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: 1-15467
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 for the year
ended December 31, 2001 ....................................................1
Report of Independent Public Accountants for the year
ended December 31, 2000 ....................................................2
Statements of Net Assets Available for Benefits.............................3
Statements of Changes in Net Assets Available for Benefits..................4
Notes to Financial Statements..............................................5-10
Schedule H - Schedule of Assets Held for Investment Purposes................11
Schedule G - Schedule of Loans or Fixed Income Obligations in Default
or Classified as Uncollectible.................................12
Signatures
Exhibit 23** Consent of Independent Auditors
** In May 2002, the Vectren Retirement Savings Plan's sponsor dismissed Arthur
Andersen LLP and engaged McGladrey & Pullen LLP to audit its financial
statements for the year ended December 31, 2001. The Plan has not been able
to obtain Arthur Andersen's consent to incorporate by reference the audited
financial statements for the year ended December 31, 2000 into the Plan's
existing registration statement. Because the Plan has not been able to
obtain such consent, recovery of damages by participants who have invested
in stock issued pursuant to that registration statement may be limited.
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.
2
INDEPENDENT AUDITOR'S REPORT
To the Vectren Corporation
Investment Committee:
We have audited the accompanying statement of net assets available for benefits
of the Vectren Corporation Retirement Savings Plan as of December 31, 2001 and
the related statement of changes in net assets available for benefits for the
year 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 audit.
We conducted our audit 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 audit provides 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, 2001, and the changes in
net assets available for benefits for the year then ended, in conformity with
accounting principles generally accepted in the United States of America.
Our audit was 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 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. The supplemental schedules
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.
McGLADREY & PULLEN LLP
Champaign, Illinois,
July 1, 2002
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Vectren Corporation Investment Committee:
We have audited the accompanying statements of net assets available for benefits
of the VECTREN CORPORATION RETIREMENT SAVINGS PLAN as of December 31, 2000 and
1999, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements and the supplemental
schedule referred to below are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements and the
schedule 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 years then ended, 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 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. 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
Indianapolis, Indiana,
June 8, 2001.
THIS REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS IS A COPY OF A PREVIOUSLY ISSUED
ARTHUR ANDERSEN LLP (ANDERSEN) REPORT AND HAS NOT BEEN REISSUED BY ANDERSEN. THE
INCLUSION OF THIS PREVIOUSLY ISSUED ANDERSEN REPORT IS PURSUANT TO THE
"TEMPORARY FINAL RULE AND FINAL RULE: REQUIREMENTS FOR ARTHUR ANDERSEN LLP
AUDITING CLIENTS," ISSUED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION IN
MARCH 2002. NOTE THAT THE PREVIOUSLY ISSUED ANDERSEN REPORT INCLUDES REFERENCES
TO INFORMATION AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1999, WHICH ARE NOT
REQUIRED TO BE PRESENTED IN THESE ACCOMPANYING FINANCIAL STATEMENTS.
VECTREN CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(In Thousands)
At December 31,
-------------------
2001 2000
------- -------
ASSETS
Cash and cash equivalents $ 56 $ 115
Investments, at fair value
Mutual funds 41,663 43,100
Vectren Corporation Common Stock Fund 33,572 35,564
Common trust fund 12,066 10,371
Participants' loans at estimated fair value 2,607 2,595
------- -------
Total investments 89,908 91,630
------- -------
Receivables
Employer contribution - 129
Employee contributions - 422
------- -------
Total receivables - 551
------- -------
NET ASSETS AVAILABLE FOR BENEFITS $89,964 $92,296
======= =======
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,
-----------------------
2001 2000
-------- --------
ADDITIONS TO NET ASSETS ATTRIBUTED TO
Investment income
Dividend, interest, and other income $ 3,680 $ 5,285
Net (depreciation) appreciation
of investments (7,757) 6,937
-------- --------
Total investment (loss) income (4,077) 12,222
-------- --------
Contributions
Employee 6,693 6,382
Employer 3,221 2,151
Transfers from (Note 1)
401(k) Plan for Salaried Employees
of SIGECO - 6,480
Other plans - 35
-------- --------
Total contributions 9,914 15,048
-------- --------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO
Distribution of benefits to participants (8,165) (9,688)
Fees paid to trustee (4) -
-------- --------
Total deductions (8,169) (9,688)
-------- --------
Net (decrease) increase (2,332) 17,582
-------- --------
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Beginning of year 92,296 74,714
-------- --------
End of year $ 89,964 $ 92,296
======== ========
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 (Plan Committee) has been appointed by the Company's Board of
Directors to administer the Plan. 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 Communication Services, Inc. Non-Standardized 401(k) Profit
Sharing Plan, and
|X| the SIGCORP Energy Services, LLC Non-Standardized 401(k)
Profit Sharing Plan.
Substantially all of Vectren's wholly owned subsidiaries participate in the
Plan.
Also included in the January 1, 2002 amended and restated document was changes
effective January 1, 2001, the most significant of which are described herein.
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. Employees may enter the Plan on April 1 or
October 1 upon meeting the hours of service requirement.
Prior to January 1, 2001, Bargaining unit employees must have either
completed 1,000 hours of service or have been employed for six months to
participate in the Plan. On January 1, 2001 the Plan was amended so that
bargaining unit employees who have not completed 1,000 hours of service may
participate in the Plan after completing one year of service.
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.
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 nine mutual funds, as directed by
participants. Plan participants may elect to contribute from 1% to 19%, 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. All participant contributions
are fully vested.
The amount of and vesting in employer contributions depends on the participant's
bargaining unit status and the year the participant first became eligible to
participate in the Plan. Employer contributions differ among the following
employee groups that participate in the Plan:
|X| Non-bargaining unit employees in the former Indiana Energy Retirement
Savings Plan participating in the Plan before March 31, 2000 (Indiana
Energy Non-Bargaining Participants)
|X| All other non-bargaining unit employees
|X| All bargaining unit employees
Indiana Energy Non-Bargaining Employees Until January 1, 2001, the Company
matched 100% of the first 6% of eligible compensation contributed by
non-bargaining unit employees who were Indiana Energy employees prior to March
31, 2000. Participants cliff-vested in employer contributions after five years
of service. On January 1, 2001, as described in the amended and restated plan
document, the Company matches 50% of the first 6% of eligible compensation and
contributes an additional 3% regardless of employee contributions. Participants
vest in the matching contribution ratably in 20% increments over five years and
cliff vest at the end of five years in the additional 3% contribution.
All Other Non-Bargaining Employees The Company matches 50% of the first 6% of
eligible compensation contributed by all other 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 ($1,000 in 2001
$900 in 2000). 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 a lump sum distribution 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, 2001 and 2000, the amount of forfeited and non-vested
accounting 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 Plan 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 Plan 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 $4,000 in both of the years ended December 31, 2001
and 2000, 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.
e. Reclassifications
Prior year interest income, dividend income, and other income, net of $206,123,
$5,018,091, and $60,909, respectively have been restated as one amount in the
statement of changes in net assets available for benefits to conform with the
current year's presentation.
3. INVESTMENTS
The following table presents the fair value of investments at December 31, 2001
and 2000, respectively. Investments that represent 5% or more of the Plan's net
assets are separately identified.
(in thousands) 2001 2000
-------- --------
* Vectren Corporation Common Stock Fund $ 33,572 $ 35,564
* T. Rowe Price
Equity Income Fund 13,360 13,521
Stable Value Common Trust Fund 12,066 10,371
Balanced Fund 8,719 9,345
Equity Index 500 Fund 5,169 5,958
Janus Fund 6,028 6,375
Franklin Small Cap Growth Fund 5,310 5,632
** Other investments less than 5% of net assets 3,077 2,269
Participants' loans 2,607 2,595
-------- --------
Total investments $ 89,908 $ 91,630
======== ========
* A party-in-interest to the Plan
** The Plan held $1,748,134 and $2,037,755 in the T. Rowe Price International
Stock Fund, a party-in-interest to the Plan, as of December 31, 2001 and
2000 respectively.
During the years ended December 31, 2001 and 2000, the Plan's investments
(including realized and unrealized gains and losses on investments) appreciated
(depreciated) in value as follows:
(in thousands) 2001 2000
-------- --------
Mutual Funds and Common Trust Fund $ (5,544) $ (2,416)
Indiana Energy, Inc. Common Stock Fund - (1,400)
Vectren Corporation Common Stock Fund (2,213) 10,753
-------- --------
Total (depreciation) appreciation $ (7,757) $ 6,937
======== ========
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 Plan
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, 2001
EIN (35-2086905)
(in thousands)
------------------------------------------------------------------------------
Identity of Issuer, Borrower, Lessor, or Similar Party Market Value
------------------------------------------------------------------------------
Investments at Fair Value
* Vectren Corporation Common Stock Fund $ 33,572
* T. Rowe Price Stable Value Common Trust Fund 12,066
Mutual Funds
* T. Rowe Price
Equity Income Fund 13,360
Balanced Fund 8,719
Equity Index 500 Fund 5,169
International Stock Fund 1,748
Janus Fund 6,028
Franklin Small Cap Growth Fund 5,310
PIMCO Total Return Fund 1,152
Sterling Capital Small Cap Value Fund 105
Morgan Stanley Instutional Equity Fund 72
Investments at Estimated Fair Value
Participants' loans, interest ranging from 6.0% to 10.0% 2,607
--------
Total assets held for investment purposes $ 89,908
========
* 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, 2001
EIN (35-2086905)
Amount Received
During Reporting Year Amount Overdue
--------------------- -------------------
Identity Original Unpaid
and Address Amount Balance,
of Obligor of Loan Principal Interest End of Year Principal Interest
------------ --------- --------- -------- ----------- --------- --------
Various $ 52,228 $ - $ - $ 42,868 $ 42,868 $ -
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 July 11, 2002
/s/ Robert L. Goocher
----------------------
Robert L. Goocher, Vice
President and Treasurer
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement File
No. 333-90763 of Vectren Corporation of our report dated July 1, 2002 appearing
in this Annual Report on Form 11-K of Vectren Corporation's Retirement Savings
Plan for the year ended December 31, 2001.
McGLADREY & PULLEN LLP
Champaign, Illinois
July 12, 2002.