EX-99 2 exhibit99.htm FINANCIALS exhibit99.htm


November 6, 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
REPORTS THIRD QUARTER RESULTS

Las Vegas – Southwest Gas Corporation recorded a net loss of $0.22 per share for the third quarter of 2007, a $0.04 improvement from the loss of $0.26 per share recorded during the third quarter of 2006.  Net loss for the third quarter of 2007 was $9.3 million, compared to a loss of $10.7 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, “Although quarterly results improved, much of the improvement is attributable to a reallocation of operating margin between periods in our California jurisdictions (from the first quarter into the second and third quarters).  After adjusting for the reallocation, incremental operating margin from rate relief and customer growth totaled approximately $2 million in the current quarter, whereas operating costs increased by $5 million.  Customer growth continues to moderate as the Company added 48,000 customers over the past 12 months.”
 
Looking ahead, Shaw noted, “We recently filed a $50 million general rate increase request in Arizona to help recover rising operating costs and infrastructure investments.  We are also supporting rate design changes which, if approved, would encourage

      
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energy efficiency and also shield the Company and its customers from weather-related volatility.  We hope to have new rates in place in about a year.”

For the twelve months ended September 30, 2007, consolidated net income was $86.8 million, or $2.06 per basic share, compared to $67.4 million, or $1.69 per basic share, during the twelve-month period ended September 30, 2006.  Results for the prior twelve-month period include net nonrecurring charges of approximately $0.09 per share.

Natural Gas Operations Segment Results

Third Quarter
Operating margin, defined as operating revenues less the cost of gas sold, increased $8 million, or seven percent, in the third quarter of 2007 compared to the third quarter of 2006.  Rate changes (primarily from implementing a California equalized margin tracker mechanism, effective January 2007) accounted for $7 million of the increase in operating margin compared to the prior year.  New customers accounted for the remaining incremental operating margin during the quarter as the Company added 48,000 customers during the last twelve months, an increase of three percent.

Operating expenses for the quarter increased $5 million, or four percent, compared to the third quarter of 2006 primarily due to general cost increases and incremental

      
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operating costs associated with serving additional customers.  A reduction in property tax rates mitigated the overall operating expense increase.

Net financing costs increased $1.2 million between periods primarily due to higher rates on variable-rate debt and interest expense associated with deferred purchased gas cost balances.

Twelve Months to Date
Operating margin increased $61 million between periods.  Rate relief in Arizona and California added $31 million.  Customer growth contributed an incremental $16 million.  Differences in heating demand, caused primarily by weather variations, resulted in a $14 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 $7 million, while the negative impact during the prior twelve-month period was $21 million).

Operating expenses increased $28.5 million, or six percent, between periods primarily due to general increases in labor and maintenance costs, and incremental operating costs associated with serving additional customers.  Higher uncollectible and employee-related costs also contributed to the increase.  Net financing costs increased slightly between periods primarily due to higher rates on variable-rate debt.


      
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Southwest Gas Corporation provides natural gas service to approximately 1,800,000 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, the effects of regulation/deregulation, the timing and amount of rate relief, and changes in rate design.

      
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SOUTHWEST GAS CONSOLIDATED EARNINGS DIGEST
(In thousands, except per share amounts)


QUARTER ENDED SEPTEMBER 30,
  
2007
    
2006
  
             
Consolidated Operating Revenues
   $
371,524
     $
351,800
  
                 
Net Loss
   $
9,318
     $
10,736
  
                 
Average Number of Common Shares Outstanding
    
42,448
      
40,982
  
                 
Loss Per Share
   $
0.22
     $
0.26
  
                 
                 
NINE MONTHS ENDED SEPTEMBER 30,
  
2007
    
2006
  
                 
Consolidated Operating Revenues
   $
1,591,777
     $
1,459,643
  
                 
Net Income
   $
40,109
     $
37,153
  
                 
Average Number of Common Shares Outstanding
    
42,219
      
40,221
  
                 
Basic Earnings Per Share
   $
0.95
     $
0.92
  
                 
Diluted Earnings Per Share
   $
0.94
     $
0.91
  
                 
                 
TWELVE MONTHS ENDED SEPTEMBER 30,
  
2007
    
2006
  
                 
Consolidated Operating Revenues
   $
2,156,892
     $
1,956,638
  
                 
Net Income
   $
86,816
     $
67,408
  
                 
Average Number of Common Shares Outstanding
    
42,060
      
39,957
  
                 
Basic Earnings Per Share
   $
2.06
     $
1.69
  
                 
Diluted Earnings Per Share
   $
2.04
     $
1.67
  

      
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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,
  
   
2007
    
2006
    
2007
    
2006
    
2007
    
2006
  
                                     
Results of Consolidated Operations
                                    
  Contribution to net income (loss) - gas operations
   $ (12,863 )   $ (13,780 )   $
32,910
     $
28,306
     $
76,077
     $
54,975
  
  Contribution to net income - construction services
    
3,545
      
3,044
      
7,199
      
8,847
      
10,739
      
12,433
  
  Net income (loss)
   $ (9,318 )   $ (10,736 )   $
40,109
     $
37,153
     $
86,816
     $
67,408
  
                                                 
  Earnings (loss) per share - gas operations
   $ (0.30 )   $ (0.34 )   $
0.78
     $
0.70
     $
1.81
     $
1.38
  
  Earnings per share - construction services
    
0.08
      
0.08
      
0.17
      
0.22
      
0.25
      
0.31
  
  Basic earnings (loss) per share
   $ (0.22 )   $ (0.26 )   $
0.95
     $
0.92
     $
2.06
     $
1.69
  
  Diluted earnings (loss) per share
   $ (0.22 )   $ (0.26 )   $
0.94
     $
0.91
     $
2.04
     $
1.67
  
                                                 
  Average outstanding common shares
    
42,448
      
40,982
      
42,219
      
40,221
      
42,060
      
39,957
  
  Average shares outstanding (assuming dilution)
    
-
      
-
      
42,607
      
40,610
      
42,469
      
40,343
  
                                                 
                                                 
                                                 
                                                 
Results of Natural Gas Operations
                                                
  Gas operating revenues
   $
274,748
     $
273,041
     $
1,345,996
     $
1,235,351
     $
1,838,039
     $
1,658,259
  
  Net cost of gas sold
    
141,825
      
148,527
      
834,453
      
760,847
      
1,107,594
      
989,281
  
  Operating margin
    
132,923
      
124,514
      
511,543
      
474,504
      
730,445
      
668,978
  
  Operations and maintenance expense
    
83,222
      
79,446
      
250,847
      
234,716
      
336,934
      
322,475
  
  Depreciation and amortization
    
39,774
      
36,896
      
117,380
      
109,012
      
155,022
      
143,925
  
  Taxes other than income taxes
    
7,848
      
9,515
      
28,253
      
25,752
      
37,495
      
34,515
  
  Operating income
    
2,079
       (1,343 )    
115,063
      
105,024
      
200,994
      
168,063
  
  Other income (expense)
    
478
      
1,686
      
5,502
      
6,567
      
8,984
      
8,801
  
  Net interest deductions
    
22,003
      
20,808
      
64,466
      
64,015
      
86,018
      
85,366
  
  Net interest deductions on subordinated debentures
    
1,932
      
1,931
      
5,795
      
5,793
      
7,726
      
7,724
  
  Income (loss) before income taxes
     (21,378 )     (22,396 )    
50,304
      
41,783
      
116,234
      
83,774
  
  Income tax expense (benefit)
     (8,515 )     (8,616 )    
17,394
      
13,477
      
40,157
      
28,799
  
  Contribution to net income (loss) - gas operations
   $ (12,863 )   $ (13,780 )   $
32,910
     $
28,306
     $
76,077
     $
54,975
  

 
SOUTHWEST GAS CORPORATION
  
SELECTED STATISTICAL DATA
  
SEPTEMBER 30, 2007
  
                         
                         
FINANCIAL STATISTICS
                        
Market value to book value per share at quarter end
     128 %                  
Twelve months to date return on equity  -- total company
     9.5 %                  
                                                                        -- gas segment
     8.7 %                  
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
   $
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
                        
   
NINE MONTHS ENDED
    
TWELVE MONTHS ENDED
  
   
SEPTEMBER 30,
    
SEPTEMBER 30,
  
(In dekatherms)
  
2007
    
2006
    
2007
    
2006
  
Residential
    
53,941,505
      
50,622,071
      
71,079,930
      
66,524,478
  
Small commercial
    
23,379,275
      
23,002,870
      
31,362,053
      
30,743,143
  
Large commercial
    
9,516,396
      
9,494,716
      
12,847,212
      
12,171,919
  
Industrial / Other
    
7,820,051
      
11,223,458
      
11,520,845
      
14,745,872
  
Transportation
    
89,318,349
      
87,164,947
      
119,677,198
      
118,671,745
  
Total system throughput
    
183,975,576
      
181,508,062
      
246,487,238
      
242,857,157
  
                                 
                                 
HEATING DEGREE DAY COMPARISON
                                
Actual
    
1,363
      
1,314
      
1,870
      
1,756
  
Ten-year average
    
1,398
      
1,405
      
1,949
      
1,968
  
                                 
Heating degree days for prior periods have been recalculated using the current period customer mix.