SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1997
Commission file number: 1-1920
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Baltimore Gas and Electric Company
Employee Savings Plan
Address same as issuer
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
Baltimore Gas and Electric Company
Gas and Electric Building, Charles Center
Baltimore, Maryland 21201
1
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
BALTIMORE GAS AND ELECTRIC COMPANY
EMPLOYEE SAVINGS PLAN
/s/ Richard D. Honaker
Date: June 25, 1998 By:___________________________________
Richard D. Honaker
Plan Administrator
2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrator of the
Baltimore Gas and Electric Company
Employee Savings Plan
We have audited the accompanying statement of net assets available
for benefits of the Baltimore Gas and Electric Company Employee Savings
Plan (the Plan) as of December 31, 1997 and the related statement of
changes in net assets available for benefits for the year then ended. 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 audit. The financial statements of the Baltimore Gas and Electric
Company Employee Savings Plan as of December 31, 1996, were audited by
other auditors whose report dated May 16,1997, expressed an unqualified
opinion on those statements.
We conducted our audit 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 audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of
the Plan as of December 31, 1997, and the changes in net assets available
for benefits for the year then ended in conformity with generally accepted
accounting principles.
Our audit was performed for the purpose of forming an opinion on
the basic financial statements taken as a whole. The supplemental schedules
of assets held for investment purposes and reportable transactions for the
year ended December 31, 1997 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but
are supplementary information required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. The Fund information in the statements of net
assets available for benefits and the statement of changes in net assets
available for benefits 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 audit of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Mitchell & Titus L.L.P.
Washington, DC
June 4, 1998
3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectuses of
Baltimore Gas and Electric Company on Forms S-8 (File Nos. 33-56084,
33-59545 and 333-45051) and Forms S-3 (File Nos. 33-57658, 33-49801,
33-33559, 333-22697, 333-32311, 333-53767 and 33-45260) of our report
dated June 4, 1998 on the financial statements and supplemental
schedules of the Baltimore Gas and Electric Company Employee Savings
Plan for the year ended December 31, 1997, which report is included in
this Annual Report on Form 11-K.
/s/ Mitchell & Titus L.L.P.
Washington, D.C.
June 4, 1998
4
Page 1 of 2
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Net Assets Available for Benefits
December 31, 1997
Investment Funds
BGE Common Interest Income Mutual
Total Stock Fund Fund Funds Loan Fund
-------------- -------------- ---------------------------- --------------
Assets
Value of securities
held in trust $534,496,187 $362,505,984 $0 $171,990,203 $0
Value of guaranteed
investment contracts 101,752,619 0 101,752,619 0 0
Loans outstanding to
plan participants 28,589,210 0 0 0 28,589,210
Short-term investments 20,505,491 170,150 20,319,172 16,169 0
Accrued dividends
receivable 4,338,636 4,338,636 0 0 0
Accrued interest
receivable 566 0 0 0 566
Accounts receivable 446,338 446,338 0 0 0
-------------- -------------- ---------------------------- --------------
Total 690,129,047 367,461,108 122,071,791 172,006,372 28,589,776
-------------- -------------- ---------------------------- --------------
Liabilities
Accounts payable 195,526 618 194,908 0 0
-------------- -------------- ---------------------------- --------------
Total 195,526 618 194,908 0 0
-------------- -------------- ---------------------------- --------------
Net assets available
for benefits $689,933,521 $367,460,490 $121,876,883 $172,006,372 $28,589,776
============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
(continued next page)
5
Page 2 of 2
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Net Assets Available for Benefits
December 31, 1997
(Continued)
Mutual Funds
Total T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price
Mutual Balanced Equity Growth Small Cap International
Funds Fund Income Fund Stock Fund Value Fund Stock Fund
-------------- ---------------------------- -------------- ----------------------------
Assets
Value of securities
held in trust $171,990,203 $7,241,838 $82,168,550 $45,262,623 $27,026,476 $10,290,716
Value of guaranteed
investment contracts 0 0 0 0 0 0
Loans outstanding to
plan participants 0 0 0 0 0 0
Short-term investments 16,169 0 5,411 4,685 3,991 2,082
Accrued dividends
receivable 0 0 0 0 0 0
Accrued interest
receivable 0 0 0 0 0 0
Accounts receivable 0 0 0 0 0 0
-------------- ---------------------------- -------------- ----------------------------
Total 172,006,372 7,241,838 82,173,961 45,267,308 27,030,467 10,292,798
-------------- ---------------------------- -------------- ----------------------------
Liabilities
Accounts payable 0 0 0 0 0 0
-------------- ---------------------------- -------------- ----------------------------
Total 0 0 0 0 0 0
-------------- ---------------------------- -------------- ----------------------------
Net assets available
for benefits $172,006,372 $7,241,838 $82,173,961 $45,267,308 $27,030,467 $10,292,798
============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
6
Page 1 of 2
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Net Assets Available for Benefits
December 31, 1996
Investment Funds
BGE Common Interest Income Mutual
Total Stock Fund Fund Funds Loan Fund
-------------- -------------- ---------------------------- --------------
Assets
Value of securities
held in trust $393,177,651 $293,158,104 $0 $100,019,547 $0
Value of guaranteed
investment contracts 117,977,728 0 117,977,728 0 0
Loans outstanding to
plan participants 28,521,694 0 0 0 28,521,694
Short-term investments 4,892,749 93,924 4,768,894 29,931 0
Accrued dividends
receivable 4,360,607 4,360,572 0 35 0
Accrued interest
receivable 7,381 0 7,057 0 324
Accounts receivable 204,724 202,201 1,959 564 0
-------------- -------------- ---------------------------- --------------
Total 549,142,534 297,814,801 122,755,638 100,050,077 28,522,018
-------------- -------------- ---------------------------- --------------
Liabilities
Accounts payable 30,690 0 30,690 0 0
-------------- -------------- ---------------------------- --------------
Total 30,690 0 30,690 0 0
-------------- -------------- ---------------------------- --------------
Net assets available
for benefits $549,111,844 $297,814,801 $122,724,948 $100,050,077 $28,522,018
============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
(continued next page)
7
Page 2 of 2
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Net Assets Available for Benefits
December 31, 1996
(Continued)
Mutual Funds
Total T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price
Mutual Balanced Equity Growth Small Cap International
Funds Fund Income Fund Stock Fund Value Fund Stock Fund
-------------- ---------------------------- -------------- ----------------------------
Assets
Value of securities
held in trust $100,019,547 $3,251,223 $53,071,111 $25,691,149 $11,561,539 $6,444,525
Value of guaranteed
investment contracts 0 0 0 0 0 0
Loans outstanding to
plan participants 0 0 0 0 0 0
Short-term investments 29,931 204 15,753 9,907 3,175 892
Accrued dividends
receivable 35 0 11 24 0 0
Accrued interest
receivable 0 0 0 0 0 0
Accounts receivable 564 0 288 276 0 0
-------------- ---------------------------- -------------- ----------------------------
Total 100,050,077 3,251,427 53,087,163 25,701,356 11,564,714 6,445,417
-------------- ---------------------------- -------------- ----------------------------
Liabilities
Accounts payable 0 0 0 0 0 0
-------------- ---------------------------- -------------- ----------------------------
Total 0 0 0 0 0 0
-------------- ---------------------------- -------------- ----------------------------
Net assets available
for benefits $100,050,077 $3,251,427 $53,087,163 $25,701,356 $11,564,714 $6,445,417
============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
8
Page 1 of 4
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997
Investment Funds
BGE Common Interest Income Mutual
Total Stock Fund Fund Funds Loan Fund
-------------- -------------- ---------------------------- --------------
Additions and Net
Investment Activity
- -------------------
Contributions:
Participant eligible
pay contributions $30,793,196 $7,760,915 $6,924,097 $16,108,184 $0
Net Participant rollover
contributions 461,112 59,435 5,840 395,837 0
Employer matching
contributions
Company stock fund 9,641,095 9,641,095 0 0 0
-------------- -------------- ---------------------------- --------------
40,895,403 17,461,445 6,929,937 16,504,021 0
-------------- -------------- ---------------------------- --------------
Income:
Dividends
Stock 31,201,128 15,239,780 0 15,961,348 0
Employee stock account 2,521,116 2,521,116 0 0 0
Interest 7,395,150 51,690 7,343,460 0 0
Interest on participant loans 2,540,609 0 0 0 2,540,609
-------------- -------------- ---------------------------- --------------
43,658,003 17,812,586 7,343,460 15,961,348 2,540,609
-------------- -------------- ---------------------------- --------------
Participant loan repayments 0 6,161,652 3,230,575 5,154,864 (14,547,091)
-------------- -------------- ---------------------------- --------------
0 6,161,652 3,230,575 5,154,864 (14,547,091)
-------------- -------------- ---------------------------- --------------
Participant interfund
transfers (net) 0 (24,105,775) (5,407,252) 29,513,027 0
-------------- -------------- ---------------------------- --------------
0 (24,105,775) (5,407,252) 29,513,027 0
-------------- -------------- ---------------------------- --------------
The accompanying notes are an integral part of the financial statements.
(continued on next page)
9
Page 2 of 4
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997
(Continued)
Investment Funds
BGE Common Interest Income Mutual
Total Stock Fund Fund Funds Loan Fund
-------------- -------------- ---------------------------- --------------
Additions and Net
Investment Activity (Continued)
- -------------------------------
Net appreciation
of investments:
Net appreciation
of common stock $78,944,467 $78,944,467 $0 $0 $0
Net appreciation
of mutual funds 14,446,526 0 0 14,446,526 0
-------------- -------------- ---------------------------- --------------
93,390,993 78,944,467 0 14,446,526 0
-------------- -------------- ---------------------------- --------------
Total additions and net
investment activity 177,944,399 96,274,375 12,096,720 81,579,786 (12,006,482)
-------------- -------------- ---------------------------- --------------
Distributions:
Withdrawal and distribution
payments to participants (37,122,722) (20,981,891) (10,108,584) (5,586,587) (445,660)
Loans to participants 0 (5,646,795) (2,836,201) (4,036,904) 12,519,900
-------------- -------------- ---------------------------- --------------
Total Distributions (37,122,722) (26,628,686) (12,944,785) (9,623,491) 12,074,240
-------------- -------------- ---------------------------- --------------
Change in net assets 140,821,677 69,645,689 (848,065) 71,956,295 67,758
Net assets available
for benefits,
beginning of year 549,111,844 297,814,801 122,724,948 100,050,077 28,522,018
-------------- -------------- ---------------------------- --------------
Net assets available
for benefits,
end of year $689,933,521 $367,460,490 $121,876,883 $172,006,372 $28,589,776
============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
10
Page 3 of 4
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997
(Continued)
Mutual Funds
Total T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price
Mutual Balanced Equity Growth Small Cap International
Funds Fund Income Fund Stock Fund Value Fund Stock Fund
-------------- ---------------------------- -------------- ----------------------------
Additions and Net
Investment Activity
- -------------------
Contributions:
Participant eligible
pay contributions $16,108,184 $923,212 $5,973,535 $4,553,007 $2,898,233 $1,760,197
Net Participant rollover
contributions 395,837 24,970 108,734 203,400 29,249 29,484
-------------- ---------------------------- -------------- ----------------------------
16,504,021 948,182 6,082,269 4,756,407 2,927,482 1,789,681
-------------- ---------------------------- -------------- ----------------------------
Income:
Dividends 15,961,348 237,726 7,909,644 5,548,590 1,720,334 545,054
Interest 0 0 0 0 0 0
0
-------------- ---------------------------- -------------- ----------------------------
15,961,348 237,726 7,909,644 5,548,590 1,720,334 545,054
-------------- ---------------------------- -------------- ----------------------------
Participant loan repayments 5,154,864 294,799 2,007,716 1,457,240 836,170 558,939
-------------- ---------------------------- -------------- ----------------------------
5,154,864 294,799 2,007,716 1,457,240 836,170 558,939
-------------- ---------------------------- -------------- ----------------------------
Participant interfund
transfers (net) 29,513,027 2,305,383 8,587,423 7,818,259 8,744,960 2,057,002
-------------- ---------------------------- -------------- ----------------------------
29,513,027 2,305,383 8,587,423 7,818,259 8,744,960 2,057,002
-------------- ---------------------------- -------------- ----------------------------
The accompanying notes are an integral part of the financial statements.
(continued on next page)
11
Page 4 of 4
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997
(Continued)
Mutual Funds
Total T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price
Mutual Balanced Equity Growth Small Cap International
Funds Fund Income Fund Stock Fund Value Fund Stock Fund
-------------- ---------------------------- -------------- ----------------------------
Additions and Net
Investment Activity (Continued)
- -------------------------------
Appreciation (depreciation)
of mutual funds
Net Appreciation (depreciation)
of mutual funds 14,446,526 629,485 9,070,273 2,526,215 2,685,419 (464,866)
-------------- ---------------------------- -------------- ----------------------------
14,446,526 629,485 9,070,273 2,526,215 2,685,419 (464,866)
-------------- ---------------------------- -------------- ----------------------------
Total additions and net
investment activity 81,579,786 4,415,575 33,657,325 22,106,711 16,914,365 4,485,810
-------------- ---------------------------- -------------- ----------------------------
Distributions:
Withdrawal and distribution
payments to participants (5,586,587) (241,661) (2,822,808) (1,354,296) (863,021) (304,801)
Loans to participants (4,036,904) (183,503) (1,747,719) (1,186,463) (585,591) (333,628)
-------------- ---------------------------- -------------- ----------------------------
Total Distributions (9,623,491) (425,164) (4,570,527) (2,540,759) (1,448,612) (638,429)
-------------- ---------------------------- -------------- ----------------------------
Change in net assets 71,956,295 3,990,411 29,086,798 19,565,952 15,465,753 3,847,381
Net assets available
for benefits,
beginning of year 100,050,077 3,251,427 53,087,163 25,701,356 11,564,714 6,445,417
-------------- ---------------------------- -------------- ----------------------------
Net assets available
for benefits,
end of year $172,006,372 $7,241,838 $82,173,961 $45,267,308 $27,030,467 $10,292,798
============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
12
Page 1 of 4
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
Investment Funds
BGE Common Interest Income Mutual
Total Stock Fund Fund Funds Loan Fund
-------------- -------------- ---------------------------- --------------
Additions and Net
Investment Activity
- -------------------
Contributions:
Participant eligible
pay contributions $28,845,671 $9,051,141 $8,129,378 $11,665,152 $0
Net Participant rollover
contributions 229,886 43,286 (3,783) 190,383 0
Employer matching
contributions
Company stock fund 9,277,360 9,277,360 0 0 0
-------------- -------------- ---------------------------- --------------
38,352,917 18,371,787 8,125,595 11,855,535 0
-------------- -------------- ---------------------------- --------------
Income:
Dividends
Stock 20,804,696 14,683,322 0 6,121,374 0
Employee stock account 2,649,952 2,649,952 0 0 0
Interest 7,432,666 0 7,432,666 0 0
Interest on participant loans 2,381,539 0 0 0 2,381,539
-------------- -------------- ---------------------------- --------------
33,268,853 17,333,274 7,432,666 6,121,374 2,381,539
-------------- -------------- ---------------------------- --------------
Participant loan repayments 0 6,055,069 3,399,940 3,154,697 (12,609,706)
-------------- -------------- ---------------------------- --------------
0 6,055,069 3,399,940 3,154,697 (12,609,706)
-------------- -------------- ---------------------------- --------------
Participant interfund
transfers (net) 0 (6,413,726) (8,817,834) 15,231,560 0
-------------- -------------- ---------------------------- --------------
0 (6,413,726) (8,817,834) 15,231,560 0
-------------- -------------- ---------------------------- --------------
The accompanying notes are an integral part of the financial statements.
(continued on next page)
13
Page 2 of 4
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
(Continued)
Investment Funds
BGE Common Interest Income Mutual
Total Stock Fund Fund Funds Loan Fund
-------------- -------------- ---------------------------- --------------
Additions and Net
Investment Activity (Continued)
- -------------------------------
Net appreciation (depreciation) of investments:
Net depreciation
of common stock ($19,127,092) ($19,127,092) $0 $0 $0
Net appreciation
of mutual funds 8,955,933 0 0 8,955,933 0
-------------- -------------- ---------------------------- --------------
(10,171,159) (19,127,092) 0 8,955,933 0
-------------- -------------- ---------------------------- --------------
Total additions and net
investment activity 61,450,611 16,219,312 10,140,367 45,319,099 (10,228,167)
-------------- -------------- ---------------------------- --------------
Distributions:
Withdrawal and distribution
payments to participants (33,203,684) (20,603,805) (9,500,502) (2,371,482) (727,895)
Loans to participants 0 (6,368,561) (3,930,867) (3,081,473) 13,380,901
-------------- -------------- ---------------------------- --------------
Total Distributions (33,203,684) (26,972,366) (13,431,369) (5,452,955) 12,653,006
-------------- -------------- ---------------------------- --------------
Change in net assets 28,246,927 (10,753,054) (3,291,002) 39,866,144 2,424,839
Net assets available
for benefits,
beginning of year 520,864,917 308,567,855 126,015,950 60,183,933 26,097,179
-------------- -------------- ---------------------------- --------------
Net assets available
for benefits,
end of year $549,111,844 $297,814,801 $122,724,948 $100,050,077 $28,522,018
============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
14
Page 3 of 4
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
(Continued)
Mutual Funds
Total T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price
Mutual Balanced Equity Growth Small Cap International
Funds Fund Income Fund Stock Fund Value Fund Stock Fund
-------------- ---------------------------- -------------- ----------------------------
Additions and Net
Investment Activity
- -------------------
Contributions:
Participant eligible
pay contributions $11,665,152 $600,174 $4,769,721 $3,413,443 $1,731,528 $1,150,286
Net Participant rollover
contributions 190,383 31,676 28,917 32,770 57,853 39,167
-------------- ---------------------------- -------------- ----------------------------
11,855,535 631,850 4,798,638 3,446,213 1,789,381 1,189,453
-------------- ---------------------------- -------------- ----------------------------
Income:
Dividends 6,121,374 110,169 3,242,525 2,023,973 572,581 172,126
Interest 0 0 0 0 0 0
0
-------------- ---------------------------- -------------- ----------------------------
6,121,374 110,169 3,242,525 2,023,973 572,581 172,126
-------------- ---------------------------- -------------- ----------------------------
Participant loan repayments 3,154,697 143,491 1,443,879 888,894 409,116 269,317
-------------- ---------------------------- -------------- ----------------------------
3,154,697 143,491 1,443,879 888,894 409,116 269,317
-------------- ---------------------------- -------------- ----------------------------
Participant interfund
transfers (net) 15,231,560 1,060,740 3,970,718 3,162,090 4,136,137 2,901,875
-------------- ---------------------------- -------------- ----------------------------
15,231,560 1,060,740 3,970,718 3,162,090 4,136,137 2,901,875
-------------- ---------------------------- -------------- ----------------------------
The accompanying notes are an integral part of the financial statements.
(continued on next page)
15
Page 4 of 4
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
(Continued)
Mutual Funds
Total T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price
Mutual Balanced Equity Growth Small Cap International
Funds Fund Income Fund Stock Fund Value Fund Stock Fund
-------------- ---------------------------- -------------- ----------------------------
Additions and Net
Investment Activity (Continued)
- -------------------------------
Appreciation
of mutual funds
Net Appreciation
of mutual funds 8,955,933 198,204 5,189,263 2,044,904 1,104,691 418,871
-------------- ---------------------------- -------------- ----------------------------
8,955,933 198,204 5,189,263 2,044,904 1,104,691 418,871
-------------- ---------------------------- -------------- ----------------------------
Total additions and net
investment activity 45,319,099 2,144,454 18,645,023 11,566,074 8,011,906 4,951,642
-------------- ---------------------------- -------------- ----------------------------
Distributions:
Withdrawal and distribution
payments to participants (2,371,482) (44,262) (1,603,271) (540,132) (127,370) (56,447)
Loans to participants (3,081,473) (96,193) (1,588,167) (939,085) (299,126) (158,902)
-------------- ---------------------------- -------------- ----------------------------
Total Distributions (5,452,955) (140,455) (3,191,438) (1,479,217) (426,496) (215,349)
-------------- ---------------------------- -------------- ----------------------------
Change in net assets 39,866,144 2,003,999 15,453,585 10,086,857 7,585,410 4,736,293
Net assets available
for benefits,
beginning of year 60,183,933 1,247,428 37,633,578 15,614,499 3,979,304 1,709,124
-------------- ---------------------------- -------------- ----------------------------
Net assets available
for benefits,
end of year $100,050,077 $3,251,427 $53,087,163 $25,701,356 $11,564,714 $6,445,417
============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
16
BALTIMORE GAS AND ELECTRIC COMPANY
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. GENERAL DESCRIPTION OF THE PLAN
Baltimore Gas and Electric Company (the Company), established the
Baltimore Gas and Electric Company Employee Savings Plan (Plan) and Trust
Agreement on July 1, 1978. T. Rowe Price Trust Company (T. Rowe Price) is
the trustee (Trustee). In addition, TRP Retirement Plan Services, Inc.,
is the provider of administrative services for the Plan.
The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). Employees become eligible to make
contributions one month after date of hire (three months in the case of
employees of certain subsidiaries of the Company). After meeting this
eligibility requirement, participants are allowed to contribute up to
15% of their eligible pay through regular payroll deductions, under a
deferred compensation option and/or a thrift option. Participant
contributions under the deferred compensation option are excluded from
current year's taxable income, whereas participant contributions under
the thrift option are included in current year's taxable income. The
Company contributes one-half of the first 6% of eligible pay contributed
by participants.
The Plan accepts rollovers of employees' eligible rollover
distributions from other qualified plans.
There are seven investment fund choices offered for participant
contributions: the BGE Common Stock Fund, the Interest Income Fund and
five mutual funds. The Interest Income Fund is managed by T. Rowe Price
Stable Asset Management, Inc. The mutual funds consist of the T. Rowe
Price Balanced Fund, the T. Rowe Price Equity Income Fund, the T. Rowe
Price Growth Stock Fund, the T. Rowe Price Small Cap Value Fund and the
T. Rowe Price International Stock Fund (mutual funds). Effective January
1, 1998, four additional T. Rowe Price Mutual Funds (the T. Rowe Price
New Income Fund, the T. Rowe Price Equity Index Fund, the T. Rowe Price
Mid-Cap Growth Fund and the T. Rowe Price New Horizons Fund) were added
to the Plan, increasing the number of investment options to eleven. All
Company contributions are initially invested by the Trustee in the BGE
Common Stock Fund.
17
1. GENERAL DESCRIPTION OF THE PLAN (Continued)
Participant and Company matching contributions are sent, each pay
period, to the Trustee, who invests participant contributions as
designated, either in (1) the BGE Common Stock Fund for the purchase (in
the open market) or other acquisition (as described in Note 2) of shares
of the Company's common stock; (2) the T. Rowe Price Balanced Fund, the
T. Rowe Price Equity Income Fund, the T. Rowe Price Growth Stock Fund,
the T. Rowe Price Small Cap Value Fund and the T. Rowe Price
International Stock Fund for the purchase of mutual fund shares; or (3)
the Interest Income Fund, as more fully described below.
Dividends and earnings received on any shares held in participants'
accounts, except for the shares of Company common stock held in their
employee stock accounts, whether in the BGE Common Stock Fund, or the
mutual funds are automatically used to purchase or otherwise acquire
additional shares for reinvestment in the corresponding fund, and all
earnings on each participant's investment in the Interest Income Fund
are automatically reinvested in that fund.
Dividends received on shares of Company common stock held in a
participant's employee stock account are invested by the Trustee in
income-producing investments. Annually, a check is sent to the
participant representing the total dividends credited to the
participant's employee stock account. Any income earned on the dividends
is not paid out annually, but is used to purchase or otherwise acquire
additional shares of Company common stock for reinvestment in the
participant's employee stock account.
The total number of common stock or mutual fund shares purchased
for any participant depends upon: (1) the participant's eligible pay;
(2) the amount of the participant's eligible pay that is contributed;
(3) the amount of that contribution which is designated for investment
in the BGE Common Stock Fund or the mutual funds; (4) the amount of
Company matching contributions invested in the BGE Common Stock Fund;
(5) the reinvested dividends and earnings on each investment fund; and
(6) the price of common stock or mutual fund shares, at the time of
purchase, for each investment fund.
18
1. GENERAL DESCRIPTION OF THE PLAN (Continued)
Amounts held in the Interest Income Fund are invested in contracts
issued by insurance companies or other financial institutions and in
short term investments. Each contract specifies a fixed or variable rate
of interest for a certain period of time. The interest rate earned by the
Interest Income Fund is a blend of the rates under the various
investments. The annual effective rates for 1997 and 1996 were 6.26% and
6.25%, respectively. The crediting interest rates as of December 31, 1997
and 1996 were 6.65% and 6.24%, respectively. The crediting interest rate
as of December 31, 1996 has been recalculated to conform with the current
year's presentation. At December 31, 1997 and 1996, there were no
investments in the aggregate contracts of any issuer in the Interest
Income Fund which exceeded 5% of net assets available for benefits.
Contracts included in the Interest Income Fund have been reported at
their contract value, which approximates fair market value. All the
investments in this fund are held for purposes other than trading.
Participants have the right, once a month, to change the amount of
their payroll deductions. Participants also have the right to change, on
a daily basis, the percentage of their future contributions being
invested in each of the seven investment funds as provided in the Plan.
In addition, participants are allowed to initiate, on a daily
basis, a transfer of the value of their contributions, including
earnings, among the seven investment funds. Furthermore, as of the
beginning of the calendar year in which participants reach age 56, they
may initiate, on a daily basis, a transfer of the value of their Company
contributions and employee stock account among the seven investment
funds.
Under a loan program, participants may borrow up to one-half of
their total account balance, with a minimum of $1,000 and a maximum of
$50,000. Participants may elect up to five years to repay the loan,
unless the loan is used for the purchase of a principal residence, in
which case they may elect up to thirty years for repayment. Participants
are allowed to have up to two loans outstanding at any time. Principal
and interest are repaid through regular payroll deductions or by direct
payment. The interest rate on amounts borrowed is set at the time the
loan is executed and remains in effect for the duration of the loan. The
interest rate for loans is equal to the prime rate plus 1% on the last
day of the month preceding the month the loan is initiated.
19
1. GENERAL DESCRIPTION OF THE PLAN (Continued)
The Plan allows participants to postpone, until withdrawal or
distribution, any income tax liability on (1) all Company contributions;
(2) participant contributions under the deferred compensation option;
and (3) earnings on their contributions and Company contributions.
Participant contributions under the thrift option are included in
current year's taxable income.
Withdrawals of thrift contributions and Company contributions,
including earnings, are allowed to be initiated on a daily basis. All
contributions held in participants accounts are immediately 100% vested.
However, participants who withdraw unmatured basic contributions
(contributions of up to the first 6% of the participant's eligible pay
that had not remained in the Plan for two full calendar years) are
suspended from making payroll contributions to the Plan for twelve
months.
Distributions to participants who retire or terminate active
employment are automatically deferred until they either reach age 65 or
cease active employment, whichever is later, unless they request an
earlier or later distribution. Generally, participants who reach age 70
1/2 must begin receiving their Plan distribution by April 1 of the
following year. Furthermore, active employees who attain age 59 1/2 may
request to receive a distribution of their deferred compensation account
balances.
The Plan is administered by the Director - Benefits, Human
Resources Division of the Company, as Plan Administrator. Administrative
fees charged by institutions which issue contracts for the Interest
Income Fund are reflected in the effective rate earned by the fund. All
other fees and expenses of the Plan, including those of the Trustee, are
currently paid by the Company. Brokerage fees, commissions and transfer
taxes associated with the purchase, sale, or transfer of shares of common
stock for the BGE Common Stock Fund and mutual fund shares for the five
mutual funds are borne by those funds.
Although it has not expressed any intent to do so, the Company has
the right under the Plan to discontinue its contributions at any time
and to terminate the Plan subject to the provisions of ERISA.
On September 25, 1995, the Company and Potomac Electric Power
Company (PEPCO) announced plans to merge into a new company,
Constellation Energy Corporation (CEC). On December 22, 1997, both
companies announced that they had mutually terminated the merger
agreement.
20
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Plan are prepared under the accrual
method of accounting.
Shares of common stock for participant contributions and Company
matching contributions currently are purchased for the BGE Common Stock
Fund on the open market, through new issuances or by other acquisition.
Mutual fund shares for the T. Rowe Price Mutual Funds are purchased on
the open market, except that the Trustee purchases from time to time a
small number of shares at current market value from participants making
withdrawals or interfund transfers or obtaining loans from the Plan. The
cost of shares sold from the BGE Common Stock Fund and the T. Rowe Price
Mutual Funds, as a result of participant distributions, withdrawals,
interfund transfers or loans, is determined under the average cost
method.
Withdrawals and distributions to participants are recorded when
paid.
Leveraging provisions are included in the Plan, but these
provisions have not yet been utilized.
Shares of common stock in the BGE Common Stock Fund held by T. Rowe
Price Trust Company are valued as of December 31, 1997 and 1996, using
the quoted closing market price as reported by the "NYSE--Composite
Transactions" published in the eastern edition of The Wall Street
Journal. Mutual fund shares held in the T. Rowe Price Mutual Funds, are
valued as of December 31, 1997 and 1996 respectively, using the net
asset value price of such shares as quoted by the "Mutual Fund
Quotations" for such date in the eastern edition of The Wall Street
Journal. Participant loans are valued at cost which approximates fair
value.
The Plan's investments are stated at fair value except for the
various contracts issued by insurance companies or other financial
institutions, under the Interest Income Fund, which are fully
benefit-responsive and are stated at contract value. Contract value is
equal to the aggregate of the net contributions and earnings thereon.
The Plan presents in the Statement of Changes in Net Assets
Available for Benefits the net appreciation (depreciation) in the fair
value of its investments which consists of realized gains or losses and
unrealized appreciation (depreciation) on those investments.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from
those estimates.
21
3. SECURITIES HELD IN TRUST
Shown below are the shares, with respective market value and cost,
which were held in trust in the BGE Common Stock Fund and the mutual
funds on December 31, 1997 and 1996.
SHARES HELD MARKET
IN TRUST VALUE COST
BGE COMMON STOCK FUND
December 31, 1997 10,624,752 $362,505,984 $226,205,259
December 31, 1996 10,959,230 $293,158,104 $226,257,846
T. ROWE PRICE BALANCED FUND
December 31, 1997 437,838 $7,241,838 $6,474,294
December 31, 1996 224,532 $3,251,223 $3,043,531
T. ROWE PRICE EQUITY INCOME FUND
December 31, 1997 3,151,843 $82,168,550 $66,812,537
December 31, 1996 2,354,543 $53,071,111 $45,160,499
T. ROWE PRICE GROWTH STOCK FUND
December 31, 1997 1,561,318 $45,262,623 $40,949,796
December 31, 1996 981,339 $25,691,149 $23,209,582
T. ROWE PRICE SMALL CAP VALUE FUND
December 31, 1997 1,154,978 $27,026,476 $23,821,921
December 31, 1996 591,081 $11,561,539 $10,602,330
T. ROWE PRICE INTERNATIONAL STOCK FUND
December 31, 1997 766,819 $10,290,716 $10,514,050
December 31, 1996 466,995 $6,444,525 $6,047,530
4. TAX STATUS
The Company has received the latest favorable determination letter
from the Internal Revenue Service, dated May 2, 1997, with respect to
the Plan as restated effective June 30, 1995, qualifying the Plan as a
stock bonus plan under Section 401 of the Internal Revenue Code (Code)
and an employee stock ownership plan under Section 4975(e)(7) of the
Code and exempting the Plan from federal income tax under Section 501 of
the Code.
22
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for
benefits per the financial statements to the Form 5500:
December 31,
1997 1996
Net assets available
for benefits per
the financial
statements $689,933,521 $549,111,844
Amounts requested by
participants for
withdrawals and
distributions at
December 31, but
paid in subsequent
years (214,050) (156,168)
------------- -------------
Net assets available
for benefits
per the Form 5500 $689,719,471 $548,955,676
============= =============
The following is a reconciliation of withdrawals and distributions
paid to participants per the financial statements to the Form 5500:
Year ended
December 31, 1997
Withdrawals and distributions paid
to participants per the
financial statements $37,122,722
Add:
Amounts requested by participants for
withdrawals and distributions at
December 31, 1997 but paid in 1998 214,050
Less:
Amounts requested by participants for
withdrawals and distributions at
December 31, 1996 but paid in 1997 (156,168)
-------------
Withdrawals and distributions to
participants per the Form 5500 $37,180,604
=============
Withdrawals and distributions to participants recorded on the Form
5500 for benefit claims include amounts that have been processed and
approved for payment prior to December 31 but not yet paid as of that
date.
23
Page 1 of 3
Baltimore Gas and Electric Company (EIN 52-0280210)
T. Rowe Price, Trustee - Baltimore Gas and Electric Company Employee Savings Plan
Item 27(a) - Schedule of Assets Held for Investment Purposes
December 31, 1997
Current Maturity
Identity of Issue Description of Asset Cost Value Date
*
Group Annuity Contract with Insurance Company Guaranteed
Canada Life Assurance Interest Contract -
Company (P-45870) Guaranteed Interest - 7.20% 3,115,307 3,115,307 6/15/2000
Group Annuity Contract with Insurance Company Guaranteed
Canada Life Assurance Interest Contract -
Company (P-45904) Guaranteed Interest - 6.31% 6,016,115 6,016,115 12/15/2000
Group Annuity Contract with Insurance Company Guaranteed
Canada Life Assurance Interest Contract -
Company (P-45908) Guaranteed Interest - 6.23% 1,518,995 1,518,995 10/16/2000
Group Annuity Contract with Insurance Company Guaranteed
Continental Assurance Interest Contract -
Company (GP-24100) Guaranteed Interest - 6.32% 6,836,790 6,836,790 9/15/2000
Group Annuity Contract with Insurance Company Guaranteed
John Hancock Life Interest Contract -
(GAC-8444) Guaranteed Interest - 5.81% 5,511,828 5,511,828 3/15/01
Group Annuity Contract with Insurance Company Guaranteed
Life Insurance Company of Virginia Interest Contract - 50% 3/1/2002
(GS-2987) Guaranteed Interest - 7.25% 6,313,989 6,313,989 Balance 4/1/2002
Group Annuity Contract with Insurance Company Guaranteed
Metropolitan Life Insurance Interest Contract -
(GA-13307-069) Guaranteed Interest - 5.75% 2,495,886 2,495,886 3/31/98
Group Annuity Contract with Insurance Company Guaranteed Excess > $1.9 Mil
New York Life Interest Contract - 3/31/98
(GA-06750-001) Guaranteed Interest - 5.15% 3,811,217 3,811,217 Balance 09/30/98
Group Annuity Contract with Insurance Company Guaranteed Excess > $3.7 Mil
New York Life Interest Contract - 9/30/98
(GA-06750-002) Guaranteed Interest - 6.35% 5,539,890 5,539,890 Balance 3/31/99
Group Annuity Contract with Insurance Company Guaranteed
Pacific Mutual Life Interest Contract -
(G-26263.01) Guaranteed Interest - 7.31% 6,609,533 6,609,533 6/14/01
Group Annuity Contract with Insurance Company Guaranteed
Peoples Security Life Interest Contract - 50% 4/15/2002
(BDA00729FR) Guaranteed Interest - 6.82% 3,617,709 3,617,709 Balance 6/14/2002
Group Annuity Contract with Insurance Company Guaranteed
Principal Mutual Interest Contract -
(4-05026-001) Guaranteed Interest - 5.85% 1,488,274 1,488,274 4/1/98
Group Annuity Contract with Insurance Company Guaranteed
Principal Mutual Interest Contract - 50% 06/30/98
(4-05026-002) Guaranteed Interest - 5.17% 10,702,555 10,702,555 Balance 12/31/98
(Continued on next page)
* Current Value of the guaranteed interest contracts equal contract value.
24
Page 2 of 3
Baltimore Gas and Electric Company (EIN 52-0280210)
T. Rowe Price, Trustee - Baltimore Gas and Electric Company Employee Savings Plan
Item 27(a) - Schedule of Assets Held for Investment Purposes
December 31, 1997
Current Maturity
Identity of Issue Description of Asset Cost Value Date
*
Group Annuity Contract with Insurance Company Guaranteed
Protective Life Interest Contract -
(GA-1174) Guaranteed Interest - 7.18% $3,619,384 $3,619,384 3/15/2000
Group Annuity Contract with Insurance Company Guaranteed
Protective Life Interest Contract -
(GA-1348) Guaranteed Interest - 6.77% 2,461,004 2,461,004 1/15/2002
Group Annuity Contract with Insurance Company Guaranteed
Protective Life Interest Contract -
(GA-1391) Guaranteed Interest - 7.31% 3,146,704 3,146,704 4/15/2002
Group Annuity Contract with Insurance Company Guaranteed
Prudential Interest Contract - 50% 01/31/99
(GA-7088-213) Guaranteed Interest - 6.48% 5,353,102 5,353,102 Balance 05/31/99
Group Annuity Contract with Insurance Company Guaranteed
SAFECO Life Interest Contract - $4.2 Mil 11/19/2001
(LP1055917-01-02) Guaranteed Interest - 7.00% 8,420,943 8,420,943 Balance 12/19/2001
Group Annuity Contract with Insurance Company Guaranteed
SAFECO Life Interest Contract -
(LP1055917-03) Guaranteed Interest - 6.85% 3,569,844 3,569,844 9/18/01
Group Annuity Contract with Insurance Company Guaranteed
Security Life Denver Interest Contract -
(FA-0494) Guaranteed Interest - 6.82% 2,660,901 2,660,901 2/14/02
Group Annuity Contract with Insurance Company Guaranteed
Transamerica Occ. Interest Contract - 50% 09/15/99
(51266-00) Guaranteed Interest - 7.16% 8,942,649 8,942,649 Balance 12/15/99
------------ ------------
$101,752,619 $101,752,619
** Baltimore Gas and Electric Company Common Stock - no par 226,205,259 362,505,984 -
T. Rowe Price Balanced Fund Mutual Fund 6,474,294 7,241,838 -
T. Rowe Price Equity Income Fund Mutual Fund 66,812,537 82,168,550 -
T. Rowe Price Growth Stock Fund Mutual Fund 40,949,796 45,262,623 -
T. Rowe Price Small Cap Value Fund Mutual Fund 23,821,921 27,026,476 -
T. Rowe Price International Stock Mutual Fund 10,514,050 10,290,716 -
** Loan Fund (Interest) Participant Loan Fund - 28,589,210 -
Interest Range 8.25 - 9.75%
T. Rowe Price Prime Reserve Fund Money Market Mutual Fund 20,291,373 20,291,373 -
T. Rowe Price Short Term Money Market Bank Account 214,118 214,118
Distribution Account
------------ ------------
Total $497,035,967 $685,343,507
========== ==========
* Current Value of the guaranteed interest contracts equal contract value.
** Parties-in-Interest
25
Page 3 of 3
Baltimore Gas and Electric Company (EIN 52-0280210)
T. Rowe Price, Trustee - Baltimore Gas and Electric Company Employee Savings Plan
27(d) Schedule of Reportable Transactions
Cumulative Transactions by Issue Exceeding 5% of Portfolio Value During Plan Year 1997
Number Number
of of
Security Description Sales Proceeds Gain Purchases Cost
* Baltimore Gas and Electric Company 430 39,041,384 7,671,576 65 29,220,722
Common Stock - no par
------ ------------- ----------- -------- -------------
Total 430 $39,041,384 $7,671,576 65 $29,220,722
====== ============ ========== ======= ============
* Parties-in-Interest
26