What is the primary driver behind the significant increase in operating revenues?

The primary drivers for the substantial increase in operating revenues are strategic acquisitions completed in 2000 (notably from Kinder Morgan and Dynegy) and strong natural gas prices, which positively impacted the Production segment and overall sales volumes.

What are the major risks and contingencies facing ONEOK?

ONEOK is facing significant legal proceedings stemming from the terminated acquisition of Southwest Gas Corporation. Additionally, the Oklahoma Corporation Commission (OCC) staff has recommended suspending ONG's unrecovered purchased gas cost (UPGC) clause, which could prevent the recovery of approximately $72.1 million. The company is actively defending against these matters and believes they will not have a material adverse effect.

How has the company's debt structure changed?

The company's capitalization structure shifted towards a higher proportion of debt, with debt representing 60% of the capitalization at March 31, 2001, compared to 64% at December 31, 2000. Long-term debt increased to $1.73 billion, partly to finance acquisitions. The company also issued $400 million in notes in April 2001 to pay off short-term debt, which was subsequently reclassified.

What is the impact of adopting new accounting standards?

ONEOK adopted SFAS 133 (Accounting for Derivative Instruments and Hedging Activities) effective January 1, 2001. This requires derivative instruments to be recorded at fair value. The company also adopted EITF 98-10 for energy trading activities, which mandates mark-to-market accounting for these contracts. These adoptions, particularly for derivative instruments, had an impact on the consolidated statements, including a cumulative effect charge on adoption of SFAS 133.

OKE 10-Q Quarterly Report Q1 FY2001 — Revenue, Net Income, EPS

Summary

ONEOK Inc.'s first quarter 2001 results show a significant increase in operating revenues compared to the prior year, primarily driven by strategic acquisitions in 2000 and strong natural gas prices. Net income saw a modest increase, with earnings per share remaining largely stable. The company's balance sheet reflects substantial growth in assets, particularly in property, plant, and equipment, and a notable increase in long-term debt to finance these expansions. Investors should note the ongoing legal proceedings related to the terminated Southwest Gas Corporation acquisition, which could have a material adverse effect on the company. Additionally, a recent recommendation by the Oklahoma Corporation Commission (OCC) staff to suspend ONG's unrecovered purchased gas cost (UPGC) clause presents a potential financial risk if the company is unable to recover approximately $72.1 million in costs. The company is actively defending itself in both matters and believes these issues will not have a material adverse impact.

Key Highlights

1Operating revenues surged to $2,956 million from $821 million in the same period last year, largely due to acquisitions and higher natural gas prices.
2Net income increased to $64.9 million ($1.08 diluted EPS) from $63.0 million ($1.07 diluted EPS) in Q1 2000.
3Total assets grew significantly, reaching $6.3 billion from $3.57 billion at the end of the prior fiscal year, primarily due to acquisitions and increases in property, plant, and equipment.
4Long-term debt increased to $1.73 billion from $1.34 billion, reflecting financing for growth initiatives.
5The company faces significant legal proceedings related to the terminated Southwest Gas Corporation acquisition, with a trial set for November 2001.
6A potential financial risk exists with the Oklahoma Corporation Commission (OCC) staff recommending suspension of ONG's unrecovered purchased gas cost (UPGC) clause, potentially impacting $72.1 million in costs.
7ONEOK adopted SFAS 133 (Accounting for Derivative Instruments and Hedging Activities) on January 1, 2001, and EITF 98-10 (Accounting for Energy Trading and Risk Management Activities) on January 1, 2000.

ONEOK INC /NEW/ Quarterly Report for Q1 Ended Mar 31, 2001

Summary

Key Highlights

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