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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) October 16, 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
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(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 October 16, 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: October 16, 2000
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FOR IMMEDIATE RELEASE CONTACTS:
October 16, 2000 News Media
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R.A. Rankin, Jr. (703) 561-6044
Michael J. McGarry (703) 561-6063
Financial Community
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Thomas L. Hughes (703) 561-6001
Melissa E. Bockelmann (703) 561-6011
COLUMBIA ENERGY GROUP POSTS RESULTS
FOR 2000 THIRD QUARTER
HERNDON, Va., Oct. 16, 2000 - Columbia Energy Group today reported
third quarter 2000 income from continuing operations of $19.5 million, or 24
cents per share, compared to $20.5 million, or 25 cents per share, in the 1999
third quarter. All per share amounts are on a diluted basis.
After adjusting for one-time items, third quarter 2000 income from
continuing operations was $32.4 million, up $6.2 million over the 1999 quarter.
Lower labor and benefits costs, and higher natural gas prices received in the
exploration and production (E&P) segment, largely offset the impact of higher
interest expense and additional costs related to the fiber-optics network being
built. The lower labor and benefits costs were attributable to voluntary
incentive retirement programs (VIRPs) implemented at several subsidiaries
earlier this year.
One-time items in the 2000 quarter include costs recorded for a
previously disclosed regulatory issue related to certain prior transactions by
the transmission subsidiaries, and employee payments made primarily resulting
from the achievement of specific objectives in Columbia Electric's project
developments. In the 1999 third quarter, income was reduced by approximately
$5.8 million after-tax for professional fees associated with the NiSource Inc.
tender offer.
Operating income in the third quarter 2000 was $73.6 million, up $15.7
million over the 1999 period. After discontinued operations, Columbia reported a
net loss of $63.8 million, or 79 cents per share, for the 2000 third quarter
compared to a net loss of $22.7 million, or 28 cents per share, in the 1999
period. Third quarter 2000 revenues of $380.7 million rose $40.4 million over
the 1999 period.
Oliver G. Richard III, chairman, president and CEO of Columbia Energy
Group, said, "Columbia's core businesses continue to achieve solid operating
performance. Our transmission, distribution and exploration and production
segments all reported higher results this quarter compared to a year ago."
Richard added, "At the same time, Columbia's employees continue to work hard
toward completing a seamless and expeditious merger with NiSource. The merger is
expected to close on Nov. 1, subject to regulatory approval. Our management also
has executed agreements for the sale of Columbia Electric's operations, and
plans for the sale of Columbia's
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propane and petroleum businesses are progressing." He said that Columbia's
dedicated employees and commitment to excellence have been key to its success
and will contribute strongly to the future performance of the combined companies
after the merger.
THIRD QUARTER RESULTS BY SEGMENT
The TRANSMISSION AND STORAGE segment's operating income for the 2000
third quarter was $61.3 million, up $5.9 million over 1999 due largely to higher
revenues from increased transportation services. Also improving results were
lower labor and benefits costs due to Columbia Gas Transmission's VIRP that was
implemented in the 2000 first quarter. These improvements were tempered by costs
recorded for certain prior transactions, mentioned above.
Operating income for DISTRIBUTION in the 2000 quarter was $12.3
million, up $11 million from the 1999 period primarily due to reduced labor and
benefits costs resulting from implementing the VIRP earlier this year, the
favorable effect of a prior regulatory settlement in Ohio, together with lower
gross receipts taxes.
EXPLORATION AND PRODUCTION reported third quarter 2000 operating income
of $15.5 million, up $3.9 million over the 1999 period reflecting higher natural
gas prices. The average price received for natural gas production, including the
effect of hedging activities, was $2.72 per thousand cubic feet (Mcf), an
increase of 33 cents per Mcf, while production of 12.4 billion cubic feet (Bcf)
decreased 800,000 Mcf from the 1999 quarter.
Higher operation and maintenance costs for the POWER GENERATION AND
OTHER segment resulted in an operating loss of $15.8 million compared to
operating income of $900,000 in the 1999 third quarter. The 2000 period loss
primarily reflected higher costs for Columbia Electric, as discussed previously,
as well as costs related to the fiber optics network that is being built along
the Washington, D.C. to New York City corridor.
The CORPORATE segment had operating income of $300,000 in the 2000
third quarter, versus an operating loss of $11.3 million in 1999. Last year an
expense of approximately $8.9 million was recorded for professional fees as
discussed above.
OTHER INCOME, INTEREST EXPENSE AND TAXES
Interest income and other, net, of $5.7 million for the third quarter
2000, decreased $2.4 million, due primarily to lower interest income from
reduced short-term investments. Interest expense and related charges of $48.3
million rose $7.3 million reflecting higher short-term borrowings caused by
additional shares purchased earlier in 2000 through the stock repurchase program
as well as higher interest rates on short-term borrowings.
Income tax expense of $11.5 million in the 2000 third quarter increased
$7 million over the 1999 quarter due largely to the recording of certain
deferred tax items last year.
DISCONTINUED OPERATIONS
As previously discussed, Columbia is exiting the retail mass marketing,
major accounts, propane and petroleum businesses. In accordance with generally
accepted accounting principles, the results from those businesses are reported
as discontinued operations.
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Discontinued operations reflected a third quarter 2000 after-tax loss
of $83.3 million versus a $43.2 million after-tax loss in the 1999 period. The
2000 amount included an additional loss on the propane and petroleum businesses
to reflect the anticipated loss on sale of these assets in the 2000 fourth
quarter. For the first nine months of 2000, discontinued operations reflected an
after-tax loss of $112.2 million, a $49.3 million greater loss than the 1999
period.
RESULTS FOR FIRST NINE MONTHS OF 2000
Columbia's income from continuing operations for the first nine months
of 2000 was $245.8 million, or $3.04 per share, up $29.1 million, or 43 cents
per share, over the $216.7 million, or $2.61 per share, in 1999. Excluding
one-time items, income from continuing operations for 2000 was $212.6 million,
an increase of $17.1 million over 1999, despite warmer weather. Such one-time
items included the third quarter items mentioned previously and the gain
recorded earlier in 2000 on the sale of Cove Point LNG, costs for professional
fees associated with the NiSource tender offer, and a $20.6 million after-tax
gain in 1999 related to a producer settlement.
After discontinued operations, Columbia reported net income of $133.6
million, or $1.65 per share, for the first nine months of 2000 compared to net
income of $153.8 million, or $1.85 per share, in the same period last year.
Revenues for 2000 of $1,848.1 million, were $197 million below the 1999 period.
2000 NINE-MONTH RESULTS BY SEGMENT
The TRANSMISSION AND STORAGE segment's operating income for the first
nine months of 2000 was $252.1 million, down $3.4 million from the 1999 period.
This decrease included the effect of costs related to certain prior
transactions, mentioned previously. In 1999, Columbia Gas Transmission recorded
a $24.8 million pre-tax improvement for the producer settlement, also discussed
above, and higher levels of base gas sales. Tempering these reductions to
operating income 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.
Operating income for DISTRIBUTION of $149.9 million increased $1.8
million in the 2000 period, primarily reflecting lower labor and benefit costs
related to implementing the VIRP in the second quarter plus reductions in other
operating expenses and gross receipts taxes, largely offset by warmer weather.
Both years were warmer than normal, nine percent in 2000 compared to six percent
in 1999.
EXPLORATION AND PRODUCTION'S operating income of $51.3 million was more
than double the $24.1 million in the 1999 period. This increase was due to 18
percent higher average gas prices and 16 percent higher gas production. Prices
received for natural gas production averaged $2.95 per Mcf, up 46 cents per Mcf
over the 1999 period. Production for 2000 of 39.5 Bcf benefited from new
production coming on-line, and reduced capacity constraints that hampered
previous results.
POWER GENERATION AND OTHER operating loss was $14.5 million in 2000
compared to an operating loss of $1.3 million in the 1999 period, reflecting the
higher costs recorded in the third quarter 2000, associated with Columbia
Electric's operations and the fiber optics network, as referred to above.
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The CORPORATE segment had an operating loss of $12 million for the 2000
period versus an operating loss of $10.4 million in the 1999 period. Both
periods included professional fees, as discussed above. In addition, a pre-tax
gain of $6.9 million was recorded in 1999 for payments made to the parent
company by Columbia Gas Transmission.
OTHER INCOME, INTEREST EXPENSE AND TAXES
Interest income and other, net, of $103.8 million for the 2000 period
was $83.6 million above 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 pre-tax gain from the sale
of coal properties recorded in 1999. Interest expense and related charges of
$139.2 million were up $23.6 million over last year due to additional interest
costs on short-term borrowings attributable to higher rates and balances.
Income tax expense of $145.6 million for the 2000 period was $41.7
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 businesses. Information about Columbia Energy Group (NYSE:CG) is
available on the Internet at www.columbiaenergygroup.com.
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 affect full-year performance, will be
available after 10:00 a.m. eastern time 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 NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
2000 1999 2000 1999
---- ---- ---- ----
INCOME STATEMENT DATA
($ in millions)
Net Revenues
Energy sales ...................................... 159.2 122.8 1,020.6 1,274.5
Less: Products purchased .......................... 25.3 1.8 468.3 689.5
------ ------ -------- --------
Gross Margin ...................................... 133.9 121.0 552.3 585.0
Transportation .................................... 147.5 140.5 563.3 509.1
Production gas sales .............................. 33.5 31.6 115.3 84.0
Other ............................................. 42.3 40.2 132.3 153.3
------ ------ -------- --------
Total Net Revenues ................................... 357.2 333.3 1,363.2 1,331.4
------ ------ -------- --------
Operating Expenses
Operation and maintenance ......................... 208.1 195.7 642.1 615.3
Settlement of gas supply charges .................. -- -- -- (29.8)
Depreciation and depletion ........................ 43.5 46.7 153.0 174.1
Other taxes ....................................... 32.0 33.0 141.3 155.8
------ ------ -------- --------
Total Operating Expenses ............................. 283.6 275.4 936.4 915.4
------ ------ -------- --------
Operating Income ..................................... 73.6 57.9 426.8 416.0
------ ------ -------- --------
Other Income (Deductions)
Interest income and other, net .................... 5.7 8.1 103.8 20.2
Interest expense and related charges .............. (48.3) (41.0) (139.2) (115.6)
------ ------ -------- --------
Total Other Income (Deductions) ...................... (42.6) (32.9) (35.4) (95.4)
------ ------ -------- --------
Income from Continuing Operations
before Income Taxes ............................. 31.0 25.0 391.4 320.6
Income Taxes ......................................... 11.5 4.5 145.6 103.9
------ ------ -------- --------
Income from Continuing Operations .................... 19.5 20.5 245.8 216.7
------ ------ -------- --------
Discontinued Operations - net of taxes
(Loss) from operations ............................ -- (30.2) (1.5) (49.9)
Estimated (loss) on disposal ...................... (83.3) (13.0) (110.7) (13.0)
------ ------ -------- --------
(Loss) from Discontinued Operations - net of taxes.... (83.3) (43.2) (112.2) (62.9)
------ ------ -------- --------
Net Income (Loss) .................................... (63.8) (22.7) 133.6 153.8
====== ====== ======== ========
PER SHARE DATA
Basic Earnings (Loss) Per Share ($)
Continuing operations ............................. 0.25 0.25 3.07 2.63
(Loss) from discontinued operations .................. -- (0.37) (0.02) (0.61)
Estimated (loss) on disposal ...................... (1.05) (0.16) (1.38) (0.16)
------ ------ -------- --------
Basic Earnings (Loss) Per Share .................. (0.80) (0.28) 1.67 1.86
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Diluted Earnings (Loss) Per Share ($)
Continuing operations ............................. 0.24 0.25 3.04 2.61
(Loss) from discontinued operations ............... -- (0.37) (0.02) (0.60)
Estimated (loss) on disposal ...................... (1.03) (0.16) (1.37) (0.16)
------ ------ -------- --------
Diluted Earnings (Loss) Per Share ................. (0.79) (0.28) 1.65 1.85
====== ====== ======== ========
Basic Average Common Shares Outstanding (millions).... 79.5 81.8 80.2 82.5
Diluted Average Common Shares (millions) ............. 80.4 82.4 80.9 82.9
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COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data (continued)
OPERATING INCOME (LOSS) BY SEGMENT
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($ in millions)
TRANSMISSION AND STORAGE OPERATIONS
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------ -------------------------
2000 1999 2000 1999
------ ------- -------- ------
OPERATING REVENUES
Transportation revenues........................... 138.0 125.3 463.8 442.2
Storage revenues.................................. 44.5 44.5 133.2 138.5
Other revenues.................................... 4.6 4.8 23.7 30.0
------- -------- -------- -------
Total Operating Revenues............................. 187.1 174.6 620.7 610.7
------- -------- -------- -------
OPERATING EXPENSES
Operation and maintenance......................... 86.2 80.9 245.9 264.4
Settlement of gas supply charges.................. -- -- -- (29.8)
Depreciation...................................... 27.2 26.2 81.8 79.8
Other taxes....................................... 12.4 12.1 40.9 40.8
------- -------- -------- -------
Total Operating Expenses............................. 125.8 119.2 368.6 355.2
------- -------- -------- -------
OPERATING INCOME..................................... 61.3 55.4 252.1 255.5
======= ======== ======== =======
DISTRIBUTION OPERATIONS
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------ -------------------------
2000 1999 2000 1999
------ ------- -------- ------
NET REVENUES
Sales revenues ................................... 150.5 120.1 992.1 1,283.9
Less: Cost of gas sold............................ 68.7 43.0 614.6 865.0
------- -------- -------- -------
Net Sales Revenues................................ 81.8 77.1 377.5 418.9
------- -------- -------- -------
Transportation revenues........................... 46.3 47.8 242.1 221.5
Less: Associated gas costs........................ 1.5 5.2 19.8 24.1
------- -------- -------- -------
Net Transportation Revenues....................... 44.8 42.6 222.3 197.4
------- -------- -------- -------
Net Revenues......................................... 126.6 119.7 599.8 616.3
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OPERATING EXPENSES
Operation and maintenance......................... 89.9 89.6 320.0 299.2
Depreciation...................................... 9.2 11.5 42.3 64.6
Other taxes....................................... 15.2 17.3 87.6 104.4
------- -------- -------- -------
Total Operating Expenses............................. 114.3 118.4 449.9 468.2
------- -------- -------- -------
OPERATING INCOME..................................... 12.3 1.3 149.9 148.1
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COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data (continued)
EXPLORATION AND PRODUCTION OPERATIONS
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
----------------------- ----------------------
2000 1999 2000 1999
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OPERATING REVENUES
Gas revenues ..................................... 34.9 32.4 118.7 86.2
Other revenues.................................... 5.0 3.4 14.0 11.6
------- -------- -------- -------
Total Operating Revenues............................. 39.9 35.8 132.7 97.8
------- -------- -------- -------
OPERATING EXPENSES
Operation and maintenance......................... 15.2 13.7 46.5 40.0
Depreciation and depletion........................ 5.9 7.7 25.3 25.9
Other taxes....................................... 3.3 2.8 9.6 7.8
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Total Operating Expenses............................. 24.4 24.2 81.4 73.7
------- -------- -------- -------
OPERATING INCOME..................................... 15.5 11.6 51.3 24.1
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POWER GENERATION AND OTHER OPERATIONS
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
2000 1999 2000 1999
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OPERATING REVENUES
Gas revenues...................................... 8.1 1.7 25.9 4.6
Power generation revenues......................... 1.9 2.5 6.7 6.0
LNG revenues...................................... -- 2.6 3.8 6.8
Other revenues.................................... 0.2 0.1 2.3 0.4
------- -------- -------- -------
Total Operating Revenues............................. 10.2 6.9 38.7 17.8
------- -------- -------- -------
OPERATING EXPENSES
Products purchased................................ 5.9 -- 19.5 0.3
Operation and maintenance......................... 19.8 5.8 33.0 18.2
Depreciation...................................... -- 0.1 0.2 0.3
Other taxes....................................... 0.3 0.1 0.5 0.3
------- -------- -------- -------
Total Operating Expenses............................. 26.0 6.0 53.2 19.1
------- -------- -------- -------
OPERATING INCOME (LOSS).............................. (15.8) 0.9 (14.5) (1.3)
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CORPORATE
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------ --------------------------
2000 1999 2000 1999
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OPERATING INCOME (LOSS).............................. 0.3 (11.3) (12.0) (10.4)
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COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data (continued)
SEPTEMBER 30, 2000 DECEMBER 31, 1999
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CAPITALIZATION
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($ in millions)
Common Stock Equity
Common stock, $.01 par value, authorized
200,000,000 shares, issued 83,898,689
and 83,786,942 shares, respectively........................ 0.8 0.8
Additional paid in capital................................. 1,617.0 1,611.6
Retained earnings.......................................... 666.4 586.9
Unearned employee compensation............................. (0.3) (0.6)
Accumulated Other Comprehensive Income:
Foreign currency translation adjustment.................. (0.5) 0.3
Treasury stock, at cost (4,368,300 and 2,478,500 shares)... (249.1) (135.0)
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Total Common Stock Equity....................................... 2,034.3 2,064.0
Long-Term Debt.................................................. 1,639.2 1,639.3
------- -------
Total Capitalization............................................ 3,673.5 3,703.3
======= =======
Current Maturities of Long-Term Debt............................ 311.1 311.1
======= =======
Short-Term Debt................................................. 54.1 465.5
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COLUMBIA ENERGY GROUP
Summary of Financial and Operating Data (continued)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------- --------------------------
2000 1999 2000 1999
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TOTAL REVENUES ($ IN MILLIONS)....................... 382.1 340.9 1,851.3 2,047.5
AVERAGE PRICE OF GAS PRODUCTION
($ PER THOUSAND CUBIC FEET)
U.S. ........................................... 2.72 2.39 2.95 2.49
Canada.......................................... 4.22 2.07 3.33 2.35
OPERATING DATA
Gas Production (billion cubic feet):
U.S. ........................................... 12.4 13.2 39.4 34.0
Canada.......................................... -- -- 0.1 0.1
------- -------- -------- --------
Total........................................... 12.4 13.2 39.5 34.1
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THROUGHPUT
Transmission (billion cubic feet):
Transportation
Columbia Transmission
Market area.................................. 141.2 149.3 705.6 707.7
Columbia Gulf
Mainline..................................... 149.5 144.5 457.2 441.4
Short-haul................................... 52.5 57.5 150.5 166.1
Intrasegment eliminations.................... (138.5) (135.8) (435.7) (420.1)
------- -------- -------- --------
Total Throughput................................... 204.7 215.5 877.6 895.1
======= ======== ======== ========
Distribution (billion cubic feet):
Gas sales......................................... 11.7 11.2 113.2 125.4
Transportation.................................... 60.5 65.8 260.3 250.6
------- -------- -------- --------
Total Throughput................................... 72.2 77.0 373.5 376.0
Off-System Sales.................................. 1.2 1.6 10.7 167.1
------- -------- -------- --------
Total Sold and Transported......................... 73.4 78.6 384.2 543.1
======= ======== ======== ========
DEGREE DAYS (DISTRIBUTION SERVICE TERRITORY)
Actual........................................... 149 80 3,294 3,341
Normal........................................... 41 41 3,600 3,568
% Colder (warmer) than normal.................... 263 95 (9) (6)
% Colder (warmer) than prior period.............. 86 95 (1) 16
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