<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 March 31, 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
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
District of Columbia and Virginia 53-0162882
- ------------------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 H Street, N. W., Washington, D. C. 20080
- --------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (703) 750-4440
--------------------------
NONE
- -------------------------------------------------------------------------------
(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.
Common Stock $1.00 par value 21,310,903 April 28, 1995
- ---------------------------- -------------------- ------------------
Class Number of Shares Date
<PAGE> 2
WASHINGTON GAS LIGHT COMPANY
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheet -
March 31, 1995 and September 30, 1994.................... 2
Consolidated Statement of Income -
Three Months Ended March 31, 1995 and 1994............... 3
Consolidated Statement of Income -
Six Months Ended March 31, 1995 and 1994................. 4
Consolidated Statement of Cash Flows -
Six Months Ended March 31, 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 4. Submission of Matters to a Vote of Security Holders. 11
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>
Mar. 31, Sept. 30,
1995 1994
-------------- ------------
(Thousands)
<S> <C> <C>
ASSETS
PROPERTY, PLANT AND EQUIPMENT
At original cost.............................. $ 1,561,327 $ 1,516,201
Accumulated depreciation and amortization..... (538,988) (521,180)
-------------- ------------
1,022,339 995,021
-------------- ------------
CURRENT ASSETS
Cash and cash equivalents..................... 36,883 3,522
Accounts receivable, less reserve............. 163,743 74,754
Inventories and storage gas costs............. 24,462 74,958
Deferred income taxes......................... 14,943 14,369
Other prepayments, principally taxes.......... 7,262 7,842
-------------- ------------
247,293 175,445
-------------- ------------
DEFERRED CHARGES AND OTHER ASSETS............... 149,834 162,488
-------------- ------------
TOTAL.................................... $ 1,419,466 $ 1,332,954
============== ============
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common shareholders' equity................... $ 549,508 $ 485,504
Preferred stock............................... 28,488 28,498
Long-term debt................................ 359,071 342,270
-------------- ------------
937,067 856,272
-------------- ------------
CURRENT LIABILITIES
Current maturities of long-term debt.......... 2,505 8,560
Notes payable................................. - 52,912
Accounts and wages payable.................... 88,267 84,961
Customer deposits and advance payments........ 6,745 15,741
Accrued taxes and interest.................... 61,348 15,171
Other current liabilities..................... 26,874 23,578
-------------- ------------
185,739 200,923
-------------- ------------
DEFERRED CREDITS................................ 296,660 275,759
-------------- ------------
TOTAL.................................... $ 1,419,466 $ 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
---------------------------------------
Mar. 31, 1995 Mar. 31, 1994
-------------- -------------
(Thousands, Except Per Share Data)
<S> <C> <C>
OPERATING REVENUES............................. $ 353,650 $ 410,184
Cost of Gas.................................... 173,875 217,466
-------------- ------------
NET REVENUES................................... 179,775 192,718
-------------- ------------
OTHER OPERATING EXPENSES
Operation.................................... 42,556 46,504
Maintenance.................................. 7,520 9,582
Depreciation and amortization................ 11,469 10,449
General taxes................................ 25,134 27,107
Income taxes................................. 31,519 33,787
-------------- ------------
118,198 127,429
-------------- ------------
OPERATING INCOME............................... 61,577 65,289
Other Income (Loss) - Net...................... 91 (2,213)
-------------- ------------
INCOME BEFORE INTEREST EXPENSE................. 61,668 63,076
Interest Expense............................... 8,230 8,118
-------------- ------------
NET INCOME..................................... 53,438 54,958
Dividends on Preferred Stock................... 334 335
-------------- ------------
NET INCOME APPLICABLE TO COMMON STOCK.......... $ 53,104 $ 54,623
============== ============
AVERAGE COMMON SHARES OUTSTANDING
(See Note F to the Consolidated Financial
Statements)................................ 21,248 20,871
EARNINGS PER AVERAGE SHARE OF COMMON STOCK
(See Exhibit 11 for computation of fully
diluted earnings per average share and Note
F to the Consolidated Financial Statements).. $ 2.50 $ 2.62
============== ============
DIVIDENDS DECLARED PER COMMON SHARE (See Note
F to the Consolidated Financial Statements).. $ .56 $ .555
============== ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE> 5
WASHINGTON GAS LIGHT COMPANY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------------------
Mar. 31, 1995 Mar. 31, 1994
------------- -------------
(Thousands, Except Per Share Data)
<S> <C> <C>
OPERATING REVENUES............................. $ 596,565 $ 681,406
Cost of Gas.................................... 289,993 353,149
-------------- ------------
NET REVENUES................................... 306,572 328,257
-------------- ------------
OTHER OPERATING EXPENSES
Operation.................................... 84,165 89,266
Maintenance.................................. 15,369 18,042
Depreciation and amortization................ 22,875 20,799
General taxes................................ 42,280 44,743
Income taxes................................. 46,917 52,411
-------------- ------------
211,606 225,261
-------------- ------------
OPERATING INCOME............................... 94,966 102,996
Other Income (Loss) - Net...................... 2,552 (1,188)
-------------- ------------
INCOME BEFORE INTEREST EXPENSE................. 97,518 101,808
Interest Expense............................... 16,354 16,598
-------------- ------------
NET INCOME..................................... 81,164 85,210
Dividends on Preferred Stock................... 667 668
-------------- ------------
NET INCOME APPLICABLE TO COMMON STOCK.......... $ 80,497 $ 84,542
============== ============
AVERAGE COMMON SHARES OUTSTANDING
(See Note F to the Consolidated Financial
Statements).................................. 21,195 20,829
EARNINGS PER AVERAGE SHARE OF COMMON STOCK
(See Exhibit 11 for computation of fully
diluted earnings per average share and Note
F to the Consolidated Financial Statements).. $ 3.80 $ 4.06
============== ============
DIVIDENDS DECLARED PER COMMON SHARE (See Note
F to the Consolidated Financial Statements).. $ 1.115 $ 1.10
============== ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE> 6
WASHINGTON GAS LIGHT COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
Mar. 31, 1995 Mar. 31, 1994
------------- -------------
(Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income.......................................... $ 81,164 $ 85,210
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization (a).............. 25,708 23,363
Deferred income taxes--net..................... (9,693) (1,772)
Amortization of investment tax credits......... (499) (509)
Allowance for funds used during construction... (329) (85)
Other noncash charges and credits--net......... 1,303 7,344
---------- -----------
97,654 113,551
Changes in assets and liabilities:
Accounts receivable and accrued utility
revenues................................. (91,240) (131,988)
Storage gas and prepaid gas costs........... 49,026 66,873
Gas costs due from/to customers - net....... 8,961 (2,045)
Other prepayments, principally taxes........ 580 5,279
Accounts and wages payable.................. 15,457 18,578
Customer deposits and advance payments...... (8,996) (9,872)
Accrued taxes............................... 46,012 42,597
Pipeline refunds due customers.............. (3,638) 5,207
Deferred purchased gas costs................ 33,960 18,727
Other--net.................................. (2,496) (727)
---------- ------------
Net Cash Provided by Operating Activities. 145,280 126,180
---------- ------------
FINANCING ACTIVITIES
Common stock issued................................. 6,962 7,275
Long-term debt issued............................... 20,000 36,000
Long-term debt retired.............................. (9,322) (35,656)
Notes payable - net................................. (52,912) (21,454)
Dividends on common and preferred stock............. (24,152) (23,338)
---------- -----------
Net Cash Used in Financing Activities..... (59,424) (37,173)
----------- -----------
INVESTING ACTIVITIES
Proceeds from sale of non-utility subsidiary........ 2,000 -
Capital Expenditures................................ (54,495) (52,087)
---------- -----------
Net Cash Used in Investing Activities..... (52,495) (52,087)
---------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS............... 33,361 36,920
Cash and Cash Equivalents at Beginning of Period.... 3,522 4,865
---------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.......... $ 36,883 $ 41,785
========== ===========
(a) Includes amounts charged to other accounts.
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid................................. $ 19,270 $ 19,873
Interest paid..................................... $ 15,792 $ 16,582
</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. 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.
C. The Company has three direct suppliers of pipeline services: Columbia
Gas Transmission Corporation (CGT), Transcontinental Gas Pipe Line
Corporation and CNG Transmission Corporation. Additionally, the
Company is served indirectly by pipelines located upstream to these
three pipelines.
In connection with the implementation of the Federal Energy Regulatory
Commission (FERC) Order No. 636 in November 1993, pipelines are being
permitted recovery of prudently incurred costs associated with
implementing the unbundled service requirement of the Order
(transition costs).
Amounts paid to the pipeline companies related to transition costs are
being collected from customers through the purchased gas adjustment
provision of the Company's retail rate schedules.
D. The Company's major provider of pipeline services, 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 from 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 FERC, with CGT's customers encompassing Order No. 636 issues
as well as the resolution of other FERC proceedings. The settlement
encompasses 113 FERC proceedings and 39 related appeals.
If the proposed settlement is approved, the Company would receive a
net refund of approximately $6 million from CGT within 30 days of
implementation of the settlement, representing the difference between
amounts that are owed to the Company now pending in the bankruptcy
proceedings and certain transition costs owed by the Company to CGT.
In addition, the remaining transition costs, such as those imposed by
upstream pipelines, are being currently recovered by CGT in its base
rates. Any refund received by the Company would be returned to
customers.
The Company believes that it will continue to have access to reliable
pipeline services, regardless of how CGT is restructured.
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 No. 106
"Employers' Accounting for Postretirement Benefits Other Than
Pensions" (SFAS No. 106). 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. A final order from the SCC of VA is
currently expected in the third fiscal quarter of 1995.
F. On May 1, 1995, a two-for-one split of the Company's common stock
became effective. The split had been authorized by the Board of
Directors on September 28, 1994 and on February 22, 1995, the
stockholders approved an increase in the number of authorized common
shares to facilitate the split. All share disclosures and per share
calculations included in this report are on a pre-split basis.
G. In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
disposed of." This statement imposes stricter criteria for regulatory
assets by requiring that such assets be probable of future recovery at
each balance sheet date. The Company is required to adopt this
standard no later than October 1, 1996 and does not expect that
adoption will have a material impact on the financial position or
results of operations of the Company based on the current regulatory
structure in which the Company operates. This conclusion may change
in the future as competitive factors influence wholesale and retail
pricing in this industry.
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 March 31, 1995 vs. March 31, 1994
For the three months ended March 31, 1995, net income applicable to
common stock amounted to $53.1 million, which represented a decline of $1.5
million from the same period in the prior year. Earnings per average common
share were $2.50, or $.12 per average common share lower than the quarter ended
March 31, 1994 and average common shares outstanding increased by 1.8% over the
prior year. The decline was due to significantly warmer weather during the
current quarter. This factor was partially offset by reduced operating
expenses, rate relief and the absence of non-utility valuation reserves during
the current quarter.
Net revenues for the period declined $12.9 million (6.7%) from the
same period last year to $179.8 million. Therm sales to firm customers
declined by 69.0 million therms (12.6%), due to weather that was 15.5% warmer
than the prior year. Partially offsetting the impact of the warmer weather was
the effect of increased customer meters served, which were 3.3% higher at the
end of the most recent period as compared to last year. 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, therm sales to interruptible
customers increased by 21.1 million therms (31.5%). The substantial increase
in therms sold to this class resulted from significantly longer interruptions
in service to these customers in the same quarter last year due to severe
weather conditions. However, margin sharing arrangements in each of the
Company's major jurisdictions minimized the effect on net income of increased
sales to the interruptible class. Under these arrangements, a majority of the
margins earned on sales to this class 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.
Volumes transported for end-users increased by 13.3 million therms to
15.9 million therms in the current quarter. All transportation customers are
currently being provided service under interruptible rate schedules and the
amounts recorded as revenue from volumes transported are shared with firm
customers in accordance with the above-mentioned margin sharing arrangements.
The effect on net income of variations in transportation volumes is therefore
minimal.
Operation and maintenance expenses declined by $6.0 million (10.7%)
from the same period last year due primarily to lower labor expenses, the
absence of accruals for potential injuries and damages in the current quarter
and lower uncollectible accounts expense due to 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 $1.0 million (9.8%) due
primarily to depreciation on the Company's rising investment in depreciable
plant.
General taxes dropped by $2.0 million (7.3%) 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 $2.3 million, due primarily to
the effect of valuation reserves recorded in the same period last year related
to various non-utility activities. No valuation reserves were recorded during
the current quarter.
8
<PAGE> 10
Six months ended March 31, 1995 vs. March 31, 1994
For the six months ended March 31, 1995, net income applicable to
common stock amounted to $80.5 million, which represented a decrease of $4.0
million from the same period in the prior year. Earnings per average common
share were $3.80, or $.26 per average common share lower than the six month
period ended March 31, 1994 and average common shares outstanding increased by
1.8% over the prior year. The decline was due to the effect of significantly
warmer weather in the current period. Factors which partially offset the
impact of the weather were lower other operating expenses, rate relief,
increased customer meters served and improved other income (loss) - net.
Net revenues for the period declined $21.7 million (6.6%) from the
same period last year to $306.6 million. Therm sales to firm customers dropped
122.6 million therms (13.7%) which resulted from weather that was 18.4% warmer
than the prior year. The above-mentioned 3.3% increase in the number of
customer meters served to mitigate 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, therm sales to interruptible
customers increased by 16.7 million therms (11.5%). The increase resulted
primarily from the previously-described interruptions in service to these
customers during the quarter ended March 31, 1994.
Volumes transported for end-users increased by 23.8 million therms to
32.2 million therms in the current six month period. Revenues earned on such
deliveries are being shared with firm customers as described on page eight of
this report.
Operation and maintenance expenses declined by $7.8 million (7.2%)
from the same period last year due primarily to lower labor expenses, the
absence of provisions for injuries and damages in the current six month period
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 $2.1 million (10.0%) due
primarily to depreciation on the Company's rising investment in depreciable
plant.
Other income (loss) - net improved by $3.7 million due primarily to a
$1.9 million gain on the sale of a non-utility subsidiary in October 1994 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 six months of fiscal year 1995 were
$54.5 million and are budgeted to be $127.5 million for the year. 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 $145.3 million during
the first six months of fiscal year 1995 and compares to $126.2 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 and prepaid gas
in the current year resulting from significantly greater use of such resources
during the first six 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 two revolving credit agreements
maintained with a consortium of banks. The revolving credit agreements together
provide borrowing capacity of $150 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 March 31,
1995, a $52.9 million decline from the balance at September 30, 1994.
The $20.0 million of long-term debt issued during the current fiscal
year represents Medium-Term Note issuances in March 1995. These notes have
30-year terms with 10 year put and call options. The Notes bear interest at a
weighted average interest rate of 7.76%.
The $9.3 million of long-term debt retired during the current fiscal
year primarily represented Medium-Term Note maturities.
During the six months ended March 31, 1995, the Company sold with
recourse, $29.0 million of non-utility accounts receivable. This compares to
$29.8 million sold in the six months ended March 31, 1994.
10
<PAGE> 12
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of stockholders was held on February 22, 1995.
(c) Matters voted upon at the meeting:
The following individuals were elected to the Board of Directors
at the annual meeting on February 22, 1995:
<TABLE>
<CAPTION>
Director Votes in Favor Votes Withheld
-------- --------------- --------------
<S> <C> <C>
Michael D. Barnes 17,727,374 272,212
Fred J. Brinkman 17,781,724 217,862
Daniel J. Callahan 17,809,142 190,444
Orlando W. Darden 17,727,947 271,639
James H. DeGraffenreidt, Jr. 17,803,701 195,885
Melvin J. Estrin 17,810,081 189,505
Sheldon W. Fantle 17,782,037 217,549
Patrick J. Maher 17,830,618 168,968
Karen Hastie Williams 17,728,547 271,039
Stephen G. Yeonas 17,799,177 200,409
</TABLE>
Other matters voted upon at the meeting
The following other matters were introduced and voted upon at the
annual meeting:
The Board of Directors recommended that the stockholders ratify the
appointment of Arthur Andersen LLP, independent public accountants, to
audit the books, records and accounts of the Company for fiscal year
1995. This proposal was approved by a vote of 18,083,557 in favor of
the proposal and 128,230 against. There were 152,461 abstentions.
The Board of Directors recommended an amendment to the Company's
Charter to provide that: (1) the total authorized shares of Common
Stock be increased from the previously authorized 40,000,000 shares to
80,000,000 shares; and (2) that the Common Stock par value be
maintained at $1.00 per share. This charter amendment was approved by
a combined vote of the common and preferred classes of 17,732,086 in
favor of the charter amendment and 362,383 against and by 17,305,072
shares of common stock voting as a class in favor of the amendment and
359,791 against. There were 269,779 abstentions.
A stockholder proposed that the Board of Directors take steps to
provide for cumulative voting in the election of Directors. This
proposal was defeated by a vote of 2,384,361 in favor of the proposal
and 10,387,076 against. There were 678,918 abstentions and 3,939,936
broker non-votes.
Item 5. Other Information
A. On March 29, 1995, the Board of Directors declared a dividend on
common stock of $.56 per share on a pre-split basis. This compares to
a $.555 dividend declared in the quarter ended December 31, 1994. The
higher dividend rate, if declared for the next three quarters, would
represent an annual increase of $.02 per share on a pre-split basis.
B. On April 7, 1995, the membership of the Office and Professional
Employees International Union, Local No. 2, (OPEIU) ratified a
contract proposal made by the Company. The new contract has a
five-year term and began on April 1, 1995. The
11
<PAGE> 13
Item 5. Other Information (continued)
agreement contains a 2.25% cash payout in the second year of the
contract and, beginning in the third year, employees will have the
opportunity to earn cash payments depending upon the attainment by the
Company of certain financial targets. OPEIU currently represents
approximately 500 employees. The Company is currently negotiating the
terms of a new contract with the International Union of Gas Workers
(IUGW), which represents approximately 1,060 employees. The existing
contract with employees represented by the IUGW expires May 31, 1995.
C. On April 12, 1995, the Public Service Commission of Maryland (PSC
of MD) approved a request by the Company to merge a wholly-owned
subsidiary, Frederick Gas Company, Inc. (Frederick) with the parent
Company. Approval for the merger must also be obtained from the SCC
of VA. Frederick currently serves approximately 11,500 customer
meters in Frederick County, Maryland, including the city of Frederick.
The proposed effective date for the merger is January 1, 1996. No
change in the rates charged Frederick's current customers or the
Company's customers in Maryland will be necessary as a result of the
merger.
D. On December 20, 1994, the Staff of the PSC of MD issued a report
containing its recommendations for changes in regulation of gas
service by local distribution companies in response to industry
deregulation resulting from the issuance of FERC Order No. 636. The
report contained a number of recommendations, a stated objective of
which was to "establish a regulatory framework which promotes the
economically efficient provision of gas services and which ensures an
equitable distribution of the benefits and risks associated with these
services among the customers and suppliers of those services." The
report proposed a November 1, 1995 implementation date for unbundled
services to large volume customers. The report further proposed that
unbundled services be provided on a pilot basis for all remaining
small volume customers by November 1, 1996.
In a collaborative effort to define unbundled gas services in
Maryland, the Company has had several meetings with the Staff of the
PSC of MD and other interested parties to discuss these issues.
The Company is discussing with the collaborative proposals to unbundle
the service it provides to large volume interruptible customers into
two major components: local delivery service and city gate gas
service. Under this proposal, all large volume interruptible
customers would subscribe to the Company's local delivery service to
pay for delivering gas from the city gate. These customers will have
the option, however, of purchasing their gas supply from either the
Company or a third party. Customers purchasing gas from the Company
would choose from a variety of new city gate gas supply options.
Similar service options may be offered to large volume firm customers.
The Company expects to file its proposals in the near future with the
PSC of MD requesting approval thereof.
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> <C>
11. Computation of Earnings per Average Share of Common 14
Stock Assuming Full Dilution from Conversion of the
$4.60 and $4.36 Convertible Preferred Series.
27. Financial Data Schedule See Separate
Volume
Additional Exhibits -
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 February 3, 1995, the Company filed a report on Form 8-K
reporting that on January 31, 1995, a Distribution
Agreement had been executed with Salomon Brothers Inc; M.R.
Beal & Company; Lehman Brothers Inc. and Merrill
Lynch & Co. for issuance of up to $150 million of
Medium-Term Notes.
</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 May 15, 1995 /s/ Frederic M. Kline
------------------- --------------------------------
Controller
(Principal Accounting Officer)
13
<PAGE> 1
EXHIBIT 11
WASHINGTON GAS LIGHT COMPANY
Computation of Earnings 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 Six Months Ended
---------------------------------- ----------------------------------
March 31, 1995 March 31, 1994 March 31, 1995 March 31, 1994
--------------- --------------- -------------- ----------------
(Thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Net income $ 53,438 $ 54,958 $ 81,164 $ 85,210
Dividends on preferred
stock (excluding
dividends on convertible
preferred stock) 330 330 660 660
-------------- --------------- -------------- ----------------
Net income applicable
to common stock (1) $ 53,108 $ 54,628 $ 80,504 $ 84,550
============== =============== ============== ================
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) 21,265 20,889 21,207 20,848
============== =============== ============== ================
Earnings per average
share of common stock
assuming full dilution (1) / (2) $ 2.50 $ 2.62 $ 3.80 $ 4.06
============== =============== ============== ================
</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
<PAGE> 1
EXHIBIT 99.0
WASHINGTON GAS LIGHT COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
TWELVE MONTHS ENDED MARCH 31, 1995
(Unaudited)
(Dollars in Thousands)
<TABLE>
<S> <C>
FIXED CHARGES:
Interest Expense................................................ $ 30,896
Amortization of Debt Premium, Discount and Expense.............. 358
Interest Component of Rentals................................... 20
------------
Total Fixed Charges................................. $ 31,274
============
EARNINGS:
Net Income...................................................... $ 56,413
Add:
Income Taxes Applicable to Operating Income......... 31,770
Income Tax Applicable to Other Income - Net......... 681
Total Fixed Charges................................. 31,274
------------
Total Earnings.................................................. $ 120,138
============
Ratio of Earnings to Fixed Charges.............................. 3.8
============
</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 MARCH 31, 1995
(Unaudited)
(Dollars in Thousands)
<TABLE>
<S> <C>
FIXED CHARGES AND PRE-TAX PREFERRED STOCK DIVIDENDS:
Interest Expense................................................ $ 30,896
Amortization of Debt Premium, Discount and Expense.............. 358
Interest Component of Rentals................................... 20
-----------
Total Fixed Charges................................. 31,274
Pre-tax Preferred Dividends.................................... 2,101
-----------
Total............................................... $ 33,375
===========
Preferred Dividends............................................. $ 1,334
Effective Income Tax Rate....................................... .3652
Complement of Effective Income Tax Rate (1 - Tax Rate).......... .6348
Pre-Tax Preferred Dividends..................................... $ 2,101
===========
EARNINGS:
Net Income...................................................... $ 56,413
Add:
Income Taxes Applicable to Operating Income......... 31,770
Income Taxes Applicable to Other Income - Net....... 681
Total Fixed Charges................................. 31,274
-----------
Total Earnings.................................................. $ 120,138
===========
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends........................... 3.6
===========
</TABLE>
16
<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> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,019,265
<OTHER-PROPERTY-AND-INVEST> 3,074<F1>
<TOTAL-CURRENT-ASSETS> 247,293
<TOTAL-DEFERRED-CHARGES> 149,834
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,419,466
<COMMON> 21,303
<CAPITAL-SURPLUS-PAID-IN> 302,554
<RETAINED-EARNINGS> 225,651
<TOTAL-COMMON-STOCKHOLDERS-EQ> 549,508
0
28,488
<LONG-TERM-DEBT-NET> 359,071<F2>
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 207,396<F3>
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 2,505
0
<CAPITAL-LEASE-OBLIGATIONS> 941
<LEASES-CURRENT> 941
<OTHER-ITEMS-CAPITAL-AND-LIAB> 478,953
<TOT-CAPITALIZATION-AND-LIAB> 1,419,466
<GROSS-OPERATING-REVENUE> 596,565
<INCOME-TAX-EXPENSE> 46,917
<OTHER-OPERATING-EXPENSES> 454,682
<TOTAL-OPERATING-EXPENSES> 501,599
<OPERATING-INCOME-LOSS> 94,966
<OTHER-INCOME-NET> 2,552
<INCOME-BEFORE-INTEREST-EXPEN> 97,518
<TOTAL-INTEREST-EXPENSE> 16,354
<NET-INCOME> 81,164
667
<EARNINGS-AVAILABLE-FOR-COMM> 80,497
<COMMON-STOCK-DIVIDENDS> 23,709
<TOTAL-INTEREST-ON-BONDS> 16,354<F4>
<CASH-FLOW-OPERATIONS> 145,280
<EPS-PRIMARY> 3.80
<EPS-DILUTED> 3.80
<FN>
<F1>Reflects only net non-utility property. Other investments of $3,584 are
included in Deferred Charges on this schedule and on the Consolidated Balance
Sheet.
<F2>Represents total long-term debt, including, $152,825 in First Mortgage Bonds,
$207,200 in medium-term notes, $196 in other long-term debt and $(1,150) in
unamortized premium and discount-net.
<F3>Includes $207,200 in medium-term notes.
<F4>Represents total interest expense, per the Statement of Income.
</FN>
</TABLE>
