NBP National Beef

TULSA, Okla., March 8 /PRNewswire-FirstCall/ -- ONEOK, Inc. (NYSE:OKE) announced today that it is reducing its year-end 2005 financial results and increasing its 2006 guidance. The earnings revision is related to a software error that affected the timing of the recognition of changes in the fair value of derivatives that are accounted for as hedges in the company's energy services segment during 2005. These amounts are recorded as cost of sales and fuel in the company's consolidated statement of income. The company uses third-party software to account for its derivative hedging instruments. The recently discovered software error reduces 2005 net income by $8.1 million, or $0.08 per diluted share of common stock, and energy services operating income by $13.2 million. This adjustment relates to the company's third-quarter 2005 earnings and does not affect fourth-quarter 2005 results. The decrease in net income in 2005 will be recognized as additional earnings during the first quarter of 2006 as the hedging instruments settle. As a result, the company is raising its 2006 guidance in its energy services segment to $183 million from $170 million, which will result in revised company guidance in the range of $2.30 to $2.36 per diluted share of common stock. Revised 2005 net income was $546.6 million, or $5.06 per diluted share, compared with $242.2 million, or $2.30 per diluted share of common stock in 2004. Revised 2005 income from continuing operations was $403.1 million, or $3.73 per diluted share, compared with 2004 income from continuing operations of $224.7 million, or $2.13 per diluted share. Revised 2006 earnings guidance exhibit is attached as Attachment I. Revised 2005 financial statements are attached as Attachments II - VI. ONEOK, Inc. (NYSE:OKE) is a diversified energy company. We are among the largest natural gas distributors in the United States, serving more than 2 million customers in Oklahoma, Kansas and Texas. We are a leader in the gathering, processing, storage and transportation of natural gas in the mid- continent region of the U.S. and own one of the nation's premier natural gas liquids (NGL) systems, connecting much of the NGL supply in the mid-continent with two key market centers. Our energy services operation focuses primarily on marketing natural gas and related services throughout the U.S. ONEOK is the majority general partner of Northern Border Partners, L.P. (NYSE:NBP), one of the largest publicly traded limited partnerships. ONEOK is a Fortune 500 company. For information about ONEOK, Inc. visit the Web site: http://www.oneok.com/ . Northern Border Partners, L.P. is a publicly traded partnership whose purpose is to own, operate and acquire a diversified portfolio of energy assets. The Partnership owns and manages natural gas pipelines and is engaged in the gathering and processing of natural gas. More information can be found at http://www.northernborderpartners.com/ . Some of the statements contained and incorporated in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Acts of 1995. The forward-looking statements relate to both ONEOK and Northern Border Partners, L.P. and apply to: anticipated financial performance, including anticipated operating income from the businesses ONEOK acquired on July 1, 2005, from Koch Industries, Inc. and affiliates, and the businesses to be acquired by Northern Border Partners from ONEOK in the transactions; management's plans and objectives for future operations; business prospects; outcome of regulatory and legal proceedings; market conditions and other matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements in certain circumstances. The following discussion is intended to identify important factors that could cause future outcomes to differ materially from those set forth in the forward-looking statements. Forward-looking statements include the items describing increased 2006 guidance in the preceding paragraphs, the information concerning possible or assumed future results of operations and distribution levels and other statements contained or incorporated in this press release generally identified by words such as "anticipate," "estimate," "expect," "forecast," "intend," "believe," "projection" or "goal." You should not place undue reliance on forward-looking statements. Known and unknown risks, uncertainties and other factors may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward- looking statements. Those factors may affect operations, markets, products, services and prices. In addition to any assumptions and other factors referred to specifically in connection with the forward-looking statements, factors that could cause actual results to differ materially from those contemplated in any forward-looking statement include, among others, the following: * actions by rating agencies concerning the credit ratings of ONEOK and Northern Border Partners; * the effects of weather and other natural phenomenon on our operations, including energy sales and prices and demand for pipeline capacity; * competition from other U.S. and Canadian energy suppliers and transporters as well as alternative forms of energy; * the capital intensive nature of our respective businesses; * the profitability of assets or businesses acquired by us; * risks of marketing, trading and hedging activities as a result of changes in energy prices or the financial condition of our counterparties; * economic climate and growth in the geographic areas in which we each do business; * the uncertainty of estimates, including accruals and cost of environmental remediation; * the timing and extent of changes in commodity prices for natural gas, natural gas liquids, electricity and crude oil; * the effects of changes in governmental policies and regulatory actions, including changes with respect to income taxes, environmental compliance, authorized rates or recovery of gas costs; * the impact of recently issued and future accounting pronouncements and other changes in accounting policies; * the possibility of future terrorist attacks or the possibility or occurrence of an outbreak of, or changes in, hostilities or changes in the political conditions in the Middle East and elsewhere; * the risk of increased costs for insurance premiums, security or other items as a consequence of terrorist attacks; * the impact of unforeseen changes in interest rates, equity markets, inflation rates, economic recession and other external factors over which we have no control, including the effect on pension expense and funding resulting from changes in stock and bond market returns; * risks associated with pending or possible acquisitions and dispositions, including our respective ability to finance or integrate any such acquisitions and any regulatory delay or conditions imposed by regulatory bodies in connection with any such acquisitions and dispositions; * the results of administrative proceedings and litigation, regulatory actions and receipt of expected regulatory clearances involving the Oklahoma Corporation Commission, Kansas Corporation Commission, Texas regulatory authorities or any other local, state or federal regulatory body, including the Federal Energy Regulatory Commission; * our respective ability to access capital at competitive rates or on terms acceptable to us; * the risk of a significant slowdown in growth or decline in the U.S. economy or the risk of delay in growth recovery in the U.S. economy; * risks associated with adequate supply to the gathering and processing, fractionation and pipeline facilities of Northern Border Partners, including production declines which outpace new drilling; * the risk that material weaknesses or significant deficiencies in our respective internal controls over financial reporting could emerge or that minor problems could become significant; * the impact of the outcome of pending and future litigation; * the possible loss of franchises or other adverse effects caused by the actions of municipalities; * the impact of unsold capacity on Northern Border Pipeline being greater or less than expected; * the ability to market pipeline capacity on favorable terms, which is affected by: -- future demand for and prices of natural gas; -- competitive conditions in the overall natural gas and electricity markets; -- availability of supplies of Canadian and United States natural gas; -- availability of additional storage capacity; -- weather conditions; and -- competitive developments by Canadian and U.S. natural gas transmission peers; * orders by the FERC which are significantly different than our assumptions related to Northern Border Pipeline's November 2005 rate case; * performance of contractual obligations by the customers and shippers; * the ability to recover operating costs, costs of property, plant and equipment and regulatory assets in our FERC regulated rates; * timely receipt of approval by FERC for construction and operation of the Midwestern Gas Transmission Eastern Extension Project and required regulatory clearances; * our ability to acquire all necessary rights-of-way and obtain agreements for interconnects in a timely manner; * our ability to promptly obtain all necessary materials and supplies required for construction; * the composition and quality of the natural gas we gather and process in our plants; * the efficiency of our plants in processing natural gas and extracting natural gas liquids; * renewal of the coal slurry pipeline transportation contract under reasonable terms and our success in completing the necessary rebuilding of the coal slurry pipeline; * the impact of potential impairment charges; * developments in the December 2, 2001, filing by Enron of a voluntary petition for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code affecting our settled claims; * the ability to control operating costs; * the risk inherent in the use of information systems in our respective businesses, implementation of new software and hardware, and the impact on the timeliness of information for financial reporting; * acts of nature, sabotage, terrorism or other similar acts causing damage to our facilities or our suppliers' or shippers' facilities; * and the other factors listed in the reports we each have filed and may file with the Securities and Exchange Commission, which are incorporated by reference. Other factors and assumptions not identified above were also involved in the making of forward-looking statements. The failure of those assumptions to be realized, as well as other factors, may also cause actual results to differ materially from those projected. ONEOK and Northern Border Partners have no obligation and make no undertaking to update publicly or revise any forward- looking information. Analyst Contact: Dan Harrison 918-588-7950 Media Contact: Lori Webster 918-588-7570 ONEOK, Inc. and Subsidiaries Attachment I EARNINGS GUIDANCE Year Ending Dec. 31, 2006 Revised as of March 8, 2006 Previous Updated (In millions, except per share amounts) Guidance* Guidance* Change Operating Income Gathering and Processing $142 $142 $--- Interstate Pipelines 20 20 --- Pipelines and Storage 85 85 --- Natural Gas Liquids 93 93 --- Distribution 124 124 --- Energy Services 170 183 13 Gain on sale of assets 108 108 --- Other 7 7 --- Operating Income 749 762 13 Other income (expense) 96 96 --- Minority interest (211) (211) --- Interest expense (203) (203) --- Income taxes (168) (173) (5) Net Income $263 $271 $8 Diluted Earnings Per Share of Common Stock $2.26 $2.33 $0.07 Average Shares of Common Stock - Diluted Average shares of common stock outstanding 115.0 115.0 --- Dilutive components 1.2 1.2 --- Total Average Shares of Common Stock - Diluted 116.2 116.2 --- Capital Expenditures Gathering and Processing $97 $97 $--- Interstate Pipelines 37 37 --- Pipelines and Storage 14 14 --- Natural Gas Liquids 20 20 --- Distribution 148 148 --- Energy Services --- --- --- Other 3 3 --- Total Capital Expenditures $319 $319 $--- Cash Flow from Operations Cash flow from operations before changes in working capital $791 $799 $8 Less: Dividends 125 125 --- Less: Distributions to minority interests 163 163 --- Less: Capital expenditures 319 319 --- Surplus $184 $192 $8 * After consolidating ONEOK and Northern Border Partners, L.P., as required by GAAP beginning January 1, 2006 ONEOK, Inc. and Subsidiaries Attachment II CONSOLIDATED STATEMENTS OF INCOME Revised as of March 8, 2006 Years Ended December 31, Quarters Ended December 31, 2005 2004 2005 2004 Revenues (Thousands of dollars, except per share amounts) Operating revenues, excluding energy trading revenues $12,663,550 $5,671,714 $4,694,536 $2,536,595 Energy trading revenues, net 12,680 113,814 1,657 7,231 Total Revenues 12,676,230 5,785,528 4,696,193 2,543,826 Cost of sales and fuel 11,338,076 4,648,311 4,287,732 2,196,952 Net Margin 1,338,154 1,137,217 408,461 346,874 Operating Expenses Operations and maintenance 552,531 475,106 157,546 123,536 Depreciation, depletion and amortization 183,394 158,053 48,374 40,079 General taxes 67,464 60,406 16,403 13,909 Total Operating Expenses 803,389 693,565 222,323 177,524 Gain on Sale of Assets 264,207 --- 264,207 --- Operating Income 798,972 443,652 450,345 169,350 Other income 14,188 17,599 (2,298) 6,445 Other expense 19,883 12,056 11,796 2,302 Interest expense 147,608 87,301 55,926 25,249 Income before Income Taxes 645,669 361,894 380,325 148,244 Income taxes 242,521 137,221 140,643 53,780 Income from Continuing Operations 403,148 224,673 239,682 94,464 Discontinued operations, net of taxes: Income (loss) from operations of discontinued components, net of tax (6,180) 17,505 (262) 3,933 Gain on sale of discontinued component, net of tax 149,577 --- (1,778) --- Net Income $546,545 $242,178 $237,642 $98,397 Earnings Per Share of Common Stock Basic: Earnings per share from continuing operations $4.01 $2.21 $2.46 $0.91 Earnings (loss) per share from operations of discontinued components, net (0.06) 0.17 --- 0.04 Earnings per share from gain on sale of discontinued component, net 1.49 --- (0.02) --- Net Earnings Per Share, Basic $5.44 $2.38 $2.44 $0.95 Diluted: Earnings per share from continuing operations $3.73 $2.13 $2.32 $0.86 Earnings (loss) per share from operations of discontinued components, net (0.06) 0.17 --- 0.04 Earnings per share from gain on sale of discontinued component, net 1.39 --- (0.02) --- Net Earnings Per Share, Diluted $5.06 $2.30 $2.30 $0.90 Average Shares of Common Stock (Thousands) Basic 100,536 101,965 97,443 103,261 Diluted 108,006 105,461 103,361 109,523 Dividends Declared Per Share of Common Stock $1.09 $0.88 $--- $--- ONEOK, Inc. and Subsidiaries Attachment III CONSOLIDATED BALANCE SHEETS Revised as of March 8, 2006 December 31, December 31, 2005 2004 Assets (Thousands of dollars) Current Assets Cash and cash equivalents $7,915 $9,458 Trade accounts and notes receivable, net 2,202,895 1,412,861 Gas and natural gas liquids in storage 911,393 593,028 Commodity exchanges 133,159 1,758 Energy marketing and risk management assets 765,157 386,781 Other current assets 385,274 90,566 Total Current Assets 4,405,793 2,494,452 Property, Plant and Equipment Property, plant and equipment 5,575,365 4,832,876 Accumulated depreciation, depletion and amortization 1,581,138 1,519,719 Net Property, Plant and Equipment 3,994,227 3,313,157 Deferred Charges and Other Assets Goodwill and intangibles 683,211 225,188 Energy marketing and risk management assets 150,026 71,310 Investments and other 716,298 589,805 Total Deferred Charges and Other Assets 1,549,535 886,303 Assets of Discontinued Component 63,911 505,240 Total Assets $10,013,466 $7,199,152 ONEOK, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS December 31, December 31, 2005 2004 Liabilities and Shareholders' Equity (Thousands of dollars) Current Liabilities Current maturities of long-term debt $6,546 $341,532 Notes payable 1,541,500 644,000 Accounts payable 1,756,307 1,161,984 Commodity exchanges 238,176 --- Energy marketing and risk management liabilities 814,803 403,626 Other 438,009 337,653 Total Current Liabilities 4,795,341 2,888,795 Long-term Debt, excluding current maturities 2,024,070 1,543,202 Deferred Credits and Other Liabilities Deferred income taxes 603,835 601,281 Energy marketing and risk management liabilities 442,842 102,865 Other deferred credits 350,157 371,130 Total Deferred Credits and Other Liabilities 1,396,834 1,075,276 Liabilities of Discontinued Component 2,464 86,175 Total Liabilities 8,218,709 5,593,448 Commitments and Contingencies Shareholders' Equity Common stock, $0.01 par value: authorized 300,000,000 shares; issued 107,973,436 shares and outstanding 97,654,697 shares at December 31, 2005; issued 107,143,722 shares and outstanding 104,106,285 shares at December 31, 2004 1,080 1,071 Paid in capital 1,044,283 1,017,603 Unearned compensation (105) (1,413) Accumulated other comprehensive loss (56,991) (9,591) Retained earnings 1,085,845 649,240 Treasury stock, at cost: 10,318,739 shares at December 31, 2005 and 3,037,437 shares at December 31, 2004 (279,355) (51,206) Total Shareholders' Equity 1,794,757 1,605,704 Total Liabilities and Shareholders' Equity $10,013,466 $7,199,152 ONEOK, Inc. and Subsidiaries Attachment IV CONSOLIDATED STATEMENTS OF CASH FLOWS Revised as of March 8, 2006 Years Ended December 31, 2005 2004 Operating Activities (Thousands of dollars) Net income $546,545 $242,178 Depreciation, depletion and amortization 183,394 158,053 Impairment expense on discontinued operations 52,226 --- Gain on sale of discontinued component, net (149,577) --- Gain on sale of assets (269,040) (10,586) Income from equity investments, net 9,705 (1,506) Deferred income taxes 16,372 91,238 Stock based compensation expense 11,842 14,330 Allowance for doubtful accounts 16,329 13,309 Changes in assets and liabilities (net of acquisition and disposition effects): Accounts and notes receivable (733,367) (476,017) Inventories (320,632) (96,510) Unrecovered purchased gas costs (8,943) 12,944 Commodity exchanges 106,775 --- Deposits (118,214) 10,030 Regulatory assets (6,357) (15,395) Accounts payable and accrued liabilities 518,406 322,387 Energy marketing and risk management assets and liabilities 223,965 (22,033) Other assets and liabilities (259,088) (36,718) Cash Provided by (Used in) Operating Activities (179,659) 205,704 Investing Activities Changes in other investments, net (23,864) 1,891 Acquisitions (1,327,907) (176,709) Capital expenditures (250,493) (264,110) Proceeds from sale of discontinued component 519,279 --- Proceeds from sale of assets 556,434 21,241 Other investing activities (6,862) (5,603) Cash Used in Investing Activities (533,413) (423,290) Financing Activities Borrowing of notes payable, net 897,500 44,000 Issuance of debt, net of issuance costs 798,792 --- Termination of interest rate swaps (22,565) 82,915 Payment of debt (636,288) (1,364) Purchase of common stock (228,149) --- Issuance of common stock 16,372 189,777 Purchase of treasury stock, net --- (823) Dividends paid (110,157) (89,229) Other financing activities (3,976) (10,404) Cash Provided by Financing Activities 711,529 214,872 Change in Cash and Cash Equivalents (1,543) (2,714) Cash and Cash Equivalents at Beginning of Period 9,458 12,172 Cash and Cash Equivalents at End of Period $7,915 $9,458 ONEOK, Inc. Attachment V INFORMATION AT A GLANCE Revised as of March 8, 2006 Years Ended Quarters Ended December 31, December 31, 2005 2004 2005 2004 (Millions of dollars) Gathering and Processing Net margin $287.3 $267.0 $60.1 $78.1 Depreciation, depletion and amortization $32.6 $32.7 $7.7 $8.4 Operating income $395.4 $116.2 $285.5 $38.5 Total gas gathered (MMMBtu/d) 1,077 1,099 973 1,080 Total gas processed (MMMBtu/d) 1,117 1,172 1,049 1,201 Natural gas liquids sales (MBbls/d) 49 51 42 50 Natural gas liquids produced (MBbls/d) 59 62 50 62 Gas sales (MMMBtu/d) 329 328 284 338 Capital expenditures $28.3 $23.1 $6.8 $9.0 Average Conway OPIS composite NGL Price ($/gal) (based on our NGL product mix) $0.89 $0.72 $1.04 $0.83 Average NYMEX crude oil price ($/Bbl) $55.76 $41.34 $62.81 $50.15 Average realized condensate sales price ($/Bbl) $52.69 $38.17 $56.59 $45.10 Average natural gas price ($/MMBtu) (mid-continent region) $7.30 $5.54 $9.87 $6.03 Gross processing spread ($/MMBtu) $2.77 $2.47 $1.94 $3.35 Natural Gas Liquids Net margin $87.9 $24.4 $35.7 $6.0 Depreciation, depletion and amortization $11.1 $0.1 $5.4 --- Operating income $43.4 $14.8 $17.0 $3.4 Natural gas liquids gathered (MBbls/d) (A) 191 --- (A) 188 --- Natural gas liquids sales (MBbls/d) 207 109 212 116 Natural gas liquids fractionated (MBbls/d) (A) 292 --- (A) 276 --- Capital expenditures $12.2 $9.3 $4.1 $5.0 Pipelines and Storage Net margin $171.6 $126.5 $59.4 $41.1 Depreciation, depletion and amortization $23.7 $17.3 $7.5 $4.4 Operating income $84.6 $59.8 $31.7 $23.4 Natural gas transported (MMcf) 486,635 432,844 127,929 118,688 Natural gas liquids transported (MBbls/d) (A) 187 --- (A) 175 --- Natural gas liquids gathered (MBbls/d) (A) 53 --- (A) 54 --- Capital expenditures $15.7 $12.3 $5.9 $4.6 Average natural gas price ($/MMBtu) (mid-continent region) $7.30 $5.54 $9.87 $6.03 Energy Services Net margin $206.4 $174.0 $78.9 $68.1 Depreciation, depletion and amortization $2.1 $1.6 $0.6 $0.4 Operating income $165.7 $139.2 $68.0 $59.0 Natural gas marketed (Bcf) 1,191 1,073 312 297 Natural gas gross margin ($/Mcf) $0.14 $0.14 $0.21 $0.20 Physically settled volumes (Bcf) 2,387 2,157 628 598 Capital expenditures $0.2 $1.8 $--- $0.4 Distribution Net margin $587.7 $557.3 $174.9 $161.7 Depreciation, depletion and amortization $113.4 $105.4 $27.1 $26.8 Operating income $113.9 $110.2 $53.1 $44.8 Customers per employee 689 664 698 668 Capital expenditures $143.8 $142.5 $40.7 $36.2 Natural gas volumes (MMcf) Gas Sales 199,816 202,898 59,450 60,042 Transportation 252,180 239,914 67,482 62,848 Natural gas margins Gas Sales $465.6 $449.5 $131.6 $129.5 Transportation $94.2 $82.0 $35.9 $26.6 (A) -- Data presented for 2005 represents the per day results of operations from July 1, 2005. ONEOK, Inc. and Subsidiaries Attachment VI REGULATION G GAAP RECONCILIATION Revised as of March 8, 2006 Year Ended December 31, 2005 (Millions of Dollars) Cash used in operating activities $(179.7) Accounts and notes receivable 733.4 Inventories 320.6 Unrecovered purchased gas costs 8.9 Commodity Exchanges (106.8) Deposits 118.2 Regulatory assets 6.4 Accounts payable and accrued liabilities (518.4) Income taxes on gain on sale recorded in operating income 102.4 Energy marketing and risk management assets and liabilities (224.0) Other assets and liabilities 259.1 Cash flow, before changes in working capital (A) $520.1 (A) Cash flow from operations, before changes in working capital, is a non-GAAP financial measure used by industry analysts, investors, lenders, and rating agencies to assess the financial performance and the operating results of a company's fundamental business activities. Cash flow from operations, before changes in working capital, should not be considered in isolation or as a substitute for net income, income from operations, or other measures of cash flow. DATASOURCE: ONEOK, Inc. CONTACT: analysts, Dan Harrison, +1-918-588-7950, or media, Lori Webster, +1-918-588-7570, both of ONEOK, Inc. Web site: http://www.oneok.com/ http://www.northernborderpartners.com/

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