XML 51 R19.htm IDEA: XBRL DOCUMENT
v3.20.4

MERGER OF GREAT PLAINS ENERGY AND EVERGY KANSAS CENTRAL | 12 Months Ended
--- | ---
Dec. 31, 2020
Business Combinations [Abstract] |
MERGER OF GREAT PLAINS ENERGY AND EVERGY KANSAS CENTRAL | MERGER OF GREAT PLAINS ENERGY AND EVERGY KANSAS CENTRAL Description of Merger Transaction On June 4, 2018, Evergy completed the mergers contemplated by the Amended Merger Agreement. As a result of the mergers, Great Plains Energy merged into Evergy, with Evergy surviving the merger and King Energy merged into Evergy Kansas Central, with Evergy Kansas Central surviving the merger. Following the completion of these mergers, Evergy Kansas Central and the direct subsidiaries of Great Plains Energy, including Evergy Metro and Evergy Missouri West, became wholly-owned subsidiaries of Evergy. The merger was structured as a merger of equals in a tax-free exchange of shares that involved no premium paid or received with respect to either Great Plains Energy or Evergy Kansas Central. As a result of the closing of the merger transaction, each outstanding share of Great Plains Energy common stock was converted into 0.5981 shares of Evergy common stock and each outstanding share of Evergy Kansas Central common stock was converted into 1 share of Evergy common stock. Accounting Charges and Deferrals Related to the Merger The following pre-tax reductions of revenue, expenses and deferral were recognized following the consummation of the merger and are included in the Evergy Companies' consolidated statements of income and comprehensive income for 2018.
Description | Income Statement Line Item | Expected Payment Period |  | Evergy |  | Evergy Kansas Central |  | Evergy Metro
|  |  |  | (millions)
One-time bill credits | Operating revenues | 2018 - 2019 |  | $ | (59.7) |  |  | $ | (23.1) |  |  | $ | (22.4) |
Annual bill credits | Operating revenues | 2019 - 2022 |  | (10.5) |  |  | (7.9) |  |  | (2.6) |
Total impact to operating revenues |  |  |  | $ | (70.2) |  |  | $ | (31.0) |  |  | $ | (25.0) |
Charitable contributions and community support | Operating and maintenance | 2018 - 2027 |  | $ | 24.7 |  |  | $ | — |  |  | $ | — |
Voluntary severance and accelerated equity compensation | Operating and maintenance | 2018 - 2019 |  | 47.9 |  |  | 44.2 |  |  | 2.6 |
Other transaction and transition costs | Operating and maintenance | 2018 |  | 51.0 |  |  | 21.5 |  |  | 2.1 |
Reallocation and deferral of merger transition costs | Operating and maintenance | n/a |  | (47.8) |  |  | (13.8) |  |  | (23.2) |
Total impact to operating and maintenance expense |  |  |  | $ | 75.8 |  |  | $ | 51.9 |  |  | $ | (18.5) |
Total |  |  |  | $ | (146.0) |  |  | $ | (82.9) |  |  | $ | (6.5) |
Reductions of revenue related to customer bill credits and expenses related to charitable contributions and community support were incurred as a result of conditions in the MPSC and KCC merger orders and were recorded as liabilities in the amounts presented above following the consummation of the merger. Reductions of revenue for annual bill credits for Evergy Kansas Central's and Evergy Metro's Kansas electric retail customers are recognized ratably in the twelve-month period preceding their payment. Voluntary severance and accelerated equity compensation represent costs related to payments for voluntary severance and change in control plans, as well as the recording of unrecognized equity compensation costs and the incremental fair value associated with the vesting of outstanding Evergy Kansas Central equity compensation awards upon the consummation of the merger. Other transaction and transition costs include merger success fees and fees for other outside services incurred. Reallocation and deferral of merger transition costs represents the net reallocation of incurred merger transition costs between Evergy, Evergy Kansas Central, Evergy Metro and Evergy Missouri West and the subsequent deferral of these transition costs to a regulatory asset for future recovery in accordance with the KCC and MPSC merger orders. Purchase Price Based on an evaluation of the provisions of ASC 805, Business Combinations, Evergy Kansas Central was determined to be the accounting acquirer in the merger. Pursuant to the Amended Merger Agreement, Great Plains Energy's common stock shares were exchanged for Evergy common stock shares at the fixed exchange rate of 0.5981. The total consideration transferred in the merger is based on the closing stock price of Evergy Kansas Central on June 4, 2018, and is calculated as follows.
|  | (millions, except share amounts)
Great Plains Energy common stock shares outstanding as of June 4, 2018 |  | 215,800,074 |
Great Plains Energy restricted stock awards outstanding as of June 4, 2018 |  | (204,825) |
Great Plains Energy shares to be converted to Evergy shares |  | 215,595,249 |
Exchange ratio |  | 0.5981 |
Evergy common stock shares issued to Great Plains Energy shareholders |  | 128,947,518 |
Closing price of Evergy Kansas Central common stock as of June 4, 2018 |  | $ | 54.00 |
Fair value of Evergy shares issued to Great Plains Energy shareholders |  | $ | 6,963.2 |
Fair value of Great Plains Energy's equity compensation awards |  | 12.5 |
Total purchase price |  | $ | 6,975.7 |
Great Plains Energy's equity compensation awards, including performance shares and restricted stock, were replaced by equivalent Evergy equity compensation awards subject to substantially the same terms and conditions upon the closing of the merger. In accordance with the accounting guidance in ASC 805, a portion of the fair value of these awards is attributable to the purchase price as it represents consideration transferred in the merger. Purchase Price Allocation The fair value of Great Plains Energy's assets acquired and liabilities assumed as of June 4, 2018, was determined based on significant estimates and assumptions that are judgmental in nature. Third-party valuation specialists were engaged to assist in the valuation of these assets and liabilities. The significant assets and liabilities recorded at fair values as of the merger date include long-term debt, asset retirement obligations, pension and post-retirement plans, accumulated deferred income tax liabilities and certain other long-term assets and liabilities. The majority of Great Plains Energy's operations were subject to the rate-setting authority of the MPSC, the KCC and the Federal Energy Regulatory Commission (FERC) and were accounted for pursuant to GAAP, including the accounting guidance for regulated operations. The rate-setting and cost recovery provisions for Great Plains Energy's regulated operations provided revenue derived from costs including a return on investment of assets and liabilities included in rate base. Except for the significant assets and liabilities for which valuation adjustments were made as discussed above, the fair values of Great Plains Energy's tangible and intangible assets and liabilities subject to these rate-setting provisions approximated their carrying values and the assets and liabilities did not reflect any adjustments to these amounts other than for amounts not included in rate base. The difference between the fair value and pre-merger carrying amounts for Great Plains Energy's long-term debt, asset retirement obligations and pension and post-retirement plans that were related to regulated operations were recorded as a regulatory asset or liability. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed were recognized as goodwill as of the merger date. The final purchase price allocation to Great Plains Energy's assets and liabilities as of June 4, 2018, is detailed in the following table.
|  | (millions)
Current assets |  | $ | 2,151.7 |
Property, plant and equipment, net |  | 9,179.7 |
Goodwill |  | 2,336.6 |
Other long-term assets, excluding goodwill |  | 1,235.9 |
Total assets |  | $ | 14,903.9 |
Current liabilities |  | 1,673.9 |
Long-term liabilities, excluding long-term debt |  | 2,895.7 |
Long-term debt, net |  | 3,358.6 |
Total liabilities |  | $ | 7,928.2 |
Total purchase price |  | $ | 6,975.7 |
Impact of Merger The impact of Great Plains Energy's subsidiaries on Evergy's revenues in the consolidated statement of comprehensive income for 2018 was an increase of $1,661.1 million. The impact of Great Plains Energy's subsidiaries on Evergy's net income attributable to Evergy in the consolidated statement of comprehensive income for 2018 was an increase of $236.2 million. Evergy had incurred total merger-related costs, including reductions of revenue for customer bill credits, of $148.0 million for 2018. Pro Forma Financial Information The following unaudited pro forma financial information reflects the consolidated results of operations of Evergy as if the merger transactions had taken place on January 1, 2018. The unaudited pro forma information was calculated after applying Evergy's accounting policies and adjusting Great Plains Energy's results to reflect purchase accounting adjustments. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of Evergy.
|  |  |  |  | 2018 |  |
|  |  |  | (millions, except per share amounts)
Operating revenues |  |  |  |  | $ | 5,334.6 |  |  |
Net income attributable to Evergy, Inc. |  |  |  |  | 714.3 |  |  |
Basic earnings per common share |  |  |  |  | $ | 2.67 |  |  |
Diluted earnings per common share |  |  |  |  | $ | 2.67 |  |  |
Evergy, Evergy Kansas Central and Great Plains Energy incurred non-recurring costs and a gain directly related to the merger that have been excluded in the 2018 pro forma earnings presented above. On an after-tax basis, these non-recurring merger-related costs and gain incurred by Evergy, Evergy Kansas Central and Great Plains Energy included: •$74.7 million of certain after-tax merger-related transition and transaction costs; •$44.4 million of after-tax reductions in operating revenues related to one-time customer bill credits; and •$36.6 million of after-tax mark-to-market gains on interest rate swaps for which cash settlement was contingent upon the consummation of the merger.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration