Note 6 – Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income

The table below provides details of activity in equity during the six months ended June 30, 2013.


	Southwest Gas Corporation Equity
							Accumulated
					Additional		Other				Non-
(In thousands, except per share amounts)	Common Stock				Paid-in		Comprehensive		Retained		controlling
(In thousands, except per share amounts)	Shares		Amount		Capital		Income (Loss)		Earnings		Interest		Total

DECEMBER 31, 2012		46,148	$	47,778	$	828,777	$	(50,745)	$	484,369	$	(1,681)	$	1,308,498
Common stock issuances		187		187		5,352								5,539
Net income (loss)										90,881		(140)		90,741
Other comprehensive income (loss):
Net actuarial gain (loss) arising during period, less amortization of unamortized benefit plan cost, net of tax								1,301						1,301
Amounts reclassified to net income, net of tax (FSIRS)								1,037						1,037
Dividends declared
Common: $0.66 per share										(30,950)				(30,950)

JUNE 30, 2013		46,335	$	47,965	$	834,129	$	(48,407)	$	544,300	$	(1,821)	$	1,376,166

The following information provides insight into amounts impacting Other Comprehensive Income (Loss), both before and after-tax, within the Condensed Consolidated Statements of Comprehensive Income, which also impact Accumulated Other Comprehensive Income in the Company’s Condensed Consolidated Balance Sheets and the associated column in the equity table above. See Note 4 – Derivatives and Fair Value Measurements for additional information on the FSIRS.


Related Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss)
(Thousands of dollars)
	Three Months Ended						Three Months Ended
	June 30, 2013						June 30, 2012
	Before-		Tax		Net-of-		Before-		Tax		Net-of-
	Tax		(Expense)		Tax		Tax		(Expense)		Tax
	Amount		or Benefit (1)		Amount		Amount		or Benefit (1)		Amount
Defined benefit pension plans:
Amortization of transition obligation	$	-	$	-	$	-	$	216	$	(82)	$	134
Amortization of net actuarial (gain)/loss		8,545		(3,247)		5,298		6,400		(2,432)		3,968
Prior service cost		88		(34)		54		-		-		-
Regulatory adjustment		(7,584)		2,882		(4,702)		(5,848)		2,222		(3,626)

Pension plans other comprehensive income (loss)		1,049		(399)		650		768		(292)		476

FSIRS (designated hedging activities):
Unrealized/realized gain		-		-		-		-		-		-
Amounts reclassified into net income		837		(318)		519		837		(318)		519

FSIRS other comprehensive income		837		(318)		519		837		(318)		519


Total other comprehensive income (loss)	$	1,886	$	(717)	$	1,169	$	1,605	$	(610)	$	995


	Six Months Ended						Six Months Ended
	June 30, 2013						June 30, 2012
	Before-		Tax		Net-of-		Before-		Tax		Net-of-
	Tax		(Expense)		Tax		Tax		(Expense)		Tax
	Amount		or Benefit (1)		Amount		Amount		or Benefit (1)		Amount
Defined benefit pension plans:
Amortization of transition obligation	$	-	$	-	$	-	$	433	$	(165)	$	268
Amortization of net actuarial (gain)/loss		17,090		(6,494)		10,596		12,800		(4,864)		7,936
Prior service cost		177		(68)		109		-		-		-
Regulatory adjustment		(15,168)		5,764		(9,404)		(11,697)		4,445		(7,252)

Pension plans other comprehensive income (loss)		2,099		(798)		1,301		1,536		(584)		952

FSIRS (designated hedging activities):
Unrealized/realized gain		-		-		-		2,959		(1,125)		1,834
Amounts reclassified into net income		1,673		(636)		1,037		1,129		(429)		700

FSIRS other comprehensive income		1,673		(636)		1,037		4,088		(1,554)		2,534


Total other comprehensive income (loss)	$	3,772	$	(1,434)	$	2,338	$	5,624	$	(2,138)	$	3,486


	Twelve Months Ended						Twelve Months Ended
	June 30, 2013						June 30, 2012
	Before-		Tax		Net-of-		Before-		Tax		Net-of-
	Tax		(Expense)		Tax		Tax		(Expense)		Tax
	Amount		or Benefit (1)		Amount		Amount		or Benefit (1)		Amount
Defined benefit pension plans:
Net actuarial gain/(loss)	$	(74,853)	$	28,444	$	(46,409)	$	(135,492)	$	51,487	$	(84,005)
Amortization of transition obligation		434		(164)		270		867		(331)		536
Amortization of net actuarial (gain)/loss		29,887		(11,357)		18,530		20,585		(7,822)		12,763
Prior service cost		(2,246)		853		(1,393)		-		-		-
Regulatory adjustment		39,300		(14,934)		24,366		101,419		(38,539)		62,880

Pension plans other comprehensive income (loss)		(7,478)		2,842		(4,636)		(12,621)		4,795		(7,826)

FSIRS (designated hedging activities):
Unrealized/realized loss		-		-		-		(11,854)		4,504		(7,350)
Amounts reclassified into net income		3,345		(1,271)		2,074		1,713		(651)		1,062

FSIRS other comprehensive income (loss)		3,345		(1,271)		2,074		(10,141)		3,853		(6,288)


Total other comprehensive income (loss)	$	(4,133)	$	1,571	$	(2,562)	$	(22,762)	$	8,648	$	(14,114)

(1)

Tax amounts are calculated using a 38% rate.

Approximately $2.1 million of realized losses (net of tax) related to the FSIRS, reported in Accumulated other comprehensive income (“AOCI”) at June 30, 2013, will be reclassified into interest expense within the next 12 months, as the related interest payments on long-term debt occur.

The following represents a rollforward of AOCI, presented on the Company’s Condensed Consolidated Balance Sheets:


AOCI - Rollforward
(Thousands of dollars)
	Defined Benefit Plans						FSIRS
	Before-Tax		Tax (Expense) Benefit		After- Tax		Before-Tax		Tax (Expense) Benefit		After- Tax		AOCI
Beginning Balance AOCI December 31, 2012	$	(52,470)	$	19,939	$	(32,531)	$	(29,378)	$	11,164	$	(18,214)	$	(50,745)

Other comprehensive income before reclassifications		-		-		-		-		-		-		-
FSIRS amounts reclassified from AOCI (1)		-		-		-		1,673		(636)		1,037		1,037
Amortization of prior service costs (2)		177		(68)		109		-		-		-		109
Amortization of net actuarial loss (2)		17,090		(6,494)		10,596		-		-		-		10,596
Regulatory adjustment (3)		(15,168)		5,764		(9,404)		-		-		-		(9,404)

Net current period other comprehensive income (loss)		2,099		(798)		1,301		1,673		(636)		1,037		2,338

Ending Balance AOCI June 30, 2013	$	(50,371)	$	19,141	$	(31,230)	$	(27,705)	$	10,528	$	(17,177)	$	(48,407)

(1)

The FSIRS reclassification amounts are included in the Net interest deductions line item on the Condensed Consolidated Statements of Income.

(2)

These AOCI components are included in the computation of net periodic benefit cost (see Note 2 – Components of Net Periodic Benefit Cost for additional details).

(3)

The regulatory adjustment represents the portion of the defined benefit plan reclassifications above that relates to the regulatory asset included in the Deferred charges and other assets line item on the Condensed Consolidated Balance Sheets.

The following table represents amounts (before income tax impacts) included in AOCI (in the table above), that have not yet been recognized in net periodic benefit cost:


Amounts Recognized in AOCI (Before Tax)
(Thousands of dollars)
	June 30, 2013		December 31, 2012
Net actuarial (loss) gain	$	(406,572)	$	(423,662)
Prior service cost		(2,246)		(2,423)
Less: amount recognized in regulatory assets		358,447		373,615

Recognized in AOCI	$	(50,371)	$	(52,470)