CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
FINANCIAL STATEMENTS AND SCHEDULES
----------------------------------
AS OF DECEMBER 31, 1996, 1995 AND 1994
--------------------------------------
TOGETHER WITH
--------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
INDEX
-----
PAGE
----
Report of Independent Public Accountants 1
Financial Statements:
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1996 2
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1995 4
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1996 6
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1995 8
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1994 10
Notes to Financial Statements and Schedules 11
Schedules:
Schedule I - Item 27a - Schedule of Assets Held for Investment 16
Purposes as of December 31, 1996
Schedule II - Item 27d - Schedule of Reportable Transactions for
the Year Ended December 31, 1996 17
All schedules, except those as set forth above, are omitted as not
applicable or not required.
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Plan Administrator of Connecticut Natural
Gas Corporation Union Employee Savings Plan:
We have audited the accompanying statements of net assets available for
benefits with fund information of Connecticut Natural Gas Corporation Union
Employee Savings Plan (the Plan) as of December 31, 1996 and 1995, 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, 1996. These financial statements and schedules referred to below are
the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits with fund
information of the Plan as of December 31, 1996 and 1995, and the changes
in its net assets available for benefits with fund information for each of
the three years in the period ended December 31, 1996, 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. The supplemental schedules of
assets held for investment purposes and reportable transactions are
presented for purposes 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.
These supplemental schedules have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
By Arthur Andersen LLP
------------------------
Arthur Andersen LLP
Hartford, Connecticut
April 30, 1997
-2-
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
--------------------------------------------------------------------
AS OF DECEMBER 31, 1996
------------------------
Participant Directed
----------------------------------------------------------------------
The Putnam
Putnam Fiduciary The George Fund for Putnam Putnam
Trust Company Putnam Fund Growth and Vista International
Stable Value Fund of Boston Income Fund Growth Fund
---------------- ------------ ---------- ---------- ----------
Assets
------
Investments, at
current value $ 477,425 $ 1,400,169 $ 3,171,867 $ 1,141,189 $ 113,784
----------- ----------- ----------- ----------- -----------
Cash and temporary
investments - - - - -
----------- ----------- ----------- ----------- -----------
Accounts receivable
from broker - - - - -
----------- ----------- ----------- ----------- -----------
Total Assets 477,425 1,400,169 3,171,867 1,141,189 113,784
----------- ----------- ----------- ----------- -----------
Liabilities
-----------
Accounts payable to
broker - - - - -
----------- ----------- ----------- ----------- -----------
Net Assets
Available for $ 477,425 $ 1,400,169 $ 3,171,867 $ 1,141,189 $ 113,784
Benefits =========== =========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
-3-
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
--------------------------------------------------------------------
AS OF DECEMBER 31, 1996
------------------------
Non-
Participant
Participant Directed Directed
-------------------- -----------
Putnam Common Common
Income Stock Stock
Fund Fund Fund Total
---------- ---------- ---------- --------
Assets
------
Investments, at
current value $ 62,964 $ 4,913,262 $ 3,892,036 $15,172,696
----------- ----------- ----------- -----------
Cash and temporary
investments - 42 3,063 3,105
----------- ----------- ----------- -----------
Accounts receivable
from broker - 637 1,293 1,930
----------- ----------- ----------- -----------
Total Assets 62,964 4,913,941 3,896,392 15,177,731
----------- ----------- ----------- -----------
Liabilities
-----------
Accounts payable to
broker - (14,125) (31,630) (45,755)
----------- ----------- ----------- -----------
Net Assets
Available for $ 62,964 $ 4,899,816 $ 3,864,762 $15,131,976
Benefits =========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
-4-
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
--------------------------------------------------------------------
AS OF DECEMBER 31, 1995
------------------------
Participant Directed
----------------------------------------------------------------------
The Putnam
Putnam Fiduciary The George Fund for Putnam Putnam
Trust Company Putnam Fund Growth and Vista International
Stable Value Fund of Boston Income Fund Growth Fund
---------------- ------------ ---------- ---------- ----------
Assets
------
Investments, at
current value $ 548,051 $ 1,240,015 $ 2,499,974 $ 474,354 $ 62,348
----------- ----------- ----------- ----------- -----------
Cash and temporary
investments - - - - -
----------- ----------- ----------- ----------- -----------
Accounts receivable:
Connecticut
Natural Gas Corp. - - - - -
Employees 3,464 11,323 24,127 6,559 1,273
Other-Putnam Vista
Fund - - 55,536 - -
----------- ----------- ----------- ----------- -----------
3,464 11,323 79,663 6,559 1,273
----------- ----------- ----------- ----------- -----------
Total Assets 551,515 1,251,338 2,579,637 480,913 63,621
----------- ----------- ----------- ----------- -----------
Liabilities
-----------
Accounts payable to
broker - - - - -
Other-The Putnam Fund
for Growth & Income - - - (55,536) -
----------- ----------- ----------- ----------- -----------
- - - (55,536) -
----------- ----------- ----------- ----------- -----------
Net Assets
Available for $ 551,515 $ 1,251,338 $ 2,579,637 $ 425,377 $ 63,621
Benefits =========== =========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
-5-
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
--------------------------------------------------------------------
AS OF DECEMBER 31, 1995
------------------------
Non-
Participant
Participant Directed Directed
-------------------- -----------
Putnam Common Common
Income Stock Stock
Fund Fund Fund Total
---------- ---------- ---------- --------
Assets
------
Investments, at
current value $ 37,044 $ 2,499,436 $ 5,081,803 $12,443,025
----------- ----------- ----------- -----------
Cash and temporary
investments - 43,310 79,728 123,038
----------- ----------- ----------- -----------
Accounts receivable:
Connecticut
Natural Gas Corp. - - 37,824 37,824
Employees 328 19,551 - 66,625
Other-Putnam Vista
Fund - - - 55,536
----------- ----------- ----------- -----------
328 19,551 37,824 159,985
----------- ----------- ----------- -----------
Total Assets 37,372 2,562,297 5,199,355 12,726,048
----------- ----------- ----------- -----------
Liabilities
-----------
Accounts payable to
broker - (42,474) (78,328) (120,802)
Other-The Putnam Fund
for Growth & Income - - - (55,536)
----------- ----------- ----------- -----------
- (42,474) (78,328) (176,338)
----------- ----------- ----------- -----------
Net Assets
Available for $ 37,372 $ 2,519,823 $ 5,121,027 $12,549,710
Benefits =========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
-6-
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
-------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1996
-------------------------------------
Participant Directed
-----------------------------------------------------
Putnam
Fiduciary Putnam
Trust Company The George Fund for Putnam
Stable Value Putnam Fund Growth and Vista
Fund of Boston Income Fund
------------- ------------- ----------- ----------
Additions to net assets
attributed to:
Dividends and interest income $ 29,716 $ 126,396 $ 261,597 $ 73,049
---------- ----------- ----------- -----------
Realized gains
(losses), net - 10,593 15,932 18,393
---------- ----------- ----------- -----------
Unrealized appreciation
(depreciation) of investments - 64,242 266,834 73,191
---------- ----------- ----------- -----------
Contributions:
Employees 39,687 141,929 318,816 131,575
Employer 1,017 5,058 14,181 10,363
---------- ----------- ----------- -----------
Total contributions 40,704 146,987 332,997 141,938
---------- ----------- ----------- -----------
Transfers, net (18,573) (23,751) (102,230) 417,255
---------- ----------- ----------- -----------
Other, net - - - -
---------- ----------- ----------- -----------
Total additions (deductions) 51,847 324,467 775,130 723,826
---------- ----------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants (125,937) (175,636) (182,900) (8,014)
---------- ----------- ----------- -----------
Net increase (decrease) (74,090) 148,831 592,230 715,812
---------- ----------- ----------- -----------
Net Assets Available
for Benefits:
Beginning of year 551,515 1,251,338 2,579,637 425,377
---------- ----------- ----------- -----------
End of year $ 477,425 $ 1,400,169 $ 3,171,867 $ 1,141,189
========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
-7-
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
-------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1996
-------------------------------------
Non-
Participant
Participant Directed Directed
------------------------------- -----------
Putnam Putnam Common Common
International Income Stock Stock
Growth Fund Fund Fund Fund Total
----------- ----------- ---------- ---------- ----------
Additions to net assets
attributed to:
Dividends and interest income $ 1,533 $ 3,320 $ 223,414 $ 279,804 $ 998,829
----------- ----------- ----------- ---------- -----------
Realized gains
(losses), net 38 (479) (9,904) (20,127) 14,446
----------- ----------- ----------- ----------- -----------
Unrealized appreciation
(depreciation) of investments 10,680 (540) 372,926 368,477 1,155,810
----------- ----------- ----------- ----------- -----------
Contributions:
Employees 13,495 5,724 217,894 - 869,120
Employer 1,309 194 364,046 85,391 481,559
----------- ----------- ----------- ----------- -----------
Total contributions 14,804 5,918 581,940 85,391 1,350,679
----------- ----------- ----------- ----------- -----------
Transfers, net 23,480 17,506 1,378,873 (1,701,888) (9,328)
----------- ----------- ----------- ----------- -----------
Other, net - - (13,783) (28,024) (41,807)
----------- ----------- ----------- ----------- -----------
Total additions (deductions) 50,535 25,725 2,533,466 (1,016,367) 3,468,629
----------- ----------- ----------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants (372) (133) (153,473) (239,898) (886,363)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) 50,163 25,592 2,379,993 (1,256,265) 2,582,266
----------- ----------- ----------- ----------- -----------
Net Assets Available
for Benefits:
Beginning of year 63,621 37,372 2,519,823 5,121,027 12,549,710
----------- ----------- ----------- ----------- -----------
End of year $ 113,784 $ 62,964 $ 4,899,816 $ 3,864,762 $15,131,976
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
-8-
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
-------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1995
-------------------------------------
Participant Directed
-----------------------------------------------------------------
Putnam
Fiduciary Putnam
Trust Company Putnam U.S. The George Fund for Putnam
Stable Value Government Putnam Fund Growth and Vista
Fund Income Trust of Boston Income Fund
------------- -------------------------- ----------- ----------
Additions to net assets
attributed to:
Dividends and interest income $ 22,417 $ 42,748 $ 86,389 $ 163,219 $ 24,795
---------- ----------- ----------- ----------- -----------
Realized gains
(losses), net - 50,960 24,986 131,025 2,433
---------- ----------- ----------- ----------- -----------
Unrealized appreciation
(depreciation) of investments - (9,256) 158,224 316,482 (13,422)
---------- ----------- ----------- ----------- -----------
Contributions:
Employees 23,264 59,707 144,780 304,597 6,559
Employer - - - - -
---------- ----------- ----------- ----------- -----------
Total contributions 23,264 59,707 144,780 304,597 6,559
---------- ----------- ----------- ----------- -----------
Transfers, net 158,551 (683,787) 30,697 248,682 408,387
---------- ----------- ----------- ----------- -----------
Other, net (17) - - - -
---------- ----------- ----------- ----------- -----------
Total additions (deductions) 204,215 (539,628) 445,076 1,164,005 428,752
---------- ----------- ----------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants (21,246) (57,481) (73,248) (61,155) (3,375)
---------- ----------- ----------- ----------- -----------
Net increase (decrease) 182,969 (597,109) 371,828 1,102,850 425,377
---------- ----------- ----------- ----------- -----------
Net Assets Available
for Benefits:
Beginning of year 368,546 597,109 879,510 1,476,787 -
---------- ----------- ----------- ----------- -----------
End of year $ 551,515 $ - $ 1,251,338 $ 2,579,637 $ 425,377
========== =========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
-9-
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
-------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1995
-------------------------------------
Non-
Participant
Participant Directed Directed
------------------------------- -----------
Putnam Putnam Common Common
International Income Stock Stock
Growth Fund Fund Fund Fund Total
----------- ----------- ---------- ---------- ----------
Additions to net assets
attributed to:
Dividends and interest income $ 515 $ 156 $ 171,358 $ 306,752 $ 818,349
----------- ----------- ---------- ----------- -----------
Realized gains
(losses), net 1,000 266 8,900 14,943 234,513
----------- ----------- ----------- ----------- -----------
Unrealized appreciation
(depreciation) of investments (394) (2) (151,388) (223,829) 76,415
----------- ----------- ----------- ----------- -----------
Contributions:
Employees 1,274 328 303,165 - 843,674
Employer - - - 474,053 474,053
----------- ----------- ----------- ----------- -----------
Total contributions 1,274 328 303,165 474,053 1,317,727
----------- ----------- ----------- ----------- -----------
Transfers, net 62,211 36,886 (280,160) (13,318) (31,851)
----------- ----------- ----------- ----------- -----------
Other, net - - 246 412 641
----------- ----------- ----------------------- -----------
Total additions (deductions) 64,606 37,634 52,121 559,013 2,415,794
----------- ----------- ----------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants (985) (262) (403,146) (258,360) (879,258)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) 63,621 37,372 (351,025) 300,653 1,536,536
----------- ----------- ----------- ----------- -----------
Net Assets Available
for Benefits:
Beginning of year - - 2,870,848 4,820,374 11,013,174
----------- ----------- ----------- ----------- -----------
End of year $ 63,621 $ 37,372 $ 2,519,823 $ 5,121,027 $12,549,710
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
-10-
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
-------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1994
-------------------------------------
Non-
Participant
Participant Directed Directed
----------------------------------------------------------------- -----------
Putnam
Fiduciary The Putnam
Trust Company Putnam U.S. The George Fund for Common Common
Stable Value Government Putnam Fund Growth and Stock Stock
Fund Income Trust of Boston Income Fund Fund Total
------------- ------------- ------------- ----------- ---------- ---------- ----------
Additions to net assets
attributed to:
Dividends and interest income $ 19,904 $ 40,245 $ 58,454 $ 93,053 $ 156,918 $ 275,285 $ 643,859
---------- ----------- ----------- ----------- ----------- ----------- -----------
Realized gains
(losses), net - (3,469) (5,990) (7,757) (22,229) (40,438) (79,883)
---------- ----------- ----------- ----------- ----------- ----------- -----------
Unrealized appreciation
(depreciation) of investments - (50,335) (55,309) (91,158) (643,594) (1,174,926) (2,015,322)
---------- ----------- ----------- ----------- ----------- ----------- -----------
Contributions:
Employees 23,171 64,489 137,584 264,162 330,277 - 819,683
Employer - - - - - 457,407 457,407
---------- ----------- ----------- ----------- ----------- ----------- -----------
Total contributions 23,171 64,489 137,584 264,162 330,277 457,407 1,277,090
---------- ----------- ----------- ----------- ----------- ----------- -----------
Transfers, net (61,188) 30,764 (50,089) (53,927) 152,684 23,900 42,144
---------- ----------- ----------- ----------- ----------- ----------- -----------
Other, net - - - - (355) (644) (999)
---------- ----------- ----------- ----------- ------------ ----------- -----------
Total additions (deductions) (18,113) 81,694 84,650 204,373 (26,299) (459,416) (133,111)
---------- ----------- ----------- ----------- ----------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants (33,305) (30,764) (57,312) (64,719) (97,452) (167,848) (451,400)
---------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) (51,418) 50,930 27,338 139,654 (123,751) (627,264) (584,511)
---------- ----------- ----------- ----------- ----------- ----------- -----------
Net Assets Available
for Benefits:
Beginning of year 419,964 546,179 852,172 1,337,133 2,994,599 5,447,638 11,597,685
---------- ----------- ----------- ----------- ----------- ----------- -----------
End of year $ 368,546 $ 597,109 $ 879,510 $ 1,476,787 $ 2,870,848 $ 4,820,374 $11,013,174
========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
-11-
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
-------------------------------------------
AS OF DECEMBER 31, 1996, 1995 AND 1994
--------------------------------------
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.
a. General -
-------
The Plan is a defined contribution thrift plan open to union
employees of Connecticut Natural Gas Corporation and subsidiaries
(the Company). The Plan was established by the Company under the
provisions of Section 401(a) of the Internal Revenue Code (IRC), and
it includes a qualified 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. The Compensation Committee of the
Company's Board of Directors appointed an Administrative Committee
to serve as manager of the Plan. Putnam Fiduciary Trust Company
(PFTC), trustee of the Plan, holds the Plan's investments and
executes transactions therein.
b. Eligibility -
-----------
Employees are eligible to participate when the following criteria
are met:
(1) Are at least age 21.
(2) Are employed by the Company for one year or more.
(3) Have completed 1,000 hours or more of service in a 12-month
period beginning with date of hire.
(4) Are normally employed for 20 or more hours per week and are
covered by a collective bargaining agreement between the Company
and any union which provides for participation under the Plan.
The number of employees participating in the Plan as of December 31,
1996 and 1995 were 350 and 366, respectively.
c. Contributions -
-------------
Eligible employees may elect to participate in the Plan and
authorize payroll deductions of not less than 1% and not greater
than 26% of basic earnings as savings contributions to their
accounts during each year, subject to the limits under Section 415
of the IRC.
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.
-12-
As of December 31, 1996, if an employee's:
Years of Continuous
Service are Or Age is The Company Will Contribute
-------------------- -- ------ ---------------------------
30 50 6% of compensation
20 45 4-1/2% of compensation
10 35 3% of compensation
Less than l0 Under 35 2% of compensation
d. Investment Options -
------------------
Plan participants direct their contributions among various
investment options in 5% increments, and they may elect to change
their investment options once during each calendar quarter. A
description of each investment option is provided below:
(1) PUTNAM FIDUCIARY TRUST COMPANY STABLE VALUE FUND - This fund
preserves principal and seeks to achieve a high current income
through a diversified portfolio of high-quality investment
contracts. The average yield for this fund was 5.74% for the
year ended December 31, 1996.
(2) PUTNAM U.S. GOVERNMENT INCOME TRUST - This mutual fund seeks
current income through a portfolio of securities backed by the
full faith and credit of the United States Government.
(3) THE GEORGE PUTNAM FUND OF BOSTON - This mutual fund seeks a
balance of capital growth and current income through a
diversified portfolio of common stocks and bonds.
(4) THE PUTNAM FUND FOR GROWTH AND INCOME - This mutual fund seeks
capital growth and current income through a portfolio of income-
producing common stocks.
(5) PUTNAM VISTA FUND - This mutual fund seeks to invest in a
variety of stocks of mostly medium-sized companies, widely
traded larger companies and, small, less well-known companies
that have the potential for above-average growth.
(6) PUTNAM INTERNATIONAL GROWTH FUND - This mutual fund seeks
appreciation of investments through a diversified collection of
stocks in companies located outside North America.
(7) PUTNAM INCOME FUND - This mutual fund invests in a variety of
bonds with an emphasis on corporate bonds and selected below-
investment-grade bonds.
(8) COMMON STOCK FUND - This fund seeks to provide current income
and capital appreciation through investment in the common stock
of the Company purchased at not more than fair market value.
The Putnam Income Fund, Putnam International Growth Fund, and Putnam
Vista Fund were added as investment options on December 6, 1995, and
at the same time the Putnam U.S. Government Income Trust was
eliminated as an option. Plan participants were required to move
any money invested in the latter fund to one of the other investment
options by December 22, 1995.
All Company matching contributions are invested in the Common Stock
Fund. Beginning on March 1, 1996 and continuing on a quarterly
basis through October 1, 1999, the Plan Administrator has 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. These transfers are scheduled to take
place on January 1, April 1, July 1, and October 1 of each year,
with the exception of 1996 for which the March 1 transfer was in
lieu of the April 1 transfer. Following the transfers, Plan
participants will have the discretion of investing the transferred
shares of common stock in the same manner as the other amounts under
-13-
their direction in the various participant directed funds. Also,
effective March 1, 1996, all Company matching contributions are
being invested in the participant directed Common Stock Fund.
In addition to transfers between the various funds noted above as a
result of 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.
e. Vesting -
-------
Participants are fully vested in their contributions and the
earnings thereon. Participants are vested in the Company matching
contributions and the earnings thereon as follows:
Years of Continuous Service are Percentage Vested
------------------------------- -----------------
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:
(1) Death
(2) Disability
(3) Attainment of age 65 (normal retirement date)
(4) Total or partial termination of the Plan
(5) 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.
f. 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.
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.
g. Participant Accounts -
--------------------
Individual accounts are maintained for each of the Plan's
participants to reflect the participant's share of the Plan's income
and the participant's and the Company's contributions. Allocations
of Plan income are based on the share balances in the participants'
accounts.
-14-
h. Use of Estimates in the Preparation of Financial Statements -
-----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles and the Department of Labor Rules and
Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 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.
2. Summary of Significant Accounting Policies:
------------------------------------------
a. Basis of Accounting -
-------------------
The accompanying financial statements have been prepared on the
accrual basis of accounting.
b. Income Recognition -
------------------
Dividend income is recorded on the ex-dividend date. Interest
income is recorded as earned.
c. Investment Valuation -
--------------------
The Plan's investments are reflected at current value. The shares
of the Common Stock Fund and the Putnam mutual funds owned by the
Plan, with the exception of the PFTC Stable Value Fund, are valued
at market as determined by the quoted market price as of the last
business day of the year. The latter fund is valued at contract
value (cost plus accumulated earnings) which approximates current
value. Purchases and sales of securities are reflected on a trade
date basis. Realized and unrealized appreciation (depreciation)
presented in the statement of changes in net assets available for
benefits with fund information are computed based on the change in
the current value of the Plan assets from year to year.
d. Administrative Expenses -
-----------------------
Administrative expenses of the Plan may be paid by either the
Company or the Plan. During 1996, 1995 and 1994 the Company paid
all administrative expenses relating to the Plan.
3. Federal 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. However, 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, 1996.
-15-
4. Investments:
-----------
The fair market values of individual assets that represent 5% or more of
the Plan's net assets as of December 31, 1996 and 1995 are as follows:
1996:
Connecticut Natural Gas Corporation
common stock $8,805,298
The Putnam Fund for Growth and Income 3,171,867
The George Putnam Fund of Boston 1,400,169
Putnam Vista Fund 1,141,189
1995:
Connecticut Natural Gas Corporation
common stock $7,581,239
The Putnam Fund for Growth and Income 2,499,974
The George Putnam Fund of Boston 1,240,015
5. Concentration of Credit Risk:
----------------------------
The Plan's assets are invested in mutual funds managed by Putnam
Investments, Inc., as described in Note 1, and the Company's common
stock. In the event of any uncertainties in the financial marketplace
the Plan may be exposed to financial risks.
6. Subsequent Event:
----------------
Effective as of the close of business on March 31, 1997, CTG Resources,
Inc. (CTG) became the holding company and parent of Connecticut Natural
Gas Corporation (CNG). Pursuant to this change in corporate
organization and an Agreement and Plan of Exchange, dated as of December
20, 1996, by and between CTG and CNG, all outstanding shares of common
stock of CNG, including those shares held by the Plan, were exchanged
for shares of common stock of CTG.
7. Reconciliation to Form 5500:
---------------------------
As of December 31, 1996, the Plan had $1,324 of contributions from
participants which were in excess of the amounts allowed by Section 415
of the IRC. This amount is recorded as a liability in the Plan's Form
5500. However, this amount is not recorded as a liability in the
accompanying statement of net assets available for benefits in
accordance with generally accepted accounting principles.
The following table reconciles net assets available for benefits per the
financial statements to the Form 5500 as filed by the Company for the
year ended December 31, 1996.
Net Assets
Other Available
Liabilities For Benefits
----------- ------------
Per financial statements $ - $15,131,976
Excess contributions
refundable to Plan
participants 1,324 (1,324)
------ -----------
Per Form 5500 $1,324 $15,130,652
====== ===========
-16-
Schedule I
EIN 06-0383860
PN 006
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
----------------------------------------------------------
AS OF DECEMBER 31, 1996
------------------------
Description of Investment
Including Maturity Date, Rate
Identity of Issue, Borrower, Lessor, or of Interest, Collateral, Par Current
Similar Party or Maturity Value Cost Value
--------------------------------------- ----------------------------- --------- ----------
*Putnam Fiduciary Trust Company Stable Value Fund comprised of
Fund investment contracts $ 477,425 $ 477,425
----------- -----------
*The George Putnam Fund of Boston Mutual fund comprised of
common stocks and bonds 1,248,698 1,400,169
----------- -----------
*The Putnam Fund for Growth and Income Mutual fund comprised of
common stocks 2,613,720 3,171,867
----------- -----------
*Putnam Vista Fund Mutual fund comprised of
common stocks 1,067,046 1,141,189
----------- -----------
*Putnam International Growth Fund Mutual fund comprised of
common stocks 102,577 113,784
----------- -----------
*Putnam Income Fund Mutual fund comprised of
bonds 63,308 62,964
----------- -----------
Participant directed -
*Connecticut Natural Gas Corporation Common stock 4,396,006 4,913,262
*Boston Safe Company Daily Liquidity Fund 42 42
----------- -----------
4,396,048 4,913,304
----------- -----------
Non-participant directed -
*Connecticut Natural Gas Corporation Common stock 3,455,786 3,892,036
*Boston Safe Company Daily Liquidity Fund 3,063 3,063
----------- -----------
3,458,849 3,895,099
----------- -----------
Total Common Stock Fund 7,854,897 8,808,403
----------- -----------
Total Investments $13,427,671 $15,175,801
=========== ===========
*Represents a party-in-interest for the year ended December 31, 1996.
The accompanying notes are an integral part of this schedule.
-17-
Schedule II
EIN 06-0383860
PN 006
Page 1 of 2
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
----------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1996
------------------------------------
Expense
Identity of Description Number of Purchase Selling Lease Incurred With
Party Involved of Asset Transactions Price Price Rental Transaction
-------------- -------- ------------ --------- --------- ------- -----------
Putnam Vista Fund Mutual fund comprised 91 $ 683,819 $ - $ - $ -
of common stocks 9 - 169,104 - -
The George Putnam Mutual fund comprised 57 357,225 - - -
Fund of Boston of common stocks and 19 - 271,941 - -
bonds
The Putnam Fund for Mutual fund comprised 81 791,914 - - -
Growth and Income of common stocks 31 - 354,962 - -
Connecticut Natural Common stock 23 2,867,777 - - -
Gas Corporation 79 - 2,414,702 - -
The accompanying notes are an integral part of this schedule.
-18-
Schedule II
EIN 06-0383860
PN 006
Page 2 of 2
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
UNION EMPLOYEE SAVINGS PLAN
---------------------------
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
----------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1996
------------------------------------
Current Value
of Asset on
Identity of Description Cost of Transaction Net Gain
Party Involved of Asset Asset Date or (Loss)
-------------- -------- --------- ----------- --------
Putnam Vista Fund Mutual fund comprised $ 683,819 $ 683,819 $ -
of common stocks 106,723 169,104 62,381
The George Putnam Mutual fund comprised 357,225 357,225 -
Fund of Boston of common stocks and 240,788 271,941 31,153
bonds
The Putnam Fund for Mutual fund comprised 791,914 791,914 -
Growth and Income of common stocks 287,369 354,962 67,593
Connecticut Natural Common stock 2,867,777 2,867,777 -
Gas Corporation 2,204,363 2,414,702 210,339
The accompanying notes are an integral part of this schedule.