UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported) February 27, 2008
SOUTHWEST
GAS CORPORATION
(Exact
name of registrant as specified in its charter)
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California
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1-7850
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88-0085720
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(State
or other jurisdiction of
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(Commission
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(I.R.S.
Employer
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incorporation
or organization)
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File
Number)
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Identification
No.)
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5241
Spring Mountain Road
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Post
Office Box 98510
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Las
Vegas, Nevada
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89193-8510
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: (702) 876-7237
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item
2.02 Results of Operations
and Financial Condition.
On
February 27, 2008, Southwest Gas Corporation (the Company) released summary
financial information to the general public, including the investment community,
regarding the Company’s operating performance for the quarter and twelve months
ended December 31, 2007. A copy of the Company’s press release and
summary financial information is attached hereto as Exhibit 99.
This Form
8-K and the attached exhibit are provided under Item 2.02 of Form 8-K and are
furnished to, but not filed with, the Securities and Exchange
Commission.
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.
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SOUTHWEST
GAS CORPORATION
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Date:
February 27, 2008
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/s/
ROY R. CENTRELLA
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Roy
R. Centrella
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Vice
President/Controller and
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Chief
Accounting Officer
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EXHIBIT
INDEX
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Exhibit
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No.
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Description
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99
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Press
Release and summary financial information dated February 27,
2008.
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February
27, 2008
Media
Contact: Cynthia Messina, Las Vegas, NV (702) 876-7132
Shareholder
Contact: Ken Kenny, Las Vegas, NV (702) 876-7237
For
Immediate Release
SOUTHWEST
GAS CORPORATION ANNOUNCES 2007 EARNINGS
Las
Vegas, Nev. – Southwest Gas Corporation (SWX – NYSE) reported consolidated
earnings of $1.97 per basic share for 2007, a $0.10 per share decrease
from the $2.07 per basic share earned in 2006. The 2006 results
included a nonrecurring benefit of approximately $0.07 per share related to
a property tax settlement. Consolidated net income for 2007 was
$83.2 million, compared to $83.9 million during 2006.
According
to Jeffrey W. Shaw, Chief Executive Officer, “We are pleased to report earnings
of $1.97 per share, our second best earnings performance in 15 years
and a noteworthy result in a time when there is turbulence in the
economy. Two main factors prevented us from having a record
year: lost operating margin resulting from warmer-than-normal
weather, and a decline in the rate of customer growth due to the downturn in the
housing market. Warmer-than-normal weather had an estimated impact of
$12 million on operating margin ($0.18 per share) as Arizona
experienced its warmest November in 113 years of recorded
history. We have included several proposed rate design changes in our
most recently filed Arizona general rate case to address this weather-related
volatility.” Addressing growth, Shaw said “For the first time in
15 years, our new customer growth rate was below 3%...we have not been
immune from the downturn in the housing markets. While we cannot
predict precisely when conditions in the housing market may return to more
normal levels, we believe they will do so in the next two
years. Until then, we anticipate that our growth rate will remain in
the range of 1.5% to 3%.” Shaw concluded “Based on current economic
conditions, we expect that 2008 will present several challenges to address, but
believe our strategy focuses our efforts to meet those challenges.”
During
the fourth quarter of 2007, consolidated net income was $43.1 million, or
$1.01 per basic share, versus $46.7 million, or $1.12 per basic
share, for the fourth quarter of 2006.
Natural Gas Operations
Segment Results
Full
Year 2007
Operating
margin, defined as operating revenues less the cost of gas sold, increased
$35 million between 2006 and 2007. The rate relief component of
the increase was $18 million ($15 million in Arizona and
$3 million in California). Customer growth contributed
$14 million toward the operating margin increase as the Company added a net
29,000 customers during 2007, an increase of about
two percent. Differences in heating demand, caused primarily by
weather variations, accounted for the remaining $3 million increase in
operating margin as warmer-than-normal temperatures were experienced during both
years (during 2007 the estimated negative weather-related impact was about
$12 million, while the negative impact during 2006 was approximately
$15 million).
-more-
Operating
expenses increased $23.4 million, or five percent, between years primarily
due to general increases in labor and maintenance costs, and incremental
operating costs (including depreciation and general taxes) associated with
serving additional customers. Higher uncollectible expenses also
contributed to the increase. A nonrecurring property tax settlement
favorably affected operating expenses in 2006.
Other
income decreased $5.2 million primarily as a result of a reduction in
interest income due to the collection of previously deferred purchased gas
adjustment (PGA) receivables and reduced returns on long-term
investments. Net financing costs increased $872,000, or
one percent, between years primarily due to interest expense associated
with deferred PGA balance payables and higher rates on variable-rate debt,
partially offset by lower average debt outstanding.
Fourth
Quarter
Operating
margin decreased a net $2 million in the fourth quarter of 2007 compared to
the fourth quarter of 2006. Differences in heating demand caused by
weather variations between periods accounted for a $5 million decrease as
Arizona experienced its warmest November on record in
2007. System-wide temperatures in both periods were warmer than
normal (during the current quarter the estimated negative impact was
$8 million, while the negative impact during the prior-year quarter was
$3 million). The weather-related decrease was partially offset
by an increase of $3 million in margin attributable to new
customers.
-more-
Operating
expenses for the quarter decreased $3.6 million, or three percent,
compared to the fourth quarter of 2006 primarily due to timing differences
between periods for certain employee-related costs and lower customer-related
expenses.
Other
income decreased $4.1 million when compared to the same period in 2006
resulting from lower returns on long-term investments and a reduction in
interest income associated with deferred PGA balances.
Southwest
Gas Corporation provides natural gas service to approximately
1,813,000 customers in Arizona, Nevada, and California.
This
press release may contain statements which constitute "forward-looking
statements" within the meaning of the Securities Litigation Reform Act of 1995
(Reform Act). All such forward-looking statements are intended to be
subject to the safe harbor protection provided by the Reform Act. A
number of important factors affecting the business and financial results of the
Company could cause actual results to differ materially from those stated in the
forward-looking statements. These factors include, but are not
limited to, the impact of weather variations on customer usage, customer growth
rates, conditions in the housing market, the effects of regulation/deregulation,
the timing and amount of rate relief, and changes in rate
design.
-more-
SOUTHWEST
GAS CONSOLIDATED EARNINGS DIGEST
(In
thousands, except per share amounts)
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YEAR
ENDED DECEMBER 31,
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2007
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2006
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Consolidated
Operating Revenues
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$ | 2,152,088 | $ | 2,024,758 | ||||
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Net
Income
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$ | 83,246 | $ | 83,860 | ||||
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Average
Number of Common Shares Outstanding
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42,336 | 40,566 | ||||||
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Basic
Earnings Per Share
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$ | 1.97 | $ | 2.07 | ||||
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Diluted
Earnings Per Share
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$ | 1.95 | $ | 2.05 | ||||
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QUARTER
ENDED DECEMBER 31,
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Consolidated
Operating Revenues
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$ | 560,311 | $ | 565,115 | ||||
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Net
Income
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$ | 43,137 | $ | 46,707 | ||||
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Average
Number of Common Shares Outstanding
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42,683 | 41,587 | ||||||
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Basic
Earnings Per Share
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$ | 1.01 | $ | 1.12 | ||||
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Diluted
Earnings Per Share
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$ | 1.00 | $ | 1.11 | ||||
-end-
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SOUTHWEST
GAS CORPORATION
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SUMMARY
UNAUDITED OPERATING RESULTS
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(In
thousands, except per share amounts)
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THREE
MONTHS ENDED
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YEAR
ENDED
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|||||||||||||||
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DECEMBER
31,
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DECEMBER
31,
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|||||||||||||||
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2007
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2006
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2007
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2006
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Results
of Consolidated Operations
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Contribution
to net income - gas operations
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$ | 39,584 | $ | 43,167 | $ | 72,494 | $ | 71,473 | ||||||||
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Contribution
to net income - construction services
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3,553 | 3,540 | 10,752 | 12,387 | ||||||||||||
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Net
income
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$ | 43,137 | $ | 46,707 | $ | 83,246 | $ | 83,860 | ||||||||
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Earnings
per share - gas operations
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$ | 0.93 | $ | 1.04 | $ | 1.71 | $ | 1.76 | ||||||||
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Earnings
per share - construction services
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0.08 | 0.08 | 0.26 | 0.31 | ||||||||||||
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Basic
earnings per share
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$ | 1.01 | $ | 1.12 | $ | 1.97 | $ | 2.07 | ||||||||
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Diluted
earnings per share
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$ | 1.00 | $ | 1.11 | $ | 1.95 | $ | 2.05 | ||||||||
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Average
outstanding common shares
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42,683 | 41,587 | 42,336 | 40,566 | ||||||||||||
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Average
shares outstanding (assuming dilution)
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43,030 | 42,058 | 42,714 | 40,975 | ||||||||||||
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Results
of Natural Gas Operations
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Gas
operating revenues
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$ | 468,770 | $ | 492,043 | $ | 1,814,766 | $ | 1,727,394 | ||||||||
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Net
cost of gas sold
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251,741 | 273,141 | 1,086,194 | 1,033,988 | ||||||||||||
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Operating
margin
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217,029 | 218,902 | 728,572 | 693,406 | ||||||||||||
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Operations
and maintenance expense
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80,361 | 86,087 | 331,208 | 320,803 | ||||||||||||
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Depreciation
and amortization
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39,710 | 37,642 | 157,090 | 146,654 | ||||||||||||
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Taxes
other than income taxes
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9,300 | 9,242 | 37,553 | 34,994 | ||||||||||||
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Operating
income
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87,658 | 85,931 | 202,721 | 190,955 | ||||||||||||
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Other
income (expense)
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(652 | ) | 3,482 | 4,850 | 10,049 | |||||||||||
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Net
interest deductions
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21,970 | 21,552 | 86,436 | 85,567 | ||||||||||||
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Net
interest deductions on subordinated debentures
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1,932 | 1,931 | 7,727 | 7,724 | ||||||||||||
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Income
before income taxes
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63,104 | 65,930 | 113,408 | 107,713 | ||||||||||||
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Income
tax expense
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23,520 | 22,763 | 40,914 | 36,240 | ||||||||||||
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Contribution
to net income - gas operations
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$ | 39,584 | $ | 43,167 | $ | 72,494 | $ | 71,473 | ||||||||
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SOUTHWEST
GAS CORPORATION
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SELECTED
STATISTICAL DATA
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DECEMBER
31, 2007
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FINANCIAL
STATISTICS
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Market
value to book value per share at year end
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130 | % | ||||||||||
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Twelve
months to date return on equity -- total
company
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8.8 | % | ||||||||||
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-- gas
segment
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8.1 | % | ||||||||||
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Common
stock dividend yield at year end
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2.9 | % | ||||||||||
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GAS
OPERATIONS SEGMENT
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||||||||||||
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Authorized
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||||||||||||
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Authorized
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Authorized
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Return
on
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||||||||||
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Rate
Base
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Rate
of
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Common
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||||||||||
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Rate
Jurisdiction
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(In
thousands)
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Return
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Equity
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Arizona
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$ | 922,721 | 8.40 | % | 9.50 | % | ||||||
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Southern
Nevada
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574,285 | 7.64 | 10.50 | |||||||||
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Northern
Nevada
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110,309 | 8.56 | 10.50 | |||||||||
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Southern
California
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102,703 | 8.74 | 10.38 | |||||||||
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Northern
California
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45,487 | 8.74 | 10.38 | |||||||||
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Paiute
Pipeline Company (1)
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82,853 | 9.44 | 11.80 | |||||||||
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(1) Estimated
amounts based on rate case settlements.
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SYSTEM
THROUGHPUT BY CUSTOMER CLASS
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YEAR
ENDED DECEMBER 31,
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(In
dekatherms)
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2007
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2006
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2005
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Residential
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69,806,322 | 67,760,496 | 65,046,522 | |||||||||
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Small
commercial
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31,066,563 | 30,985,648 | 30,007,227 | |||||||||
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Large
commercial
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12,756,072 | 12,825,532 | 11,183,873 | |||||||||
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Industrial
/ Other
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10,352,500 | 14,924,252 | 15,654,230 | |||||||||
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Transportation
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112,842,208 | 117,523,796 | 127,396,344 | |||||||||
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Total
system throughput
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236,823,665 | 244,019,724 | 249,288,196 | |||||||||
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HEATING
DEGREE DAY COMPARISON
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Actual
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1,850 | 1,820 | 1,742 | |||||||||
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Ten-year
average
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1,936 | 1,956 | 1,963 | |||||||||
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Heating
degree days for prior periods have been recalculated using the current
period customer
mix.
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