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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 8, 2018

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o




WESTAR ENERGY, INC.

Item 2.02. Results of Operations and Financial Condition.

On May 8, 2018, we issued a press release announcing our earnings for the period ended March 31, 2018. A copy of our May 8, 2018 press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. We are also including our 2018 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 9.01. Financial Statements and Exhibits.

Exhibit 99.1    Press Release dated May 8, 2018
Exhibit 99.2    2018 First 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:
 
May 8, 2018
 
By:
 
/s/ Larry D. Irick
 
 
 
 
Name:
 
Larry D. Irick
 
 
 
 
Title:
 
Vice President, General Counsel and Corporate Secretary






Exhibit
Exhibit 99.1

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Westar Energy Announces 1st Quarter 2018 Results.
TOPEKA, Kan., May 8, 2018 - Westar Energy, Inc. (NYSE:WR) today announced earnings of $60 million, or $0.42 per share, for the first quarter 2018, unchanged from the first quarter of last year.

Factors resulting in the flat earnings for the quarter included an increase in residential and commercial sales due to colder winter weather this year, with those effects being offset by higher employee benefit costs and higher operating expense, with the full cost of the Western Plains Wind Farm now being reflected in the results, as well as impacts from the newly passed tax law.

Conference Call and Additional Company Information

Westar Energy management will host a conference call Wednesday, May 9 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 (844) 646-4526, conference ID 4079817. 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 Mar. 31, 2018, 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 -


As Kansas’ largest electric utility, Westar Energy, Inc. (NYSE:WR) provides customers the safe, reliable electricity needed to power their businesses and homes. We have 7,800 MW of electric generation capacity that includes renewables and traditional power sources with half the electricity supplied to our more than 700,000 customers from emissions free sources: nuclear, wind and solar, with a third coming from renewables. We are a leader in electric transmission in Kansas coordinating a network of lines and substations that supports one of the largest consolidations of wind energy in the nation. 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.

Statements made in this release that are not based on historical facts are forward-looking, may involve risks and uncertainties, and are intended to be as of the date when made. Forward-looking statements include, but are not limited to, statements relating to the anticipated merger transaction of Westar Energy, Inc. (Westar Energy) and Great Plains Energy Incorporated (Great Plains Energy), including those that relate to the expected financial and operational benefits of the merger to the companies and their shareholders (including cost savings, operational efficiencies and the impact of the anticipated merger on earnings per share), the expected timing of closing, the outcome of regulatory proceedings, cost estimates of capital projects, dividend growth, share repurchases, balance sheet and credit ratings, rebates to customers, employee issues and other matters affecting future operations. In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Westar Energy is providing a number of important factors that could cause actual results to differ materially from the provided

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

forward-looking information. These important factors include: future economic conditions in regional, national and international markets and their effects on sales, prices and costs; prices and availability of electricity in regional and national wholesale markets; market perception of the energy industry, Great Plains Energy, KCP&L, and Westar Energy; changes in business strategy, operations or development plans; the outcome of contract negotiations for goods and services; effects of current or proposed state and federal legislative and regulatory actions or developments, including, but not limited to, deregulation, re-regulation and restructuring of the electric utility industry; decisions of regulators regarding rates that the companies can charge for electricity; adverse changes in applicable laws, regulations, rules, principles or practices governing tax, accounting and environmental matters including, but not limited to, air and water quality; financial market conditions and performance including, but not limited to, changes in interest rates and credit spreads and in availability and cost of capital and the effects on derivatives and hedges, nuclear decommissioning trust and pension plan assets and costs; impairments of long-lived assets or goodwill; credit ratings; inflation rates; effectiveness of risk management policies and procedures and the ability of counterparties to satisfy their contractual commitments; impact of terrorist acts, including, but not limited to, cyber terrorism; ability to carry out marketing and sales plans; weather conditions including, but not limited to, weather-related damage and their effects on sales, prices and costs; cost, availability, quality and deliverability of fuel; the inherent uncertainties in estimating the effects of weather, economic conditions and other factors on customer consumption and financial results; ability to achieve generation goals and the occurrence and duration of planned and unplanned generation outages; delays in the anticipated in-service dates and cost increases of generation, transmission, distribution or other projects; the inherent risks associated with the ownership and operation of a nuclear facility including, but not limited to, environmental, health, safety, regulatory and financial risks; workforce risks, including, but not limited to, increased costs of retirement, health care and other benefits; the ability of Great Plains Energy and Westar Energy to obtain the regulatory approvals necessary to complete the anticipated merger or the imposition of adverse conditions or costs in connection with obtaining regulatory approvals; the risk that a condition to the closing of the anticipated merger may not be satisfied or that the anticipated merger may fail to close; the outcome of any legal proceedings, regulatory proceedings or enforcement matters that may be instituted relating to the anticipated merger; the costs incurred to consummate the anticipated merger; the possibility that the expected value creation from the anticipated merger will not be realized, or will not be realized within the expected time period; difficulties related to the integration of the two companies; the credit ratings of the combined company following the anticipated merger; disruption from the anticipated merger making it more difficult to maintain relationships with customers, employees, regulators or suppliers; the anticipated diversion of management time and attention on the anticipated merger; and other risks and uncertainties.

This list of factors is not all-inclusive because it is not possible to predict all factors. Additional risks and uncertainties are discussed in the joint proxy statement/prospectus and other materials that Great Plains Energy, Westar Energy and Monarch Energy Holding, Inc. (Monarch Energy) file with the Securities and Exchange Commission (SEC) in connection with the anticipated merger. Other risk factors are detailed from time to time in quarterly reports on Form 10-Q and annual reports on Form 10-K filed by Westar Energy with the SEC. Each forward-looking statement speaks only as of the date of the particular statement. Westar Energy undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.



Media Contact:
Gina Penzig
Media Relations Manager
Phone: 785-575-8089
Gina.Penzig@westarenergy.com
Media line: 888-613-0003

Investor Contact:
Cody VandeVelde
Director, Investor Relations
Phone: 785-575-8227
Cody.VandeVelde@westarenergy.com


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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,
 
2018
 
2017
 
Change
 
% Change
 
(Dollars In Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
180,285

 
$
169,290

 
$
10,995

 
6.5

Commercial
155,403

 
149,552

 
5,851

 
3.9

Industrial
93,460

 
94,589

 
(1,129
)
 
(1.2
)
Other retail
4,253

 
5,042

 
(789
)
 
(15.6
)
Total Retail Revenues
433,401

 
418,473

 
14,928

 
3.6

Wholesale
94,209

 
83,925

 
10,284

 
12.3

Transmission
71,926

 
70,729

 
1,197

 
1.7

Other
1,781

 
1,611

 
170

 
10.6

Total Revenues from Contracts with Customers
601,317

 
574,738

 
26,579

 
4.6

Other
(1,113
)
 
(2,164
)
 
1,051

 
48.6

Total Revenues
600,204

 
572,574

 
27,630

 
4.8

OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
135,507

 
113,855

 
21,652

 
19.0

SPP network transmission costs
67,594

 
60,674

 
6,920

 
11.4

Operating, maintenance and administrative
139,993

 
135,319

 
4,674

 
3.5

Depreciation and amortization
89,641

 
88,625

 
1,016

 
1.1

Taxes other than income tax
43,939

 
42,716

 
1,223

 
2.9

Total Operating Expenses
476,674

 
441,189

 
35,485

 
8.0

INCOME FROM OPERATIONS
123,530

 
131,385

 
(7,855
)
 
(6.0
)
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
999

 
3,155

 
(2,156
)
 
(68.3
)
Other income
1,951

 
1,300

 
651

 
50.1

Other expense
(10,561
)
 
(10,352
)
 
(209
)
 
(2.0
)
Total Other Expense
(7,611
)
 
(5,897
)
 
(1,714
)
 
(29.1
)
Interest expense
43,841

 
41,095

 
2,746

 
6.7

INCOME BEFORE INCOME TAXES
72,078

 
84,393

 
(12,315
)
 
(14.6
)
Income tax expense
9,174

 
20,911

 
(11,737
)
 
(56.1
)
NET INCOME
62,904

 
63,482

 
(578
)
 
(0.9
)
Less: Net income attributable to noncontrolling interests
2,419

 
3,821

 
(1,402
)
 
(36.7
)
NET INCOME ATTRIBUTABLE TO COMMON STOCK
$
60,485

 
$
59,661

 
$
824

 
1.4

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic and diluted earnings per common share
$
0.42

 
$
0.42

 
$
—

 
—

Diluted earnings per common share
$
0.42

 
$
0.42

 
$
—

 
—

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
142,635

 
142,437

 
198

 
0.1

Diluted
142,652

 
142,696

 
(44
)
 
—

DIVIDENDS DECLARED PER COMMON SHARE
$
0.40

 
$
0.40

 
$
—

 
—

Effective income tax rate
13
%
 
25
%
 
 
 
 

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WESTAR ENERGY NEWS RELEASE    Page 3 of 3
Exhibit


Exhibit 99.2
Westar Energy, Inc.
First Quarter 2018 Earnings
Released May 8, 2018





Contents
Page
 
 
 
 
 
 











Cody VandeVelde
Director Investor Relations
785-575-8227
cody.vandevelde@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, 2018 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,
 
2018
 
2017
 
Change
 
% Change
 
(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
180,285

 
$
169,290

 
$
10,995

 
6.5

Commercial
155,403

 
149,552

 
5,851

 
3.9

Industrial
93,460

 
94,589

 
(1,129
)
 
(1.2
)
Other retail
4,253

 
5,042

 
(789
)
 
(15.6
)
Total Retail Revenues
433,401

 
418,473

 
14,928

 
3.6

Wholesale
94,209

 
83,925

 
10,284

 
12.3

Transmission
71,926

 
70,729

 
1,197

 
1.7

Other
1,781

 
1,611

 
170

 
10.6

Total Revenues from Contracts with Customers
601,317

 
574,738

 
26,579

 
4.6

Other
(1,113
)
 
(2,164
)
 
1,051

 
48.6

Total Revenues
600,204

 
572,574

 
27,630

 
4.8

OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
135,507

 
113,855

 
21,652

 
19.0

SPP network transmission costs
67,594

 
60,674

 
6,920

 
11.4

Operating, maintenance and administrative
139,993

 
135,319

 
4,674

 
3.5

Depreciation and amortization
89,641

 
88,625

 
1,016

 
1.1

Taxes other than income tax
43,939

 
42,716

 
1,223

 
2.9

Total Operating Expenses
476,674

 
441,189

 
35,485

 
8.0

INCOME FROM OPERATIONS
123,530

 
131,385

 
(7,855
)
 
(6.0
)
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
999

 
3,155

 
(2,156
)
 
(68.3
)
Other income
1,951

 
1,300

 
651

 
50.1

Other expense
(10,561
)
 
(10,352
)
 
(209
)
 
(2.0
)
Total Other Expense
(7,611
)
 
(5,897
)
 
(1,714
)
 
(29.1
)
Interest expense
43,841

 
41,095

 
2,746

 
6.7

INCOME BEFORE INCOME TAXES
72,078

 
84,393

 
(12,315
)
 
(14.6
)
Income tax expense
9,174

 
20,911

 
(11,737
)
 
(56.1
)
NET INCOME
62,904

 
63,482

 
(578
)
 
(0.9
)
Less: Net income attributable to noncontrolling interests
2,419

 
3,821

 
(1,402
)
 
(36.7
)
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
60,485

 
$
59,661

 
$
824

 
1.4

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic and diluted earnings per common share
$
0.42

 
$
0.42

 
$
—

 
—

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
142,635

 
142,437

 
198

 
0.1

Diluted
142,652

 
142,696

 
(44
)
 
—

DIVIDENDS DECLARED PER COMMON SHARE
$
0.40

 
$
0.40

 
$
—

 
—

Effective income tax rate
13
%
 
25
%
 
 
 
 
 
 
 
 
 
 
 
 



The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2018 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, 2018
 
December 31, 2017
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
11,166

 
$
3,432

Accounts receivable, net of allowance for doubtful accounts of $9,288 and $6,716, respectively
244,411

 
290,652

Fuel inventory and supplies
286,831

 
293,562

Prepaid expenses
20,566

 
16,425

Regulatory assets
95,580

 
99,544

Other
24,694

 
23,435

Total Current Assets
683,248

 
727,050

PROPERTY, PLANT AND EQUIPMENT, NET
9,589,164

 
9,553,755

PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITY, NET
174,500

 
176,279

OTHER ASSETS:
 
 
 
Regulatory assets
681,036

 
685,355

Nuclear decommissioning trust
241,153

 
237,102

Other
251,268

 
244,827

Total Other Assets
1,173,457

 
1,167,284

TOTAL ASSETS
$
11,620,369

 
$
11,624,368

LIABILITIES AND EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Current maturities of long-term debt of variable interest entity
$
30,337

 
$
28,534

Short-term debt
289,800

 
275,700

Accounts payable
139,308

 
204,186

Accrued dividends
53,888

 
53,830

Accrued taxes
132,593

 
87,727

Accrued interest
91,741

 
72,693

Regulatory liabilities
11,220

 
11,602

Other
81,462

 
89,445

Total Current Liabilities
830,349

 
823,717

LONG-TERM LIABILITIES:
 
 
 
Long-term debt, net
3,688,257

 
3,687,555

Long-term debt of variable interest entity, net
51,096

 
81,433

Deferred income taxes
824,699

 
815,743

Unamortized investment tax credits
256,406

 
257,093

Regulatory liabilities
1,110,055

 
1,093,974

Accrued employee benefits
533,318

 
541,364

Asset retirement obligations
382,791

 
379,989

Other
78,952

 
83,063

Total Long-Term Liabilities
6,925,574

 
6,940,214

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 142,233,103 shares and 142,094,275 shares, respective to each date
711,166

 
710,471

Paid-in capital
2,022,451

 
2,024,396

Retained earnings
1,176,095

 
1,173,255

Total Westar Energy, Inc. Shareholders’ Equity
3,909,712

 
3,908,122

Noncontrolling Interests
(45,266
)
 
(47,685
)
Total Equity
3,864,446

 
3,860,437

TOTAL LIABILITIES AND EQUITY
$
11,620,369

 
$
11,624,368


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2018 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,
 
2018
 
2017
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
 
 
 
Net income
$
62,904

 
$
63,482

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
89,641

 
88,625

Amortization of nuclear fuel
7,716

 
8,069

Amortization of deferred regulatory gain from sale leaseback
(1,374
)
 
(1,374
)
Amortization of corporate-owned life insurance
5,501

 
5,901

Non-cash compensation
2,507

 
2,468

Net deferred income taxes and credits
3,803

 
19,011

Allowance for equity funds used during construction
(1,097
)
 
(775
)
Payments for asset retirement obligations
(1,943
)
 
(961
)
Income from corporate-owned life insurance
(671
)
 
(1,311
)
Changes in working capital items:
 
 
 
Accounts receivable
46,241

 
51,547

Fuel inventory and supplies
6,885

 
(10,581
)
Prepaid expenses and other current assets
3,886

 
28,311

Accounts payable
(24,219
)
 
(23,135
)
Accrued taxes
48,674

 
47,775

Other current liabilities
(11,833
)
 
(54,223
)
Changes in other assets
(724
)
 
3,290

Changes in other liabilities
23,731

 
10,606

Cash Flows from Operating Activities
259,628

 
236,725

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 
 
 
Additions to property, plant and equipment
(174,765
)
 
(175,400
)
Purchase of securities - trusts
(85,429
)
 
(4,191
)
Sale of securities - trusts
86,060

 
5,720

Investment in corporate-owned life insurance
(998
)
 
(913
)
Proceeds from investment in corporate-owned life insurance
2,559

 
1,414

Other investing activities
(1,608
)
 
(2,354
)
Cash Flows used in Investing Activities
(174,181
)
 
(175,724
)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 
 
 
Short-term debt, net
14,100

 
(140,407
)
Proceeds from long-term debt
—

 
296,475

Retirements of long-term debt
—

 
(125,000
)
Retirements of long-term debt of variable interest entity
(28,534
)
 
(26,840
)
Repayment of capital leases
(950
)
 
(800
)
Borrowings against cash surrender value of corporate-owned life insurance
721

 
910

Repayment of borrowings against cash surrender value of corporate-owned life insurance
(1,735
)
 
—

Issuance of common stock
—

 
470

Distributions to shareholders of noncontrolling interests
—

 
(5,760
)
Cash dividends paid
(57,438
)
 
(52,750
)
Other financing activities
(3,877
)
 
(7,006
)
Cash Flows used in Financing Activities
(77,713
)
 
(60,708
)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
7,734

 
293

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
 
 
 
Beginning of period, including restricted cash of $88 and $90, respectively
3,520

 
3,156

End of period, including restricted cash of $88 and $90, respectively
$
11,254

 
$
3,449


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2018 should be read in conjunction with this financial information.
Page 3


Westar Energy, Inc.
1st Quarter 2018 vs. 2017

Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2017 earnings attributable to common stock
 
 
 
$
59,661

 
 
 
$
0.42

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Gross Margin
 
 
 
(942
)
 
A
 
 
 
Operating, maintenance and administrative
 
 
 
(4,674
)
 
B
 
 
 
Depreciation and amortization
 
 
 
(1,016
)
 
 
 
 
 
Taxes other than income tax
 
 
 
(1,223
)
 
 
 
 
 
Other income (expense)
 
 
 
(1,714
)
 
 
 
 
 
Interest expense
 
 
 
(2,746
)
 
C
 
 
 
Income tax expense
 
 
 
11,737

 
D
 
 
 
Net income attributable to noncontrolling interests
 
 
 
1,402

 
 
 
 
 
Change in shares outstanding
 
(0.01
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018 earnings attributable to common stock
 
 
 
$
60,485

 
 
 
$
0.42

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
 
 
A
Due primarily to recording a refund obligation for the change in the corporate income tax rate due to the TCJA, mostly offset by reduced income tax expense -- ($15.1M); recording a regulatory liability for transmission revenues due to tax rate change also offset by reduced income tax expense -- ($3.9M); partially offset by increase in residential and commercial sales primarily attributable to colder winter weather in 2018 when compared to mild winter weather in early 2017

 
 
 
 
 
 
 
 
 
 
B
Due primarily to higher employee benefit costs attributable partially to increased medical claims -- ($2.8M); higher operating expense due to full quarter impact of Western Plains Wind Farm -- ($1.3M); partially offset by decrease in steam generation operating and maintenance costs primarily due to planned outages at La Cygne in 2017 -- $2.0M

 
 
 
 
 
 
 
 
 
 
C
Due primarily to an increase in interest expense of long-term debt primarily from the issuances of FMBs in March 2017 -- ($1.7M); and decrease in debt AFUDC -- ($0.5M)



 
 
 
 
 
 
 
 
 
 
D
Due primarily to decrease in federal corporate income tax rate as a result of the TCJA, offset by refund obligation reflected in gross margin; and an increase in tax benefits from production tax credits


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2018 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,
 
2018
 
2017
 
Change
 
% Change
Revenues
(Dollars In Thousands)
 
 
Residential
$
180,285

 
$
169,290

 
$
10,995

 
6.5

Commercial
155,403

 
149,552

 
5,851

 
3.9

Industrial
93,460

 
94,589

 
(1,129
)
 
(1.2
)
Other retail
4,253

 
5,042

 
(789
)
 
(15.6
)
Total Retail Revenues
433,401

 
418,473

 
14,928

 
3.6

Wholesale
94,209

 
83,925

 
10,284

 
12.3

Transmission
71,926

 
70,729

 
1,197

 
1.7

Other
1,781

 
1,611

 
170

 
10.6

Total Revenues from Contracts with Customers
601,317

 
574,738

 
26,579

 
4.6

Other
(1,113
)
 
(2,164
)
 
1,051

 
48.6

Total Revenues
600,204

 
572,574

 
27,630

 
4.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
 
 
Residential
1,472

 
1,354

 
118

 
8.7

Commercial
1,697

 
1,617

 
80

 
4.9

Industrial
1,359

 
1,334

 
25

 
1.9

Other retail
14

 
20

 
(6
)
 
(30.0
)
Total Retail
4,542

 
4,325

 
217

 
5.0

Wholesale
2,901

 
2,491

 
410

 
16.5

Total Electricity Sales
7,443

 
6,816

 
627

 
9.2

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
 
 
Total retail
$
95.42

 
$
96.76

 
$
(1.34
)
 
(1.4
)
Wholesale
$
32.47

 
$
33.69

 
$
(1.22
)
 
(3.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
 
 
Fuel used for generation and long-term renewable purchases
134,137

 
123,681

 
10,456

 
8.5

Purchased power
9,588

 
9,618

 
(30
)
 
(0.3
)
Subtotal
143,725

 
133,299

 
10,426

 
7.8

RECA recovery and other
(8,218
)
 
(19,444
)
 
11,226

 
57.7

Total fuel and purchased power expense
$
135,507

 
$
113,855

 
$
21,652

 
19.0

 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
 
 
Gas
479

 
323

 
156

 
48.3

Coal
3,658

 
3,458

 
200

 
5.8

Nuclear
1,227

 
1,244

 
(17
)
 
(1.4
)
Renewables, including long-term purchases
1,759

 
1,582

 
177

 
11.2

Subtotal
7,123

 
6,607

 
516

 
7.8

Purchased
551

 
467

 
84

 
18.0

Total Electricity Supply
7,674

 
7,074

 
600

 
8.5

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
 
 
Average cost of fuel used for generation and long-term renewable purchases
$
18.83

 
$
18.72

 
$
0.11

 
0.6

Average cost of purchased power
$
17.40

 
$
20.60

 
$
(3.20
)
 
(15.5
)
Average cost of fuel and purchased power
$
18.73

 
$
18.84

 
$
(0.11
)
 
(0.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2017/
 
 
 
 
 
2018
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
—

 
16

 
(16
)
 
(100.0
)
Actual compared to 20 year average
—

 
2

 
(2
)
 
(100.0
)
Heating
 
 
 
 
 
 
 
Actual compared to last year
2,376

 
1,901

 
475

 
25.0

Actual compared to 20 year average
2,376

 
2,429

 
(53
)
 
(2.2
)

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2018 should be read in conjunction with this financial information.
Page 5



Westar Energy, Inc.
Capitalization
 
 
March 31, 2018
 
 
 
December 31, 2017
 
 
 
 
(Dollars in Thousands)
 
 
Current maturities of long-term debt of VIEs
 
$
30,337

 
 
 
$
28,534

 
 
Long-term debt, net
 
3,688,257

 
 
 
3,687,555

 
 
Long-term debt of variable interest entities, net
 
51,096

 
 
 
81,433

 
 
Total long-term debt
 
3,769,690

 
49.4
 %
 
3,797,522

 
49.6
 %
Common equity
 
3,909,712

 
51.2
 %
 
3,908,122

 
51.0
 %
Noncontrolling interests
 
(45,266
)
 
(0.6
)%
 
(47,685
)
 
(0.6
)%
Total capitalization
 
$
7,634,136

 
100.0
 %
 
$
7,657,959

 
100.0
 %
 
 
 
 
 
 
 
 
 
GAAP Book value per share
 
$
27.49

 
 
 
$
27.50

 


Period end shares outstanding (in thousands)
 
142,233

 
 
 
142,094

 
 
 
 
 
 
 
 
 
 
 
Outstanding Long-Term Debt
 
 
 
 
 
 
 
 
 
 
CUSIP
March 31, 2018
 
 
 
December 31, 2017
 
 
Westar Energy:
 
(Dollars in Thousands)
 
 
First Mortgage Bond series:
 
 
 
 
 
 
 
 
5.10% Series due July 2020
95709TAD2
250,000

 
 
 
250,000

 
 
3.25% Series due December 2025
95709TAL4
250,000

 
 
 
250,000

 
 
2.55% Series due June 2026
95709TAN0

350,000

 
 
 
350,000

 
 
3.10% Series due April 2027
95709TAP5
300,000

 
 
 
300,000

 
 
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

 
 
4.25% Series due December 2045
95709TAM2
300,000

 
 
 
300,000

 
 
 
 
2,680,000

 
 
 
2,680,000

 
 
Pollution control bond series:
 
 
 
 
 
 
 
 
Variable series due April 2032 (Wamego)
933623BN9
45,000

 
 
 
45,000

 
 
Variable series due April 2032 (St Marys)
792609AF6
30,500

 
 
 
30,500

 
 
 
 
75,500

 
 
 
75,500

 
 
Total Westar Energy
 
2,755,500

 
 
 
2,755,500

 
 
 
 
 
 
 
 
 
 
 
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

 
 
4.30% 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

 
 
2.50% Series due June 2031
 
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
 
3,726,940

 
 
 
3,726,940

 
 
Unamortized debt discount
 
(10,769
)
 
 
 
(10,925
)
 
 
Unamortized debt issuance expense
 
(27,913
)
 
 
 
(28,460
)
 
 
Total long-term debt, net
 
$
3,688,258

 
 
 
$
3,687,555

 
 

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2018 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, 2018 and 2017 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,
 
2018
 
2017
 
Change
 
(Dollars in Thousands)
Revenues
$
600,204

 
$
572,574


$
27,630

Less: Fuel and purchased power expense
135,507

 
113,855

 
21,652

 SPP network transmission costs
67,594

 
60,674

 
6,920

Gross Margin
$
397,103


$
398,045


$
(942
)
 
 
 
 
 
 
Income from operations
$
123,530

 
$
131,385

 
$
(7,855
)
Plus: Operating, maintenance and administrative expense
139,993

 
135,319

 
4,674

Depreciation and amortization expense
89,641

 
88,625

 
1,016

Taxes other than income tax
43,939

 
42,716

 
1,223

Gross Margin
$
397,103

 
$
398,045


$
(942
)
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended March 31, 2018 should be read in conjunction with this financial information.
Page 7