UNITED STATES 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 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
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
NISOURCE INC.
EMPLOYEE STOCK PURCHASE PLAN
(Full title of plan)
NISOURCE INC.
(Issuer of the Securities)
801 East 86th Avenue, Merrillville, Indiana 46410
(Address of Principal Executive Office)
NISOURCE INC.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE PLAN ADMINISTRATOR OF THE NiSOURCE INC. EMPLOYEE STOCK PURCHASE PLAN:
We have audited the accompanying balance sheet of the NiSource Inc. Employee
Stock Purchase Plan as of December 31, 2001 and 2000, and the related statements
of income and changes in plan equity for each of the three years in the period
ended December 31, 2001. These financial statements are the responsibility of
the plan administrator. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits 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 audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the NiSource Inc. Employee
Stock Purchase Plan as of December 31, 2001 and 2000, and the income and changes
in plan equity for each of the three years in the period ended December 31,
2001, in conformity with accounting principles generally accepted in the United
States.
/s/ Arthur Andersen LLP
Chicago, Illinois
March 27, 2002
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NISOURCE INC.
EMPLOYEE STOCK PURCHASE PLAN
BALANCE SHEET
As of December 31, 2001 2000
---- ----
ASSETS
Employee contributions receivable (Note 1D and 2B) $268,925 $297,147
======== ========
LIABILITIES
Amounts payable for purchases of common shares $268,925 $297,147
Plan equity -- --
-------- --------
Total Liabilities and Plan Equity $268,925 $297,147
======== ========
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
NISOURCE INC.
EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
Year Ended December 31, 2001 2000 1999
----------------------- ---- ---- ----
Plan Equity, Beginning of Year $ -- $ -- $ --
Increases (Decreases) during the year:
Employee contributions (Notes 1D and 2B) 1,116,131 1,272,128 1,374,223
Employer contributions (Note 2B) 127,150 148,171 155,639
Purchases of common shares (Note 1E) (1,271,503) (1,481,717) (1,556,394)
Refunds to participants -- -- --
Change in amounts payable for purchases
of common shares 28,222 61,418 26,532
----------- ----------- -----------
Plan Equity, End of Year $ -- $ -- $ --
=========== =========== ===========
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
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NISOURCE INC.
EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
The following brief description of the NiSource Inc. (NiSource) Employee Stock
Purchase Plan (Plan) is provided for general information purposes only.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
A. GENERAL. The Plan was established on October 27, 1964, when it was adopted by
Northern Indiana Public Service Company's Board of Directors and became
effective on December 15, 1964. Effective March 3, 1988, the Plan was assumed by
NiSource and amended to allow participation by eligible employees of NiSource
and certain of its subsidiaries as designated by the Board of Directors of
NiSource. Employees of IWC Resources, Inc. (IWC), a wholly owned subsidiary of
NiSource, began participating in the Plan as of January 1, 1998 and will
discontinue participation on March 29, 2002. Employees of Miller Pipeline
Corporation discontinued participation October 1, 2000. Employees of Bay State
Gas Company (BSG), a wholly owned subsidiary of NiSource, began participating in
the Plan as of October 1, 2000. In connection with its acquisition of Columbia
Energy Group, NiSource, Inc., an Indiana corporation ("NiSource Indiana"),
created a new Delaware corporation initially named New NiSource Inc. ("NiSource
Delaware") to serve as a holding company for the combined companies. On November
1, 2000, NiSource Delaware completed the acquisition by merger of Columbia
Energy Group and of NiSource Indiana, and NiSource Delaware changed its name to
"NiSource Inc." In the merger, each common share, without par value, of NiSource
Indiana purchased and held by participants in the Plan was converted into one
share of common stock, par value $.01 per share, of NiSource Delaware ("Common
Share"). The Plan will continue to provide a convenient means by which eligible
employees may save regularly through voluntary, systematic payroll deductions
and use such savings to purchase Common Shares at less than the market price.
B. PLAN ADMINISTRATION. The Controller of NiSource Corporate Services Company is
the administrator of the Plan and makes such rulings or interpretations as are
necessary in its operation. NiSource bears all the costs of administering and
carrying out the Plan.
C. ELIGIBILITY. Only active employees, who have one or more years of service
with NiSource, or any participating subsidiary, are eligible to participate in
the Plan. Part-time employees whose customary employment is twenty hours or less
per week and five months or less per calendar year, or employees whose customary
employment is for less than six months in any calendar year are not eligible to
participate. There were 693, 764 and 856 active participants in the Plan as of
December 31, 2001, 2000 and 1999, respectively.
D. EMPLOYEE CONTRIBUTIONS. An eligible employee may authorize payroll deductions
in any full dollar amount, not less than $10 per regular pay period but not more
than $20,000 per calendar year.
An eligible employee may enter the Plan at the beginning of any month in which
the eligibility requirements are met by signing and delivering to NiSource
Shareholder Services, upon fifteen days advance notice, an authorization for
payroll deductions for the purchase of Common Shares. Such authorization must
state (a) the amount to be deducted regularly from each paycheck, (b) authority
to issue the Common Shares in each savings period, and (c) for Shares purchased
under the Plan on or after September 1, 2000 the employee must be named as the
sole owner in the registration. Shares purchased under the Plan before September
1, 2000 that are registered solely in the employee's name as of September 1,
2000 must remain registered solely in the employee's name. Shares purchased
under the Plan before September 1, 2000, and registered joint tenancy or in the
name of a trust, may continue to be registered in such joint tenancy or in the
name of such trust on and after September 1, 2000. Payroll deductions can be
changed only at the beginning of any month upon fifteen days advance notice.
For purposes of the Plan, the savings periods are the periods during which
participants accumulate savings for the purchase of Common Shares under the
Plan. Each savings period includes all paydays within that period. Interest is
not paid on payroll deductions while held by the applicable employer for a
participant's account under the Plan. The savings periods are defined as the
three month periods from January 1 to March 31; April 1 to June 30; July 1 to
September 30; and October 1 to December 31; inclusive.
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NISOURCE INC.
EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
E. PURCHASES OF COMMON SHARES. A participant who purchases Common Shares under
the Plan will purchase as many full or fractional shares as is determined by
dividing his or her accumulated savings for the entire savings period by the
purchase price per share for such savings period. The purchase price per share
to participants is 90% of the closing market price of Common Shares on the New
York Stock Exchange on the last trading day of the savings period.
F. REFUNDS AND WITHDRAWALS. A participant who does not wish to purchase Common
Shares in any savings period must give written notice to NiSource Shareholder
Services at least seven business days prior to the purchase date on which the
participant wishes to terminate. In such event, all funds credited to the
participant under the Plan will be returned as soon as practicable, and no
further payroll deductions will be made during that savings period. To resume
payroll deductions, a participant must file a new authorization card as
described in Note 1D.
A participant may withdraw from the Plan at any time upon seven days advance
notice and reenter the Plan at the beginning of any month on fifteen days
advance notice. Withdrawal shall be made by proper notification to NiSource
Shareholder Services. Funds credited to the account of a participant not already
used or unconditionally committed to the purchase of Common Shares will be
returned to the participant as soon as practicable after notice of withdrawal is
received. The participant will also receive either a certificate for all full
Common Shares held in his or her account or at his or her request a check for
such Common Shares. The participant will also receive a check for any fractional
share held in his or her account. The cash value of Common Shares will be the
average price on the day of sale multiplied by the number of shares sold, less
fees and commissions.
G. TERMINATION OF PARTICIPATION. Participation in the Plan terminates if the
participant's employment is terminated because of retirement, resignation,
discharge, death or any other reason. In such event, all funds of the
participant under the Plan not already used or unconditionally committed for the
purchase of Common Shares will be refunded as soon as practicable. The
participant or his or her legal representative will receive either a certificate
for all full Common Shares held in his or her account or at his or her request,
a check for such Common Shares. The participant or his or her legal
representative will also receive a check for the cash and any fractional share
held in his or her account. The cash value of the Common Shares will be the
average price on the day of sale multiplied by the number of shares sold, less
fees and commissions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. METHOD OF ACCOUNTING. The financial statements of the Plan have been prepared
on the accrual basis of accounting.
B. CONTRIBUTIONS. Employee contributions receivable represents amounts due as of
December 31, 2001 and 2000, under the terms of the Plan agreement. Employer
contributions are reflected as 10% of the purchase price of Common Shares in the
accompanying financial statements when the Common Shares are purchased.
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 financial statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from the estimates.
3. INCOME TAX STATUS
The Plan is not qualified under Section 401(a) of the Internal Revenue Code. No
Federal income tax is imposed when a participant purchases shares under the
Plan. When a participant sells or otherwise disposes of shares purchased under
the Plan, Federal income tax considerations differ, depending on the length of
time the shares were held. A participant must notify his or her employer if any
Common Shares purchased under the Plan are disposed of within two years from the
date of grant of the right to purchase or one year from the date of purchase.
Any dividends received by a participant should be reported as taxable income.
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NISOURCE INC.
EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. TERMINATION OR AMENDMENT OF PLAN
NiSource reserves the right to modify, suspend or terminate the Plan, by action
of its Board of Directors as of the beginning of any Savings Period. Notice of
suspension, modification or termination will be given to all participants. Upon
termination of the Plan for any reason, the cash then credited to the
participant's account, if any, a certificate for all full Common Shares held in
the participant's Plan Account and the cash value of any fractional share shall
be distributed promptly to the participant.
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NISOURCE INC.
EMPLOYEE STOCK PURCHASE PLAN
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Controller of NiSource Corporate Services Company, who administers the Plan, has
duly caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
/s/ JEFFREY W. GROSSMAN
----------------------------------------
Jeffrey W. Grossman
Vice President and Controller
(Principal Accounting Officer)
March 27, 2002
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NISOURCE INC.
EMPLOYEE STOCK PURCHASE PLAN
EXHIBIT LIST
EXHIBIT DESCRIPTION OF ITEM
99 Letter to the U.S. Securities and Exchange Commission regarding
assurances from Arthur Andersen LLP regarding the audit of the
financial statements of NiSource Inc. Employee Stock Purchase Plan
as of December 31, 2001. *
*Filed herewith
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