Filed by: New NiSource Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Columbia Energy Group
Registration Statement No.: 333-33896
On August 17, 2000, NiSource distributed the "New Direction"
newsletter to its employees. The newsletter included news and
information on NiSource's merger with Columbia. The text of the
newsletter is set forth below.
Text of "New Direction" Employee Newsletter
August 17, 2000
NEW DIRECTION August 17, 2000 Vol. 1 No. 9
INSIDE THIS ISSUE
NiSource Management Council Formed . . . . . . . . . . . . . . Pg. 2
IT Team Focused On Enabling Growth Opportunities . . . . . . . Pg. 3
SPOTLIGHT ON STEVE SMITH
BUSINESS SERVICES TO PROVIDE COMPETITIVE ADVANTAGE TO BUSINESS UNITS
Steve Smith was recently named to head the Business Services unit of
the new NiSource. He brings to the position a customer-focused
mindset coupled with an appreciation for the operational side of the
business.
In an effort to help employees understand what this new organization
will mean to the various operating companies, Smith shared his vision
for Business Services and personal philosophies with a reporter for
NEW DIRECTION. Our questions and his answers follow:
Where will Business Services be located?
Headquarters for Business Services will be in Columbus, Ohio. It's
such a large organization that we are going to have to have
representatives from different services located in the business units.
By the nature of the position, I will be spending a lot of time in
both Columbus and Merrillville, Ind.
What is Business Services?
It will include many aspects that are currently part of NiSource's and
Columbia's shared services organizations. The focus of Business
Services will be on providing services that are common across all
subsidiaries of the new NiSource.
How will you define success for Business Services?
Primarily by focusing on the cost of delivery. Customer satisfaction
is also a main driver. My three big customers are the Merchant,
Distribution and Pipeline companies. I need to help business leaders
by providing them with an efficient platform that gives them a
competitive advantage in the marketplace.
What is your management style?
I like to solicit input from my team and encourage robust dialog to
reach the most effective solution. In my opinion, the team generally
makes a better decision than the individual because of the different
perspectives brought to the table.
What aspects of this new role excite you the most?
It's a very rare opportunity to build an organization from the ground
up and to make a difference across the new NiSource. By the way we're
organizing Business Services, we are going to impact the entire
organization much more quickly and efficiently than we would be able
to given the past structures at either Columbia or NiSource. We must
build a platform for the new NiSource that enhances our competitive
edge.
What will be the greatest challenges for Business Services?
This is a multi-billion dollar merger that covers numerous states and
the scope of operations is incredibly broad. The challenge is going
to be coordinating all of those activities going forward. We're going
to have a transition period over the next six to nine months.
Logistics and systems will be big challenges. We'll need to combine a
lot of our systems. For example, we have more than a dozen general
ledgers and a number of human resources information systems, and we
need to eventually drive to one for each.
What from your past experiences will you draw from to help with this
new assignment?
I've had a lot of experience prior to joining Columbia in the customer
services arena. My time with Columbia has provided operational
experience. I've been able to learn how things operate and to
implement a lot of initiatives that we can build upon at the new
NiSource.
What makes Steve Smith tick?
I like to start with the end in mind what is it you want to achieve?
If you don't know what it is that you want to achieve, or if you don't
know where you're going, any route will do. It doesn't mean that you
pick a route and never change. You have to respond to change every
day. However, you've got to keep moving in the direction of your
ultimate goal.
What's the "end" you're trying to achieve with Business Services?
I want to build a platform that puts the new NiSource in a position to
capitalize on its infrastructure delivery system and provides a
competitive advantage in the marketplace.
What's the best advice you ever received?
Start with the end in mind and learn from your mistakes. Also, never
ask people to do something that you wouldn't do yourself.
What's one tip for success you would offer to our readers?
Ask yourself how what you are doing adds value to the organization.
If you don't understand how you're adding value to the organization,
then you're probably doing something you shouldn't be doing.
MEET STEVE SMITH
With a bachelor's degree in petroleum engineering from the Colorado
School of Mines, Smith began his professional career as a petroleum
engineer in his native Denver, Colo. When the price of oil dropped
from $38 per barrel to $9.00 per barrel, he traded the backdrop of the
Rocky Mountains for the skyline of New York City.
After four-plus years in the Big Apple working in consulting,
investment banking and investment management, Smith reached a
crossroads in his career. He decided to invest two years in gaining
an MBA in finance and accounting from the University of Chicago. Upon
graduating, he joined Enron, where he spent two years in Houston and
two years building a presence for Enron in Europe. In 1996, Cathy
Abbott persuaded Smith to join Columbia Transmission's team.
Currently, he serves as deputy chief financial officer for Columbia
Energy Group.
Smith and his wife, Lynne, have two daughters, Kendall and Eleanor.
NISOURCE MANAGEMENT COUNCIL FORMED
Last week NiSource Chairman, President and CEO Gary Neale hosted
NiSource business leaders at a day-and-a-half-long strategy session in
Chicago. Joining Neale at the session were Steve Adik, Cathy Abbott,
Peter Fazio, Pat Mulchay, Mike O'Donnell, Steve Smith, Mark Wyckoff
and Jeff Yundt. LaNette Zimmerman facilitated the meeting. This
leadership group will become the core of the new NiSource Management
Council, a group focused on strategic business issues that affect the
whole company.
At its first meeting the group concentrated on three areas: developing
business unit organization structures aligned with NiSource strategy;
reviewing candidates for roles in these new organizations; and
developing the values that will guide the group as they work together
to become a team.
"This is the group that will lead the new NiSource," Neale stated.
"I'm depending on them to hit the ground running. I expect our work
to provide the foundation for the company's new culture."
The Management Council will meet twice monthly for the next several
months. Announcements of the direct reports to this group will be
made Tuesday, August 22 in the late afternoon. This information will
be published in NEW DIRECTION as well as on company intranets.
IT TEAM FOCUSED ON ENABLING GROWTH OPPORTUNITIES
There's never been a more exciting time to be an information
technology professional at NiSource or Columbia, leaders of the
Project Compass IT Team state enthusiastically.
"What's clear is that information technology is absolutely a strategic
differentiator for the new NiSource," said T.J. Aruffo, Compass IT
Team Leader. "It is one of the keys to our success. When you look at
the NiSource business strategy, technology is the platform for growth.
We can't reach the full value of this merged entity without
technology."
Thus the IT Team's overall goal is to help enable the various NiSource
businesses to reach their growth potential. At the same time, the
team is focused on reducing costs through the integration of the
existing IT functions.
Teamwork is key
While the challenges are great, the team leaders credit the
cooperation and commitment of the more than 50 IT employees involved
in the integration from both companies with keeping the project on
track.
"The synergy that we saw among the team members and the way we were
able to quickly come together has been very effective," said Dick
James, IT Project Leader from Columbia. "We have a good sense of
common purpose."
Those thoughts are echoed by Karen Lenzo, IT Project Leader from
NiSource, who commented: "The support, teamwork and commitment to the
IT effort has been incredible."
The numbers the team has to deal with are staggering: approximately
$200 million in annual spending on technology across the combined
companies; more than 800 employees and contractors involved in IT in
more than 50 locations; at least 900 applications or application
components running on 960 different servers and 9,000 desktop
computers; approximately 15 million lines of code; and 200,000
customer bills processed every night, six nights a week.
"At every touchpoint where there's a customer, we have information
technology. In some cases the technology is actually the touchpoint
between the customer and NiSource," Aruffo noted. "So it's absolutely
critical that we leverage the significant investment in technology
across the firm."
Common philosophy
The IT Core Team, comprised of the current IT leadership from the
various NiSource and Columbia businesses, focuses on overall IT
strategy and organizational design. The team quickly found that
NiSource and Columbia share a common philosophy in their IT functions:
the desire to support the business strategies and the day-to-day needs
of internal customers. Three sub-teams were formed to ensure this
commitment is enhanced in the new organization.
The IT Business Process team covers such issues as IT financial
management, IT management and governance. The IT
Infrastructure/Service Delivery team is working to consolidate
resources and technologies so that IT operates in the most efficient
and effective way possible in the new organization. The IT Program
Management Office is charged with managing all the information from
the other IT teams to balance resource loads with current and future
technology initiatives. This group also is designing a future IT
Program Management Office to support the overall NiSource needs.
In addition, IT professionals are participating in every one of the
Project Compass business teams, such as Corporate Support, Supply
Chain, Gas Operations and Customer Service. Their mission is to
ensure those teams are able to leverage technology to implement their
operational plans. For example, if employees in the future will
access benefits information online, the company needs to make sure
every employee uses the same secure, reliable desktop system.
"Right now we're wired where the firm has said we need to be," Aruffo
said. "There is no technical barrier to getting people connected."
Mobile computers in trucks, terminals and kiosks for access by
multiple users are all possibilities for future communication with
employees.
Best practices support customer focus
The team has looked at the IT organizational structures and processes
of companies in the utility and other industries that are known for
their customer focus.
"I'd venture to say a fair number of our NiSource customers are also
customers of L.L. Bean," Aruffo said. "If they get on the telephone
or get on the Internet to transact business with L.L. Bean, and then
they call us or go to our Web site, their expectation is that we can
do everything L.L. Bean can do.
"While we're focused on cost savings for the next 16 months, there are
other people who are focused on our customers, and we haven't lost
sight of that," he added.
At this point, the team has recognized the need to optimize resources
at the corporate level while supporting the IT needs of individual
business units and operations.
"There will be an enterprise-level IT function supporting the overall
infrastructure and service delivery process," Lenzo explained. "In
addition, each business unit will have IT executive leadership and
imbedded application support for business-unit-specific applications."
One centralized Help Desk will serve all employees, with on-site
support available in locations that have high concentrations of
employees.
"We'll be where we have to be to most effectively support the
businesses," James said.
The following information should be displayed in a chart:
IT Team Analysis
Scope:
* Integrate and identify cost saving opportunities for
enterprise-wide IT, such as data center, Help Desk,
telecommunications, network operations, network engineering,
security, training, on-site support, etc.
* Enable business area synergy savings
Similarities:
* Operational excellence philosophy to managing and delivering
IT
* Participatory management style
* Diversity of work force in IT
* Utilization of current technology
* Objective to enable business through the use of technology
Differences:
* Sourcing of IT resources (NiSource has predominantly
outsourced its IT functions, while Columbia has not)
* Specific applications deployed within companies (e.g. 10+
different financial packages, 3+ different work management
systems)
* Organization structure and location of resources
(centralization versus decentralization; some co-located
with business, some not)
* IT budgeting and cost allocation processes
Opportunities:
* Obtain infrastructure savings through
combination/consolidation (data center, WAN,
telecommunications and various support functions)
* Centralize Help Desk with support distributed throughout
business units
* Implement effective blend of sourcing employees, vendors,
contractors
* Implement enterprise IT organizational redesign
* Leverage existing technology investments across companies
* Negotiate more favorable rates with telecommunications
vendors for phone and data services through the combined
volumes of the two companies
COMING ATTRACTIONS
The Aug. 22 edition of NEW DIRECTION will announce the next level of
leaders for the new NiSource.
That edition will be published by the close of business.
The following is included to conform with federal regulations:
This publication contains certain forward-looking statements
within the meaning of the federal securities laws; these
forward-looking statements are subject to various risks and
uncertainties. The factors that could cause actual results
to differ materially from the projections, forecasts,
estimates and expectations discussed herein may include
factors that are beyond the companies' ability to control or
estimate precisely, such as estimates of actions of the
federal and state regulators. Other factors include, but
are not limited to, actions in the financial markets,
weather conditions, economic conditions in the two
companies' service territories, fluctuations in energy-
related commodity prices, conversion activity, other
marketing efforts and other uncertainties. Other risk
factors are detailed from time to time in the two companies'
SEC reports. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak
only as of the date of this publication. The companies do not
undertake any obligation to publicly release any revisions
to these forward-looking statements to reflect events or
circumstances after the date of the report.
In addition to other documents filed with the Securities and
Exchange Commission by the two companies, NiSource and the
new holding company have filed a registration statement,
which contains a joint proxy statement/prospectus for
NiSource and Columbia Energy Group. The final joint proxy
statement/prospectus, dated April 24, 2000, is available and
has been distributed to the companies' shareholders.
Investors and security holders are urged to read the joint
proxy statement/prospectus and any other relevant documents
filed with the SEC when they become available because they
will contain important information. Investors and security
holders can receive the joint proxy statement/prospectus and
other documents free of charge at the SEC's Web site,
www.sec.gov, from NiSource Investor Relations at 801 East
86th Avenue, Merrillville, Indiana 46410 or at its Web site,
www.nisource.com, or from Columbia Investor Relations at
13880 Dulles Corner Lane, Herndon, Virginia 20171 or at its
Web site, www.columbiaenergygroup.com.
Questions, Comments?
NEW DIRECTION is published by Project Compass for all NiSource and
Columbia employees. We welcome your comments and questions.
Give us a call at 877-236-2242 or e-mail us at
[email protected].
