Summary
ONEOK Inc. (OKE) filed an 8-K on February 27, 2003, reporting its 2003 earnings guidance and significant accounting changes. The company projects earnings per share between $2.40 and $2.45, excluding the impact of EITF 02-3. This new accounting standard will shift certain energy-related contracts from mark-to-market accounting to an accrual basis, necessitating a pre-tax charge of $231 million in the first quarter of 2003. Additionally, ONEOK is implementing a new shareholder agreement with Westar Energy, which will eliminate the effect of EITF Topic D-95 for the majority of 2003. This change means that for the remaining 11 months of the year, earnings will be calculated using the traditional dilutive earnings method, rather than under the specific requirements of Topic D-95. Investors should note the significant one-time charge related to the accounting change and the shift in earnings calculation methodology.
Key Highlights
- 1ONEOK announced its 2003 earnings per share guidance to be in the range of $2.40 to $2.45, excluding the impact of EITF 02-3.
- 2The company will transition from mark-to-market accounting to accrual accounting for certain energy-related contracts due to EITF 02-3.
- 3A significant pre-tax charge of $231 million is anticipated in the first quarter of 2003 as a result of adopting EITF 02-3.
- 4A new shareholder agreement with Westar Energy will be implemented, effective February 2003.
- 5The new agreement effectively eliminates the impact of EITF Topic D-95 for 11 months of 2003.
- 6Earnings calculations for the majority of 2003 will revert to the traditional dilutive earnings method.