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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
EMPLOYEE SAVINGS PLAN
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
EMPLOYEE SAVINGS PLAN
Financial Statements and Schedule
As of December 31, 1999 and 1998
Together With Auditors' Report
Employer Identification Number: 04-3442797
Plan Number: 009
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BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN
FINANCIAL STATEMENTS AND SCHEDULE
December 31, 1999 and 1998
(EIN: 04-2548120, Plan 009)
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
Employee Savings Plan:
We have audited the accompanying statement of net assets available for benefits
of the BAY STATE GAS COMPANY EMPLOYEE SAVINGS PLAN 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
EMPLOYEE SAVINGS PLAN 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
EMPLOYEE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
(EIN: 04-2548120, PLAN 009)
1999 1998
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ASSETS:
Investments (Note 3) $53,337,454 $51,059,024
Company contribution receivable 11,734 13,180
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NET ASSETS AVAILABLE FOR BENEFITS $53,349,188 $51,072,204
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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
EMPLOYEE SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(EIN: 04-2548120, PLAN 009)
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
ADDITIONS:
Investment income-
Interest and dividends $ 2,080,098 $ 1,955,441
Net appreciation in investments 871,165 3,619,179
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Total investment income 2,951,263 5,574,620
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Contributions-
Participants 3,081,352 2,394,875
Company 994,933 1,008,248
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Total contributions 4,076,285 3,403,123
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DEDUCTIONS--benefits paid to participants (4,729,286) (3,029,991)
Administrative expenses (21,278) (20,742)
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Net increase 2,276,984 5,927,010
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of Year 51,072,204 45,145,194
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End of year $ 53,349,188 $ 51,072,204
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</TABLE>
The accompanying notes to financial statements and
schedule are an integral part of these statements.
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BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 1999 AND 1998
(EIN: 04-2548120, PLAN 009)
1. DESCRIPTION OF THE PLAN
The following brief description of the Bay State Gas Company Employee
Savings Plan (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 substantially all active nonbargaining unit employees
of Bay State Gas Company, its wholly-owned subsidiaries, and Granite State
Gas Transmission, Inc. (the "Company"). Participation may begin on the
first day of the next month after the employee has completed 60 days of
service. Employees may participate in the Plan until death, retirement, or
withdrawal of the entire contributed balance
PLAN ADMINISTRATION
The Bay State Gas Company Benefits Committee (the "Committee"), which is
comprised of three to five individuals selected by the President of Bay
State Gas 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 generally consists
of straight time wages, certain supplementary compensation and 75% to 100%
of sales commissions paid or accrued. All overtime, bonuses, some
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.
Beginning October 1, 1992, for participants under the age of 45 on January
1, 1992 and all employees hired after September 1, 1990, the company
changed the amount of its contribution to each participant's account to an
amount equal to 100% of the first 2-1/2% of the participant's eligible
compensation contributed and 50% of the next 5% of the participant's
eligible compensation contributed, provided that total Company
contributions did not exceed 5% of the participant's eligible
compensation. For participant's not meeting this criteria, the Company
contributed 50% of the first 5% of the participant's eligible compensation
contributed.
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 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.
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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.
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 out of the net assets of the Plan. 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.
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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 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
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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
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NiSource Inc. Common Stock Fund $10,806,546 $13,902,100
BGI S&P 500 Stock Fund 13,509,642 --
Masterworks S&P 500 Stock Fund -- 11,321,869
Bay State Gas Stable Value Fund -- 9,036,634
Merrill Lynch Income Accumulation Fund 8,606,257 --
Templeton Foreign Fund 6,119,262 5,292,488
Aim Equity Constellation Fund 7,050,453 5,242,079
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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 $ 4,895,275 $ 1,475,648
Common/Collective Trusts 851,248 707,198
Common stock Fund (4,875,358) 1,436,333
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Total $ 871,165 $ 3,619,179
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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 $21,278 and $20,742,
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.
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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.
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SCHEDULE
BAY STATE GAS COMPANY
EMPLOYEE SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1999
(EIN 04-2548120, PLAN 009)
IDENTITY OF ISSUER/ MARKET
DESCRIPTION OF INVESTMENT VALUE
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*NiSource Inc. Common Stock Fund $ 10,806,546
*Merrill Lynch Life Path Income Fund 44,740
*Merrill Lynch Life Path 2010 1,182,901
*Merrill Lynch Life Path 2020 1,263,362
*Merrill Lynch Life Path 2030 1,174,851
*Merrill Lynch Life Path 2040 2,378,714
*Merrill Lynch Income Accumulation Fund 8,606,257
BGI S&P 500 Stock Fund 13,509,642
AIM Equity Constellation Fund 7,050,453
Templeton Foreign Fund 6,119,262
*Loans to participants (range of interest rates is 8.75%
to 9.5%) 1,200,726
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Total $ 53,337,454
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*Party-in-interest transactions.
The accompanying notes to financial statements and
schedule are an integral part of this schedule.
