- ------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) JULY 19, 1996
SOUTHWEST GAS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 1-7850 88-0085720
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) 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
- ------------------------------------------------------------------------------
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
In January 1996, Southwest Gas Corporation (the Company) entered into an
agreement to sell all of the outstanding common stock of its wholly owned
subsidiary PriMerit Bank (PriMerit or the Bank) to Norwest Corporation. In
April 1996, Norwest elected to structure the acquisition as a purchase of
substantially all of the assets and liabilities of the Bank, rather than a
stock purchase, pursuant to an option in the original agreement.
On July 19, 1996, the Company completed the sale of PriMerit. In accordance
with the agreement, Norwest paid the Company $191 million in cash for
substantially all of the assets and liabilities of PriMerit. The intended
use of the net proceeds is to reduce outstanding long-term debt.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable
(b) PRO FORMA FINANCIAL INFORMATION.
The following unaudited pro forma consolidated financial statements are filed
with this report:
Pro Forma Consolidated Balance Sheet Page F-1
Pro Forma Consolidated Statements of Income Page F-2
The Pro Forma Consolidated Balance Sheet reflects the financial position of
the Company as if the sale of the Bank had been consummated as of
March 31, 1996. The Pro Forma Consolidated Statements of Income reflect the
operations of the Company as if the sale of the Bank had been consummated at
the beginning of the quarter ended March 31, 1996 and as if it had been
consummated at the beginning of the year ended December 31, 1995.
The unaudited pro forma consolidated financial statements presented herein
are shown for illustrative purposes only and are not necessarily indicative
of the effects on the Company or the results of its operations had the proceeds
from the sale of the Bank actually been received on such dates. It should be
noted that the Company's financial statements will reflect the disposition only
from July 19, 1996, the date of closing. The unaudited pro forma consolidated
financial statements should be read in conjunction with the historical
financial statements and related notes of the Company.
The pro forma balance sheet reflects the receipt of $191 million, payment of
additional income taxes of $16 million, and elimination of net Bank assets of
$175 million. Net proceeds of $175 million ($191 million gross sales price
less additional income taxes of $16 million) are distributed assuming such
proceeds are utilized to pay previously accrued taxes and other costs
associated with the sale of the Bank of $12 million and retire long-term debt
($120 million of current maturities and $43 million of other long-term debt at
March 31, 1996).
The pro forma income statements reflect the estimated impact on interest
expense as if approximately $163 million of debt had been retired at the
beginning of each period by using the net proceeds from the sale of the Bank.
The historical consolidated statements of income already reflect an allocation
to the Bank for interest on debt associated with discontinued operations. The
amount shown in the adjustments column for net interest deductions is net of
that allocation. Income taxes are provided at a rate of 40 percent.
(c) EXHIBITS
No. Description
--- -----------
2.1 Agreement between Southwest Gas Corporation, The Southwest
Companies, and PriMerit Bank, Federal Savings Bank, as sellers
and Norwest Corporation as buyer, dated April 10, 1996,
regarding the sale of assets and liabilities of PriMerit Bank.
SIGNATURES
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 hereunto duly authorized.
SOUTHWEST GAS CORPORATION
Date: July 19, 1996 /s/ Edward A. Janov
--------------------------------------------------
Edward A. Janov
Vice President/Controller/Chief Accounting Officer
SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
(Thousands of dollars)
(Unaudited)
MARCH 31, 1996
--------------------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
ASSETS
Utility plant
Gas plant . . . . . . . . . . . . . . . . . . $ 1,604,299 $ -- $ 1,604,299
Less: accumulated depreciation . . . . . . . (476,960) -- (476,960)
Acquisition adjustments . . . . . . . . . . . 6,189 -- 6,189
Construction work in progress . . . . . . . . 25,888 -- 25,888
----------- ----------- -----------
Net utility plant . . . . . . . . . . . . . 1,159,416 -- 1,159,416
----------- ----------- -----------
Current assets
Cash and cash equivalents . . . . . . . . . . 5,932 -- 5,932
Accounts receivable, net of allowances. . . . 43,446 -- 43,446
Accrued utility revenue . . . . . . . . . . . 28,071 -- 28,071
Deferred tax benefit. . . . . . . . . . . . . 17,022 -- 17,022
Prepaids and other current assets . . . . . . 27,300 -- 27,300
Net assets of discontinued operations . . . . 175,118 (175,000) 118
----------- ----------- -----------
Total current assets. . . . . . . . . . . . 296,889 (175,000) 121,889
----------- ----------- -----------
Deferred charges and other assets . . . . . . . 76,912 -- 76,912
----------- ----------- -----------
Total assets. . . . . . . . . . . . . . . . . . $ 1,533,217 $ (175,000) $ 1,358,217
=========== =========== ===========
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock. . . . . . . . . . . . . . . . . $ 26,355 $ -- $ 26,355
Additional paid-in capital. . . . . . . . . . 316,720 -- 316,720
Retained earnings . . . . . . . . . . . . . . 27,084 -- 27,084
----------- ----------- -----------
Total common equity . . . . . . . . . . . . 370,159 -- 370,159
Company-obligated mandatorily redeemable
preferred securities of Southwest Gas Capital I 60,000 -- 60,000
Long-term debt, less current maturities . . . 612,666 (43,000) 569,666
----------- ----------- -----------
Total capitalization. . . . . . . . . . . . 1,042,825 (43,000) 999,825
----------- ------------ -----------
Commitments and contingencies
Current liabilities
Current maturities of long-term debt. . . . . 120,000 (120,000) --
Short-term debt . . . . . . . . . . . . . . . -- -- --
Accounts payable. . . . . . . . . . . . . . . 49,294 -- 49,294
Accrued taxes . . . . . . . . . . . . . . . . 45,866 -- 45,866
Deferred purchased gas costs. . . . . . . . . 34,900 -- 34,900
Other current liabilities . . . . . . . . . . 59,668 (12,000) 47,668
----------- ----------- -----------
Total current liabilities . . . . . . . . . 309,728 (132,000) 177,728
----------- ----------- -----------
Deferred income taxes and other credits
Deferred income taxes and investment tax credits 140,044 -- 140,044
Other deferred credits. . . . . . . . . . . . 40,620 -- 40,620
----------- ----------- -----------
Total deferred income taxes and other credits 180,664 -- 180,664
----------- ----------- -----------
Total capitalization and liabilities. . . . . . $ 1,533,217 $ (175,000) $ 1,358,217
=========== =========== ===========
F-1
SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
QUARTER ENDED MARCH 31, 1996
--------------------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
Gas operating revenues. . . . . . . . . . . . . $ 188,352 $ -- $ 188,352
Net cost of gas . . . . . . . . . . . . . . . . 78,469 -- 78,469
----------- ----------- -----------
Operating margin. . . . . . . . . . . . . . . 109,883 -- 109,883
----------- ----------- -----------
Operating expenses: . . . . . . . . . . . . . .
Operations and maintenance. . . . . . . . . . 47,211 -- 47,211
Depreciation and amortization . . . . . . . . 16,539 -- 16,539
Taxes other than income taxes . . . . . . . . 7,594 -- 7,594
----------- ----------- -----------
Total operating expenses. . . . . . . . . . 71,344 -- 71,344
----------- ----------- -----------
Operating income. . . . . . . . . . . . . . . . 38,539 -- 38,539
----------- ----------- -----------
Other income and (expenses):
Net interest deductions. . . . . . . . . . . (12,953) 1,000 (1) (11,953)
Preferred securities distributions . . . . . (1,369) -- (1,369)
Other income (deductions), net . . . . . . . 79 -- 79
----------- ----------- -----------
Total other income and (expenses). . . . . (14,243) 1,000 (13,243)
----------- ----------- -----------
Income from continuing operations before
income taxes. . . . . . . . . . . . . . . . . 24,296 1,000 25,296
Income tax expense. . . . . . . . . . . . . . . 9,437 400 (2) 9,837
----------- ----------- -----------
Income from continuing operations . . . . . . . $ 14,859 $ 600 $ 15,459
=========== =========== ===========
Earnings per share from continuing operations . $ 0.60 $ 0.03 $ 0.63
=========== =========== ===========
Average number of common shares outstanding . . 24,604 24,604 24,604
=========== =========== ===========
(1) Reflects the impact of a reduction in average debt outstanding during
the quarter of approximately $163 million, offset by interest costs
previously accrued for discontinued operations.
(2) Income tax effect, at 40 percent, of the pro forma adjustments.
F-2
SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
Gas operating revenues. . . . . . . . . . . . . $ 563,502 $ -- $ 563,502
Net cost of gas . . . . . . . . . . . . . . . . 227,456 -- 227,456
----------- ----------- -----------
Operating margin. . . . . . . . . . . . . . . 336,046 -- 336,046
----------- ----------- -----------
Operating expenses:
Operations and maintenance. . . . . . . . . . 187,969 -- 187,969
Depreciation and amortization . . . . . . . . 62,492 -- 62,492
Taxes other than income taxes . . . . . . . . 27,173 -- 27,173
----------- ----------- -----------
Total operating expenses . . . . . . . . . . 277,634 -- 277,634
----------- ----------- -----------
Operating income. . . . . . . . . . . . . . . . 58,412 -- 58,412
----------- ----------- -----------
Other income and (expenses):
Net interest deductions . . . . . . . . . . . (53,354) 4,000 (1) (49,354)
Preferred securities distributions. . . . . . (913) -- (913)
Other income (deductions), net. . . . . . . . (652) -- (652)
----------- ----------- -----------
Total other income and (expenses). . . . . . (54,919) 4,000 (50,919)
----------- ----------- -----------
Income from continuing operations before
income taxes. . . . . . . . . . . . . . . . . 3,493 4,000 7,493
Income tax expense. . . . . . . . . . . . . . . 839 1,600 (2) 2,439
----------- ----------- -----------
Income from continuing operations . . . . . . . $ 2,654 $ 2,400 $ 5,054
=========== =========== ===========
Preferred stock dividend requirements . . . . . $ 307 $ -- $ 307
=========== =========== ===========
Earnings per share from continuing operations . $ 0.10 $ 0.10 $ 0.20
=========== =========== ===========
Average number of common shares outstanding . . 23,167 23,167 23,167
=========== =========== ===========
(1) Reflects the impact of a reduction in average debt outstanding during the
year of approximately $163 million, offset by interest costs previously
previously allocated to discontinued operations.
(2) Income tax effect, at 40 percent, of the pro forma adjustments.
F-3