Note 7 – Equity, Other Comprehensive Income, and Accumulated Other Comprehensive Income

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


	Southwest Gas Corporation Equity
					Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Non- controlling Interest			Total

	Common Stock
(In thousands, except per share amounts)	Shares		Amount
DECEMBER 31, 2012		46,148	$	47,778	$	828,777	$	(50,745	)	$	484,369		$	(1,681	)	$	1,308,498
Common stock issuances		192		192		7,198											7,390
Net income (loss)											88,017			(333	)		87,684
Other comprehensive income (loss):
Net actuarial gain (loss) arising during period, less amortization of unamortized benefit plan cost, net of tax								1,952									1,952
Amounts reclassified to net income, net of tax (FSIRS)								1,555									1,555
Dividends declared
Common: $0.99 per share											(46,415	)					(46,415	)

SEPTEMBER 30, 2013		46,340	$	47,970	$	835,975	$	(47,238	)	$	525,971		$	(2,014	)	$	1,360,664

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
	September 30, 2013									September 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	$	—		$	—		$	—		$	217		$	(82	)	$	135
Amortization of net actuarial (gain)/loss		8,544			(3,247	)		5,297			6,398			(2,432	)		3,966
Prior service cost		89			(34	)		55			—			—			—
Regulatory adjustment		(7,583	)		2,882			(4,701	)		(5,847	)		2,222			(3,625	)

Pension plans other comprehensive income (loss)		1,050			(399	)		651			768			(292	)		476

FSIRS (designated hedging activities):
Unrealized/realized gain		—			—			—			—			—			—
Amounts reclassifed into net income		836			(318	)		518			836			(318	)		518

FSIRS other comprehensive income		836			(318	)		518			836			(318	)		518

Total other comprehensive income (loss)	$	1,886		$	(717	)	$	1,169		$	1,604		$	(610	)	$	994


	Nine Months Ended									Nine Months Ended
	September 30, 2013									September 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	$	—		$	—		$	—		$	650		$	(247	)	$	403
Amortization of net actuarial (gain)/loss		25,634			(9,741	)		15,893			19,198			(7,296	)		11,902
Prior service cost		266			(102	)		164			—			—			—
Regulatory adjustment		(22,751	)		8,646			(14,105	)		(17,544	)		6,667			(10,877	)

Pension plans other comprehensive income (loss)		3,149			(1,197	)		1,952			2,304			(876	)		1,428

FSIRS (designated hedging activities):
Unrealized/realized gain		—			—			—			2,959			(1,125	)		1,834
Amounts reclassifed into net income		2,509			(954	)		1,555			1,965			(747	)		1,218

FSIRS other comprehensive income		2,509			(954	)		1,555			4,924			(1,872	)		3,052

Total other comprehensive income (loss)	$	5,658		$	(2,151	)	$	3,507		$	7,228		$	(2,748	)	$	4,480


	Twelve Months Ended									Twelve Months Ended
	September 30, 2013									September 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		217			(82	)		135			867			(330	)		537
Amortization of net actuarial (gain)/loss		32,033			(12,172	)		19,861			23,091			(8,775	)		14,316
Prior service cost		(2,157	)		819			(1,338	)		—			—			—
Regulatory adjustment		37,564			(14,274	)		23,290			99,164			(37,682	)		61,482

Pension plans other comprehensive income (loss)		(7,196	)		2,735			(4,461	)		(12,370	)		4,700			(7,670	)

FSIRS (designated hedging activities):
Unrealized/realized gain		—			—			—			1,383			(526	)		857
Amounts reclassifed into net income		3,345			(1,271	)		2,074			2,257			(858	)		1,399

FSIRS other comprehensive income (loss)		3,345			(1,271	)		2,074			3,640			(1,384	)		2,256

Total other comprehensive income (loss)	$	(3,851	)	$	1,464		$	(2,387	)	$	(8,730	)	$	3,316		$	(5,414	)

(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 September 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)		—			—			—			2,509			(954	)		1,555			1,555
Amortization of prior service costs (2)		266			(102	)		164			—			—			—			164
Amortization of net actuarial loss (2)		25,634			(9,741	)		15,893			—			—			—			15,893
Regulatory adjustment (3)		(22,751	)		8,646			(14,105	)		—			—			—			(14,105	)

Net current period other comprehensive income (loss)		3,149			(1,197	)		1,952			2,509			(954	)		1,555			3,507

Ending Balance AOCI September 30, 2013	$	(49,321	)	$	18,742		$	(30,579	)	$	(26,869	)	$	10,210		$	(16,659	)	$	(47,238	)

(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)


	September 30, 2013			December 31, 2012
Net actuarial (loss) gain	$	(398,028	)	$	(423,662	)
Prior service cost		(2,157	)		(2,423	)
Less: amount recognized in regulatory assets		350,864			373,615

Recognized in AOCI	$	(49,321	)	$	(52,470	)