What was the primary driver for the significant increase in revenue for the six months ended June 30, 2003?

The primary driver for the substantial revenue increase was the acquisition of Texas gas distribution assets in January 2003. These assets, which serve approximately 535,000 customers, significantly expanded the company's distribution footprint and contributed to higher operating revenues.

What is the 'cumulative effect of changes in accounting principle' that significantly impacted net income?

This charge relates to the rescission of EITF 98-10, which changed accounting standards for energy trading and risk management activities. As a result, energy trading inventories previously marked-to-market are now carried at the lower of cost or market, and certain energy contracts are accounted for on an accrual basis. This accounting change resulted in a significant non-cash charge of $143,885 thousand ($141.8 million net of tax) in the first quarter of 2003.

How did the sale of the Production segment's assets affect the company's financial position?

The sale of approximately 70% of the natural gas and oil producing properties of the Production segment for $294 million in January 2003 resulted in a pre-tax gain of approximately $59 million (after-tax gain of $38.4 million). This transaction generated significant cash and allowed the company to focus on other strategic areas, with the results of these sold properties being accounted for as discontinued operations.

What is the company's outlook regarding its regulated utility rates, specifically concerning Kansas Gas Service (KGS)?

Kansas Gas Service (KGS) filed a rate case in January 2003 seeking an increase of approximately $76 million. The KCC staff recommended a revenue requirement of $28.7 million, while intervenors proposed amounts between $31 million and $59 million. A final order from the KCC was expected by September 29, 2003. The company noted that if recovery of certain regulatory assets were denied, a write-off might be required.

OKE 10-Q Quarterly Report Q2 FY2003 — Revenue, Net Income, EPS

Summary

ONEOK Inc. reported its quarterly results for the period ending June 30, 2003. The company experienced a notable shift in its financial performance compared to the prior year, largely influenced by significant acquisitions and changes in accounting for energy trading activities. Revenue from continuing operations saw a substantial increase, driven by the acquisition of Texas distribution assets, which are expected to provide a stable revenue stream. However, the company also reported a significant net income decrease for the six months ended June 30, 2003, largely due to a cumulative effect of accounting changes related to the rescission of EITF 98-10, which resulted in a substantial non-cash charge. Despite this, the underlying operational performance in segments like Distribution and Gathering & Processing showed positive trends, bolstered by strategic acquisitions and higher commodity prices. Investors should pay close attention to the integration of the Texas assets and the ongoing impact of accounting standard changes on reported earnings.

Key Highlights

1Revenue from continuing operations increased significantly to $1,372,293 thousand for the six months ended June 30, 2003, up from $916,073 thousand in the prior year, primarily due to the acquisition of Texas distribution assets.
2Net income available for common stock decreased to $24,770 thousand for the six months ended June 30, 2003, from $89,431 thousand in the prior year.
3The company recorded a cumulative effect of accounting changes (rescission of EITF 98-10) resulting in a non-cash charge of $143,885 thousand ($141.8 million net of tax) in the first quarter of 2003.
4Acquisition of Texas gas distribution assets for approximately $432.9 million in January 2003, adding significant customer base and stable revenue.
5The company sold approximately 70% of its Production segment's natural gas and oil producing properties for $294 million, recognizing a gain of $38.4 million net of tax.
6Operating income for the six months ended June 30, 2003, increased to $294,446 thousand from $220,756 thousand in the prior year, driven by higher commodity prices and acquisitions.
7Cash and cash equivalents increased to $157,993 thousand at June 30, 2003, from $73,522 thousand at December 31, 2002, reflecting strong cash flow from operations and financing activities.

ONEOK INC /NEW/ Quarterly Report for Q2 Ended Jun 30, 2003

Summary

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