<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 September 30, 1995
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)
405-553-3000
(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
------- -------
There were 40,354,677 Shares of Common Stock, par value $2.50 per share,
outstanding as of October 31, 1995.
<PAGE>
<TABLE>
OKLAHOMA GAS AND ELECTRIC COMPANY
PART I. FINANCIAL INFORMATION
Item 1 FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
3 Months Ended 9 Months Ended
September 30 September 30
1995 1994 1995 1994
----------- ------------ ------------ -----------
(thousands except per share data)
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric utility $ 436,846 $ 411,661 $ 927,246 $ 955,158
Non-utility subsidiary 30,664 31,512 90,893 118,622
----------- ------------ ------------ -----------
Total operating revenues 467,510 443,173 1,018,139 1,073,780
----------- ------------ ------------ -----------
OPERATING EXPENSES:
Fuel 94,786 87,517 206,234 216,342
Purchased power 55,444 56,420 162,806 169,970
Gas purchased for resale 20,953 20,661 60,488 88,725
Other operation 58,926 61,656 169,984 171,249
Maintenance 16,767 15,238 39,881 52,486
Depreciation and amortization 32,926 31,900 97,071 93,666
Current income taxes 67,032 51,137 80,566 56,015
Deferred income taxes, net (5,591) 3,042 (6,452) 18,962
Deferred investment tax credits, net (1,287) (1,287) (3,862) (3,862)
Taxes other than income 11,563 11,326 34,224 33,553
----------- ------------ ------------ -----------
Total operating expenses 351,519 337,610 840,940 897,106
----------- ------------ ------------ -----------
OPERATING INCOME 115,991 105,563 177,199 176,674
----------- ------------ ------------ -----------
OTHER INCOME AND DEDUCTIONS:
Interest income 446 398 2,834 1,824
Other (910) (1,205) (3,306) (2,900)
----------- ------------ ------------ -----------
Net other income and deductions (464) (807) (472) (1,076)
----------- ------------ ------------ -----------
INTEREST CHARGES:
Interest on long-term debt 15,742 17,129 46,666 52,291
Allowance for borrowed funds
used during construction (34) (312) (1,027) (719)
Other 2,850 1,688 10,722 5,193
----------- ------------ ------------ -----------
Total interest charges, net 18,558 18,505 56,361 56,765
----------- ------------ ------------ -----------
NET INCOME 96,969 86,251 120,366 118,833
PREFERRED DIVIDEND REQUIREMENTS 579 579 1,737 1,737
----------- ------------ ------------ -----------
EARNINGS AVAILABLE FOR COMMON $ 96,390 $ 85,672 $ 118,629 $ 117,096
=========== ============ ============ ==========
AVERAGE COMMON SHARES OUTSTANDING 40,355 40,340 40,354 40,344
EARNINGS PER AVERAGE COMMON SHARE $ 2.39 $ 2.12 $ 2.94 $ 2.90
=========== ============ ============ ===========
DIVIDENDS DECLARED PER SHARE $ 0.665 $ 0.665 $ 1.995 $ 1.995
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part hereof.
</FN>
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
September 30 December 31
1995 1994
---------------- --------------
(dollars in thousands)
<S> <C> <C>
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
In service $ 3,854,530 $ 3,770,247
Construction work in progress 44,982 43,943
---------------- --------------
Total property, plant and equipment 3,899,512 3,814,190
Less accumulated depreciation 1,564,222 1,487,300
---------------- --------------
Net property, plant and equipment 2,335,290 2,326,890
---------------- --------------
OTHER PROPERTY AND INVESTMENTS, at cost 8,857 7,868
---------------- --------------
CURRENT ASSETS:
Cash and cash equivalents 4,534 2,455
Accounts receivable - customers, net 182,754 118,318
Accrued unbilled revenues 51,000 36,800
Accounts receivable - other 6,755 8,601
Fuel inventories, at LIFO cost 57,867 46,494
Materials and supplies, at average cost 24,360 30,401
Prepayments and other 8,577 43,137
Accumulated deferred tax assets 11,033 12,077
---------------- --------------
Total current assets 346,880 298,283
---------------- --------------
DEFERRED CHARGES:
Advance payments for gas 10,000 10,000
Income taxes recoverable through future rates 43,246 47,246
Other 73,139 92,342
---------------- --------------
Total deferred charges 126,385 149,588
---------------- --------------
TOTAL ASSETS $ 2,817,412 $ 2,782,629
================ ==============
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock and retained earnings $ 959,308 $ 921,177
Cumulative preferred stock 49,973 49,973
Long-term debt 845,192 730,567
---------------- --------------
Total capitalization 1,854,473 1,701,717
---------------- --------------
CURRENT LIABILITIES:
Short-term debt 57,900 182,750
Accounts payable 60,881 66,391
Dividends payable 27,415 27,415
Customers' deposits 21,671 20,904
Accrued taxes 83,533 25,153
Accrued interest 15,181 23,873
Long-term debt due within one year - 25,350
Accumulated provision for rate refunds 5,050 2,970
Other 32,479 41,321
---------------- --------------
Total current liabilities 304,110 416,127
---------------- --------------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accrued pension and benefit obligation 82,392 71,014
Accumulated deferred income taxes 484,809 497,056
Accumulated deferred investment tax credits 84,465 88,328
Other 7,163 8,387
---------------- --------------
Total deferred credits and other liabilities 658,829 664,785
---------------- --------------
COMMITMENTS AND CONTINGENCIES - -
---------------- --------------
TOTAL CAPITALIZATION AND LIABILITIES $ 2,817,412 $ 2,782,629
================ ==============
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part hereof.
</FN>
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
<CAPTION>
9 Months Ended
September 30
1995 1994
-------------- ---------------
(dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 120,366 $ 118,833
Adjustments to Reconcile Net Income to Net Cash
Provided From Operating Activities:
Depreciation and amortization 97,071 93,666
Deferred income taxes and investment tax credits, net (10,314) 15,100
Provision for rate refund 3,050 2,200
Change in Certain Current Assets and Liabilities:
Accounts receivable - customers (64,436) (36,510)
Accrued unbilled revenues (14,200) (6,000)
Fuel, materials and supplies inventories (5,332) (15,144)
Accumulated deferred tax assets 1,044 13,181
Other current assets 36,406 (22,172)
Accounts payable (5,612) (24,214)
Accrued taxes 58,380 56,114
Accrued interest (8,692) (11,539)
Accumulated provision for rate refund 2,080 (38,146)
Other current liabilities (8,075) 528
Other operating activities 24,412 10,385
-------------- ---------------
Net cash provided from operating activities 226,148 156,282
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (104,725) (111,482)
-------------- ---------------
Net cash used in investing activities (104,725) (111,482)
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt, net 87,750 (90,350)
Short-term debt, net (124,850) 125,250
Cash dividends declared on preferred stock (1,737) (1,737)
Cash dividends declared on common stock (80,507) (80,484)
-------------- ---------------
Net cash used in financing activities (119,344) (47,321)
-------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,079 (2,521)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,455 6,593
-------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,534 $ 4,072
============== ===============
- ----------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest (net of amount capitalized) $ 63,001 $ 66,615
Income taxes $ 35,752 $ 9,416
- ----------------------------------------------------------------------------------------------------------------
<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>
<PAGE>
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 September 30, 1995, and December 31, 1994,
and the results of operations and the changes in cash flows for the
periods ended September 30, 1995, and September 30, 1994, 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, 1994.
2. In March 1995 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." Adoption of SFAS No. 121 is required for
fiscal years beginning after December 15, 1995. The Company will adopt
this new standard effective January 1, 1996, and believes it will not
have a material impact on the Company's consolidated financial
position or results of operations.
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 nine months ended September 30, 1995
(respectively, the "current periods"), and the financial position as of
September 30, 1995, 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.
<PAGE>
As reported in the Company's Form 10-K for the year ended December 31,
1994, the Company 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, the Company offered a Voluntary Early
Retirement Package ("VERP") and a severance package in 1994. These two packages
resulted in a reduction of the Company's workforce by approximately 900
employees. Pursuant to an order by the Oklahoma Corporation Commission ("OCC"),
OG&E was permitted to amortize the related regulatory asset of $48.9 million as
of December 31, 1994 over 26 months and reduce electric rates by approximately
$15 million annually, effective January 1995. At September 30, 1995, the
unamortized regulatory asset was $32.0 million, which is included on the
Consolidated Balance Sheets as Deferred Charges - Other. In 1995 and 1996, the
labor savings are expected to substantially offset the amortization of the
regulatory asset and the annual rate reduction of $15 million.
On July 19, 1995, the Company announced its intent to create a holding
company that would be the parent company of OG&E and Enogex. See Item 5 of Part
II of this Report.
Revenues
Total operating revenues increased $24.3 million or 5.5 percent in the
three months ended September 30, 1995. This increase was primarily attributable
to increased electric sales due to a return to more normal weather and an
increase in the number of electric customers. These increases were partially
offset by the rate reduction that took effect in January 1995 and slightly lower
Enogex revenues. In the nine-month period, total operating revenues decreased
$55.6 million or 5.2 percent due to milder weather in the first and second
quarters, the recovery of lower fuel costs, the rate reduction, a non-recurring
fuel related revenue item in 1994 and lower Enogex revenues. These decreases
were partially offset by continued customer growth.
The impact of the return to more normal weather and continued customer
growth resulted in an increase of 7.8 percent in kilowatt-hour sales to OG&E
customers ("system sales") in the three months ended September 30, 1995. For the
nine months ended September 30, 1995, system sales remained relatively constant
due to continued customer growth, which offset the mild weather in the first two
quarters of 1995. Sales to other utilities increased significantly during the
current periods; however, sales to other utilities are at much lower prices per
kilowatt-hour and have less impact on operating revenues than system sales.
Enogex revenues decreased 2.7 percent and 23.4 percent in the current
periods. These reductions were due primarily to a reduced emphasis on low margin
off-system natural gas sales and lower natural gas prices on gas purchased and
resold.
<PAGE>
Expenses
Total operating expenses increased $13.9 million or 4.1 percent in the
three months ended September 30, 1995 and decreased $56.2 million or 6.3 percent
in the nine-month period. In the three-month period, the increase was primarily
due to increased fuel costs associated with higher electric sales and higher
current income taxes from increased pre-tax income. Fuel expense increased $7.3
million or 8.3 percent in the three-month period due to increased kilowatt-hours
generated. This increase was partially offset by shifting to a higher percentage
of generation produced with lower priced coal, combined with reductions in the
cost of gas in the current periods. In the nine-month period, the decrease in
total operating expenses was due to reduced fuel costs, less purchased power,
lower maintenance costs and lower volumes and prices paid by Enogex for gas
purchased for resale to third parties.
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. The APSC is presently reviewing the gas transportation charges OG&E
pays Enogex. (See Item 1 of Part II of this Report for related discussion.)
Purchased power decreased for the nine months ended September 30, 1995
primarily due to the availability of larger quantities of economically priced
energy in 1994.
Enogex's gas purchased for resale decreased $28.2 million or 31.8 percent
in the nine months ended September 30, 1995 due to a reduced emphasis on
marketing low margin off-system natural gas and a decline in the market price of
natural gas purchased.
Maintenance expense increased during the three months ended September 30,
1995 due to a major storm in the Company's service area, costs associated with
transformer repairs and the write-off of obsolete inventory. Notwithstanding
these increases, maintenance costs during the nine months ended September 30,
1995 decreased due to the workforce reduction and efficiencies gained in the
maintenance of the Company's power plants.
For the three months ended September 30, 1995, depreciation and
amortization increased primarily due to higher levels of depreciable property.
In the nine-month period, the increase is primarily due to an increase in
depreciable property, higher oil and gas production volumes (based on units of
production depreciation method) and amortization of gas sales contracts by
Enogex.
<PAGE>
During the three months ended September 30, 1995, Current and Deferred
income tax expense had a net increase of approximately $8 million primarily due
to higher pre-tax income; however, during the nine-month period these taxes
remained relatively constant. The variance between Current and Deferred taxes
during the current periods resulted from normally occurring temporary
differences.
The decreases in interest on long-term debt in the current periods were
primarily attributable to Enogex's refinancing of $90 million of medium-term
notes in August 1994 and OG&E's refinancing of $79 million of tax exempt bonds
in January 1995.
Earnings
Net income increased $10.7 million or 12.4 percent and $1.5 million or 1.3
percent during the current periods. The increases in earnings reflect the
effects of the revenue and expense items discussed above.
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 1995. Short-term borrowings will
continue to be used to meet temporary cash requirements.
In August 1994, Enogex temporarily refinanced its $90 million of
outstanding medium-term notes with short-term borrowings. In August and
September 1995, Enogex issued $120 million of medium-term notes at a composite
interest rate of 6.89 percent and replaced the short-term borrowings.
In January 1995, OG&E refinanced its obligations with respect to $47
million of 5.875 percent Pollution Control Revenue Bonds due December 1, 2007,
and $32 million of 6.75 percent Pollution Control Revenue Bonds due March 1,
2006, through the issuance of two new series of pollution control bonds bearing
interest at variable, tax-exempt rates. The annualized composite interest rate
on the two new series of bonds was approximately 4.1 percent for the period from
their date of issuance through September 30, 1995. These refinancings are
resulting in lower long-term interest rates during 1995.
In October 1995, OG&E issued $220 million of long-term debt with $110
million at 6.25 percent due October 15, 2000 and $110 million at 7.30 percent
due October 15, 2025. The proceeds from the sale of this new debt will be
applied to the redemption on November 29, 1995, of $30 million principal amount
of the Company's 8.625 percent First Mortgage Bonds due January 1, 2000, $75
million principal amount of the Company's 8.375 percent First Mortgage Bonds due
January 1, 2004, $60 million principal amount of the Company's 9.125 percent
First Mortgage Bonds due January 1, 2005, and $55 million principal amount of
the Company's 8.625 percent First Mortgage Bonds due January 1, 2006 at the
principal amount plus the applicable redemption premium and accrued interest to
the redemption date.
<PAGE>
Management will continue to evaluate the Company's debt portfolio and
expects to issue additional debt to replace other bonds as appropriate.
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 the Consolidated Financial Statements in the
Company's 1994 Form 10-K.
<PAGE>
PART II. OTHER INFORMATION
Item 1 LEGAL PROCEEDINGS
For a description of certain legal proceedings presently pending, reference
is made to: (i) Item 3 of the Company's 1994 Form 10-K, (ii) Item 1 of Part II
of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1995 and (iii) Item 1 of Part II of the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995. Except as set forth below, there are no new
significant cases to report for Oklahoma Gas and Electric Company or its
subsidiary, Enogex Inc., and there have been no significant changes in the
previously reported proceedings.
Reference is made to paragraph No. 1 under Item 3 "Legal Proceedings" of
the Company's 1994 Form 10-K involving a breach of contract claim by Puritan Oil
and Gas Corporation against OG&E. On January 4, 1994, the United States District
Court for the Western District of Oklahoma dismissed Count III of Plaintiffs'
claim. Plaintiffs' appeal of this order was denied on January 11, 1995, by the
10th Circuit Court of Appeals pursuant to a stipulation of the parties. The
remaining breach of contract claims were submitted to private binding
arbitration. The first and second phases of the arbitration have been concluded
and the third stage is expected to be completed by the end of the year.
Management does not believe the outcome of this proceeding will have a material
adverse effect on the Company's consolidated financial position or its results
of operations for numerous reasons, which include that the underlying dispute
between the parties is a contractual dispute under a gas purchase contract.
Management is vigorously pursuing the defense of this matter.
Reference is made to paragraph No. 5 under Item 3 "Legal Proceedings" of
the Company's 1994 Form 10-K involving the voluntary disclosure under the Toxic
Substance Control Act ("TSCA"). On September 18, 1995, the EPA filed a Complaint
and Notice of Opportunity for Hearing pursuant to Section 16 of the TSCA which
sets forth known counts of alleged violations. The proposed fine, which was
mitigated due to the Company's voluntary disclosure, was approximately
$25,000.00. The Company entered into a Consent Agreement/Consent Order which
finalizes this matter.
The APSC is currently reviewing the amounts that OG&E pays Enogex and
recovers through its fuel adjustment clause for transporting natural gas to
OG&E's gas-fired generating stations. OG&E cannot predict the outcome of this
review. Nevertheless, at the present time, management does not believe this
proceeding will have a material adverse effect on the Company's consolidated
financial position or its results of operations.
Item 5 OTHER INFORMATION
Holding Company Restructuring
-----------------------------
As previously reported on its Form 8-K Current Report dated July 26, 1995,
OG&E has proposed a corporate restructuring pursuant to which it will become a
subsidiary of a newly-formed holding company ("OGE Energy Corp.") and OG&E's
common stock will be exchanged on a share-for-share basis for common stock of
OGE Energy Corp.
<PAGE>
Also as a part of this restructuring, OG&E's subsidiary, Enogex Inc., will
become a direct subsidiary of OGE Energy Corp. The restructuring is subject to
certain conditions, including shareowner approval and the receipt of regulatory
approvals. A special shareowners meeting has been set for November 16, 1995 to
vote on the proposed restructuring.
Unaudited Pro Forma Financial Information
- ------------------------------------------
The following unaudited pro forma financial information presents the
historical consolidated balance sheet, statement of income and retained earnings
and ratio of earnings to fixed charges of OG&E after giving effect to the
restructuring, including the transfer of Enogex Inc. and its subsidiaries to OGE
Energy Corp. The unaudited pro forma balance sheet at September 30, 1995, gives
effect to the restructuring as if it had occurred at September 30, 1995. The
unaudited pro forma statement of income for the period ended September 30, 1995,
gives effect to the restructuring as if it had occurred at the beginning of the
period presented. The unaudited pro forma ratio of earnings to fixed charges for
the twelve months ended September 30, 1995, gives effect to the restructuring as
if it had occurred at the beginning of the period presented.
The pro forma financial information has been prepared from, and should be
read in conjunction with, the historical consolidated financial statements and
related notes thereto of OG&E and the Form 8-K Current Report dated August 3,
1995 (File No. 1-1097) which is incorporated herein by reference. The following
information is not necessarily indicative of the financial position or operating
results that would have occurred had the transaction been consummated on the
date, or at the beginning of the periods, for which the transaction is being
given effect nor is it necessarily indicative of future operating results or
financial position.
<TABLE>
UNAUDITED PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
Twelve Months
Ended
September 30, 1995
-------------------
<S> <C>
Unaudited Pro Forma Ratio of
Earnings to Fixed Charges 3.70
<FN>
For purposes of this ratio, "Earnings" consist of the aggregate of net
income, taxes on income, investment tax credit (net) and "fixed charges." "Fixed
charges" consist of interest on long term debt, related amortization, interest
on short-term borrowings and a calculated portion of rents considered to be
interest.
See Notes to Unaudited Pro Forma Financial Statements for a description of
the assumptions used to prepare the unaudited pro forma ratio of earnings to
fixed charges.
</FN>
</TABLE>
<PAGE>
<TABLE>
Oklahoma Gas and Electric Company
Unaudited Pro Forma Balance Sheet
September 30, 1995
<CAPTION>
O.G.& E. Pro Forma Pro Forma
(As Reported) Adjustments (1) O.G. & E.
-------------- -------------- --------------
(dollars in thousands)
<S> <C> <C> <C>
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
In service $ 3,854,530 $ (363,865) $ 3,490,665
Construction work in progress 44,982 (13,861) 31,121
-------------- -------------- --------------
Total property, plant and equipment 3,899,512 (377,726) 3,521,786
------------- -------------- --------------
Less accumulated depreciation 1,564,222 (99,814) 1,464,408
-------------- -------------- --------------
Net property, plant and equipment 2,335,290 (277,912) 2,057,378
-------------- -------------- --------------
OTHER PROPERTY AND INVESTMENTS, at cost 8,857 (1,485) 7,372
-------------- -------------- --------------
CURRENT ASSETS:
Cash and cash equivalents 4,534 (4,053) 481
Accounts receivable - customers, less reserve 182,754 (15,460) 167,294
Accrued unbilled revenues 51,000 - 51,000
Accounts receivable - other 6,755 13,337 20,092
Fuel inventories, at LIFO cost 57,867 (1,548) 56,319
Materials and supplies, at average cost 24,360 (4,990) 19,370
Prepayments and other 8,577 (528) 8,049
Accumulated deferred tax assets 11,033 (364) 10,669
-------------- -------------- --------------
Total current assets 346,880 (13,606) 333,274
-------------- -------------- --------------
DEFERRED CHARGES:
Advance payments for gas 10,000 - 10,000
Income taxes recoverable - future rates 43,246 - 43,246
Other 73,139 (15,764) 57,375
-------------- -------------- --------------
Total deferred charges 126,385 (15,764) 110,621
-------------- -------------- --------------
TOTAL ASSETS $ 2,817,412 $ (308,767) $ 2,508,645
============== ============== ==============
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock and retained earnings $ 959,308 $ (103,512) $ 855,796
Cumulative preferred stock 49,973 - 49,973
Long-term debt 845,192 (120,000) 725,192
-------------- -------------- --------------
Total capitalization 1,854,473 (223,512) 1,630,961
-------------- -------------- --------------
CURRENT LIABILITIES:
Short-term debt 57,900 - 57,900
Accounts payable 60,881 (13,198) 47,683
Dividends payable 27,415 - 27,415
Customers' deposits 21,671 - 21,671
Accrued taxes 83,533 (2,168) 81,365
Accrued interest 15,181 (1,111) 14,070
Accumulated provision for rate refunds 5,050 - 5,050
Other 32,479 (960) 31,519
-------------- -------------- --------------
Total current liabilities 304,110 (17,437) 286,673
-------------- -------------- --------------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accrued pension and benefit obligation 82,392 (3,517) 78,875
Accumulated deferred income taxes 484,809 (60,746) 424,063
Accumulated deferred investment tax credits 84,465 - 84,465
Other 7,163 (3,555) 3,608
-------------- -------------- --------------
Total deferred credits and other liabilities 658,829 (67,818) 591,011
-------------- -------------- --------------
TOTAL CAPITALIZATION AND LIABILITIES $ 2,817,412 $ (308,767) $ 2,508,645
============== ============== ==============
<FN>
See accompanying notes to unaudited pro forma financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Oklahoma Gas and Electric Company
Unaudited Pro Forma Statements of Income and Retained Earnings
Nine Months ended September 30, 1995
<CAPTION>
O.G. & E. Pro Forma Pro Forma
(As Reported) Adjustments (2) O.G. & E.
--------------- ----------------- ----------------
(thousands except per share data)
<S> <C> <C> <C>
OPERATING REVENUES:
Electric Utility $ 927,246 $ $ 927,246
Non-Utility Subsidiary 90,893 (90,893) -
--------------- ---------------- ----------------
Total Operating Revenues 1,018,139 (90,893) 927,246
OPERATING EXPENSES:
Fuel 206,234 33,505 239,739
Purchased power 162,806 - 162,806
Gas purchased for resale 60,488 (60,488) -
Other operation 169,984 (26,337) 143,647
Maintenance 39,881 (1,326) 38,555
Depreciation and amortization 97,071 (14,388) 82,683
Current income taxes 80,566 (1,708) 78,858
Deferred income taxes, net (6,452) (1,256) (7,708)
Deferred investment tax credits, net (3,862) - (3,862)
Taxes other than income 34,224 (2,928) 31,296
--------------- ---------------- ----------------
Total operating expenses 840,940 (74,926) 766,014
--------------- ---------------- ----------------
OPERATING INCOME 177,199 (15,967) 161,232
--------------- ---------------- ----------------
OTHER INCOME AND DEDUCTIONS:
Interest income 2,834 (241) 2,593
Other (3,306) 105 (3,201)
--------------- ---------------- ----------------
Net other income and deductions (472) (136) (608)
--------------- ---------------- ----------------
INTEREST CHARGES:
Interest on long-term debt 46,666 (1,512) 45,154
Allowance for borrowed funds used
during construction (1,027) - (1,027)
Other 10,722 (5,454) 5,268
--------------- ---------------- ----------------
Total interest charges, net 56,361 (6,966) 49,395
--------------- ---------------- ----------------
NET INCOME 120,366 (9,137) 111,229
PREFERRED DIVIDEND REQUIREMENTS 1,737 - 1,737
--------------- ---------------- ----------------
EARNINGS AVAILABLE FOR COMMON $ 118,629 $ (9,137) $ 109,492
=============== ================ ================
AVERAGE COMMON SHARES OUTSTANDING 40,354 - 40,354
EARNINGS PER AVERAGE COMMON SHARE $ 2.94 $ (0.23) $ 2.71
STATEMENT OF RETAINED EARNINGS
O.G. & E. Pro Forma Pro Forma
(As Reported) Adjustments O.G. & E.
--------------- ---------------- ----------------
BALANCE AT BEGINNING OF PERIOD $ 409,960 $ (104,197) $ 305,763
ADD-net income 120,366 (9,137) 111,229
--------------- ---------------- ----------------
Total 530,326 (113,334) 416,992
DEDUCT:
Cash dividends declared on preferred stock 1,737 - 1,737
Cash dividends declared on common stock 80,507 (9,822) 70,685
--------------- ---------------- ----------------
Total 82,244 (9,822) 72,422
--------------- ---------------- ----------------
BALANCE AT END OF PERIOD $ 448,082 $ (103,512) $ 344,570
=============== ================ ================
<FN>
See accompanying notes to unaudited pro forma financial statements.
</FN>
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. Subsidiary assets, liabilities, equity and results of operations
have been eliminated from consolidated Oklahoma Gas and Electric
Company amounts to reflect the transfer of ownership and control
of all consolidated subsidiaries from Oklahoma Gas and Electric
Company to OGE Energy Corp.
2. After the transaction, Oklahoma Gas and Electric Company will not
retain ownership of the subsidiary currently being consolidated.
Consequently, intercompany transactions between Oklahoma Gas and
Electric Company and its current consolidated subsidiary have not
been eliminated in the pro forma financial statements.
The most significant intercompany transactions are transmission
fees and related charges to Oklahoma Gas and Electric Company
from Enogex, its subsidiary whose core business has been to
deliver natural gas to Oklahoma Gas and Electric Company power
plants. The amount of these charges were $33.5 million for the 9
months ended September 30, 1995.
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.01 - Financial Data Schedule.
99.01 - Form 8-K Report, dated August 3, 1995, (File No.
1-1097) of Oklahoma Gas and Electric Company
(incorporated by reference herein).
Reports on Form 8-K
A Form 8-K Current Report under Item 5, dated October 23,
1995, reported the Company entered into an Underwriting
Agreement relating to $110,000,000 inaggregate principal
amount of its 7.30% Senior Notes, Series due October 15, 2025.
On October 23, 1995, the Company also entered into another
Underwriting Agreement relating to $110,000,000 in aggregate
principal amount of its 6.250% Senior Notes, Series due
October 15, 2000.
A Form 8-K Current Report under Item 5, dated October 25,
1995, reported earnings for the quarter and twelve months
ended September 30, 1995.
<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.
OKLAHOMA GAS AND ELECTRIC COMPANY
(Registrant)
By /s/ D. L. Young
----------------------------
D. L. Young
Controller
(On behalf of the registrant and in
his capacity as Chief Accounting Officer)
November 13, 1995
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
27.01 Financial Data Schedule
99.01 Form 8-K Report, dated August 3, 1995 (File No. 1-1097)
of Oklahoma Gas and Electric Company (incorporated by
reference herein).
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the Oklahoma
Gas and Electric Company Consolidated Statements of Income, Balance Sheets and
Statements of Cash Flows as reported on Form 10-Q as of September 30, 1995 and
is qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,335,290
<OTHER-PROPERTY-AND-INVEST> 8,857
<TOTAL-CURRENT-ASSETS> 346,880
<TOTAL-DEFERRED-CHARGES> 126,385
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,817,412
<COMMON> 116,177
<CAPITAL-SURPLUS-PAID-IN> 395,049
<RETAINED-EARNINGS> 448,082
<TOTAL-COMMON-STOCKHOLDERS-EQ> 959,308
0
49,973
<LONG-TERM-DEBT-NET> 845,192
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 57,900
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 2,431
<LEASES-CURRENT> 1,523
<OTHER-ITEMS-CAPITAL-AND-LIAB> 901,085
<TOT-CAPITALIZATION-AND-LIAB> 2,817,412
<GROSS-OPERATING-REVENUE> 1,018,139
<INCOME-TAX-EXPENSE> 70,252
<OTHER-OPERATING-EXPENSES> 770,688
<TOTAL-OPERATING-EXPENSES> 840,940
<OPERATING-INCOME-LOSS> 177,199
<OTHER-INCOME-NET> (472)
<INCOME-BEFORE-INTEREST-EXPEN> 176,727
<TOTAL-INTEREST-EXPENSE> 56,361
<NET-INCOME> 120,366
1,737
<EARNINGS-AVAILABLE-FOR-COMM> 118,629
<COMMON-STOCK-DIVIDENDS> 80,507
<TOTAL-INTEREST-ON-BONDS> 46,666
<CASH-FLOW-OPERATIONS> 226,148
<EPS-PRIMARY> 2.94
<EPS-DILUTED> 2.94
</TABLE>
