EX-99 2 exhibit99.htm FINANCIALS exhibit99.htm

November 8, 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 THIRD QUARTER 2010 RESULTS

Las Vegas, Nev. – Southwest Gas Corporation (NYSE: SWX) recorded a net loss of $0.11 per share for the third quarter of 2010, compared to a net loss of $0.18 per share recorded for the third quarter of 2009.  Consolidated net loss was $4.8 million for the third quarter of 2010, compared to a net loss of $8.3 million for the prior-year quarter.  The current quarter includes $7.8 million ($0.17 per share) in other income associated with increases in the cash surrender values (including net death benefits recognized) of company-owned life insurance (“COLI”) policies.  The prior-year quarter included $4.9 million ($0.11 per share) in other income associated with 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, “Third quarter results in 2010 improved when compared to the corresponding quarter of 2009 primarily due to higher returns on life insurance-related investments and to an increased contribution from our construction services subsidiary.  Outside of the COLI impacts, operating results were relatively consistent between quarters.  Our focus on controlling costs has been beneficial during these challenging economic conditions.  Our next major endeavor is to file for rate relief, including a decoupling mechanism, in Arizona in the very near future.”

-more-


 
 
 

For the twelve months ended September 30, 2010, consolidated net income was $105.3 million, or $2.33 per basic share, compared to $72.3 million, or $1.63 per basic share, during the twelve-month period ended September 30, 2009.  The increase between periods reflects higher operating margin, an improvement in other income, and lower financing costs.  Other income in the current twelve-month period includes $7.2 million ($0.16 per share) associated with net death benefits and increases in cash surrender values of COLI policies, while the prior twelve-month period included a $1.2 million ($0.03 per share) increase in COLI cash surrender values.

Natural Gas Operations Segment Results
Third Quarter
Operating margin, defined as operating revenues less the cost of gas sold, increased $2 million in the third quarter of 2010 compared to the third quarter of 2009.  Rate relief in Nevada provided $1 million of the operating margin increase and customer growth provided $1 million as 17,000 net new customers were added during the last twelve months.

Operating expenses for the quarter increased $3.9 million, or three percent, when compared to the third quarter of 2009 primarily due to higher employee-related and general costs and an increase in Arizona property tax rates received and recognized in the third quarter of 2010, but retroactive to January 2010.  Other income, which principally includes returns on COLI policies and non-utility expenses, increased $2.8 million between periods primarily due to increases in the cash surrender values (and net death benefits) of COLI policies.  Net financing costs decreased $1.7 million

-more-


 
 
 

primarily due to the redemption of $100 million of subordinated debentures in March 2010.

Twelve Months to Date
Operating margin increased $51 million between periods.  Rate relief provided $23 million of the increase, consisting of $15 million in Nevada, $5 million in Arizona, and $3 million in California.  Differences in heating demand caused primarily by weather variations between periods contributed $29 million toward the 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 $2 million in operating margin.  Conservation, resulting from economic conditions and energy efficiency, negatively impacted operating margin by an estimated $3 million.

Operating expenses increased $14.8 million, or three percent, between periods principally due to general cost increases, higher employee-related benefit costs, and the increase in Arizona property tax rates, partially offset by a decline in uncollectible expense and lower depreciation rates in the Nevada rate jurisdictions.

Other income improved $5.2 million primarily due to the increase between periods of cash surrender values (and net death benefits) of COLI policies.  Net financing costs decreased $5.3 million between periods due to a reduction in outstanding debt, the redemption of the subordinated debentures, and lower interest rates on variable-rate debt.

-more-


 
 
 

Southwest Gas Corporation provides natural gas service to 1,820,000 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 SEPTEMBER 30,
  
2010
    
2009
  
             
Consolidated Operating Revenues
   $ 307,683     $ 317,509  
                 
Net Loss
   $ 4,823     $ 8,297  
                 
Average Number of Common Shares Outstanding
     45,447       44,855  
                 
Loss Per Share
   $ 0.11     $ 0.18  
                 
NINE MONTHS ENDED SEPTEMBER 30,
    2010      2009  
                 
Consolidated Operating Revenues
   $ 1,362,259     $ 1,395,019  
                 
Net Income
   $ 58,892     $ 41,090  
                 
Average Number of Common Shares Outstanding
     45,354       44,671  
                 
Basic Earnings Per Share
   $ 1.30     $ 0.92  
                 
Diluted Earnings Per Share
   $ 1.29     $ 0.91  
                 
TWELVE MONTHS ENDED SEPTEMBER 30,
    2010      2009  
                 
Consolidated Operating Revenues
   $ 1,861,064     $ 1,904,429  
                 
Net Income
   $ 105,284     $ 72,322  
                 
Average Number of Common Shares Outstanding
     45,262       44,497  
                 
Basic Earnings Per Share
   $ 2.33     $ 1.63  
                 
Diluted Earnings Per Share
   $ 2.31     $ 1.61  

-end-


 
 
 
 


SOUTHWEST GAS CORPORATION
  
SUMMARY UNAUDITED OPERATING RESULTS
  
(In thousands, except per share amounts)
  
                                     
                                     
                                     
   
THREE MONTHS ENDED
    
NINE MONTHS ENDED
    
TWELVE MONTHS ENDED
  
   
SEPTEMBER 30,
    
SEPTEMBER 30,
    
SEPTEMBER 30,
  
   
2010
    
2009
    
2010
    
2009
    
2010
    
2009
  
                                     
Results of Consolidated Operations
                                    
  Contribution to net income (loss) - gas operations
   $ (8,813 )   $ (11,367 )   $ 52,403     $ 35,749     $ 96,074     $ 64,748  
  Contribution to net income - construction services
     3,990       3,070       6,489       5,341       9,210       7,574  
  Net income (loss)
   $ (4,823 )   $ (8,297 )   $ 58,892     $ 41,090     $ 105,284     $ 72,322  
                                                 
  Basic earnings (loss) per share
   $ (0.11 )   $ (0.18 )   $ 1.30     $ 0.92     $ 2.33     $ 1.63  
  Diluted earnings (loss) per share
   $ (0.11 )   $ (0.18 )   $ 1.29     $ 0.91     $ 2.31     $ 1.61  
                                                 
  Average outstanding common shares
     45,447       44,855       45,354       44,671       45,262       44,497  
  Average shares outstanding (assuming dilution)
     -       -       45,756       44,960       45,657       44,785  
                                                 
                                                 
                                                 
                                                 
Results of Natural Gas Operations
                                                
  Gas operating revenues
   $ 213,893     $ 235,020     $ 1,133,671     $ 1,186,870     $ 1,561,644     $ 1,615,512  
  Net cost of gas sold
     81,303       104,518       581,294       668,013       779,911       884,681  
  Operating margin
     132,590       130,502       552,377       518,857       781,733       730,831  
  Operations and maintenance expense
     86,746       85,773       260,386       257,281       352,047       339,643  
  Depreciation and amortization
     42,574       41,401       127,416       125,613       168,653       168,385  
  Taxes other than income taxes
     10,006       8,265       29,388       27,880       38,826       36,747  
  Operating income (loss)
     (6,736 )     (4,937 )     135,187       108,083       222,207       186,056  
  Other income (deductions)
     6,704       3,952       997       4,589       2,998       (2,170 )
  Net interest deductions
     19,115       18,904       56,001       55,617       74,475       75,902  
  Net interest deductions on subordinated debentures
     -       1,933       1,912       5,798       3,845       7,730  
  Income (loss) before income taxes
     (19,147 )     (21,822 )     78,271       51,257       146,885       100,254  
  Income tax expense (benefit)
     (10,334 )     (10,455 )     25,868       15,508       50,811       35,506  
  Contribution to net income (loss) - gas operations
   $ (8,813 )   $ (11,367 )   $ 52,403     $ 35,749     $ 96,074     $ 64,748  

 
 
 



SOUTHWEST GAS CORPORATION
  
SELECTED STATISTICAL DATA
  
SEPTEMBER 30, 2010
  
                         
                         
FINANCIAL STATISTICS
                        
Market value to book value per share at quarter end
     136 %                  
Twelve months to date return on equity  -- total company
     9.4 %                  
                                                                        -- gas segment
     9.0 %                  
Common stock dividend yield at quarter end
     3.0 %                  
                           
                           
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
                        
   
NINE MONTHS ENDED
    
TWELVE MONTHS ENDED
  
   
SEPTEMBER 30,
    
SEPTEMBER 30,
  
(In dekatherms)
    2010      2009      2010      2009  
Residential
     54,112,309       50,147,858       70,938,044       64,481,072  
Small commercial
     22,708,979       21,852,502       30,278,902       29,134,009  
Large commercial
     8,398,127       9,007,018       11,115,230       12,013,360  
Industrial / Other
     4,209,420       5,632,449       5,839,319       8,212,877  
Transportation
     77,978,668       81,307,527       101,060,532       108,518,427  
Total system throughput
     167,407,503       167,947,354       219,232,027       222,359,745  
                                 
                                 
HEATING DEGREE DAY COMPARISON
                                
Actual
     1,475       1,278       2,019       1,734  
Ten-year average
     1,359       1,347       1,894       1,873  
                                 
                                 
Heating degree days for prior periods have been recalculated using the current period customer mix.