SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20005
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report - July 28, 1997
(Date of earliest event reported)
Mountain Fuel Supply Company
(Exact name of registrant as specified in charter)
STATE OF UTAH 1-935 87-0407509
(State or other juris- (Commission (I.R.S. Employer
diction of incorporation File No.) Identification No.)
or organization)
180 East First South Street, Salt Lake City, Utah 84111
(Address of principal executive offices)
Registrant's telephone number, including area code (801) 324-5555
Not Applicable
(Former name or former address, if changed since last report.)
<PAGE>
FORM 8-K
CURRENT REPORT
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Exhibit
99.1. Earnings release issued by Questar Corporation, the parent of
Mountain Fuel Supply Company (Mountain Fuel), on July 28, 1997.
99.2. Mountain Fuel's condensed balance sheet for the periods ending
June 30, 1997.
99.3. Mountain Fuel's income statement for the periods ending June 30,
1997.
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.
MOUNTAIN FUEL SUPPLY COMPANY
(Registrant)
July 28, 1997 By /s/D. N. Rose
(Date) D. N. Rose
President and
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The following schedule contains summarized financial information extracted
from the Mountain Fuel Supply Company Statements of Income and Balance Sheet
for the period ended June 30, 1997, and is qualified in its entirety by
reference to such unaudited financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 32,626
<ALLOWANCES> 0
<INVENTORY> 10,745
<CURRENT-ASSETS> 95,212
<PP&E> 840,247
<DEPRECIATION> 339,133
<TOTAL-ASSETS> 615,840
<CURRENT-LIABILITIES> 111,042
<BONDS> 175,000
4,808
0
<COMMON> 22,974
<OTHER-SE> 201,032
<TOTAL-LIABILITY-AND-EQUITY> 615,840
<SALES> 0
<TOTAL-REVENUES> 238,636
<CGS> 0
<TOTAL-COSTS> 180,086
<OTHER-EXPENSES> 20,591
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,807
<INCOME-PRETAX> 30,891
<INCOME-TAX> 11,185
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,706
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
Item 7. Financial Statements and Exhibits.
July 28, 1997
(N)
NYSE: STR
97-10
Contact: R. Curtis Burnett
(801) 324-5541
QUESTAR REPORTS SECOND-QUARTER, FIRST-HALF EARNINGS
SALT LAKE CITY - Questar Corp.'s (NYSE:STR) net income was lower for
the second quarter of 1997 while remaining above last year's level for
the six months ended June 30.
The integrated energy-services company reported net income of
$13.6 million, or $.32 per share, in the second quarter of this year
versus $16.1 million, or $.39 per share, in the prior-year period.
Earnings for the first half of 1997 were $54.6 million, or $1.32 per
share, compared with $50.7 million, or $1.24 per share, a year earlier.
R.D. Cash, Questar chairman, president and chief executive
officer, said continued strong customer growth in the retail
distribution business and higher natural gas production and prices were
offset by several short-term "anomalies."
"While our earnings were higher than expected in the first
quarter and lower in the second quarter, we are generally where we
planned to be at midyear, and we remain confident about our prospects
for the full year," he said.
Market Resources
Net income for Questar's Market Resources group was $8.4 million
in the second quarter of 1997 compared with $8.9 million a year earlier.
The group conducts exploration and production, gas gathering and
processing, wholesale energy trading and retail energy services.
Gas production rose 29% to 11.9 billion cubic feet (Bcf) from 9.2
Bcf in the 1996 quarter, primarily reflecting gas reserves and
properties acquired in the third quarter of 1996. Gas prices increased
12% to an average of $1.60 per thousand cubic feet (Mcf) compared with
the year-earlier average price of $1.43 per Mcf. The group's oil and
natural-gas-liquids production increased 32% to 748,000 barrels with an
average price of $18.46 per barrel compared with
$18.43 a year earlier.
However, improved second-quarter performance by the group's
exploration and production subsidiaries was offset by several factors:
energy-trading losses amounting to $156,000 due to increased competition
and smaller margins; start-up costs incurred by a retail energy-services
subsidiary; and lower activity and income from development drilling on
behalf of Questar's retail gas-distribution utility.
For the first half of 1997, Market Resources' net income was $20
million versus $18.2 million for the year-earlier period.
Regulated Services
Net income for Questar's Regulated Services group - which conducts
retail gas distribution and interstate transmission and storage - was
$2.9 million in the second quarter of 1997, down from $4.9 million in
the year-earlier period.
Mountain Fuel Supply Co. - a retail gas-distribution utility -
recorded a $2.6 million loss during the current-year quarter following a
$617,000 loss in the 1996 period. The utility's 1996 second-quarter loss
was reduced by several non-recurring items, including a $1.2 million
before-tax gain from the sale of company facilities.
Although total deliveries were 4% higher in the 1997 quarter,
Mountain Fuel's results were affected by higher operating and
maintenance expenses associated with continuing record customer growth
and other factors. The utility's customer base grew to 622,000 on June
30, 1997, a 4.1% annual rate that is among the highest in the industry.
A $2.85 million annual rate reduction also went into effect during the
first quarter.
Questar Pipeline Co., a natural gas-transmission and storage
subsidiary, had net income of $5.5 million during the 1997 quarter,
virtually the same as a year earlier. Total transportation volumes
increased 3% to 64.6 million decatherms, and gas-storage revenues were
higher.
For the six-month period, Regulated Services earned $31.5 million,
9% higher than for the first half of 1996. Mountain Fuel earned $19.7
million and Questar Pipeline $11.8 million compared with $18.2 million
and $10.8 million, respectively, a year earlier.
Other Operations
Questar's other operations, including a communications/technology
company and corporate activities, earned $2.3 million in the second
quarter, the same as the 1996 quarter. Net income was augmented by the
sale of shares in Nextel Communications Inc. (a
communications-technology company) that generated a $1.8 million
after-tax gain in 1997 compared with $1.9 million in the 1996 quarter.
First-half net income was $3.1 million versus $3.5 million for the
comparable year-earlier period.
Questar is an integrated energy-services company with $1.8 billion
in assets distributed between regulated services, such as retail natural
gas distribution and interstate gas transportation, and market-resources
activities, including gas-and-oil exploration and production, wholesale
and retail energy marketing, gas gathering and other field services.
The news release contains some forward-looking statements about
the future operations and expectations of Questar Corp. and
subsidiaries. According to management, these statements are made in good
faith and are reasonable expectations of the company's expected
performance at the time. Actual results may vary from management's
stated expectations and projections due to a variety of factors.
<TABLE>
<CAPTION>
1997 1996
(unaudited)
<S> <C> <C>
Three months ended June 30
Revenues $151,453,000 $148,968,000
Operating income 23,448,000 25,169,000
Net income $13,607,000 $16,068,000
Earnings per common share $.32 $.39
Average common shares outstanding 41,088,000 40,789,000
Six months ended June 30
Revenues $509,831,000 $374,691,000
Operating income 95,370,000 86,230,000
Net income $54,581,000 $50,664,000
Earnings per common share $1.32 $1.24
Average common shares outstanding 41,067,000 40,753,000
Twelve months ended June 30
Revenues $953,121,000 $669,477,000
Operating income 180,763,000 152,940,000
Net Income $102,062,000 $92,815,000
Earnings per common share $2.47 $2.27
Average common shares outstanding 40,993,000 40,690,000
</TABLE>
VISIT QUESTAR'S INTERNET SITE at: http://www.questarcorp.com
Item 7. Financial Statements and Exhibits
MOUNTAIN FUEL SUPPLY COMPANY
CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, June 30, Increase
1997 1997 (Decrease)
(In Thousands)
<S> <C> <C> <C>
ASSETS
Current assets
Accounts receivable $79,441 $32,626 ($46,815)
Inventories 8,154 10,745 2,591
Purchased-gas adjustments 29,331 48,866 19,535
Other current assets 3,653 2,975 (678)
Total current assets 120,579 95,212 (25,367)
Property, plant and equipment 827,208 840,247 13,039
Less allowances for depreciation 333,171 339,133 5,962
Net property, plant and equipment 494,037 501,114 7,077
Other assets 20,736 19,514 (1,222)
$635,352 $615,840 ($19,512)
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Checks outstanding in excess of
cash balances $2,924 $2,517 ($407)
Notes payable to Questar Corporation 58,700 69,900 11,200
Accounts payable and accrued
expenses 68,559 38,625 (29,934)
Total current liabilities 130,183 111,042 (19,141)
Long-term debt 175,000 175,000
Other liabilities 10,922 11,083 161
Deferred income taxes and investment
tax credits 82,234 89,901 7,667
Redeemable cumulative preferred stock 4,808 4,808
Common shareholder's equity
Common stock 22,974 22,974
Additional paid-in capital 41,875 41,875
Retained earnings 167,356 159,157 (8,199)
Total common shareholder's equity 232,205 224,006 (8,199)
$635,352 $615,840 ($19,512)
</TABLE>
Item 7. Financial Statements and Exhibits.
MOUNTAIN FUEL SUPPLY COMPANY
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended 12 Months Ended
June 30, June 30, June 30,
1997 1996 1997 1996 1997 1996
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
REVENUES $63,323 $57,927 $238,636 $202,830 $407,734 $357,488
OPERATING EXPENSES
Natural gas purchases 29,669 25,144 126,880 100,609 208,671 175,940
Operating and maintenance 25,802 23,746 53,206 49,167 101,149 93,981
Depreciation 7,369 6,842 15,302 13,943 29,668 26,615
Other taxes 2,546 2,732 5,289 5,851 7,509 9,261
TOTAL OPERATING EXPENSES 65,386 58,464 200,677 169,570 346,997 305,797
OPERATING INCOME (LOSS) (2,063) (537) 37,959 33,260 60,737 51,691
INTEREST AND OTHER INCOME 1,016 1,890 1,739 2,599 2,173 5,111
DEBT EXPENSE (4,465) (3,901) (8,807) (8,173) (17,271) (16,594)
INCOME (LOSS) BEFORE
INCOME TAXES (5,512) (2,548) 30,891 27,686 45,639 40,208
INCOME TAXES (CREDITS) (2,909) (1,931) 11,185 9,452 15,179 11,519
NET INCOME (LOSS) ($2,603) ($617) $19,706 $18,234 $30,460 $28,689
</TABLE>
