<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended September 30, 1998
Commission File No. 1-7228
THE WASHINGTON CORPORATION
(Exact Name of Small Business Issuer as Specified in Its Charter)
<TABLE>
<CAPTION>
Maryland 52-1157845
<S> <C>
(State of Incorporation) (I.R.S. Employer Identification Number)
</TABLE>
4650 East-West Highway, Bethesda, Maryland
20814
(Address of principal executive office)
(301) 657-3640
(Issuer's telephone number)
Indicate by check mark whether the issuer (1) 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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each of the registrant's classes of common
stock as of September 30, 1998:
(1) 1,640,327 shares of Class A Common Stock
(2) 21,476 shares of Class B Common Stock
(3) 45,119 shares of Class C Common Stock
EXHIBITS INDEX IS ON PAGE 13 .
------
<PAGE>
THE WASHINGTON CORPORATION
INDEX
PART I FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets--
September 30, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Operations--
Three Months Ended September 30, 1998 and 1997 and 4
Nine Months Ended September 30, 1998 and 1997
Condensed Consolidated Statements of Cash Flow--
Nine Months Ended September 30, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-12
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
2
<PAGE>
PART I. FINANCIAL STATEMENTS
ITEM I: FINANCIAL STATEMENTS
THE WASHINGTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
<TABLE>
<CAPTION>
September 30
1998 December 31,
(unaudited) 1997
------------ ------------
<S> <C> <C>
ASSETS
Real estate and development properties $ 1,610,342 $ 2,110,342
Operating property and equipment, net 17,575,211 18,510,957
Cash and short-term investments 325,441 222,821
Escrow deposits 749,384 569,348
Land purchase leaseback 400,000 400,000
Other assets 383,924 354,989
Equity in and advances to unconsolidated partnerships 5 5
------------ ------------
Total Assets $ 21,044,307 $ 22,168,462
------------ ------------
------------ ------------
LIABILITIES
Note payable - Arlington Square $ 20,600,000 $ 20,600,000
Other notes and loans payable 880,000 898,009
Interest payable 352,357 259,292
Accounts payable and other liabilities 230,501 65,078
------------ ------------
Total Liabilities 22,062,858 21,822,379
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; shares issued
Class A - 1,640,327 shares 16,403 16,403
Class B - 21,476 shares 215 215
Class C - 45,119 shares 451 451
Additional paid-in capital 2,804,821 2,804,821
Retained earnings (deficit) (3,840,444) (2,475,807)
------------ ------------
Total Stockholders' Equity (1,018,551) 346,083
------------ ------------
Total Liabilities and Stockholders' Equity $ 21,044,307 $ 22,168,462
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
3
<PAGE>
THE WASHINGTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES
Operating property rental income $ 808,783 $ 782,000 $ 2,389,178 $2,365,159
Rent from land purchase leaseback 27,789 21,358 84,068 68,777
Other income 163,661 178,334 386,204 241,255
Equity interest in net income from partnership 0 0 0 25,650
Interest income 2,077 3,031 6,254 3,046
Net (loss) gain on sale of assets 0 0 0 0
---------- ---------- ----------- -----------
1,002,310 984,723 2,865,704 2,703,887
---------- ---------- ----------- -----------
EXPENSES
Provision for estimated losses on asset value adjustments 500,000 0 500,000 0
Interest expense 590,704 372,871 1,635,508 1,113,360
Operating property expenses 170,817 195,054 761,333 557,269
General and administrative expenses 65,480 29,467 220,958 88,594
Other expenses 250,062 251,055 313,494 488,573
---------- ---------- ----------- -----------
1,577,063 848,447 3,431,293 2,247,796
---------- ---------- ----------- -----------
Net income before depreciation and amortization (574,753) 136,276 (565,589) 456,091
Depreciation and amortization 218,891 235,070 799,045 702,217
---------- ---------- ----------- -----------
Net loss (793,644) (98,794) (1,364,634) (246,126)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Earnings (loss) per share:
Net loss before depreciation and amortization ($0.34) $0.08 ($0.33) $0.28
Dpreciation and Amortization $0.13 $0.14 $0.49 $0.43
---------- ---------- ----------- -----------
Net Loss ($0.47) ($0.06) ($0.82) ($0.15)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
4
<PAGE>
THE WASHINGTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW (unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($1,364,634) ($ 246,126)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Provision for estimated losses on asset value adjustments 500,000 0
Depreciation and amortization 799,045 566,173
Amortization of deferred rental concessions 143,157 136,044
Net (gain) loss on sale of real estate assets 0 0
Distributions from partnerships 0 0
Increase (Decrease) in interest payable 93,065 52,224
Decrease (increase) in other assets (28,935) (158,183)
Decrease in accounts payable and other liabilities 165,424 154,999
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 307,122 505,131
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in operating property and equipment, net (6,457) 65,069
(Increase) decrease in esrow deposits (180,036) (239,823)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES: (186,493) (174,754)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes payable -- 20,000
Principal payments on notes payable (18,009) (411,090)
----------- -----------
NET CASH USED IN FINANCING ACTIVITIES: (18,009) (391,090)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 102,620 (60,713)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 222,821 140,918
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 325,441 $ 80,205
----------- -----------
----------- -----------
CASH PAID DURING THE PERIOD FOR INTEREST $ 1,568,544 $ 1,048,120
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
5
<PAGE>
THE WASHINGTON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
The accompanying condensed consolidated financial statements have been
prepared by The Washington Corporation ("TWC" and collectively with its
affiliates that are over 50% owned by TWC and consolidated for financial
reporting purposes, the "Company") without audit. Certain information and
footnote disclosures normally included in financial statements presented in
accordance with generally accepted accounting principles have been condensed or
omitted from the accompanying statements. The Company believes the disclosures
made are adequate to make the information presented not misleading when read in
conjunction with the financial statements and notes thereto included in the
Company's Report on Form 10-KSB for the year ended December 31, 1997.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments necessary to present
fairly the financial position of the Company and subsidiaries as of September
30, 1998, and the results of operations for the nine months ended September 30,
1998 and 1997 and statements of cash flow for the nine months ended September
30, 1998 and 1997.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Material Changes in Financial Position
Total assets decreased by $1,124,000 from $22,168,000 at December 31, 1997
to $21,044,000 at September 30, 1998. Such decrease was primarily the result of
decreases in operating property and equipment, offset, in part, by an increase
in cash and short term investments and escrow deposits.
There was a decrease in real estate and development properties of $500,000
between December 31, 1997 and September 30, 1998. This change is attributable to
a provision for estimated losses on the Timberlake property in accordance with
financial accounting standard No. 121 impairment of an asset.
Operating property and equipment decreased by $936,000 from $18,511,000 at
December 31, 1997 to $17,575,000 at September 30, 1998. Such decrease was the
result of depreciation and amortization relating to the Arlington Square Project
(as defined below).
Cash and short-term investments increased by $102,000 from $223,000 at
December 31, 1997 to $325,000 at September 30, 1998. Such increase was primarily
the result of an improvement in the payment terms on the note on the Arlington
Square Project, which resulted from the refinancing of the property in late
1997.
6
<PAGE>
Escrow deposits increased by $180,000 from $569,000 at December 31, 1997 to
$749,000 at September 30, 1998. Such increase was the result of periodic
payments made to the tenant improvement reserve on the Arlington Square Project.
Other assets increased by $29,000 from $355,000 at December 31, 1997 to
$384,000 at September 30, 1998. Such increase was the result of an increase in
rent receivable on the Arlington Square Project.
Total liabilities increased by $241,000 from $21,822,000 at December 31,
1997 to $22,063,000 at September 30, 1998. Such increase was primarily the
result of increases in interest payable and accounts payable and other
liabilities, offset, in part, by a decrease in other notes and loans payable.
Note payable-Arlington Square did not change.
Interest payable increased by $52,000 from $259,000 at December 31, 1997 to
$352,000 at September 30, 1998. Such increase was the result of an increase in
interest accrued on the Arlington Square note and land notes.
Accounts payable and other liabilities increased by $166,000 from $65,000
at December 31, 1997 to $231,000 at September 30, 1998. Such increase was the
result of an increase in the accrued interest for Timberlake and the accrued
contingent interest for payment of the Allied Participation Interest.
The Company's stockholders equity decreased by $1,365,000 from $346,000 at
December 31, 1997 to $(1,019,000) at September 30, 1998. Such decrease was the
result of recorded net loss of $1,365,000 for the nine months ended September
30, 1998.
Results of Operations
Nine Months Ended September 30, 1998
Revenues increased to $2,865,000 for the nine months ended September 30,
1998 ("First Nine Months 1998") from $2,703,000 for the nine months ended
September 30, 1997 ("First Nine Months 1997"), an increase of $162,000. Such
increase was primarily the result of an increase in other income, offset, in
part, by a decrease in equity interest in net income from partnership.
Operating property rental income increased to $2,389,000 for First Nine
Months 1998 compared to $2,365,000 for First Nine Months 1997, an increase of
$24,000. This increase was due to an annual rent increase relating to the
Arlington Square Project.
Other income increased to $386,000 for First Nine Months 1998 compared to
$241,000
7
<PAGE>
for First Nine Months 1997, an increase of $145,000. Such increase is a
direct result of the volume of tenant improvement projects undertaken by the
Company for the Arlington Square Project. Tenant improvement costs related to
these improvements are included in other operating expenses.
Equity interest in net income from partnership investments decreased from
$26,000 in First Nine Months 1997 to $0 in First Nine Months 1998. This decrease
is the result of no income from the partnership, which was sold in 1997.
Total operating expenses increased to $3,431,000 for First Nine Months 1998
compared to $2,247,000 for First Nine Months 1997, an increase of $1,184,000.
This increase was due to an increase in interest expense, operating property
expenses, and general and administrative expenses, partially offset by a
decrease in other expenses.
Interest expense increased by $522,000 to $1,635,000 in First Nine Months
1998 from $1,113,000 in First Nine Months 1997. This increase was primarily due
to an interest expense relating to the Arlington Square Project. Since the note
secured by the Arlington Square Project matured, the debt was refinanced in
November 1997 (as described below). The new mortgage note resulted in a larger
note payable and a higher interest rate.
Operating property expenses increased by $204,000 from $557,000 in First
Nine Months 1997 to $761,000 in First Nine Months 1998. This increase was
related to the Arlington Square Project.
General and Administrative expenses increased by $132,000 from $89,000 in
First Nine Months 1997 to $221,000 in First Nine Months 1998. For the First Nine
Months 1997, the Company recognized a one time credit to expenses resulting from
the cancellation of an accrued expense.
Other expenses decreased by $176,000 from $489,000 in First Nine Months
1997 to $313,000 in First Nine Months 1998, primarily as a result of the tenant
improvement costs related to the above mentioned income in the Arlington Square
Project, and costs associated with the refinancing and re-leasing of the
project.
Net income (loss) before depreciation and amortization decreased to
$(566,000) for the First Nine Months 1998 from $456,000 for the First Nine
Months 1997, a decrease of $1,022,000. Such decrease was the result of an
increase in expenses as outlined above.
The Company recorded a net loss of $1,365,000 for the First Nine Months
1998 as compared to a net loss of $246,000 for the First Nine Months 1997, a
decrease of $1,119,000. This decrease was the result of a $1,022,000 decrease in
net income before depreciation with $500,000 being attributable to a provision
for estimated losses and an increase in depreciation of $97,000.
8
<PAGE>
Three Months Ended September 30, 1998
Revenues increased to $1,002,000 for the three months ended September 30,
1998 ("Third Quarter 1998") from $985,000 for the three months ended September
30, 1997 ("Third Quarter 1997"), an increase of $17,000. Such increase was
primarily the result of an increase in operating property rental income, offset,
in part, by a decrease in other income.
Operating property rental income increased to $808,000 for Third Quarter
1998 compared to $782,000 for Third Quarter 1997, an increase of $26,000. This
increase was due to an annual rent increase relating to the Arlington Square
Project.
Other income increased to $164,000 for Third Quarter 1998 compared to
$178,000 for Third Quarter 1997, an increase of $14,000, a result of the volume
of tenant improvement projects undertaken by the Company.
Total operating expenses increased to $1,577,000 for Third Quarter 1998
compared to $848,000 for Third Quarter 1997, an increase of $729,000. This
increase was due to an increase in interest expense offset by a decrease in
operating property expense and a $500,000 provision for losses.
Interest expense increased by $218,000 to $591,000 in Third Quarter 1998
from $373,000 in Third Quarter 1997. This increase was primarily due to an
interest expense relating to the Arlington Square Project. Since the note
secured by the Arlington Square Project matured, the debt was refinanced in
November 1997 (as described below). The new mortgage note resulted in a larger
note payable and a higher interest rate.
Operating property expenses decreased by $25,000 from $195,000 in Third
Quarter 1997 to $170,000 in Third Quarter 1998.
General and Administrative expenses increased by $35,000.
Net income (loss) before depreciation and amortization decreased to
$(575,000) for the Third Quarter 1998 from $136,000 for the Third Quarter 1997,
a decrease of $711,000. Such decrease was the result of an increase in revenues
offset by an increase in expenses, as outlined above.
The Company recorded a net loss of $793,000 for the Third Quarter 1998 as
compared to a net loss of $99,000 for the Third Quarter 1997, an increased loss
of $694,000. This increased loss was the result of a $211,000 decrease in net
income before depreciation and a decrease in depreciation from $235,000 to
$218,000 and a $500,000 write down on the Nanjemoy property.
Liquidity and Capital Resources
9
<PAGE>
The Company's primary source of funds for the period ended September 30,
1998 came from rental income and property management fees from the Arlington
Square Project. As of September 30, 1998, the Company had cash, short term
investments, and escrow deposits totaling approximately $325,441 exclusive of
cash restricted for the Arlington Square Project reserve of approximately
$749,384.
During the First Nine Months 1998, cash and short-term investments
increased by $102,600 as compared to a decrease of $61,000 for the First Nine
Months 1997. The increase in the First Nine Months 1998 is primarily due to an
increase in revenue and the accrual of interest on the PMM secured in part by
the Timberlake Project, offset in part by an increase in general and
administrative expenses. Future sources of funds are anticipated to come from
the rents and a property management fee from Arlington Square. The Company's
primary use of operating funds is anticipated to be for operating expenses and
required payments on the Arlington Square Note (as defined below). The Company
has tried without success to sell its remaining assets. If asset sales do not
occur in a timely fashion, the Company may have insufficient cash to continue
operations. In addition, it is not anticipated that the Company will be able to
augment its cash flow from any outside sources, such as the issuance of
additional equity or additional borrowings.
Timberlake
TWC, through a wholly-owned subsidiary, the Nanjemoy Associates Limited
Partnership ("NALP") owns 361 acres in Charles County, Maryland for future
residential and retail development (the "Timberlake Project"). NALP defaulted on
its quarterly interest payments on the purchase money mortgage made to NALP
("PMM") that is secured by the Timberlake property. The principal amount of the
PMM is $880,000 and it matured on January 15, 1998. The PMM is not guaranteed by
TWC and the note contains a provision that the holder will rely solely on the
property for repayment of the PMM. TWC and the holders of the PMM have discussed
a restructuring of the loan that would extend the maturity and allow NALP to
accrue a portion of the interest payments. No agreement has been reached and the
note holders could foreclose on that portion of the property, approximately 313
acres, that is security for the PMM. This would result in NALP losing 313 of the
361 acres of land. In this event, the approved preliminary site plan would be
voided together with the various entitlements for the development of the
property. It is uncertain how the remaining 48 acres could be developed. It is
unlikely that development of the Timberlake property will commence prior to
April 1999. As a result, the existing approvals from Charles County will expire
and most likely will not be extended or renewed. In this event, the value of the
property most likely will be less than the outstanding principal balance on the
note plus the accrued interest. An offer to purchase the Timberlake property was
withdrawn by the prospective purchaser on July 1, 1998.
Arlington Square Limited Partnership
10
<PAGE>
The Company, through affiliates, owns a 74% interest in Arlington Square
Limited Partnership ("ASLP"). ASLP owns 1.75 acres of land and an office
building constructed thereon (the "Arlington Square Project") located in
Arlington, Virginia. During the First Nine Months 1998, approximately 83% of the
Company's revenues were derived from rental income on the Arlington Square
Project. On November 21, 1997 the loan on the Arlington Square Project from Fuji
Bank matured. The loan was replaced with a loan from Allied Capital Commercial
Corporation (the "Allied Loan") and there is a current obligation on a
$20,600,000 mortgage note (the "Arlington Square Note") secured by a first and
second deed of trust on the land and building. The Arlington Square Note bears
interest at 10%, is payable in monthly installments of $171,667 (interest only)
with the outstanding principal due on December 1, 2000. Allied will receive a
participation interest of 30% on the net cash flow and a 30% equity value in the
property if and when the property is sold (the "Allied Participation Interest").
The Allied Participation Interest will stay in full force and effect if the
property should ever be refinanced The lender requires two restricted cash
accounts be maintained, a tenant improvement leasing escrow for future capital
and tenant improvements and a tax and insurance escrow for the payment of
property taxes and property insurance. The tenant improvement leasing escrow for
$500,000 was established at settlement and is funded by monthly payments of
$16,000 which began in January 1998. The tax and insurance escrow is funded by
monthly payments of $19,397 which also began in January 1998. At September 30,
1998, these restricted cash accounts had an aggregate balance of $749,384. The
Company's agreement to manage the Arlington Square Project provides
approximately $100,000 in annual property management fees.
Submission of Bid--Arlington Square
On October 17, 1997, the General Services Administration ("GSA"), an agency
of the U. S. Government published a Solicitation for Offers ("SFO") to lease
office space in Northern Virginia for various purposes under the advanced
requisition programs. On November 7, 1997, ASLP offered to lease to GSA for a
fixed term of ten (10) years 100% of the existing office space in the Arlington
Square Building.
On February 20, 1998, ASLP submitted its Best and Final Offer ("BAFO") to
GSA. The BAFO contained the following terms: (I) a firm ten (10) year term
beginning October 1, 1998 through September 30, 2008; (ii) fixed annual rent of
$3,137,043.12 payable at the rate of $261,420.26 per month in arrears; and (iii)
should the Government and ASLP prior to June 1, 1998 enter into either a
modification to this lease or to a separate government lease, to a ten-year firm
lease for all of the 231 available parking spaces located in the building's
garage at the annual rent of $175,000.00 payable monthly at the rate of
14,583.33 in arrears subject to a 5% escalation per year, then ASLP agrees to
reduce the rate for this lease from $3,137,043.12 per annum to $3,066,190.90 per
annum (subject to adjustment and/or escalation as separately set forth in this
lease) for the first five years of the ten-year firm lease term for the leased
premises governed by this lease. Such ten-year firm lease term for such 231
available parking spaces shall not be either terminable, renewable, or subject
to annual government funding or appropriation.
11
<PAGE>
Award of Bid
On or about March 4, 1998, GSA verbally notified ASLP that they intend to
award a new ten (10) year lease for the Arlington Square Building subject to
resolving some clarifications. On March 31, 1998, ASLP submitted a signed lease
to GSA for final review. On June 22, 1998, GSA executed the lease, which
includes the terms and conditions contained in ASLP's BAFO (described above in
"Submission of Bid - Arlington Square"). On September 16th, 1998, the U.S. Fish
and Wildlife Service executed a ten year lease with ASLP for exclusive use of
231 parking spaces. The annual rent is $175,000 escalating at 5% per year.
Subsequent Events--MetLife Loan Commitment
On October 1, 1998, Metropolitan Life Insurance Company ("MetLife")
executed a loan commitment for a loan (the "MetLife Loan") to ASLP to refinance
the Allied Loan. The MetLife Loan, in the amount of $21,500,000, is amortized
over 26 years with a balloon payment of all remaining indebtedness after 12
years, and has an annual interest rate of 6.8%. The monthly payments of
principal and interest will be $147,057.86. Prepayment of the MetLife Loan is
not permitted during the first six years of the term, and is permitted
thereafter with a prepayment penalty. When the MetLife Loan closes, the Allied
Loan will be paid in full, however, Allied will retain the Allied Participation
Interest.
Subsequent Events--Demand for Payment of PMM
On November 6, 1998, the trustees for the PMM which is secured by a portion
of the Timberlake property made a demand for full repayment of principal and
interest by November 21, 1998. If full payment is not made, the trustees plan to
commence foreclosure proceedings. Since TWC does not have the funds to meet this
demand, the investment in this portion of the Timberlake property has been
written down to the amount of the note and accrued interest by adding $500,000
to loss reserve in anticipation of losing the Timberlake property through
foreclosure.
Liquidity
The Company does not have a plan to address its liquidity problems. The
Company will continue to attempt to reduce its general and administrative
expenses and, if necessary, attempt to delay payment for certain services until
properties are sold. If these attempts are not successful, the Company may be
forced to sell its remaining properties for significantly less than recorded
values and/or seek protection from its creditors under the Bankruptcy Code. The
MetLife Loan (described above in "Subsequent Events") should improve the
Company's liquidity by lowering interest expense on the Arlington Square
Project.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Computation of per share earnings for the six months ended September 30,
1998 (included in Part I, Item 1).
(b) Reports on Form 8-K. The Company filed no reports on Form 8-K during the
third quarter of 1998.
13
<PAGE>
In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
THE WASHINGTON CORPORATION
/s/WILLIAM N. DEMAS
---------------------------------
William N. Demas
President and Treasurer
(Duly authorized officer)
/s/JOSE MA. C. CASTRO
---------------------------------
Jose Ma. C. Castro
Controller
(Principal financial officer)
DATE: November 20th, 1998
----
14
<PAGE>
In accordance with the requirements of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
THE WASHINGTON CORPORATION
/s/WILLIAM N. DEMAS
-----------------------------
William N. Demas
President and Treasurer
(Duly authorized officer)
/s/JOSE MA. C. CASTRO
-----------------------------
Jose Ma. C. Castro
Controller
(Principal financial officer)
DATE: November 20th, 1998
----
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
WASHINGTON CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000314625
<NAME> THE WASHINGTON CORPORATION
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 325,441
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,458,754
<PP&E> 25,386,934
<DEPRECIATION> (7,811,723)
<TOTAL-ASSETS> 21,044,307
<CURRENT-LIABILITIES> 1,462,858
<BONDS> 20,600,000
0
0
<COMMON> 17,069
<OTHER-SE> (1,035,623)
<TOTAL-LIABILITY-AND-EQUITY> 21,044,307
<SALES> 0
<TOTAL-REVENUES> 2,865,704
<CGS> 0
<TOTAL-COSTS> 1,285,785
<OTHER-EXPENSES> 500,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,635,508
<INCOME-PRETAX> (1,364,634)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,364,634)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,364,634)
<EPS-PRIMARY> (.82)
<EPS-DILUTED> (.82)
</TABLE>
