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. 1-8796
QUESTAR CORPORATION
(Exact name of registrant as specified in its charter)
STATE OF UTAH 87-0407509
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 45433, 180 East First South, Salt Lake City, Utah 84145-0433
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 534-5000
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, without par value 40,575,615 shares
<PAGE>
QUESTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended 12 Months Ended
June 30, June 30, June 30,
1995 1994 1995 1994 1995 1994
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C> <C>
REVENUES $138,569 $135,397 $354,501 $358,706 $666,113 $641,943
OPERATING EXPENSES
Natural gas purchases 34,559 30,453 120,147 124,237 208,438 203,814
Operating and maintenance 45,861 43,703 92,205 85,638 180,647 169,781
Depreciation and amortization 24,784 24,249 49,233 46,124 96,146 91,826
Other taxes 8,401 10,760 17,600 21,000 32,615 36,287
TOTAL OPERATING EXPENSES 113,605 109,165 279,185 276,999 517,846 501,708
OPERATING INCOME 24,964 26,232 75,316 81,707 148,267 140,235
INTEREST AND OTHER INCOME 4,322 1,424 6,037 3,003 7,991 4,937
WRITE-DOWN OF INVESTMENT IN
NEXTEL COMMUNICATIONS (61,743)
DEBT EXPENSE (10,825) (9,390) (22,082) (18,360) (43,533) (35,363)
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAX 18,461 18,266 59,271 66,350 50,982 109,809
INCOME TAXES 3,899 4,338 17,636 21,329 4,951 32,374
INCOME FROM CONTINUING
OPERATIONS 14,562 13,928 41,635 45,021 46,031 77,435
DISCONTINUED OPERATIONS
Gain from sale 38,126
Loss from operations (1,110)
NET INCOME $14,562 $13,928 $41,635 $45,021 $84,157 $76,325
EARNINGS PER COMMON SHARE
Income from continuing operation $0.35 $0.34 $1.02 $1.11 $1.12 $1.92
Gain from sale of discontinued
operations 0.95
Loss from discontinued operations (0.03)
Net income $0.35 $0.34 $1.02 $1.11 $2.07 $1.89
Dividends per common share $0.285 $0.285 $0.57 $0.56 $1.14 $1.11
Average common shares outstanding 40,529 40,269 40,490 40,232 40,422 40,197
</TABLE>
<PAGE>
QUESTAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994 1994
(In Thousands)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and short-term investments $7,549
Accounts receivable $94,470 $115,095 143,081
Inventories 25,659 23,616 30,098
Other current assets 13,570 10,313 12,397
Total current assets 133,699 149,024 193,125
Property, plant and equipment 2,296,778 2,169,918 2,263,170
Less allowances for depreciation
and amortization 1,004,792 916,665 955,536
Net property, plant and
equipment 1,291,986 1,253,253 1,307,634
Securities available-for-resale,
approximates fair value 54,748 37,578
Investment in discontinued
operations 30,667
Other assets 45,042 49,231 47,238
$1,525,475 $1,482,175 $1,585,575
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Checks outstanding in excess
of cash balances $5,134 $3,810
Short-term loans 18,000 119,900 $94,900
Accounts payable and accrued
expenses 91,500 94,723 108,243
Purchased-gas adjustments 32,372 26,106 17,071
Total current liabilities 147,006 244,539 220,214
Long-term debt 477,692 394,677 494,684
Other liabilities and deferred
credits 39,963 48,172 46,223
Deferred income taxes and
investment tax credits 167,939 158,667 164,541
Redeemable cumulative
preferred stock 6,218 7,524 6,324
Common shareholders' equity
Common stock 313,572 307,354 310,402
Retained earnings 420,102 382,084 401,577
Treasury stock, at cost (33,569) (34,040) (33,847)
Note receivable from ESOP (24,050) (26,802) (24,543)
Unrealized gain on securities,
net of income taxes 10,602
Total common shareholders'
equity 686,657 628,596 653,589
$1,525,475 $1,482,175 $1,585,575
</TABLE>
<PAGE>
QUESTAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
6 Months Ended
June 30,
1995 1994
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $41,635 $45,021
Depreciation and amortization 51,540 48,259
Deferred income taxes and
investment tax credits (3,170) (2,703)
90,005 90,577
Change in operating assets
and liabilities 46,862 6,308
NET CASH PROVIDED FROM
OPERATING ACTIVITIES 136,867 96,885
INVESTING ACTIVITIES
Capital expenditures
Purchase of property, plant
and equipment (38,724) (161,692)
Investment in discontinued
operations (1,169)
Other investments (657) (459)
Total capital expenditures (39,381) (163,320)
Proceeds from disposition of
property, plant and equipment 2,998 10,064
CASH USED IN INVESTING
ACTIVITIES (36,383) (153,256)
FINANCING ACTIVITIES
Issuance of common stock 3,874 4,420
Purchase of treasury stock (426) (213)
Redemption of preferred stock (106) (1)
Issuance of long-term debt 2,000 40,000
Repayment of long-term debt (18,992) (17,036)
Increase (decrease) in
short-term loans (76,900) 41,600
Checks outstanding in excess of
cash balances 5,134 3,810
Payment of dividends (23,339) (22,838)
Other 722 264
CASH (USED IN) PROVIDED FROM
FINANCING ACTIVITIES (108,033) 50,006
DECREASE IN CASH AND
SHORT-TERM INVESTMENTS ($7,549) ($6,365)
</TABLE>
<PAGE>
QUESTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 1995
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 consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the
year ended December 31, 1994.
<PAGE>
QUESTAR CORPORATION AND SUBSIDIARIES
MANAGEMENT'S ANALYSIS
JUNE 30, 1995
Exploration and Production Operations --
Celsius Energy, Universal Resources and Wexpro (E&P group) conduct the
Company's exploration and production operations. Following is a
summary of financial results and operating information.
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended 12 Months Ended
June 30, June 30, June 30,
1995 1994 1995 1994 1995 1994
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL RESULTS
Revenues
From unaffiliated customers $60,843 $72,354 $125,431 $138,415 $241,580 $246,993
From affiliates 14,501 18,502 31,081 38,346 70,084 71,210
Total revenues $75,344 $90,856 $156,512 $176,761 $311,664 $318,203
Operating income $10,737 $16,087 $22,547 $31,168 $50,673 $56,907
Net income 8,896 10,969 16,748 21,446 35,518 40,501
OPERATING STATISTICS
Production volumes -
Natural gas (in million
cubic feet) 8,785 10,442 17,709 18,300 37,068 35,017
Oil and natural gas liquids
(in thousands of barrels) 640 638 1,260 1,150 2,552 2,193
Production revenue
Natural gas (per thousand
cubic feet) $1.26 $1.91 $1.37 $1.99 $1.48 $1.92
Oil and natural gas liquids
(per barrel) $16.52 $14.63 $16.03 $13.84 $15.80 $14.55
Gas marketing volumes (in
thousands of decatherms) 24,651 23,059 48,579 44,798 92,722 77,700
</TABLE>
Selling prices for natural gas were lower in the 1995 periods when
compared with the same periods in 1994 resulting in lower revenues.
In response to the lower selling prices, Celsius Energy, which
operates in the Rocky Mountain region, began shutting in gas
production. By the end of the second quarter, this amounted to about
8 to 10 million cubic feet (MMcf) per day and has subsequently risen
to about 20 to 25 MMcf per day. This represents approximately 50% of
Celsius' gas production. The shut in wells are those that do not
qualify for income tax credits under the tight sands production
provisions of the income tax code. Already low selling prices of
natural gas were further weakened by an abundance of hydroelectric
power in the West this past spring which reduced demand for natural
gas. In addition increasing imports of gas from Canada have put
downward pressure on gas selling prices.
To fulfill fixed-price contract obligations, E & P is purchasing
low-cost gas on the open market and delivering it through its
gas-marketing program. Net income should be about the same, but cash
flow will be lower.
Revenues from the sale of oil and natural gas liquids were higher in
the 1995 periods presented due to higher selling prices and increased
production volumes. First half selling prices of oil and natural gas
liquids were 16% higher in 1995 when compared with the same period in
1994.
Celsius has hedge contracts in place through April 1996 on 30% to 50%
of its gas production with prices ranging from $1.35 to $1.80 per Mcf.
Universal Resources has hedges in place for 25% to 30% of its gas
production at prices ranging from $1.85 to $2.00 per Mcf. In addition,
the E & P group has hedged the price of 2,000 bbl of oil production
per day at an average price of $17.34 per bbl with no contracts
extending beyond the end of 1995.
Gas marketing volumes were higher in the 1995 periods; however, lower
margins were realized from gas marketing transactions.
Natural Gas Transmission Operations --
Questar Pipeline conducts the Company's natural gas transmission,
gathering and storage operations. Following is a summary of financial
results and operating information.
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended 12 Months Ended
June 30, June 30, June 30,
1995 1994 1995 1994 1995 1994
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL RESULTS
Revenues
From unaffiliated customers $11,285 $9,614 $22,144 $18,201 $44,355 $39,709
From affiliates 18,550 19,805 37,256 38,968 73,484 75,888
Total revenues $29,835 $29,419 $59,400 $57,169 $117,839 $115,597
Operating income $12,883 $13,884 $25,736 $25,547 $53,067 $49,682
Net income 5,811 6,869 12,085 12,377 25,537 23,492
OPERATING STATISTICS
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
</TABLE>
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.
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.
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 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.
Natural Gas Distribution --
Mountain Fuel conducts the Company's natural gas distribution
operations. Following is a summary of financial results and operating
information.
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended 12 Months Ended
June 30, June 30, June 30,
1995 1994 1995 1994 1995 1994
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL RESULTS
Revenues
From unaffiliated customers $65,984 $53,382 $205,807 $201,700 $378,347 $354,167
From affiliates 1,312 1,503 2,304 2,200 4,124 3,064
Total revenues $67,296 $54,885 $208,111 $203,900 $382,471 $357,231
Operating income (loss) $814 ($4,995) $25,291 $22,781 $41,831 $30,116
Net income (loss) 152 (3,849) 13,213 11,249 25,316 13,703
OPERATING STATISTICS
Natural gas volumes (in thousands of
decatherms)
Residential and commercial sales 13,935 9,768 43,513 39,906 77,840 68,840
Industrial sales 2,068 1,692 5,253 3,909 10,226 7,321
Transportation for industrial
customers 13,952 10,020 31,561 23,291 59,652 47,558
Total deliveries 29,955 21,480 80,327 67,106 147,718 123,719
Natural gas revenue (per decatherm)
Residential and commercial $3.97 $4.55 $4.20 $4.54 $4.25 $4.55
Industrial sales 2.49 2.65 2.55 2.98 2.56 3.01
Transportation for industrial
customers 0.10 0.12 0.10 0.12 0.10 0.11
Heating degree days
Actual 895 523 3,112 2,830 5,272 4,786
Normal 741 741 3,484 3,484 5,801 5,282
Colder (warmer) than normal 21% (29%) (11%) (19%) (4%) (9%)
Number of customers at end of
period 575,450 553,350
</TABLE>
Revenues were higher in the 1995 periods when compared with the 1994
periods because of colder temperatures, a 4% increase in the number of
customers, and increased sales and transportation to industrial
customers. The colder temperatures, although warmer than normal for
the 6- and 12-month periods ended June 30, 1995, caused an increase in
the volumes of gas sold to residential and commercial customers,
primarily for space heating purposes.
Volumes delivered to industrial customers increased 35% in the first
half of 1995 compared with the same period of 1994 resulting in
$2,019,000 more revenues. Natural gas demand was higher for customers
in the metals, chemical and electric generation industries. Margins
from gas delivered to industrial customers are substantially lower than
from gas sold to residential and commercial customers.
On August 11, 1995, the Public Service Commission of Utah approved a
settlement of Mountain Fuel's general rate case subject to issuance of
a final order. Mountain Fuel originally requested a $9.6 million
increase in rates. The settlement, which is scheduled to be in effect
September 1, will allow the Company to implement a weather
normalization adjustment and will provide about $3.7 million in
additional revenue through a new-premise fee and changes in the way
capacity release revenues are recorded. The settlement does not specify
an authorized return on equity, but increases Mountain Fuel's allowed
return on rate base from 10.08% to between 10.22% and 10.34%.
Mountain Fuel continues to consolidate and restructure operations. Of
the 169 eligible employees, 109 accepted the Company's offer of an
early retirement effective April 30, 1995. The labor savings are
expected to average $400,000 per month. Mountain Fuel is proceeding
with plans to close four regional offices and reduce functions at six
other offices. The Company predicts that its investment in customer
information system technology will enable it to increase efficiency in
serving customers with fewer employees and offices.
Consolidated Results of Operations --
Consolidated revenues for the second quarter of 1995 were 2% higher
than the amount reported for the same period in 1994 primarily as a
result of increased gas sales and deliveries by the natural gas
distribution business segment. Colder temperatures, a 4% increase in
the number of customers and increase sales and transportation to
industrial customers were the main causes. Consolidated revenues for
the first half of 1995 were 1% lower when compared with the same period
of 1994 primarily because of lower gas selling prices and a decrease in
quantities of gas produced. Consolidated revenues for the 12-months
ended June 30, 1995 were 4% higher than the revenues reported in the
same period of the prior year primarily because of increased natural
gas distribution sales and higher oil selling prices and increased
production.
Natural gas purchases were higher in the 3- and 12-month periods of
1995 because increased quantities purchased more than offset lower gas
prices at the wellhead. However, in the first half of 1995 the
increase in quantities purchased was more than offset by lower gas
prices.
Operating and maintenance expense was 5% higher in the second quarter
of 1995 when compared to the same period of the 1994 primarily due to
increased costs of serving more distribution customers and inflation.
These increases more than offset the effect of lower labor cost as a
result of Mountain Fuel's early retirement program. Operating and
maintenance expenses were 8% higher in the first half of 1995 and 6%
higher in the 12 months ended June 30, 1995, when compared with the
same periods in the prior year. The increases resulted from a gain in
the number of properties owned by the E & P group through its 1994
acquisition and drilling programs and higher costs associated with
serving a growing number of natural gas distribution customers.
Depreciation and amortization increased in the periods ended June 30,
1995, because of increased investment in property, plant and equipment
by all lines of business. Other taxes were lower in the 1995 periods
compared with the1994 periods because of lower revenues from the
production of natural gas.
Interest and other income was higher in the 1995 periods primarily due
to cash received in the second quarter of 1995 for buy-out of gas-sales
agreements. Questar has not been reporting the losses from FuelMaker's
operations beginning in the first half of 1995 after writing off its
investment in 1994.
In the third quarter of 1994, Questar Corporation sold Questar Telecom
to Nextel Communications in exchange for 3.9 million shares of Nextel
common stock and reported a $38,126,000 after-tax gain from the sale.
At year-end 1994, the Company wrote down its investment in Nextel
Communications by $61,743,000. This amounted to $38,126,000, or $.95
per share, after income taxes.
The Company sold 250,000 shares of Nextel stock in July 1995 through an
equity-swap arrangement that resulted in a $1.2 million after-tax gain.
Depending upon the market conditions for Nextel stock, the Company may
sell up to 25% of its investment this year.
Debt expense was higher in the 3-, 6- and 12-month periods of 1995 compared
with the 1994 periods because of higher interest rates on variable rate debt.
The effective income tax rate for the first half was 29.8% in 1995 and
32.1% in 1994. The effective income tax rate was lower than the
statutory income tax rate primarily due to income tax credits. The
Company recognized $4,759,000 of tight-sands gas production tax credits
in the 1995 period and $4,810,000 in the 1994 period.
Liquidity and Capital Resources --
Operating Activities:
Net cash provided from operating activities was $136,867,000 for the
first half of 1995 compared with $96,885,000 for the same period of
1994. The increase was due to higher sources of cash from changes in
working capital accounts, primarily from the collection of accounts
receivable and lower natural gas purchase prices.
Investing Activities:
Capital expenditures of $39,381,000 in the first six months of 1995,
were $123,939,000 lower than for the same period a year ago due largely
to E&P reserve and property acquisitions amounting to $96,528,000 in
1994. A comparison of capital expenditures for the first six months
of 1995 and 1994 plus an estimate for the calendar year 1995 is below.
The other operations line of the estimated 1995 capital expenditures
includes about $66,300,000 for possible special projects.
<TABLE>
<CAPTION>
Estimate
Actual 12 months
Six months Ended Ended
June 30 Dec. 31,
1995 1994 1995
(In Thousands)
<S> <C> <C> <C>
Exploration and production $10,911 $113,641 $72,500
Natural gas transmission 9,535 27,356 30,300
Natural gas distribution 16,952 19,075 50,000
Other operations 1,983 3,248 79,700
$39,381 $163,320 $232,500
</TABLE>
Financing Activities:
Financing activities in 1995 have largely been focused on repayment of
debt from the proceeds of cash flows from operations. Short-term debt
decreased $76,900,000 and long-term debt decreased $16,992,000 in the
first half of 1995. Questar borrowed $50 million in 1994 as a bridge
loan to finance the E & P group's reserve acquisitions. This loan was
repaid in August 1994 from the proceeds of an existing production-based
credit facility, that was expanded to $135,000,000.
Short-term borrowings at June 30, consisted of the following:
1995 1994
(In Thousands)
Commercial paper $69,900
Bridge loan to finance reserve acquisitions 50,000
Short-term bank loans $18,000
$18,000 $119,900
Questar Corporation had borrowed $18,000,000 on an uncommitted line at
June 30, 1995. It had the capacity at June 30, 1995, to borrow an
additional $100,000,000 under commercial paper agreements. Its
affiliates had the capacity to borrow an additional $35,700,000 through
short-term credit lines with banks.
Questar plans to finance 1995 capital expenditures with cash flow from
operations, borrowings under the existing production-based credit
facility, receipts from the sales of Nextel shares and proceeds from
its dividend reinvestment plan.
<PAGE>
PART II
OTHER INFORMATION
Item 5. Other Information.
Patrick J. Early, age 62, a recently-retired executive officer with
Amoco Corporation, was appointed to serve as a director of Questar
Corporation (Questar or the Company) as of August 1, 1995. Mr. Early
was appointed to fill a vacancy for the remainder of a three-year term
that will end in May of 1996. In his years of service with Amoco, Mr.
Early served in a number of operating and management positions, most
recently as Vice Chairman (1992 to April 1995), and as President of
Amoco Production Company (1987 to 1992).
Item 6. Exhibits and Reports on Form 8-K.
The following exhibits are filed as part of this report.
Exhibit No. Exhibit
10.3 Questar Corporation Executive Incentive Retirement
Plan, as amended and restated effective August 1,
1995.
10.8 Questar Corporation Supplemental Executive
Retirement Plan, as amended and restated effective
August 1, 1995.
10.9 Questar Corporation Equalization Benefit Plan, as
amended and restated effective August 1, 1995.
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 CORPORATION
(Registrant)
August 11, 1995 /s/R. D. Cash
(Date) R. D. Cash
Chairman of the Board,
President and Chief
Executive Officer
August 11, 1995 /s/W. F. Edwards
(Date) W. F. Edwards
Senior Vice President and Chief
Financial Officer
QUESTAR CORPORATION
EXECUTIVE INCENTIVE RETIREMENT PLAN
(as amended and restated effective August 1, 1995)
1. PURPOSE
The Executive Incentive Retirement Plan (hereinafter referred to
as the Plan) is intended to enable Questar Corporation and its
subsidiaries to meet competition and to attract and retain key
management personnel by helping such individuals to maintain their
standards of living at retirement and providing for their families in
the event of their death.
2. DEFINITIONS
Unless otherwise required by the context, the terms used herein
shall have the meanings set forth below.
"Board" shall mean the Board of Directors of Questar Corporation.
"Company" shall mean Questar Corporation and any other
organization controlled by or controlling Questar Corporation, or any
successor thereto.
"Compensation" of a Nominee shall mean the total base salary paid
to the Nominee by the Company and all Participating Corporations, but
excluding any other forms of additional compensation such as bonuses or
contributions made to or under any form of employee benefit program or
ordinary income recognized as a result of exercising stock options.
Compensation shall include any base salary deferred by the Nominee under
the Company's tax-qualified plans or nonqualified plans. Compensation
during a period of leave of absence approved by the Board shall be
assumed to be equal to the Nominee's full time earnings immediately
prior to such leave.
"Dependent" shall mean the unmarried natural or adopted child of
the Nominee prior to the attainment of age 18 by such child, provided
such child is a dependent of such Nominee as defined by the Internal
Revenue Service at the time of death of the Nominee.
"Family Protection Benefit" shall mean the benefit payments
defined in Section 6 of this Plan.
"Final Average Earnings" shall mean the highest average monthly
Compensation paid to the Nominee during any period of 36 consecutive
months of employment with the Company and/or any Participating
Corporation or the average monthly Compensation during the entire period
of employment with the Company and/or any Participating Corporation if
less than 36 months long.
"Nominee" shall mean an employee nominated for participation in
the Plan who agrees to participate by signing an agreement.
"Participating Corporation" shall mean an organization
participating in the Plan in accordance with the provisions of Section 3.
"Participating Service Units" shall mean a measure of employment
with the Company determined as follows: each Nominee shall be credited
with a total of 100 Participating Service Units for each full calendar
year of employment, disability leave, or approved absence with the
Company and/or any Participating Corporation (prorated for any calendar
year in which such Nominee has less than a full calendar year of
employment, disability leave, or approved absence). The Participating
Service Units of a Nominee for any calendar year will be allocated to
the Company and to each other Participating Corporation in the same
proportion that the amount of Compensation paid to the Nominee by each
such organization during the year bears to the total amount of
Compensation paid by all such participating organizations to the Nominee
during such year.
"Regular Retirement Plan" shall mean any retirement plan
maintained by the Company which qualifies as a defined benefit plan
under the terms of ERISA.
"Retirement Benefits" shall mean the benefit payments defined in
Section 5 and Section 6 of the Plan.
"Spouse" shall mean the person to whom the Nominee is legally
married continuously for one year immediately prior to the date of the
Nominee's death if death occurs prior to the Nominee's retirement or
continuously for one year immediately prior to the Nominee's retirement
date if the Nominee's death occurs after retirement.
3. PARTICIPATING CORPORATIONS
The benefits provided to Nominees and their families by the Plan
depend upon the employment and compensation histories of the Nominees.
The Plan will recognize all employment with the Company including
periods of employment with a predecessor organization immediately prior
to the acquisition of control of such organization by the Company.
Recognition of employment by companies or entities becoming affiliated
with the Company in the future shall be at the discretion of the Board.
Compensation paid directly by the Company to the Nominee will be
recognized for the purpose of determining the benefit payable under this
Plan. The amount of Compensation paid by any other organization
affiliated with the Company will be recognized only if the Company's
Board designates such organization as an eligible Participating
Corporation, and the board of directors of such designated organization
adopts a resolution agreeing to participate under the terms of the Plan.
A Participating Corporation may revoke future participation at any time,
except, however, that such revocation shall not deprive any Nominee,
Spouse, or Dependent of benefits hereunder that such Nominee, Spouse or
Dependent is then eligible to receive.
The benefits payable to any Nominee or to the Nominee's family
that depend upon amounts of Compensation paid by two or more
organizations shall be allocated among the organizations in accordance
with the provisions of Section 8.
The Company may provide a funding source for benefits payable
under the Plan by purchasing insurance policies on the lives of
Nominees. The premiums, cash values, loans and interest of any policy
on the life of a Nominee whose benefits depend upon Compensation paid
by two or more organizations will be allocated among the organizations
in accordance with the provisions of Section 9.
4. PARTICIPATION IN THE PLAN AND ELIGIBILITY FOR BENEFITS
Participation in this Plan shall be limited to those key executive
employees of the Company or its affiliates nominated prior to June 20,
1986, by the Company's Board or the Board of Directors of a
Participating Corporation. To become eligible for Retirement Benefits
under the Plan, a Nominee must have continued in the employment of the
Company until completion of 15 years of service or the attainment of age
65, whichever first occurs. Any Nominee who reaches age 65 or who has a
total of 15 years of service with the Company (counting no single annual
period of service more than once), and who is at such time a Nominee of
more than one Participating Corporation, shall be eligible for
Retirement Benefits as herein provided from all participating
organizations having nominated such employee, payable according to the
allocation methodology set forth in Section 8 hereof.
The Company may impose such other terms and conditions as it shall
deem to be desirable including but not limited to an agreement that the
Nominee shall consult upon the request of the Company following
retirement and shall not disclose any trade secrets or other
confidential information and shall engage in no competitive business
activities, directly or indirectly, after retirement.
All Nominees who elect to participate must sign an agreement and
consent to insurance being issued upon their lives to be paid for by the
Company and with the Company as beneficiary and agree to terms and
conditions above specified. Such agreements shall not constitute an
employment contract, and the Company may dismiss or demote such Nominee
as an officer at any time. The Nominee may voluntarily terminate
employment as an officer at any time. A Nominee who ceases to serve as
an officer shall be terminated from this Plan and shall forfeit all
benefit rights under this Plan unless the Nominee has satisfied the
eligibility requirements as hereinafter provided prior to the date on
which service as an officer ends.
5. RETIREMENT BENEFITS
A Nominee who becomes eligible for retirement benefits under the
Company's Regular Retirement Plan shall be eligible to commence
Retirement Benefits under this Plan. Except as set forth in Section 6,
the first payment of Retirement Benefits will be due on the first day of
the month following retirement under the provisions of a Regular
Retirement Plan, and payments will continue on the first of each month
thereafter so long as the Nominee is alive. Nominees of more than one
Participating Corporation must retire from all Participating
Corporations to receive benefits hereunder.
A Nominee who is not eligible to receive benefits under the
Company's Regular Retirement Plan may receive Retirement Benefits under
this Plan if declared eligible to receive such benefits by the Board of
Directors.
The basic monthly retirement amount of such a Nominee shall be ten
percent (10%) of the Final Average Earnings of the Nominee.
6. LUMP-SUM ELECTION
A Nominee has a one-time election to receive the present value of
his Retirement Benefit in a lump sum. The Nominee shall make this
election at least one year prior to his retirement. The present value
of the Retirement Benefit shall be calculated using a standard mortality
table referred to as the "83 Group Annuity Mortality Table" and 80
percent of the six-month average rate for the 30-year Treasury bonds
(with the six-month period ending as of the date of the Nominee's
retirement). When making this election, the Nominee shall also indicate
when the lump-sum payment shall be made and if it is to be made in more
than one installment. The full amount of any lump-sum payment, together
with credited interest, must be paid within five years of the Nominee's
retirement. Any deferred payouts of lump-sum payments shall be credited
with interest calculated at a monthly rate using the appropriate 30-year
Treasury bond quoted in the Wall Street Journal on the first business
day of each month. (The appropriate 10-year Treasury bond shall be the
bond that has the closest maturity date (by month) preceding the date on
which the interest is to be credited.) Any lump-sum payments that are
not deferred shall be paid on the first business day of the month
following the Nominee's retirement date or as soon thereafter as is
administratively practicable. The Nominee's spouse must consent to the
Nominee's election to receive a lump-sum payment. This consent must be
in writing and must acknowledge the effect of such election.
If the Nominee fails to timely make an election prior to his
retirement, the Nominee shall receive monthly Retirement Benefits.
7. FAMILY PROTECTION BENEFITS
A Family Protection Benefit shall become payable upon the event
that the Nominee dies in the active service of the Company or after
retirement and leaves a surviving Spouse or Dependent.
In the event that the Nominee dies after retirement and did not
elect a lump-sum, the amount of the Family Protection Benefit shall be
equal to one-half of the Nominee's Retirement Benefits under this Plan.
The first payment will be due on the first day of the month following
the date of death and payments will continue on the first of each month
thereafter provided that the Spouse or a Dependent is alive and, in the
case of a Dependent, until such Dependent has reached his/her 18th
birthday.
Family Protection Benefit payments shall be paid in full to the
surviving Spouse or divided equally amongst those Dependents who have
not reached their 18th birthdays in the event that there is no Spouse.
8. ALLOCATION OF BENEFITS
Benefit payments from the Plan attributable to a Nominee will be
allocated to and paid directly by the Company and the Participating
Corporations. Unless otherwise agreed to by the boards of directors of
all participating organizations, the allocation to and responsibility
for direct benefit payment of each organization will be in the same
proportion that the total number of Participating Service Units of such
Nominee allocated to the organization throughout the period of
employment with the Company and/or any Participating Corporation bears
to the total number of Participating Service Units for such Nominee.
9. FINANCING THE BENEFITS
The Company may enter into life insurance policies on the lives of
the Nominees to protect against the burdens of premature death and to
provide for an orderly financing program. The policies will be owned by
the Company, and the proceeds will be paid to the Company. The Nominee
will have no beneficial interest in any such insurance policy.
The premium payments, cash values, loans and interest of any
policies on the life of a Nominee for any calendar year will be
allocated among the participating organizations. Unless otherwise
agreed to by the boards of directors of all Participating Corporations,
the allocation to each organization for any premium paid, cash values
accrued, loan taken or interest paid during a year shall be in the same
proportion that the total number of Participating Service Units of such
Nominee allocated to the organization throughout the period of
employment with the Company and/or any Participating Corporation up to
and including such year bears to the total number of Participating
Service Units for such Nominee.
Proceeds from policies on the lives of Nominees will be allocated
in proportion to the total benefits and premiums paid by and for which
each Participating Corporation is ultimately responsible.
10. PAYMENT OF BENEFITS
Benefits as well as premium payments will be the obligation of the
Company and/or Participating Corporations allocated as set forth in the
Plan.
11. ADMINISTRATION
The Management Performance Committee of the Company's Board shall
administer the Plan and may appoint an officer of the Company to assist
the Committee with this responsibility. The Board shall have the sole
responsibility to interpret the Plan and adopt such rules and
regulations for carrying out the Plan as it may deem necessary.
Decisions of the Board shall be final and binding.
12. SUCCESSOR TO THE COMPANY
The Company shall require any successor or assign, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business and/or assets of the Company, to
assume and agree to pay any Retirement Benefits in the same manner and
to the same extent that the Company would be required to perform if no
such succession or assignment had taken place.
13. CHANGE IN CONTROL AND LEGAL FEES
The Company shall pay all legal fees and expenses that a Retired
Nominee or a Nominee may incur as a result of the Company's contesting
the validity or enforceability of such person's right to receive
benefits under the terms of this Plan following a "Change in Control" of
the Company. For purposes of this Plan, a Change in Control of the
Company shall be deemed to have occurred if any "acquiring person" is or
becomes the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of 20 percent
or more of the Company's outstanding shares of common stock; provided,
however, that the term "acquiring person" shall not include the Company,
any subsidiary of the Company, any employee benefit plan established by
the Company, or trustee for such plan. A "Change in Control" shall also
include any act or event that, with the passage of time, would result in
a Distribution Date, within the meaning of the Rights Agreement dated as
of March 14, 1986, and as amended on May 16, 1989, between the Company
and First Chicago Trust Company of New York.
14. AMENDMENT OR TERMINATION
The Board may at any time amend, alter, modify or terminate this
Plan; provided, however, that any such action shall not adversely affect
the rights of any current Nominees or their Spouses or Dependents then
eligible to receive benefits under the Plan on the date of such
amendment, alteration, modification or termination.
QUESTAR CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(As amended and restated effective August 1, 1995)
1. PURPOSE
The Supplemental Executive Retirement Plan is intended to enable
Questar Corporation and its participating affiliates to attract and
retain key management personnel by providing them with monthly
supplemental retirement benefits to compensate them for the limitations
imposed by federal tax laws on benefits payable from the Questar
Corporation Retirement Plan. It is also intended to pay monthly
supplemental retirement benefits to certain officers based on years of
service that cannot be taken into account under the Questar Corporation
Retirement Plan.
2. DEFINITIONS
The following terms, when used herein, shall have the meanings set
forth below, unless a different meaning is plainly required by the
context:
"Board" means the Board of Directors of Questar Corporation or a
successor company.
"Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
"Committee" means the Management Performance Committee of the
Company's Board.
"Company" means Questar Corporation or any other organization
controlling Questar Corporation or any successor organization.
"Compensation" means an Officer's salary or wages, including
payments under incentive compensation plans paid by the Employer and
includable in taxable income during the applicable Plan Year, but
exclusive of any other forms of additional Compensation such as the
Employer's cost for any public or private employee benefit plan or any
income recognized by the Officer as a result of exercising stock
options. An Officer's Compensation for any Plan Year shall include any
Elective Deferrals of the Officer under Questar Corporation's Employee
Investment Plan or other tax-qualified plan, and any Compensation
deferred under the Questar Corporation Deferred Compensation Plan and
the Questar Corporation Deferred Share Plan. An Officer's Compensation
also shall include the amount of any reduction in Compensation for a
Plan Year agreed upon under one or more Compensation reduction
agreements entered into pursuant to the Questar Corporation Cafeteria
Plan.
"EIRP" means the Company's Executive Incentive Retirement Plan, as
amended or restated from time to time.
"Officer" means any officer of the Company and/or its affiliates
who has a vested right to receive benefits under the Company's
Retirement Plan and who has been nominated to receive supplemental
retirement benefits under the EIRP.
"Participating Corporation" means any company that is affiliated
with the Company and whose employees are covered by the Company's
Retirement Plan or that is affiliated with the Company and receives an
allocation of any employee benefit costs.
"Plan" means the plan set forth in and created by this document.
"Retired Officer" refers to an Officer who has satisfied the
eligibility requirements set forth in Section 4 of this Plan and who is
eligible to receive or who is receiving Supplemental Retirement Benefits
pursuant to the terms of this Plan.
"Retirement Plan" means the Company's Retirement Plan, as amended
or restated from time to time, or any successor plan. If not otherwise
defined, capitalized words or terms used in the Plan shall have the same
definitions used in the Retirement Plan.
"Special Situation Officer" means any officer or former officer of
the Company and/or its affiliates who was expressly promised upon his
reemployment prior to January 1, 1976, that his years of service prior
to a break in service would be restored to him for purposes of
calculating his retirement benefits.
"Special Supplemental Retirement Benefits" means benefits payable
to Special Situation Officers under the terms of the Plan calculated as
set forth in Section 6 or Section 7.
"Supplemental Retirement Benefits" means retirement benefits
payable to Retired Officers under the terms of the Plan calculated as
set forth in Section 5 or Section 7.
3. EFFECTIVE DATE
The Plan is effective January 1, 1987.
4. PARTICIPATION IN THE PLAN AND ELIGIBILITY FOR BENEFITS
Participation in the Plan shall be limited to Officers of the
Company and Participating Corporations. To become eligible for
Supplemental Retirement Benefits and Special Supplemental Retirement
Benefits under the Plan, an Officer must have a vested right to receive
benefits under the Retirement Plan. A Retired Officer cannot receive
benefits under both the Plan and the Company's Equalization Benefit
Plan. A Retired Officer cannot receive benefits under the Plan during
any period that his monthly benefits from the Retirement Plan are
suspended.
5. SUPPLEMENTAL RETIREMENT BENEFITS
An Officer who satisfies the eligibility requirements described
above shall be eligible to receive Supplemental Retirement Benefits
under the Plan. The first payment of Supplemental Retirement Benefits
will be due on the first day of the month following retirement, and
payments will continue on the first day of each month thereafter so long
as the Retired Officer is alive or so long as his surviving spouse is
entitled to receive monthly benefits under the Retirement Plan. (The
Retired Officer's surviving spouse must have been married to the Officer
at date of such Officer's retirement.)
The monthly Supplemental Retirement Benefit shall equal the
monthly benefit that would have been payable to or on behalf of a
Retired Officer under the Retirement Plan if the limitation on annual
benefits imposed by Section 415 of the Code and if the limitation on
annual compensation as defined in Section 401(a)(17) of the Code were
not applicable, and if the Retired Officer had not voluntarily chosen to
defer any compensation under the terms of the Questar Corporation
Deferred Share Plan or the Questar Corporation Deferred Compensation
Plan, less the monthly benefits payable from the Retirement Plan and the
EIRP. The monthly Supplemental Retirement Benefit of a Special
Situation Officer shall be calculated using the years of service
credited to him for purposes of calculating the Special Supplemental
Retirement Benefits as provided in Section 6.
Except as provided in Section 7, the monthly Supplemental
Retirement Benefit payable to or on behalf of the Retired Officer as
determined herein shall be paid in the same form as such Retired
Officer's benefits are payable under the Retirement Plan. Any monthly
Supplemental Retirement Benefits payable to the Retired Officer's
surviving spouse shall be reduced by the monthly benefits payable to
such surviving spouse under the Retirement Plan and the EIRP.
6. SPECIAL SUPPLEMENTAL RETIREMENT BENEFITS.
A Special Situation Officer shall be eligible to receive Special
Supplemental Retirement Benefits under the Plan.
The Special Supplemental Retirement Benefit is designed to provide
a Special Situation Officer with a supplemental retirement benefit that
is equal to the difference between the monthly Retirement Plan benefit
that he would have received if his years of service prior to his break
in service could be credited to him for purposes of calculating his
benefit under the Retirement Plan and the monthly Retirement Plan
benefit that he is entitled to receive because he cannot be given credit
for such years of service under the Retirement Plan.
The first payment of Special Supplemental Retirement Benefits will
be due on the first day of the month following retirement and payments
will continue on the first day of each month thereafter so long as the
Special Situation Officer is alive or so long as his surviving spouse is
entitled to receive monthly benefits under the Retirement Plan. (The
surviving spouse must have been married to the Special Situation Officer
at date of such Officer's retirement.)
The monthly benefit payable under this Section is not offset by
any monthly benefit payable under the EIRP. Except as provided in
Section 7, the monthly benefit payable to the Special Situation Officer
upon his retirement shall be paid in the same form as his benefits under
the Retirement Plan.
7. LUMP SUM ELECTION.
An Officer has a one-time election to receive the present value of
his Supplemental Retirement Benefit and Special Supplemental Retirement
Benefit (if applicable) in a lump sum. The Officer shall make this
election at least one year prior to retirement. The present value shall
be calculated using a standard mortality table referred to as the "83
Group Annuity Mortality Table" and 80 percent of the six-month average
rate for 30-year Treasury bond (with the six-month period ending as of
the date of the Officer's retirement). When making this election, the
Officer shall also indicate when the lump-sum payment shall be made and
if it is to be made in more than one installment. The full amount of
any lump-sum payment, together with credited interest, must be paid
within five years of the Officer's retirement. Any deferred payouts of
lump-sum payments shall be credited with interest calculated at a
monthly rate using the appropriate 30-year Treasury bond quoted in the
Wall Street Journal on the first business day of each month. (The
appropriate 30-year Treasury bond shall be the bond that has one closest
to maturity date (by month) preceding the date on which the interest is
to be credited.) Any lump-sum payments that are not deferred shall be
paid on the first business day of the month following the Officer's
retirement date or as soon thereafter as is administratively
practicable. The Officer's spouse must consent to the Officer's
election to receive a lump-sum payment. Such consent must be in writing
and must acknowledge the effect of such election.
If the Officer fails to make an election at least one year prior
to retirement, the Officer shall receive monthly benefits.
8. FUNDING
The Supplemental Retirement Benefits and Special Supplemental
Retirement Benefits payable under the Plan shall be paid by the Company
and Participating Corporations out of general assets. In its
discretion, the Board may establish a trust fund or make other
arrangements to assure payment of the Supplemental Retirement Benefits
and Special Supplemental Retirement Benefits.
9. ALLOCATION OF COSTS
The cost of Supplemental Retirement Benefits and Special
Supplemental Retirement Benefits paid to or on behalf of Retired
Officers shall be allocated to and be the responsibility of the Company
and Participating Corporations.
10. ADMINISTRATION
The Committee shall administer the Plan and may appoint an officer
of the Company to assist the Committee with this responsibility. The
Committee shall have the sole responsibility to interpret the Plan and
to adopt such rules and regulations for carrying out the Plan as it may
deem necessary. Decisions of the Committee shall be final and binding.
11. AMENDMENT OR TERMINATION
The Board may at any time amend, modify, or terminate this Plan;
provided, however, that any Retired Officers or their surviving spouses
receiving Supplemental Retirement Benefits and Special Supplemental
Retirement Benefits under the Plan at the date of amendment or
termination shall continue receiving such benefits as if such amendment
or termination had not occurred.
12. SUCCESSOR TO THE COMPANY
The Company shall require any successor or assign, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business and/or assets of the Company, to
assume and agree to pay any Supplemental Retirement Benefits and Special
Supplemental Retirement Benefits in the same manner and to the same
extent that the Company would be required to perform if no such
succession or assignment had taken place.
13. CHANGE IN CONTROL AND LEGAL FEES
The Company shall pay all legal fees and expenses that a Retired
Officer or an Officer may incur as a result of the Company's contesting
the validity or enforceability of such person's right to receive
benefits under the terms of this Plan following a "Change in Control" of
the Company. For purposes of this Plan, a Change in Control of the
Company shall be deemed to have occurred if any "acquiring person" is or
becomes the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of 20 percent
or more of the Company's outstanding shares of common stock; provided,
however, that the term "acquiring person" shall not include the Company,
any subsidiary of the Company, any employee benefit plan established by
the Company, or trustee for such plan. A "Change in Control" shall also
include any act or event that, with the passage of time, would result in
a Distribution Date, within the meaning of the Rights Agreement dated as
of March 14, 1986, and as amended on May 16, 1989, between the Company
and First Chicago Trust Company of New York.
QUESTAR CORPORATION
EQUALIZATION BENEFIT PLAN
(As amended and restated effective August 1, 1995)
1. PURPOSE
The Equalization Benefit Plan is intended to enable Questar
Corporation and its participating affiliates to attract and retain key
management personnel by providing them with monthly retirement benefits
to compensate them for the limitations imposed by federal tax laws on
benefits payable from the Questar Corporation Retirement Plan.
2. DEFINITIONS
The following terms, when used herein, shall have the meanings set
forth below, unless a different meaning is plainly required by the
context:
"Board" means the Board of Directors of Questar Corporation or a
successor company.
"Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
"Committee" means Questar Corporation's Employee Benefits
Committee.
"Company" means Questar Corporation or any other organization
controlling Questar Corporation or any successor organization.
"Compensation" means an Employee's salary or wages, including
payments under incentive compensation plans paid by the Employer and
includable in taxable income during the applicable Plan Year, but
exclusive of any other forms of additional Compensation such as the
Employer's cost for any public or private employee benefit plan or any
income recognized by the Employee as a result of exercising stock
options. An Employee's Compensation for any Plan Year shall include any
Elective Deferrals of the Employee under the Employee Investment Plan or
other tax-qualified plan, and any Compensation deferred under the
Questar Corporation Deferred Compensation Plan and the Questar
Corporation Deferred Share Plan. An Employee's Compensation also shall
include the amount of any reduction in Compensation for a Plan Year
agreed upon under one or more Compensation reduction agreements entered
into pursuant to the Questar Corporation Cafeteria Plan.
"Employee" means any employee who is employed by the Company or a
Participating Corporation who has a vested right to receive benefits
under the Company's Retirement Plan and who is not eligible to receive
benefits under any other supplemental retirement plan maintained by the
Company.
"Equalization Retirement Benefits" means retirement benefits
payable hereunder calculated as set forth in Section 5 or Section 6.
"Participating Corporation" means any company that is affiliated
with the Company whose employees are covered by the Company's Retirement
Plan or that is affiliated with the Company and receives an allocation
of any employer benefit costs.
"Plan" means the plan set forth in and created by this document.
"Retired Employee" means an Employee who has satisfied the
eligibility requirements set forth in Section 4 of this Plan and who is
eligible to receive or who is receiving Equalization Retirement Benefits
pursuant to the terms of this Plan.
"Retirement Plan" means the Company's Retirement Plan, as amended
or restated from time to time, or any successor plan.
3. EFFECTIVE DATE
The Plan is effective January 1, 1987.
4. PARTICIPATION IN THE PLAN AND ELIGIBILITY FOR BENEFITS
To be eligible for Equalization Retirement Benefits under the
Plan, an Employee must have a vested right to receive benefits under the
Retirement Plan. A Retired Employee cannot receive benefits under the
Plan during any period that his monthly benefits from the Retirement
Plan are suspended.
5. EQUALIZATION RETIREMENT BENEFITS
An Employee who satisfies the eligibility requirements described
above shall be eligible to receive Equalization Retirement Benefits
under the Plan. The first payment of Equalization Retirement Benefits
will be due on the first day of the month following retirement, and
payments will continue on the first day of each month thereafter so long
as the Retired Employee is alive or so long as his surviving spouse is
entitled to receive monthly benefits under the Retirement Plan. (The
Retired Employee's surviving spouse must have been married to the
Employee at the date of retirement.)
The monthly Equalization Retirement Benefit shall equal the
monthly benefit that would have been payable to or on behalf of a
Retired Employee under the Retirement Plan if the limitation on annual
benefits imposed by Section 415 of the Code, and if the limitation on
annual compensation as defined in Section 401(a)(17) of the Code were
not applicable, and/or if the Retired Employee had not voluntarily
chosen to defer any compensation under the terms of the Questar
Corporation Deferred Share Plan or the Questar Corporation Deferred
Compensation Plan, less the monthly benefits payable from the Retirement
Plan.
Except as set forth in Section 6, the monthly Equalization
Retirement Benefit payable to or on behalf of the Retired Employee as
determined herein shall be paid in the same form as such Retired
Employee's benefits are payable under the Retirement Plan. Any monthly
Equalization Retirement Benefits payable to the Retired Employee's
surviving spouse shall be reduced by the monthly benefits payable to her
under the Retirement Plan.
6. LUMP SUM ELECTION
An Employee has a one-time election to receive the present value
of his Equalization Retirement Benefit in a lump-sum. The Employee
shall make this election at least one year prior to retirement. The
present value shall be calculated using a standard mortality table
referred to as the "83 Group Annuity Mortality Table" and 80 percent of
the six-month average rate for the 30-year Treasury bonds (with the
six-month period ending as of the date of the Employee's retirement).
When making this election, the Employee shall also indicate when the
lump-sum payment shall be made and if it is to be made in more than one
installment. The full amount of any lump-sum payment, together with
credited interest, must be paid within five years of the Employee's
retirement. Any deferred payouts of lump-sum payments shall be credited
with interest calculated at a monthly rate using the appropriate 30-year
Treasury bond quoted in the Wall Street Journal on the first business
day of each month. (The appropriate 30-year Treasury bond shall be the
bond that has the closest maturity date (by month) preceding the date on
which the interest is to be credited.) Any lump-sum payments that are
not deferred shall be paid on the first business day of the month
following the Employee's retirement date or as soon thereafter as is
administratively practicable. The Employee's spouse must consent to the
Employee's election to receive a lump-sum payment. Such consent must be
in writing and must acknowledge the effect of such election.
If the Employee fails to make an election at least one year prior
to retirement, the Employee shall receive monthly Equalization
Retirement Benefits.
7. FUNDING
The Equalization Retirement Benefits payable under the Plan shall
be paid by the Company and Participating Corporations out of general
assets. In its discretion, the Board may establish a trust fund or make
other arrangements to assure payment of the Equalization Retirement
Benefits.
8. ALLOCATION OF COSTS
The cost of Equalization Retirement Benefits paid to or on behalf
of Retired Employees shall be allocated to and be the responsibility of
the Company and Participating Corporations.
9. ADMINISTRATION
The Committee shall administer the Plan. The Committee shall have
the sole responsibility to interpret the Plan and to adopt such rules
and regulations for carrying out the Plan as it may deem necessary.
Decisions of the Committee shall be final and binding.
10. AMENDMENT OR TERMINATION
The Board may at any time amend, modify, or terminate this Plan;
provided, however, that any Retired Employees or their surviving spouses
receiving Equalization Retirement Benefits under the Plan at the date of
amendment or termination shall continue receiving such benefits as if
such amendment or termination had not occurred.
11. SUCCESSOR TO THE COMPANY
The Company shall require any successor or assign, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business and/or assets of the Company, to
assume and agree to pay any Equalization Retirement Benefits in the same
manner and to the same extent that the Company would be required to
perform if no such succession or assignment had taken place.
12. CHANGE IN CONTROL AND LEGAL FEES
The Company shall pay all legal fees and expenses that a Retired
Employee or an Employee may incur as a result of the Company's
contesting the validity or enforceability of such person's right to
receive benefits under the terms of this Plan following a "Change in
Control" of the Company. For purposes of this Plan, a Change in Control
of the Company shall be deemed to have occurred if any "acquiring
person" is or becomes the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934), directly or indirectly, of
20 percent or more of the Company's outstanding shares of common stock;
provided, however, that the term "acquiring person" shall not include
the Company, any subsidiary of the Company, any employee benefit plan
established by the Company, or trustee for such plan. A "Change in
Control" shall also include any act or event that, with the passage of
time, would result in a Distribution Date, within the meaning of the
Rights Agreement dated as of March 14, 1986, and as amended on May 16,
1989, between the Company and First Chicago Trust Company of New York.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The following schedule contains summarized financial information extracted
from the Questar Corporation 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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 94,470
<ALLOWANCES> 0
<INVENTORY> 25,659
<CURRENT-ASSETS> 133,699
<PP&E> 2,296,778
<DEPRECIATION> 1,004,792
<TOTAL-ASSETS> 1,525,475
<CURRENT-LIABILITIES> 147,006
<BONDS> 477,692
<COMMON> 313,572
6,218
0
<OTHER-SE> 373,085
<TOTAL-LIABILITY-AND-EQUITY> 1,525,475
<SALES> 0
<TOTAL-REVENUES> 354,501
<CGS> 0
<TOTAL-COSTS> 212,352
<OTHER-EXPENSES> 66,833
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,082
<INCOME-PRETAX> 59,271
<INCOME-TAX> 17,636
<INCOME-CONTINUING> 41,635
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,635
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.02
</TABLE>
