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

Attached files

file	filename
EX-99.4 - EXHIBIT 99.4 - WESTAR ENERGY INC /KS	a20171031ex994.htm
EX-99.3 - EXHIBIT 99.3 - WESTAR ENERGY INC /KS	a20171031ex993.htm
EX-99.1 - EXHIBIT 99.1 - WESTAR ENERGY INC /KS	wr-09302017x8xkexhibit991.htm
8-K - 8-K - WESTAR ENERGY INC /KS	wr-09302017xearningsreleas.htm

Exhibit 99.2

Westar Energy, Inc.

Third Quarter 2017 Earnings

Released October 31, 2017



Contents	Page

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

Cody VandeVelde

Director Investor Relations

785-575-8227

Cody.VandeVelde@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, 2017 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.

Condensed Consolidated Statements of Income

(Unaudited)



	Three Months Ended September 30,
	2017			2016			Change			% Change
	(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
Residential	$	278,138		$	282,272		$	(4,134	)	(1.5	)
Commercial	219,414			218,377			1,037			0.5
Industrial	117,721			106,021			11,700			11.0
Other retail	149			7,883			(7,734		)	(98.1	)
Total Retail Revenues	615,422			614,553			869			0.1
Wholesale	102,113			86,421			15,692			18.2
Transmission	69,504			58,462			11,042			18.9
Other	7,288			5,218			2,070			39.7
Total Revenues	794,327			764,654			29,673			3.9
OPERATING EXPENSES:
Fuel and purchased power	189,804			155,673			34,131			21.9
SPP network transmission costs	62,578			57,939			4,639			8.0
Operating and maintenance	79,856			86,758			(6,902		)	(8.0	)
Depreciation and amortization	94,668			84,972			9,696			11.4
Selling, general and administrative	65,630			60,582			5,048			8.3
Taxes other than income tax	41,815			48,154			(6,339		)	(13.2	)
Total Operating Expenses	534,351			494,078			40,273			8.2
INCOME FROM OPERATIONS	259,976			270,576			(10,600		)	(3.9	)
OTHER INCOME (EXPENSE):
Investment earnings	2,593			2,619			(26		)	(1.0	)
Other income	3,849			13,353			(9,504		)	(71.2	)
Other expense	(6,493		)	(5,887		)	(606		)	(10.3	)
Total Other (Expense) Income	(51		)	10,085			(10,136		)	(100.5	)
Interest expense	43,458			40,897			2,561			6.3
INCOME BEFORE INCOME TAXES	216,467			239,764			(23,297		)	(9.7	)
Income tax expense	55,743			81,211			(25,468		)	(31.4	)
NET INCOME	160,724			158,553			2,171			1.4
Less: Net income attributable to noncontrolling interests	2,418			3,833			(1,415		)	(36.9	)
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.	$	158,306		$	154,720		$	3,586		2.3
BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
Basic earnings per common share	$	1.11		$	1.09		$	0.02		1.8
Diluted earnings per common share	$	1.11		$	1.08		$	0.03		2.8
AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
Basic	142,473			142,091			382			0.3
Diluted	142,516			142,578			(62		)	—
DIVIDENDS DECLARED PER COMMON SHARE	$	0.40		$	0.38		$	0.02		5.3
Effective income tax rate	26		%	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, 2017 should be read in conjunction with this financial information.

Page 1

Westar Energy, Inc.

Condensed Consolidated Statements of Income

(Unaudited)



	Nine Months Ended September 30,
	2017			2016			Change			% Change
	(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
Residential	$	642,449		$	664,400		$	(21,951	)	(3.3	)
Commercial	557,232			572,247			(15,015		)	(2.6	)
Industrial	324,227			314,723			9,504			3.0
Other retail	(22,293		)	(23,002		)	709			3.1
Total Retail Revenues	1,501,615			1,528,368			(26,753		)	(1.8	)
Wholesale	242,524			220,520			22,004			10.0
Transmission	209,097			188,996			20,101			10.6
Other	22,986			17,668			5,318			30.1
Total Revenues	1,976,222			1,955,552			20,670			1.1
OPERATING EXPENSES:
Fuel and purchased power	415,449			374,361			41,088			11.0
SPP network transmission costs	185,015			173,925			11,090			6.4
Operating and maintenance	248,211			250,135			(1,924		)	(0.8	)
Depreciation and amortization	277,322			252,838			24,484			9.7
Selling, general and administrative	182,367			192,762			(10,395		)	(5.4	)
Taxes other than income tax	126,421			145,529			(19,108		)	(13.1	)
Total Operating Expenses	1,434,785			1,389,550			45,235			3.3
INCOME FROM OPERATIONS	541,437			566,002			(24,565		)	(4.3	)
OTHER INCOME (EXPENSE):
Investment earnings	8,384			6,916			1,468			21.2
Other income	5,672			26,212			(20,540		)	(78.4	)
Other expense	(14,457		)	(14,338		)	(119		)	(0.8	)
Total Other (Expense) Income	(401		)	18,790			(19,191		)	(102.1	)
Interest expense	128,232			121,011			7,221			6.0
INCOME BEFORE INCOME TAXES	412,804			463,781			(50,977		)	(11.0	)
Income tax expense	112,559			160,376			(47,817		)	(29.8	)
NET INCOME	300,245			303,405			(3,160		)	(1.0	)
Less: Net income attributable to noncontrolling interests	10,213			10,760			(547		)	(5.1	)
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.	$	290,032		$	292,645		$	(2,613	)	(0.9	)
BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
Basic earnings per common share	$	2.03		$	2.06		$	(0.03	)	(1.5	)
Diluted earnings per common share	$	2.03		$	2.05		$	(0.02	)	(1.0	)
AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
Basic	142,459			142,039			420			0.3
Diluted	142,496			142,413			83			0.1
DIVIDENDS DECLARED PER COMMON SHARE	$	1.20		$	1.14		$	0.06		5.3
Effective income tax rate	27		%	35		%

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

for the period ended September 30, 2017 should be read in conjunction with this financial information.

Page 2

Westar Energy, Inc.

Condensed Consolidated Balance Sheets

(Dollars in Thousands, Except Par Values)

(Unaudited)



	September 30, 2017			December 31, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	3,388		$	3,066
Accounts receivable, net of allowance for doubtful accounts of $4,658 and $6,667, respectively	308,275			288,579
Fuel inventory and supplies	285,074			300,125
Taxes receivable	—			13,000
Prepaid expenses	15,781			16,528
Regulatory assets	94,777			117,383
Other	25,754			29,701
Total Current Assets	733,049			768,382
PROPERTY, PLANT AND EQUIPMENT, NET	9,494,023			9,248,359
PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET	178,058			257,904
OTHER ASSETS:
Regulatory assets	748,934			762,479
Nuclear decommissioning trust	229,927			200,122
Other	241,384			249,828
Total Other Assets	1,220,245			1,212,429
TOTAL ASSETS	$	11,625,375		$	11,487,074
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	—		$	125,000
Current maturities of long-term debt of variable interest entities	28,534			26,842
Short-term debt	189,100			366,700
Accounts payable	147,933			220,522
Accrued dividends	53,770			52,885
Accrued taxes	114,317			85,729
Accrued interest	64,851			72,519
Regulatory liabilities	14,068			15,760
Other	74,273			81,236
Total Current Liabilities	686,846			1,047,193
LONG-TERM LIABILITIES:
Long-term debt, net	3,686,852			3,388,670
Long-term debt of variable interest entities, net	81,433			111,209
Deferred income taxes	1,866,583			1,752,776
Unamortized investment tax credits	208,597			210,654
Regulatory liabilities	237,065			223,693
Accrued employee benefits	497,298			512,412
Asset retirement obligations	397,505			323,951
Other	84,296			83,326
Total Long-Term Liabilities	7,059,629			6,606,691
COMMITMENTS AND CONTINGENCIES (See 10-Q Notes 11 and 13)
EQUITY:
Westar Energy, Inc. Shareholders’ Equity:
Common stock, par value $5 per share; authorized 275,000,000 shares; issued and outstanding 142,094,176 shares and 141,791,153 shares, respective to each date	710,471			708,956
Paid-in capital	2,022,072			2,018,317
Retained earnings	1,196,460			1,078,602
Total Westar Energy, Inc. Shareholders’ Equity	3,929,003			3,805,875
Noncontrolling Interests	(50,103		)	27,315
Total Equity	3,878,900			3,833,190
TOTAL LIABILITIES AND EQUITY	$	11,625,375		$	11,487,074

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

for the period ended September 30, 2017 should be read in conjunction with this financial information.

Page 3

Westar Energy, Inc.

Condensed Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)



	Nine Months Ended September 30,
	2017			2016
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income	$	300,245		$	303,405
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	277,322			252,838
Amortization of nuclear fuel	24,150			22,518
Amortization of deferred regulatory gain from sale leaseback	(4,121		)	(4,121		)
Gain on lease modification	(3,500		)	—
Amortization of corporate-owned life insurance	15,744			13,779
Non-cash compensation	6,777			7,025
Net deferred income taxes and credits	126,986			160,429
Allowance for equity funds used during construction	(1,094		)	(7,894		)
Changes in working capital items:
Accounts receivable	(19,696		)	(64,100		)
Fuel inventory and supplies	15,515			11,680
Prepaid expenses and other current assets	61,287			(385		)
Accounts payable	(10,044		)	9,736
Accrued taxes	35,631			40,711
Other current liabilities	(108,503		)	(61,879		)
Changes in other assets	20,085			(4,377		)
Changes in other liabilities	5,538			13,208
Cash Flows from Operating Activities	742,322			692,573
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Additions to property, plant and equipment	(564,622		)	(821,936		)
Purchase of securities - trusts	(15,262		)	(43,252		)
Sale of securities - trusts	15,896			44,326
Investment in corporate-owned life insurance	(13,875		)	(14,648		)
Proceeds from investment in corporate-owned life insurance	265			24,242
Investment in affiliated company	—			(655		)
Other investing activities	(3,411		)	(3,095		)
Cash Flows used in Investing Activities	(581,009		)	(815,018		)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Short-term debt, net	(177,732		)	(67,402		)
Proceeds from long-term debt	296,215			396,472
Proceeds from long-term debt of variable interest entities	—			162,048
Retirements of long-term debt	(125,000		)	(50,000		)
Retirements of long-term debt of variable interest entities	(26,840		)	(190,357		)
Repayment of capital leases	(2,592		)	(2,327		)
Borrowings against cash surrender value of corporate-owned life insurance	53,422			55,952
Repayment of borrowings against cash surrender value of corporate-owned life insurance	—			(22,921		)
Issuance of common stock	659			2,003
Distributions to shareholders of noncontrolling interests	(5,760		)	(2,551		)
Cash dividends paid	(166,340		)	(152,787		)
Other financing activities	(7,023		)	(4,979		)
Cash Flows (used in) from Financing Activities	(160,991		)	123,151
NET INCREASE IN CASH AND CASH EQUIVALENTS	322			706
CASH AND CASH EQUIVALENTS:
Beginning of period	3,066			3,231
End of period	$	3,388		$	3,937

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

for the period ended September 30, 2017 should be read in conjunction with this financial information.

Page 4

Westar Energy, Inc.

3rd Quarter 2017 vs. 2016

Earnings Variances

Change

($ per share)

(Dollars in Thousands)

($ per share)

September 30, 2016 basic earnings attributable to common stock

154,720

1.09

Favorable/(Unfavorable)

Gross Margin

(9,097

)

Operating and maintenance

6,902

Depreciation and amortization

(9,696

)

Selling, general and administrative

(5,048

)

Taxes other than income tax

6,339

Other income (expense)

(10,136

)

Interest expense

(2,561

)

Income tax expense

25,468

Net income attributable to noncontrolling interests

1,415

Change in shares outstanding

(0.01

)

September 30, 2017 basic earnings attributable to common stock

158,306

1.11

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

Due primarily to lower residential and commercial sales primarily attributable to mild weather; partially offset by increase in industrial sales

Due primarily to: decrease in distribution operations and maintenance expense due primarily to executing vegetation management strategy earlier in 2017 -- $5.5M; decrease in nuclear operating and maintenance costs -- $1.7M; decrease in steam generation operating and maintenance costs -- $1.5; partially offset by higher operating expense due to start of Western Plains Wind Farm -- ($2.4M)

Due principally to property additions at Western Plains Wind Farm in March 2017

Due primarily to: increase in merger-related expense -- ($5.9M); partially offset by decrease in outside services -- $1.8M

Due primarily to decreased property tax amortization expense that is largely offset by decreased prices --

$6.3M

Due primarily to: lower COLI benefit -- ($10.1M); a decrease in equity AFUDC -- ($2.3M); partially offset by deconsolidation of the trust holding our 8% interest in JEC -- $3.5M

Due primarily to: a decrease in debt AFUDC -- ($1.3M)

Due primarily to a reduction in income tax expense from lower income before income tax -- $9.2M, a favorable deferred tax true-up -- $7.6M, and production tax credits from Western Plains Wind Farm - $5.1M

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

for the period ended September 30, 2017 should be read in conjunction with this financial information.

Page 5

Westar Energy, Inc.

YTD September 2017 vs. 2016

Earnings Variances

Change

($ per share)

(Dollars in Thousands)

($ per share)

September 30, 2016 basic earnings attributable to common stock

292,645

2.06

Favorable/(Unfavorable)

Gross Margin

(31,508

)

Operating and maintenance

1,924

Depreciation and amortization

(24,484

)

Selling, general and administrative

10,395

Taxes other than income tax

19,108

Other income (expense)

(19,191

)

Interest expense

(7,221

)

Income tax expense

47,817

Net income attributable to noncontrolling interests

547

Change in shares outstanding

(0.01

)

September 30, 2017 basic earnings attributable to common stock

290,032

2.03

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

Due primarily to lower residential and commercial sales primarily attributable to mild weather; partially offset by increase in industrial sales

Due primarily to: a decrease in nuclear operating and maintenance costs due primarily to receipt of proceeds from a legal settlement at Wolf Creek -- $7.7M; decrease in distribution operating and maintenance costs -- $1.8M; partially offset by higher operating expense due to start of Western Plains Wind Farm -- ($6.3M); and higher operating and maintenance costs for steam generation -- ($1.6M)

Due principally to property additions at Western Plains Wind Farm in March 2017

Due primarily to: a decrease in outside services -- $5.0M; a decrease in employee benefit costs attributable partially to having fewer employees -- $2.0M; and a decrease in merger-related expense -- $1.2M

Due primarily to decreased property tax amortization expense that is largely offset by decreased prices --

$18.9M

Due primarily to: lower COLI benefit -- ($16.7M); a decrease in equity AFUDC -- ($6.8M); partially offset by deconsolidation of the trust holding our 8% interest in JEC -- $3.5

Due primarily to: an increase in interest expense of long-term debt primarily from the issuances of FMBs during March 2017 -- ($5.1M); and a decrease in debt AFUDC -- ($2.9M)

Due primarily to a reduction in income tax expense from lower income before income tax -- $20.1M, production tax credits from Western Plains Wind Farm - $16.6M, and a favorable deferred tax true-up -- $7.6M

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

for the period ended September 30, 2017 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,
	2017			2016			Change			% Change
Revenues	(Dollars In Thousands)
Residential	$	278,138		$	282,272		$	(4,134	)	(1.5	)
Commercial	219,414			218,377			1,037			0.5
Industrial	117,721			106,021			11,700			11.0
Other retail	2,997			3,908			(911		)	(23.3	)
Provision for rate refunds	(2,848		)	3,975			(6,823		)	(171.6	)
Total Retail Revenues	615,422			614,553			869			0.1
Tariff-based wholesale	67,601			70,923			(3,322		)	(4.7	)
Market-based wholesale	34,512			15,498			19,014			122.7
Transmission	69,504			58,462			11,042			18.9
Other	7,288			5,218			2,070			39.7
Total Revenues	$	794,327		$	764,654		$	29,673		3.9


Electricity Sales	(Thousands of MWh)
Residential	2,081			2,209			(128		)	(5.8	)
Commercial	2,156			2,230			(74		)	(3.3	)
Industrial	1,563			1,444			119			8.2
Other retail	12			19			(7		)	(36.8	)
Total Retail	5,812			5,902			(90		)	(1.5	)
Tariff-based wholesale	1,284			1,380			(96		)	(7.0	)
Market-based wholesale	1,844			1,009			835			82.8
Total wholesale	3,128			2,389			739			30.9
Total Electricity Sales	8,940			8,291			649			7.8

	(Dollars per MWh)
Total retail	$	105.89		$	104.13		$	1.76		1.7
Tariff-based wholesale	$	52.65		$	51.39		$	1.26		2.5
Market-based wholesale	$	18.72		$	15.36		$	3.36		21.9


Fuel and Purchased Power	(Dollars In Thousands)
Fuel used for generation	$	131,635		$	131,390		$	245		0.2
Purchased power	49,517			43,676			5,841			13.4
Subtotal	181,152			175,066			6,086			3.5
RECA recovery and other	8,652			(19,393		)	28,045			144.6
Total fuel and purchased power expense	$	189,804		$	155,673		$	34,131		21.9

Electricity Supply	(Thousands of MWh)
Generated - Gas	633			631			2			0.3
Coal	4,959			5,254			(295		)	(5.6	)
Nuclear	1,244			840			404			48.1
Wind	294			84			210			250.0
Subtotal electricity generated	7,130			6,809			321			4.7
Purchased	1,956			1,673			283			16.9
Total Electricity Supply	9,086			8,482			604			7.1

	(Dollars per MWh)
Average cost of fuel used for generation	$	18.46		$	19.30		$	(0.84	)	(4.4	)
Average cost of purchased power	$	25.32		$	26.11		$	(0.79	)	(3.0	)
Average cost of fuel and purchased power	$	19.94		$	20.64		$	(0.70	)	(3.4	)


Degree Days				2016/
	2017			20 yr Avg			Change			% Change
Cooling
Actual compared to last year	1,138			1,285			(147		)	(11.4	)
Actual compared to 20 year average	1,138			1,123			15			1.3
Heating
Actual compared to last year	6			15			(9		)	(60.0	)
Actual compared to 20 year average	6			44			(38		)	(86.4	)

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

for the period ended September 30, 2017 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,
	2017			2016			Change			% Change
Revenues	(Dollars In Thousands)
Residential	$	642,449		$	664,400		$	(21,951	)	(3.3	)
Commercial	557,232			572,247			(15,015		)	(2.6	)
Industrial	324,227			314,723			9,504			3.0
Other retail	12,638			11,761			877			7.5
Provision for rate refunds	(34,931		)	(34,763		)	(168		)	(0.5	)
Total Retail Revenues	1,501,615			1,528,368			(26,753		)	(1.8	)
Tariff-based wholesale	178,154			186,203			(8,049		)	(4.3	)
Market-based wholesale	64,370			34,317			30,053			87.6
Transmission	209,097			188,996			20,101			10.6
Other	22,986			17,668			5,318			30.1
Total Revenues	$	1,976,222		$	1,955,552		$	20,670		1.1


Electricity Sales	(Thousands of MWh)
Residential	4,828			5,097			(269		)	(5.3	)
Commercial	5,588			5,763			(175		)	(3.0	)
Industrial	4,319			4,137			182			4.4
Other retail	56			60			(4		)	(6.7	)
Total Retail	14,791			15,057			(266		)	(1.8	)
Tariff-based wholesale	3,085			3,290			(205		)	(6.2	)
Market-based wholesale	4,527			2,670			1,857			69.6
Total wholesale	7,612			5,960			1,652			27.7
Total Electricity Sales	22,403			21,017			1,386			6.6

	(Dollars per MWh)
Total retail	$	101.52		$	101.51		$	0.01		—
Tariff-based wholesale	$	57.75		$	56.60		$	1.15		2.0
Market-based wholesale	$	14.22		$	12.85		$	1.37		10.7


Fuel and Purchased Power	(Dollars In Thousands)
Fuel used for generation	$	301,077		$	305,008		$	(3,931	)	(1.3	)
Purchased power	135,784			116,577			19,207			16.5
Subtotal	436,861			421,585			15,276			3.6
RECA recovery and other	(21,412		)	(47,224		)	25,812			54.7
Total fuel and purchased power expense	$	415,449		$	374,361		$	41,088		11.0

Electricity Supply	(Thousands of MWh)
Generated - Gas	1,327			1,328			(1		)	(0.1	)
Coal	11,383			11,915			(532		)	(4.5	)
Nuclear	3,734			3,334			400			12.0
Wind	990			306			684			223.5
Subtotal electricity generated	17,434			16,883			551			3.3
Purchased	5,765			4,683			1,082			23.1
Total Electricity Supply	23,199			21,566			1,633			7.6

	(Dollars per MWh)
Average cost of fuel used for generation	$	17.27		$	18.07		$	(0.80	)	(4.4	)
Average cost of purchased power	$	23.55		$	24.89		$	(1.34	)	(5.4	)
Average cost of fuel and purchased power	$	18.83		$	19.55		$	(0.72	)	(3.7	)


Degree Days				2016/
	2017			20 yr Avg			Change			% Change
Cooling
Actual compared to last year	1,660			1,882			(222		)	(11.8	)
Actual compared to 20 year average	1,660			1,583			77			4.9
Heating
Actual compared to last year	2,216			2,383			(167		)	(7.0	)
Actual compared to 20 year average	2,216			2,860			(644		)	(22.5	)

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

for the period ended September 30, 2017 should be read in conjunction with this financial information.

Page 8

Westar Energy, Inc.



Capitalization
		September 30, 2017					December 31, 2016
		(Dollars in Thousands)
Current maturities of long-term debt		$	—				$	125,000
Current maturities of long-term debt of VIEs		28,534					26,842
Long-term debt, net		3,686,852					3,388,670
Long-term debt of variable interest entities, net		81,433					111,209
Total long-term debt		3,796,819			49.5	%	3,651,721			48.8	%
Common equity		3,929,003			51.2	%	3,805,875			50.8	%
Noncontrolling interests		(50,103		)	(0.7	)%	27,315			0.4	%
Total capitalization		$	7,675,719		100.0	%	$	7,484,911		100.0	%

GAAP Book value per share		$	27.65				$	26.84
Period end shares outstanding (in thousands)		142,094					141,791

Outstanding Long-Term Debt

	CUSIP	September 30, 2017					December 31, 2016
Westar Energy:		(Dollars in Thousands)
First Mortgage Bond series:
5.15% Series due January 2017	95709TAB6	$	—				$	125,000
5.10% Series due July 2020	95709TAD2	250,000					250,000
3.25% Series due December 2025	95709TAL4	250,000					250,000
2.55% Series due June 2026	95709TAN0	350,000					350,000
3.10% Series due April 2027	95709TAP5	300,000					—
4.125% Series due March 2042	95709TAH3	550,000					550,000
4.10% Series due April 2043	95709TAJ9	430,000					430,000
4.625% Series due September 2043	95709TAK6	250,000					250,000
4.25% Series due December 2045	95709TAM2	300,000					300,000
		2,680,000					2,505,000
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		2,755,500					2,580,500

KGE
First mortgage bond series:
6.70% Series due June 2019	485260BL6	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
2.50% Series due June 2031	N/A	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		3,726,940					3,551,940
Unamortized debt discount		(11,082		)			(10,358		)
Unamortized debt issuance expense		(29,006		)			(27,912		)
Long-term debt due within one year		—					(125,000		)
Total long-term debt, net		$	3,686,852				$	3,388,670

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

for the period ended September 30, 2017 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.

The calculations of gross margin for the three and nine months ended September 30, 2017 and 2016 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 September 30,							Nine Months Ended September 30,
	2017		2016		Change			2017		2016		Change
	(Dollars in Thousands)
Revenues	$	794,327	$	764,654	$	29,673		$	1,976,222	$	1,955,552	$	20,670
Less: Fuel and purchased power expense	189,804		155,673		34,131			415,449		374,361		41,088
SPP network transmission costs	62,578		57,939		4,639			185,015		173,925		11,090
Gross margin	$	541,945	$	551,042	$	(9,097	)	$	1,375,758	$	1,407,266	$	(31,508	)

Income from operations	$	259,976	$	270,576	$	(10,600	)	$	541,437	$	566,002	$	(24,565	)
Plus: Operating and maintenance expense	79,856		86,758		(6,902		)	248,211		250,135		(1,924		)
Depreciation and amortization expense	94,668		84,972		9,696			277,322		252,838		24,484
Selling, general and administrative expense	65,630		60,582		5,048			182,367		192,762		(10,395		)
Taxes other than income tax	41,815		48,154		(6,339		)	126,421		145,529		(19,108		)
Gross margin	$	541,945	$	551,042	$	(9,097	)	$	1,375,758	$	1,407,266	$	(31,508	)

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

for the period ended September 30, 2017 should be read in conjunction with this financial information.

Page 10

WESTAR ENERGY INC /KS - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - October 31, 2017

Attached files

WESTAR ENERGY INC /KS Reports