Exhibit 99.1
July 31, 2003 | | Analyst Contact: | | Weldon Watson |
| | | | | 918-588-7158 |
| | | Media Contact: | | Andrea Chancellor |
| | | | | 918-588-7570 |
ONEOK reports second quarter earnings
Tulsa, Okla.— ONEOK, Inc., (NYSE:OKE) today announced net income of $22.5 million, or 23 cents per diluted share of common stock for the second quarter 2003.
David Kyle, chairman, president and chief executive officer of ONEOK, said, “I am pleased with the strong earnings for the quarter and the continued growth and performance of our business segments.”
Second quarter 2003 results included:
| | • | | Operating income of $62 million, compared with $79.3 million for the same quarter a year ago. Included in operating income for 2003 is only $13.3 million for mark-to-market earnings. |
| | • | | Lower earnings in 2003 compared with the previous year’s quarter because of an accounting change effective January 1, 2003. The change affects the way ONEOK’s marketing and trading segment accounts for certain energy contracts. The required change was from mark-to-market to accrual accounting. Under the accrual method, earnings from storage and transportation contracts are recorded when the transactions settle. |
| | • | | Total net income of $22.5 million, or 23 cents per diluted share, compared with $35.4 million, or 29 cents per diluted share, for the same quarter a year ago. |
The following table shows the components of net income. All numbers are net of tax:
| | | Three Months Ended June 30,
|
| | | 2003
| | 2002
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| | | (Millions of Dollars) |
Income from continuing operations | | $ | 22.5 | | $ | 32.3 |
Operations of discontinued component | | | — | | | 3.1 |
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Net income | | $ | 22.5 | | $ | 35.4 |
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ONEOK, Inc.
Second Quarter 2003 Earnings
July 31, 2003
Page 2
Fiscal year to date 2003 results included:
| | • | | Increased operating income for most ONEOK business units, with significant gains in the gathering and processing and marketing and trading segments. |
| | • | | Operating income of $294.4 million, compared with $220.8 million for the same period one year ago. Included in operating income for 2003 is only $25.2 million for mark-to-market earnings. |
| | • | | Income from continuing operations of $148.2 million or $1.43 per diluted share, compared with $104 million or 86 cents per diluted share for the same period a year ago. |
| | • | | Total net income of $45 million, or 51 cents per diluted share, compared with $108 million, or 89 cents per diluted share, for the same period last year. |
The following table shows the components of net income. All numbers are net of tax:
| | | Six Months Ended June 30,
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| | | 2003
| | | 2002
|
| | | (Millions of Dollars) |
Income from continuing operations | | $ | 148.2 | | | $ | 104.0 |
Operations of discontinued component | | | 2.3 | | | | 4.0 |
Gain on sale of producing properties | | | 38.4 | | | | — |
Cumulative effect of rescission of EITF 98-10 | | | (141.8 | ) | | | — |
Cumulative effect of adoption of FAS 143 | | | (2.1 | ) | | | — |
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Net income | | $ | 45.0 | | | $ | 108.0 |
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ONEOK business outlook:
| | • | | On July 11, 2003, the Kansas Corporation Commission staff filed pre-trial testimony and exhibits recommending the Kansas distribution company receive additional revenue in the amount of $28.7 million, compared with the $76 million increase requested by Kansas Gas Service Company in January. Intervenors in the case have recommended revenue ranging from $31 million to $59 million. Rebuttal testimony is to be filed August 4, 2003. |
| | • | | Marketing and trading added five billion cubic feet of leased storage capacity bringing its total leased capacity to 75 billion cubic feet. |
| | • | | Gathering and processing continues its efforts to mitigate processing margin volatility through contract restructuring and improved operations. |
| | • | | ONEOK has taken advantage of interest rate swaps, which changed its fixed-rate debt to a floating rate, thus reducing interest expense. At June 30, 2003, $550 million of fixed rate long-term debt at an average rate of 7.02% has been swapped to a floating rate of LIBOR plus 85 basis points. |
| | • | | At June 30, production had hedged 60 percent of its anticipated natural gas production for the remainder of 2003 at $4.50 per thousand cubic feet at the wellhead, and 25 percent of its 2004 production at $5.30 per thousand cubic feet. |
| | • | | Finally, ONEOK continues to look for acquisition opportunities primarily in the production, transportation and storage, and distribution segments. |
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ONEOK, Inc.
Second Quarter 2003 Earnings
July 31, 2003
Page 3
Second quarter business unit results:
Production
Second quarter operating income increased to $3.2 million from $2.1 million for the same quarter last year because of:
| | • | | Higher natural gas prices. |
| | • | | Increased operating costs which offset part of the positive impact of natural gas prices. |
The production segment owns, develops and produces natural gas and oil reserves in Oklahoma. Approximately two-thirds of the segment’s reserves were sold in the first quarter of 2003. This segment focuses on acquisition and development of reserves, rather than exploratory drilling.
Gathering and Processing
Second quarter operating income increased significantly to $15.8 million, compared with $28,000 for the same quarter last year because of:
| | • | | Significant increases in natural gas, natural gas liquids and crude oil prices combined with the benefit of the segment’s ongoing effort of restructuring contracts to mitigate exposure to unfavorable keep whole spreads. |
| | • | | The ability to change the operations of the plants in response to changing market conditions. |
| | • | | Decreases in operating costs due to the sale of Oklahoma assets and success in collecting outstanding receivables. |
The gathering and processing segment is engaged in the gathering and processing of natural gas and the fractionation, storage and marketing of natural gas liquids. The segment currently has a processing capacity of approximately 2 Bcf/d, of which approximately 0.2 Bcf/d is currently idle. Our gathering and processing segment owns approximately 14,000 miles of gathering pipelines that supply our gas processing plants.
Transportation and Storage
Second quarter operating income increased significantly to $11.3 million, compared with $4.1 million for the same quarter last year because of:
| | • | | Increased storage revenue due to additional available working capacity. |
| | • | | Lower litigation costs, bad debt expenses and adjustments related to reconciliation of third party volumes. |
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ONEOK, Inc.
Second Quarter 2003 Earnings
July 31, 2003
Page 4
The transportation and storage segment owns and operates intrastate pipelines and natural gas transmission pipelines, natural gas storage and nonprocessable gas gathering facilities in Oklahoma, Kansas and Texas. The storage facilities have a combined working capacity of 59.6 Bcf, of which 8 Bcf is temporarily idle.
Distribution
Second quarter operating income was $418,000, compared with $18.8 million for the same quarter one year ago because of:
| | • | | Increased bad debt expenses due to higher natural gas prices and increased employee costs partially offset by the addition of margins from the acquisition of the Texas distribution assets. |
| | • | | The prior year included income of $14.2 million related to a gas cost settlement with the Oklahoma Corporation Commission. |
The distribution segment includes Oklahoma Natural Gas Company, Kansas Gas Service Company and Texas Gas Service Company. The companies are the largest natural gas distributors in Kansas and Oklahoma and the third largest in Texas. Overall, the companies serve almost 2 million customers.
Marketing and Trading
Second quarter operating income was $30.5 million, compared with $57.6 million for the same quarter a year ago because of:
| | • | | Income from mark-to-market accounting of only $13.3 million. |
| | • | | The change in accounting for certain storage and transportation contracts from mark-to-market to accrual accounting eliminated the revenues generated from carrying the natural gas inventories at fair value. Instead, the revenue will generally be recognized when the inventories are actually sold in the first and fourth quarters. |
| | • | | A continued focus on its strategy of trading around physical assets and the use of leased storage and transport capacities. |
ONEOK Energy Marketing and Trading income is primarily generated from the following revenue sources:
| | • | | Marketing and transportation services. |
| | • | | Retail sales to industrial customers. |
| | • | | Power/crude/other marketed commodities. |
The marketing and trading segment purchases, stores, markets and trades natural gas to both the wholesale and retail sectors in most states. Leased storage and transport capacity provide direct
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ONEOK, Inc.
Second Quarter 2003 Earnings
July 31, 2003
Page 5
access to all regions of the country, with great flexibility in capturing volatility in the energy markets. The segment also markets and trades oil and power on a smaller scale.
2003 Guidance
The company confirms previous guidance provided. Net income from continuing operations is expected to be $2.03 to $2.08 per diluted share of common stock for 2003. Estimates for the third and fourth quarter earnings per diluted share of common stock are as follows:
| | | For the Quarter Ended
| | 2003 | |
| | | 03/31/2003
| | | 06/30/2003
| | 09/30/2003
| | | 12/31/2003
| | Fiscal Year
| |
Income from continuing operations | | $ | 1.20 | | | $ | 0.23 | | $ | (0.20 | ) | | $ | 0.70 | | $ | 2.05 | |
Operations of discontinued component | | | 0.02 | | | | — | | | — | | | | — | | | 0.02 | |
Gain on sale of producing properties | | | 0.34 | | | | — | | | — | | | | — | | | 0.34 | |
Cumulative effect of rescission of EITF 98-10 | | | (1.26 | ) | | | — | | | — | | | | — | | | (1.26 | ) |
Cumulative effect of adoption of FAS 143 | | | (0.02 | ) | | | — | | | — | | | | — | | | (0.02 | ) |
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Net Income | | $ | 0.28 | | | $ | 0.23 | | $ | (0.20 | ) | | $ | 0.70 | | $ | 1.13 | |
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Note: Preferred dividends are expected to exceed earnings for the third quarter, resulting in an antidilutive position for earnings per diluted share of common stock. As a result of this antidilution, the quarters will not add to the total earnings per share reported for the year. This antidilution for the third quarter does not affect the resulting earnings per share for the twelve-month period.
At this time, the company still projects 2003 capital expenditures to be about $215 million. The company is seeking an increase in wells proposed for drilling in the production segment and somewhat higher requirements in the distribution segment coming from the Texas operation that may change that number as the year progresses.
Cash flow is anticipated to exceed capital expenditures and projected dividends of $71 million by $130 to $150 million.
Earnings Conference Call
The ONEOK second quarter conference call will be held at 10 a.m. Eastern time (9 a.m. Central time) on August 1, 2003. Those who wish may join the call on the ONEOK Web site atwww.oneok.com or call 1-866-482-6973, pass code 3710395.
ONEOK, Inc., is a diversified energy company involved primarily in oil and gas production, natural gas processing, gathering, storage and transmission in the mid-continent areas of the United States. The company’s energy marketing and trading operations provide service to customers in most states. The company is the largest natural gas distributor in Kansas and Oklahoma, and the third largest in Texas, operating as Kansas Gas Service, Oklahoma Natural Gas and Texas Gas Service, serving almost 2 million customers. ONEOK is a Fortune 500 company.
For information about ONEOK, Inc. visit the Web site: www.oneok.com.
###
Some of the statements contained and incorporated in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements relate to the anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions and other matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements in various circumstances. The following discussion is intended to identify important factors that could cause future outcomes to differ materially from those set forth in the forward-looking statements.
Forward-looking statements include the items identified in the preceding paragraph, the information concerning possible or assumed future results of operations and other statements contained or incorporated in this release identified by words such as “anticipate,” “estimate,” “expect,” “intend,” “believe,” “projection” or “goal.”
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ONEOK, Inc.
Second Quarter 2003 Earnings
July 31, 2003
Page 6
You should not place undue reliance on the forward-looking statements. Known and unknown risks, uncertainties and other factors may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Those factors may affect the Company’s operations, markets, products, services and prices. In addition to any assumptions and other factors referred to specifically in connection with the forward-looking statements, factors that could cause the Company’s actual results to differ materially from those contemplated in any forward-looking statement include, among others, the following:
| | • | | risks associated with any reduction in the Company’s credit ratings; |
| | • | | the effects of weather and other natural phenomena on sales and prices; |
| | • | | competition from other energy suppliers as well as alternative forms of energy; |
| | • | | the capital intensive nature of the Company’s business; |
| | • | | further deregulation, or “unbundling” of the natural gas business; |
| | • | | competitive changes in the natural gas gathering, transportation and storage business resulting from deregulation, or “unbundling,” of the natural gas business; |
| | • | | the profitability of assets or businesses acquired by the Company; |
| | • | | risks of marketing, trading, and hedging activities as a result of changes in energy prices or the financial condition of the Company’s trading partners; |
| | • | | economic climate and growth in the geographic areas in which the Company does business; |
| | • | | the uncertainty of gas and oil reserve estimates; |
| | • | | the timing and extent of changes in commodity prices for natural gas, natural gas liquids, electricity, and crude oil; |
| | • | | the effects of changes in governmental policies and regulatory actions, including, with respect to accounting policies, income taxes, environmental compliance, authorized rates, or recovery of gas costs; |
| | • | | the impact of unforeseen changes in interest rates, equity markets, inflation rates, economic recession and other external factors over which the Company has no control, including the effect on pension expense and funding resulting from changes in stock market returns; |
| | • | | risks associated with pending or possible acquisitions and dispositions, including the Company’s ability to finance or to integrate any such acquisitions and any regulatory delay or conditions imposed by regulatory bodies in connection with any such acquisitions; |
| | • | | the results of administrative proceedings and litigation involving the OCC, KCC, Texas regulatory authorities or any other local, state or federal regulatory body; |
| | • | | the Company’s ability to access capital and competitive rates on terms acceptable to the Company; |
| | • | | actions taken by Westar or its affiliates with respect to its investment in ONEOK, including, without limitation, the effect of a sale of the Company’s shares of common stock and preferred stock beneficially owned by Westar; |
| | • | | the risk of a significant slowdown in growth or decline in the U.S. economy, the risk of delay in growth or recovery in the U.S. economy or the risk of increased costs for insurance premiums, security or other items as a consequence of the September 11, 2001, or possible future terrorists attacks or war; and |
| | • | | the other factors listed in the reports the Company has filed and may file from time to time with the SEC. |
Other factors and assumptions not identified above were also involved in the making of the forward-looking statements. The failure of those assumptions to be realized, as well as other factors, may also cause actual results to differ materially from those projected.
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ONEOK, Inc.
Second Quarter 2003 Earnings
July 31, 2003
Page 7
ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
| | | Three Months Ended June 30,
| | Six Months Ended June 30,
|
| | | 2003
| | 2002
| | 2003
| | | 2002
|
| (Unaudited) | | (Thousands of Dollars, except per share amounts) |
Revenues | | | | | | | | | | | | | |
Operating revenues, excluding energy trading revenues | | $ | 429,449 | | $ | 367,281 | | $ | 1,372,293 | | | $ | 916,073 |
Energy trading revenues, net | | | 37,090 | | | 66,070 | | | 172,761 | | | | 137,785 |
Cost of sales | | | 234,103 | | | 194,714 | | | 909,666 | | | | 520,785 |
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Net Revenues | | | 232,436 | | | 238,637 | | | 635,388 | | | | 533,073 |
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Operating Expenses | | | | | | | | | | | | | |
Operations and maintenance | | | 114,120 | | | 106,139 | | | 226,563 | | | | 210,701 |
Depreciation, depletion, and amortization | | | 39,709 | | | 38,705 | | | 80,136 | | | | 72,805 |
General taxes | | | 16,598 | | | 14,502 | | | 34,243 | | | | 28,811 |
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Total Operating Expenses | | | 170,427 | | | 159,346 | | | 340,942 | | | | 312,317 |
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Operating Income | | | 62,009 | | | 79,291 | | | 294,446 | | | | 220,756 |
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Other income | | | 1,870 | | | 9,025 | | | 4,070 | | | | 9,624 |
Other expense | | | 824 | | | 3,894 | | | 2,283 | | | | 5,213 |
Interest expense | | | 24,969 | | | 27,853 | | | 53,546 | | | | 54,035 |
Income taxes | | | 15,538 | | | 24,251 | | | 94,532 | | | | 67,121 |
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Income from continuing operations | | | 22,548 | | | 32,318 | | | 148,155 | | | | 104,011 |
Discontinued operations, net of taxes | | | | | | | | | | | | | |
Income from operations of discontinued component | | | — | | | 3,065 | | | 2,342 | | | | 3,970 |
Gain on sale of discontinued component | | | — | | | — | | | 38,369 | | | | — |
Cumulative effect of a change in accounting principle, net of tax | | | — | | | — | | | (143,885 | ) | | | — |
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Net Income | | $ | 22,548 | | $ | 35,383 | | $ | 44,981 | | | $ | 107,981 |
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Preferred stock dividends | | | 5,045 | | | 9,275 | | | 20,211 | | | | 18,550 |
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Income Available for Common Stock | | $ | 17,503 | | $ | 26,108 | | $ | 24,770 | | | $ | 89,431 |
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Earnings Per Share of Common Stock | | | | | | | | | | | | | |
Basic: | | | | | | | | | | | | | |
Earnings per share from continuing operations | | $ | 0.24 | | $ | 0.27 | | $ | 1.66 | | | $ | 0.87 |
Earnings per share from discontinued operations | | $ | — | | $ | 0.02 | | $ | 0.02 | | | $ | 0.03 |
Earnings per share from gain on sale of discontinued component | | $ | — | | $ | — | | $ | 0.34 | | | $ | — |
Earnings per share from cumulative effect of a change in accounting principle | | $ | — | | $ | — | | ($ | 1.28 | ) | | $ | — |
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Net earnings per share, basic | | $ | 0.24 | | $ | 0.29 | | $ | 0.74 | | | $ | 0.90 |
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Diluted: | | | | | | | | | | | | | |
Earnings per share from continuing operations | | $ | 0.23 | | $ | 0.27 | | $ | 1.43 | | | $ | 0.86 |
Earnings per share from discontinued operations | | $ | — | | $ | 0.02 | | $ | 0.02 | | | $ | 0.03 |
Earnings per share from gain on sale of discontinued component | | $ | — | | $ | — | | $ | 0.34 | | | $ | — |
Earnings per share from cumulative effect of a change in accounting principle | | $ | — | | $ | — | | ($ | 1.28 | ) | | $ | — |
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Net earnings per share, diluted | | $ | 0.23 | | $ | 0.29 | | $ | 0.51 | | | $ | 0.89 |
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Average Shares of Common Stock (Thousands) | | | | | | | | | | | | | |
Basic | | | 74,412 | | | 99,877 | | | 79,048 | | | | 99,808 |
Diluted | | | 97,025 | | | 100,707 | | | 97,772 | | | | 100,488 |
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ONEOK, Inc.
Second Quarter 2003 Earnings
July 31, 2003
Page 8
ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
| | | June 30,
2003
| | December 31,
2002
|
| (Unaudited) | | (Thousands of Dollars) |
Assets | | | | | | |
Current Assets | | | | | | |
Cash and cash equivalents | | $ | 157,993 | | $ | 73,522 |
Trade accounts and notes receivable, net | | | 666,218 | | | 773,017 |
Materials and supplies | | | 19,048 | | | 16,949 |
Gas in storage | | | 331,734 | | | 58,544 |
Unrecovered purchased gas costs | | | 8,912 | | | 3,576 |
Assets from price risk management activities | | | 248,600 | | | 655,974 |
Other current assets | | | 24,975 | | | 44,790 |
Assets of discontinued component | | | — | | | 276 |
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Total Current Assets | | | 1,457,480 | | | 1,626,648 |
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Property, Plant and Equipment | | | | | | |
Production | | | 152,359 | | | 144,174 |
Gathering and Processing | | | 1,012,935 | | | 993,504 |
Transportation and Storage | | | 700,414 | | | 689,150 |
Distribution | | | 2,737,325 | | | 2,169,382 |
Marketing and Trading | | | 126,155 | | | 124,512 |
Other | | | 99,517 | | | 94,778 |
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Total Property, Plant and Equipment | | | 4,828,705 | | | 4,215,500 |
Accumulated depreciation, depletion, and amortization | | | 1,487,776 | | | 1,200,451 |
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Net Property, Plant and Equipment | | | 3,340,929 | | | 3,015,049 |
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Deferred Charges and Other Assets | | | | | | |
Regulatory assets, net | | | 215,083 | | | 217,978 |
Goodwill | | | 230,729 | | | 113,510 |
Assets from price risk management activities | | | 173,599 | | | 351,660 |
Prepaid Pensions | | | 133,779 | | | 125,426 |
Investments and other | | | 67,076 | | | 55,526 |
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Total Deferred Charges and Other Assets | | | 820,266 | | | 864,100 |
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Non-current Assets of Discontinued Component | | | — | | | 225,061 |
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Total Assets | | $ | 5,618,675 | | $ | 5,730,858 |
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ONEOK, Inc.
Second Quarter 2003 Earnings
July 31, 2003
Page 9
ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
| | | June 30,
2003
| | | December 31,
2002
| |
| (Unaudited) | | (Thousands of Dollars) | |
Liabilities and Shareholders’ Equity | | | | | | | | |
Current Liabilities | | | | | | | | |
Current maturities of long-term debt | | $ | 6,334 | | | $ | 6,334 | |
Notes payable | | | — | | | | 265,500 | |
Accounts payable | | | 763,486 | | | | 672,153 | |
Dividends payable | | | 17,781 | | | | — | |
Accrued taxes | | | 108,219 | | | | 41,922 | |
Accrued interest | | | 33,626 | | | | 29,202 | |
Customers’ deposits | | | 31,634 | | | | 21,096 | |
Liabilities from price risk management activities | | | 221,374 | | | | 427,599 | |
Deferred income taxes | | | 30,155 | | | | 130,328 | |
Other | | | 151,164 | | | | 125,129 | |
Liabilities of discontinued component | | | — | | | | 1,445 | |
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Total Current Liabilities | | | 1,363,773 | | | | 1,720,708 | |
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Long-term Debt, excluding current maturities | | | 1,913,421 | | | | 1,511,118 | |
Deferred Credits and Other Liabilities | | | | | | | | |
Deferred income taxes | | | 498,461 | | | | 475,163 | |
Liabilities from price risk management activities | | | 137,548 | | | | 300,085 | |
Lease obligation | | | 107,286 | | | | 109,051 | |
Other deferred credits | | | 363,589 | | | | 208,106 | |
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Total Deferred Credits and Other Liabilities | | | 1,106,884 | | | | 1,092,405 | |
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Non-current Liabilities of Discontinued Component | | | — | | | | 41,015 | |
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Total Liabilities | | | 4,384,078 | | | | 4,365,246 | |
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Commitments and Contingencies | | | | | | | | |
Shareholders’ Equity | | | | | | | | |
Convertible preferred stock, $0.01 par value: | | | | | | | | |
Series A authorized 20,000,000 shares; issued and outstanding 19,946,448 shares at December 31, 2002 | | | — | | | | 199 | |
Series D authorized, issued and outstanding 21,825,386 shares at June 30, 2003 | | | 218 | | | | — | |
Common stock, $0.01 par value: authorized 300,000,000 shares; issued 95,315,952 shares and outstanding 74,920,913 shares at June 30, 2003; issued 63,438,441 shares and outstanding 60,761,064 shares at December 31, 2002 | | | 953 | | | | 634 | |
Paid in capital | | | 1,125,022 | | | | 903,918 | |
Unearned compensation | | | (4,811 | ) | | | (2,716 | ) |
Accumulated other comprehensive loss | | | (968 | ) | | | (5,546 | ) |
Retained earnings | | | 447,043 | | | | 507,836 | |
Treasury stock at cost: 20,395,039 shares at June 30, 2003; and 2,677,377 shares at December 31, 2002 | | | (332,860 | ) | | | (38,713 | ) |
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Total Shareholders’ Equity | | | 1,234,597 | | | | 1,365,612 | |
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Total Liabilities and Shareholders’ Equity | | $ | 5,618,675 | | | $ | 5,730,858 | |
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ONEOK, Inc.
Second Quarter 2003 Earnings
July 31, 2003
Page 10
ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | Six Months Ended June 30,
| |
| | | 2003
| | | 2002
| |
| (Unaudited) | | (Thousands of Dollars) | |
Operating Activities | | | | | | | | |
Income from continuing operations | | $ | 148,155 | | | $ | 104,011 | |
Depreciation, depletion, and amortization | | | 80,136 | | | | 72,805 | |
Gain on sale of assets | | | — | | | | (813 | ) |
Gain on sale of equity investments | | | — | | | | (7,622 | ) |
(Income) loss from equity investments | | | (762 | ) | | | 553 | |
Deferred income taxes | | | 67,999 | | | | 106,039 | |
Stock-based compensation expense | | | 2,095 | | | | 1,058 | |
Allowance for doubtful accounts | | | 8,573 | | | | 4,344 | |
Changes in assets and liabilities (net of acquisition effects): | | | | | | | | |
Accounts and notes receivable | | | 152,724 | | | | 111,699 | |
Inventories | | | (259,848 | ) | | | 27,798 | |
Unrecovered purchased gas costs | | | (5,336 | ) | | | 59,210 | |
Deposits | | | — | | | | 41,781 | |
Accounts payable and accrued liabilities | | | 47,978 | | | | 75,576 | |
Price risk management assets and liabilities | | | 8,272 | | | | (65,507 | ) |
Other assets and liabilities | | | 45,333 | | | | 91,068 | |
| | |
|
|
| |
|
|
|
Cash Provided by Continuing Operations | | | 295,319 | | | | 622,000 | |
Cash Provided by Discontinued Operations | | | 8,285 | | | | 21,292 | |
| | |
|
|
| |
|
|
|
Cash Provided by Operating Activities | | | 303,604 | | | | 643,292 | |
| | |
|
|
| |
|
|
|
Investing Activities | | | | | | | | |
Changes in other investments, net | | | 708 | | | | 1,869 | |
Acquisitions | | | (432,954 | ) | | | (3,489 | ) |
Capital expenditures | | | (84,441 | ) | | | (121,139 | ) |
Proceeds from sale of property | | | — | | | | 1,400 | |
Proceeds from sale of equity investment | | | — | | | | 57,461 | |
| | |
|
|
| |
|
|
|
Cash Used in Investing Activities of Continuing Operations | | | (516,687 | ) | | | (63,898 | ) |
Cash Provided by (Used in) Investing Activities of Discontinued Operations | | | 280,669 | | | | (12,733 | ) |
| | |
|
|
| |
|
|
|
Cash Used in Investing Activities | | | (236,018 | ) | | | (76,631 | ) |
| | |
|
|
| |
|
|
|
Financing Activities | | | | | | | | |
Payments of notes payable, net | | | (265,500 | ) | | | (248,000 | ) |
Change in bank overdraft | | | 11,830 | | | | (28,757 | ) |
Issuance of debt | | | 402,500 | | | | — | |
Payment of debt issuance costs | | | (2,564 | ) | | | — | |
Payment of debt | | | (15,667 | ) | | | (241,040 | ) |
Purchase of Series A Convertible Preferred Stock | | | (300,000 | ) | | | — | |
Issuance of common stock | | | 218,521 | | | | — | |
Issuance of treasury stock, net | | | 2,445 | | | | 3,798 | |
Dividends paid | | | (34,680 | ) | | | (37,113 | ) |
| | |
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|
Cash (Used In) Provided by Financing Activities | | | 16,885 | | | | (551,112 | ) |
| | |
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|
Change in Cash and Cash Equivalents | | | 84,471 | | | | 15,549 | |
Cash and Cash Equivalents at Beginning of Period | | | 73,522 | | | | 28,229 | |
| | |
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Cash and Cash Equivalents at End of Period | | $ | 157,993 | | | $ | 43,778 | |
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ONEOK, Inc.
Second Quarter 2003 Earnings
July 31, 2003
Page 11
ONEOK, Inc. and Subsidiaries
INFORMATION AT A GLANCE
| | | Three Months Ended June 30,
| | Six Months Ended June 30,
|
| | | 2003
| | 2002
| | 2003
| | 2002
|
| | | (Millions of Dollars) |
| Production | | | | | | | | | | | | |
Net Revenues | | $ | 9.7 | | $ | 8.1 | | $ | 22.4 | | $ | 14.6 |
Depreciation, depletion, and amortization | | | 2.6 | | $ | 3.2 | | $ | 6.0 | | $ | 6.3 |
Operating Income | | $ | 3.2 | | $ | 2.1 | | $ | 8.9 | | $ | 3.8 |
Proved reserves | | | | | | | | | | | | |
Gas (MMcf) | | | — | | | — | | | 60,323 | | | 53,957 |
Oil (MBbls) | | | — | | | — | | | 2,188 | | | 2,286 |
Production | | | | | | | | | | | | |
Gas (MMcf) | | | 1,741 | | | 1,791 | | | 3,573 | | | 3,464 |
Oil (MBbls) | | | 58 | | | 56 | | | 135 | | | 121 |
Average realized price | | | | | | | | | | | | |
Gas ($/Mcf) | | $ | 4.75 | | $ | 3.51 | | $ | 4.99 | | $ | 3.36 |
Oil ($/Bbls) | | $ | 25.14 | | $ | 29.16 | | $ | 28.10 | | $ | 22.80 |
Capital expenditures | | $ | 3.8 | | $ | 4.9 | | $ | 6.7 | | $ | 10.2 |
| | | | |
| Gathering and Processing | | | | | | | | | | | | |
Net revenues | | $ | 52.3 | | $ | 44.6 | | $ | 98.7 | | $ | 85.9 |
Depreciation, depletion, and amortization | | $ | 7.3 | | $ | 8.6 | | $ | 14.5 | | $ | 16.6 |
Operating Income | | $ | 15.8 | | $ | — | | $ | 23.6 | | $ | 1.3 |
Total gas gathered (MMMBtu/d) | | | 1,157 | | | 1,227 | | | 1,189 | | | 1,220 |
Total gas processed (MMMBtu/d) | | | 1,224 | | | 1,464 | | | 1,223 | | | 1,411 |
Natural gas liquids sales (MBbls/d) | | | 99 | | | 90 | | | 114 | | | 89 |
Natural gas liquids produced (MBbls/d) | | | 58 | | | 75 | | | 56 | | | 70 |
Gas sales (MMMBtu/d) | | | 333 | | | 337 | | | 338 | | | 341 |
Capital expenditures | | $ | 5.5 | | $ | 14.0 | | $ | 8.0 | | $ | 24.8 |
| | | | |
| Transportation and Storage (a) | | | | | | | | | | | | |
Net Revenues | | $ | 27.0 | | $ | 23.3 | | $ | 57.2 | | $ | 56.1 |
Depreciation, depletion, and amortization | | $ | 4.2 | | $ | 5.2 | | $ | 8.3 | | $ | 9.4 |
Operating Income | | $ | 11.3 | | $ | 4.1 | | $ | 26.5 | | $ | 20.5 |
Volumes transported (MMcf) | | | 95,138 | | | 99,435 | | | 240,118 | | | 233,122 |
Capital expenditures | | $ | 3.8 | | $ | 7.6 | | $ | 4.8 | | $ | 22.1 |
| | | | |
| Distribution (a) | | | | | | | | | | | | |
Net Revenues | | $ | 103.0 | | $ | 95.4 | | $ | 278.3 | | $ | 237.3 |
Depreciation, depletion, and amortization | | $ | 23.7 | | $ | 19.9 | | $ | 47.6 | | $ | 37.1 |
Operating Income | | $ | 0.4 | | $ | 18.8 | | $ | 75.4 | | $ | 78.8 |
Average number of customers | | | 1,987,892 | | | 1,440,844 | | | 1,999,834 | | | 1,445,677 |
Capital expenditures | | $ | 34.2 | | $ | 34.6 | | $ | 59.1 | | $ | 55.9 |
Natural gas volumes (MMcf) | | | | | | | | | | | | |
Gas Sales | | | 36,926 | | | 29,556 | | | 134,211 | | | 109,233 |
Pipeline capacity leases and end-use customer transportation | | | 51,356 | | | 36,072 | | | 116,046 | | | 85,731 |
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ONEOK, Inc.
Second Quarter 2003 Earnings
July 31, 2003
Page 12
| | | Three Months Ended
June 30,
| | Six Months Ended June 30,
|
| | | 2003
| | 2002
| | 2003
| | 2002
|
| | | (Millions of Dollars) |
Marketing | | | | | | | | | | | | |
| | | | |
Net Revenues | | $ | 39.4 | | $ | 67.2 | | $ | 176.9 | | $ | 139.1 |
Depreciation, depletion, and amortization | | $ | 1.5 | | $ | 1.5 | | $ | 2.9 | | $ | 2.6 |
Operating Income | | $ | 30.5 | | $ | 57.6 | | $ | 157.4 | | $ | 120.2 |
Natural gas sales volumes (MMcf) | | | 218,210 | | | 214,832 | | | 534,147 | | | 470,621 |
Power sales volumes (MMwh) | | | 453 | | | 336 | | | 743 | | | 652 |
Physically settled volumes (MMcf) | | | 472,301 | | | 457,170 | | | 1,049,736 | | | 947,343 |
Capital expenditures | | $ | 0.3 | | $ | 1.4 | | $ | 0.4 | | $ | 1.6 |
| | | | |
Discontinued Component | | | | | | | | | | | | |
| | | | |
Net Revenues | | $ | — | | $ | 16.3 | | $ | 7.7 | | $ | 29.4 |
Depreciation, depletion, and amortization | | $ | — | | $ | 6.3 | | $ | 1.9 | | $ | 12.4 |
Operating Income | | $ | — | | $ | 5.0 | | $ | 3.8 | | $ | 6.5 |
Proved reserves | | | | | | | | | | | | |
Gas (MMcf) | | | — | | | — | | | — | | | 184,571 |
Oil (MBbls) | | | — | | | — | | | — | | | 2,438 |
Production | | | | | | | | | | | | |
Gas (MMcf) | | | — | | | 4,415 | | | 1,472 | | | 9,101 |
Oil (MBbls) | | | — | | | 58 | | | 53 | | | 115 |
Average realized price | | | | | | | | | | | | |
Gas ($/Mcf) | | $ | — | | $ | 3.18 | | $ | 4.10 | | $ | 2.87 |
Oil ($/Bbls) | | $ | — | | $ | 25.48 | | $ | 32.28 | | $ | 21.71 |
Capital expenditures | | $ | — | | $ | 6.5 | | $ | — | | $ | 12.7 |
(a) Amounts for 2002 have been adjusted to reflect the transfer of certain transmission assets from the Transportation and Storage segment to the Distribution segment effective July 1, 2002.
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ONEOK, Inc.
Second Quarter 2003 Earnings
July 31, 2003
Page 13
ONEOK, Inc. and Subsidiaries
EARNINGS FORECAST 2003
| | | 2002
Fiscal Year
Actual
| | | 2003
Fiscal Year
Forecast
| |
| | | (Millions of Dollars) | |
Operating Income | | | | | | | | |
Production | | $ | 10 | | | $ | 15 | |
Gathering and Processing | | | 33 | | | | 34 | |
Transportation and Storage | | | 53 | | | | 58 | |
Distribution | | | 95 | | | | 101 | |
Marketing and Trading | | | 182 | | | | 230 | |
Other | | | (2 | ) | | | 3 | |
| | |
|
|
| |
|
|
|
Operating income | | | 371 | | | | 441 | |
Other income | | | (7 | ) | | | 3 | |
Interest | | | 106 | | | | 105 | |
Income taxes | | | 102 | | | | 131 | |
| | |
|
|
| |
|
|
|
Income from continuing operations | | | 156 | | | | 208 | |
Discontinued operations, net of tax | | | | | | | | |
Income from operations of a discontinued component | | | 11 | | | | 2 | |
Gain on the sale of a discontinued component | | | — | | | | 38 | |
Changes in accounting principle, net of tax | | | — | | | | (144 | ) |
| | |
|
|
| |
|
|
|
Net Income | | $ | 167 | | | $ | 104 | |
| | |
|
|
| |
|
|
|
Earnings Per Share of Common Stock—Diluted | | | | | | | | |
Earnings per share from continuing operations | | $ | 1.31 | | | $ | 2.05 | |
Earnings per share from discontinued operations | | | 0.09 | | | | 0.02 | |
Earnings per share from gain on sale of discontinued component | | | — | | | | 0.34 | |
Earnings per share from cumulative effect of a change in accounting principle | | | — | | | | (1.28 | ) |
| | |
|
|
| |
|
|
|
Total Earnings Per Share | | $ | 1.40 | | | $ | 1.13 | |
| | |
|
|
| |
|
|
|
| | |
Capital Expenditures | | | | | | | | |
Continuing operations | | $ | 211 | | | $ | 215 | |
Discontinued operations | | | 22 | | | | — | |
| | |
|
|
| |
|
|
|
Total Capital Expenditures | | $ | 233 | | | $ | 215 | |
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