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 nine months ended September 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 250 250 21,090 21,340 Net income (loss) 97,376 (78 ) 97,298 248 Redemption value adjustments (355 ) (355 ) 355 Foreign currency exchange translation adj. 1,850 1,850 11 Redemption of Centuri shares from noncontrolling parties (23,000 ) Other comprehensive income (loss): Net actuarial gain (loss) arising during period, less amortization of unamortized benefit plan cost, net of tax 1,786 1,786 Amounts reclassified to net income, net of tax (FSIRS) 1,554 1,554 Centuri dividend to redeemable noncontrolling interest (204 ) Dividends declared Common: $1.485 per share (71,350 ) (71,350 ) SEPTEMBER 30, 2017 47,732 $ 49,362 $ 924,213 $ (42,818 ) $ 784,934 $ (2,295 ) $ 1,713,396 $ — The table below provides details of activity in equity for Southwest Gas Corporation during the nine months ended September 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 Accumulated Additional Other Common Stock Paid-in Comprehensive 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 82,436 82,436 Other comprehensive income (loss): Net actuarial gain (loss) arising during period, less amortization of unamortized benefit plan cost, net of tax 1,786 1,786 Amounts reclassified to net income, net of tax (FSIRS) 1,554 1,554 Distribution to Southwest Gas Holdings, Inc. investment in discontinued operations (182,773 ) (182,773 ) Stock-based compensation (a) 8,576 (587 ) 7,989 Dividends declared to Southwest Gas Holdings, Inc. (60,130 ) (60,130 ) Contributions from Southwest Gas Holdings, Inc. 11,659 11,659 SEPTEMBER 30, 2017 47,482 $ 49,112 $ 917,581 $ (42,299 ) $ 606,007 $ 1,530,401 (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 impacts, 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 September 30, 2017 Three Months Ended September 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 $ 333 $ (126 ) $ 207 $ 333 $ (126 ) $ 207 Amortization of net actuarial (gain)/loss 6,362 (2,418 ) 3,944 6,767 (2,571 ) 4,196 Regulatory adjustment (5,734 ) 2,179 (3,555 ) (6,122 ) 2,326 (3,796 ) Pension plans other comprehensive income (loss) 961 (365 ) 596 978 (371 ) 607 FSIRS (designated hedging activities): Amounts reclassifed into net income 835 (317 ) 518 835 (317 ) 518 FSIRS other comprehensive income 835 (317 ) 518 835 (317 ) 518 Total other comprehensive income (loss) - Southwest Gas Corporation 1,796 (682 ) 1,114 1,813 (688 ) 1,125 Foreign currency translation adjustments: Translation adjustments 1,012 — 1,012 (238 ) — (238 ) Foreign currency other comprehensive income (loss) 1,012 — 1,012 (238 ) — (238 ) Total other comprehensive income (loss) - Southwest Gas Holdings, Inc. $ 2,808 $ (682 ) $ 2,126 $ 1,575 $ (688 ) $ 887 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2017 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 $ 1,001 $ (380 ) $ 621 $ 1,001 $ (380 ) $ 621 Amortization of net actuarial (gain)/loss 19,084 (7,252 ) 11,832 20,300 (7,714 ) 12,586 Regulatory adjustment (17,204 ) 6,537 (10,667 ) (18,368 ) 6,980 (11,388 ) Pension plans other comprehensive income (loss) 2,881 (1,095 ) 1,786 2,933 (1,114 ) 1,819 FSIRS (designated hedging activities): Amounts reclassifed into net income 2,507 (953 ) 1,554 2,508 (952 ) 1,556 FSIRS other comprehensive income 2,507 (953 ) 1,554 2,508 (952 ) 1,556 Total other comprehensive income (loss)—Southwest Gas Corporation 5,388 (2,048 ) 3,340 5,441 (2,066 ) 3,375 Foreign currency translation adjustments: Translation adjustments 1,861 — 1,861 614 — 614 Foreign currency other comprehensive income (loss) 1,861 — 1,861 614 — 614 Total other comprehensive income (loss) $ 7,249 $ (2,048 ) $ 5,201 $ 6,055 $ (2,066 ) $ 3,989 Twelve Months Ended September 30, 2017 Twelve Months Ended September 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 1,335 (507 ) 828 Amortization of net actuarial (gain)/loss 25,850 (9,823 ) 16,027 28,895 (10,980 ) 17,915 Regulatory adjustment (4,420 ) 1,679 (2,741 ) (653 ) 249 (404 ) Pension plans other comprehensive income (loss) (5 ) 1 (4 ) (942 ) 359 (583 ) FSIRS (designated hedging activities): Amounts reclassifed into net income 3,344 (1,271 ) 2,073 3,344 (1,271 ) 2,073 FSIRS other comprehensive income (loss) 3,344 (1,271 ) 2,073 3,344 (1,271 ) 2,073 Total other comprehensive income (loss)—Southwest Gas Corporation 3,339 (1,270 ) 2,069 2,402 (912 ) 1,490 Foreign currency translation adjustments: Translation adjustments 1,408 — 1,408 233 — 233 Foreign currency other comprehensive income (loss) 1,408 — 1,408 233 — 233 Total other comprehensive income (loss)—Southwest Gas Holdings, Inc. $ 4,747 $ (1,270 ) $ 3,477 $ 2,635 $ (912 ) $ 1,723 (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 September 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 — — — — — — 1,861 — 1,861 1,861 Other comprehensive income before reclassifications — — — — — — 1,861 — 1,861 1,861 FSIRS amounts reclassified from AOCI (1) — — — 2,507 (953 ) 1,554 — — — 1,554 Amortization of prior service cost (2) 1,001 (380 ) 621 — — — — — — 621 Amortization of net actuarial loss (2) 19,084 (7,252 ) 11,832 — — — — — — 11,832 Regulatory adjustment (3) (17,204 ) 6,537 (10,667 ) — — — — — — (10,667 ) Net current period other comprehensive income (loss) 2,881 (1,095 ) 1,786 2,507 (953 ) 1,554 1,861 — 1,861 5,201 Less: Translation adjustment attributable to redeemable noncontrolling interest — — — — — — 11 — 11 11 Net current period other comprehensive income (loss) attributable to Southwest Gas Holdings, Inc. 2,881 (1,095 ) 1,786 2,507 (953 ) 1,554 1,850 — 1,850 5,190 Ending Balance AOCI September 30, 2017 $ (54,732 ) $ 20,798 $ (33,934 ) $ (13,492 ) $ 5,127 $ (8,365 ) $ (519 ) $ — $ (519 ) $ (42,818 ) (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) — — — 2,507 (953 ) 1,554 1,554 Amortization of prior service cost (6) 1,001 (380 ) 621 — — — 621 Amortization of net actuarial loss (6) 19,084 (7,252 ) 11,832 — — — 11,832 Regulatory adjustment (7) (17,204 ) 6,537 (10,667 ) — — — (10,667 ) Net current period other comprehensive income (loss) attributable to Southwest Gas Corporation 2,881 (1,095 ) 1,786 2,507 (953 ) 1,554 3,340 Ending Balance AOCI September 30, 2017 $ (54,732 ) $ 20,798 $ (33,934 ) $ (13,492 ) $ 5,127 $ (8,365 ) $ (42,299 ) (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) (Thousands of dollars) September 30, 2017 December 31, 2016 Net actuarial (loss) gain $ (411,889 ) $ (430,973 ) Prior service cost (4,702 ) (5,703 ) Less: amount recognized in regulatory assets 361,859 379,063 Recognized in AOCI $ (54,732 ) $ (57,613 ) |