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f8ksale.htm

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 8-K
 
Current Report
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
 
Date of Report (Date of earliest event reported): June 6, 2008 (June 2, 2008)
 

 
Commission
File Number
  
 
Registrant, State of Incorporation,
Address and Telephone Number
  
I.R.S. Employer
Identification
Number
         
         
001-32206
  
GREAT PLAINS ENERGY INCORPORATED
  
43-1916803
   
(A Missouri Corporation)
    
   
1201 Walnut Street
    
   
Kansas City, Missouri  64106
    
   
(816) 556-2200
    
         
   
NOT APPLICABLE
(Former name or former address,
if changed since last report)
    
         

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
[  ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
[  ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
 
(17 CFR 240.14d-2(b))
   
[  ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


 
 
 


Item 2.01
Completion of Acquisition or Disposition of Assets

On June 2, 2008, the previously announced sale of Strategic Energy, L.L.C. ("Strategic Energy"), a Delaware limited liability company and an indirect wholly owned subsidiary of Great Plains Energy Incorporated (“Great Plains Energy” or the "Company"), to Direct Energy Services, LLC ("Direct Energy"), an indirect wholly owned subsidiary of Centrica plc ("Centrica"), was completed. The sale was effected pursuant to the Purchase Agreement dated as of April 1, 2008 among Great Plains Energy, Custom Energy, and Direct Energy (the "Purchase Agreement"), a copy of which was attached as Exhibit 10.1 to the Company's Current Report on Form 8-K filed April 2, 2008. At closing, Great Plains Energy received $305.3 million in cash, representing the $300 million purchase price plus an estimated working capital adjustment of $5.3 million subject to final adjustment pursuant to the terms of the Purchase Agreement.  In connection with the closing, Great Plains Energy also contributed $14.3 million to Strategic Energy for employee compensation expense incurred relating to amounts associated with Strategic Energy incentive compensation, retention, employment and change in control agreements and plans, and the vesting of restricted stock and performance share awards.

The foregoing description of the transaction is qualified by reference to the full text of the Purchase Agreement and the description contained in the Company's Form 8-K filed April 1, 2008.

Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On June 2, 2008, Shahid Malik, who was President and Chief Executive Officer of Strategic Energy and Executive Vice President of the Company, ceased to be an executive officer of the Company due to the effectiveness of his resignation from the Company in connection with the closing of the sale of Strategic Energy described in Item 2.01.  In connection with that closing, Mr. Malik received approximately $3.1 million in cash and became vested in 16,675 shares of Company stock, which cash and vesting are reflected in the employee compensation expense reported in Item 2.01.

Item 9.01
Financial Statements and Exhibits
   
(b)  Pro forma financial information
   
 
The required pro forma financial information is attached hereto as Exhibit 99.
   
(d) Exhibit No. 
   
99
Great Plains Energy Incorporated unaudited pro forma condensed consolidated financial information.
   

 
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
GREAT PLAINS ENERGY INCORPORATED
   
 
/s/ Terry Bassham
 
Terry Bassham
 
Executive Vice President- Finance & Strategic Development and Chief Financial Officer
   

Date: June 6, 2008


 
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proformafinancial.htm
Exhibit 99


GREAT PLAINS ENERGY INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

In April 2008, the Board of Directors approved management’s recommendation to sell Strategic Energy, LLC (Strategic Energy) and Great Plains Energy entered into an agreement with Direct Energy Services, LLC (Direct Energy), a subsidiary of Centrica plc, under which Direct Energy agreed to acquire all of Great Plains Energy’s interest in Strategic Energy.  The sale closed on June 2, 2008.  The Unaudited Pro Forma Condensed Consolidated Financial Statements have been prepared to reflect the sale of Great Plains Energy’s interest in Strategic Energy to Direct Energy.
 
The Unaudited Pro Forma Condensed Consolidated Statements of Income reflect the historical consolidated statements of income for Great Plains Energy giving effect to the sale as if it had occurred on January 1, 2007.  The Unaudited Pro Forma Condensed Consolidated Balance Sheet reflects the historical consolidated balance sheet of Great Plains Energy giving effect to the sale as if it had occurred on March 31, 2008.  These Unaudited Consolidated Pro Forma Financial Statements should be read in conjunction with the:
 
·  
Separate unaudited financial statements of Great Plains Energy as of and for the three months ended March 31, 2008, included in the Great Plains Energy Quarterly Report on Form 10-Q for the three months ended March 31, 2008, which is incorporated by reference into this document; and
 
·  
Separate historical financial statements of Great Plains Energy as of and for the year ended December 31, 2007, included in the Great Plains Energy Annual Report on Form 10-K for the year ended December 31, 2007, which is incorporated by reference into this document.
 
The historical financial information of Great Plains Energy, as adjusted as of and for the three months ended March 31, 2008, reflected in the Unaudited Pro Forma Condensed Consolidated Financial Information is unaudited.  The historical financial information of Great Plains Energy, as adjusted for the year ended December 31, 2007, reflected in the Unaudited Pro Forma Condensed Consolidated Financial Information is derived from the audited financial statements of Great Plains Energy but does not include all disclosures required by accounting principles generally accepted in the United States of America.  The Unaudited Pro Forma Condensed Consolidated Financial Information is provided for information purposes only and is not necessarily indicative of what Great Plains Energy’s financial position or results of operations actually would have been had the sale been completed at the dates indicated.  In addition, the Unaudited Pro Forma Condensed Consolidated Financial Information is not intended to project the future financial position or results of operations of Great Plains Energy subsequent to the sale.
 
In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” Strategic Energy will be reported as discontinued operations beginning with Great Plains Energy’s Form 10-Q for the quarterly period ending June 30, 2008.
 
1
 
                 
GREAT PLAINS ENERGY
  
Unaudited Pro Forma Condensed Consolidated Statement of Income
  
For the Three Months Ended March 31, 2008
  
                 
 
Great Plains
    
  Great Plains
 
Energy
Pro Forma
  Energy
 
Historical
Adjustments
  Pro Forma
Operating Revenues
(millions, except per shares amounts)
  
Electric revenues - KCP&L
$
 297.6  
$
 -      
$
 297.6  
Electric revenues - Strategic Energy
   527.6     (527.6 ) A     -  
Other revenues
   0.2     (0.2 ) A     -  
Total
   825.4     (527.8 )       297.6  
Operating Expenses
                      
Fuel
   54.7     -         54.7  
Purchased power - KCP&L
   30.8     -         30.8  
Purchased power - Strategic Energy
   417.5     (417.5 ) A     -  
Operating expenses - KCP&L
   74.0     -         74.0  
Selling, general and administrative - non-regulated
   27.0     (18.1 ) A     8.9  
Maintenance
   30.2     -         30.2  
Depreciation and amortization
   52.2     (2.0 ) A     50.2  
General taxes
   30.6     (0.9 ) A     29.7  
Total
   717.0     (438.5 )       278.5  
Operating income
   108.4     (89.3 )       19.1  
Non-operating income
   10.2     (1.1 ) A     9.1  
Non-operating expenses
   (1.1 )    -         (1.1 )
Interest charges
   (42.1 )    0.5   A     (41.6 )
Income (loss) from continuing operations before income taxes
                      
and loss from equity investments
   75.4     (89.9 )       (14.5 )
Income taxes
   (27.5 )   37.0   A     9.5  
Loss from equity investments, net of income taxes
   (0.4 )    -         (0.4 )
Income (loss) from continuing operations
   47.5     (52.9 )       (5.4 )
Preferred stock dividend requirements
   0.4     -         0.4  
Income (loss) from continuing operations available for common
                      
shareholders
$
 47.1  
$
 (52.9 )    
$
 (5.8 )
                       
Average number of basic common shares outstanding
   85.9     -         85.9  
                       
Basic and diluted earnings (loss) per common share from
                      
continuing operations
$
 0.55  
$
 (0.62 )    
$
 (0.07 )
                       
The accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements are an integral
  
part of these statements.
                      
 
2
 
                 
GREAT PLAINS ENERGY
  
Unaudited Pro Forma Condensed Consolidated Statement of Income
  
For the Year Ended December 31, 2007
  
                 
 
Great Plains
    
  Great Plains
 
Energy
Pro Forma
  Energy
 
Historical
Adjustments
  Pro Forma
Operating Revenues
(millions, except per shares amounts)
  
Electric revenues - KCP&L
$
 1,292.7  
$
 -      
$
 1,292.7  
Electric revenues - Strategic Energy
   1,972.8     (1,972.8 ) A     -  
Other revenues
   1.6     (1.6 ) A     -  
Total
   3,267.1     (1,974.4 )       1,292.7  
Operating Expenses
                      
Fuel
   245.5     -         245.5  
Purchased power - KCP&L
   101.0     -         101.0  
Purchased power - Strategic Energy
   1,830.7     (1,830.7 ) A     -  
Skill set realignment deferral
   (8.9 )    -         (8.9 )
Operating expenses - KCP&L
   295.8     -         295.8  
Selling, general and administrative - non-regulated
   91.7     (70.8 ) A     20.9  
Maintenance
   91.7     -         91.7  
Depreciation and amortization
   183.8     (8.2 ) A     175.6  
General taxes
   115.8     (1.4 ) A     114.4  
Other
   0.2     -         0.2  
Total
   2,947.3     (1,911.1 )       1,036.2  
Operating income
   319.8     (63.3 )       256.5  
Non-operating income
   12.4     (3.6 ) A     8.8  
Non-operating expenses
   (5.7 )    0.1   A     (5.6 )
Interest charges
   (93.8 )    1.9   A     (91.9 )
Income from continuing operations before income taxes
                      
and loss from equity investments
   232.7     (64.9 )       167.8  
Income taxes
   (71.5 )    26.6   A     (44.9 )
Loss from equity investments, net of income taxes
   (2.0 )    -         (2.0 )
Income from continuing operations
   159.2     (38.3 )       120.9  
Preferred stock dividend requirements
   1.6     -         1.6  
Income from continuing operations available for common
                      
shareholders
$
 157.6  
$
 (38.3 )    
$
 119.3  
                       
Average number of basic common shares outstanding
   84.9     -         84.9  
Average number of diluted common shares outstanding
   85.2     -         85.2  
                       
Basic earnings per common share from continuing operations
$
 1.86  
$
 (0.45 )    
$
 1.41  
Diluted earnings per common share from continuing operations
$
 1.85  
$
 (0.45 )    
$
 1.40  
                       
The accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements are an integral
  
part of these statements.
                      
 
3
 
                 
GREAT PLAINS ENERGY
  
Unaudited Pro Forma Condensed Consolidated Balance Sheet
  
March 31, 2008
  
                 
 
Great Plains
  
  Great Plains
 
Energy
Pro Forma
  Energy
 
Historical
Adjustments
  Pro Forma
ASSETS
(millions)
  
Current Assets
                
Cash and cash equivalents
$
 85.8  
$
 (69.7 )
B
      
          305.3  
C
      
          (14.1 )
D
      
          (34.1 )
E
  
$
 273.2  
Restricted cash
   0.7     (0.7 )
B
     -  
Receivables, net
   394.4     (254.6 )
B
     139.8  
Fuel inventories, at average cost
   42.9     -         42.9  
Materials and supplies, at average cost
   65.4     -         65.4  
Deferred refueling outage costs
   10.7     -         10.7  
Refundable income taxes
   24.1     (2.4 )
B
     21.7  
Derivative instruments
   128.0     (124.9 )
B
     3.1  
Other
   17.9     (5.2 )
B
     12.7  
Total
   769.9     (200.4 )       569.5  
Nonutility Property and Investments
                      
Affordable housing limited partnerships
   16.6     -         16.6  
Nuclear decommissioning trust fund
   106.9     -         106.9  
Other
   13.3     (6.0 )
B
     7.3  
Total
   136.8     (6.0 )       130.8  
Utility Plant, at Original Cost
                      
Electric
   5,514.2     -         5,514.2  
Less-accumulated depreciation
   2,638.9     -         2,638.9  
Net utility plant in service
   2,875.3     -         2,875.3  
Construction work in progress
   662.9     -         662.9  
Nuclear fuel, net of amortization of $123.5
   57.8     -         57.8  
Total
   3,596.0     -         3,596.0  
Deferred Charges and Other Assets
                      
Regulatory assets
   401.2     -         401.2  
Goodwill
   88.1     (88.1 )
B
     -  
Derivative instruments
   76.1     (76.0 )
B
     0.1  
Other
   55.0     (12.3
)
B
     42.7  
Total
   620.4     (176.4 )       444.0  
Total
$
 5,123.1  
$
 (382.8 )    
$
 4,740.3  
                       
The accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements are an integral
  
part of these statements.
                      
 
4
 
                 
GREAT PLAINS ENERGY
  
Unaudited Pro Forma Condensed Consolidated Balance Sheet
  
March 31, 2008
  
                 
 
Great Plains
  
  Great Plains
 
Energy
Pro Forma
  Energy
 
Historical
Adjustments
  Pro Forma
LIABILITIES AND CAPITALIZATION
(millions)
  
Current Liabilities
                
Notes payable
$
 68.0  
$
 -      
$
 68.0  
Commercial paper
   163.9     -         163.9  
Current maturities of long-term debt
   0.3     -         0.3  
Accounts payable
   433.3     (178.9 )
B
     254.4  
Accrued taxes
   39.9     (2.8 )
B
     37.1  
Accrued interest
   26.1     -         26.1  
Accrued compensation and benefits
   28.7     (1.0 )
B
        
          (3.6 )  D       24.1  
Pension and post-retirement liability
   1.3     -         1.3  
Deferred income taxes
   43.5     (45.5 )
B
     (2.0 )
Derivative instruments
   43.1     (4.8 )
B
     38.3  
Other
   25.7     (15.0 )
B
        
          (0.6 )
D
     10.1  
Total
   873.8     (252.2 )       621.6  
Deferred Credits and Other Liabilities
                      
Deferred income taxes
   630.5     (31.8 )
B
     598.7  
Deferred investment tax credits
   26.7     -         26.7  
Asset retirement obligations
   107.4     -         107.4  
Pension and post-retirement liability
   156.4     -         156.4  
Regulatory liabilities
   138.9     -         138.9  
Derivative instruments
   2.3     (2.3 )
B
     -  
Other
   62.3     (0.7 )
B
        
           (1.8 ) 
D 
      59.8  
Total
   1,124.5     (36.6 )       1,087.9  
Capitalization
                      
Common shareholders' equity
                      
Common stock
   1,070.1     0.5  
D
     1,070.6  
Retained earnings
   518.1     (292.4 )
B
        
          305.3  
C
        
          (8.3 )
D
        
          (34.1 )
E
     488.6  
Treasury stock, at cost
   (3.3 )    (0.3 )
D
     (3.6 )
Accumulated other comprehensive income
   48.0     (64.7 )
B
     (16.7 )
Total
   1,632.9     (94.0 )       1,538.9  
Cumulative preferred stock
   39.0     -         39.0  
Long-term debt
   1,452.9     -         1,452.9  
Total
   3,124.8     (94.0 )       3,030.8  
Commitments and Contingencies
                      
Total
$
 5,123.1  
$
 (382.8 )    
$
 4,740.3  
                       
The accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements are an integral
  
part of these statements.
                      
 
5
 
GREAT PLAINS ENERGY INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.    Pro Forma Adjustments

The pro forma adjustments included in the Unaudited Pro Forma Condensed Consolidated Financial Statements are as follows:

A – The pro forma adjustments represent the removal of Strategic Energy’s revenues and expenses.

B – The pro forma adjustments represent the removal of Strategic Energy’s assets, liabilities and accumulated other comprehensive income and related goodwill and intangible assets at March 31, 2008.

C – The pro forma adjustment represents cash proceeds received from Direct Energy upon the sale of Strategic Energy.

D – The pro forma adjustment represents the contribution of cash to Strategic Energy for the payment of employee incentive compensation, retention, employment and change in control plans and agreements; the vesting and payment of restricted stock and performance shares; and shares of common stock surrendered to Great Plains Energy to pay taxes related to the vesting of restricted stock and the issuance of performance shares.

E – The pro forma adjustment represents a preliminary estimate for the anticipated payment of income taxes resulting from the sale of Strategic Energy.

 
6