OG&E 2010 Annual Report Download - page 42

Download and view the complete annual report

Please find page 42 of the 2010 OG&E annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 123

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

effective February 1, 2011. At the end of the new lease term, which is February 1, 2016, 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 fair 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 $24.0 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 expired with respect to 135 railcars on November 2, 2009 and was not replaced. The
lease agreement with respect to the remaining 135 railcars expired on March 5, 2010 and is now continuing on a month-to-month basis
with a 30-day notice required by either party to terminate the agreement.
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 Resources
Cash Flows
Year Ended December 31 (In millions) 2010 2009 2008
Net cash provided from operating activities $ 465.7 $ 580.2 $ 206.4
Net cash used in investing activities (602.1) (599.5) (839.6)
Net cash provided from (used in) financing activities 136.4 (31.4) 683.9
The decrease of $114.5 million, or 19.7 percent, in net cash provided from operating activities in 2010 as compared to 2009
was primarily due to higher fuel refunds in 2010 as compared to 2009. This decrease in net cash provided from operating activities
was partially offset by:
Ÿ an income tax refund received in February 2010 related to a carry back of the 2008 tax loss resulting from a change
in tax method of accounting for capitalization of repair expenditures; and
Ÿ cash received in 2010 from the implementation of rate increases and riders.
The increase of $373.8 million in net cash provided from operating activities in 2009 as compared to 2008 was primarily
due to:
Ÿ higher fuel recoveries in 2009 as compared to 2008;
Ÿ cash received in 2009 from the implementation of the Redbud Plant rider in the third quarter of 2008;
Ÿ cash received in 2009 from the implementation of the Oklahoma rate increase in August 2009; and
Ÿ payments made by the Company in the first quarter of 2008 related to the December 2007 ice storm.
There was an increase of $2.6 million in net cash used in investing activities in 2010 as compared to 2009. The decrease of
$240.1 million, or 28.6 percent, in net cash used in investing activities in 2009 as compared to 2008 primarily related to higher levels
of capital expenditures in 2008 mostly related to the purchase of the Redbud Plant in September 2008 partially offset by capital
expenditures in 2009 related to OU Spirit and Windspeed being constructed by the Company.
The increase of $167.8 million in net cash provided from financing activities in 2010 as compared to 2009 was primarily
due to the Company using the proceeds received from the issuance of $250 million of long-term debt in June 2010 to make payments
to OGE Energy partially offset by dividends paid in 2010.
The decrease of $715.3 million in net cash provided from financing activities in 2009 as compared to 2008 was primarily
due to:
Ÿ proceeds received from the issuances of $700 million in long-term debt in 2008; and
Ÿ a capital contribution from OGE Energy to fund a portion of the purchase of the Redbud Plant in 2008.
These decreases in net cash provided from financing activities were partially offset by a decrease in short-term debt
primarily due to proceeds received from the issuances of long-term debt which were used to repay short-term borrowings in 2008.
35