View:

Download DOC

Download PDF

Download XLS

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, 2006 (October 25, 2006)

WESTAR ENERGY, INC.

(Exact name of registrant as specified in its charter)

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:

WESTAR ENERGY, INC.

Section 2-Financial Information

Item 2.02. Results of Operations and Financial Condition.

On November 3, 2006, we issued a press release announcing our earnings for the quarter ended September 30, 2006. A copy of our November 3, 2006 press release is attached hereto as exhibit 99.1 and is incorporated herein by this reference.

The information above is being furnished, not filed, pursuant to Item 2.02 of Form 8-K. Accordingly, the information in Item 2.02 of this Current Report, including the press release attached hereto as an exhibit, will not be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference.

Section 8-Other Events

Item 8.01. Other Events.

On October 25, 2006, our Board of Directors amended our Corporate Governance Guidelines to include a policy that in an uncontested election a nominee for director must receive a majority of the votes cast in order to be elected or re-elected. If an incumbent director does not receive the required vote to be re-elected, he or she will tender a resignation, which the Nominating and Corporate Governance Committee and the Board of Directors will thereafter determine whether to accept. A copy of our revised Corporate Governance Guidelines is attached hereto as exhibit 99.2 and is incorporated herein by this reference.

Section 9-Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

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 thereunto duly authorized.

EXHIBIT INDEX

Exhibit 99.1

WESTAR ENERGY ANNOUNCES THIRD QUARTER 2006 RESULTS

TOPEKA, Kan., Nov. 3, 2006 — Westar Energy, Inc. (NYSE:WR) today announced earnings of $89.8 million, or $1.03 per share, for the third quarter 2006 compared with earnings of $84.2 million, or $0.97 per share, for the third quarter 2005. The increase in earnings for the quarter was due primarily to increased retail sales and corporate-owned life insurance proceeds and the benefit of a lower effective income tax rate.

For the nine months ended September 30, 2006, the company reported earnings of $151.5 million, or $1.73 per share, compared with earnings of $127.2 million, or $1.47 per share, for the same period in 2005. Increased sales and income from corporate-owned life insurance, and lower interest expense and income tax expense contributed to the increased earnings for the period. These more than offset increases in fuel and purchased power expense, operating and maintenance expense and depreciation and amortization expense.

Third Quarter Results

Westar Energy reported revenues of $515.9 million for the third quarter 2006 compared with $477.9 million for the same period in 2005. Retail sales for the third quarter 2006 increased $35.2 million or 9.9% compared with the same period of 2005 due primarily to higher industrial sales and the collection of revenues this year for higher fuel and purchased power costs.

Westar Energy announces third quarter 2006 results, page 2 of 7

Wholesale sales decreased $6.6 million for the third quarter of 2006 compared with the same period in 2005 due primarily to reduced market-based wholesale sales resulting from efforts to conserve low-cost coal resources to meet the peak summer needs of our customers and lower average wholesale market prices. Energy marketing increased $5.7 million for the third quarter 2006 compared with the same period of 2005 due primarily to favorable mark-to-market contract valuations this year.

Fuel and purchased power expense for the third quarter of 2006 increased $37.0 million compared with the same period last year. In the prior period, fuel and purchased power expense was reduced due to the company having recorded a $45.8 million mark-to-market gain associated primarily with a favorable change in the value of a coal supply contract. Since implementing the retail energy cost adjustment (RECA), the company no longer records changes in the value of fuel supply contracts in current fuel expense. Operation and maintenance expense increased $7.3 million reflecting $2.9 million for amortization of deferred storm expense, $3.9 million for increased Southwest Power Pool transmission network expense and $1.8 million for increased property tax expense. Operating and maintenance expense in 2005 included a $3.5 million charge related to terminating the development of a plant operating system. Depreciation and amortization expense increased $7.6 million due primarily to the implementation of new depreciation rates.

Other income for the third quarter 2006 was $1.2 million compared with $0.5 million for the same period last year due primarily to increased corporate-owned life insurance, which more than offset reduced interest income. Interest expense for the third quarter 2006 was $25.8 million

Westar Energy announces third quarter 2006 results, page 3 of 7

compared with $26.9 million for the same period in 2005, reflecting the results of debt redemptions.

Income tax expense for the third quarter 2006 decreased $17.4 million compared with the same period last year due primarily to a decrease in the effective tax rate. The decrease in the effective tax rate is due primarily to the increase in non-taxable income from corporate-owned life insurance, a domestic manufacturer’s deduction and a reduction in tax reserves as a result of a favorable reassessment of potential tax liabilities.

Nine-month Results

Westar Energy reported revenues of $1.263 billion for the nine months ended September 30, 2006 compared with $1.189 billion for the same period of 2005. Retail revenues increased $81.5 million or 9.6% compared with the same period of 2005. This was due primarily to warmer weather this year, higher industrial sales and the company having collected revenues this year for higher fuel and purchased power costs. Wholesale sales decreased $29.1 million for the nine months ended September 30, 2006 compared with the same period in 2005 due primarily to reduced market-based wholesale sales resulting from efforts to conserve coal. Energy marketing increased $13.0 million for the nine months ended September 30, 2006 compared with the same period of 2005 due primarily to more favorable mark-to-market contract valuations this year.

Fuel and purchased power expense for the nine months ended September 30, 2006 increased $47.4 million compared with the same period in 2005. In the prior period, fuel and purchased power expense was reduced due to the company having recorded a $71.1 million mark-to-market gain associated primarily with a favorable change in the value of a coal supply contract. Operation and maintenance expense increased $21.3 million reflecting increased

Westar Energy announces third quarter 2006 results, page 4 of 7

maintenance expense at the company’s generating stations, $7.8 million for amortization of deferred storm expense, $7.7 million for increased Southwest Power Pool transmission network expense and $5.8 million for increased property taxes. These increases were partially offset by a $5.4 million reduction in the lease expense for La Cygne Unit 2. Operating and maintenance expense in 2005 included a $3.5 million charge related to terminating the development of a plant operating system. Depreciation expense increased $20.6 million due primarily to the implementation of new depreciation rates. Selling, general and administrative expense decreased $5.5 million due primarily to reduced legal expenses related to matters having to do with former management and lower insurance costs. This decrease was partially offset by increased pension and medical expense.

Other income for the nine months ended September 30, 2006 was $12.4 million compared with $4.1 million for the same period in 2005. The change between periods is due primarily to increased income from corporate-owned life insurance. Interest expense for the nine months ended September 30, 2006 was $74.2 million compared with $84.5 million for the same period in 2005, reflecting the results of debt redemptions and lower interest rates due to refinancing activities.

Income tax expense for the nine months ended September 30, 2006 decreased $16.0 million compared with the same period last year due primarily to a decrease in the effective tax rate. The decrease in the effective tax rate is due primarily to the increase in non-taxable income from corporate-owned life insurance, utilization of capital loss carry forwards, a domestic manufacturer’s deduction and a reduction in tax reserves as a result of reassessment of potential tax liabilities.

Westar Energy announces third quarter 2006 results, page 5 of 7

2006 Earnings Guidance

Based on year-to-date results, Westar Energy is updating and raising its 2006 full-year earnings guidance to $1.63 to $1.73 per share. Investors should note the company’s 2006 earnings include a number of positive elements that may not recur in the future. The company affirmed 2007 earnings guidance of $1.65 to $1.75 per share.

Additional Earnings Information and Conference Call

In conjunction with the earnings release, Westar Energy posted on its Web site more detailed financial information related to its third quarter results. The materials are available under Presentations in the Investor Relations section of the company Web site.

Westar Energy’s conference call with the investment community will be at 11 a.m. Eastern Daylight Time (10:00 a.m. Central) on Nov. 3, 2006. Jim Haines, chief executive officer, and Mark Ruelle, executive vice president and chief financial officer, will host the call. Investors, media and the public may listen to the conference call by dialing 866-203-3206, participant code 72253527. Listeners may access a live webcast of the conference call via the company’s Web site, www.WestarEnergy.com. A replay of the call will be available on the Web site. Members of the news media may direct follow-up questions to Karla Olsen.

-30-

Westar Energy, Inc. (NYSE: WR) is the largest electric utility in Kansas, providing electric service to about 667,000 customers in the state. Westar Energy has more than 6,100 megawatts of electric generation capacity and operates and coordinates approximately 33,000 miles of electric distribution and transmission lines.

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. Therefore, actual results could vary materially from what we expect. Please review our Quarterly Report on Form 10-Q for the period ended September 30, 2006 for important risk factors that could cause results to differ materially from those in any such forward-looking statements. Any forward-looking statement speaks only as of the date such

Westar Energy announces third quarter 2006 results, page 6 of 7

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 except as required by applicable laws or regulations.

Westar Energy announces third quarter 2006 results, page 7 of 7

Attachment 1

WESTAR ENERGY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Exhibit 99.2

WESTAR ENERGY, INC.

A Kansas corporation

(the “Company”)

Corporate Governance Guidelines

Adopted December 10, 2003

Amended October 25, 2006

Criteria

The Nominating and Corporate Governance Committee shall establish criteria for Board membership, which shall include the criteria set forth in these Corporate Governance Guidelines, and shall recommend individuals for membership on the Company’s Board of Directors. In making its recommendations, the Nominating and Corporate Governance Committee shall:

Election

In an uncontested election, a nominee for director must receive more votes “for” election or re-election than the total of the votes “against” or “withheld” in order to be elected or re-elected. Any broker non-votes or abstentions will be excluded from the calculation of shares voted. An uncontested election is one in which none of our stockholders has provided notice of an intention to nominate one or more candidates to compete with the Board’s nominees or one in which our stockholders have withdrawn all such nominations by the day before we print the final version of our proxy statement.

If an incumbent director does not receive the vote required to be re-elected, he or she will tender a resignation promptly following certification of the

stockholder vote. The Board agrees to nominate for director only individuals who agree to comply with this requirement.

The Nominating and Corporate Governance Committee will act on an expedited basis to determine whether to accept the director’s resignation and will submit its recommendation for prompt consideration by the Board. The Board will act on the Nominating and Corporate Governance Committee’s recommendation and publicly disclose (by press release and a filing with the Securities and Exchange Commission) its decision and the rationale behind the decision within 90 days following certification of the stockholder vote. The Nominating and Corporate Governance Committee in making its recommendation, and the Board in making its decision, may each consider any factors or other information that it considers appropriate and relevant.

Any director who tenders his or her resignation pursuant to this provision will not participate in the consideration of it by either the Nominating and Corporate Governance Committee or the Board. If an incumbent director’s resignation is not accepted, he or she will continue to serve until the next annual meeting and until his or her successor is duly elected, or his or her earlier resignation or removal.

This corporate governance policy will be summarized or included in each proxy statement relating to an election of directors of the Company.

Independence

A majority of the Board shall be comprised of directors meeting the independence requirements of the New York Stock Exchange. The Board shall make an affirmative determination at least annually as to the independence of each director. The Board has established categorical standards to assist in making independence determinations. Those standards are set forth in Annex A to these Guidelines.

Term Limits

The Board does not believe that arbitrary term limits on directors’ service are appropriate. Such limits may disadvantage the Company by curtailing the availability and contributions of directors who have developed experience with, and insight into, the Company and its needs over a period of time. Neither does the Board believe, however, that directors should expect to be renominated until they reach the mandatory retirement age.

2

Retirement Age

Under the Company’s by-laws, no director who is or would be 70 or more years of age at year end prior to the Company’s next annual meeting may be nominated to a new term. In addition, under the Company’s by-laws, no director who is a full-time employee of the Company and who is or would be 65 or more years of age at year end prior to the Company’s next annual meeting may be nominated to a new term.

Simultaneous Service on Other Public Company Boards

A director who also serves as the Company’s chief executive officer or equivalent position should not serve on more than two public company boards in addition to the Company’s Board. Other directors should not serve on more than four other public company boards in addition to the Company’s Board.

It is the policy of the Board that every director must notify the Chairman of the Nominating and Corporate Governance Committee before accepting any invitation to serve on another public company board or with a government or advisory group. Prior to a director’s re-nomination to the Board, the Nominating and Corporate Governance Committee shall evaluate the continued appropriateness of Board membership in light of the time commitments incident to their service on other public company boards or with government or other advisory groups.

Changes in Primary Employment

In accordance with the Company’s by-laws, if a director significantly changes his or her primary employment during his or her tenure, that director shall tender his or her resignation to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee shall evaluate the continued appropriateness of Board membership under the new circumstances and make a recommendation to the Board as to any action to be taken with respect to the resignation.

Conflicts of Interest

If an actual or potential conflict of interest develops because of a change in the business of the Company or a subsidiary, or in a director’s circumstances (for example, significant and ongoing competition between the Company and a business with which the director is affiliated), the director involved should report the matter immediately to the Nominating and Corporate Governance Committee for evaluation and appropriate resolution.

If a director has a personal interest in a matter before the Board, that director shall disclose the interest to the full Board, shall recuse himself or herself

3

from discussing the matter further with the Board, and shall not vote on the matter.

The Board acts as the ultimate decision-making body of the Company and advises and oversees management, who are responsible for the day-to-day operations and management of the Company. In fulfilling these roles, each director must act in what he or she reasonably believes to be in the best interests of the Company and must exercise his or her business judgment.

Participation at and Preparation for Board Meetings

The Company expects directors to be active and engaged in discharging their duties and to keep themselves informed about the business and operations of the Company. Directors are expected to attend all Board meetings and the meetings of the committees on which they serve and to prepare themselves for these meetings.

For the Board to exercise fully its oversight functions, it must rely on management to provide access to information regarding the Company and the markets in which the Company operates. This information may come from a variety of sources, including management reports, security analysts’ reports, information regarding peer performance, interaction with senior management at Board meetings and visits to Company facilities. Any written materials which would assist directors in preparing for a Board or committee meeting shall be distributed to the directors in advance of the meeting, to the extent possible, and directors are expected to review such materials prior to the meeting.

Company Performance and Corporate Strategy

The Board reviews the Company’s financial performance on a regular basis at Board meetings and through periodic updates. These reviews include the views of management, as well as those of investors and securities analysts.

The Board also conducts an annual meeting to review and approve the Company’s long-term strategy, and to assess its strategic, competitive and financial performance.

The Chairman of the Board, with the assistance of the chief executive officer, establishes on an annual basis an agenda of topics for consideration and review by the Board during the following year. This annual schedule of topics is then provided to the full Board for review and comment and is adjusted, as appropriate, during the year. In accordance with their committee charters, Board committees will regularly report on their activities to the full Board.

4

The Company’s non-management directors shall regularly schedule executive sessions in which management does not participate. The Board’s chairman, or if he or she is unable to attend, his or her designee from among the other non-management directors, shall preside at each executive session.

The Company’s restated articles of incorporation require that the Board have at least seven, but not more than 15 members. Although the Board considers its current size to be satisfactory, it may consider expanding or reducing its size as it deems appropriate.

The Board believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chairman and chief executive officer in any way that is in the best interests of the Company. The Board may make a determination as to the appropriateness of its current policies in connection with the recruitment and succession of the Chairman of the Board and/or the chief executive officer.

The Board shall have at all times an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Only independent directors meeting the independence requirements of the New York Stock Exchange and the Sarbanes-Oxley Act of 2002 and any related rules promulgated by the Securities and Exchange Commission may serve on these three committees. Committee members shall be appointed by the Board based upon the recommendation of the Nominating and Corporate Governance Committee, except for the Nominating and Corporate Governance Committee, whose members are appointed by the Board based on the recommendations of the independent directors. The Board may, from time to time, establish or maintain additional committees as it deems appropriate and in the best interests of the Company.

Each of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, shall operate pursuant to its own written charter. These charters shall, among other things, set forth the purpose, goals and responsibilities of the particular committee, the procedures for committee member appointment and removal, and committee structure and operations, as well as reporting to the Board. The charters shall also provide for an annual evaluation of each committee’s performance.

5

Directors shall have access to the management and employees of the Company and to its outside counsel and auditors. The chief audit executive shall report directly to the Audit Committee.

Executive officers and other members of senior management are expected to be present at Board meetings at the invitation of the Board. The Board encourages senior management to make presentations and to invite to Board meetings managers and other employees who can provide additional insight into the items being discussed.

The Board and each of its committees is authorized to hire independent legal, financial, or other advisors as they may consider necessary, without conferring with or obtaining the approval of management or, in the case of committees, the full Board. Board committees will inform the full Board of their hiring of advisors when they report to the Board on their activities.

The Nominating and Corporate Governance Committee shall review and approve compensation (including restricted stock units and other equity-based compensation) for the Company’s directors. In so reviewing and approving director compensation, the Nominating and Corporate Governance Committee shall, among other things:

6

All new directors and new members of committees are encouraged to participate in the Company’s orientation program for directors. Other directors may also attend the orientation programs.

All directors will be offered the opportunity and are encouraged to participate in continuing education programs to stay current and knowledgeable about the business of the Company.

Such orientation and continuing education programs shall be developed and overseen by the Nominating and Corporate Governance Committee of the Board.

The Compensation Committee shall evaluate the performance of the chief executive officer, as well as other senior management of the Company and shall present its findings to the full Board. The Compensation Committee will consult with the chief executive officer when evaluating the performance of other senior management. The Board shall review the Compensation Committee’s report to ensure that management’s performance is satisfactory and that management is providing the best leadership for the Company in the long and short-term.

The Compensation Committee shall review and report to the Board on the Company’s succession planning, including succession planning in the case of the incapacitation, retirement or removal of the chief executive officer. The chief executive officer shall provide at least annually a report to the Compensation Committee recommending and evaluating potential successors, along with a review of any development plans recommended for such individuals. The chief executive officer shall also provide to the Board, on an ongoing basis, his or her recommendation as to a successor in the event of an unexpected emergency.

The Board, led by the Nominating and Corporate Governance Committee, shall establish and conduct an annual self-evaluation to determine whether it and its committees are functioning effectively. The Nominating and Corporate Governance Committee shall oversee the evaluation with each director completing a questionnaire developed by the Nominating and Corporate Governance Committee with respect to various criteria. The collective evaluations shall be compiled in advance of the review session and shall be presented by the Chairman of the Nominating and Corporate Governance Committee to the full Board for discussion. This process shall also include annual self-assessments by each Board committee, relying on a review process similar to that used by the Board, with performance criteria for each committee established on the basis of its charter.

7

Annex A

As specified in the Corporate Governance Guidelines, a majority of the Board shall be comprised of directors meeting the independence requirements of the New York Stock Exchange (NYSE). The Board will make a determination regarding the independence of each director annually based on all relevant facts and circumstances. In addition, in accordance with the rules of the NYSE, the Board has adopted the following categorical standards to assist it in making a determination of independence. Any director who meets the following criteria shall be presumed to be independent (except for purposes of serving as a member of the Audit Committee) absent an affirmative determination to the contrary by the Nominating and Corporate Governance Committee:

8