SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. )
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Check the appropriate box:
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Columbia Energy Group
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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6(i)(3).
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Notes:
For Immediate Release Contacts:
April 13, 2000 ---------
News Media: R.A. Rankin, Jr. (703) 561-6044
Michael McGarry (703) 561-6063
Financial Community: Thomas L. Hughes (703) 561-6001
Melissa E. Bockelmann (703) 561-6011
COLUMBIA ENERGY GROUP REPORTS
FIRST QUARTER 2000 RESULTS
HERNDON, Va., Apr. 13 - Columbia Energy Group today reported income
from continuing operations for the first quarter 2000 of $149.7 million, or
$1.83 per share, compared to $160.4 million, or $1.92 per share in the 1999
period. Excluding the one-time $20.6 million after-tax gain recorded in 1999,
related to the producer settlement, income from continuing operations was up
$9.9 million, or 16 cents over the same period last year despite eight percent
warmer weather. All per share amounts are on a diluted basis.
"I am pleased to report another quarter of solid performance from our
operating segments," said Oliver G. Richard III, chairman, president and CEO of
Columbia Energy Group. "While results for the 2000 first quarter were dampened
by significantly warmer than normal weather, 14 percent this year compared to
six percent warmer than normal in the 1999 period, we maintain our commitment to
enhance future results of core businesses through initiatives to expand services
and promote cost efficiencies.
"The ongoing implementation of our customer choice programs in most of
the distribution service territories continues as planned with over 640,000
customers now enrolled," Richard stated. "The transmission and storage segment
continues to hold down costs while remaining on track with various expansion
projects that will increase transportation services and provide additional
revenues. First quarter 2000 results from continuing operations improved $5.3
million after-tax due to savings realized from Columbia Gas Transmission's (TCO)
voluntary incentive retirement program, which provided early retirement for
certain employees. This program, which was very successful at TCO, is being
rolled out to certain other subsidiaries and will reduce labor and benefit costs
for these operations as well.
"Columbia's exploration and production operations posted impressive
first quarter results, with operating income more than tripled and gas
production volumes up 33 percent over the 1999 period. In addition, we are
already beginning to realize cost savings from our system-wide procurement
project that is in the early stages of implementation," Richard said.
"As previously announced, we completed our analysis of strategic
alternatives and have executed a definitive merger agreement with NiSource Inc.,
an Indiana-based utility holding company with operations primarily in
electricity, natural gas and water. The combination of our two companies will
result in an energy powerhouse that will be the nation's second largest gas
company with operations stretching from the Gulf of Mexico to the Northeast,
with access to 30 percent of the U.S.
- more -
<PAGE>
population and 40 percent of U.S. energy consumption," Richard stated. He also
said both Columbia and NiSource are committed to completing a seamless
integration of the two companies. The transaction, subject to shareholder and
regulatory approval, is expected to be completed by year-end. Richard said that
filings already have been made with several state and federal regulatory
agencies.
Net income for the first quarter of 2000 was $149.7 million, or $1.83
per share. In the same period last year net income was $150.4 million, or $1.80
per share, which included a loss from discontinued operations of $10 million.
Total revenues for the first quarter of 2000 were $1,267.6 million versus $1,301
million in 1999.
FIRST QUARTER RESULTS BY SEGMENT
- --------------------------------
TRANSMISSION AND STORAGE segment's first quarter 2000 operating income
was $123.9 million, down $20.3 million from the same period last year. The
decrease was largely due to gains recorded in 1999 related to the producer
settlement and additional base gas sales. Partially offsetting these decreases
was an $8.1 million improvement from TCO's voluntary incentive retirement
program and increased transportation revenues from market expansion and Columbia
Gulf's Mainline '99 expansion projects.
Despite eight percent warmer weather, the DISTRIBUTION segment's first
quarter 2000 operating income of $131.2 million was essentially unchanged from
last year. First quarter results for both years were impacted by warmer than
normal weather, 14 percent in 2000 and six percent last year. The negative
weather impact was primarily offset by lower operating expenses.
OPERATING INCOME OF $20.8 MILLION FOR exploration and production ROSE
$15.2 MILLION OVER THE 1999 FIRST QUARTER, REFLECTING A 33 PERCENT GAIN IN GAS
PRODUCTION AND A 37 PERCENT INCREASE IN GAS PRICES. FIRST QUARTER 2000
PRODUCTION OF 14.1 BILLION CUBIC FEET (BCF) BENEFITED FROM NEW PRODUCTION COMING
ON-LINE AND REDUCED CAPACITY CONSTRAINTS THAT HAMPERED PRODUCTION LAST YEAR.
PRICES RECEIVED FOR NATURAL GAS PRODUCTION AVERAGED $3.34 PER THOUSAND CUBIC
FEET (MCF), UP 90 CENTS PER MCF FROM THE 1999 PERIOD.
ENERGY MARKETING reported operating income of $9.7 million for the 2000
first quarter versus an operating loss of $700,000 in 1999. Columbia Energy
Services' mass marketing business posted a $4.4 million operating loss in the
2000 first quarter, an improvement of $6.1 million over last year, reflecting
lower operating expenses partly due to reduced customer acquisition costs. The
rest of the improvement was attributable primarily to expanded propane
operations resulting from several acquisitions last year.
Operating income for the POWER GENERATION, LNG AND OTHER segment was
$200,000 in the 2000 first quarter compared to an operating loss of $600,000 in
the 1999 period, primarily reflecting reduced operation and maintenance costs.
The CORPORATE segment had an operating loss of $2.4 million in the 2000
first quarter. It reported operating income of $5 million in the 1999 period
primarily due to a gain of $6.9 million for the parent company's portion of
TCO's producer settlement.
- more -
<PAGE>
OTHER INCOME, INTEREST EXPENSE AND TAXES
- ----------------------------------------
Interest income and other, net for the first quarter of 2000 of $1.4
million, was down $2.6 million, due to a $2.9 million 1999 gain from the sale of
coal properties. Interest expense and related charges of $45.7 million increased
$8.2 million primarily due to additional short-term borrowings utilized for the
stock repurchase program and recent acquisitions as well as higher interest
rates. Income tax expense of $89.4 million in 2000 was essentially unchanged
from the 1999 first quarter.
Columbia Energy Group, based in Herndon, Va., is one of the nation's
leading energy services companies, with assets of approximately $7 billion. Its
operating companies engage in virtually all phases of the natural gas business,
including exploration and production, transmission, storage and distribution, as
well as retail energy marketing, propane and petroleum product sales, and
electric power generation. Information about Columbia Energy Group (NYSE:CG) is
available on the Internet at www.columbiaenergygroup.com.
A recorded message from Michael W. O'Donnell, Sr. Vice President and
Chief Financial Officer, providing a review of quarterly results and recent
developments that are likely to impact full year performance will be available
beginning today on Columbia's web site at www.columbiaenergygroup.com.
This release contains 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 future market conditions,
the behavior of other market participants, and the 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 document. 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 document.
NiSource and the new holding company have filed a registration
statement, which contains a joint proxy statement/prospectus of NiSource and
Columbia, and other documents with the Securities and Exchange Commission.
Investors and security holders are urged to read the joint proxy
statement/prospectus and any other relevant documents filed with the SEC because
they contain important information. Investors and security holders are able to
receive the final joint proxy statement/prospectus and other documents free of
charge at the SEC's web site, http://www.sec.gov, from NiSource at its web site,
http://www.nisource.com, or from Columbia at its web site,
http://www.columbiaenergygroup.com. Information concerning the identity of the
participants in the solicitation of proxies by the NiSource, Inc. and Columbia
Energy Group boards of directors and their direct or indirect interest, by
security holdings or otherwise, may be obtained from the Secretary of NiSource,
Inc. or the Secretary of Columbia Energy Group at the respective web site
addresses listed above.
<PAGE>
COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
-----------------------
2000 1999
------ -------
INCOME STATEMENT DATA
($ in millions)
<S> <C> <C>
Net Revenues
Energy sales ........................................... 900.0 980.5
Less: Products purchased................................ 573.2 640.8
------- --------
Gross Margin............................................ 326.8 339.7
Transportation.......................................... 251.8 217.6
Production gas sales.................................... 46.4 25.4
Other................................................... 56.6 67.6
------- --------
Total Net Revenues......................................... 681.6 650.3
------- --------
Operating Expenses
Operation and maintenance............................... 256.1 237.5
Settlement of gas supply charges........................ - (29.8)
Depreciation and depletion.............................. 69.2 75.4
Other taxes............................................. 72.9 83.5
------- --------
Total Operating Expenses................................... 398.2 366.6
------- --------
Operating Income........................................... 283.4 283.7
------- --------
Other Income (Deductions)
Interest income and other, net.......................... 1.4 4.0
Interest expense and related charges.................... (45.7) (37.5)
------- --------
Total Other Income (Deductions)............................ (44.3) (33.5)
------- --------
Income from Continuing Operations
before Income Taxes .................................. 239.1 250.2
Income Taxes............................................... 89.4 89.8
------- --------
Income from Continuing Operations ......................... 149.7 160.4
(Loss) from Discontinued Operations - net of taxes......... - (10.0)
------- --------
Net Income................................................. 149.7 150.4
======= ========
PER SHARE DATA
- --------------
Basic Earnings Per Share ($)
Continuing operations................................... 1.84 1.93
(Loss) from discontinued operations..................... - (0.12)
------- --------
Basic Earnings Per Share................................ 1.84 1.81
======= ========
Diluted Earnings Per Share ($)
Continuing operations................................... 1.83 1.92
(Loss) from discontinued operations..................... - (0.12)
------- --------
Diluted Earnings Per Share.............................. 1.83 1.80
======= ========
Basic Average Common Shares Outstanding (millions)......... 81.1 83.2
Diluted Average Common Shares (millions)................... 81.8 83.5
</TABLE>
<PAGE>
COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data (continued)
OPERATING INCOME (LOSS) BY SEGMENT
- ----------------------------------
($ in millions)
<TABLE>
<CAPTION>
TRANSMISSION AND STORAGE OPERATIONS
THREE MONTHS
ENDED MARCH 31,
-------------------------
2000 1999
------- --------
<S> <C> <C>
OPERATING REVENUES
Transportation revenues .......................... 185.6 182.4
Storage revenues.................................. 44.6 50.3
Other revenues.................................... 14.9 20.6
------- --------
Total Operating Revenues............................. 245.1 253.3
------- --------
OPERATING EXPENSES
Operation and maintenance......................... 78.6 96.9
Settlement of gas supply charges.................. - (29.8)
Depreciation...................................... 27.3 26.7
Other taxes....................................... 15.3 15.3
------- --------
Total Operating Expenses............................. 121.2 109.1
------- --------
OPERATING INCOME..................................... 123.9 144.2
======= ========
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OPERATIONS
THREE MONTHS
ENDED MARCH 31,
-------------------------
2000 1999
------- -------
<S> <C> <C>
NET REVENUES
Sales revenues ................................... 627.8 911.1
Less: Cost of gas sold............................ 425.2 666.6
------- --------
Net Sales Revenues................................ 202.6 244.5
------- --------
Transportation revenues........................... 130.7 107.0
Less: Associated gas costs....................... 12.7 9.9
------- --------
Net Transportation Revenues....................... 118.0 97.1
------- --------
Net Revenues......................................... 320.6 341.6
------- --------
OPERATING EXPENSES
Operation and maintenance......................... 117.5 112.4
Depreciation...................................... 21.6 36.0
Other taxes....................................... 50.3 63.0
------- --------
Total Operating Expenses............................. 189.4 211.4
------- --------
OPERATING INCOME..................................... 131.2 130.2
======= ========
</TABLE>
<PAGE>
COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data (continued)
<TABLE>
<CAPTION>
EXPLORATION AND PRODUCTION OPERATIONS
THREE MONTHS
ENDED MARCH 31,
------------------------
2000 1999
------- --------
<S> <C> <C>
OPERATING REVENUES
Gas revenues ..................................... 47.5 25.9
Other revenues.................................... 5.0 4.6
------- --------
Total Operating Revenues............................. 52.5 30.5
------- --------
OPERATING EXPENSES
Operation and maintenance......................... 16.1 12.9
Depreciation and depletion........................ 12.4 9.5
Other taxes....................................... 3.2 2.5
------- --------
Total Operating Expenses............................. 31.7 24.9
------- --------
OPERATING INCOME..................................... 20.8 5.6
======= ========
</TABLE>
<TABLE>
<CAPTION>
ENERGY MARKETING OPERATIONS
THREE MONTHS
ENDED MARCH 31,
------------------------
2000 1999
------- --------
<S> <C> <C>
NET REVENUES
Propane........................................... 116.1 32.7
Gas............................................... 65.6 40.3
Petroleum......................................... 85.1 -
------- --------
Total................................................ 266.8 73.0
Less: Products purchased............................. 214.1 52.7
------- --------
Gross Margin......................................... 52.7 20.3
Other revenues....................................... 11.9 4.0
------- --------
Net Revenues......................................... 64.6 24.3
------- --------
OPERATING EXPENSES
Operation and maintenance......................... 44.9 21.4
Depreciation...................................... 6.9 2.0
Other taxes....................................... 3.1 1.6
------- --------
Total Operating Expenses............................. 54.9 25.0
------- --------
OPERATING INCOME (LOSS).............................. 9.7 (0.7)
======= ========
</TABLE>
<PAGE>
COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data (continued)
<TABLE>
<CAPTION>
POWER GENERATION, LNG AND OTHER OPERATIONS
THREE MONTHS
ENDED MARCH 31,
------------------------
2000 1999
------- --------
<S> <C> <C>
OPERATING REVENUES
Power generation.................................. 0.5 2.0
LNG............................................... 2.0 2.3
Other............................................. 1.1 0.2
------- --------
Total Operating Revenues............................. 3.6 4.5
------- --------
OPERATING EXPENSES
Operation and maintenance......................... 3.3 4.9
Other taxes....................................... 0.1 0.2
------- --------
Total Operating Expenses............................. 3.4 5.1
------- --------
OPERATING INCOME (LOSS).............................. 0.2 (0.6)
======= ========
</TABLE>
<TABLE>
<CAPTION>
CORPORATE
THREE MONTHS
ENDED MARCH 31,
------------------------
2000 1999
------- --------
<S> <C> <C>
OPERATING INCOME (LOSS).............................. (2.4) 5.0
======= ========
</TABLE>
<PAGE>
COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data (continued)
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
CAPITALIZATION
- --------------
($ in millions)
<S> <C> <C>
Common Stock Equity
Common stock, $.01 par value, authorized
200,000,000 shares, issued 83,794,611
and 83,786,942 shares, respectively.................. 0.8 0.8
Additional paid in capital........................... 1,612.1 1,611.6
Retained earnings.................................... 718.3 586.9
Unearned employee compensation....................... (0.3) (0.6)
Accumulated Other Comprehensive Income:
Foreign currency translation adjustment............ 0.2 0.3
Treasury stock, at cost (3,124,800 and 2,478,500 shares) (173.2) (135.0)
------- -------
Total Common Stock Equity................................. 2,157.9 2,064.0
Long-Term Debt............................................ 1,639.6 1,639.7
------- -------
Total Capitalization...................................... 3,797.5 3,703.7
======= =======
Current Maturities of Long-Term Debt...................... 312.3 311.3
======= =======
Short-Term Debt........................................... 178.0 465.5
======= =======
</TABLE>
<PAGE>
COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data (continued)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
------------------------
2000 1999
------- --------
<S> <C> <C>
TOTAL REVENUES ($ IN MILLIONS)....................... 1,267.6 1,301.0
AVERAGE PRICE OF GAS PRODUCTION ($ PER MCF)
U.S............................................. 3.34 2.44
Canada.......................................... 2.94 2.64
OPERATING DATA
Gas Production (billion cubic feet):
U.S............................................. 14.1 10.6
Canada.......................................... - -
------- --------
Total........................................... 14.1 10.6
======= ========
Energy Marketing sales:
Propane (millions of gallons)................... 109.4 39.0
Gas (billion cubic feet)........................ 13.6 11.2
Petroleum (millions of gallons)................. 90.6 -
THROUGHPUT
Transmission (billion cubic feet):
Transportation
Columbia Transmission
Market area.................................. 378.1 394.0
Columbia Gulf
Mainline..................................... 145.7 147.4
Short-haul................................... 57.5 50.6
Intrasegment eliminations.................... (140.4) (138.7)
------- --------
Total Throughput................................... 440.9 453.3
======= ========
Distribution (billion cubic feet):
Gas sales......................................... 79.3 93.0
Transportation.................................... 123.3 107.9
------- --------
Total Throughput................................... 202.6 200.9
Off-System Sales.................................. 7.1 156.3
------- --------
Total Sold and Transported......................... 209.7 357.2
======= ========
DEGREE DAYS (DISTRIBUTION SERVICE TERRITORY)
Actual........................................... 2,566 2,778
Normal........................................... 2,979 2,947
% Colder (warmer) than normal.................... (14) (6)
% Colder (warmer) than prior period.............. (8) 20
</TABLE>
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