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
NISOURCE INC. RETIREMENT SAVINGS PLAN
NiSource Inc.
801 E. 86th Avenue
Merrillville, IN 46410
NISOURCE INC. RETIREMENT
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
NISOURCE INC. RETIREMENT 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 4-9
SUPPLEMENTAL SCHEDULE:
Form 5500 Schedule H, Line 4i -- Schedule of Assets (Held at End of Year)
as of December 31, 2003 11
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
NiSource Inc. Retirement Savings Plan
Merrillville, Indiana
We have audited the accompanying statements of net assets available for benefits
of the NiSource Inc. Retirement 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
NISOURCE INC. RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 AND 2002
2003 2002
ASSETS
Investments--at fair value:
Mutual funds $ 404,922,312 $ 335,679,560
Money market fund 148,892,554 173,271,705
Common stock fund 141,069,591 127,485,260
Participant loans 10,789,082 10,302,240
------------- -------------
Total investments 705,673,539 646,738,765
------------- -------------
Receivables:
Participant contributions 1,096,340 1,171,757
Employer contributions 566,561 590,620
------------- -------------
Total receivables 1,662,901 1,762,377
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 707,336,440 $ 648,501,142
============= =============
See notes to financial statements.
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NISOURCE INC. RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2003
ADDITIONS:
Contributions:
Participant $ 26,477,758
Employer 11,806,500
----------------
Total contributions 38,284,258
Investment income:
Net appreciation in fair value of investments 85,477,541
Dividends and interest 15,595,670
----------------
Investment income 101,073,211
----------------
Total additions 139,357,469
----------------
DEDUCTIONS:
Benefits paid to participants (80,127,896)
Transfers, net (333,317)
Administrative expenses (60,958)
----------------
Total deductions (80,522,171)
----------------
NET INCREASE 58,835,298
NET ASSETS AVAILABLE FOR BENEFITS--Beginning of year 648,501,142
----------------
NET ASSETS AVAILABLE FOR BENEFITS--End of year $ 707,336,440
================
See notes to financial statements.
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NISOURCE INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
1. DESCRIPTION OF PLAN
NiSource Inc. (the "Company") is a holding company whose major subsidiary
companies are Northern Indiana Public Service Company ("NIPSCO"), Columbia
Energy Group, Bay State Gas Company, Northern Indiana Fuel and Light
("NIFL"), and Kokomo Gas ("Kokomo").
The following description of the NiSource Inc. Retirement 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 is a defined contribution plan available to each
eligible employee who works for 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. The Company 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 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. Additionally, participants who are at
least 50 years old can make catch-up contributions to the Plan.
Contributions are subject to certain limitations. Participants direct the
investment of their contributions into various investment options offered
by the Plan. The Plan offers twenty-seven mutual funds, one money market
fund and one common stock fund as investment options for participants.
The Company contributes an amount determined as follows:
a. For the accounts of all participants who participate in the Final
Pay Option of the Retirement Plan of Columbia Energy Group
Companies, or any successor plan (as defined therein):
(1) during the first 120 months of participation, an amount equal
to 50% of the first 6% of the participant's contribution;
(2) from the 121st through the 240th month of participation, an
amount equal to 75% of the first 6% of the participant's
contribution;
(3) from the 241st month onward of participation, an amount equal
to 100% of the first 6% of the participant's contribution.
b. For the accounts of all participants who participate in the Final
Pay Option of the NiSource Inc. and NIPSCO Pension Plan Provisions
Pertaining to Salaried and Non-Exempt Employees and Kokomo nonunion
employees who participate in the Final Pay Option of the NiSource
Inc. Subsidiary Pension Plan and Kokomo union employees, or any
successor plans (as defined therein), an amount equal to 11.1% of
all pretax contributions made by the participant to the Plan.
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c. For the accounts of all participants who participate in the Final
Pay Options of the Bay State Gas Company Pension Plan, or any
successor plan (as defined therein), an amount equal to 100% of the
first 2-1/2% of pretax participant contributions plus 50% of the
next 5% of participant pre-tax contributions. Certain employees, who
were 45 or older on September 1, 1990 and employed on that date, are
grandfathered into a match of 50% of the first 5% of participant
pre-tax contributions.
d. For accounts of all employees of NIFL, who participate in the Final
Pay Option of the NiSource Inc. Subsidiary Pension Plan, or any
successor plan (as defined therein), an amount equal to 50% of the
first 6% of participant pre-tax contributions.
e. For the accounts of all participants who participate in the Account
Balance Option of the Retirement Plan of Columbia Energy Group
Companies, the NiSource Inc. and NIPSCO Pension Plan Provisions
Pertaining to Salaried and Non-Exempt Employees, the NiSource Inc.
Subsidiary Pension Plan, or the Bay State Gas Company Pension Plan,
or any successor plans (as defined therein), an amount equal to 75%
of the first 6% of participant's contributions.
The matching contribution is invested directly into the NiSource Inc.
Common Stock Fund. Employees age 50 or older may direct matching
contributions among any of the funds available in the Plan.
On January 1, 2003, the Plan was amended to allow the Company to make
additional discretionary profit sharing contributions to the Plan. These
contributions may be up to 1.5% of each participant's compensation. Such
discretionary contributions are determined and credited in the year
following the Plan year. Discretionary contributions of approximately
$1,900,000 were authorized by the administrative committee. Such amounts
will be reported as contributions to the Plan in the year authorized and
funded.
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 may borrow from their accounts a minimum
of $1,000 up to a maximum equal to the lesser of $50,000 or 50 percent of
their account balance, whichever is less. 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 11% 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. Participants may
have two loans outstanding at any given time.
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
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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 -- At the direction of the participant or beneficiary,
distribution will be made in a lump sum payment in cash, or by such other
method of payment as may be adopted by the committee according to
uniform standards. Any distribution consisting of units in the NiSource
Inc. Common Stock Fund may be paid in cash or in whole shares of common
stock represented by such units plus a cash amount equal to the fair
market value of any fraction of a share of the common stock fund. 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.
On May 1, 2004, the Plan was amended to allow all participants to
diversify their investment attributable to employer match or profit share
at any time.
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 of the Plan's net
assets.
DECEMBER 31
2003 2002
* NiSource Inc. Common Stock Fund $ 141,069,591 $ 127,485,260
Fidelity Retirement Money Market Fund 148,892,554 173,271,705
Fidelity Magellan Fund 74,607,670 62,292,747
Fidelity Growth Fund 37,035,816
Fidelity Growth and Income Fund 51,819,251 46,775,971
Fidelity Spartan U.S. Equity Index Fund 53,501,756 46,693,614
Fidelity Intermediate Bond Fund 35,046,997
* 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 $ 72,628,531
NiSource Inc. Common Stock Fund 12,849,010
-------------
$ 85,477,541
=============
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 $ 141,069,591 $ 127,485,260
============= ==============
YEAR ENDED
DECEMBER 31, 2003
* Changes in net assets:
Participant contributions $ 2,088,408
Employer contributions 10,604,557
Dividends and interest 7,130,956
Net appreciation in fair value of investments 12,849,010
Benefits paid to participants (10,930,407)
Net exchanges between investment options (7,773,820)
Transfers, net 30,136
Administrative expenses (22,298)
Participant loans, net (392,211)
-------------
$ 13,584,331
=============
* Includes participant-directed assets
5. RELATED-PARTY TRANSACTIONS
The Plan invests in NiSource Inc. common stock. Since NiSource Inc. is the
administrator and sponsor of the Plan, any investment transactions
involving NiSource Inc. common stock qualify as party-in-interest
transactions. 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.
7. TAX STATUS
The Internal Revenue Service (the "IRS") has issued a determination letter
dated February 25, 2004, stating that 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.
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* * * * * *
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SUPPLEMENTAL SCHEDULE
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NISOURCE INC. RETIREMENT SAVINGS PLAN
FORM 5500 SCHEDULE H, LINE 4I--
EIN: 35-2108964, PLAN 005
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 $ 97,473,294 $ 141,069,591
* Fidelity Investments Retirement Money Market Fund ** 148,892,554
* Fidelity Investments Magellan Fund ** 74,607,670
* Fidelity Investments Contrafund ** 26,439,474
* Fidelity Investments Equity Income Fund ** 6,213,298
* Fidelity Investments Growth Fund ** 37,035,816
* Fidelity Investments Growth and Income Fund ** 51,819,251
* Fidelity Investments Intermediate Bond Fund ** 33,325,151
* Fidelity Investments Overseas Fund ** 14,046,634
* Fidelity Investments Europe Fund ** 4,359,000
* Fidelity Investments Pacific Basin Fund ** 2,573,571
* Fidelity Investments Balanced Fund ** 18,942,903
* Fidelity Investments Puritan Fund ** 2,683,196
* Fidelity Investments Small Cap Independent Fund ** 3,078,990
* Fidelity Investments Spartan U.S. Equity Index Fund ** 53,501,756
* Fidelity Investments Freedom Income Fund ** 790,735
* Fidelity Investments Freedom 2010 Fund ** 3,829,583
* Fidelity Investments Freedom 2020 Fund ** 3,584,214
* Fidelity Investments Freedom 2030 Fund ** 1,386,015
* Fidelity Investments Freedom 2040 Fund ** 1,004,942
PIMCO Investments Total Return Fund (institutional) ** 10,590,560
PIMCO Investments Long-Term Government Fund ** 7,085,356
PIMCO Investments Low-Duration Fund (institutional) ** 7,161,936
PIMCO Investments StockPLUS Fund (institutional) ** 3,043,482
Janus Investments SmallCap Value Fund (institutional) ** 19,565,962
Dreyfus Investments Emerging Leaders Fund ** 6,660,946
Morgan Stanley Investments U.S. SmallCap Core Fund ** 2,855,084
Vanguard Investments U.S. Growth Investor Shares Fund ** 5,197,497
American Funds Investments EuroPacific Growth Fund ** 3,539,290
* Various Plan participants Participant loans, with interest rates ranging from 4.75%
to 11% and maturity dates ranging from January 2004
to August 2031. 10,789,082
-------------
TOTAL ASSETS (HELD AT END OF YEAR) $ 705,673,539
=============
** Cost omitted for participant directed investments
* Denotes a party-in-interest
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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 Post-Effective Amendment on Form S-8 to Form S-4 File No.
333-33896-01, on Post-Effective Amendment on Form S-3 to Forms S-4 File No.
333-33896-01 and File No. 333-33896, of our report dated June 10, 2004,
appearing in the Annual Report on Form 11-K of the NiSource Inc. Retirement
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.
NISOURCE INC. RETIREMENT 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. Section 1350, that, to his knowledge, the
accompanying annual report on Form 11-K of the NiSource Inc. Retirement Savings
Plan for the fiscal year ended on December 31, 2003 fully complies with the
requirements of 15 U.S.C. Section 78m and that the information contained in the
accompanying annual report fairly presents, in all material respects, the net
assets of the Plan available for benefits and changes in those net assets.
_________________________________ _________________________________
/s/ Gary L. Neale /s/ Michael W. O'Donnell
Chairman, President and Executive Vice President and
Chief Executive Officer Chief Financial Officer
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