-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GdXNyNtaNeG10qxHfYyA5EGLIJ8pO7c4vRusMikDo2/TbMtONuxQV9jPIhOFlllc DRsZtlCzEl1M4uAT/d1okA== 0000074154-95-000005.txt : 19950110 0000074154-95-000005.hdr.sgml : 19950110 ACCESSION NUMBER: 0000074154-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941130 FILED AS OF DATE: 19950109 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ONEOK INC CENTRAL INDEX KEY: 0000074154 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 730383100 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02572 FILM NUMBER: 95500725 BUSINESS ADDRESS: STREET 1: 100 W FIFTH ST CITY: TULSA STATE: OK ZIP: 74103 BUSINESS PHONE: 9185887000 FORMER COMPANY: FORMER CONFORMED NAME: OKLAHOMA NATURAL GAS CO DATE OF NAME CHANGE: 19810111 10-Q 1 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 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 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. 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. 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. 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. 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 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. 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 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. 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. 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. 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 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 -----END PRIVACY-ENHANCED MESSAGE-----