Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income | Note 9 – Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income The table below provides details of activity in equity and the noncontrolling interest for Southwest Gas Holdings, Inc. on a consolidated basis during the six months ended June 30, 2018. Southwest Gas Holdings, Inc. Equity Accumulated Additional Other Non- Common Stock Paid-in Comprehensive Retained controlling (In thousands, except per share amounts) Shares Amount Capital Income (Loss) Earnings Interest Total DECEMBER 31, 2017 48,090 $ 49,720 $ 955,332 $ (47,682 ) $ 857,398 $ (2,365 ) $ 1,812,403 Common stock issuances 1,036 1,036 68,886 69,922 Net income (loss) 100,642 (797 ) 99,845 Foreign currency exchange translation adj. (1,601 ) (1,601 ) Other comprehensive income (loss): Net actuarial gain arising during period, less amortization of unamortized benefit plan cost, net of tax 1,792 1,792 Amounts reclassified to net income, net of tax (FSIRS) 1,271 1,271 Reclassification of excess deferred taxes (a) (9,300 ) 9,300 — Elimination of shares from noncontrolling interest (b) (2,710 ) 2,710 — Dividends declared Common: $0.52 per share (51,065 ) (51,065 ) JUNE 30, 2018 49,126 $ 50,756 $ 1,021,508 $ (55,520 ) $ 916,275 $ (452 ) $ 1,932,567 (a) Release of excess deferred taxes accumulated prior to December 22, 2017 (date of enactment of the TCJA), as a result of the adoption of ASU 2018-02, (b) Centuri, through its subsidiary, NPL, has historically held a 65% ownership interest in IntelliChoice Energy, LLC (“ICE”). A residual interest of 35% has been held by a third party. During the second quarter of 2018, an additional $1 million of capital was contributed by NPL, thereby increasing NPL’s ownership interest to 95%. The carrying amount of the noncontrolling interest has been adjusted with a corresponding charge to Additional paid-in The table below provides details of activity in equity for Southwest Gas Corporation during the six months ended June 30, 2018. Only equity shares of the Company are publicly traded, under the ticker symbol “SWX.” Southwest Gas Corporation Equity Accumulated Additional Other Common Stock Paid-in Comprehensive Retained (In thousands) Shares Amount Capital Income (Loss) Earnings Total DECEMBER 31, 2017 47,482 $ 49,112 $ 948,767 $ (47,073 ) $ 659,193 $ 1,609,999 Net income 92,971 92,971 Other comprehensive income (loss): Net actuarial gain (loss) arising during period, less amortization of unamortized benefit plan cost, net of tax 1,792 1,792 Amounts reclassified to net income, net of tax (FSIRS) 1,271 1,271 Reclassification of excess deferred taxes (a) (9,300 ) 9,300 — Stock-based compensation (b) 702 (338 ) 364 Dividends declared to Southwest Gas Holdings, Inc. (44,000 ) (44,000 ) Contributions from Southwest Gas Holdings, Inc. 56,596 56,596 JUNE 30, 2018 47,482 $ 49,112 $ 1,006,065 $ (53,310 ) $ 717,126 $ 1,718,993 (a) Release of excess deferred taxes accumulated prior to December 22, 2017 (date of enactment of the TCJA), as a result of the adoption of ASU 2018-02, (b) Stock-based compensation is based on stock awards of Southwest Gas Corporation to be issued in shares of Southwest Gas Holdings, Inc. The following information provides insight into amounts impacting the Company’s Other Comprehensive Income (Loss), both before and after-tax Note 5 – Derivatives and Fair Value Measurements Related Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss) (Thousands of dollars) Three Months Ended Three Months Ended June 30, 2018 June 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 $ 334 $ (80 ) $ 254 $ 334 $ (127 ) $ 207 Amortization of net actuarial (gain)/loss 8,404 (2,017 ) 6,387 6,361 (2,417 ) 3,944 Regulatory adjustment (7,559 ) 1,815 (5,744 ) (5,735 ) 2,179 (3,556 ) Pension plans other comprehensive income 1,179 (282 ) 897 960 (365 ) 595 FSIRS (designated hedging activities): Amounts reclassifed into net income 836 (200 ) 636 836 (318 ) 518 FSIRS other comprehensive income 836 (200 ) 636 836 (318 ) 518 Total other comprehensive income - Southwest Gas Corporation 2,015 (482 ) 1,533 1,796 (683 ) 1,113 Foreign currency translation adjustments: Translation adjustments (690 ) — (690 ) 629 — 629 Foreign currency other comprehensive income (loss) (690 ) — (690 ) 629 — 629 Total other comprehensive income - Southwest Gas Holdings, Inc. $ 1,325 $ (482 ) $ 843 $ 2,425 $ (683 ) $ 1,742 Six Months Ended Six Months Ended June 30, 2018 June 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 $ 668 $ (160 ) $ 508 $ 668 $ (254 ) $ 414 Amortization of net actuarial (gain)/loss 16,808 (4,034 ) 12,774 12,722 (4,834 ) 7,888 Regulatory adjustment (15,119 ) 3,629 (11,490 ) (11,470 ) 4,358 (7,112 ) Pension plans other comprehensive income 2,357 (565 ) 1,792 1,920 (730 ) 1,190 FSIRS (designated hedging activities): Amounts reclassifed into net income 1,673 (402 ) 1,271 1,672 (636 ) 1,036 FSIRS other comprehensive income 1,673 (402 ) 1,271 1,672 (636 ) 1,036 Total other comprehensive income - Southwest Gas Corporation 4,030 (967 ) 3,063 3,592 (1,366 ) 2,226 Foreign currency translation adjustments: Translation adjustments (1,601 ) — (1,601 ) 849 — 849 Foreign currency other comprehensive income (loss) (1,601 ) — (1,601 ) 849 — 849 Total other comprehensive income - Southwest Gas Holdings, Inc. $ 2,429 $ (967 ) $ 1,462 $ 4,441 $ (1,366 ) $ 3,075 Twelve Months Ended Twelve Months Ended June 30, 2018 June 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: Net actuarial gain/(loss) $ (43,027 ) $ 10,326 $ (32,701 ) $ (22,770 ) $ 8,652 $ (14,118 ) Amortization of prior service cost 1,335 (413 ) 922 1,335 (507 ) 828 Amortization of net actuarial (gain)/loss 29,531 (8,869 ) 20,662 26,255 (9,976 ) 16,279 Regulatory adjustment 8,691 (479 ) 8,212 (4,808 ) 1,826 (2,982 ) Pension plans other comprehensive income (loss) (3,470 ) 565 (2,905 ) 12 (5 ) 7 FSIRS (designated hedging activities): Amounts reclassifed into net income 3,345 (1,037 ) 2,308 3,344 (1,271 ) 2,073 FSIRS other comprehensive income 3,345 (1,037 ) 2,308 3,344 (1,271 ) 2,073 Total other comprehensive income (loss) - Southwest Gas Corporation (125 ) (472 ) (597 ) 3,356 (1,276 ) 2,080 Foreign currency translation adjustments: Translation adjustments (679 ) — (679 ) 158 — 158 Foreign currency other comprehensive income (loss) (679 ) — (679 ) 158 — 158 Total other comprehensive income (loss) - Southwest Gas Holdings, Inc. $ (804 ) $ (472 ) $ (1,276 ) $ 3,514 $ (1,276 ) $ 2,238 (1) Tax amounts are calculated using a 24% rate following the December 22, 2017 enactment date of the TCJA. For periods prior to the enactment date (and included in specific line items of the tables for the twelve months ended June 30, 2018 and 2017), tax amounts were calculated using a 38% rate. The tax effect of before-tax Approximately $2.5 million of realized losses (net of tax) related to the FSIRS, reported in Accumulated other comprehensive income at June 30, 2018, 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 (Expense) Benefit (5) After-Tax Before-Tax Tax (Expense) Benefit (5) After-Tax Before-Tax Tax (Expense) Benefit After-Tax Other AOCI Beginning Balance AOCI $ (61,520 ) $ 22,293 $ (39,227 ) $ (12,655 ) $ 4,809 $ (7,846 ) $ (609 ) $ — $ (609 ) $ — $ (47,682 ) Translation adjustments — — — — — — (1,601 ) — (1,601 ) — (1,601 ) Other comprehensive income before reclassifications — — — — — — (1,601 ) — (1,601 ) — (1,601 ) FSIRS amounts reclassified from AOCI (1) — — — 1,673 (402 ) 1,271 — — — — 1,271 Amortization of prior service cost (2) 668 (160 ) 508 — — — — — — — 508 Amortization of net actuarial loss (2) 16,808 (4,034 ) 12,774 — — — — — — — 12,774 Regulatory adjustment (3) (15,119 ) 3,629 (11,490 ) — — — — — — — (11,490 ) Net current period other comprehensive income (loss) attributable to Southwest Gas Holdings, Inc. 2,357 (565 ) 1,792 1,673 (402 ) 1,271 (1,601 ) — (1,601 ) — 1,462 Reclassification of excess deferred taxes (4) — — — — — — — — — (9,300 ) (9,300 ) Ending Balance AOCI June 30, 2018 $ (59,163 ) $ 21,728 $ (37,435 ) $ (10,982 ) $ 4,407 $ (6,575 ) $ (2,210 ) $ — $ (2,210 ) $ (9,300 ) $ (55,520 ) (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) Release of excess deferred taxes accumulated prior to December 22, 2017 (date of enactment of the TCJA), as a result of the adoption of ASU 2018-02, (5) Tax amounts related to the before-tax 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 (Expense) Benefit (10) After-Tax Before-Tax Tax (Expense) Benefit (10) After-Tax Other AOCI Beginning Balance AOCI $ (61,520 ) $ 22,293 $ (39,227 ) $ (12,655 ) $ 4,809 $ (7,846 ) $ — $ (47,073 ) FSIRS amounts reclassified from AOCI (6) — — — 1,673 (402 ) 1,271 — 1,271 Amortization of prior service cost (7) 668 (160 ) 508 — — — — 508 Amortization of net actuarial loss (7) 16,808 (4,034 ) 12,774 — — — — 12,774 Regulatory adjustment (8) (15,119 ) 3,629 (11,490 ) — — — — (11,490 ) Net current period other comprehensive income attributable to Southwest Gas Corporation 2,357 (565 ) 1,792 1,673 (402 ) 1,271 — 3,063 Reclassification of excess deferred taxes (9) — — — — — — (9,300 ) (9,300 ) Ending Balance AOCI June 30, 2018 $ (59,163 ) $ 21,728 $ (37,435 ) $ (10,982 ) $ 4,407 $ (6,575 ) $ (9,300 ) $ (53,310 ) (6) The FSIRS reclassification amounts are included in the Net interest deductions line item on Southwest’s Condensed Consolidated Statements of Income. (7) These AOCI components are included in the computation of net periodic benefit cost (see Note 2 – Components of Net Periodic Benefit Cost (8) 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). (9) Release of excess deferred taxes accumulated prior to December 22, 2017 (date of enactment of the TCJA), as a result of the adoption of ASU 2018-02, (10) Tax amounts related to the before-tax 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) June 30, 2018 December 31, 2017 Net actuarial (loss) gain $ (431,747 ) $ (448,555 ) Prior service cost (3,700 ) (4,368 ) Less: amount recognized in regulatory assets 376,284 391,403 Recognized in AOCI $ (59,163 ) $ (61,520 ) |