WESTAR ENERGY INC /KS - FORM 8-K - EX-99.2 - EXHIBIT

Attached files

file	filename
8-K - 8-K - WESTAR ENERGY INC /KS	wr_12312013-earningsreleas.htm
EX-99.1 - EXHIBIT - WESTAR ENERGY INC /KS	a123120138-kexhibit991.htm

Exhibit 99.2

Westar Energy, Inc.

Fourth Quarter and Year-end 2013 Earnings

Released February 26, 2014



Contents	Page

Consolidated Statements of Income	2
Consolidated Balance Sheets	4
Consolidated Statements of Cash Flows	5
Earnings Variances	6
Supplemental Data	8
Capitalization & Long-Term Debt Table	10
GAAP to Non-GAAP Reconciliation	11
Supplemental Slides
2014 Earnings Guidance	12
2014 - 2018 Capital Forecast	13
Dividend	14

Bruce Burns

Director Investor Relations

785-575-8227

bruce.burns@WestarEnergy.com

NOTE:

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K for the period ended December 31, 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 December 31,
	2013			2012			Change			% Change
	(In Thousands, Except Per Share Amounts)
REVENUES:
Residential	$	160,190		$	148,494		$	11,696		7.9
Commercial	154,057			146,839			7,218			4.9
Industrial	92,670			90,873			1,797			2.0
Other retail	6,034			(6,970		)	13,004			186.6
Total Retail Revenues	412,951			379,236			33,715			8.9
Wholesale	85,491			87,387			(1,896		)	(2.2	)
Transmission	53,556			49,317			4,239			8.6
Other	7,880			7,832			48			0.6
Total Revenues	559,878			523,772			36,106			6.9
OPERATING EXPENSES:
Fuel and purchased power	151,783			137,150			14,633			10.7
SPP network transmission costs	44,894			42,405			2,489			5.9
Operating and maintenance	93,528			83,828			9,700			11.6
Depreciation and amortization	69,289			65,823			3,466			5.3
Selling, general and administrative	66,464			61,668			4,796			7.8
Taxes other than income	30,392			25,123			5,269			21.0
Total Operating Expenses	456,350			415,997			40,353			9.7
INCOME FROM OPERATIONS	103,528			107,775			(4,247		)	(3.9	)
OTHER INCOME (EXPENSE):
Investment earnings	1,444			955			489			51.2
Other income	5,861			8,136			(2,275		)	(28.0	)
Other expense	(4,188		)	(5,740		)	1,552			27.0
Total Other Income	3,117			3,351			(234		)	(7.0	)
Interest expense	46,377			44,451			1,926			4.3
INCOME BEFORE INCOME TAXES	60,268			66,675			(6,407		)	(9.6	)
Income tax expense	17,207			18,980			(1,773		)	(9.3	)
NET INCOME	43,061			47,695			(4,634		)	(9.7	)
Less: Net income attributable to noncontrolling interests	1,999			2,088			(89		)	(4.3	)
NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	41,062		$	45,607		$	(4,545	)	(10.0	)
Earnings per common share, basic	$	0.32		$	0.36		$	(0.04	)	(11.1	)
Diluted earnings per common share	$	0.32		$	0.36		$	(0.04	)	(11.1	)
Average equivalent common shares outstanding	127,892			126,929			963			0.8
DIVIDENDS DECLARED PER COMMON SHARE	$	0.34		$	0.33		$	0.01		3.0
Effective income tax rate	28.55		%	28.47		%

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K

for the period ended December 31, 2013 should be read in conjunction with this financial information.

Page 2

Westar Energy, Inc.

Consolidated Statements of Income

(Unaudited)



	Twelve Months Ended December 31,
	2013			2012			Change			% Change
	(In Thousands, Except Per Share Amounts)
REVENUES:
Residential	$	728,852		$	714,562		$	14,290		2.0
Commercial	667,106			640,654			26,452			4.1
Industrial	374,825			368,909			5,916			1.6
Other retail	8,939			(5,845		)	14,784			252.9
Total Retail Revenues	1,779,722			1,718,280			61,442			3.6
Wholesale	348,239			316,353			31,886			10.1
Transmission	210,281			193,797			16,484			8.5
Other	32,412			33,040			(628		)	(1.9	)
Total Revenues	2,370,654			2,261,470			109,184			4.8
OPERATING EXPENSES:
Fuel and purchased power	634,797			589,990			44,807			7.6
SPP network transmission costs	178,604			166,547			12,057			7.2
Operating and maintenance	359,060			342,055			17,005			5.0
Depreciation and amortization	272,593			270,464			2,129			0.8
Selling, general and administrative	224,133			226,012			(1,879		)	(0.8	)
Taxes other than income	122,282			104,269			18,013			17.3
Total Operating Expenses	1,791,469			1,699,337			92,132			5.4
INCOME FROM OPERATIONS	579,185			562,133			17,052			3.0
OTHER INCOME (EXPENSE):
Investment earnings	10,056			7,411			2,645			35.7
Other income	35,609			35,378			231			0.7
Other expense	(18,099		)	(19,987		)	1,888			9.4
Total Other Income	27,566			22,802			4,764			20.9
Interest expense	182,167			176,337			5,830			3.3
INCOME BEFORE INCOME TAXES	424,584			408,598			15,986			3.9
Income tax expense	123,721			126,136			(2,415		)	(1.9	)
NET INCOME	300,863			282,462			18,401			6.5
Less: Net income attributable to noncontrolling interests	8,343			7,316			1,027			14.0
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.	292,520			275,146			17,374			6.3
Preferred dividends	—			1,616			(1,616		)	(100.0	)
NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	292,520		$	273,530		$	18,990		6.9
Earnings per common share, basic	$	2.29		$	2.15		$	0.14		6.5
Diluted earnings per common share	$	2.27		$	2.15		$	0.12		5.6
Average equivalent common shares outstanding	127,463			126,712			751			0.6
DIVIDENDS DECLARED PER COMMON SHARE	$	1.36		$	1.32		$	0.04		3.0
Effective income tax rate	29.14		%	30.87		%

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K

for the period ended December 31, 2013 should be read in conjunction with this financial information.

Page 3

Westar Energy, Inc.

Consolidated Balance Sheets

(Dollars in Thousands, Except Par Values)

(Unaudited)



	December 31, 2013		December 31, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	4,487	$	5,829
Accounts receivable, net of allowance for doubtful accounts of $4,596 and $4,916, respectively	250,036		224,439
Fuel inventory and supplies	239,511		249,016
Deferred tax assets	37,927		—
Prepaid expenses	15,821		15,847
Regulatory assets	135,408		114,895
Other	23,608		33,049
Total Current Assets	706,798		643,075
PROPERTY, PLANT AND EQUIPMENT, NET	7,551,916		7,013,765
PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET	296,626		321,975
OTHER ASSETS:
Regulatory assets	620,006		887,777
Nuclear decommissioning trust	175,625		150,754
Other	246,140		247,885
Total Other Assets	1,041,771		1,286,416
TOTAL ASSETS	$	9,597,111	$	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	27,479		25,942
Short-term debt	134,600		339,200
Accounts payable	233,351		180,825
Accrued dividends	43,604		41,743
Accrued taxes	69,742		58,624
Accrued interest	80,457		77,891
Regulatory liabilities	35,982		37,557
Other	80,184		84,359
Total Current Liabilities	955,399		846,141
LONG-TERM LIABILITIES:
Long-term debt, net	2,968,958		2,819,271
Long-term debt of variable interest entities, net	194,802		222,743
Deferred income taxes	1,361,418		1,197,837
Unamortized investment tax credits	192,265		191,512
Regulatory liabilities	293,574		285,618
Accrued employee benefits	331,558		564,870
Asset retirement obligations	160,682		152,648
Other	69,924		74,336
Total Long-Term Liabilities	5,573,181		5,508,835
COMMITMENTS AND CONTINGENCIES (See Notes 13 and 15)
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, respective to each date	—		—
Common stock, par value $5 per share; authorized 275,000,000 shares; issued and outstanding 128,254,229 shares and 126,503,748 shares, respective to each date	641,271		632,519
Paid-in capital	1,696,727		1,656,972
Retained earnings	724,776		606,649
Total Westar Energy, Inc. Shareholders’ Equity	3,062,774		2,896,140
Noncontrolling Interests	5,757		14,115
Total Equity	3,068,531		2,910,255
TOTAL LIABILITIES AND EQUITY	$	9,597,111	$	9,265,231

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K

for the period ended December 31, 2013 should be read in conjunction with this financial information.

Page 4

Westar Energy, Inc.

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)



	Twelve Months Ended December 31,
	2013			2012
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income	$	300,863		$	282,462
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	272,593			270,464
Amortization of nuclear fuel	22,690			24,369
Amortization of deferred regulatory gain from sale leaseback	(5,495		)	(5,495		)
Amortization of corporate-owned life insurance	15,149			28,792
Non-cash compensation	8,188			7,255
Net deferred income taxes and credits	123,307			126,248
Stock-based compensation excess tax benefits	(576		)	(1,698		)
Allowance for equity funds used during construction	(14,143		)	(11,706		)
Changes in working capital items:
Accounts receivable	(24,649		)	2,408
Fuel inventory and supplies	10,124			(19,227		)
Prepaid expenses and other	(12,316		)	(3,630		)
Accounts payable	7,856			(19,161		)
Accrued taxes	14,218			11,937
Other current liabilities	(52,829		)	(105,169		)
Changes in other assets	(4,167		)	13,015
Changes in other liabilities	41,990			(1,758		)
Cash Flows from Operating Activities	702,803			599,106
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Additions to property, plant and equipment	(780,098		)	(810,209		)
Purchase of securities - trust	(66,668		)	(20,473		)
Sale of securities - trust	81,994			21,604
Investment in corporate-owned life insurance	(17,724		)	(18,404		)
Proceeds from investment in corporate-owned life insurance	147,658			33,542
Proceeds from federal grant	876			4,775
Investment in affiliated company	(4,947		)	(8,669		)
Other investing activities	(2,992		)	497
Cash Flows used in Investing Activities	(641,901		)	(797,337		)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Short-term debt, net	(205,241		)	52,900
Proceeds from long-term debt	492,347			541,374
Retirements of long-term debt	(100,000		)	(220,563		)
Retirements of long-term debt of variable interest entities	(25,942		)	(28,114		)
Repayment of capital leases	(2,995		)	(2,679		)
Borrowings against cash surrender value of corporate-owned life insurance	59,565			67,791
Repayment of borrowings against cash surrender value of corporate-owned life insurance	(145,418		)	(34,838		)
Stock-based compensation excess tax benefits	576			1,698
Preferred stock redemption	—			(22,567		)
Issuance of common stock	32,906			6,996
Distributions to shareholders of noncontrolling interests	(2,419		)	(3,295		)
Cash dividends paid	(162,904		)	(158,182		)
Other financing activities	(2,719		)	—
Cash Flows (used in) from Financing Activities	(62,244		)	200,521
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(1,342		)	2,290
CASH AND CASH EQUIVALENTS:
Beginning of period	5,829			3,539
End of period	$	4,487		$	5,829

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K

for the period ended December 31, 2013 should be read in conjunction with this financial information.

Page 5

Westar Energy, Inc.

4th Quarter 2013 vs. 2012

Earnings Variances

Change

($ per share)

(Dollars in Thousands)

($ per share)

2012 earnings attributable to common stock

45,607

0.36

Favorable/(Unfavorable)

Retail

33,715

Wholesale

(1,896

)

Transmission

4,239

Other revenues

Fuel and purchased power

(14,633

)

SPP network transmission costs

(2,489

)

Gross Margin

18,984

Operating and maintenance

(9,700

)

Depreciation and amortization

(3,466

)

Selling, general and administrative

(4,796

)

Taxes other than income taxes

(5,269

)

Other income (expense)

(234

)

Interest expense

(1,926

)

Income tax expense

1,773

Net income attributable to noncontrolling interests

Change in shares outstanding

0.00

2013 earnings attributable to common stock

41,062

0.32

Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)

Due primarily to an 6% increase in average retail prices (see page 7 for changes by customer class)

Due to a 8% decrease in MWh sales (see page 7 for changes by customer class)

Due primarily to collecting previously deferred fuel and purchase power expense in revenue

Due principally to increased investment in the transmission system within the SPP RTO that is largely offset by increased prices

Due primarily to increased costs for tree trimming and other distribution reliability activities -- ($6.8M); and higher amortization of refueling outage costs at Wolf Creek -- ($1.6M)

Due to additional depreciation expense associated primarily with additions at our power plants

Due primarily to higher labor and other employee benefit costs -- ($8.8M); contribution in 2012 to company charitable foundation -- $3.5M

Due primarily to increase in property taxes (offset through increased prices) -- ($4.9M)

Due primarily to: an increase in AFUDC -- $2.1M; and net COLI impact -- ($3.1M)

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K

for the period ended December 31, 2013 should be read in conjunction with this financial information.

Page 6

Westar Energy, Inc.

YTD December 2013 vs. 2012

Earnings Variances

Change

($ per share)

(Dollars in Thousands)

($ per share)

2012 earnings attributable to common stock

273,530

2.15

Favorable/(Unfavorable)

Retail

61,442

Wholesale

31,886

Transmission

16,484

Other revenues

(628

)

Fuel and purchased power

(44,807

)

SPP network transmission costs

(12,057

)

Gross Margin

52,320

Operating and maintenance

(17,005

)

Depreciation and amortization

(2,129

)

Selling, general and administrative

1,879

Taxes other than income

(18,013

)

Other income (expense)

4,764

Interest expense

(5,830

)

Income tax expense

2,415

Net income attributable to noncontrolling interests

(1,027

)

Preferred dividends

1,616

Change in shares outstanding

(0.01

)

2013 earnings attributable to common stock

292,520

2.29

Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)

Due primarily to a 6% increase in average retail prices (see page 8 for changes by customer class)

Due to a 11% increase in MWh sales (see page 8 for changes by customer class)

Due primarily to an 9% increase in fuel used for generation and 4% increase in MWhs generated

Due principally to increased investment in the transmission system within the SPP RTO that is largely offset by increased prices

Due principally to higher costs for tree trimming and other distribution reliability activities of -- ($11.8M), and higher amortization of refueling outage costs and costs incurred during an unscheduled maintenance outage in 2013 at Wolf Creek -- ($5.0 million).

Due primarily to: restructuring insurance contracts to lower post-retirement and other employee benefit costs -- $8.6M; lower labor cost -- $2.3M; higher pension cost (offset through increased prices) -- ($12.3M); contribution in 2012 to company charitable foundation -- $3.5M

Due primarily to an increase in property taxes (offset in increased prices) -- ($18.2M)

Due primarily to: investment earnings in a trust to fund retirement benefits and Prairie Wind Transmission JV -- $2.6M; higher Equity AFDUC -- $2.4M; COLI expense adjustment -- $1.9M; and gain on sale of fuel inventory in 2012 -- ($2.2M)

Due primarily to additional outstanding debt

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K

for the period ended December 31, 2013 should be read in conjunction with this financial information.

Page 7

Westar Energy, Inc.

Revenue, Sales and Energy Supply



Supplemental Data	Three Months Ended December 31,
	2013		2012			Change			% Change
Revenues	(Dollars In Thousands)
Residential	$	160,190	$	148,494		$	11,696		7.9
Commercial	154,057		146,839			7,218			4.9
Industrial	92,670		90,873			1,797			2.0
Other retail	3,219		3,125			94			3.0
Provision for rate refunds	2,815		(10,095		)	12,910			127.9
Total Retail Revenues	412,951		379,236			33,715			8.9
Tariff-based wholesale	66,088		62,718			3,370			5.4
Market-based wholesale	19,403		24,669			(5,266		)	(21.3	)
Transmission	53,556		49,317			4,239			8.6
Other	7,880		7,832			48			0.6
Total Revenues	$	559,878	$	523,772		$	36,106		6.9


Electricity Sales	(Thousands of MWh)
Residential	1,448		1,371			77			5.6
Commercial	1,758		1,740			18			1.0
Industrial	1,387		1,372			15			1.1
Other retail	21		21			—			—
Total Retail	4,614		4,504			110			2.4
Tariff-based wholesale	1,359		1,354			5			0.4
Market-based wholesale	775		974			(199		)	(20.4	)
Total wholesale	2,134		2,328			(194		)	(8.3	)
Total Electricity Sales	6,748		6,832			(84		)	(1.2	)

	(Dollars per MWh)
Total retail	$	89.50	$	84.20		$	5.30		6.3
Tariff-based wholesale	$	48.63	$	46.32		$	2.31		5.0
Market-based wholesale	$	25.04	$	25.33		$	(0.29	)	(1.1	)


Fuel and Purchased Power	(Dollars In Thousands)
Fuel used for generation	$	119,215	$	115,115		$	4,100		3.6
Purchased power	27,823		26,343			1,480			5.6
Subtotal	147,038		141,458			5,580			3.9
RECA recovery and other	4,745		(4,308		)	9,053			210.1
Total fuel and purchased power expense	$	151,783	$	137,150		$	14,633		10.7

Electricity Supply	(Thousands of MWh)
Generated - Gas	301		55			246			447.3
Coal	4,768		4,842			(74		)	(1.5	)
Nuclear	1,110		1,253			(143		)	(11.4	)
Wind	116		100			16			16.0
Subtotal electricity generated	6,295		6,250			45			0.7
Purchased	825		865			(40		)	(4.6	)
Total Electricity Supply	7,120		7,115			5			0.1

	(Dollars per MWh)
Average cost of fuel used for generation	$	18.94	$	18.42		$	0.52		2.8
Average cost of purchased power	$	33.72	$	30.45		$	3.27		10.7
Average cost of fuel and purchased power	$	20.65	$	19.88		$	0.77		3.9


Degree Days			2011/
	2013		20 yr Avg			Change			% Change
Cooling
Actual compared to last year	45		44			1			2.3
Actual compared to 20 year average	45		39			6			15.4
Heating
Actual compared to last year	2,052		1,651			401			24.3
Actual compared to 20 year average	2,052		1,808			244			13.5

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K

for the period ended December 31, 2013 should be read in conjunction with this financial information.

Page 8

Westar Energy, Inc.

Revenue, Sales and Energy Supply



Supplemental Data	Twelve Months Ended December 31,
	2013			2012			Change			% Change
Revenues	(Dollars In Thousands)
Residential	$	728,852		$	714,562		$	14,290		2.0
Commercial	667,106			640,654			26,452			4.1
Industrial	374,825			368,909			5,916			1.6
Other retail	12,739			12,374			365			2.9
Provision for rate refunds	(3,800		)	(18,219		)	14,419			79.1
Total Retail Revenues	1,779,722			1,718,280			61,442			3.6
Tariff-based wholesale	276,638			261,375			15,263			5.8
Market-based wholesale	71,801			54,978			16,823			30.6
Transmission	210,281			193,797			16,484			8.5
Other	32,412			33,040			(628		)	(1.9	)
Total Revenues	$	2,370,854		$	2,261,470		$	109,384		4.8


Electricity Sales	(Thousands of MWh)
Residential	6,523			6,684			(161		)	(2.4	)
Commercial	7,480			7,581			(101		)	(1.3	)
Industrial	5,407			5,588			(181		)	(3.2	)
Other retail	86			85			1			1.2
Total Retail	19,496			19,938			(442		)	(2.2	)
Tariff-based wholesale	5,777			5,643			134			2.4
Market-based wholesale	2,816			2,076			740			35.6
Total wholesale	8,593			7,719			874			11.3
Total Electricity Sales	28,089			27,657			432			1.6

	(Dollars per MWh)
Total retail	$	91.29		$	86.18		$	5.11		5.9
Tariff-based wholesale	$	47.89		$	46.32		$	1.57		3.4
Market-based wholesale	$	25.50		$	26.48		$	(0.98	)	(3.7	)


Fuel and Purchased Power	(Dollars In Thousands)
Fuel used for generation	$	532,277		$	489,268		$	43,009		8.8
Purchased power	114,783			103,902			10,881			10.5
Subtotal	647,060			593,170			53,890			9.1
RECA recovery and other	(12,263		)	(3,180		)	(9,083		)	(285.6	)
Total fuel and purchased power expense	$	634,797		$	589,990		$	44,807		7.6

Electricity Supply	(Thousands of MWh)
Generated - Gas	1,785			2,238			(453		)	(20.2	)
Coal	20,677			18,691			1,986			10.6
Nuclear	3,369			3,894			(525		)	(13.5	)
Wind	427			438			(11		)	(2.5	)
Subtotal electricity generated	26,258			25,261			997			3.9
Purchased	3,413			3,935			(522		)	(13.3	)
Total Electricity Supply	29,671			29,196			475			1.6

	(Dollars per MWh)
Average cost of fuel used for generation	$	20.27		$	19.37		$	0.90		4.6
Average cost of purchased power	$	33.63		$	26.40		$	7.23		27.4
Average cost of fuel and purchased power	$	21.81		$	20.32		$	1.49		7.3


Degree Days				2011/
	2013			20 yr Avg			Change			% Change
Cooling
Actual compared to last year	1,641			2,140			(499		)	(23.3	)
Actual compared to 20 year average	1,641			1,623			18			1.1
Heating
Actual compared to last year	5,157			3,687			1,470			39.9
Actual compared to 20 year average	5,157			4,668			489			10.5

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K

for the period ended December 31, 2013 should be read in conjunction with this financial information.

Page 9

Westar Energy, Inc.



Capitalization
		December 31, 2013					December 31, 2012
		(Dollars in Thousands)
Current maturities of long-term debt		$	250,000				$	—
Current maturities of long-term debt of VIEs		27,479					25,942
Long-term debt, net		2,968,958					2,819,271
Long-term debt of variable interest entities, net		194,802					222,743
Total debt		3,441,239			53.0	%	3,067,956			51.4	%
Common equity		3,062,774			46.9	%	2,896,140			48.4	%
Noncontrolling interests		5,757			0.1	%	14,115			0.2	%
Total capitalization		$	6,509,770		100.0	%	$	5,978,211		100.0	%

GAAP Book value per share		$	23.88				$	22.89
Period end shares outstanding (in thousands)		128,254					126,504

Outstanding Long-Term Debt

	CUSIP	December 31, 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
8.625% Series due December 2018	95709TAG5	300,000					300,000
5.10% Series due July 2020	95709TAD2	250,000					250,000
5.95% Series due January 2035	95709TAC4	125,000					125,000
5.875% Series due July 2036	95709TAE0	150,000					150,000
4.125% Series due December 2042	95709TAH3	550,000					550,000
4.10% Series due March 2043	95709TAJ9	250,000					—
4.625% Series due August 2043	95709TAK6	250,000					—
		2,250,000					1,750,000
Pollution control bond series:
Variable series due April 2032 (St Marys)	792609AF6	45,000					45,000
Variable series due April 2032 (Wamego)	933623BN9	30,500					30,500
		75,500					75,500
Total Westar Energy		2,325,500					1,825,500

KGE
First mortgage bond series:
6.70%Series due June 2019	U24448AB5	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
		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
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
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
		273,940					373,940
Total KGE		898,940					998,940

Total long-term debt		3,224,440					2,824,440
Unamortized debt discount		(5,482		)			(5,169		)
Long-term debt due within one year		(250,000		)			—
Total long-term debt, net		$	2,968,958				$	2,819,271

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K

for the period ended December 31, 2013 should be read in conjunction with this financial information.

Page 10

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. In addition, SPP network transmission costs fluctuate due primarily to investments by us and other members of the SPP for upgrades to the transmission grid within the SPP RTO. As with fuel and purchased power costs, changes in SPP network transmission costs are mostly reflected in the prices we charge customers with minimal impact on net income. For this reason, Westar management believes that gross margin is useful for understanding and analyzing changes in operating performance from one period to the next. Gross margin is calculated as total revenues, including transmission revenues, less the sum of fuel and purchased power costs and amounts billed by the SPP for network transmission costs (SPP NITS). Accordingly, gross margin reflects transmission revenues and costs on a net basis.

The calculations of gross margin for the three and twelve months ended 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.



	Three Months Ended December 31,							Twelve Months Ended December 31,
	2013		2012		Change			2013		2012		Change
	(Dollars in Thousands)
Revenues	$	559,878	$	523,772	$	36,106		$	2,370,654	$	2,261,470	$	109,184
Less: Fuel and purchased power expense	151,783		137,150		14,633			634,797		589,990		44,807
SPP network transmission costs	44,894		42,405		2,489			178,604		166,547		12,057
Gross Margin	$	363,201	$	344,217	$	18,984		$	1,557,253	$	1,504,933	$	52,320

Gross margin	$	363,201	$	344,217	$	18,984		$	1,557,253	$	1,504,933	$	52,320
Less: Operating and maintenance expense	93,528		83,828		9,700			359,060		342,055		17,005
Depreciation and amortization expense	69,289		65,823		3,466			272,593		270,464		2,129
Selling, general and administrative expense	66,464		61,668		4,796			224,133		226,012		(1,879		)
Taxes other than income tax	30,392		25,123		5,269			122,282		104,269		18,013
Income from operations	$	103,528	$	107,775	$	(4,247	)	$	579,185	$	562,133	$	17,052

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K

for the period ended December 31, 2013 should be read in conjunction with this financial information.

Page 11

2014 Earnings Guidance

2014 EPS guidance range $2.25 - $2.40

Key drivers and planning assumptions:


•	Retail MWh sales up 50 - 100 bp


•	Modest annualized price adjustments


◦	~$31 million 2012 abbreviated rate case, effective December 2013


◦	~$35 million transmission formula rate and companion TDC, net of SPP network costs


◦	~$13 million environmental cost recovery rider


•	~3% increase in combined O&M and SG&A expenses excluding SPP network costs & property tax that have revenue offsets


◦	~10% increase top line combined O&M and SG&A expense


•	~5% increase in depreciation expense


•	COLI proceeds ~$14 million


•	No change in equity AFUDC


•	Effective tax rate 32-34%


•	Financing:


◦	No additional equity


◦	No additional debt issuance anticipated


▪	Refinance $250M first mortgage bond due July


◦	Settle 3 million forward shares already priced under ATM for yearend average annual outstanding count ~130 million

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, 2013 (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; and (2) other factors discussed in the company’s filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date such statement was made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement was made.

Page 12

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Attached files

WESTAR ENERGY INC /KS Reports

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