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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
Commission file number 1 - 7479
--------
BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN FOR
OPERATING EMPLOYEES
------------------------
(Full title of the plan)
BAY STATE GAS COMPANY
300 Friberg Parkway
Westborough, Massachusetts 01581-5039
---------------------------------------------
(Name and address of issuer of the securities
held pursuant to the plan)
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Index Page No.
----- --------
(a) Signatures 3
(b) Financial Statements:
Independent Auditors' Report 4
Statements of Financial Condition as
of December 31, 1994 and 1993 5
Statements of Income and Changes in
Plan Equity for the years ended
December 31, 1994, 1993 and 1992 6-8
Notes to Financial Statements 9-14
Schedule I: Item 27a - Schedule of
Assets held for Investment Purposes 15
Schedule II: Item 27d - Schedule of
Reportable Transactions for the Year Ended
December 31, 1994 16
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee administering the Plan has duly caused this annual report to be signed
by the undersigned thereunto duly authorized.
BAY STATE GAS COMPANY
BENEFITS COMMITTEE
Date: June 30, 1995 By /s/ Charles H. Tenney III
--------------------------------------
Charles H. Tenney III
Chairman
By /s/ Paul G. Ford
--------------------------------------
Paul G. Ford
Vice-Chairman
By /s/ Thomas W. Sherman
--------------------------------------
Thomas W. Sherman
Committee Member
By /s/ William D. MacGillivray
--------------------------------------
William D. MacGillivray
Committee Member
By /s/ Kim H. Corwin
--------------------------------------
Kim H. Corwin
Committee Member
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Independent Auditors' Report
The Benefits Committee
Bay State Gas Company:
We have audited the accompanying statements of financial condition of the Bay
State Gas Company Employee Savings Plan for Operating Employees as of December
31, 1994 and 1993, and the related statements of income and changes in plan
equity for each of the years in the three-year period ended December 31, 1994.
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, the financial statements referred to above present fairly, in
all material respects, the financial condition of the Bay State Gas Company
Employee Savings Plan for Operating Employees at December 31, 1994 and 1993, and
the results of its operations and changes in plan equity for each of the years
in the three-year period ended December 31, 1994 in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
KPMG Peat Marwick LLP
Boston, Massachusetts
June 9, 1995
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BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN FOR OPERATING EMPLOYEES
Statements of Financial Condition
December 31, 1994 and 1993
Assets 1994 1993
- ------ ---- ----
Investments, at market value (note 4):
Company Stock Fund $3,027,645 $2,269,843
Templeton Growth Fund, Ltd. 913,940 284,148
State Street Bank and Trust Company:
Selection Fund 1,016,443 428,650
Index Fund 366,283 120,922
Loan Fund 237,930 85,965
---------- ----------
5,562,241 3,189,528
Cash and cash equivalents 111,740 68,567
Accrued interest receivable 7,989 2,265
Due from Bay State Gas Company
Employee Savings Plan 162,390 -
---------- ----------
Total assets and plan equity $5,844,360 $3,260,360
========== ==========
See accompanying notes to financial statements.
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BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN FOR OPERATING EMPLOYEES
Statement of Income and Changes in Plan Equity
Year ended December 31, 1994
Templeton Company
Selection Index Growth Fund Stock Loan
Fund Fund Ltd. Fund Fund Total
---------- -------- ----------- ---------- -------- ----------
Investment income:
Interest $ 59,914 $ 26 $ 380 $ 256 $ 10,668 $ 71,244
Dividends - - 81,999 162,298 - 244,297
Net appreciation (depreciation) in
the market value of
investments - 6,368 (90,424) (451,681) - (535,737)
---------- -------- -------- ---------- -------- ----------
Total investment income (loss) 59,914 6,394 (8,045) (289,127) 10,668 (220,196)
---------- -------- -------- ---------- -------- ----------
Contributions:
Employee 147,847 66,580 210,162 635,022 - 1,059,611
Employer 62,592 17,557 53,601 154,448 - 288,198
Transfers in from other plans 439,676 133,279 217,870 613,872 112,786 1,517,483
---------- -------- -------- ---------- -------- ----------
Total contributions 650,115 217,416 481,633 1,403,342 112,786 2,865,292
---------- -------- -------- ---------- -------- ----------
Total additions 710,029 223,810 473,588 1,114,215 123,454 2,645,096
---------- -------- -------- ---------- -------- ----------
Benefits paid (18,512) (4,096) (7,973) (30,515) - (61,096)
Transfers between funds (80,053) (26,014) 122,919 (73,112) 56,260 -
---------- -------- -------- ---------- -------- ----------
Net increase in plan equity 611,464 193,700 588,534 1,010,588 179,714 2,584,000
Plan equity:
Beginning of year 430,896 120,928 284,552 2,338,019 85,965 3,260,360
---------- -------- -------- ---------- -------- ----------
End of year $1,042,360 $314,628 $873,086 $3,348,607 $265,679 $5,844,360
========== ======== ======== ========== ======== ==========
See accompanying notes to financial statements.
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BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN FOR OPERATING EMPLOYEES
Statement of Income and Changes in Plan Equity
Year ended December 31, 1993
Templeton Company
Selection Index Growth Fund Stock Loan
Fund Fund Ltd. Fund Fund Total
---------- -------- ----------- ---------- -------- ----------
Investment income:
Interest $ 24,456 $ 68 $ 330 $ 144 $ 2,703 $ 27,701
Dividends - - 14,894 101,124 - 116,018
Net appreciation in the
market value of investments - 7,916 27,686 223,362 - 258,964
-------- -------- -------- ---------- ------- ----------
Total investment income 24,456 7,984 42,910 324,630 2,703 402,683
-------- -------- -------- ---------- ------- ----------
Contributions:
Employee 108,182 37,343 75,269 493,672 - 714,466
Employer 88,239 10,652 23,066 99,732 - 221,689
-------- -------- -------- ---------- ------- ----------
Total contributions 196,421 47,995 98,335 593,404 - 936,155
-------- -------- -------- ---------- ------- ----------
Total additions 220,877 55,979 141,245 918,034 2,703 1,338,838
-------- -------- -------- ---------- ------- ----------
Benefits paid (3,075) (1,327) (7,484) (77,310) (734) (89,930)
Transfers between funds (72,246) 3,850 60,938 (54,752) 62,210 -
-------- -------- -------- ---------- ------- ----------
Net increase in plan equity 145,556 58,502 194,699 785,972 64,179 1,248,908
Plan equity:
Beginning of year 285,340 62,426 89,853 1,552,047 21,786 2,011,452
-------- -------- -------- ---------- ------- ----------
End of year $430,896 $120,928 $284,552 $2,338,019 $85,965 $3,260,360
======== ======== ======== ========== ======= ==========
See accompanying notes to financial statements.
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BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN FOR OPERATING EMPLOYEES
Statement of Income and Changes in Plan Equity
Year ended December 31, 1992
Templeton Company
Selection Index Growth Fund Stock Loan
Fund Fund Ltd. Fund Fund Total
---------- -------- ----------- ---------- -------- ----------
Investment income:
Interest $ 11,184 $ 80 $ 117 $ 235 $ 831 $ 12,447
Dividends - - 7,969 65,316 - 73,285
Net appreciation (depreciation)
in the fair market value of
investments - 3,901 (6,358) 140,230 - 137,773
-------- ------- -------- ---------- ------- ----------
Total investment income 11,184 3,981 1,728 205,781 831 223,505
-------- ------- -------- ---------- ------- ----------
Contributions:
Employee 95,815 32,680 49,704 400,836 - 579,035
Employer 109,334 12,810 22,142 93,877 - 238,163
-------- ------- -------- ---------- ------- ----------
Total contributions 205,149 45,490 71,846 494,713 - 817,198
-------- ------- -------- ---------- ------- ----------
Total additions 216,333 49,471 73,574 700,494 831 1,040,703
-------- ------- -------- ---------- ------- ----------
Benefits paid (11) - - (7,656) - (7,667)
Transfers between funds (2,378) (770) (17,195) 2,903 17,440 -
-------- ------- -------- ---------- ------- ----------
Net increase in plan equity 213,944 48,701 56,379 695,741 18,271 1,033,036
Plan equity:
Beginning of year 71,396 13,725 33,474 856,306 3,515 978,416
-------- ------- -------- ---------- ------- ----------
End of year $285,340 $62,426 $ 89,853 $1,552,047 $21,786 $2,011,452
======== ======= ======== ========== ======= ==========
See accompanying notes to financial statements.
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BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN FOR OPERATING EMPLOYEES
Notes to Financial Statements
December 31, 1994, 1993 and 1992
1) Description of Plan
(a) General
The Bay State Gas Company Employee Savings Plan For
Operating Employees ("the Plan") is a defined
contribution payroll reduction savings plan. The Plan
is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"). Participants
should refer to the Plan document for more complete
information.
(b) Plan Amendments
The Plan was amended and restated in 1992 to include a
provision for employer matching of certain
contributions.
(c) Eligibility
All employees of the Company and its wholly-owned
subsidiaries, Northern Utilities, Inc. and Granite State
Gas Transmission, Inc. who are covered by a collective
bargaining agreement between the Company and any union
that specifically provides for participation in the Plan
are eligible following the completion of one year of
service. To meet the service requirement, an employee
must complete at least 1,000 hours of service during any
twelve consecutive months commencing on their date of
employment or any anniversary of that date.
Employees may participate in the plan until death,
retirement, or withdrawal of the entire contributed
balance.
2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements have been prepared
on the accrual basis of accounting.
(b) Trustee
State Street Bank & Trust Company served as Trustee of
the Plan and was granted discretionary authority
concerning purchases and sales of investments for the
Plan. Plan assets are held in safekeeping by the
Trustee. Effective April 1, 1995, Wells Fargo Bank was
appointed Trustee of the Plan, and all assets were
subsequently transferred into their possession.
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BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN FOR OPERATING EMPLOYEES
Notes to Financial Statements
December 31, 1994, 1993 and 1992
2) Summary of Significant Accounting Policies (continued)
(c) Investments
Investments in the Company Stock Fund, Templeton Growth
Fund, and the Index Fund are stated at market value.
Market values are based on quotations from national
securities exchanges for the investments as of the close
of business on the last day of the year. Investments
held in the Selection Fund consist of guaranteed
investment contracts and are valued at contract value.
Purchases and sales of securities are recorded on a
trade-date basis. Interest income is recorded on the
accrual basis. Dividends are recorded on the ex-dividend
date.
Net appreciation (depreciation) in the market value of
investments includes both realized and unrealized gains
and losses.
(d) Payment of benefits
Benefits are recorded when paid.
3) Plan Administration
(a) Administration
The Plan is administered by the Bay State Gas Company
Benefits Committee ("the Committee"), which is comprised
of three or more individuals selected by the Board of
Directors of the Company. The Committee carries out the
provisions of the Plan, replies to questions and
resolves disputes arising under the Plan. Members of
the Committee do not receive compensation for service.
(b) Expenses
A loan processing fee may be charged to participants
borrowing from their accounts. All other expenses of
the Plan are paid by the Company.
4) Investments
All contributions are remitted to the Trustee for investment in
accordance with the instructions of the participants. Participants
may allocate their contributions (in 25% multiples) to various
investment funds. Allocation percentages, as well as investment
options among the four investment funds, may be changed once in a
three month period by the participant.
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BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN FOR OPERATING EMPLOYEES
Notes to Financial Statements
December 31, 1994, 1993 and 1992
4) Investments (continued)
The following investment funds are offered to active participants of
the Plan.
Company Stock Fund - Funds are invested in the common stock of Bay
State Gas Company.
Templeton Growth Fund, Ltd. - Funds are invested in securities of
corporations and governments of any nation in the world.
State Street Bank & Trust Company Selection Fund - Funds are
invested in a pooled fund of guaranteed investment contracts
("GICs"). A GIC is the unconditional interest bearing obligation of
an insurance company to pay specified amounts.
State Street Bank & Trust Company Index Fund - Funds are invested in
publicly traded common stocks of United States corporations.
Loan Fund - Funds are comprised of amounts borrowed by participants
from their account balances (see note 6).
At December 31, 1994, there were 234, 84, 179, and 385 participating
accounts in the Selection Fund, Index Fund, Templeton Growth Fund,
Ltd., and the Company Stock Fund, respectively.
Each fund, with the exception of the Loan Fund, represented more
than five percent of plan equity at December 31, 1994. At December
31, 1993, the Selection, Templeton, and Company Stock Funds
represented more than five percent of plan equity.
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BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN FOR OPERATING EMPLOYEES
Notes to Financial Statements
December 31, 1994, 1993 and 1992
5) Contributions
(a) Participant Contributions
Each Participant may designate a percentage of their
annual compensation to be contributed to the Plan on
their behalf by entering into a salary reduction
agreement, thereby reducing their compensation by 1% to
15% of their annual eligible compensation. This
compensation reduction is limited to a maximum amount of
$9,240 per year in 1994 (indexed annually from $7,000
commencing on January 1, 1987). A participant's
eligible compensation for any given year consists of
straight time wages, including shift differentials,
Saturday/Sunday premiums, compensation paid at an
alternate rate to an employee other than a salesperson
and 75% of sales commissions paid or accrued. All
overtime, bonuses, supplementary compensation payments,
deferred compensation, retirement benefits and other
forms of nonrecurring compensation are excluded.
(b) Company Contributions
The Company makes contributions to the Plan in
accordance with the terms of contracts negotiated with
the various unions representing Company employees. For
certain employees, the Company makes no contribution.
For other employees the Company makes contributions
equal to 3.5% to 4% of gross pay.
(c) Vesting
Employee and employer contributions vest immediately.
6) Withdrawals and Distributions
(a) Withdrawals
Contributions can be withdrawn in the event of financial
hardship or the attainment of 59 1/2 years of age.
(b) Borrowings
Participants may apply to the Committee for permission
to borrow from their accounts an amount which, together
with any outstanding loans from any other qualified
plans of the Company, does not exceed the lesser of (i)
one-half of the amounts in all of their accounts or (ii)
an amount which, when added to any other amounts
borrowed under any other plan, does not exceed $50,000.
Further, effective January 1, 1987, as a result of the
Tax Reform Act of 1986, the $50,000 limitation will be
reduced by the excess (if any) of the highest
outstanding loan balance of a participant in the
preceding twelve-month
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BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN FOR OPERATING EMPLOYEES
Notes to Financial Statements
December 31, 1994, 1993 and 1992
6) Withdrawals and Distributions (continued)
(b) Borrowings (continued)
period ending on the day before the date on which the
loan was made, over the outstanding balance of loans
from the Plan on the date of the loan. Applications to
borrow must be adequately secured, must be for at least
$1,000 and must be repaid at a rate of interest equal to
the prime rate, as published in the Wall Street Journal
at the time the loan is made, plus one percent. This
interest rate is applicable for the duration of the
loan. Only one loan may be outstanding to a participant
at any time, and all loans must be repaid within five
years.
(c) Distributions
Distribution of a participant's entire account balance
in the Plan will be made upon retirement, termination of
employment, or death. Distributions will be made to the
participant or to the participant's designated
beneficiary in either a lump sum payment or in periodic
payments over a period not to exceed 10 years for a
spousal beneficiary or over a period not to exceed 5
years in the case of a non-spousal beneficiary.
Upon the death of a Plan participant, benefits to the
participant's spouse must commence no later than the
April 1st following the date the participant would have
been age 70 1/2. For any other beneficiary, death
benefits must commence within one year of the
Participant's death.
Upon the retirement or termination of employment, Plan
participants (thereby becoming inactive Plan
participants) may elect to receive their share of Plan
equity in a lump sum or in installments over a period
not to exceed 10 years.
7) Income Tax Status
The Internal Revenue Service has determined and informed the
Company, by a letter dated March 23, 1995, that the Plan is
qualified and the Trust established under the Plan is tax exempt,
under the appropriate sections of the Internal Revenue Code.
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BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN FOR OPERATING EMPLOYEES
Notes to Financial Statements
December 31, 1994, 1993 and 1992
8) Plan Termination
(a) If the Plan is discontinued, all assets of the Plan must
be used for the exclusive benefit of participants of the
Plan.
(b) The Company expects to continue the Plan indefinitely,
however, it may terminate the Plan at any time by giving
written notice to the trustee. After termination, the
Company will make no further contributions to the Plan.
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Schedule I
BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN FOR OPERATING EMPLOYEES
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1994
(a) (b) Identity of Issue (c) Description of Investment (d) Cost (e) Current Value
- -------------------------------------------------------------------------------------------------------------------------------
* Company Stock Fund Common Stock; 126,152 shares $3,044,295 $3,027,645
Templeton Growth Fund, Ltd. Mutual Fund; 56,312 shares 984,076 913,940
* State Street Bank Selection Fund Pooled Funds; 1,016,443 units 1,016,443 1,016,443
* State Street Bank Index Fund Pooled Funds; 5,191 units 349,559 366,283
Loan Fund Participant loans; 6.50% - 10.00% 237,930 237,930
---------- ----------
Total assets held for investment purposes $5,632,303 $5,562,241
<FN>
* Party in interest.
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Schedule II
BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN FOR OPERATING EMPLOYEES
Item 27(d) - Schedule of Reportable Transactions
Year Ended December 31, 1994
- ----------------------------------------------------------------------------------------------------------------------------
Identity of party Purchase Selling
involved Description of asset Price Price
(a) (b) (c) (d)
- ----------------------------------------------------------------------------------------------------------------------------
State Street Bank Selection Fund* Pooled Fund - purchased 403,567 units 403,567 -
- sold 231,039 units - 231,039
- ----------------------------------------------------------------------------------------------------------------------------
Templeton Growth Fund Mutual Fund - purchased 23,816 shares 420,930 -
- ----------------------------------------------------------------------------------------------------------------------------
Bay State Gas Company* Company Stock - purchased 40,638 shares 983,784 -
- sold 6,868 shares - 171,102
- ----------------------------------------------------------------------------------------------------------------------------
State Street Bank Short-Term Pooled Fund - purchased 443,000 units 443,000 -
Investment Fund for Employee Trusts* - sold 443,000 units - 443,000
- ----------------------------------------------------------------------------------------------------------------------------
State Street Bank Yield Enhanced Money Market - purchased 407,387 units 407,387 -
Short-Term Investment Fund* - sold 401,280 units - 401,280
- ----------------------------------------------------------------------------------------------------------------------------
<FN>
* Party in interest
- ---------------------------------------------------------------------------------------------------------------------
Current value
Identity of party Lease Expense Cost of of asset on Net gain
involved rental Incurred asset transaction date or (loss)
(a) (e) (f) (g) (h) (i)
- ---------------------------------------------------------------------------------------------------------------------
State Street Bank Selection Fund* - - 403,567 403,567 -
- - 231,039 231,039 -
- ---------------------------------------------------------------------------------------------------------------------
Templeton Growth Fund - - 420,930 420,930 -
- ---------------------------------------------------------------------------------------------------------------------
Bay State Gas Company* - - 983,784 983,784 -
- - 158,092 171,102 13,010
- ---------------------------------------------------------------------------------------------------------------------
State Street Bank Short-Term - - 443,000 443,000 -
Investment Fund for Employee Trusts* - - 443,000 443,000 -
- ---------------------------------------------------------------------------------------------------------------------
State Street Bank Yield Enhanced - - 407,387 407,387 -
Short-Term Investment Fund* - - 401,280 401,280 -
- ---------------------------------------------------------------------------------------------------------------------
<FN>
* Party in interest