--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-9779
NIPSCO INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
INDIANA 35-1719974
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
46320
5265 HOHMAN AVENUE (ZIP CODE)
HAMMOND, INDIANA
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 219-853-5200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
COMMON SHARES NEW YORK, CHICAGO AND PACIFIC
PREFERRED SHARE PURCHASE RIGHTS NEW YORK, CHICAGO AND PACIFIC
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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, AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
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. [ ]
AS OF FEBRUARY 28, 1995 64,187,689 COMMON SHARES (NOT INCLUDING 9,704,420
SHARES HELD IN TREASURY), WERE OUTSTANDING. THE AGGREGATE MARKET VALUE OF THE
COMMON SHARES (BASED UPON THE FEBRUARY 28, 1995 CLOSING PRICE OF $31 5/8 ON THE
NEW YORK STOCK EXCHANGE) HELD BY NONAFFILIATES WAS APPROXIMATELY
$2,014,111,000.
DOCUMENTS INCORPORATED BY REFERENCE
1994 NIPSCO INDUSTRIES, INC. ANNUAL REPORT TO SHAREHOLDERS--PARTS I, II AND
IV.
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT DATED MARCH 10, 1995 FOR ANNUAL
MEETING TO BE HELD APRIL 12, 1995--PART III.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PART 1
ITEM 1. BUSINESS
NIPSCO INDUSTRIES, INC. AND ITS SUBSIDIARIES. NIPSCO Industries, Inc.
(Industries) is an Indiana corporation, incorporated on September 22, 1987,
which serves as the holding company for a number of subsidiaries, including
three public utility operating companies: Northern Indiana Public Service
Company (Northern Indiana), Kokomo Gas and Fuel Company (Kokomo Gas) and
Northern Indiana Fuel and Light Company, Inc. (NIFL).
Industries' major non-utility subsidiaries include NIPSCO Development
Company, Inc. (Development), NIPSCO Energy Services, Inc. (Services), and
NIPSCO Capital Markets, Inc. (Capital Markets).
Northern Indiana, Industries' largest and dominant subsidiary, is a public
utility operating company, incorporated in Indiana on August 2, 1912, engaged
in supplying natural gas and electric energy to the public. It operates in 30
counties in the northern part of Indiana, serving an area of about 12,000
square miles with a population of approximately 2,188,000. At December 31,
1994, Northern Indiana served approximately 631,800 customers with gas and
approximately 400,500 with electricity.
Kokomo Gas is a public utility operating company incorporated in Indiana in
1917, engaged in supplying natural gas to the public. It operates in the city
of Kokomo, Indiana and the surrounding area in 6 counties having a population
of approximately 100,000, and served approximately 31,500 customers at December
31, 1994. The Kokomo Gas service territory is contiguous to Northern Indiana's
gas service territory.
NIFL is a public utility operating company incorporated in Indiana in 1906,
engaged in supplying natural gas to the public. Headquartered in Auburn,
Indiana, it operates in 5 counties in the northeast corner of the state having
a population of approximately 66,700, and served approximately 29,800 customers
at December 31, 1994. The NIFL service territory is contiguous to Northern
Indiana's gas service territory.
Development makes various investments, including real estate. Development is
a 95% shareholder in Elm Energy and Recycling (UK) Ltd. (Elm Energy), which
owns and operates a tire-fueled electric generating plant in Wolverhampton,
England, that began operating in late 1993. Services coordinates the energy-
related diversification ventures of Industries and has four wholly-owned
subsidiaries: NIPSCO Fuel Company, Inc. (Fuel) which makes investments in gas
and oil exploration and development ventures; NIPSCO Energy Trading Corp.
(NETCO) which is engaged in gas and other energy brokering businesses; NI-TEX,
Inc. (NI-TEX) which is an intrastate natural gas transmission and supply
company and Crossroads Pipeline Company (Crossroads), a natural gas
transmission company. Capital Markets handles financing for ventures of
Industries other than Northern Indiana.
The majority of the "Business" discussion of this report relates to Northern
Indiana, Kokomo Gas, NIFL and Crossroads (Utilities). See "Segments of
Business" in the Notes to Consolidated Financial Statements and "Selected
Supplemental Information--Gas Statistics and Electric Statistics" in the 1994
Annual Report to Shareholders, which note and information are incorporated by
reference (see Exhibit 13), regarding financial information about industry
segments and classes of customers served.
1
BUSINESS OF NORTHERN INDIANA, KOKOMO GAS AND NIFL.
ELECTRIC OPERATIONS. Northern Indiana owns and operates four coal fired
electric generating stations with net capabilities of 3,179,000 kilowatts (kw),
two hydroelectric generating plants with net capabilities of 10,000 kw, and
four gas fired combustion turbine generating units with net capabilities of
203,000 kw, for a total system net capability of 3,392,000 kw. During the year
ended December 31, 1994, Northern Indiana generated 89.5% and purchased 10.5%
of its electric requirements.
Northern Indiana's 1994 electric control area peak of 2,863,700 kw, which
includes Wabash Valley Power Association, Inc. (WVPA) and Indiana Municipal
Power Agency (IMPA) for which Northern Indiana controls interchange operations,
was set on June 16, 1994. Northern Indiana's all-time control area peak of
2,953,600 kw was set on August 27, 1993. Northern Indiana's 1994 internal peak
load, which excludes WVPA and IMPA, was 2,652,700 kw set on June 16, 1994.
Northern Indiana's all-time internal peak load of 2,736,100 kw was set on
August 27, 1993.
Northern Indiana's electric system is interconnected with that of Indiana
Michigan Power Company, Commonwealth Edison Company, PSI Energy, Inc.,
Consumers Power Company, WVPA, IMPA, and Central Illinois Public Service
Company. Electric energy is purchased from, sold to, or exchanged with these
and other utilities.
Northern Indiana provides WVPA with transmission and distribution service,
operating reserve requirements and capacity deficiency service, and provides
IMPA with transmission service, operating reserve requirements and capacity
deficiency service, in Northern Indiana's control area. Northern Indiana also
engages in sales and services under the interconnection agreements with WVPA
and IMPA.
WVPA provides service to twelve Rural Electric Membership Corporations
(REMC's) located in Northern Indiana's control area. IMPA provides service to
the municipal electric system of the city of Rensselaer located in Northern
Indiana's control area.
Northern Indiana and WVPA have executed a supplemental agreement for unit
peaking capacity and energy. Pursuant to this agreement, which runs from
January 1, 1992, through December, 2001, WVPA purchases 90,000 kw of capacity
per month.
Northern Indiana has full requirements agreements with each of its eight
municipal wholesale customers. These full requirements contracts became
effective October 1, 1987 and extend through January 31, 1998.
Northern Indiana is a member of the East Central Area Reliability
Coordination Agreement (ECAR). ECAR is one of nine regional electric
reliability councils established to coordinate planning and operations of
member companies regionally and nationally.
FUEL SUPPLY. The generating units of Northern Indiana are located at Bailly,
Mitchell, Michigan City and Schahfer Generating Stations. Northern Indiana's
thirteen steam generating units have a net capability of 3,179,000 kw. Coal is
the primary source of fuel for all units, except for three, which utilize
natural gas. In addition, Northern Indiana's four combustion turbine generating
units with a net capability of 203,000 kw are fired by gas. Fuel requirements
for Northern Indiana's generation for 1994 were supplied as follows:
Coal................................................................ 95.6%
Natural Gas......................................................... 4.4%
2
In 1994, Northern Indiana used approximately 7.1 million tons of coal at its
generating stations. Northern Indiana has established a normal level of coal
stock which provides adequate fuel supply during the year under all conditions.
Annual coal requirements for Northern Indiana's electric generating units
through 1999 are estimated to range from 8.2 million tons to 8.5 million tons,
depending from year to year upon anticipated sales levels, scheduled
maintenance and other variables. These requirements are being or will be met in
part under long-term contracts as follows:
MILLION
TONS/YEAR SULFUR CONTENT EXPIRATION
--------- -------------- ----------
1.0 High 1998
Up to 1.0(a) High 1998
1.3(b) Low 2001
1.5(c) Low 1998
1.0(c) Low 1997
1.0(c) Low 1997
--------
(a) Contract calls for requirements up to 1.0 million tons/contract year.
(b) 1.5 million tons in 1996.
(c) Plus or minus 10%/contract year.
The average cost of coal consumed in 1994 was $32.04 per ton or 16.85 mills
per kilowatt-hour (kwh) generated as compared to $32.90 per ton or 16.65 mills
per kwh generated in 1993. Northern Indiana's forecasts indicate that its coal
costs will remain at the current level or be slightly lower over the next two
years.
COAL RESERVES. Included in the previous table of coal contracts is a coal
mining contract with Cyprus Shoshone Coal Corporation (Cyprus) under which
Cyprus is mining Northern Indiana's coal reserves in the Cyprus mine through
the year 2001. The costs of the reserves are being recovered through the rate
making process as the coal is burned to produce electricity.
FUEL ADJUSTMENT CLAUSE. See "Fuel Adjustment Clause" in the Notes to
Consolidated Financial Statements in the 1994 Annual Report to Shareholders,
which note is incorporated herein by reference (see Exhibit 13).
GAS OPERATIONS. Northern Indiana supplies natural gas of about 1,000 Btu per
cubic foot. In a 24-hour period ended January 19, 1994, Northern Indiana's 1994
maximum day sendout was 1,784,972 dekatherms (dth). The maximum day's sendout
of gas to date in 1995, is 1,545,616 dth during the 24-hour period ended at
noon, January 5, 1995.
In 1994, all of the gas supplied by Northern Indiana was transported by
Natural Gas Pipeline Company of America (Natural), Midwestern Gas Transmission
Company (Midwestern), Panhandle Eastern Pipe Line Company (Panhandle),
Trunkline Gas Company (Trunkline), and ANR Pipeline Company (ANR).
Approximately 20% of Northern Indiana's 1994 gas supply was purchased on the
spot market, generally on 30-day agreements.
The average price per dth (including take-or-pay charges and transition
costs) in 1994 decreased to $2.99 from $3.25 in 1993, and the average cost of
purchased gas, after adjustment for take-or-pay charges and transition costs
for transport customers, was $2.90 per dth as compared to $3.21 per dth in
1993.
The transportation and storage rates of Natural, Midwestern, Panhandle,
Trunkline and ANR to Northern Indiana are subject to change in accordance with
rate proceedings filed with the Federal Energy Regulatory Commission (FERC).
3
Agreements have been negotiated with natural gas suppliers to replace former
pipeline supplier contracts pursuant to the requirements of FERC Order No. 636
(See "Rate Matters--FERC Order No. 636" in the Notes to Consolidated Financial
Statements in the 1994 Annual Report to Shareholders, which note is
incorporated herein by reference (see Exhibit 13)). Northern Indiana also has
firm transportation agreements with the pipelines, which allow Northern Indiana
to move third party gas through the pipelines' transmission systems. Northern
Indiana also has producer agreements which allow for the purchase of gas either
from gas marketers or producers.
Northern Indiana has a curtailment plan approved by the Indiana Utility
Regulatory Commission (Commission). Effective on August 11, 1981, the plan
allows unrestricted gas sales by Northern Indiana. In 1994, Northern Indiana
added 9,253 new gas customers. There were no firm sales curtailments in 1994
and none is expected during 1995.
Northern Indiana operates an underground gas storage field at Royal Center,
Indiana, which currently has a storage capacity of 6.75 million dth.
Withdrawals have been made in the 1994-95 winter of up to 79,881 dth per day.
In addition, Northern Indiana and NI-TEX have several gas storage service
agreements which make possible the withdrawal of substantial quantities of gas
from other storage facilities. All of the storage agreements have limitations
on the volume and timing of daily withdrawals. These contracts provide in the
aggregate for approximately 30,179,693 dth of annual stored volume, and allow
for approximately 632,306 dth of maximum daily withdrawal.
Northern Indiana has a liquefied natural gas plant in LaPorte County which is
designed for peak shaving and has the following capacities: maximum storage of
4,000,000 dth; maximum liquefaction rate (gas to liquid), 20,000 dth per day;
maximum vaporization rate (output to distribution system), 400,000 dth per day.
KOKOMO GAS. Kokomo Gas' total gas send-out for 1994 was 8,057,901 dth,
compared to 8,122,208 dth for 1993. Total transportation volumes for industrial
customers in 1994 were 2,998,832 dth, compared to 1,785,329 dth in 1993. Kokomo
Gas purchased gas under term agreements from NI-TEX to satisfy all of its
system requirements in 1994.
NIFL. NIFL's total gas send-out for 1994 was 8,626,056 dth compared to
7,881,513 dth for 1993. Total transportation volumes for industrial customers
in 1994 were 3,745,963 dth, compared to 3,227,853 dth in 1993. NIFL purchased
gas on the spot market from a number of suppliers and also under term
agreements from NI-TEX to satisfy all of its system requirements in 1994.
GAS COST ADJUSTMENT CLAUSE. See "Gas Cost Adjustment Clause" in the Notes to
Consolidated Financial Statements in the 1994 Annual Report to Shareholders,
which note is incorporated herein by reference (see Exhibit 13).
TAKE-OR-PAY PIPELINE GAS COSTS. See "Take-or-Pay Pipeline Gas Costs" in the
Notes to Consolidated Financial Statements in the 1994 Annual Report to
Shareholders, which note is incorporated herein by reference (see Exhibit 13).
FERC ORDER NO. 636. See "FERC Order No. 636" in the Notes to Consolidated
Financial Statements in the 1994 Annual Report to Shareholders, which note is
incorporated herein by reference (see Exhibit 13).
4
BUSINESS OF OTHER SUBSIDIARIES
CAPITAL MARKETS. Capital Markets was formed in 1989 to serve as the funding
agent for ventures of Industries and its subsidiaries other than Northern
Indiana. Capital Markets has a $150 million revolving Credit Agreement, which
provides short-term financing flexibility to Industries and also serves as the
back up instrument for a commercial paper program. As of December 31, 1994,
there were no borrowings outstanding under this agreement. Capital Markets also
has $105 million of money market lines of credit. As of December 31, 1994,
$12.7 million of borrowings were outstanding under these lines of credit. As of
December 31, 1994, Capital Markets had $49.6 million in commercial paper
outstanding, having a weighted average interest rate of 6.18%.
The obligations of Capital Markets are subject to a Support Agreement between
Industries and Capital Markets, under which Industries has committed to make
payments of interest and principal on Capital Markets' securities in the event
of a failure to pay by Capital Markets. Restrictions in the Support Agreement
prohibit recourse on the part of Capital Markets' investors against the stock
and assets of Northern Indiana which are owned by Industries. Under the terms
of the Support Agreement, in addition to the cash flow of cash dividends paid
to Industries by any of its consolidated subsidiaries, the assets of
Industries, other than the stock and assets of Northern Indiana, are available
as recourse to holders of Capital Markets' securities. The carrying value of
those assets, other than Northern Indiana, reflected in the consolidated
financial statements of Industries, was approximately $320.2 million at
December 31, 1994.
DEVELOPMENT. Development looks for partnerships with customers on energy
projects, seeks environmental project opportunities and coordinates the real
estate diversification of Industries.
Development is a 95% shareholder in Elm Energy and Recycling (UK) Ltd. (Elm
Energy), which owns and operates a tire-fueled electric generating plant in
Wolverhampton, England, that began operating in late 1993.
In conjunction with Elm Energy, Development is evaluating similar tires-to-
energy projects in Scotland and Belgium.
In 1994, Development, through a real estate partnership, increased its
investment in multiple- family residential housing developments in Hammond.
Development has similar investments in Fort Wayne and Mishawaka and other joint
projects are being considered in Portage, Gary and other communities in
Northern Indiana's service territories. These projects are part of the
continued commitment by Development to provide high-quality, energy efficient,
affordable housing to the residents of a variety of geographic and economic
regions served by Northern Indiana.
Harbor Coal Company (Harbor Coal), a wholly-owned subsidiary of Development,
has invested in a partnership to finance, construct, own and operate a $65
million pulverized coal injection facility which began commercial operation in
August, 1993. The facility receives raw coal, pulverizes it and delivers it to
Inland Steel Company blast furnaces for use in the operation of its blast
furnaces. Harbor Coal is a 50% partner in the project with an Inland Steel
affiliate. Industries has guaranteed the payment and performance of the
partnership's obligations under a sale and leaseback of a 50% undivided
interest in the facility.
NORTH LAKE ENERGY CORPORATION (NORTH LAKE). In January, 1995, Industries'
subsidiary, North Lake, entered into definitive agreements with Inland Steel
Company to construct a 75-megawatt electric cogeneration facility using by-
product fuels from Inland's blast furnaces. The plant, which will be operated
by Inland, is expected to begin operating in the third quarter of 1996.
5
Industries is evaluating other potential partnerships with Northern Indiana
customers for using waste gases from steelmaking and other processes for power
generation. Low BTU blast furnace gases and other fuels, in amounts which could
fuel up to 250 megawatts of new generation, are produced at companies served by
Northern Indiana.
SERVICES. Services coordinates energy-related diversification and has four
wholly-owned subsidiaries: NETCO, NI-TEX, Fuel and Crossroads.
NETCO. NETCO provides natural gas brokering and transportation management
services to customers within Northern Indiana's service territory. During 1993,
NETCO expanded its transportation management services to include imbalance
exchange services for its customers. Service revenues for 1994 totalled $1.0
million.
NI-TEX. NI-TEX is an intrastate natural gas transmission and supply company
providing gas sales, transportation and storage services. NI-TEX provides
flexible city gate gas supply to Northern Indiana, Kokomo Gas and NIFL under
term contracts. NI-TEX, through joint ventures with industry partners, also
owns natural gas transmission and storage facilities located in Texas. Its
Laredo-Nueces pipeline affiliate transported 17.0 million dth of natural gas in
1994. Its Mid-Tex Gas Storage Company affiliate operates a salt dome gas
storage facility with a Phase I operating capacity of 2.9 billion cubic feet,
and provides contract storage services to Northern Indiana and other third
parties. Phase II, which was partially completed and placed in service for the
1994-95 heating season, is projected to increase total storage capacity to 6.0
billion cubic feet, when fully completed during the fourth quarter of 1995.
Income from NI-TEX sales arrangements, combined with joint venture earnings,
totalled $5.9 million for the year.
Fuel. Fuel is an oil and gas exploration and production company with
activities concentrated in the mid-continent region of the United States and
offshore in the Gulf of Mexico. As of December 31, 1994, $47.5 million has been
invested in exploration and development projects. Fuel's share of estimated
proved reserves at year-end totalled 1.5 million barrels of oil and 25.7
million dth of natural gas.
Crossroads. In April 1993, Crossroads purchased a 20-inch crude-oil pipeline
that extends from the Illinois-Indiana state line east 202 miles to Cygnet,
Ohio. The Crossroads pipeline has been converted from oil to natural gas and
was approved by the Commission as an intrastate pipeline. The line provides:
(1) access to major gas supplies in the United States; (2) enhanced ability to
negotiate for gas supplies at the most competitive price; (3) a northern hub in
the Midwest gas market; and (4) increased reliability for customers in extreme
weather conditions such as those that occurred in January 1994. Crossroads was
in operation during 1994, generating operating revenues of $1.8 million.
Crossroads currently is seeking certification from the FERC to become an
interstate pipeline with service extending into Ohio.
TRIUMPH NATURAL GAS, INC. (TRIUMPH). Services owns a 51% interest in Triumph,
a Dallas-based natural gas marketing company, specializing in the purchase,
transportation and sale of natural gas to utility, industrial and commercial
customers in the upper midwest region of the U.S. Triumph also owns an interest
in a gas gathering system in Oklahoma.
On October 10, 1994, Services, in its capacity as majority stockholder,
reconstituted the Board of Directors of Triumph and took control of the
operations of Triumph. New management has actively solicited offers from
interested buyers of Triumph and potential merger partners with Triumph. Based
upon expressions of interest received, Services expects to consummate the
disposition of its interest in Triumph during the first half of 1995.
6
REGULATION
Holding Company Act. Industries is exempt from registration with the
Securities and Exchange Commission (SEC) as a "registered holding company"
under the Public Utility Holding Company Act of 1935, as amended (Holding
Company Act). However, prior approval of the SEC is required under the Holding
Company Act if Industries proposes to acquire, directly or indirectly, any
securities of other public utility companies. There may also be limits on the
extent to which Industries and its non-utility subsidiaries can enter into
businesses which are not "functionally related" to the electric and gas
businesses without raising questions about Industries' exempt status under the
Holding Company Act. SEC guidelines established in prior decisions of the SEC
require Industries to remain engaged primarily and predominantly in the
electric and gas businesses and to limit the size of its activities outside of
such businesses relative to Industries as a whole.
Industries has no present intention of becoming a registered holding company
subject to regulation by the SEC under the Holding Company Act.
Indiana Utility Regulatory Commission. Northern Indiana and Industries have
been advised by their counsel that Industries will not be subject to regulation
by the Commission as long as it is not a public utility. Under existing law,
Industries and its non-utility subsidiaries are subject to Commission
regulation with respect to transactions and contracts with the Utilities, and
are subject to certain reporting and information access requirements under
Indiana law.
The Utilities are subject to regulation by the Commission as to rates,
service, accounts, issuance of securities, and in other respects. See "Rate
Matters" in the Notes to Consolidated Financial Statements in the 1994 Annual
Report to Shareholders, which note is incorporated herein by reference (see
Exhibit 13). The Utilities are also subject to limited regulation by local
public authorities.
Federal Energy Regulatory Commission. Industries is not regulated by the
FERC, but any subsidiary, including Northern Indiana, that engages in FERC
jurisdictional sales or activities will continue to be subject to such
regulation.
Northern Indiana's restructuring under Industries was approved by a February
29, 1988 order of the FERC. The FERC's February 29, 1988 order is conditioned
upon the FERC's continuing authority to examine the books and records of
Industries and its subsidiaries, upon further order of the FERC, and to make
such supplemental orders, for good cause, as it may find necessary or
appropriate regarding the restructuring.
In 1994, about 2% of Northern Indiana's electric revenues were derived from
electric service it furnished at wholesale in interstate commerce to other
utility companies, municipalities and WVPA (see "Item 1. Business--Electric
Operations" regarding WVPA). Northern Indiana's wholesale rates and operations
are subject to the jurisdiction of the FERC. The jurisdiction of the FERC does
not extend to the issuance of securities by Northern Indiana since it is a
public utility organized and operating in the State of Indiana, under the laws
of which its security issues are regulated by the Commission. The FERC on
October 21, 1954, declared Northern Indiana exempt from the provisions of the
Natural Gas Act. Kokomo Gas, NIFL and Crossroads are also exempt from the
provisions of the Natural Gas Act.
RATE MATTERS. For information regarding Northern Indiana's gas rates, and
the Utilities' take-or-pay pipeline gas costs and gas transition costs, see
"Take-or-Pay Pipeline Gas Costs" and "FERC Order No. 636" in the Notes to
Consolidated Financial Statements in the 1994 Annual Report to Shareholders,
which notes are incorporated herein by reference (see Exhibit 13).
7
CONSTRUCTION BUDGET. Northern Indiana's 1995-99 construction budget
(including allowance for funds used during construction) is estimated at
approximately $774 million, including $175 million in 1995, $173 million in
1996, $148 million in 1997, $139 million in 1998 and $139 million in 1999.
Northern Indiana's construction estimates include adjustments for anticipated
inflation. No new electric generating units are planned in the 1995-99 budget.
Northern Indiana does not have, and has no plans to construct, a nuclear
generating unit.
COMPETITION. In municipalities where Northern Indiana renders electric
service to the general public as a public utility, no other utility renders
electric or gas service, except in Angola, DeMotte, Rome City, Wanatah and
Waterloo. In certain municipalities where electric service is supplied by
Northern Indiana, NIFL provides competing gas utility service. In localities
where Northern Indiana renders gas service only, it competes with electric
utilities, municipal or private, for the business for which they render
alternative electric service.
Kokomo Gas and NIFL service territories are contiguous to Northern Indiana's
gas service territory, but Northern Indiana, Kokomo Gas and NIFL do not compete
for any of the same customers. Kokomo Gas and NIFL compete with other electric
utilities serving customers in their respective service territories.
All electric service territories within the State of Indiana are assigned to
the existing suppliers, and boundaries of new territories outside existing
municipalities are assigned to the utility having the nearest existing electric
distribution lines. Only existing municipal electric utilities may expand their
service areas and then only into areas that have been annexed by the
municipality, subject to the approval of the Commission and certain other
conditions. Northern Indiana makes no representation as to the possible effect
upon its business of present or future competition by private or municipal
utilities or governmental agencies, instrumentalities or authorities within the
territory now served.
Northern Indiana is also subject to competition for gas sales to industrial
customers through the ability of these customers, under Northern Indiana's rate
provisions, to make their own purchases of gas and have Northern Indiana
transport the gas to them. During 1994, gas transportation represented 60% of
Northern Indiana's total gas sendout.
Indiana law requires Commission approval before a gas customer of a utility
may bypass the utility and make other arrangements for gas service. Any entity
which transports gas from outside Indiana for direct sale or delivery to itself
or other end-users within the state will be considered a public utility and
must obtain a necessity certificate from the Commission in order to engage in
such activities.
EMPLOYEE RELATIONS. Northern Indiana had 4,236 employees at December 31,
1994. Approximately 65% of the Company's employees (physical and clerical
workers) are represented by two local unions of the United Steelworkers of
America, AFL-CIO-CLC. Effective June 1, 1993, the bargaining unit employees
ratified new four-year agreements which continue until June 1, 1997. These
agreements provide for base wage increases of two percent in 1993, three
percent in 1994 and 1995, and three and one-half percent in 1996. Additional
economic provisions include an early signing bonus of four percent and a
variable compensation plan linked to improvements in productivity. Certain
officers of Northern Indiana are also officers of Industries. Industries
currently has 50 employees in its diversified operations.
Kokomo Gas had 72 full-time employees at December 31, 1994. Of these, 52
employees are represented by the Oil, Chemical and Atomic Workers International
Union, AFL-CIO. New collective bargaining agreements covering these employees
were negotiated in early 1995 and will expire February 15, 1998.
8
NIFL had 83 full-time employees at December 31, 1994, none of whom is
represented by a union.
ENVIRONMENTAL MATTERS. The Utilities are subject to regulation with regard
to environmental matters by various federal, state and local authorities. The
Utilities cannot forecast the effect of all such regulation upon their
generating, transmission or other facilities, or their operations. The
Utilities intend to comply with all applicable governmental requirements but
reserve the right to contest any such requirements they deem to be
unreasonable, impossible to comply with, otherwise invalid or contrary to the
public interest.
The application of federal and state restrictions to protect the
environment, including but not limited to those hereinafter described,
involves or may involve review, certification or issuance of permits by
various federal, state and local authorities. Such restrictions, particularly
in regard to emissions into the air and water, and disposal of solid wastes,
may impact the operation of Northern Indiana's facilities, and may also
require substantial investments.
Northern Indiana's total capital expenditures from January 1, 1990, through
December 31, 1994, for pollution control facilities were approximately $102
million and were financed in part by the sale of Pollution Control Notes and
Bonds--Jasper County. Northern Indiana anticipates expenditures of
approximately $38 million for pollution control equipment in the 1995-99
period which includes anticipated expenditures of $6 million in 1995 and $10
million in 1996.
AIR. The Indiana Department of Environmental Management (IDEM) Office of Air
Management has submitted to the U.S. Environmental Protection Agency (EPA) a
State Implementation Plan (SIP) in accordance with the requirements of the
Clean Air Act Amendments of 1977.
Attainment-Nonattainment. Under the Clean Air Act Amendments of 1977, the
State has identified areas which are in compliance with the National Ambient
Air Quality Standards (NAAQS) (attainment areas) and areas that are not in
compliance with respect to the sulfur dioxide, particulate matter and other
pollutant standards established by NAAQS (nonattainment areas). Portions of
Lake, Porter and LaPorte Counties in which Northern Indiana operates electric
generating facilities remain designated as nonattainment areas for sulfur
dioxide. Control plans for each county are being implemented. Any reductions
in emissions of sulfur dioxide required to be made by Northern Indiana have
been made, and Northern Indiana anticipates no increased costs as a result of
the implementation of the control plans for Lake, Porter and LaPorte Counties.
Lake County, Indiana, is designated as a nonattainment area for particulate
or PM-10. The State of Indiana promulgated a new PM-10 SIP rule, which became
effective on June 11, 1993. The rule requires reduced opacity and mass
emissions limits at Dean H. Mitchell Station as well as the establishment of a
fugitive dust control and continuous compliance plans. Northern Indiana
invested $2.8 million to rebuild the Unit 5 electrostatic precipitator during
1993 to help meet the new PM-10 emission limits. In order to improve fugitive
dust control, during 1994 Mitchell Station installed a water spray dust
suppression system to minimize emissions from the coal pile and coal unloading
areas. Porter County has been determined to have an unclassified status for
PM-10. According to state requirements, the area will be monitored for PM-10
impacts to determine the appropriate classification with respect to the NAAQS.
All other counties where Northern Indiana operates electric production
facilities have an unclassified status for PM-10.
Under Title I of the Clean Air Act Amendments of 1990 (CAAA), Lake and
Porter Counties are classified as severe nonattainment areas for ozone.
Passage of the CAAA results in new provisions applicable to mobile and
stationary sources in Lake and Porter Counties. Transportation control
measures required by the Employee Commute Options (ECO) rules will affect
seven Northern Indiana facilities by late 1996. These measures will include
plans to reduce the number
9
of vehicles used by employees during their daily commutes to work and programs
that promote the use of alternative fuel vehicles. Control measures requiring
reduction of emissions of nitrogen oxides from the Mitchell and Bailly
Generating Stations as a consequence of the Lake Michigan Ozone Control Program
have yet to be determined. Northern Indiana is evaluating potential least-cost
methods to reduce emissions of nitrogen oxides from the generating stations.
Northern Indiana cannot determine the cost impact of the future provisions.
Acid Rain. Title IV of the CAAA addresses the acid rain issue by targeting
large sources of sulfur dioxide and nitrogen oxides for significant reductions.
The core acid rain rules for sulfur dioxide were promulgated by the EPA January
11, 1993. As required by the regulations, Bailly Units 7 and 8 and Michigan
City Unit 12 reduced their sulfur dioxide emissions below 2.5 pounds per
million British thermal units (lbs/mmBtu) by January 1, 1995. These units,
along with the remainder of Northern Indiana's coal-fired units, are required
to reduce their sulfur dioxide emissions below 1.2 lbs/mmBtu by January 1,
2000.
Presently, all of Northern Indiana's eleven coal-fired generating units
utilize low sulfur fuel or flue gas desulfurization units to control sulfur
dioxide emissions below the 1.2 lbs/mmBtu level.
The EPA approved Northern Indiana's Acid Rain permits for the Bailly and
Michigan City Generating Stations on August 31, 1993. The Phase I Acid Rain
permits for the stations are effective from January 1, 1995 through December
31, 1999. One component of the permit is the Phase I extension plan for Bailly.
Northern Indiana was eligible for and received the extension because of the
construction and operation of the Bailly scrubber. This extension plan
allocates additional allowances above the basic allowances applicable to Bailly
and Michigan City Generating Stations.
Northern Indiana estimates that total costs of compliance with the CAAA
sulfur dioxide regulations will impact electric rates by less than 5% in the
future.
Additional Air Issues. The CAAA contain provisions that could lead to
limitations on emissions of nitrogen oxides and hazardous air pollutants which
may require significant capital expenditures for control of these emissions.
Northern Indiana is evaluating a nitrogen oxide control program to meet future
requirements. Northern Indiana cannot predict the costs of complying with CAAA
requirements, but it believes that any such mandated costs would be recoverable
through the rate making process.
The EPA has promulgated a permit program to meet the requirements of Title V
of the CAAA. The IDEM, on November 3, 1993, proposed an Air Operating permit
program to meet the requirements of Title V to the Air Pollution Control Board.
Indiana's Air Pollution Control Board adopted rules to implement the Title V
permit program on March 10, 1994. These operating permit rules, including a new
fee schedule, became effective in Indiana on June 24, 1994. Indiana submitted
the Title V rules to EPA for approval in August of 1994.
Water. The Clean Water Act, as amended, subjects point source dischargers to
technology and water quality based controls through the National Pollution
Discharge Elimination System (NPDES) permit program. Northern Indiana is
required to have NPDES permits for discharges from its generating stations into
the waters of the United States. The IDEM Office of Water Management has issued
renewal NPDES permits effective as follows: Schahfer Station, November 1, 1993;
Mitchell Station, November 1, 1993; and Michigan City Generating Station,
November 1, 1993. The renewed Bailly Station NPDES permit is expected to be
issued in 1995. Northern Indiana received NPDES permit modifications for
intermittent chemical treatment of the main discharge at the Mitchell and
Michigan City Stations for zebra mussel control. Bailly Station
10
utilizes thermal treatment in its water systems to control zebra mussels.
Schahfer Station has not presently experienced operational impacts due to zebra
mussels. Rather, Schahfer Station has experienced equipment problems due to an
asiatic clam infestation. Alternate forms of control are being investigated by
Northern Indiana in an effort to prevent any impact on plant operations
relating to these infestations, while also minimizing the environmental impact
of the controls.
Superfund Sites. Northern Indiana has received notices from the EPA that it
is a "potentially responsible party" (PRP) under the Comprehensive
Environmental Response Compensation and Liability Act (CERCLA) and the
Superfund Amendment and Reauthorization Act (SARA) and may be required to share
in the cost of cleanup of several waste disposal sites identified by the EPA.
The sites are in various stages of investigation and analysis and remediation.
At each of the sites Northern Indiana is one of several PRPs, and it is
expected that remedial costs, as provided under CERCLA and SARA, will be shared
among them. At some sites Northern Indiana and/or the other named PRPs are
presently working with the EPA to clean up the site and avoid the imposition of
fines or added costs. While all of the remedial costs at these sites are not
determinable, Northern Indiana's analysis indicates its share of such costs
with other PRPs should not have a significant impact on the results of future
operations.
Manufactured Gas Plant Sites. The Utilities have instituted a program to
investigate former manufactured gas plants where one of them is the current or
former owner. The Utilities have identified twenty-seven of these sites and
made visual inspections of these sites. The Utilities have conducted initial
samplings at eight sites. Follow-up investigations have been conducted at three
sites and potential remedial measures are being evaluated. The Utilities will
continue their program to assess sites during 1995. During the follow-up
investigation of the former manufactured gas plant in Elkhart, Indiana,
Northern Indiana noted the presence of hydrocarbons in the Elkhart River.
Northern Indiana reported this finding to IDEM and the EPA. Northern Indiana is
evaluating this site to determine what remedial measures, if any, may be
needed.
Northern Indiana was notified by IDEM of the release of a petroleum substance
into the St. Mary's River in Fort Wayne, Indiana, from the site of a former
manufactured gas plant formerly owned by Northern Indiana. In cooperation with
IDEM, Northern Indiana has taken steps to investigate and contain the
substance. Northern Indiana has remediated part of the Fort Wayne site. The
remainder of the site is being evaluated to determine what future remediation
measures, if any, may be needed.
Northern Indiana was notified by Indiana Gas Company, Inc. (Indiana Gas) that
the site of a former manufactured gas plant in Lafayette, Indiana, formerly
owned by Northern Indiana, was being investigated and partially remediated by
Indiana Gas pursuant to an administrative order issued by IDEM. Northern
Indiana is investigating its potential liability and evaluating appropriate
action.
The Utilities have an ongoing program to remain aware of laws and regulations
involved with hazardous waste. It is the Utilities' intent to continue to
evaluate their facilities and properties with respect to these rules and
identify any sites that would require corrective action.
Electric And Magnetic Fields. The possibility that exposure to electric and
magnetic fields emanating from power lines, household appliances and other
electric sources may result in adverse health effects has been the subject of
increased public, governmental and media attention. A considerable amount of
scientific research has been conducted on this topic without definitive
results. Research is continuing to resolve scientific uncertainties.
----------------
It is not possible to predict the scope, enforceability or financial impact
of other environmental regulations or standards which may be established in the
future.
11
ITEM 2. PROPERTIES.
The physical properties of the Utilities are located in the State of Indiana.
Crossroads owns a 202-mile natural gas pipeline running from northwest Indiana
to Cygnet, Ohio. Only the Indiana portion of the line is presently in service
as an intrastate gas pipeline.
The only significant properties owned by other subsidiaries of Industries
are: the Southlake Complex, a 325,000 square foot office building in
Merrillville, Indiana, leased to Northern Indiana and owned by Development; a
36-mile intrastate natural gas pipeline, located in southern Texas and half-
owned by NI-TEX, Inc.; a golf course and surrounding residential development in
Chesterton, Indiana, owned by Lake Erie Land Company (a subsidiary of
Development); a waste-to-energy generating plant in Wolverhampton, England
owned by Elm Energy; and commercial real estate joint ventures, half-owned by
KOGAF Enterprises, (a subsidiary of Development) located in Kokomo, Indiana.
ELECTRIC. Northern Indiana owns and operates four coal fired electric
generating stations with net capabilities of 3,179,000 kw, two hydroelectric
generating plants with net capabilities of 10,000 kw and four gas fired
combustion turbine generating units with net capabilities of 203,000 kw, for a
total system net capability of 3,392,000 kw. During the year ended December 31,
1994, Northern Indiana generated 89.5% and purchased 10.5% of its electric
requirements.
Northern Indiana has 292 substations with an aggregate transformer capacity
of 22,575,000 kva. Its transmission system with voltages from 34,500 to 345,000
consists of 3,049 circuit miles of line, of which 2,072 miles are on wood
poles, 822 miles are on steel towers, 134 miles are on steel poles, 19 miles
are on concrete poles and 2 miles are in underground conduits. The electric
distribution system extends into 21 counties and consists of 7,684 circuit
miles of overhead and 1,193 cable miles of underground primary distribution
lines operating at various voltages from 2,400 to 12,500 volts. Of 313,019
poles on which Northern Indiana has transmission and distribution circuits,
about 48,949 poles are owned by other utilities. Northern Indiana has
distribution transformers having an aggregate capacity of 10,597,576 kva and
425,418 electric watt-hour meters.
GAS. Northern Indiana has an underground storage field at Royal Center and a
liquefied natural gas plant in LaPorte County both of which are described under
"Item 1. Business--Gas Operations." Northern Indiana has 12,854 miles of gas
mains.
Kokomo Gas has a liquified natural gas plant in Howard County which has the
following capacities: maximum storage of 400,000 mcf; maximum liquefaction rate
(gas to liquid), 2,850 mcf per day; maximum vaporization rate (output to
distribution system), 30,000 mcf per day. Kokomo Gas also has a gas holder with
a storage capacity of 12,000 mcf. Kokomo Gas has 719 miles of gas mains.
NIFL has 751 miles of gas mains.
OTHER PROPERTIES. Northern Indiana owns offices and service buildings,
salesrooms, garages, repair shops, motor vehicles, construction equipment and
tools, and office furniture and equipment, and also leases offices in various
localities. It also owns miscellaneous parcels of real estate not now used in
utility operations.
DONATION OF PROPERTY. On January 5, 1995, Northern Indiana completed the
planned donation of approximately 2,150 acres of land, including 60 miles of
lake and river frontage, to the Shafer and Freeman Lakes Environmental
Conservation Corporation (a not-for-profit organization), the State of Indiana
Department of Natural Resources, and the Indiana Natural Resources Foundation.
The property frames and includes the resort areas of Lake Shafer and Lake
Freeman in White and Carroll Counties, near the cities of Monticello and Delphi
in central Indiana.
12
Northern Indiana acquired the property in 1944 as part of the purchase of dams
and two small hydroelectric plants and has maintained the area since that time.
Northern Indiana donated this property to ensure the land is managed to enhance
its preservation and recreational value. The dams and hydroelectric plants are
being retained for Northern Indiana operations.
CHARACTER OF OWNERSHIP. The properties of Northern Indiana are subject to the
lien of its First Mortgage Indenture. The principal offices and properties are
held in fee and are free from other encumbrances, subject to minor exceptions,
none of which is of such a nature as substantially to impair the usefulness to
Northern Indiana of such properties. Many of the offices in the various
communities served are occupied by Northern Indiana under leases. All
properties are subject to liens for taxes, assessments and undetermined charges
(if any) incidental to construction, which it is Northern Indiana's practice
regularly to pay, as and when due, unless contested in good faith. In general,
the electric and gas lines and mains are located on land not owned in fee but
are covered by necessary consents of various governmental authorities or by
appropriate rights obtained from owners of private property. These consents and
rights are deemed adequate for the purposes for which they are being used.
Northern Indiana does not, however, generally have specific easements from the
owners of the property adjacent to public highways over, upon or under which
its electric and gas lines are located. At the time each of the principal
properties was purchased a title search was made. In general, no examination
of titles as to rights-of-way for electric and gas lines and mains was made,
other than examination, in certain cases, to verify the grantors' ownership and
the lien status thereof.
ITEM 3. LEGAL PROCEEDINGS.
Industries and Northern Indiana are parties to various pending proceedings,
including suits and claims against them for personal injury, death and property
damage, but, in the opinion of their counsel, the nature of such proceedings
and suits, and the amounts involved, do not depart from the ordinary routine
litigation and proceedings incidental to the kind of business conducted by
Northern Indiana, except as set forth above under "Item 1. Business--
Environmental Matters," and as described under the captions "Pending Tax
Matter" and "Environmental Matters" in the Notes to Consolidated Financial
Statements in the 1994 Annual Report to Shareholders, which notes are
incorporated herein by reference (see Exhibit 13). To the knowledge of
Industries no other material legal proceedings against Industries, Northern
Indiana or their subsidiaries are contemplated by governmental authorities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
13
SUPPLEMENTAL ITEM--EXECUTIVE OFFICERS OF THE REGISTRANT.
DATE OF ASSUM-
ING
PRESENT POSI-
NAME AGE OFFICE TION
---- --- ------ --------------
Gary L. Neale 55 Chairman, President, Chief March 1, 1993
Executive Officer and Director
Stephen P. Adik 51 Executive Vice President, Chief January 1, 1994
Financial Officer and
Treasurer
Patrick J. Mulchay 53 Executive Vice President, Chief January 1, 1994
Operating Officer, Electric
Jeffrey W. Yundt 49 Executive Vice President, Chief January 1, 1994
Operating Officer, Gas
William R. Elliott 50 Vice President, Subsidiary Operations, June 1, 1994
Electric
Owen C. Johnson, Jr. 48 Vice President, Human January 1, 1994
Resources
David A. Kelly 56 Vice President, Real January 1, 1994
Estate and Taxes
Jerry M. Springer 62 Controller and Assistant Secretary April 13, 1994
Dennis E. Senchak 49 Assistant Treasurer January 1, 1994
Nina M. Rausch 51 Secretary July 1, 1992
Throughout the past five years, each of the executive officers of Industries
has been continuously active in the business of Industries or Northern Indiana
except as follows: Prior to July 30, 1990, Owen C. Johnson, Jr. was Senior
Vice President, Administration of LIT America,
Inc. and prior to December 31, 1991, David A. Kelly was Partner, Tax Division
of Arthur
Andersen LLP.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS.
Industries' common shares are listed and traded on the New York, Chicago and
Pacific stock exchanges. The table below indicates the high and low sales
price of Industries' common shares, on the composite tape, during the periods
indicated.
1994 1993
------------- -------------
HIGH LOW HIGH LOW
------ ------ ------ ------
First Quarter...... 33 29 1/8 30 1/4 26 1/8
Second Quarter..... 32 7/8 28 3/4 32 7/8 29 1/8
Third Quarter...... 30 1/4 26 1/8 34 7/8 31 5/8
Fourth Quarter..... 29 7/8 26 3/8 34 1/4 30 1/2
As of February 28, 1995, Industries had 38,968 common shareholders of record.
The policy of the Board of Directors has been to declare dividends on a
quarterly basis payable on or about the 20th day of February, May, August and
November. Industries paid quarterly common dividends of $0.33 per share during
1993; and quarterly common dividends of $0.36 per share during 1994. At its
December 16, 1994 meeting Industries' Board of Directors increased the
quarterly common dividend to $0.39 per share, payable February 17, 1995.
14
Holders of Industries' common shares will be entitled to receive dividends
when, as and if declared by the Board of Directors out of funds legally
available therefor. Although the Board of Directors of Industries currently
intends to consider the payment of regular quarterly cash dividends on common
shares, the timing and amount of future dividends will depend on the earnings
of Northern Indiana and other subsidiaries, their financial condition, cash
requirements, any restrictions in financing agreements and other factors deemed
relevant by the Board of Directors. During the next few years, it is expected
that the great majority of earnings available for distribution of dividends
will depend upon dividends paid to Industries by Northern Indiana.
The following limitations on payment of dividends and issuance of preferred
stock apply to Northern Indiana:
When any bonds are outstanding under its First Mortgage Indenture, Northern
Indiana may not pay cash dividends on its stock (other than preferred or
preference stock) or purchase or retire common shares, except out of earned
surplus or net profits computed as required under the provisions of the
maintenance and renewal fund. At December 31, 1994, Northern Indiana had
approximately $145.3 million of retained earnings (earned surplus) available
for the payment of dividends. Future common share dividends by Northern Indiana
will depend upon adequate retained earnings, adequate future earnings and the
absence of adverse developments.
So long as any shares of Northern Indiana's cumulative preferred stock are
outstanding, no cash dividends shall be paid on its common shares in excess of
75% of the net income available therefor for the preceding calendar year unless
the aggregate of the capital applicable to stocks subordinate as to assets and
dividends to the cumulative preferred stock plus the surplus, after giving
effect to such dividends, would equal or exceed 25% of the sum of all
obligations evidenced by bonds, notes, debentures or other securities, plus the
total capital and surplus. At December 31, 1994, the sum of the capital
applicable to stocks subordinate to the cumulative preferred stock plus the
surplus was equal to 40% of the total capitalization including surplus.
In connection with the foregoing discussion, see "Common Share Dividend" in
the Notes to Consolidated Financial Statements in the 1994 Annual Report to
Shareholders, which note is incorporated herein by reference (see Exhibit 13).
ITEM 6. SELECTED FINANCIAL DATA.
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
Operating revenues
(000's)................ $1,676,401 $1,677,872 $1,582,356 $1,535,161 $1,520,995
Net income (000's)...... $ 163,987 $ 156,140 $ 136,648 $ 133,388 $ 125,361
Earnings per average
common share .......... $2.48 $2.31 $2.00 $1.94 $1.81
Total assets (000's).... $3,944,543 $3,912,324 $3,807,941 $3,647,557 $3,625,181
Long-term obligations
and redeemable pre-
ferred stock (000's)... $1,281,395 $1,295,962 $1,160,122 $1,157,686 $1,260,040
Cash dividends declared
per common share....... $1.47 $1.35 $1.26 $1.18 $1.07
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Information regarding results of operations, liquidity and capital resources,
environmental matters and competition is reported in the 1994 Annual Report to
Shareholders under "Management's Discussion and Analysis of Financial Condition
and Results of Operations," which information is incorporated herein by
reference (see Exhibit 13).
15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following Consolidated Financial Statements and Supplementary Data are
included in the 1994 Annual Report to Shareholders and are hereby incorporated
by reference and made a part of this report (see Exhibit 13).
(1) Consolidated Financial Statements--
Consolidated Statement of Income for the years ended December 31,
1994, 1993 and 1992
Consolidated Balance Sheet at December 31, 1994 and 1993
Consolidated Statement of Capitalization at December 31, 1994 and
1993
Consolidated Statement of Long-term Debt at December 31, 1994 and
1993
Consolidated Statement of Cash Flows for the years ended December
31, 1994, 1993 and 1992
Consolidated Statement of Common Shareholders' Equity for the
years ended
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
Report of Independent Public Accountants (includes an explanatory
paragraph referring to changes in the methods of accounting for
income taxes and postretirement benefits other than pensions).
(2) Supplementary Data--
Selected Supplemental Information
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding executive officers is included as a supplemental item
at the end of Item 4 of Part I of this Form 10-K.
Information regarding directors is included at pages 2-5 in the Notice of
Annual Meeting and Proxy Statement dated March 10, 1995, for Annual Meeting to
be held April 12, 1995, which information is incorporated herein by reference.
Information regarding compliance with Forms 3, 4 and 5 reporting requirements
is included at page 19 in the Notice of Annual Meeting and Proxy Statement
dated March 10, 1995, for Annual Meeting to be held April 12, 1995, which
information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information regarding executive compensation is included at pages 5-6 and 12-
17 in the Notice of Annual Meeting and Proxy Statement dated March 10, 1995,
for Annual Meeting to be held April 12, 1995, which information is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information regarding security ownership of certain beneficial owners and
management is included at page 6-7 in the Notice of Annual Meeting and Proxy
Statement dated March 10, 1995, for Annual Meeting to be held April 12, 1995,
which information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) (1) The Financial Statements filed herewith as a part of this report on
Form 10-K are listed on the Index to Financial Statements under Item 8 on page
16.
(2) The following is a list of the Financial Statement Schedules filed
herewith as part of this report on Form 10-K:
SCHEDULE PAGE OF
NUMBER DESCRIPTION 1994 10-K
-------- ----------- ---------
I Condensed Financial
Information of
Registrant.............. 18, 19, 20 & 21
Valuation and Qualifying
II Accounts................ 22, 23 & 24
(3)
Exhibits--
The exhibits filed herewith as a part of this report on Form 10-K
are listed on the Exhibit Index included on pages 27--29. Each
management contract or compensatory plan or arrangement of
Industries listed on the Exhibit Index is separately identified by
an asterisk.
(b) Reports on Form 8-K: None.
17
NIPSCO INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEET
DECEMBER 31,
---------------------
1994 1993
---------- ----------
(DOLLARS IN
THOUSANDS)
ASSETS
------
Property:
Property in service.......................................... $ 3,495 $ 2,464
Construction work in progress................................ 20 97
Less: accumulated depreciation............................... 399 266
---------- ----------
Total property........................................... 3,116 2,295
---------- ----------
Investments (principally investments in wholly-owned
subsidiaries)................................................. 1,087,684 1,080,460
---------- ----------
Current Assets:
Cash and cash equivalents.................................... 740 2,371
Amounts receivable from subsidiaries......................... 60,485 60,809
Prepayments.................................................. 7,557 8,522
---------- ----------
Total current assets..................................... 68,782 71,702
---------- ----------
Other (principally notes receivable from associated companies). 172,935 135,947
---------- ----------
$1,332,517 $1,290,404
========== ==========
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common shares................................................ $ 870,930 $ 870,930
Cumulative preferred shares with mandatory redemption
provisions.................................................. 35,000 35,000
Additional paid-in capital................................... 29,657 27,631
Retained earnings............................................ 446,928 380,888
Less: Treasury shares........................................ 237,193 180,212
Unearned compensation...................................... 970 1,684
Currency translation adjustment............................ 1,504 2,881
---------- ----------
Total capitalization..................................... 1,142,848 1,129,672
---------- ----------
Current Liabilities:
Dividends declared on common and preferred stock............. 25,570 24,345
Amounts payable to subsidiaries.............................. 26,304 19,203
Other........................................................ 1,290 2,972
---------- ----------
Total current liabilities................................ 53,164 46,520
---------- ----------
Other (principally notes payable to associated companies)...... 136,505 114,212
---------- ----------
Commitments and Contingencies (Note 3):
$1,332,517 $1,290,404
========== ==========
The accompanying notes to condensed financial statements are an integral part
of this statement.
18
NIPSCO INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
Equity in net earnings of subsidiaries...... $ 167,780 $ 158,222 $ 141,115
---------- ---------- ----------
Other income (deductions):
Administrative and general expense........ (5,560) (6,031) (4,469)
Interest income........................... 11,289 9,576 5,345
Interest expense.......................... (8,741) (9,339) (7,919)
Other, net................................ (1,727) 203 (75)
---------- ---------- ----------
(4,739) (5,591) (7,118)
---------- ---------- ----------
Net income before income taxes.............. 163,041 152,631 133,997
Income taxes................................ (946) (3,509) (2,651)
---------- ---------- ----------
Net income.................................. 163,987 156,140 136,648
Dividend requirements on preferred shares... 3,063 3,063 3,063
---------- ---------- ----------
Balance available for common shareholders... $ 160,924 $ 153,077 $ 133,585
========== ========== ==========
Average common shares outstanding........... 64,820,039 66,136,396 66,715,941
Earnings per average common share........... $ 2.48 $ 2.31 $ 2.00
========== ========== ==========
The accompanying notes to condensed financial statements are an integral part
of this statement.
19
NIPSCO INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31,
----------------------------
1994 1993 1992
-------- -------- --------
(DOLLARS IN THOUSANDS)
Net cash provided by operating activities........ $157,613 $153,788 $133,392
-------- -------- --------
Cash flows used in investing activities:
Purchase of Kokomo Gas and Fuel Co., net of
cash acquired................................. -- -- (43,752)
Purchase of Northern Indiana Fuel and Light
Company, Inc., net of cash acquired........... -- (30,137) --
Capital expenditures........................... (954) (103) (418)
-------- -------- --------
Net cash used in investing activities........ (954) (30,240) (44,170)
-------- -------- --------
Cash flows provided by (used in) financing
activities:
Issuance of common shares...................... 2,060 36,364 53,911
Increase (decrease) in notes payable to
subsidiaries.................................. 21,262 (703) 67,031
Increase in notes receivable from subsidiaries. (26,254) (26,412) (53,768)
Cash dividends paid on common shares........... (93,578) (88,214) (83,379)
Cash dividends paid on preferred shares........ (3,063) (3,063) (3,063)
Acquisition of treasury shares................. (58,717) (40,730) (76,281)
Other.......................................... -- -- (1,467)
-------- -------- --------
Net cash used in financing activities........ (158,290) (122,758) (97,016)
-------- -------- --------
Net increase (decrease) in cash and cash
equivalents..................................... (1,631) 790 (7,794)
Cash and cash equivalents at beginning of year... 2,371 1,581 9,375
-------- -------- --------
Cash and cash equivalents at end of year......... $ 740 $ 2,371 $ 1,581
======== ======== ========
The accompanying notes to condensed financial statements are an integral part
of this statement.
20
NIPSCO INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. DIVIDENDS FROM SUBSIDIARIES
Cash dividends paid to NIPSCO Industries, Inc. (Industries) by its
consolidated subsidiaries were (in thousands of dollars): $174,245, $155,224
and $138,676 in 1994, 1993 and 1992, respectively.
2. SUPPORT AGREEMENT
The obligations of NIPSCO Capital Markets, Inc. (Capital Markets) are subject
to a Support Agreement between Industries and Capital Markets, under which
Industries has committed to make payments of interest and principal on Capital
Markets' securities in the event of a failure to pay by Capital Markets.
Restrictions in the Support Agreement prohibit recourse on the part of Capital
Markets' investors against the stock and assets of Northern Indiana Public
Service Company (Northern Indiana) which are owned by Industries. Under the
terms of the Support Agreement, in addition to the cash flow of cash dividends
paid to Industries by any of its consolidated subsidiaries, the assets of
Industries, other than the stock and assets of Northern Indiana, are available
as recourse to holders of Capital Markets' securities. The carrying value of
those assets other than Northern Indiana, reflected in the consolidated
financial statements of Industries, is approximately $320.2 million at December
31, 1994.
3. CONTINGENCIES
No proceedings against Industries or any of its subsidiaries other than
Northern Indiana are pending or contemplated to the knowledge of Industries.
The Company is a party to various pending proceedings, including suits and
claims against it for personal injury, death and property damage, but, in the
opinion of counsel for Northern Indiana, the nature of such proceedings and
suits, and the amounts involved, do not depart from the routine litigation and
proceedings incident to the kind of business conducted by Northern Indiana.
4. CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1993, Industries adopted Statement of Financial
Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions," and Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes". The adoption of these standards did not have a
significant impact on the condensed financial statements.
--------
See also Notes to Consolidated Financial Statements in the 1994 Annual Report
to Shareholders, which are incorporated herein by reference. (See Exhibit 13).
21
NIPSCO INDUSTRIES, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
TWELVE MONTHS ENDED DECEMBER 31, 1994
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
------ ------- ------------------ ------------ --------
ADDITIONS
------------------ DEDUCTIONS
CHARGED FOR PURPOSES
BALANCE TO CHARGED FOR WHICH BALANCE
JAN. 1, COSTS AND TO OTHER RESERVES DEC. 31,
DESCRIPTION 1994 EXPENSES ACCOUNTS WERE CREATED 1994
----------- ------- --------- -------- ------------ --------
(DOLLARS IN THOUSANDS)
Reserves Deducted in Consoli-
dated Balance Sheet from As-
sets to Which They Apply:
Reserve for accounts receiv-
ables...................... $4,855 $6,918 $-- $6,874 $4,899
Reserve for investments, at
equity..................... $2,500 $ 350 $-- $ -- $2,850
Reserve for investments, at
cost....................... $2,500 $ -- $-- $2,500 $ --
Reserves Classified Under Re-
serve Section of Consoli-
dated Balance Sheet:
Injuries and damages re-
serve...................... $3,994 $3,350 $-- $4,806 $2,538
Miscellaneous operating re-
serves..................... $6,102 $2,620 $-- $1,051 $7,671
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
22
NIPSCO INDUSTRIES, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
TWELVE MONTHS ENDED DECEMBER 31, 1993
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
------ ------- --------------------------- ------------ --------
ADDITIONS
---------------------------
NORTHERN
INDIANA DEDUCTIONS
FUEL AND CHARGED FOR PURPOSES
BALANCE LIGHT TO CHARGED FOR WHICH BALANCE
JAN. 1, COMPANY, COSTS AND TO OTHER RESERVES DEC. 31,
DESCRIPTION 1993 INC.(A) EXPENSES ACCOUNTS WERE CREATED 1993
----------- ------- -------- --------- -------- ------------ --------
(DOLLARS IN THOUSANDS)
Reserves Deducted in
Consolidated Balance
Sheet from Assets to
Which They Apply:
Reserve for accounts
receivables........... $5,121 $ 93 $5,254 $-- $5,613 $4,855
Reserve for invest-
ments, at equity...... $1,200 $-- $2,300 $-- $1,000 $2,500
Reserve for invest-
ments, at cost........ $ -- $-- $2,500 $-- $ -- $2,500
Reserves Classified Un-
der Reserve Section of
Consolidated Balance
Sheet:
Injuries and damages
reserve............... $4,367 $-- $4,450 $-- $4,823 $3,994
Miscellaneous operating
reserves.............. $4,160 $-- $2,066 $-- $ 124 $6,102
(a) Northern Indiana Fuel and Light Company, Inc. purchased on March 31, 1993.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
23
NIPSCO INDUSTRIES, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
TWELVE MONTHS ENDED DECEMBER 31, 1992
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
------ ------- ------------------------------ ------------ --------
ADDITIONS
------------------------------ DEDUCTIONS
CHARGED FOR PURPOSES
BALANCE KOKOMO GAS TO CHARGED FOR WHICH BALANCE
JAN. 1, AND COSTS AND TO OTHER RESERVES DEC. 31,
DESCRIPTION 1992 FUEL CO.(a) EXPENSES ACCOUNTS WERE CREATED 1992
----------- ------- ----------- --------- -------- ------------ --------
(DOLLARS IN THOUSANDS)
Reserves Deducted in
Consolidated Balance
Sheet from Assets to
Which They Apply:
Reserve for accounts
receivables......... $3,387 $ 175 $7,315 $-- $5,756 $5,121
Reserve for invest-
ments, at equity.... $1,200 $ -- $ -- $-- $ -- $1,200
Reserves Classified Un-
der Reserve Section of
Consolidated Balance
Sheet:
Injuries and damages
reserve............... $4,008 $-- $2,975 $-- $2,616 $4,367
Miscellaneous operating
reserves.............. $4,132 $190 $1,582 $-- $1,744 $4,160
(a) Kokomo Gas and Fuel Company purchased on February 10, 1992.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
24
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
NIPSCO Industries, Inc.:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements included in NIPSCO Industries, Inc.'s
annual report to shareholders for the year ended December 31, 1994,
incorporated by reference in this Form 10-K, and have issued our report thereon
dated January 27, 1995. Our audits were made for the purpose of forming an
opinion on those consolidated financial statements taken as a whole. The
schedules listed on Page 17, Item 14(a)(2) are the responsibility of NIPSCO
Industries, Inc.'s management and are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
As discussed in the notes to consolidated financial statements, effective
January 1, 1993, NIPSCO Industries, Inc. and subsidiaries changed their methods
of accounting for income taxes and postretirement benefits other than pensions.
Arthur Andersen LLP
Chicago, Illinois
January 27, 1995
25
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
NIPSCO Industries, Inc.
(Registrant)
March 29, 1995 /s/ Gary L. Neale
Date_______________________________ By_________________________________
Gary L. Neale, Its Chairman and
President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Gary L. Neale
------------------------------------
Gary L. Neale Chairman, President, Principal
Executive Officer and
Director
/s/ Stephen P. Adik
------------------------------------
Stephen P. Adik Executive Vice President and
Principal Financial Officer
/s/ Jerry M. Springer
------------------------------------
Jerry M. Springer Controller and Principal
Accounting Officer
/s/ Steven C. Beering
------------------------------------
Steven C. Beering Director
/s/ Arthur J. Decio
------------------------------------
Arthur J. Decio Director
/s/ Ernestine M. Raclin
------------------------------------
Ernestine M. Raclin Director March 29, 1995
/s/ Denis E. Ribordy
------------------------------------
Denis E. Ribordy Director
/s/ Ian M. Rolland
------------------------------------
Ian M. Rolland Director
/s/ Edmund A. Schroer
------------------------------------
Edmund A. Schroer Director
/s/ John W. Thompson
------------------------------------
John W. Thompson Director
------------------------------------
Robert J. Welsh, Jr. Director
26
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF ITEM PAGE
------- ------------------- ------------
(3.1) Articles of Incorporation of September 22, 1987, and all Articles of
Amendment thereto (incorporated by reference to Exhibit 1 to the
NIPSCO Industries, Inc. Current Report on Form 8-K dated March 25,
1992).
(3.2) Amended By-laws effective May 25, 1993 (incorporated by reference to
Exhibit (3)(ii) to the NIPSCO Industries, Inc. Form 8-K dated July
13, 1993).
(4.1) Indenture dated August 1, 1939 between Registrant and Trustees (in-
corporated by reference to Exhibit 7 to Northern Indiana Public
Service Company ("Northern Indiana") Registration Statement (Regis-
tration No. 2-5178)).
(4.2) Third Supplemental Indenture dated August 1, 1943 (incorporated by
reference to Exhibit 7-C to Northern Indiana Registration Statement
(Registration No. 2-5178)).
(4.3) Seventeenth Supplemental Indenture dated May 15, 1965 (incorporated by
reference to Exhibit 1 to Northern Indiana Current Report on Form 8-K
dated June 8, 1965).
(4.4) Eighteenth Supplemental Indenture dated September 1, 1967 (incorpo-
rated by reference to Exhibit 1 to Northern Indiana Current Report on
Form 8-K dated October 9, 1967).
(4.5) Nineteenth Supplemental Indenture dated October 1, 1968 (incorporated
by reference to Exhibit 1 to Northern Indiana Current Report on Form
8-K dated November 8, 1968).
(4.6) Twenty-third Supplemental Indenture dated March 31, 1972 (incorporated
by reference to Exhibit 2 to Northern Indiana Current Report on Form
8-K dated May 5, 1972).
(4.7) Twenty-fourth Supplemental Indenture dated July 15, 1973 (incorporated
by reference to Exhibit 1 to Northern Indiana Current Report on Form
8-K dated August 7, 1973).
(4.8) Twenty-ninth Supplemental Indenture dated August 15, 1977 (incorpo-
rated by reference to Exhibit 1 to Northern Indiana Current Report on
Quarterly Report on Form 10-Q for the quarter ended September 30,
1977).
(4.9) Thirty-third Supplemental Indenture dated June 1, 1980 (incorporated
by reference to Exhibit 1 to Northern Indiana Quarterly Report on
Form 10-Q for the quarter ended June 30, 1980).
(4.10) Forty-first Supplemental Indenture dated July 1, 1991 (incorporated by
reference to Exhibit 1 to Northern Indiana Current Report on Form 8-K
dated March 25, 1992).
(4.11) Indenture, dated as of March 1, 1988, between Northern Indiana and
Manufacturers Hanover Trust Company, as Trustee (incorporated by
reference to Exhibit 4 to Northern Indiana Registration Statement
(Registration No. 33-44193)).
(4.12) First Supplemental Indenture dated December 1, 1991, between Northern
Indiana and Manufacturers Hanover Trust Company, as Trustee (incor-
porated by reference to Exhibit 4.1 to Northern Indiana Registration
Statement (Registration No. 33-63870)).
27
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF ITEM PAGE
------- ------------------- ------------
(4.13) Memorandum of Agreement with City of Michigan City, Indiana (incorpo-
rated by reference to Exhibit 7 to Northern Indiana Registration
Statement (Registration No. 2-48531)).
(4.14) Financing Agreement No. 1 dated November 1, 1988 with Jasper County,
Indiana regarding $37,000,000 Series 1988A Pollution Control Re-
funding Revenue Bonds. Identical financing agreements between Regis-
trant and Jasper County provide for the issuance of $47,000,000 Se-
ries 1988B, $46,000,000 Series 1988C and $24,000,000 Series 1988D
Pollution Control Refunding Revenue Bonds (incorporated by reference
to Exhibit 8 to Northern Indiana Current Report on Form 8-K dated
March 16, 1989).
(4.15) Financing Agreement dated July 1, 1991, with Jasper County, Indiana
regarding $55,000,000 Series 1991 Collateralized Pollution Control
Refunding Revenue Bonds (incorporated by reference to Exhibit 3 to
Northern Indiana Current Report on Form 8-K dated March 25, 1992).
(4.16) Financing Agreement dated August 1, 1994, with Jasper County, Indiana
regarding $10,000,000 Series 1994A, $18,000,000 Series 1994B and
$41,000,000 Series 1994C Pollution Control Refunding Revenue Bonds
(incorporated by reference to Exhibit 4.16 to Northern Indiana Annual
Report on Form 10-K for year ended December 31, 1994).
(4.17) Rights Agreement between Registrant and Harris Trust and Savings Bank,
dated February 27, 1990 (incorporated by reference to Exhibit 4.1 to
the NIPSCO Industries, Inc. Current Report on Form 8-K dated March 7,
1990).
(10.1) Supplemental Life Insurance Plan effective January 1, 1991 (incorpo-
rated by reference to Exhibit 2 to the NIPSCO Industries, Inc. Cur-
rent Report on Form 8-K dated March 25, 1992).*
(10.2) Executive Deferred Compensation Plan effective December 1, 1990 (in-
corporated by reference to Exhibit 3 to the NIPSCO Industries, Inc.
Current Report on Form 8-K dated March 25, 1992).*
(10.3) Form of Change in Control and Termination Agreements (incorporated by
reference to Exhibit 4 to the NIPSCO Industries, Inc. Current Report
on Form 8-K dated March 25, 1992).*
(10.4) Nonemployee Director Stock Incentive Plan effective February 1, 1992
(incorporated by reference to Exhibit 5 to the NIPSCO Industries,
Inc. Current Report on Form 8-K dated March 25, 1992).*
(10.5) NIPSCO Industries, Inc. Long-Term Incentive Plan (incorporated by ref-
erence to Exhibit 6 to the NIPSCO Industries, Inc. Current Report on
Form 8-K dated March 25, 1992).*
(10.6) Amended and Restated Pension Plan Provisions effective January 1, 1989
(incorporated by reference to Exhibit 17 to Northern Indiana Current
Report on Form 8-K dated March 25, 1992).*
(10.7) NIPSCO Industries, Inc. 1994 Long-Term Incentive Plan.*
(10.8) NIPSCO Industries, Inc. Directors' Charitable Gift Program.*
(11) Computation of Per Share Earnings.
(13) 1994 Annual Report to Shareholders for pages 39-67.
28
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF ITEM PAGE
------- ------------------- ------------
(21) List of Subsidiaries.
(23) Consent of Arthur Andersen LLP.
(99) Amended Articles of Incorporation of Northern Indiana Public Service
Company (incorporated by reference to Exhibit 1 to the Northern In-
diana Current Report of Form 8-K dated May 5, 1982).
--------
* Management contract or compensatory plan arrangement of NIPSCO Industries,
Inc.
29