-----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, CxDOJU4hM83eTErXWfAdGrubaAM3qenTLQ+2itDBsC/KORwkl04eo01K3zhimD/T h5wh+NFG+PA31ZHy0YASOQ== 0000764044-95-000022.txt : 19950814 0000764044-95-000022.hdr.sgml : 19950814 ACCESSION NUMBER: 0000764044-95-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUESTAR PIPELINE CO CENTRAL INDEX KEY: 0000764044 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [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: 95561959 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 JUNE 30, 1995 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 July 31, 1995 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 6 Months Ended 12 Months Ended June 30, June 30, June 30, 1995 1994 1995 1994 1995 1994 (In Thousands) REVENUES $29,835 $29,419 $59,400 $57,169 $117,839 $115,597 OPERATING EXPENSES Natural gas purchases 2,984 Operating and maintenance 11,628 10,570 22,992 21,849 43,921 44,136 Depreciation 4,148 3,728 8,262 7,402 16,313 14,531 Other taxes 1,176 1,237 2,410 2,371 4,538 4,264 TOTAL OPERATING EXPENSES 16,952 15,535 33,664 31,622 64,772 65,915 OPERATING INCOME 12,883 13,884 25,736 25,547 53,067 49,682 INTEREST AND OTHER INCOME (EXPENSE) (295) 252 (339) 478 (1,941) (35) INCOME FROM UNCONSOLIDATED AFFILIATES 11 60 96 129 196 218 DEBT EXPENSE (3,361) (3,273) (6,767) (6,476) (13,398) (13,012) INCOME BEFORE INCOME TAXES 9,238 10,923 18,726 19,678 37,924 36,853 INCOME TAXES 3,427 4,054 6,641 7,301 12,387 13,361 NET INCOME $5,811 $6,869 $12,085 $12,377 $25,537 $23,492
QUESTAR PIPELINE COMPANY CONDENSED BALANCE SHEETS (Unaudited)
June 30, December 31, 1995 1994 1994 (In Thousands) ASSETS Current assets Cash and short-term investments $1,340 $1,448 Accounts receivable $13,850 12,847 15,236 Federal income tax receivable 1,008 1,080 Inventories 2,984 2,892 2,583 Other current assets 2,392 1,801 2,809 Total current assets 20,234 18,880 23,156 Property, plant and equipment 622,427 587,964 615,313 Less allowances for depreciation 211,009 197,182 203,008 Net property, plant and equipment 411,418 390,782 412,305 Investment in unconsolidated affiliates 7,759 7,460 7,988 Other assets 11,159 10,884 11,594 $450,570 $428,006 $455,043 LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities Checks outstanding in excess of cash balances $643 Notes payable to Questar Corporation 7,700 $21,100 $14,600 Accounts payable and accrued expenses 12,356 12,767 13,305 Total current liabilities 20,699 33,867 27,905 Long-term debt 134,516 134,497 134,506 Deferred credits 4,611 2,540 4,861 Deferred income taxes 69,202 67,597 68,814 Common shareholder's equity Common stock 6,551 6,551 6,551 Additional paid-in capital 82,034 57,034 82,034 Retained earnings 132,957 125,920 130,372 Total common shareholder's equity 221,542 189,505 218,957 $450,570 $428,006 $455,043
QUESTAR PIPELINE COMPANY CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
6 Months Ended June 30, 1995 1994 (In Thousands) OPERATING ACTIVITIES Net income $12,085 $12,377 Depreciation 9,059 8,216 Deferred income taxes 388 262 Income from unconsolidated affiliates (96) (129) 21,436 20,726 Change in operating assets and liabilities 870 (2,472) NET CASH PROVIDED FROM OPERATING ACTIVITIES 22,306 18,254 INVESTING ACTIVITIES Capital expenditures Purchase of property, plant and equipment (9,209) (27,170) Other investments (326) (186) Total capital expenditures (9,535) (27,356) Proceeds from the disposition of property, plant and equipment 1,538 1 CASH USED IN INVESTING ACTIVITIES (7,997) (27,355) FINANCING ACTIVITIES Increase (decrease) in notes payable to Questar Corporation (6,900) 18,100 Checks outstanding in excess of cash balance 643 Payment of dividends (9,500) (9,000) CASH (USED IN) PROVIDED FROM FINANCING ACTIVITIES (15,757) 9,100 DECREASE IN CASH AND SHORT-TERM INVESTMENTS ($1,448) ($1)
QUESTAR PIPELINE COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS June 30, 1995 (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 six-month periods ended June 30, 1995, are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. 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, 1994. QUESTAR PIPELINE COMPANY MANAGEMENT'S ANALYSIS June 30, 1995 Operating Results -- Following is a summary of operating information for the Company:
3 Months Ended 6 Months Ended 12 Months Ended June 30, June 30, June 30, 1995 1994 1995 1994 1995 1994 Natural gas volumes (in thousands of decatherms) Transportation For unaffiliated customers 38,978 33,130 77,547 57,668 149,129 109,118 For Mountain Fuel 15,553 8,702 44,752 43,212 77,481 85,236 For other affiliated customers 10,133 12,101 16,359 21,116 40,336 38,447 Total transportation 64,664 53,933 138,658 121,996 266,946 232,801 Gathering For unaffiliated customers 10,126 9,887 19,747 20,086 39,461 39,069 For Mountain Fuel 7,470 7,638 16,860 18,202 30,756 35,364 For other affiliated customers 1,815 3,736 3,095 6,821 8,359 16,775 Total gathering 19,411 21,261 39,702 45,109 78,576 91,208 Natural gas revenues (per decatherm) Transportation $0.25 $0.28 $0.23 $0.25 $0.24 $0.25 Gathering 0.28 0.34 0.28 0.28 0.28 0.25
Revenues reported in the 1995 periods were higher than the amounts reported in the 1994 periods primarily because of increased storage activities. Storage revenues improved as a result of increased firm commitments at the Clay Basin storage reservoir. Contracts for gas storage services at Clay Basin were boosted from 31 Bcf to 41.8 Bcf in May 1994 and to 46.3 Bcf in May 1995. Storage services have remained fully subscribed. Transportation revenues from customers paying interruptible rates were lower in 1995 due to decreasing volumes. Questar Pipeline's interruptible transportation service competes with a lower priced service offered as released capacity from firm transportation customers. The amount of gas volumes gathered decreased in the 1995 periods primarily because of lower gas production from Questar Pipeline's affiliated customers. In addition, gathering revenues were higher in 1994 because of a one-time adjustment. In April 1994, the Federal Energy Regulatory Commission (FERC) approved a gathering agreement between Questar Pipeline and Mountain Fuel retroactive to September 1, 1993, which allocated 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. Operating and maintenance expenses were higher in the 3- and 6-month periods of 1995 when compared to the same periods of 1994 primarily because of increased labor costs and volume-related costs. Labor costs increased due to less construction activities, additional employees and merit increases in 1995. The increase in volume-related costs was offset by an increase in storage and transportation revenues. Operating and maintenance expenses were 1% lower for the 12 months ended June 30, 1995, because of the transfer of activities to Mountain Fuel associated with the gas-purchase function in the last half of 1993. Depreciation expense was higher in the periods ended June 30, 1995, because of capital spending for storage, gathering, and transmission activities. Interest and other income (expense) was an expense in the 1995 periods presented because of the costs of evaluating other business opportunities, reductions in value of certain investments, less AFUDC (cost of capital) capitalization and lower interest income. The Blacks Fork gas processing plant in southwestern Wyoming began operations in June of 1995. Its results of operations are included with income from unconsolidated affiliates. The effective income tax rate of 35.5% in the first half of 1995 was lower than the 37.1% in the first half of 1994 after a downward revision of tax expense estimates. Questar Pipeline filed a general rate case with the FERC on July 31, 1995, seeking a $23.3 million increase in revenues. The request for additional revenues is intended to recover the costs of enhanced service to customers, meet regulatory requirements and collect the costs associated with employee postretirement benefits. Questar Pipeline, currently earning about a 13% return on equity, asked for a 14.5% return on equity. Included in the filing are requests to recover $2.8 million of transition costs associated with FERC Order No. 636, $1.6 million for employee postretirement and long-term disability costs and $1 million of increased labor. Questar Pipeline requested that the new rates become effective by January 1, 1996, to coincide with its request to spin-down gathering assets. Questar Pipeline concurrently filed a plan with the FERC to transfer about $60 million of gathering assets, an amount which is net of accumulated depreciation, to Questar Gas Management Company, a wholly-owned subsidiary. Questar Pipeline requested an effective date of January 1, 1996, for the transaction. Liquidity and Capital Resources -- Operating Activities: Net cash provided from operating activities was $22,306,000 for the first half of 1995 compared with $18,254,000 for the same period of 1994. An increase in cash flow resulted from collection of receivables and higher depreciation. Investing Activities: Capital expenditures were $9,535,000 in the first half of 1995, compared with $27,356,000 in the corresponding 1994 period. Capital expenditures for calendar year 1995 are estimated at $30,300,000. Financing Activities: First half financing activities in 1995 reflect a repayment of debt because cash flow from operating activities was more than sufficient to fund capital expenditures. Financing activities for the first half of 1994 reflects increased debt largely due to funding a higher level of capital expenditures. 1995 capital expenditures are expected to be financed from cash flow provided from operations and amounts borrowed from Questar Corporation. The Company has a short-term line-of-credit arrangement with a bank totaling $200,000. No amounts were borrowed under the short-term line-of-credit arrangement at June 30, 1995. In addition, Questar Corporation, Questar Pipeline's parent company, loans funds to the Company under a short-term arrangement. PART II OTHER INFORMATION Item 5. Other Information. a. On July 31, 1995, Questar Pipeline Company (Questar Pipeline or the Company) filed a general rate case application with the Federal Energy Regulatory Commission (the FERC). In its application, the Company is seeking authorization to increase its rates to collect an additional $23.3 million in annualized revenues, including a return on equity of 14.5 percent. Questar Pipeline's requested revenue increase includes transition costs associated with Order No. 636, postemployment costs, increased labor costs, and the costs of facilities added since the Company's last general rate case. Questar Pipeline requested that the new rates be effective September 1, 1995, or at the latest January 1, 1996, to coincide with the desired date for transferring gathering assets to a wholly-owned subsidiary (see Item 5b below). The FERC generally permits rates to become effective, subject to refund, six months after the filing date, which would be February 1, 1996. b. Questar Pipeline, on July 31, 1995, also requested that the FERC approve its application to abandon specified gathering facilities, which is required before it can spin-down its gathering facilities to Questar Gas Management Company (Questar Gas Management). On August 1, 1995, Questar Gas Management, which is a wholly-owned subsidiary of the Company, requested that the FERC issue a declaratory order acknowledging that the gathering facilities and services to be assumed by Questar Gas Management are, in fact, nonjurisdictional. Questar Pipeline and Questar Gas Management have proposed that the transfer be effective January 1, 1996. Questar Gas Management was organized in 1993 to conduct activities such as gas processing, field services, and gathering that are not subject to regulation by the FERC. 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) August 11, 1995 /s/A. J. Marushack (Date) A. J. Marushack President and Chief Executive Officer August 11, 1995 /s/W. F. Edwards (Date) W. F. Edwards Vice President and Chief Financial Officer EX-27 2
5 The following schedule contains summarized financial information extracted from the Questar Pipeline Company Statements of Income and Balance Sheet for the period ended June 30, 1995, and is qualified in its entirety by reference to such unaudited financial statements. 1,000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 0 0 14,858 0 2,984 20,234 622,427 211,009 450,570 20,699 134,516 6,551 0 0 214,991 450,570 0 59,400 0 22,992 10,672 0 6,767 18,726 6,641 12,085 0 0 0 12,085 0 0
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