<PAGE> 1
File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form U-1
APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
THE COLUMBIA GAS SYSTEM, INC.
12355 Sunrise Valley Drive, Suite 300
Reston, VA 20191-3420
- --------------------------------------------------------------------------------
(Names of company or companies filing this statement
and addresses of principal executive offices)
T. S. Bindra, Associate General Counsel
and Assistant Secretary
The Columbia Gas System, Inc.
12355 Sunrise Valley Drive, Suite 300
Reston, VA 20191-3420
- --------------------------------------------------------------------------------
(Name and address of agent for service)
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Item 1. Description of Proposed Transaction
(a) Furnish a reasonably detailed and precise description of the
proposed transaction, including a statement of the reasons why it is desired
to consummate the transaction and the anticipated effect thereof. If the
transaction is part of a general program, describe the program and its
relation to the proposed transaction
The Columbia Gas System, Inc. ("Columbia"), a Delaware corporation, and a
holding company registered under the Public Utility Holding Company Act of
1935 (the "Act"), is the Applicant-Declarant. Columbia requests
authorization to establish a direct subsidiary ("Captive") to engage in the
business of reinsuring certain levels of predictable risk for Columbia and its
affiliates (including project companies in which Columbia subsidiaries have an
equity interest) as described herein.
As will be discussed, Columbia estimates that it can significantly reduce
its cost of purchasing commercial insurance for "predictable" losses by using
its own 10-year loss experience to actuarially identify its "predictable"
losses for automobile, general liability and "all-risk" property losses and
underwriting such losses through the Captive. Such an arrangement should
result in an immediate reduction in insurance premiums and in other
advantages discussed herein. However, an understanding of how the current
insurance program functions is helpful prior to a discussion of the details
of the operations of the Captive.
CURRENT PROGRAM
Columbia deems the Risk Management function to be a key corporate
function in providing for the protection of physical and financial assets
thereby permitting each company in
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the Columbia system to carry out its strategic goals and objectives. As such,
risk management is co-ordinated by the Columbia Gas System Service Corporation
("Service Corporation"). One of the Service Corporation's Risk Management
Department's primary responsibilities is the procurement of a broad array of
insurance coverages and services. To maximize cost effectiveness, Risk
Management purchases such services and insurance on behalf of the entire
organization, including Columbia and all direct and indirect subsidiaries
(referred to collectively as the "System").
On an annual basis, the System spends approximately $30,000,000 for the
purchase of commercial insurance and related services (including the
reimbursement of the self-insurance level). (Exhibits I-1 and I-2 hereto set
forth loss history and premiums paid for each direct operating subsidiary in
the System for the last five years in the areas initially to be covered by the
Captive). This is a significant expenditure. In view of the rapid pace of
deregulation and the intensifying competitive nature of the System's business,
it is important for the System to maintain and enhance its competitive
situation by continuing to aggressively monitor and manage the cost for
insurance and related services. (Columbia's leading edge in insurance
activities is demonstrated by Columbia's equity participation in ACE, an
industry-captive insurance company. (See File No. 70-7261).)
Under the current insurance program, Columbia maintains an underlying
deductible of $200,000 per event for automobile and general liability
coverage, and $50,000 per event for "all-risk" property coverage. In excess
of these deductibles, Columbia purchases commercial insurance. Subsidiaries of
Columbia, regardless of size and business needs, have no choice as to
deductibles.
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Commercial premiums are then allocated to subsidiaries based on such factors
as number of automobiles, total property values, revenues, product throughput,
etc. in accordance with the allocation filed with and approved by the
Commission. A subsidiary's individual loss experience is not considered for
purposes of allocating premium expenses.
Columbia believes that this "one size fits all" approach is no longer the
best way to maximize cost effectiveness and does not provide the operating
units with the required flexibility to meet their strategic goals and
objectives. For example, a smaller company might prefer a smaller deductible
to stabilize its costs, whereas a large company might select a larger
deductible if they had a choice. Under the current program, the choice is not
available.
PROPOSED CAPTIVE INSURANCE PROGRAM
STRUCTURE:
Columbia proposes to establish Captive as a new direct subsidiary which
would be authorized to operate as an insurance company in Bermuda and would
reinsure certain commercial insurance bought by Columbia, its subsidiaries and
affiliates from commercial insurance companies such as Travelers Insurance
Companies.
Although Captive will initially focus on providing three major
coverages: 1) automobile liability, 2) "all-risk" property and 3) general
liability, Captive will entertain underwriting, at some future time, such
areas as workers' compensation, director and officer liability, legal
malpractice for employee attorneys, performance bonds, as well as various
warranty programs planned to be
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offered to consumers (See File No. 70-8775). These programs do not involve
material exposure compared to the three areas in which the Captive will
initially operate.
Captive would not be an admitted commercial insurer in the states of the
United States, but instead would work through admitted commercial insurers, as
described below. Although the regulated utility companies(1) would not be
dealing with an affiliate directly, it is Columbia's intention to review the
Captive arrangements with the utility commissions in each state in which the
utility subsidiaries operate.
No additional staff would be required for the operation of the Captive.
Instead, as in the case with most captives, a Bermuda management company will
be retained to provide administrative services. Columbia employees will be
directors of the Captive. Employees of the Service Corporation will be
principle officers and will provide all administrative functions. Time and
expenses will be billed to the Captive and recovered in premiums.
Funding of the Captive is proposed at $3,000,000, with the first
$1,000,000 in capital contributions and/or cash from Columbia in exchange for
Captive common stock $25 par value and an additional $2,000,000 in letters of
credit under Columbia's bank facility previously approved by this Commission
(See File No. 70-8627). If payment is required under a letter of credit,
Columbia would reimburse the Bank and the amount paid would be treated as a
capital contribution to the Captive. All funds will be deposited with the
Captive's bank in Bermuda and will be managed by an investment manager in
accordance with Rule 40 promulgated under the Act as such Rule may be amended
from time to time or until the effective date of any legislation repealing the
Act.
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(1) Columbia Gas of Kentucky, Inc.; Columbia Gas of Maryland, Inc.;
Columbia Gas of Ohio, Inc.; Columbia Gas of Pennsylvania, Inc. and
Commonwealth Gas Services, Inc.
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OPERATIONS:
The Captive would assume the risk of the more predictable loss layer from
the commercial insurers, for losses between zero and $2,000,000 for automobile
and general liability losses and between zero and $750,000 for "all-risk"
property losses.(2) Commercial insurance would continue to be purchased for
"unpredictable" losses above $2,000,000 and $750,000, respectively, just as is
done under the current program. Premiums for the first year which were
actuarially determined to equal the aggregate predictable loss plus
administrative expenses (determined in accordance with Rule 91 but without a
return on equity(3)) are estimated at $4,200,000, which when aggregated with
$3 million of funding, give the Captive a total of $7,200,000 plus interest to
respond to claims during the first year.(4)
Each subsidiary would be given a choice of deductible and premiums would
be based on that choice and the subsidiary's own prior loss experience so that
a subsidiary with a historical lower loss experience would be rewarded with
lower premiums. With this exception, premium allocations would continue to be
made using the bases of allocation previously filed with the Commission under
the current program. Under the current program, a premium increase caused by
a significant loss or a higher frequency of losses was allocated on bases that
did not take the loss or frequency of loss into account. Under the new
program, the source of the loss would be a
- --------------------
(2) The projections attached hereto are based on assumed minimum
deductibles of $200,000 for automobile and general liability and $100,000 for
all-risk property losses.
(3) Should Columbia seek to provide insurance for third parties, Rule 91
would not apply. Also, in the future premiums may include a return on equity in
accordance with Rule 91.
(4) Exhibit I-2 shows all premiums for the three areas of insurance.
The predictable loss portion which will be placed with the Captive totals only
$4,200,000 out of the $10,105,127 premiums shown.
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basis of allocation. However, due to the lower administrative costs and
efficiency of the program, premiums will be lower.
Attached hereto is a projection of the results of operations for the
first five years of the Captive's operations.(5) To the extent that premiums
and interest earned exceed current claims and expenses, an appropriate reserve
would be accumulated to respond in years when claims and expenses exceed
premiums. To the extent that losses over the long term are lower than
projected, premiums would be appropriately reduced. Excess cash would be
invested in accordance with System's investment guidelines.
In addition, to assure the financial strength and integrity of the
Captive, which must comply with strict Bermuda capital to premium requirements
of $1 of capital for every $5 of net premium, aggregate "stop loss" protection
will be arranged from a commercial insurer. Using actuarial models with a
high confidence factor, it is expected that the Captive would not experience
losses in excess of $7,200,000 in the first year of operation. As noted
above, the Captive's available funding is designed to meet this level of loss.
In the unlikely event of losses exceeding this amount, however, commercial
insurance will respond to any claim(s) in excess of the aggregate and
retention. This ensures coverage will be available to the Columbia
subsidiaries.
BENEFITS OF CAPTIVE:
1) Significant reduction in the 30% to 40% overhead charge for
commercial insurers underwriting "predictable" risk.
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(5) Premiums for affiliated project companies are initially projected
to be sufficient to qualify the captive as an insurance company for tax
purposes. However, to be conservative in the cash flow projections, the
attached projections assume that the captive does not qualify as an insurance
company for tax purposes. This assumption raises the cash required for taxes.
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Commercial insurers charge insurance premiums based on actuarially
projected "predictable" losses plus a 30% to 40% overhead charge.
Therefore, for every $1.00 in projected loss, a commercial insurer
charges an additional $.40 for administrative charges/overhead. In
contrast, the Captive would only add the actual cost of administration.
This will result in substantial savings. In the first year this is
expected to result in a savings in premiums of approximately $1,500,000.
(See Exhibit I-2.)
2) Provide direct access to global reinsurers to ensure the most
competitive and cost-effective pricing for Columbia's
"unpredictable" commercial insurance exposures. This could result in
savings in premiums above the $1,500,000 level.
Reinsurers are generally only accessible by commercial insurers and
brokers who charge a fee. A captive insurance company provides Columbia
direct access to reinsurance markets, avoiding the fee and permits access
to the same group of "elite" reinsurers which most Fortune 500 companies
already access. These "elite" reinsurers, Munich RE, Zurich RE and Swiss
RE are not only part of the world's largest and most innovative insurers,
they are among the most competitively priced.
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3) Permit subsidiaries to select deductibles consistent with their
business needs and objectives.
Higher deductibles foster an increased awareness for loss prevention
programs at the subsidiary level with the likely prospect of reduced
losses in the future, as well as lower future premiums. The better
the loss experience, the lower the premium.
4) Provide Columbia companies with greater control and input over the
claim management process.
Under current arrangements, commercial insurers determine if and when to
settle claims; use of a captive places this responsibility on the System
through the Captive.
5) Less reliance on the commercial insurance market for insuring
"predicable" risk resulting in less volatility of future premiums.
Commercial insurers base premiums not only on a company's loss history,
but also on the results in the industry, subjecting companies to possible
dramatic changes in insurance rates from year to year. To the extent
that the Captive reduces reliance on commercial insurers, the
vulnerability to such changes is lessened. The portion of the System's
insurance premiums that are paid to the Captive would be based on a
company's loss experience solely and would not be subject to
industry-driven volatility.
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Sixty percent of the Fortune 500 companies presently utilize a captive
insurance company to more effectively control and manage their insurance
costs.(6) Columbia strongly believes a captive insurance company will be
very important in "leveling the playing field" and in providing access to the
most competitive global insurance markets, thereby resulting in reduced cost
for insurance and related services.
CERTIFICATES OF NOTIFICATION
Applicant will file as an Exhibit to its Annual Report on Form U5-S, a
statement of all premiums received by Captive by affiliate from which received
and a balance sheet as of December 31st of the previous year and an income
statement for the year ended on the preceding December 31st.
AUTHORIZATION REQUESTED
Columbia requests authorization to create and fund Captive through
the purchase through December 31, 1996 of up to $1,000,000 of common stock of
Captive, $25 par value per share, at a purchase price at or above par value
and to provide to the Captive up to $2,000,000 of letters of credit under
Columbia's bank facility previously approved, which if called upon, would be
converted to capital advances to the extent called.
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(6) Other natural gas systems with captive insurance companies include
the Williams companies, Inc., Enserch Corporation, Enron Corporation,
Panhandle Eastern Corporation, Coastal Corporation, Tenneco, Inc., Sonat Inc,
Midcon Corporation and UGI Corporation.
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Item 2. Fees, Commissions and Expenses
(a) State (1) the fees, commissions and expenses paid or incurred, or to
be paid or incurred, directly or indirectly, in connection with the proposed
transaction by the applicant or declarant or any associate company thereof,
and (2) if the proposed transaction involves the sale of securities at
competitive bidding, the fees and expenses to be paid to counsel selected by
applicant or declarant to act for the successful bidder.
Columbia Gas System Service Corporation has provided certain
services in connection with the preparation of this filing as follows:
<TABLE>
<C> <C>
Securities and Exchange Commission Filing Fee . . . . . . . . . . . $ 2,000
Services of Columbia Gas System Service Corporation
in connection with the preparation of the Application-Declaration. . *
Services of LeBoeuf, Lamb, Leiby & MacRae . . . . . . . . . . . . . *
Services of Alexander & Alexander (?) . . . . . . . . . . . . . . . *
Total . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,000
</TABLE>
(b) If any person to whom fees or commissions have been or are to be paid in
connection with the proposed transaction is an associate company or an
affiliate of any applicant or declarant, or is an affiliate of an associate
company, set forth the facts with respect thereto.
Columbia Gas System Service Corporation is a wholly owned subsidiary
of Columbia and has performed certain services at cost as set forth in Item
2(a) (1) above.
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* To be filed by Amendment.
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Item 3. Applicable Statutory Provisions.
(a) State the section of the Act and the rules thereunder believed to be
applicable to the proposed transaction. If any section or rule would be
applicable in absence of a specific exemption, state the basis of exemption.
The issuance of new securities by Captive will be pursuant to Sections
6(a) and 7 and Rule 43. Sections 9(a), 10 and 12(f) is deemed applicable to
the acquisition by Columbia of the capital stock of Captive. The letters of
credit provided by Columbia are made pursuant to Section 12(b) and Rule 45.
The request for authorization to invest assets of the Captive pursuant to
guidelines attached hereto is made pursuant to Section 9(c)(3) of the Act.
Columbia does not own, nor operate nor is it an equity participant in any
Exempt Wholesale Generator or any Foreign Utility Company and will not be a
company that owns, operates or has an equity participation in an Exempt
Wholesale Generator or Foreign Utility Company as a result of the approvals
requested herein. Columbia does not have any rights, nor will it have any
rights or obligations under a service, sales or construction contract with an
Exempt Wholesale Generator or Foreign Utility Company as a result of the
proposed transactions.
To the extent that the proposed transactions are considered by the
Commission to require authorization, approval or exemption under any section
of the Act or any provision of the rules and regulations other than those
specifically referred to herein, a request for such authorization, approval or
exemption is hereby made.
(b) If any applicant is not a registered holding company or a subsidiary
thereof, state the name of each public utility company of which it is an
affiliate, or of which it will become an affiliate as a result of the proposed
transaction, and the reasons why it is or will become such an affiliate.
Not applicable
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Item 4. Regulatory Approval.
(a) State the nature and extent of the jurisdiction of any State
commission or any Federal commission (other than the Securities and Exchange
Commission) over the proposed transaction.
Not applicable.
Although it is Columbia's view that no State public utility
commission has jurisdiction over the formation of Captive and the reinsurance
program described above, it is Columbia's intention to review the program with
the utility commission in each state in which a Columbia utility operates.
For the avoidance of doubt, filings were made with Virginia and Pennsylvania
Public Utility Commissions because these states have jurisdiction over
affiliate contracts and transactions. Virginia public utility commission has
issued an order disclaiming jurisdiction over the Captive program. In
Pennsylvania a filing is pending which seeks concurrence as to the absence of
jurisdiction, or in the alternative, approval of the Pennsylvania public
utility commission.
(b) Describe the action taken or proposed to be taken before any
Commission named in answer to Paragraph (a) of this item in connection with
the proposed transaction.
Not applicable.
Item 5. Procedure.
(a) State the date when Commission action is requested. If the
date is less than 40 days from the date of the original filing, set forth the
reasons for acceleration.
It is respectfully requested that the Commission issue its notice by
August 28, 1996 and its order on or by September 18, 1996.
(b) State (i) whether there should be a recommended decision by a
hearing officer, (ii) whether there should be a recommended decision by any
other responsible officer of the Commission, (iii) whether the Division of
Investment Management may assist in the preparation of the Commission's
decision, and (iv) whether there should be a 30-day waiting period between the
issuance of the Commission's order and the date on which it is to become
effective.
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The Applicants hereby (i) waive a recommended decision by a hearing
officer, (ii) waive a recommended decision by any other responsible officer of
the Commission, (iii) specify that the Division of Investment Management may
assist in the preparation of the Commission's decision, and (iv) specifies
that there should not be a 30-day waiting period between the issuance of the
Commission's order and the date on which it is to become effective.
Item 6. Exhibits and financial Statements.
(a) Exhibits
A Form of Subsidiary Common Stock Certificate (Exhibit A-2 to
Joint-Application Declaration (File No. 70-7276) is hereby
incorporated by reference.
F Opinion of Counsel (to be filed by amendment).
G Financial Data Schedules.
H Draft Notice.
I-1 Five Year History of Losses by Subsidiary
I-2 Five Year History of Premiums by Subsidiary
J 5 year Projections
(b) Financial Statements
(1) The Columbia Gas System, Inc. and Subsidiaries
(a) Balance Sheets as of June 30, 1996 (actual and pro forma).
(b) Statements of Capitalization as of June 30 1996 (actual
and pro forma).
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(c) Statements of Income for the Twelve Months ended June 30
1996 (actual and pro forma).
(d) Statements of Common Stock Equity as of June 30 1996
(actual and pro forma).
(2) The Columbia Gas System, Inc.
(a) Balance Sheets as of June 30 1996 (actual and pro forma).
(b) Statements of Capitalization as of June 30 1996 (actual
and pro forma).
(c) Statements of Income for the Twelve Months ended June 30
1996 (actual and pro forma).
(d) Statements of Common Stock Equity as of June 30 1996
(actual and pro forma).
(e) Pro forma entries.
(3) Captive
(a) Balance Sheets as of June 30 1996 (actual and pro forma).
(b) Statements of Capitalization as of June 30 1996 (actual
and pro forma).
(c) Statements of Income for the Twelve Months ended June 30
1996 (actual and pro forma).
(d) Statements of Common Stock Equity as of June 30 1996
(actual and pro forma).
(e) Pro forma entries.
There have been no material changes, not in the ordinary course of
business, since the date of the financial statements filed herewith.
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Item 7. Information as to Environmental Effects.
(a) Describe briefly the environmental effects of the proposed
transaction in terms of the standards set forth in Section 102(2)(C) of the
National Environmental Policy Act (42 U.S.C. 4232(2)(C)). If the response to
this item is a negative statement as to the applicability of Section 102(2)(C)
in connection with the proposed transaction, also briefly state the reasons
for that response.
As more fully described in Item 1, the proposed transactions relate
only to establishment of a subsidiary company and have no environmental impact
in and of themselves.
(b) State whether any other federal agency has prepared or is preparing
an environmental impact statement ("EIS") with respect to the proposed
transaction. If any other federal agency has prepared or is preparing an EIS,
state which agency or agencies and indicate the status of that EIS
preparation.
No federal agency has prepared or is preparing an EIS with respect
to the proposed transaction.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, each of the undersigned companies has duly caused this Declaration to be
signed on its behalf by the undersigned thereunto duly authorized.
THE COLUMBIA GAS SYSTEM, INC.
Date: August 27, 1996 By: /s/ T. S. Bindra
------------------------------
T. S. Bindra
Associate General Counsel
and Assistant Secretary
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THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED
(b)(1)(a)
(1 of 2)
CONSOLIDATED BALANCE SHEET
ACTUAL and PRO FORMA
As of June 30, 1996
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
------------ ------------ -----------
<S> <C> <C> <C>
ASSETS
Property, Plant and Equipment
Gas utility and other plant, at original cost .... 6,834,224 - 6,834,224
Accumulated depreciation and depletion ........... (3,292,497) - (3,292,497)
------------ ------------ -----------
Net Gas Utility and Other Plant .................. 3,541,727 - 3,541,727
------------ ------------ -----------
Oil and gas producing properties, full cost method 517,170 - 517,170
Accumulated depletion ............................ (151,821) - (151,821)
------------ ------------ -----------
Net Oil and Gas Producing Properties ............. 365,349 - 365,349
------------ ------------ -----------
Net Property, Plant, and Equipment ................. 3,907,076 - 3,907,076
------------ ------------ -----------
Investments and Other Assets
Accounts receivable - noncurrent ................. 76,983 - 76,983
Unconsolidated affiliates ........................ 66,941 - 66,941
Other ............................................ 16,978 - 16,978
------------ ------------ ------------
Total Investments and Other Assets ................. 160,902 - 160,902
------------ ------------ ------------
Investments in Subsidiaries
Capital stock .................................... - - -
Equity in undistributed retained earnings ........ - - -
Installment promissory notes receivable .......... - - -
Other investments ................................ - - -
------------ ------------ ------------
Total Investments in Subsidiaries .................. - - -
------------ ------------ ------------
Current Assets
Cash and temporary cash investments .............. 75,372 - 75,372
Accounts receivable, net
Customers ...................................... 331,154 - 331,154
Affiliated ..................................... - - -
Other .......................................... 27,200 - 27,200
Gas inventory .................................... 149,112 - 149,112
Other inventory at average cost .................. 45,962 - 45,962
Prepayments ...................................... 61,396 - 61,396
Current regulatory assets ........................ 66,745 - 66,745
Other ............................................ 251,401 - 251,401
------------ ------------ ------------
Total Current Assets ............................... 1,008,342 - 1,008,342
------------ ------------ ------------
Deferred Charges ................................... 51,440 - 51,440
Long term regulatory assets ........................ 422,279 - 422,279
------------ ------------ ------------
Total Assets ....................................... 5,550,039 - 5,550,039
============ ============ ============
</TABLE>
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THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES
UNAUDITED
(b)(1)(a)
(2 of 2)
BALANCE SHEET
ACTUAL and PRO FORMA
As of June 30, 1996
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
------------ ------------ -----------
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization
Stockholder's equity ............................. 1,499,682 - 1,499,682
Long-term debt ................................... 2,004,127 - 2,004,127
------------ ------------ -----------
Total Capitalization ............................... 3,503,809 - 3,503,809
------------ ------------ -----------
Current Liabilities
Current maturities of long term debt ............. 484 - 484
Short-term debt .................................. - - -
Debtor in possession financing ................... - - -
Accounts and drafts payable ...................... 184,762 - 184,762
Affiliated accounts payable ...................... - - -
Accrued taxes .................................... 267,734 - 267,734
Accrued interest ................................. 23,605 - 23,605
Estimated rate refunds ........................... 94,864 - 94,864
Estimated supplier obligations ................... 129,198 - 129,198
Current regulatory liabilities ................... 9,200 - 9,200
Deferred income taxes - current .................. - - -
Other ............................................ 354,498 - 354,498
------------ ------------ -----------
Total Current Liabilities .......................... 1,064,345 - 1,064,345
------------ ------------ -----------
Liabilities Subject to Chapter 11 Proceedings ...... - - -
------------ ------------ -----------
Other Liabilities and Deferred Credits
Deferred income taxes, noncurrent ................ 530,085 - 530,085
Deferred investment tax credit ................... 37,862 - 37,862
Postretirement benefits other than pensions ...... 180,502 - 180,502
Long term regulatory liabilities ................. 44,642 - 44,642
Other ............................................ 188,794 - 188,794
------------ ------------ -----------
Total Other Liabilities and Deferred Credits ....... 981,885 - 981,885
------------ ------------ -----------
Total Capitalization and Liabilities ............... 5,550,039 - 5,550,039
============ ============ ===========
</TABLE>
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THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES
UNAUDITED
(b)(1)(b)
STATEMENT OF CAPITALIZATION
ACTUAL and PRO FORMA
As of June 30, 1996
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
Stockholder's Equity
Common Stock, $10 par value, authorized
100,000,000 shares, outstanding 55,065,869
shares .......................................... 550,658 - 550,658
Additional paid in capital ....................... 736,762 - 736,762
Retained earnings ................................ 213,721 - 213,721
Unearned employee compensation ................... (1,459) - (1,459)
------------ ------------ ------------
Total Stockholder's Equity ......................... 1,499,682 - 1,499,682
------------ ------------ ------------
Long-Term Debt
Long term debt ................................... 2,004,127 - 2,004,127
Installment promissory notes payable ............. - - -
------------ ------------ ------------
Total Long-Term Debt ............................... 2,004,127 - 2,004,127
------------ ------------ ------------
Total Capitalization ............................... 3,503,809 - 3,503,809
============ ============ ============
</TABLE>
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THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES
UNAUDITED
(b)(1)(c)
STATEMENT OF INCOME
ACTUAL and PRO FORMA
Twelve Months Ended June 30, 1996
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
------------ ------------ -----------
<S> <C> <C> <C>
Operating Revenues
Gas Sales ........................................ 2,223,113 - 2,223,113
Transportation ................................... 508,136 - 508,136
Other ............................................ 204,013 - 204,013
------------ ------------ -----------
Total Operating Revenues ........................... 2,935,262 - 2,935,262
------------ ------------ -----------
Operating Expenses
Products purchased ............................... 1,048,411 - 1,048,411
Operation ........................................ 838,202 - 838,202
Maintenance ...................................... 114,410 - 114,410
Depreciation and depletion ....................... 245,368 - 245,368
Other taxes ...................................... 211,283 - 211,283
------------ ------------ -----------
Total Operating Expenses ........................... 2,457,674 - 2,457,674
------------ ------------ -----------
Operating Income (Loss) ............................ 477,588 - 477,588
------------ ------------ -----------
Other Income (Deductions)
Interest income and other, net ................... (50,111) - (50,111)
Interest expense and related charges ............. (1,059,149) - (1,059,149)
Reorganization items, net ........................ (19,072) - (19,072)
------------ ------------ -----------
Total Other Income (Deductions) .................... (1,128,332) - (1,128,332)
------------ ------------ -----------
Income (Loss) before Income Taxes and
Extraordinary Item ............................... (650,744) - (650,744)
Income Taxes ....................................... (218,268) - (218,268)
------------ ------------ -----------
Income (Loss) before Extraordinary Item ............ (432,476) - (432,476)
Extraordinary Item ................................. 71,575 - 71,575
------------ ------------ -----------
Net Income (Loss) .................................. (360,901) - (360,901)
============ ============ ===========
</TABLE>
<PAGE> 22
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES
UNAUDITED
(b)(1)(d)
STATEMENTS OF COMMON STOCK EQUITY
ACTUAL and PRO FORMA
Twelve Months Ended June 30, 1996
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
COMMON STOCK
Balance at July 1, 1995 ............................ 505,734 - 505,734
Common stock issued -
Subsidiaries ..................................... - - -
Leveraged employee stock ownership plan (LESOP) .. - - -
Dividend reinvestment plan ....................... - - -
Long-term incentive plan ......................... 1,586 - 1,586
Public offering .................................. 43,338 - 43,338
------------ ------------ ------------
Balance at June 30, 1996 ........................... 550,658 - 550,658
------------ ------------ ------------
PREFERRED STOCK
Balance at July 1, 1995 ............................ - - -
Preferred stock issued ............................. - - -
------------ ------------ ------------
Balance at June 30, 1996 ........................... - - -
------------ ------------ ------------
ADDITIONAL PAID IN CAPITAL
Balance at July 1, 1995 ............................ 602,026 - 602,026
Common stock issued -
Subsidiaries ..................................... - - -
Leveraged employee stock ownership plan (LESOP) .. (7,903) - (7,903)
Dividend reinvestment plan ....................... - - -
Long-term incentive plan ......................... 5,135 - 5,135
Public offering .................................. 137,504 - 137,504
Preferred stock issued ............................. - - -
------------ ------------ ------------
Balance at June 30, 1996 ........................... 736,762 - 736,762
------------ ------------ ------------
RETAINED EARNINGS
Balance at July 1, 1995 ............................ 590,265 - 590,265
Net income ......................................... (360,901) - (360,901)
Common stock dividends - - - -
CG ............................................... (15,643) - (15,643)
Subsidiaries (to CG) ............................. - - -
Other .............................................. - - -
------------ ------------ ------------
Balance at June 30, 1996 ........................... 213,721 - 213,721
------------ ------------ ------------
UNEARNED EMPLOYEE COMPENSATION
Balance at July 1, 1995 ............................ (69,966) - (69,966)
Adjustment ......................................... 68,507 - 68,507
------------ ------------ ------------
Balance at June 30, 1996 ........................... (1,459) - (1,459)
------------ ------------ ------------
TOTAL COMMON STOCK EQUITY .......................... 1,499,682 - 1,499,682
============ ============ ============
</TABLE>
<PAGE> 23
THE COLUMBIA GAS SYSTEM, INC.
UNAUDITED
(b)(2)(a)
(1 of 2)
BALANCE SHEET
ACTUAL and PRO FORMA
As of June 30, 1996
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Investments and Other Assets
Accounts receivable - noncurrent ................. 4,183 - 4,183
Unconsolidated affiliates ........................ - - -
------------ ------------ ------------
Total Investments and Other Assets ................. 4,183 - 4,183
------------ ------------ ------------
Investments in Subsidiaries
Capital stock .................................... 2,388,963 1,000 2,389,963
Equity in undistributed retained earnings ........ (315,744) - (315,744)
Installment promissory notes receivable .......... 566,002 - 566,002
Other investments ................................ 643,000 - 643,000
------------ ------------ ------------
Total Investments in Subsidiaries .................. 3,282,221 1,000 3,283,221
------------ ------------ ------------
Current Assets
Cash and temporary cash investments .............. 48,964 (1,000) 47,964
Accounts receivable, net
Customers ...................................... - - -
Affiliated ..................................... 252,864 - 252,864
Other .......................................... 1,879 - 1,879
Prepayments ...................................... 130 - 130
Other ............................................ 24,899 - 24,899
------------ ------------ ------------
Total Current Assets ............................... 328,736 (1,000) 327,736
------------ ------------ ------------
Deferred Charges ................................... 9,601 - 9,601
------------ ------------ ------------
Total Assets ....................................... 3,624,741 - 3,624,741
============ ============ ============
</TABLE>
<PAGE> 24
THE COLUMBIA GAS SYSTEM, INC.
UNAUDITED
(b)(2)(a)
(2 of 2)
BALANCE SHEET
ACTUAL and PRO FORMA
As of June 30, 1996
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization
Stockholder's equity ............................. 1,499,682 - 1,499,682
Long-term debt ................................... 2,000,056 - 2,000,056
------------ ------------ ------------
Total Capitalization ............................... 3,499,738 - 3,499,738
------------ ------------ ------------
Current Liabilities
Short-term debt .................................. - - -
Debtor in possession financing ................... - - -
Accounts and drafts payable ...................... 2,657 - 2,657
Affiliated accounts payable ...................... 359 - 359
Accrued taxes .................................... 69,899 - 69,899
Accrued interest ................................. 25,049 - 25,049
Deferred income taxes - current .................. - - -
Other ............................................ 13,917 - 13,917
------------ ------------ ------------
Total Current Liabilities .......................... 111,881 - 111,881
------------ ------------ ------------
Liabilities Subject to Chapter 11 Proceedings ...... - - -
------------ ------------ ------------
Other Liabilities and Deferred Credits
Deferred income taxes, noncurrent ................ - - -
Postretirement benefits other than pensions ...... 8,075 - 8,075
Other ............................................ 5,047 - 5,047
------------ ------------ ------------
Total Other Liabilities and Deferred Credits ....... 13,122 - 13,122
------------ ------------ ------------
Total Capitalization and Liabilities ............... 3,624,741 - 3,624,741
============ ============ ============
</TABLE>
<PAGE> 25
THE COLUMBIA GAS SYSTEM, INC.
UNAUDITED
(b)(2)(b)
STATEMENT OF CAPITALIZATION
ACTUAL and PRO FORMA
As of June 30, 1996
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
------------ ------------ ------------
Stockholder's Equity
<S> <C> <C> <C>
Common Stock, $10 par value, authorized
100,000,000 shares, outstanding 55,065,869
shares .......................................... 550,658 - 550,658
Additional paid in capital ....................... 736,762 - 736,762
Retained earnings ................................ 213,721 - 213,721
Unearned employee compensation ................... (1,459) - (1,459)
------------ ------------ ------------
Total Stockholder's Equity ......................... 1,499,682 - 1,499,682
------------ ------------ ------------
Long-Term Debt
Long term debt ................................... 2,000,056 - 2,000,056
Installment promissory notes payable.............. - - -
------------ ------------ ------------
Total Long-Term Debt ............................... 2,000,056 - 2,000,056
------------ ------------ ------------
Total Capitalization ............................... 3,499,738 - 3,499,738
============ ============ ============
</TABLE>
<PAGE> 26
THE COLUMBIA GAS SYSTEM, INC.
UNAUDITED
(b)(2)(c)
STATEMENT OF INCOME
ACTUAL and PRO FORMA
Twelve Months Ended June 30, 1996
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
Operating Revenues
Gas Sales ........................................ - - -
Transportation ................................... - - -
Other ............................................ - - -
------------ ------------ ------------
Total Operating Revenues ........................... - - -
------------ ------------ ------------
Operating Expenses
Products purchased ............................... - - -
Operation ........................................ 21,509 - 21,509
Maintenance ...................................... - - -
Depreciation and depletion ....................... - - -
Other taxes ...................................... 367 - 367
------------ ------------ ------------
Total Operating Expenses ........................... 21,876 - 21,876
------------ ------------ ------------
Operating Income (Loss) ............................ (21,876) - (21,876)
------------ ------------ ------------
Other Income (Deductions)
Interest income and other, net ................... 387,130 - 387,130
Interest expense and related charges ............. (1,088,111) - (1,088,111)
Reorganization items, net ........................ (18,430) - (18,430)
------------ ------------ ------------
Total Other Income (Deductions) .................... (719,411) - (719,411)
------------ ------------ ------------
Income (Loss) before Income Taxes .................. (741,287) - (741,287)
Income Taxes ....................................... (380,386) - (380,386)
------------ ------------ ------------
Net Income (Loss) .................................. (360,901) - (360,901)
============ ============ ============
</TABLE>
<PAGE> 27
THE COLUMBIA GAS SYSTEM, INC.
UNAUDITED
(b)(2)(d)
STATEMENTS OF COMMON STOCK EQUITY
ACTUAL and PRO FORMA
Twelve Months Ended June 30, 1996
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
COMMON STOCK
Balance at July 1, 1995 ............................ 505,734 - 505,734
Common stock issued -
Subsidiaries ..................................... - - -
Leveraged employee stock ownership plan (LESOP) .. - - -
Dividend reinvestment plan ....................... - - -
Long-term incentive plan ......................... 1,586 - 1,586
Public offering .................................. 43,338 - 43,338
------------ ------------ ------------
Balance at June 30, 1996 ........................... 550,658 - 550,658
------------ ------------ ------------
PREFERRED STOCK
Balance at July 1, 1995 ............................ - - -
Preferred stock issued ............................. - - -
------------ ------------ ------------
Balance at June 30, 1996 ........................... - - -
------------ ------------ ------------
ADDITIONAL PAID IN CAPITAL
Balance at July 1, 1995 ............................ 602,026 - 602,026
Common stock issued -
Subsidiaries ..................................... - - -
Leveraged employee stock ownership plan (LESOP) .. (7,903) - (7,903)
Dividend reinvestment plan ....................... - - -
Long-term incentive plan ......................... 5,135 - 5,135
Public offering .................................. 137,504 - 137,504
Preferred stock issued ............................. - - -
------------ ------------ ------------
Balance at June 30, 1996 ........................... 736,762 - 736,762
------------ ------------ ------------
RETAINED EARNINGS
Balance at July 1, 1995 ............................ 590,265 - 590,265
Net income ......................................... (360,901) - (360,901)
Common stock dividends -
CG ............................................... (15,643) - (15,643)
Subsidiaries (to CG) ............................. - - -
Other .............................................. - - -
------------ ------------ ------------
Balance at June 30, 1996 ........................... 213,721 - 213,721
------------ ------------ ------------
UNEARNED EMPLOYEE COMPENSATION
Balance at July 1, 1995 ............................ (69,966) - (69,966)
Adjustment ......................................... 68,507 - 68,507
------------ ------------ ------------
Balance at June 30, 1996 ........................... (1,459) - (1,459)
------------ ------------ ------------
TOTAL COMMON STOCK EQUITY .......................... 1,499,682 - 1,499,682
============ ============ ============
</TABLE>
<PAGE> 28
THE COLUMBIA GAS SYSTEM, INC. UNAUDITED
(b)(2)(e)
PRO FORMA ENTRIES
($000)
<TABLE>
<CAPTION>
Debit Credit
<S> <C> <C> <C>
1. Investment in Subsidiaries - Capital Stock 1,000
Cash and Temporary Cash Investments 1,000
To record CG's purchase of 4,800 shares of Captive common
stock at $208.33 per share ($25 par value).
</TABLE>
<PAGE> 29
CAPTIVE INSURANCE COMPANY
UNAUDITED
(b)(3)(a)
(1 of 2)
BALANCE SHEET
ACTUAL and PRO FORMA
As of June 30, 1996
($000)
<TABLE>
<CAPTION>
CIC Pro Forma CIC
Actual Entries Pro Forma
------------ ------------ -----------
<S> <C> <C> <C>
ASSETS
Property, plant and equipment
Gas utility and other plant ...................... - - -
Accumulated depreciation and depletion ........... - - -
------------ ------------ ------------
Net Gas Utility and Other PP&E ..................... - - -
------------ ------------ -----------
Investments and Other Assets
Accounts Receivable - noncurrent ................. - - -
Unconsolidated affiliates ........................ - - -
Investment in Subsidiaries ....................... - - -
Other ............................................ - - -
------------ ------------ ------------
Total Investments and Other Assets ................. - - -
------------ ------------ ------------
Current Assets
Cash and temporary cash investments .............. - 1,000 1,000
Accounts receivable, net
Customers ...................................... - - -
Affiliated ..................................... - - -
Other .......................................... - - -
Prepayments ...................................... - - -
Other ............................................ - - -
------------ ------------ ------------
Total Current Assets ............................... - 1,000 1,000
------------ ------------ ------------
Deferred Charges ................................... - - -
------------ ------------ ------------
Total Assets ....................................... - 1,000 1,000
============ ============ ============
</TABLE>
<PAGE> 30
CAPTIVE INSURANCE COMPANY
UNAUDITED
(b)(3)(a)
(2 of 2)
BALANCE SHEET
ACTUAL and PRO FORMA
As of June 30, 1996
($000)
<TABLE>
<CAPTION>
CIC Pro Forma CIC
Actual Entries Pro Forma
------------ ------------ -----------
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization
Stockholder's equity ............................. - 1,000 1,000
Long term debt ................................... - - -
------------ ------------ -----------
Total Capitalization ............................... - 1,000 1,000
------------ ------------ -----------
Current Liabilities
Short-term debt .................................. - - -
Accounts and drafts payable ...................... - - -
Affiliated accounts payable ...................... - - -
Accrued taxes .................................... - - -
Accrued interest ................................. - - -
Deferred income taxes - current .................. - - -
Other ............................................ - - -
------------ ------------ -----------
Total Current Liabilities .......................... - - -
------------ ------------ -----------
Other Liabilities and Deferred Credits
Deferred income taxes, noncurrent ................ - - -
Postretirement benefits other than pensions ...... - - -
Other ............................................ - - -
------------ ------------ -----------
Total Other Liabilities and Deferred Credits ....... - - -
------------ ------------ -----------
Total Capitalization and Liabilities ............... - 1,000 1,000
============ ============ ===========
</TABLE>
<PAGE> 31
CAPTIVE INSURANCE COMPANY
UNAUDITED
(b)(3)(b)
STATEMENT OF CAPITALIZATION
ACTUAL and PRO FORMA
As of June 30, 1996
($000)
<TABLE>
<CAPTION>
CIC Pro Forma CIC
Actual Entries Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
Stockholder's Equity
Common Stock, $25 par value, authorized
4,800 shares, outstanding 4,800 shares .......... - 120 120
Additional paid in capital ....................... - 880 880
Retained earnings ................................ - - -
------------ ------------ ------------
Total Stockholder's Equity ......................... - 1,000 1,000
------------ ------------ ------------
Long-Term Debt ..................................... - - -
------------ ------------ ------------
Total Capitalization ............................... - 1,000 1,000
============ ============ ============
</TABLE>
<PAGE> 32
CAPTIVE INSURANCE COMPANY
UNAUDITED
(b)(3)(c)
STATEMENT OF INCOME
ACTUAL and PRO FORMA
Twelve Months Ended June 30, 1996
($000)
<TABLE>
<CAPTION>
CIC Pro Forma CIC
Actual Entries Pro Forma
------------ ------------ -----------
<S> <C> <C> <C>
Operating Revenues
Gas Sales ........................................ - - -
Transportation ................................... - - -
Other ............................................ - - -
------------ ------------ -----------
Total Operating Revenues ........................... - - -
------------ ------------ -----------
Operating Expenses
Products purchased ............................... - - -
Operation ........................................ - - -
Maintenance ...................................... - - -
Depreciation and depletion ....................... - - -
Other taxes ...................................... - - -
------------ ------------ -----------
Total Operating Expenses ........................... - - -
------------ ------------ -----------
Operating Income ................................... - - -
------------ ------------ -----------
Other Income (Deductions)
Interest income and other, net ................... - - -
Interest expense and related charges ............. - - -
------------ ------------ -----------
Total Other Income (Deductions) .................... - - -
------------ ------------ -----------
Income before Income Taxes ......................... - - -
------------ ------------ -----------
Income taxes ....................................... - - -
------------ ------------ -----------
Net Income ......................................... - - -
============ ============ ===========
</TABLE>
<PAGE> 33
CAPTIVE INSURANCE COMPANY
UNAUDITED
(b)(3)(d)
STATEMENTS OF COMMON STOCK EQUITY
ACTUAL and PRO FORMA
Twelve Months Ended June 30, 1996
($000)
<TABLE>
<CAPTION>
CIC Pro Forma CIC
Actual Entries Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
COMMON STOCK
Balance at July 1, 1995 ............................ - - -
Common stock issued -
Subsidiaries ..................................... - 120 120
Leveraged employee stock ownership plan (LESOP) .. - - -
Dividend reinvestment plan ....................... - - -
Long-term incentive plan ......................... - - -
Public offering .................................. - - -
------------ ------------ ------------
Balance at June 30, 1996 ........................... - 120 120
------------ ------------ ------------
PREFERRED STOCK
Balance at July 1, 1995 ............................ - - -
Preferred stock issued ............................. - - -
------------ ------------ ------------
Balance at June 30, 1996 ........................... - - -
------------ ------------ ------------
ADDITIONAL PAID IN CAPITAL
Balance at July 1, 1995 ............................ - - -
Common stock issued -
Subsidiaries ..................................... - 880 880
Leveraged employee stock ownership plan (LESOP) .. - - -
Dividend reinvestment plan ....................... - - -
Long-term incentive plan ......................... - - -
Public offering .................................. - - -
Preferred stock issued ............................. - - -
------------ ------------ ------------
Balance at June 30, 1996 ........................... - 880 880
------------ ------------ ------------
RETAINED EARNINGS
Balance at July 1, 1995 ............................ - - -
Net income ......................................... - - -
Common stock dividends -
CG ............................................... - - -
Subsidiaries (to CG) ............................. - - -
Other .............................................. - - -
------------ ------------ ------------
Balance at June 30, 1996 ........................... - - -
------------ ------------ ------------
UNEARNED EMPLOYEE COMPENSATION
Balance at July 1, 1995 ............................ - - -
Adjustment ......................................... - - -
------------ ------------ ------------
Balance at June 30, 1996 ........................... - - -
------------ ------------ ------------
TOTAL COMMON STOCK EQUITY .......................... - 1,000 1,000
============ ============ ============
</TABLE>
<PAGE> 34
CAPTIVE INSURANCE COMPANY
UNAUDITED
(b)(3)(e)
PRO FORMA ENTRIES
($000)
<TABLE>
<CAPTION>
Debit Credit
<S> <C> <C> <C>
1. Cash 1,000
Common Stock 120
Additional Paid In Capital 880
To record the issuance of 4,800 shares of $25 par value
common stock at $208.33 per share.
</TABLE>
<PAGE> 35
PAGE 1
EXHIBIT INDEX
(a) Exhibits
A Form of Subsidiary Common Stock Certificate (Exhibit A-2 to
Joint-Application Declaration (File No. 70-7276) is hereby
incorporated by reference)
F Opinion of Counsel (to be filed by amendment).
G Financial Data Schedules
H Draft Notice
I-1 Five Year History of Losses by Subsidiary
I-2 Five Year History of Premiums by Subsidiary
J 5 year Projections
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000022099
<SUBSIDIARY>
<NUMBER> 1
<NAME> CGS
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JUL-01-1995 JUL-01-1995
<PERIOD-END> JUN-30-1996 JUN-30-1996
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 3,541,727 3,541,727
<OTHER-PROPERTY-AND-INVEST> 526,251 526,251
<TOTAL-CURRENT-ASSETS> 1,008,342 1,008,342
<TOTAL-DEFERRED-CHARGES> 51,440 51,440
<OTHER-ASSETS> 422,279 422,279
<TOTAL-ASSETS> 5,550,039 5,550,039
<COMMON> 550,658 550,658
<CAPITAL-SURPLUS-PAID-IN> 736,762 736,762
<RETAINED-EARNINGS> 213,721 213,721
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,499,682 1,499,682
0 0
0 0
<LONG-TERM-DEBT-NET> 2,004,127 2,004,127
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 484 484
0 0
<CAPITAL-LEASE-OBLIGATIONS> 2,673 2,673
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,046,230 2,046,230
<TOT-CAPITALIZATION-AND-LIAB> 5,550,039 5,550,039
<GROSS-OPERATING-REVENUE> 2,935,262 2,935,262
<INCOME-TAX-EXPENSE> (218,268) (218,268)
<OTHER-OPERATING-EXPENSES> 2,457,674 2,457,674
<TOTAL-OPERATING-EXPENSES> 2,457,674 2,457,674
<OPERATING-INCOME-LOSS> 477,588 477,588
<OTHER-INCOME-NET> (69,183) (69,183)
<INCOME-BEFORE-INTEREST-EXPEN> 408,405 408,405
<TOTAL-INTEREST-EXPENSE> 1,059,149 1,059,149
<NET-INCOME> (360,901) (360,901)
0 0
<EARNINGS-AVAILABLE-FOR-COMM> (360,901) (360,901)
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> (6.99) (6.99)
<EPS-DILUTED> (6.99) (6.99)
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000022099
<SUBSIDIARY>
<NUMBER> 2
<NAME> CG
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JUL-01-1995 JUL-01-1995
<PERIOD-END> JUN-30-1996 JUN-30-1996
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 0 0
<OTHER-PROPERTY-AND-INVEST> 3,286,404 3,287,404
<TOTAL-CURRENT-ASSETS> 328,736 327,736
<TOTAL-DEFERRED-CHARGES> 9,601 9,601
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 3,624,741 3,624,741
<COMMON> 550,658 550,658
<CAPITAL-SURPLUS-PAID-IN> 736,762 736,762
<RETAINED-EARNINGS> 213,721 213,721
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,499,682 1,499,682
0 0
0 0
<LONG-TERM-DEBT-NET> 2,000,056 2,000,056
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 125,003 125,003
<TOT-CAPITALIZATION-AND-LIAB> 3,624,741 3,624,741
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> (380,386) (380,386)
<OTHER-OPERATING-EXPENSES> 21,876 21,876
<TOTAL-OPERATING-EXPENSES> 21,876 21,876
<OPERATING-INCOME-LOSS> (21,876) (21,876)
<OTHER-INCOME-NET> 368,700 368,700
<INCOME-BEFORE-INTEREST-EXPEN> 346,824 346,824
<TOTAL-INTEREST-EXPENSE> 1,088,111 1,088,111
<NET-INCOME> (360,901) (360,901)
0 0
<EARNINGS-AVAILABLE-FOR-COMM> (360,901) (360,901)
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> (6.99) (6.99)
<EPS-DILUTED> (6.99) (6.99)
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000022099
<SUBSIDIARY>
<NUMBER> 3
<NAME> CIC
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JUL-01-1995 JUL-01-1995
<PERIOD-END> JUN-30-1996 JUN-30-1996
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 0 0
<OTHER-PROPERTY-AND-INVEST> 0 0
<TOTAL-CURRENT-ASSETS> 0 1,000
<TOTAL-DEFERRED-CHARGES> 0 0
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 0 1,000
<COMMON> 0 120
<CAPITAL-SURPLUS-PAID-IN> 0 880
<RETAINED-EARNINGS> 0 0
<TOTAL-COMMON-STOCKHOLDERS-EQ> 0 1,000
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 0 0
<TOT-CAPITALIZATION-AND-LIAB> 0 1,000
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> 0 0
<OTHER-OPERATING-EXPENSES> 0 0
<TOTAL-OPERATING-EXPENSES> 0 0
<OPERATING-INCOME-LOSS> 0 0
<OTHER-INCOME-NET> 0 0
<INCOME-BEFORE-INTEREST-EXPEN> 0 0
<TOTAL-INTEREST-EXPENSE> 0 0
<NET-INCOME> 0 0
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 0 0
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0.00 0.00
<EPS-DILUTED> 0.00 0.00
</TABLE>
<PAGE> 1
PAGE 1
EXHIBIT H
SECURITIES AND EXCHANGE COMMISSION
(Release No. )
The Columbia Gas System, Inc. ("Columbia"), a holding company
registered under the Public Utility Holding Company Act of 1935 (the "Act"),
located at 12355 Sunrise Valley Drive, Reston, VA 20191-3420, has filed an
application-declaration under section 6(a), 7, 9(a), 10, and 12(b) and (f), of
the Act and rules 43 and 45 thereunder.
Columbia requests authorization to form a subsidiary to engage in the
business of reinsuring certain predictable risks for the benefit of affiliates,
including project companies in which subsidiaries of Columbia have an equity
interest. Columbia seeks authorization to fund the new subsidiary by making
cash, capital contributions and/or through the purchase of up to $1 million
dollars of equity and the provision of $2,000,000 in letters of credit. If any
letter of credit should be drawn upon, a capital contribution from Columbia
would result. Under the new program, subsidiaries will be able to choose
deductibles appropriate to their business and premiums will be allocated based
on these deductibles and bases of allocation which have been previously
approved by the Commission. Loss histories will also be taken into account in
the allocation of premiums. Columbia asserts that use of a Captive will benefit
the subsidiaries by eliminating the 30% to 40% administrative charge made by
commercial insurers with respect to predictable losses, by allowing direct
access to the reinsurer market and by giving Columbia greater control over the
management and settlement of claims. The Captive will initially reinsure
predictable losses under the automobile and general liability and "all risk"
property coverages. At a later date, the Captive may also underwrite director
and officer liability, Employee attorney liability, legal malpractice for
employee attorneys, performance bonds and various warranty programs offered to
consumers.
The application-declaration and any amendments thereto are available
for public inspection through the Commission's office of Public Reference.
Interested persons wishing to comment or request a hearing should submit their
views in writing by _______________________________________, 1996, to the
Secretary, Securities and Exchange Commission, Washington, DC 20549, and serve
a copy on the applicant-declarant at the address specified above. Proof of
service (by affidavit or, in the case of an attorney-at-law, by certificate)
should be filed with the request. Any request for hearing shall identify
specifically the issues of fact or law that are disputed. A person who so
requests will be notified of any hearing, if ordered, and will receive a copy
of any notice or order issued in this matter. After said date, the
application-declaration, as filed or as it may be amended, may be permitted to
become effective.
For the Commission by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
<PAGE> 1
EXHIBIT I-1
THE COLUMBIA GAS SYSTEM, INC.
AUTO LIABILITY, GENERAL LIABILITY AND PROPERTY LOSSES 1991-1995
<TABLE>
<CAPTION>
SUBSIDIARY
SUBSIDIARY 1991 1992 1993 1994 1995 TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
CKY $ 3,916 $ 18,989 $ 363,048 $ 183,533 $ 12,821 $ 582,307
CMD $ - $ 4,380 $ 7,714 $ 709,837 $ 10,075 $ 732,006
COH $ 4,805,023 $ 695,825 $ 218,681 $ 3,053,744 $ 167,979 $ 8,941,252
CPA $ 48,626 $ 101,705 $ 62,180 $ 758,948 $ 98,132 $ 1,069,591
COS $ 18,159 $ 54,210 $ 36,364 $ 5,538 $ 51,978 $ 166,249
TCO $ 7,570,401 $ 737,328 $ 2,899,037 $ 864,676 $ 1,866,835 $ 13,938,277
CGT $ 915,771 $ 2,685,840 $ 6,939,561 $ 2,074,756 $ 3,083,762 $ 15,699,710
CNR $ 20,233 $ - $ 18,584 $ 750,000 $ 47,331 $ 836,148
TVC $ - $ - $ 1,232,295 $ - $ 1,103,784 $ 2,336,079
CGC $ - $ 156 $ - $ - $ - $ 156
CES $ - $ (58) $ - $ - $ - $ (58)
CLG $ 133,004 $ 8,371 $ 2,382 $ - $ - $ 143,757
CPC $ 1,369 $ 6,442 $ 2,277 $ 29,679 $ 3,147 $ 42,914
CPI $ 31,915 $ 54,055 $ 55,443 $ 795,579 $ 68,062 $ 1,005,054
AE $ - $ 90 $ - $ - $ - $ 90
CS $ 500 $ 3,394 $ 3,665 $ 39 $ 2,720 $ 10,318
CG $ - $ (1,594) $ - $ - $ - $ (1,594)
TOTAL $ 13,548,917 $ 4,369,133 $ 11,841,231 $ 9,226,329 $ 6,516,646
</TABLE>
1
<PAGE> 1
EXHIBIT I-2
COLUMBIA GAS SYSTEM, INC.
1991-1995 PREMIUMS
(AUTO, LIABILITY, GENERAL LIABILITY & PROPERTY)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
First Year
Captive
1991 1992 1993 1994 1995 Premium Savings
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CKY 166,137 139,372 165,449 205,749 380,056 238,466 141,590
- ---------------------------------------------------------------------------------------------------------------------------------
CMD 13,273 34,418 59,134 58,635 65,877 57,235 8,642
- ---------------------------------------------------------------------------------------------------------------------------------
COH 1,316,625 1,594,275 1,675,537 1,807,258 2,462,535 2,194,717 267,818
- ---------------------------------------------------------------------------------------------------------------------------------
CPA 423,621 469,429 489,319 589,287 778,622 691,879 86,743
- ---------------------------------------------------------------------------------------------------------------------------------
COS 154,975 204,470 199,365 230,781 333,294 298,921 34,373
- ---------------------------------------------------------------------------------------------------------------------------------
TCO 1,764,206 1,705,762 2,685,049 3,133,876 3,486,293 3,386,224 100,069
- ---------------------------------------------------------------------------------------------------------------------------------
CGT 1,941,180 1,857,399 2,522,937 2,677,083 2,343,018 2,236,012 107,006
- ---------------------------------------------------------------------------------------------------------------------------------
CNR 399,974 302,093 419,232 483,618 412,876 364,321 48,555
- ---------------------------------------------------------------------------------------------------------------------------------
TVC 969,489 970,006 970,501 970,806 972,153 603,587 368,566
- ---------------------------------------------------------------------------------------------------------------------------------
CGC 6,347 6,984 5,615 5,464 7,529 7,691 -162
- ---------------------------------------------------------------------------------------------------------------------------------
CES 196,349 89,521 106,828
- ---------------------------------------------------------------------------------------------------------------------------------
IGC 20,884 13,609 0
- ---------------------------------------------------------------------------------------------------------------------------------
CLG 261,966 267,356 319,981 480,920 477,589 295,624 181,965
- ---------------------------------------------------------------------------------------------------------------------------------
CPI 148,052 136,362 134,503 133,022 199,014 151,839 47,175
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
First Year
Captive
1991 1992 1993 1994 1995 Premium Savings
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CPC 36,143 36,371 29,786 44,521 54,861 40,333 14,528
- ---------------------------------------------------------------------------------------------------------------------------------
AE 150,112 145,074 171,470 195,620 252,207 13,770 238,437
- ---------------------------------------------------------------------------------------------------------------------------------
CS 163,418 70,694 101,283 114,796 115,100 99,622 15,478
- ---------------------------------------------------------------------------------------------------------------------------------
CG 0 (47,134)* 34,714 3,558 4,948 5,813 -865
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL 7,936,402 7,906,540 9,983,875 11,134,994 12,542,321 11,067,321 1,475,000
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Premium refund due to discontinued operations.
<PAGE> 1
EXHIBIT J
THE COLUMBIA GAS SYSTEM, INC.
Captive Insurance Program
Proforma Income Statement
Policy Years One to Five
<TABLE>
<CAPTION>
Year Year Year Year Year
One Two Three Four Five
--- --- ----- ---- ----
<S> <C> <C> <C> <C> <C>
Commercial Premiums/Fees 7,437,000 7,883,000 8,355,000 8,856,000 9,387,000
Captive Premiums 4,244,000 4,499,000 4,769,000 5,055,000 5,358,000
Captive Projected Admin Expenses 108,000 114,000 120,000 127,000 134,000
-----------------------------------------------------------------------------
Total Premiums 11,789,000 12,496,000 13,244,000 14,038,000 14,879,000
Net Underwriting Income 0 0 0 0 0
Investment Income 338,000 557,000 780,000 976,000 1,151,000
</TABLE>
