ML20095A657
| ML20095A657 | |
| Person / Time | |
|---|---|
| Site: | Wolf Creek  |
| Issue date: | 12/31/1991 |
| From: | Jennings D KANSAS CITY POWER & LIGHT CO. |
| To: | |
| Shared Package | |
| ML20095A652 | List: |
| References | |
| NUDOCS 9204200076 | |
| Download: ML20095A657 (107) | |
Text
.
!- ~.
p : ){ ; A o N .-: SEA : S . C: 11T-- Y -
P O. W E R -& l. 1 G ' H T -C O M P'A N Y I s
6 .l l
i
< i i
9 e
.e . 4' . t
.. .,.s j
(
~. .
% vr '~..-
0
.. 8- '- -
. . . .. 4 o
l' : ,
l '
<.g ...,z -
l
- p. . s '- : . .
_a.,. ..
- O l
- - d. '.-
.v '
i4 t- '- ,
vp ,s -
i ,, .. ,, ,.
- i g .
- '- s
.y .. ,
~ < _
3 ,,
3 1
t .
I - "
1 ENERGY FOR-OUR FUTURE i 1
.i 1
l j
l i
[ .-
r
- l. '9204200076 920414 PDR ADOCK'050004B2 '
1- PDR ~
-A ' N i - N" U. A L R E P O R T 1 9 9 1
m- W:p ' _~ y%M ',
q[k39 _
- r
.. = U r
-1 3;. ., .,,
, > ~
w
,5-'.
,y .
n h y .' '- ? l' J ;);,
4 J v-f
__n ys ;-k'_i . _p' $ . ~, J A f" [ L-i' 1 r
k..
h (:, x-
, . '..,.e-. V1
,[{ .'. .t w . 3, . s
,,'4y:t.,4 :,y n. 4 s 4
t..
' .ty#'
[l,
. 4- .
4 j _- '
A. '.e_;
s . - e
' A 4
x
?.-2 @t . - 4 x -
g ":n , pQ - , j ,p
!z;% p,M -I -
RW g
- 4 1 1
a,+
cg b
- x _ . v,r.- > 5 r, ,
7, ..
M. -a, p4 4
- vs ., , ,
l.i-
- ,.I,.~ g .: p N .'.O , _
[hg'e
[
da . r t
-e
-m:r; .:.. o * , .,- , .
t
+ ,
Q. :_r 1/,' ' , .[ d 4 _
1 f_g ' ' -
s
- s 11 9y .
j ,
Lg@h.\
,x ,< r 4
me. ' -
.. _ o
. 4- u , ;
t
.y. .; ,..f m-,- a g gw' ' u -
e s
}.
34"l,I.
x
]
lt'<,,
\, ,/.sp-f. 4 y '
-.+- ., ,.
9q ~ -
4 .
4
- i
' a : .:.
p a'y 4 i f{ ' f f_' h. . 2h U
We' ' ' e: ;- ) , an - ,
s n..n -t s x , - ,
~ :xw a s,
, a w
4ws , - -
{4 W6 W
- n ,
x . ,
Fy . ..,
-e u #(
- d
,.$ ; . , ,y=,
w'4 7 ';
+
=[ :,
4 , ,
7b.~k 4 -..er, { t t,-(:
- - ., 3 y - .
4
. e e s r_i
+eyW.; .d hfi. *
. - 4 .
x, ,
',- )
- 4 , _
a .,,1. }- t 4
-2,9. ,
r ,,_gs. 4
(
-,sg-..4'..-
/' g .f --
3_
Y th> Y
< k -g 1 S~,
e,y c86
, ^y s 1 1A -
1 m,, m. .. ,
. .s ,
v ., .n -w -
,1f
, f- e'
.g $
W '
- y.;, .__
,w.
s 4
' +
. , +
(. I.54 1
.W d '
- )..
, p l
{m*nh ..;p, ,
v,s , r s n% --
3y.-.sh .
s s,r . x
+
'% i,-' I.- g c
x
)
.'u.
2_* .
- v w E
~'I ('$s,'._a . , ; '
.j.-_.' . # i. t
, . .. ,-" Ey d 'y.[3ON THE COVERIMf. j-j Electricityja the product we se!!. But the f ; y f.[ Energy ofKanns City *'is a partnership -
qwrth our marketplam--the inheret vitaf l k,d
.S. sty and untapped potential of the rmas -
il% ' b City matopolitan area. The Enemy of '
TS4;t,
.m.7 d Kansar City ,is. the . . . . ,
Er'ergy of Our . Future. - - -
b #
(= g- -
' 7. ., . . a
, . . . r 4 r- .
t- #
. $i 5 -
. O ,' he. c .g ",}.~.-s
_t :
" (1 _ s , 71
- =+ ~
^ ' ~
srp w 6 1 7 v- 1 vv YT.h6 '
tN-- T'T'
vm ;i 2 k ; : ~,
4 ,
Q exNl J g " % +
' fsi ., . ~~
,, - sn;
. .+ _
- 4
.4 ,
j j 4
..e- . _
,[ Q . .
m , _
D- '
i i .:.. 01<,, ..
.(. . . _ . e Q.y r p4 , .
3 F '
- C O N . T- E ' N- T S - '
,",e fM s- >
9- = The Year at a Glance L. n . . . . . . . . . i . . . . . . , . 2 -
o ^
n
. liighlights of the Thar . . . . 3 , . . . . . . ... . . . ,. . . . 3-Ixiter to Shareholders , . ( . . , . . . . . . . . . . . . . . . . . 4 .
~ :a
-. ' g' - ,
. ' Die Company and its Service Area . . . . . . ,, . . 8 j
'(Specialfoldout) i
~ '
[ Financial Statements ?. . . . u . . . . ....... . 16 . . ,
, . Notes to Financial Statements . . . . . . . . . . . . . . . 22 ..
L e -
- ~ 1ndependent Auditor's Report L. . . . . . . . . . . . . . . 27
'l Q' .
.z:
-. Management's Discussion and Analysis . . . . . . . 28
- e
-- - Summary of Operations arid Financial Data . . . . ,32
, 1 Electric Statistics . . . . . . . . .. . . . . . . . . . . . . . .'. 33 9
.( Company Officens and Baani of Directors . . ., . 34 -
- # {
- Shareholder Information . . . . . . . . . . . . . . . . . . . 35 N 9 9? L Generating Capacity & the McKan Pool . . . . . . 36' .
f: s
\
y'. 7
- / r e- t 9-9:2 .A'N N U'A-.L M E E T- ! N u H
-g; g H
' ~
OF ' S. H AL R E 'H O' L D B R S ~ a jW - .
[
^
, 7 L Date:'Ibesday, May $.1992 ' .
Tune: 1000 a.m.-
[ .. Locationi liyatt Regency Crown Center :
- 1
- ,,s" , '(Atlanta Dallroom) n
,'y 2345 McGee Street, Kansas City, Missouri ' I o
1"..
. , .. .. - -_s..
c- ' '
s - Shareholders of rm;rd on March 3,1992, are eligible
- d :.N ~
, to vote at the meetit g and will be mailed'a not. ice of ; -
( ~ ' ' ! n'eeting, proxy sta'.ements and form of proxy ~
1y
, .. . b
~ CORPGRATEOFFICES '
sfA (" ' ~'(, .Q n -
,, - (until July 1).
!1330 Balti nore _
~
' q . ., ,N Kansas City, Mimuri 64105-
'.f.. 4
'; N _( after July 1) : v T ; -
. -1201 Walnut ' .
M,.y--M . , ', = ' >
. Kansas City Missouri 64106-2124 l l
-y .
. MAILING ADDRESS -
PCL Box 418679 m..
. Kansas City, Missouri 6414.1-9679
, 1 <
f 4 x 7. C :
- g t' 2~ -
6, g-- , a" 'es' s e %
f -
TQ = ,, ,,
1 'l
~_f..
. - .a . . , ,. . ,
h'
[
.Y E A R A T- A GLANCE E On August 6, the Board of Directors increased the quarterly common stock dhidend to 70 cents per share. That action boosted the indicated annual per. share lotl of dividends 4.5%, from $2.68 to $750.
E Earning per averag common share for 1991 were $3.16.
B On December 31cKCPL common stock closx! out the 3rar at 47 3/8, an all-time high close when adjusted for stock splits in 1%3 and 1933. Over the last fne years, KCPL stock posted a total return of 140.2%, an annual astrage of about 19.2%. For 1991, total return was 42.2%.
E Prompted by a combination of high temperatures and load growth, on July 22, cur tom es set a new record peak demC of 2,751 megawatts, topping the 2,720 mw peak set three day before. Previously, the peak was 2,711 set in August 1990. July 22 sho masked A KCPE system encrgy USe record for a one-day period,52,446 megawatt-hours.
E la March, Standard & Poor's Corg increased its rating on KCPI's senior debt to *A" from "A " and senior unsecured debt and preferred stock to "A " from "BBB+ " All the major rating agencies now have our first mortgage debt at "A" and all our long-term securities are now in the *A" category. These standings enhance our ability to fmance at more favoable terms. .
E- ' In ftbruary, the Company formed a new Envimnmental and Resevch Smices dhision, kcaded by vice president Jim Hogan. The new dhision wil! help sharpen our focus on environmental and research and dockipment acthities in order to improve performance -
- as well as to bettec respond prtuctively to environmental expectations ud concerns of our customers.
5 On Febrary 4,1992, the Bwd of Directors authorized a 2-for-1 common stock split, subject to shareholder approval at the annual meeting of shareholders, May 5,1992.
'l2 s
L . .
j; 'l E T T E R - TO S H A R ' E 11 O L D - E R S :
+
1 l.
['-
'i
! wners of the 42.17 percent. Declining Company's com- interest rates in this reces-mon stock found 1991 to sionary economy certainly be a very rewarding year. comributed toincreasing in August the floard of utility share pricesin j
l
- Directors declared a 4.5% general, but only those 4 increasein the quarterly companies like KCPL, j dividend, to an indicated whose underlying fun- j annualleve! of $2.80 per damentals remain strong, l
shart, and by ) tar e.nd the enjo)cd such robuh market closing price had appreciation. .
j appreciated to $47.375, a Earnings per share split. adjusted all-time high.
were $3.16, compared with The combined share price
$3.11 in 1990. Last > var's i g appreciation and dhidends, carnings reflected a 5.26 per -
.caos ofA,a,e when nnnvested, yielded a share reduction due to the d Iwrunt total trturn for the year of expense of the unsuccessful I a!!empt to acquire and i
- ' - merge with Kansas Gas and
- l - Electric Company. For ;
L .. 1991, an unexpected delay ;
l . in the completion of %blf . I L
' ~
_...~
~ ' ~
- Creek Generating Station's ,
a refueling and maintenance outage had an adverse +
(d.
~
j - "*- impact of e sproximately s -
'kV
$.18 per share. Earnings quality and cash fknv 1
-i
- remained very strong )
In a year of deepening recession, our Kansas City
, ..- +
w c:onomy actually fared bet-
-- ~E ter than most-a tribute to
- i- . Its underlying strength and 9
- diversity. At KCPL our f .t retailelectric revenues incaased 3.9 percent to
, s .
(' . .
j '.- -
4 .
4 .
. l
'I l
D
'. I
. 3
,g . 1 - "*
b
_k . '
o.
9 ~' '* ,
'N -
4
)
- . - - , ~. _ _ . _ _ _ _ _ _ _ . - _ - _ _ _ _ _ - - _ _ _ . _ _ _ _ _ _ _ _ - _ _ _ _ _ _ _ _ _ . -
- 11 1 - 0,li c h I O H T LS lO F T 11 E YEAR i ' )Vav Ended December 31 IVrcent 1991 1990 Increase .
- + _ _ (Ikcrease)
,7btalopera.ing revenues (0001)* $ 825,101 $ 815,570 1.2
. Netincome /0001) $ 103,893 $ 102,732 1.1
- Earnings asaltablefor common (000%) $ 97,870 $ 96,372 I.6 Avem5;e numberofsharer 30,954,363 30,949,7G3 -
t1 Pr. comr-on sfwre "
' Earnings . S 3.16 5 3.11' l.6
- t. Dividends
$ 2.74 $. 2.62 4.6
. Book value - $ 27.79 $ 27.50 1.1
- Mr endstockprice 5 47.37S $ 35.250 34.4 Return on > var-end common equity (%) 1I.4 11.3 .9
- Dividendpayout (%)
87 84 3.6 l Construction e.tpendituns (000M $ 122,447 $ - 92,558 - 32.3 ;
[Electricplant(0003) . $ 3,060,333 $ 2,985,145 2.5
- SelectedStatistics(00v8)
Retallkilowatt.hoursaler 11,052,269 10,491,556 5.3 J JVakload-summer (kw) _2,751 2,711 1.5
~ Jrck load-winter (kw) 1,674 1,680 (.4)
' Number ofretailcustomers(avemge) 413,426 409,958 .8
, Number ofstockholders - 30,698 33,294 (7.8)
- Capita lir,ation(% osal)"*.
. Common equity 49.9 $0.2 -
- Preferredstock 2.4 5.6
' Long. term debt 47.7 44.2 n' Reclassification has been made to prior year amount to conform with currer.t year presentation.
' **See Nots 6 to the Financial Statements.
- " Exclusive of long-term debt and preferred stock included in current liabilities.
Fuel Mix %
Coal 78 2%
OMt21%
Nakiral Gas .5*i, Od .3%
~
W' .
b
$776.5 million, on retail '
Our system fuel costs ( a sales of 11.1 billion Lilowatt. hours, up 5.3 p r-continued to be among the lowest in the region, at 92 5
3;Y a inmtmmi Ql cent from last 3rar. Sales to cents per million BTU. 6 industrial customers weir However, d6e to Wolf ;
up 3.7 percent, Customer Creek Generating Station's '
growthlagged historical encaded outage, and tw averages, but still resulted in unplanned outages at twa ll.e addition of 3,527 new fossil. fueled plants gener-retail customers, to a year . ating station system astrage * --- -
cndlevelof 416,100.Cond avritability declined slightly mercialandindustnalsales to 78.5 percent. Fossil plant availability was 80.2 per-
- ~ ~
achieved firm commitments for over 3.2 million square ' cent, compared with the feet of electrically hemed 10-year industry astrage of , ,
buildings,57 percent of 79.4 percent.
the square footage of new The encouraging resil-commercialspace m the ience of our market area m#w - o metropolitan area. On the reveals its continuing evolu- t residentials:de, Kansas
- tion from an agriculture-destlopers commi:ted 30
- bd river town to a percent of their new' multifaceted economy com.
housing subdivisions to prised of diserse business -
electric heat, compared sectors. At the same time, with 22 percent in Missourf, thecrea has develop an Interes: costs were ' excellent reputation for down sharply for the year, quality oflife - defined as our averageintere4 rate simply as an outstanding i on long-term debt was 7.53 place to own and operate
- percent, down from 8.00 a busincu, and to raise a ,-
. preent in 1990 and 8.32 family. In its Nostmber 4
. percent.in 1989. In March, issue, Fortune magazine Standard & Poor's Corpo- reported that executivesin f
ration raised the Com-~~ ' search of the ideal home
- pany's rating on senior debt for their businesses cited
- to "A" from "A-;' and our eight key benchmarks senior unsecured debt and preferred stock to "A " ~
from "BBB + " In Decem-ber Duff and Phelps raised
'our senior debt rating from-
"A" to "A +"
is -
f
'b b
< which must be met favora; additions of new peaking i p j
- g ,o 3 y g g bly Kansas City ranted - capacity, and implementa-w fourth overallin compari- tion of customer-focused '
. soa with America's 50 - energy efficiency programs.
la gest metropolitan areas. We anticipate the next WhLe certainlyaffected by major addition of base-
_em economic downturn, the - load generating capacity local economy's perfor- will not be necessary until-manceis evidence of our after the > car 2000. The to -
strength; unemployment flexibility of KCPLAN '91 I-I andinflation remained an:icipates changing oper-lower than the national ating environments which averages in the current : could arise due to ri w envi-recession.The most recent . ronmental requita.ents, indexof affordablehousing changesin the federaland prepared by the National state regulation, and the Associationofilomebuilders construction and operation plac-s Kansas City at the. _ of generating capacity by
""""l top of thelist of cities of non utility suppliers.The owr one mi!! ion people. Company continues to par.
Forecasts of population ' ticipatein national public - -
growth, household fonna- ' policy debate dealing with tion, new job creation, energy stmtegy, industry
- housingpumitsandpublicly. structural change, and w E=m* financed construction sug-~ concerns for electric service v N.
gest continued stability for' reliability.
,, ' the regional economy.
KCPLAN 91 demon-These basic strengths . strates our commitment to uns 1in our performance electric energy as our core and our expectations, par- business and requires of us
. ticularly our resource plan- nothing short of excellence ning for the foreseeable - in service quality in the future. KCPLAN '91, - production, transmission thelatest update of our and distribution of electric resource and operating energy, and thehi tt hst framework, envisions the possible level of customer -
goals of price stability, atisfaction. .
.. maximizing the use of exist-in anticipation of ing resources through both continued customer growth life cxtension of generating and higher service expecta.
-o,, , , ,y ' equipment and favorable tions, we initiated a three-off-system purchases, year, $23 million facilities -
improvement planin March 1991, which will elevute our .
l level of customer respon-siveness and provide our l6 -
. _ ._ _ . _. _ . .. _ ._._ __ . _ . . ~___
' j employees with a much requiring noless than the more efficient and cost- finest performance from C*y,' 0gld' 'I
~effecthe working environ- our equipment and our ment as they pursue even people. Second, the sys- m snaterlor!s of achieve- tematic growthin our basic ment. Not since 1955 has business in terms of cus-
- ~
the Companyinvested so tomers, sales and improved
- broadly in its customer - profitability requires that we imest in the growth, .52 8 service and administrative facilities. We will build two economic and qualitati e ;
t new service centers and development of our mar- 1,a _
I expand, renovate and mod- ketplace. Our aggressht ernize existing facilities. . - promotion of our products
'* ~
The elecUic system control - and services is tempered >
l center, transmission and ' only by the condition that dktribution operations and they be oflasting Company su -
L. ,
the customer communica- and customer benefit.
Finally, the long term tions center have been con-solidated in onelocation. enhancement of c.ur j m '" " * *
- We will relocate our head- strengths anticipates 3 quarters toleased spacein change, and the Company's downtown Kansas City to willingness to explore aher-provide much more effi- nathes for strategic growth cient working co..ditions which complement our core
. and to consolidate opera- business, neum. cute sai..
tions formerly housed in We believe strongly in -
l- ,
- l. - t,uree separate locations. : the strength of our market- se ,
Finally, we will utilize elec-7'
. place, and remain commit-tric energy for heating and ted to nothing short of **- -
coolirsin allof the new exceptional performance as
~ faciliaes, and we will
. an energy supplier, as an
'" ~
]' -
D demonstrate the use of ~
emerging, state-ef.the-art imtstmert and as an im ~
employer.
technologiesin two of '* * ^
our new facilities. These For the Board ofDirectors,'
changes are illustrative of. ,,
Q '-
l; cur continuing commitment. M
-: to improvenient, cuality .
sm -
and service excellence.
Drue Jenninp se -
We temain focused Chairman of theBeard i
r.d she three fuurlamental & President . ~ 4 ,, , ,,m R dimensions around which l2 we structure our plars and pals. First,lwe must strive ;i to constantlyimprove in the mangment and operation of our existing resources, !
lL i - .:-
4
- ti 9
[ e5 - ,
kI I)
%v, - .
f;
. . - - .g -
-- 1 ,
-p J,al*1 . , . .
' . 6*
1- ,
o 1 .
N .
' kkd.
,i i
i 3_ v l t ,
/ ..
' ,i
, . . ' . '- - O.,. " } \ ;
a
' ' ~' r -
} ,
4-9 i 3 J
i s , ,
s-,
o
'. ) -
, e ,
'e , -
Aributing 23.8% of rnoking guikiwirt rsh Kartsm C'ity% empigmeret, omigrkding med.a. lith tirartt((dcturmg e.ditdthe - C0rbOR Wlot tcds Gnd the 1980s with b: proved systems appnah to grind-l$msing owr 2,000 swpetitiwness through ing rnedic are a keypart qf.
objecuin itspermanent intructurmg andrins- thecompsstyk hmg-mnge ingJer exar*:14 in 1991, sitategy to beco v known collectwa a allas owiseeing many special _ . ARhfC.O Hlvidade asecustumerf cused exhibiu th' Nelson,Atkins Gri'alint Systems put 38 supde ofquaGrygoods Afuseurn of Artprovida mi!Voninto upguf:ng the ervf wvLn.
mil lat ks Kansas Oty theperf=ct educaticnaland culturalbackdropfor the . . %beks operctiont The mill producessteelbars usedin nearby Emsas Ory Art frutuu:e endcrea residena Owr 323.000 vintors touredthemuseum in 1991.
Kansar Q1jk artistic diver ~
sityincludesprqfastonal symphony, balkt. thxue, indepmdent artms anda !
, wcith cf historits!siten . >
.- Neariy 150organt;:a: tons
.I provideculiumlactivitiesin _..._ l ^,' * '^
the metropolitan arnt ' +y
' - - :LL:
bh b80..
2 M., & - ~.
.r- ' - . :- - . - .
ee e e-o w : - e- r fyig g g .
-i% r.<51*Ae5 ear,,*,%
- - A +- ~
- qv gg 4 4 -
}
e 4' .
f
,3 5
4, J J . ' ,}"
- <f~
~
.is g+ .j h4
, .a
.g ,
. y[t r. -
-E y , '
I' . $ *-
' ' ~ ~ '
,* , . 'e l _
g- * ~
[ I'I ,; , p % #4 & s.Q') $4% h..ph.&. . , ,& .
s
. e-hi$We
.t
-- ~ . . - ." ,
-}. , . .
p 'I. )
.. . ' .- ., ,,,,c.' ' . .:. . ... -e, *
'r'*
1.
1 'E M' E % M"" __
. ' ll 6' m,'-
5 .'
- ' 1, .s
'[ unemployment nate M us g ,3
. . -. . .n : ; .,-. .e ,, ,
- iers nu- was isso i bsthe worldhndquan
- sers qfHallmark Cad c
. Kansa City kods de
- nation in greetin ami putkhirtg. Over M printiq andpublahing bwinessesin the Karuas City arro empiqr wse
. 21.?fJ mvrkers Aiong with i:s nu.ome diwisit,% knsas Oty un%cs its estwraldi.ersity, ;
in 199L aseven+tek
- l exhibit ofceculAfrican -
artdrew ser 44t)oo vist.
tors to theNelson-Atkins ,
Museum ofArt and '
2;; awned <mssaltum! '
siucationalactivitics city wide. ..
i 1
l _z.._____l_ __J_.i.__________ _ . _ _ __i___l_______._._____._.___ . _ _ _ _ _ _ . _ . _ _ . _ _ _ _ _ _ _ _ _ _ . . _ _ _ _ _ _ _ _ . _ . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ . . _ _ _ _ _ _ _ _ _ _ _ _ . _ _ _ . _ _ _ _ _ _ _ _ _ _ . _ _ _ _ _ _ _ _ _ _ _ . _ _ _ _
+-vv l
he Enctgy ofKansas Citg We deriw 95% of our retail menues from it. %b base but bushess~and our -
~
i [eg. '
- confiden:e on it. %b raise our families in it But just 'j ;}[- '
what h The Eneqr ofKansas City? Why is it important
. to our compan/s value?
f' -
~
- TheEnctgy ofKansas Cityis diversity With a metn> - y
. area population of nearly 1.6 million people, Kansae City's economy features a healthy mix of manufacturing,
[~
Q -
rg -
I senices, retail and agricuhure, This diwrsity translates to - 4m -
6- -
a regional economy which n: mains relatively healthy in '
,N. *%* ) f,
. troubled times. It means kmer cost of living, housing, '/ e ,F q<f(_I.- f,
' a*d towar unemployment. I ,, ;jg
,k
- The Enetgy ofKansas City is also centrality of location, ,k t #
i quality of life, But facts speak touder than words "Ihat's T f */
2-what this special section is all about: the facts behind -
( r -
the niu' '
Tummet-Tne Ericy of knsas City is the energy of our future. "d**P*'"' h **"I -
10 major capitalu.npnw.
mentsprojects, totahng nearly 1%0 mil'.on, cn rently under weyin Kansas City,14ojects mngefrom comenhan center eman-Thexansa c.ty saa,1 theian; thehishca anti pourp,sucuor ennn ete. san tom conwand tf Tnxk, where wheat ona - totalin the bcant%135 year varorstomte capacity and bnvutykviion to midti.
otherfutures contrats air ; : hhtory. 5:rwr1983, ks feedercattle marketing. - continent too exhibits.
Inded, k the world% big- . sivireof the wheatfutures Aansas City k~ ads the
. test n'arletplarfor hant . market hanrownfrom 18 nation in sales anddhtri-mi minter wheat. in 1991, ' w27 percent, Kansa City - bution cffarm equipnent
- the board kgged1 billion . mnts et one ofahe nation > and supphet.
ht wheat bushelsInutedfor leadesinjnz:enfoodstor-
- ageanddistribution whett! .
s-Tk .%. x t m . g' ; 4 8 M h.
/b Jy y r> #
Oh d
~
g '
y,-
% . yy -
m.
w.
, g . .
+
l me
,.. g n,. 4 e
+ ,,
z.t .
.,g.".
-Y'.,
~ . g; ;..
.a
~
J- *
[. *i.; .,....
... . . . . ~ . - - - ._.- -w.~. . _.. ._ - . . . _ -.__._-w_w . --___._.
L ,
l' - . , e y m m.,
+ i-[*){?
r ir,p g.
. S g;.
l ,
t47w id!thed %$h the
.: envbonmentin mir4 -
. Komm ary)parksand . _.l
~ boukvardtystm adds :. :
l
- to the arratkuutyand .
'a quahty afEfe, Out q{the \
'; '316squarr mila comprb- }
l' _ ing Konsm arypmper,
^ IG000acreso%devotedto
- .-_thecityk137 park.t The. :
l
. cityownsandoperata33
- fountains andnumerous >
' cthersareprivatelyownd i ~ondopemtd Ofthe2,200 L ,
~~
mila ofpantstrees wl:hin ci:1 Emits 130miks ( -
, #t S . , r .., m
' - * ^*-':"" " "* " " ' ' - >
are MnedMands '
rnorr than wty othe city [n 1991, KCPLfoinnt with in the country. theMissouriLMurtmer,t
(: ,
t ofCon.wrvation to Mp >
P!cler'elh!Pt'rtrin!
__ _ _w phon. KCPL built hack bom to houseleby
- n fahyns as wellas built ,
i.
andinstallednesting bau:s ,
on pl,m! smokestacks to .
^
ena>unge adultfakons to ,
remaist in thearea to mbe t, .
theiryoung. Kansas Otyis vwof20 midwatern cities
- . %patingin nptor renatuhtationpmjects
' ^
e
^
with the (!niversity qf i- .
Minnesota Raptar Cen.w p 6 -
l 4
- i. . 4
.s . ..S ,
pAcd E
\d i MOST AFIVRIMBIE IlOUSING MARKUS
'._t
,s
' . . , s ;. ' .
w .
cu.3. u,u.,osa A,= ~ ror.m i,me.an
^y .
J' 1. Er sas City, MO-KS g.
9 ',L' . - - 2. Milwaukee, WI i
" r-E ( ' 3. Detroit, MI ,
- 4. Miancapous St. Paul, MN Wi
! = . . , - ' 2 , Q ,, L !
i ' . * : 5. Rochester, NY .
. l
~
4 * ,
~ '
- y, 6. New Orleans, LA
- 7. Pitt6urgh, PA l
., r. }
[ 8.Oncinnati, Oil KY-IN
- 9. Columbus, OH
- ,*. g .10. Denwr, CO
[. .
9 k . ;
!~
l - .: .
- -.a
~
- W: -
, , yA&-
.w; . , -
- - m.
- . . .. -
- '^
l . e
- e. . .
- r
\
V . . . p cw Forirtfortnation sou:m
- - --' and asshtarace. sce insMe <
/ '
. back cover ,
l+ . .
f '. -
-- w.w--wy >-7-*' N-
l' : 4 i
r' - [bfwtybelmerm US
[ .-q '
~%_
< population unters and -
' ^ Istidwsty twtwxn houston .
l g ',, . .lyn -
-l(+f the Camdian bwdec . c ,,,,,,,, gg ,,,y 3,, g g
w- t 3 - Kansas CTY h he# = Compsrvd To U.S. Inhation p 5 t ' h,, a~ : positiag Ma natiJena! l ,ga HER *QQ e a.
.. 1 . . h%for efukstinetworks hN i* . ? . ofIntnsportationand distribution, Karuas Ory k *'
D'
, ~
' thenotwn6secondkvgra EK ^ l' \
X,
( ,
. - railcekks andik.1s errr ong .-
l j
, thela7est coruintration of **) t f
1' % ,
y,,,.,w p,jp ** - .
. = l l
,t 5
.-(' ,
i Hansas City Employment Shares '
By Im$uaty . !
- , s
} . (}.
@ g -
.' ..> -,,,,Q}_}9 s -_:
4 g 9.
, ,n. . g ;. . .
m- s.-s 9
.- . .5.
[
=s_. C=' '. .- .-
" .O.' "
= ,
[si m = >
a guy
. m$ .
" = ,.
[ ;. , l -
y 4_ sj , ;a " a- !
I 3+t
.- s'
- . ' L .. r~ . 7 ,. , , . ,
kW*
q
- 4 v ,, __ . L. - 3 esag',. -
f ;
.d '
, e A n
m Bussingastrongsenar : . ararsact:nicacortsuitanis.
n- . se" toc KansaQwserves i + such asflowantNentles
= ' '
- asaregiondornatimtd IT,murnen & BergendofX on n unterfor nummuapa'n, - arch ltectund,engiaterm
~
cidandinswunce set. ices, - cndplanningfun-.
.as wr0a engineeringfinns i-
.g.
._w f ' #
'[I W aume . ,
- p ,'...., w - .
m.- -
- e'J,
...... . ... ....J
+,'r<
. s .,,
m +
,q;
,f
- t
- ,a g?l g 3 , .;..q.
- 1 . ;.
' .. j ,
.f '. ps . - 9 , a .
^
[f '. t k. P - ,e
' 5 *
>i- - ~}[
g
- m. .
.x4 ..
,r. ,
,J.,, ,
9w '.'
4 s#. - cd i .
,', .w
- s ,
+.
- . .c,. .4 7 , . .,. c.
4 t . ,- ~1,
.~4.. %
A.3
'? . . r he,,?wp.N:- *O . 1 W. '.91..
- ~
- s. .- ' '. s Y
. l' '. *~.
Y' ,
.. n - . .
.. . y . .
.,% ,e .(-
. ., u ,.,4 g ' ' ' t - -
.g [, 1. ) ',
., ?
,g
's,
., ' . . , a .
'['* ..
t, g .4 '* .
- p e'
e, g- .
- /, s .
pf i
,g . '.
... 4 ..- .g. ., .
- . s .' #3 .. '4 4 # . -i 1 ' - l- .."'I' .
.. ~ -. . .. . . _ . . - . . - - - - . . . . - . . -- . . .
. 3 7..
en i ha .
-^ '.. , - . ~. .7..
N
...- *(.
s, G,? / . v . '5?"* CuMLkition
. '. .*. .",. . & . ' . .;<,1.,',~'"$lY. w dU,%:.
f ' QS. ELl' Ul-(W.i u - ^ M ,
j w , . ::YfQ 3,:r. ~ .: ; ; , /. . '-. a,' s.a_ n'mo,,Wn on;+a.
w' . c ' ~. :-:. .,Q. .
. . .G.g.:,.n. ..n.
.m')
s..y '
.. q . . , . Cl@fsji:vdustledbw gr ,, a l
- .; ,
- L. .Z
, ['
- u. . .
'q - .
. .p K. _ ;
, - 3. ,1 n ".
- a- --
...'7'. i
.m , ; -
i
.m..
- } ; 7 c;e
< -l'
~ - } sm%,me nr.y gg r 3 3e,9ff TI a:! css citics gg Mustym, I
y .' .p a ?; , ; . . , .- , y % %., ,, , .I
- ' andthewwliestforlui
- f .'. ..c.( .. : f ^ ^.
. l. ta k av a s h; r...
/ . eturty3 ni%n st en farn a,v,.
]
'~~. &. ':
.PW . ..f . _ , . '
J l\ %,
- kyun og ,,, g,,,_yg ,r dutiv the kynt 199]'.w
- a. km imwnefrwn & two ' q,
';, - 1 l - ~
- l }
.s. $2,nrmittion om.4 g m o ~ ., i ~
~l J
- ~. } _
mmong Aum ci;, et,
.[ ' ~ ._
. r- -
. q. ' % gy y ,, '
3 c ' , .. ; - .
) . "; % - :;..: e, ; ,', ~ ',
-4 ~-
sewrx!nx nnatandwt
- . .a? ..J ~ -
? :, , 3 alk/cm.mfw .
,' ;. . . J.T %' [. .:.2 ,y, f .i
'7 . ;. ; c_f. ' '.*.. - : N,.' g.. . : $.
. + n .
O '*
1 i
I(
i; ' ' " " " " ' ~
- ==am m.m.,
!' " M ".
b +
KCPdleal4 Mic. raw arioca, ..
n >
- m. m 3 W widur tiren.orde 4 l
- ) Y j; ,
- in 'l !*"C Gn Maarian ak 4
+
k s
3 '", _ - . .- - _ , _mg h .'
g
[
f.G,,.
, .p g ,,
. Me,m
$6b E R. y } . .
,l T ,
7 +;
marm
[ ,gr[ f[- -
r
+ )
j I
p ~ .
iL
- it ;
v.5 0.t y a l{.
t o : .
$^
,)J u .
- m. o .a
' 6 8' ** e '_ _ ,
L
'.'...., _M _gn ... ;
}
- w. g . e'
.,'g".,
?..,,'
k.s . _ .
' ,.v f , , . .[%.s ~,. .'
a
^e
.. , ?
$ '.,.sp 2 J 9
.- " V-
. .e. gr.'. A,%*
-}'* " "
a
- t
.q. . ' .s,f
, ' +. .
. .~ .,'r
, , op . .
' .:,.'s% .: _m.yy t,%
'W: ' i Q',;
%.cq .. . r 4.,.,.
y ,.. '
.,.* - ._ ,, , ew . , ,a ,z ....-
ye j
,,.y ;--+ ; .
- . .. % .. - y. a . . _
.j,s.~ y,
.' . f p y'* '"A .) ~ , - _y p. y '. . .
y a
c s4 ..'. ;
..3x. , jjd,. ,
- 4 . . r: Q)w .
y _p
.. <- fy, -
- g .-
9 ,-
p . .Y _*
.:~..p . i.
? ,' y
,:) v ; , ,_ * , ,, } . ? 4
~ *; ;
p '
.Q [ _ . . - ._
y -y.R T.. I.< 4P- K.~C'f v2 ' l. a'5 '.'.,. . '.'.s..-, :: Y, ..p P.Q.
e r *.. -l'
~^<..$,-.;.; rkd N ~.:
'.o.%, ., . , .;... %:3.$.:'.
, $? ~ j N L t. .y
- i
.f
.. .a .s , , .- t *L.4 .. . . ~. 3- p.-
. , c' c. ..
a pu m
.x. -
- d Q
,4 G
M v.
A-M e,.. + .
' 4
- c. f . .a'
- K %+l H - xm., Q 2 , ,PL . s.:. . a.8s, .
- 7
- .;2.$,;~ j. 7 , ..-w ,, . 3 A;A. .y@.k.nc v-
< 4 y, . . .a t
.., .c.p .4 .n 3,< w%ya w . w- ,
.a . ? ,. n..
., g ..
y, y ,
4 ;.,c
., . . ,.R_
gd k '
pn,. 4-c . % :4 .- ,
D,3 :.
d f' .,
~r. r9
= ~_ f:. lc % ?
,. } ' . . ..
' Y* l
O . . ,
3 %.'. <~*~:
c
.~ . ..,a s j+pw,- 1 Gml.
~,m M, . ~
B .
1 ge . 4 3 gn,!;
m -
g I .
l - . - _
- - . . _. _ _ _ _ _ _ _ _ . . - - - - - __ -. . __- _ . - . . ...______-.m m.... - _ _ . . . . _ . . _ . ~ . _ _ -
Y .b=
.' I i#~I 5 ' N s
-n.f. "x ,y'1.
-s
.s; 9
- % .. c.1, .
e.
.CA - ,," g t ,-
,q \ . -
2L**M*-Q, ,b~s - .
.__ a%@_~ 1 3 L"..**'
- Ee -
]d n J,i._4% s. ^ ' C
. m. e?.-k Q. e ; ^ .f ,
-i
')
$Q ,, - ,.
- 2. {' - 5. ' ' b r* 1
'9
- -_ . . .-- y=1, g , rJ.e>4 G:d._L.h~s~$.'E^* . . . q. ,
.,.s,- ,
o ~- .
.; m i N, 1 ~ 5. . . - .. - .
pg =g 1, :. .T k '
a -- p) .1r3 : -
, 7 'r. M g
~
h '. .
>]-L-q; p., y. f,, . z . p .__..
J;'*'J; . - V7
- i
_i .
T'
. ..A- , ,
,l 9,m.,m .,,....A "
m,.
i
~
t~
tom AT'PD statufs -the cetsystern controltrnter. .
ofruturs monitor the ,
- , amipad bulic post * '
- mWm. In 1991, KCPL y;
' lauwheda 5,13 milhun facilitictim;wovementivo-t
, ; q. Fam, thejitst exteruin
. + 4 ..,a urgraiesince 1951 The <1
. plan carsforbuildmgI& ?""""*"""~~"""~^
new.sm re etn:rrs in tir ,- d
, Market share - Dectric heat !
comte @extendalcus7 y yl ,
i1 3 toms toe m the northern
%'9 ;y' y
{-i ,
. andsouthern twche of )
the A'am Cry crn:. .
ygwcyr _b
.p t '
Y i;L m,. t,. r1 AF. Ai - -
4 f .
y-JK,-arysuure locatics makes it a natus'
[
{
'x . _- ~
'h t
1 l .hubfor te!ccommunica- 'l l\ tiar:t 16 o mmor .
V F cperating bawfor AT&T andhcarm Unita1
%. W
-( 0 i Te!teom.3 print, the 4
(
" " ~ ~ - - " ~ " - - ~ " " * * "
. natwn% thirdiatar tc;phorelong darance '
com;wny.
s 0 -
, g e p.
E ,/ N p 'y - ,
- g. e c = - - ..
s,
% -M b. ' s ,
1
~' {
gi - ,
teeg.
y "g/ ~gg" f i
,mzae wm e
&a_t:
r.
~
mm u._ ,
, .i
<q; g 'j g -__
sm :
-=1
- pg.n y 2
- -g-ge Am.w..yu : b, wg W}7a<
7" & : m. .
, p+
W v
l f
Zix QC=M %
" .L E rff E lii, Pi, -
ll !.i
[4 L W !" E nnmuman nn_ ., wmn wmmmwom
_ _e wann M
w:vmn al r~
Fs -
af ge, e ms,,
y?JwLn fJ 9 9 4 +g g
- - m z -
ccr ._. .
\ x %,
Nx
. i / / 7, V n 4 ,, 4 ).
l
/
/ -
Seniry this vitaant metropalitan area is .-
KamatCityIbad Light Company.KCPL is a medium-sim electric utility and the cor-parate succasor to one of the weekfs first electric companies, generating Je.tricity sinc.e 18$1, licadquanered in downtown Kamas City, hfurpuri, the Company genemies and
.distrib4Ks ekttricity to R:r 44,000 customers in a difMsquareanile area hxated in D coun-tielln western hfissouri and eastern Kansas.
~ Custonesinch& %6,000 residences,48,00u
. commen.ial finm, and mer 2,000industriah, municipalities and other electric utstick About twt >4hirdsof totalretallkilowst -hout-sales and menue am imm Missouri customers and the remainder from Kansas customers,
\
w n, n:
aawa(
.- e(
(
4 t
c \
.w m,)L O
.r Amrsa,seitneraenis .
the KCPLservkr temtory.
-- e /
'N. . ' x \ NN\\x
K A N5A 7 5- . C. ' ) - T ' O P O W-E R ~&- L' l: G H T.~ COM-PA N 'Y r -
'Baixoce saccu -
.f ihremier31 Assr:rs 1991 1990-(thousands)
- Utility Plant, at originalcost - Electric $3,060,333 12,985,145 (NoJer /, 7 and SJ ~ less- Accumulated depreciation 891,782 _ 830,622-Net utility plant in senice ' 2,168,551 2.154,521 Constru: tion work in progress $7,706 52,759 Nuclear fuel, net of amortir.ation of 569,152,000 and 370,624,000 27,060 13,413 Total 2,253,317 2,220,695
. Deferred Wolf Creek Costs tNote 1) 49,C50 60,217 D6'rred Regklatory Anet (Note 1) 99,000 97.000
'Invcstments and Nonwility s't operty 17,394 12,824
' Current Assets Cash 128 134 Special deposits -
162 Receivables -- =
Customer accounts recchuble (Note 4) 20,324 33,098
- Other receivables 20,939 21,801 Fuelinventories, at average cost 19,766 19,903 Materials and supplies, at average cost 45,917 45,819
' Prepayments 8J65 5,327 Total 11$,239 126,244
- DeferredCharges . Settlement of fuel contracts 29,982 25,088 KCC Wolf Creek carrying costs (Note 1) 15,047 15,759
.MPSC rate phase-in plan (Note 1) 14,144 21,216 Deferred income taxes 1,655 - 1,544 Other ,, 19,411 '18,272 Total 80,239 ' 81,879 Total 52,615A39 $2,598,859 The accompanying Notes to Fmancial Statements are an integral part of these statements.
l16
.__w- _ _ - _ _ _ - _ - . . _ _ _ _ _ . . - . __-_s_ . _ _ - - . _ - _ _ _ _ _ ___.__.___-.--_-n-- - - . _ - _ _ ---..-.-----.-----.--,-n
C A - N ; S : ' A '. S .
C 1. T Y - P -- 0 W ' E R &' L 'l G .11. T C O M- P. A' N Y
, t, December 3)
- t /
[J
'^
LtAnn m ts 1991 1990 Ohouwnds)
. Capitali:ation (Notes 6 and 7) - Common stock-authorized 60,000,000 shares without f(See Star nents) par value-30,954,363 shares issued and outstanding-stated value $ 449,697 $ 449,697 Retained earnings 411,161 399,294 Capital stock pre *nium and expense (629) 2J91 Common Stock Equity 860,229 851,282 Cumulathe preferred stock 39,000 92,000 Cumulative prefenrd stock (redeemable) 2,076 2,236 long term debt 822,680 750, 4 _09 Total - 1.723,985 1,695,927 Cunent Liabilitics NYes payable to banks (Note 5) 34,000 15.500-Commercial paper (Note 5) 52,000 28,000 Current maturities oflong term debt - 100,000 Preferred stock (Notc 6) 13.000 --
Accounts payabic 72,324 69,463
' Dividends declared 680 -1,589 -
Accrued taxes 17,440 14,465 Accrued interest .
12,461 13,705 '
Accrued payroll and vacations 15,169 13,814 '
Other - 7,444 6,893
- Total 224,538 263,429 Deferred Credits and Deferred income taxes $53,345 523,306 Other Liabilities . Deferred investn;ent tax credits - 96,051 103,060
. Other . 17,12p _13d3]
Total 666,516 639,503-Commitmen:s and Contingencies (No:e3) 1 l17
\ - - - - -- - --- -- _ __---__- - --
ft
? IK9 AUNTS)AES C ~ 11T Y P ;O LW E: R &- L " l : G 11 Te CO'M'PA IN Y
.c 6
t r.
n p LSimmeteennceme korEndedDemnlxt 31 sr
-n !: 1991 1990 1989 chouu mte
$ 825,101 - . $ 812,912 70; erd $cRevenues; th tric 5 782,766 p -V' ' Swim lua - . '2,658 _ _ _ 7,450 qi Tbtal 825.101 815,570 790,216 w-~
Operating Exper.sn
' Operation hm, ~ Fuel . 132,100 _ 136,849 134,329 p Purchased power 22,226 15,421 12,991 Othst 166,009 152,847 137,895
- Maintenance 80,922 79,467 68,953 -
. Depreciation 86,795 85,020 85,356 h~
11hxes (See statement 5)
Income '. 60,573 63,3St. 66,105
, General . 83,525 : 83,564 80,381
, Amortization of MPSC rate phase-in plan (Note 1) . 7,072 7,072 7,072.
Deferred %bif Creek costs (Note 1) ,
11,734 10,366 10.3,66
- Total - 655,956 633,992 603,448 o OpemtingIncome 169,145 I81,578 ' I86,768
- OtherIncome and: Allowance for eqwy funds used during
' ~ Deductions : construction 539 126-' 235 Ts - Deferred Wolf Creek carryi, rig costs (Note 1) 791-. 1,489 6,037 Miscellaneous 068) (!1,549) 748-s , income taxes ,.,
295 _ 6 324 2 220
. Total. ' - 1,257 (3,610) 7,240 -
, , in<vme Bxfore ;
- Interest Charges - 170,402 177,% 87 194,008 =
T1ntemst Chargs long-term debt ' . r' 63,057 68,853 78,576
,( '
- Short-term rotes' 3,299- 6,199 - 6,521 Miscellaneous _
2,665 2,492 1,985
! Allowance for borrowed furids used during construction . (2,512) ' (2,308) . (1,6%)
' Total' 66,509 75,236 85,390
? Yearly Rauhs ' ' Net income 103,893 102,732 108,615 _
,' Preferred stock dividend requirements 6,0?3 6,360 6,359 Earmngs avultable for common stock $ 97,870 %,372' $ 102,259 f $
, Average number of common shares outstanding 30,954,363 30,949,763- 30,927,257 Earnings per common 10 tare fhore 6) . S 3,16 $ 3.11 3 3.31 Cash dividends per common share - S 2.74 5 2.62 5 2.50 ,
- The accompanying Notes to Financial Sra.ements are an integral part of these statements.
- l18 :
K AN SA5 C I T Y P OW E_R & L 1. G 11 T _C O M PAN Y l
l Latements of Cash Flows learEndedikctmtier31 1991 1990 1989 et.ouwide Cash flows From Net income $103,893 $102,732 5108,618 Operating Activitics . Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 86,795 85 020 85,356 Amortization of nuclear fuel 6,199 8,391 10,739 Deferred income taxes inet) 28,064 28,255 35,599 investment tax credit (net) (7,0091 (3,276) 7,894 Deferred Wolf Creek costs and amortization 10,943 8,877 4,329 MPSC rate phase in plan amortization 7.072 7,072 7,072 Other amortizations 5,147 3,631 2,521 Allcwance for equity funds used during construction _(D9) (126). _{235)
Total 240,% 5 240,576- 261,893 Cash flows affected by changes in:
Receivables 13,636 (6,064) - 36,229 Fuelinventories 137 2,893 3,761 Materials and supplies -(98) 2,129 (3,502)
Accounts payable 2,h61 2,566 (12,%7)
Accrued taxes 2,995 549 2,179
' Accrued interest (1,244) (1,239) 73 Settlement of fuel contracts . (8,578) (939) (22,601)
_ O_ther opecting activities 2,175 2,401 8,370
. Net cash provided by operating activities ' 252,449 242,8H 273,435 Cash Flows Fiori Construction expenditures - (122,447) (92,558) (103,169) j-lavestingActivitres Alkswance for borrowed funds used during construction (2,512) (2,308) (1,6%)
Other investing activities (5,404) 2,290 - j3,140) tdet cash used in imesting activities (130,363) (92,576) (108,005)
CashI7ows from - Issuance oflong-term debt 135,250 -
566 Financing Activities - Increase (decreaseitn borrowings under banker's acceptances (3,000) (3,000) 18,000 Retirement of long-tenn debt ^ (160,215) (65,345) ' (92,908)
Retirement of preferred stock (40,000). - -
Premium on reacquired stock and longaerm d'bt (5,516) - -
Increase (decrease) in sh' ort-term borTowings 42,500 5,600_ (7,300)
Dividends declared (90,232) (87,442)' (33,68i)
Other financing activities - -(879)- (113) (113)
' Net cash used in financing activities (122,092) (150,300) (165,436).
Net decrease in cash (6) _(4) (6)
Cash at beginning of year 134 138 144 Cash at end of year 5 128 $ 134 5 138
~ == .. n Cash paid during the year fcc Interest (net of amount capitalized) S 66,290 5 74,844 $ 83,658 Income taxes 5 37,117 5 28,600 5 20,389 The accompanying Notes to I'inancial Statements are an integral part of these statements.
f19
KA N-S-A 2- C I ET. Y P O W'E R-- &. -L 1 G 11 T C'O M PAN Y v
w Smtemenu oraxei Year Ended tMrmber 31 t,4 -
1991 1990 1989 Courowrsrs or INcows tax Exrrxsc owwndo
' Curn ntly Puyable lideral $ 33,667 $ 27,324 $ 18,082 State- 5,556 4,759 4,310 Total. 39,223 32,083 22,392 Deferred . Federal (net) 23,6% - ' 24,013 31,142-State (net) 4,368 4,242 4,457 Total 28,0 4 28,255 35,599 Investment Tax Credit Provision - 1,413 12,080 Amortization (7,009) If689) (43).
Total (7,009; (3,276) 7,894 Tbtalincome tax expense 60,278 57,062 65,885
. Less: Income taxes applicable to other income and deductions (195) (6,324) (220)
Income tax c; pense applicable to operating incorne $_ 60,57) $ 63,3Sj [Jg
. DEFERRED INCOME tax EXPENSE
'E Depreciation differences 5 30,270 $ 30,683 $ 32,7I8 Settlement of fuel contracts - 1,760 CGS) 8,133 Other (3,966) (2224) (5,252)
! Total - $ 28,064 $ 28,255 $ 35,599 GENERALTAx EXPENSE
- Property and real estate $ 33,803 $ ' 35,666 $ 34,188 Gross receipts 41,223 39,637 38,571 Other ' A,499 8,261 7,622 Total *
$ 88,525 - $ - 63,54 '$= 80,381 a=== =- e: = = =
' The accompanying Notes to Firancial Statements are an integral part of these statements, 4
1 1
,,y '
A 1e
- K A' .N L s A z SL . C 't. T ' Y P.O W'E R &- L I G " il T COM PA N' Y-Q Statements or cumulative etererred stock & iong-Term ocbl December 31 1991 1990 CvuvtATwu Pntrtnnto Stocn (scluding current portion) (Note 6) ( w wndo
. J100 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% -120,000sharesissued 12,000 12,000 7.72ar - 0 and i30,000 shares issued - 13,000 NoIttr 3 2.33 - O and 800,000 shares issued - 20,000
$ 2.20 - O and 800,000 shares issued .
- 20,000 Total 5 39,000 $ 92,000 CowutArtve Par.rtnRED STocx (RtDEEM ADLE)(Note 6)
J100Per Velue 4% - 20,757 and 22,357 shares issued $j~2,076 $_2,236
.~~
two-huu DzsT (excluding current maturities)(Note ?)
I7rt!MortgageBonds - 10%% s. ries due 1993* $ 7,50,. $ 7,500 9.46% series duc 1994* 60,000 60,000 (f 4%% series dt J 1995 15,000 15,000 5%% series due 1997 30,000 30,000 6%% series due 1998 25,000 25,000 7%%. series due 1999 26,000 26,000 9%% . series duc 2000 35,000 35,000 7%% ~ series due 2001 27,000 27,000.
7%% seriesdue 2002 30,000 3J,000 8%% series due 2006 - 40,000 40,000 8X% 1 series due 2006 30,000 30,000 5%% series due 2007* 21,940 21,940 5%% series due 2007* 20,000 20,000 l 8%% series due 2007 _ 30,000 -30,000
. 9%% . series due 2008 - 25,000 25,000 6%% series "A" due 200S' 9,200 9,200 6%% - series "B" due 2008' 21,800 '21,800 12 % series due 2013*- 11,980 1J,980'
-MortgageBonds - 8%% teries due 1994 - 60,000 7.34% Mediam-Term Notes" _ 135,250 -
Guaranty ofPollution ControlBands 5%% series due 2003 14,110 14,425 Variable rate series" 4.82% series "A" duc 2015 56,500 - .i6,500 4,93% series "is" due 2015 50,000 50,000 4.85% series "A" due 2017 : 50,000 50,000 4.92% serles "B" due 2017 40,000 40,000
? Ban Aer's Acceptances . 12,000 15,000
' Unamorti:ed Premiunt and Discount (net) (200) _ (936)
. Total _$_822.,6. 8.=0 $7_50,4 _09
- Pledged in support of pollution control bonds or othu agreements.
- Weighted average rate at December 31,1991.
Tb: accompanying Notes to Financial Statements are an integral part of these statementt l21
47 [5 ~ A ' C I :T J Y 2 "P OiW-ELRl '&' 't 1: G H T' C:0 M P A N Y!
F
'}
h-o L
tatements of Retained Earnings
%r EndedDecernher31 a
1991 1990 1989 fthousands)
Y Beginning Baldnce $399,294 $384,004 $359,067
- NetIncome 103,893 102,732 108,618, 503,187 486,736 467,6*5 JPremiwn on ReacquiredPreferredSteA: 1,794 - -
DividendsDeclared
~
Preferred stock 5,417 6,359 6,357
. (at required annual rates)
Common stock-52.50 per share 77,324 -
$2.62 per share ' 81,033
~ $2.74 per share 84,815 90,232 87,442 83,68_1 Ending Balance (Note 6) . $4,,11,161 $}99,294 $g g
- The accompanying Notes to Financial Statements are an integral part of these statements otes Tb Financial Statements -
4
- 1. SUMM ARY Or SIGNIFICANT ACCOUN11NG FO! JOES . to establish rates for utility charps under established regulatory
'" rate mMe rates med to onpue gmss AE are m
- System of Accouars The accounting records of the Companywinaintained in - N "" Y ""U **8W' # ' "
1990 and 10.0% for 1989. -
_ accordance with the Uniform System of Accounts pn: scribed by -
the Federal Energy Regula:ory Commission (FERC) and generally
~
Ikpredation and Maintenance ;
axepted accountmg pnnopies.- Provisiom for depreciation art computed on a straight line
' Utikity Plant - I"* **
- O # *
. Utility plant is stated at historica! costs of construction. Rese ""I D b#N' "* ""d b#
uas Capwation hon Appmam amd
! other eosts indade taxes, payrou-re!ated costs including pens;cns and fringe benefits and an aHouance for funds used during - {9ynemeswen
, , s and M co De Company sold the steam heat system in The Corr.pany charges to maintenance expense the repairs of g L -
property and replacement and renewals ofitems determined to
- i. . _ _
5 Allowance for Funds Used During Construction (AFDC) ' be less than units of property, cc:ept for such costs which are
. AFDCirdudet the cost of bormed funds used for construe < charged to clearir.g account: and redhtributed to various operat-
{ tion purposes and a reasonable rate upon other (equity) funds. ing, construccon and other accound. The rosts of renewals and i De allowar.ce for borrowed funds represents an allocation of betterma_nts of units of property are charged to the utility plant intnest costs to construction, while the allowatt e for equity funds - accounts. Property units retired or otherwise disposed of in the is a non-cash item ofincome. AFDC is charged to construction . normal course of business are charged to accumulated deprecia-.
+ork in progress durir4 the perhd of construction. When a con- ~ tion, along with removal costs, net of saluge. The amoimts of struction project is placed in service, the re!ared AFDC becomes maintenance and depn:ciation expense other than these set forth a part of the original cost of the compicted plant which is used in the Statements of Income are not significant.
2
K A N S.A S C1 T Y P'O W E R & t. I O 11 T C O M l' A N Y e
himt Pisal Decommkdoning Omh rate estabhshed ly the replaton will recover amortirmion The MPSCin v rd the KCCin 1985 catiwted in 19M of such cosit if subwqncut recmtty is not permitted, any
. Mlars the :ot.t of cecommhsioning the Wolf Creek Geneniting uramonized bal.ince will be charpd to eyeme at tha' time.
g e 4 t hatiori(Wuf Crtrk) to be 1)03.3 milhon and 1140 ndition, I
mpectively. In August 1989, the KCC irceaud :h:ir estimated n
1 I]'"# f ,
g ,g gg g
, eat of dmommissioning Wolf Creek 101206 milhon in i48 rmnue fot sales unbilied at the end of cuh reparting perkd Mha lie correspm&nwicase m in ding and cApenvr commemxd during M0. hrsuant to MPSC ard KCC require. Itedmificem
' trent;thr: reneuhe ju *tanalI.ortiom of the Company's llulk peer tsics for IW1 wve 135 8 milhon and are refketed 4% she (4 this costs are king re',twted and chargd to as Operating Rewnms in comphan:t with a IIRC Axounting fL ;
[ goutimpxto it av.r ik his of the rhot and placed it. an ettercal truit fund to be used m'y for the physal demntriksioning of Relea c.11ulk power saks wve peviously netied apin t pahued power and classified as Intes change ponti (net) 'Itetuf-s Wolf Crttk which h ntr,ox cted to occu pic' to'#12$. t etween tornw and operating evenn of 154 4 ndllion hi IWO The bvest.nent it' tk trust f n% ns 173 mittion arw!!53 ndtlion and $58.7 moiion in 1987 have been made to imioush iwued a Decembt 31, IWI a..d 19% respecnwly. Such attoana are income statene.ts in ordes to conform *ith the IW1 pttentation refkued tuder Imtments and Nonutility Propeny on the of bulk gmtr sala and other emnor reclairications.
Q !!ahnce Shetind Orc relat d liaN!ities for decommhsioning g
inde&d h &bml CrtdittOther.
f-F C ny he adopted Fmancial Accounting Stand rds Ikiard (I ASB) Statement Nc4 96 m bich requires etabhshment of Nedeur Tod g h; W cott of nuden f H is anx riirnt to fuel expene t ed deferred tu liabikties and assen, as approgriate. for all temporary d' on hirrmity of bcst pr4 ced for the g :neration of electric differences caused when the tu basis of an anet or liabihty evry@ der thr Nuckar %e ible Act of 1982, the Depart d.ffer: from that reponed in the financial statenems. Aho,
[
e netM Erergy (DOD h resN 04k for the permanent degr.a! the dderred tu assets and habihdes created as a rnuh of thesc
= of spent nucear .uct he Cormparn corrudty paf to the DOE temporary differewei muu be determined using the tax rates q
far f uungotaasit Spahenices 6 quawrly Ice of one mill sdeMed by tne th law to be in cffeet when the temporary i.c - ! ps kibaatFhnur d rat trJear rp.catbrt The d sposal costs d Iferences reverse
[ '
The muet Deferred Regulatory Asset. reflects primarily the
= ax chrgtd to hd tzem :tH ucomed through electric rates.
knutumnut requiremen necessary to rece h tu towQs i eteepolf Orek Costs Otim frorn t'.t KCC and El'SC previJed for catinuance "8 *#" "**#' O*"8 """
cIconst uction 3,tmmttng for ratemaldng purpmes subsequent ' E# ^""**"#" ##"*#
k to the September 3, i 18$ tomiweial inenice 4 tate of Wolf I"" #'8 " 'E " I***"I *W' "'" "I
.[
Creek to Sepemta 10,190 and May 5,l,N6, repec$rly. Also
^ "#""I "" * ##* " * * " " "
liaNhties pursuant t IASB 96, operadng income tun are authorinchas the 4:ktral of cenain &de:atrying costs. These
- ""'m axe ratemahng onn@
- ddertrh are tong uraonked tad troocedin rates owr an
' h Me.g table shou the reconaban,an of the federal t
atgennw ta. yttr pM statutory income tax rate to the effecthe income tas rate rete J KCC%lf Cmk CaMing(m.ts in the income statementt 3 >
= On M@l,1%9, thd CC arprmed a Nipulation and 1991 iW0 1989 l A ptenet which, amoner,kr thire, extended the Wolf Creek Federalw2tutoryixome v dgreciatAc lik fran 301p O yea s, and authorned the Company tax rate 34.0% 34.0% M.0%
to ecue on June 30,1989 Oc amal of cryir g costs c,a 314 mw Diffenses toten 1ook and
- of aleged eseess canadi3 t.id m ncrue es.trymg costs on the tax dep,rciation not cumvh6e 64ferred act ihrough. lure 30, M1. Stanl rig July 1, normalued 1.8 1.7 1A 1991, rht &fermiis tmomoniud aH rewvered over a sh Amortiration ofimestment 3OM ta cte&t (4.3) (2.9) (2A)
OF$C liste Phse-in Pir. Stateincome tues 4.0 3.7 3.3 g- , The MPSCS 19W.'41! Caek ran phastrin pian nnhed in Other 1.2 (.8) 15 t
defortal nf a :mh rtmmy ol'a portion of the cost of equity and EHectiw imone tu raie 3 0 's 35 P 4 3L8%
t hi twryim cosa e n < he deferral. Recme y of such defurah and = = -
tbi ttrt pMug 'n ruwJon of theie deferrah mer five years If the application of TASB 96 s.m tefktted in the Staene:s c
hept er Jawary 3 %. of Income, net income wouk! temain the samt Otlw Intferrtd Omr,tes investment tu credits ha e twen defened when utihred and are Cetuire costs, sut u thos e inmd for major storms, being amonized to income mer the rmaining smice hves of the premiure on tedteneH&t, dey (2penw, settkmerg of fuel con. related piorenies.
tracu ard other cims, .iv.tcoMis defeard charges when it is pdubk, based ou histtM regula:ory precedent, thr.t future rn i 7, l - -
wr .. ,--
.Cil T
[g '
W TA N3A $ '
Y- -I.EO I N li H ' A L iO il 1 .C'O M P- A N L
- 4 ; a:
g p
h' : ' 2. ItrI1RiallNT PLANS - ,
3.COMMilMEW11i AND(UN11NCENCll3 ;
~ The Company has person plam kr allits regular ernplates, Nudent Dabilit3 and lawraice indudaut officen, poviding for bmefits ogwirement - 1he PrkAndernn A:t cunently limin the publie Imbihty to .
' norma 5 at age 61. In sacrdarwe with the Unployee Retirement $7.807 biumn, including attonry cot of nudcar reactor outers !
i Income Security Ar; of 1974 (ERISA), the Company has satided fat daina that could aree frt,m a nadear inddent. A:cordmsly. -
? wt least its minimum funding requirements. Benefits under these the Company and the other caters of Wolf Citti haw habihty
- plans reflee the empletti comperaation, years of service and insuramt coverage of thh enount uhlch consisa ri tho
- ageatrethenerr < .
madmurn avaHabk commerdalimurance of $200 rn!Dion and
~ Prwhions for pensiors are doertnined undet de tules Secondary financial Protection (STP). The STP cowrage is funded by a mandatory prostam of deferred premlurm assessed p
, ' 'prescrited theplans: by TASil 87. The folkming is the f:: ded status of againt all ownen of licemed reactors for any nudear inddent j; ,
pg,3g 3, anye he.t in the country. The madmum aueurnent per reactor .
L is $63 million ($29.6 ml" ion, Compants sharel plus a surcharge P 1991 19( of 5%, rer inddent, The owners of %bitCreeL arejointly and
= gwo,,4 sewrally hable foi these chargen, raable st a rate tot to ex ecd ,
Accumula:ad llenefit Obligation, 110 mill:on ($4.7 million, Compants share) per hicident per year.
Verted . $154,858 $la0,708 The eners of Ebi! Creek aho have property damage, decon- <
Nonmsted ' 5,772 4,612 amination and dannmission'ng insurance for lou resulting 3;
from damage to the Wolf Creek facihties in the amount of ;
. lbtal - 1
$160,130 $145,320 "
$2.515 billion. Nuclear imurance pooh provide $1.265 billion of Determination of Plan Anets - cwtz age, Nudear Electric Imurance Limited (NEIL) proddes kss Obhgatiorr . 11.250 biDion, in the ennt of an meddent, insurance proceeds j Fait value of;4n aneu (a) ~ $251,535 $3,564 must first be med fee reactee stabihzation and she decontamina- r
- Pro,lected benefit obbgauon(b) . 212,6 ) 1 % 0 0 ' tion. The remaining poceeds from the $2.515 billion insurance .
= $ 38,880 '3 21,5f cowrage ($1.182 bifuon, Compan/s share), if any, can be used for -
Diffaen:e property damage up to $1,041 million (Compants sheet prema, L ) Reconciliation of Diffrnnce; ture decommissioning cosu up ;s 198 milhoc (Company 4 share)
Contribu'lons to tram . .. - in escess of funds proiously n$ceted for decomminioning (as -t Ptepaid : $ 3.776 n $ 1,283 ' dacussed in Note 1) with the remaining $47 million (Company's i fAccruedliability . (3,1!8) " = (4,261) share) available for either property damage or gemature decom. ,
Uramortiaed tramition amount 20,899 22,971 minioning costs. .
, Unrecogidzednetgain . J 21,832 - 6.220 . The owners of %b!f Creek haw aho prattued extra expense
- , Umceognized prior senice cost L 1 (4,529) ' (4,692) . insurr. ace from NEIL Under teth the NFIL praperty and extra Differcrm $ 38,880 $ 21,521' atense policies, the Company is subject to retroactin nuessment
. if NEIL loues, with repect to each policy year, exceed the
, (a) Plan assets are invested in insuu.rtcc contracts,' corporate acaulated funds availabk to the imer tmder that poh@ The &
_ bonds, equhy securities, US Gowrnmcat securities, note. esdmmed masmum retroactive asseuments for the Compants N 4 mortgages and shorterm imestments. . Share unde de pohcies total apreximmely $$ mEon pa par,
- (b) Based on discount r .s of 8% to 9% and rates ofincrease in nent f a catam@ aNmed, De amount - -
' o'f insurance available may not be adequate for property dsmases -
- j ;; . future salary levh of $% to 6%.- - . and extra apemes incurred Unimured losses to the extent not ~ .
recovered through rates, would be asumed by the Company and ;
. Componenu of pov. .isions for pensions (in thousand0: .
could have a material adwrse effect on the Company's finandal
'1991 1990' .1989 ' condition. !
Servicecost ' .
$ 6,162 ' $- 6,208 - $ 5,30 Nudcar fuelCommitmenu O4 : Interest r9st on poje:ted . At December 31,1991, %b!f Cicci's nudear fuel commitmems - -
- bent.in obhgation L . ; 16,617 ,15,757 13,6!6 - (Company's share) acre approximately 121 mHlion for uranium .
Ac;ualreturn on plan assets - 145,542) '),0R8 (27,06) - concentrates through 1997, $147 million for enridunent through 4, . Other ? ' 27,026 3 416) 12,856 - 2014 and $52 million for fabrication through 2014
- f 4}' ' ' Total h mion Extense ; ~ $ L 4,263 : $ 4.637 5 4,41i *
. ,Long. term rua of re"srn on plan assets of 7% to 8% were used.
.v j x
g..
.s R: m
1: A N ~ i' ALb h 4.! s 3 )
1 IE O ' W li R 4. L i ' G 11 l C O M; P A Ni ,
j L
. Ten Matters .
Other Agnernents -
. The Compan/s federalincome tax returru for the years 1985 The Company has entered inig in the normal courw of -
- through 1988 are pnsently under examination h the laternal - business, a variety of contractL s Revenue krvice ORS). De Compny has rteeived Notixs of Under long term contractual artangements, the Compn /s ,
- . Protoed Adjustments to be indudaiin the Rornue Agern . shre of purchawd coal during the tan thrn gra totaled
/ Repxt (RAR) urden the addhic.ual information being supplint apprcnimately $21 million in 1971,128 million in 1990 and t the IRS by the Company would aber or rewrw the proposed $27 million in 1989. De Cortpan/s share d put hase commil- j adjuumentL he adjustmeras sedst the Wolf Creek tai ments in 1991 dothrs under the remaining term of the coal con-dyacciation and investment tax credits genented. Management h tracu b approximately $14$ mitbon. DMompny aho purcham
- h (20 process 6f rniewing the adjustmenu and has sigruficant coalon the spot market.
getians regarding the themy, computatiors and sampling Under kases, the Compny incurred rental extense during the ;
i techruques used by the IRS to arrive at their proposed adjus- hst thre( yan of apprtaimately $11 million to $13 rnilhon per mentt Other adjuuments have aho tan proposed by the IR% as year. Rental commitments under leases for railroad cars, canputer !
equipment, buildings and similar items are approximately i L a resuh of this examhtatiott. he Company expecu to rexive the .
' RAR fut 1983 and 1986 sometime during the firm part of 1992 1114 million ovet the hfe of the leases with payments during each l- and does rK4 espect this report to indade any significant adjun- of the rat frve years ranging from a high of $15 milhon in 1992 to $8 million in 1996. De Company, aho in 19?l, extended and i
- ments not Lnown at this time. In the opinion of management,ik ulumate add tional tar charge, induding interest, h not expected - revised a transmisdon line icaw with another utility. With FERC .
. to be mate ial to the Comparrfs financial position. apptwal, the remal payments under this hsw can be increased by the lessor, after which the Company is entiued to cancel the lease faviremental Matters - if the Compny h able to secun an ahernatin transmhslon rath.
interstate Ibwer Company Onterstate) filed a complaint in Total commitments under this lease, nu induded stor, an 19E9 against the Cornuny seeking indemnhy and contribution M mmen per par ami appnWmateW mMon owr Me for cleanup costs enirnattd to be $1 milhon to $10 minim, at of the kaw if the lease a not cancelled. ,
i an 100 site sok! by the Company to Internate in 1937. ne - .
he Com#as emaednm co,aacu twhaw capasy -
. Comoany acquired a gas man ; ;turing plant on the site in 1932
' thrwgh May 2000 frun oths unlities Such obligations increase ,
and pHegedly operated it for wry brief periods of time before each contract year from $6.5 million m 1992 for 250 mw to demo!!shing it in 1951
$16hmEwa m Gndr conuact gan IM to 1%
. He Company telines that it %s several meritorious defenses the con is $1M m@um pu par im 300 mw of capady.
agaimt this action and has aucried them in its pleadings, induding the fact that the 1957 sales documents include a clause Indemnifying the Company Itom and against all china and -
t SAllOF ACCOUNf3 RiflWAlill '
ntlamages arising after the sale. As we!!, the Compny h seeking - On Septemhe: 27,1989, the Company entered into an agree-contribu% or indemnity for these cleanup costs, to the extent = ment with a financialinstitution to sell wirnlimited recourse, an
/ that tla sngny is found liable, from other parties to . undivided imerest in designated accoums receivabo of Decem-
. thelawsuit. = _. .. ._ . .
. ber 31,1991 and 1990,150 miPion and $50 taillionsspectively, his matter is scheduled to be tried in 1992 whenin the court of the Compny's accounts receivable remained sold ander this = ,
, may determine allocation of cleanup costs among the parties. - agreement. The Company incurred $15 million, $U million and
~
t if the Company is unsuccessful on the hsues of liability, the " $1.2 million of cons associated with the sale of Citstomer .
' Company be'ieves that its a!!ocated share of the deanup costsi ' Accounts Receivable during 1991,1990 and 199. tespectively. ,
would not be rnaterial to the financial condition of the Company?
E - 1 The Companfs cprations mun comply with federal, state and 5.M10RT.TERMll0RROWINGS '
i local environmental bus and regubdons. Cornpuance programs
, r.ecessary to meet exisdng and Imute cuvirotar_4al laws and TM Cgny% & m NMsimm % ad
( regulations governing water and air quality, hazardous waste
- . through the sale of commerclaf paper as needed. Under minimal fee arrangements, the Company has confirmed bank lines of. credit handlms and disposal, toxic substances cod the ef' ts of E totahng $15$ million, of wluch $121 in
- !! ion rem.in unus:d at
- ciectromegnetic fields could require sutmantial changes to the
' December 31'1991'
- k. c Compnis operations or fadhties. De costs of comphance with o - emironmental laws and regulations are normany reemerable .
lthroughthe miemalmg process.
l 3
i is d }
I e
t I
l
. KfA N S A ' SL
~
C; t .T - Y P.O E 1: R & L 1 U il I CO'M P.A N Y L . ,
3 C0%1 MON S1DCE 17)U!1Y, PRII1'ItRil) SlDCE AND 1,1DNG.1ERM DIXI l
- RI'D11MABIE PRl
- ITRR111SiOCK gy W Doard of Duccio% on February 4,1992, authonied a . De Compey cannut inue additional First Mortgage Ibnh i
' 2.for-1 common stock spbt subject to shareholJer a;prmt he authorized ty the Indenture of Mortpge and Deed ei Trust d.ned ;
siiareholders, at their annual meeting set for May 5,1992, will te as of December 1,14th at suppkmented, as long as any of the asked to ammt an amendment to the Company's itestated Arti- Mortpre Ibnh (&scuswd bekm) are outstardng Sutstantially
- ' elet of Conwlidation increasing the number of authorized shares all of the Company's utihty plant is pledged under the terras of a of common stock from 60A10,000 to 150.000,0L') and the com. the Indenture.
iL man stock split. If approval h reeriwd in May 1992, reported Mort Bonds
- j. carnings per share for all periods will te adjusted accordingly.
Th mpany is autherited to issue Mortgage Bonds under the r . Raamed carrungs at December 31,1991 included 113 million General Mortpge Indenture and Deed of Trust dated thxrmter shich was not anibbk for cash dWa
- comrran stock I,1956 as suppkmented. De amnunt of additional k'nh which unds the praisions of the Indente. or, M sge securing lirst may be inued is subject to certain restrictiw pnwisions of the ccm 31,1988, $8,148 common shares were held by the Genera gage Neum M hrahpMnhua consthutes a mortpge lien upon substantially all of the Company and distributed to the emplovees' 401(K) plan in 1989.
Company's utihty pht and is junior to the ben of the The Compar purchased 30,000 shares in 1990 mhich mere sutwe.
b queritly distributed to the empkryces' 401(K) plan in 1990. The
. pin on the differeme between the purchase prke of these shares U[n 9,1991, the Company t,tleemed the 560 mi!Iion, 8 3/f % series Mortpge Ibnds due 1994. His fedemption -
and market at the time of distribution ns charged to capital indaded a petmum of $774,000 whichhas been deferred and will -
. stock prmium arm expense along with the pin on the purchase '
ofIreferred stock for sinking fund requirements. tiW@ Dd R On April !!,1991, the Company entered into an agreement
- During 1901, the Company reaquired and retired the 600J00 I authorizing the inue of un in $150 million of Medium 7enn Notes shares of the 1233 and 800,000 shares of the 12.20 Cumulathe
.g g,p ,, g , pg No hr Pn fened Sted with a conhined stated value of December 31,1991,5135.3 million of Notes um outstanding M a
$40 million. The total cost of this transacion induded a ~
weighted attage internt rate of 734% and maturities ranging
. 54.7 million premium of ahich 12.9 millian was charged against from May lW3 to 3anwy 2000. -
capital stxk premium and expense and $1.8 million was charged against retained earning. - Ihnker's Acceptances -
Aho dunng 1991, the Compny authorized the Rbrey 1992 De Company has a fman:ing arrangement with a bank,-
redemption and retirement of the 130f00 outstandin; shares expiring 3anuuy 16,1994, which enables the Company to borrtw
. of the 7.72% Cumulative Prefer.ed Stock with a par value of fun 6 t'y collaterahr.ing its coal and fuel oil imentories at rates
' $13 million. %c cost of redecraint this stock willindude a _ based upon the cunent banker's axepance dacount rate plus an premium of $3 million which will le charged agalmt common axegance chatye As of December 31,1991, $12 milhon was stock equhy. As of December 31,1991, this asue was reclassified outstanding undo thh agreement with an interest rate of 530%.
to cunent liabihties.
Scheduled Maturities
_ ~ De outstanding Cumulative Prefened Stock of $41 million
. ne folkning pollution control bond series have sinting fund (esdusive of the $13 million of 7.72% Cumuhtive Preferred Stock requirements which berin in various years: 5 3/4% in 1989
,mduded in cunent liabilities) may t< redeemed at the option of . $ 7/8% in 1997,5 7/M in 199?,67/M *r in 19V9 and M -- the Company at prices whkh, in the aggreste, total 542 million. . g gg ,,g., ,i999 ,
1 Scheduled mandatory sinths fund requirements for outstand.
ne aggregate amount of maturities and sinking fund require.
ing redeemable 4% Cumulatiw Prefened Stock are 5160,000 ments durint c:ch of the next fiw ) ears for the long term delt pe m at outstan&ng at December 31,1991 is 50 irt 1992, $26.7 million in
- At December 31, IMI, the Comi,any had authonzed $40,757 1993, $D13 million n 1994,130J million in 1995 and $17.3 shares of Cumuhtive Prefened Stock at a par value of $100 per millira in 1996.
share,1.572,000 shares of Cum;lative No br Preferred Stock and he Daaru of Directors, on fhary 4,1992, authorized the 11,000/00 shares of Preference Stock withou par nlue.
redemption and retirement, in Mant 1992, of the 135 million, Jf any dividends on its preferred stock are not declared and 91/8% first Mortgage Bonds due in 2000. ,
- paid when schedukd, the Company could not declare or pay dividends on its common stcd or acquire any shares thereof for -
comideration. If the amount of any such unpaid dividends equah four or more f ull quvterly dividends, the holders of preferred Ork, voting as a singk class, could eket representatives on the Company's Board of Directors.
Y
- T T I
r, h
K: A' N $ A S' C1TY 'P O W E R O !, l ' O 11 T CO M PA N Y i
1 1E I nelCosts
', Wlanagemenes Discussion and Analysis of Averase electric fud cost per million 1170 increawd to 5.92 in L Financial Condition and Results of Operations 1991 from 5.67 in 1990 and $. lid it.1989 ,
Average fut cost per milton DTU of nudcar fud, indudmg d:sposal costs, was $30 in 1M,5.29 in 1W0 and 5.33 in 1989.
Kah Sales and Operstmg Ibtnues The 190 deacase refi cts the lower costs of nudear fud loaded Sales and revenue data: n the sea: tor during the 1990 3fuchng. The capacity factor at Increaw (Decrease)
Wolf C,ci. was $8.9% in 1991,79.2% in 1990 and 97.7% in irom Prior Year 19149. During the first half of 1991, Wolf Creck's power prodx-
~
gg tion was gradually nduetd to approdmatdy .0% of capacity to 3,93 assure adequate fud for full power operation during the surnmer.
Kuh lbennes huh lbenots season. Such connration was neceswy because the phat had rmmmw immmw previously generate /, more cuergy than originally Sanned for the Retdlsales: fuelin the reaaor. Den, from Sepember 20,1991 through
, Residential E4% 1 18 5.4% $ 17 year <4 the unit was off.htt 103 days for a scheduled refuding h outage which w as extended to accommodate adJitional testing.
Coinmercial 4.1 9 3.7 15 Industrial ' 3.7 '2 2A 2 The frevious scheduled refuehng ou; age lasted 68 dm in 1990 h Other - (.7) -
(.5) - a hile there was so reftriing outage in 1969.
Average fud cost per milhon BTU for fcasil plants was $1.08 Total re ail r. ales 3.3 29 3.9 34 In 1991,11.06 in 1990 and 11.09 in 1989. The 19M lower cost 3g, gc, g,.
reDects an kcadevd of lower cost coal purchases from the E Duik poetr sahs (39,0) (17) (9.7) (4)
Other -
($.6) -
(3.9)
~
M da Totalsale 12 30 Steamheat and other reenues . . (2) , (5) _
innease(Decene)
I rom Prior Year Totaloperating revenues $ 10 125 1991 1990 Residential and commerad iwh sales increned in 1991 cal _
(mmme 1990 reflecting prim r!!y Mgher usage due to warmer coolmg Generation for customen ani sensoru and inaex.cs in load growth, industrial kwh sales in 1991 bulk per sales $(8) ' 12 were affeced by increased sdes to a major steel manufacturer; - Average fuelcost 8 3 sales to this manufreturer increasetl shghtly in 1990. Eaduding Coal physicat inveritory adjustment 01 -
this manufasurer, hdustrial sales hereased 3.2% in 4991 and h4- $m' 15' 2A% in 1990.
- Pursuant to a l'ederal Energy llegulatory Comminion (1IRC) 'lloth years exclude a $2 millbn drop in fuel costs lecause of the Accounting Release,in 1991 the Compar.y reclusified bulk sale of the steam system.
powtr sales frnra interchange power (net) to operating revenues.
Because W 11 Ceck's fud costs are kwr than any 0.her
' Dulk power sales decreased 1.2 billion kwh and .3 billion kwh in Company unit, the average fuel cost is highet a henever the unit
.1991 and 1990, respectively, due to lower as allabiht y of genera 6ng u down for refueling or operates below the prior period s tmits and increased Company s)mm requirements,
' lariffs have not changed materially in either 1991 or 1990. De average capah i chan;c la revenues applicable to base r6tes h affeaed by changes Purchawd Power ,
in the tre of kwh sales among clanifications and by the effect on Pudned powdereased 548 million in 1991 and certain clauifications of dedining price per kwh tis k wh usage 12A milhon in 1990 reflecting the louer availability of generating s
~- inatus. units, induing Wolf Cr:ck, ard irreased Company systern
[ De levd of kah saler in the future will depend upon urather
' conditions,cunomer conservation efforu, corogslag fud - 'C4 L""'""- .
The lod of purchased power in the future w:ll de;end upon sources and the overall economy of the Compargnervice area.
the availabihty of the generating units, fuel costs, the requirements 7 ' Aho, issues facing the dectric utilia industry inseneral, such as of other elecinc systems and the Company's system tegturanents, deregulation, vensmission accen and increased competition.
b cotkiaffect kwh sales.
See Note 3 to the Finar>:ial Statements-Commitments and Contirgencies-for commitments under contracts to Sicam heat revenues deceased for IM amd were climinated in purchaw capacuy.
' 1991 reflectir4 the sale of the steam synem in March 1990, Only the Company's w holesde rate schedules, wlM do not
' indade bulk power sales, contain fuel adjustment promions; e holesale revenues account for less than 1% of the Company's resenues, I
a l2s
yn KA N S A l $ . - C 'l T'Y POW ER & Ls4 0 11 1 C0 M PA NY S
g L
)
~ 8. JOINTLY 4)WNED 11EClRIC LTillJIT I'lAVIS Expenses uere affected t>y the scheduled Wolf Crtti refucting The Carpany has, undet joint owner, hip agreements with stagesmays imm MaM, N to May 16,1990 and 103 i
- other utilities, undivided intereus at December 31,1991 in utihty daNn M, starting Segember 20,1991. Startmg m 1992, the l npany SW nonnalar M Cmk nWs wtage costs; sec ;
Gnu as follout (in mulians of oallan).
diossion in Mt.nagement's Dionion and Analysa of l'inancial !
Wolf Orck la Cygne latan Condition and Resufts of Operations.
Unit l'nlis Unit The bunness of the Company is subjec to seasonal fluctuations I Company's share 47 % 50 % 70% with eak l priods c<eurring during summer months.
. Utihty plant in senke $1,314 $264 $243
. Nuclear fue!la senice 3 34 - -
Spe st nuclear fuel 1 $3 - -
- Esimated a,ccumulated degeaanon 1NDEPENDENT (Production plant enty) - 1 210 $140 $ 97 AUDITOR *S REPORT Axumulated
~
_'* " N'0*" To the Stockholders and floarti of Dimetors
- ' I 09 ~ ~
Karnas City Mer & Light Compary: .
(
capacity 4nw 533 678 469 We have audited the accompanying balance sheets and statements of cumulative preferred stock and long.
Each pr ticipant must podde its own financing. The term debt of Kansas City Ibwet & L.lght Company as Cornpany's share of direct expenses is included in the curre-o ecembu 31, IW and 1990, and the related state .
sponing openting expenses on the Statements of inotxne. .
ments of income, laws, retained earningt, and cash flows for each of the three years in the period ends 3
- 9. QUARTERIX OPERA 11NG RIStfLTS (UN At!Dritni December 31.1991. These financial staternents are the
- lu . 2nd. -3rd 4th responsibihty of the Company's management. Our
! Quaner Quarter - Quarter Quarter responsibility is to express an opinion on thew financial
- 3991 pg statements based on our audits. ,
We conducted our audits in accordance with genn8Dyaccepte a ng standad Wse nane revenu .. $181,851 $208,f02 $254,365 $180,283 ,
require that we plan and perform the audit to obtain
$ $4,$M $ 45,0N $ 66,125 $ 23A81 ma e assmance t wQ tMMal pa ements are ce mated nusuatement An aue Netincome ' $ 17,728 $ 28,833 $ 49*6B $ 7,699 includes cumining, on a test basis, evidence supporting
. Eamings the amounts and disclosures in the financial statements.
per common L An audit also includes assessing the accounting .
L < share . $- .32 $ .85 $ .1.5$ $ .21 principles used and sigruficant estimates made by .
managernent, as well as evaluating the werall financlaj '
'* # ' statement presentation. We believe that our audits i 0;xrating ; prtnide a reasonable basis for our opinion. _
1 tewnucs - $176,159 $199,221 $247,858 $191/1s2 In our opinion, the financial statementvefctred to p Operating - abow: present fairly, in all material respects, the finan-p ; mcome $ 31A35 $ 40.699 $ 70,719 $ 38,725 cial position of Kersas City Power & Light Company as
- . Net income . $ 13,952 $ 21,895 $ $2,351.$ 14,534(a) of December 31,1991 and 1990, and the resnits of its f Earnings operations and its cash flows for cat.h of the three year:
- per common in the period ended December 31,1991, in conformity share - $ 40 5 .66 $ 1.64 $ A2(a) with generally accepted accounting principles.
f(a)In the founh gaatter of 1990, the Ccmpany expensed the (4 legal, financial and administrative cons associated eith the O *4m .
terminated tender offer for Kansas Gas & Electric Company, i e 'these costs totaled $12.9 mi!! ion before taxes and $8.1 mi: lion Kansas City, Missourl
.. after tues($.26 per share). February 4.1992 t
r K LA N SLA 5 C 1 T. Y P'O W 11 R .A _ lJ l O !!17 C=OM-PA-N'Y t
i i
I h Sonnalisation of blf Creek 14rfueling Outage Com IMeonmentalMsticas o Tie Company changed, effcetic January 1991 hs inethod On Octoter 27, JWQ, Congms appmved the Ckan Air Act I:
- of arounting for the a#tional costs inevind during schedukd Amendments of IWO. Two pans of the legislation miu affect the Wolf Cittk refueling outeges. Instead of expensing the e cosa as ytility industry The acid rala ptwisions willincrease de Com-u' '
incurred the Company will accrue iotecasted outage cosa ornly p.ufs constru: tion evenditures by an estimated $164 million for ont the uni operating t cycle ahich rennally lasts approximately the imtallation of continuous emission monitoting equipment
- 13 months The Cont;any beliews this method of accounting will and lon NOx burners. Thne costs are ircluded in the atet fhe produw a more meaningfulF esentatiormi yearly resuhs of over. year projected construdion expenditures. De Compan/s cmts
' Gkms than the prior snethod. Since the atual legan on January urdei er Aa would haw teen greater if the Company had not 15,1992 mhen Wolf Creek cant back onine, there is no turnula. volumarily switched to low mulfur westert cod in the mid 1930s.
. the dfeet for the change in a: counting pdtciple 11ecause there is 1h other utility-related provision calh fer a study of certain air
, , no refuchng scheduled dunng 1992,the effect of this change on toxlet bsed on the outcome of thne studin, regulaton of air y . 1992 operations would be to incre.se operaticunaintcaarte tmics, induding mercury, could te required. The Company
[ - and replacement power erlemcs by a total of appmimately cannot, at this time, predict de likelihood of any such regulatkms j $116 milVon and, after taxes, deercase net income ty apgoxi- or compliatxe costt Provisiom in the Clean Air A:t Amendments
[ i tnately $7.8 milhon($.25 per share)i '
of 1990 could add up to $2 million a Star io the Compart>'s expemes leginning in 1993 laause of sequirements that R '
Projected Construction Dpenditures companies make paymenu to the state e:wironmental refutatory Cowruction expenditures, exdudmg AFDC, mere agencies to furgi administration of certain pmisions of
' $122A million in 1991 and are projected for the next the >vars. the Amendments as follows See Note 3 to the Fmancial Statements-Em ironmental
- CorJructionExpendeurn . hiatten-f r dinssion of potentialliabibty, whieb the Company telieves is not material to its fmanu,al condition, for cleanup costs e 3 1992 . 1993 1994 ' 1995 , 1996 'lotal under the l'edcralSuperfundlaw.
ImWwnt)
Generating . .
08Dh8133rquirements and Uguidity ' -
l - faciuties $ 37;D $ 40t $ $!4 $ 79.0 $ 97.6 $309J ne Cevany cur:rmly estimates that it will be able to nret Nudear fuel '19.9 = 7.0 21.8 23.0 - 10.3 82.0 the atet construction e .penditures through 1994 and a signifi-
' Transmissioni su pnrtion of the irrnaining > ears with internally. generated P facihties - z 12.2 j 15.7c : 10.8 13.5 3.8 - 56.0 - fundt 11 is anddpated that furids for reaturing debt through
- Pism% tion -. 1996 and the redamption of geferred stock,induding preferred
- and generd -
ucck and hwte m detoink' nu fund obligations, totaling Mir.ks i 'NS 1'61 3 % 8 - 60.5
. 64.6 319 1 $219.5 million will be pcvided from operations, refinancings or
- $.d hD 3.T-DNd
- T Com 's capital'tructure at December 31,1991 (indud-Ing current portions) consisted of 49.5% common stock equity,
. De alo"t expetdarres for generating fulities m , elude g 3Me preferred stock and 47A% long-term debt. The Companfs
$1!3.? miUion for three new 8% rro and one new 160 mw ps-goal b to maintain a capital structure in w hich the percentages of fired combustion wrbirus, the first of which is scheduled to be common stock equity and long. term debt (induding curreru -
i compiced in 1996. The other three IWs are scheduled to be com-meinNe ap@@ equd pkted betweer,1997 and 1979. Generating fadimet also indude
. De Compny intends to regmer $$0 million Auction Markd
$3A million btgmfng m 1996 for a pw 500 mw (250 mw. - '
Preferted Stock and $150 milhon additional Medium. Term Notes Compan/a shart) coahraed generatmg unh tentatively scheduled, with the Securities and Fxhange Commission in Itbruary 1o91
. . m be m senice by 2002. : ' Proceeds from th; sale of these securities will be tard to .
The timing of comttsctier ami cost estima:es are subject to .
- refinance redeemd or mr.turing debt and redeemed preferred stock. .
- continual toiew and adjustrnent. htual construcuan espendit ta'es may vary significantly from thor ev.imates. -
_ 4 3
a, ( #.
i
-t
=
.1; ;i aa ., '4A- ;_: 3_. :)
. A N S ' A ' 5. ' C:1 T Y 30W ll L R & .L l O H T C O' M P A' N Y r
l Other Operska Expenses Curtratly, the Kamu lel:islatuit is comiderig various Other operatian expenses incnasci in 1991 and 1990 re!)ecting proposals w change the determination of 1992 poperty tax rates.
Increasts in gersraf and administratlw c(pernes of $19 million in - Re Company is not >tt able to poject whether chages will 199' and $13 iniDion in 1990 primarily due to ircremed wages occur, Ikumt, bued upon these proposah to date, the inacase and the cost of varion em;b/nenefits, including hospitaliza- in Kanse popeny taxes could be as much as $10 mimon get year,
. tior, empknee dewloppem and training agmes and other effects ofinflation. In addition, other ogration npemes at Wolf Other incores and Delsettora Creek inacawd $4.2 million in 1991 and $4.0 million in 1990 M!rellaneous and incane hes-This reficett a dectease to net mainly du to costs succiaus mith the scheduled refueling out- income in 1990 primarily tecame of the npensir;in tie fourth
. t.ges and a 1991 increme of $.8 million for Nuclear Regulatory quaner of 1990 the costs anociated mith the terminated tender Commission (HRC) fees and inspection costs. Refueling costs in offci for Kansas Gas and Dectfic Company (KGAE)in the 1991 inercued mer tle prvious outace as antional mour open amotmt of $12.9 mi!! ion tefore taxc+ and til million after taxes '
ated valve testing was performed in response to an NRC industry- (1.26 gr share). This decnce to net income was partiaDy othet
. wide generic letter. The 1991 refueling outage tegan on September - by the sale in March 19XIof the dwntown Kansas City, Misserl
'20,1991 and lasted 101 days in 1991 cornpwed to 68 des for the steam spiem at a profit after taxes of $26 million.
1990 outage. De outage continued until January 15,1992 for a total of 117 days with apprtnimately 12 milhon in additional . Interest Charges operation and maintcaance costs incurred in IW2. The nat . The dechnes in long. term interest extense for 1991 and 1990 -
refueling outage is seteduled to begin in March 1991 reflect lower interest rares on variable rate deb
- and the retirement, At the Company's fossil plants, other operation expenses repayment or reTmancing of debt. The awrnge balarre of
' increased $1.6 million in both 1991 and 1970 reflecung slight - long-term dels including current inaturitics declined compared to increases at the various gercrating unlit Addit.onally, other oper. . the prior ) tar by $211 million in 1991 and $816 m!Ilion in 1990. -
Clon expernes in 1990 include increases of $12 nuWn in ersts - The sale of Customer Accounts Receivable has allowed the -
associated with the sale of Customet Accounts Rec-ivable and Company to carry a kmrt amount of debt. .
. $12 million in electric distribution system cperating costt ne The dechne in short-term imerest expeme in 1991 is due to
- increases in 1991 and 1990 were partially offset by the absence of lower etrage leveh of short-term debt and lowcr interest rates.
- steam system operating expenses after it was sold in March 1990,
. , Earnings per Share Maintenance : .
. Excluding the $.26 per share reduction because of the expenses
. - Maintent,rre expemes at Wb!f Creek incnased by $.9 miEon in incurred in connection with the terminated tender offer,1990 1991 and $6.2 million in 1990 primstily for costs associated with earnings per shart (EpS) would han teen $331 The 1991 EPS the scheduled refueling outages. In aMtion,1990 maintenance < of $116 decreased from thh $337 level primarily teame of the expene teflects an mera!! increase of $12 miDion in fossil plant costs incurred resuhing from the atended 1991 Wulf Crtd
. generating unit maintenance, primarily fct boDer overhauls and - . refueling outage. The Wolf Creek refueling outage dec cad EPS generator and turbine maintenance.The 1991 fossil plant genera:ing ' appmximady let in 1991 and $301.t 1990. Wolf Crees is one of unit maintenance is apprmimately equal to the amount incurred the Company's principal generating facilities and has the louest
' in 1990.i fuel cast of any oflu generating facilities. An extendec' shut <! awn -
of the unit could ha t a substantial adverse effect on the
- Income Tases . . . Company's business and finawial condition. Future reteling The decreases in operating income taxes for 1991 and 1990 are . outnps are planned to occur apprmimately every 18 m mths with i due to deenases in income subject to tax. In aution, haestment the next outage planu! for the spring of 1991(See Normaliza.
tax endit (I1C) amortization increased $2.1 million in the fourth tion of Wolf Creek Refueling Outage Costs.)
quarter of 1991 to fully amonize previously utilized ITC on Eliminating the effects of the refueling outage, earnings for '
- nuclear fuel aheady burned, Substantially all of the ITC on - 1991 were positinly affected by favorable weather conditionr.
nuclear fue! has teen arnortized as of December 31,1991, increased load growth and a reduction of interest charges, w hich :
un more than ofhet by increased purchaed power, reduced bulk '
- GeneralTaxes . .
poner sales and the effect of inflation and other irereses on
- Tha increases in general taxes'during 1991 and 1990 relate . operating expenses.
- primarily to increases of $1.6 milhon and $1.1 million in gross . There was no refuehng outage in 1989 Earnings for 1990, i receipts taxes resulting from higher billed revenues in areas subject cicludmg the tender offer and refuehng costs,inacased owr 1989 L to tax and ircreases of $11 million and $1.$ million in property mainly t ecause of more favorable wrather conditions The 1990 and real estate taxes due to higher pmpeny auessments and . summer was significantly warmer than 19f 9, tax rates.
l29 m . -
4 K A N-S A S- C 1-T Y POW L R & L . I d 'el T C 'O M P A N Y_ ,
i: ,
i 1
l' ;
. Unxrtaintio which aflat the degne to which these e.*Dital '
requirements wlD te snet with funds prmice<l from opera.lora ;
irelude such items as the eficet of mf!ation on operating expenws,
- the bel of ks h sales, regulatory actions, compMrce with futuit .
. errvironmenta! regulations, antilabihty of the Company's gercrat- t ing unitA and the kwl of buit poort sales with othrt utih:ies i
- On Tvbruary 8,1991, the Company an! KO&E rettled their i p:ndmg lawsuit agamst AMAX, Inc. (AMAM 'De coal supply agrecraent among the Company, KG&E and AMAX vm tems
- l. ' nated effectie Dxceer 31,194 and the Company agned to
{? pay AM AX $8.$ million (its tit,are of the 117 miD on total settle-ment). His amount vu receded to Settlement of Fuel Contracts
!. - on the lhlance Sheet because it is probabk that future rates will include prmisions for recovery of this arttler.wat payment. - ,
(; Cash prmided by operating aethities A, ring 1989 was lugher -
- than 1991 oc 1990 mainly as a rem't of the ireial sale of
$50 million of Customer Axounts Retxivabkin f 987, partially Gifset ty the settkment of the fuel contract with Pittsburg & Mid.
way Coal Mining Company for $22.5 niilhon. Cuh pu ided by
"i -operating a.tivl.ies during IMI w.u pcsi'ive!;affected by an addi.
.tional $10 million sak of Cunma A: counts IMcival% partially' 61fset by the 58.5 million paid 'o AMAXc .
. He Company edght incur additional debt and/o 'ime additional equity ic finance syne'n groath or new g/owth oppor.
l tu.dt'ai, dsough business combinations or c$ct tvestrrents, so :
take advantage of the benefits inherent bt a Ints t energy system.
New Accounsag Stauderds " . ,. .
Finarcal Accounting Standards Board (TALV) Statement f40. J 10kEinployert Accoundeg for Postnxitement Benefits Other ,
? Than hasitns-is umi in late December 1990, establishes stan.
- dards of financial accounting and reportir.t for the Corr +aay's :
rnedical and life insurance benefits prwided to retirect FASE IM N requires, scnong other things, that the cost of ptcv, dirt thse bene .
. fits te recognized as a 1:bar cost oc a perhi of time prior lo the - ,
emplo>te's retirement rather than after the employce retires. His .
Statement is effecthe for fiscal yurs beginning afe Dxem'At 1$, - q
- 1992, and 97dle earlier application is encouraged, the Company -
L plans on adoption in 1991 *P.e Company 1.as deteimined, tased
- upon preliminary ste. dies, that adoption of RSB !% will not -
. haw a material eflect on its fiweial statements.1 p ,10 7
t k
.L -
yr '% -
D
~
< 'M A'N.S A S' C.1 T Y- ~ l' O ' W E R' & L1 G.H T C 0 -M l' A NY I
l urumary of Operations and l'inancial Data
)
' EMtMARY on- ErnNtsas _
1991 1941 1989 1988 198' 1981 !
. Operating Re.vnues MW)' $ A25.101 1 813,570 $ 7W,216 4 791,650 $ 764,200 $ 535,230 Operg/ing Esperors (000hl* ._,,,655/56 633,992 603,448 _ ,,,611.3406 589,$}B 44025 Opcmt'ng /wwnc(((Ch) 169,145 181,*78 186,768 f f0,244 174,662 94,485 Other/ncemeandDeductions(tWKf 1,257 1),610) 7,240 15.267 24,0g 29 g incomebc(orrin/arstCharges((Wh/ 170,402 - 177,968 194,008 19$,511 198,724 123,885 chtemt Charges (000i/ 66,509 75,236 85,390 89.856 94,742 44,739 Net /ncome (fWr) ' Y3,893 102,732 108,618 105,655 103,982 79,146 F Preferredand Perferena Stock DiridendRequiremrac #XOil 63023 . 6,3M) 'i,359 6JJl 10,882 l{,749
. Apphcab/c to (bmmon Stock f0001) - $ 97.870 '$u m 96u,372 5=--102.259 $ 95,974 1 93,100 65,397 ,
. -- m _ .$.= = m 4
' - Arerege Shares Outstar. ding 30,954,363 30,949,763 30,927,257 ' 30,939,199 30,954,363 23.302.723 Earnings per Common Shair" $ 3,16 $' 3.11 $ 3.31 $ 3.20 $ 3.01 $' 3.22 Retun on Wr-endCommwelamity 11.4 % 11.3 % 12.2 % 12.2 % 11,9 % 14.2 %
' Cash Dividendsper Sha+r S 2.74 $ 2.62 $ 2.50 $ '2.34 $ 2.12 $- 1.88 CAMA 1.tZADON DATA (00(h)" * ' _
Common Stock Equity -$ 860,229 $ 831,282 $ 835,917 $ 810,801 $ : 784,119 $ -459,313 PerferrrdSw* - $ - $2,000 $ 92,0no 5- 92,000 $ _ 92,000 $ 92,000 $ 112,000
[Prr/rrrrdStock (Redeemob/c) '$ 2,076 1 2,236 $ 2,396 $ - 2,556 - $ 2,716 $ 3,676 Pv/crrnce Stock (Redemab/c) $ -$ - 5 - $ - $ 4,166 $ X),0C0
- Long scim Debt $ h22/40 > $ 850,409 $ 918,td4 1 99' 897 $ 1,079,505 $ 462,050 -
Onita UATA AND EAUC5 Conuruction Espent/ituirs (00051- $ 122,447 $ 92,558 $ 103,169 $ 95,022- $ ~ 71',fwo $ 133,980
- 7bta/Aots gWh) $ 2,615.039 $ 2,598,859 $ 2,620,826 $ 2,60,4 5 $ 2,654,371 5 1,617,781
- Book liriueper Sharr $ .27.79 1 27.,40 $ 27 N $ 26,19 $ 23.33 $ 22,25
- Comicon Stock Equity Ratio 49.9 % 50.2 % 46.2 % 4).9% . 4I.2% 35.1 %
~ = Common Seocle Prict-
] #ith $- 475 $ 35% $ 364 5 324 1 314 1 164' l --. Low $ 34). $. 294 $ 28% $ 24% 3 21 1 13 Railo ofEntnings to FimiChatyes ~ 3.22' 2.% 2.92 2.75 2.71 2.15 d
- (Rxtassifications have teen made to prior year amounts to conform with current ye.,r prescutation.
- $;Ste Note 6 to the Financial Statements. -
- Capitalization data ir cluhs amounts to be redeerned or purciand and current maturities.
-l32
K A[ N. S A S CIT Y POW ER O- L .I O ll ' T CO MPA N Y i
l
-COMPANY O F-F ! C E R S' DRUE JENNINGS,45 FRANK L BRANCA,44 TURNER WillTE,42 Chairman qf theBoard ; l' ice 1%ident Mer Supply i'ia 1%ident-Conununicalions 4 andPresident ' 1989 Atarketing
- CllARLLS R. COLE,43 ##
llERNARD J. DEAUDO!N,51 Pia President-Customer Servica JOIIN J. Dr5fEFANO,42 ,
Senior Iice Presidentliname and 1990' 'lhnssurer JAMES L llOOAN,61
$[fN"#"d##Oll'"# JEAN 111 SELL LAT2,40 l' ice 14nident-Environmentaland SAMUEL P. COWLEY, $1 Reseawh Serrim Cortwrate Secretary
' Senior Via.*Wident-Corporate Affairs 1984 IV91 jp"#p ^ # Ol ## MARCUS JACKSON,40 NEIL ROADMAN,46 Vice Preldent-Mer Pmduction Controller RONALD G. WASSON,47 1939 193o
- #'"I"#*## WILLIAM 11. MILLER,57 MARR C.SilOLANDER,46
'$"g### [ f 3m
, 7 1933 Via Praident.fis. man Resounn GencrulCouruel 1980 19M
'usting imhedes ese, istle and year ,
geturnited to of0cet 11 O A R-D 0P- D1 RECTORS t.
DRt/E JENNINGS' W, TilOMAS GRANT 11 DR. LINDA IlOOD TAlllOTT
. Chairman of the Doant . Praident and ChiefDecutin Oftar, . I4aident, TheClearinghousefor andPtnident SeafleidCapitc)Corporction . .
. AfidctmtinentMndations Wi!.LIAM 1L CLARK * -
~ ### "#"*"#'S"#"d###"# ~ ##"#N#" "A#"##I"
'# ~ # " "Y # " "' '
Ptnident, Urten ingue qf Greater Kansas City ' GEORGE k NETTELS, JR., ROBERT 11. WEST *
-communityservke agency , Chairman of the Board, Chairman af the Boardand Chid Emwive Offiar,
~
Afodwest Afinerals, Inc -
l ROBERT J. DINEEN, Butler Afangfacturing Company
~~eonstnoction mineralprocening
- President and ChiefDecutive Offour, _ and quarry opemtions a .sul1 4ier ed non residentialbuilding
- The h1arley Company ' 14aident, Yampo Resowre syremx specialty components and
-diversifieg mongfacturir.g Associales,Inc, . Construction serriws andsernce company . -minedland nrlamation opemtion ARTilDR J. DOYLE' ' * *" *' D " * ""
- GEORGE A. RUSSELL Retired Chairman of the Board President, Unlarsity qfAfissouri EUGENE M. STRAUSS" Praident, ESCO Plans, Inc .
-insumnce opency and oilandgas production compary
, .-- _. . .,:a.---,..- , ,
l' A N S A S' C1 TY POW E R & L I O 11 T C0 M'PA NY
(?
Eieucstaiu,
(. Ei.irrnic Satis Statimes 199 1990 1989 1988 1987 1981 Rennues (ixC's)
Residential 5 291,579 5 273,080 $ 255,913 $ 266,745 $ 252,217 5 154,916 Coamercial 355,750 347,087 332,150 326,716 309.033 192,526 Industrial 114,979 112,999 110,413 112,699 11),649 94,168 Other . 14,193 14,035 . 13,971 13,716 13,345 9 3414 Total retail 776,501 747,201 712,447 719,876 6R8,214 451,024 Dulk power 35,839 52,862 57,209 55,114 59,361 9,519 Other sales for resale 4,$35 4,756 5.174 12,64R 4f2(i 4,999 7btal . 816.875 hN,819 774,830 779,816 752,574 527,191 Other electrie revenues 8,126 8,093 7,936 3,6'2 3,452 2,l53 h 825,101 $ 812,912 $ 782,766 5 783,46S $ 756,026 Total wwas .c = = = . = = = =m w. .=n= amma nn,344
$' 529 a i Soiss in Kilowatt-hours (tKO's)
Residential 3,613,751 3,334,828 3,165,47) 3,251,7M 3,050.543 2,345,646 -
Commercial 5,072,586 4.871,569 4,699,160 4,554,053 4,282,779 3,251,235
' Industrial 2,294,734 2,213,465 2,462,396 2,229,379 2,315,898 2.326,664 Other 71,198 71J94 72,075 71,539 67,942 702 75_2 Total retcil 11,052,269 10,491,556 10,099,1W 10,106,735 9,719,972 7,991,487 Bu!L power 1,945,182 3,187,751 3,528,919 2,841,379 3,264,004 2,620,785 Other sales for resale 109,327 1132 799 1131605 107,952 12015_09 327f2 "I 13,091,928 rE4 DIE dll IAN dIEEMS 21r.bl{l9 10,939,294
- Awmge Numler of Chstomers Residential 362,878 359,875 356,609 351,199 342,(M 304,613 i- - Commercial 48,042 47,551 46,857 46,366 44,974 39,158 industrial 2,372 2.,400 . 2,452 2,479 2,486 2'559 Other '134 132 133 132 132 133 Total retail 413,426 - 409,958 406,051 400,126 389,690 346,155-ik,lk power 23 23 22 22 22 20
'Other sales for resale 12 13 12 11 11 13 Total 413,461 409,994 400 389,723 246.896
. . . wa=w= w 406,0 ,85
- =m.x=m,159 .~,=x,=..= ~r:x --a -(,
kesidentialSales Average Lw h per customer . 9.959 9,267 8.877 9.259 ~ 8,917 7,700 _
' Average revemse per Lwh<ents 8.009 8.189 8.085 8.203 8.268 6 604
- LoadStati,sucs -
Generated (net)-Lwh (0004) 12,922,963 13,836,091 13,764,615 12,706,839 12,9(5,948 10,762,034 Purchawd-kwh (000's) 880,545 6751 507 666,827 12 053 785,797 723,457 3 2;25 Total-kw h (000's) 13,803,508 14,511,598 14 431 2 13,751,745 11,485,487-uz=mm w.,. .w- m,.~,44 =a 13 w=,760,067 m m=x=a anna M:2imum net hourly demand in
. mepwatts-Winter 1,674 1,680 1,829 1.573 1,514 - 1,3N
-Summer - 2,751 2,711 "54
, 2,65( 2,531 2,123 Net generating capability in megaw11tts (summer) - 3,09C - 3,048 3,025 2,992 2,937 2,8S4
- Net capae ty in megawatts t
(sold) purchased-summer 231 186 81 36 (44) (200)
Iku per r,et kwh generated 10,637 10,774 10,674 10,797 10,676 l1,119
. Num!wr of employees December 31 2,8si 2,857 2,873 2,663 2,799 2,928 December 31- Adiusted' 3,276 3,243 3,251 3.214 3,154 2,694 2Excludm rmployees allocated 1o other participating companies at la Cygne and latan stations and includes emplo>res allocated from Wolf Creek, l33
v K ~ A I N S ! A' ' S -C.I T Y l' ' O iV 11 . 3 '& L :l' O 31 l~ C ' O ' h1 l' . A N~ Y p
b 1 ),
- y b .OENERATINO CAPAC1TY AND .T l'i ' E . h1 O K.A N l' O O L
l-The Compac/s 1991 total availaNe capacity - "
was 3321 megantts,irduding 3,(90 mw of -
Ingalled generating capacity plus 231 mw of -
^ oct capadty pun;han its 1991 sptem peak -
laaf was 2,751 ms and rnuhed in a capacity margin of atuut 17%, the equhalent of a ,
.. reserve margin of 20.54 in addition to teing a memter of the Southmst Ibwer ibol,a e regional reliabihty coundt, KCPL is one of 11 L
F members of the MOKAN Ibol formed in 1962 P ' to share recrve capacity, coordinate planning .
for additbnal generating units and expand transmission lines. Trammission connections t with numerous utilities in hii.wauri, Kansas, Nebraska, Iowa and hiinnoots enhance tie Company's system reliability. Kansas City is a key cemer in the interconnected sptem which
- enables regional and interregional bulk power l transacions among electdc uSity systems, .
1 b.
8 V
a L,f,', .'
m.
i I
a
KA N S A-S- 'C"I~TY POW E R & l'10 11 T L 0 M PANY S 11 A R E If O L D E R ' i N F O' R M A T I O N SilARE110LDER RELATIONS DUPLICA1E MAILINGS IURM 10.K I u are og duphcate For shareholderinformr. tion and Coples of the Company's 1991 assistance with accounts, contact may be registe ; annual n1ert filed with the Secu-the Shareholder Relations Depart- r rent ritics and Exchange Commission
. ment. Write to us at., . ways. For assistance in consoli-on Form 10 K will be providest at dating accounts or climir. sting Kansas City Ibst: A Light Co. no charge to any shareholder or duplicate mallings, please call Shattholder Relations Department l>eneficial owner of shares of the or writC P.O. Box 418679 Compan's sid m>n written Kamas City, MO 64141-9670 INVES1DR RELATIONS med to:
Or, call fl&$56-2L53+ "
Membera of the financial commu-Co -
CilANGE OF ADDRESS . nity seekhg corporate information Kansas City Power & Ught Co.
If your address has cl unged, may contact Investor Relatk>ns at pg gg g79 please contact us inunediately - 836 M I2' Kansas City, MO 64141-9679
- to' ensure your dividends arrive
. promptly. TRANSf+ER AGENT AND REGISTRAR
- DIRECT DEPOSIT ~ For Common and Preferred Stock Contact us if you would like. .
to enrollin the Direct Deposit United Missoun flant n.a.
Dividend Program. Sect:ritics Tromfer Division P.0 BosotrX%4 DIVIDEND REINVESTMENT y.r.nsn City, MO 64141-OLV4 -
The Company does not have r Bl&S60 77M Dividend Reinetment/ Stock Purchase Plan at this time.
COMMON STOCK PRICE - COMMON SfDCK DIVIDENDS PREFERRED STOCK RANGE DIVIDENDS
- r. Im IM- 1990 1991 1990 ,
Quarterly dividends on Preferred
- First $0.70 $0.67 $0.64 Stock were declared in each quar.
- Quarter liigh Low liigh low -
ter of 1991 and 1990 as follon:
First 36% - 34X - 35X 31% '
Third 0.70 0.67 Cumulative -
Second 23% -35y 33% .30X Fourth Cumulative No Par 0.70 0.67 4
. Third - 44 % .36% 33% 29% Preferred Stock Preferred Stock g Fourth 47XL 42 35% 30X All dividends paid by the Company crin Amount Sch Amount in 1991 were determined to be dt/i- 3.80% $0.95 $2.33* $0.5825 Come on ttock is listed on the dend income and no portion we -
1 New York Stock Exchange (NYSE) - considered a return of capitat
' and the Midwest Stock Exchange. 4.20% - 1.05-NYSE Ticker Symbol: KLT 4.35 % 1.0875
' Number cf Commert stockholders: 4.50% . 1.125 29,397 at Dec nb r 31.1991. 7,7;gn 3,93
' Redeemed December 2,1991
" Redeemed February 28.19'12 l33
Q k- qfg: q .A- - N 's7AL: s t : c it yd : p,.o w: tj. g ; & L 3. G E ll: L -C O M ' P A' N ' Y
- w. 3 ,
r i
- p
'O E N E R - ALT. I N 0 - C A:.P. A = C I T Y
- .A"N D - T H . E.l M O. K A N P~O O L 1
p
" The Company's 1991 total anilable capacity
.- was 3,321 megawatts induding 3,090 mw of installed generating capacity plus 231 mw of '
- g. ,' '
e ret capacity put;;hases Its 1991 sptem geak load was 2,751 mw and resulted in a capacity .
margin of about 17%, the equivalern of a -
reserve margin of 209/t in addition to teing .
. a m mber of the Southwest IWtr bl, a regional reliability council, KCPL is one of 11 '
f '.
^
- k. 1 menacts of the MOKAN bl formed.in 1962
' to share resme catmeiry, coordinate planning :
!1 ~ for additional generating units and e pand v
. transmission lines. Transmission corucctions
, cith nunwoos utDities in Missouri, Kansas,
, ' Nebraska, toma and Minnesota enhance the -
Company's sptem rehabihty. Kansas Oty is a ,
i Ley center in the intercorJWCled System whkh ;
, f enablesregionalandintenegionalbulk pourt transactions among electric utility sptemt. .
p
> n; 1
ij e
Y$ '
!-k b
i .,
34 e;
I 9
e s er =
'[- I -
- s. .t ,
r h 1 1:
p i
'iUANKS: P1101D CREDI15:
Appreciation to others who provided Carr - ISil Jude/ Science Photo 1ibrary, statisticalinforttiation and anistance for NehanAtkins Museum of Art-.
our special foldout section. r4 Sci.:mpf llenry's Producc, Rher Market Square Drue Jennings, Rhte Mar Let, Board of The Kansas City Board of Trade Traddmprm AN Icitz, lloward Needles Tammen & Ber.
'The lowc!! Press gendoff, Thietm, KCPL Spiem Contro!
' Mid-America Regional Courseil Center, Buiung under coststruction-ChutL Kneyse ARMCO Worldwide Grind 2ng Sptems, Kansas City War La Fiber optics-Will & Denni McIntpr laitz Furniture Warehouse hm Oy Nh he4M bug flowwd Needles Thmmen & Bergendoff Air wheadStadium-MichaelMihalevich
'I '
est lates Adserthing and Design,Inc
- 'I Printed by:
Lansas City Sports Comminion The Lmvell Press ' ,
Wilcot Electric United Telecom/ Sprint Unhrrsity of Minnesota Raptor Center Kansas City Parks & Recreation Nationd Association of flome Builders Karnas City Econ 0mic Development Council L.
Petweed es secreted pspes.
Wr
er UNITED STATES SECURITIES AND EXCHANGE COMMISSION Wmblagena, D.C.,20549 FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Encud Decernber 31,1991
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission Fue Number 1-7324 Kansas Gas and Electric Company a- e-. or r,e-e -,w. -
KANSAS 48-0289340 (s w o or on. , p ^ % of
_ G.R.3. Erwkryer moorporeraus or cry ==amw=) Em6cauum No.)
P.O. Box 208, Wichita, Kansas 67201 (316) 261-6611 (Addeone of principal sasowrve ot5ces) (Zip sode) (Talephone nuneer)
Securales registwed pursuant to Srction 12(b) of the Att:
n==== mar at Name of each euhange ce T1ste of each class March 26.1992 which resistered Commen Stock (No per valus) 31,000,333 New York Stock Exchange Pacific Stock Exchange Secarales registensd persnaat to Section 12(g) of the Act:
Preferred Stock l (T& o(class) l Indicate by check userk whether the registrant (1) has filed all reports rtquired to be filed by Section 13 or 15(d) -
l- of the Se rities h ;: Act of 1934 during the prvceding 12 months (or for such shorter period that the l regutraw '<as require] to fue such reports), and (2) has been subject to such filing requiranents for the past j 90 days. X Yes No The aggregate market valtae at March 26,1992, of the carnmon stock held by non-affiliates of the registrant was
$1,019,314,032. The riggistrant also has outstanding voting preferred stock with a book value of $18,701.000, the market value of which is amat readily ascertainahle.
DOCUMENTS INCORPORATED BY REFERENCE y
_ _ _ _ - _ _ - ~. - _ _ . _ . . -. -._ _ _ _ _. _.. _.. ___ - _
fia Part I Ites 1. Business 1 General 1 Merger 1 Operating Statistics . 2 General Problems of the Industry and the Company 3 Fuel Supply 3 Regulation and Rates 5 Environmental Matters 5 l Item 2. Properties 7 Construction Program 8 Item 3. Legal Proceedings 9 ,
Item 4. Submission of Matters to a Vote of Security Holders 10 Part II Market for Registrant's Common Equity and Item SL Related Stockholder Matters 10 Item 6. Selected Financial Data 11 Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition 12 Merger Agreement 12 Results of Operations 14 Liquidity and Capital Ressurces 17 Rate Developments 18 Other Mat u rs 20 Management Statement of Responsibility for Financial Statements 22 Item 8. Financial Statements and Supplementary Data 23 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 50 I Ites 10. Directors and Executive Officers of the Registrant 50
-Item 11. Executive Compensation 54 Item 12. Security Ownership of Certain Beneficial Owners and Management 58 j
Item 13. Certain Relationships and Related Transactions 59 Part IV E Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 60 l
L -II-o
T. -
l
- DEFIllITI0ftS i Certain abbreviations and acronyms used in the text and notes are defined l below. .
Abbreviation l or Acronym Tg_rg Btu British Thermal Unit . !
Company or KG&E Kansas Gas and Electric Company ECA EnergyCostAdjustment(Fueladjustmentclause) s i
EPA Environmental Protection Agency #
FERC Federal Energy Regulatory Commission
. JEC Jeffrey Energy Center, a three unit generating-station KCC State Corporation Commission of the State of Kansas l KCPL Kansas City Power & Li(iht Company s KPL The Kansas Power and L'ght Company kWh Kilowatthour La Cygne La Cygne Steam Electric Station, a two unit generating station ;
MW - Megawatt NRC __ Nuclear Regulatory Consission SEC Securities and Exchange Comission Wolf Creek Wolf Creek Cenerating Station i i
l t
5
-III-
PART I ITD4 1. MISIESS GENERAL The Company, a Kansas Corporation, is an electric utility which generates, transmits, di; tributes and sells electricity in the southeastern quarter of the State of Kansas including the Wichita metropolitan area. At December 31, 1991, electric service was being provided to 258,707 retail customers and to 27 connunities and 12 other electric utilities at wholesale.
The Company owns no gas properties. At December 31, 1991, the Company b?d 1,208 employees.
During 1991, 37 percent of the Company's operating revenues -were from residential customers, 26 percent from consercial customers, 29 percent from industrial customers, and 8 percent from wholesale customers and other revenues. During that period, 19 percent of industrial revenues were from the petroleum refining industry, 19 )ercent from the aircraft manufacturing industry and 14 percent from t 1e chemical industry (principally one customer}.
As a regulated utility, the Company does not have diiect competition for retail electric service in its certified service area. However, there is competition, based largely on price, between electricity and gas as energy sources and from the generation, or potential generation, of electricity by large connercial and industrial customers.
The Company competes with other utilities in the region for wholesale sales. Service to wholesale customers is regulated by the FERC. The Corspany's firs power sales to municipalities are not significant.
The Company's business is subject to seasonal fluctuations with the peak Seriod occurring during the summer. Approximately one-third of residential cilowatthour sales occur in the third quarter. Accordingly, earnings and revenue information for any quarterly period should not be considered as a basis for estimating results of operation for a full year.
ERGER The Company has agreed to merge with and into a-wholly-owned subsidiary of RPL. Management's Discussion and Analysis of Results of Operations and Financial Condition (Management's Discussion) and Note 11 of the Notes to Consolidated Financial Statements include discussion of the merger.
l 1
l OPERATING STATISTICS Year Ended December 31. !
1991 1980 (W 1089 (af_
Electric Opersung Movenues (Thoumarrar) 1 S 219,907 3 214,544 $ 187,657 Roaldential 155,547 151,096 135,740 Caid W 172,963 168.294 153,300 Ircastrial Pubuc street and highway Bghtiry 5,982_,, 6,019 5,743 l Retal 564,858 539,955 482,500 N 29.989_, 36,152_ 40.834 l Total amies d electrictly 584,848 576,107 523,334 Other 10,32 _0 10,534_ 10,19_9 ;
Total electric operating revernies 1 594,988_ $ 586,641_ } _ ,_533g Sales in K]lowatthours (Thousands)
Residential 2.340,534 2,270,222 2,104,710 Commercial 1,907,882 1,837,971 1,748,434 industrial 3,194,385 3,093,096 2,978,423 Pubec street and highway Ighting 45,898 47,400 49,743 Retas 7,488,497 7,248,691 6,881,318 Wi m 1,188.178., 1.688 m 288_ 2.08" E Totai knowatthours soid _ 8 % 575 2 82 936J1 8,944,285, Customers at End of Year Reeldential 230,880 223,220 228,958 Commercial 22,830 22,763 20,697 Industrial 4,343 4,358 4,307 Pubec street andinghway Dghting 888_ 8 _36 809 Retal 258,707 256,177 254 771 39 ,*9 39 Wbrm Totalelectric customers 258,748 258,216 254,810 Kliowatthours Generated and Purchased (Thousands) 8,828,568 9,499,759 9,585,827 Genensted (net after stattri use)
Purchemed 430,06_3, 181,92_5 57,388 TotalaveBable 9,258,000 9,881,684 9,643,215 Laos: Company use,line loan, etc. 500,384 744,705 698,930
(
Totei kilowattnours snid 8,8ss,s7s _ __8pse,979 _ _ _8.944,285_
Residential Service Averages Knowatthours por customer 10,219 9,951 9.248 Rewnue per customer 5 900.11 5 940.36 5 825.54 Revenue peridlowarthour 9.40 e 9.45 s B.92 s l Temperature (Percent of normnQ Coonng degree days 138 % 131 % 92 %
Heating degree days 98 94 101 (a) Soo Note 2 of the Notee to ConeanidatedFinancialStatements krimpact of rate rmAJrx1 crders.
?
GENERAL PROBLDES OF THE IlWUSTRY Als THE CapFANY Electric utilities have been experiencing problems such as (a) controverty over the safety and use of coal and nuclear power plants, (b) compliance with changing environmental requirements, (c) long construction periods required to complete new generating units resulting in high fixed costs for those facilities, (d) difficulties in obtaining timely and adequate r6te relief to recover these high fixed costs, (e) uncertainties in predicting future. load rec uirements, (f) cogeneration, and (g) the effects of changing accounting stancards.
The prob'lems which most significantly affect the Company are the (a) controversy over the -ate treatment,- safety and use of Wolf Creek, (b) inability to market uncouaitted power reserves, (c) the use, or potential use, of cogeneration facilities by large commercial and industrial customers, and (d) compliance with environmental requirements. See Management's Discussion and Notes 2 and 10 of the Notes to Consolidated Financial Statements for additional information.
FUEL 71PPLY Fuel usage on a Stu basis has been as follows:
.l.221 19.20. 128.9.
Nuclear 29.7% '6.6%
, 44.6%
Coa 1 54.1 54.5 46.5 Gas _,,16J . 8,9 8.9 Total g4 3% g%
The Com)any anticipates fuel usage to fluctuate with the operation of Wolf Creek, w11ch operates on an 18-month refueling and maintenance schedule. The 18-month schedule pemits uninterrupted operation every third calendar year.
The Company's 17ng-term contracts to supply fuel for its coal- and gas-fired generating units do not provide the full fuel requirements at the various stations. The Company's long-term coal supply contracts contain escalation provisions based upon the costs of production and transportation.
Fuel is procured on the s)ot market both to supplement the long-term contracts and, at times when t1e price is favorable, to supply fuel in excess of contract minimum requirements.
Nuclear M unit costs in 1991 changed modestly from 1990. The Company'i a init mi costs were unchanged in 1991 from 1990. Per unit nat:rel w v ts during 1991 decreased due to increased spot market purchas*e ages in fuel costs during 1991 were reflected in rates through the ECA epps'e.ile to the Company's rate schedules (See "Busine,: - Regulation and Rates", 7.egal Proceedings" and " Management's Discussion and Analysis -
Rate Developments").
l 3
The Company's weighted average fuel cost per million Stu has been as follows:
1291 192E 1939.
Nuclear $0.32 50.34 $0.34 Coal 1.32 1.32 1.38 Gas 1.74 1.96 1.91 Weighted Average 1.09 1.01 0.96 Nuclear The owners of Wolf Creek have on hand or under contract 76 percent of the uranium required for operation of Wolf Creek through the year 2001. The balance is expected to De obtained through spot market and contract purchases.
Contractual arrangements are in place for 100 percent of Wolf Creek's uranium enrichment requirements for 1992-1996, 70 nercent for 1997-1998 and 100 percent for 2002-2014. The balance of the 1997-2001 requirements is expected to be obtained through a combination of spot market and contract purchases. The decision not to contract for the full enrichment requirements is one of cost rather than availability of service. When terms in the spot mt ket are more favceable, the owners of Wolf Creek will take advantage of that market to keep the total cost of nuclear fuel as low as practicable.
Contractual arrangements are in place for the conversion of sufficient uranium to uranium hexafluorido to meet Wolf Creek's requirements through 1995 as well as the fabrication of fuel assemblies to meet Wolf Creek's requirements through 2014.
The Nuclear Waste Policy Act of 1982 has established schedules, guidelines and responsibilities for the Department of Energy (00E) to develop and construct repositories for the ultimate disposal of spent fuel and high-level waste. The DOE has not yet constructed a hi h-level waste disposal site and has announced that a permanent storage faci ity may not be in operation prior to 2010 although an interia facility may be available earlier. Wolf Creek contains an on-site spent fuel storage facility which, under current regulatory guidelines, provides space for the storace of spent fuel for approximately 20 years of operation while still mainta ning full core off-load capability. The Company believes adequate additional storage space can be obtained, as necessary.
Coal Most of the Company's coal requirements are purchased under long-term contracts. La Cygne 2 and JEC burn low sulfur Wyoming coal. Substantially all of the Wyoming coal for La Cygne 2 and JEC is obtained under contracts which expire in 1993 and 2013, respectively. KCPL, the operator of La Cygne 1, currently purchases coal for la Cygne 1 thrngh spot market and short-term transactions. See Management's Discussion - " Rate Developments -
Coal Contract Settlements" for discussion of long-term contract settlements for la Cygne 1 and La Cygne 2 coal supply. Upon comp? tion of test burns of various suppliers and coal sources, a long-term fuel supply strategy for La Cygne 1 will be adopted during 1992.
4 I
Gas During 1991, 40 percent of the Company's gas requirements were supplied under an intrastate gas contract which extends through 1995 with provision for automatic one-year extensions thereafter until terminated by either party.
Under the contract, the Company is provided a firm supply of natural gas sufficient to generate 40-55 MW and additional gas on an "as available" basis. The remaining requirements.were purchased on month-to-month and spot market basis. See Legal Proceedings for information pertaining to litigation concerning gas procurement.
REGULATION AM) RATES The Company is subject to the jurisdiction of the KCC, FERC, NRC and certain other governmental regulatory bodies as to various phases of its operation, including rates, service, accounting, safety and nuclear plant operations, environmental matters and the issuance of securities.
The Company's retail and wholesale rate schedules include fuel adjustment clauses which permit current billings of increases or decreases in fuel and purchased power costs. On March 26, 1992, the KCC approved the elimination of the ECA effective April 1, 1992. The fuel costs established by this agreement include recovery of costs provided by previously issued orders relating to coal contract settlements and storm damage recovery.
Management's Discussion - " Rate Developments" and Note 2 of the Notes to Consolidated Financial Statements include further information concerning regulatory matters.
ENVIROMENTAL MATTERS The Company is subject to state and Federal laws and regulations dealing with & and water quality and other environmental matters. The Company believes that its operations are in substantial compliance with state and Federal laws governing such matters. Management's Discussion - " Rate Developments" and Note 2 of Notes to Consolidated Financial Statements include further information concerning coal contract settlements.
The Company's coal-fired plants were constructed and are operated to limit sulfur dioxide emissions. JEC was constructed with scrubbers and precipitators, La Cygne 1 was built with scrubbers and La Cygne 2 was built with precipitators. Low sulfur coal is burned in JEC and La Cygne 2 and combined with medium sulfur coal at La Cygne 1.
Stack tests at the LaCygne Station in 1989 showed both units were in compliance with particulate and sulfur dioxide emission limits, but that La Cygne 1 was not in compliance with opacity standards. Subsequent to the test period, the unit was switched to a cleaner burning coal. A program was undertaken to identify a long-term fuel source, operating practices and equipment modifications necessary to assure the unit's compliance with the opacity standard. The EPA has been advised of these actions.
l l 5
In November 1990, the EPA provided notification that La Cygne 2 had been found in violation of the New Source Performance Standards as they relate to- I sulfur dioxide emissions. 'KCPL installed a continuous emission monitoring system on the unit in July 1991. Following installation of the continuous emission monitor, the unit has exceeded regulatory emission limits for sulphur dioxide on several occasions. KCPL has initiated a program to determine the cause of the prob 1's and a plan to ensure sulphur dioxide emissions are within regulatory limits ;
Clean Air Act mendment The Clean Air Act Amendments of 1990 (the Act) require a two-phase I reduction in sulfur dioxide emissions effective in 1995 and 2000 and a ;
reduction of nitrous oxide and toxic emissions effective in 2000. All of the !
Company's generating units are generally in compliance with the sulfur dioxide requirements of the Act. Continuous etission monitors have been installed on ,
all coal-fired generating units. .The cost to install monitors on the Company's gas-fired gene st<ng units by January 1, 1995,- will not be significant. The nitrous oxide and toxic limits, which were not set in the law, will be specified in future EPA regulations. Until such time as these :
regulations are prescribed, management cannot predict the impac'. on its financial condition. :
i 1
i l'
l l
I i
i 6 ;
ITEM 2. PMPutTIES The Company's active generating stations, owned or leased, all of which are in Kansas, are as follows: ;
Accredited !
Capability - W Name and location (Company's Share)
Nuclear Wolf Creek, near Burlington 533 ggj, La Cygne 1, near La Cygne 342 :
La Cygne 2, near la Cygne 320 JEC 1, near St. Marys 133 JEC 2, near St. Marys 135 JEC 3, near St. Marys j]2 Subtotal 1,069 :
Gas /0il Gordon Evans, Wichita 511 Murray Gill, Wichita 325, Subtotal 837 Diesel Wichita, Wichita 3 Total active capability ,L44g, W The Company's system capability in 1991 was 2,388 W consisting of 2,442 W of generating capability less 54 W of firm capacity sales, which includes an agreement for a 40 MW capacity sale through the year 2000.
The Company's maximum peak responsibility during 1991 occurred July 22.
On that day the peak demand of-1,751 W plus 28 W of fins sales to partial requirements wholesale customers resulted in a peak res)onsibility of 1,779 W , with a reserve capacity of 609 MW. The 1991 pea c responsibility increased 1' percent from the 1990 peak-responsibil'ty of 1,761 MW.
the 1991-1992 winter season l Through was 1,195 W , aFebruary 1 percent1992, decreasethe from peakthe demand durin1990).991 winter peak of 1,21 y set in December 1990. The decrease in the winter peak resulted primarily from the mild < weather- from December 1991 through February 199r compared to more l
normal weather in the 1990-1991 winter season, l- .-
The Company has capacity available which may not be fully utilized by growth _ in customer demand for at least five years. The Company has been and is attempting to market capacity and energy to other utilities. A M0KAN Power Pool study indicates.a need for additional generating capacity in the region through the year 2000.
7
- _ _ _ _ . __. . _ . .- - _ _ - - _ -_. . - _ _ _ = _ _ ~.
Extra capacity has resulted, in largo part, from the Company's response to the gas shortage of the 1970's which threatened to end the use of natural gas as fuel for generation and from customer energy conservation. In the early 1970's, the Company's generating capacity was natural gas fueled with oil as a backup. In the 1960's, the Company's gas suppliers warned that they would not be able to meet the Company's future gas needs. The natural gas shortage became so serious that Congress, in 1978, banned the use of gas in large utility boilers, including those of the Company after January 1, 1990.
With the easing of t,.e nattral gas shortage, Congress, late in 1981, repealed this 1990 deadline. By this time, the Company's construction of coal and nuclear generating facilities had proceeded to the point where cancellation was not economical.
In 1987, the Company completed a sale and leaseback of its 50 percent interest in La Cygne 2. The base term of the lease expires in 2016, with options to renew or purchase. The Company is responsible for 50 percent of the unit's onerating costs and is entitled to 50 percent of the electricity produced by the unit.
The Company maintains 15 interconnections with other public utilities which permit substantial direct extra-high voltage interchange. It is also a member of the M0KAN Power Pool, consisting of 11 utilities in Kansas and western Missouri. These utilities coordinate planning electric generation and transmission facilities, share capacity margin requirements and interchange electricity to enhance reliability of service and economy of operations. The Company is also a member of the Southwest Power Pool, the regional coordinating council for electric utilities throughout the south central United States.
The Company owns a transmission and distribution system which enables it to supply its service area. Transmission and distribution lines, in general, are located by permit or easement on public roads and streets or the ' ands of others.
The Company also owns office buildings, a system control u nter, and a number of service and other buildings in various locations. The amount of the property leased by the Company, excluding La Cygne 2, is not material.
Substantially all of the assets of the Company, except transportation equipment, are subject to the lien of the Company's Mortgage and Deed of Trust, dated April 1, 1940, as supolemented.
CONSTRUCTION PROGRAM The Company has adequate generating capacity to meet its needs for the foreseeable future. Its construction program is focused on providing. service to new customers and improving present electric facilities. See " Management's Discussion - Liquidity and Capital Resources."
1 I
8
l ITDi 3. LEGAL PROCEEDINGS In February 1987, Chevron U.S.A., Inc. (Chevron) filed an action ia the !
United States District CS rt for the District of Kansas against Kansas Gas i Supply Corporation (KGS), a natural gas tunplier of the Company, alleging a failure to purchase contracted amounts of natural gas and to pay price increases. In January 1988, KGS #iled a third party complaint against the Company seeking recovery from the Company for any damages which Chevron may recover from KGS. In Jul Barbara Oil Company (Barbara) and Pickrell Drilling Company (Pickrell)yfiled 1989, a similar action in the Barber County, Kansas District Court against KGS. In September 1989, KGS filed a third party complaint against the Company in this additional action. In both cases, KGS alleges that it had obligated itself to purchase gas for the benefit of the Company, that the Company's dealings with it were not consistent with reasonable standards of fair dealing in the trade, that the Company acted in bad faith and that the Conr/ny's actions constituted fraud.
XGS further alleges it was acting as an agent of the Company when contracting for gas supplies. Managemens has denied the allegations nf KGS and believes that it has, at all time;, fulfilled its contractual obligations with respect to the supplier, has acted in good faith and that KGS was not an agent of the Company.
KGS has settled the claims of Chevron, Barbara and Pickrell, and is seeking recovery of such settlement costs (approximately $40 millior) from the Company. On February 20, 1991, following a two-week jury trial of the third party action against the Company regarding Barbara and Pickrell, a $5.3 million verdict (one-half of amount claimed) was returned against the Company in favor of KGS. On February 28, 1992, the Kansas Supreme Court affirmed the February 1991 judgement against the Company regarding Barbara and Pickrell.
The Company has requested the Court to reconsider its decision. In the opinion of management, adequate provision has been made for these claims.
The Company is involved in various other legal proceedings. While the resolution of these matters may have an additional impact on the financial results of the year in which the matters are resolved, management believes that their ultimate disesitions will not have a material adverse effect upon the business or financial position of the Company.
In July and August, 1990, four shareholder suits, Maver st. Kansas Gas and Electric Company, Freedman v. Kansas Gas and Electric Compara, Krieaer v.
Kansas Gas and Electr'c Company, and Werbowsky v. Kansas Gas and Electric Comoany, were filed against the Company and its directors, individually, in the Missouri Federal Court alleging that the Kansas Control Share Acquisition Act and the Kansas Business Combination Statute are unconstitutional and that the directors and certain executive officers of the Company hao breached certain fiduciary duties in connection with the July 23, 1990 KCPL tender offer for all of the outstanding shares of the Company. The KCPL tender offer was withdrawn in December 1990 and in May 1991 these suits were dismissed with prejudice.
l l See Business - " Fuel Supply", Management's Discussion -
" Rate i Developments" and Notes 2 and 10 of the Notes to Consolidated Financial l Statements for additional information concerning regulatory and l legal proceedings.
l 9
1
ITEN 4. SUBMISSION OF MATTERS TO A VOT2 0F SECURITY HOLDERS No matters were sut'mitted to a vote of security holders in the fourth quarter of 1991.
Executive Officers of the Company at December 31, 1991
. The following sets forth certain information with respect to the Company's Executive Officers. All Executive Officers are elected by the Board of Directors to terms which will expire at the organizational meeting of the Board of Directors which next follows the Annual Meeting of Stockholders. No family relationships exist between the below-listed of heers.
Positions During Last 5 Years Name Ace (Year Elected to Present Position)
Wilson K. Cadman 64 Director, Chairman of the Board & Presioent (1982)
Kent R. Brown 47 Group Vice President 1982 i
, Richard M. Haden 52 Group Vice President 1984 James S. Haines, Jr. 45 Group Vice President 1985 Robert L. Rives 58 Group Vice President 1982 James T. Clark 51 Vice President - Accounting (1986)
Ralph Foster 63 Director & Vice President -
l GeneralCounsel(1979)
William B. Moore 39 Vice President - Finance and Treasurer since 11-1-90 and prior to that Vice President -
l Finance PART II ITEM 5. !!@;gT FOR REGISTRANT'S C0PM04 EOUITY AND RELATED ST0cti41 DER MATTERS l All preferred and common 0 -0 dividends paid in 1991 were fully taxable to the recipients as income.
l On Decewber 31, 1991, ths book value of the Company's comuon stock was
$19.63 per share and the closing price on December 31, 1991, as reported in The Wall Street Journa.],, was $34.125 per share.
l The Automatic Dividend Reinvestment and Common Stock Purchase Plan (StockCompany)'s Plan which permitted preferred and common stockholders to automatically reinvest dividends and/or invest optional cash payments will be terminated upon completion of the .nerger. See Management's Discussion -
" Merger Agreement" and Note 11 of the Notes to Consolidated Financial Statements.
l The Company's common stock will be delisted by the New York Stock Exchange and the Pacific Stock Exchange upon completion of the merger.
Additional information called for by this item is set forth after Note 13 of the Notes to Consolidated Financial Statements.
10
ITEM 6. SELECTED FINANCIAL DATA 1991 1990 (a) 1989 (a) 1988 1987
( prasng revenues (D00) $ 584,968 $ 586,641 5 533,533 $ 526,220 $ t,14,332 Netincome (D00) $ 53,602 $ 64,134 $ 47,493 $ 77.183 $ 72,322 Eamings applicatie b common abck $00) $ ';C1 ' t 63,363 $ 46.672 5 76,362 $ 63,846 Average shares of common abckoutstancing $00) '.~~ 31,673 34,280 - 36,398 40,523 Common stock per share data Eamings $ 1.70 $ 200 $ 1.36 $ 2.1C $ 1.72 Cash dMdanda 8 1.72 $ 1.72 5 1.63 $ 1.51 $ 1.39 Indicated year-end dMdend rate (aanuaft. red) $ 1.72 $ 1.72 $ 1.72 $ 1.60 $ 1.48 Marketvalue-end of year $ 34.125 $ 27.00 $ 23.375 $ 20.75 $ 19.25 C
l Book value (Abody'2not i
tang /bfe asseLi)- and of year $ 19.63 $ 19.65 $ 19.50 $ 19.78 $ 19.21 l
System capabigty (MW) R388 2,387 2,380 2,376 2,399 System peak responalblBty (MW) 1,779 1,761 1,568 1,677 1,653 Reserve capacity (MW) 609 626 812 699 746 Average use per residental cusemer (AWh) 10,219 9.951 9,248 9,726 9,314 Average price per residental kWh 9.40 g 9.45 g 8.92 $ 9.01 5 9.02 s l
Number of customers at end of year 258,748 256,216 254,810 251,849 249,970 l
Long-te'm debt (000) $ 850,851 4 824,424 5 725,537 $ 772,549 $ 1,016,096 Total uti:y giant - net $00) $ 1,853,937 $ 1,858.057 $ 1,874,914 $ 1,897,829 $ 1,926,536 Total assets (000) $ 2,350,546 $ 2,348,862 $ 2,363,069 $ 2.420,872 $ 2,553,472 (a) See Note 20t the hbtes D CdasoRdatedFinancialStataments kwknpactof rate rehndorders
. _ _ . __ . . _ _ . _ ~ . _ _ _ _ _. . _. __
l l
ITEN 7. MANAGDUT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS Am FINANCIAL COMITION l
MERGER AGREEMENT In October 1990, the Company's Board of Directors approved an Agreement and Plan of Merger (the Merger Agreement) with The Kansas Power and Light 1 Company (KPL), a kansas corporation and KCA Corporation (KCA), a wholly-owned subsidiary of KPL, providing for the merger of the Company with and into KCA.
4 The Company, KPL and KCA subsequently executed the Merger Agreement.
Following the merger KCA will change its name to Kansas Gas and Electric Company.
Pursuant to the Merger Agreement, 56.25% of the shares of the Company's Comon Stock outstanding at the merger date will be converted into the right I to receive KPL Comon Stock at a conversion ratio (defined as the number of )
shares of KPL Common Stock issued for each share of the Company's Ccmon Stock) equal to $32 divided by the Average KPL Price (defined as the average of the closing prices of the KPL Comon Stock as reported on the New York Stock Exchange Composite Tape on each of the fifteen consecutive trading days !
preceding the fifth trading day prior to the consumation of the merger); !
proviced that the conversion ratio will become fixed at 1.6 shares when the ;
Average KPL-Price falls below $20 per share and 1.347 shares when the Average l KPL Price rises above $23.75 per share. The amount of cash to be paid in the i merger will be $434 million, so if holders of more than 43.75% of Company comon stock elect to receive cash, shareholders electing to receive cash will i also receive KPL comon stock. Likewise, if holders of more thhn 56.25% of Company's common stock elect to receive KPL common stock, shareholders electing to receive KPL common stock will also receive cash. Preferred shareholders of- the (cmpany will receive in cash plus accumulated dividends, if any, $110 for each share of 4-1/2% Preferred Stock; $101.64 for each share of 4.32% Preferred Stock; and $101 for each share of 4.28% Preferred Stock.
The merger was approved by the shareholders of the Company and additional KPL comon shares were authorized by KPL shareholders at saecial meetings in March 1991. Approvals of the merger were received from t1e FERC and Missouri Public Service Commission in September 1991, the KCC and NPC in November 1991 and the Securitics and Exchange Commission in February 1992. Significant conditions affecting the Company, among_others, imposed by the KCC in its order on the merger are:
- Rates are froren until August 1995.
- Refunds to customers were ordered totalling $32 million to the combined companies' customers in order to share the merger-related cost savings with customers during the rate moratorium.
. A mechanism -was approved to share equally,
- between the combined companies and their customers, the cost savings generated in the merger in excess of the revenue requirement needed to allow recovery of the arortization of a portion of the acquisition adjustment, 12
including income tax, paid for the Company's common stock up to
$29.50 per share on a dollar for dollar basis from savings gererated.- The order provides an amortization period of 40 years commencing in 1995 for the acquisition adjustment.
- A separate proceeding to eliminate the ECA is required (See " Rate Developments").
Closing of the merger with KPL previously announced to occur on or about March 16, 1992, was delayed pending analysis of an unexplained noise reported at Wolf Creek on February 28 and March 16. The closing date will be set when the companies are satisfied that Wolf Creek is operating sati;'actorily and serving customers. Cee "Other Matters -- Noise Reported at Wolt Creek".
The license transfer approval received from the NRC and XPL's merger financing arrangements rec uire the merger to occur on or before March 31,
- ')92. Extensions of these cates have been requested and are anticipated to be
'sceived.
Conduct of Business Pending the Merger The Merger Agreement places certain restrictions on the conduct of the Company's business pending consummation of the merger. Without prior written consent of KPL, the Company is restricted from, among other things, (1) issuing securities with the exception of borrewings in the normal course of business under short-term debt facilities and the Company's existing long ii acquiring, selling, or otherwise disposing of an term agreements}
capacity, (iv p(urc)hasing or. disposing of additional capacity, and(v transmitting any electrical power or energy over another party's lines or becoming obligated to allow another party to transmit any power or energy over KG&E's lines, other than in the ordinary course of business. The Company does not expect these restrictions to adversely affect its ability to conduct business.
RESULTS OF OPERATI0ftS Earnings and Dividends Earnings applicable to common stock (earnings) were $53 million in 1991, 563 million in 1990, and $47 million in 1989. Significant items decreasing 1991 earnings were a provision for various claims and legal matters (See Note 10 of Notes to Consolidated Financial Statements for additional information regarding legal matters), increased maintenance expenses at two of the Company's generating units over the 1990 level, and increased property taxes.
The earnings decrease was offset, in part, by increased retail revenues and an increase in other income and deductions. The earnings increase in 1990 was the result of. increased retail kilowatthour sales, riversals of previously recorded KCC ordered refunds and reduced interest expense. Certain items offsetting the 1990 earnings increase were expenses of tha Company's response to the unsolicited tender offer by KCPL, recognition of an investment loss, expenses for the scheduled refueling and maintenance ouNge at Wolf Creek and 13
_ ._ __ __ _ _. _ _ _ . _ _ _ ~ . _ . _ _ _ . _ _
expenses to restore service after March and June storms. Mild weather, KCC ordered refunds, elimination of phase-in revenue accruals and amortization of phase-in revenues contributed to the 1989 earnings decrease of $30 million.
Increased sales to wholesale customers, a retail rate increase effective January 1989, and reduced operation and maintenance expenses partially offset the decrease.
i Due to elimination of the ECA on March 26, 1992, future changes in fuel cost and mix of fuel will have a direct impact on Company earnings.
The Company's return on average common equity was 8.7 percent for 1991, 10.0 percent for 1990, and 6.9 percent for 1989. ,
Earnings per share of common stock were $1.70 in 1991, $2.00 in 1990, and ,
$1.36 in 1989. The reduction in average shares outstanding resulting from the Company's purchases of its common stock that began in 1987 and was completed in 1990 has provided annual increases in earn'ngs per share of approximately 15 cents in 1990 and 8 cents in 1989.
Dividends paid per share of common stock were $1.72 in 1991 and 1990, and
$1.63 in 1989, a 12 cent increase over 1988.
Operating Revenues and Sales Operating revenues were $595 million ir 1991, $587 million in 1990, and
$534 million in 1989. The 1991 operating revenue increase results from weather related additional retail kilowatthour sales and the recovery through rates of increased fuel and purchased power expenses. Future operating revenues may be affected due to elimination of the ECA (See " Rate Developments"). Reversing two KCC ordered refund 3 previously recorded in 1989 increased 1990 operating revenue by approximately $15 million. Reversal of the refunds is discussed under Rate Developments. The remainder of the 1990 operating revenue increase results primarily from revenues due to increased retail kilowatthour sales and the recovery through rates of an $8 mil 1Nn increase in fuel expense. Operating revenues for 1989 compared f.o 1988 were affected by.a-$15 million increase in wholesale revenues, a $29 million rate increase effective January 1989, lower retail sales which reduced revenues by an estimated $16 million primarily as a result of cool sunner weather, the refunds noted above totaling $15 million and a $5 million reduction in fuel expense which flowed through revenues.
Retail kilowatthour sales in 1991 increased 3 percent from 1990. -The weather related sales increase was fairly equal among the customer classes.
Retail kilowatthour sales in 1990 increased 5 percent from 1989 sales which Lwere less than 1 percent below 1988 sales. Weather was the most significant
-factor affecting 1990 sales just as it was in-1989. The 1990 summer weather was slightly above normal compared to 1989, when Kansas experienced the
- mildest surener weather in 20 years. Residential sales increased 8 percent L over 1989, commercici sales increased 5 percent, and industrial sales
! increased 4 percent.
Wholesale kilowatthour sales for 1991 decreased 31 percent compared to 1990. The decrease was due primarily to reduced availability of generating
-units for scheduled maintenance. Wholesale sales for 1990 decreased 18 14
percent compared to 1989 which had a 77 )ercent increase over 1988. A short-term power sale agreement with a neigh >oring utility during 1989 is the primary reason;for the -1990 decrease from 1989 and the 1989 increase from 1988.
Operating Expenses Fuel and purchased power expenses for 1991 increased $6 million over 1990. The increase was due to additional )urchases of )ower and increased generation by gas-fired generating units w111e Wolf Creec and La Cygne 2 were unavailable due to scheduled maintenance. Fuel and purchased power expenses for 1990 increased $8 million over 1989. The increase was due to additional purchases of power and increased generation of electricity by ;oal-fired generating units while Wolf Creek was unavailable during a scheduled refueling and maintenance outage. The 1989 fuel and purchased power decreased by- $5 million from 1988, primarily because Wolf Creek was not down for refueling and maintenance in 1989.
Other operation and maintenance expenses in 1991 increased $10 million from 1990. The increase was primarily the result of increased expenses for a major overhaul at La Cygne 2 and a refueling and maintenance outage at Wolf Creek.- Expenses related to the KCPL tender offer and the merger with KPL l included in other operations decreased $3 million from 1990. The decrease was offset by increased employee costs, primarily medical and employee benefit expenses. Other operation and maintenance expenses in 1990 increased $20 ,
million or 11 percent from 1989. The increase was due primarily to $8 million 1 for a' scheduled refueling and maintenance outage at Wolf Creek, $7 million for I
expenses related to the Company's response to the unsolicited KCPL tender ,
l ofS r and the merger with KPL, $2 million for the March and June 1990 storms and $1 million for increased maintenance expenses as a result of an overhaul at La Cygne 1. The 1989 other operation and maintenance expenses decreased by-
$7 million from 1988, primarily as a result of there being=no refueling and maintenance outage at Wolf Creek during 1989.
l Other taxes in 1991 increased primarily due to increases in property tax assessment and mill levy rates.
The $11 million increase in income taxes in 1990 resulted primarily from increased operating income before taxes.
Other Income and Deductions The Company has purchased corporate-owned life insurance policies on
, cenain of its employees. The $2 million increase in-1991 from 1990, the $4 L
miliion increase -in 1990 from 1989 and the $2 million-increase in 1989 from 1988 in the corporate-owned life insurance - net, _ result from an~ increase in the cash values. net of applicable expenses on these policies.
Income from short-term investments 1990 decreased $5 million.from
-1989, which had decreased by $11 million from 1988. Proceeds from the sale of i short-term investments have been used to purchase the Company's comon stock and retire high-coupon debt. In 1991, the Company used the remaining short-term investments, therefore future investment income will be minimal.
I 15
I A provision of $12 millien was recorded in 1991 miscellaneous - net with respect to various claims and legal matters. (See Note 10 of the Notes to ConsolidatedFinancialStatements.)
Miscellaneous -
net reflects the write off in 1990 of $6.6 million of Drexel Burnham Lambert Group Inc. (Drexel) commercial paper following the Drexel. (See Note 10 of the Notes to Consolidated Financial bankruptcy).of Statements In January 1990, the Company increased its ownership in CIC Systems, Inc.
to 80 percent. CIC is developing PowerStat, a prepay metering system. The Company recorded a $1 million charge (included in Miscellaneous - net) in 1991 and a $3 million charge in each of the years 1990 and 1989 representing the annual net losses incurred by CIC during the development and testing of the system.
Interest Charges Interest charges decreased by $1 million in 1991, $8 million in 1990 and
$9 million in 1985. The 1991 decrease reflects lower interest rates.
Approximately $6 million of the 1990 decrease results from retiring the $100 million 13.5% Series First Mortgage Bonds in March 1989 and redeeming the
$18.1 million 16% Series First Mortgage Bonds in December 1989. The balance of the interest charge decrease results from the lower interest rates on the Company's $328 million of variable rate debt and reduced interest expense of
$2 million associated with reversing the KCC ordered refunds. The 1989 decrease results- primarily from the retirement of the $100 million 13.S'4 Series First Mortgage Bands in March 1989.
l l
16
LIQUIDITY AND CAPITAL RESOURCES Capital Resources Available The Company has authority from the FERC to make short-term borrowings up to $250 million.
The Company has the following ba.nk facilities available:
. At December 31, 1991, the Company had short-term bank lines of credit totaling $65 million, all of which was available.
i e At December 31, 1991, the Company had $38 million outstanding in unsecured bank borrowings.
= The Company has a long-term revolving credit agreement totaling $150 !
million all of which was utilized at year-end. The loan agreement l currently extends through October 1994. The agreement may be ;
extended until 1995 and may be repaid prior to its expiration date !
without penalty.
. The Company has a long-term agreement that expires in 1995, which rovisions for the sale of accounts receivable and unbilled contains revenues p(receivables) and phase-in revenues up to a total of $180 million. Amounts related to receivables are accounted for as sales while those related to phase-in revenues are accounted for as collateralized borrowings. At December 31, 1991, the Company had receivables amounting to $58 million which are considered sold and borrowings related to phase-in revenues of $36 million.
The Company has entered into interest rate swap agreements to reduce the impact of changes in interest rates on its variable rate debt. At December 31, 1991, the Company had interest rate swap agreements totaling $190 million associated with short-term debt, the revolving credit agreement and borrowings collateralized by phase-in revenues. See Note 6 of the Notes to Consolidated Financial Statements fcr additional information.
In 1986, the Company purchased corporate-owned life insurance policies on certain of its employees. The annual cash outflow for the premiums on these policies from 1989 through 1992 is a? proximately $27 million. In 1993, the Company will be able to increase its )orrowings against the accumulated cash values of the policies. See Note 1 of the Notes to Consolidated Financial Statements for additional information on the accumulated cash surrender value. After 1993, the borrowings are expected to produce annual cash inflows, net of expenses, through the remaining life of the policies.
Borrowings against the policies will be repaid from the death proceeds.
In 1990, the Company completed the common stock purchase program begun in 1987. Ten million shares were purchased, representing a 24 percent reduction of the 41 million shares outstanding as of October 1987.
17
Capital Requirements The Company has adequate generating capacity to meet its needs for the foreseeable future. Its construction program is focused on providing service to new customers and improving present electric facilities. The five-year construction program throegh 1996, including nuclear fuel, is estimated to be
$400 million, which does not include $20 million for allowance for funds used during construction for the five years.
First mortgage bond maturities and sinking fund requirements through 1996 are $17 million. The Company expects the capital requirements to be met generally with funds internally generated from operations. The Company will consider issuing long-term debt to refund outstanding short-term debt to take advantage of favorable long-term interest rates. Borrowings against the accumulated cash surrender values of the corporate-owned life insurance policies are expected to be used in the repayment of the Company's existing long-tenn agreements that are due to expire by 1995. Such agreements had $186 million ' estanding at December 31, 1991.
RATE DEVELOPENTS Interia Rate Refund In February 1990, the KCC found that $8.7 million of the Company's January 1989 $29 million rate increase should be refunded with interest. A reserve for the ordered refund was established for 1989 which reduced revenues by'58.2 million and increased related interest expense by 50.4 million. Prior to payment of the refund, the Kansas Court of Appeals overturned the KCC ordered refund. In September 1990, the Company reversed the previously recorded reserves. The effect was to increase revenues and reduce interest expense in 1990 by the amount of the 1989 reserve. This increased 1990 net income and earnings by $5.3 million and earnings per share by 17 cents.
Cost of Service Audit appeal The February 1990 KCC order also found that beginning May 8, 1990, the Company's rates should be reduced by $8.7 million. A full stay of the order was received pending the catcome of an appeal. The Company was denied a rehearing by the KCC and lost its request for judicial review to the Kansas Court of Apseals in September 1990. The Company appealed the Court of Appeals ruling to tae Kansas Supreme Court and the United States Supreme Court. Both appeals were subsequently denied.
In August 1990, the Company filec with tne KCC a Motion to Reopen the record to recognize its July 2, 1990, peak demand as the basis for eliminating the rate reduction ordered by the KCC from July 2, 1990 forwsrd. In June 1991, the Company filed with the KCC a Motion to Stay the effective date of the KCC order regarding the reduction in rates pending resolution of the t Company's Motion to Reopen. In July 1991, the KCC granted the Company's 1
18
Motion to Reopen the record and ordered a refund of approximately $1.2 million of reve.1ues plus $0.1 million interest for the period May 8, 1990, through July 1, 1990. In September 1991, the KCC ordered the Company to refund $5.6 million of revenues plus $0.6 million in interest for the period July 2, 1990, through January 31, 1991. These refunds have been made. The September 1991 order made rates permanent and because the Company had previously recorded reserves totalling $10.8 million, the excess reserves of $3.3 million were reversed in September 1991.
Refueling Outage Appeal In February 1990, the KCC issued an order which found that the s u rf.
schedt. led refueling and maintenance outage at Wolf Creek was extended from 49 to 101 days and followed by a 26-day forced outage due to imprudent management. The KCC found the extension of the outage increased fuel costs by
$6.9 million and ordered that amount plus interest to be refunded. A full stay of the order was received )ending the outcome of an appeal. In 1989, the Company established a reserve w11ch reduced revenues by $6.9 million and increased related interest expense by $1.3 million for a refund of the fuel costs incurred and collected in 1987 and 1988. In June 1990, the Court of Appeals ruled the KCC engaged in retroactive rate making, which is prohibited in Kansas, when it did not calculate the refund according to the terms of the approved fuel clause tariff. The Court of Appeals remanded this case to the KCC with directions to calculate the refund, if any, based upon the approved tariff. In December 1990, the previously recorded reserves were reversed.
The effect was to increase 1990 revenues by $6.9 million and reduce interest expense by $1.3 million, which increased net incom and earnings by $5 million and earnings per share by 15 cents. In September 1991, the KCC issued an order closing the docket without a refund.
Coal Contract Settlements In March 1990, the KCC issued an order allowing the Company to defer its share of a 1989 coal contract settlement with Pittsburg and Midway Coal Mining Company amounting to $22.5 million. The settlement resulted in the termination of a long-term coal contract. In June 1991, the KCC permitted the Company to recover this settlement as follows: 76 percent of the settlement plus a return through the Company's ECA through 2002, the remaining term of the terminated contract, and 24 percent to be amortized to expense with a deferred return equivalent to the carrying cost of the asset which is recorded as a deferred regulatory asset.
In February 1991, the Company paid $8.5 million to settle a coal contract lawsuit with AMAX Coal Company, and recorded the payment as a deferred regulatory asset. In July 1991, the KCC approved the recovery of the settlement plus a return equivalent to the carrying cost of the asset, through the ECA through 1996, the remaining term of the terminated contract.
19
Stom Damage Recovery In October 1990, the Company asked the KCC for approval of a plan to recover the cost of stom damage primarily from the March 13 anu June 19, 1990 storms. A) proximately $15 million of capital expenditures were incurred.
These costs lave been included in the Company's electric plant accounts.
Other costs of approximately $3 million, et of approximately $1 million expected to be recovered through insurance, w re also incurred and were expensed in 1991. In May 1991, the Company amended this request to include the estimated $5 million of capital expenditures associated with an April 1991 storm. In November 1991 and January 1992, the KCC approved the deferral and recovery of the capital expenditures of the 1990 and 1991 storms, respectively, as well as carrying charges on the amounts. Recovery of the amounts previously expensed was denied.
Elimination of the ECA On March 26, 1992, the KCC approved the elimination of the ECA effective April 1, 1992. The fuel costs established by this order include recovery of costs provided by previously issued orders relating to coal contract settlements and storm damage recovery discussed above.
OBER MA1TERS Postretirement Benefits Accounting Standard Released The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 106, Snpioyer s ' Accounting for Postretirement Benefits Other Than Pensions. The Company plans to adopt this statement in 1993. This statement will require accrual of postretirement benefits during the years an employee provides services. The costs of these i benefits, which generally relate to health care benefits for early retirees up to age 65, are currently expensed on a pay-as-you-go basis. These costs were
$2.1, $1.3 and $1.2 million in 1991, 1990 and 1989, respectively. The increase in 1991 was caused by the voluntary early retirement program in i 1990. The impact of this new standard has not been fully determined. Except for the effect of the recently announced special retirement and voluntary
- separation program, management estimates the change will not result in significantly greater expense than recognized in 1991 for these benefits. See Note 8 of the Notes to Consolidated Financials Statements for additional information.
Income Taxes Accourrting Standard Released The Company adopted Statement of Financial Accounting Standards No. 96, Accounting for Incane Taxes (SFAS 96) in 1987. SFAS 96 will be superseded l by SFAS 109 issued in February 1992, effective for the Company's year ended l December 31, 1993. Management believes that adoption of SFAS 109 should have no significant effect on the Company's financial statements.
l 20
Clean Air Act Amendment The Clean Air Act Amendments of 1990 (the Act) require a two-phase reduction in sulfur dioxide emissions effective in 1995 and 2000 and a reduction of nitrous oxide and toxic emissions effective in 2000. All of the Company's generating units are generally in compliance with the sulfur dioxide requirement of the Act. Continuous emission monitors have been installed on all coal-fired generating units. The. cost to install monitors on the Company's gas-fired generating units by January 1, 1995, will not be significant. The nitrous oxide and toxic limits, which were not set in the law, will be specified in future EPA regulations. Until such time as these regulations are prescribed, management cannot predict the impact on its financial condition.
NRC Fines Wolf Creek In February 1992, the NRC imposed a $150,000 fine on Wolf Creek resulting from concerns with testing of motor-operated valves. Motor-operated valves are designed to be opened or closed automatically under various circumstances. The problem resulted from concerns ioentified by Wolf Crc.ek employees in February and May of 1991 that were not acted on until the refueling outage in the fourth quarter of 1991. Valves were analyzed or repaired prior to the unit returning to service in January 1992. The valve testing program caused the 1991 refueling and maintenance outage to be extended by approximately 49 days.
Noise Reported at Wolf Creek Wolf Creek was shut down for maintenance February 19, due to the failure of an integrated circuit card in a oower supply system. Wolf Creek used the outage to replace the failed card and perform other maintenance tasks.
On February 28 as the plant was heating up in preparation to restart, an unexpected noise was reported by personnel in the containment building. Upon inspection of the reactor and related equipment no damage was found. The NRC was informed of the noise. Analysis and inspection suggested that clearances on certain of the reactor coolant system pipe restraints were not adequate to allow smooth expansion as the piping heated up. Several pipe restraints were found to have moved from their de::ign position, which could have caused interference with other supports as the system expanded during heatup.
After realignment of the restraints the plant was heated to normal operating temperature. On March 16, the noise was he M and recorded by additional instrumentatien that had been installed to monitor the 91 art following the February 28 noise. Analysis of the data indicated insufficient clearances on pipe restraints called saddle blocks as the most likely cause of the noise.
Subsequent heatup of the unit on March 23 was successfully accomplished
! without the noise or other difficulty. The noise events caused no damage and had no safety consequences. The NRC accepted the analysis of the cause of the noise and gave its concurrence to restart the unit on March 26. On March 27, at 10:33 a.m. the plant began producing power.
21 1
MMBAGDUT STATDUT OF RESPOIISIBILITY FOR FINANCIAL STATOUT5 The management of Kansas Gas and Electric Company is responsible for the consolidated financial statements, the financial statements schedules, and other information in this report. The accompanying consolidated financial statements and finan:ial statement schedules have been prepared by management in accordance with generally accepted accounting principles. The accounting system is in accordance with the Uniform System of Accounts prescribed by the Federal Energy Regulatory Commission and the State Corporation Commission of the State of Kansas.
The integrity of the accounting records is upheld by a comprehensive system of internal accounting controls, monitored on a re ular basis by the internal audit staff of the Company. This system is comp.cmented by a set of accounting policies and procedures which provide the necessary guidar.ce needed to institute effective internal control.
The Board of Directors maintains its oversight responsibility through an Audit Committee, consisting of three outside directors. The Committee meets-with management, the internal auditors, and the independent auditors ;a connection with its review of matters relating to tne Company's financia' reporting; the Company's internel audit program; the Company's system (-
. internal accounting controls; and services of the independent auditors. The Committee meets. with the auditors without management present in order to assure independent treatment of catters brought to its attention. The Committee also recommends to the Directors the selection of independent auditors.
I E. D. Prothro Controller and Assistant Secretary L
! Wichita, Kansas March 6, 1992 l
{
l 22
ITEM 8. FIIIAIICIAL STATEmnis AfD SUFPLDENTARY DATA TABLE OF CtNmDETS f8E -
Independent Auditors' Report 24 Financial Statements:
Consolidated 5'tatements of Income' for the Years Ended December 31, 1991, 1990 and 1989 25 -
Consolidated Balance Sheets, December 31, 1991 and 1990 26 Consolidated Statements of Cash Flows for the Years Ended December 31, 1991, 1990 and 1989 27 Consolidated Statements of Capitalization, December 31, 1991 and 1990 28 Consolidated Statements of Common Stock Equity for the Years Ended December 31, 1991, 1990 and 1989 29
> Consolidated Statements of In.ome Taxes for the Years Ended December 31, 1991, 1990 and 1989 30 Notes to Consolidated Financial Statements 31 Financial Statement Schedules:
V Electric Plant Property for the Years Ended December 31, 1991, 1990 and 1989 46 VI - Accumulated Provision for Depreciation and Amortization of Electric Plant Property for the Years Ended December 31, 1991, 1990 and 1989 47 l VIII - Reserves for the Years Ended December 31, 1991, 1990'and 1989 48 IX - Short-Ters Borrowings for the Years Ended December 31, 1991, 1990 and 1989 49 SCHEDULES GEITTED l-l The following schedules are omitted because-of the absence of the conditions o under which they are required or the information is included in the financial statements and schedules presented:
I,_II, III, IV, VII, X, XI, XII and XIII.
23
IM)EPEllDENT AUDITORS' REPORT To the Stockholdars and the Board of Directors of Kansas Gas and Electric Company:
We hcve audited the consolidated financial statements of Kansas Gas and Electric Company and Subsidiary listed in the accompanying table of contents. Our audits also included the financial statement schedules listed in the accompanying table of contents. 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 ocr 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, such consolidated financial statements present fairly, in all material respects, the financial position of the Company and Subsidiary as of December 31, 1991 and 1990 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1991 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information shown therein.
DELOITTE & TOUCHE i
l Kansas City, Missouri March 6, 1992 l
l l
24
k CONSOUDATED STATEMENTS OF INCOME
- Fortw YourEnointf OncenDer31 1991 1980- 1900 (7houseriam acceptpersfaw)
Opereeng Revenues (Noep 4 8.S$4 gLS._ $ 588.641 8 533.533 Openning Esponese Fuel and purchased power 113,888 107,008 90,096 Ogieroperemon (Noep f f) 148,312 141,644 129,472 Melrnenance 52.984 40.242 41.767 Toesioperemon and metritanence 314,000 257,964 270,335 Deproclamon 75,115 73,5e0 72,083 Amoritteson of phase-in rewnues (Mar @ 17,546 17,544 -17,545 22,875 24,833 13,527 income tones (Mar 9)
Ogier tause 35.540 33.484 32.438 Totalopenudng expenome . 405.006 447.365. 405.938 Cis.edng income 125.083 130.288 127,596
- oiner snooms and peduonone t.mincome 3,147 W 9,139 C4=_ owned We insuronos - ret 4,815 2,788 (T52) an=aaminous - not (Noen f@ (12,844) (13,179) (5,907) income tunes - not (Noep SJ 8.9 21 6.917 1.281 Tote: otier inoame and o=*=*wie 1.839_ 433 3.741
- Income Before interest Charges 127.9 3 , 1:5.719 131.338 Internet Chargre l.ong-term osta se,ess - se,2ss 65.772-
- Oriorinserest 14 M 16.272 ,
18,0 27
. TommiIrverest chargas - not 74.3 3 75.536 - 83,843 Not income 53,002 64,184 47,483 Preferred Stock Div6dende 821 821 82_1 Eamings Appilombio to Coinmon Stock L ,jFJg1 N 8 46.672 Aversee Sheres of Common Stock Outelanding 31,001 31,673 34,280
. Eamingo Per Shere of Common Stock 8 1.70 $ 200 $- 1.36 see newee e cor=**=-v nhanew sensnerne.
25
h CONSOLIDATED 13ALANCE SHEETS December 37 1990 1991 (17cusands)
Aeosto Electric Plant - at Origiosi Cost (Notes # and 14 $ 2,428,561 Plantin sorwce
$ 2,482,319 865.233_ 604,338 IJsse acceTiulated dep.sc:okii 1,807,088 1,824,223 Not phntin serwce 13,812 14,760 -
Construcson work in progrees 8,840 6,529 Electnc piant neid Ibr tuture use - rwt 28.589 12.545 Nucieer fuel - not-Total electrn pisnt - not 1.a63.937 _ 1.858.057 Other Property and investnente 522 13,785 Special deposite 5,964 4,800
- D=u...a xdng trus' (Noor 10) 8,412 7.384 Ottw Totee other property and IrwoesTiente 14.888 26.049 Cumani Aseste 2,378 7,971 Cmh and conh equivaiente
- 21,664 Short-toim invuelmente 12,884 13,240 Accounts recchecie and unoDied rmonuse - not (Noor 6)
Fosed fuel- at average cost 18,888 22.299 28,880 27,095 Motoriais 41d supp8ee - et everage cost 9,887 10,750 Propeymente and other cunsnt aneste 70.457__ 103.019 Totalcurrent assete Defe:Tod Dehlte and Other Aeosto 188,986 144,507 Deferred regulemry assels (Noes Q 114,038 131,584 Phase inrevenuesi?kee Q 71,307 Corportae-owned life insurance - not (Now f) 107,062 0;her 20il88 14,339 Total deferred debite and other assete 411.254 301.737 Total $ A M 548
$ 2,348,862, OPwn and LlatnNeles cW'=*M (See CW Stapementnof CapiseMraelon) $ 1.478.182 $ 1.452.265 Current Wahilities Short-term bonowinge (Nose 3) 37,500 30 000 215 57,203 ~
Securtiles due within one year (Aber 6)
Accounts peydbie 80,478 66,000
('
' ~ 6,307 Retailrefunds (Nose @
13,718 16,411 Interwet accrux!
18,848 14,659
- Taxes accruau Cuae3mers' dsposite 3,086 2.993 l- 153,962 193,573 Total curTent liabdities Defemed Credits and Other Uabilities
. 334,523 312,555 Deio:recircorne taxes (Noes 9) 78,170 75,461 l
Deferred investment tax credits (Pete 9)
Deterred gain from ende w (Note 7) 281,281 290,902 l 5,964 4,880 j Accumutated provieson for G.u...J 49 (lear 70) t Other 20,504 19,226 Total defensd credtte and other liabilfties 718.412 703.024 Commitmente and Contingencies (Notas 10 and f f)
Total 5 2.350,546 $. 2,348,862 l
- See nones b consoUdaardt%encialsGrtements 26
CONSOUDATED STATEMENTS OF CASH FLOWS Fortw YestrEndedDecember37
~ increase (Decrease) h Ceeft arrd Case CguMelants 1981 1990 1989 (T?cusands)
Cash Flows from Operating ActMtles Notinoame $ 53,602 5 64,184 5 47,493 Actusments to ruoncas not income to ne caen prev &c:
Depreciamon and amorittadon 81,1 3 78,483 79,294 2,816 4,046 9,916 Deferred income taxes DefmTod Invoornent tax crecito - not 708 ' 398
, (1,745)
Amortzallon of phaerw-in revenues 17,546 17,544 17,545 Corporate-owned life invence (11,9C0) (10,003) (8,11Q (8,500) - (22,500)
Coat contact seinemente fece Q Amor*zeelon of gain fmm sels hk (9,841) (9,640) (9,627)
- 6,632- -
Inverarnent wr!m-off (Noor 10)
Other - not 3,947 3,000 10,492 Changes in current assets and ReLfliest Accounts recofweble aryd unbilled revenuse - no 344 13,588 (6,972)
Other current acesse 4,948 (1,725) (871)
Accounto peyeble and ratsi refunde 8,188 (18,518) 23,327 Interest and tause a'crued 1,298 965 (6,892)
Olner current Rebeless 102 (174) (tiB81 Not conh provided by operseng actMties 144,483 149,829_ 130,850 Cash Floom front Financing ActMales Pre front lasuance of common asock 31 249 154 leauerv;e of tins mongage bonos 323,40s -- -
Re%cMng credit agreement 1!,D,000 90,000 -
Special depoelte - not - 13,283 (267) 2,041
- Other long-term debt 44,501 90,000 -
Bom3 wings agelnet cash summder value of Rfe insurarre poHeise 3,500 3,800 2,130 snort-term bonowings:
Prrvaarta - maturttles over three monthe 110,000 9ti,000 125,000 Redempsons - mesurtiles over ifwee rnontre (120,000) (150,000) (50,000)
Mesurtiles three montne or lese - not 17,600 (56,400) (5,300)
Redemptonect:
Firstmorigege bonde (57,000) - (118,100)
RomMng credit agreement (70,000) (20,000) (30,000)
Other long-term detx (421,822) (5,121) (100)
Deremnd hsw come (a,50s) - -
Purchases of treasury seck - (64,528) (17,912)-
l - DMdenr)s paid (54.143) (55,116) (56 2 )
Net caen usedin L6iw actMWee (88.5_eq (72.389) r148.88H p
Cash Flows fmm inveneng Acewees Additions to electric plant . (74,348) (62,786) (56,776)
Corporate-owned life insurance tv*ia= (27,340) _(27,407) (28,348) :
Purenese of snort-term invesenente (742) (524) (7,332)
Drewdown of snort-term imeernente 22,087 28,300 115,643 Other investments (1.142) (8.244) (3,7861 Not caen prodded by (used in) inveedng actMties (81.4841 (72,641) - 19,421 Not increene (Decrease) in Cash and Cash Equivalente (5,583) 4,799 1,384 l
- Cash and Cash Equivaiente at Beginning of Year 7.971 3.172 1.788 l' Cash and Cash Equivalente at End of Yeer 5 2,3 _78 $ 7.971 5 3.172 See notes e consolidated financial statements.
l 27
( CONSOUOATED STATEMENTS OF CAPITAUZATION l%cenber31:
1991 1900 (Thouemode)
Common snook Equity (see consomelseed SIssemenes of Common Sincdr Equey)
Congnon suck, wlmout per value, autnortred 50,000,000 sherse $ 837,003 43.1 % $ 836,986 43.9 %
170,808 11.8 171,139 11.7 Rossined seminge
- omer paid-in capnel 2s4 -- 270_
807,835 54.7 808,396 56.6 SuDIDeW
. Treneury stock, et cost , (190M (13.5) (199 3 (13.7) 808.830_ 41.2 _0_09,140._. 41.9
- Tolai common emek equity Cumuleswo Preferred Stock (Nose 4)
Redemptonnotrequired _
4-1/2%, $100 per value; aumortmed and outstancAng 82,011 shares 8,201 8,201 Seial, $100 per value; aumortred 286,000 sherse-4.32% series, ousmanding 80,000 shares 8,000 - 6,000 4.28% series, outseending 46,000 shares 4.500 -4,500
- Total cumuleeve preferred as n':- 18.701 1.3 18.701 1.3 .
lAng-Tenn Debt (Nose 4
- First Mangage Bonde:
Sedes . .Due 1991 igue-4-5M - 1991 'S - 8 -.7,000
.- = 14.00% 1991 - 30,000
.14-1/8% 1991 - 2,000 5/9% 1900 18,000 _16,000 - '
5-7/8% .1987-2007 21,940 21,940 8%- ,
1908-2007 10,000 10,000 1/2% 2 00 35,000 36,000-8-1/8% 301_ 35,000 - 35,000 7-3/8% . _2002 25,000 c 26,000 6.8% 2004 14,800- -14,500 9-5/8% 2006 40,000 40,000 -
8-3/8% 2006 25,000 25,000
. 8-1/2% 2007- 25,000 - 25,000 8-7/8% _ 2 08 30,000 30,000
- . 9-3/4% ~2016 50,000 50,000 7% 2031 327.500- -
-: Total first monge0s bonde 854,940 384,440
. Omar Long-Tem Debt -
Posuson Conect Revenue Bonde:
5-3/4% sortes - 1992-2003 14,425 14,82B -
- 2013 83,000
- 9 m eisserlesr -
Adjusesbie reas aortes l 2013 - 87,000
- 9mrete earles ' 2014 - 98,000
' ~
2015- 79,500 ~
Atmreis sertes - -
Revolving credit agreement _1994 _150,000 70,000
= Omer long-term agrsvnent -1993-1996 '35.737 - 85.006 Total omer long-temt debt 2D0,182 497,193 Unemortmed premiurn and cdecount-not ; (4,038) (6)
Securtees duewlmin oneyear- (215) (57.203)
- Totallong-term datz 800.061 57.5 824.424 56.8
' Total Capsemanetari 8 1,478.182_ 100.0 % $ 1.462,286 = 100.0 % ,
L see noue m oonsosdend tnencev asessmona L
i-1, l
28
. . = -- . . .
4 CONSOUDATED STATEMENTS OF COMMON STOCK EQUITY For the Years EtxNd Deosmber31,1991,1990 and 1989 Common Stock Treasury Stock other Shares Paid-in Retained leeued Amount Capita _l E_,arninge_ Sharec_.,_ Amount Total
. (7?xxmerx* ""=r* arwes)
Science January 1,1988 40,900,586 5 636,061 $ 286 $ 171,296 (6,036,799) $ (116,888) $ 691,336 Not inoame 47,493 47,493 Caeh divkiende Cormtvi esock - $1,63 per shers (55,899) (55,899)
Preferred stock (B21) (821)
Purchase of treasury sock (883,500) (17,912) (17,912)
Employee stock plane 7.490 154 154 Salance December 31,1989 40,988,075 636,815 266 162,071 (6,920,299) (134,800) 664,351 Not irmame .
64,184 64,184 Cash dmo ode:
Cormion secek - $1,72 per share (54,296) (54,295)
Preferred seack (821) (821)
Purchase of treasury sock (3,079,800) (64,528) (64,528)
Employee neock piene 8,110 171 5 3.67 _3 _37_ 249 Belence December 31,1900 40,996,186 636,906 270 171.139 (9,996,428) (199,155)- 609,140 Notincome 53,002 53,802 Cash dMdendet Common stock - $1.72 per share (53,322) (53,322)
Preferred seack (821) (821)
Empeoyee seack piens - 1,500. 17 14 ___
31 Science December 31,1981 40.997.746, S 837,003 $ 234, S 170.508,, _(9.906,428) In90j56] L608 S30, t See nosso e a:r=**mwf &ienciaf seassmerns.
l 29 l
CONSOUDATED STATEMENTS OF INCOME TAXES Fortw YearsEncledOnonmuer31 1991
- 1590 1989 (Thousance) income Taxes as Recorded in the Consolidated Statements of income Operaeng expenses-
$ 12.488 5 13,650 $ 4,773 Curren9y payabie - Federal
- Stues 1,723 1,496 49 4,100 942 6,739 Deforted - Federal
- State 3,578 3,966 3,340 3,622 4,582 1,365 trweetment tax credit - Deferral
- Amortzstion (2.651) (2.811) (2.739)
Total 22.876 74,833_ 13.52_7 Other income and deductions:
Curteney p'yeble - Federal (1,475) (4,658) (678)
- Stase (322) (1,324) (49)
Deferred - Federal (4,034) 9 28) (147)
- State . (828) (136) (1 61 frwomimenttaxcredit smortzanon (2B23 (373) (371)
(8.9211 (6.917) (1,2611 Total Totalincome tamos } 15 956_ } 17,916 $ 12,266 Sources of Deferred income Taxes Ax:eierened depreciation S 28,311 & 28,736 0 315t$
DiseHewence of plant costs 1,224 1,224 1,23G Phase-in twenues (Mne Q (7,905) ' p,909 (7,905) .
Unbilled twenues - (1,975) (1,975)
N amoruzanon (11,736) (11,736) (11,736)
Notopensting taxlose - 3,312 (1,243)
Deferred gain on ante-lammahart (Noge 7) 4,248 4.248 4.248 Allemative minimwn taxcredite (9,048) (15,191) (5,460)
Coal contract settlements (Noes @ 1,970 - 8 622 Retail refunds (Mme @ 2,425 4,019 (6.444)
Utigattort (M:ee 10) (4,615) - -
Otner - not 03 8) . ss7) (1,xa)
- Total defened income tusee $ s 4.048 1 9,916 2.s1_o_
Effacen inoame Tax Rees Statutory federalincome tax rate 34 % 34 % 34 %
Add (Deduct) Income tax effecie of:
Accelerased amom of deferred inmme tax credits (15) (12) (17) -
Depreciallon 8 6 10 Stese income taxes, not of federal benefit 4 2- 3 Amorttzstion of Irwomiment lex crsdits (4) (4) (5)
Corporass-owned life Insurance (6) (5) (3)
Other items - not 2 1 (1)
Effectheincome tax rato 23 % 22_% _
21 %
See noaur D conso#dsend Anandal screamentet I
I 30
NOTES 10 CONSOLIDATED FINANCIAL STATDOTS
- 1. Summary of Significant Accounting Policies Principles of Consolidation - The consolidated financial statements include Kansas Gas and Electric Company (the Company) and its 80%-owned subsidiary, CIC Systems, Inc. (CIC). All significant intercompany items and transactions have been eliminated in consolidation.
The Company owns 47% of Wolf Creek Nuclear Operating Corporation (WCNOC),
the operating company for Wolf Creek Generating Station. The Company records its proportionate share of all transactions of WCNOC as it does other jointly-owned facilities (See Note 12).
System of Accounts - The Company is subject to the jurisdiction of the State Corporation Commission of the State of Kansas (KCC) and the Federal Energy Regulatory Commission (FERC) and maintains its accounts in accordance with the Uniform System of Accounts prescribed by these regulatory commissions. As a regulated utility, the accounting principles applied by the Company differ in certain respects from those appi d by a non-regulated business.
Electric Plant - The cost of plant includes contracted work, direct labor and materials, allocable engineering, supervision, general and administrative costs, and allowance for funds used during construction (AFC). /fC in 1991, 1990 and 1989 was immaterial and, therefore, not separately reported in the consolidated statements of income.
Maintenance and repairs of property, and replacements and renewals of items determined to be less than units of property, are charged to operating expenses. The cost of units of property replaced or renewed, plus removal costs, less. salvage, is charged to accumulated depreciation, and the cost of related replacements and renewals is added to electric plant. Betterments are added to electric plant.
Cash %.. _h- Value orf Life Insurance Contracts - The following amounts related to corporate-owned life insurance contracts, primarily with one major insurance company, are recorded on the consolidated balance sheets:
1991 1990 (Mi!ilons)
Cash surrender value of contracts $192.1 $152.7 Borrowings against contracts (85.0) (81.4)
Net $107.1 $ 71.3 Interest expense included in corporate-owned life insurance - net on the consolidated statements of income was $7.3, $7.1 and $6.9 million for 1991, 1990 and 1989, respectively. Management expects to realize increases in cash surrender value of contracts resulting from premiums and investment earnings on a. tax-free basis upon receipt of net proceeds from death benefits under the contracts.
31
l Revenues - Operating revenues include amounts actually billed for services rendered and an accrual of estimated unbilled revenues. Unbilled revenues result from services delivered since the period covered by the latest billings to customers. Unbilled revenues of $23.9 and $22.1 million at December 31, 1991 and 1990, respectively, are recorded as a component of accounts receivable on the balance sheets. Certain amounts of unbilled revenues have t,een sold (See Note 6).
Fuel Costs - The cost of nuclear fuel in process of refinement, conversien, enrichment and fabrication is recorded as an asset at original cost and is amortized to expense based upon the quantity of heat produced for the generation of electricity. The accumulated amortization of nuclear fuel in the reactor at December 31, 1991 and 1990 was $16.1 and $15.6 million, respectively. The Company's rate schedules include a feel adjustment clause (ECA) which pemits current recoveries of fuel costs. See Note 2 regarding a rate order which would discontinue the ECA upon the closing of the merger discussed in Note 11.
Depreciation - For financial reporting purposes, the Company uses the straight-line method to depreciate the original cost of property over its estimated remaining service life. The provision for depreciation stated as a percent of original cost of depreciable property was 3.0% for 1991 and 1990 and 2.9% for 1989.
Income Taxes - The Company adooted Statement of Financial Accounting Standards No. 96, Accountlag for Inc e Taxes (SFAS 96) in 1987. This statement requires the Company to establish deferred tax liabilities or assets, as appropriate, for all temporary differences, and to adjust deferred tax balances to reflect changes in tax rat.es expected to be in effect during the periods in which the temporary differences reverse. The significant temporary differences that give rise to the net accumulated deferred income tax liabilities include accelerated tax deoreciation, AFC, unamortized investment tax credits, deferred gain from sale-leaseback and phase-in revenues. SFAS 96 will be superseded by SFAS 109 issued in February 1992, effective for the Company's year ended December 31, 1993. Management believes that adoption of SFAS 109 should have no significant effect on the Company's financial statements.
In accordance with various rate orders received from the KCC, the Company has not yet collected through rates the amounts necessary to pay a significant portion of the net deferred income tax liabilities. As management believes it is probable that the net future increases in income taxes payable will be recovered from customers through future rates, it has recorded net deferred regulatory assets for the portions of the net deferred income tax liabilities not yet collected through rates. These assets are also a temporary difference for which deferred income. tax liabilities have been provided. At December 31, 1991 and 1990, the net deferred regulatory asset related to income taxes i amounted to $116.6 and $95.4 million, respectively. The rate increases l
necessary to recover these taxes will not be required until periods after the expiration of the Compnny's rate moratorium with the KCC as discussed in Note 11.
Investment Tax Credits - The Tax Reform Act of 1986 repealed investment tax credits. In accordance with KCC requirements, investment tax credits relating to utility property placed into service are deferred when utilized and are being amortized to income over the remaining lives of the related property.
32
Consolidated Statements of Cash Flows - For purposes of the consolidated statemeMs of cash flows, the Company considers highly liquid collsteralized debt instruments, except those classified as short-term investments, purchased with a maturity of three months or less to be cash equivalents.
The amounts of interest (net of amounts capitalized) and income taxes paid for each of the three years in the periods ended December 31, are as follows:
1991 1990 1989 (Thousands)
Interest M $86.427 $91,397 Income taxes $11.350 $14,650 $ 7,500
- 2. Regulatory Iktters Rate Stabilization Plan - In 1988, the KCC issued an order requiring that
! the accrual of phase-in revenues be discontinued effective December 31, 1988.
l Eff?ctive January 1, 1989, the Company began amortizing the phase-in revenue asset on a straight-line basis over 9-1/2 years.
Interim Rate Refund - In 1989, the Company established a reserve which reduced revenues by $8.2 million and increased related interest expense by 50.4 million for a refund of revenues collected subject to refund ordered by the KCC in February 1990. Prior to payment of the refund, the Kansas Court of Appeals agreed with the Com)any that evidence had not been presented to l justify changing a portion of t.1e original increase to interim and reversed the KCC decision. In September 1990,- the Citizens' Utility Ratepayers Board-appealed the Court's ruling to the Kansas Supreme Court; the appeal was denied. Accordingly, in September 1990, the Company reversed the previously l
I recorded reserves; the effect was to increase 1990 revenues by $8.2 million, net income and earnings applicable to comon stock by $5.3 million and earnings per share by $0.17.
Cost of Service Audit Appeal - In addition, the February 1990 KCC order i
required the Company to reduce rates by $8.7 million beginning May 8, 1990.
l The Ccmpany was denied a rehearing by the KCC and lost its request for l judicial review to the Kansas Court of Appeals in September 1990. The Company appealed the Court of Appeals ruling to the Kansas Supreme Court and the United States Supreme Court to review the rate reduction ordered by the KCC in February 1990 and both appeals were denied. In August 1990, the Company filed with the KCC a. request to recognize its peak demand established July 2, 1990 as the basis for eliminating the rate reduction ordered by the KCC from July 2, 1990 forward. In June 1991, the Company filed with the KCC a Motion to Stay the effective date of the KCC order regarding the reduction in rates pending resolution of the Company's Motion to Reopen. In July 1991, the KCC granted the Company's Motion to Reopen the record and ordered a refund of approximately $1.2 million of revenues plus $0.1 million interest for the period May 8, 1990 through July 1, 1990. In September 1991, the KCC ordered the Company to refund (which the Company has done) $5.6 million of revenues plus $0.6 million in interest, for the period July 2, 1990 through January 31, 1991. The Company had previously recorded reserves totalling $10.8 million; however, as the order also made rates permanent, the excess reserves of $3.3 million were reversed in September 1991 (See Note 13).
33
l Refueling Outage Appeal - Also in 1989, the Company established a reserve which reduced revenues by $6.9 million and increased related interest expense by $1.3 million for a refund of fuel costs, incurred and collected in 1987 and 1988, ordered by the KCC in Feoruary 1990. In April 1990, the Kansas Court of Appeals granted a stay allowing the Company to delay the refund. In June 1990, the Court ruled the KCC engaged in retroactive rate making, which is prohibited in Kansas, when it did not calculate the refund according to the terms of the ECA. The Court has remanded this case to the KCC with directions to calculate the refund, if any, based upon the approved tariff. In December 1990, the previously recorded reserves were reversed. The effect was to increase 1990 revenues by $6.9 million, net income and earnings applicable to common stock by $5.0 million ar.d earnings per share by 50.16. In Septemoer 1991, the KCC issued an order closing the docket without a refund.
Coal Contract Settlements - In March 1990, the KCC issued an order allowing the Company to defer its share of a 1989 coal contract settlement with Pittsburg and Midway Coal Mining Company amounting to $22.5 million; this amount is recorded as a deferred regulatory asset in the Company's consolidated balance sheets. The settlement results in the termination of a long-term coal contract. The Company proposed that these costs be recovered ratably through the ECA over the period during which the contract wculd have been in effect. In June 1991, the KCC permitted the Company to recover this settlement as follows: 76% of the settlement plus a return through its ECA over the remaining term of the terminated contract (through 2002), and 24% to be amortized to expense with a deferred return equivalent to the carrying cost of the asset.
In February 1991, the Company paid $8.5 million to settle a coal contract lawsuit with AMAX Coal Company and recorded the payment as a deferred regulatory asset. In July 1991, the KCC a0 proved the recovery of the settlement plus a return equivalent to the carrying cost of the asset, through the ECA over the remaining term of the terminated contract (through 1996).
Storm Damage Recovery - In October 1990, the Company asked the KCC for approval of a plan to recover the cost of damage primarily from the March 13 and June 19, 1990 storms. Approximately $15 million of capital expenditures were incurred. These costs have been included in the Company's electric plant accounts. Other costs of approximately $3 million, net of approximately $1 million expected to be recovered through insurance, were also incurred and were expensed in 1990. In May 1991, the Company amended this request to include the estimated $5 million of capital expenditures associated with an April 1991 storm. In November 1991 and January 1992, the KCC approved the l
l deferral and recovery of the capital expenditures of the 1990 and 1991 storms, respectively, as well as carrying charges thereon. The recovery of othar costs, previously expensed, was denied.
Elimination of the ECA - In January 1992, the Company entered into a
. Stipulation and Agreement with the staff of the KCC to eliminate the ECA l contingent upon the closing of the merger discussed in Note 11. The fuel costs established by this agreement include the costs contemplated by 7
previously issued orders relating to coal contract settlements and storm l damage recovery discussed above. Management expects the final order to be issued by the KCC with no significant changes from this agreement.
t l
l 34
'~
- 3. Short-Tere Borrowings-At December 31,- 1991', the Company had. bank credit arrangements available of $65 million. In_ addition, .the Company has-uncommitted loan participation agreements.. Maximum- short-term borrowings outstanding during 1991 and 1990 were_$126 nillion on June 26, 1991 and $211 million on June 25, 1990.- The weighted: average interest rates, including -fees and the effects of= swap agreements.(See Note 6), were 7.8% and 8.6% for 1991 and 1990, respectively.
l 4.- Cumulative Preferred Stock
.The call ' prices at December 31, 1991 on the 4-1/2%, 4.32% and 4.28%
series preferred stoc.ks were 3110, $101.64 and $101, respectively (See Note 11). The 6mbedded costs of preferred stock at December 31,' 1991, 1990
. and 1989'were 4.44%.
- 5. Long-Ters Incentive Plan During 1989, the Company adopted a_ long tens incentive plan (the plan) providing for- the issuance of perfonnance-shares and stock options for up to 1,500,000. shares of common stock during a period :of ten years. beginning.
January -1, 1989. The plan penuits grants of various awards to qualif.ied employees. During 1990 and-1989, grants for 10,088 and 10,424 performance
. --s hares, respectively, were made-to qualified employees under this plan. No grants were made-.in -1991. The- performance- s1 ares are: issuable to the employees five-years from the grant period. At December 31, 1991, no such shares were issuable. Compensation expense related to the plan was $0.7, $0.1 and 50.1 million during 1991, 1990 and 1989,.respectively.. ,
Stock options granted under the plan are exercisable for a period of nine l l years after the grant year unless the employee's service _ is tenainated.- The following table sets forth changes in options:
- 1991 1990. _.1982 Options January 1 60,290_ .29,751 -
Options granted 34,212 29,751
_ Options exercised ,
(average of 121.35 per share) (327) (3.673)
- Options December 31 g pgj29, 29.ML L
Option price range December 31 $20.81-21.94_ $20.81-21.94 $21.94
- At December:31, 1991,- 1,496,000 shares of common stock are reserved for
.. issuance under the plan. Upon a change of control of the Company,
! participating emplob es will be paid in cash for (1) performance shares. on a l- pro - ratt. 5 asis -for~ the time elapsed from the date of-grant and (ii) stock options tor. aay' excess of fair value of the Company's common stock over the-option price. Pursuant to the merger agreement with The Kansas Power and-Light Company (KPL), no new grants may be made and immediately prior to the merger the plan will be cancelled-(See Note 11).
- 6. Long-Ters Debt Required redemptions and sinking fund payments for 1992 through 1996 for long-term debt are $0.2, $0.2, $150.2, $36.0 and $16.3 million, respectively.
First mortgage bonds may be issued in additional amounts, limited by property, earnings and other provisions of the Company's Mortgage dated April 1, 1940, as supplemented (Mortgage) and prior approval by KPL under the merger agreement described in Note 11. In 1991, the Company refinanced $327.5 million of adjustable rate series )ollution control revenue bonds by issuing
$327.5 million first mortgage )onds at 7%, due 2031. Electric plant is subject to the lien of the Mortgage except for transportation equipment.
The 6.8% series, due 2004, the 6% and 5-7/8% series due 2007 and the 7%
series due 2031 are pledged as collateral for pollution control revenue bonds issued by Kansas municipalities.
The revolving credit agreement, which expires in 1994, provides for borrewings of up to $150 million. This agreement may be extended in one year increments until 1995 and it may be repaid prior to its expiration date without penalty. The weighted average interest rate was 8.4% for 1991 and 10.1% for 1990.
The other long-term agreement, which expires in 1995, contains provisions for both the sale of accounts receivable and unbilled revenues (receivables) and phase-in revenues up to a tctal of $180 million. Amounts related to receivables are accounted for as sales while those related to phase-in revenues are accounted for as collateralized borrowings. Additional receivables are continually sold to replace those collected. At December 31, 1991 and 1990, outstanding receivables amounting to $58.3 and $52.2 million, respectively, are considered sold under the agreement. The credit risk associated with the sale of customer accounts receivable is considered minimal. The weighted average interest rate on this agreement was 7.8% for 1991 and 8.4% for 1990. At December 31, 1991, an additional $54.4 million was available under the agreement.
l At December 31, 1991, the Company had outstanding interest rate swap
- agreements with financial institutions, having a total notional principal amount of $190 million associated with short-term debt, the revolving credit agreement and borrowings collateralized by phase-in revenues. Under these swap agreements, the Company will pay the counter parties interest at a fixed rete l and the counter parties will pay the Company interest at a variable rate based on the London Interbank Offered Rate (LIBOR) at six month increments. The l
fixed rates payable under these swap agreements range from 7.6% to 8.4%.
l These swap agreements terminate in increments of $45 million in 1992, $130 million in 1993 and $15 million in 1994. The Company is. exposed to credit loss in the event of nonperfonnance by the other parties to the interest rate swap agreements. However, the Company does not anticipate nonperformance by the counterparties. At December 31, 1991, 1990 and 1989, the amount recognized in the consolidated financial statements for interest rate swap agreements was immaterial.
The embedded costs, including effects of the swap agreements, of long-term debt at December 31, 1991, 1990 and 1989 were 7.9%, 8.6% and 8.3%,
respectively.
36
- 7. Sale-teaseback of La Cygne 2 In 1987, the Company sold and leased back its 50% undivided interest in La Cygne 2. The lease has an initial term of 29 years, with various options to renew the lease or repurchase the 50% undivided interest. The Company remains responsible for its share of operation and maintenance costs, and other related operating costs of La Cygne 2. The Company has determined the lease is an operating lease for financial reporting purposes.
The gain of approximately $322 million realized at the date of the sale has been deferred for financial reporting purposes, and is being amortized over the initial lease term in proportion to the related lease expense. The Company's 1991, 1990 and 1989 laase expense, net of amortization of the deferred gain, is approximately $30 million.
Future minimum annual lease payments required under the a~ eement are approximately $41.9 million for each year through 1995, $41.7 million in 1996 and $971 million over the remainder of the contract.
- 8. Benefit Plans The Company has noncontributory, defir.ed benefit pension plans for all employees. Plan benefits are generally based on years of service and the employee's highest aggregate compensation in five consecutive years of the final ten years of service. Due to the present funding status of the plans, the Company's current funding policy is to contribute the minimum amount required by federal law. .
Net periodic pension cost for 1991, 1990 and 1989 included the following components:
1991 1990 1989 (Millions)
Service cost -- benefits earned during period $ 3.1 $ 3.5 $ 3.2 Interest cost on projected benefit obligation 7.4 6.5 6.2 Actual return on assets (14.0) 1.1 (19.8)
Net amortization and deferral 5.4 (9.7) 12.6 Effect of curtailment - 1.7 -
Net periodic pension cost $_ 1.9 $ 3.1 $ 2.2 The curtailment adjustment results from the voluntary early retrcement program offered during 1990 as discussed below.
The following table sets forth the plans' funded status at November 30, 1991 and 1990 (the. plan years) and a reconciliation of such status to the December 31,1991- and 1990 consolidated financial statements:
37
Actuarici present value at November 30:
,,Jjh.it, 1990 (MiiIlons)
Yested benefit obligation $ 70.1 $ 69.2 Accumulated benefit obligation $ 74.5 $ 73.4 Fair value of plan assets at November 30 (prinripally comon stock of public companies and U.S. goverranent securities) $106.4 $ 98.7 Projected benefit obligation at Mc,vember 30 (96.9) (91.3)
Plan assets in excess of projected benefit obligation at November 30 9.5 7.4 Unrecognized net gain from g n experience different from that assumed (24.9) (21.2)
Prior service cost not yet recognized in net periodic pension cost 9.2 9.5 Recognition of net asset at u suary 1, 1986 over 18 years (2.2} (2.4)
Contribution accrued for December (0.1, (0.2)
Pension liability recognized in the consolidated balance sheets at December 31 $(8.5) $ (6,9)
The following were used in the determination of actuarial present values of *.he projected benefit obligations at November 30, 1991 and 1990:
Weighted average discoJnt rate 8.0-8,5%
Rate of increase in future compensation 6.0%
Long-term rate of return on assets 8.0-8.5%
During 1990, the Board of Directcrs approved a voluntary early reti ement program for all employees age 50 or over with at least 5 years of s vvice.
The program consisted of an additional 5 years of accredited servh.e for purposes of the Company's retirement plan, and an incentive payment based on salary and years of service. The incentive payments were made from trust assets of the Company's retirement plan. Of the 275 employees eligible for the program, 92 employees, representing 7% of the Companu's work force, elected to retire on or before the November 1, 1990 deadline. The effect of the program was to increase 1990 pension costs by $1.7 million. This amount, along with related income tax benefits of $0.7 million, has been recorded in the Company 1 1990 consolidated statement of income. In January 1992, the Company announced a saecial early retirement and voluntary separation program for all employees wit 1 at least 10 years of service. The effects of this plan cannot be measured until the election process by employees is completed.
The Cowany sponsors defined contribution 31ans for all employees. The Company's matching contribution is based on tw. Company's performance during the prior year and the level of employee contributions. The total expense for the plans was $2.0, $1.8 and $4.2 inillion in 1991, 1990 and 1989, respectively.
38 )
The Financial Accounting Etandards Board has issued Statement of Financial Accounting Standards No. 106, anployers* Accounting for Postretiiement Benefits 01her Than Pensions. The Company plans to adopt this statement in 1993. This statement will rec uire accrual of postretirement benefits during the years an employee provicas services. The costs of these benefits, which generally relate to health care benefits for early retirees up to age 65, are currentl3 expensed on a pay-as-you-go basis. These costs were
$2.1, $1.3 and $1.2 million in 1991, 1990 and 1989, respectively. The increase in 1991 was caused by the voluntary early retirement program in 1990 discussed r.bove. The impact of this new standard has not been fully det emirad, but: except for the effect of the recently announced special retirement and voluntary separation program discussed above, management estimates the change will not result in significantly greater expense than recognized in 1991 for these benefits.
- 9. Income Taxes See Consolidated Statements of Income Taxes.
At December 31, 1991, the Company has unused investinent tay credits of apprra'mately $15.8 million available for carryforward to future years which, if not utilizeo will expire in the years 2000 through 2002 (See "ote 10).
These credits have been applied in detemining the Company's net deferred income tax liability and corresponding deferred regulatory revenue asset at December 31, 1991. In addition, the Company has alternative minimum tax credits, which carryforward without ex)iration, of $40.2 million which may be used to offset future regular tax to t1e extent the regular tax exceeds the alternative minimum tax.
- 10. Commitments and Contingencies Spent kclear Fuel Disposal - Under the Nuclear Waste Policy Act of 1982, the U.S. Department of Energy (00E) is responsible for the ultimate storage and disposal of spent nuclear fuel removed from nuclear reactors. Under a i contract with the DOE for disposal of spent nuclear fuel, the Company pays a quarterly fee to DOE of one mill per kilowatthour on net nuclear generation.
Such fees were $2.8, $3.7 and $4.6 million for 1991, 1990 and 1989, respectively. These fees are included in nuclear fuel expense wnich in currently recovered through the fuel adjustment clause (See Note 2).
Decummissioning - The Company's share of Wolf Creek Generating Station (Wolf Creek) decomuissioning costs is estimated to be approximate y $97 million in 1988 dollars. Decomissioning costs are being charged to operating expenses. Electric rates charged to customers provide for recovery of these decomissioning costs over the life of Wolf Creek. Amounts so collected from customers are deposited in an external trust fund and will be used solely for the phys' cal decomissioning of the plant. et December 31, 1991 and 1990,
$6.0 and $4.9 million, respectively, were on deposit in the decomissioning fund. In March 1990, thu KCC issued an order authorizing contributien4 to the decomissioning trust at levels which management believes meet the future decomissioning requirements. In July 1990, WCNOC, on behalf of the owners of Wolf Creek, filed a certification of financial assurance on decomission:ng funding with the Nuclear Regulatcry Comission (NRC).
39
The Company carries $131 million in prematute decomissioning insurance in the event of a shortfall inofthe trust fund. The insurance coverage has several restrictions. One these is that it can only be used if Wolf Creek incurs an accident exceeding $500 million in expenses to safely stabilize the reactor, to decontaminate the reactor and reactor station site in accordance with a plan approved by the NRC and to pay for on-site property damages. If the amount designated as decomissioning insurance is needed to implement the NRC-ap) roved plar, for stabilization and decontamination, it would not be
' availa)1e for decomissioning purposes.
Nuclear Insurance - The Price-Anderson Act limits the combined public liability of the owners of 115 nuclear power plants to $7.8 billion for a single nuclear incident. The Wolf Creek owners (Owners) have purchased the maximum available private insurance of $200 million and the balance is provided by an assessment plan mandated by the NRC. Under this plan, the Owners are jointly and severally subject to a retrospective assessment of up to $65.2 million ($31.1 million, Company's share) in the event there is a nuclear incident involving cny of the nation's licensed reactors. This assessment is subjrlt to an inflation adjustment based on the Consumer Price Index. There is a limitation of $10 million ($4.7 million, Company's shara) in retrospective assessments per incident per year.
The Owners carry docontamination liability, )remature decomissioning liability and property damage irsurance for Wolf Cree ( totaling approximately
$2.5 billion. This insurance is provided by a combination of " nuclear insurance pools" and Nuclear Electric Insurance Limited (NEIL). The Owners also carry additional insurance with NEIL to cover the costs of replacement power and other extra expenses incurred during a prolonged outage resulting from accidental property damage at Wolf Creek. If losses incurred at any of the nuclear plants insured under the NEIL policies exceed premiums, reserves and other NEIL resources, the Cnmpany may be subject to retrospective assessments of approximately $5 million per year.
There can be no assurance that all potential losses or liabilities will be insurable or that the amount of insurance will be sufficient to cover l them. Any substantial losses not covered by insurance could have a material adverse effect on the Company's financial condition.
Clean Air Act - The Clean Air Act Amendments of 1990 (the Act) require a l two-phase reduction in sulfur dioxide emissions effective in 1995 and 2000 and a rtiduction of nitrous oxide and toxic emissions effective in 2000. Ail of I
the Company's generating units are generally in compliance with the sulfur dioxide requirement of the Act. Continuous emission monitors have been l installed on all generating units except at the Company's gas-fired generating plants. The ctat to install such monitors by January 1, 1995 in these plants
- will not be significant. The nitrous oxide and toxic limits, which were not
, set in the law, will be specified in future EPA regulations. Until such time
! as these regulations are prescribed, management cannot predict the impact on its financial condition.
Litigation - In February 1987, Chevron U.S.A., Inc. (Chevrco) filed an action in the United States District Court for the District of Kansas against Kansas Gas Supply (KGS), a natural gas supplier of the Company, alleging a l
failure to purchase contracted amounts of natural gas and to pay price increases. In January 1988, KGS filed a third party complaint against the 40
Company seeking recovery from the Company for any damages which Chevron may recover from KGS. In July 1989, Barbara 011 Company (Barbara) and Pickrell ,
Drilling Company (Pickrell) filed a similar action in the Barber County District Court against KGS. In September 1989, KGS filed a third party complaint against the Company in this additional action. In both cases, KGS alleges that it had obligated itself to purchase gas for the benefit of the Company, that the Company's dealing with it were not consistent with reasonable standsrds of fair dealing in the trade, that the Company acted in bad faith and that the Company's actions constituted fraud. KGS further alleges it was acting as an agent of the Company when contracting for gas supplies. Management has denied the allegations of KGS and believes that it has, at all times, fulfilled its contractual obligations with respect to the supplier, has acted in good faith and that KGS was not an agent of the Company.
KGS has settled the claims of Chevron, Barbara and Pickrell, and is seeking recovery of such settlement costs (approximately $40 million) from the Company. On February 20, 1991, following a two-week jury trial of the third party action against the Company regarding Barbara and Pickrell, a $5.3 million verdict (one-half of anmnt claimed) was returned against the Company in favor of KGS. On February 2o, 1992, the Kansas Supreme Court affirmed the February 1991 judgement against the Company regarding Barbara and pickrell.
The Company is reviewing its options with respect to the decision. In the opinion of management, adequate provision has been made for these claims.
The Company is involved in various other legal and environmental proceedings. While the 'esolut Sn of these matters may have an additional impact on the financial resul s of the year in which the matters are resolved, management believes that their ultirnate dispositions will not have a material adverse effect upon the business or financial position of the Company.
A provision of $12 million has been recorded in miscellaneous expense on the 1991 consolidated statement of income with respect to these matters.
federal Income Taxes - During 1991, the Internal Revenue Service CRS) completed an examination of the Company's federal income tax returns for the years 1985 through 1987. The Company has received Notices of Proposed Adjustment to be included in the examination report. The Company is continuing to provide information te the IRS which may modify or reverse the proposed adjustments. The most significant proposed adjustments reduce the depreciable basis of certain assets and investment tax credits generated.
Management believes there are significant questions regarding the theory, computations and sampling techniques used by the IRS to arrive at its proposed adjustments, and also believes any additional taxes or loss of investment tax credits will not be material to the Company's financial position.
Other Investments - The Company routinely purchased short-term investment grade comercial paper for special deposit interest accounts associated with l tax-exempt pollution control bonds. On February 1, 1990, the Company purchased $6.6 million of Orexel Burnham Lambert Group Inc.
(Drexel) commercial paper. On February 13, 1990, Orexel filed for bankruptcy. On March 1, 1990, the Company was required to substitute similar amounts of investments in the special deposit accounts. The Company continually monitors
( and evaluates the information received in the bankruptcy proceeding. In the 41
third quarter of 1990, additional claims being filed indicated full recovery would be unlikely; accordingly, $1.7 million of the investment was written off. Due to the number and complexity of claims filed in the fourth qt wter of 1990 which indicate lengthy litigation, the Company determined that the investment has been permanently impaired and, accordingly, the remainder of the investment was written off. These write-offs are included in miscellaneous expense in the 1990 consolidated statement of income.
Fuel Cassitzents - To sup)1y a portion of the fuel requirements for its generating plants, the Company las entered into various comitments to obtain nuclear fuel, coal and natural gas. Some of these contracts contain provisions for price escalation and minimum purchase comitments . At December 31, 1991, WCNOC's nuclear fuel comitments (Company's share) were approximately $23.5 million for uranium concentrates through 1995 and 1997,
$144.2 million for enrichment thro @ 1996 and 2014 and $51.9 million for fabrication through 2014. At December 31, 1991, the Company's coal and natural gas contract comitments in 1991 dollars under the remaining term of the contracts are $689 and $38.2 million, respectively. The coal contracts expire in 1992, 1993 and 2013 and the natural gas contract, expire in 1995.
In the normal course of business, additional comitments will be made to assure adequate fuel supplies.
- 11. Merger Agreement In October 1990, the Company's Board of Directors approved an Agreement and Plan of Merger (the Merger Agreement) with The Kansas Power and Light Company (KPL), a Kansas corporation and KCA Corporation (KCA), a wholly-owned subsidiary of KPL, providing for the merger of the Company with and into KCA.
The Company, KPL and KCA subsequently executed the Merger Agreement.
Following the merger KCA will change its name to Kansas Gas and Electric Company.
Pursuant to the Merger Agreement, 56.25% of the shares of the Company's Comon Stock outstanding at the merger date will be converted into the right to receive KPL Common Stock at a conversion ratio (defined as the number of shares of KPL Comon Stock issued for each share of the Company's Comon Stock) equal to $32 divided by the Average KPL Price (defined as the average of the closing prices of the KPL Comon Stock as reported on the New York Stock Exchange Composite Tape on each of the fifteen consecutive trading days preceding the fifth trading day prior to the consumation of the merger);
L provided that the conversion ratio will become fixed at 1.6 shares when the Average KPL Price falls below $20 per share and 1.347 shares when the Average l KPL Price rises above $23,75 per share. The amount of cash to be paid in the merger will be $434 million, so if holders of more than 43.75% of the Company's comon stock elect to receive cash, shareholders electing to receive cash will also receive KPL comon stock. Likewise, if holders of more than
. 56.25% of tne Company's comon stock elect to receive KPL comon stock, l shareholdt~, electing to receive KPL comon stock will also receive cash.
Preferred shartholders of the Company will receive in cash plus accumulated dividends, if any, $110 for each share of 4-1/2% Preferred Stock; $101.64 for each share of 4.32% Preferred Stock; and $101 for each share of 4.28%
Preferred Stock.
l 1
l 42 l
The merger was approved by the shareholders of the Company and additional KPL comon shares were authorized by KPL shareholders at special meetings in March 1991. Approvals of the merger were received from the FERC and Missouri Public Service Comission in September 1991, the KCC and NRC in November 1991 and the Securities and Exchange Comission in February 1992. The merger is expected to be consumated in March 1992. Significant conditions affecting the Company, among cchers, imposed by the KCC in its order on the merger ares e Rates are ftozen until August 1995.
- Refunds to customers were ordered totalling $32 million to the combined companies' customers in order to share the merger-related cost savings with customers during the rate moratorium.
e A mechanism was approved to share equally, between the combined companies and their customers, the cost savings generated in the merger in excess of the revenue ~ /
- ement needed to allow recovery of the amortization of a porti o oi % equisition adjustment, including income tax, paid < Jr thi wan, comon stock up to
$29.50 per share on a dollat Y tr W .e.1 s from savings generated. The order provides y ay e u a tion period of 40 years comencirg in 1995 for the acquisition avuste:ent.
O A separate proceeding to eliminate the EC', is requirsd (See Note 2).
Other operation expenses in the consolidated statement of income for 1991 and 1990 include $3.8 and $6.8 million, respectively, for expenses related to the Company's response to the unsolicited tender offer by Kansas City Power &
Light Company (KCPL) and the merger with KPL.
- 12. Joint Ownership of Utility Plants Company's Ownership at December 31. 1991 In-Service Invest- Accumulated llet Per-Dates ment Deoreciation Dtd cent (Mi!ilons)
La Cygne 1(a) June 1973 3 128 $ 81 342 50 Jeffrey 1 July 1978 65 26 133 20 Jeffrey 2 May 1980 64 22 135 20 Jeffrey 3 May 1983 91 26 139 20 Wolf Creek 1(c) Sept 1985 1,359 219 533 47 (a) Jointly owned with KCPL.
(b) Jointly owned with KPL and UtiliCorp United, Inc.
(c) Jointly owned with KCPL and Kansas Electric Power Cooperative Inc.
Amounts and capacity represent the Company's share and have been financed by the Company. The Company's share of operating expenses of the plants in service above, as well as such expenses for a 50% undivided interest in La Cygne 2 (representing 320 Kd capacity) sold and leased back to the Company 43
in 1987, are included in operating expenses in the consolidated statements of income. The Company's share of other transactions associated with the plants is included in the appropriate classification in the Company's consolidated financial statements.
- 13. QuarterlyFinancialStatistics(Unaudited)
(Thousands, except per share amants) 1991 4th Qtr. 3rd Qir. 2nd Qtr. 1st Qtr7 Operating Revenues $136,983 $184,807 $148,198 $124,980 Operating Income 11,865 53,585 35,260 25,373 Net Income (Loss) (11,292) 36,592 19,474 8,828 Earnings (Loss) Applicable to Common Stock (11,497) 36,387 19,268 8,623 Average Shares Outstanding 31,001 31,001 31,001 31,001 Earnings (Loss) Per Share $ (0.37) $ 1.17 $ 0.62 $ 0.28 1990 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
Operating Revenues $120,372 $179,688 $139,804 5146,777 Operating Income 20,565 52,947 30,529 35,245 Net Income 802 33,162 12,164 18,056 Earnings Applicable to Comon Stock 597 32,957 11,958 17,851 Average Shares Outstanding 30,999 31,012 31,685 33,025 Earnings Per Share $ 0.02 $ 1.06 $ 0.38 $ 0.54 The Company's operating revenues and interest charges for the fir t and second quarters of 1991 have been restated from amounts previously reported to reflect the September 1991 KCC order discussed in Note 2. The effect was to increase first and second quarter revenues by $1.3 and $2.0 million,
, respectively. Net income and earnings applicable to comon stock increased by l $0.8 and $1.2 million, respectively, and earnings per share increased by 50.03 and $0.04 for the first and second quarters, respectively.
l the Compan for variousDuringthefourthquarterof1991[SeeNote10)yrecordedaprovisionNet claims and legal matters .
income and applicable to common stock decreased by $7.4 million or 50.24 per share.
The Company's operating revenues for the first quarter of 1990 include
$15.2 million of 1969 revenues due to the reversal in 1990 of refunds previously ordered by the KCC relating to an interim rate refund and a refund of fuel costs incurred during a refueling outage. Related interest expense reversals amounted to $1.6 million. The effect increased net income and earnings applicable to comon stock by $10.3 million or $0.31 per share in the first quarter of 1990.
During the fourth quarter of 1990, the Compan its remaining investment in Drexel comercial paper (See Note 10)y . Hetwrote offand earnings income applicable to comon stock decreased by $3.1 million or 50.10 per share.
44
i The Company's business is subject to seasonal fluctuations with the peak
)eriod occurring during the summer months. Approximately 30% of the Company's cilowatt hour sales occur during the third quarter. Accordingly, earnings infonnation for any three-month period should not be considered as a basis for estimating results of operations for a full year.
i t
Market Prices and Dividend Rates of Common Stock tah/ Law Market Price Dividends Common- n 3 3 g 3
. First Quarter $27-5/8 $25-3/8 $23-3/4 $20-1/2 $.43 $.43 Second Quarter 28-1/2 26-1/2 21-1/2 20-1/8 .43 .43 Third Quarter 32 27-1/2 25-7/8 19-5/8 .43 .43 Fourth Quarter 34-1/8 31-3/8 27-3/4 23-7/8 .43 .43 The Company had 26,160 common stockholders as of December 31, 1991.
3 f
45
- . - - . -_ - .- - . - - - _ - . . . .-- .._ - - _ - - - . =. - .. - - .. _ ._
,I SCHEDULE V ELECTRIC PLANT PPOPERTY BALANCE AT ET TRANEFERS, BALANCE BEGINNING ADDmONS MCLASS4- AT END
, CLASSIFCAT10N OF PEROD AT COS7 NTIEMENTS FCATIONS OF PERIOD W
For the yeet ended December 31,1991 Electrto Plant in SeMee Producson - Stearn S 450,753 $ 13,748 $ 1.300 $ (1) $ 443,198 Producson - Nuclear 1,383,312 11,032 15,916 1,358.428 Trenamismon 208,705 8,358 1,129 (4) 213,928 Dlertbuton 340,458 19,205 2.178 357,486 Generaf $8,363 5,288 1,342 (2) 62,295 Electric plant leased e omers 6.St0.,, _
4_ 6,964_
Total electrte plant in servtos 2,4 3 ,981 56,838 21,806 (3) 2,462,319 Electric plant held for future use 15,370 88 28 3 15,433 Construccon wortt in progrees - not 14,790 (1,148) 13,612 Nuciens fuel 28.152. 19.782_, 5.203- 42JJ1 _
Total electric piant i 2.488.848 8 74.348_ ) 27,006_ $ - $_2,534,096_
For the year ended December 31,1980 Elecsto Plant in Servios Produallon - Sesam 8 448,782 8 3,003 $ 1,025 $ (7) $ 450,753 Producson - Nucieer 1,358,306 6,737 1,731 1,363,312 Transmiselon 194,746 16,308 2,340 208,705 Distributon 325,157 18,073 2.772 340,458 General 48,153 12.222 2,022 58.353 Elecinc plant lemmed to others 6,974 8 ( 6 980_
Total elecyte pient in servloe 2,382.118 56,361 9,901 (7) 2,428,561 Electric plant held for future use 15,300 6 7 15.370 Construction wortt in progrees - r:et 13,181 1,57 9 14,760 Nucteer fuel 35,828_ 4,838 - 12.310 28,152 Total electric plant 5 2.446,294 }_,6%796_ $ 22.2_17_ $ -
$_2M843, For the year ended December 31,1980 Electric Plant in SeMoe Producson - Steam $ - ~ 2,172 8 8,341 $ 1,731 $ 448,782 -
Producson - Nucteer 1,356,048 4,677 91 $ (1,325) 1,358,306 Trenomiselon 191,802 1,801 150 1,293 1E4,746 Distribution 311,564 16,512 2,907 (2) 325,157 General 43,032 5,896 802 25 48,153 Electric plantleased 2 omers 6572_ _ __,
2 62 9_74, Totalelectic plantin service 2,350,577 37,235 5,6*' (7) 2,382.118 Electric piant held for future use 15,468 (104) 1 6 15,389 Constructiert woric in progrees - not 10,401 2,780 13,181 Nuoleer fuel 18,761. 16.886, 35.628 Total electric plant J 2.306.207 $ $6,776 $ S,688 $ (1) $_ _ 2,446,29_4 46
SCHEDULE W ACCUMULATED PROVISION FOR DEPRECIAT10N AND AMORTIZAT)ON OF ELECTRIC PLANT PROPERTY ADDITIONS BALANCE AT CHARGED TO EW.ANCE BEGINNING COSTS AND OTHER AT END CLASP #iCA110N OF PERIOD EXPENSES FETIFEMENTS CHANGES OF PERIOD (TrousencW For the year ended December 31,1991 Electric Plant in Service Prodtetton - Stoern S 212,421 8 17,305 $ 1,207 $ 19 (f) E 228,538 Productbn - Nuc!eer 199,938 35,480 18.087 219,311 Transmisebn 85,483 5,107 1,21 5 89,355 Distribunon 104,043 10,388 2,478 111,981 General 21,582 4,127 1,278 572 (4 25,003 Electric plant leased e others a01= 174_ 1.085_
Total electric plantin sorwoo 804,338 72,589 22,285 501 655,233 Electric plant held for future use 8,841 29 (19) 8,733 Nucteer fuel 15 2 8E 5.728_ 5.203 16.132 Total electric piani $_ _82sJas_ $ 78 29,7 $ 1 27.487_ b 572, f_6a0g For the year ended December 31,1990 Electric Plant in Servtos P:oductbn - Steam $ 196,538 $ 10,983 $ 1,100 $ 212,421 Production - Nuclear t06,027 35,459 1,548 199.938 Transmienion %),075 4,836 2,450 65,463 Distrentbn r)f,094 9,921 2,949 $ (23) 104,043 General 10,166 3,539 1,852 730 @ 21,582 Eler% plant leased e others 719 171 2 89_1_,
f oiel elecirto pt,1nt in service 542,618 70,914 9,901 707 604,333 Electric plant he6d for future use 8,847 8 8.841 Nuclear fuel 19,915_ 8.002_ 12.310 15.607 Total elecirte plant 5 571,380__ $ 78,916 $ 22,217_ $ 707 }_62E86_
l For the year ended December 31,1989 Electric Plant in Servtoe Productun - Steam $ 181,617 $ 16,005 $ 1,887 $ 213 (f) $ 196,538 Producson - Nuclear 130,899 35,334 63 (143) 166,027 I hansmiencn 58,496 4,604 140 115 63,075 l Distributbn 90,715 9,467 3,108 97,094 General 16,673 2,647 751 $96 @ 19,165 l
Electric plant leaser!3 others 719 546_ 173 Total e6ectric piern in service 478,946 68,850 5,969 781 542.618 Electric plant he6d for future use 8,641 6 8.847 Nuclear fust 9,501 10,324 19,915 Total e6ectnc plant } 497.378_ $ 79,174 } _ __5959_
m $ 787, 5 571,38 _0 l Abase (f) incluttee depreciadort d Unt! traers charged D IUnisAx:k and albcated off me basis dIbelissued M Includee 06fa a4.hi d ki.aysiaikai and pomer-operated equtpment charged U cleottog axotsits Arx1 albcuted or1 the basie duse dequimucrt.
47
SDHEDULE Vilt RESERVES
~
ADDmONS DEDUCTIONS SAUINCE AT CHARGdD TO CHARGED TO BALANCE SEGlNNING COSTS AND OTHER AT END DESCRIPTION 02 PERIOD EXPENSES ACCOUNTS (Note f) OF PERIOD (Thousewe)
For the year ended Decomter 31,1991
, Reserves, deducted from reisted assete on CorwmM Baience Sheet Accumuisted prwtelort for f __,_.1,9.Z9, 3,574 ) $ _ g,875, 1 1,783 unoollectible secounts f 3_
Reserves other then thces deducted from assets on cow 8elance Sheet injuttes and damages (Noas @ . $ 1.088_ $ .. _1 J_1.)_ f 99, $ 12 7_09,, ) 1,189_
For the year unded December 31,1990 Reserves, deducted from reisted essete on CW Betance Sheet Accumulated provision for ure ecoounte $ 802_ S 2.675_ $ (in S 2,381 1 1.079 Roemves othw then thoes deducind tmm assets on Connolldened Selance Sheet injuries and damages (Note @ $ 1,375_ $ 1,482_ 5 89 $ 1,863_ $ 1,083, For the year ended December 31,1999 Reserves, deducted from related essets on Cor=he Belanos Sheet Accumuleled prmtsion for -
i uncdAm accounte 1 745_ }_. 1.876_ $ (27) } 13 $_ 002 Reserves other then those dark e'ad frorn aseele on Corm Selance Sheet I
injuries and deraeges (Mate # $ 1,224 8 '2,295_ $_ ._ 81 $ 2,225_ $ _1,375; Notes (f) Deducebne ham teesnee topressor Jasone or auponses fbr whdt the insparWe iseenee nero cnpated. In the caos d the
(-
i accumulatedproMleian Jbr N accourne, aud; e revne me toduced by recoverise d amounts prewously wrtften c#.
I
($ infurise and damages tosene Je tarowded fo abecr0 appropulser sapenses arxf the seemeled cost dsofdhg clatins. Deductions nom the tasone Mobole hourance premiume andpe) ment #oleime andrefered esponses.
l 148
a Schedule IX SHORT-TERM BORROWINGS WAR END ONLY WEIGHTED AVERAGE MA)0 MUM AVERAGE AVERAGE
- CATECORY OF INTETEST AMOUNT AMOUNT- INTEFEST RATE SHORT-lERM YEAR END RATE OlfTSTANDiNG OUTSTANDING DURING YEAR SOMOWINGS BNANCE (PWW f) DURNG YEAR DURNG YEAR (Abw a M
For the year onded December 31,1991 Amount Qgle Payable to Banks $ .. 372800_ g% 5 120M 6/28 5_ 83,500, g%
For the year ended December 31,1900 Ammnt De
- Pwyable to Banks $ 30.000. - 9.1 % $ 211,000_ 6/25 } 120 293,, _8 6_ ,%
For the year ended December 31,1900 An'ount De i
PaysDie 10 Banks $ 141 @ _ 8.9 % } 178R 6A)2 } 119 100 R%
Abese (f) ocynpuendushg to aseed annusf herestinns atper anct a W e av beimons ovmemamp ar)eer eM (Q Eqttment e avwege denyhavent, bdudhg M enpmand n a Mpear cMood by tw asonage pnncigw R
I t
49 i'
. - - _ _ - . - . = . - - . _ . - - . . . __ __ _ - _ _
ITEM 9. CHAIEES IN _AlW DISAGtEEMNTS WITH ACCOUNTANTS ON ACCOUNTING AfW FINANCIAL DISCLOSURE I None l PART III ITEM 10. DIRECTORS Als EXECUTIVE OFFICERS OF THE REGISTRANT Set forth below is information regarding Directors of the Company. See Item 4 for Executive Officers information.
A Common Stock Business Experience Since Director Beneficially 1987 And Directorships Continuously As of Name Other Than The Company Ace Since March _27.1992 Frank J. Becker Personal Investments since 56 1981 4,019 (a)(d)(e)(h)(i) September 1989, and prior to (2) that Chairman of the Board and Chief Executive Officer, BeckerCorporation(Truck Transportation - Bulk Connon Carrier)
Directorships BANK IV Butler County, N.A.
Great-West Life & Annuity Insurance Co.
Glenn Biggs Personal Investments since 58 1986 200 (a)(e)(j) July 1989, and prior to that Chairman of the Board and Chief Executive Officer of Gill Companies (Financial Services), May 1987 to July 1989 Directorships Central and South West Corporation Diamond Shamrock Southwestern Bancorp, Inc.
Wilson K. Cadman Chairman of the Board and 64 1978 24,439 l (b)(d)(h) and President of the_ Company (2)(3)
Directorships BANK IV Wichita, N.A.
l 50
A Common Stock Business Experience Since Director Beneficially 1987 And Directorships Continuously As of i Name Ot.k;- Than The C-any Ace Since March 27.199J C. Q. Chandler Chairman of the Board, 65 1974 1,000 (b)(d)(g)(h)(i) First National Bank in (2)
Wichita '
Directorships First Bancorp of Kansas Robert T. Crain Owner, Crain Realty Co., 66 1981 2,060 (a)(f)(g) Fort Scott, Kansas (1)
Vice President and General 64 1970 11,562 Ralp(h (b)h)(1)Foster Counsel of the Company (1)(3)
Directorships Citizens National Bank Donald A. Corporate General Manager 58 1980 500 Johnston of Maupintour, Inc., (1)
-(a)(f)(g) Lawrence, Kansas (Escorted Tours and Travel)
Glenn L. Koester Retired Vice President - 66 1986 8,522 (c) Nuclear of the Company (1)(3)
Russell W. Chairman and Chief Executive 59 1982 1,000 Meyer, Jr. Officer, Cessna Aircraft (2)
(a)(d)(h) Company Directorships Fourth Financial Corporation James J. Noone Attorney and retired 71 1986 150 (c)(j) Administrative Judge for (1) the District Court of Sedgwick County, Kansas 4
Marjorie I. Consultant, Armstrong 67 1980 1,517 Setter Creative Services, Inc.
l (a)(i) (since June 1991, L
Consultant, Stephan Advertising; (March 1990 to June 1991)andpriortothat President Setter & Assoc., Inc.
L (Advertisin Relations)g-andPublic 1
l L 51
l i l
l A Commeon Stock .
Business Experience Since Director Beneficially 1987 And Directorships Continuously As of ;
Nane Other Than The Company Ace Since March 27,1992 -
Donald C. Slawson Chairman of the Board and 58 1983 0 :
(c)(e)(h) President, Slawson Companies, a group of privately owned . ,
companies Directorships First Bancorp of Kansas i Security Benefit Life Insurance Company Security Benefit Group, i Inc.
Newton C. Smith Physician and Surgeon, 70 1985 6,000 :
(c)(g) Arkansas City, Kansas (1)
All Directors and Executive Officers as a group 99,538 (3)
(a) Term expires 1992 (b) Term expires 1993 J'
(c) Term expires 1994 (d) Member of the Executive Comittee, of wh'ich Mr. Cadman is Chairman.
(e)- Member of the Audit Connittee of which Mr. Becker is Chairman. The Audit Committee has responsibility for the investigation and review of the financial affairs of the Company and its relations with independent accountants.
(f) Member of the Compensation and Benefit Committee, of which Mr.
Johnston is Chainnan. The Compensation and Benefit Comittee reviews and reconnends to the Board of Directors the annual salary of the- .-
executive officers of the Company and employee benefits.
(g) Member of the Nomit ating Connittee, of which Mr. Chandler is Chairman. The Nominating Comittee meets primarily to review and screen all recomendations submitted to it and to select and recomend potential candidates to fill vacancies that occur on the Feard of Dir6ctors. The Comittee, in recomending candidates for election as Directors, endeaves to locate candidates for Board '
membership who have attained a prominent position in their field of endeavor - ud whose br3kgrounds indicate that they have -broad knowleoge and experience and the ability to exercise soutd business l
i 52
judgment. The Comittee will consider nominees recomended by shareholders for election as Directors. The names of such nominees, together with the nominees' qualifications and consent to be considered as a nominee, should be sent to the Secretary of the Company.
(h) Member of the Planning Comittee, of which Mr. Cadman is Chairman.
The Planning Comittee reviews and considers the long term goals and objectives of the Company with management of the Company.
(i) Member of the Shareholder Relations Committee, of which Ms. Setter is Chairman. The Shareholder Relations Comittee considers and acts upon shareholder mnters as assigned, from time to time, by the Chairman of the Board.
(j) Member of the Special Litigation Comittee, of which Mr. Noone is Chairman. The Special Litigation Comittee considers and acts upon litigation matters as assigned, from time to time, by the Board of Directors.
(1) No Director or Officer owns over .08% of any class of stock and all Officers and Directors as a group hold .32% of the Company's outstanding common shares. Shares of stock on which there is shared voting and investment power are 300 shares of Mr. Becker, 1,000 shares of Mr. Crain, 1,000 shares of Mr. Foster, 500 shares of Mr. Johnston, 5,019 shares of Mr. Koester, .150 shares of Mr. Noone, and 6,000 shares of Dr. Smith.
(2) Mr. Chandler is the Chairman of the Board of First National Bank in Wichita. Mr. Cadman is a Director of BANK IV Wichita, N.A and Mr.
Meyer is a Director of Fourth Financial Cor) oration, which owns Bank IV Wichtia, M.A. The Company maintains banc accounts in these banks and from time to time makes short-term borrowings from them. First National Bank in Wichita is also Transfer Agent for the Company's stock. BANK IV Wichita, N.A. is Registrar for the Company's stock and acts as Master Trustee for the Retirement Plan for Employees of Kansas Gas and Electric Company. Mr. Becker is a part owner in Price Brothers Equipment Company which supplied approximately
$13,000 of equipment to the Co any in 1991.
(3) Includes unexercised stock options of 14,903 for Mr. Cadman, 3,673 for Mr. Foster, and 39,838 for the Executive Officers as a group.
L l Outside Directors are paid $3,750 per quarter retainer and all Directors j are paid an attendance fee of $600 for Directors' meetings ($300 if attending by phone) and $500 for comittee meetings. An additional comittee meeting L attendance fee of $300 is paid to the outside Director Audit Comittee l- Chairman, and $200 to other outside Director Comittee Chairmen. All outside L Directors are reimbursed mileage and expenses while attending Directors' --and Comittee Meetings.
L 53 l
=:-. . . . - . . . . -
4 The Board of Directors held 7 meetings during the year, the Audit Comittee 4, the Compensation and Benefit Comittee 3, the Executive Comittee 1, the Nominating Comittee 0, the Planning Comittee 0, the Shareholders Relations Comittee 0, and the Special Litigation Comittee 0. All Directors attended 75% or more of ti.eir applicable meetings.
ITEM 11. EXECUTIVE COW EMSATION .
The tables below set forth all cash compensation of the five highest paid Executive Officers of the Company for services in all capacities during the year ended December 31, 1991, and the estimated retirement benefits to be received in the event of retirement at normal (or later) retirement age. Also set forth is cash compensation for all Executive Officers as a group for the portion of the year during which each person served as an Executive Officer:
Cash N= Capacities in Which Served Compensation Wilson K. Cadman Director, Chairman of the Board & President $ 345,000 Kent R. Brown Group Vice President $ 164,000 Ralph Foster Director, Vice President -
General Counsel $ 159,000 Robert L. Rives Group Vice President 5 159,000 James S. Haines, Jr. Group Vice President $ 155,000 All Eight Executive Officers as a group $1,335,000 Deferred Compensation Included in cash compensation are amounts placed in a voluntary Deferred Compensation Plan for certain employees selected by the management of the Company. The Deferred Ccupensa*. ion Plan allows participating employees to defer up to 50% of their 1nual salary and provides benefit payments in amounts related to salary deferred and to age at the time of deferral.
Participants who remain in "le employ of the Com)any for seven years subsequent to a deferral election will receive, after tie seventh year, lump sum payments of amounts deferred plus interest. If a participant's employment terminates prior to seven years subsec;uent to a deferral, the participant will receive reduced payments. Supplemental retirement income or survivor payments, made on a monthly basis over a fifteen-year period, will be available if a participant continues in the employ of the Company until age 65 or the attainment of eligibility for early retirement under the Company's Retirement Plan at age 60 or later.
The Deferred Compensation Agreements provide that, upon the employee's
- termination without cause or departure for good reascn within two years (or, l in the case of certain executives, three years) after a change in control, (i) if the employee is then at least age 60, he is entitled to early retirement 1
54
benefits provided by the applicable Deferred Compensation Agreement without consent from the Com)any, (ii) if the employee at the time of termination is at least age 50 and 1ad at least five years of service, the employee is fully vested in the lump sum payments and supplemental retirement income, and(iii) if the employee is not age 50 and completed five years of service, such payments are vested at reduced levels.
The amount of interest accrued, during 1991, on deferred compensation for Messrs. Drown, Cadman, Foster, Haines, and Rives was $23,162, $128,694,
$21,095, 50 and $45,462, respectively; the eight executive officers as a group, $252,761.
The Deferred Compensation Plan is available to Directors of the Company who choose to participate and provides the option to defer up to 100% of a Director's annual retainer and certain attendance fees. Benefit payment amounts relate to fees deferred and to age at the time of deferral. Benefits starting at retirement (normally age 70), will be paid on a monthly basis for up to 120 months, with any installments not paid prior to death being paid to the Director's designated beneficiary. The amount of interest accrued, for 1991, for all current Directors who are not executive officers was $177,041.
The Deferred Compensation Plans are designed in a manner which, it is anticipated, will result in no additional cost to the Company since the Company purchases life insurance policies on the participants' lives. The Company is the owner and beneficiary of these policies. The participants have no rights in these insurance policies.
Retirement Plans -
All employees after completion of one year of service and attainment of age 21 become eligible to participate in the Company's non-contributory Retirement Plan. Retirement income is based on the average of an employee's highest five-year's pay during the last ten years of employment, and is calculated by multiplying such pay, up to the Social Security covered compensation level, by 1.3% and the excess by 1.65%, and by multiplying the
! sum of such amounts by the number of years of service covered by the Retirement Plan.
The following table shows the estimated maximum annual retirement benefit, upon normal retirement, after selected periods of service under the j
Retirement Plan. The amounts presented do not take into account any reduction
! for joint and survivorship payments.
l t
55
Average Final Pay Innual Benefit - Year Lof Service 2 0 ._ _ 25 30 35 40 125,000 39,771 49,70_ 59,656 69,599 79,542 150,000 48,021 60,026 72,031 84,036 96,042 175,000 56,271 70,338 84,406 98,474 112,221 a 200,000 64.521 80,651 96,781 112,221 a 112,221 a 225,000 72,771 90,963 109,156 112,221 a 112,221 a 250,000 81,021 101,276 112,221 a 112,221 a 112,221 a 275,000 89,271 111,588 112,221 a 112,221 a 112,221 a 300,000 97,521 112,221 a 112,221 a 112,221 a 112,221 a 325,000 105,771 112,221 a 112,221 a 112,221 a 112,221 a 350,000 112,221(a) 112,221 a 112,221 a 112,221 a 112,221 a (orgreater)
(a) Maximum allowed by current law.
Estimated years of accredited service for Messrs. Brown, Cadman, Foster, Haines and Rives are 26, 40, 12, 30 and 30, res)ectively. Ralph Foster will also receive benefits under an agreement wit 1 the Company under which approximately ten years of service as General Counsel to the Company prior to employment will be considered as accredited service in calculating his retirement benefits.
The five officers referred to above also participate in an Executive Salary Continuation Plan which is a non-qualified plan for the benefit of designated management employees of the Company selected b the Board's Compensation and Benefit Connittee. This plan provides (a) ya retirement benefit at or after age 65, or upon disability prior to age 65, in an amount equal to 80% of such person's final three-year average compensation, reduced by existing pension and social security benefits, such amount to be paid to the employee or his de:iignated beneficiaries for the employee's life with a 15 year term certain; and (b) a death benefit if death occurs before age 65, equal to 80% of the employee's then monthly salary payable to his beneficiary for 180 months following his death. This plan allows for early retirement with a benefit reduction of 2% per annum for each full year between ages 65 and
- 60. If, after a change in control, a participant's employment is terminated without cause or within three years after a change in control by the participant for good reason, (i) the participant's beneficiary will be entitled to the death benefits provided ender the Program in the event the participant's death occurs within two years after the date of termination of employment, (ii)iftheparticipantisatthetimeofsuchchangein control at least 60 years of age, the participant will be entitled to the early retirement benefits provided under the Program, and (iii) if the participant is not then age 60, upon attaining age 60 the participant will be entitled to a portion of the participant's normal retirement benefit under the program.
In addition to-the foregoing, certain employees of the Company, including the five officers referred to above, partici,'te in a death benefit plan which pays to a participant's estate or survivors, whether before or after l
l 56
retirement, 40% of such participant's annual compensation for a period of ten years. management of the Participants Com in the If, death within twobenefit years p(lan are selected by thethree years in th executives) pany.after a change in control, the employee's employment is terminated by the Company without cause or by the participant for good reason the employee's beneficiary will be entitled to the death benefits provided under the Agreement in the event the employee's death occurs within three years after the date of temination of employment.
The Executive Salary Continuation and death benefit plans are designed in a manner which, it is anticipated, will result in no additional cost to the Company since the Company purchases life insurance policies on the participants' lives. The Company is the owner and beneficiary of these policies. The participants have no rights in these insurance policies.
Employee Stock Ownership Plan The Company's Employee Stock Ownership Plan (ESOP) was terminated October 1, 1991 and distribution of accounts or transfer to tha Company's 401(k) Plan was effected on November 18, 1991. All employees af tw .:ompletion of six months of service and attainment of age 21 became eligible to participate in the ESOP. The Company, through a trustee, distributed to ES0P participants comon stock in an amount equal to utilized qualified federal investment tax credits, in the proportion that each part Mipant's compensation bore to the total compensation of all participants. A portion of the credits was available only wnen matched by employees. In general, employees were unable to withdraw contributions from their accounts until termination of employment.' No Company contributions were made for 1991.
Long Tern Incentive Plan The Company has adopted a Long Term Incentive Plan for certain employees (including officers) of the Company and its subsidiaries. The Incentive Plan is intended to stimulate individual performance by eligible employees, so as to raise the performance of the CompOny in a manner benefiting shareholders and customers and increase employees' attention and priorities to the achievement of specific long term goals which will increase the Company's profitability. Types of awards that may be granted under the Incentive Plan are restricted shares, incentive stock options, non-qualified stock options, stock appreciation rights, performance shares and dividend equivalents. The Incentive Plan is administered by the Compensation and Benefit Committee of the Board. In 1991, tt Company made no grants under the Incentive Plan. In the event of a char.,e in control (i) unexercised stock options which were outstanding at least six months prior to the change in control will be converted to cash based upon the difference between the market value and option price, and (ii) each outstanding performance share will become vested with respect to the period the performance share was outstanding. Pursuant to the Amended Agreement and Plan of Merger between the Company and The Kansas Power and Light Company, the Incentive Plan will be cancelled pr1or to the merger and no new grants may be made.
57
+
i Employment Agreements ,
The Company has adopted a special severance policy for employees of the Company which provides that in the event of the termination of emp loy.nent of '
such employees, within 18 to 24 mo hs after g change in control, other than for cause or by the employees for go. reason, they will be entitled to payments equal to 1.5 to 3 weeks of base salary for each year of service, with t a minimum payment of 8 weeks and a maximum up to 52 weeks plus up to 13 additional weeks if the employee is unemployed at the end of the initial '
severance period. The employees also receive continued life, medical / dental and disability insurance coverage for the period.
The Company has entered into certain employment agreements with the ;
Executive Officers of the Company, which provide that in the event that the employment of the employee is terminat.) within 36 months after a change in >
control other than for disability, deati, retirement or cause, or by the ,
employee for good reason the employee is entitled to receive (A) a lump-sum say.nent of an amount equal to (i) three times the higher of the average annual Jase salary for the five years preceding the change in control and three times the average annual base salary on the date of termination of employment for Messrs. Cadman and Foster, (ii) three times current annual base salary for Messrs. Richard M. Haden and Rives, and(iii)twotimescurrentannualbase salary for the remaining employees, (B) continued life, medical / dental and disability insurance coverage for three years for Messrs. Cadman, Foster, Haden and Rives and two years for the other employees, and (C) if the employee is subject to an excise tax imposed under Section 4999 of the Internal Revenue Code, an additional payment in an amount sufficient such that the employee s retains an amount, after deduction of the excise tax and any federal, state or r local income taxes on such additional payment, equal to the severance payment to which he is entitled under the employment agreement. Assuming a change in control and the employee's employment is terminated, such lump sum payments to Messrs. Brown, Cadman, Foster, Haines, and Rives would be $330,000, $897,000,
$421,200, $324,000, and $471,000, respectively; and $3,862,200, for all Executive Officers as a group.
ITEM 12. SECIRITY OlNERSHIP OF CERTAIN BENEFICIAL OlNIERS AM) MANAGDENT As of December 27, 1991 the following shareholders were known to the u.anagement of the Company to be the beneficial owner of more than 5% of the outstanding shares of any class of voting securities as set forth below:
Name and Address of Amount and Nature Percent Title of Class Beneficial Owner of Beneficial OwnershiD of Class 4.32% Preierred Wellington Management 11,900 shares, shared 19.834 Stock Company dispositive power Boston, MA 02109 l Common Stock, Alpine Associates, 2,353,700 shares, no 7.59%
no par value A Limited Partnership shared dispositive 100 Union Avenue power Cresskill, N.J. 07626 1
58
Change in Control In October 1990, the Company's Board of Directors Lgproved an Agreement and Plan of Merger (the Merger Agreement) with The Kansas Power and Light Company (KPL), a Kansas corporation and KCA Corporation (KCA), a wholly-owned subsidiary of KPL, providing for the merger of the Company with and into KCA.
The Company, KPL and KCA subsequently executed the Merger Agreement.
Following the merger KCA will change its name to Kansas Gas and Electric Company.
See item 7 and Note 11 of the Notes to Consolidated Financial Statements for additional information.
ITEM 13. CERTAIN RELATIORSHIPS AE RELATED TRANSACTIONS See Item 10 l
l l
l l
l l
59 l
PART IV ITEM 14. EXHIBITS. FINANCIAL STATEENT SCHEDULES AND REPORTS ON FORM 8-K (a) Financial Statements - The financial statements and schedules are listed in the table of contents for Item B of this annual report.
(b) Exhibits:
- 2(a) Agreement and Plan of Merger (Files as Exhibit 2 to Form 10-K for the year ended December 31, 1990, File No. 1-7324).
- 2(b) Amendment No. I to Agreement and Plant of Herger (Filed as Exhibit 2 to Form 10-K for the year ended December 31, 1990, File No. 1-7324).
- 3(a) Restated Articles of Incorporation, as amended (Filed as Exhibit 3(a) to Form 10-0, for the quarter ended March 31, 1987, File No.1-7324).
- 3(b) By-laws, as amended (Filed as Exhibit 3(b) to "'rm 10-K for the year ended December 31, 1990, File No. 1-7324).
- 4(c)1 Mortgage and Deed of Trust, dated as of April 1, 1940 to Guaranty Trust Company of New York (now Morgan Guaranty Trust Company of New York) and Henry A. Theis (to whom W. A. Spooner is successor),
Trustees, as supplemented by thirty-three Sup)lemental Indentures, dated as of June 1, 1942, March 1, 1948, Decem)er 1, 1949, June 1, 1952, October 1, 1953, March 1, 1955, February 1, 1956, January 1, 1961, May 1, 1966, March 1, 1970, May 1, 1971, March 1, 1972, May 31, 1973, July 1, 1975, December 1, 1975, September 1, 1976, March 1, 1977, May 1, 1977, August 1, 1977, March 15, 1978, January 1, 1979, April 1, 1980, July 1, 1980, August 1, 1980, June 1, 1981, December 1, 1981, May 1, 1982, March 15, 1984, September 1, 1984 (Twenty-ninth and Thirtieth), February 1, 1985, April 15, 1986, and June 1, 1991, (Filed, respectivel , as Exhibit A-1 to Form U-1, FileNo.70-23; Exhibits 7(b)and7(y), c File No. 2-7405; Exhibit 7(d), File No. 2-8242; Exhibit 4(c), File No. 2-9626; Exhibit 4 c ,
File No. 2-10465; Exhibit 4(c), File No. 2-12228; Exhibit 4 c ,
File No. 2-15351; Exhibit 2(b)-1, File No. 2-24680; Exhibit 2 c ,
File No. 2-36170; Exhibits 2(c) and_2(d), File No. 2-39975; Exhibit 2(d), File No. 2,43053; Exhibit 4(c)2 to Form 10-X, for December 31, 1989, File No. 1-7324; Exhibit (c),FileNo. 2-53765; Exhibit 2(e),FileNo. 2-55488; Exhibit 2( ), File No. 2-57013; Exhibit 2(c),FileNo. 2-58180; Exhibit 4(c 3 to Form 10-K for December 31, 1989, File No. 1-7324; Exhibit 2( ,
File No. 2-60089; Exhibit 2(c),FileNo. 2-60777; Exhibit 2( , File No. 2-64521; Exhibit 2(h), File No. 2-66758; Exhibits 2 )and2(e),FileNo. 2-69620; Exhibits 4(d) and 4(e), File No. 2-75634; and Exhibit 4(d), File No. 2-78944; Exhibit 4(d),FileNo. 2-87532; and Exhibits 4(c)4, 4(c)5 and 4(c)6 to Form 10-K for December 31, 1989, File No. 1-7324.
60
4(c)2 Thirty-second Supplemental Indenture dated as of April 15, 1986, to the Company's Mortgage and Deed of Trust.
4(c)3 Thirty-third Supplemental Indenture dated as of June 1, 1991, to the Company's Mortgage and Deed of Trust.
Instruments defining the rights of holders of other long-term debt not required to be filed as exhibits will be furnished to the Comission upon request.
- 10(a)1 Severance Agreement (Filed as Exhibit 10(a)1 to Form 10-K for the year ended December 31, 1990, File No. 1-7324).
- 10(a)2 Severance Agreement (Filed as Exhibit 10(a)2 to Form W 4 for the year ended December 31, 1990, File No. 1-7324).
- 10(a)3 Severance Agreement (FiledasExhibit10(a)3toForm10-Kforthe year ended December 31, 1990, FileNo.1-7324).
10(b)1 Executive Salary Continuation Program.
- 10(b)2 Amendment to Executive Salary Continuation Program (Filed as Exhibit 10(b)2 to Form 10-K for the year ended December 31, 1990, File No. 1-7324).
- 10(c) La Cygne 2 Lease (Filed as Exhibit 10(a) to Fonn 10-K for the year ended December 31, 1988, File No. 1-7324).
- 10(d)1 Long-Term Incentive Plan (Filed as Exhibit 10(d) to Form 10-K for the year ended December 31, 1989, File No. 1-7324).
- 10(d)2 Amendment to Long-Tem Incentive Plan (Filed as Exhibit 10(d)2 to Form 10-K for the year ended December 31, 1990, File No. 1-7324).
12 Computation of Ratio of Conudidated Earnings to Fixed Charges.
24 Independent Auditors' Consent.
- Incorporated herein by reference as indicated.
(c) No reports on rorm 8-K were filed in the fourth quarter of 1991.
A report or. Fom 8-K was filed on February 7,1992, reporting the receipt of all required approvals in the merger with KPL.
A report on Form-8-K was filed on March 9, 1992, reporting the Company's 1991 earnings and providing the 1991 Consolidated Financial Statements including Notes to Consolidated Financial Statements.
l A report on Form 8-K was filed on March 13, 1992, reporting the possible delay of the closing of the merger with KPL.
l 61
SIGNATURE 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.
KANSAS GAS AND ELECTRIC COMPANY BY:
William B Moore William B. Moore Vice President - Finance and Treasurer March 30, 1992 l
l l
l l 62
4
$1GNA M Pursuant to See seguirements of the Seoumies Eschenge M of 1104, this report hee been agned beoow by the folkrmno persone on behalf of geo regi.arant and in the cepecines and on the dates Indiosted.
Skr m M .QBR Cheltmen of the Boere Mrrch 30,1992
/tWisen K Cadman end Proeident Whoon K Cedmen (Prtnosped EneoutNo Omoet and Okoctor)
_ /aMAulam R. Moore Vke Prookloct . Anant.* March 30.1992 WIgnam 8. Moore and Treasumr (Principal Rnenoted Omoer)
/s/ James T. Qartr Ynoe Proeident- March 30,1992 Jemer. T. Com Aeoouming (Prtnoipal Accounting Omaar)
/a/ Frank J. Snaker Frank J. Beener la/(Monn h Glenn Bigge la/C. O. Chandler C. Q. Chandler la/ Robert i. Crain Roeert T. Crean
/s%miori Foster Ralph Foseer Olrectors Martti 30,1992
, la/Done6d A. Johnston Donaed A Janneton la/Gienn L Koesear Glenn L Koester l /a/hanet W Mover. Jr.
Neeen w. Mept, Jr.
t la/ James J. Noone l James J. Noone i
la/Mariotte L Seneur Mar)ene L $ suer, la/ L - M C. ~
Donald C. Seussen
/ / Newton C, Smt.. M D.
Newton C. Sm#th M_D.
l l
1 63 _u
y b
t IIBEPmmlT AIBITERS' CollSDIT We consent to the incorporatirm by reference in Registration Statements Nos.
33-26891, 2-64703 (Post-Effr:tive Amendment No. 3), 33-28651 and 33-32515 of f Kansas Gas and Electric Corgany on Form S-8, No. 33-2176 of Kansas Gas and Electric Company on Form 5-3, No. 33-38967 of The Kansas Power and Light Company on Fom S-4, and No. 33-40527 of The Kansas Power and Light Company 1992 appearing in this Annual on Fom S-3 of our repore Report on Form 10-K of Kansas Gas and E dated March 6}ectric Company for the year ended December 31, 1991. 4 DELOITTE & TOUCHE Kansas City, Missouri March 30, 1992 t
l l
l l
-64 L -