File No. 001-16189
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
ANNUAL REPORT
PURSUANT TO SECTION 15(d)
of the
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
NiSource Inc.
801 E. 86th Avenue
Merrillville, IN 46410
NORTHERN INDIANA PUBLIC
SERVICE COMPANY
BARGAINING UNIT TAX
DEFERRED SAVINGS PLAN
Financial Statements as of December 31, 2003 and
2002 and for the Year Ended December 31, 2003,
Supplemental Schedule as of December 31, 2003
and Report of Independent Registered Public
Accounting Firm
NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
TABLE OF CONTENTS
PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 31, 2003 and 2002 2
Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2003 3
Notes to Financial Statements 4-8
SUPPLEMENTAL SCHEDULE:
Form 5500 Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2003 10
NOTE: Schedules not filed herewith are omitted because of the absence of the
conditions under which they are required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Administrative Committee of the
Northern Indiana Public Service Company
Bargaining Unit Tax Deferred Savings Plan
Merrillville, Indiana
We have audited the accompanying statements of net assets available for benefits
of the Northern Indiana Public Service Company Bargaining Unit Tax Deferred
Savings Plan (the "Plan") as of December 31, 2003 and 2002, and the related
statement of changes in net assets available for benefits for the year ended
December 31, 2003. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2003 and 2002, and the changes in net assets available for benefits for the year
ended December 31, 2003, in conformity with accounting principles generally
accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
Table of Contents is presented for the purpose of additional analysis and is not
a required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audit of the basic 2003 financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic 2003 financial
statements taken as a whole.
/s/DELOITTE & TOUCHE LLP
Indianapolis, Indiana
June 10, 2004
NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 AND 2002
2003 2002
ASSETS
Investments--at fair value:
Mutual funds $ 58,866,537 $47,240,642
Common stock fund 19,480,438 17,427,431
Money market fund 10,848,141 12,428,479
Participant loans 1,761,940 1,860,286
------------ -----------
Total investments 90,957,056 78,956,838
Receivables:
Participant contributions 32,656 36,259
Employer contributions 3,500 3,973
------------ -----------
Total receivables 36,156 40,232
------------ -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 90,993,212 $78,997,070
============ ===========
See notes to financial statements.
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NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2003
ADDITIONS:
Contributions:
Participant $ 5,118,929
Employer 546,063
-----------
Total contributions 5,664,992
Investment income:
Net appreciation in fair value of investments 10,815,327
Dividends and interest 2,096,856
-----------
Investment income 12,912,183
-----------
Total additions 18,577,175
-----------
DEDUCTIONS:
Benefits paid to participants (6,514,017)
Transfers--net (59,998)
Administrative expenses (7,018)
-----------
Total deductions (6,581,033)
-----------
NET INCREASE 11,996,142
NET ASSETS AVAILABLE FOR BENEFITS-Beginning of year 78,997,070
-----------
NET ASSETS AVAILABLE FOR BENEFITS-End of year $90,993,212
===========
See notes to financial statements.
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NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
1. DESCRIPTION OF PLAN
Northern Indiana Public Service Company (the "Company") is a wholly owned
subsidiary of NiSource Inc. The following description of the Northern
Indiana Public Service Company Bargaining Unit Tax Deferred Savings Plan
(the "Plan") provides general information regarding the Plan. Participants
should refer to the Plan document for a more complete description of the
Plan's provisions.
GENERAL -- The Plan was established effective October 1, 1987. It is a
defined contribution plan available to substantially all active bargaining
unit employees of the Company. It is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"), as amended.
PLAN ADMINISTRATION -- The Company serves as administrator and sponsor of
the Plan. NiSource Inc. maintains an administrative committee appointed by
the Board of Directors, which has the responsibility to assist the Company
in administering the Plan. Fidelity Management Trust Company (the
"Trustee") holds all of the Plan's assets and executes all investment
transactions.
CONTRIBUTIONS -- Each year, participants may contribute up to 50% of
compensation (as defined in the Plan) on a pre-tax basis and 25% on an
after-tax basis, up to 75% in total. Contributions are subject to certain
limitations. Participants direct the investment of their contributions
into various investment options offered by the Plan. The Plan currently
offers twenty-seven mutual funds, one money market fund and one common
stock fund as investment options for participants.
The Company contributes an amount equal to 1/9th of a participant's
pre-tax contribution that is invested in NiSource Inc. Common Stock Fund.
Employees, age 50 and older, may direct matching NiSource Inc. Common
Stock Fund contributions among any of the funds available in the Plan.
ROLLOVERS FROM OTHER QUALIFIED EMPLOYER PLANS -- The Plan allows for
employees to transfer certain of their other qualified employer retirement
plan assets to the Plan. These amounts are reflected in participant
contributions in the accompanying statement of changes in net assets
available for benefits.
PARTICIPANT ACCOUNTS -- Each participant's account is credited with the
participant's contribution and allocations of the Company's contribution
and Plan earnings and charged with an allocation of Plan losses and
certain administrative expenses.
VESTING -- Participants are fully vested in their accounts at all times.
PARTICIPANT LOANS -- Participants that have participated in the Plan for
at least one year may borrow up to 50% from their accounts a minimum of
$1,000 up to a maximum of $50,000. The loans are secured by the balance in
the participant's account and bear interest at prime rate plus 1% based on
the last day of the previous month they take out the loan. Interest rates
range from 4.75% to 9.5% at December 31, 2003. Principal and interest are
paid ratably through payroll deductions over a period not to exceed five
years, unless the loan is to purchase the participant's primary residence,
which allows repayment up to 15 years (30 years prior to January 1, 2002).
Participants may only have two loans outstanding at any given time.
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PARTICIPANT WITHDRAWALS -- Withdrawals from the Plan are generally
permitted when the participant terminates employment, retires, or becomes
permanently disabled. The Plan offers the following options for
withdrawals while still employed:
Age 59-1/2 withdrawals;
Voluntary withdrawals from after-tax, rollover and matching
contributions; and
Hardship withdrawals, subject to the Plan rules.
A company matching contribution or hardship withdrawal may result in the
suspension of the participant's deferral and company matching
contributions for six months.
PAYMENT OF BENEFITS -- All amounts distributed from a participant's
account following termination of employment shall be distributed in one
lump sum amount, in cash, or, if elected by the participant or
beneficiary, in shares of NiSource Inc. common stock based on the numbers
of whole shares allocated to the NiSource Inc. Common Stock Fund for the
participant. If the amount payable under the plan to any participant or
beneficiary is less than or equal to $5,000, the committee will direct
that such amount be paid in a lump sum.
TRANSFERS BETWEEN PLANS -- Transfers between plans occur when employees
transfer in/out of a union but stay with NiSource Inc., which results in a
transfer of any related balances between this Plan and other plans.
Amounts are included in transfers, net on the accompanying statement of
changes in net assets available for benefits.
EMPLOYEE STOCK OWNERSHIP PLAN -- The NiSource Inc. Common Stock Fund
operates as an Employee Stock Ownership Plan ("ESOP"). As an ESOP, under
the terms of this plan, participants may diversify their investment
attributable to employer match at any time after they reach age 50.
Participants may also elect to have dividends paid to them in cash or
reinvested in the fund.
VOTING AND TENDERING RIGHTS OF NISOURCE INC. COMMON STOCK FUND
PARTICIPANTS -- Each participant in the NiSource Inc. Common Stock Fund is
entitled to direct the Trustee as to the manner of voting at each meeting
of shareholders, all shares of NiSource Inc. common stock (including
fractional shares) or tendering shares during a tender offer, represented
by the value of the participant's interest in the NiSource Inc. Common
Stock Fund.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING -- The financial statements of the Plan were prepared
using the accrual basis of accounting.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, and changes therein, and
disclosure of contingent assets and liabilities. Actual results could
differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION -- The Plan's investments are
stated at fair value. Participant loans are valued at cost, which
approximates fair value. Quoted market prices are used to value
investments. Purchases and sales of securities are recorded on a
trade-date basis. Dividends are recorded on the record date.
PAYMENT OF BENEFITS -- Benefits are recorded when paid.
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ADMINISTRATIVE EXPENSES -- Most administrative expenses of the Plan are
paid by the Company. Certain other expenses of the Plan such as investment
manager and broker fees are paid by the Plan. Certain loan administration
fees are paid from the individual participant accounts.
3. INVESTMENTS
The following presents investments that represent 5% or more the Plan's
net assets.
DECEMBER 31,
------------------------------
2003 2002
* NiSource Inc. Common Stock Fund $19,480,438 $17,427,431
Fidelity Magellan Fund 26,970,875 21,231,977
Fidelity Growth and Income Fund 14,614,053 12,441,723
Fidelity Retirement Money Market Fund 10,848,141 12,428,479
Fidelity Intermediate Bond Fund 6,630,365 6,697,180
* Includes nonparticipant-directed investments
During 2003, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value as follows:
Mutual funds $ 9,024,977
NiSource Inc. Common Stock Fund 1,790,350
------------
$ 10,815,327
============
The Plan provides for investments in mutual funds and common stock that,
in general, are exposed to various risks, such as interest rate, credit
and overall market volatility risks. Due to the level of risk associated
with certain investment securities, it is reasonably possible that changes
in the values of investment securities will occur in the near term and
that such changes could materially affect the amounts reported in the
accompanying statements of net assets available for benefits.
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4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the assets and the significant components of the changes
in assets relating to the nonparticipant-directed investments is as
follows:
DECEMBER 31,
-------------------------------
2003 2002
* Net assets:
NiSource Inc. Common Stock Fund $ 19,480,438 $17,427,431
============ ===========
YEAR ENDED
DECEMBER 31,
2003
* Changes in net assets:
Participant contributions $ 1,088,189
Employer contributions 481,878
Dividends and interest 975,378
Participant loans, net (2,327)
Net appreciation in fair value of investments 1,790,350
Benefits paid to participants (877,976)
Transfers, net (30,326)
Administrative expenses (4,479)
Net exchanges between investment options (1,367,680)
------------
$ 2,053,007
============
* Includes participant-directed investments
5. RELATED-PARTY TRANSACTIONS
The Plan invests in NiSource Inc. common stock. Since NiSource Inc. is the
parent of the Company, any investment transactions involving NiSource Inc.
common stock qualify as party-in-interest transactions. Additionally,
certain Plan investments are shares of mutual funds managed by the
Fidelity Management Trust Company. Fidelity Management Trust Company is
the Trustee, as defined by the Plan; therefore, these transactions qualify
as party-in-interest transactions.
6. PLAN TERMINATION
Although it has not expressed any intention to do so, the Company reserves
the right under the Plan document to terminate the Plan at any time,
subject to the provisions of ERISA. In the event of Plan termination, the
rights of each participant to all amounts then credited to his or her
account will continue to be nonforfeitable.
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7. TAX STATUS
The Internal Revenue Service (the "IRS") has determined and informed the
Company by a letter dated September 26, 2003, that the Plan is designed in
accordance with applicable sections of the Internal Revenue Code (the
"IRC"). Although the Plan has been amended since receiving the
determination letter, the Plan administrator believes that the Plan is
designed and is currently being operated in compliance with the applicable
requirements of the IRC.
******
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SUPPLEMENTAL SCHEDULE
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NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
FORM 5500 SCHEDULE H, LINE 4i
EIN: 35-0552990, PLAN: 003
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2003
IDENTITY OF ISSUER, DESCRIPTION OF INVESTMENT,
BORROWER, LESSOR, INCLUDING MATURITY DATE, RATE OF INTEREST, FAIR
OR SIMILAR PARTY COLLATERAL AND PAR OR MATURITY VALUE COST VALUE
- -----------------------------------------------------------------------------------------------------------------------------
* NiSource Inc. Common Stock Fund $ 15,927,746 $ 19,480,438
* Fidelity Investments Retirement Money Market Fund ** 10,848,141
* Fidelity Investments Magellan Fund ** 26,970,875
* Fidelity Investments Contrafund ** 386,130
* Fidelity Investments Equity Income Fund ** 283,231
* Fidelity Investments Growth Fund ** 381,166
* Fidelity Investments Growth and Income Fund ** 14,614,053
* Fidelity Investments Intermediate Bond Fund ** 6,630,365
* Fidelity Investments Overseas Fund ** 1,359,425
* Fidelity Investments Europe Fund ** 79,539
* Fidelity Investments Pacific Basin Fund ** 72,760
* Fidelity Investments Balanced Fund ** 458,854
* Fidelity Investments Puritan Fund ** 978,048
* Fidelity Investments Small Cap Independent Fund ** 740,040
* Fidelity Investments Spartan U.S. Equity Index Fund ** 1,951,934
* Fidelity Investments Freedom Income Fund ** 268,341
* Fidelity Investments Freedom 2010 Fund ** 1,010,187
* Fidelity Investments Freedom 2020 Fund ** 292,263
* Fidelity Investments Freedom 2030 Fund ** 53,366
* Fidelity Investments Freedom 2040 Fund ** 8,707
PIMCO Investments Total Return Fund (institutional) ** 457,936
PIMCO Investments Long-Term Government Fund ** 359,144
PIMCO Investments Low-Duration Fund (institutional) ** 65,722
PIMCO Investments StockPLUS Fund (institutional) ** 111,848
Janus Investments SmallCap Value Fund (institutional) ** 700,427
Dreyfus Investments Emerging Leaders Fund ** 209,772
Morgan Stanley Investments U.S. SmallCap Core Fund ** 108,323
Vanguard Investments U.S. Growth Investor Shares Fund ** 82,640
American Funds Investments EuroPacific Growth Fund ** 231,441
* Various Plan participants Participant loans, with interest rates ranging from 4.75%
to 9.5% and maturity dates ranging from January 2004
to October 2031. 1,761,940
------------
TOTAL ASSETS (HELD AT END OF YEAR) 90,957,056
============
* Denotes a party-in-interest
** Cost omitted for participant-directed investments
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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in these Registration Statements of
NiSource Inc. on Form S-8 File No. 333-19983, on Post-Effective Amendment on
Form S-8 to Form S-4 File No. 333-33896-01 and on Post-Effective Amendment on
Form S-3 to Forms S-4 File No. 333-33896 and File No. 333-33896-01 of our report
dated June 10, 2004, appearing in the Annual Report on Form 11-K of the Northern
Indiana Public Service Company Bargaining Unit Tax Deferred Savings Plan for the
year ended December 31, 2003.
/s/DELOITTE & TOUCHE LLP
Indianapolis, Indiana
June 28, 2004
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
NORTHERN INDIANA PUBLIC SERVICE COMPANY
BARGAINING UNIT TAX DEFERRED SAVINGS PLAN
By _________________________________________________
/s/ David J. Vajda
Vice President & Treasurer, NiSource Inc.
Member, Administrative Committee
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Each of the undersigned, in his capacity as an officer of NiSource Inc., hereby
certifies as required by 18 U.S.C. ss.1350, that, to his knowledge, the
accompanying annual report on Form 11-K of the Northern Indiana Public Service
Company Bargaining Unit Tax Deferred Savings Plan for the fiscal year ended on
December 31, 2003 fully complies with the requirements of 15 U.S.C. ss.78m and
that the information contained in the accompanying annual report fairly
presents, in all material respects, the net assets of the Plan available for
benefits and changes in those net assets.
___________________________________ ___________________________________
/s/ Gary L. Neale /s/ Michael W. O'Donnell
Chairman, President and Executive Vice President and
Chief Executive Officer Chief Financial Officer
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