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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

 

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 2, 2006

 

SOUTHWEST GAS CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

 

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.

 

On November 2, 2006, 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, nine, and twelve months ended September 30, 2006. 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.

 

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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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EXHIBIT INDEX

 

 

 

 

 

 

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November 2, 2006

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 THIRD QUARTER RESULTS

 

 

Las Vegas - Southwest Gas Corporation recorded a net loss of $0.26 per share for the third quarter of 2006, a $0.17 improvement from the loss of $0.43 per share recorded during the third quarter of 2005. Net loss for the third quarter of 2006 was $10.7 million, compared to a loss of $16.4 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, "The improvement in operating results over the same period a year ago is due largely to higher operating margin associated with the new rates in place in Arizona, coupled with continued customer growth. And while the pace of growth has slowed somewhat recently, we remain well above industry averages. Additionally, operating expenses are moderating as we use technology to curb labor cost increases and maintain effective customer-to-employee ratios.” Shaw went on to say, “We are quite pleased with our results for the second and third quarters of 2006. We now look optimistically to the winter heating season in hopes of a continued trend of improved operating results.”

 

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For the twelve months ended September 30, 2006, consolidated net income was $67.4 million, or $1.69 per basic share, compared to $54 million, or $1.44 per basic share, during the twelve-month period ended September 30, 2005. Results for the current 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 approximately $0.07 per share related to a favorable nonrecurring property tax settlement reached in the second quarter of 2006.

 

Natural Gas Operations Segment Results

Third Quarter

Operating margin, defined as operating revenues less the cost of gas sold, increased approximately $14 million, or 13 percent, in the third quarter of 2006 compared to the third quarter of 2005. During the last twelve months, the Company added 75,000 customers, an increase of over four percent. New customers contributed an incremental $4 million in operating margin during the quarter. Rate relief added approximately $10 million ($9 million in Arizona) in operating margin compared to the prior year.

 

Operating expenses for the quarter increased $3.9 million, or three percent, compared to the third quarter of 2005 primarily due to general cost increases and incremental operating costs associated with serving additional customers. Net financing costs increased $485,000, or two percent, between periods primarily due to an increase in average debt outstanding and higher rates on variable-rate debt.

 

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Twelve Months to Date

Operating margin increased $36 million between periods. Customer growth contributed an incremental $26 million and rate relief in Arizona and California added $24 million. Differences in heating demand caused primarily by weather variations between periods resulted in a $14 million operating margin decrease as warmer-than-normal temperatures were experienced during both periods.

 

Operating expenses increased $23.3 million, or five percent, between periods reflecting the previously noted $10 million nonrecurring injuries and damages charge, along with general increases in labor and maintenance costs, and incremental operating costs associated with serving additional customers. These costs were partially offset by the property tax settlement and lower property tax rates in Arizona.

 

Other income improved $6 million primarily due to higher returns on long-term investments, increased interest income on higher deferred purchased gas cost balances, and interest income related to the property tax settlement. Net financing costs rose $4.1 million, or five percent, between periods primarily due to an increase in average debt outstanding and higher rates on variable-rate debt.

 

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Southwest Gas Corporation provides natural gas service to 1,752,000 customers in Arizona, Nevada, and California. Its service territories are 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 SEPTEMBER 30,			2006			2005
Consolidated Operating Revenues			$	351,800		$	313,278
Net Loss			$	10,736		$	16,444
Average Number of Common Shares Outstanding				40,982			38,528
Loss Per Share			$	0.26		$	0.43

NINE MONTHS ENDED SEPTEMBER 30,			2006			2005
Consolidated Operating Revenues			$	1,459,643		$	1,217,288
Net Income			$	37,153		$	13,568
Average Number of Common Shares Outstanding				40,221			37,780
Basic Earnings Per Share			$	0.92		$	0.36
Diluted Earnings Per Share			$	0.91		$	0.36

TWELVE MONTHS ENDED SEPTEMBER 30,			2006			2005
Consolidated Operating Revenues			$	1,956,638		$	1,677,784
Net Income			$	67,408		$	54,014
Average Number of Common Shares Outstanding				39,957			37,392
Basic Earnings Per Share			$	1.69		$	1.44
Diluted Earnings Per Share			$	1.67		$	1.43

 

 

-end-

 

 

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SOUTHWEST GAS CORPORATION
SUMMARY UNAUDITED OPERATING RESULTS
(In thousands, except per share amounts)

 

 

			THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,						TWELVE MONTHS ENDED SEPTEMBER 30,
			2006			2005			2006			2005			2006			2005
Results of Consolidated Operations
Contribution to net income (loss) - gas operations			$	(13,780	)	$	(20,023	)	$	28,306		$	7,001		$	54,975		$	44,363
Contribution to net income - construction services				3,044			3,579			8,847			6,567			12,433			9,651
Net income (loss)			$	(10,736	)	$	(16,444	)	$	37,153		$	13,568		$	67,408		$	54,014
Earnings (loss) per share - gas operations			$	(0.34	)	$	(0.52	)	$	0.70		$	0.19		$	1.38		$	1.18
Earnings per share - construction services				0.08			0.09			0.22			0.17			0.31			0.26
Basic earnings (loss) per share			$	(0.26	)	$	(0.43	)	$	0.92		$	0.36		$	1.69		$	1.44
Diluted earnings (loss) per share			$	(0.26	)	$	(0.43	)	$	0.91		$	0.36		$	1.67		$	1.43
Average outstanding common shares				40,982			38,528			40,221			37,780			39,957			37,392
Average shares outstanding (assuming dilution)				--			--			40,610			38,101			40,343			37,722
Results of Natural Gas Operations
Gas operating revenues			$	273,041		$	239,318		$	1,235,351		$	1,032,349		$	1,658,259		$	1,427,402
Net cost of gas sold				148,527			128,745			760,847			599,697			989,281			794,773
Operating margin				124,514			110,573			474,504			432,652			668,978			632,629
Operations and maintenance expense				79,446			77,445			234,716			226,678			322,475			302,521
Depreciation and amortization				36,896			34,611			109,012			103,068			143,925			136,187
Taxes other than income taxes				9,515			9,888			25,752			30,277			34,515			38,920
Operating income (loss)				(1,343	)		(11,371	)		105,024			72,629			168,063			155,001
Other income (expense)				1,686			767			6,567			2,853			8,801			2,837
Net interest deductions				20,808			20,323			64,015			60,244			85,366			81,259
Net interest deductions on subordinated debentures				1,931			1,931			5,793			5,792			7,724			7,725
Income (loss) before income taxes				(22,396	)		(32,858	)		41,783			9,446			83,774			68,854
Income tax expense (benefit)				(8,616	)		(12,835	)		13,477			2,445			28,799			24,491
Contribution to net income (loss) - gas operations			$	(13,780	)	$	(20,023	)	$	28,306		$	7,001		$	54,975		$	44,363

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SOUTHWEST GAS CORPORATION
SELECTED STATISTICAL DATA
SEPTEMBER 30, 2006

 

 

FINANCIAL STATISTICS
Market value to book value per share at quarter end		168%
Twelve months to date return on equity -- total company		8.5%
-- gas segment		7.3%
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
Arizona			$	922,721			8	.40%		9	.50%
Southern Nevada				574,285			7	.45		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

		NINE MONTHS ENDED SEPTEMBER 30,				TWELVE MONTHS ENDED SEPTEMBER 30,
(In dekatherms)		2006		2005		2006		2005
Residential		50,622,071		49,144,115		66,524,478		67,407,463
Small commercial		23,002,870		22,266,954		30,743,143		30,426,489
Large commercial		9,494,716		8,506,670		12,171,919		11,213,737
Industrial / Other		11,223,458		12,131,816		14,745,872		16,353,624
Transportation		87,164,947		95,889,546		118,671,745		129,922,926
Total system throughput		181,508,062		187,939,101		242,857,157		255,324,239
HEATING DEGREE DAY COMPARISON
Actual		1,318		1,306		1,762		1,948
Ten-year average		1,409		1,406		1,974		1,966

Heating degree days for prior periods have been recalculated using the current period customer mix.