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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 17, 1995
SOUTHWEST GAS CORPORATION
(exact name of registrant as specified in its charter)
California 1-7850 88-0085720
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
5241 Spring Mountain Road
Post Office Box 98510
Las Vegas, Nevada 89193-8510
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 876-7237
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<PAGE>
ITEM 5. OTHER EVENTS
SOUTHWEST GAS ANNOUNCES FIRST QUARTER EARNINGS
Las Vegas - Southwest Gas Corporation announced 1995 first quarter earnings of
$0.68 per share, a $0.39 decrease from the $1.07 per share reported for the
same period in 1994. Consolidated net income applicable to common stock was
$14,550,000, compared to $22,571,000 for the same quarter in 1994. Average
outstanding common shares increased to 21,396,000 in the first quarter of 1995
from 21,023,000 in the first quarter of 1994.
The gas operations segment's contribution to consolidated net income was
$14,449,000, compared to a $21,734,000 contribution reported for the first
quarter of 1994. According to Michael O. Maffie, President and Chief Executive
Officer, the decrease was principally the result of lower operating margin
(revenues less cost of gas purchased) directly attributable to significantly
warmer weather throughout the Company's service territories when compared to
the same period in 1994. In addition, higher operating expenses and net
interest deductions were incurred as a result of the continued expansion and
upgrading of the gas system to accommodate the Company's unprecedented customer
growth, which continues to significantly outpace industry averages.
Operating margin decreased approximately $11 million in the first quarter of
1995 as compared to the same period in 1994 due to the differences in heating
demand between periods. Unseasonably warm weather in the Company's three
largest operating areas, Phoenix, Las Vegas and Tucson, resulted in weather-
sensitive customers purchasing approximately 14 percent less gas than
anticipated. On a weather-normalized basis, first quarter 1995 operating
margin would have been approximately $14.6 million, or 14 percent, greater than
actually reported, while first quarter 1994 operating margin would have been
approximately $3.6 million, or three percent greater than actual.
Record customer growth partially mitigated the $11 million negative impact of
warmer weather on operating margin between the two quarters. During the first
quarter of 1995, the Company billed an average of 48,000 more customers per
month than in the first quarter of 1994, resulting in approximately $5.3
million of additional operating margin.
Overall, on a net basis, operating margin declined $5.7 million, or five
percent, in the first quarter of 1995 when compared to the first quarter of
1994.
Operating expenses and net interest deductions increased due to new investment
in gas plant and higher costs incurred as a result of the Company's providing
service to meet the record customer growth. This growth is exacting a net
earnings penalty in the form of higher operating and financing costs as the
Company builds the infrastructure necessary to accommodate customer growth.
However, net earnings should improve as construction programs are completed,
additional rate relief is applied for and granted, and new customers contribute
incremental operating margin.
The Company's financial services subsidiary, PriMerit Bank, reported 1995 first
quarter net income of $1,678,000 compared to net income of $2,189,000 reported
for the first quarter of 1994. The difference between quarters was principally
due to the first quarter 1994 recognition of a $1,690,000 net gain ($1.1
million after tax) on the sale of the Bank's credit card portfolio. PriMerit
contributed $196,000 to first quarter 1995 consolidated net income after
deducting tax-effected carrying costs associated with its acquisition by
Southwest Gas Corporation compared to a $976,000 contribution in the first
quarter of 1994. First quarter 1995 core bank earnings (net income exclusive
of goodwill amortization and one-time, nonrecurring transactions) were
$2,952,000, compared to first quarter 1994 core bank earnings of $2,375,000, a
24 percent improvement.<PAGE>
<PAGE>
For the twelve months ended March 31, 1995, consolidated net income applicable
to common stock was $17,770,000 and earnings per share were $0.84, compared to
consolidated net income applicable to common stock of $20,316,000 and earnings
per share of $0.98 during the twelve month period ended March 31, 1994.
The gas operations segment's contribution to consolidated net income for the
twelve months ended March 31, 1995 was $16,240,000 compared to a $20,792,000
contribution reported for the prior period. The decrease in earnings was
principally attributable to increased operations and maintenance expenses,
depreciation expense, general taxes and net interest deductions. Differences
in heating demand between periods also negatively impacted current period net
income. Prior period results include the December 1993 write-off of certain
pipe replacement costs in Arizona, as ordered by the Arizona Corporation
Commission. The Company wrote off $15,886,000 in gross plant, which resulted
in a noncash, after-tax reduction to prior period net income of $9,264,000, or
$0.44 per share.
Net earnings from PriMerit Bank were $7,161,000 (contributing $1,997,000 to
consolidated net income after deducting tax-effected carrying costs) for the
twelve months ended March 31, 1995, compared to net income of $5,131,000
(resulting in a contribution of $198,000 after deducting tax-effected carrying
costs) for the twelve-month period ended March 31, 1994. Core bank earnings
were $11,884,000, compared to $8,550,000 for the earlier period, a 39 percent
improvement.
Southwest Gas Corporation is a diversified natural gas and financial services
organization. It provides natural gas to approximately 989,000 customers in
Arizona, Nevada and California. PriMerit Bank, a federally chartered savings
bank, markets a wide variety of consumer financial products and services
through its branches in northern and southern Nevada.
SOUTHWEST GAS CONSOLIDATED EARNINGS DIGEST
QUARTER ENDED MARCH 31, 1995 1994
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Revenues $ 238,888,000 $ 239,155,000
Net Income $ 14,645,000 $ 22,710,000
Net Income Applicable
to Common Stock $ 14,550,000 $ 22,571,000
Average Number of Common
Shares Outstanding 21,396,000 21,023,000
Earnings Per Share
of Common Stock $ 0.68 $ 1.07
TWELVE MONTHS ENDED MARCH 31, 1995 1994
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Revenues $ 727,689,000 $ 708,435,000
Net Income $ 18,237,000 $ 20,990,000
Net Income Applicable
to Common Stock $ 17,770,000 $ 20,316,000
Average Number of Common
Shares Outstanding 21,170,000 20,833,000
Earnings Per Share
of Common Stock $ 0.84 $ 0.98<PAGE>
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<TABLE>
SOUTHWEST GAS CORPORATION
SUMMARY STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
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1995 1994 1995 1994
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<S> <C> <C> <C> <C>
GAS OPERATIONS SEGMENT:
Operating revenues $ 203,521 $ 207,297 $ 595,492 $ 563,069
Net cost of gas purchased 98,906 96,996 251,833 222,547
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Operating margin 104,615 110,301 343,659 340,522
Operations and maintenance expenses 45,867 42,420 181,631 170,776
Depreciation, amortization, and general taxes 21,919 20,396 84,091 79,731
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Operating income 36,829 47,485 77,937 90,015
Net interest deductions 13,323 11,652 51,136 43,475
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Pre-tax utility income 23,506 35,833 26,801 46,540
Utility income tax expense 9,127 14,017 9,936 16,713
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Net utility income 14,379 21,816 16,865 29,827
Other income (expense), net 70 (82) (625) 229
Arizona pipe replacement disallowance, net --- --- --- (9,264)
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Contribution to net income - gas operations segment 14,449 21,734 16,240 20,792
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FINANCIAL SERVICES SEGMENT:
Net interest income after loan loss provision 13,418 12,562 52,270 50,965
Net loss from real estate operations (433) (485) (560) (1,232)
Other income, net 2,243 3,812 9,062 13,821
General and administrative expenses 12,116 11,954 47,532 51,206
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Pre-tax income 3,112 3,935 13,240 12,348
Income tax expense 1,434 1,746 6,079 7,217
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Net income before carrying cost allocation 1,678 2,189 7,161 5,131
Acquisition carrying costs, net of tax - NOTE 5 (1,482) (1,213) (5,164) (4,933)
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Contribution to net income - financial services segment 196 976 1,997 198
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Net income 14,645 22,710 18,237 20,990
Preferred & preference dividends 95 139 467 674
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Net income applicable to common stock $ 14,550 $ 22,571 $ 17,770 $ 20,316
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Earnings per share $ 0.68 $ 1.07 $ 0.84 $ 0.98
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Earnings per share excluding disallowance $ --- $ --- $ --- $ 1.42
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Average outstanding common shares 21,396 21,023 21,170 20,833
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See Notes to Summary Financial Statements.
/TABLE
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<TABLE>
<CAPTION>
SOUTHWEST GAS CORPORATION
BALANCE SHEET
AT MARCH 31, 1995
(In thousands)
(Unaudited)
<S> <C> <C>
ASSETS
UTILITY PLANT
Gas plant, net of accumulated depreciation $ 1,030,404
Construction work in progress 23,152
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Net utility plant 1,053,556
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OTHER PROPERTY AND INVESTMENTS
PriMerit Bank - NOTE 2 177,532
Other 33,152
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Total other property and investments 210,684
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CURRENT AND ACCRUED ASSETS
Cash, working funds and temporary cash investments 29,986
Receivables - less reserve of $1,959 for uncollectibles 41,509
Accrued utility revenue 29,653
Other 24,345
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Total current and accrued assets 125,493
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DEFERRED DEBITS
Unamortized debt expense 14,082
Other deferred debits 42,801
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Total deferred debits 56,883
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TOTAL ASSETS $ 1,446,616
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CAPITALIZATION, LIABILITIES AND DEFERRED CREDITS
CAPITALIZATION
Common stockholders' equity
Common stock equity, $1 par, 21,528 shares outstanding $ 299,734
Retained earnings 62,550
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Total common stockholders' equity - NOTE 6 362,284 34.4%
Preferred stock equity - NOTE 3 4,000 0.4
Long term debt - NOTE 4 687,286 65.2
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Total capitalization 1,053,570 100.0%
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CURRENT AND ACCRUED LIABILITIES
Notes Payable 70,000
Accounts payable 31,821
Customer deposits 22,514
Taxes accrued (including income taxes) 59,989
Deferred purchased gas costs 6,213
Other 44,049
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Total current and accrued liabilities 234,586
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DEFERRED CREDITS
Deferred investment tax credits 20,524
Deferred income taxes 111,064
Other 26,872
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Total deferred credits 158,460
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TOTAL CAPITALIZATION, LIABILITIES AND DEFERRED CREDITS $ 1,446,616
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See Notes to Summary Financial Statements.
/TABLE
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<TABLE>
SOUTHWEST GAS CORPORATION
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995
(In thousands)
(Unaudited)
<S> <C>
CASH FLOWS FROM OPERATIONS:
Net income $ 14,645
Adjustments to reconcile net income to net
cash provided by operating activity:
Depreciation and amortization 15,137
Change in receivables and payables 14,535
Change in accrued taxes 7,204
Undistributed earnings from subsidiaries (1,651)
Change in gas cost related balancing items 23,472
Allowance for funds used during construction (485)
Change in deferred taxes 1,213
Other 4,418
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Net cash provided from operating activities 78,488
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CASH FLOWS FROM FINANCING ACTIVITIES:
Change in notes payable (22,000)
Dividends paid (4,478)
Net change in long-term debt 3,870
Proceeds from stock issuance 3,605
Other (44)
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Net cash used in financing activities (19,047)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures (33,929)
Other (1,395)
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Net cash used in investing activities (35,324)
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Change in cash and temporary cash investments 24,117
Cash at beginning of period 5,869
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Cash at end of period $ 29,986
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SUPPLEMENTAL INFORMATION:
Interest paid, net of amount capitalized $ 16,766
Income taxes, net of refunds $ 5,179
See Notes to Summary Financial Statements.
/TABLE
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SOUTHWEST GAS CORPORATION
NOTES TO SUMMARY FINANCIAL STATEMENTS
(In thousands, except par values)
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION:
The financial statements have been prepared by Southwest Gas Corporation
(the Company) using the equity method of accounting for PriMerit Bank
(PriMerit). Segmented information is presented within the income
statement. The Financial Services segment includes the net income of
PriMerit and its subsidiaries on a stand-alone basis, reduced by
allocated carrying costs associated with the Company's investment in
PriMerit (principally interest) net of taxes. This presentation is not
in accordance with generally accepted accounting principles (GAAP), and
certain information and footnote disclosures normally included in
financial statements prepared in accordance with GAAP have been omitted.
The financial statement presentation in this report produces the same
net income as the consolidated financial statements and, in management's
opinion, is a fair representation of the operations and contributions to
net income of the Company's two segments.
NOTE 2 - INVESTMENT IN PRIMERIT BANK:
The financing sources for Southwest's investment in PriMerit consist of
approximately $62,400 of 9.375% series D debentures, $20,000 of 9.75%
series F debentures, and 4,027 shares of common stock.
<TABLE>
<S> <C>
NOTE 3 - PREFERRED STOCK:
Cumulative preferred stock, $100 par value, 9.5% series, 40 shares outstanding $ 4,000
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CURRENT REDEMPTION REQUIREMENTS $ 800
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NOTE 4 - LONG-TERM DEBT:
Commercial paper facility $ 200,000
Debentures:
Debentures, 9% series A, due 2011 26,964
Debentures, 9% series B, due 2011 31,226
Debentures, 8.75% series C, due 2011 18,485
Debentures, 9.375% series D, due 2017 120,000
Debentures, 10% series E, due 2013 23,074
Debentures, 9.75% series F, due 2002 100,000
Industrial revenue bonds - net of funds held in trust 177,972
Unamortized discount on long-term debt (10,435)
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TOTAL LONG-TERM DEBT $ 687,286
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CURRENT MATURITIES $ 5,000
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</TABLE>
<TABLE>
NOTE 5 - ACQUISITION CARRYING COSTS, NET:
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
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1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Interest expense $ (2,409) $ (1,968) $ (8,314) $ (7,873)
Other intercompany expenses (60) (54) (293) (349)
Income taxes 987 809 3,443 3,289
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ACQUISITION CARRYING COSTS, NET $ (1,482) $ (1,213) $ (5,164) $ (4,933)
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</TABLE>
NOTE 6 - COMMON STOCKHOLDERS' EQUITY:
For purposes of this report, common stockholders' equity excludes
PriMerit's unrealized loss on debt securities available for sale since
PriMerit is presented on the equity method of accounting.<PAGE>
<PAGE>
SOUTHWEST GAS CORPORATION
SELECTED STATISTICAL DATA
MARCH 31, 1995
FINANCIAL STATISTICS
Book value per share at quarter end - NOTE 6 $16.83
Market value to book value per share at quarter end 88%
Twelve months to date return on equity -- total company 5.2%
-- gas segment 5.8%
Common stock dividend yield at quarter end 5.6%
GAS OPERATIONS SEGMENT
<TABLE>
<CAPTION>
Authorized
Authorized Authorized Return on
Rate Base Rate of Common
Rate Jurisdiction (In thousands) Return Equity
- ----------------- -------------- ---------- ----------
<S> <C> <C> <C>
Central Arizona $ 267,348 9.13% 10.75%
Southern Arizona 157,620 9.12 11.00
Southern Nevada 184,673 8.89 11.55
Northern Nevada 47,695 9.16 11.55
Southern California 69,486 9.94 11.35
Northern California 8,357 10.02 11.35
Paiute Pipeline Company 61,057 10.09 12.50
</TABLE>
<TABLE>
<CAPTION>
SYSTEM THROUGHPUT BY CUSTOMER CLASS THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
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(In dekatherms) 1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Residential 19,800,543 21,701,250 44,066,066 44,393,683
Small commercial 8,522,980 9,015,839 23,079,427 22,628,941
Large commercial 2,382,095 3,269,202 9,419,127 11,536,369
Industrial / Other 1,954,513 1,733,971 8,562,073 7,450,529
Transportation 24,061,877 18,522,128 97,018,813 75,172,217
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Total system throughput 56,722,008 54,242,390 182,145,506 161,181,739
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HEATING DEGREE DAY COMPARISON
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Actual 1,113 1,262 2,289 2,363
Ten year average 1,277 1,317 2,346 2,407
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/TABLE
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<PAGE>
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
/s/ Edward A. Janov
_______________________________________
Edward A. Janov
Controller and Chief Accounting Officer
Date: April 17, 1995<PAGE>
