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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2002
 
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 number    001-13643
 
ONEOK, Inc.
(Exact name of registrant as specified in its charter)
 
Oklahoma
 
73-1520922
(State or other jurisdiction of
incorporation of organization)
 
(I.R.S. Employer Identification No.)
 
100 West Fifth Street, Tulsa, OK
 
74103
(Address of principal executive offices)
 
(Zip Code)
 
(Registrant’s telephone number, including area code) (918) 588-7000
 
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
 
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  ¨
 
At November 9, 2002, the registrant had 60,436,441 shares of common stock, with par value of $0.01 outstanding.


Table of Contents
 
ONEOK, Inc.
 
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2002
 
         
Page No.

           
Part I.
  
Financial Information
    
Item 1.
  
Financial Statements (Unaudited)
    
       
3
       
4-5
       
6
       
7
Item 2.
     
24
Item 3.
     
44
Item 4.
     
47
Part II.
  
Other Information
    
Item 1.
     
47
Item 2.
     
48
Item 3.
     
48
Item 4.
     
48
Item 5.
     
48
Item 6.
     
48
Signatures
         
Certifications
         
 
As used in this Quarterly Report on Form 10-Q, the terms “we”, “our” or “us” mean ONEOK, Inc., an Oklahoma corporation, and its predecessors and subsidiaries, unless the context indicates otherwise.

2


Table of Contents
 
Part I—FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
 
    
Three Months Ended
September 30,

    
Nine Months Ended
September 30,

 
(Unaudited)

  
2002

    
2001

    
2002

    
2001

 
    
(Thousands of Dollars, except per share amounts)
 
Revenues
                                   
Operating revenues, excluding energy trading revenues
  
$
416,342
 
  
$
352,881
 
  
$
1,361,833
 
  
$
1,414,288
 
Energy trading revenues, net
  
 
49,051
 
  
 
27,085
 
  
 
186,836
 
  
 
93,541
 
Cost of sales
  
 
240,195
 
  
 
177,210
 
  
 
760,980
 
  
 
793,257
 
    


  


  


  


Net Revenues
  
 
225,198
 
  
 
202,756
 
  
 
787,689
 
  
 
714,572
 
    


  


  


  


Operating Expenses
                                   
Operations and maintenance
  
 
96,608
 
  
 
92,492
 
  
 
315,772
 
  
 
283,466
 
Depreciation, depletion, and amortization
  
 
44,732
 
  
 
39,322
 
  
 
129,944
 
  
 
114,133
 
General taxes
  
 
14,594
 
  
 
15,209
 
  
 
45,444
 
  
 
46,252
 
    


  


  


  


Total Operating Expenses
  
 
155,934
 
  
 
147,023
 
  
 
491,160
 
  
 
443,851
 
    


  


  


  


Operating Income
  
 
69,264
 
  
 
55,733
 
  
 
296,529
 
  
 
270,721
 
    


  


  


  


Other income, net
  
 
(7,012
)
  
 
(1,914
)
  
 
(2,601
)
  
 
1,951
 
Interest expense
  
 
28,991
 
  
 
34,731
 
  
 
83,026
 
  
 
108,515
 
Income taxes
  
 
12,542
 
  
 
301
 
  
 
82,202
 
  
 
54,752
 
    


  


  


  


Income before cumulative effect of a change in
accounting principle
  
 
20,719
 
  
 
18,787
 
  
 
128,700
 
  
 
109,405
 
Cumulative effect of a change in
accounting principle, net of tax (Note H)
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
(2,151
)
    


  


  


  


Net Income
  
 
20,719
 
  
 
18,787
 
  
 
128,700
 
  
 
107,254
 
Preferred stock dividends
  
 
9,275
 
  
 
9,275
 
  
 
27,825
 
  
 
27,825
 
    


  


  


  


Income Available for Common Stock
  
$
11,444
 
  
$
9,512
 
  
$
100,875
 
  
$
79,429
 
    


  


  


  


Earnings Per Share of Common Stock (Note D)
                                   
Basic
  
$
0.17
 
  
$
0.16
 
  
$
1.07
 
  
$
0.90
 
    


  


  


  


Diluted
  
$
0.17
 
  
$
0.16
 
  
$
1.06
 
  
$
0.90
 
    


  


  


  


Average Shares of Common Stock (Thousands)
                                   
Basic
  
 
99,957
 
  
 
99,521
 
  
 
99,852
 
  
 
99,382
 
Diluted
  
 
100,573
 
  
 
99,633
 
  
 
100,518
 
  
 
99,648
 
    


  


  


  


Dividends per share of Common Stock
  
$
0.16
 
  
$
0.16
 
  
$
0.47
 
  
$
0.47
 
 
See accompanying Notes to Consolidated Financial Statements.

3


Table of Contents
 
ONEOK, Inc. and Subsidiaries
 
CONSOLIDATED BALANCE SHEETS
 
(Unaudited)

  
September 30, 2002

  
December 31, 2001

Assets
  
(Thousands of Dollars)
Current Assets
             
Cash and cash equivalents
  
$
5,909
  
$
28,229
Trade accounts and notes receivable, net
  
 
487,998
  
 
677,796
Materials and supplies
  
 
17,651
  
 
20,310
Gas in storage
  
 
47,262
  
 
82,694
Unrecovered purchased gas costs
  
 
—  
  
 
45,098
Assets from price risk management activities
  
 
833,693
  
 
587,740
Deposits
  
 
—  
  
 
41,781
Other current assets
  
 
57,940
  
 
78,321
    

  

Total Current Assets
  
 
1,450,453
  
 
1,561,969
    

  

Property, Plant and Equipment
             
Marketing and Trading
  
 
124,489
  
 
122,172
Gathering and Processing
  
 
1,075,560
  
 
1,040,195
Transportation and Storage
  
 
706,512
  
 
691,976
Distribution
  
 
2,150,354
  
 
2,085,842
Production
  
 
512,748
  
 
482,404
Other
  
 
93,322
  
 
85,168
    

  

Total Property, Plant and Equipment
  
 
4,662,985
  
 
4,507,757
Accumulated depreciation, depletion, and amortization
  
 
1,335,946
  
 
1,234,789
    

  

Net Property, Plant and Equipment
  
 
3,327,039
  
 
3,272,968
    

  

Deferred Charges and Other Assets
             
Regulatory assets, net (Note B)
  
 
225,013
  
 
232,520
Goodwill
  
 
113,868
  
 
113,868
Assets from price risk management activities
  
 
386,546
  
 
475,066
Prepaid Pensions
  
 
136,991
  
 
116,847
Investments and other
  
 
53,926
  
 
105,921
    

  

Total Deferred Charges and Other Assets
  
 
916,344
  
 
1,044,222
    

  

Total Assets
  
$
5,693,836
  
$
5,879,159
    

  

 
See accompanying Notes to Consolidated Financial Statements.

4


Table of Contents
ONEOK, Inc. and Subsidiaries
 
CONSOLIDATED BALANCE SHEETS
 
(Unaudited)

  
September 30, 2002

    
December 31, 2001

 
Liabilities and Shareholders’ Equity
  
(Thousands of Dollars)
 
Current Liabilities
                 
Current maturities of long-term debt
  
$
6,334
 
  
$
250,000
 
Notes payable
  
 
371,106
 
  
 
599,106
 
Accounts payable
  
 
362,869
 
  
 
390,479
 
Accrued taxes
  
 
33,130
 
  
 
11,528
 
Accrued interest
  
 
23,984
 
  
 
31,954
 
Unrecovered purchased gas costs
  
 
3,002
 
  
 
—  
 
Customers’ deposits
  
 
20,615
 
  
 
21,697
 
Liabilities from price risk management activities
  
 
543,364
 
  
 
381,409
 
Deferred income taxes
  
 
82,369
 
  
 
3,327
 
Other
  
 
178,793
 
  
 
128,917