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WR-03.31.2015-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 5, 2015

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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o 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 5, 2015, we issued a press release announcing our earnings for the period ended March 31, 2015. A copy of our May 5, 2015 press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. We are also including our 2015 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 2015 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 5, 2015
Exhibit 99.2
2015 First Quarter Earnings Package and 2015 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 5, 2015
 
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 5, 2015
Exhibit 99.2
 
2015 First Quarter Earnings Package and 2015 Earnings Guidance May Update




WR-03.31.2015-8-K Exhibit 99.1
Exhibit 99.1


Westar Energy Announces 1st Quarter 2015 Results.
TOPEKA, Kan., May 5, 2015 - Westar Energy, Inc. (NYSE:WR) today announced earnings of $51 million, or $0.38 per share, for the first quarter 2015 compared with earnings of $69 million, or $0.53 per share, for the first quarter 2014.

Lower net income for the quarter, compared with last year, reflects milder weather which reduced both energy marketing margins and retail energy sales and a $6 million estimated refund obligation for transmission revenues. Lower expenses partially offset the lower revenues.

Earnings Guidance
The company lowered its 2015 earnings guidance to $2.18 to $2.33 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 Wednesday, May 6 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 866-703-6104, participant code 31896774. 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, 2015 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,” “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

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

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, 2014 (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 5, 2015, (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
Manager, 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,
 
2015
 
2014
 
Change
 
% Change
 
(Dollars In Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
181,294

 
$
192,287

 
$
(10,993
)
 
(5.7
)
Commercial
161,305

 
161,100

 
205

 
0.1

Industrial
96,479

 
94,495

 
1,984

 
2.1

Other retail
539

 
(8,523
)
 
9,062

 
106.3

Total Retail Revenues
439,617

 
439,359

 
258

 
0.1

Wholesale
86,755

 
110,613

 
(23,858
)
 
(21.6
)
Transmission
58,585

 
61,466

 
(2,881
)
 
(4.7
)
Other
5,850

 
17,118

 
(11,268
)
 
(65.8
)
Total Revenues
590,807

 
628,556

 
(37,749
)
 
(6.0
)
OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
155,482

 
173,839

 
(18,357
)
 
(10.6
)
SPP network transmission costs
56,812

 
51,958

 
4,854

 
9.3

Operating and maintenance
85,080

 
91,790

 
(6,710
)
 
(7.3
)
Depreciation and amortization
74,586

 
70,110

 
4,476

 
6.4

Selling, general and administrative
55,418

 
56,486

 
(1,068
)
 
(1.9
)
Taxes other than income tax
37,871

 
34,832

 
3,039

 
8.7

Total Operating Expenses
465,249

 
479,015

 
(13,766
)
 
(2.9
)
INCOME FROM OPERATIONS
125,558

 
149,541

 
(23,983
)
 
(16.0
)
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
2,480

 
2,378

 
102

 
4.3

Other income
2,814

 
5,917

 
(3,103
)
 
(52.4
)
Other expense
(5,713
)
 
(5,664
)
 
(49
)
 
(0.9
)
Total Other (Expense) Income
(419
)
 
2,631

 
(3,050
)
 
(115.9
)
Interest expense
44,298

 
46,241

 
(1,943
)
 
(4.2
)
INCOME BEFORE INCOME TAXES
80,841

 
105,931

 
(25,090
)
 
(23.7
)
Income tax expense
27,678

 
34,961

 
(7,283
)
 
(20.8
)
NET INCOME
53,163

 
70,970

 
(17,807
)
 
(25.1
)
Less: Net income attributable to noncontrolling interests
2,183

 
2,015

 
168

 
8.3

NET INCOME ATTRIBUTABLE TO COMMON STOCK
$
50,980

 
$
68,955

 
$
(17,975
)
 
(26.1
)
BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
0.38

 
$
0.53

 
$
(0.15
)
 
(28.3
)
Diluted earnings per common share
$
0.38

 
$
0.52

 
$
(0.14
)
 
(26.9
)
AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
132,395

 
129,004

 
3,391

 
2.6

Diluted
135,540

 
131,269

 
4,271

 
3.3

DIVIDENDS DECLARED PER COMMON SHARE
$
0.36

 
$
0.35

 
$
0.01

 
2.9

Effective income tax rate
34.24
%
 
33.00
%
 
 
 
 

WESTAR ENERGY NEWS RELEASE    Page 3 of 3
WR-03.31.2015-8-K Exhibit 99.2


Exhibit 99.2
Westar Energy, Inc.
First Quarter 2015 Earnings
Released May 5, 2015





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, 2015 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,
 
2015
 
2014
 
Change
 
% Change
 
(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
181,294

 
$
192,287

 
$
(10,993
)
 
(5.7
)
Commercial
161,305

 
161,100

 
205

 
0.1

Industrial
96,479

 
94,495

 
1,984

 
2.1

Other retail
539

 
(8,523
)
 
9,062

 
106.3

Total Retail Revenues
439,617

 
439,359

 
258

 
0.1

Wholesale
86,755

 
110,613

 
(23,858
)
 
(21.6
)
Transmission
58,585

 
61,466

 
(2,881
)
 
(4.7
)
Other
5,850

 
17,118

 
(11,268
)
 
(65.8
)
Total Revenues
590,807

 
628,556

 
(37,749
)
 
(6.0
)
OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
155,482

 
173,839

 
(18,357
)
 
(10.6
)
SPP network transmission costs
56,812

 
51,958

 
4,854

 
9.3

Operating and maintenance
85,080

 
91,790

 
(6,710
)
 
(7.3
)
Depreciation and amortization
74,586

 
70,110

 
4,476

 
6.4

Selling, general and administrative
55,418

 
56,486

 
(1,068
)
 
(1.9
)
Taxes other than income tax
37,871

 
34,832

 
3,039

 
8.7

Total Operating Expenses
465,249

 
479,015

 
(13,766
)
 
(2.9
)
INCOME FROM OPERATIONS
125,558

 
149,541

 
(23,983
)
 
(16.0
)
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
2,480

 
2,378

 
102

 
4.3

Other income
2,814

 
5,917

 
(3,103
)
 
(52.4
)
Other expense
(5,713
)
 
(5,664
)
 
(49
)
 
(0.9
)
Total Other (Expense) Income
(419
)
 
2,631

 
(3,050
)
 
(115.9
)
Interest expense
44,298

 
46,241

 
(1,943
)
 
(4.2
)
INCOME BEFORE INCOME TAXES
80,841

 
105,931

 
(25,090
)
 
(23.7
)
Income tax expense
27,678

 
34,961

 
(7,283
)
 
(20.8
)
NET INCOME
53,163

 
70,970

 
(17,807
)
 
(25.1
)
Less: Net income attributable to noncontrolling interests
2,183

 
2,015

 
168

 
8.3

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
50,980

 
$
68,955

 
$
(17,975
)
 
(26.1
)
BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
0.38

 
$
0.53

 
$
(0.15
)
 
(28.3
)
Diluted earnings per common share
$
0.38

 
$
0.52

 
$
(0.14
)
 
(26.9
)
AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
132,395

 
129,004

 
3,391

 
2.6

Diluted
135,540

 
131,269

 
4,271

 
3.3

DIVIDENDS DECLARED PER COMMON SHARE
$
0.36

 
$
0.35

 
$
0.01

 
2.9

Effective income tax rate
34.24
%
 
33.00
%
 
 
 
 
 
 
 
 
 
 
 
 





The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2015 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, 2015
 
December 31, 2014
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
6,074

 
$
4,556

Accounts receivable, net of allowance for doubtful accounts of $7,072 and $5,309, respectively
236,285

 
267,327

Fuel inventory and supplies
265,967

 
247,406

Deferred tax assets
19,747

 
29,636

Prepaid expenses
18,842

 
15,793

Regulatory assets
103,925

 
105,549

Other
23,725

 
30,655

Total Current Assets
674,565

 
700,922

PROPERTY, PLANT AND EQUIPMENT, NET
8,232,333

 
8,162,908

PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET
275,989

 
278,573

OTHER ASSETS:
 
 
 
Regulatory assets
756,382

 
754,229

Nuclear decommissioning trust
190,354

 
185,016

Other
280,112

 
265,353

Total Other Assets
1,226,848

 
1,204,598

TOTAL ASSETS
$
10,409,735

 
$
10,347,001

LIABILITIES AND EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Current maturities of long-term debt of variable interest entities
$
28,315

 
$
27,933

Short-term debt
425,400

 
257,600

Accounts payable
203,138

 
219,351

Accrued dividends
46,425

 
44,971

Accrued taxes
110,957

 
74,356

Accrued interest
89,821

 
79,707

Regulatory liabilities
57,185

 
55,142

Other
75,461

 
90,571

Total Current Liabilities
1,036,702

 
849,631

LONG-TERM LIABILITIES:
 
 
 
Long-term debt, net
3,090,722

 
3,215,539

Long-term debt of variable interest entities, net
138,209

 
166,565

Deferred income taxes
1,488,721

 
1,475,487

Unamortized investment tax credits
210,280

 
211,040

Regulatory liabilities
289,468

 
288,343

Accrued employee benefits
529,229

 
532,622

Asset retirement obligations
233,659

 
230,668

Other
77,397

 
75,799

Total Long-Term Liabilities
6,057,685

 
6,196,063

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 132,166,154 shares and 131,687,454 shares, respective to each date
660,831

 
658,437

Paid-in capital
1,788,787

 
1,781,120

Retained earnings
858,172

 
855,299

Total Westar Energy, Inc. Shareholders’ Equity
3,307,790

 
3,294,856

Noncontrolling Interests
7,558

 
6,451

Total Equity
3,315,348

 
3,301,307

TOTAL LIABILITIES AND EQUITY
$
10,409,735

 
$
10,347,001


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2015 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,
 
2015
 
2014
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
 
 
 
Net income
$
53,163

 
$
70,970

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
74,586

 
70,110

Amortization of nuclear fuel
4,960

 
5,966

Amortization of deferred regulatory gain from sale leaseback
(1,374
)
 
(1,374
)
Amortization of corporate-owned life insurance
5,747

 
5,884

Non-cash compensation
2,226

 
1,796

Net deferred income taxes and credits
26,573

 
34,787

Stock-based compensation excess tax benefits
(1,073
)
 
636

Allowance for equity funds used during construction
(1,950
)
 
(5,006
)
Changes in working capital items:
 
 
 
Accounts receivable
31,042

 
16,892

Fuel inventory and supplies
(18,404
)
 
(9,956
)
Prepaid expenses and other
4,638

 
(2,255
)
Accounts payable
17,321

 
1,422

Accrued taxes
40,007

 
33,428

Other current liabilities
(20,327
)
 
2,838

Changes in other assets
(17,034
)
 
3,650

Changes in other liabilities
12,394

 
8,524

Cash Flows from Operating Activities
212,495

 
238,312

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 
 
 
Additions to property, plant and equipment
(187,223
)
 
(218,329
)
Purchase of securities - trusts
(7,345
)
 
(2,707
)
Sale of securities - trusts
7,847

 
3,745

Proceeds from investment in corporate-owned life insurance
1,144

 
1,121

Investment in affiliated company
—

 
1,362

Other investing activities
(717
)
 
(1,230
)
Cash Flows used in Investing Activities
(186,294
)
 
(216,038
)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 
 
 
Short-term debt, net
167,800

 
44,139

Retirements of long-term debt
(125,000
)
 
—

Retirements of long-term debt of variable interest entities
(27,925
)
 
(27,148
)
Repayment of capital leases
(886
)
 
(755
)
Borrowings against cash surrender value of corporate-owned life insurance
1,045

 
861

Repayment of borrowings against cash surrender value of corporate-owned life insurance
(899
)
 
(1,040
)
Stock-based compensation excess tax benefits
1,073

 
(636
)
Issuance of common stock
8,206

 
10,317

Distributions to shareholders of noncontrolling interests
(1,076
)
 
—

Cash dividends paid
(43,787
)
 
(41,591
)
Other financing activities
(3,234
)
 
(1,843
)
Cash Flows used in Financing Activities
(24,683
)
 
(17,696
)
NET CHANGE IN CASH AND CASH EQUIVALENTS
1,518

 
4,578

CASH AND CASH EQUIVALENTS:
 
 
 
Beginning of period
4,556

 
4,487

End of period
$
6,074

 
$
9,065


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2015 should be read in conjunction with this financial information.
Page 3


Westar Energy, Inc.
1st Quarter 2015 vs. 2014

Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2014 earnings attributable to common stock
 
 
 
$
68,955

 
 
 
$
0.53

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Retail
 
 
 
258

 
A
 
 
 
Wholesale
 
 
 
(23,858
)
 
B
 
 
 
Transmission
 
 
 
(2,881
)
 
C
 
 
 
Other revenues
 
 
 
(11,268
)
 
D
 
 
 
Fuel and purchased power
 
 
 
18,357

 
E
 
 
 
SPP network transmission costs
 
 
 
(4,854
)
 
 
 
 
 
Gross Margin
 
 
 
(24,246
)
 
 
 
 
 
Operating and maintenance
 
 
 
6,710

 
F
 
 
 
Depreciation and amortization
 
 
 
(4,476
)
 
G
 
 
 
Selling, general and administrative
 
 
 
1,068

 
H
 
 
 
Taxes other than income tax
 
 
 
(3,039
)
 
I
 
 
 
Other income (expense)
 
 
 
(3,050
)
 
 
 
 
 
Interest expense
 
 
 
1,943

 
 
 
 
 
Income tax expense
 
 
 
7,283

 
J
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(168
)
 
 
 
 
 
Change in shares outstanding
 
(0.01
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 earnings attributable to common stock
 
 
 
$
50,980

 
 
 
$
0.38

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to a 4% increase in average retail prices (see page 5 for changes by customer class); largely offset by warmer weather, HDD 13% lower than last year
 
 
 
 
 
 
 
 
 
 
 
B
Due principally to a 24% decrease in average wholesale prices (see page 5 for changes by customer class)
 
 
 
 
 
 
 
 
 
 
C
Due primarily to estimated refund obligation for transmission revenues -- ($6M)
 
 
 
 
 
 
 
 
 
 
D
Due primarily to lower energy marketing margins reflecting 2014 favorable market conditions -- ($12.2M)
 
 
 
 
 
 
 
 
 
 
E
Due primarily to a 3% decrease in combined MWh generated and purchased, and a 26% decrease in the average cost of purchased MWhs
 
 
 
 
 
 
 
 
 
 
F
Due principally to lower costs for scheduled outage at Wolf Creek in 2014 -- $5.6M
 
 
 
 
 
 
 
 
 
 
G
Due principally to property additions
 
 
 
 
 
 
 
 
 
 
H
Due primarily to reduction in amortization for previously deferred energy efficiency programs -- $1.2M
 
 
 
 
 
 
 
 
 
 
I
Due primarily to higher property tax expense that is largely offset by increased prices -- ($2.9M)
 
 
 
 
 
 
 
 
 
 
J
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 March 31, 2015 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,
 
2015
 
2014
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
181,294

 
$
192,287

 
$
(10,993
)
 
(5.7
)
Commercial
161,305

 
161,100

 
205

 
0.1

Industrial
96,479

 
94,495

 
1,984

 
2.1

Other retail
3,505

 
3,462

 
43

 
1.2

Provision for rate refunds
(2,966
)
 
(11,985
)
 
9,019

 
75.3

Total Retail Revenues
439,617

 
439,359

 
258

 
0.1

Tariff-based wholesale
60,334

 
67,894

 
(7,560
)
 
(11.1
)
Market-based wholesale
26,421

 
42,719

 
(16,298
)
 
(38.2
)
Transmission
58,585

 
61,466

 
(2,881
)
 
(4.7
)
Other
5,850

 
17,118

 
(11,268
)
 
(65.8
)
Total Revenues
$
590,807

 
$
628,556

 
$
(37,749
)
 
(6.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
1,554

 
1,709

 
(155
)
 
(9.1
)
Commercial
1,731

 
1,760

 
(29
)
 
(1.6
)
Industrial
1,324

 
1,339

 
(15
)
 
(1.1
)
Other retail
20

 
21

 
(1
)
 
(4.8
)
Total Retail
4,629

 
4,829

 
(200
)
 
(4.1
)
Tariff-based wholesale
1,284

 
1,371

 
(87
)
 
(6.3
)
Market-based wholesale
1,287

 
1,105

 
182

 
16.5

Total wholesale
2,571

 
2,476

 
95

 
3.8

Total Electricity Sales
7,200

 
7,305

 
(105
)
 
(1.4
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
94.97

 
$
90.98

 
$
3.99

 
4.4

Tariff-based wholesale
$
46.99

 
$
49.52

 
$
(2.53
)
 
(5.1
)
Market-based wholesale
$
20.53

 
$
38.66

 
$
(18.13
)
 
(46.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
108,248

 
$
138,650

 
$
(30,402
)
 
(21.9
)
Purchased power
45,527

 
39,452

 
6,075

 
15.4

Subtotal
153,775

 
178,102

 
(24,327
)
 
(13.7
)
RECA recovery and other
1,707

 
(4,263
)
 
5,970

 
140.0

Total fuel and purchased power expense
$
155,482

 
$
173,839

 
$
(18,357
)
 
(10.6
)
 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
312

 
304

 
8

 
2.6

                    Coal
4,452

 
5,181

 
(729
)
 
(14.1
)
                    Nuclear
794

 
894

 
(100
)
 
(11.2
)
                    Wind
106

 
114

 
(8
)
 
(7.0
)
Subtotal electricity generated
5,664

 
6,493

 
(829
)
 
(12.8
)
Purchased
1,623

 
1,045

 
578

 
55.3

Total Electricity Supply
7,287

 
7,538

 
(251
)
 
(3.3
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
19.11

 
$
21.35

 
$
(2.24
)
 
(10.5
)
Average cost of purchased power
$
28.05

 
$
37.75

 
$
(9.70
)
 
(25.7
)
Average cost of fuel and purchased power
$
21.10

 
$
23.63

 
$
(2.53
)
 
(10.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2014/
 
 
 
 
 
2015
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
1

 
—

 
1

 
nm

Actual compared to 20 year average
1

 
2

 
(1
)
 
(50.0
)
Heating
 
 
 
 
 
 
 
Actual compared to last year
2,434

 
2,803

 
(369
)
 
(13.2
)
Actual compared to 20 year average
2,434

 
2,428

 
6

 
0.2

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, 2015 should be read in conjunction with this financial information.
Page 5


Westar Energy, Inc.
Capitalization
 
 
March 31, 2015
 
 
 
December 31, 2014
 
 
 
 
(Dollars in Thousands)
 
 
Current maturities of long-term debt
 
$
—

 
 
 
$
—

 
 
Current maturities of long-term debt of VIEs
 
28,315

 
 
 
27,933

 
 
Long-term debt, net
 
3,090,722

 
 
 
3,215,539

 
 
Long-term debt of variable interest entities, net
 
138,209

 
 
 
166,565

 
 
Total long-term debt
 
3,257,246

 
49.6
%
 
3,410,037

 
50.8
%
Common equity
 
3,307,790

 
50.3
%
 
3,294,856

 
49.1
%
Noncontrolling interests
 
7,558

 
0.1
%
 
6,451

 
0.1
%
Total capitalization
 
$
6,572,594

 
100.0
%
 
$
6,711,344

 
100.0
%
 
 
 
 
 
 
 
 
 
GAAP Book value per share
 
$
25.03

 
 
 
$
25.02

 


Period end shares outstanding (in thousands)
 
132,166

 
 
 
131,687

 
 
 
 
 
 
 
 
 
 
 
Outstanding Long-Term Debt
 
 
 
 
 
 
 
 
 
 
CUSIP
March 31, 2015
 
 
 
December 31, 2014
 
 
Westar Energy:
 
(Dollars in Thousands)
 
 
First Mortgage Bond series:
 
 
 
 
 
 
 
 
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

 
 
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

 
 
 
430,000

 
 
4.625% Series due September 2043
95709TAK6
250,000

 
 
 
250,000

 
 
 
 
2,055,000

 
 
 
2,180,000

 
 
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
 
2,130,500

 
 
 
2,255,500

 
 
 
 
 
 
 
 
 
 
 
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

 
 
 
250,000

 
 
 
 
875,000

 
 
 
875,000

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

 
 
 
21,940

 
 
4.85% Series due June 2031
121825CB7
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

 
 
 
 
96,440

 
 

96,440

 
 
Total KGE
 
971,440

 
 
 
971,440

 
 
 
 
 
 
 
 
 
 
 
Total long-term debt
 
3,101,940

 
 
 
3,226,940

 
 
Unamortized debt discount
 
(11,218
)
 
 
 
(11,401
)
 
 
Long-term debt due within one year
 
—

 
 
 
—

 
 
Total long-term debt, net
 
$
3,090,722

 
 
 
$
3,215,539

 
 

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2015 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, 2015 and 2014 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,
 
2015
 
2014
 
Change
 
(Dollars in Thousands)
Revenues
$
590,807

 
$
628,556


$
(37,749
)
Less: Fuel and purchased power expense
155,482

 
173,839

 
(18,357
)
 SPP network transmission costs
56,812

 
51,958

 
4,854

Gross Margin
$
378,513


$
402,759


$
(24,246
)
 
 
 
 
 
 
Gross margin
$
378,513

 
$
402,759

 
$
(24,246
)
Less: Operating and maintenance expense
85,080

 
91,790

 
(6,710
)
Depreciation and amortization expense
74,586

 
70,110

 
4,476

Selling, general and administrative expense
55,418

 
56,486

 
(1,068
)
Taxes other than income tax
37,871

 
34,832

 
3,039

Income from operations
$
125,558

 
$
149,541


$
(23,983
)
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2015 should be read in conjunction with this financial information.
Page 7


2015 Earnings Guidance
May Update



2015 EPS guidance range                            $2.18 - $2.33

2015 Drivers:
•
Retail MWh sales up 100 bp
•
Normal weather and energy marketing activity
•
Modest price adjustments
◦
≈$11 million transmission margin
▪
FERC transmission formula rate and companion TDC, net of increase in SPP expenses
◦
≈$11 million environmental cost recovery rider
•
≈2% decrease in combined O&M and SG&A expenses
◦
≈1% increase top line operating expense excluding fuel and depreciation
•
COLI proceeds ≈$15 million
•
Equity AFUDC decrease ≈$15 million
•
Depreciation increase ≈$24 million
◦
Includes ≈$5 million of La Cygne depreciation beginning November
•
Effective tax rate 33-35%
•
Interest expense decrease ≈$3 million
•
Financing:
◦
No sale of additional equity
▪
Settle ≈9 million forward shares already priced
▪
Yearend average annual shares outstanding 138 million
◦
No additional debt issuance planned
▪
Explore refinancing opportunities of debt portfolio
•
Filed a $152 million GRC in March, with a decision expected by late October
•
Transmission revenue decrease ≈$14 million for estimated refund obligation
◦
Refund based on 10.3% ROE (9.8% base + 0.5% RTO adder)

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, 2014 (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 5, 2015, (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 5, 2015


Page 8