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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) April 27, 2007

 

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 April 27, 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 and twelve months ended March 31, 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.

 

 

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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.

 

 

	SOUTHWEST GAS CORPORATION
Date: April 27, 2007	/s/ ROY R. CENTRELLA
	Roy R. Centrella
	Vice President/Controller and
	Chief Accounting Officer

 

 

 

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EXHIBIT INDEX

 

 

Exhibit

No.	Description

 

99	Press Release and summary financial information dated April 27, 2007.

 

 

 

 

 

 

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April 27, 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

ANNOUNCES FIRST QUARTER EARNINGS

 

Las Vegas – Southwest Gas Corporation announced consolidated earnings of $1.19 per basic share for the first quarter of 2007, a $0.07 increase from the $1.12 per basic share earned during the first quarter of 2006. Consolidated net income was $49.8 million, compared to $44.2 million in the prior period.

 

According to Jeffrey W. Shaw, Chief Executive Officer, “The increase in earnings between quarters reflects the recognition of two additional months of Arizona rate relief that went into effect March 1, 2006 and a return to more normal temperatures overall. The solid operating performance in the first quarter of 2007 is a continuation of the improvements made in 2006, which resulted in the first increase in the common stock dividend in 13 years.” Shaw concluded by saying “While we are pleased with first quarter results, we recognize that managing weather risk continues to be a challenge for us. We experienced both extremes during the quarter – a cold January and hot March – and remain resolute in our need to continue working with regulators to improve the level and stability of earnings and cash flows going forward.”

 

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For the twelve months ended March 31, 2007, consolidated net income was $89.4 million, or $2.17 per basic share, compared to $55.2 million, or $1.42 per basic share, during the twelve-month period ended March 31, 2006. The current twelve-month results include a benefit of approximately $0.07 per share related to a nonrecurring property tax benefit recognized in the second quarter of 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.

Natural Gas Operations Segment Results

First Quarter

Operating margin, defined as operating revenues less the cost of gas sold, increased approximately $22 million, or 11 percent, in the first quarter of 2007 compared to the first quarter of 2006. Rate relief added a net $8 million in operating margin compared to the prior year consisting of $15 million in Arizona general rate relief and $1 million for California attrition amounts, offset by an $8 million impact of implementing a California equalized margin tracker mechanism, effective January 2007. Under this mechanism, margin is earned equally throughout the year. Differences in heating demand, caused primarily by weather variations between periods, accounted for an $8 million increase in operating margin as overall temperatures in the current quarter returned to more normal levels compared to the warmer-than-normal temperatures experienced in the first quarter of 2006. New customers contributed an incremental $6 million in operating margin during the quarter as the Company added 62,000 customers during the last twelve months, an increase of nearly four percent.

 

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Operating expenses for the quarter increased $9 million, or seven percent, compared to the first 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. Net financing costs decreased $807,000, or three percent, between periods as strong operating cash flows were used to reduce average debt outstanding.

 

Twelve Months to Date

Operating margin increased $69 million between periods. Rate relief in Arizona and California added $40 million (net of the California equalized margin tracker mechanism impact) and customer growth contributed an incremental $19 million. Differences in heating demand, caused primarily by weather variations, accounted for a $10 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 $8 million, while the negative impact to the prior twelve-month period was $18 million).

 

Operating expenses increased $14.2 million, or three percent between periods primarily due to general increases in labor and maintenance costs, and incremental operating costs associated with serving additional customers. The impacts of higher uncollectible and employee-related costs were partially offset by the property tax benefit and lower property tax rates in Arizona during the current twelve-month period and the impact on the prior twelve-month period of the previously noted $10 million nonrecurring injuries

 

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and damages charge. Net financing costs between periods increased one percent as strong operating cash flows and common stock issued under the Company’s various plans mitigated the amount of additional debt needed to finance customer growth.

 

Southwest Gas Corporation provides natural gas service to 1,799,000 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 MARCH 31,			2007			2006
Consolidated Operating Revenues			$	793,716		$	676,941
Net Income			$	49,764		$	44,180
Average Number of Common Shares Outstanding				41,979			39,492
Basic Earnings Per Share			$	1.19		$	1.12
Diluted Earnings Per Share			$	1.17		$	1.11

TWELVE MONTHS ENDED MARCH 31,			2007			2006
Consolidated Operating Revenues			$	2,141,533		$	1,848,344
Net Income			$	89,444		$	55,174
Average Number of Common Shares Outstanding				41,179			38,722
Basic Earnings Per Share			$	2.17		$	1.42
Diluted Earnings Per Share			$	2.15		$	1.41

 

 

 

 

-end-

 

 

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

			THREE MONTHS ENDED MARCH 31,						TWELVE MONTHS ENDED MARCH 31,
			2007			2006			2007			2006
Results of Consolidated Operations
Contribution to net income - gas operations			$	48,628		$	42,077		$	78,024		$	43,361
Contribution to net income - construction services				1,136			2,103			11,420			11,813
Net income			$	49,764		$	44,180		$	89,444		$	55,174
Earnings per share - gas operations			$	1.16		$	1.07		$	1.89		$	1.12
Earnings per share - construction services				0.03			0.05			0.28			0.30
Basic earnings per share			$	1.19		$	1.12		$	2.17		$	1.42
Diluted earnings per share			$	1.17		$	1.11		$	2.15		$	1.41
Average outstanding common shares				41,979			39,492			41,179			38,722
Average shares outstanding (assuming dilution)				42,376			39,847			41,599			39,073
Results of Natural Gas Operations
Gas operating revenues			$	727,015		$	608,142		$	1,846,267		$	1,568,416
Net cost of gas sold				494,211			397,497			1,130,702			921,701
Operating margin				232,804			210,645			715,565			646,715
Operations and maintenance expense				84,535			78,387			326,951			318,548
Depreciation and amortization				38,530			35,553			149,631			139,287
Taxes other than income taxes				10,467			10,617			34,844			39,343
Operating income				99,272			86,088			204,139			149,537
Other income (expense)				1,376			2,952			8,473			6,953
Net interest deductions				21,148			21,955			84,760			83,668
Net interest deductions on subordinated debentures				1,931			1,931			7,724			7,723
Income before income taxes				77,569			65,154			120,128			65,099
Income tax expense				28,941			23,077			42,104			21,738
Contribution to net income - gas operations			$	48,628		$	42,077		$	78,024		$	43,361

 

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SOUTHWEST GAS CORPORATION
SELECTED STATISTICAL DATA
MARCH 31, 2007

 

 

FINANCIAL STATISTICS
Market value to book value per share at quarter end		172%
Twelve months to date return on equity -- total company		10.5%
-- gas segment		9.6%
Common stock dividend yield at quarter end		2.2%

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	.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

			THREE MONTHS ENDED MARCH 31,						TWELVE MONTHS ENDED MARCH 31,
(In dekatherms)			2007			2006			2007			2006
Residential				36,166,497			31,071,810			72,855,183			65,830,968
Small commercial				12,252,559			11,454,591			31,783,616			30,565,828
Large commercial				4,073,069			3,675,862			13,222,739			11,712,219
Industrial / Other				3,277,681			2,898,727			15,303,206			15,254,883
Transportation				26,640,967			26,618,636			117,546,127			120,734,011
Total system throughput				82,410,773			75,719,626			250,710,871			244,097,909

HEATING DEGREE DAY COMPARISON
Actual				1,156			1,020			1,960			1,730
Ten-year average				1,104			1,103			1,960			1,968

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