-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, VwvtY3qVbqgNDzLo9zIXR0buZjer8ZrmN5obNzFjjl/G9hTOWxk8lIryMtiBK63w FQL7SFfOYxJdSkaTviALfQ== 0000764044-94-000007.txt : 19941111 0000764044-94-000007.hdr.sgml : 19941111 ACCESSION NUMBER: 0000764044-94-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUESTAR PIPELINE CO CENTRAL INDEX KEY: 0000764044 STANDARD INDUSTRIAL CLASSIFICATION: 4924 IRS NUMBER: 870307414 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14147 FILM NUMBER: 94558732 BUSINESS ADDRESS: STREET 1: 79 S STATE ST STREET 2: P O BOX 11450 CITY: SALT LAKE CITY STATE: UT ZIP: 84147 BUSINESS PHONE: 8015302400 MAIL ADDRESS: STREET 1: 79 SOUTH STATE STREET STREET 2: P O BOX 11150 CITY: SALT LAKE CITY STATE: UT ZIP: 84147 FORMER COMPANY: FORMER CONFORMED NAME: MOUNTAIN FUEL RESOURCES INC DATE OF NAME CHANGE: 19880331 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____ Commission File No. 0-14147 QUESTAR PIPELINE COMPANY (Exact name of registrant as specified in its charter) STATE OF UTAH 87-0307414 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 11450, 79 South State Street, Salt Lake City, Utah 84147 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (801) 530-2400 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding as of October 31, 1994 Common Stock, $1.00 par value 6,550,843 shares Registrant meets the conditions set forth in General Instruction H(a)(1) and (b) of Form 10-Q and is filing this Form 10-Q with the reduced disclosure format. QUESTAR PIPELINE COMPANY STATEMENTS OF INCOME (Unaudited)
3 Months Ended 9 Months Ended 12 Months Ended September 30, September 30, September 30, 1994 1993 1994 1993 1994 1993 (In Thousands) REVENUES $27,948 $29,317 $85,117 $142,517 $114,228 $209,892 OPERATING EXPENSES Natural gas purchases 2,984 56,022 90,718 Operating and maintenance 10,253 11,491 32,102 37,560 42,898 50,395 Depreciation 3,920 3,540 11,322 10,495 14,911 13,701 Other taxes 1,046 961 3,417 2,983 4,349 3,908 TOTAL OPERATING EXPENSES 15,219 18,976 46,841 107,060 62,158 158,722 OPERATING INCOME 12,729 10,341 38,276 35,457 52,070 51,170 INTEREST AND OTHER INCOME (EXPENSE) 185 369 663 743 (219) 916 INCOME FROM UNCONSOLIDATED AFFILIATES 58 22 187 61 254 15 DEBT EXPENSE (3,263) (3,292) (9,739) (9,870) (12,983) (13,337) INCOME BEFORE INCOME TAXES 9,709 7,440 29,387 26,391 39,122 38,764 INCOME TAXES 3,612 2,981 10,913 9,772 13,992 13,984 NET INCOME $6,097 $4,459 $18,474 $16,619 $25,130 $24,780
QUESTAR PIPELINE COMPANY CONDENSED BALANCE SHEETS (Unaudited)
September 30, December 31, 1994 1993 1993 (In Thousands) ASSETS Current assets Cash and short-term investments $249 $1,196 $1,341 Notes receivable from parent company 4,600 Accounts receivable 14,281 24,018 11,191 Inventories 2,745 6,203 2,394 Other current assets 1,979 1,852 2,268 Total current assets 23,854 33,269 17,194 Property, plant and equipment 602,129 537,457 561,108 Less allowances for depreciation 201,255 186,956 189,279 Net property, plant and equipment 400,874 350,501 371,829 Investment in unconsolidated affiliates 7,729 6,978 7,145 Other assets 11,363 9,473 9,726 $443,820 $400,221 $405,894 LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities Notes payable to parent company $1,400 $3,000 Accounts payable and accrued expenses $21,249 13,173 12,668 Total current liabilities 21,249 14,573 15,668 Long-term debt 134,501 134,482 134,487 Deferred credits 4,689 792 2,276 Deferred income taxes 67,281 66,903 67,335 Common shareholder's equity Common stock 6,551 6,551 6,551 Additional paid-in capital 82,032 57,034 57,034 Retained earnings 127,517 119,886 122,543 Total common shareholder's equity 216,100 183,471 186,128 $443,820 $400,221 $405,894
QUESTAR PIPELINE COMPANY CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
9 Months Ended September 30, 1994 1993 (In Thousands) OPERATING ACTIVITIES Net income $18,474 $16,619 Depreciation 12,539 11,910 Deferred income taxes (54) 3,297 Income from unconsolidated affiliates (187) (61) 30,772 31,765 Change in operating assets and liabilities 6,217 12,615 NET CASH PROVIDED FROM OPERATING ACTIVITIES 36,989 44,380 INVESTING ACTIVITIES Capital expenditures Purchase of property, plant and equipment (41,668) (25,730) Other investments (397) (264) Total capital expenditures (42,065) (25,994) Disposition of property, plant and equipment 84 (145) CASH USED IN INVESTING ACTIVITIES (41,981) (26,139) FINANCING ACTIVITIES Capital contribution 25,000 Decrease notes payable to parent company (3,000) (6,100) Increase in notes receivable from parent company (4,600) Payment of dividends (13,500) (12,000) CASH PROVIDED FROM (USED IN) FINANCING ACTIVITIES 3,900 (18,100) INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS ($1,092) $141
QUESTAR PIPELINE COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS September 30, 1994 (Unaudited) Note A - Basis of Presentation The interim financial statements furnished reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. Due to the seasonal nature of the business, the results of operations for the three-and nine-month periods ended September 30, 1994, are not necessarily indicative of the results that may be expected for the year ending December 31, 1994. For further information refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1993. Note B - Accounting for Postemployment Benefits Effective January 1, 1994, the Company recorded a liability for postemployment disability and health care benefits in compliance with the Statement of Financial Accounting Standards No. 112. This did not have an effect on net income since the $1,256,000 liability was offset with a regulatory asset because the Company expects to include these costs in future rates. Note C - Financing On July 1, 1994, Questar Pipeline received a $25,000,000 capital contribution from its parent company. Proceeds from the capital contribution were used to fund capital expenditures, to repay short-term debt and for other corporate purposes. QUESTAR PIPELINE COMPANY MANAGEMENT'S ANALYSIS September 30, 1994 Operating Results -- Following is a summary of operating information for the Company:
3 Months Ended 9 Months Ended 12 Months Ended September 30, September 30, September 30, 1994 1993 1994 1993 1994 1993 (Dollars in Thousands) FINANCIAL RESULTS Revenues From unaffiliated customers $12,251 $9,221 $30,452 $29,067 $42,739 $45,043 From affiliates 15,697 20,096 54,665 113,450 71,489 164,849 Total revenues $27,948 $29,317 $85,117 $142,517 $114,228 $209,892 Operating income $12,729 $10,341 $38,276 $35,457 $52,070 $51,170 Net income 6,097 4,459 18,474 16,619 25,130 24,780 OPERATING STATISTICS Natural gas volumes (in thousands of decatherms) Transportation For Mountain Fuel 10,369 10,557 62,433 33,594 93,900 47,105 For other customers 49,287 37,538 119,219 117,945 150,462 163,685 Total transportation 59,656 48,095 181,652 151,539 244,362 210,790 Sales for resale to Mountain Fuel 24,337 39,235 Total system throughput 59,656 48,095 181,652 175,876 244,362 250,025 Gathering For Mountain Fuel 3,514 5,329 19,716 32,599 31,549 50,643 For other customers 13,577 14,260 42,484 33,659 57,161 42,860 Total gathering 17,091 19,589 62,200 66,258 88,710 93,503 Natural gas revenues (per decatherm) Transportation $0.28 $0.26 $0.26 $0.24 $0.25 $0.22 Sales for resale 3.36 3.24 Gathering 0.28 0.22 0.28 0.22 0.26 0.22
Questar Pipeline began operating under Federal Energy Regulatory Commission (FERC) Order 636 effective September 1, 1993. As of that date Questar Pipeline unbundled its transportation, gathering and storage services and eliminated its sales-for-resale function. Under the Order 636 operating environment, firm-transportation volumes do not have a significant impact on current operating results since 96% of the cost of service is recovered in the reservation component of rates equally each month using the straight fixed-variable rate design. As a result of Order 636, no sales-for-resales revenues were collected during the 9- and 12- month periods of 1994. Substantially all of Questar Pipeline's transportation capacity has been reserved by firm-transportation customers. Roughly 98% of firm-transportation contracts have remaining terms of at least five years. Mountain Fuel has reserved transportation capacity from Questar Pipeline of approximately 800,000 decatherms per day, or about 85% of total reserved daily transportation capacity. Transportation for other customers was higher in the 3- and 9-month periods of 1994 reflecting transportation of volumes under capacity release arrangements. In April 1994, the FERC approved a gathering agreement between Questar Pipeline and Mountain Fuel retroactive to September 1, 1993, which allocates 60% of gathering costs to the reservation component of rates and 40% to the usage component. Gathering revenues were increased $1,335,000 in the second quarter of 1994, to retroactively reflect the FERC approved gathering agreement. Gathering for Mountain Fuel represented 73% of the revenues from gathering gas in the first nine months of 1994. Questar Pipeline expanded firm storage service at Clay Basin from 31 to 41.8 Bcf working gas capacity in mid-May 1994, which added quarterly revenues of about $1,500,000. After additional investment in cushion gas, storage capacity will be increased to 46.3 Bcf by the 1995-96 heating season. Operating and maintenance expenses were lower in the periods ended September 30, 1994, because of lower variable transmission costs and lower field gathering costs. Depreciation expense was higher in the periods ended September 30, 1994, because of capital spending, primarily for storage and gathering activities. The effective income tax rate was 37.1% in the first nine months of 1994 compared with 37.0% in the first nine months of 1993. Effective January 1, 1994, the Company recorded a liability for postemployment disability and health care benefits in compliance with the Statement of Financial Accounting Standards No. 112. This did not have an effect on net income since the $1,256,000 liability was offset with a regulatory asset because the Company expects to include these costs in future rates. Liquidity and Capital Resources -- Operating Activities: Net cash provided from operating activities was $36,989,000 for the first nine months of 1994 compared with $44,380,000 for the same period of 1993. The decrease was due to reduced sources from deferred income taxes and working capital. In the Order 636 operating environment, Questar Pipeline eliminated the purchased-gas adjustments account and all but 3 Bcf of working gas capacity. As a result, the Company no longer experiences the large seasonal changes in working capital as it did prior to Order 636 regulation. Investing Activities: Capital expenditures were $42,065,000 in the first nine months of 1994, compared with $25,994,000 in the corresponding 1993 period as the Company continues expanding a major gas storage reservoir. Capital expenditures for calendar year 1994 are estimated at $57,000,000. Financing Activities: On July 1, 1994, Questar Pipeline received a $25,000,000 capital contribution from its parent company. Proceeds from the capital contribution were used to fund capital expenditures, to repay short-term debt and for other corporate purposes. The Company has a short-term line-of-credit arrangement with a bank totaling $200,000. In addition, its parent company loans funds to the Company under a short-term arrangement. As of September 30, 1994, Questar Pipeline had no loans payable to Questar Corporation. PART II OTHER INFORMATION Item 1. Legal Proceedings. On October 24, 1994, the Federal Energy Regulatory Commission (the FERC) approved an offer of settlement that Questar Pipeline Company (Questar Pipeline) filed as operator of the Overthrust Pipeline Company (Overthrust). The settlement offer approved by the FERC established new rates for Overthrust and was a pretax return of 10.2 percent. Overthrust is a partnership that owns and operates an 88-mile line that extends from Whitney Canyon in southwestern Wyoming to the vicinity of Rock Springs, Wyoming. Questar Pipeline has an 18-percent ownership interest in Overthrust; its partners are CIG Overthrust Inc., Columbia Gulf Transmission Company, Enron Overthrust Pipeline Company, NGPL - Overthrust Inc., and Tennessee Overthrust Gas Company. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. QUESTAR PIPELINE COMPANY (Registrant) November 10, 1994 /s/ A. J. Marushack (Date) A. J. Marushack President and Chief Executive Officer November 10, 1994 /s/ W. F. Edwards (Date) W. F. Edwards Vice President and Chief Financial Officer EX-27 2
5 The schedule contains summarized financial information extracted from the Questar Pipeline Company Statements of Income and Balance Sheet for the period ended September 30, 1994, and is qualified in its entirety by references to such unaudited financial statements. 1,000 9-MOS DEC-31-1994 SEP-30-1994 249 0 18,881 0 2,745 23,854 602,129 201,255 443,820 21,249 134,501 6,551 0 0 209,549 443,820 0 85,117 0 32,102 14,739 0 9,739 29,387 10,913 18,474 0 0 0 18,474 0 0
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