<PAGE> 1
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
ANNUAL REPORT
PURSUANT TO SECTION 15(d)
of the
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
The Columbia Gas System, Inc.
Suite 300, 12355 Sunrise Valley Drive
Reston, Virginia 20191-3420
<PAGE> 2
EMPLOYEES' THRIFT PLAN
OF COLUMBIA GAS SYSTEM
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1996 AND 1995
<TABLE>
<S> <C>
Report of Independent Public Accountants.......................................................................... 3
Statements of Net Assets Available for Benefits................................................................... 4
Statement of Changes in Net Assets Available for Benefits......................................................... 5
Notes to Financial Statements and Schedules....................................................................... 6
Schedule A - Statements of Net Assets Available for Benefits...................................................... 11
Schedule B - Statement of Changes in Net Assets Available for Benefits............................................ 13
Item 27(a) - Schedule of Assets Held for Investment Purposes...................................................... 15
Item 27(d) - Schedule of Reportable Transactions.................................................................. 16
Consent of Independent Public Accountants......................................................................... 18
Federal Tax Consequences (Unaudited).............................................................................. 19
</TABLE>
All other schedules are omitted as they are not applicable or are not required
based on the disclosure requirements of the Employee Retirement Income Security
Act of 1974 ("ERISA") and applicable regulations issued by the Department of
Labor.
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<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Thrift Plan Committee of the
Employees' Thrift Plan of Columbia
Gas System:
We have audited the accompanying statements of net assets available for
benefits of the Employees' Thrift Plan of Columbia Gas System (the "Plan") as of
December 31, 1996 and 1995, and the related statement of changes in net assets
available for benefits for the year ended December 31, 1996. These financial
statements and the schedules referred to below are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of the
Plan as of December 31, 1996 and 1995, and the changes in net assets available
for benefits for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes and reportable transactions are presented
for purposes of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The Fund Information in the
statement of net assets available for benefits (Schedule A) and the statement of
changes in net assets available for benefits (Schedule B) is presented for
purposes of additional analysis rather than to present the net assets available
for plan benefits and changes in net assets available for plan benefits of each
fund. The supplemental schedules and Fund Information have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
As explained in the notes thereto, information certified by the trustee
and presented in the schedule of assets held for investment purposes and the
schedule of reportable transactions does not disclose the historical cost of
certain investments. Disclosure of this information is required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974.
ARTHUR ANDERSEN LLP
New York, New York
June 4, 1997
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<PAGE> 4
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1996 December 31, 1995
----------------- -----------------
<TABLE>
<CAPTION>
Assets
- ------
Investments at fair value:
<S> <C> <C>
The Columbia Gas System, Inc.
Common Stock $312,295,105 $281,964,004
Interest-bearing cash 2,867,931 2,067,750
------------ ------------
Total Columbia Gas Stock Fund $315,163,036 $284,031,754
Fidelity Mutual Funds:
Retirement Money Market Portfolio $ 63,338,627 $ 40,454,700
Magellan Fund 25,427,413 27,461,720
Contrafund 14,692,522 6,465,118
Growth Company Fund 9,411,407 3,715,110
Growth & Income Portfolio 40,140,670 26,471,961
Intermediate Bond Fund 40,243,765 45,273,849
Overseas Fund 8,064,260 7,224,105
Europe Fund 3,156,219 1,250,274
Pacific Basin Fund 1,382,440 1,195,685
Balanced Fund 13,409,495 14,169,385
Capital Appreciation Fund 2,209,569 1,442,322
Short-Term Bond Fund 3,448,915 3,073,421
Spartan U.S. Equity Index Fund 60,565,817 51,424,890
------------ ------------
Loans to Participants 7,228,579 --
------------ ------------
$607,882,734 $513,654,294
Columbia Gas Litigation Settlement (Note 5) 2,008,983 --
Employer Contributions Receivable 1,009,880 1,023,167
Participant Deposits Receivable 1,820,000 1,816,274
------------ ------------
Total Assets $612,721,597 $516,493,735
============ ============
</TABLE>
The accompanying notes to financial statements and schedules are an
integral part of these statements.
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<PAGE> 5
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1996
------------------------------------
<TABLE>
<S> <C> <C>
Net Assets, Beginning of Year $516,493,735
Net Investment Income 19,581,815
Net Realized Gain on Securities Sold or
Distributed 60,969,843
Net Change in Unrealized Appreciation on
Investments 63,838,899
Participants' Deposits 23,564,909
Columbia's Contributions 12,471,268
Distributions to Participants (86,419,955)
Interfund Exchanges 0
Columbia Gas Litigation Settlement (Note 5) 2,008,983
Loan Activity:
Withdrawal (8,153,438)
Administrative Fees (36,826)
Repayment (Principal) 885,621
Repayment (Interest) 288,164
Net Receivable 7,228,579
-----------
212,100
------------
Net Assets, End of Year $612,721,597
============
</TABLE>
The accompanying notes to financial statements and schedules are an
integral part of this statement.
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<PAGE> 6
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
December 31, 1996 and December 31, 1995
1. Description of the Plan
The Employees' Thrift Plan of Columbia Gas System (the "Plan") was
adopted by the Board of Directors of The Columbia Gas System, Inc. ("Columbia")
on May 1, 1958. Its purpose is to encourage employees to adopt a regular savings
program and to provide additional security for retirement. Each employee who
works for a Columbia company participating in the Plan is eligible to join the
Plan on the first day of any month after completing twelve months of service.
Participation is voluntary, and participants are fully and immediately vested in
the Plan.
The Plan offers a wide range of funds to Plan participants. All but the
Columbia Gas Stock Fund are offered through Fidelity Investments' family of
mutual funds. The investment options offered include:
Columbia Gas Stock Fund: This Fund consists almost entirely of Columbia
Common Stock. A small portion is invested in money market instruments
for administrative purposes.
Retirement Money Market Portfolio: The Retirement Money Market
Portfolio seeks to maximize current income consistent with the
preservation of capital. The Portfolio invests in high quality U.S.
dollar denominated money market instruments of U.S. and foreign
issuers.
Short-Term Bond Fund: The Short-Term Bond Fund seeks current income
consistent with preservation of capital, by investing in a broad range
of investment grade fixed income securities. The assets of the fund are
invested in securities with a maturity of 1 to 3 years.
Intermediate Bond Fund: The Intermediate Bond Fund is an
income-oriented mutual fund that seeks a high level of current income.
The Fund invests primarily in investment grade corporate debt
obligations, as well as obligations issued or guaranteed by the U.S.
Government and its agencies or instrumentalities, U.S. banks, prime
commercial paper, as well as a limited amount of high quality foreign
debt instruments.
Balanced Fund: The Balanced Fund is a growth and income mutual fund
that seeks the highest amount of income possible while still preserving
its capital investment. The Fund invests in a broadly diversified
(domestic and foreign) portfolio of high-yielding securities, including
common stocks, preferred stocks and bonds. At least 25% of the Balanced
Fund's assets are always invested in fixed-income securities.
Spartan U.S. Equity Index Fund (formerly U. S. Equity Index Portfolio):
The Spartan U.S. Equity Index Fund is a growth and income mutual fund
that seeks to duplicate the composition and total return of the
Standard & Poor's 500 Composite Stock Price Index (S&P). The Fund
invests primarily in the common stock of the 500 companies that make up
the S&P.
Growth & Income Portfolio: The Growth & Income Portfolio is a growth
and income mutual fund that seeks long-term capital growth, current
income and growth of income with reasonable investment risk. The
Portfolio is primarily invested in the securities of companies with the
potential for growth of earnings
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<PAGE> 7
while paying current dividends, as well as securities convertible into
common stocks, preferred stocks and fixed income securities.
-7-
<PAGE> 8
Magellan Fund: The Magellan Fund's goal is capital appreciation.
Magellan primarily invests in common stock and securities convertible
into common stock of U.S., multinational, and foreign companies of all
sizes and industries that offer potential for growth. Up to 20% of the
Fund may be invested in fixed income securities.
Contrafund: The Contrafund seeks capital appreciation by investing
primarily in undervalued domestic and foreign stocks. These companies
may have favorable long-term outlooks due to termination of
unprofitable operations, changes in management, industry or products,
or possible mergers and acquisitions. A substantial portion of the
portfolio is invested in medium- to small-capitalization stocks.
Growth Company Fund: The Growth Company Fund focuses on capital
appreciation by investing primarily in common stocks with above-average
growth characteristics. Investments include both foreign and domestic
securities. Growth can be measured by earnings or gross sales.
Capital Appreciation Fund: The Capital Appreciation Fund seeks capital
appreciation by investing primarily in common stocks of well-known and
established companies as well as smaller, lesser-known companies.
Investments include domestic and foreign securities.
Overseas Fund: The Overseas Fund is a growth mutual fund that seeks
long-term capital growth through investments in foreign securities in
both developed and emerging markets. At least 65% of its total assets
are invested in securities of issuers from at least three countries
outside of North America.
Currency hedging is permitted.
Europe Fund: The Europe Fund seeks long-term capital growth by
investing primarily in companies in Western Europe. The Fund may also
invest in Eastern Europe. Normally, the Fund intends to maintain
investments in at least three different countries, though it may at
times invest all of its assets in a single country. A 1% redemption fee
will be charged for shares held less than 90 days.
Pacific Basin Fund: Pacific Basin Fund seeks long-term growth of
capital by investing in companies in the Pacific Basin. The Fund will
generally be invested in at least three different countries, although
it may at times invest all of its assets in one country. (It normally
invests a significant percentage of its assets in Japan.) A 1%
redemption fee will be charged for shares held less than 90 days.
Fidelity is the Trustee of the Plan assets.
Employees may deposit up to 6% of their monthly base pay, subject to
IRS limitations, in the various investment funds, and Columbia will match such
deposits at various levels based on the period of an employee's participation in
the Plan. Columbia's contributions are invested in the Columbia Gas Stock Fund
except for employees age 55 or older who may direct monthly Columbia
contributions among any of those funds available for Plan participants'
deposits. Employees may also invest up to an additional 10% of their monthly
base pay, subject to IRS limitations, but no additional contributions will be
made by Columbia. Employee deposits may be made on an after-tax and/or
before-tax basis. Before-tax deposits are not subject currently to Federal
income tax but are taxable to the employee when they are withdrawn from the
Plan. Prior to age 59-1/2, an active employee may withdraw before-tax deposits
only under certain hardship conditions. Such withdrawals are subject to a 10%
excise tax. If an employee makes a withdrawal from his account, his future
deposits are subject to various suspension periods depending on the type of
withdrawal. After-tax deposits are taxed before they go into the applicable
Funds of the Plan; therefore, they will not be taxed again.
The administrative expenses of the Plan are paid by the participating
subsidiaries of Columbia. Administrative fees relating to participant loans are
borne by the participants.
The value of participants' deposits in the Plan is reflected in
Shares/Units in each applicable Fund. Each Share/Unit has a value equal to every
other Share/Unit in that Fund. The value of a Share/Unit is determined daily
-8-
<PAGE> 9
by dividing the value of each Fund by its total number of outstanding
Shares/Units.
The following is a summary of the Share/Unit Values and Shares/Units
outstanding as of:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
------------------------------- ------------------------------
Share/Unit Shares/ Share/Unit Shares/
Value Units Value Units
----- ----- ----- -----
($) ($)
<S> <C> <C> <C> <C>
Columbia Gas Stock Fund 23.52 13,401,206 16.09 17,657,667
Retirement Money
Market Portfolio 1.00 63,338,627 1.00 40,454,700
Magellan Fund 80.65 315,281 85.98 319,397
Contrafund 42.15 348,577 38.02 170,045
Growth Company Fund 40.46 232,610 36.29 102,373
Growth & Income Portfolio 30.73 1,306,237 27.05 978,631
Intermediate Bond Fund 10.08 3,992,437 10.41 4,349,073
Overseas Fund 30.84 261,487 29.07 248,507
Europe Fund 26.61 118,610 22.82 54,789
Pacific Basin Fund 14.70 94,044 15.20 78,664
Balanced Fund 14.08 952,379 13.52 1,048,032
Capital Appreciation Fund 17.64 125,259 16.78 85,955
Short-Term Bond Fund 8.72 395,518 8.88 346,106
Spartan U.S. Equity Index Fund 26.95 2,247,340 22.57 2,278,462
</TABLE>
As of December 31, 1996 and 1995, the only individual security held by
the Plan in excess of 5% of net assets was Columbia Gas Common Stock, 4,908,371
shares valued at $312,295,105 and 6,426,530 shares valued at $281,964,004,
respectively.
The above is a brief description of the Plan and is provided for general
information purposes only. Participants should refer to the Plan documents for
more complete information.
2. Summary of Significant Accounting Policies
(A) Valuation of investments.
The assets of the Plan are reflected in the accompanying Statements of
Net Assets Available for Benefits based on quoted market prices and per share
net asset value.
(B) Basis of accounting.
The accounts of the Plan have been maintained on a modified cash basis
of accounting; however, the accompanying financial statements have been prepared
on an accrual basis as of December 31, 1996 and December 31, 1995, by
application of memorandum entries to reflect participant deposits, Columbia
contributions and participant loans receivable.
(C) Net realized gain (loss) on securities sold or distributed.
The cost of securities sold or distributed is determined on the
revalued cost of assets basis, whereby the cost of assets is adjusted to reflect
the market value of assets as of the prior year end. The Plan recognized gains
and losses on the sale of securities and the distribution of Columbia Gas Common
Stock to withdrawn participants
-9-
<PAGE> 10
in settlement of their accounts equal to the difference between the revalued
cost and market value of the securities sold or distributed through December 31,
1996.
(D) Unrealized appreciation (depreciation) of investments.
Fidelity determines the market value of all assets and share
values on a daily basis. Unrealized appreciation (depreciation) is equal to the
difference between the revalued cost of assets and market value of assets at
December 31, 1996.
(E) Financial derivatives.
Plan assets are invested through thirteen mutual funds, any of
which could from time-to-time utilize financial derivatives. Generally Accepted
Accounting Principles require the investment managers of such funds, e.g.,
Fidelity, to list in their financial statements the amount and purpose of such
derivatives. Participants are provided with copies of the mutual funds=
financial statements directly from Fidelity on a regular basis and should refer
to these for information on this issue. Generally speaking, the investment
managers use derivatives to hedge against certain unwanted actions, e.g.,
interest rate movements and foreign currency changes.
3. Participating Companies
The names of the participating companies, as of December 31, 1996
with contributions for the year ended December 31, 1996 are shown below:
<TABLE>
<CAPTION>
Columbia
Contributions
-------------
<S> <C>
Columbia Gas Development Corp.............................. $ 82,827
Columbia Gas Transmission Corp............................. 3,930,057
Columbia Gas of Kentucky, Inc.............................. 305,638
Columbia Gas of Maryland, Inc.............................. 83,520
Columbia Gas of Ohio, Inc.................................. 4,026,449
Columbia Gas of Pennsylvania, Inc.......................... 1,121,628
Columbia Gas System Service Corp........................... 809,015
Columbia Gulf Transmission Company......................... 843,082
Columbia Propane Corp...................................... 16,901
Columbia LNG Corp.......................................... 36,431
Columbia Natural Resources, Inc. .......................... 442,700
Commonwealth Gas Services, Inc............................. 428,234
Commonwealth Propane, Inc.................................. 208,671
TriStar Ventures Corp. .................................... 51,486
Columbia Energy Services . . . . . . ...................... 84,391
Columbia Network Services.................................. 238
------------
Total.................................................. $ 12,471,268
============
</TABLE>
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<PAGE> 11
4. Distributions
As of December 31, 1996 and 1995, amounts due to participants who had
requested a withdrawal were $4,822,851 and $4,752,385, respectively.
5. Columbia Gas System Securities Litigation Settlement
The Columbia Gas Stock Fund's applicable Securities Litigation
Settlement ("Settlement") totaled $2,008,983. Upon receipt, the Settlement
monies applicable to Plan participants are invested by the Trustee in the
Fidelity Retirement Money Market Fund. Under the terms of the Settlement, these
monies plus accumulated interest will be allocated pursuant to the Court Order
to current and former Plan participants who acquired units of the Columbia Gas
Stock Fund between January 19, 1990 and June 18, 1991. The account allocations
are currently being processed and the distribution will be made as soon as
practicable. An estimate of distributions to withdrawn participants is not
available.
6. Confederation Life Guaranteed Investment Contract
On August 12, 1994, the Confederation Life Insurance Company Guaranteed
Investment Contract ("GIC") held by the Plan was frozen by Canadian and Michigan
regulators. In order to provide liquidity to Plan participants who had invested
in the Retirement Money Market/GIC Fund, on September 20, 1995, The Columbia Gas
System, Inc. (CG) and Columbia Gas Transmission Corporation (TCO) lent the Plan
$4,182,650 and $2,416,711, respectively. As of April 30, 1997, $5,670,026 in
proceeds from the liquidation of Confederation Life Insurance Company assets had
been received by the Trustee. Proceeds totaling $3,572,116 and $2,097,909 were
forwarded to CG and TCO, respectively. The second payment occurred on May 31,
1997. Additional payments will occur at the end of July 1997 and on or about
every six months thereafter. Under the provisions of the loans, the principal is
to be repaid in full to CG and TCO. After the principal is repaid, any excess
monies received on account of the Confederation Life GIC will be paid to the
Thrift Plan participants who were invested in the Thrift Plan's Money Market/GIC
Fund on the date of the Confederation Life default, August 12, 1994. In no event
shall the repayments to CG and TCO exceed the principal amount of the notes.
7. Tax Status
See "Federal Tax Consequences" located elsewhere in this document for
additional discussion of the tax status.
The Plan received a favorable determination letter, dated November 28,
1990, from the Internal Revenue Service in which it ruled that the Plan is in
compliance with Sections 401(a) and 401(k) and the Trust is exempt from taxation
under Section 501(a) of the Internal Revenue Code (IRC). The Company is of the
opinion that the Plan, as amended, meets the IRC requirements and, therefore,
continues to be tax-qualified and tax-exempt.
8. Other
The accompanying Schedules A and B reflect additional detail by Fund of
the Statements of Net Assets Available for Benefits for the years ended December
31, 1996 and December 31, 1995 and Statement of Changes in Net Assets Available
for Benefits for the year ended December 31, 1996.
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<PAGE> 12
Schedule A
(Page 1 of 2)
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Assets
- -------------------------------------------------------------------------------------------------------------------------------
Employer Contributions Participant Deposits
12/31/96 Market Value Receivable Receivable
Investments Total Net Assets
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Columbia Gas Stock Fund $ 315,163,036 $ 948,474 $ 496,446 $ 316,607,956
Fidelity Mutual Funds:
Retirement Money Market 63,338,627 16,774 213,506 63,568,907
Portfolio
Magellan Fund 25,427,413 4,219 195,995 25,627,627
Contrafund 14,692,522 5,429 101,277 14,799,228
Growth Company Fund 9,411,407 3,599 61,103 9,476,109
Growth & Income Portfolio 40,140,670 11,540 210,171 40,362,381
Intermediate Bond Fund 40,243,765 4,403 152,262 40,400,430
Overseas Fund 8,064,260 2,656 48,998 8,115,914
Europe Fund 3,156,219 1,075 16,517 3,173,811
Pacific Basin Fund 1,382,440 295 9,982 1,392,717
Balanced Fund 13,409,495 4,294 74,980 13,488,769
Capital Appreciation Fund 2,209,569 381 13,176 2,223,126
Short-Term Bond Fund 3,448,915 383 21,666 3,470,964
Spartan U.S. Equity Index Fund 60,565,817 6,358 203,921 60,776,096
Columbia Gas Litigation
Settlement (note 5) 2,008,983 - - 2,008,983
Loans to Participants 7,228,579 - - 7,228,579
</TABLE>
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<PAGE> 13
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Assets
- -------------------------------------------------------------------------------------------------------------------------------
Employer Contributions Participant Deposits
12/31/96 Market Value Receivable Receivable
Investments Total Net Assets
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TOTAL $ 609,891,717 $ 1,009,880 $ 1,820,000 $ 612,721,597
</TABLE>
Schedule A
(Page 2 of 2)
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Assets
- ---------------------------------------------------------------------------------------------------------------------------------
12/31/95 Employer Participants Deposits
Investments Market Value Contributions Receivable Total Total Net Assets
Receivable
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Columbia Stock Fund $ 284,031,754 $ 966,295 $ 597,463 $285,595,512 $ 285,595,512
Fidelity Mutual Funds:
Retirement Money Market
Portfolio 40,454,700 11,346 181,437 40,647,483 40,647,483
Magellan Fund 27,461,720 6,420 222,420 27,690,560 27,690,560
Contrafund 6,465,118 2,499 49,607 6,517,224 6,517,224
Growth Company Fund 3,715,110 1,758 29,781 3,746,649 3,746,649
Growth & Income Portfolio 26,471,961 9,135 164,149 26,645,245 26,645,245
Intermediate Bond Fund 45,273,849 7,612 187,588 45,469,049 45,469,049
Overseas Fund 7,224,105 3,960 51,449 7,279,514 7,279,514
</TABLE>
-13-
<PAGE> 14
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Assets
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Europe Fund 1,250,274 83 7,839 1,258,196 1,258,196
Pacific Basin Fund 1,195,685 417 12,380 1,208,482 1,208,482
Balanced Fund 14,169,385 5,954 87,780 14,263,119 14,263,119
Capital Appreciation Fund 1,442,322 413 10,320 1,453,055 1,453,055
Short-Term Bond Fund 3,073,421 657 22,188 3,096,266 3,096,266
U.S. Equity Index Portfolio 51,424,890 6,618 191,873 51,623,381 51,623,381
TOTAL $513,654,294 $1,023,167 $1,816,274 $516,493,735 $ 516,493,735
</TABLE>
Schedule B
(Page 1 of 2)
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA RETIREMENT GROWTH
TOTAL STOCK FUND MONEY MARKET MAGELLAN CONTRAFUND COMPANY
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Assets, Beginning of
Year $ 516,493,735 $ 285,595,512 $ 40,647,483 $ 27,690,560 $ 6,517,224 $ 3,746,649
Net Investment Income 19,581,815 3,560,529 2,508,801 4,231,472 961,367 396,533
Net Realized Gain/(Loss)
on Securities Sold or
Distributed 60,969,843 59,628,789 -- (1,192,650) 208,173 278,867
Net Change Unrealized
Appreciation/(Depreciation)
of Investments 63,838,899 50,978,979 -- (174,599) 958,054 275,544
Participants' Deposits 23,564,909 6,787,242 2,561,176 2,777,262 1,098,103 668,312
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
GROWTH & INTERMEDIATE
INCOME BOND
- -------------------------------------------------------------------
<S> <C> <C>
Net Assets, Beginning of
Year $ 26,645,245 $ 45,469,049
Net Investment Income 1,847,170 2,842,404
Net Realized Gain/(Loss)
on Securities Sold or
Distributed 971,953 (461,668)
Net Change Unrealized
Appreciation/(Depreciation)
of Investments 3,275,263 (991,640)
Participants' Deposits 2,531,250 2,059,553
</TABLE>
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<PAGE> 15
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Columbia Contributions 12,471,268 11,778,183 149,041 62,744 49,525 36,393
Distributions to (86,419,955) (38,744,808) (20,829,342) (3,329,973) (893,295) (701,311)
Participants
Interfund Exchanges -- (59,459,612) 39,468,872 (3,886,777) 5,970,649 4,796,467
Columbia Gas Litigation --
Settlement (Note 5) 2,008,983 -- -- -- -- --
Loan Activity 212,100 (3,516,858) (937,124) (550,412) (70,572) (21,345)
Net Assets, End of Year $ 612,721,597 $ 316,607,956 $ 63,568,907 $ 25,627,627 $ 14,799,228 $ 9,476,109
</TABLE>
<TABLE>
<S> <C> <C>
Columbia Contributions 131,517 67,449
Distributions to (4,994,119) (6,026,809)
Participants
Interfund Exchanges 10,433,174 (2,069,279)
Columbia Gas Litigation
Settlement (Note 5) --
Loan Activity (479,072) (488,629)
Net Assets, End of Year $ 40,362,381 $ 40,400,430
</TABLE>
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<PAGE> 16
Schedule B
(Page 2 of 2)
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
CAPITAL SHORT-TERM
OVERSEAS EUROPE PACIFIC BASIN BALANCED APPRECIATION BOND
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Assets,
Beginning of $7,279,514 $1,258,196 $1,208,482 $14,263,119 $1,453,055 $3,096,266
Year
Net Investment Income 487,418 209,310 7,710 605,374 191,712 182,425
Net Realized
Gain/(Loss) on
Securities Sold or 313,822 93,652 9,900 (73,121) 69,155 (27,513)
Distributed
Net Change
Unrealized
Appreciation/(Depreciation) 149,289 191,439 (63,489) 552,134 1,148 (24,491)
of Investments
Participants' 695,806 152,960 155,913 1,026,701 247,829 274,477
Deposits
Columbia 34,187 6,022 3,667 57,546 6,628 6,558
Contributions
Distributions to (1,520,361) (235,460) (111,909) (1,853,497) (370,064) (563,582)
Participants
Interfund Exchanges 733,120 1,509,822 190,461 (844,189) 634,283 600,735
Columbia Gas
Litigation -- -- -- -- -- --
Settlement (Note 5)
Loan Activity (56,881) (12,130) (8,018) (245,298) (10,620) (73,911)
Net Assets, End of $8,115,914 $3,173,811 $1,392,717 $13,488,769 $2,223,126 $3,470,964
Year
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
SPARTAN COLUMBIA
U.S. EQUITY GAS LOAN
INDEX LITIGATION ACTIVITY
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Assets,
Beginning of $51,623,381 $
Year -- --
Net Investment Income 1,549,590 -- --
Net Realized
Gain/(Loss) on
Securities Sold or 1,150,484 -- --
Distributed
Net Change
Unrealized
Appreciation/(Depreciation) 8,711,268 -- --
of Investments
Participants' 2,528,325 -- --
Deposits
Columbia 81,808 -- --
Contributions
Distributions to (6,245,425) -- --
Participants
Interfund Exchanges 1,922,274 -- --
Columbia Gas
Litigation -- 2,008,983 --
Settlement (Note 5)
Loan Activity (545,609) -- 7,228,579
Net Assets, End of $60,776,096 $2,008,983 $7,228,579
Year
</TABLE>
-16-
<PAGE> 17
Employer ID#: 13-1594808
Plan #: 002
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
ITEM 27(a) SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Identity of Issuer,
Borrower, Lessor,
or Similar Party* Description of Investment Cost Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Columbia 13,401,206 units of Columbia Gas Stock Fund(1) --(2) $ 315,163,036
Fidelity 63,338,627 shares of Retirement Money Market --(2) 63,338,627
Portfolio
Fidelity 315,281 shares of Magellan Fund --(2) 25,427,413
Fidelity 348,577 shares of Contrafund --(2) 14,692,522
Fidelity 232,610 shares of Growth Company Fund --(2) 9,411,407
Fidelity 1,306,237 shares of Growth & Income Portfolio --(2) 40,140,670
Fidelity 3,992,437 shares of Intermediate Bond Fund --(2) 40,243,765
Fidelity 261,487 shares of Overseas Fund --(2) 8,064,260
Fidelity 118,610 shares of Europe Fund --(2) 3,156,219
Fidelity 94,044 shares of Pacific Basin Fund --(2) 1,382,440
Fidelity 952,379 shares of Balanced Fund --(2) 13,409,495
Fidelity 125,259 shares of Capital Appreciation Fund --(2) 2,209,569
Fidelity 395,518 shares of Short-Term Bond Fund --(2) 3,448,915
Fidelity 2,247,340 shares of Spartan U.S. Equity Index
Fund --(2) 60,565,817
Participants Loans to Participants 7,228,579 7,228,579
-------------
TOTAL THRIFT PLAN(2) $ 607,882,734
</TABLE>
* All parties listed are considered parties-in-interest.
(1) Actual shares of The Columbia Gas System, Inc. Common Stock held
equals 4,908,371, valued at $312,295,105.
(2) Records are maintained by Fidelity on a fair market value basis;
therefore, historical cost basis information is unavailable.
-17-
<PAGE> 18
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Employer ID#: 13-1594808
- -----------------------------------------------------------------------------------------------------------------------------------
Plan #: 002
EMPLOYEES= THRIFT PLAN OF COLUMBIA GAS SYSTEM
Item 27(d) Schedule of Reportable Transactions
Individual Transactions By Issue
For The Year Ended December 31, 1996
Current Value of
Identity Description Purchase Selling Transaction Cost of Asset on Transaction Net Gain
of Party of Asset Price Price Expense Asset Date (Loss)
-------- --------- ------ ------ ------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
No Reportable Transactions
NOTE: There were no lease rentals during the year.
-18-
<PAGE> 19
<TABLE>
<CAPTION>
Employer ID#:13-1594808
Plan #: 002
EMPLOYEES THRIFT PLAN OF COLUMBIA GAS SYSTEM
Item 27(d) Schedule of Reportable Transactions
Cumulative Transactions By Issue
For the Year Ended December 31, 1996
- ----------------------------------------------------------------------------------------------------------
Identity Description Transaction
of Party* of Asset Total Purchases Total Sales Expenses
--------- ------------- --------------- ----------- --------
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Columbia Columbia Gas Stock Fund $46,543,611 --
- ----------------------------------------------------------------------------------------------------------
Columbia Columbia Gas Stock Fund -- $129,580,293 ---
- ----------------------------------------------------------------------------------------------------------
Fidelity Magellan Fund 15,932,705 -- --
- ----------------------------------------------------------------------------------------------------------
Fidelity Magellan Fund -- 16,599,763 --
- ----------------------------------------------------------------------------------------------------------
Fidelity Intermediate Bond Fund 11,089,586 -- --
- ----------------------------------------------------------------------------------------------------------
Fidelity Intermediate Bond Fund -- 14,666,362 --
- ----------------------------------------------------------------------------------------------------------
Fidelity Retirement Money
Market Fund 84,500,690 -- --
- ----------------------------------------------------------------------------------------------------------
Fidelity Retirement Money
Market fund -- 61,616,763 --
- ----------------------------------------------------------------------------------------------------------
Fidelity Spartan U.S. Equity Index 12,976,766 -- --
Fund
- ----------------------------------------------------------------------------------------------------------
Fidelity Spartan U.S. Equity Index
Fund -- 13,697,592 --
- ----------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Fund 26,350,000 -- --
- ----------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Fund 16,928,507 --
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Current Value of
Identity Asset on
of Party* Cost of Asset Transaction Date Net Gain or Loss
--------- ------------- ---------------- ----------------
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Columbia $46,543,611 $46,543,611 --
- ---------------------------------------------------------------------------
Columbia (1) $129,580,293 $45,624,581
- ---------------------------------------------------------------------------
Fidelity 15,932,705 15,932,705 --
- ---------------------------------------------------------------------------
Fidelity (1) 16,599,763 698,390
- ---------------------------------------------------------------------------
Fidelity 11,089,586 11,089,586 --
- ---------------------------------------------------------------------------
Fidelity (1) 14,666,362 (316,061)
- ---------------------------------------------------------------------------
Fidelity
84,500,690 84,500,690 --
- ---------------------------------------------------------------------------
Fidelity
(1) 61,616,763 0
- ---------------------------------------------------------------------------
Fidelity 12,976,766 12,976,766 --
- ---------------------------------------------------------------------------
Fidelity
(1) 13,697,592 3,360,733
- ---------------------------------------------------------------------------
Fidelity 26,350,000 26,350,000 --
- ---------------------------------------------------------------------------
Fidelity (1) 16,928,507 1,613,311
- ---------------------------------------------------------------------------
</TABLE>
* All parties listed are considered parties-in-interest.
(1) Records are maintained by Fidelity; historical cost information unavailable.
Note: There were no lease rentals during the year.
<PAGE> 20
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 11-K, into the Company's previously filed Form
S-8 Registration Statement File No. 33-42776.
ARTHUR ANDERSEN LLP
New York, New York
June 4, 1997
<PAGE> 21
FEDERAL TAX CONSEQUENCES
(Unaudited)
NOTE: THE INFORMATION PROVIDED HEREIN IS INTENDED TO PROVIDE GENERAL
INFORMATION REGARDING THE FEDERAL TAX TREATMENT OF AN INDIVIDUAL'S WITHDRAWALS
OF FUNDS FROM THE PLAN. THE INFORMATION IS BASED ON CURRENT INTERNAL REVENUE
CODE PROVISIONS AND REGULATIONS IN EFFECT AS OF 1/1/97 AND DOES NOT ADDRESS ANY
STATE AND LOCAL TAX CONSEQUENCES OF PLAN WITHDRAWALS.
PARTICIPANTS ARE URGED TO CONSULT WITH THEIR PERSONAL TAX ADVISOR
BEFORE MAKING PLAN WITHDRAWALS.
Tax Treatment of Distributions and Withdrawals
If a participant withdraws money from the Plan, some or all of the participant's
withdrawal may be taxed. To the extent that any taxable money is sent directly
to the participant, the Trustee is required to withhold 20% of the taxable
amount to meet Federal tax requirements. A participant can avoid the 20% Federal
withholding requirement by requesting a direct rollover of all or part of the
taxable portion of the participant's withdrawal and distribution to an
Individual Retirement Account (IRA) or to another tax-qualified plan.
In addition to ordinary income taxes, a 10% additional income tax may be imposed
on the taxable portion of a participant's distribution unless:
- - the participant is age 55 or older in the year he or she terminates employment
with Columbia,
- - the participant is age 59-1/2 or over when he or she receives the
distribution,
- - the withdrawal is due to disability or death,
- - the withdrawal is used to pay unreimbursed medical expenses,
- - payment is made to an alternate payee under a QDRO, or
- - the withdrawal is rolled over directly to an Individual Retirement Account
(IRA) or another qualified plan.
Tax Treatment of Withdrawals
The following withdrawals are 100% taxable, even for hardship:
- - Company contributions and their earnings,
- - a participant's savings in a before-tax account and their earnings,
- - earnings on a participant's Rollover Contributions, lump sum and after-tax
deposits, and
- - a participant's Rollover Contribution deposits.
<PAGE> 22
All of a participant's after-tax deposits made to the Plan before January 1,
1987 can be withdrawn during active employment for any reason with no taxes
applied to the withdrawal.
A participant's after-tax deposits made to the Plan after December 31, 1986 can
also be withdrawn for any reason, but such withdrawals are tax free. Once a
participant has withdrawn all pre-1987 after-tax contributions, a portion of
each subsequent withdrawal from the participant's after-tax account will be
considered investment earnings, and will be taxable. The amount of your
withdrawal that is considered a return of the participant's after-tax savings,
and consequently non-taxable, will be determined as follows:
Total remaining savings before a participant's withdrawal in his or her
after-tax account contributed after December 31, 1986 divided by total remaining
savings in his or her after-tax account contributed after December 31, 1986,
plus his or her investment earnings multiplied by the total amount of the
withdrawal equals non-taxable portion of the participant's withdrawal.
<TABLE>
<CAPTION>
For example:
<S> <C> <C>
- - If savings in a participant's after-tax account
contributed after 12/31/86 equals $3,000
- - And the investment earnings since 12/31/86 equals $1,000
- - The total of the after-tax savings contributed after
12/31/86 plus investment earnings equals $4,000
- - And the withdrawal equals $1,000
- - 3/4 of the withdrawal will not be taxable ($3,000)
divided by $4,000);
1/4 of the withdrawal will be taxable
- - Non-taxable amount equals $ 750
- - Taxable amount equals $ 250
</TABLE>
In other words, in the above example, if a participant withdraws $1,000 from his
or her after-tax account that he or she contributed to the Plan after December
31, 1986, $750 would not be taxable; $250 would be considered by the IRS to be a
return of investment earnings and subject to regular income tax, the 20%
withholding requirement and possibly the 10% additional tax.
Tax Treatment of Withdrawals From a Participant's Before-Tax Account
A participant's before-tax contributions are not taxed when they go into his or
her account, rather they are fully taxed when withdrawn. If a participant
withdraws money from his or her
<PAGE> 23
account during active employment, the money will be added to his or her other
income for that year and taxed at the participant's applicable income tax rate.
Withdrawals during active employment may also be subject to a 10% additional tax
over and above any regular income taxes due, unless a participant meets any of
the conditions previously listed under Tax Treatment of Distributions and
Withdrawals. Loans from a participant's before-tax account are not taxable.
If the withdrawal is payable to a participant, the withholding requirements
discussed previously apply. A participant can avoid the Federal withholding
requirement by requesting a direct transfer rollover to an IRA or another tax
qualified plan.
Possible Tax Advantages When Receiving a Lump Sum Distribution
If a participant receives a lump sum distribution of his or her account, he or
she may be able to defer or reduce their tax liability.
In general, a participant can use only one of the following tax advantages:
1. Deferral of tax liability
If a participant leaves the Company and receives a withdrawal from his or her
account, he or she may want to consider rolling all or part of the taxable
amount into an IRA or into another employer=s tax qualified plan. By doing so,
the participant can continue to defer paying taxes on the money. If the account
would otherwise be subject to the 10% additional tax, this approach would let
the participant avoid paying this additional tax if he or she leaves their money
in the IRA or other plan until they are age 59-1/2
2. Reduction of tax liability
If a participant takes a lump sum distribution of his or her account, he or she
may be entitled to special tax treatment such as five-year or ten-year averaging
or long-term capital gains treatment.
If the participant was younger than 50 years old on January 1, 1986, five-year
averaging tax treatment is currently available only once, and only if:
- - the entire account balance is paid to the participant in one tax year after
age 59-1/2, and
- - the individual was a Plan participant for five or more years.
Under five-year averaging, the lump sum distribution is taxed in one year as if
the participant had received it over five years and as if he or she had no other
income during that time. The tax rate used is the one effective during the year
the participant receives the distribution.
<PAGE> 24
If a participant was age 50 or over as of January 1,1986, he or she is
grandfathered under pre-1987 tax laws. This means that if the participant
receives the entire balance of his or her account in one tax year, he or she
will have a choice of:
- - ten-year averaging under 1986 tax rates, or
- - five-year averaging under the rates prevailing in the year he or she receives
the money.
If a participant is grandfathered, he or she can use five-year or ten-year
averaging at any time, but whichever method he or she chooses can only be used
once. The participant can choose whichever method is best for him or her.
However, to use either averaging method, he or she must have been a Plan
participant for five or more years.
<PAGE> 25
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Thrift Plan Committee has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
EMPLOYEES' THRIFT PLAN OF
COLUMBIA GAS SYSTEM
By /s/ M. W. O'Donnell
----------------------------------------
M. W. O'Donnell
Member, Thrift Plan Committee
June 30, 1997
