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,
1999 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
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999.
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, 1999, 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 28, 2000 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, 1999 and 1998
with Report of Independent Auditors
Questar Corporation Employee Investment Plan
Financial Statements
and Schedules
Years ended December 31, 1999 and 1998
Contents
Report of Independent Auditors
Audited Financial Statements
Statements of Net Assets Available for Plan Benefits
Statements of Changes in Net Assets Available for Plan Benefits
Notes to Financial Statements
Schedules
Schedule of Assets Held for Investment Purposes at End of Year
Schedule of Reportable Transactions
<PAGE>
Report of Independent Auditors
Participants in Questar Corporation
Employee Investment Plan
We have audited the accompanying statements of net assets available
for plan benefits of Questar Corporation Employee Investment Plan
as of December 31, 1999 and 1998, and the related statements of
changes in net assets available for plan 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 our 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
plan benefits of the Plan at December 31, 1999 and 1998, and
the changes in its net assets available for plan benefits for the
years then ended, 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, 1999, 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 1999 financial statements taken
as a whole.
16-Jun-00 /s/Ernst & Young LLP
<PAGE>
Questar Corporation
Employee Investment Plan
Statements of Net Assets Available for Plan Benefits
<TABLE>
<CAPTION>
December 31
1999 1998
<S> <C> <C>
Assets
Investments - at current value :
Questar Corporation common stock :
Allocated 85,662,540 126,795,730
Unallocated 5,869,895
Mutual funds 27,029,382 24,412,047
Merrill Lynch Retirement Preservation Trust 1,948,575 2,158,833
Loans receivable from employees 3,363,507
118,004,004 159,236,505
Cash and short-term investments 749,934 96,780
Contribution receivable from Questar Corporation 417,800 398,000
Interest receivable 12,513 12,224
119,184,251 159,743,509
Liabilities
Unallocated contributions and dividends 749,914 71,687
Security acquisition loans 3,955,225
749,914 4,026,912
Net assets available for plan benefits 118,434,337 155,716,597
</TABLE>
See accompanying notes.
<PAGE>
Statements of Changes in Net Assets Available for Plan Benefits
<TABLE>
<CAPTION>
Year ended December 31
1999 1998
<S> <C> <C>
Additions
Dividend and interest income 5,631,900 6,298,664
Contributions :
Employees 7,958,654 7,256,970
Employer 3,657,895 4,975,420
Interest income from employee loans 187,772
11,804,321 12,232,390
Total additions 17,436,221 18,531,054
Deductions
Withdrawals - at current value 29,547,817 25,358,000
Distribution of dividends to participants 328,001
Trustee fees and commissions 34,232 16,847
Interest expense 163,746 622,900
Total deductions 29,745,795 26,325,748
Net realized and unrealized depreciation
of the current value of investments (24,972,686)(19,324,694)
Net deductions (37,282,260)(27,119,388)
Net assets available for plan benefits at
beginning of year 155,716,597 182,835,985
Net assets available for plan benefits
at end of year 118,434,337 155,716,597
</TABLE>
See accompanying notes.
<PAGE>
Notes To Financial Statements
December 31, 1999
1. Description of the Plan
The Questar Corporation Employee Investment Plan (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 (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 they are scheduled to work 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
rrangements that qualify under section 401(k) of the Code, subject
to limits imposed by Federal tax laws and to discrimination testing.
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 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. 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. Should the Plan terminate at some
future time, all amounts vested and allocated to the participants'
accounts would be distributed to them.
2. Accounting Policies
The preparation of financial statements in conformity with
generally accepted accounting principles 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.
Investments
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 nationally listed mutual
funds are stated at current value. The Merrill Lynch Retirement
Preservation Trust is valued at cost plus interest earned, which
approximates market. Short-term investments consist primarily of
investments in a separate money market portfolio fund and in
unallocated mutual funds and are stated at current 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.
3. Security Acquisition Loans
In 1989 the Plan issued two promissory notes payable to Questar
totaling $35,000,000 and used the proceeds to purchase 3,985,768
shares (leveraged shares) of Questar common stock at $8.7813 per
share. 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. Payments on the notes were made with contributions from
Questar and from dividends and earnings received on the remaining
allocated and unallocated leveraged shares. The notes were
collateralized by the unreleased leveraged shares.
Under the terms of the notes, the Plan was obligated to make
principal payments annually, which, in aggregate, had to meet or
exceed cumulative minimum principal payments as of each payment
date. The 1998 end of year balance of $3,955,225 was repaid July 1,
1999, and all remaining shares were allocated to employees
throughout the year.
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 (the
"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
First Security Bank, N.A., is the Plan Trustee. Investments in
common stock of Questar are non-participant directed *. Activity
for the two years ended December 31, 1999 and 1998, was as follows:
<TABLE>
<CAPTION>
Allocated Unallocated
Shares Cost Shares Cost
<S> <C> <C> <C> <C>
Balances at January 1, 1998 6,839,022 87,624,866 805,900 7,076,809
Purchases 331,419 6,555,742
Allocation of shares 502,941 9,857,179 (502,941) (4,416,362)
Withdrawals (1,129,086)(14,310,440)
Balances at December 31, 1998 6,544,296 89,727,347 302,959 2,660,447
Purchases 353,584 6,310,234
Allocation of shares 302,959 5,462,203 (302,959) (2,660,447)
Loan Distributions/Payments (132,407) (2,362,574)
Transfers In/Out (139,750) (1,697,496)
Withdrawals (1,217,846)(16,986,068)
Balances at December 31, 1999 5,710,836 80,453,646 0 0
</TABLE>
<PAGE>
Average cost per share of allocated stock was $14.09 and $13.71 as
of December 31, 1999 and 1998, respectively. The current price per
share of stock, both allocated and unallocated, was $15.00 and
$19.38 as of December 31, 1999 and 1998, respectively.
The cost of allocated shares is based on the average market
purchase price for shares for each month, whereas the cost of
unallocated shares is shown as the original purchase price of the
shares which was $8.78 per share.
Statement amounts that were attributable to allocated and
unallocated shares during 1999 and 1998, were as follows:
<TABLE>
<CAPTION>
Allocated Unallocated
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Changes in net realized
and unrealized depreciation (24,288,662)(15,541,516) (3,209,452) (7,695,375)
Security acquisition loans 3,955,225
Dividends 3,854,876 4,437,272 99,496 374,357
</TABLE>
<PAGE>
Interest expense was entirely attributable to shares that were
unreleased during 1999 and 1998. Employer contributions
receivable, employer contributions, and distributions were entirely
attributable to allocated shares.
* The participant directed shares are included with the
non-participant directed share balances.
6. Investments
Investments that represent 5% or more of the current value of the
Plan's net assets are as follows:
<TABLE>
<CAPTION>
December 31
1999 1998
<S> <C> <C>
Questar Corporation Common Stock * 85,662,540 132,665,625
Fidelity Magellan Fund 11,551,672 11,807,522
Vanguard 500 Portfolio Index Fund 8,708,341 5,640,040
</TABLE>
*Non-participant directed
<PAGE>
EIN 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, 1999
<TABLE>
<CAPTION>
Identity of
Issue, Borrower,
Lessor or
Similar Party Description of Investments Cost Current Value
<S> <C> <C>
Questar Corporation Common Stock - 5,710,836 shares 80,453,646 85,662,540
Fidelity Magellan Fund - 84,547 units 9,593,599 11,551,672
Fidelity Puritan Fund - 252,711 units 5,454,902 4,809,089
Fidelity Intermediate Bond Fund
46,396 units 682,466 450,336
Vanguard 500 Portfolio Index Fund
64,348 units 6,586,392 8,708,341
Vanguard Total International Portfolio
Fund - 63,508 units 734,536 908,810
Vanguard Index Trust Small Capitalization
Stock Portfolio Fund - 25,472 units 561,623 601,134
Merrill Lynch Retirement Preservation Trust
1,948,575 units 1,948,575 1,948,575
Employees Loans receivable from employees
at interest rates from 8.75%
to 9.50%, maturing through 2000 3,363,507
106,015,739 118,004,004
</TABLE>
<PAGE>
Schedule H, Line 4j-Schedule of Reportable Transactions
Year ended December 31, 1999
<TABLE>
<CAPTION> Current Value
Identity of Description Purchase Selling Cost of of Asset on Net Gain
Party Involved of Assets Price Price Asset Transaction or Loss
Date
<S> <C> <C> <C> <C> <C> <C>
Category (i) - Single Transaction in Excess of 5% of Plan Assets
None
Category (ii) - Series of Transactions (Other than Securities Transactions)
with the Same Person Aggregating 5% of Plan Assets
None
Category (iii) - A Series of Transactions in Excess of 5% of Plan Assets
Questar Corporation Common Stock 11,772,437 11,772,437 11,772,437
Questar Corporation Common Stock 20,936,203 16,986,069 20,936,203 3,950,134
Category (iv) - Transactions in Securities with a Person if Any Single Transaction
with that Person was in Excess of 5% of Plan Assets
None
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
23. Consent of Independent Auditors.
