-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GPNAYn+ZqMOz2MJvQfLlpHgYs/p7MqMSQY8HPL+EFSQ6q9Kv3/SiULS8oKno+hzK 77Xbcm9N82bxU6iLwe9S0A== 0000071304-96-000009.txt : 19960501 0000071304-96-000009.hdr.sgml : 19960501 ACCESSION NUMBER: 0000071304-96-000009 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960430 SROS: BSE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMONWEALTH ENERGY SYSTEM CENTRAL INDEX KEY: 0000071304 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 041662010 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 001-07316 FILM NUMBER: 96553726 BUSINESS ADDRESS: STREET 1: ONE MAIN ST CITY: CAMBRIDGE STATE: MA ZIP: 02142 BUSINESS PHONE: 6172254000 MAIL ADDRESS: STREET 1: P O BOX 9150 CITY: CAMBRIDGE STATE: MA ZIP: 02142-9150 FORMER COMPANY: FORMER CONFORMED NAME: NEW ENGLAND GAS & ELECTRIC ASSOCIATION DATE OF NAME CHANGE: 19810603 10-K405/A 1 COMMONWEALTH ENERGY SYSTEM 1995 FORM 10-K405/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549-1004 Form 10-K/A Amendment No. 1 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from ________________ to ________________ Commission file number 1-7316 COMMONWEALTH ENERGY SYSTEM (Exact name of registrant as specified in its Declaration of Trust) Massachusetts 04-1662010 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Main Street, Cambridge, Massachusetts 02142-9150 (Address of principal executive offices) (Zip Code) (617) 225-4000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Shares of Beneficial New York Stock Exchange, Inc. Interest $4 par value Boston Stock Exchange, Inc. Pacific Stock Exchange, Inc. Securities registered pursuant to Section 12(g) of the Act: Title of Class None Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ x ] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES [ x ] NO [ ] Aggregate market value of the voting stock held by non-affiliates of the registrant as of March 15, 1996: $473,652,872 Common Shares outstanding at March 15, 1996: 10,764,838 shares Document Incorporated by Reference Part in Form 10-K Notice of 1996 Annual Meeting, Proxy State- ment and 1995 Financial Information, dated March 29, 1996 (pages as specified herein) Parts I, II and III COMMONWEALTH ENERGY SYSTEM The undersigned registrant hereby amends the following item of its Annual Report for 1995 on Form 10-K as set forth on page 3. Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K Exhibit 10. Material Agreements: Filed herewith as Exhibit 1: 10.3.2.2 Second Amendment to the Employees Savings Plan of Commonwealth Energy System and Subsidiary Companies, as amended and restated January 1, 1993, effective April 1, 1996. Exhibit 99. Additional Exhibit: Pursuant to Rule 15(d)-21 of the Securities Exchange Act of 1934, information, financial statements and exhibits required in Form 11-K with respect to: (1) Employees Savings Plan of Commonwealth Energy System and Subsidiary Companies Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. COMMONWEALTH ENERGY SYSTEM (Registrant) By JAMES D. RAPPOLI James D. Rappoli, Financial Vice President and Treasurer Date: April 30, 1996 INFORMATION REQUIRED BY FORM 11-K ANNUAL REPORT For the Fiscal Year Ended December 31, 1995 A. Full title of plan: Employees Savings Plan of Commonwealth Energy System and Subsidiary Companies (hereinafter referred to as the "Plan"). B. Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office: Commonwealth Energy System One Main Street Cambridge, Massachusetts 02142-9150 Item 1. Financial Statements and Exhibits (a) Financial Statements and Schedules attached hereto: Page Report of Independent Public Accountants 4 Statements of Financial Position at December 31, 1995 and 1994 5 - 10 Statements of Income and Changes in Participants' Equity for the Years Ended December 31, 1995, 1994 and 1993 11 - 19 Notes to Financial Statements 20 - 29 Schedule I, Investments 30 - 31 Schedule II, Allocation of Plan Assets and Liabilities to Investment Programs Not Required Schedule III, Allocation of Plan Income and Changes in Plan Equity to Investment Programs Not Required Schedule IV, Reportable Transactions 32 (b) Exhibits filed herewith: Number in SEC Exhibit Exhibit Table Description Number 10 Second Amendment to the Employees Savings Plan 1 of Commonwealth Energy System and Subsidiary Companies, as amended and restated January 1, 1993, effective April 1, 1996. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES Report of Independent Public Accountants To the Savings Plan Board of the Employees Savings Plan of Commonwealth Energy System and Subsidiary Companies: We have audited the accompanying statements of financial position of the EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES as of December 31, 1995 and 1994, and the related statements of income and changes in participants' equity for each of the three years in the period ended December 31, 1995. These financial statements and supplemental schedules referred to below are the responsibility of the plan administrator. Our responsibility is to express an opinion on these financial statements and supplemental 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 financial position of the Employees Savings Plan of Commonwealth Energy System and Subsidiary Companies as of December 31, 1995 and 1994, and its income and changes in participants' equity for each of the three years in the period ended December 31, 1995, 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. Supplemental Schedules I and IV are presented for purposes of additional analysis and are not a required part of the basic financial statements, but are supplemental 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 Fund Information in the statement of financial position and the statement of changes in participants' equity is presented for purposes of additional analysis rather than to present the financial position and changes in participants' equity of each fund. The supplemental schedules and Fund Information 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. ARTHUR ANDERSEN LLP Arthur Andersen LLP Boston, Massachusetts April 23, 1996 EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF FINANCIAL POSITION DECEMBER 31, 1995 (Page 1 of 3) Commonwealth Vanguard Energy System Money Market Common Share Reserves-Prime Total Fund Portfolio INVESTMENTS, at quoted market value (Schedule I): Common Shares of Commonwealth Energy System $ 75 692 483 $75 692 483 $ - Mutual funds 144 116 194 - 27 312 540 219 808 677 75 692 483 27 312 540 OTHER ASSETS: Loans to participants 8 557 638 - - Receivables - Proceeds from securities sold 98 820 98 820 - Loan repayments 81 575 25 388 11 951 Interest 591 591 - Contributions 304 417 86 546 39 883 9 043 041 211 345 51 834 TOTAL ASSETS 228 851 718 75 903 828 27 364 374 LIABILITY: Accounts payable 164 607 164 607 - PARTICIPANTS' EQUITY $228 687 111 $75 739 221 $27 364 374 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF FINANCIAL POSITION DECEMBER 31, 1995 (Page 2 of 3) Vanguard Fixed Income Securities Fund- Vanguard Short-Term Vanguard Windsor II Corporate Wellington Fund Portfolio Fund INVESTMENTS, at quoted market value (Schedule I): Common Shares of Commonwealth Energy System $ - $ - $ - Mutual funds 68 643 492 5 868 083 31 149 835 68 643 492 5 868 083 31 149 835 OTHER ASSETS: Loans to participants - - - Receivables - Proceeds from securities sold - - - Loan repayments 23 513 2 506 13 122 Interest - - - Contributions 90 782 8 814 55 539 114 295 11 320 68 661 TOTAL ASSETS 68 757 787 5 879 403 31 218 496 LIABILITY: Accounts payable - - - PARTICIPANTS' EQUITY $ 68 757 787 $ 5 879 403 $31 218 496 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF FINANCIAL POSITION DECEMBER 31, 1995 (Page 3 of 3) Vanguard Vanguard Index Trust- International Extended Growth Market Loan Portfolio Portfolio Fund INVESTMENTS, at quoted market value (Schedule I): Common Shares of Commonwealth Energy System $ - $ - $ - Mutual funds 7 290 725 3 851 519 - 7 290 725 3 851 519 - OTHER ASSETS: Loans to participants - - 8 557 638 Receivables - Proceeds from securities sold - - - Loan repayments 3 776 1 319 - Interest - - - Contributions 14 972 7 881 - 18 748 9 200 8 557 638 TOTAL ASSETS 7 309 473 3 860 719 8 557 638 LIABILITY: Accounts payable - - - PARTICIPANTS' EQUITY $ 7 309 473 $ 3 860 719 $ 8 557 638 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF FINANCIAL POSITION DECEMBER 31, 1994 (Page 1 of 3) Commonwealth Vanguard Energy System Money Market Common Share Reserves-Prime Total Fund Portfolio INVESTMENTS, at quoted market value: Common Shares of Commonwealth Energy System $ 62 506 428 $62 506 428 $ - Mutual funds 109 695 942 157 791 26 681 528 172 202 370 62 664 219 26 681 528 OTHER ASSETS: Loans to participants 8 661 719 - - Receivables - Loan repayments 93 194 28 439 22 163 Interest 4 029 2 339 1 690 Contributions 296 871 95 080 45 974 9 055 813 125 858 69 827 PARTICIPANTS' EQUITY $181 258 183 $62 790 077 $26 751 355 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF FINANCIAL POSITION DECEMBER 31, 1994 (Page 2 of 3) Vanguard Fixed Income Securities Fund- Vanguard Short-Term Vanguard Windsor II Corporate Wellington Fund Portfolio Fund INVESTMENTS, at quoted market value: Common Shares of Commonwealth Energy System $ - $ - $ - Mutual funds 48 646 331 4 886 306 21 042 454 48 646 331 4 886 306 21 042 454 OTHER ASSETS: Loans to participants - - - Receivables - Loan repayments 23 399 2 699 12 701 Interest - - - Contributions 81 160 7 888 48 709 104 559 10 587 61 410 PARTICIPANTS' EQUITY $48 750 890 $ 4 896 893 $21 103 864 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF FINANCIAL POSITION DECEMBER 31, 1994 (Page 3 of 3) Vanguard Vanguard Index Trust- International Extended Growth Market Loan Portfolio Portfolio Fund INVESTMENTS, at quoted market value: Common Shares of Commonwealth Energy System $ - $ - $ - Mutual funds 6 625 340 1 656 192 - 6 625 340 1 656 192 - OTHER ASSETS: Loans to participants - - 8 661 719 Receivables - Loan repayments 3 374 419 - Interest - - - Contributions 14 721 3 339 - 18 095 3 758 8 661 719 PARTICIPANTS' EQUITY $ 6 643 435 $ 1 659 950 $ 8 661 719 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF INCOME AND CHANGES IN PARTICIPANTS' EQUITY DECEMBER 31, 1995 (Page 1 of 3) Commonwealth Vanguard Energy System Money Market Common Share Reserves-Prime Total Fund Portfolio NET INVESTMENTS INCOME: Cash dividends - Common Shares of Commonwealth Energy System$ 5 219 181 $ 5 219 181 $ - Registered investment company shares 7 757 823 - 1 569 762 Interest on loans 647 206 - - 13 624 210 5 219 181 1 569 762 REALIZED AND UNREALIZED GAIN ON INVESTMENTS 36 861 646 14 531 777 - 50 485 856 19 750 958 1 569 762 CONTRIBUTIONS: Employee 8 679 077 2 397 221 1 082 525 Employer 4 392 730 1 270 786 618 671 13 071 807 3 668 007 1 701 196 DISTRIBUTIONS TO PARTICIPANTS 16 118 786 3 733 426 6 012 404 TRANSFERS BETWEEN FUNDS - (6 736 395) 3 354 465 PURCHASE FEES (9 949) - - NET CHANGE DURING YEAR 47 428 928 12 949 144 613 019 PARTICIPANTS' EQUITY, Beginning of year 181 258 183 62 790 077 26 751 355 PARTICIPANTS' EQUITY, End of year $228 687 111 $ 75 739 221 $27 364 374 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF INCOME AND CHANGES IN PARTICIPANTS' EQUITY DECEMBER 31, 1995 (Page 2 of 3) Vanguard Fixed Income Securities Fund- Vanguard Short-term Vanguard Windsor II Corporate Wellington Fund Portfolio Fund NET INVESTMENTS INCOME: Cash dividends - Common Shares of Commonwealth Energy System$ - $ - $ - Registered investment company shares 4 014 071 352 866 1 517 817 Interest on loans - - - 4 014 071 352 866 1 517 817 REALIZED AND UNREALIZED GAIN ON INVESTMENTS 14 943 396 316 587 5 839 233 18 957 467 669 453 7 357 050 CONTRIBUTIONS: Employee 2 585 284 263 787 1 628 304 Employer 1 248 079 141 641 791 068 3 833 363 405 428 2 419 372 DISTRIBUTIONS TO PARTICIPANTS 3 000 179 761 498 1 916 861 TRANSFERS BETWEEN FUNDS 216 246 669 127 2 255 071 PURCHASE FEES - - - NET CHANGE DURING YEAR 20 006 897 982 510 10 114 632 PARTICIPANTS' EQUITY, Beginning of year 48 750 890 4 896 893 21 103 864 PARTICIPANTS' EQUITY, End of year $ 68 757 787 $ 5 879 403 $31 218 496 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF INCOME AND CHANGES IN PARTICIPANTS' EQUITY DECEMBER 31, 1995 (Page 3 of 3) Vanguard Vanguard Index Trust- International Extended Growth Market Loan Portfolio Portfolio Fund NET INVESTMENTS INCOME: Cash dividends - Common Shares of Commonwealth Energy System$ - $ - $ - Registered investment company shares 194 489 108 818 - Interest on loans - - 647 206 194 489 108 818 647 206 REALIZED AND UNREALIZED GAIN ON INVESTMENTS 682 362 548 291 - 876 851 657 109 647 206 CONTRIBUTIONS: Employee 533 713 188 243 - Employer 238 129 84 356 - 771 842 272 599 - DISTRIBUTIONS TO PARTICIPANTS 337 375 96 424 260 619 TRANSFERS BETWEEN FUNDS (645 280) 1 377 434 (490 668) PURCHASE FEES - (9 949) - NET CHANGE DURING YEAR 666 038 2 200 769 (104 081) PARTICIPANTS' EQUITY, Beginning of year 6 643 435 1 659 950 8 661 719 PARTICIPANTS' EQUITY, End of year $ 7 309 473 $ 3 860 719 $ 8 557 638 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF INCOME AND CHANGES IN PARTICIPANTS' EQUITY DECEMBER 31, 1994 (Page 1 of 3) Commonwealth Vanguard Energy System Money Market Common Share Reserves-Prime Total Fund Portfolio NET INVESTMENTS INCOME: Cash dividends - Common Shares of Commonwealth Energy System$ 4 962 431 $ 4 962 431 $ - Registered investment company shares 5 466 258 18 774 1 064 295 Interest on loans 608 616 - - 11 037 305 4 981 205 1 064 295 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (21 792 845) (16 553 656) - (10 755 540) (11 572 451) 1 064 295 CONTRIBUTIONS: Employee 8 417 407 2 540 138 1 112 452 Employer 4 302 027 1 349 700 633 952 12 719 434 3 889 838 1 746 404 DISTRIBUTIONS TO PARTICIPANTS 10 632 937 3 105 327 3 916 251 TRANSFERS BETWEEN FUNDS - (2 948 329) 1 807 854 PURCHASE FEES (13 069) - - NET CHANGE DURING YEAR (8 682 112) (13 736 269) 702 302 PARTICIPANTS' EQUITY, Beginning of year 189 940 295 76 526 346 26 049 053 PARTICIPANTS' EQUITY, End of year $181 258 183 $ 62 790 077 $26 751 355 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF INCOME AND CHANGES IN PARTICIPANTS' EQUITY DECEMBER 31, 1994 (Page 2 of 3) Vanguard Fixed Income Securities Fund- Vanguard Short-term Vanguard Windsor II Corporate Wellington Fund Portfolio Fund NET INVESTMENTS INCOME: Cash dividends - Common Shares of Commonwealth Energy System$ - $ - $ - Registered investment company shares 2 991 591 302 990 955 792 Interest on loans - - - 2 991 591 302 990 955 792 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (3 597 124) (314 911) (1 104 997) (605 533) (11 921) (149 205) CONTRIBUTIONS: Employee 2 438 780 272 838 1 540 882 Employer 1 187 818 147 193 756 284 3 626 598 420 031 2 297 166 DISTRIBUTIONS TO PARTICIPANTS 1 916 160 370 461 1 111 006 TRANSFERS BETWEEN FUNDS (1 059 058) (1 435 667) (494 165) PURCHASE FEES - - - NET CHANGE DURING YEAR 45 847 (1 398 018) 542 790 PARTICIPANTS' EQUITY, Beginning of year 48 705 043 6 294 911 20 561 074 PARTICIPANTS' EQUITY, End of year $ 48 750 890 $ 4 896 893 $21 103 864 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF INCOME AND CHANGES IN PARTICIPANTS' EQUITY DECEMBER 31, 1994 (Page 3 of 3) Vanguard Vanguard Index Trust- International Extended Growth Market Loan Portfolio Portfolio Fund NET INVESTMENTS INCOME: Cash dividends - Common Shares of Commonwealth Energy System$ - $ - $ - Registered investment company shares 87 669 45 147 - Interest on loans - - 608 616 87 669 45 147 608 616 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (147 733) (74 424) - (60 064) (29 277) 608 616 CONTRIBUTIONS: Employee 393 654 118 663 - Employer 172 814 54 266 - 566 468 172 929 - DISTRIBUTIONS TO PARTICIPANTS 36 356 19 182 158 194 TRANSFERS BETWEEN FUNDS 3 391 961 946 134 (208 730) PURCHASE FEES - (13 069) - NET CHANGE DURING YEAR 3 862 009 1 057 535 241 692 PARTICIPANTS' EQUITY, Beginning of year 2 781 426 602 415 8 420 027 PARTICIPANTS' EQUITY, End of year $ 6 643 435 $ 1 659 950 $ 8 661 719 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF INCOME AND CHANGES IN PARTICIPANTS' EQUITY DECEMBER 31, 1993 (Page 1 of 3) Commonwealth Vanguard Energy System Money Market Common Share Reserves-Prime Total Fund Portfolio NET INVESTMENTS INCOME: Cash dividends - Common Shares of Commonwealth Energy System$ 5 121 101 $ 5 121 101 $ - Registered investment company shares 5 286 472 10 312 875 818 Interest on loans 629 576 - - 11 037 149 5 131 413 875 818 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 11 065 753 6 888 012 - 22 102 902 12 019 425 875 818 CONTRIBUTIONS: Employee 8 107 135 2 713 918 1 335 111 Employer 4 245 181 1 462 206 749 377 12 352 316 4 176 124 2 084 488 DISTRIBUTIONS TO PARTICIPANTS 24 001 390 7 900 315 6 817 531 TRANSFERS BETWEEN FUNDS - (12 281 314) (331 558) PURCHASE FEES (5 996) - - NET CHANGE DURING YEAR 10 447 832 (3 986 080) (4 188 783) PARTICIPANTS' EQUITY, Beginning of year 179 492 463 80 512 426 30 237 836 PARTICIPANTS' EQUITY, End of year $189 940 295 $76 526 346 $26 049 053 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF INCOME AND CHANGES IN PARTICIPANTS' EQUITY DECEMBER 31, 1993 (Page 2 of 3) Vanguard Fixed Income Securities Fund- Vanguard Short-term Vanguard Windsor II Corporate Wellington Fund Portfolio Fund NET INVESTMENTS INCOME: Cash dividends - Common Shares of Commonwealth Energy System $ - $ - $ - Registered investment company shares 2 770 033 411 151 1 184 562 Interest on loans - - - 2 770 033 411 151 1 184 562 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 3 046 550 9 202 936 094 5 816 583 420 353 2 120 656 CONTRIBUTIONS: Employee 2 301 097 319 714 1 398 249 Employer 1 135 390 171 711 709 041 3 436 487 491 425 2 107 290 DISTRIBUTIONS TO PARTICIPANTS 5 384 634 1 169 334 2 517 355 TRANSFERS BETWEEN FUNDS 2 628 991 675 303 6 170 796 PURCHASE FEES - - - NET CHANGE DURING YEAR 6 497 427 417 747 7 881 387 PARTICIPANTS' EQUITY, Beginning of year 42 207 616 5 877 164 12 679 687 PARTICIPANTS' EQUITY, End of year $ 48 705 043 $ 6 294 911 $20 561 074 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES STATEMENT OF INCOME AND CHANGES IN PARTICIPANTS' EQUITY DECEMBER 31, 1993 (Page 3 of 3) Vanguard Vanguard Index Trust- International Extended Growth Market Loan Portfolio Portfolio Fund NET INVESTMENTS INCOME: Cash dividends - Common Shares of Commonwealth Energy System$ - $ - $ - Registered investment company shares 22 121 12 475 - Interest on loans - - 629 576 22 121 12 475 629 576 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 190 765 (4 870) - 212 886 7 605 629 576 CONTRIBUTIONS: Employee 27 804 11 242 - Employer 12 183 5 273 - 39 987 16 515 - DISTRIBUTIONS TO PARTICIPANTS - - 212 221 TRANSFERS BETWEEN FUNDS 2 528 553 584 291 24 938 PURCHASE FEES - (5 996) - NET CHANGE DURING YEAR 2 781 426 602 415 442 293 PARTICIPANTS' EQUITY, Beginning of year - - 7 977 734 PARTICIPANTS' EQUITY, End of year $ 2 781 426 $ 602 415 $ 8 420 027 The accompanying notes are an integral part of these financial statements. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS (1) General Information The Employees Savings Plan of Commonwealth Energy System and Subsidiary Companies (the Plan) was originally created in 1962 by Commonwealth Energy System (the System) and its subsidiaries to assist employees in adopting a regular savings program and to help employees by providing additional security for their retirement. The Plan has been amended or restated from time to time thereafter. The latest Plan restatement was made as of January 1, 1993. Since January 1, 1989, Vanguard Fiduciary Trust Company of Valley Forge, Pennsylvania, has acted as Trustee for the Plan (Plan Trustee). The Trustee retains the Plan assets and provides records of Plan activity to a Plan Agent designated by a three-member Savings Plan Board (the Board) that is appointed by the Trustees of the System and by the directors of its subsidiary companies. The Board is responsible (except for the duties specifically vested in the Plan Trustee) for the administration of the Plan. The term "Participant" shall be deemed to include Members, Inactive Members or Former Members, all as defined in the Plan. The Employers participating in the Plan consist of certain subsidiary companies of Commonwealth Energy System, as follows: Cambridge Electric Light Company, Canal Electric Company, Commonwealth Gas Company, COM/Energy Services Company and Commonwealth Electric Company (Employers). The Employers are wholly-owned by the System. Each eligible employee, upon joining the Plan, shall specify in 1% increments his or her contributions and the applicable Employer contributions to be invested in each of seven separate Investment Funds (Fund(s)) that are collectively referred to as the trust fund (Trust Fund) and are further described in Note 4. Participants may change their Fund allocation contribution daily by contacting Vanguard Participant Services. However, not more than 50% of a Participant's contributions and the applicable Employer contributions may be allocated to the System's Common Share Fund. Effective April 1, 1996, five additional investment options have been made available to Participants. These options include the Vanguard Explorer Fund (which seeks long-term growth of capital by investing primarily in common stocks of small and emerging growth companies) and the four Vanguard LifeStrategy Funds which are designed to match the objectives and risk tolerances of a Participant's various life stages. The Plan is subject to provisions of the Employee Retirement Income Security Act of 1974 (ERISA), the Retirement Equity Act of 1984, the Tax Reform Act of 1986 and the Omnibus Budget Reconciliation Act of 1993 relating to plans of this type. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS (2) Significant Accounting Policies (a) Principles of Accounting The Plan Trustee's records are maintained on a cash basis. The accompanying financial statements include all adjustments necessary to present the statements on an accrual basis of accounting. Quoted market prices are used to value the System's Common Share Fund and the Vanguard Funds. In addition, certain prior period amounts are reclassified from time to time to conform with the presentation used in the current year's financial statements. (b) Federal Income Taxes The Plan is subject to certain provisions of the Internal Revenue Code (IRC) and qualifies under Sections 401(a) and 401(k) of the Code. The Internal Revenue Service (IRS) has issued a favorable determination letter, applicable to Plan years beginning after January 1, 1993 and for amendments adopted on January 15, 1993, which indicates that the Plan was designed in accordance with applicable IRC requirements. Management believes that the Plan is currently designed and operated in accordance with applicable IRC requirements. As a result, the Plan has not provided for Federal income taxes. Generally, Participants are not subject to taxes on contributions or the earned income until such time as a distribution is made. (c) Expenses Brokerage fees, commissions, stock transfer taxes and other expenses in connection with the purchase, sale or distribution of securities for each investment 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. All other expenses and charges incurred in the administration of the Plan are paid by the Employers. (d) Realized Gain (Loss) on Investments Sold or Distributed Pursuant to rules issued by the Department of Labor (DOL), realized gain (loss) was computed by comparing the market value of the securities distributed or sold with the market value of said securities at the beginning of the Plan year. The System's Common Share Fund realized gains (losses) of $1,027,097, ($545,138) and $1,199,274 on the distribution or sale of 207,410, 97,867 and 296,171 System Common Shares in 1995, 1994 and 1993, respectively. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS A summary of realized gains (losses) on securities sold or distributed during the years ended December 31, 1995, 1994 and 1993 is set forth below: Quoted Quoted Market Price Market Price Beginning of Gain Investment Funds or Proceeds Year (Loss) 1995 Commonwealth Energy System Common Shares $ 8 320 160 $ 7 293 063 $1 027 097 Vanguard Money Market Reserves- Prime Portfolio 13 863 305 13 863 305 - Vanguard Windsor II 8 895 459 7 758 707 1 136 752 Vanguard Fixed Income Securities Fund- Short-Term Corporate Portfolio 1 708 442 1 664 677 43 765 Vanguard Wellington 4 213 461 3 690 865 522 596 Vanguard International Growth Portfolio 3 897 722 3 816 016 81 706 Vanguard Index Trust- Extended Market Portfolio 450 953 412 569 38 384 $41 349 502 $38 499 202 $2 850 300 1994 Commonwealth Energy System Common Shares $ 3 981 245 $ 4 526 383 $ (545 138) Vanguard Money Market Reserves- Prime Portfolio 8 709 357 8 709 357 - Vanguard Windsor II 6 529 551 6 624 955 (95 404) Vanguard Fixed Income Securities Fund- Short-Term Corporate Portfolio 2 231 660 2 287 937 (56 277) Vanguard Wellington 4 428 748 4 544 012 (115 264) Vanguard International Growth Portfolio 1 382 971 1 368 400 14 571 Vanguard Index Trust- Extended Market Portfolio 221 842 225 328 (3 486) $27 485 374 $28 286 372 $ (800 998) 1993 Commonwealth Energy System Common Shares $13 823 563 $12 624 289 $1 199 274 Vanguard Money Market Reserves- Prime Portfolio 16 089 894 16 089 894 - Vanguard Windsor II 11 755 590 11 121 195 634 395 Vanguard Fixed Income Securities Fund- Short-Term Corporate Portfolio 3 979 976 3 959 379 20 597 Vanguard Wellington 4 942 133 4 740 977 201 156 Vanguard International Growth Portfolio* 180 199 167 669 12 530 Vanguard Index Trust- Extended Market Portfolio* 6 068 6 067 1 $50 777 423 $48 709 470 $2 067 953 * Available to Participants since October 1, 1993 EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS (e) Unrealized Appreciation (Depreciation) of Investments The Plan provides that the market value of each Investment Fund shall be determined by the Trustee each quarter. Pursuant to the rules issued by the DOL, unrealized appreciation (depreciation) shall equal the difference between market value at the beginning of the Plan year and the quoted market price of the investments at the applicable valuation date in determining the value of each fund. The change in unrealized appreciation (depreciation) during the years ended December 31, 1995, 1994 and 1993 is set forth below: Unrealized Beginning Appreciation Investment Funds of Year End of Year (Depreciation) 1995 Commonwealth Energy System Common Shares $28 493 785 $41 998 465 $ 13 504 680 Vanguard Windsor II 5 208 271 19 014 915 13 806 644 Vanguard Fixed Income Securities Fund-Short-Term Corporate Portfolio (195 651) 77 171 272 822 Vanguard Wellington 381 130 5 697 767 5 316 637 Vanguard International Growth Portfolio 15 931 616 587 600 656 Vanguard Index Trust- Extended Market Portfolio (75 809) 434 098 509 907 $33 827 657 $67 839 003 $ 34 011 346 1994 Commonwealth Energy System Common Shares $44 502 303 $28 493 785 $(16 008 518) Vanguard Windsor II 8 709 991 5 208 271 (3 501 720) Vanguard Fixed Income Securities Fund-Short-Term Corporate Portfolio 62 983 (195 651) (258 634) Vanguard Wellington 1 370 863 381 130 (989 733) Vanguard International Growth Portfolio 178 235 15 931 (162 304) Vanguard Index Trust- Extended Market Portfolio (4 871) (75 809) (70 938) $54 819 504 $33 827 657 $(20 991 847) 1993 Commonwealth Energy System Common Shares $38 813 565 $44 502 303 $ 5 688 738 Vanguard Windsor II 6 297 836 8 709 991 2 412 155 Vanguard Fixed Income Securities Fund-Short-Term Corporate Portfolio 74 378 62 983 (11 395) Vanguard Wellington 635 925 1 370 863 734 938 Vanguard International Growth Portfolio* - 178 235 178 235 Vanguard Index Trust- Extended Market Portfolio* - (4 871) (4 871) $45 821 704 $54 819 504 $ 8 997 800 * Available to Participants since October 1, 1993 EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS (f) Income Recognition Income of the System Common Share Fund consists primarily of dividends on its Common Shares. The allocation of each Fund's earnings to a Participant's account is based on the percent of the Participant's units in the Funds and is allocated daily. (3) Participating Companies and Contributions Employees are eligible to join the Plan upon completion of one-thousand (1,000) hours of service in a twelve-month period and are fully vested upon Plan entry. Generally, Participants in the Plan are required to make contributions of at least 1% but not more than 16% of their compensation as defined in the Plan. However, the maximum amount a Participant may defer annually is $9,500 currently (as increased from time to time by the Secretary of the Treasury in accordance with the cost of living adjustment factor prescribed in Section 402(g)(1) of the IRC). Compensation is defined to be an employee's authorized basic salary (including any "lump sum payment" under the authorized basic compensation pay program), except that in the case of sales personnel compensated in whole or in part by commissions, compensation shall be considered to equal 90% of the average compensation earned by such employee in the preceding four calendar quarters but not less than his authorized basic compensation. Salary deferral contributions by employees are made to the Plan by payroll deduction. The Employer contributes an additional amount equal to such employee's contribution, up to a maximum of 4% of such employee's basic compensation, as previously defined. Effective January 1, 1993, the maximum participating Employer contribution was increased to 5% for those non- bargaining employees who were less than forty (40) years of age or had less than twelve (12) years of service at that date and who, therefore, are no longer eligible for postretirement health care benefits. In April 1993, certain bargaining employees also became eligible for the 5% Employer matching contribution. The additional match has been made available to defray the cost of postretirement health care benefit costs to those employees. Effective April 1, 1996 any eligible employee may change the percentage of his or her contribution as of January 1, April 1, July 1 or October 1 in each calendar year (but not retroactively) by contacting Vanguard Participant Services at least thirty (30) days prior to the beginning of any quarter. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS The participating system companies and contributions for the years ended December 31, 1995, 1994 and 1993 are summarized below: Employee Contributions 1995 1994 1993 Cambridge Electric Light Company $ 654 474 $ 688 568 $ 670 016 Canal Electric Company 642 435 609 812 558 858 Commonwealth Electric Company 3 687 316 3 482 617 3 266 376 Commonwealth Gas Company 2 749 403 2 759 444 2 760 996 COM/Energy Services Company 945 449 876 966 850 889 $8 679 077 $8 417 407 $8 107 135 Employer Contributions 1995 1994 1993 Cambridge Electric Light Company $ 317 289 $ 325 109 $ 320 738 Canal Electric Company 258 375 249 749 234 040 Commonwealth Electric Company 1 813 432 1 745 722 1 699 786 Commonwealth Gas Company 1 439 253 1 447 005 1 443 731 COM/Energy Services Company 564 381 534 442 546 886 $4 392 730 $4 302 027 $4 245 181 Participation by employees is voluntary and may begin on the next succeeding January 1, April 1, July 1 or October 1, coincident with or next following attainment of eligibility. Of the 2,325 former or current eligible employees as of December 31, 1995, 2,277 (97.9%) members were participating in the Plan. At December 31, 1995, the number of Participants in each of the Plan's seven separate Investment Funds was as follows: Investment Fund Participants Commonwealth Energy System Common Shares 1,945 Vanguard Money Market Reserves-Prime Portfolio 1,272 Vanguard Windsor II 1,875 Vanguard Fixed Income Securities Fund- Short-Term Corporate Portfolio 493 Vanguard Wellington 1,388 Vanguard International Growth Portfolio 528 Vanguard Index Trust-Extended Market Portfolio 258 In addition, there were 967 Participants in the Plan's Loan Fund. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS (4) Investments (a) Investment Funds Descriptions The following is a description of the seven Investment Funds in which a Participant may allocate his or her contributions and the matching Employer contributions: Common Shares of Commonwealth Energy System - Consists of Common Shares of Beneficial Interest of Commonwealth Energy System purchased on the open market or through the System's Dividend Reinvestment and Common Share Purchase Plan. The System's Common Shares may also be acquired directly from the System, if such Common Shares are made available by the Board of Trustees of the System, based on the fair market value at the time of acquisition. The Common Shares are acquired with employee contributions and Employer contributions, dividends and interest income. The Trustee, at its discretion, will determine the manner in which such shares may be acquired. Vanguard Money Market Reserves-Prime Portfolio - A mutual fund which seeks the maximum current income that is consistent with preservation of capital and liquidity. Value is added primarily by emphasizing specific issues and sectors of the money market that appear to be attractively priced based upon historical yield spread relationships. Average maturity for the Fund is normally maintained in the range of 30-70 days, and the Fund can own no security with a maturity longer than one year. Such money market instruments include domestic certificates of deposit and bankers' acceptances, commercial paper, U.S. Treasury and Government agency securities and repurchase agreements on such securities and up to 50% of net assets can be invested in Eurodollar certificates of deposit issued by approved U.S. banks. Vanguard Windsor II - A mutual fund having a primary objective to provide long-term growth of capital and income. As a secondary objective, the Fund seeks a reasonable level of current income. The Fund is a value-oriented growth and income fund seeking investment opportunities primarily in common stocks that are out of favor or undervalued. Vanguard Fixed Income Securities Fund-Short-Term Corporate Portfolio - A mutual fund which seeks to provide a high level of current income consistent with a two to three-year average maturity. By investing in relatively short maturity investment-grade bonds, the Portfolio is designed to help preserve capital. Vanguard Wellington Fund - A mutual fund designed to pursue conservation of capital, reasonable current income and profits without undue risk. Conservatively structured, the Fund uses a balanced investment approach allocating 60%-70% of net assets to equities and the remainder to fixed income securities. The fixed income securities reduce the Fund's exposure to risks of common stocks while common stocks are selected from dividend-paying medium and large-capitalization stocks whose prospects are improving. The objective is to identify these companies before their values are recognized in the marketplace. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS Vanguard International Growth Portfolio - A mutual fund which seeks long- term capital growth by investing in capital stocks of companies based outside the United States that have above-average growth potential. Vanguard Index Trust-Extended Market Portfolio - A mutual fund which attempts to duplicate the investment results of the broad universe of publicly traded United States stocks not included in the S&P 500 Index. The Extended Market Portfolio is a market-capitalization-weighted "benchmark portfolio" consisting of more than 4,500 regularly traded stocks that are represented by the Wilshire 4500 Index. The Portfolio will invest in a sample of stocks in the benchmark portfolio selected on the basis of market capitalization, industry weightings and fundamental investment characteristics. Investors are charged a .5% transaction fee (reduced from 1% on January 1, 1995) on shares purchased that is paid directly to the Portfolio. (b) Investment Funds Performance The following table is the total return (including the reinvestment of all dividends and capital gains distributions) on the Plan's Investment Funds for the years ended December 31, 1995, 1994 and 1993. All returns are net of expenses: Investment Funds 1995 1994 1993 Total Return on Year-End Investment Commonwealth Energy System Common Shares 32.5% (15.5)% 15.6% Vanguard Money Market Reserves- Prime Portfolio 5.8 4.1 3.0 Vanguard Windsor II 38.8 (1.2) 13.6 Vanguard Fixed Income Securities Fund- Short-Term Corporate Portfolio 12.7 (0.1) 7.1 Vanguard Wellington 32.9 (0.5) 13.5 Vanguard International Growth Portfolio 14.9 0.8 44.7 * Vanguard Index Trust- Extended Market Portfolio 33.1 (2.8) 13.4 * * Available to Participants since October 1, 1993 (c) Investment Funds Accounts The Savings Plan Board maintains for each Participant in the Plan, under each Fund in which all or part of his or her contributions and the applicable Employer contributions are invested, a separate Member Account that includes a Pay Deferral Account for current pre-tax contributions. In addition, the Member Account may include previous after-tax contributions. The Savings Plan Board also maintains a separate Company Account (for each Participant) that includes Employer contributions made on behalf of Participants. These Accounts reflect the portion of each Participant's interest in the Investment Fund which is attributable to the contributions to such Accounts. The Plan permits Participants to transfer amounts between Funds on a daily basis, subject to certain limitations. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS The Plan Trustee may, at its discretion, temporarily invest funds designated for a particular Fund in short-term interest-bearing securities or may retain certain amounts of cash in each Fund without interest being credited thereon, for the purpose of more effectively timing the purchase of investments or liquidity needs for the several Funds. All contributions are transmitted weekly to the Plan Trustee. A Participant's choice of contribution allocation to eligible Funds will continue until changed by such Participant. Investment designations may be changed once a day by contacting a Vanguard Participant Services representative. All interest, dividends, and other income, as well as any cash from the sale or exchange of securities or other property produced by each of the Funds will be reinvested in the same Fund which produced such interest, dividends and other income. (5) Party in Interest Commonwealth Energy System is a "party in interest" as that term is defined in Section 3.14 of the Employee Retirement Income Security Act of 1974. Certain transactions involving the acquisition and distribution of securities are made at the direction of participants in the Plan who elect to participate in the System Common Share Fund as one of their investment options. These transactions are reflected in the accompanying financial statements at market value and are net of brokerage commissions relating to the acquisition of these securities. During the years ended December 31, 1995, 1994 and 1993, the Plan Trustee purchased Common Shares of Commonwealth Energy System, made distributions of Common Shares to Participants and sold Common Shares to accommodate cash distributions as follows: Commonwealth Energy System Common Shares Shares Shares Sold and Distributed Purchased Cost Shares Aggregate Value 1995 180 473 $7 226 244 207 411 $5 706 748 1994 170 204 6 902 558 97 867 2 540 623 1993 63 915 3 031 010 296 171 7 302 526 The Plan Trustee also represents a party in interest to the Plan due to the Plan's investments in several Vanguard Funds. EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS (6) Loans to Plan Participants Participants may request a loan from the Plan for a minimum amount of $1,000. The amount of the loan shall not exceed the lesser of $50,000 or fifty percent (50%) of the balance of the participant's total value in the various funds of the Plan. The interest rate on a loan is based on the prime rate at Bank of Boston on the first day of the quarter preceding the loan request plus one percent. Participants may choose a repayment period of one to five years. Effective April 1, 1996, eligible Participants have the option of securing a second loan from the Plan including requests for up to a thirty (30) year loan to purchase a primary residence. Prior to that date, Participants were restricted to one outstanding loan at any one time. Schedule I Employer Identification Number: 04-1662010 Plan Number: 091187 EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES INVESTMENTS DECEMBER 31, 1995 Market Value Name of Issuer and Number of at End of Title of Issue Shares or Units Cost Period COMMONWEALTH ENERGY SYSTEM COMMON SHARE FUND: Common Shares of Beneficial Interest - Commonwealth Energy System* 1 691 452 $ 47 332 293 $ 75 692 483 VANGUARD FUNDS*: Money Market Reserves- Prime Portfolio 27 312 540 27 312 540 27 312 540 Windsor II 3 322 531 52 258 184 68 643 492 Fixed Income Securities Fund- Short-Term Corporate Portfolio 537 863 5 809 716 5 868 083 Wellington 1 275 065 25 777 228 31 149 835 International Growth Portfolio 485 401 6 686 004 7 290 725 Index Trust- Extended Market Portfolio 160 013 3 401 777 3 851 519 Total Vanguard Funds 121 245 449 144 116 194 Total Investments $168 577 742 $219 808 677 Loans to Participants $8 557 638 $8 557 638 * Represent parties in interest to the Plan The accompanying notes are an integral part of this schedule. Schedule I (Continued) EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES INVESTMENTS DECEMBER 31, 1995 Note: The Commonwealth Energy System Common Share Fund requires investment in Common Shares of Commonwealth Energy System. However, funds are invested in Vanguard Money Market Reserves on a short-term basis pending the purchase of the System's Common Shares or distribution to Participants. The remaining investment options require investment in the appropriate Vanguard mutual fund for which each option is named. Percentage of quoted market price over cost: Commonwealth Energy System Common Share Fund 59.9% Vanguard Money Market Reserves-Prime Portfolio - Vanguard Windsor II Fund 31.4 Vanguard Fixed Income Securities Fund- Short-Term Corporate Portfolio 1.0 Vanguard Wellington Fund 20.8 Vanguard International Growth Portfolio 9.0 Vanguard Index Trust-Extended Market Portfolio 13.2 The Plan Trustee accounts for members' interests in the mutual funds available as investment options on a unit basis. The Plan Trustee also uses a unit basis in accounting for the Commonwealth Energy System Common Share Fund. At December 31, 1995, the value per unit of each of the Investment Funds (options) was as follows: Investment Funds Unit Value Commonwealth Energy System Common Shares $18.01 Vanguard Money Market Reserves-Prime Portfolio 1.00 Vanguard Windsor II 20.66 Vanguard Fixed Income Securities Fund- Short-Term Corporate Portfolio 10.91 Vanguard Wellington 24.43 Vanguard International Growth Portfolio 15.02 Vanguard Index Trust-Extended Market Portfolio 24.07 The closing market price of the System's Common Shares as listed on the New York Stock Exchange composite transactions was $44.75, $36.375 and $46.25 for December 31, 1995, 1994 and 1993, respectively. The accompanying notes are an integral part of this schedule. Schedule IV Employer Identification Number: 04-1662010 Plan Number: 091187 EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES REPORTABLE TRANSACTIONS (a) FOR THE YEAR ENDED DECEMBER 31, 1995 Number of Cost of PURCHASES Purchases Asset Vanguard Money Market Reserves- Prime Portfolio (b) 207 $14 494 329 Vanguard Windsor II Fund (b) 195 13 949 205 Vanguard Wellington Fund (b) 181 8 481 587 Number of Proceeds Gain on SALES Sales from Sales Sales Vanguard Money Market Reserves- Prime Portfolio (b) 199 $13 863 305 $ - Vanguard Windsor II Fund (b) 178 8 895 459 1 136 752 Vanguard Wellington Fund (b) 145 4 213 461 522 596 (a) Fund investments with total transactions exceeding 5% of beginning Plan assets. (b) Represent parties in interest to the Plan The accompanying notes are an integral part of this schedule. EX-10 2 10.3.2.2 SECOND AMENDMENT TO EMPLOYEES SAV. PLAN SECOND AMENDMENT TO EMPLOYEES SAVINGS PLAN OF COMMONWEALTH ENERGY SYSTEM AND SUBSIDIARY COMPANIES, AS AMENDED AND RESTATED AS OF JANUARY 1, 1993, EFFECTIVE AS OF APRIL 1, 1996 WHEREAS, the Employees Savings Plan of Commonwealth Energy System and Subsid- iary Companies (the "Plan") was originally established effective September 1, 1962, amended from time to time, was restated in its entirety as of December 1, 1975, as of January 1, 1979, as of May 11, 1981, as of January 1, 1984, as of January 1, 1985, as of January 1, 1989 and as of January 1, 1993 and was amended by a First Amendment effective as of October 1, 1994; and WHEREAS, Section 14.01 of the Plan gives Commonwealth Energy System ("the System") the right to further amend said Plan; NOW, THEREFORE, in consideration of the premises and of the covenants con- tained herein, the System does hereby covenant and agree that the Plan shall be amended in accordance with the following provisions effective as of April 1, 1996. 1. Section 1.01 is hereby amended by deleting the words "and to establish the Retirement Health Benefit Account." 2. Article 2 "Definitions" is hereby amended by adding the following new Sections 2.24, 2.25, 2.26, 2.27 and 2.28. "Section 2.24 "Fund I" means the Investment Fund or Funds forming part of the Trust Fund consisting of the monies which the Savings Plan Board shall direct the Plan Trustee to invest in the interests of a fund whose primary objective seeks long-term growth of capital by investing in common stocks of small capitalization companies." "Section 2.25 "Fund J" means the Investment Fund or Funds forming part of the Trust Fund consisting of the monies which the Savings Plan Board shall direct the Plan Trustee to invest in the interests of a fund whose primary objective seeks to provide current income with a balanced and diversified investment approach." "Section 2.26 "Fund K" means the Investment Fund or Funds forming part of the Trust Fund consisting of the monies which the Savings Plan Board shall direct the Plan Trustee to invest in the interests of a fund whose primary objective seeks to provide current income and low to moderate growth of capital with a balanced and diversified investment approach." "Section 2.27 "Fund L" means the Investment Fund or Funds forming part of the Trust Fund consisting of the monies which the Savings Plan Board shall direct the Plan Trustee to invest in the interests of a fund whose primary objective seeks to provide a reasonable level of current income and growth of capital with a balanced and diversified investment ap- proach." "Section 2.28 "Fund M" means the Investment Fund or Funds forming part of the Trust Fund consisting of the monies which the Savings Plan Board shall direct the Plan Trustee to invest in the interests of a fund whose primary objective seeks to provide growth of capital with a balanced and diversified investment approach." 3. Section 2.24 is hereby amended i) by deleting the words "Section 2.241 (iii)" as appears in the third line of said Section 2.24 and substituting therein the words "Section 2.291 (iii)", and ii) by deleting the words "Section 2.24(a)" as appears in the first line of Section 2.24 (b)(ii) and substituting therein the words "Section 2.29(a)." 4. Section 2.241 (ii) is hereby amended i) by deleting the words "2.241 (iii)" as appears in the second line of said Section 2.241 (ii) and substituting therein the words "Section 2.291 (iii)" and ii) by deleting the words "2.24(a) (iii) or (iv), or Section 2.24(b) (ii)" as appears in the eighth line of said Section 2.241 (ii) and substituting therein the words "Section 2.229(a) (iii) or (iv), or Section 2.29(b) (ii)." 5. Article 2 is hereby amended by renumbering Sections 2.24, 2.241, 2.25, 2.26, 2.27, 2.28, 2.29, 2.30, 2.31, 2.32, 2.33, 2.34, 2.35, 2.36, 2.37, 2.38, 2.39, 2.40, 2.41, 2.42, 2.43, 2.44, 2.45, 2.46, 2.47, 2.48 and 2.49 as Sections 2.29, 2.291, 2.30, 2.31, 2.32, 2.33, 2.34, 2.35, 2.36, 2.37, 2.38, 2.39, 2.40, 2.41, 2.42, 2.43, 2.44, 2.45, 2.46, 2.47, 2.48, 2.49, 2.50, 2.51, 2.52, 2.53 and 2.54, respectively. 6. Section 2.41 is hereby amended by deleting the words "or Valuation Date" as appears in the third line of said Section 2.41 and the word "distri- butions" on the fourth line. 7. Section 2.54 is hereby amended by deleting the words "in the calendar months of March, June, September and December" and substituting therein the words "of each calendar month." 8. Article 2 "Definitions" is hereby amended by adding the following new Section 2.55 "Valuation Notification Date" means the fifteenth (15th) day of each calendar month prior to any Valuation Date. 9. Section 5.02 is hereby amended by adding the following words "or any other means authorized by the Savings Plan Board" after the word "writ- ing" as appears in the third line of said Section 5.02. 10. Section 5.03 is hereby amended by adding the following words "or any other means authorized by the Savings Plan Board" after the word "writ- ing" as appears in the third line of said Section 5.03. 11. Section 5.04 is hereby amended by adding the words "or any other means authorized by the Savings Plan Board" after the word "writing" as appears in both the third and the sixth lines of said Section 5.04. 12. Section 5.13 is hereby amended by deleting the words "(as defined in Section 2.241 (i))" as appears in the fourth and fifth lines of said Section 5.13 and substituting therein words "(as defined in Section 2.291 (i))." 13. Section 6.01 is hereby amended by deleting the words "who is eligible for the Retirement Health Benefit Account in accordance with the eligibility requirements in Section 17.02 whether or not the Member elects to con- tribute to such account in accordance with Section 17.04" as appears in the seventh through ninth lines of such Section 6.01 and substituting therein the words "other than a Member who is covered by a collective bargaining agreement that does not provide for a five percent (5%) Participating Company match provided the Member either: (i) was under age forty (40) as of January 1, 1993; (ii) had less than twelve (12) full years of employment as of January 1, 1993, or (iii) was hired on or after January 1, 1993. Employees age forty (40) and older who have completed twelve (12) or more full years of employment with the System as of January 1, 1993 shall not be eligible for the Participating Companies increase of up to a five percent (5%) match." 14. Section 6.02 is hereby amended by deleting the words "who is eligible for the Retirement Health Benefit Account in accordance with the eligibility requirements in Section 17.02 whether or not the Member elects to con- tribute to such account in accordance with Section 17.04" as appears in the sixth through ninth lines of such Section 6.02 and substituting therein the words "other than a Member who is covered by a collective bargaining agreement that does not provide for a five percent (5%) Participating Company match provided the Member either: (i) was under age forty (40) as of January 1, 1993; (ii) had less than twelve (12) full years of employment as of January 1, 1993; or (iii) was hired on or after January 1, 1993." Employees age forty (40) and older who have completed twelve (12) or more full years of employment with the System as of January 1, 1993 are not eligible for the Participating Companies' in- crease of up to a five percent (5%) match. 15. Section 8.05 is hereby amended by adding the word "Valuation" before the word "Notification" as appears in the eighth line of such Section 8.05. 16. Section 9.01 is hereby amended by deleting the words "(other than the Retirement Health Benefit Account)" as appears in the fifth line of such Section 9.01 and by deleting the last sentence of such Section 9.01 in its entirety. 17. Section 10.01 is hereby amended by deleting the words "April 1, 1989" as appears in the first line of such Section 10.01 and substituting the words "April 1, 1996," and by adding the words "or loans" after the word "loan" on the second line of such Section 10.01. 18. Section 10.02 is hereby amended: i) by adding the words "or loans" after to the word "loan" on the first, third and fourth lines of such Section 10.02; ii) by adding the words "or balances" after the word "balance" on the fifth line of such Section 10.02; and iii) by deleting the words "other than the Member's Retirement Health Benefit Account established in accordance with Article 17." as appears in the seventh and eighth lines of such Section 10.02. 19. Section 10.04 is hereby amended by deleting the words "(other than the Retirement Health Benefit Account)" as appears in the fourth line of such Section 10.04, and by deleting the words "no loan shall be available from the Retirement Health Benefit Account" as appears in the first line of the second paragraph of such Section 10.04. 20. Section 10.05 (a) is hereby amended by adding the words "or a period of one to thirty years if the loan is to purchase a primary residence" in the first line of such Section 10.05(a). 21. Section 10.05 (b) is hereby amended by adding the words "or balances" after to the word "balance" as used twice in the twelfth line of such Section 10.05(b) and by adding the words "or loans" after and the word "loan" on the thirteenth line of such Section 10.05(b). 22. Section 10.05 (d) is hereby amended by deleting the words "one loan" as appears in the first line of such Section 10.05(d) and substituting therein the words "two loans." 23. Article 17 is hereby deleted in its entirety. IN WITNESS WHEREOF, Commonwealth Energy System, Cambridge Electric Light Company, Canal Electric Company, Commonwealth Gas Company, COM/Energy Services Company and Commonwealth Electric Company have caused this Amendment No. 2 to be duly executed in their name and on their behalf, this 26th day of February, 1996, effective as of the date set forth herein. COMMONWEALTH ENERGY SYSTEM* CAMBRIDGE ELECTRIC LIGHT COMPANY CANAL ELECTRIC COMPANY COMMONWEALTH GAS COMPANY COM/ENERGY SERVICES COMPANY COMMONWEALTH ELECTRIC COMPANY By W. G. POIST W. G. Poist President of Commonwealth Energy System and Chairman of its Subsidiary Companies By M. P. SULLIVAN M. P. Sullivan Secretary of Commonwealth Energy System and Clerk of its Subsidiary Companies * The name "Commonwealth Energy System" means the trustees for the time being (as trustees but not individually) under a declaration of Trust dated December 31, 1926, as amended, which is hereby referred to, and a copy of which has been filed with the Secretary of the Commonwealth of Massachusetts. Any agreement, obligation or liability made, entered into or incurred by or on behalf of said System binds only the trust estate, and no shareholder, director, trustee, officer or agent assumes, or shall be held to, any liability by reason therefore. -----END PRIVACY-ENHANCED MESSAGE-----