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) November 8, 2010
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 November 8, 2010, 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 three, nine, and twelve months ended September 30, 2010. 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: November 8, 2010
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/s/ GREGORY J. PETERSON
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Gregory J. Peterson
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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 November 8, 2010.
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November 8, 2010
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
REPORTS THIRD QUARTER 2010 RESULTS
Las Vegas, Nev. – Southwest Gas Corporation (NYSE: SWX) recorded a net loss of $0.11 per share for the third quarter of 2010, compared to a net loss of $0.18 per share recorded for the third quarter of 2009. Consolidated net loss was $4.8 million for the third quarter of 2010, compared to a net loss of $8.3 million for the prior-year quarter. The current quarter includes $7.8 million ($0.17 per share) in other income associated with increases in the cash surrender values (including net death benefits recognized) of company-owned life insurance (“COLI”) policies. The prior-year quarter included $4.9 million ($0.11 per share) in other income associated with COLI policies. Due to the seasonal nature of the business, net losses duri
ng the second and third quarters are normal and not generally indicative of earnings for a complete twelve-month period.
According to Jeffrey W. Shaw, Chief Executive Officer, “Third quarter results in 2010 improved when compared to the corresponding quarter of 2009 primarily due to higher returns on life insurance-related investments and to an increased contribution from our construction services subsidiary. Outside of the COLI impacts, operating results were relatively consistent between quarters. Our focus on controlling costs has been beneficial during these challenging economic conditions. Our next major endeavor is to file for rate relief, including a decoupling mechanism, in Arizona in the very near future.”
-more-
For the twelve months ended September 30, 2010, consolidated net income was $105.3 million, or $2.33 per basic share, compared to $72.3 million, or $1.63 per basic share, during the twelve-month period ended September 30, 2009. The increase between periods reflects higher operating margin, an improvement in other income, and lower financing costs. Other income in the current twelve-month period includes $7.2 million ($0.16 per share) associated with net death benefits and increases in cash surrender values of COLI policies, while the prior twelve-month period included a $1.2 million ($0.03 per share) increase in COLI cash surrender values.
Natural Gas Operations Segment Results
Third Quarter
Operating margin, defined as operating revenues less the cost of gas sold, increased $2 million in the third quarter of 2010 compared to the third quarter of 2009. Rate relief in Nevada provided $1 million of the operating margin increase and customer growth provided $1 million as 17,000 net new customers were added during the last twelve months.
Operating expenses for the quarter increased $3.9 million, or three percent, when compared to the third quarter of 2009 primarily due to higher employee-related and general costs and an increase in Arizona property tax rates received and recognized in the third quarter of 2010, but retroactive to January 2010. Other income, which principally includes returns on COLI policies and non-utility expenses, increased $2.8 million between periods primarily due to increases in the cash surrender values (and net death benefits) of COLI policies. Net financing costs decreased $1.7 million
-more-
primarily due to the redemption of $100 million of subordinated debentures in March 2010.
Twelve Months to Date
Operating margin increased $51 million between periods. Rate relief provided $23 million of the increase, consisting of $15 million in Nevada, $5 million in Arizona, and $3 million in California. Differences in heating demand caused primarily by weather variations between periods contributed $29 million toward the operating margin increase as temperatures in the current period were relatively normal, while temperatures were significantly warmer than normal in the prior-year period. Customer growth contributed $2 million in operating margin. Conservation, resulting from economic conditions and energy efficiency, negatively impacted operating margin by an estimated $3 million.
Operating expenses increased $14.8 million, or three percent, between periods principally due to general cost increases, higher employee-related benefit costs, and the increase in Arizona property tax rates, partially offset by a decline in uncollectible expense and lower depreciation rates in the Nevada rate jurisdictions.
Other income improved $5.2 million primarily due to the increase between periods of cash surrender values (and net death benefits) of COLI policies. Net financing costs decreased $5.3 million between periods due to a reduction in outstanding debt, the redemption of the subordinated debentures, and lower interest rates on variable-rate debt.
-more-
Southwest Gas Corporation provides natural gas service to 1,820,000 customers in Arizona, Nevada, and California.
This press release may contain statements which constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (Reform Act). All such forward-looking statements are intended to be subject to the safe harbor protection provided by the Reform Act. A number of important factors affecting the business and financial results of the Company could cause actual results to differ materially from those stated in the forward-looking statements. These factors include, but are not limited to, the impact of weather variations on customer usage, customer growth rates, conditions in the housing market, the effects of regulation/deregulation, the timing and amount of rate relief, changes in rate design, and the impac
ts of stock market volatility.
-more-
SOUTHWEST GAS CONSOLIDATED EARNINGS DIGEST
(In thousands, except per share amounts)
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QUARTER ENDED SEPTEMBER 30,
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2010
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2009
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Consolidated Operating Revenues
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$ | 307,683 | $ | 317,509 | ||||
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Net Loss
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$ | 4,823 | $ | 8,297 | ||||
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Average Number of Common Shares Outstanding
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45,447 | 44,855 | ||||||
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Loss Per Share
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$ | 0.11 | $ | 0.18 | ||||
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NINE MONTHS ENDED SEPTEMBER 30,
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2010 | 2009 | ||||||
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Consolidated Operating Revenues
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$ | 1,362,259 | $ | 1,395,019 | ||||
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Net Income
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$ | 58,892 | $ | 41,090 | ||||
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Average Number of Common Shares Outstanding
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45,354 | 44,671 | ||||||
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Basic Earnings Per Share
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$ | 1.30 | $ | 0.92 | ||||
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Diluted Earnings Per Share
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$ | 1.29 | $ | 0.91 | ||||
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TWELVE MONTHS ENDED SEPTEMBER 30,
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2010 | 2009 | ||||||
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Consolidated Operating Revenues
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$ | 1,861,064 | $ | 1,904,429 | ||||
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Net Income
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$ | 105,284 | $ | 72,322 | ||||
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Average Number of Common Shares Outstanding
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45,262 | 44,497 | ||||||
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Basic Earnings Per Share
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$ | 2.33 | $ | 1.63 | ||||
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Diluted Earnings Per Share
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$ | 2.31 | $ | 1.61 | ||||
-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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NINE MONTHS ENDED
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TWELVE MONTHS ENDED
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SEPTEMBER 30,
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SEPTEMBER 30,
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SEPTEMBER 30,
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2010
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2009
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2010
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2009
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2010
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2009
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Results of Consolidated Operations
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Contribution to net income (loss) - gas operations
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$ | (8,813 | ) | $ | (11,367 | ) | $ | 52,403 | $ | 35,749 | $ | 96,074 | $ | 64,748 | ||||||||||
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Contribution to net income - construction services
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3,990 | 3,070 | 6,489 | 5,341 | 9,210 | 7,574 | ||||||||||||||||||
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Net income (loss)
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$ | (4,823 | ) | $ | (8,297 | ) | $ | 58,892 | $ | 41,090 | $ | 105,284 | $ | 72,322 | ||||||||||
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Basic earnings (loss) per share
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$ | (0.11 | ) | $ | (0.18 | ) | $ | 1.30 | $ | 0.92 | $ | 2.33 | $ | 1.63 | ||||||||||
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Diluted earnings (loss) per share
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$ | (0.11 | ) | $ | (0.18 | ) | $ | 1.29 | $ | 0.91 | $ | 2.31 | $ | 1.61 | ||||||||||
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Average outstanding common shares
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45,447 | 44,855 | 45,354 | 44,671 | 45,262 | 44,497 | ||||||||||||||||||
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Average shares outstanding (assuming dilution)
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- | - | 45,756 | 44,960 | 45,657 | 44,785 | ||||||||||||||||||
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Results of Natural Gas Operations
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Gas operating revenues
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$ | 213,893 | $ | 235,020 | $ | 1,133,671 | $ | 1,186,870 | $ | 1,561,644 | $ | 1,615,512 | ||||||||||||
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Net cost of gas sold
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81,303 | 104,518 | 581,294 | 668,013 | 779,911 | 884,681 | ||||||||||||||||||
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Operating margin
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132,590 | 130,502 | 552,377 | 518,857 | 781,733 | 730,831 | ||||||||||||||||||
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Operations and maintenance expense
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86,746 | 85,773 | 260,386 | 257,281 | 352,047 | 339,643 | ||||||||||||||||||
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Depreciation and amortization
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42,574 | 41,401 | 127,416 | 125,613 | 168,653 | 168,385 | ||||||||||||||||||
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Taxes other than income taxes
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10,006 | 8,265 | 29,388 | 27,880 | 38,826 | 36,747 | ||||||||||||||||||
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Operating income (loss)
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(6,736 | ) | (4,937 | ) | 135,187 | 108,083 | 222,207 | 186,056 | ||||||||||||||||
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Other income (deductions)
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6,704 | 3,952 | 997 | 4,589 | 2,998 | (2,170 | ) | |||||||||||||||||
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Net interest deductions
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19,115 | 18,904 | 56,001 | 55,617 | 74,475 | 75,902 | ||||||||||||||||||
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Net interest deductions on subordinated debentures
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- | 1,933 | 1,912 | 5,798 | 3,845 | 7,730 | ||||||||||||||||||
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Income (loss) before income taxes
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(19,147 | ) | (21,822 | ) | 78,271 | 51,257 | 146,885 | 100,254 | ||||||||||||||||
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Income tax expense (benefit)
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(10,334 | ) | (10,455 | ) | 25,868 | 15,508 | 50,811 | 35,506 | ||||||||||||||||
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Contribution to net income (loss) - gas operations
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$ | (8,813 | ) | $ | (11,367 | ) | $ | 52,403 | $ | 35,749 | $ | 96,074 | $ | 64,748 | ||||||||||
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SOUTHWEST GAS CORPORATION
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SELECTED STATISTICAL DATA
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SEPTEMBER 30, 2010
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FINANCIAL STATISTICS
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Market value to book value per share at quarter end
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136 | % | ||||||||||||||
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Twelve months to date return on equity -- total company
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9.4 | % | ||||||||||||||
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-- gas segment
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9.0 | % | ||||||||||||||
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Common stock dividend yield at quarter end
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3.0 | % | ||||||||||||||
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GAS OPERATIONS SEGMENT
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Authorized
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Authorized
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Authorized
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Return on
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Rate Base
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Rate of
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Common
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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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$ | 1,066,108 | 8.86 | % | 10.00 | % |
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Southern Nevada
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819,717 | 7.40 | 10.15 | |||||||||||||
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Northern Nevada
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116,584 | 8.29 | 10.15 | |||||||||||||
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Southern California
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143,851 | 7.87 | 10.50 | |||||||||||||
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Northern California
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52,285 | 8.99 | 10.50 | |||||||||||||
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South Lake Tahoe
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11,815 | 8.99 | 10.50 | |||||||||||||
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Paiute Pipeline Company (1)
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84,717 | 9.47 | 12.00 | |||||||||||||
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(1) Estimated amounts based on rate case settlement.
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SYSTEM THROUGHPUT BY CUSTOMER CLASS
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NINE MONTHS ENDED
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TWELVE MONTHS ENDED
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SEPTEMBER 30,
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SEPTEMBER 30,
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(In dekatherms)
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2010 | 2009 | 2010 | 2009 | ||||||||||||
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Residential
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54,112,309 | 50,147,858 | 70,938,044 | 64,481,072 | ||||||||||||
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Small commercial
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22,708,979 | 21,852,502 | 30,278,902 | 29,134,009 | ||||||||||||
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Large commercial
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8,398,127 | 9,007,018 | 11,115,230 | 12,013,360 | ||||||||||||
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Industrial / Other
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4,209,420 | 5,632,449 | 5,839,319 | 8,212,877 | ||||||||||||
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Transportation
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77,978,668 | 81,307,527 | 101,060,532 | 108,518,427 | ||||||||||||
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Total system throughput
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167,407,503 | 167,947,354 | 219,232,027 | 222,359,745 | ||||||||||||
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HEATING DEGREE DAY COMPARISON
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Actual
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1,475 | 1,278 | 2,019 | 1,734 | ||||||||||||
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Ten-year average
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1,359 | 1,347 | 1,894 | 1,873 | ||||||||||||
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Heating degree days for prior periods have been recalculated using the current period customer mix.
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