UNITED STATES
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
[X] For annual reports of employee stock
purchase, savings and similar plans pursuant
to Section 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 2001
or
[ ] Transition report pursuant to Section 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number 1-14768
NSTAR SAVINGS PLAN
(Full title of the plan)
NSTAR
(Name of issuer of the securities held pursuant to the plan)
800 Boylston Street, Boston, Massachusetts 02199
(Address of principal executive offices)
REPORT OF INDEPENDENT ACCOUNTANTS
To the Retirement Plans Committee:
In our opinion, the accompanying statements of net assets
available for benefits and the related statement of changes in
net assets available for benefits present fairly, in all material
respects, the net assets available for benefits of the NSTAR
Savings Plan (the "Plan") at December 31, 2001 and 2000, and the
changes in net assets available for benefits for the year ended
December 31, 2001, in conformity with accounting principles
generally accepted in the United States of America. 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 of these statements in accordance with auditing standards
generally accepted in the United States of America, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedules of assets (held at end of year) at
December 31, 2001 and reportable transactions for the year ended
December 31, 2001 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. These supplemental schedules are the responsibility of the
Plan's management. 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.
As further described in Note A, on March 30, 2001, the NSTAR
Negotiated Savings Plan for Office, Technical and Professional
Employees, the NSTAR Negotiated Savings Plan for Production and
Maintenance Employees and the NSTAR 401(k) Plan merged into the
Plan.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
June 28, 2002
NSTAR SAVINGS PLAN
Statements of Net Assets Available for Benefits
(in thousands)
December 31,
2001 2000
Assets
Investments, at fair value:
Registered investment company shares $ 334,124 $ 70,206
NSTAR Common Share Fund 171,120 44,863
Fidelity Brokerage Link 14,922 4,652
Loans to participants 12,964 1,680
Total investments 533,130 121,401
Other assets:
Receivables -
Employee contributions 262 44
Employer contributions 165 24
Total other assets 427 68
Net assets available for benefits $ 533,557 $ 121,469
========== ==========
The accompanying notes are an integral part of these financial
statements.
NSTAR SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
Plan year ended December 31, 2001
(in thousands)
Additions to net assets attributed to:
Investment income
Interest and dividends -
Registered investment company shares $ 6,815
NSTAR Common Share Fund 6,715
Fidelity Brokerage Link 166
Interest on participant loans 871
14,567
Net appreciation (depreciation) in fair value of investments:
NSTAR Common Share Fund 21,482
Registered investment companies (9,867)
Fidelity Brokerage Link (2,160)
9,455
Contributions:
Employee 17,411
Employer 7,105
24,516
Total additions, net 48,538
Deductions from net assets attributed to:
Benefits paid to participants or beneficiaries 39,098
Deemed distributions from participant loans 325
Total deductions 39,423
Net increase in net assets available for benefits
prior to merger 9,115
Merger of net assets from other NSTAR savings plans 402,973
(Note A)
Net increase in net assets available for benefits 412,088
Net assets available for benefits:
Beginning of year 121,469
End of year $533,557
========
The accompanying notes are in integral part of these financial
statements.
NSTAR SAVINGS PLAN
Notes to Financial Statements
A. Summary
The following description of the NSTAR Savings Plan (the "Plan")
provides only general information. Eligible employees'
("Participants") benefits under this Plan are determined in
accordance with the Plan document. Effective January 1, 2000,
the current Plan name was adopted following a corporate merger in
August 1999 and replaced the former Boston Edison Savings Plan.
Features of the Plan are described below.
The Plan is administered by the Retirement Plans Committee
("Committee"), which is empowered to decide questions of
eligibility and make other interpretations under the Plan in its
discretion, and in general to administer the operation of the
Plan. In addition, the Executive Personnel Committee of the
Trustees of NSTAR, the Plan sponsor, has the responsibility to
appoint and remove the Plan Trustee. Members of the Committee
and the Pension Management Committee select investment funds,
employ Plan advisors, appoint investment managers and generally
establish policies, including funding and investment policies,
for the Plan. The Pension Management Committee also has the
responsibility to implement these policies and generally to
monitor the operations of the Plan and the Plan Trustee.
The Plan investments are held in trust by Fidelity Management
Trust Company ("Fidelity"), the Plan's trustee and record keeper.
The Trustee retains the Plan assets, provides records of Plan
activity and makes distributions as instructed by the Committee
or its designee.
On March 30, 2001, the NSTAR Negotiated Savings Plan for Office,
Technical and Professional Employees, the NSTAR Negotiated
Savings Plan for Production and Maintenance Employees and the
NSTAR 401(k) Plan were merged into the Plan. Effective April 2,
2001, all participants in those plans became Participants in the
NSTAR Savings Plan. Net plan assets of $50,910,000, $88,647,000
and $263,416,000 were transferred from the NSTAR Negotiated
Savings Plan for Office, Technical and Professional Employees,
the NSTAR Negotiated Savings Plan for Production and Maintenance
Employees and the NSTAR 401(k) Plan, respectively, into the Plan.
General
NSTAR (the "Company") is an energy delivery company serving
approximately 1.3 million customers in Massachusetts including
more than one million electric customers in 81 communities and
246,000 gas customers in 51 communities. Common Shares of NSTAR
are listed on the New York and Boston stock exchanges under the
trading symbol of NST.
The Plan was originally established in 1986 and provides
retirement benefits for participating eligible employees through
a program of salary-reduction contributions and limited matching
employer contributions. The Plan has been amended from time to
time thereafter. The Plan is a defined contribution plan subject
to the rules and regulations of the Employee Retirement Income
Security Act of 1974 ("ERISA"). The Plan is qualified under
section 401(a) of the Internal Revenue Code (the "Code") and
utilizes the special federal income tax deferral features of
section 401(k) of the Code.
Participation
Active NSTAR employees who are full-time or part-time who are
regularly scheduled to work at least twenty hours per week, are
eligible to participate in the Plan.
Contribution Policy
Employees who participated in the Plan prior to April 2, 2001
elected to make contributions of at least 2% but not more than
15% of their pretax annual compensation as defined in the Plan.
Effective April 2, 2001, Participants in the merged Plan can
elect to make contributions of at least 1% but not more than 17%
of their pretax annual compensation as defined in the Plan up to
the annual Internal Revenue Service dollar limit ($10,500 in
2001). Participants can change contributions at any time.
Participants are immediately fully vested in and have a non-
forfeitable right to the value of their contributions and company
matching contributions. On January 1, 2000, a Plan amendment
changed the company matching contribution feature of the Plan to
equal 50% up to the first 8% of a Participant's eligible
compensation invested through payroll deductions directed into
the Plan. Effective with this amendment, the matching funds were
restricted and invested only in the NSTAR Stock Fund and any
contributions and earnings thereon were restricted from being
transferred to other available Plan funds. These restrictions on
transferring funds out of the renamed NSTAR Common Share Fund
were removed from the Plan effective April 2, 2001.
Investments
Prior to April 2, 2001, investments in the Plan were directed by
the Plan Participants to nine investment choices offered under
the Plan: seven mutual funds (Asset Manager, Magellan, Retirement
Government Money Market, Spartan U.S. Equity Index, Intermediate
Bond, International Growth and Income and Disciplined Equity)
managed by Fidelity, the NSTAR Stock Fund and Fidelity Brokerage
Link. Fidelity Brokerage Link is a self-directed brokerage
account through which Participants are able to invest in a
variety of securities, including stock, bonds, mutual funds and
certificates of deposit.
Effective April 2, 2001, the NSTAR Savings Plan began offering
twelve investment choices: eight Fidelity-managed investment
options described above, excluding the Disciplined Equity Fund
and including the Growth Company and Mid-Cap Stock Funds, a
Vanguard growth and income mutual fund, a Morgan Stanley growth-
oriented mutual fund, Fidelity Brokerage Link and the renamed
NSTAR Common Share Fund. Participant contributions and
investment earnings remain available for Participant direction.
Investments at fair value are summarized below. Investments
representing more than 5% of Plan assets are listed separately
(in thousands):
December 31,
2001 2000
Registered Investment Companies:
Fidelity Asset Manager $ 58,190 $ 11,819
Fidelity Magellan 78,401 33,809
Fidelity Retirement Government
Money Market 43,710 5,518
Fidelity Spartan U.S. Equity Index 22,397 11,558
Vanguard Windsor II 77,144 -
Other registered investments 54,282 7,502
Total registered investment companies 334,124 70,206
Fidelity Brokerage Link 14,922 4,652
NSTAR Common Share Fund # 171,120 44,863
Participant loans receivable 12,964 1,680
Total investments * $533,130 $121,401
======== ========
* All investments listed above represent parties-in-interest to
the Plan, except Vanguard Windsor II and other registered investments
# Partially non-participant directed (see Note C)
Participants' Accounts
Each Participant account is credited with their contribution and
an allocation of Plan earnings (based on the Participant's
account balance). The Company matching contribution is invested
in the NSTAR Common Share Fund and a Participant may transfer
balances in this Fund to any of the Plan's other investment
options effective April 2, 2001.
Vesting
Participants are fully vested at all times in the entire balance
of their own contributions to the Plan and are immediately vested
in the Company match.
Receiving Payments from the Plan
Participants may be eligible to take a withdrawal from the Plan
depending on the assets in their Member Account, Rollover
Account, Company Account and Pay Deferral Account and their
particular circumstances. While actively employed at NSTAR,
withdrawals from accounts are restricted by the Internal Revenue
Service due to the Plan's tax advantages.
Effective April 2, 2001, upon termination of employment,
Participant account balances may be paid in a lump-sum or payment
may be deferred until age seventy and one-half.
Plan Termination
The Plan was established with the intent of continuing it
indefinitely. The Executive Personnel Committee reserves the
right to terminate, suspend, withdraw, amend or modify the Plan
in whole or in part for any reason at any time subject to
applicable laws. If the Plan, that now continues, is terminated
or there is a complete discontinuance of contributions,
Participants will continue to be fully vested in their account
balances. Distributions will be made upon Plan termination to
the extent consistent with continued qualification of the Plan
under the Code of 1986, as amended. The Code places restrictions
on plan termination distributions in the case of a plan such as
the Plan, if the employer continues to maintain another similar
plan.
Because Participant benefits depend solely on the amount in
individual accounts, the Plan was not insured by the Pension
Benefit Guaranty Corporation under Title IV of ERISA.
Participant Loans
Participants in the Plan may obtain a loan from the balance in
their account. The loan may not be less than $1,000 nor exceed
the lesser of $50,000 or 50% of the market value of the
Participant's account. Loans must be repaid to the Participant's
account over a period not to exceed five years (unless the loan
is for the purchase of a principal residence) via payroll
deductions. Both the principal and interest on the loan are
repaid to the borrower's account. The annual interest rate on a
loan will be the Prime Rate as of the prior January 1 and is
fixed for the term of the loan.
B. Summary of Significant Accounting Policies
Basis of Accounting and Use of Estimates
The Plan's financial statements have been prepared under the
accrual method of accounting and in accordance with the rules and
regulations of ERISA. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
these estimates.
Risks and Uncertainties
The Plan provides for various investment options in any
combination of stocks, mutual funds and other investment
securities. Investment securities are exposed to various risks,
such as interest rate, market and credit. Due to the level of
risk associated with certain investment securities and the level
of uncertainty related to changes in the value of investment
securities, it is at least reasonably possible that changes in
risks in the near term would materially affect Participants'
account balances and the amounts reported in the statement of net
assets available for benefits and the statement of changes in net
assets available for benefits.
Investments Valuation
Plan investments held by Fidelity, Vanguard and Morgan Stanley
Dean Witter are stated at fair value. Fair value of shares of
registered investment companies represent the net asset value of
such shares as of the close of business at the end of the period.
Fair value of NSTAR common shares are based on the last quoted
market price as of the close of business at period end. Fair
value of the Fidelity Brokerage Link Account assets, which
consist primarily of registered investment companies, are
determined using the methods stated above. Participant loans are
valued at cost plus interest which approximates fair value.
Income Recognition
Income of the NSTAR Common Share Fund consists primarily of
dividends on its common shares. The allocation of each Plan
investment fund's earnings to a Participant's account is based on
the percentage of the Participant's units in the fund's Plan
investment and is allocated daily. Capital gain distributions
are included in dividend income. Dividend income is recorded on
the ex-dividend date. Interest income is recorded on the accrual
basis. Purchases and sales of securities are recorded on a trade-
date basis.
Net Appreciation/(Depreciation) in the Fair Value of Investments
Gains and losses are realized upon distributions (including
withdrawals) to Participants and the transfer of all or a portion
of a Participant's account between investment choices. The Plan
presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments
which consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
Contributions
Salary reduction contributions made on behalf of Participants and
matching Company contributions are recorded in the period payroll
deductions are made from Participants. Contributions receivable
at December 31, 2001 and 2000 represent amounts withheld from
Participants and the corresponding matching Company contributions
subsequently deposited to the Plan in the following month.
Distributions and withdrawals
Distributions and withdrawal payments are recorded when paid.
Transfers Between Investment Choices
Plan Participants may, with certain limitations, elect to
transfer their elective contribution account balances from any
investment option or options to any of the other options offered
by the Plan on a daily basis. Refer to Note A for a change to
the Plan's Contribution Policy effective in 2001.
C. NSTAR Common Share Fund
Information about the significant components of the changes in
net assets relating to the NSTAR Common Share Fund is
as follows (in thousands):
Year Ended
December 31, 2001
NSTAR Common Share Fund
Beginning of year $ 44,863
Changes in Net Assets -
Interest and dividends $ 6,885
Contributions 8,735
Net appreciation 21,482
Benefits paid to Participants (11,674)
Merger of Plans 118,948
Loans to Participants (3,396)
Interfund transfers (14,723) 126,257
End of year $ 171,120*
=======
* Includes participant and nonparticipant-directed investments
D. Expenses
Brokerage fees, commissions, stock transfer taxes and other
expenses in connection with the purchase, sale or distribution of
securities for each fund may be charged to such fund. Any
expense of litigation may be paid by the Plan Trustee and charged
to the Trust Fund or to the investment fund or funds to which the
litigation relates. Expenses and charges incurred in the
administration of the Plan are generally paid by the Company. An
administrative fee relating to the issuance of Plan loans is paid
by Plan Participants.
E. Related Party Transactions
Certain Plan investments are shares of mutual funds managed by an
affiliate of Fidelity. Fidelity is the trustee as defined by the
Plan and, therefore, these transactions qualify as party-in-
interest. Common Shares of NSTAR and the Fidelity Funds are
parties-in-interest as that term is defined in
section 3(14) of ERISA.
F. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for
benefits per these financial statements to the Form 5500 at
December 31, 2001 and 2000 (in thousands):
2001 2000
Net assets available for benefits
per these financial statements $533,557 $121,469
Less: Contributions receivable 427 68
Net assets available for benefits
per the Form 5500 $533,130 $121,401
======== ========
The following is a reconciliation of contributions received per
these financial statements to the Form 5500 for the year ended
December 31, 2001 (in thousands):
2001
Contributions per these financial statements $ 24,516
Add: Contributions receivable at the
beginning of the year 68
Less: Contributions receivable at the
end of the year 427
Contributions per the Form 5500 $ 24,157
========
Contributions are recorded on the Form 5500 when received.
G. Tax Status
The Internal Revenue Service has determined and informed
management by a letter dated May 15, 2002, that the Plan is
designed in accordance with applicable sections of the Internal
Revenue Code. The Plan administrator and tax counsel for the
Plan believe the Plan is designed and is currently being operated
in compliance with the applicable requirements of the Internal
Revenue Code. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
H. Subsequent Event
Effective January 1, 2002, Participants may contribute from 1% to
50% of their compensation on a pre-tax basis, up to the annual
IRS limit of $11,000 in 2002 (for the 2001 Plan year, the maximum
amount was 17%, up to the IRS limit of $10,500). This limit will
increase by $1,000 each year thereafter until it reaches $15,000
in 2006. After 2006, the maximum amount will be adjusted for
inflation in $500 increments.
In addition, starting in January 2002, Participants have the
option of reinvesting dividends paid on the NSTAR Common Share
Fund or receiving such dividends in cash.
Effective April 1, 2002, Participants will be able to elect pre-
tax "catch-up" contributions to the Plan if they are at least age
50 by December 31, 2002. Catch-up contributions are additional
pre-tax contributions for Participants who are at least age 50 or
older during the plan year and are contributing the maximum IRS
limit ($11,000 for deferral in 2002) or the Plan's pre-tax
contribution limit (50% of eligible compensation in 2002).
Starting in 2002, the maximum annual pre-tax catch-up
contribution is $1,000. The catch-up contribution will increase
to $2,000 in 2003, $3,000 in 2004, $4,000 in 2005, and $5,000 in
2006. After 2006, the catch-up contribution will be adjusted for
inflation in $500 increments.
Supplemental Schedule I
Employer Identification
Number: 04-3466300
Plan Number: 52709
NSTAR SAVINGS PLAN
Schedule of Assets (held at end of Year)
(in thousands)
Schedule H, Line 4i - Form 5500
December 31, 2001
Current
Name of Issuer and Title of Issue Cost Value
Fidelity Mutual Funds*:
Asset Manager $ 58,961 $ 58,190
Magellan 75,644 78,401
Retirement Government Money Market 43,710 43,710
Spartan U.S. Equity Index 21,233 22,397
Intermediate Bond 11,184 11,218
International Growth & Income 12,039 11,321
Growth Company 11,816 12,083
Mid-Cap Stock 11,484 11,146
Total Fidelity Mutual Funds 246,071 248,466
Vanguard Windsor II 69,750 77,144
MSI Small Corporate Growth 7,584 8,514
Fidelity Brokerage Link* 14,922 14,922
NSTAR Common Share Fund* 88,772 171,120
$ 427,099 $ 520,166
========= =========
Participant Loans*
(Rates of 6.0% to 10.5%) $ 12,964 $ 12,964
Total $ 440,063 $ 533,130
========= =========
* Represent parties in interest to the Plan
Supplemental Schedule II
Employer Identification
Number: 04-3466300
Plan Number: 52709
NSTAR SAVINGS PLAN
Schedule of Reportable Transactions*
Year ended December 31, 2001
Schedule H, Part IV, Line 4j - Form 5500
Current
Value On
Purchase Selling Cost of Expenses Lease Transaction Net
Description Prices Prices Asset Incurred Rental Date Gain/Loss
Series of
transactions:
NSTAR
Common
Shares $12,461,142 $33,350,097 $28,555,788 $45,811,239 $4,794,309
* Transactions or a series of transactions in excess of 5% of
the Plan's assets at December 31, 2000, as defined in Section
2520.103-6 of the Department of Labor's Rules and Regulations and
Disclosure under ERISA.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Retirement Plans Committee of the NSTAR Savings Plan
has duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
NSTAR Savings Plan
Date: June 28, 2002 /s/ Timothy R. Manning
Senior Vice President - Human Resources
and on behalf of the
NSTAR Retirement Plans Committee