<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
NIPSCO INDUSTRIES, INC.
TAX DEFERRED SAVINGS PLAN
(Full title of plan)
NIPSCO INDUSTRIES, INC.
(Issuer of the Securities)
5265 Hohman Avenue, Hammond, Indiana 46320-1775
(Address of Principle Executive Office)
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Tax Deferred Savings Plan
Committee of NIPSCO Industries, Inc.:
We have audited the accompanying statements of net assets available for
benefits of the NIPSCO Industries, Inc. 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>
NIPSCO Industries, Inc.
Tax Deferred Savings Plan
Statements of Net Assets Available for Benefits
December 31,
1996 1995
<S> <C> <C>
ASSETS
Investments, at fair value
(Notes 1 and 2 and Schedule of Assets
Held for Investment Purposes)
Fixed Income Fund $ 4,857,198 $ 5,169,844
Company Common Stock Fund 18,038,820 17,442,889
Equity Fund 33,335,390 32,726,131
Interest Bearing Cash Fund 9,358,607 9,338,718
Growth and Income Fund 16,169,131 9,924,053
Overseas Fund 1,449,505 488,844
<S> <C> <C>
Total Investments $83,208,651 $75,090,479
Loans to Participants (Note 1) 1,283,772 1,141,965
<S> <C> <C>
Net Assets Available for Benefits $84,492,423 $76,232,444
<FN>
The accompanying notes to financial statements are an integral part of
these statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
NIPSCO Industries, Inc.
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 $ 5,169,844 $ 17,442,889
------------ ------------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) 291,851 1,617,552
Contributions from employer
(Note 1) - 177,523
Rollover from other qualified
employer plans (Note 3) 23,025 20,244
Investment income 339,483 749,380
Net unrealized appreciation
(depreciation) in fair value
of investments (Note 2) (126,385) 689,523
Net realized gain (loss)
on disposition of
investments (Note 2) (34,262) (35,141)
Benefits paid to participants
(Note 1) (484,775) (1,232,313)
Transfers of participants'
balances, net (Note 1) (318,203) (1,473,126)
Transfers to/from loan
fund, net (Note 1) (14,491) (19,461)
Interest on participant loans 3,822 30,987
Other 7,289 70,763
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits (312,646) 595,931
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $ 4,857,198 $ 18,038,820
============ ============
Interest
Equity Bearing
Fund Cash Fund
=========== ============
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $32,726,131 $ 9,338,718
------------ ------------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) 1,596,601 368,287
Contributions from employer
(Note 1) - -
Rollover from other qualified
employer plans (Note 3) 38,861 -
Investment income 5,315,787 457,509
Net unrealized appreciation
(depreciation)in fair value
of investments (Note 2) (1,097,684) -
Net realized gain (loss)
on disposition of investments
(Note 2) (537,584) -
Benefits paid to participants
(Note 1) (1,700,598) (1,207,472)
Transfers of participants'
balances, net (Note 1) (3,044,347) 461,604
Transfers to/from loan
fund, net (Note 1) (27,125) (81,378)
Interest on participant loans 32,739 9,915
Other 32,609 11,424
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits 609,259 19,889
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $33,335,390 $ 9,358,607
=========== ============
Growth and
Income Overseas
Fund Fund
=========== ============
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $ 9,924,053 $ 488,844
------------ ------------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) 765,799 118,198
Contributions from employer
(Note 1) - -
Rollover from other qualified
employer plans (Note 3) 64,227 8,452
Investment income 735,364 86,704
Net unrealized appreciation
(depreciation) in fair value
of investments (Note 2) 1,558,663 26,648
Net realized gain (loss) on disposition
of investments (Note 2) 116,649 10,598
Benefits paid to participants
(Note 1) (602,811) (22,167)
Transfers of participants'
balances, net (Note 1) 3,644,322 729,750
Transfers to/from loan
fund, net (Note 1) (46,995) 7,008
Interest on participant loans 9,668 2,470
Other 192 (7,000)
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits 6,245,078 960,661
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $16,169,131 $ 1,449,505
=========== ============
Loan
Fund Total
=========== ============
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $ 1,141,965 $ 76,232,444
------------ ------------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) - 4,758,288
Contributions from employer
(Note 1) - 177,523
Rollover from other qualified
employer plans (Note 3) - 154,809
Investment income - 7,684,227
Net unrealized appreciation
(depreciation) in fair value
of investments (Note 2) - 1,050,765
Net realized gain (loss) on disposition
of investments (Note 2) - (479,740)
Benefits paid to participants
(Note 1) (40,632) (5,290,768)
Transfers of participants'
balances, net (Note 1) - -
Transfers to/from loan
fund, net (Note 1) 182,442 -
Interest on participant loans - 89,601
Other (3) 115,274
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits 141,807 8,259,979
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $ 1,283,772 $ 84,492,423
=========== ============
<FN>
The accompanying notes to financial statements are an integral part of
this statement.
</FN>
</TABLE>
<TABLE>
<CAPTION>
NIPSCO Industries, Inc.
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 $ 4,580,571 $ 13,385,658
------------ ------------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) 300,670 1,433,905
Contributions from employer
(Note 1) - 156,441
Rollover from other qualified
employer plans (Note 3) 2,721 -
Investment income 317,238 699,540
Net unrealized appreciation
in fair value of investments
(Note 2) 254,401 3,632,258
Net realized gain on disposition
of investments (Note 2) 29,924 228,102
Benefits paid to participants
(Note 1) (374,853) (1,131,688)
Transfers of participants'
balances, net (Note 1) 52,344 (1,081,576)
Transfers to/from loan
fund, net (Note 1) (15,533) 90,768
Interest on participant loans 3,981 23,019
Other 18,380 6,462
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits 589,273 4,057,231
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $ 5,169,844 $ 17,442,889
=========== =============
Interest
Equity Bearing
Fund Cash Fund
=========== ============
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $24,931,083 $ 8,829,311
------------ ------------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) 1,552,702 431,656
Contributions from employer
(Note 1) - -
Rollover from other qualified
employer plans (Note 3) 24,697 -
Investment income 1,894,761 531,826
Net unrealized appreciation
in fair value of investments
(Note 2) 6,204,549 -
Net realized gain on disposition
of investments (Note 2) 802,354 -
Benefits paid to participants
(Note 1) (1,525,065) (1,253,893)
Transfers of participants'
balances, net (Note 1) (1,219,014) 816,318
Transfers to/from loan
fund, net (Note 1) (19,835) (33,008)
Interest on participant loans 35,153 14,059
Other 44,746 2,449
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits 7,795,048 509,407
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $32,726,131 $ 9,338,718
=========== ============
Growth and
Income Overseas
Fund Fund
=========== ============
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $ 6,290,359 $ -
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) 606,204 59,366
Contributions from employer
(Note 1) - -
Rollover from other qualified
employer plans (Note 3) 22,208 9,538
Investment income 470,172 10,612
Net unrealized appreciation
in fair value of investments
(Note 2) 1,796,366 24,093
Net realized gain on disposition
of investments (Note 2) 179,694 1,502
Benefits paid to participants
(Note 1) (530,789) -
Transfers of participants'
balances, net (Note 1) 1,063,211 368,717
Transfers to/from loan
fund, net (Note 1) (7,971) 13,415
Interest on participant loans 6,510 2,121
Other 28,089 (520)
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits 3,633,694 488,844
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $ 9,924,053 $ 488,844
=========== ============
Loan
Fund Total
=========== ============
<S> <C> <C>
Net Assets Available for
Benefits,
Beginning of year $ 1,227,254 $ 59,244,236
------------ ------------
<S> <C> <C>
Changes in Net Assets
Available for Benefits:
Contributions from participants
(Note 1) - 4,384,503
Contributions from employer
(Note 1) - 156,441
Rollover from other qualified
employer plans (Note 3) - 59,164
Investment income - 3,924,149
Net unrealized appreciation
in fair value of investments
(Note 2) - 11,911,667
Net realized gain on disposition
of investments (Note 2) - 1,241,576
Benefits paid to participants
(Note 1) (64,397) (4,880,685)
Transfers of participants'
balances, net (Note 1) - -
Transfers to/from loan
fund, net (Note 1) (27,836) -
Interest on participant loans - 84,843
Other 6,944 106,550
<S> <C> <C>
Total Changes in Net Assets
Available for Benefits (85,289) 16,988,208
<S> <C> <C>
NET ASSETS AVAILABLE FOR
BENEFITS,
End of year $ 1,141,965 $ 76,232,444
=========== ============
<FN>
The accompanying notes to financial statements are an integral part of
this statement.
</FN>
</TABLE>
<PAGE>
NIPSCO Industries, Inc.
Tax Deferred Savings Plan
Notes to Financial Statements
(1) Description of the Plan-
The following brief description of the NIPSCO Industries, Inc. 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 effective May 1, 1984. 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 non-bargaining unit employees of NIPSCO Industries, Inc. (the Company)
and its subsidiaries who adopt the Plan, who have been employed by the Company
or any adopting subsidiary for at least six consecutive months. There were 1,566
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 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 or the applicable subsidiary on a
before-tax and after-tax basis. The terms of any such agreement shall provide
that the participant consents to a reduction in salary from the Company, or the
applicable subsidiary in whole dollar or percentage-based amounts not less than
$10 or 1% of gross compensation per pay period, respectively, or in lump sum
amounts from unused vacation pay, provided that any 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 $9500 in 1996.
(e) Employer Matching Contributions
A participant will receive a matching contribution from the Company or the
applicable subsidiary 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 as soon as practible 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 120 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 and rollover 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 11.0%.
(i) Administrative Expenses -
Administrative expenses of the Plan are paid by the Company or the applicable
subsidiary.
(2) Summary of Significant Accounting Policies
(a) Method of Accounting -
The accompanying 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
income and expenses during the reporting period. Actual results could
differ from those estimates.
(3) Rollovers from Other Qualified Employer Plans
The Plan allows for employees to transfer other qualified employer
retirement plan assets to the Plan. These amounts are reflected
as Rollovers from other qualified employer plans in the
accompanying Statements of Changes in Net Assets Available for Benefits.
(4) Income Tax Status
The Internal Revenue Service has issued a determination dated June 20,
1996, stating that the Plan is qualified under applicable sections of the
Internal Revenue Code (IRC). The Plan has been amended since receiving the
determination letter. However, the Plan administrator and the Plan's tax counsel
believe that the Plan is designed and is currently being operated in compliance
with the applicable requirements of the IRC.
(5) 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 particpant to the amounts then credited to his or her
account shall continue to be non-forfeitable.
(6) Plan Amendment
The Plan was amended effective May 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
the Vice President of Human Resources, who administers the Plan, has duly
caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
NIPSCO Industries, Inc.
Tax Deferred Savings Plan
(Name of Plan)
BY: /s/ Owen Johnson
Vice President of Human Resources
NIPSCO Industries, Inc.
Date: June 30, 1997
<PAGE>
<TABLE>
<CAPTION>
NIPSCO Industries, Inc.
Tax Deferred Savings Plan
Question 27(a) - Schedule of Assets Held for Investment Purposes
as of December 31, 1996
Plan 002
Employer I.D. #35-1719974
Share Fair
Investments Balance Price Cost Value
<S> <C> <C> <C> <C>
Fidelity Intermediate
Bond Fund (b) $ 481,865 $ 10.08 $ 4,915,264 $ 4,857,198
NIPSCO Industries, Inc.
Common Shares (a)(b) 455,238 39.62 9,561,123 18,038,820
Fidelity Magellan
Fund (b) 413,334 80.65 27,082,385 33,335,390
Retirement Money Market
Fund (b) 9,358,607 1.00 9,358,607 9,358,607
Fidelity Growth and
Income Fund (b) 526,168 30.73 12,832,115 16,169,131
Fidelity Overseas Fund (b) 47,001 30.84 1,397,395 1,449,505
Total Investments $ 65,146,889 $83,208,651
Loans to Participants (c) - 1,283,772
Total Assets Held for Investment $ 65,146,889 $84,492,423
<FN>
(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 rates on loans outstanding at December 31, 1996 is
11% - highest and 6% - lowest.
The accompanying notes to financial statements are an integral part of this
schedule.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NIPSCO Industries, Inc.
Tax Deferred Savings Plan
Question 27(d) - Schedule of Reportable Transactions (a)
For the Year Ended December 31, 1996
Plan 002
Employer I.D. #35-1719974
Description of Number of Purchase Selling Cost of Realized
Transactions Transactions Price Price Asset Gain
<S> <C> <C> <C> <C> <C>
NIPSCO Industries,
Inc.
Common Shares (b)
Purchases 92 $2,872,337 $ - $2,872,337 $ -
Sales 39 - 2,930,789 1,735,927 1,194,862
Fidelity Magellan
Fund (b)
Purchases 181 8,290,611 - 8,290,611 -
Sales 126 - 6,046,084 5,190,160 855,924
Retirement Money
Market Fund (b)
Purchases 130 3,783,462 - 3,783,462 -
Sales 140 - 3,763,572 3,763,572 -
Fidelity Growth
and Income
Fund (b)
Purchases 177 6,504,215 - 6,504,215 -
Sales 60 - 1,934,449 1,681,856 252,593
<FN>
(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.
The accompanying notes to financial statements are an integral part of
this schedule.
</FN>
</TABLE>
Exihibit 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 No.333-08263;
Form S-8 Registration No. 333-19981; Form S-8 Registration No.
333-19983; Form S-8 Registration No. 333-19985; and Form S-8
Registration No. 333-22347.
/s/ Arthur Andersen LLP
Chicago, Illinois
June 26, 1997
