SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------------------
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
-----------------------------------------------------------
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
FOR YEAR ENDED DECEMBER 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No fee required]
For the transition period from to
------- ---------
-----------------------------------------------------
COMMISSION FILE NUMBER 0-17605
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
YANKEE ENERGY SYSTEM, INC.
401(k) EMPLOYEE STOCK OWNERSHIP PLAN
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
YANKEE ENERGY SYSTEM, INC.
599 Research Parkway
Meriden, CT 06450
YANKEE ENERGY SYSTEM, INC.
401(k) EMPLOYEE STOCK OWNERSHIP PLAN
FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1996 AND 1995
INDEX
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
Statement of Net Assets Available for
Benefits as of December 31, 1996
Statement of Net Assets Available for
Benefits as of December 31, 1995
Statement of Changes in Net Assets Available
for Benefits for the Year Ended December 31, 1996
Statement of Changes in Net Assets Available
for Benefits for the Year Ended December 31, 1995
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
SUPPLEMENTAL SCHEDULES:
Schedule I: Item 27a - Schedule of Assets Held
for Investment Purposes as of
December 31, 1996
Schedule II: Item 27d - Schedule of Reportable
Transactions for the
Year Ended December 31, 1996
All schedules, except as set forth above, are omitted as not
applicable or not required.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Plan Administrator of the
Yankee Energy System, Inc.
401(k) Employee Stock Ownership Plan:
We have audited the accompanying statements of net assets
available for benefits of Yankee Energy System, Inc. 401(k)
Employee Stock Ownership Plan (the Plan) as of December 31, 1996
and 1995, and the related statements of changes in net assets
available for benefits for the years then ended. 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 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 the 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 of the Plan as of December 31, 1996 and
1995, and the changes in net assets available for benefits for
the years then ended 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 reportable transactions and assets held for
investment purposes 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. The supplemental schedules have been subjected to the
auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
Hartford, Connecticut
May 16, 1997
YANKEE ENERGY SYSTEM, INC.
401(k) EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1996
Merrill Lynch
Retirement
Cash Preservation
Fund Trust
---------- -------------
ASSETS:
Cash $ 3,289 $ -
Short term investments - 7,504,288
Mutual funds - -
Common stock - -
Employer contributions
receivable - 6,358
Employee contributions
receivable - 37,672
Accrued interest receivable 6,058 -
-------- ------------
Total assets 9,347 7,548,318
-------- ------------
LIABILITIES:
Note payable-long term - -
Note payable-current - -
Accounts payable - -
-------- -----------
Total liabilities - -
-------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS $ 9,347 $7,548,318
========= ===========
Merrill Lynch
Growth Fund Northeast
Investment and Utilities
Retirement Stock
Class A Fund
-------------- -----------
ASSETS:
Cash $ - $ -
Short term investments - -
Mutual funds 5,444,954 -
Common stock - 1,346,425
Employer contributions
receivable 2,840 -
Employee contributions
receivable 39,311 -
Accrued interest receivable - -
----------- -----------
Total assets 5,487,105 1,346,425
----------- -----------
LIABILITIES:
Note payable-long term - -
Note payable-current - -
Accounts payable - -
---------- -----------
Total liabilities - -
---------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS $5,487,105 $1,346,425
========== ===========
Merrill Merrill
Lynch Lynch
Basic Value Capital
Fund Fund
Class A Class A
----------- ----------
ASSETS:
Cash $ - $ -
Short term investments - -
Mutual funds 2,877,346 1,616,090
Common stock - -
Employer contributions
receivable 1,691 1,439
Employee contributions
receivable 24,489 14,483
Accrued interest receivable - -
----------- -----------
Total assets 2,903,526 1,632,012
----------- -----------
LIABILITIES:
Note payable-long term - -
Note payable-current - -
Accounts payable - -
---------- -----------
Total liabilities - -
---------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS $2,903,526 $1,632,012
========== ==========
Merrill
Lynch
YES, Inc. Global
Loan Allocation
Fund Fund Class A
---------- ------------
ASSETS:
Cash $ - $ -
Short term investments 641,534 -
Mutual funds - 383,005
Common stock - -
Employer contributions
receivable - 430
Employee contributions
receivable - 6,452
Accrued interest receivable - -
----------- -----------
Total assets 641,534 389,887
----------- -----------
LIABILITIES:
Note payable-long term - -
Note payable-current - -
Accounts payable - -
---------- -----------
Total liabilities - -
---------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS $ 641,534 $ 389,887
========== ==========
YES, Inc.
YES, Inc. Voluntary
Allocation Stock
Fund Fund
---------- ---------
ASSETS:
Cash $ - $ -
Short term investments - -
Mutual funds - -
Common stock 3,004,905 1,752,396
Employer contributions
receivable 453,532 2,015
Employee contributions
receivable - 10,950
Accrued interest receivable - -
----------- -----------
Total assets 3,458,437 1,765,361
----------- -----------
LIABILITIES:
Note payable-long term - -
Note payable-current - -
Accounts payable - -
---------- -----------
Total liabilities - -
---------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS $3,458,437 $1,765,361
========== ==========
Loan 1996
Suspense Total
-------- ----------
ASSETS:
Cash $ - $ 3,289
Short term investments - 8,145,822
Mutual funds - 10,321,395
Common stock 2,235,151 8,338,877
Employer contributions
receivable - 468,305
Employee contributions
receivable - 133,357
Accrued interest receivable - 6,058
----------- -----------
Total assets 2,235,151 27,417,103
----------- -----------
LIABILITIES:
Note payable-long term 600,000 600,000
Note payable-current 400,000 400,000
Accounts payable - -
---------- -----------
Total liabilities 1,000,000 1,000,000
---------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS $1,235,151 $26,417,103
========== ===========
The accompanying notes are an integral part of these financial
statements.
YANKEE ENERGY SYSTEM, INC.
401(k) EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1995
Merrill Lynch
Retirement
Cash Preservation
Fund Trust
------- ------------
ASSETS:
Cash $ - $ -
Short term investments - 7,512,415
Mutual funds - -
Common stock - -
Employer contributions
receivable - -
Employee contributions
receivable - 47,218
---------- ----------
Total assets - 7,559,633
---------- ----------
LIABILITIES:
Note payable-long term - -
Note payable-current - -
Accounts payable 38,043 -
---------- ----------
Total liabilities 38,043 -
---------- ----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ (38,043) $7,559,633
============ ==========
Merrill Lynch
Growth Fund Northeast
Investment and Utilities
Retirement Stock
Class A Fund
-------------- ---------
ASSETS:
Cash $ - $ -
Short term investments - -
Mutual funds 3,879,539 -
Common stock - 2,919,374
Employer contributions
receivable - -
Employee contributions
receivable 32,639 -
---------- ----------
Total assets 3,912,178 2,919,374
---------- ----------
LIABILITIES:
Note payable-long term - -
Note payable-current - -
Accounts payable - -
---------- ----------
Total liabilities - -
---------- ----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ 3,912,178 $2,919,374
=========== ==========
Merrill Lynch
Basic Value Merrill Lynch
Fund Capital Fund
Class A Class A
------------- -------------
ASSETS:
Cash $ - $ -
Short term investments - -
Mutual funds 2,179,247 1,254,357
Common stock - -
Employer contributions
receivable - -
Employee contributions
receivable 21,511 13,136
---------- ----------
Total assets 2,200,758 1,267,493
---------- ----------
LIABILITIES:
Note payable-long term - -
Note payable-current - -
Accounts payable - -
---------- ----------
Total liabilities - -
---------- ----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ 2,200,758 $1,267,493
=========== ==========
Merrill Lynch
Yes, Inc. Global
Loan Allocation
Fund Fund Class A
--------- ------------
ASSETS:
Cash $ - $ -
Short term investments 339,450 -
Mutual funds - 102,222
Common stock - -
Employer contributions
receivable - -
Employee contributions
receivable - 1,780
---------- ----------
Total assets 339,450 104,002
---------- ----------
LIABILITIES:
Note payable-long term - -
Note payable-current - -
Accounts payable - -
---------- ----------
Total liabilities - -
---------- ----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ 339,450 $ 104,002
=========== ==========
YES, Inc. YES, Inc.
Allocation Voluntary
Fund Stock Fund
---------- ----------
ASSETS:
Cash $ - $ -
Short term investments - -
Mutual funds - -
Common stock 3,497,219 1,956,448
Employer contributions
receivable 520,568 -
Employee contributions
receivable - 12,775
---------- ----------
Total assets 4,017,787 1,969,223
---------- ----------
LIABILITIES:
Note payable-long term - -
Note payable-current - -
Accounts payable - -
---------- ----------
Total liabilities - -
---------- ----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ 4,017,787 $1,969,223
=========== ==========
Loan 1995
Suspense Total
-------- -----
ASSETS:
Cash $ - $ -
Short term investments - 7,851,865
Mutual funds - 7,415,365
Common stock 3,160,921 11,533,962
Employer contributions
receivable - 520,568
Employee contributions
receivable - 129,059
---------- ----------
Total assets 3,160,921 27,450,819
---------- ----------
LIABILITIES:
Note payable-long term 1,000,000 1,000,000
Note payable-current 400,000 400,000
Accounts payable 47,748 85,791
---------- ----------
Total liabilities 1,447,748 1,485,791
---------- ----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ 1,713,173 $25,965,028
=========== ===========
The accompanying notes are an integral part of these financial
statements.
YANKEE ENERGY SYSTEM, INC.
401(k) EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1996
Participant Directed
--------------------
Merrill Lynch
Cash Retirement
Fund Preservation Trust
------ ------------------
ADDITIONS:
Employee contributions
and rollovers $ - $ 522,829
Employer contributions - 92,877
Interfund transfers - 8,015,932
Earnings -
Interest 3,902 16,054
Dividends - 460,811
Realized gain (loss) - -
Unrealized gain (loss) - -
------------- ------------
Total additions 3,902 9,108,503
------------ ------------
DEDUCTIONS:
Interfund transfers - 8,304,202
Benefit payments (43,488) 815,616
Interest expense - -
------------ ----------
Total deductions (43,488) 9,119,818
------------ ----------
Net increase (decrease) 47,390 (11,315)
NET ASSETS AVAILABLE FOR
BENEFITS, beginning of year (38,043) 7,559,633
------------ ----------
NET ASSETS AVAILABLE FOR
BENEFITS, end of year $ 9,347 $7,548,318
=========== ==========
Participant Directed
--------------------------------
Merrill Lynch
Growth Fund Northeast
Investment and Utilities
Retirement Stock
Class A Fund
-------------- ----------
ADDITIONS:
Employee contributions
and rollovers $ 455,932 $ -
Employer contributions 36,917 -
Interfund transfers 514,186 -
Earnings -
Interest 10,252 -
Dividends 403,618 180,442
Realized gain (loss) 18,955 (174,552)
Unrealized gain (loss) 767,965 (1,123,798)
------------- ------------
Total additions 2,207,825 (1,117,908)
------------ ------------
DEDUCTIONS:
Interfund transfers 536,912 284,207
Benefit payments 95,986 170,834
Interest expense - -
------------ ----------
Total deductions 632,898 455,041
------------ ----------
Net increase (decrease) 1,574,927 (1,572,949)
NET ASSETS AVAILABLE FOR
BENEFITS, beginning of year 3,912,178 2,919,374
------------ ----------
NET ASSETS AVAILABLE FOR
BENEFITS, end of year $ 5,487,105 $ 1,346,425
=========== ==========
Participant Directed
--------------------------------
Merrill Lynch Merrill Lynch
Basic Value Capital
Fund Fund
Class A Class A
------------- -------------
ADDITIONS:
Employee contributions
and rollovers $ 305,796 $ 178,113
Employer contributions 22,085 19,631
Interfund transfers 286,737 221,832
Earnings -
Interest 5,230 4,965
Dividends 189,645 152,542
Realized gain (loss) 23,071 4,282
Unrealized gain (loss) 201,889 19,176
------------- ------------
Total additions 1,034,453 600,541
------------ ------------
DEDUCTIONS:
Interfund transfers 99,466 102,754
Benefit payments 232,219 133,268
Interest expense - -
------------ ----------
Total deductions 331,685 236,022
------------ ----------
Net increase (decrease) 702,768 364,519
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of year 2,200,758 1,267,493
------------ ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $ 2,903,526 $ 1,632,012
=========== ==========
Participant
Directed
--------------
Merrill Lynch
Global
YES, Inc. Allocation
Loan Fund Fund Class A
--------- ------------
ADDITIONS:
Employee contributions
and rollovers $ - $ 58,146
Employer contributions - 4,058
Interfund transfers (157,164) 197,097
Earnings -
Interest - 726
Dividends - 34,166
Realized gain (loss) - 122
Unrealized gain (loss) - 5,192
------------- ------------
Total additions (157,164) 299,507
------------- ------------
DEDUCTIONS:
Interfund transfers (464,282) 5,546
Benefit payments 5,034 8,076
Interest expense - -
------------ ----------
Total deductions (459,248) 13,622
------------ ----------
Net increase (decrease) 302,084 285,885
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of year 339,450 104,002
------------ ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $ 641,534 $ 389,887
=========== ==========
Participant
Directed
--------------
YES, Inc. YES, Inc.
Allocation Voluntary
Fund Stock Fund
---------- ----------
ADDITIONS:
Employee contributions
and rollovers $ - $ 153,995
Employer contributions 454,268 25,290
Interfund transfers - 70,522
Earnings -
Interest - 8,565
Dividends 155 126,651
Realized gain (loss) (1,417) 869
Unrealized gain (loss) (593,296) (315,788)
------------- ------------
Total additions (140,290) 70,104
------------- ------------
DEDUCTIONS:
Interfund transfers 120,423 159,914
Benefit payments 298,637 114,052
Interest expense - -
------------ ----------
Total deductions 419,060 273,966
------------ ----------
Net increase (decrease) (559,350) (203,862)
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of year 4,017,787 1,969,223
------------ ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $ 3,458,437 $ 1,765,361
=========== ==========
Loan 1996
Suspense Total
-------- -----
ADDITIONS:
Employee contributions
and rollovers $ - $1,674,811
Employer contributions - 655,126
Interfund transfers - 9,149,142
Earnings -
Interest - 49,694
Dividends - 1,548,030
Realized gain (loss) - (128,670)
Unrealized gain (loss) (525,770) (1,564,430)
------------- ------------
Total additions (525,770) 11,383,703
------------- ------------
DEDUCTIONS:
Interfund transfers - 9,149,142
Benefit payments - 1,830,234
Interest expense (47,748) (47,748)
------------ ----------
Total deductions (47,748) 10,931,628
------------ ----------
Net increase (decrease) (478,022) 452,075
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of year 1,713,173 25,965,028
------------ ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $ 1,235,151 $26,417,103
=========== ==========
The accompanying notes are an integral part of these financial
statements.
YANKEE ENERGY SYSTEM, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1995
Participant
Directed
-------------
Merrill Lynch
Retirement
Cash Preservation
Fund Trust
---------- ------------
ADDITIONS:
Employee contributions
and rollovers $ 484 $ 313,456
Employer contributions 75 40,688
Interfund transfers in - 701,762
Earnings -
Interest 1,976 294,991
Dividends - 236,084
Realized gain (loss) - -
Unrealized gain (loss) - (22,877)
--------------- ---------------
Total additions 2,535 1,564,104
--------------- ---------------
DEDUCTIONS:
Interfund transfers out - 1,087,104
Benefit payments 40,578 1,212,743
Interest expense - -
--------------- ---------------
Total deductions 40,578 2,299,847
--------------- ---------------
Net increase (decrease) (38,043) (735,743)
NET ASSETS AVAILABLE FOR
BENEFITS, beginning
of year - 8,295,376
--------------- ---------------
NET ASSETS AVAILABLE FOR
BENEFITS, end of year $ (38,043) $ 7,559,633
================ ===============
Participant Directed
----------------------------------
Merrill Lynch
Growth Fund Northeast
Investment and Utilities
Retirement Stock
Class A Fund
--------------- ----------
ADDITIONS:
Employee contributions
and rollovers $ 188,709 $ -
Employer contributions 11,886 -
Interfund transfers in 577,708 659
Earnings -
Interest 7,725 5,000
Dividends 373,003 185,707
Realized gain (loss) 863,491 160,463
Unrealized gain (loss) (481,778) 188,451
--------------- ---------------
Total additions 1,540,744 540,280
--------------- ---------------
DEDUCTIONS:
Interfund transfers out 113,178 263,290
Benefit payments 187,699 390,859
Interest expense - -
--------------- ---------------
Total deductions 300,877 654,149
--------------- ---------------
Net increase (decrease) 1,239,867 (113,869)
NET ASSETS AVAILABLE FOR
BENEFITS, beginning
of year 2,672,311 3,033,243
--------------- ---------------
NET ASSETS AVAILABLE FOR
BENEFITS, end of year $ 3,912,178 $ 2,919,374
================ ===============
Participant Directed
----------------------------------
Merrill Lynch
Basic Value Merrill Lynch
Fund Capital Fund
Class A Class A
------------- -------------
ADDITIONS:
Employee contributions
and rollovers $ 131,978 $ 79,756
Employer contributions 7,445 5,832
Interfund transfers in 547,983 236,685
Earnings -
Interest 5,022 2,929
Dividends 99,439 100,563
Realized gain (loss) 272,856 80,609
Unrealized gain (loss) 62,859 45,714
--------------- ---------------
Total additions 1,127,582 552,088
--------------- ---------------
DEDUCTIONS:
Interfund transfers out 116,244 84,509
Benefit payments 153,386 139,107
Interest expense - -
--------------- ---------------
Total deductions 269,630 233,616
--------------- ---------------
Net increase (decrease) 857,952 328,472
NET ASSETS AVAILABLE FOR
BENEFITS, beginning
of year 1,342,806 939,021
--------------- ---------------
NET ASSETS AVAILABLE FOR
BENEFITS, end of year $ 2,200,758 $ 1,267,493
================ ===============
Participant
Directed
--------------
Merrill Lynch
YES, Inc. Global
Loan Allocation
Fund Fund Class A
--------- ------------
ADDITIONS:
Employee contributions
and rollovers $ - $ 5,102
Employer contributions - 406
Interfund transfers in (3,796) 95,271
Earnings -
Interest - 30
Dividends - 6,303
Realized gain (loss) - -
Unrealized gain (loss) - (3,034)
--------------- ---------------
Total additions (3,796) 104,078
--------------- ---------------
DEDUCTIONS:
Interfund transfers out (343,246) 76
Benefit payments - -
Interest expense - -
--------------- ---------------
Total deductions (343,246) 76
--------------- ---------------
Net increase (decrease) 339,450 104,002
NET ASSETS AVAILABLE FOR
BENEFITS, beginning
of year - -
--------------- ---------------
NET ASSETS AVAILABLE FOR
BENEFITS, end of year $ 339,450 $ 104,002
================ ===============
Participant
Directed
-------------
YES, Inc.
YES, Inc. Voluntary
Allocation Stock
Fund Fund
---------- ---------
ADDITIONS:
Employee contributions
and rollovers $ - $ 87,135
Employer contributions 568,448 11,106
Interfund transfers in - 303,057
Earnings -
Interest 57,913 1,687
Dividends 91,380 63,138
Realized gain (loss) (7,508) 2,495
Unrealized gain (loss) 484,326 261,367
--------------- ---------------
Total additions 1,194,559 729,985
--------------- ---------------
DEDUCTIONS:
Interfund transfers out - 132,980
Benefit payments 375,767 43,943
Interest expense - -
--------------- ---------------
Total deductions 375,767 176,923
--------------- ---------------
Net increase (decrease) 818,792 553,062
NET ASSETS AVAILABLE FOR
BENEFITS, beginning
of year 3,198,995 1,416,161
--------------- ---------------
NET ASSETS AVAILABLE FOR
BENEFITS, end of year $ 4,017,787 $ 1,969,223
================ ===============
Loan 1995
Suspense Total
-------- -----
ADDITIONS:
Employee contributions
and rollovers $ 974,201 $ 1,780,821
Employer contributions 110,986 756,872
Interfund transfers in - 2,459,329
Earnings -
Interest 27,680 404,953
Dividends 117,186 1,272,803
Realized gain (loss) - 1,372,406
Unrealized gain (loss) 713,832 1,248,860
--------------- ---------------
Total additions 1,943,885 9,296,044
--------------- ---------------
DEDUCTIONS:
Interfund transfers out 1,005,194 2,459,329
Benefit payments - 2,544,082
Interest expense 199,931 199,931
--------------- ---------------
Total deductions 1,205,125 5,203,342
--------------- ---------------
Net increase (decrease) 738,760 4,092,702
NET ASSETS AVAILABLE FOR
BENEFITS, beginning
of year 974,413 21,872,326
--------------- ---------------
NET ASSETS AVAILABLE FOR
BENEFITS, end of year $ 1,713,173 $25,965,028
================ ===============
The accompanying notes are an integral part of these financial
statements.
YANKEE ENERGY SYSTEM, INC.
401(k) EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1996 AND 1995
1. Establishment of The Plan:
-------------------------
The Yankee Energy System, Inc. 401(k) Employee Stock
Ownership Plan (the Plan) was established and effective on
July 1, 1989 (the effective date) following the divestiture
of the gas business of the Connecticut Light and Power
Company (CL&P), a wholly owned subsidiary of Northeast
Utilities (NU), and the related creation of Yankee Energy
System, Inc. (YES). Each transferred gas employee
participating in the Northeast Utilities Tax Reduction Act
Employee Stock Ownership Plan (TRAESOP), Payroll Based
Employee Stock Ownership Plan (PAYSOP) or Supplemental
Retirement Savings Plan became a participant in the Plan
effective July 1, 1989. Participant account balances and
$7,203,056 in assets were transferred to the Plan on the
effective date. The assets were comprised of NU common
stock and cash.
2. Plan Description:
----------------
The following description of the Plan provides only general
information. Participants should refer to the Plan
agreement for a more complete description of the Plan's
provisions.
General -
-------
The Plan is a defined contribution 401(k) Employee Stock
Ownership Plan established to provide benefits to eligible
employees. Participation in the Plan is voluntary. Union
employees become eligible to participate on the first day of
the month following the completion of one year of service.
Non-union employees become eligible to participate on the
first day of the month following the completion of six
months of service.
Contributions -
-------------
Participants contribute between 1% and 12% of compensation
subject to limitations set forth by the Plan. Investment of
employee contributions in the various funds is at the
employees' discretion. YES matches 100% of non-union
employee pre-tax contributions annually up to 3% of
compensation and 50% of union employee pre-tax contributions
each month up to 5% of compensation.
Benefit payments -
----------------
Unless a participant elects otherwise, benefit distributions
are made in a lump sum not later than sixty days following
the end of the Plan year following the later of the
participant's 65th birthday, the 10th anniversary of the
date on which participation commenced or the termination of
employment. In the event of the death of a participant
prior to distribution, benefits will be paid to a designated
beneficiary in a lump sum. Distribution will commence not
later than 90 days following the Plan year end in which the
participant attains age 70 and one half years.
Vesting -
-------
Non-union employees become 100% vested upon commencing
participation in the Plan. Union employees shall at all
times be fully vested in employee contributions and will
vest in the employer contributions in accordance with the
following schedule:
Years of Service Vesting %
---------------- --------
1 20%
2 40%
3 60%
4 80%
5 or more 100%
The account balances of union employees, as of June 3, 1989,
formerly participating in the NU Supplemental Retirement
Savings Plan and NU TRAESOP and PAYSOP became fully vested
on July 1, 1989.
Not withstanding the foregoing, union participants shall be
fully vested in employer contributions upon reaching age 65
or in the event of death or total disability. Any union
employee forfeitures will be used to reduce future employer
contributions.
Loans -
-----
Participants may borrow up to the lesser of 50% of the
participants vested interest in his total account or
$50,000, reduced by the highest outstanding balance of loans
from the Plan during the one-year period preceding the date
of the loan.
Investment options -
------------------
The Plan consists of ten funds as follows:
Cash Fund -
Represents a cash fund which is used as a
temporary account for overnight transactions and
features an investment sweep option to earn
interest daily.
Merrill Lynch Retirement Preservation Trust -
Provides preservation of participants'
investments, liquidity and current income that is
typically higher than money market funds.
Merrill Lynch Growth Fund for Investment and Retirement
Class A -
Invests in securities, primarily equities.
Northeast Utilities Stock Fund -
Account maintains Northeast Utilities stock
belonging to transferred CL&P and Northeast
Utilities Service Company (NUSCO) employees
formerly participating in the NU Supplemental
Retirement Savings Plan.
Merrill Lynch Basic Value Fund Class A -
Invests in securities, primarily equities.
Merrill Lynch Capital Fund Class A -
Invests in equity securities, corporate bonds and
money market securities.
YES, Inc. Loan Fund -
Represents a clearing account for participant
loans.
Merrill Lynch Global Allocation Fund Class A -
Invests in U.S. and foreign equity, debt and money
market securities.
YES, Inc. Allocation Fund -
Represents the employer matching fund which
invests in Yankee Energy System, Inc. common
stock.
YES, Inc. Voluntary Stock Fund -
Invests in Yankee Energy System, Inc. common
stock.
3. Summary of Significant Accounting Policies:
------------------------------------------
Basis of accounting -
-------------------
The accompanying financial statements and schedules of the
Plan have been prepared on the accrual basis of accounting.
Administrative expenses -
-----------------------
Administrative expenses of the Plan are paid from the Plan
assets unless paid by Yankee Energy System, Inc. (the
Company). Administrative expenses of approximately $41,000
and $50,000 were paid by the Company in 1996 and 1995,
respectively.
Valuation of investments -
------------------------
The Plan's investments are stated at fair value. Securities
traded on the national securities exchange are valued at the
last reported sales price on the last business day of the
plan year. Investments traded in the over-the-counter
market and listed securities for which no sale was reported
on that date are valued at the last reported bid price.
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 of the plan 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.
4. Investments:
-----------
The fair market value of individual investments that
represent 5% or more of the Plan's total net assets as of
December 31, 1996 and 1995 are as follows:
1996 1995
---- ----
Yankee Energy System, Inc.
common stock $6,992,452 $8,614,588
Northeast Utilities common stock 1,346,425 2,919,374
Merrill Lynch Growth Fund
Investment and
Retirement Class A 5,444,954 3,879,539
Merrill Lynch Retirement
Preservation Trust
Money Market 7,504,288 7,512,415
Merrill Lynch Basic Value
Fund Class A 2,877,346 2,179,247
Merrill Lynch Capital
Fund Class A 1,616,090 -
During 1996, the Plan's investments depreciated in fair
value by $1,693,100 as follows:
Net (Depreciation)
Appreciation
in Fair Value
During Year
-------------
Year ended December 31, 1996:
Fair value as determined by quoted market value:
Mutual funds $ 1,040,652
YES, Inc. common stock (1,435,402)
NU common stock (1,298,350)
-----------
$(1,693,100)
===========
During 1995, the Plan's investments appreciated in fair
value by $2,621,266, as follows:
Net Appreciation
(Depreciation)
in Fair Value
During Year
-----------------
Year ended December 31, 1995:
Fair value as determined by quoted market value:
Short term investments $ (22,877)
Mutual funds 1,554,549
YES, Inc. common stock 740,680
NU common stock 348,914
-----------
$2,621,266
===========
5. Note Payable:
------------
The Plan has secured a $4,000,000 loan from a commercial
bank to Fleet Bank, N.A., the former trustee, the proceeds
of which were used to buy YES common stock for the Plan.
YES has guaranteed the loan. The loan will be repaid over a
ten year period ending July 1, 1999 at $400,000 per year
plus interest at a rate of 10.38%. Employer non-union
matching contributions are used to make annual principal
payments. Interest is paid from the earnings of the YES,
Inc. loan fund. As the loan is paid down, an equivalent
amount of YES stock, which serves as collateral, is released
and allocated to participants.
6. Tax Status:
----------
The Plan obtained its latest determination letter on March
20, 1996 in which the Internal Revenue Service stated that
the form of the Plan, as then designed, was in compliance
with the applicable requirements of the Internal Revenue
Code. The Plan has been amended since the determination
letter was received. However, the Plan administrator
believes that the Plan is currently designed and being
operated in compliance with the applicable requirements of
the Internal Revenue Code. Therefore, the Plan
administrator believes that the Plan was qualified as of the
financial statement date.
7. Voting Rights:
-------------
Each participant is entitled to exercise voting rights
attributable to the shares allocated to his account and is
notified by Merrill Lynch (the Trustee) prior to the time
that such rights are to be exercised. The Trustee is not
permitted to vote any share for which instructions have not
been given by a participant. The Trustee is required,
however, to vote any unallocated shares on behalf of the
collective best interest of plan participants and
beneficiaries.
8. Termination of the Plan:
-----------------------
YES may suspend, terminate, or completely discontinue
contributions under the Plan with respect to its employees
subject to the provisions of the Employee Retirement Income
Security Act of 1974 relating to plan terminations.
Upon termination or partial termination of the Plan, the
rights of all affected participants to their accounts to the
date of such termination shall be fully vested to the extent
funded.
9. Plan Amendment:
--------------
The Plan was amended during 1995 to increase the maximum
supplemental contribution for participants from 10% to 12%
of compensation. The Plan was also amended to allow for
participant loans. No amendments were made to the Plan in
1996.
10. Reconciliation to Form 5500:
---------------------------
Net assets available for plan benefits in the Form 5500
include amounts payable to participants of $0 and $5,000 as
of December 31, 1996 and 1995, respectively.
The Form 5500 has been prepared in accordance with the
Department of Labor Rules and Regulations for Reporting and
Disclosure. Accordingly, the Form 5500 includes this amount
for benefits payable to participants as of December 31, 1995
who have elected to withdraw from the plan but have not yet
received their distribution. The attached financial
statements do not include this amount as benefits payable.
There is no corresponding payable for 1996.
SCHEDULE I
EIN# 06-1236430
PLAN# 001
YANKEE ENERGY SYSTEM, INC.
401 (k) EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1996
(c)Description of
investment, including
maturity date, rate of
(a)(b) Identity of issue, borrower interest, collateral
lessor or similar party par or maturity value
- ---------------------------------- ------------------------
Common Stock:
------------
*Yankee Energy System, Inc. 327,132 shares
*Northeast Utilities 102,585 shares
Total common stock
Mutual Funds:
------------
*Merrill Lynch Growth Fund
Investment and Retirement
Class A 208,379 shares
*Merrill Lynch Basic Value
Fund Class A 92,818 shares
*Merrill Lynch Capital Fund
Class A 52,048 shares
*Merrill Lynch Global
Allocation Fund Class A 26,323 shares
Total Mutual Funds
Short Term Investments:
----------------------
*Merrill Lynch Retirement
Preservation Trust 7,504,288 shares
*YES, Inc. Loan Fund 641,535 shares
Total short term
investments
Total investments
*Indicates a party in interest.
The accompanying notes are an integral part of this
schedule.
(a)(b) Identity of issue, borrower (e) Current
lessor or similar party (d) Cost Value
- ---------------------------------- -------- ----------
Common Stock:
------------
*Yankee Energy System, Inc. $ 7,155,318 $ 6,992,452
*Northeast Utilities 2,264,340 1,346,425
----------- -----------
Total common stock 9,419,658 8,338,877
----------- -----------
Mutual Funds:
------------
*Merrill Lynch Growth Fund
Investment and Retirement
Class A 4,793,483 5,444,954
*Merrill Lynch Basic Value
Fund Class A 2,600,099 2,877,346
*Merrill Lynch Capital Fund
Class A 1,578,243 1,616,090
*Merrill Lynch Global
Allocation Fund Class A 380,846 383,005
----------- -----------
Total Mutual Funds 9,352,671 10,321,395
----------- -----------
Short Term Investments:
----------------------
*Merrill Lynch Retirement
Preservation Trust 7,504,288 7,504,288
*YES, Inc. Loan Fund 641,534 641,534
----------- -----------
Total short term
investments 8,145,822 8,145,822
----------- -----------
Total investments $26,918,151 $26,806,094
=========== ===========
*Indicates a party in interest.
The accompanying notes are an integral part of this
schedule.
SCHEDULE II
EIN# 06-1236430
PLAN# 001
YANKEE ENERGY SYSTEM, INC.
401(k) EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(a) Identity of (b) Description (c) Purchase
party involved of asset price
- --------------- --------------- ------------
Merrill Lynch Retirement
Preservation Trust $9,101,275
-
Merrill Lynch Growth Fund
Class A 1,397,254
-
(a) Identity of (b) Description (d) Selling
party involved of asset price
- --------------- --------------- ------------
Merrill Lynch Retirement
Preservation Trust $ -
9,119,821
Merrill Lynch Growth Fund
Class A -
613,648
(a) Identity of (b) Description (e) Lease
party involved of asset Rental
- --------------- --------------- ------------
Merrill Lynch Retirement
Preservation Trust $ -
-
Merrill Lynch Growth Fund
Class A -
-
(a) Identity of (b) Description (f) Expense incurred
party involved of asset with transaction
- --------------- --------------- --------------------
Merrill Lynch Retirement
Preservation Trust $ -
-
Merrill Lynch Growth Fund
Class A -
-
(a) Identity of (b) Description (g) Cost of
party involved of asset asset
- --------------- --------------- ------------
Merrill Lynch Retirement
Preservation Trust $ -
9,119,821
Merrill Lynch Growth Fund
Class A -
594,692
(h) Current value
(a) Identity of (b) Description of an asset on
party involved of asset transaction date
- --------------- --------------- --------------------
Merrill Lynch Retirement
Preservation Trust $9,101,275
$9,119,821
Merrill Lynch Growth Fund
Class A 1,397,254
613,648
(a) Identity of (b) Description (i) Net gain
party involved of asset or (loss)
- --------------- --------------- ------------
Merrill Lynch Retirement
Preservation Trust $ -
-
Merrill Lynch Growth Fund
Class A -
18,956
The accompanying notes are an integral part of this schedule.
Pursuant to the requirements of the Securities Exchange Act of
1934, the Form 11-K has been signed below by the following
persons in the capacities indicated.
Date Title Signature
June 27, 1997 Chairman, President and /s/Branko Terzic
Chief Executive Officer ----------------------
Branko Terzic
June 27, 1997 Vice President and /s/Michael E. Bielonko
Chief Financial Officer ----------------------
Michael E. Bielonko
June 27, 1997 Controller /s/Nicholas A. Rinaldi
----------------------
Nicholas A. Rinaldi
June 27, 1997 Director
----------------------
Sanford Cloud, Jr.
June 27, 1997 Director /s/ Eileen S. Kraus
-----------------------
Eileen S. Kraus
June 27, 1997 Director /s/Frederick M. Lowther
-----------------------
Frederick M. Lowther
June 27, 1997 Director /s/ Emery G. Olcott
-----------------------
Emery G. Olcott
June 27, 1997 Director /s/ John J. Rando
------------------------
John J. Rando
June 27, 1997 Director
----------------------
Nicholas L. Trivisonno
June 27, 1997 Director /s/ Patricia M. Worthy
-----------------------
Patricia M. Worthy