Exhibit 99.1
[ONEOK LOGO APPEARS HERE]
News
February 23, 2004 | Analyst Contact: | Weldon Watson | ||
| 918-588-7158 | ||||
| Media Contact: | Andrea Chancellor | |||
| 918-588-7570 |
ONEOK reports 2003 earnings
Tulsa, Okla.— ONEOK, Inc. (NYSE:OKE) today announced income from continuing operations for fiscal 2003 of $214.3 million, or $2.13 per diluted share of common stock compared with income from continuing operations of $156 million, or $1.30 per diluted share of common stock, for 2002.
For the fourth quarter, income from continuing operations was $61.5 million, or 65 cents per diluted share of common stock, compared with $34.6 million, or 30 cents per diluted share of common stock last year.
David Kyle, chairman, president and chief executive officer of ONEOK, said, “Obviously, I am pleased with the 2003 performance. The results clearly show that our focus on executing our business strategy brings positive results for shareholders. We continue to look for opportunities to expand while we look to improve upon our existing operations.”
2003 results included:
| • | Operating income of $446.1 million, compared with $371.5 million one year ago, |
| • | Cash flow from continuing operations, before changes in working capital, of $506 million, which exceeded capital expenditures of $215.1 million and dividends of $71 million by $219.9 million, and |
| • | Net income of $1.22 per diluted share of common stock compared with $1.39 per diluted share of common stock in 2002. |
The following table shows the components of net income and earnings per share of common stock, net of tax:
| Year Ended December 31, | ||||||||||||||
| 2003 | 2002 | |||||||||||||
| (Net Income in Millions of Dollars) | Net Income | EPS | Net Income | EPS | ||||||||||
Income from continuing operations | $ | 214.3 | $ | 2.13 | $ | 156.0 | $ | 1.30 | ||||||
Income from operations of discontinued component | 2.3 | 0.02 | 10.6 | 0.09 | ||||||||||
Gain on sale of discontinued component | 39.8 | 0.35 | — | — | ||||||||||
Cumulative effect of rescission of EITF 98-10 | (141.8 | ) | (1.26 | ) | — | — | ||||||||
Cumulative effect of adoption of FAS 143 | (2.1 | ) | (0.02 | ) | — | — | ||||||||
Net income | $ | 112.5 | $ | 1.22 | $ | 166.6 | $ | 1.39 | ||||||
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ONEOK, Inc.
Year-End 2003 Earnings
February 23, 2004
Page 2
Fourth quarter results
| • | Operating income of $119.8 million, compared with $86.9 million for one year ago. |
| • | Reimbursement of $8 million for legal costs related to the previously terminated acquisition of Southwest Gas Corporation. |
| • | An accrual of a $5 million contribution to the ONEOK Foundation. |
| • | An accrual of $6 million in legal contingencies, including a $3 million settlement with the Commodity Futures Trading Commission. |
| • | Including income from discontinued operations, net income of $62.9 million or 66 cents per diluted share of common stock, compared with $37.9 million, or 33 cents per diluted share of common stock for the same period in 2002. |
ONEOK business outlook
The company reaffirms its December 19, 2003 earnings guidance for 2004, in the range of $2.12 to $2.18 per share of common stock. This earnings guidance includes:
| • | The Wagner & Brown Ltd. reserve acquisition closed in December 2003, which added 177.2 Bcfe of proved gas reserves and is expected to increase the production segment’s operating income to $48 million for 2004; |
| • | Hedges in our production segment at December 31, 2003, on approximately 89 percent of our anticipated 2004 natural gas production at a weighted average wellhead price of $5.28 per MMBtu, and on approximately 89 percent of our anticipated crude oil production at an average NYMEX price of $30.35 per Bbl; |
| • | The offering of 6.9 million of our common shares announced February 3, 2004; |
| • | The rate increase effective in Oklahoma on February 1, 2004, which is estimated to increase operating income by approximately $9 million compared with 2003; |
| • | A full year of the rate increase in Kansas, which is expected to increase operating income by approximately $20 million compared with 2003; |
| • | Interest rate swaps, which are expected to result in interest savings of $28.6 million in 2004 as compared with $24.4 million in 2003; |
| • | An increase in benefit costs of approximately $14 million in 2004 due to changes in discount rates, return on assets rates, census data and cost inflation; and |
| • | Capital expenditures for 2004 in the range of $270 to $280 million. |
2003 business segment results
Production
Operating income increased to $16.1 million in 2003 compared with $10.3 million in 2002 because of:
| • | Higher realized natural gas and crude oil prices; |
| • | Higher natural gas production volumes reflecting a partial month of production on properties acquired in December 2003; and |
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ONEOK, Inc.
Year-End 2003 Earnings
February 23, 2004
Page 3
| • | Lower depreciation and depletion rates due to a successful drilling program and a production mix which provided for increased production out of lower cost fields. |
These increases were partially offset by increased operating costs resulting from:
| • | Higher production taxes resulting from higher prices; |
| • | Higher well operating costs due to maintenance and workovers; and |
| • | Higher administrative costs. |
The production segment owns, develops and produces natural gas and oil reserves in Oklahoma and Texas. This segment focuses on acquisition and development of reserves, rather than exploratory drilling.
Gathering and Processing
Operating income for 2003 increased by almost 90 percent to $62.7 million, compared with $33.1 million for 2002 as a result of:
| • | Increased prices for natural gas, natural gas liquids and crude oil, partially offset by reduced volumes; |
| • | Ongoing restructuring of contracts to mitigate exposure to unfavorable keep whole spreads; |
| • | Modifications of plant operations to optimize production of specific commodities in line with favorable pricing conditions; and |
| • | Decreases in operating costs. |
These increases were partially offset by decreased revenues and volumes resulting from the sale of gas processing plants and related gathering systems in December 2002.
The gathering and processing segment is engaged in the gathering and processing of natural gas and the fractionation, storage, transportation 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 13,800 miles of gathering pipelines that supply our gas processing plants.
Transportation and Storage
Operating income decreased to $50.8 million in 2003, compared with $53.3 million in 2002 as a result of:
| • | The sale of operational inventory gas in 2002, which provided $12.7 in net revenues, partially offset by revenues from the increased storage capacity created by those sales; and |
| • | The impact of higher prices on the valuation of net retained fuel. |
The transportation and storage segment owns and operates intrastate pipelines and natural gas transmission pipelines, natural gas storage and gas gathering facilities in Oklahoma, Kansas and
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ONEOK, Inc.
Year-End 2003 Earnings
February 23, 2004
Page 4
Texas. The storage facilities have a combined working capacity of 59.6 Bcf, of which 8 Bcf is temporarily idle.
Distribution
Operating income in 2003 increased to $117.8 million, compared with $95.2 million in 2002 as a result of:
| • | The addition of $25.1 million of operating income resulting from the Texas gas distribution assets acquired in January 2003; and |
| • | Approval of a rate order in Kansas, which increased operating income by $9.8 million for 2003. |
Fiscal 2002 included an additional $14.2 million in operating income due to a reduction in gas costs based on our 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
Operating income increased to $197 million in 2003, compared with $181.5 million in 2002 as a result of:
| • | Volatility in gas prices in the first part of 2003; |
| • | Colder than normal weather which allowed us to take advantage of our storage and transport capacity; and |
| • | Expansion of retail operations into Wyoming, Nebraska and Texas. |
The revenue from Marketing and Trading is derived from the following three sources:
| Year Ended December 31, | ||||||
| 2003 | 2002 | |||||
| (Millions of Dollars) | ||||||
Marketing and storage | $ | 100 | $ | 125 | ||
Retail marketing | 20 | 12 | ||||
Trading crude, power, NGLs and gas options | 116 | 77 | ||||
| 236 | 214 | |||||
Less: expenses | 39 | 32 | ||||
Operating income | $ | 197 | $ | 182 | ||
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 access to all regions of the country providing flexibility to capture volatility in the energy markets. The segment also markets and trades oil and power on a smaller scale.
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ONEOK, Inc.
Year-End 2003 Earnings
February 23, 2004
Page 5
Fourth quarter business unit results
Production
Fourth quarter operating income decreased to $3.8 million from $4.4 million for the same quarter last year as a result of increased operating and employee costs.
Gathering and Processing
Fourth quarter operating income increased to $21.6 million, compared with $17.9 million for the same quarter last year as a result of increases in prices for natural gas, natural gas liquids and crude oil.
These increases were partially offset by:
| • | Reduced volumes, primarily due to the sale of gas processing plants and related gathering systems in December 2002; and |
| • | Increased bad debt expense. |
Transportation and Storage
Fourth quarter operating income decreased to $13.5 million, compared with $15.3 million for the same quarter last year as a result of the sale of operational inventory gas in 2002, which provided $4.7 in net revenues, and increased employee costs and general taxes. This decrease in operating income was partially offset by the impact of higher prices on the valuation of net retained fuel.
Distribution
Fourth quarter operating income increased to $48.3 million, compared with $30.4 million for the same quarter one year ago as a result of:
| • | Additional operating income of $5.7 million from our Texas gas distribution assets acquired in January 2003; |
| • | Approval of a rate order in Kansas, which increased operating income by $8.9 million in 2003; and |
| • | Increased customer transport revenues in Oklahoma. |
Marketing and Trading
Fourth quarter operating income was $33.2 million, compared with $17.1 million for the same quarter a year ago as a result of new market penetration into the upper Midwest and the Southeast corridor of the United States. The 2002 operating income reflects the impact of mark-to-market accounting for certain storage and transportation contracts, which are accounted for under accrual accounting for 2003.
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ONEOK, Inc.
Year-End 2003 Earnings
February 23, 2004
Page 6
Earnings Conference Call
The ONEOK year-end conference call will be held at 11 a.m. Eastern time (10 a.m. Central time) on February 24, 2004. Those who wish may join the call on the ONEOK Web site at www.oneok.com or call 1-866-246-6870, pass code 3945333. A recording of the call will be available on the Web site for 30 days. A recording will be available by phone for seven days. The playback call may be accessed at 1-866-219-1444, pass code 3945333.
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.
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Some of the statements contained and incorporated in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements relate to: anticipated financial performance, including anticipated operating income for the east Texas gas and oil properties and related gathering systems acquired from Wagner & Brown, Ltd. in December 2003 and the Texas properties acquired from Southern Union Company early in January 2003, a reduction in operating income and a recognition of gains from the sale of some of the assets of our production segment and a reduction in operating income from the sale of some of our midstream natural gas assets; management’s plans and objectives for future operations, including anticipated capital expenditures related to the east Texas properties acquired from Wagner & Brown, Ltd. and the Texas properties acquired from Southern Union Company and anticipated reductions in capital expenditures related to the sale of some of the assets of our production segment; expectations relating to pending or possible acquisitions and dispositions; expectations as to the dividend level on our common stock; 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 certain 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 information concerning possible or assumed future results of our operations and other statements contained or incorporated in this press release identified by words such as “anticipate,” “estimate,” “expect,” “intend,” “believe,” “projection” or “goal.”
You should not place undue reliance on forward-looking statements. Known and unknown risks, uncertainties and other factors may cause our 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 our 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 our actual results to differ materially from those contemplated in any forward-looking statement include, among others, the following:
| • | risks associated with any reduction in our 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 our 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 us; |
| • | risks of marketing, trading and hedging activities as a result of changes in energy prices or the financial condition of our trading partners; |
| • | economic climate and growth in the geographic areas in which we do business; |
| • | the uncertainty of estimates, including estimates for oil and gas reserves; |
| • | the timing and extent of changes in commodity prices for natural gas, natural gas liquids, electricity and crude oil; |
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ONEOK, Inc.
Year-End 2003 Earnings
February 23, 2004
Page 7
| • | the effects of changes in governmental policies and regulatory actions, including with respect to income taxes, environmental compliance, authorized rates or recovery of gas costs; |
| • | the impact of recently issued and future accounting pronouncements and other changes in accounting policies; |
| • | the possibility of future terrorist attacks or the possibility or occurrence of an outbreak of, or changes in, hostilities or changes in the political conditions in the Middle East or elsewhere; |
| • | the impact of unforeseen changes in interest rates, equity markets, inflation rates, economic recession and other external factors over which we have 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 our ability to finance or integrate any such acquisitions and any regulatory delay or conditions imposed by regulatory bodies in connection with any such acquisitions and dispositions; |
| • | the results of administrative proceedings and litigation involving the Oklahoma Corporation Commission, Kansas Corporation Commission, Texas regulatory authorities or any other local, state or federal regulatory body, including the Federal Energy Regulatory Commission; |
| • | our ability to access capital at competitive rates or on terms acceptable to us; |
| • | 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 cost for insurance premiums, security and other items as a consequence of the September 11, 2001 terrorist attacks; and |
| • | the other factors listed in the reports we have filed and may file with the Securities and Exchange Commission, which are incorporated by reference. |
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. We have no obligation and make no undertaking to update publicly or revise any forward-looking information.
ONEOK, Inc.
Year-End 2003 Earnings
February 23, 2004
Page 8
ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
| Years Ended December 31, | Quarter Ended December 31, | ||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||
| (Thousands of Dollars, except per share amounts) | |||||||||||||
Revenues | |||||||||||||
Operating revenues, excluding energy trading revenues | $ | 2,769,214 | $ | 1,894,851 | $ | 803,184 | $ | 578,792 | |||||
Energy trading revenues, net | 229,782 | 209,429 | 45,844 | 22,593 | |||||||||
Cost of gas | 1,862,518 | 1,128,620 | 542,320 | 367,640 | |||||||||
Net Revenues | 1,136,478 | 975,660 | 306,708 | 233,745 | |||||||||
Operating Expenses | |||||||||||||
Operations and maintenance | 463,116 | 401,328 | 130,120 | 97,818 | |||||||||
Depreciation, depletion, and amortization | 160,861 | 147,843 | 40,620 | 36,521 | |||||||||
General taxes | 66,437 | 55,011 | 16,170 | 12,468 | |||||||||
Total Operating Expenses | 690,414 | 604,182 | 186,910 | 146,807 | |||||||||
Operating Income | 446,064 | 371,478 | 119,798 | 86,938 | |||||||||
Other income | 9,329 | 12,426 | 4,007 | 1,631 | |||||||||
Other expense | 6,389 | 19,038 | 3,634 | 5,642 | |||||||||
Interest expense | 104,185 | 106,405 | 25,667 | 23,379 | |||||||||
Income before income taxes | 344,819 | 258,461 | 94,504 | 59,548 | |||||||||
Income taxes | 130,527 | 102,485 | 32,962 | 24,959 | |||||||||
Income from continuing operations | 214,292 | 155,976 | 61,542 | 34,589 | |||||||||
Discontinued operations, net of taxes: | |||||||||||||
Income from operations of discontinued component | 2,342 | 10,648 | — | 3,335 | |||||||||
Gain on sale of discontinued component | 39,739 | — | 1,370 | — | |||||||||
Cumulative effect of a change in accounting principle, net of tax | (143,885 | ) | — | — | — | ||||||||
Net Income | 112,488 | 166,624 | 62,912 | 37,924 | |||||||||
Preferred stock dividends | 24,211 | 37,100 | — | 9,275 | |||||||||
Income Available for Common Stock | $ | 88,277 | $ | 129,524 | $ | 62,912 | $ | 28,649 | |||||
Earnings Per Share of Common Stock | |||||||||||||
Basic: | |||||||||||||
Earnings per share from continuing operations | $ | 2.38 | $ | 1.31 | $ | 0.71 | $ | 0.30 | |||||
Earnings per share from operations of discontinued component | $ | 0.02 | $ | 0.09 | $ | — | $ | 0.03 | |||||
Earnings per share from gain on sale of discontinued component | $ | 0.36 | $ | — | $ | 0.02 | $ | — | |||||
Earnings per share from cumulative effect of a changes in accounting principle | $ | (1.28 | ) | $ | — | $ | — | $ | — | ||||
Net earnings per share, basic | $ | 1.48 | $ | 1.40 | $ | 0.73 | $ | 0.33 | |||||
Diluted: | |||||||||||||
Earnings per share from continuing operations | $ | 2.13 | $ | 1.30 | $ | 0.65 | $ | 0.30 | |||||
Earnings per share from operations of discontinued component | $ | 0.02 | $ | 0.09 | $ | — | $ | 0.03 | |||||
Earnings per share from gain on sale of discontinued component | $ | 0.35 | $ | — | $ | 0.01 | $ | — | |||||
Earnings per share from cumulative effect of a changes in accounting principle | $ | (1.28 | ) | $ | — | $ | — | $ | — | ||||
Net earnings per share, diluted | $ | 1.22 | $ | 1.39 | $ | 0.66 | $ | 0.33 | |||||
Average Shares of Common Stock(Thousands) | |||||||||||||
Basic | 80,569 | 99,914 | 86,270 | 100,072 | |||||||||
Diluted | 96,999 | 100,528 | 95,300 | 100,584 | |||||||||
Dividends per share of Common Stock | $ | 0.69 | $ | 0.62 | $ | 0.18 | 0.155 | ||||||
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ONEOK, Inc.
Year-End 2003 Earnings
February 23, 2004
Page 9
ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
| December 31, 2003 | December 31 2002 | |||||
| Assets | (Thousands of Dollars) | |||||
Current Assets | ||||||
Cash and cash equivalents | $ | 12,172 | $ | 73,522 | ||
Trade accounts and notes receivable, net | 970,141 | 773,017 | ||||
Materials and supplies | 18,962 | 16,949 | ||||
Gas in storage | 500,439 | 58,544 | ||||
Unrecovered purchased gas costs | — | 3,576 | ||||
Assets from price risk management activities | 289,417 | 724,842 | ||||
Deposits | 42,424 | — | ||||
Other current assets | 46,184 | 44,790 | ||||
Assets of discontinued component | — | 276 | ||||
Total Current Assets | 1,879,739 | 1,695,516 | ||||
Property, Plant and Equipment | ||||||
Production | 404,254 | 144,174 | ||||
Gathering and Processing | 1,036,080 | 993,504 | ||||
Transportation and Storage | 699,676 | 689,150 | ||||
Distribution | 2,813,800 | 2,169,382 | ||||
Marketing and Trading | 126,315 | 124,512 | ||||
Other | 99,549 | 94,778 | ||||
Total Property, Plant and Equipment | 5,179,674 | 4,215,500 | ||||
Accumulated depreciation, depletion, and amortization | 1,525,479 | 1,200,451 | ||||
Net Property, Plant and Equipment | 3,654,195 | 3,015,049 | ||||
Deferred Charges and Other Assets | ||||||
Regulatory assets, net | 213,915 | 217,978 | ||||
Goodwill | 225,615 | 113,510 | ||||
Assets from price risk management activities | 113,052 | 360,645 | ||||
Prepaid pensions | 120,618 | 125,426 | ||||
Investments and other | 69,283 | 55,526 | ||||
Total Deferred Charges and Other Assets | 742,483 | 873,085 | ||||
Non-current assets of discontinued component | — | 225,061 | ||||
Total Assets | $ | 6,276,417 | $ | 5,808,711 | ||
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ONEOK, Inc.
Year-End 2003 Earnings
February 23, 2004
Page 10
ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
| December 31, 2003 | December 31, 2002 | |||||||
| (Thousands of Dollars) | ||||||||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities | ||||||||
Current maturities of long-term debt | $ | 6,334 | $ | 6,334 | ||||
Notes payable | 600,000 | 265,500 | ||||||
Accounts payable | 813,895 | 672,153 | ||||||
Accrued taxes | 102,637 | 41,922 | ||||||
Accrued interest | 32,999 | 29,202 | ||||||
Customers' deposits | 34,692 | 21,096 | ||||||
Unrecovered purchased gas costs | 51,378 | — | ||||||
Liabilities from price risk management activities | 302,878 | 496,467 | ||||||
Deferred income taxes | 150,816 | 130,328 | ||||||
Other | 130,174 | 125,129 | ||||||
Liabilities of discontinued component | — | 1,445 | ||||||
Total Current Liabilities | 2,225,803 | 1,789,576 | ||||||
Long-term Debt, excluding current maturities | 1,878,264 | 1,511,118 | ||||||
Deferred Credits and Other Liabilities | ||||||||
Deferred income taxes | 414,734 | 475,163 | ||||||
Liabilities from price risk management activities | 112,714 | 309,070 | ||||||
Lease obligation | 100,292 | 109,051 | ||||||
Other deferred credits | 303,218 | 208,106 | ||||||
Total Deferred Credits and Other Liabilities | 930,958 | 1,101,390 | ||||||
Non-current Liabilities of Discontinued Component | — | 41,015 | ||||||
Total Liabilities | 5,035,025 | 4,443,099 | ||||||
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 | ||||||
Common stock, $0.01 par value: | ||||||||
authorized 300,000,000 shares; issued 98,194,674 shares and outstanding 95,194,666 shares at December 31, 2003; issued 63,438,441 shares and outstanding 60,761,064 shares at December 31, 2002 | 982 | 634 | ||||||
Paid in capital | 815,870 | 903,918 | ||||||
Unearned compensation | (3,422 | ) | (2,716 | ) | ||||
Accumulated other comprehensive loss | (17,626 | ) | (5,546 | ) | ||||
Retained earnings | 495,971 | 507,836 | ||||||
Treasury stock at cost: 3,000,008 shares at December 31, 2003 and 2,677,377 shares at December 31, 2002 | (50,383 | ) | (38,713 | ) | ||||
Total Shareholders’ Equity | 1,241,392 | 1,365,612 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 6,276,417 | $ | 5,808,711 | ||||
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ONEOK, Inc.
Year-End 2003 Earnings
February 23, 2004
Page 11
ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Years Ended December 31, | ||||||||||||
| 2003 | 2002 | 2001 | ||||||||||
| (Thousands of Dollars) | ||||||||||||
Operating Activities | ||||||||||||
Income from continuing operations | $ | 214,292 | $ | 155,976 | $ | 78,837 | ||||||
Depreciation, depletion, and amortization | 160,861 | 147,843 | 133,533 | |||||||||
Gain on sale of assets | 292 | (1,213 | ) | (1,120 | ) | |||||||
Gain on sale of equity investments | — | (7,622 | ) | (758 | ) | |||||||
Income from equity investments | (1,547 | ) | (366 | ) | (8,109 | ) | ||||||
Deferred income taxes | 111,789 | 165,723 | 120,189 | |||||||||
Stock based compensation expense | 6,286 | 2,121 | 1,110 | |||||||||
Allowance for doubtful accounts | 14,073 | 12,478 | 43,495 | |||||||||
Changes in assets and liabilities (net of acquisition effects): | ||||||||||||
Accounts and notes receivable | (156,887 | ) | (122,733 | ) | 909,284 | |||||||
Inventories | (428,408 | ) | 27,334 | (11,854 | ) | |||||||
Unrecovered purchased gas costs | 54,954 | 41,522 | (43,520 | ) | ||||||||
Deposits | (42,424 | ) | 41,781 | 79,019 | ||||||||
Regulatory assets | (13,467 | ) | (543 | ) | (8,387 | ) | ||||||
Accounts payable and accrued liabilities | 100,961 | 239,167 | (701,153 | ) | ||||||||
Price risk management assets and liabilities | 27,651 | (19,038 | ) | (198,611 | ) | |||||||
Other assets and liabilities | (52,629 | ) | 86,062 | (49,992 | ) | |||||||
Cash Provided by (Used In) Continuing Operations | (4,203 | ) | 768,492 | 341,963 | ||||||||
Cash Provided by Discontinued Operations | 8,285 | 43,789 | 63,388 | |||||||||
Cash Provided by Operating Activities | 4,082 | 812,281 | 405,351 | |||||||||
Investing Activities | ||||||||||||
Changes in other investments, net | (1,126 | ) | 2,015 | 981 | ||||||||
Acquisitions | (690,302 | ) | (4,036 | ) | (14,940 | ) | ||||||
Capital expenditures | (215,148 | ) | (210,652 | ) | (306,022 | ) | ||||||
Proceeds from sale of property | 3,084 | 102,390 | 7,911 | |||||||||
Proceeds from sale of equity investment | — | 57,461 | 7,425 | |||||||||
Cash Used in Continuing Operations | (903,492 | ) | (52,822 | ) | (304,645 | ) | ||||||
Cash Provided by (Used in) Discontinued Operations | 280,669 | (22,393 | ) | (36,407 | ) | |||||||
Cash Used in Investing Activities | (622,823 | ) | (75,215 | ) | (341,052 | ) | ||||||
Financing Activities | ||||||||||||
Borrowing (payments) of notes payable, net | 334,500 | (333,606 | ) | (225,000 | ) | |||||||
Change in bank overdraft | 20,574 | 14,584 | (141,923 | ) | ||||||||
Issuance of debt | 404,964 | 3,500 | 401,367 | |||||||||
Payment of debt issuance costs | (2,564 | ) | — | — | ||||||||
Payment of debt | (16,148 | ) | (305,623 | ) | (7,583 | ) | ||||||
Purchase of Series A Convertible Preferred Stock | (300,000 | ) | — | — | ||||||||
Purchase of common stock | (50,000 | ) | — | — | ||||||||
Issuance of common stock | 224,412 | — | 5,447 | |||||||||
Issuance of treasury stock, net | 12,616 | 3,673 | 5,214 | |||||||||
Dividends paid | (70,963 | ) | (74,301 | ) | (73,841 | ) | ||||||
Cash Provided by (Used In) Financing Activities | 557,391 | (691,773 | ) | (36,319 | ) | |||||||
Change in Cash and Cash Equivalents | (61,350 | ) | 45,293 | 27,980 | ||||||||
Cash and Cash Equivalents at Beginning of Period | 73,522 | 28,229 | 249 | |||||||||
Cash and Cash Equivalents at End of Period | $ | 12,172 | $ | 73,522 | $ | 28,229 | ||||||
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ONEOK, Inc.
Year-End 2003 Earnings
February 23, 2004
Page 12
ONEOK, Inc.
INFORMATION AT A GLANCE
Year Ended December 31, | Quarter Ended December 31, | |||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||
Production | ||||||||||||
Net Revenues | $ | 44.0 | $ | 32.5 | $ | 11.8 | $ | 9.4 | ||||
Depreciation, depletion, and amortization | $ | 12.1 | $ | 13.8 | $ | 3.3 | $ | 3.8 | ||||
Operating Income | $ | 16.1 | $ | 10.3 | $ | 3.8 | $ | 4.4 | ||||
Proved reserves | ||||||||||||
Gas(MMcf) | 221,119 | 61,748 | — | — | ||||||||
Oil(MBbls) | 4,127 | 2,461 | — | — | ||||||||
Production | ||||||||||||
Gas (MMcf) | 7,486 | 7,370 | 2,204 | 1,815 | ||||||||
Oil(MBbls) | 265 | 273 | 63 | 71 | ||||||||
Average realized price | ||||||||||||
Gas($/Mcf) | $ | 4.78 | $ | 3.49 | $ | 4.70 | $ | 4.20 | ||||
Oil($/Bbls) | $ | 27.25 | $ | 24.37 | $ | 28.05 | $ | 26.60 | ||||
Capital expenditures | $ | 18.7 | $ | 17.8 | $ | 5.8 | $ | 3.6 | ||||
Gathering and Processing | ||||||||||||
Net revenues | $ | 214.1 | $ | 194.4 | $ | 62.0 | $ | 55.3 | ||||
Depreciation, depletion, and amortization | $ | 29.3 | $ | 33.5 | $ | 7.4 | $ | 7.3 | ||||
Operating Income | $ | 62.7 | $ | 33.1 | $ | 21.6 | $ | 17.9 | ||||
Total gas gathered(MMMBtu/d) | 1,171 | 1,205 | 1,152 | 1,155 | ||||||||
Total gas processed(MMMBtu/d) | 1,209 | 1,411 | 1,189 | 1,399 | ||||||||
Natural gas liquids sales(MBbls/d) | 114 | 95 | 116 | 101 | ||||||||
Natural gas liquids produced(MBbls/d) | 59 | 73 | 60 | 74 | ||||||||
Gas sales(MMMBtu/d) | 330 | 343 | 304 | 345 | ||||||||
Capital expenditures | $ | 20.6 | $ | 43.1 | $ | 8.4 | $ | 8.0 | ||||
Conway OPIS composite NGL Price ($/gal) (based on our NGL product mix) | $ | 0.59 | $ | 0.41 | $ | 0.59 | $ | 0.49 | ||||
Average NYMEX crude oil price ($/Bbl) | $ | 30.98 | $ | 25.41 | $ | 30.00 | $ | 28.73 | ||||
Average natural gas price ($/MMBtu) (mid-continent region) | $ | 5.06 | $ | 3.00 | $ | 4.34 | $ | 3.76 | ||||
Transportation and Storage (a) | ||||||||||||
Net Revenues | $ | 113.7 | $ | 117.6 | $ | 29.7 | $ | 30.5 | ||||
Depreciation, depletion, and amortization | $ | 16.7 | $ | 17.6 | $ | 4.2 | $ | 4.1 | ||||
Operating Income | $ | 50.8 | $ | 53.3 | $ | 13.5 | $ | 15.3 | ||||
Volumes transported(MMcf) | 449,261 | 507,972 | 108,118 | 128,843 | ||||||||
Capital expenditures | $ | 15.2 | $ | 20.6 | $ | 4.8 | $ | 1.3 | ||||
Average natural gas price ($/MMBtu) (mid-continent region) | $ | 5.06 | $ | 3.00 | $ | 4.34 | $ | 3.76 | ||||
Distribution (a) | ||||||||||||
Net Revenues | $ | 526.2 | $ | 414.4 | $ | 158.5 | $ | 113.2 | ||||
Depreciation, depletion, and amortization | $ | 95.7 | $ | 76.1 | $ | 24.0 | $ | 19.6 | ||||
Operating Income | $ | 117.8 | $ | 95.2 | $ | 48.3 | $ | 30.4 | ||||
Average number of customers | 1,990,757 | 1,439,657 | — | — | ||||||||
Capital expenditures | $ | 153.4 | $ | 115.6 | $ | 46.4 | $ | 27.8 | ||||
Natural gas volumes(MMcf) | ||||||||||||
Gas Sales | 207,692 | 177,041 | 51,558 | 47,871 | ||||||||
Transportation | 223,771 | 193,701 | 58,045 | 68,292 | ||||||||
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ONEOK, Inc.
Year-End 2003 Earnings
February 23, 2004
Page 13
Marketing | ||||||||||||
Net Revenues | $ | 236.4 | $ | 214.5 | $ | 45.0 | $ | 24.3 | ||||
Depreciation, depletion, and amortization | $ | 5.7 | $ | 5.3 | $ | 1.4 | $ | 1.3 | ||||
Operating Income | $ | 197.0 | $ | 181.5 | $ | 33.2 | $ | 17.1 | ||||
Natural gas volumes (MMcf) | 1,011,530 | 998,537 | 256,761 | 280,321 | ||||||||
Power volumes (MMwh) | 2,086 | 2,228 | 782 | 1,010 | ||||||||
Physically settled volumes (MMcf) | 2,027,853 | 1,990,371 | 508,159 | 551,134 | ||||||||
Capital expenditures | $ | 0.6 | $ | 2.3 | $ | 0.1 | — | |||||
Discontinued Component | ||||||||||||
Net Revenues | $ | 7.7 | $ | 64.0 | $ | — | $ | 18.2 | ||||
Depreciation, depletion, and amortization | $ | 1.9 | $ | 24.8 | $ | — | $ | 6.2 | ||||
Operating Income | $ | 3.8 | $ | 17.5 | $ | — | $ | 5.5 | ||||
Proved reserves | ||||||||||||
Gas(MMcf) | — | 177,828 | — | — | ||||||||
Oil(MBbls) | — | 2,787 | — | — | ||||||||
Production | ||||||||||||
Gas(MMcf) | 1,472 | 18,036 | — | 4,498 | ||||||||
Oil(MBbls) | 53 | 241 | — | 62 | ||||||||
Average realized price | ||||||||||||
Gas ($/Mcf) | $ | 4.10 | $ | 3.19 | $ | — | $ | 3.79 | ||||
Oil($/Bbls) | $ | 32.28 | $ | 25.00 | $ | — | $ | 27.74 | ||||
Capital expenditures | $ | — | $ | 21.8 | $ | — | $ | 2.9 | ||||
| (a) | Amounts 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. |
