================================================================================
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, 1998
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
================================================================================
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 benefits as of December 31, 1998 and 1997, and
the related statement of changes in net assets available for
benefits for the year ended December 31, 1998 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, 1999
2
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997 AND
FOR THE YEAR ENDED DECEMBER 31, 1998
TOGETHER WITH AUDITORS' REPORT
3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Benefit Committee,
Southwest Gas Corporation:
We have audited the accompanying statements of net assets available for benefits
of the SOUTHWEST GAS CORPORATION EMPLOYEES' INVESTMENT PLAN (the Plan) as of
December 31, 1998 and 1997, and the related statement of changes in net assets
available for benefits for the year ended December 31, 1998. 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 generally accepted auditing
standards. 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 benefits of the Plan as of
December 31, 1998 and 1997, and the changes in net assets available for benefits
for the year ended December 31, 1998, in conformity with generally accepted
accounting principles.
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, 1998, and reportable transactions for
the year ended December 31, 1998, 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 Fund Information in the statements of net assets
available for benefits and the statement of changes in net assets available for
benefits is presented for purposes of additional analysis rather than to present
the net assets available for benefits and changes in net assets available for
benefits of each fund. The supplemental schedules and Fund Information 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, 1999
4
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998
Fund Information
-------------------------------------------------------------------------------------
Company
Directed Participant Directed
----------- ------------------------------------------------------------------------
Fidelity Fidelity
Vanguard Vanguard Invst Grade Growth &
Southwest Gas Southwest Gas 500 Index Intl Growth Fidelity Bond Income
Stock Fund Stock Fund Fund Fund Contrafund Fund Fund
----------- ----------- ----------- ----------- ----------- ---------- ------------
ASSETS
Investments, at market value (Notes 2 and 3):
Southwest Gas Corporation-Common stock $33,452,061 $26,615,499 $ - $ - $ - $ - $ -
Vanguard 500 Index Fund - - 4,507,095 - - - -
Vanguard Intl Growth Fund - - - 807,951 - - -
Fidelity Contrafund - - - - 39,874,689 - -
Fidelity Invst Grade Bond Fund - - - - - 3,679,516 -
Fidelity Growth & Income Fund - - - - - - 10,718,620
Fidelity Asset Manager Fund - - - - - - -
Fidelity Asset Mgr Growth Fund - - - - - - -
Fidelity Asset Mgr Income Fund - - - - - - -
Fidelity Low-priced Stock Fund - - - - - - -
Fidelity Retirement Money Mkt Fund - - - - - - -
Temporary cash investments - 893,820 - - - - -
Loans to participants (Note 4) - - - - - - -
----------- ----------- ----------- ---------- ----------- ----------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $33,452,061 $27,509,319 $ 4,507,095 $ 807,951 $39,874,689 $ 3,679,516 $ 10,718,620
=========== =========== =========== ========== =========== =========== ============
Fund Information
-----------------------------------------------------------
Participant Directed
-----------------------------------------------------------
Fidelity Fidelity Fidelity Fidelity Fidelity
Asset Asset Mgr Asset Mgr Low-priced Retirement
Manager Growth Income Stock Money Mkt Participant
Fund Fund Fund Fund Fund Loans Total
----------- ----------- ----------- ---------- ----------- ----------- ------------
ASSETS
Investments, at market value (Notes 2 and 3):
Southwest Gas Corporation-Common stock $ - $ - $ - $ - $ - $ - $ 60,067,560
Vanguard 500 Index Fund - - - - - - 4,507,095
Vanguard Intl Growth Fund - - - - - - 807,951
Fidelity Contrafund - - - - - - 39,874,689
Fidelity Invst Grade Bond Fund - - - - - - 3,679,516
Fidelity Growth & Income Fund - - - - - - 10,718,620
Fidelity Asset Manager Fund - - - - - - -
Fidelity Asset Mgr Growth Fund - 10,287,322 - - - - 10,287,322
Fidelity Asset Mgr Income Fund - - - - - - -
Fidelity Low-priced Stock Fund - - - 4,563,120 - - 4,563,120
Fidelity Retirement Money Mkt Fund - - - - 10,440,755 - 10,440,755
Temporary cash investments - - - - - - 893,820
Loans to participants (Note 4) - - - - - 5,295,211 5,295,211
----------- ----------- ----------- ---------- ----------- ----------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $ - $10,287,322 $ - $4,563,120 $10,440,755 $ 5,295,211 $151,135,659
=========== =========== =========== ========== =========== =========== ============
The accompanying notes are an integral part of this statement.
5
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
Fund Information
-------------------------------------------------------------------------------------
Company
Directed Participant Directed
------------ ------------------------------------------------------------------------
Fidelity Fidelity
Vanguard Vanguard Invst Grade Growth &
Southwest Gas Southwest Gas 500 Index Intl Growth Fidelity Bond Income
Stock Fund Stock Fund Fund Fund Contrafund Fund Fund
----------- ----------- ----------- ---------- ----------- ----------- ------------
ASSETS
Investments, at market value (Notes 2 and 3):
Southwest Gas Corporation-Common stock $23,581,702 $21,479,111 $ - $ - $ - $ - $ -
Vanguard 500 Index Fund - - - - - - -
Vanguard Intl Growth Fund - - - - - - -
Fidelity Contrafund - - - - 28,807,658 - -
Fidelity Invst Grade Bond Fund - - - - - 2,692,577 -
Fidelity Growth & Income Fund - - - - - - 5,718,943
Fidelity Asset Manager Fund - - - - - - -
Fidelity Asset Mgr Growth Fund - - - - - - -
Fidelity Asset Mgr Income Fund - - - - - - -
Fidelity Low-priced Stock Fund - - - - - - -
Fidelity Retirement Money Mkt Fund - - - - - - -
Temporary cash investments - 650,498 - - - - -
Loans to participants (Note 4) - - - - - - -
----------- ----------- ----------- ---------- ----------- ----------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $23,581,702 $22,129,609 $ - $ - $28,807,658 $ 2,692,577 $ 5,718,943
=========== =========== =========== ========== =========== =========== ============
Fund Information
-----------------------------------------------------------
Participant Directed
-----------------------------------------------------------
Fidelity Fidelity Fidelity Fidelity Fidelity
Asset Asset Mgr Asset Mgr Low-priced Retirement
Manager Growth Income Stock Money Mkt Participant
Fund Fund Fund Fund Fund Loans Total
----------- ----------- ----------- ---------- ----------- ----------- ------------
ASSETS
Investments, at market value (Notes 2 and 3):
Southwest Gas Corporation-Common stock $ - $ - $ - $ - $ - $ - $ 45,060,813
Vanguard 500 Index Fund - - - - - - -
Vanguard Intl Growth Fund - - - - - - -
Fidelity Contrafund - - - - - - 28,807,658
Fidelity Invst Grade Bond Fund - - - - - - 2,692,577
Fidelity Growth & Income Fund - - - - - - 5,718,943
Fidelity Asset Manager Fund 4,284,823 - - - - - 4,284,823
Fidelity Asset Mgr Growth Fund - 8,750,221 - - - - 8,750,221
Fidelity Asset Mgr Income Fund - - 1,320,392 - - - 1,320,392
Fidelity Low-priced Stock Fund - - - 4,020,307 - - 4,020,307
Fidelity Retirement Money Mkt Fund - - - - 5,021,429 - 5,021,429
Temporary cash investments - - - - - - 650,498
Loans to participants (Note 4) - - - - - 5,050,026 5,050,026
----------- ----------- ----------- ---------- ----------- ----------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 4,284,823 $ 8,750,221 $ 1,320,392 $4,020,307 $ 5,021,429 $ 5,050,026 $111,377,687
=========== =========== =========== ========== =========== =========== ============
The accompanying notes are an integral part of this statement.
6
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1998
Fund Information
------------------------------------------------------------------------------------------
Company
Directed Participant Directed
------------ -----------------------------------------------------------------------------
Fidelity Fidelity
Vanguard Vanguard Invst Grade Growth &
Southwest Gas Southwest Gas 500 Index Intl Growth Fidelity Bond Income
Stock Fund Stock Fund Fund Fund Contrafund Fund Fund
------------ ------------ ----------- ----------- ------------ ------------ -------------
Net investment income:
Interest and dividends $ 999,820 $ 836,611 $ 47,113 $ 17,403 $ 2,939,978 $ 201,309 $ 542,095
Loan fees - - - - - - -
------------ ------------ ----------- ----------- ------------ ------------ -------------
999,820 836,611 47,113 17,403 2,939,978 201,309 542,095
------------ ------------ ----------- ----------- ------------ ------------ -------------
Net appreciation (depreciation)
in fair value of investments 10,183,718 8,626,480 410,070 (14,925) 6,440,087 46,556 1,544,726
------------ ------------ ----------- ----------- ------------ ------------ -------------
Contributions:
Southwest Gas Corporation 2,397,677 - 5,864 2,330 28,468 5,944 27,133
Participants - 1,454,743 242,238 66,272 2,716,020 264,154 854,276
Rollovers - 22,690 36,591 15,799 123,176 - 14,257
------------ ------------ ----------- ----------- ------------ ------------ -------------
2,397,677 1,477,433 284,693 84,401 2,867,664 270,098 895,666
------------ ------------ ----------- ----------- ------------ ------------ -------------
Distributions to participants
and beneficiaries (Note 5) (1,605,004) (1,019,015) - - (1,001,060) (116,439) (429,410)
------------ ------------ ----------- ----------- ------------ ------------ -------------
Transfers between funds (2,105,852) (4,541,799) 3,765,219 721,072 (179,638) 585,415 2,446,600
------------ ------------ ----------- ----------- ------------ ------------ -------------
Net increase (decrease) 9,870,359 5,379,710 4,507,095 807,951 11,067,031 986,939 4,999,677
Net assets available for benefits:
Beginning of year 23,581,702 22,129,609 - - 28,807,658 2,692,577 5,718,943
------------ ------------ ----------- ----------- ------------ ------------ -------------
End of year $33,452,061 $27,509,319 $4,507,095 $ 807,951 $39,874,689 $ 3,679,516 $ 10,718,620
============ ============ =========== =========== ============ ============ =============
Fund Information
---------------------------------------------------------------
Participant Directed
---------------------------------------------------------------
Fidelity Fidelity Fidelity Fidelity Fidelity
Asset Asset Mgr Asset Mgr Low-priced Retirement
Manager Growth Income Stock Money Mkt Participant
Fund Fund Fund Fund Fund Loans Total
------------ ------------ ----------- ----------- ------------ ------------ -------------
Net investment income:
Interest and dividends $ 34,268 $ 1,435,587 $ 19,639 $ 412,379 $ 428,821 $ 522,566 $ 8,437,589
Loan fees - - - - - (16,921) (16,921)
------------ ------------ ----------- ----------- ------------ ------------ -------------
34,268 1,435,587 19,639 412,379 428,821 505,645 8,420,668
------------ ------------ ----------- ----------- ------------ ------------ -------------
Net appreciation (depreciation)
in fair value of investments 222,024 176,805 34,087 (490,264) - - 27,179,364
------------ ------------ ----------- ----------- ------------ ------------ -------------
Contributions:
Southwest Gas Corporation 1,631 8,502 1,753 15,283 18,476 - 2,513,061
Participants 194,101 986,788 43,890 605,877 480,051 - 7,908,410
Rollovers 4,864 3,248 - 19,992 16,879 - 257,496
------------ ------------ ----------- ----------- ------------ ------------ -------------
200,596 998,538 45,643 641,152 515,406 - 10,678,967
------------ ------------ ----------- ----------- ------------ ------------ -------------
Distributions to participants
and beneficiaries (Note 5) (310,758) (223,742) (48,001) (157,353) (1,390,796) (219,449) (6,521,027)
------------ ------------ ----------- ----------- ------------ ------------ -------------
Transfers between funds (4,430,953) (850,087) (1,371,760) 136,899 5,865,895 (41,011) -
------------ ------------ ----------- ----------- ------------ ------------ -------------
Net increase (decrease) (4,284,823) 1,537,101 (1,320,392) 542,813 5,419,326 245,185 39,757,972
Net assets available for benefits:
Beginning of year 4,284,823 8,750,221 1,320,392 4,020,307 5,021,429 5,050,026 111,377,687
------------ ------------ ----------- ----------- ------------ ------------ -------------
End of year $ - $10,287,322 $ - $4,563,120 $10,440,755 $ 5,295,211 $151,135,659
============ ============ =========== =========== ============ ============ =============
The accompanying notes are an integral part of this statement.
7
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
8
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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.
PAYMENT OF BENEFITS
If a participant terminates employment with the Company as a result of
retirement, death or permanent and total disability, such participant 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, 1998. Loan origination and maintenance fees paid by Plan
participants for the year ended December 31, 1998 were $16,921.
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.
At December 31, 1998, investments representing 5 percent or more of the Plan's
net assets are: (a) Southwest Gas Corporation Common Stock - $60,067,560 (40%),
(b) Fidelity Contrafund - $39,874,689 (26%), (c) Fidelity Growth & Income Fund -
$10,718,620 (7%), (d) Fidelity Retirement Money Market Fund - $10,440,755 (7%),
and (e) Fidelity Asset Manager: Growth Fund - $10,287,322 (7%).
9
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(3) FUND DESCRIPTIONS
Effective May 1998, the Fidelity Asset Manager and Fidelity Asset Manager:
Income funds were no longer available for investment under the Plan. Amounts
held in these accounts were transferred to other investment options as directed
by the participants. Effective April 1998, the Vanguard 500 Index and Vanguard
International Growth funds were added as investment options. Employees can
invest their contributions in any combination of the available investment
options in 10 percent increments. Participants can change the allocation of
their ongoing contributions on a monthly basis in increments of 10 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.
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 FUND
Contributions are invested in the Fidelity Asset Manager Fund which seeks a
high total return with reduced risk over the long term by using a balanced
mix of stocks, bonds, and short-term investments. As of May 1998, this
investment option was eliminated from the Plan.
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 ASSET MANAGER: INCOME FUND
Contributions are invested in the Fidelity Asset Manager: Income Fund which
seeks a high level of current income by maintaining a diversified portfolio
of stocks, bonds, and short-term investments with an emphasis on short-term
investments. As of May 1998, this investment option was eliminated from the
Plan.
10
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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
4).
(4) 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, 1998, outstanding loans had annual
interest rates ranging from 8 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.
(5) FORFEITURES
The nonvested balances forfeited by participants who withdrew from the Plan
during the year ended December 31, 1998 were $38,282. The market value of the
nonvested portion of a withdrawing participant account is reallocated to the
remaining participants in the Plan.
(6) PLAN EQUITY
There were no outstanding withdrawal requests at December 31, 1998 and 1997.
At December 31, 1998, the Trustee held for the Plan the following:
Shares/Units Market Value
Fund Name Held Per Share/Unit
-------------------------------- -------------- ----------------
Southwest Gas Stock 2,235,072 $ 26.88
Vanguard 500 Index 39,553 113.95
Vanguard International Growth 43,045 18.77
Fidelity Contrafund 702,143 56.79
Fidelity Investment-Grade Bond 497,905 7.39
Fidelity Growth & Income 233,827 45.84
Fidelity Asset Manager: Growth 550,713 18.68
Fidelity Low-Priced Stock 199,699 22.85
Fidelity Retirement Money Market 10,440,755 1.00
11
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(7) 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.
(8) 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.
(9) 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. It is the opinion of the Benefit
Committee (the Plan Committee) that the Plan, as amended and as currently
operating, is tax exempt and in compliance with all applicable provisions of the
Internal Revenue Code.
(10) MERGER AGREEMENT WITH ONEOK, INC.
In December 1998, the Boards of Directors of the Company and ONEOK, Inc.
(ONEOK), headquartered in Tulsa, Oklahoma, announced an agreement for the
Company to be merged into ONEOK. The agreement called for ONEOK to pay $28.50 in
cash for each share of Company common stock outstanding. In April 1999, the
agreement was amended to reflect, among other things, a revised cash purchase
price of $30.00 per share. The transaction is subject to customary conditions,
including approvals from shareholders of the Company and state regulators in
Arizona, California, and Nevada.
If the merger is consummated, each share of Southwest Gas Corporation common
stock held in the Southwest Gas Stock Fund would be exchanged for the $30.00 per
share cash consideration noted above. After the merger, ONEOK would then
initiate the changes necessary to provide for the issuance, or purchase in the
open market, of ONEOK common stock rather than Southwest common stock as part of
the Plan.
12
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, 1998
Number of Fair Market
Shares Cost Value
-------------- --------------- ---------------
Southwest Gas Corporation Common Stock* 2,235,072 $ 38,223,269 $ 60,067,560
Vanguard 500 Index Fund 39,553 4,089,471 4,507,095
Vanguard International Growth Fund 43,045 809,397 807,951
Fidelity Contrafund* 702,143 29,100,001 39,874,689
Fidelity Investment-Grade Bond Fund* 497,905 3,579,951 3,679,516
Fidelity Growth & Income Fund* 233,827 8,773,597 10,718,620
Fidelity Asset Manager: Growth Fund* 550,713 9,370,690 10,287,322
Fidelity Low-Priced Stock Fund* 199,699 4,680,488 4,563,120
Fidelity Retirement Money Market Fund* 10,440,755 10,440,755 10,440,755
Temporary Cash Investments* 893,820 893,820 893,820
--------------- ---------------
109,961,439 145,840,448
Participant Loans (with interest ranging from 8% to 11%) 5,295,211 5,295,211
--------------- ---------------
$ 115,256,650 $ 151,135,659
=============== ===============
* Party-in-interest
13
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, 1998
Purchases Sales
---------------------------- ----------------------------------------------------------
Number of Number of Original
Description Transactions Cost Transactions Proceeds Cost Gain (Loss)
- ------------------------------------- ------------ ------------- ------------ ------------- ------------- -------------
Southwest Gas Corporation Common
Stock * 242 $ 8,811,927 233 $ 12,367,979 $ 9,872,337 $ 2,495,642
Vanguard 500 Index Fund 130 4,925,193 42 828,168 835,722 (7,554)
Fidelity Contrafund 241 10,759,978 213 6,133,034 4,916,360 1,216,674
Fidelity Growth & Income Fund 205 5,851,466 137 2,396,515 2,097,690 298,825
Fidelity Asset Manager 70 571,069 55 5,077,916 4,338,911 739,005
Fidelity Asset Manager: Growth 204 4,014,174 165 2,653,877 2,248,907 404,970
Fidelity Retirement Money Market Fund 184 10,601,004 169 5,181,678 5,181,678 -
* 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.
14
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated June 22, 1999 included in this Form 11-K, into Southwest Gas
Corporation's previously filed Form S-8 Registration Statement File No.
333-31267.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
June 22, 1999