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 8, 2011
SOUTHWEST GAS CORPORATION
(Exact name of registrant as specified in its charter)
|
California
|
1-7850
|
88-0085720
|
|
(State or other jurisdiction of
|
(Commission
|
(I.R.S. Employer
|
|
incorporation or organization)
|
File Number)
|
Identification No.)
|
|
5241 Spring Mountain Road
|
||
|
Post Office Box 98510
|
||
|
Las Vegas, Nevada
|
89193-8510
|
|
|
(Address of principal executive offices)
|
(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:
[ ] 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 8, 2011, 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, 2011. 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.
|
SOUTHWEST GAS CORPORATION
|
|
|
Date: August 8, 2011
|
|
|
/s/ GREGORY J. PETERSON
|
|
|
Gregory J. Peterson
|
|
|
Vice President/Controller and
|
|
|
Chief Accounting Officer
|
EXHIBIT INDEX
|
Exhibit
|
||
|
No.
|
Description
|
|
|
99
|
Press Release and summary financial information dated August 8, 2011.
|
August 8, 2011
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 2011 RESULTS
Las Vegas, Nev. – Southwest Gas Corporation (NYSE: SWX) reported consolidated earnings of $0.09 per basic share for the second quarter of 2011, an $0.11 increase from the net loss of $0.02 per share recorded for the second quarter of 2010. Consolidated net income was $4.1 million for the second quarter of 2011, compared to a net loss of $933,000 for the prior-year quarter. The current quarter includes $2.6 million ($0.06 per share) in other income associated with increases in cash surrender values of company-owned life insurance (“COLI”) policies (including net death benefits). The prior-year quarter reflected a $3.6 million ($0.08 per share) decrease in other income associated with COLI policies. Due to the seasonal nature of the business, results for quarterly periods are not generally indicative of earnings for a complete twelve-month period.
According to Jeffrey W. Shaw, Chief Executive Officer, “Second quarter 2011 results compared favorably to the second quarter of 2010. We continue to focus on minimizing cost increases and maintaining the stability of our financial results. In June 2011, Fitch upgraded our credit rating to BBB+ from BBB. This upgrade, as well as the earlier Standard & Poor’s upgrade in April 2011, is indicative of our improved earnings and cash flows.” Shaw concluded by stating, “In connection with the current Arizona general rate case, we recently filed a settlement agreement with the Arizona Corporation
-more-
Commission that is supported by a majority of the interested parties. Hearings on the proposed settlement will begin later this week. We are optimistic that a decision on the rate case can be reached before the end of the year.”
For the twelve months ended June 30, 2011, consolidated net income was $112.8 million, or $2.47 per basic share, compared to $101.8 million, or $2.26 per basic share, during the twelve-month period ended June 30, 2010. The improvement between periods includes a significant increase in other income and an additional $6.1 million contribution from construction services activities. Other income in the current twelve-month period includes $16.7 million ($0.37 per share) associated with increases in cash surrender values of COLI policies and net death benefits. The prior twelve-month period included a $4.3 million ($0.10 per share) increase in COLI cash surrender values.
Natural Gas Operations Segment Results
Second Quarter
Operating margin, defined as operating revenues less the cost of gas sold, decreased $1 million in the second quarter of 2011 compared to the second quarter of 2010. Weather changes between quarters accounted for a $2 million margin decrease as warmer-than-normal temperatures were experienced in the current quarter. Rate relief in California and customer growth combined for a $1 million increase in operating margin, partially offsetting the weather impact. Approximately 14,000 net new customers were added during the last twelve months.
-more-
Operating expenses for the quarter increased $3.8 million, or 3%, compared to the second quarter of 2010 primarily due to general cost increases, partially offset by lower uncollectible expenses. Other income, which principally includes returns on COLI policies and non-utility expenses, increased $6.7 million between periods. This was primarily due to an increase in the cash surrender values (including recognized net death benefits) of COLI policies. Net financing costs decreased $1.7 million between the comparative quarters primarily due to lower interest rates on variable-rate debt and the favorable impact of long-term debt refinancing.
Twelve Months to Date
Operating margin increased $3 million between periods. Rate relief provided $6 million of the operating margin increase, consisting of $3 million in Nevada and $3 million in California. Customer growth contributed $2 million in operating margin. Differences in heating demand caused by weather variations between periods resulted in a decrease of $5 million.
Operating expenses increased $17.9 million, or 3%, between periods principally due to higher general costs, higher employee-related benefit costs including pension expense, and an increase in depreciation expense resulting from additional plant in service. The increases were mitigated by cost containment efforts (including lower staffing levels) and a decrease in uncollectible expense.
-more-
Other income, which principally includes changes in the cash surrender values of COLI policies and non-utility expenses, increased $10.8 million between periods, primarily due to a significant increase in COLI-related income. Net financing costs decreased $6.8 million between periods largely due to the redemption of $100 million of subordinated debentures in March 2010 and lower interest rates on variable-rate debt.
Southwest Gas Corporation provides natural gas service to 1,839,000 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)
|
QUARTER ENDED JUNE 30,
|
2011
|
2010
|
||||||
|
Consolidated Operating Revenues
|
$ | 388,505 | $ | 385,825 | ||||
|
Net Income (Loss)
|
$ | 4,055 | $ | (933 | ) | |||
|
Average Number of Common Shares Outstanding
|
45,864 | 45,391 | ||||||
|
Basic Earnings (Loss) Per Share
|
$ | 0.09 | $ | (0.02 | ) | |||
|
Diluted Earnings (Loss) Per Share
|
$ | 0.09 | $ | (0.02 | ) | |||
|
SIX MONTHS ENDED JUNE 30,
|
2011 | 2010 | ||||||
|
Consolidated Operating Revenues
|
$ | 1,016,945 | $ | 1,054,576 | ||||
|
Net Income
|
$ | 72,604 | $ | 63,715 | ||||
|
Average Number of Common Shares Outstanding
|
45,814 | 45,306 | ||||||
|
Basic Earnings Per Share
|
$ | 1.58 | $ | 1.41 | ||||
|
Diluted Earnings Per Share
|
$ | 1.57 | $ | 1.39 | ||||
|
TWELVE MONTHS ENDED JUNE 30,
|
2011 | 2010 | ||||||
|
Consolidated Operating Revenues
|
$ | 1,792,740 | $ | 1,870,890 | ||||
|
Net Income
|
$ | 112,766 | $ | 101,810 | ||||
|
Average Number of Common Shares Outstanding
|
45,656 | 45,113 | ||||||
|
Basic Earnings Per Share
|
$ | 2.47 | $ | 2.26 | ||||
|
Diluted Earnings Per Share
|
$ | 2.45 | $ | 2.24 | ||||
-end-
|
SOUTHWEST GAS CORPORATION
|
||||||||||||||||||||||||
|
SUMMARY UNAUDITED OPERATING RESULTS
|
||||||||||||||||||||||||
|
(In thousands, except per share amounts)
|
||||||||||||||||||||||||
|
THREE MONTHS ENDED
|
SIX MONTHS ENDED
|
TWELVE MONTHS ENDED
|
||||||||||||||||||||||
|
JUNE 30,
|
JUNE 30,
|
JUNE 30,
|
||||||||||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||||||||
|
Results of Consolidated Operations
|
||||||||||||||||||||||||
|
Contribution to net income (loss) - gas operations
|
$ | 199 | $ | (4,101 | ) | $ | 68,214 | $ | 61,216 | $ | 98,380 | $ | 93,520 | |||||||||||
|
Contribution to net income - construction services
|
3,856 | 3,168 | 4,390 | 2,499 | 14,386 | 8,290 | ||||||||||||||||||
|
Net income (loss)
|
$ | 4,055 | $ | (933 | ) | $ | 72,604 | $ | 63,715 | $ | 112,766 | $ | 101,810 | |||||||||||
|
Basic earnings (loss) per share
|
$ | 0.09 | $ | (0.02 | ) | $ | 1.58 | $ | 1.41 | $ | 2.47 | $ | 2.26 | |||||||||||
|
Diluted earnings (loss) per share
|
$ | 0.09 | $ | (0.02 | ) | $ | 1.57 | $ | 1.39 | $ | 2.45 | $ | 2.24 | |||||||||||
|
Average outstanding common shares
|
45,864 | 45,391 | 45,814 | 45,306 | 45,656 | 45,113 | ||||||||||||||||||
|
Average shares outstanding (assuming dilution)
|
46,299 | - | 46,239 | 45,698 | 46,091 | 45,484 | ||||||||||||||||||
|
Results of Natural Gas Operations
|
||||||||||||||||||||||||
|
Gas operating revenues
|
$ | 273,414 | $ | 305,269 | $ | 827,267 | $ | 919,778 | $ | 1,419,396 | $ | 1,582,771 | ||||||||||||
|
Net cost of gas sold
|
117,055 | 147,736 | 400,861 | 499,991 | 637,045 | 803,126 | ||||||||||||||||||
|
Operating margin
|
156,359 | 157,533 | 426,406 | 419,787 | 782,351 | 779,645 | ||||||||||||||||||
|
Operations and maintenance expense
|
88,708 | 86,935 | 179,658 | 173,640 | 360,961 | 351,074 | ||||||||||||||||||
|
Depreciation and amortization
|
43,476 | 42,146 | 87,357 | 84,842 | 172,971 | 167,480 | ||||||||||||||||||
|
Taxes other than income taxes
|
10,296 | 9,616 | 20,165 | 19,382 | 39,652 | 37,085 | ||||||||||||||||||
|
Operating income
|
13,879 | 18,836 | 139,226 | 141,923 | 208,767 | 224,006 | ||||||||||||||||||
|
Other income (deductions)
|
1,525 | (5,176 | ) | 1,289 | (5,707 | ) | 11,012 | 246 | ||||||||||||||||
|
Net interest deductions
|
17,153 | 18,862 | 34,981 | 36,886 | 73,208 | 74,264 | ||||||||||||||||||
|
Net interest deductions on subordinated debentures
|
- | - | - | 1,912 | - | 5,778 | ||||||||||||||||||
|
Income (loss) before income taxes
|
(1,749 | ) | (5,202 | ) | 105,534 | 97,418 | 146,571 | 144,210 | ||||||||||||||||
|
Income tax expense (benefit)
|
(1,948 | ) | (1,101 | ) | 37,320 | 36,202 | 48,191 | 50,690 | ||||||||||||||||
|
Contribution to net income (loss) - gas operations
|
$ | 199 | $ | (4,101 | ) | $ | 68,214 | $ | 61,216 | $ | 98,380 | $ | 93,520 | |||||||||||
|
SOUTHWEST GAS CORPORATION
|
||||||||||||||||
|
SELECTED STATISTICAL DATA
|
||||||||||||||||
|
JUNE 30, 2011
|
||||||||||||||||
|
FINANCIAL STATISTICS
|
||||||||||||||||
|
Market value to book value per share at quarter end
|
145 | % | ||||||||||||||
|
Twelve months to date return on equity -- total company
|
9.6 | % | ||||||||||||||
|
-- gas segment
|
8.8 | % | ||||||||||||||
|
Common stock dividend yield at quarter end
|
2.7 | % | ||||||||||||||
|
GAS OPERATIONS SEGMENT
|
||||||||||||||||
|
Authorized
|
||||||||||||||||
|
Authorized
|
Authorized
|
Return on
|
||||||||||||||
|
Rate Base
|
Rate of
|
Common
|
||||||||||||||
|
Rate Jurisdiction
|
(In thousands)
|
Return
|
Equity
|
|||||||||||||
|
Arizona
|
$ | 1,066,108 | 8.86 | % | 10.00 | % |
|
|||||||||
|
Southern Nevada
|
819,717 | 7.40 | 10.15 | |||||||||||||
|
Northern Nevada
|
116,584 | 8.29 | 10.15 | |||||||||||||
|
Southern California
|
143,851 | 7.87 | 10.50 | |||||||||||||
|
Northern California
|
52,285 | 8.99 | 10.50 | |||||||||||||
|
South Lake Tahoe
|
11,815 | 8.99 | 10.50 | |||||||||||||
|
Paiute Pipeline Company (1)
|
84,717 | 9.47 | 12.00 | |||||||||||||
|
(1) Estimated amounts based on rate case settlement.
|
||||||||||||||||
|
SYSTEM THROUGHPUT BY CUSTOMER CLASS
|
||||||||||||||||
|
SIX MONTHS ENDED
|
TWELVE MONTHS ENDED
|
|||||||||||||||
|
JUNE 30,
|
JUNE 30,
|
|||||||||||||||
|
(In dekatherms)
|
2011 | 2010 | 2011 | 2010 | ||||||||||||
|
Residential
|
47,156,075 | 47,556,591 | 70,068,784 | 70,987,598 | ||||||||||||
|
Small commercial
|
18,247,627 | 18,216,906 | 30,124,722 | 30,312,892 | ||||||||||||
|
Large commercial
|
6,361,911 | 6,179,464 | 11,365,742 | 11,212,962 | ||||||||||||
|
Industrial / Other
|
2,736,932 | 3,014,098 | 5,615,047 | 6,311,663 | ||||||||||||
|
Transportation
|
47,483,477 | 49,168,221 | 98,175,205 | 101,647,613 | ||||||||||||
|
Total system throughput
|
121,986,022 | 124,135,280 | 215,349,500 | 220,472,728 | ||||||||||||
|
HEATING DEGREE DAY COMPARISON
|
||||||||||||||||
|
Actual
|
1,382 | 1,446 | 1,933 | 2,016 | ||||||||||||
|
Ten-year average
|
1,338 | 1,335 | 1,878 | 1,893 | ||||||||||||
|
Heating degree days for prior periods have been recalculated using the current period customer mix.
|
||||||||||||||||