Analysis of Financial Condition and Results of Operations describe in a manner that is true, fair and adequate and not misleading: (i) (a) the accounting policies that the Bank believes to be the most important in the portrayal of the Bank’s financial condition and results of operations and which require management’s most difficult, subjective or complex judgments (“Critical Accounting Policies”), (b) the uncertainties affecting the application of Critical Accounting Policies, and (c) an explanation of the likelihood that materially different amounts would be reported under different conditions or using different assumptions and (ii) all material trends, demands, commitments, events, uncertainties and risks, and the potential effects thereof, that would materially affect liquidity and are reasonably likely to occur. The Bank is not engaged in any transactions with, nor has any obligations to, any unconsolidated entities (if any) that are contractually limited to narrow activities that facilitate the transfer of or access to assets by the Bank, including structured finance entities and special purpose entities, or otherwise engage in, or have any obligations under, any off-balance sheet transactions or arrangements. As used herein, the phrase reasonably likely refers to a disclosure threshold lower than more likely than not; and the description set out in the Draft Red Xxxxxxx Prospectus, under the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” presents in a manner that is true, fair and adequate and not misleading, the factors that the management believes have, in the past, and may, in the foreseeable future, affect the business, financial condition and results of operations of the Bank.
Analysis of Financial Condition and Results of Operations. Bold italics indicate the first reference to a defined term. This Annual Report to Shareholders contains “forward-looking statements,” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements should be read with the cautionary statements included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 30, under the heading Safe Harbor for Forward-Looking Statements. Forward-looking statements are all statements, other than those of historical fact, including those statements containing words such as, but not limited to, “estimates,” “expects,” “anticipates,” “intends,” “believes,” “plans,” variations of these words and similar expressions. This management’s discussion should be read in conjunction with the company’s Consolidated Financial Statements and Notes thereto. OVERVIEW Established in 1848, Washington Gas and its subsidiaries sell and deliver natural gas and a variety of energy-related products and services to customers in metropolitan Washington, D.C., Maryland, Virginia and beyond. The company’s core business, the distribution and sale of natural gas, is primarily regulated by state regulatory commissions. In response to federal and state changes in regulation, the company has taken the initiative to offer competitively priced gas and electricity to customers. The company also offers energy-related products and services that are closely related to its core business. The majority of these energy-related activities are performed by wholly owned subsidiaries of Washington Gas Resources Corp. (Washington Gas Resources). On November 1, 2000, Washington Gas Resources became a wholly owned subsidiary of WGL Holdings (see Note 2 to the Consolidated Financial Statements for additional details regarding the restructuring). During the fiscal years ended September 30, 2000, 1999 and 1998, Washington Gas reported on four major business segments: 1) regulated utility; 2) retail energy marketing; 3) heating, ventilating and air conditioning (HVAC); and 4) consumer financing. These four segments are described below: Regulated Utility. With nearly 95 percent of the corporation’s assets, Washington Gas delivers natural gas to retail customers in accordance with tariffs set by state regulatory commissions that have regional jurisdiction over the company’s rates. These rates provide the regulated utility an opportunity to earn a reasonable rate of return for the service on the investm...
Analysis of Financial Condition and Results of Operations. In connection with the Notes offering, we entered into a prepaid forward stock repurchase transaction agreement (Prepaid Forward) with a financial institution. Pursuant to the Prepaid Forward, we used approximately $78.0 million of the proceeds from the offering of the Notes to pay the prepayment amount. The aggregate number of shares of our Class A common stock underlying the Prepaid Forward is approximately 9.2 million shares. The expiration date for the Prepaid Forward is April 15, 2022, although it may be settled earlier in whole or in part. Upon settlement of the Prepaid Forward, at expiration or upon any early settlement, the forward counterparty will deliver to us the number of shares of Class A common stock underlying the Prepaid Forward or the portion thereof being settled early. The shares purchased under the Prepaid Forward were treated as treasury stock on the Condensed Consolidated Balance Sheets (and not outstanding for purposes of the calculation of basic and diluted income (loss) per share), but remain outstanding for corporate law purposes, including for purposes of any future stockholders’ votes, until the forward counterparty delivers the shares underlying the Prepaid Forward to us. The net proceeds from the Convertible Senior Notes offering of approximately $91 million were used for general corporate purposes. On October 22, 2020, 8.8 million shares of common stock underlying the Prepaid Forward entered into as part of our Convertible Notes were early settled and delivered to us. The remaining 0.4 million shares of common stock under the Prepaid Forward will continue to be treated as treasury stock on the Condensed Consolidated Balance Sheets until the financial institution delivers the remaining underlying shares to us. There was no financial statement impact due to the return of shares, however shares outstanding for corporate law purposes will be reduced by the early settlement. Liquidity The COVID-19 pandemic negatively impacted our financial results in the first nine months of 2020, and as a result, we took several actions to maximize liquidity, including the acceleration of a shift in our sales channel strategy to reduce the number of distributors and retailers that we work with to focus more on direct-to-consumer sales through GoPrx.xxx, xxducing our marketing expenses to reflect the appropriate levels of support for our shift to a direct-to-consumer model, and announced a restructuring plan in April 2020, which included a reduct...
Analysis of Financial Condition and Results of Operations. In connection with the Notes offering, we entered into a prepaid forward stock repurchase transaction agreement (Prepaid Forward) with a financial institution. Pursuant to the Prepaid Forward, we used approximately $78.0 million of the proceeds from the offering of the Notes to pay the prepayment amount. The aggregate number of shares of our Class A common stock underlying the Prepaid Forward is approximately 9.2 million shares. The expiration date for the Prepaid Forward is April 15, 2022, although it may be settled earlier in whole or in part. Upon settlement of the Prepaid Forward, at expiration or upon any early settlement, the forward counterparty will deliver to us the number of shares of Class A common stock underlying the Prepaid Forward or the portion thereof being settled early. The shares purchased under the Prepaid Forward were treated as treasury stock on the Condensed Consolidated Balance Sheets (and not outstanding for purposes of the calculation of basic and diluted income (loss) per share), but remain outstanding for corporate law purposes, including for purposes of any future stockholders’ votes, until the forward counterparty delivers the shares underlying the Prepaid Forward to us. The net proceeds from the Convertible Senior Notes offering of approximately $91 million were used for general corporate purposes. On October 22, 2020, 8.8 million shares of common stock underlying the Prepaid Forward entered into as part of our Convertible Notes were early settled and delivered to us. The remaining 0.4 million shares of common stock under the Prepaid Forward will continue to be treated as treasury stock on the Condensed Consolidated Balance Sheets until the financial institution delivers the remaining underlying shares to us. There was no financial statement impact due to the return of shares, however shares outstanding for corporate law purposes will be reduced by the early settlement. Liquidity The COVID-19 pandemic negatively impacted our financial results in the first nine months of 2020, and as a result, we took several actions to maximize liquidity, including the acceleration of a shift in our sales channel strategy to reduce the number of distributors and retailers that we work with to focus more on direct-to-consumer sales through GoPrx.xxx, xxducing our marketing expenses to reflect the appropriate levels of support for our shift to a direct-to-consumer model, and announced a restructuring plan in April 2020, which included a reduct...
