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, 2004
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
One Vectren Square
Evansville, Indiana 47708
TABLE OF CONTENTS
Page
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Report of Independent Registered Public Accounting Firm....................1
Statements of Net Assets Available for Benefits............................2
Statements of Changes in Net Assets Available for Benefits.................3
Notes to Financial Statements......................................... ...4-9
Schedule H - Schedule of Assets Held at End of Year.......................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.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2004 and
2003 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 consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Plan's internal control over
financial reporting. Accordingly, we express no such opinion. 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, 2004 and 2003, 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
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 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 1, 2005
VECTREN CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(In Thousands)
At December 31,
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2004 2003
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ASSETS
Cash and cash equivalents $ 1 $ 61
Investments, at fair value
Mutual funds 65,604 55,202
Vectren Corporation Common Stock Fund 29,956 29,362
Common trust fund 20,951 19,195
Participants' loans 2,771 2,611
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Total investments 119,282 106,370
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NET ASSETS AVAILABLE FOR BENEFITS $ 119,283 $ 106,431
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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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2004 2003
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ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Dividend, interest, and other income $ 4,178 $ 3,207
Net appreciation of investments 6,907 12,433
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Total investment income 11,085 15,640
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Contributions:
Employee 6,962 6,665
Employer 3,523 3,504
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Total contributions 10,485 10,169
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Distribution of benefits to participants (8,713) (5,544)
Fees paid to trustee (5) (4)
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Total deductions (8,718) (5,548)
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Net increase 12,852 20,261
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NET ASSETS AVAILABLE FOR PLAN BENEFITS
Beginning of year 106,431 86,170
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End of year $ 119,283 $ 106,431
==============================================================================
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.
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 seventeen 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. Employees who become eligible to participate in the Plan
subsequent to December 1, 2004 automatically have 3% of their eligible
compensation contributed to the Plan. Such contributions are invested in fund
options that consider the participants' estimated retirement date. The
participant has the option to elect any other contribution percentage, including
zero percent, and any other investment option.
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 ($1,300 in 2004 and $1,200 in 2003).
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, 2004 and 2003, 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.
Loan origination fees paid by participants of the Plan to T. Rowe Price
amounted to $5,200 and $4,350 for the years ended December 31, 2004 and 2003,
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. 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, 2004
and 2003, respectively. Investments that represent 5% or more of the Plan's net
assets are separately identified.
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(in thousands) 2004 2003
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1) Vectren Corporation Common Stock Fund $ 29,956 $ 29,362
1) T. Rowe Price
Stable Value Common Trust Fund 20,951 19,195
Equity Income Fund 16,300 14,594
Balanced Fund 10,720 9,719
Growth Stock Fund 9,919 739
Equity Index 500 Fund 6,271 5,827
RS Diversified Growth Fund 7,158 -
Janus Fund - 8,084
Franklin Small Cap Growth Fund - 7,293
2) Other investments less than 5% of net assets 15,236 8,946
Participants' loans 2,771 2,611
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Total investments $ 119,282 $ 106,370
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1) A party-in-interest to the Plan
2) T. Rowe Price is a party-in-interest to the Plan. The Plan held $2,625,739
and $2,042,602 in the T. Rowe Price International Stock Fund as of December
31, 2004 and 2003, respectively. In addition, new funds added in 2004 and
the associated ending balances at December 31, 2004 are as follows:
Retirement 2010 Fund, $1,148,995; Retirement 2015 Fund, $418,390;
Retirement 2020 Fund, $536,121; Retirement 2025 Fund, $340,499; Retirement
2030 Fund, $51,607; Retirement 2035 Fund, $8,470; and Retirement 2040 Fund,
$12,788.
During the years ended December 31, 2004 and 2003, the Plan's investments
(including realized and unrealized gains and losses on investments) appreciated
in value as follows:
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(in thousands) 2004 2003
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Mutual Funds and Common Trust Fund $ 4,460 $ 10,194
Vectren Corporation Common Stock Fund 2,447 2,239
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Total appreciation $ 6,907 $ 12,433
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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 AT END OF YEAR
AS OF DECEMBER 31, 2004
EIN (35-2086905)
(in thousands)
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Identity of Issuer, Borrower, Lessor, or Similar Party Current Value
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1) Vectren Corporation Common Stock Fund $ 29,956
1) T. Rowe Price Stable Value Common Trust Fund 20,951
Mutual Funds
1) T. Rowe Price
Equity Income Fund 16,300
Balanced Fund 10,720
Equity Index 500 Fund 6,271
Growth Fund 9,919
International Stock Fund 2,626
Retirement 2010 Fund 1,149
Retirement 2015 Fund 418
Retirement 2020 Fund 536
Retirement 2025 Fund 340
Retirement 2030 Fund 52
Retirement 2035 Fund 8
Retirement 2040 Fund 13
RS Diversified Growth Fund 7,158
PIMCO Total Return Fund 4,596
Sterling Capital Small Cap Value Fund 3,826
Morgan Stanley Instutional Equity Fund 1,672
Participants' loans, interest rates from 5.0% to 10.0% 2,771
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Total assets held at end of year $ 119,282
===============================================================================
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 30, 2005
/s/ Robert L. Goocher
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Robert L. Goocher, Vice President and
Treasurer of Vectren Corporation and
Chairman of the Vectren Corporation
Investment Committee
Vectren Corporation Retirement Savings Plan
2004 Form 11-K
Attached Exhibits
The following Exhibits were filed electronically with the SEC with this filing.
Exhibit
Number Document
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23.1 Consent of Independent Auditors