<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) July 14, 1997
THE COLUMBIA GAS SYSTEM, INC.
(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
(Address of principal executive offices)
Registrant's telephone number, including area code (703) 295-0300
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Item 5. Other Events
Information contained in a News Release dated July 14, 1997, 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/ J. W. Grossman
---------------------------------
Vice President &
Controller
Date: July 16, 1997
<PAGE> 4
For Immediate Release Contact: Carl Ericson
July 14, 1997 (703) 295-0424
COLUMBIA GAS ANNOUNCES SHARP RISE IN 2ND QUARTER NET INCOME
RESTON, Va., July 14 -- The Columbia Gas System Inc. today reported
that 1997 second-quarter net income rose sharply to $34.9 million, or 63 cents
per share, which is $26.7 million more than the year-ago level.
Oliver G. Richard III, chairman, CEO and president of Columbia, said,
"Columbia's earnings performance in the second quarter of 1997 reflects our
continued trend of improving operating efficiencies, the sale of base gas from a
deactivated storage field and colder-than-normal weather. In addition, of
course, it reflects our continued concentration on first-class customer
service."
Richard also said that Columbia had a record high net income for the
first half of 1997 of $197.6 million, or $3.57 per share, which was achieved
despite unseasonably mild temperatures during the first quarter. Net income for
the first six months of 1997 increased $38.1 million, or 53 cents per share,
over the same period last year, which also was a record high.
SECOND-QUARTER RESULTS
Columbia's transmission and storage segment's second-quarter operating
income of $66 million, increased $27 million over last year. This primarily
included $19.1 million from the sale of base gas from a Columbia Transmission
storage field, the sale of which was part of its overall rate settlement, as
well as increased revenues from transportation and storage services plus lower
operation and maintenance costs.
Cold weather in the second quarter -- 44 percent colder than normal and
19 percent colder than last year -- as well as lower operation and maintenance
costs contributed to $21.3 million of operating income for Columbia's
distribution segment. In the same period last year, the distribution companies
had an operating loss of $3 million, due in large part to restructuring expenses
of $15.1 million.
The exploration and production segment's operating income of $5.4
million decreased $1 million from last year, primarily reflecting lower natural
gas prices. In the second quarter of 1997, gas prices averaged $2.67 per
thousand cubic feet (Mcf), down 5 percent from the same period last year, while
production was 8.4 billion cubic feet (Bcf), up 0.4 Bcf.
An operating loss of $1.8 million for the marketing, propane and power
generation segment was $600,000 greater than the $1.2 million loss in last
year's second quarter. This largely was due to lower
<PAGE> 5
margins for gas marketing activities and additional costs associated with new
services, which more than offset increased gas marketing sales volumes. In last
year's second quarter, $1.4 million was recorded for restructuring activities.
SIX-MONTH RESULTS
Several factors more than offset the impact of mild first quarter
weather, enabling Columbia to achieve record net income for the first half of
1997. These included the sale of base gas from one of Columbia Transmission's
storage fields, a $12.8 million reduction to tax expense resulting from benefits
gained through the filing of a consolidated state tax return, $5.5 million from
a gain on the temporary deactivation of a storage field, the full period effect
of higher rates for Columbia Transmission and Columbia Gas of Kentucky and
reduced interest costs because Columbia paid off its short-term borrowings. Last
year's net income was reduced $18.6 million for restructuring activities,
whereas in the first half of 1997, net income was reduced by $7.7 million. Last
year's net income also benefited from a $5.6 million adjustment to the Dec. 31,
1995, sale of the Columbia Development Corp., a southwestern exploration and
production unit.
OPERATING INCOME BY SEGMENT
Operating income of $158.9 million for the transmission and storage
segment increased $34.4 million over the first half of last year. Improvements
included recording the sale of the base gas, the full-period effect of new rates
for Columbia Transmission (implemented in February 1996) and reduced operation
and maintenance costs.
The distribution segment posted year-to-date operating income of $161.9
million, a decrease of $3.1 million from last year. A $25 million decrease to
operating income attributable to mild first quarter weather was largely offset
by expense in 1996 for restructuring activities, higher off-system sales
revenues and lower operation and maintenance expense.
The exploration and production segment's operating income of $17.1
million for the first six months of 1997 was essentially unchanged from the same
period last year. The effect of lower natural gas prices was mitigated by
revenues received from the buyout of a purchase contract by a cogeneration
project. The average price that Columbia received for its natural gas production
was $2.72 per Mcf, a 26-cent decrease from last year.
In the first half of 1997, the marketing, propane and power generation
segment reported operating income of $8.1 million, a decrease of $5.4 million
due primarily to lower margins for gas marketing, as well as reduced propane
sales. The current period benefited from additional gas marketing sales volumes
and a $2.6 million gain resulting from the deactivation of a Binghamton, N.Y.,
cogeneration facility in which TriStar Ventures Corp. is a partner.
The Columbia Gas System, a Fortune 500 and S&P 500 company located in
Reston, Va., is one of the nation's largest natural gas systems with assets of
about $6 billion. Its operating companies are engaged in all phases of the gas
business plus marketing, fuel management services and electric power generation.
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Columbia companies, directly or indirectly, serve more than 7 million natural
gas customers in 15 states -- 12 percent of the nation's total -- and the
District of Columbia.
Information about the Columbia Gas System is available on the World
Wide Web at http://www.columbiaenergy.com. Columbia stock trades on the New York
Stock Exchange under the symbol CG.
-30-
CONTACTS FOR FINANCIAL COMMUNITY:
Melissa Bockelmann: (703) 295-0427
Thomas Hughes: (703) 295-0429
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THE COLUMBIA GAS SYSTEM INC.
Summary of Financial and Operating Data
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
-------------------- ---------------------
INCOME STATEMENT DATA 1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
($ millions)
Total Operating Revenues ............................ 810.7 582.4 2,338.4 1,785.4
Operating Expenses
Products Purchased ................................ 403.6 205.9 1,303.2 757.7
Operation and Maintenance ......................... 227.4 242.0 450.9 472.7
Depreciation and Depletion ........................ 49.2 50.9 120.4 119.0
Other Taxes ....................................... 46.2 47.6 123.0 121.8
-------- -------- -------- --------
Total Operating Expenses ............................ 726.4 546.4 1,997.5 1,471.2
-------- -------- -------- --------
Operating Income .................................... 84.3 36.0 340.9 314.2
-------- -------- -------- --------
Other Income (Deductions)
Interest Income and other net ..................... 6.1 13.7 20.4 16.8
Interest expense and related charges .............. (38.0) (39.2) (78.3) (82.9)
-------- -------- -------- --------
Total Other Income (Deductions) ..................... (31.9) (25.5) (57.9) (66.1)
-------- -------- -------- --------
Income before Income Taxes .......................... 52.4 10.5 283.0 248.1
Income Taxes ........................................ 17.5 2.3 85.4 88.6
-------- -------- -------- --------
Net Income .......................................... 34.9 8.2 197.6 159.5
======== ======== ======== ========
PER SHARE DATA
Earnings on Common Stock ($) ........................ 0.63 0.15 3.57 3.04
Average Common Shares
Outstanding (millions) ............................. 55.4 55.0 55.3 52.5
<CAPTION>
OPERATING INCOME (LOSS) BY SEGMENT
($ millions)
TRANSMISSION AND STORAGE OPERATIONS
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
-------------------- ---------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Transportation revenues ............................... 136.8 137.6 317.0 320.6
Storage revenues ...................................... 48.3 40.5 91.8 79.2
Other revenues ........................................ 25.0 5.2 34.7 10.1
-------- -------- -------- --------
Total Operating Revenues ................................. 210.1 183.3 443.5 409.9
-------- -------- -------- --------
OPERATING EXPENSES
Operation and maintenance ............................. 103.6 101.7 203.7 200.3
Depreciation .......................................... 26.6 28.2 52.9 55.2
Other taxes ........................................... 13.9 14.4 28.0 29.9
-------- -------- -------- --------
Total Operating Expenses ................................. 144.1 144.3 284.6 285.4
-------- -------- -------- --------
OPERATING INCOME ......................................... 66.0 39.0 158.9 124.5
======== ======== ======== ========
</TABLE>
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THE COLUMBIA GAS SYSTEM INC.
Summary of Financial and Operating Data (continued)
DISTRIBUTION OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
----------------- ------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET REVENUES
Sales revenues ................... 342.8 299.9 1,368.0 1,156.6
Less: Cost of gas sold ........... 207.5 168.8 926.6 687.5
------- ------- ------- -------
Net Sales Revenues ............... 135.3 131.1 441.4 469.1
------- ------- ------- -------
Transportation revenues .......... 33.3 30.5 75.4 66.4
Less: Associated gas costs ....... 3.3 4.2 6.2 7.4
------- ------- ------- -------
Net Transportation Revenues ...... 30.0 26.3 69.2 59.0
------- ------- ------- -------
Net Revenues ........................ 165.3 157.4 510.6 528.1
------- ------- ------- -------
OPERATING EXPENSES
Operation and maintenance ........ 102.6 118.6 212.8 235.1
Depreciation ..................... 12.4 12.2 48.0 43.8
Other taxes ...................... 29.0 29.6 87.9 84.2
------- ------- ------- -------
Total Operating Expenses ............ 144.0 160.4 348.7 363.1
------- ------- ------- -------
OPERATING INCOME (LOSS) ............. 21.3 (3.0) 161.9 165.0
======= ======= ======= =======
<CAPTION>
EXPLORATION AND PRODUCTION OPERATIONS
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
----------------- ------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Gas .............................. 25.8 23.5 53.7 51.2
Oil and liquids .................. 0.9 1.6 2.0 2.8
------- ------- ------- -------
Total Operating Revenues ............ 26.7 25.1 55.7 54.0
------- ------- ------- -------
OPERATING EXPENSES
Operation and maintenance ........ 11.4 9.1 20.1 18.0
Depreciation and depletion ....... 7.8 7.4 14.6 14.3
Other taxes ...................... 2.1 2.2 3.9 4.5
------- ------- ------- -------
Total Operating Expenses ............ 21.3 18.7 38.6 36.8
------- ------- ------- -------
OPERATING INCOME .................... 5.4 6.4 17.1 17.2
======= ======= ======= =======
</TABLE>
<PAGE> 9
THE COLUMBIA GAS SYSTEM INC.
Summary of Financial and Operating Data (continued)
MARKETING, PROPANE AND POWER GENERATION OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
----------------- -----------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET REVENUES
Gas marketing revenues ........ 296.4 152.3 602.1 310.4
Less: Products purchased ...... 291.7 149.5 592.1 299.4
------ ------ ------ ------
Net Gas Marketing Revenues .... 4.7 2.8 10.0 11.0
------ ------ ------ ------
Propane revenues .............. 12.7 10.9 41.2 43.2
Less: Products purchased ...... 7.0 6.3 23.2 24.2
------ ------ ------ ------
Net Propane Revenues .......... 5.7 4.6 18.0 19.0
------ ------ ------ ------
Other Revenues ................ 2.5 2.3 8.4 5.3
------ ------ ------ ------
Net Revenues ....................... 12.9 9.7 36.4 35.3
------ ------ ------ ------
OPERATING EXPENSES
Operation and maintenance ..... 13.0 9.5 24.9 18.8
Depreciation .................. 1.0 0.7 1.9 1.5
Other taxes ................... 0.7 0.7 1.5 1.5
------ ------ ------ ------
Total Operating Expenses ........... 14.7 10.9 28.3 21.8
------ ------ ------ ------
OPERATING INCOME (LOSS) ............ (1.8) (1.2) 8.1 13.5
====== ====== ====== ======
<CAPTION>
CORPORATE
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
----------------- -----------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
OPERATING (LOSS) ................... (6.6) (5.2) (5.1) (6.0)
====== ====== ====== ======
</TABLE>
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THE COLUMBIA GAS SYSTEM INC.
Summary of Financial and Operating Data (continued)
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
CAPITALIZATION
($ millions)
Common Stock Equity
Common Stock, par value $10 per share-
issued 55,382,267 and 55,263,659
shares, respectively ......................... 553.8 552.6
Additional paid in capital .................... 747.1 743.2
Retained earnings ............................. 434.7 259.3
Unearned employee compensation ................ (1.1) (1.5)
------- -------
Total Common Stock Equity .......................... 1,734.5 1,553.6
Long-Term Debt ..................................... 2,003.6 2,003.8
------- -------
Total Capitalization ............................... 3,738.1 3,557.4
======= =======
Short-Term Debt .................................... -- 250.0
======= =======
</TABLE>
<PAGE> 11
THE COLUMBIA GAS SYSTEM INC.
Summary of Financial and Operating Data (continued)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
--------------------- ---------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
AVERAGE PRICE OF GAS PRODUCTION ($ PER MCF) .. 2.67 2.81 2.72 2.98
======== ======== ======== ========
OPERATING DATA
Gas production (billion cubic feet) ....... 8.4 8.0 16.7 16.5
======== ======== ======== ========
Propane gallons sold (millions) ........... 12.7 10.8 36.9 42.0
======== ======== ======== ========
Marketing volumes sold (billion cubic feet) 121.7 59.9 228.4 106.4
======== ======== ======== ========
THROUGHPUT
Transmission (billion cubic feet):
Transportation
Columbia Transmission
Market area ........................... 196.4 197.6 574.2 627.1
Columbia Gulf
Main-line ............................. 161.9 159.1 312.9 329.3
Short-haul ............................ 57.0 64.1 119.0 133.4
Intrasegment Eliminations ............. (160.6) (158.2) (305.4) (324.7)
-------- -------- -------- --------
Total Throughput ............................ 254.7 262.6 700.7 765.1
======== ======== ======== ========
Distribution (billion cubic feet):
Gas Sales .................................. 41.0 43.3 163.8 191.8
Transportation ............................. 61.0 60.0 133.0 131.7
-------- -------- -------- --------
Total Throughput ............................ 102.0 103.3 296.8 323.5
-------- -------- -------- --------
Off-system sales ........................... 10.9 0.9 42.2 5.3
-------- -------- -------- --------
Total sold and transported ................... 112.9 104.2 339.0 328.8
======== ======== ======== ========
DEGREE DAYS-DISTRIBUTION SERVICE TERRITORY
Actual ...................................... 837 705 3,530 3,807
Normal ...................................... 580 580 3,527 3,559
% Colder (warmer) than normal ............... 44 22 -- 7
% Colder (warmer) than prior period ......... 19 13 (7) 13
</TABLE>
