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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: February 3,1997
I.R.S. Employer
Commission State of Identification
File Number Registrant Incorporation Number
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001-11227 Washington Energy Company Washington 91-1005304
001-11271 Washington Natural Gas Company Washington 91-1005303
815 Mercer Street, Seattle, Washington 98109
(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 30, 1997, Washington Energy Company,
parent company of Washington Natural Gas Company, issued the following
press release:
TURNAROUND STRATEGIES CONTRIBUTE TO EARNINGS INCREASE
SEATTLE - Washington Energy Company's quarterly and 12-month earnings both
rose dramatically for the period that ended December 31, 1996, Chairman, CEO and
President William P. Vititoe announced today.
First-quarter net income totaled $16.9 million ($.70 per share), compared
to net income of $10.1 million ($.42 per share) for the same period one year
ago.
Twelve-month net income was $29.9 million ($1.24 per share), compared to a
net loss of $44.2 million ($1.84 per share) in the same period one year prior.
"Colder weather and continuing customer growth were the essential factors
in the quarterly improvement," Vititoe said, "but our turnaround strategies --
including the May 1995 general rate increase as well as our ongoing programs to
reduce costs and improve service -- were additional ingredients in the 12- month
results."
The weather for the quarter was 21 percent colder than a year ago, and 11
percent colder than normal. The colder weather added approximately $3 million to
utility net income for the quarter, or about $.13 per share, compared to
estimated results assuming normal weather. The company also served 22,270, or
4.7 percent, more customers during the current quarter, compared to the same
period one year ago
12-MONTH RESULTS FROM CONTINUING OPERATIONS
Excluding losses from the discontinued coal and rail operations, the
company earned $31.5 million from continuing operations ($1.30 per share) during
the 12-month period, compared to a loss of $17.4 million ($.72 per share) in the
prior year. As previously reported, the comparison period included an employee
severance charge of $2.0 million (after taxes), or $.08 per share, and
non-utility charges for reserves and asset write-downs totaling $20.6 million
(after taxes), or $.86 per share.
Weather for the period was 5 percent colder than normal, compared to 17
percent warmer than normal in the prior period. The company served 20,215 more
customers in the current period, an increase of 4.3 percent over the prior year.
Utility operations and maintenance expense as reported decreased by $9.7
million. However, after excluding a non-recurring benefit of $3.2 million in
1996 and non-recurring charges of $7.1 million in 1995, ongoing utility
operations and maintenance expense was essentially flat.
"These results show the effectiveness of our turnaround strategies,"
Vititoe said. "We have held ongoing utility operating and maintenance expense
essentially constant even while growing three times faster than average for our
industry and increasing customer satisfaction."
MERGER WITH PUGET SOUND POWER & LIGHT COMPANY
A definitive agreement to merge Washington Energy Company (NYSE: WEG) and
its major operating subsidiary, Washington Natural Gas Company, with Puget Sound
Power & Light Company (NYSE: PSD) was announced October 18, 1995. The agreement
was approved by shareholders of the companies on March 20, 1996.
The strategic merger of equals would create a combination utility company
to be called Puget Sound Energy, serving more than 855,000 electric and 500,000
gas customers in western Washington state (with approximately 250,000 customers
purchasing both forms of energy from the company).
The Washington Utilities and Transportation Commission, whose approval is
required before the merger can take effect, has advised the management of Puget
Power and Washington Energy that the Commission intends to issue its decision on
February 5, 1997. Pending that decision, and subsequent approval by the
companies' boards of directors, the merger could be concluded on Monday,
February 10, following the close of trading on the New York Stock Exchange. The
following day, Puget Sound Energy shares would begin trading on the NYSE under
the symbol, PSD.
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
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1996 1995 1996 1995
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Washington Energy Company
Operating revenues
Regulated utility sales $ 142,292 $ 120,525 $ 421,875 $ 390,826
Merchandise, conservation products, and other 6,348 6,970 24,981 24,035
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Total operating revenues $ 148,640 $ 127,495 $ 446,856 $ 414,861
Operating income after income taxes $ 28,665 $ 22,300 $ 78,351 $ 49,817
Non-utility charges after income taxes $ --- $ --- $ --- $ (20,622)
Preferred dividend requirement - Washington Natural Gas $ (1,755) $ (1,755) $ (7,020) $ (7,020)
Income (loss) from continuing operations $ 16,903 $ 10,402 $ 31,461 $ (17,353)
Discontinued operations, net of income taxes $ --- $ (267) $ (1,565) $ (26,829)
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Net income (loss) $ 16,903 $ 10,135 $ 29,896 $ (44,182)
Earnings(loss) per common share
from continuing operations 0.70 0.43 1.30 (0.72)
from discontinued operations --- (0.01) (0.06) (1.12)
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Earnings (loss) per common share $ 0.70 $ 0.42 $ 1.24 $ (1.84)
Dividends per common share $ 0.25 $ 0.25 $ 1.00 $ 1.00
Average common shares outstanding (in thousands) 24,279 24,080 24,193 23,980
Book value per share $ 8.68 $ 8.12
Capitalization and short-term debt
Common $ 211,142 $ 195,804
Preferred 90,000 90,000
Long-term debt 341,860 344,920
Current portion long-term debt 3,060 140
Commercial paper and notes payable 166,150 161,846
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Total capitalization and short-term debt $ 812,212 $ 792,710
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(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.
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
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1996 1995 1996 1995
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Washington Natural Gas Company
Operating revenues
Firm gas sales $ 128,624 $ 106,431 $ 375,028 $ 331,976
Interruptible gas sales 7,141 8,165 22,352 37,671
Transportation 3,631 3,140 13,303 10,660
Rentals and other 2,896 2,789 11,192 10,519
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Total operating revenues $ 142,292 $ 120,525 $ 421,875 $ 390,826
Gross utility margin
Gas sales less gas purchases $ 70,592 $ 58,819 $ 210,265 $ 176,672
Transportation margin 3,631 3,140 13,303 10,660
Rentals and other 2,896 2,789 11,192 10,519
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Total margin $ 77,119 $ 64,748 $ 234,760 $ 197,851
Utility operations & maintenance expense $ 16,496 $ 16,500 (3) $ 59,872 (2)$ 69,583 (2)
Net income $ 19,856 $ 13,873 $ 43,207 $ 15,584
Gas volumes (000's of therms)
Firm gas sales 245,412 202,581 699,519 601,850
Interruptible gas sales 20,705 27,050 65,884 117,523
Transportation 72,630 57,037 257,892 171,895
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Total gas volumes 338,747 286,668 1,023,295 891,268
Customers served (average)
Firm gas sales 495,896 473,599 488,574 468,354
Interruptible gas sales 977 1,027 988 1,037
Transportation 120 97 111 67
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Total customers 496,993 474,723 489,673 469,458
Annual increase in customers 20,215 19,386
Weather % colder (+) or warmer (-) than normal
(in terms of degree days) 11 % -10 % 5 % -17 %
Degree days 1,884 1,541 4,973 3,989
(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 12 months ended December 31, 1996 and 1995 include
consulting and certain non-recurring charges (benefits) of ($3,225) and $7,102, 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
James P. Torgerson
Executive Vice President,
Chief Administrative Officer and
Chief Financial Officer; the
Principal Financial Officer
WASHINGTON NATURAL GAS COMPANY
by /s/ James P. Torgerson
James P. Torgerson
Executive Vice President,
Chief Administrative Officer and
Chief Financial Officer; the
Principal Financial Officer
February 3,1997