Back to GetFilings.com




QuickLinks -- Click here to rapidly navigate through this document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from                              to                             

Commission file number: 1-3368

THE EMPIRE DISTRICT ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)

Kansas
(State of Incorporation)		   44-0236370
(I.R.S. Employer Identification No.)

602 Joplin Street, Joplin, Missouri
(Address of principal executive offices)
 
64801
(zip code)

Registrant's telephone number: (417) 625-5100

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý  No  o

        Common stock outstanding as of August 1, 2002: 22,445,591 shares.

THE EMPIRE DISTRICT ELECTRIC COMPANY
INDEX

 
  
   Page
Number

Part I—
Financial Information:
 
 

Item 1.
Consolidated Financial Statements:
 
 

 
a.    Consolidated Statements of Income
 
3

 
b.    Consolidated Statement of Comprehensive Income
 
6

 
c.    Consolidated Balance Sheet
 
7

 
d.    Consolidated Statement of Cash Flows
 
8

 
e.    Notes to Consolidated Financial Statements
 
9

 
Forward Looking Statements
 
10

Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
11

 
Results of Operations
 
11

 
Liquidity and Capital Resources
 
17

Item 3.
Quantitative and Qualitative Disclosures About Market Risk
 
21

Part II—
Other Information:
 
22

Item 1.
Legal Proceedings—(none)
 
 

Item 2.
Changes in Securities and Use of Proceeds—(none)
 
 

Item 3.
Defaults Upon Senior Securities—(none)
 
 

Item 4.
Submission of Matters to a Vote of Security Holders
 
22

Item 5.
Other Information
 
22

Item 6.
Exhibits and Reports on Form 8-K
 
22

Signatures
 
23

2


PART I.    FINANCIAL INFORMATION


Item 1.    Consolidated Financial Statements

THE EMPIRE DISTRICT ELECTRIC COMPANY
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

 
   Three Months Ended
June 30,
  
 
   2002
   2001
  
Operating revenues:              
  Electric   $ 68,155,498   $ 58,133,591  
  Water     271,975     269,695  
   
 
 
      68,427,473     58,403,286  
Operating revenue deductions:              
  Operating expenses:              
    Fuel     11,907,792     12,391,276  
    Purchased power     14,585,443     14,313,072  
    Other     11,069,329     9,118,400  
    Merger Related Expenses     —     (27,832 )
   
 
 
  Total operating expenses     37,562,564     35,794,916  
  Maintenance and repairs     6,439,570     4,304,151  
  Depreciation and amortization     6,314,561     7,243,766  
  Provision for income taxes     2,236,123     243,942  
  Other taxes     3,695,388     3,238,820  
   
 
 
      56,248,206     50,825,595  
   
 
 
Operating income     12,179,267     7,577,691  
Other income and deductions:              
  Allowance for equity funds used during construction     —     241,444  
  Interest income     19,658     50,152  
  Provision for other income taxes     144,885     (2,537 )
  Other — net     (420,126 )   (499,253 )
   
 
 
      (255,583 )   (210,194 )
   
 
 
Income before interest charges     11,923,684     7,367,497  
Interest charges:              
  Long-term debt — other     6,596,385     6,606,627  
  Trust preferred distributions by subsidiary holding solely parent debentures     1,062,500     1,062,500  
  Commercial paper     151,928     616,681  
  Allowance for borrowed funds used during construction     (139,188 )   (1,763,572 )
  Other     225,543     104,400  
   
 
 
      7,897,168     6,626,636  
   
 
 
Net income applicable to common stock   $ 4,026,516   $ 740,861  
   
 
 
Weighted average number of common shares outstanding     20,919,087     17,634,603  
   
 
 
Basic and diluted earnings per weighted average share of common stock   $ 0.19   $ 0.04  
   
 
 
Dividends per share of common stock   $ 0.32   $ 0.32  
   
 
 

See accompanying Notes to Financial Statements.

3

THE EMPIRE DISTRICT ELECTRIC COMPANY
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

 
   Six Months Ended
June 30,
  
 
   2002
   2001
  
Operating revenues:              
  Electric   $ 132,717,045   $ 118,428,066  
  Water     529,870     527,157  
   
 
 
      133,246,915     118,955,223  
Operating revenue deductions:              
  Operating expenses:              
    Fuel     26,188,344     21,589,655  
    Purchased power     29,341,620     35,797,007  
    Other     21,188,891     17,986,196  
    Merger Related Expenses     1,524,355     1,236,754  
   
 
 
  Total operating expenses     78,243,210     76,609,612  
  Maintenance and repairs     12,525,507     7,440,368  
  Depreciation and amortization     12,678,162     14,438,736  
  Provision for income taxes     2,161,008     (2,124,516 )
  Other taxes     7,484,215     6,695,785  
   
 
 
      113,092,102     103,059,985  
   
 
 
Operating income     20,154,813     15,895,238  
Other income and deductions:              
  Allowance for equity funds used during construction     —     465,857  
  Interest income     48,774     134,993  
  Provision for other income taxes     306,356     (1,666 )
  Other — net     (1,121,450 )   (508,897 )
   
 
 
      (766,320 )   90,287  
   
 
 
Income before interest charges     19,388,493     15,985,525  
Interest charges:              
  Long-term debt — other     13,193,134     13,192,283  
  Trust preferred distributions by subsidiary holding solely parent debentures     2,125,000     1,416,667  
  Commercial paper     291,962     1,474,251  
  Allowance for borrowed funds used during construction     (239,957 )   (3,403,046 )
  Other     528,382     357,308  
   
 
 
      15,898,521     13,037,463  
   
 
 
Net income applicable to common stock   $ 3,489,972   $ 2,948,062  
   
 
 
Weighted average number of common shares outstanding     20,355,121     17,621,228  
   
 
 
Basic and diluted earnings per weighted average share of common stock   $ 0.17   $ 0.17  
   
 
 
Dividends per share of common stock   $ 0.64   $ 0.64  
   
 
 

See accompanying Notes to Financial Statements.

4

THE EMPIRE DISTRICT ELECTRIC COMPANY
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

 
   Twelve Months Ended
June 30,
  
 
   2002
   2001
  
Operating revenues:              
  Electric   $ 277,478,486   $ 266,411,793  
  Water     1,068,060     1,088,803  
   
 
 
      278,546,546     267,500,596  
Operating revenue deductions:              
  Operating expenses:              
    Fuel     61,122,059     51,662,467  
    Purchased power     55,928,565     72,145,963  
    Other     39,928,875     34,731,005  
    Merger Related Expenses     1,679,275     1,596,798  
   
 
 
  Total operating expenses     158,658,774     160,136,233  
  Maintenance and repairs     24,179,874     14,450,379  
  Depreciation and amortization     27,694,877     28,490,713  
  Provision for income taxes     5,962,696     6,661,470  
  Other taxes     14,346,868     13,341,098  
   
 
 
      230,843,089     223,079,893  
   
 
 
Operating income     47,703,457     44,420,703  
Other income and deductions:              
  Allowance for equity funds used during construction     104,104     2,006,861  
  Interest income     113,229     413,983  
  Loss on plant disallowance     (4,087,066 )   —  
  Provision for other income taxes     1,985,194     29,908  
  Other — net     (2,002,573 )   (947,511 )
   
 
 
      (3,887,112 )   1,503,241  
   
 
 
Income before interest charges     43,816,345     45,923,944  
Interest charges:              
  Long-term debt     26,385,160     26,367,947  
  Trust preferred distributions by subsidiary holding solely parent debentures     4,250,000     1,416,667  
  Commercial paper     1,046,927     2,621,486  
  Allowance for borrowed funds used during construction     121,791     (5,655,609 )
  Other     1,067,642     562,979  
   
 
 
      32,871,520     25,313,470  
   
 
 
Net income applicable to common stock   $ 10,944,825   $ 20,610,474  
   
 
 
Weighted average number of common shares outstanding     19,133,160     17,598,161  
   
 
 
Basic and diluted earnings per weighted average share of common stock   $ 0.57   $ 1.17  
   
 
 
Dividends per share of common stock   $ 1.28   $ 1.28  
   
 
 

See accompanying Notes to Financial Statements.

5

THE EMPIRE DISTRICT ELECTRIC COMPANY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

 
   Current
Quarter
   Year to
Date
   June 30, 2002
12 Months
Ended
  
Net income   $ 4,026,516   $ 3,489,972   $ 10,944,825  
Contracts settled     (232,750 )   1,132,400     1,822,800  
Change in fair market value of open contracts for period     3,376,251     8,746,321     6,218,421  
Income taxes     (1,194,530 )   (3,753,914 )   (3,055,664 )
   
 
 
 
Net change in unrealized gain/(loss)     1,948,971     6,124,807     4,985,557  
   
 
 
 
Comprehensive Income   $ 5,975,487   $ 9,614,779   $ 15,930,382  
   
 
 
 

See accompanying Notes to Financial Statements

6

THE EMPIRE DISTRICT ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEET (UNAUDITED)

 
   June 30,
2002
   December 31,
2001
  
ASSETS              
  Utility plant, at original cost:              
    Electric   $ 1,096,301,659   $ 1,072,289,259  
    Water     8,132,887     7,810,754  
    Construction work in progress     21,904,242     20,136,645  
   
 
 
      1,126,338,788     1,100,236,658  
    Accumulated depreciation     362,104,333     349,743,785  
   
 
 
      764,234,455     750,492,873  
  Current assets:              
    Cash and cash equivalents     3,907,341     11,440,275  
    Accounts receivable — trade, net     23,852,740     19,621,889  
    Accrued unbilled revenues     10,800,841     10,986,746  
    Accounts receivable — other     3,695,866     7,231,772  
    Fuel, materials and supplies     28,296,522     20,094,559  
    Prepaid expenses     1,312,240     1,063,195  
   
 
 
      71,865,550     70,438,436  
   
 
 
  Deferred charges:              
    Regulatory assets     36,628,508     37,743,107  
    Unamortized debt issuance costs     4,937,691     5,180,243  
    Gain in fair value of derivatives     17,626,573     7,726,580  
    Other     20,175,722     18,639,293  
   
 
 
      79,368,494     69,289,223  
   
 
 
      Total Assets   $ 915,468,499   $ 890,220,532  
   
 
 
CAPITALIZATION AND LIABILITIES:              
  Common stock, $1 par value, 22,432,335 and 19,759,598 shares issued and outstanding, respectively   $ 22,432,335   $ 19,759,598  
  Capital in excess of par value     257,880,139     208,223,200  
  Retained earnings (Note 2)     31,904,534     41,906,483  
  Accumulated other comprehensive income (loss)(net)     4,543,497     (1,581,310 )
   
 
 
      Total common stockholders' equity     316,760,505     268,307,971  
Long-term Debt              
  Company obligated manditorily redeemable trust preferred securities of subsidiary holding solely parent debentures     50,000,000     50,000,000  
  Obligations under capital lease     541,488     567,315  
  First mortgage bonds and unsecured debt     308,032,162     308,047,363  
   
 
 
      358,573,650     358,614,678  
   
 
 
  Current liabilities:              
    Accounts payable and accrued liabilities     24,142,557     34,520,862  
    Commercial paper     62,000,000     55,500,000  
    Customer deposits     4,313,374     4,127,061  
    Interest accrued     3,811,445     5,091,240  
    Taxes accrued, including income taxes     4,683,085     —  
    Current maturities — mortgage bonds     —     37,500,000  
    Obligations under capital lease     188,448     158,329  
    Loss in fair value of derivatives     9,980,692     10,273,880  
   
 
 
      109,119,601     147,171,372  
   
 
 
  Noncurrent liabilities and deferred credits:              
    Regulatory liability     12,322,202     12,915,456  
    Deferred income taxes     89,433,134     84,625,946  
    Unamortized investment tax credits     6,607,498     6,681,000  
    Postretirement benefits other than pensions     4,835,424     4,884,161  
    Other     17,816,485     7,019,948  
   
 
 
      131,014,743     116,126,511  
   
 
 
      Total Capitalization and Liabilities   $ 915,468,499   $ 890,220,532  
   
 
 

See accompanying Notes to Financial Statements.

7

THE EMPIRE DISTRICT ELECTRIC COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

 
   Six Months Ended
June 30,
  
 
   2002
   2001
  
Operating activities:              
  Net income   $ 3,489,972   $ 2,948,062  
  Adjustments to reconcile net income to cash flows:              
    Depreciation and amortization     14,631,742     16,129,422  
    Pension income     (1,790,891 )   (1,881,500 )
    Deferred income taxes, net     633,862     152,489  
    Investment tax credit, net     (73,502 )   (44,669 )
    Allowance for equity funds used during construction     —     (465,857 )
    Issuance of common stock for stock purchase and reinvest. plans     605,642     508,337  
    Gain(loss) on derivatives     (317,660 )   —  
    Cash flows impacted by changes in:              
      Accounts receivable and accrued unbilled revenues     (509,040 )   (815,440 )
      Fuel, materials and supplies     (996,434 )   (1,441,168 )
      Prepaid expenses and deferred charges     371,505     1,286,097  
      Accounts payable and accrued liabilities     (10,378,305 )   (4,438,253 )
      Customer deposits, interest