UNITED STATES
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 September 30, 2004 |
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: 1-12579
OGE ENERGY CORP.
(Exact name of registrant as specified in its charter)
| Oklahoma (State or other jurisdiction of incorporation or organization) |
73-1481638 (I.R.S. Employer Identification No.) |
321 North Harvey
P.O. Box 321
Oklahoma City, Oklahoma 73101-0321
(Address of principal executive offices)
(Zip Code)
405-553-3000
(Registrant’s
telephone number, including area code)
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
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Act).
Yes X No
As of October 31, 2004, 88,980,115 shares of common stock, par value $0.01 per share, were outstanding.
| Part I - FINANCIAL INFORMATION |
Page |
| Item 1. Financial Statements (Unaudited) | |
| Condensed Consolidated Balance Sheets | 1 |
| Condensed Consolidated Statements of Income | 3 |
| Condensed Consolidated Statements of Cash Flows | 4 |
| Notes to Condensed Consolidated Financial Statements |
5 |
| Item 2. Management’s Discussion and Analysis of Financial Condition | |
|
and Results of Operations |
39 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
68 |
| Item 4. Controls and Procedures |
69 |
| Part II - OTHER INFORMATION | |
| Item 1. Legal Proceedings |
70 |
| Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
71 |
| Item 6. Exhibits |
71 |
| Signature |
72 |
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
| (In millions) |
September 30, 2004 |
December 31, 2003 | ||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 28 | .1 | $ | 245 | .6 | ||
| Accounts receivable, less reserve of $4.6 and $4.2, respectively | 409 | .2 | 350 | .2 | ||||
| Accrued unbilled revenues | 67 | .8 | 38 | .0 | ||||
| Fuel inventories | 119 | .5 | 163 | .3 | ||||
| Materials and supplies, at average cost | 50 | .3 | 45 | .1 | ||||
| Price risk management | 141 | .6 | 61 | .3 | ||||
| Gas imbalance | 33 | .1 | 70 | .0 | ||||
| Accumulated deferred tax assets | 11 | .9 | 9 | .4 | ||||
| Fuel clause under recoveries | 48 | .9 | 4 | .0 | ||||
| Other | 7 | .3 | 21 | .5 | ||||
| Total current assets | 917 | .7 | 1,008 | .4 | ||||
| OTHER PROPERTY AND INVESTMENTS, at cost | 36 | .7 | 34 | .7 | ||||
| PROPERTY, PLANT AND EQUIPMENT | ||||||||
| In service | 5,857 | .3 | 5,596 | .3 | ||||
| Construction work in progress | 120 | .6 | 56 | .7 | ||||
| Other | 9 | .6 | 15 | .0 | ||||
| Total property, plant and equipment | 5,987 | .5 | 5,668 | .0 | ||||
| Less accumulated depreciation | 2,456 | .2 | 2,358 | .5 | ||||
| Net property, plant and equipment | 3,531 | .3 | 3,309 | .5 | ||||
| DEFERRED CHARGES AND OTHER ASSETS | ||||||||
| Recoverable take or pay gas charges | 32 | .5 | 32 | .5 | ||||
| Income taxes recoverable from customers, net | 31 | .0 | 31 | .6 | ||||
| Intangible asset - unamortized prior service cost | 40 | .2 | 40 | .2 | ||||
| Prepaid benefit obligation | 100 | .7 | 55 | .7 | ||||
| Price risk management | 30 | .8 | 13 | .5 | ||||
| Other | 65 | .1 | 58 | .6 | ||||
| Total deferred charges and other assets | 300 | .3 | 232 | .1 | ||||
| TOTAL ASSETS | $ | 4,786 | .0 | $ | 4,584 | .7 | ||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part hereof.
1
| (In millions) |
September 30, 2004 |
December 31, 2003 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Short-term debt | $ | 10 | .2 | $ | 202 | .5 | ||
| Accounts payable | 312 | .3 | 280 | .2 | ||||
| Dividends payable | 29 | .4 | 29 | .1 | ||||
| Customers’ deposits | 46 | .0 | 41 | .6 | ||||
| Accrued taxes | 74 | .6 | 18 | .7 | ||||
| Accrued interest | 24 | .9 | 30 | .7 | ||||
| Accrued interest - unconsolidated affiliate | 3 | .5 | 3 | .5 | ||||
| Tax collections payable | 9 | .9 | 7 | .9 | ||||
| Accrued vacation | 18 | .1 | 17 | .2 | ||||
| Long-term debt due within one year | 38 | .1 | 52 | .1 | ||||
| Non-recourse debt of joint venture | 1 | .2 | 1 | .2 | ||||
| Price risk management | 162 | .1 | 46 | .9 | ||||
| Gas imbalance | 26 | .9 | 22 | .5 | ||||
| Fuel clause over recoveries | - | -- | 32 | .4 | ||||
| Other | 35 | .2 | 41 | .2 | ||||
| Total current liabilities | 792 | .4 | 827 | .7 | ||||
| LONG-TERM DEBT | ||||||||
| Long-term debt | 1,288 | .0 | 1,189 | .7 | ||||
| Non-recourse debt of joint venture | 39 | .6 | 40 | .2 | ||||
| Long-term debt - unconsolidated affiliate | 206 | .2 | 206 | .2 | ||||
| Total long-term debt | 1,533 | .8 | 1,436 | .1 | ||||
| DEFERRED CREDITS AND OTHER LIABILITIES | ||||||||
| Accrued pension and benefit obligations | 175 | .4 | 167 | .4 | ||||
| Accumulated deferred income taxes | 781 | .8 | 747 | .3 | ||||
| Accumulated deferred investment tax credits | 38 | .1 | 42 | .0 | ||||
| Accrued removal obligations, net | 122 | .1 | 116 | .3 | ||||
| Price risk management | 16 | .4 | 4 | .5 | ||||
| Provision for payments of take or pay gas | 32 | .5 | 32 | .5 | ||||
| Asset retirement obligation | 1 | .1 | - | -- | ||||
| Other | 13 | .4 | 9 | .3 | ||||
| Total deferred credits and other liabilities | 1,180 | .8 | 1,119 | .3 | ||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stockholders’ equity | 662 | .0 | 636 | .1 | ||||
| Retained earnings | 680 | .0 | 623 | .9 | ||||
| Accumulated other comprehensive loss, net of tax | (63 | .0) | (58 | .4) | ||||
| Total stockholders’ equity | 1,279 | .0 | 1,201 | .6 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 4,786 | .0 | $ | 4,584 | .7 | ||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part hereof.
2
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In millions, except per share data) |
2004 |
2003 |
2004 |
2003 | ||||||||||
| OPERATING REVENUES | ||||||||||||||
| Electric Utility operating revenues | $ | 535 | .9 | $ | 540 | .3 | $ | 1,251 | .7 | $ | 1,230 | .9 | ||
| Natural Gas Pipeline operating revenues | 788 | .8 | 519 | .7 | 2,270 | .1 | 1,731 | .9 | ||||||
| Total operating revenues | 1,324 | .7 | 1,060 | .0 | 3,521 | .8 | 2,962 | .8 | ||||||
| COST OF GOODS SOLD | ||||||||||||||
| Electric Utility cost of goods sold | 267 | .3 | 254 | .3 | 669 | .6 | 634 | .0 | ||||||
| Natural Gas Pipeline cost of goods sold | 737 | .0 | 467 | .3 | 2,108 | .5 | 1,578 | .0 | ||||||
| Total cost of goods sold | 1,004 | .3 | 721 | .6 | 2,778 | .1 | 2,212 | .0 | ||||||
| Gross margin on revenues | 320 | .4 | 338 | .4 | 743 | .7 | 750 | .8 | ||||||
| Other operation and maintenance | 89 | .0 | 90 | .3 | 273 | .2 | 273 | .7 | ||||||
| Depreciation | 43 | .5 | 43 | .5 | 133 | .7 | 133 | .1 | ||||||
| Impairment of assets | 8 | .6 | - | -- | 8 | .6 | 1 | .0 | ||||||
| Taxes other than income | 16 | .7 | 17 | .3 | 52 | .4 | 51 | .4 | ||||||
| OPERATING INCOME | 162 | .6 | 187 | .3 | 275 | .8 | 291 | .6 | ||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||
| Other income | 5 | .2 | 0 | .3 | 10 | .9 | 7 | .0 | ||||||
| Other expense | (0 | .1) | (2 | .8) | (3 | .1) | (6 | .3) | ||||||
| Net other income (expense) | 5 | .1 | (2 | .5) | 7 | .8 | 0 | .7 | ||||||
| INTEREST INCOME (EXPENSE) | ||||||||||||||
| Interest income | 0 | .4 | 0 | .2 | 1 | .3 | 0 | .5 | ||||||
| Interest on long-term debt | (18 | .5) | (18 | .5) | (55 | .6) | (56 | .7) | ||||||
| Interest on trust preferred securities | - | -- | (4 | .3) | - | -- | (13 | .0) | ||||||
| Interest expense - unconsolidated affiliate | (4 | .3) | - | -- | (13 | .0) | - | -- | ||||||
| Allowance for borrowed funds used during construction | 0 | .9 | 0 | .1 | 1 | .2 | 0 | .5 | ||||||
| Interest on short-term debt and other interest charges | (0 | .6) | (1 | .6) | (2 | .6) | (5 | .1) | ||||||
| Net interest expense | (22 | .1) | (24 | .1) | (68 | .7) | (73 | .8) | ||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE TAXES | 145 | .6 | 160 | .7 | 214 | .9 | 218 | .5 | ||||||
| INCOME TAX EXPENSE | 51 | .0 | 59 | .4 | 71 | .5 | 80 | .7 | ||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE | ||||||||||||||
| CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING | ||||||||||||||
| PRINCIPLE | 94 | .6 | 101 | .3 | 143 | .4 | 137 | .8 | ||||||
| DISCONTINUED OPERATIONS | ||||||||||||||
| Income (loss) from discontinued operations | - | -- | (0 | .5) | 0 | .7 | 1 | .7 | ||||||
| Income tax expense | - | -- | 1 | .3 | 0 | .3 | 2 | .2 | ||||||
| Income (loss) from discontinued operations | - | -- | (1 | .8) | 0 | .4 | (0 | .5) | ||||||
| INCOME BEFORE CUMULATIVE EFFECT OF CHANGE | ||||||||||||||
| IN ACCOUNTING PRINCIPLE | 94 | .6 | 99 | .5 | 143 | .8 | 137 | .3 | ||||||
| CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR | ||||||||||||||
| ENERGY TRADING CONTRACTS, NET OF TAX OF $3.7 | - | -- | - | -- | - | -- | (5 | .9) | ||||||
| NET INCOME | $ | 94 | .6 | $ | 99 | .5 | $ | 143 | .8 | $ | 131 | .4 | ||
| BASIC AVERAGE COMMON SHARES OUTSTANDING | 87 | .8 | 82 | .4 | 87 | .6 | 80 | .1 | ||||||
| DILUTED AVERAGE COMMON SHARES OUTSTANDING | 88 | .3 | 82 | .7 | 88 | .1 | 80 | .4 | ||||||
| BASIC EARNINGS (LOSS) PER AVERAGE COMMON SHARE | ||||||||||||||
| Income from continuing operations | $ | 1 | .08 | $ | 1 | .23 | $ | 1 | .64 | $ | 1 | .72 | ||
| Loss from discontinued operations, net of tax | - | -- | (0 | .02) | - | -- | (0 | .01) | ||||||
| Loss from cumulative effect of accounting change, net of tax | - | -- | - | -- | - | -- | (0 | .07) | ||||||