-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GAI/IzLUQX8Oycvb34Z5xHtHOBaKNQmfjpxy4bb6A4LHTl5PrRhBT+lddweRwaIR jKVwUjX7cetLJjCbSGQhqA== 0000893220-97-001650.txt : 19971015 0000893220-97-001650.hdr.sgml : 19971015 ACCESSION NUMBER: 0000893220-97-001650 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971010 ITEM INFORMATION: FILED AS OF DATE: 19971014 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBIA GAS SYSTEM INC CENTRAL INDEX KEY: 0000022099 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 131594808 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-01098 FILM NUMBER: 97694678 BUSINESS ADDRESS: STREET 1: 12355 SUNRISE VALLEY DRIVE STREET 2: SUITE 300 CITY: RESTON STATE: VA ZIP: 20191-3458 BUSINESS PHONE: 7032950394 MAIL ADDRESS: STREET 1: 12355 SUNRISE VALLEY DRIVE STREET 2: SUITE 300 CITY: RESTON STATE: VA ZIP: 20191-3458 8-K 1 FORM 8-K FOR COLUMBIA GAS SYSTEM, INC. 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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 10, 1997 THE COLUMBIA GAS SYSTEM, INC. ----------------------------- (Exact name of registrant as specified in its charter) Delaware 1-1098 13-1594808 - ---------------------------- ------------ ------------------- (State of other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 12355 Sunrise Valley Drive, Suite 300, Reston, VA 20191-3420 ------------------------------------------------------------ (Address of principal executive offices) Registrant's telephone number, including area code (703) 295-0300 2 Item 5. Other Events Information contained in a News Release dated October 10, 1997, is incorporated herein by reference. 3 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. The Columbia Gas System, Inc. ----------------------------- (Registrant) By /s/ J. W. Grossman ------------------- Vice President & Controller Date: October 14, 1997 4 For Immediate Release Contact: Carl Ericson (703) 295-0424 Oct. 10, 1997 COLUMBIA GAS REPORTS BETTER 3rd QUARTER RESULTS COMPARED TO SAME PERIOD LAST YEAR RESTON, Va., Oct. 10 -- The Columbia Gas System Inc. today reported third-quarter 1997 net income of $100,000. This is an improvement of $6.2 million, or 11 cents per share, over the same period last year, when Columbia had an after-tax loss of $6.1 million, or 11 cents per share. Oliver G. Richard III, chairman, CEO and president of Columbia, said, "Columbia's improved third-quarter results were due in part to implementation of restructuring initiatives that are also improving customer services and operating efficiencies." In addition, Richard said, results were affected by recording an after-tax $6.6 million loss for certain pipeline assets, whose sale currently is being negotiated, and $3.8 million of higher costs from restructuring activities. He also said that after-tax results were improved by $3.5 million for a settlement reached for a 1985 regulatory issue involving Order 94 of the Federal Energy Regulatory Commission; that order involves the allocation to customers of certain gas-production related costs charged to interstate pipelines. THIRD-QUARTER RESULTS The transmission and storage segment's operating income of $39.6 million increased $2.9 million over the third quarter last year. Not counting unusual items, discussed below, the increase was largely due to lower operating costs. One unusual item included in the results was a before-tax increase of $5.4 million for the Order 94 regulatory issue mentioned above regarding production-related costs dating back to 1985. In the third quarter of 1996, a $4.3 million reserve was established for this issue; however, the settlement was $1.1 million less than the reserve level. Mitigating these improvements were additional restructuring costs and a $10.1 million loss on the anticipated sale of certain pipeline facilities in New York and Pennsylvania. Absent these unusual items, operating income improved by $17 million. The distribution segment reported a seasonal operating loss of $11.4 million compared to a loss of $19.3 million in the same quarter last year. Lower operating costs and additional off-system sales revenues were the principal reasons for the improvement. Because the seasonal nature of natural gas use for heating results in reduced sales in the summer months, the third quarter of any year typically shows a loss for the distribution companies. The exploration and production segment's operating income was essentially unchanged at $5.6 million. Increased natural gas production of 600 million cubic feet (MMcf) reflected the 1997 acquisition of Alamco Inc., a gas and oil production company in Appalachia. However, the benefit of this production increase was offset by a 4 percent decrease in the average price for 5 natural gas. For the third quarter, natural gas production was 8.6 billion cubic feet (Bcf), with an average price of $2.36 per thousand cubic feet (Mcf). An operating loss of $3.1 million for the marketing, propane and power generation segment was $900,000 greater than the $2.2 million loss experienced in the same period last year. Reduced margins for gas marketing activities and start-up costs for new services were partially offset by increased gas marketing volumes sold. Due largely to the acquisition of PennUnion Energy Services LLC and the agreement to purchase and market offshore production for the Kerr-McGee Corp., gas marketing volumes in the current quarter were 323 Bcf, a significant increase over the 64.8 Bcf in the third quarter of 1996. NINE-MONTH RESULTS Columbia posted net income for the first nine months of 1997 of $197.7 million, or $3.57 per share, an increase of $44.3 million, or 69 cents per share, over the same period last year, despite weather in the first nine months of 1997 being about 7 percent warmer than last year. The net effect of lower operating costs, increased revenues from off-system sales, transportation and storage services as well as higher rates for regulated subsidiaries more than offset the impact of milder weather. Other factors affecting net income included $12.4 million for the sale of approximately 9 Bcf of Columbia Transmission's base gas as provided for under its rate settlement, a $12.8 million reduction to tax expense resulting from benefits gained through the filing of a consolidated state tax return, a $5.5 million gain on the temporary deactivation of a storage field, reduced interest costs and the loss on the anticipated sale of certain pipeline facilities. Last year's net income was reduced $21.9 million for restructuring activities, while in the current period net income was reduced by $14.4 million for that item. Last year's results benefited from the effect of a $5.6 million increase for a favorable adjustment to the sale of Columbia's southwest gas and oil subsidiary. The transmission and storage segment's operating income of $198.5 million for the first nine months of 1997 increased $37.3 million over the same period last year. Included in this improvement were the sale of base gas, lower operating costs, incremental storage and transportation revenues and the full period effect of higher Columbia Transmission rates implemented in early 1996. Also improving results were additional revenues for peaking services generated by the Cove Point LNG facility. Additional restructuring costs and the loss on the sale of certain pipeline facilities tempered these improvements. The distribution segment recorded operating income of $150.5 million, an increase of $4.8 million over last year despite warmer weather. Restructuring costs were lower in 1997 and made possible the implementation of cost-conservation measures and operating efficiencies that resulted in lower operation and maintenance expenses. Also improving 1997 results were off-system sales revenues that Columbia Gas of Ohio was allowed to retain under the terms of its 1996 rate settlement. These improvements more than offset the $25 million decrease attributable to warmer weather. 6 Operating income of $22.7 million for the exploration and production segment was essentially unchanged from last year. A $4.1 million improvement for a contract buyout by a cogeneration facility and a 700 MMcf increase in production volumes was offset by an 8 percent decrease in the average price received for gas production. The price that Columbia received for its natural gas production averaged $2.59 per Mcf in 1997. Year-to-date natural gas production is 25.3 Bcf. The marketing, propane and power generation segment's operating income of $5 million decreased $6.3 million due primarily to lower margins for gas marketing operations and additional start-up costs for new services. Although gas marketing volumes of more than 551 Bcf were 380 Bcf greater than last year, lower margins mitigated this improvement. Propane operations, which were down from last year due to lower sales volumes, primarily as a result of the warmer first-quarter weather, were partially offset by increased margins. The current period benefitted from $2.6 million received from the termination of a partnership in a cogeneration facility. The Columbia Gas System, located in Reston, Va., is one of the nation's largest natural gas systems, with assets of about $6 billion. Its operating companies are engaged in all phases of the gas business plus marketing, fuel management services and electric power generation. Columbia companies, directly or indirectly, serve more than 7 million natural gas customers -- 12 percent of the nation's total -- in 15 states and the District of Columbia. Information about the Columbia Gas System is available on the World Wide Web at http://www.columbiaenergy.com. Columbia stock trades on the New York Stock Exchange under the symbol CG. -30- FINANCIAL COMMUNITY CONTACTS: Thomas Hughes (703) 295-0429 Melissa Bockelmann (703) 295-0427 7 THE COLUMBIA GAS SYSTEM INC. Summary of Financial and Operating Data
THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 ------------------ ------------------ INCOME STATEMENT DATA 1997 1996 1997 1996 - --------------------- ---- ---- ---- ---- ($ millions) Total Operating Revenues ...................... 995.0 450.8 3,333.4 2,236.2 Operating expenses Products Purchased .......................... 663.7 144.0 1,966.9 901.7 Operation and Maintenance ................... 223.7 210.0 674.6 682.7 Depreciation and Depletion .................. 42.8 38.8 163.2 157.8 Other Taxes ................................. 35.1 37.1 158.1 158.9 ----- ----- ------- ------- Total Operating Expenses ...................... 965.3 429.9 2,962,8 1,901.1 ----- ----- ------- ------- Operating Income .............................. 29.7 20.9 370.6 335.1 ----- ----- ------- ------- Other Income (Deductions) Interest income and other, net .............. 7.5 22.2 27.9 39.0 Interest expense and related charges ........ (37.0) (51.8) (115.3) (134.7) ----- ----- ------- ------- Total Other Income (Deductions) ............... (29.5) (29.6) (87.4) (95.7) ----- ----- ------- ------- Income (Loss) before Income Taxes ............. 0.2 (8.7) 283.2 239.4 Income Taxes .................................. 0.1 (2.6) 85.5 86.0 ----- ----- ------- ------- Net Income (Loss) ............................. 0.1 (6.1) 197.7 153.4 ===== ===== ======= ======= PER SHARE DATA Earnings (Loss) on Common Stock ($) ........... -- (0.11) 3.57 2.88 Average Common Shares Outstanding (millions) ...................... 55.4 55.2 55.4 53.3
OPERATING INCOME (LOSS) BY SEGMENT - ---------------------------------- ($ millions) TRANSMISSION AND STORAGE OPERATIONS
THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 ------------------ ------------------ 1997 1996 1997 1996 ---- ---- ---- ---- OPERATING REVENUES Transportation revenues ....................... 131.8 130.5 448.8 451.1 Storage revenues .............................. 45.2 40.2 137.0 119.4 Other revenues ................................ 6.5 4.8 41.2 14.9 ----- ----- ------- ------- Total Operating Revenues ........................ 183.5 175.5 627.0 585.4 ----- ----- ------- ------- OPERATING EXPENSES Operation and maintenance ..................... 105.1 103.6 308.8 303.9 Depreciation .................................. 25.8 20.9 78.7 76.1 Other taxes ................................... 13.0 14.3 41.0 44.2 ----- ----- ------- ------- Total Operating Expenses ........................ 143.9 138.8 425.8 424.2 ----- ----- ------- ------- OPERATING INCOME ................................ 39.6 36.7 198.5 161.2 ===== ===== ======= =======
8 THE COLUMBIA GAS SYSTEM INC. Summary of Financial and Operating Data (continued) DISTRIBUTION OPERATIONS
THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 -------------------- ----------------------- 1997 1996 1997 1996 ------ ------ ------- ------- NET REVENUES Sales revenues................... 166.5 171.5 1,534.5 1,328.1 Less: Cost of gas sold........... 77.6 84.0 1,004.2 771.5 ----- ----- -------- ------- Net Sales Revenues............... 88.9 87.5 530.3 556.6 ----- ----- -------- ------- Transportation revenues.......... 22.4 21.6 97.8 88.0 Less: Associated gas costs....... 1.7 3.2 7.9 10.6 ----- ----- -------- ------- Net Transportation Revenues...... 20.7 18.4 89.9 77.4 ----- ----- -------- ------- Net Revenues....................... 109.6 105.9 620.2 634.0 ----- ----- -------- ------- OPERATING EXPENSES Operation and maintenance........ 94.8 97.5 307.6 332.6 Depreciation..................... 7.8 7.9 55.8 51.7 Other taxes...................... 18.4 19.8 106.3 104.0 ----- ----- -------- ------- Total Operating Expenses........... 121.0 125.2 469.7 488.3 ----- ----- -------- ------- OPERATING INCOME (LOSS)............ (11.4) (19.3) 150.5 145.7 ===== ===== ======== =======
EXPLORATION AND PRODUCTION OPERATIONS
THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 -------------------- ----------------------- 1997 1996 1997 1996 ------ ------ ------- ------- OPERATING REVENUES Gas............................. 23.9 21.6 77.6 72.8 Oil and liquids................. 0.8 1.2 2.8 4.0 ----- ----- -------- ------- Total Operating Revenues.......... 24.7 22.8 80.4 76.8 ----- ----- -------- ------- OPERATING EXPENSES Operation and maintenance...... 10.8 8.4 30.9 26.4 Depreciation and depletion..... 6.0 7.0 20.6 21.3 Other taxes.................... 2.3 2.0 6.2 6.5 ----- ----- -------- ------- Total Operating Expenses......... 19.1 17.4 57.7 54.2 ----- ----- -------- ------- OPERATING INCOME................. 5.6 5.4 22.7 22.6 ===== ===== ======== =======
9 THE COLUMBIA GAS SYSTEM INC. Summary of Financial and Operating Data (continued) MARKETING, PROPANE AND POWER GENERATION OPERATIONS
THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 -------------------- ----------------------- 1997 1996 1997 1996 ------ ------ ------- ------- NET REVENUES Gas marketing revenues........... 680.2 151.9 1,282.3 462.3 Less: Products purchased......... 673.4 149.7 1,265.5 449.1 ----- ----- -------- ------- Net Gas Marketing Revenues....... 6.8 2.2 16.8 13.2 ----- ----- -------- ------- Propane revenues................. 11.1 10.8 52.3 54.0 Less: Products purchased......... 6.4 6.9 29.6 31.1 ----- ----- -------- ------- Net Propane Revenues............. 4.7 3.9 22.7 22.9 ----- ----- -------- ------- Other Revenues................... 1.1 0.9 9.5 6.2 ----- ----- -------- ------- Net Revenues....................... 12.6 7.0 49.0 42.3 ----- ----- -------- ------- OPERATING EXPENSES Operation and maintenance........ 13.5 8.3 38.4 27.1 Depreciation..................... 1.6 0.8 3.5 2.3 Other taxes...................... 0.6 0.1 2.1 1.6 ----- ----- -------- ------- Total Operating Expenses........... 15.7 9.2 44.0 31.0 ----- ----- -------- ------- OPERATING INCOME (LOSS)............ (3.1) (2.2) 5.0 11.3 ===== ===== ======== =======
CORPORATE
THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 -------------------- ----------------------- 1997 1996 1997 1996 ------ ------ ------- ------- OPERATING INCOME (LOSS)............ (1.0) 0.3 (6.1) (5.7) ===== ===== ======== =======
10 THE COLUMBIA GAS SYSTEM INC. Summary of Financial and Operating Data (continued)
SEPTEMBER 30, 1997 DECEMBER 31, 1996 ------------------ ----------------- CAPITALIZATION ($ millions) Common Stock Equity Common Stock, $10 par value, outstanding 55,441,917 and 55,263,659 shares, respectively..... 554.4 552.6 Additional paid in capital......................... 748.8 743.2 Retained earnings.................................. 420.9 259.3 Unearned employee compensation..................... (1.1) (1.5) -------- ------- Total Common Stock Equity............................ 1,723.0 1,553.6 Long-Term Debt....................................... 2,003.6 2,003.8 -------- ------- Total Capitalization................................. 3,726.6 3,557.4 ======== ======= Short-Term Debt...................................... 80.0 250.0 ======== =======
11 THE COLUMBIA GAS SYSTEM INC. Summary of Financial and Operating Data (continued)
THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 ------------------ ------------------ 1997 1996 1997 1996 ---- ---- ---- ---- AVERAGE PRICE OF GAS PRODUCTION ($ PER Mcf) ......... 2.36 2.45 2.59 2.81 ====== ====== ====== ====== OPERATING DATA Gas production (billion cubic feet) ............... 8.6 8.0 25.3 24.6 ====== ====== ====== ====== Propane gallons sold (millions) ................... 10.9 10.9 47.8 52.9 ====== ====== ====== ====== Marketing volumes sold (billion cubic feet) ....... 323.0 64.8 551.4 171.2 ====== ====== ====== ====== THROUGHPUT Transmission (billion cubic feet): Transportation Columbia Transmission Market area ................................. 145.4 161.1 719.6 788.2 Columbia Gulf Main-line ................................... 145.4 145.9 458.3 475.2 Short-haul .................................. 66.1 69.3 185.1 202.7 Intrasegment Eliminations ................... (142.6) (145.1) (488.0) (469.8) ------ ------ ------ ------ Total Throughput .................................. 214.3 231.2 915.0 996.3 ====== ====== ====== ====== Distribution (billion cubic feet): Gas Sales ....................................... 16.6 17.6 180.4 209.4 Transportation .................................. 54.0 52.1 187.0 183.8 ------ ------ ------ ------ Total Throughput .................................. 70.6 69.7 367.4 393.2 ------ ------ ------ ------ Off-system sales ................................ 3.1 3.0 45.3 8.3 ------ ------ ------ ------ Total sold and transported ........................ 73.7 72.7 412.7 401.5 ====== ====== ====== ====== DEGREE DAYS-DISTRIBUTION SERVICE TERRITORY Actual ............................................ 108 103 3,638 3,910 Normal ............................................ 41 41 3,568 3,600 % Colder (warmer) than normal ..................... 163 151 2 9 % Colder (warmer) than prior period ............... 5 1 (7) 12
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