SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2002
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _________________ to ________________________
Commission file number: 1-15467
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Vectren Corporation Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive officer:
Vectren Corporation
20 N.W. Fourth Street
Evansville, Indiana 47708
TABLE OF CONTENTS
Page
Independent Auditor's Report....................................1
Statements of Net Assets Available for Benefits.............................2
Statements of Changes in Net Assets Available for Benefits..................3
Notes to Financial Statements..............................................4-8
Schedule H - Schedule of Assets Held for Investment Purposes................9
Schedule G - Schedule of Loans or Fixed Income Obligations in
Default or Classified as Uncollectible........................10
Signatures.................................................................11
Index of Exhibits..........................................................12
Note: The accompanying financial statements have been prepared for the purpose
of filing with Form 5500. Supplemental schedules required by the
Department of Labor's rules and regulations for reporting and disclosure
under the Employee Retirement Income Security Act of 1974, other than
the schedule listed above, are omitted because of the absence of the
conditions under which they are required.
INDEPENDENT AUDITOR'S REPORT
To the Investment Committee of the Vectren Corporation Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Vectren Corporation Retirement Savings Plan as of December 31, 2002 and
2001 and the related statements of changes in net assets available for benefits
for the years then ended. 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 of America. 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 Vectren
Corporation Retirement Savings Plan as of December 31, 2002 and 2001, and the
changes in net assets available for benefits for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
Our audits were made 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 loans in default are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements, but are supplementary information required by the United States
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in the audits
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/ McGladrey & Pullen LLP
McGLADREY & PULLEN LLP
Champaign, Illinois,
June 13, 2003
VECTREN CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(In Thousands)
At December 31,
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2002 2001
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ASSETS
Cash and cash equivalents $ - $ 56
Investments, at fair value
Mutual funds 39,732 41,663
Vectren Corporation Common Stock Fund 28,456 33,572
Common trust fund 15,345 12,066
Participants' loans 2,637 2,607
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Total investments 86,170 89,908
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NET ASSETS AVAILABLE FOR BENEFITS $ 86,170 $ 89,964
============================================================================
The accompanying notes are an integral part of these financial statements.
VECTREN CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(In Thousands)
Year Ended December 31,
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2002 2001
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ADDITIONS TO NET ASSETS ATTRIBUTED TO
Investment income
Dividend, interest, and other income $ 3,260 $ 3,680
Net depreciation of investments (9,901) (7,757)
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Total investment loss (6,641) (4,077)
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Contributions
Employee 6,910 6,693
Employer 2,914 3,221
Plan transfers (Note 1) 897 -
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Total contributions 10,721 9,914
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO
Distribution of benefits to participants (7,870) (8,165)
Fees paid to trustee (4) (4)
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Total deductions (7,874) (8,169)
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Net decrease (3,794) (2,332)
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NET ASSETS AVAILABLE FOR PLAN BENEFITS
Beginning of year 89,964 92,296
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End of year $ 86,170 $ 89,964
=============================================================================
The accompanying notes are an integral part of these financial statements.
VECTREN CORPORATION
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
a. General
The Vectren Corporation Retirement Savings Plan (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's sponsor, Vectren Corporation
(Vectren or the Company), serves as the plan administrator. An Investment
Committee has been appointed by the Company's Board of Directors to administer
the Plan. The following description of the Plan provides only general
information. Further details of the Plan are provided in the Summary Plan
Description which has been distributed to all plan participants.
Vectren, an Indiana corporation, is an energy and applied technology holding
company headquartered in Evansville, Indiana. The Company was organized on June
10, 1999 solely for the purpose of effecting the merger of Indiana Energy, Inc.
(Indiana Energy) and SIGCORP, Inc. (SIGCORP). On March 31, 2000, the merger of
Indiana Energy with SIGCORP and into Vectren was consummated with a tax-free
exchange of shares and has been accounted for as a pooling-of-interests in
accordance with Accounting Principles Board Opinion No. 16 "Business
Combinations."
Multiple defined contribution plans of the predecessor companies either became
part of or were merged into the Plan during 2000. Plans of predecessor companies
that became a part of or were merged into the Vectren Retirement Savings Plan
are as follows:
|X| the Indiana Energy, Inc. Retirement Savings Plan
|X| the 401(k) Plan for Salaried Employees of Southern Indiana Gas and Electric
Company (SIGECO),
|X| the SIGCORP, Inc. 401(k) Profit Sharing Plan, and
|X| the SIGECO Advanced Communication, Inc. Non-Standardized 401(k) Profit
Sharing Plan.
Effective January 1, 2002, the Plan was again amended and restated in its
entirety and the following additional plans of wholly owned subsidiaries of
Vectren were merged into the plan:
|X| the SIGCORP Energy Services, LLC Non-Standardized 401(k) Profit Sharing
Plan (SES Plan), and
|X| the SIGCORP Communication Services, Inc. Non-Standardized 401(k) Profit
Sharing Plan (SCS Plan).
The amount of funds transferred into the Plan from the SES Plan and the SCS Plan
on January 1, 2002 totaled $391,521 and $505,842, respectively.
Substantially all of Vectren's wholly owned subsidiaries participate in the
Plan.
b. Participation
Non-bargaining unit employees who have completed at least one hour of service
and who are expected to complete 1,000 hours of service during their first year
of employment are eligible to participate in the Plan. Non-bargaining unit
employees who are not expected to meet the 1,000 hours of service threshold are
eligible to participate after completing one year of Period Service, as defined
in the Plan document. Employees may enter the Plan on April 1 or October 1 upon
meeting the hours of service requirement.
Bargaining unit employees must have either completed 1,000 hours of service or
completed one year of service to participate in the Plan.
Each participant's account is adjusted daily for contributions, withdrawals,
distributions, income earned, changes in the value of trust fund assets, and
expenses directly related to investment transactions. Adjustments are based on
participant earnings or account balances, as defined.
c. Contributions and Vesting
Contributions are subject to maximum limitations as defined in the Internal
Revenue Code and are invested in 5% increments in the Vectren Corporation Common
Stock Fund, a common trust fund, and ten mutual funds, as directed by
participants. Plan participants may elect to contribute from 1% to 50% beginning
in 2002 and 19% prior to 2002, in whole percentages, of their eligible
compensation, as defined in the amended and restated plan document.
Additionally, bargaining unit participants may contribute 100% of any pay out
under their performance incentive plan and any guaranteed annual payment earned
by the employee. Participants may also contribute amounts representing
distributions from other qualified defined benefit or defined contribution
plans. Contributions are subject to limitations established by federal law. All
participant contributions are fully vested.
Non-Bargaining Employees Since January 1, 2001, the Company matches 50% of the
first 6% of eligible compensation contributed by all non-bargaining unit
employees. Participants, who were SIGCORP or SIGECO employees on March 30, 2000,
were given the option to choose an additional 3% contribution in lieu of rights
available under other qualified retirement plans. All other non-bargaining unit
employees, other than certain participants of subsidiaries in Vectren's
nonregulated operations, automatically receive the additional 3% contribution on
eligible compensation. Participants vest ratably in 20% increments over five
years in employer matching contributions and cliff vest at the end of five years
in the additional 3% contribution.
Bargaining Unit Employees The Company's matching contribution depends on the
negotiated collective bargaining arrangement, but is generally 50% of the first
3% or 4% of eligible compensation. The Company's matching contribution for
bargaining unit employees covered under the Utility Workers Union of America,
Local 175 (UWUA) agreement is limited to $1,000 per year. Additionally, the
Company will contribute an annual contribution for employees covered under the
UWUA , which increases annually as defined in the Plan document ($1,100 in 2002
and $1,000 in 2001). Vesting in employer contributions also depends on the
collective bargaining arrangement. Some arrangements cliff-vest in employer
contributions after five years of service while others vest ratably in 20%
increments over five years.
d. Distributions
Upon termination, retirement, or disability, participants have the option to
receive either a lump sum distribution equal to the value of their vested
account balance, or periodic installments over a period not to exceed 10 years,
unless benefits are less than $5,000. If benefits are less than $5,000,
participants are required to receive a lump sum distribution. Also, if a lump
sum distribution is received, the participant or beneficiary may elect to
receive their existing investments in the Vectren Corporation Common Stock Fund
in whole shares with fractional shares paid in cash.
Upon death of a participant, the beneficiary will continue to receive benefits
if the participant was already receiving benefit payments. If the participant
had not began receiving benefit payments, the beneficiary will receive a lump
sum distribution of the participant's account balance within 5 years of the
participant's death unless an election was made to distribute the participant's
account balance in equal installments over a period not greater than 10 years to
the beneficiary. If the beneficiary is the participant's spouse, an election can
be made not to begin distributions before the participant would have reached age
70-1/2.
e. Forfeited Accounts
Forfeited non-vested accounts are used to reduce future employer contributions.
At both December 31, 2002 and 2001, the amount of forfeited non-vested accounts
was not significant.
f. Withdrawals While Employed
Once an employee reaches age 59-1/2 and has completed 5 years of service, the
employee can withdraw the partial or full value of his/her account at any time
without penalty.
Prior to age 59-1/2, an employee can withdraw employee contributions and
employer matching and discretionary contributions if the employee satisfies
certain hardship requirements as defined in the Plan. The distribution can be
the amount necessary to satisfy the immediate financial need of the participant
and is only available after the participant has obtained all other distributions
and loans available under the Plan.
g. Participant Loans
The Plan allows eligible participants to borrow up to 50% of the vested amount
of their account balance up to $50,000 with a minimum borrowing of $1,000. Each
loan shall bear interest at a rate determined by the Investment Committee and is
collateralized by the participant's remaining balance in his/her account. The
term of the loan is mutually agreed upon by the Investment Committee and the
participant. The loan repayment period shall not exceed 5 years, except in
instances where the loan proceeds were used to acquire the principal residence
of the participant. Each participant for whom a loan is approved will be charged
a $50 fee which is deducted from the participant's account.
A participant may have no more than one active loan outstanding. Loan payments,
both principal and interest, shall be reapplied to the participant's account and
reinvested in the applicable fund based on the participant's current election.
h. Party-in-Interest Transactions
The Plan invests in shares of mutual funds managed by T. Rowe Price (the
Trustee) and invests in shares of common stock of the Plan's sponsor, Vectren.
Investment management fees paid by the Plan for investment management services
to T. Rowe Price amounted to $4,400 and $4,000 for the years ended December 31,
2002 and 2001, respectively. Additionally, Vectren performs certain services at
no cost to the Plan and pays certain trustee fees and record keeping costs for
the benefit of the Plan.
i. Plan Termination
While it has not expressed any intention to do so, the Company has the right to
terminate the Plan subject to the provisions of ERISA. Upon partial or total
termination of the Plan, the participants' accounts shall become fully vested
and non-forfeitable.
j. Voting Rights of Vectren Corporation Common Stock Fund Participants
Each participant who has an account balance in the Vectren Corporation Common
Stock Fund is entitled to direct the Trustee as to the manner of voting at each
meeting of shareholders for all shares of Vectren Corporation common stock
(including fractional shares), represented by the value of the participant's
interest in the Vectren Corporation Common Stock Fund.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Accounting
The accompanying financial statements of the Plan have been prepared under the
accrual method of accounting.
b. Investments
Investments are stated at fair value as determined by the Trustee using quoted
market prices. Shares of mutual funds are valued at quoted market prices which
represent the net asset value of shares held by the plan at year end.
Participant loans are valued at cost which approximates fair value. Investment
transactions are reported on the trade date. All investment transactions are
participant directed. The Plan provides for various investment options in
investment securities. Investment securities are exposed to various risks, such
as interest rate and market volatility risks. Due to the level of risk
associated with investment securities, it is at least 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.
c. Distributions
Distributions to withdrawing participants are recorded when paid.
d. 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 assets, liabilities, and
changes therein and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
3. INVESTMENTS
The following table presents the fair value of investments at December 31, 2002
and 2001, respectively. Investments that represent 5% or more of the Plan's net
assets are separately identified.
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(in thousands) 2002 2001
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1) Vectren Corporation Common Stock Fund $ 28,456 $ 33,572
1) T. Rowe Price
Equity Income Fund 11,674 13,360
Stable Value Common Trust Fund 15,345 12,066
Balanced Fund 8,081 8,719
Equity Index 500 Fund 4,409 5,169
Janus Fund 5,297 6,028
Franklin Small Cap Growth Fund 4,464 5,310
2) Other investments less than 5% of net assets 5,807 3,077
Participants' loans 2,637 2,607
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Total investments $ 86,170 $ 89,908
==========================================================================
1) A party-in-interest to the Plan
2) The Plan held $1,438,838 and $1,748,134 in the T. Rowe Price International
Stock Fund as of December 31, 2002 and 2001, respectively and $59,659 in
the T. Rowe Price Growth Fund as of December 31, 2002. T. Rowe Price is a
party-in-interest to the Plan.
During the years ended December 31, 2002 and 2001, the Plan's investments
(including realized and unrealized gains and losses on investments) depreciated
in value as follows:
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(in thousands) 2002 2001
-----------------------------------------------------------------------------
Mutual Funds and Common Trust Fund $ (8,899) $ (5,544)
Vectren Corporation Common Stock Fund (1,002) (2,213)
-----------------------------------------------------------------------------
Total depreciation $ (9,901) $ (7,757)
=============================================================================
4. TAX STATUS
The Company has made certain amendments to the Plan since receiving its last
determination letter, dated August 5, 1999, in which the Internal Revenue
Service (IRS) stated that the Plan, as then designed, was in compliance with the
applicable requirements of the Internal Revenue Code. In the opinion of the
Investment Committee, the Plan is currently designed, and continues to operate,
in a manner that qualifies it under Internal Revenue Code Section 401(a) and,
therefore, is exempt from income taxes under the provisions of Internal Revenue
Code Section 501(a). Accordingly, no provision for Federal income taxes has been
made.
SCHEDULE H
VECTREN CORPORATION
RETIREMENT SAVINGS PLAN
SCHEDULE H, PART IV, LINE 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 2002
EIN (35-2086905)
(in thousands)
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Identity of Issuer, Borrower, Lessor, or Similar Party Market Value
------------------------------------------------------------------------------
Investments at Fair Value
1) Vectren Corporation Common Stock Fund $ 28,456
1) T. Rowe Price Stable Value Common Trust Fund 15,345
Mutual Funds
1) T. Rowe Price
Equity Income Fund 11,674
Balanced Fund 8,081
Equity Index 500 Fund 4,409
International Stock Fund 1,439
Growth Fund 60
Janus Fund 5,297
Franklin Small Cap Growth Fund 4,464
PIMCO Total Return Fund 2,743
Sterling Capital Small Cap Value Fund 950
Morgan Stanley Instutional Equity Fund 615
Other Investments
Participants' loans, interest rates from 5.25% to 10.0% 2,637
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Total assets held for investment purposes $ 86,170
==============================================================================
1) Party-in-interest to the Plan.
SCHEDULE G
VECTREN CORPORATION
RETIREMENT SAVINGS PLAN
SCHEDULE G, PART I - SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS
IN DEFAULT OR CLASSIFIED AS UNCOLLECTIBLE
AS OF DECEMBER 31, 2002
EIN (35-2086905)
Amount Received During
Reporting Year Amount Overdue
---------------------- -------------------
Original Unpaid
Identity and Amount Balance,
Address of Obligor of Loan Principal Interest End of Year Principal Interest
------------------ -------- --------- -------- ----------- --------- --------
Various $ 49,228 $ - $ - $ 40,217 $ 40,217 $ -
The above loans in default are loans from participants and have been deemed
distributions for tax purposes.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Vectren
Corporation Investment Committee has duly caused this annual report to be signed
on its behalf by the undersigned, thereunto duly authorized.
VECTREN CORPORATION
RETIREMENT SAVINGS PLAN
Dated June 27, 2003
/s/ Robert L. Goocher
--------------------------------
Robert L. Goocher, Vice President
Treasurer, and Chairman of the Vectren
Corporation Investment Committee
Vectren Corporation Retirement Savings Plan
2002 Form 11-K
Attached Exhibits
The following Exhibits were filed electronically with the SEC with this filing.
Exhibit
Number Document
23.1 Consent of Independent Auditors
99.1 Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.