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_________________________________________________________________
_____________
_________________________________________________________________
_____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report November 8, 1994
I.R.S.
Commission
Employer
File State of
Identification
Number Registrant Incorporation
Number
001-11227 Washington Energy Company Washington
91-1005304
001-11271 Washington Natural Gas Company Washington
91-1005303
815 Mercer Street, Seattle, Washington 98111
(Address of Registrant's principal executive offices)
Registrant's telephone number, including area code: (206)
622-6767
_________________________________________________________________
_____________
_________________________________________________________________
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Item 5. Other Events
On October 26, 1994, Washington Energy Company made the following
press release:
ONE-TIME CHARGES ADD TO FISCAL-YEAR LOSS
SEATTLE -- Washington Energy Company (NYSE: WEG) posted a
fiscal 1994 loss on common stock of $46.3 million, or $1.97 per
share, including previously-announced major charges for efforts
to refocus the business, Chairman, CEO and President William P.
Vititoe announced today.
Excluding the major charges, the company recorded a loss of
$3.8 million, or 16 cents per share, for the fiscal year ended
Sept. 30.
"The one-time charges significantly increased our loss, but
they set in motion essential strategies to rebuild our long-term
profitability," Vititoe said. "The major factors in the remain-
der of our loss were poor financial performance by our utility,
primarily as a result of lower rates and warmer weather, and
reduced operating income from merchandise sales and oil and gas
exploration and production."
Earnings at the utility subsidiary, Washington Natural Gas,
were down approximately $7 million as a result of rate changes
during the year. "The $15.4 million rate decrease that went into
effect last October was in place throughout the heating season,"
Vititoe said. "We received a rate increase of $19 million in
June, but it came too late to have a significant impact on the
year."
Utility gas sales suffered because weather was 10 percent
warmer than normal during the fiscal year, lowering earnings by
approximately $5 million.
Charges recorded to launch key strategies
Most of the company's fiscal-year loss resulted from charges
taken to implement key management strategies.
"Our fundamental strategy is to refocus on our utility,
which remains our key asset," Vititoe said. "In fiscal '94, we
added 21,500 utility customers, a growth rate of 5%, which is
much higher than the national average.
"To fully develop this asset, we reduced our diversified
activities, merging our exploration and production subsidiary
with Cabot Oil & Gas Corp. and divesting our Unisyn biowaste
technology operation. We also restructured our utility work
force and reduced it by 12 percent, to improve efficiency and
decrease ongoing operating costs."
In carrying out these strategies, the company recorded
charges totalling $42.5 million, or $1.81 per share. Of that,
$40.9 million was recorded in the third quarter. In the fourth
quarter, the company recorded additional charges of $1.6 million,
$600,000 of which relates to the final disposition of the Unisyn
operation (reported under "discontinued operations").
Additional factors affecting fiscal-year results
Other factors contributing to the company's 1994 financial
loss included:
- - $8.1 million in higher depreciation, interest and general
taxes.
- - a decline of $8 million in operating income from merchandise
sales, which resulted from the re-establishment of those
activities in a separate subsidiary.
- - an overall decline of $6.7 million (before interest and
income taxes) from oil and gas exploration and production.
(These activities contributed $150,000 in fiscal '94, prior
to their May 1 merger with Cabot Oil & Gas, and $850,000
following the merger -- all of which is reported as "other
income.")
- - a $1.3 million increase in preferred dividends following the
issuance of additional shares of Washington Natural Gas
preferred stock, and a one-time premium of $673,000 paid on
the early redemption of higher-dividend gas utility pre-
ferred stock.
Quarterly results
Continuing operations showed a loss of $11.9 million, or 50
cents per share, for the quarter ended Sept. 30, 1994, compared
with a loss of $7.4 million, or 32 cents per share, during the
corresponding quarter one year ago, Vititoe said.
Lower gas sales resulted in a $3.9 million reduction in
utility margin (pre-tax), primarily because of weather that was
74 percent warmer than in the same quarter one year ago, and 68
percent warmer than normal.
In addition, quarterly results were affected by the same
factors impacting fiscal-year earnings, as discussed above.
As a provider of heating fuel, the company normally posts an
operating loss in its fourth, or summer, quarter.
Dividend unchanged
Vititoe re-emphasized his commitment not to recommend to the
Board of Directors any change in the current annual dividend at
this time. "The strategies we are implementing should support
the dividend over the long term," Vititoe said.
<TABLE>
WASHINGTON ENERGY COMPANY
SUMMARY INCOME STATEMENT AND OTHER FINANCIAL DATA
(Dollars in thousands, except per share amounts)
3 Months Ended 12 Months Ended
September 30(1)(3) September 30 (3)
- ----------------------- ------------------------
1994 1993 1994 1993
Washington Energy Company
- ---------- ---------- ----------- ----------
<S> <C>
<C> <C> <C>
Operating Revenues
Utility sales of gas $
47,821 $ 52,301 $ 387,002 $ 360,141
Merchandise and other
6,966 20,398 45,023 78,897
Oil and natural gas production
---(2) 9,767 ---(2) 31,354
Total operating revenues $
54,787 $ 82,466 $ 432,025 $ 470,392
Operating income (loss) $
(2,217) $ 922 $ 25,730 $ 55,482
Preferred dividend requirement - Washington Natural Gas $
(1,118) $ (652) $ (3,970) $ (2,612
Income (loss) from continuing operations $
(11,890) $ (7,415) $ (44,847) $ 22,035
Discontinued operations, net of income taxes $
(596) $ (10,381) $ (799) $ (12,388
Net income (loss) $
(12,486) $ (17,796) $ (45,646) $ 9,647
Preferred dividends
--- 25 9 101
Premium - preferred redemption
--- --- 673 ---
Earnings (loss) on common stock $
(12,486) $ (17,821) $ (46,328) $ 9,546
Earnings (loss) per common share
(.53) (.77) (1.97) .42
Dividends per common share
.25 .35 1.00 1.40
Average common shares outstanding in thousands
23,637 23,229 23,486 22,996
Book value per share
10.83 13.85
Capitalization and Short-Term Debt
Common
$ 256,799 $ 322,931
Preferred
90,000 17,300
Long-term debt
290,200 353,400
Current Portion LT Debt
60,140 5,528
Commercial paper and notes payable
125,182 145,498
Total capitalization and short-term debt
$ 822,321 $ 844,657
Net plant
$ 765,642 $ 851,493
Operating Income (Loss) by Business Segment
Before Income Taxes
Natural gas distribution $
(8,153) $ (3,788) $ 19,064 $ 52,505
Retail merchandise and services
73 1,977 (106) 7,945
Oil and natural gas
---(2) 1,923 ---(2) 7,700
Other
188 (2,686) (891) (2,936
Total $
(7,892) $ (2,574) $ 18,067 $ 65,214
(1) Results for the quarter are not indicative of what can be
expected for a full year of operations because operating
revenues and earnings are greatly affected by variations in
weather conditions.
(2) Due to the merger of the exploration and production subsidiary
with Cabot Oil & Gas Corp. in May, 1994, year-to-date
revenues and expenses have been reclassified to other income
consistent with the presentation of earnings from
ownership of Cabot stock.
(3) Prior quarters have been restated to conform to current
presentation.
WASHINGTON ENERGY COMPANY
SUMMARY INCOME STATEMENT AND OTHER FINANCIAL DATA (Continued)
(Dollars in thousands)
3 Months Ended 12 Months Ended
September 30 (1) September 30
- ----------------------- -----------------------
1994 1993 1994 1993
Washington Natural Gas Company
- ---------- ---------- ---------- ----------
Operating Revenues
Firm $
36,975 $ 42,333 $ 329,671 $ 309,585
Interruptible
10,847 9,968 57,332 50,556
Rentals and other
2,340 1,938 9,405 7,712
Total operating revenues $
50,162 $ 54,239 $ 396,408 $ 367,853
Gross utility margin - gas revenues less gas purchases $
22,943 $ 26,811 $ 163,501 $ 178,984
Net income (loss) $
(9,653) $ (5,711) $ (8,243) $ 21,771
Preferred dividends $
1,118 $ 677 $ 3,979 $ 2,720
Utility gas sales (000's of therms)
Firm
63,754 72,439 628,284 636,149
Interruptible
49,388 52,913 251,319 265,232
Total sales of gas
113,142 125,352 879,603 901,381
Customers served (average)
Firm
448,670 427,798 443,578 422,086
Interruptible
1,023 1,043 1,045 1,056
Total customers
449,693 428,841 444,623 423,142
Annual increase in customers
21,481 16,921
Weather % colder (+) or warmer (-) than normal (in terms
of degree days)
-68.1% 16.3% -9.6% -1.5%
Degree days
74 281 4,289 4,702
(1) Results for the quarter are not indicative of what can be
expected for a full year of operations because operating
revenues and earnings are greatly affected by variations in
weather conditions.
</TABLE>
Signatures
Pursuant to the Requirements of the Securities Exchange Act of
1934, the
Registrant has duly caused this report to be signed on its behalf
by the
undersigned hereunto duly authorized.
WASHINGTON ENERGY COMPANY
by /S/ James P. Torgerson
Senior Vice President - Finance,
Planning and Development and
Chief Financial Officer
WASHINGTON NATURAL GAS COMPANY
by /S/ James P. Torgerson
Senior Vice President - Finance,
Planning and Development and
Chief Financial Officer
November 8, 1994
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