EX-99 2 exhibit99.htm FINANCIAL STATEMENTS exhibit99.htm


November 5, 2009
Media Contact:  Cynthia Messina, NV (702) 876-7132
Shareholder Contact:  Ken Kenny, Las Vegas, NV (702) 876-7237
For Immediate Release



SOUTHWEST GAS CORPORATION
REPORTS THIRD QUARTER 2009 RESULTS

Las Vegas, Nev. – Southwest Gas Corporation (NYSE: SWX) recorded a net loss of $0.18 per share for the third quarter of 2009, compared to a loss of $0.38 per share recorded during the third quarter of 2008.  Consolidated net loss was $8.3 million, compared to a loss of $16.7 million in the prior-year quarter.  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 improved compared to the same period last year primarily due to positive returns on investments this quarter versus negative returns in the corresponding prior-year quarter.  In addition, we have successfully minimized cost increases through the effective use of technology and selectively filling employee vacancies.  We have also reduced capital expenditures due to the current low-growth environment, but we continue to upgrade and expand the distribution system as necessary.”

Regarding regulatory matters, Shaw added, “We recently received a $17.1 million annualized general rate increase in Nevada effective November 2009.  Factoring in other aspects of the rate case decision, we estimate the operating income benefit to be

-more-



 
 

 

$19.1 million.  We also received authorization to establish a margin tracking (decoupling) mechanism.  This change is designed to encourage conservation efforts while insulating the Company from the effects on operating margin of lower usage (including volumes associated with unusual weather).  We now have decoupled rate designs in two of the three states that we serve.  We continue to participate in a productive rulemaking proceeding in Arizona that deals with energy efficiency standards and alternatives for a decoupled rate design.”

For the twelve months ended September 30, 2009, consolidated net income was $72.3 million, or $1.63 per basic share, compared to $72.9 million, or $1.69 per basic share, during the twelve-month period ended September 30, 2008.

Natural Gas Operations Segment Results
Third Quarter
Operating margin, defined as operating revenues less the cost of gas sold, decreased by approximately $4 million in the third quarter of 2009 compared to the third quarter of 2008.  The decline resulted from a $9 million decrease related to the return to a seasonal margin methodology in California, partially offset by rate relief of $5 million in Arizona.  This completes the seasonal adjustment impacts to margin in California.  Customer growth was not a factor, as only 1,000 net new customers (on a comparative seasonally adjusted basis) were added during the last twelve months.

-more-



 
 

 

Operating expenses for the quarter decreased $1.8 million, or one percent, compared to the third quarter of 2008 primarily due to lower depreciation rates in California and Nevada and cost containment efforts.  Other income increased $8.5 million between quarters as the cash surrender values of company-owned life insurance (“COLI”) policies increased by $4.9 million in the third quarter of 2009 compared to a reduction of $3.7 million in the prior-year quarter.  Net financing costs decreased $1.6 million due principally to a reduction in outstanding debt and lower interest rates on variable-rate debt.

Twelve Months to Date
Operating margin decreased a net $9 million between periods.  Rate relief provided $24 million of operating margin, consisting of $22 million in Arizona and $2 million in California.  Customer growth contributed $1 million in operating margin.  Differences in heating demand caused primarily by weather variations between periods resulted in a $22 million operating margin decrease as warmer-than-normal temperatures were experienced during both periods (during the twelve-month period of 2009, operating margin was negatively impacted by $29 million, while the negative impact in the twelve-month period of 2008 was $7 million).  Conservation resulting from current economic conditions and energy efficiency negatively impacted operating margin by an estimated $12 million.

Operating expenses increased $7.6 million, or one percent, between periods due to incremental operating costs (including depreciation) associated with facilities upgrades

-more-



 
 

 
 
and general cost increases.  The increase was mitigated by lower staffing levels and labor efficiencies associated with the conversion to electronic meter reading.

Other income, which principally includes interest income, changes in cash surrender values of COLI policies, and non-utility expenses, increased $5.2 million between periods.  This was primarily due to an $8.5 million incremental increase in the cash surrender values of COLI policies between periods partially offset by lower interest income.  Net financing costs decreased $8.9 million due to a reduction in outstanding debt and lower interest rates on variable-rate debt.

Southwest Gas Corporation provides natural gas service to 1,803,000 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,
 
2009
   
2008
 
             
Consolidated Operating Revenues
  $ 317,509     $ 374,422  
                 
Net Loss
  $ 8,297     $ 16,686  
                 
Average Number of Common Shares Outstanding
    44,855       43,581  
                 
Loss Per Share
  $ 0.18     $ 0.38  
                 
NINE MONTHS ENDED SEPTEMBER 30,
    2009       2008  
                 
Consolidated Operating Revenues
  $ 1,395,019     $ 1,635,333  
                 
Net Income
  $ 41,090     $ 29,741  
                 
Average Number of Common Shares Outstanding
    44,671       43,307  
                 
Basic Earnings Per Share
  $ 0.92     $ 0.69  
                 
Diluted Earnings Per Share
  $ 0.91     $ 0.68  
                 
TWELVE MONTHS ENDED SEPTEMBER 30,
    2009       2008  
                 
Consolidated Operating Revenues
  $ 1,904,429     $ 2,195,644  
                 
Net Income
  $ 72,322     $ 72,878  
                 
Average Number of Common Shares Outstanding
    44,497       43,150  
                 
Basic Earnings Per Share
  $ 1.63     $ 1.69  
                 
Diluted Earnings Per Share
  $ 1.61     $ 1.68  


-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,
 
   
2009
   
2008
   
2009
   
2008
   
2009
   
2008
 
                                     
Results of Consolidated Operations
                                   
   Contribution to net income (loss) - gas operations
  $ (11,367 )   $ (19,678 )   $ 35,749     $ 24,748     $ 64,748     $ 64,332  
   Contribution to net income - construction services
    3,070       2,992       5,341       4,993       7,574       8,546  
   Net income (loss)
  $ (8,297 )   $ (16,686 )   $ 41,090     $ 29,741     $ 72,322     $ 72,878  
                                                 
   Basic earnings (loss) per share
  $ (0.18 )   $ (0.38 )   $ 0.92     $ 0.69     $ 1.63     $ 1.69  
   Diluted earnings (loss) per share
  $ (0.18 )   $ (0.38 )   $ 0.91     $ 0.68     $ 1.61     $ 1.68  
                                                 
   Average outstanding common shares
    44,855       43,581       44,671       43,307       44,497       43,150  
   Average shares outstanding (assuming dilution)
    -       -       44,960       43,610       44,785       43,464  
                                                 
                                                 
                                                 
                                                 
Results of Natural Gas Operations
                                               
   Gas operating revenues
  $ 235,020     $ 268,450     $ 1,186,870     $ 1,362,753     $ 1,615,512     $ 1,831,523  
   Net cost of gas sold
    104,518       134,030       668,013       839,309       884,681       1,091,050  
   Operating margin
    130,502       134,420       518,857       523,444       730,831       740,473  
   Operations and maintenance expense
    85,773       87,489       257,281       256,298       339,643       336,659  
   Depreciation and amortization
    41,401       41,623       125,613       123,565       168,385       163,275  
   Taxes other than income taxes
    8,265       8,103       27,880       27,913       36,747       37,213  
   Operating income (loss)
    (4,937 )     (2,795 )     108,083       115,668       186,056       203,326  
   Other income (expense)
    3,952       (4,548 )     4,589       (6,710 )     (2,170 )     (7,362 )
   Net interest deductions
    18,904       20,521       55,617       62,811       75,902       84,781  
   Net interest deductions on subordinated debentures
    1,933       1,933       5,798       5,797       7,730       7,729  
   Income (loss) before income taxes
    (21,822 )     (29,797 )     51,257       40,350       100,254       103,454  
   Income tax expense (benefit)
    (10,455 )     (10,119 )     15,508       15,602       35,506       39,122  
   Contribution to net income (loss) - gas operations
  $ (11,367 )   $ (19,678 )   $ 35,749     $ 24,748     $ 64,748     $ 64,332  

 

 
 

 

SOUTHWEST GAS CORPORATION
 
SELECTED STATISTICAL DATA
 
SEPTEMBER 30, 2009
 
                         
                         
FINANCIAL STATISTICS
                       
Market value to book value per share at quarter end
    108 %                  
Twelve months to date return on equity  -- total company
    6.8 %                  
                                                                        -- gas segment
    6.5 %                  
Common stock dividend yield at quarter end
    3.7 %                  
                           
                           
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 (1)
    819,719       7.40       10.15        
Northern Nevada (1)
    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 (2)
    82,853       9.44       11.80        
                               
(1) Effective November 1, 2009.                               
(2) Estimated amounts based on rate case settlements.
                       
                               
SYSTEM THROUGHPUT BY CUSTOMER CLASS
                       
   
NINE MONTHS ENDED
   
TWELVE MONTHS ENDED
 
   
SEPTEMBER 30,
   
SEPTEMBER 30,
 
(In dekatherms)
    2009       2008       2009       2008  
Residential
    50,147,858       56,165,408       64,481,072       72,030,225  
Small commercial
    21,852,502       24,173,970       29,134,009       31,861,258  
Large commercial
    9,007,018       9,505,802       12,013,360       12,745,478  
Industrial / Other
    5,632,449       7,189,719       8,212,877       9,722,168  
Transportation
    81,307,527       89,208,081       108,518,427       112,731,940  
Total system throughput
    167,947,354       186,242,980       222,359,745       239,091,069  
                                 
                                 
HEATING DEGREE DAY COMPARISON
                               
Actual
    1,279       1,447       1,734       1,933  
Ten-year average
    1,347       1,367       1,874       1,905  
                                 
Heating degree days for prior periods have been recalculated using the current period customer mix.