UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1994
COMMISSION FILE NO. 1-2572
ONEOK Inc.
100 West Fifth Street, Tulsa, OK 74103
(918) 588-7000
INCORPORATED IN IRS EMPLOYER
DELAWARE IDENTIFICATION NO.
73-0383100
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
The number of common shares outstanding of the registrant was 26,690,004
as of November 30, 1994.
Page 1 of 16
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TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Earnings -
Three Months Ended November 30, 1994 and 1993 3
Consolidated Condensed Balance Sheets -
November 30, 1994, and August 31, 1994 4
Consolidated Condensed Statements of
Cash Flows - Three Months Ended
November 30, 1994 and 1993 5
Notes to Consolidated Condensed Financial
Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14-15
Item 6. Exhibits and Reports on Form 8-K 15
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
ONEOK Inc.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
(UNAUDITED)
3 Months Ended
November 30,
1994 1993
OPERATING REVENUES
Distribution and transmission $126,453 $135,975
Exploration and production 5,151 6,674
Gas processing 23,655 29,530
Other 11,009 5,012
Total operating revenues 166,268 177,191
OPERATING EXPENSES
Gas purchase expense 82,170 87,224
Operations 43,675 49,295
Maintenance 1,758 1,718
Depreciation, depletion,
and amortization 11,853 13,059
Income taxes 4,835 4,794
Other taxes 4,905 4,509
Total operating expense 149,196 160,599
Operating income 17,072 16,592
Net interest 9,284 8,780
Net income 7,788 7,812
Preferred stock dividend
requirement 107 107
Earnings available for
common stock $ 7,681 $ 7,705
Earnings per common share $.29 $.29
Dividends per common share $.28 $.27
Weighted average common
shares outstanding (thousands) 26,690 26,634
See accompanying notes to consolidated condensed financial statements.
<PAGE>
ONEOK Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
Nov. 30, Aug. 31,
1994 1994
ASSETS
Property and equipment $1,247,323 $1,217,739
Less accumulated depreciation,
depletion, and amortization 491,647 480,288
Net property and equipment 755,676 737,451
Current assets:
Cash and cash equivalents 5,670 4,545
Accounts receivable 84,243 51,029
Inventories 111,062 94,454
Purchased gas cost adjustment 12,476 11,809
Other current assets 8,165 7,416
Total current assets 221,616 169,253
Deferred debits and other assets:
Take-or-pay 106,514 107,491
Other 123,483 122,805
Total deferred debits and
other assets 229,997 230,296
$1,207,289 $1,137,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Common shareholders' equity:
Common stock $ 195,568 $ 195,568
Retained earnings 175,134 174,926
Total common shareholders' equity 370,702 370,494
Preferred stock 9,000 9,000
Total shareholders' equity 379,702 379,494
Long-term debt, excluding current maturities 362,897 362,897
Current liabilities:
Current maturities of long-term debt 14,050 14,050
Notes payable 100,000 50,000
Accounts payable 52,090 44,238
Accrued income taxes 4,345 -
Accrued general taxes 13,849 9,845
Accrued liabilities 22,751 20,140
Customers' deposits 7,151 6,413
Deferred taxes 3,455 3,822
Total current liabilities 217,691 148,508
Deferred credits:
Deferred income taxes 196,114 197,156
Other 50,885 48,945
Total deferred credits 246,999 246,101
$1,207,289 $1,137,000
See accompanying notes to consolidated condensed financial statements.
<PAGE>
ONEOK Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
3 Months Ended
Nov. 30,
1994 1993
OPERATING ACTIVITIES
Net income $ 7,788 $ 7,812
Amortization of take-or-pay deferrals 1,110 -
Depreciation, depletion, and amortization 11,853 13,059
Nonproductive well drilling 119 416
Net losses of equity investees 463 352
Net gain on sale of property - (2,053)
Deferred income taxes (1,461) 713
Changes in assets and liabilities (30,987) (32,758)
Net cash used in operating
activities (11,115) (12,459)
INVESTING ACTIVITIES
(Increase) decrease in investments, net 17 (308)
Capital expenditures (31,896) (18,769)
Proceeds from salvage, net of removal costs 1,699 1,917
Net cash used in investing
activities (30,180) (17,160)
FINANCING ACTIVITIES
Increase in notes payable, net 50,000 43,000
Dividends paid (7,580) (7,298)
Net cash provided by financing
activities 42,420 35,702
Change in cash and cash equivalents $ 1,125 $ 6,083
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest $13,782 $13,218
Income taxes $ 1 $ 698
Noncash transactions:
Gas received as payment-in-kind $24,055 $21,859
See accompanying notes to consolidated condensed financial statements.
<PAGE>
ONEOK Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1. General. The interim consolidated condensed financial
statements reflect all adjustments which, in the opinion of management,
are necessary for a fair presentation of the results for the interim
periods presented. All such adjustments are of a normal recurring
nature. Due to the seasonal nature of the business, the results of
operations for the three-month period ended November 30, 1994, are not
necessarily indicative of the results that may be expected for the year
ended August 31, 1995. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended August 31, 1994.
Note 2. Rate Regulation. On November 22, 1994, the Company received a
final rate order from the Oklahoma Corporation Commission (OCC) on its
rate request filed in December 1991. The Company had requested an
annual rate increase of $50.5 million. The OCC had granted an interim
annual rate increase of $18.2 million effective in March 1992. The
final order granted $5.5 million in addition to the interim annual rate
increase. Under the rate order, customers will begin paying a monthly
customer charge that will reduce the weather-related variability of
earnings. On December 30, 1994, the Company filed another rate
application with the OCC seeking a $36.4 million rate increase.
Note 3. Other Assets. Through subsidiaries, the Company is a 25
percent partner in two natural gas transmission systems, Ozark Gas
Transmission System (Ozark) and Red River Pipeline (Red River). Ozark
operates in Oklahoma and Arkansas. Red River operates in Texas.
Through a subsidiary financing corporation, Ozark issued certain long-
term notes for the financing of the system's gas transmission
facilities. There is no recourse to the partners under the notes. One
of the two firm shippers, Columbia Gas Transmission Corporation
(Columbia), previously commenced a voluntary case under the Federal
Bankruptcy laws which constituted an event of default under the
applicable note agreements. Ozark has called its remaining long-term
notes and plans to sell the system. Ozark has negotiated exit fee
agreements with Columbia and Tennessee Ozark Gas Company, the other firm
shipper. The agreements are subject to approval by the Federal Energy
Regulatory Commission (FERC) and the bankruptcy court in the case of
Columbia. It is anticipated that funds generated by the exit agreements
and sale of the system will exceed the amount of the note payments. If
the attempt to sell the pipeline is unsuccessful, or if Ozark is unable
to generate sufficient revenues, a liquidity problem for Ozark could
result. Such an occurrence could affect the Company's ability to
recover its investment. The amount of such effect is not presently
determinable.
Through its subsidiary, TransTex Pipeline Company (TransTex), the
Company has agreed to advance cash to Red River, limited to its
proportionate share, for operating expenses and for debt sinking fund
payments when cash deficiencies occur. The Company has made such cash
advances in each of the last three years. During 1993, long-term debt
was refinanced, the system was modified to allow bidirectional flow, and
the method of allocating transportation revenue was changed to credit
revenues to the partner responsible for the throughput. Subsequently,
TransTex has entered into a one-year limited agency agreement with a
third party for shipping gas on Red River, which will generate
additional revenue for TransTex during the 1995 fiscal year. If the
system does not improve cash flow as a result of these or other changes,
the Company may not be able to fully recover its investment. The amount
of such effect is not presently determinable.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ONEOK Inc. and its subsidiaries (the Company) engage in natural gas
distribution, transmission, and storage operations. They also are
involved in oil and gas energy operations and other operations as
described below.
Distribution and Transmission. Oklahoma Natural Gas Company
purchases, distributes, and sells natural gas and leases pipeline
capacity. ONG Transmission Company and four subsidiaries gather,
compress, transport, and store natural gas for intrastate
distribution, transport gas in interstate commerce, and lease pipeline
capacity. In addition, two subsidiaries own interests in partnerships
that operate natural gas transmission systems.
Exploration and Production. ONEOK Exploration Company and ONEOK
Resources Company explore for and produce natural gas and oil.
Gas Processing. ONEOK Products Company extracts and sells natural gas
liquids. It also buys and sells natural gas.
Other Operations. ONEOK Gas Marketing Company owns an interest in a
partnership that markets natural gas. Other subsidiaries operate the
headquarters office building and a parking garage. Contract drilling
operations were sold during fiscal year 1994.
RESULTS OF OPERATIONS
The Company reported consolidated net income of $7.8 million, or 29
cents per share of common stock, for its first quarter ended November
30, 1994. This compares with net income of $7.8 million or 29 cents
per share for the previous year.
Distribution and transmission operations reported a 21 percent
increase in net income. Major contributing factors were increased
margins on gas deliveries and the nonrecurring effect of a rate order
issued during the quarter. The increased earnings were partially
offset by the impact of warmer weather.
Exploration and production earnings decreased primarily due to
decreased oil and natural gas production volumes and natural gas
prices.
Net income for the gas processing business declined primarily because
of a $2.1 million gain on the sale of a pipeline recognized in the
prior year.
Consolidated net interest expense increased during the 1995 first
quarter due to increased amounts of short-term debt outstanding and
higher interest rates during the period.
<PAGE>
Following is a summary of consolidated earnings:
3 Months Ended
Nov. 30,
NET INCOME (LOSS) 1994 1993
(Thousands of $)
Distribution and transmission $7,600 $6,305
Exploration and production (341) 154
Gas processing 883 2,046
Contract drilling 0 (313)
Other operations (354) (380)
Consolidated $7,788 $7,812
3 Months Ended
Nov. 30,
EARNINGS (LOSS) PER COMMON SHARE 1994 1993
Distribution and transmission $ .28 $ .23
Exploration and production (.01) .01
Gas processing .03 .07
Contract drilling - (.01)
Other operations (.01) (.01)
Consolidated $ .29 $ .29
Following are summaries of financial results and operating information
for the various segments of the Company for the first quarters ended
November 30, 1994 and 1993.
3 Months Ended
Nov. 30,
DISTRIBUTION AND TRANSMISSION 1994 1993
(Thousands of $, except per share amounts)
Revenues:
From unaffiliated customers $126,453 $135,975
Intersegment sales 71 79
Total revenues 126,524 136,054
Less gas purchase expense 65,712 75,931
Net revenues/gross margins 60,812 60,123
Operating expenses 40,098 42,108
Operating income before
income taxes 20,714 18,015
Income taxes 4,717 3,841
Net interest expense 8,397 7,869
Net income $ 7,600 $ 6,305
Earnings per share $.28 $.23
Gas sales:
Residential and commercial $ 81,600 $ 85,303
Industrial 5,434 5,001
Wholesale 247 623
PCL/SISP gas sales 14,105 21,567
Total gas sales 101,386 112,494
Less gas purchased expense 65,712 75,931
Gas sales margins 35,674 36,563
PCL/SISP margins 5,639 4,930
Pipeline capacity lease margins 15,999 13,179
Other revenues 3,500 5,451
Net revenues $ 60,812 $ 60,123
<PAGE>
3 Months Ended
Nov. 30,
DISTRIBUTION AND TRANSMISSION (CONT.) 1994 1993
Volumes (MMcf):
Gas sales:
Residential and commercial 13,609 18,057
Industrial 1,707 1,558
Wholesale 68 212
Total gas sales 15,384 19,827
PCL/SISP 9,456 10,776
Pipeline capacity leases 30,540 30,026
Total volumes 55,380 60,629
Average cost of gas purchased (per Mcf):
General system $3.33 $2.89
SISP $1.64 $1.98
PCL margins (per MMcf) $.54 $.44
Degree days:
Actual 582 909
Normal 648 631
Number of customers at end of periods 728,630 722,501
Despite serving 6,000 additional customers, residential and commercial
sales decreased because of warmer weather.
The market to serve industrial customers remains extremely
competitive, so the Company offers its pipeline capacity lease program
(PCL) and payment-in-kind program (PIK) to certain of these customers
as a response to the competitive pressures. Under its PIK program,
the Company accepts gas in lieu of cash for PCL payments and for
transportation charges. PIK gas is priced to general system gas
distribution operations at the weighted average cost of gas (WACOG).
Some of the PCL contracts include price caps, which reduce the volume
of gas delivered to the Company as the price of gas purchased by the
customers escalates. Average spot market prices increased
significantly in 1993 and continued to increase for part of 1994,
triggering price caps and reducing the volume of PIK gas delivered to
the Company. In May 1994, spot market prices began declining to
levels under those which triggered the price caps, improving PCL
margins. Prices continued to decline during the current fiscal year
first quarter causing PCL margins to increase.
<PAGE>
3 Months Ended
Nov. 30,
EXPLORATION AND PRODUCTION 1994 1993
(Thousands of $ except per share amounts)
Revenues:
From unaffiliated customers $5,151 $6,674
Intersegment sales 271 375
Total revenues 5,422 7,049
Operating expenses 5,529 6,334
Operating income (loss)
before income taxes (107) 715
Income taxes (215) 97
Net interest expense 449 464
Net income (loss) $ (341) $ 154
Earnings (loss) per share $(.01) $.01
Oil production sales:
Revenue (thousands of $) $1,675 $2,279
Volumes (Bbls.) 106,147 144,089
Average price (per bbl.) $15.78 $15.82
Gas production sales:
Revenue (thousands of $) $3,330 $4,630
Volumes (MMcf) 2,159 2,300
Average price (per Mcf) $1.54 $2.01
Decreased earnings were due primarily to decreased oil and natural gas
production volumes and lower natural gas prices.
3 Months Ended
Nov. 30,
GAS PROCESSING 1994 1993
(Thousands of $ except per share amounts)
Revenues:
From unaffiliated customers $23,655 $29,530
Intersegment sales - 13
Total revenues 23,655 29,543
Operating expenses 21,976 25,986
Operating income before
income taxes 1,679 3,557
Income taxes 557 1,291
Net interest expense 239 220
Net income $ 883 $ 2,046
Earnings per share $.03 $.07
Natural gas liquids sales:
Revenue (thousands of $) $14,045 $14,228
Volumes (Mgals.) 52,876 53,728
Average price (per gal.) $.27 $.26
Margin (per gal.) $.03 $.03
Other gas sales:
Revenue (thousands of $) $6,753 $9,591
Volumes (MMcf) 4,175 4,382
Average price (per Mcf) $1.62 $2.19
Margin (per Mcf) $.06 $.11
<PAGE>
In July 1994, the Company began trading NYMEX natural gas futures
contracts to hedge shrinkage and fuel requirements in its gas
processing operations. A loss of $1.2 million was recognized in first
quarter operations for futures contracts that have expired. At
November 30, 1994, the Company had $1.1 million of deferred losses on
contracts outstanding to purchase 2,700,000 MMBtu. These contracts
are for the period January 1995 through March 1995.
Margins on other gas sales decreased during the current quarter
because of lower prices.
Included in last fiscal year's first quarter revenues is a $2.1
million gain on the sale of a pipeline.
3 Months Ended
Nov. 30,
OTHER 1994 1993
(Thousands of $ except per share amounts)
Revenues:
From unaffiliated customers $11,009 $ 2,960
Intersegment sales 17,992 24,921
Total revenues 29,001 27,881
Gas purchase expense 26,544 25,499
Operating expenses 2,839 2,829
Operating income (loss)
before income taxes (382) (447)
Income taxes (225) (240)
Net interest expense 197 173
Net income (loss) $ (354) $ (380)
Earnings (loss) per share $(.01) $(.01)
Buildings operations (thousands of $):
Revenue $2,156 $2,327
Earnings per share $(.01) $(.01)
Corporate operations (thousands of $):
Revenue $92 $73
Earnings per share $ - $ -
Gas marketing operations (thousands of $):
Revenue $26,753 $25,481
Less gas purchase expense 26,544 25,499
Net revenue $ 209 $ (18)
Earnings per share $ - $ -
ONEOK Gas Marketing Company supplies natural gas to its gas marketing
partnership with Ward Gas Services and to other affiliates at cost.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The estimated sources of funds (cash) for the 1995 fiscal year are as
follows:
Sources of Funds (Millions of $)
Proceeds from:
Issuance of short-term debt $ 48.6
Issuance of long-term debt -
Cash provided by operating
activities 85.7
Total $134.3
Short-Term Debt. The aggregate amount of short-term debt outstanding
at January 6, 1995, and November 30,1994, was $100 million.
Long-Term Debt. As of January 6, 1995, the Company could have issued
approximately $246.4 million of additional long-term debt under the
most restrictive of the provisions contained in the Company's various
lending agreements.
Stock and Dividends. As of January 6, 1995, the Company could have
issued approximately 33 million shares of common stock, 160,000 shares
of preferred stock, and three million shares of preference stock.
Common dividends were 28 cents per share for the 1995 first quarter
and 27 cents per share for last year's first quarter. Preferred
dividends were 59.375 cents per share for both periods.
Funds Generated from Operations. For changes stipulated and agreed to
as part of the rate proceedings, see "Rate Regulation" and "Industrial
Load" (relative to PCL contracts) below.
Rate Regulation. On November 22, 1994, the Oklahoma Corporation
Commission (OCC) issued a rate order granting the Company a rate
increase of $23.7 million. This is an increase of $5.5 million over
the $18.2 million interim rate increase that went into effect in March
1992. The Company had requested an annual increase of $50.5 million,
excluding recovery of the remaining balance of its take-or-pay and
other settlement costs. Terra Nitrogen Limited Partnership, an
intervenor, has appealed the rate design for industrial customers to
the Oklahoma Supreme Court. The Company does not anticipate that this
appeal will have a materially adverse impact on the operations of the
Company.
Previously, on January 6, 1994, the OCC had authorized an annual
recovery of $6.7 million for take-or-pay and other settlement costs by
a combination of a surcharge from customers and revenue from
transportation under Section 311 (a) of the Natural Gas Policy Act of
1978 (NGPA) and other intrastate transportation revenues.
The OCC combined with the rate case another proceeding relating to the
acquisition of the Oklahoma properties of Lone Star Gas Company in
which the Company asked that the full purchase price be included in
rate base. The OCC allowed the Company to recover and amortize the
acquisition premium over a 5-year period but earn no return on the
outstanding balance. The expense for amortizing the premium and
previously deferred pension costs will be approximately $4.5 million
per year. In addition, during the second quarter of its 1995 fiscal
year, the Company will begin recognizing annual net periodic pension
cost in operations.
On December 30, 1994, the Company filed another rate application with
the OCC seeking a $36.4 million rate increase.
Industrial Load. Under the rate order received in November 1994, the
OCC reduced the minimum volumes qualifying for a PCL agreement from
75,000 Mcf per year to 30,000 Mcf per year. A tariff has been
established setting forth maximum rates and a standard form for PCL
agreements, subject to changes negotiated between the Company and the
customer.
The Company's largest industrial customer, Agricultural Mineral,
Limited Partnership (AMLP), a fertilizer manufacturer, has instituted
an antitrust proceeding in state District Court challenging the
validity of its 15-year PCL contract with the Company entered into in
1989, contending that the Company's practice of charging negotiated
rather than uniform PCL rates is discriminatory and illegal. The
Company responded by filing an OCC proceeding seeking a determination
that the terms and conditions of its contract with AMLP are just and
reasonable. The Administrative Law Judge ruled that the case should
be stayed pending the outcome of the District Court proceedings. The
Company appealed the ruling to the Commission, and a hearing has been
scheduled for September 11, 1995. Management believes that AMLP's
contentions are unfounded and will be rejected in both the judicial
and administrative proceedings. Nevertheless, unfavorable results in
such proceedings, unless the Company could offset or recover any
resulting damages or earnings reduction by increased revenue from
customers, could have a materially adverse effect on the Company's
earnings. The amount of such effect is not presently determinable.
Capital Expenditures. Capital expenditures budgeted for the 1995
fiscal year are as follows:
(Est.)
CAPITAL EXPENDITURES 1995
(Millions of $)
Distribution $44.0
Transmission 15.0
Exploration and production 26.3
Gas processing 3.5
Other operations .1
Total $88.9
The 1995 estimate for the exploration and production segment includes
an October 1994 acquisition of Louisiana properties at a cost of
approximately $17.6 million.
Other. Through a subsidiary, the Company is a 25 percent partner in
Ozark Gas Transmission System (Ozark), which operates a gas
transmission line in Oklahoma and Arkansas. Ozark has negotiated exit
fee agreements with its two primary shippers, Columbia Gas
Transmission Corporation (Columbia) and Tennessee Ozark Gas Company.
The agreements are subject to FERC approval and approval of a
bankruptcy court in the case of Columbia. Ozark has called its
remaining long-term notes and plans to sell the system. It is
anticipated that funds generated by the exit agreements and sale of
the system will exceed the amount of the note payments. If the
attempt to sell the pipeline is unsuccessful, or if Ozark is unable to
generate sufficient revenues, a liquidity problem for Ozark could
result. Such an occurrence could affect the Company's ability to
recover its investment. The amount of such effect is not presently
determinable.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Fent, et ux v. Oklahoma Natural Gas Company, a Division of ONEOK Inc.,
et al., No. CJ-88-10148, District Court, Oklahoma County. Motion to
stay has been granted by agreement of the parties, staying further
proceedings pending resolution of appeal of companion case to Oklahoma
Supreme Court.
Fent, et ux v. Oklahoma Natural Gas Company, a Division of ONEOK Inc.,
No. 79,243, Oklahoma Supreme Court. On October 24, 1994, the Company
filed a Petition for Rehearing with the Oklahoma Supreme Court. On
October 24, 1994, the plaintiffs filed a motion for attorney fees on
the Commission appeal. The Company filed a response on November 3,
1994.
Hadson Energy Resources Corporation v. ONG Western, Inc., No. CJ-93-
3953-62, District Court, Oklahoma County. This case has been settled.
Final settlement documents are being prepared and circulated to the
parties.
Mustang Fuel Corp. of Oklahoma, et al. v. ONEOK Exploration Company
and ONEOK Resources Company, No. CJ-94-4293-63, District Court,
Oklahoma County. This case has been settled.
Payne, et al. v. Mustang Fuel Corporation and ONEOK Resources Company,
No. CJ-94-53, District Court, Grady County. This case has been
settled.
In the Matter of the Application of Oklahoma Natural Gas Company, a
Division of ONEOK Inc., for Examination of Standby Service, Cause No.
598, Oklahoma Corporation Commission. On October 21, 1994, the
Commission staff filed a motion to dismiss for failure to prosecute.
The motion was denied. A scheduling conference was held on November
10, 1994. The hearing has been scheduled for September 11, 1995.
In the Matter of the Application of Oklahoma Natural Gas Company, a
Division of ONEOK Inc., for a Review and Determination Concerning its
Rates and Earnings in Compliance with the Requirements of 17 O.S.
Supp. 1990, Section 263, and for Other Appropriate Relief, Cause PUD
No. 910001190, Oklahoma Corporation Commission. On November 22, 1994,
the Oklahoma Corporation Commission (OCC) issued a rate order granting
the Company a rate increase of $23.7 million. This is an increase of
$5.5 million over the $18.2 million interim rate increase that went
into effect in March 1992. The Company had requested an annual
increase of $50.5 million, excluding recovery of the remaining balance
of its take-or-pay and other settlement costs. On January 6, 1994,
the OCC authorized an annual recovery of $6.7 million for take-or-pay
and other settlements costs by a combination of a surcharge from
customers and revenue from transportation under Section 311(a) of the
Natural Gas Policy Act of 1978 and other intrastate transportation
revenues. The OCC combined with the rate case another proceeding
relating to the acquisition of the Oklahoma properties of Lone Star
Gas Company in which the Company asked that the full purchase price be
included in rate base. The OCC allowed the Company to recover and
amortize the acquisition premium over a 5-year period but earn no
return on the outstanding balance. The expense for amortizing the
premium and previously deferred pension costs will be approximately
$4.5 million per year. In addition, during the second quarter of its
1995 fiscal year, the Company will begin recognizing annual net
periodic pension cost in operations. On December 2, 1994, the Company
filed a Motion to Reconsider asking the Commission to reconsider six
issues totalling approximately $8 million in additional revenue. The
matter was heard by the Commission on December 14, 1994, and the
Commission took the matter under advisement. On December 22, 1994,
the Commission denied the motion. The Company has decided not to
appeal. Terra Nitrogen Limited Partnership, an intervenor, has
appealed the rate design for industrial customers to the Oklahoma
Supreme Court. The Company's response to the appeal is due January
11, 1995.
Application for a Determination that the Rate Charges Pursuant to a
Pipeline Capacity Lease Agreement between ONG and AMLP is Just and
Reasonable, Cause No. PUD 940000419, Oklahoma Corporation Commission.
The Administrative Law Judge ruled that the case should be stayed
pending the outcome of the District Court proceedings. The Company
appealed the ruling to the Commission and is awaiting the
establishment of a hearing date.
In the Matter of the Application for a Change or Modification in the
Rates, Charges, and Tariffs of Oklahoma Natural Gas Company, a
Division of ONEOK, Inc., Cause No. 940000477. On December 30, 1994,
the Company filed a new application with the OCC seeking a $36.4
million rate increase. The Company's application requests a rate of
return on rate base of 10.997 percent and a return of equity of 13.2
percent. The Company is also seeking Commission approval to
restructure the method in which it handles revenues from its largest
customers, to implement an incentive ratemaking plan and a weather
normalization plan, and to recover postretirement benefit cost
required by Statement of Financial Accounting Standards No. 106.
Under the incentive ratemaking plan, the Company would be allowed to
make limited rate adjustments tied to costs as reflected by the
Consumer Price Index, reduced by an adjustment for improved
productivity. Under the plan, the Company would agree not to seek a
general rate increase for a period of at least three years.
(a) Exhibits
None
(b) Reports on Form 8-K
Two reports on Form 8-K were filed during the first quarter of the
1995 fiscal year or preceding the filing of this report. The report
dated November 22, 1994, reported the receipt of a final rate order
from the OCC on the Company's 1991 request for a rate increase. The
report dated December 30, 1994, reported that the Company filed an
application with the OCC requesting a $36.4 million rate increase.
There were no financial statements filed with either of the Forms 8-K.
<PAGE>
SIGNATURE
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, on this 9th day of
January 1995.
ONEOK Inc.
(Registrant)
By: (J. D. NEAL)
J. D. Neal
Vice President,
Chief Financial Officer,
and Treasurer
<PAGE>
TYPE EX-27
DESCRIPTION FINANCIAL DATA SCHEDULE
ARTICLE 5
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE 1995 FISCAL YEAR'S
FIRST QUARTER ENDED NOVEMBER 30, 1994, AND THE CONSOLIDATED BALANCE
SHEET AT NOVEMBER 30, 1994, FOR ONEOK INC. AND SUBSIDIARIES AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
MULTIPLIER 1,000
PERIOD-TYPE 3-MOS.
FISCAL-YEAR-END AUG-31-1995
PERIOD-START SEP-01-1994
PERIOD-END NOV-30-1994
CASH 5,670
SECURITIES 0
RECEIVABLES 84,243
ALLOWANCES 0
INVENTORY 111,062
CURRENT-ASSETS 221,616
PP&E 1,247,323
DEPRECIATION 491,647
TOTAL-ASSETS 1,207,289
CURRENT-LIABILITIES 217,691
BONDS 0
COMMON 195,568
PREFERRED-MANDATORY 0
PREFERRED 9,000
OTHER-SE 0
TOTAL-LIABILITY-AND-EQUITY 1,207,289
SALES 0
TOTAL-REVENUES 166,268
CGS 0
TOTAL-COSTS 144,361
OTHER-EXPENSES 0
LOSS-PROVISION 0
INTEREST-EXPENSE 9,284
INCOME-PRETAX 12,623
INCOME-TAX 4,835
INCOME-CONTINUING 7,788
DISCONTINUED 0
EXTRAORDINARY 0
CHANGES 0
NET-INCOME 7,788
EPS-PRIMARY .29
EPS-DILUTED .29
