UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] Annual Report Pursuant to Section 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 2004
or
[ ] Transition Report Pursuant to Section 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to ___________
Commission file number 1-7297
Nicor Companies Savings Investment Plan,
Nicor Gas Thrift Plan
A. Full title of the plan and address of the plan, if different
from that of the issuer named below:
Nicor Companies Savings Investment Plan, and
Nicor Gas Thrift Plan
B. Name of the issuer of the securities held pursuant to the plan
and the address of its principal executive office:
Nicor Inc.
1844 Ferry Road
Naperville, Illinois 60563-9600
Table of Contents
- -----------------
Financial Information
Nicor Companies Savings Investment Plan
Cover Page............................................................ 1
Report of Independent Registered Public Accounting Firm............... 2
Financial Statements.................................................. 3
Notes to the Financial Statements..................................... 4
Form 5500, Schedule H, Part IV, Line 4(i),
Schedule of Assets (Held at end of year).......................... 9
Nicor Gas Thrift Plan
Cover Page............................................................ 10
Report of Independent Registered Public Accounting Firm............... 11
Financial Statements.................................................. 12
Notes to the Financial Statements..................................... 13
Form 5500, Schedule H, Part IV, Line 4(i),
Schedule of Assets (Held at end of year).......................... 18
Other Information
Signature............................................................. 19
Exhibit Index......................................................... 20
NICOR COMPANIES SAVINGS INVESTMENT PLAN
EMPLOYER IDENTIFICATION NO. 36-2863847
PLAN NO. 4
FINANCIAL STATEMENTS AS OF DECEMBER 31, 2004 AND 2003
TOGETHER WITH REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM AND SUPPLEMENTAL SCHEDULE
1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Nicor Companies
Savings Investment Plan Committee:
We have audited the accompanying statements of net assets available for benefits
of Nicor Companies Savings Investment Plan (the "Plan") as of December 31, 2004
and 2003, 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,
2004 and 2003, 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, 2004 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 2004 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.
DELOITTE & TOUCHE LLP
Chicago, Illinois
June 8, 2005
2
Nicor Companies Savings Investment Plan
Statements of Net Assets Available for Benefits
December 31
------------------------------
2004 2003
------------- -------------
Assets:
Investment in Master Trust:
Investment securities and other $ 164,331,238 $ 151,188,206
Participant loans 1,889,070 1,800,262
------------- -------------
166,220,308 152,988,468
------------- -------------
Receivables:
Participant contributions 6,466 178,173
Employer contributions 284,130 332,880
------------- -------------
290,596 511,053
------------- -------------
Net assets available for benefits $ 166,510,904 $ 153,499,521
============= =============
Statements of Changes in Net Assets Available for Benefits
Year ended December 31
------------------------------
2004 2003
------------- -------------
Net increase in Plan assets from investment
activities of the Master Trust $ 14,245,488 $ 19,254,595
Contributions:
Participant 6,083,704 5,373,840
Employer 3,005,643 2,843,078
------------- -------------
9,089,347 8,216,918
Distributions to participants (10,702,424) (7,721,053)
Transfers, net and other 378,972 262,269
------------- -------------
Net increase 13,011,383 20,012,729
Net assets available for benefits at
beginning of year 153,499,521 133,486,792
------------- -------------
Net assets available for benefits at
end of year $ 166,510,904 $ 153,499,521
============= =============
The accompanying notes are an integral part of these statements.
3
Nicor Companies Savings Investment Plan
Notes to the Financial Statements
For the Years Ended December 31, 2004 and 2003
1. DESCRIPTION OF THE PLAN
The following description of the Nicor Companies Savings Investment 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 provides supplemental
retirement benefits to substantially all employees of Nicor Gas Company (the
Company), not represented by a collective bargaining agreement, and employees of
certain affiliated companies. Plan investments are commingled with those of the
Nicor Gas Thrift Plan and held for safekeeping and investment by the Nicor Gas
Savings Investment and Thrift Trust (the Master 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 Master 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. Administrative expenses associated with operation of the
Plan are paid from Plan assets.
Contributions. The participant may elect to make either tax-deferred
contributions (up to 15 percent of participant's base pay) or after-tax
contributions (up to 7 percent of participant's base pay), or a combination
thereof, by payroll deduction that are partially matched by the Company. The
Company will provide matching contributions of 100 percent of the first 3
percent of the participant's contributions, and 75 percent of the next 3 percent
of the participant's contributions, for a maximum Company contribution of 5.25
percent. For employees hired on and after January 1, 1998, the Company makes an
additional annual contribution subject to service requirements, up to 1.5
percent of the participant's prior year's actual base pay. The Plan also accepts
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.
Investments. The Plan's investment options currently include the Nicor Stock
Fund, the Nicor Stable Value Fund, and 22 mutual funds.
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 based on the prime rate plus 1 percent and is fixed over the life of the
loan.
4
Nicor Companies Savings Investment Plan
Notes to the Financial Statements (continued)
For the Years Ended December 31, 2004 and 2003
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. However,
the participant will be fully vested in the Company's contribution 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 or an affiliate is terminated and the participant is
not reemployed within five years by the Company or an affiliate. Any amounts
forfeited by a participant are applied to reduce the amount of the Company's
contributions under the Plan. During 2004 and 2003 the application of
forfeitures reduced the Company's contribution by $215,499 and $160,000
respectively, and at December 31, 2004 and 2003 the Plan had $205,924 and
$29,026, 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 may elect to receive either a lump-sum amount equal to the
participant's vested interest in his or her account balance, or annual
installments over a specified period. For termination of service for other
reasons, a participant has the option to receive the value of the vested
interest in his or her account as either a lump-sum distribution or they can
defer it to no later than the age of 70-1/2. Benefit payments to participants
are recorded and distributed on the date requested.
Suspensions and withdrawals. The participant may suspend contributions and will
not cease to be a participant during the suspension period.
The participant may elect, under certain conditions, to withdraw certain
participant contributions and earnings thereon prior to termination of
employment. The Company's matching contributions and earnings thereon will not
be distributed until the vested participant's attainment of age 59-1/2 or
employment has been terminated.
Plan termination. The Company expects to continue the Plan indefinitely, but
reserves the right to amend 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.
2. ACCOUNTING POLICIES
Basis of accounting. The financial statements of the Plan are prepared under the
accrual method of accounting.
Use of estimates. The preparation of financial statements in accordance with
accounting policies 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. The Plan utilizes various investment
instruments, including mutual funds and investment contracts. 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 that such changes could materially affect
the amounts reported in the financial statements.
5
Nicor Companies Savings Investment Plan
Notes to the Financial Statements (continued)
For the Years Ended December 31, 2004 and 2003
Investment valuation. The Plan states its investment in the Master Trust at the
underlying fair value of the investments of the Master Trust as follows:
The market value for Nicor Inc. common stock is based on the closing price on
the New York Stock Exchange Composite Tape.
Shares of mutual funds are valued at quoted market prices, which represent the
net asset value of shares held by the Master Trust at year-end.
The Nicor Stable Value Fund is primarily composed of benefit-responsive
investment contracts including insurance contracts and investments in certain
registered investment companies and common/collective trusts whose contract
values are guaranteed by bank contracts. These benefit-responsive investment
contracts are carried at contract value, which in aggregate approximates their
fair market value. The contract value represents contributions made plus
interest at the various contract rates, less Plan withdrawals and administrative
expenses. The crediting interest rates for the registered investment companies
and common/collective trusts are adjusted quarterly based upon their
performance. The average crediting interest rate for the Nicor Stable Value Fund
was 4.5 percent and 4.6 percent at December 31, 2004 and 2003, respectively. The
average yield for this fund was approximately 4.4 percent and 4.9 percent for
the years ended December 31, 2004 and 2003, respectively. There are no reserves
against contract value for credit risk of the contract issuer or otherwise.
3. NET TRANSFER TO NICOR COMPANIES SAVINGS INVESTMENT PLAN
When the status of a participant changes between union employees covered by a
collective bargaining agreement, and nonunion employees not covered by a
collective bargaining agreement, eligibility for participation shifts between
the Nicor Gas Thrift Plan (the "union plan") and this Plan (the "nonunion
plan"). When eligibility changes, the account balance of the participant is
transferred to the corresponding plan. During 2004 and 2003, net transfers of
$378,972 and $262,269, respectively, were made from the Nicor Gas Thrift Plan to
the Nicor Companies Savings Investment Plan.
4. EXEMPT PARTY-IN-INTEREST TRANSACTIONS
The Plan invests in shares of mutual funds managed by an affiliate of VFTC. VFTC
acts as trustee for only those investments as defined by the Plan. Transactions
in such investments qualify as party-in-interest transactions which 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, 2004 and 2003, the Plan held 218,256 and 275,663 shares,
respectively, of common stock of Nicor Inc., the sponsoring employer, with a
cost basis of $6,983,191 and $8,517,383, respectively. During the year ended
December 31, 2004, the Plan recorded dividend income of $464,745.
6
Nicor Companies Savings Investment Plan
Notes to the Financial Statements (continued)
For the Years Ended December 31, 2004 and 2003
5. MASTER TRUST FINANCIAL INFORMATION
Use of the Master Trust permits the commingling of the Plan's assets with the
assets of the Nicor Gas Thrift Plan for investment and administrative purposes.
Although assets of both plans are commingled in the Master Trust, the Trustee
maintains supporting records for each of the participating plans. The net
investment income of the investment assets is allocated daily by the Trustee to
each participating plan based on the relationship of the interest of each plan
to the total of the interests of both participating plans.
The following presents the Master Trust's net assets as of December 31, 2004 and
2003, the increase or decrease in the Master Trust's net assets derived from
investment activities for the years then ended and the Plan's share of each:
Net Assets in Master Trust
--------------------------
December 31
-----------------------------
2004 2003
------------- -------------
Assets:
General Investments:
Group annuity contracts $ 23,038,979 $ 31,904,756
Common/collective trusts* 89,112,846 80,342,717
Nicor Inc. common stock* 19,838,886 20,800,891
Registered investment companies* 157,677,983 135,933,355
Loans to participants* 5,738,419 5,478,054
------------- -------------
295,407,113 274,459,773
Liabilities:
Operating payables 15,950 15,964
------------- -------------
Net assets in Trust $ 295,391,163 $ 274,443,809
============= =============
Plan's interest in Trust net assets $ 166,220,308 $ 152,988,468
============= =============
Plan's percentage interest in
Trust net assets 56% 56%
============= =============
* Party-in-interest investments.
The Plan's interest in the Trust's investments that represent five percent
or more of the Plan's net assets available for benefits as of December 31,
2004 and 2003 are as follows:
December 31
-----------------------------
2004 2003
------------- -------------
Vanguard 500 Index Fund Investor Shares $ 23,755,675 $ 21,486,751
Vanguard Small-Cap Index Fund Investor
Shares 12,286,847 10,138,722
Vanguard Wellington Fund Investor Shares 16,232,104 13,843,957
Nicor Stable Value Fund 71,835,474 71,883,037
Nicor Stock Fund 8,100,627 9,421,492
7
Nicor Companies Savings Investment Plan
Notes to the Financial Statements (concluded)
For the Years Ended December 31, 2004 and 2003
Master Trust Investment Activities
----------------------------------
Year Ended December 31
----------------------------
2004 2003
------------ ------------
Investment income:
Interest $ 2,193,705 $ 3,116,241
Dividends 1,084,283 1,192,306
Net change in market value of
Nicor Inc. common stock 1,537,144 642,756
Net investment gain from common/
collective trusts 3,340,218 3,184,674
Net investment gain from registered
investment companies 17,110,752 25,447,346
Other (27,143) (41,197)
------------ ------------
25,238,959 33,542,126
Administrative expenses (269,192) (269,267)
------------ ------------
Increase in Trust net assets derived
from investment activities $ 24,969,767 $ 33,272,859
============ ============
Plan's interest in Trust
investment activities $ 14,245,488 $ 19,254,595
============ ============
6. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by a letter
dated April 22, 2003, that the Plan and related Trust was tax exempt under
Section 401(a) of the Internal Revenue Code (the Code). The Plan's management
believes that the Plan and related Master 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.
8
Nicor Companies Savings Investment Plan
Form 5500 Schedule H, Part IV,
Line 4(i) - Schedule of Assets (Held at End of Year)
December 31, 2004
Identity of Issue, Borrower
or Similar Party Description of Investment Current Value
- ------------------------------------ ------------------------- --------------
(A) Investments held in Master Trust $ 164,331,238
(A) Participant Notes Receivable Participant loans earning 1,889,070
interest from 5% to 10.5%
maturing from 2005 to 2009
-------------
Total $ 166,220,308
=============
(A) Denotes party-in-interest investment
9
NICOR GAS THRIFT PLAN
EMPLOYER IDENTIFICATION NO. 36-2863847
PLAN NO. 8
FINANCIAL STATEMENTS AS OF DECEMBER 31, 2004 AND 2003
TOGETHER WITH REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM AND SUPPLEMENTAL SCHEDULE
10
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Nicor Gas Thrift Plan Committee:
We have audited the accompanying statements of net assets available for benefits
of Nicor Gas Thrift Plan (the "Plan") as of December 31, 2004 and 2003, 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,
2004 and 2003, 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 the year) as of December 31, 2004 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 2004 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.
DELOITTE & TOUCHE LLP
Chicago, Illinois
June 8, 2005
11
Nicor Gas Thrift Plan
Statements of Net Assets Available for Benefits
December 31
------------------------------
2004 2003
------------- -------------
Assets:
Investment in Master Trust:
Investment securities and other $ 125,321,506 $ 117,777,550
Participant loans 3,849,349 3,677,791
------------- -------------
129,170,855 121,455,341
------------- -------------
Receivables:
Participant contributions - 142,488
Employer contributions 134,366 150,402
------------- -------------
134,366 292,890
------------- -------------
Net assets available for benefits $ 129,305,221 $ 121,748,231
============= =============
Statements of Changes in Net Assets Available for Benefits
Year ended December 31
------------------------------
2004 2003
------------- -------------
Net increase in Plan assets from investment
activities of the Master Trust $ 10,724,279 $ 14,018,264
Contributions:
Participant 3,783,692 3,784,676
Employer 1,629,196 1,523,225
------------- -------------
5,412,888 5,307,901
Distributions to participants (8,201,205) (6,078,215)
Transfers, net and other (378,972) (262,269)
------------- -------------
Net increase 7,556,990 12,985,681
Net assets available for benefits at
beginning of year 121,748,231 108,762,550
------------- -------------
Net assets available for benefits at
end of year $ 129,305,221 $ 121,748,231
============= =============
The accompanying notes are an integral part of these statements.
12
Nicor Gas Thrift Plan
Notes to the Financial Statements
For the Years Ended December 31, 2004 and 2003
1. DESCRIPTION OF THE PLAN
The following description of the Nicor Gas Thrift 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 provides supplemental
retirement benefits to substantially all employees of Nicor Gas Company (the
Company) represented by a collective bargaining agreement. Plan investments are
commingled with those of the Nicor Companies Savings Investment Plan and held
for safekeeping and investment by the Nicor Gas Savings Investment and Thrift
Trust (the Master 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 Master 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. Administrative expenses associated with operation of the
Plan are paid from Plan assets.
Contributions. The participant may elect to make either tax-deferred
contributions (up to 10 percent of participant's base pay) or after-tax
contributions (up to 7 percent of participant's base pay), or a combination
thereof, by payroll deduction, that are partially matched by the Company. The
Company will provide matching contributions of 60 percent of the first 6 percent
of the participant's contributions for a maximum Company contribution of 3.6
percent. For employees hired on and after January 1, 1998, the Company makes an
additional annual contribution subject to service requirements. For awards
accrued in years 2004 through 2006, the award percentage is 1.3 percent. For
awards accrued in 2007 and beyond, the award percentage is 1.35 percent.
Participants direct the investment of their contributions, Company contributions
and account balances into various investment options offered by the Plan.
Investments. The Plan's investment options currently include the Nicor Stock
Fund, the Nicor Stable Value Fund, and 22 mutual funds.
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 based on the prime rate plus 1 percent and is fixed over the life of the
loan.
13
Nicor Gas Thrift Plan
Notes to the Financial Statements (continued)
For the Years Ended December 31, 2004 and 2003
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. However,
the participant will be fully vested in the Company's contribution 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 or an affiliate is terminated and the participant is
not reemployed within five years by the Company or an affiliate. Any amounts
forfeited by a participant are applied to reduce the amount of the Company's
contributions under the Plan. During 2004 and 2003 the application of
forfeitures reduced the Company's contribution by $52,569 and $105,000,
respectively, and at December 31, 2004 and 2003 the Plan had $63 and $8,788,
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 may elect to receive either a lump-sum amount equal to the
participant's vested interest in his or her account balance, or annual
installments over a specified period. For termination of service for other
reasons, a participant has the option to receive the value of the vested
interest in his or her account as either a lump-sum distribution or they can
defer it to no later than the age of 70-1/2. Benefit payments to participants
are recorded and distributed on the date requested.
Suspensions and withdrawals. The participant may suspend contributions and will
not cease to be a participant during the suspension period.
The participant may elect, under certain conditions, to withdraw certain
participant contributions and earnings thereon prior to termination of
employment. The Company's matching contributions and earnings thereon will not
be distributed until the vested participant's attainment of age 59-1/2 or
employment has been terminated.
Plan termination. The Company expects to continue the Plan indefinitely, but
reserves the right to amend or discontinue it at any time in a manner consistent
with any collective bargaining agreement and subject to the provisions of ERISA.
In the event of plan termination, participants will become fully vested in their
account balances.
2. ACCOUNTING POLICIES
Basis of accounting. The financial statements of the Plan are prepared under the
accrual method of accounting.
Use of estimates. The preparation of financial statements in accordance with
accounting policies 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. The Plan utilizes various investment
instruments, including mutual funds and investment contracts. 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.
14
Nicor Gas Thrift Plan
Notes to the Financial Statements (continued)
For the Years Ended December 31, 2004 and 2003
Investment valuation. The Plan states its investment in the Master Trust at the
underlying fair value of the investments of the Master Trust as follows:
The market value for Nicor Inc. common stock is based on the closing price on
the New York Stock Exchange Composite Tape.
Shares of mutual funds are valued at quoted market prices, which represent the
net asset value of shares held by the Master Trust at year-end.
The Nicor Stable Value Fund is primarily composed of benefit-responsive
investment contracts including insurance contracts and investments in certain
registered investment companies and common/collective trusts whose contract
values are guaranteed by bank contracts. These benefit-responsive investment
contracts are carried at contract value, which in aggregate approximates their
fair market value. The contract value represents contributions made plus
interest at the various contract rates, less Plan withdrawals and administrative
expenses. The crediting interest rates for the registered investment companies
and common/collective trusts are adjusted quarterly based upon their
performance. The average crediting interest rate for the Nicor Stable Value Fund
was 4.5 percent and 4.6 percent at December 31, 2004 and 2003, respectively. The
average yield for this fund was approximately 4.4 percent and 4.9 percent for
the years ended December 31, 2004 and 2003, respectively. There are no reserves
against contract value for credit risk of the contract issuer or otherwise.
3. NET TRANSFER TO NICOR COMPANIES SAVINGS INVESTMENT PLAN
When the status of a participant changes between union employees covered by a
collective bargaining agreement, and nonunion employees not covered by a
collective bargaining agreement, eligibility for participation shifts between
this Plan (the "union plan") and the Nicor Companies Savings Investment Plan
(the "nonunion plan"). When eligibility changes, the account balance of the
participant is transferred to the corresponding plan. During 2004 and 2003, net
transfers of $378,972 and $262,269, respectively, were made from the Nicor Gas
Thrift Plan to the Nicor Companies Savings Investment Plan.
4. EXEMPT PARTY-IN-INTEREST TRANSACTIONS
The Plan invests in shares of mutual funds managed by an affiliate of VFTC. VFTC
acts as trustee for only those investments as defined by the Plan. Transactions
in such investments qualify as party-in-interest transactions which 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, 2004 and 2003, the Plan held 318,801 and 335,409 shares,
respectively, of common stock of Nicor Inc., the sponsoring employer, with a
cost basis of $9,586,791 and $9,743,979, respectively. During the year ended
December 31, 2004, the Plan recorded dividend income of $619,538.
15
Nicor Gas Thrift Plan
Notes to the Financial Statements (continued)
For the Years Ended December 31, 2004 and 2003
5. MASTER TRUST FINANCIAL INFORMATION
Use of the Master Trust permits the commingling of the Plan's assets with the
assets of the Nicor Companies Savings Investment Plan for investment and
administrative purposes. Although assets of both plans are commingled in the
Master Trust, the Trustee maintains supporting records for each of the
participating plans. The net investment income of the investment assets is
allocated daily by the Trustee to each participating plan based on the
relationship of the interest of each plan to the total of the interests of both
participating plans.
The following presents the Master Trust's net assets as of December 31, 2004 and
2003, the increase or decrease in the Master Trust's net assets derived from
investment activities for the years then ended and the Plan's share of each:
Net Assets in Master Trust
--------------------------
December 31
-----------------------------
2004 2003
------------- -------------
Assets:
General Investments:
Group annuity contracts $ 23,038,979 $ 31,904,756
Common/collective trusts* 89,112,846 80,342,717
Nicor Inc. common stock* 19,838,886 20,800,891
Registered investment companies* 157,677,983 135,933,355
Loans to participants* 5,738,419 5,478,054
------------- -------------
295,407,113 274,459,773
Liabilities:
Operating payables 15,950 15,964
------------- -------------
Net assets in Trust $ 295,391,163 $ 274,443,809
============= =============
Plan's interest in Trust net assets $ 129,170,855 $ 121,455,341
============= =============
Plan's percentage interest in
Trust net assets 44% 44%
============= =============
* Party-in-interest investments.
The Plan's interest in the Trust's investments that represent five percent
or more of the Plan's net assets available for benefits as of December 31,
2004 and 2003 are as follows:
December 31
-----------------------------
2004 2003
------------- -------------
Vanguard 500 Index Fund Investor Shares $ 16,864,349 $ 15,456,681
Vanguard Small-Cap Index Fund Investor
Shares 10,049,421 8,393,973
Vanguard Wellington Fund Investor Shares 10,755,769 9,583,743
Nicor Stable Value Fund 59,890,676 60,616,677
Nicor Stock Fund 11,831,575 11,463,667
16
Nicor Gas Thrift Plan
Notes to the Financial Statements (concluded)
For the Years Ended December 31, 2004 and 2003
Master Trust Investment Activities
----------------------------------
Year Ended December 31
----------------------------
2004 2003
------------ ------------
Investment income:
Interest $ 2,193,705 $ 3,116,241
Dividends 1,084,283 1,192,306
Net change in market value of
Nicor Inc. common stock 1,537,144 642,756
Net investment gain from common/
collective trusts 3,340,218 3,184,674
Net investment gain from registered
investment companies 17,110,752 25,447,346
Other (27,143) (41,197)
------------ ------------
25,238,959 33,542,126
Administrative expenses (269,192) (269,267)
------------ ------------
Increase in Trust net assets derived
from investment activities $ 24,969,767 $ 33,272,859
============ ============
Plan's interest in Trust
investment activities $ 10,724,279 $ 14,018,264
============ ============
6. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by a letter
dated April 2, 2003, that the Plan and related Trust was tax exempt under
Section 401(a) of the Internal Revenue Code (the Code). The Plan has since been
amended, and Plan management believes that the Plan and related Master 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.
17
Nicor Gas Thrift Plan
Form 5500 Schedule H, Part IV,
Line 4(i) - Schedule of Assets (Held at End of Year)
December 31, 2004
Identity of Issue, Borrower
or Similar Party Description of Investment Current Value
- ----------------------------------- ------------------------- -------------
(A) Investments held in Master Trust $ 125,321,506
(A) Participant Notes Receivable Participant loans earning 3,849,349
interest from 5% to 10.5%
maturing from 2005 to 2009
-------------
Total $ 129,170,855
=============
(A) Denotes party-in-interest investment
18
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused these annual reports to be signed on their behalf by the undersigned
hereunto duly authorized.
Nicor Companies Savings Investment Plan,
and Nicor Gas Thrift Plan
Date June 9, 2005 /s/ CLAUDIA J. COLALILLO
---------------- -----------------------------------
Claudia J. Colalillo
Plan Administrator and Senior Vice President
Human Resources and Corporate Communications,
Nicor Inc.
19
Exhibit Index
- -------------
Exhibit
Number Description of Document
- ------- -------------------------------------------------------------------
23.01 Consent of Independent Registered Public Accounting Firm - Nicor
Companies Savings Investment Plan
23.02 Consent of Independent Registered Public Accounting Firm - Nicor Gas
Thrift Plan
20