UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2005
or
o TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
| Commission File Number |
Registrant, State of Incorporation, Address and Telephone Number |
I.R.S. Employer Identification Number | ||
|---|---|---|---|---|
| 0-33207 | GREAT PLAINS ENERGY INCORPORATED (A Missouri Corporation) 1201 Walnut Street Kansas City, Missouri 64106 (816) 556-2200 www.greatplainsenergy.com |
43-1916803 | ||
1-707 |
KANSAS CITY POWER & LIGHT COMPANY (A Missouri Corporation) 1201 Walnut Street Kansas City, Missouri 64106 (816) 556-2200 www.kcpl.com |
44-0308720 |
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 _ No X
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 May 2, 2005, the number of shares outstanding of (i) Great Plains Energy’s common stock was 74,577,521 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. It should be read in conjunction with the consolidated financial statements and related notes and with the management’s discussion and analysis included in the companies’ 2004 Form 10-K.
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 Holding 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 |
| • | 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, quality 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
GLOSSARY OF TERMS
The following is a glossary of frequently used abbreviations or acronyms that are found throughout this report.
| Abbreviation or Acronym | Definition |
|---|---|
35 Act |
Public Utility Holding Company Act of 1935, as amended |
| CAIR | Clean Air Interstate Rule |
| Clean Air Act | Clean Air Act Amendments of 1990 |
| CO2 | Carbon Dioxide |
| Compact | Central Interstate Low-Level Radioactive Waste Compact |
| Company | Great Plains Energy Incorporated and its subsidiaries |
| Consolidated KCP&L | KCP&L and its wholly owned subsidiary, HSS |
| Digital Teleport | Digital Teleport, Inc. |
| DOE | Department of Energy |
| DTI | DTI Holdings, Inc. and its subsidiaries, Digital Teleport, Inc. and Digital Teleport of Virginia, Inc. |
| Duquesne | Duquesne Light Company |
| EBITDA | Earnings before interest, income taxes, depreciation and amortization |
| EEI | Edison Electric Institute |
| EIRR | Environmental Improvement Revenue Refunding |
| EPA | Environmental Protection Agency |
| EPS | Earnings per common share |
| FASB | Financial Accounting Standards Board |
| FELINE PRIDESSM | Flexible Equity Linked Preferred Increased Dividend Equity Securities, a service mark of Merrill Lynch & Co., Inc. |
| FERC | The Federal Energy Regulatory Commission |
| FIN | Financial Accounting Standards Board Interpretation |
| GPP | Great Plains Power Incorporated, a wholly owned subsidiary of Great Plains Energy |
| Great Plains Energy | Great Plains Energy Incorporated and its subsidiaries |
| Holdings | DTI Holdings, Inc. |
| 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 |
| IRS | Internal Revenue Service |
| KCBPU | Kansas City, Kansas Board of Public Utilities |
| 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. |
| KLT Telecom | KLT Telecom Inc., a wholly owned subsidiary of KLT Inc. |
| KW | Kilowatt |
| kWh | Kilowatt hour |
| MAC | Material Adverse Change |
| MISO | Midwest Independent Systems Operator |
| MPSC | Missouri Public Service Commission |
3
| Abbreviation or Acronym | Definition |
|---|---|
MW |
Megawatt |
| MWh | Megawatt hour |
| NEIL | Nuclear Electric Insurance Limited |
| NOx | Nitrogen Oxide |
| NRC | Nuclear Regulatory Commission |
| NSPS | New Source Performance Standards |
| OCI | Other Comprehensive Income |
| Receivables Company | Kansas City Power & Light Receivables Company, a wholly owned subsidiary of KCP&L |
| RTO | Regional Transmission Organization |
| SEC | Securities and Exchange Commission |
| SECA | Seams Elimination Charge Adjustment |
| SE Holdings | SE Holdings, L.L.C. |
| Services | Great Plains Energy Services Incorporated |
| SFAS | Statement of Financial Accounting Standards |
| 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 1 - FINANCIAL INFORMATION Item 1 - Consolidated Financial Statements | ||||||||
|---|---|---|---|---|---|---|---|---|
GREAT PLAINS ENERGY Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
March 31 2005 |
December 31 2004 | |||||||
| ASSETS | (thousands) | |||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 84,671 | $ | 127,129 | ||||
| Restricted cash | 10,050 | 7,700 | ||||||
| Receivables, net | 284,156 | 247,184 | ||||||
| Fuel inventories, at average cost | 24,908 | 21,121 | ||||||
| Materials and supplies, at average cost | 55,704 | 54,432 | ||||||
| Deferred income taxes | 6,736 | 13,065 | ||||||
| Assets of discontinued operations | - | 749 | ||||||
| Derivative instruments | 30,745 | 6,372 | ||||||
| Other | 18,570 | 14,485 | ||||||
| Total | 515,540 | 492,237 | ||||||
| Nonutility Property and Investments | ||||||||
| Affordable housing limited partnerships | 40,343 | 41,317 | ||||||
| Nuclear decommissioning trust fund | 85,112 | 84,148 | ||||||
| Other | 34,432 | 32,739 | ||||||
| Total | 159,887 | 158,204 | ||||||
| Utility Plant, at Original Cost | ||||||||
| Electric | 4,857,076 | 4,841,355 | ||||||
| Less-accumulated depreciation | 2,239,908 | 2,196,835 | ||||||
| Net utility plant in service | 2,617,168 | 2,644,520 | ||||||
| Construction work in progress | 67,327 | 53,821 | ||||||
| Nuclear fuel, net of amortization of $130,908 and $127,631 | 33,635 | 36,109 | ||||||
| Total | 2,718,130 | 2,734,450 | ||||||
| Deferred Charges | ||||||||
| Regulatory assets | 144,901 | 144,345 | ||||||
| Prepaid pension costs | 111,673 | 119,811 | ||||||
| Goodwill | 86,767 | 86,767 | ||||||
| Other deferred charges | 70,035 | 63,087 | ||||||
| Total | 413,376 | 414,010 | ||||||
| Total | $ | 3,806,933 | $ | 3,798,901 | ||||
| The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. | ||||||||
5
| GREAT PLAINS ENERGY Consolidated Balance Sheets | ||||||||
|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||
| March 31 2005 |
December 31 2004 | |||||||
| LIABILITIES AND CAPITALIZATION | (thousands) | |||||||
| Current Liabilities | ||||||||
| Notes payable | $ | 17,000 | $ | 20,000 | ||||
| Commercial paper | 9,200 | - | ||||||
| Current maturities of long-term debt | 398,505 | 253,230 | ||||||
| EIRR bonds classified as current | 85,922 | 85,922 | ||||||
| Accounts payable | 198,378 | 199,952 | ||||||
| Accrued taxes | 42,877 | 46,993 | ||||||
| Accrued interest | 13,051 | 11,598 | ||||||
| Accrued payroll and vacations | 23,569 | 32,462 | ||||||
| Accrued refueling outage costs | 14,903 | 13,180 | ||||||
| Supplier collateral | 10,050 | 7,700 | ||||||
| Liabilities of discontinued operations | - | 2,129 | ||||||
| Other | 27,933 | 24,931 | ||||||
| Total | 841,388 | 698,097 | ||||||
| Deferred Credits and Other Liabilities | ||||||||
| Deferred income taxes | 640,151 | 632,160 | ||||||
| Deferred investment tax credits | 32,615 | 33,587 | ||||||
| Asset retirement obligations | 115,489 | 113,674 | ||||||
| Pension liability | 96,181 | 95,805 | ||||||
| Other | 89,577 | 88,524 | ||||||
| Total | 974,013 | 963,750 | ||||||
| Capitalization | ||||||||
| Common shareholders' equity | ||||||||
| Common stock-150,000,000 shares authorized without par value | ||||||||
| 74,587,492 and 74,394,423 shares issued, stated value | 771,181 | 765,482 | ||||||
| Unearned compensation | (2,519 | ) | (1,393 | ) | ||||
| Capital stock premium and expense | (32,060 | ) | (32,112 | ) | ||||
| Retained earnings | 440,378 | 451,491 | ||||||
| Treasury stock-28,488 shares, at cost | (856 | ) | (856 | ) | ||||
| Accumulated other comprehensive loss | (32,331 | ) | (41,018 | ) | ||||
| Total | 1,143,793 | 1,141,594 | ||||||
| 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 8) | 808,739 | 956,460 | ||||||
| Total | 1,991,532 | 2,137,054 | ||||||
| Commitments and Contingencies (Note 11) | ||||||||
| Total | $ | 3,806,933 | $ | 3,798,901 | ||||
| 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 March 31 |
2005 | 2004 | ||||||
| Operating Revenues | (thousands, except per share amounts) | |||||||
| Electric revenues - KCP&L | $ | 233,215 | $ | 246,535 | ||||
| Electric revenues - Strategic Energy | 311,316 | 294,111 | ||||||
| Other revenues | 583 | 832 | ||||||
| Total | 545,114 | 541,478 | ||||||
| Operating Expenses | ||||||||
| Fuel | 41,490 | 40,600 | ||||||
| Purchased power - KCP&L | 11,490 | 12,467 | ||||||
| Purchased power - Strategic Energy | 277,866 | 264,354 | ||||||
| Other | 79,895 | 79,734 | ||||||
| Maintenance | 29,358 | 20,471 | ||||||
| Depreciation and amortization | 37,862 | 36,520 | ||||||
| General taxes | 25,856 | 24,721 | ||||||
| Gain on property | (519 | ) | (35 | ) | ||||
| Total | 503,298 | 478,832 | ||||||
| Operating income | 41,816 | 62,646 | ||||||
| Non-operating income | 1,924 | 1,412 | ||||||
| Non-operating expenses | (1,315 | ) | (2,902 | ) | ||||
| Interest charges | (17,487 | ) | (18,339 | ) | ||||
| Income from continuing operations before income taxes, | ||||||||
| minority interest in subsidiaries and loss from equity | ||||||||
| investments | 24,938 | 42,817 | ||||||
| Income taxes | (5,291 | ) | (12,163 | ) | ||||
| Minority interest in subsidiaries | 888 | (845 | ) | |||||
| Loss from equity investments | (345 | ) | (307 | ) | ||||
| Income from continuing operations | 20,190 | 29,502 | ||||||
| Discontinued operations, net of income taxes (Note 7) | - | (2,178 | ) | |||||
| Net income | 20,190 | 27,324 | ||||||
| Preferred stock dividend requirements | 411 | 411 | ||||||
| Earnings available for common shareholders | $ | 19,779 | $ | 26,913 | ||||
| Average number of common shares outstanding | 74,436 | 69,257 | ||||||
Basic and diluted earnings (loss) per common share | ||||||||
| Continuing operations | $ | 0.27 | $ | 0.42 | ||||
| Discontinued operations | - | (0.03 | ) | |||||
| Basic and diluted earnings per common share | $ | 0.27 | $ | 0.39 | ||||
| Cash dividends per common share | $ | 0.415 | $ | 0.415 | ||||
| The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. | ||||||||
7
| GREAT PLAINS ENERGY Consolidated Statements of Cash Flows | ||||||||
|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||
Three Months Ended March 31 |
2005 | 2004 | ||||||
| Cash Flows from Operating Activities | (thousands) | |||||||
| Net income | $ | 20,190 | $ | 27,324 | ||||
| Less: Discontinued operations, net of income taxes | - | (2,178 | ) | |||||
| Income from continuing operations | 20,190 | 29,502 | ||||||
| Adjustments to reconcile income to net cash from operating activities: | ||||||||
| Depreciation and amortization | 37,862 | 36,520 | ||||||
| Amortization of: | ||||||||