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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 January 29, 1996
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
a) On January 26, 1996, Washington Energy Company made the following press
release:
HIGH TEMPERATURES OFFSET BENEFITS OF RATE INCREASE
SEATTLE -- Washington Energy Company's net income for the
first quarter of fiscal 1996 declined 24 percent compared to the
same period one year ago, due to the negative impact of
unseasonably warm weather on utility gas sales, Chairman William
P. Vititoe announced today.
Net income was $10.1 million, or 42 cents per share, for the
quarter ended December 31, 1995, down from $13.2 million, or 56
cents per share, for the same period last year.
"Average temperatures during the quarter were the warmest on
record for the past 15 years, reducing net income by more than
$4 million compared to estimated results with normal weather.
That negative factor more than offset the positive impact of the
$17.7 million general rate increase received by our utility
subsidiary last May," Vititoe said.
"While the financial results are disappointing, I continue
to be confident that we have restored the fundamental earning
power of the utility, assuming more normal weather," Vititoe
said. "We haven't seen the full impact of our most recent rate
increase yet. And we continue to work on lowering costs. We
reduced staff by 4 percent in the first quarter -- for a total 18
percent reduction since we began down-sizing in fiscal 1994."
Detail of quarterly results
The $3.1 million decline in quarterly net income was due to
the negative impact of weather on utility gas sales. Weather was
13 percent warmer than one year ago and 10 percent warmer than
normal. Utility gas volumes were down 10 percent.
Utility margin (revenue less cost of gas sold) of $64.7
million represented a decrease of $3.2 million compared to the
same quarter last year. The weather-related decline in gas
volumes reduced utility margin by approximately $9 million.
However, weather's impact was partially offset by the positive
contributions of the May 1995 general rate increase and by
customer growth, which added approximately $4 million and
$2 million to utility margin, respectively.
The company served over 16,000 more utility customers, on
average, in the December 1995 quarter than it did in the same
period last year, a 4 percent growth rate.
Detail of 12-month results
The company posted a 12-month net loss of $44.2 million, or
$1.84 per share, including $49.1 million in previously-announced
special charges taken in fiscal 1995. This compares to a prior-
year net loss of $40.7 million, or $1.73 per share, including
$43.3 million in special charges and losses from discontinued
operations. (The special charges affecting both years are
described in detail in the company's 1995 annual report to
shareholders).
Excluding special charges, the company's current 12-month
earnings of $4.9 million, while representing a $2.3 million
increase over the comparison period, were severely affected by
the warmest weather for at least the past 30 years. Temperatures
averaged 9 percent warmer than the prior year and 17 percent
warmer than normal. The warmer weather reduced utility margin by
approximately $12 million compared to the prior year and an
estimated $18 million compared to normal. Overall, utility margin
increased by $13.7 million due to the positive impact of two
general rate increases over the past two years and customer
growth.
Utility operations and maintenance (O&M) expenses of $69.6
million for the current 12-month period include $6.6 million of
consulting and other non-recurring charges. Excluding these
charges, in both the current and prior 12-month periods, O&M
expenses have decreased by $5.0 million as a result of the
company's continuing cost-cutting programs.
Merger with Puget Sound Power & Light Company
A definitive agreement to merge Washington Energy Company
(NYSE: WEG) and its subsidiary, Washington Natural Gas Company,
into Puget Sound Power & Light Company (NYSE: PSD) was announced
October 18, 1995. The strategic merger of equals, unanimously
approved by the boards of all three companies, would create a
combination utility company serving 830,000 electric and 475,000
gas customers in western Washington state.
The merger could be concluded in the second half of calendar
1996, subject to, among other conditions, the approval of
shareholders and the Washington Utilities and Transportation
Commission. Shareholder votes will be taken by the companies in
separate meetings on March 20, 1996.
###
Washington Energy Company
Summary Income Statements And Other Financial Data
(Dollars in thousands, except per share amounts)
3 Months Ended 12 Months Ended
December 31 (1) December 31
1995 1994 1995 1994
--------- --------- --------- ---------
Washington Energy
Company
Operating revenues
Regulated utility
sales $ 120,525 $ 149,747 $ 390,826 $ 414,184
Merchandise,
conservation
products, and other 6,970 6,498 24,035 27,643
--------- --------- --------- ---------
Total operating
revenues $ 127,495 $ 156,245 $ 414,861 $ 441,827
Operating income
after income taxes $ 22,284 $ 24,311 $ 49,769 $ 34,841
Net loss on
merger of oil
and gas subsidiary $ --- $ --- $ --- $ (30,015)
Non-utility charges
after income taxes $ --- $ --- $ (47,078) $ ---
Preferred dividend
requirement -
Washington
Natural Gas $ (1,755) $ (1,861) $ (7,020) $ (5,214)
Income (loss) from
continuing
operations $ 10,135 $ 13,255 $ (44,182) $ (39,949)
Discontinued
operations,
net of income taxes $ --- $ --- $ --- $ (752)
Net income (loss) $ 10,135 $ 13,255 $ (44,182) $ (40,701)
Earnings (loss)
per common share .42 .56 (1.84) (1.73)
Dividends
per common share .25 .25 1.00 1.00
Average common shares
outstanding
(in thousands) 24,080 23,737 23,980 23,587
Book value per share 8.12 10.89
Capitalization and
short-term debt
Common $ 195,804 $ 259,606
Preferred 90,000 90,000
Long-term debt 344,920 290,060
Current portion
long-term debt 140 60,140
Commercial paper
and notes payable 161,846 121,516
Total capitalization --------- ---------
and short-term debt $ 792,710 $ 821,322
========= =========
Net plant $ 806,188 $ 789,550
========= =========
Operating income
(loss) by business
segment before
income taxes
Regulated utility
sales $ 27,833 $ 31,961 $ 54,916 $ 33,098
Merchandise,
conservation
products, and other 166 (104) (1,470) (1,336)
Other (228) (366) 138 (1,045)
--------- --------- --------- ---------
Total $ 27,771 $ 31,491 $ 53,584 $ 30,717
========= ========= ========= =========
<FN>
(1) Results for the quarter are not indicative of what can be expected
for a full year of operations.
Washington Energy Company
Summary Income Statements And Other Financial Data (Continued)
(Dollars in thousands)
3 Months Ended 12 Months Ended
December 31 (1) December 31
1995 1994 1995 1994
--------- --------- --------- ---------
Washington Natural
Gas Company
Operating revenues
Firm gas sales $ 106,431 $ 128,913 $ 331,976 $ 345,309
Interruptible
gas sales 8,165 15,011 37,671 49,792
Transportation 3,140 3,237 10,659 9,423
Rentals and other 2,789 2,586 10,519 9,660
Total operating --------- --------- --------- ---------
revenues $ 120,525 $ 149,747 $ 390,825 $ 414,184
Gross utility margin
Gas sales less
gas purchases $ 58,819 $ 62,100 $ 176,672 $ 165,096
Transportation
margin 3,140 3,237 10,659 9,423
Rentals and other 2,789 2,586 10,519 9,660
--------- --------- --------- ---------
Total margin $ 64,748 $ 67,923 $ 197,850 $ 184,179
Utility operations &
maintenance expense $ 16,500 $ 15,014 $ 69,611 $ 79,221
(see notes below) (2) (3) (3)
Net income (loss) $ 13,873 $ 16,142 $ 15,584 $ (1,308)
Gas volumes
(000's of therms)
Firm gas sales 202,581 234,102 601,850 632,948
Interruptible
gas sales 27,050 41,843 117,523 145,563
Transportation 57,037 42,085 171,895 128,798
--------- --------- --------- ---------
Total gas volumes 286,668 318,030 891,268 907,309
Customers served
(average)
Firm gas sales 473,599 457,486 468,354 448,992
Interruptible
gas sales 1,027 1,027 1,037 1,040
Transportation 97 50 67 40
--------- --------- --------- ---------
Total customers 474,723 458,563 469,458 450,072
Annual increase
in customers 19,386 21,354
Weather % colder (+)
or warmer (-) than
normal (in terms
of degree days) -10 % 3 % -17 % -8 %
Degree days 1,541 1,753 3,989 4,341
<FN>
(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) Utility operations and maintenance expense for the 3 months ended
December 31, 1995 include consulting and certain non-recurring
changes of $1,098,000.
(3) Utility operations and maintenance expense for the 12 months ended
December 31, 1995 and 1994 included consulting and certain
non-recurring changes of $7,073,000 and $11,699,000, respectively.
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
Executive Vice President,
Chief Administrative Officer and
Chief Financial Officer
WASHINGTON NATURAL GAS COMPANY
by /s/ James P. Torgerson
Executive Vice President,
Chief Administrative Officer and
Chief Financial Officer
January 29, 1996