WESTAR ENERGY INC /KS - FORM 8-K - EX-99.2 - 2015 FOURTH QUARTER EARNINGS PACKAGE - February 24, 2016

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Exhibit 99.2
Westar Energy, Inc.
Fourth Quarter and Year-end 2015 Earnings
Released February 24, 2016

















Cody VandeVelde
Director Investor Relations
785-575-8227
cody.vandevelde@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, 2015 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,
 
2015
 
2014
 
Change
 
% Change
 
(In Thousands, Except Per Share Amounts)
 
 
REVENUES:
 
 
 
 
 
 
 
Residential
$
157,843


$
164,522

 
$
(6,679
)
 
(4.1
)
Commercial
161,640


165,082

 
(3,442
)
 
(2.1
)
Industrial
95,751


100,478

 
(4,727
)
 
(4.7
)
Other retail
(11,654
)

(6,592
)
 
(5,062
)
 
(76.8
)
Total Retail Revenues
403,580

 
423,490

 
(19,910
)
 
(4.7
)
Wholesale
68,869


102,003

 
(33,134
)
 
(32.5
)
Transmission
60,765


64,527

 
(3,762
)
 
(5.8
)
Other
12,751


6,419

 
6,332

 
98.6

Total Revenues
545,965

 
596,439

 
(50,474
)
 
(8.5
)
OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
101,561


166,077

 
(64,516
)
 
(38.8
)
SPP network transmission costs
57,392

 
55,713

 
1,679

 
3.0

Operating and maintenance
82,026


89,347

 
(7,321
)
 
(8.2
)
Depreciation and amortization
82,062


73,172

 
8,890

 
12.1

Selling, general and administrative
70,711


70,807

 
(96
)
 
(0.1
)
Taxes other than income
43,854

 
36,054

 
7,800

 
21.6

Total Operating Expenses
437,606

 
491,170

 
(53,564
)
 
(10.9
)
INCOME FROM OPERATIONS
108,359

 
105,269

 
3,090

 
2.9

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
3,372

 
3,414

 
(42
)
 
(1.2
)
Other income
866

 
4,956

 
(4,090
)
 
(82.5
)
Other expense
(3,899
)
 
(4,196
)
 
297

 
7.1

Total Other Income
339

 
4,174

 
(3,835
)
 
(91.9
)
Interest expense
42,682

 
45,043

 
(2,361
)
 
(5.2
)
INCOME BEFORE INCOME TAXES
66,016

 
64,400

 
1,616

 
2.5

Income tax expense
24,190

 
18,627

 
5,563

 
29.9

NET INCOME
41,826

 
45,773

 
(3,947
)
 
(8.6
)
Less: Net income attributable to noncontrolling interests
2,591

 
2,324

 
267

 
11.5

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
39,235

 
$
43,449

 
$
(4,214
)
 
(9.7
)
Earnings per common share, basic
$
0.28

 
$
0.33

 
$
(0.05
)
 
(15.2
)
Diluted earnings per common share
$
0.28

 
$
0.32

 
$
(0.04
)
 
(12.5
)
Weighted average equivalent common shares outstanding – basic (in thousands)
141,713

 
131,467

 
10,246

 
7.8

Weighted average equivalent common shares outstanding – diluted (in thousands)
142,057

 
134,522

 
7,535

 
5.6

DIVIDENDS DECLARED PER COMMON SHARE
$
0.36

 
$
0.35

 
$
0.01

 
2.9

Effective income tax rate
36.64
%
 
28.92
%
 
 
 
 
 
 
 
 
 
 
 
 







The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2015 should be read in conjunction with this financial information.
Page 2


Westar Energy, Inc.
Consolidated Statements of Income
(Unaudited)

 
Twelve Months Ended December 31,
 
2015
 
2014
 
Change
 
% Change
 
(In Thousands, Except Per Share Amounts)
 
 
REVENUES:
 
 
 
 
 
 
 
Residential
$
768,618


$
793,586

 
$
(24,968
)
 
(3.1
)
Commercial
712,400


727,964

 
(15,564
)
 
(2.1
)
Industrial
400,687


414,997

 
(14,310
)
 
(3.4
)
Other retail
(17,155
)

(24,180
)
 
7,025

 
29.1

Total Retail Revenues
1,864,550

 
1,912,367

 
(47,817
)
 
(2.5
)
Wholesale
318,371


392,730

 
(74,359
)
 
(18.9
)
Transmission
241,835


256,838

 
(15,003
)
 
(5.8
)
Other
34,408


39,768

 
(5,360
)
 
(13.5
)
Total Revenues
2,459,164

 
2,601,703

 
(142,539
)
 
(5.5
)
OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
561,065

 
705,450

 
(144,385
)
 
(20.5
)
SPP network transmission costs
229,043

 
218,924

 
10,119

 
4.6

Operating and maintenance
330,289

 
367,188

 
(36,899
)
 
(10.0
)
Depreciation and amortization
310,591

 
286,442

 
24,149

 
8.4

Selling, general and administrative
250,278

 
250,439

 
(161
)
 
(0.1
)
Taxes other than income
156,901

 
140,302

 
16,599

 
11.8

Total Operating Expenses
1,838,167

 
1,968,745

 
(130,578
)
 
(6.6
)
INCOME FROM OPERATIONS
620,997

 
632,958

 
(11,961
)
 
(1.9
)
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
7,799

 
10,622

 
(2,823
)
 
(26.6
)
Other income
19,438

 
31,522

 
(12,084
)
 
(38.3
)
Other expense
(17,636
)
 
(18,389
)
 
753

 
4.1

Total Other Income
9,601

 
23,755

 
(14,154
)
 
(59.6
)
Interest expense
176,802

 
183,118

 
(6,316
)
 
(3.4
)
INCOME BEFORE INCOME TAXES
453,796

 
473,595

 
(19,799
)
 
(4.2
)
Income tax expense
152,000

 
151,270

 
730

 
0.5

NET INCOME
301,796

 
322,325

 
(20,529
)
 
(6.4
)
Less: Net income attributable to noncontrolling interests
9,867

 
9,066

 
801

 
8.8

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
291,929

 
$
313,259

 
$
(21,330
)
 
(6.8
)
Earnings per common share, basic
$
2.11

 
$
2.40

 
$
(0.29
)
 
(12.1
)
Diluted earnings per common share
$
2.09

 
$
2.35

 
$
(0.26
)
 
(11.1
)
Weighted average equivalent common shares outstanding – basic (in thousands)
137,958

 
130,015

 
7,943

 
6.1

Weighted average equivalent common shares outstanding – diluted (in thousands)
139,278

 
132,825

 
$
6,453

 
4.9

DIVIDENDS DECLARED PER COMMON SHARE
$
1.44

 
$
1.40

 
$
0.04

 
2.9

Effective income tax rate
33.50
%
 
31.94
%
 
 
 
 
 
 
 
 
 
 
 
 



The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2015 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, 2015
 
December 31, 2014
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
3,231

 
$
4,556

Accounts receivable, net of allowance for doubtful accounts of $5,294 and $5,309, respectively
258,286

 
267,327

Fuel inventory and supplies
301,294

 
247,406

Prepaid expenses
16,864

 
15,793

Regulatory assets
109,606

 
105,549

Other
27,860

 
28,772

Total Current Assets
717,141

 
669,403

PROPERTY, PLANT AND EQUIPMENT, NET
8,524,902

 
8,162,908

PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET
268,239

 
278,573

OTHER ASSETS:
 
 
 
Regulatory assets
751,312

 
754,229

Nuclear decommissioning trust
184,057

 
185,016

Other
260,015

 
238,777

Total Other Assets
1,195,384

 
1,178,022

TOTAL ASSETS
$
10,705,666

 
$
10,288,906

LIABILITIES AND EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Current maturities of long-term debt of variable interest entities
$
28,309

 
$
27,933

Short-term debt
250,300

 
257,600

Accounts payable
220,969

 
219,351

Accrued dividends
49,829

 
44,971

Accrued taxes
83,773

 
74,356

Accrued interest
71,426

 
79,707

Regulatory liabilities
25,697

 
55,142

Other
106,632

 
90,571

Total Current Liabilities
836,935

 
849,631

LONG-TERM LIABILITIES:
 
 
 
Long-term debt, net
3,163,950

 
3,187,080

Long-term debt of variable interest entities, net
138,097

 
166,565

Deferred income taxes
1,591,430

 
1,445,851

Unamortized investment tax credits
209,763

 
211,040

Regulatory liabilities
267,114

 
288,343

Accrued employee benefits
462,304

 
532,622

Asset retirement obligations
275,285

 
230,668

Other
88,825

 
75,799

Total Long-Term Liabilities
6,196,768

 
6,137,968

COMMITMENTS AND CONTINGENCIES (See Notes 13 and 15)
 
 
 
EQUITY:
 
 
 
Westar Energy, Inc. Shareholders’ Equity:
 
 
 
Common stock, par value $5 per share; authorized 275,000,000 shares; issued and outstanding 141,353,426 shares and 131,687,454 shares, respective to each date
706,767

 
658,437

Paid-in capital
2,004,124

 
1,781,120

Retained earnings
945,830

 
855,299

Total Westar Energy, Inc. Shareholders’ Equity
3,656,721

 
3,294,856

Noncontrolling Interests
15,242

 
6,451

Total Equity
3,671,963

 
3,301,307

TOTAL LIABILITIES AND EQUITY
$
10,705,666

 
$
10,288,906


The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2015 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,
 
2015
 
2014
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
 
 
 
Net income
$
301,796

 
$
322,325

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
310,591

 
286,442

Amortization of nuclear fuel
26,974

 
26,051

Amortization of deferred regulatory gain from sale leaseback
(5,495
)
 
(5,495
)
Amortization of corporate-owned life insurance
19,850

 
20,202

Non-cash compensation
8,345

 
7,280

Net deferred income taxes and credits
151,332

 
151,451

Stock-based compensation excess tax benefits
(1,307
)
 
(875
)
Allowance for equity funds used during construction
(2,075
)
 
(17,029
)
Changes in working capital items:
 
 
 
Accounts receivable
9,042

 
(17,291
)
Fuel inventory and supplies
(53,263
)
 
(8,773
)
Prepaid expenses and other
(23,145
)
 
36,717

Accounts payable
6,636

 
6,189

Accrued taxes
13,073

 
6,596

Other current liabilities
(80,396
)
 
(31,624
)
Changes in other assets
2,199

 
6,378

Changes in other liabilities
30,386

 
35,811

Cash Flows from Operating Activities
714,543

 
824,355

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 
 
 
Additions to property, plant and equipment
(700,228
)
 
(852,052
)
Purchase of securities - trust
(37,557
)
 
(9,075
)
Sale of securities - trust
37,930

 
11,125

Investment in corporate-owned life insurance
(14,845
)
 
(16,250
)
Proceeds from investment in corporate-owned life insurance
66,794

 
43,234

Investment in affiliated company
(575
)
 
(8,000
)
Other investing activities
(1,223
)
 
(7,730
)
Cash Flows used in Investing Activities
(649,704
)
 
(838,748
)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 
 
 
Short-term debt, net
(7,300
)
 
122,406

Proceeds from long-term debt
543,881

 
417,943

Retirements of long-term debt
(635,891
)
 
(427,500
)
Retirements of long-term debt of variable interest entities
(27,933
)
 
(27,479
)
Repayment of capital leases
(2,591
)
 
(3,340
)
Borrowings against cash surrender value of corporate-owned life insurance
59,431

 
59,766

Repayment of borrowings against cash surrender value of corporate-owned life insurance
(64,593
)
 
(41,249
)
Stock-based compensation excess tax benefits
1,307

 
875

Issuance of common stock
257,998

 
87,669

Distributions to shareholders of noncontrolling interests
(1,076
)
 
(1,030
)
Cash dividends paid
(186,120
)
 
(171,507
)
Other financing activities
(3,277
)
 
(2,092
)
Cash Flows (used in) from Financing Activities
(66,164
)
 
14,462

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(1,325
)
 
69

CASH AND CASH EQUIVALENTS:
 
 
 
Beginning of period
4,556

 
4,487

End of period
$
3,231

 
$
4,556


The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2015 should be read in conjunction with this financial information.
Page 5



Westar Energy, Inc.
4th Quarter 2015 vs. 2014

Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2014 earnings attributable to common stock
 
 
 
$
43,449

 
 
 
$
0.33

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Gross Margin
 
 
 
12,363

 
A
 
 
 
Operating and maintenance
 
 
 
7,321

 
B
 
 
 
Depreciation and amortization
 
 
 
(8,890
)
 
C
 
 
 
Selling, general and administrative
 
 
 
96

 
 
 
 
 
Taxes other than income taxes
 
 
 
(7,800
)
 
D
 
 
 
Other income (expense)
 
 
 
(3,835
)
 
E
 
 
 
Interest expense
 
 
 
2,361

 
F
 
 
 
Income tax expense
 
 
 
(5,563
)
 
 
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(267
)
 
 
 
 
 
Change in shares outstanding
 
(0.02
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 earnings attributable to common stock
 
 
 
$
39,235

 
 
 
$
0.28

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to: estimated annual transmission margin increase of $11.2M; annual ECRR revenue increase of $10.8M; and general rate case impact of $9.0M; partially offset by 3.5% decrease in retail MWh sales partly due to extremely mild winter weather; and refund obligation for transmission revenues -- ($2.5M)


 
 
 
 
 
 
 
 
 
 
B
Due primarily to: lower transmission and distribution expense -- $6.4M; lower costs at coal-fired plants primarily due to planned outages -- $2.7M

 
 
 
 
 
 
 
 
 
 
C
Due primarily to property additions

 
 
 
 
 
 
 
 
 
 
D
Due primarily to an increase in property taxes (offset through increased prices) -- ($8.0M)

 
 
 
 
 
 
 
 
 
 
E
Due primarily to a decrease in equity AFUDC -- ($3.6M)

 
 
 
 
 
 
 
 
 
 
F
Due primarily to a decrease in long-term interest expense -- $4.7M; partially offset by reduction in debt AFUDC -- ($2.1M)


 
 
 
 
 
 
 
 
 
 

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2015 should be read in conjunction with this financial information.
Page 6


Westar Energy, Inc.
YTD December 2015 vs. 2014
Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2014 earnings attributable to common stock
 
 
 
$
313,259

 
 
 
$
2.40

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Margin
 
 
 
(8,273
)
 
A
 
 
 
Operating and maintenance
 
 
 
36,899

 
B
 
 
 
Depreciation and amortization
 
 
 
(24,149
)
 
C
 
 
 
Selling, general and administrative
 
 
 
161

 
 
 
 
 
Taxes other than income
 
 
 
(16,599
)
 
D
 
 
 
Other income (expense)
 
 
 
(14,154
)
 
E
 
 
 
Interest expense
 
 
 
6,316

 
F
 
 
 
Income tax expense
 
 
 
(730
)
 
 
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(801
)
 
 
 
 
 
Change in shares outstanding
 
(0.13
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 earnings attributable to common stock
 
 
 
$
291,929

 
 
 
$
2.11

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to: refund obligation for transmission revenues -- ($13.8M); lower energy marketing margins reflecting 2014 favorable market conditions -- ($11.2M); and 1.7% decrease in retail MWh sales partly due to milder winter weather and a few large industrial customers experienced reduced demand for their product; partially offset by estimated annual transmission margin increase of $11.2M, annual ECRR revenue increase of $10.8M, and general rate case impact of $9.0M

 
 
 
 
 
 
 
 
 
 
B
Due primarily to: lower transmission and distribution expense -- $14.8M; lower costs at coal-fired plants primarily due to planned outages -- $10.5M; and lower costs at Wolf Creek principally the result of scheduled outage in 2014 - $10.3M

 
 
 
 
 
 
 
 
 
 
C
Due primarily to property additions

 
 
 
 
 
 
 
 
 
 
D
Due primarily to an increase in property taxes (offset through increased prices) -- ($16.9M)

 
 
 
 
 
 
 
 
 
 
E
Due primarily to a decrease in equity AFUDC -- ($15.0M); partially offset by higher COLI -- $2.7M
 
 
 
 
 
 
 
 
 
 
F
Due primarily to a decrease in long-term interest expense -- $14.7M; partially offset by reduction in debt AFUDC -- ($8.5M)

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2015 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,
 
2015
 
2014
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
157,843

 
$
164,522

 
$
(6,679
)
 
(4.1
)
Commercial
161,640

 
165,082

 
(3,442
)
 
(2.1
)
Industrial
95,751

 
100,478

 
(4,727
)
 
(4.7
)
Other retail
3,675

 
3,561

 
114

 
3.2

Provision for rate refunds
(15,329
)
 
(10,153
)
 
(5,176
)
 
(51.0
)
Total Retail Revenues
403,580

 
423,490

 
(19,910
)
 
(4.7
)
Tariff-based wholesale
57,425

 
66,454

 
(9,029
)
 
(13.6
)
Market-based wholesale
11,444

 
35,549

 
(24,105
)
 
(67.8
)
Transmission
60,765

 
64,527

 
(3,762
)
 
(5.8
)
Other
12,751

 
6,419

 
6,332

 
98.6

Total Revenues
$
545,965

 
$
596,439

 
$
(50,474
)
 
(8.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
1,257

 
1,352

 
(95
)
 
(7.0
)
Commercial
1,713

 
1,729

 
(16
)
 
(0.9
)
Industrial
1,307

 
1,348

 
(41
)
 
(3.0
)
Other retail
20

 
22

 
(2
)
 
(9.1
)
Total Retail
4,297

 
4,451

 
(154
)
 
(3.5
)
Tariff-based wholesale
913

 
1,212

 
(299
)
 
(24.7
)
Market-based wholesale
763

 
1,386

 
(623
)
 
(44.9
)
Total wholesale
1,676

 
2,598

 
(922
)
 
(35.5
)
Total Electricity Sales
5,973

 
7,049

 
(1,076
)
 
(15.3
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
93.92

 
$
95.14

 
$
(1.22
)
 
(1.3
)
Tariff-based wholesale
$
62.90

 
$
54.83

 
$
8.07

 
14.7

Market-based wholesale
$
15.00

 
$
25.65

 
$
(10.65
)
 
(41.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
80,475

 
$
112,497

 
$
(32,022
)
 
(28.5
)
Purchased power
40,232

 
44,590

 
(4,358
)
 
(9.8
)
Subtotal
120,707

 
157,087

 
(36,380
)
 
(23.2
)
RECA recovery and other
(19,146
)
 
8,990

 
(28,136
)
 
(313.0
)
Total fuel and purchased power expense
$
101,561

 
$
166,077

 
$
(64,516
)
 
(38.8
)
 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
181

 
298

 
(117
)
 
(39.3
)
                    Coal
3,139

 
4,326

 
(1,187
)
 
(27.4
)
                    Nuclear
1,267

 
1,253

 
14

 
1.1

                    Wind
121

 
111

 
10

 
9.0

Subtotal electricity generated
4,708

 
5,988

 
(1,280
)
 
(21.4
)
Purchased
1,585

 
1,324

 
261

 
19.7

Total Electricity Supply
6,293

 
7,312

 
(1,019
)
 
(13.9
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
17.09

 
$
18.79

 
$
(1.70
)
 
(9.0
)
Average cost of purchased power
$
25.38

 
$
33.68

 
$
(8.30
)
 
(24.6
)
Average cost of fuel and purchased power
$
19.18

 
$
21.48

 
$
(2.30
)
 
(10.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2014/
 
 
 
 
 
2015
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
57

 
52

 
5

 
9.6

Actual compared to 20 year average
57

 
39

 
18

 
46.2

Heating
 
 
 
 
 
 
 
Actual compared to last year
1,372

 
1,793

 
(421
)
 
(23.5
)
Actual compared to 20 year average
1,372

 
1,809

 
(437
)
 
(24.2
)
 
 
 
 
 
 
 
 

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2015 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,
 
2015
 
2014
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
768,618

 
$
793,586

 
$
(24,968
)
 
(3.1
)
Commercial
712,400

 
727,964

 
(15,564
)
 
(2.1
)
Industrial
400,687

 
414,997

 
(14,310
)
 
(3.4
)
Other retail
14,113

 
14,076

 
37

 
0.3

Provision for rate refunds
(31,268
)
 
(38,256
)
 
6,988

 
18.3

Total Retail Revenues
1,864,550

 
1,912,367

 
(47,817
)
 
(2.5
)
Tariff-based wholesale
244,949

 
270,868

 
(25,919
)
 
(9.6
)
Market-based wholesale
73,422

 
121,862

 
(48,440
)
 
(39.7
)
Transmission
241,835

 
256,838

 
(15,003
)
 
(5.8
)
Other
34,408

 
39,768

 
(5,360
)
 
(13.5
)
Total Revenues
$
2,459,164

 
$
2,601,703

 
$
(142,539
)
 
(5.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
6,364

 
6,580

 
(216
)
 
(3.3
)
Commercial
7,500

 
7,521

 
(21
)
 
(0.3
)
Industrial
5,502

 
5,601

 
(99
)
 
(1.8
)
Other retail
84

 
86

 
(2
)
 
(2.3
)
Total Retail
19,450

 
19,788

 
(338
)
 
(1.7
)
Tariff-based wholesale
4,631

 
5,204

 
(573
)
 
(11.0
)
Market-based wholesale
3,861

 
4,340

 
(479
)
 
(11.0
)
Total wholesale
8,492

 
9,544

 
(1,052
)
 
(11.0
)
Total Electricity Sales
27,942

 
29,332

 
(1,390
)
 
(4.7
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
95.86

 
$
96.64

 
$
(0.78
)
 
(0.8
)
Tariff-based wholesale
$
52.89

 
$
52.05

 
$
0.84

 
1.6

Market-based wholesale
$
19.02

 
$
28.08

 
$
(9.06
)
 
(32.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
427,164

 
$
510,892

 
$
(83,728
)
 
(16.4
)
Purchased power
156,234

 
190,483

 
(34,249
)
 
(18.0
)
Subtotal
583,398

 
701,375

 
(117,977
)
 
(16.8
)
RECA recovery and other
(22,333
)
 
4,075

 
(26,408
)
 
(648.0
)
Total fuel and purchased power expense
$
561,065

 
$
705,450

 
$
(144,385
)
 
(20.5
)
 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
1,302

 
1,380

 
(78
)
 
(5.7
)
                    Coal
17,352

 
19,495

 
(2,143
)
 
(11.0
)
                    Nuclear
4,056

 
4,022

 
34

 
0.8

                    Wind
422

 
426

 
(4
)
 
(0.9
)
Subtotal electricity generated
23,132

 
25,323

 
(2,191
)
 
(8.7
)
Purchased
5,727

 
5,112

 
615

 
12.0

Total Electricity Supply
28,859

 
30,435

 
(1,576
)
 
(5.2
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
18.47

 
$
20.18

 
$
(1.71
)
 
(8.5
)
Average cost of purchased power
$
27.28

 
$
37.26

 
$
(9.98
)
 
(26.8
)
Average cost of fuel and purchased power
$
20.22

 
$
23.05

 
$
(2.83
)
 
(12.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2014/
 
 
 
 
 
2015
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
1,800

 
1,689

 
111

 
6.6

Actual compared to 20 year average
1,800

 
1,622

 
178

 
11.0

Heating
 
 
 
 
 
 
 
Actual compared to last year
4,079

 
5,025

 
(946
)
 
(18.8
)
Actual compared to 20 year average
4,079

 
4,667

 
(588
)
 
(12.6
)
 
 
 
 
 
 
 
 

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2015 should be read in conjunction with this financial information.
Page 9




Westar Energy, Inc.
Capitalization
 
 
December 31, 2015
 
 
 
December 31, 2014
 
 
 
 
(Dollars in Thousands)
 
 
Current maturities of long-term debt
 
$
—

 
 
 
$
—

 
 
Current maturities of long-term debt of VIEs
 
28,309

 
 
 
27,933

 
 
Long-term debt, net
 
3,163,950

 
 
 
3,187,080

 
 
Long-term debt of variable interest entities, net
 
138,097

 
 
 
166,565

 
 
Total debt
 
3,330,356

 
47.6
%
 
3,381,578

 
50.6
%
Common equity
 
3,656,721

 
52.2
%
 
3,294,856

 
49.3
%
Noncontrolling interests
 
15,242

 
0.2
%
 
6,451

 
0.1
%
Total capitalization
 
$
7,002,319

 
100.0
%
 
$
6,682,885

 
100.0
%
 
 
 
 
 
 
 
 
 
GAAP Book value per share
 
$
25.87

 
 
 
$
25.02

 


Period end shares outstanding (in thousands)
 
141,353

 
 
 
131,687

 
 
 
 
 
 
 
 
 
 
 
Outstanding Long-Term Debt
 
 
 
 
 
 
 
 
 
 
CUSIP
December 31, 2015
 
 
 
December 31, 2014
 
 
Westar Energy:
 
(Dollars in Thousands)
 
 
First Mortgage Bond series:
 
 
 
 
 
 
 
 
5.15% Series due January 2017
95709TAB6
125,000

 
 
 
125,000

 
 
8.625% Series due December 2018
95709TAG5
—

 
 
 
300,000

 
 
5.10% Series due July 2020
95709TAD2
250,000

 
 
 
250,000

 
 
3.250% Series due December 2025
95709TAL4
250,000

 
 
 
—

 
 
5.95% Series due January 2035
95709TAC4
—

 
 
 
125,000

 
 
5.875% Series due July 2036
95709TAE0
—

 
 
 
150,000

 
 
4.125% Series due December 2042
95709TAH3
550,000

 
 
 
550,000

 
 
4.10% Series due March 2043
95709TAJ9
430,000

 
 
 
430,000

 
 
4.625% Series due August 2043
95709TAK6
250,000

 
 
 
250,000

 
 
4.250% Series due December 2045
95709TAM2
300,000

 
 
 
—

 
 
 
 
2,155,000

 
 
 
2,180,000

 
 
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
 
2,230,500

 
 
 
2,255,500

 
 
 
 
 
 
 
 
 
 
 
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

 
 
4.30% Series due July 2044
485260BM4
250,000

 
 
 
250,000

 
 
 
 
875,000

 
 
 
875,000

 
 
Pollution control bond series:
 
 
 
 
 
 
 
 
Variable rate series due April 2027 (LaCygne)
502828AJ5
21,940

 
 
 
21,940

 
 
4.85% Series due June 2013
121825CB7
50,000

 
 
 
50,000

 
 
Variable rate series due April 2032 (St Marys)
792609AE9
14,500

 
 
 
14,500

 
 
Variable rate series due April 2032 (Wamego)
933623BM1
10,000

 
 
 
10,000

 
 
 
 
96,440

 
 
 
96,440

 
 
Total KGE
 
971,440

 
 
 
971,440

 
 
 
 
 
 
 
 
 
 
 
Total long-term debt
 
3,201,940

 
 
 
3,226,940

 
 
Unamortized debt discount
 
(10,374
)
 
 
 
(11,401
)
 
 
Unamortized debt issuance expense
 
(27,616
)
 
 
 
(28,459
)
 
 
Long-term debt due within one year
 
—

 
 
 
—

 
 
Total long-term debt, net
 
$
3,163,950

 
 
 
$
3,187,080

 
 

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2015 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 2015 and 2014 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,
 
2015
 
2014
 
Change
 
2015
 
2014
 
Change
 
(Dollars in Thousands)
Revenues
$
545,965

 
$
596,439


$
(50,474
)

$
2,459,164

 
$
2,601,703


$
(142,539
)
Less: Fuel and purchased power expense
101,561

 
166,077

 
(64,516
)
 
561,065

 
705,450

 
(144,385
)
 SPP network transmission costs
57,392

 
55,713

 
1,679

 
229,043

 
218,924

 
10,119

Gross Margin
$
387,012

 
$
374,649


$
12,363


$
1,669,056

 
$
1,677,329


$
(8,273
)
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
$
387,012

 
$
374,649

 
$
12,363

 
$
1,669,056

 
$
1,677,329

 
$
(8,273
)
Less: Operating and maintenance expense
82,026

 
89,347

 
(7,321
)
 
330,289

 
367,188

 
(36,899
)
Depreciation and amortization expense
82,062

 
73,172

 
8,890

 
310,591

 
286,442

 
24,149

Selling, general and administrative expense
70,711

 
70,807

 
(96
)
 
250,278

 
250,439

 
(161
)
Taxes other than income tax
43,854

 
36,054

 
7,800

 
156,901

 
140,302

 
16,599

Income from operations
$
108,359

 
$
105,269


$
3,090


$
620,997

 
$
632,958


$
(11,961
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2015 should be read in conjunction with this financial information.
Page 11




2016 Earnings Guidance

2016 EPS guidance range                                    $2.38 - $2.53

2016 Drivers:
•
Retail MWh sales up ≈50 bp
•
Normal weather
•
Modest price adjustments
◦
$78 million annual general rate increase effective October 28, 2015
◦
≈$22 million transmission margin
▪
FERC TFR and companion TDC, net of increase in SPP expenses
▪
Assumes 10.3% ROE (9.8% base + 0.5% RTO adder)
◦
≈$3 million for balance of 2015 ECRR rolled into base rates (5 months)
•
Combined O&M and SG&A expenses will be flat
◦
≈6% increase top line operating expense excluding fuel and depreciation
•
COLI proceeds ≈$16 million
•
Equity AFUDC increase ≈$10 million
•
Depreciation increase ≈$31 million
•
Effective tax rate 35-37%
•
Interest expense decrease ≈$5 million
•
Financing:
◦
No sale of additional equity
▪
Yearend average annual shares outstanding 142 million
◦
Debt issuance included in interest expense guidance


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, 2015 (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




Page 13





Page 14

WESTAR ENERGY INC /KS Reports