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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1993
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-707
KANSAS CITY POWER & LIGHT COMPANY
(Exact name of registrant as specified in its charter)
Missouri 44-0308720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1201 Walnut Street
Kansas City, Missouri 64106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 816-556-2200
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Cumulative Preferred Stock New York Stock Exchange
par value $100 per share -
3.80%, 4.50%, 4.35%
Common Stock without par value New York Stock Exchange
Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. Yes X No
On March 21, 1994, the Company had 61,908,726 outstanding shares of common
stock without par value, and the aggregate market value (based upon the
closing price of these shares on the New York Stock Exchange) of voting
securities held by nonaffiliates of the Company was approximately
$1,375,382,037.
Documents Incorporated by Reference
Portions of the Company's 1994 Notice of Annual Meeting of Stockholders and
Proxy Statement are incorporated by reference in Part III of this report.
TABLE OF CONTENTS
Page
Number
Item 1. Business . . . . . . . . . . . . . . . . . . . 1
The Company . . . . . . . . . . . . . . . . . . . 1
Regulation . . . . . . . . . . . . . . . . . . . 1
Rates . . . . . . . . . . . . . . . . . . . 1
Environmental Matters . . . . . . . . . . . 2
Air . . . . . . . . . . . . . . . . . . . 2
Water . . . . . . . . . . . . . . . . . . . 2
Waste Disposal . . . . . . . . . . . . . . . 3
Fuel Supply . . . . . . . . . . . . . . . . . . . 3
Coal . . . . . . . . . . . . . . . . . . . 3
Gas . . . . . . . . . . . . . . . . . . . 4
Oil . . . . . . . . . . . . . . . . . . . 4
Nuclear . . . . . . . . . . . . . . . . . . 4
Employees . . . . . . . . . . . . . . . . . 6
Subsidiaries . . . . . . . . . . . . . . . . . . . 6
Subsequent Financing Events. . . . . . . . . . . . 6
Officers of the Registrant . . . . . . . . . . . . 7
Item 2. Properties . . . . . . . . . . . . . . . . . . . . 8
Generation Resources . . . . . . . . . . . . . . . 8
Transmission and Distribution Resources . . . . . 9
General . . . . . . . . . . . . . . . . . . . 9
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Security Holders. . . 10
Item 5. Market for the Registrant's Common Equity and Related. .
Stockholder Matters . . . . . . . . . . . . . . . . . . 10
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . 11
Item 7. Management's Discussion and Analysis of Financial. . . .
Condition and Results of Operations . . . . . . . . . . 11
Item 8. Financial Statements and Supplementary Data . . . . . . 18
Item 9. Changes in and Disagreements with Accountants on . . .
Accounting and Financial Disclosure . . . . . . . . . . 38
Item 10. Directors and Executive Officers of the Registrant . . . 38
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . 38
Item 12. Security Ownership of Certain Beneficial Owners and. . .
Management . . . . . . . . . . . . . . . . . . . 38
Item 13. Certain Relationships and Related Transactions . . . . . 38
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . 39
PART I
ITEM 1. BUSINESS
The Company
Kansas City Power & Light Company (Company) was incorporated in
Missouri in 1922 and is headquartered in downtown Kansas City, Missouri. The
Company is a medium-sized public utility engaged in the generation,
transmission, distribution and sale of electricity to over 419,000 customers
in a 4,700 square mile area located in all or portions of 23 counties in
western Missouri and eastern Kansas. About two-thirds of the total retail
kilowatt-hour sales and revenue are from Missouri customers and the remainder
from Kansas customers. Customers include 368,000 residences, 49,000
commercial firms, 2,000 industries, 12 municipalities and 25 other electric
utilities. Retail revenues in Missouri and Kansas accounted for
approximately 91% of the Company's total revenues in 1993. Wholesale firm
power, bulk power sales and miscellaneous electric revenues accounted for the
remainder of revenues. The Kansas City metropolitan area, from which about
95% of the Company's retail revenues are derived, is an agribusiness center
and a major regional commercial center for wholesale, retail and service
companies.
The Company as a regulated utility does not have direct competition for
retail electric service in its service territory; however, there is
competition in the generation of electricity and between electric and gas as
an energy source.
Regulation
The Company is subject to the jurisdiction of the Public Service
Commission of the State of Missouri (MPSC), the State Corporation Commission
of the State of Kansas (KCC), the Federal Energy Regulatory Commission
(FERC), the Nuclear Regulatory Commission (NRC) and certain other
governmental regulatory bodies as to various phases of its operations,
including rates, service, safety and nuclear plant operations, environmental
matters and issuances of securities.
Rates
The Company's retail electric rates are regulated by the MPSC and KCC
for sales within the respective states of Missouri and Kansas. FERC approves
the Company's rates for wholesale bulk electricity sales. Firm electric
sales are made by contractual arrangements between the entity being served
and the Company.
The Company has not increased any of its retail or wholesale rates
since 1988. Pursuant to a stipulation and agreement with the MPSC, the
Company reduced Missouri retail rates by about 2.7 percent effective
January 1, 1994 and agreed to a moratorium through 1995 on the filing of
general retail rate increases or decreases in Missouri.
Environmental Matters
The Company, like other electric utilities, is subject to regulation by
various federal, state and local authorities with respect to air and water
emissions, waste disposal and other environmental matters. Environmental
regulations and standards are subject to continual review and the Company
cannot presently estimate the additional cost, if any, of meeting any new
regulations or standards which might be established in the future, nor can it
estimate the possible effect which any new regulations or standards could
have upon its operations. However, the Company currently estimates that
expenditures necessary to comply with environmental regulations during 1994
will not be material with the possible exceptions set forth below.
Air
The Clean Air Act Amendments of 1990 contain acid rain and air toxic
provisions which affect the Company. The acid rain provisions established a
two-phase utility pollution control program for reducing national SO2
emissions by 10 million tons and NOx emissions by 2 million tons from 1980
levels. Compliance will require the Company to install continuous emission
monitoring equipment (CEM) at some of its coal-fired electric generating
facilities during the period ending in the year 2000. The Company is
currently estimating its costs of such compliance to be approximately $4.1
million during such period ($2.9 million of such amount was spent through
1993). The other utility-related provision of the Act calls for a study by
the Environmental Protection Agency (EPA) of certain toxic emissions into the
air. Based on the outcome of these studies, regulation of certain toxic
emissions into the air, including mercury, could be required in the future.
Water
The Company commissioned an environmental assessment of its Northeast
Station and of its Spill Prevention Control and Countermeasure plan as
required by the Clean Water Act. The assessment revealed contamination of
the site by petroleum products, heavy metals, volatile and semi-volatile
organic compounds, asbestos, pesticides and other regulated substances.
Based upon studies and discussions with Burns & McDonnell, the cost of the
cleanup could range between $1.5 million and $6 million.
Also, groundwater analysis has indicated that certain volatile organic
compounds are moving through the Northeast site, just above bedrock, from
unidentified sources off-site. There is no evidence that the Company
released these compounds; however, notice was given to the Missouri
Department of Natural Resources (MDNR). MDNR has not responded to date to the
notice. Because the Company believes it will not have liability in this
matter, it has not performed a study regarding the possible cost of
remediation.
Waste Disposal
The Comprehensive Environmental Response, Compensation and Liability
Act (Superfund) established joint and several liability for persons and
entities that generate, transport or deposit hazardous waste at contaminated
sites, as well as the current owners of such sites and predecessors in title
since the time such sites were contaminated.
Interstate Power Company of Dubuque, Iowa (Interstate) filed a lawsuit
in 1989 against the Company in the Federal District Court for the District of
Iowa seeking from the Company contribution and indemnity under the Superfund
for clean-up costs of hazardous substances at the site of a demolished gas
manufacturing plant in Mason City, Iowa. The plant was operated by the
Company for very brief periods of time before the plant was demolished in
1952. The site and all other properties the Company owned in Iowa were sold
to Interstate in 1957. The Company estimates that the cleanup could cost up
to $10 million. The Company's estimate is based upon an evaluation of
available information from on-going site investigation and assessment
activities, including the costs of such activities.
Fuel Supply
The Company's latest fuel budget anticipates that fuel used for its
electric generating requirements during 1994 will be approximately 73.7%
coal, 0.3% gas, 0.3% oil, 25.6% nuclear and 0.1% steam.
Coal
The Company currently projects that during 1994 9.7 million tons of
coal will be burned at all of the Company's generating units (including
jointly-owned units); 6.7 million tons will be burned for the Company's
account. The long-term contractual arrangements for coal for the Company's
account are as follows:
1993
Average
Year Undelivered 1994 Sulfur
of Maximum Contract Content
Supplier and Expir- Quantities Designations of Coal
Surface Mine Location ation (Tons) (Tons) %
Rochelle Coal Company
Wright, Wyoming....... 1999(a) 2,544,000 1,100,000 0.2
ARCO Coal Company
Wright, Wyoming....... 2003 15,680,000(b) 1,610,000(b) 0.3
Total 18,224,000 2,710,000
(a) Contract is effective until December 31, 1999 or until the
maximum quantity of coal is delivered, whichever occurs first.
It is estimated the maximum quantity of coal will be delivered by
December 31, 1996.
(b) Company's share of coal under contract for jointly-owned units.
These long-term contracts supply 40% of the Company's anticipated coal
requirements for 1994, and the remainder will be supplied by open market
purchases.
The Company's average costs of coal burned for its account, exclusive
of fuel handling costs, for the past three years are as follows:
1993 1992 1991
Cost per million BTU..........$ 0.962 $ 1.022 $ 1.059
Cost per ton..................$16.66 $17.87 $18.79
Gas
Natural gas is purchased directly from natural gas producers or
marketers. The Company's Hawthorn Station, which uses coal as boiler fuel,
primarily uses gas for ignition and flame stabilization purposes. When
available, natural gas can also be used as a supplementary fuel to generate
electricity at Hawthorn when required for environmental or other temporary
operating conditions. The Company also has facilities at Hawthorn to use oil
for ignition and flame stabilization purposes because of possible
interruptions in the availability of gas. The Company's use of gas for
electric generation was 0.7 million mcf in 1991, 0.2 million mcf in 1992 and
0.4 million mcf in 1993. For the year ended December 31, 1993, the average
cost of gas burned for electric generation was $2.51 per million BTU.
Oil
Middle distillate fuel oil is used to operate the Company's eight peak
load combustion turbine generating units, for ignition and flame
stabilization purposes at other fossil fueled units and to fuel auxiliary
boilers at the Wolf Creek Nuclear Generating Station (Wolf Creek). In 1993,
the Company used about 20,000 barrels of fuel oil at its combustion turbine,
about 34,000 barrels for ignition and flame stabilization purposes and about
3,000 barrels at Wolf Creek. The Company's share of fuel oil storage
capacity is about 190,000 barrels. At December 31, 1993, the Company had
about 101,100 barrels of fuel oil in storage at an average cost of $27.43 per
barrel, or $4.73 per million BTU.
Nuclear
The Wolf Creek Nuclear Operating Corporation (WCNOC), which operates
Wolf Creek, has on hand or under contract 73% of the uranium required to
operate Wolf Creek through the year 2001, and the balance is expected to be
obtained through open market or contract purchases.
Contracts are in place for 100% of Wolf Creek's uranium fuel enrichment
services requirements for 1994-1996, 70% of such requirements for 1997-1998,
and 100% of such requirements for 2002-2014. The balance of the requirements
is expected to be obtained through a combination of open market and contract
purchases.
Contracts are in place for the conversion of sufficient uranium to
uranium hexaflouride to meet Wolf Creek's uranium fuel requirements through
1995 as well as for the fabrication of uranium fuel assemblies to meet Wolf
Creek's requirements through 2014.
High-Level Waste
The Nuclear Waste Policy Act of 1982 established schedules, guidelines
and responsibilities for the United States Department of Energy (DOE) to
develop and construct repositories for the ultimate disposal of spent nuclear
fuel and nuclear high-level waste. The DOE has not yet constructed a
high-level nuclear waste disposal site and has announced that a permanent
storage facility for such waste may not be in operation prior to 2013,
although an interim facility may be available earlier. Wolf Creek contains
a temporary on-site spent nuclear fuel storage facility which, under current
regulatory guidelines, provides space for the storage of spent nuclear fuel
from plant operation until approximately 2006, while still maintaining full
core off-load nuclear fuel storage capability. The Company believes adequate
additional temporary storage space for Wolf Creek's nuclear waste can be
obtained, as necessary.
Low-Level Waste
The Low-Level Radioactive Waste Policy Amendments Act of 1985 mandated
that the various states, individually or through interstate compacts, develop
alternative low-level radioactive waste disposal facilities to replace the
three currently-available facilities in South Carolina, Nevada and
Washington.
The states of Kansas, Nebraska, Arkansas, Louisiana and Oklahoma formed
the Central Interstate Low-Level Radioactive Waste Compact and selected a
site in northern Nebraska to locate a disposal facility. The present
estimate of the cost for such a facility is about $146 million. WCNOC and
the owners of the other five nuclear units in the compact have provided most
of the pre-construction financing for this project. To date, the compact has
spent in excess of $55 million, of which $6.8 million was WCNOC's share. If
WCNOC and the owners of the other nuclear units in the compact elect to
provide construction financing, WCNOC's share would be about $9.6 million.
There is uncertainty as to whether this project will be completed.
Significant opposition to the project has been raised by the residents in the
area of the proposed facility and attempts have been made to pass legislation
in Nebraska to slow down or stop development of the facility. In January
1993, a lawsuit was filed in the U.S. District Court by the Nebraska Attorney
General seeking to halt further development of the proposed facility. The
trial court rendered judgment against the Attorney General, but the decision
has been appealed to the U.S. Court of Appeals. Although all federally-
imposed milestones have been met in the past, the compact did not meet the
last milestone of having a disposal facility in operation by January 1, 1993;
however, none of the other eight compacts in the United States met this
deadline. WCNOC has expanded its on-site temporary storage capacity in order
to handle its low-level radioactive waste until such time as a disposal
facility becomes available.
Employees
At December 31, 1993, the Company had 2,735 employees (including
temporary employees), 1,809 of which were represented by three local unions
of the International Brotherhood of Electrical Workers (IBEW). However, the
Company announced an early retirement program in March 1994. See "Notes to
Consolidated Financial Statements - Subsequent Event" on page 36 of this
report. Included in the total number of employees are 315 located at LaCygne
Generating Station (LaCygne), 50% of whose services are attributable to
Kansas Gas and Electric Company (KG&E) for its 50% share of LaCygne, and 137
located at Iatan Generating Station (Iatan), 30% of whose services are
attributable to St. Joseph Light & Power Company (SJLP) and the Empire
District Electric Company (EDE) for their 18% and 12% shares of Iatan,
respectively. The Company has labor agreements with Local 1613, representing
clerical employees (which expires March 29, 1996), with Local 1464,
representing outdoor workers (which expires January 8, 1997), and with Local
412, representing power plant workers (which expires March 5, 1995). The
Company is also a 47% owner of WCNOC, which employs 1,242 persons to operate
Wolf Creek, 308 of which are represented by the IBEW.
Subsidiaries
KLT Inc., a wholly-owned subsidiary of the Company, was formed in 1992
as a holding company for various non-regulated business opportunities.
Currently KLT Inc., has three wholly owned subsidiaries which include KLT
Investments Inc. which is a passive investor in economic and community
development and energy related investments; KLT Energy Services Inc., which
is a partner in an energy management services business; and KLT Power Inc.,
which was formed in 1993 to participate in independent power and cogeneration
projects. The Company's equity investment in the KLT companies is currently
$9.5 million ($4.5 million was invested as of December 31, 1993).
Subsequent Financing Events
Since December 31, 1993, the Company has redeemed $13,982,500 its
portion of the outstanding $30,000,000 City of LaCygne, Kansas Pollution
Control Revenue Bonds (Kansas City Power & Light Company - Kansas Gas and
Electric Company) Series 1973 and $21,940,000 City of LaCygne, Kansas
Pollution Control Revenue Refunding Bonds (Kansas City Power & Light Company
Project) Series 1977 with the issuance of $35,922,500 City of LaCygne,
Kansas, Environmental Improvement Revenue Refunding Bonds (Kansas City Power
& Light Company Project) Series 1994.
Officers of the Registrant
Year Elected
Name Age Positions Currently Held as an Officer
Drue Jennings 47 Chairman of the Board, President 1980
and Chief Executive Officer
Bernard J. Beaudoin 53 Senior Vice President-Finance 1984
Chief Financial Officer
Samuel P. Cowley 59 Senior Vice President-Corporate 1977
Affairs, Chief Legal Officer and
Assistant Secretary
Ronald G. Wasson 49 Senior Vice President-Administrative 1983
& Technical Services
Frank L. Branca 46 Vice President-Power Supply 1989
Charles R. Cole 47 Vice President-Customer Services 1990
James L. Hogan 63 Vice President-Environmental & 1984
Research Services
Marcus Jackson 42 Vice President-Power Production 1989
Turner White* 44 Vice President-Communications 1990
John J. DeStefano 44 Treasurer 1989
Jeanie Sell Latz 42 Corporate Secretary 1991
Neil Roadman 48 Controller 1980
Mark C. Sholander 48 General Counsel and Assistant 1986
Secretary
* All of the foregoing persons have been officers of the Company or
employees in a responsible position with the Company for the past five years
except for Mr. White. Mr. White has been with the Company since 1989; prior
to that he was Vice President, Public Relations of Bernstein-Rein
Advertising, Inc. from 1986 to 1989.
The term of office of each officer commences with his or her
appointment by the Board of Directors and ends at such time as the Board of
Directors may determine.
ITEM 2. PROPERTIES
Generation Resources
The Company's generating facilities consist of the following:
Estimated
1994
Year Megawatt(mw)
Unit Completed Capacity
Fuel
Existing Units
Base Load..Wolf Creek(a) 1985 545(b) Nuclear
Iatan 1980 469(b) Coal
LaCygne 2 1977 335(b) Coal
LaCygne 1 1973 343(b) Coal
Hawthorn 5 1969 457
Coal/Gas
Montrose 3 1964 161 Coal
Montrose 2 1960 152 Coal
Montrose 1 1958 150 Coal
Peak Load..Northeast 13 and 14(c) 1976 112 Oil
Northeast 17 and 18(c) 1977 108 Oil
Northeast 15 and 16(c) 1975 103 Oil
Northeast 11 and 12(c) 1972 99 Oil
Grand Avenue (2 units) 1929 & 1948 64 Gas
Total 3,098
(a) This unit is one of the Company's principal generating facilities
and has the lowest fuel cost of any of its generating facilities.
Any extended shutdown of the unit for any reason could have a
substantial adverse effect on the operations of the Company and
its financial condition.
(b) Company's share of jointly-owned unit.
(c) Combustion turbines.
The Company's maximum system net hourly peak load of 2,819 mw occurred
on August 17, 1993. The maximum winter peak load of 1,829 mw occurred on
December 21, 1989. The accredited generating capacity of the Company's
electric facilities in the summer (when peak loads are experienced) of 1993
under MOKAN Power Pool standards was 3,085 mw.
The Company owns the Hawthorn Station (Jackson County, Missouri),
Montrose Station (Henry County, Missouri), Northeast Station (Jackson County,
Missouri) and two Grand Avenue Station turbine generators (Jackson County,
Missouri). The Company also owns 50% of the 685-mw LaCygne 1 Unit and 670-mw
LaCygne 2 Unit in Linn County, Kansas; 70% of the 670-mw Iatan Station in
Platte County, Missouri; and 47% of the 1,160 mw Wolf Creek in Coffey County,
Kansas.
Transmission and Distribution Resources
The Company's electric transmission system is interconnected with
systems of other utilities to permit bulk power transactions with other
electricity suppliers in Kansas, Missouri, Iowa, Nebraska and Minnesota. The
Company is a member of the MOKAN Power Pool, which is a contractual
arrangement among eleven utilities in western Missouri and Kansas which
interchange electric energy, share reserve generating capacity, and provide
emergency and standby electricity services to each other.
The Company owns approximately 1,700 miles of transmission lines and
approximately 8,900 miles of overhead distribution lines, and approximately
2,800 miles of underground distribution lines. The Company has all
franchises necessary to sell electricity within the territories from which
substantially all of its gross operating revenue is derived.
General
The Company's principal plants and properties, insofar as they
constitute real estate, are owned in fee; certain other facilities are
located on premises held under leases, permits or easements; and its electric
transmission and distribution systems are for the most part located over or
under highways, streets, other public places or property owned by others for
which permits, grants, easements or licenses (deemed satisfactory but without
examination of underlying land titles) have been obtained.
Substantially all of the fixed property and franchises of the Company,
which consists principally of electric generating stations, electric
transmission and distribution lines and systems, and buildings (subject to
exceptions and reservations) are subject to a General Mortgage Indenture and
Deed of Trust dated as of December 1, 1986. The last series of mortgage
bonds under the Indenture of Mortgage and Deed of Trust dated as of
December 1, 1946 (1946 Mortgage) secured the City of LaCygne pollution
control bonds (Pollution Bonds) which were refinanced in the first quarter of
1994--see "Subsequent Financing Events" on page 6. Upon the redemption of
the Pollution Bonds on March 1, 1994, the 1946 mortgage was discharged.
ITEM 3. LEGAL PROCEEDINGS
Inter-City Beverage Co., Inc. et. al vs. Kansas City Power & Light Company
On August 13, 1993, a lawsuit was filed by nine customers in the Circuit
Court of Jackson County, Missouri against the Company. The suit alleged the
misapplication of certain of the Company's electric rate tariffs resulting in
overcharges to industrial and commercial customers which have been provided
service under those tariffs and requested certification as a class action.
On December 3, 1993, the Court postponed ruling on motion to certify as a
class action, and dismissed the matter for lack of subject matter
jurisdiction. The plaintiff appealed to the Missouri Court of Appeals,
Western District. The Company has not yet determined the amount of the
alleged overcharges. The Company believes it will be able to successfully
defend this action.
See "Environmental Matters - Waste Disposal" on page 3 and "Notes to
Consolidated Financial Statements - Tax Matters" on page 31 of this report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders, through the
solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Market Information:
(1) Principal Market:
Common Stock of the Company is listed on the New York Stock
Exchange and the Chicago Stock Exchange.
(2) Stock Price Information:
Common Stock Price Range
1993 1992
Quarter High Low High Low
First $25-1/8 $22 $23-3/4 $19-7/8
Second 25-1/4 23-1/2 22-1/2 20-5/8
Third 26-1/4 24-3/8 24-1/2 21-7/8
Fourth 25 21-3/4 23-1/4 21-3/4
Holders:
At December 31, 1993, the Company's Common Stock was held by 31,267
shareholders of record.
Dividends:
Common Stock dividends were declared as follows:
Quarter 1994 1993 1992
First $0.37 $0.36 $0.35
Second 0.36 0.36
Third 0.37 0.36
Fourth 0.37 0.36
The Company's Restated Articles of Consolidation contains certain
restrictions on the payment of dividends on the Company's Common Stock.
ITEM 6. SELECTED FINANCIAL DATA
Year Ended December 31
1993 1992 1991 1990 1989
(Thousands)
Operating revenues $ 857,450 $ 802,668 $ 825,101 $ 815,570 $ 790,216
Net income $ 105,772 $ 86,334 $ 103,893 $ 102,732 $ 108,618
Earnings per common
share $ 1.66 $ 1.35 $ 1.58 $ 1.56 $ 1.65
Total assets at
year-end $ 2,755,068 $ 2,646,923 $ 2,615,039 $ 2,598,859 $ 2,620,826
Total redeemable
preferred stock and
long-term debt
(including current
maturities) $ 869,908 $ 816,625 $ 824,756 $ 852,645 $ 921,050
Cash dividends per
common share $ 1.46 $ 1.43 $ 1.37 $ 1.31 $ 1.25
Ratio of earnings to
fixed charges 3.80 3.12 3.22 2.96 2.92
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
KILOWATT (KWH) SALES AND OPERATING REVENUES
Sales and revenue data:
Increase (Decrease)
From Prior Year
1993 1992
KWH Revenues KWH Revenues
(Millions) (Millions)
Retail sales:
Residential 13 % $ 30 (12)% $ (33)
Commercial 3 % 9 (2)% (4)
Industrial 3 % 3 6 % 3
Other 1 % - 1 % -
Total retail 6 % 42 (4)% (34)
Sales for resale:
Bulk power sales 27 % 13 51 % 12
Other 5 % - (6)% -
Total operating revenues $ 55 $ (22)
Although 1993 temperatures have been milder than normal, residential and
commercial sales reflect closer to normal temperatures during 1993 compared to
the abnormally mild weather of 1992 and warmer than normal weather of 1991.
Based on the Company's records of cooling degree days above 65 degrees
Fahrenheit, the summer of 1992 was the coolest since 1950. The weather
conditions were the primary cause for the variances in residential and
commercial sales although both 1993 and 1992 also reflect load growth.
Industrial kwh sales continued to increase over prior years and reflect
increased large customer usage in the steel, auto manufacturing, grain
processing and plastic container production sectors.
Bulk power sales reflect an increase in the number of sales commitments,
the Company's high unit and fuel availability, and the requirements of other
electric systems.
Changes in total revenue per kwh are due to changes in the mix of kwh
sales among customer classifications and the effect on certain classifications
of declining price per kwh as kwh usage increases. Less than 1% of the
Company's revenues are affected by an automatic fuel adjustment provision.
Tariffs have not changed materially since 1988. Effective January 1,
1994, Missouri jurisdictional retail rates were reduced 2.66%, or
approximately $12.5 million annually, primarily to reflect the end of the
Missouri Public Service Commission (MPSC) rate phase-in amortization. This
agreement with the MPSC and public counsel also includes a provision whereby
none of the parties can file for a general increase or decrease in Missouri
retail electric rates prior to January 1, 1996. Approximately two-thirds of
total retail sales are from Missouri customers.
The level of future kwh sales will depend upon weather conditions,
customer conservation efforts, competing fuel sources and the overall economy
of the Company's service territory. Sales to industrial customers, such as
steel and auto manufacturers, are also affected by the national economy. The
level of bulk power sales in the future will depend upon the availability of
generating units, fuel costs, requirements of other electric systems and the
Company's system requirements.
Also, issues facing the electric utility industry such as transmission
access, demand-side management programs, increased competition and retention
of large industrial customers could affect sales. Alternative sources of
electricity, such as cogeneration, could affect the retention of, and future
sales to large industrial customers.
COMPETITION
The National Energy Policy Act of 1992 gave the Federal Energy
Regulatory Commission (FERC) the authority to require electric utilities to
provide wholesale transmission line access (wholesale wheeling) to independent
power producers and other utilities. Amendments to the Public Utility Holding
Company Act simplified the organization of exempt wholesale generators, who
engage exclusively in generating electricity for wholesale markets. Although
the Act prohibits FERC from ordering retail wheeling (allowing retail
customers to select a different power producer and use the transmission
facilities of the host utility to deliver the energy), the Act itself does not
prevent the state commissions from doing so. The state commissions however,
may be preempted by other provisions of the Federal Power Act. If retail
wheeling were allowed, utilities with large industrial customers could face
intense competition and potentially lose a major customer which could place an
unfair, costly burden on the remaining customer base or shareholders.
The Company continues to evaluate the effects of competition on its
operations and position itself for a more competitive marketplace. It has
been participating in wholesale wheeling voluntarily and has tariffs in place
to accommodate these activities. The Company has a diverse customer mix with
less than 18% of total sales derived from industrial customers as compared to
a utility average of approximately 35%. The Company's industrial rates are
competitively priced compared to the regional average and its rate structure
allows some flexibility in setting
rates. In addition, Company sponsored programs help customers manage their
electricity consumption, and control their costs.
FUEL, PURCHASED POWER, OTHER OPERATION AND MAINTENANCE EXPENSES
Wolf Creek completed its sixth scheduled refueling outage during 1993
and returned on-line after 73 days. The Company began accruing for this
outage in January 1992 (see Note 1 to the Consolidated Financial Statements
for a discussion of the 1992 change in accounting principle). The prior
refueling outage began in 1991, before the Company started accruing for these
costs, and extended into January 1992. Because these costs, as well as a
forced outage in 1992, had not been accrued, all expenses associated with
these outages were expensed as incurred. As a result, 1992 expenses
associated with Wolf Creek outages (including amounts accrued beginning in
January 1992) exceeded amounts expensed in 1993 by $5.6 million ($0.06 per
share) and 1992 expenses were less than 1991 expenses by $4.6 million ($0.05
per share). The next refueling outage is scheduled to begin in September
1994.
Combined fuel and purchased power expenses for 1993 increased over 1992
and 1991 reflecting additional sales. Partially offsetting these increases,
fuel prices and freight rates have gradually decreased since 1991.
Other operation expenses increased during 1993 and 1992 reflecting
increased generating plant production expenses and higher levels of
administrative and general expenses mostly due to increased wages and employee
benefits, and the 1993 accrual of postretirement benefits (see Note 2 to the
Consolidated Financial Statements).
The Company continues to place emphasis on cost control. Processes are
being reviewed and changed to provide increased efficiencies and improved
operations.
INCOME TAXES
The change in income tax expense is mostly due to the changes in income
subject to tax, but 1993 also reflects an increase of approximately $2 million
in federal income tax expense because federal income tax rates increased.
GENERAL TAXES
Components of general taxes (in thousands):
1993 1992 1991
Property taxes $ 45,545 $ 44,300 $ 38,803
Gross receipts taxes 40,659 39,232 41,223
Other general taxes 9,455 8,929 8,499
Total general taxes $ 95,659 $ 92,461 $ 88,525
Increases in property taxes since 1991 are primarily due to the Kansas
school finance legislation. The Company estimates the effects of this
legislation will increase future property taxes over 1993 levels by
approximately $1 million.
The majority of Missouri customers are billed gross receipts tax based
on billed revenues.
OTHER INCOME AND DEDUCTIONS
Miscellaneous and Income Taxes - 1992 reflects gains from the sale of
property and other contract settlements.
INTEREST CHARGES
Declines in long-term interest expense since 1991 reflect lower interest
rates on variable rate debt and the retirement, repayment or refinancing of
debt. The average interest rate paid on long-term debt including current
maturities declined to 6.0% in 1993 compared to 6.6% in 1992 and 7.5% in 1991.
Declines in short-term interest expense reflect the decreasing interest
rates since 1991 and a lower level of short-term debt outstanding during 1993.
The average daily outstanding balance of short-term debt decreased to $16
million in 1993 from $60 million in 1992 and $50 million in 1991.
PREFERRED STOCK DIVIDEND REQUIREMENTS
The 1992 decrease in the preferred stock dividend requirements compared
to 1991 reflects the refinancing of higher rate preferred stock with variable
rate preferred stock.
EARNINGS PER SHARE (EPS)
EPS for 1993 increased $0.31 over 1992 and EPS for 1992 decreased $0.23
from 1991.
The effects of weather increased 1993 EPS by approximately $0.25 over
1992 and decreased 1992 EPS by approximately $0.46 from 1991. Temperatures in
1993 were milder than normal, but closer to normal compared to the extremely
mild weather in 1992 and warmer than normal weather of 1991. Based on a
statistical relationship between sales and the differences in actual and
normal temperatures for the year, the Company estimates the effects of
abnormal weather for the last three years were as follows:
1993 1992 1991
Estimated effects of
abnormal weather on EPS $ (0.10) $ (0.35) $ 0.11
In addition to the effects of abnormal weather on EPS, 1993 expenses
associated with Wolf Creek outages (including outage accruals which began in
January 1992) decreased from 1992 resulting in an increase in EPS of $0.06.
These same 1992 expenses decreased from 1991 causing an increase in 1992 EPS
of $0.05.
EPS for 1993 and 1992 reflect efforts of the Company to control costs
despite increases in production expenses and general and administrative
expenses. Also, since 1991, the Company has refinanced a significant portion
of its long-term debt and preferred stock to take advantage of lower rates.
EPS for 1992 also reflect gains from the sales of property and other contract
settlements.
PROJECTED CONSTRUCTION EXPENDITURES
Construction expenditures, excluding AFDC, were $129.2 million in 1993
and are projected for the next five years as follows:
Construction Expenditures
1994 1995 1996 1997 1998 Total
(millions)
Generating facilities $ 52.8 $ 74.3 $ 67.4 $ 114.1 $ 148.3 $456.9
Nuclear fuel 19.3 20.7 8.1 21.0 25.7 94.8
Transmission facilities 11.1 10.6 8.5 8.7 8.8 47.7
Distribution and
general facilities 70.4 53.7 52.9 52.9 54.5 284.4
Total $ 153.6 $ 159.3 $ 136.9 $ 196.7 $ 237.3 $883.8
The Company's resource plan includes four new 146 megawatt (mw) gas-
fired combustion turbines scheduled to be completed from 1998 through 2000.
In addition, the plan envisions a new 705 mw (250 mw, Company's share) coal-
fired generating unit scheduled to begin construction in 1997 and be completed
by 2002. The projected construction expenditures include $200.2 million of
forecasted costs for these projects during the next five years. The Company's
resource plan is subject to periodic review and modification. The next
integrated resource plan will be submitted to the MPSC in July 1994.
WOLF CREEK
Wolf Creek is one of the Company's principal generating facilities
representing approximately 17% of the Company's accredited generating capacity
and 26% of the Company's annual kwh generation during the last three years,
and has the lowest fuel cost of any of its generating facilities. The plant
operated at 80%, 85% and 59% of capacity for 1993, 1992 and 1991,
respectively. Wolf Creek's assets and operating expenses represent
approximately 50% and 20% of the Company's total assets and operating
expenses, respectively. Currently no major equipment replacements are
anticipated and the Company estimates the cost of nuclear fuel per million
BTU, after the next refueling in the fall of 1994, will increase from
approximately 35% to 40% of the cost of coal. Based on contract prices and
projected future spot market prices for nuclear fuel and coal, it is
anticipated that by 1996 the cost of nuclear fuel will increase in relation to
coal to be about one-half the cost of coal.
An extended shut-down of the unit could have a substantial adverse
effect on the Company's business, financial condition and results of
operations. Higher replacement power and other costs would be incurred as a
result. Although not expected, an abnormal shut-down of the plant could be
caused by adverse incidents at the plant or by actions of the Nuclear
Regulatory Commission reacting to safety concerns at the plant or other
similar nuclear facilities. If a long-term shut-down occurred, the state
regulatory commissions could consider reducing rates by excluding Wolf Creek
investment from rate base.
Ownership and operation of a nuclear generating unit exposes the Company
to potential retroactive assessments and property losses in excess of
insurance coverage. These risks are more fully discussed in Note 4 to the
Consolidated Financial Statements-Commitments and Contingencies-Nuclear
Liability and Insurance.
ENVIRONMENTAL MATTERS
The Company's policy is to act in an environmentally responsible manner
and utilize the latest technological processes possible to avoid and treat
contamination. The Company continually conducts environmental audits designed
to assure compliance with governmental regulations and detect contamination.
However, these regulations are constantly evolving; governmental bodies may
impose additional or more rigid environmental regulations which could require
substantial changes to the Company's operations or facilities.
See Note 4 to the Consolidated Financial Statements-Commitments and
Contingencies-Environmental Matters-for discussion of costs of compliance with
environmental laws and regulations and a potential liability (which the
Company believes is not material to its financial condition or results of
operations) for cleanup costs under the Federal Superfund law.
Clean Air Act Amendments of 1990 contain two programs significantly
affecting the utility industry. Based on the results of current studies, the
Company estimates total capital expenditures needed to comply with existing
and proposed acid rain program regulations will be $4.1 million for the
installation of continuous emission monitoring equipment. The Company has
spent $2.9 million as of December 31, 1993 and has included the remaining $1.2
million in the five year projected construction expenditures. Future acid
rain program regulations may require the Company to make further capital
expenditures, but it is not possible to estimate those expenditures, if any.
The other utility-related program calls for a study of certain air toxic
substances. Based on the outcome of this study, regulation of air toxic
substances, including mercury, could be required. The Company cannot, at this
time, predict the likelihood of any such regulations or compliance costs.
CAPITAL REQUIREMENTS AND LIQUIDITY
On January 3, 1994, Moody's Investors Service upgraded the credit rating
of the Company's bonds due to an improved financial profile and low-cost
operations. The Company's long-term debt was upgraded as follows: secured
pollution control bonds to A1 from A2; general mortgage bonds-medium-term
notes to A1 from A3; unsecured pollution control bonds to A2 from Baa1; and,
preferred stock to a2 from a3. In addition, in 1993 Standard & Poor's
Corporation and Duff & Phelps upgraded the Company's General Mortgage Bonds as
follows: Standard & Poor's from A- to A; and Duff & Phelps from A to A+.
Improved ratings will make it less costly for the Company to raise funds when
needed and will contribute to the Company's continued efforts to meet the
challenge of increased competition in the utility industry.
The Company's capital structure at December 31, 1993 (including current
maturities of long-term debt less special deposit for retirement of debt)
consisted of 49.1% common stock equity, 5.1% preferred stock and 45.8% long-
term debt. The Company's goal is to maintain a capital structure in which the
percentages of common stock equity and long-term debt are approximately equal.
The Company currently estimates that it will be able to meet a
significant portion of the projected construction expenditures with
internally-generated funds. It is anticipated that funds for maturing debt
through 1998 totaling $274.5 million will be provided from operations,
refinancings or short-term debt. As of December 31, 1993, the Company had $78
million of registered but unissued Medium-Term Notes and $149 million of
unused bank lines of credit. Uncertainties which affect the
degree to which these capital requirements will be met with funds provided
from operations include such items as the effect of inflation on operating
expenses, the level of kwh sales, regulatory actions, compliance with future
environmental regulations, availability of the Company's generating units and
the level of bulk power sales with other utilities.
The Company currently uses an accelerated depreciation method for tax
purposes. The accelerated depreciation on the Wolf Creek plant has reduced
the Company's tax payments during the last three years by approximately $30
million per year. Accelerated depreciation on Wolf Creek ends in 1994.
See Note 4 to the Consolidated Financial Statements-Commitments and
Contingencies-Tax Matters-for discussion of the Company's federal income tax
returns for the years 1985 through 1990 which are presently under audit by the
Internal Revenue Service.
In order to take advantage of the potential benefits inherent in a
larger energy system, the Company might incur additional debt and/or issue
additional equity to finance system growth or new growth opportunities,
through business combinations or other investments such as an exempt wholesale
generator.
SUBSEQUENT EVENT
The Company announced an early retirement program in March 1994. See
Note 11 to the Consolidated Financial Statements for discussion of the expense
and savings of the program.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS
December 31 December 31
1993 1992
ASSETS (Thousands)
UTILITY PLANT, at original cost (Notes 1, 8 and 9)
Electric $ 3,240,384 $ 3,133,059
Less-Accumulated depreciation 1,019,714 948,266
Net utility plant in service 2,220,670 2,184,793
Construction work in progress 67,766 65,965
Nuclear fuel, net of amortization of
$76,722,000 and $78,735,000 29,862 34,210
Total 2,318,298 2,284,968
REGULATORY ASSET - DEFERRED WOLF CREEK COSTS
(Note 1) 29,118 39,484
REGULATORY ASSET - RECOVERABLE TAXES (Note 1) 122,000 94,000
INVESTMENTS AND NONUTILITY PROPERTY 28,454 27,570
CURRENT ASSETS
Cash 1,539 128
Special deposit for the retirement of debt (Note 8) 60,118 -
Receivables
Customer accounts receivable (Note 5) 29,320 14,372
Other receivables 19,340 24,043
Fuel inventories, at average cost 14,550 20,625
Materials and supplies, at average cost 44,157 45,263
Prepayments 4,686 4,209
Deferred income taxes (Note 3) 3,648 5,553
Total 177,358 114,193
DEFERRED CHARGES
Regulatory Assets (Note 1)
Settlement of fuel contracts 20,634 25,751
KCC Wolf Creek carrying costs 9,575 12,311
MPSC rate phase-in plan - 7,072
Other 31,899 26,798
Other deferred charges 17,732 14,776
Total 79,840 86,708
Total $ 2,755,068 $ 2,646,923
LIABILITIES
CAPITALIZATION (Notes 7 and 8)(See Statements)
Common stock-authorized 150,000,000 shares
without par value-61,908,726 shares issued
and outstanding-stated value $ 449,697 $ 449,697
Retained earnings 418,201 405,985
Capital stock premium and expense (1,747) (1,758)
Common stock equity 866,151 853,924
Cumulative preferred stock 89,000 89,000
Cumulative preferred stock (redeemable) 1,756 1,916
Long-term debt 733,664 788,209
Total 1,690,571 1,733,049
CURRENT LIABILITIES
Notes payable to banks (Note 6) 4,000 -
Commercial paper (Note 6) 25,000 33,000
Current maturities of long-term debt 134,488 26,500
Accounts payable 59,421 77,162
Dividends declared 423 423
Accrued taxes 27,800 19,864
Accrued interest 15,575 12,949
Accrued payroll and vacations 20,127 18,044
Accrued refueling outage costs (Note 1) 7,262 12,600
Other 8,531 7,631
Total 302,627 208,173
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes (Note 3) 627,819 576,222
Deferred investment tax credits 87,185 91,530
Other 46,866 37,949
Total 761,870 705,701
COMMITMENTS AND CONTINGENCIES (Note 4)
Total $ 2,755,068 $ 2,646,923
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31
1993 1992 1991
(Thousands)
ELECTRIC OPERATING REVENUES $ 857,450 $ 802,668 $ 825,101
OPERATING EXPENSES
Operation
Fuel 130,117 130,032 132,100
Purchased power 31,403 21,868 22,226
Other 184,633 175,937 162,548
Maintenance 78,550 81,163 80,922
Depreciation 91,110 88,768 86,795
Taxes
Income (Note 3) 69,502 51,691 61,871
General 95,659 92,461 88,525
Amortization of
MPSC rate phase-in plan (Note 1) 7,072 7,072 7,072
Deferred Wolf Creek costs (Note 1) 13,102 13,102 11,734
Total 701,148 662,094 653,793
OPERATING INCOME 156,302 140,574 171,308
OTHER INCOME AND DEDUCTIONS
Allowance for equity funds used during
construction 2,846 1,073 539
Deferred Wolf Creek carrying
costs (Note 1) - - 791
Miscellaneous (2,486) 2,595 (3,829)
Income taxes (Note 3) 1,549 (505) 1,593
Total 1,909 3,163 (906)
INCOME BEFORE INTEREST CHARGES 158,211 143,737 170,402
INTEREST CHARGES
Long-term debt 50,118 54,266 63,057
Short-term notes 750 2,749 3,299
Miscellaneous 4,113 2,173 2,665
Allowance for borrowed funds used during
construction (2,542) (1,785) (2,512)
Total 52,439 57,403 66,509
YEARLY RESULTS
Net income 105,772 86,334 103,893
Preferred stock dividend requirements 3,153 3,062 6,023
Earnings available for common stock $ 102,619 $ 83,272 $ 97,870
Average number of common shares
outstanding 61,908,726 61,908,726 61,908,726
Earnings per common share $ 1.66 $ 1.35 $ 1.58
Cash dividends per common share $ 1.46 $ 1.43 $ 1.37
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31
1993 1992 1991
(Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 105,772 $ 86,334 $ 103,893
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 91,110 88,768 86,795
Amortization of:
Nuclear Fuel 8,705 9,583 6,199
Deferred Wolf Creek costs 13,102 13,102 10,943
MPSC rate phase-in plan 7,072 7,072 7,072
Other 8,234 5,921 5,147
Deferred income taxes (net) 25,502 23,979 28,064
Investment tax credit (net) (4,345) (4,521) (7,009)
Allowance for equity funds used during
construction (2,846) (1,073) (539)
Cash flows affected by changes in:
Receivables (10,245) 2,848 13,636
Fuel inventories 6,075 (859) 137
Materials and supplies 1,106 654 (98)
Accounts payable (17,741) 4,838 2,861
Accrued taxes 7,936 2,404 2,995
Accrued interest 2,626 488 (1,244)
Wolf Creek refueling outage accrual (5,338) 12,600 -
Settlement of fuel contracts - - (8,578)
Other operating activities 6,419 1,599 2,175
Net cash provided by operating
activities 243,144 253,737 252,449
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (129,199) (129,559) (122,447)
Allowance for borrowed funds used during
construction (2,542) (1,785) (2,512)
Other investing activities 306 (4,589) (5,404)
Net cash used in investing activities (131,435) (135,933) (130,363)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt 324,846 134,750 135,250
Issuance of preferred stock - 50,000 -
Retirement of long-term debt (271,480) (143,230) (163,215)
Retirement of preferred stock - (13,000) (40,000)
Special deposit for the retirement of
debt (60,118) - -
Premium on reacquired stock and long-term
debt (4,077) (2,321) (5,516)
Increase (decrease) in short-term
borrowings (4,000) (53,000) 42,500
Dividends declared (93,556) (91,277) (90,232)
Other financing activities (1,913) 274 (879)
Net cash used in financing activities (110,298) (117,804) (122,092)
Net increase (decrease) in cash 1,411 - (6)
Cash at beginning of year 128 128 134
Cash at end of year $ 1,539 $ 128 $ 128
Cash paid during the year for:
Interest (net of amount capitalized) $ 47,361 $ 55,223 $ 66,290
Income taxes $ 40,141 $ 32,995 $ 37,117
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
CONSOLIDATED STATEMENTS OF CUMULATIVE PREFERRED STOCK AND LONG-TERM DEBT
December 31
1993 1992
CUMMULATIVE PREFERRED STOCK (Note 7) (in thousands)
$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
No Par Value
3.04%* - 500,000 shares issued 50,000 50,000
Total $ 89,000 $ 89,000
CUMMULATIVE PREFERRED STOCK (REDEEMABLE) (Note 7)
$100 Par Value
4.00% - 17,557 and 19,157 shares issued $ 1,756 $ 1,916
LONG-TERM DEBT (EXCLUDING CURRENT MATURITIES) (Note 8)
First Mortgage Bonds
7.33% weighted average rate, amounts redeemed
in 1993 $ - $ 244,980
9.46% series due 1994 - 60,000
5 7/8% series due 2007 21,940 21,940
Secured by General Mortgage Bonds
Medium-Term Notes due 1994-2008, 6.78% and 7.29%
weighted average rate at December 31 378,750 220,000
3.34%* Environmental Improvement Revenue
Refunding Bonds due 2012-23 122,846 31,000
Guaranty of Pollution Control Bonds
5 3/4% series due 2003 13,742 13,980
3.15%* due 2015-17 196,500 196,500
Unamortized Premium and Discount (net) (114) (191)
Total $ 733,664 $ 788,209
* Variable rate securities, weighted average rate as of December 31, 1993
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
Year ended December 31
1993 1992 1991
(in thousands)
Beginning Balance $ 405,985 $ 411,161 $ 399,294
Net Income 105,772 86,334 103,893
511,757 497,495 503,187
Premium on Reacquired Preferred Stock - 233 1,794
Dividends Declared:
Preferred Stock, at required rates 3,169 2,747 5,417
Common Stock - $1.46, $1.43 and $1.37
per share 90,387 88,530 84,815
Ending Balance (Note 7) $ 418,201 $ 405,985 $ 411,161
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
KANSAS CITY POWER & LIGHT COMPANY
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
System of Accounts
The accounting records of Kansas City Power & Light Company (the
Company) are maintained in accordance with the Uniform System of Accounts
prescribed by the Federal Energy Regulatory Commission (FERC) and generally
accepted accounting principles.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and KLT Inc., a wholly-owned subsidiary. Intercompany balances and
transactions have been eliminated. Because KLT Inc. is not an electric
utility, its revenues and expenses have been classified under Other Income and
Deductions in the Consolidated Statements of Income.
KLT Inc. was formed in 1992 as a holding company for various non-
regulated business opportunities. The Company's equity investment in KLT Inc.
was $4.5 million and $1.5 million as of December 31, 1993 and 1992,
respectively.
Utility Plant
Utility plant is stated at historical costs of construction. These
costs include taxes, payroll-related costs, including pensions and other
fringe benefits, and an allowance for funds used during construction.
Allowance for Funds Used During Construction (AFDC)
AFDC represents the cost of borrowed funds and a return on equity funds
used to finance construction projects and is capitalized as a cost of
construction work in progress. The portion attributable to borrowed funds is
reflected as a reduction of interest charges while the portion applicable to
equity funds is shown as a non-cash item of other income. When a
construction project is placed in service, the related AFDC, as well as other
construction costs, is used to establish rates under regulatory rate
practices. The rates used to compute gross AFDC are compounded semi-annually
and averaged 8.3% for 1993, 6.6% for 1992 and 7.7% for 1991.
Depreciation and Maintenance
Depreciation is computed on a straight-line basis for jurisdictional
property based on depreciation rates approved by the Missouri Public Service
Commission (MPSC) and the Kansas Corporation Commission (KCC). Annual
composite rates were approximately 2.9% during the last three years.
Costs of improvements to units of property are charged to the utility
plant accounts. Property units retired or otherwise disposed are charged to
accumulated depreciation, along with removal costs, net of salvage. Repairs
of property and replacements of items determined not to be units of property
are expensed as incurred.
Nuclear Plant Decommissioning Costs
In 1986, the MPSC estimated the cost of decommissioning the Wolf Creek
Generating Station (Wolf Creek) to be $103 million in 1985 dollars. In 1989,
the KCC estimated the cost to be $206 million in 1988 dollars. Then, in 1992,
the MPSC increased its estimate to $347 million in 1990 dollars. In
accordance with MPSC and KCC requirements, the jurisdictional portions of the
Company's 47% share of these costs (current level of $3.2 million, annually)
are being recovered and charged to other operation expenses over the life of
the plant and placed in an external trust fund to be used only for the
physical decommissioning of Wolf Creek (immediate dismantlement method) which
is not expected to occur prior to 2025. A study was filed with the KCC and
MPSC during 1993 estimating the projected decommissioning costs to be $370
million in 1993 dollars. Based on this study, it is expected that the MPSC
will determine that no increase in the current level of the Missouri
jurisdictional funding and expenses will be necessary. A hearing before the
KCC is expected during 1994.
The investment in the trust fund, including reinvested earnings, was
$14.3 million and $10.6 million at December 31, 1993 and 1992, respectively.
These amounts are reflected in the Consolidated Balance Sheets under
Investments and Nonutility Property with the related liabilities for
decommissioning included in Deferred Credits and Other Liabilities-Other.
Nuclear Fuel
The cost of nuclear fuel is amortized to fuel expense based on the
quantity of heat produced for the generation of electricity. Under the
Nuclear Waste Policy Act of 1982, the Department of Energy (DOE) is
responsible for the permanent disposal of spent nuclear fuel. Currently, the
Company pays a quarterly fee of one mill per kilowatt-hour of net nuclear
generation to the DOE for future permanent disposal services. Disposal costs
are charged to fuel expense and recovered through rates. These disposal
services may not be available prior to 2013 although an interim facility may
be available earlier. Wolf Creek has an on-site, temporary storage facility
for spent nuclear fuel which, under current regulatory guidelines, can provide
storage space until approximately 2006. The Company believes additional
temporary storage space can be constructed or obtained, as necessary.
Regulatory Assets
Certain costs are recorded as regulatory assets when a rate order allows
the deferral and inclusion of the amortization in rates or when it is
probable, based on historical regulatory precedent, that future rates
established by the regulators will recover amortization of the costs. If
subsequent recovery is not permitted, any unamortized balance, net of tax,
would reduce net income.
Deferred Wolf Creek Costs
Orders from the KCC and MPSC provided for continued construction
accounting for ratemaking purposes after the September 3, 1985
commercial in-service date of Wolf Creek through September 30, 1985 and
May 5, 1986, respectively. The deferral of certain other carrying costs
was also authorized. These deferrals are being amortized and recovered
in rates over an approximate 10 year period ending in 1996.
Recoverable Taxes
See Income Taxes below for discussion.
Settlement Of Fuel Contracts
The Company has deferred the cost incurred to terminate certain
coal purchase contracts. These costs are being amortized through the
year 2002.
KCC Wolf Creek Carrying Costs
As ordered by the KCC, the Company deferred certain carrying costs
through June 1991. The recovery and corresponding amortization of this
deferral over six years began in July 1991.
MPSC Rate Phase-In Plan
MPSC's 1986 Wolf Creek rate phase-in plan resulted in the deferral
of a cash recovery of a portion of the cost of equity and the carrying
costs on the deferral. Recovery of these deferrals was completed
December 31, 1993.
Effective January 1, 1994, the MPSC approved a 2.66% rate
reduction (approximately $12.5 million annually) for the Company's
Missouri retail customers primarily to reflect the completion of this
amortization. The reduction will be spread evenly over the Missouri
retail customer classes. This agreement with the MPSC and public
counsel also includes a provision whereby none of the parties can file
for a general increase or decrease in Missouri retail electric rates
prior to January 1, 1996. Approximately two-thirds of total retail
sales are from Missouri customers.
Other
Other regulatory assets include premium on redeemed debt, deferred
flood costs, the deferral of costs to decommission and decontaminate
federal uranium enrichment facilities and other costs. These deferrals
are amortized over various periods extending to 2017.
Fair Value of Financial Instruments
The stated values of the Company's financial instruments as of December
31, 1993 and 1992 approximated the fair market values based on quoted market
prices for the securities or for similar types of securities. If quotes were
not available, the Company's incremental borrowing rate for similar types of
debt was used.
Revenue Recognition
The Company utilizes cycle billing and accrues an estimated amount for
unbilled revenue at the end of each reporting period.
Income Taxes
The Company has adopted Financial Accounting Standards Board (FASB)
Statement No. 109, Accounting for Income Taxes. This statement is not
materially different from FASB Statement No. 96, which the Company adopted in
1988. As a result, the Company establishes deferred tax liabilities and
assets, as appropriate, for all temporary differences caused when the tax
basis of an asset or liability differs from that reported in the financial
statements. These deferred tax assets and liabilities must be determined
using the tax rates scheduled by the tax law to be in effect when the
temporary differences reverse.
The Regulatory Asset-Recoverable Taxes primarily reflects the future
revenue requirements necessary to recover the tax benefits of existing
temporary differences flowed through to ratepayers in the past. During 1993,
the net change in the Regulatory Asset-Recoverable Taxes and Deferred income
taxes included a $40 million increase resulting from the changes in the
federal and Missouri state income tax laws effective January 1, 1993 and
January 1, 1994, respectively. Although the Company has calculated its
deferred tax assets and liabilities pursuant to FASB 109, operating income
taxes were recorded in accordance with ratemaking principles. However, if
FASB 109 were reflected in the Consolidated Statements of Income, net income
would remain the same.
Investment tax credits have been deferred when utilized and are
amortized to income over the remaining service lives of the related
properties.
Accrued Refueling Outage Costs - Change In Accounting Principle
Effective January 1992, the Company changed its method of accounting for
incremental costs to be incurred during scheduled Wolf Creek refueling
outages. Instead of expensing these costs as incurred, the Company is
accruing forecasted outage costs evenly (monthly) over the unit's operating
cycle which normally lasts approximately 18 months. The Company believes this
method of accounting produces a more meaningful presentation of yearly results
of operations than the prior method. Since the accrual began in January 1992,
when Wolf Creek returned on-line from a refueling outage, there was no
cumulative effect for the change in accounting principle. The pro forma
effects for the year ended December 31, 1991 were not material but would have
increased net income by $3.2 million ($0.05 per share). Because there was no
refueling outage in 1992, the effect of this change decreased 1992 net income
by $7.8 million ($0.13 per share).
Environmental Matters
The Company's policy is to accrue environmental and cleanup costs when
it is probable that a liability has been incurred and the amount of the
liability can be reasonably estimated. The Company believes it has
appropriately recorded all such costs related to environmental matters.
Reclassifications
Certain reclassifications have been made to previously issued financial
statements in order to conform with the 1993 presentation.
2. PENSION PLANS AND OTHER EMPLOYEE BENEFITS
Pension Plans
The Company has defined benefit pension plans for all its regular
employees, including officers, providing for benefits upon retirement,
normally at age 65. In accordance with the Employee Retirement Income
Security Act of 1974 (ERISA), the Company has satisfied at least its minimum
funding requirements. Benefits under these plans reflect the employee's
compensation, years of service and age at retirement.
Provisions for pensions are determined under the rules prescribed by
FASB Statement No. 87-Employers' Accounting for Pensions. The following is
the funded status of the plans:
December 31
1993 1992
(thousands)
Accumulated Benefit Obligation:
Vested $ 209,193 $173,021
Non-vested 6,296 6,126
Total $ 215,489 $179,147
Determination of Plan Assets
less Obligations:
Fair value of plan assets $ 315,179 $272,001
Projected benefit obligation 279,525 241,902
Difference $ 35,654 $ 30,099
Reconciliation of Difference:
Contributions to trusts
Prepaid $ 10,677 $ 8,759
Accrued liability (6,304) (4,881)
Unamortized transition amount 16,756 18,828
Unrecognized net gain 18,197 11,494
Unrecognized prior service cost (3,672) (4,101)
Difference $ 35,654 $ 30,099
Plan assets are invested in insurance contracts, corporate bonds, equity
securities, U.S. Government securities, notes, mortgages and short-term
investments.
Based on discount rates of 7% in 1993 and 8% in 1992; and increases in
future salary levels of 4% to 5% in 1993 and 5% to 6% in 1992.
Components of provisions for pensions (in thousands):
1993 1992 1991
Service cost $ 8,671 $ 7,301 $ 6,162
Interest cost on projected benefit
obligation 19,521 17,903 16,617
Actual return on plan assets (49,875) (24,541) (45,542)
Other 27,715 3,653 27,026
Net periodic pension cost $ 6,032 $ 4,316 $ 4,263
Long-term rates of return on plan assets of 8% to 8.5% were used.
Postretirement Benefits Other Than Pensions
In addition to providing pension benefits, the Company provides certain
postretirement health care and life insurance benefits for substantially all
retired employees.
During the first quarter of 1993 the Company adopted FASB Statement No.
106-Employers' Accounting for Postretirement Benefits Other Than Pensions.
FASB 106 requires companies to accrue the cost of postretirement health care
and life insurance benefits during an employee's active years of service.
Previously, the Company expensed these costs as paid (pay-as-you-go). The
Company currently recovers these costs through rates on a pay-as-you-go basis.
As of December 31, 1992, the transition obligation under FASB 106 was
approximately $23.5 million, with amortization over 20 years beginning in
1993.
Net periodic postretirement benefit cost (in thousands):
1993
Service cost for benefits earned
during the year $ 616
Interest cost on the accumulated
postretirement benefit obligation (APBO) 1,893
Amortization of unrecognized
transition obligation 1,175
Net periodic postretirement cost 3,684
Less: Pay-as-you-go costs 1,109
Net increase in cost due to FASB 106 $ 2,575
The increase in the annual health care cost trend rate for 1994 is
assumed to be 13%, decreasing gradually over a seven year period to its
ultimate level of 6%. The Company's health care plan requires retirees to
participate in the cost when premiums exceed a certain amount. Because of
this provision, an increase in the assumed health care cost trend rate by 1%
in each year would only increase the APBO as of December 31, 1993 by
approximately $786,000 and the aggregate service and interest cost components
of net periodic postretirement benefit cost for 1993 by approximately $98,000.
Reconciliation of the status of postretirement benefit plans to amounts
recorded in the Consolidated Balance Sheets (in thousands):
December 31
1993
APBO:
Retirees $ (10,672)
Fully eligible active plan participants (6,405)
Other active plan participants (10,501)
Unfunded APBO (27,578)
Unrecognized loss 2,689
Unrecognized transition obligation 22,314
Accrued postretirement benefit obligation
(included in Deferred Credits
and Other Liabilities - Other) $ (2,575)
The weighted average discount rate of 7% and future salary level
increases of 4% were used to determine the APBO.
Long-Term Incentive Plan
In 1992, the shareholders adopted a 10 year, Long-Term Incentive Plan
for officers and key employees. Awards issued under the Plan cannot exceed
three million common stock shares. During 1993 and 1992, awards to purchase
63,125 and 86,000 shares of common stock were granted with exercise prices of
$23.875 and $21.625 per share, respectively. During 1993, awards to purchase
4,000 shares were canceled. Under granted stock options, recipients are
entitled to receive accumulated dividends as though reinvested if the options
are exercised and if the market price at the time of exercise equals or
exceeds the grant price. Under the assumption that all shares will eventually
be exercised, the Company expensed $0.1 million and $0.2 million in 1993 and
1992, respectively, representing accumulated dividends and the change in stock
price since the date of grant. At December 31, 1993, options for 145,125
shares of common stock were outstanding and options for 41,000 shares were
exercisable.
3. INCOME TAXES
Income tax expense as shown in the Consolidated Statements of Income
consists of the following:
1993 1992 1991
(thousands)
Current income taxes:
Federal $ 41,207 $ 28,081 $33,667
State 5,589 4,657 5,556
Total 46,796 32,738 39,223
Deferred income taxes, net:
Federal 22,274 20,488 23,696
State 3,228 3,491 4,368
Total 25,502 23,979 28,064
Investment tax credit, net (4,345) (4,521) (7,009)
Total income tax expense $ 67,953 $ 52,196 $60,278
The following table shows a reconciliation of the federal statutory income
tax rate to the effective rate reflected in the Consolidated Statements of
Income. See Note 1 to the Consolidated Financial Statements for a discussion
of the Company's income tax policies.
1993 1992 1991
Federal statutory income tax rate 35.0 % 34.0 % 34.0 %
Differences between book and tax
depreciation not normalized 1.3 1.7 1.8
Amortization of investment tax
credit (2.5) (3.3) (4.3)
State income taxes 3.3 3.9 4.0
Other 2.0 1.4 1.2
Effective income tax rate 39.1 % 37.7 % 36.7 %
The significant temporary differences resulting in deferred tax assets
and liabilities in the Consolidated Balance Sheets are as follows:
December 31
1993 1992
(thousands)
Depreciation differences $ 476,637 $ 449,701
Recoverable taxes 122,000 94,000
Other 25,534 26,968
Net deferred income tax liability $ 624,171 $ 570,669
The net deferred income tax liability consists of the following:
December 31
1993 1992
(thousands)
Gross deferred income tax assets $ (63,187) $ (64,746)
Gross deferred income tax liabilities 687,358 635,415
Net deferred income tax liability $ 624,171 $ 570,669
4. COMMITMENTS AND CONTINGENCIES
Nuclear Liability and Insurance
The Price-Anderson Act currently limits the public liability of nuclear
reactor owners to $9.4 billion, including attorney costs, for claims that
could arise from a nuclear incident. Accordingly, the Company and the other
owners of Wolf Creek have liability insurance coverage of this amount which
consists of the maximum available commercial insurance of $200 million and
Secondary Financial Protection (SFP). SFP coverage is funded by a mandatory
program of deferred premiums assessed against all owners of licensed reactors
for any nuclear incident anywhere in the country. The maximum assessment per
reactor is $79.3 million ($37.3 million, Company's share) per incident. The
owners of Wolf Creek are jointly and severally liable for these charges,
payable at a rate not to exceed $10 million ($4.7 million, Company's share)
per incident per year.
The owners of Wolf Creek also have $2.8 billion of property damage,
decontamination and decommissioning insurance for loss resulting from damage
to the Wolf Creek facilities. Nuclear insurance pools provide $1.3 billion of
coverage, while Nuclear Electric Insurance Limited (NEIL) provides $1.5
billion. In the event of an accident, insurance proceeds must first be used
for reactor stabilization and site decontamination. The remaining proceeds
from the $2.8 billion insurance coverage ($1.3 billion, Company's share), if
any, can be used for property damage up to $1.1 billion (Company's share),
premature decommissioning costs up to $117.5 million (Company's share) in
excess of funds previously collected for decommissioning (as discussed in Note
1) with the remaining $47 million (Company's share) available for either
property damage or premature decommissioning costs.
The owners of Wolf Creek have also procured extra expense insurance from
NEIL. Under both the NEIL property and extra expense policies, the Company is
subject to retroactive assessment if NEIL losses, with respect to each policy
year, exceed the accumulated funds available to the insurer under that policy.
The estimated maximum retroactive assessments for the Company's share under
the policies total approximately $9 million per year.
In the event of a catastrophic loss at Wolf Creek, the amount of
insurance available may not be adequate to cover property damages and extra
expenses incurred. Uninsured losses, to the extent not recovered through
rates, would be assumed by the Company and could have a material, adverse
effect on the Company's financial condition and results of operations.
Nuclear Fuel Commitments
At December 31, 1993, Wolf Creek's nuclear fuel commitments (Company's
share) were approximately $16 million for uranium concentrates through 1997,
$126 million for enrichment through 2014 and $46 million for fabrication
through 2014.
Tax Matters
The Company's federal income tax returns for the years 1985 through 1990
are presently under examination by the Internal Revenue Service (IRS). The
IRS has issued Revenue Agent's Reports for the years 1985 through 1990. The
Reports include proposed adjustments that would reduce the Company's Wolf
Creek investment tax credit (ITC) by 25% or approximately $20 million and tax
depreciation by 23% or approximately $190 million. These amounts include the
continuing effect of the adjustments through December 31, 1993. These
adjustments, principally, are based upon the IRS's contention that (i) certain
start-up and testing costs considered by the Company to be costs of the plant,
should be treated as licensing costs, which do not qualify for ITC or
accelerated depreciation, and (ii) certain cooling and generating facilities
should not qualify for ITC or accelerated depreciation.
If the IRS were to prevail on all of these proposed adjustments, the
Company would be obligated to make cash payments, calculated through December
31, 1993, of approximately $95 million for additional federal and state income
taxes and $50 million for corresponding interest. After offsets for deferred
income taxes, these payments would reduce net income by approximately $30
million.
The Company has filed a protest with the appeals division of the IRS.
Based upon their interpretation of applicable tax principles and the tax
treatment of similar costs and facilities with respect to other plants, it is
the opinion of management and outside tax counsel that the IRS's proposed Wolf
Creek adjustments are substantially overstated. Management believes any
additional taxes, together with interest, resulting from the final resolution
of these matters will not be material to the Company's financial condition or
results of operations.
Environmental Matters
The Company's operations must comply with federal, state and local
environmental laws and regulations. The generation of electricity utilizes,
produces and requires disposal of certain products and by-products including
polychlorinated biphenyl (PCB's), asbestos and other potentially hazardous
materials. The Federal Comprehensive Environmental Response, Compensation and
Liability Act, the "Superfund" law, imposes strict joint and several liability
for those who generate, transport or
deposit hazardous waste as well as the current property owner and predecessor
owner at the time of contamination. The Company continually conducts
environmental audits designed to detect contamination and assure compliance
with governmental regulations. However, compliance programs necessary to meet
future environmental laws and regulations governing water and air quality,
including carbon dioxide emissions, hazardous waste handling and disposal,
toxic substances and the effects of electromagnetic fields, could require
substantial changes to the Company's operations or facilities.
Interstate Power Company of Dubuque, Iowa (Interstate) filed a lawsuit
in 1989 against the Company in the Federal District Court for the District of
Iowa seeking from the Company contribution and indemnity under the Superfund
law for cleanup costs of hazardous substances at the site of a demolished gas
manufacturing plant in Mason City, Iowa. The plant was operated by the
Company for very brief periods of time before the plant was demolished in
1952. The site and all other properties the Company owned in Iowa were sold
to Interstate in 1957. The Company estimates that the cleanup could cost up
to $10 million. The Company's estimate is based upon an evaluation of
available information from on-going site investigation and assessment
activities, including the costs of such activities.
In August 1993, the Company, along with other parties to the lawsuit,
received a letter from the Environmental Protection Agency (EPA) notifying
each such party that it was considered a potentially responsible party for
cleanup costs at the site. The EPA has also proposed to list the site on the
National Priorities List.
The Company believes it has several valid defenses to this action
including the fact that the 1957 sales documents included clauses which
require Interstate to indemnify the Company from and against all claims and
damages arising after the sale. However, the Court in an October 1993 order
rejected this position, ruling that the indemnity clauses were not
sufficiently broad to indemnify for environmental cleanup. This order will be
final for appeal after a trial to allocate the cleanup costs among the
parties, which is expected in 1994. Even if unsuccessful on the liability
issue, the Company does not believe its allocated share of the cleanup costs
will be material to its financial condition or results of operations.
Other Agreements
Under long-term contractual arrangements, the Company's share of
purchased coal totaled approximately $17 million in 1993 and $21 million in
1992 and 1991. The Company's share of purchase commitments in 1993 dollars
under the remaining terms of the coal contracts is approximately $110 million.
The Company also purchases coal on the spot market.
The Company has a transmission line lease with another utility whereby,
with FERC approval, the rental payments can be increased by the lessor, after
which the Company is entitled to cancel the lease if able to secure an
alternative transmission path. Total commitments under this lease are $1.9
million per year and approximately $60 million over the remaining life of the
lease if the lease is not canceled.
Under other leases, the Company incurred rental expense during the last
three years of approximately $15 million to $19 million per year. Rental
commitments under these leases for railroad cars, computer equipment,
buildings, a transmission line and similar items are approximately $114
million over the remaining life of the leases with payments during each of the
next five years ranging from a high of $17 million in 1994 to $8 million in
1998. Capital leases are not material to the Company and are included in the
amounts discussed above.
The Company has contracted to purchase capacity from other utilities
through 2009. The obligations are as follows (cost in millions):
Cost Megawatts (mw)
1994 $12.4 470
1995 15.1 450
1996 19.4 500
1997 22.8 500
1998 22.8 500
1999 22.8 500
2000 16.6 150
Thereafter -
annual amounts through 2009 10.4 150
5. SALE OF ACCOUNTS RECEIVABLE
In 1989, the Company entered into an agreement with a financial
institution to sell, with limited recourse, an undivided interest in
designated accounts receivable. Accounts receivable sold under this agreement
totaled $60 million as of December 31, 1993, 1992 and 1991. Costs associated
with the sale of customer accounts receivable of $2.2 million, $2.6 million
and $3.5 million for 1993, 1992 and 1991, respectively, are included in Other
Income and Deductions-Miscellaneous.
6. SHORT-TERM BORROWINGS
The Company borrows short-term funds from banks and through the sale of
commercial paper as needed. Under minimal fee arrangements, the Company has
confirmed bank lines of credit totaling $153 million, of which $149 million
remains available at December 31, 1993.
7. COMMON STOCK EQUITY, PREFERRED STOCK AND REDEEMABLE PREFERRED STOCK
Retained earnings at December 31, 1993 included $16 million which was
not available for cash dividends on common stock under the provisions of the
Indenture of Mortgage securing First Mortgage Bonds.
During 1991, the Company reacquired and retired the 800,000 shares of
the $2.33 and 800,000 shares of the $2.20 Cumulative No Par Preferred Stock
with a combined stated value of $40 million. This transaction included a $4.7
million premium of which $2.9 million was charged against capital stock
premium and expense and $1.8 million was charged against retained earnings.
In February 1992, the Company redeemed and retired the 130,000 shares of
the 7.72% Cumulative Preferred Stock with a par value of $13 million. The
cost of redeeming this stock included a premium of $0.3 million which was
charged against retained earnings.
In April 1992, the Company issued $50 million, Cumulative No Par
Preferred Stock, Auction Series A, stated value of $100 per share. The $0.9
million in costs associated with this issue were charged to capital stock
premium and expense.
The issued cumulative preferred stock of $91 million may be redeemed at
the option of the Company at prices which, in the aggregate, total $91
million.
Scheduled mandatory sinking fund requirements for the outstanding
redeemable 4% Cumulative Preferred Stock are $160,000 per year.
At December 31, 1993, the Company had authorized 407,557 shares of
Cumulative Preferred Stock at a par value of $100 per share, 1,572,000 shares
of Cumulative No Par Preferred Stock and 11,000,000 shares of Preference Stock
without par value.
If any dividends on its preferred stock are not declared and paid when
scheduled, the Company could not declare or pay dividends on its common stock
or acquire any shares in consideration thereof. If the amount of any such
unpaid dividends equals four or more full quarterly dividends, the holders of
preferred stock, voting as a single class, could elect representatives to the
Company's Board of Directors.
On January 3, 1994, the Company registered 2,000,000 shares of its
common stock with the Securities and Exchange Commission for a Dividend
Reinvestment and Stock Purchase Plan (the Plan). Under the Plan, common
shareholders and employees and directors of the Company and its subsidiaries
have the opportunity to purchase shares of the Company's common stock by
reinvesting dividends and/or making optional cash payments. Rather than
issuing new shares, the Company intends to purchase the shares for the Plan on
the open market.
8. LONG-TERM DEBT
First Mortgage Bonds
The Company cannot issue additional First Mortgage Bonds authorized by
the Indenture of Mortgage and Deed of Trust dated as of December 1, 1946, as
supplemented, as long as any of the General Mortgage Bonds (discussed below)
are outstanding. Substantially all of the Company's utility plant is pledged
under the terms of the Indenture.
At December 31, 1993, $60 million was held as a special deposit and used
on January 5, 1994 to redeem the maturing $60 million First Mortgage Bonds.
General Mortgage Bonds
The Company is authorized to issue General Mortgage Bonds under the
General Mortgage Indenture and Deed of Trust dated December 1, 1986, as
supplemented. The amount of additional bonds which may be issued is subject
to certain restrictive provisions of the General Mortgage Indenture. The
General Mortgage Indenture constitutes a mortgage lien on substantially all of
the Company's utility plant and is junior to the lien of the First Mortgage.
Upon retirement and/or maturity of the remaining outstanding First Mortgage
Bonds, the General Mortgage Bonds will become first mortgage bonds.
The Company pledged General Mortgage Bonds in the amount of $531 million
to secure the outstanding $453 million (including $74 million classified as
current maturities of long-term debt) and the unissued $78 million of Medium-
Term Notes as of December 31, 1993.
Scheduled Maturities
The amount of long-term debt maturing in each of the next five years is
as follows (in millions): 1994 - $134.5; 1995 - $30.0; 1996 - $47.3; 1997 -
$0.8; and 1998 - $61.9.
9. JOINTLY-OWNED ELECTRIC UTILITY PLANTS
The Company has joint ownership agreements with other utilities
providing undivided interests in utility plants at December 31, 1993 as
follows (in millions of dollars):
Wolf Creek La Cygne Iatan
Unit Units Unit
Company's share 47% 50% 70%
Utility plant in service $ 1,326 $ 282 $ 247
Estimated accumulated depreciation
(Production plant only) $ 270 $ 150 $ 111
Nuclear fuel, net $ 30 - -
Company's accredited capacity-mw 532 678 469
Each participant must provide its own financing. The Company's share of
direct expenses is included in the corresponding operating expenses in the
Consolidated Statements of Income.
10. QUARTERLY OPERATING RESULTS
(UNAUDITED)
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
(thousands)
1993
Operating revenues $ 191,380 $ 208,323 $ 256,919 $ 200,828
Operating income $ 29,624 $ 38,878 $ 57,865 $ 29,935
Net income $ 15,800 $ 25,731 $ 44,920 $ 19,321
Earnings per common share $ 0.24 $ 0.40 $ 0.72 $ 0.30
1992
Operating revenues $ 180,022 $ 196,505 $ 229,425 $ 196,716
Operating income $ 23,795 $ 34,351 $ 50,638 $ 31,790
Net income $ 8,321 $ 21,335 $ 38,044 $ 18,634
Earnings per common share $ 0.12 $ 0.33 $ 0.60 $ 0.29
The business of the Company is subject to seasonal fluctuations with peak
periods occurring during summer months. See Management's Discussion and
Analysis of Financial Condition and Results of Operations for discussion of
items affecting quarterly results.
11. EVENT (UNAUDITED) SUBSEQUENT TO THE DATE OF THE INDEPENDENT ACCOUNTANTS'
REPORT
In March 1994, the Company offered a voluntary early retirement program
to 411 eligible management and union employees. Eligible employees have until
May 31, 1994 to decide whether or not to participate in the program. As of
March 24, 1994, approximately 35% of eligible employees had elected to
participate.
The Company's last early retirement program in 1986 had a participation
rate of approximately 60% of those eligible. While there is no way of knowing
how many or which employees will elect to participate in the program, assuming
the 1986 participation rate and using averages, the cost of the program to the
Company would be approximately $22 million and would be recorded in the first
half of 1994 as an expense when the employee elects to participate in the
program. The Company estimates that these program costs would be offset by
savings of payroll and benefit costs of approximately $6 million in 1994 and
an average of $11 million per year for the period 1995 through 1998. These
savings assume no replacements for retiring employees.
The expense and savings of the program as discussed above are estimates
and could change significantly because of changes from the assumed
participation rate, mix of employees accepting the offer, and extent of
replacements of retiring employees.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Kansas City Power & Light Company:
We have audited the consolidated financial statements and the financial
statement schedules of Kansas City Power & Light Company listed in the index
on page 39 of this Form 10-K. These financial statements and financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Kansas City
Power & Light Company as of December 31, 1993 and 1992, and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1993, in conformity with generally accepted
accounting principles. In addition, in our opinion, the financial statement
schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for incremental nuclear refueling outage costs
in 1992.
/s/Coopers & Lybrand
COOPERS & LYBRAND
Kansas City, Missouri
January 28, 1994
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors
The information concerning directors required by Item 401 of Regulation S-K
has been furnished by the Company in its definitive proxy statement dated
March 11, 1994, filed with the Securities and Exchange Commission pursuant to
Regulation 14A under the Securities Exchange Act of 1934, and is incorporated
herein by reference.
Executive Officers
See Part I, page 7, entitled "Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 402 of Regulation S-K has been furnished
by the Company in its definitive proxy statement dated March 11, 1994, filed
with the Securities and Exchange Commission pursuant to Regulation 14A under the
Securities and Exchange Act of 1934, and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The information required by Item 403 of Regulation S-K has been furnished
by the Company in its definitive proxy statement dated March 11, 1994, filed
with the Securities and Exchange Commission pursuant to Regulation 14A under the
Securities and Exchange Act of 1934, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
Page
No.
Financial Statements
a.
Consolidated Balance Sheets - December 31, 1993 and 1992 18-19
b.
Consolidated Statements of Income for the years ended
December 31, 1993, 1992 and 1991
20
c. Consolidated Statements of Cash Flows for the years
ended December 31, 1993, 1992 and 1991
21
d.
Consolidated Statements of Cumulative Preferred Stock &
Long-Term Debt - December 31, 1993 and 1992 22
e.
Consolidated Statements of Retained Earnings for the
years ended December 31, 1993, 1992 and 1991 22
f.
Notes to Consolidated Financial Statements 23
g.
Report of Independent Accountants 37
Financial Statement Schedules
a.
Schedule V - Property, Plant and Equipment - For the
years ended December 31, 1993, 1992 and 1991
42-44
b.
Schedule VI - Accumulated Depreciation and Amortization
of Property, Plant and Equipment - For the years ended
December 31, 1993, 1992 and 1991
45-47
c.
Schedule IX - Short-Term Borrowings - December 31, 1993,
1992 and 1991
48
Compensatory Plans or Arrangements
a. Long-Term Incentive Plan 41
b. Indemnification Agreement entered into by the Company
with each of its officers and directors 41
c. Executive Incentive Compensation Plan 41
d. Severance Agreement entered into by the Company with
certain of its executive officers 41
e. Supplemental Executive Retirement and Deferred
Compensation Plan 41
Exhibits Required by Item 601 of Regulation S-K.
Exhibit
Number Description of Document
3-a *Restated Articles of Consolidation of the Company dated as of May 5, 1992
Exhibit 4 to Registration Statement, Registration No. 33-54196).
3-b *By-laws of the Company, as amended and in effect on December 31, 1993
(Exhibit 3-b to Form 10-K for the year ended 1993).
4-a *General Mortgage and Deed of Trust dated as of December 1, 1986, between
the Company and United Missouri Bank N.A. (formerly United Missouri
Bank of Kansas City, N.A.), Trustee (Exhibit 4-bb to Form 10-K for the
year ended December 31, 1986).
4-b *Third Supplemental Indenture dated as of April 1, 1991, to Indenture
dated as of December 1, 1986 (Exhibit 4-aq to Registration Statement,
Registration No. 33-42187).
4-c *Fourth Supplemental Indenture dated as of February 15, 1992, to Indenture
dated as of December 1, 1986 (Exhibit 4-y to Form 10-K for year ended
December 31, 1991).
4-d *Fifth Supplemental Indenture dated as of September 15, 1992, to Indenture
dated as of December 1, 1986 (Exhibit 4-a to Form 10-Q dated September
30, 1992).
4-e *Sixth Supplemental Indenture dated as of November 1, 1992, to Indenture
dated as of December 1, 1986 (Exhibit 4-z to Registration Statement,
Registration No. 33-54196).
4-f *Seventh Supplemental Indenture dated as of October 1, 1993, to Indenture
dated as of December 1, 1986 (Exhibit 4-a to Form 10-Q dated September
30, 1993).
4-g *Eighth Supplemental Indenture dated as of December 1, 1993, to Indenture
dated as of December 1, 1986 (Exhibit 4 to Registration Statement,
Registration No. 33-51799).
4-h Ninth Supplemental indenture dated as of February 1, 1994, to Indenture
dated as of December 1, 1986.
4-i *Resolution of Board of Directors Establishing 3.80% Cumulative Preferred
Stock (Exhibit 2-R to Registration Statement, Registration No. 2-40239).
4-j *Resolution of Board of Directors Establishing
Stock (Exhibit 2-S to Registration Statement, Registration No. 2-40239).
4-k *Resolution of Board of Directors Establishing 4.50% Cumulative Preferred
Stock (Exhibit 2-T to Registration Statement, Registration No. 2-40239).
4-l *Resolution of Board of Directors Establishing 4.20% Cumulative Preferred
Stock (Exhibit 2-U to Registration Statement, Registration No. 2-40239).
4-m *Resolution of Board of Directors Establishing 4.35% Cumulative Preferred
Stock (Exhibit 2-V to Registration Statement, Registration No. 2-40239).
4-n *Certificate of Designation of Board of Directors Establishing the
$50,000,000 Cumulative No Par Preferred Stock, Auction Series A
(Exhibit 4-a to Form 10-Q dated March 31, 1992).
4-o *Indenture for Medium-Term Note Program dated as of April 1, 1991,
between the Company and The Bank of New York (Exhibit 4-bb to
Registration Statement, Registration No. 33-42187).
4-p *Indenture for Medium-Term Note Program dated as of February 15, 1992,
between the Company and The Bank of New York (Exhibit 4-bb to
Registration Statement, Registration No. 33-45736).
4-q *Indenture for Medium-Term Note Program dated as of November 15, 1992,
between the Company and The Bank of New York (Exhibit 4-aa to
Registration Statement, Registration No. 33-54196).
10-a *Copy of Wolf Creek Generating Station Ownership Agreement between Kansas
City Power & Light Company, Kansas Gas and Electric Company and Kansas
Electric Power Cooperative, Inc. (Exhibit 10-d to Form 10-K for the
year ended December 31, 1981).
10-b *Copy of Receivables Purchase Agreement dated as of September 27, 1989,
between the Company, Commercial Industrial Trade-Receivables Investment
Company and Citicorp North America, Inc., (Exhibit 10-p to Form 10-K
for year ended December 31, 1989).
10-c *Copy of Amendment to Receivables Purchase Agreement dated as of August 8,
1991, between the Company, Commercial Industrial Trade-Receivables
Investment Company and Citicorp North America, Inc. (Exhibit 10-m to
Form 10-K for year ended December 31, 1991).
10-d *Long-Term Incentive Plan (Exhibit 28 to Registration Statement,
Registration No. 33-42187).
10-e *Copy of Indemnification Agreement entered into by the Company with each
of its officers and directors (Exhibit 10-O to Form 10-K for year ended
December 31, 1986).
10-f *Copy of Executive Incentive Compensation Plan (Exhibit 10-g to form 10-K
for year ended December 31, 1986).
10-g *Copy of Severance Agreement entered into by the Company with certain of
its executive officers (Exhibit 10 to Form 10-Q dated June 30, 1993).
10-h Copy of Supplemental Executive Retirement and Deferred Compensation Plan.
10-i Copy of $50 million Letter of Credit and reimbursement agreement dated
as of August 19, 1993, with The Toronto-Dominion Bank.
10-j Copy of $56 million Letter of Credit and Reimbursement Agreement dated
as of August 19, 1993, with Societe Generale, Chicago Branch.
10-k Copy of $50 million Letter of Credit and Reimbursement Agreement dated
as of August 19, 1993, with The Toronto-Dominion Bank.
10-l Copy of $40 million Letter of Credit and Reimbursement Agreement dated
as of August 19, 1993, with Deutsche Bank AG, acting through its New
York and Cayman Islands Branches.
12 Computation of Ratios of Earnings to Fixed Charges.
23-a Consent of Counsel.
23-b Consent of Independent Public Accountants--Coopers & Lybrand.
24 Powers of Attorney.
* Filed with the Securities and Exchange Commission as exhibits to prior
registration statements (except as otherwise noted) and are incorporated herein
by reference and made a part hereof. The exhibit number and file number of the
documents so filed, and incorporated herein by reference, are stated in
parenthesis in the description of such exhibit.
Copies of any of the exhibits filed with the Securities and Exchange
Commission in connection with this document may be obtained from the Company
upon written request.
KANSAS CITY POWER & LIGHT COMPANY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
Column A Column B Column C Column D Column E Column F
Balance at Other Balance at
Beginning Additions Retire- Changes - End of
Classification of Period at Cost ments Add(Deduct) Period
(Thousands)
Electric Utility Plant
Plant in service
Steam production $ 727,202 $ 44,287 $ 7,727 $ - $ 763,762
Nuclear production 1,304,921 11,369 587 - 1,315,703
Other production 41,949 527 - - 42,476
Transmission 179,507 9,645 1,026 276 188,402
Distribution 810,053 43,963 6,884 (153) 846,979
General 62,750 17,044 2,604 24 77,214
Intangibles 365 - - - 365
Property under capital lease 3,144 - - (319) 2,825
Plant held for future use 3,168 2 - (512) 2,658
Construction work in progress 65,965 1,663 - 138 67,766
Total 3,199,024 128,500 18,828 (546) 3,308,150
Nuclear Fuel 112,945 6,087 12,448 - 106,584
Total Utility Plant 3,311,969 134,587 31,276 (546) 3,414,734
Nonutility Property 4,573 - 795 227 4,005
Total $3,316,542 $ 134,587 $ 32,071 $ (319) $3,418,739
Additions are reflected net of electric utility plant completions.
Includes allowance for funds used during construction.
Amount reflects the reduction in capital lease obligations.
KANSAS CITY POWER & LIGHT COMPANY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
Column A Column B Column C Column D Column E Column F
Balance at Other Balance at
Beginning Additions Retire- Changes - End of
Classification of Period at Cost ments Add(Deduct) Period
(Thousands)
Electric Utility Plant
Plant in service
Steam production $ 717,689 $ 16,387 $ 6,869 $ (5) $ 727,202
Nuclear production 1,304,071 7,567 6,717 - 1,304,921
Other production 41,475 680 209 3 41,949
Transmission 170,332 10,702 1,725 198 179,507
Distribution 774,897 46,816 11,704 44 810,053
General 47,505 22,644 5,173 (2,226) 62,750
Intangibles 95 270 - - 365
Property under capital lease - 3,151 - (7) 3,144
Plant held for future use 4,216 (803) - (245) 3,168
Plant acquisition adjustment 53 - - (53) -
Construction work in progress 57,706 8,259 - - 65,965
Total 3,118,039 115,673 32,397 (2,291) 3,199,024
Nuclear Fuel 96,212 16,744 - (11) 112,945
Total Utility Plant 3,214,251 132,417 32,397 (2,302) 3,311,969
Nonutility Property 1,529 879 68 2,233 4,573
Total $3,215,780 $ 133,296 $ 32,465 $ (69) $3,316,542
Additions are reflected net of electric utility plant completions.
Includes allowance for funds used during construction.
In 1992, amortized to other income and deductions - miscellaneous.
KANSAS CITY POWER & LIGHT COMPANY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
Column A Column B Column C Column D Column E Column F
Balance at Other Balance at
Beginning Additions Retire- Changes - End of
Classification of Period at Cost ments Add(Deduct) Period
(Thousands)
Electric Utility Plant
Plant in service
Steam production $ 691,506 $ 27,106 $ 923 $ - $ 717,689
Nuclear production 1,310,118 8,469 14,514 (2) 1,304,071
Other production 41,427 48 - - 41,475
Transmission 162,202 8,754 708 84 170,332
Distribution 730,553 51,975 7,303 (328) 774,897
General 45,226 4,303 2,021 (3) 47,505
Intangibles 95 - - - 95
Plant held for future use 3,921 50 - 245 4,216
Plant acquisition adjustment 97 - - (44) 53
Construction work in progress 52,759 4,947 - - 57,706
Total 3,037,904 105,652 25,469 (48) 3,118,039
Nuclear Fuel 84,037 19,846 7,671 - 96,212
Total Utility Plant 3,121,941 125,498 33,140 (48) 3,214,251
Nonutility Property 1,508 17 - 4 1,529
Total $3,123,449 $ 125,515 $ 33,140 $ (44) $3,215,780
Additions are reflected net of electric utility plant completions.
Includes allowance for funds used during construction.
KANSAS CITY POWER & LIGHT COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
Column A Column B Column C Column D Column E Column F
Additions Retirements
Balance Charged to Removal Other
at Deprecia- Charged Cost and Changes Balance at
Beginning tion to Other Property Salvage Add End of
Description of Period Accounts Retired (Net) (Deduct) Period
(Thousands)
Electric Utility Plant
Steam production $ 350,011 $ 25,720 $ 810 $ 7,727 $ 1,153 $ - $ 367,661
Nuclear production 236,949 34,139 - 587 202 - 270,299
Other production 28,342 1,723 - - 29 - 30,036
Transmission 72,561 4,080 - 1,026 174 - 75,441
Distribution 247,032 23,374 - 6,884 (508) - 264,030
General 13,399 1,880 106 2,604 (36) - 12,817
Retirement work in
progress (28) - - - 542 - (570)
Total 948,266 90,916 916 18,828 1,556 - 1,019,714
Nuclear Fuel 78,735 - 8,705 12,448 - 1,730 76,722
Total 1,027,001 90,916 9,621 31,276 1,556 1,730 1,096,436
Nonutility Property 424 22 - - - - 446
Total $1,027,425 $ 90,938 $ 9,621 $ 31,276 $ 1,556 $ 1,730 $1,096,882
See Note 1 of Notes to Consolidated Financial Statements for a description of the depreciation
policy.
Depreciation on the Consolidated Statements of Income includes an additional $194,000 which
represents amortization of certain costs recorded in Regulatory Assets - Other.
Amount reflects an adjustment to nuclear fuel carrying value.
The $76,722,000 of accumulated provision for amortization of nuclear fuel has been netted
against nuclear fuel on the Consolidated Balance Sheets. Nuclear fuel amortization is charged
to fuel expense.
KANSAS CITY POWER & LIGHT COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
Column A Column B Column C Column D Column E Column F
Additions Retirements
Balance Charged to Removal Other
at Deprecia- Charged Cost and Changes Balance at
Beginning tion to Other Property Salvage Add End of
Description of Period Accounts Retired (Net) (Deduct) Period
(Thousands)
Electric Utility Plant
Steam production $ 331,330 $ 25,075 $ 790 $ 6,869 $ 315 $ - $ 350,011
Nuclear production 209,884 34,014 - 6,686 263 - 236,949
Other production 26,989 1,683 - 210 120 - 28,342
Transmission 71,298 3,875 - 1,725 887 - 72,561
Distribution 236,580 22,360 - 10,851 686 (371) 247,032
General 17,031 1,567 144 5,172 (161) (332) 13,399
Retirement work in
progress (1,330) - - - (1,302) - (28)
Total 891,782 88,574 934 31,513 808 (703) 948,266
Nuclear Fuel 69,152 - 9,583 - - - 78,735
Total 960,934 88,574 10,517 31,513 808 (703) 1,027,001
Nonutility Property 87 14 - 10 - 333 424
Total $ 961,021 $ 88,588 $ 10,517 $ 31,523 $ 808 $ (370) $1,027,425
See Note 1 of Notes to Consolidated Financial Statements for a description of the depreciation
policy.
Depreciation on the Consolidated Statements of Income includes an additional $194,000 which
represents amortization of certain costs recorded in Regulatory Assets - Other.
The $78,735,000 of accumulated provision for amortization of nuclear fuel which has been netted
against nuclear fuel on the Consolidated Balance Sheets. Nuclear fuel amortization is charged
to fuel expense.
KANSAS CITY POWER & LIGHT COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
Column A Column B Column C Column D Column E Column F
Additions Retirements
Balance Charged to Removal Other
at Deprecia- Charged Cost and Changes Balance at
Beginning tion to Other Property Salvage Add End of
Description of Period Accounts Retired (Net) (Deduct) Period
(Thousands)
Electric Utility Plant
Steam production $ 307,415 $ 24,344 $ 755 $ 923 $ 261 $ - $ 331,330
Nuclear production 190,428 34,159 - 14,514 189 - 209,884
Other production 25,303 1,686 - - - - 26,989
Transmission 68,385 3,676 - 708 55 - 71,298
Distribution 222,314 21,274 - 7,114 (201) (95) 236,580
General 17,479 1,418 196 2,021 41 - 17,031
Retirement work in
progress (702) - - - 628 - (1,330)
Total 830,622 86,557 951 25,280 973 (95) 891,782
Nuclear Fuel 70,624 - 6,199 7,671 - - 69,152
Total 901,246 86,557 7,150 32,951 973 (95) 960,934
Nonutility Property 87 - - - - - 87
Total $ 901,333 $ 86,557 $ 7,150 $ 32,951 $ 973 $ (95) $ 961,021
See Note 1 of Notes to Consolidated Financial Statements for a description of the depreciation
policy.
Depreciation on the Consolidated Statements of Income includes an additional $238,000 which
represents amortization of certain costs recorded in Regulatory Assets - Other ($194,000) and
amortization of a unit train acquisition adjustment recorded in Utility Plant ($44,000).
The $69,152,000 of accumulated provision for amortization of nuclear fuel which has been netted
against nuclear fuel on the Consolidated Balance Sheets. Nuclear fuel amortization is charged
to fuel expense.
KANSAS CITY POWER & LIGHT COMPANY
SCHEDULE IX - SHORT-TERM BORROWINGS
Column A Column B Column C Column D Column E Column F
Weighted
Maximum Daily
Combined Average Average
Weighted Amount Amount Interest
Category of Aggregate Balance at Average Outstanding Outstanding Rate
Short-Term Borrowings End of Interest at any During the During the
Period Rate Month End Period Period
December 31, 1993
Bank loans $ 4,000,000 4.47% $ 6,000,000 $ 964,384 5.15%
Commercial paper 25,000,000 3.96% 55,000,000 14,984,110 4.68%
Combined $ 29,000,000 4.03% $ 61,000,000 $ 15,948,494 4.71%
December 31, 1992
Bank loans $ - - $ 36,500,000 $ 18,594,000 5.43%
Commercial paper 33,000,000 4.30% 64,000,000 41,125,000 4.23%
Combined $ 33,000,000 4.30% $ 100,500,000 $ 59,719,000 4.60%
December 31, 1991
Bank loans $ 34,000,000 4.62% $ 34,000,000 $ 13,444,000 7.61%
Commercial paper 52,000,000 5.13% 52,000,000 36,315,000 6.27%
Combined $ 86,000,000 4.93% $ 86,000,000 $ 49,759,000 6.63%
Short-term borrowings normally mature in less than three months with an interest rate
determined at the time of borrowing or on a daily basis.
The average is based on a daily average.
The weighted daily average interest rate during the year is determined by dividing interest
expense, including commitment fees, by the average daily balance (Column E). Commitment
fees of $213,000, $196,900 and $175,500 were charged to interest expense for 1993, 1992
and 1991, respectively.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Kansas City, and State of Missouri on the 25th day of March, 1994.
KANSAS CITY POWER & LIGHT COMPANY
By /s/Drue Jennings
(Drue Jennings)
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1934, this report
has been signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Signature Title Date
Chairman of the Board and )
/s/Drue Jennings President (Principal )
(Drue Jennings) Executive Officer) )
)
Senior Vice President-Finance )
/s/B. J. Beaudoin (Principal Financial )
(B. J. Beaudoin) Officer) )
)
/s/Neil Roadman Controller (Principal )
(Neil Roadman) Accounting Officer )
)
William H. Clark* Director )
)
Robert J. Dineen* Director ) March 25, 1994
)
)
Arthur J. Doyle* Director )
)
W. Thomas Grant II* Director )
)
George E. Nettels, Jr.* Director )
)
George A. Russell* Director )
)
Dr. Linda Hood Talbott* Director )
)
Robert H. West* Director )
)
*By /s/Drue Jennings
(Drue Jennings)
Attorney-in-fact