Higher interest expenses and new costs related to a fiber opticsproject sent third quarter earnings for Columbia Energy Groupdownward, failing to measure up forecasts by First Call/ThomsonFinancial analysts, who had expected higher earnings. Herndon,VA-based Columbia reported income of $19.5 million, or 24 cents pershare, with analysts forecasting earnings of 29 cents per share.

For the third quarter of 1999, Columbia had reported earnings of$20.5 million, or 25 cents per share. Still, after adjusting forone-time items, Columbia’s third quarter income from continuingoperations was $32.4 million, which is $6.2 million more than thirdquarter 1999.

Even with lower labor costs and higher natural gas prices, thecompany could not offset the impact of higher interest expensesassociated with its pending takeover by NiSource Inc., which isscheduled to close Nov. 1 (see Daily GPI, June 2; Feb. 29). The lower labor and benefitscosts were attributed to voluntary incentive retirement programs atseveral subsidiaries earlier this year.

Columbia also said that it had additional costs associated withbuilding a fiber optics network between Washington, D.C. and NewYork City, said Columbia.

Discounting the shortfall in earnings and pointing to the actualearnings in several areas, CEO Oliver G. Richard III said,”Columbia’s core businesses continue to achieve solid operatingperformance. Our transmission, distribution and exploration andproduction segments all reported higher result this quartercompared with a year ago.”

Richard said that Columbia is preparing for the pending NiSourcemerger, which at times has been contentious, and said managementhad executed agreements to sell Columbia Electric’s operations.Columbia also has plans to sell its propane and petroleumbusinesses in line with the NiSource merger, he said.

The deadline for Columbia shareholders to elect to receive newNiSource stock in exchange for Columbia Energy Group common stockis Oct. 30. Under terms of the merger agreement, Columbiashareholders can take the new stock, or receive a combination ofcash and NiSource SAILS, Stock Appreciation Income LinkedSecurities, which are units consisting of a zero coupon debtsecurity and a forward equity contract.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.