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FORM 8-K
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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) October 11, 1996
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THE COLUMBIA GAS SYSTEM, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-1098 13--1594808
- - ---------------------------- ----------------- -------------------
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
12355 Sunrise Valley Drive, Suite 300, Reston, VA 20191-3420
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(Address of principal executive offices)
Registrant's telephone number, including area code (302) 429-5000
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Item 5. Other Events
Information contained in a News Release dated October 10, 1996, is
incorporated herein by reference.
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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.
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(Registrant)
By /s/J. W. Grossman
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Vice President &
Controller
Date: October 11, 1996
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CONTACTS
Media: John H. Jennrich (703) 295-0423
Carl Ericson (703) 295-0424
Analysts: Tom Hughes (703) 295-0429
Melissa Bockelmann (703) 295-0427
For Immediate Release October 10, 1996
COLUMBIA GAS REPORTS IMPROVED THIRD QUARTER,
CITES RESTRUCTURING, HIGHER WELLHEAD PRICES
RESTON, Va., Oct. 10 -- The Columbia Gas System Inc. today said that
adjusted 1996 third quarter income improved $11.5 million, or 23 cents per
share, over last year, posting an adjusted net loss of $3.6 million, or 7 cents
per share, compared to an adjusted loss of $15.1 million, or 30 cents per
share, in the same period in 1995.
Columbia Chairman Oliver G. Richard III said the improvement in third
quarter results "reflects higher rates, higher wellhead prices and
restructuring initiatives that have improved customer services and operating
efficiencies and helped control costs."
Richard also said that colder weather and higher rates for the first
nine months of 1996 resulted in adjusted net income of $168.9 million, or $3.17
per share, up $93.1 million, or $1.67 per share, over the same period last
year, reflecting the strong performance for the first three quarters of this
year.
Current nine-month results were adjusted for $21.1 million, after
tax, for restructuring costs, and a $5.6 million improvement to net income for
an adjustment to the sale of Columbia's southwestern natural gas and oil
subsidiary that was sold at year-end 1995. Adjustments in the prior period
consisted of $126.3 million for the after-tax effect of not recording interest
expense on prepetition debt obligations and a decrease in net income of $23.1
million for bankruptcy-related professional fees and related services, he said.
Reported net income for the first nine months of 1996 was $153.4
million, or $2.88 per share, compared to $179 million, or $3.54 per share, last
year. The 1995 results included the
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beneficial effect of not recording $126.3 million of interest on debt because
of Columbia's Chapter 11 status. Columbia came out of bankruptcy at the end of
November 1995.
Third Quarter Results
Because of the seasonal nature of local gas distribution businesses,
the third quarter of any year typically shows a loss.
This year, Columbia had a reported third quarter net loss of $6.1
million, or 11 cents per share. Last year, when Columbia was in Chapter 11 and
had no interest expense for prepetition debt obligations, net income was $19.3
million, or 38 cents per share. The current period includes $2.5 million for
the after-tax effect of severance and benefits expenses generated by an ongoing
Columbia restructuring program; the year-ago period included $8.5 million
after-tax expense for bankruptcy-related issues and the benefit of not
recording $42.9 million of interest on prepetition debt during the Chapter 11
proceedings.
For the three months ending Sept. 30, operating income for the
transmission segment of $36 million was down $5.3 million from the same period
last year. Contributing to lower income were an unfavorable court decision that
overturned an earlier Federal Energy Regulatory Commission ruling, as well as
higher property taxes. On the other hand, higher rates helped mitigate those
decreases. In the third quarter last year, $6.8 million in revenue was
recorded for exit fees paid to Columbia Gulf.
A third quarter 1996 seasonal operating loss for the distribution
segment of $19.3 million was tempered by higher rates in Pennsylvania,
Maryland, Kentucky and Virginia, plus lower operating costs resulting from
recently implemented restructuring initiatives. In the same period last year
the distribution segment had an operating loss of $25.5 million.
The oil and gas exploration and production segment had operating
income of $5.4 million compared to an operating loss of $400,000 in 1995 that
included the results of Columbia's southwestern natural gas and oil subsidiary
that was sold at year-end 1995. The principal reason for improvement was
higher Appalachian average gas prices of $2.45 per thousand cubic feet (Mcf),
up 18 percent. In addition, Appalachian production of 8 billion cubic feet
(Bcf) was relatively unchanged.
Operating income of $1.4 million for other Columbia energy operations
decreased $1.4 million from the same period last year, reflecting restructuring
expenses, start-up costs for new appliance programs, lower margins from gas
marketing, reduced income from cogeneration activities and by power project
development expenses.
Nine Month Operating Income By Segment
The transmission segment's operating income of $160.4 million
increased $6.6 million in 1996 over the same period in 1995, due primarily to
higher rates. Partially offsetting the higher rates was a restructuring
expense of $6.1 million recorded earlier, the unfavorable court
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decision (mentioned above) and higher taxes. Income in 1995 was increased by
$12.2 million by exit fees paid to Columbia Gulf.
The favorable impact of colder weather and higher rates for the
distribution segment resulted in operating income of $145.7 million, an
increase of $62.9 million over last year. These gains were tempered by $15.9
million of restructuring expenses.
Operating income of $22.6 million for the oil and gas exploration and
production segment reflected sharply higher natural gas prices in 1996. There
was a $700,000 operating loss for the same period in 1995. The average gas
price for Appalachian production for the first nine months of 1996 was $2.81
per Mcf, up 30 percent over the same period in 1995.
Colder weather also improved results for the other Columbia energy
operations through increased gas marketing activities and higher propane sales
and margins. This was partially offset by restructuring expenses and resulted
in operating income of $15 million, an increase of $2.6 million over the same
period in 1995.
Columbia Gas System is one of the nation's largest natural gas
systems with assets of nearly $6 billion. Its operating companies are engaged
in all phases of the natural gas business from the wellhead to the burner tip,
plus marketing and fuel management services and electric power generation.
Columbia companies, directly or indirectly, serve more than 7 million natural
gas consumers in 15 states and the District of Columbia. Information about
Columbia is available on the World Wide Web at http://www.columbiaenergy.com.
Columbia Gas System stock trades on the New York Stock Exchange under the
symbol CG.
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THE COLUMBIA GAS SYSTEM, INC.
Summary of Financial Operating Data
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
INCOME STATEMENT DATA 1996 1995 1996 1995
- - --------------------- ---- ---- ---- ----
($ millions)
<S> <C> <C> <C> <C>
Total Operating Revenue . . . . . . . . . . 450.8 366.3 2,236.2 1,851.6
Net Income . . . . . . . . . . . . . . . . . (6.1) 19.3 153.4 179.0
Operating Income (Loss)
By Segment:
Transmission . . . . . . . . . . . . . . 36.0 41.3 160.4 153.8
Distribution . . . . . . . . . . . . . . (19.3) (25.5) 145.7 82.8
Oil and Gas . . . . . . . . . . . . . . 5.4 (0.4) 22.6 (0.7)
Other Energy . . . . . . . . . . . . . . 1.4 2.8 15.0 12.4
Corporation . . . . . . . . . . . . . . (2.6) (3.9) (8.6) (7.2)
------ ----- ----- -----
Total . . . . . . . . . . . . . . . . . . . . 20.9 14.3 335.1 241.1
====== ===== ===== =====
Per Share Data
Earnings on Common Stock . . . . . . . . . . ($0.11) $0.38 $2.88 $3.54
Average Common Shares
Outstanding (millions) . . . . . . . . . . 55.2 50.6 53.3 50.6
</TABLE>
<TABLE>
<CAPTION>
CAPITALIZATION
- - --------------
($millions)
SEPTEMBER 30, DECEMBER 31,
1996 1995
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<S> <C> <C>
Common Stock Equity
Common Stock, par value $10 per share-
outstanding 55,206,184 and 49,204,025
shares, respectively . . . . . . . . . . . 552.1 506.2
Additional paid in capital . . . . . . . . . 741.2 595.8
Retained earnings . . . . . . . . . . . . . 199.3 69.8
Unearned employee compensation . . . . . . . (1.5) ---
Cost of treasury stock (1,416,155 shares
outstanding as of December 31, 1995) . . . --- (57.8)
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Total Common Stock Equity . . . . . . . . . . . . 1,491.1 1,114.0
Preferred Stock . . . . . . . . . . . . . . . . . --- 399.9
Long-Term Debt . . . . . . . . . . . . . . . . . 2,004.0 2,004.5
------- -------
Total Capitalization . . . . . . . . . . . . . . 3,495.1 3,518.4
======= =======
</TABLE>
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THE COLUMBIA GAS SYSTEM, INC.
Summary of Financial Operating Data (continued)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
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1996 1995 1996 1995
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OPERATING DATA
<S> <C> <C> <C> <C>
Oil and Gas Volumes:
Gas Production (billion cubic feet)
Appalachian . . . . . . . . . . . . . . . . 8.0 7.9 24.6 25.1
Southwest . . . . . . . . . . . . . . . . . --- 8.0 --- 24.7
------ ----- ----- -----
Total . . . . . . . . . . . . . . . . . . . 8.0 15.9 24.6 49.8
====== ===== ===== =====
Oil Production (000 barrels)
Appalachian . . . . . . . . . . . . . . . . 64 76 217 234
Southwest . . . . . . . . . . . . . . . . . --- 661 --- 1,941
------ ----- ----- -----
Total . . . . . . . . . . . . . . . . . . . 64 737 217 2,175
====== ===== ===== =====
Transmission (billion cubic feet):
Transportation
Columbia Transmission
Market Area . . . . . . . . . . . . . . 161.1 171.8 788.2 767.7
Columbia Gulf
Main-Line . . . . . . . . . . . . . . . 145.9 143.3 475.2 450.0
Short haul . . . . . . . . . . . . . . 90.1 55.5 223.5 159.9
Intrasegment Eliminations . . . . . . . . . (145.1) (141.8) (469.8) (443.8)
------- ------ -------- -------
Total Throughput . . . . . . . . . . . . . . . . 252.0 228.8 1,017.1 933.8
======= ====== ======== =======
Distribution (billion cubic feet):
Gas Sales . . . . . . . . . . . . . . . . . 20.6 20.3 217.7 190.9
Transportation . . . . . . . . . . . . . . . 52.1 55.1 183.8 190.6
------ ------ ------ ------
Total Throughput . . . . . . . . . . . . . . . . 72.7 75.4 401.5 381.5
====== ====== ====== ======
Degree Days-Distribution Service Territory
Actual . . . . . . . . . . . . . . . . . . . 103 102 3,910 3,484
Normal . . . . . . . . . . . . . . . . . . . 41 41 3,600 3,568
% Colder (warmer) than normal . . . . . . . 151 149 9 (2)
% Colder (warmer) than prior period . . . . 1 4 12 (10)
BANKRUPTCY-RELATED AND UNUSUAL ITEMS
AFTER-TAX EFFECT ON NET INCOME
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($ millions)
Reported Net Income . . . . . . . . . . . . . . . (6.1) 19.3 153.4 179.0
Less:
Bankruptcy related items
Estimated interest costs not recorded on
prepetition debt prior to emergence . . . --- 42.9 --- 126.3
Professional fees and related expenses . . --- (8.5) --- (23.1)
Restructure costs . . . . . . . . . . . . (2.5) --- (21.1) ---
Adjustments to Southwest oil and gas
operations . . . . . . . . . . . . . . . --- --- 5.6 ---
------ ----- ------ -----
Total adjustments . . . . . . . . . . . . . . . . (2.5) 34.4 (15.5) 103.2
------ ----- ------ -----
Net Income after adjusting for bankruptcy and
unusual items . . . . . . . . . . . . . . . . . (3.6) (15.1) 168.9 75.8
====== ====== ===== =====
</TABLE>
