-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NxnyMpjv/1e8Q/kDCgfzXEKYf+jcrUJgtbJNOSTYYEjwMwsq7L/36Xz0pN3O0zeb MkrLpEl9DcAuqNsqhSoE1A== 0000092416-00-000024.txt : 20000516 0000092416-00-000024.hdr.sgml : 20000516 ACCESSION NUMBER: 0000092416-00-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHWEST GAS CORP CENTRAL INDEX KEY: 0000092416 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 880085720 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07850 FILM NUMBER: 633609 BUSINESS ADDRESS: STREET 1: 5241 SPRING MOUNTAIN RD STREET 2: PO BOX 98510 CITY: LAS VEGAS STATE: NV ZIP: 89193-8510 BUSINESS PHONE: 7028767237 MAIL ADDRESS: STREET 1: 5241 SPRING MOUNTAIN RD STREET 2: PO BOX 98510 CITY: LAS VEGAS STATE: NV ZIP: 89193 10-Q 1 QUARTERLY REPORT ON FORM 10-Q ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 Commission File Number 1-7850 SOUTHWEST GAS CORPORATION (Exact name of registrant as specified in its charter) California 88-0085720 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) 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 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Common Stock, $1 Par Value, 31,275,737 shares as of May 8, 2000. ================================================================================ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SOUTHWEST GAS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Thousands of dollars, except par value)
MARCH 31, DECEMBER 31, 2000 1999 -------------- -------------- ASSETS (Unaudited) Utility plant: Gas plant $ 2,236,132 $ 2,203,223 Less: accumulated depreciation (670,855) (662,510) Acquisition adjustments 3,408 3,503 Construction work in progress 30,876 36,886 -------------- -------------- Net utility plant 1,599,561 1,581,102 -------------- -------------- Other property and investments 87,418 84,850 -------------- -------------- Current assets: Cash and cash equivalents 10,510 17,126 Accounts receivable, net of allowances 84,417 88,476 Accrued utility revenue 33,373 56,373 Deferred income taxes 8,689 6,141 Deferred purchased gas costs 4,135 9,051 Prepaids and other current assets 28,666 31,971 -------------- -------------- Total current assets 169,790 209,138 -------------- -------------- Deferred charges and other assets 47,881 48,352 -------------- -------------- Total assets $ 1,904,650 $ 1,923,442 ============== ============== CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $1 par (authorized - 45,000,000 shares; issued and outstanding - 31,229,788 and 30,985,120 shares) $ 32,860 $ 32,615 Additional paid-in capital 444,325 439,262 Retained earnings 52,312 33,548 -------------- -------------- Total common equity 529,497 505,425 Redeemable preferred securities of Southwest Gas Capital I 60,000 60,000 Long-term debt, less current maturities 858,762 859,291 -------------- -------------- Total capitalization 1,448,259 1,424,716 -------------- -------------- Current liabilities: Current maturities of long-term debt 7,460 7,931 Short-term debt 5,400 61,000 Accounts payable 53,900 64,247 Customer deposits 28,260 27,408 Accrued taxes 63,498 40,611 Accrued interest 14,064 14,270 Other current liabilities 46,745 49,423 -------------- -------------- Total current liabilities 219,327 264,890 -------------- -------------- Deferred income taxes and other credits: Deferred income taxes and investment tax credits 179,598 178,438 Other deferred credits 57,466 55,398 -------------- -------------- Total deferred income taxes and other credits 237,064 233,836 -------------- -------------- Total capitalization and liabilities $ 1,904,650 $ 1,923,442 ============== ============== The accompanying notes are an integral part of these statements.
2 SOUTHWEST GAS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED MARCH 31, MARCH 31, ------------------------ ------------------------- 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Operating revenues: Gas operating revenues $ 267,079 $ 279,110 $ 779,124 $ 804,344 Construction revenues 29,736 28,915 146,532 128,389 ----------- ----------- ----------- ----------- Total operating revenues 296,815 308,025 925,656 932,733 ----------- ----------- ----------- ----------- Operating expenses: Net cost of gas sold 123,504 135,886 317,649 344,748 Operations and maintenance 57,327 53,566 225,019 211,888 Depreciation and amortization 26,138 24,167 100,496 91,587 Taxes other than income taxes 7,673 7,212 28,071 30,886 Construction expenses 25,554 24,469 129,315 112,231 ----------- ----------- ----------- ----------- Total operating expenses 240,196 245,300 800,550 791,340 ----------- ----------- ----------- ----------- Operating income 56,619 62,725 125,106 141,393 ----------- ----------- ----------- ----------- Other income and (expenses): Net interest deductions (16,786) (14,870) (65,118) (61,944) Preferred securities distributions (1,369) (1,369) (5,475) (5,475) Other income (deductions) 785 277 (1,072) (1,715) ----------- ----------- ----------- ----------- Total other income and (expenses) (17,370) (15,962) (71,665) (69,134) ----------- ----------- ----------- ----------- Income before income taxes 39,249 46,763 53,441 72,259 Income tax expense 14,051 18,497 17,199 32,409 ----------- ----------- ----------- ----------- Net income $ 25,198 $ 28,266 $ 36,242 $ 39,850 =========== =========== =========== =========== Basic earnings per share $ 0.81 $ 0.93 $ 1.17 $ 1.36 =========== =========== =========== =========== Diluted earnings per share $ 0.80 $ 0.92 $ 1.16 $ 1.35 =========== =========== =========== =========== Dividends paid per share $ 0.205 $ 0.205 $ 0.82 $ 0.82 =========== =========== =========== =========== Average number of common shares outstanding 31,140 30,497 30,934 29,363 Average shares outstanding (assuming dilution) 31,302 30,753 31,186 29,591 The accompanying notes are an integral part of these statements.
3 SOUTHWEST GAS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousands of dollars) (Unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED MARCH 31, MARCH 31, ---------------------------- ---------------------------- 2000 1999 2000 1999 ------------- ------------- ------------- ------------- CASH FLOW FROM OPERATING ACTIVITIES: Net income $ 25,198 $ 28,266 $ 36,242 $ 39,850 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 26,138 24,167 100,496 91,587 Deferred income taxes (1,388) (10,376) (11,008) (13,954) Changes in current assets and liabilities: Accounts receivable, net of allowances 4,059 4,613 (993) (4,551) Accrued utility revenue 23,000 23,873 (373) 500 Deferred purchased gas costs 4,916 34,527 18,933 63,283 Accounts payable (9,869) (8,704) (1,213) (1,912) Accrued taxes 22,887 33,294 (3,276) 35,541 Other current assets and liabilities 1,384 (2,231) 6,352 11,094 Other 1,097 287 3,106 1,233 ------------- ------------- ------------- ------------- Net cash provided by operating activities 97,422 127,716 148,266 222,671 ------------- ------------- ------------- ------------- CASH FLOW FROM INVESTING ACTIVITIES: Construction expenditures and property additions (45,776) (45,682) (229,597) (203,091) Other (585) 1,766 1,170 9,403 ------------- ------------- ------------- ------------- Net cash used in investing activities (46,361) (43,916) (228,427) (193,688) ------------- ------------- ------------- ------------- CASH FLOW FROM FINANCING ACTIVITIES: Issuance of common stock, net 5,308 2,846 17,459 67,684 Dividends paid (6,384) (6,252) (25,296) (24,305) Issuance of long-term debt, net 1,000 1,000 53,348 40,564 Retirement of long-term debt, net (2,001) (1,466) (6,703) (6,313) Temporary changes in long-term debt - (33,000) 33,000 (33,000) Change in short-term debt (55,600) (51,280) 4,680 (77,280) ------------- ------------- ------------- ------------- Net cash provided by (used in) financing activities (57,677) (88,152) 76,488 (32,650) ------------- ------------- ------------- ------------- Change in cash and temporary cash investments (6,616) (4,352) (3,673) (3,667) Cash at beginning of period 17,126 18,535 14,183 17,850 ------------- ------------- ------------- ------------- Cash at end of period $ 10,510 $ 14,183 $ 10,510 $ 14,183 ============= ============= ============= ============= Supplemental information: Interest paid, net of amounts capitalized $ 16,475 $ 14,218 $ 63,417 $ 60,091 Income taxes paid (received), net 98 4,209 25,977 9,776 The accompanying notes are an integral part of these statements.
4 Note 1 - Summary of Significant Accounting Policies Nature of Operations. Southwest Gas Corporation (the Company) is comprised of two segments: natural gas operations (Southwest or the natural gas operations segment) and construction services. Southwest purchases, transports, and distributes natural gas to customers in portions of Arizona, Nevada, and California. Southwest's public utility rates, practices, facilities, and service territories are subject to regulatory oversight. The timing and amount of rate relief can materially impact results of operations. Natural gas sales are seasonal, peaking during the winter months. Variability in weather from normal temperatures can materially impact results of operations. Northern Pipeline Construction Co. (Northern or the construction services segment), a wholly owned subsidiary, is a full-service underground piping contractor which provides utility companies with trenching and installation, replacement, and maintenance services for energy distribution systems. Basis of Presentation. The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, all adjustments, consisting of normal recurring items and estimates necessary for a fair presentation of the results for the interim periods, have been made. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the 1999 Annual Report to Shareholders, which is incorporated by reference into the Form 10-K. Intercompany Transactions. The construction services segment recognizes revenues generated from contracts with Southwest (see Note 2 below). Accounts receivable for these services were $4.6 million at March 31, 2000 and $4.4 million at December 31, 1999. The accounts receivable balance, revenues, and associated profits are included in the consolidated financial statements of the Company and were not eliminated during consolidation. Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation," provides that intercompany profits on sales to regulated affiliates should not be eliminated in consolidation if the sales price is reasonable and if future revenues approximately equal to the sales price will result from the rate-making process. Management believes these two criteria are being met. Note 2 - Segment Information The following tables list revenues from external customers, intersegment revenues, and segment net income (thousands of dollars):
Natural Gas Construction Operations Services Total --------------- ---------------- ------------- Three months ended March 31, 2000 Revenues from external customers $ 267,079 $ 18,420 $ 285,499 Intersegment revenues -- 11,316 11,316 --------------- ---------------- ------------- Total $ 267,079 $ 29,736 $ 296,815 =============== ================ ============= Segment net income $ 24,364 $ 834 $ 25,198 =============== ================ ============= Three months ended March 31, 1999 Revenues from external customers $ 279,110 $ 17,219 $ 296,329 Intersegment revenues -- 11,696 11,696 --------------- ---------------- ------------- Total $ 279,110 $ 28,915 $ 308,025 =============== ================ ============= Segment net income $ 27,065 $ 1,201 $ 28,266 =============== ================ =============
5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company is principally engaged in the business of purchasing, transporting, and distributing natural gas. Southwest is the largest distributor in Arizona, selling and transporting natural gas in most of southern, central, and northwestern Arizona, including the Phoenix and Tucson metropolitan areas. Southwest is also the largest distributor and transporter of natural gas in Nevada, and serves the Las Vegas metropolitan area and northern Nevada. In addition, Southwest distributes and transports natural gas in portions of California, including the Lake Tahoe area in northern California and the high desert and mountain areas in San Bernardino County. Southwest purchases, transports, and distributes natural gas to approximately 1,290,000 residential, commercial, industrial and other customers, of which 57 percent are located in Arizona, 34 percent are in Nevada, and 9 percent are in California. During the twelve months ended March 31, 2000, Southwest earned 56 percent of operating margin in Arizona, 34 percent in Nevada, and 10 percent in California. During this same period, Southwest earned 83 percent of operating margin from residential and small commercial customers, 4 percent from other sales customers, and 13 percent from transportation customers. These patterns are similar to prior years and are expected to continue. Northern is a full-service underground piping contractor, which provides utility companies with trenching and installation, replacement, and maintenance services for energy distribution systems. Capital Resources and Liquidity The capital requirements and resources of the Company generally are determined independently for the natural gas operations and construction services segments. Each business activity is generally responsible for securing its own financing sources. The capital requirements and resources of the construction services segment are not material to the overall capital requirements and resources of the Company. Southwest continues to experience significant population growth throughout its service territories. This growth has required large amounts of capital to finance the investment in infrastructure, in the form of new transmission and distribution plant, to satisfy consumer demand. For the twelve months ended March 31, 2000, natural gas construction expenditures totaled $205 million. Approximately 74 percent of these current-period expenditures represented new construction and the balance represented costs associated with routine replacement of existing transmission, distribution, and general plant. Cash flows from operating activities of Southwest (net of dividends) were $110 million for the twelve months ended March 31, 2000. Operating cash flows were below prior year levels because previously deferred purchased gas costs are now fully recovered. Southwest estimates construction expenditures during the three-year period ending December 31, 2002 will be approximately $630 million. During the three-year period, cash flow from operating activities (net of dividends) is estimated to fund approximately 60 percent of the gas operations total construction expenditures. The remaining cash requirements are expected to be provided by external financing sources. The timing, types, and amounts of these additional external financings will be dependent on a number of factors, including conditions in the capital markets, timing and amounts of rate relief and growth factors in Southwest service areas. These external financings may include the issuance of both debt and equity securities, bank and other short-term borrowings, and other forms of financing. 6 Results of Consolidated Operations Quarterly Analysis Contribution to Net Income Three Months Ended March 31, ------------------------------------------ (Thousands of dollars) 2000 1999 ----------- ----------- Natural gas operations $ 24,364 $ 27,065 Construction services 834 1,201 ----------- ----------- Net income $ 25,198 $ 28,266 =========== =========== Earnings per share for the quarter ended March 31, 2000 were $0.81, compared to $0.93 per share recorded during the corresponding quarter of the prior year. Earnings from natural gas operations decreased $0.11 per share. See separate discussion at Results of Natural Gas Operations. The contribution from construction services for the current quarter decreased $0.01 compared to the corresponding quarter of the prior year. Twelve-Month Analysis Contribution to Net Income Twelve Months Ended March 31, ------------------------------------------ (Thousands of dollars) 2000 1999 ----------- ----------- Natural gas operations $ 32,772 $ 36,238 Construction services 3,470 3,612 ----------- ----------- Net income $ 36,242 $ 39,850 =========== =========== Earnings per share for the twelve months ended March 31, 2000 were $1.17, a $0.19 decrease from per share earnings of $1.36 recorded during the prior twelve-month period. Earnings contributed from natural gas operations decreased $0.18 per share. See separate discussion at Results of Natural Gas Operations. The contribution from construction services of $0.11 for the current twelve-month period decreased $0.01 compared to the twelve-month period of the prior year. Average shares outstanding increased 1.6 million shares between periods primarily due to a 2.5 million share issuance of common stock in August 1998 and continuing issuances under the Dividend Reinvestment and Stock Purchase Plan. The following table sets forth the ratios of earnings to fixed charges for the Company: For the Twelve Months Ended ----------------------------------- March 31, December 31, 2000 1999 ------------ ------------ Ratio of earnings to fixed charges 1.67 1.78 Earnings are defined as the sum of pretax income plus fixed charges. Fixed charges consist of all interest expense including capitalized interest, one-third of rent expense (which approximates the interest component of such expense), preferred securities distributions, and amortized debt costs. 7 Results of Natural Gas Operations Quarterly Analysis Three Months Ended March 31, ------------------------------ (Thousands of dollars) 2000 1999 ----------- ----------- Gas operating revenues $ 267,079 $ 279,110 Net cost of gas sold 123,504 135,886 ----------- ----------- Operating margin 143,575 143,224 Operations and maintenance expense 57,327 53,566 Depreciation and amortization 23,416 21,911 Taxes other than income taxes 7,673 7,212 ----------- ----------- Operating income 55,159 60,535 Other income 270 117 ----------- ----------- Income before interest and income taxes 55,429 60,652 Net interest deductions 16,387 14,632 Preferred securities distributions 1,369 1,369 Income tax expense 13,309 17,586 ----------- ----------- Contribution to consolidated net income $ 24,364 $ 27,065 =========== =========== Contribution from natural gas operations declined approximately $2.7 million compared to the first quarter of 1999. The decline was principally the result of higher operating expenses and financing costs as operating margin was relatively flat between periods. Operating margin increased $351,000 in the first quarter of 2000. Differences in heating demand caused by weather variations between periods resulted in a $6 million decrease, as both periods experienced warmer-than-normal temperatures. Offsetting the weather-related impacts was an increase of approximately $6 million in operating margin due to customer growth, as Southwest served 65,000, or five percent, more customers than a year ago. Operations and maintenance expenses increased $3.8 million, or seven percent, reflecting general increases in labor and maintenance costs along with incremental operating expenses associated with providing service to a steadily growing customer base. Depreciation expense and general taxes increased $2 million, or seven percent, as a result of construction activities. Average gas plant in service increased $181 million, or nine percent, as compared to the first quarter of 1999. The increase reflects ongoing capital expenditures for the upgrade of existing operating facilities and the expansion of the system to accommodate continued customer growth. Net interest deductions increased $1.8 million, or 12 percent, resulting primarily from additional borrowings to finance construction expenditures, and higher interest rates on variable-rate debt. 8 Twelve-Month Analysis Twelve Months Ended March 31, ------------------------------ (Thousands of dollars) 2000 1999 ----------- ----------- Gas operating revenues $ 779,124 $ 804,344 Net cost of gas sold 317,649 344,748 ----------- ----------- Operating margin 461,475 459,596 Operations and maintenance expense 225,019 211,888 Depreciation and amortization 89,759 82,840 Taxes other than income taxes 28,071 30,886 ----------- ----------- Operating income 118,626 133,982 Other income (expense) (2,772) (2,009) ----------- ----------- Income before interest and income taxes 115,854 131,973 Net interest deductions 63,352 60,891 Preferred securities distributions 5,475 5,475 Income tax expense 14,255 29,369 ----------- ----------- Contribution to consolidated net income $ 32,772 $ 36,238 =========== =========== Contribution to consolidated net income decreased $3.5 million compared to the corresponding twelve-month period ended March 1999. The decrease was the result of higher operating expenses and financing costs partially offset by slightly higher operating margin. Operating margin increased $1.9 million between periods. Customer growth contributed $17 million in incremental margin. However, weather in the current period was nine percent warmer than the prior period, resulting in a $15 million offsetting decrease in operating margin from weather-sensitive customers. Operations and maintenance expenses increased $13.1 million, or six percent, reflecting general increases in labor and maintenance costs along with incremental operating expenses associated with providing service to a steadily growing customer base. Depreciation expense and general taxes increased a net $4.1 million, or four percent, as a result of additional plant in service. Average gas plant in service for the current twelve-month period increased $169 million, or nine percent, compared to the corresponding period a year ago. This was attributable to the upgrade of existing operating facilities and the expansion of the system to accommodate new customers being added to the system. Net interest deductions increased $2.5 million, or four percent, resulting primarily from additional borrowings to finance construction expenditures, and higher interest rates on variable-rate debt. Other income (expense) for the twelve-month period ended March 2000 includes approximately $5 million (pretax) of costs associated with the now terminated merger agreement with ONEOK, Inc. On a net of tax basis, merger costs were $2.7 million, which reduced earnings per share by $0.09. In the twelve-month period ended March 1999, other income (expense) included $1.5 million of pretax merger-related costs, which reduced earnings per share by $0.03. Utility income tax expense, exclusive of changes in pretax income, decreased $4 million between periods. The decrease was attributed to the favorable resolution of certain federal and state income tax issues during the current period and the recognition of income tax liabilities for unrelated tax issues in the prior period. 9 Rates and Regulatory Proceedings Arizona In May 2000, the Company filed a general rate application with the Arizona Corporation Commission (ACC) seeking approval to increase revenues by $37.1 million, or nine percent, annually for its Arizona rate jurisdiction. The Company is seeking rate relief for increased operating costs, changes in financing costs, declining average residential useage, and improvements and additions to the distribution system. The Company has proposed shifting more day-to-day operating costs to the basic service charge to ease the impact of weather on monthly bills. The Company does not expect an ACC decision until early 2001. Arizona general rates were last increased in September 1997. Recently Issued Accounting Pronouncements In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133 "Accounting for Derivative Instruments and Hedging Activities." In June 1999, the FASB issued SFAS No. 137 "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133." As it applies to the Company, SFAS No. 137 postpones the effective date of SFAS No. 133 to January 2001. The Company does not currently utilize stand-alone derivatives for speculative purposes or for hedging, and does not have foreign currency exposure. However, the Company has fixed-price gas supply contracts, which may be considered derivatives under the requirements of this statement, even though they are part of the Company's normal gas purchase portfolio. In March 2000, the FASB issued an Exposure Draft that would exclude these contracts from the scope of SFAS No. 133. The Company will continue to review the terms of these contracts and monitor the progress of the Exposure Draft to determine if SFAS No. 133 accounting requirements apply. Forward-Looking Statements This quarterly report contains 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, natural gas prices, the effects of regulation/deregulation, the timing and amount of rate relief, changes in capital requirements and funding, acquisitions, and competition. 10 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Litigation is pending in California, Arizona, and Oklahoma relating to the now terminated acquisition of the Company by ONEOK, Inc. and the Company's rejection of competing offers from Southern Union Company. This litigation is described in Item 3, "Legal Proceedings" in the 1999 Form 10-K filed with the Securities and Exchange Commission. There have been no new material developments related to these proceedings. Other Proceedings The Company has been named as defendant in various other legal proceedings. The ultimate dispositions of these proceedings are not presently determinable; however, it is the opinion of management that none of this litigation will have a material adverse impact on the Company's financial position or results of operations. ITEMS 2-5. None 11 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report on Form 10-Q: Exhibit 12.1 - Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends. Exhibit 27.1 - Financial Data Schedule (filed electronically only). (b) Reports on Form 8-K The Company filed a Form 8-K, dated April 27, 2000, reporting summary financial information for the quarter and twelve months ended March 31, 2000. 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 thereunto duly authorized. Southwest Gas Corporation -------------------------------------------------- (Registrant) Date: May 15, 2000 /s/ Edward A. Janov -------------------------------------------------- Edward A. Janov Vice President/Controller/Chief Accounting Officer 12 EX-12 2 COMPUTATION OF RATIOS EXHIBIT 12.1 SOUTHWEST GAS CORPORATION COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES (Thousands of dollars)
For the Twelve Months Ended --------------------------------------------------------------------------------------- March 31, December 31, ------------------------------------------------------------------------ Continuing operations 2000 1999 1998 1997 1996 1995 ------------- ------------- -------------- -------------- -------------- ------------- 1. Fixed charges: A) Interest expense $ 64,867 $ 63,110 $ 63,416 $ 63,247 $ 54,674 $ 52,844 B) Amortization 1,407 1,366 1,243 1,164 1,494 1,569 C) Interest portion of rentals 8,370 8,217 7,531 6,973 6,629 4,435 D) Preferred securities distributions 5,475 5,475 5,475 5,475 5,475 913 ------------- ------------- -------------- -------------- -------------- ------------- Total fixed charges $ 80,119 $ 78,168 $ 77,665 $ 76,859 $ 68,272 $ 59,761 ============= ============= ============== ============== ============== ============= 2. Earnings (as defined): E) Pretax income from continuing operations $ 53,441 $ 60,955 $ 83,951 $ 21,328 $ 10,448 $ 3,493 Fixed Charges (1. above) 80,119 78,168 77,665 76,859 68,272 59,761 ------------- ------------- -------------- -------------- -------------- ------------- Total earnings as defined $ 133,560 $ 139,123 $ 161,616 $ 98,187 $ 78,720 $ 63,254 ============= ============= ============== ============== ============== ============= 1.67 1.78 2.08 1.28 1.15 1.06 ============= ============= ============== ============== ============== =============
For the Twelve Months Ended --------------------------------------------------------------------------------------- Adjusted for interest allocated to March 31, December 31, ------------------------------------------------------------------------ discontinued operations 2000 1999 1998 1997 1996 1995 ------------- ------------- -------------- -------------- -------------- ------------- 1. Fixed charges: A) Interest expense $ 64,867 $ 63,110 $ 63,416 $ 63,247 $ 54,674 $ 52,844 B) Amortization 1,407 1,366 1,243 1,164 1,494 1,569 C) Interest portion of rentals 8,370 8,217 7,531 6,973 6,629 4,435 D) Preferred securities distributions 5,475 5,475 5,475 5,475 5,475 913 E) Allocated interest [1] - - - - - 9,636 ------------- ------------- -------------- -------------- -------------- ------------- Total fixed charges $ 80,119 $ 78,168 $ 77,665 $ 76,859 $ 68,272 $ 69,397 ============= ============= ============== ============== ============== ============= 2. Earnings (as defined): F) Pretax income from continuing operations $ 53,441 $ 60,955 $ 83,951 $ 21,328 $ 10,448 $ 3,493 Fixed Charges (1. above) 80,119 78,168 77,665 76,859 68,272 69,397 ------------- ------------- -------------- -------------- -------------- ------------- Total earnings as defined $ 133,560 $ 139,123 $ 161,616 $ 98,187 $ 78,720 $ 72,890 ============= ============= ============== ============== ============== ============= 3. Ratio of earnings to fixed charges 1.67 1.78 2.08 1.28 1.15 1.05 ============= ============= ============== ============== ============== ============= [1] Represents allocated interest through the period ended December 31, 1995. Carrying costs for the period subsequent to year end through the disposition of the discontinued operations were accrued and recorded as disposal costs.
SOUTHWEST GAS CORPORATION COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS (Thousands of dollars) For the Twelve Months Ended ---------------------------------------------------------------------------------------- March 31, December 31, ------------------------------------------------------------------------- Continuing operations 2000 1999 1998 1997 1996 1995 ------------- ------------- ------------- ------------- ------------- -------------- 1. Combined fixed charges: A) Total fixed charges $ 80,119 $ 78,168 $ 77,665 $ 76,859 $ 68,272 $ 59,761 B) Preferred dividends [1] - - - - - 404 ------------- ------------- ------------- ------------- ------------- -------------- Total fixed charges and preferred dividends $ 80,119 $ 78,168 $ 77,665 $ 76,859 $ 68,272 $ 60,165 ============= ============= ============= ============= ============= ============== 2. Earnings $ 133,560 $ 139,123 $ 161,616 $ 98,187 $ 78,720 $ 63,254 ============= ============= ============= ============= ============= ============== 3. Ratio of earnings to fixed charges and preferred dividends 1.67 1.78 2.08 1.28 1.15 1.05 ============= ============= ============= ============= ============= ==============
For the Twelve Months Ended ---------------------------------------------------------------------------------------- Adjusted for interest allocated to March 31, December 31, ------------------------------------------------------------------------- discontinued operations 2000 1999 1998 1997 1996 1995 ------------- ------------- ------------- ------------- ------------- -------------- 1. Combined fixed charges: A) Total fixed charges $ 80,119 $ 78,168 $ 77,665 $ 76,859 $ 68,272 $ 69,397 B) Preferred dividends [1] - - - - - 404 ------------- ------------- ------------- ------------- ------------- -------------- Total fixed charges and preferred dividends $ 80,119 $ 78,168 $ 77,665 $ 76,859 $ 68,272 $ 69,801 ============= ============= ============= ============= ============= ============== 2. Earnings $ 133,560 $ 139,123 $ 161,616 $ 98,187 $ 78,720 $ 72,890 ============= ============= ============= ============= ============= ============== 3. Ratio of earnings to fixed charges and preferred dividends 1.67 1.78 2.08 1.28 1.15 1.04 ============= ============= ============= ============= ============= ============== [1] Preferred dividends have been adjusted to represent the pretax earnings necessary to cover such dividend requirements.
EX-27 3 FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from Southwest Gas Corporation's Form 10-Q for the quarter ended March 31, 2000 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-2000 MAR-31-2000 PER-BOOK 1,599,561 87,418 169,790 47,881 0 1,904,650 32,860 444,325 52,312 529,497 0 0 858,762 5,400 0 0 7,460 0 0 0 503,531 1,904,650 296,815 14,051 240,196 240,196 56,619 (584) 56,035 (16,786) 25,198 0 25,198 6,384 0 97,422 0.81 0.80 Includes: trust originated preferred securities of $60,000, current liabilities, net of current long-term debt maturities and short-term debt, of $206,467 and deferred income taxes and other credits of $237,064 Includes distributions related to trust originated preferred securities of $1,369
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