WESTAR ENERGY INC /KS - FORM 8-K - EX-99.2 - 2012 SECOND QUARTER EARNINGS PACKAGE

Attached files

file	filename
8-K - FORM 8-K - WESTAR ENERGY INC /KS	wr_6302012-earningsrelease.htm
EX-99.1 - PRESS RELEASE DATED AUGUST 7, 2012 - WESTAR ENERGY INC /KS	exhibit991.htm

Exhibit 99.2

Westar Energy, Inc.

Second Quarter 2012 Earnings

Released August 7, 2012



Contents	Page

Consolidated Statements of Income	1
Consolidated Balance Sheets	3
Consolidated Statements of Cash Flows	4
Earnings Variances	5
Supplemental Data	7
Capitalization & Long-Term Debt Table	9
GAAP to Non-GAAP Reconciliation	10

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 June 30, 2012 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.

Consolidated Statements of Income

(Unaudited)



	Three Months Ended June 30,
	2012			2011			Change			% Change
	(In Thousands, Except Per Share Amounts)
REVENUES:
Residential	$	176,893		$	157,120		$	19,773		12.6
Commercial	170,132			153,554			16,578			10.8
Industrial	95,960			91,245			4,715			5.2
Other retail	(2,363		)	(2,440		)	77			3.2
Total Retail Revenues	440,622			399,479			41,143			10.3
Wholesale	68,971			77,515			(8,544		)	(11.0	)
Transmission	49,380			39,160			10,220			26.1
Other	7,289			8,738			(1,449		)	(16.6	)
Total Revenues	566,262			524,892			41,370			7.9
OPERATING EXPENSES:
Fuel and purchased power	147,680			152,973			(5,293		)	(3.5	)
Operating and maintenance	156,470			137,254			19,216			14.0
Depreciation and amortization	66,299			71,089			(4,790		)	(6.7	)
Selling, general and administrative	62,711			55,970			6,741			12.0
Total Operating Expenses	433,160			417,286			15,874			3.8
INCOME FROM OPERATIONS	133,102			107,606			25,496			23.7
OTHER INCOME (EXPENSE):
Investment (losses) earnings	(598		)	1,374			(1,972		)	(143.5	)
Other income	7,537			2,557			4,980			194.8
Other expense	(2,416		)	(3,113		)	697			22.4
Total Other Income	4,523			818			3,705			452.9
Interest expense	44,823			43,300			1,523			3.5
INCOME BEFORE INCOME TAXES	92,802			65,124			27,678			42.5
Income tax expense	28,340			19,599			8,741			44.6
NET INCOME	64,462			45,525			18,937			41.6
Less: Net income attributable to noncontrolling interests	1,728			1,396			332			23.8
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.	62,734			44,129			18,605			42.2
Preferred dividends	1,373			242			1,131			467.4
NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	61,361		$	43,887		$	17,474		39.8
Earnings per common share, basic	$	0.48		$	0.38		$	0.10		26.3
Average equivalent common shares outstanding	126,637			114,908			11,729			10.2
DIVIDENDS DECLARED PER COMMON SHARE	$	0.33		$	0.32		$	0.01		3.1
Effective income tax rate	30.54		%	30.09		%

Westar Energy, Inc.

Consolidated Statements of Income

(Unaudited)



	Six Months Ended June 30,
	2012			2011			Change			% Change
	(In Thousands, Except Per Share Amounts)
REVENUES:
Residential	$	315,311		$	310,028		$	5,283		1.7
Commercial	299,782			282,382			17,400			6.2
Industrial	181,380			170,441			10,939			6.4
Other retail	(5,281		)	(5,455		)	174			3.2
Total Retail Revenues	791,192			757,396			33,796			4.5
Wholesale	140,183			156,109			(15,926		)	(10.2	)
Transmission	95,343			76,336			19,007			24.9
Other	15,222			16,770			(1,548		)	(9.2	)
Total Revenues	1,041,940			1,006,611			35,329			3.5
OPERATING EXPENSES:
Fuel and purchased power	275,334			287,157			(11,823		)	(4.1	)
Operating and maintenance	312,514			274,606			37,908			13.8
Depreciation and amortization	139,579			141,348			(1,769		)	(1.3	)
Selling, general and administrative	110,046			104,734			5,312			5.1
Total Operating Expenses	837,473			807,845			29,628			3.7
INCOME FROM OPERATIONS	204,467			198,766			5,701			2.9
OTHER INCOME (EXPENSE):
Investment earnings	3,727			3,342			385			11.5
Other income	21,127			4,806			16,321			339.6
Other expense	(7,969		)	(8,482		)	513			6.0
Total Other Income (Expense)	16,885			(334		)	17,219			nm
Interest expense	86,869			86,838			31			nm
INCOME BEFORE INCOME TAXES	134,483			111,594			22,889			20.5
Income tax expense	40,783			33,112			7,671			23.2
NET INCOME	93,700			78,482			15,218			19.4
Less: Net income attributable to noncontrolling interests	3,442			2,770			672			24.3
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY	90,258			75,712			14,546			19.2
Preferred dividends	1,616			485			1,131			233.2
NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	88,642		$	75,227		$	13,415		17.8
Earnings per common share, basic	$	0.70		$	0.66		$	0.04		6.1
Average equivalent common shares outstanding	126,566			114,397			12,169			10.6
DIVIDENDS DECLARED PER COMMON SHARE	$	0.66		$	0.64		$	0.02		3.1
Effective income tax rate	30.33		%	29.67		%

nm - not meaningful

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q

for the period ended June 30, 2012 should be read in conjunction with this financial information.

Page 2

Westar Energy, Inc.

Consolidated Balance Sheets

(Dollars in Thousands, Except Par Values)

(Unaudited)



	June 30, 2012		December 31, 2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	6,654	$	3,539
Restricted cash	22,567		—
Accounts receivable, net of allowance for doubtful accounts of $4,919 and $7,384, respectively	277,488		226,428
Fuel inventory and supplies	256,316		229,118
Energy marketing contracts	5,981		8,180
Taxes receivable	—		5,334
Deferred tax assets	—		394
Prepaid expenses	14,883		13,078
Regulatory assets	111,374		123,818
Other	21,022		23,696
Total Current Assets	716,285		633,585
PROPERTY, PLANT AND EQUIPMENT, NET	6,724,590		6,411,922
PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET	327,734		333,494
OTHER ASSETS:
Regulatory assets	909,488		922,272
Nuclear decommissioning trust	140,741		130,270
Other	223,983		251,308
Total Other Assets	1,274,212		1,303,850
TOTAL ASSETS	$	9,042,821	$	8,682,851
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt of variable interest entities	$	45,853	$	28,114
Short-term debt	348,407		286,300
Accounts payable	151,227		187,428
Accrued taxes	63,102		52,451
Energy marketing contracts	4,414		6,353
Accrued interest	50,440		77,437
Regulatory liabilities	44,592		40,857
Other	142,759		148,347
Total Current Liabilities	850,794		827,287
LONG-TERM LIABILITIES:
Long-term debt, net	2,818,966		2,491,109
Long-term debt of variable interest entities, net	223,506		249,283
Deferred income taxes	1,138,708		1,110,463
Unamortized investment tax credits	161,389		164,175
Regulatory liabilities	292,535		230,530
Accrued employee benefits	546,793		592,617
Asset retirement obligations	146,541		142,508
Other	69,475		74,138
Total Long-Term Liabilities	5,397,913		5,054,823
COMMITMENTS AND CONTINGENCIES (See Notes 8 and 9)
EQUITY:
Westar Energy, Inc. Shareholders’ Equity:
Cumulative preferred stock, par value $100 per share; authorized 600,000 shares; issued and outstanding zero shares and 214,363 shares, respectively	—		21,436
Common stock, par value $5 per share; authorized 275,000,000 shares; issued and outstanding 126,223,848 shares and 125,698,396 shares, respectively	631,119		628,492
Paid-in capital	1,646,991		1,639,503
Retained earnings	505,720		501,216
Total Westar Energy, Inc. Shareholders’ Equity	2,783,830		2,790,647
Noncontrolling Interests	10,284		10,094
Total Equity	2,794,114		2,800,741
TOTAL LIABILITIES AND EQUITY	$	9,042,821	$	8,682,851

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q

for the period ended June 30, 2012 should be read in conjunction with this financial information.

Page 3

Westar Energy, Inc.

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)



	Six Months Ended June 30,
	2012			2011
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income	$	93,700		$	78,482
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	139,579			141,348
Amortization of nuclear fuel	9,026			5,913
Amortization of deferred regulatory gain from sale leaseback	(2,748		)	(2,748		)
Amortization of corporate-owned life insurance	10,921			12,041
Non-cash compensation	3,738			4,889
Net changes in energy marketing assets and liabilities	(425		)	417
Net deferred income taxes and credits	33,586			26,645
Stock-based compensation excess tax benefits	(1,498		)	(727		)
Allowance for equity funds used during construction	(6,778		)	(3,421		)
Changes in working capital items:
Accounts receivable	(51,055		)	(44,249		)
Fuel inventory and supplies	(26,830		)	(16,682		)
Prepaid expenses and other	15,255			(28,608		)
Accounts payable	(8,741		)	17,013
Accrued taxes	16,276			10,173
Other current liabilities	(59,356		)	(85,444		)
Changes in other assets	(40,100		)	(13,673		)
Changes in other liabilities	(21,371		)	(29,922		)
Cash Flows from Operating Activities	103,179			71,447
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Additions to property, plant and equipment	(417,617		)	(345,550		)
Purchase of securities within trusts	(16,817		)	(34,560		)
Sale of securities within trusts	18,040			33,821
Proceeds from trust	1,183			—
Investment in corporate-owned life insurance	(18,167		)	(18,845		)
Proceeds from investment in corporate-owned life insurance	16,330			744
Proceeds from federal grant	3,289			3,746
Investment in affiliated company	(4,505		)	(909		)
Investment in non-utility investments	(302		)	—
Other investing activities	(1,224		)	2,354
Cash Flows used in Investing Activities	(419,790		)	(359,199		)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Short-term debt, net	62,107			242,091
Proceeds from long-term debt	541,504			—
Retirements of long-term debt	(220,563		)	(191		)
Retirements of long-term debt of variable interest entities	(7,736		)	(10,903		)
Repayment of capital leases	(1,287		)	(931		)
Borrowings against cash surrender value of corporate-owned life insurance	63,287			64,875
Repayment of borrowings against cash surrender value of corporate-owned life insurance	(18,252		)	(3,020		)
Stock-based compensation excess tax benefits	1,498			727
Preferred stock redemption	(22,567		)	—
Issuance of common stock	3,697			69,220
Distributions to shareholders of noncontrolling interests	(3,252		)	(1,916		)
Cash dividends paid	(78,710		)	(67,846		)
Cash Flows from Financing Activities	319,726			292,106
NET INCREASE IN CASH AND CASH EQUIVALENTS	3,115			4,354
CASH AND CASH EQUIVALENTS:
Beginning of period	3,539			928
End of period	$	6,654		$	5,282

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q

for the period ended June 30, 2012 should be read in conjunction with this financial information.

Page 4

Westar Energy, Inc.

2nd Quarter 2012 vs. 2011



Earnings Variances
					Change
		($ per share)			(Dollars in Thousands)
2011 earnings attributable to common stock		$	0.38		$	43,887

		Favorable/(Unfavorable)

	Retail				41,143			A
	Wholesale				(8,544		)	B
	Transmission				10,220
	Other revenues				(1,449		)
	Fuel and purchased power				5,293			C
	SPP network transmission costs				(9,580		)
	Gross Margin				37,083
	Operating and maintenance w/o SPP NITS				(9,636		)	D
	Depreciation and amortization				4,790			E
	Selling, general and administrative				(6,741		)	F
	Other income (expense)				3,705			G
	Interest expense				(1,523		)
	Income tax expense				(8,741		)
	Net income attributable to noncontrolling interests				(332		)
	Preferred dividends				(1,131		)
	Change in shares outstanding	(0.05		)

2012 earnings attributable to common stock		$	0.48		$	61,361

	Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A	Due principally to increased average retail prices; MWh sales increased 3% (see page 7 for changes by customer class)

B	Due primarily to decreased demand; MWh sales decreased 10% (see page 7 for changes by customer class)

C	Due to decreased cost of natural gas consumed and reduced MWhs generated

D	Due principally to: increased tree trimming expense -- ($3.1M); increased property tax expense (this is largely offset in revenues through property tax surcharge) -- ($2.9M); increased O&M expense at steam powered plants -- ($2.4M)

E	Due primarily to reduced depreciation rates to reflect changes in the estimated useful lives of some of our depreciable assets

F	Due primarily to higher pension and other employee benefit costs -- ($11.1M); lower legal costs related to arbitration of legal claim in 2011 -- $6.2M

G	Due primarily to COLI proceeds -- $3.4M

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q

for the period ended June 30, 2012 should be read in conjunction with this financial information.

Page 5

Westar Energy, Inc.

YTD June 2012 vs. 2011



Earnings Variances
					Change
		($ per share)			(Dollars in Thousands)
2011 earnings attributable to common stock		$	0.66		$	75,227

		Favorable/(Unfavorable)

	Retail				33,796			A
	Wholesale				(15,926		)	B
	Transmission				19,007
	Other revenues				(1,548		)
	Fuel and purchased power				11,823			C
	SPP network transmission costs				(16,891		)
	Gross Margin				30,261
	Operating and maintenance w/o SPP NITS				(21,017		)	D
	Depreciation and amortization				1,769
	Selling, general and administrative				(5,312		)	E
	Other income (expense)				17,219			F
	Interest expense				(31		)
	Income tax expense				(7,671		)
	Net income attributable to noncontrolling interests				(672		)
	Preferred dividends				(1,131		)
	Change in shares outstanding	(0.08		)

2012 earnings attributable to common stock		$	0.70		$	88,642

	Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A	Due to increased average retail prices (see page 8 for changes by customer class)

B	Due to decreased demand; MWh sales decreased 11% (see page 8 for changes by customer class)

C	Due principally to decreased MWhs generated

D	Due principally to: higher costs at Wolf Creek -- ($9.4M); increased property tax expense (this is largely offset in revenues through property tax surcharge) -- ($5.3M); increased tree trimming expense -- ($4.2M)

E	Due primarily to higher pension and other employee benefit costs -- ($11.9M); lower legal costs related to arbitration claim in 2011 -- $7.9M

F	Due primarily to COLI proceeds -- $12.6M; increased equity AFUDC related to construction activity -- $3.4M

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q

for the period ended June 30, 2012 should be read in conjunction with this financial information.

Page 6

Westar Energy, Inc.

Revenue, Sales and Energy Supply



Supplemental Data	Three Months Ended June 30,
	2012			2011			Change			% Change
Revenues	(Dollars In Thousands)
Residential	$	176,893		$	157,120		$	19,773		12.6
Commercial	170,132			153,554			16,578			10.8
Industrial	95,960			91,245			4,715			5.2
Other retail	3,068			3,094			(26		)	(0.8	)
Provision for rate refunds	(5,431		)	(5,534		)	103			1.9
Total Retail Revenues	440,622			399,479			41,143			10.3
Tariff-based wholesale	58,793			64,709			(5,916		)	(9.1	)
Market-based wholesale	10,178			12,806			(2,628		)	(20.5	)
Transmission	49,380			39,160			10,220			26.1
Other	7,289			8,738			(1,449		)	(16.6	)
Total Revenues	$	566,262		$	524,892		$	41,370		7.9


Electricity Sales	(Thousands of MWh)
Residential	1,629			1,549			80			5.2
Commercial	1,977			1,890			87			4.6
Industrial	1,418			1,438			(20		)	(1.4	)
Other retail	22			22			—			—
Total Retail	5,046			4,899			147			3.0
Tariff-based wholesale	1,241			1,381			(140		)	(10.1	)
Market-based wholesale	363			395			(32		)	(8.1	)
Total wholesale	1,604			1,776			(172		)	(9.7	)
Total Electricity Sales	6,650			6,675			(25		)	(0.4	)

	(Dollars per MWh)
Total retail	$	87.32		$	81.54		$	5.78		7.1
Tariff-based wholesale	$	47.38		$	46.86		$	0.52		1.1
Market-based wholesale	$	28.04		$	32.42		$	(4.38	)	(13.5	)


Fuel and Purchased Power	(Dollars In Thousands)
Fuel used for generation	$	113,744		$	139,765		$	(26,021	)	(18.6	)
Purchased power	23,713			27,613			(3,900		)	(14.1	)
Subtotal	137,457			167,378			(29,921		)	(17.9	)
RECA recovery and other	10,223			(14,405		)	24,628			171.0
Total fuel and purchased power expense	$	147,680		$	152,973		$	(5,293	)	(3.5	)

Electricity Supply	(Thousands of MWh)
Generated - Gas/oil	687			610			77			12.6
Coal	4,049			5,523			(1,474		)	(26.7	)
Nuclear	1,228			(11		)	1,239			nm
Wind	123			130			(7		)	(5.4	)
Subtotal electricity generated	6,087			6,252			(165		)	(2.6	)
Purchased	969			834			135			16.2
Total Electricity Supply	7,056			7,086			(30		)	(0.4	)

	(Dollars per MWh)
Average cost of fuel used for generation	$	18.69		$	22.36		$	(3.67	)	(16.4	)
Average cost of purchased power	$	24.47		$	33.11		$	(8.64	)	(26.1	)
Average cost of fuel and purchased power	$	19.48		$	23.62		$	(4.14	)	(17.5	)


Degree Days				2011/
	2012			20 yr Avg			Change			% Change
Cooling
Actual compared to last year	745			623			122			19.6
Actual compared to 20 year average	745			457			288			63.0
Heating
Actual compared to last year	180			364			(184		)	(50.5	)
Actual compared to 20 year average	180			385			(205		)	(53.2	)
nm - not meaningful

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q

for the period ended June 30, 2012 should be read in conjunction with this financial information.

Page 7

Westar Energy, Inc.

Revenue, Sales and Energy Supply



Supplemental Data	Six Months Ended June 30,
	2012			2011			Change			% Change
Revenues	(Dollars In Thousands)
Residential	$	315,311		$	310,028		$	5,283		1.7
Commercial	299,782			282,382			17,400			6.2
Industrial	181,380			170,441			10,939			6.4
Other retail	6,124			6,111			13			0.2
Provision for rate refunds	(11,405		)	(11,566		)	161			1.4
Total Retail Revenues	791,192			757,396			33,796			4.5
Tariff-based wholesale	121,325			124,847			(3,522		)	(2.8	)
Market-based wholesale	18,858			31,262			(12,404		)	(39.7	)
Transmission	95,343			76,336			19,007			24.9
Other	15,222			16,770			(1,548		)	(9.2	)
Total Revenues	$	1,041,940		$	1,006,611		$	35,329		3.5


Electricity Sales	(Thousands of MWh)
Residential	3,044			3,207			(163		)	(5.1	)
Commercial	3,626			3,594			32			0.9
Industrial	2,779			2,776			3			0.1
Other retail	42			43			(1		)	(2.3	)
Total Retail	9,491			9,620			(129		)	(1.3	)
Tariff-based wholesale	2,590			2,758			(168		)	(6.1	)
Market-based wholesale	708			929			(221		)	(23.8	)
Total wholesale	3,298			3,687			(389		)	(10.6	)
Total Electricity Sales	12,789			13,307			(518		)	(3.9	)

	(Dollars per MWh)
Total retail	$	83.36		$	78.73		$	4.63		5.9
Tariff-based wholesale	$	46.84		$	45.27		$	1.57		3.5
Market-based wholesale	$	26.64		$	33.65		$	(7.01	)	(20.8	)


Fuel and Purchased Power	(Dollars In Thousands)
Fuel used for generation	$	213,380		$	254,301		$	(40,921	)	(16.1	)
Purchased power	61,124			48,449			12,675			26.2
Subtotal	274,504			302,750			(28,246		)	(9.3	)
RECA recovery and other	830			(15,593		)	16,423			105.3
Total fuel and purchased power expense	$	275,334		$	287,157		$	(11,823	)	(4.1	)

Electricity Supply	(Thousands of MWh)
Generated - Gas/oil	1,140			942			198			21.0
Coal	8,178			10,382			(2,204		)	(21.2	)
Nuclear	1,430			1,013			417			41.2
Wind	248			246			2			0.8
Subtotal electricity generated	10,996			12,583			(1,587		)	(12.6	)
Purchased	2,540			1,432			1,108			77.4
Total Electricity Supply	13,536			14,015			(479		)	(3.4	)

	(Dollars per MWh)
Average cost of fuel used for generation	$	19.41		$	20.21		$	(0.80	)	(4.0	)
Average cost of purchased power	$	24.06		$	33.83		$	(9.77	)	(28.9	)
Average cost of fuel and purchased power	$	20.28		$	21.60		$	(1.32	)	(6.1	)


Degree Days				2011/
	2012			20 yr Avg			Change			% Change
Cooling
Actual compared to last year	790			636			154			24.2
Actual compared to 20 year average	790			460			330			71.7
Heating
Actual compared to last year	2,005			3,056			(1,051		)	(34.4	)
Actual compared to 20 year average	2,005			2,824			(819		)	(29.0	)

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q

for the period ended June 30, 2012 should be read in conjunction with this financial information.

Page 8

Westar Energy, Inc.



Capitalization
		June 30, 2012					December 31, 2011
		(Dollars in Thousands)
Current maturities of long-term debt of VIEs		$	45,853				$	28,114
Long-term debt, net		2,818,966					2,491,109
Long-term debt of variable interest entities, net		223,506					249,283
Total debt		3,088,325			52.5	%	2,768,506			49.7	%
Preferred		—			—	%	21,436			0.4	%
Common equity		2,783,830			47.3	%	2,769,211			49.7	%
Noncontrolling interests		10,284			0.2	%	10,094			0.2	%
Total capitalization		$	5,882,439		100.0	%	$	5,569,247		100.0	%

GAAP Book value per share		$	22.05				$	22.03
Period end shares outstanding (in thousands)		126,224					125,698

Outstanding Long-Term Debt

	CUSIP	June 30, 2012					December 31, 2011
Westar Energy:		(Dollars in Thousands)
First Mortgage Bond series:
6.00% Series due July 2014	95709TAA8	$	250,000				$	250,000
5.15% Series due January 2017	95709TAB6	125,000					125,000
5.95% Series due January 2035	95709TAC4	125,000					125,000
5.10% Series due July 2020	95709TAD2	250,000					250,000
5.875% Series due July 2036	95709TAE0	150,000					150,000
6.10% Series due May 2047	95709T704	—					150,000
8.625% Series due December 2018	95709TAG5	300,000					300,000
4.125% Series due December 2042	95709TAH3	550,000					—
		1,750,000					1,350,000
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
5.0% Series due February 2033 (Wamego)	933623BQ2	—					57,245
		75,500					132,745
Total Westar Energy		1,825,500					1,482,745

KGE
First mortgage bond series:
6.53% Series due December 2037	485260BJ1	175,000					175,000
6.15% Series due May 2023	485260B@1	50,000					50,000
6.64%Series due May 2038	485260B#9	100,000					100,000
6.70%Series due June 2019	U24448AB5	300,000					300,000
		625,000					625,000
Pollution control bond series:
5.3% Series due June 2031	121825BW2	108,600					108,600
5.3% Series due June 2031	933623BR0	18,900					18,900
4.85% Series due June 2031	121825CB7	50,000					50,000
5.10% Series due March 2023	502828AH9	—					13,318
Variable rate series due April 2027 (LaCygne)	502828AJ5	21,940					21,940
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
5.6% Series due June 2031	121825CD3	50,000					50,000
6.0% Series due June 2031	121825CE1	50,000					50,000
5.0% Series due June 2031	121825CF8	50,000					50,000
		373,940					387,258
Total KGE		998,940					1,012,258

Total long-term debt		2,824,440					2,495,003
Unamortized debt discount		(5,474		)			(3,894		)
Long-term debt due within one year		—					—
Total long-term debt, net		$	2,818,966				$	2,491,109

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q

for the period ended June 30, 2012 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. However, transmission costs are recorded as operating and maintenance expense on Westar's consolidated statements of income.

The calculations of gross margin and operating and maintenance expense w/o SPP NITS for the three and six months ended June 30, 2012 and 2011 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. Operating and maintenance expense is the GAAP financial measure most directly comparable to operating and maintenance expense w/o SPP NITS.



	Three Months Ended June 30,									Six Months Ended June 30,
	2012			2011			Change			2012			2011			Change
	(Dollars in Thousands)
Revenues
Residential	$	176,893		$	157,120		$	19,773		$	315,311		$	310,028		$	5,283
Commercial	170,132			153,554			16,578			299,782			282,382			17,400
Industrial	95,960			91,245			4,715			181,380			170,441			10,939
Other retail	(2,363		)	(2,440		)	77			(5,281		)	(5,455		)	174
Total Retail Revenues	440,622			399,479			41,143			791,192			757,396			33,796
Wholesale	68,971			77,515			(8,544		)	140,183			156,109			(15,926		)
Transmission	49,380			39,160			10,220			95,343			76,336			19,007
Other	7,289			8,738			(1,449		)	15,222			16,770			(1,548		)
Total Revenues	566,262			524,892			41,370			1,041,940			1,006,611			35,329
Less: Fuel and purchased power expense	147,680			152,973			(5,293		)	275,334			287,157			(11,823		)
SPP network transmission costs	42,265			32,685			9,580			81,627			64,736			16,891
Gross Margin	$	376,317		$	339,234		$	37,083		$	684,979		$	654,718		$	30,261

Gross margin	$	376,317		$	339,234		$	37,083		$	684,979		$	654,718		$	30,261
Add: SPP network transmission costs	42,265			32,685			9,580			81,627			64,736			16,891
Less: Operating and maintenance expense	156,470			137,254			19,216			312,514			274,606			37,908
Depreciation and amortization expense	66,299			71,089			(4,790		)	139,579			141,348			(1,769		)
Selling, general and administrative expense	62,711			55,970			6,741			110,046			104,734			5,312
Income from operations	$	133,102		$	107,606		$	25,496		$	204,467		$	198,766		$	5,701


Operating and maintenance expense	$	156,470		$	137,254		$	19,216		$	312,514		$	274,606		$	37,908
Less: SPP Network transmission costs	42,265			32,685			9,580			81,627			64,736			16,891
Operating and maintenance expense w/o SPP NITS	$	114,205		$	104,569		$	9,636		$	230,887		$	209,870		$	21,017

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q

for the period ended June 30, 2012 should be read in conjunction with this financial information.

Page 10

WESTAR ENERGY INC /KS - FORM 8-K - EX-99.2 - 2012 SECOND QUARTER EARNINGS PACKAGE - August 7, 2012

Attached files

WESTAR ENERGY INC /KS Reports