Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-707
KANSAS CITY POWER & LIGHT COMPANY
(Exact name of registrant as specified in its charter)
Missouri 44-0308720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1201 Walnut, Kansas City, Missouri 64106-2124
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (816) 556-2200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes (X) No ( )
The number of shares outstanding of the registrant's Common stock at April 28,
1995 was 61,902,078 shares.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS
(thousands of dollars)
March 31 December 31
1995 1994
ASSETS
UTILITY PLANT, at original cost
Electric $3,333,365 $3,330,478
Less-accumulated depreciation 1,098,444 1,092,436
Net utility plant in service 2,234,921 2,238,042
Construction work in progress 59,086 57,294
Nuclear fuel, net of amortization of
$70,185 and $66,773 43,224 40,806
Total 2,337,231 2,336,142
REGULATORY ASSET - DEFERRED WOLF CREEK COSTS 16,160 18,752
REGULATORY ASSET - RECOVERABLE TAXES 120,000 120,000
INVESTMENTS AND NONUTILITY PROPERTY 122,879 98,429
CURRENT ASSETS
Cash and cash equivalents 21,466 20,217
Receivables
Customer accounts receivable 15,858 24,513
Other receivables 21,137 22,604
Fuel inventories, at average cost 21,067 16,570
Materials and supplies, at average cost 44,867 44,953
Prepayments 4,516 5,138
Deferred income taxes 2,816 1,444
Total 131,727 135,439
DEFERRED CHARGES
Regulatory assets
Settlement of fuel contracts 15,721 16,625
KCC Wolf Creek carrying costs 6,155 6,839
Other 26,267 27,909
Other deferred charges 10,827 10,262
Total 58,970 61,635
Total $2,786,967 $2,770,397
LIABILITIES
CAPITALIZATION
Common stock-authorized 150,000,000 shares
without par value-61,908,726 shares issued -
stated value $449,697 $449,697
Retained earnings 425,080 426,738
Capital stock premium and expense (1,725) (1,736)
Common stock equity 873,052 874,699
Cumulative preferred stock 89,000 89,000
Cumulative redeemable preferred stock 1,436 1,596
Long-term debt 802,633 798,470
Total 1,766,121 1,763,765
CURRENT LIABILITIES
Notes payable to banks 2,500 1,000
Commercial paper 39,000 31,000
Current maturities of long-term debt 33,419 33,419
Accounts payable 41,830 73,486
Dividends payable 423 423
Accrued taxes 58,353 24,684
Accrued interest 10,026 12,209
Accrued payroll and vacations 18,340 19,594
Accrued refueling outage costs 5,300 2,120
Other 7,847 7,221
Total 217,038 205,156
DEFERRED CREDITS
Deferred income taxes 640,696 644,139
Deferred investment tax credits 74,488 82,840
Other 88,624 74,497
Total 803,808 801,476
COMMITMENTS AND CONTINGENCIES
Total $2,786,967 $2,770,397
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
<PAGE>
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(thousands of dollars)
Year to Date Twelve Months Ended
March 31 March 31
1995 1994 1995 1994
ELECTRIC OPERATING REVENUES $ 198,906 $ 199,295 $ 867,883 $ 865,365
OPERATING EXPENSES
Operation
Fuel 34,719 38,009 131,816 136,801
Purchased power 6,732 6,482 34,179 32,110
Other 44,445 58,562 188,187 199,027
Maintenance 20,678 18,816 74,330 79,264
Depreciation 24,139 23,331 95,169 91,930
Taxes
Income 11,617 6,748 75,818 65,088
General 23,857 23,468 96,751 95,458
Amortization of:
MPSC rate phase-in plan 0 0 0 5,304
Deferred Wolf Creek costs 3,276 3,276 13,102 13,102
Total 169,463 178,692 709,352 718,084
OPERATING INCOME 29,443 20,603 158,531 147,281
OTHER INCOME AND DEDUCTIONS
Allowance for equity funds
used during construction 235 473 1,849 2,777
Miscellaneous 6,568 123 2,286 (2,103)
Income taxes (336) 79 4,157 1,466
Total 6,467 675 8,292 2,140
INCOME BEFORE INTEREST CHARGE 35,910 21,278 166,823 149,421
INTEREST CHARGES
Long-term debt 12,333 10,380 45,915 46,717
Short-term notes 620 338 1,452 890
Miscellaneous 618 1,188 3,558 4,400
Allowance for borrowed funds
used during construction (548) (519) (1,873) (2,449)
Total 13,023 11,387 49,052 49,558
PERIOD RESULTS
Net income 22,887 9,891 117,771 99,863
Preferred stock
dividend requirements 1,026 807 3,676 3,133
Earnings available for
common stock 21,861 9,084 114,095 96,730
Average number of common
shares outstanding 61,902 61,909 61,902 61,909
Earnings per common share $0.35 $0.15 $1.84 $1.56
Cash dividends per
common share $0.38 $0.37 $1.51 $1.47
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
<PAGE>
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of dollars)
Year to Date Twelve Months Ended
March 31 March 31
1995 1994 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 22,887 $ 9,891 $117,771 $ 99,863
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 24,139 23,331 95,169 91,930
Amortization of:
Nuclear fuel 3,412 2,589 10,959 9,580
Deferred Wolf Creek costs 3,276 3,276 13,102 13,102
MPSC rate phase-in plan 0 0 0 5,304
Other 2,028 2,647 8,989 8,937
Deferred income taxes (net) (4,815) 426 15,283 16,607
Deferred investment tax credit
amortization and reversals (8,352) (1,086) (11,611) (4,345)
Allowance for equity funds used
during construction (235) (473) (1,849) (2,777)
Cash flows affected by changes in:
Receivables 10,122 11,548 117 (8,751)
Fuel inventories (4,497) 1,206 (7,723) 6,007
Materials and supplies 86 (669) (41) (43)
Accounts payable (31,656) (23,161) 5,570 (9,878)
Accrued taxes 33,669 12,246 18,307 9,696
Accrued interest (2,183) (6,764) 1,215 (6,557)
Wolf Creek refueling outage
accrual 3,180 3,113 (5,075) 2,626
Pension and postretirement benefit
obligations (2,405) 15,991 13,807 17,850
Other operating activities (6,661) (3,336) (6,185) (934)
Net cash provided by operating
activites 41,995 50,775 267,805 248,217
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (26,657) (29,148) (122,474) (130,000)
Allowance for borrowed funds used
during construction (548) (519) (1,873) (2,449)
Purchases of investments (6,455) (5,737) (68,278) (8,935)
Other investing activities 3,306 (686) 9,616 6,469
Net cash used in investing
activities (30,354) (36,090) (183,009) (134,915)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt 4,163 38,922 99,034 195,768
Retirement of long-term debt 0 (95,920) (74,250) (284,400)
Special deposits 0 60,118 0 38,824
Net change in short-term borrowings 9,500 9,000 3,500 38,000
Dividends paid (24,545) (23,709) (97,074) (94,126)
Other financing activities 490 806 19 (3,186)
Net cash used in financing
activities (10,392) (10,783) (68,771) (109,120)
NET CHANGE IN CASH AND CASH
EQUIVALENTS 1,249 3,902 16,025 4,182
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 20,217 1,539 5,441 1,259
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $21,466 $5,441 $21,466 $5,441
CASH PAID DURING THE PERIOD FOR:
Interest, net of amount capitalized $14,808 $17,493 $45,561 $53,496
Income taxes $3,975 $7,098 $50,597 $42,530
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
<PAGE>
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(thousands of dollars)
Year to Date Twelve Months Ended
March 31 March 31
1995 1994 1995 1994
Beginning balance $426,738 $418,201 $404,383 $398,646
Net income 22,887 9,891 117,771 99,863
449,625 428,092 522,154 498,509
Dividends declared 24,545 23,709 97,074 94,126
Ending balance $425,080 $404,383 $425,080 $404,383
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
<PAGE>
KANSAS CITY POWER & LIGHT COMPANY
Notes to Consolidated Financial Statements
In management's opinion, the consolidated interim financial statements
reflect all adjustments (which include only normal recurring adjustments)
necessary to present fairly the results of operations for the interim periods
presented. These statements and notes should be read in connection with the
financial statements and related notes included in the Company's 1994 annual
report filed with the Securities and Exchange Commission on Form 10-K.
1. CAPITALIZATION
During the first quarter, a subsidiary of the Company, KLT Investments
Inc., borrowed approximately $4 million to finance affordable housing limited
partnership investments. These notes have interest rates ranging from 8.5% to
9.2% and maturity dates through 2003. As of March 31, 1995, KLT Investments
had subscribed to invest an additional $15 million in these partnerships. The
subscriptions, which are reflected in the Consolidated Balance Sheets under
Investments and Nonutility Property with the related liabilities in Deferred
Credits - Other, include $5 million which were converted to notes during April
1995 and $10 million to be converted between June 30 and October 1, 1995.
From April 1, through May 5, 1995, the Company issued $32 million of
Medium-Term Notes (Notes) with weighted average interest rates of 7.3% and
maturity dates in 1999. After these issuances, $125 million of Notes remained
available for issuance under the shelf registrations.
2. COMMITMENTS AND CONTINGENCIES
TAX MATTERS
As a result of an audit of the Company's income tax returns, the Internal
Revenue Service (IRS) proposed significant adjustments relating to the Wolf
Creek Generating Station (Wolf Creek) investment tax credits (ITC) and
depreciation deductions included in income tax returns after the unit's 1985
commercial in-service date. The Company filed a protest with the Appeals
Division of the IRS (Appeals). After extensive negotiations, a settlement has
been reached relating to these issues. Appeals has agreed that a substantial
portion of the disputed costs do qualify for ITC and accelerated depreciation.
Based on an internal calculation of the federal and state liabilities under the
terms of the settlement (including the continuing effect of the adjustments
through March 31, 1995), management believes the resulting expense was
adequately accrued as of December 31, 1994 and the resulting net payments to
the IRS to satisfy the liability will not be material.
ENVIRONMENTAL MATTERS
The Company's policy is to act in an environmentally responsible manner
utilizing the latest technological processes possible to avoid and treat
contamination. The Company accrues environmental and cleanup costs when it is
probable that a liability has been incurred and the amount of the liability can
be reasonably estimated. While continually conducting environmental audits
designed to assure compliance with governmental regulations and detect
contamination, the regulations are constantly evolving and governmental bodies
may impose additional or more rigid environmental regulations that could
require substantial changes to the Company's operations or facilities.
<PAGE>
Interstate Power Company of Dubuque, Iowa (Interstate) filed a lawsuit in
1989 against the Company in the Federal District Court for the District of Iowa
seeking from the Company contribution and indemnity under the Superfund law for
cleanup costs of hazardous substances at the site of a demolished gas
manufacturing plant in Mason City, Iowa. The plant was operated by the Company
for very brief periods of time before it was demolished in 1952. The site and
all other properties the Company owned in Iowa were sold to Interstate in 1957.
The Company estimates the cleanup could cost up to $10 million. The Court has
set the issue of the allocation of cleanup costs among the parties for trial in
September 1995. Based upon an evaluation of available information from on-
going site investigation and assessment activities, including the costs of
those activities, management believes its share of the estimated cleanup costs
will be between $1 and $4 million.
3. EARLY RETIREMENT
In April 1995, Wolf Creek Nuclear Operating Corporation, the operating
company for Wolf Creek, offered a voluntary early retirement program to 68
employees. These employees have until May 31, 1995 to decide whether to
participate in the program.
Based on a 100% acceptance rate, the Company's 47% share of program costs
would be approximately $3 million. It is expected that future payroll and
benefits savings will offset program costs in less than two years if no
retiring employees are replaced.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
REGULATION AND COMPETITION
The electric utility industry is undergoing fundamental changes in
response to increasing competition. To achieve its desired market position in
this changing environment, the Company is continually modifying its business
processes to operate more efficiently and cost effectively, and is developing
energy related businesses through its subsidiary, KLT Inc. To take advantage
of opportunities presented through increased competition, the Company may
consider various business strategies including partnerships, acquisitions,
combinations, additions to or dispositions of service territory, and
restructuring of wholesale and retail businesses.
The National Energy Policy Act of 1992 (NEPA) gave the Federal Energy
Regulatory Commission (FERC) the authority to require electric utilities to
provide wholesale transmission line access (wholesale wheeling) to independent
power producers (IPPs) and other utilities. Although NEPA prohibits FERC from
ordering retail wheeling (allowing retail customers to select a different power
producer and use the transmission facilities of the host utility to deliver the
energy), it does not prevent the state commissions from doing so. The state
commissions however, may be preempted by other provisions of the Federal Power
Act or relevant provisions of state laws.
Although the Missouri Public Service Commission (MPSC) and the Kansas
Corporation Commission (KCC) have not changed regulatory policy relating to
mandated wholesale or retail competition, certain other state commissions are
actively planning the transition to a competitive environment. If retail
wheeling were allowed or mandated, the competition would present growth
opportunities for low-cost energy producers and risks for higher-cost producers
with large industrial customers able to select less expensive providers. The
loss of major customers could result in under-utilized assets (stranded
investment) placing a costly burden on the remaining customer base or
shareholders. The Company believes it is positioned well and has a diverse
customer mix with less than 16% of total sales derived from industrial
customers as compared to the utility average of approximately 35%. Its
industrial rates are competitively priced compared to the regional average and
its rate structure allows flexibility in setting rates. In addition, long-term
contracts are in place or under negotiation for a significant portion of the
Company's industrial sales.
Increased competition could also force utilities to change accounting
methods. Financial Accounting Standards Board (FASB) Statement No. 71-
Accounting for Certain Types of Regulation, applies to regulated entities whose
rates are designed to recover the costs of providing service. An entity's
operations could cease to meet the requirements of FASB 71 for various reasons,
including a change in regulation or a change in the competitive environment for
a company's regulated services. For those operations no longer meeting the
requirements of regulatory accounting, regulatory assets would be written off
and other assets adjusted and evaluated for impairment. In a competitive
environment, asset recoverability would be determined using market-based rates
which could be lower than traditional cost-based rates. The Company has not
had direct competition for retail electric service in its service territory
although there has been competition in the bulk power market and between
alternative fuels. The Company's regulatory assets will be maintained as long
as it continues to meet the requirements of FASB 71.
<PAGE>
NON-REGULATED OPPORTUNITIES
KLT Inc. was formed in 1992 as a holding company to pursue non-regulated,
energy related business ventures to supplement the growth from electric utility
operations. KLT Inc. has invested in the following wholly-owned, non-regulated
subsidiaries: KLT Power Inc. (non-regulated power production), KLT Energy
Services Inc. (energy services including energy audits and efficient
equipment), KLT Gas Inc. (oil and gas reserves), KLT Investments Inc. (passive
investment opportunities including affordable housing limited partnerships),
KLT Investments II Inc. (passive investments in economic and community
development and energy related fields), and KLT Telecom Inc. (investment
opportunities in telecommunications and fiber optics). As of March 31, 1995,
the consolidated assets of KLT Inc. totaled approximately $115 million,
including capital contributions from Kansas City Power & Light Company of $37
million. Management anticipates total subsidiary assets of up to $800 million
within the next 10 years, consisting of approximately $200 million in capital
investment from Kansas City Power & Light Company and the remainder through
subsidiary borrowings.
RESULTS OF OPERATIONS
Three month three months ended March 31, 1995 compared to
period: three months ended March 31, 1994
Twelve month twelve months ended March 31, 1995 compared
period: to twelve months ended March 31, 1994
EARNINGS OVERVIEW
EPS for the three month period increased to $0.35 from $0.15, and EPS for
the twelve month period increased to $1.84 from $1.56, due mainly to the 1994
early retirement plan and a gain ($0.08 per share) realized from the sale of
unit trains during the first quarter of 1995. The early retirement plan
resulted in total charges to 1994 earnings of $22.5 million ($0.22 per share),
$14 million ($0.14 per share) during the first quarter of 1994. Savings after
the June 30, 1994 retirements are expected to offset program costs in less than
two years.
Weather continued to be milder than normal during the first quarter of
1995. Based on a statistical relationship between kwh sales and the
differences in actual and normal temperatures, the Company estimates the effect
of abnormal weather on each period was as follows:
Three Month Twelve Month
Period Period
1995 1994 1995 1994
Estimated effects of
abnormal weather on EPS $(0.02) $ - $(0.09) $(0.11)
<PAGE>
KILOWATT (KWH) SALES AND OPERATING REVENUES
Sales and revenue data:
Increase (Decrease) from Prior Year
Three Month Twelve Month
Period Period
Kwh Revenues Kwh Revenues
(millions) (millions)
Retail sales:
Residential 1 % $ 1 2 % $ 3
Commercial 5 % 3 4 % 4
Industrial 3 % (2) 2 % (7)
Other (5)% - (4)% -
Total retail 3 % 2 3 % -
Sales for resale:
Bulk power sales (16)% (2) 4 % 4
Other (28)% - (27)% (1)
Total operating
revenues $ - $ 3
Effective January 1, 1994, Missouri retail rates were reduced 2.66%, or
approximately $12.5 million annually, resulting from the end of the Wolf Creek
Generating Station (Wolf Creek) rate phase-in amortization. Approximately two-
thirds of the Company's retail sales are to Missouri customers. Other tariffs
have not changed materially since 1988. However, the amortization of the
Regulatory Asset-Deferred Wolf Creek Costs ends in 1996 and may result in
future rate adjustments.
Retail kwh sales and revenues increased during the three month period
despite milder weather. The increases in residential and commercial sales
reflect load growth. While industrial sales continued to increase, industrial
revenues during the three month period decreased reflecting customized long-
term sales contracts and additional load management curtailment credits. The
Company has entered into long-term sales contracts with major industrial
customers to respond to their needs in return for their commitment to purchase
energy from the Company. Long-term contracts are in place or under negotiation
for a significant portion of the Company's industrial sales. Curtailment
credits were granted to certain industrial customers in exchange for reduced
energy consumption during peak periods. Both programs have enhanced the
Company's competitive position and improved overall power generating
efficiencies and load factors, while boosting consumption and providing short-
term and long-term capacity savings.
Twelve month retail kwh sales increased over the prior year reflecting
load growth and the impact of warmer summer weather. Based on cooling degree
days above 65 degrees Fahrenheit, 1994 summer temperatures increased over the
mild temperatures of 1993, but still remained below normal. Despite this sales
increase, the related twelve month revenues remained unchanged reflecting the
2.66% Missouri rate reduction and the customized long-term sales contracts and
load management curtailment credits given to large industrial customers.
Bulk power sales vary with generating unit and purchased power
availability, the requirements of other electric systems and fuel costs.
<PAGE>
Total revenue per kwh sold varies with changes in the mix of kwh sales
among customer classifications and the effect on certain classifications of
declining price per kwh as usage increases. An automatic fuel adjustment
provision applies to less than 1% of revenues.
Future kwh sales and revenues per kwh will be affected by national and
local economic conditions, weather conditions and customer conservation
efforts. Competitive forces, including alternative sources of energy such as
natural gas, cogeneration, IPPs and other electric utilities, may also affect
future sales and revenue.
FUEL AND PURCHASED POWER
Fuel costs decreased for the three month period due to reduced kwh
generation and lower delivered coal costs. These costs also decreased for the
twelve month period as lower delivered coal costs more than offset costs
associated with increased kwh generation.
The Company's delivered coal cost is about two-thirds that of the regional
average. Reduced freight rates during both periods and favorable spot market
conditions during the twelve month period contributed to the lower delivered
coal costs. Spot market purchases allowed the Company to acquire coal at
prices below long-term contract rates. However, due to increasing demand for
low-sulfur coal, the Company is again securing a larger percentage of coal
through medium-term agreements.
The reduction in fuel costs resulting from lower delivered coal costs is
partially offset by increases in the cost of nuclear fuel. Coal accounts for
approximately 75% of generation and nuclear fuel about 25%.
For the twelve month period, lower replacement power expenses associated
with Wolf Creek refueling and maintenance outages also contributed to lower
combined fuel and purchased power expenses. Replacement power expenses
decreased $1.5 million for the twelve month period reflecting Wolf Creek's 47
day outage in 1994 versus the 73 day outage in 1993.
The Company has entered into capacity purchase contracts to provide a cost-
effective alternative to constructing new capacity. These purchases
contributed to the increases in purchased power.
OTHER OPERATION AND MAINTENANCE EXPENSES
Combined other operation and maintenance expenses for the three and twelve
month periods decreased primarily due to the costs and subsequent savings from
the 1994 voluntary early retirement program. Fluctuations in maintenance
expense also reflect variations in the Company's normal maintenance schedule.
The Company continues to place increased emphasis on new technologies,
improved methods and cost control. Processes are being changed to provide
increased efficiencies and improved operations. Through the use of cellular
technology, a majority of customer meters will be read automatically by the end
of 1996. These types of changes have allowed the Company to assimilate work
performed by those who elected to participate in the early retirement program.
<PAGE>
OTHER INCOME AND DEDUCTIONS
The three months ended March 31, 1995, includes an $8 million gain
recorded from the sale of steel unit trains which were replaced by leased
aluminum trains. Aluminum trains are lighter-weight and offer more coal
capacity per car contributing to lower delivered coal prices.
During the first quarter of 1995 the Company accrued tax credits of $1
million representing one-fourth of the total expected 1995 credits related to
existing affordable housing investments. Non-taxable increases in the cash
surrender value of corporate-owned life insurance contracts also affect the
relationship between miscellaneous income and income taxes.
INTEREST CHARGES
The increase in interest expense for the three month period mainly
reflects higher weighted-average interest rates associated with variable and
fixed rate debt.
ENVIRONMENTAL MATTERS
See Note 2 to the Consolidated Financial Statements-Commitments and
Contingencies-Environmental Matters for a discussion of costs of compliance
with environmental laws and regulations and a potential liability (which the
Company believes is not material to its financial condition or results of
operations) for cleanup costs under the Superfund law.
WOLF CREEK
Wolf Creek is one of the Company's principal generating facilities
representing approximately 18% of accredited generating capacity. The plant's
operating performance has remained strong, contributing approximately 25% of
the Company's annual kwh generation while operating on average above 80% of
capacity over the last three years. It has the lowest fuel cost of any of the
Company's generating units. The plant's next refueling and maintenance outage
is scheduled for the spring of 1996.
An extended shut-down of Wolf Creek could have a substantial adverse
effect on the Company's business, financial condition and results of
operations. Higher replacement power and other costs would be incurred as a
result. Although not expected, an unscheduled plant shut-down could be caused
by actions of the Nuclear Regulatory Commission reacting to safety concerns at
the plant or other similar nuclear facilities. If a long-term shut-down
occurred, the state regulatory commissions could consider reducing rates by
excluding Wolf Creek investment from rate base.
Ownership and operation of a nuclear generating unit exposes the Company
to potential retrospective assessments and property losses in excess of
insurance coverage.
<PAGE>
CAPITAL REQUIREMENTS AND LIQUIDITY
The Company uses an accelerated depreciation method for tax purposes.
Application of this method on the Wolf Creek plant substantially reduced the
Company's tax payments through 1994. Accelerated depreciation on Wolf Creek
ended in 1994. Management is implementing various tax planning strategies to
minimize future tax payments resulting from the loss of this depreciation
deduction.
See Note 2 to the Consolidated Financial Statements-Commitments and
Contingencies-Tax Matters for a discussion of the Company's settlement with the
Internal Revenue Service.
<PAGE>
SIGNATURES
Pursuant to the requirements 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 CITY POWER & LIGHT COMPANY
Dated: May 5, 1995 /s/Drue Jennings
(Chief Executive Officer)
Dated: May 5, 1995 /s/Neil Roadman
(Principal Accounting Officer)
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<EPS-DILUTED> 0.35
</TABLE>
