OG&E 2013 Annual Report Download - page 65

In June 2010, new legislation was passed in Oklahoma that created
a moratorium, from July 1, 2010 through June 30, 2012, on 30 income
tax credits. For income tax purposes, credits affected by the moratorium
could not be claimed for any event, transaction, investment, expenditure
or other act for which the credits would otherwise be allowable. During
this two-year period, affected credits generated by the Company were
deferred and will be utilized at a future date. For financial accounting
purposes, the Company is receiving the benefits as most of these credits
did not expire if they were not utilized in the period they were generated.
Other
The Company sustained Federal and state tax operating losses through
2012 caused primarily by bonus depreciation and other book verses tax
temporary differences. As a result, the Company had accrued Federal
and state income tax benefits carrying into 2013. As the Company can
no longer carry these losses back to prior periods, these losses are
being carried forward for utilization in future years. In addition to the
operating losses, the Company was unable to utilize the various tax
credits that were generating during these years. These tax losses and
credits are being carried as deferred tax assets and will be utilized in
future periods. Under current law, the Company anticipates future tax-
able income will be sufficient to utilize all of the losses and credits before
they begin to expire, accordingly no valuation allowance is considered
necessary. The following table summarizes these carry forwards:
Carry Deferred Earliest
Forward Tax Expiration
(In millions) Amount Asset Date
Net operating losses
State operating loss $893.6 $÷32.8 2030
Federal operating loss 474.6 166.1 2030
Federal tax credits 113.2 113.2 2029
State tax credits
Oklahoma investment tax credits 106.1 69.0 N/A
Oklahoma capital investment
board credits 7.3 7.3 N/A
Oklahoma zero emission tax credits 24.3 16.3 2020
Acquisition of the equity interest in Enable on May 1, 2013, is also
expected to increase the Company’s utilization of state net operating loss
carryforwards. Under current tax law, the Company projects full utiliza-
tion of all Federal operating losses in 2014 as well as partial utilization
of State operating loss carryforwards. Accordingly, a current deferred
tax asset of $180.1 million has been reflected on the balance sheet.
As a result of acquiring an equity interest in Enable, the Company
has a lower effective tax rate in conjunction with the formation of Enable
in states with lower state tax rates. Remeasurement of state deferred
tax expense to reflect these lower rates reduced income tax expense
for 2013 by $8.4 million. In addition, deferred tax adjustments related to
the Company’s deconsolidation of Enogex Holdings increased income
tax expense for 2013 by $3.9 million.
During 2013, the Company recognized a $16.4 million reduction in
deferred state income taxes, associated with a remeasurement of the
accumulated deferred taxes related to the formation of an employment
company within Enable.
10. Common Equity
Forward Stock Split
On May 16, 2013, the Company’s Board of Directors approved a 2-for-1
forward stock split of the Company’s common stock, effective July 1,
2013, which entitled each shareholder of record to receive two shares
for every one share of Company stock owned by the shareholder. In
connection with the stock split, an amendment to the Company’s Articles
of Incorporation was approved on May 16, 2013 which increased the
number of authorized shares of common stock from 225 million to
450 million. All share and per share amounts presented within this
Form 10-K reflect the effects of the stock split.
Automatic Dividend Reinvestment and Stock Purchase Plan
The Company issued 399,485 shares of common stock under its
Automatic Dividend Reinvestment and Stock Purchase Plan in 2013
and received proceeds of $13.8 million. The Company may, from
time to time, issue additional shares under its Automatic Dividend
Reinvestment and Stock Purchase Plan to fund capital requirements or
working capital needs. At December 31, 2013, there were 3,845,503
shares of unissued common stock reserved for issuance under the
Company’s Automatic Dividend Reinvestment and Stock Purchase Plan.
Earnings Per Share
Basic earnings per share is calculated by dividing net income attributable
to OGE Energy by the weighted average number of the Company’s
common shares outstanding during the period. In the calculation of
diluted earnings per share, weighted average shares outstanding are
increased for additional shares that would be outstanding if potentially
dilutive securities were converted to common stock. Potentially dilutive
securities for the Company consist of performance units. Basic and
diluted earnings per share for the Company were calculated as follows:
(In millions) 2013 2012 2011
Net income attributable to OGE Energy $387.6 $355.0 $342.9
Average common shares outstanding
Basic average common shares outstanding 198.2 197.1 195.8
Effect of dilutive securities:
Contingently issuable shares
(performance units) 1.2 1.0 2.7
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
OGE Energy Corp. 59