eip123107.htm

(a)

Financial statements, including statements of net assets available for benefits as of December 31, 2007 and 2006, and the related statement of changes in net assets available for benefits for the year ended December 31, 2007 and notes to financial statements, together with the report thereon of PricewaterhouseCoopers LLP, independent registered public accounting firm.

(b)

Supplemental Schedule: Schedule H, Line 4i - Schedule of Assets (Held at End of Year). All other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 and not included herein have been omitted because they are not applicable.

In our opinion, the accompanying statements 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, 2007 and December 31, 2006, and the changes in net assets available for benefits for the year ended December 31, 2007 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 audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2007 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is 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. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN

Statements of Net Assets Available for Benefits





	December 31,
	2007		2006


Assets:
Investments (see Note 2)	$	279,186,514	$	282,769,463
Receivable from employer		43,462		41,314
Total assets		279,229,976		282,810,777


Net assets available for benefits	$	279,229,976	$	282,810,777


The accompanying notes are an integral part of these statements.

SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN

Statement of Changes in Net Assets Available for Benefits



	Year Ended
	December 31,
	2007
Additions:
Additions to net assets attributed to:
Investment income:
Net depreciation in fair value of investments (see Note 3)	$	(13,483,228	)
Interest and dividends		17,268,703
		3,785,475
Less investment expenses		27,435
		3,758,040


Contributions:
Participant		13,225,121
Employer		3,638,861
		16,863,982

Net additions		20,622,022

Deductions:
Deductions from net assets attributed to:
Benefits paid to participants		24,202,823
Net deductions		24,202,823

Net decrease		(3,580,801	)

Net assets available for benefits:
Beginning of year		282,810,777
End of year	$	279,229,976




The accompanying notes are an integral part of these statements.

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”). The Plan’s assets invested in Company stock (consisting of (i) Company matching contributions and (ii) participant deferrals) are designated as an Employee Stock Ownership Plan (“ESOP”).

The ESOP invests primarily in qualifying employer securities. The non-ESOP portion of the Plan is a profit-sharing plan that is qualified under Code Sections 401(a) and 401(k). The ESOP portion of the Plan is 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). The profit-sharing plan and the ESOP together are a single plan under Treasury Regulation Section 1.414(1)-1(b)(1). The Plan satisfies the requirements of ERISA and the trust fund maintained under the Plan is tax-exempt under Code Section 501(a).

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. 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 (increasing to three and one-half percent in 2008) of a participant’s annual compensation before bonuses and overtime. Beginning June 2008, deferral percentages elected by participants will also be applied to overtime earnings, however they will not be matched by the Company.

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 initially deposited in the Southwest Gas Stock Fund. Beginning January 1, 2007, participants may immediately transfer Company matching contributions between and among other available funds. Upon attaining age 50, participants may elect to invest future Company matching contributions directly in any available fund.

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 years ended December 31, 2007 and 2006, forfeitures of non-vested accounts reallocated to participants were approximately $42,000 and $28,000, respectively.

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, 2007, outstanding loans had annual interest rates ranging from 6.00 percent to 11.50 percent maturing in 2008 through 2012. 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.

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. If the participant’s vested account balance is less than $1,000, the participant will receive a lump-sum distribution or, if the participant so directs, the amount will be rolled-over into an Individual Retirement Account (“IRA”). If the participant’s vested account balance is greater than $1,000 but less than $5,000, the participant’s account will be rolled-over into an IRA unless the participant requests a lump-sum distribution. If the participant’s vested account balance is greater than $5,000, the participant may remain in the Plan, receive a lump-sum distribution, or roll-over the account into an IRA. 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-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. The Company paid all Plan expenses, except loan origination and maintenance fees, during 2007. Loan origination and maintenance fees paid by Plan participants for the year ended December 31, 2007 were $27,435.

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) 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 changes in net assets during the reporting period. Actual results could differ from those estimates.

All investments of the Plan are stated at quoted market value as of the date of the statement. Shares of mutual funds are valued at the net asset value of shares held by the Plan at year end. Common stock of the Company is traded on a national securities exchange and is valued at the last reported sales price on the last business day of the Plan year. The Plan provides for investments in various investment securities including common stock of the Company. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility risks as well as changes in prevailing market and interest rates, increases in defaults and credit rating downgrades. Due to the level of risk associated with certain investment securities and the amount invested in the Company’s common stock, 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, which approximates fair value.

Investments representing five percent or more of Plan net assets are:

	December 31,
	2007		2006
Fidelity Contrafund
(968,385 and 956,907 shares, respectively)	$	70,798,650	$	62,390,358
Southwest Gas Corporation Common Stock
(2,175,544 and 2,392,620 shares, respectively)		64,765,945		91,804,829	**
Fidelity Low-Priced Stock Fund
(498,421 and 478,736 shares, respectively)		20,500,059		20,844,157
Fidelity Money Market Trust: Retirement Money Market Portfolio
(17,638,209 and 17,363,432 shares, respectively)		17,638,209		17,363,432
Fidelity Freedom 2020 Fund
(1,030,371 shares in 2007)		16,290,173		*

* Threshold percentage not met
** This amount includes $57,500,933 in nonparticipant-directed investments in 2006.

Since the Company’s common stock is an investment held by the Plan, investments in this common stock represent transactions with parties-in-interest. Certain other plan investments are short-term deposits and investments, and shares of mutual funds managed by Fidelity Management Trust Company, the Trustee as defined by the Plan. These certain plan investments qualify as parties-in-interest transactions for which a statutory exemption exists. During the year ended December 31, 2007, the Plan made purchases of approximately $31.9 million and sales (including distributions) of approximately $40.5 million of Company common stock. The following represents investments held by related parties:

In April 2003, the Company received a favorable determination letter from the IRS stating that the Plan, amended and restated effective October 1, 2001, qualifies for deferred tax treatment of contributions under Section 401(k) of the Internal Revenue Code (“IRC”). Although the Plan has been amended since October 1, 2001, the Plan administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC.

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. The provisions of SFAS No. 157 are effective for the Plan beginning January 1, 2008. The adoption of the standard is not expected to have a material impact on the financial position or results of operations of the Plan.

				SCHEDULE I

	SOUTHWEST GAS CORPORATION
	EMPLOYEES’ INVESTMENT PLAN

	E.I.N. 88-0085720

	SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
	AT DECEMBER 31, 2007

	Identity and Description of	Number of		Current
	Investment	Shares		Value

*	Southwest Gas Corporation Common Stock		2,175,544	$	64,765,945

	Brown Capital Management Small Company Fund		90,584		3,236,551

	Vanguard Institutional Index Fund		82,086		11,011,067

*	Fidelity Contrafund		968,385		70,798,650

*	Fidelity Freedom 2000 Fund		57,468		710,885

*	Fidelity Freedom 2010 Fund		803,997		11,915,241

*	Fidelity Freedom 2020 Fund		1,030,371		16,290,173

*	Fidelity Freedom 2030 Fund		165,116		2,727,710

*	Fidelity Freedom 2040 Fund		193,539		1,883,138

*	Fidelity Freedom 2050 Fund		7,617		87,063

*	Fidelity Freedom 2005 Fund		17,108		201,702

*	Fidelity Freedom 2015 Fund		139,280		1,736,825

*	Fidelity Freedom 2025 Fund		93,714		1,235,155

*	Fidelity Freedom 2035 Fund		18,907		258,645

*	Fidelity Freedom 2045 Fund		8,686		98,591

*	Fidelity Freedom Income Fund		44,023		504,061

*	Fidelity Growth & Income Portfolio		413,237		11,273,099

*	Fidelity Low-Priced Stock Fund		498,421		20,500,059

*	Fidelity Money Market Trust: Retirement Money Market Portfolio		17,638,209		17,638,209

*	Fidelity U.S. Bond Index Fund		1,012,754		11,028,887

*	Fidelity U.S. Government Reserve		390		390

	Vanguard International Growth Fund Admiral Shares		151,778		11,987,426

	Lord Abbett Small Cap Value Fund		424,651		12,493,225

*	Temporary Cash Investments		750,996		750,996
					273,133,693

	Participant Loans (with interest ranging from 6.00% to 11.50%)				6,052,821

				$	279,186,514

	* A party-in-interest for which a statutory exemption exists.

By	/s/ George C. Biehl
	George C. Biehl
	Executive Vice President,
	Chief Financial Officer and
	Corporate Secretary
	Southwest Gas Corporation

		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

Southwest Gas Corporation common stock	$	(18,862,640	)
Mutual funds		5,379,412
	$	(13,483,228	)