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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1999
Commission file number 1-7850
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
SOUTHWEST GAS CORPORATION EMPLOYEES' INVESTMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principle executive office:
SOUTHWEST GAS CORPORATION
5241 Spring Mountain Road, Post Office Box 98510
Las Vegas, Nevada 89193-8510
(702) 876-7237
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FINANCIAL STATEMENTS AND EXHIBITS.
Listed below are all financial statements and exhibits filed as part of this
annual report:
(a) Financial statements, including statements of net assets
available for Plan benefits as of December 31, 1999 and 1998,
and the related statement of changes in net assets available
for Plan benefits for the year ended December 31, 1999 and
notes to financial statements, together with the report
thereon of Arthur Andersen LLP, independent public
accountants.
(b) Consent of Arthur Andersen LLP, independent public accountants.
Pursuant to the requirements of the Securities Exchange Act of 1934, the members
of the Southwest Gas Corporation Benefit Committee have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
By /s/ George C. Biehl
---------------------------
George C. Biehl
Senior Vice President,
Chief Financial Officer and
Corporate Secretary
Southwest Gas Corporation
Dated: June 22, 2000
2
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998 AND
FOR THE YEAR ENDED DECEMBER 31, 1999
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Benefit Committee,
Southwest Gas Corporation:
We have audited the accompanying statements of net assets available for Plan
benefits of the SOUTHWEST GAS CORPORATION EMPLOYEES' INVESTMENT PLAN (the Plan)
as of December 31, 1999 and 1998, and the related statement of changes in net
assets available for Plan benefits for the year ended December 31, 1999. These
financial statements and the schedules referred to below are the responsibility
of the Plan Committee. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Plan Committee, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for Plan benefits as of December
31, 1999 and 1998, and the changes in net assets available for Plan benefits for
the year ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes at December 31, 1999, and reportable transactions for
the year ended December 31, 1999, are presented for purposes of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedules have been subjected to the
auditing procedures applied in our audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
June 22, 2000
4
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
Statements of Net Assets Available for Plan Benefits
December 31,
-------------------------------
1999 1998
-------------- --------------
Assets:
Investments (see Note 2) $ 162,964,101 $ 151,135,659
-------------- --------------
Total assets 162,964,101 151,135,659
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Net assets available for benefits $ 162,964,101 $ 151,135,659
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The accompanying notes are an integral part of these statements.
5
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
Statement of Changes in Net Assets Available for Plan Benefits
December 31,
1999
---------------
Additions:
Additions to net assets attributed to
Investment income
Net appreciation (depreciation) in fair
value of investments (see Note 2) $ (4,545,199)
Interest and dividends 12,637,851
--------------
8,092,652
Less investment expenses 19,492
--------------
8,073,160
--------------
Contributions
Participant 8,741,461
Employer 2,649,222
--------------
11,390,683
--------------
Total additions 19,463,843
--------------
Deductions:
Deductions from net assets attributed to
Benefits paid to participants 7,635,401
--------------
Net increase 11,828,442
--------------
Net assets available for benefits:
Beginning of year 151,135,659
--------------
End of year $ 162,964,101
==============
The accompanying notes are an integral part of these statements.
6
Southwest Gas Corporation
EMPLOYEES' INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(1) Description of Plan
The following description of the Southwest Gas Corporation Employees' Investment
Plan (the Plan), as amended, provides general information. Participants should
refer to the Plan document for a more complete description of the Plan's
provisions.
General
The Plan is a voluntary defined contribution plan covering all employees of
Southwest Gas Corporation (the Company). It is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method
of accounting.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Contributions
Participants may contribute up to 16 percent of their annual wages before
bonuses and overtime. However, contributions may not exceed amounts
promulgated in Internal Revenue Code Section 402(g). The Company contributes
to the Plan an amount equal to 50 percent of a participant's contribution.
The Company's maximum contribution is three percent of a participant's
annual compensation before bonuses and overtime.
Participants Accounts
Each participant account is credited with the participant's contribution and
the portion contributed by the Company. The portion contributed by the
participant is invested in the various funds according to the direction of
the participant. The Company contributions are invested in the Southwest Gas
Stock Fund. Upon attaining age 50, participants may elect the investment
funds in which the present balance of Company contributions, as well as
future Company matching contributions, will be invested.
Vesting
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. Vesting in the contributions made by the Company
and in the earnings thereon is based on years of continuous service as
follows:
Vested
Years of Service Percentage
----------------------- ----------
One but less than two...............................20
Two but less than three.............................40
Three but less than four............................60
Four but less than five.............................80
Five and over......................................100
In the event of death, retirement or total disability of a participant,
Company contributions become fully vested irrespective of the years of
service at the date of termination.
7
Southwest Gas Corporation
EMPLOYEES' INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Payment of Benefits
If a participant terminates employment with the Company as a result of
retirement, death or permanent and total disability, such participant or
designated beneficiary in the case of death, will be entitled to receive an
amount equal to the value of his account at the end of the month immediately
following termination of employment. Distributions from the Southwest Gas
Stock Fund will be made in the Company's common stock plus cash in lieu of
fractional shares. A participant may apply to the Plan Committee to request
a single lump sum payment in cash of the value of the Company's common stock
otherwise distributable to the participant. Distributions from other funds
will be made in a single lump sum cash payment.
Distributions under the Plan will begin as soon as practicable, but not
later than April 1 following the end of the Plan year in which the
participant attains age 70-1/2 or terminates employment, if later. No
distribution in excess of $5,000 will be made to employees at the time of
termination of employment without the participant's consent. A participant
who is terminated and does not elect to take a distribution will continue to
receive his share of investment income on all vested portions of his
accounts until electing to receive distributions from the Plan. All
distributions to beneficiaries of a participant must be made within five
years after the participant's death.
Plan Expenses
Plan-related expenses and any other costs of administering the Plan will be
paid with funds from the Plan unless paid by the Company at its discretion.
All Plan expenses, except loan origination and maintenance fees for loans
initiated after July 1, 1996, were paid by the Company for the year ended
December 31, 1999. Loan origination and maintenance fees paid by Plan
participants for the year ended December 31, 1999 were $19,492.
Plan Administration
Fidelity Management Trust Company acts as the trustee and Fidelity
Institutional Retirement Services Company performs all recordkeeping of the
Plan.
(2) Investments
All investments of the Plan are stated at quoted market value as of the date of
the statement. Loans to participants are valued at their outstanding principal
amount. Realized gains/losses on investments sold and the unrealized
gains/losses on investments held during the year are determined on a revalued
cost basis.
Investments representing five percent or more of Plan net assets are:
December 31,
-------------------------------------
1999 1998
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Southwest Gas Corporation Common Stock
(2,384,382 and 2,235,072 shares, respectively) $54,840,786 $60,067,560
Fidelity Contrafund
(837,748 and 702,143 shares, respectively) 50,281,659 39,874,689
Fidelity Growth & Income Fund
(240,960 and 233,827 shares, respectively) 11,363,694 10,718,620
Fidelity Retirement Money Market Fund
(11,721,487 and 10,440,755 shares, respectively) 11,721,487 10,440,755
Fidelity Asset Manager: Growth Fund
(569,104 and 550,713 shares, respectively) 11,194,272 10,287,322
Vanguard 500 Index Fund
(63,940 and 39,553 shares, respectively) 8,653,059 4,507,095
8
Southwest Gas Corporation
EMPLOYEES' INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
During 1999, Plan investments (including gains and losses on investments bought
and sold as well as held during the year) depreciated in value by $4,545,199 as
follows:
Common stock $(9,087,604)
Mutual funds 4,542,405
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$(4,545,199)
============
Purchases and sales of securities are recorded on a trade-date basis. Dividends
are recorded on the ex-dividend date.
(3) Nonparticipant-Directed Investments
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows:
December 31,
1999 1998
-------------- --------------
Net Assets:
Common stock $ 29,776,393 $ 33,452,061
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$ 29,776,393 $ 33,452,061
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December 31,
1999
--------------
Changes in Net Assets:
Contributions $ 2,495,900
Dividends 1,019,006
Net (depreciation) (4,858,414)
Benefits paid to participants (1,734,142)
Transfers to participant-directed investments (598,018)
--------------
$ (3,675,668)
==============
(4) Fund Descriptions
Employees can invest their contributions in any combination of the available
investment options in ten percent increments. Participants can change the
allocation of their ongoing contributions on a monthly basis in increments of
ten percent and can transfer amounts they previously contributed to other funds.
Descriptions of the Plan funds are as follows:
Southwest Gas Stock Fund
Contributions are invested in Southwest Gas Corporation common stock.
Vanguard 500 Index Fund
Contributions are invested in the Vanguard Index Trust-500 Portfolio which
invests in all 500 stocks in the Standard & Poor's 500 Stock Composite Index
(S&P 500) in approximately the same proportion as they are represented in
the S&P 500.
Vanguard International Growth Fund
Contributions are invested in the Vanguard International Growth Portfolio
which invests in stocks of high-quality, seasoned companies located outside
the United States with records of good growth.
Fidelity Contrafund
Contributions are invested in the Fidelity Contrafund which seeks capital
growth by investing primarily in securities which the management of the fund
considers to have better than average prospects for appreciation in value
due to the undervalued or out-of-favor position of the securities.
9
Southwest Gas Corporation
EMPLOYEES' INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Fidelity Investment-Grade Bond Fund
Contributions are invested in the Fidelity Investment-Grade Bond Fund which
invests in a broad range of fixed-income securities, primarily
investment-grade debt securities and preferred stocks.
Fidelity Growth & Income Fund
Contributions are invested in the Fidelity Growth & Income Fund which seeks
a high total return through a combination of current income and capital
appreciation by investing mainly in equity securities of companies that pay
current dividends and offer potential growth of earnings.
Fidelity Asset Manager: Growth Fund
Contributions are invested in the Fidelity Asset Manager: Growth Fund which
seeks to maximize total return over the long term by allocating its assets
among stocks, bonds, and short-term investments with an emphasis on stocks.
Fidelity Low-Priced Stock Fund
Contributions are invested in the Fidelity Low-Priced Stock Fund which seeks
long-term capital appreciation by investing primarily in low-priced stocks
in small, less well known, or overlooked companies which may be undervalued
and offer the potential for growth.
Fidelity Retirement Money Market Fund
Contributions are invested in the Fidelity Retirement Money Market Portfolio
Fund which seeks as high a level of current income as is consistent with the
preservation of capital and liquidity by investing in high-quality, U.S.
dollar-denominated money market investments of U.S. and foreign issues.
Participant Loans
These funds are the result of loans to participants in the Plan (see
Note 5).
(5) Participant Loans
The Plan provides that participants may borrow against the balances in their
accounts, subject to certain limitations specified in the Plan. Funds for loans
are obtained through the liquidation of participants' investment accounts.
Payments on the loans include interest at a rate that approximates the prime
rate, plus two percent. At December 31, 1999, outstanding loans had annual
interest rates ranging from 9.75 percent to 11 percent. Principal and interest
payments on a participant's loan will be credited to the participant's
investment accounts in the same ratio as ongoing contributions. The maximum
repayment period for participant loans is five years.
(6) Related-Party Transactions
Investments in the Southwest Gas Stock Fund consist of Company Common Stock and
are considered party-in-interest. Investments in Fidelity Funds (e.g.;
Contrafund, Growth & Income, Low-Priced Stock, etc.) are managed by Fidelity,
the Plan trustee, and are also considered party-in-interest.
(7) Plan Termination
Although the Company expects to continue the Plan indefinitely, it reserves the
right to amend or terminate the Plan at any time. Upon termination, partial
termination or complete discontinuance of contributions to the Plan, Company
contributions will become fully vested.
(8) Federal Income Taxes
In March 1996, the Company received a favorable determination letter from the
Internal Revenue Service stating that the Plan, amended and restated effective
December 1, 1994, qualifies for deferred tax treatment of contributions under
Section 401(k) of the Internal Revenue Code. The Plan has been amended since
receiving the determination letter. However, the Plan administrator and the
Plan's tax counsel believe that the Plan is currently designed and is being
operated in compliance with the applicable requirements of the Internal Revenue
Code. Therefore, the Plan administrator and the Plan's tax counsel believe that
the Plan was qualified and tax-exempt for the years ended December 31, 1999 and
1998.
10
SCHEDULE I
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
E.I.N. 88-0085720
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT DECEMBER 31, 1999
Number of Fair Market
Shares Cost Value
------------- ------------- -------------
Southwest Gas Corporation Common Stock* 2,384,382 $ 43,878,143 $ 54,494,719
Vanguard 500 Index Fund 63,940 7,248,077 8,653,059
Vanguard International Growth Fund 53,989 1,041,736 1,214,220
Fidelity Contrafund* 837,748 38,782,425 50,281,659
Fidelity Investment-Grade Bond Fund* 454,884 3,252,420 3,134,152
Fidelity Growth & Income Fund* 240,960 9,583,470 11,363,694
Fidelity Asset Manager: Growth Fund* 569,104 9,968,892 11,194,272
Fidelity Low-Priced Stock Fund* 145,108 3,370,770 3,285,244
Fidelity Retirement Money Market Fund* 11,721,487 11,721,487 11,721,487
Temporary Cash Investments* 2,056,613 2,056,613 2,056,613
------------- -------------
130,904,033 157,399,119
Participant Loans (with interest ranging from 9.75% to 11%) 5,564,982 5,564,982
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$ 136,469,015 $ 162,964,101
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* Party-in-interest
11
SCHEDULE II
Southwest Gas Corporation
EMPLOYEES' INVESTMENT PLAN
E.I.N. 88-0085720
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
Purchases Sales
--------------------------- ---------------------------------------------------------
Number of Number of Original
Description Transactions Cost Transactions Proceeds Cost Gain (Loss)
- ---------------------------------- ---------------- --------- ------------ ---------------- ---------- -------------
NO REPORTABLE TRANSACTIONS
* The Southwest Gas Corporation Common Stock shares which are distributed to
terminated or withdrawing participants are not included in this schedule;
however, a realized gain (loss) is recognized on the statement of changes in net
assets available for benefits.
12
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated June 22, 2000 included in this Form 11-K, into Southwest Gas
Corporation's previously filed Form S-8 Registration Statement File No.
333-35556.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
June 22, 2000