LAS VEGAS, July 30 /PRNewswire-FirstCall/ -- Southwest Gas Corporation
(NYSE: SWX) recorded a net loss of $0.12 per share for the second quarter of
2003, a $0.51 improvement over the $0.63 per share loss reported for the
second quarter of 2002. Net loss for the second quarter of 2003 was
$4.1 million compared to the 2002 second quarter net loss of $20.6 million.
Second quarter 2002 results reflected a $9 million, or $0.28 per share,
net-of-tax charge for the August 2002 settlements of merger-related
litigation. Due to the seasonal nature of the business, net losses during the
second and third quarters are normal and not generally indicative of earnings
for a complete 12-month period.
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According to Michael O. Maffie, Chief Executive Officer, "The benefits of
the management initiatives implemented over the last nine months involving
cost controls and debt refinancing can be seen in the second quarter results.
Operating costs and interest expense in the second quarter of this year were
about the same as last year even as we continue to grow our business. The
fundamentals of our company remain strong, but in order to reach our
bottom-line potential, we will need some help from Mother Nature in the form
of colder weather this winter to offset the record-setting warm temperatures
experienced earlier this year."
For the twelve months ended June 30, 2003, consolidated net income was
$43.1 million, or $1.29 per share, compared to $36.8 million, or $1.13 per
share, during the twelve-month period ended June 30, 2002.
Natural Gas Operations Segment Results
Operating margin, defined as operating revenues less the cost of gas sold,
increased $5.5 million, or five percent, in the second quarter of 2003
compared to the second quarter of 2002. Customer growth throughout
Southwest's service territories, partially offset by the impact of
conservation and energy efficient appliances, added a net $3 million.
Differences in heating demand caused by weather variations between periods
accounted for the remainder of the margin increase as warmer-than-normal
temperatures experienced in April of 2002 returned to more normal levels in
2003. During the last 12 months the Company added nearly 60,000 customers, an
increase of four percent.
Operating expenses for the quarter increased $1.4 million, or one percent,
compared to the second quarter of 2002. The impact of general cost increases
and costs associated with the continued expansion and upgrading of the gas
system to accommodate customer growth were mitigated by cost-saving management
initiatives. Net financing costs decreased $1.3 million, or six percent,
between periods primarily due to lower interest rates (including the benefits
realized on the refinancing of $130 million of debt in the first quarter).
Other income/expense improved $19.6 million, before tax, between quarters
primarily due to costs recognized in 2002. In the second quarter of 2002,
merger litigation costs, net merger-related litigation settlements, and an
accrual for a regulatory disallowance in California totaled approximately
Twelve Months to Date
Operating margin increased $4 million between periods. Customer growth
contributed an incremental $18 million and rate relief granted during the
fourth quarter of 2001 added $8 million. Differences in heating demand caused
by weather variations between periods resulted in a $22 million margin
decrease as warmer-than-normal temperatures were experienced during both
periods. During the current twelve-month period, operating margin was
negatively impacted by $35 million, and in the prior period, the negative
impact was $13 million.
Operating expenses increased $16.3 million, or four percent, reflecting
incremental costs associated with servicing additional customers. Net
financing costs were relatively flat between periods as the impact of
incremental borrowings to finance construction expenditures was offset by
lower interest rates on variable-rate and refinanced debt.
Other income/expense improved $17.8 million between periods. The timing
of merger-related litigation settlements, merger litigation costs and the
associated insurance recoveries created a net improvement between periods of
$32.4 million. The recognition of $11.9 million in gains on the sale of
property and other assets recognized during the fourth quarter of 2001 and
first quarter of 2002 partially offset the merger-related change noted above.
In addition, interest income earned primarily on the unrecovered balance of
deferred purchased gas costs declined $3.1 million between periods.
Southwest Gas Corporation provides natural gas service to approximately
1,477,000 customers in Arizona, Nevada and California. Its service territory
is centered in the fastest-growing region of the country.
This press release may contain statements which constitute
"forward-looking statements" within the meaning of the Securities Litigation
Reform Act of 1995 (Reform Act). All such forward-looking statements are
intended to be subject to the safe harbor protection provided by the Reform
Act. A number of important factors affecting the business and financial
results of the Company could cause actual results to differ materially from
those stated in the forward-looking statements. These factors include, but
are not limited to, the impact of weather variations on customer usage,
customer growth rates, natural gas prices, the effects of
regulation/deregulation, the timing and amount of rate relief, changes in gas
procurement practices, changes in capital requirements and funding, the impact
of conditions in the capital markets on financing costs, acquisitions, and
SOUTHWEST GAS CONSOLIDATED EARNINGS DIGEST
(In thousands, except per share amounts)
QUARTER ENDED JUNE 30, 2003 2002
Consolidated Operating Revenues $255,852 $261,123
Net Loss $4,104 $20,610
Average Number of Common Shares Outstanding 33,665 32,897
Loss Per Share $0.12 $0.63
SIX MONTHS ENDED JUNE 30, 2003 2002
Consolidated Operating Revenues $659,137 $760,624
Net Income $21,435 $22,286
Average Number of Common Shares Outstanding 33,552 32,759
Basic Earnings Per Share $0.64 $0.68
Diluted Earnings Per Share $0.63 $0.67
TWELVE MONTHS ENDED JUNE 30, 2003 2002
Consolidated Operating Revenues $1,219,422 $1,390,854
Net Income $43,114 $36,773
Average Number of Common Shares Outstanding 33,346 32,542
Basic Earnings Per Share $1.29 $1.13
Diluted Earnings Per Share $1.28 $1.12
SOURCE Southwest Gas Corporation