OG&E 2012 Annual Report Download - page 70

unremarketed bonds. As OG&E has both the intent and ability to
refinance the bonds on a long-term basis and such ability is supported
by an ability to consummate the refinancing, the bonds are classified
as long-term debt in the Company’s Consolidated Financial Statements.
OG&E believes that it has sufficient liquidity to meet these obligations.
Enogex Term Loan Agreement
On August 2, 2012, Enogex entered into a $250 million, three-year term
loan agreement with a maturity date of August 2, 2015. The loan was
used to fund capital expenditures and for working capital purposes.
Long-Term Debt Maturities
Maturities of the Company’s long-term debt during the next five years
consist of $0.2 million, $300.2 million, $250.2 million, $110.2 million and
$125.2 million in years 2013, 2014, 2015, 2016 and 2017, respectively.
The Company has previously incurred costs related to debt
refinancings. Unamortized loss on reacquired debt is classified as a
Non-Current Regulatory Asset, unamortized debt expense is classified
as Deferred Charges and Other Assets and the unamortized premium
and discount on long-term debt is classified as Long-Term Debt, respec-
tively, in the Consolidated Balance Sheets and are being amortized over
the life of the respective debt.
13. Short-Term Debt and Credit Facilities
The Company borrows on a short-term basis, as necessary, by the
issuance of commercial paper and by borrowings under its revolving
credit agreements. The short-term debt balance was $430.9 million
and $277.1 million at December 31, 2012 and 2011, respectively, at
a weighted-average interest rate of 0.43 percent and 0.48 percent,
respectively. The following table provides information regarding the
Company’s revolving credit agreements and available cash at
December 31, 2012.
Weighted-
Aggregate Amount Average
(In millions) Commitment Outstanding (A) Interest Rate Maturity
Revolving credit agreements
and available cash
OGE Energy(B) $÷«750.0 $430.9 0.43% 12/13/16
OG&E(C) 400.0 2.2 0.53% 12/13/16
Enogex LLC(D) 400.0 – –% 12/13/16
1,550.0 433.1 0.43%
Cash 1.8 N/A N/A N/A
Total $1,551.8 $433.1 0.43%
(A) Includes direct borrowings under the revolving credit agreements, commercial paper borrowings
and letters of credit at December 31, 2012.
(B) This bank facility is available to back up OGE Energy’s commercial paper borrowings and to
provide revolving credit borrowings. This bank facility can also be used as a letter of credit facility.
At December 31, 2012, there was $430.9 million in outstanding commercial paper borrowings.
(C) This bank facility is available to back up OG&E’s commercial paper borrowings and to provide
revolving credit borrowings. This bank facility can also be used as a letter of credit facility. At
December 31, 2012, there was $2.2 million supporting letters of credit.
(D) This bank facility is available to provide revolving credit borrowings for Enogex LLC. As Enogex
LLC’s credit agreement matures on December 13, 2016, along with its intent in utilizing its
credit agreement, borrowings thereunder are classified as long-term debt in the Company’s
Consolidated Balance Sheets.
(E) Represents the weighted-average interest rate for the outstanding borrowings under the revolving
credit agreements, commercial paper borrowings and letters of credit.
The Company’s ability to access the commercial paper market
could be adversely impacted by a credit ratings downgrade or major
market disruptions. Pricing grids associated with the Company’s credit
facilities could cause annual fees and borrowing rates to increase if
an adverse rating impact occurs. The impact of any future downgrade
could include an increase in the costs of the Company’s short-term
borrowings, but a reduction in the Company’s credit ratings would not
result in any defaults or accelerations. Any future downgrade could also
lead to higher long-term borrowing costs and, if below investment grade,
would require the Company to post collateral or letters of credit.
OG&E must obtain regulatory approval from the FERC in order
to borrow on a short-term basis. OG&E has the necessary regulatory
approvals to incur up to $800 million in short-term borrowings at any
one time for a two-year period beginning January 1, 2013 and ending
December 31, 2014.
14. Retirement Plans and Postretirement Benefit Plans
Pension Plan and Restoration of Retirement Income Plan
In October 2009, the Company’s Pension Plan and the Company’s
qualified defined contribution retirement plan (“401(k) Plan”) were
amended, effective January 1, 2010 to provide eligible employees a
choice to select a future retirement benefit combination from the
Company’s Pension Plan and the Company’s 401(k) Plan.
Employees hired or rehired on or after December 1, 2009 do not
participate in the Pension Plan but are eligible to participate in the
401(k) Plan where, for each pay period, the Company contributes to
the 401(k) Plan, on behalf of each participant, 200 percent of the
participant’s contributions up to five percent of compensation.
It is the Company’s policy to fund the Pension Plan on a current
basis based on the net periodic pension expense as determined by the
Company’s actuarial consultants. During 2012 and 2011, OGE Energy
made contributions to its Pension Plan of $35 million and $50 million,
respectively, to help ensure that the Pension Plan maintains an adequate
funded status. Such contributions are intended to provide not only for
benefits attributed to service to date, but also for those expected to be
earned in the future. During 2013, OGE Energy expects to contribute
up to $35 million to its Pension Plan. The expected contribution to the
Pension Plan during 2013 would be a discretionary contribution, antici-
pated to be in the form of cash, and is not required to satisfy the minimum
regulatory funding requirement specified by the Employee Retirement
Income Security Act of 1974, as amended. OGE Energy could be required
to make additional contributions if the value of its pension trust and
postretirement benefit plan trust assets are adversely impacted by a
major market disruption in the future.
The Company provides a Restoration of Retirement Income Plan
to those participants in the Company’s Pension Plan whose benefits
are subject to certain limitations of the Internal Revenue Code of 1986
(“Code”). Participants in the Restoration of Retirement Income Plan
receive the same benefits that they would have received under the
Company’s Pension Plan in the absence of limitations imposed by
the Federal tax laws. The Restoration of Retirement Income Plan is
intended to be an unfunded plan.
68 OGE Energy Corp.
(E)
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