<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(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, 1997
------------------------------------
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
----------------------------------------
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)
(703) 750-4440
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code
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 43,699,547 July 31, 1997
- ---------------------------- ------------------ -----------------
Class Number of Shares Date
<PAGE>
WASHINGTON GAS LIGHT COMPANY
INDEX
<TABLE>
<CAPTION>
Page
No.
------
<S> <C>
PART I. Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheet -
June 30, 1997 and September 30, 1996 2
Consolidated Statement of Income -
Three Months Ended June 30, 1997 and 1996 3
Consolidated Statement of Income -
Nine Months Ended June 30, 1997 and 1996 4
Consolidated Statement of Cash Flows -
Nine Months Ended June 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-15
PART II. Other Information:
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 17
Signature 17
</TABLE>
1
<PAGE>
WASHINGTON GAS LIGHT COMPANY
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, Sept. 30,
1997 1996
---------- ----------
(Unaudited)
(Thousands)
<S> <C> <C>
ASSETS
Property, Plant and Equipment
At original cost $1,807,828 $1,721,956
Accumulated depreciation and amortization (623,260) (591,382)
---------- ----------
1,184,568 1,130,574
---------- ----------
Current Assets
Cash and cash equivalents 13,436 4,589
Accounts receivable, less reserve 104,453 84,967
Inventories and storage gas purchased 54,356 98,254
Deferred income taxes 20,092 17,888
Other prepayments, principally taxes 8,052 10,047
---------- ----------
200,389 215,745
---------- ----------
Deferred Charges and Other Assets 110,616 118,282
---------- ----------
Total $1,495,573 $1,464,601
========== ==========
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholders' equity $ 616,219 $ 558,809
Preferred stock 28,433 28,440
Long-term debt 402,729 353,893
---------- ----------
1,047,381 941,142
---------- ----------
Current Liabilities
Current maturities of long-term debt 7,706 8,006
Notes payable 14,296 115,278
Accounts and wages payable 106,825 104,832
Customer deposits and advance payments 6,625 12,997
Accrued taxes and interest 43,571 10,504
Other current liabilities 19,650 22,537
---------- ----------
198,673 274,154
---------- ----------
Deferred Credits 249,519 249,305
---------- ----------
Total $1,495,573 $1,464,601
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
2
<PAGE>
WASHINGTON GAS LIGHT COMPANY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
----------------------
June 30, June 30,
1997 1996
--------- ---------
(Thousands, Except Per
Share Data)
<S> <C> <C>
Operating Revenues $ 171,942 $ 157,760
Cost of Gas 87,578 76,008
--------- ---------
Net Revenues 84,364 81,752
--------- ---------
Other Operating Expenses
Operation 39,822 47,451
Maintenance 9,211 8,571
Depreciation and amortization 12,949 11,900
General taxes 15,564 15,217
Income taxes (200) (2,974)
--------- ---------
77,346 80,165
--------- ---------
Operating Income 7,018 1,587
Other Income - Net 609 210
--------- ---------
Income Before Interest Expense 7,627 1,797
Interest Expense 7,992 7,218
--------- ---------
Net Income (Loss) (365) (5,421)
Dividends on Preferred Stock 333 333
--------- ---------
Net Income (Loss) Applicable to Common Stock $ (698) $ (5,754)
========= =========
Average Common Shares Outstanding 43,704 43,472
Earnings (Loss) per Average Share of Common Stock
(See Exhibit 11 for computation of fully
diluted earnings per average share) $ (0.02) $ (0.13)
========= =========
Dividends Declared per Common Share $ .295 $ .285
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
WASHINGTON GAS LIGHT COMPANY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
----------------------
June 30, June 30,
1997 1996
--------- ---------
(Thousands, Except Per
Share Data)
<S> <C> <C>
Operating Revenues $ 948,365 $ 863,912
Cost of Gas 521,740 424,660
--------- ---------
Net Revenues 426,625 439,252
--------- ---------
Other Operating Expenses
Operation 127,728 139,799
Maintenance 26,191 23,675
Depreciation and amortization 38,348 35,737
General taxes 59,364 56,093
Income taxes 54,960 59,882
--------- ---------
306,591 315,186
--------- ---------
Operating Income 120,034 124,066
Other Income (Loss) - Net 2,266 (1,355)
--------- ---------
Income Before Interest Expense 122,300 122,711
Interest Expense 26,097 22,883
--------- ---------
Net Income 96,203 99,828
Dividends on Preferred Stock 999 999
--------- ---------
Net Income Applicable to Common Stock $ 95,204 $ 98,829
========= =========
Average Common Shares Outstanding 43,708 43,272
Earnings per Average Share of Common Stock
(See Exhibit 11 for computation of fully
diluted earnings per average share) $ 2.18 $ 2.28
========= =========
Dividends Declared per Common Share $ .875 $ .850
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
WASHINGTON GAS LIGHT COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
----------------------
June 30, June 30,
1997 1996
--------- ---------
(Thousands)
<S> <C> <C>
Operating Activities
Net Income $ 96,203 $ 99,828
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization a/ 44,067 40,778
Deferred income taxes-net 3,644 8,595
Amortization of investment tax credits (716) (730)
Allowance for funds used during construction (282) (386)
Other noncash charges and credits-net (2,715) 4,980
--------- ---------
140,201 153,065
Changes in assets and liabilities:
Accounts receivable and accrued utility revenues (41,688) (32,903)
Gas costs due from/to customers - net 21,233 (39,142)
Materials and supplies 1,781 1,222
Storage gas costs 42,117 9,353
Other prepayments, principally taxes 1,995 1,690
Accounts and wages payable 1,291 25,491
Customer deposits and advance payments (6,372) (9,164)
Accrued taxes 25,458 22,156
Accrued interest 7,609 5,863
Pipeline refunds due customers (2,355) (1,300)
Rate refund due customers -- (9,306)
Deferred purchased gas costs 7,033 (1,978)
Other-net (3,266) 5,904
--------- ---------
Net Cash Provided by Operating Activities 195,037 130,951
--------- ---------
Financing Activities
Common stock issued 312 9,568
Long-term debt issued 83,812 50,000
Long-term debt retired (35,543) (69,830)
Premium on long-term debt retired (1,422) (2,263)
Notes payable - net (100,982) --
Dividends on common and preferred stock (38,809) (37,515)
--------- ---------
Net Cash Used in Financing Activities (92,632) (50,040)
--------- ---------
Investing Activities
Capital expenditures (93,558) (82,748)
--------- ---------
Net Cash Used in Investing Activities (93,558) (82,748)
--------- ---------
Increase (Decrease) in Cash and Cash Equivalents 8,847 (1,837)
Cash and Cash Equivalents at Beginning of Period 4,589 13,911
--------- ---------
Cash and Cash Equivalents at End of Period $ 13,436 $ 12,074
========= =========
Supplemental Disclosures of Cash Flow Information
Income taxes paid $ 26,785 $ 31,180
Interest paid $ 18,380 $ 16,705
a/ Includes amounts charged to other accounts.
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
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.
Refer to the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996.
B. Due to the seasonal nature of the Company's business, the results of
operations shown do not indicate the expected results for the fiscal year
ended September 30, 1997.
C. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
D. During the nine months ended June 30, 1997, the Company issued a total of
$83 million in Medium-Term Notes (MTNs). The notes have a 30-year nominal
life and coupon rates ranging from 6.57% to 6.82%. Holders of $28 million
of these MTNs have a one-time option to have the Company redeem the notes
at their face value in seven years. The holders of the remaining $55
million of MTNs have a one-time option to have the Company redeem the notes
at their face value in ten years.
In July 1997, the Company issued a total of $12 million in MTNs with
maturity dates in fiscal year 2027. Of this total, the Company issued $6
million in notes with a coupon rate of 6.40%. Holders of these MTNs have a
one-time option to have the Company redeem the notes at their face value in
July 2004. The Company issued the remaining $6 million with a coupon
rate of 6.46%. Holders of these MTNs have a one-time option to have the
Company redeem the notes at their face value in July 2004.
E. In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share" (SFAS No. 128) and SFAS No. 129, "Disclosure of Information about
Capital Structure" (SFAS No. 129). The Company will adopt both of these
statements in the first quarter of fiscal 1998; however, there is not
expected to be any effect on the Company's Consolidated Financial
Statements.
SFAS No. 128 establishes standards for computing and presenting earnings
per share (EPS) which simplifies calculations found in Accounting
Principles Board Opinion No. 15, "Earnings Per Share," as amended and
interpreted, and thus, makes them comparable to international EPS
standards. SFAS No. 128 replaces primary EPS with a presentation of basic
EPS. Basic EPS excludes dilution for any potentially dilutive securities
and is computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for the period. SFAS
No. 128 also requires dual presentation of basic and fully diluted EPS (now
called diluted EPS) on the face of the income statement for all entities
with complex capital structures and requires a reconciliation of the basic
EPS calculation to the diluted EPS computation.
SFAS No. 129 continues the existing requirements to disclose the pertinent
rights and privileges of all security holders other than ordinary common
stockholders but expands the number of companies subject to portions of its
requirements.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" (SFAS No. 130). This statement is effective for fiscal years
beginning after December 15, 1997, and the Company will adopt it in the
first quarter of fiscal year 1998. SFAS No. 130 establishes standards for
reporting and displaying all components of comprehensive income in a full
set of general purpose financial statements. Comprehensive income is the
total of net income and all other nonowner changes in equity. Currently,
several accounting standards make specific exceptions to the "all-inclusive
income concept" requiring that certain changes in assets and liabilities
not be reported in a statement that reports results of operations for the
period in which they are recognized but instead to report the accumulated
balances of these items as a separate component of equity in a statement of
financial position. SFAS No. 130 amends existing accounting pronouncements
that provide for these specific exceptions and requires that all components
of comprehensive income be reported in a financial statement for the period
in which they are recognized. This statement does not require a specific
6
<PAGE>
WASHINGTON GAS LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(continued)
format. The accumulated balance of other comprehensive income must be
displayed as a separate component of equity in the statement of financial
position. Currently the Company has no items of other comprehensive income,
and adopting this standard is not expected to affect the Company's
reporting requirements.
F. Certain amounts in financial statements of prior years have been
reclassified to conform to the presentation of the current year.
7
<PAGE>
WASHINGTON GAS LIGHT COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
Statements contained in this report that are not based on historical facts
are forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995. Actual results could differ from the expectations discussed
herein.
Factors that could cause actual results to differ from management's beliefs
described in this report include, among other matters: (1) the effect of
fluctuations in weather from normal levels; (2) regulatory and legislative
changes; (3) variations in prices of natural gas and competing energy sources;
(4) improvements in products or services offered by competitors; and (5)
changing economic conditions.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 vs. JUNE 30, 1996
Earnings
For the three months ended June 30, 1997, the Company recorded a seasonal
net loss applicable to common stock of $0.7 million, which represented a $5.1
million smaller loss as compared to the same quarter last year. The net loss per
average common share was $.02, or an improvement over the prior year of $.11 per
average common share. Average common shares outstanding increased by less than
1% over the prior year. Effective November 1, 1996, shares issued under the
Dividend Reinvestment and Common Stock Purchase Plan and Employee Savings Plans
are being purchased on the open market instead of being issued as new shares.
The lower loss this year primarily resulted from lower other operating expenses
reflecting non-recurring employee-related costs recorded last year associated
with the Company's redesign of its organization.
Net Revenues
Net revenues for the period increased by $2.6 million (3.2%) from the same
period last year to $84.4 million primarily resulting from cooler weather in the
current quarter and the effect of increased customer meters. The table on the
following page compares certain operating statistics for the quarters ended June
30, 1997 and 1996.
8
<PAGE>
WASHINGTON GAS LIGHT COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
(continued)
<TABLE>
<CAPTION>
Three Months Ended
June 30, June 30,
1997 1996
-------- --------
<S> <C> <C>
Gas Sales and Deliveries (thousands of therms)
Gas Sold and Delivered
Firm 161,416 164,887
Interruptible 25,728 44,944
Electric Generation - -
------- -------
187,144 209,831
------- -------
Gas Delivered for Others
Firm 5,872 916
Interruptible 43,758 20,977
Electric Generation 35,288 16,082
------- -------
84,918 37,975
------- -------
Total Deliveries 272,062 247,806
======= =======
Gas Sold Off System (thousands of therms) 81,526 509
Degree Days
Actual 462 399
Normal 310 310
Customer Meters (end of period) 796,202 770,076
</TABLE>
Gas Delivered to Firm Customers
Therm deliveries to firm customers, including gas sold and delivered and
gas delivered for others, increased by 1.5 million therms primarily due to
weather that was 15.8% colder than the same quarter last year and the effect of
a 3.4% increase in the number of customer meters.
Gas Delivered to Interruptible Customers
Therms delivered to interruptible customers, including gas sold and
delivered and gas delivered for others, increased by 3.6 million therms (5.4%)
in the current quarter, resulting in a slight increase in net revenues when
compared to the same quarter last year. The increase in volumes delivered
resulted primarily from the colder weather in the current year's quarter.
However, margin-sharing arrangements in each of the Company's major
jurisdictions minimize the effect on net income of increases in sales and
deliveries to the interruptible class. Under these arrangements, the Company
returns a majority of the margins earned on sales and deliveries to the
interruptible class to firm customers after it reaches a certain gross margin
threshold, or in exchange for the shift of a portion of fixed costs from the
interruptible class to the firm class.
9
<PAGE>
WASHINGTON GAS LIGHT COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
(continued)
Gas Delivered for Electric Generation
The Company sells and/or transports gas to two customers with facilities in
Maryland who use the supplies to generate electricity. Volumes delivered for
electric generation in the current quarter increased by 19.2 million therms over
the same period last year, primarily as a result of lower gas prices in the
current period as compared with other competing fuels. The addition of the
second customer in August 1996 also contributed to the increase. The Company
shares a significant majority of the margins earned on deliveries to these
customers with firm customers and, therefore, the change in volumes delivered
between periods has an immaterial effect on net income.
Gas Sold Off System
During the quarter ended June 30, 1997, the Company sold 81.5 million
therms to customers outside its service territory, an increase of 81.0 million
therms over the same period last year. These sales are made at relatively small
margins, and although a large volume of gas was sold off system, the effect of
these sales on net income was not material.
Other Operating Expenses
Operation and maintenance expenses declined by $7.0 million (12.5%) from
the same period last year. This decrease is primarily attributable to
non-recurring employee-related costs recorded last year associated with the
Company's redesign of its organization and lower labor and related employee
benefit costs. Partially offsetting these decreases are higher uncollectible
accounts expenses due primarily to increased revenues caused by higher gas
costs during the recent heating season.
Depreciation and amortization increased by $1.0 million (8.8%) primarily
due to the effect of the Company's continuing investment in new plant and
equipment.
General taxes rose by $347,000 (2.3%) primarily due to higher property
taxes resulting from increased investments in property.
Income taxes, including amounts reflected in other income, increased by
$3.1 million, due primarily to a lower pre-tax loss generated this quarter.
Other Income - Net
Other income - net increased by $399,000, primarily as a result of earnings
generated from non-regulated gas marketing activities and other energy-related
services.
Interest Expense
Interest expense increased by $774,000 (10.7%) reflecting greater interest
expense on both long-term and short-term debt and lower interest on supplier
refunds. Interest on long-term debt increased by $766,000. This increase was
due to a $47.5 million rise in the average amount of long-term debt outstanding,
partially offset by a decline of 0.10 percentage points in the weighted average
cost of long-term debt. Interest on short-term debt increased by $329,000. This
increase was due to a $22.9 million increase in the average amount of short-term
debt outstanding, slightly offset by a decline of 0.18 percentage points in the
average cost of debt. Interest on supplier refunds due to customers decreased
10
<PAGE>
WASHINGTON GAS LIGHT COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
(continued)
by $201,000, reflecting a decline in the previously existing balance due
to customers and no significant refunds in the current year.
NINE MONTHS ENDED JUNE 30, 1997 vs. JUNE 30, 1996
Earnings
For the nine months ended June 30, 1997, net income applicable to common
stock amounted to $95.2 million, or $3.6 million lower than for the same period
last year. Earnings per average common share were $2.18, or $.10 lower than last
year. Average common shares outstanding increased by 1.0% over the prior year.
The decrease in net income applicable to common stock was directly attributable
to warmer weather in the current period. The effects of warmer weather were
partially offset by a 3.4% increase in customer meters, a decrease in other
operating expenses and an increase in other income (loss)- net.
Net Revenues
The variability of weather affects the level of gas delivered to customers,
since a large portion of the Company's deliveries of natural gas is used for
heating. The Company establishes its rates on the basis of normal weather.
Weather for the nine months ended June 30, 1997 was slightly colder than normal
while weather for the same period last year was 18.9% colder than normal. The
Company has no weather normalization tariff provision in any of its
jurisdictions. However, the Company has declining block rates in two of its
three major jurisdictions that reduce the impact on net revenues of deviations
in weather from normal.
Net revenues for the nine months ended June 30, 1997 decreased by $12.6
million (2.9%) from the same period last year to $426.6 million. This decrease
primarily resulted from the significantly colder weather last year, partially
offset by an increase in customer meters in the current year. The table on the
following page compares certain operating statistics for the nine months ended
June 30, 1997 and 1996.
11
<PAGE>
WASHINGTON GAS LIGHT COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
(continued)
<TABLE>
<CAPTION>
Nine Months Ended
June 30, June 30,
1997 1996
--------- ---------
<S> <C> <C>
Gas Sales and Deliveries (thousands of therms)
Gas Sold and Delivered
Firm 1,014,816 1,121,808
Interruptible 133,403 153,161
Electric Generation 51 375
--------- ---------
1,148,270 1,275,344
--------- ---------
Gas Delivered for Others
Firm 19,814 2,501
Interruptible 142,565 59,219
Electric Generation 55,512 22,874
--------- ---------
217,891 84,594
--------- ---------
Total Deliveries 1,366,161 1,359,938
========= =========
Gas Sold Off System (thousands of therms) 167,329 36,565
Degree Days
Actual 3,862 4,561
Normal 3,838 3,836
Customer Meters (end of period) 796,202 770,076
</TABLE>
Gas Delivered to Firm Customers
Therm deliveries to firm customers decreased by 89.7 million therms (8.0%),
resulting in a decline in related net revenues. These decreases were primarily
caused by weather that was 15.3% warmer than for the same period last year,
partially offset by a 3.4% increase in customer meters.
Gas Delivered to Interruptible Customers
Therms delivered to interruptible customers in the current period increased
by 63.6 million therms (29.9%) because the Company interrupted service to these
customers significantly more in the same period last year due to the colder
weather. As a result of the previously mentioned margin-sharing arrangements in
each of the Company's jurisdictions, the effect on net income of increased
deliveries to interruptible customers was minimal.
Gas Delivered for Electric Generation
Volumes delivered for electric generation in the current nine months
increased by 32.3 million therms from the same period last year, primarily due
to a second customer being added in August 1996. Therms delivered to this class
of customer also increased due to favorable gas prices as compared to prices for
other competing fuels. Margins earned on such deliveries are being shared with
firm customers as described previously in this report.
12
<PAGE>
WASHINGTON GAS LIGHT COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
(continued)
Gas Sold Off System
During the nine months ended June 30, 1997, the Company sold 167.3 million
therms to customers outside its service territory, a 130.8 million therm
increase over the same period last year. Because of relatively small margins on
this type of sale, the effect of these sales on net income was not material.
Other Operating Expenses
Operation and maintenance expenses declined by $9.6 million (5.8%) from the
same period last year. This decrease primarily reflects lower labor and related
employee benefit costs because of reduced employee levels and the
previously-described charge recorded last year related to the Company's
reorganization. Partially offsetting these decreases are higher uncollectible
accounts expenses, as previously discussed.
Depreciation and amortization increased by $2.6 million (7.3%) primarily
due to additional depreciation on the Company's new investments in plant and
equipment.
General taxes increased by $3.3 million (5.8%) due primarily to increased
property taxes resulting from increased investments in property, and higher
gross receipts taxes on higher revenues. The higher revenues reflect an
increased cost of gas per therm in 1997 compared to 1996. Recovery of gross
receipts taxes are included in revenues and, therefore, fluctuations in these
amounts have no effect on net income.
Income taxes, including amounts reflected in other income, decreased by
$3.1 million, due primarily to lower pre-tax income. The effective income tax
rate for the nine months ended June 30, 1997 was 36.8% and was 37.2% in the same
period in the prior year.
Other Income (Loss) - Net
Other income (loss) - net increased by $3.6 million, primarily due to the
difference in valuation reserves for certain non-utility activities recorded in
the two periods. Also contributing to the increase were earnings generated from
non-regulated gas marketing activities and other energy-related services.
Interest Expense
Interest expense increased by $3.2 million (14.0%) reflecting higher
interest expense on both long-term and short-term debt and lower interest on
supplier refunds. Interest on long-term debt increased by $1.7 million. This
increase was due to a $46.3 million rise in the average amount of long-term debt
outstanding, partially offset by a decline of 0.28 percentage points in the
weighted average cost of long-term debt. Interest on short-term debt increased
by $2.1 million. This increase was due to a $51.4 million increase in the
average amount of short-term debt outstanding, slightly offset by a decline of
0.18 percentage points in the average cost of debt. The increase in short-term
debt reflects the effect of financing increased gas costs and an increased
emphasis on using short-term debt to finance current assets. Interest on
supplier refunds due to customers decreased by $404,000, for reasons described
previously in this report.
13
<PAGE>
WASHINGTON GAS LIGHT COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
(continued)
LIQUIDITY AND CAPITAL RESOURCES
Short-Term Cash Requirements and Related Financing
The Company's business is highly weather sensitive and seasonal.
Approximately 75% of the Company's therms delivered (excluding deliveries for
electric generation) occur in the first and second fiscal quarters. This weather
sensitivity causes short-term cash requirements to vary significantly during the
year. Cash requirements peak in the fall and winter months when accounts
receivable, accrued utility revenues and storage gas are at or near their
highest levels. When these assets are converted into cash after the winter
heating season, the Company liquidates short-term debt and acquires storage gas
for the subsequent heating season.
The Company uses short-term debt in the form of commercial paper and
short-term bank loans to fund seasonal cash requirements. Alternative seasonal
sources include unsecured lines of credit, some of which are seasonal, and $130
million in a revolving-credit agreement maintained with a group of banks. The
Company activates these financing options to support or replace the Company's
commercial paper. Excluding current maturities, the Company had $14.3 million of
short-term debt outstanding ($10.0 million of bank loans and $4.3 million of
commercial paper) as of June 30, 1997, and had no short-term debt outstanding as
of June 30, 1996. Total short-term debt outstanding declined by $101.0 million
from the balance outstanding at September 30, 1996, reflecting the seasonality
of borrowing.
Long-Term Cash Requirements and Related Financing
Capital expenditures for the first nine months of fiscal year 1997 were
$93.6 million with a budget of $153.2 million for the fiscal 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
Company's last significant base rate increase became effective in December 1994.
The number of customer meters and the variability of the weather almost
exclusively affect the level of therms delivered.
Operating activities provided net cash of $195.0 million during the first
nine months of fiscal year 1997 compared to $131.0 million for the same period
in fiscal year 1996. This improvement was derived from: (1) increased
collections from customers of gas costs; (2) higher costs for gas storage
withdrawals in the current year, combined with lower levels of storage gas
injections due to warmer weather as compared to last year; (3) refunds made to
customers in the prior year for amounts overcollected due to the implementation
of interim rates; and (4) lower income tax payments as a result of lower taxable
income in the current year. Partially offsetting these sources of cash were the
following: (1) decreased sources of cash reflected in accounts and wages
payable, primarily due to decreased gas prices in June 1997 compared to June
1996, and the payment during fiscal year 1997 of amounts associated with the
redesign of the Company's organization; (2) lower net income; and (3) greater
funds supporting accounts receivable primarily due to colder weather in June
1997.
The total long-term debt issued in the current nine month period ($83.8
million) comprises issuances of Medium-Term Notes (MTNs) in October 1996 and
February 1997 and other long-term debt ($.8 million) issued by a subsidiary of
the Company. The $30.0 million issuance of MTNs in February 1997 was used for
the retirement on March 27, 1997 of $27.5 million of the 8-5/8% Series of First
14
<PAGE>
WASHINGTON GAS LIGHT COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
(continued)
Mortgage Bonds that were callable on or after March 1, 1997. Other retirements
of long-term debt ($8.0 million) occurred in January 1997 related to the
maturity of MTNs with coupon rates of 6.50% to 6.58%.
The discontinuation of new shares being issued through the Dividend
Reinvestment and Common Stock Purchase Plan and Employee Savings Plans caused
the $9.3 million decrease in cash provided by common stock issued. Effective
November 1, 1996, the plans purchase shares in the open market.
During the nine months ended June 30, 1997, the Company sold with recourse,
$26.1 million of non- utility accounts receivable. This compares to $23.7
million sold in the nine months ended June 30, 1996.
YEAR 2000
Like all companies with business-application-software programs written over
many years and computing infrastructure including computerized devices, the
Company is also affected by the so-called "Year 2000" issue. These programs,
which include the Company's customer service, operations and financial systems,
were written using two-year digits to define the applicable year, rather than
four. Any of the Company's programs that have time-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in the computer shutting down or performing incorrect computations.
The computing infrastructure, including computerized devices, could contain
date-sensitive software that could cause the devices to fail to operate or to
operate inconsistently.
The Company is completing the process of identifying the systems and
infrastructure that could be affected by the Year 2000 issue and has developed
an implementation plan to resolve the issue. The plan includes the replacement
of certain equipment, modification of certain software to recognize the turn of
the century, or replacement of certain software systems with new systems that
provide additional strategic information as well as recognize four-digit dates.
The plan is currently expected to result in non-recurring expenses over the next
two years of approximately $8 million to $10 million.
In order to provide additional strategic information, the Company expects
to replace certain existing systems with new systems that will also be Year 2000
operational. The costs to replace these systems, of $15 million to $20 million,
will be capitalized.
The Company believes, with appropriate replacement or modifications, it
will be able to operate its time-sensitive business-application-software
programs and infrastructure through the turn of the century.
15
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PART II. OTHER INFORMATION
Item 5.
Other Information
A. Many in the energy industry, including the Company, believe that the
increasingly deregulated and more competitive energy industry will continue
to lead to industry consolidation, combination, disaggregation and other
strategic alliances and restructuring as energy companies seek to offer a
broader range of energy services to compete more effectively in attracting
and retaining customers. For example, affiliations with other operating
utilities could potentially result in economies and synergies, and
combinations could provide a means to offer customers a more complete range
of energy services. Others are discontinuing operations in certain portions
of the energy industry or divesting portions of their business and
facilities. The Company, from time to time, performs studies, and in some
cases holds discussions regarding utility and energy-related investments
and transactions. The ultimate impact on the Company of any such
investments and transactions that may occur can not be determined at this
time.
B. On August 1, 1997, Shenandoah Gas Company (Shenandoah), one of the
Company's distribution subsidiaries, filed a request with the State
Corporation Commission of Virginia for new rates designed to collect
additional annual operating revenues of $2,306,000, or 10.54%. This
request included an overall rate of return of 10.03%, a return on common
equity of 12.25%, and a 55.24% common equity ratio. The requested increase
in rates is necessary to compensate Shenandoah for its increased capital
investment.
16
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PART II. OTHER INFORMATION (continued)
Item 6.
Exhibits and Reports on Form 8-K
(a) Exhibits Filed Herewith:
<TABLE>
<CAPTION>
Description Page in 10-Q
- ------------------------------------------------------- ----------------
<S> <C> <C>
10.0 Employment Agreement between the Company and See separate
Patrick J. Maher, dated May 19, 1997 volume
10.1 Form of Employment Agreement between the "
Company and the certain named executive officers,
as defined in Item 404(a)3 of Regulation S-K.
Following is a listing of those named executive
officers and the dates of their agreements:
Officer Date
---------------------------- ------------
James H. DeGraffenreidt, Jr. May 19, 1997
John K. Keane, Jr. May 19, 1997
Joseph M. Schepis May 19, 1997
Frederic M. Kline May 19, 1997
11 Computation of Earnings per Average Share of "
Common Stock Assuming Full Dilution from
Conversions of the $4.60 and $4.36 Convertible
Preferred Series
27 Financial Data Schedule "
99.0 Computation of Ratio of Earnings to Fixed Charges "
99.1 Computation of Ratio of Earnings to Fixed Charges "
and Preferred Stock Dividends
</TABLE>
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three months ended
June 30, 1997.
SIGNATURE
Pursuant to the requirements of the Securities and 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 11, 1997 /s/ Robert E. Tuoriniemi
------------------------------------ ------------------------------------
Controller
(Principal Accounting Officer)
17
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Exhibit 10.0
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and among
Washington Gas Light Company (the "Company") and Patrick J. Maher (the
"Executive"), as of the 19th day of May, 1997.
RECITALS
The Board of Directors of the Company (the "Board"), has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.
AGREEMENT
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall mean the first date
during the Change of Control Period (as defined in Section l(b)) on which a
Change of Control (as defined in Section 2) occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated within twelve months prior
to the date on which the Change of Control occurs, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately prior to the date
of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing on the
date hereof and ending on the second anniversary of the Effective Date.
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
30% or more of either (I) the then-outstanding shares of common stock of
the Company (the "Outstanding Company Common Stock") or (ii) the combined
voting power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
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Company Voting Securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a Change
of Control: (I) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (I), (ii)
and (iii) of subsection of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board; or
Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (I) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then- outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(excluding any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 30% or more of, respectively, the then-outstanding shares of
common stock of the corporation resulting from such Business Combination,
or the combined voting power of the then- outstanding voting securities of
such corporation except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
3. Employment Period. "Employment Period" shall mean the period
commencing on the Effective Date and ending on the second anniversary of
such date.
2
<PAGE>
4. Terms of Employment. (a) Position and Duties. (I) During the
Employment Period, the Executive's position, duties and responsibilities
shall be at least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time during the
120-day period immediately preceding the Effective Date (it being
understood that changes in reporting relationships or offices shall not
necessarily constitute a material change in position, duties or
responsibilities) and;
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours
to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it shall
not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions, and
manage personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the
Effective Date, the continued conduct of such activities (or the conduct of
the activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
(b) Compensation. (I) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve times the highest
monthly base salary paid or payable, including any base salary which has
been earned but deferred, to the Executive by the Company and its
affiliated companies in respect of the 12-month period immediately
preceding the month in which the Effective Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed no more than 12
months after the last salary increase awarded to the Executive prior to the
Effective Date and thereafter at least annually. Any increase in Annual
Base Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(ii) Annual Incentive. In addition to Annual Base Salary, the
Executive shall have the opportunity to earn annual incentive compensation
(the "Annual Incentive") for each fiscal year ending during the Employment
Period, at least equal to that available to other peer executives of the
Company and its affiliated companies. Each such Annual Incentive shall be
paid no later than the end of the third month of the fiscal year next
following the fiscal year for which the Annual Incentive is awarded, unless
the Executive shall elect to defer the receipt of such Annual Incentive. In
the event the Executive is terminated during the Employment Period, the
Executive's Annual Incentive for the most recent year shall be prorated for
the portion of that year that the Executive worked in the manner set forth
in Section 6(a)(I)(A)(2).
3
<PAGE>
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in
no event shall such plans, practices, policies and programs provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, less favorable, in the aggregate, than the most favorable of
those provided by the Company and its affiliated companies for the Executive
under such plans, practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the Effective Date or if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's beneficiaries, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company
and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, payment of
club dues, and, if applicable, use of an automobile and payment of related
expenses, in accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for the Executive
at any time during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vii) Office. During the Employment Period, the Executive shall be
entitled to an office at least equal to that of other peer executives of the
Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 120-day period immediately
4
<PAGE>
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
5. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of
such notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(I) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its affiliates
(other than any such failure from incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered to the Executive
by the Board of the Company which specifically identifies the manner in which
the Board believes that the Executive has not substantially performed the
Executive's duties; provided, however, resignation by the Executive for any
reason (or for no express reason) shall not constitute "Cause" under this
Section; or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board of the Company or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the Company. The
cessation of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three quarters
of the entire membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (I) or (ii) above, and
specifying the particulars thereof in detail.
5
<PAGE>
Termination by Executive. During the Employment Period, the
Executive may resign for any reason (or for no express reason).
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive during the Employment Period, shall be communicated by
Notice of Termination to the other party hereto given in accordance with
Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice
of Termination" means a written notice which (I) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
under the provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than 30 days after the
giving of such notice).
(e) Date of Termination. "Date of Termination" means (I) if the
Executive's employment is terminated by the Company for Cause, the date of
receipt of the Notice of Termination or any later date specified therein,
as the case may be, (ii) if the Executive's employment is terminated by the
Company other than for Cause or Disability, the Date of Termination shall
be the date on which the Company notifies the Executive of such
termination, (iii) if the Executive's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may be, and
(iv) if the Executive terminates his employment for any reason whatsoever,
the Date of Termination shall be the date on which the Executive notifies
Company of such termination.
6. Obligations of the Company upon Termination During Employment
Period. (a) Other Than for Cause. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
the Executive shall terminate employment for any reason whatsoever:
(I) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Target Annual Incentive (as defined in the
Executive Compensation Plan of the Company) in the fiscal year of
the Executive's Termination and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365 and (3) any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay,
in each case to the extent not therefore paid (the sum of the
amounts described in clauses (1), (2), and (3) shall be hereinafter
referred to as the "Accrued Obligations"); and
B. Subject to the provisions of Section 9, the amount equal
to three times the Executive's Average Pay. For purposes of this
Agreement, Average Pay shall mean
6
<PAGE>
the sum of (1) the Executive's Annual Base Salary, plus (2)the
Executive's average Annual Incentive actually earned for the last
three full fiscal years.
(ii) for three years after the Executive's Date of Termination,
or such longer period as may be provided by the terms of the appropriate
plan, program, practice or policy, the Company shall continue benefits to
the Executive and/or the Executive's beneficiaries at least equal to
those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b) (iv) of this
Agreement if the Executive's employment had not been terminated or, if
more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided, however, that if the
Executive becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another employer-provided
plan, the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such applicable
period of eligibility. After this three-year term, the Executive shall
immediately be eligible for COBRA benefits. For purposes of determining
eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to have remained
employed until three years after the Date of Termination and to have
retired on the last day of such period;
(iii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies (such
other amounts and benefits shall be hereinafter referred to as the "Other
Benefits"); and
(iv) The Company shall credit the Executive with up to an additional
three years of benefit service under the Company's Supplemental Executive
Retirement Plan (the "SERP"), but in no event shall such additional years
of benefit service result in total years of benefit service exceeding the
maximum under the SERP.
(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the term
Other Benefits as utilized in this Section 6(b) shall include, without
limitation, and the Executive's estate and/or beneficiaries shall be
entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated
companies under such plans, programs, practices and policies relating to
death benefits, if any, as in effect with respect to other peers and their
beneficiaries at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive's estate and/or
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<PAGE>
the Executive's beneficiaries, as in effect on the date of the Executive's
death with respect to other peer executives of the Company and its
affiliated companies and their beneficiaries.
Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement
shall terminate without further obligations to the Executive, other than
for payment of Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term "Other Benefits" as utilized in
this Section 6 shall include, and the Executive shall be entitled after
the Disability Effective Date to receive, disability and other benefits at
least equal to the most favorable of those generally provided by the
Company and its affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to
other peer executives and their families at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to
the Executive and/or the Executive's beneficiaries, as in effect at any
time thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.
(d) Cause: Other than for Change of Control. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive
other than the obligation to pay to the Executive (x) his Annual Base
Salary through the Date of Termination, (y) the amount of any compensation
previously deferred by the Executive, and (z) Other Benefits, in each case
to the extent theretofore unpaid.
7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor, subject
to Section 12(f), shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any
plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice
or program or contract or agreement except as explicitly modified by this
Agreement.
8. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
the Executive or others. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the
Executive obtains other employment.
9. Certain Additional Payments by the Company. (a) Anything in this
Agreement to the contrary notwithstanding and except as set forth below, in
the event it shall be determined that any payment or distribution by the
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Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment") would be subject to the excise tax imposed pursuant to
Sections 280G and/or 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
choose whether to receive (I) the amount of such Payment, or (ii) a smaller
amount equal to one dollar less than the maximum amount that Executive may
receive without having such payment be treated as an excess parachute
payment under Section 280G of the Code or that may otherwise give rise to
Excise Tax (the "Reduced Amount"), or (iii) with respect to the payment in
Section 6(a) (I) (B), an amount equal to (A) 2.0 times Average Pay, plus (B) an
amount of cash that enables the Executive to pay the Excise tax on such amount,
plus an amount that enables the Executive to pay all additional Excise Taxes
that may arise due to payments to Executive that are made for the purpose of
paying Excise Taxes.
(b) In order to choose among the benefits described above, the
calculation of such amounts shall be computed by an accounting firm
designated by the Company (the "Accounting Firm"). Such Accounting Firm
shall provide detailed supporting calculations both to the Company and to
the Executive within 15 days of the Date of Termination. In the event the
Executive chooses the benefit described in Section 9(a)(ii) above, the
Executive shall determine which benefits shall be eliminated or reduced
consistent with the requirements of Section 9(a)(ii). If the Executive does
not make such determination within ten days of the receipt of the
calculations made by the Accounting Firm, the Company shall elect which and
how much of the benefits shall be eliminated or reduced consistent with the
requirements of this Section 9 and shall notify the Executive promptly of
such election. Within five days thereafter, the Company shall pay to or
distribute to or for the benefit of the Executive such amounts as are then
due to the Executive under this Agreement.
In the event the Internal Revenue Service ("IRS") subsequently
challenges the Excise Tax computation herein described, then the Executive
shall notify the Company in writing of any claim by the IRS that, if
successful, would require the payment by the Executive of additional Excise
Taxes. Such notification shall be given no later than ten days after the
Executive receives written notice of such claim. The Executive shall not
pay such claim prior to the expiration of the 30-day period following the
date on which the Executive gives notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim and
that it will bear the costs and provide the indemnification as required by
this sentence, the Executive shall cooperate with the Company in good faith
in order effectively to contest such claim and permit the Company to
participate in any proceedings relating to such claim. In the event a final
determination is made with respect to the IRS claim, or in the event the
Company chooses not to further challenge such claim, then the Company shall
reimburse the Executive for the additional Excise Tax owed to the IRS in
excess of the Excise Tax calculated by the Accounting Firm. The Company
shall also reimburse the Executive for all interest and penalties related
to the underpayment of such Excise Tax. The Company will also reimburse the
Executive for all federal and state income tax and employment taxes
thereon.
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10. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or representatives of
the Executive in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not, without
the prior written consent of the Company or as may otherwise be required by
law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by
it. In no event shall an asserted violation of the provisions of this
Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. Successors & Assigns. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
The Company will require any successor or any party that acquires
control of the Company (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company or any party that acquires control of the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) Governing Law; Headings; Amendment. This
Agreement shall be governed by and construed in accordance with the laws of
the Commonwealth of Virginia, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended
or modified otherwise than by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
(b) Notices. All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
-------------------
at the address for Executive that is on file with the Company
If to the Company:
-----------------
Washington Gas Light Company
1100 H Street, N.W.
Washington, D.C. 20080
ATTN: General Counsel
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or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications shall
be effective when actually received by the addressee.
Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
(d) Withholding. The Company may withhold from any amounts payable
under this Agreement such federal, state, local or foreign taxes as shall
be required to be withheld pursuant to any applicable law or regulation.
(e) Waiver. The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment pursuant to Section 5 of this Agreement, shall not be deemed
to be a waiver of such provision or right or any other provision or right
under this Agreement.
(f) At Will Employment. The Executive and the Company acknowledge
that, except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by
the Company is "at will" and, subject to Section l(a) hereof, prior to the
Effective Date, the Executive's employment and/or this Agreement may be
terminated by either the Executive or the Company at any time prior to the
Effective Date, in which case the Executive shall have no further rights
under this Agreement. From and after the Effective Date this Agreement
shall supersede any other agreement between the parties with respect to the
subject matter hereof.
(g) Arbitration. In the event of any dispute between the parties
regarding this Agreement, the parties shall submit to binding arbitration,
conducted in Washington, DC or in Virginia within 25 miles of Washington,
DC. The arbitration shall be conducted pursuant to the rules of the
American Arbitration Association. Each of the parties shall select one
arbitrator, who shall not be related to, affiliated with or employed by
that party. The two arbitrators shall, in turn, select a third arbitrator.
The decision of any two of the arbitrators shall be binding upon the
parties, and may, if necessary, be reduced to judgment in any court of
competent jurisdiction. Notwithstanding the foregoing, the parties
expressly agree that nothing herein in any way precludes Company from
seeking injunctive relief or declaratory judgement through a court of
competent jurisdiction with respect to a breach (or an alleged breach) of
any covenant not to compete or of any confidentiality covenant contained in
this Agreement. In the event the Executive pursues arbitration pursuant to
this Section herein, the Executive shall be compensated up to $150,000 in
legal costs.
(h) Pooling of Interests Accounting. In the event any provision of
this Agreement would prevent the use of pooling of interests accounting in
a corporate transaction involving the Company and such transaction is
contingent upon pooling of interests accounting, then that provision shall
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be deemed amended or revoked to the extent required to preserve such
pooling of interests. The Executive will, upon advice from the Company,
take (or refrain from taking, as appropriate) all actions necessary
or desirable to ensure that pooling of interests accounting is available.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
/s/ Patrick J. Maher_
Name: Patrick J. Maher
WASHINGTON GAS LIGHT COMPANY
By: /s/ Daniel J. Callahan, III
Title: Chairman, Personnel & Compensation
Committee
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Exhibit 10.1
Form of Employment Agreement between the Company and the certain named executive
officers, as defined in Item 404(a)3 of Regulation S-K. Following is a listing
of those named executive officers and the dates of their agreements:
Officer Date
--------------------------- ------------
James H. DeGraffenreidt, Jr. May 19, 1997
John K. Keane, Jr. May 19, 1997
Joseph M. Schepis May 19, 1997
Frederic M. Kline May 19, 1997
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and
among Washington Gas Light Company (the "Company") and (the "Executive"), as of
the ___ day of _______, 1997.
RECITALS
--------
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
AGREEMENT
---------
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall mean the
first date during the Change of Control Period (as defined in Section l(b)) on
which a Change of Control (as defined in Section 2) occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
the Executive's employment with the Company is terminated within twelve months
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (I) was at the
request of a third party who has taken steps reasonably calculated to effect a
Change of Control or (ii) otherwise arose in connection with or anticipation of
a Change of Control, then for all purposes of this Agreement the "Effective
Date" shall mean the date immediately prior to the date of such termination of
employment.
(b) The "Change of Control Period" shall mean the period commencing
on the date hereof and ending on the second anniversary of the Effective Date.
2. Change of Control. For the purpose of this Agreement, a "Change
of Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (I) the then-outstanding shares of common stock of the
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Company (the "Outstanding Company Common Stock") or (ii) the combined voting
power of the then-outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change of Control: (I) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company, or
(iv) any acquisition by any corporation pursuant to a transaction which complies
with clauses (I), (ii) and (iii) of subsection of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (I) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then- outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 30% or more of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination, or the
combined voting power of the then-outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
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3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the second anniversary of
such date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (I) During the
Employment Period, the Executive's position, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date (it being understood that changes in
reporting relationships or offices shall not necessarily constitute a material
change in position, duties or responsibilities); and
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of the activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation. (I) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve times the highest
monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the 12-month period immediately preceding the month in
which the Effective Date occurs. During the Employment Period, the Annual Base
Salary shall be reviewed no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter at least
annually. Any increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement. Annual Base Salary
shall not be reduced after any such increase and the term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base Salary as so increased. As
used in this Agreement, the term "affiliated companies" shall include any
company controlled by, controlling or under common control with the Company.
(ii) Annual Incentive. In addition to Annual Base Salary, the
Executive shall have the opportunity to earn annual incentive compensation (the
"Annual Incentive") for each fiscal year ending during the Employment Period, at
least equal to that available to other peer executives of the Company and its
affiliated companies. Each such Annual Incentive shall be paid no later than the
end of the third month of the fiscal year next following the fiscal year for
which the Annual Incentive is
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<PAGE>
awarded, unless the Executive shall elect to defer the receipt of such Annual
Incentive. In the event the Executive is terminated during the Employment
Period, the Executive's Annual Incentive for the most recent year shall be
prorated for the portion of that year that the Executive worked in the manner
set forth in Section 6(a)(I)(A)(2).
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, less
favorable, in the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the 120-day
period immediately preceding the Effective Date or if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's beneficiaries, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.
(v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, payment of
club dues, and, if applicable, use of an automobile and payment of related
expenses, in accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for the Executive
at any time during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
4
<PAGE>
(vii) Office. During the Employment Period, the Executive shall be
entitled to an office at least equal to that of other peer executives of the
Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
5. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean:
(I) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its
affiliates (other than any such failure from incapacity due to physical or
mental illness), after a written demand for substantial performance is
delivered to the Executive by the Board or the Chief Executive Officer of
the Company which specifically identifies the manner in which the Board or
Chief Executive Officer believes that the Executive has not substantially
performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the
Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there
5
<PAGE>
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three quarters of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (I) or (ii) above, and specifying the particulars
thereof in detail.
Good Reason. The Executive's employment may be terminated by
the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(I) the assignment to the Executive of any duties inconsistent in
any material respect with the Executive's position as contemplated by
Section 4(a) of this Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent action which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated, insubstantial
and inadvertent failure which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) failure by the Company to reimburse the Executive for
expenses related to a required relocation;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
11 of this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (I) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than 30
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (I) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if
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the Executive's employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
6. Obligations of the Company upon Termination During Employment
Period. (a) Good Reason, Other Than for Cause, Death or Disability. If, during
the Employment Period, the Company shall terminate the Executive's employment
other than for Cause or Disability or the Executive shall terminate employment
for Good Reason:
(I) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Target Annual Incentive (as defined in the
Executive Compensation Plan of the Company) in the fiscal year of
the Executive's Termination and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365 and (3) any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay,
in each case to the extent not therefore paid (the sum of the
amounts described in clauses (1), (2), and (3) shall be hereinafter
referred to as the "Accrued Obligations"); and
B. Subject to the provisions of Section 9, the amount equal to
three times the Executive's Average Pay. For purposes of this
Agreement, Average Pay shall mean the sum of (1) the Executive's
Annual Base Salary, plus (2) the Executive's average Annual
Incentive actually earned for the last three full fiscal years.
(ii) for three years after the Executive's Date of Termination, or
such longer period as may be provided by the terms of the appropriate
plan, program, practice or policy, the Company shall continue benefits to
the Executive and/or the Executive's beneficiaries at least equal to those
which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) of this
Agreement if the Executive's employment had not been terminated or, if
more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided, however, that if the
Executive becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another employer-provided
plan, the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such applicable
period of eligibility. After this three-year term, the Executive shall
immediately be eligible for COBRA benefits. For purposes of determining
eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, practices, programs
and policies, the Executive shall be considered to have remained employed
7
<PAGE>
until three years after the Date of Termination and to have retired
on the last day of such period;
(iii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (such other amounts
and benefits shall be hereinafter referred to as the "Other Benefits");
and
(iv) The Company shall credit the Executive with up to an additional
three years of benefit service under the Company's Supplemental Executive
Retirement Plan (the "SERP"), but in no event shall such additional years
of benefit service result in total years of benefit service exceeding the
maximum under the SERP.
(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations shall be paid
to the Executive's estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peers and their beneficiaries at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive's estate and/or the Executive's beneficiaries,
as in effect on the date of the Executive's death with respect to other peer
executives of the Company and its affiliated companies and their beneficiaries.
Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination. With respect to the provision
of Other Benefits, the term "Other Benefits" as utilized in this Section 6
shall include, and the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at least equal to the
most favorable of those generally provided by the Company and its affiliated
companies to disabled executives and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their families at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive and/or the Executive's beneficiaries, as in
effect at any time thereafter generally with respect to other peer executives of
the Company and its affiliated companies and their families.
8
<PAGE>
(d) Cause: Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) the Executive's Annual Base Salary through the Date
of Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination.
7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment.
9. Certain Additional Payments by the Company. (a) Anything in this
Agreement to the contrary notwithstanding and except as set forth below, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (a "Payment")
would be subject to the excise tax imposed pursuant to Sections 280G and/or 4999
of the Code or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to choose whether to receive (I) the amount of
such Payment, or (ii) a smaller amount equal to one dollar less than the maximum
amount that Executive may receive without having such payment be treated as an
excess parachute payment under Section 280G of the Code or that may otherwise
give rise to Excise Tax (the "Reduced Amount"), or (iii) with respect to the
payment in Section 6(a)(I)(B), an amount equal to (A) 2.0 times Average Pay,
plus (B) an amount of cash that enables the Executive to pay the Excise tax on
such amount, plus an amount that enables the Executive to pay all additional
Excise Taxes that may arise due to payments to Executive that are made for the
purpose of paying Excise Taxes.
9
<PAGE>
(b) In order to choose among the benefits described above, the
calculation of such amounts shall be computed by an accounting firm designated
by the Company (the "Accounting Firm"). Such Accounting Firm shall provide
detailed supporting calculations both to the Company and to the Executive within
15 days of the Date of Termination. In the event the Executive chooses the
benefit described in Section 9(a)(ii) above, the Executive shall determine which
benefits shall be eliminated or reduced consistent with the requirements of
Section 9(a)(ii). If the Executive does not make such determination within ten
days of the receipt of the calculations made by the Accounting Firm, the Company
shall elect which and how much of the benefits shall be eliminated or reduced
consistent with the requirements of this Section 9 and shall notify the
Executive promptly of such election. Within five days thereafter, the Company
shall pay to or distribute to or for the benefit of the Executive such amounts
as are then due to the Executive under this Agreement.
In the event the Internal Revenue Service ("IRS") subsequently
challenges the Excise Tax computation herein described, then the Executive shall
notify the Company in writing of any claim by the IRS that, if successful, would
require the payment by the Executive of additional Excise Taxes. Such
notification shall be given no later than ten days after the Executive receives
written notice of such claim. The Executive shall not pay such claim prior to
the expiration of the 30-day period following the date on which the Executive
gives notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim and that it will bear the costs and provide the
indemnification as required by this sentence, the Executive shall cooperate with
the Company in good faith in order effectively to contest such claim and permit
the Company to participate in any proceedings relating to such claim. In the
event a final determination is made with respect to the IRS claim, or in the
event the Company chooses not to further challenge such claim, then the Company
shall reimburse the Executive for the additional Excise Tax owed to the IRS in
excess of the Excise Tax calculated by the Accounting Firm. The Company shall
also reimburse the Executive for all interest and penalties related to the
underpayment of such Excise Tax. The Company will also reimburse the Executive
for all federal and state income tax and employment taxes thereon.
10. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
11. Successors & Assigns. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
10
<PAGE>
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
The Company will require any successor or any party that
acquires control of the Company (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company or any party that acquires control of the Company
to assume expressly and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
12. Miscellaneous. (a) Governing Law; Headings; Amendment. This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia, without reference to principles of conflict of laws.
The captions of this Agreement are not part of the provisions hereof and shall
have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) Notices. All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
-------------------
at the address for Executive that is on file with the Company
If to the Company:
-----------------
Washington Gas Light Company
1100 H Street, N.W.
Washington, D.C. 20080
ATTN: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(d) Withholding. The Company may withhold from any amounts payable
under this Agreement such federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
11
<PAGE>
(e) Waiver. The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(I)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right under this
Agreement.
(f) At Will Employment. The Executive and the Company acknowledge
that, except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by the
Company is "at will" and, subject to Section l(a) hereof, prior to the Effective
Date, the Executive's employment and/or this Agreement may be terminated by
either the Executive or the Company at any time prior to the Effective Date, in
which case the Executive shall have no further rights under this Agreement. From
and after the Effective Date this Agreement shall supersede any other agreement
between the parties with respect to the subject matter hereof.
(g) Arbitration. In the event of any dispute between the parties
regarding this Agreement, the parties shall submit to binding arbitration,
conducted in Washington, DC or in Virginia within 25 miles of Washington, DC.
The arbitration shall be conducted pursuant to the rules of the American
Arbitration Association. Each of the parties shall select one arbitrator, who
shall not be related to, affiliated with or employed by that party. The two
arbitrators shall, in turn, select a third arbitrator. The decision of any two
of the arbitrators shall be binding upon the parties, and may, if necessary, be
reduced to judgment in any court of competent jurisdiction. Notwithstanding the
foregoing, the parties expressly agree that nothing herein in any way precludes
Company from seeking injunctive relief or declaratory judgement through a court
of competent jurisdiction with respect to a breach (or an alleged breach) of any
covenant not to compete or of any confidentiality covenant contained in this
Agreement. In the event the Executive pursues arbitration pursuant to this
Section herein, the Executive shall be compensated up to $150,000 in legal
costs.
(h) Pooling of Interests Accounting. In the event any provision of
this Agreement would prevent the use of pooling of interests accounting in a
corporate transaction involving the Company and such transaction is contingent
upon pooling of interests accounting, then that provision shall be deemed
amended or revoked to the extent required to preserve such pooling of interests.
The Executive will, upon advice from the Company, take (or refrain from taking,
as appropriate) all actions necessary or desirable to ensure that pooling of
interests accounting is available.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
_______________________________
Name:
WASHINGTON GAS LIGHT COMPANY
By:_____________________________
Title:__________________________
12
<PAGE>
EXHIBIT 11
WASHINGTON GAS LIGHT COMPANY AND SUBSIDIARIES
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>
Three Months Ended Nine Months Ended
-------------------- -------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
-------- -------- -------- --------
(Thousands, Except Per Share Data)
<S> <C> <C> <C> <C>
Net income (loss) $ (365) $ (5,421) $ 96,203 $ 99,828
Dividends on preferred
stock (excluding
dividends on convertible
preferred stock) 330 330 990 990
-------- -------- -------- --------
Net income (loss)
applicable to common stock $ (695) $ (5,751) $ 95,213 $ 98,838
======== ======== ======== ========
Average common shares
outstanding on a fully
diluted basis assuming
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 43,731 43,502 43,735 43,303
======== ======== ======== ========
Earnings (loss) per average
share of common stock
assuming full dilution $ (0.02) $ (0.13) $ 2.18 $ 2.28
======== ======== ======== ========
</TABLE>
- ------------------------------------------
Note: These calculations are submitted in accordance with 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.
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE INTERIM
CONSOLIDATED 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> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,181,447
<OTHER-PROPERTY-AND-INVEST> 3,121
<TOTAL-CURRENT-ASSETS> 200,389
<TOTAL-DEFERRED-CHARGES> 110,616
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,495,573
<COMMON> 43,742
<CAPITAL-SURPLUS-PAID-IN> 301,894
<RETAINED-EARNINGS> 270,583
<TOTAL-COMMON-STOCKHOLDERS-EQ> 616,219
0
28,433
<LONG-TERM-DEBT-NET> 402,729 <F1>
<SHORT-TERM-NOTES> 10,000 <F2>
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 4,296 <F2>
<LONG-TERM-DEBT-CURRENT-PORT> 7,706
0
<CAPITAL-LEASE-OBLIGATIONS> 913
<LEASES-CURRENT> 491
<OTHER-ITEMS-CAPITAL-AND-LIAB> 424,786
<TOT-CAPITALIZATION-AND-LIAB> 1,495,573
<GROSS-OPERATING-REVENUE> 948,365
<INCOME-TAX-EXPENSE> 54,960
<OTHER-OPERATING-EXPENSES> 773,371
<TOTAL-OPERATING-EXPENSES> 828,331
<OPERATING-INCOME-LOSS> 120,034
<OTHER-INCOME-NET> 2,266
<INCOME-BEFORE-INTEREST-EXPEN> 122,300
<TOTAL-INTEREST-EXPENSE> 26,097
<NET-INCOME> 96,203
999
<EARNINGS-AVAILABLE-FOR-COMM> 95,204
<COMMON-STOCK-DIVIDENDS> 38,247
<TOTAL-INTEREST-ON-BONDS> 26,097 <F3>
<CASH-FLOW-OPERATIONS> 195,037
<EPS-PRIMARY> 2.18
<EPS-DILUTED> 2.18
<FN>
<F1> REPRESENTS TOTAL LONG-TERM DEBT INCLUDING $56,000 IN FIRST
MORTGAGE BONDS,
$346,500 IN UNSECURED MEDIUM-TERM NOTES, $958 IN OTHER LONG-TERM DEBT
AND ($729)
IN UNAMORTIZED PREMIUM AND DISCOUNT-NET.
<F2> TOTAL OF SHORT-TERM NOTES PAYABLE AND COMMERCIAL PAPER TIES TO
BALANCE
SHEET CAPTION ENTITLED NOTES PAYABLE.
<F3> REPRESENTS TOTAL INTEREST EXPENSE, PER STATEMENT OF INCOME.
</FN>
</TABLE>
<PAGE>
EXHIBIT 99.0
WASHINGTON GAS LIGHT COMPANY AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
Twelve Months Ended June 30, 1997
-------------------------------------------------
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
<S> <C>
FIXED CHARGES:
Interest Expense $ 33,186
Amortization of Debt Premium, Discount and Expense 293
Interest Component of Rentals 64
--------
Total Fixed Charges $ 33,543
========
EARNINGS:
Net Income $ 77,966
Add:
Income Taxes Applicable to Operating Income 44,454
Income Taxes Applicable to Other Income (Loss) - Net 1,189
Total Fixed Charges 33,543
--------
Total Earnings $157,152
========
Ratio of Earnings to Fixed Charges 4.7
========
</TABLE>
<PAGE>
EXHIBIT 99.1
WASHINGTON GAS LIGHT COMPANY AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends
Twelve Months Ended June 30, 1997
-----------------------------------------------------
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
<S> <C>
FIXED CHARGES AND PRE-TAX PREFERRED STOCK DIVIDENDS:
Preferred Dividends $ 1,332
Effective Income Tax Rate .3693
Complement of Effective Income Tax Rate (1 - Tax Rate) .6307
Pre-Tax Preferred Dividends $ 2,112
========
Interest Expense $ 33,186
Amortization of Debt Premium, Discount and Expense 293
Interest Component of Rentals 64
--------
Total Fixed Charges 33,543
Pre-tax Preferred Dividends 2,112
--------
Total $ 35,655
========
EARNINGS:
Net Income $ 77,966
Add:
Income Taxes Applicable to Operating Income 44,454
Income Taxes Applicable to Other Income (Loss) - Net 1,189
Total Fixed Charges 33,543
--------
Total Earnings $157,152
========
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends 4.4
========
</TABLE>
