-----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, LwBO0r/ZErtN0LU2p7RkC7RFlhuwj/gRZBwNDFq1HIjmtLnAln9eTYyJ4nuS7VZj G9vnqWfaxi+P9/eejvgkEg== 0000074154-94-000013.txt : 19940331 0000074154-94-000013.hdr.sgml : 19940331 ACCESSION NUMBER: 0000074154-94-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940328 FILED AS OF DATE: 19940328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ONEOK INC CENTRAL INDEX KEY: 0000074154 STANDARD INDUSTRIAL CLASSIFICATION: 4923 IRS NUMBER: 730383100 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 001-02572 FILM NUMBER: 94518167 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 ONEOK INC.'S 10-Q QUARTERLY REPORT 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 quarter ended Commission File No. February 28, 1994 1-2572 ONEOK Inc. (Exact name of registrant as specified in its charter) Delaware 73-0383100 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 100 West Fifth Street, Tulsa, OK 74103 (Address, including zip code, of principal executive offices) Registrant's telephone number, including area code: (918) 588-7000 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 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Class Outstanding at February 28, 1994 Common stock, without par value 26,690,004 Page 1 of 17 ONEOK Inc. TABLE OF CONTENTS FORM 10-Q FOR THE QUARTER ENDED FEBRUARY 28, 1994 PART I. FINANCIAL INFORMATION Page No. Item 1. Financial Statements Consolidated Condensed Statements of Earnings - Three Months and Six Months Ended February 28, 1994, and 1993 3 Consolidated Condensed Balance Sheets - February 28, 1994, and August 31, 1993 4 Consolidated Condensed Statements of Cash Flows - Six Months Ended February 28, 1994 and 1993 5 Notes to Consolidated Condensed Financial Statements 6 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 2. Changes in the Rights of the Company's Security Holders 15 Item 3. Defaults by the Company on its Senior Securities 15 Item 4. Submission of Matters to a Vote of Security Holders 15-16 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K 16 ONEOK Inc. CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (STATED IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) 3 Months Ended 6 Months Ended February 28, February 28, 1994 1993 1994 1993 OPERATING REVENUES Utility revenues $249,155 $266,916 $383,497 $385,416 Oil and gas production 6,254 5,783 12,899 11,936 Natural gas liquids and residue gas sales 13,698 19,575 31,522 36,892 Other gas sales 21,466 15,778 33,260 29,272 Other operating revenues 4,871 5,832 11,457 9,818 Total operating revenues 295,444 313,884 472,635 473,334 OPERATING EXPENSES Utility gas purchased exp. 159,865 175,452 235,796 241,461 Other gas purchased exp. 20,027 15,063 31,320 28,227 Operations and maintenance 45,763 48,980 96,776 95,167 Depreciation, depletion, and amortization 12,993 11,491 26,052 23,994 Income taxes 16,518 17,363 21,312 19,709 Other taxes 4,896 4,874 9,405 9,169 Total operating expense 260,062 273,223 420,661 417,727 Operating income 35,382 40,661 51,974 55,607 Net interest 8,995 9,431 17,775 18,380 Net income 26,387 31,230 34,199 37,227 Preferred stock dividend 107 107 214 214 Balance for common stock $ 26,280 $ 31,123 $ 33,985 $ 37,013 Earnings per common share $.98 $1.17 $1.27 $1.39 Dividends per common share $.28 $.27 $.55 $.52 Average common shares outstanding 26,681 26,630 26,657 26,629 See accompanying notes to consolidated condensed financial statements. ONEOK Inc. CONSOLIDATED CONDENSED BALANCE SHEETS (STATED IN THOUSANDS) (UNAUDITED) Feb. 28, Aug. 31, 1994 1993 ASSETS Property, plant, and equipment, at cost $1,226,031 $1,196,433 Less accumulated depreciation, depletion, and amortization 492,544 474,685 Net property, plant, and equipment 733,487 721,748 Current assets: Cash and cash equivalents 13,392 9,667 Accounts receivable 138,112 51,545 Inventories 37,508 92,907 Other current assets 23,774 13,966 Total current assets 212,786 168,085 Deferred debits and other assets: Take-or-pay 109,334 109,682 Other assets 108,466 104,953 Total deferred debits and other assets 217,800 214,635 $1,164,073 $1,104,468 CAPITALIZATION AND LIABILITIES Common shareholders' equity: Common stock $ 195,568 $ 194,365 Retained earnings 188,105 168,784 Total common shareholders' equity 383,673 363,149 Preferred stock 9,000 9,000 Long-term debt, excluding current maturities 375,897 375,897 768,570 748,046 Current liabilities: Current maturities of long-term debt 16,050 16,050 Accounts and notes payable 95,308 60,782 Accrued liabilities 39,809 42,760 Customers' deposits 7,023 6,091 Total current liabilities 158,190 125,683 Deferred credits 237,313 230,739 $1,164,073 $1,104,468 See accompanying notes to consolidated condensed financial statements. ONEOK Inc. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (STATED IN THOUSANDS) (UNAUDITED) 6 Months Ended February 28, 1994 1993 OPERATING ACTIVITIES Net income $ 34,199 $ 37,227 Depreciation, depletion, and amortization 26,052 23,994 Deferred income taxes 1,282 (9,004) Nonproductive well drilling 866 161 Net losses of equity investees 540 707 Gain on sale of property (2,053) - Changes in assets and liabilities (2,042) 30,311 Net cash provided by operating activities 58,844 83,396 INVESTING ACTIVITIES Increase in investments, net (1,637) (3,182) Capital expenditures (38,276) (29,106) Salvage, net of removal costs 1,672 (153) Cash used in investing activities (38,241) (32,441) FINANCING ACTIVITIES Repayment of long-term debt - (7,137) Decrease in notes payable, net (2,000) (5,000) Dividends paid (14,878) (14,061) Cash used in financing activities (16,878) (26,198) Change in cash and cash equivalents $ 3,725 $ 24,757 SUPPLEMENTAL DISCLOSURES Cash paid during the period for: Income taxes $ 9,122 $10,808 Interest $17,470 $19,375 Noncash transactions: Gas received as payment-in-kind $32,533 $38,243 Stock Performance Plan $ 1,203 $ - Decrease in take-or-pay deferrals reflected by decrease in take-or-pay liabilities $ - $20,000 See accompanying notes to consolidated condensed financial statements. ONEOK Inc. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Note 1. The interim consolidated condensed financial statements reflect all adjustments which are, in the opinion of management, 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- and six-month periods ended February 28, 1994, are not necessarily indicative of the results that may be expected for the year ended August 31, 1994. 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, 1993. Note 2. Recovery of Settlement Costs for Take-or-Pay and Similar Claims: On February 1, 1994, the Company began recovering the unamortized portion of take-or-pay and other settlement costs based upon a stipulation and settlement agreement approved by the Oklahoma Corporation Commission on January 6, 1994. The agreement provides for recovery and return by an annual $6.7 million revenue amount over a period not to exceed 20 years. Revenue to recover the amortized costs will come from a volumetric gas surcharge not exceeding $6.0 million annually, and revenue from transportation under Section 311(a) of the NGPA and other nonjurisdictional intrastate transportation revenue. If such transportation revenue falls below $3.0 million in a year, the Company will be required to absorb 25 percent of the shortfall, up to a maximum of $750,000. The consolidated condensed balance sheets reflected outstanding balances for these costs of $109.3 million at February 28, 1994, and $109.7 million at August 31, 1993. Note 3. Rate Proceedings: Hearings on the Company's pending application for a rate increase commenced on October 25, 1993, and concluded on January 12, 1994. Deliberations are scheduled to begin on April 1 and continue through the month of April. Both 3-month and 6-month periods included utility revenue resulting from an interim annualized rate increase of $18.2 million, which is subject to refund until the OCC rules on the pending rate case. Note 4. Other Assets: Included in other assets are the Company's 25 percent investments in two natural gas transmission systems, Ozark Gas Transmission System (Ozark) and Red River Pipeline (Red River) of $11.3 million and $13.6 million, respectively. Ozark continues to negotiate an exit fee with one of its two firm shippers, Columbia Gas Transmission Corporation (Columbia), which previously commenced a voluntary case under the Federal Bankruptcy laws. The Company is attempting to improve the performance of Red River, which continues to be unprofitable and continues to require cash calls from the partners. If an acceptable exit fee cannot be negotiated with Columbia by Ozark or Red River's operations do not become profitable, the Company may not be able to recover all of its investments. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL ONEOK Inc. and its subsidiaries, hereinafter referred to as the Company, engage in several aspects of the energy business. The Company purchases, gathers, compresses, transports, and stores natural gas for distribution to consumers. It transports gas for others, leases pipeline capacity to others for their use in transporting gas, and is a partner in a gas marketing business and two natural gas transmission systems that transport gas for others. The Company explores for and produces oil and gas, extracts and sells natural gas liquids, and performs contract drilling of oil and gas wells. In addition, it leases and operates a headquarters office building (leasing excess space to others) and owns and operates a related parking facility. The following is a discussion of selected changes in financial condition from the end of the 1993 fiscal year to the end of the second quarter of the 1994 fiscal year and results of operations with respect to the three months and six months ended February 28, 1994 and 1993. LIQUIDITY AND CAPITAL RESOURCES The estimated sources of funds (cash) for the 1994 fiscal year are as follows: Source of Funds (Millions of $) Proceeds from: Issuance of short-term debt $ 25.0 Issuance of long-term debt - Sale of property 1.3 Cash provided by operating activities 93.3 Total $119.6 The Company had $20 million in short-term debt outstanding on February 28, 1994, and none outstanding on March 24, 1994. The Company has $77 million in notes outstanding under its $150 million medium-term note facility. On February 28, 1994, the Company could have issued approximately $244 million of additional long-term debt under the most restrictive of the provisions contained in its various lending agreements. The Company invests available funds on a short-term basis. There were no short-term investments on February 28, 1994, and $10.8 million on March 24, 1994. FUNDS GENERATED FROM OPERATIONS RATE PROCEEDINGS Hearings on the Company's pending application for a rate increase commenced on October 25, 1993, and concluded on January 12, 1994. Deliberations are scheduled to begin on April 1 and continue through the month of April. INDUSTRIAL LOAD One of the Company's fertilizer plant customers has filed a legal proceeding alleging that its 15-year gas service agreement and pipeline capacity lease agreement with the Company is discriminatory and violates state antitrust laws. This customer accounted for approximately six percent of the Consolidated gross revenues for the 1993 fiscal year. See "Item 1. Legal Proceedings" on page 15 for more information. CAPITAL EXPENDITURES Capital expenditures budgeted for the 1994 fiscal year, compared with actual expenditures for the 1993 and 1992 fiscal years, are as follows: Est. Actuals Capital Expenditures (Millions of $) 1994 1993 1992 Natural gas distribution $41.8 $45.8 $42.4 Natural gas transmission 14.7 13.0 14.9 Exploration and production 10.0 24.9 (1) 10.6 Other operations 3.6 2.5 1.8 $70.1 $86.2 $69.7 (1) Includes the April 1993 acquisition of the North Frisco City Field in Monroe County, Alabama, at a cost of approximately $16.7 million. RESULTS OF OPERATIONS A summary of consolidated earnings is as follows: 3 Months Ended 6 Months Ended (Stated in Thousands, February 28, February 28, Except Per Share Data) 1994 1993 1994 1993 Net income $26,387 $31,230 $34,199 $37,227 Earnings per common share $.98 $1.17 $1.27 $1.39 The consolidated effective income tax rate was 38.5 percent for the second quarter of 1994, and 38.4 percent for the fiscal year to date, compared with 35.7 percent and 34.6 percent, respectively, for the same periods last year. The 1994 effective tax rate was higher due to the recently enacted 1 percent federal tax rate increase and adjustments made in the first quarter of 1993 to revise prior tax estimates. Consolidated net interest expense decreased due to lower interest rates on long-term debt. Following is a summary of financial results and operating information for the various operating segments of the Company: UTILITY OPERATIONS 3 Months Ended 6 Months Ended February 28, February 28, 1994 1993 1994 1993 FINANCIAL RESULTS (Thousands of dollars, except per share amounts) Utility revenues: From unaffiliated cust. $249,155 $266,916 $383,497 $385,416 Intersegment sales 984 982 1,064 1,097 Total 250,139 267,898 384,561 386,513 Other nonutility revenues 1,489 2,232 3,121 3,613 Total revenues 251,628 270,130 387,682 390,126 Gas purchased expense 159,865 175,452 235,796 241,461 Operating expenses 41,187 41,513 83,295 80,216 Operating income before income taxes 50,576 53,165 68,591 68,449 Income taxes 16,392 15,847 20,233 18,290 Net interest 8,000 8,589 15,869 16,754 Net income $ 26,184 $ 28,729 $ 32,489 $ 33,405 Earnings per share $.98 $1.08 $1.21 $1.25 OPERATING STATISTICS Revenues (thousands of dollars): Utility gas sales: Residential and commercial $190,229 $201,183 $276,173 $273,473 Industrial 33,574 38,364 59,075 63,516 Wholesale 2,572 3,634 3,622 5,156 Total utility sales 226,375 243,181 338,870 342,145 PCL\SISP margins 5,577 7,944 10,506 12,460 Pipeline cap. leases 13,461 12,592 26,640 24,340 Transportation 2,185 2,237 4,020 3,708 Other utility revenues 2,541 1,944 4,525 3,860 Total utility rev. 250,139 267,898 384,561 386,513 Less utility gas purchases 159,865 175,452 235,796 241,461 Net utility revenues $ 90,274 $ 92,446 $148,765 $145,052 Volumes (MMcf): Utility gas sales: Residential and commercial 43,339 44,782 61,712 60,107 Industrial 14,040 18,287 25,843 30,096 Wholesale 926 1,278 1,353 1,857 Total utility sales 58,305 64,347 88,908 92,060 Pipeline cap. leases 31,043 25,394 61,069 52,364 Transportation 13,035 14,211 27,200 25,445 Total volumes 102,383 103,952 177,177 169,869 UTILITY OPERATIONS 3 Months Ended 6 Months Ended February 28, February 28, 1994 1993 1994 1993 Average cost of gas purchased (per Mcf): General system $2.92 $2.90 $2.92 $2.90 SISP $2.05 $1.97 $2.01 $1.86 Degree days: Actual 2,314 2,406 3,212 3,113 Normal 2,335 2,287 2,966 2,906 Number of customers at end of period 729,642 720,585 In spite of more than 9,000 additional customers, revenue for residential and commercial gas sales decreased during the current fiscal quarter because of weather which was warmer than last year's second quarter. For the fiscal year to date, weather was 4 percent colder than the previous year, and revenues increased slightly for those customers. Volumes sold to industrial customers or delivered under pipeline capacity leases (PCLs) are as follows: 3 Months Ended 6 Months Ended February 28, February 28, INDUSTRIAL DELIVERIES 1994 1993 1994 1993 Volumes (MMcf): Sales 14,040 18,287 25,843 30,096 PCLs 34,160 24,262 62,047 49,405 Total 48,200 42,549 87,890 79,501 Amount (000's of $): Sales $33,574 $38,364 $59,075 $63,516 PCL's 14,742 11,859 26,884 22,850 Total $48,316 $50,223 $85,959 $86,366 Revenues from industrial customers decreased for both periods because of decreased PCL margins. Margins began declining in October 1992 and continue to decrease. Under the Company's payment-in-kind (PIK) program, a portion of gas transported for pipeline capacity lease customers is retained in lieu of cash payment for transportation charges. Certain contracts using the PIK program include price equivalent caps, which reduce the volumes of gas retained by the Company as the price of PIK gas purchased escalates. PIK gas is priced to utility customers at the weighted average cost of gas purchased from all sources. Revenues received under the PIK program decline as spot market prices increase, reducing both the spread and the volumes of gas retained. Utility gas purchased expense decreased due to lower sales volumes because of increased customers' utilization of the PCL program. Operating expenses increased during the current fiscal year to date primarily because of increased labor costs and regulatory expenses, but decreased slightly during the quarter because of lower legal costs and the prior year's accruals for an employee incentive plan. Depreciation expense increased due to additional utility property in service. GAS PROCESSING 3 Months Ended 6 Months Ended (Stated in Thousands February 28, February 28, Except Per Share Data) 1994 1993 1994 1993 Natural gas liquids and gas sales: To unaffiliated cust. $25,209 $35,353 $52,637 $66,164 Intersegment sales 647 13,618 647 18,972 Total sales 25,856 48,971 53,284 85,136 Other revenues 52 - 2,167 - Total revenues 25,908 48,971 55,451 85,136 Operating expenses 24,666 45,405 50,652 79,013 Operating income before income taxes 1,242 3,566 4,799 6,123 Income taxes 403 1,250 1,694 1,885 Net interest 200 253 420 493 Net income $ 639 $ 2,063 $ 2,685 $ 3,745 Earnings per share $.03 $.08 $.10 $.14 OPERATING STATISTICS Natural gas liquids sales: Volumes (Mgals.) 41,294 54,008 95,022 96,402 Average price (per gal.) $.25 $.31 $.26 $.31 Margin (per gal.) $ - $.06 $.02 $.06 Residue gas sales: Volumes (MMcf) 1,843 1,797 3,624 3,679 Average price (per Mcf) $2.13 $2.23 $2.08 $2.12 Other gas sales: Volumes (MMcf) 4,537 13,173 8,919 22,606 Average price (per Mcf) $2.54 $2.14 $2.37 $2.07 Margin (per Mcf) $.32 $.05 $.22 $.05 Volumes of natural gas liquids sold were down due to reduced recovery of ethane because of decreased margins. Product prices were down, resulting in revenues of $10.4 million for the three-month period, down 38 percent, and $24.6 million for the fiscal year to date, down 19 percent. Increased operating expense, primarily shrinkage and fuel costs, also reduced margins on natural gas liquids sales. Other gas sales margins increased because of lower-cost supplies of gas obtained at an earlier date and held for sale. Included in the current fiscal year to date is a gain of $2.1 million on the sale of a gas gathering system, which was included in other revenues during the first quarter. EXPLORATION AND PRODUCTION 3 Months Ended 6 Months Ended (Stated in Thousands, February 28, February 28, Except Per Share Data) 1994 1993 1994 1993 Oil and gas production sales: To unaffiliated cust. $6,254 $5,783 $12,899 $11,936 Intersegment sales 362 368 738 369 Total sales 6,616 6,151 13,637 12,305 Other revenues 168 - 196 - Total revenues 6,784 6,151 13,833 12,305 Operating expenses 6,311 4,686 12,645 10,652 Operating income (loss) before income taxes 473 1,465 1,188 1,653 Income taxes 15 430 112 490 Net interest 435 327 899 662 Net income (loss) $ 23 $ 708 $ 177 $ 501 Earnings (loss) per share $(.01) $.02 $ - $.02 OPERATING STATISTICS Oil production: Volumes (bbls.) 149,033 97,388 304,133 191,260 Average price (per bbl.) $13.09 $18.77 $14.28 $19.71 Gas production: Volumes (MMcf) 2,249 2,094 4,549 4,162 Average price (per Mcf) $2.07 $2.08 $2.04 $2.07 Revenue from oil production increased 7 percent for the quarter and 15 percent for the fiscal year to date because of increased sales volumes, primarily production from the North Frisco City Field acquired in April 1993. Dry hole costs, which increased for both periods, and increased depreciation and depletion expenses were primarily responsible for increased operating expenses. GAS MARKETING 3 Months Ended 6 Months Ended (Stated in Thousands, February 28, February 28, Except Per Share Data) 1994 1993 1994 1993 Gas sales: To the partnership $ 9,943 $ - $12,145 $ - Intersegment sales 15,711 - 39,010 - Total sales 25,654 - 51,155 - Other revenues 113 - 113 - Equity in net income of partnership 165 544 145 467 Total revenues 25,932 544 51,413 467 Operating expenses 25,834 73 51,403 108 Operating income before income taxes 98 471 10 359 Income taxes 16 177 (26) 135 Net interest 56 2 76 2 Net income (loss) $ 26 $292 $ (40) $222 Earnings per share $ - $.01 $ - $.01 ONEOK Gas Marketing supplies natural gas at cost to the gas marketing partnership and to other affiliates. ONEOK Gas Marketing Company began partnership operations in October 1992 and began marketing gas in March 1993. CONTRACT DRILLING 3 Months Ended 6 Months Ended (Stated in Thousands, February 28, February 28, Except Per Share Data) 1994 1993 1994 1993 Revenues $2,042 $2,176 $4,094 $4,029 Operating expenses 2,374 2,632 4,880 4,906 Operating loss before income taxes (332) (456) (786) (877) Income taxes (151) (197) (347) (318) Net interest 57 65 112 128 Net loss $ (238) $ (324) $ (551) $ (687) Loss per share $(.01) $(.01) $(.02) $(.03) OPERATING STATISTICS Rig utilization rate 39% 47% 41% 43% The contract drilling industry remains depressed, which is reflected in this segment's results for the quarter and fiscal year to date. Currently six of the Company's twelve rigs are operating. BUILDINGS 3 Months Ended 6 Months Ended (Stated in Thousands, February 28, February 28, Except Per Share Data) 1994 1993 1994 1993 Revenues: From unaffiliated cust. $ 671 $ 769 $1,377 $1,523 Intersegment sales 1,622 1,616 3,243 3,232 Total revenues 2,293 2,385 4,620 4,755 Operating expenses 2,618 2,682 5,377 5,330 Operating income (loss) before income taxes (325) (297) (757) (575) Income taxes (155) (145) (353) (773) Net interest 77 86 157 157 Net income (loss) $ (247) $ (238) $ (561) $ 41 Earnings (loss) per share $(.01) $(.01) $(.02) $ - Buildings operations remained flat, with a slight decrease in net income for the current year's second quarter. Lower income tax benefits accounted for most of the reduction in net income for the fiscal year to date. PART II. OTHER INFORMATION Item 1. Legal Proceedings AGRICULTURAL MINERALS, LIMITED PARTNERSHIP V. ONEOK INC., ET AL., No. CJ-94-93, District Court, Rogers County. Plaintiff alleges that it is the successor to a 15-year gas service agreement and pipeline capacity lease agreement necessary to transport gas to its fertilizer plant, that such agreements are an exclusive dealing arrangement in furtherance and preservation of the Company's monopoly power preventing its customers from securing alternate sources of transportation service and causing artificially higher rates for transportation service because of the lack of any free and open competition; that in the exercise of its monopoly power the Company has devised and implemented an unregulated scheme to unlawfully discriminate against the Plaintiff, and that as a result the Company charges competitors substantially less than it charges the Plaintiff for comparable transportation services. The Plaintiff alleges that such conduct is in violation of the Oklahoma antitrust laws and asks for actual damages in excess of $10,000, trebling of the actual damages, costs, and reasonable attorney fees. A response was filed March 24. CARMEN FIELD LIMITED PARTNERSHIP V. ONEOK INC., ET AL., No. C-89-77, District Court, Woods County. The case was initially filed July 7, 1989, but has been amended twice, most recently on September 7, 1993, after Magic Circle Energy Company, predecessor to Carmen Field Limited Partnership, regained control of the lawsuit as a result of agreements reached with its creditors in its bankruptcy proceedings. Magic Circle has alleged claims against ONG for (1) failure to take a specified volume of gas under two gas purchase contracts, (2) failure to pay the correct price for gas taken under the contracts, (3) anticipatory repudiation of the contracts, and (4) tortious interference with contractual relations. After a hearing on ONG's Motion to Dismiss plaintiff's claim for tortious interference, plaintiff dismissed that claim without prejudice. Plaintiff previously asked for $20,100,129.14 in actual damages. Counsel for plaintiff is re-examining the price claim, and it is anticipated that plaintiff will now contend that higher prices apply to the contracts. As a result, plaintiff's claim is expected to be substantially more than the amount originally claimed. With respect to plaintiff's "take-or-pay" claim, the Company's position is that because these are "take" contracts, rather than take-or-pay, no deficiency payments are owed, because the Company was prohibited from taking any more gas than it did by the Priority Rule enacted by the Oklahoma Corporation Commission and there is no alternate performance obligation to pay for gas not taken under the contracts. Most of the gas not taken was in fact sold to alternate purchasers, albeit at a lower price than plaintiff claims is provided for in the contracts. The Court's current scheduling order provides for discovery cutoff on June 7, 1994, and trial is set to begin on June 27, 1994. HILL RESOURCES, ET AL. V. ONEOK INC., ET AL., No. C-89-143, District Court, Alfalfa County. A settlement conference was held on February 16, 1994, and negotiations on a settlement are continuing. Further pretrial scheduling is awaiting the outcome of settlement negotiations. PAYNE, ET AL. V. MUSTANG FUEL CORPORATION AND ONEOK RESOURCES COMPANY, No. CJ-94-53, District Court, Grady County. Plaintiff trustees allege that they are a working interest owner in a well, and they are entitled to be compensated for 30,379 Mcf of gas overproduction of the well for the account of ONEOK Resources, and another working interest owner, and asks for damages in excess of $10,000, interest, and attorney fees. ONEOK Resources Company was a working interest owner when the well was overproduced in 1986 and 1987, which interest was subsequently sold to Mustang Fuel Corporation. A motion to dismiss was filed on or before March 22, 1994. POWERSMITH COGENERATION PROJECT, LTD. MATTERS. Oral Arguments were held on February 4, 1994, and the court has taken the matter under advisement. 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. Hearings on rate design were held on January 11 and 12, 1994. Deliberations by the Corporation Commission are scheduled for March 31 and April 5, 1994. Item 2. Changes in the Rights of the Company's Security Holders (a) None (b) None Item 3. Defaults by the Company on its Senior Securities (a) None (b) None Item 4. Submission of Matters to a Vote of Security Holders (a) Results of Votes of Security Holders The Annual Meeting of Shareholders of ONEOK Inc. was held on January 20, 1994, in Tulsa, Oklahoma. At this meeting, shareholders voted to elect directors and approve the appointment of independent auditors. Proxies for the meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934 and there was no solicitation in opposition to management's solicitation. The results of the voting are as follows: (1) Election of Class A Directors Common Stock Votes Preferred Stock Votes For Withheld For Withheld W. M. Bell 23,033,344 324,271 309,971 4,399 W. L. Ford 23,065,549 292,066 310,410 3,960 B. H. Mackie 23,032,290 325,325 310,410 3,960 G. D. Parker 23,059,665 297,950 310,410 3,960 Class B Directors continuing after the meeting are as follows: S. J. Jatras Douglas Ann Newsom, Ph.D. J. E. Tyree Class C Directors continuing after the meeting are as follows: D. R. Cummings J. M. Graves J. D. Scott G. R. Williams S. L. Young (2) Appointment of KPMG Peat Marwick as independent auditors for the Company. For Against Abstain Preferred 261,092 48,260 5,018 Common 23,068,728 130,395 158,492 Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K One Current Report on Form 8-K was filed during the second quarter of the 1994 fiscal year. It was dated February 17, 1994, and reported the retirement of J. D. Scott as Chairman of the Board, President, and Chief Executive Officer of ONEOK and the election of Larry W. Brummett to the same positions. There were no financial statements filed with the Form 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 25th day of March, 1994. ONEOK Inc. (Registrant) By: (J. D. NEAL) J. D. Neal Vice President, Chief Financial Officer, and Treasurer -----END PRIVACY-ENHANCED MESSAGE-----