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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 3, 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 November 3, 2015, we issued a press release announcing our earnings for the period ended September 30, 2015. A copy of our November 3, 2015 press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. We are also including our 2015 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 7.01. Regulation FD Disclosure.

We are furnishing an update to our 2015 Earnings Guidance and our preliminary 2016 Earnings Guidance, both of which are included in Exhibit 99.2 attached hereto and 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 November 3, 2015
Exhibit 99.2
2015 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 3, 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 November 3, 2015
Exhibit 99.2
 
2015 Third Quarter Earnings Package




Exhibit
Exhibit 99.1


Westar Energy announces 3rd quarter 2015 results.
TOPEKA, Kan., Nov. 3, 2015 - Westar Energy, Inc. (NYSE:WR) today announced earnings of $138 million, or $0.97 per share, for the third quarter 2015 compared with earnings of $147 million, or $1.13 per share, for the third quarter 2014. Earnings for the nine months ended Sept. 30, 2015 were $253 million, or $1.84 per share, compared with $270 million, or $2.08 per share, for the same period in 2014.

Net income for the third quarter 2015 decreased primarily from lower corporate-owned life insurance benefits, recording a $3 million refund obligation for transmission revenues and recording a $2 million write-off for canceled capital projects related to retirements of generating units.
    
Net income for the nine months ended Sept. 30, 2015 decreased primarily from lower energy marketing margins of $13 million due to greater power price volatility in 2014 in the wholesale markets and recording an $11 million refund obligation for transmission revenues.

In addition to the decrease in net income, basic EPS decreased for the quarter and year-to-date periods due to issuance of common stock.

Earnings Guidance
    
The company tightened its 2015 earnings guidance range to $2.18 to $2.25 per share from $2.18 to $2.33. Additionally the company issued preliminary 2016 earnings guidance of $2.38 to $2.53 per share. Factors the company believes to be drivers of earnings guidance for both years 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 Wednesday, Nov. 4 with the investment community at 10:00 a.m. ET (9:00 a.m. CT). Investors, media and the public may listen to the conference call by dialing 877-703-6106, participant code 48652722. 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 Sept. 30, 2015 and other

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

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 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 Nov. 3, 2015, (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 3, 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
Media Relations Manager
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,
 
2015
 
2014
 
Change
 
% Change
 
2015
 
2014
 
Change
 
% Change
 
(Dollars In Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
$
255,804

 
$
261,106

 
$
(5,302
)
 
(2.0
)
 
$
610,775

 
$
629,064

 
$
(18,289
)
 
(2.9
)
Commercial
213,461

 
223,588

 
(10,127
)
 
(4.5
)
 
550,761

 
562,882

 
(12,121
)
 
(2.2
)
Industrial
105,307

 
113,039

 
(7,732
)
 
(6.8
)
 
304,937

 
314,518

 
(9,581
)
 
(3.0
)
Other retail
1,620

 
(6,032
)
 
7,652

 
126.9

 
(5,503
)
 
(17,587
)
 
12,084

 
68.7

Total Retail Revenues
576,192

 
591,701

 
(15,509
)
 
(2.6
)
 
1,460,970

 
1,488,877

 
(27,907
)
 
(1.9
)
Wholesale
87,918

 
97,680

 
(9,762
)
 
(10.0
)
 
249,502

 
290,727

 
(41,225
)
 
(14.2
)
Transmission
61,190

 
67,145

 
(5,955
)
 
(8.9
)
 
181,070

 
192,311

 
(11,241
)
 
(5.8
)
Other
7,529

 
7,514

 
15

 
0.2

 
21,657

 
33,349

 
(11,692
)
 
(35.1
)
Total Revenues
732,829

 
764,040

 
(31,211
)
 
(4.1
)
 
1,913,199

 
2,005,264

 
(92,065
)
 
(4.6
)
OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Fuel and purchased power
163,943

 
200,755

 
(36,812
)
 
(18.3
)
 
459,504

 
539,373

 
(79,869
)
 
(14.8
)
SPP network transmission costs
57,487

 
55,720

 
1,767

 
3.2

 
171,651

 
163,211

 
8,440

 
5.2

Operating and maintenance
80,444

 
84,213

 
(3,769
)
 
(4.5
)
 
248,263

 
277,841

 
(29,578
)
 
(10.6
)
Depreciation and amortization
77,184

 
72,279

 
4,905

 
6.8

 
228,529

 
213,270

 
15,259

 
7.2

Selling, general and administrative
60,485

 
60,977

 
(492
)
 
(0.8
)
 
179,567

 
179,633

 
(66
)
 
—

Taxes other than income tax
37,682

 
34,677

 
3,005

 
8.7

 
113,047

 
104,248

 
8,799

 
8.4

Total Operating Expenses
477,225

 
508,621

 
(31,396
)
 
(6.2
)
 
1,400,561

 
1,477,576

 
(77,015
)
 
(5.2
)
INCOME FROM OPERATIONS
255,604

 
255,419

 
185

 
0.1

 
512,638

 
527,688

 
(15,050
)
 
(2.9
)
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Investment earnings
314

 
1,655

 
(1,341
)
 
(81.0
)
 
4,427

 
7,208

 
(2,781
)
 
(38.6
)
Other income
637

 
14,991

 
(14,354
)
 
(95.8
)
 
18,572

 
26,566

 
(7,994
)
 
(30.1
)
Other expense
(5,392
)
 
(6,242
)
 
850

 
13.6

 
(13,737
)
 
(14,192
)
 
455

 
3.2

Total Other (Expense) Income
(4,441
)
 
10,404

 
(14,845
)
 
(142.7
)
 
9,262

 
19,582

 
(10,320
)
 
(52.7
)
Interest expense
44,306

 
44,531

 
(225
)
 
(0.5
)
 
134,120

 
138,075

 
(3,955
)
 
(2.9
)
INCOME BEFORE INCOME TAXES
206,857

 
221,292

 
(14,435
)
 
(6.5
)
 
387,780

 
409,195

 
(21,415
)
 
(5.2
)
Income tax expense
66,293

 
71,532

 
(5,239
)
 
(7.3
)
 
127,810

 
132,643

 
(4,833
)
 
(3.6
)
NET INCOME
140,564

 
149,760

 
(9,196
)
 
(6.1
)
 
259,970

 
276,552

 
(16,582
)
 
(6.0
)
Less: Net income attributable to noncontrolling interests
2,561

 
2,378

 
183

 
7.7

 
7,277

 
6,742

 
535

 
7.9

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
138,003

 
$
147,382

 
$
(9,379
)
 
(6.4
)
 
$
252,693

 
$
269,810

 
$
(17,117
)
 
(6.3
)
BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
$
0.97

 
$
1.13

 
$
(0.16
)
 
(14.2
)
 
$
1.84

 
$
2.08

 
$
(0.24
)
 
(11.5
)
Diluted earnings per common share
$
0.97

 
$
1.10

 
$
(0.13
)
 
(11.8
)
 
$
1.82

 
$
2.04

 
$
(0.22
)
 
(10.8
)
AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
141,623

 
130,196

 
11,427

 
8.8

 
136,686

 
129,526

 
7,160

 
5.5

Diluted
141,838

 
133,029

 
8,809

 
6.6

 
138,182

 
132,200

 
5,982

 
4.5

DIVIDENDS DECLARED PER COMMON SHARE
$
0.36

 
$
0.35

 
$
0.01

 
2.9

 
$
1.08

 
$
1.05

 
$
0.03

 
2.9

Effective income tax rate
32
%
 
32
%
 
 
 
 
 
33
%
 
32
%
 
 
 
 


WESTAR ENERGY NEWS RELEASE    Page 3 of 3
Exhibit


Exhibit 99.2
Westar Energy, Inc.
Third Quarter 2015 Earnings
Released November 3, 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 September 30, 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 September 30,
 
2015
 
2014
 
Change
 
% Change
 
(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
255,804

 
$
261,106

 
$
(5,302
)
 
(2.0
)
Commercial
213,461

 
223,588

 
(10,127
)
 
(4.5
)
Industrial
105,307

 
113,039

 
(7,732
)
 
(6.8
)
Other retail
1,620

 
(6,032
)
 
7,652

 
126.9

Total Retail Revenues
576,192

 
591,701

 
(15,509
)
 
(2.6
)
Wholesale
87,918

 
97,680

 
(9,762
)
 
(10.0
)
Transmission
61,190

 
67,145

 
(5,955
)
 
(8.9
)
Other
7,529

 
7,514

 
15

 
0.2

Total Revenues
732,829

 
764,040

 
(31,211
)
 
(4.1
)
OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
163,943

 
200,755

 
(36,812
)
 
(18.3
)
SPP network transmission costs
57,487

 
55,720

 
1,767

 
3.2

Operating and maintenance
80,444

 
84,213

 
(3,769
)
 
(4.5
)
Depreciation and amortization
77,184

 
72,279

 
4,905

 
6.8

Selling, general and administrative
60,485

 
60,977

 
(492
)
 
(0.8
)
Taxes other than income tax
37,682

 
34,677

 
3,005

 
8.7

Total Operating Expenses
477,225

 
508,621

 
(31,396
)
 
(6.2
)
INCOME FROM OPERATIONS
255,604

 
255,419

 
185

 
0.1

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
314

 
1,655

 
(1,341
)
 
(81.0
)
Other income
637

 
14,991

 
(14,354
)
 
(95.8
)
Other expense
(5,392
)
 
(6,242
)
 
850

 
13.6

Total Other (Expense) Income
(4,441
)
 
10,404

 
(14,845
)
 
(142.7
)
Interest expense
44,306

 
44,531

 
(225
)
 
(0.5
)
INCOME BEFORE INCOME TAXES
206,857

 
221,292

 
(14,435
)
 
(6.5
)
Income tax expense
66,293

 
71,532

 
(5,239
)
 
(7.3
)
NET INCOME
140,564

 
149,760

 
(9,196
)
 
(6.1
)
Less: Net income attributable to noncontrolling interests
2,561

 
2,378

 
183

 
7.7

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
138,003

 
$
147,382

 
$
(9,379
)
 
(6.4
)
BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
0.97

 
$
1.13

 
$
(0.16
)
 
(14.2
)
Diluted earnings per common share
$
0.97

 
$
1.10

 
$
(0.13
)
 
(11.8
)
AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
141,623

 
130,196

 
11,427

 
8.8

Diluted
141,838

 
133,029

 
8,809

 
6.6

DIVIDENDS DECLARED PER COMMON SHARE
$
0.36

 
$
0.35

 
$
0.01

 
2.9

Effective income tax rate
32
%
 
32
%
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2015 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,
 
2015
 
2014
 
Change
 
% Change
 
(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
610,775

 
$
629,064

 
$
(18,289
)
 
(2.9
)
Commercial
550,761

 
562,882

 
(12,121
)
 
(2.2
)
Industrial
304,937

 
314,518

 
(9,581
)
 
(3.0
)
Other retail
(5,503
)
 
(17,587
)
 
12,084

 
68.7

Total Retail Revenues
1,460,970

 
1,488,877

 
(27,907
)
 
(1.9
)
Wholesale
249,502

 
290,727

 
(41,225
)
 
(14.2
)
Transmission
181,070

 
192,311

 
(11,241
)
 
(5.8
)
Other
21,657

 
33,349

 
(11,692
)
 
(35.1
)
Total Revenues
1,913,199

 
2,005,264

 
(92,065
)
 
(4.6
)
OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
459,504

 
539,373

 
(79,869
)
 
(14.8
)
SPP network transmission costs
171,651

 
163,211

 
8,440

 
5.2

Operating and maintenance
248,263

 
277,841

 
(29,578
)
 
(10.6
)
Depreciation and amortization
228,529

 
213,270

 
15,259

 
7.2

Selling, general and administrative
179,567

 
179,633

 
(66
)
 
—

Taxes other than income tax
113,047

 
104,248

 
8,799

 
8.4

Total Operating Expenses
1,400,561

 
1,477,576

 
(77,015
)
 
(5.2
)
INCOME FROM OPERATIONS
512,638

 
527,688

 
(15,050
)
 
(2.9
)
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
4,427

 
7,208

 
(2,781
)
 
(38.6
)
Other income
18,572

 
26,566

 
(7,994
)
 
(30.1
)
Other expense
(13,737
)
 
(14,192
)
 
455

 
3.2

Total Other (Expense) Income
9,262

 
19,582

 
(10,320
)
 
(52.7
)
Interest expense
134,120

 
138,075

 
(3,955
)
 
(2.9
)
INCOME BEFORE INCOME TAXES
387,780

 
409,195

 
(21,415
)
 
(5.2
)
Income tax expense
127,810

 
132,643

 
(4,833
)
 
(3.6
)
NET INCOME
259,970

 
276,552

 
(16,582
)
 
(6.0
)
Less: Net income attributable to noncontrolling interests
7,277

 
6,742

 
535

 
7.9

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
252,693

 
$
269,810

 
$
(17,117
)
 
(6.3
)
BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
1.84

 
$
2.08

 
$
(0.24
)
 
(11.5
)
Diluted earnings per common share
$
1.82

 
$
2.04

 
$
(0.22
)
 
(10.8
)
AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
136,686

 
129,526

 
7,160

 
5.5

Diluted
138,182

 
132,200

 
5,982

 
4.5

DIVIDENDS DECLARED PER COMMON SHARE
$
1.08

 
$
1.05

 
$
0.03

 
2.9

Effective income tax rate
33
%
 
32
%
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2015 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, 2015
 
December 31, 2014
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
3,829

 
$
4,556

Accounts receivable, net of allowance for doubtful accounts of $3,519 and $5,309, respectively
288,764

 
267,327

Fuel inventory and supplies
276,689

 
247,406

Deferred tax assets
22,861

 
29,636

Prepaid expenses
16,380

 
15,793

Regulatory assets
125,562

 
105,549

Other
23,598

 
30,655

Total Current Assets
757,683

 
700,922

PROPERTY, PLANT AND EQUIPMENT, NET
8,379,029

 
8,162,908

PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET
270,822

 
278,573

OTHER ASSETS:
 
 
 
Regulatory assets
735,474

 
754,229

Nuclear decommissioning trust
181,756

 
185,016

Other
259,315

 
265,353

Total Other Assets
1,176,545

 
1,204,598

TOTAL ASSETS
$
10,584,079

 
$
10,347,001

LIABILITIES AND EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Current maturities of long-term debt of variable interest entities
$
28,309

 
$
27,933

Short-term debt
303,600

 
257,600

Accounts payable
175,309

 
219,351

Accrued dividends
49,781

 
44,971

Accrued taxes
122,791

 
74,356

Accrued interest
60,844

 
79,707

Regulatory liabilities
47,432

 
55,142

Other
90,627

 
90,571

Total Current Liabilities
878,693

 
849,631

LONG-TERM LIABILITIES:
 
 
 
Long-term debt, net
2,941,889

 
3,215,539

Long-term debt of variable interest entities, net
138,134

 
166,565

Deferred income taxes
1,601,511

 
1,475,487

Unamortized investment tax credits
208,760

 
211,040

Regulatory liabilities
259,545

 
288,343

Accrued employee benefits
518,307

 
532,622

Asset retirement obligations
286,389

 
230,668

Other
74,930

 
75,799

Total Long-Term Liabilities
6,029,465

 
6,196,063

COMMITMENTS AND CONTINGENCIES (See 10-Q Notes 3, 10 and 12)
 
 
 
EQUITY:
 
 
 
Westar Energy, Inc. Shareholders’ Equity:
 
 
 
Common stock, par value $5 per share; authorized 275,000,000 shares; issued and outstanding 141,268,889 shares and 131,687,454 shares, respective to each date
706,344

 
658,437

Paid-in capital
1,999,204

 
1,781,120

Retained earnings
957,721

 
855,299

Total Westar Energy, Inc. Shareholders’ Equity
3,663,269

 
3,294,856

Noncontrolling Interests
12,652

 
6,451

Total Equity
3,675,921

 
3,301,307

TOTAL LIABILITIES AND EQUITY
$
10,584,079

 
$
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 September 30, 2015 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,
 
2015
 
2014
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
 
 
 
Net income
$
259,970

 
$
276,552

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
228,529

 
213,270

Amortization of nuclear fuel
18,528

 
18,218

Amortization of deferred regulatory gain from sale leaseback
(4,121
)
 
(4,121
)
Amortization of corporate-owned life insurance
15,309

 
15,510

Non-cash compensation
6,280

 
6,034

Net deferred income taxes and credits
126,602

 
134,714

Stock-based compensation excess tax benefits
(1,231
)
 
(790
)
Allowance for equity funds used during construction
(2,034
)
 
(13,345
)
Changes in working capital items:
 
 
 
Accounts receivable
(21,437
)
 
(50,084
)
Fuel inventory and supplies
(28,814
)
 
(5,703
)
Prepaid expenses and other
(22,742
)
 
8,693

Accounts payable
(4,979
)
 
(4,397
)
Accrued taxes
51,867

 
41,323

Other current liabilities
(66,000
)
 
(19,732
)
Changes in other assets
1,394

 
6,019

Changes in other liabilities
26,512

 
28,051

Cash Flows from Operating Activities
583,633

 
650,212

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 
 
 
Additions to property, plant and equipment
(486,515
)
 
(648,933
)
Purchase of securities - trusts
(20,752
)
 
(6,582
)
Sale of securities - trusts
20,957

 
8,221

Investment in corporate-owned life insurance
(14,845
)
 
(16,250
)
Proceeds from investment in corporate-owned life insurance
65,962

 
23,989

Other investing activities
(781
)
 
(2,203
)
Cash Flows used in Investing Activities
(435,974
)
 
(641,758
)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 
 
 
Short-term debt, net
46,000

 
67,206

Proceeds from long-term debt
—

 
417,943

Retirements of long-term debt
(275,000
)
 
(427,500
)
Retirements of long-term debt of variable interest entities
(27,933
)
 
(27,321
)
Repayment of capital leases
(1,759
)
 
(2,397
)
Borrowings against cash surrender value of corporate-owned life insurance
57,726

 
57,764

Repayment of borrowings against cash surrender value of corporate-owned life insurance
(63,894
)
 
(22,737
)
Stock-based compensation excess tax benefits
1,231

 
790

Issuance of common stock
257,169

 
58,560

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

Cash dividends paid
(137,616
)
 
(127,364
)
Other financing activities
(3,234
)
 
(2,050
)
Cash Flows used in Financing Activities
(148,386
)
 
(7,106
)
NET CHANGE IN CASH AND CASH EQUIVALENTS
(727
)
 
1,348

CASH AND CASH EQUIVALENTS:
 
 
 
Beginning of period
4,556

 
4,487

End of period
$
3,829

 
$
5,835


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2015 should be read in conjunction with this financial information.
Page 4


Westar Energy, Inc.
3rd Quarter 2015 vs. 2014
Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2014 basic earnings attributable to common stock
 
 
 
$
147,382

 
 
 
$
1.13

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Gross Margin
 
 
 
3,834

 
A
 
 
 
Operating and maintenance
 
 
 
3,769

 
B
 
 
 
Depreciation and amortization
 
 
 
(4,905
)
 
C
 
 
 
Selling, general and administrative
 
 
 
492

 
 
 
 
 
Taxes other than income tax
 
 
 
(3,005
)
 
D
 
 
 
Other income (expense)
 
 
 
(14,845
)
 
E
 
 
 
Interest expense
 
 
 
225

 
 
 
 
 
Income tax expense
 
 
 
5,239

 
F
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(183
)
 
 
 
 
 
Change in shares outstanding
 
(0.09
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 basic earnings attributable to common stock
 
 
 
$
138,003

 
 
 
$
0.97

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to 1.6% increase in retail MWh sales; annual ECRR revenue increase of $10.8M; and estimated annual transmission revenue increase of $11.2M; refund obligation for transmission revenues -- ($2.5M)
 
 
 
 
 
 
 
 
 
 
B
Due primarily to lower transmission and distribution maintenance expense -- $3.1M and lower generation maintenance -- $1.6M; partially offset by write off of capital project costs related to planned retirements of generating units -- ($2.0M)
 
 
 
 
 
 
 
 
 
 
C
Due principally to property additions
 
 
 
 
 
 
 
 
 
 
D
Due primarily to higher property tax expense that is largely offset by increased prices -- ($3.0M)
 
 
 
 
 
 
 
 
 
 
E
Due primarily to lower COLI benefit -- ($10.7M) and decrease in equity AFUDC -- ($3.6M)

 
 
 
 
 
 
 
 
 
 
F
Due primarily to lower income before income taxes


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2015 should be read in conjunction with this financial information.
Page 5


Westar Energy, Inc.
YTD September 2015 vs. 2014
Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2014 basic earnings attributable to common stock
 
 
 
$
269,810

 
 
 
$
2.08

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Gross Margin
 
 
 
(20,636
)
 
A
 
 
 
Operating and maintenance
 
 
 
29,578

 
B
 
 
 
Depreciation and amortization
 
 
 
(15,259
)
 
C
 
 
 
Selling, general and administrative
 
 
 
66

 
 
 
 
 
Taxes other than income tax
 
 
 
(8,799
)
 
D
 
 
 
Other income (expense)
 
 
 
(10,320
)
 
E
 
 
 
Interest expense
 
 
 
3,955

 
 
 
 
 
Income tax expense
 
 
 
4,833

 
 
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(535
)
 
 
 
 
 
Change in shares outstanding
 
(0.11
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 basic earnings attributable to common stock
 
 
 
$
252,693

 
 
 
$
1.84

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
1.2% decrease in retail MWh sales; lower energy marketing margins reflecting 2014 favorable market conditions -- ($12.7M); and refund obligation for transmission revenues -- ($11.0M); partially offset by annual ECRR revenue increase of $10.8M and estimated annual transmission revenue increase of $11.2M
 
 
 
 
 
 
 
 
 
 
B
Due primarily to: lower costs at Wolf Creek principally the result of scheduled outage in 2014 -- $10.8M
lower costs at coal-fired plants primarily due to planned outages -- $7.9M, and lower transmission and distribution maintenance -- $8.4M
 
 
 
 
 
 
 
 
 
 
C
Due principally to property additions
 
 
 
 
 
 
 
 
 
 
D
Due primarily to higher property tax expense that is largely offset by increased prices -- ($8.9M)

 
 
 
 
 
 
 
 
 
 
E
Due primarily to a decrease in equity AFUDC -- ($11.3M); partially offset by higher COLI -- $3.0M

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2015 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,
 
2015
 
2014
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
255,804

 
$
261,106

 
$
(5,302
)
 
(2.0
)
Commercial
213,461

 
223,588

 
(10,127
)
 
(4.5
)
Industrial
105,307

 
113,039

 
(7,732
)
 
(6.8
)
Other retail
3,430

 
3,532

 
(102
)
 
(2.9
)
Provision for rate refunds
(1,810
)
 
(9,564
)
 
7,754

 
81.1

Total Retail Revenues
576,192

 
591,701

 
(15,509
)
 
(2.6
)
Tariff-based wholesale
70,501

 
72,544

 
(2,043
)
 
(2.8
)
Market-based wholesale
17,417

 
25,136

 
(7,719
)
 
(30.7
)
Transmission
61,190

 
67,145

 
(5,955
)
 
(8.9
)
Other
7,529

 
7,514

 
15

 
0.2

Total Revenues
$
732,829

 
$
764,040

 
$
(31,211
)
 
(4.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
2,168

 
2,104

 
64

 
3.0

Commercial
2,221

 
2,190

 
31

 
1.4

Industrial
1,463

 
1,467

 
(4
)
 
(0.3
)
Other retail
21

 
20

 
1

 
5.0

Total Retail
5,873

 
5,781

 
92

 
1.6

Tariff-based wholesale
1,337

 
1,430

 
(93
)
 
(6.5
)
Market-based wholesale
863

 
1,037

 
(174
)
 
(16.8
)
Total wholesale
2,200

 
2,467

 
(267
)
 
(10.8
)
Total Electricity Sales
8,073

 
8,248

 
(175
)
 
(2.1
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
98.11

 
$
102.35

 
$
(4.24
)
 
(4.1
)
Tariff-based wholesale
$
52.73

 
$
50.73

 
$
2.00

 
3.9

Market-based wholesale
$
20.18

 
$
24.24

 
$
(4.06
)
 
(16.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
132,272

 
$
143,932

 
$
(11,660
)
 
(8.1
)
Purchased power
36,960

 
47,370

 
(10,410
)
 
(22.0
)
Subtotal
169,232

 
191,302

 
(22,070
)
 
(11.5
)
RECA recovery and other
(5,289
)
 
9,453

 
(14,742
)
 
(156.0
)
Total fuel and purchased power expense
$
163,943

 
$
200,755

 
$
(36,812
)
 
(18.3
)
 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
571

 
457

 
114

 
24.9

                    Coal
5,220

 
5,529

 
(309
)
 
(5.6
)
                    Nuclear
1,240

 
1,243

 
(3
)
 
(0.2
)
                    Wind
90

 
86

 
4

 
4.7

Subtotal electricity generated
7,121

 
7,315

 
(194
)
 
(2.7
)
Purchased
1,201

 
1,242

 
(41
)
 
(3.3
)
Total Electricity Supply
8,322

 
8,557

 
(235
)
 
(2.7
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
18.57

 
$
19.68

 
$
(1.11
)
 
(5.6
)
Average cost of purchased power
$
30.77

 
$
38.14

 
$
(7.37
)
 
(19.3
)
Average cost of fuel and purchased power
$
20.34

 
$
22.36

 
$
(2.02
)
 
(9.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2014/
 
 
 
 
 
2015
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
1,206

 
1,083

 
123

 
11.4

Actual compared to 20 year average
1,206

 
1,123

 
83

 
7.4

Heating
 
 
 
 
 
 


Actual compared to last year
4

 
37

 
(33
)
 
(89.2
)
Actual compared to 20 year average
4

 
44

 
(40
)
 
(90.9
)


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2015 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,
 
2015
 
2014
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
610,775

 
$
629,064

 
$
(18,289
)
 
(2.9
)
Commercial
550,761

 
562,882

 
(12,121
)
 
(2.2
)
Industrial
304,937

 
314,518

 
(9,581
)
 
(3.0
)
Other retail
10,436


10,516

 
(80
)
 
(0.8
)
Provision for rate refunds
(15,939
)
 
(28,103
)
 
12,164

 
43.3

Total Retail Revenues
1,460,970

 
1,488,877

 
(27,907
)
 
(1.9
)
Tariff-based wholesale
187,524

 
204,414

 
(16,890
)
 
(8.3
)
Market-based wholesale
61,978

 
86,313

 
(24,335
)
 
(28.2
)
Transmission
181,070

 
192,311

 
(11,241
)
 
(5.8
)
Other
21,657

 
33,349

 
(11,692
)
 
(35.1
)
Total Revenues
$
1,913,199

 
$
2,005,264

 
$
(92,065
)
 
(4.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
5,108

 
5,229

 
(121
)
 
(2.3
)
Commercial
5,787

 
5,792

 
(5
)
 
(0.1
)
Industrial
4,195

 
4,252

 
(57
)
 
(1.3
)
Other retail
63

 
64

 
(1
)
 
(1.6
)
Total Retail
15,153

 
15,337

 
(184
)
 
(1.2
)
Tariff-based wholesale
3,718

 
3,993

 
(275
)
 
(6.9
)
Market-based wholesale
3,099

 
2,953

 
146

 
4.9

Total wholesale
6,817

 
6,946

 
(129
)
 
(1.9
)
Total Electricity Sales
21,970

 
22,283

 
(313
)
 
(1.4
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
96.41

 
$
97.08

 
$
(0.67
)
 
(0.7
)
Tariff-based wholesale
$
50.44

 
$
51.19

 
$
(0.75
)
 
(1.5
)
Market-based wholesale
$
20.00

 
$
29.23

 
$
(9.23
)
 
(31.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
346,689

 
$
398,395

 
$
(51,706
)
 
(13.0
)
Purchased power
116,002

 
145,893

 
(29,891
)
 
(20.5
)
Subtotal
462,691

 
544,288

 
(81,597
)
 
(15.0
)
RECA recovery and other
(3,187
)
 
(4,915
)
 
1,728

 
35.2

Total fuel and purchased power expense
$
459,504

 
$
539,373

 
$
(79,869
)
 
(14.8
)
 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
1,121

 
1,082

 
39

 
3.6

                    Coal
14,213

 
15,169

 
(956
)
 
(6.3
)
                    Nuclear
2,790

 
2,769

 
21

 
0.8

                    Wind
301

 
315

 
(14
)
 
(4.4
)
Subtotal electricity generated
18,425

 
19,335

 
(910
)
 
(4.7
)
Purchased
4,142

 
3,788

 
354

 
9.3

Total Electricity Supply
22,567

 
23,123

 
(556
)
 
(2.4
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
18.82

 
$
20.60

 
$
(1.78
)
 
(8.6
)
Average cost of purchased power
$
28.01

 
$
38.51

 
$
(10.50
)
 
(27.3
)
Average cost of fuel and purchased power
$
20.50

 
$
23.54

 
$
(3.04
)
 
(12.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2014/
 
 
 
 
 
2015
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
1,744

 
1,637

 
107

 
6.5

Actual compared to 20 year average
1,744

 
1,583

 
161

 
10.2

Heating
 
 
 
 
 
 
 
Actual compared to last year
2,707

 
3,232

 
(525
)
 
(16.2
)
Actual compared to 20 year average
2,707

 
2,859

 
(152
)
 
(5.3
)
 

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2015 should be read in conjunction with this financial information.
Page 8


Westar Energy, Inc.
Capitalization
 
 
September 30, 2015
 
 
 
December 31, 2014
 
 
 
 
(Dollars in Thousands)
 
 
Current maturities of long-term debt of VIEs
 
$
28,309

 
 
 
$
27,933

 
 
Long-term debt, net
 
2,941,889

 
 
 
3,215,539

 
 
Long-term debt of variable interest entities, net
 
138,134

 
 
 
166,565

 
 
Total long-term debt
 
3,108,332

 
45.8
%
 
3,410,037

 
50.8
%
Common equity
 
3,663,269

 
54.0
%
 
3,294,856

 
49.1
%
Noncontrolling interests
 
12,652

 
0.2
%
 
6,451

 
0.1
%
Total capitalization
 
$
6,784,253

 
100.0
%
 
$
6,711,344

 
100.0
%
 
 
 
 
 
 
 
 
 
GAAP Book value per share
 
$
25.93

 
 
 
$
25.02

 


Period end shares outstanding (in thousands)
 
141,269

 
 
 
131,687

 
 
 
 
 
 
 
 
 
 
 
Outstanding Long-Term Debt
 
 
 
 
 
 
 
 
 
 
CUSIP
September 30, 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

 
 
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

 
 
 
 
1,905,000

 
 
 
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
 
1,980,500

 
 
 
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
 
2,951,940

 
 
 
3,226,940

 
 
Unamortized debt discount
 
(10,051
)
 
 
 
(11,401
)
 
 
Total long-term debt, net
 
$
2,941,889

 
 
 
$
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 September 30, 2015 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, 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 September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
Change
 
2015
 
2014
 
Change
 
(Dollars in Thousands)
Revenues
$
732,829

 
$
764,040


$
(31,211
)

$
1,913,199


$
2,005,264


$
(92,065
)
Less: Fuel and purchased power expense
163,943

 
200,755

 
(36,812
)
 
459,504

 
539,373

 
(79,869
)
 SPP network transmission costs
57,487

 
55,720

 
1,767

 
171,651

 
163,211

 
8,440

Gross Margin
$
511,399


$
507,565


$
3,834


$
1,282,044


$
1,302,680


$
(20,636
)
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
$
511,399

 
$
507,565

 
$
3,834

 
$
1,282,044

 
$
1,302,680

 
$
(20,636
)
Less: Operating and maintenance expense
80,444

 
84,213

 
(3,769
)
 
248,263

 
277,841

 
(29,578
)
Depreciation and amortization expense
77,184

 
72,279

 
4,905

 
228,529

 
213,270

 
15,259

Selling, general and administrative expense
60,485

 
60,977

 
(492
)
 
179,567

 
179,633

 
(66
)
Taxes other than income tax
37,682

 
34,677

 
3,005

 
113,047

 
104,248

 
8,799

Income from operations
$
255,604

 
$
255,419


$
185


$
512,638


$
527,688


$
(15,050
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2015 should be read in conjunction with this financial information.
Page 10


2015 Earnings Guidance
November Update

Updated 2015 EPS guidance range                            $2.18 - $2.25


2015 Drivers:
•
Retail MWh sales up to 25 bp
•
Normal weather
•
Modest price adjustments
◦
≈$11 million transmission margin
▪
FERC TFR and companion TDC, net of increase in SPP expenses
◦
≈$11 million environmental cost recovery rider
•
≈4% decrease in combined O&M and SG&A expenses
◦
No year over year change to 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%
•
Interest expense decrease ≈$6 million
•
Financing:
◦
No sale of additional equity
▪
Settled ≈9 million forward shares in May
▪
Yearend average annual shares outstanding 138 million
◦
Explore refinancing opportunities of debt portfolio
•
$78 million general rate increase, effective October 28, 2015
◦
2015 margin impact ≈$9 million
•
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 Nov. 3, 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.


Page 11



Preliminary 2016 Earnings Guidance

Preliminary 2016 EPS guidance range                        $2.38 - $2.53

2016 Drivers:
•
Retail MWh sales up 50 bp
•
Normal weather
•
Modest price adjustments
◦
$78 million annual general rate increase effective October 28, 2015
◦
≈$19 million transmission margin
▪
FERC TFR and companion TDC, net of increase in SPP expenses
▪
Assumes 10.3% ROE (9.8% base + 0.5% RTO adder)
◦
≈$3 million for balance of 2015 ECRR rolled into base rates (5 months)
•
≈2% decrease in combined O&M and SG&A expenses
◦
≈4% increase top line operating expense excluding fuel and depreciation
•
COLI proceeds ≈$16 million
•
Equity AFUDC increase ≈$2 million
•
Depreciation increase ≈$33 million
•
Effective tax rate 35-37%
•
Interest expense decrease ≈$3 million
•
Financing:
◦
No sale of additional equity
▪
Yearend average annual shares outstanding 142 million
◦
No additional debt issuance planned
•
Unit retirement benefits of ≈$14 million included in O&M and depreciation expenses


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 Nov. 3, 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.


Page 12