Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income | Note 8 – Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income The table below provides details of activity in equity and the redeemable noncontrolling interest for Southwest Gas Holdings, Inc. on a consolidated basis during the six months ended June 30, 2017. Southwest Gas Holdings, Inc. Equity Accumulated Redeemable Additional Other Non- Noncontrolling Common Stock Paid-in Comprehensive Retained controlling Interest (In thousands, except per share amounts) Shares Amount Capital Income (Loss) Earnings Interest Total (Temporary DECEMBER 31, 2016 47,482 $ 49,112 $ 903,123 $ (48,008 ) $ 759,263 $ (2,217 ) $ 1,661,273 $ 22,590 Common stock issuances 101 101 7,972 8,073 Net income (loss) 87,172 (95 ) 87,077 49 Redemption value adjustments 2,315 2,315 (2,315 ) Foreign currency exchange translation adj. 820 820 29 Other comprehensive income (loss): Net actuarial gain (loss) arising during period, less amortization of unamortized benefit plan cost, net of tax 1,190 1,190 Amounts reclassified to net income, net of tax (FSIRS) 1,036 1,036 Centuri dividend to redeemable noncontrolling interest (204 ) Dividends declared Common: $0.99 per share (47,528 ) (47,528 ) JUNE 30, 2017 47,583 $ 49,213 $ 911,095 $ (44,962 ) $ 801,222 $ (2,312 ) $ 1,714,256 $ 20,149 The table below provides details of activity in equity for Southwest Gas Corporation during the six months ended June 30, 2017. Effective in January 2017, Southwest became a subsidiary of Southwest Gas Holdings, Inc., and only equity shares of the latter are publicly traded, under the ticker symbol “SWX.” Southwest Gas Corporation Equity Common Stock Additional Accumulated Retained (In thousands, except per share amounts) Shares Amount Capital Income (Loss) Earnings Total DECEMBER 31, 2016 47,482 $ 49,112 $ 897,346 $ (45,639 ) $ 767,061 $ 1,667,880 Net income 86,460 86,460 Other comprehensive income (loss): Net actuarial gain (loss) arising during period, less amortization of unamortized ben efit plan cost, net of tax 1,190 1,190 Amounts reclassified to net income,net of tax (FSIRS) 1,036 1,036 Distribution to Southwest Gas Holdings, Inc. investment in discontinued operations (182,773 ) (182,773 ) Stock-based compensation (a) 7,369 (392 ) 6,977 Dividends declared to Southwest Gas Holdings, Inc. (39,130 ) (39,130 ) JUNE 30, 2017 47,482 $ 49,112 $ 904,715 $ (43,413 ) $ 631,226 $ 1,541,640 (a) Stock-based compensation is based on stock awards of Southwest Gas Corporation to be issued in shares of Southwest Gas Holdings, Inc. The table above gives effect to the holding company reorganization whereby Southwest and Centuri became subsidiaries of the Company. The historic investment in Centuri was distributed to the parent holding company. This presentation is only applicable to Southwest and not to the Company overall, as Centuri continues to be included in the continuing operations of the Company. Also in connection with the holding company creation, compensation plans of Southwest include programs that will be settled with equity shares issued by Southwest Gas Holdings, Inc. Management has determined that when no consideration is directly exchanged for these programs between Southwest and the Company, the accounting impact at Southwest for these programs is reflected both as compensation expense and as an equity contribution (of the parent) in Southwest. The following information provides insight into amounts impacting the Company’s 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 Condensed Consolidated Balance Sheets and the associated column in the equity table above, as well as the Redeemable Noncontrolling Interest. See Note 4 – Derivatives and Fair Value Measurements Related Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss) (Thousands of dollars) Three Months Ended June 30, 2017 Three Months Ended June 30, 2016 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 prior service cost $ 334 $ (127 ) $ 207 $ 334 $ (127 ) $ 207 Amortization of net actuarial (gain)/loss 6,361 (2,417 ) 3,944 6,766 (2,572 ) 4,194 Regulatory adjustment (5,735 ) 2,179 (3,556 ) (6,123 ) 2,327 (3,796 ) Pension plans other comprehensive income (loss) 960 (365 ) 595 977 (372 ) 605 FSIRS (designated hedging activities): Amounts reclassifed into net income 836 (318 ) 518 837 (318 ) 519 FSIRS other comprehensive income 836 (318 ) 518 837 (318 ) 519 Total other comprehensive income (loss) - Southwest Gas Corporation 1,796 (683 ) 1,113 1,814 (690 ) 1,124 Foreign currency translation adjustments: Translation adjustments 629 — 629 70 — 70 Foreign currency other comprehensive income (loss) 629 — 629 70 — 70 Total other comprehensive income (loss) - Southwest Gas Holdings, Inc. $ 2,425 $ (683 ) $ 1,742 $ 1,884 $ (690 ) $ 1,194 Six Months Ended June 30, 2017 Six Months Ended June 30, 2016 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 prior service cost $ 668 $ (254 ) $ 414 $ 668 $ (254 ) $ 414 Amortization of net actuarial (gain)/loss 12,722 (4,834 ) 7,888 13,533 (5,143 ) 8,390 Regulatory adjustment (11,470 ) 4,358 (7,112 ) (12,246 ) 4,654 (7,592 ) Pension plans other comprehensive income (loss) 1,920 (730 ) 1,190 1,955 (743 ) 1,212 FSIRS (designated hedging activities): Amounts reclassifed into net income 1,672 (636 ) 1,036 1,673 (635 ) 1,038 FSIRS other comprehensive income 1,672 (636 ) 1,036 1,673 (635 ) 1,038 Total other comprehensive income (loss)—Southwest Gas Corporation 3,592 (1,366 ) 2,226 3,628 (1,378 ) 2,250 Foreign currency translation adjustments: Translation adjustments 849 — 849 852 — 852 Foreign currency other comprehensive income (loss) 849 — 849 852 — 852 Total other comprehensive income (loss)—Southwest Gas Holdings, Inc. $ 4,441 $ (1,366 ) $ 3,075 $ 4,480 $ (1,378 ) $ 3,102 Twelve Months Ended June 30, 2017 Twelve Months Ended June 30, 2016 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) $ (22,770 ) $ 8,652 $ (14,118 ) $ (30,519 ) $ 11,597 $ (18,922 ) Amortization of prior service cost 1,335 (507 ) 828 1,336 (508 ) 828 Amortization of net actuarial (gain)/loss 26,255 (9,976 ) 16,279 30,723 (11,675 ) 19,048 Regulatory adjustment (4,808 ) 1,826 (2,982 ) (2,318 ) 882 (1,436 ) Pension plans other comprehensive income (loss) 12 (5 ) 7 (778 ) 296 (482 ) FSIRS (designated hedging activities): Amounts reclassifed into net income 3,344 (1,271 ) 2,073 3,345 (1,271 ) 2,074 FSIRS other comprehensive income (loss) 3,344 (1,271 ) 2,073 3,345 (1,271 ) 2,074 Total other comprehensive income (loss)—Southwest Gas Corporation 3,356 (1,276 ) 2,080 2,567 (975 ) 1,592 Foreign currency translation adjustments: Translation adjustments 158 — 158 (39 ) — (39 ) Foreign currency other comprehensive income (loss) 158 — 158 (39 ) — (39 ) Total other comprehensive income (loss)—Southwest Gas Holdings, Inc. $ 3,514 $ (1,276 ) $ 2,238 $ 2,528 $ (975 ) $ 1,553 (1) Tax amounts are calculated using a 38% rate. The Company has elected to indefinitely reinvest the earnings of Centuri’s Canadian subsidiaries in Canada, thus preventing deferred taxes on such earnings. As a result of this assertion, the Company is not recognizing any tax effect or presenting a tax expense or benefit for the currency translation adjustment amount reported in Other Comprehensive Income, as repatriation of earnings is not anticipated. Approximately $2.1 million of realized losses (net of tax) related to the FSIRS, reported in Accumulated other comprehensive income (“AOCI”) at June 30, 2017, will be reclassified into interest expense within the next 12 months as the related interest payments on long-term debt occur. The following table represents a rollforward of AOCI, presented on the Company’s Condensed Consolidated Balance Sheets: AOCI—Rollforward (Thousands of dollars) Defined Benefit Plans FSIRS Foreign Currency Items Before-Tax Tax After-Tax Before-Tax Tax After-Tax Before-Tax Tax After-Tax AOCI Beginning Balance AOCI December 31, 2016 $ (57,613 ) $ 21,893 $ (35,720 ) $ (15,999 ) $ 6,080 $ (9,919 ) $ (2,369 ) $ — $ (2,369 ) $ (48,008 ) Translation adjustments — — — — — — 849 — 849 849 Other comprehensive income before reclassifications — — — — — — 849 — 849 849 FSIRS amounts reclassified from AOCI (1) — — — 1,672 (636 ) 1,036 — — — 1,036 Amortization of prior service cost (2) 668 (254 ) 414 — — — — — — 414 Amortization of net actuarial loss (2) 12,722 (4,834 ) 7,888 — — — — — — 7,888 Regulatory adjustment (3) (11,470 ) 4,358 (7,112 ) — — — — — — (7,112 ) Net current period other comprehensive income (loss) 1,920 (730 ) 1,190 1,672 (636 ) 1,036 849 — 849 3,075 Less: Translation adjustment attributable to redeemable noncontrolling interest — — — — — — 29 — 29 29 Net current period other comprehensive income (loss) attributable to Southwest Gas Holdings, Inc. 1,920 (730 ) 1,190 1,672 (636 ) 1,036 820 — 820 3,046 Ending Balance AOCI June 30, 2017 $ (55,693 ) $ 21,163 $ (34,530 ) $ (14,327 ) $ 5,444 $ (8,883 ) $ (1,549 ) $ — $ (1,549 ) $ (44,962 ) (1) The FSIRS reclassification amounts are included in the Net interest deductions line item on the Company’s 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 (3) The regulatory adjustment represents the portion of the activity above that is expected to be recovered through rates in the future (the related regulatory asset is included in the Deferred charges and other assets line item on the Company’s Condensed Consolidated Balance Sheets). (4) Tax amounts are calculated using a 38% rate. The following table represents a rollforward of AOCI, presented on Southwest’s Condensed Consolidated Balance Sheets: AOCI—Rollforward (Thousands of dollars) Defined Benefit Plans FSIRS Before-Tax Tax After-Tax Before-Tax Tax After-Tax AOCI Beginning Balance AOCI December 31, 2016 $ (57,613 ) $ 21,893 $ (35,720 ) $ (15,999 ) $ 6,080 $ (9,919 ) $ (45,639 ) FSIRS amounts reclassified from AOCI (5) — — — 1,672 (636 ) 1,036 1,036 Amortization of prior service cost (6) 668 (254 ) 414 — — — 414 Amortization of net actuarial loss (6) 12,722 (4,834 ) 7,888 — — — 7,888 Regulatory adjustment (7) (11,470 ) 4,358 (7,112 ) — — — (7,112 ) Net current period other comprehensive income (loss) attributable to Southwest Gas Corporation 1,920 (730 ) 1,190 1,672 (636 ) 1,036 2,226 Ending Balance AOCI June 30, 2017 $ (55,693 ) $ 21,163 $ (34,530 ) $ (14,327 ) $ 5,444 $ (8,883 ) $ (43,413 ) (5) The FSIRS reclassification amounts are included in the Net interest deductions line item on Southwest’s Condensed Consolidated Statements of Income. (6) These AOCI components are included in the computation of net periodic benefit cost (see Note 2 – Components of Net Periodic Benefit Cost (7) The regulatory adjustment represents the portion of the activity above that is expected to be recovered through rates in the future (the related regulatory asset is included in the Deferred charges and other assets line item on Southwest’s Condensed Consolidated Balance Sheets). (8) Tax amounts are calculated using a 38% rate. The following table represents amounts (before income tax impacts) included in AOCI (in the tables above), that have not yet been recognized in net periodic benefit cost: Amounts Recognized in AOCI (Before Tax) June 30, 2017 December 31, 2016 (Thousands of dollars) Net actuarial (loss) gain $ (418,251 ) $ (430,973 ) Prior service cost (5,035 ) (5,703 ) Less: amount recognized in regulatory assets 367,593 379,063 Recognized in AOCI $ (55,693 ) $ (57,613 ) |