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, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
_____ TO _____
Commission File No. 0-14147
QUESTAR PIPELINE COMPANY
(Exact name of registrant as specified in its charter)
STATE OF UTAH 87-0307414
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 11450, 79 South State Street, Salt Lake City, Utah 84147
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 324-2400
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of June 30, 1997
Common Stock, $1.00 par value 6,550,843 shares
Registrant meets the conditions set forth in General Instruction H(a)(1)
and (b) of Form 10-Q and is filing this Form 10-Q with the reduced
disclosure format.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
QUESTAR PIPELINE 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 $25,907 $25,726 $52,628 $51,802 $105,004 $98,892
OPERATING EXPENSES
Operating and maintenance 9,637 9,314 18,545 19,575 38,929 36,149
Depreciation 3,614 3,434 7,211 6,812 14,605 13,311
Other taxes 664 902 1,415 1,944 1,990 3,349
TOTAL OPERATING EXPENSES 13,915 13,650 27,171 28,331 55,524 52,809
OPERATING INCOME 11,992 12,076 25,457 23,471 49,480 46,083
INTEREST AND OTHER INCOME 91 260 96 804 1,090 592
INCOME (LOSS) FROM
UNCONSOLIDATED AFFILIATES (6) 35 (74) 72 36 1,111
DEBT EXPENSE (3,314) (3,452) (6,665) (6,846) (13,235) (13,551)
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 8,763 8,919 18,814 17,501 37,371 34,235
INCOME TAXES 3,303 3,384 7,032 6,715 13,732 12,566
INCOME FROM CONTINUING
OPERATIONS 5,460 5,535 11,782 10,786 23,639 21,669
DISCONTINUED OPERATIONS -
QUESTAR GAS MANAGEMENT
COMPANY 356 1,495 3,175
NET INCOME $5,460 $5,891 $11,782 $12,281 $23,639 $24,844
</TABLE>
See notes to financial statements
<PAGE>
QUESTAR PIPELINE COMPANY
CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996 1996
(In Thousands)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and short-term investments $5,411 $1,254 $2,550
Notes receivable from Questar
Gas Management 16,000
Accounts receivable $10,229 4,854 8,229
Inventories 2,363 2,186 2,301
Other current assets 1,754 1,513 1,938
Total current assets 19,757 25,807 15,018
Property, plant and equipment 566,777 552,372 562,711
Less allowances for depreciation 201,269 189,636 194,396
Net property, plant and equipment 365,508 362,736 368,315
Investment in discontinued operations 29,250
Investment in unconsolidated
affiliates 14,323 9,155 14,347
Other assets 10,789 10,645 11,070
$410,377 $437,593 $408,750
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Notes payable to Questar
Corporation $11,600 $700 $11,800
Accounts payable and accrued
expenses 15,869 62,438 14,823
Total current liabilities 27,469 63,138 26,623
Long-term debt 134,554 134,535 134,544
Other liabilities 4,257 4,878 4,322
Deferred income taxes 58,572 53,406 58,768
Common shareholder's equity
Common stock 6,551 6,551 6,551
Additional paid-in capital 82,034 82,034 82,034
Retained earnings 96,940 93,051 95,908
Total common shareholder's equity 185,525 181,636 184,493
$410,377 $437,593 $408,750
</TABLE>
See notes to financial statements
<PAGE>
QUESTAR PIPELINE COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
6 Months Ended
June 30,
1997 1996
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $11,782 $12,281
Depreciation 7,768 7,670
Deferred income taxes (196) (2,743)
Income from discontinued operations (1,495)
Loss (income) from unconsolidated
affiliates 74 (72)
19,428 15,641
Change in operating assets
and liabilities (606) 30,825
NET CASH PROVIDED FROM
OPERATING ACTIVITIES 18,822 46,466
INVESTING ACTIVITIES
Capital expenditures
Purchase of property, plant
and equipment (4,227) (5,745)
Other investments (50)
Total capital expenditures (4,277) (5,745)
Costs of disposition of property,
plant and equipment (734) (669)
NET CASH USED IN INVESTING
ACTIVITIES (5,011) (6,414)
FINANCING ACTIVITIES
Decrease in note receivable from
Questar Gas Management 689
Decrease in note payable
to Questar Corporation (200) (14,500)
Payment of dividends (10,750) (26,000)
NET CASH USED IN FINANCING
ACTIVITIES (10,950) (39,811)
INCREASE IN CASH AND
SHORT-TERM INVESTMENTS $2,861 $241
</TABLE>
The $29,250,000 special dividend declaration of Questar Gas Management
shares was a non-cash transaction and excluded from the Statement of
Cash Flows.
See notes to financial statements
<PAGE>
QUESTAR PIPELINE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
Note 1 - Basis of Presentation
The interim financial statements 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. The results of operations for the three-and
six-month periods ended June 30, 1997, are not necessarily indicative of
the results that may be expected for the year ending December 31, 1997.
For further information refer to the financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the
year ended December 31, 1996.
Note 2 - Discontinued Operations - Gathering Division Spin Down and
Transfer
Questar Pipeline transferred approximately $55 million of gas-gathering
assets to Questar Gas Management Company, a wholly owned subsidiary.
The transfer was approved by the Federal Energy Regulatory Commission
(FERC) February 28, 1996 and was effective March 1, 1996. Questar Gas
Management was subsequently transferred to the nonregulated Market
Resources group of Questar on July 1, 1996 and now is a wholly owned
subsidiary of Entrada Industries. The transaction was in the form of a
stock dividend payable to Questar with no gain or loss recorded.
Questar Pipeline's financial statements for prior periods were restated
reflecting gas-gathering operations as a discontinued business segment.
Questar Pipeline has submitted an application to the FERC to transfer
approximately $1.5 million of additional facilities to Questar Gas
Management. The facilities consist of several miles of non-mainline
laterals, a portion of a mainline pipeline and a compressor station.
The application requested that the transfer be effective May 31, 1997.
However, the transfer was delayed by a group of producers protesting
part of the transfer. The FERC has not yet ruled on the Company's
application.
Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations
QUESTAR PIPELINE COMPANY
June 30, 1997
(Unaudited)
Operating Results
Following is a summary of financial and operating information for the
Company:
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended 12 Months Ended
June 30, June 30, June 30,
1997 1996 1997 1996 1997 1996
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL RESULTS
Revenues
From unaffiliated customers $8,732 $11,360 $17,863 $19,447 $37,253 $37,700
From affiliates 17,175 14,366 34,765 32,355 67,751 61,192
Total revenues $25,907 $25,726 $52,628 $51,802 $105,004 $98,892
Operating income $11,992 $12,076 $25,457 $23,471 $49,480 $46,083
Income from continuing operations $5,460 $5,535 $11,782 $10,786 $23,639 $21,669
OPERATING STATISTICS
Natural gas transportation volumes (in
thousands of decatherms)
For unaffiliated customers 27,633 36,158 60,936 73,031 119,800 147,427
For Mountain Fuel 26,011 16,426 68,275 53,582 114,854 88,702
For other affiliated customers 10,993 10,271 17,809 14,869 47,267 37,349
Total transportation 64,637 62,855 147,020 141,482 281,921 273,478
Transportation revenue (per
decatherm) $0.26 $0.28 $0.23 $0.24 $0.23 $0.24
</TABLE>
Revenues were higher in the 6- and 12-month periods of 1997 due
primarily to a rate increase, which became effective on February 1,
1996.
Operating and maintenance expenses increased 3% in the second quarter of
1997 when compared to the second quarter of 1996 due primarily to
charges for electronic field measurement services. Operating and
maintenance expenses were lower in the first half of 1997 due to reduced
labor and related costs and some operating efficiencies. Operating
efficiencies resulted from the consolidation of certain administrative,
marketing, financial, technical and related services under Questar
Regulated Services Co., which wholly owns Questar Pipeline. These
services were previously staffed and performed separately by Questar
Pipeline and its affiliated company, Mountain Fuel. Operating and
maintenance expenses were 8% higher for the 12-month period ended June
30, 1997 when compared with the same period of 1996, primarily because
of some one-time costs associated with the spin-down of certain assets
to Questar Gas Management Company and settlement issues in Questar
Pipeline's most recent rate proceeding.
Depreciation expense was higher in the 1997 periods as a result of
increased investment in property, plant and equipment. Other taxes were
lower in the 3- and 6-month periods of 1997 when compared with the same
periods of 1996 primarily due to reduced payroll taxes because the
number of employees has decreased from a year ago. Interest and other
income was lower in the 3- and 6-month periods of 1997 because Questar
Gas Management repaid a loan to the Company and the proceeds were
dividended to Questar. The effective income tax rate for the first half
was 37.4% in 1997 compared with 38.4% in 1996.
On May 9, 1997, the Federal Energy Regulatory Commission (FERC) issued an
"Order Instituting Proceeding" in Docket No. IN97-1, in which it alleges
that Questar Pipeline had overcharged its affiliated company, Mountain Fuel,
for gathering services provided from November 1988 through September 1992.
The FERC order states that Questar Pipeline may have violated the Natural Gas
Act by charging Mountain Fuel rates different from those rates specified in
the tariff. The FERC is ordering Questar Pipeline to show why the
allegations are incorrect and why it should not refund the alleged
overcharge of $3.4 million plus interest to Mountain Fuel. Questar
Pipeline believes that it did not overcharge Mountain Fuel. Questar
Pipeline also believes that its actions were fully justified and in full
compliance with applicable law and FERC orders, based on its
understanding of the issues dealing with jurisdiction over gathering
during the period in question. Management does not believe the ultimate
outcome of this order will have a material impact on results of
operations, financial position or liquidity.
Liquidity and Capital Resources
Operating Activities:
Net cash provided from operating activities of $18,822,000 for the first
half of 1997 was lower when compared with $46,466,000 for the same
period in 1996 due primarily to changes in operating assets and
liabilities. The 1996 period included a $16,000,000 special dividend
declaration associated with the loan repayment from Questar Gas
Management. Also, the first half of 1996 included the collection of
rates subject to refund amounting to $7,400,000.
Investing Activities:
Capital expenditures were $4,277,000 in the first half of 1997 compared
with $5,745,000 in the corresponding 1996 period. Capital expenditures
for calendar year 1997 are estimated to be $48,500,000, which includes
$18,600,000 earmarked for the Company's share of the second phase of the
TransColorado Pipeline. The second phase will cost approximately $200
million and includes 270 miles of 22- and 24-inch pipeline and two
compressor plants. The Company will ultimately have a 50% share of the
project after completing a purchase of 50% of El Paso Energy
Corporation's interest in Phase II and 100% of El Paso's interest in
Phase I.
Financing Activities:
The Company has a short-term line-of-credit arrangement with a bank
totaling $200,000. In addition, Questar Corporation loans funds to the
Company under a short-term arrangement. As of June 30, amounts borrowed
from Questar were $11,600,000 in 1997 and $700,000 in 1996. No amounts
were borrowed under the short-term line-of-credit arrangement at June
30, 1997. First half financing activities in 1997 and 1996 included
payment of dividends and a partial repayment of the Company's notes
payable to Questar. Capital expenditures for 1997 are expected to be
financed from net cash flow provided from operations and borrowings from
Questar.
This 10-Q contains forward-looking statements about the future
operations and expectations of Questar Pipeline. According to
management, these statements are made in good faith and are reasonable
representations 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.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
On August 7, 1997, Questar Pipeline Company (Questar Pipeline or
the Company) filed a formal Answer and Motion for Hearing in response to
an Order Instituting Proceeding issued by the Federal Energy Regulatory
Commission (the FERC). This order, which contains allegations that the
Company charged gathering rates higher than specified in its tariff to
Mountain Fuel Supply Company for the period from November 1, 1988
through September 30, 1992, is described in the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997. In its
answer, Questar Pipeline emphasized that the issues raised by the FERC
were treated in earlier rate settlements involving interested parties
and that all parties are bound by these settlements. In addition, the
Company denied that it overcharged Mountain Fuel when collecting rates
for gathering activities. Questar Pipeline believes that its gathering
rates were fully justified and that its activities were in full
compliance with applicable law and FERC orders. The Company requested
the FERC to dismiss the proceeding or to conduct a full hearing on the
issues.
Questar Pipeline transferred its gathering assets to Questar Gas
Management Company, an affiliated entity, effective March 1, 1996, but
is the responsible party for any ultimate outcome.
Item 6. Exhibits and Reports on Form 8-K.
a. The following exhibit has been filed as part of this report:
Exhibit No.Exhibit
3.3. Bylaws (as amended on August 12, 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.
QUESTAR PIPELINE COMPANY
(Registrant)
August 13, 1997 /s/ D. N. Rose
(Date) D. N. Rose
President and Chief
Executive Officer
August 13, 1997 /s/ S. E. Parks
(Date) S. E. Parks
Vice President, Treasurer
and Chief Financial Officer
BYLAWS
of
QUESTAR PIPELINE COMPANY
A Utah Corporation
OFFICES
SECTION 1. The principal office shall be in the City of Salt
Lake, County of Salt Lake, State of Utah.
The Corporation may also have offices at such other places as the
Board of Directors may from time to time appoint or the business of the
Corporation may require.
SEAL
SECTION 2. The corporate seal shall have inscribed thereon the
name of the Corporation, and the words "Corporate Seal," and "Utah."
Said seal may be used by causing it, or a facsimile thereof, to be
impressed or affixed or reproduced, or otherwise.
SHAREHOLDERS' MEETINGS
SECTION 3. All meetings of the shareholders shall be held at the
Corporation's office in Salt Lake City, Utah, or at such other place as
may be specified by the Board of Directors.
SECTION 4. The annual meeting of shareholders shall be held on
the third Tuesday in May of each year, and if such day is a legal
holiday, then on the preceding secular business day, at 1:00 p.m., when
they shall elect by majority vote a Board of Directors and transact such
other business as may properly be brought before the meeting.
SECTION 5. The Board of Directors may direct the calling of
special meetings of the shareholders at such time and place as the Board
may deem necessary.
SECTION 6. Holders of a majority of the shares issued and
outstanding, and entitled to vote thereat, present in person or
represented by proxy, shall be requisite and shall constitute a quorum
at all meetings of the shareholders for the transaction of business,
except as otherwise provided by law, by the Articles of Incorporation,
or by these Bylaws. If, however, such majority shall not be present or
represented at any meeting of the shareholders, the shareholders
entitled to vote thereat, present in person or by proxy, shall have
power to adjourn the meeting, from time to time, without notice other
than announcement at the meeting, until such requisite amount of voting
stock shall be present. At such adjourned meeting at which the
requisite amount of voting stock shall be represented, business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 7. The Secretary shall, but in case of his failure any
other officer of the Corporation may, give written or printed notice to
the shareholders stating the place, day and hour of each shareholders
meeting and, in case of a special meeting, the purpose or purposes for
which the meeting is called. Such notice shall be given not less than
ten (10) nor more than fifty (50) days before the date of the meeting.
SECTION 8. Notice may be given either personally or by mail, and
if given by mail, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to the shareholder at his
address as it appears on the stock transfer books of the Corporation,
with postage prepaid thereon.
SECTION 9. At each meeting of the shareholders, every shareholder
having the right to vote shall be entitled to vote in person or by proxy
appointed by an instrument in writing, subscribed by such shareholder
and bearing a date not more than three months prior to said meeting.
Each shareholder shall have one vote for each share of stock registered
in such shareholder's name on the books of the Corporation. The vote
for directors and, upon the demand of any shareholder, the vote upon any
question before any meeting of shareholders shall be by ballot. All
elections shall be had and all questions decided by a plurality vote.
SECTION 10. A complete list of shareholders entitled to vote at
any meeting of shareholders shall be prepared and be available for
inspection by any shareholder beginning two business days after notice
is given of the meeting for which the list was prepared and continuing
throughout the meeting. The list shall be arranged by voting group and
by class or series of shares within each voting group and be
alphabetical within each voting group or class. The list shall indicate
each shareholder's name, address, and number of voting shares.
A shareholder, directly or through an agent or attorney, has the
right to inspect and copy, at his expense, the list of shareholders
prepared for each meeting of shareholders. The shareholder must make a
written request to examine the list and must examine it during the
Corporation's regular business hours.
SECTION 11. Business transacted at all special meetings of the
shareholders shall be confined to the objects stated in the call and
notice.
SECTION 12. Unless otherwise provided in the Articles of
Incorporation, any action that may be taken at any annual or special
meeting of the shareholders may be taken without a meeting and without
prior notice upon the receipt of a unanimous written consent.
DIRECTORS
SECTION 13. The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. The Board shall
consist of five directors. A majority shall have the power to transact
the business of the corporation in conformity with the powers conferred
upon the Board of Directors by the Articles of Incorporation. Directors
elected at any annual or special meeting of the shareholders shall hold
office until the next annual meeting of the shareholders and until their
successors shall be duly elected. One or more directors may be removed
with or without cause by a vote of the majority of the shareholders at a
meeting of shareholders called for that purpose.
SECTION 14. Unless the Articles of Incorporation provide
otherwise, any acts required or permitted to be taken by the Board of
Directors at a meeting may be taken without a meeting if all the
directors take the action, each director signs a written consent
describing the action taken, and the consents are filed with the records
of the Corporation. Action taken by consent is effective when the last
director signs the consent, unless the consent specifies a different
effective date. A signed consent has the effect of a meeting vote and
may be described as such in any document.
SECTION 15. The directors may hold their meetings and have one or
more offices and keep the books of the Corporation at such place as they
may from time to time determine.
SECTION 16. In addition to the powers and authority by these
Bylaws expressly conferred upon them, the Board may exercise all such
powers of the Corporation and do all such lawful acts and things as are
not by statute of the State of Utah, or by the Articles of Incorporation
or by these Bylaws directed or required to be exercised or done by the
shareholders.
COMMITTEE
SECTION 17. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board, designate one or
more Committees, each Committee to consist of two or more of the
Directors of the Corporation and shall have and may exercise the powers
conferred upon them by the Board of Directors. All Committees when so
appointed shall have such name or names as may be determined from time
to time by resolutions adopted by the Board of Directors.
SECTION 18. The Committees shall keep regular minutes for their
proceedings and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
SECTION 19. Directors, as such, shall not receive any salary for
their services, but the Board of Directors, by resolution, shall fix the
fees to be allowed and paid to directors, as such, for their services
and provide for the payment of the expenses of the directors incurred by
them in performing their duties. Nothing herein contained, however,
shall be considered to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefore.
SECTION 20. Fees to members of special or standing committees and
expenses incurred by them in the performance of their duties, as such,
shall also be fixed and allowed by resolution of the Board of Directors.
MEETINGS OF THE BOARD
SECTION 21. The Board of Directors may meet at Salt Lake City,
Utah, or at such other place as may be determined by a majority of the
members of the Board.
SECTION 22. Regular meetings of the Board may be held without
notice at such time and place as shall from time to time be determined
by the Board.
SECTION 23. Special meetings of the Board may be called by the
President on at least two days' notice to each director, either
personally or by mail or telegram; special meetings shall be called by
the President or Secretary in like manner and on like notice on the
written request of two directors.
SECTION 24. At all meetings of the Board a majority of the
Directors shall be necessary and sufficient to constitute a quorum for
the transaction of business, and the act of a majority of the directors
present at any meeting at which there is a quorum, shall be the act of
the Board of Directors. Directors may participate in a meeting and be
counted in the quorum by means of conference telephone or similar
communication equipment by which all directors participating in the
meeting can hear each other.
SECTION 25. The officers of the Corporation shall be chosen by
the Board of Directors and shall consist of: a Chairman of the Board, a
President and Chief Executive Officer, a Vice President, a Secretary,
and a Treasurer. The Board may also choose a Vice Chairman, additional
Vice Presidents, Assistant Secretaries and Assistant Treasurers.
SECTION 26. The Board of Directors at its first meeting after
each annual meeting shall choose a Chairman of the Board, a President,
one or more Vice Presidents, a Secretary and a Treasurer, and such
Assistant Secretaries and Assistant Treasurers as the Board deems
necessary or appropriate. None of the officers except the Chairman of
the Board, Vice Chairman, and the President need be members of the
Board.
SECTION 27. The Board may appoint such other officers and agents
as it may deem necessary, who hold their offices for such terms and
shall exercise such powers and perform such duties as shall be
determined from time to time by the Board.
SECTION 28. The salaries of all officers of the Corporation shall
be fixed by the
Board of Directors.
SECTION 29. The officers of the Corporation shall hold office
until their successors are chosen and qualified in their stead. Any
officer elected or appointed by the Board of Directors may be removed at
any time by the affirmative vote of a majority of the whole Board of
Directors. If the office of any officer or officers becomes vacant for
any reason, the vacancy shall be filled by the affirmative vote of a
majority of the whole Board of Directors.
CHAIRMAN OF THE BOARD
SECTION 30. The Chairman of the Board shall preside at the
meetings of the shareholders and directors. In the Chairman's absence,
the Vice Chairman (if one has been chosen) shall preside at the meetings
of the shareholders and directors.
PRESIDENT
SECTION 31. The President shall be the Chief Executive Officer of
the Corporation; in the absence of the Chairman of the Board and the
Vice Chairman of the Board, shall preside at all meetings of the
shareholders and directors; shall have general and active management of
the Corporation; and shall see that all orders and resolutions of the
Board are carried into effect. He shall have the general powers and
duties of supervision and management usually vested in the office of
president and chief executive officer of a corporation. He shall
perform such other functions and duties as shall be prescribed by the
Board of Directors.
VICE PRESIDENT
SECTION 32. The Vice Presidents shall perform the duties
prescribed by the President or the Board of Directors.
SECRETARY AND ASSISTANT SECRETARIES
SECTION 33. (a) The Secretary: shall attend the meetings of the
Board and the meetings of the shareholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose and
shall perform like duties for the Committees appointed by the Board when
required; give or cause to be given notice of the meetings of the
shareholders and of the Board of Directors; and perform such other
duties as may be prescribed by the Board of Directors or President,
under whose supervision the Secretary shall keep in safe custody the
seal of the Corporation and affix the same to any instrument requiring
it.
(b) The Assistant Secretary, senior in time of service, in the
absence or disability of the Secretary, shall perform the duties and
exercise the powers of the Secretary and shall perform such other duties
as shall be prescribed by the President or the Board of Directors.
TREASURER AND ASSISTANT TREASURERS
SECTION 34. The Treasurer and Assistant Treasurers shall perform
such duties as shall be prescribed by the President or the Board.
VACANCIES
SECTION 35. If the office of any director or directors becomes
vacant by reason of the death, resignation, disqualification, removal
from office, or otherwise, the remaining directors, not less than a
quorum, shall choose a person or persons to fill the vacancy or
vacancies who shall hold office until the successor or successors shall
have been duly appointed or elected.
CERTIFICATES OF STOCK
SECTION 36. The certificates of stock of the Corporation shall be
numbered and shall be entered in the books of the Corporation as they
are issued.
FISCAL YEAR
SECTION 37. The fiscal year shall begin the first day of January
in each year.
RECORDS AND INSPECTION RIGHTS
Section 38. The Corporation shall maintain permanent records of
the minutes of all meetings of its shareholders and Board of Directors;
all actions taken by the shareholders or Board of Directors without a
meeting; and all actions taken by a Committee of the Board of Directors
on behalf of the Corporation. The Corporation shall also maintain
appropriate accounting records. The Corporation shall keep such records
at its office in salt Lake City, and at any other location designated by
the Board of Directors.
A shareholder of the Corporation, directly or through an agent or
attorney, shall have the limited rights to inspect and copy the
Corporation's records as provided under applicable state law and by
complying with the procedures specified under such law.
BANK ACCOUNTS
SECTION 39. All checks, demands for money, or other transactions
involving the Corporation's bank accounts shall be signed by such
officers or other responsible employees as the Board of Directors may
designate. No third party is allowed access to the Corporation's bank
accounts without express written authorization by the Board of
Directors.
AMENDMENTS
SECTION 40. The Corporation's Board of Directors may amend or
repeat the Corporation's Bylaws unless the Corporation's Articles of
Incorporation or Utah's Revised Business Corporation Act reserve this
power exclusively to the shareholders in whole or part; unless the
shareholders, in adopting, amending, or repealing a particular Bylaw,
provide expressly that the Board of Directors may not amend or repeal
that Bylaw; or unless the Bylaw either establishes, amends or deletes a
supermajority shareholder quorum or voting requirement. The
Corporation's shareholders may amend or repeal the Corporation's Bylaws
even though the Bylaws may also be amended or repealed by the Board of
Directors.
INDEMNIFICATION AND LIABILITY INSURANCE
SECTION 41. (a) Voluntary Indemnification. Unless otherwise
provided in the Articles of Incorporation, the Corporation shall
indemnify any individual made a party to a proceeding because he is or
was a director of the Corporation, against liability incurred in the
proceeding, but only if the Corporation has authorized the payment in
accordance with the applicable statutory provisions [Sections 16-10a-902
and 16-10a-904 of Utah's Revised Business Corporation Act] and a
determination has been made in accordance with the procedures set forth
in such provision that the director conducted himself in good faith;
that he reasonably believed that his conduct, if in his official
capacity with the Corporation, was in its best interests and that his
conduct, in all other cases, was at least not opposed to the
Corporation's best interests; and that he had no reasonable cause to
believe his conduct was unlawful in the case of any criminal proceeding.
(b) The Corporation may not voluntarily indemnify a director in
connection with a proceeding by or in the right of the Corporation in
which the director was adjudged liable to the Corporation or in
connection with any other proceeding charging improper personal benefit
to him, whether or not involving action in his official capacity, in
which he was adjudged liable on the basis that personal benefit was
improperly received by him.
(c) Indemnification permitted under Paragraph (a) in connection
with a proceeding by or in the right of the Corporation is limited to
reasonable expenses incurred in connection with the proceeding.
(d) If a determination is made, using the procedures set forth in
the applicable statutory provision, that the director has satisfied the
requirements listed herein and if an authorization of payment is made,
using the procedures and standards set forth in the applicable statutory
provision, then, unless otherwise provided in the Corporation's Articles
of Incorporation, the Corporation shall pay for or reimburse the
reasonable expenses incurred by a director who is a party to a
proceeding in advance of the final disposition of the proceeding if the
director furnishes the Corporation a written affirmation of his good
faith belief that he has satisfied the standard of conduct described in
this Section, furnishes the Corporation a written undertaking, executed
personally or on his behalf, to repay the advance if it is ultimately
determined that he did not meet the standard of conduct (which
undertaking must be an unlimited general obligation of the director, but
need not be secured and may be accepted without reference to financial
ability to make repayment); and if a determination is made that the
facts then known of those making the determination would not preclude
indemnification under this Section.
(e) Mandatory Indemnification. Unless otherwise provided in the
Corporation's Articles of Incorporation, the Corporation shall indemnify
a director or officer of the Corporation who was wholly successful, on
the merits or otherwise, in the defense of any proceeding to which he
was a party because he is or was a director or officer of the
Corporation against reasonable expenses incurred by him in connection
with the proceeding.
(f) Court-Ordered Indemnification. Unless otherwise provided in
the Corporation's Articles of Incorporation, a director or officer of
the Corporation who is or was a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another
court of competent jurisdiction. The court may order indemnification if
it determines that the director or officer is entitled to mandatory
indemnification as provided in this Section and applicable law, in which
case the court shall also order the Corporation to pay the reasonable
expenses incurred by the director or officer to obtain court-ordered
indemnification. The court may also order indemnification if it
determines that the director or officer is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances,
whether or not the director or officer met the applicable standard of
conduct set forth in this Section and applicable law. Any
indemnification with respect to any proceeding in which liability has
been adjudged in the circumstances described in Paragraph (b) above is
limited to reasonable expenses.
(g) Indemnification of Others. Unless otherwise provided in the
Corporation's Articles of Incorporation, an officer, employee, or agent
of the Corporation shall have the same indemnification rights provided
to a director by this Section. The Board of Directors may also
indemnify and advance expenses to any officer, employee, or agent of the
Corporation, to any extent consistent with public policy as determined
by the general or specific purpose of the Board of Directors.
(h) Insurance. The Corporation may purchase and maintain
liability insurance on behalf of a person who is or was a director,
officer, employee, fiduciary, or agent or the Corporation, or who, while
serving as a director, officer, employee, fiduciary, or agent of the
Corporation, is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee, fiduciary or agent of
another foreign or domestic corporation, other person, of an employee
benefit plan, or incurred by him in that capacity or arising from his
status as a director, officer, employee, fiduciary, or agent, whether or
not the Corporation has the power to indemnify him against the same
liability under applicable law.
LIMITATION ON LIABILITY
SECTION 41. No director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for
any action taken or any failure to take any action, as a director,
except liability for (a) the amount of a financial benefit received by a
director to which he is not entitled; (b) an intentional infliction of
harm on the Corporation or the shareholders; (c) any action that would
result in liability of the director under the applicable statutory
provision concerning unlawful distributions [Section 16-10-842 of Utah's
Revised Business Corporation Act]; or (d) an intentional violation of
criminal law. This provision shall not limit the liability of a
director for any act or omission occurring prior to August 11, 1992.
Any repeal or modification of this provision by the stockholders shall
be prospective only and shall not adversely affect any limitation on the
personal liability of a director of the Corporation for acts or
omissions occurring prior to the effective date of such repeal or
modification.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The following schedule contains summarized financial information extracted
from the Questar Pipeline Co. Statements of Income and Balance Sheet for the
period ended June 30, 1997, and is qualified in its entirety 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> 5,411
<SECURITIES> 0
<RECEIVABLES> 10,229
<ALLOWANCES> 0
<INVENTORY> 2,363
<CURRENT-ASSETS> 19,757
<PP&E> 566,777
<DEPRECIATION> 201,269
<TOTAL-ASSETS> 410,377
<CURRENT-LIABILITIES> 27,469
<BONDS> 134,554
0
0
<COMMON> 6,551
<OTHER-SE> 178,974
<TOTAL-LIABILITY-AND-EQUITY> 410,377
<SALES> 0
<TOTAL-REVENUES> 52,628
<CGS> 0
<TOTAL-COSTS> 18,545
<OTHER-EXPENSES> 8,626
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,665
<INCOME-PRETAX> 18,814
<INCOME-TAX> 7,032
<INCOME-CONTINUING> 11,782
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,782
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
