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) August 6, 2007
SOUTHWEST GAS CORPORATION
(Exact name of registrant as specified in its charter)
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California |
1-7850 |
88-0085720 |
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(State or other jurisdiction of |
(Commission |
(I.R.S. Employer |
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incorporation or organization) |
File Number) |
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) |
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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02 |
Results of Operations and Financial Condition. |
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On August 6, 2007, 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, six, and twelve months ended June 30, 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: August 6, 2007 |
/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 |
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 August 6, 2007. |
August 6, 2007
Media Contact: Cynthia Messina, Las Vegas, NV (702) 876-7132
Shareholder Contact: Ken Kenny, Las Vegas, NV (702) 876-7237
SWX-NYSE
For Immediate Release
SOUTHWEST GAS CORPORATION
REPORTS SECOND QUARTER RESULTS
Las Vegas – Southwest Gas Corporation recorded a net loss of $0.01 per basic share for the second quarter of 2007, compared to net income of $0.09 per basic share earned during the second quarter of 2006. The second quarter of 2006 results included a benefit of approximately $0.07 per share related to a nonrecurring property tax settlement. Net loss for the second quarter of 2007 was $337,000, compared to net income of $3.7 million in the prior period. 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 twelve-month period.
According to Jeffrey W. Shaw, Chief Executive Officer, “Excluding the nonrecurring item, quarterly results declined slightly compared to the same period in 2006 primarily due to a decrease in contribution from our construction services segment, which had experienced record second quarter earnings in 2006.” Shaw also noted that “the torrid customer growth levels experienced in recent years have moderated. During the past twelve months, Southwest added 57,000 customers, an increase of three percent. We anticipate this more moderate growth level will continue throughout the second half of 2007.”
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For the twelve months ended June 30, 2007, consolidated net income was $85.4 million, or $2.05 per basic share, compared to $61.7 million, or $1.57 per basic share, during the twelve-month period ended June 30, 2006. Results for the prior twelve-month period include a $10 million, or $0.16 per share, nonrecurring charge recorded in the fourth quarter of 2005 related to an injuries and damages incident, partially offset by the favorable property tax settlement.
Natural Gas Operations Segment Results
Second Quarter
Operating margin, defined as operating revenues less the cost of gas sold, increased $6.5 million, or five percent, in the second quarter of 2007 compared to the second quarter of 2006. Rate relief added $3 million in operating margin compared to the prior year (consisting of $1 million in California attrition amounts and a $2 million increase from implementing a California equalized margin tracker mechanism, effective January 2007). New customers accounted for the remaining incremental operating margin during the quarter as the Company added 57,000 customers during the last twelve months, an increase of three percent. Warmer-than-normal temperatures were experienced during both quarters, but had no incremental impact between quarters.
Operating expenses for the quarter increased $13 million, or 11 percent, compared to the second quarter of 2006 primarily due to general cost increases and incremental operating costs associated with serving additional customers. Higher uncollectible and employee-related costs also contributed to the operating expense increase. The increase also reflects the impact of the favorable nonrecurring property tax benefit recognized in the second quarter of 2006.
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Other income improved $1.7 million primarily due to higher returns on long-term investments. Net financing costs were relatively unchanged between periods as strong operating cash flows, collection of construction advances, and common stock issuances mitigated the need for incremental borrowings to finance construction activities.
Twelve Months to Date
Operating margin increased $67 million between periods. Rate relief in Arizona and California added $34 million (net of the California equalized margin tracker mechanism year-to-date decrease of $6 million). Customer growth contributed an incremental $19 million. Differences in heating demand, caused primarily by weather variations, accounted for a $14 million increase in operating margin as warmer-than-normal temperatures were experienced during both periods (during the current twelve-month period the negative impact was $7 million, while the negative impact during the prior twelve-month period was $21 million).
Operating expenses increased $27 million, or six percent, between periods primarily due to general increases in labor and maintenance costs, and incremental operating costs associated with serving additional customers. Higher uncollectible and employee-related costs also contributed to the increase. The prior twelve-month period included the impact of the previously noted $10 million nonrecurring injuries and damages charge, partially offset by the favorable property tax settlement. Net financing costs decreased slightly between periods due to strong operating cash flows.
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Southwest Gas Corporation provides natural gas service to approximately 1,800,000 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, changes in natural gas prices, the ability to recover costs through the PGA mechanism, the effects of regulation/deregulation, the timing and amount of rate relief, changes in rate design, changes in gas procurement practices, changes in capital requirements and funding, the impact of conditions in the capital markets on financing costs, changes in construction expenditures and financing, changes in operations and maintenance expenses, future liability claims, changes in pipeline capacity for the transportation of gas and related costs, acquisitions and management’s plans related thereto, competition, and the ability to raise capital in external financings. In addition, the Company can provide no assurance that its discussions regarding certain trends relating to its financing, operations, and maintenance expenses will continue in future periods.
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SOUTHWEST GAS CONSOLIDATED EARNINGS DIGEST
(In thousands, except per share amounts)
| QUARTER ENDED JUNE 30, |
2007 |
2006 | ||||||
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| Consolidated Operating Revenues | $ | 426,537 | $ | 430,902 | ||||
| Net Income (Loss) | $ | (337 | ) | $ | 3,709 | |||
| Average Number of Common Shares Outstanding | 42,226 | 40,174 | ||||||
| Basic Earnings (Loss) Per Share | $ | (0.01 | ) | $ | 0.09 | |||
| Diluted Earnings (Loss) Per Share | $ | (0.01 | ) | $ | 0.09 | |||
| SIX MONTHS ENDED JUNE 30, |
2007 |
2006 | ||||||
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| Consolidated Operating Revenues | $ | 1,220,253 | $ | 1,107,843 | ||||
| Net Income | $ | 49,427 | $ | 47,889 | ||||
| Average Number of Common Shares Outstanding | 42,103 | 39,835 | ||||||
| Basic Earnings Per Share | $ | 1.17 | $ | 1.20 | ||||
| Diluted Earnings Per Share | $ | 1.16 | $ | 1.19 | ||||
| TWELVE MONTHS ENDED JUNE 30, |
2007 |
2006 | ||||||
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| Consolidated Operating Revenues | $ | 2,137,168 | $ | 1,918,116 | ||||
| Net Income | $ | 85,398 | $ | 61,700 | ||||
| Average Number of Common Shares Outstanding | 41,691 | 39,339 | ||||||
| Basic Earnings Per Share | $ | 2.05 | $ | 1.57 | ||||
| Diluted Earnings Per Share | $ | 2.03 | $ | 1.55 | ||||
-end-
SOUTHWEST GAS CORPORATION
SUMMARY UNAUDITED OPERATING RESULTS
(In thousands, except per share amounts)
| THREE MONTHS ENDED JUNE 30, |
SIX MONTHS ENDED JUNE 30, |
TWELVE MONTHS ENDED JUNE 30, | ||||||||||||||||||
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2006 |
2007 |
2006 |
2007 |
2006 | |||||||||||||||
| Results of Consolidated Operations | ||||||||||||||||||||
| Contribution to net income (loss) - gas operations | $ | (2,855 | ) | $ | 9 | $ | 45,773 | $ | 42,086 | $ | 75,160 | $ | 48,732 | |||||||
| Contribution to net income - construction services | 2,518 | 3,700 | 3,654 | 5,803 | 10,238 | 12,968 | ||||||||||||||
| Net income (loss) | $ | (337 | ) | $ | 3,709 | $ | 49,427 | $ | 47,889 | $ | 85,398 | $ | 61,700 | |||||||
| Earnings (loss) per share - gas operations | $ | (0.07 | ) | $ | -- | $ | 1.09 | $ | 1.06 | $ | 1.80 | $ | 1.24 | |||||||
| Earnings per share - construction services | 0.06 | 0.09 | 0.08 | 0.14 | 0.25 | 0.33 | ||||||||||||||
| Basic earnings (loss) per share | $ | (0.01 | ) | $ | 0.09 | $ | 1.17 | $ | 1.20 | $ | 2.05 | $ | 1.57 | |||||||
| Diluted earnings (loss) per share | $ | (0.01 | ) | $ | 0.09 | $ | 1.16 | $ | 1.19 | $ | 2.03 | $ | 1.55 | |||||||
| Average outstanding common shares | 42,226 | 40,174 | 42,103 | 39,835 | 41,691 | 39,339 | ||||||||||||||
| Average shares outstanding (assuming dilution) | -- | 40,541 | 42,516 | 40,196 | 42,126 | 39,704 | ||||||||||||||
| Results of Natural Gas Operations | ||||||||||||||||||||
| Gas operating revenues | $ | 344,233 | $ | 354,168 | $ | 1,071,248 | $ | 962,310 | $ | 1,836,332 | $ | 1,624,536 | ||||||||
| Net cost of gas sold | 198,417 | 214,823 | 692,628 | 612,320 | 1,114,296 | 969,499 | ||||||||||||||
| Operating margin | 145,816 | 139,345 | 378,620 | 349,990 | 722,036 | 655,037 | ||||||||||||||
| Operations and maintenance expense | 83,090 | 76,883 | 167,625 | 155,270 | 333,158 | 320,474 | ||||||||||||||
| Depreciation and amortization | 39,076 | 36,563 | 77,606 | 72,116 | 152,144 | 141,640 | ||||||||||||||
| Taxes other than income taxes | 9,938 | 5,620 | 20,405 | 16,237 | 39,162 | 34,888 | ||||||||||||||
| Operating income | 13,712 | 20,279 | 112,984 | 106,367 | 197,572 | 158,035 | ||||||||||||||
| Other income (expense) | 3,648 | 1,929 | 5,024 | 4,881 | 10,192 | 7,882 | ||||||||||||||
| Net interest deductions | 21,315 | 21,252 | 42,463 | 43,207 | 84,823 | 84,881 | ||||||||||||||
| Net interest deductions on subordinated debentures | 1,932 | 1,931 | 3,863 | 3,862 | 7,725 | 7,724 | ||||||||||||||
| Income (loss) before income taxes | (5,887 | ) | (975 | ) | 71,682 | 64,179 | 115,216 | 73,312 | ||||||||||||
| Income tax expense (benefit) | (3,032 | ) | (984 | ) | 25,909 | 22,093 | 40,056 | 24,580 | ||||||||||||
| Contribution to net income (loss) - gas operations | $ | (2,855 | ) | $ | 9 | $ | 45,773 | $ | 42,086 | $ | 75,160 | $ | 48,732 | |||||||
SOUTHWEST GAS CORPORATION
SELECTED STATISTICAL DATA
JUNE 30, 2007
| FINANCIAL STATISTICS | |||
| Market value to book value per share at quarter end | 150% | ||
| Twelve months to date return on equity -- total company | 9.6% | ||
| -- gas segment | 8.9% | ||
| Common stock dividend yield at quarter end | 2.5% | ||
GAS OPERATIONS SEGMENT
| Rate Jurisdiction |
Authorized Rate Base (In thousands) |
Authorized Rate of Return |
Authorized Return on Common Equity | ||||||||
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| Arizona | $ | 922,721 | 8.40 | % | 9.50 | % | |||||
| Southern Nevada | 574,285 | 7.64 | 10.50 | ||||||||
| Northern Nevada | 110,309 | 8.56 | 10.50 | ||||||||
| Southern California | 102,703 | 8.74 | 10.38 | ||||||||
| Northern California | 45,487 | 8.74 | 10.38 | ||||||||
| Paiute Pipeline Company (1) | 82,853 | 9.44 | 11.80 | ||||||||
(1) Estimated amounts based on rate case settlements.
SYSTEM THROUGHPUT BY CUSTOMER CLASS
| SIX MONTHS ENDED JUNE 30, |
TWELVE MONTHS ENDED JUNE 30, | |||||||||||||
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2007 |
2006 |
2007 |
2006 | ||||||||||
| Residential | 47,230,392 | 43,884,112 | 71,106,776 | 66,472,627 | ||||||||||
| Small commercial | 18,619,628 | 18,184,352 | 31,420,924 | 30,683,620 | ||||||||||
| Large commercial | 6,925,266 | 6,784,356 | 12,966,442 | 11,917,991 | ||||||||||
| Industrial / Other | 5,508,314 | 6,818,874 | 13,613,692 | 15,293,079 | ||||||||||
| Transportation | 54,532,239 | 54,169,141 | 117,886,894 | 120,615,281 | ||||||||||
| Total system throughput | 132,815,839 | 129,840,835 | 246,994,728 | 244,982,598 | ||||||||||
| HEATING DEGREE DAY COMPARISON |
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| Actual | 1,340 | 1,291 | 1,872 | 1,763 | ||||||||||
| Ten-year average | 1,370 | 1,376 | 1,952 | 1,970 | ||||||||||
Heating degree days for prior periods have been recalculated using the current period customer mix.