<PAGE>
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, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-1097
OKLAHOMA GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Oklahoma 73-0382390
(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)
405-272-3000
(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
-----
There were 40,346,477 Shares of Common Stock, par value $2.50 per share,
outstanding as of July 29, 1994.
<PAGE> 1
<TABLE>
OKLAHOMA GAS AND ELECTRIC COMPANY
PART I. FINANCIAL INFORMATION
Item 1 FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
3 Months Ended 6 Months Ended
June 30 June 30
1994 1993 1994 1993
-------- -------- -------- --------
(dollars in thousands except per share data)
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric utility . . . . . . . . $304,633 $302,426 $543,497 $566,491
Non-utility subsidiary . . . . . 41,990 39,373 87,110 78,730
-------- -------- -------- --------
Total operating revenues . . . . 346,623 341,799 630,607 645,221
-------- -------- -------- --------
OPERATING EXPENSES:
Fuel . . . . . . . . . . . . . . 66,608 90,134 128,825 173,502
Purchased power . . . . . . . . . 58,590 55,245 113,550 109,201
Gas purchased for resale . . . . 30,752 34,544 68,064 65,470
Other operation . . . . . . . . . 60,354 47,974 109,593 96,770
Maintenance . . . . . . . . . . . 19,187 21,952 37,248 38,835
Depreciation and amortization . . 31,105 29,523 61,766 58,756
Current income taxes . . . . . . 20,463 10,272 4,878 12,115
Deferred income taxes, net . . . (809) 2,572 15,920 5,789
Deferred investment tax credits,
net . . . . . . . . . . . . . . (1,287) (1,287) (2,575) (2,575)
Taxes other than income . . . . . 11,233 11,413 22,227 22,680
-------- -------- -------- --------
Total operating expenses . . . . 296,196 302,342 559,496 580,543
-------- -------- -------- --------
OPERATING INCOME . . . . . . . . . 50,427 39,457 71,111 64,678
-------- -------- -------- --------
OTHER INCOME AND DEDUCTIONS:
Interest income . . . . . . . . . 1,098 439 1,426 625
Other . . . . . . . . . . . . . . (1,108) (768) (1,695) (1,109)
-------- -------- -------- --------
Net other income and deductions. (10) (329) (269) (484)
-------- -------- -------- --------
INTEREST CHARGES:
Interest on long-term debt . . . 17,578 17,595 35,162 35,300
Allowance for borrowed funds used
during construction . . . . . . (198) (82) (407) (270)
Other . . . . . . . . . . . . . . 1,955 1,219 3,505 2,078
-------- -------- -------- --------
Total interest charges, net . . 19,335 18,732 38,260 37,108
-------- -------- -------- --------
NET INCOME . . . . . . . . . . . . 31,082 20,396 32,582 27,086
PREFERRED DIVIDEND REQUIREMENTS . . 579 579 1,158 1,158
-------- -------- -------- --------
EARNINGS AVAILABLE FOR COMMON . . . $ 30,503 $ 19,817 $ 31,424 $ 25,928
======== ======== ======== ========
AVERAGE COMMON SHARES OUTSTANDING
(thousands) . . . . . . . . . . . 40,346 40,328 40,346 40,328
EARNINGS PER AVERAGE COMMON SHARE . $ .76 $ .49 $ .78 $ .64
======== ======== ======== ========
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.
</TABLE>
<PAGE> 2
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
June 30 December 31
1994 1993
---------- ----------
(dollars in thousands)
<S> <C> <C>
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
In service . . . . . . . . . . . . . . . $3,702,403 $3,656,113
Construction work in progress . . . . . . 42,099 33,970
---------- ----------
Total property, plant and equipment . . 3,744,502 3,690,083
Less accumulated depreciation . . . . 1,426,896 1,370,227
---------- ----------
Net property, plant and equipment . . . . 2,317,606 2,319,856
---------- ----------
OTHER PROPERTY AND INVESTMENTS, at cost . . 7,157 6,920
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . 3,005 6,593
Accounts receivable-customers, net . . . 133,072 126,997
Accrued unbilled revenues . . . . . . . . 64,100 45,100
Accounts receivable-other . . . . . . . . 6,955 6,269
Fuel inventories, at LIFO cost . . . . . 41,458 27,127
Materials and supplies, at average cost . 27,259 26,813
Prepayments and other . . . . . . . . . . 36,110 28,648
Accumulated deferred tax assets . . . . . 12,258 24,088
---------- ----------
Total current assets . . . . . . . . . 324,217 291,635
---------- ----------
DEFERRED CHARGES:
Advance payments for gas . . . . . . . . 20,567 21,165
Income taxes recoverable through
future rates . . . . . . . . . . . . . 47,379 47,593
Other . . . . . . . . . . . . . . . . . . 47,400 44,255
---------- ----------
Total deferred charges . . . . . . . . 115,346 113,013
---------- ----------
TOTAL ASSETS . . . . . . . . . . . . . . . $2,764,326 $2,731,424
========== ==========
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock and retained earnings . . . $1,097,946 $1,120,183
Cumulative preferred stock . . . . . . . 49,973 49,973
Treasury stock . . . . . . . . . . . . . (213,379) (213,379)
Long-term debt . . . . . . . . . . . . . 813,489 838,660
---------- ----------
Total capitalization . . . . . . . . . 1,748,029 1,795,437
---------- ----------
CURRENT LIABILITIES:
Short-term debt . . . . . . . . . . . . . 163,750 47,000
Accounts payable . . . . . . . . . . . . 74,522 100,285
Dividends payable . . . . . . . . . . . . 27,410 27,410
Customers' deposits . . . . . . . . . . . 20,241 19,353
Accrued taxes . . . . . . . . . . . . . . 21,987 24,717
Accrued interest . . . . . . . . . . . . 26,342 26,712
Long-term debt due within one year . . . 25,350 350
Provision for rate refund . . . . . . . . 1,024 39,117
Other . . . . . . . . . . . . . . . . . . 45,407 48,666
---------- ----------
Total current liabilities . . . . . . . 406,033 333,610
---------- ----------
DEFERRED CREDITS AND OTHER
LIABILITIES:
Accrued pension and benefit obligation . 23,016 16,210
Accumulated deferred income taxes . . . . 487,244 484,003
Accumulated deferred investment
tax credits . . . . . . . . . . . . . . 90,903 93,478
Other . . . . . . . . . . . . . . . . . . 9,101 8,686
---------- ----------
Total deferred credits and other
liabilities . . . . . . . . . . . . . 610,264 602,377
---------- ----------
COMMITMENTS AND CONTINGENCIES . . . . . . . - -
---------- ----------
TOTAL CAPITALIZATION AND LIABILITIES . . . $2,764,326 $2,731,424
========== ==========
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral
part hereof.
</TABLE>
<PAGE> 3
<TABLE>
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
<CAPTION>
6 Months Ended
June 30
1994 1993
-------- --------
(dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . $ 32,582 $ 27,086
Adjustments to Reconcile Net Income to Net Cash
Provided From (Used In) Operating Activities:
Depreciation and amortization . . . . . . . . . . . 61,766 58,756
Deferred income taxes and investment tax
credits, net . . . . . . . . . . . . . . . . . . . 13,345 3,214
Provision for rate refund . . . . . . . . . . . . . 2,200 -
Change in Certain Current Assets and Liabilities:
Accounts receivable - customers . . . . . . . . . (6,075) (22,806)
Accrued unbilled revenues . . . . . . . . . . . . (19,000) (14,200)
Fuel, materials and supplies inventories . . . . (14,777) (1,295)
Accumulated deferred tax assets . . . . . . . . . 11,830 -
Other current assets . . . . . . . . . . . . . . (8,148) 2,397
Accounts payable . . . . . . . . . . . . . . . . (27,523) (24,266)
Accrued taxes . . . . . . . . . . . . . . . . . . (2,730) (3,849)
Accrued interest . . . . . . . . . . . . . . . . (370) (666)
Accumulated provision for rate refund . . . . . . (38,093) -
Other current liabilities . . . . . . . . . . . . (2,371) 174
Other operating activities . . . . . . . . . . . . 4,665 7,876
-------- --------
Net cash (used in) provided from
operating activities . . . . . . . . . . . . 7,301 32,421
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . . (72,470) (64,876)
-------- --------
Net cash used in investing activities . . . . . (72,470) (64,876)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of long-term debt . . . . . . . . . . . (350) (15,300)
Short-term debt, net . . . . . . . . . . . . . . . 116,750 96,400
Cash dividends declared on preferred stock . . . . (1,158) (1,158)
Cash dividends declared on common stock . . . . . . (53,661) (53,636)
-------- --------
Net cash provided from financing activities . . 61,581 26,306
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . (3,588) (6,149)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . 6,593 11,316
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . $ 3,005 $ 5,167
======== ========
- - - --------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest (net of amount capitalized) . . . . . . . $ 37,402 $ 36,328
Income taxes . . . . . . . . . . . . . . . . . . . $ 7,841 $ 17,000
- - - --------------------------------------------------------------------------------------
<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.
</TABLE>
<PAGE> 4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The condensed consolidated financial statements included
herein have been prepared by 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. In the opinion of the Company,
all adjustments necessary to present fairly the financial
position of Oklahoma Gas and Electric Company ("OG&E") and
its subsidiaries as of June 30, 1994, and December 31, 1993,
and the results of operations and the changes in cash flows
for the periods ended June 30, 1994, and June 30, 1993, have
been included and are of a normal recurring nature excluding
the following:
* a $2.2 million provision for rate refund recorded in
the first quarter of 1994;
* approximately $16 million of non-recurring revenue
associated with the lowered fuel component of recently
established tariffs in the Oklahoma jurisdiction; and
* recognition in June of approximately $8.4 million of
SFAS No. 106 expense previously recorded as a
regulatory asset (see Note 3 below).
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, 1993.
2. On January 1, 1994, Statement of Financial Accounting
Standards ("SFAS") No. 112, "Employers' Accounting for
Postemployment Benefits," and SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," became
effective. These requirements do not have a material impact
on the Company's consolidated financial position or results
of operations.
3. The Company adopted provisions of SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions,"
beginning January 1, 1993. During 1993, OG&E expensed "pay-
as-you-go" postretirement benefits and recorded a deferral
for the difference between pay-as-you-go and SFAS No. 106
requirements. The February 25, 1994, Oklahoma Corporation
Commission rate order directed OG&E to recover
postretirement benefit costs following the pay-as-you-go
method and to defer the incremental cost associated with
accrual recognition of SFAS No. 106 related costs following
<PAGE> 5
a "phase-in" plan. Accordingly, OG&E recorded a regulatory
asset for the difference between the amounts using the pay-
as-you-go method (adjusted for the phase-in plan) and those
required by SFAS No. 106. Due to the February 25, 1994,
Oklahoma Corporation Commission's order and the increasing
competition in the utility industry, OG&E commenced a
complete review and redesign of its operations in March
1994. As a result of the cost-savings anticipated from the
redesign and in anticipation of filing an application for a
rate reduction in the Oklahoma jurisdiction, OG&E did not
expect to file a general rate case in the near future in
which recovery of SFAS No. 106 costs previously deferred
would be requested. Accordingly, a decision was made in the
second quarter to discontinue deferral of the differential
and to charge to expense $8.4 million of postretirement
benefits that had been recorded as a regulatory asset.
Although OG&E continues to believe that it could have
recovered these costs in future rate proceedings before the
Oklahoma Corporation Commission, OG&E decided to recognize
these expenses currently, due to its strategy to reduce its
cost-structure which minimizes future revenue requirements.
OG&E expects to continue charging to expense the SFAS No.
106 costs annually and to include an annual amount as a
component of cost of service in future ratemaking
proceedings.
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, 1994 (respectively, the "current periods"), and
the financial position as of June 30, 1994, of Oklahoma Gas and
Electric Company ("OG&E") and its wholly-owned non-utility
subsidiary, Enogex Inc. and its subsidiaries ("Enogex")
(collectively, the "Company"). Unless indicated otherwise, all
comparisons are with the corresponding periods of the prior year.
As reported in the Company's Form 10-K for the year ended
December 31, 1993, the Oklahoma Corporation Commission ("Oklahoma
Commission") issued an order on February 25, 1994, directing OG&E
to reduce its electric rates to its Oklahoma retail customers
prospectively by approximately $14 million annually (based on a
test year ended June 30, 1991) and to refund approximately $41.3
million. The $14 million annual reduction in rates is expected
to lower OG&E's rates to its Oklahoma customers by approximately
$17 million in 1994. With respect to the $41.3 million refund,
$2.2 million (including interest) was recorded in the first
quarter, while the remaining impact of the rate refund was
reflected in prior periods. The majority of the $41.3 million
was refunded to customers in March 1994. A refund reserve was
established for prior service customers who may request a refund,
and as of June 30, 1994, this reserve contained approximately $1
million.
<PAGE> 6
Enogex transports natural gas to OG&E for use at its gas-
fired generating units and performs related gas gathering
activities for OG&E. The entire $41.3 million refund related to
the Oklahoma Commission's disallowance of a portion of the fees
paid by OG&E to Enogex for such services in the past. Of the
approximately $17 million annual rate reduction, approximately
$9.9 million reflects the Oklahoma Commission's reduction of the
amount to be recovered by OG&E from its Oklahoma customers for
the future performance of such services by Enogex.
Due to the rate order and the ever-increasing competition in
the utility industry, OG&E commenced a complete review and
redesign of its operations which resulted in downsizing and other
cost-cutting measures. These actions are expected to generate
cost-savings which will offset some of the impact of the February
rate order and to make OG&E more competitive in the years ahead.
On April 28, 1994, OG&E's Board of Directors approved a
voluntary early retirement package ("VERP") for employees and a
proposed organizational change, effective July 31 and August 1,
respectively. The VERP was only offered to OG&E employees who
were at least 50 years old and had five or more years of service
as of July 31, 1994. A total of 739 employees elected to retire
at the end of July, at a cost of approximately $58 million. OG&E
announced a severance package on August 3, 1994, for eligible
employees who do not have a position as of August 19, 1994.
Affected employees will be entitled to twelve weeks of pay, plus
one and one half additional weeks of pay for each completed year
of service. This severance package also includes certain
insurance coverage, outplacement services, educational assistance
and relocation assistance for a specified period of time. The
cost of the severance package is expected to be approximately $5
million.
In an application filed with the Oklahoma Commission, OG&E
has requested to defer the cost of the VERP and severance package
which has not been offset with labor savings at the time an order
is issued by the Oklahoma Commission. The application requests
that the remaining regulatory asset be amortized over 26 months.
OG&E recorded the cost of the VERP as a regulatory asset in
July 1994. During the remainder of 1994 the regulatory asset to
be recovered will be reduced by an amount approximating the
operating labor savings resulting from the work force reduction.
Assuming the Oklahoma Commission grants OG&E's request on the
accounting treatment, the VERP and the severance package will not
materially adversely impact the 1994 results of operations. In
1995 and 1996, the labor savings will serve to offset the
amortization of the regulatory asset with an accompanying
rate reduction of approximately $12 million each year (see
Part II, Item 1 "Legal Proceedings" and Part II, Item 5 "Other
Information" for further information on the matters discussed
in this paragraph).
<PAGE> 7
EARNINGS
Net income increased $10.7 million or 52.4 percent and $5.5
million or 20.3 percent during the current periods. The three-
month increase included $0.5 million from Enogex, but the six-
month increase was partially offset by a decrease of $2.3 million
in Enogex earnings. The resulting increases in earnings per
share reflect the effects of the revenue and expense items
discussed below.
REVENUES
As a result of implementing the rate order issued by the
Oklahoma Commission, the fuel component of OG&E's electric
tariffs were lowered to more closely match the current cost of
fuel. This resulted in recognition of approximately $16 million
of non-recurring revenue in the second quarter. Absent this
non-recurring item, total operating revenues decreased $11.2
million or 3.3 percent for the three-month period and
$30.6 million or 4.7 percent for the six-month period. These
decreases were primarily attributable to lower electric revenues
from sales to OG&E customers ("system sales") due to the recovery
of lower fuel costs and the impact of the Oklahoma Commission's
order. The order required a $1.6 million refund related to the
first quarter of 1994, (excluding interest) and a reduction in
electric rates, including reduced recoveries of gas transmission
fees paid by OG&E to Enogex (see related discussion in
"Overview"). These decreases were partially offset by increased
kilowatt-hour sales to OG&E customers (system sales), higher
Enogex revenues and the recovery of higher purchased power costs.
Very hot weather in June and continued customer growth
produced increases of 9.5 percent and 5.6 percent in system sales
for the current periods. The increases in system sales were
offset by 89.6 and 60.1 percent decreases in sales to other
utilities; causing total kilowatt-hour sales to be almost flat
for the current periods. The Company utilized its lowest-cost
capacity to generate power for system customers which decreased
availability for off-system sales. Sales to other utilities are
at much lower prices per kilowatt-hour and have less impact on
operating revenues and income than system sales.
Enogex's revenues increased due to increased sales of
petroleum products and natural gas.
EXPENSES
Total operating expenses decreased $6.1 million or 2.0
percent and $21.0 million or 3.6 percent for the current periods,
primarily due to decreases in fuel costs. Decreases in fuel
expense reflect lower prices due to renegotiated coal and
transportation contracts and lower natural gas usage. 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.
<PAGE> 8
The automatic fuel adjustment clauses are subject to periodic
review by the Oklahoma Commission, the Arkansas Public Service
Commission ("APSC") and the Federal Energy Regulatory Commission
("FERC"). As indicated above, Enogex Inc. owns and operates a
pipeline business that delivers natural gas to the generating
stations of OG&E. The Oklahoma Commission, 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. As indicated above, the Oklahoma Commission in its rate
order of February 25, 1994, disallowed $41.3 million previously
recovered by OG&E through its fuel adjustment clause for amounts
Enogex has charged OG&E for transporting natural gas to OG&E's
generating stations and reduced OG&E's future recovery of such
charges by approximately $9.9 million annually.
Enogex's gas purchased for resale decreased $3.8 million or
11.0 percent in the three-month period due to a drop in the price
of natural gas. During the six-month period, however, an
increase of $2.6 million or 4.0 percent was recorded due to an
increase in gas marketing volumes and increased marketing
activities for natural gas liquids.
Other operation increased $12.4 million or 25.8 percent
during the three-month period and $12.8 million or 13.3 percent
in the six-month period due to the write-off of SFAS No. 106
costs previously recorded as a regulatory asset (see Note 3 of
Notes to Consolidated Financial Statements) and costs related
to the corporate redesign efforts. Enogex recorded increases in
the current periods due to higher gas processing plant
operating costs. These increases were offset slightly by lower
uncollectible accounts expense.
Decreases in maintenance costs for the current periods were
due primarily to less power plant overhaul expense in 1994
compared to 1993.
Current income taxes increased $10.2 million or 99.2 percent
in the three-month period. This was due primarily to an increase
in taxable income from normal operations. However, $2.9 million
of the increase was related to postretirement benefits which are
not currently deductible for income tax purposes. In the six-
month period, current taxes decreased $7.2 million or 59.7
percent. This decrease resulted from the rate refund ordered by
the Oklahoma Commission which reduced current taxes $14.5
million.
Deferred income taxes, net, decreased $3.4 million during
the three-month period. The majority of this decrease ($2.9
million) was related to postretirement benefits which will be
deductible in future periods. In the six-month period, deferred
income taxes, net, increased $10.1 million. This increase
resulted from the rate refund discussed above and was partially
offset by the decrease related to postretirement benefits.
<PAGE> 9
Other interest charges increased $0.7 million and $1.4
million in the current periods due to customer refund related
activities.
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 1994. Short-term borrowings will
continue to be used to meet temporary cash requirements.
On August 10, 1994, Enogex redeemed its $90 million in
aggregate principal amount of outstanding medium-term notes.
This redemption is being financed temporarily by Enogex through
the use of short-term bank borrowings.
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 and to "Management's Discussion and Analysis"
and Notes 9 and 10 of Notes to Consolidated Financial Statements
in the Company's 1993 Form 10-K.
PART II. OTHER INFORMATION
Item 1 LEGAL PROCEEDINGS
Reference is made to Item 3 of the Company's 1993 Form 10-K
for a description of certain legal proceedings presently pending.
Except as set forth below, there are no new significant cases to
report against Oklahoma Gas and Electric Company or its
subsidiary, Enogex Inc., and there have been no significant
changes in the previously reported proceedings.
1. On August 9, 1994, OG&E filed an application with the
Oklahoma Corporation Commission requesting approval for:
* the establishment of a regulatory asset for the workforce
reduction implementation costs (to be amortized over 26
months);
* reducing OG&E's rates for its commercial and industrial
customers in Oklahoma, effective January 1, 1995, by
approximately $12 million annually. This amount represents
the excess of the anticipated labor savings from the
workforce reduction over the amortization of the regulatory
asset described above; and
* a tariff rider to OG&E's residential tariffs where those
customers will receive 75 percent of Oklahoma jurisdictional
profits associated with off-system firm capacity sales of
one year or less. Currently, there is not a tariff rider
governing such sales.
<PAGE> 10
OG&E has filed this application seeking to restructure its
rates to achieve competitive goals of attracting and retaining
certain Oklahoma retail electric customers without adversely
affecting OG&E's investors or impacting other customer classes
not included in the restructuring of rates.
2. On July 8, 1994, an employee of OG&E filed a lawsuit in
state court against OG&E in connection with OG&E's voluntary
early retirement package. The case has been removed to the U.S.
District Court in Tulsa, Oklahoma. The lawsuit purports to be a
class action and alleges violation of Title VII, ERISA,
intentional infliction of emotional distress and other issues.
Due to the early stages of this matter, the Company cannot
predict its outcome. Yet, at the present time, the Company
believes that the lawsuit is without merit and will not result in
a material effect on its consolidated financial position or
results of operations.
Item 4 SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
(a) The Company's Annual Meeting of Shareowners was held on
May 19, 1994.
(b) Not applicable.
(c) The matters voted upon and the results of the voting at
the Annual Meeting were as follows:
The Shareowners voted to elect the Company's nominees
for election to the Board of Directors as follows:
William E. Durrett - 38,465,660 votes for election
and 641,283 votes withheld.
Hugh L. Hembree III - 38,516,160 votes for election
and 590,783 votes withheld.
John F. Snodgrass - 38,493,765 votes for election
and 613,178 votes withheld.
(d) Not applicable.
<PAGE> 11
Item 5 OTHER INFORMATION
On April 28, 1994, OG&E's Board of Directors approved a
proposed organizational change which took effect on August 1.
The change places all Company activities into seven operational
and administrative groups headquartered in Oklahoma City.
Officers named to lead the newly structured organization are
James G. Harlow Jr., Chairman, President and CEO; Patrick J.
Ryan, Vice Chairman; Al M. Strecker, Senior Vice President of
Finance and Administration; Steven E. Moore, Senior Vice
President of Law and Public Affairs; Melvin D. Bowen Jr., Vice
President of Power Delivery; Jack T. Coffman, Vice President of
Power Supply; Mike G. Davis, Vice President of Marketing and
Customer Service; Don L. Young, Controller; Irma B. Elliott,
Corporate Secretary; and Jim O. Edwards Jr., President of Enogex.
This new organizational structure is designed to shape OG&E
along clearer lines of responsibility and enable the Company to
respond more quickly to future competitive challenges.
Effective July 29, 1994, OG&E has a new trade name. The
official name of the Company will remain Oklahoma Gas and
Electric Company; however, it will operate under the new trade
name "OG&E Electric Services." Studies found that most
customers and shareowners already referred to the Company as
OG&E. This new name more accurately reflects OG&E's line of
business which, in addition to the sales of electricity, includes
bill management services, energy management services, product
consultation and product financing, among other things.
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None.
(b) Reports on Form 8-K.
A Form 8-K Current Report under Item 5, dated
April 29, 1994, reported on results of a special Board
of Directors' meeting held on April 28, 1994.
<PAGE> 12
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.
OKLAHOMA GAS AND ELECTRIC COMPANY
(Registrant)
By /s/ A M Strecker
_______________________________
A M Strecker
SENIOR VICE PRESIDENT
FINANCE AND ADMINISTRATION
(On behalf of the registrant and in
his capacity as Chief Financial Officer)
August 12, 1994
