Page 62 - SWGas Annual Report 2015

associated with unamortized discount, ($5,223,000) for debentures and ($1,943,000) for IDRBs. The difference
between the associated figures in the debt listing table and these figures are amounts associated with unamortized
debt issue costs reclassified in accordance with the update.

In a related update, the SEC provided guidance that for line-of-credit (“LOC”) arrangements, companies could elect
to present debt issuance costs within assets, regardless of whether there is an outstanding balance on such
borrowings. Making such an election may make presentations less confusing as net negative balances would
otherwise result in cases when there are no outstanding LOC borrowings but associated issuance costs are still
being amortized. Therefore, for LOC arrangements, such as Southwest’s revolving credit facility and Centuri’s
secured revolving credit portion of its facility, the Company has elected, as permitted, to continue to recognize
unamortized debt issuance costs within its asset categories and no such amounts have been reclassified. The
unamortized debt issuance costs associated with the term loan portion of Centuri’s $300 million facility, ($816,000),
have been reclassified as a deduction from the related 2014 debt balance. The debt listing table has been updated
to reflect these changes based on the elections made.

Note 8 – Short-Term Debt
As discussed in Note 7, Southwest has a $300 million credit facility that is scheduled to expire in March 2020, of
which $150 million has been designated by management for working capital purposes. The Company had
$18 million in short-term borrowings outstanding at December 31, 2015 and $5 million in short-term borrowings
outstanding at December 31, 2014. The effective interest rate on the short-term portion of the credit facility was
1.37% at December 31, 2015.

Note 9 – Commitments and Contingencies
The Company is a defendant in miscellaneous legal proceedings. The Company is also a party to various regulatory
proceedings. The ultimate dispositions of these proceedings are not presently determinable; however, it is the
opinion of management that no litigation or regulatory proceeding to which the Company is currently subject will
have a material adverse impact on its financial position or results of operations.

The Company maintains liability insurance for various risks associated with the operation of its natural gas pipelines
and facilities. In connection with these liability insurance policies, the Company is responsible for an initial
deductible or self-insured retention amount per incident, after which the insurance carriers would be responsible
for amounts up to the policy limits. For the policy year August 2015 to July 2016, these liability insurance policies
require Southwest to be responsible for the first $1 million (self-insured retention) of each incident plus the first
$4 million in aggregate claims above its self-insured retention in the policy year. Through an assessment process,
the Company may determine that certain costs are likely to be incurred in the future related to specific legal
matters. In these circumstances and in accordance with accounting policies, the Company will make an accrual, as
necessary.

Note 10 – Pension and Other Postretirement Benefits
Southwest has an Employees’ Investment Plan that provides for purchases of various mutual fund investments and
Company common stock by eligible Southwest employees through deduction of a percentage of base
compensation, subject to IRS limitations. Southwest matches one-half of amounts deferred by employees, up to a
maximum matching contribution of 3.5% of an employee’s annual compensation. Centuri has a separate plan, the
cost and liability of which are not significant. The cost of the Southwest plan is listed below (in thousands):

2015 2014 2013

Employee Investment Plan cost $5,072 $4,816 $4,850

Southwest Gas Corporation