UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-7324
KANSAS GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
KANSAS 48-1093840
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 208, WICHITA, KANSAS 67201
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code 316/261-6611
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this
Form 10-K. (X)
Indicate the number of shares outstanding of each of the registrant's classes
of
common stock.
Common Stock, No par value 1,000 Shares
(Title of each class) (Outstanding at March 18, 1994)
Indicated 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
Registrant meets the conditions of General Instruction J(2)(c) to Form 10-K
for certain wholly-owned subsidiaries and is therefore filing an abbreviated
form.
KANSAS GAS AND ELECTRIC COMPANY
FORM 10-K
December 31, 1993
TABLE OF CONTENTS
Description Page
PART I
Item 1. Business 3
Item 2. Properties 11
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of
Security Holders 12
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 12
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 13
Item 8. Financial Statements and Supplementary Data 19
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 44
PART III
Item 10. Directors and Executive Officers of the
Registrant 45
Item 11. Executive Compensation 46
Item 12. Security Ownership of Certain Beneficial
Owners and Management 46
Item 13. Certain Relationships and Related Transactions 46
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 47
Signatures 56
PART I
ITEM 1. BUSINESS
ACQUISITION AND MERGER
On March 31, 1992, Western Resources, Inc. (formerly The Kansas Power and
Light Company) (Western Resources) through its wholly-owned subsidiary KCA
Corporation (KCA), acquired all of the outstanding common and preferred stock
of Kansas Gas and Electric Company (KG&E) for $454 million in cash and
23,479,380 shares of Western Resources common stock (the Merger). Western
Resources also paid approximately $20 million in costs to complete the Merger.
Simultaneously, KCA and Kansas Gas and Electric Company merged and adopted
the name Kansas Gas and Electric Company (the Company, KG&E).
Additional information relating to the Merger can be found in Management's
Discussion and Analysis of Financial Condition and Results of Operations and
Note 1 of the Notes to Financial Statements.
GENERAL
The Company is an electric public utility engaged in the generation,
transmission, distribution and sale of electric energy in the southeastern
quarter of Kansas including the Wichita metropolitan area. The Company owns
47 percent of Wolf Creek Nuclear Operating Corporation, the operating company
for Wolf Creek Generating Station (Wolf Creek). Corporate headquarters of the
Company is located in Wichita, Kansas. The Company has no gas properties. At
December 31, 1993, the Company had no employees. All employees are provided
by Western Resources.
As a regulated utility, the Company does not have direct competition for
retail electric service in its certified service area. However, there is
competition, based largely on price, from the generation, or potential
generation, of electricity by large commercial and industrial customers, and
independent power producers.
The Company's business is subject to seasonal fluctuations with the peak
period occurring during the summer. Approximately one-third of residential
kilowatthour sales occur in the third quarter. Accordingly, earnings and
revenue information for any quarterly period should not be considered as a
basis for estimating results of operations for a full year.
Electric utilities have been experiencing problems such as controversy
over the safety and use of coal and nuclear power plants, compliance with
changing environmental requirements, long construction periods required to
complete new generating units resulting in high fixed costs for those
facilities, difficulties in obtaining timely and adequate rate relief to
recover these high fixed costs, uncertainties in predicting future load
requirements, competition from independent power producers and cogenerators,
and the effects of changing accounting standards.
The problems which most significantly affect the Company are the use, or
potential use, of cogeneration and self-generation facilities by large
commercial and industrial customers, and compliance with environmental
requirements. For additional information see Management's Discussion and
Analysis and Notes 3 and 4 of the Notes to Financial Statements.
Discussion of other factors affecting the Company are set forth in the
Notes to Financial Statements and Management's Discussion and Analysis
included herein.
ELECTRIC OPERATIONS
General. The Company supplies electric energy at retail to approximately
268,000 customers in 139 communities in Kansas. The Company also supplies
electric energy to 27 communities and 1 rural electric cooperative, and has
contracts for the sale, purchase or exchange of electricity with other
utilities at wholesale.
The Company's electric sales for the last five years were as follows:
1993 1992 1991 1990 1989
(Thousands of MWH)
Residential 2,386 2,102 2,341 2,270 2,105
Commercial 1,991 1,892 1,908 1,838 1,748
Industrial 3,323 3,248 3,194 3,093 2,978
Other 2,049 1,313 1,214 1,736 2,113
Total 9,749 8,555 8,657 8,937 8,944
The Company's electric revenues for the last five years were as follows:
1993 1992 1991 1990 (1) 1989
(Thousands of Dollars)
Residential $219,069 $194,142 $219,907 $214,544 $187,657
Commercial 162,858 154,005 155,847 151,098 135,740
Industrial 179,256 174,226 172,953 168,294 153,360
Other 55,814 31,878 46,261 52,705 56,776
Total $616,997 $554,251 $594,968 $586,641 $533,533
(1) See Note 4 of the Notes to Financial Statements for impact
of rate refund orders.
Capacity. The aggregate net generating capacity of the Company's system
is presently 2,472 megawatts (MW). The system comprises interests in twelve
fossil fueled steam generating units, one nuclear generating unit (47%
interest) and one diesel generator, located at seven generating stations. One
of the twelve fossil fueled units has been "mothballed" for future use (see
Item 2. Properties).
The Company's 1993 peak system net load occurred on August 16, 1993 and
amounted to 1,811 MW. The Company's net generating capacity together with
power available from firm interchange and purchase contracts, provided a
capacity margin of approximately 22% above system peak responsibility at the
time of the peak.
The Company and ten companies in Kansas and western Missouri have agreed
to provide capacity (including margin), emergency and economy services for
each other. This arrangement is called the MOKAN Power Pool. The pool
participants also coordinate the planning of electric generating and
transmission facilities.
Future Capacity. The Company does not contemplate any significant
expenditures in connection with construction of any major generating
facilities through the turn of the century (see Management's Discussion and
Analysis, Liquidity and Capital Resources). The Company has capacity
available which may not be fully utilized by growth in customer demand for at
least 5 years. The Company continues to market this capacity and energy to
other utilities.
Fuel Mix. The Company's coal-fired units comprise 1,092 MW of the total
2,472 MW of generating capacity and the Company's nuclear unit provides 533 MW
of capacity. Of the remaining 847 MW of generating capacity, units that can
burn either natural gas or oil account for 844 MW, and the remaining unit
which burns only diesel accounts for 3 MW (see Item 2, Properties).
During 1993, low sulfur coal was used to produce 60% of the Company's
electricity. Nuclear produced 33% and the remainder was produced from natural
gas, oil, or diesel. Based on the Company's estimate of the availability of
fuel, coal will continue to be used to produce approximately 61% of the
Company's electricity and 33% from nuclear.
The Company anticipates the fuel mix to fluctuate with the operation of
the nuclear powered Wolf Creek which operates on an 18-month refueling and
maintenance schedule. The 18-month schedule permits uninterrupted operation
every third calendar year. Beginning March 5, 1993, Wolf Creek was taken off-
line for its sixth refueling and maintenance outage. The refueling outage
took approximately 73 days to complete, during which time electric demand was
met primarily by the Company's coal-fired generating units.
Nuclear. The owners of Wolf Creek have on hand or under contract 73
percent of the uranium required for operation of Wolf Creek through the year
2001. The balance is expected to be obtained through spot market and contract
purchases.
Contractual arrangements are in place for 100 percent of Wolf Creek's
uranium enrichment requirements for 1993-1996, 70 percent for 1997-1998 and
100 percent for 2003-2014. The balance of the 1997-2002 requirements is
expected to be obtained through a combination of spot market and contract
purchases. The decision not to contract for the full enrichment requirements
is one of cost rather than availability of service.
Contractual arrangements are in place for the conversion of uranium to
uranium hexafluoride sufficient to meet Wolf Creek's requirements through 1995
as well as the fabrication of fuel assemblies to meet Wolf Creek's
requirements through 2012. During 1994, the Company plans to begin securing
additional arrangements, for the post 1995 period.
The Nuclear Waste Policy Act of 1982 established schedules, guidelines and
responsibilities for the Department of Energy (DOE) to develop and construct
repositories for the ultimate disposal of spent fuel and high-level waste.
The DOE has not yet constructed a high-level waste disposal site and has
announced that a permanent storage facility may not be in operation prior to
2010 although an interim storage facility may be available earlier. Wolf
Creek contains an on-site spent fuel storage facility which, under current
regulatory guidelines, provides space for the storage of spent fuel through
2006 while still maintaining full core off-load capability. The Company
believes adequate additional storage space can be obtained, as necessary.
Coal. Western Resources, the operator of Jeffrey Energy Center (JEC) and
KG&E (20% interest in JEC), have a long-term coal supply contract with Amax
Coal West, Inc. (AMAX), a subsidiary of Cyprus Amax Coal Company, to supply
low sulfur coal to JEC from AMAX's Eagle Butte Mine or an alternate mine
source of AMAX's Belle Ayr Mine, both located in the Powder River Basin in
Campbell County, Wyoming. The contract expires December 31, 2020. The
contract contains a schedule of minimum annual delivery quantities with
deficient mmBTU provisions applicable to deficiencies in the scheduled
delivery. The coal to be supplied is surface mined and has an average BTU
content of approximately 8,300 BTU per pound and an average sulfur content of
.43 lbs/mmBTU (see Environmental Matters). The average delivered cost of coal
for JEC was approximately $1.045 per mmBTU or $17.35 per ton during 1993.
Coal is transported by Western Resources from Wyoming under a long-term
rail transportation contract with Burlington Northern (BN) and Union Pacific
(UP) to JEC through December 31, 2013. Rates are based on net load carrying
capabilities of each rail car. Western Resources provides 770 aluminum rail
cars, under a 20 year lease, to transport coal to JEC. During 1994 Western
Resources will provide an additional 120 rail cars under a similar lease.
The two coal fired units at La Cygne generating station have an aggregate
generating capacity of 677 MW (KG&E's 50 percent share) (see Item 2.
Properties). The operator, Kansas City Power & Light Company (KCP&L),
maintains coal contracts as discussed in the following paragraphs.
During 1993, La Cygne 1 was converted to use low sulfur Powder River Basin
coal which is supplied under the AMAX contract for La Cygne 2, discussed
below. Illinois or Kansas/Missouri coal is blended with the Powder River
Basin coal and is secured from time to time under spot market arrangements.
La Cygne 1 uses a blend of 85 percent Powder River Basin coal. During the
third and fourth quarters of 1993, the Company along with the operator secured
supplemental Illinois or Kansas/Missouri coal, for blending purposes, on a
short-term basis through spot market purchase orders.
La Cygne 2 and additional La Cygne 1 Powder River Basin coal was supplied,
through a contract that expired December 31, 1993, by AMAX from its mines in
Gillette, Wyoming. This low sulfur coal had an average BTU content of
approximately 8,500 BTU per pound and a maximum sulfur content of .50
lbs/mmBTU (see Environmental Matters). For 1994, the operator has secured
Powder River Basin coal, similar to the AMAX coal, from two sources; Carter
Mining Company's Caballo Mine, a subsidiary of Exxon Coal USA; and Caballo
Rojo Inc's Caballo Rojo Mine, a subsidiary of Drummond Inc. Transportation is
covered by KCP&L through its Omnibus Rail Transportation Agreement with BN and
Kansas City Southern Railroad through December 31, 1995. An alternative rail
transportation agreement with Western Railroad Property, Inc. (WRPI), a
partnership between UP and Chicago Northwestern (CNW), lasts through December
31, 1995. The WRPI/UP/CNW agreement is a supplemental access contract to
handle tonnages not covered by the Omnibus contract.
During 1993, the average delivered cost of all coal procured for La Cygne
1 was approximately $0.81 per mmBTU or $14.24 per ton and the average
delivered cost of Powder River Basin coal for La Cygne 2 was approximately
$0.84 per mmBTU or $14.18 per ton.
Natural Gas. The Company uses natural gas as a primary fuel in its Gordon
Evans and Murray Gill Energy Centers. Natural gas for these generating
stations is supplied under a firm contract that runs through 1995 by Kansas
Gas Supply (KGS). Short-term economical spot market purchases from the
Williams Natural Gas (WNG) system provide the Company flexible natural gas to
meet operational needs.
Oil. The Company uses oil as an alternate fuel when economical or when
interruptions to natural gas make it necessary. Oil is also used as a
supplemental fuel at each of the coal plants. All oil burned by the Company
during the past several years has been obtained by spot market purchases. At
December 31, 1993, the Company had approximately 770 thousand gallons of No. 2
oil and 11.5 million gallons of No. 6 oil which is sufficient to meet
emergency requirements and protect against lack of availability of natural gas
and/or the loss of a large generating unit.
Other Fuel Matters. The Company's contracts to supply fuel for its coal-
and natural gas-fired generating units, with the exception of JEC, do not
provide full fuel requirements at the various stations. Supplemental fuel is
procured on the spot market to provide operational flexibility and, when the
price is favorable, to take advantage of economic opportunities.
On March 26, 1992, in connection with the Merger, the Kansas Corporation
Commission (KCC) approved the elimination of the Energy Cost Adjustment Clause
(ECA) for most Kansas retail customers of the Company effective April 1, 1992.
The provisions for fuel costs included in base rates were established at a
level intended by the KCC to equal the projected average cost of fuel through
August 1995 and to include recovery of costs provided by previously issued
orders relating to coal contract settlements and storm damage recovery. Any
increase or decrease in fuel costs from the projected average will be absorbed
by the Company.
Set forth in the table below is information relating to the weighted
average cost of fuel used by the Company.
1993 1992 1991 1990 1989
Per Million BTU:
Nuclear $0.35 $0.34 $0.32 $0.34 $0.34
Coal 0.96 1.25 1.32 1.32 1.38
Gas 2.37 1.95 1.74 1.96 1.91
Oil 3.15 4.28 4.13 3.01 3.30
Cents per KWH Generation 0.93 0.98 1.09 1.01 0.96
Environmental Matters. The Company currently holds all Federal and State
environmental approvals required for the operation of all its generating
units. The Company believes it is presently in substantial compliance with
all air quality regulations (including those pertaining to particulate matter,
sulfur dioxide and nitrogen oxides) promulgated by the State of Kansas and the
Environmental Protection Agency (EPA).
The Federal sulfur dioxide standards applicable to the Company's JEC and
La Cygne 2 units, prohibit the emission of more than 1.2 pounds of sulfur
dioxide per million BTU of heat input. Federal particulate matter emission
standards applicable to these units prohibit: (1) the emission of more than
0.1 pounds of particulate matter per million BTU of heat input and (2) an
opacity greater than 20 percent. Federal nitrogen oxides emission standards
applicable to these units prohibit the emission of more than 0.7 pounds of
nitrogen oxides per million BTU of heat input.
The JEC and La Cygne 2 units have met: (1) the sulfur dioxide standards
through the use of low sulfur coal (see Coal); (2) the particulate matter
standards through the use of electrostatic precipitators; and (3) the nitrogen
oxides standards through boiler design and operating procedures. The JEC
units are also equipped with flue gas scrubbers providing additional sulfur
dioxide and particulate matter emission reduction capability.
The Kansas Department of Health and Environment regulations, applicable to
the Company's other generating facilities, prohibit the emission of more than
3.0 pounds of sulfur dioxide per million BTU of heat input at the Company's
generating units. The Company has contracted to purchase low sulfur coal (see
Coal) which will allow compliance with such limits at La Cygne. All
facilities burning coal are equipped with flue gas scrubbers and/or
electrostatic precipitators.
The Clean Air Act Amendments of 1990 (the Act) require a two-phase
reduction in sulfur dioxide and nitrogen oxide emissions effective in 1995 and
2000 and a probable reduction in toxic emissions. To meet the monitoring and
reporting requirements under the acid rain program, the Company is installing
continuous monitoring and reporting equipment at a total cost of approximately
$2.3 million. At December 31, 1993, the Company had completed approximately
$850 thousand of these capital expenditures with the remaining $1.4 million of
capital expenditures to be completed in 1994 and 1995. The Company does not
expect additional equipment to reduce sulfur emissions to be necessary under
Phase II. The Company currently has no Phase I affected units.
The nitrogen oxide and toxic limits, which were not set in the law, will
be specified in future EPA regulations. The EPA has issued, for public
comment, preliminary nitrogen oxide regulations for Phase I group 1 units.
Nitrogen oxide regulations for Phase II units and Phase I group 2 units are
mandated in the Act to be promulgated by January 1, 1997. Although the
Company has no Phase I units, the final nitrogen oxide regulations for Phase 1
group 1 may allow for early compliance for Phase II group 1 units. Until
such time as the Phase I group 1 nitrogen oxide regulations are final, the
Company will be unable to determine its compliance options or related
compliance costs.
All of the Company's generating facilities are in substantial compliance
with the Best Practicable Technology and Best Available Technology
regulations issued by EPA pursuant to the Clean Water Act of 1977. Most EPA
regulations are administered in Kansas by the Kansas Department of Health and
Environment.
Additional information with respect to Environmental Matters is discussed
in Note 3 of the Notes to Financial Statements.
FINANCING
The Company's ability to issue additional debt is restricted under
limitations imposed by the Mortgage and Deed of Trust of the Company.
The Company's mortgage prohibits additional first mortgage bonds from
being issued (except in connection with certain refundings) unless the
Company's net earnings before income taxes and before provision for retirement
and depreciation of property for a period of 12 consecutive months within 15
months preceding the issuance are not less than two and one-half times the
annual interest charges on, or 10% of the principal amount of, all first
mortgage bonds outstanding after giving effect to the proposed issuance.
Based on the Company's results for the 12 months ended December 31, 1993,
approximately $1 billion principal amount of additional first mortgage bonds
could be issued (7.5 percent interest rate assumed).
Additional KG&E bonds may be issued, subject to the restrictions in the
preceding paragraph, on the basis of property additions not subject to an
unfunded prior lien and on the basis of bonds which have been retired. As of
December 31, 1993, the Company had approximately $1.3 billion of net bondable
property additions not subject to an unfunded prior lien entitling the Company
to issue up to $882 million principal amount of additional bonds. As of
December 31, 1993, the Company could also issue up to $115 million bonds on
the basis of retired bonds.
REGULATION AND RATES
The Company is subject as an operating electric utility to the
jurisdiction of the KCC which has general regulatory authority over the
Company's rates, extensions and abandonments of service and facilities,
valuation of property, the classification of accounts and various other
matters. The Company is also subject to the jurisdiction of the FERC and the
KCC with respect to the issuance of the Company's securities.
Additionally, the Company is subject to the jurisdiction of the FERC,
including jurisdiction as to rates with respect to sales of electricity for
resale, and the Nuclear Regulatory Commission as to nuclear plant operations
and safety.
Additional information with respect to Regulation and Rates is discussed
in Notes 1 and 4 of the Notes to Financial Statements.
EXECUTIVE OFFICERS OF THE COMPANY
Other Offices or Positions
Name Age Present Office Held During Past Five
Years
Kent R. Brown 48 Chairman of the Board, Group Vice President
(since June 1992) (1982 to 1992)
President and Chief
Executive Officer
(since March 1992)
Richard D. LaGree 63 Vice President, Field Vice President, Electric
Operations (since Distribution
Operations,
April 1992) (1990 to 1992) Western
Resources, Inc.
Vice President, Western
Region Operations
(1985 to 1990) Western
Resources, Inc.
Richard D. Terrill 39 Secretary, Treasurer Secretary and Attorney
and General Counsel (1983 to 1992)
(since April 1992)
The present term of office of each of the executive officers extends to May 3,
1994, or until their respective successors are chosen and appointed by the
Board of Directors. There are no family relationships among any of the
officers, nor any arrangements or understandings between any officer and other
persons pursuant to which he/she was elected as an officer.
ITEM 2. PROPERTIES
The Company owns or leases and operates an electric generation,
transmission, and distribution system in Kansas.
During the five years ended December 31, 1993, the Company's gross
property additions totalled $330,737,000, and retirements were $93,737,000.
ELECTRIC FACILITIES
Unit Year Principal Unit Capacity
Name No. Installed Fuel (MW) (2)
Gordon Evans Energy Center:
Steam Turbines 1 1961 Gas--Oil 150
2 1967 Gas--Oil 367
Jeffrey Energy Center (20%):
Steam Turbines 1 1978 Coal 140
2 1980 Coal 135
3 1983 Coal 140
La Cygne Station (50%):
Steam Turbines 1 1973 Coal 342
2 1977 Coal 335
Murray Gill Energy Center:
Steam Turbines 1 1952 Gas--Oil 46
2 1954 Gas--Oil 69
3 1956 Gas--Oil 107
4 1959 Gas--Oil 105
Neosho Energy Center:
Steam Turbine 3 1954 Gas--Oil 0 (1)
Wichita Plant:
Diesel Generator 5 1969 Diesel 3
Wolf Creek Generating Station (47%):
Nuclear 1 1985 Uranium 533
Total 2,472
(1) This unit has been "mothballed" for future use.
(2) Based on MOKAN rating.
The Company jointly-owns Jeffrey Energy Center (20%), La Cygne Station
(50%)
and Wolf Creek Generating Station (47%).
ITEM 3. LEGAL PROCEEDINGS
Information on legal proceedings involving the Company is set forth in
Note 10 of Notes to Financial Statements included herein.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Information required by Item 4 is omitted pursuant to General Instruction
J(2)(c) to Form 10-K.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
On March 31, 1992, Western Resources through its wholly-owned subsidiary
KCA, acquired all of the outstanding common and preferred stock of KG&E. As a
result, the Company's common stock was delisted by the New York Stock Exchange
and the Pacific Stock Exchange.
ITEM 6. SELECTED FINANCIAL DATA
1993 1992 1991 1990(1) 1989
(Dollars in Thousands)
Income Statement Data:
Operating revenues . . . . . . . $ 616,997 $ 554,251 $ 594,968 $ 586,641 $ 533,533
Operating expenses . . . . . . . 469,616 424,089 468,885 447,355 405,938
Operating income . . . . . . . . 147,381 130,162 126,083 139,286 127,595
Net income . . . . . . . . . . . 108,103 77,981 53,602 64,184 47,493
Balance Sheet Data:
Gross electric plant in service. $3,339,832 $3,293,365 $2,468,959 $2,435,090 $2,388,640
Construction work in progress. . 28,436 29,634 13,612 14,760 13,181
Total assets . . . . . . . . . . 3,187,479 3,279,232 2,350,546 2,348,862 2,363,069
Long-term debt . . . . . . . . . 653,543 871,652 850,851 824,424 726,537
Interest coverage ratio (before
income taxes, including
AFUDC) . . . . . . . . . . . . 3.58 2.35 1.90 2.07 1.71
(1) See Note 4 of the Notes to Financial Statements for impact of rate refund orders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
The results of operations for the year ended December 31, 1993, and the
nine months ended December 31, 1992, included herein, refer to the Company
following the merger with Western Resources, Inc. (formerly The Kansas Power
and Light Company) through its wholly-owned subsidiary, KCA Corporation, on
March 31, 1992 (the Merger) (see Note 1).
Pro forma results of operations for the twelve months ended December 31,
1992 presented herein, give effect to the Merger as if it occurred on January
1, 1992 and were derived by combining the historical information for the three
month period ended March 31, 1992 and the nine month period ended December 31,
1992. The results of operations for the year ended December 31, 1991, refer
to the Company prior to the Merger but are not materially different than if
presented on a pro forma basis. Additional information relating to changes
between years is provided in the Notes to Financial Statements.
General: The Company had net income of $108.1 million for 1993 compared
to pro forma net income of $78 million in 1992. The increase in net income is
a result of the increase in energy sales due to the return of more normal
temperatures compared to unusually mild winter and summer temperatures in
1992, Merger-related cost savings, and reduced interest charges.
Liquidity and Capital Resources: The Company's liquidity is a function of
its ongoing construction program, designed to improve facilities which provide
electric service and meet future customer service requirements.
During 1993, construction expenditures for the Company's electric system
were approximately $61 million and nuclear fuel expenditures were
approximately $6 million. It is projected that adequate capacity margins will
be maintained through the turn of the century. The construction program is
focused on providing service to new customers and improving present electric
facilities.
First mortgage bond maturities and sinking fund requirements through 1998
are $18.6 million. This capital as well as capital required for construction
will be provided from internal and external sources available under then
existing financial conditions. During 1993, the Company issued and retired
long-term debt to take advantage of favorable long-term interest rates and
increased borrowings against the accumulated cash surrender values of the
corporate-owned life insurance policies.
The embedded cost of long-term debt was 7.3% at December 31, 1993, a
decrease from 7.5% at December 31, 1992. The decrease was primarily
accomplished through refinancing of higher cost debt.
On November 22, 1993, the Company redeemed three series of first mortgage
bonds, $25 million principal amount of First Mortgage Bonds, 7 3/8% Series due
2002, $25 million principal of First Mortgage Bonds, 8 3/8% Series due 2006,
and $25 million principal of First Mortgage Bonds, 8 1/2% Series due 2007.
On September 20, 1993, the Company terminated a long-term revolving credit
agreement which provided for borrowings of up to $150 million. The loan
agreement, which was effective through October 1994, was repaid without
penalty.
At December 31, 1993, the Company had $150 million of First Mortgage Bonds
available to be issued under a shelf registration filed on August 24, 1993.
On January 20, 1994, the Company issued $100 million of First Mortgage Bonds,
6.20% Series due January 15, 2006 under this shelf registration. The net
proceeds were
used to reduce short-term debt.
On August 12, 1993, the Company issued $65 million of First Mortgage
Bonds, 6 1/2% Series due August 1, 2005. The net proceeds from the new issue,
together with available cash, were used to refund $35 million of First
Mortgage Bonds, 8 1/8% Series due 2001, and $30 million of First Mortgage
Bonds, 8 7/8% Series due 2008.
The Company has a long-term agreement that expires in 1995 which contains
provisions for the sale of accounts receivable and unbilled revenues
(receivables) and phase-in revenues up to a total of $180 million. Amounts
related to receivables are accounted for as sales while those related to
phase-in revenues are accounted for as collateralized borrowings. At December
31, 1993, the Company had receivables amounting to $56.8 million which were
considered sold.
In 1986 the Company purchased corporate-owned life insurance policies
(COLI) on certain of its employees. The annual cash outflow for the premiums
on these policies from 1991 through 1993 was approximately $27 million. On
August 23, 1993, the Company increased its borrowings against the accumulated
cash surrender values of the policies by $164.7 million and received $6.9
million from increased borrowings on Wolf Creek Nuclear Operating Company
(WCNOC) policies. Total 1993 COLI borrowings amounted to $184.6 million. See
Note 2 of the Notes to Financial Statements for additional information on the
accumulated cash surrender value. After 1993, the borrowings are expected to
produce annual cash inflows, net of expenses, through the remaining life of
the policies. Borrowings against the policies will be repaid from death
proceeds.
The Company's short-term financing requirements are satisfied, as needed,
through short-term bank loans and borrowings under other unsecured lines of
credit maintained with banks. At December 31, 1993, short-term borrowings
amounted to $155.8 million (see Note 5).
The KG&E common and preferred stock was redeemed in connection with the
Merger, leaving 1,000 shares of common stock held by Western Resources. The
debt structure of the Company and available sources of funds were not affected
by the Merger.
RESULTS OF OPERATIONS
The following is an explanation of significant variations from prior year
results in revenues, operating expenses, other income and deductions, and
interest charges. Additional information relating to changes between years is
provided in the Notes to Financial Statements.
Revenues: The operating revenues of the Company are based on sales
volumes and rates, authorized by the Kansas Corporation Commission (KCC) and
the FERC, charged for the sale and delivery of electricity. Rates are
designed to recover the cost of service and allow investors a fair rate of
return. Future electric sales will continue to be affected by weather
conditions, competing fuel sources, customer conservation efforts and the
overall economy of the Company's service area.
The KCC order approving the Merger provided a moratorium on increases,
with certain exceptions, in the Company's electric rates until August 1995.
The KCC ordered refunds totalling $32 million to the combined companies'
(Western Resources and the Company) customers to share with customers the
Merger-related cost savings achieved during the moratorium period. The first
refund was made in April 1992 and amounted to approximately $4.9 million for
the Company. A refund of approximately $4.9 million was made in December 1993
and an additional refund of approximately $8.7 million will be made in
September 1994 (see Note 1).
On March 26, 1992, in connection with the Merger, the KCC approved the
elimination of the Energy Cost Adjustment Clause (ECA) for most retail
customers of the Company effective April 1, 1992. The fuel costs are now
included in base rates and were established at a level intended by the KCC to
equal the projected average cost of fuel through August 1995. Any increase or
decrease in fuel costs from the projected average will be absorbed by the
Company.
1993 COMPARED TO 1992: Total operating revenues increased $62.7 million
or 11.3 percent in 1993 compared to 1992 pro forma revenues. The increase is
due to the return of near normal temperatures during 1993 compared to
unusually mild winter and summer temperatures in 1992. All customer classes
experienced increased sales volumes during 1993. The number of cooling degree
days recorded for the city of Wichita were 1,546 for 1993, a 23 percent
increase from 1992. Contributing to the increase in wholesale sales were
sales to neighboring utilities to meet peak demand periods while those
utilities' units were down as a result of the summer flooding.
Partially offsetting these increases in revenues was the amortization of
the Merger-related refund.
1992 COMPARED TO 1991: Pro forma operating revenues were $554 million in
1992, a 6.8 percent decrease from 1991. The decrease is a result of unusually
mild temperatures during 1992 compared to 1991. Revenues from residential
customers decreased 11.7 percent compared to 1991 primarily due to reduced air
conditioning load. The Company experienced only 1,258 cooling degree days in
Wichita in 1992, a 38.9 percent decrease from 1991 and a 22.7 percent decrease
from normal weather. Commercial, industrial and wholesale revenues also
reflected small decreases in 1992. Also decreasing revenues was the
amortization of the Merger-related refund discussed previously.
Operating Expenses: 1993 COMPARED TO 1992: Total operating expenses
increased $45.5 million or 10.7 percent in 1993 compared to 1992. Fuel, and
purchased power expenses increased $21.4 million or 22.5 percent primarily due
to increased generation resulting from increased customer demand for
electricity during the summer peak season. Federal and state income taxes
increased $28.6 million primarily as a result of higher net income. General
taxes increased $4.8 million primarily due to an increase in plant, the
property tax assessment ratio, and higher mill levies.
Partially offsetting these increases in total operating expenses was a
decrease in other operations expense of $10.1 million primarily as a result of
merger-related savings for the entire year of 1993 and reduced net lease
expense for La Cygne 2 (see Note 7) compared to pro forma operating expenses
of 1992.
At December 31, 1993, the Company completed the accelerated amortization
of deferred income tax reserves related to the allowance for borrowed funds
used during construction capitalized for Wolf Creek Generating Station. The
amortization of these deferred income tax reserves amounted to approximately
$12 million in 1993. In accordance with the provisions of the Merger order
(see Note 1), the Company is precluded from recovering the $12 million annual
amortization in rates until the next rate filing. Therefore the Company's
earnings will be impacted negatively until these income taxes are recovered in
future rates.
1992 COMPARED TO 1991: Pro forma operating expenses decreased $44.8
million or 9.6 percent in 1992 compared to 1991. Fossil fuel expenses
decreased $23.3 million or 24.1 percent primarily due to decreased generation
resulting from reduced demand for electricity during the summer peak season
and decreased generation by natural gas-fired units with the availability of
Wolf Creek. Merger-related cost savings, an early retirement plan, a
voluntary separation program and unseasonable mild weather allowed other
operating expenses to decrease $19.2 million. Maintenance expenses decreased
$6.2 million primarily due to the scheduled major overhaul at La Cygne 2
during 1991.
Partially offsetting these decreases were higher nuclear fuel expenses of
$4 million as a result of the increased availability of Wolf Creek in 1992
compared to 1991. Property taxes also increased as a result of increased plant
and tax mill levies.
As permitted under the La Cygne 2 generating station lease agreement, in
1992, KG&E requested the Trustee Lessor to refinance $341.1 million of secured
facility bonds of the Trustee and owner of La Cygne 2. The transaction was
requested to reduce the Company's recurring future net lease expense. To
accomplish this transaction, a one-time payment of approximately $27 million
was made which will be amortized over the remaining life of the lease and will
be included in operating expense as part of the future lower lease expense.
On September 29, 1992 the Trustee Lessor refinanced bonds having a coupon rate
of approximately 11.7% with bonds having a coupon rate of approximately 7.7%.
Expenses related to the merger with Western Resources were $1.1 million
for the three months ended March 31, 1992. Other operations expense for 1991,
included $3.8 for expenses related to the Company's response to the
unsolicited tender offer by Kansas City Power & Light Company (KCPL) and the
merger with Western Resources.
Other Income and Deductions: Other income and deductions, net of taxes,
increased slightly in 1993 compared to 1992 due to the increased cash
surrender values of COLI policies and the receipt of death benefit proceeds.
Partially offsetting these increases was higher interest expense on COLI
borrowings.
Pro forma other income and deductions, net of taxes, increased
significantly for 1992 compared to 1991 as a result of increased cash
surrender values of corporate-owned life insurance polices and the recognition
of the recovery of $4.2 million of the previously written-off investment in
Drexel Burnham Lambert Group Inc. (Drexel) commercial paper.
In April 1992, the Company completed the sale of its 80% interest in CIC
Systems, Inc. (CIC). The Company had recorded a $1 million charge in 1991
representing the annual net loss incurred by CIC.
Interest Charges: Interest charges decreased $12.4 million in 1993
compared to 1992 as the Company continued to take advantage of lower interest
rates on variable-rate and fixed-rate debt by retiring and refinancing higher
cost debt. The Company's embedded cost of long-term debt decreased to 7.3% at
December 31, 1993 compared to 7.5% and 7.9% at December 31, 1992 and 1991,
respectively.
Pro forma interest charges decreased $3.3 million in 1992, primarily as a
result of the refinancing of higher cost fixed-rate debt and lower interest
rates on variable-rate debt.
OTHER INFORMATION
Inflation: Under the ratemaking procedures prescribed by the regulatory
commissions to which the Company is subject, only the original cost of plant
is recoverable in revenues as depreciation. Therefore, because of inflation,
present and future depreciation provisions are inadequate for purposes of
maintaining the purchasing power invested by common shareholders and the
related cash flows are inadequate for replacing property. The impact of this
ratemaking process on common shareholders is mitigated to the extent
depreciable property is financed with debt that can be repaid with dollars of
less purchasing power. While the Company has experienced relatively low
inflation in the recent past, the cumulative effect of inflation on operating
costs may require the Company to seek regulatory rate relief to recover these
higher costs.
Environmental: The Company has recognized the importance of environmental
responsibility and has taken a proactive position with respect to the
potential environmental liability associated with former manufactured gas
sites. The Company has an agreement with the Kansas Department of Health and
Environment to systematically evaluate these sites in Kansas (see Note 3).
The Company currently has no Phase I affected units under the Clean Air
Act of 1990. Until such time that additional regulations become final the
Company will be unable to determine its compliance options or related
compliance costs. (see Note 3).
Energy Policy Act: The 1992 Energy Policy Act (the Act) requires
increased efficiency of energy usage and will potentially change the way
electricity is marketed. The Act also provides for increased competition in
the wholesale electric market by permitting the FERC to order third party
access to utilities' transmission systems and by liberalizing the rules for
ownership of generating facilities. As part of the Merger, the Company agreed
to open access to its transmission system. Another part of the Act requires a
special assessment to be collected from utilities for a uranium enrichment,
decontamination, and decommissioning fund. The Company's portion of the
assessment for Wolf Creek is approximately $7 million, payable over 15 years.
Management expects such costs to be recovered through the ratemaking process.
Statement of Financial Accounting Standards No. 106 (SFAS 106) and No. 112
(SFAS 112): For discussion regarding the effect of SFAS 106 and SFAS 112 on
the Company see Note 8 of the Notes to Financial Statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TABLE OF CONTENTS PAGE
Independent Auditors' Report 20
Financial Statements:
Balance Sheets, December 31, 1993 and 1992 22
Statements of Income for the year ended December 31, 1993 23
(Successor), the nine months ended December 31, 1992
(Successor), the three months ended March 31, 1992
(Predecessor), and the year ended December 31, 1991
(Predecessor)
Statements of Cash Flows for the year ended December 31, 1993 24
(Successor), the period March 31 to December 31, 1992
(Successor), the three months ended March 31, 1992
(Predecessor), and the year ended December 31, 1991
(Predecessor)
Statements of Taxes for the year ended December 31, 1993 25
(Successor), the nine months ended December 31, 1992
(Successor), the three months ended March 31, 1992
(Predecessor), and the year ended December 31, 1991
(Predecessor)
Statements of Capitalization, December 31, 1993 and 1992 26
Statements of Common Stock Equity for the year ended 27
December 31, 1993 (Successor), the nine months ended
December 31, 1992 (Successor), the three months ended
March 31, 1992 (Predecessor), and the year ended
December 31, 1991 (Predecessor)
Notes to Financial Statements 28
Financial Statement Schedules:
V- Utility Plant for the year ended December 31, 1993, 50
(Successor), the nine months ended December 31, 1992
(Successor), the three months ended March 31, 1992
(Predecessor), and the year ended December 31, 1991
(Predecessor)
VI- Accumulated Depreciation of Utility Plant for the year ended 53
December 31, 1993 (Successor), the nine months ended
December 31, 1992 (Successor) the three months ended
March 31, 1992 (Predecessor), and the year ended
December 31, 1991 (Predecessor)
SCHEDULES OMITTED
The following schedules are omitted because of the absence of the
conditions under which they are required or the information is included
in the financial statements and schedules presented:
I, II, III, IV, VII, VIII, IX, X, XI, XII and XIII.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Kansas Gas and Electric Company:
We have audited the accompanying balance sheet and statement of capitalization
of Kansas Gas and Electric Company (a wholly-owned subsidiary of Western
Resources, inc.) as of December 31, 1993, and the related statements of
income, cash flows, taxes, and common stock equity for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kansas Gas and Electric
Company as of December 31, 1993, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
As explained in Note 8 to the financial statements, effective January 1, 1993,
the Company changed its method of accounting for postretirement benefits.
Our audit was made for the purpose of forming an opinion on the 1993 basic
financial statements taken as a whole. The financial statement schedules
listed in the table of contents on page 19 are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules for 1993 have been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.
Kansas City, Missouri, ARTHUR ANDERSEN &
CO.
January 28, 1994
INDEPENDENT AUDITORS' REPORT
Kansas Gas and Electric Company:
We have audited the 1992 and 1991 financial statements of Kansas Gas and
Electric Company (a wholly-owned subsidiary of Western Resources, Inc.) listed
in the accompanying table of contents. Our audits also included the 1992 and
1991 financial statement schedules listed in the accompanying table of
contents. These financial statements and financial statement schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1992 and
the results of its operations and its cash flows for the periods indicated in
conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedules, when considered in relation to
the basic financial statements taken as a whole, present fairly in all
material respects the information shown therein.
DELOITTE & TOUCHE
Kansas City, Missouri
January 29, 1993
KANSAS GAS AND ELECTRIC COMPANY
BALANCE SHEETS
(Thousands of Dollars)
December 31,
1993 1992
ASSETS
UTILITY PLANT:
Electric plant in service (Notes 1, 6, and 12). . . . . . $3,339,832 $3,293,365
Less - Accumulated depreciation . . . . . . . . . . . . . 790,843 724,188
2,548,989 2,569,177
Construction work in progress . . . . . . . . . . . . . . 28,436 29,634
Nuclear fuel (net). . . . . . . . . . . . . . . . . . . . 29,271 33,312
Net utility plant . . . . . . . . . . . . . . . . . . . 2,606,696 2,632,123
OTHER PROPERTY AND INVESTMENTS:
Decommissioning trust (Note 3). . . . . . . . . . . . . . 13,204 9,272
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 10,941 13,855
24,145 23,127
CURRENT ASSETS:
Cash and cash equivalents (Note 2). . . . . . . . . . . . 63 892
Accounts receivable and unbilled revenues (net)(Note 6) . 11,112 10,543
Advances to parent company (Note 14). . . . . . . . . . . 192,792 74,289
Fossil fuel, at average cost, . . . . . . . . . . . . . . 7,594 16,101
Materials and supplies, at average cost . . . . . . . . . 29,933 31,453
Prepayments and other current assets. . . . . . . . . . . 14,995 7,820
256,489 141,098
DEFERRED CHARGES AND OTHER ASSETS:
Deferred future income taxes (Note 9) . . . . . . . . . . 113,479 138,361
Deferred coal contract settlement costs (Note 4). . . . . 21,247 24,520
Phase-in revenues (Note 4). . . . . . . . . . . . . . . . 78,950 96,495
Other deferred plant costs. . . . . . . . . . . . . . . . 32,008 32,212
Corporate-owned life insurance (net) (Note 2) . . . . . . 45 144,547
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 54,420 46,749
300,149 482,884
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . $3,187,479 $3,279,232
CAPITALIZATION AND LIABILITIES
CAPITALIZATION (see statement). . . . . . . . . . . . . . . $1,899,221 $2,009,227
CURRENT LIABILITIES:
Short-term debt (Note 5). . . . . . . . . . . . . . . . . 155,800 93,500
Long-term debt due within one year (Note 6) . . . . . . . 238 228
Accounts payable. . . . . . . . . . . . . . . . . . . . . 51,095 60,908
Accrued taxes . . . . . . . . . . . . . . . . . . . . . . 12,185 17,684
Accrued interest. . . . . . . . . . . . . . . . . . . . . 7,381 10,935
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 9,427 5,963
236,126 189,218
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes (Notes 1 and 9) . . . . . . . . . . 646,159 671,196
Deferred investment tax credits (Note 9). . . . . . . . . 78,048 73,939
Deferred gain from sale-leaseback (Note 7). . . . . . . . 261,981 271,621
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 65,944 64,031
1,052,132 1,080,787
COMMITMENTS AND CONTINGENCIES (Notes 3 and 10)
TOTAL CAPITALIZATION AND LIABILITIES . . . . . . . . . $3,187,479 $3,279,232
The NOTES TO FINANCIAL STATEMENTS are an integral part of these statements.
KANSAS GAS AND ELECTRIC COMPANY
STATEMENTS OF INCOME
(Thousands of Dollars)
Year Ended December 31,
1992
Pro Forma April 1 | January 1
1993 1992 to Dec. 31 | to March 31 1991
(Successor) | (Predecessor)
|
OPERATING REVENUES (Notes 2 and 4). . . . $ 616,997 $ 554,251 $ 423,538 | $ 130,713 $ 594,968
|
OPERATING EXPENSES: |
Fuel used for generation: |
Fossil fuel . . . . . . . . . . . . . 93,388 73,785 53,701 | 20,084 97,159
Nuclear fuel. . . . . . . . . . . . . 13,275 12,558 10,126 | 2,432 8,593
Power purchased . . . . . . . . . . . . 9,864 8,746 3,207 | 5,539 7,811
Other operations. . . . . . . . . . . . 118,948 129,083 91,436 | 37,647 148,312
Maintenance . . . . . . . . . . . . . . 46,740 46,702 35,956 | 10,746 52,934
Depreciation and amortization . . . . . 75,530 74,696 55,547 | 19,149 75,115
Amortization of phase-in revenues . . . 17,545 17,544 13,158 | 4,386 17,545
Taxes (see statement): |
Federal income. . . . . . . . . . . . 39,553 16,305 17,523 | (1,218) 17,569
State income . . . . . . . . . . . . 9,570 4,264 4,732 | (468) 5,307
General . . . . . . . . . . . . . . . 45,203 40,406 30,155 | 10,251 38,540
Total operating expenses. . . . . . 469,616 424,089 315,541 | 108,548 468,885
|
OPERATING INCOME. . . . . . . . . . . . . 147,381 130,162 107,997 | 22,165 126,083
|
OTHER INCOME AND DEDUCTIONS: |
Investment income . . . . . . . . . . . 629 1,367 953 | 414 3,147
Corporate-owned life insurance (net). . 7,841 10,724 9,308 | 1,416 4,615
Miscellaneous (net) (Note 3). . . . . . 8,642 6,506 8,464 | (1,958) (12,844)
Income taxes (net) (see statement). . . 2,227 191 (1,296) | 1,487 6,921
Total other income and deductions . 19,339 18,788 17,429 | 1,359 1,839
|
INCOME BEFORE INTEREST CHARGES. . . . . . 166,720 148,950 125,426 | 23,524 127,922
|
INTEREST CHARGES: |
Long-term debt. . . . . . . . . . . . . 53,908 57,862 42,889 | 14,973 59,668
Other . . . . . . . . . . . . . . . . . 6,075 15,121 11,777 | 3,344 17,838
Allowance for borrowed funds used during |
construction (credit) . . . . . . . . (1,366) (2,014) (1,181) | (833) (3,186)
Total interest charges. . . . . . . 58,617 70,969 53,485 | 17,484 74,320
|
NET INCOME. . . . . . . . . . . . . . . . 108,103 77,981 71,941 | 6,040 53,602
|
PREFERRED DIVIDENDS . . . . . . . . . . . - - - | 205 821
|
EARNINGS APPLICABLE TO COMMON STOCK . . . $ 108,103 $ 77,981 $ 71,941 | $ 5,835 $ 52,781
The NOTES TO FINANCIAL STATEMENTS are an integral part of these statements.
KANSAS GAS AND ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Year Ended December 31,
1992
March 31 | January 1
1993 to Dec. 31 | to March 31 1991
(Successor) | (Predecessor)
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
Net income. . . . . . . . . . . . . . . . . . . . . . $ 108,103 $ 71,941 | $ 6,040 $ 53,602
Depreciation and amortization . . . . . . . . . . . . 75,530 55,547 | 19,149 75,115
Other amortization (including nuclear fuel) . . . . . 11,254 8,929 | 1,352 6,014
Deferred taxes and investment tax credits (net) . . . 22,572 9,326 | (2,851) 3,525
Amortization of phase-in revenues . . . . . . . . . . 17,545 13,158 | 4,386 17,545
Corporate-owned life insurance. . . . . . . . . . . . (21,650) (14,704) | (3,295) (11,986)
Coal contract settlements (Note 4). . . . . . . . . . - - | - (8,500)
Amortization of gain from sale-leaseback. . . . . . . (9,640) (7,231) | (2,409) (9,641)
Changes in working capital items: |
Accounts receivable and unbilled |
revenues (net) (Note 2) . . . . . . . . . . . . . (569) 1,079 | 1,272 346
Fossil fuel . . . . . . . . . . . . . . . . . . . . 8,507 4,425 | (1,858) 3,631
Accounts payable. . . . . . . . . . . . . . . . . . (9,813) (7,216) | (6,100) 15,421
Interest and taxes accrued. . . . . . . . . . . . . (9,053) (14,345) | 10,598 1,296
Other . . . . . . . . . . . . . . . . . . . . . . . (2,191) (8,456) | 1,689 (5,832)
Changes in other assets and liabilities . . . . . . . (16,530) (41,401) | (5,479) 3,947
Net cash flows from operating activities. . . . . . 174,065 71,052 | 22,494 144,483
|
CASH FLOWS USED IN INVESTING ACTIVITIES: |
Additions to utility plant. . . . . . . . . . . . . . 66,886 53,138 | 11,496 74,348
Corporate-owned life insurance policies . . . . . . . 27,268 20,233 | 6,802 27,349
Death proceeds of corporate-owned life insurance. . . (10,160) (6,789) | - -
Purchase of short-term investments . . . . . . . . . - - | - 742
Proceeds from short-term investments. . . . . . . . . - - | - (22,097)
Other investments . . . . . . . . . . . . . . . . . . - - | (552) 1,142
Merger: |
Purchase of KG&E common stock-net of cash received. - 432,043 | - -
Purchase of KG&E preferred stock. . . . . . . . . . - 19,665 | - -
Net cash flows used in investing activities . . . 83,994 518,290 | 17,746 81,484
|
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES: |
Short-term debt (net) . . . . . . . . . . . . . . . . 62,300 49,900 | 5,800 7,800
Advances to parent company (net). . . . . . . . . . . (118,503) (74,289) | - -
First mortgage bonds issued . . . . . . . . . . . . . 65,000 135,000 | - 323,406
First mortgage bonds retired. . . . . . . . . . . . . (140,000) (125,000) | - (57,000)
Other long-term debt (net). . . . . . . . . . . . . . 7,043 14,498 | (3,810) (377,031)
Borrowings against life insurance policies (net). . . 183,260 (5,649) | 6,398 3,590
Revolving credit agreement (net). . . . . . . . . . . (150,000) - | - 80,000
Special deposits (net). . . . . . . . . . . . . . . . - - | - 13,263
Other (net) . . . . . . . . . . . . . . . . . . . . . - - | (17) 31
Dividends on preferred and common stock . . . . . . . - - | (13,535) (54,143)
Financing expenses. . . . . . . . . . . . . . . . . . - - | - (8,508)
Issuance of KCA common stock. . . . . . . . . . . . . - 453,670 | - -
Net cash flows from (used in) financing activities (90,900) 448,130 | (5,164) (68,592)
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS. . (829) 892 | (416) (5,593)
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD. . . . 892 - | 2,378 7,971
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD. . . . . . . $ 63 $ 892 | $ 1,962 $ 2,378
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
CASH PAID FOR: |
Interest on financing activities (net of amount |
capitalized) . . . . . . . . . . . . . . . . . . $ 77,653 $ 63,451 | $ 11,635 $ 89,901
Income taxes . . . . . . . . . . . . . . . . . . . . 29,354 14,225 | - 11,350
The NOTES TO FINANCIAL STATEMENTS are an integral part of these statements.
KANSAS GAS AND ELECTRIC COMPANY
STATEMENTS OF TAXES
(Thousands of Dollars)
Year Ended December 31,
1992
April 1 | January 1
1993 to Dec. 31 | to March 31 1991
(Successor) | (Predecessor)
|
FEDERAL INCOME TAXES: |
Payable currently . . . . . . . . . . . . . . . . . $ 19,220 $ 11,356 | $ (322) $ 11,023
Deferred (net). . . . . . . . . . . . . . . . . . . 16,691 8,633 | (1,785) 64
Investment tax credit-Deferral. . . . . . . . . . . 4,900 946 | - 3,622
-Amortization. . . . . . . . . (3,114) (2,400) | (777) (2,913)
Total Federal income taxes . . . . . . . . . . . 37,697 18,535 | (2,884) 11,796
Income taxes applicable to non-operating items. . . . 1,856 (1,012) | 1,666 5,773
Total Federal income taxes charged to operations 39,553 17,523 | (1,218) 17,569
|
STATE INCOME TAXES: |
Payable currently . . . . . . . . . . . . . . . . . 5,104 2,869 | - 1,407
Deferred (net). . . . . . . . . . . . . . . . . . . 4,095 2,147 | (289) 2,752
Total state income taxes . . . . . . . . . . . . 9,199 5,016 | (289) 4,159
Income taxes applicable to non-operating items. . . 371 (284) | (179) 1,148
Total state income taxes charged to operations . 9,570 4,732 | (468) 5,307
|
GENERAL TAXES: |
Property. . . . . . . . . . . . . . . . . . . . . . 38,432 26,380 | 8,622 32,755
Payroll and other taxes . . . . . . . . . . . . . . 6,771 3,775 | 1,629 5,785
Total general taxes charged to operations. . . . 45,203 30,155 | 10,251 38,540
|
TOTAL TAXES CHARGED TO OPERATIONS . . . . . . . . . . $ 94,326 $ 52,410 | $ 8,565 $ 61,416
Year Ended December 31,
Pro Forma
1993 1992 1991
(Successor) (Predecessor)
EFFECTIVE INCOME TAX RATE . . . . . . . . . . . . . . 30% 21% 23%
Effect of:
Additional depreciation . . . . . . . . . . . . . . (3) (4) (8)
Accelerated amortization of deferred income
tax credits. . . . . . . . . . . . . . . . . . 8 11 15
State income taxes, net of Federal benefit. . . . . (4) (2) (4)
Amortization of investment tax credits. . . . . . . 2 2 4
Corporate-owned life insurance. . . . . . . . . . . 5 6 6
Other items (net) . . . . . . . . . . . . . . . . . (3) - (2)
STATUTORY FEDERAL INCOME TAX RATE . . . . . . . . . . 35% 34% 34%
The NOTES TO FINANCIAL STATEMENTS are an integral part of these statements.
KANSAS GAS AND ELECTRIC COMPANY
STATEMENTS OF CAPITALIZATION
(Thousands of Dollars)
December 31,
1993 1992
COMMON STOCK EQUITY (Note 1):
(see statement)
Common stock, without par value, authorized and issued
1,000 shares. . . . . . . . . . . . . . . . . . . . . . . $1,065,634 56.1% $1,065,634 53.0%
Retained earnings . . . . . . . . . . . . . . . . . . . . . 180,044 9.5 71,941 3.6
Total common stock equity . . . . . . . . . . . . . . . . 1,245,678 65.6 1,137,575 56.6
LONG-TERM DEBT (Note 6):
First Mortgage Bonds:
Series Due 1993 1992
5-5/8% 1996 $ 16,000 $ 16,000
8-1/8% 2001 - 35,000
7-3/8% 2002 - 25,000
7.6% 2003 135,000 135,000
6-1/2% 2005 65,000 -
8-3/8% 2006 - 25,000
8-1/2% 2007 - 25,000
8-7/8% 2008 - 30,000
216,000 291,000
Pollution Control Bonds:
6.80% 2004 14,500 14,500
5-7/8% 2007 21,940 21,940
6% 2007 10,000 10,000
7.0% 2031 327,500 327,500
373,940 373,940
Total bonds. . . . . . . . . . . . . . . . . . . . . . 589,940 664,940
Other Long-Term Debt:
Pollution control obligations:
5-3/4% series 2003 13,980 14,205
Revolving credit agreement 1993 - 150,000
Other long-term agreement 1995 53,913 46,640
Total other long-term debt . . . . . . . . . . . . . . 67,893 210,845
Unamortized premium and discount (net). . . . . . . . . . . (4,052) (3,905)
Long-term debt due within one year. . . . . . . . . . . . . (238) (228)
Total long-term debt . . . . . . . . . . . . . . . . . 653,543 34.4 871,652 43.4
TOTAL CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . $1,899,221 100.0% $2,009,227 100.0%
The NOTES TO FINANCIAL STATEMENTS are an integral part of these statements.
KANSAS GAS AND ELECTRIC COMPANY
STATEMENTS OF COMMON STOCK EQUITY
(Thousands of Dollars, Except Shares)
Years Ended December 31,
Other
Common Stock Paid-in Retained Treasury Stock
Shares Amount Capital Earnings Shares Amount Total
BALANCE DECEMBER 31, 1990. . 40,996,185 $ 636,986 $ 270 $171,139 (9,996,426) (199,255) $ 609,140
(Predecessor)
Net income . . . . . . . . 53,602 53,602
Cash dividends:
Common stock . . . . . . (53,322) (53,322)
Preferred stock. . . . . (821) (821)
Employee stock plans . . . 1,560 17 14 31
BALANCE DECEMBER 31, 1991. . 40,997,745 637,003 284 170,598 (9,996,426) (199,255) 608,630
(Predecessor)
Net income . . . . . . . . 6,040 6,040
Cash dividends:
Common stock . . . . . . (13,330) (13,330)
Preferred stock. . . . . (205) (205)
Employee stock plans . . . (12) (966) (12)
Merger of KG&E with KCA. . (40,997,745) (636,991) (284) (163,103) 9,997,392 199,255 (601,123)
BALANCE MARCH 31, 1992
(Predecessor). . . . . . . -0- -0- -0- -0- -0- -0- -0-
KCA common stock issued. . 1,000 $1,065,634 - - - - $1,065,634
Net income . . . . . . . . $ 71,941 71,941
BALANCE DECEMBER 31, 1992. . 1,000 1,065,634 - 71,941 - - 1,137,575
(Successor)
Net income . . . . . . . . 108,103 108,103
BALANCE DECEMBER 31, 1993. . 1,000 $1,065,634 $ - $ 180,044 - $ - $1,245,678
The NOTES TO FINANCIAL STATEMENTS are an integral part of these statements.
KANSAS GAS AND ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS
1. ACQUISITION AND MERGER
On March 31, 1992, Western Resources, Inc. (formerly The Kansas Power and
Light Company) (Western Resources) through its wholly-owned subsidiary KCA
Corporation (KCA), acquired all of the outstanding common and preferred stock
of Kansas Gas and Electric Company (KG&E) for $454 million in cash and
23,479,380 shares of Western Resources common stock (the Merger). Western
Resources also paid $20 million in costs to complete the Merger. The total
cost of the acquisition to Western Resources was $1.066 billion.
Simultaneously, KCA and KG&E merged and adopted the name of Kansas Gas and
Electric Company. The Merger was accounted for as a purchase. For income tax
purposes the tax basis of the Company's assets was not changed by the Merger.
In the accompanying statements, KG&E prior to the Merger is labeled as the
"Predecessor" and after the Merger as the "Successor". Throughout the notes
to financial statements, the "Company, KG&E" refers to both Predecessor and
Successor.
As Western Resources acquired 100% of the common and preferred stock of
KG&E, the Company recorded an acquisition premium of $490 million on the
balance sheet for the difference in purchase price and book value and
increased common stock equity to reflect the new cost basis of Western
Resources' investment in the Company. This acquisition premium and related
income tax requirement of $294 million under Statement of Financial Accounting
Standards No. 109 (SFAS 109) have been classified as plant acquisition
adjustment in electric plant in service on the balance sheets. Under the
provisions of the order of the Kansas Corporation Commission (KCC), the
acquisition premium is recorded as an acquisition adjustment and not allocated
to the other assets and liabilities of the Company.
The pro forma information for the year ended December 31, 1992 in the
accompanying financial statements gives effect to the Merger as if it occurred
on January 1, 1992, and was derived by combining the historical information
for the three month period ended March 31, 1992 and the nine month period
ended December 31, 1992. No purchase accounting adjustments were made for
periods prior to the Merger in determining pro forma amounts, other than the
elimination of preferred dividends, because such adjustments would be
immaterial. This pro forma information is not necessarily indicative of the
results of operations that would have occurred had the Merger been consummated
on January 1, 1992, nor is it necessarily indicative of future operating
results or financial position. The pro forma effects on the Company's net
income for 1991 presented giving effect to the Merger as if it had occurred at
the beginning of the earliest period presented would not be materially
different from that shown in the income statements included herein.
In the November 1991 KCC order approving the Merger, a mechanism was
approved to share equally between the shareholders and ratepayers the cost
savings generated by the Merger in excess of the revenue requirement needed to
allow recovery of the amortization of a portion of the acquisition adjustment,
including income tax, calculated on the basis of a purchase price of KG&E's
common stock at $29.50 per share. The order provides an amortization period
for the acquisition adjustment of 40 years commencing in August 1995, at which
time the full amount of cost savings is expected to have been implemented.
Merger savings will be measured by application of an inflation index to
certain pre-merger operating and maintenance costs at the time of the next
Kansas rate case. While the Company has achieved savings from the Merger,
there is no assurance that the savings achieved will be sufficient to, or the
cost savings sharing mechanism will operate as to fully offset the
amortization of the acquisition adjustment. The order further provides a
moratorium on increases, with certain exceptions, in the Company's Kansas
electric rates until August 1995. The KCC ordered refunds totalling $32
million to the combined companies' (Western Resources and the Company)
customers to share with customers the Merger-related cost savings achieved
during the moratorium period. The first refund was made in April 1992 and
amounted to approximately $4.9 million for the Company. A refund of
approximately $4.9 million was made in December 1993 and an additional refund
of approximately $8.7 million will be made in September 1994.
The KCC order approving the Merger requires the legal reorganization of
the Company so that it is no longer held as a separate subsidiary after
January 1, 1995, unless good cause is shown why such separate existence should
be maintained. The Securities and Exchange Commission order relating to the
Merger granted Western Resources an exemption under the Public Utilities
Holding Company Act until January 1, 1995. In connection with a requested
ruling that a merger of the Company into Western Resources would not adversely
affect the tax structure of the merger, the Company received a response from
the Internal Revenue Service that the IRS would not issue the requested
ruling. In light of the IRS response, the Company withdrew its request for a
ruling. The Company will consider alternative forms of combination or seek
regulatory approvals to waive the requirements for a combination. There is no
certainty as to whether a combination will occur or as to the form or timing
thereof.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General: The financial statements of KG&E include, through March 31,
1992, its 80% owned subsidiary, CIC Systems, Inc. (CIC). In April 1992, the
Company disposed of its 80% interest in CIC. KG&E owns 47 percent of Wolf
Creek Nuclear Operating Corporation (WCNOC), the operating company for Wolf
Creek Generating Station (Wolf Creek). The Company records its proportionate
share of all transactions of WCNOC as it does other jointly-owned facilities.
The accounting policies of the Company are in accordance with generally
accepted accounting principles as applied to regulated public utilities. The
accounting and rates of the Company are subject to requirements of the KCC and
the Federal Energy Regulatory Commission (FERC).
Utility Plant: Utility plant (including plant acquisition adjustment) is
stated at cost. For constructed plant, cost includes contracted services,
direct labor and materials, indirect charges for engineering, supervision,
general and administrative costs, and an allowance for funds used during
construction (AFUDC). The AFUDC rate was 4.41% for 1993, 6.51% for the nine
months ended December 31, 1992, 6.70% for the three months ended March 31,
1992, and 7.74% for 1991. The cost of additions to utility plant and
replacement units of property is capitalized. Maintenance costs and
replacement of minor items of property are charged to expense as incurred.
When units of depreciable property are retired, they are removed from the
plant accounts and the original cost plus removal charges less salvage are
charged to accumulated depreciation.
Depreciation: Depreciation is provided on the straight-line method based
on estimated useful lives of property. Composite provisions for book
depreciation approximated 2.9% during 1993, 2.9% during the nine months ended
December 31, 1992, 3.0% during the three months ended March 31, 1992, and 3.0%
during 1991 of the average original cost of depreciable property.
Cash and Cash Equivalents: For purposes of the Statements of Cash Flows,
cash and cash equivalents include cash on hand and highly liquid
collateralized debt instruments purchased with maturities of three months or
less.
Income Taxes: Income tax expense includes provisions for income taxes
currently payable and deferred income taxes calculated in conformance with
income tax laws, regulatory orders and Statement of Financial Accounting
Standards No. 109 (SFAS 109) (see Note 9).
Investment tax credits are deferred as realized and amortized to income
over the life of the property which gave rise to the credits.
Revenues: Operating revenues include amounts actually billed for
services rendered and an accrual of estimated unbilled revenues. Unbilled
revenues represent the estimated amount customers will be billed for service
provided from the time meters were last read to the end of the accounting
period. Unbilled revenues of $22.3 and $16.6 million at December 31, 1993 and
1992, respectively, are recorded as a component of accounts receivable on the
balance sheets. Certain amounts of unbilled revenues have been sold (see Note
6).
The Company had reserves for doubtful accounts receivable of $3.0 and
$2.4 million at December 31, 1993 and 1992, respectively.
Fuel Costs: The cost of nuclear fuel in process of refinement,
conversion, enrichment and fabrication is recorded as an asset at original
cost and is amortized to expense based upon the quantity of heat produced for
the generation of electricity. The accumulated amortization of nuclear fuel
in the reactor at December 31, 1993 and 1992 was $17.4 and $26.0 million,
respectively.
Cash Surrender Value of Life Insurance Contracts: The following amounts
related to corporate-owned life insurance contracts (COLI), primarily with one
highly rated major insurance company, are recorded on the balance sheets
(millions of dollars):
1993 1992
Cash surrender value of contracts. . . $269.1 $230.3
Prepaid COLI . . . . . . . . . . . . . 9.5 4.8
Borrowings against contracts . . . . . (269.0) (85.8)
COLI (net) . . . . . . . . . . . . $ 9.6 $149.3
The decrease in COLI (net) is a result of increased borrowings against
the accumulated cash surrender value of the COLI policies. The COLI
borrowings will be repaid with proceeds from death benefits. Management
expects to realize increases in cash surrender value of contracts resulting
from premiums and investment earnings on a tax free basis upon receipt of net
proceeds from death benefits under the contracts. Interest expense included
in corporate-owned life insurance (net) on the statements of income was $11.9
million for 1993, $5.3 million for the nine months ended December 31, 1992,
$1.9 million for the three months ended March 31, 1992, and $7.3 for 1991.
As approved by the Kansas Corporation Commission (KCC), the Company is
using a portion of the net income stream generated by COLI policies purchased
in 1993 and 1992 (see Note 8) to offset Statement of Financial Accounting
Standards No. 106 (SFAS 106) expenses.
Reclassifications: Certain amounts in prior years have been reclassified
to conform with classifications used in the current year presentation.
3. COMMITMENTS AND CONTINGENCIES
Environmental: The Company and the Kansas Department of Health and
Environment entered into a consent agreement to perform preliminary
assessments of six former manufactured gas sites. The preliminary assessments
of these sites have been completed at minimal cost. Until such time that risk
assessments are completed at these sites, it will be impossible to predict the
cost of remediation. However, the Company is aware of other utilities in
Region VII of the EPA (Kansas, Missouri, Nebraska, and Iowa) which have
incurred remediation costs for such sites ranging between $500,000 and $10
million, depending on the site. The Company is also aware that the KCC has
permitted another Kansas utility to recover a portion of the remediation costs
through rates. To the extent that such remediation costs are not recovered
through rates, the costs could be material to the Company's financial position
or results of operations depending on the degree of remediation and number of
years over which the remediation must be completed.
Spent Nuclear Fuel Disposal: Under the Nuclear Waste Policy Act of 1982,
the U.S. Department of Energy (DOE) is responsible for the ultimate storage
and disposal of spent nuclear fuel removed from nuclear reactors. Under a
contract with the DOE for disposal of spent nuclear fuel, the Company pays a
quarterly fee to DOE of one mill per kilowatthour of net nuclear generation.
These fees are included as part of nuclear fuel expense and amounted to $3.5
million for 1993, $1.6 million for the nine months ended December 31, 1992,
$.5 million for the three months ended March 31, 1992, and $2.8 million for
1991.
Decommissioning: The Company's share of Wolf Creek decommissioning
costs, currently authorized in rates, was estimated to be approximately $97
million in 1988 dollars. Decommissioning costs are being charged to operating
expenses. Amounts so expensed are deposited in an external trust fund and
will be used solely for the physical decommissioning of the plant. Electric
rates charged to customers provide for recovery of these decommissioning costs
over the estimated life of Wolf Creek. At December 31, 1993 and 1992, $13.2
and $9.3 million respectively, were on deposit in the decommissioning fund.
On September 1, 1993, WCNOC filed an application with the KCC for an order
approving a 1993 Wolf Creek Decommissioning Cost Study which estimates the
Company's share of Wolf Creek decommissioning costs at approximately $174
million in 1993 dollars. If approved by the KCC, management expects
substantially all such cost increases to be recovered through the ratemaking
process.
The Company carries $164 million in premature decommissioning insurance
in the event of a shortfall in the trust fund. The insurance coverage has
several restrictions. One of these is that it can only be used if Wolf Creek
incurs an accident exceeding $500 million in expenses to safely stabilize the
reactor, to decontaminate the reactor and reactor station site in accordance
with a plan approved by the Nuclear Regulatory Commission (NRC), and to pay
for on-site property damages. If the amount designated as decommissioning
insurance is needed to implement the NRC-approved plan for stabilization and
decontamination, it would not be available for decommissioning purposes.
Nuclear Insurance: The Price-Anderson Act limits the combined public
liability of the owners of nuclear power plants to $9.4 billion for a single
nuclear incident. The Wolf Creek owners (Owners) have purchased the maximum
available private insurance of $200 million and the balance is provided by an
assessment plan mandated by the NRC. Under this plan, the Owners are jointly
and severally subject to a retrospective assessment of up to $79.3 million
($37.3 million, Company's share) in the event there is a nuclear incident
involving any of the nation's licensed reactors. This assessment is subject
to an inflation adjustment based on the Consumer Price Index. There is a
limitation of $10 million ($4.7 million, Company's share) in retrospective
assessments per incident per year.
The Owners carry decontamination liability, premature decommissioning
liability, and property damage insurance for Wolf Creek totalling
approximately $2.8 billion ($1.3 billion, Company's share). This insurance is
provided by a combination of "nuclear insurance pools" ($1.3 billion) and
Nuclear Electric Insurance Limited (NEIL) ($1.5 billion). In the event of an
accident, insurance proceeds must first be used for reactor stabilization and
site decontamination. The remaining proceeds from the $2.8 billion insurance
coverage ($1.3 billion, Company's share), if any, can be used for property
damage up to $1.1 billion (Company's share) and premature decommissioning
costs up to $117.5 million (Company's share) in excess of funds previously
collected for decommissioning (as discussed under "Decommissioning"), with the
remaining $47 million (Company's share) available for either property damage
or premature decommissioning costs.
The Owners also carry additional insurance with NEIL to cover costs of
replacement power and other extra expenses incurred during a prolonged outage
resulting from accidental property damage at Wolf Creek. If losses incurred
at any of the nuclear plants insured under the NEIL policies exceed premiums,
reserves, and other NEIL resources, the Company may be subject to
retrospective assessments of approximately $9 million per year.
There can be no assurance that all potential losses or liabilities will
be insurable or that the amount of insurance will be sufficient to cover them.
Any substantial losses not covered by insurance, to the extent not recoverable
through rates, could have a material adverse effect on the Company's financial
position and results of operations.
Clean Air Act: The Clean Air Act Amendments of 1990 (the Act) require a
two-phase reduction in sulfur dioxide and nitrogen oxide emissions effective
in 1995 and 2000 and a probable reduction in toxic emissions. To meet the
monitoring and reporting requirements under the acid rain program, the Company
is installing continuous monitoring and reporting equipment at a total cost of
approximately $2.3 million. At December 31, 1993, the Company had completed
approximately $850 thousand of these capital expenditures with the remaining
$1.4 million of capital expenditures to be completed in 1994 and 1995. The
Company does not expect additional equipment to reduce sulfur emissions to be
necessary under Phase II. The Company currently has no Phase I affected
units.
The nitrogen oxide and toxic limits, which were not set in the law, will
be specified in future EPA regulations. The EPA has issued for public comment
preliminary nitrogen oxide regulations for Phase I group 1 units. Nitrogen
oxide regulations for Phase II units and Phase I group 2 units are mandated in
the Act to be promulgated by January 1, 1997. Although the Company has no
Phase I units, the final nitrogen oxide regulations for Phase I group 1 may
allow for early compliance for Phase II group 1 units. Until such time as the
Phase I group 1 nitrogen oxide regulations are final, the Company will be
unable to determine its compliance options or related compliance costs.
Federal Income Taxes: During 1991, the Internal Revenue Service (IRS)
completed an examination of the Company's federal income tax returns for the
years 1984 through 1988. In April 1992, the Company received the examination
report and upon review filed a written protest in August 1992. In October
1993, the Company received another examination report for the years 1989 and
1990 covering the same issues identified in the previous examination report.
Upon review of this report, the Company filed a written protest in November
1993. The most significant proposed adjustments reduce the depreciable basis
of certain assets and investment tax credits generated. Management believes
there are significant questions regarding the theory, computations, and
sampling techniques used by the IRS to arrive at its proposed adjustments, and
also believes any additional tax expense incurred or loss of investment tax
credits will not be material to the Company's financial position and results
of operations. Additional income tax payments, if any, are expected to be
offset by investment tax credit carryforwards, alternative minimum tax credit
carryforwards, or deferred tax provisions.
Other Investments: In prior years, the Company routinely purchased
short-term investment grade commercial paper for special deposit interest
accounts associated with tax-exempt pollution control bonds. On February 1,
1990, the Company purchased $6.6 million of Drexel Burnham Lambert Group Inc.
(Drexel) commercial paper. On February 13, 1990, Drexel filed for bankruptcy.
In 1990, additional claims being filed and potential lengthy litigation
indicated full recovery would be unlikely; accordingly, the investment was
written off in 1990. The Company recognized the recovery of approximately
$4.2 million during the nine months ended December 31, 1992, of the
investment, which is included in miscellaneous income.
Fuel Commitments: To supply a portion of the fuel requirements for its
generating plants, the Company has entered into various commitments to obtain
nuclear fuel, coal, and natural gas. Some of these contracts contain
provisions for price escalation and minimum purchase commitments. At
December 31, 1993, WCNOC's nuclear fuel commitments (Company's share) were
approximately $18.0 million for uranium concentrates expiring at various times
through 1997, $123.6 million for enrichment expiring at various times through
2014, and $45.5 million for fabrication through 2012. At December 31, 1993,
the Company's coal and natural gas contract commitments in 1993 dollars under
the remaining term of the contracts are $666 million and $20.4 million,
respectively. The largest coal contract was renegotiated in early 1993 and
expires in 2020 with the remaining coal contracts expiring at various times
through 2013. The majority of natural gas contracts expire in 1995 with
automatic one-year extension provisions. In the normal course of business,
additional commitments and spot market purchases will be made to obtain
adequate fuel supplies.
Energy Act: As part of the 1992 Energy Policy Act, a special assessment
is being collected from utilities for a uranium enrichment decontamination and
decommissioning fund. The Company's portion of the assessment for Wolf Creek
is approximately $7 million, payable over 15 years. Management expects such
costs to be recovered through the ratemaking process.
4. RATE MATTERS AND REGULATION
Elimination of the Energy Cost Adjustment Clause (ECA): On March 26,
1992, in connection with the Merger, the KCC approved the elimination of the
ECA for most retail customers effective April 1, 1992. The provisions for
fuel costs included in base rates were established at a level intended by the
KCC to equal the projected average cost of fuel through August 1995, and to
include recovery of costs provided by previously issued orders relating to
coal contract settlements and storm damage recovery discussed below. Any
increase or decrease in fuel costs from the projected average will be absorbed
by the Company.
Rate Stabilization Plan: In 1988, the KCC issued an order requiring that
the accrual of phase-in revenues be discontinued effective December 31, 1988.
Effective January 1, 1989, the Company began amortizing the phase-in revenue
asset on a straight-line basis over 9-1/2 years.
Cost of Service Audit Appeal: In September 1991, the KCC ordered the
Company to refund (which the Company has done) $5.6 million of revenues plus
$0.6 million in interest, for the period July 2, 1990 through January 31,
1991. This order concluded the appeal of the February 1990 KCC order to
reduce rates by $8.7 million. The Company had previously recorded reserves
totalling $10.8 million; however, as the order also made rates permanent, the
excess reserves of $3.3 million were reversed in September 1991.
Coal Contract Settlements: In March 1990, the KCC issued an order
allowing the Company to defer its share of a 1989 coal contract settlement
with the Pittsburg and Midway Coal Mining Company amounting to $22.5 million.
This amount was recorded as a deferred charge on the balance sheets. The
settlement resulted in the termination of a long-term coal contract. In June
1991, the KCC permitted the Company to recover this settlement as follows:
76% of the settlement plus a return over the remaining term of the terminated
contract (through 2002) and 24% to be amortized to expense with a deferred
return equivalent to the carrying cost of the asset.
In February 1991, the Company paid $8.5 million to settle a coal contract
lawsuit with AMAX Coal Company and recorded the payment as a deferred charge
on the Company's balance sheet. In July 1991, the KCC approved the recovery
of the settlement plus a return equivalent to the carrying cost of the asset,
over the remaining term of the terminated contract (through 1996).
Storm Damage Recovery: In October 1990, the Company asked the KCC for
approval of a plan to recover the cost of damage primarily from the March 13
and June 19, 1990 storms. Approximately $15 million of capital expenditures
were incurred. These costs have been included in the Company's electric plant
accounts. In May 1991, the Company amended this request to include the
estimated $5 million of capital expenditures associated with an April 1991
storm. In November 1991 and January 1992, the KCC approved the deferral and
recovery of the capital expenditures of the 1990 and 1991 storms,
respectively, as well as carrying charges thereon.
5. SHORT-TERM BORROWINGS
At December 31, 1993, the Company had bank credit arrangements available
of $35 million. In addition, the Company has uncommitted loan participation
agreements. Maximum short-term borrowings outstanding during 1993 and 1992
were $175.8 million on December 14, 1993 and $128 million on October 6, 1992.
The weighted average interest rates, including fees, were 3.5% for 1993, 6.4%
for the nine months ended December 31, 1992, 7.1% for the three months ended
March 31, 1992, and 7.8% for 1991.
6. LONG-TERM DEBT
The amount of first mortgage bonds authorized by the KG&E Mortgage and
Deed of Trust (Mortgage) dated April 1, 1940, as supplemented, is limited to a
maximum of $2 billion. Amounts of additional bonds which may be issued are
subject to property, earnings, and certain restrictive provisions of the
Mortgage. Electric plant is subject to the lien of the Mortgage except for
transportation equipment. During 1993, the Company refinanced $65 million of
first mortgage bonds by issuing $65 million of First Mortgage Bonds, 6 1/2%
Series due 2005. In 1992, the Company refinanced $125 million of first
mortgage bonds by issuing $135 million of First Mortgage Bonds, 7.6% Series
due 2003.
Debt discount and expenses are being amortized over the remaining lives
of each issue. The improvement and maintenance fund requirements for certain
first mortgage bond series can be met by bonding additional property. The
sinking fund requirements for certain pollution control series bonds can be
met only through the acquisition and retirement of outstanding bonds.
The 6.80% series, due 2004, the 6% and 5 7/8% series due 2007 and the 7%
series due 2031 are pledged as collateral for pollution control revenue bonds
issued by Kansas municipalities.
On September 20, 1993, the Company terminated a long-term revolving
credit agreement which provided for borrowings of up to $150 million. The
loan agreement, which was effective through October 1994, was repaid without
penalty. The weighted average interest rate, including fees, was 3.7% for
1993, 6.8% for the nine months ended December 31, 1992, 7.7% for the three
months ended March 31, 1992, and 8.4% for 1991.
The Company has a long-term agreement, expiring in 1995, which contains
provisions for the sale of accounts receivable and unbilled revenues
(receivables) and phase-in revenues up to a total of $180 million. Amounts
related to receivables are accounted for as sales while those related to
phase-in revenues are accounted for as collateralized borrowings. Additional
receivables are continually sold to replace those collected. At December 31,
1993 and 1992, outstanding receivables amounting to $56.8 and $47.7 million,
respectively, were considered sold under the agreement. The credit risk
associated with the sale of customer accounts receivable is considered
minimal. The weighted average interest rate, including fees, on this
agreement was 3.7% for 1993, 6.6% for the nine months ended December 31, 1992,
7.9% for the three months ended March 31, 1992, and 7.8% for 1991. At
December 31, 1993, an additional $16.4 million was available under the
agreement.
Bonds maturing and acquisition and retirement of bonds for sinking fund
requirements for the five years subsequent to December 31, 1993 are as
follows:
Maturing Retiring
Year Bonds Bonds
(Dollars in Thousands)
1994. . . . . . . $ - $ 238
1995. . . . . . . - 253
1996. . . . . . . 16,000 270
1997. . . . . . . - 833
1998. . . . . . . - 1,050
7. SALE-LEASEBACK OF LA CYGNE 2
In 1987, the Company sold and leased back its 50 percent undivided
interest in La Cygne 2 generating unit. The lease has an initial term of 29
years, with various options to renew the lease or repurchase the 50 percent
undivided interest. The Company remains responsible for its share of
operation and maintenance costs and other related operating costs of La Cygne
2. The lease is an operating lease for financial reporting purposes.
As permitted under the lease agreement, the Company in 1992 requested the
Trustee Lessor to refinance $341.1 million of secured facility bonds of the
Trustee and owner of La Cygne 2. The transaction was requested to reduce
recurring future net lease expense. In connection with the refinancing on
September 29, 1992, a one-time payment of approximately $27 million was made
by the Company which has been deferred and is being amortized over the
remaining life of the lease and included in operating expense as part of the
future lease expense.
Future minimum annual lease payments required under the lease agreement
are approximately $34.6 million for each year through 1998 and $715 million
over the remainder of the lease.
The gain of approximately $322 million realized at the date of the sale
has been deferred for financial reporting purposes, and is being amortized
over the initial lease term in proportion to the related lease expense. The
Company's lease expense, net of amortization of the deferred gain and a one-
time payment, was approximately $22.5 million for 1993, $20.6 million for the
nine months ended December 31, 1992, $7.5 million for the three months ended
March 31, 1992, and $30 million for 1991.
8. EMPLOYEE BENEFIT PLANS
Pension: The Company maintains noncontributory defined benefit pension
plans covering substantially all employees of the Company prior to the Merger.
Pension benefits are based on years of service and the employee's compensation
during the five highest paid consecutive years out of ten before retirement.
The Company's
policy is to fund pension costs accrued, subject to limitations set by the
Employee Retirement Income Security Act of 1974 and the Internal Revenue Code.
The following table provides information on the components of pension
cost for the Company's pension plans (millions of dollars):
1992
April 1 | Jan.1 to
1993 to Dec.31 | March 31 1991
(Successor) | (Predecessor)
Pension Cost: |
Service cost . . . . . . . . . . . $ 3.2 $ 2.5 | $ .8 $ 3.1
Interest cost on projected |
benefit obligation . . . . . . . 9.5 6.7 | 2.1 7.4
Return on plan assets. . . . . . . (14.1) (5.8) | (9.0) (14.0)
Net amortization & deferral. . . . 4.9 (1.0) | 6.7 5.4
Net pension cost . . . . . . . . $ 3.5 $ 2.4 | $ .6 $ 1.9
The following table sets forth the plans' actuarial present value and
funded status at November 30, 1993 and 1992 (the plan years) and a
reconciliation of such status to the December 31, 1993 and 1992 financial
statements (millions of dollars):
1993 1992
Funded Status:
Actuarial present value of benefit obligations:
Vested. . . . . . . . . . . . . . . . . . . . . $ 95.2 $ 82.9
Non-vested. . . . . . . . . . . . . . . . . . . 6.1 3.6
Total . . . . . . . . . . . . . . . . . . . . $101.3 $ 86.5
Plan assets at November 30 (principally debt
and equity securities) at fair value. . . . . . $119.9 $113.7
Projected benefit obligation at November 30 . . . (125.5) (110.8)
Plan assets in excess of projected benefit
obligation at November 30 . . . . . . . . . . . (5.6) 2.9
Unrecognized transition asset . . . . . . . . . . (1.7) (2.0)
Unrecognized prior service costs. . . . . . . . . 12.4 12.1
Unrecognized net gain . . . . . . . . . . . . . . (20.6) (26.1)
Accrued pension costs at December 31. . . . . . . $(15.5) $(13.1)
Year Ended December 31, 1993 1992
Actuarial Assumptions:
Discount rate . . . . . . . . . . . . . . . . . 7.0-7.75% 8.0-8.5%
Annual salary increase rate . . . . . . . . . . 5.0 % 6.0%
Long-term rate of return. . . . . . . . . . . . 8.0-8.5 % 8.0-8.5%
Early Retirement and Voluntary Separation Plans: In January 1992, the
Board of Directors approved an early retirement plan and a voluntary
separation program. The voluntary early retirement plan was offered to all
vested participants of the Company's defined benefit pension plan who reached
the age of 55 with 10 or more years of service on or before May 1, 1992.
Certain pension plan improvements were made including a waiver of the
actuarial reduction factors for early retirement and a cash incentive payable
as a monthly supplement up to 60 months or a lump sum payment. Of the 111
employees eligible for the early retirement option, 71, representing 6% of the
Company's work force, elected to retire on or before the May 1, 1992,
deadline. Another 29 employees, with 10 or more years of service, elected to
participate in the voluntary separation program. In addition, 61 employees
received Merger-related severance benefits. The actuarial cost, based on plan
provisions for early retirement and voluntary separation programs, and Merger-
related severance benefits, was approximately $3.9 million of which $1.8
million was included in the pension liability at December 31, 1992. The
actuarial cost was considered in purchase accounting for the Merger (See Note
1).
Postretirement: The Company adopted the provisions of Statement of
Financial Accounting Standards No. 106 (SFAS 106) in the first quarter of
1993. This statement requires the accrual of postretirement benefits other
than pensions, primarily medical benefits costs, during the years an employee
provides service.
Based on actuarial projections and adoption of the transition method of
implementation which allows a 20-year amortization of the accumulated benefit
obligation, the annual expense under SFAS 106 was approximately $3.4 million
in 1993 (as compared to approximately $1.8 million on a cash basis) and the
Company's total obligation was approximately $23.9 million at December 31,
1993. To mitigate the impact of SFAS 106 expense, the Company has implemented
programs to reduce health care costs. In addition, the Company has received
an order from the KCC permitting the initial deferral of SFAS 106 expense. To
mitigate the impact SFAS 106 expense will have on rate increases, the Company
will include in the future computation of cost of service the actual SFAS 106
expense and an income stream generated from corporate-owned life insurance
policies (COLI) purchased in 1993 and 1992. To the extent SFAS 106 expense
exceeds income from the COLI program, this excess will be deferred (as allowed
by FASB Emerging Issues Task Force Issue No. 92-12) and offset by income
generated through the deferral period by the COLI program. Should the income
stream generated by the COLI program not be sufficient to offset the deferred
SFAS 106 expense, the KCC order allows recovery of such deficit through the
ratemaking process.
Prior to the adoption of SFAS 106 the Company's policy was to recognize
expenses as claims were paid. The costs of benefits were $0.8 million for the
nine months ended December 31, 1992, $0.2 million for the three months ended
March 31, 1992, and $2.1 million for 1991.
The following table summarizes the status of the Company's postretirement
plans for financial statement purposes and the related amount included in the
balance sheet:
December 31, 1993
(Dollars in Millions)
Actuarial present value of postretirement
benefit obligations:
Retirees. . . . . . . . . . . . . . . . . . . . $ 12.4
Active employees fully eligible . . . . . . . . 2.5
Active employees not fully eligible . . . . . . 9.0
Unrecognized prior service cost . . . . . . . . (.1)
Unrecognized transition obligation. . . . . . . (20.4)
Unrecognized net loss . . . . . . . . . . . . . (1.7)
Balance sheet liability . . . . . . . . . . . . . . $ 1.7
For measurement purposes, an annual health care cost growth rate of 13%
was assumed for 1994, decreasing to 6% by 2002 and thereafter. The
accumulated post retirement benefit obligation was calculated using a
weighted-average discount rate of 7.75%, a weighted-average compensation
increase rate of 5.0%, and a weighted-average expected rate of return of 8.5%.
The health care cost trend rate has a significant effect on the projected
benefit obligation. Increasing the trend rate by 1% each year would increase
the present value of the accumulated projected benefit obligation by $.6
million and the aggregate of the service and interest cost components by $.1
million.
Postemployment: The FASB has issued Statement of Financial Accounting
Standards No. 112 (SFAS 112), which establishes accounting and reporting
standards for postemployment benefits. The new statement will require the
Company to recognize the liability to provide postemployment benefits when the
liability has been incurred. The Company adopted SFAS 112 effective January
1, 1994. To mitigate the impact adopting SFAS 112 will have on rate
increases, the Company will file an application with the KCC for an order
permitting the initial deferral of SFAS 112 transition costs and expenses and
its inclusion in the future computation of cost of service net of an income
stream generated from COLI. At December 31, 1993, the Company estimates SFAS
112 liability to total approximately $700,000.
Savings Plans: The Company maintains 401(k) savings plans in which
substantially all employees participate. The Company matches employees'
contributions up to a maximum limit of 3 percent of the employees' salary.
Prior to the Merger, the Company's matching contribution was based on the
Company's performance during the prior year and the level of employee
contributions. The funds of the plans are deposited with a trustee and
invested at each employee's option in one or more investment funds, including
a Western Resources common stock fund. The Company's contributions were $1.3
for 1993, $1.7 million for the nine months ended December 31, 1992, $0.2
million for the three months ended March 31, 1992, and $2.0 million for 1991.
9. INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 96
(SFAS 96) in 1987. This statement required the Company to establish deferred
tax assets and liabilities, as appropriate, for all temporary differences, and
to adjust deferred tax balances to reflect changes in tax rates expected to be
in effect during the periods the temporary differences reverse. SFAS 96 was
superseded by SFAS 109 issued in February 1992 and the Company adopted the
provisions of that standard prospectively in the first quarter of 1992. The
accounting for SFAS 109 is substantially the same as SFAS 96.
In accordance with various rate orders received from the KCC, the Company
has not yet collected through rates the amounts necessary to pay a significant
portion of the net deferred income tax liabilities. As management believes it
is probable that the net future increases in income taxes payable will be
recovered from customers through future rates, it has recorded a deferred
asset for these amounts. These assets are also a temporary difference for
which deferred income tax liabilities have been provided. Accordingly, the
adoption of SFAS 109 did not have a material effect on the Company's results
of operations.
At December 31, 1993, the Company had unused investment tax credits of
approximately $7.1 million available for carryforward which, if not utilized,
will expire in the years 2000 through 2002 (see Note 3). In addition, the
Company has alternative minimum tax credits generated prior to April 1, 1992,
which carryforward without expiration, of $53.9 million which may be used to
offset future regular tax to the extent the regular tax exceeds the
alternative minimum tax. These credits have been applied in determining the
Company's net deferred income tax liability and corresponding deferred future
income taxes at December 31, 1993.
Beginning April 1, 1992, the Company is part of the consolidated income
tax return of Western Resources. However, the Company determines its income
tax provisions on a separate company basis.
Deferred income taxes result from temporary differences between the
financial statement and tax basis of the Company's assets and liabilities.
The sources of these differences and their cumulative tax effects are as
follows:
December 31, 1993
Debits Credits Total
(Dollars in Thousands)
Sources of Deferred Income Taxes:
Accelerated depreciation and
other property items . . . . . . $ - $ (350,105) $ (350,105)
Energy and purchased gas
adjustment clauses . . . . . . . 3,257 - 3,257
Phase-in revenues. . . . . . . . . - (35,573) (35,573)
Deferred gain on sale-leaseback. . 116,186 - 116,186
Alternative minimum tax credits. . 39,882 - 39,882
Deferred coal contract
settlements. . . . . . . . . . . - (7,797) (7,797)
Deferred compensation/pension
liability. . . . . . . . . . . . 10,856 - 10,856
Acquisition premium. . . . . . . . - (300,814) (300,814)
Deferred future income taxes . . . - (109,178) (109,178)
Other. . . . . . . . . . . . . . . - (12,873) (12,873)
Total Deferred Income Taxes. . . . . $ 170,181 $ (816,340) $ (646,159)
December 31, 1992
Debits Credits Total
(Dollars in Thousands)
Sources of Deferred Income Taxes:
Accelerated depreciation and
other property items . . . . . . $ - $ (324,972) $ (324,972)
Energy and purchased gas
adjustment clauses . . . . . . . 2,691 - 2,691
Phase-in revenues. . . . . . . . . - (37,564) (37,564)
Deferred gain on sale-leaseback. . 104,573 - 104,573
Alternative minimum tax credits. . 39,882 - 39,882
Deferred coal contract
settlements. . . . . . . . . . . - (9,263) (9,263)
Deferred compensation/pension
liability. . . . . . . . . . . . 11,002 - 11,002
Acquisition premium. . . . . . . . - (313,721) (313,721)
Deferred future income taxes . . . - (146,962) (146,962)
Other. . . . . . . . . . . . . . . 3,138 - 3,138
Total Deferred Income Taxes. . . . . $ 161,286 $ (832,482) $ (671,196)
10. LEGAL PROCEEDINGS
The Company is involved in various other legal and environmental
proceedings. Management believes that adequate provision has been made within
the financial statements for these matters and accordingly believes their
ultimate dispositions will not have a material adverse effect upon the
financial position or results of operations of the Company.
A provision of $12 million was recorded in miscellaneous expenses on the
1991 statement of income with respect to various legal matters.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate that value as set forth in Statement of Financial Accounting
Standards No. 107:
Cash and Cash Equivalents-
The carrying amount approximates the fair value because of the short-
term maturity of these investments.
Decommissioning Trust-
The fair value of the decommissioning trust is based on quoted market
prices at December 31, 1993 and 1992.
Variable-rate Debt-
The carrying amount approximates the fair value because of the short-
term variable rates of these debt instruments.
Fixed-rate Debt-
The fair value of the fixed-rate debt is based on the sum of the
estimated value of each issue taking into consideration the coupon
rate, maturity, and redemption provisions of each issue.
The estimated fair values of the Company's financial instruments are as
follows:
Carrying Value Fair Value
December 31, 1993 1992 1993 1992
(Dollars in Thousands)
Cash and cash
equivalents. . . . . . . $ 63 $ 892 $ 63 $ 892
Decommissioning trust. . . 13,204 9,272 13,929 9,500
Variable-rate debt . . . . 478,743 375,909 478,743 375,909
Fixed-rate debt. . . . . . 603,920 679,145 660,750 705,970
12. JOINT OWNERSHIP OF UTILITY PLANTS
Company's Ownership at December 31, 1993
In-Service Invest- Accumulated Net Per-
Dates ment Depreciation (MW) cent
(Dollars in Thousands)
La Cygne 1 (a) Jun 1973 $ 150,265 $ 91,175 342 50
Jeffrey 1 (b) Jul 1978 65,803 28,717 140 20
Jeffrey 2 (b) May 1980 64,375 25,552 135 20
Jeffrey 3 (b) May 1983 95,336 31,084 140 20
Wolf Creek (c) Sep 1985 1,366,387 281,819 533 47
(a) Jointly owned with Kansas City Power & Light Company (KCP&L)
(b) Jointly owned with Western Resources, UtiliCorp United Inc., and a third
party
(c) Jointly owned with KCPL and Kansas Electric Power Cooperative, Inc.
Amounts and capacity represent the Company's share. The Company's share
of operating expenses of the plants in service above, as well as such expenses
for a 50 percent undivided interest in La Cygne 2 (representing 335 MW
capacity) sold and leased back to the Company in 1987, are included in
operating expenses in the statements of income. The Company's share of other
transactions associated with the plants is included in the appropriate
classification in the Company's financial statements.
13. QUARTERLY FINANCIAL STATISTICS (Unaudited)
(Dollars in Thousands)
The amounts in the table are unaudited but, in the opinion of management,
contain all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results of such periods. The
business of the Company is seasonal in nature and, in the opinion of
management, comparisons between the quarters of a year do not give a true
indication of overall trends and changes in operations.
1993
4th Qtr. 3rd Qtr. 2nd Qtr. 1st. Qtr.
(Successor)
Operating revenues. . . . . $136,097 $191,941 $150,478 $138,481
Operating income. . . . . . 26,188 52,874 35,545 32,774
Net income. . . . . . . . . 13,692 46,406 24,274 23,731
Earnings applicable
to common stock . . . . . 13,692 46,406 24,274 23,731
1992
4th Qtr. 3rd Qtr. 2nd Qtr. 1st. Qtr.
(Successor) |(Predecessor)
|
Operating revenues. . . . . $127,058 $167,825 $128,655| $130,713
Operating income. . . . . . 29,282 49,541 29,174| 22,165
Net income. . . . . . . . . 15,528 35,987 20,426| 6,040
Earnings applicable |
to common stock . . . . . 15,528 35,987 20,426| 5,835
14. RELATED PARTY TRANSACTIONS
Subsequent to the Merger, the cash management function, including cash
receipts and disbursements, for KG&E has been assumed by Western Resources.
As a result, the proceeds of cash collections, including short-term
borrowings, less disbursements related to KG&E transactions have been recorded
by the Companies through an intercompany account which, at December 31, 1993,
resulted in a net advance by KG&E to Western Resources of $192.8 million.
Certain of the Company's operating expenses have been allocated from Western
Resources. These expenses are allocated, depending on the nature of the
expense, based on allocation
studies, net investment, number of customers, and/or other appropriate
allocators. Management believes such allocation procedures are reasonable.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements with accountants on accounting and financial
disclosure. Information relating to a change in accountants is incorporated
by reference from the Company's Current Report on Form 8-K dated March 8,
1993.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Western Resources, Inc. owns 100 percent of the Company's outstanding
common stock.
A Director
Business Experience Since 1988 and Other Continuously
Name Age Directorships Other Than The Company Since
Kent R. Brown 48 Chairman of the Board, President and 1992
Chief Executive Officer since June
1992, and prior to that President
and Chief Executive Officer since
March 1992, and prior to that Group
Vice President
Directorships
Bank IV Wichita
Robert T. Crain 68 Owner, Crain Realty, Co., Fort Scott, 1992(b)
(a) Kansas
Directorships
Citizens National Bank
Anderson E. 60 President, Jackson Mortuary, Wichita, 1994
Jackson Kansas
Donald A. 60 President, Maupintour, Inc., Lawrence, 1992(b)
Johnston Kansas (Escorted Tours and Travel)
(a) Directorships
Commerce Bank, Lawrence
Maupintour, Inc.
Steven L. 48 Executive Vice President and Chief 1992
Kitchen Financial Officer, Western Resources,
Inc., (since March 1990) and prior to
that Senior Vice President, Finance
and Accounting (October 1987 to
March 1990)
Glenn L. 68 Retired Vice President - Nuclear of the 1992(b)
Koester Company
James J. Noone 73 Attorney and retired Administrative Judge 1992(b)
(a) for the District Court of Sedgwick
County, Kansas
Marilyn B. 44 President, Bank IV Wichita, 1994
Pauly Wichita, Kansas
Directorships
St. Francis Regional Medical Center
Farmers Mutual Alliance Insurance Company
A Director
Business Experience Since 1988 and Other Continuously
Name Age Directorships Other Than The Company Since
Newton C. Smith 72 Physician and Surgeon, Arkansas City, 1992(b)
Kansas
Richard Smith 60 President, Range Oil Company 1993
Directorships
Bank IV Kansas
Wichita HCA Wesley Medical Center
(a) Member of the Audit Committee of which Mr. Johnston is Chairman.
The Audit Committee has responsibility for the investigation and
review of the financial affairs of the Company and its relations
with independent accountants.
(b) Mr. Crain, Mr. Johnston, Mr. Koester, Mr. Noone, and Mr. Newton
Smith were directors of the former Kansas Gas & Electric Company
since 1981, 1980, 1986, 1986, and 1985, respectively.
Outside Directors are paid $3,750 per quarter retainer and all Directors
are paid an attendance fee of $600 for Directors' meetings ($300 if attending
by phone) and $500 for committee meetings. An additional committee meeting
attendance fee of $800 is paid to the outside Director Audit Committee
Chairman, and $500 to other outside Committee members. All outside Directors
are reimbursed mileage and expenses while attending Directors' and Committee
Meetings.
The Board of Directors held 5 meetings during the year and the Audit
Committee held 2 meetings. All Directors attended 75% or more of their
applicable meetings.
Other information required by Item 10 is omitted pursuant to General
Instruction J(2)(c) to Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Information required by Item 11 is omitted pursuant to General
Instruction J(2)(c) to Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by Item 12 is omitted pursuant to General
Instruction J(2)(c) to Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 13 is omitted pursuant to General
Instruction J(2)(c) to Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following financial statements are included herein under Item 8.
FINANCIAL STATEMENTS
Balance Sheets, December 31, 1993 and 1992
Statements of Income for the year ended December 31, 1993 (Successor),
the nine months ended December 31, 1992 (Successor), the three months
ended March 31, 1992 (Predecessor), and the year ended December
31, 1991 (Predecessor)
Statements of Cash Flows for the year ended December 31, 1993 (Successor),
the period March 31 to December 31, 1992 (Successor), the three months
ended March 31, 1992 (Predecessor), and the year ended December
31, 1991 (Predecessor)
Statements of Taxes for the year ended December 31, 1993 (Successor), the
nine months ended December 31, 1992 (Successor), the three months ended
March 31, 1992 (Predecessor), and the year ended December 31, 1991
(Predecessor)
Statements of Capitalization, December 31, 1993 and 1992
Statements of Common Stock Equity for the year ended December 31, 1993
(Successor), the nine months ended December 31, 1992 (Successor), the
three months ended March 31, 1992 (Predecessor), and the year ended
December 31, 1991 (Predecessor)
Notes to Financial Statements
The following supplemental schedules are included herein.
SCHEDULES
Schedule V - Utility Plant for the year ended December 31, 1993, (Successor),
the nine months ended December 31, 1992 (Successor), the three months ended
March 31, 1992 (Predecessor), and the year ended December 31, 1991
(Predecessor)
Schedule VI - Accumulated Depreciation of Utility Plant for the year ended
December 31, 1993 (Successor), the nine months ended December 31, 1992
(Successor) the three months ended March 31, 1992 (Predecessor), and the
year ended December 31, 1991 (Predecessor)
REPORTS ON FORM 8-K
Form 8-K dated January 31, 1994
EXHIBIT INDEX
All exhibits marked "I" are incorporated herein by reference.
Description
2(a) Agreement and Plan of Merger (Filed as Exhibit 2 to Form 10-K I
for the year ended December 31, 1990, File No. 1-7324).
2(b) Amendment No. 1 to Agreement and Plan of Merger (Filed as I
Exhibit 2 to Form 10-K for the year ended December 31, 1990,
File No. 1-7324).
3(a) Articles of Incorporation (Filed as Exhibit 3(a) to Form 10-K I
for the year ended December 31, 1992, File No. 1-7324)
3(b) Certificate of Merger of Kansas Gas and Electric Company into I
KCA Corporation (Filed as Exhibit 3(b) to Form 10-K
for the year ended December 31, 1992, File No. 1-7324)
3(c) By-laws as amended (Filed as Exhibit 3(c) to Form 10-K I
for the year ended December 31, 1992, File No. 1-7324)
4(c)1 Mortgage and Deed of Trust, dated as of April 1, 1940 to I
Guaranty Trust Company of New York (now Morgan Guaranty Trust
Company of New York) and Henry A. Theis (to whom W. A. Spooner
is successor), Trustees, as supplemented by thirty-six
Supplemental Indentures, dated as of June 1, 1942, March 1, 1948,
December 1, 1949, June 1, 1952, October 1, 1953, March 1, 1955,
February 1, 1956, January 1, 1961, May 1, 1966, March 1, 1970,
May 1, 1971, March 1, 1972, May 31, 1973, July 1, 1975,
December 1, 1975, September 1, 1976, March 1, 1977, May 1, 1977,
August 1, 1977, March 15, 1978, January 1, 1979, April 1, 1980,
July 1, 1980, August 1, 1980, June 1, 1981, December 1, 1981,
May 1, 1982, March 15, 1984, September 1, 1984 (Twenty-ninth
and Thirtieth), February 1, 1985, April 15, 1986, June 1, 1991
March 31, 1992, December 17, 1992, and August 24, 1993, (Filed,
respectively, as Exhibit A-1 to Form U-1, File No. 70-23;
Exhibits 7(b) and 7(c), File No. 2-7405; Exhibit 7(d), File
No. 2-8242; Exhibit 4(c), File No. 2-9626; Exhibit 4(c),
File No. 2-10465; Exhibit 4(c), File No. 2-12228; Exhibit 4(c),
File No. 2-15851; Exhibit 2(b)-1, File No. 2-24680; Exhibit 2(c),
File No. 2-36170; Exhibits 2(c) and 2(d), File No. 2-39975;
Exhibit 2(d), File No. 2-43053; Exhibit 4(c)2 to Form 10-K, for
December 31, 1989, File No. 1-7324; Exhibit 2(c), File No.
2-53765; Exhibit 2(e), File No. 2-55488; Exhibit 2(c), File No.
2-57013; Exhibit 2(c), File No. 2-58180; Exhibit 4(c)3 to Form
10-K for December 31, 1989, File No. 1-7324; Exhibit 2(e), File
No. 2-60089; Exhibit 2(c), File No. 2-60777; Exhibit 2(g), File
No. 2-64521; Exhibit 2(h), File No. 2-66758; Exhibits 2(d) and
2(e), File No. 2-69620; Exhibits 4(d) and 4(e), File No. 2-75634;
Exhibit 4(d), File No. 2-78944; Exhibit 4(d), File No. 2-87532;
Exhibits 4(c)4, 4(c)5 and 4(c)6 to Form 10-K for December 31,
1989, File No. 1-7324; Exhibits 4(c)2 and 4(c)3 to Form 10-K for
Description
December 31, 1992, File No. 1-7324; Exhibit 4(b) to Form S-3,
File No. 33-50075)
4(c)2 Thirty-seventh Supplemental Indenture dated as of January 15, 1994,
to the Company's Mortgage and Deed of Trust (Filed electronically)
4(c)3 Thirty-eighth Supplemental Indenture dated as of March 1, 1994,
to the Company's Mortgage and Deed of Trust (Filed electronically)
Instruments defining the rights of holders of other long-term debt not
required to be filed as exhibits will be furnished to the Commission
upon request.
10(a)1 Severance Agreement (Filed as Exhibit 10(a)1 to Form 10-K for the I
year ended December 31, 1990, File No. 1-7324).
10(a)2 Severance Agreement (Filed as Exhibit 10(a)2 to Form 10-K for the I
year ended December 31, 1990, File No. 1-7324).
10(a)3 Severance Agreement (Filed as Exhibit 10(a)3 to Form 10-K for the I
year ended December 31, 1990, File No. 1-7324).
10(b) La Cygne 2 Lease (Filed as Exhibit 10(a) to Form 10-K for the year I
ended December 31, 1988, File No. 1-7324).
10(b)1 Amendment No. 3 to La Cygne 2 Lease Agreement dated as of September I
29, 1992. (Filed as Exhibit 10(b)1 to Form 10-K for the year ended
December 31, 1992, File No. 1-7324)
10(c) Outside Directors' Deferred Compensation Plan
12 Computation of Ratio of Consolidated Earnings to Fixed Charges.
(Filed electronically)
16 Letter re Change in Certifying Accountant. (Filed as Exhibit 16 to I
the Current Report on Form 8-K dated March 8, 1993.
23(a) Consent of Independent Public Accountants, Arthur Andersen & Co.
(Filed electronically)
23(b) Consent of Independent Public Accountants, Deloitte & Touche
(Filed electronically)
KANSAS GAS AND ELECTRIC COMPANY
Schedule V - Utility Plant
(Successor)
Balance at Transfers, Balance at
Beginning Additions Retire- Reclassi- End
Classification of Period at Cost ments fications of Period
(Thousands of Dollars)
For the Year Ended December 31, 1993
Electric Plant:
Steam Production. . . . . . . . . $ 469,258 $ 26,648 $ 2,710 $ - $ 493,196
Nuclear Production. . . . . . . . 1,355,678 11,324 614 - 1,366,388
Transmission. . . . . . . . . . . 215,898 1,422 141 - 217,179
Distribution. . . . . . . . . . . 371,714 19,630 1,872 - 389,472
General . . . . . . . . . . . . . 62,110 6,839 1,846 - 67,103
Electric Plant Leased to Others . 6,984 - - - 6,984
Construction Work in Progress . . 29,634 (1,198) - - 28,436
Electric Plant Held for Future
Use . . . . . . . . . . . . . . 15,458 5 129 - 15,334
Nuclear Fuel. . . . . . . . . . . 59,305 6,764 19,381 - 46,688
Plant Acquisition Adjustment. . . 796,265 - - (12,089) 784,176
$3,382,304 $ 71,434 $ 26,693 $ (12,089) $3,414,956
KANSAS GAS AND ELECTRIC COMPANY
Schedule V - Utility Plant
Balance at Transfers, Balance at
Beginning Additions Retire- Reclassi- End
Classification of Period at Cost ments fications of Period
(Thousands of Dollars)
(Pro Forma) (2)
For the Year Ended December 31, 1992
Electric Plant:
Steam Production. . . . . . . . . $ 463,198 $ 8,420 $ 2,354 $ (6) $ 469,258
Nuclear Production. . . . . . . . 1,358,428 4,283 7,033 - 1,355,678
Transmission. . . . . . . . . . . 213,928 2,328 358 - 215,898
Distribution. . . . . . . . . . . 357,486 15,764 1,536 - 371,714
General . . . . . . . . . . . . . 62,295 1,933 762 (1,356) 62,110
Electric Plant Leased to Others . 6,984 - - - 6,984
Construction Work in Progress . . 13,612 16,024 - (2) 29,634
Electric Plant Held for Future
Use . . . . . . . . . . . . . . 15,433 - - 25 15,458
Nuclear Fuel. . . . . . . . . . . 42,731 16,661 - (87) 59,305
Plant Acquisition Adjustment. . . - 796,265(1) - - 796,265
$2,534,095 $861,678 $12,043 $ (1,426) $3,382,304
(Successor)
For the Nine Months Ended December 31, 1992
Electric Plant:
Steam Production. . . . . . . . . $ 468,032 $ 3,034 $ 1,808 $ - $ 469,258
Nuclear Production. . . . . . . . 1,358,833 3,505 6,660 - 1,355,678
Transmission. . . . . . . . . . . 213,898 2,220 220 - 215,898
Distribution. . . . . . . . . . . 359,223 13,531 1,040 - 371,714
General . . . . . . . . . . . . . 61,007 1,799 696 - 62,110
Electric Plant Leased to Others . 6,984 - - - 6,984
Construction Work in Progress . . 15,744 13,892 - (2) 29,634
Electric Plant Held for Future
Use . . . . . . . . . . . . . . 15,458 - - - 15,458
Nuclear Fuel. . . . . . . . . . . 43,456 15,936 - (87) 59,305
Plant Acquisition Adjustment. . . - 796,265(1) - - 796,265
$2,542,635 $850,182 $10,424 $ (89) $3,382,304
(Predecessor)
For the Three Months Ended March 31, 1992
Electric Plant:
Steam Production. . . . . . . . . $ 463,198 $ 5,386 $ 546 $ (6) $ 468,032
Nuclear Production. . . . . . . . 1,358,428 778 373 - 1,358,833
Transmission. . . . . . . . . . . 213,928 108 138 - 213,898
Distribution. . . . . . . . . . . 357,486 2,233 496 - 359,223
General . . . . . . . . . . . . . 62,295 134 66 (1,356) 61,007
Electric Plant Leased to Others . 6,984 - - - 6,984
Construction Work in Progress . . 13,612 2,132 - - 15,744
Electric Plant Held for Future
Use . . . . . . . . . . . . . . 15,433 - - 25 15,458
Nuclear Fuel. . . . . . . . . . . 42,731 725 - - 43,456
$2,534,095 $11,496 $ 1,619 $ (1,337) $2,542,635
(1) See Note 1 of Notes to the Financial Statements for explanation of plant acquisition adjustment.
(2) The pro forma information for the year ended December 31, 1992 was derived by combining the
historical information of the three month period ended March 31, 1992 (Predecessor) and the
nine month period ended December 31, 1992 (Successor). No purchase accounting adjustments
were made for periods prior to the Merger in determining pro forma amounts because such
adjustments would be immaterial.
KANSAS GAS AND ELECTRIC COMPANY
Schedule V - Utility Plant
(Predecessor)
Balance at Transfers, Balance at
Beginning Additions Retire- Reclassi- End
Classification of Period at Cost ments fications of Period
(Thousands of Dollars)
For the Year Ended December 31, 1991
Electric Plant:
Steam Production. . . . . . . . . $ 450,753 $13,746 $ 1,300 $ (1) $ 463,198
Nuclear Production. . . . . . . . 1,363,312 11,032 15,916 - 1,358,428
Transmission. . . . . . . . . . . 208,705 6,356 1,129 (4) 213,928
Distribution. . . . . . . . . . . 340,458 19,206 2,178 - 357,486
General . . . . . . . . . . . . . 58,353 5,286 1,342 (2) 62,295
Electric Plant Leased to Others . 6,980 - - 4 6,984
Construction Work in Progress . . 14,760 (1,148) - - 13,612
Electric Plant Held for Future
Use . . . . . . . . . . . . . . 15,370 88 28 3 15,433
Nuclear Fuel. . . . . . . . . . . 28,152 19,782 5,203 - 42,731
$2,486,843 $74,348 $27,096 $ - $2,534,095
KANSAS GAS AND ELECTRIC COMPANY
Schedule VI - Accumulated Depreciation of Utility Plant
(Successor)
Additions
Balance at Charged to Balance at
Beginning Costs and Retire- Other End
Description of Period Expenses ments Charges of Period
(Thousands of Dollars)
For the Year Ended December 31, 1993
Electric Plant:
Steam Production. . . . . . . . . $242,596 $16,486 $ 3,159 $ - $255,923
Nuclear Production. . . . . . . . 247,370 35,465 832 31 282,034
Transmission. . . . . . . . . . . 74,167 5,244 20 - 79,391
Distribution. . . . . . . . . . . 120,897 11,324 2,449 - 129,772
General . . . . . . . . . . . . . 29,100 4,576 1,359 1,260 33,577
Electric Plant Leased to Others . 1,239 174 - 1,413
Electric Plant Held for Future
Use . . . . . . . . . . . . . . 8,819 - 86 - 8,733
Nuclear Fuel. . . . . . . . . . . 25,993 10,805 19,381 - 17,417
$750,181 $84,074 $27,286 $1,291 $808,260
KANSAS GAS AND ELECTRIC COMPANY
Schedule VI - Accumulated Depreciation of Utility Plant
Additions
Balance at Charged to Balance at
Beginning Costs and Retire- Other End
Description of Period Expenses ments Charges of Period
(Thousands of Dollars)
(Pro Forma) (1)
For the Year Ended December 31, 1992
Electric Plant:
Steam Production. . . . . . . . . $228,538 $16,433 $ 2,374 $ (1) $242,596
Nuclear Production. . . . . . . . 219,311 35,361 7,302 - 247,370
Transmission. . . . . . . . . . . 69,355 5,199 387 - 74,167
Distribution. . . . . . . . . . . 111,961 10,835 1,899 - 120,897
General . . . . . . . . . . . . . 25,003 4,369 745 473 29,100
Electric Plant Leased to Others . 1,065 174 - - 1,239
Electric Plant Held for Future
Use . . . . . . . . . . . . . . 8,793 - - 26 8,819
Nuclear Fuel. . . . . . . . . . . 16,132 9,850 - 11 25,993
$680,158 $82,221 $12,707 $ 509 $750,181
(Successor)
For the Nine Months Ended December 31, 1992
Electric Plant:
Steam Production. . . . . . . . . $232,589 $11,942 $ 1,935 $ - $242,596
Nuclear Production. . . . . . . . 227,819 26,438 6,887 - 247,370
Transmission. . . . . . . . . . . 70,547 3,960 340 - 74,167
Distribution. . . . . . . . . . . 114,153 8,113 1,369 - 120,897
General . . . . . . . . . . . . . 26,211 3,147 695 437 29,100
Electric Plant Leased to Others . 1,109 130 - - 1,239
Electric Plant Held for Future
Use . . . . . . . . . . . . . . 8,819 - - - 8,819
Nuclear Fuel. . . . . . . . . . . 17,377 8,605 - 11 25,993
$698,624 $62,335 $11,226 $ 448 $750,181
(Predecessor)
For the Three Months Ended March 31, 1992
Electric Plant:
Steam Production. . . . . . . . . $228,538 $ 4,491 $ 439 $ (1) $232,589
Nuclear Production. . . . . . . . 219,311 8,923 415 - 227,819
Transmission. . . . . . . . . . . 69,355 1,239 47 - 70,547
Distribution. . . . . . . . . . . 111,961 2,722 530 - 114,153
General . . . . . . . . . . . . . 25,003 1,222 50 36 26,211
Electric Plant Leased to Others . 1,065 44 - - 1,109
Electric Plant Held for Future
Use . . . . . . . . . . . . . . 8,793 - - 26 8,819
Nuclear Fuel. . . . . . . . . . . 16,132 1,245 - - 17,377
$680,158 $19,886 $ 1,481 $ 61 $698,624
(1) The pro forma information for the year ended December 31, 1992 was derived by combining the
historical information of the three month period ended March 31, 1992 (Predecessor) and the
nine month period ended December 31, 1992 (Successor). No purchase accounting adjustments
were made for periods prior to the Merger in determining pro forma amounts because such
adjustments would be immaterial.
KANSAS GAS AND ELECTRIC COMPANY
Schedule VI - Accumulated Depreciation of Utility Plant
(Predecessor)
Additions
Balance at Charged to Balance at
Beginning Costs and Retire- Other End
Description of Period Expenses ments Charges of Period
(Thousands of Dollars)
For the Year Ended December 31, 1991
Electric Plant:
Steam Production. . . . . . . . . $212,421 $17,305 $ 1,207 $ 19 $228,538
Nuclear Production. . . . . . . . 199,938 35,460 16,087 - 219,311
Transmission. . . . . . . . . . . 65,463 5,107 1,215 - 69,355
Distribution. . . . . . . . . . . 104,043 10,396 2,478 - 111,961
General . . . . . . . . . . . . . 21,582 4,127 1,278 572 25,003
Electric Plant Leased to Others . 891 174 - - 1,065
Electric Plant Held for Future
Use . . . . . . . . . . . . . . 8,841 - 29 (19) 8,793
Nuclear Fuel. . . . . . . . . . . 15,607 5,728 5,203 - 16,132
$628,786 $78,297 $27,497 $ 572 $680,158
SIGNATURE
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
KANSAS GAS AND ELECTRIC COMPANY
March 18, 1994 By KENT R. BROWN
(Kent R. Brown, Chairman of the Board,
President and Chief Executive Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Signature Title Date
Chairman of the Board, President
KENT R. BROWN and Chief Executive Officer March 18,
1994
(Kent R. Brown) (Principal Executive Officer)
Secretary, Treasurer and General
RICHARD D. TERRILL Counsel (Principal Financial March 18,
1994
(Richard D. Terrill) and Accounting Officer)
ROBERT T. CRAIN
(Robert T. Crain)
(Anderson E. Jackson)
DONALD A. JOHNSTON
(Donald A. Johnston)
S. L. KITCHEN Directors March 18,
1994
(S. L. Kitchen)
GLENN L. KOESTER
(Glenn L. Koester)
JAMES J. NOONE
(James J. Noone)
(Marilyn B. Pauly)
NEWTON C. SMITH, M.D.
(Newton C. Smith, M. D.)
RICHARD SMITH
(Richard Smith)
CONFORMED
KANSAS GAS AND ELECTRIC COMPANY
TO
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
(formerly Guaranty Trust Company of New York)
AND
W. A. SPOONER
(successor to Henry A. Theis, Oliver R. Brooks,
Wesley L. Baker, Edwin F. McMichael and R. Amundsen)
as Trustees under Kansas Gas and Electric Company's
Mortgage and Deed of Trust, Dated as of April 1, 1940
_______________________
THIRTY-SEVENTH SUPPLEMENTAL INDENTURE
Providing, among other things, for
First Mortgage Bonds, 6.20% Series Due 2006
Dated as of January 15, 1994
THIRTY-SEVENTH SUPPLEMENTAL INDENTURE
INDENTURE, dated as of January 15, 1994, between KANSAS
GAS AND ELECTRIC COMPANY, a corporation of the State of Kansas
(formerly named KCA Corporation and successor by merger to
Kansas Gas and Electric Company, a corporation of the State of
Kansas, hereinafter sometimes called the ``Company-Kansas''),
whose post office address is 120 East First Street, Wichita,
Kansas 67202 (hereinafter sometimes called the ``Company''),
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK (formerly
Guaranty Trust Company of New York), a corporation of the State
of New York, whose post office address is 60 Wall Street, New
York, New York 10260-0060 (hereinafter sometimes called the
``Corporate Trustee''), and W. A. SPOONER (successor to Henry
A. Theis, Oliver R. Brooks, Wesley L. Baker, Edwin F. McMichael
and R. Amundsen, and being hereinafter sometimes called the
``Individual Trustee''), whose post office address is 1 Juliet
Court, Old Bridge, New Jersey 08857 (the Corporate Trustee and
the Individual Trustee being hereinafter together sometimes
called the ``Trustees''), as Trustees under the Mortgage and
Deed of Trust, dated as of April 1, 1940 (hereinafter called
the ``Mortgage''), which Mortgage was executed and delivered by
Kansas Gas and Electric Company, a corporation of the State of
West Virginia to which the Company-Kansas was successor by
merger (hereinafter sometimes called the ``Company-West
Virginia''), to secure the payment of bonds issued or to be
issued under and in accordance with the provisions of the
Mortgage, reference to which Mortgage is hereby made, this
Indenture (hereinafter sometimes called the ``Thirty-seventh
Supplemental Indenture'') being supplemental thereto;
Whereas, the Company-West Virginia caused the Mortgage to
be filed for record as a mortgage of real property and as a
chattel mortgage in the offices of the Registers of Deeds in
various counties in the State of Kansas, and on April 25, 1940
paid to the Register of Deeds of Sedgwick County, Kansas, that
being the County in which the Mortgage was first filed for
record, the sum of $40,000 in payment of the Kansas mortgage
registration tax as provided by Section 79-3101 et seq.,
General Statutes of Kansas 1935; and
Whereas, by the Mortgage, the Company-West Virginia
covenanted that it would execute and deliver such supplemental
indenture or indentures and such further instruments and do
such further acts as might be necessary or proper to carry out
more effectually the purposes of the Mortgage and to make
subject to the lien of the Mortgage any property thereafter
acquired, intended to be subject to the lien thereof; and
Whereas, an instrument, dated May 31, 1949, was executed
by the Company-West Virginia appointing Oliver R. Brooks as
Individual Trustee in succession to said Henry A. Theis,
resigned, under the Mortgage, and by Oliver R. Brooks accepting
the appointment as Individual Trustee under the Mortgage in
succession to said Henry A. Theis, which instrument was filed
for record in the offices of the Registers of Deeds in various
counties in the State of Kansas; and
Whereas, an instrument, dated March 3, 1958, was executed
by the Company-West Virginia appointing Wesley L. Baker as
Individual Trustee in succession to said Oliver R. Brooks,
resigned, under the Mortgage, and by Wesley L. Baker accepting
the appointment as Individual Trustee under the Mortgage in
succession to said Oliver R. Brooks, which instrument was filed
for record in the offices of the Registers of Deeds in various
counties in the State of Kansas; and
Whereas, an instrument, dated November 20, 1969, was
executed by the Company-West Virginia appointing Edwin F.
McMichael as Individual Trustee in succession to said Wesley L.
Baker, resigned, under the Mortgage, and by Edwin F. McMichael
accepting the appointment as Individual Trustee under the
Mortgage in succession to said Wesley L. Baker, which
instrument was filed for record in the offices of the Registers
of Deeds in various counties in the State of Kansas; and
Whereas, by the Twenty-seventh Supplemental Indenture
mentioned below, the Company-Kansas, among other things,
appointed R. Amundsen as Individual Trustee in succession to
said Edwin F. McMichael, resigned, under the Mortgage, and by
R. Amundsen accepting the appointment as Individual Trustee
under the Mortgage in succession to said Edwin F. McMichael;
and
Whereas, by the Thirty-second Supplemental Indenture
mentioned below, the Company-Kansas, among other things,
appointed W. A. Spooner as Individual Trustee in succession to
said R. Amundsen, resigned, under the Mortgage, and by W. A.
Spooner accepting the appointment as Individual Trustee under
the Mortgage in succession to said R. Amundsen; and
Whereas, the Company-West Virginia executed and delivered
to the Trustees a First Supplemental Indenture, dated as of
June 1, 1942 (which supplemental indenture is hereinafter
sometimes called the ``First Supplemental Indenture''); and
Whereas, the Company-West Virginia caused the First
Supplemental Indenture to be filed for record as a mortgage of
real property and as a chattel mortgage in the offices of the
Registers of Deeds in various counties in the State of Kansas,
but paid no mortgage registration tax in connection with the
recordation of the First Supplemental Indenture, no such tax
having been payable in connection with such recordation; and
Whereas, the Company-West Virginia executed and delivered
to the Trustees the following supplemental indentures:
Designation Dated as of
Second Supplemental Indenture . . . . March 1, 1948
Third Supplemental Indenture. . . . . December 1, 1949
Fourth Supplemental Indenture . . . . June 1, 1952
Fifth Supplemental Indenture. . . . . October 1, 1953
Sixth Supplemental Indenture. . . . . March 1, 1955
Seventh Supplemental Indenture. . . . February 1, 1956
Eighth Supplemental Indenture . . . . January 1, 1961
Ninth Supplemental Indenture. . . . . May 1, 1966
Tenth Supplemental Indenture. . . . . March 1, 1970
Eleventh Supplemental Indenture . . . May 1, 1971
Twelfth Supplemental Indenture. . . . March 1, 1972
which supplemental indentures are hereinafter sometimes called
the Second through Twelfth Supplemental Indentures,
respectively; and
Whereas, the Company-West Virginia caused the Second
through Eighth Supplemental Indentures to be filed for record
as a mortgage of real property and as a chattel mortgage in the
offices of the Registers of Deeds in various counties in the
State of Kansas, and caused the Ninth through Twelfth
Supplemental Indentures to be filed for record as a mortgage of
real property in the offices of the Registers of Deeds in
various counties in the State of Kansas and as a chattel
mortgage in the Office of the Secretary of State of Kansas, and
on the following dates paid to the Register of Deeds of
Sedgwick County, Kansas, that being the County in which the
Second through Twelfth Supplemental Indentures were first filed
for record as a mortgage of real property, the following
amounts:
Date Amount
March 30, 1948 . . . . . . . . . . $12,500
December 7, 1949 . . . . . . . . . 7,500
June 17, 1952 . . . . . . . . . . 30,000
October 21, 1953 . . . . . . . . . 25,000
March 22, 1955 . . . . . . . . . . 25,000
March 5, 1956 . . . . . . . . . . 17,500
January 24, 1961 . . . . . . . . . 17,500
May 17, 1966 . . . . . . . . . . . 40,000
March 10, 1970 . . . . . . . . . . 87,500
May 19, 1971 . . . . . . . . . . . 87,500
March 23, 1972 . . . . . . . . . . 62,500
such amounts being in payment of the Kansas mortgage
registration tax as provided by the then currently applicable
sections of the statutes of the State of Kansas in effect on
those dates; and
Whereas, the Company-West Virginia was merged into the
Company-Kansas on May 31, 1973; and
Whereas, in order to evidence the succession of the
Company-Kansas to the Company-West Virginia and the assumption
by the Company-Kansas of the covenants and conditions of the
Company-West Virginia in the bonds and in the Mortgage
contained, and to enable the Company-Kansas to have and
exercise the powers and rights of the Company-West Virginia
under the Mortgage in accordance with the terms thereof, the
Company-Kansas executed and delivered to the Trustees a
Thirteenth Supplemental Indenture, dated as of May 31, 1973
(which supplemental indenture is hereinafter sometimes called
the ``Thirteenth Supplemental Indenture''); and
Whereas, the Company-Kansas caused the Thirteenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the offices of the Registers of Deeds in
various counties in the State of Kansas and as a chattel
mortgage in the Office of the Secretary of State of Kansas, but
paid no mortgage registration tax in connection with the
recordation of the Thirteenth Supplemental Indenture, no such
tax having been payable in connection with such recordation;
and
Whereas, the Company-Kansas executed and delivered to the
Trustees the following supplemental indentures:
Designation Dated as of
Fourteenth Supplemental Indenture . . . . . July 1, 1975
Fifteenth Supplemental Indenture . . . . . December 1, 1975
Sixteenth Supplemental Indenture . . . . . September 1, 1976
Seventeenth Supplemental Indenture . . . . March 1, 1977
Eighteenth Supplemental Indenture . . . . . May 1, 1977
Nineteenth Supplemental Indenture . . . . . August 1, 1977
Twentieth Supplemental Indenture . . . . . March 15, 1978
Twenty-first Supplemental Indenture . . . . January 1, 1979
Twenty-second Supplemental Indenture . . . April 1, 1980
Twenty-third Supplemental Indenture . . . . July 1, 1980
Twenty-fourth Supplemental Indenture . . . August 1, 1980
Twenty-fifth Supplemental Indenture . . . . June 1, 1981
Twenty-sixth Supplemental Indenture . . . . December 1, 1981
Twenty-seventh Supplemental Indenture . . . May 1, 1982
Designation Dated as of
Twenty-eighth Supplemental Indenture . . . March 15, 1984
Twenty-ninth Supplemental Indenture . . . . September 1, 1984
Thirtieth Supplemental Indenture . . . . . September 1, 1984
Thirty-first Supplemental Indenture . . . . February 1, 1985
Thirty-second Supplemental Indenture . . . April 15, 1986
Thirty-third Supplemental Indenture . . . . June 1, 1991
Thirty-fourth Supplemental Indenture . . . March 31, 1992
Thirty-fifth Supplemental Indenture . . . . December 17, 1992
Thirty-sixth Supplemental Indenture . . . . August 12, 1993
which supplemental indentures are hereinafter sometimes called
the Fourteenth through Thirty-sixth Supplemental Indentures,
respectively; and
Whereas, the Company-Kansas caused the Fourteenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the offices of the Registers of Deeds in
various counties in the State of Kansas and as a chattel
mortgage in the Office of the Secretary of State of Kansas; and
Whereas, the Company-Kansas caused the Fifteenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on December 10, 1975, Film 169,
page 363), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on December 10, 1975 and
indexed as No. 325,911); and
Whereas, the Company-Kansas caused the Sixteenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on September 29, 1976, Film 211,
page 363), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on September 29, 1976 and
indexed as No. 363,835); and
Whereas, the Company-Kansas caused the Seventeenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on March 16, 1977, Film 234,
page 492), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on March 1, 1977 and
indexed as No. 384,759); and
Whereas, the Company-Kansas caused the Eighteenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on May 26, 1977, Film 246, page
655), and as a chattel mortgage in the Office of the Secretary
of State of Kansas (filed on May 26, 1977 and indexed as
No. 394,573); and
Whereas, the Company-Kansas caused the Nineteenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on August 31, 1977, Film 263,
page 882), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on September 1, 1977 and
indexed as No. 406,577); and
Whereas, the Company-Kansas caused the Twentieth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on March 29, 1978, Film 297,
pages 635-656), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on March 30, 1978 and
indexed as No. 434,072); and
Whereas, the Company-Kansas caused the Twenty-first
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on January 9, 1979, Film 345,
page 648), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on January 10, 1979 and
indexed as No. 470,851); and
Whereas, the Company-Kansas caused the Twenty-second
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on April 2, 1980, Film 413, page
1,468), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on April 3, 1980 and
indexed as No. 533,415); and
Whereas, the Company-Kansas caused the Twenty-third
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on July 1, 1980, Film 425, page
1,003), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on July 2, 1980 and indexed
as No. 546,185); and
Whereas, the Company-Kansas caused the Twenty-fourth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on August 28, 1980, Film 435,
page 266), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on August 29, 1980 and
indexed as No. 554,543); and
Whereas, the Company-Kansas caused the Twenty-fifth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on June 30, 1981, Film 483, page
1,512), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on June 30, 1981 and
indexed as No. 601,270); and
Whereas, the Company-Kansas caused the Twenty-sixth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on December 30, 1981, Film 510,
page 300), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on December 31, 1981 and
indexed as No. 628,293); and
Whereas, the Company-Kansas caused the Twenty-seventh
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on May 6, 1982, Film 526, page
1,141), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on May 7, 1982 and indexed
as No. 650,115); and
Whereas, the Company-Kansas caused the Twenty-eighth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on March 22, 1984, Film 645,
page 1,524), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on March 23, 1984 and
indexed as No. 796,449); and
Whereas, the Company-Kansas caused the Twenty-ninth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on September 5, 1984, Film 681,
page 763), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on September 6, 1984 and
indexed as No. 852,425); and
Whereas, the Company-Kansas caused the Thirtieth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on September 12, 1984, Film 682,
page 1,087), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on September 13, 1984 and
indexed as No. 854,284); and
Whereas, the Company-Kansas caused the Thirty-third
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on June 18, 1991, Film 1177,
page 0876), and as a security agreement in the Office of
Secretary of State of Kansas (filed on June 18, 1991 and
indexed as No. 1,693,446); and
Whereas, the Company on the following dates paid to the
Register of Deeds of Sedgwick County, Kansas, that being the
County in which the Fourteenth through Thirtieth Supplemental
Indentures and the Thirty-third Supplemental Indenture were
first filed for record as a mortgage of real property, the
following amounts:
Date
Amount
July 2, 1975 . . . . . . . . . . . . .$100,000
December 10, 1975. . . . . . . . . . . 48,750
September 29, 1976 . . . . . . . . . . 62,500
March 16, 1977 . . . . . . . . . . . . 62,500
May 26, 1977 . . . . . . . . . . . . . 25,000
August 31, 1977. . . . . . . . . . . . 6,100
March 29, 1978 . . . . . . . . . . . . 62,500
January 9, 1979. . . . . . . . . . . . 36,250
April 2, 1980. . . . . . . . . . . . . 67,500
July 1, 1980 . . . . . . . . . . . . . 37,500
August 28, 1980. . . . . . . . . . . . 63,750
June 30, 1981. . . . . . . . . . . . . 75,000
December 30, 1981. . . . . . . . . . . 62,500
May 6, 1982. . . . . . . . . . . . . .100,000
March 22, 1984 . . . . . . . . . . . . 93,750
September 5, 1984. . . . . . . . . . . 75,000
September 12, 1984 . . . . . . . . . . 50,000
June 18, 1991. . . . . . . . . . . . .334,100
such amounts being in payment of the Kansas mortgage
registration tax as provided by the then currently applicable
sections of the statutes of the State of Kansas in effect on
those dates; and
Whereas, the Company-Kansas caused the Thirty-first
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on February 1, 1985, Film 707,
page 378), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on February 4, 1985 and
indexed as No. 895,468), but paid no mortgage registration tax
in connection with the recordation of the Thirty-first
Supplemental Indenture, no such tax having been payable in
connection with such recordation; and
Whereas, the Company-Kansas caused the Thirty-second
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on April 16, 1986, Film 791,
page 1,336), and as a chattel mortgage in the Office of the
Secretary of State of Kansas (filed on April 17, 1986 and
indexed as No. 1,048,212), but paid no mortgage registration
tax in connection with the recordation of the Thirty-second
Supplemental Indenture, no such tax having been payable in
connection with such recordation; and
Whereas, in order to evidence the succession of the
Company to the Company-Kansas and the assumption by the Company
of the covenants and conditions of the Company-Kansas in the
bonds and in the Mortgage contained, and to enable the Company
to have and exercise the powers and rights of the Company-
Kansas under the Mortgage in accordance with the terms thereof,
the Company executed and delivered to the Trustees a Thirty-
fourth Supplemental Indenture, dated as of March 31, 1992
(which supplemental indenture is hereinafter sometimes called
the ``Thirty-fourth Supplemental Indenture''); and
Whereas, the Company-Kansas caused the Thirty-fourth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on March 31, 1992, Film 1236,
page 987), and as a security agreement in the Office of
Secretary of State of Kansas (filed on March 31, 1992 and
indexed as No. 1,780,893), but paid no mortgage registration
tax in connection with the recordation of the Thirty-fourth
Supplemental Indenture, no such tax having been payable in
connection with such recordation; and
Whereas, the Company caused the Thirty-fifth Supplemental
Indenture to be filed for record as a mortgage of real property
in the office of the Register of Deeds of Sedgwick County,
Kansas (filed on December 16, 1992, Film 301, page 0104), and
as a security agreement in the Office of Secretary of State of
Kansas (filed on December 16, 1992 and indexed as
No. 1,861,886), but paid no mortgage registration tax in
connection with the recordation of the Thirty-fifth
Supplemental Indenture, no such tax having been payable in
connection with such recordation; and
Whereas, the Company-Kansas caused the Thirty-sixth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of
Sedgwick County, Kansas (filed on August 10, 1993, Film 1364,
page 0515), and as a security agreement in the Office of
Secretary of State of Kansas (filed on August 11, 1993 and
indexed as No. 1,936,501), but paid no mortgage registration
tax in connection with the recordation of the Thirty-sixth
Supplemental Indenture, no such tax having been payable in
connection with such recordation; and
Whereas, the Company-West Virginia, the Company-Kansas or
the Company has from time to time caused to be filed in the
respective offices of the above-mentioned Registers of Deeds
and Secretary of State affidavits executed by the Trustees
under the Mortgage, preserving and continuing the lien thereof
either as a chattel mortgage in accordance with the provisions
of K.S.A. 58-303 (Section 58-303 of the General Statutes of
Kansas 1935) or as a security agreement under the provisions of
K.S.A. 84-9-401 et seq.; and
Whereas, in addition to the aforesaid filings for record
in the respective offices of the above-mentioned Registers of
Deeds, the Company-West Virginia, the Company-Kansas or the
Company has filed copies of the Mortgage and the First through
Thirty-sixth Supplemental Indentures, certified as true by it,
with the Secretary of State of Kansas; and
Whereas, the Company-West Virginia, the Company-Kansas or
the Company has heretofore issued, in accordance with the
provisions of the Mortgage, as heretofore supplemented, the
following series of First Mortgage Bonds:
Principal Principal
Amount Amount
Series Issued Outstanding
3-3/8% Series due 1970 . . $16,000,000 None
3-1/8% Series due 1978 . . 5,000,000 None
2-3/4% Series due 1979 . . 3,000,000 None
3-3/8% Series due 1982 . . 12,000,000 None
3-5/8% Series due 1983 . . 10,000,000 None
3-3/8% Series due 1985 . . 10,000,000 None
3-3/8% Series due 1986 . . 7,000,000 None
4-5/8% Series due 1991 . . 7,000,000 None
5-5/8% Series due 1996 . . 16,000,000 $16,000,000
8-1/2% Series due 2000 . . 35,000,000 None
8-1/8% Series due 2001 . . 35,000,000 None
7-3/8% Series due 2002 . . 25,000,000 None
9-5/8% Series due 2005 . . 40,000,000 None
6% Series due 1985 . . 7,000,000 None
7-3/4% Series due 2005 . . 12,500,000 None
8-3/8% Series due 2006 . . 25,000,000 None
8-1/2% Series due 2007 . . 25,000,000 None
6% Series due 2007 . . 10,000,000 10,000,000
5-7/8% Series due 2007 . . 21,940,000 21,940,000
8-7/8% Series due 2008 . . 30,000,000 None
6.80% Series due 2004 . . $14,500,000 $14,500,000
16-1/4% Series due 1987 . . 30,000,000 None
6-1/2% Series due 1983 . . 15,000,000 None
7-1/4% Series due 1983 . . 25,500,000 None
14-7/8% Series due 1987-1991 30,000,000
None
16% Series due 1996 . . 25,000,000 None
15-3/4% Series due 1989 . . 40,000,000 None
13-1/2% Series due 1989 . . 100,000,000 None
14.05% Series due 1991 . . 30,000,000 None
14-1/8% Series due 1991 . . 20,000,000 None
10-7/8% Series due 1987 . . 30,000,000 None
9-3/4% Series due 2016 . . 50,000,000 None
7.00% Series A due 2031 . 18,900,000 18,900,000
7.00% Series B due 2031 . 308,600,000 308,600,000
7.60% Series due 2003 . . 135,000,000 135,000,000
6-1/2% Series due 2005 . . 65,000,000 65,000,000
hereinafter sometimes called Bonds of the First through Thirty-
sixth Series; and
Whereas, Section 8 of the Mortgage provides that the form
of each series of bonds (other than the First Series) issued
thereunder and of the coupons to be attached to the coupon
bonds of such series shall be established by Resolution of the
Board of Directors of the Company and that the form of such
series, as established by said Board of Directors, shall
specify the descriptive title of the bonds and various other
terms thereof, and may also contain such provisions not
inconsistent with the provisions of the Mortgage as the Board
of Directors may, in its discretion, cause to be inserted
therein expressing or referring to the terms and conditions
upon which such bonds are to be issued and/or secured under the
Mortgage; and
Whereas, Section 120 of the Mortgage provides, among other
things, that any power, privilege or right expressly or
impliedly reserved to or in any way conferred upon the Company
by any provision of the Mortgage whether such power, privilege
or right is in any way restricted or is unrestricted, may be in
whole or in part waived or surrendered or subjected to any
restriction if at the time unrestricted or to additional
restriction if already restricted, and the Company may enter
into any further covenants, limitations or restrictions for the
benefit of any one or more series of bonds issued thereunder,
or the Company may cure any ambiguity contained therein or in
any supplemental indenture, or may establish the terms and
provisions of any series of bonds other than said First Series,
by an instrument in writing executed and acknowledged by the
Company in such manner as would be necessary to entitle a
conveyance of real estate to record in all of the states in
which any property at the time subject to the lien of the
Mortgage shall be situated; and
Whereas, the Company now desires to create a new series of
bonds; and
Whereas, the execution and delivery by the Company of this
Thirty-seventh Supplemental Indenture, and the terms of the
bonds of the Thirty-seventh Series, hereinafter referred to,
have been duly authorized by the Board of Directors of the
Company by appropriate Resolutions of said Board of Directors;
Now, Therefore, This Indenture Witnesseth:
That Kansas Gas and Electric Company, in consideration of
the premises and of One Dollar ($1) to it duly paid by the
Trustees at or before the ensealing and delivery of these
presents, the receipt whereof is hereby acknowledged, and in
further evidence of assurance of the estate, title and rights
of the Trustees and in order further to secure the payment both
of the principal of and interest and premium, if any, on the
bonds from time to time issued under the Mortgage, according to
their tenor and effect and the performance of all the provi-
sions of the Mortgage (including any instruments supplemental
thereto and any modification made as in the Mortgage provided)
and of said bonds, hereby grants, bargains, sells, releases,
conveys, assigns, transfers, mortgages, pledges, sets over and
confirms (subject, however, to Excepted Encumbrances as defined
in Section 6 of the Mortgage) unto Morgan Guaranty Trust Com-
pany of New York and to W. A. Spooner, as Trustees under the
Mortgage, and to their successor or successors in said trust,
and to said Trustees and their successors and assigns forever,
all property, real, personal and mixed, acquired by the
Company after the date of the execution and delivery of the
Mortgage, in addition to property covered by the First through
the Thirty-sixth Supplemental Indentures (except any herein or
in the Mortgage, as heretofore supplemented, expressly
excepted), now owned or, subject to the provisions of Section
87 of the Mortgage, hereafter acquired by the Company and
wheresoever situated, including (without in anywise limiting or
impairing by the enumeration of the same the scope and intent
of the foregoing or of any general description contained in
this Thirty-seventh Supplemental Indenture) all lands, flowage
rights, water rights, flumes, raceways, dams, rights of way and
roads; all steam and power houses, gas plants, street lighting
systems, standards and other equipment incidental thereto,
telephone, radio and television systems, air-conditioning
systems and equipment incidental thereto, water works, steam
heat and hot water plants, lines, service and supply systems,
bridges, culverts, tracks, rolling stock, ice or refrigeration
plants and equipment, street and interurban railway systems,
offices, buildings and other structures and the equipment
thereof; all machinery, engines, boilers, dynamos, electric and
gas machines, regulators, meters, transformers, generators,
motors, electrical, gas and mechanical appliances, conduits,
cables, water, steam heat, gas or other pipes, gas mains and
pipes, service pipes, fittings, valves and connections, pole
and transmission lines, wires, cables, tools, implements,
apparatus, furniture, chattels and choses in action; all
municipal and other franchises; all lines for the transmission
and distribution of electric current, gas, steam heat or water
for any purpose, including poles, wires, cables, pipes,
conduits, ducts and all apparatus for use in connection
therewith; all real estate, lands, easements, servitudes,
licenses, permits, franchises, privileges, rights of way and
other rights in or relating to real estate or the occupancy of
the same and (except as herein or in the Mortgage, as
heretofore supplemented, expressly excepted), all the right,
title and interest of the Company in and to all other property
of any kind or nature appertaining to and/or used and/or
occupied and/or enjoyed in connection with any property
hereinbefore or in the Mortgage, as heretofore supplemented,
described.
Together With all and singular the tenements,
hereditaments and appurtenances belonging or in anywise
appertaining to the aforesaid property or any part thereof,
with the reversion and reversions, remainder and remainders and
(subject to the provisions of Section 57 of the Mortgage) the
tolls, rents, revenues, issues, earnings, income, product and
profits thereof, and all the estate, right, title and interest
and claim whatsoever, at law as well as in equity, which the
Company now has or may hereafter acquire in and to the
aforesaid property and franchises and every part and parcel
thereof.
It Is Hereby Agreed by the Company that, subject to the
provisions of Section 87 of the Mortgage, all the property,
rights and franchises acquired by the Company after the date
hereof (except any herein or in the Mortgage, as heretofore
supplemented, expressly excepted), shall be as fully embraced
within the lien hereof and the lien of the Mortgage, as if such
property, rights and franchises were now owned by the Company
and were specifically described herein and conveyed hereby.
Provided that the following are not and are not intended
to be now or hereafter granted, bargained, sold, released,
conveyed, assigned, transferred, mortgaged, pledged, set over
or confirmed hereunder and are hereby expressly excepted from
the lien and operation of this Thirty-seventh Supplemental
Indenture and from the lien and operation of the Mortgage,
viz.: (1) cash, shares of stock and obligations (including
bonds, notes and other securities) not hereafter specifically
pledged, paid, deposited or delivered under the Mortgage or
covenanted so to be; (2) merchandise, equipment, materials or
supplies held for the purpose of sale in the usual course of
business and fuel, oil and similar materials and supplies
consumable in the operation of any properties of the Company;
vehicles and automobiles; (3) bills, notes and accounts
receivable, and all contracts, leases and operating agreements
not specifically pledged under the Mortgage or covenanted so to
be; and (4) electric energy, and other materials or products
generated, manufactured, produced or purchased by the Company
for sale, distribution or use in the ordinary course of its
business; provided, however, that the property and rights
expressly excepted from the lien and operation of the Mortgage
and this Thirty-seventh Supplemental Indenture in the above
subdivisions (2) and (3) shall (to the extent permitted by law)
cease to be so excepted in the event that either or both of the
Trustees or a receiver or trustee shall enter upon and take
possession of the Mortgaged and Pledged Property in the manner
provided in Article XII of the Mortgage by reason of the
occurrence of a Default as defined in said Article XII.
There is expressly excepted from the lien of the Mortgage
and from the lien hereof all property of the Company located in
the State of Missouri now owned or hereafter acquired unless
such property in the State of Missouri shall be subjected to
the lien of the Mortgage by an indenture or indentures
supplemental thereto, pursuant to authorization by the Board of
Directors of the Company.
To Have And To Hold all such properties, real, personal
and mixed, granted, bargained, sold, released, conveyed,
assigned, transferred, mortgaged, pledged, set over or
confirmed by the Company as aforesaid, or intended so to be,
unto the Trustees, their successors and assigns forever.
In Trust Nevertheless, for the same purposes and upon the
same terms, trusts and conditions and subject to and with the
same provisos and covenants as are set forth in the Mortgage,
as supplemented, this Thirty-seventh Supplemental Indenture
being supplemental thereto.
And It Is Hereby Covenanted by the Company that all the
terms, conditions, provisos, covenants and provisions contained
in the Mortgage, as supplemented, shall affect and apply to the
property hereinbefore described and conveyed and to the estate,
rights, obligations and duties of the Company and Trustees and
the beneficiaries of the trust with respect to said property,
and to the Trustees and their successors as Trustees of said
property in the same manner and with the same effect as if the
said property had been owned by the Company at the time of the
execution of the Mortgage, and had been specifically and at
length described in and conveyed to the Trustees by the
Mortgage as a part of the property therein stated to be
conveyed.
The Company further covenants and agrees to and with the
Trustees and their successors in said trust under the Mortgage,
as follows:
ARTICLE I
THIRTY-SEVENTH SERIES OF BONDS
Section 1. (I) There shall be a series of bonds
designated ``6.20% Series due 2006'' (herein sometimes referred
to as the ``Thirty-seventh Series''), each of which shall also
bear the descriptive title, First Mortgage Bond, and the form
thereof, which is established by Resolution of the Board of
Directors of the Company, shall contain suitable provisions
with respect to the matters hereinafter in this Article I
specified. Bonds of the Thirty-seventh Series shall mature on
January 15, 2006, and shall be issued as fully registered bonds
in denominations of One Thousand Dollars and in any multiple or
multiples of One Thousand Dollars. Bonds of the Thirty-seventh
Series shall bear interest at the rate of 6.20% per annum,
payable semi-annually each year, the first interest payment to
be made on July 15, 1994 for the period from January 20, 1994
to July 15, 1994, with subsequent interest payments to be made
semi-annually on January 15 and July 15 of each year. The
principal of and interest on bonds of the Thirty-seventh Series
shall be payable at the office or agency of the Company in the
Borough of Manhattan, The City of New York, in such coin or
currency of the United States of America as at the time of
payment is legal tender for public and private debts. Bonds of
the Thirty-seventh Series shall be dated as in Section 10 of
the Mortgage provided.
(II) Bonds of the Thirty-seventh Series shall not be
redeemable at the option of the Company at any time prior to
maturity.
(III) At the option of the registered owner, any Bonds
of the Thirty-seventh Series, upon surrender thereof, for
cancellation, at the office or agency of the Company in the
Borough of Manhattan, The City of New York, shall be
exchangeable for a like aggregate principal amount of bonds of
the same series of other authorized denominations. The Bonds
of the Thirty-seventh Series may bear such legends as may be
necessary to comply with any law or with any rules or
regulations made pursuant thereto or with the rules or
regulations of any stock exchange or to conform to usage with
respect thereto.
(IV) Bonds of the Thirty-seventh Series shall be
transferable upon the surrender thereof, for cancellation
together with a written instrument of transfer in form approved
by the registrar duly executed by the registered owner or by
his duly authorized attorney, at the office or agency of the
Company in the Borough of Manhattan, The City of New York.
(V) Upon any exchange or transfer of Bonds of the Thirty-
seventh Series, the Company may make a charge therefor
sufficient to reimburse it for any tax or taxes or other
governmental charge required to be paid by the Company, as
provided in Section 12 of the Mortgage, but the Company hereby
waives any right to make a charge in addition thereto for any
exchange or transfer of Bonds of the Thirty-seventh Series.
Section 2. The Company reserves the right, subject to
appropriate corporate action, but without any consent or other
action by holders of Bonds of the Thirty-seventh Series or of
any subsequent series of Bonds, to make such amendments to the
Mortgage, as supplemented, as shall be necessary in order to
(A) permit the issuance of additional Prior Lien Bonds other
than to the Corporate Trustee (i) in a principal amount not to
exceed the principal amount of Bonds which could then be issued
on the basis of Property Additions under the Mortgage or (ii)
upon the redemption or retirement of Prior Lien Bonds secured
by such Prior Lien, (B) to remove the requirement that Prior
Lien Bonds be issued to the Corporate Trustee, (C) remove the
provisions of Article V which eliminate from the calculation of
unfunded net Property Additions available for issuance of Bonds
the amount of any Property Additions subject to a Prior Lien if
the aggregate amount of Outstanding Prior Lien Bonds is 15% or
more of the sum of the Outstanding Bonds and Prior Lien Bonds,
and (D) and make such other amendments to the Mortgage as may
be necessary or desirable in the opinion of the Company to
effect the foregoing.
ARTICLE II
MISCELLANEOUS PROVISIONS
Section 1. Subject to the amendments provided for in this
Thirty-seventh Supplemental Indenture, the terms defined in the
Mortgage, as heretofore supplemented, shall, for all purposes
of this Thirty-seventh Supplemental Indenture, have the
meanings specified in the Mortgage, as heretofore supplemented.
Section 2. The Trustees hereby accept the trusts herein
declared, provided, created or supplemented and agree to
perform the same upon the terms and conditions set forth herein
and in the Mortgage, as heretofore amended and supplemented,
and upon the following terms and conditions:
The Trustees shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of
this Thirty-seventh Supplemental Indenture or for or in respect
of the recitals contained herein, all of which recitals are
made by the Company solely. In general, each and every term
and condition contained in Article XVI of the Mortgage, as
heretofore amended and supplemented, shall apply to and form
part of this Thirty-seventh Supplemental Indenture with the
same force and effect as if the same were herein set forth in
full with such omissions, variations and insertions, if any, as
may be appropriate to make the same conform to the provisions
of this Thirty-seventh Supplemental Indenture.
Section 3. Subject to the provisions of Article XV and
Article XVI of the Mortgage, as heretofore amended and
supplemented, whenever in this Thirty-seventh Supplemental
Indenture any of the parties hereto is named or referred to,
this shall be deemed to include the successors or assigns of
such party, and all the covenants and agreements in this
Thirty-seventh Supplemental Indenture contained by or on behalf
of the Company or by or on behalf of the Trustees shall bind
and inure to the benefit of the respective successors and
assigns of such parties whether so expressed or not.
Section 4. Nothing in this Thirty-seventh Supplemental
Indenture, expressed or implied, is intended, or shall be
construed, to confer upon, or to give to, any person, firm or
corporation, other than the parties hereto and the holders of
the bonds and coupons Outstanding under the Mortgage, any
right, remedy or claim under or by reason of this Thirty-
seventh Supplemental Indenture or any covenant, condition,
stipulation, promise or agreement hereof, and all the
covenants, conditions, stipulations, promises and agreements in
this Thirty-seventh Supplemental Indenture contained by or on
behalf of the Company shall be for the sole and exclusive
benefit of the parties hereto, and of the holders of the bonds
and of the coupons Outstanding under the Mortgage.
Section 5. This Thirty-seventh Supplemental Indenture
shall be executed in several counterparts, each of which shall
be an original and all of which shall constitute but one and
the same instrument.
In Witness Whereof, KANSAS GAS AND ELECTRIC COMPANY has
caused its corporate name to be hereunto affixed, and this
instrument to be signed and sealed by its President or one of
its Vice Presidents, and its corporate seal to be attested by
its Secretary or one of its Assistant Secretaries for and in
its behalf, MORGAN GUARANTY TRUST COMPANY OF NEW YORK has
caused its corporate name to be hereunto affixed, and this
instrument to be signed and sealed by one of its Vice
Presidents and its corporate seal to be attested by one of its
Assistant Secretaries, and has hereunto set his hand and
affixed his seal, all as of the day and year first above
written.
KANSAS GAS AND ELECTRIC COMPANY
By /s/ Kent R. Brown
Kent R. Brown
President
Attest:
/s/ Richard D. Terrill
Richard D. Terrill
Secretary
Executed, sealed and delivered by
KANSAS GAS AND ELECTRIC COMPANY,
in the presence of:
/s/ Stacy Kramer
/s/ Robert J. Knott
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Trustee
By /s/ Norma Pane
Norma Pane
Vice President
Attest:
/s/ Karen Jule
Assistant Secretary
/s/ W.A. Spooner
(W.A. Spooner)
Executed, sealed and delivered by
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK and W.A. SPOONER, in
the presence of:
/s/ Dennis Karoly
/s/ Madeline Schneider
STATE OF KANSAS )
: ss.:
COUNTY OF SEDGWICK )
Be It Remembered, that on this 17th day of January, A.D.
1994, before me, the undersigned, a Notary Public within and for
the County and State aforesaid, came Kent R. Brown, the President
of KANSAS GAS AND ELECTRIC COMPANY, a corporation duly organized,
incorporated and existing under the laws of the State of Kansas,
who is personally known to me to be such officer, and who is
personally known to me to be the same person who executed, as
such officer, the within instrument of writing, and such person
duly acknowledged the execution of the same to be the act and
deed of said corporation and that said instrument of writing was
so executed by order of the Board of Directors of said
corporation.
On this 17th day of January, 1994, before me appeared Kent
R. Brown, to me personally known, who being by me duly sworn did
say that he is the President of KANSAS GAS AND ELECTRIC COMPANY,
and that the seal affixed to the foregoing instrument is the
corporate seal of said corporation, and that said instrument was
signed and sealed in behalf of said corporation by authority of
its Board of Directors, and said Kent R. Brown acknowledged said
instrument to be the free act and deed of said corporation.
On the 17th day of January in the year 1994, before me
personally came Kent R. Brown to me known, who, being by me duly
sworn, did depose and say that he resides at 4907 Portwest
Circle, Wichita, Kansas; that he is the President of KANSAS GAS
AND ELECTRIC COMPANY, one of the corporations described in and
which executed the above instrument; that he knows the seal of
said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation, and that he signed his name
thereto by like order.
In Witness Whereof, I have hereunto subscribed my name and
affixed my official seal on the day and year above written.
/s/ Regina I. Degarmo
REGINA I. DEGARMO
NOTARY PUBLIC - STATE OF KANSAS
MY APPOINTMENT EXPIRES AUGUST 4, 1997
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
Be It Remembered, that on this 14th day of January, A.D.
1994, before me, the undersigned, a Notary Public within and for
the County and State aforesaid, came Norma Pane, a Vice President
of Morgan Guaranty Trust Company of New York, a corporation, duly
organized, incorporated and existing under the laws of the State
of New York, who is personally known to me to be such officer,
and who is personally known to me to be the same person who
executed, as such officer, the within instrument of writing, and
such person duly acknowledged the execution of the same to be the
act and deed of said corporation and that said instrument of
writing was so executed by authority of the Board of Directors of
said corporation.
On this 14th day of January, 1994, before me appeared Norma
Pane, to me personally known, who being by me duly sworn did say
that she is a Vice President of MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, and that the seal affixed to the foregoing instrument
is the corporate seal of said corporation, and that said
instrument was signed and sealed in behalf of said corporation by
authority of its Board of Directors, and said Norma Pane
acknowledged said instrument to be the free act and deed of said
corporation.
On the 14th day of January in the year 1994, before me
personally came Norma Pane, to me known, who, being by me duly
sworn, did depose and say that she resides at 2057 63rd Street,
Brooklyn, New York; that she is a Vice President of MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, one of the corporations
described in and which executed the above instrument; that she
knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation, and that
she signed her name thereto by like authority.
In Witness Whereof, I have hereunto subscribed my name and
affixed my official seal on the day and year above written.
/s/ Alison M. Levchuck
ALISON M. LEVCHUCK
NOTARY PUBLIC, STATE OF NEW YORK
NO. 4997425
QUALIFIED IN NASSAU COUNTY
COMMISSION EXPIRES JUNE 8, 1994
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 14th day of January in the year 1994, before me, the
undersigned, a Notary Public in and for the State of New York, in
the County of New York, personally appeared and came W. A.
Spooner, to me known and known to me to be the person described
in and who executed the within and foregoing instrument and whose
name is subscribed thereto and acknowledged to me that he
executed the same.
In Witness Whereof, I have hereunto subscribed my name and
affixed my official seal the day and year in this certificate
first above written.
/s/ Alison M. Levchuck
ALISON M. LEVCHUCK
NOTARY PUBLIC, STATE OF NEW YORK
No. 4997425
QUALIFIED IN NASSAU COUNTY
COMMISSION EXPIRES JUNE 8, 1994
CONFORMED
KANSAS GAS AND ELECTRIC COMPANY
TO
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
(formerly Guaranty Trust Company of New York)
AND
W. A. SPOONER
(successor to Henry A. Theis, Oliver R. Brooks,
Wesley L. Baker, Edwin F. McMichael and R. Amundsen)
as Trustees under Kansas Gas and Electric Company's
Mortgage and Deed of Trust, Dated as of April 1, 1940
_______________________
THIRTY-EIGHTH SUPPLEMENTAL INDENTURE
Providing, among other things, for
First Mortgage Bonds, 5.10% Series Due 2023
Dated as of March 1, 1994
THIRTY-EIGHTH SUPPLEMENTAL INDENTURE
INDENTURE, dated as of March 1, 1994, between KANSAS GAS AND
ELECTRIC COMPANY, a corporation of the State of Kansas (formerly
named KCA Corporation and successor by merger to Kansas Gas and
Electric Company, a corporation of the State of Kansas,
hereinafter sometimes called the ``Company-Kansas''), whose post
office address is 120 East First Street, Wichita, Kansas 67202
(hereinafter sometimes called the ``Company''), and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK (formerly Guaranty Trust
Company of New York), a corporation of the State of New York,
whose post office address is 60 Wall Street, New York, New York
10260-0060 (hereinafter sometimes called the ``Corporate
Trustee''), and W. A. SPOONER (successor to Henry A. Theis,
Oliver R. Brooks, Wesley L. Baker, Edwin F. McMichael and R.
Amundsen, and being hereinafter sometimes called the ``Individual
Trustee''), whose post office address is 1 Juliet Court, Old
Bridge, New Jersey 08857 (the Corporate Trustee and the
Individual Trustee being hereinafter together sometimes called
the ``Trustees''), as Trustees under the Mortgage and Deed of
Trust, dated as of April 1, 1940 (hereinafter called the
``Mortgage''), which Mortgage was executed and delivered by
Kansas Gas and Electric Company, a corporation of the State of
West Virginia to which the Company-Kansas was successor by merger
(hereinafter sometimes called the ``Company-West Virginia''), to
secure the payment of bonds issued or to be issued under and in
accordance with the provisions of the Mortgage, reference to
which Mortgage is hereby made, this Indenture (hereinafter
sometimes called the ``Thirty-eighth Supplemental Indenture'')
being supplemental thereto;
Whereas, the Company-West Virginia caused the Mortgage to be
filed for record as a mortgage of real property and as a chattel
mortgage in the offices of the Registers of Deeds in various
counties in the State of Kansas, and on April 25, 1940 paid to
the Register of Deeds of Sedgwick County, Kansas, that being the
County in which the Mortgage was first filed for record, the sum
of $40,000 in payment of the Kansas mortgage registration tax as
provided by Section 79-3101 et seq., General Statutes of Kansas
1935; and
Whereas, by the Mortgage, the Company-West Virginia
covenanted that it would execute and deliver such supplemental
indenture or indentures and such further instruments and do such
further acts as might be necessary or proper to carry out more
effectually the purposes of the Mortgage and to make subject to
the lien of the Mortgage any property thereafter acquired,
intended to be subject to the lien thereof; and
Whereas, an instrument, dated May 31, 1949, was executed by
the Company-West Virginia appointing Oliver R. Brooks as
Individual Trustee in succession to said Henry A. Theis,
resigned, under the Mortgage, and by Oliver R. Brooks accepting
the appointment as Individual Trustee under the Mortgage in
succession to said Henry A. Theis, which instrument was filed for
record in the offices of the Registers of Deeds in various
counties in the State of Kansas; and
Whereas, an instrument, dated March 3, 1958, was executed by
the Company-West Virginia appointing Wesley L. Baker as
Individual Trustee in succession to said Oliver R. Brooks,
resigned, under the Mortgage, and by Wesley L. Baker accepting
the appointment as Individual Trustee under the Mortgage in
succession to said Oliver R. Brooks, which instrument was filed
for record in the offices of the Registers of Deeds in various
counties in the State of Kansas; and
Whereas, an instrument, dated November 20, 1969, was
executed by the Company-West Virginia appointing Edwin F.
McMichael as Individual Trustee in succession to said Wesley L.
Baker, resigned, under the Mortgage, and by Edwin F. McMichael
accepting the appointment as Individual Trustee under the
Mortgage in succession to said Wesley L. Baker, which instrument
was filed for record in the offices of the Registers of Deeds in
various counties in the State of Kansas; and
Whereas, by the Twenty-seventh Supplemental Indenture
mentioned below, the Company-Kansas, among other things,
appointed R. Amundsen as Individual Trustee in succession to said
Edwin F. McMichael, resigned, under the Mortgage, and by R.
Amundsen accepting the appointment as Individual Trustee under
the Mortgage in succession to said Edwin F. McMichael; and
Whereas, by the Thirty-second Supplemental Indenture
mentioned below, the Company-Kansas, among other things,
appointed W. A. Spooner as Individual Trustee in succession to
said R. Amundsen, resigned, under the Mortgage, and by W. A.
Spooner accepting the appointment as Individual Trustee under the
Mortgage in succession to said R. Amundsen; and
Whereas, the Company-West Virginia executed and delivered to
the Trustees a First Supplemental Indenture, dated as of June 1,
1942 (which supplemental indenture is hereinafter sometimes
called the ``First Supplemental Indenture''); and
Whereas, the Company-West Virginia caused the First
Supplemental Indenture to be filed for record as a mortgage of
real property and as a chattel mortgage in the offices of the
Registers of Deeds in various counties in the State of Kansas,
but paid no mortgage registration tax in connection with the
recordation of the First Supplemental Indenture, no such tax
having been payable in connection with such recordation; and
Whereas, the Company-West Virginia executed and delivered to
the Trustees the following supplemental indentures:
Designation Dated as of
Second Supplemental Indenture . . . . March 1, 1948
Third Supplemental Indenture. . . . . December 1, 1949
Fourth Supplemental Indenture . . . . June 1, 1952
Fifth Supplemental Indenture. . . . . October 1, 1953
Sixth Supplemental Indenture. . . . . March 1, 1955
Seventh Supplemental Indenture. . . . February 1, 1956
Eighth Supplemental Indenture . . . . January 1, 1961
Ninth Supplemental Indenture. . . . . May 1, 1966
Tenth Supplemental Indenture. . . . . March 1, 1970
Eleventh Supplemental Indenture . . . May 1, 1971
Twelfth Supplemental Indenture. . . . March 1, 1972
which supplemental indentures are hereinafter sometimes called
the Second through Twelfth Supplemental Indentures, respectively;
and
Whereas, the Company-West Virginia caused the Second through
Eighth Supplemental Indentures to be filed for record as a
mortgage of real property and as a chattel mortgage in the
offices of the Registers of Deeds in various counties in the
State of Kansas, and caused the Ninth through Twelfth
Supplemental Indentures to be filed for record as a mortgage of
real property in the offices of the Registers of Deeds in various
counties in the State of Kansas and as a chattel mortgage in the
Office of the Secretary of State of Kansas, and on the following
dates paid to the Register of Deeds of Sedgwick County, Kansas,
that being the County in which the Second through Twelfth
Supplemental Indentures were first filed for record as a mortgage
of real property, the following amounts:
Date Amount
March 30, 1948 . . . . . . . . . . $12,500
December 7, 1949 . . . . . . . . . 7,500
June 17, 1952 . . . . . . . . . . 30,000
October 21, 1953 . . . . . . . . . 25,000
March 22, 1955 . . . . . . . . . . 25,000
March 5, 1956 . . . . . . . . . . 17,500
January 24, 1961 . . . . . . . . . 17,500
May 17, 1966 . . . . . . . . . . . 40,000
March 10, 1970 . . . . . . . . . . 87,500
May 19, 1971 . . . . . . . . . . . 87,500
March 23, 1972 . . . . . . . . . . 62,500
such amounts being in payment of the Kansas mortgage registration
tax as provided by the then currently applicable sections of the
statutes of the State of Kansas in effect on those dates; and
Whereas, the Company-West Virginia was merged into the
Company-Kansas on May 31, 1973; and
Whereas, in order to evidence the succession of the Company-
Kansas to the Company-West Virginia and the assumption by the
Company-Kansas of the covenants and conditions of the Company-
West Virginia in the bonds and in the Mortgage contained, and to
enable the Company-Kansas to have and exercise the powers and
rights of the Company-West Virginia under the Mortgage in
accordance with the terms thereof, the Company-Kansas executed
and delivered to the Trustees a Thirteenth Supplemental
Indenture, dated as of May 31, 1973 (which supplemental indenture
is hereinafter sometimes called the ``Thirteenth Supplemental
Indenture''); and
Whereas, the Company-Kansas caused the Thirteenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the offices of the Registers of Deeds in various
counties in the State of Kansas and as a chattel mortgage in the
Office of the Secretary of State of Kansas, but paid no mortgage
registration tax in connection with the recordation of the
Thirteenth Supplemental Indenture, no such tax having been
payable in connection with such recordation; and
Whereas, the Company-Kansas executed and delivered to the
Trustees the following supplemental indentures:
Designation Dated as of
Fourteenth Supplemental Indenture . . . . . July 1, 1975
Fifteenth Supplemental Indenture . . . . . December 1, 1975
Sixteenth Supplemental Indenture . . . . . September 1, 1976
Seventeenth Supplemental Indenture . . . . March 1, 1977
Eighteenth Supplemental Indenture . . . . . May 1, 1977
Nineteenth Supplemental Indenture . . . . . August 1, 1977
Twentieth Supplemental Indenture . . . . . March 15, 1978
Twenty-first Supplemental Indenture . . . . January 1, 1979
Twenty-second Supplemental Indenture . . . April 1, 1980
Twenty-third Supplemental Indenture . . . . July 1, 1980
Twenty-fourth Supplemental Indenture . . . August 1, 1980
Twenty-fifth Supplemental Indenture . . . . June 1, 1981
Twenty-sixth Supplemental Indenture . . . . December 1, 1981
Twenty-seventh Supplemental Indenture . . . May 1, 1982
Designation Dated as of
Twenty-eighth Supplemental Indenture . . . March 15, 1984
Twenty-ninth Supplemental Indenture . . . . September 1, 1984
Thirtieth Supplemental Indenture . . . . . September 1, 1984
Thirty-first Supplemental Indenture . . . . February 1, 1985
Thirty-second Supplemental Indenture . . . April 15, 1986
Thirty-third Supplemental Indenture . . . . June 1, 1991
Thirty-fourth Supplemental Indenture . . . March 31, 1992
Thirty-fifth Supplemental Indenture . . . . December 17, 1992
Thirty-sixth Supplemental Indenture . . . . August 12, 1993
Thirty-seventh Supplemental Indenture . . . January 15, 1994
which supplemental indentures are hereinafter sometimes called
the Fourteenth through Thirty-seventh Supplemental Indentures,
respectively; and
Whereas, the Company-Kansas caused the Fourteenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the offices of the Registers of Deeds in various
counties in the State of Kansas and as a chattel mortgage in the
Office of the Secretary of State of Kansas; and
Whereas, the Company-Kansas caused the Fifteenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on December 10, 1975, Film 169, page 363),
and as a chattel mortgage in the Office of the Secretary of State
of Kansas (filed on December 10, 1975 and indexed as No.
325,911); and
Whereas, the Company-Kansas caused the Sixteenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on September 29, 1976, Film 211, page 363),
and as a chattel mortgage in the Office of the Secretary of State
of Kansas (filed on September 29, 1976 and indexed as
No. 363,835); and
Whereas, the Company-Kansas caused the Seventeenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on March 16, 1977, Film 234, page 492), and
as a chattel mortgage in the Office of the Secretary of State of
Kansas (filed on March 1, 1977 and indexed as No. 384,759); and
Whereas, the Company-Kansas caused the Eighteenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on May 26, 1977, Film 246, page 655), and
as a chattel mortgage in the Office of the Secretary of State of
Kansas (filed on May 26, 1977 and indexed as No. 394,573); and
Whereas, the Company-Kansas caused the Nineteenth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on August 31, 1977, Film 263, page 882),
and as a chattel mortgage in the Office of the Secretary of State
of Kansas (filed on September 1, 1977 and indexed as No.
406,577); and
Whereas, the Company-Kansas caused the Twentieth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on March 29, 1978, Film 297, pages 635-
656), and as a chattel mortgage in the Office of the Secretary of
State of Kansas (filed on March 30, 1978 and indexed as No.
434,072); and
Whereas, the Company-Kansas caused the Twenty-first
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on January 9, 1979, Film 345, page 648),
and as a chattel mortgage in the Office of the Secretary of State
of Kansas (filed on January 10, 1979 and indexed as No. 470,851);
and
Whereas, the Company-Kansas caused the Twenty-second
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on April 2, 1980, Film 413, page 1,468),
and as a chattel mortgage in the Office of the Secretary of State
of Kansas (filed on April 3, 1980 and indexed as No. 533,415);
and
Whereas, the Company-Kansas caused the Twenty-third
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on July 1, 1980, Film 425, page 1,003), and
as a chattel mortgage in the Office of the Secretary of State of
Kansas (filed on July 2, 1980 and indexed as No. 546,185); and
Whereas, the Company-Kansas caused the Twenty-fourth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on August 28, 1980, Film 435, page 266),
and as a chattel mortgage in the Office of the Secretary of State
of Kansas (filed on August 29, 1980 and indexed as No. 554,543);
and
Whereas, the Company-Kansas caused the Twenty-fifth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on June 30, 1981, Film 483, page 1,512),
and as a chattel mortgage in the Office of the Secretary of State
of Kansas (filed on June 30, 1981 and indexed as No. 601,270);
and
Whereas, the Company-Kansas caused the Twenty-sixth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on December 30, 1981, Film 510, page 300),
and as a chattel mortgage in the Office of the Secretary of State
of Kansas (filed on December 31, 1981 and indexed as
No. 628,293); and
Whereas, the Company-Kansas caused the Twenty-seventh
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on May 6, 1982, Film 526, page 1,141), and
as a chattel mortgage in the Office of the Secretary of State of
Kansas (filed on May 7, 1982 and indexed as No. 650,115); and
Whereas, the Company-Kansas caused the Twenty-eighth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on March 22, 1984, Film 645, page 1,524),
and as a chattel mortgage in the Office of the Secretary of State
of Kansas (filed on March 23, 1984 and indexed as No. 796,449);
and
Whereas, the Company-Kansas caused the Twenty-ninth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on September 5, 1984, Film 681, page 763),
and as a chattel mortgage in the Office of the Secretary of State
of Kansas (filed on September 6, 1984 and indexed as
No. 852,425); and
Whereas, the Company-Kansas caused the Thirtieth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on September 12, 1984, Film 682, page
1,087), and as a chattel mortgage in the Office of the Secretary
of State of Kansas (filed on September 13, 1984 and indexed as
No. 854,284); and
Whereas, the Company-Kansas caused the Thirty-third
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on June 18, 1991, Film 1177, page 0876),
and as a security agreement in the Office of Secretary of State
of Kansas (filed on June 18, 1991 and indexed as No. 1,693,446);
and
Whereas, the Company on the following dates paid to the
Register of Deeds of Sedgwick County, Kansas, that being the
County in which the Fourteenth through Thirtieth Supplemental
Indentures and the Thirty-third Supplemental Indenture were first
filed for record as a mortgage of real property, the following
amounts:
Date
Amount
July 2, 1975 . . . . . . . . . . . . .$100,000
December 10, 1975. . . . . . . . . . . 48,750
September 29, 1976 . . . . . . . . . . 62,500
March 16, 1977 . . . . . . . . . . . . 62,500
May 26, 1977 . . . . . . . . . . . . . 25,000
August 31, 1977. . . . . . . . . . . . 6,100
March 29, 1978 . . . . . . . . . . . . 62,500
January 9, 1979. . . . . . . . . . . . 36,250
April 2, 1980. . . . . . . . . . . . . 67,500
July 1, 1980 . . . . . . . . . . . . . 37,500
August 28, 1980. . . . . . . . . . . . 63,750
June 30, 1981. . . . . . . . . . . . . 75,000
December 30, 1981. . . . . . . . . . . 62,500
May 6, 1982. . . . . . . . . . . . . .100,000
March 22, 1984 . . . . . . . . . . . . 93,750
September 5, 1984. . . . . . . . . . . 75,000
September 12, 1984 . . . . . . . . . . 50,000
June 18, 1991. . . . . . . . . . . . .334,100
such amounts being in payment of the Kansas mortgage registration
tax as provided by the then currently applicable sections of the
statutes of the State of Kansas in effect on those dates; and
Whereas, the Company-Kansas caused the Thirty-first
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on February 1, 1985, Film 707, page 378),
and as a chattel mortgage in the Office of the Secretary of State
of Kansas (filed on February 4, 1985 and indexed as No. 895,468),
but paid no mortgage registration tax in connection with the
recordation of the Thirty-first Supplemental Indenture, no such
tax having been payable in connection with such recordation; and
Whereas, the Company-Kansas caused the Thirty-second
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on April 16, 1986, Film 791, page 1,336),
and as a chattel mortgage in the Office of the Secretary of State
of Kansas (filed on April 17, 1986 and indexed as No. 1,048,212),
but paid no mortgage registration tax in connection with the
recordation of the Thirty-second Supplemental Indenture, no such
tax having been payable in connection with such recordation; and
Whereas, in order to evidence the succession of the Company
to the Company-Kansas and the assumption by the Company of the
covenants and conditions of the Company-Kansas in the bonds and
in the Mortgage contained, and to enable the Company to have and
exercise the powers and rights of the Company-Kansas under the
Mortgage in accordance with the terms thereof, the Company
executed and delivered to the Trustees a Thirty-fourth
Supplemental Indenture, dated as of March 31, 1992 (which
supplemental indenture is hereinafter sometimes called the
``Thirty-fourth Supplemental Indenture''); and
Whereas, the Company-Kansas caused the Thirty-fourth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on March 31, 1992, Film 1236, page 987),
and as a security agreement in the Office of Secretary of State
of Kansas (filed on March 31, 1992 and indexed as No. 1,780,893),
but paid no mortgage registration tax in connection with the
recordation of the Thirty-fourth Supplemental Indenture, no such
tax having been payable in connection with such recordation; and
Whereas, the Company caused the Thirty-fifth Supplemental
Indenture to be filed for record as a mortgage of real property
in the office of the Register of Deeds of Sedgwick County, Kansas
(filed on December 16, 1992, Film 301, page 0104), and as a
security agreement in the Office of Secretary of State of Kansas
(filed on December 16, 1992 and indexed as No. 1,861,886), but
paid no mortgage registration tax in connection with the
recordation of the Thirty-fifth Supplemental Indenture, no such
tax having been payable in connection with such recordation; and
Whereas, the Company-Kansas caused the Thirty-sixth
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on August 10, 1993, Film 1364, page 0515),
and as a security agreement in the Office of Secretary of State
of Kansas (filed on August 11, 1993 and indexed as
No. 1,936,501), but paid no mortgage registration tax in
connection with the recordation of the Thirty-sixth Supplemental
Indenture, no such tax having been payable in connection with
such recordation; and
Whereas, the Company-Kansas caused the Thirty-seventh
Supplemental Indenture to be filed for record as a mortgage of
real property in the office of the Register of Deeds of Sedgwick
County, Kansas (filed on January 18, 1994, Film 1411, page 0710),
and as a security agreement in the Office of Secretary of State
of Kansas (filed on January 18, 1994 and indexed as
No. 1,985,104), but paid no mortgage registration tax in
connection with the recordation of the Thirty-seventh
Supplemental Indenture, no such tax having been payable in
connection with such recordation; and
Whereas, the Company-West Virginia, the Company-Kansas or
the Company has from time to time caused to be filed in the
respective offices of the above-mentioned Registers of Deeds and
Secretary of State affidavits executed by the Trustees under the
Mortgage, preserving and continuing the lien thereof either as a
chattel mortgage in accordance with the provisions of K.S.A. 58-
303 (Section 58-303 of the General Statutes of Kansas 1935) or as
a security agreement under the provisions of K.S.A. 84-9-401 et
seq.; and
Whereas, in addition to the aforesaid filings for record in
the respective offices of the above-mentioned Registers of Deeds,
the Company-West Virginia, the Company-Kansas or the Company has
filed copies of the Mortgage and the First through Thirty-seventh
Supplemental Indentures, certified as true by it, with the
Secretary of State of Kansas; and
Whereas, the Company-West Virginia, the Company-Kansas or
the Company has heretofore issued, in accordance with the
provisions of the Mortgage, as heretofore supplemented, the
following series of First Mortgage Bonds:
Principal Principal
Amount Amount
Series Issued Outstanding
3-3/8% Series due 1970. . . $16,000,000 None
3-1/8% Series due 1978. . . 5,000,000 None
2-3/4% Series due 1979. . . 3,000,000 None
3-3/8% Series due 1982. . . 12,000,000 None
3-5/8% Series due 1983. . . 10,000,000 None
3-3/8% Series due 1985. . . 10,000,000 None
3-3/8% Series due 1986. . . 7,000,000 None
4-5/8% Series due 1991. . . 7,000,000 None
5-5/8% Series due 1996. . . 16,000,000 $16,000,000
8-1/2% Series due 2000. . . 35,000,000 None
8-1/8% Series due 2001. . . 35,000,000 None
7-3/8% Series due 2002. . . 25,000,000 None
9-5/8% Series due 2005. . . 40,000,000 None
6% Series due 1985. . . . . 7,000,000 None
7-3/4% Series due 2005. . . 12,500,000 None
8-3/8% Series due 2006. . . 25,000,000 None
8-1/2% Series due 2007. . . 25,000,000 None
6% Series due 2007. . . . . 10,000,000 10,000,000
5-7/8% Series due 2007. . . 21,940,000 21,940,000
8-7/8% Series due 2008. . . 30,000,000 None
6.80% Series due 2004 . . . 14,500,000 14,500,000
16-1/4% Series due 1987 . . 30,000,000 None
6-1/2% Series due 1983. . . 15,000,000 None
7-1/4% Series due 1983. . . 25,500,000 None
14-7/8% Series due 1987-1991 30,000,000 None
16% Series due 1996 . . . . 25,000,000 None
15-3/4% Series due 1989 . . 40,000,000 None
13-1/2% Series due 1989 . . 100,000,000 None
14.05% Series due 1991. . . 30,000,000 None
14-1/8% Series due 1991 . . 20,000,000 None
10-7/8% Series due 1987 . . 30,000,000 None
9-3/4% Series due 2016. . . 50,000,000 None
7.00% Series A due 2031 . . 18,900,000 18,900,000
7.00% Series B due 2031 . . 308,600,000 308,600,000
7.60% Series due 2003 . . . 135,000,000 135,000,000
6-1/2% Series due 2005. . . 65,000,000 65,000,000
6.20% Series due 2006 . . . 100,000,000 100,000,000
hereinafter sometimes called Bonds of the First through Thirty-
seventh Series; and
Whereas, Section 8 of the Mortgage provides that the form of
each series of bonds (other than the First Series) issued
thereunder and of the coupons to be attached to the coupon bonds
of such series shall be established by Resolution of the Board of
Directors of the Company and that the form of such series, as
established by said Board of Directors, shall specify the
descriptive title of the bonds and various other terms thereof,
and may also contain such provisions not inconsistent with the
provisions of the Mortgage as the Board of Directors may, in its
discretion, cause to be inserted therein expressing or referring
to the terms and conditions upon which such bonds are to be
issued and/or secured under the Mortgage; and
Whereas, Section 120 of the Mortgage provides, among other
things, that any power, privilege or right expressly or impliedly
reserved to or in any way conferred upon the Company by any
provision of the Mortgage whether such power, privilege or right
is in any way restricted or is unrestricted, may be in whole or
in part waived or surrendered or subjected to any restriction if
at the time unrestricted or to additional restriction if already
restricted, and the Company may enter into any further covenants,
limitations or restrictions for the benefit of any one or more
series of bonds issued thereunder, or the Company may cure any
ambiguity contained therein or in any supplemental indenture, or
may establish the terms and provisions of any series of bonds
other than said First Series, by an instrument in writing
executed and acknowledged by the Company in such manner as would
be necessary to entitle a conveyance of real estate to record in
all of the states in which any property at the time subject to
the lien of the Mortgage shall be situated; and
Whereas, the Company now desires to create a new series of
bonds; and
Whereas, the execution and delivery by the Company of this
Thirty-eighth Supplemental Indenture, and the terms of the bonds
of the Thirty-eighth Series, hereinafter referred to, have been
duly authorized by the Board of Directors of the Company by
appropriate Resolutions of said Board of Directors;
Now, Therefore, This Indenture Witnesseth:
That Kansas Gas and Electric Company, in consideration of
the premises and of One Dollar ($1) to it duly paid by the
Trustees at or before the ensealing and delivery of these
presents, the receipt whereof is hereby acknowledged, and in
further evidence of assurance of the estate, title and rights of
the Trustees and in order further to secure the payment both of
the principal of and interest and premium, if any, on the bonds
from time to time issued under the Mortgage, according to their
tenor and effect and the performance of all the provisions of the
Mortgage (including any instruments supplemental thereto and any
modification made as in the Mortgage provided) and of said bonds,
hereby grants, bargains, sells, releases, conveys, assigns,
transfers, mortgages, pledges, sets over and confirms (subject,
however, to Excepted Encumbrances as defined in Section 6 of the
Mortgage) unto Morgan Guaranty Trust Company of New York and to
W. A. Spooner, as Trustees under the Mortgage, and to their
successor or successors in said trust, and to said Trustees and
their successors and assigns forever, all property, real,
personal and mixed, acquired by the Company after the date of
the execution and delivery of the Mortgage, in addition to
property covered by the First through the Thirty-seventh
Supplemental Indentures (except any herein or in the Mortgage, as
heretofore supplemented, expressly excepted), now owned or,
subject to the provisions of Section 87 of the Mortgage,
hereafter acquired by the Company and wheresoever situated,
including (without in anywise limiting or impairing by the
enumeration of the same the scope and intent of the foregoing or
of any general description contained in this Thirty-eighth
Supplemental Indenture) all lands, flowage rights, water rights,
flumes, raceways, dams, rights of way and roads; all steam and
power houses, gas plants, street lighting systems, standards and
other equipment incidental thereto, telephone, radio and
television systems, air-conditioning systems and equipment
incidental thereto, water works, steam heat and hot water plants,
lines, service and supply systems, bridges, culverts, tracks,
rolling stock, ice or refrigeration plants and equipment, street
and interurban railway systems, offices, buildings and other
structures and the equipment thereof; all machinery, engines,
boilers, dynamos, electric and gas machines, regulators, meters,
transformers, generators, motors, electrical, gas and mechanical
appliances, conduits, cables, water, steam heat, gas or other
pipes, gas mains and pipes, service pipes, fittings, valves and
connections, pole and transmission lines, wires, cables, tools,
implements, apparatus, furniture, chattels and choses in action;
all municipal and other franchises; all lines for the
transmission and distribution of electric current, gas, steam
heat or water for any purpose, including poles, wires, cables,
pipes, conduits, ducts and all apparatus for use in connection
therewith; all real estate, lands, easements, servitudes,
licenses, permits, franchises, privileges, rights of way and
other rights in or relating to real estate or the occupancy of
the same and (except as herein or in the Mortgage, as heretofore
supplemented, expressly excepted), all the right, title and
interest of the Company in and to all other property of any kind
or nature appertaining to and/or used and/or occupied and/or
enjoyed in connection with any property hereinbefore or in the
Mortgage, as heretofore supplemented, described.
Together With all and singular the tenements, hereditaments
and appurtenances belonging or in anywise appertaining to the
aforesaid property or any part thereof, with the reversion and
reversions, remainder and remainders and (subject to the
provisions of Section 57 of the Mortgage) the tolls, rents,
revenues, issues, earnings, income, product and profits thereof,
and all the estate, right, title and interest and claim
whatsoever, at law as well as in equity, which the Company now
has or may hereafter acquire in and to the aforesaid property and
franchises and every part and parcel thereof.
It Is Hereby Agreed by the Company that, subject to the
provisions of Section 87 of the Mortgage, all the property,
rights and franchises acquired by the Company after the date
hereof (except any herein or in the Mortgage, as heretofore
supplemented, expressly excepted), shall be as fully embraced
within the lien hereof and the lien of the Mortgage, as if such
property, rights and franchises were now owned by the Company and
were specifically described herein and conveyed hereby.
Provided that the following are not and are not intended to
be now or hereafter granted, bargained, sold, released, conveyed,
assigned, transferred, mortgaged, pledged, set over or confirmed
hereunder and are hereby expressly excepted from the lien and
operation of this Thirty-eighth Supplemental Indenture and from
the lien and operation of the Mortgage, viz.: (1) cash, shares
of stock and obligations (including bonds, notes and other
securities) not hereafter specifically pledged, paid, deposited
or delivered under the Mortgage or covenanted so to be;
(2) merchandise, equipment, materials or supplies held for the
purpose of sale in the usual course of business and fuel, oil and
similar materials and supplies consumable in the operation of any
properties of the Company; vehicles and automobiles; (3) bills,
notes and accounts receivable, and all contracts, leases and
operating agreements not specifically pledged under the Mortgage
or covenanted so to be; and (4) electric energy, and other
materials or products generated, manufactured, produced or
purchased by the Company for sale, distribution or use in the
ordinary course of its business; provided, however, that the
property and rights expressly excepted from the lien and
operation of the Mortgage and this Thirty-eighth Supplemental
Indenture in the above subdivisions (2) and (3) shall (to the
extent permitted by law) cease to be so excepted in the event
that either or both of the Trustees or a receiver or trustee
shall enter upon and take possession of the Mortgaged and Pledged
Property in the manner provided in Article XII of the Mortgage by
reason of the occurrence of a Default as defined in said
Article XII.
There is expressly excepted from the lien of the Mortgage
and from the lien hereof all property of the Company located in
the State of Missouri now owned or hereafter acquired unless such
property in the State of Missouri shall be subjected to the lien
of the Mortgage by an indenture or indentures supplemental
thereto, pursuant to authorization by the Board of Directors of
the Company.
To Have And To Hold all such properties, real, personal and
mixed, granted, bargained, sold, released, conveyed, assigned,
transferred, mortgaged, pledged, set over or confirmed by the
Company as aforesaid, or intended so to be, unto the Trustees,
their successors and assigns forever.
In Trust Nevertheless, for the same purposes and upon the
same terms, trusts and conditions and subject to and with the
same provisos and covenants as are set forth in the Mortgage, as
supplemented, this Thirty-eighth Supplemental Indenture being
supplemental thereto.
And It Is Hereby Covenanted by the Company that all the
terms, conditions, provisos, covenants and provisions contained
in the Mortgage, as supplemented, shall affect and apply to the
property hereinbefore described and conveyed and to the estate,
rights, obligations and duties of the Company and Trustees and
the beneficiaries of the trust with respect to said property, and
to the Trustees and their successors as Trustees of said property
in the same manner and with the same effect as if the said
property had been owned by the Company at the time of the
execution of the Mortgage, and had been specifically and at
length described in and conveyed to the Trustees by the Mortgage
as a part of the property therein stated to be conveyed.
The Company further covenants and agrees to and with the
Trustees and their successors in said trust under the Mortgage,
as follows:
ARTICLE I.
THIRTY-EIGHTH SERIES OF BONDS
Section A. 1. There shall be a series of bonds designated
``5.10% Series due 2023'' (herein sometimes referred to as the
``Thirty-eighth Series''), each of which shall also bear the
descriptive title, First Mortgage Bond, and the form thereof,
which is established by Resolution of the Board of Directors of
the Company, shall contain suitable provisions with respect to
the matters hereinafter in this Article I specified. Bonds of
the Thirty-eighth Series shall be limited to $13,982,500 in
aggregate principal amount, except as provided in Section 16 of
the Mortgage, shall mature on March 1, 2023, and shall be issued
as fully registered bonds in denominations of Five Thousand
Dollars and in any multiple or multiples of Five Thousand Dollars
(except for one Bond of the Thirty-eighth Series, which shall be
in the denomination of $2,500 or any integral multiple thereof).
Bonds of the Thirty-eighth Series shall bear interest at the rate
of 5.10% per annum, payable semi-annually on March 1 and
September 1 of each year, the first payment to be made on
September 1, 1994 for the period from March 1, 1994 to September
1, 1994. The principal of and interest on bonds of the Thirty-
eighth Series shall be payable at the office or agency of the
Company in the Borough of Manhattan, The City of New York, in
such coin or currency of the United States of America as at the
time of payment is legal tender for public and private debts.
Bonds of the Thirty-eighth Series shall be dated as in Section 10
of the Mortgage provided.
2. Upon the redemption, in whole or in part, of the City of
La Cygne, Kansas, Pollution Control Revenue Refunding Bonds
(Kansas Gas and Electric Company Project) Series 1994
(hereinafter referred to as the ``1994 La Cygne Bonds''), issued
under the Indenture of Trust, dated as of March 1, 1994
(hereinafter referred to as the ``La Cygne Indenture''), of the
City of La Cygne, Kansas, bonds of the Thirty-eighth Series shall
be redeemed in whole or in like part. To effect the redemption
of bonds of the Thirty-eighth Series, the trustee under the La
Cygne Indenture (hereinafter referred to as the ``La Cygne
Trustee'') shall deliver to the Corporate Trustee (and mail a
copy thereof to the Company) a written demand (hereinafter
referred to as a ``La Cygne Redemption Demand'') for the
redemption of bonds of the Thirty-eighth Series equal in
principal amount to the principal amount of the 1994 La Cygne
Bonds to be redeemed. The La Cygne Redemption Demand shall be
signed by the President, a Vice President, an Assistant Vice
President or a Trust Officer of the La Cygne Trustee and shall
state: (1) the aggregate principal amount of the 1994 La Cygne
Bonds then outstanding under the La Cygne Indenture; (2) the
principal amount of the 1994 La Cygne Bonds to be redeemed;
(3) the interest thereon to be payable on the redemption date;
(4) the redemption date and that notice thereof has been given as
required in the La Cygne Indenture; (5) in the case of an
optional redemption of the 1994 La Cygne Bonds, that there are
sufficient available funds in the Bond Fund established pursuant
to the La Cygne Indenture to effect such redemption; and (6) that
the Corporate Trustee is thereby instructed to call for
redemption bonds of the Thirty-eighth Series equal in principal
amount to the principal amount of the 1994 La Cygne Bonds
specified in (2) above. The La Cygne Redemption Demand shall
also contain a waiver of notice of such redemption by the La
Cygne Trustee, as holder of all bonds of the Thirty-eighth Series
then outstanding. The Corporate Trustee may conclusively presume
the statements contained in the La Cygne Redemption Demand to be
correct. Redemption of bonds of the Thirty-eighth Series shall
be at the principal amount of the bonds to be redeemed, together
with accrued interest to the redemption date, and such amount
shall become and be due and payable on the redemption date. The
Company hereby covenants that, if a La Cygne Redemption Demand
shall be delivered to the Corporate Trustee, the Company, subject
to subdivision (III) of this Article I, will deposit, on or
before the redemption date, with the Corporate Trustee, in
accordance with Article X of the Mortgage, an amount in cash
sufficient to redeem the bonds of the Thirty-eighth Series so
called for redemption.
3. All bonds of the Thirty-eighth Series shall be pledged
by the Company with the La Cygne Trustee to secure the payment of
the principal of, and interest on, the 1994 La Cygne Bonds. The
obligation of the Company to make payments with respect to the
principal of and interest on bonds of the Thirty-eighth Series
shall be fully or partially, as the case may be, satisfied and
discharged to the extent that, at the time that any such payment
shall be due, the then due principal of and interest on the 1994
La Cygne Bonds shall have been fully or partially paid, or there
shall be in the Bond Fund established pursuant to the La Cygne
Indenture sufficient available funds to fully or partially pay
the then due principal of and interest on the 1994 La Cygne
Bonds. The Corporate Trustee may conclusively presume that the
obligation of the Company to make payments with respect to the
principal of and interest on bonds of the Thirty-eighth Series
shall have been fully satisfied and discharged unless and until
the Corporate Trustee shall have received a written notice from
the La Cygne Trustee, signed by its President, a Vice President
or a Trust Officer, stating (i) that timely payment of the
principal of or interest on the 1994 La Cygne Bonds required to
be made by the Company has not been made, (ii) that there are not
sufficient available funds in the Bond Fund to make such payment,
and (iii) the amount of funds, in addition to available funds in
the Bond Fund, required to make such payment.
4. At the option of the registered owner, any bonds of the
Thirty-eighth Series, upon surrender thereof, for cancellation,
at the office or agency of the Company in the Borough of
Manhattan, The City of New York, shall be exchangeable for a like
aggregate principal amount of bonds of the same series of other
authorized denominations. The bonds of the Thirty-eighth Series
may bear such legends as may be necessary to comply with any law
or with any rules or regulations made pursuant thereto or with
the rules or regulations of any stock exchange or to conform to
usage with respect thereto.
5. Bonds of the Thirty-eighth Series shall be transferable
upon the surrender thereof, for cancellation together with a
written instrument of transfer in form approved by the registrar
duly executed by the registered owner or by his duly authorized
attorney, at the office or agency of the Company in the Borough
of Manhattan, The City of New York.
ARTICLE II.
MISCELLANEOUS PROVISIONS
Section A. All bonds of the Thirty-eighth Series acquired
by the Company shall forthwith be delivered to the Corporate
Trustee for cancellation.
Section B. Section 64 of the Mortgage is hereby deleted in
its entirety.
Section C. Subject to the amendments provided for in this
Thirty-eighth Supplemental Indenture, the terms defined in the
Mortgage, as heretofore supplemented, shall, for all purposes of
this Thirty-eighth Supplemental Indenture, have the meanings
specified in the Mortgage, as heretofore supplemented.
Section D. The Trustees hereby accept the trusts herein
declared, provided, created or supplemented and agree to perform
the same upon the terms and conditions set forth herein and in
the Mortgage, as heretofore amended and supplemented, and upon
the following terms and conditions:
The Trustees shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of
this Thirty-eighth Supplemental Indenture or for or in respect of
the recitals contained herein, all of which recitals are made by
the Company solely. In general, each and every term and
condition contained in Article XVI of the Mortgage, as heretofore
amended and supplemented, shall apply to and form part of this
Thirty-eighth Supplemental Indenture with the same force and
effect as if the same were herein set forth in full with such
omissions, variations and insertions, if any, as may be
appropriate to make the same conform to the provisions of this
Thirty-eighth Supplemental Indenture.
Section E. Subject to the provisions of Article XV and
Article XVI of the Mortgage, as heretofore amended and
supplemented, whenever in this Thirty-eighth Supplemental
Indenture any of the parties hereto is named or referred to, this
shall be deemed to include the successors or assigns of such
party, and all the covenants and agreements in this Thirty-eighth
Supplemental Indenture contained by or on behalf of the Company
or by or on behalf of the Trustees shall bind and inure to the
benefit of the respective successors and assigns of such parties
whether so expressed or not.
Section F. Nothing in this Thirty-eighth Supplemental
Indenture, expressed or implied, is intended, or shall be
construed, to confer upon, or to give to, any person, firm or
corporation, other than the parties hereto and the holders of the
bonds and coupons Outstanding under the Mortgage, any right,
remedy or claim under or by reason of this Thirty-eighth
Supplemental Indenture or any covenant, condition, stipulation,
promise or agreement hereof, and all the covenants, conditions,
stipulations, promises and agreements in this Thirty-eighth
Supplemental Indenture contained by or on behalf of the Company
shall be for the sole and exclusive benefit of the parties
hereto, and of the holders of the bonds and of the coupons
Outstanding under the Mortgage.
Section G. The Company reserves the right, subject to
appropriate corporate action, but without any consent or other
action by holders of bonds of the Thirty-eighth Series or of any
subsequent series of bonds, to make such amendments to the
Mortgage, as supplemented, as shall be necessary in order to (A)
permit the issuance of additional Prior Lien Bonds other than to
the Corporate Trustee (i) in a principal amount not to exceed the
principal amount of Bonds which could then be issued on the basis
of Property Additions under the Mortgage or (ii) upon the
redemption or retirement of Prior Lien Bonds secured by such
Prior Lien, (B) to remove the requirement that Prior Lien Bonds
be issued to the Corporate Trustee, (C) remove the provisions of
Article V which eliminate from the calculation of unfunded net
Property Additions available for issuance of Bonds the amount of
any Property Additions subject to a Prior Lien if the aggregate
amount of Outstanding Prior Lien Bonds is 15% or more of the sum
of the Outstanding Bonds and Prior Lien Bonds, and (D) make such
other amendments to the Mortgage as may be necessary or desirable
in the opinion of the Company to effect the foregoing.
Section H. This Thirty-eighth Supplemental Indenture shall
be executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same
instrument.
In Witness Whereof, KANSAS GAS AND ELECTRIC COMPANY has
caused its corporate name to be hereunto affixed, and this
instrument to be signed and sealed by its President or one of its
Vice Presidents, and its corporate seal to be attested by its
Secretary or one of its Assistant Secretaries for and in its
behalf, MORGAN GUARANTY TRUST COMPANY OF NEW YORK has caused its
corporate name to be hereunto affixed, and this instrument to be
signed and sealed by one of its Vice Presidents and its corporate
seal to be attested by one of its Assistant Secretaries, and has
hereunto set his hand and affixed his seal, all as of the day and
year first above written.
KANSAS GAS AND ELECTRIC COMPANY
By /s/ Kent R. Brown
Kent R. Brown
President
Attest:
/s/ Richard D. Terrill
Richard D. Terrill
Secretary
Executed, sealed and delivered by
KANSAS GAS AND ELECTRIC COMPANY,
in the presence of:
/s/ Stacy F. Kramer
/s/ Robert J. Knott
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Trustee
By /s/ Norma Pane
Norma Pane
Vice President
Attest:
/s/ Lorraine Eugenio
Assistant Secretary
/s/ W.A. Spooner
(W.A. Spooner)
Executed, sealed and delivered by
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK and W.A. SPOONER, in
the presence of:
/s/ Susan Donnelly
/s/ Evelyn Visocky
STATE OF KANSAS )
: ss.:
COUNTY OF SEDGWICK )
Be It Remembered, that on this 28th day of February, A.D.
1994, before me, the undersigned, a Notary Public within and for
the County and State aforesaid, came Kent R. Brown, the President
of KANSAS GAS AND ELECTRIC COMPANY, a corporation duly organized,
incorporated and existing under the laws of the State of Kansas,
who is personally known to me to be such officer, and who is
personally known to me to be the same person who executed, as such
officer, the within instrument of writing, and such person duly
acknowledged the execution of the same to be the act and deed of
said corporation and that said instrument of writing was so
executed by order of the Board of Directors of said corporation.
On this 28th day of February, 1994, before me appeared Kent R.
Brown, to me personally known, who being by me duly sworn did say
that he is the President of KANSAS GAS AND ELECTRIC COMPANY, and
that the seal affixed to the foregoing instrument is the corporate
seal of said corporation, and that said instrument was signed and
sealed in behalf of said corporation by authority of its Board of
Directors, and said Kent R. Brown acknowledged said instrument to
be the free act and deed of said corporation.
On the 28th day of February in the year 1994, before me
personally came Kent R. Brown to me known, who, being by me duly
sworn, did depose and say that he resides at 4907 Portwest Circle,
Wichita, Kansas; that he is the President of KANSAS GAS AND
ELECTRIC COMPANY, one of the corporations described in and which
executed the above instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of
Directors of said corporation, and that he signed his name thereto
by like order.
In Witness Whereof, I have hereunto subscribed my name and
affixed my official seal on the day and year above written.
/s/ Regina I. Degarmo
REGINA I. DEGARMO
NOTARY PUBLIC - STATE OF KANSAS
MY APPOINTMENT EXPIRES AUGUST 4, 1997
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
Be It Remembered, that on this 24th day of February, A.D.
1994, before me, the undersigned, a Notary Public within and for
the County and State aforesaid, came Norma Pane, a Vice President
of Morgan Guaranty Trust Company of New York, a corporation, duly
organized, incorporated and existing under the laws of the State of
New York, who is personally known to me to be such officer, and who
is personally known to me to be the same person who executed, as
such officer, the within instrument of writing, and such person
duly acknowledged the execution of the same to be the act and deed
of said corporation and that said instrument of writing was so
executed by authority of the Board of Directors of said
corporation.
On this 24th day of February, 1994, before me appeared Norma
Pane, to me personally known, who being by me duly sworn did say
that she is a Vice President of MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, and that the seal affixed to the foregoing instrument is
the corporate seal of said corporation, and that said instrument
was signed and sealed in behalf of said corporation by authority of
its Board of Directors, and said Norma Pane acknowledged said
instrument to be the free act and deed of said corporation.
On the 24th day of February in the year 1994, before me
personally came Norma Pane, to me known, who, being by me duly
sworn, did depose and say that she resides at 2057 63rd Street,
Brooklyn, New York; that she is a Vice President of MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, one of the corporations described in and
which executed the above instrument; that she knows the seal of
said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that she signed her name thereto
by like authority.
In Witness Whereof, I have hereunto subscribed my name and
affixed my official seal on the day and year above written.
/s/ Alison M. Levchuck
ALISON M. LEVCHUCK
NOTARY PUBLIC, STATE OF NEW YORK
NO. 4997425
QUALIFIED IN NASSAU COUNTY
COMMISSION EXPIRES JUNE 8, 1994
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 24th day of February in the year 1994, before me, the
undersigned, a Notary Public in and for the State of New York, in
the County of New York, personally appeared and came W. A. Spooner,
to me known and known to me to be the person described in and who
executed the within and foregoing instrument and whose name is
subscribed thereto and acknowledged to me that he executed the
same.
In Witness Whereof, I have hereunto subscribed my name and
affixed my official seal the day and year in this certificate first
above written.
/s/ Alison M. Levchuck
ALISON M. LEVCHUCK
NOTARY PUBLIC, STATE OF NEW YORK
NO. 4997425
QUALIFIED IN NASSAU COUNTY
COMMISSION EXPIRES JUNE 8, 1994
Exhibit 10(c)
KANSAS GAS AND ELECTRIC COMPANY
OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
I. PURPOSE
The purpose of the Plan is to improve the Company's ability
to attract and retain Outside Directors who will contribute
to the overall success of the Company.
II. DEFINITIONS
BENEFICIARY shall mean any person designated by the
Participant on a form supplied by the Plan Administrator and
if no beneficiary is designated, then the Participant's
estate.
BOARD shall mean the Board of Directors of the Company.
COMPANY shall mean Kansas Gas and Electric Company, a Kansas
corporation, or any successor thereto.
OUTSIDE DIRECTOR shall mean any director of the Company who
is not also an employee of the Company.
PARTICIPANT shall mean any Outside Director of the Company
who elects to defer fees hereunder.
PLAN shall mean Kansas Gas and Electric Company Outside
Directors' Deferred Compensation Plan as set forth in its
entirety in this document as it may be amended from time to
time.
PLAN ADMINISTRATOR shall mean such committee appointed by
the Board of Directors to act in said capacity.
PLAN YEAR shall mean the calendar year.
PRONOUNS Masculine pronouns used herein shall refer to men
or women or both and nouns and pronouns when stated in the
singular shall include the plural and when stated in the
plural shall include the singular, wherever appropriate.
III. EFFECTIVE DATE
The Plan will become effective on January 1, 1993.
IV. HISTORY
The Outside Directors of the Company are paid an annual
retainer and a per meeting fee. The Plan allows the Outside
Directors to elect to defer all, part, or none of their
retainer and/or meeting fees. The Outside Directors have
two investment alternatives from which to choose: Cash
Deferral and Phantom Stock.
V. ADMINISTRATION OF THE PLAN
The Plan shall be administered by such Committee as may be
appointed by the Board from time to time. Each designated
Plan Participant shall enter into a written agreement
(including the execution of the appropriate exhibits
thereto) with the Company which contains the detailed
provisions of the Plan.
VI. ELIGIBILITY
All Outside Directors of the Company shall be eligible to
participate.
VII. ELECTION TO DEFER
The Plan is a voluntary participation plan. The Outside
Director must irrevocably elect to defer the designated
portion of his annual retainer and/or meeting fees. Such
election is made by entering into a written agreement with
the Company prior to the Director providing service to the
Company as Director. All deferrals must be for a minimum of
six months.
Directors are elected in May of each year. To be eligible
to defer amounts during his initial year, the Director must
make the election to defer the amounts as soon as elected
but no later than May 31. This election is effective until
December 31 of the first year of the Director's term.
If during a year, it becomes necessary to replace a
Director, the new Director must make the election as soon as
possible after his appointment but not later than fourteen
(14) days after appointment.
For subsequent years, the agreement must be entered into on
or before December 31 of the year preceding the year for
which the deferral is to be effective. In years subsequent
to the execution of the above agreement, a new election to
defer shall be evidenced by the execution and delivery on or
before December 31 immediately prior to the year it is to be
effective, of a deferral election form prescribed for that
purpose by the Committee.
The Director must elect the amount, if any, to be deferred,
the deferral option and timing of payments. All of the
above are defined below.
VIII. AMOUNT TO BE DEFERRED
The Director may defer all, a portion or none of the annual
retainer, designated as a percentage of the retainer. The
Director may also defer all, a portion or none of the per
meeting fee, designated as a percentage of the fee.
IX. DEFERRAL PLAN OPTIONS
The Director may choose one of the following deferral
options: cash deferral or phantom stock. All amounts
deferred are subject to terms of the option elected. The
election is made as part of the election process of part
VII.
(a) Cash Deferral
Under the cash deferral option, the Director elects to
defer the receipt of the cash payment of all or a
portion of his annual retainer and/or meeting fee.
Interest will accrue at the rate defined in Part X.
(b) Phantom Stock
Under the phantom stock option, the Director elects to
defer all or a portion of his annual retainer and/or
meeting fee. The Director receives credit for "stock
units" that represent shares of Western Resources,
Inc.'s common stock equal to the amount deferred.
(1) The number of "stock units" received is dependent
on the fair market value of the common stock on the
measurement date.
(2) "Fractional stock units" will be accounted for as
non-interest bearing cash.
(3) The measurement date is the regular payment date
of the retainer and/or meeting fee. The "stock units"
will be measured at the closing price on the date the
deferred amount would have been paid.
(4) Dividend reinvestment is discussed in Part X.
X. DEFERRED COMPENSATION ACCOUNT
The Company will establish a separate "account" for each
Participant and will credit to said account the compensation
deferred by the Participant. The amount deferred under the
cash deferral option will earn interest at the New York
prime rate and will be credited quarterly (March 15, June
15, September 15, and December 15).
The Director's account is deemed to receive "dividends" on
the "units" of phantom stock equal to the dividends paid on
the common stock. The dividend received will be treated
similar to the Western Resources, Inc. Dividend Reinvestment
Program and will be used to purchase additional "units" of
the common stock at the closing price of the stock on the
date the common stock dividend is paid. Any fractional
stock units will be accounted for as non-interest bearing
cash. The account is also adjusted for any stock dividends,
stock splits, etc. In the event the Dividend Reinvestment
Program is modified in any way, dividends paid through this
Plan will be made in accordance with said modification. If
the Dividend Reinvestment Program is terminated, dividends
made through this Plan will continue to be reinvested in
accordance with the provisions of the terminated Dividend
Reinvestment Program.
The amount equal to the balance in the account of the
Participant, taking into account all credits, shall be the
Participant's deferred compensation benefit available from
time to time under the terms hereof.
XI. DISTRIBUTION FROM THE DEFERRED COMPENSATION ACCOUNT
By written irrevocable election made at the time of each
deferral election, the Director must select one of the
following methods for receipt of the balance in his deferred
compensation account:
(a) lump sum at termination; or
(b) paid monthly over a specified number of years
determined by the irrevocable election.
The balance in the deferred compensation account becomes
measurable at the end of the Director's term.
The balance to be distributed in the deferred compensation
account under the cash deferral option is the cash balance
of the account. The balance to be distributed in the
deferred compensation account under the phantom stock option
is an amount equal to the credited "stock units'" fair
market value at the time the account becomes measurable.
At the time the account balance becomes measurable, the
account balance is valued. From that date forward, any
remaining balance (i.e., balance during time of installment
payments) shall bear interest at the New York prime rate.
Distribution in the form elected by the Director shall
commence immediately upon the occurrence of any of the
following events: death, retirement, disability, or
termination, if such event occurs prior to the distribution
date elected by the Director.
The Director shall also designate a beneficiary to receive
the unpaid balance of the value of his account in the event
of his death prior to complete distribution of such unpaid
balance. If no beneficiary is designated, then his estate
will be deemed his beneficiary. Distribution after the
death of a Participant shall be in the form selected by the
Participant.
XII. STATE LAWS GOVERNING PLAN
This Plan shall be governed by the laws of the State of
Kansas.
AMENDMENT OR TERMINATION
This Plan shall continue in effect until amended or terminated by
the Company's Board of Directors. Any such amendment or
termination shall not adversely affect any agreement theretofore
entered into with a designated Director.
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT, made as of the ______ day of ______________,
19____, by and between Kansas Gas and Electric Company with
executive and general offices at 120 E. First Street, Wichita,
Kansas 66202 (hereinafter called the "Company"), and
______________________ residing at ________________________
(hereinafter called "Director").
WITNESSETH in consideration of the premises, and the mutual
promises and agreements herein contained, the parties hereto
agree as follows, intending to be legally bound hereby:
1. Agreement Incorporates Plan
The terms of Kansas Gas and Electric Company Outside
Directors' Deferred Compensation Plan (hereinafter referred
to as "Plan"), are hereby incorporated herein and made a
part hereof as if set out verbatim. Said Plan and this
Agreement set forth the terms which govern and control
Director's participation in the Plan.
2. Exhibits A and B are Incorporated Herein
Exhibit A, which is the Election Deferring Compensation
described in the Plan, is attached hereto and made a part
hereof. Exhibit B, which is Director's Designation of
Beneficiary, is attached hereto and made a part hereof.
3. Agreement to Participate
By execution of this Agreement, Director hereby agrees to
participate in the Plan pursuant to the terms hereof, elect
to defer compensation pursuant to Exhibit A, and designates
his Beneficiary pursuant to Exhibit B.
4. Restrictions Against Alienation
Neither the Director nor his Beneficiary shall have any
right to commute, sell, assign, transfer, or otherwise
convey or encumber the rights to receive any payments
hereunder, which payments and all the rights thereto are
expressly declared to be nonassignable and nontransferable.
5. Termination of the Agreement by the Company
The Company may terminate this Agreement at any time. If
the Company terminates this Agreement, the Company shall pay
Director or his Beneficiary an amount equal to the value of
his account as described in the Plan in the amount(s) and at
the time(s) elected by the Director hereunder.
6. What Constitutes Notice to the Director
Any notice to Director hereunder may be given either by hand
delivering it to Director or by depositing it in the United
States Mail, postage prepaid, return receipt requested,
addressed to his last known address.
7. Advance Disclaimer of Any Waiver on the Part of the Company
Failure to insist upon strict compliance with any of the
terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant, or condition, nor shall any
waiver or relinquishment of any right or power hereunder at
any one or more times be deemed a waiver or relinquishment
of such right or power at any other time or times.
8. Effect of Invalidity of Any Part of the Agreement Upon the
Whole Agreement
The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any
other provision.
9. Agreement Binding on Any Successor Owner
Except as otherwise provided herein, this Agreement shall
inure to the benefit of and be binding upon Director, his
heirs, executors, and administrators and upon the Company,
its successors and assigns, including but not limited to any
corporation which may acquire all or substantially all of
the Company's assets and business or with or into which the
Company may be consolidated or merged.
10. State Laws Governing this Agreement
This Agreement shall be governed by the laws of the State of
Kansas.
11. Counterparts of this Agreement and Director's
Acknowledgement that he has Read and Understands all parts
of this Agreement
This Agreement has been executed in several counterparts,
each of which shall be an original, but such counterparts
shall together constitute but one (1) instrument. Director
acknowledges that he has read all parts of the Plan and this
Agreement, including Exhibits A and B annexed hereto and
made a part of this Agreement and has sought and obtained
satisfactory answer(s) to any question(s) he had as to his
rights, obligations, and potential liabilities under this
Agreement prior to affixing his signature and initials to
any part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ATTEST: KANSAS GAS AND ELECTRIC COMPANY
______________________ By: _______________________________
Name: _____________________________
WITNESS: Title: ____________________________
_____________________
____________________________________
Director
Name:_______________________________
(Please Print)
Exhibit 12
KANSAS GAS AND ELECTRIC COMPANY
Computations of Ratio of Earnings to Fixed Charges
(Thousands of Dollars)
1992
Pro Forma April 1 | January 1
1993 1992 (2) to Dec. 31 | to March 31
(Successor) | (Predecessor)
Net Income. . . . . . . . . . . . . $ 108,103 $ 77,981 $ 71,941 | $ 6,040
Taxes on Income . . . . . . . . . . 46,896 20,378 23,551 | (3,173)
Net Income Plus Taxes. . . . . 154,999 98,359 95,492 | 2,867
|
Fixed Charges: |
Interest on Long-Term Debt. . . . 53,908 57,862 42,889 | 14,973
Interest on Other Indebtedness. . 6,075 15,121 11,777 | 3,344
Interest on Corporate-owned |
Life Insurance Borrowings . . . 11,865 7,155 5,294 | 1,861
Interest Applicable to Rentals. . 24,967 30,212 22,133 | 8,079
Total Fixed Charges . . . . . 96,815 110,350 82,093 | 28,257
|
Earnings (1). . . . . . . . . . . . $251,814 $208,709 $177,585 | $ 31,124
|
Ratio of Earnings to Fixed Charges. 2.60 1.89 2.16 | 1.10
Year Ended December 31,
(Predecessor)
1991 1990 1989
Net Income. . . . . . . . . . . . . $ 53,602 $ 64,184 $ 47,493
Taxes on Income . . . . . . . . . . 15,955 17,916 12,266
Net Income Plus Taxes. . . . . 69,557 82,100 59,759
Fixed Charges:
Interest on Long-Term Debt. . . . 59,668 59,263 65,772
Interest on Other Indebtedness. . 17,838 17,432 18,446
Interest on Corporate-owned
Life Insurance Borrowings . . . 7,304 7,134 6,923
Interest Applicable to Rentals. . 32,193 32,119 32,150
Total Fixed Charges . . . . . 117,003 115,948 123,291
Earnings (1). . . . . . . . . . . . $186,560 $198,048 $183,050
Ratio of Earnings to Fixed Charges. 1.59 1.71 1.48
(1) Earnings are deemed to consist of net income to which has been added income taxes (including
net deferred investment tax credit) and fixed charges. Fixed charges consist of all
interest on indebtedness, amortization of debt discount and expense, and the portion of
rental expense which represents an interest factor.
(2) The pro forma information for the year ended December 31, 1992 was derived by combining the
historical information of the three month period ended March 31, 1992 (Predecessor) and the
nine month period ended December 31, 1992 (Successor). No purchase accounting adjustments
were made for periods prior to the Merger in determining pro forma amounts because such
adjustments would be immaterial. (See Note 1 of Notes to Financial Statements)
Exhibit 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 10-K, into the Company's previously filed
Registration Statement File No. 33-50075 of Kansas Gas and Electric Company on
Form S-3., Nos. 33-23021, 33-23022, 33-23023, and 33-47344 of Western
Resources, Inc. on Form S-8 and Nos. 33-49467, 33-49505, 33-49553, and 33-
50069 of Western Resources, Inc. on Form S-3.
ARTHUR ANDERSEN & CO.
Kansas City, Missouri,
March 18, 1994
Exhibit 23(b)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements No.
33-50075 of Kansas Gas and Electric Company on Form S-3, Nos. 33-23021, 33-
23022, 33-23023 and 33-47344 of Western Resources, Inc. on Form S-8 and Nos.
33-49467, 33-49505, 33-49553, and 33-50069 of Western Resources, Inc. on Form
S-3 of our report dated January 29, 1993 appearing in this Annual Report on
Form 10-K of Kansas Gas and Electric Company for the year ended December 31,
1993.
DELOITTE & TOUCHE
Kansas City, Missouri
March 18, 1994
