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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



Form 10-Q



QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 2003


Commission File Number 1-7850


SOUTHWEST GAS CORPORATION
(Exact name of registrant as specified in its charter)




California
(State or other jurisdiction of
incorporation or organization)


5241 Spring Mountain Road
Post Office Box 98510
Las Vegas, Nevada
(Address of principal executive offices)
  
 88-0085720
(I.R.S. Employer
Identification No.)


89193-8510
(Zip Code)


Registrant's telephone number, including area code: (702) 876-7237


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes |X|   No |_|

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).   Yes |X|   No |_|

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.

Common Stock, $1 Par Value, 33,832,120 shares as of August 1, 2003.



PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars, except par value)


JUNE 30,
2003
 DECEMBER 31,
2002
ASSETS (Unaudited)
Utility plant:            
    Gas plant   $ 2,905,978   $ 2,779,960  
    Less: accumulated depreciation    (916,210 )  (869,908 )
    Acquisition adjustments    2,623    2,714  
    Construction work in progress    24,757    66,693  
        Net utility plant    2,017,148    1,979,459  
Other property and investments    85,490    87,391  
Current assets:  
    Cash and cash equivalents    10,557    19,392  
    Accounts receivable, net of allowances    86,352    130,695  
    Accrued utility revenue    28,900    65,073  
    Deferred income taxes    7,464    3,084  
    Prepaids and other current assets    36,295    43,524  
        Total current assets    169,568    261,768  
Deferred charges and other assets    56,632    49,310  
Total assets   $ 2,328,838   $ 2,377,928  
                                               CAPITALIZATION AND LIABILITIES    
Capitalization:  
    Common stock, $1 par (authorized - 45,000,000 shares; issued  
        and outstanding - 33,761,510 and 33,289,015 shares)   $ 35,392   $ 34,919  
    Additional paid-in capital    496,560    487,788  
    Retained earnings    81,039    73,460  
        Total equity    612,991    596,167  
    Mandatorily redeemable preferred securities due 2025    60,000    60,000  
    Long-term debt, less current maturities    1,087,867    1,092,148  
        Total capitalization    1,760,858    1,748,315  
Current liabilities:  
    Current maturities of long-term debt    8,000    8,705  
    Short-term debt    --    53,000  
    Accounts payable    52,059    88,309  
    Customer deposits    40,195    34,313  
    Income taxes payable, net    11,944    10,969  
    Accrued general taxes    28,851    28,400  
    Accrued interest    19,297    21,137  
    Deferred purchased gas costs    33,937    26,718  
    Other current liabilities    40,034    41,630  
        Total current liabilities    234,317    313,181  
Deferred income taxes and other credits:  
    Deferred income taxes and investment tax credits    243,049    229,358  
    Other deferred credits    90,614    87,074  
        Total deferred income taxes and other credits    333,663    316,432  
Total capitalization and liabilities   $ 2,328,838   $ 2,377,928  

        The accompanying notes are an integral part of these statements.


2




SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)


THREE MONTHS ENDED
JUNE 30,
 SIX MONTHS ENDED
JUNE 30,
 TWELVE MONTHS ENDED
JUNE 30,
2003
 2002
 2003
 2002
 2003
 2002
Operating revenues:                            
    Gas operating revenues   $ 205,382   $ 211,425   $ 565,365   $ 667,630   $ 1,013,635   $ 1,187,216  
    Construction revenues    50,470    49,698    93,772    92,994    205,787    203,638  
        Total operating revenues    255,852    261,123    659,137    760,624    1,219,422    1,390,854  
Operating expenses:  
    Net cost of gas sold    93,038    104,622    286,510    379,285    470,604    647,663  
    Operations and maintenance    64,433    65,033    130,490    130,335    264,343    259,100  
    Depreciation and amortization    33,526    31,603    66,838    63,037    134,011    123,400  
    Taxes other than income taxes    9,155    8,789    18,455    17,809    35,211    33,650  
    Construction expenses    43,911    44,032    82,741    82,797    182,012    180,914  
        Total operating expenses    244,063    254,079    585,034    673,263    1,086,181    1,244,727  
Operating income    11,789    7,044    74,103    87,361    133,241    146,127  
Other income and (expenses):  
    Net interest deductions    (19,537 )  (20,900 )  (39,774 )  (39,926 )  (79,819 )  (80,130 )
    Preferred securities distributions    (1,369 )  (1,369 )  (2,738 )  (2,738 )  (5,475 )  (5,475 )
    Other income (deductions)    1,614    (18,071 )  1,597    (8,055 )  13,981    (3,757 )
        Total other income and (expenses)    (19,292 )  (40,340 )  (40,915 )  (50,719 )  (71,313 )  (89,362 )
Income (loss) before income taxes    (7,503 )  (33,296 )  33,188    36,642    61,928    56,765  
Income tax expense (benefit)    (3,399 )  (12,686 )  11,753    14,356    18,814    19,992  
Net income (loss)   $ (4,104 ) $ (20,610 ) $ 21,435   $ 22,286   $ 43,114   $ 36,773  
Basic earnings (loss) per share   $ (0.12 ) $ (0.63 ) $ 0.64   $ 0.68   $ 1.29   $ 1.13  
Diluted earnings (loss) per share   $ (0.12 ) $ (0.63 ) $ 0.63   $ 0.67   $ 1.28   $ 1.12  
Dividends paid per share   $ 0.205   $ 0.205   $ 0.41   $ 0.41   $ 0.82   $ 0.82  
Average number of common shares outstanding    33,665    32,897    33,552    32,759    33,346    32,542  
Average shares outstanding (assuming dilution)    --    --    33,789    33,025    33,612    32,820  

The accompanying notes are an integral part of these statements.


3



SOUTHWEST GAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)


SIX MONTHS ENDED
JUNE 30,
 TWELVE MONTHS ENDED
JUNE 30,
2003
 2002
 2003
 2002
CASH FLOW FROM OPERATING ACTIVITIES:                    
     Net income   $ 21,435   $ 22,286   $ 43,114   $ 36,773  
     Adjustments to reconcile net income to net  
       cash provided by operating activities:  
         Depreciation and amortization    66,838    63,037    134,011    123,400  
         Deferred income taxes    9,311    (24,663 )  18,290    (30,662 )
         Changes in current assets and liabilities:  
           Accounts receivable, net of allowances    44,343    59,623    9,407    19,012  
           Accrued utility revenue    36,173    35,799    (926 )  (3,001 )
           Deferred purchased gas costs    7,219    103,280    14,158    152,848  
           Accounts payable    (36,250 )  (56,245 )  (863 )  (26,678 )
           Accrued taxes    1,426    33,403    2,020    29,911  
           Other current assets and liabilities    9,504    16,895    (2,628 )  11,063  
         Other    (6,828 )  (6,245 )  (12,108 )  (2,827 )
         Net cash provided by operating activities    153,171    247,170    204,475    309,839  
CASH FLOW FROM INVESTING ACTIVITIES:  
     Construction expenditures and property additions    (100,893 )  (122,770 )  (260,974 )  (268,970 )
     Other    3,307    12,517    14,775    18,386  
         Net cash used in investing activities    (97,586 )  (110,253 )  (246,199 )  (250,584 )
CASH FLOW FROM FINANCING ACTIVITIES:  
     Issuance of common stock, net    9,245    10,154    17,265    18,540  
     Dividends paid    (13,759 )  (13,422 )  (27,346 )  (26,674 )
     Issuance of long-term debt, net    164,513    203,523    167,151    210,362  
     Retirement of long-term debt, net    (134,419 )  (205,439 )  (139,008 )  (215,965 )
     Temporary changes in long-term debt    (37,000 )  (67,000 )  30,000    (46,000 )
     Change in short-term debt    (53,000 )  (91,500 )  (1,500 )