===================================================================
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 1-973
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
PUBLIC SERVICE ELECTRIC AND GAS COMPANY EMPLOYEE SAVINGS PLAN
80 PARK PLAZA
NEWARK, NEW JERSEY 07101
MAILING ADDRESS: P.O. Box 570
NEWARK, NEW JERSEY 07101-0570
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
See page 2.
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Stable Value Fund AIG LIFE INSURANCE COMPANY
PRIMCO CAPITAL MANAGEMENT ONE ALICO PLAZA
101 SOUTH FIFTH STREET, SUITE 2150 P.O. BOX 667
LOUSIVILLE, KY 40202 WILMINGTON, DELAWARE 19899
THE PRUDENTIAL LIFE INSURANCE CAISSE des DEPOTS
COMPANY OF AMERICA 9 WEST 57th STREET
PRUDENTIAL PLAZA NEW YORK, NEW YORK 10019
NEWARK, NJ 07101
METROPOLITAN LIFE INSURANCE Enterprise Common Stock Fund and
COMPANY ESOP Fund
ONE MADISON AVENUE PUBLIC SERVICE ENTERPRISE GROUP
NEW YORK, NEW YORK 10010-3690 INCORPORATED
80 PARK PLAZA
NEWARK, NJ 07101-1171
ALLSTATE LIFE INSURANCE Large Company Stock Index Fund
COMPANY THE VANGUARD GROUP
ALLSTATE PLAZA WEST INSTITUTIONAL DIVISION
3100 SANDERS ROAD P.O. BOX 2900
NORTHBROOK, ILLINOIS 60062 VALLEY FORGE, PA 19482
J.P. MORGAN Intermediate Government Securities Fund
60 WALL STREET DELAWARE MANAGEMENT COMPANY INC.
NEW YORK, NEW YORK 10260 ONE COMMERCE SQUARE
2005 MARKET STREET
PHILADELPHIA, PA 19103
NEW YORK LIFE INSURANCE International Stock Fund
COMPANY T. ROWE PRICE INC.
501 MADISON AVENUE 100 EAST PRATT STREET
NEW YORK, NEW YORK 10010 BALTIMORE, MARYLAND 02120
THE CHASE MANHATTAN BANK Mid/Small Company Stock Fund
270 PARK AVENUE PUTNAM INVESTMENTS
NEW YORK, NEW YORK 10017 P.O. BOX 41203
PROVIDENCE, RHODE ISLAND 02940
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
---------------------------------------
EMPLOYEE SAVINGS PLAN
INDEX
PAGE
INDEPENDENT AUDITORS' REPORT........................................... 4
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997 AND 1996..................................... 5-8
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1997 and 1996....................... 9-12
NOTES TO FINANCIAL STATEMENTS.......................................... 13-25
SIGNATURES............................................................. 26
EXHIBIT INDEX.......................................................... 27
INDEPENDENT AUDITORS' REPORT
Employee Benefits Committee of
Public Service Electric and Gas Company:
We have audited the accompanying statements of net assets available for benefits
of the Public Service Electric and Gas Company Employee Savings Plan (the
"Plan") as of December 31, 1997 and 1996, and the related statements of changes
in net assets available for benefits for the years 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 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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 1997
and 1996, and the changes in net assets available for benefits for the years
then ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information by fund is
presented for the purpose of additional analysis of the basic financial
statements rather than to present information regarding the net assets available
for benefits and changes in net assets available for benefits of the individual
funds, and is not a required part of the basic financial statements. This
information is the responsibility of the Plan's management. Such information has
been subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects when considered in relation to the basic financial statements taken as
a whole.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
June 5, 1998
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1997
Supplemental Information by Fund
--------------------------------------------------------------------------
Enterprise Large Intermediate
Stable Common Company Government International
Value Stock Stock Index Securities Stock
Total Fund Fund Fund Fund Fund
-------------------------------------------------------------------------------------------
ASSETS
Investments, at fair value
Plan interest in Master Employee
Benefit Plan Trust $ 267,035,879 $ 98,804,289 $ 31,619,028 $ 60,491,100 $ 2,166,037 $ 8,857,796
Receivables-from Investments Sold 197,360 - 197,360 - - -
Receivables-Interest and Dividends 562,619 560,220 2,399 - - -
-------------------------------------------------------------------------------------------
Total Assets $ 267,795,858 $ 99,364,509 $ 31,818,787 $ 60,491,100 $ 2,166,037 $ 8,857,796
===========================================================================================
LIABILITIES
Accounts Payable $ 1,239,186 $ 223,210 $ 132,065 $ 247,937 $ 926 $ 227,628
Transfer to/from Thrift & Tax-Deferred
Savings Plan 1,943 1,943 - - - -
Forfeitures 9,051 2,057 4,404 924 127 166
-------------------------------------------------------------------------------------------
Total Liabilities 1,250,180 227,210 136,469 248,861 1,053 227,794
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Net Assets Available for Benefits $ 266,545,678 $ 99,137,299 $ 31,682,318 $ 60,242,239 $ 2,164,984 $ 8,630,002
===========================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1997
Supplemental Information by Fund (Concluded)
-------------------------------------------------------------------------------------------
Mid/Small
Company Conservative Moderate Aggressive Trust
Stock Pre-Mix Pre-Mix Pre-Mix ESOP Holding Loan
Fund Portfolio Portfolio Portfolio Fund Account Fund
-------------------------------------------------------------------------------------------
ASSETS
Investments, at fair value
Plan interest in Master Employee
Benefit Plan Trust $ 14,148,879 $ 4,750,911 $ 10,533,788 $ 14,162,641 $ 8,734,091 $ 285,490 $ 12,481,829
Receivables-from Investments Sold - - - - - - -
Receivables-Interest and Dividends - - - - - - -
-------------------------------------------------------------------------------------------
Total Assets $ 14,148,879 $ 4,750,911 $ 10,533,788 $ 14,162,641 $ 8,734,091 $ 285,490 $ 12,481,829
===========================================================================================
LIABILITIES
Accounts Payable 40,336 $ 138,060 $ 36,044 $ 29,871 $ 698 $ 211,116 $ (48,705)
Transfer to/from Thrift & Tax-Deferred
Savings Plan - - - - - - -
Forfeitures 214 418 313 428 - - -
-------------------------------------------------------------------------------------------
Total Liabilities 40,550 138,478 36,357 30,299 698 211,116 (48,705)
-------------------------------------------------------------------------------------------
Net Assets Available for Benefits $ 14,108,329 $ 4,612,433 $ 10,497,431 $ 14,132,342 $ 8,733,393 $ 74,374 $ 12,530,534
===========================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1996
Supplemental Information by Fund
-----------------------------------------------------------------------------
Large
Enterprise Company Interm.
Equities Stable Common Stock Utilities Government
Growth Balanced Value Stock Index Equities Securities
Total Fund Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------
ASSETS
Investments, at fair value
Plan interest in Master Employee
Benefit Plan Trust $ 216,734,220 $ - $ - $ 100,834,108 $ 25,100,017 $ 36,476,571 $ - $ 2,172,925
Receivables-Interest and Dividends 523,198 - - 514,629 8,236 - - -
--------------------------------------------------------------------------------------------
Total Assets $ 217,257,418 $ - $ - $ 101,348,737 $ 25,108,253 $ 36,476,571 $ - $ 2,172,925
============================================================================================
LIABILITIES
Accounts Payable $ 193,558 $ - $ - $ 319,521 $ 22,896 $ 43,629 $ - $ (773)
Transfer to/(from) Thrift &
Tax-Deferred Savings Plan (181,176) - - (168,771) - - - -
Forfeitures 4,830 - - 2,447 355 911 - 8
--------------------------------------------------------------------------------------------
Total Liabilities 17,212 - - 153,197 23,251 44,540 - (765)
--------------------------------------------------------------------------------------------
Net Assets Available for Benefits $ 217,240,206 $ - $ - $ 101,195,540 $ 25,085,002 $ 36,432,031 $ - $ 2,173,690
============================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1996
Supplemental Information by Fund (Concluded)
---------------------------------------------------------------------------------------------
Mid/Small
International Company Conservative Moderate Aggressive
Stock Stock Pre-Mix Pre-Mix Pre-Mix ESOP Holding Trust
Fund Fund Portfolio Portfolio Portfolio Fund Account Loan Fund
---------------------------------------------------------------------------------------------
ASSETS
Investments, at fair value
Plan interest in Master Employee
Benefit Plan Trust $ 7,989,413 $ 6,686,242 $ 2,704,371 $ 6,801,302 $8,960,644 $ 8,349,458 $ 48,053 $10,611,116
Receivables-Interest and Dividends - - - - - 146 187 -
---------------------------------------------------------------------------------------------
Total Assets $ 7,989,413 $ 6,686,242 $ 2,704,371 $ 6,801,302 $8,960,644 $ 8,349,604 $ 48,240 $10,611,116
=============================================================================================
LIABILITIES
Accounts Payable $ (5,186) $ (66,571) $ 3,906 $ (111,156) $ (10,358)$ 15,147 $ 26,071 $ (43,568)
Transfer to/(from) Thrift &
Tax-Deferred Savings Plan - - (6,190) (6,215) - - - -
Forfeitures 123 479 138 196 173 - - -
---------------------------------------------------------------------------------------------
Total Liabilities (5,063) (66,092) (2,146) (117,175) (10,185) 15,147 26,071 (43,568)
---------------------------------------------------------------------------------------------
Net Assets Available for Benefits $ 7,994,476 $ 6,752,334 $ 2,706,517 $ 6,918,477 $ 8,970,829 $ 8,334,457 $ 22,169 $10,654,684
=============================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1997
Supplemental Information by Fund
----------------------------------------------------------------------
Enterprise Large Intermediate
Stable Common Company Government International
Value Stock Stock Index Securities Stock
ADDITIONS Total Fund Fund Fund Fund Fund
-------------------------------------------------------------------------------------
Participant Deposits $ 28,020,575 $ 10,710,685 $ 3,736,563 $ 5,768,228 $ 359,097 $ 1,499,589
Employers Contributions 7,390,107 3,269,873 596,812 1,506,833 101,809 366,779
Interfund Transfers - net - (12,058,995) (2,118,955) 6,255,169 (507,927) (822,923)
-------------------------------------------------------------------------------------
Total Deposits and Contributions 35,410,682 1,921,563 2,214,420 13,530,230 (47,021) 1,043,445
-------------------------------------------------------------------------------------
Plan Interest in Master Trust
Investment Income 34,488,879 6,705,374 6,742,087 13,228,647 176,499 199,968
-------------------------------------------------------------------------------------
Total Additions 69,899,561 8,626,937 8,956,507 26,758,877 129,478 1,243,413
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DEDUCTIONS
Withdrawals 17,808,370 9,495,024 2,191,248 2,463,646 115,889 417,373
Forfeitures 26,886 6,782 9,604 5,717 - 523
Administrative Expenses 473,208 241,710 53,256 90,890 3,844 17,360
Transfer to/(from) Thrift &
Tax-Deferred Savings Plan 2,285,625 941,662 105,083 388,416 18,451 172,631
-------------------------------------------------------------------------------------
Total Deductions 20,594,089 10,685,178 2,359,191 2,948,669 138,184 607,887
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INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 49,305,472 (2,058,241) 6,597,316 23,810,208 (8,706) 635,526
NET ASSETS AVAILABLE FOR
BENEFITS - BEGINNING OF YEAR 217,240,206 101,195,540 25,085,002 36,432,031 2,173,690 7,994,476
-------------------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS - END OF YEAR $ 266,545,678 $ 99,137,299 $ 31,682,318 $ 60,242,239 $ 2,164,984 $ 8,630,002
=====================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1997
Supplemental Information by Fund (Concluded)
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Mid/Small
Company Conservative Moderate Aggressive Trust
Stock Pre-Mix Pre-Mix Pre-Mix ESOP Holding Loan
ADDITIONS Fund Portfolio Portfolio Portfolio Fund Account Fund
---------------------------------------------------------------------------------------------------
Participant Deposits $ 1,712,180 $ 534,149 $ 1,431,665 $ 2,268,419 $ - $ - $ -
Employers Contributions 428,970 128,606 398,619 591,806 - - -
Interfund Transfers - net 3,790,187 1,164,220 1,110,726 1,096,413 (208,858) - 2,300,943
---------------------------------------------------------------------------------------------------
Total Deposits and
Contributions 5,931,337 1,826,975 2,941,010 3,956,638 (208,858) - 2,300,943
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Plan Interest in Master Trust
Investment Income 1,945,859 486,435 1,261,285 1,877,889 1,812,631 52,205 -
---------------------------------------------------------------------------------------------------
Total Additions 7,877,196 2,313,410 4,202,295 5,834,527 1,603,773 52,205 2,300,943
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DEDUCTIONS
Withdrawals 318,370 327,943 511,247 476,127 1,189,126 - 302,377
Forfeitures 1,327 417 312 2,204 - - -
Administrative Expenses 19,521 7,572 16,997 12,330 9,728 - -
Transfer to/(from) Thrift &
Tax-Deferred Savings Plan 181,983 71,562 94,785 182,353 5,983 - 122,716
---------------------------------------------------------------------------------------------------
Total Deductions 521,201 407,494 623,341 673,014 1,204,837 - 425,093
---------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS AVAILABLE
FOR BENEFITS 7,355,995 1,905,916 3,578,954 5,161,513 398,936 52,205 1,875,850
NET ASSETS AVAILABLE
FOR BENEFITS -
BEGINNING OF YEAR 6,752,334 2,706,517 6,918,477 8,970,829 8,334,457 22,169 10,654,684
---------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS -
END OF YEAR $ 14,108,329 $ 4,612,433 $ 10,497,431 $ 14,132,342 $ 8,733,393 $ 74,374 $ 12,530,534
===================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1996
Supplemental Information by Fund
-------------------------------------------------------------------------------------------
Large
Enterprise Company Interm.
Equities Stable Common Stock Utilities Gov't.
Growth Balanced Value Stock Index Equities Secur.
ADDITIONS Total Fund Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------------------------
Participant Deposits $ 25,446,411 $ 2,124,415 $ 911,782 $ 12,099,306 $ 2,601,655 $ 4,305,948 $ 908,928 $ 418,981
Employers Contributions 6,832,948 533,038 231,973 3,384,696 723,595 1,091,139 236,244 109,485
Interfund Transfers-net - (14,049,337) (5,650,428) (1,021,676) (5,400,095) 4,795,229 (6,265,669) (127,450)
---------------------------------------------------------------------------------------------------------
Total Deposits
and Contributions 32,279,359 (11,391,884) (4,506,673) 14,462,326 (2,074,845) 10,192,316 (5,120,497) 401,016
---------------------------------------------------------------------------------------------------------
Plan Interest in Master
Trust Investment Income 14,157,526 1,552,689 320,176 6,327,021 (1,174,986) 6,062,703 281,058 55,842
---------------------------------------------------------------------------------------------------------
Total Additions 46,436,885 (9,839,195) (4,186,497) 20,789,347 (3,249,831) 16,255,019 (4,839,439) 456,858
---------------------------------------------------------------------------------------------------------
DEDUCTIONS
Withdrawals 11,907,962 390,739 210,594 6,978,593 1,538,490 1,355,392 199,146 93,157
Dividends Paid 702,350 - - - - - - -
Forfeitures 19,081 2,319 264 8,381 2,128 2,848 239 18
Transfer to/(from)
Thrift & Tax-Deferred
Savings Plan 10,686 70,049 21,642 (350,283) (29,941) 185,968 25,769 1,879
---------------------------------------------------------------------------------------------------------
Total Deductions 12,640,079 463,107 232,500 6,636,691 1,510,677 1,544,208 225,154 95,054
---------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS AVAILABLE
FOR BENEFITS 33,796,806 (10,302,302) (4,418,997) 14,152,656 (4,760,508) 14,710,811 (5,064,593) 361,804
NET ASSETS AVAILABLE
FOR BENEFITS -
BEGINNING OF YEAR 183,443,400 10,302,302 4,418,997 87,042,884 29,845,510 21,721,220 5,064,593 1,811,886
---------------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS -
END OF YEAR $217,240,206 $ - $ - $101,195,540 $25,085,002 $36,432,031 $ - $2,173,690
=========================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1996
Supplemental Information by Fund (Concluded)
---------------------------------------------------------------------------------------------------------
Mid/Small
International Company Conservative Moderate Aggressive
Stock Stock Pre-Mix Pre-Mix Pre-Mix ESOP Holding Trust
ADDITIONS Fund Fund Portfolio Portfolio Portfolio Fund Account Loan Fund
---------------------------------------------------------------------------------------------------------
Participant Deposits $ 1,147,174 $ 264,750 $ 82,986 $ 218,743 $ 361,743 $ - $ - $ -
Employers Contributions 275,435 66,725 19,434 62,437 98,747 - - -
Interfund Transfers-net 2,483,959 6,479,440 2,591,459 6,555,161 8,294,731 (498,329) - 1,813,005
---------------------------------------------------------------------------------------------------------
Total Deposits
and Contributions 3,906,568 6,810,915 2,693,879 6,836,341 8,755,221 (498,329) - 1,813,005
---------------------------------------------------------------------------------------------------------
Plan Interest in Master
Trust Investment Income 852,322 9,624 67,943 167,343 272,023 (636,417) 11,683 (11,498)
---------------------------------------------------------------------------------------------------------
Total Additions 4,758,890 6,820,539 2,761,822 7,003,684 9,027,244 (1,134,746) 11,683 1,801,507
---------------------------------------------------------------------------------------------------------
DEDUCTIONS
Withdrawals 245,548 67,929 55,167 85,011 56,025 492,326 - 139,845
Dividends Paid - - - - - 702,350 - -
Forfeitures 1,884 276 138 196 390 - - -
Transfer to/(from)
Thrift & Tax-Deferred
Savings Plan 22,113 - - - - 4,958 - 58,532
---------------------------------------------------------------------------------------------------------
Total Deductions 269,545 68,205 55,305 85,207 56,415 1,199,634 - 198,377
---------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS AVAILABLE
FOR BENEFITS 4,489,345 6,752,334 2,706,517 6,918,477 8,970,829 (2,334,380) 11,683 1,603,130
NET ASSETS AVAILABLE
FOR BENEFITS -
BEGINNING OF YEAR 3,505,131 - - - - 10,668,837 10,486 9,051,554
---------------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS -
END OF YEAR $ 7,994,476 $6,752,334 $2,706,517 $6,918,477 $8,970,829 $8,334,457 $22,169 $10,654,684
=========================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF THE PLAN
The Board of Directors of Public Service Electric and Gas Company (PSE&G or the
Company) adopted the Public Service Electric and Gas Company Employee Savings
Plan (Plan) to encourage thrift and savings by eligible bargaining unit
employees of PSE&G (Eligible Employees). It was first offered to Eligible
Employees in 1987 as a result of collective bargaining and contributions began
in January 1988. Effective January 1, 1996, the trust that holds the Plan assets
was converted into the Public Service Electric & Gas Company Master Employee
Benefit Plan Trust, (Master Trust), a master trust covering all of the Company's
qualified retirement plans including the Plan and the Public Service Electric &
Gas Company Thrift and Tax-Deferred Savings Plan (Thrift Plan) (See Note 4.
Investment of the Plan and Thrift Plan in the Master Trust.) The Plan was last
amended August 11, 1997, effective August 11, 1997, except for changes listed
below, which are effective subsequent to December 31, 1997. The Plan amendments
made during 1997 provide for the following: an automatic rebalancing of
investment funds; administrative and wording changes made, including the
transfer of age and service credits and availability of transferred amounts from
the Cash Balance Plan; partial withdrawals of nondeferred deposits and related
earnings permitted after termination of employment and prior to age 70 1/2.
The Plan permits, among other things, participation in the Plan by Affiliates of
PSE&G and their bargaining unit employees (each such participating Affiliate
with PSE&G, an "Employer"). Participation in the Plan is entirely voluntary,
except with respect to those employees who participate in the Employee Stock
Ownership Plan (ESOP) Fund as a result of their participation in the PSE&G Tax
Reduction Act Employee Stock Ownership Plan (TRASOP) and/or the PSE&G
Payroll-Based Employee Stock Ownership Plan (PAYSOP), which plans were merged
into this Plan in 1988.
An employee may participate in the Plan from the date of hire. Matching Company
Contributions begin when an employee has completed one Year of Service. At the
time any employee who is a Participant in the Thrift Plan becomes an Eligible
Employee for the Plan, that employee will automatically be enrolled in the Plan,
all balances in the Thrift Plan will be transferred to the Plan and all
contributions and investment elections in effect for the Thrift Plan will remain
in effect. Certain Eligible Employees may also elect to have a distribution from
another qualified corporate plan contributed as a rollover contribution with the
approval of PSE&G's Employee Benefits Committee (Committee), the Plan
Administrator.
Under the Plan, each participating employee (Participant), except as otherwise
noted, may elect to make basic deposits to Investment Funds of such
Participant's choosing within the Savings Account Fund of 1% - 7% of his/her
Compensation (Basic Deposits), and his/her Employer will contribute an amount
equal to 50% thereof, subject to certain exceptions and limitations (Employer
Contributions). Employer Contributions for Participants who are employed by the
Company with respect to Basic Deposits in excess of 5% and up to 7% of
Compensation are made in shares of the Common Stock of Public Service Enterprise
Group Incorporated (Enterprise), the parent of the Company, and are not
available for transfer to any other Fund or withdrawal from the Plan prior to
the Participant's termination of employment. In addition, a Participant may
elect to make supplemental deposits to his/her Savings Account Fund in
increments of 1% of Compensation up to an additional 18% of Compensation
(Supplemental Deposits), subject to certain limitations, without any
corresponding matching Employer Contribution. Participants may designate such
Basic and/or Supplemental Deposits as Nondeferred (post-income tax
contributions) or Deferred (pre-income tax contributions).
Participants employed by CEA Newark Bay Services, Inc., an affiliate of PSE&G,
may elect to make basic deposits to Investment Funds of such Participant's
choosing within the Savings Account Fund of 1% - 8% of their Compensation, and
the Employer will contribute an amount equal to 50% thereof, subject to certain
exceptions and limitations (Employer Contributions). In addition, CEA Newark Bay
Services, Inc. Participants may elect to make supplemental deposits to their
Savings Account Fund in increments of 1% of Compensation up to an additional 17%
of Compensation (Supplemental Deposits), subject to certain limitations, without
any corresponding matching Employer Contribution. Participants may designate
such Basic and/or Supplemental Deposits as Nondeferred (post-income tax
contributions) or Deferred (pre-income tax contributions).
Each Participant may also, within any Plan Year, make one or more Additional
Lump Sum Deposits on a Nondeferred basis in minimum amounts of $250 and in such
total amounts which, when aggregated with such Participant's Basic Deposits and
Supplemental Deposits, do not exceed 25% of his or her Compensation for that
Plan Year.
The maximum amount of Deferred Deposits to a Participant's Savings Account may
have to be limited to less than 25% of Compensation to meet requirements of the
Internal Revenue Code of 1986, as amended (IRC). The extent of any such
limitation will be determined from time to time by the Committee based on the
actual pattern of Deferred Deposits by all Participants. If the maximum
permitted percentage of Compensation for Savings Account Deferred Deposits is
reduced, then all Deferred Deposits in excess of such percentage will
automatically be treated as Nondeferred Deposits. This will result in taxable
income to the affected Participants for Deferred Deposits in excess of any limit
so established. The Committee will attempt to assure that any such limitation
will apply only to future contributions, but it is possible that, in order to
meet requirements of the IRC, the limitation will, in some circumstances, have
to be applied retroactively. Deferred Deposits may not generally be withdrawn
until age 59-1/2. Nondeferred Deposits, on the other hand, may be withdrawn at
any time subject to certain penalties and restrictions.
Savings Account Deposits are made through payroll deductions by the Employer,
rollover contributions from other qualified plans and Additional Lump Sum
Deposits. Deposits by Participants and Employer Contributions are transferred to
a Trustee and separately held in the Plan's Savings Account Fund of the Trust
Fund for investment and other transactions, as directed by Participants. Each
Participant is entitled to choose the investment Funds in which his/her Deposits
and Employer Contributions will be invested from among the investment Funds
offered under the Plan, except for Employer Contributions with respect to Basic
Deposits in excess of 6% for Participants employed by CEA Newark Bay Services,
Inc. and 5% for all others.
Bankers Trust Company is the Trustee of the Master Trust established pursuant to
the Plan.
The following Plan changes were effective subsequent to December 31, 1997:
1. Savings Plan amended to permit CEA Newark Bay Services, Inc. employees to
increase Basic Deposits from 6% to 8% of Compensation. The Employer
Contribution related to Basic Deposits in excess of 6% of Compensation
will be made in shares of Enterprise Common Stock and will not be
available for withdrawals or transfer prior to termination of employment.
2. The merger, for investment management purposes, of the Stable Value Funds
and the Conservative and Moderate Pre-Mixed Portfolios in the Plan and
Thrift and Tax Deferred Savings Plan.
Loan Provisions
The Trustee may, subject to the approval of PSE&G's Director Performance and
Rewards, lend a Participant an amount up to 50% of the value of the vested
portion of such Participant's Savings Account and ESOP Fund, but no more than
the aggregate value of such Participant's Savings Account or $50,000, whichever
is less. Any Participant loan must be for a principal amount of $1,000 or more
and no Participant may have more than two loans outstanding at any time. All
loans, including interest thereon, must be repaid by payroll deductions in equal
monthly installments of 12 to 60 months as selected by the Participant. However,
a Participant may prepay any such loan in full or in part in a lump sum in
accordance with such rules as are prescribed by the Committee. A Participant may
not apply for more than one loan in any calendar year. A loan to a Participant
is considered an investment of such Participant's Savings Account and repayments
of principal of any loan, together with interest thereon, are invested in the
Savings Account Investment Funds of the Plan in accordance with the
Participant's then-current investment direction for Deposits and Employer
Contributions.
Each loan bears interest at a rate fixed from time to time by the Committee
taking into consideration the then-current interest rates being charged by other
lenders. The rate of interest applicable to any loan at its inception remains in
effect for the duration of such loan. During 1997, the rate of interest on loans
granted to Participants, by quarter and starting with the first quarter, was
8-1/4%, 8-1/2%, 8-1/2%, 8-1/2% (See Note 2. SIGNIFICANT ACCOUNTING POLICIES -
Loans.)
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan have been prepared in accordance with
generally accepted accounting principles.
Use of Estimates
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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Dividends and Interest
Dividends, interest and other income attributable to each Investment Fund of the
Plan are reinvested in that Investment Fund to the extent not used to pay direct
expenses of that Investment Fund. (See Expenses of Plan, below.)
All Deposits and Employer Contributions in the Stable Value Fund are invested in
either traditional Guaranteed Investment Contracts issued by insurance companies
or other financial intermediaries (Traditional GICs) or Benefit Responsive
Agreements (Synthetic GICs) which are similar to Traditional GICs in terms of
their ability to preserve principal and provide a stable rate of return.
Synthetic GICs are different in that they are backed or secured by a separate
portfolio of high-quality fixed income securities that are directly owned by the
Plan. The portfolio is wrapped by a "book value wrapper", usually a financial
institution other than the investment manager of the Synthetic GIC, which
provides a crediting rate and which guarantees that benefit repayments will be
made at book value. Deposits and Employer Contributions earn interest at the
composite rate of all GICs in which the assets of the Stable Value Fund are then
invested. Such rate varies as such Traditional and Synthetic GICs mature or are
entered into, and as Deposits and Employer Contributions are made to and
withdrawn from such contracts. Under the contracts in effect during 1997, the
composite rate of interest earned by such assets so invested was not less than
6.38%.
ESOP Fund Participants receive quarterly payments directly from the Trustee
equal to the dividends paid to the Trustee on the shares of Enterprise Common
Stock held for their ESOP Fund.
Valuation of Investments
The value of the Enterprise Common Stock Fund, the Large Company Stock Index
Fund, the Intermediate Government Securities Fund, the International Stock Fund,
the Mid/Small Company Stock Fund and the shares of Enterprise Common Stock held
by the ESOP Fund are based upon quoted market values. The value of the Stable
Value Fund is based on the contract value of all GICs in which the assets of the
Stable Value Fund are invested. These contracts are included in the financial
statements at contract value, which approximates fair value. Temporary
investments are valued at cost, which approximates fair market value. Securities
transactions are accounted for on the trade date.
The Plan's financial statements have been prepared in accordance with financial
reporting requirements of the Employee Retirement Income Security Act of 1974,
as amended, (ERISA) as permitted by applicable rules. Under such requirements,
realized gains and losses from securities transactions are computed using an
adjusted cost basis as prescribed by the Department of Labor's (DOL) Rules and
Regulations for Reporting and Disclosure. The adjusted cost is the fair value of
the security at the beginning of the Plan Year, or cost if acquired since that
date. Unrealized gains and losses on securities held for investment are computed
on the basis of the change in fair value between the beginning and end of the
Plan Year.
Expenses of Plan
Effective January 1, 1997, all expenses incurred with the administration of the
Plan, including taxes and brokerage costs, are deducted from the Trust Fund.
However, prior to January 1, 1997, all expenses incurred in connection with the
administration of the Plan, including expenses of the Trustee, but excluding
brokerage commissions and taxes relating to the sale of shares of Enterprise
Common Stock at the direction of Participants, were paid directly by the
Employers.
The assets of the Common Stock Fund and the ESOP Fund are invested in shares of
Enterprise Common Stock. Shares of Enterprise Common Stock required for the
Common Stock Fund are purchased by the Trustee either directly from Enterprise
at its sole discretion, on the open market through a broker or from the ESOP
Fund. In situations where the ESOP Fund is in a "sell" position and the Common
Stock Fund is in a "buy" position, the Common Stock Fund will buy from the ESOP
Fund at the closing price on the New York Stock Exchange for that day. In such
case, no brokerage commissions will be charged on the transaction. Otherwise,
all shares sold for the Common Stock Fund and the ESOP Fund are sold by the
Trustee on the open market through a broker. The proceeds, net of brokerage
commissions and transfer taxes, are distributed to the Participant.
Loans
A loan to a Participant is considered an investment in such Participant's
Savings Account and the principal amount of the loan is treated as a separate
investment within the various sub-accounts of the Participant's Savings Account.
Repayments of the principal amount of the loan are credited to each such
sub-account and repayments of principal along with any accrued interest thereon
are invested in the Plan's Investment Funds in the same manner as the
Participant's then current-investment direction for Deposits and Employer
Contributions.
Loan amounts are taken from sub-accounts of a Participant's Savings Account in
the following order:
(a) Deferred Deposits
(b) Unmatured vested Employer Contributions
(c) Matured vested Employer Contributions
(d) Rollover Contributions
(e) Unmatured post-1986 Nondeferred Deposits
(f) Matured post-1986 Nondeferred Deposits
(g) Pre-1987 Nondeferred Deposits
Each loan is secured by an assignment of the Participant's entire right, title
and interest in and to the Trust Fund to the extent of the loan and
accrued interest thereon (See Note 1. SUMMARY OF THE PLAN - Loan Provisions.)
Interfund Transfers -- ESOP Fund to Savings Account
Participants are permitted to transfer all, but not less than all, shares of
Enterprise Common Stock from their ESOP Funds to their Savings Accounts. To
effect such transfers, the Trustee will sell the shares of Enterprise Common
Stock held in the ESOP Fund and invest the proceeds in the Savings Account Funds
designated by the Participant. The cash value of each share of Enterprise Common
Stock transferred will be equal to the price per share of Enterprise Common
Stock actually received by the Trustee. Any such transfer is treated as a
rollover contribution.
Holding Account
The Holding Account is a vehicle to record the transactions either from one
investment Fund to another investment Fund or from an investment Fund to an
outside source. Daily balances which remain in the Holding Account are
temporarily invested in short-term, liquid investments until disbursement.
Activity within the Holding Account includes inflows and outflows of cash
related to investment Fund transfers, Deposits, Employer Contributions,
withdrawals, receipts of dividends and interest, expenses incurred in connection
with the administration of the Plan, benefit payments and loan transactions.
Vesting
Employer Contributions to a Participant's Savings Account are immediately
vested upon a Participant's completion of five years of service with an
Employer, or when a Participant is eligible for retirement, disabled, laid off
or dies. All amounts credited to a Participant's ESOP Fund are fully vested.
Penalties Upon Withdrawal
If a Participant withdraws vested Employer Contributions and/or Deposits before
they have been in the Plan for twenty-four months, such Participant will lose
the matching Employer Contributions on Deposits made during the subsequent three
months. Distributions to Participants electing to withdraw Nondeferred Deposits
and Employer Contributions are made as soon as practicable after such elections
are received by the Plan's Record Keeper. Nondeferred Deposits may be withdrawn
at any time, but certain penalties may apply. Deferred Deposits may not be
withdrawn during employment prior to age 59-1/2 except for reasons of
extraordinary financial hardship and to the extent permitted by the IRC
(hardship withdrawals). Distributions to Participants of approved hardship
withdrawals are made as soon as practicable after such approval.
Rights Upon Termination
The Company expects and intends to continue the Plan indefinitely, but has
reserved the right to amend, suspend or terminate the Plan at any time. In the
event of termination of the Plan, the net assets of the Plan would be
distributed to the Participants based on the balances in their individual
accounts at the date of termination.
3. INVESTMENTS
The financial statements of the Plan include the following:
A. Savings Account Investment Funds
(1) The assets of the Stable Value Fund are invested in GICs and similar
investment instruments issued by insurance companies or other financial
institutions which contractually provide for a guarantee of principal
and interest for the respective contract periods. Effective October
1997, PRIMCO Capital Management was hired to manage the assets of the
Stable Value Fund. All contract values approximate fair value.
The following Traditional GICs are continuing in effect:
(i)A four and one-half year contract expiring December 31, 1999, with
Metropolitan Life Insurance Company, effective interest rate of
8.12%, contract value of $6,316,876;
(ii) A five-year contract expiring January 4, 1999, with Allstate Life
Insurance Company, effective interest rate of 5.65%, contract value
of $14,916,508;
(iii) A five-year contract expiring June 30, 1999, with New York Life
Insurance Company, effective interest rate of 7.07%, contract value
of $8,859,186;
(iv) A five-year contract expiring December 31, 1999, with Prudential
Life Insurance Company, effective interest rate of 8.01%, contract
value of $14,471,754; and
(v)A five-year contract expiring June 30, 2000, with AIG Life Insurance
Company, effective interest rate of 6.14%, contract value of
$8,460,099.
The following Synthetic GICs are continuing in effect:
(i)An open-ended contract with J.P. Morgan as the book value wrapper
and Pacific Investment Management Company managing the underlying
portfolio providing an effective credit rate, as of December 31,
1997, of 7.29% and contract value of $21,036,619. The credit rate for
the Synthetic GIC effective January 1, 1998 through March 31, 1998
was 7.47%.
(ii) An open-ended contract with The Chase Manhattan Bank as the book
value wrapper and Seix Investment Advisors managing the underlying
portfolio providing an effective crediting rate, as of December 31,
1997, of 6.96% and contract value of $16,508,149. The crediting rate
effective March 31, 1998 was 7.03%.
(iii) A five year floating-rate contract with Caisse des Depots,
expiring November 26, 2002, effective crediting rate as of December
31, 1997 of 5.95%, contract value of $2,011,115. The crediting rate
effective March 31, 1998 was 5.62%.
(2) The assets of the Enterprise Common Stock Fund are invested in
Enterprise Common Stock.
(3) Effective September 1997, the assets of the Large Company Stock Index
Fund are invested in the capital stock of the Vanguard Institutional
Index Fund ("Stock Index Equities Fund"), a no-load mutual fund managed
by The Vanguard Group, Inc. The prospectus for the Stock Index Equities
Fund indicates that such fund seeks to replicate the investment
performance of the Standard and Poor's 500 Composite Stock Price Index.
Prior to September 1997, the assets of the Large Company Stock Index
Fund were invested in the Bankers Trust Institutional Equity 500 Index
Fund managed by Bankers Trust Company.
(4) The assets of the Intermediate Government Securities Fund are invested
in the capital stock of the Delaware-Voyageur U.S. Government Securities
Fund ("Delaware-Voyageur U.S. Government Securities Fund"), an
open-ended mutual fund managed by the Delaware Management Company, Inc.
The prospectus of the Delaware-Voyageur U.S. Government Securities Fund
indicates that such fund invests primarily in U.S. Treasury bills,
notes, bonds and other obligations issued or unconditionally guaranteed
by the U.S. Government, or otherwise backed by the full faith and credit
of the U.S. Government, and repurchase agreements fully secured by such
obligations.
(5) The assets of the International Stock Fund are invested in the capital
stock of T. Rowe Price International Funds Inc. ("T. Rowe Price
International Stock Fund"), a no-load, open-ended investment company or
mutual fund managed by Rowe Price-Fleming International, Inc. The
prospectus for T. Rowe Price International Stock Fund indicates that
such fund invests primarily in common stocks of established, non-U.S.
companies.
(6) The assets of the Mid/Small Company Stock Fund are invested in the
capital stock of Putnam Vista Fund, an open-ended investment company
managed by Putnam Investment Management, Inc. The prospectus for the
Putnam Vista Fund indicates that such fund invests in a diversified
portfolio of common stocks which may include widely-traded common stocks
of larger companies as well as common stocks of smaller, less well-known
companies.
(7) The assets of the Conservative Pre-Mix Portfolio are invested in
specific percentages within a mix of five existing Plan investment
Funds: 40% Stable Value Fund, 20% Intermediate Government Securities
Fund, 20% Large Company Stock Index Fund, 10% International Stock Fund,
and 10% Mid/Small Company Stock Fund. Every quarter the Trustee
re-aligns this portfolio to match its conservative (risk and return)
investment strategy of 60% in bonds and 40% in stocks.
(8) The assets of the Moderate Pre-Mix Portfolio are invested in specific
percentages within a mix of five existing Plan investment Funds: 25%
Large Company Stock Index Fund, 20% Stable Value Fund, 20% International
Stock Fund, 20% Intermediate Government Securities Fund, and 15%
Mid/Small Company Stock Fund. Every quarter the Trustee re-aligns this
portfolio to match its moderate (risk and return) investment strategy of
60% in stocks and 40% in bonds.
(9) The assets of the Aggressive Pre-Mix Portfolio are invested in
specific percentages within a mix of four existing Plan investment
Funds: 30% Large Company Stock Index Fund, 25% International Stock Fund,
25% Mid/Small Company Stock Fund, and 20% Intermediate Government
Securities Fund. Every quarter the Trustee re-aligns this portfolio to
match its aggressive (risk and return) investment strategy of 80% in
stocks and 20% in bonds.
B. ESOP FUND
Shares of Enterprise Common Stock held as assets of the Plan's ESOP Fund
were transferred to the Plan in 1988 as a result of the spin-off and
merger with the Plan of the bargaining unit portions of PSE&G's former
TRASOP and PAYSOP. No additional contributions to or transfers into the
ESOP Fund are presently permitted or were allowed during 1997.
C. PARTICIPANTS
Participants
As of December 31,
------------------
1997 1996
----- -----
Total Plan Participants 7,708 7,704
Participants by Fund
Stable Value Fund 4,146 1,968
Enterprise Common Stock Fund 5,098 1,812
Large Company Stock Index Fund 3,051 1,251
Intermediate Government Securities Fund 493 245
International Stock Fund 1,271 630
Mid/Small Company Stock Fund (1) 1,404 454
Conservative Pre-Mix Portfolio (1) 396 144
Moderate Pre-Mix Portfolio (1) 917 326
Aggressive Pre-Mix Portfolio (1) 1,265 446
ESOP Fund 1,067 1,176
------------------------------------------
(1) New Investment Option in 1996.
4. INVESTMENT OF THE PLAN AND THRIFT PLAN IN THE MASTER TRUST
Since January 1, 1996, the Plan's investments have been included in the Master
Trust which was established for the investment of assets of all of the Company's
qualified retirement plans including the Plan and the Thrift Plan. The following
tables present the fair values of and the investment income recognized by the
investments of the Plan and Thrift Plan in the Master Trust as of and for the
periods ending December 31, 1997 and 1996. As of December 31, 1997 and 1996, the
Plan's interest in such assets of the Master Trust were approximately 35% and
37%, respectively.
December 31,
------------
1997 1996
---- ----
Investments at fair value:
Participant Loans $ 23,576,663 $ 22,451,539
Cash and Cash equivalents 47,743,519 41,413,758
Common Stock of Public
Service Enterprise Group 92,087,265 75,274,227
Mutual Funds 326,616,013 218,696,575
Guaranteed Insurance Contracts 279,675,584 308,079,794
------------- -------------
$769,699,044 $665,915,893
============= =============
December 31,
------------
1997 1996
---- ----
Investment income recognized:
Net appreciation in fair value of
Mutual Funds* $ 57,823,392 $32,523,112
Net appreciation/(depreciation) in
fair value of Common Stock
of Enterprise 14,876,883 (11,569,069)
Interest from Mutual Funds 864,144 45,265
Interest from Common Stock of
Enterprise Funds 319,066 154,745
Interest from Guaranteed Insurance
Contracts 20,956,370 20,845,795
Dividends from Common Stock of
Enterprise 5,268,123 6,676,501
------------ ------------
$100,107,978 $48,676,349
============ ============
* Includes Dividends earned from Mutual Funds.
5. UNIT VALUE INFORMATION -- SAVINGS ACCOUNT INVESTMENT FUNDS
Unit values of the Investment Funds are determined at the end of each business
day (Valuation Day) by dividing the market value of net assets available for
benefits by the number of units allocated to all Participants as of the
respective Valuation Date.
New units are allocated to each Participant's Savings Account at the end of each
business day by dividing Deposits made by, or on behalf of, such Participant for
such business day and the related Employer Contributions, if any, together with
repayment of the principal amount of any loan to the Participant's Savings
Account, including interest paid thereon, by the unit value determined as of the
end of the Valuation Date. If a Participant makes a transfer between Investment
Funds, makes a withdrawal, receives a distribution or a loan or makes a rollover
contribution, the amount so transferred, withdrawn, distributed, loaned or
rolled over is also determined by the unit value of each Investment Fund as of
the applicable Valuation Date for such transaction.
The unit information of investments by Investment Fund as of the last business
day of each year is as follows:
Unit Value
Investment Fund Year (Dollars) Number of Units
--------------- ---- --------- ---------------
Stable Value Fund 1997 $12.870313 7,702,788.469
1996 $12.098876 8,350,095.525
Enterprise Common Stock 1997 $11.554155 2,742,071.404
Fund 1996 $ 9.916231 2,526,215.433
Large Company Stock Index 1997 $15.509003 3,884,339.868
Fund 1996 $11.659470 3,124,673.082
Intermediate Govt. 1997 $11.443806 189,183.902
Securities Fund 1996 $10.507339 206,692.815
International Stock Fund 1997 $11.238976 767,863.690
1996 $10.966759 728,973.380
Mid/Small Company Stock 1997 $12.276519 1,149,212.528
Fund (1) 1996 $ 9.984863 676,256.863
Conservative Pre-Mix 1997 $11.709055 393,920.168
Portfolio (1) 1996 $10.316356 261,752.007
Moderate Pre-Mix 1997 $11.943916 878,893.594
Portfolio (1) 1996 $10.370244 666,547.701
Aggressive Pre-Mix 1997 $12.264464 1,152,300.026
Portfolio (1) 1996 $10.399420 861,443.643
- -----------------------------
(1) New Investment Option in 1996.
ESOP FUND VALUATION
Enterprise Common Stock share value is determined by using the closing market
price on the New York Stock Exchange as reported in the Wall Street Journal as
Composite Transactions. If a Participant withdraws shares, the shares are, at
the Participant's election, either distributed to such Participant or sold by
the Trustee and the proceeds, net of commissions and taxes, are distributed to
the Participant. The ESOP Fund information as of the last business day of each
year is as follows:
Year Price per share Number of Shares
---- --------------- ----------------
1997 $31.6875 275,610
1996 $27.2500 306,402
6. FEDERAL INCOME TAXES
The Company believes that the Plan and its related Trust, including the portions
of the former TRASOP and PAYSOP applicable to bargaining unit Participants,
which portions were spun-off and merged with the Plan effective January 1, 1988,
are qualified under Sections 401(a) and 501(a) of the IRC and, as such, the Plan
is exempt from taxation on its earnings. A determination letter to such effect,
dated April 8, 1998, was obtained from the Internal Revenue Service.
Participants are not taxed on Company Contributions, Deferred Deposits, or on
the earnings credited to their Savings Account, until distribution of such
amounts from the Plan.
7. COMPLIANCE WITH ERISA
The Plan is generally subject to the provisions of Titles I and II of ERISA,
including the provisions with respect to reporting, disclosure, participation,
vesting and fiduciary responsibility. However, it is not subject to the funding
requirements of Title I and benefits under the Plan are not guaranteed by the
Pension Benefit Guarantee Corporation under Title IV of ERISA.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
Public Service Electric and Gas Company
Employee Savings Plan
--------------------------------------------
(Name of Plan)
By: M. PETER MELLETT
-----------------------------------
M. Peter Mellett
Chairman of Employee
Benefits Committee
Date: June 23, 1998
EXHIBIT INDEX
Exhibit Number
1 Public Service Electric and Gas Company Employee Savings Plan, amended
effective August 11, 1997.
2 Independent Auditors' Consent