<PAGE> 1
File No. 1-1098
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
ANNUAL REPORT
PURSUANT TO SECTION 15(d)
of the
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
The Columbia Gas System, Inc.
20 Montchanin Road
Wilmington, Delaware 19807
<PAGE> 2
EMPLOYEES' THRIFT PLAN
OF COLUMBIA GAS SYSTEM
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
AS OF DECEMBER 31, 1994 AND 1993
<TABLE>
<S> <C>
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule A - Statements of Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . 14
Schedule B - Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . 21
Item 27(a) - Schedule of Assets Held for Investment Purposes. . . . . . . . . . . . . . 23
Item 27(d) - Schedule of Reportable Transactions. . . . . . . . . . . . . . . . . . . . 24
Federal Tax Consequences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
All other schedules are omitted as they are not applicable or are not required
based on the disclosure requirements of the Employee Retirement Income Security
Act of 1974 and applicable regulations issued by the Department of Labor.
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<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Thrift Plan Committee of the
Employees' Thrift Plan of Columbia
Gas System:
We have audited the accompanying statements of net assets of the
Employees' Thrift Plan of Columbia Gas System (the "Plan") as of December 31,
1994 and 1993, and the related statement of changes in net assets for the year
ended December 31, 1994. These financial statements and schedules referred to
below are the responsibility of the Plan's management. Our responsibility is
to express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with Generally Accepted Auditing
Standards. 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 financial status of the Employees' Thrift
Plan of Columbia Gas System as of December 31, 1994 and 1993, and the changes
in its financial status for the year ended December 31, 1994, in conformity
with generally accepted accounting principles.
Our audits were 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 reportable transactions are presented
for purposes of additional analysis and are not a required part of the basic
financial statements but are 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
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, except as discussed in the following paragraph.
As explained in the notes thereto, information certified by the
trustees and presented in the schedule of assets held for investment purposes
and the schedule of reportable transactions does not disclose the historical
cost of certain investments. Disclosure of this information is required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974.
As discussed in Note 2, on July 31, 1991, The Columbia Gas System,
Inc. ("Columbia") and its wholly owned subsidiary Columbia Gas Transmission
Corporation ("Transmission") filed separate voluntary petitions seeking
protection under Chapter 11 of the Federal Bankruptcy Code. Columbia and
Transmission are currently operating as debtors-in-possession subject to the
jurisdiction of the Bankruptcy Court and filed plans of reorganization with the
Court to emerge from Chapter 11. Although there can be no assurance Columbia
and Transmission will be able to complete a successful reorganization or what
the impact of such reorganization may be, the Plan is not included in the
Chapter 11 filings and management does not currently believe the pendency
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<PAGE> 4
and resolution of such filings will adversely affect the reported financial
status of the Plan. Although it is management's intention to continue to
operate the Plan, it is not possible to determine the ultimate effect, if any,
of the bankruptcy proceedings upon the future operations of the Plan.
ARTHUR ANDERSEN LLP
New York, New York
June 23, 1995
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<PAGE> 5
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENTS OF NET ASSETS
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
----------------- -----------------
Assets
- ------
<S> <C> <C>
Investments:
Columbia Stock Fund $155,378,724 $145,239,646
Confederation Life GIC 6,838,984 7,067,099
Fidelity Mutual Funds:
Retirement Money Market Portfolio 28,275,251 25,147,456
Ginnie Mae Portfolio -- 4,047,167
Magellan Fund 19,562,197 16,198,590
Contrafund 1,871,184 --
Growth Company Fund 792,201 --
Growth & Income Portfolio 18,037,123 16,292,041
Intermediate Bond Fund 44,825,705 55,415,046
Overseas Fund 8,062,282 6,314,414
Europe Fund 882,814 --
Pacific Basin Fund 1,193,399 --
Balanced Fund 13,775,972 13,657,686
Capital Appreciation Fund 760,419 --
Short-Term Bond Portfolio 2,942,976 --
U.S. Equity Index Portfolio 38,689,121 41,091,202
ESOP (Note 5) 33,309,119 31,714,837
------------ ------------
375,197,471 362,185,184
Employer Contributions Receivable 984,750 934,189
Participant Deposits Receivable 1,730,644 1,648,240
------------ ------------
Total Assets $377,912,865 $364,767,613
Liabilities
- -----------
ESOP Loan Payable (Note 5) $ 86,992,707 $ 86,992,707
Interest Payable on ESOP Loan 28,875,989 19,291,000
------------ ------------
Net Assets $262,044,169 $258,483,906
============ ============
</TABLE>
The accompanying notes to financial statements and schedules are an integral
part of these statements.
-5-
<PAGE> 6
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF CHANGES IN NET ASSETS
For the Year Ended December 31, 1994
<TABLE>
<S> <C>
Net Assets, beginning of year $258,483,906
Net Investment Income 9,374,325
Net Realized Gain on Securities Sold or
Distributed 4,498,522
Net Change in Unrealized Depreciation on
Investments (4,992,103)
Participants' Deposits 21,787,948
Columbia's Contributions 11,857,777
Distributions to Participants (29,381,217)
Interest Expense on ESOP Loan (9,584,989)
------------
Net Assets, end of year $262,044,169
=============
</TABLE>
The accompanying notes to financial statements and schedules are an integral
part of this statement.
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<PAGE> 7
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
December 31, 1994 and December 31, 1993
1. Description of the Plan
The Employees' Thrift Plan of Columbia Gas System (Plan) was adopted
by the Board of Directors of The Columbia Gas System, Inc. (Columbia) on May 1,
1958. Its purpose is to encourage employees to adopt a regular savings program
and to provide additional security for retirement. Each employee who works for
a Columbia company participating in the Plan is eligible to join the Plan on
the first day of any month after completing twelve months of service.
Participation is voluntary, and participants are fully and immediately vested
in the Plan.
The Plan offers a wide range of mutual funds to Plan participants
through Fidelity Investments' family of mutual funds. The investment funds
offered include:
Columbia Stock Fund: This Fund consists almost entirely of Columbia
Common Stock. A small portion is invested in money market instruments
for administrative purposes.
Confederation Life Guaranteed Investment Contract (GIC): The GIC is
presented in the financial statements and Item 27(a) at contract
value. The contract value reasonably approximates the fair market
value of the GIC, as of August 11, 1994, the date the GIC assets were
frozen.
The Plan acquired the GIC on January 2, 1990 for $6.5 million from
Confederation Life Insurance Company of Canada (Confederation Life).
It was scheduled to mature on January 2, 1995. However, on August 12,
1994, the Canadian government seized Confederation Life and on the
same date the Insurance Commissioner of the State of Michigan moved to
seize all Confederation Life's U.S. assets in order to protect them.
Shortly after Confederation Life's U.S. assets were seized, a
segregated account was established by the Plan's trustee, Fidelity
Management Trust Company (Fidelity-Boston), and the GIC assets were
frozen.
In January 1995, in response to these events, the Thrift Plan
Committee received approval from the Columbia Gas and Columbia Gas
Transmission (Transmission) boards of directors for loans to be made
to the Plan for the purpose of providing Plan participants access to
their frozen GIC assets. The Boards' acceptance was subject to
approval from the Bankruptcy Court, Securities and Exchange
Commission, United States Department of Labor and Internal Revenue
Service. Since January 1995 approval has been received from the
Bankruptcy Court and the Securities and Exchange Commission. The
response from the United States Department of Labor and the Internal
Revenue Service are expected shortly. The total amount of the loans
will be approximately $6.7 million. This amount represents the
accumulated value of the frozen investment in the GIC, including
accrued interest, as of the close of business on August 11, 1994, less
a small portion that was subsequently remitted to Plan participants.
Columbia's loan share is approximately two-thirds and Transmission's
loan share is approximately one-third. These loans are to be made
unsecured and without interest. They are to be evidenced by notes and
are to be non-recourse to participants or any assets held in the Plan.
Repayment will be made only from the proceeds received from
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<PAGE> 8
Confederation Life (from liquidation and rehabilitation proceedings or
otherwise), state guaranty funds, and other sources, including
litigation, in connection with the GIC. Should the ultimate recovery
of these funds from Confederation Life and other sources be less than
100 percent, full repayment will be waived, and this cost will be
borne by Columbia and Transmission.
Retirement Money Market Portfolio: Fidelity Retirement Money Market
Portfolio seeks to maximize current income consistent with the
preservation of capital. The Fidelity Retirement Money Market
Portfolio invests in high quality U.S. dollar denominated money market
instruments of U.S. and foreign issuers.
Magellan Fund: Fidelity Magellan Fund's goal is capital appreciation.
Magellan primarily invests in common stock and securities convertible
into common stock of U.S., multinational, and foreign companies of all
sizes and industries that offer potential for growth. Up to 20% of
the Fund may be invested in debt securities.
Growth & Income Portfolio: Fidelity Growth & Income Portfolio is a
growth and income mutual fund that seeks long-term capital growth,
current income and growth of income with reasonable investment risk.
The Portfolio primarily is invested in the securities of companies
with the potential for growth of earnings while paying current
dividends, as well as securities convertible into common stocks,
preferred stocks and fixed income securities.
Intermediate Bond Fund: Fidelity Intermediate Bond Fund is an
income-oriented mutual fund that seeks a high level of current income.
The Fund invests primarily in investment grade (rated Baa or better by
Moody's or BBB or better by S&P) corporate debt obligations, as well
as obligations issued or guaranteed by the U.S. Government and its
agencies or instrumentalities, U.S. banks, prime commercial paper, as
well as high quality foreign debt instruments.
Overseas Fund: Fidelity Overseas Fund is a growth mutual fund that
seeks long-term capital growth through investments in foreign
securities in both developed and emerging markets. At least 65% of
its total assets are invested in securities of issuers from at least
three countries outside of North America. These securities include
common stock, securities convertible to common stock and debt
instruments of foreign corporations and governments. Currency hedging
is permitted.
Balanced Fund: Fidelity Balanced Fund is a growth and income mutual
fund that seeks the highest amount of income possible consistent with
preservation of capital by investing in a broadly diversified
portfolio of high-yielding securities, including common stocks,
preferred stocks and bonds. At least 25% of Balanced Fund's assets
are always invested in fixed- income securities. The Fund maintains a
diversified portfolio of stocks and bonds including foreign securities
from time- to-time through all market conditions.
U.S. Equity Index Portfolio: Fidelity U.S. Equity Index Portfolio is
a growth and income mutual fund that seeks to duplicate the
composition and total return of the Standard & Poor's 500 Composite
Stock Price Index (S&P). The Portfolio invests primarily in the
common stock of the 500 companies that make up the S&P.
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<PAGE> 9
Effective July 1, 1994, the following funds were added as investment
options:
Contrafund: Fidelity Contrafund seeks capital appreciation by
investing primarily in undervalued domestic and foreign stocks and
securities convertible into common stocks. The fund seeks companies
currently out of favor with the investing public. These companies may
have favorable long-term outlooks due to termination of unprofitable
operations, changes in management, industry or products, or possible
mergers and acquisitions. A substantial portion of the portfolio is
invested in medium to small capitalization stocks.
Growth Company Fund: The Fidelity Growth Company Fund focuses on
capital appreciation by investing primarily in common stocks with
above-average growth characteristics. Investments include both
foreign and domestic securities. Growth can be measured by earnings
or gross sales.
Europe Fund: The Fidelity Europe Fund seeks long-term capital growth
by investing in companies that have their principal business
activities in Western Europe. This fund may also invest in Eastern
Europe. Normally, the fund intends to maintain investments in at
least three different countries, though it may at times invest all of
its assets in a single country.
Pacific Basin Fund: Fidelity Pacific Basin Fund seeks long-term growth
of capital by investing in companies that have their principal
business activities in the Pacific Basin. The fund will generally be
invested in at least three different countries, although it may at
times invest all of its assets in one country.
Capital Appreciation Fund: Fidelity Capital Appreciation Fund is a
value/contrarian fund which seeks capital appreciation by investing
primarily in common stocks, but may invest in other types of
securities including preferred stocks and bonds. Investments include
domestic and foreign securities. These securities may be issued by
well-known and established cheap and out-of-favor companies as well as
smaller, lesser-known companies. The fund seeks investment
opportunities in companies involved in prospective acquisitions,
spinoffs, consolidations and liquidations.
Short-Term Bond Portfolio: The Fidelity Short-Term Bond Portfolio
seeks current income consistent with preservation of capital, by
investing in a broad range of investment grade fixed income
securities. The assets of the fund will be invested in securities
with a maturity of 1 to 3 years.
Effective June 30, 1994, the following mutual fund was terminated as
an investment option:
Ginnie Mae Portfolio: The portfolio invests primarily in
mortgage-backed securities issued by the Government National Mortgage
Association and other obligations guaranteed as to the timely payment
of principal and interest by the U.S. Government, although the
portfolio itself is not guaranteed by the U.S. Government.
Fidelity-Boston continues to be Trustee for the Fidelity family of
mutual funds. First Fidelity Bank, N.A. (Fidelity-Philadelphia) continues to
be Trustee for the Columbia Stock Fund and the Employee Stock Ownership Plan
(ESOP).
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<PAGE> 10
Employees may deposit up to 6% of their monthly base pay subject to
IRS limitations, in the various investment funds, and Columbia will match such
deposits at various levels based on the period of an employee's participation
in the Plan. Columbia's contributions are invested in the Columbia Stock Fund
except for employees age 55 or older who may direct monthly Columbia
contributions among any of those funds available for Plan participants'
deposits. Employees may also invest up to an additional 10% of their monthly
base pay, subject to IRS limitatins, but no additional contributions will be
made by Columbia. Employee deposits may be made on an after-tax and/or
before-tax basis. Before-tax deposits are not subject currently to Federal
income tax but are taxable to the employee when they are withdrawn from the
Plan. Prior to age 59-1/2, an active employee may withdraw before-tax deposits
only under certain hardship conditions. If an employee makes a withdrawal from
his account, his future deposits are subject to various suspension periods
depending on the type of withdrawal. After-tax deposits are taxed before they
go into the applicable Funds of the Plan; therefore, they will not be taxed
again.
Administrative expenses of the Plan are paid by the participating
subsidiaries of Columbia.
The value of participants' deposits in the Plan is reflected in
Shares/Units in each applicable Fund. Each Share/Unit has a value equal to
every other Share/Unit in that Fund. The value of a Share/Unit is determined
daily by dividing the value of each Fund by its total number of outstanding
Shares/Units.
The following is a summary of the Share/Unit Values and Shares/Units
outstanding as of:
<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
------------------------------ ---------------------------
Share/Unit Shares/ Unit
Value Units Value Units
----------- ---------- -------- --------
($) ($)
<S> <C> <C> <C> <C>
Columbia Stock Fund 8.65 17,958,914 8.29 17,524,511
Confederation Life GIC 1.00 6,838,984 1.00 7,067,099
Retirement Money
Market Portfolio 1.00 28,275,251 1.00 32,214,555
Ginnie Mae Portfolio -- -- 10.86 372,667
Magellan Fund 66.80 292,847 70.85 228,632
Contrafund 30.28 61,796 -- --
Growth Company Fund 27.26 29,061 -- --
Growth & Income Portfolio 21.09 855,245 22.22 733,215
Intermediate Bond Fund 9.83 4,560,092 10.78 5,140,542
Overseas Fund 27.30 295,322 27.43 230,201
Europe Fund 20.00 44,141 -- --
Pacific Basin Fund 16.19 73,712 -- --
Balanced Fund 12.29 1,120,909 13.39 1,019,991
Capital Appreciation
Fund 15.31 49,668 -- --
Short-Term Bond
Portfolio 8.60 342,206 -- --
U.S. Equity Index
Portfolio 16.91 2,287,943 17.27 2,379,340
</TABLE>
As of December 31, 1994 and 1993, the only security held by the Plan in
excess of 5% of net assets was Columbia common stock, valued at $155,378,724
and $145,239,646, respectively.
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<PAGE> 11
The above is a brief description of the Plan and is provided for general
information purposes only. Participants should refer to the Plan documents for
more complete information.
2. Chapter 11 Bankruptcy filings
On July 31, 1991, Columbia and its wholly-owned subsidiary,
Transmission, filed separate voluntary petitions seeking protection under
Chapter 11 of the Federal Bankruptcy Code. Columbia and Transmission are
currently operating as debtors-in-possession subject to the jurisdiction of the
Bankruptcy Court. On April 17, 1995, Columbia and Transmission filed plans of
reorganization with the Court to emerge from Chapter 11. Although there can be
no assurance Columbia and Transmission will be able to complete a successful
reorganization or what the impact of such reorganization may be, the Plan is
not included in the Chapter 11 filings and management does not currently
believe the pendency and resolution of such filings will adversely affect the
reported financial status of the Plan. Although it is management's intention
to continue to operate the Plan indefinitely, it is not possible to determine
the ultimate effect, if any, of the bankruptcy proceedings upon the future
operations of the Plan.
3. Summary of significant accounting policies
(A) Valuation of Investments.
The assets of the Plan are reflected in the accompanying Statements of
Net Assets based on quoted market prices and per share net asset value. The
investment contract is based on contract value, which reasonably approximated
the fair market value of the asset as of August 11, 1994.
(B) Basis of accounting.
The accounts of the Plan have been maintained on a modified cash basis
of accounting by Fidelity-Boston for the family of mutual funds, and by
Fidelity-Philadelphia for the Columbia Stock Fund and the ESOP Suspense
Account, which holds the unallocated shares under the ESOP; however, the
accompanying financial statements have been prepared on an accrual basis, by
application of memorandum entries to reflect:
(1) participants' deposits and Columbia's contributions
receivable;
(2) ESOP loan payable; and
(3) interest payable on ESOP loan.
(C) Net realized gain (loss) on securities sold or distributed.
The cost of securities sold or distributed is determined on the
revalued cost of assets basis, whereby the cost of assets is adjusted to
reflect the market value of assets as of the prior year end. The Plan
recognized gains and losses on the sale of securities and the distribution of
Columbia Gas Common Stock to withdrawn participants in settlement of their
accounts equal to the difference between the revalued cost and market value of
the securities sold or distributed through December 31, 1994. Sales of
temporary investments, such as demand notes, United States Treasury Bills,
Certificates of Deposit and commingled funds of money market instruments, have
been excluded because no gains or losses resulted.
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<PAGE> 12
(D) Unrealized appreciation (depreciation) of investments.
Fidelity-Boston determines the market value of all assets and
share values on a daily basis. Unrealized appreciation (depreciation) is equal
to the difference between the revalued cost of assets and market value of
assets at December 31, 1994.
(E) Financial derivative disclosure.
Plan assets are invested through thirteen mutual funds, any of
which could from time-to-time utilize financial derivatives. New Generally
Accepted Accounting Principles disclosure requirements require investment
managers of such funds, e.g., Fidelity, to list in their financial statements
the amount and purpose of such derivatives. Participants are provided with
copies of the mutual funds' financial statements directly from Fidelity on a
regular basis and should refer to these for information on this issue.
Generally speaking, the investment managers use derivatives to hedge against
certain unwanted actions, e.g., interest rate movements and foreign currency
changes.
4. Participating Companies
The names of the participating companies, as of December 31,
1994, with contributions for the year ended December 31, 1994 are shown below:
<TABLE>
<CAPTION>
Columbia
Contributions
-------------
<S> <C>
Columbia Coal Gasification Corp. . . . . . . . . . . . $ 10,051
Columbia Gas Development Corp. . . . . . . . . . . . . 279,957
Columbia Gas Transmission Corp. . . . . . . . . . . . . 3,716,469
Columbia Gas of Kentucky, Inc. . . . . . . . . . . . . 301,155
Columbia Gas of Maryland, Inc. . . . . . . . . . . . . 78,977
Columbia Gas of Ohio, Inc. . . . . . . . . . . . . . . 3,813,000
Columbia Gas of Pennsylvania, Inc. . . . . . . . . . . 1,003,693
Columbia Gas System Service Corp. . . . . . . . . . . . 734,641
Columbia Gulf Transmission Company . . . . . . . . . . 776,150
Columbia Propane Corp. . . . . . . . . . . . . . . . . 17,641
Columbia LNG Corp. . . . . . . . . . . . . . . . . . . 28,336
Columbia Natural Resources . . . . . . . . . . . . . . 449,943
Commonwealth Gas Services, Inc. . . . . . . . . . . . . 389,983
Commonwealth Propane, Inc. . . . . . . . . . . . . . . 186,988
TriStar Ventures Corp. . . . . . . . . . . . . . . . . 27,212
Columbia Energy Services. . . . . . . . . . . . . . . . 43,581
----------
Total . . . . . . . . . . . . . . . . . . . . . . . $11,857,777
===========
</TABLE>
5. Employee Stock Ownership Plan
In 1990, Columbia established an ESOP. The ESOP was designed to
pre-fund a portion of the matching obligation under the terms of the Thrift
Plan and to utilize tax advantages afforded by the Internal Revenue Code.
In October 1991, the Board of Directors of Columbia authorized the
termination of the ESOP subject to the approval of the Bankruptcy Court. It is
anticipated that the termination will be part of Columbia's plan of
reorganization. Upon termination, any shares of common stock of Columbia
remaining in the ESOP Trust account would be sold and the proceeds paid to the
holders of debentures issued under the ESOP. Any unpaid balance due would
become subject to the subordinate guarantee of Columbia and become a claim to
be resolved as part of the reorganization plan.
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<PAGE> 13
In March, 1993, First National Bank of Boston (FNBB), Trustee for the
Indenture under which the ESOP debt was issued, filed a complaint against
Columbia alleging tortious interference with contract for failure to pay debt
service and breach of fiduciary duty. On March 24, 1994, the Bankruptcy Court
issued an order denying Columbia's motion for summary judgment on the
pleadings. Columbia appealed this order to the U.S. District Court. On May
12, 1995, the U.S. District Court affirmed the Bankruptcy Court's order.
Columbia believes that it has meritorious defenses to FNBB's claims and that
the non-payment of ESOP debt will not affect the participants' benefits under
the Plan, as Columbia expects the outstanding ESOP debt balance will be
satisfied upon its emergence from bankruptcy.
6. Distributions
As of December 31, 1994 and 1993, amounts due to participants who had
requested a withdrawal were $1,780,803 and $1,972,785, respectively.
7. Tax Status
See "Federal Tax Consequences" located elsewhere in this document for
additional discussion of the tax status.
The Plan received a favorable determination letter from the Internal
Revenue Service in which it ruled that the Plan is in compliance with Section
401(a) and 401(k) and is exempt from taxation under Section 501(a) of the
Internal Revenue Code (IRC). The Company and legal counsel are of the opinion
that the Plan, as amended, meets the IRC requirements and, therefore, continues
to be tax-exempt.
8. Other
Schedules A and B below reflect additional detail by Fund of the
accompanying Statements of Net Assets, for the years ended December 31, 1994
and December 31, 1993 and Statement of Changes of Net Assets for the year ended
December 31, 1994.
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<PAGE> 14
Schedule A
(p. 1 of 3)
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF NET ASSETS
For the Year Ended December 31, 1994
<TABLE>
<CAPTION>
COLUMBIA CONFEDERATION RETIREMENT
ASSETS TOTAL STOCK FUND LIFE GIC MONEY MARKET GINNIE MAE MAGELLAN
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investments:
Columbia Stock Fund $155,378,724 $155,378,724
Confederation Life GIC 6,838,984 $6,838,984
Fidelity Mutal Funds:
Retirement Money Market 28,275,251 $28,275,251
Portfolio
Ginnie Mae Portfolio -- --
Magellan Fund 19,562,197 $19,562,197
Contrafund 1,871,184
Growth Company Fund 792,201
Growth & Income 18,037,123
Portfolio
Intermediate Bond Fund 44,825,705
Overseas Fund 8,062,282
Europe Fund 882,814
Pacific Basin Fund 1,193,399
Balanced Fund 13,775,972
Capital Appreciation
Fund 760,419
Short-Term Bond
Portfolio 2,942,976
U.S. Equity Index
Portfolio 38,689,121
ESOP 33,309,119
375,197,471 155,378,724 6,838,984 28,275,251 -- 19,562,197
Employer Contributions
Receivable 984,750 919,650 -- 11,263 -- 7,365
Participant Deposits
Receivable 1,730,644 612,217 -- 160,901 -- 189,338
Total Assets 377,912,865 156,910,591 6,838,984 28,447,415 -- 19,758,900
LIABILITIES
ESOP Loan Payable 86,992,707 -- -- -- -- --
Interest Payable on ESOP
Loan 28,875,989 -- -- -- -- --
Net Assets $262,044,169 $156,910,591 $6,838,984 $28,447,415 -- $19,758,900
</TABLE>
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<PAGE> 15
Schedule A
(p. 2 of 3)
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF NET ASSETS
For the Year Ended December 31, 1994
<TABLE>
<CAPTION>
GROWTH GROWTH & INTERMEDIATE OVERSEAS
ASSETS CONTRAFUND COMPANY INCOME BOND FUND EUROPE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investments:
Columbia Stock Fund
Confederation Life GIC
Fidelity Mutal Funds:
Retirement Money
Market Portfolio
Ginnie Mae Portfolio
Magellan Fund
Contrafund $1,871,184
Growth Company Fund $792,201
Growth & Income $18,037,123
Portfolio
Intermediate Bond Fund $44,825,705
Overseas Fund $8,062,282
Europe Fund $882,814
Pacific Basin Fund
Balanced Fund
Capital Appreciation
Short-Term Bond
Portfolio
U.S. Equity Index
ESOP
1,871,184 792,201 18,037,123 44,825,705 8,062,282 882,814
Employer Contributions
Receivable 1,543 518 10,678 9,215 4,790 222
Participant Deposits
Receivable 19,464 8,534 138,671 199,452 62,500 6,698
Total Assets 1,892,191 801,253 18,186,472 45,034,372 8,129,572 889,734
LIABILITIES
ESOP Loan Payable -- -- -- -- -- --
Interest Payable on ESOP
Loan -- -- -- -- -- --
Net Assets $1,892,191 $801,253 $18,186,472 $45,034,372 $8,129,572 $889,734
</TABLE>
-15-
<PAGE> 16
Schedule A
(p. 3 of 3)
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF NET ASSETS
For the Year Ended December 31, 1994
<TABLE>
<CAPTION>
PACIFIC CAPITAL SHORT-TERM U.S. EQUITY ESOP
ASSETS BASIN BALANCED APPRECIATION BOND INDEX
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investments:
Columbia Stock Fund
Confederation Life GIC
Fidelity Mutal Funds:
Retirement Money
Market Portfolio
Ginnie Mae Portfolio
Magellan Fund
Contrafund
Growth Company Fund
Growth & Income
Portfolio
Intermediate Bond Fund
Overseas Fund
Europe Fund
Pacific Basin Fund $1,193,399
Balanced Fund $13,775,972
Capital Appreciation $760,419
Short-Term Bond $2,942,976
Portfolio
U.S. Equity Index $38,689,121
ESOP $33,309,119
1,193,399 13,775,972 760,419 2,942,976 38,689,121 33,309,119
Employer Contributions
Receivable 869 8,706 457 1,595 7,879 --
Participant Deposits
Receivable 12,385 96,365 7,024 24,998 192,097 --
Total Assets 1,206,653 13,881,043 767,900 2,969,569 38,889,097 33,309,119
LIABILITIES
ESOP Loan Payable -- -- -- -- -- 86,992,707
Interest Payable on ESOP
Loan -- -- -- -- -- 28,875,989
Net Assets $1,206,653 $13,881,043 $767,900 $2,969,569 $38,889,097 $(82,559,577)
</TABLE>
-16-
<PAGE> 17
Schedule A
(p. 1 of 4)
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF NET ASSETS
For the Year Ended December 31, 1993
<TABLE>
<CAPTION>
COLUMBIA CONFEDERATION RETIREMENT
ASSETS TOTAL STOCK FUND LIFE GIC MARKET MONEY GINNIE MAE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments:
Columbia Stock Fund $145,239,646 $145,239,646
Confederation Life GIC 7,067,099 $7,067,099
Fidelity Mutal Funds:
Retirement Money Market 25,147,456 $25,147,456
Portfolio
Ginnie Mae Portfolio 4,047,167 $4,047,167
Magellan Fund 16,198,590
Contrafund --
Growth Company --
Growth & Income 16,292,041
Intermediate Bond 55,415,046
Overseas 6,314,414
Europe --
Pacific Basin --
Balanced 13,657,686
Capital Appreciation Fund --
Short-Term Bond --
U.S. Equity Index 41,091,202
ESOP 31,714,837
362,185,184 145,239,646 7,067,099 25,147,456 4,047,167
Employer Contributions 934,189 864,456 -- 14,600 2,057
Receivable
Participant Deposits Receivable 1,648,240 623,531 -- 159,923 30,233
Total Assets 364,767,613 146,727,633 7,067,099 25,321,979 4,079,457
LIABILITIES
ESOP Loan Payable 86,992,707 -- -- -- --
Interest Payable on ESOP Loan 18,916,648 -- -- -- --
Net Assets $258,858,258 $146,727,633 $7,067,099 $25,321,979 $4,079,457
</TABLE>
-17-
<PAGE> 18
Schedule A
(p. 2 of 4)
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF NET ASSETS
For the Year Ended December 31, 1993
<TABLE>
<CAPTION>
GROWTH GROWTH & INTERMEDIATE
ASSETS MAGELLAN CONTRAFUND COMPANY INCOME BOND
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments:
Columbia Stock Fund
Confederation Life GIC
Fidelity Mutal Funds:
Retirement Money Market
Portfolio
Ginnie Mae Portfolio
Magellan Fund $16,198,590
Contrafund --
Growth Company --
Growth & Income $16,292,041
Intermediate Bond $55,415,046
Overseas
Europe
Pacific Basin
Balanced
Capital Appreciation Fund
Short-Term Bond
U.S. Equity Index
ESOP
16,198,590 -- -- 16,292,041 55,415,046
Employer Contributions
Receivable 7,377 -- -- 10,210 13,433
Participant Deposits Receivable 150,884 -- -- 125,256 221,731
Total Assets 16,356,851 -- -- 16,427,507 55,650,210
LIABILITIES
ESOP Loan Payable -- -- -- -- --
Interest Payable on ESOP Loan -- -- -- -- --
Net Assets $16,356,851 -- -- $16,427,507 $55,650,210
</TABLE>
-18-
<PAGE> 19
Schedule A
(p. 3 of 4)
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF NET ASSETS
For the Year Ended December 31, 1993
<TABLE>
<CAPTION>
CAPITAL
ASSETS OVERSEAS EUROPE PACIFIC BASIN BALANCED APPRECIATION FUND
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments:
Columbia Stock Fund
Confederation Life GIC
Fidelity Mutal Funds:
Retirement Money Market
Portfolio
Ginnie Mae
Magellan
Contrafund
Growth Company
Growth & Income
Intermediate Bond
Overseas $6,314,414
Europe --
Pacific Basin --
Balanced $13,657,686
Capital Appreciation Fund --
Short-Term Bond
U.S. Equity Index
ESOP
6,314,414 -- - 13,657,686 --
Employer Contributions
Receivable 3,351 -- -- 9,884 --
Participant Deposits Receivable 43,156 -- -- 83,237 --
Total Assets 6,360,921 -- -- 13,750,807 --
LIABILITIES
ESOP Loan Payable -- -- -- -- --
Interest Payable on ESOP Loan -- -- -- -- --
Net Assets $6,360,921 -- -- $13,750,807 --
</TABLE>
-19-
<PAGE> 20
Schedule A
(p. 4 of 4)
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF NET ASSETS
For the Year Ended December 31, 1993
<TABLE>
<CAPTION>
ASSETS Short-Term Bond U.S. Equity Index ESOP
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investments:
Columbia Stock Fund
Confederation Life GIC
Fidelity Mutal Funds:
Retirement Money Market
Portfolio
Ginnie Mae
Magellan
Contrafund
Growth Company
Growth & Income
Intermediate Bond
Overseas
Europe
Pacific Basin
Balanced
Capital Appreciation Fund
Short-Term Bond --
U.S. Equity Index $41,091,202
ESOP $31,714,837
-- 41,091,202 31,714,837
Employer Contributions Receivable -- 8,821 --
Participant Deposits Receivable -- 210,289 --
Total Assets -- 41,310,312 31,714,837
LIABILITIES
ESOP Loan Payable -- -- 86,992,707
Interest Payable on ESOP Loan -- -- 18,916,648
Net Assets -- $41,310,312 $(74,194,518)
</TABLE>
-20-
<PAGE> 21
Schedule B
(p. 1 of 2)
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF CHANGES IN NET ASETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
COLUMBIA RETIREMENT CONFEDERATION
TOTAL STOCK FUND MONEY MARKET LIFE GIC GINNIE MAE MAGELLAN
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Assets, Beginning of
Year $258,858,258 $146,727,633 $25,321,979 $7,067,099 $4,079,457 $16,356,851
Net Investment Income 9,374,325 -- 1,199,019 343,824 108,822 714,182
Net Realized Gain/(Loss)
on Securities Sold or
Distributed 4,498,522 6,110,315 -- (243,099) (432,059)
Net Change Unrealized
Appreciation/(Depreciat
ion) of Investments (4,992,103) 1,328,947 -- 176 (642,621)
Participants' Deposits 21,787,948 7,419,165 2,613,229 162,257 2,356,173
Columbia Contributions 11,857,777 11,023,371 164,037 10,404 98,431
Distributions (29,381,217) (11,306,284) (6,585,222) (1,573) (226,844) (953,226)
Interfund Exchanges -- (4,392,556) 5,734,373 (570,366) (3,891,173) 2,261,169
Interest Expense on ESOP
Loan (9,959,341) -- -- -- --
Net Assets, End of Year $262,044,169 $156,910,597 $28,447,415 $6,838,984 -- $19,758,900
<CAPTION>
GROWTH GROWTH &
CONTRAFUND COMPANY INCOME
=========================================================================
<S> <C> <C> <C>
Net Assets, Beginning of --
Year -- $16,427,507
Net Investment Income -- 30,072 1,327,180
Net Realized Gain/(Loss)
on Securities Sold or
Distributed 2,246 472 (55,921)
Net Change Unrealized
Appreciation/
(Depreciation)
of Investments 19,416 (23,230) (917,924)
Participants' Deposits 101,648 43,379 1,728,850
Columbia Contributions 7,179 2,163 134,858
Distributions (16,642) (6,146) (1,399,360)
Interfund Exchanges 1,778,344 754,543 941,282
Interest Expense on ESOP
Loan -- -- --
Net Assets, End of Year $1,892,191 $801,253 $18,186,472
</TABLE>
-21-
<PAGE> 22
Schedule B
(p. 2 of 2)
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF CHANGES IN NET ASETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
INTERMEDIATE CAPITAL
BOND OVERSEAS EUROPE PACIFIC BASIN BALANCED APPRECIATION
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Assets, Beginning of
Year $55,650,210 $6,360,921 -- -- $13,750,807 --
Net Investment Income 3,491,224 139,730 13,889 143,860 471,211 70,362
Net Realized Gain/(Loss)
on Securities Sold or
Distributed (817,148) 264,622 18,496 (5,023) (294,323) 372
Net Change Unrealized
Appreciation/
(Depreciation)
of Investments (3,801,648) (382,095) (9,396) (208,197) (1,046,517) (54,158)
Participants' Deposits 2,570,628 760,919 39,275 73,510 1,178,972 24,710
Columbia Contributions 126,813 55,448 2,328 4,221 112,054 2,541
Distributions (4,458,407) (443,766) (128) (16,563) (853,587) (5,574)
Interfund Exchanges (7,727,300) 1,373,793 825,270 1,214,845 562,426 729,647
Interest Expense on ESOP
Loan -- -- -- -- -- --
Net Assets, End of Year $45,034,372 $8,129,572 $889,734 $1,206,653 $13,881,043 $767,900
<CAPTION>
SHORT-TERM INDEX
BOND U.S. EQUITY ESOP
===========================================================================
<S> <C> <C> <C>
Net Assets, Beginning of
Year -- $41,310,312 $(74,194,518)
Net Investment Income 85,548 1,234,294 1,108
Net Realized Gain/(Loss)
on Securities Sold or
Distributed 453 (50,881) --
Net Change Unrealized
Appreciation/
(Depreciation)
of Investments (112,833) (735,197) 1,593,174
Participants' Deposits 178,893 2,536,340 --
Columbia Contributions 13,232 100,697 --
Distributions (190,085) (2,917,810) --
Interfund Exchanges 2,994,361 (2,588,658) --
Interest Expense on ESOP
Loan -- -- (9,959,341)
Net Assets, End of Year $2,969,569 $38,889,097 $(82,559,577)
</TABLE>
-22-
<PAGE> 23
Employer ID#: 13-1594808
Plan #: 002
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
ITEM 27(a) SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
Identity of Issue,
Borrower, Lessor,
or Similar Party Description of Investment Cost(3) Value
--------------------- ------------------------------------ ------- --------------
<S> <C> <C> <C>
Columbia 17,958,914 units of Columbia Stock Fund(1) -- $155,378,724
Fidelity-Boston 28,275,251 shares of Money Market Portfolio -- 28,275,251
Confederation Life 8.8% Guaranteed Investment Contract -- 6,838,984
Fidelity-Boston 292,847 shares of Magellan Fund -- 19,562,197
Fidelity-Boston 61,796 shares of Contrafund -- 1,871,184
Fidelity-Boston 29,061 shares of Growth Company Fund -- 792,201
Fidelity-Boston 855,245 shares of Growth & Income Portfolio -- 18,037,123
Fidelity-Boston 4,560,092 shares of Intermediate Bond Fund -- 44,825,705
Fidelity-Boston 295,322 shares of Overseas Fund -- 8,062,282
Fidelity-Boston 44,141 shares of Europe Fund -- 882,814
Fidelity-Boston 73,712 shares of Pacific Basin Fund -- 1,193,399
Fidelity-Boston 1,120,909 shares of Balanced Fund -- 13,775,972
Fidelity-Boston 49,668 shares of Capital Appreciation Fund -- 760,419
Fidelity-Boston 342,206 shares of Short-Term Bond Portfolio -- 2,942,976
Fidelity-Boston 2,287,943 shares of U.S. Equity Index Portfolio -- 38,689,121
Columbia ESOP(2) -- 33,309,119
------------
TOTAL THRIFT PLAN(3) $375,197,471
============
</TABLE>
(1) Actual shares of The Columbia Gas System, Inc. Common Stock held equals
6,557,093.
(2) Actual shares of The Columbia Gas System, Inc. Common Stock held equals
1,416,155.
(3) Records are maintained by Fidelity-Boston on a fair market value basis;
therefore, cost basis information is unavailable.
-23-
<PAGE> 24
Employer ID#: 13-1594808
Plan #: 002
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
Item 27(d) Schedule of Reportable Transactions
Individual Transactions By Issue
For The Year Ended December 31, 1994
<TABLE>
<CAPTION>
Identity Description Purchase Cost of Current Value of Asset on
of Party of Asset Price Selling Price Expenses Asset Transaction Date Net Gain (Loss)
----------- ------------ --------- ------------- -------- --------- ---------------- ---------------
<S> <C>
No Reportable Transactions.
NOTE: There were no lease rentals during the year.
</TABLE>
-24-
<PAGE> 25
Employer ID#: 13-1594808
Plan #: 002
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
Item 27(d) Schedule of Reportable Transactions
Cumulative Transaction By Issue
For The Year Ended December 31, 1994
<TABLE>
<CAPTION>
Identity Description Purchase Selling
of Party of Asset Price Price
---------------- --------------------- ------------- ------------
<S> <C> <C> <C>
Columbia Columbia Stock Fund $ 35,221,211 $32,513,131
Fidelity-Boston Retirement Money Market 32,023,067 30,094,830
Portfolio
Fidelity-Boston Magellan Fund 15,436,865 10,998,578
Fidelity-Boston Intermediate Bond Fund 9,156,154 15, 126,699
<CAPTION>
Current Value of
Identity Cost of Asset on Net Gain
of Party Expenses Asset(1) Transaction Date(1) or(Loss)
---------------- -------- ----------- -------------------- --------
<S> <C> <C> <C> <C>
Columbia -- -- -- $110,176
Fidelity-Boston -- -- -- --
Fidelity-Boston -- -- -- 81,848
Fidelity-Boston -- -- -- 239,981
</TABLE>
(1) Records are maintained by Fidelity-Boston; cost and current value
information are unavailable.
NOTE: There were no lease rentals during the year.
-25-
<PAGE> 26
FEDERAL TAX CONSEQUENCES
Thrift Plan accounts can be paid in different ways and at different times -
depending on the needs and the various alternatives requested by the
participants. Accordingly, the federal, state and local tax laws may affect
each participant's individual situation.
It is not possible to explain here all of the tax implications of each
individual situation. Thus, each participant should seek competent advice from
a tax advisor prior to requesting a distribution from the Thrift Plan.
Generally:
- after-tax deposits are taxed before they go into the Plan so they
will not be taxed again.
- before-tax deposits are not subject to federal income tax before
they go into the Plan and as long as they remain in the Plan, but
are generally taxable when received.
- before-tax deposits are subject to current Social Security taxes,
and may be subject to current state and local taxes as well.
- withdrawals of investment earnings, Columbia contributions, or
before-tax deposits are subject to federal income tax; an
additional 10% tax is payable if the withdrawal is made prior to
age 59-1/2, with the following exceptions:
- withdrawals made because of disability, or death;
- withdrawals made after the participant's separation from
service after attainment of age 55;
- withdrawals after the participant's separation from service
payable at least annually in substantially equal installments
over the life (or life expectancy) of the employee or the
joint lives (or life expectancies) of the participant and a
designated beneficiary;
- withdrawals made to cover a family member's deductible medical
expenses; and
- withdrawals made to comply with a qualified domestic relations
order (QDRO).
Note: A QDRO arises out of court proceedings in which a spouse, child or other
dependent is awarded a share of the participant's Thrift Plan account as a
marital asset.
The 1/1/87 Tax Rule
During employment, a participant may withdraw after-tax deposits placed into
the Plan before 1/1/87 without federal tax liability, since these monies were
taxed before being deposited.
The situation is different as to withdrawals of after-tax deposits placed into
the Plan on or after 1/1/87. Participants may not withdraw only their
deposits. To accelerate collection of tax the federal tax law requires that
each withdrawal be prorated among after-tax deposits, before-tax deposits and
investment earnings.
-26-
<PAGE> 27
Subject to the exceptions noted above, when taxable amounts are withdrawn,
federal income tax plus an additional 10% tax is due if the withdrawal is made
prior to age 59-1/2.
Taxation of A Hardship Withdrawal
Hardship withdrawals are subject to the federal income tax plus the additional
10% tax unless they are made on or after the date on which the participant
attains age 59-1/2 or are made to cover a family member's deductible medical
expenses.
Lump Sum Distributions
A "lump sum distribution" qualifies for special treatment under the federal tax
laws. A lump sum distribution is the payment, within the same year, of the
participant's entire balance under the Plan that is payable (i) on account of
the participant's disability or death, (ii) after the participant has reached
age 59-1/2, or (iii) on account of the participant's separation from
employment. Except in the case of payments to a beneficiary on account of the
participant's death, the participant must also have been a participant in the
Thrift Plan for five years. The following rules apply to lump sum
distributions:
1. The portion of the distribution representing a return of after-tax
deposits is not subject to federal income tax. If the participant
was age 50 or older before January 1, 1986, he may make a one-time
election (before or after reaching age 59 1/2) of a special
"ten-year averaging" available under pre-1987 tax law, or a special
"five-year averaging" available under the Tax Reform Act of 1986.
In general, ten-year averaging allows the participant to calculate
the tax on his distribution separately from other income as if
equal portions of the distribution were received over a ten-year
period using 1986 tax rates. If elected, pre-1987 capital gain
rules (using a 20% tax rate) will apply to the taxable portion
allocated to years prior to 1974. Five-year averaging is similar,
but the averaging period is shorter, as the name implies, and uses
the tax rates in effect in the year of the distribution.
Participants must have attained the age of 59-1/2 in order to elect
five-year averaging.
If the participant was younger than age 50 on January 1, 1986, he
can only make a one-time election of "five-year averaging" provided
his account is paid in a lump sum after reaching age 59-1/2.
2. Unless the participant otherwise elects, taxation of net unrealized
appreciation on Columbia stock distributed in a lump sum is
deferred until the shares are sold. At that time, gains realized
will be considered as long-term capital gains to the extent of the
unrealized appreciation at the time of the distribution. If the
value of the stock has increased between the time of the
distribution and sale, the additional gain is subject to the normal
holding period on capital gains. The five-year participation
requirement for lump sum treatment does not apply.
-27-
<PAGE> 28
If a participant's distribution of Columbia stock does not qualify
for lump sum treatment, then the deferral of taxation for net
unrealized appreciation applies only to stock attributable to a
participant's after-tax participant contributions.
Annuity Distributions and Periodic Payments
If the participant elects to receive a distribution in the form of an annuity,
or in a series of equal periodic payments over more than one year, a portion of
each payment will be considered non-taxable to the extent it represents a
participants after tax deposits. In general, the portion that is not taxable
is determined by multiplying each payment by a fraction, the numerator of which
is the participant's total after-tax deposits (if any) and the denominator of
which is the total expected payments. If the participant's payments started
after December 31, 1986, then the following rule applies: once the total
amount of payments treated as non-taxable equals the total amount of the
participant's after-tax deposits, all subsequent payments are fully taxable.
If a participant's payments started before January 1, 1987, this rule does not
apply. Furthermore, if the participant's payments started on or before July 1,
1986 and all of his after-tax deposits were recoverable within the first three
years, after-tax deposits were treated as recovered first (and therefore
nontaxable), with all subsequent payment being fully taxable.
Other Rules
Different rules may apply to payments made directly to beneficiaries and to
payments to persons who are "alternate payees" under a QDRO.
Under the Tax Reform Act of 1986, an additional excise tax of 15% may also
apply where an individual receives, within one calendar year, retirement
distributions from one or more qualified plans in excess of a specific
statutory amount.
Required Withholding
As of January 1, 1993, the Plan is required by federal law to withhold 20% from
the taxable portion of any cash distribution of the participant's Thrift Plan
Account made directly to the participant. The participant may avoid the 20%
withholding only by arranging for the Plan to make the distribution on the
participant's behalf directly to an Individual Retirement Account (IRA) or
other qualified benefit plan or annuity. Pursuant to this arrangement, a
participant may not personally receive any distribution of his Plan interest.
However, the required 20% withholding does not apply to the following
distributions:
- payments that will continue over the participant's life or life
expectancy or over the joint lives or life expectancies of the
participant and a beneficiary;
- payments payable in installments over 10 years or more;
- required distributions after age 70-1/2;
- corrective distributions; or
- payments expected to total less than $200 annually.
-28-
<PAGE> 29
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Thrift Plan Committee has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
EMPLOYEES' THRIFT PLAN OF
COLUMBIA GAS SYSTEM
June 28, 1995 By /s/ M. W. O'Donnell
--------------------------------
M. W. O'Donnell
Chief Financial Officer
-29-
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated June 23, 1995 included in this Form 11-K, into the Company's
previously filed Form S-8 Registration Statement File No. 33-42776.
ARTHUR ANDERSEN LLP
New York, New York
June 28, 1995
