OG&E 2009 Annual Report Download - page 47

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The balance of Accumulated Deferred Income Taxes was approximately $931.2 million and $722.8 million at December 31,
2009 and 2008, respectively, an increase of approximately $208.4 million, or 28.8 percent, primarily due to accelerated bonus tax
depreciation which resulted in higher Federal and state deferred tax accruals.
The balance of Accrued Removal Obligations, Net was approximately $168.2 million and $150.9 million at December 31,
2009 and 2008, respectively, an increase of approximately $17.3 million, or 11.5 percent, primarily due to the net removal accrual
exceeding actual removal expense net of salvage.
The balance of Retained Earnings was approximately $1,066.3 million and $865.9 million at December 31, 2009 and 2008,
respectively, an increase of approximately $200.4 million, or 23.1 percent. See “Statement of Changes in Stockholder’s Equity” for a
discussion of changes in Retained Earnings.
Off-Balance Sheet Arrangement
Railcar Lease Agreement
At December 31, 2009, the Company had a noncancellable operating lease with purchase options, covering 1,462 coal hopper
railcars to transport coal from Wyoming to the Company’s coal-fired generation units. Rental payments are charged to Fuel Expense
and are recovered through the Company’s tariffs and fuel adjustment clauses. At the end of the lease term, which is January 31, 2011,
the Company has the option to either purchase the railcars at a stipulated fair market value or renew the lease. If the Company
chooses not to purchase the railcars or renew the lease agreement and the actual value of the railcars is less than the stipulated fair
market value, the Company would be responsible for the difference in those values up to a maximum of approximately $31.5 million.
On February 10, 2009, the Company executed a short-term lease agreement for 270 railcars in accordance with new coal
transportation contracts with BNSF Railway and Union Pacific. These railcars were needed to replace railcars that have been taken
out of service or destroyed. The lease agreement expires with respect to 135 railcars on March 5, 2010. The lease agreement with
respect to the remaining 135 railcars expired on November 2, 2009 and was not replaced.
The Company is also required to maintain all of the railcars it has under lease to transport coal from Wyoming and has
entered into agreements with Progress Rail Services and WATCO, both of which are non-affiliated companies, to furnish this
maintenance.
Liquidity and Capital Requirements
The Company’s primary needs for capital are related to acquiring or constructing new facilities and replacing or expanding
existing facilities in its electric utility business. Other working capital requirements are expected to be primarily related to maturing
debt, operating lease obligations, hedging activities, delays in recovering unconditional fuel purchase obligations, fuel clause under
and over recoveries and other general corporate purposes. The Company generally meets its cash needs through a combination of
cash generated from operations, short-term borrowings (through a combination of bank borrowings, commercial paper and borrowings
from OGE Energy) and permanent financings. See “Future Sources of Financing – Short-Term Debt” for information regarding the
Company’s revolving credit agreement and commercial paper.
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