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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d)
Of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1999
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
NISOURCE INC.
801 East 86th Avenue
MERRILLVILLE, INDIANA 46410
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Vice
President of Finance and Strategy, who is a Member of the Benefits Committee,
has duly caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
Bay State Gas Company
Savings Plan for Operating Employees
BY: /s/ Scott C. MacDonald
------------------------------------
Vice President, Finance and Strategy
Bay State Gas Company
Date: June 28, 2000
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BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
Financial Statements and Schedule
As of December 31, 1999 and 1998
Together With Auditors' Report
Employer Identification Number 04-3442797
Plan Number 011
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BAY STATE GAS COMPANY
SAVINGS PLAN
FOR OPERATING EMPLOYEES
FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 1999 AND 1998
(EIN: 04-2548120, PLAN 011)
TABLE OF CONTENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
December 31, 1999 and 1998
Statements of Changes in Net Assets Available for Benefits for the Years
Ended December 31, 1999 and 1998
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
SCHEDULE:
Schedule of Assets Held for Investment Purposes as of December 31, 1999
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of
Bay State Gas Company
Savings Plan for Operating Employees:
We have audited the accompanying statement of net assets available for benefits
of the BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES as of December
31, 1999, and the related statement of changes in net assets available for
benefits for the year ended December 31, 1999. These financial statements and
the schedule referred to below are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audit. The financial statements of BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES as of December 31, 1998 were audited by
other auditors whose report dated June 11, 1999 expressed an unqualified opinion
on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. 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 audit provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1999, and the changes in net assets available for benefits for the
year ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedule of assets held for
investment purposes 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. The supplemental schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
June 28, 2000
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BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
(EIN: 04-2548120, PLAN 011)
1999 1998
---- ----
ASSETS:
Investments (Note 3) $20,928,682 $18,569,950
Company contribution receivable 42,050 38,583
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NET ASSETS AVAILABLE FOR BENEFITS $20,970,732 $18,608,533
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The accompanying notes to financial statements and
schedule are an integral part of these statements.
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BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(EIN: 04-2548120, PLAN 011)
1999 1998
---- ----
ADDITIONS:
Investment income-
Interest and dividends $ 842,351 $ 640,377
Net appreciation in investments 65,296 1,415,046
Total investment income 907,647 2,055,423
----------- -----------
Contributions-
Participants 2,382,604 1,847,027
Company 318,539 343,386
Total contributions 2,701,143 2,190,413
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DEDUCTIONS (1,239,435) (947,821)
Benefits paid to participants
Administrative expenses (7,156) (5,572)
----------- -----------
Net increase 2,362,199 3,292,443
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 18,608,533 15,316,090
----------- -----------
End of year $20,970,732 $18,608,533
=========== ===========
The accompanying notes to financial statements and
schedule are an integral part of these statements.
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BAY STATE GAS COMPANY
SAVINGS PLAN
FOR OPERATING EMPLOYEES
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 1999 AND 1998
(EIN: 04-2548120, PLAN 011)
1. DESCRIPTION OF THE PLAN
The following brief description of the Bay State Gas Company Savings Plan
for Operating Employees (the "Plan") is provided for general information
based on the provisions of the Plan in effect on December 31, 1999, and
during the periods covered by the financial statements. Participants
should refer to the Plan document for a more complete description of the
Plan.
GENERAL
The Plan is a defined contribution plan subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"), as amended. The
Plan is available to all employees of the company who are covered by a
collective bargaining agreement between the Company and any union that
specifically provides for participation in the Plan are eligible for
participation.
PLAN ADMINISTRATION
The Bay State Gas Company Benefits Committee (the "Committee"), which is
comprised of three to five individuals selected by the President of the
Company, serves as administrator and sponsor of the Plan as those terms
are used in ERISA. Merrill Lynch Trust Company (the "Trustee") holds all
the Plan's assets and executes all investment transactions.
CONTRIBUTIONS
EMPLOYEE
Participants may designate a percentage of their annual compensation to be
contributed to the Plan on their behalf by entering into a salary
reduction agreement, thereby reducing their compensation by 1% to 15% of
their annual eligible compensation. This compensation reduction was
limited to a maximum amount of $10,000 per year in 1999 and 1998. A
participant's eligible compensation for any given year consists of
straight time wages, including shift differentials, Saturday/Sunday wages,
including premiums, compensation paid or accrued. All overtime, bonuses,
supplementary compensation payments, deferred compensation, retirement
benefits and other forms of nonrecurring compensation are excluded.
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EMPLOYER MATCHING
Company contributions begin on the first day of the next month after
completion of a 12-month eligibility period in which the employee is
credited with at least 1,000 hours of service during that period. The
company makes contributions to the Plan in accordance with the terms of
contracts negotiated with the various unions representing Company
employees. For certain employees, the Company makes no contribution. For
other employees, the Company makes contributions equal to 2.5% to 3.5% of
eligible compensation.
ROLLOVERS TO/FROM OTHER QUALIFIED EMPLOYER PLANS
The Plan allows for employees to transfer certain of their other qualified
employer retirement plan assets to the Plan or to transfer plan assets to
another qualified employer retirement plan. These amounts are reflected in
participant contributions/distributions in the accompanying statements of
changes in net assets available for benefits.
INVESTMENT OPTIONS
There are ten investment alternatives available for the investment of
contributions to the Plan. Participants may invest their contributions to
the Plan in any one or more of the investment funds and may request the
transfer of their contributions among the funds through direct
communication with the Trustee on a daily basis.
VESTING
The interest of a participant or a former participant in all of his or her
contribution accounts, including the Company matching portion, shall at
all times be nonforfeitable and fully vested.
PARTICIPANT LOANS
Loan provisions in the Plan enable participants to borrow against the
tax-deferred balances in their accounts in accordance with the following
guidelines:
Minimum Limit - the minimum amount for any loan is $1,000
Maximum Limit - subject to the legal limit described below, the maximum
amount, including the aggregate outstanding balances of existing Plan
loans, is 100% of the following of the Participant's Accounts in the
priority order as follows: Employee Pre-Tax Account, Employer Match
Account, Prior Company Account, Rollover Account, Prior After-Tax Account.
Legal Maximum Limit - the maximum a Participant may borrow, including the
aggregate outstanding balances of existing Plan loans, is 50% of his or
her vested Account balance, not to exceed $50,000. The $50,000 maximum is
reduced by the Participant's highest aggregate outstanding Plan loan
balance during the 12-month period ending on the day before the Sweep Date
as of which the loan is made.
Maximum Number of Loans - A participant may have a maximum of two loans
outstanding at any given time.
The repayment period may not exceed five years.
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During the 1999 plan year, the interest rate on participant loans range
from 8.75% to 9.5%.
PAYMENT OF BENEFITS
Benefits are recorded when paid. Participant's are entitled to certain
withdrawals from the Plan. Participants should refer to the Plan document
for a more complete description of payment options and requirements.
ADMINISTRATIVE EXPENSES
Certain administrative expenses of the Plan are paid by the Company. Other
expenses of the Plan such as investment manager fees and broker fees are
paid by participants. The Plan charges loan processing fees to the account
of each participant borrowing from the plan.
VOTING RIGHTS OF COMPANY COMMON STOCK FUND PARTICIPANTS
Each participant in the Company 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),
represented by the value of the participant's interest in the Company
Common Stock Fund. For shares which the Trustee receives no voting or
tendering instructions from Participants or Beneficiaries, the
Administrator shall instruct the Trustee with respect to how to vote or
tender such shares and the Trustee shall act with respect to such shares
as instructed.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
METHOD OF ACCOUNTING
The financial statements of the Plan were prepared on the accrual basis of
accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of net assets available for
benefits and changes therein. Actual results could differ from those
estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments in the AIM Constellation Fund, BGI S&P 500 Stock Fund,
LifePath Funds, Company Stock and the Templeton Foreign Fund are stated at
market value. Market values are based on quotations from national
securities exchanges for the various investments as of the close of
business on the last day of the year.
The Stable Value Fund held Guaranteed Investment Contracts ("GICs") that
matured by December 31, 1999. The matured contract amounts were invested
in the Merrill Lynch Income Accumulation Fund. The Merrill Lynch Income
Accumulation Fund, is stated at market value which is based on the fair
value of its underlying securities as follows: GICs and
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synthetic GICs, which are all benefit responsive, are stated at contract
value, publicly traded U.S. Government notes and bonds are stated at
quoted market value and money market securities are stated at cost which
approximates fair value.
Participant loans are valued at cost, which approximates fair value.
Dividend income is recorded on the ex-dividend date. Interest earned on
investments is recorded on the accrual basis.
NET APPRECIATION IN FAIR VALUE OF INVESTMENTS
The net appreciation in fair value of investments consists of realized
gains or losses and unrealized appreciation in the fair value of such
investments.
DISTRIBUTIONS
Benefits paid to participants are based upon the fair value of each
participant's investment account as of the date of distribution.
ADOPTION OF STATEMENT OF POSITION 99-3
The Accounting Standards Executive Committee issued Statement of Position
("SOP") 99-3, "Accounting for and Reporting of Certain Defined
Contribution Plan Investments and Other Disclosure Matters," which
eliminates the requirement for a defined contribution plan to disclose
participant-directed investment programs. SOP 99-3 was adopted for the
1999 financial statements and, as such, the 1998 financial statements have
been reclassified to eliminate the participant-directed fund investment
program disclosures.
3. INVESTMENTS
The following presents investments that represent 5% or more of the Plan's
net assets at December 31:
1999 1998
---- ----
NiSource Inc. Common Stock Fund $4,136,270 $6,281,048
BGI S&P 500 Stock Fund 5,466,797 --
Masterworks S&P 500 Stock Fund -- 3,884,260
Bay State Gas Stable Value Fund -- 2,186,604
Merrill Lynch Income Accumulation Fund 2,332,130 --
Templeton Foreign Fund 2,221,387 1,536,967
Merrill Lynch Life Path 2040 Fund 1,148,492 671,308
Aim Equity Constellation Fund 3,262,960 2,072,548
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During 1999 and 1998, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
(depreciated) appreciated in value as follows:
1999 1998
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Mutual funds $ 1,809,032 $520,105
Common/Collective Trusts 341,020 257,941
Common Stock Funds (2,084,756) 636,833
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Total $ 65,296 $1,415,046
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4. PARTY-IN-INTEREST TRANSACTIONS
The Trustee is a party in interest according to Section 3(14) of ERISA.
The Trustee serves as Plan fiduciary, investment manager and custodian to
the Plan. As defined by ERISA, any person or organization which provides
these services to the Plan is a related party in interest. In 1999 and
1998, fees paid to the Trustee by the Plan were $7,156 and $5,572,
respectively.
5. PLAN TERMINATION
Although it has not expressed any intent 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.
6. TAX STATUS
The Internal Revenue Service has issued a determination letter dated
November 19, 1996, stating the Plan is qualified under applicable sections
of the Internal Revenue Code (the "IRC"). The Plan has been amended since
receiving the determination letter. However, the Plan administrator
believes that the Plan is designed and is currently being operated in
compliance with the applicable requirements of the IRC.
7. SUBSEQUENT EVENT
The Plan has been amended subsequent to December 31, 1999 to include a new
collective bargaining unit.
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SCHEDULE
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1999
(EIN: 04-2548120, PLAN 011)
IDENTITY OF ISSUER/ MARKET
DESCRIPTION OF INVESTMENT VALUE
- --------------------------------------------------------------------------------
*NiSource Inc. Common Stock Fund $ 4,136,270
*Merrill Lynch Life Path Income Fund 87,863
*Merrill Lynch Life Path 2010 420,452
*Merrill Lynch Life Path 2020 479,870
*Merrill Lynch Life Path 2030 416,596
*Merrill Lynch Life Path 2040 1,148,492
*Merrill Lynch Income Accumulation Fund 2,332,130
BGI S&P 500 Stock Fund 5,466,797
AIM Equity Constellation Fund 3,262,960
Templeton Foreign Fund 2,221,387
*Loans to participants (range of interest rates is 8.75%
to 9.5%) 955,865
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Total $ 20,928,682
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*Party-in-interest transactions.
The accompanying notes to financial statements and
schedule are an integral part of this schedule.