Great Plains Energy Announces First Quarter Financial Results; Core Earnings Stronger Than Last Year.KANSAS CITY Kansas City, two adjacent cities of the same name, one (1990 pop. 149,767), seat of Wyandotte co., NE Kansas (inc. 1859), the other (1990 pop. 435,146), Clay, Jackson, and Platte counties, NW Mo. (inc. 1850). , Mo. -- Great Plains Energy Incorporated (NYSE NYSE See: New York Stock Exchange :GXP GXP Geospatial Exploitation Products GXP Galaxy Police (anime) GXP Grid Exit Point (utilities, electricity) GxP Good X Practice ) today announced core earnings, which exclude net mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. gains and losses on energy contracts and a workforce realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. at Kansas City Power & Light (KCP&L), were $24.4 million or $0.33 per share in the first quarter of 2006, compared to $16.9 million or $0.23 per share in the first quarter of 2005. Reported earnings, which include $21.1 million of net mark-to-market losses on energy contracts at Strategic Energy and a $5.8 million impact of the workforce realignment, were a loss of $2.5 million or $0.03 per share, compared to first quarter 2005 earnings of $19.8 million or $0.27 per share. Reported earnings are reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. to core earnings in attachment See attach a file. B. Higher core earnings in the first quarter of 2006 compared to the same quarter last year were driven primarily by KCP&L's results, as higher wholesale prices, lower purchased power expense and the absence of 2005 ice storm costs more than offset the effects of higher fuel prices and lower wholesale volumes. Strategic Energy core earnings in the first quarter of 2006 were slightly higher than last year, with higher gross margins more than offsetting lower delivered volumes. "In the first quarter, we continued to have strong financial performance while executing on our Strategic Intent," said Chairman Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. Chesser Chesser is a suburb of Edinburgh, Scotland. It is south of the water of Leith. Chesser is a mainly residential part of Edinburgh situated between Longstone to the West and Slateford and Shandon to the East. . "We broke ground on our wind turbine turbine, rotary engine that uses a continuous stream of fluid (gas or liquid) to turn a shaft that can drive machinery. A water, or hydraulic, turbine is used to drive electric generators in hydroelectric power stations. project, took initial steps on environmental upgrades on our coal fleet, continued securing the long lead time items for our new coal plant and filed our first rate cases in nearly 20 years. We also made progress on our plan for workforce realignment at KCP&L designed to help improve our skill sets to deliver on our Strategic Intent. Strategic Energy also demonstrated continuing improvement, growing backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. 23% through increased sales and longer contract durations during the quarter." Kansas City Power & Light KCP&L core earnings, which exclude a $5.8 million impact of severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and related costs associated with the workforce realignment, were $17.8 million or $0.24 per share, compared to $10.8 million or $0.15 per share last year. Reported earnings were $12.0 million or $0.16 per share, compared to first quarter 2005 earnings of $10.8 million or $0.15 per share. Revenues for the first quarter of 2006 were $240 million compared to $233 million for the first quarter of 2005. Retail revenues were essentially flat at $189 million. Wholesale revenues were $48 million, up from $39 million in the first quarter of 2005 due to higher prices. Average wholesale electricity prices for the first quarter of 2006 were up 45% over the same period last year. Fuel costs in the first quarter of 2006, which were up 14% compared to last year due to higher commodity and transportation prices, were largely offset by a 55% decrease in purchased power expense. The absence of ice storm costs experienced in the first quarter of 2005 also benefited KCP&L earnings compared to last year. During the first quarter, KCP&L began securing long lead-time lead-time n. The time between the initial stage of a project or policy and the appearance of results: a long lead-time in oil production because of the need for new exploration and drilling. items for its Comprehensive Energy Plan. Although contracting is not complete, developing market conditions have resulted in potential increases in the estimated overall cost for the Plan in the range of 10%-20%. The primary drivers are increases in material and labor costs and some scope additions. The Company anticipates completing its definitive estimates by August and is confident that project costs will be competitive with other similar projects. Strategic Energy Strategic Energy core earnings, which exclude net mark-to-market gains and losses on energy contracts, were $10.2 million or $0.13 per share, compared to $9.9 million or $0.13 per share in the same period last year. Reported earnings were a loss of $10.9 million or $0.15 per share, compared to earnings of $12.8 million or $0.17 per share in the first quarter of 2005. Total backlog at Strategic Energy grew 23% in the first quarter as new sales volume more than doubled to 7.3 million MWhs in the first quarter of 2006 compared to 3.0 million MWhs in the same period in 2005. The company's improved marketing approach, a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. sales environment in several states, lower energy prices and changing customer perceptions about the longer-term price of electricity, led to increased sales and longer duration for new contracts. Average contract lengths increased to 18 months in the first quarter of 2006, compared to 10 months in the same quarter last year. Delivered volume during the quarter combined with 2006 backlog totaled 13.8 million MWhs at the end of the first quarter, compared to 2006 backlog of 10.4 million MWhs at the end of 2005. Retail gross margin per MWh in the first quarter of 2006 was ($2.12). However, excluding net mark-to-market losses on energy contracts, retail gross margin per MWh was strong at $7.67. This compares to an average retail gross margin per MWh, excluding net mark-to-market gains on energy contracts, of $6.08 last year. Retail gross margin per MWh in the first quarter reflects the positive impacts of portfolio optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. , a gain from the early termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of a power contract, and a favorable product mix during the quarter. Retail gross margin on new sales during the first quarter of 2006 was $3.24, which is exclusive of potential portfolio optimization benefits. Strategic Energy's delivered volume decreased to 3.7 million MWhs during the first quarter from 4.6 million MWhs last year, which is in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with lower overall delivered volume guidance for the year. KLT KLT Karhunen-Loeve Transform KLT Kernel Latency Time KLT Kernel Level Thread Investments and "Other" First quarter 2006 earnings and core earnings from KLT Investments were $0.7 million or $0.01 per share, compared to $3.0 million or $0.04 per share in the first quarter of 2005. The lower earnings in the first quarter of 2006 are due to the timing of reductions of affordable housing investments and a decline in available tax credits from the investments. In the first quarter of 2006 the "other" category loss was $4.3 million compared to a loss of $6.8 million in the same period last year. The loss per share was $0.05 in the first quarter of 2006 versus $0.09 in the first quarter of 2005. Non-GAAP Financial Measure Great Plains Energy provides in its earnings releases descriptions of "core earnings" in addition to earnings calculated in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . Great Plains Energy also provides its earnings guidance in terms of core earnings. Core earnings is a non-GAAP financial measure that differs from GAAP earnings because it excludes the effects of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , certain unusual items and mark-to-market gains and losses on energy contracts. Core earnings for historical periods are reconciled to GAAP earnings in Attachment B. The Company believes core earnings provide to investors a meaningful indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of its results that is comparable among periods because it excludes the effects of discontinued operations, certain unusual items and mark-to-market gains and losses on energy contracts. These items are excluded from core earnings because they may not be indicative indicative: see mood. of Great Plains Energy's prospective earnings potential. Investors should note that this non-GAAP measure involves judgments by management, including whether an item is classified as an unusual item. Core earnings is used internally to measure performance against budget and in reports for management and the Board of Directors. Great Plains Energy's definition of core earnings may differ from similar terms used by other companies. Great Plains Energy Incorporated (NYSE:GXP) headquartered in Kansas City, MO, is the holding company for Kansas City Power & Light Company, a leading regulated reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. provider of electricity in the Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians , and Strategic Energy L.L.C., a competitive electricity supplier. The Company's web site is www.greatplainsenergy.com. CERTAIN FORWARD-LOOKING for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. INFORMATION -- Statements made in this release that are not based on historical facts are forward-looking, may involve risks and uncertainties, and are intended to be as of the date when made. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. include, but are not limited to, statements regarding projected delivered volumes and margins, the outcome of regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. proceedings, cost estimates of the comprehensive energy plan and other matters affecting future operations. In connection with the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, the Company is providing a number of important factors that could cause actual results to differ materially from the provided forward-looking information. These important factors include: future economic conditions in the regional, national and international markets, including but not limited to regional and national wholesale electricity markets; market perception of the energy industry and Great Plains Energy; changes in business strategy, operations or development plans; effects of current or proposed state and federal legislative and regulatory actions or developments, including, but not limited to, deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. , re-regulation and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of the electric utility industry; decisions of regulators regarding rates KCP&L can charge for electricity; adverse changes in applicable laws, regulations, rules, principles or practices governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. tax, accounting and environmental matters including, but not limited to, air and water quality; financial market conditions and performance including, but not limited to, changes in interest rates and in availability and cost of capital and the effects on pension plan assets and costs; credit ratings; inflation rates; effectiveness of risk management policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental and the ability of counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. to satisfy their contractual commitments; impact of terrorist acts; increased competition including, but not limited to, retail choice in the electric utility industry and the entry of new competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; ability to carry out marketing and sales plans; weather conditions including weather-related damage; cost, availability, quality and deliverability of fuel; ability to achieve generation planning goals and the occurrence and duration of unplanned generation outages; delays in the anticipated in-service in-service In-service training adjective Referring to any form of on-the-job training noun In-service training of an employee dates and cost increases of additional generating capacity; nuclear operations; ability to enter new markets successfully and capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. growth opportunities in non-regulated businesses and the effects of competition; application of critical accounting policies, including, but not limited to, those related to derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. and pension liabilities Pension liabilities Future liabilities resulting from pension commitments made by a corporation. Accounting for pension liabilities varies widely by country. ; workforce risks including compensation and benefits costs; performance of projects undertaken by non-regulated businesses and the success of efforts to invest in and develop new opportunities and other risks and uncertainties. Other risk factors are detailed from time to time in the Company's most recent quarterly report on Form 10-Q Form 10-Q See 10-Q. or annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the Securities and Exchange Commission. This list of factors is not all-inclusive because it is not possible to predict all factors.
Attachment A
GREAT PLAINS ENERGY
Consolidated Statements of Income
(Unaudited)
Three Months Ended March 31 2006 2005
----------------------------------------------------------------------
Operating Revenues (thousands, except per
share amounts)
Electric revenues - KCP&L $240,390 $233,215
Electric revenues - Strategic Energy 318,012 311,316
Other revenues 783 583
-----------------------
Total 559,185 545,114
----------------------------------------------------------------------
Operating Expenses
Fuel 47,400 41,490
Purchased power - KCP&L 5,117 11,490
Purchased power - Strategic Energy 325,758 277,866
Skill set realignment costs 9,393 -
Other 76,235 79,895
Maintenance 22,590 29,358
Depreciation and amortization 38,946 37,862
General taxes 27,644 25,856
(Gain) loss on property 99 (519)
-----------------------
Total 553,182 503,298
----------------------------------------------------------------------
Operating income 6,003 41,816
Non-operating income 2,985 1,924
Non-operating expenses (2,141) (1,315)
Interest charges (17,323) (17,487)
----------------------------------------------------------------------
Income (loss) before income taxes, minority
interest in subsidiaries and loss from equity
investments (10,476) 24,938
Income taxes 8,630 (5,291)
Minority interest in subsidiaries - 888
Loss from equity investments, net of income
taxes (290) (345)
----------------------------------------------------------------------
Net income (loss) (2,136) 20,190
Preferred stock dividend requirements 411 411
----------------------------------------------------------------------
Earnings (loss) available for common
shareholders $(2,547) $19,779
----------------------------------------------------------------------
Average number of common shares outstanding 74,659 74,436
Basic and diluted earnings (loss) per common
share $(0.03) $0.27
Cash dividends per common share $0.415 $0.415
----------------------------------------------------------------------
Attachment B
GREAT PLAINS ENERGY
Consolidated Earnings and Earnings Per Share
Three Months Ended March 31
(Unaudited)
Earnings (Loss)
per Great
Plains Energy
Earnings (Loss) Share
----------------- -----------------
2006 2005 2006 2005
----------------------------------------------------------------------
(millions)
KCP&L $12.0 $10.8 $0.16 $0.15
Strategic Energy (10.9) 12.8 (0.15) 0.17
KLT Investments 0.7 3.0 0.01 0.04
Other (3.9) (6.4) (0.05) (0.09)
------------------------------------
Net income (loss) (2.1) 20.2 (0.03) 0.27
Preferred dividends (0.4) (0.4) - -
----------------------------------------------------------------------
Earnings (loss) available
for common shareholders $(2.5) $19.8 $(0.03) $0.27
----------------------------------------------------------------------
Reconciliation of GAAP to Non-GAAP
Earnings (loss) available for
common shareholders $(2.5) $19.8 $(0.03) $0.27
Reconciling items
KCP&L - skill set realignment
costs 5.8 - 0.08 -
Strategic Energy - mark-to-
market impacts from energy
contracts 21.1 (2.9) 0.28 (0.04)
----------------------------------------------------------------------
Core earnings $24.4 $16.9 $0.33 $0.23
----------------------------------------------------------------------
Core earnings
KCP&L $17.8 $10.8 $0.24 $0.15
Strategic Energy 10.2 9.9 0.13 0.13
KLT Investments 0.7 3.0 0.01 0.04
Other (4.3) (6.8) (0.05) (0.09)
----------------------------------------------------------------------
Core earnings $24.4 $16.9 $0.33 $0.23
----------------------------------------------------------------------
Attachment C
GREAT PLAINS ENERGY
Summary Income Statement by Segment
Three Months Ended March 31, 2006
(Unaudited)
Consolidated Strategic
GPE KCP&L Energy Other
----------------------------------------------------------------------
(millions)
Operating revenues $559.2 $240.4 $318.8 $-
Fuel (47.4) (47.4) - -
Purchased power (330.9) (5.1) (325.8) -
Skill set realignment costs (9.4) (9.3) - (0.1)
Other operating expense (126.5) (111.4) (12.5) (2.6)
Depreciation and amortization (38.9) (37.0) (1.9) -
Gain (loss) on property (0.1) (0.1) - -
----------------------------------------------------------------------
Operating income (loss) 6.0 30.1 (21.4) (2.7)
Non-operating income (expenses) 0.8 0.7 0.9 (0.8)
Interest charges (17.3) (14.9) (0.3) (2.1)
Income taxes 8.7 (3.9) 9.9 2.7
Loss from equity investments (0.3) - - (0.3)
---------------------------------------
Net income (loss) $(2.1) $12.0 $(10.9) $(3.2)
----------------------------------------------------------------------
Earnings (loss) per GPE common
share $(0.03) $0.16 $(0.15) $(0.04)
----------------------------------------------------------------------
Attachment D
GREAT PLAINS ENERGY
Consolidated Balance Sheets
(Unaudited)
March 31 December 31
2006 2005
------------------------
ASSETS (thousands)
Current Assets
Cash and cash equivalents $87,553 $103,068
Restricted cash - 1,900
Receivables, net 241,792 259,043
Fuel inventories, at average cost 21,186 17,073
Materials and supplies, at average cost 57,556 57,017
Deferred income taxes 19,783 -
Assets of discontinued operations - 627
Derivative instruments 15,753 39,189
Other 13,248 13,001
------------------------
Total 456,871 490,918
----------------------------------------------------------------------
Nonutility Property and Investments
Affordable housing limited partnerships 26,302 28,214
Nuclear decommissioning trust fund 95,063 91,802
Other 16,961 17,291
------------------------
Total 138,326 137,307
----------------------------------------------------------------------
Utility Plant, at Original Cost
Electric 4,999,326 4,959,539
Less-accumulated depreciation 2,354,984 2,322,813
------------------------
Net utility plant in service 2,644,342 2,636,726
Construction work in progress 123,881 100,952
Nuclear fuel, net of amortization of
$119,130 and $115,240 34,849 27,966
------------------------
Total 2,803,072 2,765,644
----------------------------------------------------------------------
Deferred Charges and Other Assets
Regulatory assets 188,383 179,922
Prepaid pension costs 87,763 98,295
Goodwill 88,139 87,624
Derivative instruments 8,628 21,812
Other 47,668 52,204
------------------------
Total 420,581 439,857
----------------------------------------------------------------------
Total $3,818,850 $3,833,726
----------------------------------------------------------------------
Attachment D continued
GREAT PLAINS ENERGY
Consolidated Balance Sheets
(Unaudited)
March 31 December 31
2006 2005
---------------------------------------------------------------------
LIABILITIES AND CAPITALIZATION (thousands)
Current Liabilities
Notes payable $- $6,000
Commercial paper 73,800 31,900
Current maturities of long-term debt 390,275 1,675
Accounts payable 205,435 231,496
Accrued taxes 41,593 37,140
Accrued interest 13,102 13,329
Accrued payroll and vacations 31,054 36,024
Accrued refueling outage costs 12,148 8,974
Deferred income taxes - 1,351
Supplier collateral - 1,900
Liabilities of discontinued operations - 64
Derivative instruments 31,623 7,411
Other 24,821 25,658
-----------------------
Total 823,851 402,922
---------------------------------------------------------------------
Deferred Credits and Other Liabilities
Deferred income taxes 610,073 621,359
Deferred investment tax credits 28,937 29,698
Asset retirement obligations 148,294 145,907
Pension liability 87,919 87,355
Regulatory liabilities 71,284 69,641
Derivative instruments 18,652 7,750
Other 64,141 65,787
-----------------------
Total 1,029,300 1,027,497
---------------------------------------------------------------------
Capitalization
Common shareholders' equity
Common stock-150,000,000 shares authorized
without par value
74,931,157 and 74,783,824 shares
issued, stated value 747,903 744,457
Retained earnings 454,308 488,001
Treasury stock-44,836 and 43,376 shares,
at cost (1,346) (1,304)
Accumulated other comprehensive loss (25,925) (7,727)
-----------------------
Total 1,174,940 1,223,427
Cumulative preferred stock $100 par value
3.80% - 100,000 shares issued 10,000 10,000
4.50% - 100,000 shares issued 10,000 10,000
4.20% - 70,000 shares issued 7,000 7,000
4.35% - 120,000 shares issued 12,000 12,000
-----------------------
Total 39,000 39,000
Long-term debt 751,759 1,140,880
-----------------------
Total 1,965,699 2,403,307
---------------------------------------------------------------------
Commitments and Contingencies
---------------------------------------------------------------------
Total $3,818,850 $3,833,726
---------------------------------------------------------------------
Attachment E
GREAT PLAINS ENERGY
Statistical Summary
Three Months Ended March 31 2006 2005
----------------------------------------------------------------------
KCP&L
Retail revenues (millions) $189.2 $189.5
Wholesale revenues (millions) $47.5 $39.1
Average non-firm wholesale price per MWh $50.45 $34.88
Wholesale MWh sales (thousands) 1,104 1,210
Equivalent availability - coal plants 80 % 78 %
Capacity factor - coal plants 70 % 75 %
Strategic Energy
Average retail gross margin per MWh $(2.12) $7.16
Change in fair value related to non-hedging energy
contracts and from cash flow hedge
ineffectiveness 9.79 (1.08)
----------------
Average retail gross margin per MWh without fair
value impacts (a) $7.67 $6.08
----------------
MWhs delivered (thousands) 3,662 4,625
MWhs delivered plus current year backlog
(thousands) 13,794 16,634
Average duration - new and resigned contracts
(months) 18 10
MWh sales (thousands) 7,302 2,969
Retention rate 50 % 72 %
Retention rate including month to month customers 62 % 79 %
----------------------------------------------------------------------
(a) This is a non-GAAP financial measure that differs from GAAP
because it excludes the impact of unrealized fair value gains or
losses. Management believes this measure is more reflective of
average retail gross margins on MWhs delivered due to the non-cash
nature and volatility of changes in fair value related to
non-hedging energy contracts and from cash flow hedge
ineffectiveness.
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