Washington, D.C. 20549
Birdsall, Inc. Retirement Savings Plan
B. Name of the issuer of the securities held pursuant to the plan and the address of its principal executive office:
Nicor Inc.
Note: 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 have been omitted because they are not applicable.
To the Birdsall, Inc.
Retirement Savings Plan Committee:
We have audited the accompanying statements of net assets available for benefits of Birdsall, Inc. Retirement Savings Plan (the "Plan") as of December 31, 2009 and 2008, and the related statements of changes in net assets available for benefits for the years then ended. 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 net assets available for benefits of the Plan as of December 31, 2009 and 2008, and the changes in net assets available for benefits for the years then ended 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, 2009, 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. This schedule is the responsibility of the Plan's management. Such schedule has been subjected to the auditing procedures applied in our audit of the basic 2009 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
Chicago, Illinois
June 18, 2010
| 1. DESCRIPTION OF THE PLAN |
The following description of the Birdsall, Inc. Retirement Savings Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for more detailed information.
The Plan. The Plan is a defined contribution plan that is designed to provide retirement benefits to substantially all employees of Tropical Shipping USA, LLC and employees of certain affiliated companies (collectively referred to as the “Company”). The funds of the Plan are held for safekeeping and investment by the Birdsall, Inc. Retirement Savings Plan Trust (the “Trust”). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
Plan administration. Authority to control and manage the operation and administration of the Plan is vested in a committee appointed by the Board of Directors of the Company. The Vanguard Fiduciary Trust Company (“VFTC”) acts as trustee for the Trust and holds the investments of the Plan under the terms of a trust agreement. The VFTC also acts as investment manager for certain assets of the Plan. Certain administrative expenses associated with the operation of the Plan are paid from Plan assets.
Contributions. Subject to Plan and Internal Revenue Service (“IRS”) limitations, the participant may elect to make either tax-deferred contributions or after-tax contributions, or a combination thereof, by payroll deductions that are partially matched by the Company. The Company may also contribute annual discretionary profit sharing awards, based on Company performance and allocated equally to eligible participants, which totaled $400,757 for the year ended December 31, 2008. The Plan also accepts certain rollover contributions representing distributions from other qualified plans. Participants direct the investment of their contributions, Company contributions and account balances into various investment options offered by the Plan. To the extent a participant does not elect to invest their account balances in any investment fund, the Plan has designated a default investment fund.
Investments. The Plan’s investment options currently include the Nicor Stock Fund (which invests primarily in Nicor Inc. common stock), 37 mutual funds and a stable value fund (the Vanguard Retirement Savings Trust (“VRST”), a fully benefit-responsive common/collective trust fund).
Participant accounts. Individual accounts are maintained for each Plan participant. Each participant’s account is increased by the participant’s contributions, Company contributions and allocated plan investment earnings, and decreased by withdrawals, allocated plan investment losses and administrative expenses. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account balance.
Participant loans. Participants may borrow up to the lesser of $50,000 or 50 percent of their vested account balance from their account. Loans are repaid through payroll deductions over periods ranging from six months to five years, and are secured by the balance in the participant’s account. The interest rate is established at the date of the loan and is based on the prime rate plus 1 percent. The interest rate remains fixed over the life of the loan.
Vesting and forfeitures. The participant’s contributions and earnings thereon are immediately vested. The Company’s contributions and earnings thereon are vested after the participant’s completion of three years of service or if the participant retires, becomes disabled or dies before completing three years of service.
If the participant’s interest in the Company’s contributions and earnings thereon is not vested, such interest will be forfeited if the participant’s employment with the Company is terminated. If the participant is reemployed within five years by the Company, forfeited contributions and earnings thereon are restored to the participant’s account. Any amounts forfeited by a participant are applied to reduce the amount of the Company’s contributions under the Plan. During 2009 and 2008, the application of forfeitures reduced the Company’s contributions by $1,132 and $36,941, respectively, and at December 31, 2009 and 2008, the Plan had $58,170 and $44,638, respectively, of forfeitures available for application against future Company contributions.
Payment of benefits. On termination of service due to retirement, disability, or death, a participant (or in certain instances, their beneficiary) may elect to defer distribution until attainment of age 70 ½, receive either a lump sum amount equal to the participant’s vested interest in his or her account balance or request certain payments over a specified period. For termination of service for other reasons, a participant has the option to defer distribution until attainment of age 70 ½ if their vested account balance exceeds $1,000 or receive a lump sum distribution equal to the value of the vested interest in his or her account.
Suspensions and withdrawals. A participant may suspend contributions and will continue to be a participant during the suspension period.
A participant may elect, under certain conditions, to withdraw certain participant contributions and earnings thereon prior to termination of employment. The vested portion of the Company’s matching contributions and earnings thereon will not be distributed prior to termination of employment.
Plan termination. The Company expects to continue the Plan indefinitely, but reserves the right to amend, suspend or discontinue it at any time subject to the provisions of ERISA. In the event of plan termination, participants will become fully vested in their account balances.
Basis of accounting. The financial statements of the Plan have been prepared under the accrual method of accounting except for benefits paid to participants which are recorded when paid.
Use of estimates. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires Plan management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein. Actual results could differ from those estimates.
Subsequent events. The Plan’s management evaluated subsequent events for potential recognition and disclosure through the date the financial statements were issued.
Risks and uncertainties. The Plan utilizes various investment instruments, including Nicor Inc. (the Company’s ultimate parent) common stock, mutual funds and a stable value fund. 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 their values will occur in the near term and such changes could materially affect the amounts reported in the financial statements.
Income recognition. Purchases and sales of securities are recorded on the trade date. Interest income is recorded on the accrual basis and dividends are recorded on the ex-dividend date. Net increase (decrease) in Plan net assets includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
Investment valuation. The Plan states its investments at fair value. The Statements of Net Assets Available for Benefits present investments at fair value, as well as an additional line item showing an adjustment for the stable value fund from fair value to contract value. The Statements of Changes in Net Assets Available for Benefits presents changes in the stable value fund on a contract value basis and all other investments on a fair value basis. The fair values of the respective investments of the Plan are determined as noted in Note 3 - Investments.
The stable value fund or VRST is fully benefit-responsive to the participants. The difference between the valuation of fully benefit-responsive investments at fair value and contract value is reflected over time through the crediting rate. Contract value represents contributions made plus interest accrued at the contract rate, less withdrawals. To the extent the underlying portfolio has unrealized and/or realized gains/losses, an adjustment is made when reconciling from fair value to contract value. As a result, the future crediting rate may be different than the current market rate. The crediting rate of the contract resets every quarter based on the performance of the underlying investment portfolio. The average crediting interest rate for the VRST was 3.3 percent and 3.7 percent at December 31, 2009 and 2008, respectively. The average yield for this fund was 3.0 percent and 4.3 percent for the years ended December 31, 2009 and 2008, respectively.
The existence of certain conditions can limit the VRST’s ability to transact at contract value. Specifically, any event outside the normal operation of the VRST that causes a withdrawal from an investment contract may result in a negative market value adjustment with respect to the withdrawal. Examples of such events include, but are not limited to, partial or complete legal termination of the VRST or a unitholder, tax disqualification of the VRST or unitholder and certain VRST amendments if issuers’ consent is not obtained.
In general, issuers may terminate the contract and settle at other than contract value if there is a change in the qualification status of the participant, employer or plan; a breach of material obligations under the contract and misrepresentation by the contract holder; or failure of the underlying portfolio to conform to the pre-established investment guidelines. As of December 31, 2009, Plan management believes that the occurrence of an event that would cause the VRST to transact at less than contract value is not probable.
The fair value of the Plan investments that represent five percent or more of the Plan’s net assets available for benefits as of December 31 are as follows:
| | | 2009 | | | 2008 | |
| | | | | | | |
| Vanguard 500 Index Fund Investor Shares | | $ | 11,905,676 | | | $ | 9,119,144 | |
| Vanguard Balanced Index Investment Fund | | | 7,038,293 | | | | 5,621,483 | |
| Nicor Inc. common stock | | | 4,609,035 | | | | 3,869,240 | |
| VRST* | | | 24,915,772 | | | | 23,030,282 | |
| | | | | | | | | |
*At December 31, 2009 and 2008, the contract values of the VRST were $24,377,139 and $23,331,363, respectively. |
When available and appropriate, the Plan uses quoted market prices in active markets to determine fair value and classifies such items within Level 1. Securities not traded on an active market but for which observable market inputs are readily available are classified within Level 2. The fair value of the Plan’s investments is categorized in the table below based upon the valuation inputs. There were no Level 3 inputs at December 31, 2009 and 2008.
| | | | | | Significant | | | | |
| | | | | | observable | | | | |
| | | | | | inputs | | | | |
| | | (Level 1) | | | (Level 2) | | | Total | |
| December 31, 2009 | | | | | | | | | |
| Stable value fund | | $ | - | | | $ | 24,915,772 | | | $ | 24,915,772 | |
| Nicor Inc. common stock | | | 4,609,035 | | | | - | | | | 4,609,035 | |
| Registered investment companies: | | | | | | | | | |
| Bond funds | | | 4,043,004 | | | | - | | | | 4,043,004 | |
| Balanced funds | | | 8,368,283 | | | | - | | | | 8,368,283 | |
| Domestic stock funds | | | 18,453,089 | | | | - | | | | 18,453,089 | |
| International stock funds | | | 2,483,228 | | | | - | | | | 2,483,228 | |
| Participant loans | | | - | | | | 1,579,203 | | | | 1,579,203 | |
| | | $ | 37,956,639 | | | $ | 26,494,975 | | | $ | 64,451,614 | |
| | | | | | | | | | | | | |
| December 31, 2008 | | | | | | | | | | | | |
| Stable value fund | | $ | - | | | $ | 23,030,282 | | | $ | 23,030,282 | |
| Nicor Inc. common stock | | | 3,869,240 | | | | - | | | | 3,869,240 | |
| Registered investment companies: | | | | | | | | | | | | |
| Bond funds | | | 4,339,979 | | | | - | | | | 4,339,979 | |
| Balanced funds | | | 5,839,734 | | | | - | | | | 5,839,734 | |
| Domestic stock funds | | | 13,607,198 | | | | - | | | | 13,607,198 | |
| International stock funds | | | 2,006,158 | | | | - | | | | 2,006,158 | |
| Participant loans | | | - | | | | 1,535,777 | | | | 1,535,777 | |
| | | $ | 29,662,309 | | | $ | 24,566,059 | | | $ | 54,228,368 | |
Shares of Nicor Inc. common stock are valued at the closing price on the New York Stock Exchange and are classified within Level 1.
Registered investment companies include actively-traded mutual funds. Shares of mutual funds are valued at quoted market prices, which represent the net asset value of shares held by the Trust at year-end and are
classified within Level 1. Bond funds are diversified across a broad range of investment grade corporate bonds and other fixed income securities. Balanced funds are asset allocation funds that seek both capital appreciation and current income through stock and bond holdings. Domestic stock funds are diversified across small, mid and large cap equity investments. International stock funds are diversified across countries and capitalization size in order to maintain a broad market representation of non-U.S. markets.
Participant loans are valued at the total outstanding loan balance, which approximates fair value. The overall fair value of the participant loans is based on significant observable inputs and is classified within Level 2.
| 4. EXEMPT PARTY-IN-INTEREST TRANSACTIONS |
The Plan invests in shares of mutual funds and a collective investment trust fund managed by an affiliate of VFTC. VFTC acts as trustee for those investments as defined by the Plan. Transactions in such investments qualify as party-in-interest transactions and are exempt from the prohibited transaction rules. Fees paid by the Plan for investment management services were included as a reduction of the return earned by each fund.
At December 31, 2009 and 2008, the Plan held 109,344 and 111,220 shares, respectively, of common stock of Nicor Inc. with a cost basis of $4,132,231 and $4,226,638, respectively. During the years ended December 31, 2009 and 2008, the Plan recorded dividend income of $213,037 and $205,689, respectively, related to Nicor Inc. common stock.
| 5. FEDERAL INCOME TAX STATUS |
The IRS has determined and informed the Company by a letter dated June 10, 2009, that the Plan and related Trust were tax exempt under Section 401(a) of the Internal Revenue Code (the “Code”). The Plan has since been amended; however, Plan management believes that the Plan and related Trust continue to be designed and operated in compliance with the requirements of the Code. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
| 6. RECONCILIATION TO FORM 5500 |
The following is a reconciliation of the net increase per the Statement of Changes in Net Assets Available for Benefits to net income per Form 5500 for the year ended December 31:
| | | 2009 | |
| | | | |
| Net increase per the financial statements | | $ | 8,996,092 | |
Adjustment from fair value to contract value for the stable value fund | | | 538,633 | |
| Net income per Form 5500 | | | 9,534,725 | |
| |
| Form 5500 — Schedule H, Part IV, Line 4(i) — Schedule of Assets (Held at End of Year) | |
| December 31, 2009 | |
| | | | | | |
| | Identity of Issue, Borrower or Similar Party | Description of Investment | | Current Value | |
| | | | | | |
| (A) | Nicor Inc. | Common stock at $2.50 par value | | $ | 4,609,035 | |
| (A) | Participant loans | Participant loans earning interest from 4.25%–9.50%, maturing from 2010 to 2014 | | | 1,579,203 | |
| | AIM Constellation Fund, A Shares | Registered investment company | | | 45,109 | |
| | AIM Dynamics Fund | Registered investment company | | | 273,322 | |
| | American Century Int’l Growth | Registered investment company | | | 1,521,523 | |
| | American Century Equity Growth | Registered investment company | | | 171,293 | |
| | Columbia Acorn Int’l Fund | Registered investment company | | | 49,545 | |
| | Columbia Acorn USA Fund | Registered investment company | | | 1,025,291 | |
| | Davis New York Venture | Registered investment company | | | 1,119,136 | |
| | Fidelity Blue Chip Growth Fund | Registered investment company | | | 271,085 | |
| | Janus Investment Fund | Registered investment company | | | 285,195 | |
| | Managers Special Equity Fund | Registered investment company | | | 1,446,882 | |
| (A) | Vanguard 500 Index Inv Fund | Registered investment company | | | 11,905,676 | |
| (A) | Vanguard Asset Allocation Fund | Registered investment company | | | 356,186 | |
| (A) | Vanguard Balanced Index Fund | Registered investment company | | | 7,038,293 | |
| (A) | Vanguard Devel Mkts Index Fund | Registered investment company | | | 912,160 | |
| (A) | Vanguard GNMA Investors Shares | Registered investment company | | | 517,669 | |
| (A) | Vanguard Growth Equity Fund | Registered investment company | | | 508,048 | |
| (A) | Vanguard Growth Index Inv Shares | Registered investment company | | | 233,723 | |
| (A) | Vanguard LifeStrategy Growth Fund | Registered investment company | | | 779 | |
| (A) | Vanguard LifeStrategy Income Fund | Registered investment company | | | 996 | |
| (A) | Vanguard LifeStrategy Mod Growth | Registered investment company | | | 7,473 | |
| (A) | Vanguard LT Treasury Inv Shares | Registered investment company | | | 755,451 | |
| (A) | Vanguard Mid-Cap Value Index Inv Shares | Registered investment company | | | 114,357 | |
| (A) | Vanguard PRIMECAP Fund | Registered investment company | | | 870,731 | |
| (A) | Vanguard Prime Money Mkt | Registered investment company | | | 73,215 | |
| (A) | Vanguard Sm-Cap Value Index | Registered investment company | | | 110,026 | |
| (A) | Vanguard Tgt Retirement 2005 Fund | Registered investment company | | | 2 | |
| (A) | Vanguard Tgt Retirement 2010 Fund | Registered investment company | | | 116,595 | |
| (A) | Vanguard Tgt Retirement 2015 Fund | Registered investment company | | | 134,381 | |
| (A) | Vanguard Tgt Retirement 2020 Fund | Registered investment company | | | 428,322 | |
| (A) | Vanguard Tgt Retirement 2025 Fund | Registered investment company | | | 95,840 | |
| (A) | Vanguard Tgt Retirement 2030 Fund | Registered investment company | | | 81,644 | |
| (A) | Vanguard Tgt Retirement 2035 Fund | Registered investment company | | | 14,758 | |
| (A) | Vanguard Tgt Retirement 2040 Fund | Registered investment company | | | 61,630 | |
| (A) | Vanguard Tgt Retirement 2045 Fund | Registered investment company | | | 26,273 | |
| (A) | Vanguard Tgt Retirement 2050 Fund | Registered investment company | | | 4,228 | |
| Birdsall, Inc. Retirement Savings Plan | |
| Form 5500 — Schedule H, Part IV, Line 4(i) — Schedule of Assets (Held at End of Year) | |
| December 31, 2009 (Continued) | |
| | | | | | |
| | Identity of Issue, Borrower or Similar Party | Description of Investment | | Current Value | |
| | | | | | |
| (A) | Vanguard Target Retirement Income | Registered investment company | | | 883 | |
| (A) | Vanguard Total Bond Market Ind | Registered investment company | | | 2,769,884 | |
| (A) | Vanguard Retirement Savings Trust | Stable value fund | | | 24,915,772 | |
| | | | | | | |
| | TOTAL | | | $ | 64,451,614 | |
| | | | | | | |
| (A) | Denotes party-in-interest investment | | | | | |
