1
File No. 1-1098
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, 1998
EMPLOYEES' THRIFT PLAN OF COLUMBIA ENERGY GROUP
Columbia Energy Group
13880 Dulles Corner Lane
Herndon, Virginia 20171-4600
2
EMPLOYEES' THRIFT PLAN
OF COLUMBIA ENERGY GROUP
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1998 AND 1997
Report of Independent Public Accountants..........................................................................2
Statements of Net Assets Available for Benefits...................................................................3
Statement of Changes in Net Assets Available for Benefits.........................................................4
Notes to Financial Statements and Schedules.......................................................................5
Schedule A - Statements of Net Assets Available for Benefits.....................................................10
Schedule B - Statement of Changes in Net Assets Available for Benefits...........................................12
Item 27(a) - Schedule of Assets Held for Investment Purposes.....................................................14
Item 27(d) - Schedule of Reportable Transactions.................................................................15
Consent of Independent Public Accountants........................................................................17
Federal Tax Consequences (Unaudited).............................................................................18
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.
3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Thrift Plan Committee of the
Employees' Thrift Plan of
Columbia Energy Group:
We have audited the accompanying statements of net assets available for benefits
of the Employees' Thrift Plan of Columbia Energy Group (the "Plan") as of
December 31, 1998 and 1997, and the related statement of changes in net assets
available for benefits for the year ended December 31, 1998. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements 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, 1998 and 1997, and the changes in net assets available for benefits
for the year ended December 31, 1998, 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. These supplemental schedules are the
responsibility of the Plan's Management. The supplemental schedules 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
April 30, 1999
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EMPLOYEES' THRIFT PLAN OF COLUMBIA ENERGY GROUP
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1998 December 31, 1997
----------------- -----------------
Assets
- ------
Investments at fair value:
Columbia Energy Group
Common Stock $346,169,555 $324,570,127
Interest-bearing cash 2,930,746 2,563,671
------------ ------------
Total Columbia Stock Fund 349,100,301 327,133,798
Fidelity Mutual Funds:
Retirement Money Market Portfolio 58,762,865 60,986,098
Magellan Fund 40,167,065 32,031,366
Contrafund 25,481,841 20,613,094
Growth Company Fund 13,560,277 11,892,345
Growth & Income Portfolio 63,071,162 54,286,745
Intermediate Bond Fund 35,429,049 36,666,784
Overseas Fund 8,791,851 9,416,950
Europe Fund 6,994,294 5,039,683
Pacific Basin Fund 1,436,029 1,241,893
Balanced Fund 19,724,355 17,244,862
Capital Appreciation Fund 4,968,029 3,746,107
Short-Term Bond Fund 3,666,107 4,049,336
Spartan U.S. Equity Index Fund 85,055,824 75,451,588
Loans to Participants 10,348,004 9,271,509
------------ ------------
726,557,053 669,072,158
Confederation Life Receivable 377,760 --
Columbia Gas Litigation Settlement (Note 5) -- 2,116,228
(Retirement Money Market Portfolio)
Employer Contributions Receivable 696,883 943,407
Participant Deposits Receivable 1,362,142 1,749,607
------------ ------------
Net Assets Available for Benefits $728,993,838 $673,881,400
============ ============
The accompanying notes to financial statements and schedules
are an integral part of these statements.
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EMPLOYEES' THRIFT PLAN OF COLUMBIA ENERGY GROUP
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
Net Assets, Beginning of Year $673,881,400
Net Investment Income 23,076,167
Net Realized Gain on Securities Sold or
Distributed 48,090,861
Net Change in Unrealized Appreciation on
Investments 31,646,580
Participants' Deposits 23,917,837
Employer Contributions 11,571,504
Distributions to Participants (84,350,566)
Confederation Life (Note 6) 651,245
Loan Activity - Interest 508,810
------------
Net Assets, End of Year $728,993,838
============
The accompanying notes to financial statements and schedules
are an integral part of this statement.
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EMPLOYEES' THRIFT PLAN OF COLUMBIA ENERGY GROUP
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
December 31, 1998 and December 31, 1997
1. Description of the Plan
The Employees' Thrift Plan of Columbia Energy Group, formerly the
Employees' Thrift Plan of Columbia Gas System, (the "Plan") was adopted by the
Board of Directors of Columbia Energy Group, formerly 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
immediately eligible to join the plan. 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 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, while maintaining an average maturity of 3 to 10
years.
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: 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 while paying current dividends, as
well as securities convertible into common stocks, preferred stocks and
fixed income securities.
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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.
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 that have their principal activities
in 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: The 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 Stock Fund
except for employees age 50 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.
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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 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:
December 31, 1998 December 31, 1997
----------------- -----------------
Share/Unit Shares/ Share/Unit Shares/
Value Units Value Units
--------- --------- ------ --------
($) ($)
Columbia Stock Fund 32.77 10,652,948 29.34 11,149,235
Retirement Money
Market Portfolio 1.00 58,762,865 1.00 60,986,098
Magellan Fund 120.82 332,454 95.27 336,217
Contrafund 56.79 448,703 46.63 442,056
Growth Company Fund 51.02 265,784 43.32 274,523
Growth & Income Portfolio 45.84 1,375,898 38.10 1,424,849
Intermediate Bond Fund 10.27 3,449,761 10.17 3,605,387
Overseas Fund 35.98 244,353 32.54 289,396
Europe Fund 33.48 208,910 29.94 168,326
Pacific Basin Fund 13.22 108,625 12.23 101,545
Balanced Fund 16.36 1,205,645 15.27 1,129,330
Capital Appreciation Fund 22.07 225,103 19.38 193,298
Short-Term Bond Fund 8.71 420,908 8.70 465,441
Spartan U.S. Equity Index Fund 43.96 1,934,846 34.98 2,156,992
As of December 31, 1998 and 1997, the only individual security held by
the Plan in excess of 5% of net assets was Columbia Common Stock, 5,994,278
shares valued at $346,169,555 and 4,131,362 shares valued at $324,570,127,
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 accompanying financial statements have been prepared on an accrual
basis as of December 31, 1998 and December 31, 1997.
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(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 Common
Stock to withdrawn participants 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, 1998.
(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, 1998.
(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
any 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, 1998
with contributions for the year then ended are shown below:
Employer
Contributions
-------------
Columbia Gas Transmission Corp............................. $ 3,544,941
Columbia Gas of Kentucky, Inc.............................. 315,855
Columbia Gas of Maryland, Inc.............................. 85,860
Columbia Gas of Ohio, Inc.................................. 3,441,278
Columbia Gas of Pennsylvania, Inc.......................... 1,099,414
Columbia Energy Group Service Corp......................... 729,228
Columbia Gulf Transmission Company......................... 788,120
Columbia Propane Corp...................................... 249,931
Columbia LNG Corp.......................................... 47,585
Columbia Natural Resources, Inc. .......................... 472,497
Columbia Gas of Virginia, Inc.............................. 485,532
Columbia Electric Corp..................................... 53,164
Columbia Energy Services................................... 252,221
Columbia Network Services.................................. 5,878
-----------
Total.................................................. $11,571,504
===========
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4. Distributions Payable
As of December 31, 1998 and 1997, amounts due to participants who had
requested a withdrawal were $ 0 and $ 8,984,667, respectively.
5. Columbia Gas System Securities Litigation Settlement
On March 20, 1998, $2,134,727 was distributed to current and former
Plan participants who acquired units of the Columbia Gas Stock Fund between
January 19, 1990 and June 18, 1991. The Securities Litigation Settlement monies
plus accumulated interest were allocated pursuant to the methodology contained
in the Stipulation of Settlement.
6. Confederation Life Guaranteed Investment Contract
On August 12, 1994, Canadian and Michigan regulators froze the
Confederation Life Insurance Company Guaranteed Investment Contract (GIC). In
order to provide liquidity to Plan participants who had invested in the
Retirement Money Market/GIC Fund, on September 20, 1995 Columbia Energy Group
and Columbia Gas Transmission (TCO) lent monies to the Plan. On July 29, 1998,
these loans were satisfied. Under the terms of the loans, once the principal was
paid in full to Columbia and TCO, the excess monies received on account of the
Confederation Life GIC is to be paid to Plan participants who had investments in
the Money Market/GIC Fund on August 12, 1994. An initial payment of $273,485 was
received on July 29, 1998. A second payment totaling $377,760 was received by
Fidelity on December 21, 1998. These monies were allocated to participants'
accounts on January 5, 1999. Additional payments may occur in the future.
7. Tax Status
See "Federal Tax Consequences" located elsewhere in this document for a
general discussion of the impact of taxes on the participant.
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 related 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, 1998 and December 31, 1997 and Statement of Changes in Net Assets Available
for Benefits for the year ended December 31, 1998.
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Schedule A (Page 1 of 2)
EMPLOYEES' THRIFT PLAN OF COLUMBIA ENERGY GROUP
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Investments 12/31/97 Market Employer Contributions Participant Total Net
Value Receivable Deposits Receivable Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Columbia Stock Fund $327,133,798 $ 906,598 $ 409,650 $328,450,046
- ----------------------------------------------- ------------ ------------ ------------ ------------
Fidelity Mutual Funds:
- ----------------------------------------------- ------------ ------------ ------------ ------------
Retirement Money Market
Portfolio 60,986,098 10,137 192,362 61,188,597
- ----------------------------------------------- ------------ ------------ ------------ ------------
Magellan Fund 32,031,366 2,285 194,600 32,228,251
- ----------------------------------------------- ------------ ------------ ------------ ------------
Contrafund 20,613,094 2,122 116,012 20,731,228
- ----------------------------------------------- ------------ ------------ ------------ ------------
Growth Company Fund 11,892,345 2,410 70,074 11,964,829
- ----------------------------------------------- ------------ ------------ ------------ ------------
Growth & Income Portfolio 54,286,745 6,782 238,609 54,532,136
- ----------------------------------------------- ------------ ------------ ------------ ------------
Intermediate Bond Fund 36,666,784 2,076 124,761 36,793,621
- ----------------------------------------------- ------------ ------------ ------------ ------------
Overseas Fund 9,416,950 1,311 50,014 9,468,275
- ----------------------------------------------- ------------ ------------ ------------ ------------
Europe Fund 5,039,683 360 20,256 5,060,299
- ----------------------------------------------- ------------ ------------ ------------ ------------
Pacific Basin Fund 1,241,893 193 10,667 1,252,753
- ----------------------------------------------- ------------ ------------ ------------ ------------
Balanced Fund 17,244,862 3,568 72,247 17,320,677
- ----------------------------------------------- ------------ ------------ ------------ ------------
Capital Appreciation Fund 3,746,107 791 21,874 3,768,772
- ----------------------------------------------- ------------ ------------ ------------ ------------
Short-Term Bond Fund 4,049,336 507 19,151 4,068,994
- ----------------------------------------------- ------------ ------------ ------------ ------------
Spartan U.S. Equity Index Fund 75,451,588 4,267 209,330 75,665,185
- ----------------------------------------------- ------------ ------------ ------------ ------------
Columbia Gas Litigation Settlement (note 5) 2,116,228 -- -- 2,116,228
- ----------------------------------------------- ------------ ------------ ------------ ------------
Loans to Participants 9,271,509 -- -- 9,271,509
- ----------------------------------------------- ------------ ------------ ------------ ------------
TOTAL $671,188,386 $ 943,407 $ 1,749,607 $673,881,400
- ----------------------------------------------- ------------ ------------ ------------ ------------
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Schedule A (Page 2 of 2)
EMPLOYEES' THRIFT PLAN OF COLUMBIA ENERGY GROUP
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS 12/31/98 MARKET VALUE EMPLOYER CONTRIBUTIONS PARTICIPANT TOTAL
RECEIVABLE DEPOSITS RECEIVABLE NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA STOCK FUND 349,100,301 662,050 273,641 350,035,992
- -----------------------------------------------------------------------------------------------------------------------------------
FIDELITY MUTUAL FUNDS:
- -----------------------------------------------------------------------------------------------------------------------------------
RETIREMENT MONEY MARKET PORTFOLIO 58,762,865 11,054 146,940 58,920,859
- -----------------------------------------------------------------------------------------------------------------------------------
MAGELLAN FUND 40,167,065 3,112 160,007 40,330,184
- -----------------------------------------------------------------------------------------------------------------------------------
CONTRAFUND 25,481,841 2,278 100,988 25,585,107
- -----------------------------------------------------------------------------------------------------------------------------------
GROWTH COMPANY FUND 13,560,277 2,554 57,236 13,620,067
- -----------------------------------------------------------------------------------------------------------------------------------
GROWTH & INCOME PORTFOLIO 63,071,162 5,014 199,721 63,275,897
- -----------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE BOND FUND 35,429,049 887 86,845 35,516,781
- -----------------------------------------------------------------------------------------------------------------------------------
OVERSEAS FUND 8,791,851 821 37,784 8,830,456
- -----------------------------------------------------------------------------------------------------------------------------------
EUROPE FUND 6,994,294 764 23,328 7,018,386
- -----------------------------------------------------------------------------------------------------------------------------------
PACIFIC BASIN FUND 1,436,029 232 9,225 1,445,486
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED FUND 19,724,355 2,917 59,757 19,787,029
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL APPRECIATION FUND 4,968,029 1,217 23,073 4,992,319
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM BOND FUND 3,666,107 382 13,669 3,680,158
- -----------------------------------------------------------------------------------------------------------------------------------
SPARTAN U.S. EQUITY INDEX FUND 85,055,824 3,601 169,928 85,229,353
- -----------------------------------------------------------------------------------------------------------------------------------
CONFEDERATION LIFE 377,760 377,760
- -----------------------------------------------------------------------------------------------------------------------------------
LOANS TO PARTICIPANTS 10,348,004 10,348,004
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL 726,934,813 696,883 1,362,142 728,993,838
- -----------------------------------------------------------------------------------------------------------------------------------
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Schedule B
(Page 1 of 2)
EMPLOYEES' THRIFT PLAN OF COLUMBIA ENERGY GROUP
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
============================================================================================================
COLUMBIA RETIREMENT
TOTAL STOCK FUND MONEY MARKET MAGELLAN
Net Assets Beginning of Year $ 673,881,400 $ 328,849,506 $ 60,531,022 $ 32,265,710
- ------------------------------------------------------------------------------------------------------------
Net Investment Income 23,076,167 4,797,798 3,021,373 1,917,492
- ------------------------------------------------------------------------------------------------------------
Net Realized Gain/(Loss) on 48,090,861 31,879,573 __ 1,735,554
Securities Sold or
Distributed
- ------------------------------------------------------------------------------------------------------------
Net Change Unrealized 31,646,580 444,930 __ 6,652,702
Appreciation/(Depreciation)
of Investments
- ------------------------------------------------------------------------------------------------------------
Participants' Deposits 23,917,837 5,258,399 2,492,335 2,742,385
- ------------------------------------------------------------------------------------------------------------
Columbia Contributions 11,571,504 11,132,032 109,645 34,211
- ------------------------------------------------------------------------------------------------------------
Distributions to Participants (84,350,566) (25,436,895) (22,113,427) (3,870,415)
- ------------------------------------------------------------------------------------------------------------
Interfund Exchanges __ (6,880,630) 15,116,608 (1,120,757)
- ------------------------------------------------------------------------------------------------------------
Confederation Life 651,245 __ __ __
- ------------------------------------------------------------------------------------------------------------
Loan Activity 508,810 (8,721) (236,697) (26,698)
- ------------------------------------------------------------------------------------------------------------
Net Assets, End of Year 728,993,838 350,035,992 58,920,859 40,330,184
============================================================================================================
============================================================================================================
GROWTH GROWTH & INTERMEDIATE
CONTRAFUND COMPANY INCOME BOND
Net Assets Beginning of Year $ 20,734,868 $ 11,968,927 $ 54,539,110 36,860,697
- ------------------------------------------------------------------------------------------------------------
Net Investment Income 1,880,963 960,961 3,424,901 2,204,777
- ------------------------------------------------------------------------------------------------------------
Net Realized Gain/(Loss) on 903,130 530,459 4,439,489 4,101
Securities Sold or
Distributed
- ------------------------------------------------------------------------------------------------------------
Net Change Unrealized 3,303,635 1,534,204 6,543,451 336,140
- ------------------------------------------------------------------------------------------------------------
Appreciation/(Depreciation)
of Investments
Participants' Deposits 1,739,471 944,984 3,392,903 1,496,518
- ------------------------------------------------------------------------------------------------------------
Columbia Contributions 33,831 27,382 83,862 14,200
- ------------------------------------------------------------------------------------------------------------
Distributions to Participants (2,370,508) (1,305,938) (7,956,456) (5,516,327)
- ------------------------------------------------------------------------------------------------------------
Interfund Exchanges (663,620) (1,073,951) (928,246) 206,743
- ------------------------------------------------------------------------------------------------------------
Confederation Life __ __ __ __
- ------------------------------------------------------------------------------------------------------------
Loan Activity 23,337 33,039 (263,117) (90,068)
- ------------------------------------------------------------------------------------------------------------
Net Assets, End of Year 25,585,107 13,620,067 63,275,897 35,516,781
============================================================================================================
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Schedule B
(Page 2 of 2)
EMPLOYEES' THRIFT PLAN OF COLUMBIA ENERGY GROUP
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
=======================================================================================================================
CAPITAL
OVERSEAS EUROPE PACIFIC BALANCED APPRECIATION
BASIN
=======================================================================================================================
Net Assets, Beginning of Year $ 9,519,426 $ 5,062,159 $ 1,252,753 $ 17,321,830 $ 3,768,772
- -----------------------------------------------------------------------------------------------------------------------
Net Investment Income 172,759 493,907 3,283 2,045,244 122,253
- -----------------------------------------------------------------------------------------------------------------------
Net Realized Gain/(Loss)
on Securities Sold or
Distributed 389,467 328,836 (139,013) 424,761 53,249
- -----------------------------------------------------------------------------------------------------------------------
Net Change Unrealized
Appreciation/(Depreciation)
of Investments 474,000 87,036 231,220 958,499 525,210
- -----------------------------------------------------------------------------------------------------------------------
Participants' Deposits 649,219 399,917 140,120 1,122,933 364,033
- -----------------------------------------------------------------------------------------------------------------------
Columbia Contributions 14,122 8,337 3,452 43,802 11,615
- -----------------------------------------------------------------------------------------------------------------------
Distributions to Participants (1,085,492) (720,560) (127,367) (2,938,065) (422,786
- -----------------------------------------------------------------------------------------------------------------------
Interfund Exchanges (1,345,710) 1,353,816 63,845 871,164 539,337
- -----------------------------------------------------------------------------------------------------------------------
Confederation Life -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Loan Activity 42,665 4,938 17,193 (63,139) 30,636
- -----------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year 8,830,456 7,018,386 1,445,486 19,787,029 4,992,319
=======================================================================================================================
======================================================================================================================
CONFEDERATION
SPARTAN COLUMBIA GAS LIFE
SHORT-TERM U.S. EQUITY LITIGATION LOAN RECEIVABLE
BOND INDEX ACTIVITY
======================================================================================================================
Net Assets, Beginning of Year 4,068,994 $ 75,749,889 $ 2,116,228 $ 9,271,509 --
- ----------------------------------------------------------------------------------------------------------------------
Net Investment Income 210,259 1,801,698 18,499 -- --
- ----------------------------------------------------------------------------------------------------------------------
Net Realized Gain/(Loss)
on Securities Sold or
Distributed (4,724) 7,545,979 -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Net Change Unrealized
Appreciation/(Depreciation)
of Investments 8,532 10,547,021 -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Participants' Deposits 253,955 2,920,665 -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Columbia Contributions 4,053 50,960 -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Distributions to Participants (905,378) (9,580,952) -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Interfund Exchanges 64,674 (3,795,061) (2,134,727) -- (273,485)
- ----------------------------------------------------------------------------------------------------------------------
Confederation Life -- -- -- -- 651,245
- ----------------------------------------------------------------------------------------------------------------------
Loan Activity (20,207) (10,846) -- 1,076,495
- ----------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year 3,680,158 85,229,353 -- 10,348,004 377,760
======================================================================================================================
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Employer ID#: 13-1594808
Plan #: 002
EMPLOYEES' THRIFT PLAN OF COLUMBIA ENERGY GROUP
ITEM 27(a) SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1998
Identity of Issuer,
Borrower, Lessor,
or Similar Party* Description of Investment Cost Value
----------------- ------------------------- ---- -----
Columbia 10,652,948 units of Columbia Stock Fund(1) --(2) $349,100,301
Fidelity 58,762,865 shares of Retirement Money Market Portfolio --(2) 58,762,865
Fidelity 332,454 shares of Magellan Fund --(2) 40,167,065
Fidelity 448,703 shares of Contrafund --(2) 25,481,841
Fidelity 265,784 shares of Growth Company Fund --(2) 13,560,277
Fidelity 1,375,898 shares of Growth & Income Portfolio --(2) 63,071,162
Fidelity 3,449,761 shares of Intermediate Bond Fund --(2) 35,429,049
Fidelity 244,353 shares of Overseas Fund --(2) 8,791,851
Fidelity 208,910 shares of Europe Fund --(2) 6,994,294
Fidelity 108,625 shares of Pacific Basin Fund --(2) 1,436,029
Fidelity 1,205,645 shares of Balanced Fund --(2) 19,724,355
Fidelity 225,103 shares of Capital Appreciation Fund --(2) 4,968,029
Fidelity 420,908 shares of Short-Term Bond Fund --(2) 3,666,107
Fidelity 1,934,846 shares of Spartan U.S. Equity Index Fund --(2) 85,055,824
Participants Loans to Participants -- 10,348,004
------------
TOTAL THRIFT PLAN(2) $726,557,053
============
* All parties listed are considered parties-in-interest.
(1) Actual shares of The Columbia Energy Group, Inc. Common Stock
held equals 5,994,278, valued at $346,169,555.
(2) Records are maintained by Fidelity on a fair market value basis;
therefore, historical cost basis information is unavailable.
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16
Employer ID#: 13-1594808
Plan #: 002
EMPLOYEES' THRIFT PLAN OF COLUMBIA ENERGY GROUP
Item 27(d) Schedule of Reportable Transactions
Individual Transactions By Issue
For The Year Ended December 31, 1998
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)
-------- --------- ----- ----- ------- ----- ---- ------
No Reportable Transactions
NOTE: There were no lease rentals during the year.
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17
Employer ID#:13-1594808
Plan #: 002
EMPLOYEES THRIFT PLAN OF COLUMBIA ENERGY GROUP
Item 27(d) Schedule of Reportable Transactions
Cumulative Transactions By Issue
For the Year Ended December 31, 1998
- ------------------------------------------------------------------------------------------------------
Identity Description Total Total Sales Transaction
of Party* of Asset Purchases Expenses
- ------------------------------------------------------------------------------------------------------
Columbia Columbia Gas Stock Fund $61,440,055 --
- ------------------------------------------------------------------------------------------------------
Columbia Columbia Gas Stock Fund -- 76,589,595
- ------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Fund 18,090,265 --
- ------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Fund -- 20,288,788
- ------------------------------------------------------------------------------------------------------
Fidelity Retirement Money Market 70,494,509 --
Fund
- ------------------------------------------------------------------------------------------------------
Fidelity Retirement Money Market
Fund -- 74,725,177
- ------------------------------------------------------------------------------------------------------
Fidelity Spartan U. S. Equity Index
Fund 15,859,437 --
- ------------------------------------------------------------------------------------------------------
Fidelity Spartan U.S. Equity Index Fund 24,348,202
- ------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Current Value of
Identity Description Cost of Asset Asset on Net Gain or Loss
of Party* of Asset Transaction Date
- ---------------------------------------------------------------------------------------------------------
Columbia Columbia Gas Stock Fund $61,440,055 $61,440,055 --
- ---------------------------------------------------------------------------------------------------------
Columbia Columbia Gas Stock Fund (1) 76,589,595 26,765,668
- ---------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Fund 18,090,265 18,090,265 --
- ---------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Fund (1) 20,288,788 4,439,489
- ---------------------------------------------------------------------------------------------------------
Fidelity Retirement Money Market 70,494,509 70,494,509 --
Fund
- ---------------------------------------------------------------------------------------------------------
Fidelity Retirement Money Market
Fund (1) 74,725,177 --
- ---------------------------------------------------------------------------------------------------------
Fidelity Spartan U. S. Equity Index
Fund 15,859,437 15,859,437 --
- ---------------------------------------------------------------------------------------------------------
Fidelity Spartan U.S. Equity Index Fund (1) 24,348,202 7,545,979
- ---------------------------------------------------------------------------------------------------------
* 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.
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18
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 28, 1999
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19
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 1/1/98 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:
o the participant is age 55 or older in the year he or she terminates
employment with Columbia,
o the participant is age 59-1/2 or over when he or she receives the
distribution,
o the withdrawal is due to disability or death,
o the withdrawal is used to pay unreimbursed medical expenses,
o payment is made to an alternate payee under a QDRO, or
o 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:
o Company contributions and their earnings,
o a participant's savings in a before-tax account and their earnings,
o earnings on a participant's Rollover Contributions, lump sum and
after-tax deposits, and
o a participant's Rollover Contribution deposits.
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20
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 not 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.
For example:
o If savings in a participant's after-tax account
contributed after 12/31/86 equals $3,000
o And the investment earnings since 12/31/86 equals $1,000
o The total of the after-tax savings contributed after
12/31/86 plus investment earnings equals $4,000
o And the withdrawal equals $1,000
o : of the withdrawal will not be taxable ($3,000)$4,000);
3 of the withdrawal will be taxable
o Non-taxable amount equals $ 750
o Taxable amount equals $ 250
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 account during active employment, the money will
be added to his or her
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21
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
distribution of the account would otherwise be subject to the 10% additional
tax, this approach would also 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
592.
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:
o the entire account balance is paid to the participant in one tax year
after age 59-1/2, and
o 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.
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22
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:
o ten-year averaging under 1986 tax rates, or
o 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.
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23
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 21, 1999 DATE
- -------------
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