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WR_9.30.2013-Earnings Release 8K


UNITED STATES
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) November 7, 2013

WESTAR ENERGY, INC.

(Exact name of registrant as specified in its charter)


Kansas
 
1-3523
 
48-0290150
(State or other jurisdiction of incorporation or organization)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
 
 
818 South Kansas Avenue, Topeka, Kansas
 
66612
 
(785) 575-6300
(Address of principal executive offices)
 
(Zip Code)
 
(Registrant's telephone number, including area code)


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))






WESTAR ENERGY, INC.

Item 2.02 Results of Operations and Financial Condition

Item 7.01 Regulation FD Disclosure

On November 7, 2013, we issued a press release announcing our earnings for the period ended September 30, 2013. A copy of our November 7, 2013 press release is attached hereto as Exhibit 99.1.

A copy of our 2013 Third Quarter Earnings Package, which includes our Updated 2013 Earnings Guidance summary and our 2014 Earnings Drivers summary, is attached hereto as Exhibit 99.2. This information is available to the public on our website, http://www.WestarEnergy.com.

The information furnished pursuant to this Current Report on Form 8-K, including the exhibits hereto, will not be incorporated by reference into any registration statement filed by us under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference.

Item 9.01. Financial Statements and Exhibits

Exhibit 99.1    Press Release dated November 7, 2013
Exhibit 99.2    2013 Third Quarter Earnings Package

Certain matters discussed in this Current Report on Form 8-K are “forward-looking statements.” The Private Securities Litigation Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like “believe,” “anticipate,” “target,” “expect,” “pro forma,” “estimate,” “intend,” “drivers,” “assumption,” “guidance” or words of similar meaning. Forward-looking statements describe future plans, objectives, expectations or goals. Although Westar Energy believes that its expectations are based on reasonable assumptions, all forward-looking statements involve risk and uncertainty. The factors that could cause actual results to differ materially from these forward-looking statements include those discussed herein as well as (1) those discussed in the company's Annual Report on Form 10-K for the year ended Dec. 31, 2012 (a) under the heading, “Forward-Looking Statements,” (b) in ITEM 1. Business, (c) in ITEM 1A. Risk Factors, (d) in ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, and (e) in ITEM 8. Financial Statements and Supplementary Data: Notes 13 and 15; (2) those discussed in the company's Quarterly Report on Form 10-Q filed Nov. 7, 2013, (a) in ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and (b) in Part I, Financial Information, ITEM 1. Financial Statements: Notes 10 and 11; and (3) other factors discussed in the company's filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date such statement was made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement was made.

SIGNATURE

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.
 

 
 
 
 
WESTAR ENERGY, INC.
 
 
 
 
 
 
 
Date:
 
November 7, 2013
 
By:
 
/s/ Larry D. Irick
 
 
 
 
Name:
 
Larry D. Irick
 
 
 
 
Title:
 
Vice President, General Counsel and Corporate Secretary

EXHIBIT INDEX


Exhibit Number
 
Description of Exhibit
Exhibit 99.1
 
Press Release dated November 7, 2013
Exhibit 99.2
 
2013 Third Quarter Earnings Package



WR-09.30.2013-8-K Exhibit 99.1
Exhibit 99.1


WESTAR ENERGY ANNOUNCES 3rd QUARTER 2013 RESULTS
TOPEKA, Kan., Nov. 7, 2013 - Westar Energy, Inc. (NYSE:WR) today announced earnings of $133 million, or $1.04 per share, for the third quarter 2013 compared with earnings of $139 million, or $1.10 per share, for the third quarter 2012. Earnings for the nine months ended Sep. 30, 2013 were $251 million, or $1.97 per share, compared with $228 million, or $1.79 per share, for the same period in 2012.

Lower net income for the three months ending Sep. 30, 2013 was driven by cooler weather, reduced demand from industrial customers and higher O&M costs at the company’s power plants. The decreases were partially offset by recording income from corporate-owned life insurance and price increases.

Higher net income for the nine months ending Sep. 30, 2013 was driven primarily by higher prices, recording additional benefits from corporate-owned life insurance and lower general and administrative costs. These benefits were partially offset by lower electric sales as a result of cooler weather and reduced demand primarily from industrial customers.

Earnings Guidance
The company revised its 2013 earnings guidance of $2.05 to $2.15 per share to $2.20 to $2.30 per share. The increase reflects year-to-date trends including improved residential and commercial sales, lower interest expenses, benefits from lower operating expenses and lower effective income tax rate. The company has posted to its website an updated summary of factors it considers to be key drivers and assumptions used in arriving at earnings guidance. The summary is located under Supplemental Materials within the Investors section of the company website at www.WestarEnergy.com.

Conference Call and Additional Company Information
Westar Energy management will host a conference call Friday, Nov. 8 with the investment community at 10 a.m. ET (9 a.m. CT). Investors, media and the public may listen to the conference call by dialing 877.415.3179, participant code 63251422. A webcast of the live conference call will be available at www.WestarEnergy.com.

Members of the media are invited to listen to the conference call and then contact Gina Penzig with any follow-up questions.

This earnings announcement, a package of detailed third quarter financial information, the company's quarterly report on Form 10-Q for the period ended Sep. 30, 2013 and other filings the company has made with the Securities and Exchange Commission are available on the company's website at www.WestarEnergy.com.
- 30 -

WESTAR ENERGY NEWS RELEASE    Page 1 of 3
Westar Energy announces 3rd quarter results


Westar Energy, Inc. (NYSE: WR) is Kansas' largest electric utility. For more than a century, we have provided Kansans the safe, reliable electricity needed to power their businesses and homes. Every day our team of professionals takes on projects to generate and deliver electricity, protect the environment and provide excellent service to our nearly 700,000 customers. Westar has 7,200 MW of electric generation capacity fueled by coal, uranium, natural gas, wind and landfill gas. We are also a leader in electric transmission in Kansas. Our innovative customer service programs include mobile-enabled customer care, digital meters and paving the way for electric vehicle adoption. Our employees live, volunteer and work in the communities we serve.

For more information about Westar Energy, visit us on the Internet at http://www.WestarEnergy.com.

Forward-looking statements: Certain matters discussed in this news release are “forward-looking statements.” The Private Securities Litigation Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like “believe,” “anticipate,” “target,” “expect,” “pro forma,” “estimate,” “intend,” “guidance” or words of similar meaning. Forward-looking statements describe future plans, objectives, expectations or goals. Although Westar Energy believes that its expectations are based on reasonable assumptions, all forward-looking statements involve risk and uncertainty. The factors that could cause actual results to differ materially from these forward-looking statements include those discussed herein as well as (1) those discussed in the company's Annual Report on Form 10-K for the year ended Dec. 31, 2012 (a) under the heading, “Forward-Looking Statements,” (b) in ITEM 1. Business, (c) in ITEM 1A. Risk Factors, (d) in ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, and (e) in ITEM 8. Financial Statements and Supplementary Data: Notes 13 and 15; (2) those discussed in the company's Quarterly Report on Form 10-Q filed Nov. 7, 2013, (a) in ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and (b) in Part I, Financial Information, ITEM 1. Financial Statements: Notes 10 and 11;and (3) other factors discussed in the company's filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date such statement was made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement was made.


Media Contact:
Gina Penzig
Director, corporate communications
Phone: 785.575.8089
Gina.Penzig@westarenergy.com
Media line: 888.613.0003

Investor Contact:
Bruce Burns
Director, investor relations
Phone: 785.575.8227
Bruce.Burns@westarenergy.com


WESTAR ENERGY NEWS RELEASE    Page 2 of 3
Westar Energy announces 3rd quarter results

Westar Energy, Inc.
Consolidated Statements of Income
(Unaudited)

 
Three Months Ended Sept. 30,
 
Nine Months Ended Sept. 30,
 
2013
 
2012
 
Change
 
% Change
 
2013
 
2012
 
Change
 
% Change
 
(Dollars In Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
$
237,984

 
$
250,757

 
$
(12,773
)
 
(5.1
)
 
$
568,662

 
$
566,069

 
$
2,593

 
0.5

Commercial
199,921

 
194,032

 
5,889

 
3.0

 
513,049

 
493,814

 
19,235

 
3.9

Industrial
98,410

 
96,656

 
1,754

 
1.8

 
282,155

 
278,036

 
4,119

 
1.5

Other retail
3,849

 
6,407

 
(2,558
)
 
(39.9
)
 
2,905

 
1,125

 
1,780

 
158.2

Total Retail Revenues
540,164

 
547,852

 
(7,688
)
 
(1.4
)
 
1,366,771

 
1,339,044

 
27,727

 
2.1

Wholesale
94,496

 
88,784

 
5,712

 
6.4

 
262,749

 
228,966

 
33,783

 
14.8

Transmission
52,410

 
49,137

 
3,273

 
6.7

 
156,725

 
144,480

 
12,245

 
8.5

Other
7,904

 
9,985

 
(2,081
)
 
(20.8
)
 
24,531

 
25,208

 
(677
)
 
(2.7
)
Total Revenues
694,974

 
695,758

 
(784
)
 
(0.1
)
 
1,810,776

 
1,737,698

 
73,078

 
4.2

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Fuel and purchased power
178,562

 
177,506

 
1,056

 
0.6

 
483,014

 
452,840

 
30,174

 
6.7

Operating and maintenance
169,100

 
149,001

 
20,099

 
13.5

 
491,132

 
461,515

 
29,617

 
6.4

Depreciation and amortization
68,861

 
65,061

 
3,800

 
5.8

 
203,305

 
204,640

 
(1,335
)
 
(0.7
)
Selling, general and administrative
54,245

 
54,300

 
(55
)
 
(0.1
)
 
157,668

 
164,346

 
(6,678
)
 
(4.1
)
Total Operating Expenses
470,768

 
445,868

 
24,900

 
5.6

 
1,335,119

 
1,283,341

 
51,778

 
4.0

INCOME FROM OPERATIONS
224,206

 
249,890

 
(25,684
)
 
(10.3
)
 
475,657

 
454,357

 
21,300

 
4.7

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Investment earnings (losses)
2,863

 
2,729

 
134

 
4.9

 
8,612

 
6,456

 
2,156

 
33.4

Other income
12,321

 
6,115

 
6,206

 
101.5

 
29,748

 
27,242

 
2,506

 
9.2

Other expense
(6,195
)
 
(6,278
)
 
83

 
1.3

 
(13,911
)
 
(14,246
)
 
335

 
2.4

Total Other Income
8,989

 
2,566

 
6,423

 
250.3

 
24,449

 
19,452

 
4,997

 
25.7

Interest expense
45,708

 
45,017

 
691

 
1.5

 
135,790

 
131,886

 
3,904

 
3.0

INCOME BEFORE INCOME TAXES
187,487

 
207,439

 
(19,952
)
 
(9.6
)
 
364,316

 
341,923

 
22,393

 
6.5

Income tax expense
52,392

 
66,372

 
(13,980
)
 
(21.1
)
 
106,514

 
107,156

 
(642
)
 
(0.6
)
NET INCOME
135,095

 
141,067

 
(5,972
)
 
(4.2
)
 
257,802

 
234,767

 
23,035

 
9.8

Less: Net income attributable to noncontrolling interests
1,970

 
1,786

 
184

 
10.3

 
6,344

 
5,228

 
1,116

 
21.3

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
133,125

 
139,281

 
(6,156
)
 
(4.4
)
 
251,458

 
229,539

 
21,919

 
9.5

Preferred dividends
—

 
—

 
—

 
—

 
—

 
1,616

 
(1,616
)
 
(100.0
)
NET INCOME ATTRIBUTABLE TO COMMON STOCK
$
133,125

 
$
139,281

 
$
(6,156
)
 
(4.4
)
 
$
251,458

 
$
227,923

 
$
23,535

 
10.3

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
$
1.04

 
$
1.10

 
$
(0.06
)
 
(5.5
)
 
$
1.97

 
$
1.79

 
$
0.18

 
10.1

Diluted earnings per common share
$
1.04

 
$
1.09

 
$
(0.05
)
 
(4.6
)
 
$
1.96

 
$
1.79

 
$
0.17

 
9.5

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
127,445

 
126,783

 
662

 
0.5

 
127,318

 
126,639

 
679

 
0.5

Diluted
128,111

 
127,135

 
976

 
0.8

 
127,851

 
126,855

 
996

 
0.8

DIVIDENDS DECLARED PER COMMON SHARE
$
0.34

 
$
0.33

 
$
0.01

 
3.0

 
$
1.02

 
$
0.99

 
$
0.03

 
3.0

Effective income tax rate
27.94
%
 
32.00
%
 
 
 
 
 
29.24
%
 
31.34
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

WESTAR ENERGY NEWS RELEASE    Page 3 of 3
WR-09.30.2013-8-K Exhibit 99.2


Exhibit 99.2
Westar Energy, Inc.
Third Quarter 2013 Earnings
Released November 7, 2013





Contents
Page
 
 
 











Bruce Burns
Director Investor Relations
785-575-8227
bruce.burns@WestarEnergy.com



NOTE:
The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q for the period ended September 30, 2013 should be read in conjunction with this financial information. The enclosed statements have been prepared for the purpose of providing information concerning the Company and not in connection with any sale, offer for sale, or solicitation to buy any securities.





Westar Energy, Inc.
Consolidated Statements of Income
(Unaudited)

 
Three Months Ended September 30,
 
2013
 
2012
 
Change
 
% Change
 
(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
237,984

 
$
250,757

 
$
(12,773
)
 
(5.1
)
Commercial
199,921

 
194,032

 
5,889

 
3.0

Industrial
98,410

 
96,656

 
1,754

 
1.8

Other retail
3,849

 
6,407

 
(2,558
)
 
(39.9
)
Total Retail Revenues
540,164

 
547,852

 
(7,688
)
 
(1.4
)
Wholesale
94,496

 
88,784

 
5,712

 
6.4

Transmission
52,410

 
49,137

 
3,273

 
6.7

Other
7,904

 
9,985

 
(2,081
)
 
(20.8
)
Total Revenues
694,974

 
695,758

 
(784
)
 
(0.1
)
OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
178,562

 
177,506

 
1,056

 
0.6

Operating and maintenance
169,100

 
149,001

 
20,099

 
13.5

Depreciation and amortization
68,861

 
65,061

 
3,800

 
5.8

Selling, general and administrative
54,245

 
54,300

 
(55
)
 
(0.1
)
Total Operating Expenses
470,768

 
445,868

 
24,900

 
5.6

INCOME FROM OPERATIONS
224,206

 
249,890

 
(25,684
)
 
(10.3
)
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
2,863

 
2,729

 
134

 
4.9

Other income
12,321

 
6,115

 
6,206

 
101.5

Other expense
(6,195
)
 
(6,278
)
 
83

 
1.3

Total Other Income
8,989

 
2,566

 
6,423

 
250.3

Interest expense
45,708

 
45,017

 
691

 
1.5

INCOME BEFORE INCOME TAXES
187,487

 
207,439

 
(19,952
)
 
(9.6
)
Income tax expense
52,392

 
66,372

 
(13,980
)
 
(21.1
)
NET INCOME
135,095

 
141,067

 
(5,972
)
 
(4.2
)
Less: Net income attributable to noncontrolling interests
1,970

 
1,786

 
184

 
10.3

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
133,125

 
$
139,281

 
$
(6,156
)
 
(4.4
)
BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
1.04

 
$
1.10

 
$
(0.06
)
 
(5.5
)
Diluted earnings per common share
$
1.04

 
$
1.09

 
$
(0.05
)
 
(4.6
)
AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
127,445

 
126,783

 
662

 
0.5

Diluted
128,111

 
127,135

 
976

 
0.8

DIVIDENDS DECLARED PER COMMON SHARE
$
0.34

 
$
0.33

 
$
0.01

 
3.0

Effective income tax rate
27.94
%
 
32.00
%
 
 
 
 
 
 
 
 
 
 
 
 



The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2013 should be read in conjunction with this financial information.
Page 1


Westar Energy, Inc.
Consolidated Statements of Income
(Unaudited)

 
Nine Months Ended September 30,
 
2013
 
2012
 
Change
 
% Change
 
(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
568,662

 
$
566,069

 
$
2,593

 
0.5

Commercial
513,049

 
493,814

 
19,235

 
3.9

Industrial
282,155

 
278,036

 
4,119

 
1.5

Other retail
2,905

 
1,125

 
1,780

 
158.2

Total Retail Revenues
1,366,771

 
1,339,044

 
27,727

 
2.1

Wholesale
262,749

 
228,966

 
33,783

 
14.8

Transmission
156,725

 
144,480

 
12,245

 
8.5

Other
24,531

 
25,208

 
(677
)
 
(2.7
)
Total Revenues
1,810,776

 
1,737,698

 
73,078

 
4.2

OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
483,014

 
452,840

 
30,174

 
6.7

Operating and maintenance
491,132

 
461,515

 
29,617

 
6.4

Depreciation and amortization
203,305

 
204,640

 
(1,335
)
 
(0.7
)
Selling, general and administrative
157,668

 
164,346

 
(6,678
)
 
(4.1
)
Total Operating Expenses
1,335,119

 
1,283,341

 
51,778

 
4.0

INCOME FROM OPERATIONS
475,657

 
454,357

 
21,300

 
4.7

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
8,612

 
6,456

 
2,156

 
33.4

Other income
29,748

 
27,242

 
2,506

 
9.2

Other expense
(13,911
)
 
(14,246
)
 
335

 
2.4

Total Other Income
24,449

 
19,452

 
4,997

 
25.7

Interest expense
135,790

 
131,886

 
3,904

 
3.0

INCOME BEFORE INCOME TAXES
364,316

 
341,923

 
22,393

 
6.5

Income tax expense
106,514

 
107,156

 
(642
)
 
(0.6
)
NET INCOME
257,802

 
234,767

 
23,035

 
9.8

Less: Net income attributable to noncontrolling interests
6,344

 
5,228

 
1,116

 
21.3

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
251,458

 
229,539

 
21,919

 
9.5

Preferred dividends
—

 
1,616

 
(1,616
)
 
(100.0
)
NET INCOME ATTRIBUTABLE TO COMMON STOCK
$
251,458

 
$
227,923

 
$
23,535

 
10.3

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
1.97

 
$
1.79

 
$
0.18

 
10.1

Diluted earnings per common share
$
1.96

 
$
1.79

 
$
0.17

 
9.5

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
127,318

 
126,639

 
679

 
0.5

Diluted
127,851

 
126,855

 
996

 
0.8

DIVIDENDS DECLARED PER COMMON SHARE
$
1.02

 
$
0.99

 
$
0.03

 
3.0

Effective income tax rate
29.24
%
 
31.34
%
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2013 should be read in conjunction with this financial information.
Page 2


Westar Energy, Inc.
Consolidated Balance Sheets
(Dollars in Thousands, Except Par Values)
(Unaudited)

 
September 30, 2013
 
December 31, 2012
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
9,923

 
$
5,829

Restricted cash
387

 
573

Accounts receivable, net of allowance for doubtful accounts of $3,073 and $4,916, respectively
266,533

 
224,439

Fuel inventory and supplies
237,591

 
249,016

Prepaid expenses
12,780

 
15,847

Regulatory assets
145,909

 
114,895

Other
21,149

 
32,476

Total Current Assets
694,272

 
643,075

PROPERTY, PLANT AND EQUIPMENT, NET
7,350,935

 
7,013,765

PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET
299,312

 
321,975

OTHER ASSETS:
 
 
 
Regulatory assets
850,423

 
887,777

Nuclear decommissioning trust
167,548

 
150,754

Other
243,345

 
247,885

Total Other Assets
1,261,316

 
1,286,416

TOTAL ASSETS
$
9,605,835

 
$
9,265,231

LIABILITIES AND EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Current maturities of long-term debt
$
250,000

 
$
—

Current maturities of long-term debt of variable interest entities
27,764

 
25,942

Short-term debt
52,100

 
339,200

Accounts payable
178,213

 
180,825

Accrued dividends
43,199

 
41,743

Accrued taxes
100,180

 
58,624

Accrued interest
65,817

 
77,891

Regulatory liabilities
40,179

 
37,557

Other
96,643

 
84,359

Total Current Liabilities
854,095

 
846,141

LONG-TERM LIABILITIES:
 
 
 
Long-term debt, net
2,968,797

 
2,819,271

Long-term debt of variable interest entities, net
195,074

 
222,743

Deferred income taxes
1,296,909

 
1,197,837

Unamortized investment tax credits
189,140

 
191,512

Regulatory liabilities
286,475

 
285,618

Accrued employee benefits
550,037

 
564,870

Asset retirement obligations
158,904

 
152,648

Other
69,204

 
74,336

Total Long-Term Liabilities
5,714,540

 
5,508,835

COMMITMENTS AND CONTINGENCIES (See 10-Q Notes 10 and 11)
 
 
 
EQUITY:
 
 
 
Westar Energy, Inc. Shareholders’ Equity:
 
 
 
Common stock, par value $5 per share; authorized 275,000,000 shares; issued and outstanding 127,064,039 shares and 126,503,748 shares, respective to each date
635,320

 
632,519

Paid-in capital
1,669,792

 
1,656,972

Retained earnings
727,568

 
606,649

Total Westar Energy, Inc. Shareholders’ Equity
3,032,680

 
2,896,140

Noncontrolling Interests
4,520

 
14,115

Total Equity
3,037,200

 
2,910,255

TOTAL LIABILITIES AND EQUITY
$
9,605,835

 
$
9,265,231


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2013 should be read in conjunction with this financial information.
Page 3


Westar Energy, Inc.
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)

 
Nine Months Ended September 30,
 
2013
 
2012
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
 
 
 
Net income
$
257,802

 
$
234,767

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
203,305

 
204,640

Amortization of nuclear fuel
15,270

 
16,658

Amortization of deferred regulatory gain from sale leaseback
(4,121
)
 
(4,121
)
Amortization of corporate-owned life insurance
10,442

 
17,062

Non-cash compensation
6,148

 
5,482

Net deferred income taxes and credits
107,709

 
106,730

Stock-based compensation excess tax benefits
(502
)
 
(1,628
)
Allowance for equity funds used during construction
(9,473
)
 
(9,096
)
Changes in working capital items:
 
 
 
Accounts receivable
(42,400
)
 
(40,740
)
Fuel inventory and supplies
13,842

 
(19,634
)
Prepaid expenses and other
2,992

 
14,680

Accounts payable
2,088

 
(7,201
)
Accrued taxes
44,573

 
40,825

Other current liabilities
(53,042
)
 
(88,402
)
Changes in other assets
(22,682
)
 
(1,061
)
Changes in other liabilities
21,159

 
(15,005
)
Cash Flows from Operating Activities
553,110

 
453,956

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 
 
 
Additions to property, plant and equipment
(557,988
)
 
(598,426
)
Purchase of securities - trusts
(61,495
)
 
(18,684
)
Sale of securities - trusts
76,906

 
19,808

Investment in corporate-owned life insurance
(17,724
)
 
(18,404
)
Proceeds from investment in corporate-owned life insurance
147,591

 
16,501

Proceeds from federal grant
876

 
4,470

Investment in affiliated company
(2,694
)
 
(6,550
)
Other investing activities
(2,886
)
 
(30
)
Cash Flows used in Investing Activities
(417,414
)
 
(601,315
)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 
 
 
Short-term debt, net
(287,741
)
 
(71,544
)
Proceeds from long-term debt
492,572

 
541,374

Retirements of long-term debt
(100,000
)
 
(220,563
)
Retirements of long-term debt of variable interest entities
(25,498
)
 
(7,765
)
Repayment of capital leases
(2,262
)
 
(1,984
)
Borrowings against cash surrender value of corporate-owned life insurance
57,948

 
64,479

Repayment of borrowings against cash surrender value of corporate-owned life insurance
(145,418
)
 
(18,369
)
Stock-based compensation excess tax benefits
502

 
1,628

Preferred stock redemption
—

 
(22,567
)
Issuance of common stock
4,526

 
5,348

Distributions to shareholders of noncontrolling interests
(1,657
)
 
(3,252
)
Other financing activities
(2,699
)
 
—

Cash dividends paid
(121,875
)
 
(118,586
)
Cash Flows (used in) from Financing Activities
(131,602
)
 
148,199

NET CHANGE IN CASH AND CASH EQUIVALENTS
4,094

 
840

CASH AND CASH EQUIVALENTS:
 
 
 
Beginning of period
5,829

 
3,539

End of period
$
9,923

 
$
4,379


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2013 should be read in conjunction with this financial information.
Page 4



Westar Energy, Inc.
3rd Quarter 2013 vs. 2012

Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2012 earnings attributable to common stock
 
 
 
$
139,281

 
 
 
$
1.10

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Retail
 
 
 
(7,688
)
 
A
 
 
 
Wholesale
 
 
 
5,712

 
B
 
 
 
Transmission
 
 
 
3,273

 
 
 
 
 
Other revenues
 
 
 
(2,081
)
 
 
 
 
 
Fuel and purchased power
 
 
 
(1,056
)
 
C
 
 
 
SPP network transmission costs
 
 
 
(2,799
)
 
 
 
 
 
Gross Margin
 
 
 
(4,639
)
 
 
 
 
 
Operating and maintenance w/o SPP NITS
 
 
 
(17,300
)
 
D
 
 
 
Depreciation and amortization
 
 
 
(3,800
)
 
E
 
 
 
Selling, general and administrative
 
 
 
55

 
 
 
 
 
Other income (expense)
 
 
 
6,423

 
F
 
 
 
Interest expense
 
 
 
(691
)
 
 
 
 
 
Income tax expense
 
 
 
13,980

 
G
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(184
)
 
 
 
 
 
Change in shares outstanding
 
(0.01
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013 earnings attributable to common stock
 
 
 
$
133,125

 
 
 
$
1.04

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to an 5% decrease in retail MWh sales (see page 7 for changes by customer class)
 
 
 
 
 
 
 
 
 
 
B
Due to a 13% increase in MWh sales (see page 7 for changes by customer class)
 
 
 
 
 
 
 
 
 
 
C
Due primarily to a 8% increase in the average cost of MWhs purchased
 
 
 
 
 
 
 
 
 
 
D
Major contributors include: higher property tax expense (this is largely offset in revenues through a property tax surcharge) -- ($3.6M); higher tree trimming costs (offset through increased prices) -- ($3.0M); higher operating and maintenance cost of fossil generating units -- ($5.9M); higher cost at Wolf Creek including higher amortization of refueling outage costs and recognition of costs incurred during an unscheduled maintenance outage -- ($4.2M)
 
 
 
 
 
 
 
 
 
 
E
Due principally to property additions
 
 
 
 
 
 
 
 
 
 
F
Due primarily to recording higher COLI proceeds in 2013 -- $7.5M
 
 
 
 
 
 
 
 
 
 
G
Due primarily to lower income before income taxes
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2013 should be read in conjunction with this financial information.
Page 5


Westar Energy, Inc.
YTD September 2013 vs. 2012

 
 
 
 
 
 
 
 
 
 
Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2012 earnings attributable to common stock
 
 
 
$
227,923

 
 
 
$
1.79

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail
 
 
 
27,727

 
A
 
 
 
Wholesale
 
 
 
33,783

 
B
 
 
 
Transmission
 
 
 
12,245

 
 
 
 
 
Other revenues
 
 
 
(677
)
 
 
 
 
 
Fuel and purchased power
 
 
 
(30,174
)
 
C
 
 
 
SPP network transmission costs
 
 
 
(9,569
)
 
 
 
 
 
Gross Margin
 
 
 
33,335

 
 
 
 
 
Operating and maintenance w/o SPP NITS
 
 
 
(20,048
)
 
D
 
 
 
Depreciation and amortization
 
 
 
1,335

 
E
 
 
 
Selling, general and administrative
 
 
 
6,678

 
F
 
 
 
Other income (expense)
 
 
 
4,997

 
G
 
 
 
Interest expense
 
 
 
(3,904
)
 
 
 
 
 
Income tax expense
 
 
 
642

 
 
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(1,116
)
 
 
 
 
 
Preferred dividends
 
 
 
1,616

 
 
 
 
 
Change in shares outstanding
 
(0.01
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013 earnings attributable to common stock
 
 
 
$
251,458

 
 
 
$
1.97

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to increased average retail prices (see page 8 for changes by customer class)
 
 
 
 
 
 
 
 
 
 
B
Due to MWh sales increasing 20% (see page 8 for changes by customer class)
 
 
 
 
 
 
 
 
 
 
C
Due principally to increased MWhs generated
 
 
 
 
 
 
 
 
 
 
D
Due principally to: higher property tax expense (this is largely offset in revenues through a property tax surcharge) -- ($13M); higher operating and maintenance cost for fossil fuel generation -- ($6.0M); higher tree trimming costs (offset through increased prices) -- ($3.3M)
 
 
 
 
 
 
 
 
 
 
E
Due to reduced depreciation rates to reflect changes in the estimated useful lives of some of our assets
 
 
 
 
 
 
 
 
 
 
F
Due primarily to restructuring insurance contracts to lower post-retirement and other employee benefit cost -- $11.7M; lower labor costs -- $6.7M; higher pension costs -- ($12.8M)
 
 
 
 
 
 
 
 
 
 
G
Due primarily to recording more COLI benefits -- $4.9M
 
 
 
 
 
 
 
 
 
 

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2013 should be read in conjunction with this financial information.
Page 6



Westar Energy, Inc.
Revenue, Sales and Energy Supply
Supplemental Data
Three Months Ended September 30,
 
2013
 
2012
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
237,984

 
$
250,757

 
$
(12,773
)
 
(5.1
)
Commercial
199,921

 
194,032

 
5,889

 
3.0

Industrial
98,410

 
96,656

 
1,754

 
1.8

Other retail
3,153

 
3,125

 
28

 
0.9

Provision for rate refunds
696

 
3,282

 
(2,586
)
 
(78.8
)
Total Retail Revenues
540,164

 
547,852

 
(7,688
)
 
(1.4
)
Tariff-based wholesale
76,111

 
77,332

 
(1,221
)
 
(1.6
)
Market-based wholesale
18,385

 
11,452

 
6,933

 
60.5

Transmission
52,410

 
49,137

 
3,273

 
6.7

Other
7,904

 
9,985

 
(2,081
)
 
(20.8
)
Total Revenues
$
694,974

 
$
695,758

 
$
(784
)
 
(0.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
2,073

 
2,270

 
(197
)
 
(8.7
)
Commercial
2,163

 
2,215

 
(52
)
 
(2.3
)
Industrial
1,396

 
1,437

 
(41
)
 
(2.9
)
Other retail
22

 
20

 
2

 
10.0

Total Retail
5,654

 
5,942

 
(288
)
 
(4.8
)
Tariff-based wholesale
1,611

 
1,699

 
(88
)
 
(5.2
)
Market-based wholesale
755

 
395

 
360

 
91.1

Total wholesale
2,366

 
2,094

 
272

 
13.0

Total Electricity Sales
8,020

 
8,036

 
(16
)
 
(0.2
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
95.54

 
$
92.20

 
$
3.34

 
3.6

Tariff-based wholesale
$
47.24

 
$
45.52

 
$
1.72

 
3.8

Market-based wholesale
$
24.35

 
$
28.99

 
$
(4.64
)
 
(16.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
155,250

 
$
160,774

 
$
(5,524
)
 
(3.4
)
Purchased power
27,426

 
16,436

 
10,990

 
66.9

Subtotal
182,676

 
177,210

 
5,466

 
3.1

RECA recovery and other
(4,114
)
 
296

 
(4,410
)
 
nm

Total fuel and purchased power expense
$
178,562

 
$
177,506

 
$
1,056

 
0.6

 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
626

 
1,043

 
(417
)
 
(40.0
)
                    Coal
5,976

 
5,671

 
305

 
5.4

                    Nuclear
968

 
1,211

 
(243
)
 
(20.1
)
                    Wind
97

 
90

 
7

 
7.8

Subtotal electricity generated
7,667

 
8,015

 
(348
)
 
(4.3
)
Purchased
820

 
530

 
290

 
54.7

Total Electricity Supply
8,487

 
8,545

 
(58
)
 
(0.7
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
20.25

 
$
20.06

 
$
0.19

 
0.9

Average cost of purchased power
$
33.45

 
$
31.01

 
$
2.44

 
7.9

Average cost of fuel and purchased power
$
21.52

 
$
20.74

 
$
0.78

 
3.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2012/
 
 
 
 
 
2013
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
1,104

 
1,306

 
(202
)
 
(15.5
)
Actual compared to 20 year average
1,104

 
1,123

 
(19
)
 
(1.7
)
Heating
 
 
 
 
 
 
 
Actual compared to last year
13

 
31

 
(18
)
 
(58.1
)
Actual compared to 20 year average
13

 
44

 
(31
)
 
(70.5
)
nm - not meaningful

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2013 should be read in conjunction with this financial information.
Page 7


Westar Energy, Inc.
Revenue, Sales and Energy Supply
Supplemental Data
Nine Months Ended September 30,
 
2013
 
2012
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
568,662

 
$
566,069

 
$
2,593

 
0.5

Commercial
513,049

 
493,814

 
19,235

 
3.9

Industrial
282,155

 
278,036

 
4,119

 
1.5

Other retail
9,520

 
9,249

 
271

 
2.9

Provision for rate refunds
(6,615
)
 
(8,124
)
 
1,509

 
18.6

Total Retail Revenues
1,366,771

 
1,339,044

 
27,727

 
2.1

Tariff-based wholesale
210,350

 
198,657

 
11,693

 
5.9

Market-based wholesale
52,399

 
30,309

 
22,090

 
72.9

Transmission
156,725

 
144,480

 
12,245

 
8.5

Other
24,531

 
25,208

 
(677
)
 
(2.7
)
Total Revenues
$
1,810,776

 
$
1,737,698

 
$
73,078

 
4.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
5,075

 
5,314

 
(239
)
 
(4.5
)
Commercial
5,722

 
5,841

 
(119
)
 
(2.0
)
Industrial
4,020

 
4,216

 
(196
)
 
(4.6
)
Other retail
64

 
63

 
1

 
1.6

Total Retail
14,881

 
15,434

 
(553
)
 
(3.6
)
Tariff-based wholesale
4,418

 
4,289

 
129

 
3.0

Market-based wholesale
2,041

 
1,103

 
938

 
85.0

Total wholesale
6,459

 
5,392

 
1,067

 
19.8

Total Electricity Sales
21,340

 
20,826

 
514

 
2.5

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
91.85

 
$
86.76

 
$
5.09

 
5.9

Tariff-based wholesale
$
47.61

 
$
46.32

 
$
1.29

 
2.8

Market-based wholesale
$
25.67

 
$
27.48

 
$
(1.81
)
 
(6.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
413,062

 
$
374,153

 
$
38,909

 
10.4

Purchased power
86,959

 
77,560

 
9,399

 
12.1

Subtotal
500,021

 
451,713

 
48,308

 
10.7

RECA recovery and other
(17,007
)
 
1,127

 
(18,134
)
 
nm

Total fuel and purchased power expense
$
483,014

 
$
452,840

 
$
30,174

 
6.7

 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
1,490

 
2,183

 
(693
)
 
(31.7
)
                    Coal
15,910

 
13,848

 
2,062

 
14.9

                    Nuclear
2,259

 
2,641

 
(382
)
 
(14.5
)
                    Wind
311

 
338

 
(27
)
 
(8.0
)
Subtotal electricity generated
19,970

 
19,010

 
960

 
5.0

Purchased
2,588

 
3,070

 
(482
)
 
(15.7
)
Total Electricity Supply
22,558

 
22,080

 
478

 
2.2

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
20.68

 
$
19.68

 
$
1.00

 
5.1

Average cost of purchased power
$
33.60

 
$
25.26

 
$
8.34

 
33.0

Average cost of fuel and purchased power
$
22.17

 
$
20.46

 
$
1.71

 
8.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2012/
 
 
 
 
 
2013
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
1,600

 
2,095

 
(495
)
 
(23.6
)
Actual compared to 20 year average
1,600

 
1,583

 
17

 
1.1

Heating
 
 
 
 
 
 
 
Actual compared to last year
3,103

 
2,038

 
1,065

 
52.3

Actual compared to 20 year average
3,103

 
2,859

 
244

 
8.5

nm - not meaningful


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2013 should be read in conjunction with this financial information.
Page 8


Westar Energy, Inc.
Capitalization
 
 
September 30, 2013
 
 
 
December 31, 2012
 
 
 
 
(Dollars in Thousands)
 
 
Current maturities of long-term debt
 
$
250,000

 
 
 
$
—

 
 
Current maturities of long-term debt of VIEs
 
27,764

 
 
 
25,942

 
 
Long-term debt, net
 
2,968,797

 
 
 
2,819,271

 
 
Long-term debt of variable interest entities, net
 
195,074

 
 
 
222,743

 
 
Total long-term debt
 
3,441,635

 
53.1
%
 
3,067,956

 
51.4
%
Common equity
 
3,032,680

 
46.8
%
 
2,896,140

 
48.4
%
Noncontrolling interests
 
4,520

 
0.1
%
 
14,115

 
0.2
%
Total capitalization
 
$
6,478,835

 
100.0
%
 
$
5,978,211

 
100.0
%
 
 
 
 
 
 
 
 
 
GAAP Book value per share
 
$
23.87

 
 
 
$
22.89

 


Period end shares outstanding (in thousands)
 
127,064

 
 
 
126,504

 
 
 
 
 
 
 
 
 
 
 
Outstanding Long-Term Debt
 
 
 
 
 
 
 
 
 
 
CUSIP
September 30, 2013
 
 
 
December 31, 2012
 
 
Westar Energy:
 
(Dollars in Thousands)
 
 
First Mortgage Bond series:
 
 
 
 
 
 
 
 
6.00% Series due July 2014
95709TAA8
$
250,000

 
 
 
$
250,000

 
 
5.15% Series due January 2017
95709TAB6
125,000

 
 
 
125,000

 
 
5.95% Series due January 2035
95709TAC4
125,000

 
 
 
125,000

 
 
5.10% Series due July 2020
95709TAD2
250,000

 
 
 
250,000

 
 
5.875% Series due July 2036
95709TAE0
150,000

 
 
 
150,000

 
 
8.625% Series due December 2018
95709TAG5
300,000

 
 
 
300,000

 
 
4.125% Series due March 2042
95709TAH3
550,000

 
 
 
550,000

 
 
4.10% Series due April 2043
95709TAJ9
250,000

 
 
 
—

 
 
4.625% Series due September 2043
95709TAK6
250,000

 
 
 
—

 
 
 
 
2,250,000

 
 
 
1,750,000

 
 
Pollution control bond series:
 
 
 
 
 
 
 
 
Variable series due April 2032 (Wamego)
933623BN9
30,500

 
 
 
30,500

 
 
Variable series due April 2032 (St Marys)
792609AF6
45,000

 
 
 
45,000

 
 
 
 
75,500

 
 
 
75,500

 
 
Total Westar Energy
 
2,325,500

 
 
 
1,825,500

 
 
 
 
 
 
 
 
 
 
 
KGE
 
 
 
 
 
 
 
 
First mortgage bond series:
 
 
 
 
 
 
 
 
6.53% Series due December 2037
485260BJ1
175,000

 
 
 
175,000

 
 
6.15% Series due May 2023
485260B@1
50,000

 
 
 
50,000

 
 
6.64%Series due May 2038
485260B#9
100,000

 
 
 
100,000

 
 
6.70%Series due June 2019
U24448AB5
300,000

 
 
 
300,000

 
 
 
 
625,000

 
 
 
625,000

 
 
Pollution control bond series:
 
 
 
 
 
 
 
 
Variable rate series due April 2027 (LaCygne)
502828AJ5
21,940

 
 
 
21,940

 
 
5.3% Series due June 2031
121825BW2
108,600

 
 
 
108,600

 
 
5.3% Series due June 2031
933623BR0
18,900

 
 
 
18,900

 
 
4.85% Series due June 2031
121825CB7
50,000

 
 
 
50,000

 
 
5.6% Series due June 2031
121825CD3
—

 
 
 
50,000

 
 
6.0% Series due June 2031
121825CE1
—

 
 
 
50,000

 
 
5.0% Series due June 2031
121825CF8
50,000

 
 
 
50,000

 
 
Variable rate series due April 2032 (St Marys)
792609AE9
14,500

 
 
 
14,500

 
 
Variable rate series due April 2032 (Wamego)
933623BM1
10,000

 
 
 
10,000

 
 
 
 
273,940

 
 

373,940

 
 
Total KGE
 
898,940

 
 
 
998,940

 
 
 
 
 
 
 
 
 
 
 
Total long-term debt
 
3,224,440

 
 
 
2,824,440

 
 
Unamortized debt discount
 
(5,643
)
 
 
 
(5,169
)
 
 
Long-term debt due within one year
 
(250,000
)
 
 
 
—

 
 
Total long-term debt, net
 
$
2,968,797

 
 
 
$
2,819,271

 
 

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2013 should be read in conjunction with this financial information.
Page 9



Westar Energy, Inc.
GAAP to Non-GAAP Reconciliation

Fuel and purchased power costs fluctuate with electricity sales and unit costs. As permitted by regulators, prices are adjusted to reflect changes in the costs of fuel and purchased power. Fuel and purchased power costs for wholesale customers are recovered at prevailing market prices or based on a predetermined formula with a price adjustment approved by FERC. As a result, changes in fuel and purchased power costs are offset in revenues with minimal impact on net income. For this reason, Westar management believes that gross margin is useful for understanding and analyzing changes in operating performance from one period to the next. Gross margin is calculated as total revenues, including transmission revenues, less the sum of fuel and purchased power costs and amounts billed by the SPP for network transmission costs (SPP NITS). Accordingly, gross margin reflects transmission revenues and costs on a net basis. However, transmission costs are recorded as operating and maintenance expense on Westar's consolidated statements of income.

The calculations of gross margin and operating and maintenance expense w/o SPP NITS for the three and nine months ended September 30, 2013 and 2012 are shown in the table below. The table also includes a reconciliation of gross margin to income from operations for both periods. Income from operations is the GAAP financial measure most directly comparable to gross margin. Operating and maintenance expense is the GAAP financial measure most directly comparable to operating and maintenance expense w/o SPP NITS.
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
Change
 
2013
 
2012
 
Change
 
(Dollars in Thousands)
Revenues
 
 
 
 
 
 
 
 
 
 
 
Residential
$
237,984

 
$
250,757

 
$
(12,773
)
 
$
568,662

 
$
566,069

 
$
2,593

Commercial
199,921

 
194,032

 
5,889

 
513,049

 
493,814

 
19,235

Industrial
98,410

 
96,656

 
1,754

 
282,155

 
278,036

 
4,119

Other retail
3,849

 
6,407

 
(2,558
)
 
2,905

 
1,125

 
1,780

Total Retail Revenues
540,164

 
547,852

 
(7,688
)
 
1,366,771

 
1,339,044

 
27,727

Wholesale
94,496

 
88,784

 
5,712

 
262,749

 
228,966

 
33,783

Transmission
52,410

 
49,137

 
3,273

 
156,725

 
144,480

 
12,245

Other
7,904

 
9,985

 
(2,081
)
 
24,531

 
25,208

 
(677
)
Total Revenues
694,974

 
695,758


(784
)

1,810,776


1,737,698


73,078

Less: Fuel and purchased power expense
178,562

 
177,506

 
1,056

 
483,014

 
452,840

 
30,174

 SPP network transmission costs
45,315

 
42,516

 
2,799

 
133,711

 
124,142

 
9,569

Gross Margin
$
471,097


$
475,736


$
(4,639
)

$
1,194,051


$
1,160,716


$
33,335

 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
$
471,097

 
$
475,736

 
$
(4,639
)
 
$
1,194,051

 
$
1,160,716

 
$
33,335

Add: SPP network transmission costs
45,315

 
42,516

 
2,799

 
133,711

 
124,142

 
9,569

Less: Operating and maintenance expense
169,100

 
149,001

 
20,099

 
491,132

 
461,515

 
29,617

Depreciation and amortization expense
68,861

 
65,061

 
3,800

 
203,305

 
204,640

 
(1,335
)
Selling, general and administrative expense
54,245

 
54,300

 
(55
)
 
157,668

 
164,346

 
(6,678
)
Income from operations
$
224,206

 
$
249,890


$
(25,684
)

$
475,657


$
454,357


$
21,300

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating and maintenance expense
$
169,100

 
$
149,001

 
$
20,099

 
$
491,132

 
$
461,515

 
$
29,617

Less: SPP network transmission costs
45,315

 
42,516

 
2,799

 
133,711

 
124,142

 
9,569

Operating and maintenance expense w/o SPP NITS
$
123,785

 
$
106,485


$
17,300


$
357,421


$
337,373


$
20,048

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2013 should be read in conjunction with this financial information.
Page 10
2013 Earnings Guidance
November Update

2013 updated earnings per share range                        $2.20 - $2.30

November update:
Increase in guidance reflects stronger residential and commercial sales, lower interest expense, additional O&M expense reductions and lower effective income tax rate.


Key drivers and assumptions for 2013:
•
Weather adjusted total retail sales flat
•
Transmission revenue increase ~$18 million effective January
•
Includes companion retail TDC of ~$11 million effective April
•
Combined O&M and SG&A ~5% gross increase
•
Reflects ~1% decrease for all items without revenue offsets (i.e., gross increase includes ~$49 million increase for items with a revenue offset, such as SPP Transmission, property taxes, pension and tree trimming expenses)
•
Depreciation and amortization expense increase ~$4 million
•
Annual adjustment to Environmental Cost Recovery Rider ~$27 million effective June 1
•
Includes $17 million of COLI proceeds vs. $14 million planned
•
Equity AFUDC increase ~$2 million
•
Prairie Wind joint venture earnings increase ~$4 million
•
Effective tax rate of approximately 29-30%
•
Funding 2013 construction program:
•
Primary source will be debt
•
Settle ~2 million shares already priced under earlier forward sale agreements

The effects of the key assumptions are not necessarily independent of one another, and the combination of effects can cause individual impacts smaller or larger than the ranges indicated.


Forward-looking statements: Certain matters discussed in this document are “forward-looking statements.” The Private Securities Litigation Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like “driver,” “assumption,” “believe,” “anticipate,” “target,” “expect,” “pro forma,” “estimate,” “intend,” “guidance” or words of similar meaning. Forward-looking statements describe future plans, objectives, expectations or goals. Although Westar Energy believes that its expectations are based on reasonable assumptions, all forward-looking statements involve risk and uncertainty. The factors that could cause actual results to differ materially from these forward-looking statements include those discussed herein as well as (1) those discussed in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2012 (a) under the heading, “Forward-Looking Statements,” (b) in ITEM 1. Business, (c) in ITEM 1A. Risk Factors, (d) in ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (e) in ITEM 8. Financial Statements and Supplementary Data: Notes 13 and 15; (2) those discussed in the company's Quarterly Report on Form 10-Q filed Nov. 7, 2013, (a) in ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and (b) in Part I, Financial Information, ITEM 1. Financial Statements: Notes 10 and 11; and (3) other factors discussed in the company’s filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date such statement was made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement was made.

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2013 should be read in conjunction with this financial information.
Page 11
2014 Earnings Drivers

Plan to provide 2014 guidance with year end 2013 results in February

2014 Drivers:
•
Retail MWh sales up modestly 50 - 75 bp
•
Modest price adjustments
◦
$31 million 2012 abbreviated rate case
◦
$37 million transmission formula rate and companion TDC
◦
$13 million environmental cost recovery rider
•
~3% increase in combined O&M and SG&A expenses without revenue offset items
◦
~10% increase top line combined O&M and SG&A expenses, includes transmission and property tax expenses that have revenue offsets
•
COLI proceeds ~$14 million
•
Effective tax rate 31-33%
•
Financing
◦
No additional equity
◦
Refinance $250M first mortgage bond due July
◦
Settle ~$60 million of forward shares already priced under ATM


Forward-looking statements: Certain matters discussed in this document are “forward-looking statements.” The Private Securities Litigation Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like “driver,” “assumption,” “believe,” “anticipate,” “target,” “expect,” “pro forma,” “estimate,” “intend,” “guidance” or words of similar meaning. Forward-looking statements describe future plans, objectives, expectations or goals. Although Westar Energy believes that its expectations are based on reasonable assumptions, all forward-looking statements involve risk and uncertainty. The factors that could cause actual results to differ materially from these forward-looking statements include those discussed herein as well as (1) those discussed in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2012 (a) under the heading, “Forward-Looking Statements,” (b) in ITEM 1. Business, (c) in ITEM 1A. Risk Factors, (d) in ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (e) in ITEM 8. Financial Statements and Supplementary Data: Notes 13 and 15; (2) those discussed in the company's Quarterly Report on Form 10-Q filed Nov. 7, 2013, (a) in ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and (b) in Part I, Financial Information, ITEM 1. Financial Statements: Notes 10 and 11; and (3) other factors discussed in the company’s filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date such statement was made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement was made.


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2013 should be read in conjunction with this financial information.
Page 12