<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
-----------------------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ________________________
Commission file number 1-1483
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WASHINGTON GAS LIGHT COMPANY
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(Exact name of registrant as specified in its charter)
District of Columbia and Virginia 53-0162882
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 H Street, N. W., Washington, D. C. 20080
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(Address of principal executive) (Zip Code)
Registrant's telephone number, including area code (703) 750-4440
----------------------
NONE
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(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<S> <C> <C>
Common Stock $1.00 par value 42,784,077 July 31, 1995
---------------------------- ------------------------ -----------------------------
Class Number of Shares Date
</TABLE>
<PAGE> 2
WASHINGTON GAS LIGHT COMPANY
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheet -
June 30, 1995 and September 30, 1994............................................. 2
Consolidated Statement of Income -
Three Months Ended June 30, 1995 and 1994........................................ 3
Consolidated Statement of Income -
Nine Months Ended June 30, 1995 and 1994......................................... 4
Consolidated Statement of Cash Flows -
Nine Months Ended June 30, 1995 and 1994......................................... 5
Notes to Consolidated Financial Statements......................................... 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................................... 8-10
PART II. Other Information:
Item 5. Other Information.......................................................... 11-12
Item 6. Exhibits and Reports on Form 8-K........................................... 13
Signatures............................................................................ 13
</TABLE>
1
<PAGE> 3
WASHINGTON GAS LIGHT COMPANY
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
June 30, Sept. 30,
1995 1994
------------ ------------
(Thousands)
<S> <C> <C>
ASSETS
PROPERTY, PLANT AND EQUIPMENT
At original cost....................................... $ 1,578,640 $ 1,516,201
Accumulated depreciation and amortization.............. (542,010) (521,180)
------------ ------------
1,036,630 995,021
------------ ------------
CURRENT ASSETS
Cash and cash equivalents.............................. 77,016 3,522
Accounts receivable, less reserve...................... 67,854 74,754
Inventories and storage gas costs...................... 48,489 74,958
Deferred income taxes.................................. 15,190 14,369
Other prepayments, principally taxes................... 6,576 7,842
------------ ------------
215,125 175,445
------------ ------------
DEFERRED CHARGES AND OTHER ASSETS........................ 146,807 162,488
------------ ------------
TOTAL.............................................. $ 1,398,562 $ 1,332,954
============ ============
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common shareholders' equity........................... $ 534,935 $ 485,504
Preferred stock....................................... 28,477 28,498
Long-term debt........................................ 379,040 342,270
------------ ------------
942,452 856,272
------------ ------------
CURRENT LIABILITIES
Current maturities of long-term debt.................. 2,505 8,560
Notes payable......................................... - 52,912
Accounts and wages payable............................ 77,890 84,961
Customer deposits and advance payments................ 6,642 15,741
Accrued taxes and interest............................ 44,750 15,171
Other current liabilities............................. 29,705 23,578
------------ ------------
161,492 200,923
------------ ------------
DEFERRED CREDITS......................................... 294,618 275,759
------------ ------------
TOTAL.............................................. $ 1,398,562 $ 1,332,954
============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
2
<PAGE> 4
WASHINGTON GAS LIGHT COMPANY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
June 30, 1995 June 30, 1994
------------- -------------
(Thousands, Except Per Share Data)
<S> <C> <C>
OPERATING REVENUES........................................ $ 131,916 $ 130,907
Cost of Gas............................................... 57,717 63,220
------------ ------------
NET REVENUES.............................................. 74,199 67,687
------------ ------------
OTHER OPERATING EXPENSES
Operation.............................................. 40,168 40,984
Maintenance............................................ 7,912 8,901
Depreciation and amortization.......................... 11,781 10,935
General taxes.......................................... 14,653 14,877
Income taxes........................................... (2,546) (5,211)
------------ ------------
71,968 70,486
------------ ------------
OPERATING INCOME (LOSS)................................... 2,231 (2,799)
Other Income - Net........................................ 200 335
------------ ------------
INCOME (LOSS) BEFORE INTEREST EXPENSE..................... 2,431 (2,464)
Interest Expense.......................................... 7,872 7,665
------------ ------------
NET LOSS.................................................. (5,441) (10,129)
Dividends on Preferred Stock.............................. 333 333
------------ ------------
NET LOSS APPLICABLE TO COMMON STOCK....................... $ (5,774) $ (10,462)
============ ============
AVERAGE COMMON SHARES OUTSTANDING
(See Note B to the Consolidated Financial
Statements)........................................... 42,679 41,932
============ ============
LOSS PER AVERAGE SHARE OF COMMON STOCK
(See Exhibit 11 for computation of fully
diluted earnings per average share and Note
B to the Consolidated Financial Statements)............ $ (0.14) $ (0.25)
============ ============
DIVIDENDS DECLARED PER COMMON SHARE (See Note
B to the Consolidated Financial Statements)............ $ .28 $ .2775
============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE> 5
WASHINGTON GAS LIGHT COMPANY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------------------
June 30, 1995 June 30, 1994
------------- -------------
(Thousands, Except Per Share Data)
<S> <C> <C>
OPERATING REVENUES......................................... $ 728,481 $ 812,313
Cost of Gas................................................ 347,710 416,369
----------- -----------
NET REVENUES............................................... 380,771 395,944
----------- -----------
OTHER OPERATING EXPENSES
Operation............................................... 124,333 130,250
Maintenance............................................. 23,281 26,943
Depreciation and amortization........................... 34,656 31,734
General taxes........................................... 56,933 59,620
Income taxes............................................ 44,371 47,200
----------- -----------
283,574 295,747
----------- -----------
OPERATING INCOME........................................... 97,197 100,197
Other Income (Loss) - Net.................................. 2,752 (853)
----------- -----------
INCOME BEFORE INTEREST EXPENSE............................. 99,949 99,344
Interest Expense........................................... 24,226 24,263
----------- -----------
NET INCOME................................................. 75,723 75,081
Dividends on Preferred Stock............................... 1,000 1,001
----------- -----------
NET INCOME APPLICABLE TO COMMON STOCK...................... $ 74,723 $ 74,080
=========== ===========
AVERAGE COMMON SHARES OUTSTANDING
(See Note B to the Consolidated Financial
Statements)............................................. 42,485 41,748
=========== ===========
EARNINGS PER AVERAGE SHARE OF COMMON STOCK
(See Exhibit 11 for computation of fully
diluted earnings per average share and Note
B to the Consolidated Financial Statements)............. $ 1.76 $ 1.77
=========== ===========
DIVIDENDS DECLARED PER COMMON SHARE (See Note
B to the Consolidated Financial Statements)............. $ .8375 $ .8275
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE> 6
W WASHINGTON GAS LIGHT COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------------------
June 30, 1995 June 30, 1994
------------- -------------
(Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income..................................................... $ 75,723 $ 75,081
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization (a)........................ 39,025 35,602
Deferred income taxes-net................................ (4,404) 4,763
Amortization of investment tax credits................... (745) (762)
Allowance for funds used during construction............. (380) (138)
Other noncash charges and credits-net.................... 1,878 9,108
------------ ------------
111,097 123,654
Changes in assets and liabilities:
Accounts receivable and accrued utility
revenues............................................ 4,052 (18,625)
Gas costs due from/to customers-net...................... 11,922 (2,730)
Storage and prepaid gas costs............................ 25,612 40,633
Other prepayments, principally taxes..................... 1,266 3,472
Accounts and wages payable............................... (10,203) (15,316)
Customer deposits and advance payments................... (9,099) (10,031)
Accrued taxes............................................ 23,053 19,559
Accrued interest......................................... 6,526 5,605
Pipeline refunds due customers........................... (3,210) 5,828
Deferred purchased gas costs............................. 25,524 11,379
Other-net................................................ 9,094 (1,547)
------------ ------------
Net Cash Provided by Operating Activities.............. 195,634 161,881
------------ ------------
FINANCING ACTIVITIES
Common stock issued............................................ 10,133 10,687
Long-term debt issued.......................................... 40,000 36,016
Long-term debt retired......................................... (9,322) (35,680)
Notes payable-net.............................................. (52,912) (21,454)
Dividends on common and preferred stock........................ (36,419) (36,041)
------------ ------------
Net Cash Used in Financing Activities.................. (48,520) (46,472)
------------ ------------
INVESTING ACTIVITIES
Proceeds from sale of non-utility subsidiary................... 2,000 -
Capital expenditures........................................... (75,620) (80,291)
------------ ------------
Net Cash Used in Investing Activities.................. (73,620) (80,291)
------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS.......................... 73,494 35,118
Cash and Cash Equivalents at Beginning of Period............... 3,522 4,865
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD..................... $ 77,016 $ 39,983
============ ============
(a) Includes amounts charged to other accounts.
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid........................................... $ 27,980 $ 22,156
Interest paid............................................... $ 16,997 $ 17,707
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
<PAGE> 7
WASHINGTON GAS LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. In the opinion of the Company, the accompanying consolidated financial
statements reflect all adjustments (which include only normal recurring
adjustments) necessary to present fairly the results for such periods.
Reference is hereby made to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1994.
B. On May 1, 1995, the additional shares issued in connection with the
Company's two for-one stock split were distributed to stockholders. All
share disclosures and per share calculations included in this report are
on a post-split basis.
C. Due to the seasonal nature of the Company's business, the results of
operations shown are not indicative of the results to be expected for the
fiscal year ended September 30, 1995.
D. The Company's major provider of pipeline services, Columbia Gas
Transmission Corporation (CGT), as well as CGT's parent, The Columbia Gas
System, Inc. (CGS), continue to operate as debtors in possession under
Chapter 11 of Title 11 of the Bankruptcy Code. The services received by
the Company as a customer of CGT have not been adversely affected by
these bankruptcy proceedings.
CGT and CGS filed reorganization plans and disclosure statements with the
U.S. Bankruptcy Court on April 17, 1995. CGT's reorganization plan
includes a comprehensive settlement, filed with the Bankruptcy Court and
the Federal Energy Regulatory Commission (FERC), with CGT's customers
that encompasses Order No. 636 issues as well as the resolution of other
FERC proceedings. FERC has approved the settlement which encompasses 113
FERC proceedings and 39 related appeals.
Full effectuation of the customer settlement requires confirmation of the
CGS and CGT plans. Under the CGT plan, the Company would receive a net
refund from CGT of approximately $6 million after offsetting remaining
payments for transition costs due CGT as a result of Order No. 636
against refunds due from CGT from prior regulatory proceedings that were
pending at the time CGT filed a petition in bankruptcy. If the plans are
confirmed, the net refund noted above would be distributed in early
calendar year 1996. The refund received by the Company would be returned
to the Company's customers.
The Bankruptcy Court (Court) has approved a settlement with the producers
which is incorporated as a separate element in the CGT plan. The Court
has also approved CGT's and CGS' Disclosure Statements and a voting
procedure whereby individual creditors of each entity can vote to accept
or reject the respective plans. After a solicitation period of sixty
(60) days, the Court will hold a confirmation hearing to rule on the
plans.
The Company believes that it will continue to have access to reliable
pipeline services when CGT emerges from bankruptcy.
E. On April 29, 1994, the Company's Virginia Division filed a request with
the State Corporation Commission of Virginia (SCC of VA) for a rate
increase of $15.7 million, or 6.4%. In this filing, the Company
requested recovery of the additional costs associated with implementing
Statement of Financial Accounting Standards (SFAS) No. 106 "Employers'
Accounting for Postretirement Benefits Other Than Pensions." The
increase in rates that is likely to result from the final decision by the
SCC of VA in this proceeding will cause the Company to record expenses
applicable to SFAS No. 106 of approximately $5.5 million in fiscal year
1995.
6
<PAGE> 8
WASHINGTON GAS LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On September 27, 1994, the Company implemented rates designed to recover
the requested increase of $15.7 million. These rates are being collected
subject to refund and the Company is currently recording a provision for
rate refunds for the difference between the amount placed into effect and
the amount the Company expects to be granted by the SCC of VA.
On May 26, 1995, a Hearing Examiner designated by the SCC of VA issued a
report on the Company's rate request. The report recommended an increase
in retail rates of $6.9 million and a return on equity of 11.50%. The
report of the Hearing Examiner is being reviewed by the SCC of VA and a
final order from the SCC of VA is currently expected in the fourth fiscal
quarter of 1995.
F. The Company's accounting policies and the accompanying consolidated
financial statements conform to generally accepted accounting principles
applicable to rate-regulated enterprises and reflect the effects of the
ratemaking process in accordance with SFAS No. 71, "Accounting for the
Effects of Certain Types of Regulation." In the event that a portion of
the Company's operations is no longer subject to the provisions of SFAS
No. 71, as a result of a change in regulation or the effects of
competition, the Company would be required to write off related
regulatory assets and liabilities. In addition, the Company would be
required to determine any impairment to other assets and write down the
assets to their fair value.
In March 1995, the Financial Accounting Standards Board issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." SFAS No. 121 establishes
accounting standards for the impairment of long-lived assets. The
standard also requires that regulatory assets which are no longer
probable of recovery through future revenues be charged to earnings. The
Company is required to adopt this standard no later than October 1, 1996.
SFAS No. 121 is not currently expected to have an impact on the Company's
financial position or results of operations upon adoption.
7
<PAGE> 9
WASHINGTON GAS LIGHT COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three months ended June 30, 1995 vs. June 30, 1994
For the three months ended June 30, 1995, the net loss applicable to
common stock amounted to $5.8 million, which represented a $4.7 million smaller
loss as compared to the same period in the prior year. The loss per average
common share was $.14, compared to a loss of $.25 per average common share last
year. Average common shares outstanding were 1.8% higher in the current
period. The lower loss was due to the effect of higher firm therm sales, rate
relief and lower operation and maintenance expenses.
Net revenues for the period increased by $6.5 million (9.6%) from the
same period last year to $74.2 million. Therm sales to firm customers
increased by 10.9 million therms (8.3%), due to cooler weather during the
current period and the effect of a 3.6% increase in the number of customer
meters served. Rate relief placed into effect in the District of Columbia,
Virginia and Maryland in August 1994, September 1994 and December 1994,
respectively, also contributed to the increase in net revenues.
Excluding sales for electric generation, therms sold or delivered to
interruptible customers increased by 3.4 million therms (5.9%). Margin sharing
arrangements in each of the Company's major jurisdictions minimize the effect
on net income of increases or decreases in sales and deliveries to the
interruptible class. Under these arrangements, a majority of the margins
earned on sales and deliveries to these classes are returned to firm customers
after a certain gross margin threshold is reached or in exchange for the
transfer of a portion of the fixed costs from the interruptible to the firm
class.
Sales made to Potomac Electric Power Company (Pepco), the Company's
largest customer, increased by 1.7 million therms (12.9%). Variations in sales
volumes to this customer are dependent upon pricing considerations by Pepco and
weather-related interruptions in service. Margins earned on such sales are
being shared with the Company's firm customers in the State of Maryland and
variations in volumes sold to Pepco therefore have a minimal effect on net
income. However, these sales do improve the Company's competitive position in
the Maryland jurisdiction.
Operation and maintenance expenses declined by $1.8 million (3.6%)
from the same period last year. Contributing to the decline were lower Demand
Side Management (DSM) expenses in the State of Maryland. DSM expenses are
recovered in revenues; expenses associated with this program therefore have no
effect on net income.
Depreciation and amortization increased by $846,000 (7.7%) due
primarily to depreciation on the Company's rising investment in depreciable
plant.
Nine months ended June 30, 1995 vs. June 30, 1994
For the nine months ended June 30, 1995, net income applicable to
common stock amounted to $74.7 million, which represented an increase of
$643,000 from the same period in the prior year. Earnings per average common
share were $1.76 which was $.01 per average common share lower than for the
nine month period ended June 30, 1994, due to a 1.8% increase in the number of
average common shares outstanding. The effect of lower firm therm sales
resulting from significantly warmer weather than last year did not fully offset
the effect of rate relief, a greater number of customer meters, lower other
operating expenses and an improvement in other income (loss) - net in the
current year.
8
<PAGE> 10
Net revenues for the period declined $15.2 million (3.8%) from the
same period last year to $380.8 million. Therm sales to firm customers dropped
111.7 million therms (10.9%) which resulted from weather that was 15.7% warmer
than the prior year. The above-mentioned 3.6% increase in the number of
customer meters mitigated the effect of the warmer weather. Rate relief placed
into effect in the District of Columbia, Virginia and Maryland in August 1994,
September 1994 and December 1994, respectively, also served to partially offset
the detrimental impact of the warmer weather conditions.
Excluding sales for electric generation, therms sold or delivered to
interruptible customers increased by 43.9 million therms (20.8%). The increase
resulted primarily from prolonged interruptions in service to these customers
during the quarter ended March 31, 1994.
Sales made to Pepco increased by 18.8 million therms to 42.1 million
therms, due primarily to interruptions in service to this customer during the
quarter ended March 31, 1994.
Operation and maintenance expenses declined by $9.6 million (6.1%)
from the same period last year due primarily to lower labor expenses, lower
provisions for injuries and damages and lower uncollectible accounts expenses
resulting from the warmer weather. An increased provision for postretirement
medical and life insurance costs resulting from additional recognition of these
costs in retail rates partially offset these factors.
Depreciation and amortization increased by $2.9 million (9.2%) due
primarily to depreciation on the Company's rising investment in depreciable
plant.
General taxes dropped by $2.7 million (4.5%) due primarily to the
effect of the warmer weather on revenue-based gross receipts taxes. These
taxes are recovered in the Company's retail rates and fluctuations in such
amounts therefore have no effect on net income.
Other income (loss) - net improved by $3.6 million due primarily to a
$1.9 million gain on the sale of a non-utility subsidiary in the current nine
month period and the absence in the current period of valuation reserves
related to various non-utility activities.
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures for the first nine months of fiscal year 1995
were $75.6 million. To fund construction expenditures and other capital
requirements, the Company draws upon both internal and external sources of
cash. The Company's ability to generate adequate cash internally depends upon
a number of factors, including the timing and amount of rate increases received
and the level of therm sales. The level of therm sales is almost exclusively
dependent upon the number of customer meters and the variability of the
weather.
The Company's business is highly weather sensitive and seasonal.
Approximately 75% of the Company's therm sales (excluding sales made for
electric generation) are normally generated in the first and second fiscal
quarters. This seasonality causes short-term cash requirements to vary
significantly during the year. Cash requirements peak in the winter months
when accounts receivable, accrued utility revenues and storage gas costs are at
or near their highest levels. After the winter heating season, these assets
are converted into cash and are used to liquidate short-term debt and acquire
storage gas for the subsequent heating season.
9
<PAGE> 11
WASHINGTON GAS LIGHT COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONT'D)
Net cash provided by operating activities was $195.6 million during the
first nine months of fiscal year 1995 and compares to $161.9 million for the
same period in fiscal year 1994. The increase in the current period is
primarily attributable to lower funds used to support accounts receivable and
accrued utility revenues resulting from lower sales and a reduced cost of gas,
along with a greater overcollection of gas costs from customers. These factors
were partially offset by a reduced source of funds from storage gas in the
current year resulting from significantly greater use of storage inventories
during the first nine months of fiscal year 1994.
The Company uses short-term debt, usually in the form of commercial
paper, to fulfill its seasonal cash requirements. Alternative seasonal sources
include unsecured lines of credit and a revolving credit agreement maintained
with a consortium of banks. The revolving credit agreement provides borrowing
capacity of $130 million. These financing options may be activated to support
or replace the Company's commercial paper. Excluding current maturities, the
Company had no short-term debt outstanding at June 30, 1995, a $52.9 million
decline from the balance at September 30, 1994.
In the current quarter, the Company issued $20 million in Medium-Term
Notes (MTNs). These notes have 30-year terms with 10 year put and call options.
The Notes bear interest at a rate of 6.50%. During the nine month period ended
June 30, 1995, the Company issued $40 million in MTNs.
The $9.3 million of long-term debt retired during the current fiscal year
primarily represented Medium-Term Note maturities.
During the nine months ended June 30, 1995, the Company sold with
recourse, $36.9 million of non-utility accounts receivable. This compares to
$29.8 million sold in the nine months ended June 30, 1994.
10
<PAGE> 12
PART II. OTHER INFORMATION
Item 5. Other Information
A. On January 26, 1995, Shenandoah Gas Company (Shenandoah), a
distribution subsidiary serving portions of Virginia and West Virginia,
filed for a rate increase with the Public Service Commission of West
Virginia (PSC of WVA). The request sought an increase in annual revenues
of $791,000, an overall rate of return of 10.44% and a return on equity
of 12.5%.
On July 13, 1995, a joint stipulation and agreement between the Staff of
the PSC of WVA and Shenandoah was submitted during a public hearing. The
settlement agreement provides for an annual revenue increase of $522,000,
proposed to take effect on December 1, 1995. The agreement did not
specify a return on equity or an overall rate of return. Shenandoah is
currently awaiting a decision on the agreement from the PSC of WVA.
B. On May 31, 1995, the three year labor agreement between the Company
and the approximately 1,050 member bargaining unit of the International
Union of Gas Workers (IUGW) expired. The Company granted the IUGW three
extensions of discussion deadlines during which union-eligible employees
continued working without a contract while wages and benefits remained
unchanged.
On May 25, 1995, the union membership voted to give its leadership
authority to strike. On June 9, 1995, after a federal mediator had been
brought in on May 30, 1995 to assist the parties in negotiation, the
union voted to reject the Company's contract offer. Although the union
leadership did not call a strike, they expressed a willingness to call a
strike when appropriate. Faced with this potential for a strike and the
Company's responsibility to provide uninterrupted natural gas service to
its customers, the Company exercised its rights under the labor laws by
locking out IUGW-eligible employees, effective 12 o'clock a.m. on June
10, 1995. The Company is continuing to provide service to its customers
through the efforts of its management workforce and outside contractors.
Members of another union represented at the Company are performing their
normal job duties.
Both the Company and the IUGW have filed charges against each other
before the National Labor Relations Board (NLRB) claiming unfair labor
practices including, among other things, bad faith bargaining. The
Company denies these charges by the IUGW and is vigorously defending
itself against them. If it were determined by the NLRB that the Company
had not bargained in good faith, the Company could be liable for back
wages which would have been earned had the union employees been at work
during the period of the lockout.
The Company remains committed to negotiating in good faith with the IUGW
with the goal of reaching a mutually acceptable agreement to best serve
its customers, its employees and its shareholders.
C. On June 30, 1995, the Company filed proposed tariffs with the Public
Service Commission of Maryland (PSC of MD) that would take significant
steps toward unbundling services that have historically been offered as a
package.
On August 2, 1995, the PSC of MD approved the tariff filings. The
tariffs will increase opportunities for the Company to tailor new
services to meet the needs of firm and interruptible customers and will
allow these customers the flexibility to acquire their gas supplies from
the supplier of their choice, thus creating new market opportunities and
challenges for the Company.
11
<PAGE> 13
Under the approved tariffs, all interruptible customers in Maryland will
become delivery service customers. Furthermore, they must elect whether
to buy gas from the company (city gate service) or from a third party
supplier. Despite the election, the Company will provide delivery
service to transport the gas through its distribution system to the
customer. The Company will continue to share the gross margins from the
delivery service, with 92% being returned to firm customers and 8% being
retained by the Company after a certain gross margin threshold is
reached. However, in recognition of the increased costs and risks in
making gas sales to interruptible customers, whether on system or off
system, margins on city gate service will be shared equally, with 50%
being returned to firm customers and 50% retained by the Company.
Additionally, transportation options for firm group metered apartments
and firm commercial customers will expand, by decreasing the annual
minimum requirement in order for a customer to avail itself of delivery
service from 80,000 therms to 40,000 therms. A city gate gas supply
service is also being offered to these delivery service customers and
will be provided as an additional service to compete with gas supplied by
third party suppliers. Margin sharing will be utilized for margins
derived from this city gate gas supply service, with 50% being returned
to firm customers and 50% retained by the Company.
Under a two year pilot program, small volume non-residential firm
customers who secure their own gas supplies from a third party supplier
will collectively be assigned 3,000 dekatherms per day of the Company's
firm interstate pipeline capacity, at cost, to transport the supplies.
In a first step toward unbundling for residential customers in Maryland,
the price of gas purchased and the price of the delivery of the gas to
the customer will be stated separately on the customer's bill. Although
this change will have no effect on the amount of a residential customer's
bill, it will serve to inform such customers of the prices they pay for
the components of service they are receiving.
Implementation of the unbundled service will begin on September 1, 1995
for interruptible customers, on November 1, 1995 for firm commercial and
group metered apartment customers burning at least 40,000 therms per year
and on May 1, 1996 for the pilot program to be offered to all
non-residential firm customers.
D. On July 7, 1995, Shenandoah filed an application with the SCC of VA
under the expedited rate case rules for an increase in annual revenues of
approximately $1.2 million. The request included an overall return of
9.88% and a return on equity of 11.50%. New rates were placed into
effect, subject to refund, on August 6, 1995.
12
<PAGE> 14
PART II. OTHER INFORMATION (CONT'D)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Filed Herewith:
<TABLE>
<CAPTION>
Page in
Description 10-Q
----------- --------
<S> <C>
11. Computation of Earnings (Loss) per Average Share of Common 14
Stock Assuming Full Dilution from Conversion of the
$4.60 and $4.36 Convertible Preferred Series.
Additional Exhibits -
27. Financial Data Schedule See Separate
Volume
99.0 Computation of Ratio of Earnings to Fixed Charges 15
99.1 Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends 16
(b) Reports on Form 8-K:
On June 23, 1995, the Company filed a report on Form 8-K
stating that the Company locked out employees represented
by the International Union of Gas Workers on June 10, 1995.
</TABLE>
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 thereunto duly authorized.
WASHINGTON GAS LIGHT COMPANY
--------------------------------
(Registrant)
Date August 14, 1995 /s/ Frederic M. Kline
---------------------- -----------------------------
Controller
(Principal Accounting Officer)
13
<PAGE> 1
EXHIBIT 11
WASHINGTON GAS LIGHT COMPANY
Computation of Earnings (Loss) Per Average Share of Common
Stock Assuming Full Dilution from Conversion
of the $4.60 and $4.36 Convertible Preferred Series
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
---------------------------------- ---------------------------------
June 30, 1995 June 30, 1994 June 30, 1995 June 30, 1994
--------------- --------------- --------------- ---------------
(Thousands, except per share data)
<S> <C> <C> <C> <C>
Net income (loss) $ (5,441) $ (10,129) $ 75,723 $ 75,081
Dividends on preferred
stock (excluding
dividends on convertible
preferred stock) 330 330 990 990
------------- ------------- -------------- -------------
Net income (loss) applicable
to common stock (1) $ (5,771) $ (10,459) $ 74,733 $ 74,091
============= ============= ============== =============
Average common shares
outstanding on a fully
diluted basis assuming
the conversion of the
outstanding shares of
the $4.60 and $4.36
convertible preferred
stock as of the beginning
of each period based on
the applicable conversion
price (2) 42,714 41,968 42,508 41,786
============= ============= ============== =============
Earnings (loss) per average
share of common stock
assuming full dilution (1) / (2) $ (0.14) $ (0.25) $ 1.76 $ 1.77
============= ============= ============== =============
</TABLE>
----------------------
Note:
These calculations are submitted in accordance with the Securities Exchange Act
of 1934 Release No. 9083 although not required by footnote 2 to paragraph 14 of
Accounting Principles Board Opinion No. 15 because no dilution results.
14
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the Income
Statement, Balance Sheet and Statement of Cash Flows and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,033,743
<OTHER-PROPERTY-AND-INVEST> 2,887<F1>
<TOTAL-CURRENT-ASSETS> 215,125
<TOTAL-DEFERRED-CHARGES> 146,807
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,398,562
<COMMON> 42,767<F2>
<CAPITAL-SURPLUS-PAID-IN> 284,264
<RETAINED-EARNINGS> 207,904
<TOTAL-COMMON-STOCKHOLDERS-EQ> 534,935
0
28,477
<LONG-TERM-DEBT-NET> 379,040<F3>
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 227,396<F4>
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 2,505
0
<CAPITAL-LEASE-OBLIGATIONS> 1,018
<LEASES-CURRENT> 885
<OTHER-ITEMS-CAPITAL-AND-LIAB> 455,092
<TOT-CAPITALIZATION-AND-LIAB> 1,398,562
<GROSS-OPERATING-REVENUE> 728,481
<INCOME-TAX-EXPENSE> 44,371
<OTHER-OPERATING-EXPENSES> 586,913
<TOTAL-OPERATING-EXPENSES> 631,284
<OPERATING-INCOME-LOSS> 97,197
<OTHER-INCOME-NET> 2,752
<INCOME-BEFORE-INTEREST-EXPEN> 99,949
<TOTAL-INTEREST-EXPENSE> 24,226
<NET-INCOME> 75,723
1,000
<EARNINGS-AVAILABLE-FOR-COMM> 74,723
<COMMON-STOCK-DIVIDENDS> 35,681
<TOTAL-INTEREST-ON-BONDS> 24,226<F5>
<CASH-FLOW-OPERATIONS> 195,634
<EPS-PRIMARY> 1.76<F2>
<EPS-DILUTED> 1.76<F2>
<FN>
<F1>Reflects only net non-utility property. Other investments of $3,546 are
included in Deferred Charges on this schedule and on the Consolidated Balance
Sheet.
<F2>Reported on a post two for one stock split basis.
<F3>Represents total long-term debt, including, $152,825 in First Mortgage Bonds,
$227,200 in medium-term notes, $196 in other long-term debt and $(1,181) in
unamortized premium and discount-net.
<F4>Includes $227,200 in medium-term notes.
<F5>Represents total interest expense, per the Statement of Income.
</FN>
</TABLE>
<PAGE> 1
EXHIBIT 99.0
WASHINGTON GAS LIGHT COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
TWELVE MONTHS ENDED JUNE 30, 1995
(Unaudited)
(Dollars in Thousands)
<TABLE>
<S> <C>
FIXED CHARGES:
Interest Expense.......................................................... $ 31,109
Amortization of Debt Premium, Discount and Expense........................ 354
Interest Component of Rentals............................................. 40
-----------
Total Fixed Charges.................................................. $ 31,503
===========
EARNINGS:
Net Income................................................................ $ 61,101
Add:
Income Taxes Applicable to Operating Income.......................... 34,435
Income Tax Applicable to Other Income (Loss) - Net................... 374
Total Fixed Charges.................................................. 31,503
-----------
Total Earnings............................................................ $ 127,413
===========
Ratio of Earnings to Fixed Charges........................................ 4.0
===========
</TABLE>
15
<PAGE> 1
EXHIBIT 99.1
WASHINGTON GAS LIGHT COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
TWELVE MONTHS ENDED JUNE 30, 1995
(Unaudited)
(Dollars in Thousands)
<TABLE>
<S> <C>
FIXED CHARGES AND PRE-TAX PREFERRED STOCK DIVIDENDS:
Interest Expense........................................................................... $ 31,109
Amortization of Debt Premium, Discount and Expense......................................... 354
Interest Component of Rentals.............................................................. 40
-------------
Total Fixed Charges................................................................... 31,503
Pre-tax Preferred Dividends................................................................ 2,094
-------------
Total................................................................................. $ 33,597
=============
Preferred Dividends........................................................................ $ 1,334
Effective Income Tax Rate.................................................................. .3629
Complement of Effective Income Tax Rate (1 - Tax Rate)..................................... .6371
Pre-Tax Preferred Dividends................................................................ $ 2,094
=============
EARNINGS:
Net Income................................................................................. $ 61,101
Add:
Income Taxes Applicable to Operating Income........................................... 34,435
Income Taxes Applicable to Other Income (Loss) - Net.................................. 374
Total Fixed Charges................................................................... 31,503
-------------
Total Earnings............................................................................. $ 127,413
=============
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends............................................................. 3.8
=============
</TABLE>
16
