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14 OGE Energy Corp.
Results of Operations
The following discussion and analysis presents factors that affected
the Company’s consolidated results of operations for the years ended
December 31, 2013, 2012 and 2011 and the Company’s consolidated
financial position at December 31, 2013 and 2012. The following infor-
mation should be read in conjunction with the Consolidated Financial
Statements and Notes thereto. Known trends and contingencies of a
material nature are discussed to the extent considered relevant.
(In millions, except per share data,
year ended December 31) 2013 2012 2011
Operating income $÷553.5 $÷676.9 $÷646.7
Net income attributable to OGE Energy $÷387.6 $÷355.0 $÷342.9
Basic average common
shares outstanding 198.2 197.1 195.8
Diluted average common
shares outstanding 199.4 198.1 198.5
Basic earnings per average common
share attributable to OGE Energy
common shareholders $÷÷1.96 $÷÷1.80 $÷÷1.75
Diluted earnings per average common
share attributable to OGE Energy
common shareholders $÷÷1.94 $÷÷1.79 $÷÷1.73
Dividends declared per common share $0.8513 $0.7975 $0.7588
In reviewing its consolidated operating results, the Company believes
that it is appropriate to focus on operating income and equity in earnings
of unconsolidated affiliates as reported in its Consolidated Statements
of Income as those measures indicate the ongoing profitability of the
Company excluding the cost of capital and income taxes.
(In millions, year ended December 31) 2013 2012 2011
Operating results by business segment
Operating income (loss)
OG&E (Electric Utility) $525.3 $489.4 $472.3
OGE Holdings (Natural Gas
Midstream Operations)(A) 33.2 185.6 175.1
Other operations(B) (5.0) 1.9 (0.7)
Consolidated operating income $553.5 $676.9 $646.7
Equity in earnings of unconsolidated affiliate
OGE Holdings (Natural Gas
Midstream Operations)(A) $101.9 $÷÷÷«– $÷÷÷«–
(A) The former natural gas transportation and storage segment and natural gas gathering and
processing segment have been combined into the natural gas midstream operations segment
and have been restated for all prior periods presented.
(B) Other Operations primarily includes the operations of the holding company and consolidating
eliminations.
The following operating results analysis by business segment
includes intercompany transactions that are eliminated in the
Consolidated Financial Statements.
(Dollars in millions, year ended December 31) 2013 2012 2011
OG&E (Electric Utility)
Operating revenues $2,262.2 $2,141.2 $2,211.5
Cost of sales 965.9 879.1 1,013.5
Other operation and maintenance 438.8 446.3 436.0
Depreciation and amortization 248.4 248.7 216.1
Taxes other than income 83.8 77.7 73.6
Operating income 525.3 489.4 472.3
Allowance for equity funds used
during construction 6.6 6.2 20.4
Other income 8.1 8.2 8.5
Other expense 4.6 4.3 8.4
Interest expense 129.3 124.6 111.6
Income tax expense 113.5 94.6 117.9
Net income $÷«292.6 $÷«280.3 $÷«263.3
Operating revenues by classification
Residential $÷«901.4 $÷«878.0 $÷«943.5
Commercial 554.2 523.5 531.3
Industrial 220.6 206.8 216.0
Oilfield 176.4 163.4 165.1
Public authorities and street light 214.3 202.4 207.4
Sales for resale 59.4 54.9 65.3
System sales revenues 2,126.3 2,029.0 2,128.6
Off-system sales revenues 14.7 36.5 36.2
Other 121.2 75.7 46.7
Total operating revenues $2,262.2 $2,141.2 $2,211.5
Reconciliation of gross margin to revenue:
Operating revenues 2,262.2 2,141.2 2,211.5
Cost of sales 965.9 879.1 1,013.5
Gross margin 1,296.3 1,262.1 1,198.0
MWH sales by classification (in millions)
Residential 9.4 9.1 9.9
Commercial 7.1 7.0 6.9
Industrial 3.9 4.0 3.9
Oilfield 3.4 3.3 3.2
Public authorities and street light 3.2 3.3 3.2
Sales for resale 1.2 1.3 1.4
System sales 28.2 28.0 28.5
Off-system sales 0.4 1.4 1.0
Total sales 28.6 29.4 29.5
Number of customers 806,940 798,110 789,146
Weighted-average cost of energy
per kilowatt-hour (cents)
Natural gas 3.905 2.930 4.328
Coal 2.273 2.310 2.064
Total fuel 2.784 2.437 2.897
Total fuel and purchased power 3.178 2.806 3.215
Degree days(A)
Heating – Actual 3,673 2,667 3,359
Heating – Normal 3,349 3,349 3,631
Cooling – Actual 2,106 2,561 2,776
Cooling – Normal 2,092 2,092 1,911
(A) Degree days are calculated as follows: The high and low degrees of a particular day are added
together and then averaged. If the calculated average is above 65 degrees, then the difference
between the calculated average and 65 is expressed as cooling degree days, with each degree
of difference equaling one cooling degree day. If the calculated average is below 65 degrees,
then the difference between the calculated average and 65 is expressed as heating degree days,
with each degree of difference equaling one heating degree day. The daily calculations are then
totaled for the particular reporting period.