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 September 30, 1996
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
November 5, 1996, was 61,904,744 shares.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS
(thousands of dollars)
September 30 December 31
1996 1995
ASSETS
UTILITY PLANT, at original cost
Electric $3,452,362 $3,388,538
Less-accumulated depreciation 1,216,628 1,156,115
Net utility plant in service 2,235,734 2,232,423
Construction work in progress 68,831 72,365
Nuclear fuel, net of amortization of
$79,330 and $81,452 45,220 54,673
Total 2,349,785 2,359,461
REGULATORY ASSET - DEFERRED WOLF CREEK COSTS 2,220 8,880
REGULATORY ASSET - RECOVERABLE TAXES 123,000 123,000
INVESTMENTS AND NONUTILITY PROPERTY 211,736 166,751
CURRENT ASSETS
Cash and cash equivalents 23,229 28,390
Customer accounts receivable, net of allowance
for doubtful accounts of $1,654 and $1,574 42,593 32,830
Other receivables 27,563 31,838
Fuel inventories, at average cost 19,540 22,103
Materials and supplies, at average cost 46,489 47,175
Deferred income taxes 2,621 5,947
Other 1,116 5,179
Total 163,151 173,462
DEFERRED CHARGES
Regulatory assets
Settlement of fuel contracts 10,575 13,007
KCC Wolf Creek carrying costs 2,052 4,104
Other 18,789 21,231
Other deferred charges 14,564 12,610
Total 45,980 50,952
Total $2,895,872 $2,882,506
CAPITALIZATION AND 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 462,171 449,966
Unrealized gain on securities available for sale 6,938 0
Capital stock premium and expense (1,714) (1,725)
Common stock equity 917,092 897,938
Cumulative preferred stock 89,000 89,000
Cumulative redeemable preferred stock 1,276 1,436
Long-term debt 834,136 835,713
Total $1,841,504 $1,824,087
CURRENT LIABILITIES
Notes payable to banks 0 0
Commercial paper 35,000 19,000
Current maturities of long-term debt 46,591 73,803
Accounts payable 45,982 52,506
Accrued taxes 67,062 39,726
Accrued interest 13,283 16,906
Accrued payroll and vacations 22,648 22,764
Accrued refueling outage costs 4,547 13,563
Other 10,958 11,787
Total 246,071 250,055
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 650,056 648,374
Deferred investment tax credits 68,164 71,270
Other 90,077 88,720
Total 808,297 808,364
COMMITMENTS AND CONTINGENCIES
Total $2,895,872 $2,882,506
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
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<TABLE>
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Year to Date Twelve Months Ended
September 30 September 30 September 30
1996 1995 1996 1995 1996 1995
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
ELECTRIC OPERATING REVENUES $ 270,202 $ 277,670 $ 703,031 $ 681,881 $ 907,105 $ 873,979
OPERATING EXPENSES
Operation
Fuel 37,266 36,113 104,135 103,877 139,629 132,012
Purchased power 14,261 16,387 40,786 30,705 48,864 38,366
Other 44,216 42,823 133,234 136,307 175,526 178,678
Maintenance 16,601 15,876 54,039 59,054 73,424 76,764
Depreciation 26,992 24,325 76,569 72,679 101,115 96,678
Taxes
Income 33,429 40,039 65,769 63,579 79,252 78,465
General 27,457 27,509 75,269 74,047 98,043 96,599
Deferred Wolf Creek costs
amortization 2,904 3,152 8,712 9,703 11,616 12,978
Total 203,126 206,224 558,513 549,951 727,469 710,540
OPERATING INCOME 67,076 71,446 144,518 131,930 179,636 163,439
OTHER INCOME
Allowance for equity funds
used during construction 418 757 1,535 1,497 2,317 1,851
Miscellaneous income 2,154 (1,249) 4,843 7,806 5,660 8,250
Miscellaneous deductions (33,865) (3,503) (48,578) (9,408) (50,271) (11,197)
Income taxes 14,678 3,786 29,144 7,521 31,882 9,801
Total (16,615) (209) (13,056) 7,416 (10,412) 8,705
INCOME BEFORE INTEREST CHARGES 50,461 71,237 131,462 139,346 169,224 172,144
INTEREST CHARGES
Long-term debt 13,097 13,315 39,726 38,538 53,372 50,590
Short-term debt 527 (33) 1,141 1,058 1,272 1,214
Miscellaneous 1,128 744 3,620 2,001 4,731 2,810
Allowance for borrowed funds
used during construction (500) (445) (1,431) (1,490) (1,904) (1,718)
Total 14,252 13,581 43,056 40,107 57,471 52,896
PERIOD RESULTS
Net income 36,209 57,656 88,406 99,239 111,753 119,248
Preferred stock
dividend requirements 948 991 2,840 3,039 3,812 3,974
Earnings available for
common stock 35,261 56,665 85,566 96,200 107,941 115,274
Average number of common
shares outstanding 61,902 61,902 61,902 61,902 61,902 61,902
Earnings per common share $0.57 $0.91 $1.38 $1.55 $1.74 $1.86
Cash dividends per
common share $0.405 $0.390 $1.185 $1.150 $1.575 $1.530
<F1>
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>
<PAGE>
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of dollars)
Year to Date Twelve Months Ended
September 30 September 30
1996 1995 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 88,406 $ 99,239 $111,753 $119,248
Adjustments to reconcile net income
to net cash from operating
activities:
Depreciation 76,569 72,679 101,115 96,678
Amortization of:
Nuclear fuel 10,884 10,888 14,675 13,283
Deferred Wolf Creek costs 8,712 9,703 11,616 12,978
Other 4,104 6,150 6,106 8,345
Deferred income taxes (net) 608 (15,139) 12,479 (2,159)
Deferred investment tax credit
amortization and reversals (3,106) (10,524) (4,152) (11,610)
Deferred merger costs 0 0 0 0
Allowance for equity funds used
during construction (1,535) (1,497) (2,317) (1,851)
Cash flows affected by changes in:
Receivables (5,488) (23,908) 869 (12,749)
Fuel inventories 2,563 (3,489) 519 (5,412)
Materials and supplies 686 175 (1,711) (1,078)
Accounts payable (6,524) (26,228) (1,276) 5,611
Accrued taxes 27,336 80,601 (38,223) 40,728
Accrued interest (3,623) (3,014) 4,088 136
Wolf Creek refueling outage
accrual (9,016) 8,920 (6,493) 1,585
Pension and postretirement benefit
obligations (2,399) (5,835) (740) (3,680)
Other operating activities 9,452 626 13,151 (6,936)
Net cash from operating
activites 197,629 199,347 221,459 253,117
CASH FLOWS FROM INVESTING ACTIVITIES
Utility capital expenditures (76,624) (89,390) (121,304) (125,073)
Allowance for borrowed funds used
during construction (1,431) (1,490) (1,904) (1,718)
Purchases of investments (15,557) (37,811) (34,505) (64,975)
Purchases of nonutility property (15,380) 0 (15,380) 0
Other investing activities (4,445) 3,763 838 4,425
Net cash used in investing
activities (113,437) (124,928) (172,255) (187,341)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt 25,441 90,834 45,662 138,287
Repayment of long-term debt (54,230) (33,428) (54,230) (86,428)
Net change in short-term borrowings 16,000 (32,000) 35,000 (1,000)
Dividends paid (76,201) (74,243) (101,316) (98,657)
Other financing activities (363) 464 2,646 197
Net cash used in financing
activities (89,353) (48,373) (72,238) (47,601)
NET CHANGE IN CASH AND CASH
EQUIVALENTS (5,161) 26,046 (23,034) 18,175
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 28,390 20,217 46,263 28,088
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $23,229 $46,263 $23,229 $46,263
CASH PAID DURING THE PERIOD FOR:
Interest (net of amount capitalized) $45,560 $41,867 $51,893 $51,431
Income taxes $40,739 $23,074 $84,718 $41,537
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
September 30 September 30
1996 1995 1996 1995
Beginning balance $449,966 $426,738 $451,734 $431,143
Net income 88,406 99,239 111,753 119,248
538,372 525,977 563,487 550,391
Dividends declared 76,201 74,243 101,316 98,657
Ending balance $462,171 $451,734 $462,171 $451,734
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
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 our 1995 annual report on Form 10-K.
1. AGREEMENT AND PLAN OF MERGER WITH UTILICORP UNITED INC.
On September 18, 1996, KCPL terminated a definitive merger
agreement with UtiliCorp United Inc. (UtiliCorp) due to the failure of
KCPL shareholders to approve the shares issuance necessary to
consummate the merger. As a result of terminating the merger
agreement, $13 million in previously deferred merger costs and a $5
million termination fee were expensed. See discussion of merger
related legal proceedings in Part II - Other Information.
2. CONDITIONAL HOSTILE BID BY WESTERN RESOURCES, INC.
During the second quarter of 1996, Western Resources, Inc.
(Western Resources) delivered an unsolicited proposal to KCPL's Board
of Directors (the Western Resources Proposal). In the proposal,
Western Resources would acquire all of the outstanding shares of KCPL
common stock in a stock-for-stock transaction contingent on their
ability to achieve numerous conditions. This proposal calls for an
exchange of each share of KCPL common stock for Western Resources
common stock valued at $31.00, subject to a "collar" limiting the
amount of Western Resources common stock that holders of KCPL common
stock would receive to no more than 1.1 shares, and no less than 0.933
shares, of Western Resources common stock for each share of KCPL
common stock. After careful consideration of the Western Resources
Proposal, it was rejected by KCPL's Board of Directors, who determined
that it is not in the best interests of KCPL, its shareholders,
employees or customers.
In July 1996 Western Resources commenced its exchange offer for
KCPL common stock. Western Resources' proposed exchange offer is
still subject to numerous conditions, including the tender of at least
90% of the outstanding shares of KCPL common stock, the availability
of pooling of interests accounting, obtaining shareholder and
regulatory approvals, and complying with certain laws that may
prohibit the proposed transaction. The KCPL Board has recommended
that KCPL shareholders reject Western Resources' exchange offer and
not tender their shares.
The terminated UtiliCorp merger agreement included certain
termination provisions which would require an additional payment to
UtiliCorp by KCPL of $53 million upon the signing of an agreement to
combine or the closing of a combination with Western Resources within
two and one-half years from the termination of the UtiliCorp
agreement.
Through September 30, 1996, about $13 million in costs to defend
against this unsolicited proposal, including costs to explain to KCPL
shareholders why the Board of Directors rejected this offer, were
expensed.
3. MISSOURI STIPULATION AND AGREEMENT
During July 1996 the Missouri Public Service Commission approved
a stipulation and agreement to implement new pricing structures for
our Missouri customers, reduce Missouri annual electric revenues, and
increase depreciation and amortization expense.
The revenue reduction will take place in two phases. Phase one,
implemented in July 1996, is designed to reduce revenues from
commercial and industrial customers by an estimated $9 million per
year. The overall decrease is achieved with an increase in summer
revenues offset by a larger decrease in winter revenues. This design
more closely follows our increased costs of generating electricity in
the summer. In addition, depreciation and amortization expense will
increase a total of $9 million per year.
The second phase, scheduled to take effect January 1, 1997, will
further reduce Missouri residential, commercial and industrial
revenues by an estimated $11 million per year.
4. SECURITIES AVAILABLE FOR SALE
KLT Inc., a wholly-owned subsidiary of KCPL, held a $5 million
investment in convertible preferred stock. In September 1996 the
investee company completed a public offering triggering conversion of
the preferred stock into common stock. As a result of the conversion,
the carrying value of the investment at September 30, 1996, was
adjusted to its market value of $16.3 million. The $11.3 million
increase in market value over original cost results in an unrealized
gain at September 30, 1996, of $6.9 million (net of deferred taxes of
$4.4 million).
5. CAPITALIZATION
From January 1 to September 30, 1996, KCPL repaid $47 million in
medium-term notes (notes). From October 1 through November 5, 1996,
KCPL borrowed an additional $50 million in notes decreasing the amount
of registered but unissued notes from $98 million at September 30,
1996, to $48 million.
KLT Inc. amended its long-term revolving line of credit agreement
during the second quarter of 1996. The agreement was revised to
extend the maturity date to 1999 and increase the amount of credit
available to $150 million. The other significant terms of the
agreement were not changed. As of September 30, 1996, $43 million had
been borrowed against this line. From October 1 through November 5,
1996, an additional $3 million was borrowed against this line.
6. SUBSEQUENT EVENT
On October 22, 1996, heavy snow caused roughly 175,000 customer
outages throughout the KCPL service territory. Early estimates
indicate the costs to repair damage from this storm could exceed $10
million. The Company plans on filing requests with the Missouri Public
Service Commission and the Kansas Corporation Commission for approval
to defer incremental storm expenses and amortize the deferral over a
five year period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
REGULATION AND COMPETITION
As competition develops throughout the electric utility industry,
we are positioning Kansas City Power & Light Company (KCPL) to excel
in an open market. We're improving the efficiency of KCPL's core
utility operations and creating growth through its unregulated
subsidiary. As competition presents new opportunities, we will also
consider various strategies including partnerships, acquisitions,
combinations, additions to or dispositions of service territory, and
restructuring wholesale and retail businesses.
Competition in the electric utility industry was accelerated with
the National Energy Policy Act of 1992. This gave the Federal Energy
Regulatory Commission (FERC) the authority to require electric
utilities to provide transmission line access to independent power
producers (IPPs) and other utilities (wholesale wheeling). KCPL,
already active in the wholesale wheeling market, was one of the first
utilities to receive FERC's approval of an open-access tariff for
wholesale wheeling transactions. In April 1996 FERC issued an order
requiring all owners of transmission facilities to adopt open-access
tariffs and participate in wholesale wheeling. KCPL has made the
necessary filings to comply with additional terms required by the
April order.
Certain states have also adopted open access requirements for
utilities' retail electric service, allowing competing suppliers
access to their retail customers (retail wheeling). Many other
states, including Kansas, are actively considering retail wheeling.
Retail wheeling provides growth opportunities for low-cost producers
and risks for higher cost producers, especially those with large
industrial customers. The loss of major customers could result in
under-utilized assets and place an unfair burden on the remaining
customer base or shareholders if an adequate and fair provision for
recovery of these lost revenues is not provided.
Although Missouri and Kansas have not yet authorized retail
wheeling, we believe KCPL is positioned well to compete in an open
market with its diverse customer mix and pricing strategies. About
22% of KCPL's retail mwh sales are to industrial customers compared to
the utility average of about 35%. KCPL has a flexible rate structure
with industrial rates that are competitively priced within our region.
In addition, long-term contracts are in place or under negotiation for
a large portion of KCPL's industrial sales. There has not been direct
competition for retail electric service in our service territory
although there has been competition in the bulk power market and
between alternative fuels.
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 stop meeting 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. KCPL's regulatory assets will be maintained as long as
FASB 71 requirements are met. In a competitive environment, electric
rates and therefore asset recoverability would be determined by the
market place. These rates could be lower than regulated cost-based
rates.
NONREGULATED OPPORTUNITIES
In 1992 we formed KLT Inc. to supplement the growth of our
electric utility operations. It is a wholly-owned subsidiary pursuing
nonregulated, mainly energy-related business ventures. KLT's strategy
capitalizes on new market opportunities by combining our expertise in
energy-related fields with the knowledge of our joint venture
partners. Existing ventures include investments in domestic and
international nonregulated power production, energy services, oil and
gas reserves, and affordable housing limited partnerships.
KLT has grown steadily since inception. We had a total equity
investment in KLT of $51 million as of September 30, 1996, and expect
that investment to grow to about $165 million within the next five
years. KLT's consolidated assets at September 30, 1996, totaled $201
million. Within the next five years we expect KLT's consolidated
assets to exceed $500 million, generated through the $165 million of
equity investment, subsidiary retained earnings and borrowings. The
growth of KLT accounts for the majority of the increase in KCPL's
consolidated investments and nonutility property.
RESULTS OF OPERATIONS
Three-month three months ended September 30, 1996,
period: compared with three months ended September 30,
1995
Nine-month nine months ended September 30, 1996,
period: compared with nine months ended September 30,
1995
Twelve-month twelve months ended September 30, 1996,
period: compared with twelve months ended September 30,
1995
EARNINGS OVERVIEW
Earnings Per Share (EPS)
For the Periods Ended
September 30
___________________________
1996 1995 Decrease
_____ _____ ________
Three months ended $0.57 $0.91 $(0.34)
Nine months ended $1.38 $1.55 $(0.17)
Twelve months ended $1.74 $1.86 $(0.12)
Current period earnings decreased significantly due to extremely
mild weather during the third quarter of 1996 and the termination of
the UtiliCorp merger agreement. Terminating the merger agreement and
continuing to defend against Western Resources' hostile offer reduced
EPS for the three-month period by $0.26 and for the nine- and twelve-
month periods by $0.31. In addition, EPS for the prior nine- and
twelve-month periods include a $0.05 per share gain on the sale of
rail cars.
Despite the unfavorable weather and merger related charges,
continued load growth contributed favorably to EPS in all periods. In
addition, a new pricing structure for Missouri customers designed to
increase summer revenues and decrease winter and overall revenues
contributed about $0.05 per share to third-quarter earnings.
MEGAWATT-HOUR (MWH) SALES AND OPERATING REVENUES
Sales and revenue data:
(revenue change in millions)
Periods ended September 30, 1996 versus
September 30, 1995
Three Months Nine Months Twelve Months
Mwh Revenues Mwh Revenues Mwh Revenues
Increase (decrease)
Retail Sales:
Residential (12)% $ (11) 1 % $ 3 3 % $ 8
Commercial (3) % (1) 4 % 12 4 % 15
Industrial 8 % 1 6 % 5 4 % 5
Other (4) % - (5)% - (6)% -
Total Retail (5) % (11) 3 % 20 3 % 28
Sales for Resale:
Bulk Power Sales 46 % 4 (3)% 1 5 % 1
Other 38 % - 23 % - 19 % -
Total (7) 21 29
Other revenues - - 4
Total Operating
Revenues $(7) $ 21 $ 33
In July 1996 we implemented phase one of a new Missouri pricing
structure designed to reduce revenues from commercial and industrial
customers by an estimated $9 million per year. The overall decrease
is achieved with an increase in summer revenues offset by a larger
decrease in winter revenues. This design more closely follows our
increased costs of generating electricity in the summer. This new
pricing structure increased third-quarter revenues about $6 million.
In addition, depreciation and amortization expense will increase a
total of $9 million per year. The second phase of this stipulation,
scheduled to take effect January 1, 1997, will further reduce Missouri
residential, commercial and industrial revenues by an estimated $11
million per year.
During April and May of 1995 the classification of about 600 net
commercial customers was changed to industrial to more appropriately
reflect their business operations. This change results in the
reclassification of about $680,000 (10,300 mwh sales) from commercial
to industrial in each subsequent month. Prior periods have not been
restated.
Extremely mild weather during the third quarter of 1996, compared
with above normal temperatures during the same period in 1995,
decreased third-quarter revenues significantly. Through the second
quarter of 1996, year-to-date and twelve-month weather conditions were
above normal and favorable compared with the prior year. However,
third-quarter conditions were so mild they reduced overall nine- and
twelve-month weather conditions below normal and the comparable 1995
periods.
Despite unfavorable weather, revenues and mwh sales for the nine-
and twelve-month periods increased due mainly to continued load
growth. Load growth consists of higher usage-per-customer as well as
the addition of new customers. Seasonal revenues also resulted in
increased customer accounts receivable at September 30, 1996, compared
with December 31, 1995.
KCPL has long-term sales contracts with certain major industrial
customers. These contracts are tailored to meet customers' needs in
exchange for their long-term commitment to purchase energy. Long-term
contracts are now in place for a large portion of KCPL's industrial
sales and more contracts are under negotiation. Overall, these
contracts tend to reduce the average mwh price of industrial sales.
Bulk power sales vary with system requirements, generating unit
and purchased power availability, fuel costs and the requirements of
other electric systems.
Total revenue per mwh sold varies with changes in the mix of mwh
sales among customer classifications and the effect of declining price
per mwh as usage increases. An automatic fuel adjustment provision is
included in only sales for resale tariffs, which apply to less than 1%
of revenues.
Future mwh sales and revenues per mwh will also be affected by
national and local economies, weather and customer conservation
efforts. Competition, 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
Combined fuel and purchased power expenses for the three-month
period decreased 2% or $1 million, despite a 2% increase in total mwh
sales (total of Retail and Sales for Resale). The decrease reflects
approximately $4 million in incremental costs incurred in the third
quarter of 1995 when a fire forced an outage at LaCygne I, a low-cost,
coal-fired generating unit. We replaced power by increasing the
generation at higher-cost, coal-fired units and purchasing power on
the wholesale market. Damage was covered by insurance, but the
incremental fuel and purchased power increased 1995 expenses. This
decrease is partially offset by additional capacity purchases in the
1996 period. These contracts provide a cost-effective alternative to
constructing new capacity.
Combined fuel and purchased power expenses increased 8% or $10
million for the nine-month period while total mwh sales increased only
2%. The additional expense reflects an increase in replacement power
expenses for Wolf Creek's spring 1996 refueling outage (see Wolf Creek
section), an increase in capacity purchases and an increase in the
charge for each mwh of power purchased. These year-to-date increases
are partially offset by the incremental LaCygne fire costs incurred in
the prior year.
Combined fuel and purchased power expenses increased 11% or $18
million for the twelve-month period while total mwh sales increased
only 4%. The additional expense reflects the increase in replacement
power expenses for Wolf Creek's spring 1996 refueling outage and an
increase in capacity purchases. Also contributing to the increase are
savings realized in the prior twelve-month period when Wolf Creek
completed a record short refueling outage. These twelve-month
increases are partially offset by the incremental LaCygne fire costs
incurred in the prior year.
Overall fuel prices varied only slightly in all periods as
increases in the cost of nuclear fuel were offset by decreases in the
cost of coal. While nuclear fuel costs remain much less than the
price of coal, the cost of nuclear fuel increased about 17% during the
twelve-month period. Nuclear fuel costs averaged 54% of the price of
coal during the current twelve months compared with 45% during the
prior twelve-month period. We expect this relationship to remain
around 55% to 60% through the year 2000. Coal continues to account for
about 75% of generation and nuclear fuel about 25%.
The average cost of coal burned decreased in all periods. Our
coal procurement strategies continue to provide coal costs well below
the regional average. We expect to maintain coal costs at or below
1995 levels through the year 2000.
OTHER OPERATION AND MAINTENANCE EXPENSES
Combined operations and maintenance expense for the nine- and
twelve-month periods reflect savings realized from Wolf Creek's 1995
and our 1994 voluntary early retirement programs. In addition, the
1995 periods reflect several one-time costs including repairs of the
June 1995 storm damage, an extended coal plant maintenance outage and
our share of Wolf Creek's voluntary early retirement program costs.
The timing of our normal maintenance program also resulted in changes
in maintenance expense between periods.
We continue to emphasize new technologies, improved methods and
cost control. We are changing processes to provide increased
efficiencies and improved operations. Through the use of CellNet, a
wireless data network, most of our customer meters will be
automatically read by the end of 1996. Using this network, we can
provide an expanded line of products and services to customers in most
of our service area. These types of changes have allowed us to
assimilate work performed by those who elected to take part in the
early retirement program.
OTHER INCOME
Miscellaneous Income
The nine and twelve months ended September 30, 1995, include a
net $5 million gain from the sale of steel railcars, which were
replaced by leased aluminum cars. Aluminum cars are lighter-
weight and offer more coal capacity per car, contributing to
lower delivered coal prices. The sale occurred in the first
quarter of 1995. The third quarter of 1995 includes an
adjustment to reduce this gain from $8 million to $5 million.
The adjustment was based on a re-calculation of the cars' net
cost.
The 1996 periods also reflect increased miscellaneous income from
certain subsidiary investments.
Miscellaneous Deductions
Miscellaneous deductions increased in all periods due to the
termination of the UtiliCorp merger agreement and the continued
defense against Western Resources' hostile offer. During the
third quarter of 1996, $13 million in previously deferred merger
costs and a $5 million termination fee were expensed. In
addition, costs incurred to defend against Western Resources'
unsolicited proposal increased expense in the three-month period
by $8 million, and in the nine- and twelve-month periods by $13
million. (See Notes 1 & 2 to the Financial Statements.)
All periods reflect increased subsidiary operating expenses.
Income Taxes
During the first nine months of 1996, we accrued tax credits of
$8.5 million, or three-fourths, of the total expected 1996
credits related to KLT's affordable housing partnership
investments. During the first nine months of 1995, we accrued
tax credits of $3.4 million. Accrued tax credits for the twelve-
month period increased $5 million. The 1995 nine- and twelve-
month periods also reflect the 1995 income tax expense related to
the gain on the sale of railcars. Non-taxable increases in the
cash surrender value of corporate-owned life insurance contracts
also affect the relationship between miscellaneous deductions and
income taxes.
INTEREST CHARGES
Long-term interest expense for the nine- and twelve-month periods
increased mainly due to increases in subsidiary debt. These
borrowings were used to make additional subsidiary investments,
including affordable housing limited partnerships. The affordable
housing partnerships provide tax benefits that more than offset the
related interest expense.
WOLF CREEK
Wolf Creek, one of KCPL's principal generating units, represents
about 18% of accredited generating capacity. The plant's operating
performance has remained strong, contributing about 25% of annual mwh
generation while operating, on average, above 80% of capacity over the
last three years. It has the lowest fuel cost of any of KCPL's
generating units. The Utility Data Institute, an industry database,
ranked Wolf Creek as the third-most economical nuclear plant in the
nation, based on 1995 production costs per net mwh generated.
During 1994 Wolf Creek completed its seventh scheduled refueling
and maintenance outage in only 47 days, a plant record. Its eighth
scheduled refueling and maintenance outage began in early February
1996 and was completed in April 1996 (64 days). The incremental
operating, maintenance and replacement power costs are accrued evenly
over the unit's operating cycle, normally 18 months. As actual outage
expenses are incurred, the refueling liability and related deferred
tax asset are reduced. The eighth outage started one month early when
the plant was shut-down after water flow from the cooling lake was
restricted by ice buildup on an intake screen. This extended the
length of the outage and is the primary reason for the increase in
Wolf Creek related replacement power and maintenance expenses for the
nine- and twelve-month periods.
Currently, no major equipment replacements are expected, but an
extended shut-down of Wolf Creek could have a substantial adverse
effect on KCPL'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 units. If a long-term shut-down occurred, the state
regulatory commissions could consider reducing rates by excluding the
Wolf Creek investment from rate base.
Ownership and operation of a nuclear generating unit exposes KCPL
to potential retrospective assessments and property losses in excess
of insurance coverage.
CAPITAL REQUIREMENTS AND LIQUIDITY
As of September 30, 1996, KCPL's liquid resources included cash
flows from operations, $98 million of registered but unissued medium-
term notes (notes) and $351 million of unused bank lines of credit.
The unused lines consist of KCPL's short-term bank lines of credit of
$244 million and KLT's long-term revolving line of credit of $107
million.
Effective October 1, 1996, KCPL increased its available short-
term lines of credit $36 million to $280 million. Also, from October
1 through November 5, 1996, KCPL borrowed an additional $50 million in
notes and KLT borrowed an additional $3 million against its line of
credit.
KCPL continues to generate positive cash flows from operating
activities, although individual components of working capital will
vary with normal business cycles and operations including the timing
of receipts and payments. The fluctuations in deferred income taxes,
investment tax credits and accrued taxes mainly result from the first
quarter 1995 settlement of the Internal Revenue Service audit and the
timing of the Wolf Creek refueling outage.
During the twelve months ended September 30, 1996, KCPL's
dividend payout ratio was 91%. We expect day-to-day operations,
utility construction requirements and dividends to be met with
internally-generated funds. Uncertainties affecting our ability to
meet these requirements with internally-generated funds include the
effect of inflation on operating expenses, the level of mwh sales,
regulatory actions, compliance with future environmental regulations
and the availability of generating units. We might incur additional
debt and/or issue additional equity to finance growth or take
advantage of new opportunities.
Through the first nine months of 1996, KLT issued about $20
million in long-term debt to finance nonutility investments. KCPL's
short-term borrowings increased during this period mainly to repay
maturing medium-term notes and make quarterly income tax payments.
Debt service requirements will be provided from operations,
refinancings and/or short-term debt.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On May 20, 1996, KCPL commenced litigation captioned Kansas
City Power & Light Co. v. Western Resources, Inc., et al., C.A. No.
96-0552-CV-W-5 in the United States District Court for the Western
District of Missouri, Western Division (District Court), against
Western Resources, Inc. (Western Resources) and Robert L. Rives
(Rives). KCPL sought a declaratory judgment that the Amended and
Restated Agreement and Plan of Merger by and among KCPL, KC Merger
Sub, Inc., UtiliCorp and KC United Corp., dated as of January 19,
1996, as amended and restated as of May 20, 1996 (Amended Merger
Agreement), and the transactions contemplated thereby
(collectively, the Transaction) were in accordance with Missouri
law and were not void, voidable, nor subject to injunction or
rescission based upon any claim that KCPL's directors, officers or
agents acted illegally or inequitably in adopting the Amended
Merger Agreement. On May 24, 1996, Jack R. Manson (Manson), a
shareholder of KCPL, filed a motion to intervene in the above
action as a representative of a class consisting of similarly
situated KCPL shareholders. On June 7, 1996, this motion to
intervene was granted. Manson filed counterclaims against KCPL and
each of its directors alleging that KCPL and its directors breached
their fiduciary duties, and their actions in adopting the Amended
Merger Agreement were illegal and ultra vires; that the adoption of
the Amended Merger Agreement illegally deprived KCPL shareholders
of voting and appraisal rights under Missouri law; and that the
adoption of the Amended Merger Agreement was a disproportionate
response to Western Resources' acquisition offer.
On June 7, 1996, Western Resources and Rives answered the
complaint and asserted two counterclaims against KCPL, alleging
that the Amended Merger Agreement was illegal under Missouri law
because it did not require approval of two-thirds of all
outstanding KCPL shares and did not provide dissenters' rights to
KCPL shareholders, and that the directors of KCPL breached their
fiduciary duties by adopting the Amended Merger Agreement.
On July 25 and 26, 1996, the District Court heard evidence and
argument on the issues of the legality of the Amended Merger
Agreement and its adoption. On August 2, 1996, the District Court
ruled that although the transactions contemplated by the Amended
Merger Agreement were legally valid and authorized under Missouri
law, their use in conjunction would result in a merger between KCPL
and UtiliCorp, rendering applicable the Missouri statute requiring
approval of certain mergers by two-thirds of the outstanding shares
of the merging corporation's stock. There have been no material
developments in the litigation since the District Court's ruling.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held a Special Meeting of Shareholders on
August 16, 1996, to vote on matters relating to the proposed merger
of the Company and UtiliCorp United Inc. (combined company to be
named Maxim Energy Inc.). At that meeting, votes cast with respect
to the approval of the issuance of up to a maximum of 54,000,000
shares of Kansas City Power & Light Company common stock, no par
value, pursuant to the Merger Agreement with UtiliCorp United Inc.
were as follows:
FOR AGAINST ABSTAIN
23,581,467 25,150,026 904,477
With respect to the approval of the Maxim Stock Incentive
Plan, the votes cast were as follows:
FOR AGAINST ABSTAIN
20,559,889 16,760,032 12,316,049
With respect to the approval of the Maxim Management Incentive
Compensation Plan, the votes cast were as follows:
FOR AGAINST ABSTAIN
21,073,523 16,027,603 12,534,845
Since the share issuance, which was a condition to the
consummation of the merger, was not approved, the two incentive
plans will not be implemented. For information regarding
termination of the Merger Agreement with UtiliCorp, see "Notes to
Consolidated Financial Statements" on page 5 of this Form 10-Q.
Item 6. Exhibits and Reports on Form 8-K.
Exhibits
3(ii). By-laws of the Company, as amended August 6, 1996.
27. Financial Data Schedule (for the nine months ended
September 30, 1996).
Reports on Form 8-K
A Report on Form 8-K was filed with the Securities and
Exchange Commission on September 19, 1996, with attached copy of a
press release announcing Kansas City Power & Light Company and
UtiliCorp United Inc. had terminated the Amended and Restated
Agreement and Plan of Merger among Kansas City Power & Light
Company, KC Merger Sub, Inc., UtiliCorp United Inc., and KC United
Corp, dated as of January 19, 1996, and as amended May 20, 1996.
<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: November 7, 1996 /s/Drue Jennings
(Drue Jennings)
(Chief Executive Officer)
Dated: November 7, 1996 /s/Neil Roadman
(Neil Roadman)
(Principal Accounting Officer)
<PAGE>
Exhibit 3(ii)
KANSAS CITY POWER & LIGHT COMPANY
BY-LAWS
AS AMENDED AUGUST 6, 1996
<PAGE>
KANSAS CITY POWER & LIGHT COMPANY
BY-LAWS
ARTICLE I
Offices
Section 1. The registered office of the Company in the
State of Missouri shall be at 1201 Walnut, in Kansas City,
Jackson County, Missouri.
Section 2. The Company also may have offices at such other
places either within or without the State of Missouri as the
Board of Directors may from time to time determine or the
business of the Company may require.
ARTICLE II
Shareholders
Section 1. All meetings of the shareholders shall be held
at such place within or without the State of Missouri as may be
selected by the Board of Directors or Executive Committee, but if
the Board of Directors or Executive Committee shall fail to
designate a place for said meeting to be held, then the same
shall be held at the principal place of business of the Company.
Section 2. An annual meeting of the shareholders shall be
held on May 22 in each year, if not a legal holiday, and if a
legal holiday, then on the first succeeding day which is not a
legal holiday or Sunday, at ten o'clock in the forenoon, for the
purpose of electing directors of the Company and transacting such
other business as may properly be brought before the meeting.
Section 3. Unless otherwise expressly provided in the
Restated Articles of Consolidation of the Company with respect to
the Cumulative Preferred Stock, Cumulative No Par Preferred Stock
or Preference Stock, special meetings of the shareholders may
only be called by the Chairman of the Board, by the President or
at the request in writing of a majority of the Board of
Directors. Special meetings of shareholders of the Company may
not be called by any other person or persons.
Section 4. Written or printed notice of each meeting of the
shareholders, annual or special, shall be given in the manner
provided in the corporation laws of the State of Missouri. In
case of a call for any special meeting, the notice shall state
the time, place and purpose of such meeting.
Any notice of a shareholders' meeting sent by mail shall be
deemed to be delivered when deposited in the United States mail
with postage thereon prepaid addressed to the shareholder at his
address as it appears on the records of the Company.
In addition to the written or printed notice provided for in
the first paragraph of this Section, published notice of each
meeting of shareholders shall be given in such manner and for
such period of time as may be required by the laws of the State
of Missouri at the time such notice is required to be given.
Section 5. Attendance of a shareholder at any meeting shall
constitute a waiver of notice of such meeting except where a
shareholder attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting
is not lawfully called or convened.
Section 6. At least ten days before each meeting of the
shareholders, a complete list of the shareholders entitled to
vote at such meeting, arranged in alphabetical order with the
address of and the number of shares held by each, shall be
prepared by the officer having charge of the transfer book for
shares of the Company. Such list, for a period of ten days prior
to such meeting, shall be kept on file at the registered office
of the Company and shall be subject to inspection by any
shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original share ledger
or transfer book, or a duplicate thereof kept in the State of
Missouri, shall be prima facie evidence as to who are the
shareholders entitled to examine such list or share ledger or
transfer book or to vote at any meeting of shareholders.
Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at any such
meeting.
Section 7. Each outstanding share entitled to vote under
the provisions of the articles of consolidation of the Company
shall be entitled to one vote on each matter submitted at a
meeting of the shareholders. A shareholder may vote either in
person or by proxy executed in writing by the shareholder or by
his duly authorized attorney-in-fact. No proxy shall be valid
after eleven months from the date of its execution, unless
otherwise provided in the proxy.
At any election of directors of the Company, each holder of
outstanding shares of any class entitled to vote thereat shall
have the right to cast as many votes in the aggregate as shall
equal the number of shares of such class held, multiplied by the
number of directors to be elected by holders of shares of such
class, and may cast the whole number of votes, either in person
or by proxy, for one candidate, or distribute them among two or
more candidates as such holder shall elect.
Section 8. At any meeting of shareholders, a majority of
the outstanding shares entitled to vote represented in person or
by proxy shall constitute a quorum for the transaction of
business, except as otherwise provided by statute or by the
articles of consolidation or by these By-laws. The holders of a
majority of the shares represented in person or by proxy and
entitled to vote at any meeting of the shareholders shall have
the right successively to adjourn the meeting to a specified date
not longer than ninety days after any such adjournment, whether
or not a quorum be present. The time and place to which any such
adjournment is taken shall be publicly announced at the meeting,
and no notice need be given of any such adjournment to
shareholders not present at the meeting. At any such adjourned
meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as
originally called.
Section 9. The vote for directors and the vote on any other
question that has been properly brought before the meeting in
accordance with these By-laws shall be by ballot. Each ballot
cast by a shareholder must state the name of the shareholder
voting and the number of shares voted by him and if such ballot
be cast by a proxy, it must also state the name of such proxy.
All elections and all other questions shall be decided by
plurality vote, unless the question is one on which by express
provision of the statutes or of the articles of consolidation or
of these By-laws a different vote is required, in which case such
express provision shall govern and control the decision of such
question.
Section 10. The Chairman of the Board, or in his absence
the President of the Company, shall convene all meetings of the
shareholders and shall act as chairman thereof. The Board of
Directors may appoint any shareholder to act as chairman of any
meeting of the shareholders in the absence of the Chairman of the
Board and the President, and in the case of the failure of the
Board so to appoint a chairman, the shareholders present at the
meeting shall elect a chairman who shall be either a shareholder
or a proxy of a shareholder.
The Secretary of the Company shall act as secretary of all
meetings of shareholders. In the absence of the Secretary at any
meeting of shareholders, the presiding officer may appoint any
person to act as secretary of the meeting.
Section 11. At any meeting of shareholders where a vote by
ballot is taken for the election of directors or on any
proposition, the person presiding at such meeting shall appoint
not less than two persons, who are not directors, as inspectors
to receive and canvass the votes given at such meeting and
certify the result to him. Subject to any statutory requirements
which may be applicable, all questions touching upon the
qualification of voters, the validity of proxies, and the
acceptance or rejection of votes shall be decided by the
inspectors. In case of a tie vote by the inspectors on any
question, the presiding officer shall decide the issue.
Section 12. Unless otherwise provided by statute or by the
articles of consolidation, any action required to be taken by
shareholders may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by
all of the shareholders entitled to vote with respect to the
subject matter thereof.
Section 13. No business may be transacted at an annual
meeting of shareholders, other than business that is either
(a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors
(or any duly authorized committee thereof), (b) otherwise
properly brought before the annual meeting by or at the direction
of the Board of Directors (or any duly authorized committee
thereof) or (c) otherwise properly brought before the annual
meeting by any shareholder of the Company (i) who is a
shareholder of record on the date of the giving of the notice
provided for in this Section 13 and on the record date for the
determination of shareholders entitled to vote at such annual
meeting and (ii) who complies with the notice procedure set forth
in this Section 13.
In addition to any other applicable requirements, for
business to be properly brought before an annual meeting by a
shareholder, such shareholder must have given timely notice
thereof in proper written form to the Secretary of the Company.
To be timely, a shareholder's notice to the Secretary must
be delivered to or mailed and received at the principal executive
offices of the Company not less than sixty (60) days nor more
than ninety (90) days prior to the date of the annual meeting of
shareholders; provided, however, that in the event that less than
seventy (70) days' notice or prior public disclosure of the date
of the meeting is given to shareholders, notice by the
shareholder to be timely must be so received not later than the
close of business on the tenth (10th) day following the day on
which such notice of the date of the annual meeting was mailed or
such public disclosure of the date of the annual meeting was
made, whichever first occurs.
To be in proper written form, a shareholder's notice to the
Secretary must set forth as to each matter such shareholder
proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at
the annual meeting, (ii) the name and record address of such
shareholder, (iii) the class or series and number of shares of
capital stock of the Company that are owned beneficially or of
record by such shareholder, (iv) a description of all
arrangements or understandings between such shareholder and any
other person or persons (including their names) in connection
with the proposal of such business by such shareholder and any
material interest of such shareholder in such business and (v) a
representation that such shareholder intends to appear in person
or by proxy at the annual meeting to bring such business before
the meeting.
No business shall be conducted at the annual meeting of
shareholders except business brought before the annual meeting in
accordance with the procedures set forth in this Section 13,
provided, however, that, once business has been properly brought
before the annual meeting in accordance with such procedures,
nothing in this Section 13 shall be deemed to preclude discussion
by any shareholder of any such business. If the Chairman of an
annual meeting determines that business was not properly brought
before the annual meeting in accordance with the foregoing
procedures, the Chairman shall declare to the meeting that the
business was not properly brought before the meeting and such
business shall not be transacted.
ARTICLE III
Board of Directors
Section 1. The property, business and affairs of the
Company shall be managed and controlled by a Board of Directors
which may exercise all such powers of the Company and do all such
lawful acts and things as are not by statute or by the articles
of consolidation or by these By-laws directed or required to be
exercised or done by the shareholders.
Section 2. The Board of Directors shall consist of nine
directors who shall be elected at the annual meeting of the
shareholders. Each director shall be elected to serve until the
next annual meeting of the shareholders and until his successor
shall be elected and qualified. Directors need not be
shareholders.
Section 3. In case of the death or resignation of one or
more of the directors of the Company, a majority of the remaining
directors, though less than a quorum, may fill the vacancy or
vacancies until the successor or successors are elected at a
meeting of the shareholders. A director may resign at any time
and the acceptance of his resignation shall not be required in
order to make it effective.
Section 4. The Board of Directors may hold its meetings
either within or without the State of Missouri at such place as
shall be specified in the notice of such meeting.
Section 5. Regular meetings of the Board of Directors shall
be held as the Board of Directors by resolution shall from time
to time determine. The Secretary or an Assistant Secretary shall
give at least five days' notice of the time and place of each
such meeting to each director in the manner provided in Section 9
of this Article III. The notice need not specify the business to
be transacted.
Section 6. Special meetings of the Board of Directors shall
be held whenever called by the Chairman of the Board, the
President or three members of the Board and shall be held at such
place as shall be specified in the notice of such meeting.
Notice of such special meeting stating the place, date and hour
of the meeting shall be given to each director either by mail not
less than forty-eight (48) hours before the date of the meeting,
or personally or by telephone, telecopy, telegram, telex or
similar means of communication on twenty-four (24) hours' notice,
or on such shorter notice as the person or persons calling such
meeting may deem necessary or appropriate in the circumstances.
Section 7. A majority of the full Board of Directors as
prescribed in these By-laws shall constitute a quorum for the
transaction of business. The act of the majority of the
directors present at a meeting at which a quorum is present shall
be the act of the Board of Directors. If a quorum shall not be
present at any meeting of the directors, the directors present
may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be
present. Members of the Board of Directors or of any committee
designated by the Board of Directors may participate in a meeting
of the Board or committee by means of conference telephone or
similar communications equipment whereby all persons
participating in the meeting can hear each other, and
participation in a meeting in this manner shall constitute
presence in person at the meeting.
Section 8. The Board of Directors, by the affirmative vote
of a majority of the directors then in office, and irrespective
of any personal interest of any of its members, shall have
authority to establish reasonable compensation for directors.
Compensation for nonemployee directors may include both a stated
annual retainer and a fixed fee for attendance at each regular or
special meeting of the Board. Nonemployee members of special or
standing committees of the Board may be allowed a fixed fee for
attending committee meetings. Any director may serve the Company
in any other capacity and receive compensation therefor. Each
director may be reimbursed for his expenses, if any, in attending
regular and special meetings of the Board and committee meetings.
Section 9. Whenever under the provisions of the statutes or
of the articles of consolidation or of these By-laws, notice is
required to be given to any director, it shall not be construed
to require personal notice, but such notice may be given by
telephone, telecopy, telegram, telex or similar means of
communication addressed to such director at such address as
appears on the books of the Company, or by mail by depositing the
same in a post office or letter box in a postpaid, sealed wrapper
addressed to such director at such address as appears on the
books of the Company. Such notice shall be deemed to be given at
the time when the same shall be thus telephoned, telecopied,
telegraphed or mailed.
Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting except where a director attends
a meeting for the express purpose of objecting to the transaction
of any business because the meeting is not lawfully called or
convened.
Section 10. The Board of Directors may by resolution provide
for an Executive Committee of said Board, which shall serve at
the pleasure of the Board of Directors and, during the intervals
between the meetings of said Board, shall possess and may
exercise any or all of the powers of the Board of Directors in
the management of the business and affairs of the corporation,
except with respect to any matters which, by resolution of the
Board of Directors, may from time to time be reserved for action
by said Board.
Section 11. The Executive Committee, if established by the
Board, shall consist of the Chief Executive Officer of the
Company and two or more additional directors, who shall be
elected by the Board of Directors to serve at the pleasure of
said Board until the first meeting of the Board of Directors
following the next annual meeting of shareholders and until their
successors shall have been elected. Vacancies in the Committee
shall be filled by the Board of Directors.
Section 12. Meetings of the Executive Committee shall be
held whenever called by the chairman or by a majority of the
members of the committee, and shall be held at such time and
place as shall be specified in the notice of such meeting. The
Secretary or an Assistant Secretary shall give at least one day's
notice of the time, place and purpose of each such meeting to
each committee member in the manner provided in Section 9 of this
Article III, provided, that if the meeting is to be held outside
of Kansas City, Missouri, at least three days' notice thereof
shall be given.
Section 13. At all meetings of the Executive Committee, a
majority of the committee members shall constitute a quorum and
the unanimous act of all the members of the committee present at
a meeting where a quorum is present shall be the act of the
Executive Committee. All action by the Executive Committee shall
be reported to the Board of Directors at its meeting next
succeeding such action.
Section 14. In addition to the Executive Committee provided
for by these By-laws, the Board of Directors, by resolution
adopted by a majority of the whole Board of Directors, (i) shall
designate, as standing committees, an Audit Committee and a
Nominating & Compensation Committee, each to consist of three or
more nonemployee directors, and (ii) may designate one or more
special committees, each consisting of two or more directors.
Each standing or special committee shall have and may exercise so
far as may be permitted by law and to the extent provided in such
resolution or resolutions or in these By-laws, the
responsibilities of the business and affairs of the corporation.
The Board of Directors may, at its discretion, appoint qualified
directors as alternate members of a standing or special committee
to serve in the temporary absence or disability of any member of
a committee. Except where the context requires otherwise,
references in these By-laws to the Board of Directors shall be
deemed to include the Executive Committee, a standing committee
or a special committee of the Board of Directors duly authorized
and empowered to act in the premises.
Section 15. Each standing or special committee shall record
and keep a record of all its acts and proceedings and report the
same from time to time to the Board of Directors.
Section 16. Regular meetings of any standing or special
committee, of which no notice shall be necessary, shall be held
at such times and in such places as shall be fixed by majority of
the committee. Special meetings of a committee shall be held at
the request of any member of the committee. Notice of each
special meeting of a committee shall be given not later than one
day prior to the date on which the special meeting is to be held.
Notice of any special meeting need not be given to any member of
a committee, if waived by him in writing or by telegraph before
or after the meeting; and any meeting of a committee shall be a
legal meeting without notice thereof having been given, if all
the members of the committee shall be present.
Section 17. A majority of any committee shall constitute a
quorum for the transaction of business, and the act of a majority
of those present, by telephone conference call or otherwise, at
any meeting at which a quorum is present shall be the act of the
committee. Members of any committee shall act only as a
committee and the individual members shall have no power as such.
Section 18. The members or alternates of any standing or
special committee shall serve at the pleasure of the Board of
Directors.
Section 19. If all the directors severally or collectively
shall consent in writing to any action which is required to be or
may be taken by the directors, such consents shall have the same
force and effect as a unanimous vote of the directors at a
meeting duly held. The Secretary shall file such consents with
the minutes of the meetings of the Board of Directors.
Section 20. Only persons who are nominated in accordance
with the following procedures shall be eligible for election as
directors of the Company, except as may be otherwise provided in
the Restated Articles of Consolidation of the Company with
respect to the right of holders of Preferred Stock to nominate
and elect a specified number of directors in certain
circumstances. Nominations of persons for election to the Board
of Directors may be made at any annual meeting of shareholders
(a) by or at the direction of the Board of Directors (or any duly
authorized committee thereof) or (b) by any shareholder of the
Company (i) who is a shareholder of record on the date of the
giving of the notice provided for in this Section 20 and on the
record date for the determination of shareholders entitled to
vote at such annual meeting and (ii) who complies with the notice
procedures set forth in this Section 20.
In addition to any other applicable requirements, for a
nomination to be made by a shareholder, such shareholder must
have given timely notice thereof in proper written form to the
Secretary of the Company.
To be timely, a shareholder's notice to the Secretary must
be delivered to or mailed and received at the principal executive
offices of the Company not less than sixty (60) days nor more
than ninety (90) days prior to the date of the annual meeting of
shareholders; provided, however, that in the event that less than
seventy (70) days' notice or prior public disclosure of the date
of the meeting is given to shareholders, notice by the
shareholder in order to be timely must be so received not later
than the close of business on the tenth (10) day following the
day on which such notice of the date of the annual meeting was
mailed or such public disclosure of the date of the annual
meeting was made, whichever first occurs.
To be in proper written form, a shareholder's notice to the
Secretary must set forth (a) as to each person whom the
shareholder proposes to nominate for election as a director
(i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of capital
stock of the Company that are owned beneficially or of record by
the person and (iv) any other information relating to the person
that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to
Section 14 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations promulgated
thereunder; and (b) as to the shareholder giving the notice
(i) the name and record of such shareholder, (ii) the class or
series and number of shares of capital stock of the Company that
are owned beneficially or of record by such shareholder, (iii) a
description of all arrangements or understandings between such
shareholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the
nomination(s) are to be made by such shareholder, (iv) a
representation that such shareholder intends to appear in person
or by proxy at the meeting to nominate the persons named in the
notice and (v) any other information relating to such shareholder
that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to
Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a
written consent of each proposed nominee to being name as a
nominee and to serve as a director if elected.
No person shall be eligible for election as a director of
the Company unless nominated in accordance with the procedures
set forth in this Section 20. If the Chairman of the annual
meeting determines that a nomination was not made in accordance
with the foregoing procedures, the Chairman shall declare to the
meeting that the nomination was defective and such defective
nomination shall be disregarded.
ARTICLE IV
Officers
Section 1. The officers of the Company shall include a
Chairman of the Board, a President, one or more Vice Presidents,
a Secretary, one or more Assistant Secretaries, a Treasurer and
one or more Assistant Treasurers, all of whom shall be appointed
by the Board of Directors. Any one person may hold two or more
offices except that the offices of President and Secretary may
not be held by the same person.
Section 2. The officers of the Company shall be appointed
annually by the Board of Directors. The office of Chairman of
the Board may or may not be filled, as may be deemed advisable by
the Board of Directors.
Section 3. The Board of Directors may from time to time
appoint such other officers as it shall deem necessary or
expedient, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as the Board of
Directors or the Chief Executive Officer may from time to time
determine.
Section 4. The officers of the Company shall hold office
until their successors shall be chosen and shall qualify. Any
officer appointed by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the whole board.
If the office of any officer becomes vacant for any reason, or if
any new office shall be created, the vacancy may be filled by the
Board of Directors.
Section 5. The salaries of all officers of the Company
shall be fixed by the Board of Directors.
ARTICLE V
Powers and Duties of Officers
Section 1. The Board of Directors shall designate the Chief
Executive Officer of the Company, who may be either the Chairman
of the Board or the President. The Chief Executive Officer shall
have general and active management of and exercise general
supervision of the business and affairs of the Company, subject,
however, to the right of the Board of Directors, or the Executive
Committee acting in its stead, to delegate any specific power to
any other officer or officers of the Company, and the Chief
Executive Officer shall see that all orders and resolutions of
the Board of Directors and the Executive Committee are carried
into effect. During such times when neither the Board of
Directors nor the Executive Committee is in session, the Chief
Executive Officer of the Company shall have and exercise full
corporate authority and power to manage the business and affairs
of the Company (except for matters required by law, the By-laws
or the articles of consolidation to be exercised by the
shareholders or Board itself or as may otherwise be specified by
orders or resolutions of the Board) and the Chief Executive
Officer shall take such actions, including executing contracts or
other documents, as he deems necessary or appropriate in the
ordinary course of the business and affairs of the Company. The
Vice Presidents and other authorized persons are authorized to
take actions which are (i) routinely required in the conduct of
the Company's business or affairs, including execution of
contracts and other documents incidental thereto, which are
within their respective areas of assigned responsibility, and
(ii) within the ordinary course of the Company's business or
affairs as may be delegated to them respectively by the Chief
Executive Officer.
Section 2. The Chairman of the Board shall preside at all
meetings of the shareholders and at all meetings of the Board of
Directors, and shall perform such other duties as the Board of
Directors shall from time to time prescribe, including, if so
designated by the Board of Directors, the duties of Chief
Executive Officer.
Section 3. The President, if not designated Chief Executive
Officer, shall perform such duties and exercise such powers as
shall be assigned to him from time to time by the Board of
Directors or the Chief Executive Officer. In the absence of the
Chairman of the Board, or if the position of Chairman of the
Board be vacant, the President shall preside at all meetings of
the shareholders and at all meetings of the Board of Directors.
Section 4. The Vice Presidents shall perform such duties
and exercise such powers as shall be assigned to them from time
to time by the Board of Directors or the Chief Executive Officer.
Section 5. The Secretary shall attend all meetings of the
shareholders, the Board of Directors and the Executive Committee,
and shall keep the minutes of such meetings. He shall give, or
cause to be given, notice of all meetings of the shareholders,
the Board of Directors and the Executive Committee, and shall
perform such other duties as may be prescribed by the Board of
Directors or the Chief Executive Officer. He shall be the
custodian of the seal of the Company and shall affix the same to
any instrument requiring it and, when so affixed, shall attest it
by his signature. He shall, in general, perform all duties
incident to the office of secretary.
Section 6. The Assistant Secretaries shall perform such of
the duties and exercise such of the powers of the Secretary as
shall be assigned to them from time to time by the Board of
Directors or the Chief Executive Officer or the Secretary, and
shall perform such other duties as the Board of Directors or the
Chief Executive Officer shall from time to time prescribe.
Section 7. The Treasurer shall have the custody of all
moneys and securities of the Company. He is authorized to
collect and receive all moneys due the Company and to receipt
therefor, and to endorse in the name of the Company and on its
behalf when necessary or proper all checks, drafts, vouchers or
other instruments for the payment of money to the Company and to
deposit the same to the credit of the Company in such
depositaries as may be designated by the Board of Directors. He
is authorized to pay interest on obligations and dividends on
stocks of the Company when due and payable. He shall, when
necessary or proper, disburse the funds of the Company, taking
proper vouchers for such disbursements. He shall render to the
Board of Directors and the Chief Executive Officer, whenever they
may require it, an account of all his transactions as Treasurer
and of the financial condition of the Company. He shall perform
such other duties as may be prescribed by the Board of Directors
or the Chief Executive Officer. He shall, in general, perform
all duties incident to the office of treasurer.
Section 8. The Assistant Treasurers shall perform such of
the duties and exercise such of the powers of the Treasurer as
shall be assigned to them from time to time by the Board of
Directors or the Chief Executive Officer or the Treasurer, and
shall perform such other duties as the Board of Directors or the
Chief Executive Officer shall from time to time prescribe.
Section 9. The Board of Directors may, by resolution,
require any officer to give the Company a bond (which shall be
renewed every six years) in such sum and with such surety or
sureties as shall be satisfactory to the Board for the faithful
performance of the duties of his office and for the restoration
to the Company, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his
control and belonging to the Company.
Section 10. In the case of absence or disability or refusal
to act of any officer of the Company, other than the Chairman of
the Board, the Chief Executive Officer may delegate the powers
and duties of such officer to any other officer or other person
unless otherwise ordered by the Board of Directors.
Section 11. The Chairman of the Board, the President, the
Vice Presidents and any other person duly authorized by
resolution of the Board of Directors shall severally have power
to execute on behalf of the Company any deed, bond, indenture,
certificate, note, contract or other instrument authorized or
approved by the Board of Directors.
Section 12. Unless otherwise ordered by the Board of
Directors, the Chairman of the Board, the President or any Vice
President of the Company (a) shall have full power and authority
to attend and to act and vote, in the name and on behalf of this
Company, at any meeting of shareholders of any corporation in
which this Company may hold stock, and at any such meeting shall
possess and may exercise any and all of the rights and powers
incident to the ownership of such stock, and (b) shall have full
power and authority to execute, in the name and on behalf of this
Company, proxies authorizing any suitable person or persons to
act and to vote at any meeting of shareholders of any corporation
in which this Company may hold stock, and at any such meeting the
person or persons so designated shall possess and may exercise
any and all of the rights and powers incident to the ownership of
such stock.
ARTICLE VI
Certificates of Stock
Section 1. The Board of Directors shall provide for the
issue, transfer and registration of the certificates representing
the shares of capital stock of the Company, and shall appoint the
necessary officers, transfer agents and registrars for that
purpose.
Section 2. Until otherwise ordered by the Board of
Directors, stock certificates shall be signed by the President or
a Vice President and by the Secretary or an Assistant Secretary
or the Treasurer or an Assistant Treasurer, and sealed with the
seal of the Company. Such seal may be facsimile, engraved or
printed. In case any officer or officers who shall have signed,
or whose facsimile signature or signatures shall have been used
on, any stock certificate or certificates shall cease to be such
officer or officers of the Company, whether because of death,
resignation or otherwise, before such certificate or certificates
shall have been delivered by the Company, such certificate or
certificates may nevertheless be issued by the Company with the
same effect as if the person or persons who signed such
certificate or certificates or whose facsimile signature or
signatures shall have been used thereon had not ceased to be such
officer or officers of the Company.
Section 3. Transfers of stock shall be made on the books of
the Company only by the person in whose name such stock is
registered or by his attorney lawfully constituted in writing,
and unless otherwise authorized by the Board of Directors only on
surrender and cancellation of the certificate transferred. No
stock certificate shall be issued to a transferee until the
transfer has been made on the books of the Company.
Section 4. The Company shall be entitled to treat the
person in whose name any share of stock is registered as the
owner thereof, for all purposes, and shall not be bound to
recognize any equitable or other claim to or interest in such
share on the part of any other person, whether or not it shall
have notice thereof, except as otherwise expressly provided by
the laws of Missouri.
Section 5. In case of the loss or destruction of any
certificate for shares of the Company, a new certificate may be
issued in lieu thereof under such regulations and conditions as
the Board of Directors may from time to time prescribe.
ARTICLE VII
Closing of Transfer Books
The Board of Directors shall have power to close the stock
transfer books of the Company for a period not exceeding seventy
days preceding the date of any meeting of shareholders or the
date for payment of any dividend or the date for the allotment of
rights or the date when any change or conversion or exchange of
shares shall go into effect; provided, however, that in lieu of
closing the stock transfer books as aforesaid, the Board of
Directors may fix in advance a date, not exceeding seventy days
preceding the date of any meeting of shareholders, or the date
for the payment of any dividend, or the date for the allotment of
rights, or the date when any change or conversion or exchange of
shares shall go into effect, as a record date for the
determination of the shareholders entitled to notice of, and to
vote at, any such meeting, and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such
allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of shares, and in such case
such shareholders and only such shareholders as shall be
shareholders of record on the date of closing the transfer books
or on the record date so fixed shall be entitled to notice of,
and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the
Company after such date of closing of the transfer books or such
record date fixed as aforesaid.
ARTICLE VIII
Inspection of Books
Section 1. A shareholder shall have the right to inspect
books of the Company only to the extent such right may be
conferred by law, by the articles of consolidation, by the
By-laws or by resolution of the Board of Directors.
Section 2. Any shareholder desiring to examine books of the
Company shall present a demand to that effect in writing to the
President or the Secretary or the Treasurer of the Company. Such
demand shall state:
(a) the particular books which he desires to examine;
(b) the purpose for which he desires to make the examination;
(c) the date on which the examination is desired;
(d) the probable duration of time the examination will require; and
(e) the names of the persons who will be present at the examination.
Within three days after receipt of such demand, the President or
the Secretary or the Treasurer shall, if the shareholder's
purpose be lawful, notify the shareholder making the demand of
the time and place the examination may be made.
Section 3. The right to inspect books of the Company may be
exercised only at such times as the Company's registered office
is normally open for business and may be limited to four hours on
any one day.
Section 4. The Company shall not be liable for expenses
incurred in connection with any inspection of its books.
ARTICLE IX
Corporate Seal
The corporate seal of the Company shall have inscribed
thereon the name of the Company and the words "Corporate Seal",
"Missouri" and "1922".
ARTICLE X
Fiscal Year
Section 1. The fiscal year of the Company shall be the
calendar year.
Section 2. As soon as practicable after the close of each
fiscal year, the Board of Directors shall cause a report of the
business and affairs of the Company to be made to the
shareholders.
ARTICLE XI
Waiver of Notice
Whenever by statute or by the articles of consolidation or
by these By-laws any notice whatever is required to be given, a
waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE XII
Indemnification by the Company
[Deleted].
ARTICLE XIII
Amendments
The Board of Directors may make, alter, amend or repeal
By-laws of the Company by a majority vote of the whole Board of
Directors at any regular meeting of the Board or at any special
meeting of the Board if notice thereof has been given in the
notice of such special meeting. Nothing in this Article shall be
construed to limit the power of the shareholders to make, alter,
amend or repeal By-laws of the Company at any annual or special
meeting of shareholders by a majority vote of the shareholders
present and entitled to vote at such meeting, provided a quorum
is present.
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