OG&E 2011 Annual Report Download - page 61

Accrued Vacation
The Company accrues vacation pay monthly by establishing a liability
for vacation earned. Vacation may be taken as earned and is charged
against the liability. At the end of each year, the liability represents the
amount of vacation earned, but not taken.
Accumulated Other Comprehensive Income (Loss)
The following table summarizes the components of accumulated other
comprehensive loss at December 31, 2011 and 2010 attributable to
OGE Energy. At both December 31, 2011 and 2010, there was no accu-
mulated other comprehensive loss related to Enogex’s noncontrolling
interest in Atoka.
(In millions, December 31) 2011 2010
Pension plan and restoration
of retirement income plan:
Net loss $(42.1) $(31.1)
Prior service cost (0.1) (0.5)
Postretirement plans:
Net loss (15.4) (13.6)
Prior service cost 9.0 –
Net transition obligation (0.1) (0.3)
Deferred commodity contracts hedging losses 3.3 (19.5)
Deferred interest rate swaps hedging losses (0.7) (1.0)
Total accumulated other comprehensive loss (46.1) (66.0)
Less: Accumulated other comprehensive loss
attributable to noncontrolling interests (5.5) (5.8)
Accumulated other comprehensive loss,
net of tax $(40.6) $(60.2)
Of the deferred hedging losses at December 31, 2011, $4.9 million
are expected to be recognized into earnings during 2012.
Pension Plan, Restoration of Retirement Income
Plan and Postretirement Plans
The amounts in accumulated other comprehensive loss at December 31,
2011 that are expected to be recognized as components of net periodic
benefit cost in 2012 are as follows:
(In millions)
Pension plan and restoration
of retirement income plan:
Net loss $«2.7
Prior service cost 0.3
Postretirement plans:
Net loss 1.9
Prior service cost (1.8)
Net transition obligation 0.1
Total, net of tax $«3.2
Environmental Costs
Accruals for environmental costs are recognized when it is probable
that a liability has been incurred and the amount of the liability can be
reasonably estimated. Costs are charged to expense or deferred as a
regulatory asset based on expected recovery from customers in future
rates, if they relate to the remediation of conditions caused by past
operations or if they are not expected to mitigate or prevent contamina-
tion from future operations. Where environmental expenditures relate to
facilities currently in use, such as pollution control equipment, the costs
may be capitalized and depreciated over the future service periods.
Estimated remediation costs are recorded at undiscounted amounts,
independent of any insurance or rate recovery, based on prior experi-
ence, assessments and current technology. Accrued obligations are
regularly adjusted as environmental assessments and estimates are
revised, and remediation efforts proceed. For sites where OG&E or
Enogex have been designated as one of several potentially responsible
parties, the amount accrued represents OG&E’s or Enogex’s estimated
share of the cost. The Company has less than $0.1 million in accrued
environmental liabilities at both December 31, 2011 and 2010.
Reclassifications
Certain prior year amounts have been reclassified on the Consolidated
Statements of Income for impairment of assets and on the Consolidated
Balance Sheet for intangible assets to conform to the 2011 presentation.
2. Accounting Pronouncements
In December 2011, the Financial Accounting Standards Board issued
"Balance Sheet: Disclosures about Offsetting Assets and Liabilities."
The new standard requires entities to disclose information about finan-
cial instruments and derivative instruments that are either offset on the
balance sheet or are subject to a master netting arrangement, including
providing both gross information and net information for recognized
assets and liabilities, the net amounts presented on an entity’s balance
sheet and a description of the rights of setoff associated with these
assets and liabilities. The new standard is applicable for all entities that
have financial instruments and derivative instruments shown using a
net presentation on an entity’s balance sheet or are subject to a master
netting arrangement. The new standard is effective for interim and
annual reporting periods for fiscal years beginning on or after January
1, 2013 and should be applied retrospectively for all periods presented.
The Company plans to adopt this new standard effective January 1,
2013 and will provide any additional disclosures necessary to comply
with the new standard.
In December 2011, the Financial Accounting Standards Board
issued "Comprehensive Income: Deferral of the Effective Date for
Amendments to the Presentation of Reclassifications of Items Out of
Accumulated Other Comprehensive Income in Accounting Standards
OGE Energy Corp. 59