File No. 001-16189
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
ANNUAL REPORT
PURSUANT TO SECTION 15(d)
of the
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
NiSource Inc.
801 E. 96th Avenue
Merrillville, IN 46410
NORTHERN INDIANA PUBLIC
SERVICE COMPANY BARGAINING
UNIT TAX DEFERRED SAVINGS
PLAN
Financial Statements as of December 31, 2002 and
2001 and for the Year Ended December 31, 2002,
Supplemental Schedule as of December 31, 2002,
and Independent Auditors' Report
NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
TABLE OF CONTENTS
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PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 31, 2002 and 2001 2
Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2002 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULE*:
Form 5500 Schedule H, Line 4i -- Schedule of Assets (Held at End of Year) as of December 31, 2002 10
* Schedules not filed herewith are omitted because of the absence of the
conditions under which they are required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974.
INDEPENDENT AUDITORS' REPORT
To the Administrative Committee of the
Northern Indiana Public Service Company
Bargaining Unit Tax Deferred Savings Plan
Merrillville, Indiana
We have audited the accompanying statements of net assets available for benefits
of the Northern Indiana Public Service Company Bargaining Unit Tax Deferred
Savings Plan (the "Plan") as of December 31, 2002 and 2001, and the related
statement of changes in net assets available for benefits for the year ended
December 31, 2002. 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 auditing standards generally accepted
in the United States of America. 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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2002 and 2001, and the changes in net assets available for benefits for the year
ended December 31, 2002, 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 listed in the
Table of Contents 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 supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audit of the basic 2002 financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic 2002 financial
statements taken as a whole.
DELOITTE & TOUCHE LLP
Indianapolis, Indiana
June 1, 2003
NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2002 AND 2001
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ASSETS 2002 2001
Investments, at fair value:
Mutual funds $47,240,642 $55,055,588
Common stock fund 17,427,431 23,175,532
Money market fund 12,428,479 11,357,733
Participant loans 1,860,286 1,734,161
----------- -----------
Total investments 78,956,838 91,323,014
----------- -----------
Receivables:
Participant contributions 36,259
Employer contributions 3,973
----------- -----------
Total receivables 40,232
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $78,997,070 $91,323,014
=========== ===========
See notes to financial statements.
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NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2002
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ADDITIONS:
Contributions:
Participant $ 5,105,617
Employer 562,790
------------
Total additions 5,668,407
------------
DEDUCTIONS:
Investment income (loss):
Net depreciation in fair value of investments (13,811,061)
Dividends and interest 2,065,568
------------
Investment loss, net (11,745,493)
Benefits paid to participants (6,234,032)
Transfers, net (9,921)
Administrative expenses (4,905)
------------
Total deductions (17,994,351)
------------
NET DECREASE (12,325,944)
NET ASSETS AVAILABLE FOR BENEFITS--Beginning of year 91,323,014
------------
NET ASSETS AVAILABLE FOR BENEFITS--End of year $ 78,997,070
============
See notes to financial statements.
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NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
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1. DESCRIPTION OF PLAN
Northern Indiana Public Service Company (the "Company") is a wholly owned
subsidiary of NiSource Inc. The following description of the Northern
Indiana Public Service Company Bargaining Unit Tax Deferred Savings Plan
("Plan") provides general information regarding the Plan. Participants
should refer to the Plan document for a more complete description of the
Plan's provisions.
GENERAL--The Plan was established effective October 1, 1987. It is a
defined contribution plan available to substantially all active bargaining
unit employees of the Company. It is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"), as amended.
PLAN ADMINISTRATION--The Company serves as administrator and sponsor of
the Plan. NiSource Inc. maintains an administrative committee appointed by
the Board of Directors, which has the responsibility to assist the Company
in administering the Plan. Fidelity Management Trust Company (the
"Trustee") holds all of the Plan's assets and executes all investment
transactions.
CONTRIBUTIONS--Each year, participants may contribute up to 50% of
compensation (as defined in the Plan) on a pre-tax basis and 25% on an
after-tax basis, up to 75% in total. Contributions are subject to certain
limitations. Participants direct the investment of their contributions
into various investment options offered by the Plan. The Plan currently
offers twenty-seven mutual funds, one money market fund and one common
stock fund as investment options for participants.
The Company contributes an amount equal to 1/9th of a participant's
pre-tax contribution that is invested in NiSource Inc. Common Stock Fund.
Employees, age 50 and older, may direct matching NiSource Inc. Common
Stock Funds among any of the funds available in the Plan.
ROLLOVERS FROM OTHER QUALIFIED EMPLOYER PLANS--The Plan allows for
employees to transfer certain of their other qualified employer retirement
plan assets to the Plan. These amounts are reflected in participant
contributions in the accompanying statement of changes in net assets
available for benefits.
PARTICIPANT ACCOUNTS--Each participant's account is credited with the
participant's contribution and allocations of (a) the Company's
contribution and (b) Plan earnings, and charged with an allocation of
certain administrative expenses.
VESTING--Participants are fully vested in their accounts at all times.
PARTICIPANT LOANS--Participants that have participated in the Plan for at
least one year may borrow up to 50% from their accounts a minimum of
$1,000 up to a maximum of $50,000. The loans are secured by the balance in
the participant's account and bear interest at prime rate plus 1% based on
the last day of the previous month they take out the loan. Principal and
interest are paid ratably through payroll deductions over a period not to
exceed five years, unless the loan is to purchase the participant's
primary residence, which allows repayment up to 15 years.
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PAYMENT OF BENEFITS--All amounts distributed from a participant's account
following termination of employment shall be distributed in one lump sum
amount, in cash, or, if elected by the participant or beneficiary, in
shares of NiSource Inc. common stock based on the numbers of whole shares
allocated to the NiSource Inc. Common Stock Fund for the participant. If
the amount payable under the plan to any participant or beneficiary is
less than or equal to $5,000, the committee will direct that such amount
be paid in a lump sum.
TRANSFERS BETWEEN PLANS--Transfers between plans occur when employees
transfer out of the Union but stay with NiSource Inc., which results in a
transfer of any related balances between this Plan and other plans.
Amounts are included in transfers, net on the accompanying statement of
changes in net assets available for benefits.
EMPLOYEE STOCK OWNERSHIP PLAN--Effective January 1, 2002, the NiSource
Inc. Common Stock Fund was changed to operate as an Employee Stock
Ownership Plan (ESOP). As an ESOP, under the terms of this plan,
participants may diversify their investment attributable to employer match
at any time after they reach age 50. Participants may also elect to have
dividends paid to them in cash or reinvested in the fund.
VOTING AND TENDERING RIGHTS OF NISOURCE INC. COMMON STOCK FUND
PARTICIPANTS--Each participant in the NiSource Inc. Common Stock Fund is
entitled to direct the Trustee as to the manner of voting at each meeting
of shareholders, all shares of NiSource Inc. common stock (including
fractional shares) or tendering shares during a tender offer, represented
by the value of the participant's interest in the NiSource Inc. Common
Stock Fund.
RECLASSIFICATIONS--Certain amounts in the 2001 financial statements have
been reclassified to conform with the 2002 presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING--The financial statements of the Plan were prepared
using the accrual basis of accounting.
USE OF ESTIMATES--The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, and changes therein, and
disclosure of contingent assets and liabilities. Actual results could
differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION--The Plan's investments are
stated at fair value. Quoted market prices are used to value investments.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the record date.
PAYMENT OF BENEFITS--Benefits are recorded when paid.
ADMINISTRATIVE EXPENSES--Most administrative expenses of the Plan are paid
by the Company. Certain other expenses of the Plan such as investment
manager and broker fees are paid by the Plan.
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3. INVESTMENTS
The following presents investments that represent 5% or more the Plan's
net assets.
DECEMBER 31,
-----------------------------
2002 2001
* NiSource Inc. Common Stock Fund $17,427,431 $23,175,532
Fidelity Magellan Fund 21,231,977 29,731,611
Fidelity Growth and Income Fund 12,441,723 15,503,649
Fidelity Retirement Money Market Fund 12,428,479 11,357,733
Fidelity Intermediate Bond Fund 6,697,180 5,541,238
* Includes nonparticipant-directed investments
During 2002, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value as follows:
Mutual funds $(11,064,144)
NiSource Inc. Common Stock Fund (2,746,917)
------------
$(13,811,061)
============
The Plan provides for investments in mutual funds and common stock that,
in general, are exposed to various risks, such as interest rate, credit
and overall market volatility risks. Due to the level of risk associated
with certain investment securities, it is reasonably possible that changes
in the values of investment securities will occur in the near term and
that such changes could materially affect the amounts reported in the
accompanying statements of net assets available for benefits.
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4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the assets and the significant components of the changes
in assets relating to the nonparticipant-directed investments is as
follows:
DECEMBER 31,
----------------------------
2002 2001
* Net assets:
NiSource Inc. Common Stock Fund $ 17,427,431 $ 23,175,532
============ ============
YEAR ENDED
DECEMBER 31, 2002
* Changes in net assets:
Participant contributions $ 1,198,019
Employer contributions 526,074
Dividends and interest 1,009,317
Participant loans, net (45,927)
Net depreciation (2,746,917)
Benefits paid to participants (964,437)
Transfers out (1,859)
Fees (2,861)
Net exchanges between investment options (4,719,510)
------------
$ (5,748,101)
============
* Includes participant-directed investments
5. RELATED-PARTY TRANSACTIONS
The Plan invests in NiSource Inc. common stock. Since NiSource Inc. is the
parent of the Company, any investment transactions involving NiSource Inc.
common stock qualify as party-in-interest transactions. Additionally,
certain Plan investments are shares of mutual funds managed by the
Fidelity Management Trust Company. Fidelity Management Trust Company is
the Trustee, as defined by the Plan and therefore, these transactions
qualify as party-in-interest transactions.
6. PLAN TERMINATION
Although it has not expressed any intention to do so, the Company reserves
the right under the Plan document to terminate the Plan at any time,
subject to the provisions of ERISA. In the event of Plan termination, the
rights of each participant to all amounts then credited to his or her
account will continue to be nonforfeitable.
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7. TAX STATUS
The Internal Revenue Service (the "IRS") has determined and informed the
Company by a letter dated January 28, 1997, that the Plan is designed in
accordance with applicable sections of the Internal Revenue Code (the
"IRC"). Although the Plan has been amended since receiving the
determination letter, the Plan administrator believes that the Plan is
designed and is currently being operated in compliance with the applicable
requirements of the IRC. The Plan administrator submitted a letter to the
IRS, dated February 28, 2002, requesting a new determination.
******
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SUPPLEMENTAL SCHEDULE
NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
EIN: 35-0552990, PLAN 003
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS (HELD AT END OF YEAR) AS OF
DECEMBER 31, 2002
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IDENTITY OF ISSUER, DESCRIPTION OF INVESTMENT,
BORROWER, LESSOR, INCLUDING MATURITY DATE, RATE OF INTEREST, FAIR
OR SIMILAR PARTY COLLATERAL AND PAR OR MATURITY VALUE COST VALUE
* NiSource Inc. Common Stock Fund $ 15,032,878 $ 17,427,431
* Fidelity Investments Retirement Money Market Fund ** 12,428,479
* Fidelity Investments Magellan Fund ** 21,231,977
* Fidelity Investments Contrafund ** 228,283
* Fidelity Investments Equity Income Fund ** 170,722
* Fidelity Investments Growth Fund ** 110,176
* Fidelity Investments Growth & Income Fund ** 12,441,723
* Fidelity Investments Intermediate Bond Fund ** 6,697,180
* Fidelity Investments Overseas Fund ** 857,723
* Fidelity Investments Europe Fund ** 4,590
* Fidelity Investments Pacific Basin Fund ** 1,303
* Fidelity Investments Balanced Fund ** 142,273
* Fidelity Investments Puritan Fund ** 833,386
* Fidelity Investments Small Cap Independent Fund ** 522,231
* Fidelity Investments Spartan U.S. Equity Index Fund ** 1,149,558
* Fidelity Investments Freedom Income Fund ** 181,566
* Fidelity Investments Freedom 2010 Fund ** 688,345
* Fidelity Investments Freedom 2020 Fund ** 224,614
* Fidelity Investments Freedom 2030 Fund ** 19,624
* Fidelity Investments Freedom 2040 Fund ** 4,481
PIMCO Investments Total Return Fund (institutional) ** 347,258
PIMCO Investments Long-term Government Fund ** 487,545
PIMCO Investments Low-duration Fund (institutional) ** 67,379
PIMCO Investments StockPLUS Fund (institutional) ** 33,069
Berger Investments SmallCap Value Fund (institutional) ** 525,940
Dreyfus Investments Emerging Leaders Fund ** 123,463
Morgan Stanley Investments U.S. SmallCap Core Fund ** 10,318
Vanguard Investments U.S. Growth Investor Shares Fund ** 58,366
American Funds Investments EuroPacific Growth Fund ** 77,549
* Various Plan participants Participant loans, with interest rates
ranging from 4.75% to 9.5% and maturity
dates ranging from May 9, 2003 to October 24, 2031. ** 1,860,286
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Total assets (held at end of year) $ 78,956,838
=============
* Denotes a party-in-interest
** Cost omitted for participant directed investments
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
By /s/David J. Vajda
-------------------------------------------
Vice President & Treasurer, NiSource Inc.
Member, Administrative Committee
Each of the undersigned, in his capacity as an officer of NiSource Inc., hereby
certifies as required by 18 U.S.C. Section 1350, that, to his knowledge, the
accompanying annual report on Form 11-K of the Northern Indiana Public Service
Company Bargaining Unit Tax Deferred Savings Plan for the fiscal year ended on
December 31, 2002 fully complies with the requirements of 15 U.S.C. Section 78m
and that the information contained in the accompanying annual report fairly
presents, in all material respects, the net assets of the Plan available for
benefits and changes in those net assets.
/s/ Gary L. Neale /s/ Michael W. O'Donnell
- ----------------------------- ----------------------------------
Chairman, President and Executive Vice President and
Chief Executive Officer Chief Financial Officer