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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 2000
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COLUMBIA ENERGY GROUP
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(Exact name of registrant as specified in its charter)
Delaware 1-1098 13--1594808
- ---------------------------- ----------- -------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
13880 Dulles Corner Lane, Herndon, VA 20171-4600
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(Address of principal executive offices)
Registrant's telephone number, including area code (703) 561-6000
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Item 5. Other Events
Information contained in a News Release dated July 14, 2000 is
incorporated herein by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Columbia Energy Group
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(Registrant)
By /s/ J. W. Grossman
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J. W. Grossman
Vice President & Controller
Date: July 14, 2000
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FOR IMMEDIATE RELEASE CONTACTS:
July 14, 2000 News Media: R.A. Rankin, Jr. (703) 561-6044
Michael J. McGarry (703) 561-6063
Financial Community: Thomas L. Hughes (703) 561-6001
Melissa E. Bockelmann (703) 561-6011
COLUMBIA ENERGY GROUP POSTS
RECORD SECOND QUARTER RESULTS
HERNDON, Va., July 14 -- Columbia Energy Group today reported record
second quarter income from continuing operations of $82.9 million, or $1.03 per
share for the 2000 quarter, up from $35.3 million, or 43 cents per share, in the
1999 second quarter.
This improvement primarily reflects a gain on the sale of Columbia's
Cove Point LNG business, lower labor and benefit costs for Columbia Gas
Transmission due to its voluntary incentive retirement program (VIRP)
implemented in the 2000 first quarter, and increased natural gas production. The
improvement was partially offset by professional fees associated with the
planned merger with NiSource Inc., higher interest expense on short-term
borrowings and costs associated with implementing a VIRP at certain other
Columbia subsidiaries. After adjusting for nonrecurring items, income from
continuing operations was $37.2 million, or 46 cents per share, up $6.4 million,
or 9 cents per share over last year. All per share amounts are on a diluted
basis.
Net income after discontinued operations was $47.7 million, or 59 cents
per share, for the second quarter 2000 compared to $26.1 million, or 32 cents
per share, in the same period last year. Second quarter 2000 revenues of $468.5
million were essentially unchanged from the 1999 period, while operating income
was $79.5 million, an increase of $4.8 million over the 1999 second quarter.
Oliver G. Richard III, chairman, president and CEO of Columbia Energy
Group, said, "Columbia Gas Transmission is moving forward with its various
expansion projects. With recent regulatory approval in another of distribution's
service areas, by the fall of this year approximately 90 percent of Columbia's
2.1 million distribution customers are expected to have the option to choose
their natural gas supplier.
"We continue to look for ways to reduce costs and improve efficiencies
across our company," said Richard. "For example, Columbia's employee complement
has been reduced through voluntary retirement programs implemented in several
business units, which will lower labor and benefit costs. Retirement costs for
these employees are funded through the pension plan and will not have a
significant impact on Columbia's consolidated annual net income.
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"Columbia's planned merger with NiSource is progressing well, with
completion expected by the end of 2000," Richard added. "Shareholders of both
companies approved the merger in early June by significant margins. Regulatory
actions on the merger have been completed in eight states, with final regulatory
action expected soon in the last remaining state. At the federal level,
appropriate filings have been made and the process is proceeding on schedule.
Plans are moving forward for the integration of the two companies."
Richard said, "The strategic focus of the new combined company will be
different than Columbia's direction in the past few years. While Columbia's core
businesses will be an integral part of the new company, Columbia is exiting some
of its non-core, non-regulated businesses." He added, "In the second quarter of
2000, we signed a definitive agreement to sell Columbia Energy Services' mass
marketing business and announced that we were offering the propane and petroleum
operations for sale. In June, we completed the sale of the Cove Point LNG
facilities. In addition, Columbia Electric's interests in four qualifying
generation facilities will be sold as required under the Public Utility
Regulatory Policies Act prior to the NiSource merger, and sale of the remainder
of its business may be pursued."
SECOND QUARTER RESULTS BY SEGMENT
The TRANSMISSION AND STORAGE segment's operating income for the 2000
quarter was $66.9 million, up $11 million over 1999. The increase included the
effect of lower labor and benefits costs due to Columbia Gas Transmission's VIRP
that was implemented in the 2000 first quarter. Higher revenues from increased
transportation services also improved operating income.
Second quarter operating income for DISTRIBUTION was $6.4 million, down
$10.2 million from the 1999 period primarily due to one-time costs related to
implementing the VIRP.
Operating income of $15 million for EXPLORATION AND PRODUCTION was $8.1
million above the 1999 second quarter, reflecting increased natural gas
production. Production of 13 billion cubic feet (Bcf) rose 2.7 Bcf or 26 percent
over 1999's second quarter. The average price received for natural gas
production, including the effect of hedging activities, was $2.75 per thousand
cubic feet (Mcf), an increase of $0.08 per Mcf.
An improvement from a contract restructuring for a cogeneration
facility led to operating income for the POWER GENERATION AND OTHER segment of
$1.1 million versus an operating loss of $600,000 in the 1999 second quarter.
Tempering this improvement were higher operating expenses primarily attributable
to start-up costs for the fiber optics network in the process of being planned
and built to serve customers in the Washington D.C. to New York City corridor.
The CORPORATE segment had an operating loss of $9.9 million in the 2000
second quarter, compared to an operating loss of $4.1 million last year. The
increased loss primarily reflects higher professional fees associated with the
pending merger with NiSource.
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OTHER INCOME, INTEREST EXPENSE AND TAXES
Interest income and other, net, for the second quarter 2000 of $93.8
million, was up $86.4 million, due to a $90.6 million pre-tax gain on the Cove
Point LNG sale, partially offset by reduced interest income on short-term
investments. Interest expense and related charges of $45.2 million rose $8
million primarily due to additional short-term borrowings for the stock
repurchase program as well as higher interest rates. Income tax expense of $45.2
million in the 2000 quarter was up $35.6 million from the year earlier primarily
due to this year's higher pre-tax income.
DISCONTINUED OPERATIONS
As mentioned previously, Columbia is exiting the energy marketing
segment, which includes the mass marketing, propane and petroleum businesses. In
accordance with generally accepted accounting principles, the results from those
businesses are reported as discontinued operations.
For the 2000 second quarter, discontinued operations reflected an
after-tax loss of $35.2 million compared to a $9.2 million after-tax loss in the
same period last year. Included in the amount recorded for discontinued
operations for the 2000 second quarter are the estimated losses through the
anticipated sale date. For the first half of 2000, discontinued operations
represented an after-tax loss of $28.9 million, a $9.2 million greater loss than
the first six months of 1999.
RESULTS FOR FIRST HALF OF 2000
Columbia's income from continuing operations for the 2000 first half
was $226.3 million, or $2.79 per share, up $30.1 million, or 43 cents per share,
over the $196.2 million, or $2.36 per share, in 1999. Excluding this year's gain
on the sale of Cove Point LNG, costs for merger-related professional fees, and a
$20.6 million after-tax gain recorded in 1999 related to a producer settlement,
income from continuing operations was $180.5 million, an increase of $11.3
million over the first half of 1999, despite 4 percent warmer weather.
FIRST HALF 2000 RESULTS BY SEGMENT
The TRANSMISSION AND STORAGE segment's operating income for the 2000
first half was $190.8 million, down $9.3 million from the same period last year.
In 1999, Columbia Gas Transmission recorded a $24.8 million pre-tax improvement
for the producer settlement mentioned above, and higher levels of base gas
sales. Tempering this decrease were lower labor and benefits costs as a result
of the VIRP that was implemented earlier this year, plus increased revenues from
additional transportation services resulting from recent expansion projects
coming on-line.
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DISTRIBUTION'S operating income of $137.6 million decreased $9.2
million in the 2000 first half, primarily reflecting warmer weather. Both years
were warmer than normal, 12 percent in 2000 compared to 8 percent in 1999. Also
reducing 2000 operating income were costs related to implementing the VIRP in
the second quarter, which will result in lower labor and benefits costs in the
future. The effect of these factors was mitigated by reductions in other
operating expenses and gross receipts taxes.
EXPLORATION AND PRODUCTION'S operating income of $35.8 million rose
$23.3 million over the 1999 six months due to 30 percent higher gas production
and a 20 percent increase in average gas prices. Production for the 2000 first
half of 27.1 Bcf benefited from new production coming on-line, and reduced
capacity constraints that hampered previous results. Prices received for natural
gas production averaged $3.06 per Mcf, an increase of $0.50 per Mcf from the
1999 period.
POWER GENERATION AND OTHER operating income was $1.3 million in the
2000 first half versus an operating loss of $2.2 million in the 1999 period,
primarily reflecting the second quarter improvement for the cogeneration
contract restructuring, mentioned previously, partially offset by higher
start-up costs for the fiber network activities.
The CORPORATE segment had an operating loss of $12.3 million in the
2000 first half compared to operating income of $900,000 in the 1999 period,
primarily due to additional professional fees in 2000. In addition, a gain of
$6.9 million was recorded in 1999 for the parent company's portion of Columbia
Gas Transmission's producer settlement.
OTHER INCOME, INTEREST EXPENSE AND TAXES
Interest income and other, net, of $98.1 million for the 2000 first
half rose $86 million over 1999 due to the gain on the Cove Point LNG sale,
mentioned previously. This increase was partially offset by lower interest
income on temporary investments, and a $2.9 million gain from the sale of coal
properties recorded in 1999. Interest expense and related charges of $90.9
million rose $16.3 million over last year due to additional interest costs on
short-term borrowings attributable to higher rates and balances.
Income tax expense of $134.1 million for the first half of 2000 was
$34.7 million above the 1999 period primarily reflecting higher pre-tax income.
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 nearly all phases of the natural gas business,
including exploration and production, transmission, storage and distribution, as
well as other operations. Information about Columbia Energy Group (NYSE:CG) is
available on the Internet at HYPERLINK http://www.columbiaenergygroup.com
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A recorded message from Thomas L. Hughes, vice president--investor
relations of Columbia Energy Group, providing a review of quarterly results and
recent developments that are likely to effect full-year performance, will be
available beginning later 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 include factors that are beyond the company's 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 Columbia's service
territories, fluctuations in energy-related commodity prices, conversion
activity, other marketing efforts and other uncertainties. These and other risk
factors are detailed from time to time in the company's SEC reports. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this release. The company does 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.
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COLUMBIA ENERGY GROUP
SUMMARY OF FINANCIAL AND OPERATING DATA
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------------- ----------------------------
2000 1999 2000 1999
-------- -------- ------ -------
INCOME STATEMENT DATA
($ in millions)
Net Revenues
Energy sales ....................................... 223.1 244.0 861.4 1,151.7
Less: Products purchased ........................... 76.2 99.5 443.0 687.7
----- ----- ------- -------
Gross Margin ....................................... 146.9 144.5 418.4 464.0
Transportation ..................................... 163.9 151.0 415.8 368.6
Production gas sales ............................... 35.4 27.0 81.8 52.4
Other .............................................. 40.4 48.2 90.0 113.1
----- ----- ------- -------
Total Net Revenues .................................... 386.6 370.7 1,006.0 998.1
----- ----- ------- -------
Operating Expenses
Operation and maintenance .......................... 220.6 201.1 434.0 419.6
Settlement of gas supply charges ................... -- -- -- (29.8)
Depreciation and depletion ......................... 47.1 54.0 109.5 127.4
Other taxes ........................................ 39.4 40.9 109.3 122.8
----- ----- ------- -------
Total Operating Expenses .............................. 307.1 296.0 652.8 640.0
----- ----- ------- -------
Operating Income ...................................... 79.5 74.7 353.2 358.1
----- ----- ------- -------
Other Income (Deductions)
Interest income and other, net ..................... 93.8 7.4 98.1 12.1
Interest expense and related charges ............... (45.2) (37.2) (90.9) (74.6)
----- ----- ------- -------
Total Other Income (Deductions) ....................... 48.6 (29.8) 7.2 (62.5)
----- ----- ------- -------
Income from Continuing Operations
before Income Taxes ............................. 128.1 44.9 360.4 295.6
Income Taxes .......................................... 45.2 9.6 134.1 99.4
----- ----- ------- -------
Income from Continuing Operations ..................... 82.9 35.3 226.3 196.2
----- ----- ------- -------
Discontinued Operations - net of taxes
(Loss) from operations ............................. (7.8) (9.2) (1.5) (19.7)
Estimated (loss) on disposal ....................... (27.4) -- (27.4) --
----- ----- ------- -------
(Loss) from Discontinued Operations - net of taxes..... (35.2) (9.2) (28.9) (19.7)
----- ----- ------- -------
Net Income ............................................ 47.7 26.1 197.4 176.5
===== ===== ======= =======
PER SHARE DATA
Basic Earnings Per Share ($)
Continuing operations .............................. 1.04 0.43 2.81 2.37
(Loss) from discontinued operations ................ (0.10) (0.11) (0.02) (0.24)
Estimated (loss) on disposal ....................... (0.34) -- (0.34) --
----- ----- ------- -------
Basic Earnings Per Share ........................... 0.60 0.32 2.45 2.13
===== ===== ======= =======
Diluted Earnings Per Share ($)
Continuing operations .............................. 1.03 0.43 2.79 2.36
(Loss) from discontinued operations ................ (0.10) (0.11) (0.02) (0.24)
Estimated (loss) on disposal ....................... (0.34) -- (0.34) --
----- ----- ------- -------
Diluted Earnings Per Share ......................... 0.59 0.32 2.43 2.12
===== ===== ======= =======
Basic Average Common Shares Outstanding (millions)..... 79.8 82.3 80.4 82.8
Diluted Average Common Shares (millions) .............. 80.5 82.8 81.1 83.2
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COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data (continued)
OPERATING INCOME (LOSS) BY SEGMENT
($ in millions)
TRANSMISSION AND STORAGE OPERATIONS
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------- --------------------
2000 1999 2000 1999
---- ---- ---- ----
OPERATING REVENUES
Transportation revenues ............... 140.2 134.5 325.8 316.9
Storage revenues ...................... 44.1 43.7 88.7 94.0
Other revenues ........................ 4.2 4.6 19.1 25.2
----- ----- ----- -----
Total Operating Revenues ................ 188.5 182.8 433.6 436.1
----- ----- ----- -----
OPERATING EXPENSES
Operation and maintenance ............. 81.1 86.6 159.7 183.5
Settlement of gas supply charges ...... -- -- -- (29.8)
Depreciation .......................... 27.3 26.9 54.6 53.6
Other taxes ........................... 13.2 13.4 28.5 28.7
----- ----- ----- -----
Total Operating Expenses ................ 121.6 126.9 242.8 236.0
----- ----- ----- -----
OPERATING INCOME ........................ 66.9 55.9 190.8 200.1
===== ===== ===== =====
DISTRIBUTION OPERATIONS
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------- -----------------------
2000 1999 2000 1999
---- ---- ---- ----
NET REVENUES
Sales revenues ..................... 213.8 252.7 841.6 1,163.8
Less: Cost of gas sold ............. 120.7 155.4 545.9 822.0
----- ----- ----- -------
Net Sales Revenues ................. 93.1 97.3 295.7 341.8
----- ----- ----- -------
Transportation revenues ............ 65.1 66.7 195.8 173.7
Less: Associated gas costs 5.6 9.0 18.3 18.9
----- ----- ----- -------
Net Transportation Revenues 59.5 57.7 177.5 154.8
----- ----- ----- -------
Net Revenues ......................... 152.6 155.0 473.2 496.6
----- ----- ----- -------
OPERATING EXPENSES
Operation and maintenance .......... 112.6 97.2 230.1 209.6
Depreciation ....................... 11.5 17.1 33.1 53.1
Other taxes ........................ 22.1 24.1 72.4 87.1
----- ----- ----- -------
Total Operating Expenses ............. 146.2 138.4 335.6 349.8
----- ----- ----- -------
OPERATING INCOME ..................... 6.4 16.6 137.6 146.8
===== ===== ===== =======
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COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data (continued)
EXPLORATION AND PRODUCTION OPERATIONS
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
--------------- ---------------
2000 1999 2000 1999
---- ---- ---- ----
OPERATING REVENUES
Gas revenues ...................... 36.3 27.9 83.8 53.8
Other revenues .................... 4.0 3.6 9.0 8.2
---- ---- ---- ----
Total Operating Revenues ............. 40.3 31.5 92.8 62.0
---- ---- ---- ----
OPERATING EXPENSES
Operation and maintenance ............ 15.2 13.4 31.3 26.3
Depreciation and depletion......... 7.0 8.7 19.4 18.2
Other taxes ....................... 3.1 2.5 6.3 5.0
---- ---- ---- ----
Total Operating Expenses ............. 25.3 24.6 57.0 49.5
---- ---- ---- ----
OPERATING INCOME ..................... 15.0 6.9 35.8 12.5
==== === ==== ====
POWER GENERATION AND OTHER OPERATIONS
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
---------------- -----------------
2000 1999 2000 1999
---- ---- ---- ----
OPERATING REVENUES
Gas sales .......................... 8.0 1.5 17.8 2.9
Power generation ................... 4.3 1.5 4.8 3.5
LNG ................................ 1.8 1.9 3.8 4.2
Other .............................. 0.9 0.2 2.1 0.3
---- ---- ---- ----
Total Operating Revenues 15.0 5.1 28.5 10.9
---- ---- ---- ----
OPERATING EXPENSES
Products purchased ................. 5.9 0.3 13.6 0.3
Operation and maintenance........... 7.8 5.3 13.2 12.4
Depreciation ....................... 0.1 0.1 0.2 0.2
Other taxes ........................ 0.1 -- 0.2 0.2
---- ---- ---- ----
Total Operating Expenses ............. 13.9 5.7 27.2 13.1
---- ---- ---- ----
OPERATING INCOME (LOSS)............... 1.1 (0.6) 1.3 (2.2)
==== ==== ==== ====
CORPORATE
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
---------------- -----------------
2000 1999 2000 1999
---- ---- ---- ----
OPERATING INCOME (LOSS) ............. (9.9) (4.1) (12.3) 0.9
==== ==== ===== ===
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COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data (continued)
JUNE 30, 2000 DECEMBER 31, 1999
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CAPITALIZATION
($ in millions)
Common Stock Equity
Common stock, $.01 par value, authorized
200,000,000 shares, issued 83,880,779
and 83,786,942 shares, respectively ......................... 0.8 0.8
Additional paid in capital .................................. 1,616.1 1,611.6
Retained earnings ........................................... 748.1 586.9
Unearned employee compensation .............................. (0.3) (0.6)
Accumulated Other Comprehensive Income:
Foreign currency translation adjustment .................. -- 0.3
Treasury stock, at cost (4,368,300 and 2,478,500 shares)..... (249.1) (135.0)
------- -------
Total Common Stock Equity ...................................... 2,115.6 2,064.0
Long-Term Debt ................................................. 1,639.2 1,639.3
------- -------
Total Capitalization ........................................... 3,754.8 3,703.3
======= =======
Current Maturities of Long-Term Debt ........................... 311.1 311.1
======= =======
Short-Term Debt ................................................ 328.9 465.5
======= =======
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COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data (continued)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- -------------------------
2000 1999 2000 1999
------- ------ ------- -------
TOTAL REVENUES ($ IN MILLIONS) ............. ..... 468.5 479.2 1,467.4 1,704.8
Average Price of Gas Production ($ per Mcf)
U.S. ................................... ..... 2.75 2.69 3.06 2.56
Canada ................................. ..... 2.73 2.24 2.80 2.41
OPERATING DATA
Gas Production (billion cubic feet):
U.S. ................................... ..... 12.9 10.2 27.0 20.8
Canada ................................. ..... 0.1 0.1 0.1 0.1
------ ------ ------ ------
Total .................................. ..... 13.0 10.3 27.1 20.9
====== ====== ====== ======
THROUGHPUT
Transmission (billion cubic feet):
Transportation
Columbia Transmission
Market area ....................... ...... 186.3 164.4 564.4 558.4
Columbia Gulf
Mainline .......................... ...... 162.0 149.5 307.7 296.9
Short-haul ........................ ...... 40.5 58.0 98.0 108.6
Intrasegment eliminations ......... ...... (156.8) (145.6) (297.2) (284.3)
------ ------ ------ ------
Total Throughput ........................... ..... 232.0 226.3 672.9 679.6
====== ====== ====== ======
Distribution (billion cubic feet):
Gas sales ......................... ............ 22.2 21.2 101.5 114.2
Transportation .................... ............ 76.5 76.9 199.8 184.8
------ ------ ------ ------
Total Throughput ........................... ..... 98.7 98.1 301.3 299.0
Off-System Sales .................. ............ 2.4 9.2 9.5 165.5
------ ------ ------ ------
Total Sold and Transported ................. ..... 101.1 107.3 310.8 464.5
====== ====== ====== ======
DEGREE DAYS (DISTRIBUTION SERVICE TERRITORY)
Actual ..................................... ... 579 483 3,145 3,261
Normal ..................................... ... 580 580 3,559 3,527
% Colder (warmer) than normal ..... -- (17) (12) (8)
% Colder (warmer) than prior period ............ 20 (7) (4) 15
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