CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
EMPLOYEE SAVINGS PLAN
---------------------
FINANCIAL STATEMENTS AND SCHEDULES
----------------------------------
AS OF DECEMBER 31, 1997, 1996 AND 1995
--------------------------------------
TOGETHER WITH
--------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
EMPLOYEE SAVINGS PLAN
---------------------
INDEX
-----
PAGE
----
Report of Independent Public Accountants 1
Financial Statements:
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1997 2
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1996 4
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1997 6
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1996 8
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1995 10
Notes to Financial Statements and Schedules 12
Schedules:
Schedule I - Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1997 18
Schedule II - Item 27d - Schedule of Reportable Transactions for
the Year Ended December 31, 1997 19
All schedules, except those as set forth above, are omitted as not
applicable or not required.
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Plan Administrator of Connecticut Natural
Gas Corporation Employee Savings Plan:
We have audited the accompanying statements of net assets available for
benefits with fund information of Connecticut Natural Gas Corporation
Employee Savings Plan (the Plan) as of December 31, 1997 and 1996, and the
related statements of changes in net assets available for benefits with
fund information for each of the three years in the period ended December
31, 1997. These financial statements and schedules referred to below are
the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits with fund
information of the Plan as of December 31, 1997 and 1996, and the changes
in its net assets available for benefits with fund information for each of
the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes and reportable transactions are
presented for purposes of additional analysis and are not a required part
of the basic financial statements but are supplementary information
required by the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974.
These supplemental schedules have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
By Arthur Andersen LLP
----------------------
Arthur Andersen LLP
Hartford, Connecticut
June 15, 1998
-2-
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1997
Participant Directed
--------------------------------------------------------------------------------------------------
Putnam
Putnam Fiduciary The George The Putnam Fund Putnam International Putnam
Trust Company Putnam Fund for Growth Vista Growth Income
Stable Value Fund of Boston and Income Fund Fund Fund
----------------- ------------ --------------- ----------- ----------- ---------
Assets
------
Investments, at
current value $946,034 $4,418,806 $7,420,095 $2,851,094 $915,595 $151,471
Cash and temporary
investments, at
current value - - - - - -
Accounts receivable
from broker - - - - - -
-------- ---------- ---------- ---------- -------- --------
Total Assets 946,034 4,418,806 7,420,095 2,851,094 915,595 151,471
-------- ---------- ---------- ---------- -------- --------
Liabilities
-----------
Accounts payable to
broker - - - - - -
-------- ---------- ---------- ---------- -------- --------
Net Assets Available
for Benefits $946,034 $4,418,806 $7,420,095 $2,851,094 $915,595 $151,471
======== ========== ========== ========== ======== ========
The accompanying notes are an integral part of this financial statement.
-3-
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1997
Non-
Participant Participant
Directed Directed
----------- -----------
Common Common
Stock Stock
Fund Fund Total
----------- ----------- -----------
Assets
------
Investments, at
current value $5,532,814 $2,901,306 $25,137,215
Cash and temporary
investments, at
current value 458 34,845 35,303
Accounts receivable
from broker 121,237 63,564 184,801
---------- ---------- -----------
Total Assets 5,654,509 2,999,715 25,357,319
---------- ---------- -----------
Liabilities
-----------
Accounts payable to
broker (28,461) - (28,461)
---------- ---------- ----------
Net Assets Available
for Benefits $5,626,048 $2,999,715 $25,328,858
========== ========== ===========
The accompanying notes are an integral part of this financial statement.
-4-
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1996
Participant Directed
-----------------------------------------------------------------------------------------------
Putnam
Putnam Fiduciary The George The Putnam Fund International Putnam
Trust Company Putnam Fund for Growth Putnam Growth Income
Stable Value Fund of Boston and Income Fund Fund Fund
--------------- -------------- ------------ ------------ ------------ --------
Assets
------
Investments, at
current value $1,010,028 $3,553,346 $5,778,562 $1,653,502 $422,679 $115,529
Cash and temporary
investments, at
current value - - - - - -
Accounts receivable
from broker - - - - - -
---------- ---------- ---------- ---------- -------- --------
Total Assets 1,010,028 3,553,346 5,778,562 1,653,502 422,679 115,529
---------- ---------- ---------- ---------- -------- --------
Liabilities
-----------
Accounts payable to
broker - - - - - -
---------- ---------- ---------- ---------- -------- --------
Net Assets Available
for Benefits $1,010,028 $3,553,346 $5,778,562 $1,653,502 $422,679 $115,529
========== ========== ========== ========== ======== ========
The accompanying notes are an integral part of this financial statement.
-5-
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1996
Non-
Participant Participant
Directed Directed
----------- -----------
Common Common
Stock Stock
Fund Fund Total
------------ ------------ ------------
Assets
------
Investments, at
current value $4,762,743 $5,027,978 $22,324,367
Cash and temporary
investments, at
current value 8,564 (5,077) 3,487
Accounts receivable
from broker 5,764 19,628 25,392
---------- ---------- -----------
Total Assets 4,777,071 5,042,529 22,353,246
---------- ---------- -----------
Liabilities
-----------
Accounts payable to
broker (14,572) (15,380) (29,952)
---------- ---------- -----------
Net Assets Available
for Benefits $4,762,499 $5,027,149 $22,323,294
========== ========== ===========
The accompanying notes are an integral part of this financial statement.
-6-
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
Participant Directed
-----------------------------------------------------------------------------
Putnam
Fiduciary The Putnam Putnam
Trust Company The George Fund for Putnam International
Stable Value Putnam Fund Growth Vista Growth
Fund of Boston and Income Fund Fund
------------- -------------- ------------- ----------- ------------
Additions to net assets
attributed to:
Dividends and interest income $64,065 $403,725 $933,486 $210,427 $52,988
Realized gains
(losses), net - 15,550 81,950 5,239 246
Unrealized appreciation
of investments - 325,249 380,688 229,100 48,035
Contributions:
Employees 50,526 189,025 399,544 217,668 71,757
Employer 6,234 23,791 53,478 55,022 20,674
----------- ----------- ----------- ----------- -----------
Total contributions 56,760 212,816 453,022 272,690 92,431
Transfers, net 262,654 12,334 404,655 564,179 300,627
Other, net - - - - -
----------- ----------- ----------- ----------- -----------
Total additions/(deductions) 383,479 969,674 2,253,801 1,281,635 494,327
----------- ----------- ----------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants (447,473) (104,214) (612,268) (84,043) (1,411)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) (63,994) 865,460 1,641,533 1,197,592 492,916
Net Assets Available
for Benefits:
Beginning of year 1,010,028 3,553,346 5,778,562 1,653,502 422,679
----------- ----------- ----------- ----------- -----------
End of year $946,034 $4,418,806 $7,420,095 $2,851,094 $915,595
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
-7-
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
Non-
Participant
Participant Directed Directed
----------------------- ----------
Putnam Common Common
Income Stock Stock
Fund Fund Fund Total
----------- ----------- ----------- -----------
Additions to net assets
attributed to:
Dividends and interest income $8,029 $264,285 $230,891 $2,167,896
Realized gains
(losses), net (246) (174,957) (184,667) (256,885)
Unrealized appreciation
of investments 1,691 401,364 65,878 1,452,005
Contributions:
Employees 11,480 45,948 - 985,948
Employer 2,611 344,424 - 506,234
-------- ----------- ----------- -----------
Total contributions 14,091 390,372 - 1,492,182
Transfers, net 12,377 385,375 (1,916,094) 26,107
Other, net - 92,779 88,797 181,576
-------- ----------- ----------- -----------
Total additions/(deductions) 35,942 1,359,218 (1,715,195) 5,062,881
-------- ----------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants - (495,669) (312,239) (2,057,317)
-------- ----------- ----------- -----------
Net increase (decrease) 35,942 863,549 (2,027,434) 3,005,564
Net Assets Available
for Benefits:
Beginning of year 115,529 4,762,499 5,027,149 22,323,294
-------- ----------- ----------- -----------
End of year $151,471 $5,626,048 $2,999,715 25,328,858
========= =========== =========== ============
The accompanying notes are an integral part of this financial statement.
-8-
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
Participant Directed
-------------------------------------------------------------------------
Putnam
Fiduciary The Putnam Putnam
Trust Company The George Fund for Putnam International
Stable Value Putnam Fund Growth Vista Growth
Fund of Boston and Income Fund Fund
------------- -------------- ------------- ----------- ------------
Additions to net assets
attributed to:
Dividends and interest income $62,418 $322,456 $494,326 $97,303 $5,660
Realized gains
(losses), net - 15,609 51,138 31,889 3,292
Unrealized appreciation
(depreciation) of investments - 172,914 486,678 93,150 42,243
Contributions:
Employees 54,790 194,884 402,688 198,989 46,065
Employer 3,879 12,008 21,946 26,051 7,795
----------- ----------- ----------- ----------- -----------
Total contributions 58,669 206,892 424,634 225,040 53,860
Transfers, net 4,406 (15,109) (12,853) 522,063 116,277
Other, net - - - - -
----------- ----------- ----------- ----------- -----------
Total additions/(deductions) 125,493 702,762 1,443,923 969,445 221,332
----------- ----------- ----------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants (298,769) (332,982) (452,747) (81,348) (28,329)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) (173,276) 369,780 991,176 888,097 193,003
Net Assets Available
for Benefits:
Beginning of year 1,183,304 3,183,566 4,787,386 765,405 229,676
----------- ----------- ----------- ----------- -----------
End of year $1,010,028 $3,553,346 $5,778,562 $1,653,502 $422,679
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
-9-
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
Non-
Participant
Participant Directed Directed
----------------------- ----------
Putnam Common Common
Income Stock Stock
Fund Fund Fund Total
----------- ----------- ----------- -----------
Additions to net assets
attributed to:
Dividends and interest income $9,705 $212,290 $384,533 $1,588,691
Realized gains
(losses), net (3,856) (13,004) (44,265) 40,803
Unrealized appreciation
(depreciation) of investments (2,131) 346,939 507,602 1,647,395
Contributions:
Employees 14,846 57,958 - 970,220
Employer 1,703 317,692 86,597 477,671
-------- ----------- ----------- -----------
Total contributions 16,549 375,650 86,597 1,447,891
Transfers, net (61,437) 2,005,626 (2,549,645) 9,328
Other, net - (447) (1,503) (1,950)
-------- ----------- ----------- -----------
Total additions/(deductions) (41,170) 2,927,054 (1,616,681) 4,732,158
-------- ----------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants (5,959) (320,794) (696,730) (2,217,658)
-------- ----------- ----------- -----------
Net increase (decrease) (47,129) 2,606,260 (2,313,411) 2,514,500
Net Assets Available
for Benefits:
Beginning of year 162,658 2,156,239 7,340,560 19,808,794
-------- ----------- ----------- -----------
End of year $115,529 $4,762,499 $5,027,149 22,323,294
========= =========== =========== ============
The accompanying notes are an integral part of this financial statement.
-10-
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
Participant Directed
-------------------------------------------------------------------------
Putnam
Fiduciary The Putnam
Trust Company Putnam U. S. The George Fund for Putnam
Stable Value Government Putnam Fund Growth Vista
Fund Income Trust of Boston and Income Fund
------------- ----------- --------------------------- -----------
Additions to net assets
attributed to:
Dividends and interest income $66,142 $79,432 $237,487 $314,524 $38,861
Realized gains
(losses), net - 87,221 88,744 160,068 672
Unrealized appreciation
(depreciation) of investments - (9,024) 427,496 777,724 (12,240)
Contributions:
Employees 56,824 69,103 232,176 450,914 11,074
Employer - - - - -
----------- ----------- ----------- ----------- -----------
Total contributions 56,824 69,103 232,176 450,914 11,074
Transfers, net 345,106 (1,154,001) (53,943) 51,678 727,678
Other, net - - - - -
----------- ----------- ----------- ----------- -----------
Total additions/(deductions) 468,072 (927,269) 931,960 1,754,908 766,045
----------- ----------- ----------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants (434,158) (151,101) (242,087) (280,196) (640)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) 33,914 (1,078,370) 689,873 1,474,712 765,405
Net Assets Available
for Benefits:
Beginning of year 1,149,390 1,078,370 2,493,693 3,312,674 -
----------- ----------- ----------- ----------- -----------
End of year $1,183,304 $ - $3,183,566 $4,787,386 $765,405
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
-11-
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
Non-
Participant Directed Participant
----------------------------------------- Directed
Putnam ----------
International Putnam Common Common
Growth Income Stock Stock
Fund Fund Fund Fund Total
------------ ----------- ----------- ----------- -----------
Additions to net assets
attributed to:
Dividends and interest income $2,076 $470 $147,466 $452,733 $1,339,191
Realized gains
(losses), net 89 278 (31,712) (84,982) 220,378
Unrealized appreciation
(depreciation) of investments 839 1,111 (97,147) (246,344) 842,415
Contributions:
Employees 2,432 847 91,652 - 915,022
Employer - - - 482,636 482,636
----------- -------- ----------- ----------- -----------
Total contributions 2,432 847 91,652 482,636 1,397,658
Transfers, net 224,270 160,191 (279,647) 10,500 31,832
Other, net - - 217 582 799
----------- -------- ----------- ----------- -----------
Total additions/(deductions) 229,706 162,897 (169,171) 615,125 3,832,273
----------- -------- ----------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants (30) (239) (413,662) (614,720) (2,136,833)
----------- -------- ----------- ----------- -----------
Net increase (decrease) 229,676 162,658 (582,833) 405 1,695,440
Net Assets Available
for Benefits:
Beginning of year - - 2,739,072 7,340,155 18,113,354
----------- -------- ----------- ----------- -----------
End of year $229,676 $162,658 $2,156,239 $7,340,560 19,808,794
=========== ========= =========== =========== ============
The accompanying notes are an integral part of this financial statement.
-12-
CONNECTICUT NATURAL GAS CORPORATION
-----------------------------------
EMPLOYEE SAVINGS PLAN
---------------------
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
-------------------------------------------
AS OF DECEMBER 31, 1997, 1996, AND 1995
---------------------------------------
1. Description of the Plan:
------------------------
The following description of the Connecticut Natural Gas Corporation
Employee Savings Plan (the Plan) is provided for general information
purposes only. More complete information regarding the Plan's provisions
may be found in the Plan document.
a. General -
-------
The Plan is a defined contribution thrift plan open to non-union
employees of Connecticut Natural Gas Corporation and subsidiaries
(the Company). The Plan was established by the Company under the
provisions of Section 401(a) of the Internal Revenue Code (IRC), and
it includes a qualified cash or deferred arrangement as described in
Section 401(k) of the IRC for the benefit of eligible employees of
the Company. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). The Plan
Administrator is the Company. The Compensation Committee of the
Company's Board of Directors appointed an Administrative Committee
to serve as manager of the Plan. Putnam Fiduciary Trust Company
(PFTC), trustee of the Plan, holds the Plan's investments and
executes transactions therein.
b. Eligibility -
-----------
Employees are eligible to participate when the following criteria
are met:
(1) Are at least age 21.
(2) Are employed by the Company for one year or more.
(3) Have completed 1,000 hours or more of service in a 12-month
period beginning with date of hire.
(4) Are on the management payroll or are subject to the Salary
Administration Program.
The number of employees participating in the Plan as of December 31,
1997 and 1996 were 250 and 276, respectively.
c. Contributions -
-------------
Eligible employees may elect to participate in the Plan and
authorize payroll deductions of not less than 1% and not greater
than 26% of basic earnings as savings contributions to their
accounts during each year, subject to the limits under Section 415
of the IRC.
The Company will match a percentage of an employee's compensation
depending on age or years of continuous service. The amount of the
Company contribution will be determined according to the schedule
below. However, if an employee's elected savings allotment is less
than the percentage contained in the schedule, the Company will
match no more than the percentage contributed by the employee.
-13-
As of December 31, 1997, if an employee's:
Years of Continuous
Service are Or Age is The Company Will Contribute
-------------------- -- ------ ---------------------------
30 50 6% of compensation
20 45 4-1/2% of compensation
10 35 3% of compensation
Less than l0 Under 35 2% of compensation
d. Investment Options -
------------------
Plan participants direct their contributions among various
investment options in 5% increments, and they may elect to change
their investment options once during each calendar quarter. A
description of each investment option is provided below:
(1) PUTNAM FIDUCIARY TRUST COMPANY STABLE VALUE FUND - This fund
seeks to provide interest income while preserving principal and
maintaining liquidity. The fund invests in pools of guaranteed
income contracts, issued by insurance companies, and high
quality money market instruments issued by banks and the U.S.
government. The average yield for this fund was 6.48% and 5.74%
for the years ended December 31, 1997 and 1996, respectively.
(2) THE GEORGE PUTNAM FUND OF BOSTON - This fund primarily seeks
current income and capital growth through investment in common
and preferred stocks, debt securities, and cash equivalents.
(3) THE PUTNAM FUND FOR GROWTH AND INCOME - This fund seeks long-
term capital growth and current income through a portfolio of
income-producing common stocks.
(4) PUTNAM VISTA FUND - This fund seeks to provide capital
appreciation by investing primarily in stocks of medium-sized
companies believed to have above-average growth potential.
(5) PUTNAM INTERNATIONAL GROWTH FUND - This fund seeks to provide
capital appreciation by investing in a diversified portfolio of
equity securities in companies located outside the United
States.
(6) PUTNAM INCOME FUND - This fund seeks to provide as high a level
of income as possible given a prudent level of risk by investing
in high yield and investment grade corporate, mortgage backed,
and U.S. Treasury securites and foreign bonds.
(7) COMMON STOCK FUND - This fund seeks to provide capital
appreciation and current income through investment in the common
stock of the Company's parent company, CTG Resources, Inc.
(CTG), purchased at not more than fair market value.
Effective as of the close of business on March 31, 1997, CTG became
the holding company and parent of the Company. Pursuant to this
change in corporate organization and an Agreement and Plan of
Exchange, dated as of December 20, 1996, by and between CTG and the
Company, all outstanding shares of common stock of the Company,
including those shares held by the Plan, were exchanged for shares
of common stock of CTG.
All Company matching contributions are invested in the Common Stock
Fund. Beginning on March 1, 1996 and continuing on a quarterly
basis through October 1, 1999, the Plan Administrator has directed
that portions of the non-participant directed Common Stock Fund be
transferred to the participant directed Common Stock Fund based upon
a predetermined schedule. These transfers are scheduled to take
place on January 1, April 1, July 1, and October 1 of each year,
with the exception of 1996 for which the March 1 transfer was in
lieu of the April 1 transfer. Following the transfers, Plan
participants will have the discretion of investing the transferred
-14-
shares of common stock in the same manner as the other amounts under
their direction in the various participant directed funds. Also,
effective March 1, 1996, all Company matching contributions are
being invested in the participant directed Common Stock Fund.
In addition to transfers between the various funds noted above as a
result of investment elections made by Plan participants, transfers
are also made to or from the Union Employee Savings Plan for those
employees who transfer to (from) one of the Company's collective
bargaining units.
e. Vesting -
-------
Participants are fully vested in their contributions and the
earnings thereon. Participants are vested in the Company matching
contributions and the earnings thereon as follows:
Years of Continuous Service are Percentage Vested
------------------------------- -----------------
Less than 1 0%
1 but less than 2 20
2 but less than 3 40
3 but less than 4 60
4 but less than 5 80
5 or more 100
Participants also become fully vested in their Company matching
contribution account if any one of the following occurs:
(1) Death
(2) Disability
(3) Attainment of age 65 (normal retirement date)
(4) Total or partial termination of the Plan
(5) Discontinuance of Company contributions to the Plan
Upon termination of employment before full vesting, the non-vested
Company match portion of a participant's common stock account shall
be forfeited after five years if the participant is not rehired and
applied as a credit against the employer's future contributions.
f. Benefits -
--------
Upon termination of employment due to retirement, disability, or
death, a participant (or his/her beneficiary) may elect to receive a
lump-sum distribution equal to the value of the participant's vested
interest in his/her account as soon as practicable following the
termination date or defer the distribution to some future date.
Participants may request the withdrawal of certain account balances
prior to termination of employment. Application for withdrawal of
after-tax contributions and employee IRA contributions may be made
once a year. There are no Plan penalties for such withdrawals.
g. Participant Accounts -
--------------------
Individual accounts are maintained for each of the Plan's
participants to reflect the participant's share of the Plan's income
and the participant's and the Company's contributions. Allocations
of Plan income are based on the share balances in the participants'
accounts.
-15-
h. Use of Estimates in the Preparation of Financial Statements -
-----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles and the Department of Labor Rules and
Regulations for Reporting and Disclosure under ERISA requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expense during the
reporting period. Actual results could differ from those estimates.
2. Summary of Significant Accounting Policies:
------------------------------------------
a. Basis of Accounting -
-------------------
The accompanying financial statements have been prepared on the
accrual basis of accounting.
b. Income Recognition -
------------------
Dividend income is recorded on the ex-dividend date. Interest income
is recorded as earned.
c. Investment Valuation -
--------------------
The Plan's investments are reflected at current value. The shares of
the Common Stock Fund and the Putnam mutual funds owned by the Plan,
with the exception of the PFTC Stable Value Fund, are valued at
market as determined by the quoted market price as of the last
business day of the year. The latter fund is valued at contract
value (cost plus accumulated earnings) which approximates current
value. Purchases and sales of securities are reflected on a trade
date basis. Realized and unrealized appreciation (depreciation)
presented in the statement of changes in net assets available for
benefits with fund information are computed based on the change in
the current value of the Plan assets from year to year.
d. Administrative Expenses -
-----------------------
Administrative expenses of the Plan may be paid by either the Company
or the Plan. During 1997, 1996, and 1995 the Company paid all
administrative expenses relating to the Plan.
3. Federal Income Tax Status:
-------------------------
In 1994 the Plan was amended and restated to meet the requirements of
the Tax Reform Act of 1986, and the Plan received a favorable
determination letter from the Internal Revenue Service dated September
19, 1994. The Plan has been amended since receiving the determination
letter. However, the Plan Administrator and management believe that
the Plan is designed and is currently being operated in compliance with
the applicable requirements of the IRC. Therefore, they believe that
the Plan was qualified and the related trust was tax-exempt through the
year ended December 31, 1997.
-16-
4. Investments:
-----------
The fair market values of individual assets that represent 5% or more of
the Plan's net assets as of December 31, 1997 and 1996 are as follows:
1997:
CTG Resources, Inc. common stock $ 8,434,120
The Putnam Fund for Growth and Income 7,420,095
The George Putnam Fund of Boston 4,418,806
Putnam Vista Fund 2,851,094
1996:
CTG Resources, Inc. common stock $ 9,790,721
The Putnam Fund for Growth and Income 5,778,562
The George Putnam Fund of Boston 3,553,346
Putnam Vista Fund 1,653,502
5. Concentration of Credit Risk:
----------------------------
The Plan's assets are invested in mutual funds managed by Putnam
Investments, Inc., as described in Note 1, and the common stock of CTG.
In the event of any uncertainties in the financial marketplace the Plan
may be exposed to financial risks.
6. Reconciliation to Form 5500:
---------------------------
As of December 31, 1996, the Plan had a $43,307 pending distribution to
a participant who elected to withdraw from the Plan and $5,297 of excess
contributions from participants. These amounts were recorded as
liabilities in the Plan's Form 5500; however, they are not recorded as
liabilities in the accompanying statement of net assets available for
benefits in accordance with generally accepted accounting principles.
The following table reconciles net assets available for benefits per the
financial statements to the Form 5500 as filed by the Company for the
year ended December 31, 1996.
Benefits Net Assets
Payable to Other Available
Participants Liabilities For Benefits
------------ ----------- ------------
Per financial statements $ - $ - $22,323,294
Accrued benefit payments 43,307 - (43,307)
Excess contributions
refundable to Plan
participants - 5,297 (5,297)
------- ------ -----------
Per Form 5500 $43,307 $5,297 $22,274,690
======= ====== ===========
-17-
7. Subsequent Event:
----------------
The Board of Directors of the Company adopted two amendments to the
Plan, effective May 1, 1998, which change the level of Company matching
contributions set forth in Note 1c above and establish a loan provision.
The Company will no longer match 6% of compensation for those Plan
participants who have attained 30 years of continuous service or age 50.
The match offered by the Company will be 75% of compensation during the
payroll period up to 6% of compensation (maximum matching contribution
of 4.5% of compensation) for participants who have attained 20 years of
continuous service or age 45. Also, the Company will contribute 50% of
compensation during the payroll period up to 6% of compensation (maximum
matching congribution of 3% of compensation) with respect to all other
participants. All other provisions in Note 1c remain the same.
Regarding the loan provision, a Plan participant will be allowed to
borrow up to the lesser of one-half of the participant's vested account
balance or $50,000. Each loan will carry an interest rate of prime plus
1%, established on the first day of the calendar quarter in which the
loan is made, and repayment in full will be required within five or
fifteen years following the date of the loan, depending upon whether the
loan is classified as a "general purpose" loan or a "principal
residence" loan, respectively.
-18-
Schedule I
EIN 06-0383860
Plan No. 007
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
(c)Description of Investment
Including Maturity Date, Rate
(b)Identity of Issue, Borrower, of Interest, Collateral, Par (e)Current
(a) Lessor, or Similar Party or Maturity Value (d)Cost Value
--- -------------------------------------- ------------------------------- ----------- ---------
* Putnam Fiduciary Trust Company Stable Fund comprised of
Value Fund investment contracts $946,034 $946,034
* The George Putnam Fund of Boston Mutual fund comprised of
common stocks and bonds 3,691,733 4,418,806
* The Putnam Fund for Growth and Income Mutual fund comprised of
common stocks 6,042,184 7,420,095
* Putnam Vista Fund Mutual fund comprised of
common stocks 2,516,925 2,851,094
* Putnam International Growth Fund Mutual fund comprised of
common stocks 824,672 915,595
* Putnam Income Fund Mutual fund comprised of bonds
and U.S. Treasury securities 151,146 151,471
Participant directed -
* CTG Resources, Inc. Common stock 4,613,588 5,532,814
Boston Safe Company Daily Liquidity Fund 458 458
----------- -----------
4,614,046 5,533,272
----------- -----------
Non-participant directed -
* CTG Resources, Inc. Common stock 2,431,158 2,901,306
Boston Safe Company Daily Liquidity Fund 34,845 34,845
----------- -----------
2,466,003 2,936,151
----------- -----------
Total Common Stock Fund 7,080,049 8,469,423
----------- -----------
Total Investments $21,252,743 $25,172,518
<FN>
*Represents a party-in-interest.
The accompanying notes are an integral part of this schedule.
-19-
Schedule II
EIN 06-0383860
Plan No. 007
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
Current Value
Number of Asset on
Identity of Description of Purchase Selling Cost of Transaction Net Gain
Party Involved of Asset Transactions Price Price Asset Date or (Loss)
--------------- --------------- ---------- ---------- ---------- ---------- ------------ ----------
Putnam Vista Mutual fund 76 $1,322,519 $ - $1,322,519 $1,322,519 $ -
Fund comprised of 14 - 148,840 143,543 148,840 5,297
common stocks
The Putnam Mutual fund 81 2,699,672 - 2,699,672 2,699,672 -
Fund for comprised of 33 - 735,680 541,854 735,680 193,826
Growth and common stocks
Income
CTG Common stock 24 2,835,488 - 2,835,488 2,835,488 -
Resources, Inc. 124 - 4,298,634 3,980,388 4,298,634 318,246
The accompanying notes are an integral part of this schedule.