UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2004
or
|
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from _______ to _______ |
| Commission | Registrant, State of Incorporation, | I.R.S. Employer | |||
| File Number | Address and Telephone Number | Identification Number | |||
| 001-32206 | GREAT PLAINS ENERGY INCORPORATED | 43-1916803 | |||
| (A Missouri Corporation) | |||||
| 1201 Walnut Street | |||||
| Kansas City, Missouri 64106 | |||||
| (816) 556-2200 | |||||
| www.greatplainsenergy.com | |||||
| 1-707 | KANSAS CITY POWER & LIGHT COMPANY | 44-0308720 | |||
| (A Missouri Corporation) | |||||
| 1201 Walnut Street | |||||
| Kansas City, Missouri 64106 | |||||
| (816) 556-2200 | |||||
| www.kcpl.com | |||||
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 X No _
Indicated by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Great Plains Energy Incorporated Yes X No _ Kansas City Power & Light Company Yes _ No X
As of November 1, 2004 the number of shares outstanding of (i) Great Plains Energy’s common stock was 74,317,784 and (ii) Kansas City Power & Light Company’s common stock was one, which was held by Great Plains Energy Incorporated.
Great Plains Energy Incorporated and Kansas City Power & Light Company separately file this combined Quarterly Report on Form 10-Q. Information contained herein relating to an individual registrant and its subsidiaries is filed by such registrant on its own behalf. Each registrant makes representations only as to information relating to itself and its subsidiaries.
The terms “Great Plains Energy”, “Company”, “KCP&L”, and “consolidated KCP&L” are used throughout this report. “Great Plains Energy” and the “Company” refer to Great Plains Energy Incorporated and its consolidated subsidiaries, unless otherwise indicated. “KCP&L” refers to Kansas City Power & Light Company, and “consolidated KCP&L” refers to KCP&L and its consolidated subsidiaries.
This report should be read in its entirety. No one section of the report deals with all aspects of the subject matter.
CAUTIONARY STATEMENTS
REGARDING CERTAIN FORWARD-LOOKING INFORMATION
Statements made in this report
that are not based on historical facts are forward-looking, may involve risks and
uncertainties, and are intended to be as of the date when made. In connection with the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the
registrants are providing a number of important factors that could cause actual results to
differ materially from the provided forward-looking information. These important factors
include:
| • | future economic conditions in the regional, national and international markets, including but not limited to regional and national wholesale electricity markets |
| • | market perception of the energy industry and the Company |
| • | changes in business strategy, operations or development plans |
| • | effects of current or proposed state and federal legislative and regulatory actions or developments, including, but not limited to, deregulation, re-regulation and restructuring of the electric utility industry and constraints placed on the Company's actions by the Public Utility Company Act of 1935 |
| • | adverse changes in applicable laws, regulations, rules, principles or practices governing tax, accounting and environmental matters including, but not limited to, air quality |
| • | financial market conditions and performance including, but not limited to, changes in interest rates and in availability and cost of capital and the effects on the Company's pension plan assets and costs |
| • | ability to maintain current credit ratings |
| • | inflation rates |
| • | effectiveness of risk management policies and procedures and the ability of counterparties to satisfy their contractual commitments |
| • | impact of terrorist acts |
| • | increased competition including, but not limited to, retail choice in the electric utility industry and the entry of new competitors |
| • | ability to carry out marketing and sales plans |
| • | weather conditions including weather-related damage |
| • | cost, availability and deliverability of fuel |
| • | ability to achieve generation planning goals and the occurrence of unplanned generation outages |
| • | delays in the anticipated in-service dates of additional generating capacity |
| • | nuclear operations |
| • | ability to enter new markets successfully and capitalize on growth opportunities in non-regulated businesses |
| • | performance of projects undertaken by the Company's non-regulated businesses and the success of efforts to invest in and develop new opportunities, and |
| • | other risks and uncertainties. |
This list of factors is not all-inclusive because it is not possible to predict all factors.
2
The following is a glossary of frequently used abbreviations or acronyms that are found throughout this report:
| Abbreviation or Acronym | Definition | ||
|---|---|---|---|
| 2003 Form 10-K | Combined 2003 Annual Report on Form 10-K, as amended by | ||
| Amendment No. 1 on Form 10-K/A and by the Current Report on Form | |||
| 8-K dated May 12, 2004 | |||
| 35 Act | Public Utility Holding Company Act of 1935, as amended | ||
| AOCI | Accumulated Other Comprehensive Income | ||
| ARO | Asset Retirement Obligations | ||
| CAIR | Clean Air Interstate Rule | ||
| CO2 | Carbon Dioxide | ||
| Clean Air Act | Clean Air Act Amendments of 1990 | ||
| Compact | Central Interstate Low-Level Radioactive Waste Compact | ||
| Company | Great Plains Energy Incorporated and its subsidiaries | ||
| Consolidated KCP&L | KCP&L and its subsidiary, HSS | ||
| Custom Energy Holdings | Custom Energy Holdings, L.L.C. | ||
| DOE | Department of Energy | ||
| EBITDA | Earnings before interest, income taxes, depreciation and amortization | ||
| EEI | Edison Electric Institute | ||
| EIRR | Environmental Improvement Revenue Refunding | ||
| EITF | Emerging Issues Task Force | ||
| EPA | Environmental Protection Agency | ||
| EPS | Earnings per common share | ||
| ERISA | Employee Retirement Income Security Act of 1974 | ||
| FASB | Financial Accounting Standards Board | ||
| FELINE PRIDESSM | Flexible Equity Linked Preferred Increased Dividend Equity Securities, | ||
| a service mark of Merrill Lynch & Co., Inc. | |||
| FERC | Federal Energy Regulatory Commission | ||
| GDP | Gross Domestic Product | ||
| GPP | Great Plains Power Incorporated, a wholly-owned subsidiary | ||
| of Great Plains Energy | |||
| Great Plains Energy | Great Plains Energy Incorporated and its subsidiaries | ||
| HSS | Home Service Solutions Inc., a wholly-owned subsidiary of KCP&L | ||
| IEC | Innovative Energy Consultants Inc., a wholly-owned subsidiary | ||
| of Great Plains Energy | |||
| ISO | Independent System Operator | ||
| KCC | The State Corporation Commission of the State of Kansas | ||
| KCP&L | Kansas City Power & Light Company, a wholly-owned subsidiary | ||
| of Great Plains Energy | |||
| KLT Energy Services | KLT Energy Services Inc., a wholly-owned subsidiary of KLT Inc. | ||
| KLT Gas | KLT Gas Inc., a wholly-owned subsidiary of KLT Inc. | ||
| KLT Gas portfolio | KLT Gas natural gas properties | ||
| KLT Inc. | KLT Inc., a wholly-owned subsidiary of Great Plains Energy | ||
| KLT Investments | KLT Investments Inc., a wholly-owned subsidiary of KLT Inc. | ||
| kWh | Kilowatt hour | ||
| MAC | Material Adverse Change | ||
| MACT | Maximum Achievable Control Technology | ||
3
| Abbreviation or Acronym | Definition | ||
|---|---|---|---|
| MPSC | Missouri Public Service Commission | ||
| MWh | Megawatt hour | ||
| NEIL | Nuclear Electric Insurance Limited | ||
| NOx | Nitrogen Oxide | ||
| NRC | Nuclear Regulatory Commission | ||
| OCI | Other Comprehensive Income | ||
| RSAE | R.S. Andrews Enterprises, Inc., a subsidiary of HSS | ||
| RTO | Regional Transmission Organization | ||
| Receivables Company | Kansas City Power & Light Receivables Company, a wholly-owned | ||
| subsidiary of KCP&L | |||
| SE Holdings | SE Holdings, L.L.C. | ||
| SEC | Securities and Exchange Commission | ||
| Services | Great Plains Energy Services Incorporated | ||
| SFAS | Statement of Financial Accounting Standards | ||
| SIP | State Implementation Plan | ||
| SO2 | Sulfur Dioxide | ||
| SOx | Sulfur Oxide | ||
| SPP | Southwest Power Pool, Inc. | ||
| Strategic Energy | Strategic Energy, L.L.C., a subsidiary of KLT Energy Services | ||
| WCNOC | Wolf Creek Nuclear Operating Corporation | ||
| Wolf Creek | Wolf Creek Generating Station | ||
| Worry Free | Worry Free Service, Inc., a wholly-owned subsidiary of HSS | ||
4
| PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements | ||||||||
|---|---|---|---|---|---|---|---|---|
| GREAT PLAINS ENERGY Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| September 30 2004 |
December 31 2003 | |||||||
| ASSETS | (thousands) | |||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 138,894 | $ | 114,227 | ||||
| Restricted cash | 11,560 | 20,850 | ||||||
| Receivables | 272,593 | 240,344 | ||||||
| Fuel inventories, at average cost | 21,491 | 22,543 | ||||||
| Materials and supplies, at average cost | 53,858 | 56,599 | ||||||
| Deferred income taxes | 1,967 | 686 | ||||||
| Assets of discontinued operations | 16,767 | 27,830 | ||||||
| Other | 23,663 | 14,293 | ||||||
| Total | 540,793 | 497,372 | ||||||
| Nonutility Property and Investments | ||||||||
| Affordable housing limited partnerships | 42,486 | 52,644 | ||||||
| Nuclear decommissioning trust fund | 79,644 | 74,965 | ||||||
| Other | 40,953 | 44,428 | ||||||
| Total | 163,083 | 172,037 | ||||||
| Utility Plant, at Original Cost | ||||||||
| Electric | 4,806,802 | 4,700,983 | ||||||
| Less-accumulated depreciation | 2,165,956 | 2,082,419 | ||||||
| Net utility plant in service | 2,640,846 | 2,618,564 | ||||||
| Construction work in progress | 57,874 | 53,250 | ||||||
| Nuclear fuel, net of amortization of $124,057 and $113,472 | 22,285 | 29,120 | ||||||
| Total | 2,721,005 | 2,700,934 | ||||||
| Deferred Charges | ||||||||
| Regulatory assets | 150,877 | 145,627 | ||||||
| Prepaid pension costs | 105,674 | 108,247 | ||||||
| Goodwill | 86,899 | 26,105 | ||||||
| Other deferred charges | 66,183 | 31,628 | ||||||
| Total | 409,633 | 311,607 | ||||||
| Total | $ | 3,834,514 | $ | 3,681,950 | ||||
| The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. | ||||||||
5
| GREAT PLAINS ENERGY Consolidated Balance Sheets | ||||||||
|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||
| September 30 2004 |
December 31 2003 | |||||||
| LIABILITIES AND CAPITALIZATION | (thousands) | |||||||
| Current Liabilities | ||||||||
| Notes payable | $ | - | $ | 87,000 | ||||
| Current maturities of long-term debt | 3,177 | 59,303 | ||||||
| EIRR bonds classified as current | 85,922 | 129,288 | ||||||
| Accounts payable | 191,656 | 186,747 | ||||||
| Accrued taxes | 121,879 | 39,886 | ||||||
| Accrued interest | 12,798 | 11,937 | ||||||
| Accrued payroll and vacations | 26,682 | 34,762 | ||||||
| Accrued refueling outage costs | 9,405 | 1,760 | ||||||
| Supplier collateral | 11,560 | 20,850 | ||||||
| Liabilities of discontinued operations | 1,693 | 4,607 | ||||||
| Other | 28,059 | 28,944 | ||||||
| Total | 492,831 | 605,084 | ||||||
| Deferred Credits and Other Liabilities | ||||||||
| Deferred income taxes | 621,214 | 609,333 | ||||||
| Deferred investment tax credits | 34,583 | 37,571 | ||||||
| Asset retirement obligations | 111,887 | 106,694 | ||||||
| Pension liability | 88,312 | 89,488 | ||||||
| Other | 95,856 | 79,141 | ||||||
| Total | 951,852 | 922,227 | ||||||
| Capitalization | ||||||||
| Common stock equity | ||||||||
| Common stock-150,000,000 shares authorized without par value | ||||||||
| 74,321,659 and 69,259,203 shares issued, stated value | 763,296 | 611,424 | ||||||
| Unearned compensation | (1,231 | ) | (1,633 | ) | ||||
| Capital stock premium and expense | (32,410 | ) | (7,240 | ) | ||||
| Retained earnings | 446,800 | 391,750 | ||||||
| Treasury stock-13,988 and 3,265 shares, at cost | (415 | ) | (121 | ) | ||||
| Accumulated other comprehensive loss | (33,730 | ) | (36,886 | ) | ||||
| Total | 1,142,310 | 957,294 | ||||||
| Cumulative preferred stock $100 par value | ||||||||
| 3.80% - 100,000 shares issued | 10,000 | 10,000 | ||||||
| 4.50% - 100,000 shares issued | 10,000 | 10,000 | ||||||
| 4.20% - 70,000 shares issued | 7,000 | 7,000 | ||||||
| 4.35% - 120,000 shares issued | 12,000 | 12,000 | ||||||
| Total | 39,000 | 39,000 | ||||||
| Long-term debt (Note 6) | 1,208,521 | 1,158,345 | ||||||
| Total | 2,389,831 | 2,154,639 | ||||||
| Commitments and Contingencies (Note 12) | ||||||||
| Total | $ | 3,834,514 | $ | 3,681,950 | ||||
| The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. | ||||||||
6
| GREAT PLAINS ENERGY Consolidated Statements of Income | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||||||||
| Three Months Ended September 30 |
Year to Date September 30 | |||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||
| Operating Revenues | (thousands) | |||||||||||||
| Electric revenues - KCP&L | $ | 323,287 | $ | 350,056 | $ | 844,447 | $ | 831,763 | ||||||
| Electric revenues - Strategic Energy | 390,747 | 309,694 | 1,022,887 | 793,470 | ||||||||||
| Other revenues | 817 | 1,007 | 2,495 | 2,729 | ||||||||||
| Total | 714,851 | 660,757 | 1,869,829 | 1,627,962 | ||||||||||
| Operating Expenses | ||||||||||||||
| Fuel | 52,257 | 51,407 | 135,113 | 125,911 | ||||||||||
| Purchased power - KCP&L | 14,015 | 10,210 | 43,835 | 42,151 | ||||||||||
| Purchased power - Strategic Energy | 358,879 | 276,963 | 930,637 | 702,909 | ||||||||||
| Other | 79,108 | 74,976 | 236,748 | 215,169 | ||||||||||
| Maintenance | 19,276 | 18,152 | 63,306 | 64,902 | ||||||||||
| Depreciation | 37,999 | 35,454 | 112,084 | 106,131 | ||||||||||
| General taxes | 28,468 | 28,368 | 78,492 | 76,476 | ||||||||||
| Gain on property | (613 | ) | (1,617 | ) | (771 | ) | (22,167 | ) | ||||||
| Total | 589,389 | 493,913 | 1,599,444 | 1,311,482 | ||||||||||
| Operating income | 125,462 | 166,844 | 270,385 | 316,480 | ||||||||||
| Non-operating income | 1,626 | 2,016 | 4,595 | 5,594 | ||||||||||