<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 11-K
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (NO FEE REQUIRED) For the fiscal year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (NO FEE REQUIRED) For the transition period from to
Commission file number 1-9779
Northern Indiana Public Service Company
Bargaining Unit Tax Deferred Savings Plan
(Full title of plan)
NIPSCO INDUSTRIES. INC.
(Issuer of the Securities)
5265 Hohman Avenue, Hammond, Indiana 46320-1775
(Address of Principal Executive Office)
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Bargaining Unit Tax Deferred Savings Plan
Committee of Northern Indiana Public Service Company:
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, 1996 and 1995, and the
related statements of changes in net assets available for benefits for the
years then ended. These financial statements and the supplemental schedules
referred to below are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements and
supplemental schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, 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, 1996 and 1995, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for
purposes of additional analysis and are not a required part of the basic
financial statements but are 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 Fund Information in
the statements of net assets available for benefits and the statements of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets available for
benefits and changes in net assets available for benefits of each fund. The
supplemental schedules and Fund Information have been subjected to the
auditing procedures applied in the audit of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Chicago, Illinois
June 20, 1997
<PAGE>
<TABLE>
<CAPTION>
Northern Indiana Public Service Company
Bargaining Unit Tax Deferred Savings Plan
Statements of Net Assets Available for Benefits
December 31,
------------------------------
1996 1995
============= ============
<S> <C> <C>
Investments, at fair value
(Notes 1 and 2 and Schedule of Assets
Held for Investment Purposes)
Fixed Income Fund $ 4,231,525 $ 4,090,072
Company Common Stock Fund 16,004,510 15,100,995
Equity Fund 20,544,813 18,365,448
Interest Bearing Cash Fund 5,247,948 4,799,480
Growth and Income Fund 8,154,867 4,517,172
Overseas Fund 657,911 247,108
------------ ------------
<S> <C> <C>
Total Investments $54,841,574 $47,120,275
Loans to Participants (Note 1) 1,038,668 875,719
------------ ------------
<S> <C> <C>
Net Assets Available for Benefits $55,880,242 $47,995,994
============ ============
<FN>
The accompanying notes to financial statements are an integral part of
these statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Northern Indiana Public Service Company
Bargaining Unit Tax Deferred Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
Fixed Company
Income Common
Fund Stock Fund
========== ==========
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $ 4,090,072 $15,100,995
----------- -----------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) 411,167 1,426,988
Contributions from employer
(Note 1) - 158,260
Investment Income 278,103 666,171
Net unrealized appreciation
(depreciation) in fair value
of investments (Note 2) (113,653) 593,417
Net realized gain (loss) on
disposition of investments
(Note 2) (18,648) (65,016)
Benefits paid to participants
(Note 1) (151,387) (831,604)
Transfers of participants'
balances, net (Note 1) (254,338) (966,431)
Transfers to/from loan
fund, net (Note 1) (6,448) (33,977)
Interest on participant loans 3,946 26,903
Other (7,289) (71,196)
------------ -------------
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits 141,453 903,515
---------- -------------
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $ 4,231,525 $16,004,510
============ ============
Interest
Equity Bearing
Fund Cash Fund
============= =============
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $18,365,448 $ 4,799,480
------------- -------------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) 1,823,759 524,002
Contributions from employer
(Note 1) - -
Investment Income 3,085,555 253,756
Net unrealized appreciation
(depreciation) in fair value
of investments (Note 2) (661,215) -
Net realized gain (loss)on
disposition of investments
(Note 2) (247,314) -
Benefits paid to participants
(Note 1) (581,595) (330,321)
Transfers of participants'
balances, net (Note 1) (1,091,913) (5,064)
Transfers to/from loan
fund, net (Note 1) (116,916) (20,367)
Interest on participant loans 23,155 8,923
Other (54,151) 17,539
------------ --------------
<S> <C> <C>
Total Changes in Net Assets 2,179,365 448,468
Available for Benefits ------------ -------------
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $20,544,813 $ 5,247,948
============ ===========
Growth and
Income Overseas
Fund Fund
============= =============
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $ 4,517,172 $ 247,108
------------- -------------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) 735,264 61,619
Contributions from employer
(Note 1) - -
Investment Income 363,735 39,881
Net unrealized appreciation
(depreciation) in fair value
of investments (Note 2) 704,105 12,669
Net realized gain (loss) on
disposition of investments
(Note 2) 108,811 6,020
Benefits paid to participants
(Note 1) (300,118) (12,651)
Transfers of participants'
balances, net (Note 1) 2,026,056 291,690
Transfers to/from loan
fund, net (Note 1) (5,926) 10,693
Interest on participant loans 5,961 882
Other (193) -
------------- -------------
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits 3,637,695 410,803
------------- -------------
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $ 8,154,867 $ 657,911
=========== ============
Loan
Fund Total
========== ==========
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $ 875,719 $47,995,994
----------- ------------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) - 4,982,799
Contributions from employer
(Note 1) - 158,260
Investment Income - 4,687,201
Net unrealized appreciation
(depreciation) in fair value
of investments (Note 2) - 535,323
Net realized gain (loss)
on disposition of investments
(Note 2) - (216,147)
Benefits paid to participants
(Note 1) (9,992) (2,217,668)
Transfers of participants'
balances, net (Note 1) - -
Transfers to/from loan
fund, net (Note 1) 172,941 -
Interest on participant loans 69,770
Other (115,290)
----------- ------------
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits 162,949 7,884,248
----------- -----------
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $ 1,038,668 $55,880,242
=========== ===========
<FN>
The accompanying notes to financial statements are an integral part of this
statement.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Northern Indiana Public Service Company
Bargaining Unit Tax Deferred Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1995
Fixed Company
Income Common
Fund Stock Fund
============ ============
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $ 3,581,738 $11,263,686
----------- -----------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) 428,197 1,245,370
Contributions from employer
(Note 1) - 138,056
Investment Income 242,354 603,582
Net unrealized appreciation
in fair value of investments
(Note 2) 191,377 3,131,593
Net realized gain on disposition
of investments (Note 2) 23,156 136,636
Benefits paid to participants
(Note 1) (342,124) (721,638)
Transfers of participants'
balances, net (Note 1) (4,085) (664,012)
Transfers to/from loan
fund, net (Note 1) (16,597) (16,816)
Interest on participant loans 4,491 20,114
Other (18,435) (35,576)
---------- -----------
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits 508,334 3,837,309
---------- -----------
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $ 4,090,072 $15,100,995
=========== ===========
Interest
Equity Bearing
Fund Cash Fund
=========== =============
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $13,001,051 $ 4,036,245
----------- -----------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) 1,640,912 520,008
Contributions from employer
(Note 1) - -
Investment Income 1,058,173 253,505
Net unrealized appreciation
in fair value of investments
(Note 2) 3,197,307 -
Net realized gain on disposition
of investments (Note 2) 565,817 -
Benefits paid to participants
(Note 1) (630,293) (517,729)
Transfers of participants'
balances, net (Note 1) (405,615) 543,698
Transfers to/from loan
fund, net (Note 1) (32,330) (39,832)
Interest on participant loans 15,649 6,409
Other (45,223) (2,824)
------------ ------------
<S> <C> <C>
Total Changes in Net Assets 5,364,397 763,235
Available for Benefits ------------ ------------
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $18,365,448 $ 4,799,480
=========== ===========
Growth and
Income Overseas
Fund Fund
=========== =============
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $ 2,702,297 $ -
----------- -----------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) 552,241 39,324
Contributions from employer
(Note 1) - -
Investment Income 215,978 5,370
Net unrealized appreciation
in fair value of investments
(Note 2) 687,531 11,245
Net realized gain on disposition
of investments (Note 2) 180,447 3,319
Benefits paid to participants
(Note 1) (112,999) -
Transfers of participants'
balances, net (Note 1) 318,957 211,057
Transfers to/from loan
fund, net (Note 1) (5,548) (23,385)
Interest on participant loans 7,045 178
Other (28,777) -
------------ -------------
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits 1,814,875 247,108
----------- -----------
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $ 4,517,172 $ 247,108
=========== ===========
Loan
Fund Total
========== ==========
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $ 751,515 $35,336,532
----------- -----------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) - 4,426,052
Contributions from employer
(Note 1) - 138,056
Investment Income - 2,378,962
Net unrealized appreciation
in fair value of investments
(Note 2) - 7,219,053
Net realized gain on disposition
of investments (Note 2) - 909,375
Benefits paid to participants
(Note 1) (10,304) (2,335,087)
Transfers of participants'
balances, net (Note 1) - -
Transfers to/from loan
fund, net (Note 1) 134,508 -
Interest on participant loans - 53,886
Other - (130,835)
----------- ------------
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits 124,204 12,659,462
----------- -------------
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $ 875,719 $47,995,994
=========== ===========
<FN>
The accompanying notes to financial statements are an integral part of this
statement.
</FN>
</TABLE>
<PAGE>
Northern Indiana Public Service Company
Bargaining Unit Tax Deferred Savings Plan
Notes to Financial Statements
(1) Description of the Plan
The following brief description of the Northern Indiana Public Service
Company Bargaining Unit Tax Deferred Savings Plan (the Plan) is provided for
general information purposes only. Participants should refer to the Plan
document for a more complete description of the Plan.
(a) General -
The Plan was established on October 1, 1987. It is a defined contribution
plan subject to the provisions of the Employee Retirement Income Security
Act of 1974, as amended (ERISA). The Plan is available to all active
bargaining unit employees of Northern Indiana Public Service Company (the
Company) who have been employed by the Company for at least six consecutive
months. There were 1,987 participants in the Plan as of December 31, 1996.
(b) Plan Administration -
The Company serves as administrator and sponsor of the Plan as those terms are
used in ERISA. The Company maintains an administrative committee appointed by
the Board of Directors which has the responsibility to assist the Company in
administering the Plan. The Company has entered into a trust agreement
dated October 10,1987 with Fidelity Management Trust Company (the
Trustee) of Boston, Massachusetts, pursuant to which the Trustee holds the
Plan's assets and executes investment transactions.
(c) Investment Funds -
There are six investment alternatives available for the investment of
contributions to the Plan. The interest bearing cash fund, which is invested
in Fidelity's Retirement Money Market Fund, offers a fixed interest return for
a stated period of time. The equity fund is a pooled account which invests
in Fidelity's Magellan Fund and seeks capital appreciation by investing
primarily in common stock and securities convertible into common stock. The
fixed income fund invests in corporate and government bonds through Fidelity's
Intermediate Bond Fund. The Company common stock fund invests solely in
common shares of NIPSCO Industries, Inc., the parent company of Northern
Indiana Public Service Company. The overseas fund is a pooled account
which invests in Fidelity's Overseas Fund. The growth and income fund is a
pooled account which invests in Fidelity's Growth and Income Fund.
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,
excluding the Company common stock fund, for which transfers can be made on a
quarterly basis. Company matching contributions must be invested in the
Company common stock fund.
(d) Employee Contributions -
A participant may elect to enter into a written salary reduction agreement
with the Company on a before-tax and an after-tax basis. The terms of any
such agreement shall provide that the participant consents to a
reduction in salary from the Company, in whole dollar or percentage - based
amounts not less that $10 or 1% of gross compensation per pay period,
respectively, or in lump sum amounts from bonuses, provided that any
participant's after-tax reduction does not exceed 10% of gross compensation
and the participant's total reduction does not exceed 20% of gross
compensation in accordance with the Plan's provisions. Individual tax deferred
contributions were limited to $9,500 in 1996.
(e) Employer Matching Contributions
A participant will receive a matching contribution from the Company equal to
1/9 th of his or her pre-tax contribution invested in the Company common stock
fund. Matching contributions must remain invested in the Company common stock
fund until final distribution. Matching contributions are not available for a
hardship withdrawal or a loan but may be used to determine the amount
available for a loan.
(f) Payment of Benefits -
Except for certain withdrawal rights under the Plan, distribution of Plan
benefits is made commencing no earlier than the participant's retirement on
or after age 65, disability, death or other termination of employment.
All distributions from a participant's account shall be made in a lump
sum amount of cash, except that a participant or beneficiary may elect a
distribution from the portion of his or her account invested in the Company
common stock fund to be in whole shares of common stock, with cash being
paid for the remaining fractional share.
The payment of benefits is to begin within four months after termination.
For account balances less than or equal to $3,500, the amount will
be paid in a lump sum as soon as practicable, in full satisfaction and
release of all further rights of the participant to receive any benefits
under the Plan. For balances greater than $3,500 no payments can begin at
any time prior to the first to occur of the participant's 65th birthday
or death, without the participant's written consent. Participants
who do not consent to a distribution of benefits shall be entitled to
request a distribution of the entire balance, at any time prior to the first
to occur of the participant's 65th birthday and the date of the participant's
death by written instrument delivered to the administrative committee at
least 90 days prior to the valuation date as to which the distribution
is to be determined. Certain withdrawals can be made prior to termination
of employment in the event of financial hardship or after age 59 1/2.
After-tax contributions can be withdrawn at any time.
(g) Vesting -
The interest of a participant or a former participant in his or her tax
deferred and after-tax contribution account, including the Company matching
portion, shall at all times be non-forfeitable and fully vested.
(h) Loans to Participants -
Loan provisions in the Plan enable participants to borrow
against the tax deferred balances in their accounts in accordance with the
following guidelines:
Participant's Maximum Amount
Account Balance of Loan
$2,000 - $100,000 50% of account balance
not less than $1,000
$100,000 and over $50,000
No loans may be made from after-tax contribution accounts. Applicants
must have participated in the Plan for at least one year to be eligible for
a loan. The repayment period may not exceed five years unless the loan
is used for the participant's residence, subject to certain restrictions.
The interest rate is based on the prevailing rate charged by a
commercial lender, subject to review periodically by the administrative
committee. The range of interest rates on loans outstanding at December
31, 1996 is 6.0% to 10.0%.
(i) Administrative Expenses -
Administrative expenses of the Plan are paid by the Company.
(2) Summary of Significant Accounting Policies
(a) Method of Accounting -
The financial statements of the Plan have been prepared on the accrual basis.
(b) Investment Valuation -
The assets invested in the Company common stock fund, the equity fund, the
growth and income fund, the fixed income fund and the overseas fund are
stated at fair value. The interest bearing cash fund is valued at cost,
which approximates fair value.
Realized and unrealized gains and losses are calculated as the difference
between fair value at the beginning of the year, or date of purchase if
subsequent to the beginning of the year, and fair value at date of sale or
year-end, respectively.
(c) 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 assets and liabilities at the date of the
financial statements and the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
(3) Income Tax Status
The Plan obtained its latest determination letter on January 28, 1997,
in which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the
Internal Revenue Code.
(4) Plan Termination
Although it has not expressed any intent to do so, the Company reserves
the right under the Plan agreement 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 the amounts then credited to his or
her account shall continue to be non-forfeitable.
(5) Plan Amendment
The Plan was amended effective October 1, 1996 to entitle part-time employees
to participate in the Plan.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Vice President of Human Resources of Northern Indiana Public Service Company,
who administers the Plan, has duly caused this annual report to be signed on
its behalf by the undersigned thereunto duly authorized.
Northern Indiana Public Service Company
Bargaining Unit Tax Deferred Savings Plan
(Name of Plan)
BY: /s/ Owen Johnson
Vice President of Human Resources
Northern Indiana Public Service Company
Date: June 30, 1997
<PAGE>
<TABLE>
<CAPTION>
Northern Indiana Public Service Company
Bargaining Unit Tax Deferred Savings Plan
Question 27(a)-Schedule of Assets Held for Investment Purposes
As of December 31, 1996
Plan 003
Employer ID #35-0552990
Share Fair
Investments Balance Price Cost Value
========================== ========= ====== =========== ===========
<S> <C> <C> <C> <C>
Fidelity Intermediate
Bond Fund (b) $ 419,794 $10.08 $ 4,289,265 $ 4,231,525
NIPSCO Industries, Inc.
Common Shares (a)(b) 403,899 39.62 8,082,258 16,004,510
Fidelity Magellan Fund (b) 254,740 80.65 $17,637,517 20,544,813
Retirement Money
Market Fund(b) 5,247,948 1.00 5,247,948 5,247,948
Fidelity Growth and
Income Fund (b) 265,372 30.73 6,654,944 8,154,867
Fidelity Overseas Fund (b) 21,333 30.84 631,105 657,911
--------- ---------
Total Investments $42,543,037 $54,841,574
----------- -----------
<S> <C> <C>
Loans to Participants (c) - 1,038,668
----------- -----------
<S> <C> <C>
Total Assets Held for Investment $42,543,037 $55,880,242
(a) Excludes cost of shares transferred from the NIPSCO Industries, Inc.
Employee Stock Purchase Plan in 1989.
(b) Party-in-interest transactions.
(c) The range of interest rate on loans outstanding at December 31, 1996
is 10%-highest and 6%-lowest.
<FN>
The accompanying notes to financial statements are an integral part of this
schedule.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Northern Indiana Public Service Company
Bargaining Unit Tax Deferred Savings Plan
Question 27(d)-Schedule of Reportable Transactions(a)
For the Year Ended December 31, 1996
Plan 003
Employer ID #35-0552890
Description of Number of Purchase Selling Cost Realized
Transactions Trans- Price Price of Asset Gain
actions
====================== ========= ======== ========= ======== =========
<S> <C> <C> <C> <C> <C>
Fidelity Growth
and Income Fund(b)
Purchases 184 $4,239,258 $ - $4,239,258 $ -
Sales 63 - 1,414,479 1,300,320 114,159
NIPSCO Industries, Inc.
Common Shares(b)
Purchases 79 2,516,576 - 2,516,576 -
Sales 46 - 2,141,461 1,296,491 844,970
Fidelity Magellan
Fund(b)
Purchases 169 5,872,990 - 5,872,990 -
Sales 110 - 2,785,096 2,550,171 234,925
Retirement Money
Market Fund(b)
Purchases 141 2,854,662 - 2,854,662 -
Sales 149 - 2,406,194 2,406,194 -
(a) This schedule includes series of transactions involving securities of
the same issue which in the aggregate, amount to more than 5% of the current
value of Plan assets at the beginning of the Plan year.
(b) Party-in-interest transactions.
<FN>
The accompanying notes to financial statements are an integral part of
this schedule.
</FN>
</TABLE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 11-K, into NIPSCO Industries, Inc.'s
previously filed Form S-8 Registration Statement No. 33-30619; Form S-8
Registration No. 33-30621; Form S-8 Registration Statement No. 333-08263; Form
S-8 Registration Statement No. 333-19981; Form S-8 Registration Statement No.
333-19983; Form S-8 Registration Statement No. 333-19985; and Form S-8
Registration Statement No. 333-22347.
/s/ Arthur Andersen LLP
Chicago, Illinois
June 26, 1997
