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 9, 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 August
9, 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 quarter, six, and twelve months
ended June 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:
August 9, 2010
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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 August 9,
2010.
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August 9,
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
SECOND QUARTER 2010 RESULTS
Las
Vegas, Nev. – Southwest Gas Corporation (NYSE: SWX) recorded a net loss of
$0.02 per share for the second quarter of 2010, compared to a net loss of
$0.01 per share recorded for the second quarter of 2009. Consolidated
net loss was $933,000 for the second quarter of 2010, compared to a net loss of
$594,000 for the prior-year quarter. The current quarter includes a
$3.6 million ($0.08 per share) decrease in the cash surrender values of
company-owned life insurance (“COLI”) policies, while the corresponding
prior-year quarter included a $3.7 million ($0.08 per share) increase in
COLI policies. 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, “Overall, we are pleased with
second quarter 2010 operating results for our core business
activities. When compared to the second quarter of 2009, natural gas
segment operating margin was up over $8 million, operating expenses were
relatively flat, and financing costs were down $1.6 million. The
bottom-line results for our construction services subsidiary also improved by
$1 million over the prior-year quarter.” Shaw concluded by
saying, “Recently, Moody’s upgraded our credit rating to Baa2 from Baa3 and both
Fitch and
-more-
Standard
& Poor’s revised our credit rating outlook to positive from
stable. It’s gratifying to achieve these affirmative changes in such
challenging economic conditions.”
For the
twelve months ended June 30, 2010, consolidated net income was
$101.8 million, or $2.26 per basic share, compared to
$63.9 million, or $1.45 per basic share, during the twelve-month
period ended June 30, 2009. The increase between periods reflects
higher operating margin, a significant improvement in other income, and lower
financing costs. Other income in the current twelve-month period
includes a $4.3 million ($0.10 per share) increase in the cash surrender
values of COLI policies, while the prior twelve-month period included a
$7.4 million ($0.17 per share) decrease in COLI policies.
Natural Gas Operations
Segment Results
Second
Quarter
Operating
margin, defined as operating revenues less the cost of gas sold, increased
$8 million in the second quarter of 2010 compared to the second quarter of
2009. Differences in heating demand, caused primarily by weather
variations in Arizona, provided $4 million of the operating margin increase
as temperatures in the current quarter were relatively normal, while
temperatures were warmer than normal in the second quarter of
2009. Rate relief provided $4 million of the operating margin
increase, consisting of $3 million in Nevada and $1 million in
California. Customer growth provided a minimal benefit as
16,000 net new customers were added during the last twelve
months.
-more-
Operating
expenses for the quarter were virtually unchanged when compared to the second
quarter of 2009. Other income, which principally includes returns on
COLI policies and non-utility expenses, decreased $7.6 million between
periods. This was primarily due to a negative swing in the cash
surrender values of COLI policies. Net financing costs decreased
$1.6 million primarily due to the redemption of $100 million of
subordinated debentures in March 2010.
Twelve
Months to Date
Operating
margin increased $45 million between periods. Rate relief and
rate changes provided a net $18 million increase, consisting of rate relief
of $10 million in Arizona, $14 million in Nevada, and $3 million
in California, partially offset by a decrease of $9 million related to the
return to a seasonal margin methodology in California in
2009. Differences in heating demand caused primarily by weather
variations between periods resulted in a $29 million 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 $1 million in operating
margin. Conservation, resulting from economic conditions and energy
efficiency, negatively impacted operating margin by an estimated
$3 million.
Operating
expenses increased $9.1 million, or two percent, between periods
principally due to general cost increases and higher employee-related benefit
costs. The increase was mitigated by a decline in uncollectible
expense. Despite additional plant in service, depreciation expense
decreased slightly due to lower depreciation rates in California and Nevada rate
jurisdictions.
-more-
Other
income improved $10.9 million between periods. This was
primarily due to the net change in the cash surrender values of COLI
policies. Net financing costs decreased $5.2 million between
periods due to a reduction in outstanding debt, the redemption of the
subordinated debentures, and lower interest rates on variable-rate
debt.
Southwest
Gas Corporation provides natural gas service to 1,825,000 customers in Arizona,
Nevada, and California.
This
press release may contain statements which constitute “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995 (Reform Act). All such forward-looking statements are
intended to be subject to the safe harbor protection provided by the Reform
Act. A number of important factors affecting the business and
financial results of the Company could cause actual results to differ materially
from those stated in the forward-looking statements. These factors
include, but are not limited to, the impact of weather variations on customer
usage, customer growth rates, conditions in the housing market, the effects of
regulation/deregulation, the timing and amount of rate relief, changes in rate
design, and the impacts of stock market volatility.
-more-
SOUTHWEST
GAS CONSOLIDATED EARNINGS DIGEST
(In
thousands, except per share amounts)
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QUARTER
ENDED JUNE 30,
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2010
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2009
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||||||
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Consolidated
Operating Revenues
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$ | 385,825 | $ | 387,648 | ||||
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Net
Loss
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$ | 933 | $ | 594 | ||||
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Average
Number of Common Shares Outstanding
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45,391 | 44,730 | ||||||
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Loss
Per Share
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$ | 0.02 | $ | 0.01 | ||||
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SIX
MONTHS ENDED JUNE 30,
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2010 | 2009 | ||||||
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Consolidated
Operating Revenues
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$ | 1,054,576 | $ | 1,077,510 | ||||
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Net
Income
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$ | 63,715 | $ | 49,387 | ||||
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Average
Number of Common Shares Outstanding
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45,306 | 44,578 | ||||||
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Basic
Earnings Per Share
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$ | 1.41 | $ | 1.11 | ||||
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Diluted
Earnings Per Share
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$ | 1.39 | $ | 1.10 | ||||
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TWELVE
MONTHS ENDED JUNE 30,
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2010 | 2009 | ||||||
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Consolidated
Operating Revenues
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$ | 1,870,890 | $ | 1,961,342 | ||||
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Net
Income
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$ | 101,810 | $ | 63,933 | ||||
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Average
Number of Common Shares Outstanding
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45,113 | 44,176 | ||||||
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Basic
Earnings Per Share
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$ | 2.26 | $ | 1.45 | ||||
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Diluted
Earnings Per Share
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$ | 2.24 | $ | 1.44 | ||||
-end-
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SOUTHWEST
GAS CORPORATION
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||||||||||||||||||||||||
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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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SIX
MONTHS ENDED
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TWELVE
MONTHS ENDED
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||||||||||||||||||||||
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JUNE
30,
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JUNE
30,
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JUNE
30,
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||||||||||||||||||||||
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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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$ | (4,101 | ) | $ | (2,736 | ) | $ | 61,216 | $ | 47,116 | $ | 93,520 | $ | 56,437 | ||||||||||
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Contribution to net income - construction services
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3,168 | 2,142 | 2,499 | 2,271 | 8,290 | 7,496 | ||||||||||||||||||
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Net income (loss)
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$ | (933 | ) | $ | (594 | ) | $ | 63,715 | $ | 49,387 | $ | 101,810 | $ | 63,933 | ||||||||||
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Basic earnings (loss) per share
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$ | (0.02 | ) | $ | (0.01 | ) | $ | 1.41 | $ | 1.11 | $ | 2.26 | $ | 1.45 | ||||||||||
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Diluted earnings (loss) per share
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$ | (0.02 | ) | $ | (0.01 | ) | $ | 1.39 | $ | 1.10 | $ | 2.24 | $ | 1.44 | ||||||||||
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Average outstanding common shares
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45,391 | 44,730 | 45,306 | 44,578 | 45,113 | 44,176 | ||||||||||||||||||
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Average shares outstanding (assuming dilution)
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- | - | 45,698 | 44,848 | 45,484 | 44,461 | ||||||||||||||||||
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Results
of Natural Gas Operations
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Gas operating revenues
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$ | 305,269 | $ | 316,744 | $ | 919,778 | $ | 951,850 | $ | 1,582,771 | $ | 1,648,942 | ||||||||||||
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Net cost of gas sold
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147,736 | 167,685 | 499,991 | 563,495 | 803,126 | 914,193 | ||||||||||||||||||
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Operating margin
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157,533 | 149,059 | 419,787 | 388,355 | 779,645 | 734,749 | ||||||||||||||||||
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Operations and maintenance expense
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86,935 | 86,846 | 173,640 | 171,508 | 351,074 | 341,359 | ||||||||||||||||||
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Depreciation and amortization
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42,146 | 41,873 | 84,842 | 84,212 | 167,480 | 168,607 | ||||||||||||||||||
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Taxes other than income taxes
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9,616 | 9,504 | 19,382 | 19,615 | 37,085 | 36,585 | ||||||||||||||||||
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Operating income
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18,836 | 10,836 | 141,923 | 113,020 | 224,006 | 188,198 | ||||||||||||||||||
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Other income (deductions)
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(5,176 | ) | 2,423 | (5,707 | ) | 637 | 246 | (10,670 | ) | |||||||||||||||
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Net interest deductions
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18,862 | 18,531 | 36,886 | 36,713 | 74,264 | 77,519 | ||||||||||||||||||
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Net interest deductions on subordinated debentures
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- | 1,932 | 1,912 | 3,865 | 5,778 | 7,730 | ||||||||||||||||||
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Income (loss) before income taxes
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(5,202 | ) | (7,204 | ) | 97,418 | 73,079 | 144,210 | 92,279 | ||||||||||||||||
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Income tax expense (benefit)
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(1,101 | ) | (4,468 | ) | 36,202 | 25,963 | 50,690 | 35,842 | ||||||||||||||||
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Contribution to net income (loss) - gas operations
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$ | (4,101 | ) | $ | (2,736 | ) | $ | 61,216 | $ | 47,116 | $ | 93,520 | $ | 56,437 | ||||||||||
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SOUTHWEST
GAS CORPORATION
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SELECTED
STATISTICAL DATA
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||||||||||||||||
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JUNE
30, 2010
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||||||||||||||||
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FINANCIAL
STATISTICS
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Market
value to book value per share at quarter end
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118 | % | ||||||||||||||
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Twelve
months to date return on equity -- total
company
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9.2 | % | ||||||||||||||
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-- gas segment
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8.9 | % | ||||||||||||||
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Common
stock dividend yield at quarter end
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3.4 | % | ||||||||||||||
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GAS
OPERATIONS SEGMENT
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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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$ | 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 settlements.
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||||||||||||||||
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SYSTEM
THROUGHPUT BY CUSTOMER CLASS
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||||||||||||||||
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SIX
MONTHS ENDED
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TWELVE
MONTHS ENDED
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|||||||||||||||
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JUNE
30,
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JUNE
30,
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|||||||||||||||
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(In
dekatherms)
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2010 | 2009 | 2010 | 2009 | ||||||||||||
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Residential
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47,556,591 | 43,542,586 | 70,987,598 | 64,514,089 | ||||||||||||
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Small
commercial
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18,216,906 | 17,326,439 | 30,312,892 | 29,331,177 | ||||||||||||
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Large
commercial
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6,179,464 | 6,690,623 | 11,212,962 | 12,189,966 | ||||||||||||
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Industrial
/ Other
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3,014,098 | 3,964,783 | 6,311,663 | 8,749,530 | ||||||||||||
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Transportation
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49,168,221 | 51,909,999 | 101,647,613 | 112,965,316 | ||||||||||||
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Total
system throughput
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124,135,280 | 123,434,430 | 220,472,728 | 227,750,078 | ||||||||||||
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HEATING
DEGREE DAY COMPARISON
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||||||||||||||||
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Actual
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1,446 | 1,252 | 2,017 | 1,727 | ||||||||||||
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Ten-year
average
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1,335 | 1,323 | 1,895 | 1,875 | ||||||||||||
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Heating
degree days for prior periods have been recalculated using the current
period customer mix.
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