TULSA, Okla., Feb 26, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- ONEOK, Inc. (NYSE: OKE) announced today that its net income for the year was $306.3 million, or $2.68 per diluted share of common stock, compared with $546.5 million, or $5.06 per diluted share of common stock, a year earlier. 2006 results include a $113.9 million pre-tax gain related to ONEOK Partners' sale of a 20 percent partnership interest in Northern Border Pipeline; ONEOK's after-tax share of the gain was $32.3 million, or 28 cents per diluted share.
Year-end 2005 net income included an after-tax gain on the sale of a discontinued component of $149.6 million, or $1.39 per diluted share of common stock, from the sale of the company's oil and gas production business, and an after-tax gain of $161.8 million, or $1.50 per diluted share of common stock, on the sale of the company's Texas gathering and processing assets, recorded in income from continuing operations. These 2005 gains were partially offset by a $32.4 million, or 30 cents per diluted share, impairment related to the company's sale of its Spring Creek power plant in Oklahoma.
The following table adjusts 2006 and 2005 reported net income to eliminate the effects of these gains and losses:
Fiscal Year
(Millions of dollars, except per
share amounts)
(Unaudited) 2006 2005
Net Income, reported $306.3 $2.68 $546.5 $5.06
Less gain on sale of 20 percent
partnership interest in Northern
Border Pipeline (32.3) (0.28) --- ---
Less gain on sale of oil and gas
production business --- --- (149.6) (1.39)
Less gain on sale of Texas gathering
and processing assets --- --- (161.8) (1.50)
Add loss on sale of Spring Creek
power plant --- --- 32.4 0.30
Net Income excluding asset sales $274.0 $2.40 $267.5 $2.47
Average Diluted Shares of Common
Stock (Millions) 114.5 108.0
In the fourth quarter 2006, ONEOK reported net income of $74.6 million, or 66 cents per diluted share, compared with net income of $75.8 million, or 73 cents per diluted share, in the fourth quarter 2005, excluding the $161.8 million, or $1.57 per diluted share of common stock, after-tax gain on the sale of the Texas gathering and processing assets, recorded in income from continuing operations.
"Our ONEOK Partners and energy services segments turned in exceptional performances," said John W. Gibson, chief executive officer of ONEOK. "Our distribution segment also reported solid results, benefiting from the first full year of new rates in Oklahoma.
"The transaction with ONEOK Partners that was completed in April 2006 is delivering strong operating results and providing an excellent platform for additional growth at ONEOK," Gibson stated.
Net margin increased in 2006, compared with 2005, primarily as a result of the Jan. 1, 2006, consolidation of the company's investment in ONEOK Partners as required by the applicable accounting rules; the effect of the natural gas liquids assets acquired from Koch in July 2005; strong commodity prices, wider gross processing spreads and increased natural gas transportation revenue in the ONEOK Partners segment; and higher transportation margins in the energy services segment.
In 2006, operating income increased to $745.7 million from $534.8 million in 2005, excluding the gains on the sales of assets of $115.9 million in 2006 and $264.2 million in 2005.
Operating costs for 2006 increased primarily because of the consolidation of the legacy ONEOK Partners operations and the natural gas liquids assets acquired in 2005, offset by the sale of the Texas natural gas gathering and processing assets in December 2005.
Depreciation, depletion and amortization expense increased in 2006, compared with 2005, primarily as a result of the consolidation of the legacy ONEOK Partners operations at the beginning of 2006, the acquisition of the natural gas liquids assets in July 2005 and the ONEOK Partners impairment charges for Black Mesa Pipeline of $12.0 million in the second quarter 2006.
Equity earnings from investments increased $93.3 million in 2006, compared with 2005. Equity earnings from Northern Border Pipeline contributed $72.4 million, and ONEOK Partners' gathering and processing joint ventures contributed $22.6 million in 2006.
YEAR-END 2006 RESULTS INCLUDED:
* The completion of the transactions in which ONEOK sold assets to ONEOK
Partners, received $1.35 billion in cash and approximately 36.5 million
limited partner units, and became the sole general partner and owner of
45.7 percent of the partnership;
* ONEOK Partners' announcement that it plans to develop $1.1 billion in
internally generated growth projects, which include construction of
Overland Pass Pipeline, a 750-mile natural gas liquids pipeline from
Opal, Wyo., to the Mid-Continent natural gas liquids market center in
Conway, Kan., and related infrastructure upgrades;
* Improved performance in the distribution segment, resulting in
operating income of $117.5 million in 2006 versus $113.9 million in
2005;
* A final settlement in the Kansas Gas Service rate case that will
increase annual operating income by approximately $45 million in 2007;
* Record operating income of $229.2 million in the energy services
segment, compared with $165.6 million in 2005;
* Energy services being selected to provide subsidiaries of FirstEnergy
Corp. with natural gas supply and natural gas management services for
three of their natural gas-fired electric generation plants;
* An accelerated share repurchase plan, resulting in the purchase of 7.5
million shares of the company's common stock;
* Distributions from the company's general partner interest in ONEOK
Partners of $36.6 million, compared with $6.6 million for last year;
distributions from the company's limited partner interest in ONEOK
Partners was $111.0 million, compared with $10.8 million for 2005;
* ONEOK, on a stand-alone basis, having no short-term debt, $47.2 million
of cash invested and $727.1 million of natural gas in storage at
Dec. 31, 2006, and long-term debt of 48 percent of capitalization;
* ONEOK stand-alone cash flow from continuing operations, before changes
in working capital, of $405.7 million, which exceeded capital
expenditures and dividend distributions of $310.0 million by $95.7
million;
* Increasing the company's dividend 14 percent during the year and
another 6 percent in January 2007 to 34 cents a share;
* Share price appreciation in 2006 of 62 percent;
* Being named one of FORTUNE Magazine's most admired and fastest-growing
companies;
* Energy services being ranked as the nation's top major natural gas
marketer in an annual customer survey;
* Texas Gas Service being ranked first in business customer service from
a nationally known research firm;
* Celebrating the company's 100th anniversary in October.
2006 BUSINESS UNIT RESULTS
ONEOK Partners
The ONEOK Partners segment posted operating income of $510.6 million, compared with $523.4 million in 2005, a decrease of $12.8 million. Excluding gains on sales of assets in 2005 and 2006, operating income increased $136.5 million from $259.2 million in 2005 to $395.7 million in 2006. Operating income for 2006 includes the gain on sale of assets of $113.9 million related to ONEOK Partners' sale of a 20 percent partnership interest in Northern Border Pipeline in April 2006. Operating income in 2005 includes a pre-tax gain of $264.2 million on the sale of the company's Texas gathering and processing assets, recorded in income from continuing operations.
Net margin increased to $841.2 million for 2006, compared with $546.8 million in 2005, as a result of: an increase of $191.1 million from the legacy ONEOK Partners operations, which was consolidated beginning Jan. 1, 2006; an increase of $101.8 million related to the natural gas liquids gathering and distribution pipelines acquired from Koch in July 2005; an increase of $72.1 million from the legacy ONEOK operations, driven primarily by strong commodity prices, higher gross processing spreads and increased natural gas transportation revenues; and a decrease of $80.5 million resulting from the sale of Texas natural gas gathering and processing assets in December 2005.
Operating costs increased $103.2 million in 2006, compared with 2005, primarily related to the consolidation of the legacy ONEOK Partners operations at Jan. 1, 2006, and the natural gas liquids assets acquired in 2005, offset by the impact resulting from the sale of the Texas natural gas gathering and processing assets in December 2005.
Depreciation, depletion and amortization expense increased by $54.6 million for 2006 compared with 2005, primarily due to $37.9 million related to the consolidation of the legacy ONEOK Partners operations, $12.0 million for the Black Mesa Pipeline impairments and $15.5 million for the acquisition of natural gas liquids assets from Koch in 2005. These increases were offset by an $8.2 million decrease resulting from the December 2005 sale of the Texas natural gas gathering and processing assets.
Equity earnings from investments increased by $103.5 million in 2006, primarily from ONEOK Partners' interest in Northern Border Pipeline.
Fourth-quarter operating income was $90.5 million versus $70.0 million in the same quarter 2005, excluding the 2005 pre-tax gain of $264.2 million on the sale of the company's Texas gathering and processing assets. Net margin for the period was $217.0 million, compared with $155.3 million in 2005, as a result of an increase of $48.4 million from the legacy ONEOK Partners operations, which were consolidated beginning Jan. 1, 2006; an increase of $24.0 million, driven primarily by strong commodity prices, higher gross processing spreads and increased natural gas transportation revenues from the legacy ONEOK operations; and a decrease of $15.6 million resulting from the sale of Texas natural gas gathering and processing assets in December 2005.
Distribution
The distribution segment reported 2006 operating income of $117.5 million, compared with $113.9 million last year. Net margin was $599.8 million in 2006 versus $587.7 million in 2005, an increase of $12.1 million.
Net margin improvements were the result of implementation of new rates in Oklahoma, which contributed $39.7 million, and in Texas, which contributed $2.6 million. These increases were offset by a decrease of $19 million, primarily due to expired riders that are a component of the new rates in Oklahoma; a decrease of $10 million in customer sales due to warmer weather in the company's service territory; and a decrease of $1.8 million due to reduced wholesale volumes in Kansas.
Operating costs increased $11.1 million year over year because of $17.2 million in higher labor and employee benefit costs and $1.7 million of higher property taxes, partially offset by a $7.6 million decrease in bad debt expense.
Residential and commercial volumes decreased for the year due to warmer weather, primarily in the first quarter of 2006. Customer conservation also contributed to lower volumes. Wholesale volumes decreased in 2006, compared with 2005, due to reduced volumes available for sale.
The temperatures for the 2006 winter heating season were among the warmest on record in the past 100 years -- second warmest year in Texas and Oklahoma, and fourth warmest in Kansas. The impact of warmer-than-normal weather for the year was moderated by approved weather-protection mechanisms and by the implementation of a new two-tier rate structure in Oklahoma. The new rate structure in Oklahoma reduces volumetric sensitivity while providing more consistent earnings and cash flow over time.
Fourth-quarter operating income was $48.9 million versus $53.1 million in the same quarter 2005, primarily due to increased operating costs. Net margin was $177.8 million, compared with $174.9 million in the fourth quarter 2005. Operating costs increased $6.0 million in the fourth quarter 2006 versus 2005 primarily because of higher employee-related costs and property taxes, partially offset by lower bad debt expense.
Energy Services
The energy services segment posted operating income of $229.2 million, compared with $165.6 million in 2005. Net margin increased to $273.8 million from $206.4 million in 2005.
Net margin increases included $58 million in transportation margins primarily due to improved natural gas basis differentials between the Mid- Continent and Gulf Coast regions, and $7.1 million from financial trading.
Operating costs for the year increased to $42.5 million, compared with $38.7 million in 2005, primarily as a result of higher employee-related costs.
On Dec. 31, 2006, natural gas in storage was 74.1 Bcf, compared with 62.1 Bcf a year earlier. Natural gas storage capacity under lease was 86 Bcf on Dec. 31, 2006, and 2005. On Jan. 31, 2007, natural gas in storage was 53.0 Bcf.
Fourth-quarter operating income was $60.9 million versus $68.0 million in the same quarter 2005. Net margin was $75.6 million, compared with $78.9 million in the 2005 fourth quarter. Fourth-quarter 2006 net margin decreased $9.4 million related to transportation margins associated with strong 2005 Mid-Continent to Gulf Coast spreads, partially offset by an increase of $6.1 million due to improved storage and marketing margins. Trading and retail margins in the fourth quarter 2005 were relatively unchanged, compared with the fourth quarter 2005.
The net margin for the energy services segment was derived from the
following sources:
Year Ended Year Ended
December 31, 2006 December 31, 2005
(Thousands of dollars)
Marketing and storage, gross $414,951 $350,227
Less: Storage and transportation
costs (180,708) (174,838)
Marketing and
storage, net 234,243 175,389
Retail marketing 19,006 17,526
Financial trading 20,569 13,445
Net margin $273,818 $206,360
EARNINGS CONFERENCE CALL
A joint conference call with ONEOK and ONEOK Partners management will be held on Feb. 27, 2007, at 11 a.m. Eastern Standard Time (10 a.m. Central Standard Time). To participate in the call, dial 866-814-8448, pass code 1024620, or log on to the ONEOK Web site at http://www.oneok.com . If you are unable to participate in the conference call or the webcast, the replay will be archived and available on the company's Web site http://www.oneok.com for 30 days. A recording will be available by phone for seven days. The playback may be accessed at 866-837-8032, pass code 1024620.
ONEOK, Inc. is a diversified energy company. We are the general partner and own 45.7 percent of ONEOK Partners, L.P. (NYSE: OKS), one of the largest publicly traded limited partnerships, which is a leader in the gathering, processing, storage and transportation of natural gas in the U.S. and owns one of the nation's premier natural gas liquids (NGL) systems, connecting much of the natural gas and NGL supply in the Mid-Continent with key market centers. ONEOK is among the largest natural gas distributors in the United States, serving more than 2 million customers in Oklahoma, Kansas and Texas. Our energy services operation focuses primarily on marketing natural gas and related services throughout the U.S. ONEOK is a Fortune 500 company.
For information about ONEOK, Inc. visit the Web site: http://www.oneok.com .
Some of the statements contained and incorporated in this new 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; management's plans and objectives for future operations; business prospects; outcome of regulatory and legal 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 items identified in the preceding paragraph, the information concerning possible or assumed future results of our operations and other statements contained or incorporated in this Annual Report on Form 10-K identified by words such as "anticipate," "plan," "estimate," "expect," "forecast," "intend," "believe," "projection," "goal" or similar phrases.
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 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:
* actions by rating agencies concerning the credit ratings of ONEOK and
ONEOK Partners;
* the effects of weather and other natural phenomena on our operations,
including energy sales and prices and demand for pipeline capacity;
* competition from other U.S. and Canadian energy suppliers and
transporters as well as alternative forms of energy;
* the capital intensive nature of our businesses;
* the profitability of assets or businesses acquired by us;
* risks of marketing, trading and hedging activities, including the risks
of changes in energy prices or the financial condition of our
counterparties;
* economic climate and growth in the geographic areas in which we do
business;
* the risk of a significant slowdown in growth or decline in the U.S.
economy or the risk of delay in growth recovery in the U.S. economy;
* the uncertainty of estimates, including accruals and costs of
environmental remediation;
* the timing and extent of changes in commodity prices for natural gas,
NGLs, electricity and crude oil;
* the effects of changes in governmental policies and regulatory actions,
including changes with respect to income taxes, environmental
compliance, and authorized rates or recovery of gas and gas
transportation 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 and elsewhere;
* the risk of increased costs for insurance premiums, security or other
items as a consequence of terrorist attacks;
* 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 and bond 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, regulatory
actions and receipt of expected regulatory clearances involving the
OCC, KCC, Texas regulatory authorities or any other local, state or
federal regulatory body, including the FERC;
* our ability to access capital at competitive rates or on terms
acceptable to us;
* risks associated with adequate supply to our gas gathering and
processing, fractionation and pipeline facilities, including production
declines which outpace new drilling;
* the risk that material weaknesses or significant deficiencies in our
internal controls over financial reporting could emerge or that minor
problems could become significant;
* the impact of the outcome of pending and future litigation;
* the possible loss of gas distribution franchises or other adverse
effects caused by the actions of municipalities;
* the impact of unsold pipeline capacity being greater or less than
expected;
* the ability to market pipeline capacity on favorable terms, including
the affects of:
-- future demand for and prices of natural gas;
-- competitive conditions in the overall natural gas and electricity
markets;
-- availability of supplies of Canadian and United States natural gas;
-- availability of additional storage capacity;
-- weather conditions; and
-- competitive developments by Canadian and U.S. natural gas
transmission peers;
* our ability to successfully transfer ONEOK Partners' operations from
Omaha to Tulsa;
* performance of contractual obligations by our customers and shippers;
* the ability to recover operating costs and amounts equivalent to income
taxes, costs of property, plant and equipment and regulatory assets in
our state and FERC-regulated rates;
* timely receipt of approval by applicable governmental entities for
construction and operation of our pipeline projects and required
regulatory clearances;
* our ability to acquire all necessary rights-of-way permits and consents
in a timely manner, and our ability to promptly obtain all necessary
materials and supplies required for construction, and our ability to
construct pipelines without labor or contractor problems;
* our ability to promptly obtain all necessary materials and supplies
required for construction of gathering, processing and transportation
facilities;
* the composition and quality of the natural gas we gather and process in
our plants and transport on our pipelines;
* the efficiency of our plants in processing natural gas and extracting
NGLs;
* the mechanical integrity of facilities operated;
* demand for our services in the proximity of our facilities;
* the impact of potential impairment charges;
* our ability to control operating costs;
* the risk inherent in the use of information systems in our respective
businesses, implementation of new software and hardware, and the impact
on the timeliness of information for financial reporting;
* acts of nature, sabotage, terrorism or other similar acts causing
damage to our facilities or our suppliers' or shippers' facilities; and
* the risk factors listed in the reports we have filed and may file with
the SEC, which are incorporated by reference.
These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other factors could also have material adverse effects on our future results. These and other risks are described in greater detail in Item 1A, Risk Factors, in the company's Annual Report on Form 10-K. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Other than as required under securities laws, we undertake no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.
Analyst Contact: Dan Harrison
918-588-7950
Media Contact: Megan Washbourne
918-588-7572
OKE-FE
ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
Quarters Ended Years Ended
December 31, December 31,
(Unaudited) 2006 2005 2006 2005
(Thousands of dollars, except per share amounts)
Revenues
Operating revenues,
excluding energy
trading revenues $3,063,930 $4,694,536 $11,889,307 $12,663,550
Energy trading revenues,
net 3,750 1,657 6,797 12,680
Total Revenues 3,067,680 4,696,193 11,896,104 12,676,230
Cost of sales and fuel 2,596,571 4,287,732 10,176,510 11,338,076
Net Margin 471,109 408,461 1,719,594 1,338,154
Operating Expenses
Operations and
maintenance 191,548 157,546 660,291 552,531
Depreciation, depletion
and amortization 56,654 48,374 235,543 183,394
General taxes 20,321 16,403 78,086 67,464
Total Operating Expenses 268,523 222,323 973,920 803,389
Gain on Sale of Assets --- 264,207 115,892 264,207
Operating Income 202,586 450,345 861,566 798,972
Equity earnings (losses)
from investments 23,133 (5,723) 95,883 2,538
Other income 7,653 3,425 29,388 11,650
Other expense 12,076 11,796 24,671 19,883
Interest expense 63,077 55,926 239,725 147,608
Income before Minority
Interests and Income
Taxes 158,219 380,325 722,441 645,669
Minority interests in
income of consolidated
subsidiaries 37,380 --- 222,000 ---
Income taxes 46,259 140,643 193,764 242,521
Income from Continuing
Operations 74,580 239,682 306,677 403,148
Discontinued operations,
net of taxes:
Income (loss) from
operations of
discontinued
components, net of tax 45 (262) (365) (6,180)
Gain on sale of
discontinued component,
net of tax --- (1,778) --- 149,577
Net Income $74,625 $237,642 $306,312 $546,545
Earnings Per Share of
Common Stock
Basic:
Earnings per share from
continuing operations $0.68 $2.46 $2.74 $4.01
Earnings (loss) per
share from operations
of discontinued
components, net of tax --- --- --- (0.06)
Earnings per share from
gain on sale
of discontinued
component, net of tax --- (0.02) --- 1.49
Net Earnings Per Share,
Basic $0.68 $2.44 $2.74 $5.44
Diluted:
Earnings per share from
continuing operations $0.66 $2.32 $2.68 $3.73
Earnings (loss) per
share from operations
of discontinued
components, net of tax --- --- --- (0.06)
Earnings per share from
gain on sale
of discontinued
component, net of tax --- (0.02) --- 1.39
Net Earnings Per Share,
Diluted $0.66 $2.30 $2.68 $5.06
Average Shares of Common
Stock (Thousands)
Basic 110,257 97,443 112,006 100,536
Diluted 112,705 103,361 114,477 108,006
Dividends Declared Per
Share of Common Stock $0.32 $0.28 $1.22 $1.09
ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(Unaudited) 2006 2005
Assets (Thousands of dollars)
Current Assets
Cash and cash equivalents $68,268 $7,915
Trade accounts and notes receivable,
net 1,348,490 1,961,208
Gas and natural gas liquids in
storage 925,194 911,393
Commodity exchanges 167,072 133,159
Energy marketing and risk management
assets 401,670 399,439
Deposits 100,163 150,608
Other current assets 227,743 234,666
Total Current Assets 3,238,600 3,798,388
Property, Plant and Equipment
Property, plant and equipment 6,724,759 5,575,365
Accumulated depreciation, depletion
and amortization 1,879,838 1,581,138
Net Property, Plant and Equipment 4,844,921 3,994,227
Deferred Charges and Other Assets
Goodwill and intangible assets 1,051,440 683,211
Energy marketing and risk management
assets 91,133 55,713
Investments in unconsolidated
affiliates 771,507 245,009
Other assets 507,120 471,289
Total Deferred Charges and Other
Assets 2,421,200 1,455,222
Assets of Discontinued Component --- 63,911
Total Assets $10,504,721 $9,311,748
ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(Unaudited) 2006 2005
Liabilities and Shareholders'
Equity (Thousands of dollars)
Current Liabilities
Current maturities of long-term debt $18,159 $6,546
Notes payable 6,000 1,541,500
Accounts payable 1,076,954 1,514,620
Commodity exchanges and imbalances 290,090 238,176
Energy marketing and risk
management liabilities 306,658 449,085
Other 366,316 438,009
Total Current Liabilities 2,064,177 4,187,936
Long-term Debt, excluding current
maturities 4,030,855 2,024,070
Deferred Credits and Other Liabilities
Deferred income taxes 707,444 603,835
Energy marketing and risk
management liabilities 137,312 348,529
Other deferred credits 548,330 350,157
Total Deferred Credits and Other
Liabilities 1,393,086 1,302,521
Liabilities of Discontinued Component --- 2,464
Commitments and Contingencies
Minority Interests in Consolidated
Subsidiaries 800,645 ---
Shareholders' Equity
Common stock, $0.01 par value:
authorized 300,000,000 shares; issued
120,333,908 shares and outstanding
110,678,499 shares at December 31, 2006;
issued 107,973,436 shares and
outstanding 97,654,697 shares at
December 31, 2005 1,203 1,080
Paid in capital 1,258,717 1,044,283
Unearned compensation --- (105)
Accumulated other comprehensive
income (loss) 39,532 (56,991)
Retained earnings 1,256,759 1,085,845
Treasury stock, at cost: 9,655,409
shares at December 31, 2006 and
10,318,739 shares at December 31, 2005 (340,253) (279,355)
Total Shareholders' Equity 2,215,958 1,794,757
Total Liabilities and Shareholders'
Equity $10,504,721 $9,311,748
ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(Unaudited) 2006 2005
Operating Activities (Thousands of dollars)
Net income $306,312 $546,545
Depreciation, depletion, and
amortization 235,543 183,394
Impairment expense for discontinued
component --- 52,226
Gain on sale of discontinued
component, net --- (149,577)
Gain on sale of assets (115,892) (264,207)
Minority interest in income of
consolidated subsidiaries 222,000 ---
Distributions received from
unconsolidated affiliates 123,427 10,983
Income from equity investments, net (95,883) (2,538)
Deferred income taxes 115,384 16,372
Stock-based compensation expense 16,499 11,842
Allowance for doubtful accounts 9,056 16,329
Changes in assets and liabilities
(net of acquisition and disposition
effects):
Accounts and notes receivable 649,415 (733,367)
Inventories (14,107) (320,632)
Unrecovered purchased gas costs (73,534) (8,943)
Commodity exchanges 18,001 106,775
Deposits 50,445 (118,214)
Regulatory assets 15,441 (6,357)
Accounts payable and accrued
liabilities (499,996) 518,406
Energy marketing and risk management
assets and liabilities (139,488) 223,965
Other assets and liabilities 50,767 (247,296)
Cash Provided by (Used in) Operating
Activities 873,390 (164,294)
Investing Activities
Acquisitions (149,006) (1,327,907)
Capital expenditures (376,306) (250,493)
Proceeds from sale of discontinued
component 53,000 519,279
Proceeds from sale of assets 298,964 556,434
Increase in cash for previously
unconsolidated subsidiaries 1,334 ---
Decrease in cash for previously
consolidated subsidiaries (22,039) ---
Change in short-term investments (31,125) ---
Changes in other investments, net (6,608) (22,604)
Other investing activities (5,565) (6,862)
Cash Used in Investing Activities (237,351) (532,153)
Financing Activities
Repayment of notes payable, net (641,500) (2,500)
Short-term financing payments (2,634,000) (100,000)
Short-term financing borrowings 1,533,500 1,000,000
Issuance of debt, net of issuance
costs 1,397,328 798,792
Long-term debt financing costs (12,003) ---
Termination of interest rate swaps --- (22,565)
Payment of debt (44,359) (636,288)
Equity unit conversion 402,448 ---
Repurchase of common stock (281,444) (233,074)
Issuance of common stock 10,829 4,672
Dividends paid (135,451) (110,157)
Distributions to minority interests (165,283) ---
Other financing activities (48,841) (3,976)
Cash Provided by (Used in) Financing
Activities (618,776) 694,904
Change in Cash and Cash Equivalents 17,263 (1,543)
Cash and Cash Equivalents at
Beginning of Period 7,915 9,458
Effect of Accounting Change on Cash
and Cash Equivalents 43,090 ---
Cash and Cash Equivalents at End of
Period $68,268 $7,915
ONEOK, Inc. and Subsidiaries
INFORMATION AT A GLANCE
Quarters Ended Years Ended
December 31, December 31,
(Unaudited) 2006 2005 2006 2005
(Millions of dollars)
ONEOK Partners (a)
Net margin $217.0 $155.3 $841.2 $546.8
Depreciation, depletion and
amortization $27.8 $20.5 $122.0 $67.4
Operating income $90.5 $334.2 $510.6 $523.4
Total gas gathered (BBtu/d) 1,182 973 1,168 1,077
Total gas processed (BBtu/d) 1,010 1,049 988 1,117
Natural gas liquids gathered
(MBbl/d) 211 188 (b) 206 191 (b)
Natural gas liquids sales
(MBbl/d) 222 212 216 207
Natural gas liquids fractionated
(MBbl/d) 314 276 (b) 313 292 (b)
Natural gas liquids transported
(MBbl/d) 51 175 (b) 200 187 (b)
Natural gas transported (MMcf/d) 1,181 1,391 2,226 1,333
Natural gas sales (BBtu/d) 297 301 313 334
Capital expenditures $87.0 $16.9 $201.7 $56.3
Realized composite NGL sales
prices ($/gallon) $0.87 $1.04 $0.93 $0.89
Realized condensate sales price
($/Bbl) $60.79 $56.59 $57.84 $52.69
Realized natural gas sales price
($/MMBtu) $5.83 $9.87 $6.31 $7.30
Realized gross processing spread
($/MMBtu) $4.51 $1.94 $5.05 $2.77
Distribution
Net margin $177.8 $174.9 $599.8 $587.7
Depreciation, depletion and
amortization $28.2 $27.1 $110.9 $113.4
Operating income $48.9 $53.1 $117.5 $113.9
Customers per employee 726 698 713 689
Capital expenditures $44.2 $40.7 $159.0 $143.8
Natural gas volumes (MMcf)
Gas Sales 59,823 59,450 178,395 199,816
Transportation 50,810 67,482 200,828 252,180
Natural gas margins
Gas Sales $148.0 $145.7 $489.9 $479.7
Transportation $21.4 $21.9 $76.9 $80.1
Energy Services
Net margin $75.6 $78.9 $273.8 $206.4
Depreciation, depletion and
amortization $0.5 $0.6 $2.1 $2.1
Operating income $60.9 $68.0 $229.2 $165.6
Natural gas marketed (Bcf) 293 312 1,132 1,191
Natural gas gross margin ($/Mcf) $0.22 $0.21 $0.22 $0.14
Physically settled volumes (Bcf) 586 628 2,288 2,387
Capital expenditures $--- $--- $--- $0.2
(a) - 2005 includes only our legacy operations and does not include
results of ONEOK Partners.
(b) - Data presented for 2005 represents the per day results of
operations from July 1, 2005.
Attachment A
ONEOK, Inc. and Subsidiaries
Consolidating Income Statement
Quarter Ended December 31, 2006
ONEOK Consolidating
(Unaudited) ONEOK Partners Entries Consolidated
(Millions of dollars)
Operating Income
Distribution $49 --- --- $49
Energy Services 61 --- --- 61
ONEOK Partners --- 91 --- 91
Other 2 --- --- 2
Operating Income 112 91 --- 203
Equity in earnings of
ONEOK Partners 43 --- (43) ---
Other income (expense) (7) 25 --- 18
Interest expense (29) (34) --- (63)
Minority interest --- --- (37) (37)
Income Taxes (44) (2) --- (46)
Net Income $75 $80 $(80) $75
Year Ended December 31, 2006
ONEOK Consolidating
(Unaudited) ONEOK Partners Entries Consolidated
(Millions of dollars)
Operating Income
Distribution $118 $--- $--- $118
Energy Services 229 --- --- 229
ONEOK Partners --- 511 --- 511
Other 4 --- --- 4
Operating Income 351 511 --- 862
Equity in earnings of
ONEOK Partners 225 --- (225) ---
Other income (expense) 2 98 --- 100
Interest expense (106) (134) --- (240)
Minority interest --- (2) (220) (222)
Income Taxes (166) (28) --- (194)
Net Income $306 $445 $(445) $306
ONEOK, Inc. and Subsidiaries
REGULATION G GAAP RECONCILIATION
ONEOK, Inc. Stand-Alone Cash Flow, before Changes in Working Capital
Year Ended
(Unaudited) December 31, 2006
(Millions of dollars)
Net income $306.3
Depreciation, depletion and amortization 113.5
Gain on sale of assets (110.3)
Distributions received from unconsolidated
affiliates 145.0
Income from equity investments, net (189.8)
Deferred income taxes 115.4
Stock based compensation expense 16.5
Allowance for doubtful accounts 9.1
Cash flow, before changes in working
capital (a) $405.7
(a) ONEOK, Inc. stand-alone cash flow, before changes in working capital,
is a non-GAAP financial measure used by management, industry
analysts, investors, lenders, and rating agencies to assess the
financial performance and the operating results of our fundamental
business activities. ONEOK, Inc. stand-alone cash flow, before
changes in working capital, should not be considered in isolation or
as a substitute for net income, income from operations, or other
measures of cash flow.
SOURCE ONEOK, Inc.
analysts, Dan Harrison, +1-918-588-7950, or media, Megan Washbourne, +1-918-588-7572,
both of ONEOK, Inc.
www.oneok.com