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WASHINGTON--(BUSINESS WIRE)--
WGL Holdings, Inc. (WGL):
Consolidated Results
WGL Holdings, Inc. (WGL), the parent company of Washington Gas
Light Company (Washington Gas) and other energy-related subsidiaries,
today reported net income applicable to common stock determined in
accordance with generally accepted accounting principles in the United
States of America (GAAP) for the quarter ended December 31, 2014, of
$63.9 million, or $1.28 per share, compared to net income applicable to
common stock of $18.6 million, or $0.36 per share, reported for the
quarter ended December 31, 2013.
On a consolidated basis, WGL uses operating earnings (loss) to evaluate
overall financial performance. Beginning in the first quarter of fiscal
year 2015, we evaluate segment financial performance based on earnings
before interest and taxes, as adjusted (adjusted EBIT). We believe that
adjusted EBIT enhances the ability to evaluate segment performance
because it excludes interest and income tax expense, which are affected
by corporate-wide strategies such as capital financing and tax sharing
allocations. Additionally, both operating earnings (loss) and adjusted
EBIT adjust for the accounting recognition of certain transactions that
are not representative of the ongoing earnings of the company. Operating
earnings (loss) and adjusted EBIT are non-GAAP financial measures, which
are not recognized in accordance with GAAP and should not be viewed as
alternatives to GAAP measures of performance. Refer to “Reconciliation
of Non-GAAP Financial Measures” attached to this news release for a
detailed discussion of management’s use of these measures and for
reconciliations to GAAP financial measures.
For the quarter ended December 31, 2014, operating earnings were $58.0
million, or $1.16 per share, an improvement of $6.6 million, or $0.17
per share, over operating earnings of $51.4 million, or $0.99 per share,
for the same quarter of the prior fiscal year.
“Our first quarter results have given us a strong start to 2015. I am
pleased to report growth in adjusted EBIT in all of our business
segments in the quarter compared to the first quarter of the prior
year,” said Terry D. McCallister, Chairman and Chief Executive Officer.
“Results in our core regulated utility improved more than 6% over what
had been a strong first quarter of 2014. The drivers of this performance
were improvements in revenue which offset routine operating expense
increases.”
“In addition, our Midstream Energy Services and Commercial Energy
Systems segments showed robust growth as they continue to execute well
on their business strategies. I am particularly pleased to see adjusted
EBIT improve dramatically in our Retail Energy Marketing segment. This
business is beginning to recover to more normal levels of profitability
as costs for electricity in the PJM market return to expected levels.”
“Driven by these increases in segment performance, our consolidated per
share operating earnings for the quarter improved 17% over 2014. As a
result, we now expect operating earnings to finish the year in the high
end of our previously announced range of $2.70 to $2.90 per share.”
“Additionally, our board of directors has approved a nine-cent increase
in our dividend to an annual rate of $1.85 per share. This increase is
consistent with our previously announced goal of targeting a 5% dividend
growth rate, and reflects our continued confidence in our ability to
achieve our strategic goals. This increase marks the 39th year of
consecutive dividend increases and the 164th year that we have paid a
dividend.”
First Quarter Results by Business Segment
Regulated Utility
For the quarter ended December 31, 2014, the regulated utility segment
reported adjusted EBIT of $96.6 million, an increase of $5.7 million
over adjusted EBIT of $90.9 million for the same quarter of the prior
fiscal year. The improvement in adjusted EBIT reflects higher revenues
from: (i) customer growth; (ii) new base rates in
Maryland; (iii) realized margins associated with our asset
optimization program; (iv) rate recovery related to our
accelerated pipe replacement programs; and (v) lower employee
benefit costs. Partially offsetting these favorable variances were
higher operating expenses due to labor and employee incentive costs and
the growth in our utility plant.
Retail Energy-Marketing
For the quarter ended December 31, 2014, the retail energy-marketing
segment reported adjusted EBIT of $9.0 million, an increase of $7.6
million over adjusted EBIT of $1.4 million for the same quarter of the
prior fiscal year. This improvement in adjusted EBIT primarily reflects
higher electricity margins due to lower capacity and ancillary service
charges from the regional power grid operator (PJM). Partially
offsetting this favorable variance were lower natural gas margins.
Commercial Energy Systems
For the quarter ended December 31, 2014, the commercial energy systems
segment reported adjusted EBIT of $1.2 million, an increase of $1.2
million over adjusted EBIT for the same quarter of the prior fiscal
year. The improvement in adjusted EBIT reflects the growth in
distributed generation assets in service and producing income, as well
as increases in the federal contracting and investment solar businesses.
Midstream Energy Services
For the quarter ended December 31, 2014, the midstream energy services
segment reported adjusted EBIT of $2.6 million, an increase of $0.8
million over adjusted EBIT of $1.8 million for the same period of the
prior fiscal year. The improvement in adjusted EBIT reflects favorable
storage spreads.
Interest Expense
For the quarter ended December 31, 2014, interest expense was $12.3
million, an increase of $3.3 million over interest expense of $9.0
million for the same period of the prior fiscal year. This comparison
reflects the issuance of long-term debt for both WGL and Washington Gas.
Earnings Outlook
We are affirming our consolidated non-GAAP operating earnings estimate
for fiscal year 2015 in a range of $2.70 per share to $2.90 per share.
In providing fiscal year 2015 earnings guidance, management is aware
that there could be differences between what is reported GAAP earnings
and estimated operating earnings for matters such as, but not limited
to, unrealized mark-to-market positions for our energy-related
derivatives. At this time, WGL management is not able to reasonably
estimate the aggregate impact of these items on reported earnings and
therefore is not able to provide a corresponding GAAP equivalent for its
operating earnings guidance.
We assume no obligation to update this guidance. The absence of any
statement by us in the future should not be presumed to represent an
affirmation of this earnings guidance. For the assumptions underlying
this guidance, please refer to the slides accompanying our webcast that
will be posted to WGL’s website, www.wgl.com.
Other Information
We will hold a conference call at 10:30 a.m., Eastern Time on February
5, 2015, to discuss our first quarter fiscal year 2015 financial
results. The live conference call will be available to the public via a
link located on WGL’s website, www.wgl.com.
To hear the live webcast, click on “Investor Relations” then “Events &
Webcasts.” The webcast and related slides will be archived on WGL's
website through March 6, 2015.
Headquartered in Washington, D.C., WGL is a leading source for clean,
efficient and diverse energy solutions. With activities in 32 states and
the District of Columbia, our operating units consist of Washington Gas,
WGL Energy, WGL Midstream and Hampshire Gas. WGL Energy is an operating
unit that delivers a full ecosystem of energy offerings including
natural gas, electricity, green power, carbon reduction, distributed
generation and energy efficiency provided by WGL Energy Services, Inc.
(formerly Washington Gas Energy Services, Inc.) and WGL Energy Systems,
Inc. (formerly Washington Gas Energy Systems, Inc.). WGL provides
options for natural gas, electricity, green power and energy services,
including generation, storage, transportation, distribution, supply and
efficiency. Our calling as a company is to make energy surprisingly easy
for our employees, our community and all of our customers. Whether you
are a homeowner or renter, small business or multinational corporation,
state and local or federal agency, WGL is here to provide Energy
Answers. Ask Us. For more information, visit us at www.wgl.com.
Unless otherwise noted, earnings per share amounts are presented on a
diluted basis, and are based on weighted average common and common
equivalent shares outstanding.
Please see the attached comparative statements for additional
information on our operating results. Also attached to this news release
are reconciliations of non-GAAP financial measures.
Forward-Looking Statements
This news release and other statements by us include forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 with respect to the outlook for earnings, revenues
and other future financial business performance or strategies and
expectations. Forward-looking statements are typically identified
by words such as, but not limited to, “estimates,” “expects,”
“anticipates,” “intends,” “believes,” “plans,” and similar expressions,
or future or conditional verbs such as “will,” “should,” “would,” and
“could.” Although we believe such forward-looking statements are
based on reasonable assumptions, we cannot give assurance that every
objective will be achieved. Forward-looking statements speak only
as of today, and we assume no duty to update them. Factors that
could cause actual results to differ materially from those expressed or
implied include, but are not limited to, general economic conditions and
the factors discussed under the “Risk Factors” heading in our most
recent annual report on Form 10-K and other documents that we have filed
with, or furnished to, the U.S. Securities and Exchange Commission.
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WGL Holdings, Inc.
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Consolidated Balance Sheets
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(Unaudited)
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December 31,
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September 30,
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(In thousands)
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2014
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2014
|
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ASSETS
|
|
|
|
|
|
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Property, Plant and Equipment
|
|
|
|
|
|
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At original cost
|
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$
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4,658,194
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|
|
$
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4,582,764
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Accumulated depreciation and amortization
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(1,258,762
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)
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(1,268,319
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)
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Net property, plant and equipment
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3,399,432
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|
|
|
3,314,445
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Current Assets
|
|
|
|
|
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Cash and cash equivalents
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7,390
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8,811
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Accounts receivable, net
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524,559
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|
298,978
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Storage gas
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|
296,911
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|
|
333,602
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Derivatives and other
|
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|
199,302
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|
194,124
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Total current assets
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1,028,162
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|
835,515
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Deferred Charges and Other Assets
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720,498
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706,539
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Total Assets
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$
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5,148,092
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$
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4,856,499
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CAPITALIZATION AND LIABILITIES
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Capitalization
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Common shareholders' equity
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$
|
1,242,650
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|
|
$
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1,246,576
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Washington Gas Light Company preferred stock
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|
28,173
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|
28,173
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Long-term debt
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|
975,611
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|
|
|
679,228
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Total capitalization
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|
2,246,434
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|
|
|
1,953,977
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Current Liabilities
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|
|
|
|
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Notes payable and current maturities of long-term debt
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|
|
370,000
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|
|
|
473,500
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Accounts payable and other accrued liabilities
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|
|
336,352
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|
|
313,221
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Derivatives and other
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|
|
326,477
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|
|
|
233,564
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Total current liabilities
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|
|
1,032,829
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|
1,020,285
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Deferred Credits
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|
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1,868,829
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|
|
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1,882,237
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Total Capitalization and Liabilities
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$
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5,148,092
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|
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$
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4,856,499
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WGL Holdings, Inc.
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Consolidated Statements of Income
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(Unaudited)
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Three Months Ended
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December 31,
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(In thousands, except per share data)
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2014
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2013
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OPERATING REVENUES
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Utility
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$
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381,712
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$
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386,541
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Non-utility
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|
|
367,525
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|
|
293,756
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Total Operating Revenues
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|
|
749,237
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|
|
680,297
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OPERATING EXPENSES
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|
|
|
|
|
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Utility cost of gas
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|
|
129,704
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|
|
186,881
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Non-utility cost of energy-related sales
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|
|
336,568
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|
|
305,351
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Operation and maintenance
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|
|
92,380
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|
|
88,142
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Depreciation and amortization
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|
|
29,360
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|
|
26,590
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General taxes and other assessments
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|
|
39,383
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|
|
40,621
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Total Operating Expenses
|
|
|
627,395
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|
|
647,585
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OPERATING INCOME
|
|
|
121,842
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|
|
32,712
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Equity in earnings of unconsolidated affiliates
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|
|
1,144
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|
|
490
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Other income (expenses) — net
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|
|
(4,355)
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|
|
219
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Interest expense
|
|
|
12,310
|
|
|
8,992
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INCOME BEFORE TAXES
|
|
|
106,321
|
|
|
24,429
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INCOME TAX EXPENSE
|
|
|
42,103
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|
|
5,470
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NET INCOME
|
|
|
64,218
|
|
|
18,959
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Dividends on Washington Gas Light Company preferred stock
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|
|
330
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|
|
330
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NET INCOME APPLICABLE TO COMMON STOCK
|
|
$
|
63,888
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|
$
|
18,629
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AVERAGE COMMON SHARES OUTSTANDING
|
|
|
|
|
|
|
Basic
|
|
|
49,946
|
|
|
51,816
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Diluted
|
|
|
50,091
|
|
|
51,827
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EARNINGS PER AVERAGE COMMON SHARE
|
|
|
|
|
|
|
Basic
|
|
$
|
1.28
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|
$
|
0.36
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Diluted
|
|
$
|
1.28
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$
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0.36
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|
|
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WGL Holdings, Inc.
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Consolidated Financial and Operating Statistics
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(Unaudited)
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FINANCIAL STATISTICS
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Twelve Months Ended December 31,
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|
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|
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2014
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2013
|
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|
|
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Closing Market Price — end of period
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$
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54.62
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$
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40.06
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52-Week Market Price Range
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|
|
|
|
|
|
$
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56.79-$35.35
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|
|
$
|
46.96-$37.96
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Price Earnings Ratio
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|
|
|
|
|
|
|
|
18.5
|
|
|
|
44.5
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Annualized Dividends Per Share
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|
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|
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|
|
|
$
|
1.76
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|
|
$
|
1.68
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Dividend Yield
|
|
|
|
|
|
|
|
|
|
3.2
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%
|
|
|
4.2
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%
|
Return on Average Common Equity
|
|
|
|
|
|
|
|
|
|
12.0
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%
|
|
|
3.6
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%
|
Total Interest Coverage (times)
|
|
|
|
|
|
|
|
|
|
6.8
|
|
|
|
2.7
|
|
Book Value Per Share — end of period
|
|
|
|
|
|
|
|
|
$
|
25.00
|
|
|
$
|
24.55
|
|
Common Shares Outstanding — end of period (thousands)
|
|
|
|
|
|
|
|
|
|
49,709
|
|
|
|
51,842
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|
|
|
|
|
|
|
|
|
|
|
|
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|
|
UTILITY GAS STATISTICS
|
|
|
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|
|
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|
|
Three Months Ended
|
|
|
Twelve Months Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
(In thousands)
|
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenues
|
|
|
|
|
|
|
|
|
|
|
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|
|
Gas Sold and Delivered
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential — Firm
|
|
$
|
243,734
|
|
$
|
244,921
|
|
|
$
|
889,891
|
|
$
|
|
763,742
|
|
Commercial and Industrial — Firm
|
|
|
56,418
|
|
|
60,218
|
|
|
|
209,987
|
|
|
|
183,404
|
|
Commercial and Industrial — Interruptible
|
|
|
718
|
|
|
521
|
|
|
|
2,464
|
|
|
|
2,755
|
|
Electric Generation
|
|
|
275
|
|
|
275
|
|
|
|
1,100
|
|
|
|
1,100
|
|
|
|
|
301,145
|
|
|
305,935
|
|
|
|
1,103,442
|
|
|
|
951,001
|
|
Gas Delivered for Others
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Firm
|
|
|
56,121
|
|
|
56,222
|
|
|
|
198,978
|
|
|
|
179,510
|
|
Interruptible
|
|
|
13,736
|
|
|
13,025
|
|
|
|
60,040
|
|
|
|
50,062
|
|
Electric Generation
|
|
|
132
|
|
|
114
|
|
|
|
534
|
|
|
|
589
|
|
|
|
|
69,989
|
|
|
69,361
|
|
|
|
259,552
|
|
|
|
230,161
|
|
|
|
|
371,134
|
|
|
375,296
|
|
|
|
1,362,994
|
|
|
|
1,181,162
|
|
Other
|
|
|
10,578
|
|
|
11,245
|
|
|
|
49,128
|
|
|
|
32,170
|
|
Total
|
|
$
|
381,712
|
|
$
|
386,541
|
|
$
|
|
1,412,122
|
|
$
|
|
1,213,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Twelve Months Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
(In thousands of therms)
|
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Sales and Deliveries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Sold and Delivered
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential — Firm
|
|
|
217,059
|
|
|
226,067
|
|
|
|
729,955
|
|
|
|
677,000
|
|
Commercial and Industrial — Firm
|
|
|
59,178
|
|
|
63,171
|
|
|
|
196,160
|
|
|
|
188,698
|
|
Commercial and Industrial — Interruptible
|
|
|
1,055
|
|
|
562
|
|
|
|
2,686
|
|
|
|
2,756
|
|
|
|
|
277,292
|
|
|
289,800
|
|
|
|
928,801
|
|
|
|
868,454
|
|
Gas Delivered for Others
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Firm
|
|
|
160,006
|
|
|
158,642
|
|
|
|
536,867
|
|
|
|
496,364
|
|
Interruptible
|
|
|
77,659
|
|
|
77,697
|
|
|
|
267,668
|
|
|
|
272,543
|
|
Electric Generation
|
|
|
26,255
|
|
|
37,118
|
|
|
|
133,540
|
|
|
|
163,434
|
|
|
|
|
263,920
|
|
|
273,457
|
|
|
|
938,075
|
|
|
|
932,341
|
|
Total
|
|
|
541,212
|
|
|
563,257
|
|
|
|
1,866,876
|
|
|
|
1,800,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WGL ENERGY SERVICES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Therm Sales (thousands of therms)
|
|
|
201,084
|
|
|
210,566
|
|
|
|
708,607
|
|
|
|
702,148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Customers (end of period)
|
|
|
153,400
|
|
|
168,000
|
|
|
|
153,400
|
|
|
|
168,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity Sales (thousands of kWhs)
|
|
|
2,668,531
|
|
|
2,828,393
|
|
|
|
11,532,505
|
|
|
|
12,157,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Accounts (end of period)
|
|
|
156,600
|
|
|
189,000
|
|
|
|
156,600
|
|
|
|
189,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UTILITY GAS PURCHASED EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(excluding asset optimization)
|
|
|
56.18
|
¢
|
|
56.35
|
¢
|
|
|
67.90
|
¢
|
|
|
55.20
|
¢
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEATING DEGREE DAYS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
1,255
|
|
|
1,394
|
|
|
|
3,972
|
|
|
|
3,854
|
|
Normal
|
|
|
1,343
|
|
|
1,344
|
|
|
|
3,750
|
|
|
|
3,771
|
|
Percent Colder (Warmer) than Normal
|
|
|
(6.6
|
)%
|
|
3.7
|
%
|
|
|
5.9
|
%
|
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Active Customer Meters
|
|
|
1,123,272
|
|
|
1,111,138
|
|
|
|
1,120,257
|
|
|
|
1,107,901
|
|
WGL HOLDINGS, INC. RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (Unaudited)
The tables below reconcile operating earnings (loss) to GAAP net income
(loss) applicable to common stock on a consolidated basis and adjusted
EBIT on a segment basis to GAAP net income (loss) applicable to common
stock. Management believes operating earnings (loss) and adjusted EBIT
provide a more meaningful representation of our earnings from ongoing
operations on a consolidated and segment basis, respectively. These
measures facilitate analysis by providing consistent and comparable
measures to help management, investors and analysts better understand
and evaluate our operating results and performance trends, and assist in
analyzing period-to-period comparisons. Additionally, we use these
non-GAAP measures to report to the board of directors and to evaluate
management’s performance.
To derive our non-GAAP measures, we adjust for the accounting
recognition of certain transactions (non-GAAP adjustments) based on at
least one of the following criteria:
-
To better match the accounting recognition of transactions with their
economics;
-
To better align with regulatory view/recognition;
-
Significant out of period adjustments;
-
Other significant items that may obscure historical earnings
comparisons and are not indicative of performance trends; and
-
For adjusted EBIT, other items which may obscure segment comparisons.
There are limits in using operating earnings (loss) and adjusted EBIT to
analyze our consolidated and segment results, respectively, as they are
not prepared in accordance with GAAP and may be different from non-GAAP
financial measures used by other companies. In addition, using operating
earnings (loss) and adjusted EBIT to analyze our results may have
limited value as they exclude certain items that may have a material
impact on our reported financial results. We compensate for these
limitations by providing investors with the attached reconciliations to
the most directly comparable GAAP financial measures.
The following table summarizes the reconciliation of adjusted EBIT by
segment to its most comparable GAAP financial measure, income before
income taxes:
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
(In thousands)
|
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
Adjusted EBIT:
|
|
|
|
|
|
|
|
|
|
|
|
Regulated utility
|
|
|
|
|
|
|
$
|
96,556
|
|
|
$
|
90,855
|
|
Retail energy-marketing
|
|
|
|
|
|
|
|
8,955
|
|
|
|
1,358
|
|
Commercial energy systems
|
|
|
|
|
|
|
|
1,168
|
|
|
|
(23
|
)
|
Midstream energy services
|
|
|
|
|
|
|
|
2,566
|
|
|
|
1,840
|
|
Other activities* |
|
|
|
|
|
|
|
(1,474
|
)
|
|
|
(1,910
|
)
|
Eliminations
|
|
|
|
|
|
|
|
(32
|
)
|
|
|
144
|
|
Total
|
|
|
|
|
|
|
|
107,739
|
|
|
|
92,264
|
|
Non-GAAP adjustments(1) |
|
|
|
|
|
|
|
10,892
|
|
|
|
(58,843
|
)
|
Interest expense
|
|
|
|
|
|
|
|
12,310
|
|
|
|
8,992
|
|
Income before income taxes
|
|
|
|
|
|
|
|
106,321
|
|
|
|
24,429
|
|
Income tax expense
|
|
|
|
|
|
|
|
42,103
|
|
|
|
5,470
|
|
Dividends on Washington Gas preferred stock
|
|
|
|
|
|
|
|
330
|
|
|
|
330
|
|
Net income applicable to common stock
|
|
|
|
|
|
|
$
|
63,888
|
|
|
$
|
18,629
|
|
|
*Activities and transactions that are not significant
enough on a stand-alone basis to warrant treatment as an operating
segment and that do not fit into one of our four operating segments.
WGL HOLDINGS, INC. (Consolidated by Quarter) RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES (Unaudited)
The following tables represent the reconciliation of operating earnings
to its most comparable GAAP financial measure, net income applicable to
common stock (consolidated by quarter):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2015
|
|
|
|
Quarterly Period Ended
|
(In thousands, except per share data)
|
|
Dec. 31
|
Mar. 31
|
Jun. 30
|
Sept. 30
|
|
Fiscal Year
|
Operating earnings
|
|
$
|
58,004
|
|
|
|
|
|
|
|
|
$
|
58,004
|
|
Non-GAAP adjustments(1) |
|
|
10,892
|
|
|
|
|
|
|
|
|
|
10,892
|
|
Income tax benefit on non-GAAP adjustments
|
|
|
(5,008
|
)
|
|
|
|
|
|
|
|
|
(5,008
|
)
|
Net income applicable to common stock
|
|
$
|
63,888
|
|
|
|
|
|
|
|
|
$
|
63,888
|
|
Diluted average common shares outstanding
|
|
|
50,091
|
|
|
|
|
|
|
|
|
|
50,091
|
|
Operating earnings per share
|
|
$
|
1.16
|
|
|
|
|
|
|
|
|
$
|
1.16
|
|
Per share effect of non-GAAP adjustments
|
|
|
0.12
|
|
|
|
|
|
|
|
|
|
0.12
|
|
Diluted earnings per average common share
|
|
$
|
1.28
|
|
|
|
|
|
|
|
|
$
|
1.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2014
|
|
|
|
Quarterly Period Ended
|
(In thousands, except per share data)
|
|
|
Dec. 31
|
|
Mar. 31
|
|
Jun. 30
|
|
Sept. 30
|
|
|
Fiscal Year
|
Operating earnings
|
|
$
|
51,398
|
|
|
|
|
|
|
|
|
$
|
51,398
|
|
Non-GAAP adjustments(1) |
|
|
(58,843
|
)
|
|
|
|
|
|
|
|
|
(58,843
|
)
|
Income tax expense on non-GAAP adjustments
|
|
|
22,453
|
|
|
|
|
|
|
|
|
|
22,453
|
|
Regulatory asset - tax effect Medicare Part D** |
|
|
3,621
|
|
|
|
|
|
|
|
|
|
3,621
|
|
Net income applicable to common stock
|
|
$
|
18,629
|
|
|
|
|
|
|
|
|
$
|
18,629
|
|
Diluted average common shares outstanding
|
|
|
51,827
|
|
|
|
|
|
|
|
|
|
51,827
|
|
Operating earnings per share
|
|
$
|
0.99
|
|
|
|
|
|
|
|
|
$
|
0.99
|
|
Per share effect of non-GAAP adjustments
|
|
|
(0.63
|
)
|
|
|
|
|
|
|
|
|
(0.63
|
)
|
Diluted earnings per average common share
|
|
$
|
0.36
|
|
|
|
|
|
|
|
|
$
|
0.36
|
|
|
**In March 2010, the Patient Protection and Affordable
Care Act (PPACA) eliminated future Medicare Part D (Med D) tax benefits
for Washington Gas' tax years beginning after September 30, 2013. On
March 30, 2012, based on positions taken by the Public Service
Commission of Maryland (PSC of MD) in Washington Gas' rate case,
Washington Gas determined that it is not probable that the PSC of MD
would permit recovery of this asset. Therefore, the Maryland portion of
the regulatory asset related to the Med D benefit was charged to tax
expense. In November of 2013, the PSC of MD issued an order authorizing
Washington Gas to establish a regulatory asset and amortize the costs
related to the change in tax treatment of Med D.
WGL HOLDINGS, INC. RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (Unaudited)
(1) The following are non-GAAP adjustments, by operating
segment as well as a reconciliation of adjusted EBIT to EBIT. EBIT is
defined as earnings before interest and taxes from continuing
operations. Items we do not include in EBIT are interest expense,
dividends on Washington Gas preferred stock, and income taxes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2014
|
|
|
|
Regulated
|
|
|
Retail-Energy
|
|
|
Commercial Energy
|
|
|
Midstream Energy
|
|
|
Other
|
|
|
Intersegment
|
|
|
|
(In thousands)
|
|
|
Utility
|
|
|
Marketing
|
|
|
Systems
|
|
|
Services
|
|
|
Activities
|
|
|
Eliminations
|
|
|
Total
|
Adjusted EBIT
|
|
$
|
96,556
|
|
|
$
|
8,955
|
|
|
$
|
1,168
|
|
|
$
|
2,566
|
|
|
$
|
(1,474
|
)
|
|
$
|
(32
|
)
|
|
$
|
107,739
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized mark-to-market valuations on
energy-related derivatives(a)
|
|
|
25,077
|
|
|
|
(24,850
|
)
|
|
|
-
|
|
|
|
8,329
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,556
|
|
Storage optimization program(b)
|
|
|
(4,180
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,180
|
)
|
DC weather impact(c )
|
|
|
(2,826
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,826
|
)
|
Distributed generation asset related
investment tax credits(d)
|
|
|
-
|
|
|
|
-
|
|
|
|
(909
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(909
|
)
|
Change in measured value of inventory(e)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,876
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,876
|
|
Investment impairment(f)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,625
|
)
|
|
|
-
|
|
|
|
(5,625
|
)
|
Total non-GAAP adjustments
|
|
$
|
18,071
|
|
|
$
|
(24,850
|
)
|
|
$
|
(909
|
)
|
|
$
|
24,205
|
|
|
$
|
(5,625
|
)
|
|
$
|
-
|
|
|
$
|
10,892
|
|
EBIT
|
|
$
|
114,627
|
|
|
$
|
(15,895
|
)
|
|
$
|
259
|
|
|
$
|
26,771
|
|
|
$
|
(7,099
|
)
|
|
$
|
(32
|
)
|
|
$
|
118,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2013
|
|
|
|
Regulated
|
|
|
Retail-Energy
|
|
|
Commercial Energy
|
|
|
Midstream Energy
|
|
|
Other
|
|
|
Intersegment
|
|
|
|
(In thousands)
|
|
|
Utility
|
|
|
Marketing
|
|
|
Systems
|
|
|
Services
|
|
|
Activities
|
|
|
Eliminations
|
|
|
Total
|
Adjusted EBIT
|
|
$
|
90,855
|
|
|
$
|
1,358
|
|
|
$
|
(23
|
)
|
|
$
|
1,840
|
|
|
$
|
(1,910
|
)
|
|
$
|
144
|
|
|
$
|
92,264
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized mark-to-market valuations on
energy-related derivatives(a)
|
|
|
(26,131
|
)
|
|
|
3,932
|
|
|
|
-
|
|
|
|
(22,561
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(44,760
|
)
|
Storage optimization program(b)
|
|
|
1,861
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,861
|
|
DC weather impact(c )
|
|
|
(850
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(850
|
)
|
Distributed generation asset related
investment tax credits(d)
|
|
|
-
|
|
|
|
-
|
|
|
|
(573
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(573
|
)
|
Change in measured value of inventory(e)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,488
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,488
|
)
|
Competitive service provider imbalance
cash settlement(g)
|
|
|
488
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
488
|
|
Incremental professional services fees(h)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(751
|
)
|
|
|
-
|
|
|
|
(751
|
)
|
Impairment loss on Springfield
Operations Center(i)
|
|
|
(770
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(770
|
)
|
Total non-GAAP adjustments
|
|
$
|
(25,402
|
)
|
|
$
|
3,932
|
|
|
$
|
(573
|
)
|
|
$
|
(36,049
|
)
|
|
$
|
(751
|
)
|
|
$
|
-
|
|
|
$
|
(58,843
|
)
|
EBIT
|
|
$
|
65,453
|
|
|
$
|
5,290
|
|
|
$
|
(596
|
)
|
|
$
|
(34,209
|
)
|
|
$
|
(2,661
|
)
|
|
$
|
144
|
|
|
$
|
33,421
|
|
Footnotes:
(a)
|
|
Adjustments to eliminate unrealized mark-to-market gains
(losses) for our energy-related derivatives for our regulated
utility and retail energy-marketing operations as well as certain
derivatives for the long-term purchase of natural gas for the
midstream energy services segment. With the exception of certain
transactions related to the optimization of system capacity assets
as discussed below, when these derivatives settle, the realized
economic impact is reflected in our non-GAAP results, as we are
only removing interim unrealized mark-to-market amounts.
|
(b)
|
|
Adjustments to shift the timing of storage optimization margins
for the regulated utility segment from the periods recognized for
GAAP purposes to the periods in which such margins are recognized
for regulatory sharing purposes. In addition, lower-of-cost or
market adjustments related to system and non-system storage
optimization are eliminated for non-GAAP reporting, since the
margins will be recognized for regulatory purposes when the
withdrawals are made at the unadjusted historical cost of storage
inventory.
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(c)
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Eliminates the estimated financial effects of warm or cold
weather in the District of Columbia, as measured consistent with
our regulatory tariff. For fiscal year 2015, Washington Gas did
not enter into weather protection products due to the pricing
environment. Washington Gas has regulatory weather protection
mechanisms in Maryland and Virginia designed to neutralize the
estimated financial effects of weather. Utilization of normal
weather is an industry standard, and it is our practice to
evaluate our rate-regulated revenues by utilizing normal weather
and to provide estimates and guidance on the basis of normal
weather.
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(d)
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To reclassify the amortization of deferred investment tax
credits from income taxes to operating income for the Commercial
Energy Systems segment. These credits are a key component of the
operating success of this segment and therefore are included
within adjusted EBIT to help management and investors better
assess its performance.
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(e)
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For our Midstream Energy Services segment, adjustments to
reflect storage inventory at market or at a value based on the
price used to value the physical forward sales contract that is
economically hedging the storage inventory. This adjustment also
includes the estimated effects of certain sharing mechanisms on
all of our non-GAAP unrealized gains and losses. Adjusting our
storage optimization inventory in this fashion better aligns the
settlement of both our physical and financial transactions and
allows investors and management to better analyze the results of
our non-utility asset optimization strategies.
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(f)
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Represents an impairment of an equity investment in a solar
holding company, accounted for at cost, which occurred in the
first quarter of fiscal year 2015. We do not believe this
impairment charge is indicative of our historical or future
performance trends.
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(g)
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Represents amounts collected by the regulated utility segment
in relation to the refund to customers ordered by the PSC of MD in
September 2011 associated with a cash settlement of gas imbalances
with competitive service providers.
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(h)
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These costs include incremental legal and consulting costs in
connection with business development activities. These costs are
unpredictable and may vary greatly with each opportunity.
Management believes that excluding these costs allows management
and investors to better compare, analyze and forecast the
performance of our revenue generating opportunities.
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(i)
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During the first quarter of fiscal year 2014, Washington Gas
recorded an impairment charge related to its Springfield
Operations Center. Non-GAAP earnings have been adjusted to reflect
a comparable measure in analyzing period-to-period comparisons.
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