<PAGE>
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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, 1998
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.)
321 North Harvey
P. O. Box 321
Oklahoma City, Oklahoma 73101-0321
(Address of principal executive offices)
(Zip Code)
405-553-3000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes x No
-------- --------
There were 40,378,745 Shares of Common Stock, par value $2.50 per share,
outstanding as of July 31, 1998.
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<TABLE>
<CAPTION>
OKLAHOMA GAS AND ELECTRIC COMPANY
PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
STATEMENTS OF INCOME
(UNAUDITED)
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30 JUNE 30
------------------------- -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
(THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
OPERATING REVENUES............................... $ 336,017 $ 282,148 $ 572,662 $ 510,026
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Fuel......................................... 88,922 70,624 158,790 137,931
Purchased power.............................. 57,757 52,693 114,082 110,850
Other operation & maintenance................ 73,519 58,685 125,370 114,792
Depreciation and amortization................ 29,395 28,671 58,928 57,147
Current income taxes......................... 25,462 19,504 28,256 18,416
Deferred income taxes, net................... (1,048) (987) (1,022) (2,404)
Deferred investment tax credits, net......... (1,288) (1,288) (2,575) (2,575)
Taxes other than income...................... 11,407 10,963 22,725 22,477
---------- ---------- ---------- ----------
Total operating expenses.................. 284,126 238,865 504,554 456,634
---------- ---------- ---------- ----------
OPERATING INCOME................................. 51,891 43,283 68,108 53,392
---------- ---------- ---------- ----------
OTHER INCOME (DEDUCTIONS):
Interest Income.............................. 639 494 1,202 1,275
Other........................................ (1,049) (345) (1,500) (692)
---------- ---------- ---------- ----------
Net other income (deductions)............. (410) 149 (298) 583
---------- ---------- ---------- ----------
INTEREST CHARGES:
Interest on long-term debt................... 10,904 13,455 22,063 26,770
Allowance for borrowed funds used
during construction........................ (278) (157) (459) (224)
Other........................................ 1,406 1,011 2,406 2,191
---------- ---------- ---------- ----------
Total interest charges, net................. 12,032 14,309 24,010 28,737
---------- ---------- ---------- ----------
NET INCOME....................................... 39,449 29,123 43,800 25,238
PREFERRED DIVIDEND REQUIREMENTS.................. - 572 733 1,143
---------- ---------- ---------- ----------
LOSS AVAILABLE FOR COMMON........................ $ 39,449 $ 28,551 $ 43,067 $ 24,095
========== ========== ========== ==========
AVERAGE COMMON SHARES OUTSTANDING................ 40,379 40,379 40,379 40,379
EARNINGS PER AVERAGE COMMON SHARE................ $ 0.98 $ (0.71) $ 1.07 $ 0.60
========== ========== ========== ==========
DIVIDENDS DECLARED PER SHARE..................... $ .665 $ .640 $ 1.31 $ 1.40
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART HEREOF.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
(UNAUDITED)
JUNE 30 DECEMBER 31
1998 1997
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
In service.......................................... $ 3,644,484 $ 3,647,366
Construction work in progress....................... 40,954 18,910
------------ ------------
Total property, plant and equipment............ 3,685,438 3,666,276
Less accumulated depreciation.............. 1,694,331 1,653,771
------------ ------------
Net property, plant and equipment................... 1,991,107 2,012,505
------------ ------------
OTHER PROPERTY AND INVESTMENTS, at cost............... 28,439 28,140
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents........................... 1,495 228
Accounts receivable - customers, less reserve
of $4,705 and $3,583 respectively................. 121,813 92,379
Accrued unbilled revenues........................... 61,100 36,900
Accounts receivable - other......................... 14,293 9,795
Fuel inventories, at LIFO cost...................... 44,341 43,577
Materials and supplies, at average cost............. 24,321 24,481
Prepayments and other............................... 4,232 2,533
Accumulated deferred tax assets..................... 6,183 6,048
------------ ------------
Total current assets.............................. 277,778 215,941
------------ ------------
DEFERRED CHARGES:
Advance payments for gas............................ 10,500 10,500
Income taxes recoverable through future rates....... 41,640 42,549
Other............................................... 38,157 41,147
------------ ------------
Total deferred charges............................ 90,297 94,196
------------ ------------
TOTAL ASSETS.......................................... $ 2,387,621 $ 2,350,782
============ ============
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock and retained earnings.................. $ 841,747 $ 851,390
Cumulative preferred stock.......................... - 49,266
Long-term debt...................................... 702,845 691,924
------------ ------------
Total capitalization.............................. 1,544,592 1,592,580
------------ ------------
CURRENT LIABILITIES:
Accounts payable - affiliates....................... 142,050 14,986
Accounts payable.................................... 32,299 47,802
Dividends payable................................... - 571
Customers' deposits................................. 23,807 23,846
Accrued taxes....................................... 19,380 18,963
Accrued interest.................................... 13,335 15,746
Long-term debt due within one year.................. - 25,000
Other............................................... 43,049 35,386
------------ ------------
Total current liabilities......................... 273,920 182,300
------------- ------------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accrued pension and benefit obligation.............. 54,432 57,418
Accumulated deferred income taxes................... 438,763 439,657
Accumulated deferred investment tax credits......... 70,303 72,878
Other............................................... 5,611 5,949
------------ ------------
Total deferred credits and other liabilities...... 569,109 575,902
------------ ------------
TOTAL CAPITALIZATION AND LIABILITIES.................. $ 2,387,621 $ 2,350,782
============ ============
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART HEREOF.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF
CASH FLOWS
(UNAUDITED)
6 MONTHS ENDED
JUNE 30
1998 1997
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income.................................................. $ 43,800 $ 25,238
Adjustments to Reconcile Net Income to Net
Cash Provided From Operating Activities:
Depreciation and amortization............................ 58,928 57,147
Deferred income taxes and investment tax credits, net.... (3,597) (4,979)
Change in Certain Current Assets and Liabilities:
Accounts receivable - customers........................ (29,434) 7,241
Accrued unbilled revenues.............................. (24,200) (20,700)
Fuel, materials and supplies inventories............... (604) (1,295)
Accumulated deferred tax assets........................ (135) 3,012
Other current assets................................... 6,261 37,538
Accounts payable....................................... 39,597 (3,387)
Accrued taxes.......................................... 417 98
Accrued interest....................................... (2,411) (834)
Other current liabilities.............................. 7,053 5,653
Other operating activities............................... (2,711) 1,306
---------- -----------
Net cash provided from operating activities........... 92,964 106,038
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................................... (48,449) (41,790)
---------- -----------
Net cash used in investing activities................. (48,449) (41,790)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of long-term debt............................. (112,500) (15,000)
Proceeds from long-term debt............................. 100,000 -
Short-term debt, net..................................... 71,964 10,451
Redemption of preferred stock............................ (49,266) (110)
Cash dividends declared on preferred stock............... (733) (1,143)
Cash dividends declared on common stock.................. (52,713) (56,698)
---------- -----------
Net cash used in financing activities................. (43,248) (62,500)
---------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS..................... 1,267 1,748
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.............. 228 200
---------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................... $ 1,495 $ 1,948
========== ===========
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest (net of amount capitalized)....................... $ 23,460 $ 27,977
Income taxes............................................... $ 12,183 $ 5,891
- ---------------------------------------------------------------------------------------------
</TABLE>
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 FINANCIAL STATEMENTS ARE AN INTEGRAL PART HEREOF.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. The condensed financial statements included herein have been prepared by
Oklahoma Gas and Electric Company (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 management, all adjustments necessary to present fairly
the financial position of the Company as of June 30, 1998, and December 31,
1997, and the results of operations and the changes in cash flows for the
periods ended June 30, 1998, and June 30, 1997, 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 financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's Form 10-K for
the year ended December 31, 1997.
2. In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("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. Adoption
of this new standard will change the presentation of certain financial
information of the Company, but will not affect reported earnings.
3. In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
About Pensions and Other Postretirement Benefits." Adoption of SFAS No. 132
is required for financial statements for periods beginning after December
15, 1997. The Company will adopt this new standard effective December 31,
1998. Adoption of this new standard will change the presentation of certain
disclosure information of the Company, but will not affect reported
earnings.
4. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and for Hedging Activities". Adoption of SFAS No. 133 is
required for financial statements for periods beginning after June 15,
1999. The Company will adopt this new standard effective January 1, 2000,
and management believes the adoption of this new standard will not have a
material impact on its financial position or results of operations.
4
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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, 1998
(respectively, the "current periods"), and the financial position as of June 30,
1998, of the Company. Revenues from sales of electricity are somewhat seasonal,
with a large portion of the Company's annual electric revenues occurring during
the summer months when the electricity needs of its customers increase. Because
of seasonal fluctuations and other factors, the results of one interim period
are not necessarily indicative of results to be expected for the year. Actions
of the regulatory commissions that set the Company's electric rates will
continue to affect 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; failure of companies that
the Company does business with to be Year 2000 compliant; regulatory decisions
and other risk factors listed in the Company's Form 10-K for the year ended
December 31, 1997, including Exhibit 99.01 thereto and other factors described
from time to time in the Company's reports to the Securities and Exchange
Commission.
In 1994, the Company restructured and redesigned its operations to reduce
costs in order to more favorably position itself for the competitive electric
utility environment. As part of this process, the Company implemented a VERP and
a severance package in 1994. These two packages reduced the Company's workforce
by approximately 900 employees.
In response to an application filed by the Company, the Oklahoma
Corporation Commission ("OCC") issued an order on October 26, 1994, that
permitted the Company 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 the
Company'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.
5
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EARNINGS
Net income increased $10.3 million or 35.5 percent and $18.6 million or
73.5 percent in the current periods. As explained below, the Company's increase
in earnings was primarily attributable to higher revenues from warmer weather
and higher margins on off-system sales.
REVENUES
Total operating revenues increased $53.9 million or 19.1 percent and $62.6
million or 12.3 percent in the current periods. These increases were
attributable to increased electric sales primarily attributable to significantly
warmer weather, continued electric customer growth and the impact of the
Generation Efficiency Performance Rider ("GEP Rider") that was authorized by the
OCC in the Company's most recent rate order. The significantly warmer weather
resulted in increased revenue of approximately $22.8 million and $23.4 million.
The GEP Rider increased revenue by approximately $4.2 million and $9.9 million.
These increases offset the effects of the annual rate reduction that became
effective March 5, 1997.
Favorable weather conditions in the electric service area and customer
growth resulted in a 12.7 percent and 8.1 percent increase in kilowatt-hour
sales to Company customers ("system sales"). Kilowatt-hour sales to other
utilities increased 9.1 percent and decreased 1.3 percent; however, the early
summer heat drove prices of this off-system electricity to record levels,
increasing operating revenues approximately $8.5 million in the current periods
and at margins significantly higher than had been experienced in the past. There
can be no assurance that such margins on future off-system sales will continue.
EXPENSES
Total operating expenses increased $45.3 million or 18.9 percent and $47.9
million or 10.5 percent in the current periods primarily due to increased fuel
costs, other operation and maintenance and current income taxes.
Fuel expense increased $18.3 million or 25.9 percent and $20.9 million or
15.1 percent in the current periods. These increases were primarily due to
increased generation as a result of the significantly warmer 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 the Company'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 the Company. The OCC, the APSC and the FERC have authority to
examine the appropriateness of any gas transportation charges or other fees the
Company pays Enogex, which the Company seeks to recover through the fuel
adjustment clause or other tariffs.
6
<PAGE>
Purchased power costs increased $5.1 million or 9.6 percent and $3.2
million or 2.9 percent primarily due to the start of a power purchase contract
with a cogeneration plant near Pryor, Oklahoma, from which the Company is
obligated to purchase 110 megawatts of peaking capacity, beginning in January
1998. See "Liquidity and Capital Requirements."
Other operation and maintenance increased $14.8 million or 25.3 percent and
$10.6 million or 9.2 percent in the current periods. These increases resulted
primarily from increased costs associated with scheduled overhauls at three
power generating plants, increased maintenance costs on generating units due to
increased electric sales and increased labor costs.
Current income taxes increased $6.0 million or 30.5 percent and $9.8
million or 53.4 percent in the current periods due to higher pre-tax earnings.
Depreciation and amortization increased during the current periods due to
an increase in depreciable property.
Interest charges decreased $2.3 million or 15.9 percent and $4.7 million or
16.4 percent primarily due to the redemption on August 21, 1997 of the Company's
$250 million of long-term debt, refinanced at lower interest cost, the Company
refinancing $56 million of 7 percent Pollution Control Revenue Bonds in July
1997 and the Company retiring $25 million of 6.375 percent First-Mortgage Bonds
in January 1998. These interest savings were partially offset by costs
associated with increased short-term debt.
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 1998. 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 utility service, to replace or expand
existing facilities and to some extent, for satisfying maturing debt and sinking
fund obligations. Capital expenditures of $48.4 million for the six months ended
June 30, 1998 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 $1.3 million during the six months ended June 30, 1998. The
increase reflects the Company's cash flow from operations plus an increase in
short-term borrowings, net of retirement of long-term debt, construction
expenditures, redemption of preferred stock and dividend payments.
In January 1998, the Company filed an application with the OCC seeking
approval to revise an existing cogeneration contract with Mid-Continent Power
Company ("MCPC"), a
7
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cogeneration plant near Pryor, Oklahoma. Under the Public Utility Regulatory
Policies Act of 1978 ("PURPA"), the Company was obligated to enter into the
original contract, which was approved by the OCC in 1987, and which required the
Company to purchase 110 megawatts of peaking capacity from the plant for 10
years beginning in 1998 - whether the capacity was needed or not. As part of
this transaction, OGE Energy Corp. ("Energy Corp.") agreed to purchase the stock
of Oklahoma Loan Acquisition Corporation ("OLAC"), the company that owns the
MCPC plant, for approximately $25 million. The Company has obtained the required
regulatory approvals from the OCC, APSC and FERC. Assuming the transaction is
completed, the term of the existing cogeneration contract will be reduced by
four and one-half years, which should reduce the amounts to be paid by the
Company, and should provide savings for its Oklahoma customers, of approximately
$46 million as compared to the existing cogeneration contract. Funding for the
$25 million purchase price is expected to be provided by internally generated
funds and short-term borrowings. The Company has been notified by the company
that currently owns the stock of OLAC (the "Seller") that it is in arbitration
with a third party over its ability to sell the stock of OLAC to Energy Corp.
The Company has been further notified that the arbitrator has ruled that the
stock of OLAC may not be sold to Energy Corp. until it has first been offered to
the third party on the same terms as it was offered to Energy Corp. If the
Seller does not sell the stock of OLAC to Energy Corp., Energy Corp. intends to
pursue its available legal remedies.
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 Part II, Item 1 - "Legal Proceedings" in the
Company's Form 10-Q for the quarter ended March 31, 1998 and to "Management's
Discussion and Analysis" and Notes 8 and 9 of Notes to the Financial Statements
in the Company's 1997 Form 10-K.
PART II. OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
Reference is made to Item 3 of the Company's 1997 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 and
there have been no significant changes in the previously reported proceedings.
As reported in the Company's Form 10-Q, for the quarter ended March 31,
1998, in 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, on February 24, 1997, the
taxpayers instituted litigation against the Company and Co-Defendants Oklahoma
Corporation Commission, Oklahoma Tax Commission and individual commissioners
seeking judgment in the amount of $970,184.14 and treble penalties of
8
<PAGE>
$2,910,552.42, plus interest and costs, for overcharges refunded by the Company
to its ratepayers in compliance with an Order of the OCC which Plaintiffs allege
was illegal. Plaintiffs allege the refunds should have been paid into the state
Unclaimed Property Fund. In June 1997, the Company's Motion for Summary Judgment
was granted. Plaintiffs appealed. On April 10, 1998, the Court of Civil Appeals
affirmed the order of the trial court granting the Company Summary Judgment. On
April 29, 1998, Plaintiffs petitioned the Court of Civil Appeals for rehearing.
Plaintiffs' Petition for Rehearing was overruled. Plaintiffs timely filed a
Petition for Certiorari with the Oklahoma Supreme Court. Plaintiffs' Petition
for Certiorari with the Oklahoma Supreme Court is presently pending. Management
believes that the lawsuit is without merit and will not have a material adverse
effect on the Company's financial position or its results of operations.
As reported under Item 1 of the Company's 1997 Form 10-K, the Staff of the
APSC commenced a preceeding in February 1998 seeking a $3.1 million annual
reduction of the Company's electric rates in Arkansas. The Company has made
various filings in this proceeding asserting that no reduction in its rates is
appropriate. The Company cannot predict at the present time when this matter
will be concluded or its ultimate outcome.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
(a) The Company's Annual Meeting of Shareowners was held on
May 21, 1998.
(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:
Luke R. Corbett - 40,378,745 votes for election and
no votes withheld
Robert Kelley - 40,378,745 votes for election and
no votes withheld
Bill Swisher - 40,378,745 votes for election and
no votes withheld
ITEM 5 OTHER INFORMATION
Reference is made to Item 1 of the Company's 1997 Form 10-K for a
discussion of the Electric Restructuring Act of 1997 (the "Act"), which, if
implemented as proposed, would allow
9
<PAGE>
electric retail customers in Oklahoma to choose their electric supplier by July
2002. In June 1998, various amendments to the Act were enacted, which
amendments, among other things: (i) direct that the Joint Electric Utility Task
Force (i.e., a committee composed of members of the Oklahoma Senate and Oklahoma
House of Representatives), rather than the OCC or Oklahoma Tax Commission,
conduct the various studies required by the Act; (ii) establish October 1, 1999
as the completion date for such studies; (iii) require a uniform tax policy be
established by July 1, 2002 (the original language of the Act precluded retail
consumer choice until a uniform tax policy was established); and (iv) add a new
provision to the Act that requires out-of-state suppliers of electricity and
their affiliates who make retail sales of electricity in Oklahoma through the
use of transmission and distribution facilities of in-state suppliers to provide
equal access to their transmission and distribution facilities outside of
Oklahoma.
Reference is made to Item 1 of the Company's 1997 Form 10-K for a
discussion of various proceedings established by the APSC to consider the
implementation of a competitive retail electric market in Arkansas. Those
proceedings have commenced and the Company is actively participating in the
process. It appears that, following the completion of these proceedings, the
APSC will submit a report on retail choice to the Arkansas Legislature by the
end of 1998.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.01 - Financial Data Schedule.
(b) Reports on Form 8-K
None
10
<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/ Donald R. Rowlett
------------------------------------
Donald R. Rowlett
Controller Corporate Accounting
(On behalf of the registrant and in
his capacity as Chief Accounting Officer)
August 13, 1998
11
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
27.01 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the Oklahoma
Gas and Electric Company Statements of Income, Balance Sheets, and Statements of
Cash Flows as reported on Form 10-Q as of June 30, 1998 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-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,991,107
<OTHER-PROPERTY-AND-INVEST> 28,439
<TOTAL-CURRENT-ASSETS> 277,778
<TOTAL-DEFERRED-CHARGES> 90,297
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,387,621
<COMMON> 100,947
<CAPITAL-SURPLUS-PAID-IN> 411,499
<RETAINED-EARNINGS> 329,301
<TOTAL-COMMON-STOCKHOLDERS-EQ> 841,747
0
0
<LONG-TERM-DEBT-NET> 702,845
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 3,475
<LEASES-CURRENT> 2,580
<OTHER-ITEMS-CAPITAL-AND-LIAB> 836,974
<TOT-CAPITALIZATION-AND-LIAB> 2,387,621
<GROSS-OPERATING-REVENUE> 572,662
<INCOME-TAX-EXPENSE> 24,659
<OTHER-OPERATING-EXPENSES> 479,895
<TOTAL-OPERATING-EXPENSES> 504,554
<OPERATING-INCOME-LOSS> 68,108
<OTHER-INCOME-NET> (298)
<INCOME-BEFORE-INTEREST-EXPEN> 67,810
<TOTAL-INTEREST-EXPENSE> 24,010
<NET-INCOME> 43,800
733
<EARNINGS-AVAILABLE-FOR-COMM> 43,067
<COMMON-STOCK-DIVIDENDS> 52,713
<TOTAL-INTEREST-ON-BONDS> 22,063
<CASH-FLOW-OPERATIONS> 92,964
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
</TABLE>
