__________________________________________________________________________
__________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 2
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
-------------------------------------- --------
815 Mercer Street, Seattle, Washington 98109
Registrants' Telephone Number, Including Area Code
---------------------------------------------------
(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 Amendment No. 2 to 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 5. Other Information.............................................. 3
Signatures ............................................................ 9
2
PART II - OTHER INFORMATION
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
on May 2, 1994 of Washington Energy Resources Company ( Resources ),
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.
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 Resources/Cabot merger 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 together with
the notes following such information and with the historical financial
statements of Washington Energy.
3
<TABLE>
WASHINGTON ENERGY COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1994
(in thousands)
Company Merger Company
Historical Adjustments Pro Forma
ASSETS
<S> <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
- 4 -
WASHINGTON ENERGY COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FISCAL YEAR ENDED SEPTEMBER 30, 1993
(in thousands, except per share data)
Company Merger Company
Historical Adjustments Pro Forma
<S> <C> <C> <C>
OPERATING REVENUES
Sales of natural gas $ 360,141 $ - $ 360,141
Other operating revenues 110,251 (31,619) (c) 78,632
--------- --------- ---------
Total operating revenues 470,392 (31,619) 438,773
OPERATING EXPENSES
Related to natural gas revenue 381,261 - 381,261
Other operating expenses 33,649 (24,487) (c) 9,162
--------- -------- --------
Total operating expenses 414,910 (24,487) 390,423
--------- -------- --------
OPERATING INCOME 55,482 (7,132) 48,350
INVESTMENT INCOME - 2,972 (d) 2,972
OTHER INCOME (EXPENSE), NET (2,057) (1,063) (c) (3,120)
-------- -------- --------
GROSS INCOME 53,425 (5,223) 48,202
INTEREST CHARGES 31,390 (2,730) (c) 28,660
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS 22,035 (2,493) 19,542
DISCONTINUED OPERATIONS (12,388) - (12,388)
-------- -------- --------
NET INCOME 9,647 (2,493) 7,154
DIVIDENDS ON PREFERRED STOCK 101 - 101
-------- -------- --------
EARNINGS ON COMMON STOCK $ 9,546 $ (2,493) $ 7,053
======== ======== ========
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
- 5 -
WASHINGTON ENERGY COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
PERIOD ENDED MARCH 31, 1994
(in thousands, except per share data)
Company Merger Company
Historical Adjustments Pro Forma
<S> <C> <C> <C>
OPERATING REVENUES
Sale of natural gas $269,079 $ - $269,079
Other operating revenues 43,798 (19,496) (c) 24,302
-------- -------- --------
Total operating revenues 312,877 (19,496) 293,381
OPERATING EXPENSES
Related to natural gas revenue 240,811 - 240,811
Other operating expenses 37,789 (15,948) (c) 21,841
-------- -------- --------
Total operating expenses 278,600 (15,948) 262,652
OPERATING INCOME 34,277 (3,548) 30,729
INVESTMENT INCOME - 1,766 (d) 1,766
OTHER INCOME (EXPENSE), NET (784) (578) (c) (1,362)
-------- -------- --------
GROSS INCOME 33,493 (2,360) 31,133
INTEREST CHARGES 17,737 (1,728) (c) 16,009
-------- -------- --------
NET INCOME 15,756 ( 632) 15,124
DIVIDENDS ON PREFERRED STOCK 682 - 682
-------- -------- --------
EARNINGS ON COMMON STOCK $ 15,074 $ ( 632) $ 14,442
======== ======== ========
EARNINGS PER COMMON SHARE $ .64 $ (.02) $ .62
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 completed the merger of Resources into
COG Acquisition Company, a wholly-owned subsidiary of Cabot Oil & Gas
Corporation ("Cabot"). Washington Energy received 2,133,000 shares of Cabot
Class A common stock, 1,134,000 shares of Cabot 6% convertible voting
preferred stock ("Preferred Stock"), stated value $50, and $63.7 million cash
in exchange for all the outstanding capital stock of Resources. The shares of
Cabot Preferred Stock are 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, assuming conversion of the preferred stock owned by Washington
Energy. As part of the transaction, Cabot increased its Board of Directors
from 10 to 12 and agreed to appoint two directors nominated by Washington
Energy to fill the new positions.
Prior to the consummation of this transaction there were no material
relationships between Washington Energy and Cabot.
The pro forma adjustments for the above transaction are as follows (in
thousands):
<TABLE>
(a) To record the merger transaction at March 31, 1994:
<S> <C>
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 funds to redeem
commercial paper:
Cash $ (63,700)
Commercial Paper 63,700
(c) To remove Resources' income items from Washington Energy's income
statement:
9/30/93 3/31/94
<S> <C> <C>
Decrease revenues $ (31,619) $ (19,496)
Decrease operating expenses (24,487) (15,948)
Decrease other income (1,063) (578)
Decrease interest expense (2,730) (1,728)
Resources' 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
after the merger.
Interest expense was adjusted to reflect the assumed 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%.
- 7 -
(d) To record Washington Energy's share of Cabot Net Income (adjusted to
include Resources) 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
<S> <C> <C>
Washington
Energy 9.4% share,
net of income taxes $ (73) $ 244
Preferred dividends,
net of income taxes 3,045 1,522
------- -------
Total $ 2,972 $ 1,766
======= =======
</TABLE>
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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
August 17, 1994
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