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WR_3.31.2014-Earnings Release 8-K


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) May 7, 2014

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
(Address of principal executive offices)
 
(Zip Code)

Registrant's telephone number, including area code _(785) 575-6300____________________


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

On May 7, 2014, we issued a press release announcing our earnings for the period ended March 31, 2014. A copy of our May 7, 2014 press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. We are also including our 2014 First Quarter Earnings package, which is attached hereto as Exhibit 99.2 and is incorporated herein by reference. The information furnished pursuant to this Item 2.02, including Exhibits 99.1 and 99.2, 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 7.01. Regulation FD Disclosure

We are furnishing an update to our 2014 Earnings Guidance, which is included in Exhibit 99.2 attached hereto and is incorporated herein by reference. This information is available to the public on our website, http://www.WestarEnergy.com. The information furnished pursuant to this Item 7.01, including Exhibit 99.2, 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 May 7, 2014
Exhibit 99.2
2014 First Quarter Earnings package and 2014 Earnings Guidance May Update





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:
 
May 7, 2014
 
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 May 7, 2014
Exhibit 99.2
 
2014 First Quarter Earnings package and 2014 Earnings Guidance May Update



WR-03.31.2014-8-K Exhibit 99.1
Exhibit 99.1


Westar Energy Announces 1st Quarter 2014 Results
TOPEKA, Kan., May 7, 2014 - Westar Energy, Inc. (NYSE:WR) today announced earnings of $69 million, or $0.53 per share, for the first quarter 2014 compared with earnings of $51 million, or $0.40 per share, for the first quarter 2013.

Higher net income for the quarter, compared with last year, was largely driven by higher revenues. The higher revenues are due principally from higher energy sales from colder weather and higher prices from investments in air quality controls and transmission infrastructure. The increase in revenues was partially offset with higher operating costs due to scheduled maintenance, employee benefit costs and depreciation expense.

Earnings Guidance
The company raised its 2014 earnings guidance to $2.30 to $2.45 per share. Updated guidance drivers have been posted under Supplemental Materials within the investor section of the company website at www.WestarEnergy.com.

Conference Call and Additional Company Information
Westar Energy management will host a conference call Thursday, May 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 866-700-0133, participant code 37389140. 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 first quarter financial information, the company's quarterly report on Form 10-Q for the period ended March 31, 2014 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, 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,”

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

“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, 2013 (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 May 7, 2014, (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 1st quarter results

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

 
Three Months Ended Mar. 31,
 
2014
 
2013
 
Change
 
% Change
 
(Dollars In Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
192,287

 
$
165,375

 
$
26,912

 
16.3

Commercial
161,100

 
147,956

 
13,144

 
8.9

Industrial
94,495

 
90,925

 
3,570

 
3.9

Other retail
(8,523
)
 
(3,171
)
 
(5,352
)
 
(168.8
)
Total Retail Revenues
439,359

 
401,085

 
38,274

 
9.5

Wholesale
110,613

 
86,469

 
24,144

 
27.9

Transmission
61,466

 
51,510

 
9,956

 
19.3

Other
17,118

 
7,148

 
9,970

 
139.5

Total Revenues
628,556

 
546,212

 
82,344

 
15.1

OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
173,839

 
151,752

 
22,087

 
14.6

SPP network transmission costs
51,958

 
43,796

 
8,162

 
18.6

Operating and maintenance
91,790

 
84,155

 
7,635

 
9.1

Depreciation and amortization
70,110

 
66,846

 
3,264

 
4.9

Selling, general and administrative
56,486

 
48,945

 
7,541

 
15.4

Taxes other than income tax
34,832

 
30,778

 
4,054

 
13.2

Total Operating Expenses
479,015

 
426,272

 
52,743

 
12.4

INCOME FROM OPERATIONS
149,541

 
119,940

 
29,601

 
24.7

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
2,378

 
4,059

 
(1,681
)
 
(41.4
)
Other income
5,917

 
3,715

 
2,202

 
59.3

Other expense
(5,664
)
 
(5,361
)
 
(303
)
 
(5.7
)
Total Other Income
2,631

 
2,413

 
218

 
9.0

Interest expense
46,241

 
44,284

 
1,957

 
4.4

INCOME BEFORE INCOME TAXES
105,931

 
78,069

 
27,862

 
35.7

Income tax expense
34,961

 
24,813

 
10,148

 
40.9

NET INCOME
70,970

 
53,256

 
17,714

 
33.3

Less: Net income attributable to noncontrolling interests
2,015

 
2,112

 
(97
)
 
(4.6
)
NET INCOME ATTRIBUTABLE TO COMMON STOCK
$
68,955

 
$
51,144

 
$
17,811

 
34.8

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
0.53

 
$
0.40

 
$
0.13

 
32.5

Diluted earnings per common share
$
0.52

 
$
0.40

 
$
0.12

 
30.0

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
129,004

 
127,196

 
1,808

 
1.4

Diluted
131,269

 
127,619

 
3,650

 
2.9

DIVIDENDS DECLARED PER COMMON SHARE
$
0.35

 
$
0.34

 
$
0.01

 
2.9

Effective income tax rate
33.00
%
 
31.78
%
 
 
 
 

WESTAR ENERGY NEWS RELEASE    Page 3 of 3
WR-03.31.2014-8-K Exhibit 99.2


Exhibit 99.2
Westar Energy, Inc.
First Quarter 2014 Earnings
Released May 7, 2014





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 March 31, 2014 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.
Condensed Consolidated Statements of Income
(Unaudited)

 
Three Months Ended March 31,
 
2014
 
2013
 
Change
 
% Change
 
(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
192,287

 
$
165,375

 
$
26,912

 
16.3

Commercial
161,100

 
147,956

 
13,144

 
8.9

Industrial
94,495

 
90,925

 
3,570

 
3.9

Other retail
(8,523
)
 
(3,171
)
 
(5,352
)
 
(168.8
)
Total Retail Revenues
439,359

 
401,085

 
38,274

 
9.5

Wholesale
110,613

 
86,469

 
24,144

 
27.9

Transmission
61,466

 
51,510

 
9,956

 
19.3

Other
17,118

 
7,148

 
9,970

 
139.5

Total Revenues
628,556

 
546,212

 
82,344

 
15.1

OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
173,839

 
151,752

 
22,087

 
14.6

SPP network transmission costs
51,958

 
43,796

 
8,162

 
18.6

Operating and maintenance
91,790

 
84,155

 
7,635

 
9.1

Depreciation and amortization
70,110

 
66,846

 
3,264

 
4.9

Selling, general and administrative
56,486

 
48,945

 
7,541

 
15.4

Taxes other than income tax
34,832

 
30,778

 
4,054

 
13.2

Total Operating Expenses
479,015

 
426,272

 
52,743

 
12.4

INCOME FROM OPERATIONS
149,541

 
119,940

 
29,601

 
24.7

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
2,378

 
4,059

 
(1,681
)
 
(41.4
)
Other income
5,917

 
3,715

 
2,202

 
59.3

Other expense
(5,664
)
 
(5,361
)
 
(303
)
 
(5.7
)
Total Other Income
2,631

 
2,413

 
218

 
9.0

Interest expense
46,241

 
44,284

 
1,957

 
4.4

INCOME BEFORE INCOME TAXES
105,931

 
78,069

 
27,862

 
35.7

Income tax expense
34,961

 
24,813

 
10,148

 
40.9

NET INCOME
70,970

 
53,256

 
17,714

 
33.3

Less: Net income attributable to noncontrolling interests
2,015

 
2,112

 
(97
)
 
(4.6
)
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
68,955

 
$
51,144

 
$
17,811

 
34.8

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
0.53

 
$
0.40

 
$
0.13

 
32.5

Diluted earnings per common share
$
0.52

 
$
0.40

 
$
0.12

 
30.0

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
129,004

 
127,196

 
1,808

 
1.4

Diluted
131,269

 
127,619

 
3,650

 
2.9

DIVIDENDS DECLARED PER COMMON SHARE
$
0.35

 
$
0.34

 
$
0.01

 
2.9

Effective income tax rate
33.00
%
 
31.78
%
 
 
 
 
 
 
 
 
 
 
 
 





The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2014 should be read in conjunction with this financial information.
Page 1


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

 
March 31, 2014
 
December 31, 2013
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
9,065

 
$
4,487

Accounts receivable, net of allowance for doubtful accounts of $7,233 and $4,596, respectively
231,782

 
250,036

Fuel inventory and supplies
249,687

 
239,511

Deferred tax assets
38,618

 
37,954

Prepaid expenses
19,934

 
15,821

Regulatory assets
134,458

 
135,408

Other
23,280

 
23,608

Total Current Assets
706,824

 
706,825

PROPERTY, PLANT AND EQUIPMENT, NET
7,669,016

 
7,551,916

PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET
293,939

 
296,626

OTHER ASSETS:
 
 
 
Regulatory assets
606,840

 
620,006

Nuclear decommissioning trust
178,591

 
175,625

Other
255,249

 
246,140

Total Other Assets
1,040,680

 
1,041,771

TOTAL ASSETS
$
9,710,459

 
$
9,597,138

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

 
$
250,000

Current maturities of long-term debt of variable interest entities
28,256

 
27,479

Short-term debt
178,900

 
134,600

Accounts payable
191,216

 
233,351

Accrued dividends
45,075

 
43,604

Accrued taxes
101,832

 
69,769

Accrued interest
91,958

 
80,457

Regulatory liabilities
46,235

 
35,982

Other
78,435

 
80,184

Total Current Liabilities
1,011,907

 
955,426

LONG-TERM LIABILITIES:
 
 
 
Long-term debt, net
2,969,118

 
2,968,958

Long-term debt of variable interest entities, net
166,791

 
194,802

Deferred income taxes
1,397,197

 
1,363,148

Unamortized investment tax credits
191,484

 
192,265

Regulatory liabilities
297,544

 
293,574

Accrued employee benefits
327,558

 
331,558

Asset retirement obligations
171,432

 
160,682

Other
71,924

 
68,194

Total Long-Term Liabilities
5,593,048

 
5,573,181

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 128,813,670 shares and 128,254,229 shares, respective to each date
644,068

 
641,271

Paid-in capital
1,705,254

 
1,696,727

Retained earnings
748,411

 
724,776

Total Westar Energy, Inc. Shareholders’ Equity
3,097,733

 
3,062,774

Noncontrolling Interests
7,771

 
5,757

Total Equity
3,105,504

 
3,068,531

TOTAL LIABILITIES AND EQUITY
$
9,710,459

 
$
9,597,138


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2014 should be read in conjunction with this financial information.
Page 2


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

 
Three Months Ended March 31,
 
2014
 
2013
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
 
 
 
Net income
$
70,970

 
$
53,256

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
70,110

 
66,846

Amortization of nuclear fuel
5,966

 
2,857

Amortization of deferred regulatory gain from sale leaseback
(1,374
)
 
(1,374
)
Amortization of corporate-owned life insurance
5,884

 
3,522

Non-cash compensation
1,796

 
2,221

Net deferred income taxes and credits
34,787

 
22,387

Stock-based compensation excess tax benefits
636

 
(202
)
Allowance for equity funds used during construction
(5,006
)
 
(2,746
)
Changes in working capital items:
 
 
 
Accounts receivable
16,892

 
(2,313
)
Fuel inventory and supplies
(9,956
)
 
12,180

Prepaid expenses and other
(2,255
)
 
7,641

Accounts payable
1,422

 
28,214

Accrued taxes
33,428

 
31,431

Other current liabilities
2,838

 
(7,251
)
Changes in other assets
3,650

 
(31,259
)
Changes in other liabilities
8,524

 
8,224

Cash Flows from Operating Activities
238,312

 
193,634

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 
 
 
Additions to property, plant and equipment
(218,329
)
 
(181,987
)
Purchase of securities - trusts
(2,707
)
 
(32,582
)
Sale of securities - trusts
3,745

 
33,305

Proceeds from investment in corporate-owned life insurance
1,121

 
79,508

Proceeds from federal grant
—

 
876

Investment in affiliated company
1,362

 
—

Other investing activities
(1,230
)
 
240

Cash Flows used in Investing Activities
(216,038
)
 
(100,640
)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 
 
 
Short-term debt, net
44,139

 
(196,318
)
Proceeds from long-term debt
—

 
246,179

Retirements of long-term debt of variable interest entities
(27,148
)
 
(25,368
)
Repayment of capital leases
(755
)
 
(802
)
Borrowings against cash surrender value of corporate-owned life insurance
861

 
—

Repayment of borrowings against cash surrender value of corporate-owned life insurance
(1,040
)
 
(78,655
)
Stock-based compensation excess tax benefits
(636
)
 
202

Issuance of common stock
10,317

 
1,546

Cash dividends paid
(41,591
)
 
(39,964
)
Other financing activities
(1,843
)
 
—

Cash Flows used in Financing Activities
(17,696
)
 
(93,180
)
NET CHANGE IN CASH AND CASH EQUIVALENTS
4,578

 
(186
)
CASH AND CASH EQUIVALENTS:
 
 
 
Beginning of period
4,487

 
5,829

End of period
$
9,065

 
$
5,643


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2014 should be read in conjunction with this financial information.
Page 3


Westar Energy, Inc.
1st Quarter 2014 vs. 2013

Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2013 earnings attributable to common stock
 
 
 
$
51,144

 
 
 
$
0.40

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Retail
 
 
 
38,274

 
A
 
 
 
Wholesale
 
 
 
24,144

 
B
 
 
 
Transmission
 
 
 
9,956

 
 
 
 
 
Other revenues
 
 
 
9,970

 
C
 
 
 
Fuel and purchased power
 
 
 
(22,087
)
 
D
 
 
 
SPP network transmission costs
 
 
 
(8,162
)
 
 
 
 
 
Gross Margin
 
 
 
52,095

 
 
 
 
 
Operating and maintenance
 
 
 
(7,635
)
 
E
 
 
 
Depreciation and amortization
 
 
 
(3,264
)
 
F
 
 
 
Selling, general and administrative
 
 
 
(7,541
)
 
G
 
 
 
Taxes other than income tax
 
 
 
(4,054
)
 
H
 
 
 
Other income (expense)
 
 
 
218

 
 
 
 
 
Interest expense
 
 
 
(1,957
)
 
 
 
 
 
Income tax expense
 
 
 
(10,148
)
 
I
 
 
 
Net income attributable to noncontrolling interests
 
 
 
97

 
 
 
 
 
Change in shares outstanding
 
(0.01
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014 earnings attributable to common stock
 
 
 
$
68,955

 
 
 
$
0.53

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to a 6% increase in retail MWh sales (see page 5 for changes by customer class; HDD 12% higher than last year and 16% higher than normal
 
 
 
 
 
 
 
 
 
 
 
B
Due to a 21% increase in MWh sales (see page 5 for changes by customer class)
 
 
 
 
 
 
 
 
 
 
C
Due primarily to an increase in energy marketing margins from favorable market conditions -- $10.4M
 
 
 
 
 
 
 
 
 
 
D
Due primarily to a 9% increase in combined MWh generated and purchased, and a 12% increase in the average cost of MWhs purchased
 
 
 
 
 
 
 
 
 
 
E
Due primarily to higher costs at Wolf Creek from higher costs incurred during a scheduled outage -- ($5.6M); and higher amortization of refueling outage costs -- ($1.6M)
 
 
 
 
 
 
 
 
 
 
 
F
Due principally to property additions
 
 
 
 
 
 
 
 
 
 
G
Due principally to higher post-retirement and other employee benefits costs due to the restructuring of insurance contracts in 2013 resulting in an increase in 2014 -- ($3.5M); increased allowance for uncollectible accounts -- ($1.5M)
 
 
 
 
 
 
 
 
 
 
H
Due primarily to higher property tax expense that is largely offset by increased prices -- ($3.3M)
 
 
 
 
 
 
 
 
 
 
I
Due primarily to higher 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 March 31, 2014 should be read in conjunction with this financial information.
Page 4


Westar Energy, Inc.
Revenue, Sales and Energy Supply
Supplemental Data
Three Months Ended March 31,
 
2014
 
2013
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
192,287

 
$
165,375

 
$
26,912

 
16.3

Commercial
161,100

 
147,956

 
13,144

 
8.9

Industrial
94,495

 
90,925

 
3,570

 
3.9

Other retail
3,462

 
3,198

 
264

 
8.3

Provision for rate refunds
(11,985
)
 
(6,369
)
 
(5,616
)
 
(88.2
)
Total Retail Revenues
439,359

 
401,085

 
38,274

 
9.5

Tariff-based wholesale
67,894

 
71,749

 
(3,855
)
 
(5.4
)
Market-based wholesale
42,719

 
14,720

 
27,999

 
190.2

Transmission
61,466

 
51,510

 
9,956

 
19.3

Other
17,118

 
7,148

 
9,970

 
139.5

Total Revenues
$
628,556

 
$
546,212

 
$
82,344

 
15.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
1,709

 
1,543

 
166

 
10.8

Commercial
1,760

 
1,703

 
57

 
3.3

Industrial
1,339

 
1,312

 
27

 
2.1

Other retail
21

 
21

 
—

 
—

Total Retail
4,829

 
4,579

 
250

 
5.5

Tariff-based wholesale
1,371

 
1,479

 
(108
)
 
(7.3
)
Market-based wholesale
1,105

 
566

 
539

 
95.2

Total wholesale
2,476

 
2,045

 
431

 
21.1

Total Electricity Sales
7,305

 
6,624

 
681

 
10.3

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
90.98

 
$
87.59

 
$
3.39

 
3.9

Tariff-based wholesale
$
49.52

 
$
48.51

 
$
1.01

 
2.1

Market-based wholesale
$
38.66

 
$
26.01

 
$
12.65

 
48.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
138,650

 
$
127,653

 
$
10,997

 
8.6

Purchased power
39,452

 
29,016

 
10,436

 
36.0

Subtotal
178,102

 
156,669

 
21,433

 
13.7

RECA recovery and other
(4,263
)
 
(4,917
)
 
654

 
13.3

Total fuel and purchased power expense
$
173,839

 
$
151,752

 
$
22,087

 
14.6

 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
304

 
350

 
(46
)
 
(13.1
)
                    Coal
5,181

 
5,185

 
(4
)
 
(0.1
)
                    Nuclear
894

 
454

 
440

 
96.9

                    Wind
114

 
104

 
10

 
9.6

Subtotal electricity generated
6,493

 
6,093

 
400

 
6.6

Purchased
1,045

 
857

 
188

 
21.9

Total Electricity Supply
7,538

 
6,950

 
588

 
8.5

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
21.35

 
$
20.95

 
$
0.40

 
1.9

Average cost of purchased power
$
37.75

 
$
33.86

 
$
3.89

 
11.5

Average cost of fuel and purchased power
$
23.63

 
$
22.54

 
$
1.09

 
4.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2013/
 
 
 
 
 
2014
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
—

 
—

 
—

 
nm

Actual compared to 20 year average
—

 
3

 
(3
)
 
nm

Heating
 
 
 
 
 
 
 
Actual compared to last year
2,804

 
2,510

 
294

 
11.7

Actual compared to 20 year average
2,804

 
2,428

 
376

 
15.5

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 March 31, 2014 should be read in conjunction with this financial information.
Page 5


Westar Energy, Inc.
Capitalization
 
 
March 31, 2014
 
 
 
December 31, 2013
 
 
 
 
(Dollars in Thousands)
 
 
Current maturities of long-term debt
 
$
250,000

 
 
 
$
250,000

 
 
Current maturities of long-term debt of VIEs
 
28,256

 
 
 
27,479

 
 
Long-term debt, net
 
2,969,118

 
 
 
2,968,958

 
 
Long-term debt of variable interest entities, net
 
166,791

 
 
 
194,802

 
 
Total long-term debt
 
3,414,165

 
52.4
%
 
3,441,239

 
52.9
%
Common equity
 
3,097,733

 
47.5
%
 
3,062,774

 
47.0
%
Noncontrolling interests
 
7,771

 
0.1
%
 
5,757

 
0.1
%
Total capitalization
 
$
6,519,669

 
100.0
%
 
$
6,509,770

 
100.0
%
 
 
 
 
 
 
 
 
 
GAAP Book value per share
 
$
24.05

 
 
 
$
23.88

 


Period end shares outstanding (in thousands)
 
128,814

 
 
 
128,254

 
 
 
 
 
 
 
 
 
 
 
Outstanding Long-Term Debt
 
 
 
 
 
 
 
 
 
 
CUSIP
March 31, 2014
 
 
 
December 31, 2013
 
 
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

 
 
8.625% Series due December 2018
95709TAG5
300,000

 
 
 
300,000

 
 
5.10% Series due July 2020
95709TAD2
250,000

 
 
 
250,000

 
 
5.95% Series due January 2035
95709TAC4
125,000

 
 
 
125,000

 
 
5.875% Series due July 2036
95709TAE0
150,000

 
 
 
150,000

 
 
4.125% Series due March 2042
95709TAH3
550,000

 
 
 
550,000

 
 
4.10% Series due April 2043
95709TAJ9
250,000

 
 
 
250,000

 
 
4.625% Series due September 2043
95709TAK6
250,000

 
 
 
250,000

 
 
 
 
2,250,000

 
 
 
2,250,000

 
 
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

 
 
 
2,325,500

 
 
 
 
 
 
 
 
 
 
 
KGE
 
 
 
 
 
 
 
 
First mortgage bond series:
 
 
 
 
 
 
 
 
6.70%Series due June 2019
485260BL6
300,000

 
 
 
300,000

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

 
 
 
50,000

 
 
6.53% Series due December 2037
485260BJ1
175,000

 
 
 
175,000

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

 
 
 
100,000

 
 
 
 
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

 
 
5.0% 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

 
 

273,940

 
 
Total KGE
 
898,940

 
 
 
898,940

 
 
 
 
 
 
 
 
 
 
 
Total long-term debt
 
3,224,440

 
 
 
3,224,440

 
 
Unamortized debt discount
 
(5,322
)
 
 
 
(5,482
)
 
 
Long-term debt due within one year
 
(250,000
)
 
 
 
(250,000
)
 
 
Total long-term debt, net
 
$
2,969,118

 
 
 
$
2,968,958

 
 

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2014 should be read in conjunction with this financial information.
Page 6



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.

The calculations of gross margin for the three months ended March 31, 2014 and 2013 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.
 
Three Months Ended March 31,
 
2014
 
2013
 
Change
 
(Dollars in Thousands)
Revenues
$
628,556

 
$
546,212


$
82,344

Less: Fuel and purchased power expense
173,839

 
151,752

 
22,087

 SPP network transmission costs
51,958

 
43,796

 
8,162

Gross Margin
$
402,759


$
350,664


$
52,095

 
 
 
 
 
 
Gross margin
$
402,759

 
$
350,664

 
$
52,095

Less: Operating and maintenance expense
91,790

 
84,155

 
7,635

Depreciation and amortization expense
70,110

 
66,846

 
3,264

Selling, general and administrative expense
56,486

 
48,945

 
7,541

Taxes other than income tax
34,832

 
30,778

 
4,054

Income from operations
$
149,541

 
$
119,940


$
29,601

 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2014 should be read in conjunction with this financial information.
Page 7


2014 Earnings Guidance
May Update



2014 EPS guidance range                            $2.30 - $2.45

Updated key drivers and planning assumptions:
•
Retail MWh sales up 50 - 100 bp
•
Modest annualized price adjustments
◦
~$31 million 2012 abbreviated rate case, effective December 2013
◦
~$44 million transmission formula rate and companion TDC, net of SPP network costs
◦
~$11 million environmental cost recovery rider
•
Normal weather and energy marketing activity remainder of the year
•
~6% increase in combined O&M and SG&A expenses excluding SPP network costs and property tax that have revenue offsets
◦
~10% increase top line operating expense excluding fuel and depreciation
•
~4 - 5% increase in depreciation expense
•
COLI proceeds ~$14 million
•
Higher equity AFUDC ~$2 million
•
Higher interest expense ~$5 million
•
Effective tax rate 32-34%
•
Financing:
◦
No additional equity sales
▪
Settle 3 million forward shares already priced under ATM for yearend average annual outstanding count ~130 million
◦
No additional debt issuance anticipated
▪
Refinance $177.5 million of pollution control bonds in June
▪
Refinance $250 million first mortgage bond due July

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, 2013 (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 May 7, 2014, (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.

May 7, 2014



Page 8