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 MARCH 31, 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 April 30, 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 12 Months Ended
March 31, March 31,
1995 1994 1995 1994
(In Thousands)
REVENUES $29,565 $27,750 $117,423 $121,227
OPERATING EXPENSES
Natural gas purchases 10,853
Operating and maintenance 11,364 11,279 42,863 45,890
Depreciation 4,114 3,674 15,893 14,302
Other taxes 1,234 1,134 4,599 4,006
TOTAL OPERATING EXPENSES 16,712 16,087 63,355 75,051
OPERATING INCOME 12,853 11,663 54,068 46,176
INTEREST AND OTHER
INCOME (EXPENSE) (44) 226 (1,394) 2
INCOME FROM UNCONSOLIDATED
AFFILIATES 85 69 245 179
DEBT EXPENSE (3,406) (3,203) (13,310) (13,003)
INCOME BEFORE INCOME TAXES 9,488 8,755 39,609 33,354
INCOME TAXES 3,214 3,247 13,014 11,953
NET INCOME $6,274 $5,508 $26,595 $21,401
QUESTAR PIPELINE COMPANY
CONDENSED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994 1994
(In Thousands)
ASSETS
Current assets
Cash and short-term investments $2,004 $1,448
Accounts receivable $18,837 11,221 15,236
Federal income tax receivable 1,080
Inventories 2,569 2,730 2,583
Other current assets 2,523 1,989 2,809
Total current assets 23,929 17,944 23,156
Property, plant and equipment 618,240 566,191 615,313
Less allowances for depreciation 207,407 193,365 203,008
Net property, plant and
equipment 410,833 372,826 412,305
Investment in unconsolidated
affiliates 8,208 7,214 7,988
Other assets 11,024 10,127 11,594
$453,994 $408,111 $455,043
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Checks outstanding in excess of
cash balances $2,652
Notes payable to Questar
Corporation 7,800 $300 $14,600
Accounts payable and
accrued expenses 14,751 17,224 13,305
Total current liabilities 25,203 17,524 27,905
Long-term debt 134,511 134,492 134,506
Deferred credits 4,812 1,485 4,861
Deferred income taxes 68,987 67,474 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 131,896 123,551 130,372
Total common shareholder's
equity 220,481 187,136 218,957
$453,994 $408,111 $455,043
QUESTAR PIPELINE COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
3 Months Ended
March 31,
1995 1994
(In Thousands)
OPERATING ACTIVITIES
Net income $6,274 $5,508
Depreciation 4,523 4,091
Deferred income taxes 173 139
Income from unconsolidated affiliates (85) (69)
10,885 9,669
Change in operating assets and liabilities (249) 3,282
NET CASH PROVIDED FROM
OPERATING ACTIVITIES 10,636 12,951
INVESTING ACTIVITIES
Capital expenditures
Purchase of property, plant and equipment (3,036) (5,089)
Other investments (135)
Total capital expenditures (3,171) (5,089)
Proceeds from (cost of) disposition of
property, plant and equipment (15) 1
CASH USED IN INVESTING
ACTIVITIES (3,186) (5,088)
FINANCING ACTIVITIES
Decrease in notes payable
to Questar Corporation (6,800) (2,700)
Checks outstanding in excess of
cash balances 2,652
Payment of dividends (4,750) (4,500)
CASH USED IN FINANCING
ACTIVITIES (8,898) (7,200)
CHANGE IN CASH AND SHORT-TERM
INVESTMENTS ($1,448) $663
QUESTAR PIPELINE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
March 31, 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-month period ended
March 31, 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
March 31, 1995
Operating Results --
Following is a summary of operating information for the Company:
3 Months Ended 12 Months Ended
March 31, March 31,
1995 1994 1995 1994
<S >
Natural gas volumes (in thousands of
decatherms)
Transportation
For unaffiliated customers 38,569 24,538 143,281 107,880
For Mountain Fuel 29,199 34,510 70,630 86,312
For other affiliated
customers 6,226 9,015 42,304 35,990
Total transportation 73,994 68,063 256,215 230,182
Sales for resale to
Mountain Fuel 3,298
Total system throughput 73,994 68,063 256,215 233,480
Gathering
For unaffiliated customers 9,621 10,199 39,222 38,091
For Mountain Fuel 9,390 10,564 30,924 34,007
For other affiliated
customers 1,280 3,085 10,280 15,939
Total gathering 20,291 23,848 80,426 88,037
Natural gas revenues (per decatherm)
Transportation $0.21 $0.23 $0.24 $0.24
Gathering 0.28 0.23 0.29 0.22
Sales for resale 7.57
Revenues were higher in the first quarter of 1995 when compared to the
first quarter of 1994 due primarily to increased firm-storage service at
Questar Pipeline's Clay Basin storage reservoir. This increased storage
service was responsible for $1,782,000 of the improvement in revenues.
Working gas storage capacity increased from 31 Bcf to 41.8 Bcf in May
1994 and contracts are in place to increase capacity to 46.3 Bcf
beginning May 1995. Storage capacity is fully subscribed.
Revenues reported for the 12-month period of 1995 were lower than was
reported in the comparable 1994 period due largely to the discontinuance
of sales for resale effective September 1, 1993 with the adoption of
FERC Order No. 636.
Transportation revenues were slightly lower in the first quarter of 1995
because of lower interruptible- transportation volumes. Most of
Questar Pipeline's transportation capacity is reserved by
firm-transportation customers.
Volumes gathered in the 1995 periods were lower than the quantities
gathered in the same periods of 1994 primarily because of imputed
volumes used for rate design and warmer weather. Billings for gas
gathered for Mountain Fuel in 1993 and 1992 were based on imputed
volumes, which were substantially higher than volumes gathered. Higher
average gathering rates more than offset the decrease in volumes and
resulted in higher revenues in the 1995 periods. The higher revenues
were the product of a shift in rates to the usage component. Under
current gathering agreements about 55% of revenues are collected through
the usage component of rates and about 45% in the reservation component.
Questar Pipeline currently plans to file a general rate case in either
the second quarter or third quarter of 1995 because of its capital
expenditure program, recent adoption of new accounting rules for
postretirement and postemployment costs, and loss of
interruptible-transportation revenues.
Operating and maintenance expenses increased less than 1% in the first
quarter of 1995 compared with the same quarter in 1994. Operating and
maintenance expenses were 7% lower in the 12-month period ended March
31, 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 March 31, 1995,
because of capital spending for gathering, transmission and storage
activities.
The effective income tax rate of 33.9% in the first quarter of 1995 was
lower than the 37.1% in the first quarter of 1994 after a downward
revision of tax expense estimates.
Interest and other income (expense) was an expense in the 1995 periods
presented. The first quarter of 1995 was lower because of less AFUDC
(cost of capital) capitalized and lower interest income. The 12-month
period ended March 31, 1995 includes the reduction in value of certain
investments.
Liquidity and Capital Resources --
Operating Activities:
Net cash provided from operating activities was $10,636,000 for the
first three months of 1995 compared with $12,951,000 for the same period
of 1994. An increase in cash flow from income and depreciation was
more than offset by an increase in construction costs receivable from
the Blacks Fork Plant partnership.
Investing Activities:
Capital expenditures were $3,171,000 in the first three months of 1995,
compared with $5,089,000 in the corresponding 1994 period. Capital
expenditures for calendar year 1995 are estimated at $41,000,000.
Financing Activities:
The Company has a short-term line-of-credit arrangement with a bank
totaling $200,000. In addition, Questar Corporation, its parent
company, loans funds to the Company under a short-term arrangement. As
of March 31, amounts borrowed from Questar Corporation were $7,800,000
in 1995 and $300,000 in 1994. No amounts were borrowed under the
short-term line-of-credit arrangement at March 31, 1995. First quarter
financing activities in 1995 and 1994 included repayments of a portion
of the Company's loans from Questar Corporation. 1995 capital
expenditures are expected to be financed from cash flow provided from
operations and amounts borrowed from Questar Corporation.
PART II
OTHER INFORMATION
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibit is filed as part of this report.
Exhibit No. Exhibit
10.10. Partnership Agreement for the Blacks Fork Gas Processing
Company dated May 1, 1994, between Questar Gas Management
Company (a wholly owned subsidiary of Questar Pipeline
Company) and Coastal Gas Gathering and Processing Company
(an indirect wholly owned subsidiary of The Coastal
Corporation).
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)
May 12, 1995 /s/ A. J. Marushack
(Date) A. J. Marushack
President and Chief
Executive Officer
May 12, 1995 /s/ W. F. Edwards
(Date) W. F. Edwards
Vice President and Chief
Financial Officer