View:
Document
Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2018
or
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______to_______
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12537135&doc=19
 
 
Exact name of registrant as specified in its charter,
 
 
Commission
 
state of incorporation, address of principal
 
I.R.S. Employer
File Number
 
executive offices and telephone number
 
Identification Number
 
 
 
 
 
001-38515
 
EVERGY, INC.
 
82-2733395
 
 
(a Missouri corporation)
 
 
 
 
1200 Main Street
 
 
 
 
Kansas City, Missouri  64105
 
 
 
 
(816) 556-2200
 
 
 
 
 
 
 
001-03523
 
WESTAR ENERGY, INC.
 
48-0290150
 
 
(a Kansas corporation)
 
 
 
 
818 South Kansas Avenue
 
 
 
 
Topeka, Kansas 66612
 
 
 
 
(785) 575-6300
 
 
 
 
 
 
 
000-51873
 
KANSAS CITY POWER & LIGHT COMPANY
 
44-0308720
 
 
(a Missouri corporation)
 
 
 
 
1200 Main Street
 
 
 
 
Kansas City, Missouri  64105
 
 
 
 
(816) 556-2200
 
 
 
 
 
 
 



Table of Contents


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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evergy, Inc.
 
 
 
 
Yes
 
 
No
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westar Energy, Inc.
 
 
 
 
Yes
 
 
No
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kansas City Power & Light Company
 
 
 
 
Yes
 
 
No
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evergy, Inc.
 
 
 
 
Yes
 
 
No
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westar Energy, Inc.
 
 
 
 
Yes
 
 
No
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kansas City Power & Light Company
 
 
 
 
Yes
 
 
No
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
 
 
 
 
 
 
 
 
 
 
 
Large Accelerated Filer
 
Accelerated Filer
 
Non-accelerated Filer
 
Smaller Reporting Company
 
Emerging Growth Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evergy, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westar Energy, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kansas City Power & Light Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evergy, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westar Energy, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kansas City Power & Light Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evergy, Inc.
 
 
 
 
Yes
 
 
No
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westar Energy, Inc.
 
 
 
 
Yes
 
 
No
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kansas City Power & Light Company
 
 
 
 
Yes
 
 
No
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
On October 31, 2018, Evergy, Inc. had 263,455,083 shares of common stock outstanding.  On October 31, 2018, Kansas City Power & Light Company and Westar Energy, Inc. each had one share of common stock outstanding and held by Evergy, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westar Energy, Inc. and Kansas City Power & Light Company meet the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and are therefore filing this Form 10-Q with the reduced disclosure format.
This combined Quarterly Report on Form 10-Q is provided by the following registrants: Evergy, Inc. (Evergy), Westar Energy, Inc. (Westar Energy) and Kansas City Power & Light Company (KCP&L) (collectively, the Evergy Companies). Information relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.
This report should be read in its entirety.  No one section of the report deals with all aspects of the subject matter.  It should be read in conjunction with the Westar Energy First Quarter 2018 Quarterly Report on Form 10-Q, the Great Plains Energy Incorporated (Great Plains Energy) and KCP&L combined First Quarter 2018 Quarterly Report on Form 10-Q, the Westar Energy 2017 Form 10-K and the Great Plains Energy and KCP&L combined 2017 Form 10-K.



Table of Contents


TABLE OF CONTENTS
 
 
 
Page Number
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note 1:
 
Note 2:
 
Note 3:
 
Note 4:
 
Note 5:
 
Note 6:
 
Note 7:
 
Note 8:
 
Note 9:
 
Note 10:
 
Note 11:
 
Note 12:
 
Note 13:
 
Note 14:
 
Note 15:
 
Note 16:
 
Note 17:
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 
 
 
 
 
 

3

Table of Contents


CAUTIONARY STATEMENTS REGARDING CERTAIN FORWARD-LOOKING INFORMATION
Statements made in this report 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 include, but are not limited to, statements relating to the merger of Great Plains Energy and Westar Energy that resulted in the creation of Evergy, including those that relate to the expected financial and operational benefits of the merger to the companies and their shareholders (including cost savings, operational efficiencies and the impact of the merger on earnings per share), cost estimates of capital projects, dividend growth, share repurchases, balance sheet and credit ratings, rebates to customers, employee issues and other matters affecting future operations.
In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the Evergy Companies are 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 regional, national and international markets and their effects on sales, prices and costs; prices and availability of electricity in regional and national wholesale markets; market perception of the energy industry, Evergy, Westar Energy and KCP&L; changes in business strategy, operations or development plans; the outcome of contract negotiations for goods and services; effects of current or proposed state and federal legislative and regulatory actions or developments, including, but not limited to, deregulation, re-regulation and restructuring of the electric utility industry; decisions of regulators regarding rates that Westar Energy and KCP&L (or other regulated subsidiaries of Evergy) can charge for electricity; adverse changes in applicable laws, regulations, rules, principles or practices governing 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 credit spreads and in availability and cost of capital and the effects on derivatives and hedges, nuclear decommissioning trust and pension plan assets and costs; impairments of long-lived assets or goodwill; credit ratings; inflation rates; effectiveness of risk management policies and procedures and the ability of counterparties to satisfy their contractual commitments; impact of terrorist acts, including, but not limited to, cyber terrorism; ability to carry out marketing and sales plans; weather conditions including, but not limited to, weather-related damage and their effects on sales, prices and costs; cost, availability, quality and deliverability of fuel; the inherent uncertainties in estimating the effects of weather, economic conditions and other factors on customer consumption and financial results; ability to achieve generation goals and the occurrence and duration of planned and unplanned generation outages; delays in the anticipated in-service dates and cost increases of generation, transmission, distribution or other projects; Evergy's ability to successfully manage its transmission joint ventures; the inherent risks associated with the ownership and operation of a nuclear facility including, but not limited to, environmental, health, safety, regulatory and financial risks; workforce risks, including, but not limited to, increased costs of retirement, health care and other benefits; the possibility that the expected value creation from the merger will not be realized, or will not be realized within the expected time period; difficulties related to the integration of the two companies; disruption from the merger making it more difficult to maintain relationships with customers, employees, regulators or suppliers; the diversion of management time; and other risks and uncertainties.

This list of factors is not all-inclusive because it is not possible to predict all factors. Part II, Item 1A, Risk Factors included in this report, together with the risk factors included in the Westar Energy 2017 Form 10-K and the Great Plains Energy and KCP&L combined 2017 Form 10-K under Part I, Item 1A, should be carefully read for further understanding of potential risks for the Evergy Companies. Other sections of this report and other periodic reports filed by the Evergy Companies with the Securities and Exchange Commission (SEC) should also be read for more information regarding risk factors. Each forward-looking statement speaks only as of the date of the particular statement. The Evergy Companies undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

4

Table of Contents


GLOSSARY OF TERMS 
The following is a glossary of frequently used abbreviations or acronyms that are found throughout this report.
Abbreviation or Acronym
 
Definition
 
 
 
AEP
 
American Electric Power Company, Inc.
AFUDC
 
Allowance for Funds Used During Construction
Amended Merger Agreement
 
Amended and Restated Agreement and Plan of Merger, dated as of July 9, 2017, by and among Great Plains Energy, Westar Energy, Monarch Energy Holding, Inc. and King Energy, Inc.
AMT
 
Alternative Minimum Tax
ARO
 
Asset Retirement Obligation
ASC
 
Accounting Standards Codification
ASU
 
Accounting Standards Update
CCRs
 
Coal combustion residuals
Clean Air Act
 
Clean Air Act Amendments of 1990
CO2
 
Carbon dioxide
COLI
 
Corporate-owned life insurance
CWA
 
Clean Water Act
DOE
 
Department of Energy
EIRR
 
Environmental Improvement Revenue Refunding
EPA
 
Environmental Protection Agency
EPS
 
Earnings per common share
ERISA
 
Employee Retirement Income Security Act of 1974, as amended
ERSP
 
Earnings Review and Sharing Plan
Evergy
 
Evergy, Inc. and its consolidated subsidiaries
Evergy Board
 
Evergy Board of Directors
Evergy Companies
 
Evergy, Westar Energy, and KCP&L, collectively, which are individual registrants within the Evergy consolidated group
Exchange Act
 
The Securities Exchange Act of 1934, as amended
FASB
 
Financial Accounting Standards Board
FERC
 
The Federal Energy Regulatory Commission
FMBs
 
First mortgage bonds
GAAP
 
Generally Accepted Accounting Principles
GHG
 
Greenhouse gas
GMO
 
KCP&L Greater Missouri Operations Company, a wholly-owned subsidiary of Evergy
GPETHC
 
GPE Transmission Holding Company LLC, a wholly-owned subsidiary of Evergy
Great Plains Energy
 
Great Plains Energy Incorporated
KCC
 
State Corporation Commission of the State of Kansas
KCP&L
 
Kansas City Power & Light Company, a wholly-owned subsidiary of Evergy, and its consolidated subsidiaries
KCP&L Receivables Company
 
Kansas City Power & Light Receivables Company, a wholly-owned subsidiary of KCP&L
KDHE
 
Kansas Department of Health & Environment
KGE
 
Kansas Gas and Electric Company, a wholly-owned subsidiary of Westar Energy
King Energy
 
King Energy, Inc., a wholly-owned subsidiary of Evergy
kWh
 
Kilowatt hour

5

Table of Contents


Abbreviation or Acronym
 
Definition
 
 
 
MEEIA
 
Missouri Energy Efficiency Investment Act
MMBtu
 
Millions of British thermal units
Monarch Energy
 
Monarch Energy Holding, Inc.
MPSC
 
Public Service Commission of the State of Missouri
MW
 
Megawatt
MWh
 
Megawatt hour
NAAQs
 
National Ambient Air Quality Standards
NAV
 
Net Asset Value
NO2
 
Nitrogen dioxide
NRC
 
Nuclear Regulatory Commission
PISA
 
Plant-in service accounting
PM
 
Particulate matter
Prairie Wind
 
Prairie Wind Transmission, LLC, 50% owned by Westar Energy
RSU
 
Restricted share unit
RTO
 
Regional transmission organization
SEC
 
Securities and Exchange Commission
SO2
 
Sulfur dioxide
SPP
 
Southwest Power Pool, Inc.
TFR
 
Transmission formula rate
Transource
 
Transource Energy, LLC and its subsidiaries, 13.5% owned by GPETHC
VIE
 
Variable interest entity
WCNOC
 
Wolf Creek Nuclear Operating Corporation
Westar Energy
 
Westar Energy, Inc., a wholly-owned subsidiary of Evergy, and its consolidated subsidiaries
Wolf Creek
 
Wolf Creek Generating Station
WOTUS
 
Waters of the United States


6

Table of Contents


PART I
ITEM 1. FINANCIAL STATEMENTS

EVERGY, INC.
Consolidated Balance Sheets
(Unaudited)
 
 
 
 
 
September 30
 
December 31
 
2018
 
2017
ASSETS
(millions, except share amounts)
CURRENT ASSETS:
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
679.7

 
 
 
$
3.4

 
Receivables, net
 
496.5

 
 
 
290.7

 
Accounts receivable pledged as collateral
 
195.0

 
 
 

 
Fuel inventory and supplies
 
520.9

 
 
 
293.6

 
Income taxes receivable
 
20.8

 
 
 

 
Regulatory assets
 
332.5

 
 
 
99.5

 
Prepaid expenses and other assets
 
73.6

 
 
 
39.8

 
Total Current Assets
 
2,319.0

 
 
 
727.0

 
PROPERTY, PLANT AND EQUIPMENT, NET
 
18,836.0

 
 
 
9,553.8

 
PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET
 
170.9

 
 
 
176.3

 
OTHER ASSETS:
 
 

 
 
 
 

 
Regulatory assets
 
1,518.1

 
 
 
685.4

 
Nuclear decommissioning trust fund
 
518.0

 
 
 
237.1

 
Goodwill
 
2,333.5

 
 
 

 
Other
 
379.7

 
 
 
244.8

 
Total Other Assets
 
4,749.3

 
 
 
1,167.3

 
TOTAL ASSETS
 
$
26,075.2

 
 
 
$
11,624.4

 
The accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.

7

Table of Contents


EVERGY, INC.
Consolidated Balance Sheets
(Unaudited)
 
 
September 30
 
December 31
 
2018
 
2017
LIABILITIES AND EQUITY
(millions, except share amounts)
CURRENT LIABILITIES:
 
 
 
 
 
 
 
Current maturities of long-term debt
 
$
709.6

 
 
 
$

 
Current maturities of long-term debt of variable interest entities
 
30.3

 
 
 
28.5

 
Notes payable and commercial paper
 
675.9

 
 
 
275.7

 
Collateralized note payable
 
195.0

 
 
 

 
Accounts payable
 
303.7

 
 
 
204.2

 
Accrued dividends
 

 
 
 
53.8

 
Accrued taxes
 
282.1

 
 
 
87.7

 
Accrued interest
 
119.6

 
 
 
72.7

 
Regulatory liabilities
 
117.2

 
 
 
11.6

 
Other
 
225.8

 
 
 
89.5

 
Total Current Liabilities
 
2,659.2

 
 
 
823.7

 
LONG-TERM LIABILITIES:
 
 

 
 
 
 

 
Long-term debt, net
 
6,639.8

 
 
 
3,687.6

 
Long-term debt of variable interest entities, net
 
51.1

 
 
 
81.4

 
Deferred income taxes
 
1,536.0

 
 
 
815.7

 
Unamortized investment tax credits
 
378.9

 
 
 
257.1

 
Regulatory liabilities
 
2,357.1

 
 
 
1,094.0

 
Pension and post-retirement liability
 
949.7

 
 
 
491.2

 
Asset retirement obligations
 
622.7

 
 
 
380.0

 
Other
 
231.9

 
 
 
133.3

 
Total Long-Term Liabilities
 
12,767.2

 
 
 
6,940.3

 
Commitments and Contingencies (Note 12)
 


 
 
 


 
EQUITY:
 
 
 
 
 
 
 
Evergy, Inc. Shareholders' Equity:
 
 
 
 
 
 
 
Common stock - 600,000,000 shares authorized, without par value, 264,797,584 shares issued (275,000,000 shares authorized, $5 par value, 142,094,275 shares issued as of December 31, 2017)
 
9,236.4

 
 
 
2,734.8

 
Retained earnings
 
1,452.5

 
 
 
1,173.3

 
Total Evergy, Inc. Shareholders' Equity
 
10,688.9

 
 
 
3,908.1

 
Noncontrolling Interests
 
(40.1
)
 
 
 
(47.7
)
 
Total Equity
 
10,648.8

 
 
 
3,860.4

 
TOTAL LIABILITIES AND EQUITY
 
$
26,075.2

 
 
 
$
11,624.4

 
The accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.

8

Table of Contents


EVERGY, INC.
Consolidated Statements of Income
(Unaudited)
 
 
 
 
 
 
 
Three Months Ended
September 30
 
Year to Date
September 30
 
 
2018
 
2017
 
2018
 
2017
 
 
(millions, except per share amounts)
OPERATING REVENUES
 
$
1,582.5

 
$
794.3

 
$
3,076.1

 
$
1,976.2

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
Fuel and purchased power
 
383.7

 
189.8

 
748.9

 
415.4

SPP network transmission costs
 
58.4

 
62.6

 
194.4

 
185.0

Operating and maintenance
 
330.4

 
140.6

 
754.2

 
415.6

Depreciation and amortization
 
193.9

 
94.6

 
411.6

 
277.3

Taxes other than income tax
 
83.0

 
41.8

 
183.5

 
126.4

Total Operating Expenses
 
1,049.4

 
529.4

 
2,292.6

 
1,419.7

INCOME FROM OPERATIONS
 
533.1

 
264.9

 
783.5

 
556.5

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
 
Investment earnings
 
4.9

 
1.0

 
6.2

 
3.5

Other income
 
1.6

 
3.9

 
5.3

 
5.7

Other expense
 
(30.8
)
 
(11.5
)
 
(55.2
)
 
(29.6
)
Total Other Income (Expense), Net
 
(24.3
)
 
(6.6
)
 
(43.7
)
 
(20.4
)
Interest expense
 
89.1

 
43.4

 
191.3

 
128.2

INCOME BEFORE INCOME TAXES
 
419.7

 
214.9

 
548.5

 
407.9

Income tax expense
 
64.1

 
55.8

 
28.3

 
112.6

Equity in earnings of equity method investees, net of income taxes
 
2.0

 
1.6

 
4.7

 
4.9

NET INCOME
 
357.6

 
160.7

 
524.9

 
300.2

Less: Net income attributable to noncontrolling interests
 
2.6

 
2.4

 
7.6

 
10.2

NET INCOME ATTRIBUTABLE TO EVERGY, INC.
 
$
355.0

 
$
158.3

 
$
517.3

 
$
290.0

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO EVERGY (see Note 1)
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
1.32

 
$
1.11

 
$
2.61

 
$
2.03

Diluted earnings per common share
 
$
1.32

 
$
1.11

 
$
2.61

 
$
2.03

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING
 
 
 
 
 
 
 
 
Basic
 
268.6

 
142.5

 
197.9

 
142.5

Diluted
 
268.8

 
142.5

 
198.0

 
142.5

The accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.


9

Table of Contents


EVERGY, INC.
Consolidated Statements of Cash Flows
 
(Unaudited)
 
 
 
 
 
 
Year to Date September 30
2018
 
 
2017
 
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
(millions)
Net income
$
524.9

 
 
$
300.2

 
Adjustments to reconcile income to net cash from operating activities:
 
 
 
 
 
Depreciation and amortization
411.6

 
 
277.3

 
Amortization of nuclear fuel
28.6

 
 
24.2

 
Amortization of deferred refueling outage
14.7

 
 
12.1

 
Amortization of deferred regulatory gain from sale leaseback
(4.1
)
 
 
(4.1
)
 
Amortization of corporate-owned life insurance
17.2

 
 
15.7

 
Non-cash compensation
25.2

 
 
6.7

 
Net deferred income taxes and credits
47.8

 
 
127.0

 
Allowance for equity funds used during construction
(2.4
)
 
 
(1.1
)
 
Payments for asset retirement obligations
(15.9
)
 
 
(1.9
)
 
Equity in earnings of equity method investees, net of income taxes
(4.7
)
 
 
(4.9
)
 
Other
(1.9
)
 
 
(5.3
)
 
Changes in working capital items:
 
 
 
 
 
Accounts receivable
(34.9
)
 
 
(19.7
)
 
Accounts receivable pledged as collateral
(15.0
)
 
 

 
Fuel inventory and supplies
44.6

 
 
15.5

 
Prepaid expenses and other current assets
(3.4
)
 
 
55.5

 
Accounts payable
(58.5
)
 
 
(10.0
)
 
Accrued taxes
119.0

 
 
35.6

 
Other current liabilities
38.9

 
 
(108.5
)
 
Changes in other assets
26.0

 
 
22.9

 
Changes in other liabilities
33.9

 
 
5.5

 
Cash Flows from Operating Activities
1,191.6

 
 
742.7

 
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 

 
 
 

 
Additions to property, plant and equipment
(698.3
)
 
 
(564.6
)
 
Cash acquired from the merger with Great Plains Energy
1,154.2

 
 

 
Purchase of securities - trusts
(107.0
)
 
 
(15.3
)
 
Sale of securities - trusts
110.2

 
 
15.9

 
Investment in corporate-owned life insurance
(16.2
)
 
 
(16.2
)
 
Proceeds from investment in corporate-owned life insurance
6.5

 
 
2.1

 
Proceeds from settlement of interest rate swap
140.6

 
 

 
Other investing activities
(15.2
)
 
 
(3.3
)
 
Cash Flows from (used in) Investing Activities
574.8

 
 
(581.4
)
 
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 

 
 
 

 
Short term debt, net
(166.7
)
 
 
(177.7
)
 
Collateralized short-term borrowings, net
15.0

 
 

 
Proceeds from long-term debt
22.9

 
 
296.2

 
Retirements of long-term debt
(127.4
)
 
 
(125.0
)
 
Retirements of long-term debt of variable interest entities
(28.5
)
 
 
(26.8
)
 
Repayment of capital leases
(2.9
)
 
 
(2.6
)
 
Borrowings against cash surrender value of corporate-owned life insurance
55.1

 
 
53.4

 
Repayment of borrowings against cash surrender value of corporate-owned life insurance
(3.9
)
 
 

 
Distributions to shareholders of noncontrolling interests

 
 
(5.8
)
 
Cash dividends paid
(350.4
)
 
 
(166.3
)
 
Repurchase of common stock
(486.1
)
 
 

 
Other financing activities
(17.2
)
 
 
(6.4
)
 
Cash Flows (used in) Financing Activities
(1,090.1
)
 
 
(161.0
)
 
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
676.3

 
 
0.3

 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
 
 
 
 
 
Beginning of period, including restricted cash of $0.1 and $0.1, respectively
3.5

 
 
3.2

 
End of period, including restricted cash of $0.1 and $0.1, respectively
$
679.8

 
 
$
3.5

 
The accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.

10

Table of Contents


EVERGY, INC.
Consolidated Statements of Changes in Equity
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Evergy, Inc. Shareholders
 
 
 
 
 
Common stock shares
 
Common stock
 
Retained earnings
 
Non-controlling interests
 
Total equity
 
(millions, except share amounts)
Balance as of December 31, 2016
141,791,153

 
$
2,727.3

 
$
1,078.6

 
$
27.3

 
$
3,833.2

Net income

 

 
290.0

 
10.2

 
300.2

Issuance of stock
12,131

 
0.6

 

 

 
0.6

Issuance of stock for compensation and reinvested dividends
290,892

 
4.9

 

 

 
4.9

Tax withholding related to stock compensation

 
(7.0
)
 

 

 
(7.0
)
Dividends declared on common stock ($1.20 per share)

 

 
(172.1
)
 

 
(172.1
)
Stock compensation expense

 
6.7

 

 

 
6.7

Deconsolidation of noncontrolling interests

 

 

 
(81.9
)
 
(81.9
)
Distributions to shareholders of noncontrolling interests

 

 

 
(5.7
)
 
(5.7
)
Balance as of September 30, 2017
142,094,176

 
$
2,732.5

 
$
1,196.5

 
$
(50.1
)
 
$
3,878.9

 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2017
142,094,275

 
$
2,734.8

 
$
1,173.3

 
$
(47.7
)
 
$
3,860.4

Net income

 

 
517.3

 
7.6

 
524.9

Issuance of stock to Great Plains Energy shareholders
128,947,518

 
6,979.9

 

 

 
6,979.9

Issuance of restricted common stock
122,505

 

 

 

 

Issuance of stock for compensation and reinvested dividends
528,359

 
0.4

 

 

 
0.4

Tax withholding related to stock compensation

 
(17.2
)
 

 

 
(17.2
)
Dividends declared on common stock ($1.26 per share)

 

 
(237.5
)
 

 
(237.5
)
Dividend equivalents declared

 

 
(0.6
)
 

 
(0.6
)
Stock compensation expense

 
25.2

 

 

 
25.2

Repurchase of common stock
(6,895,073
)
 
(486.1
)
 

 

 
(486.1
)
Other

 
(0.6
)
 

 

 
(0.6
)
Balance as of September 30, 2018
264,797,584

 
$
9,236.4

 
$
1,452.5

 
$
(40.1
)
 
$
10,648.8

The accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.

11

Table of Contents


WESTAR ENERGY, INC.
Consolidated Balance Sheets
(Unaudited)
 
 
 
 
 
September 30
 
December 31
 
2018
 
2017
ASSETS
(millions, except share amounts)
CURRENT ASSETS:
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
3.3

 
 
 
$
3.4

 
Receivables, net
 
347.5

 
 
 
290.7

 
Related party receivables
 
0.7

 
 
 

 
Fuel inventory and supplies
 
268.7

 
 
 
293.6

 
Regulatory assets
 
120.4

 
 
 
99.5

 
Prepaid expenses and other assets
 
31.9

 
 
 
39.8

 
Total Current Assets
 
772.5

 
 
 
727.0

 
PROPERTY, PLANT AND EQUIPMENT, NET
 
9,637.5

 
 
 
9,553.8

 
PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET
 
170.9

 
 
 
176.3

 
OTHER ASSETS:
 
 

 
 
 
 

 
Regulatory assets
 
693.7

 
 
 
685.4

 
Nuclear decommissioning trust fund
 
245.8

 
 
 
237.1

 
Other
 
227.3

 
 
 
244.8

 
Total Other Assets
 
1,166.8

 
 
 
1,167.3

 
TOTAL ASSETS
 
$
11,747.7

 
 
 
$
11,624.4

 
The disclosures regarding Westar Energy included in the accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.


12

Table of Contents


WESTAR ENERGY, INC.
Consolidated Balance Sheets
(Unaudited)
 
 
September 30
 
December 31
 
2018
 
2017
LIABILITIES AND EQUITY
(millions, except share amounts)
CURRENT LIABILITIES:
 
 
 
 
 
 
 
Current maturities of long-term debt
 
$
300.0

 
 
 
$

 
Current maturities of long-term debt of variable interest entities
 
30.3

 
 
 
28.5

 
Notes payable and commercial paper
 
326.3

 
 
 
275.7

 
Accounts payable
 
135.1

 
 
 
204.2

 
Related party payables
 
73.9

 
 
 

 
Accrued dividends
 

 
 
 
53.8

 
Accrued taxes
 
144.9

 
 
 
87.7

 
Accrued interest
 
65.3

 
 
 
72.7

 
Regulatory liabilities
 
91.6

 
 
 
11.6

 
Other
 
109.4

 
 
 
89.5

 
Total Current Liabilities
 
1,276.8

 
 
 
823.7

 
LONG-TERM LIABILITIES:
 
 

 
 
 
 

 
Long-term debt, net
 
3,389.7

 
 
 
3,687.6

 
Long-term debt of variable interest entities, net
 
51.1

 
 
 
81.4

 
Deferred income taxes
 
787.1

 
 
 
815.7

 
Unamortized investment tax credits
 
255.1

 
 
 
257.1

 
Regulatory liabilities
 
1,136.9

 
 
 
1,094.0

 
Pension and post-retirement liability
 
465.2

 
 
 
491.2

 
Asset retirement obligations
 
257.8

 
 
 
380.0

 
Other
 
127.8

 
 
 
133.3

 
Total Long-Term Liabilities
 
6,470.7

 
 
 
6,940.3

 
Commitments and Contingencies (Note 12)
 


 
 
 


 
EQUITY:
 
 

 
 
 
 
 
Westar Energy, Inc. Shareholder's Equity:
 
 

 
 
 
 

 
Common stock - 1,000 shares authorized, $0.01 par value, 1 share issued (275,000,000 shares authorized, $5 par value, and 142,094,275 shares issued as of December 31, 2017)
 
2,737.6

 
 
 
2,734.8

 
Retained earnings
 
1,302.7

 
 
 
1,173.3

 
Total Westar Energy, Inc. Shareholder's Equity
 
4,040.3

 
 
 
3,908.1

 
Noncontrolling Interests
 
(40.1
)
 
 
 
(47.7
)
 
Total Equity
 
4,000.2

 
 
 
3,860.4

 
TOTAL LIABILITIES AND EQUITY
 
$
11,747.7

 
 
 
$
11,624.4

 
The disclosures regarding Westar Energy included in the accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.


13

Table of Contents


WESTAR ENERGY, INC.
Consolidated Statements of Income
(Unaudited)
 
 
Three Months Ended
September 30
 
Year to Date
September 30
 
 
2018
 
2017
 
2018
 
2017
 
 
(millions)
OPERATING REVENUES
 
$
764.8

 
$
794.3

 
$
2,015.9

 
$
1,976.2

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
Fuel and purchased power
 
169.7

 
189.8

 
463.2

 
415.4

SPP network transmission costs
 
58.4

 
62.6

 
194.4

 
185.0

Operating and maintenance
 
141.7

 
140.6

 
491.4

 
415.6

Depreciation and amortization
 
95.9

 
94.6

 
281.6

 
277.3

Taxes other than income tax
 
42.2

 
41.8

 
128.8

 
126.4

Total Operating Expenses
 
507.9

 
529.4

 
1,559.4

 
1,419.7

INCOME FROM OPERATIONS
 
256.9

 
264.9

 
456.5

 
556.5

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
 
Investment earnings
 

 
1.0

 
(0.4
)
 
3.5

Other income
 
1.3

 
3.9

 
4.9

 
5.7

Other expense
 
(15.2
)
 
(11.5
)
 
(36.1
)
 
(29.6
)
Total Other Income (Expense), Net
 
(13.9
)
 
(6.6
)
 
(31.6
)
 
(20.4
)
Interest expense
 
43.9

 
43.4

 
132.1

 
128.2

INCOME BEFORE INCOME TAXES
 
199.1

 
214.9

 
292.8

 
407.9

Income tax expense (benefit)
 
22.4

 
55.8

 
(22.0
)
 
112.6

Equity in earnings of equity method investees, net of income taxes
 
1.3

 
1.6

 
3.7

 
4.9

NET INCOME
 
178.0

 
160.7

 
318.5

 
300.2

Less: Net income attributable to noncontrolling interests
 
2.6

 
2.4

 
7.6

 
10.2

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
 
$
175.4

 
$
158.3

 
$
310.9

 
$
290.0

The disclosures regarding Westar Energy included in the accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.



14

Table of Contents


WESTAR ENERGY, INC.
Consolidated Statements of Cash Flows
(Unaudited)
 
 
 
 
 
Year to Date September 30
2018
 
 
2017
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
(millions)
Net income
$
318.5

 
 
$
300.2

Adjustments to reconcile income (loss) to net cash from operating activities:
 
 
 
 
Depreciation and amortization
281.6

 
 
277.3

Amortization of nuclear fuel
18.6

 
 
24.2

Amortization of deferred refueling outage
10.5

 
 
12.1

Amortization of deferred regulatory gain from sale leaseback
(4.1
)
 
 
(4.1
)
Amortization of corporate-owned life insurance
17.2

 
 
15.7

Non-cash compensation
19.9

 
 
6.7

Net deferred income taxes and credits
(34.2
)
 
 
127.0

Allowance for equity funds used during construction
(2.4
)
 
 
(1.1
)
Payments for asset retirement obligations
(10.6
)
 
 
(1.9
)
Equity in earnings of equity method investees, net of income taxes
(3.7
)
 
 
(4.9
)
Other
(1.9
)
 
 
(5.3
)
Changes in working capital items:
 
 
 
 
Accounts receivable
(50.6
)
 
 
(19.7
)
Fuel inventory and supplies
25.4

 
 
15.5

Prepaid expenses and other current assets
(7.0
)
 
 
55.5

Accounts payable
36.2

 
 
(10.0
)
Accrued taxes
74.4

 
 
35.6

Other current liabilities
23.2

 
 
(108.5
)
Changes in other assets
22.9

 
 
22.9

Changes in other liabilities
(26.7
)
 
 
5.5

Cash Flows from Operating Activities
707.2

 
 
742.7

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 

 
 
 

Additions to property, plant and equipment
(510.3
)
 
 
(564.6
)
Purchase of securities - trusts
(96.1
)
 
 
(15.3
)
Sale of securities - trusts
101.2

 
 
15.9

Investment in corporate-owned life insurance
(16.2
)
 
 
(16.2
)
Proceeds from investment in corporate-owned life insurance
6.5

 
 
2.1

Other investing activities
(8.1
)
 
 
(3.3
)
Cash Flows (used in) Investing Activities
(523.0
)
 
 
(581.4
)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 

 
 
 

Short term debt, net
48.3

 
 
(177.7
)
Proceeds from long-term debt

 
 
296.2

Retirements of long-term debt

 
 
(125.0
)
Retirements of long-term debt of variable interest entities
(28.5
)
 
 
(26.8
)
Repayment of capital leases
(2.9
)
 
 
(2.6
)
Borrowings against cash surrender value of corporate-owned life insurance
55.1

 
 
53.4

Repayment of borrowings against cash surrender value of corporate-owned life insurance
(3.9
)
 
 

Distributions to shareholders of noncontrolling interests

 
 
(5.8
)
Cash dividends paid
(235.1
)
 
 
(166.3
)
Other financing activities
(17.3
)
 
 
(6.4
)
Cash Flows (used in) Financing Activities
(184.3
)
 
 
(161.0
)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(0.1
)
 
 
0.3

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
 
 
 
 
Beginning of period, including restricted cash of $0.1 and $0.1, respectively
3.5

 
 
3.2

End of period, including restricted cash of $0.1 and $0.1, respectively
$
3.4

 
 
$
3.5

The disclosures regarding Westar Energy included in the accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.

15

Table of Contents


WESTAR ENERGY, INC.
Consolidated Statements of Changes in Equity
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Westar Energy, Inc. Shareholders
 
 
 
 
 
Common stock shares
 
Common stock
 
Retained earnings
 
Non-controlling interests
 
Total equity
 
(millions, except share amounts)
Balance as of December 31, 2016
141,791,153

 
$
2,727.3

 
$
1,078.6

 
$
27.3

 
$
3,833.2

Net income

 

 
290.0

 
10.2

 
300.2

Issuance of stock
12,131

 
0.6

 

 

 
0.6

Issuance of stock for compensation and reinvested dividends
290,892

 
4.9

 

 

 
4.9

Tax withholding related to stock compensation

 
(7.0