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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the three- and six-month periods ended March 31, 1994, or
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________ to ____________.
I.R.S.
Commission Employer
File Exact Name of Registrant as State of Identification
Number Specified in Its Charter Incorporation Number
- ---------- --------------------------- ------------- --------------
001-11227 Washington Energy Company Washington 91-1005304
000-11271 Washington Natural Gas Company Washington 91-1005303
Address of Principal Executive Offices Zip Code
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815 Mercer Street, Seattle, Washington 98109
Registrants' Telephone Number, Including Area Code
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(206) 622-6767
Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days Yes X No .
Indicate the number of shares outstanding of each of the issuers' classes of
common stock, as of the latest practicable date.
Outstanding
Registrant Title of Stock March 31, 1994
- ------------------------------ -------------- --------------
Washington Energy Company $5 par value 23,512,116
Washington Natural Gas Company $5 par value 10,650,571
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INTRODUCTION
Washington Energy Company ("Company") or ("Washington Energy"), incorporated
under the laws of the State of Washington, is a holding company exempt from
the provisions of the Public Utility Holding Company Act of 1935 except Sec-
tion 9(a)(2) thereof. It is the parent of Washington Natural Gas Company
("Washington Natural"), a natural gas distribution company incorporated under
the laws of the State of Washington. This Form 10-Q is filed on behalf of
Company and Washington Natural, which companies are referred to herein as
Registrants.
INDEX
Page
Part II - OTHER INFORMATION............................................... 3
Item 4. Submission of Matters to a Vote of Security Holders............ 3
Item 5. Other Information.............................................. 3
Item 6. Exhibits and Reports on Form 8-K............................... 8
Signatures ............................................................ 9
Exhibit Index ............................................................ 11
2
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The 1993 Annual Meeting of the Stockholders of Washington
Energy Company was held on February 25, 1994.
(b) The names of the four directors elected at the annual
meeting, the term of office each is to serve, and the
tabulation of votes are as follows:
Affirmative Negative Votes
Votes Votes Withheld
----------- -------- --------
(Term Expiring in 1997):
Virginia Anderson 20,341,510 - 363,314
Tomio Moriguchi 20,399,877 - 311,302
Sally G. Narodick 20,364,455 - 341,649
(Term Expiring in 1996):
William P. Vititoe 20,417,276 - 315,749
(c) Stockholders approved the Resolution adopting the Washington
Energy Company Stock Option Plan. There were 18,150,635
common shares voted in favor of this proposal and 1,720,028
shares voted against.
Item 5. Other Information
RATIOS OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges for the twelve months ended
March 31, 1994 and 1993 were 1.31 and 1.68, respectively.
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet
of Washington Energy as of March 31, 1994 and unaudited pro forma condensed
statements of income for the six months ended March 31, 1994 and for the
fiscal year ended September 30, 1993 have been prepared to reflect the merger
of Washington Energy Resources Company ( WERCO ), previously a wholly-owned
subsidiary of Washington Energy, into COG Acquisition Company, a wholly-owned
subsidiary of Cabot Oil & Gas Corporation ( Cabot ).
The accompanying pro forma condensed consolidated balance sheet of
Washington Energy as of March 31, 1994 has been prepared as if such
transactions had occurred on March 31, 1994.
The accompanying unaudited pro forma condensed consolidated statements
of income for the six months ended March 31, 1994 and for fiscal year ended
September 30, 1993 have been prepared as if such transactions had occurred on
the first day of the fiscal year ended September 30, 1993.
3
The pro forma condensed consolidated financial statements presented
below are unaudited and do not purport to present the financial condition and
results of operations of Washington Energy had the WERCO/Cabot merger actually
been completed as of the dates indicated. In addition, the pro forma
condensed consolidated financial information is not necessarily indicative of
the future results of operations of Washington Energy and should be read in
conjunction with the notes following such information and with the historical
financial statements of Washington Energy.
4
<TABLE>
WASHINGTON ENERGY COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1994
(in thousands)
WECO Merger WECO
Historical Adjustments PRO FORMA
ASSETS
<F> <C> <C> <C>
PROPERTY, PLANT & EQUIPMENT
Utility plant, at original cost $ 930,730 $ - $ 930,730
Oil and gas (on full cost method),
coal and other 295,011 (240,923) (b) 54,088
Accumulated provision for (320,057) 79,173 (b) (240,884)
depreciation
CURRENT ASSETS 100,747 (25,312) (a)(b) 75,435
INVESTMENT IN CABOT OIL AND GAS COMPANY 98,545 (a) 98,545
OTHER ASSETS AND DEFERRED CHARGES 88,651 (3,686) (a) 84,965
---------- ---------- ----------
$1,095,082 $ (92,203) $1,002,879
========== ========== ==========
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common shareholders' interest $ 328,006 $ (27,860) (a) $ 300,146
Preferred Stock 60,000 - 60,000
Long-term debt 333,260 - 333,260
CURRENT LIABILITIES
Notes payable and commercial paper 126,642 (64,159) (a)(b) 62,483
Other current liabilities 126,500 (17,002) (a) 109,498
DEFERRED CREDITS AND OTHER LIABILITIES 120,674 16,818 (a) 137,492
---------- ---------- ----------
$1,095,082 $ (92,203) $1,002,879
========== ========== ==========
See Accompanying Notes to Pro Forma Financial Information
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WASHINGTON ENERGY COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FISCAL YEAR ENDED SEPTEMBER 30, 1993
(in thousands, except per share data)
WECO Merger WECO
Historical Adjustments PRO FORMA
<F> <C> <C> <C>
OPERATING REVENUES
Sales of natural gas $ 360,141 $ - $(360,141)
Other operating revenues 110,251 (31,619) (c) 78,632
--------- --------- ---------
470,392 (31,619) 438,773
OPERATING EXPENSES
Related to natural gas revenue 381,261 - 381,261
Other operating expenses 33,649 (24,155) (c) 9,494
--------- --------- --------
Total operating expenses 414,910 (24,155) 390,755
--------- --------- --------
OPERATING INCOME 55,482 (7,464) 48,018
INVESTMENT INCOME - 3,907 (d) 3,907
OTHER INCOME (EXPENSE), NET (2,057) (1,635) (c) (3,692)
-------- --------- --------
GROSS INCOME 53,425 (5,192) 48,233
INTEREST CHARGES 31,390 (2,730) (c) 28,660
-------- --------- --------
INCOME FROM CONTINUING OPERATIONS 22,035 (2,462) 19,573
DISCONTINUED OPERATIONS (12,388) - (12,388)
-------- --------- --------
NET INCOME 9,647 (2,462) 7,185
DIVIDENDS ON PREFERRED STOCK 101 - 101
-------- --------- --------
EARNINGS ON COMMON STOCK $ 9,546 $ (2,462) $ 7,084
======== ========= ========
EARNINGS PER COMMON SHARE
From continuing operations $ .95 $ (.11) $ .84
From discontinued operations $ (.53) $ - $ (.53)
Earnings per common share $ .42 $ (.11) $ .31
AVERAGE COMMON SHARES OUTSTANDING 22,996 22,996 22,996
See Accompanying Notes to Pro Forma Financial Information
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WASHINGTON ENERGY COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
PERIOD ENDED MARCH 31, 1994
(in thousands, except per share data)
WECO Merger WECO
Historical Adjustments PRO FORMA
OPERATING REVENUES
Sale of natural gas $269,079 $ - $269,079
Other operating revenues 43,798 (17,556) (c) 26,242
-------- -------- --------
312,877 (17,556) 295,321
OPERATING EXPENSES
Related to natural gas revenue 240,811 - 240,811
Other operating expenses 37,789 (13,669) (c) 24,120
-------- -------- --------
278,600 (13,669) 264,931
OPERATING INCOME 34,277 (3,887) 30,390
INVESTMENT INCOME - 1,305 (d) 1,305
OTHER INCOME (EXPENSE), NET (784) (859) (c) (1,643)
-------- -------- --------
GROSS INCOME 33,493 (3,441) 30,052
INTEREST CHARGES 17,737 (1,059) (c) 16,678
-------- -------- --------
NET INCOME 15,756 (2,382) 13,373
DIVIDENDS ON PREFERRED STOCK 682 - 682
-------- -------- --------
EARNINGS ON COMMON STOCK $ 15,074 $ (2,382) $ 12,691
======== ======== ========
EARNINGS PER COMMON SHARE $ .64 $ (.10) $ .54
AVERAGE COMMON SHARES OUTSTANDING 23,387 23,387 23,387
See Accompanying Notes to Pro Forma Financial Information
</TABLE>
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NOTES TO PRO FORMA FINANCIAL INFORMATION
On May 2, 1994 Washington Energy Company closed the merger of Washington
Energy Resources Company into COG Acquisition Company, a wholly-owned
subsidiary of Cabot Oil & Gas Corporation. Washington Energy received
2,133,000 shares of Cabot class A common stock, 1,134,000 shares of Cabot 6%
convertible preferred stock ("Preferred Stock"), stated value $50, and $63.7
million in cash in exchange for all of the outstanding capital stock of WERCO.
The shares of Cabot Preferred Stock is convertible to 1,972,174 shares of
Cabot class A common stock making Washington Energy the beneficial owner of
4,105,174 shares in total, representing 16.6% of the class A common stock of
Cabot on a diluted basis after assuming conversion of the Preferred Stock into
Cabot class A common stock at the date of this transaction. Washington Energy
also received the right to two seats on Cabot's Board of Directors.
Prior to the consummation of this transaction there were no material
relationships between Washington Energy and Cabot.
The proforma adjustments for the above transaction are as follows (in
thousands):
(a) To record the merger transaction at March 31, 1994:
Property, plant and equipment $(240,923)
Accumulated provision for depreciation 79,173
Current assets 38,388
Investment in Cabot 98,545
Other assets and deferred charges (3,686)
Retained earnings-loss on merger 27,860
Notes payable and commercial paper 459
Other current liabilities 17,002
Other liabilities and deferred (16,818)
(b) To record disbursement of Washington Energy Company funds to redeem
commercial paper:
Cash $ (63,700)
Commercial Paper 63,700
(c) To remove WERCO income items from Washington Energy's income
statement:
9/30/93 3/31/94
Decrease revenues $ (31,619) $ (17,556)
Decrease operating expenses (24,155) (13,669)
Decrease other income (1,635) (859)
Decrease interest expense (2,730) (1,059)
WERCO's revenue and operating expenses have been adjusted to remove
revenue and expenses related to the marketing, pipeline and gas
storage contractual arrangements retained by Washington Energy
Company after the merger.
Interest expense was adjusted to pro forma the decrease in expense
related to the $63.7 million reduction in short-term debt per
adjustment (b) above calculated using a weighted average interest
rate of 4.2%.
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(d) To record Washington Energy's share of Cabot Net Income (adjusted to
include WERCO) for the year ended September 30, 1993 and six months
ended March 31, 1994 and to record preferred dividend income.
9/30/93 3/31/94
Cabot net income $ 4,131 $ 4,682
WERCO net income 4,625 981
------- -------
Total net income 8,756 5,663
Less preferred dividends 3,402 851
------- -------
Earnings avaiable
to common $ 5,354 $ 4,812
======= =======
Washington
Energy 9.4% share $ 505 $ 454
Preferred dividends 3,402 851
------- -------
Total $ 3,907 $ 1,305
======= =======
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See Exhibits Index at page 10.
(b) Reports on Form 8-K.
A report on Form 8-K was filed by Washington Energy and Washington
Natural on February 23, 1994, regarding a shareholder class-action suit filed
against the Company.
A report on Form 8-K was filed by Washington Energy and Washington
Natural on March 1, 1994, regarding the signing of a merger agreement between
Cabot Oil & Gas Corporation and Washington Energy Resources Company, regarding
the Company's board of directors approval of the merger and election of
William P. Vititoe as chairman and chief executive officer, and regarding the
resignation of Robert R. Golliver, as President and Chief Operating Officer.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WASHINGTON ENERGY COMPANY
By /s/ William P. Vititoe
William P. Vititoe
Chairman, President and Chief Executive Officer
By /s/ James P. Torgerson
James P. Torgerson
Senior Vice President - Finance, Planning and
Development and Principal Financial Officer
WASHINGTON NATURAL GAS COMPANY
By /s/ William P. Vititoe
William P. Vititoe
Chairman, President and Chief Executive Officer
By /s/ James P. Torgerson
James P. Torgerson
Senior Vice President - Finance, Planning and
Development and Principal Financial Officer
July 15, 1994
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EXHIBIT INDEX
The following exhibits have heretofore been filed with the Commission and are
incorporated herein by reference.
10-A Agreement of Merger by and among Cabot Oil & Gas Corporation, COG
Acquisition Company, Washington Energy Resources Company and Washington Energy
Company, dated February 25, 1994, (incorporated by reference from Exhibits to
Washington Energy Company Schedule 13D, for event dated May 2, 1994).
10-B Amendment No. 1 to Agreement of Merger by and among Cabot Oil & Gas
Corporation, COG Acquisition Company, Washington Energy Resources Company and
Washington Energy Company, dated May 2, 1994 (incorporated by reference from
Exhibits to Washington Energy Company Schedule 13D, for event dated May 2,
1994).
10-C Registration Rights Agreement by and between Cabot Oil & Gas Corporation
and Washington Energy Company, dated May 2, 1994 (incorporated by reference
from Exhibits to Washington Energy Company Schedule 13D, for event dated May
2, 1994).
10-D Standstill and Right of First Refusal Agreement by and among Cabot Oil &
Gas Corporation, COG Acquisition Company, and Washington Energy Company, dated
February 25, 1994 (incorporated by reference from Exhibits to Washington
Energy Company Schedule 13D, for event dated May 2, 1994).
10-E Cabot Oil & Gas Corporation financial statements for the year ended
December 31, 1993 (incorporated herein by reference to Cabot Oil & Gas
Corporation Form 10-K for the year ended December 31, 1993, File No. 1-10447).
10-F Cabot Oil & Gas Corporation financial statements for the quarter ended
March 31, 1994 (incorporated herein by reference to Cabot Oil & Gas
Corporation Form 10-Q for the quarter ended March 31, 1994, File No. 1-10447).
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