<PAGE> 1
FORM 8-K
--------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
--------------
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event Reported) February 8, 1996
---------------------------
THE COLUMBIA GAS SYSTEM, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1-1098 13--1594808
- - --------------------------- ------------ -------------------
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
20 Montchanin Road, Wilmington, Delaware 19807
-----------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (302) 429-5000
--------------
<PAGE> 2
Item 5. Other Events
Information contained in News Releases dated February 5, 1996, and
February 8, 1996, is incorporated herein by reference.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
The Columbia Gas System, Inc.
-----------------------------
(Registrant)
By /s/ R. E. Lowe
-----------------------------
Vice President &
Controller
Date: February 8, 1996
<PAGE> 4
Contacts: Media - Bill Chaddock (302) 429-5261
Bill McLaughlin (302) 429-5443
Analysts - Tom Hughes (302) 429-5363
Ken Murphy (302) 429-5471
FOR IMMEDIATE RELEASE February 5, 1996
COLUMBIA GAS REPORTS STRONG ADJUSTED FOURTH QUARTER EARNINGS;
RECORDS EFFECTS OF BANKRUPTCY EMERGENCE
WILMINGTON, DEL. -- The Columbia Gas System, Inc., (NYSE:CG)
today announced that its net income for the fourth quarter of 1995, after
adjustments for bankruptcy-related costs and other unusual items, was $77.5
million, or $1.54 per share. This reflects a 10 percent increase over
similarly adjusted net income of $70 million, or $1.39 per share, during the
fourth quarter of 1994. Operating income in the fourth quarter was $47.6
million above the previous period.
Adjusted net income for 1995 was $153.3 million, or $3.04 per
share, as compared to $164.9 million, or $3.26 per share, during 1994.
Operating income for the year was $390.2 million as compared to $384.1 million
in 1994.
Columbia System Chairman Oliver G. (Rick) Richard III said:
"Many positive things happened to Columbia in 1995, besides our successful
emergence from Chapter 11 with investment grade debt ratings. The price of our
stock appreciated over 86 percent. Our cost of long-term debt (7.03 percent)
is among the lowest in the gas pipeline industry. Our principal pipeline
company announced a major expansion program that will deliver an additional 500
million cubic feet of natural gas daily and filed its first general rate
increase since 1991 to recover the higher operating costs it is experiencing.
The long-idle liquefied natural gas terminal in Maryland returned to operation
providing peaking and storage services to customers. The distribution
companies launched new programs designed to provide more cost-efficient,
higher-quality service to their customers."
Richard said these and other positive developments "are
precursors of the continued growth and expansion I would expect for Columbia in
coming years as our new, diverse management team develops innovative ways to
better utilize the System's strong physical assets to grow our businesses and
improve shareholder value. Particular attention will be given to maximizing
and unlocking latent potential in our nonregulated businesses."
(more)
<PAGE> 5
2
The increase in adjusted 1995 fourth quarter net income was
principally due to increased distribution segment throughput, resulting from
temperatures that were 32 percent colder than the previous year, and higher
prices for oil and gas. For the year, the favorable effects in the fourth
quarter were more than offset by the effect of higher operating costs, higher
interest expense, and the combined effect of lower oil and gas prices and
reduced production.
Prior to adjustments for the bankruptcy-related and other
unusual items, Columbia reported a net loss of $539.7 million, or $10.74 per
share, for the fourth quarter, as compared to net income of $73.2 million, or
$1.45 per share, during the fourth quarter of 1994. For the year, Columbia
reported a net loss of $360.7 million, or $7.15 per share, as compared to net
income of $240.6 million or $4.76 per share in 1994.
The most significant item affecting both the fourth quarter and
the 12-month results was an after-tax charge of $638.4 million resulting from
the recording of interest and interest on interest expense on prepetition debt
obligations for the four and one-half years the company operated under Chapter
11.
Fourth quarter and annual results also reflect a $54.8 million
after-tax charge associated with the proposed sale of Columbia's southwest oil
and gas company and an after-tax improvement of $71.6 million due to the
reapplication of Financial Accounting Standard No. 71 "Accounting for the
Effects of Certain Types of Regulation" by the transmission subsidiaries. This
accounting statement allows certain costs, such as environmental charges, that
previously were expensed, to be recognized as regulatory assets to the extent
they are recoverable in rates and permits revenues and expenses to be recorded
in a manner that reflects the ratemaking process.
FOURTH QUARTER RESULTS
Operating income for the transmission segment in the current
period was $60.3 million, an increase of 59 percent or $22.5 million over the
fourth quarter of last year. This improvement reflected $21.1 million for
certain adjustments associated with emergence from Chapter 11 and the effect of
lower customer settlement reserve additions of $17.5 million in 1995 compared
to $35 million in 1994. While increased operating costs partially offset the
favorable effect of these items, additional revenues resulting from a rate case
Columbia Gas Transmission Corp. has pending before the Federal Energy
Regulatory Commission will provide the opportunity to recover higher operating
costs that are being incurred.
Temperatures in the distribution segment's operating territory
were 32 percent colder during the current period than during the same period in
1994, generating an 18 percent increase in throughput. This, combined with
higher rates and increased customer usage and growth, resulted in operating
income that increased 43 percent, or $24.5 million, to $80.8 million..
(more)
<PAGE> 6
3
The oil and gas segment had operating income of $4.4 million
during the current period, an increase of $1.2 million over the same period in
1994. The increase reflects a $2.8 million payment received as a result of an
investment in an area impacted by Columbia Transmission's emergence from
Chapter 11. On average, prices received for oil ($16.31 per barrel) and
natural gas ($2.09 per thousand cubic feet) were up slightly during the current
period, but this was partially offset by an eight percent decrease in gas
production and an 18 percent decrease in oil production.
Operating income for other energy operations improved $300,000
to $6.9 million because of the favorable effect of colder weather on propane
sales and gas marketing activities. This was reduced by lower income from
cogeneration operations.
TWELVE MONTHS RESULTS
The transmission segment had operating income of $214.1 million
during 1995. The $4.4 million increase over the previous year reflects the
positive effect of unusual items associated with emergence from Chapter 11.
Operating income was reduced $35 million for a customer settlement reserve in
1994 compared to a reserve addition of $17.5 million in 1995. Tempering these
increases were higher operating costs not being recovered in present rates, but
which are reflected in a rate case currently pending before the Federal Energy
Regulatory Commission.
Operating income for the distribution segment was $163.6
million in 1995. The $35.3 million improvement over 1994 was due to the impact
of higher rates that generated an additional $56.3 million in revenue,
increased industrial throughput resulting from strong economic conditions and
colder weather. These positive effects were reduced by higher operating costs.
The oil and gas segment had operating income of $3.7 million in
1995, as compared to $30.6 million in 1994, due principally to a 10 percent
decrease in the average price received for natural gas and a 21 percent decline
in oil production. The average price for oil increased more than a dollar per
barrel between the two periods. Also affecting segment operating income were
the 1994 reversal of a reserve related to a royalty dispute and the payment
received following Columbia Transmission's emergence from Chapter 11.
Other energy operating income in 1995 was $19.3 million, a
decline of $4.8 million from the previous year reflecting lower propane margins
and other miscellaneous changes.
The Columbia Gas System, Inc., is one of the nation's largest
integrated natural gas systems with assets in excess of $6 billion. Its
operating units are actively engaged in all phases of the natural gas industry,
provide marketing and fuel management services, and generate electric power.
Information about Columbia and its operating units will be available at The
(more)
<PAGE> 7
4
Energy Station(SM) on the World Wide Web (http://www.columbiaenergy.com)
beginning February 15.
This press release includes forward looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Although Columbia believes that its
expectations are based on reasonable assumptions, it can give no assurance that
its goals will be achieved. Important factors that could cause actual results
to differ materially from those in the forward looking statements herein
include prolonged unusual weather patterns, political and regulatory actions,
the pace of deregulation of domestic retail natural gas and electricity
markets, the timing and extent of change in commodity prices for all forms of
energy and the timing and extent of Columbia's efforts to implement changes
planned by management.
# # #
<PAGE> 8
THE COLUMBIA GAS SYSTEM, INC.
Summary of Financial and Operating Data
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended December 31 Ended December 31
----------------- -----------------
1995 1994 1995 1994
---- ---- ---- -----
<S> <C> <C> <C> <C>
Income Statement Data
- - ---------------------
($ millions)
Total Operating Revenue . . . . . . . . . . 783.6 748.2 2,635.2 2,747.1
Income (Loss) Before Extraordinary item . . (611.3) 73.2 (432.3) 246.2
Net Income (Loss) . . . . . . . . . . . . . (539.7) (a) 73.2 (360.7) (a) 240.6 (a)
Operating Income (Loss) by Segment:
Transmission . . . . . . . . . . . . . . 60.3 (b) 37.8 (b) 214.1 (b) 209.7 (b)
Distribution . . . . . . . . . . . . . . 80.8 56.3 163.6 128.3
Oil and Gas . . . . . . . . . . . . . . 4.4 3.2 3.7 30.6
Other Energy . . . . . . . . . . . . . . 6.9 6.6 19.3 24.1
Corporation . . . . . . . . . . . . . . (3.3) (2.4) (10.5) (8.6)
-------- -------- ------- --------
Total . . . . . . . . . . . . . . . . . 149.1 101.5 390.2 384.1
======= ======= ======= =======
Per Share Data
- - ---------------
Earnings (Loss) Before Extraordinary item ($) (12.17) 1.45 (8.57) 4.87
Earnings (Loss) on Common Stock . . . . . . (10.74) 1.45 (7.15) 4.76 (a)
Average Common Shares Outstanding
(millions) . . . . . . . . . . . . . . . 50.2 50.6 50.5 50.6
</TABLE>
(a) Includes the reapplication of SFAS No. 71, "Accounting for the Effects of
Certain Types of Regulation", in 1995 and the adoption of SFAS No. 112,
"Employers Accounting for Postemployment Benefits" in 1994.
(b) Includes establishing a $17.5 million reserve in 1995 and a $35 million
reserve in 1994 for a customer settlement.
<TABLE>
<CAPTION>
Capitalization as of December 31 (in millions) 1995 1994
- - ---------------------------------------------- ----- -----
<S> <C> <C>
Common Stock Equity
Common stock, par value $10 per share - outstanding 49,204,025
and 50,563,335 shares, respectively . . . . . . . . . . . $506.2 $505.6
Additional paid in capital . . . . . . . . . . . . . . . . 595.8 601.9
Retained earnings . . . . . . . . . . . . . . . . . . . . . 69.8 430.5
Less: Cost of treasury stock (1,416,155 shares) . . . . . . 57.8 -
Unearned employee compensation . . . . . . . . . . . . . . - (70.0)
--------- ---------
Total Common Stock Equity . . . . . . . . . . . . . . . . . . 1,114.0 1,468.0
Redeemable Preferred Stock . . . . . . . . . . . . . . . . . . 399.9 -
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . 2,004.5 4.3
--------- ---------
Total Capitalization . . . . . . . . . . . . . . . . . . . . . $3,518.4 $1,472.3
========= =========
</TABLE>
<PAGE> 9
THE COLUMBIA GAS SYSTEM, INC.
Summary of Financial and Operating Data
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended December 31 Ended December 31
----------------- -----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating Data
Oil and Gas Volumes:
Gas Production (billion cubic feet) . . . . 15.6 16.9 65.4 66.7
Oil Production (000 barrels) . . . . . . . 674 823 2,849 3,611
Transmission (billion cubic feet):
Transportation
Columbia Transmission
Market Area . . . . . . . . . . . . 338.4 288.4 1,106.1 1,038.6
Columbia Gulf
Main-line . . . . . . . . . . . . . 155.0 114.6 605.0 590.3
Short-haul . . . . . . . . . . . . 61.5 23.5 221.4 225.4
Intrasegment Eliminations . . . . . . (152.5) (137.1) (596.3) (583.2)
------- -------- -------- --------
Total Transportation . . . . . . . . . . 402.4 289.4 1,336.2 1,271.1
------- -------- -------- --------
Sales . . . . . . . . . . . . . . . . . 0.0 0.0 0.0 0.9
------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . 402.4 289.4 1,336.2 1,272.0
======= ======== ======== ========
Distribution (billion cubic feet):
Gas Sales . . . . . . . . . . . . . . . . 99.8 75.8 290.7 280.5
Transportation . . . . . . . . . . . . 65.3 64.5 255.9 232.5
------ -------- -------- --------
Total Throughput . . . . . . . . . . . . . 165.1 140.3 546.6 513.0
======= ======== ======== ========
Degree Days-Distribution Service
Territory
Actual . . . . . . . . . . . . . . . 2,208 1,671 5,692 5,530
Normal . . . . . . . . . . . . . . . 2,032 2,032 5,600 5,600
% Colder (warmer) than normal . . . . 9 (18) 2 (1)
% Colder (warmer) than prior period . 32 (20) 3 (3)
Bankruptcy-related and Unusual Items
After-tax effect on Net Income
- - ------------------------------
Reported Net Income (Loss) . . . . . . . . . . $(539.7) $ 73.2 $(360.7) $240.6
Less:
Bankruptcy related items
Interest and customer settlement issues . (649.4) (22.8) (649.4) (22.8)
Estimated interest costs not recorded on
prepetition debt prior to emergence . 28.2 39.9 158.0 149.2
Professional fees and related expenses . (3.7) (9.0) (26.8) (30.1)
Producer claim adjustment . . . . . . . - - - (35.4)
Reapplication of SFAS No. 71 for transmission
subsidiaries . . . . . . . . . . . . . . 71.6 - 71.6 -
Estimated loss on sale of Southwest oil and gas
subsidiary . . . . . . . . . . . . . . . . (54.8) - (54.8) -
Miscellaneous unusual items . . . . . . . . (9.1) (4.9) (12.6) 14.8
-------- ------- ------ -------
Total adjustments . . . . . . . . . . . . . (617.2) 3.2 (514.0) 75.7
-------- ------- ------- -------
Net Income after adjusting for bankruptcy and
unusual items . . . . . . . . . . . . . . . $ 77.5 $ 70.0 $153.3 $164.9
====== ======= ======= =======
</TABLE>
<PAGE> 10
Contact: Media - Bill Chaddock (302) 429-5261
Bill McLaughlin (302) 429-5443
Analysts - Tom Hughes (302) 429-5363
Ken Murphy (302) 429-5471
FOR IMMEDIATE RELEASE February 8, 1996
COLUMBIA GAS TO REDEEM PREFERRED STOCK, CONVERTIBLE SECURITIES
WILMINGTON, DEL. --- The Columbia Gas System, Inc., (NYSE:CG) today announced
it will redeem, on February 26, 1996, all outstanding shares of the 7.89 %
Preferred Stock, Series A and 5.22 % Convertible Preferred Stock, Series B
(Dividend Enhanced Convertible Securities(TM) or "DECS") issued to the
company's creditors when the company emerged from Chapter 11 November 28, 1995.
The shares will be redeemed for cash at their liquidation value, which is $25
per share for the Series A Preferred Stock and $40.82 per share for the DECS.
Since the shares are being redeemed within the 90-day period specified in
Columbia's Chapter 11 reorganization plan, no dividends are required to be
paid. Also, as provided by the reorganization plan, no conversion of the DECS
to Columbia Common Stock is permitted.
The Columbia Gas System, Inc., is one of the nation's largest natural gas
systems with assets in excess of $6 billion. Its operating units are actively
engaged in all phases of the natural gas business, provide marketing and fuel
management services and generate electric power. Information about Columbia and
its operating units will be available at The Energy Station(SM) on the World
Wide Web (http://www.columbiaenergy.com) beginning February 15, 1996.
# # #
