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, 2000
BAY STATE GAS COMPANY
SAVINGS PLAN FOR
OPERATING EMPLOYEES
Full Title of Plan
NISOURCE INC.
801 EAST 86TH AVENUE
MERRILLVILLE, INDIANA 46410
Name of Issuer of the
Securities Held Pursuant to the Plan
and the Address of its Principal Executive Office
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
Financial Statements and Schedule
As of December 31, 2000 and 1999
Together With Auditors' Report
Employer Identification Number 04-2548120
Plan Number 011
BAY STATE GAS COMPANY
SAVINGS PLAN
FOR OPERATING EMPLOYEES
FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 2000 AND 1999
(EMPLOYER IDENTIFICATION NUMBER: 04-2548120, PLAN 011)
TABLE OF CONTENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
as of December 31, 2000 and 1999
Statement of Changes in Net Assets Available for
Benefits for the Year Ended December 31, 2000
NOTES TO FINANCIAL STATEMENT
SCHEDULE:
Schedule of Assets Held for Investment Purposes
at End of Year December 31, 2000
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Benefits Committee of
Bay State Gas Company
Savings Plan for Operating Employees:
We have audited the accompanying statements of net assets available
for benefits of the BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING
EMPLOYEES as of December 31, 2000 and 1999, and the related statement
of changes in net assets available for benefits for the year ended
December 31, 2000. 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 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 net assets available for
benefits of the Plan as of December 31, 2000 and 1999, and the changes
in net assets available for benefits for the year ended December 31,
2000, in conformity with accounting principles generally accepted in
the United States.
Our audits were 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 at end of year 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 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
Chicago, Illinois
July 6, 2001
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2000 and 1999
(EMPLOYER IDENTIFICATION NUMBER: 04-2548120, PLAN 011)
2000 1999
----------- -----------
ASSETS:
Investments (Note 3) $26,792,614 $20,934,959
Cash 64,671 -
Accrued Income 669 559
Contributions receivable:
Participants 39,762 28,033
Company 10,750 14,017
----------- -----------
Total Assets $26,908,466 $20,977,568
PAYABLES:
Miscellaneous payable - 6,836
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $26,908,466 $20,970,732
=========== ===========
The accompanying notes to financial statements
are an integral part of these statements.
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2000
(EMPLOYER IDENTIFICATION NUMBER: 04-2548120, PLAN 011)
ADDITIONS:
Investment income-
Interest and dividends $ 1,831,143
Net appreciation in fair value of investments 1,174,467
-----------
Total investment income 3,005,610
-----------
Contributions-
Participants 2,006,547
Company 533,434
-----------
Total contributions 2,539,981
-----------
DEDUCTIONS:
Benefits paid to participants (857,210)
Administrative expenses (8,557)
-----------
Total deductions (865,767)
-----------
TRANSFERS BETWEEN PLANS (Note 1) 1,257,910
-----------
Net increase 5,937,734
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 20,970,732
-----------
End of year $26,908,466
===========
The accompanying notes to financial statements
are an integral part of this statement.
BAY STATE GAS COMPANY
SAVINGS PLAN
FOR OPERATING EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(EMPLOYER IDENTIFICATION NUMBER: 04-2548120, PLAN 011)
1. DESCRIPTION OF THE PLAN
The following brief description of the Bay State Gas Company
Savings Plan for Operating Employees (the "Plan") is provided
for general information based on the provisions of the Plan in
effect on December 31, 2000, 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 all employees of the
company who are covered by a collective bargaining agreement
between the Company and any union that specifically provides for
participation in the Plan are eligible for participation.
PLAN ADMINISTRATION
The Bay State Gas Company Benefits Committee (the "Committee"),
which is comprised of three to five individuals selected by the
Board of Directors of 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. 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 $10,500 in 2000. A participant's eligible
compensation for any given year consists of straight time wages,
including shift differentials, Saturday/Sunday wages, including
premiums, compensation paid or accrued. All overtime, bonuses,
supplementary compensation payments, deferred compensation,
retirement benefits and other forms of nonrecurring compensation
are excluded.
Employer Matching
-----------------
Company contributions begin on the first day of the following 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. The Company makes contributions to the Plan in
accordance with the terms of contracts negotiated with the
various unions representing Company employees. For certain
employees, the Company makes no contribution. For other
employees, the Company makes contributions equal to 2.5% to 3.5%
of eligible compensation.
ROLLOVERS TO/FROM OTHER QUALIFIED EMPLOYER PLANS
The Plan allows for employees to transfer certain of their other
qualified employer retirement plan assets to the Plan or to
transfer plan assets to another qualified employer retirement
plan. These amounts are reflected in participant
contributions/distributions in the accompanying statement 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.
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 2000 plan year, the interest rates on participant loans
range from 9.50% to 10.50%.
PAYMENT OF BENEFITS
Benefits are recorded when paid. Participants 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 by participants. 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 Committee 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.
TRANSFERS BETWEEN PLANS
Transfers between plans occur when there is a change in employee
job title classifications which results in a transfer of any
related balances between this Plan and the Bay State Gas Company
Savings Plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
METHOD OF ACCOUNTING
The financial statements of the Plan are prepared on the accrual
basis of accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
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 are stated at fair value. Fair 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.
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/depreciation
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. Benefits are recorded when paid.
RECLASSIFICATIONS
Certain prior-year amounts have been reclassified to conform to
the 2000 presentation.
3. INVESTMENTS
The following presents investments that represent 5% or more of
the Plan's net assets at December 31:
2000 1999
---------- -----------
BGI S&P 500 Stock Fund $ 5,581,090 $ 5,466,797
Merrill Lynch Income Accumulation
Fund 2,402,445 2,332,130
Templeton Foreign Fund 2,266,977 2,221,387
Merrill Lynch Life Path 2040 Fund - 1,148,492
NiSource Inc. Common Stock Fund 8,542,254 4,136,270
AIM Equity Constellation Fund 3,894,672 3,262,960
----------- -----------
Total $22,687,438 $18,568,036
=========== ===========
During 2000, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
(depreciated) appreciated in fair value as follows:
Mutual funds $(2,327,500)
Common/Collective Trusts (92,926)
Common Stock fund 3,914,386
-----------
Total $ 1,493,960
===========
The Plan provides for investments in common stock and mutual
funds 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
Statement of Net Assets Available for Benefits.
4. RELATED PARTY 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 2000 and 1999, fees paid to the
Trustee by the Plan were $8,557 and $7,156, respectively. A
significant portion of the Plan's assets is invested in common
stock of the Company's parent company.
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.
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.
7. SUBSEQUENT EVENT
Effective May 1, 2001, the NiSource Inc. and Affiliates
Retirement Plan Administrative and Investment Committee
established by NiSource Inc. (parent company of the Company) will
replace the Committee and shall have administrative and
investment responsibilities with respect to the Plan.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
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.
Bay State Gas Company
Savings Plan for Operating Employees
BY: /s/ Dennis W. McFarland
------------------------------------
Vice President, Finance and Planning
NiSource Inc.
Date: July 6, 2001
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated July 6, 2001, included
in this Form 11-K, into NiSource's previously filed Form S-8
Registration Statement No. 333-72367, Form S-3 Registration Statement
No. 333-766435, Post-Effective Amendment No. 11 on Form S-8
to Form S-4 Registration Statement No. 333-33896-01 and Post-Effective
Amendment No. 6 on Form S-3 to Form S-4 Registration Statement
No. 333-33896-01.
Arthur Andersen LLP
Chicago, Illinois
July 16, 2001
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
AS OF DECEMBER 31, 2000
(EMPLOYER IDENTIFICATION NUMBER: 04-2548120, PLAN 011)
Identity of Issuer/ Market
Description of Investment Value
------------------------------------------------- ----------
*NiSource Inc. Common Stock Fund $8,542,254
*Merrill Lynch Life Path Income Fund 85,997
*Merrill Lynch Life Path 2010 548,442
*Merrill Lynch Life Path 2020 614,610
*Merrill Lynch Life Path 2030 509,208
*Merrill Lynch Life Path 2040 1,137,744
*Merrill Lynch Income Accumulation Fund 2,402,445
BGI S&P 500 Stock Fund 5,581,090
AIM Equity Constellation Fund 3,894,672
Templeton Foreign Fund 2,266,977
Bay State Gas Stable Value Fund 1,742
*Loans to participants (range of interest
rates is 9.5% to 10.5%) 1,207,433
Total -----------
$26,792,614
===========
*Party-in-interest transactions.