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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report February 2, 1995
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 January 26, 1995, Washington Energy Company made the following
press release:
QUARTERLY EARNINGS UP 74 PERCENT
SEATTLE -- Washington Energy Company's quarterly earnings rose 74
percent in the period that ended Dec. 31, 1994, compared to the same
quarter one year ago, Chairman, CEO and President William P. Vititoe
announced today.
Earnings for the quarter were $13.3 million, or 56 cents per share.
One year ago, first-quarter earnings were $7.6 million, and earnings
per share were 33 cents.
Vititoe attributed the improvement primarily to the following
factors: 1) a rate increase granted in June 1994 for the company's
utility subsidiary, Washington Natural Gas Company;
2) colder weather; 3) continuing growth in the number of utility
customers; and 4) cost savings resulting from the company's
restructuring and work-force reduction last summer.
"The improved quarterly results, we believe, indicate that
Washington Energy Company is indeed on the path toward a turn-around,"
Vititoe said. "We have a long way to go, certainly, and our utility
will require further rate relief. But the strategies we have put in
place are beginning to have an impact."
The company posted a net loss of $40.7 million, or $1.73 per share,
for the 12 months ending Dec. 31. Vititoe noted that the 12-month
results suffered in part because the first six months of operations
were without benefit of the June 1994 rate increase. They also
include $42.6 million (after tax) in previously announced one-time
charges.
Analysis of quarterly results
Utility gross margin was up $11 million for the quarter, compared
to the same period last year.
The utility rate increase implemented last June improved the gross
margin on gas sales by approximately $6 million, compared to the first
quarter last year.
"The improved margin will benefit us into the future. However,
we're not yet where we need to be in order to earn a competitive rate
of return," Vititoe said. "We will address that concern in a general
rate case, which the utility plans to file in March 1995."
The balance of the increase in utility gross margin reflects colder
weather and customer growth, which increased gas sales volumes.
Weather during the quarter was 3 percent colder than in the same
period last year, when weather was near normal. The utility served
21,400 more customers during the quarter, an increase of 5 percent
over the comparable period one year ago.
Utility operating and maintenance costs were down 11 percent for
the quarter, primarily as a result of the previously announced
restructuring and work-force reduction. The company employed 12
percent fewer people during the quarter, compared to the same period
last year.
Analysis of 12-month results
Twelve-month results suffered as a result of lower utility rates
that were in effect from October 1993 to June 1994, and also because
of the previously announced one-time charges.
"The charges were taken primarily to launch our fundamental
strategy, which is to build value for shareowners by refocusing on our
core business, Washington Natural Gas," Vititoe said. "This company
remains one of the fastest growing gas utilities in the nation. The
strategies we have in place are designed to restore its earnings
capability and bring the value of its growth to the bottom line."
Washington Natural Gas is the largest natural gas utility in the
Pacific Northwest. Its service territory, in western Washington
state, includes the greater Seattle area, the state capital, and the
majority of the state's population and commerce.
Common stock in the parent company, Washington Energy, trades on
the New York Stock Exchange under the symbol, "WEG."
###
<TABLE>
WASHINGTON ENERGY COMPANY
SUMMARY INCOME STATEMENT AND OTHER FINANCIAL DATA
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
3 Months Ended 12 Months Ended
December 31 (1) December 31
1994 1993 1994 1993
Washington Energy Company
Operating Revenues
Regulated utility sales $149,747 $131,970 $414,184 $388,962
Merchandise, conservation
products, and other 6,498 14,473 27,643 67,081
Oil and natural gas
production ---(2) ---(2) ---(2) 24,668(2)
Total operating revenues $156,245 $146,443 $441,827 $480,711
Operating income $ 24,230 $ 17,612 $ 32,348 $ 50,279
Loss on merger of oil and
gas subsidiary $(30,015)
Preferred dividend
requirement - Washington
Natural Gas $ (1,861) $ (617) $ (5,214) $ (2,575)
Income (loss) from
continuing operations $ 13,255 $ 8,357 $(39,949) $ 16,098
Discontinued operations,
net of income taxes $ $ (47) $ (752) $(11,722)
Net income (loss) $ 13,255 $ 8,310 $(40,701) $ 4,376
Preferred dividends --- 9 --- 84
Premium - preferred
redemption --- 673 --- 673
Earnings (loss) on
common stock $ 13,255 $ 7,628 $(40,701) $ 3,619
Earnings (loss) per
common share .56 .33 (1.73) .16
Dividends per
common share .25 .25 1.00 1.30
Average common shares
outstanding
(in thousands) 23,737 23,332 23,587 23,183
Book value per share 10.89 13.63
Capitalization and
Short-Term Debt
Common $259,606 $319,228
Preferred 90,000 60,000
Long-term debt 290,060 353,260
Current portion
LT Debt 60,140 280
Commercial paper
and notes payable 121,516 123,638
Total capitalization
and short-term debt $821,322 $856,406
Net plant $789,550 $746,767
Operating Income (Loss)
by Business Segment
Before Income Taxes
Regulated utility sales $ 31,950 $ 21,330 $ 29,684 $ 48,465
Merchandise, conservation
products, and other (104) 1,126 (1,336) 6,974
Oil and natural gas ---(2) ---(2) ---(2) 5,771
Other (366) (211) (1,046) (3,045)
Total $ 31,480 $ 22,245 $ 27,302 $ 58,165
</TABLE>
(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) The 1994 operating revenues and expenses have been reclassified to
other income (expense) due to the merger of the exploration and
production subsidiary with Cabot Oil & Gas Corp. in May, 1994,
consistent with the presentation of earnings from ownership of
Cabot stock.
<TABLE>
WASHINGTON ENERGY COMPANY
SUMMARY INCOME STATEMENT AND OTHER FINANCIAL DATA (Continued)
(Dollars in thousands)
<S> <C> <C> <C> <C>
3 Months Ended 12 Months Ended
December 31 (1)(3) December 31 (3)
1994 1993 1994 1993
Washington Natural Gas Company
Operating Revenues
Firm gas sales $128,912 $110,820 $345,307 $323,181
Interruptible gas sales 15,187 16,416 49,989 49,256
Transportation 3,062 2,403 9,228 8,442
Rentals and other 2,586 2,331 9,660 8,083
Total operating revenues $149,747 $131,970 $414,184 $388,962
Gross utility margin -
Gas revenues less gas
purchases $ 62,274 $ 51,915 $165,291 $168,854
Transportation margin 3,062 2,403 9,228 8,442
Total margin $ 65,336 $ 54,318 $174,519 $177,296
Net income (loss) $ 16,142 $ 9,207 $ (1,308) $ 17,351
Gas volumes
(000's of therms)
Firm gas sales 234,883 209,692 633,728 621,991
Interruptible gas sales 48,866 44,921 152,586 137,862
Transportation 34,280 35,711 120,994 150,776
Total gas volumes 318,029 290,324 907,308 910,629
Customers served (average)
Firm gas sales 457,461 435,829 448,986 427,620
Interruptible gas sales 1,041 1,045 1,044 1,051
Transportation 50 38 40 47
Total customers 458,552 436,912 450,070 428,718
Annual increase
in customers 21,352 22,597
Weather % colder (+)
or warmer (-) than normal
(in terms of degree days) 3% 0% -8% -2%
Degree days 1,753 1,698 4,344 4,692
</TABLE>
(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.
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
February 2, 1995
