SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _________________
Commission file number 1-14766
Connecticut Natural Gas Corporation Union Employee Savings Plan
P. O. Box 1500
Hartford, CT 06144-1500
(Full title of the plan and address of the plan, if different from
that of the issuer named below)
Energy East Corporation
P. O. Box 12904
Albany, NY 12212-2904
(Name and address of issuer of the securities held pursuant to
the plan and the address of its principal executive office)
REQUIRED INFORMATION
The Connecticut Natural Gas Corporation Union Employee Savings Plan ("Plan") is subject to the Employee Retirement Income Security Act of 1974 ("ERISA"). Therefore, in lieu of the requirements of Items 1-3 of Form 11-K, the financial statements and schedules of the Plan for the two fiscal years ended December 31, 2000 and 1999, which have been prepared in accordance with the financial reporting requirements of ERISA, are attached hereto as Appendix 1 and incorporated herein by reference .
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Committee to administer the Connecticut Natural Gas Corporation Union Employee Savings Plan has duly caused this Annual Report to be signed on its behalf by the undersigned hereunto duly authorized.
Connecticut Natural Gas Corporation Union Employee Savings Plan
By | /s/Vincent L. Ammann | June 15, 2001 |
Vincent L. Ammann | ||
By | /s/Richard R. Benson | June 15, 2001 |
Richard R. Benson | ||
By | /s/Joseph L. Vicidomino | June 15, 2001 |
Joseph L. Vicidomino |
APPENDIX 1
CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
FINANCIAL STATEMENTS AT AND
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
SUPPLEMENTAL SCHEDULE AT DECEMBER 31, 2000
AND REPORT OF THE INDEPENDENT ACCOUNTANTS
Connecticut Natural Gas Corporation
Union Employee Savings Plan
Year Ended December 31, 2000
INDEX
Report of Independent Accountants | 1 |
Statements of Net Assets Available for Benefits -- |
|
Statements of Changes in Net Assets Available for Benefits - |
|
Notes to Financial Statements | 4 |
Line 4i, Schedule H - Schedule of Assets Held for Investment Purposes -- |
|
Consent of Independent Accountants | 11 |
Other supplemental schedules required by the regulations of the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the Connecticut Natural Gas Corporation
Union Employee Savings Plan
In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Connecticut Natural Gas Corporation Union Employee Savings Plan (the "Plan") at December 31, 2000, and the changes in net assets available for benefits for the year ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held for investment purposes is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
The financial statements of the Plan as of December 31, 1999, and for the year then ended, were audited by other independent accountants whose report dated June 1, 2000, expressed an unqualified opinion on those statements.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2001
Connecticut Natural Gas Corporation
Union Employee Savings Plan
Statements of Net Assets Available for Benefits
December 31, 2000 and 1999
2000 | 1999 | |
Assets | ||
Investments, at fair value | $25,349,040 | $24,368,937 |
Participant loans | 625,730 | 514,582 |
Cash and temporary investments | 34,499 | 12,853 |
Total investments | 26,009,269 | 24,896,372 |
Accounts receivable from broker | 556 | - |
Liabilities | ||
Accounts payable to broker | 20,381 | 11,119 |
Net assets available for benefits | $25,989,444 | $24,885,253 |
The accompanying notes are an integral part of these financial statements.
Connecticut Natural Gas Corporation
Union Employee Savings Plan
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2000 and 1999
2000 | 1999 | |
Additions to net assets attributed to: | ||
Dividends and interest income | $2,018,439 | $1,675,594 |
Realized gains related to investments, net | 1,837,663 | 706,062 |
Unrealized appreciation of investments | - | 2,419,204 |
Contributions: | ||
Employees | 1,105,893 | 984,553 |
Employer | 490,230 | 485,807 |
Total contributions | 1,596,123 | 1,470,360 |
Transfers from Employee Savings Plan | - | 33,009 |
Total additions | 5,452,225 | 6,304,229 |
Deductions: | ||
Benefits paid to participants | 1,359,512 | 1,303,488 |
Loan distributions | 1,340 | 14,100 |
Unrealized depreciation of investments | 2,942,644 | - |
Transfers to Employee Savings Plan | 23,754 | - |
Other, net | 20,784 | 59,849 |
Total deductions | 4,348,034 | 1,377,437 |
Net increase during year | 1,104,191 | 4,926,792 |
Net assets available for benefits: |
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|
|
|
|
The accompanying notes are an integral part of these financial statements.
Connecticut Natural Gas Corporation
Union Employee Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
1. DESCRIPTION OF THE PLAN
The following description of the Connecticut Natural Gas Corporation Union Employee Savings Plan (the "Plan") is provided for general information purposes only. More complete information regarding the Plan's provisions may be found in the Plan document.
General
The Plan is a defined contribution thrift plan open to union employees of CTG Resources, Inc. (the "Company") and its subsidiaries and affiliates. Effective September 1, 2000, the Company was merged into and became a wholly-owned subsidiary of Energy East Corporation ("Energy East"), in accordance with an agreement and plan to merge (the "Merger") the Company entered into with Energy East in June 1999.
The Plan was established by the Company under the provisions of Section 401(a) of the Internal Revenue Code (the "IRC"), and it includes a qualified cash or deferred arrangement as described in Section 401(k) of the IRC for the benefit of eligible employees of the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). The Plan Administrator is the Company, and the Board of Directors of Energy East appointed an Administrative Committee to serve as manager of the Plan. Putnam Fiduciary Trust Company ("Putnam"), trustee of the Plan, holds the Plan's investments and executes transactions therein.
Eligibility
Effective July 1, 1999, employees are eligible to participate in the Plan in the first payroll period beginning on or after the first day of the month following the employee's date of employment if at least age 21, are employed full time, and are covered by a collective bargaining agreement between the Company and any union which provides for participation in the Plan.
Prior to July 1, 1999, employees were eligible to participate in the Plan if they were at least age 21, employed by the Company for one year or more, completed 1,000 hours or more of service in a twelve-month period beginning with date of hire, were employed for 20 or more hours per week, and were covered by a collective bargaining agreement between the Company and any union which provided for participation in the Plan.
The number of employees participating in the Plan at December 31, 2000 and 1999 were 312 and 315, respectively.
Contributions
Eligible employees may elect to participate in the Plan and authorize payroll deductions of not less than 1% and not greater than 16% of basic earnings as savings contributions to their accounts during each year, subject to the limits under Section 415 of the IRC.
Connecticut Natural Gas Corporation
Union Employee Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
1. DESCRIPTION OF THE PLAN (Continued)
Contributions (Continued)
The Company will match a percentage of an employee's compensation depending on age or years of continuous service. The amount of the Company contribution will be determined according to the schedule below. However, if an employee's elected savings allotment is less than the percentage contained in the schedule, the Company will match no more than the percentage contributed by the employee.
As of December 31, 2000, if an employee's:
Years of Continuous Service | or | Age is | The Company Will Contribute |
20 | 45 | 4-1/2% of compensation | |
10 | 35 | 3% of compensation | |
Less than 10 | Under 35 | 2% of compensation |
An exception to the above schedule exists for those Plan participants subject to the collective bargaining agreement between the Company and the employees in its Greenwich division. Each such participant who, as of April 1, 1998, had either (1) attained age 50 or (2) completed 30 years of continuous service is grandfathered with respect to a previous Plan provision entitling such individual to a matching contribution of up to 6% of compensation or the amount of the participant's contribution, if less.
Investment Options
Plan participants direct their contributions among various investment options in 5% increments, and they may elect to change their investment options at any time. The investment options include shares in mutual funds and common collective trusts managed by Putnam and shares of Energy East common stock.
All Company matching contributions are invested in the participant-directed Common Stock Fund. Beginning on March 1, 1996, and continuing on a quarterly basis through October 1, 1999, the Plan Administrator directed that portions of the non-participant-directed Common Stock Fund be transferred to the participant-directed Common Stock Fund based upon a predetermined schedule. Following these transfers, Plan participants had the discretion of investing the transferred shares of common stock in the same manner as the other amounts under their direction in the various participant directed funds, with the result that all amounts in the Plan became participant directed effective October 1, 1999.
In addition to transfers between various investment options as noted above resulting from investment elections made by Plan participants, transfers are also made to or from the Employee Savings Plan for those employees who transfer to (from) the Company's non-union payroll.
Connecticut Natural Gas Corporation
Union Employee Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
1. DESCRIPTION OF THE PLAN (Continued)
Investment Options (Continued)
Effective with the merger with Energy East, each participant received, in accordance with the provisions of the Merger agreement, $41 in cash or a combination of cash and Energy East common stock in exchange for each share of the Company's common stock.
Vesting
Effective with the consummation of the Merger, all participants became fully vested in the Company's matching contributions and earnings thereon without regard to the number of years of continuous service.
All participants are fully vested in their contributions and the earnings thereon. New participants are vested in the Company matching contributions and the earnings thereon as follows:
Years of Continuous Service |
| ||
Less than 1 | 0% | ||
1 but less than 2 | 20% | ||
2 but less than 3 | 40% | ||
3 but less than 4 | 60% | ||
4 but less than 5 | 80% | ||
5 or more | 100% |
Participants also become fully vested in their Company matching contribution account if any one of the following occurs:
- Death
- Disability
- Attainment of age 65 (normal retirement date)
- Total or partial termination of the Plan
- Discontinuance of Company contributions to the Plan
Upon termination of employment before full vesting, the non-vested Company match portion of a participant's common stock account shall be forfeited after five years if the participant is not rehired and applied as a credit against the employer's future contributions.
Benefits
Upon termination of employment due to retirement, disability, or death, a participant (or his/her beneficiary) may elect to receive a lump-sum distribution equal to the value of the participant's vested interest in his/her account as soon as practicable following the termination date or defer the distribution to some future date.
Connecticut Natural Gas Corporation
Union Employee Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
1. DESCRIPTION OF THE PLAN (Continued)
Benefits (Continued)
Participants may request the withdrawal of certain account balances prior to termination of employment. Application for withdrawal of after-tax contributions and employee IRA contributions may be made once a year. There are no Plan penalties for such withdrawals.
Participant Notes Receivable
The Plan has a participant loan provision under which a Plan participant may borrow a minimum of $1,000 up to a maximum of one-half of the participant's vested account balance or $50,000, less the highest outstanding loan balance in the prior twelve months, whichever is less. Each loan carries an interest rate of prime plus 1%, established on the first day of the calendar quarter in which the loan is made. Security for each loan is provided by one-half of the Plan participant's vested account balance. Two types of loans are available to Plan participants-"general purpose" and "principal residence" loans. Full repayment of each of these types of loans is required within five and fifteen years following loan origination, respectively, and loan refinancing is not permitted. All loans require level amortization with principal and interest payments made at least quarterly, and for those Plan participants who are active employees, payments are made ratably through payroll deductions. No Plan participant may have more than one "general purpose" loan and one "principal residence" loan outstanding at any time.
Participant Accounts
Individual accounts are maintained for each of the Plan's participants to reflect the participant's share of the Plan's income, the participant's and the Company's contributions, and the participant's loan(s), if applicable. Allocations of Plan income are based on the share balances in the participants' accounts.
Related Party Transactions
The Plan's investments are comprised primarily of shares in mutual funds and common collective trusts managed by Putnam and shares of common stock of Energy East. As Putnam is the trustee of the Plan and Energy East is the employer of Plan participants, transactions in these investment vehicles qualify as party-in-interest transactions.
Connecticut Natural Gas Corporation
Union Employee Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared on the accrual basis of accounting. The preparation of financial statements in conformity with accounting principles generally accepted in the United States and the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.
Income Recognition
Dividend income is recorded on the ex-dividend date. Interest income is recorded as earned.
Investment Valuation
The Plan's investments are reflected at fair value. The shares of the Common Stock Fund and the Putnam mutual funds and common collective trusts owned by the Plan, with the exception of the Putnam Stable Value Fund, are valued at market as determined by the quoted market prices as of the last business day of the year. The Putnam Stable Value Fund is valued at contract value (cost plus accumulated earnings) which approximates fair value. Purchases and sales of securities are reflected on a trade date basis. Realized and unrealized appreciation presented in the accompanying statements of changes in net assets available for benefits are computed based on the change in the current value of the Plan assets from year to year.
Administrative Expenses
Administrative expenses of the Plan may be paid by either the Company or the Plan. During 2000 and 1999, the Company paid all administrative expenses relating to the Plan.
Reclassifications
Certain amounts have been reclassified on the financial statements to conform with the 2000 presentation.
Plan Termination
Although the Company has not expressed any intent to terminate the Plan, it has the right to discontinue contributions at any time and terminate the Plan subject to the provisions of the plan document. In the event of termination of the Plan, the net assets of the Plan are set aside, first for payment of all Plan expenses and, second, for distribution to the participants, based upon the balances in their individual accounts.
Connecticut Natural Gas Corporation
Union Employee Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
3. INVESTMENTS
The fair market values of individual assets that represent 5% or more of the Plan's net assets at December 31, 2000 and 1999 are as follows:
2000 | 1999 | |
Energy East Corporation common stock | $5,359,992 | - |
CTG Resources, Inc. common stock | - | $10,317,449 |
The Putnam Fund for Growth and Income | $4,717,214 | $5,162,899 |
The George Putnam Fund of Boston | $1,660,212 | $1,853,602 |
Putnam Vista Fund | $5,704,656 | $4,534,115 |
Putnam Stable Value Fund | $4,979,343 | - |
Putnam International Growth Fund | $1,333,936 | - |
4. INCOME TAX STATUS
In 1994 the Plan was amended and restated to meet the requirements of the Tax Reform Act of 1986, and the Plan received a favorable determination letter from the Internal Revenue Service dated October 24, 1994. The Plan has been amended since receiving the determination letter, including an amendment and restatement effective January 1, 2000, to incorporate all prior amendments and federal legislation affecting pension plans ("GUST" amendments). The Plan Administrator and management believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. Therefore, they believe that the Plan was qualified and the related trust was tax-exempt through the year ended December 31, 2000. Accordingly, no provision for taxes has been made in the accompanying financial statements.
5. CONCENTRATION OF CREDIT RISK
The Plan's assets are invested in mutual funds and common collective trusts managed by Putnam and the common stock of Energy East. In the event of any uncertainties in the financial marketplace, the Plan may be exposed to financial risks.
6. SUMMARY OF INFORMATION CERTIFIED BY TRUSTEE
Information certified by the Plan's trustee, Putnam Fiduciary Trust Company, as of December 31, 2000, and for the year then ended includes cash and cash equivalents, investments at cost and fair market value, participant notes receivable, investment income, contributions by the employer and participants, benefits paid to participants, and net realized and unrealized gains and losses on investments.
Connecticut Natural Gas Corporation
Union Employee Savings Plan
Line 4i, Schedule H - Schedule of Assets Held for Investment Purposes
December 31, 2000
| Description of Investment Including |
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| |
*The George Putnam Fund of | Mutual fund comprised of common stocks |
| |
*The Putnam Fund for Growth and Income | Mutual fund comprised of common |
| |
*Putnam Vista Fund | Mutual fund comprised of common |
| |
*Putnam International Growth Fund | Mutual fund comprised of common |
| |
*Putnam Income Fund | Mutual fund comprised of government and |
| |
*Putnam Investors Fund | Mutual fund comprised of common |
| |
*Putnam S&P 500 Index Fund | Common collective trust comprised of |
| |
*Participant loans | Varying interest rates from |
| |
*Energy East Corporation | Common stock | 5,359,992 | |
TBC Inc. | Daily Liquidity Fund | 34,499 | |
Total common stock fund | 5,394,491 | ||
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* Denotes a party-in-interest as of December 31, 2000.
** All investments are participant directed. Disclosure of cost information is not applicable.
The accompanying notes are an integral part of this schedule.
Consent of Independent Accountants
We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-45082) pertaining to the Connecticut Natural Gas Corporation Union Employee Savings Plan of our report dated June 15, 2001, with respect to the financial statements and schedule of the Connecticut Natural Gas Corporation Union Employee Savings Plan for the year ended December 31, 2000, which report is included in this Annual Report on Form 11-K.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2001