Great Plains Energy Announces Full-Year and Fourth Quarter Results for 2007

Business Wire, Feb 6, 2008

Other

Reported results for the "other" segment, which mainly includes the Company's investments in affordable housing and unallocated corporate charges, for the full-year 2007 were a loss of $37.6 million or $0.44 loss per share compared to a loss of $13.7 million or $0.17 loss per share last year. Core results in the "other" category for the full-year 2007 were a loss of $20.6 million or $0.24 loss per share in 2007 compared to a loss of $13.6 million or $0.17 loss per share in 2006. The difference between core and reported results for full-year 2007 reflected the unrealized mark-to-market impact of interest rate hedging and transition non-labor costs related to the Aquila merger.

Reported results for the 2007 quarter were a loss of $15.9 million, or $0.19 loss per share, compared to a loss of $2.9 million, or $0.04 loss per share in the 2006 quarter. In the fourth quarter of 2007, core results for the "other" category were a loss of $7.2 million or $0.08 loss per share compared to a loss of $3.0 million or $0.04 loss per share last year.

The greater core earnings loss in the other category for both the fourth quarter and full-year is primarily attributable to a decline in available tax credits from affordable housing investments and overall higher expenses at the holding company, including $1.8 million and $4.7 million, respectively, of labor related expenses related to the Aquila transaction that would otherwise be reflected in the KCP&L segment.

Non-GAAP Financial Measures

Great Plains Energy provides in its earnings releases descriptions of "core earnings" in addition to earnings calculated in accordance with GAAP. Great Plains Energy also provides its earnings guidance in terms of core earnings. Core earnings are a non-GAAP financial measure that differs from GAAP earnings because it excludes the effects of discontinued operations, certain unusual items and mark-to-market gains and losses on energy contracts. Core earnings for historical periods are reconciled to GAAP earnings in attachment B and C. The Company also provides Strategic Energy average retail gross margin per MWh, excluding unrealized net mark-to-market impacts, in addition to average retail gross margin per MWh calculated in accordance with GAAP.

The Company believes core earnings provide to investors a meaningful indicator of its results that is comparable among periods because it excludes the effects of discontinued operations, certain unusual items and mark-to-market gains and losses on energy contracts. These items are excluded from core earnings because they may not be indicative of Great Plains Energy's prospective earnings potential. Investors should note that this non-GAAP measure involves judgments by management, including whether an item is classified as an unusual item, and the Company's definition of core earnings may differ from similar terms used by other companies. The impact of these items could be material to operating results presented in accordance with GAAP. The Company believes average retail gross margin per MWh excluding unrealized net mark-to-market impacts removes non-cash timing differences that occur during the term of the contracts prior to delivery and impact only one side of the overall buy-sell transaction and provides investors with a measure of average retail gross margin per MWh that more accurately reflects Strategic Energy's realized margin on delivered MWhs.