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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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
Commission file number 1-12579
OGE ENERGY CORP.
(Exact name of registrant as specified in its charter)
Oklahoma 73-1481638
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 North Robinson
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
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There were 40,371,844 Shares of Common Stock, par value $0.01 per share,
outstanding as of July 31, 1997.
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<CAPTION>
OGE ENERGY CORP.
PART I. FINANCIAL INFORMATION
Item 1 FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
3 Months Ended 6 Months Ended
June 30 June 30
-------------------------------- ----------------------------------
1997 1996 1997 1996
-------------- -------------- ---------------- ----------------
(thousands except per share data)
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric utility......................................... $ 282,148 $ 303,077 $ 510,026 $ 536,903
Non-utility.............................................. 51,080 45,567 114,417 89,793
-------------- -------------- ---------------- ----------------
Total operating revenues............................... 333,228 348,644 624,443 626,696
-------------- -------------- ---------------- ----------------
OPERATING EXPENSES:
Fuel..................................................... 60,348 69,504 116,962 129,084
Purchased power.......................................... 52,693 52,949 110,850 109,598
Gas purchased for resale................................. 32,501 30,225 75,459 59,512
Other operation and maintenance.......................... 74,943 76,048 146,568 147,081
Depreciation and amortization............................ 34,900 33,485 70,220 66,955
Current income taxes..................................... 18,724 24,835 17,838 25,763
Deferred income taxes, net............................... 169 (2,352) (50) (3,450)
Deferred investment tax credits, net..................... (1,288) (1,288) (2,575) (2,575)
Taxes other than income.................................. 12,189 11,615 25,121 23,888
-------------- -------------- ---------------- ----------------
Total operating expenses............................... 285,179 295,021 560,393 555,856
-------------- -------------- ---------------- ----------------
OPERATING INCOME........................................... 48,049 53,623 64,050 70,840
-------------- -------------- ---------------- ----------------
OTHER INCOME (DEDUCTIONS):
Interest income.......................................... 824 651 1,371 1,162
Other.................................................... (313) (919) (418) (1,236)
-------------- -------------- ---------------- ----------------
Net other income (deductions).......................... 511 (268) 953 (74)
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INTEREST CHARGES:
Interest on long-term debt............................... 15,558 15,570 30,977 31,169
Allowance for borrowed funds used during construction. (157) (147) (224) (334)
Other.................................................... 2,074 2,604 3,425 4,065
-------------- -------------- ---------------- ----------------
Total interest charges, net............................ 17,475 18,027 34,178 34,900
-------------- -------------- ---------------- ----------------
NET INCOME ................................................ 31,085 35,328 30,825 35,866
PREFERRED DIVIDEND REQUIREMENTS............................ 572 579 1,143 1,158
-------------- -------------- ---------------- ----------------
EARNINGS AVAILABLE FOR COMMON.............................. $ 30,513 $ 34,749 $ 29,682 $ 34,708
============== ============== ================ ================
AVERAGE COMMON SHARES OUTSTANDING.......................... 40,373 40,368 40,373 40,369
EARNINGS PER AVERAGE COMMON SHARE.......................... $ 0.76 $ 0.86 $ 0.74 $ 0.86
============== ============== ================ ================
DIVIDENDS DECLARED PER SHARE.............................. $ 0.665 $ 0.665 $ 1.33 $ 1.33
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part hereof.
</FN>
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<CAPTION>
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30 December 31
1997 1996
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(dollars in thousands)
<S> <C> <C>
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
In service.................................................... $ 4,064,942 $ 4,005,532
Construction work in progress................................. 36,899 27,968
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Total property, plant and equipment......................... 4,101,841 4,033,500
Less accumulated depreciation............................. 1,747,649 1,687,423
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Net property, plant and equipment............................. 2,354,192 2,346,077
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OTHER PROPERTY AND INVESTMENTS, at cost......................... 32,469 24,802
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CURRENT ASSETS:
Cash and cash equivalents..................................... 9,491 2,523
Accounts receivable - customers, less reserve of $3,362 and
$4,626 respectively......................................... 108,884 128,974
Accrued unbilled revenues..................................... 55,600 34,900
Accounts receivable - other................................... 11,130 11,748
Fuel inventories, at LIFO cost................................ 59,665 62,725
Materials and supplies, at average cost....................... 28,407 24,827
Prepayments and other......................................... 2,849 4,300
Accumulated deferred tax assets............................... 5,950 10,067
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Total current assets........................................ 281,976 280,064
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DEFERRED CHARGES:
Advance payments for gas...................................... 9,500 9,500
Income taxes recoverable through future rates................. 43,459 44,368
Other......................................................... 48,536 57,544
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Total deferred charges...................................... 101,495 111,412
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TOTAL ASSETS.................................................... $ 2,770,132 $ 2,762,355
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CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock and retained earnings............................ $ 937,360 $ 961,603
Cumulative preferred stock.................................... 49,269 49,379
Long-term debt................................................ 804,490 829,281
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Total capitalization........................................ 1,791,119 1,840,263
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CURRENT LIABILITIES:
Short-term debt............................................... 113,600 41,400
Accounts payable.............................................. 63,458 86,856
Dividends payable............................................. 27,418 27,421
Customers' deposits........................................... 23,514 23,257
Accrued taxes................................................. 34,449 26,761
Accrued interest.............................................. 18,998 19,832
Long-term debt due within one year............................ 25,000 15,000
Other......................................................... 43,133 39,188
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Total current liabilities................................... 349,570 279,715
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DEFERRED CREDITS AND OTHER LIABILITIES:
Accrued pension and benefit obligation........................ 61,947 61,335
Accumulated deferred income taxes............................. 482,218 488,016
Accumulated deferred investment tax credits................... 75,453 78,028
Other......................................................... 9,825 14,998
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Total deferred credits and other liabilities.............`... 629,443 642,377
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COMMITMENTS AND CONTINGENCIES................................... --- ---
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TOTAL CAPITALIZATION AND LIABILITIES............................ $ 2,770,132 $ 2,762,355
============= ==============
The accompanying Notes to Consolidated Financial Statements are an integral part hereof.
</TABLE>
2
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<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
6 Months Ended
June 30
1997 1996
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(dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ........................................................ $ 30,825 $ 35,866
Adjustments to Reconcile Net Income to Net
Cash Provided From Operating Activities:
Depreciation and amortization.................................... 70,220 66,955
Deferred income taxes and investment tax credits, net............ (2,625) (6,025)
Provision for rate refund........................................ --- 1,804
Change in Certain Current Assets and Liabilities:
Accounts receivable - customers.................................. 20,090 (12,417)
Accrued unbilled revenues........................................ (20,700) (21,450)
Fuel, materials and supplies inventories......................... (520) 2,111
Accumulated deferred tax assets.................................. 4,117 624
Other current assets............................................. 2,069 (7,237)
Accounts payable................................................. (23,398) (5,838)
Accrued taxes.................................................... 7,688 15,308
Accrued interest................................................. (834) 195
Accumulated provision for rate refund............................ --- 1,804
Other current liabilities........................................ 4,199 (228)
Other operating activities......................................... (2,174) 12,116
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Net cash provided from operating activities...................... 88,957 83,588
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................... (84,240) (72,643)
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Net cash used in investing activities............................ (84,240) (72,643)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of long-term debt, net.................................. (15,000) ---
Short-term debt, net............................................... 72,200 54,100
Redemption of preferred stock...................................... (110) (5)
Cash dividends declared on preferred stock......................... (1,143) (1,158)
Cash dividends declared on common stock............................ (53,696) (53,687)
-------------- --------------
Net cash provided from (used in) financing activities............ 2,251 (750)
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NET INCREASE IN CASH AND CASH EQUIVALENTS............................ 6,968 10,195
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD..................... 2,523 5,420
-------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD........................... $ 9,491 $ 15,615
============== ==============
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest (net of amount capitalized)............................. $ 32,885 $ 33,209
Income taxes..................................................... $ 11,887 $ 11,963
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<FN>
DISCLOSURE OF ACCOUNTING POLICY:
For purposes of these statements, the Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents. These investments are carried at cost which approximates market.
The accompanying Notes to Consolidated Financial Statements are an integral part hereof.
</FN>
</TABLE>
3
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The condensed consolidated financial statements included herein have been
prepared by OGE Energy Corp. (the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations; however, the Company believes that the disclosures are
adequate to make the information presented not misleading.
The Company became the parent company for Oklahoma Gas and Electric Company
("OG&E") and its former subsidiary, Enogex Inc. on December 31, 1996. On
that date, all outstanding OG&E common stock was exchanged on a
share-for-share basis for common stock of OGE Energy Corp. and the common
stock of Enogex Inc. was distributed to the Company. The financial
information presented represents the consolidated results of the Company
for the three months and six months ended June 30, 1997. All significant
intercompany transactions have been eliminated in consolidation.
In the opinion of management, all adjustments necessary to present fairly
the financial position of the Company and its subsidiaries as of June 30,
1997, and December 31, 1996, and the results of operations and the changes
in cash flows for the periods ended June 30, 1997, and June 30, 1996, have
been included and are of a normal recurring nature (excluding amortization
of a regulatory asset relating to a Voluntary Early Retirement Package
("VERP") and severance package - (See Item 2 "Management's Discussion and
Analysis of Financial Condition and Results of Operations" for related
discussion).
The results of operations for such interim periods are not necessarily
indicative of the results for the full year. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Company's Form 10-K for the year ended December 31, 1996.
2. In March 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." Adoption of SFAS No. 128 is required for both interim and annual
periods ending after December 15, 1997. The Company will adopt this new
standard effective December 31, 1997, and management does not believe the
adoption of this standard will have a material impact on its earnings per
share.
3. In March 1997, the FASB issued SFAS No. 129, "Disclosure of Information
about Capital Structure." Adoption of SFAS No. 129 is required for
financial statements for periods ending after December 15, 1997. The
Company will adopt this new standard effective December 31, 1997.
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4. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." Adoption of SFAS No. 130 is required for both interim and annual
periods beginning after December 15, 1997. The Company will adopt this new
standard effective March 31, 1998, and management does not believe the
adoption of this standard will have a material impact on its consolidated
financial polition or results of operations.
5. In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of
an Enterprise and Related Information." Adoption of SFAS No. 131 is
required for fiscal years beginning after December 15, 1997. The Company
will adopt this new standard effective December 31, 1998.
5
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Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OVERVIEW
The following discussion and analysis presents factors which affected the
results of operations for the three and six months ended June 30, 1997
(respectively, the "current periods"), and the financial position as of June 30,
1997, of the Company and its subsidiaries: OG&E, Enogex Inc. and its
subsidiaries ("Enogex") and Origen and its subsidiaries ("Origen"). For current
periods, approximately 85 percent and 82 percent of the Company's revenues
consisted of regulated sales of electricity by OG&E, a public utility, while the
remaining 15 percent and 18 percent were provided by the non-utility operations
of Enogex. Origen recently was formed and its operations to date have been
deminimis. Revenues from sales of electricity are somewhat seasonal, with a
large portion of OG&E's annual electric revenues occurring during the summer
months when the electricity needs of its customers increase. Enogex's primary
operations consist of transporting natural gas through its intra-state pipeline
to various customers (including OG&E), marketing (buying and selling) natural
gas to third parties, selling natural gas liquids extracted by its natural gas
processing plants and investing in natural gas development and production
activities. Actions of the regulatory commissions that set OG&E's electric rates
will continue to affect the Company's financial results. Unless indicated
otherwise, all comparisons are with the corresponding periods of the prior year.
Some of the matters discussed in this Form 10-Q may contain forward-looking
statements that are subject to certain risks, uncertainties and assumptions.
Actual results may vary materially. Factors that could cause actual results to
differ materially include, but are not limited to: general economic conditions,
including their impact on capital expenditures; business conditions in the
energy industry; competitive factors; unusual weather; regulatory decisions and
other risk factors listed in the Company's Form 10-K for the year ended December
31, 1996 including Exhibit 99.01 thereto and other factors described from time
to time in the Company's reports to the Securities and Exchange Commission.
On February 11, 1997, the Oklahoma Corporation Commission ("OCC") issued an
order that, among other things, effectively lowered OG&E's rates to its Oklahoma
retail customers by $50 million annually (based on a test year ended December
31, 1995). Of the $50 million rate reduction, approximately $45 million became
effective on March 5, 1997, and the remaining $5 million becomes effective March
1, 1998. This $50 million rate reduction is in addition to the $15 million rate
reduction discussed below that was effective January 1, 1995. The Order also
directed OG&E to transition to competitive bidding of its gas transportation
requirements, currently met by Enogex, no later than April 30, 2000 and set
annual compensation for the transportation services provided by Enogex to OG&E
at $41.3 million until competitively-bid gas transportation begins.
6
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On June 18, 1997, OG&E filed documents with the OCC relating to a
Generation Efficiency Performance Rider ("GEP Rider"), which was approved in the
February 11, 1997 order. The GEP Rider is designed so that when OG&E's average
annual cost of fuel per kwh is less than 96.261 percent of the average
non-nuclear fuel cost per kwh of the other fifteen investor owned utility
members of the Southwest Power Pool, OG&E is allowed to collect, through the GEP
Rider, one-third of the amount by which OG&E's average annual cost of fuel comes
in below 96.261 percent of such Southwest Power Pool average.
The fuel cost information used to calculate the GEP Rider is based on fuel
cost data submitted by each of the utilities in their Form No. 1 Annual Report
filed with the Federal Energy Regulatory Commission. The GEP Rider is revised
effective July 1 of each year to reflect any changes in the relative annual cost
of fuel reported for the preceding year. Management estimates that the
additional 1997 revenue impact from the current revision to the GEP Rider will
be approximately $9 million, or approximately $0.13 per share. The current GEP
Rider is estimated to positively impact revenue by $27 million, or approximately
$0.41 per share during the 12 months ending June 1998.
In 1994, OG&E restructured and redesigned its operations to reduce costs
and to more favorably position itself for the competitive electric utility
environment. As part of this process, OG&E implemented a Voluntary Early
Retirement Package ("VERP") and a severance package in 1994. These two packages
reduced OG&E's workforce by approximately 900 employees.
In response to an application filed by OG&E, the OCC issued an order on
October 26, 1994, that permitted OG&E to: (i) establish a regulatory asset in
connection with the costs associated with the workforce reduction; (ii) amortize
the December 31, 1994, balance of the regulatory asset over 26 months; and (iii)
reduce OG&E's electric rates by approximately $15 million annually, effective
January 1995. In 1996, the labor savings substantially offset the amortization
of the regulatory asset and the annual rate reduction of $15 million. The
regulatory asset was fully amortized at February 28, 1997 and again the labor
savings substantially offset the regulatory asset amortization in 1997 and
therefore, did not significantly impact operating results in the current period.
REVENUES
Total operating revenues decreased $15.4 million or 4.4 percent and $2.3
million or 0.4 percent in the current periods. These decreases were primarily
attributable to decreased kilowatt-hour sales attributable primarily to milder
weather and the $45 million annual rate reduction that took effect in March,
1997. These reductions were partially offset by increased Enogex revenues and an
increase in the number of electric customers.
The increase in customers only partially offset the impact of milder
weather in the Company's service area, resulting in decreases of 2.2 percent and
1.6 percent in kilowatt-hour sales to OG&E customers ("system sales") in the
current periods. Sales to other utilities decreased significantly (56.4 percent
and 46.5 percent during the current periods); however, sales
7
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to other utilities are at much lower prices per kilowatt-hour and have less
impact on operating revenues and earnings than system sales.
Enogex revenues increased $5.5 million or 12.1 percent and $24.6 million or
27.4 percent in the current periods, largely due to increased revenues from its
marketing of natural gas and natural gas liquids. These increased revenues were
attributable primarily to significantly higher volumes sold with minimal
decreases in sales prices.
EXPENSES
Total operating expenses decreased $9.8 million or 3.3 percent in the three
months ended June 30, 1997. This decrease was primarily due to decreased fuel
expense and current income taxes. Fuel expense decreased $9.2 million or 13.2
percent in the three months ended June 30, 1997 primarily due to decreased
generation as a result of the milder than normal weather.
In the six months ended June 30, 1997, total operating expenses were up
$4.5 million or 0.8 percent primarily due to increased Enogex sales volumes and
costs resulting from Enogex's expansion efforts, partially offset by decreased
fuel expense ($12.1 million or 9.4 percent) primarily due to decreased
generation as a result of the milder than normal weather. Variances in the
actual cost of fuel used in electric generation and certain purchased power
costs, as compared to that component in cost-of-service for ratemaking, are
passed through to OG&E's electric customers through automatic fuel adjustment
clauses. The automatic fuel adjustment clauses are subject to periodic review by
the OCC, the Arkansas Public Service Commission ("APSC") and the Federal Energy
Regulatory Commission ("FERC"). Enogex Inc. owns and operates a pipeline
business that delivers natural gas to the generating stations of OG&E. The OCC,
the APSC and the FERC have authority to examine the appropriateness of any gas
transportation charges or other fees OG&E pays Enogex, which OG&E seeks to
recover through the fuel adjustment clause or other tariffs.
Enogex's gas purchased for resale pursuant to its gas marketing operations
increased $2.3 million or 7.5 percent and $15.9 million or 26.8 percent in the
current periods, due to significantly higher sales volumes and slightly higher
purchase prices.
Other operation and maintenance decreased $1.1 million or 1.5 percent and
$.5 million or 0.3 percent in the current periods. These decreases were due to
the completion of the VERP amortization in February 1997 and costs associated
with the development of the enterprise software in 1996. These reductions were
partially offset by increased corporate expenses and costs at Enogex associated
with increased sales volumes and costs resulting from its expansion activities.
Depreciation and amortization increased $1.4 million or 4.2 percent and
$3.3 million or 4.9 percent during the current periods due to an increase in
depreciable property and higher oil and gas production volumes (based on units
of production depreciation method).
8
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Current income taxes decreased $6.1 million or 24.6 percent and $7.9
million or 30.8 percent in the current periods due to lower pre-tax earnings.
Other income and deductions increased $.8 million and $1.0 million in the
current periods, resulting from costs of various non-regulated marketing efforts
in 1996 and a gain on the sale of sulfur dioxide allowances by OG&E.
Interest charges decreased $.6 million or 3.1 percent and $.7 million or
2.1 percent in the current periods as a result of retiring $15 million of 5.125
percent First-Mortgage Bonds in January 1997 and a lower average daily balance
in short-term debt.
EARNINGS
Net income decreased $4.2 million or 12 percent in the three months ended
June 30, 1997. Of the $4.2 million decrease, approximately $1.9 million was
related to non-regulated corporate expenses, $1.9 million was attributable to a
decrease in OG&E's income from continuing operations and approximately $.4
million was attributable to a decrease in net income at Enogex. For the six
months ended June 30, 1997, net income decreased $5.0 million or 14.1 percent.
Of the $5.0 million decrease, approximately $2.4 million was related to
non-regulated corporate expenses, $1.8 million was attributable to a decrease in
OG&E's income from continuing operations and approximately $.8 million was
attributable to Enogex. Earnings per average common share decreased from $0.86
to $0.76 and from $0.86 to $0.74 in the current periods. These changes reflect
the above items and the seasonal nature of the Company's regulated electric
business.
LIQUIDITY AND CAPITAL REQUIREMENTS
The Company meets its cash needs through internally generated funds,
permanent financing and short-term borrowings. Internally generated funds and
short-term borrowings are expected to meet virtually all of the Company's
capital requirements through the remainder of 1997. Short-term borrowings will
continue to be used to meet temporary cash requirements.
The Company's primary needs for capital are related to construction of new
facilities to meet anticipated demand for OG&E's utility service, to replace or
expand existing facilities in OG&E's electric utility business and to acquire
new facilities or replace or expand existing facilities at Enogex and other
non-utility businesses, and to some extent, for satisfying maturing debt and
sinking fund obligations. Capital expenditures of $84.2 million for the six
months ended June 30, 1997 were financed with internally generated funds and
short-term borrowings.
The Company's capital structure and cash flow remained strong throughout
the current period. The Company's combined cash and cash equivalents increased
approximately $7 million during the six months ended June 30, 1997. The increase
reflects the Company's cash flow from
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operations plus an increase in short-term borrowings, net of retirement of
long-term debt, construction expenditures and dividend payments.
In July 1997, OG&E issued $250 million of long-term debt with $125 million
at 6.50 percent due July 15, 2017 and $125 million at 6.65 percent due July 15,
2027. The proceeds from the sale of this new debt will be applied to the
redemption on August 21, 1997, of $75 million principal amount of OG&E's 8.375
percent First Mortgage Bonds due January 1, 2007, $100 million principal amount
of OG&E's 8.25 percent First Mortgage Bonds due August 15, 2016 and $75 million
principal amount of OG&E's 8.875 percent First Mortgage Bonds due December 1,
2020 at the principal amount plus the applicable redemption premium and accrued
interest to the redemption date. OG&E also refinanced its obligations with
respect to $56 million of 7 percent Pollution Control Revenue Bonds due March 1,
2017, through the issuance of a new series due June 1, 2027 and bearing interest
at a variable rate.
On April 30, 1997, Enogex acquired an 80 percent interest in the NUSTAR
Joint Venture for approximately $26 million. The assets of the joint venture
include a two-thirds interest in a gas processing plant, 100 percent interest in
a gas processing bypass plant, approximately 50 miles of natural gas liquid
pipeline and approximately 200 miles of related gas gathering facilities in West
Texas. For the year ended December 31, 1996, the joint venture generated
revenues of approximately $36.6 million and partnership net income (before
income taxes) of approximately $3.2 million. Enogex financed this acquisition
with borrowings from the Company and in July 1997, issued $30 million of
medium-term notes at 6.79 percent, due July 23, 2004, to repay the amounts
borrowed from the Company.
Effective March 31, 1997, Enogex also disposed of its 80 percent interest
in Centoma Gas Systems, Inc. for $3.2 million, which approximated the net book
value of Enogex's share of Centoma's assets at December 31, 1996. Enogex had
purchased its interest in Centoma in 1994 for approximately $6.5 million.
In February 1997, OG&E filed a registration statement for up to $50 million
of grantor trust preferred securities. Assuming favorable market conditions,
OG&E may issue all or part of the $50 million of grantor trust preferred
securities to refinance preferred stock.
Like any business, the Company is subject to numerous contingencies, many
of which are beyond its control. For discussion of significant contingencies
that could affect the Company, reference is made to Part II, Item 1 - "Legal
Proceedings" of this Form 10-Q, to Item 5 - "Other Information" in the Company's
Form 10-Q for the quarter ended March 31, 1997 and to "Management's Discussion
and Analysis" and Notes 9 and 10 of Notes to the Consolidated Financial
Statements in the Company's 1996 Form 10-K.
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PART II. OTHER INFORMATION
Item 1 LEGAL PROCEEDINGS
Reference is made to Item 3 of the Company's 1996 Form 10-K for a
description of certain legal proceedings presently pending. Except as described
below, there are no new significant cases to report against the Company or its
subsidiaries and there have been no significant changes in the previously
reported proceedings.
As reported in the Company's 1996 Form 10-K, in February 1997, certain
taxpayers instituted litigation (The State of Oklahoma, ex rel., Teresa Harvey
----------------------------------------------
(Carroll); Margaret B. Fent and Jerry R. Fent v. Oklahoma Gas and Electric
- --------------------------------------------------------------------------------
Company, et.al, District Court, Oklahoma County, Case No. CJ-97-1242-63) against
- -----------------------------------------------------------------------
OG&E and certain other defendants relating to overcharges refunded by OG&E to
its ratepayors in compliance with an order of the OCC, which plaintiffs alleged
should have been paid into the state Unclaimed Property Fund. In June 1997, OG&E
was dismissed from this proceeding. At this time, the Company cannot predict
whether the plaintiffs will appeal the dismissal.
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
(a) The Company's Annual Meeting of Shareowners was held on May 15,1997.
(b) Not applicable.
(c) The matters voted upon and the results of the voting at the Annual
Meeting were as follows:
(1) The Shareowners voted to elect the Company's nominees for
election to the Board of Directors as follows:
William E. Durrett - 35,729,993 votes for election and
736,312 votes withheld
H. L. Hembree, III - 35,759,134 votes for election and
707,170 votes withheld
Steven E. Moore - 35,792,339 votes for election and 673,965
votes withheld
11
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Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.01 - Financial Data Schedule.
(b) Reports on Form 8-K
A Form 8-K Current Report under Item 5, dated June 19, 1997, reported
on OG&E's Generation Efficiency Performance Rider ("GEP Rider"). OG&E
management estimates that the additional 1997 revenue impact from the
current revision to the GEP Rider will be approximately $9 million, or
approximately $0.13 per share. The current GEP Rider is estimated to
positively impact revenue by $27 million, or approximately $0.41 per
share during the 12 months ending June 1998.
12
<PAGE>
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.
OGE ENERGY CORP.
(Registrant)
By /s/ James R. Hatfield
----------------------------
James R. Hatfield
Vice President and Treasurer
(On behalf of the registrant and in
his capacity as Vice President and Treasurer)
August 13, 1997
13
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT INDEX DESCRIPTION
- ------------- -----------
<S> <C>
27.01 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the OGE
Energy Corp. Consolidated Statements of Income, Balance Sheets, and Statements
of Cash Flows as reported on Form 10-Q as of June 30, 1997 and is qualified in
its entirety by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,354,192
<OTHER-PROPERTY-AND-INVEST> 32,469
<TOTAL-CURRENT-ASSETS> 281,976
<TOTAL-DEFERRED-CHARGES> 101,495
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,770,132
<COMMON> 465
<CAPITAL-SURPLUS-PAID-IN> 511,710
<RETAINED-EARNINGS> 425,185
<TOTAL-COMMON-STOCKHOLDERS-EQ> 937,360
0
49,269
<LONG-TERM-DEBT-NET> 804,490
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 113,600
<LONG-TERM-DEBT-CURRENT-PORT> 25,000
0
<CAPITAL-LEASE-OBLIGATIONS> 6,118
<LEASES-CURRENT> 3,000
<OTHER-ITEMS-CAPITAL-AND-LIAB> 831,295
<TOT-CAPITALIZATION-AND-LIAB> 2,770,132
<GROSS-OPERATING-REVENUE> 624,443
<INCOME-TAX-EXPENSE> 15,213
<OTHER-OPERATING-EXPENSES> 545,180
<TOTAL-OPERATING-EXPENSES> 560,393
<OPERATING-INCOME-LOSS> 64,050
<OTHER-INCOME-NET> 953
<INCOME-BEFORE-INTEREST-EXPEN> 65,003
<TOTAL-INTEREST-EXPENSE> 34,178
<NET-INCOME> 30,825
1,143
<EARNINGS-AVAILABLE-FOR-COMM> 29,682
<COMMON-STOCK-DIVIDENDS> 53,696
<TOTAL-INTEREST-ON-BONDS> 30,977
<CASH-FLOW-OPERATIONS> 88,957
<EPS-PRIMARY> 0.74
<EPS-DILUTED> 0.74
</TABLE>
