Attached files
| file | filename |
|---|---|
| EX-99.01 - EXHIBIT 99.01 - OGE ENERGY CORP. | exhibit99017-16x13.htm |
| EX-99.02 - EXHIBIT 99.02 - OGE ENERGY CORP. | exhibit99027-16x13.htm |
| EX-23.01 - EXHIBIT 23.01 - OGE ENERGY CORP. | exhibit23017-16x13.htm |
| 8-K/A - OGE ENERGY CORP. 8-K/A - OGE ENERGY CORP. | ogeenergy8-ka7x16x13.htm |
Exhibit 99.03
OGE Energy Corp.
Unaudited Pro Forma Condensed Consolidated Financial Statements and Footnotes
For the Three Months Ended March 31, 2013
and the Year Ended December 31, 2012
Introduction
On March 14, 2013, OGE Energy entered into a Master Formation Agreement with Bronco Midstream Holdings, LLC and Bronco Midstream Holdings II, LLC (collectively, the "ArcLight group") and CenterPoint Energy, Inc. ("CenterPoint"), pursuant to which OGE Energy, the ArcLight group and CenterPoint, agreed to form a partnership (the "Midstream Partnership") to own and operate the midstream businesses of OGE Energy and CenterPoint that will initially be structured as a private limited partnership. This transaction closed on May 1, 2013.
Pursuant to the Master Formation Agreement, OGE Energy and the ArcLight group indirectly contributed 100 percent of the equity interests in Enogex LLC to the Midstream Partnership. CenterPoint Energy Field Services, LLC, a Delaware limited liability company and wholly owned subsidiary of CenterPoint Energy Resources Corp. (wholly owned subsidiary of CenterPoint), was converted into a Delaware limited partnership that became the Midstream Partnership. CenterPoint contributed to the Midstream Partnership its equity interests in each of CenterPoint Energy Gas Transmission Company, LLC, a Delaware limited liability company, CenterPoint Energy - Mississippi River Transmission, LLC, a Delaware limited liability company, and certain of its other midstream subsidiaries and caused its subsidiary CenterPoint Energy Southeastern Pipelines Holding, LLC to contribute a 24.95 percent interest in Southeast Supply Header, LLC, a Delaware limited liability company. CenterPoint Energy Field Services, LLC provides natural gas gathering and processing services for certain natural gas fields in the Mid-continent region of the United States that interconnect with CenterPoint Energy Gas Transmission Company, LLC and CenterPoint Energy - Mississippi River Transmission, LLC pipelines, as well as other interstate and intrastate pipelines. CenterPoint indirectly owns a 50 percent interest in Southeast Supply Header, LLC. The general partner of the Midstream Partnership is equally controlled by CenterPoint and OGE Energy, who each have 50 percent of the management rights. Based on the 50/50 management ownership, with neither company having control, effective May 1, 2013, OGE Energy deconsolidated its interest in Enogex LLC and began accounting for its interest in the Midstream Partnership under the equity method of accounting. OGE Energy will recognize the acquisition of its equity interest in the Midstream Partnership at historical cost, using in substance real estate accounting in accordance with ASC 360-20 "Real Estate Sales" on the basis that Enogex's midstream assets are considered in substance real estate, consisting of land, property improvements and integral equipment. OGE Energy will not recognize a gain as a result of the transactions contemplated by the Master Formation Agreement for financial reporting purposes or for purposes of the accompanying pro forma financial statements.
The unaudited pro forma condensed consolidated balance sheet of OGE Energy at March 31, 2013 assumes the formation of the Midstream Partnership occurred on March 31, 2013. The unaudited pro forma condensed consolidated statements of income of OGE Energy for the year ended December 31, 2012 and for the three months ended March 31, 2013 assume the formation of the Midstream Partnership occurred on January 1, 2012.
The unaudited pro forma condensed consolidated financial statements and accompanying notes have been prepared in conformity with U.S. generally accepted accounting principles consistent with those used in, and should be read together with, OGE Energy's historical consolidated financial statements and related
1
notes included in OGE Energy's Form 10-K for the year ended December 31, 2012 and Form 10-Q for the quarter ended March 31, 2013.
The adjustments reflected in the unaudited pro forma condensed consolidated financial statements are based on currently available information and certain estimates and assumptions; therefore, actual results may differ from the pro forma adjustments. However, management believes that the assumptions used provide a reasonable basis for presenting the significant effects of the formation of the Midstream Partnership and that the pro forma adjustments in the unaudited pro forma condensed consolidated financial statements give appropriate effect to the assumptions and are applied in conformity with U.S. generally accepted accounting principles.
The unaudited pro forma condensed consolidated financial statements do not purport to present OGE Energy's results of operations had the formation of the Midstream Partnership actually been completed at the dates indicated. In addition, the unaudited pro forma condensed consolidated financial statements do not project OGE Energy's results of operations for any future period.
2
OGE ENERGY CORP.
CONDENSED CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(UNAUDITED)
Twelve Months Ended December 31, 2012 | ||||||||||||||||
Pro Forma Adjustments | ||||||||||||||||
OGE Energy Corp. Historical | Deconsolidation Adjustment (3)(a) | Other Adjustments (3)(b) | Midstream Partnership Pro Forma Adjustments | OGE Energy Corp. Pro Forma | ||||||||||||
(In millions) | ||||||||||||||||
OPERATING REVENUES | ||||||||||||||||
Electric Utility operating revenues | $ | 2,141.2 | $ | — | $ | — | $ | — | $ | 2,141.2 | ||||||
Natural Gas Midstream Operations operating revenues | 1,530.0 | (1,608.6 | ) | 78.6 | — | |||||||||||
Total operating revenues | 3,671.2 | (1,608.6 | ) | 78.6 | 2,141.2 | |||||||||||
COST OF GOODS SOLD (exclusive of depreciation and amortization shown below) | ||||||||||||||||
Electric Utility cost of goods sold | 819.0 | 60.1 | 879.1 | |||||||||||||
Natural Gas Midstream Operations cost of goods sold | 1,099.7 | (1,120.2 | ) | 20.5 | — | |||||||||||
Total cost of goods sold | 1,918.7 | (1,120.2 | ) | 80.6 | 879.1 | |||||||||||
Gross margin on revenues | 1,752.5 | (488.4 | ) | (2.0 | ) | 1,262.1 | ||||||||||
OPERATING EXPENSES | ||||||||||||||||
Other operation and maintenance | 601.5 | (172.8 | ) | 428.7 | ||||||||||||
Depreciation and amortization | 371.0 | (108.8 | ) | 262.2 | ||||||||||||
Impairment of assets | 0.4 | (0.4 | ) | — | ||||||||||||
Gain on insurance proceeds | (7.5 | ) | 7.5 | — | ||||||||||||
Taxes other than income | 110.2 | (28.4 | ) | 81.8 | ||||||||||||
Total operating expenses | 1,075.6 | (302.9 | ) | 772.7 | ||||||||||||
OPERATING INCOME | 676.9 | (185.5 | ) | (2.0 | ) | 489.4 | ||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||
Interest income | 0.6 | 2.3 | 2.9 | |||||||||||||
Equity in earnings of unconsolidated affiliates | — | 197.2 | (3)(c) | 197.2 | ||||||||||||
Allowance for equity funds used during construction | 6.2 | 6.2 | ||||||||||||||
Other income | 17.0 | (1.0 | ) | 16.0 | ||||||||||||
Other expense | (16.5 | ) | 4.5 | (12.0 | ) | |||||||||||
Net other income | 7.3 | 3.5 | 2.3 | 197.2 | 210.3 | |||||||||||
INTEREST EXPENSE | ||||||||||||||||
Interest on long-term debt | 158.9 | (29.1 | ) | 129.8 | ||||||||||||
Allowance for borrowed funds used during construction | (3.5 | ) | (3.5 | ) | ||||||||||||
Interest on short-term debt and other interest charges | 8.7 | (3.5 | ) | 2.3 | 7.5 | |||||||||||
Interest expense | 164.1 | (32.6 | ) | 2.3 | 133.8 | |||||||||||
INCOME BEFORE TAXES | 520.1 | (149.4 | ) | (2.0 | ) | 197.2 | 565.9 | |||||||||
INCOME TAX EXPENSE | 135.1 | (45.7 | ) | (0.6 | ) | 75.8 | (3)(d) | 164.6 | ||||||||
NET INCOME | 385.0 | (103.7 | ) | (1.4 | ) | 121.4 | 401.3 | |||||||||
Less: Net income attributable to noncontrolling interests | 30.0 | (29.6 | ) | (0.4 | ) | — | — | |||||||||
NET INCOME ATTRIBUTABLE TO OGE ENERGY | $ | 355.0 | $ | (74.1 | ) | $ | (1.0 | ) | $ | 121.4 | $ | 401.3 | ||||
BASIC AVERAGE COMMON SHARES OUTSTANDING | 98.6 | 98.6 | ||||||||||||||
DILUTED AVERAGE COMMON SHARES OUTSTANDING | 99.1 | 99.1 | ||||||||||||||
BASIC EARNINGS PER AVERAGE COMMON SHARE | $ | 3.60 | $ | 4.07 | ||||||||||||
DILUTED EARNINGS PER AVERAGE COMMON SHARE | $ | 3.58 | $ | 4.05 | ||||||||||||
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.
3
OGE ENERGY CORP.
CONDENSED CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended March 31, 2013 | ||||||||||||||||
Pro Forma Adjustments | ||||||||||||||||
OGE Energy Corp. Historical | Deconsolidation Adjustment (3)(a) | Other Adjustments (3)(b) | Midstream Partnership Pro Forma Adjustments | OGE Energy Corp. Pro Forma | ||||||||||||
(In millions) | ||||||||||||||||
OPERATING REVENUES | ||||||||||||||||
Electric Utility operating revenues | $ | 455.5 | $ | — | $ | — | $ | — | $ | 455.5 | ||||||
Natural Gas Midstream Operations operating revenues | 445.9 | (464.3 | ) | 18.4 | — | |||||||||||
Total operating revenues | 901.4 | (464.3 | ) | 18.4 | 455.5 | |||||||||||
COST OF GOODS SOLD (exclusive of depreciation and amortization shown below) | ||||||||||||||||
Electric Utility cost of goods sold | 199.4 | 13.6 | 213.0 | |||||||||||||
Natural Gas Midstream Operations cost of goods sold | 353.6 | (359.2 | ) | 5.6 | — | |||||||||||
Total cost of goods sold | 553.0 | (359.2 | ) | 19.2 | 213.0 | |||||||||||
Gross margin on revenues | 348.4 | (105.1 | ) | (0.8 | ) | 242.5 | ||||||||||
OPERATING EXPENSES | ||||||||||||||||
Other operation and maintenance | 148.0 | (45.2 | ) | 102.8 | ||||||||||||
Depreciation and amortization | 91.9 | (27.6 | ) | 64.3 | ||||||||||||
Taxes other than income | 33.1 | (8.0 | ) | 25.1 | ||||||||||||
Total operating expenses | 273.0 | (80.8 | ) | 192.2 | ||||||||||||
OPERATING INCOME | 75.4 | (24.3 | ) | (0.8 | ) | 50.3 | ||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||
Interest income | 0.1 | 0.7 | 0.8 | |||||||||||||
Equity in earnings of unconsolidated affiliates | — | 36.3 | (3)(c) | 36.3 | ||||||||||||
Allowance for equity funds used during construction | 1.2 | 1.2 | ||||||||||||||
Other income | 14.6 | (10.1 | ) | 4.5 | ||||||||||||
Other expense | (6.5 | ) | 1.2 | (5.3 | ) | |||||||||||
Net other income | 9.4 | (8.9 | ) | 0.7 | 36.3 | 37.5 | ||||||||||
INTEREST EXPENSE | ||||||||||||||||
Interest on long-term debt | 39.7 | (7.2 | ) | 32.5 | ||||||||||||
Allowance for borrowed funds used during construction | (0.7 | ) | (0.7 | ) | ||||||||||||
Interest on short-term debt and other interest charges | 2.2 | (0.9 | ) | 0.7 | 2.0 | |||||||||||
Interest expense | 41.2 | (8.1 | ) | 0.7 | 33.8 | |||||||||||
INCOME BEFORE TAXES | 43.6 | (25.1 | ) | (0.8 | ) | 36.3 | 54.0 | |||||||||
INCOME TAX EXPENSE | 15.6 | (7.6 | ) | (0.3 | ) | 13.9 | (3)(d) | 21.6 | ||||||||
NET INCOME | 28.0 | (17.5 | ) | (0.5 | ) | 22.4 | 32.4 | |||||||||
Less: Net income attributable to noncontrolling interests | 4.9 | (5.2 | ) | 0.3 | — | — | ||||||||||
NET INCOME ATTRIBUTABLE TO OGE ENERGY | $ | 23.1 | $ | (12.3 | ) | $ | (0.8 | ) | $ | 22.4 | $ | 32.4 | ||||
BASIC AVERAGE COMMON SHARES OUTSTANDING | 98.9 | 98.9 | ||||||||||||||
DILUTED AVERAGE COMMON SHARES OUTSTANDING | 99.4 | 99.4 | ||||||||||||||
BASIC EARNINGS PER AVERAGE COMMON SHARE | $ | 0.23 | $ | 0.33 | ||||||||||||
DILUTED EARNINGS PER AVERAGE COMMON SHARE | $ | 0.23 | $ | 0.33 | ||||||||||||
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.
4
OGE ENERGY CORP.
CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEETS
(UNAUDITED)
March 31, 2013 | ||||||||||||||||
Pro Forma Adjustments | ||||||||||||||||
OGE Energy Corp. Historical | Deconsolidation Adjustment (3)(a) | Other Adjustments (3)(b) | Midstream Partnership Pro Forma Adjustments | OGE Energy Corp. Pro Forma | ||||||||||||
(In millions) | ||||||||||||||||
ASSETS | ||||||||||||||||
CURRENT ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 7.1 | $ | (2.3 | ) | $ | — | $ | — | $ | 4.8 | |||||
Accounts receivable, net | 286.9 | (140.9 | ) | 0.6 | 146.6 | |||||||||||
Accounts receivable - unconsolidated affiliates | — | 225.9 | 225.9 | |||||||||||||
Accrued unbilled revenues | 49.6 | 49.6 | ||||||||||||||
Income taxes receivable | 7.2 | 7.2 | ||||||||||||||
Fuel inventories | 99.7 | (8.8 | ) | 90.9 | ||||||||||||
Materials and supplies, at average cost | 82.2 | (5.0 | ) | 77.2 | ||||||||||||
Price risk management | 0.4 | (1.7 | ) | 1.3 | — | |||||||||||
Gas imbalances | 12.7 | (12.1 | ) | 0.6 | ||||||||||||
Deferred income taxes | 40.6 | (0.1 | ) | 40.5 | ||||||||||||
Fuel clause under recoveries | 0.4 | 0.4 | ||||||||||||||
Other | 39.7 | (3.2 | ) | 3.9 | 40.4 | |||||||||||
Total current assets | 626.5 | 51.9 | 5.7 | 684.1 | ||||||||||||
OTHER PROPERTY AND INVESTMENTS, at cost | ||||||||||||||||
Investment in unconsolidated affiliates | — | 1,211.1 | (3)(e) | 1,211.1 | ||||||||||||
Other | 55.9 | (1.5 | ) | 54.4 | ||||||||||||
Total other property and investments, at cost | 55.9 | (1.5 | ) | 1,211.1 | 1,265.5 | |||||||||||
PROPERTY, PLANT AND EQUIPMENT | ||||||||||||||||
In service | 11,656.8 | (2,939.0 | ) | 8,717.8 | ||||||||||||
Construction work in progress | 543.6 | (186.2 | ) | 357.4 | ||||||||||||
Total property, plant and equipment | 12,200.4 | (3,125.2 | ) | 9,075.2 | ||||||||||||
Less accumulated depreciation | 3,620.0 | (763.9 | ) | 2,856.1 | ||||||||||||
Net property, plant and equipment | 8,580.4 | (2,361.3 | ) | 6,219.1 | ||||||||||||
DEFERRED CHARGES AND OTHER ASSETS | ||||||||||||||||
Regulatory assets | 502.6 | 502.6 | ||||||||||||||
Intangible assets, net | 126.0 | (126.0 | ) | — | ||||||||||||
Goodwill | 39.4 | (39.4 | ) | — | ||||||||||||
Other | 51.0 | (20.1 | ) | 0.2 | 31.1 | |||||||||||
Total deferred charges and other assets | 719.0 | (185.5 | ) | 0.2 | 533.7 | |||||||||||
TOTAL ASSETS | $ | 9,981.8 | $ | (2,496.4 | ) | $ | 5.9 | $ | 1,211.1 | $ | 8,702.4 | |||||
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.
5
OGE ENERGY CORP.
CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEETS
(UNAUDITED)
March 31, 2013 | ||||||||||||||||
Pro Forma Adjustments | ||||||||||||||||
OGE Energy Corp. Historical | Deconsolidation Adjustment (3)(a) | Other Adjustments (3)(b) | Midstream Partnership Pro Forma Adjustments | OGE Energy Corp. Pro Forma | ||||||||||||
(In millions) | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||
CURRENT LIABILITIES | ||||||||||||||||
Short-term debt | $ | 707.0 | — | — | — | $ | 707.0 | |||||||||
Accounts payable | 409.5 | (197.8 | ) | 0.6 | 212.3 | |||||||||||
Dividends payable | 41.4 | 41.4 | ||||||||||||||
Customer deposits | 71.3 | (1.8 | ) | 69.5 | ||||||||||||
Accrued taxes | 28.8 | (6.4 | ) | 22.4 | ||||||||||||
Accrued interest | 35.7 | (3.8 | ) | 31.9 | ||||||||||||
Accrued compensation | 37.1 | 37.1 | ||||||||||||||
Price risk management | 0.4 | (0.4 | ) | 1.3 | 1.3 | |||||||||||
Gas imbalances | 5.7 | (5.7 | ) | — | ||||||||||||
Fuel clause over recoveries | 81.6 | 81.6 | ||||||||||||||
Other | 63.7 | (12.2 | ) | 3.9 | 55.4 | |||||||||||
Total current liabilities | 1,482.2 | (228.1 | ) | 5.8 | 1,259.9 | |||||||||||
LONG-TERM DEBT | 2,848.7 | (698.5 | ) | 2,150.2 | ||||||||||||
DEFERRED CREDITS AND OTHER LIABILITIES | ||||||||||||||||
Accrued benefit obligations | 399.9 | 399.9 | ||||||||||||||
Deferred income taxes | 1,817.7 | 1,817.7 | ||||||||||||||
Deferred investment tax credits | 3.4 | 3.4 | ||||||||||||||
Regulatory liabilities | 245.5 | 245.5 | ||||||||||||||
Deferred revenues | 38.5 | (38.5 | ) | — | ||||||||||||
Other | 93.6 | (4.3 | ) | 89.3 | ||||||||||||
Total deferred credits and other liabilities | 2,598.6 | (42.8 | ) | — | 2,555.8 | |||||||||||
Total liabilities | 6,929.5 | (969.4 | ) | 5.8 | — | 5,965.9 | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||||||
Common stockholders' equity | 1,039.7 | (0.2 | ) | 0.2 | 1,039.7 | |||||||||||
Retained earnings | 1,754.1 | (1,211.1 | ) | 0.7 | 1,211.1 | (3)(e) | 1,754.8 | |||||||||
Accumulated other comprehensive loss, net of tax | (48.3 | ) | (8.9 | ) | (0.8 | ) | (58.0 | ) | ||||||||
Total OGE Energy stockholders' equity | 2,745.5 | (1,220.2 | ) | 0.1 | 1,211.1 | 2,736.5 | ||||||||||
Noncontrolling interests | 306.8 | (306.8 | ) | — | ||||||||||||
Total stockholders' equity | 3,052.3 | (1,527.0 | ) | 0.1 | 1,211.1 | 2,736.5 | ||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 9,981.8 | $ | (2,496.4 | ) | $ | 5.9 | $ | 1,211.1 | $ | 8,702.4 | |||||
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.
6
OGE ENERGY CORP.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
1. Basis of Presentation
The historical financial information for the year ended December 31, 2012 is derived from and should be read in conjunction with the audited historical consolidated financial statements of OGE Energy contained in OGE Energy's Form 10-K for the year ended December 31, 2012. The historical financial information for the three months ended March 31, 2013 and at March 31, 2013 is derived from and should be read in conjunction with the unaudited historical condensed consolidated financial statements of OGE Energy contained in OGE Energy's Form 10-Q for the quarter ended March 31, 2013. The pro forma adjustments have been prepared as if certain transactions had taken place on March 31, 2013, in the case of the balance sheet, or as of January 1, 2012, in the case of the statements of income for the year ended December 31, 2012 and the three months ended March 31, 2013. These transactions include:
• | presenting OGE Energy's interest in the Midstream Partnership using the equity method of accounting and the related deconsolidation of Enogex Holdings LLC ("Enogex"); |
• | removal of certain eliminations between OGE Energy's subsidiaries and OGE Energy that were previously eliminated in OGE Energy's historical financial statements; |
• | OGE Energy's ownership interest in the Midstream Partnership; |
• | OGE Energy's 28.5 percent interest in the earnings of the Midstream Partnership; and |
• | the tax effect of the pro forma adjustments on OGE Energy's earnings before income taxes assuming an estimated statutory tax rate of 38.4 percent for all jurisdictions. |
2. Summary of Significant Accounting Policies
The accounting policies followed in preparing the unaudited pro forma condensed consolidated financial statements are those used by OGE Energy as set forth in its historical consolidated financial statements contained in its Form 10-K for the year ended December 31, 2012 and Form 10-Q for the quarter ended March 31, 2013.
3. Pro Forma Adjustments and Assumptions
The unaudited pro forma condensed consolidated financial statements give pro forma effect to the following:
(a) | Reflects the deconsolidation of Enogex. These adjustments represent the removal of the revenues, expenses and other income (loss) impacts of the remaining Enogex operations for the year ended December 31, 2012 and the three months ended March 31, 2013 and the removal of the assets, liabilities and business equity related to these operations. |
(b) | Reflects the reclassification of sales, purchases and other intercompany transactions between OGE Energy's subsidiaries and OGE Energy that were previously eliminated in OGE Energy's consolidated historical financial statements to third-party transactions that would not have been eliminated in OGE Energy's pro forma financial statements for the year ended December 31, 2012 and the three months ended March 31, 2013. |
(c) | Reflects OGE Energy's 28.5 percent interest in the earnings of the Midstream Partnership for the year ended December 31, 2012 and the three months ended March 31, 2013. |
(d) | Reflects the tax effect of the pro forma adjustments on OGE Energy's earnings before income taxes assuming an estimated statutory tax rate of 38.4 percent for all jurisdictions that would have applied during this period. |
7
(e) | Reflects OGE Energy's ownership interest in the Midstream Partnership at March 31, 2013. |
4. Commitments and Contingencies
Commitments and contingencies of OGE Energy are set out in the audited historical condensed consolidated financial statements for the year ended December 31, 2012 and the unaudited condensed consolidated financial statements for the three months ended March 31, 2013 contained in OGE Energy's Form 10-K for the year ended December 31, 2012 and Form 10-Q for the quarter ended March 31, 2013, respectively.
8