to
maximize total investment return (i.e. capital growth and income), subject to
different investment guidelines and asset allocation policies. These Funds
invest in other Vanguard mutual funds, representing different combinations of
stocks, bonds and cash reserves, and reflecting varying degrees of investment
risk and reward. The four funds are:
The Income Fund seeks a high level of income.
The Conservative Growth Fund seeks a high level of income and moderate
long-term growth of capital and income.
The Moderate Growth Fund seeks to provide a reasonable level of income
and long-term growth of capital and income.
The Growth Fund seeks to provide long-term growth of capital and income.
(b) Investment Funds Accounts
The 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 Board also main-
tains 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 Fund that 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.
Effective January 1, 1998, a Participant may request to rollover an
"eligible rollover distribution" as defined in Section 402(c)(4) of the IRC
from a qualified plan or a distribution from a conduit Individual Retirement
Account to the Plan. The Board will maintain a separate Rollover Account for
each Participant and all Participants are fully vested in their Rollover
Account at all times.
<PAGE>
<PAGE 38>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
The Plan Trustee may, at its discretion, temporarily invest funds desig-
nated 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 invest-
ments 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 daily 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 that produced such interest, dividends and
other income.
(5) Party in Interest
COM/Energy is a "party in interest" as that term is defined in Section
3.14 of ERISA.
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 Commonwealth Energy System Common Share Fund as one of
their investment options. These transactions are reflected in the accompany-
ing financial statements at market value and are net of brokerage commissions
relating to the acquisition of these securities.
During the years ended December 31, 1998, 1997 and 1996, 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 Share Fund
Shares Shares Sold / Distributed
Purchased Cost Shares Aggregate Value
1998 179,601 $6,570,462 209,450 $3,187,551
1997 198,067 4,667,158 721,145 10,862,830
1996 258,747 9,134,782 453,158 8,876,352
The Plan Trustee also represents a party in interest to the Plan due to
the Plan's investments in Funds of the Plan Trustee.
(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 BankBoston, N.A. on the first day of the quarter preceding the loan
request plus one percent. Participants may choose a repayment period of one
<PAGE>
<PAGE 39>
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
to five years. For the years 1998, 1997 and 1996, the interest rates ranged
from 8.75% to 9.50%.
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.
(7) Reportable Transactions
Under ERISA, transactions which, individually or in the aggregate with
the same issuer, exceed five percent (5%) of the current value of Plan assets
at the beginning of the Plan year are "reportable transactions." Details of
these reportable transactions are set forth in Schedule II of this report.
(8) Amendment and Termination
COM/Energy expects the Plan to be permanent, but since future conditions
affecting the Plan cannot be anticipated or foreseen, COM/Energy reserves the
right by action of the Board of Trustees of COM/Energy and Boards of Directors
of the Participating Companies to terminate or amend the Plan in whole or in
part at any time and from time to time. In addition, by action only of the
Board's officers, each of the Participating Companies may make any modifica-
tions or amendments to the Plan that are necessary or appropriate to maintain
the Plan as a plan meeting the requirements of Section 401 of the IRC, or any
other applicable provisions of the IRC as now in effect, or hereafter amended,
or the provisions of ERISA and the regulations or rulings issued thereunder.
Notwithstanding the foregoing, it shall be impossible for any part of the
Trust Fund, after the payment of expenses, to be used for or diverted to any
purpose other than for the exclusive benefit of the Participants or their
beneficiaries, either by amendment, operation or termination of the Plan, or
by other means. COM/Energy does not expect to terminate the Plan. However,
as discussed in Note 1, COM/Energy expects to merge with BEC Energy during the
second half of 1999 and this event could have an impact on the Plan.
Upon termination of the Plan or upon permanent discontinuance of contri-
butions under the Plan, the interest of each person having an interest in the
Trust Fund shall be determined as of that date. The interest of each such
person in the Trust Fund shall be set aside by the Plan Trustee for the
special account of such Participant or his or her beneficiary. Thereafter,
after payments of expenses, distribution shall be made in accordance with the
provisions of the Plan.
<PAGE>
<PAGE 40>
Schedule I
Employer Identification
Number: 04-1662010
Plan Number: 091187
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
ITEM 27A: SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
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* 2,635,566 $ 44,103,918 $106,740,442
Temporary Investments -
Vanguard Prime Money Market Fund* 549,978 549,978 549,978
44,653,896 107,290,420
Vanguard Funds*:
Prime Money Market Fund 24,473,796 24,473,796 24,473,796
Windsor II Fund 4,016,622 85,295,607 119,896,169
Short-Term Corporate Fund 476,518 5,138,293 5,165,460
Wellington Fund 1,670,943 41,742,494 49,042,170
International Growth Fund 556,581 8,856,032 10,447,020
Extended Market Index Fund 212,306 5,613,395 6,500,818
Explorer Fund 45,617 2,528,465 2,586,920
LifeStrategy Income Fund 53,544 659,290 707,856
LifeStrategy Conservative
Growth Fund 57,749 748,043 849,482
LifeStrategy Moderate
Growth Fund 138,524 2,029,074 2,335,510
LifeStrategy Growth Fund 130,778 2,080,152 2,457,324
Total Vanguard Funds 179,164,641 224,462,525
Total Investments $223,818,537 $331,752,945
Loans to Participants (rates of 8.75% - 9.50%) $ 8,390,564 $ 8,390,564
* Represent parties in interest to the Plan
The accompanying notes are an integral part of this schedule.
<PAGE>
<PAGE 41>
Schedule II
Employer Identification
Number: 04-1662010
Plan Number: 091187
EMPLOYEES SAVINGS PLAN
OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES
ITEM 27D: SCHEDULE OF REPORTABLE TRANSACTIONS (a)
FOR THE YEAR ENDED DECEMBER 31, 1998
Purchase
PURCHASES Price
Vanguard Prime Money Market Fund (b) $21,748,519
Vanguard Windsor II Fund (b) 28,977,676
Vanguard Wellington Fund (b) 12,896,873
Commonwealth Energy System
Common Share Fund (b) 15,841,051
Selling Historical Historical
SALES Price Cost Gain
Vanguard Prime Money Market Fund (b) $23,084,177 $23,084,177 $ -
Vanguard Windsor II Fund (b) 24,862,870 19,034,451 5,828,419
Vanguard Wellington Fund (b) 8,886,380 7,167,289 1,719,091
Commonwealth Energy System
Common Share Fund (b) 16,135,264 9,791,744 6,343,520
(a) Fund investments with transactions or a series of transactions in excess
of five percent (5%) of the current value of the Plan's assets as of the
beginning of the Plan year.
(b) Represent parties in interest to the Plan
The accompanying notes are an integral part of this schedule.
