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WR-9.30.2014-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) November 5, 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 November 5, 2014, we issued a press release announcing our earnings for the period ended September 30, 2014. A copy of our November 5, 2014 press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. We are also including our 2014 Third 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 9.01. Financial Statements and Exhibits.

Exhibit 99.1    Press Release dated November 5, 2014
Exhibit 99.2
2014 Third Quarter Earnings package







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 5, 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 November 5, 2014
Exhibit 99.2
 
2014 Third Quarter Earnings package



WR-09.30.2014-8-K Exhibit 99.1
Exhibit 99.1


Westar Energy announces 3rd quarter 2014 results.
TOPEKA, Kan., Nov. 5, 2014 - Westar Energy, Inc. (NYSE:WR) today announced earnings of $147 million, or $1.13 per share, for the third quarter 2014 compared with earnings of $133 million, or $1.04 per share, for the third quarter 2013. Earnings for the nine months ended September 30, 2014 were $270 million, or $2.08 per share, compared with $251 million, or $1.97 per share, for the same period in 2013.

Higher net income for the three months ended September 30, 2014 was driven largely by higher prices and lower operating and maintenance costs at the company’s power plants.
    
Higher net income for the nine months ended September 30, 2014 was largely driven by higher revenues. The higher revenues are due primarily to higher prices resulting from investments in transmission infrastructure and air quality controls and to a lesser extent to higher energy sales from cooler winter weather earlier this year and increased sales from industrial customers. The higher revenues were partially offset by an increase in general and administrative costs.

Earnings Guidance

The company tightened its 2014 earnings guidance to $2.35 to $2.45 per share with a bias towards the upper end of the range. The earnings guidance drivers are located 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, Nov. 6 with the investment community at 9:30 a.m. ET (8:30 a.m. CT). Investors, media and the public may listen to the conference call by dialing 877-703-6106, participant code 64808703. 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 September 30, 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 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, 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 Nov. 5, 2014, (a) under the heading "Forward-Looking Statements." (b) in ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and (c) in Part I, Financial Information, ITEM 1. Financial Statements: Notes 10 and 12; 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.
Condensed Consolidated Statements of Income
(Unaudited)
 
Three Months Ended Sep. 30,
 
Nine Months Ended Sep. 30,
 
2014
 
2013
 
Change
 
% Change
 
2014
 
2013
 
Change
 
% Change
 
(Dollars In Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
$
261,106

 
$
237,984

 
$
23,122

 
9.7

 
$
629,064

 
$
568,662

 
$
60,402

 
10.6

Commercial
223,588

 
199,921

 
23,667

 
11.8

 
562,882

 
513,049

 
49,833

 
9.7

Industrial
113,039

 
98,410

 
14,629

 
14.9

 
314,518

 
282,155

 
32,363

 
11.5

Other retail
(6,032
)
 
3,849

 
(9,881
)
 
(256.7
)
 
(17,587
)
 
2,905

 
(20,492
)
 
(705.4
)
Total Retail Revenues
591,701

 
540,164

 
51,537

 
9.5

 
1,488,877

 
1,366,771

 
122,106

 
8.9

Wholesale
97,680

 
94,496

 
3,184

 
3.4

 
290,727

 
262,749

 
27,978

 
10.6

Transmission
67,145

 
52,410

 
14,735

 
28.1

 
192,311

 
156,725

 
35,586

 
22.7

Other
7,514

 
7,904

 
(390
)
 
(4.9
)
 
33,349

 
24,531

 
8,818

 
35.9

Total Revenues
764,040

 
694,974

 
69,066

 
9.9

 
2,005,264

 
1,810,776

 
194,488

 
10.7

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Fuel and purchased power
200,755

 
178,562

 
22,193

 
12.4

 
539,373

 
483,014

 
56,359

 
11.7

SPP network transmission costs
55,720

 
45,315

 
10,405

 
23.0

 
163,211

 
133,711

 
29,500

 
22.1

Operating and maintenance
84,213

 
93,377

 
(9,164
)
 
(9.8
)
 
277,841

 
265,532

 
12,309

 
4.6

Depreciation and amortization
72,279

 
68,861

 
3,418

 
5.0

 
213,270

 
203,305

 
9,965

 
4.9

Selling, general and administrative
60,977

 
54,245

 
6,732

 
12.4

 
179,633

 
157,668

 
21,965

 
13.9

Taxes other than income tax
34,677

 
30,408

 
4,269

 
14.0

 
104,248

 
91,889

 
12,359

 
13.4

Total Operating Expenses
508,621

 
470,768

 
37,853

 
8.0

 
1,477,576

 
1,335,119

 
142,457

 
10.7

INCOME FROM OPERATIONS
255,419

 
224,206

 
31,213

 
13.9

 
527,688

 
475,657

 
52,031

 
10.9

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Investment earnings
1,655

 
2,863

 
(1,208
)
 
(42.2
)
 
7,208

 
8,612

 
(1,404
)
 
(16.3
)
Other income
14,991

 
12,321

 
2,670

 
21.7

 
26,566

 
29,748

 
(3,182
)
 
(10.7
)
Other expense
(6,242
)
 
(6,195
)
 
(47
)
 
(0.8
)
 
(14,192
)
 
(13,911
)
 
(281
)
 
(2.0
)
Total Other Income
10,404

 
8,989

 
1,415

 
15.7

 
19,582

 
24,449

 
(4,867
)
 
(19.9
)
Interest expense
44,531

 
45,708

 
(1,177
)
 
(2.6
)
 
138,075

 
135,790

 
2,285

 
1.7

INCOME BEFORE INCOME TAXES
221,292

 
187,487

 
33,805

 
18.0

 
409,195

 
364,316

 
44,879

 
12.3

Income tax expense
71,532

 
52,392

 
19,140

 
36.5

 
132,643

 
106,514

 
26,129

 
24.5

NET INCOME
149,760

 
135,095

 
14,665

 
10.9

 
276,552

 
257,802

 
18,750

 
7.3

Less: Net income attributable to noncontrolling interests
2,378

 
1,970

 
408

 
20.7

 
6,742

 
6,344

 
398

 
6.3

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
147,382

 
$
133,125

 
$
14,257

 
10.7

 
$
269,810

 
$
251,458

 
$
18,352

 
7.3

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
$
1.13

 
$
1.04

 
$
0.09

 
8.7

 
$
2.08

 
$
1.97

 
$
0.11

 
5.6

Diluted earnings per common share
$
1.10

 
$
1.04

 
$
0.06

 
5.8

 
$
2.04

 
$
1.96

 
$
0.08

 
4.1

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
130,196

 
127,445

 
2,751

 
2.2

 
129,526

 
127,318

 
2,208

 
1.7

Diluted
133,029

 
128,111

 
4,918

 
3.8

 
132,200

 
127,851

 
4,349

 
3.4

DIVIDENDS DECLARED PER COMMON SHARE
$
0.35

 
$
0.34

 
$
0.01

 
2.9

 
$
1.05

 
$
1.02

 
$
0.03

 
2.9

Effective income tax rate
32.32
%
 
27.94
%
 
 
 
 
 
32.42
%
 
29.24
%
 
 
 
 


WESTAR ENERGY NEWS RELEASE    Page 3 of 3
WR-09.30.2014-8-K Exhibit 99.2


Exhibit 99.2
Westar Energy, Inc.
Third Quarter 2014 Earnings
Released November 5, 2014





Contents
Page
 
 
 
2014 Earnings Guidance November Update
11
2015 Earnings Drivers
12











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, 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 September 30,
 
2014
 
2013
 
Change
 
% Change
 
(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
261,106

 
$
237,984

 
$
23,122

 
9.7

Commercial
223,588

 
199,921

 
23,667

 
11.8

Industrial
113,039

 
98,410

 
14,629

 
14.9

Other retail
(6,032
)
 
3,849

 
(9,881
)
 
(256.7
)
Total Retail Revenues
591,701

 
540,164

 
51,537

 
9.5

Wholesale
97,680

 
94,496

 
3,184

 
3.4

Transmission
67,145

 
52,410

 
14,735

 
28.1

Other
7,514

 
7,904

 
(390
)
 
(4.9
)
Total Revenues
764,040

 
694,974

 
69,066

 
9.9

OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
200,755

 
178,562

 
22,193

 
12.4

SPP network transmission costs
55,720

 
45,315

 
10,405

 
23.0

Operating and maintenance
84,213

 
93,377

 
(9,164
)
 
(9.8
)
Depreciation and amortization
72,279

 
68,861

 
3,418

 
5.0

Selling, general and administrative
60,977

 
54,245

 
6,732

 
12.4

Taxes other than income tax
34,677

 
30,408

 
4,269

 
14.0

Total Operating Expenses
508,621

 
470,768

 
37,853

 
8.0

INCOME FROM OPERATIONS
255,419

 
224,206

 
31,213

 
13.9

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
1,655

 
2,863

 
(1,208
)
 
(42.2
)
Other income
14,991

 
12,321

 
2,670

 
21.7

Other expense
(6,242
)
 
(6,195
)
 
(47
)
 
(0.8
)
Total Other Income
10,404

 
8,989

 
1,415

 
15.7

Interest expense
44,531

 
45,708

 
(1,177
)
 
(2.6
)
INCOME BEFORE INCOME TAXES
221,292

 
187,487

 
33,805

 
18.0

Income tax expense
71,532

 
52,392

 
19,140

 
36.5

NET INCOME
149,760

 
135,095

 
14,665

 
10.9

Less: Net income attributable to noncontrolling interests
2,378

 
1,970

 
408

 
20.7

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
147,382

 
$
133,125

 
$
14,257

 
10.7

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
1.13

 
$
1.04

 
$
0.09

 
8.7

Diluted earnings per common share
$
1.10

 
$
1.04

 
$
0.06

 
5.8

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
130,196

 
127,445

 
2,751

 
2.2

Diluted
133,029

 
128,111

 
4,918

 
3.8

DIVIDENDS DECLARED PER COMMON SHARE
$
0.35

 
$
0.34

 
$
0.01

 
2.9

Effective income tax rate
32.32
%
 
27.94
%
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2014 should be read in conjunction with this financial information.
Page 1




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

 
Nine Months Ended September 30,
 
2014
 
2013
 
Change
 
% Change
 
(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
629,064

 
$
568,662

 
$
60,402

 
10.6

Commercial
562,882

 
513,049

 
49,833

 
9.7

Industrial
314,518

 
282,155

 
32,363

 
11.5

Other retail
(17,587
)
 
2,905

 
(20,492
)
 
(705.4
)
Total Retail Revenues
1,488,877

 
1,366,771

 
122,106

 
8.9

Wholesale
290,727

 
262,749

 
27,978

 
10.6

Transmission
192,311

 
156,725

 
35,586

 
22.7

Other
33,349

 
24,531

 
8,818

 
35.9

Total Revenues
2,005,264

 
1,810,776

 
194,488

 
10.7

OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
539,373

 
483,014

 
56,359

 
11.7

SPP network transmission costs
163,211

 
133,711

 
29,500

 
22.1

Operating and maintenance
277,841

 
265,532

 
12,309

 
4.6

Depreciation and amortization
213,270

 
203,305

 
9,965

 
4.9

Selling, general and administrative
179,633

 
157,668

 
21,965

 
13.9

Taxes other than income tax
104,248

 
91,889

 
12,359

 
13.4

Total Operating Expenses
1,477,576

 
1,335,119

 
142,457

 
10.7

INCOME FROM OPERATIONS
527,688

 
475,657

 
52,031

 
10.9

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
7,208

 
8,612

 
(1,404
)
 
(16.3
)
Other income
26,566

 
29,748

 
(3,182
)
 
(10.7
)
Other expense
(14,192
)
 
(13,911
)
 
(281
)
 
(2.0
)
Total Other Income
19,582

 
24,449

 
(4,867
)
 
(19.9
)
Interest expense
138,075

 
135,790

 
2,285

 
1.7

INCOME BEFORE INCOME TAXES
409,195

 
364,316

 
44,879

 
12.3

Income tax expense
132,643

 
106,514

 
26,129

 
24.5

NET INCOME
276,552

 
257,802

 
18,750

 
7.3

Less: Net income attributable to noncontrolling interests
6,742

 
6,344

 
398

 
6.3

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
269,810

 
$
251,458

 
$
18,352

 
7.3

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
2.08

 
$
1.97

 
$
0.11

 
5.6

Diluted earnings per common share
$
2.04

 
$
1.96

 
$
0.08

 
4.1

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
129,526

 
127,318

 
2,208

 
1.7

Diluted
132,200

 
127,851

 
4,349

 
3.4

DIVIDENDS DECLARED PER COMMON SHARE
$
1.05

 
$
1.02

 
$
0.03

 
2.9

Effective income tax rate
32.42
%
 
29.24
%
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2014 should be read in conjunction with this financial information.
Page 2


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

 
September 30, 2014
 
December 31, 2013
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
5,835

 
$
4,487

Accounts receivable, net of allowance for doubtful accounts of $3,561 and $4,596, respectively
300,120

 
250,036

Fuel inventory and supplies
244,179

 
239,511

Deferred tax assets
35,009

 
37,954

Prepaid expenses
16,342

 
15,821

Regulatory assets
122,406

 
135,408

Other
25,447

 
23,608

Total Current Assets
749,338

 
706,825

PROPERTY, PLANT AND EQUIPMENT, NET
8,025,042

 
7,551,916

PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET
288,567

 
296,626

OTHER ASSETS:
 
 
 
Regulatory assets
585,816

 
620,006

Nuclear decommissioning trust
184,656

 
175,625

Other
240,245

 
246,140

Total Other Assets
1,010,717

 
1,041,771

TOTAL ASSETS
$
10,073,664

 
$
9,597,138

LIABILITIES AND EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Current maturities of long-term debt
$
—

 
$
250,000

Current maturities of long-term debt of variable interest entities
28,091

 
27,479

Short-term debt
202,400

 
134,600

Accounts payable
194,663

 
233,351

Accrued dividends
45,445

 
43,604

Accrued taxes
109,245

 
69,769

Accrued interest
65,574

 
80,457

Regulatory liabilities
64,104

 
35,982

Other
91,517

 
80,184

Total Current Liabilities
801,039

 
955,426

LONG-TERM LIABILITIES:
 
 
 
Long-term debt, net
3,215,356

 
2,968,958

Long-term debt of variable interest entities, net
166,639

 
194,802

Deferred income taxes
1,489,334

 
1,363,148

Unamortized investment tax credits
189,920

 
192,265

Regulatory liabilities
299,456

 
293,574

Accrued employee benefits
325,126

 
331,558

Asset retirement obligations
230,925

 
160,682

Other
78,492

 
68,194

Total Long-Term Liabilities
5,995,248

 
5,573,181

COMMITMENTS AND CONTINGENCIES (See 10-Q Notes 10 and 12)
 
 
 
EQUITY:
 
 
 
Westar Energy, Inc. Shareholders’ Equity:
 
 
 
Common stock, par value $5 per share; authorized 275,000,000 shares; issued and outstanding 130,657,941 shares and 128,254,229 shares, respective to each date
653,290

 
641,271

Paid-in capital
1,753,460

 
1,696,727

Retained earnings
858,128

 
724,776

Total Westar Energy, Inc. Shareholders’ Equity
3,264,878

 
3,062,774

Noncontrolling Interests
12,499

 
5,757

Total Equity
3,277,377

 
3,068,531

TOTAL LIABILITIES AND EQUITY
$
10,073,664

 
$
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 September 30, 2014 should be read in conjunction with this financial information.
Page 3


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

 
Nine Months Ended September 30,
 
2014
 
2013
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
 
 
 
Net income
$
276,552

 
$
257,802

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
213,270

 
203,305

Amortization of nuclear fuel
18,218

 
15,270

Amortization of deferred regulatory gain from sale leaseback
(4,121
)
 
(4,121
)
Amortization of corporate-owned life insurance
15,510

 
10,442

Non-cash compensation
6,034

 
6,148

Net deferred income taxes and credits
134,714

 
107,709

Stock-based compensation excess tax benefits
(790
)
 
(502
)
Allowance for equity funds used during construction
(13,345
)
 
(9,473
)
Changes in working capital items:
 
 
 
Accounts receivable
(50,084
)
 
(42,400
)
Fuel inventory and supplies
(5,703
)
 
13,842

Prepaid expenses and other
8,693

 
2,992

Accounts payable
(4,397
)
 
2,088

Accrued taxes
41,323

 
44,573

Other current liabilities
(19,732
)
 
(53,042
)
Changes in other assets
6,019

 
(22,682
)
Changes in other liabilities
28,051

 
21,159

Cash Flows from Operating Activities
650,212

 
553,110

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 
 
 
Additions to property, plant and equipment
(648,933
)
 
(557,988
)
Purchase of securities - trusts
(6,582
)
 
(61,495
)
Sale of securities - trusts
8,221

 
76,906

Investment in corporate-owned life insurance
(16,250
)
 
(17,724
)
Proceeds from investment in corporate-owned life insurance
23,989

 
147,591

Proceeds from federal grant
—

 
876

Investment in affiliated company
—

 
(2,694
)
Other investing activities
(2,203
)
 
(2,886
)
Cash Flows used in Investing Activities
(641,758
)
 
(417,414
)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 
 
 
Short-term debt, net
67,206

 
(287,741
)
Proceeds from long-term debt
417,943

 
492,572

Retirements of long-term debt
(427,500
)
 
(100,000
)
Retirements of long-term debt of variable interest entities
(27,321
)
 
(25,498
)
Repayment of capital leases
(2,397
)
 
(2,262
)
Borrowings against cash surrender value of corporate-owned life insurance
57,764

 
57,948

Repayment of borrowings against cash surrender value of corporate-owned life insurance
(22,737
)
 
(145,418
)
Stock-based compensation excess tax benefits
790

 
502

Issuance of common stock
58,560

 
4,526

Distributions to shareholders of noncontrolling interests
—

 
(1,657
)
Cash dividends paid
(127,364
)
 
(121,875
)
Other financing activities
(2,050
)
 
(2,699
)
Cash Flows used in Financing Activities
(7,106
)
 
(131,602
)
NET CHANGE IN CASH AND CASH EQUIVALENTS
1,348

 
4,094

CASH AND CASH EQUIVALENTS:
 
 
 
Beginning of period
4,487

 
5,829

End of period
$
5,835

 
$
9,923


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2014 should be read in conjunction with this financial information.
Page 4


Westar Energy, Inc.
3rd Quarter 2014 vs. 2013
Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2013 basic earnings attributable to common stock
 
 
 
$
133,125

 
 
 
$
1.04

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Retail
 
 
 
51,537

 
A
 
 
 
Wholesale
 
 
 
3,184

 
 
 
 
 
Transmission
 
 
 
14,735

 
 
 
 
 
Other revenues
 
 
 
(390
)
 
 
 
 
 
Fuel and purchased power
 
 
 
(22,193
)
 
B
 
 
 
SPP network transmission costs
 
 
 
(10,405
)
 
 
 
 
 
Gross Margin
 
 
 
36,468

 
 
 
 
 
Operating and maintenance
 
 
 
9,164

 
C
 
 
 
Depreciation and amortization
 
 
 
(3,418
)
 
D
 
 
 
Selling, general and administrative
 
 
 
(6,732
)
 
E
 
 
 
Taxes other than income tax
 
 
 
(4,269
)
 
F
 
 
 
Other income (expense)
 
 
 
1,415

 
G
 
 
 
Interest expense
 
 
 
1,177

 
 
 
 
 
Income tax expense
 
 
 
(19,140
)
 
H
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(408
)
 
 
 
 
 
Change in shares outstanding
 
(0.02
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014 basic earnings attributable to common stock
 
 
 
$
147,382

 
 
 
$
1.13

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to increased average retail prices (see page 7 for changes by customer class)
 
 
 
 
 
 
 
 
 
 
B
Due primarily to an increase in quantity of purchased power
 
 
 
 
 
 
 
 
 
 
C
Due primarily to: lower routine maintenance costs at coal-fired plants -- $4.9M; lower maintenance costs at Wolf Creek -- $2.7M; lower expense for previously deferred storm costs -- $2.1M
 
 
 
 
 
 
 
 
 
 
 
D
Due principally to property additions
 
 
 
 
 
 
 
 
 
 
E
Due principally to higher benefit costs -- ($5.4M); higher fees related to implementing new software systems -- ($1.4M)
 
 
 
 
 
 
 
 
 
 
F
Due primarily to higher property tax expense that is largely offset by increased prices -- ($3.9M)
 
 
 
 
 
 
 
 
 
 
G
Due primarily to COLI benefits this year -- $2.8M
 
 
 
 
 
 
 
 
 
 
H
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 September 30, 2014 should be read in conjunction with this financial information.
Page 5


Westar Energy, Inc.
YTD September 2014 vs. 2013
Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2013 basic earnings attributable to common stock
 
 
 
$
251,458

 
 
 
$
1.97

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Retail
 
 
 
122,106

 
A
 
 
 
Wholesale
 
 
 
27,978

 
B
 
 
 
Transmission
 
 
 
35,586

 
 
 
 
 
Other revenues
 
 
 
8,818

 
C
 
 
 
Fuel and purchased power
 
 
 
(56,359
)
 
D
 
 
 
SPP network transmission costs
 
 
 
(29,500
)
 
 
 
 
 
Gross Margin
 
 
 
108,629

 
 
 
 
 
Operating and maintenance
 
 
 
(12,309
)
 
E
 
 
 
Depreciation and amortization
 
 
 
(9,965
)
 
F
 
 
 
Selling, general and administrative
 
 
 
(21,965
)
 
G
 
 
 
Taxes other than income tax
 
 
 
(12,359
)
 
H
 
 
 
Other income (expense)
 
 
 
(4,867
)
 
I
 
 
 
Interest expense
 
 
 
(2,285
)
 
 
 
 
 
Income tax expense
 
 
 
(26,129
)
 
J
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(398
)
 
 
 
 
 
Change in shares outstanding
 
(0.04
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014 basic earnings attributable to common stock
 
 
 
$
269,810

 
 
 
$
2.08

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to increased average retail prices (see page 7 for changes by customer class)
 
 
 
 
 
 
 
 
 
 
B
Due to an 8% increase in MWh sales (see page 7 for changes by customer class)
 
 
 
 
 
 
 
 
 
 
C
Due primarily to an increase in energy marketing margins from favorable market conditions primarily in Q1
 
 
 
 
 
 
 
 
 
 
D
Due primarily to an increase in quantity of purchased power
 
 
 
 
 
 
 
 
 
 
E
Due primarily to: higher costs at Wolf Creek for a planned outage -- ($8.7M); higher costs to enhance reliability in our distribution system -- ($6.0M); higher costs for planned outages at coal fired plants -- ($2.7M); partially offset by lower expense for previously deferred storm costs -- $6.4M
 
 
 
 
 
 
 
 
 
 
 
F
Due principally to property additions and implementing new software systems
 
 
 
 
 
 
 
 
 
 
G
Due principally to: higher benefit costs including the effect of restructuring insurance contracts in 2013 -- ($13.2M); integration costs associated with implementing new software systems -- ($3.7M); higher allowance for uncollectible accounts -- ($2.1M)
 
 
 
 
 
 
 
 
 
 
H
Due primarily to higher property tax expense that is largely offset by increased prices -- ($10.7M)
 
 
 
 
 
 
 
 
 
 
I
Due primarily to less COLI benefits this year -- ($7.0M); higher equity AFUDC -- $3.9 M
 
 
 
 
 
 
 
 
 
 
J
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 September 30, 2014 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,
 
2014
 
2013
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
261,106

 
$
237,984

 
$
23,122

 
9.7

Commercial
223,588

 
199,921

 
23,667

 
11.8

Industrial
113,039

 
98,410

 
14,629

 
14.9

Other retail
3,532

 
3,153

 
379

 
12.0

Provision for rate refunds
(9,564
)
 
696

 
(10,260
)
 
(a)

Total Retail Revenues
591,701

 
540,164

 
51,537

 
9.5

Tariff-based wholesale
72,544

 
76,111

 
(3,567
)
 
(4.7
)
Market-based wholesale
25,136

 
18,385

 
6,751

 
36.7

Transmission
67,145

 
52,410

 
14,735

 
28.1

Other
7,514

 
7,904

 
(390
)
 
(4.9
)
Total Revenues
$
764,040

 
$
694,974

 
$
69,066

 
9.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
2,104

 
2,073

 
31

 
1.5

Commercial
2,190

 
2,163

 
27

 
1.2

Industrial
1,467

 
1,396

 
71

 
5.1

Other retail
20

 
22

 
(2
)
 
(9.1
)
Total Retail
5,781

 
5,654

 
127

 
2.2

Tariff-based wholesale
1,430

 
1,611

 
(181
)
 
(11.2
)
Market-based wholesale
1,037

 
755

 
282

 
37.4

Total wholesale
2,467

 
2,366

 
101

 
4.3

Total Electricity Sales
8,248

 
8,020

 
228

 
2.8

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
102.35

 
$
95.54

 
$
6.81

 
7.1

Tariff-based wholesale
$
50.73

 
$
47.24

 
$
3.49

 
7.4

Market-based wholesale
$
24.24

 
$
24.35

 
$
(0.11
)
 
(0.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
143,932

 
$
155,250

 
$
(11,318
)
 
(7.3
)
Purchased power
47,370

 
27,426

 
19,944

 
72.7

Subtotal
191,302

 
182,676

 
8,626

 
4.7

RECA recovery and other
9,453

 
(4,114
)
 
13,567

 
329.8

Total fuel and purchased power expense
$
200,755

 
$
178,562

 
$
22,193

 
12.4

 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
457

 
626

 
(169
)
 
(27.0
)
                    Coal
5,529

 
5,976

 
(447
)
 
(7.5
)
                    Nuclear
1,243

 
968

 
275

 
28.4

                    Wind
86

 
97

 
(11
)
 
(11.3
)
Subtotal electricity generated
7,315

 
7,667

 
(352
)
 
(4.6
)
Purchased
1,242

 
820

 
422

 
51.5

Total Electricity Supply
8,557

 
8,487

 
70

 
0.8

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
19.68

 
$
20.25

 
$
(0.57
)
 
(2.8
)
Average cost of purchased power
$
38.14

 
$
33.45

 
$
4.69

 
14.0

Average cost of fuel and purchased power
$
22.36

 
$
21.52

 
$
0.84

 
3.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2013/
 
 
 
 
 
2014
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
1,084

 
1,102

 
(18
)
 
(1.6
)
Actual compared to 20 year average
1,084

 
1,124

 
(40
)
 
(3.6
)
Heating
 
 
 
 
 
 


Actual compared to last year
36

 
13

 
23

 
176.9

Actual compared to 20 year average
36

 
44

 
(8
)
 
(18.2
)
(a) Change greater than 1,000%

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2014 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,
 
2014
 
2013
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
629,064

 
$
568,662

 
$
60,402

 
10.6

Commercial
562,882

 
513,049

 
49,833

 
9.7

Industrial
314,518

 
282,155

 
32,363

 
11.5

Other retail
10,516


9,520

 
996

 
10.5

Provision for rate refunds
(28,103
)
 
(6,615
)
 
(21.488
)
 
(324.8
)
Total Retail Revenues
1,488,877

 
1,366,771

 
122,106

 
8.9

Tariff-based wholesale
204,414

 
210,350

 
(5,936
)
 
(2.8
)
Market-based wholesale
86,313

 
52,399

 
33,914

 
64.7

Transmission
192,311

 
156,725

 
35,586

 
22.7

Other
33,349

 
24,531

 
8,818

 
35.9

Total Revenues
$
2,005,264

 
$
1,810,776

 
$
194,488

 
10.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
5,229

 
5,075

 
154

 
3.0

Commercial
5,792

 
5,722

 
70

 
1.2

Industrial
4,252

 
4,020

 
232

 
5.8

Other retail
64

 
64

 
—

 
—

Total Retail
15,337

 
14,881

 
456

 
3.1

Tariff-based wholesale
3,993

 
4,419

 
(426
)
 
(9.6
)
Market-based wholesale
2,953

 
2,041

 
912

 
44.7

Total wholesale
6,946

 
6,460

 
486

 
7.5

Total Electricity Sales
22,283

 
21,341

 
942

 
4.4

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
97.08

 
$
91.85

 
$
5.23

 
5.7

Tariff-based wholesale
$
51.19

 
$
47.60

 
$
3.59

 
7.5

Market-based wholesale
$
29.23

 
$
25.67

 
$
3.56

 
13.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
398,395

 
$
413,062

 
$
(14,667
)
 
(3.6
)
Purchased power
145,893

 
86,959

 
58,934

 
67.8

Subtotal
544,288

 
500,021

 
44,267

 
8.9

RECA recovery and other
(4,915
)
 
(17,007
)
 
12,092

 
71.1

Total fuel and purchased power expense
$
539,373

 
$
483,014

 
$
56,359

 
11.7

 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
1,082

 
1,490

 
(408
)
 
(27.4
)
                    Coal
15,169

 
15,910

 
(741
)
 
(4.7
)
                    Nuclear
2,769

 
2,259

 
510

 
22.6

                    Wind
315

 
311

 
4

 
1.3

Subtotal electricity generated
19,335

 
19,970

 
(635
)
 
(3.2
)
Purchased
3,788

 
2,588

 
1,200

 
46.4

Total Electricity Supply
23,123

 
22,558

 
565

 
2.5

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
20.60

 
$
20.68

 
$
(0.08
)
 
(0.4
)
Average cost of purchased power
$
38.51

 
$
33.60

 
$
4.91

 
14.6

Average cost of fuel and purchased power
$
23.54

 
$
22.17

 
$
1.37

 
6.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2013/
 
 
 
 
 
2014
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
1,637

 
1,598

 
39

 
2.4

Actual compared to 20 year average
1,637

 
1,583

 
54

 
3.4

Heating
 
 
 
 
 
 
 
Actual compared to last year
3,231

 
3,104

 
127

 
4.1

Actual compared to 20 year average
3,231

 
2,859

 
372

 
13.0

 

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2014 should be read in conjunction with this financial information.
Page 8


Westar Energy, Inc.
Capitalization
 
 
September 30, 2014
 
 
 
December 31, 2013
 
 
 
 
(Dollars in Thousands)
 
 
Current maturities of long-term debt
 
$
—

 
 
 
$
250,000

 
 
Current maturities of long-term debt of VIEs
 
28,091

 
 
 
27,479

 
 
Long-term debt, net
 
3,215,356

 
 
 
2,968,958

 
 
Long-term debt of variable interest entities, net
 
166,639

 
 
 
194,802

 
 
Total long-term debt
 
3,410,086

 
51.0
%
 
3,441,239

 
52.9
%
Common equity
 
3,264,878

 
48.8
%
 
3,062,774

 
47.0
%
Noncontrolling interests
 
12,499

 
0.2
%
 
5,757

 
0.1
%
Total capitalization
 
$
6,687,463

 
100.0
%
 
$
6,509,770

 
100.0
%
 
 
 
 
 
 
 
 
 
GAAP Book value per share
 
$
24.99

 
 
 
$
23.88

 


Period end shares outstanding (in thousands)
 
130,658

 
 
 
128,254

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

 
 
 
$
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
430,000

 
 
 
250,000

 
 
4.625% Series due September 2043
95709TAK6
250,000

 
 
 
250,000

 
 
 
 
2,180,000

 
 
 
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
 
2,255,500

 
 
 
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

 
 
4.3% Series due July 2044
485260BM4
250,000

 
 
 
—

 
 
 
 
875,000

 
 
 
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

 
 
5.3% Series due June 2031
933623BR0
—

 
 
 
18,900

 
 
4.85% Series due June 2031
121825CB7
50,000

 
 
 
50,000

 
 
5.0% Series due June 2031
121825CF8
—

 
 
 
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

 
 
 
 
96,440

 
 

273,940

 
 
Total KGE
 
971,440

 
 
 
898,940

 
 
 
 
 
 
 
 
 
 
 
Total long-term debt
 
3,226,940

 
 
 
3,224,440

 
 
Unamortized debt discount
 
(11,584
)
 
 
 
(5,482
)
 
 
Long-term debt due within one year
 
—

 
 
 
(250,000
)
 
 
Total long-term debt, net
 
$
3,215,356

 
 
 
$
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 September 30, 2014 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.

The calculations of gross margin for the three and nine months ended September 30, 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 September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
Change
 
2014
 
2013
 
Change
 
(Dollars in Thousands)
Revenues
$
764,040

 
$
694,974


$
69,066


$
2,005,264


$
1,810,776


$
194,488

Less: Fuel and purchased power expense
200,755

 
178,562

 
22,193

 
539,373

 
483,014

 
56,359

 SPP network transmission costs
55,720

 
45,315

 
10,405

 
163,211

 
133,711

 
29,500

Gross Margin
$
507,565


$
471,097


$
36,468


$
1,302,680


$
1,194,051


$
108,629

 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
$
507,565

 
$
471,097

 
$
36,468

 
$
1,302,680

 
$
1,194,051

 
$
108,629

Less: Operating and maintenance expense
84,213

 
93,377

 
(9,164
)
 
277,841

 
265,532

 
12,309

Depreciation and amortization expense
72,279

 
68,861

 
3,418

 
213,270

 
203,305

 
9,965

Selling, general and administrative expense
60,977

 
54,245

 
6,732

 
179,633

 
157,668

 
21,965

Taxes other than income tax
34,677

 
30,408

 
4,269

 
104,248

 
91,889

 
12,359

Income from operations
$
255,419

 
$
224,206


$
31,213


$
527,688


$
475,657


$
52,031

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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


2014 Earnings Guidance
November Update


Nov. 5, 2014



2014 EPS guidance range                            $2.35 - $2.45

Updated key drivers and planning assumptions:
•
Retail MWh sales up ≈150 bp
•
Normal weather and energy marketing activity remainder of the year
•
Implemented planned 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, effective June 2014
•
≈6% increase in combined O&M and SG&A expenses
◦
≈10% increase top line operating expense excluding fuel and depreciation
•
≈5% increase in depreciation expense
•
COLI proceeds ≈$14 million
•
Higher equity AFUDC ≈$4 million
•
Interest expense unchanged
•
Effective tax rate 32-34%
•
Financing:
◦
Equity
▪
Settle in 4th quarter 1.2 million forward shares out of 3 million total shares settled in 2014
▪
Year end average annual outstanding count ≈130 million
◦
Completed debt transactions
▪
Refinanced $177.5 million of pollution control bonds in May
▪
Refinanced $250 million first mortgage bonds 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 Nov. 5, 2014, (a) under the heading, "Forward-Looking Statements," (b) in ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and (c) 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.


Nov. 5, 2014


2015 Earnings Drivers

2015 Drivers:
•
Retail MWh sales increase ≈150 bp
•
Normal rider price adjustments:
◦
$19 million transmission formula rate and companion TDC
◦
$17 million environmental cost recovery rider
•
≈1% decrease in combined O&M and SG&A expenses
◦
≈3% increase top line operating expenses excluding fuel and depreciation
•
COLI proceeds ≈$15 million
•
Equity AFUDC decrease ≈$9 million
•
Depreciation increase ≈$24 million
◦
≈$5 million of increase represents La Cygne retrofit depreciation that begins in November following completion of the GRC
•
Effective tax rate 33-36%
•
Financing:
◦
Settle 9 million of forward shares already priced (≈$250 million)
◦
Year end average annual shares outstanding 138 million
•
Interest expense unchanged
◦
La Cygne carrying charge credited to interest expense
•
File a GRC March 2 with a decision by late October


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 Nov. 5, 2014, (a) under the heading, "Forward-Looking Statements," (b) in ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and (c) 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.


Nov. 5, 2014