WESTAR ENERGY INC /KS - FORM 8-K - EX-99.2 - 2013 THIRD QUARTER EARNINGS PACKAGE

Attached files

file	filename
EX-99.1 - PRESS RELEASE DATED NOVEMBER 7, 2013 - WESTAR ENERGY INC /KS	wr-09302013x8xkexhibit991.htm
8-K - 8-K - WESTAR ENERGY INC /KS	wr_9302013-earningsrelease.htm

Exhibit 99.2

Westar Energy, Inc.

Third Quarter 2013 Earnings

Released November 7, 2013



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
Supplemental Information
2013 Earnings Guidance Update	11
2014 Earnings Drivers	12

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, 2013 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 September 30,
	2013			2012			Change			% Change
	(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
Residential	$	237,984		$	250,757		$	(12,773	)	(5.1	)
Commercial	199,921			194,032			5,889			3.0
Industrial	98,410			96,656			1,754			1.8
Other retail	3,849			6,407			(2,558		)	(39.9	)
Total Retail Revenues	540,164			547,852			(7,688		)	(1.4	)
Wholesale	94,496			88,784			5,712			6.4
Transmission	52,410			49,137			3,273			6.7
Other	7,904			9,985			(2,081		)	(20.8	)
Total Revenues	694,974			695,758			(784		)	(0.1	)
OPERATING EXPENSES:
Fuel and purchased power	178,562			177,506			1,056			0.6
Operating and maintenance	169,100			149,001			20,099			13.5
Depreciation and amortization	68,861			65,061			3,800			5.8
Selling, general and administrative	54,245			54,300			(55		)	(0.1	)
Total Operating Expenses	470,768			445,868			24,900			5.6
INCOME FROM OPERATIONS	224,206			249,890			(25,684		)	(10.3	)
OTHER INCOME (EXPENSE):
Investment earnings	2,863			2,729			134			4.9
Other income	12,321			6,115			6,206			101.5
Other expense	(6,195		)	(6,278		)	83			1.3
Total Other Income	8,989			2,566			6,423			250.3
Interest expense	45,708			45,017			691			1.5
INCOME BEFORE INCOME TAXES	187,487			207,439			(19,952		)	(9.6	)
Income tax expense	52,392			66,372			(13,980		)	(21.1	)
NET INCOME	135,095			141,067			(5,972		)	(4.2	)
Less: Net income attributable to noncontrolling interests	1,970			1,786			184			10.3
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.	$	133,125		$	139,281		$	(6,156	)	(4.4	)
BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
Basic earnings per common share	$	1.04		$	1.10		$	(0.06	)	(5.5	)
Diluted earnings per common share	$	1.04		$	1.09		$	(0.05	)	(4.6	)
AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
Basic	127,445			126,783			662			0.5
Diluted	128,111			127,135			976			0.8
DIVIDENDS DECLARED PER COMMON SHARE	$	0.34		$	0.33		$	0.01		3.0
Effective income tax rate	27.94		%	32.00		%

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

for the period ended September 30, 2013 should be read in conjunction with this financial information.

Page 1

Westar Energy, Inc.

Consolidated Statements of Income

(Unaudited)



	Nine Months Ended September 30,
	2013			2012			Change			% Change
	(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
Residential	$	568,662		$	566,069		$	2,593		0.5
Commercial	513,049			493,814			19,235			3.9
Industrial	282,155			278,036			4,119			1.5
Other retail	2,905			1,125			1,780			158.2
Total Retail Revenues	1,366,771			1,339,044			27,727			2.1
Wholesale	262,749			228,966			33,783			14.8
Transmission	156,725			144,480			12,245			8.5
Other	24,531			25,208			(677		)	(2.7	)
Total Revenues	1,810,776			1,737,698			73,078			4.2
OPERATING EXPENSES:
Fuel and purchased power	483,014			452,840			30,174			6.7
Operating and maintenance	491,132			461,515			29,617			6.4
Depreciation and amortization	203,305			204,640			(1,335		)	(0.7	)
Selling, general and administrative	157,668			164,346			(6,678		)	(4.1	)
Total Operating Expenses	1,335,119			1,283,341			51,778			4.0
INCOME FROM OPERATIONS	475,657			454,357			21,300			4.7
OTHER INCOME (EXPENSE):
Investment earnings	8,612			6,456			2,156			33.4
Other income	29,748			27,242			2,506			9.2
Other expense	(13,911		)	(14,246		)	335			2.4
Total Other Income	24,449			19,452			4,997			25.7
Interest expense	135,790			131,886			3,904			3.0
INCOME BEFORE INCOME TAXES	364,316			341,923			22,393			6.5
Income tax expense	106,514			107,156			(642		)	(0.6	)
NET INCOME	257,802			234,767			23,035			9.8
Less: Net income attributable to noncontrolling interests	6,344			5,228			1,116			21.3
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.	251,458			229,539			21,919			9.5
Preferred dividends	—			1,616			(1,616		)	(100.0	)
NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	251,458		$	227,923		$	23,535		10.3
BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
Basic earnings per common share	$	1.97		$	1.79		$	0.18		10.1
Diluted earnings per common share	$	1.96		$	1.79		$	0.17		9.5
AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
Basic	127,318			126,639			679			0.5
Diluted	127,851			126,855			996			0.8
DIVIDENDS DECLARED PER COMMON SHARE	$	1.02		$	0.99		$	0.03		3.0
Effective income tax rate	29.24		%	31.34		%

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

for the period ended September 30, 2013 should be read in conjunction with this financial information.

Page 2

Westar Energy, Inc.

Consolidated Balance Sheets

(Dollars in Thousands, Except Par Values)

(Unaudited)



	September 30, 2013		December 31, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	9,923	$	5,829
Restricted cash	387		573
Accounts receivable, net of allowance for doubtful accounts of $3,073 and $4,916, respectively	266,533		224,439
Fuel inventory and supplies	237,591		249,016
Prepaid expenses	12,780		15,847
Regulatory assets	145,909		114,895
Other	21,149		32,476
Total Current Assets	694,272		643,075
PROPERTY, PLANT AND EQUIPMENT, NET	7,350,935		7,013,765
PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET	299,312		321,975
OTHER ASSETS:
Regulatory assets	850,423		887,777
Nuclear decommissioning trust	167,548		150,754
Other	243,345		247,885
Total Other Assets	1,261,316		1,286,416
TOTAL ASSETS	$	9,605,835	$	9,265,231
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	250,000	$	—
Current maturities of long-term debt of variable interest entities	27,764		25,942
Short-term debt	52,100		339,200
Accounts payable	178,213		180,825
Accrued dividends	43,199		41,743
Accrued taxes	100,180		58,624
Accrued interest	65,817		77,891
Regulatory liabilities	40,179		37,557
Other	96,643		84,359
Total Current Liabilities	854,095		846,141
LONG-TERM LIABILITIES:
Long-term debt, net	2,968,797		2,819,271
Long-term debt of variable interest entities, net	195,074		222,743
Deferred income taxes	1,296,909		1,197,837
Unamortized investment tax credits	189,140		191,512
Regulatory liabilities	286,475		285,618
Accrued employee benefits	550,037		564,870
Asset retirement obligations	158,904		152,648
Other	69,204		74,336
Total Long-Term Liabilities	5,714,540		5,508,835
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 127,064,039 shares and 126,503,748 shares, respective to each date	635,320		632,519
Paid-in capital	1,669,792		1,656,972
Retained earnings	727,568		606,649
Total Westar Energy, Inc. Shareholders’ Equity	3,032,680		2,896,140
Noncontrolling Interests	4,520		14,115
Total Equity	3,037,200		2,910,255
TOTAL LIABILITIES AND EQUITY	$	9,605,835	$	9,265,231

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

for the period ended September 30, 2013 should be read in conjunction with this financial information.

Page 3

Westar Energy, Inc.

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)



	Nine Months Ended September 30,
	2013			2012
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income	$	257,802		$	234,767
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	203,305			204,640
Amortization of nuclear fuel	15,270			16,658
Amortization of deferred regulatory gain from sale leaseback	(4,121		)	(4,121		)
Amortization of corporate-owned life insurance	10,442			17,062
Non-cash compensation	6,148			5,482
Net deferred income taxes and credits	107,709			106,730
Stock-based compensation excess tax benefits	(502		)	(1,628		)
Allowance for equity funds used during construction	(9,473		)	(9,096		)
Changes in working capital items:
Accounts receivable	(42,400		)	(40,740		)
Fuel inventory and supplies	13,842			(19,634		)
Prepaid expenses and other	2,992			14,680
Accounts payable	2,088			(7,201		)
Accrued taxes	44,573			40,825
Other current liabilities	(53,042		)	(88,402		)
Changes in other assets	(22,682		)	(1,061		)
Changes in other liabilities	21,159			(15,005		)
Cash Flows from Operating Activities	553,110			453,956
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Additions to property, plant and equipment	(557,988		)	(598,426		)
Purchase of securities - trusts	(61,495		)	(18,684		)
Sale of securities - trusts	76,906			19,808
Investment in corporate-owned life insurance	(17,724		)	(18,404		)
Proceeds from investment in corporate-owned life insurance	147,591			16,501
Proceeds from federal grant	876			4,470
Investment in affiliated company	(2,694		)	(6,550		)
Other investing activities	(2,886		)	(30		)
Cash Flows used in Investing Activities	(417,414		)	(601,315		)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Short-term debt, net	(287,741		)	(71,544		)
Proceeds from long-term debt	492,572			541,374
Retirements of long-term debt	(100,000		)	(220,563		)
Retirements of long-term debt of variable interest entities	(25,498		)	(7,765		)
Repayment of capital leases	(2,262		)	(1,984		)
Borrowings against cash surrender value of corporate-owned life insurance	57,948			64,479
Repayment of borrowings against cash surrender value of corporate-owned life insurance	(145,418		)	(18,369		)
Stock-based compensation excess tax benefits	502			1,628
Preferred stock redemption	—			(22,567		)
Issuance of common stock	4,526			5,348
Distributions to shareholders of noncontrolling interests	(1,657		)	(3,252		)
Other financing activities	(2,699		)	—
Cash dividends paid	(121,875		)	(118,586		)
Cash Flows (used in) from Financing Activities	(131,602		)	148,199
NET CHANGE IN CASH AND CASH EQUIVALENTS	4,094			840
CASH AND CASH EQUIVALENTS:
Beginning of period	5,829			3,539
End of period	$	9,923		$	4,379

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

for the period ended September 30, 2013 should be read in conjunction with this financial information.

Page 4

Westar Energy, Inc.

3rd Quarter 2013 vs. 2012



Earnings Variances
				Change
		($ per share)		(Dollars in Thousands)				($ per share)
2012 earnings attributable to common stock				$	139,281			$	1.10

		Favorable/(Unfavorable)

	Retail			(7,688		)	A
	Wholesale			5,712			B
	Transmission			3,273
	Other revenues			(2,081		)
	Fuel and purchased power			(1,056		)	C
	SPP network transmission costs			(2,799		)
	Gross Margin			(4,639		)
	Operating and maintenance w/o SPP NITS			(17,300		)	D
	Depreciation and amortization			(3,800		)	E
	Selling, general and administrative			55
	Other income (expense)			6,423			F
	Interest expense			(691		)
	Income tax expense			13,980			G
	Net income attributable to noncontrolling interests			(184		)
	Change in shares outstanding	(0.01	)

2013 earnings attributable to common stock				$	133,125			$	1.04

	Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A	Due primarily to an 5% decrease in retail MWh sales (see page 7 for changes by customer class)

B	Due to a 13% increase in MWh sales (see page 7 for changes by customer class)

C	Due primarily to a 8% increase in the average cost of MWhs purchased

D	Major contributors include: higher property tax expense (this is largely offset in revenues through a property tax surcharge) -- ($3.6M); higher tree trimming costs (offset through increased prices) -- ($3.0M); higher operating and maintenance cost of fossil generating units -- ($5.9M); higher cost at Wolf Creek including higher amortization of refueling outage costs and recognition of costs incurred during an unscheduled maintenance outage -- ($4.2M)

E	Due principally to property additions

F	Due primarily to recording higher COLI proceeds in 2013 -- $7.5M

G	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, 2013 should be read in conjunction with this financial information.

Page 5

Westar Energy, Inc.

YTD September 2013 vs. 2012




Earnings Variances
				Change
		($ per share)		(Dollars in Thousands)				($ per share)
2012 earnings attributable to common stock				$	227,923			$	1.79

		Favorable/(Unfavorable)

	Retail			27,727			A
	Wholesale			33,783			B
	Transmission			12,245
	Other revenues			(677		)
	Fuel and purchased power			(30,174		)	C
	SPP network transmission costs			(9,569		)
	Gross Margin			33,335
	Operating and maintenance w/o SPP NITS			(20,048		)	D
	Depreciation and amortization			1,335			E
	Selling, general and administrative			6,678			F
	Other income (expense)			4,997			G
	Interest expense			(3,904		)
	Income tax expense			642
	Net income attributable to noncontrolling interests			(1,116		)
	Preferred dividends			1,616
	Change in shares outstanding	(0.01	)

2013 earnings attributable to common stock				$	251,458			$	1.97

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

B	Due to MWh sales increasing 20% (see page 8 for changes by customer class)

C	Due principally to increased MWhs generated

D	Due principally to: higher property tax expense (this is largely offset in revenues through a property tax surcharge) -- ($13M); higher operating and maintenance cost for fossil fuel generation -- ($6.0M); higher tree trimming costs (offset through increased prices) -- ($3.3M)

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

F	Due primarily to restructuring insurance contracts to lower post-retirement and other employee benefit cost -- $11.7M; lower labor costs -- $6.7M; higher pension costs -- ($12.8M)

G	Due primarily to recording more COLI benefits -- $4.9M

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

for the period ended September 30, 2013 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,
	2013			2012		Change			% Change
Revenues	(Dollars In Thousands)
Residential	$	237,984		$	250,757	$	(12,773	)	(5.1	)
Commercial	199,921			194,032		5,889			3.0
Industrial	98,410			96,656		1,754			1.8
Other retail	3,153			3,125		28			0.9
Provision for rate refunds	696			3,282		(2,586		)	(78.8	)
Total Retail Revenues	540,164			547,852		(7,688		)	(1.4	)
Tariff-based wholesale	76,111			77,332		(1,221		)	(1.6	)
Market-based wholesale	18,385			11,452		6,933			60.5
Transmission	52,410			49,137		3,273			6.7
Other	7,904			9,985		(2,081		)	(20.8	)
Total Revenues	$	694,974		$	695,758	$	(784	)	(0.1	)


Electricity Sales	(Thousands of MWh)
Residential	2,073			2,270		(197		)	(8.7	)
Commercial	2,163			2,215		(52		)	(2.3	)
Industrial	1,396			1,437		(41		)	(2.9	)
Other retail	22			20		2			10.0
Total Retail	5,654			5,942		(288		)	(4.8	)
Tariff-based wholesale	1,611			1,699		(88		)	(5.2	)
Market-based wholesale	755			395		360			91.1
Total wholesale	2,366			2,094		272			13.0
Total Electricity Sales	8,020			8,036		(16		)	(0.2	)

	(Dollars per MWh)
Total retail	$	95.54		$	92.20	$	3.34		3.6
Tariff-based wholesale	$	47.24		$	45.52	$	1.72		3.8
Market-based wholesale	$	24.35		$	28.99	$	(4.64	)	(16.0	)


Fuel and Purchased Power	(Dollars In Thousands)
Fuel used for generation	$	155,250		$	160,774	$	(5,524	)	(3.4	)
Purchased power	27,426			16,436		10,990			66.9
Subtotal	182,676			177,210		5,466			3.1
RECA recovery and other	(4,114		)	296		(4,410		)	nm
Total fuel and purchased power expense	$	178,562		$	177,506	$	1,056		0.6

Electricity Supply	(Thousands of MWh)
Generated - Gas	626			1,043		(417		)	(40.0	)
Coal	5,976			5,671		305			5.4
Nuclear	968			1,211		(243		)	(20.1	)
Wind	97			90		7			7.8
Subtotal electricity generated	7,667			8,015		(348		)	(4.3	)
Purchased	820			530		290			54.7
Total Electricity Supply	8,487			8,545		(58		)	(0.7	)

	(Dollars per MWh)
Average cost of fuel used for generation	$	20.25		$	20.06	$	0.19		0.9
Average cost of purchased power	$	33.45		$	31.01	$	2.44		7.9
Average cost of fuel and purchased power	$	21.52		$	20.74	$	0.78		3.8


Degree Days				2012/
	2013			20 yr Avg		Change			% Change
Cooling
Actual compared to last year	1,104			1,306		(202		)	(15.5	)
Actual compared to 20 year average	1,104			1,123		(19		)	(1.7	)
Heating
Actual compared to last year	13			31		(18		)	(58.1	)
Actual compared to 20 year average	13			44		(31		)	(70.5	)

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 September 30, 2013 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,
	2013			2012			Change			% Change
Revenues	(Dollars In Thousands)
Residential	$	568,662		$	566,069		$	2,593		0.5
Commercial	513,049			493,814			19,235			3.9
Industrial	282,155			278,036			4,119			1.5
Other retail	9,520			9,249			271			2.9
Provision for rate refunds	(6,615		)	(8,124		)	1,509			18.6
Total Retail Revenues	1,366,771			1,339,044			27,727			2.1
Tariff-based wholesale	210,350			198,657			11,693			5.9
Market-based wholesale	52,399			30,309			22,090			72.9
Transmission	156,725			144,480			12,245			8.5
Other	24,531			25,208			(677		)	(2.7	)
Total Revenues	$	1,810,776		$	1,737,698		$	73,078		4.2


Electricity Sales	(Thousands of MWh)
Residential	5,075			5,314			(239		)	(4.5	)
Commercial	5,722			5,841			(119		)	(2.0	)
Industrial	4,020			4,216			(196		)	(4.6	)
Other retail	64			63			1			1.6
Total Retail	14,881			15,434			(553		)	(3.6	)
Tariff-based wholesale	4,418			4,289			129			3.0
Market-based wholesale	2,041			1,103			938			85.0
Total wholesale	6,459			5,392			1,067			19.8
Total Electricity Sales	21,340			20,826			514			2.5

	(Dollars per MWh)
Total retail	$	91.85		$	86.76		$	5.09		5.9
Tariff-based wholesale	$	47.61		$	46.32		$	1.29		2.8
Market-based wholesale	$	25.67		$	27.48		$	(1.81	)	(6.6	)


Fuel and Purchased Power	(Dollars In Thousands)
Fuel used for generation	$	413,062		$	374,153		$	38,909		10.4
Purchased power	86,959			77,560			9,399			12.1
Subtotal	500,021			451,713			48,308			10.7
RECA recovery and other	(17,007		)	1,127			(18,134		)	nm
Total fuel and purchased power expense	$	483,014		$	452,840		$	30,174		6.7

Electricity Supply	(Thousands of MWh)
Generated - Gas	1,490			2,183			(693		)	(31.7	)
Coal	15,910			13,848			2,062			14.9
Nuclear	2,259			2,641			(382		)	(14.5	)
Wind	311			338			(27		)	(8.0	)
Subtotal electricity generated	19,970			19,010			960			5.0
Purchased	2,588			3,070			(482		)	(15.7	)
Total Electricity Supply	22,558			22,080			478			2.2

	(Dollars per MWh)
Average cost of fuel used for generation	$	20.68		$	19.68		$	1.00		5.1
Average cost of purchased power	$	33.60		$	25.26		$	8.34		33.0
Average cost of fuel and purchased power	$	22.17		$	20.46		$	1.71		8.4


Degree Days				2012/
	2013			20 yr Avg			Change			% Change
Cooling
Actual compared to last year	1,600			2,095			(495		)	(23.6	)
Actual compared to 20 year average	1,600			1,583			17			1.1
Heating
Actual compared to last year	3,103			2,038			1,065			52.3
Actual compared to 20 year average	3,103			2,859			244			8.5

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 September 30, 2013 should be read in conjunction with this financial information.

Page 8

Westar Energy, Inc.



Capitalization
		September 30, 2013					December 31, 2012
		(Dollars in Thousands)
Current maturities of long-term debt		$	250,000				$	—
Current maturities of long-term debt of VIEs		27,764					25,942
Long-term debt, net		2,968,797					2,819,271
Long-term debt of variable interest entities, net		195,074					222,743
Total long-term debt		3,441,635			53.1	%	3,067,956			51.4	%
Common equity		3,032,680			46.8	%	2,896,140			48.4	%
Noncontrolling interests		4,520			0.1	%	14,115			0.2	%
Total capitalization		$	6,478,835		100.0	%	$	5,978,211		100.0	%

GAAP Book value per share		$	23.87				$	22.89
Period end shares outstanding (in thousands)		127,064					126,504

Outstanding Long-Term Debt

	CUSIP	September 30, 2013					December 31, 2012
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
8.625% Series due December 2018	95709TAG5	300,000					300,000
4.125% Series due March 2042	95709TAH3	550,000					550,000
4.10% Series due April 2043	95709TAJ9	250,000					—
4.625% Series due September 2043	95709TAK6	250,000					—
		2,250,000					1,750,000
Pollution control bond series:
Variable series due April 2032 (Wamego)	933623BN9	30,500					30,500
Variable series due April 2032 (St Marys)	792609AF6	45,000					45,000
		75,500					75,500
Total Westar Energy		2,325,500					1,825,500

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:
Variable rate series due April 2027 (LaCygne)	502828AJ5	21,940					21,940
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
5.6% Series due June 2031	121825CD3	—					50,000
6.0% Series due June 2031	121825CE1	—					50,000
5.0% Series due June 2031	121825CF8	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
		273,940					373,940
Total KGE		898,940					998,940

Total long-term debt		3,224,440					2,824,440
Unamortized debt discount		(5,643		)			(5,169		)
Long-term debt due within one year		(250,000		)			—
Total long-term debt, net		$	2,968,797				$	2,819,271

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

for the period ended September 30, 2013 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 nine months ended September 30, 2013 and 2012 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 September 30,							Nine Months Ended September 30,
	2013		2012		Change			2013		2012		Change
	(Dollars in Thousands)
Revenues
Residential	$	237,984	$	250,757	$	(12,773	)	$	568,662	$	566,069	$	2,593
Commercial	199,921		194,032		5,889			513,049		493,814		19,235
Industrial	98,410		96,656		1,754			282,155		278,036		4,119
Other retail	3,849		6,407		(2,558		)	2,905		1,125		1,780
Total Retail Revenues	540,164		547,852		(7,688		)	1,366,771		1,339,044		27,727
Wholesale	94,496		88,784		5,712			262,749		228,966		33,783
Transmission	52,410		49,137		3,273			156,725		144,480		12,245
Other	7,904		9,985		(2,081		)	24,531		25,208		(677		)
Total Revenues	694,974		695,758		(784		)	1,810,776		1,737,698		73,078
Less: Fuel and purchased power expense	178,562		177,506		1,056			483,014		452,840		30,174
SPP network transmission costs	45,315		42,516		2,799			133,711		124,142		9,569
Gross Margin	$	471,097	$	475,736	$	(4,639	)	$	1,194,051	$	1,160,716	$	33,335

Gross margin	$	471,097	$	475,736	$	(4,639	)	$	1,194,051	$	1,160,716	$	33,335
Add: SPP network transmission costs	45,315		42,516		2,799			133,711		124,142		9,569
Less: Operating and maintenance expense	169,100		149,001		20,099			491,132		461,515		29,617
Depreciation and amortization expense	68,861		65,061		3,800			203,305		204,640		(1,335		)
Selling, general and administrative expense	54,245		54,300		(55		)	157,668		164,346		(6,678		)
Income from operations	$	224,206	$	249,890	$	(25,684	)	$	475,657	$	454,357	$	21,300


Operating and maintenance expense	$	169,100	$	149,001	$	20,099		$	491,132	$	461,515	$	29,617
Less: SPP network transmission costs	45,315		42,516		2,799			133,711		124,142		9,569
Operating and maintenance expense w/o SPP NITS	$	123,785	$	106,485	$	17,300		$	357,421	$	337,373	$	20,048

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

for the period ended September 30, 2013 should be read in conjunction with this financial information.

Page 10

2013 Earnings Guidance

November Update

2013 updated earnings per share range $2.20 - $2.30

November update:

Increase in guidance reflects stronger residential and commercial sales, lower interest expense, additional O&M expense reductions and lower effective income tax rate.

Key drivers and assumptions for 2013:


•	Weather adjusted total retail sales flat


•	Transmission revenue increase ~$18 million effective January


•	Includes companion retail TDC of ~$11 million effective April


•	Combined O&M and SG&A ~5% gross increase


•	Reflects ~1% decrease for all items without revenue offsets (i.e., gross increase includes ~$49 million increase for items with a revenue offset, such as SPP Transmission, property taxes, pension and tree trimming expenses)


•	Depreciation and amortization expense increase ~$4 million


•	Annual adjustment to Environmental Cost Recovery Rider ~$27 million effective June 1


•	Includes $17 million of COLI proceeds vs. $14 million planned


•	Equity AFUDC increase ~$2 million


•	Prairie Wind joint venture earnings increase ~$4 million


•	Effective tax rate of approximately 29-30%


•	Funding 2013 construction program:


•	Primary source will be debt


•	Settle ~2 million shares already priced under earlier forward sale agreements

The effects of the key assumptions are not necessarily independent of one another, and the combination of effects can cause individual impacts smaller or larger than the ranges indicated.

Forward-looking statements: Certain matters discussed in this document 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 “driver,” “assumption,” “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, 2012 (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. 7, 2013, (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.

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

for the period ended September 30, 2013 should be read in conjunction with this financial information.

Page 11

2014 Earnings Drivers

Plan to provide 2014 guidance with year end 2013 results in February

2014 Drivers:


•	Retail MWh sales up modestly 50 - 75 bp


•	Modest price adjustments


◦	$31 million 2012 abbreviated rate case


◦	$37 million transmission formula rate and companion TDC


◦	$13 million environmental cost recovery rider


•	~3% increase in combined O&M and SG&A expenses without revenue offset items


◦	~10% increase top line combined O&M and SG&A expenses, includes transmission and property tax expenses that have revenue offsets


•	COLI proceeds ~$14 million


•	Effective tax rate 31-33%


•	Financing


◦	No additional equity


◦	Refinance $250M first mortgage bond due July


◦	Settle ~$60 million of forward shares already priced under ATM

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

for the period ended September 30, 2013 should be read in conjunction with this financial information.

Page 12

WESTAR ENERGY INC /KS - FORM 8-K - EX-99.2 - 2013 THIRD QUARTER EARNINGS PACKAGE - November 7, 2013

Attached files

WESTAR ENERGY INC /KS Reports