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, 2003
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
Signatures...................................................................10
Index of Exhibits............................................................11
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, 2003 and
2002 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 standards of the Public Company
Accounting Oversight Board (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 Vectren
Corporation Retirement Savings Plan as of December 31, 2003 and 2002, 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 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 United States Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audits 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.
/S/ McGladrey & Pullen LLP
-----------------------------------
McGLADREY & PULLEN LLP
Champaign, Illinois,
June 8, 2004
VECTREN CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(In Thousands)
At December 31,
--------------------------------------------------------------------------------
2003 2002
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ASSETS
Cash and cash equivalents $ 61 $ -
Investments, at fair value
Mutual funds 55,202 39,732
Vectren Corporation Common Stock Fund 29,362 28,456
Common trust fund 19,195 15,345
Participants' loans 2,611 2,637
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Total investments 106,370 86,170
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NET ASSETS AVAILABLE FOR BENEFITS $ 106,431 $ 86,170
================================================================================
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,
--------------------------------------------------------------------------------
2003 2002
--------------------------------------------------------------------------------
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income (loss):
Dividend, interest, and other income $ 3,207 $ 3,260
Net appreciation (depreciation) of
investments 12,433 (9,901)
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Total investment income (loss) 15,640 (6,641)
--------------------------------------------------------------------------------
Contributions
Employee 6,665 6,910
Employer 3,504 2,914
Plan transfers (Note 1) - 897
--------------------------------------------------------------------------------
Total contributions 10,169 10,721
--------------------------------------------------------------------------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Distribution of benefits to participants (5,544) (7,870)
Fees paid to trustee (4) (4)
--------------------------------------------------------------------------------
Total deductions (5,548) (7,874)
--------------------------------------------------------------------------------
Net increase (decrease) 20,261 (3,794)
--------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Beginning of year 86,170 89,964
--------------------------------------------------------------------------------
End of year $ 106,431 $ 86,170
================================================================================
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. Vectren, an Indiana
corporation, is an energy and applied technology holding company headquartered
in Evansville, Indiana. 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.
Effective January 1, 2002, the Plan was 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.
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% 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 and defined contribution plans. Contributions are subject to limitations
established by federal law. All participant contributions are fully vested.
Non-Bargaining Employees
Generally, the Company matches 50% of the first 6% of eligible compensation
contributed by all non-bargaining unit employees. Most participants also receive
an additional 3% contribution on eligible compensation; however, certain
participants in the Plan prior to March 30, 2000 declined the additional 3%
contribution in lieu of rights available under other qualified retirement plans.
Certain employees of Vectren's nonregulated operations also do not receive the
additional 3% contribution. 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 ($1,200 in 2003 and $1,100 in 2002).
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 begun 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, 2003 and 2002, 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 $4,350 and $4,400 for the years ended December 31,
2003 and 2002, 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 of America 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, 2003
and 2002, respectively. Investments that represent 5% or more of the Plan's net
assets are separately identified.
--------------------------------------------------------------------------------
(in thousands) 2003 2002
--------------------------------------------------------------------------------
1) Vectren Corporation Common Stock Fund $ 29,362 $ 28,456
1) T. Rowe Price
Stable Value Common Trust Fund 19,195 15,345
Equity Income Fund 14,594 11,674
Balanced Fund 9,719 8,081
Equity Index 500 Fund 5,827 4,409
Janus Fund 8,084 5,297
Franklin Small Cap Growth Fund 7,293 4,464
2) Other investments less than 5% of net assets 9,685 5,807
Participants' loans 2,611 2,637
--------------------------------------------------------------------------------
Total investments $ 106,370 $ 86,170
================================================================================
1) A party-in-interest to the Plan
2) The Plan held $2,042,602 and $1,438,838 in the T. Rowe Price International
Stock Fund as of December 31, 2003 and 2002, respectively and $739,716 and
$59,659 in the T. Rowe Price Growth Fund as of December 31, 2003 and 2002,
respectively. T. Rowe Price is a party-in-interest to the Plan.
During the years ended December 31, 2003 and 2002, the Plan's investments
(including realized and unrealized gains and losses on investments)
appreciated (depreciated) in value as follows:
--------------------------------------------------------------------------------
(in thousands) 2003 2002
--------------------------------------------------------------------------------
Mutual Funds and Common Trust Fund $ 10,194 $ (8,899)
Vectren Corporation Common Stock Fund 2,239 (1,002)
--------------------------------------------------------------------------------
Total appreciation (depreciation) $ 12,433 $ (9,901)
================================================================================
4. TAX STATUS
The Company received its last determination letter on December 3, 2003, 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, 2003
EIN (35-2086905)
(in thousands)
--------------------------------------------------------------------------------
Identity of Issuer, Borrower, Lessor, or Similar Party Market Value
--------------------------------------------------------------------------------
Investments at Fair Value
1) Vectren Corporation Common Stock Fund $ 29,362
1) T. Rowe Price Stable Value Common Trust Fund 19,195
Mutual Funds
1) T. Rowe Price
Equity Income Fund 14,594
Balanced Fund 9,719
Equity Index 500 Fund 5,827
International Stock Fund 2,043
Growth Fund 739
Janus Fund 8,084
Franklin Small Cap Growth Fund 7,293
PIMCO Total Return Fund 4,392
Sterling Capital Small Cap Value Fund 1,700
Morgan Stanley Instutional Equity Fund 811
Other Investments
Participants' loans, interest rates from 5.0% to 10.0% 2,611
--------------------------------------------------------------------------------
Total assets held for investment purposes $106,370
================================================================================
1) Party-in-interest to the Plan.
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 25, 2004
/s/ Robert L. Goocher
---------------------------------------------
Robert L. Goocher, Vice President and
Treasurer of Vectren Corporation and
Chairman of the Vectren Corporation
Investment Committee
Vectren Corporation Retirement Savings Plan
2003 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