UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
Form 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK
REPURCHASE SAVINGS AND SIMILAR PLANS
PERSUANT 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 the fiscal year ended December 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ___________ to _________
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Commission file no. 1-14161
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KeySpan Energy
401(k) Plan for Union Employees
(Full title of the Plan)
KeySpan Corporation
(Name of issuer of the securities held pursuant to the Plan)
One MetroTech Center
Brooklyn, NY 11201-3385
(Address of principal executive office)
KEYSPAN ENERGY 401(k) PLAN FOR UNION EMPLOYEES
TABLE OF CONTENTS
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Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Assets Available for Benefits as of December 31, 2005 and 2004 2
Statement of Changes in Assets Available for Benefits for the Year Ended December 31, 2005 3
Notes to Financial Statements as of December 31, 2005 and 2004 and for the Year Ended
December 31, 2005 4-11
SUPPLEMENTAL SCHEDULES:
Form 5500, Schedule H, Part IV, Line 4i - Schedule of Assets (Held at End of Year)
as of December 31, 2005 12
SIGNATURES 13
EXHIBIT INDEX:
Consent of Independent Registered Public Accounting Firm 14
All other schedules required by Section 2520.103-10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974 ("ERISA"), have been omitted because they are not
applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Investment Review Committee and Participants of
KeySpan Energy 401(k) Plan for Union Employees:
We have audited the accompanying statements of assets available for benefits of
KeySpan Energy 401(k) Plan for Union Employees (the "Plan") as of December 31,
2005 and 2004, and the related statement of changes in assets available for
benefits for the year ended December 31, 2005. 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 standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Plan is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Plan's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the assets available for benefits of the Plan at December 31, 2005 and
2004, and the changes in assets available for benefits for the year ended
December 31, 2005, in conformity with accounting principles generally accepted
in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) as of December 31, 2005 is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements, but is 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 schedule is the
responsibility of the Plan's management. Such supplemental schedule has been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects when considered in relation to the basic financial statements taken as
a whole.
/s/ Deloitte & Touche LLP
New York, New York
June 22, 2006
KEYSPAN ENERGY 401(K) PLAN FOR UNION EMPLOYEES
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2005 AND 2004
2005 2004
ASSETS:
Participant-directed investments $ 529,104,506 $ 484,044,168
Nonparticipant-directed investments 106,977,442 107,460,796
------------------------- -------------------------
Total investments 636,081,948 591,504,964
------------------------- -------------------------
RECEIVABLES:
Participant contributions 561,778 550,273
Employer contributions 51,583 50,729
------------------------- -------------------------
Total receivables 613,361 601,002
------------------------- -------------------------
ASSETS AVAILABLE FOR BENEFITS $ 636,695,309 $ 592,105,966
========================= =========================
========================= =========================
See notes to financial statements.
2
KEYSPAN ENERGY 401(k) PLAN FOR UNION EMPLOYEES
STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2005
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ADDITIONS:
Investment income (loss):
Net depreciation in fair value of investments $ (2,373,506)
Interest 6,952,457
Dividends 20,809,455
-----------------
-----------------
Net investment income 25,388,406
-----------------
Contributions:
Participants 36,624,196
Employer 3,347,780
Rollovers 478,627
-----------------
Total contributions 40,450,603
-----------------
Total additions 65,839,009
DEDUCTIONS:
Benefits paid to participants (20,258,286)
Plan administration fees (26,320)
Net assets transferred out to the Management Plan (965,060)
-----------------
Total deductions (21,249,666)
INCREASE IN ASSETS 44,589,343
ASSETS AVAILABLE FOR BENEFITS:
Beginning of Year 592,105,966
-----------------
End of Year $ 636,695,309
=================
See notes to financial statements.
3
KEYSPAN ENERGY 401(k) PLAN FOR UNION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2005 AND 2004 AND FOR THE YEAR ENDED DECEMBER 31, 2005
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the KeySpan Energy 401(k) Plan for Union
Employees (the "Plan") available to eligible employees of KeySpan
Corporation (the "Company" or "KeySpan"), provides only general
information. Participants should refer to the Plan Document for a more
complete description of the Plan's provisions.
General - The Plan was approved by the shareholders of the Company at the
annual meeting of shareholders on February 3, 1983. The Plan provides for
eligible employees of the Company and its selected subsidiaries to become
participants of the Plan. In general, all union employees as defined in the
plan document are eligible to participate in the Plan immediately upon
hire. The Plan is a defined contribution plan and is subject to the
provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
The recordkeeper and custodian of the Plan is The Vanguard Group
("Vanguard") and the trustee of the Plan is the Vanguard Fiduciary Trust
Company. The Vanguard Fiduciary Trust Company was appointed to act as the
trustee under the Plan to receive and hold Company Common Stock and the
investment of contributions in the other funds as described herein and in
the Plan Document. Pursuant to a trust document executed by the Vanguard
Fiduciary Trust Company, the trustee is subject to the same fiduciary
responsibility to the Plan's participants as an independent trustee.
Plan Amendments - Effective January 1, 2004, the match for Ravenswood Local
1-2 Members was changed from 1/3 of the first $30 to 1/3 of the first $45
of weekly contributions.
Effective June 1, 2004, KeySpan Energy Delivery New England Local 12012-03
members hired after April 15, 1993 were given a match of $0.50 on each
$1.00 that the employee contributes to the Plan, up to a maximum employee
contribution of 7%.
Effective March 1, 2005, the involuntary cash-out threshold was reduced
from $5,000 to $1,000.
Effective May 1, 2005, 11 Algonquin LNG, Inc. management employees
unionized under Local 251 Teamsters. The new union members were given a
match of $0.25 of each $1.00 that they contribute to the Plan, up to a
maximum of 6% of the employee's compensation
On February 16, 2005, the Investment Review Committee (the "Committee")
approved the adoption of ERISA section 404(c) for the mutual funds in
KeySpan's 401(k) Plans. Section 404(c) of ERISA states that if a plan
sponsor, such as KeySpan, gives participants a broad range of investment
options from which to choose, the opportunity to exercise control over
4
their accounts, and enough information to make informed investment
decisions, then each participant becomes responsible for the success or
failure of his or her own investment program.
Contributions - All participants of the Plan may elect to have their
compensation reduced by not less than 1% and no more than 50% (in multiples
of 1%) and contributed to the Plan on the participants' behalf by the
Company. Compensation may not be reduced by an amount greater than the
limitation imposed by Section 402(g) of the Internal Revenue Code. Such
contributions reduce the amount of the participants' salary subject to
current Federal income tax and, subject to applicable laws, state and local
income taxes. Such contributions are subject to Social Security taxes.
All employees who are eligible pursuant to their collective bargaining
agreement and contributing to the Plan will receive employer contributions
and a 10% discount on the Company Common Stock on the first of the month
following completion of twelve months of service. Additionally, all
eligible employees will receive matching contributions in Company Common
Stock regardless of where employees choose to invest their contributions.
The match and discount amounts may be transferred out of Company Common
Stock immediately. There are no holding periods or restrictions with
respect to Company Common Stock. All other contributions are
participant-directed.
Effective January 1, 2002, the entire portion of a participant's pre-tax,
after-tax, matching, employer non-elective, rollover, and discount employer
contribution accounts that are invested in the Company Common Stock shall
be deemed part of the Employee Stock Ownership Plan ("ESOP").
All contributions under the Plan are held in a trust fund with a trustee
who is appointed by the Committee and the Board of Directors. The Committee
is also the administrative committee of the Plan. The Plan makes available
the funds in which participants may invest. Such investment options may be
changed from time to time.
Rollover Contributions - If a participant of the Plan receives a lump sum
distribution from a qualified savings or profit sharing plan of a previous
employer, a "rollover" contribution by the participant of the amount of the
lump-sum distribution may be made to the Plan.
Participant Accounts - Individual accounts are maintained for each
participant. Each participant's account is credited with the participant's
contribution, the Company's matching contribution and discount on Company
Common Stock, if applicable, and allocations of (1) Company discretionary
contributions and (2) Plan earnings, and charged with withdrawals and an
allocation of Plan losses. Allocations are based on participant earnings or
account balances, as defined. A participant's benefit is distributed from
the participant's vested account as provided in the Plan Document.
Vesting and Forfeitures - Participants will be 100% vested in employer
match and discount contributions on the earlier to occur of (i) the
participant's completion of three (3) years of service with the Company,
(ii) the participant's retirement from the Company at age fifty-five or
older (iii) the death of the participant (iv) the disability of the
participant if the participant is receiving disability benefits under Title
II of the Social Security Act or (v) the termination or partial termination
of the Plan.. A participant will be 100% vested immediately in his or her
deferred cash contributions, rollover/transfer contributions, and earnings
thereon, if any. If a participant does not vest, such participant will
forfeit the match and discount, and any earnings thereon into a forfeiture
account, which is maintained by Vanguard.
5
On December 31, 2005 and 2004, forfeited non-vested accounts totaled $6,467
and $23,670 respectively. These accounts will be used to reduce future
employer contributions and pay Plan administration expenses. During the
year ended December 31, 2005, employer contributions were reduced by $50
from forfeited non-vested accounts.
Investments - All employees who are eligible pursuant to their collective
bargaining agreement have an opportunity to acquire shares of Company
Common Stock ($.01 par value) at a 10% discount. In addition to Company
Common Stock, participants may invest in other investment options
(collectively, the "Funds").
At the direction of the participants, Plan assets are invested in the
KeySpan Common Stock Fund, and/or one or more of the following funds,
namely: Vanguard Windsor Fund, Vanguard 500 Index Fund, Vanguard Retirement
Savings Trust V, Vanguard Explorer Fund, Vanguard LifeStrategy Conservative
Growth Fund, Vanguard LifeStrategy Moderate Growth Fund, Vanguard
LifeStrategy Growth Fund, Vanguard Windsor II Fund, Vanguard PRIMECAP Fund,
Vanguard International Growth Fund, Vanguard Total Bond Market Index Fund,
Vanguard Mid-Cap Index Fund, and American Funds Growth Fund of America,
Class R-5. Participants should refer to the applicable Fund's prospectus
for a complete description of each of the Funds.
On May 21, 2004, The Committee approved the removal of Vanguard U.S. Growth
Fund, the addition of American Funds Growth Fund of America, Class R-5
("American Funds Growth Fund of America") and the Vanguard Mid-Cap Index
Fund. Beginning August 20, 2004, no new contributions or transfers into
Vanguard U.S. Growth Fund were permitted. Participant contribution
allocations to Vanguard U.S. Growth Fund were redirected to American Funds
Growth Fund of America. Participants were given 90 days to transfer their
Vanguard U.S. Growth Fund balances into other funds in the Plan otherwise
all remaining balances would automatically be transferred to American Funds
Growth Fund of America.
On November 19, 2004, remaining Vanguard U.S. Growth Fund balances of
$5,435,792 were transferred to American Funds Growth Fund of America.
The Vanguard Mid-Cap Index was added as an investment option to the Plan to
complement the existing fund options.
On January 20, 2005, all participant balances in Vanguard Retirement
Savings Trust, with an expense ratio of 0.30%, were moved to Vanguard
Retirement Savings Trust V, which offers an expense ratio of 0.25%.
Liquidation of the Preferred Stock Fund - During 2004, in an effort to
allow participants greater investment flexibility, the Preferred Stock Fund
was liquidated. Proceeds paid to participants were transferred from the
Preferred Stock Fund to the Vanguard Retirement Savings Trust. The funds
were immediately eligible to be transferred to other funds in the Plan.
On June 30, 2004, KeySpan's Board of Directors authorized the redemption of
all of the outstanding shares of Preferred Stock Series A partially held by
the Plan in the Preferred Stock Fund.
On July 29, 2004, the Preferred Stock Fund was liquidated. At the time of
redemption, 4,157 participants held 51,154 shares. Each participant who
held shares of the preferred stock received the par value of $100 per share
plus a 2% premium for a total of $102 per share. The total redemption
6
amount was $5,217,742, which included a premium of $102,308. KeySpan paid
accrued dividends through July 29, 2004 of $127,031 ($2.4833 per share).
Participant Loans - Participants may borrow a minimum of $1,000 and a
maximum amount not to exceed the lesser of $50,000 or 50% of the
participants' account balance from the Plan (only employee deferred cash
contributions, rollover/transfer contributions and earnings thereon are
used to determine the maximum loan amount that can be taken). Currently, no
more than two loans per participant are allowed outstanding at the same
time. General purpose loans are payable over a period not to exceed five
years, and bear interest at the prime rate plus 1% (the prime rate at the
time the loan is requested) as described in the Plan Document. Currently,
participants may also amortize a loan for the purchase of their primary
residence over a fifteen-year period, which bears interest at the prime
rate plus 1%. The loans are secured by the participants' interest in the
Plan.
Payment of Benefits - Upon termination of service, a participant or
eligible beneficiary whose account balance is greater than $1,000, may
elect to leave their balance in the Plan, receive a lump-sum amount equal
to the value of the participant's vested account, elect to receive annual
installments or a partial distribution, or roll over their balance to an
Individual Retirement Account or another qualified plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America.
Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, and changes therein and
disclosure of contingent assets and liabilities. Actual results could
differ from those estimates.
Risks and Uncertainties - The Plan provides for various investment options.
The Plan's mutual funds invest in various securities including U.S.
Government securities, corporate debt instruments and corporate stocks.
Investment securities, in general, are exposed to various risks such as
interest rate, credit and overall market volatility. Due to the level of
risk associated with certain investment securities, it is reasonably
possible that changes in the values of investment securities will occur in
the near term and that such changes could materially affect participants'
account balances and the amount reported in the financial statements.
Investment Valuation and Income Recognition - The Plan's investments are
stated at fair value. Quoted market prices are used to value investments.
Shares of mutual funds are valued at quoted closing market prices, which
represent the net asset value of shares held by the Plan on the last
business day of the year.
Purchases and sales of securities are recorded on a trade-date basis.
Dividend income is recorded on the ex-dividend date. Interest income is
recorded on an accrual basis.
7
Participant loans are valued at outstanding loan balances.
Management fees and operating expenses are charged to Plan participants and
are reflected as a reduction of investment return in the mutual funds. Such
management fees and operating expenses are deducted from income earned on a
daily basis.
Valuation of Investments (Securities with No Quoted Market Prices) -
Amounts for securities that have no quoted market price represent estimated
fair value. Many factors are considered in arriving at that fair value. The
estimated fair value of the KeySpan Common Stock Fund is the quoted market
price of the Company's common stock. The KeySpan Common Stock fund is
divided into fund units. Each unit represents a portion of ownership in the
fund and consists primarily of shares of Company Common Stock and a small
cash balance so that transactions can be processed daily. The KeySpan
Preferred Stock was not publicly traded, and was recorded at par value of
$100 and paid a 6% dividend semi-annually. Fair value of the common
collective trust has been estimated by Vanguard based on the underlying
assets of the portfolio.
Administrative Expenses - Expenses for the administration of the Plan are
paid for either by the Plan Sponsor or the Plan as stated in the Plan
Document. KeySpan and its subsidiaries are allocated for their expenses
related to administration of the Plan as well as matching contributions and
discount on Company Common Stock.
Payment of Benefits - Benefits to participants are recorded when paid.
There have been no amounts accrued but not yet paid as of December 31,
2005.
3. INVESTMENTS
The following investments represent 5% or more of the Plan's assets
available as of December 31, 2005 and 2004:
2005 2004
KeySpan Stock Fund -
*KeySpan Common Stock Fund, 3,009,211 and 2,735,067 and units,
respectively** $106,977,442 $107,460,796
Common and Collective Trust -
Vanguard Retirement Savings Trust V, 138,628,463 and 129,180,320
shares, respectively**
138,628,463 129,180,320
Mutual Funds:
Vanguard PRIMECAP Fund, 1,503,779 and 1,543,747 shares, 98,211,792 96,175,465
respectively**
Vanguard 500 Index Fund, 390,236 and 383,394 shares, 44,845,936 42,802,064
respectively**
Vanguard Windsor Fund, 2,401,624 and 2,217,722 shares, 41,187,859 40,074,242
respectively**
Vanguard Windsor Fund II, 1,560,720 and 1,425,877 shares, 48,897,367 43,817,191
respectively**
Vanguard Explorer Fund, 451,534 and 404,994 shares** 33,914,727 30,200,399
* Non-participant directed
** Permitted party-in-interest
8
During 2005, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated (depreciated) in
value by ($2,373,506) as follows:
KeySpan Common Stock ($10,768,788)
American Funds Growth Fund of America 1,049,304
Vanguard PRIMECAP Fund 4,393,473
Vanguard 500 Index Fund 1,266,563
Vanguard Windsor Fund (2,039,070)
Vanguard Windsor II Fund 871,875
Vanguard Total Bond Market Index Fund (494,052)
Vanguard LifeStrategy Moderate Growth Fund 719,648
Vanguard Explorer Fund 251,755
Vanguard International Growth Fund 1,327,878
Vanguard LifeStrategy Growth Fund 388,515
Vanguard LifeStrategy Conservative Growth Fund 72,194
Vanguard Mid-Cap Index Fund 587,199
-------------------
Net depreciation in fair value of investments ($2,373,506)
===================
4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the assets as of December 31, 2005 and 2004 and the
significant components of changes in assets for the year ended December 31,
2005 relating to the nonparticipant-directed investments is as follows:
2005
KeySpan Common Stock fund - beginning of year: $107,460,796
Changes in assets:
Net depreciation in fair value of investment (10,768,788)
Dividend income 5,109,437
Employer contributions 3,346,271
Participant contributions 6,571,269
Participant loan repayments 3,881,349
Net assets transferred (558,272)
Benefits paid to participants (2,727,552)
Participant loan withdrawals (2,799,847)
Transfers to participant-directed investments (2,537,221)
--------------------------
Net change (483,354)
--------------------------
KeySpan Common Stock fund - end of year: $106,977,442
==========================
9
5. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Plan
administrator by a letter dated January 15, 2003, that the Plan is
qualified and the Trust established under the Plan is tax-exempt, under the
appropriate sections of the Internal Revenue Code ("IRC"). The Plan has
been amended since receiving the determination letter; however, the Company
and the Plan administrator believe that the Plan is currently designed and
being operated in compliance with the applicable requirements of the IRC.
Therefore, no provision for income taxes has been included in the Plan's
financial statements.
6. EXEMPT PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments are shares of mutual funds and a common and
collective trust managed by the asset custodian, trustee, and recordkeeper,
the Vanguard Group, as defined by the Plan and therefore these transactions
qualify as exempt party-in-interest transactions. Fees paid for investment
management services are charged to Plan participants and were included as a
reduction of the return earned on each fund. The Plan's transactions
involving Company Common Stock are also party-in-interest transactions.
Certain employees and officers of the Company, who may also be participants
in the Plan, perform administrative services to the Plan at no cost to the
Plan. These party-in-interest transactions are not deemed prohibited
because they are covered by statutory and administrative exemptions from
the Code and the rules and prohibited transactions of ERISA.
At December 31, 2005 and 2004, the Plan held 3,009,211 and 2,735,067 units,
respectively, of KeySpan Common Stock, the sponsoring employer, with a cost
basis of $96,314,388 and $84,947,866, respectively. During the year ended
December 31, 2005, the Plan recorded dividend income of $5,109,437.
7. PLAN TERMINATION
Although the Company has not expressed any intent to do so, it may
terminate the Plan at any time. In the event of Plan termination, the
accounts of all participants affected shall become fully vested and
non-forfeitable. Assets remaining in the trust fund will be distributed to
the participants and beneficiaries in proportion to their respective
account balances.
8. SUBSEQUENT EVENTS
On September 22, 2005, KeySpan Board of Directors approved an amendment to
the Plan, effective January 1, 2006, allowing participants to invest
Company match into any of the funds available in the Plan. Prior to this
amendment, company match was initially invested in the KeySpan Common Stock
Fund.
Effective January 1, 2006, the Plan adopted all relevant provisions of the
IRS regulations applicable for 401(k) plans that were amended and restated
effective December 29, 2004. This restatement is generally applies for the
Plan year commencing January 1, 2006
On February 25, 2006, KeySpan entered into an Agreement and Plan of Merger
(the "Merger Agreement"), with National Grid PLC, a public limited company
incorporated under the laws of England and Wales ("Parent") and National
Grid USA, Inc., a New York Corporation ("Merger Sub"), pursuant to which
Merger Sub will merge with and into KeySpan (the "Merger"), with KeySpan
10
continuing as the surviving company. Pursuant to the Merger Agreement, at
the effective time of the Merger, each outstanding share of common stock,
par value $0.01 per share of KeySpan (the "Shares"), other than shares
owned by KeySpan, shall be canceled and shall be converted into the right
to receive $42.00 in cash, without interest.
Consummation of the Merger is subject to various closing conditions,
including but not limited to the satisfaction or waiver of conditions
regarding the receipt of requisite regulatory approvals and the adoption of
the Merger Agreement by the stockholders of KeySpan and the Parent.
Assuming receipt or waiver of the foregoing, it is currently anticipated
that the Merger will be consummated in early 2007. However, no assurance
can be given that the Merger will occur, or, the timing of its completion.
******
11
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2005
- ------------------------------------------------------------------------------------------------------------------------------------
c) Description of Investment, Including
(b) Identity of Issue, Borrower, Maturity Date, Rate of Interest, (e) Current
(a) Lessor or Similar Party Collateral, Par or Maturity Value (d) Cost Shares Value
* KeySpan Common Stock Fund Common Stock $ 96,314,388 3,009,211 $ 106,977,442
American Funds Growth Fund of America Mutual Fund ** 333,153 10,277,842
Vanguard Funds:
* Vanguard Retirement Savings Trust V Common Collective Trust ** 138,628,463 138,628,463
* Vanguard PRIMECAP Fund Mutual Fund ** 1,503,779 98,211,792
* Vanguard 500 Index Fund Mutual Fund ** 390,236 44,845,936
* Vanguard Windsor Fund Mutual Fund ** 2,401,624 41,187,859
* Vanguard Windsor II Fund Mutual Fund ** 1,560,720 48,897,367
* Vanguard Total Bond Market Index Fund Mutual Fund ** 2,437,433 24,520,573
* Vanguard LifeStrategy Moderate Growth Fund Mutual Fund ** 1,302,115 24,050,073
* Vanguard Explorer Fund Mutual Fund ** 451,534 33,914,727
* Vanguard International Growth Fund Mutual Fund ** 689,531 14,480,156
* Vanguard LifeStrategy Growth Fund Mutual Fund ** 421,844 8,858,729
* Vanguard LifeStrategy Conservative Growth Fund Mutual Fund ** 359,655 5,571,054
* Vanguard Mid-Cap Index Fund Mutual Fund ** 395,971 6,980,971
--------------
607,402,984
* Participant loans receivable Participant loans (maturing 28,678,964
2006 to 2020 at interest --------------
rates of 5% to 11%) **
Total $ 636,081,948
==============
* Permitted party-in-interest.
** Cost information is not required for participant-directed investments and,
therefore, is not included.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Investment Review Committee (the Plan Fiduciaries) has duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
KeySpan Energy 401(k) Plan for
Union Employees
BY:/s/ Michael J. Taunton
---------------------------------------
Michael J. Taunton
Senior Vice President and Treasurer
KeySpan Corporation
Date: June 22, 2006
13