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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____.
Commission File No. 1-8796
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
Questar Corporation
180 East 100 South
P.O. Box 45433
Salt Lake City, Utah 84145-0433
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FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000.
Commission File Number 1-8796.
A. The full title of the plan is the Questar Corporation Employee
Investment Plan. The address of the plan is the same as that of the issuer named
below.
B. The name of the issuer of the securities held pursuant to the
plan and the address of its principal executive office are: Questar Corporation,
180 East 100 South, P.O. Box 45433, Salt lake city, Utah 84145-0433.
C. Financial statements and schedules prepared in accordance with
the Employee retirement Income Security Act of 1974 for the fiscal year ended
December 31, 2000, are attached as an exhibit to this Form 11-K
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the members of the Questar Corporation Employee Benefits Committee have duly
caused this annual report to be signed by its duly authorized chairman.
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
Date: June 27, 2001 By: /s/ R. D. Cash
R. D. Cash, Chairman
Employee Benefits Committee
Financial Statements
and Schedules
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
YEARS ENDED DECEMBER 31, 2000 AND 1999
WITH REPORT OF INDEPENDENT AUDITORS
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
FINANCIAL STATEMENTS
AND SCHEDULES
YEARS ENDED DECEMBER 31, 2000 AND 1999
CONTENTS
Report of Independent Auditors.................................................2
Audited Financial Statements
Statements of Net Assets Available for Benefits................................3
Statement of Changes in Net Assets Available for Benefits......................4
Notes to Financial Statements..................................................5
Schedules
Schedule of Assets Held for Investment Purposes at End of Year................11
Schedule of Reportable Transactions...........................................12
REPORT OF INDEPENDENT AUDITORS
Participants in Questar corporation
Employee Investment Plan
We have audited the accompanying statements of net assets available for benefits
of Questar Corporation Employee Investment Plan as of December 31, 2000 and
1999, and the related statement of changes in net assets available for benefits
for the years then ended. 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 in accordance with auditing standards generally accepted
in the 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. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2000 and 1999, and the changes in its net assets available for
benefits for the year ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 2000, and reportable
transactions for the year then ended, are presented for purposes of additional
analysis and are not a required part of the financial statements but are
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. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in our audits of the financial statements and, in
our opinion, are fairly stated in all material respects in relation to the 2000
financial statements taken as a whole.
Ernst & Young LLP
Salt Lake City, Utah
May 25, 2001
2
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31,
2000 1999
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ASSETS
Investments at current value:
Questar Corporation common stock $ 143,853,573 $ 85,662,540
Mutual funds 26,004,703 27,029,382
Merrill Lynch Retirement Preservation Trust 1,321,779 1,948,575
Loans receivable from employees 4,325,062 3,363,507
---------------------------------
175,505,117 118,004,004
Cash and short-term investments 249,413 749,934
Contributions receivable from Questar Corporation 360,000 417,800
Dividends receivable 835,147
Interest receivable 10,261 12,513
---------------------------------
176,959,938 119,184,251
LIABILITIES
Other Payable 749,914
---------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 176,959,938 $ 118,434,337
=================================
SEE ACCOMPANYING NOTES.
3
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2000
ADDITIONS
Dividends and interest income $ 5,035,078
Interest income from employee loans 374,301
Contributions:
Employees 7,992,556
Employer 5,042,367
Other 249,413
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Total contributions 13,284,336
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Total additions 18,693,715
DEDUCTIONS
Withdrawals at current value 43,721,121
Trustee fees and commissions 33,623
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Total deductions 43,754,744
NET REALIZED AND UNREALIZED APPRECIATION
OF THE CURRENT VALUE OF INVESTMENTS 83,586,630
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Net additions 58,525,601
Net assets available for benefits at
Beginning of year 118,434,337
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NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 176,959,938
==============
SEE ACCOMPANYING NOTES.
4
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
1. DESCRIPTION OF THE PLAN
The Questar Corporation Employee Investment Plan (the "Plan") is a defined
contribution plan for employees of Questar Corporation and certain of its
subsidiaries (Questar). As of August 1, 1999, the Plan is no longer an employee
stock ownership plan (ESOP) as defined in the Internal Revenue Code (the "Code")
Section 4975(e)(7).
In addition to Questar common stock, employees are able to direct the investment
of their contributions into the following funds: the 1) Merrill Lynch Retirement
Preservation Trust, which invests primarily in a broadly diversified portfolio
of Guaranteed Investment Contracts (GICs) and in obligations of U.S. government
and government-agency securities; 2) Fidelity Magellan Fund, which invests
primarily in common stocks; 3) Fidelity Puritan Fund, which invests primarily in
common stocks and bonds; 4) Fidelity Intermediate Bond Fund, which invests
primarily in high and upper-medium grade fixed-income obligations; 5) Vanguard
500 Portfolio Index Fund, which invests primarily in common stocks as it seeks
to replicate the Standard & Poor's 500 Composite Price Index; 6) Vanguard Total
International Portfolio Fund, which invests in a combination of the European,
Pacific, and Emerging Markets Vanguard International Equity Index Funds; and 7)
Vanguard Index Trust-Small Capitalization Stock Portfolio Fund, which invests in
a diversified group of small-sized companies as it attempts to track the
performance of the Russell 2000 Index. Employees are required to have any plan
change request forms submitted to the Personnel Services Department by the 25th
day of the prior month or the preceding business day if the 25th falls on a
weekend.
Participants are able to transfer all or part of their 401(k) account balance
between any of the Plan investment funds, including their Questar stock. The
Plan, however, does not permit the transfer of any portion of a participant's
account balance attributable to employer contributions. Participants who
contributed to the stock fund or any of the other investment funds received
employer matching contributions in the form of Questar shares released from an
ESOP suspense account (Note 3) or purchased on the open market, on up to 6% of
their eligible compensation contributed, at the following percentages: 100% on
the first 3% and 60% on the next 3% of eligible contributions.
Employees are eligible to participate in the Plan immediately upon hire if
scheduled to work a minimum of 20 hours per week. In 1999, all participants were
allowed to contribute from 1% to 16% of annual compensation on a pre-tax basis
pursuant to salary reduction arrangements that qualify under section 401(k) of
the Code, subject to limits imposed by Federal tax laws and to discrimination
testing.
5
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. DESCRIPTION OF THE PLAN (CONTINUED)
Beginning in the year 2000, the contribution maximum was increased to 19% of
monthly compensation on a pre-tax basis, subject to the same limits. The ability
to have after-tax payroll deductions made to the Plan was terminated as of
January 1, 1999.
The Plan provides an additional $200 annual employer contribution at the end of
the Plan year in the form of shares of Questar stock to each employee working a
minimum of 20 hours per week with at least one year of service at the beginning
of the Plan year and employed on the last day of the Plan year. This
contribution is made irrespective of whether the eligible employee otherwise
participates in the Plan.
Beginning in 1999, employees have the opportunity to borrow up to 50% of the
value of their Plan account balance, not to exceed $50,000. Beginning in 2000,
employees are allowed a maximum of three outstanding loans. The interest rate is
fixed and is equal to prime plus one percent, set at the time the loan is made.
The participant can elect loan repayment terms up to a maximum of five years
(ten years if the loan is to purchase or build a primary residence) and
repayment is by payroll deductions. Upon termination of employment, the
participant can either elect to repay the loan or treat the loan as a taxable
distribution from their account.
The Plan provides for the direct rollover of taxable amounts withdrawn from the
Plan to the trustee of the participant's Individual Retirement Account (IRA) or
other qualified plan, if the participant so elects.
The rules for in-service withdrawals of Questar shares and investment funds
allocated to participants' accounts and for distributions of such amounts upon
termination of employment, disability or death are set forth in the Summary Plan
Description of the Plan.
In 1999, participants were fully vested in all shares and funds allocated to
their individual accounts. Beginning in 2000, employees hired or who became
eligible after January 1, 2000 must have one year of service before any employer
contributions and earnings thereon are vested. Forfeited balances of terminated
participants' nonvested accounts are allocated among participants to offset
employer matching contributions. Amounts forfeited during 2000 were negligible.
Should the Plan terminate at some future time, all amounts vested and allocated
to the participants' accounts would be distributed to them.
6
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual amounts could differ from the estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
Investment in Questar common stock is stated at current value based on the
closing market price on the last business day of the year on the New York Stock
Exchange. The mutual funds are valued at published market prices which represent
the net asset value of shares held by the Plan at year end. The Merrill Lynch
Retirement Preservation Trust is valued at cost plus interest earned, which
approximates market. Participant loans and short-term investments are valued at
cost which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
DIVIDENDS
Questar has a Dividend Reinvestment and Stock Purchase Plan (DRP) whereby
participants may reinvest dividends to purchase additional shares of Questar
common stock at market value. Beginning in 1999, dividends on all shares of
Questar stock held in the Plan are reinvested through the DRP. Dividends paid on
leveraged shares were applied to the principal and interest payments on the
promissory note payable to Questar until the note was repaid in 1999.
WITHDRAWALS
Withdrawals are recorded based on current prices at the date withdrawn. The
differences between cost and current value at the time of withdrawal are
included in the financial statements as realized gains or losses.
ADMINISTRATIVE EXPENSES
Legal, accounting, and other administrative expenses except commissions and a
portion of the trustee fees have been paid by Questar.
7
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. ACCOUNTING POLICIES (CONTINUED)
OTHER CONTRIBUTIONS
Other contributions represent Plan assets and contributions that are unallocated
to participants' accounts at the end of the year.
3. SECURITY ACQUISITION LOANS
In 1989 the Plan issued two promissory notes payable to Questar and used the
proceeds to purchase leveraged shares of Questar common stock. The leveraged
shares were held in a separate suspense account established under the Trust and
were released and allocated to eligible participants as the notes were repaid
over a ten-year period. The final balance was repaid July 1, 1999, and all
remaining shares were allocated to employees throughout 1999.
4. INCOME TAXES
The Plan has received a determination letter from the Internal Revenue Service
dated January 19, 2000, stating that the plan is qualified under Section 401(a)
of the Internal Revenue Code and, therefore, the related trust is exempt from
taxation. Once qualified, the Plan is required to operate in conformity with the
Code to maintain its qualification. The Plan Administrator believes the Plan is
being operated in compliance with the applicable requirements of the Code and,
therefore, believes that the Plan is qualified and the related trust is tax
exempt.
5. NON-PARTICIPANT DIRECTED INVESTMENTS
The only non-participant directed investments in the Plan consist primarily of
Questar employer contributions held in the Questar Corporation Common Stock
Fund, which also holds participant directed investments. Presently, the
investment activity cannot be split between participant directed 401(k)
contributions and non-participant directed employer contributions. Consequently,
information about the net assets and the significant components of changes in
net assets related to these investments are classified as non-participant
directed as follows:
DECEMBER 31,
2000 1999
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Investments at fair value:
Questar Corporation common stock $143,853,573 $85,662,540
8
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. NON-PARTICIPANT DIRECTED INVESTMENTS (CONTINUED)
YEAR ENDED
DECEMBER 31, 2000
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Change in net assets:
Contributions $ 7,376,055
Dividends 2,960,992
Net realized and unrealized appreciation in fair value 86,418,733
Withdrawals (37,283,221)
Loan distributions (687,348)
Transfers out (594,178)
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Total $ 58,191,033
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6. INVESTMENTS
During 2000, the Plan's investments appreciated (depreciated) in fair value as
determined by quoted market prices as follows.
NET REALIZED AND
UNREALIZED
APPRECIATION IN FAIR
VALUE OF INVESTMENTS
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Common stock $ 86,418,733
Shares of registered investment companies (2,832,103)
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83,586,630
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Investments that represent 5% or more of the current value of the Plan's net
assets are as follows:
DECEMBER 31,
2000 1999
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Questar Corporation Common Stock $143,853,573 $85,662,540
Fidelity Magellan Fund 10,382,647 11,551,672
Vanguard 500 Portfolio Index Fund 8,750,855 8,708,341
9
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
YEAR ENDED
DECEMBER 31, 2000
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Net assets available for benefits per the financial statements $ 176,959,938
Amounts allocated to withdrawn participants (39,431)
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Net assets available for benefits per the Form 5500 176,920,507
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The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
YEAR ENDED
DECEMBER 31, 2000
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Benefits paid to participants per the financial statements $ 43,721,121
Amounts allocated on Form 5500 to withdrawn participants 39,431
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Benefits paid to participants per the Form 5500 $ 43,760,552
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Amounts allocated to participants who have withdrawn from the Plan are recorded
on the Form 5500 for benefit claims that have been processed and approved for
payment prior to year-end but not yet paid.
8. RELATED PARTY TRANSACTIONS
During 2000, the Plan received dividends from the Company of $3,812,863.
Purchases of Questar Corporation common stock amounted to $12,103,441. Sales of
Questar Corporation common stock were $3,047,920 in 2000.
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EJN 87-0407509
PLAN #002
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
SCHEDULE H, LINE 4i-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT END OF YEAR
DECEMBER 31, 2000
IDENTITY OF
ISSUE, BORROWER,
LESSOR OR
SIMILAR PARTY DESCRIPTION OF INVESTMENTS COST CURRENT VALUE
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Common Stock:
Questar Corporation(1) Common Stock, 4,785,548 shares $ 70,515,877 $ 143,853,573
Mutual Funds:
Fidelity Magellan Fund, 87,030 units (2) 10,382,647
Fidelity Puritan Fund, 232,812 units (2) 4,383,848
Fidelity Intermediate Bond Fund, 40,442 units (2) 406,041
Vanguard 500 Portfolio Index Fund, 71,811 units (2) 8,750,855
Vanguard Total International Portfolio Fund,
89,433 units (2) 1,058,001
Vanguard Index Trust Small Capitalization Stock
Portfolio Fund, 52,639 units (2) 1,023,311
Merrill Lynch Retirement Preservation Trust,
1,321,779 units (2) 1,321,779
Participant loans(1) Loans receivable from employees at
interest rates from 8.40% to 10.50%
maturing through 2010 4,325,062
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$ 70,515,877 $ 175,505,117
================================
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(1) Party in interest to the Plan
(2) Investments are participant directed, thus cost information is not
applicable
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EJN 87-0407509
PLAN #002
QUESTAR CORPORATION
EMPLOYEE INVESTMENT PLAN
SCHEDULE H, LINE 4j-SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 2000
CURRENT VALUE
IDENTITY OF DESCRIPTION PURCHASE SELLING COST OF OF ASSET ON NET GAIN
PARTY INVOLVED OF ASSETS PRICE PRICE ASSET TRANSACTION DATE OR LOSS
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Category (i) - Single Transaction in Excess of 5% of Plan Assets
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None
Category (ii) - Series of Transactions (Other than Securities Transactions)
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With the Same Person Aggregating 5% of Plan Assets
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None
Category (iii) - A Series of Transactions in Excess of 5% of Plan Assets
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Questar Corporation Common Stock $12,103,441 $12,103,441 $12,103,441
Questar Corporation Common Stock $40,331,141 $22,041,210 $40,331,141 $18,289,931
Category (iv) - Transactions in Securities with a Person if Any Single
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Transaction with that Person was in Excess of 5% of Plan Assets
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None
Columns for "lease rental" and "expense incurred with transaction" are not
applicable.
12