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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, 2001
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Commission file number 1-7850
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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
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B. Name of issuer of the securities held pursuant to the plan and the address
of its principle executive office:
SOUTHWEST GAS CORPORATION
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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
benefits as of December 31, 2001 and 2000, and the related statement of
changes in net assets available for benefits for the year ended
December 31, 2001 and notes to financial statements, together with the
report thereon of PricewaterhouseCoopers LLP, independent public
accountants as of and for the year ended December 31, 2001 and the
report thereon of Arthur Andersen LLP as of December 31, 2000.
(b) Consent of PricewaterhouseCoopers 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
Executive Vice President,
Chief Financial Officer and
Corporate Secretary
Southwest Gas Corporation
Dated: June 27, 2002
2
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
AS OF DECEMBER 31, 2001 AND 2000 AND
FOR THE YEAR ENDED DECEMBER 31, 2001
3
Report of Independent Accountants
To the Participants and Administrator of
Southwest Gas Corporation Employees' Investment Plan:
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of Southwest Gas Corporation Employees' Investment Plan (the "Plan") at December
31, 2001, and the changes in net assets available for benefits for the year
ended December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these statements in accordance with auditing standards generally accepted in
the United States of America, which 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, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion. The statement of net assets
available for benefits of the Plan as of December 31, 2000 was audited by other
independent accountants whose report dated June 15, 2001 expressed an
unqualified opinion on that statement.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Assets (Held
at End of Year) and Schedule of Reportable Transactions as of and for the year
ended December 31, 2001 are presented for the purpose 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. These supplemental schedules are the responsibility of the plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in our audit 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.
PricewaterhouseCoopers LLP
Los Angeles, California
June 27, 2002
4
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, 2000 and 1999, and the related statement of changes
in net assets available for plan benefits for the year ended December 31, 2000.
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, 2000 and 1999, and the changes in net assets available for Plan benefits for
the year ended December 31, 2000, 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, 2000 and reportable transactions for the
year ended December 31, 2000 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 15, 2001
The aforementioned report on the statements of net assets available for plan
benefits of the Southwest Gas Corporation Employees' Investment Plan as of
December 31, 2000 and 1999, and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 2000 is a copy of a
previously issued Arthur Andersen LLP report. Arthur Andersen LLP has not
reissued this report.
5
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
Statements of Net Assets Available for Benefits
December 31,
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2001 2000
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Assets:
Investments (see Note 3) $161,752,156 $162,392,888
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Total assets 161,752,156 162,392,888
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Net assets available for benefits $161,752,156 $162,392,888
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The accompanying notes are an integral part of these statements.
6
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
Statement of Changes in Net Assets Available for Benefits
Year Ended
December 31,
2001
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Additions:
Additions to net assets attributed to
Investment income (loss)
Net depreciation in fair value of investments (see Note 3) $ (8,118,688)
Interest and dividends 4,625,152
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(3,493,536)
Less investment expenses 20,644
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(3,514,180)
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Contributions
Participant 9,387,971
Employer 2,873,600
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12,261,571
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Net additions 8,747,391
Deductions:
Deductions from net assets attributed to
Benefits paid to participants 9,388,123
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Net decrease (640,732)
Net assets available for benefits:
Beginning of year 162,392,888
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End of year $ 161,752,156
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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 in the United States 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 60 percent of their annual wages before
bonuses and overtime. However, contributions may not exceed amounts
promulgated by the Internal Revenue Code (Code). 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
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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. Forfeitures as a result of a
participant's termination prior to vesting are reallocated to the remaining
participants on a quarterly basis based on the employer contribution ratio.
For the year ended December 31, 2001 forfeitures reallocated to participants
were approximately $23,000.
8
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, 2001. Loan origination and maintenance fees paid by Plan
participants for the year ended December 31, 2001 were $20,644.
Plan Administration
Fidelity Management Trust Company acts as the trustee and Fidelity
Institutional Retirement Services Company performs all recordkeeping of the
Plan.
Reclassifications
Certain reclassifications have been made to the prior year's financial
information to present it on a basis comparable with the current year's
presentation.
(2) Plan Amendments
The Southwest Gas Corporation Employee's Investment Plan, as amended and
restated effective October 1, 2001, constitutes a continuation of the Plan as
originally effective April 1, 1965. The purpose of this latest amendment was to
amend and restate the terms of the Plan so as to comply with new regulations
issued by the Internal Revenue Service (IRS), ERISA, and other regulatory
bodies. In addition, effective January 1, 2002, the portion of the Plan invested
in Company stock (consisting of (i) Company matching contributions and (ii)
participant deferrals) was designated as an Employee Stock Ownership Plan
(ESOP).
The ESOP is designed to invest primarily in qualifying employer securities. It
is the intention of the Company that (i) the non-ESOP portion of the Plan shall
be a profit-sharing plan that is qualified under Code Sections 401(a) and
401(k), (ii) the ESOP portion of the Plan shall be both a stock bonus plan and
an employee stock ownership plan that is qualified under Code Sections 401(a)
and 4975(e)(7) and described in ERISA Section 407(d)(6), (iii) that the
profit-sharing plan and the ESOP together shall constitute a single plan under
Treasury Regulation Section 1.414(1)-1(b)(1); (iv) that the Plan shall satisfy
the requirements of ERISA; and (v) that the trust fund maintained under the Plan
shall be tax-exempt under Code Section 501(a).
The amendment of the Plan to include the ESOP shall not affect any beneficiary
designation or other applicable agreements, elections, or consents that
participants, spouses or beneficiaries validly executed under the terms of the
Plan before the January 1, 2002 effective date of the ESOP, and such
designations, elections, and consents shall be applied under the ESOP in the
same manner as they applied under the Plan before the addition of the ESOP.
9
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(3) Investments
All investments of the Plan are stated at quoted market value as of the date of
the statement. The Plan provides for investments in various investments.
Investment securities, in general, are exposed to various risks, such as
interest rate, credit and overall market volatility risks. Due to the level of
risk associated with certain investment securities, it is reasonably possible
that changes in the values of investment securities will occur in the near term
and such changes could materially affect the amounts reported in the statements
of net assets available for benefits. 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,
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2001 2000
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Southwest Gas Corporation Common Stock
(2,684,574 and 2,527,438 shares, respectively) $60,000,229 $55,287,706
Fidelity Contrafund
(966,650 and 993,093 shares, respectively) 41,343,631 48,830,402
Fidelity Retirement Money Market Fund
(11,047,056 and 11,406,120 shares, respectively) 11,047,056 11,406,120
Fidelity Growth & Income Fund
(274,468 and 253,060 shares, respectively) 10,259,614 10,653,812
Fidelity Asset Manager: Growth Fund
(690,633 and 668,975 shares, respectively) 9,903,672 10,643,394
Vanguard 500 Index Fund
(93,492 and 81,233 shares, respectively) 9,899,891 9,899,080
During 2001, Plan investments (including gains and losses on investments bought
and sold as well as held during the year) depreciated in value by $(8,118,688)
as follows:
Common stock $ 1,351,500
Mutual funds (9,470,188)
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$(8,118,688)
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Purchases and sales of securities are recorded on a trade-date basis. Dividends
are recorded on the ex-dividend date.
(4) 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,
---------------------------------
2001 2000
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Net Assets:
Common stock $31,780,641 $29,601,424
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$31,780,641 $29,601,424
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December 31,
2001
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Changes in Net Assets:
Contributions $ 2,635,918
Dividends 1,120,360
Net appreciation 706,473
Benefits paid to participants (1,691,787)
Transfers to participant-directed investments (591,747)
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$ 2,179,217
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10
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(5) Fund Descriptions
Employees can invest their contributions in any combination of the available
investment options in whole percentage increments starting at one percent.
Participants can change the allocation of their ongoing contributions as often
as they like in whole percentage increments starting at one 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 or substantially 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 a broadly diversified array of non-U.S. equity securities,
primarily common stocks of seasoned companies.
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 U.S. dollar-denominated investment-grade bonds (those of medium
and high quality). The fund is managed to have similar overall interest rate
risk to the Lehman Brothers Aggregate Bond Index.
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 instruments and other investments.
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 and medium-sized 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 issuers and
repurchase agreements.
Participant Loans
These funds are the result of loans to participants in the Plan (see
Note 6).
(6) 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, 2001, outstanding loans had annual
interest rates ranging from 8.00 percent to 11.50 percent. Principal and
11
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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.
(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
IRS 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 effective October 1, 2001
and the Company submitted an application for a determination letter to the IRS
in February 2002. The IRS acknowledged receipt of the application with a letter
dated March 9, 2002 which also notified the Company to expect a determination
letter within 145 days but no sooner than 60 days. As of June 27, 2002 a
determination letter had not yet been received. 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 the related trust was tax-exempt for the
years ended December 31, 2001 and 2000.
12
SCHEDULE I
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
E.I.N. 88-0085720
ITEM 27a - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AT DECEMBER 31, 2001
Number of Fair Market
Shares Cost Value
--------------- --------------- ---------------
Southwest Gas Corporation Common Stock* 2,684,574 $ 50,911,540 $ 60,000,229
Vanguard 500 Index Fund 93,492 11,014,093 9,899,891
Vanguard International Growth Fund 98,585 1,933,569 1,479,752
Fidelity Contrafund* 966,650 45,801,374 41,343,631
Fidelity Investment-Grade Bond Fund* 657,442 4,719,548 4,825,627
Fidelity Growth & Income Fund* 274,468 11,173,315 10,259,614
Fidelity Asset Manager: Growth Fund* 690,633 11,734,687 9,903,672
Fidelity Low-Priced Stock Fund* 242,299 5,814,393 6,643,847
Fidelity Retirement Money Market Fund* 11,047,056 11,047,056 11,047,056
Temporary Cash Investments* 543,347 543,347 543,347
--------------- ---------------
154,692,922 155,946,666
Participant Loans (with interest ranging from 8.00% to 11.50%) 5,805,490 5,805,490
--------------- ---------------
$160,498,412 $161,752,156
=============== ===============
* 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, 2001
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.
14
EXHIBIT 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-35556) of Southwest Gas Corporation of our report
dated June 27, 2002 relating to the financial statements of Southwest Gas
Corporation Employees' Investment Plan, which appears in this Form 11-K.
PricewaterhouseCoopers LLP
Los Angeles, California
June 27, 2002