Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - WESTAR ENERGY INC /KS | d8k.htm |
| EX-99.1 - PRESS RELEASE - WESTAR ENERGY INC /KS | dex991.htm |
| EX-99.3 - 2011 EARNINGS GUIDANCE - WESTAR ENERGY INC /KS | dex993.htm |
Exhibit 99.2
Westar Energy, Inc
2010 Fourth Quarter and Year-end Earnings
Released February 24, 2011
| 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 | |||
| Capital expenditures 2011-2013 |
11 | |||
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 Annual Report on Form 10-K for the period ended December 31, 2010 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, | ||||||||||||||||
| 2010 | 2009 | Change | % Change | |||||||||||||
| (In Thousands, Except Per Share Amounts) | ||||||||||||||||
| REVENUES: |
||||||||||||||||
| Residential |
$ | 130,957 | $ | 128,927 | $ | 2,030 | 1.6 | |||||||||
| Commercial |
128,170 | 119,817 | 8,353 | 7.0 | ||||||||||||
| Industrial |
75,637 | 68,332 | 7,305 | 10.7 | ||||||||||||
| Other retail |
(2,240 | ) | (196 | ) | (2,044 | ) | (a | ) | ||||||||
| Total Retail Revenues |
332,524 | 316,880 | 15,644 | 4.9 | ||||||||||||
| Wholesale |
78,804 | 86,490 | (7,686 | ) | (8.9 | ) | ||||||||||
| Transmission |
36,016 | 31,548 | 4,468 | 14.2 | ||||||||||||
| Other |
9,379 | 5,200 | 4,179 | 80.4 | ||||||||||||
| Total Revenues |
456,723 | 440,118 | 16,605 | 3.8 | ||||||||||||
| OPERATING EXPENSES: |
||||||||||||||||
| Fuel and purchased power |
124,568 | 132,242 | (7,674 | ) | (5.8 | ) | ||||||||||
| Operating and maintenance |
150,825 | 124,658 | 26,167 | 21.0 | ||||||||||||
| Depreciation and amortization |
69,982 | 64,990 | 4,992 | 7.7 | ||||||||||||
| Selling, general and administrative |
63,108 | 56,421 | 6,687 | 11.9 | ||||||||||||
| Total Operating Expenses |
408,483 | 378,311 | 30,172 | 8.0 | ||||||||||||
| INCOME FROM OPERATIONS |
48,240 | 61,807 | (13,567 | ) | (22.0 | ) | ||||||||||
| OTHER INCOME (EXPENSE): |
||||||||||||||||
| Investment income |
2,676 | 4,143 | (1,467 | ) | (35.4 | ) | ||||||||||
| Other income |
1,577 | 1,501 | 76 | 5.1 | ||||||||||||
| Other expense |
(4,611 | ) | (5,747 | ) | 1,136 | 19.8 | ||||||||||
| Total Other Expense |
(358 | ) | (103 | ) | (255 | ) | (247.6 | ) | ||||||||
| Interest expense |
43,080 | 40,591 | 2,489 | 6.1 | ||||||||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
4,802 | 21,113 | (16,311 | ) | (77.3 | ) | ||||||||||
| Income tax (benefit) expense |
(1,748 | ) | 10,496 | (12,244 | ) | (116.7 | ) | |||||||||
| INCOME FROM CONTINUING OPERATIONS |
6,550 | 10,617 | (4,067 | ) | (38.3 | ) | ||||||||||
| Results of discontinued operations, net of tax |
— | 767 | (767 | ) | (100.0 | ) | ||||||||||
| NET INCOME |
6,550 | 11,384 | (4,834 | ) | (42.5 | ) | ||||||||||
| Less: Net income attributable to nonontrolling interests |
1,389 | — | 1,389 | (a | ) | |||||||||||
| NET INCOME ATTRIBUTABLE TO WESTAR ENERGY |
5,161 | 11,384 | (6,223 | ) | (54.7 | ) | ||||||||||
| Preferred dividends |
242 | 242 | — | — | ||||||||||||
| NET INCOME ATTRIBUTABLE TO COMMON STOCK |
$ | 4,919 | $ | 11,142 | $ | (6,223 | ) | (55.9 | ) | |||||||
| BASIC EARNINGS PER COMMON SHARE: |
||||||||||||||||
| Earnings available from continuing operations |
$ | 0.04 | $ | 0.09 | $ | (0.05 | ) | (55.6 | ) | |||||||
| Discontinued operations, net of tax |
— | 0.01 | (0.01 | ) | (100.0 | ) | ||||||||||
| Earnings per common share |
$ | 0.04 | $ | 0.10 | $ | (0.06 | ) | (60.0 | ) | |||||||
| Average equivalent common shares outstanding (in thousands) |
112,348 | 109,960 | 2,388 | 2.2 | ||||||||||||
| DIVIDENDS DECLARED PER COMMON SHARE |
$ | 0.31 | $ | 0.30 | $ | 0.01 | 3.3 | |||||||||
| (a) | Change greater than 1000% |
The Notes to the Condensed Consolidated Financial Statements in the company’s Annual Report on Form 10-K
for the period ended December 31, 2010 should be read in conjunction with this financial information.
Westar Energy, Inc.
Consolidated Statements of Income
(Unaudited)
| Twelve Months Ended December 31, | ||||||||||||||||
| 2010 | 2009 | Change | % Change | |||||||||||||
| (In Thousands, Except Per Share Amounts) | ||||||||||||||||
| REVENUES: |
||||||||||||||||
| Residential |
$ | 661,177 | $ | 576,896 | $ | 84,281 | 14.6 | |||||||||
| Commercial |
572,062 | 529,847 | 42,215 | 8.0 | ||||||||||||
| Industrial |
318,249 | 291,754 | 26,495 | 9.1 | ||||||||||||
| Other retail |
(12,703 | ) | (18,516 | ) | 5,813 | 31.4 | ||||||||||
| Total Retail Revenues |
1,538,785 | 1,379,981 | 158,804 | 11.5 | ||||||||||||
| Wholesale |
334,669 | 308,269 | 26,400 | 8.6 | ||||||||||||
| Transmission |
144,513 | 132,450 | 12,063 | 9.1 | ||||||||||||
| Other |
38,204 | 37,531 | 673 | 1.8 | ||||||||||||
| Total Revenues |
2,056,171 | 1,858,231 | 197,940 | 10.7 | ||||||||||||
| OPERATING EXPENSES: |
||||||||||||||||
| Fuel and purchased power |
583,361 | 534,864 | 48,497 | 9.1 | ||||||||||||
| Operating and maintenance |
520,409 | 516,930 | 3,479 | 0.7 | ||||||||||||
| Depreciation and amortization |
271,937 | 251,534 | 20,403 | 8.1 | ||||||||||||
| Selling, general and administrative |
207,607 | 199,961 | 7,646 | 3.8 | ||||||||||||
| Total Operating Expenses |
1,583,314 | 1,503,289 | 80,025 | 5.3 | ||||||||||||
| INCOME FROM OPERATIONS |
472,857 | 354,942 | 117,915 | 33.2 | ||||||||||||
| OTHER INCOME (EXPENSE): |
||||||||||||||||
| Investment income |
7,026 | 12,658 | (5,632 | ) | (44.5 | ) | ||||||||||
| Other income |
5,369 | 7,128 | (1,759 | ) | (24.7 | ) | ||||||||||
| Other expense |
(16,655 | ) | (17,188 | ) | 533 | 3.1 | ||||||||||
| Total Other (Expense) Income |
(4,260 | ) | 2,598 | (6,858 | ) | (264.0 | ) | |||||||||
| Interest expense |
174,941 | 157,360 | 17,581 | 11.2 | ||||||||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
293,656 | 200,180 | 93,476 | 46.7 | ||||||||||||
| Income tax expense |
85,032 | 58,850 | 26,182 | 44.5 | ||||||||||||
| INCOME FROM CONTINUING OPERATIONS |
208,624 | 141,330 | 67,294 | 47.6 | ||||||||||||
| Results of discontinued operations, net of tax |
— | 33,745 | (33,745 | ) | (100.0 | ) | ||||||||||
| NET INCOME |
208,624 | 175,075 | 33,549 | 19.2 | ||||||||||||
| Less: Net income attributable to nonontrolling interests |
4,728 | — | 4,728 | (a | ) | |||||||||||
| NET INCOME ATTRIBUTABLE TO WESTAR ENERGY |
203,896 | 175,075 | 28,821 | 16.5 | ||||||||||||
| Preferred dividends |
970 | 970 | — | — | ||||||||||||
| NET INCOME ATTRIBUTABLE TO COMMON STOCK |
$ | 202,926 | $ | 174,105 | $ | 28,821 | 16.6 | |||||||||
| BASIC EARNINGS PER COMMON SHARE: |
||||||||||||||||
| Earnings available from continuing operations |
$ | 1.81 | $ | 1.28 | $ | 0.53 | 41.4 | |||||||||
| Discontinued operations, net of tax |
— | 0.30 | (0.30 | ) | (100.0 | ) | ||||||||||
| Earnings per common share |
$ | 1.81 | $ | 1.58 | $ | 0.23 | 14.6 | |||||||||
| Average equivalent common shares outstanding (in thousands) |
111,629 | 109,648 | 1,981 | 1.8 | ||||||||||||
| DIVIDENDS DECLARED PER COMMON SHARE |
$ | 1.24 | $ | 1.20 | $ | 0.04 | 3.3 | |||||||||
| (a) | Change greater than 1000% |
The Notes to the Condensed Consolidated Financial Statements in the company’s Annual Report on Form 10-K
for the period ended December 31, 2010 should be read in conjunction with this financial information.
Westar Energy, Inc.
Consolidated Balance Sheets
(Dollars in Thousands, except par values)
(Unaudited)
| December 31, 2010 |
December 31, 2009 |
|||||||
| ASSETS | ||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 928 | $ | 3,860 | ||||
| Accounts receivable, net |
227,700 | 216,186 | ||||||
| Inventories and supplies, net |
206,867 | 193,831 | ||||||
| Energy marketing contracts |
13,005 | 33,159 | ||||||
| Taxes receivable |
16,679 | 45,200 | ||||||
| Deferred tax assets |
30,248 | 7,927 | ||||||
| Prepaid expenses |
12,413 | 11,830 | ||||||
| Regulatory assets |
73,480 | 97,220 | ||||||
| Other |
20,289 | 20,269 | ||||||
| Total Current Assets |
601,609 | 629,482 | ||||||
| PROPERTY, PLANT AND EQUIPMENT, NET |
5,964,439 | 5,771,740 | ||||||
| PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET |
345,037 | — | ||||||
| OTHER ASSETS: |
||||||||
| Regulatory assets |
787,585 | 758,538 | ||||||
| Nuclear decommissioning trust |
126,990 | 112,268 | ||||||
| Energy marketing contracts |
9,472 | 10,653 | ||||||
| Other |
244,506 | 242,802 | ||||||
| Total Other Assets |
1,168,553 | 1,124,261 | ||||||
| TOTAL ASSETS |
$ | 8,079,638 | $ | 7,525,483 | ||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES: |
||||||||
| Current maturities of long-term debt |
$ | 61 | $ | 1,345 | ||||
| Current maturities of long-term debt of variable interest entities |
30,155 | — | ||||||
| Short-term debt |
226,700 | 242,760 | ||||||
| Accounts payable |
187,954 | 112,211 | ||||||
| Accrued taxes |
45,534 | 46,931 | ||||||
| Energy marketing contracts |
9,670 | 39,161 | ||||||
| Accrued interest |
77,771 | 76,955 | ||||||
| Regulatory liabilities |
28,284 | 39,745 | ||||||
| Other |
176,717 | 123,370 | ||||||
| Total Current Liabilities |
782,846 | 682,478 | ||||||
| LONG-TERM LIABILITIES: |
||||||||
| Long-term debt, net |
2,490,871 | 2,490,734 | ||||||
| Long-term debt of variable interest entities, net |
278,162 | — | ||||||
| Obligation under capital leases |
7,514 | 109,300 | ||||||
| Deferred income taxes |
1,102,625 | 964,461 | ||||||
| Unamortized investment tax credits |
101,345 | 127,777 | ||||||
| Regulatory liabilities |
135,754 | 100,963 | ||||||
| Deferred regulatory gain from sale-leaseback |
97,541 | 108,532 | ||||||
| Accrued employee benefits |
483,769 | 433,561 | ||||||
| Asset retirement obligations |
125,999 | 119,519 | ||||||
| Energy marketing contracts |
10 | 210 | ||||||
| Other |
59,364 | 117,720 | ||||||
| Total Long-Term Liabilities |
4,882,954 | 4,572,777 | ||||||
| COMMITMENTS AND CONTINGENCIES (See Notes 13 & 15 in Form 10-K) |
||||||||
| TEMPORARY EQUITY |
3,465 | 3,443 | ||||||
| EQUITY: |
||||||||
| Westar Energy Shareholders’ Equity: |
||||||||
| Cumulative preferred stock, par value $100 per share; authorized 600,000 shares; issued and outstanding 214,363 shares |
21,436 | 21,436 | ||||||
| Common stock, par value $5 per share; authorized 150,000,000 shares; issued and outstanding 112,128,068 and 109,072,000 shares, respectively |
560,640 | 545,360 | ||||||
| Paid-in capital |
1,398,580 | 1,339,790 | ||||||
| Retained earnings |
423,647 | 360,199 | ||||||
| Total Westar Energy Shareholders’ Equity |
2,404,303 | 2,266,785 | ||||||
| Noncontrolling Interests |
6,070 | — | ||||||
| Total Equity |
2,410,373 | 2,266,785 | ||||||
| TOTAL LIABILITIES AND EQUITY |
$ | 8,079,638 | $ | 7,525,483 | ||||
The Notes to the Condensed Consolidated Financial Statements in the company’s Annual Report on Form 10-K
for the period ended December 31, 2010 should be read in conjunction with this financial information.
Westar Energy, Inc.
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
| Twelve Months Ended December 31, | ||||||||
| 2010 | 2009 | |||||||
| CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES: |
||||||||
| Net income |
$ | 208,624 | $ | 175,075 | ||||
| Discontinued operations, net of tax |
— | (33,745 | ) | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
271,937 | 251,534 | ||||||
| Amortization of nuclear fuel |
25,089 | 16,161 | ||||||
| Amortization of deferred regulatory gain from sale-leaseback |
(5,495 | ) | (5,495 | ) | ||||
| Amortization of corporate-owned life insurance |
20,650 | 22,116 | ||||||
| Non-cash compensation |
11,373 | 5,133 | ||||||
| Net changes in energy marketing assets and liabilities |
(1,284 | ) | 8,972 | |||||
| Accrued liability to certain former officers |
2,675 | 2,296 | ||||||
| Net deferred income taxes and credits |
120,169 | 46,447 | ||||||
| Stock based compensation excess tax benefits |
(641 | ) | (448 | ) | ||||
| Allowance for equity funds used during construction |
(3,104 | ) | (5,031 | ) | ||||
| Changes in working capital items, net of acquisitions and dispositions: |
||||||||
| Accounts receivable |
(11,434 | ) | (17,159 | ) | ||||
| Inventories and supplies |
(12,266 | ) | 10,466 | |||||
| Prepaid expenses and other |
8,475 | (10,635 | ) | |||||
| Accounts payable |
30,330 | (15,115 | ) | |||||
| Accrued taxes |
27,565 | 30,493 | ||||||
| Other current liabilities |
(80,660 | ) | 13,572 | |||||
| Changes in other assets |
(42,544 | ) | 73,784 | |||||
| Changes in other liabilities |
38,243 | (89,516 | ) | |||||
| Cash flows from operating activities |
607,702 | 478,905 | ||||||
| CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES: |
||||||||
| Additions to property, plant and equipment |
(540,076 | ) | (555,637 | ) | ||||
| Investment in corporate-owned life insurance |
(19,162 | ) | (17,724 | ) | ||||
| Purchase of securities within trust funds |
(192,350 | ) | (64,016 | ) | ||||
| Sale of securities within trust funds |
191,603 | 61,096 | ||||||
| Proceeds from investment in corporate-owned life insurance |
2,204 | 1,748 | ||||||
| Proceeds from federal grants |
3,180 | — | ||||||
| Investment in affiliated company |
(280 | ) | (818 | ) | ||||
| Other investing activities |
(1,164 | ) | 2,920 | |||||
| Cash flows used in investing activities |
(556,045 | ) | (572,431 | ) | ||||
| CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES: |
||||||||
| Short-term debt, net |
(16,060 | ) | 67,860 | |||||
| Proceeds from long-term debt |
— | 347,507 | ||||||
| Retirements of long-term debt |
(1,695 | ) | (196,821 | ) | ||||
| Retirements of long-term debt of variable interest entities |
(28,610 | ) | — | |||||
| Repayment of capital leases |
(2,981 | ) | (10,190 | ) | ||||
| Borrowings against cash surrender value of corporate-owned life insurance |
74,134 | 10,299 | ||||||
| Repayment of borrowings against cash surrender value of corporate-owned life insurance |
(3,430 | ) | (3,531 | ) | ||||
| Stock based compensation excess tax benefits |
641 | 448 | ||||||
| Issuance of common stock, net |
54,651 | 4,587 | ||||||
| Distributions to shareholders of noncontrolling interests |
(2,093 | ) | — | |||||
| Cash dividends paid |
(129,146 | ) | (122,937 | ) | ||||
| Cash flows (used in) from financing activities |
(54,589 | ) | 97,222 | |||||
| CASH FLOWS USED IN INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS: |
||||||||
| Payment of settlement to former subsidiary |
— | (22,750 | ) | |||||
| Cash flow used in investing activities of discontinued operations |
— | (22,750 | ) | |||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS |
(2,932 | ) | (19,054 | ) | ||||
| CASH AND CASH EQUIVALENTS: |
||||||||
| Beginning of period |
3,860 | 22,914 | ||||||
| End of period |
$ | 928 | $ | 3,860 | ||||
The Notes to the Condensed Consolidated Financial Statements in the company’s Annual Report on Form 10-K
for the period ended December 31, 2010 should be read in conjunction with this financial information.
Westar Energy, Inc.
4th Quarter 2010 vs. 2009
Earnings Variances
| Change | ||||||||||||||||
| ($ per share) | (Dollars in thousands) | |||||||||||||||
| 2009 earnings attributable to common stock |
$ | 0.10 | $ | 11,142 | ||||||||||||
| Favorable / (Unfavorable) | ||||||||||||||||
| Retail |
15,644 | A | ||||||||||||||
| Wholesale |
(7,686 | ) | B | |||||||||||||
| Transmission |
4,468 | |||||||||||||||
| Other revenues |
4,179 | |||||||||||||||
| Fuel and purchased power |
7,674 | C | ||||||||||||||
| SPP network transmission costs |
(3,614 | ) | ||||||||||||||
| Gross Margin |
20,665 | D | ||||||||||||||
| Operating and maintenance w/o SPP NITS |
(22,553 | ) | E | VIE | ||||||||||||
| Depreciation and amortization |
(4,992 | ) | F | VIE | ||||||||||||
| Selling, general and administrative |
(6,687 | ) | G | |||||||||||||
| Other (expense) income |
(255 | ) | ||||||||||||||
| Interest expense |
(2,489 | ) | H | VIE | ||||||||||||
| Income tax expense |
12,244 | VIE | ||||||||||||||
| Discontinued operations, net of tax |
(767 | ) | ||||||||||||||
| Net income attributable to noncontrolling interests |
(1,389 | ) | VIE | |||||||||||||
| Change in shares outstanding |
0.00 | |||||||||||||||
| 2010 earnings attributable to common stock |
$ | 0.04 | $ | 4,919 | ||||||||||||
| Major factors influencing the period to period change in EPS — Favorable/(Unfavorable) | ||
| A | Due principally to price increases; MWh sales increased 0.6 percent (see page 7 for changes is sales by class) | |
| B | Due primarily to decreased demand; MWh sales decreased 14 percent and average market prices increased 6 percent | |
| C | Lower level of electricity generated and lower average unit cost of fuel and purchased power | |
| D | Due primarily to increased retail revenues driven by increases in prices | |
| E | Increase in maintenance and repair outages at power plants - ($9.1M); increased maintenance of electrical distribution system, primarily tree trimming - ($4.9M); increased ad valorem tax expense, which is largely offset in revenues via a property tax surcharge - ($4.7M); all of which were partially offset with reduction in lease expense as a result of consolidation of variable interest entities (VIEs) - $5.1M | |
| F | Higher plant balances; and consolidation of VIEs - ($1.5M) | |
| G | Increase due primarily to: higher non-executive short term incentive compensation related to performance against operational and financial targets - ($4.6M); increased expense due to adjustment to long-term incentive and share award plan - ($1.9M); increase in employee benefit costs - (2.4M); partially offset by 2009 expense related to settlement of EPA litigation - $4M | |
| H | Primarily additional interest expense as a result of consolidation of VIEs - ($2.8M) | |
| I | Lower taxable income; utilization of capital loss and effect of non-deductible EPA settlement expense | |
The Notes to the Condensed Consolidated Financial Statements in the company’s Annual Report on Form 10-K
for the period ended December 31, 2010 should be read in conjunction with this financial information.
Westar Energy, Inc.
YTD December 2010 vs. 2009
Earnings Variances
| Change | ||||||||||||||||
| ($ per share) | (Dollars in thousands) | |||||||||||||||
| 2009 earnings attributable to common stock |
$ | 1.58 | $ | 174,105 | ||||||||||||
| Favorable / (Unfavorable) | ||||||||||||||||
| Retail |
158,804 | A | ||||||||||||||
| Wholesale |
26,400 | B | ||||||||||||||
| Transmission |
12,063 | |||||||||||||||
| Other revenues |
673 | |||||||||||||||
| Fuel and purchased power |
(48,497 | ) | C | |||||||||||||
| SPP network transmission costs |
(11,048 | ) | ||||||||||||||
| Gross Margin |
138,395 | |||||||||||||||
| Operating and maintenance w/o SPP NITS |
7,569 | D | VIE | |||||||||||||
| Depreciation and amortization |
(20,403 | ) | E | VIE | ||||||||||||
| Selling, general and administrative |
(7,646 | ) | F | |||||||||||||
| Other (expense) income |
(6,858 | ) | G | |||||||||||||
| Interest expense |
(17,581 | ) | H | VIE | ||||||||||||
| Income tax expense |
(26,182 | ) | I | VIE | ||||||||||||
| Discontinued operations, net of tax |
(33,745 | ) | J | |||||||||||||
| Net income attributable to noncontrolling interests |
(4,728 | ) | VIE | |||||||||||||
| Change in shares outstanding |
(0.03 | ) | ||||||||||||||
| 2010 earnings attributable to common stock |
$ | 1.81 | $ | 202,926 | ||||||||||||
| Major factors influencing the period to period change in EPS — Favorable/(Unfavorable) | ||
| A | Reflects 6 percent increase in retail MWh sales, which benefited from favorable weather and economic improvement in industrial sales; reflects higher prices (see page 8 for changes in sales by class) | |
| B | Higher average market prices; MWh sales decreased 1 percent | |
| C | Increased electricity generated and purchased and a higher average unit cost for fuel and purchased power | |
| D | Due primarily to: higher power plant maintenance primarily at Wolf Creek and wind generation facilities - ($7.6M); higher maintenance of electrical distribution system, primarily tree trimming and line clearance - ($5.6M); decrease of lease expense as a result of consolidation of variable interest entities (VIEs) - $20.4M; and recognition of reduction to maximum liability for environmental remediation cost associated with assets divested many years ago - $5.0M | |
| E | Higher plant balances due to addition of wind generation facilities, new generating plant, air quality controls at power plants in addition to other plant additions; consolidation of VIEs - ($6.1M)
| |
| F | Higher non-executive short term incentive compensation related to performance against operational and financial targets and adjustment to long-term incentive plan - ($12.9M); partially offset with 2009 expense related to settlement of EPA litigation - $4M | |
| G | Due principally to recording lower gains on investments held in a trust to fund retirement benefits - ($3.6M); decrease in equity AFUDC - ($1.9M) | |
| H | Increased interest expense as a result of consolidation of VIEs - ($12.2M) and increased interest expense on additional debt issued in 2009 | |
| I | Due principally to increased pretax income and increase in production tax credits and VIE accounting | |
| J | Reflects tax settlement for past years related to sale of non-regulated investments | |
The Notes to the Condensed Consolidated Financial Statements in the company’s Annual Report on Form 10-K
for the period ended December 31, 2010 should be read in conjunction with this financial information.
| Westar Energy, Inc | ||||
| Supplemental Data | Revenue, Sales and Energy Supply |
| Three Months Ended December 31, | ||||||||||||||||
| 2010 | 2009 | Change | % Change | |||||||||||||
| (Dollars In Thousands) | ||||||||||||||||
| Revenues |
||||||||||||||||
| Residential |
$ | 130,957 | $ | 128,927 | $ | 2,030 | 1.6 | |||||||||
| Commercial |
128,170 | 119,817 | 8,353 | 7.0 | ||||||||||||
| Industrial |
75,637 | 68,332 | 7,305 | 10.7 | ||||||||||||
| Other retail |
2,985 | 2,907 | 78 | 2.7 | ||||||||||||
| Provision for rate refunds |
(5,225 | ) | (3,103 | ) | (2,122 | ) | (68.4 | ) | ||||||||
| Total Retail Revenues |
332,524 | 316,880 | 15,644 | 4.9 | ||||||||||||
| Tariff-based wholesale |
62,260 | 63,845 | (1,585 | ) | (2.5 | ) | ||||||||||
| Market-based wholesale |
16,544 | 22,645 | (6,101 | ) | (26.9 | ) | ||||||||||
| Transmission |
36,016 | 31,548 | 4,468 | 14.2 | ||||||||||||
| Other |
9,379 | 5,200 | 4,179 | 80.4 | ||||||||||||
| Total Revenues |
$ | 456,723 | $ | 440,118 | $ | 16,605 | 3.8 | |||||||||
| (Thousands of MWh) | ||||||||||||||||
| Electricity Sales |
||||||||||||||||
| Residential |
1,394 | 1,460 | (66 | ) | (4.5 | ) | ||||||||||
| Commercial |
1,726 | 1,713 | 13 | 0.8 | ||||||||||||
| Industrial |
1,303 | 1,224 | 79 | 6.5 | ||||||||||||
| Other retail |
22 | 22 | — | — | ||||||||||||
| Total Retail |
4,445 | 4,419 | 26 | 0.6 | ||||||||||||
| Tariff-based wholesale |
1,346 | 1,511 | (165 | ) | (10.9 | ) | ||||||||||
| Market-based wholesale |
563 | 699 | (136 | ) | (19.5 | ) | ||||||||||
| Total wholesale |
1,909 | 2,210 | (301 | ) | (13.6 | ) | ||||||||||
| Total Electricity Sales |
6,354 | 6,629 | (275 | ) | (4.1 | ) | ||||||||||
| (Dollars per MWh) | ||||||||||||||||
| Total retail |
$ | 74.81 | $ | 71.71 | $ | 3.10 | 4.3 | |||||||||
| Tariff-based wholesale |
$ | 46.26 | $ | 42.25 | $ | 4.01 | 9.5 | |||||||||
| Market-based wholesale |
$ | 29.39 | $ | 32.40 | $ | (3.01 | ) | (9.3 | ) | |||||||
| (Dollars In Thousands) | ||||||||||||||||
| Fuel and Purchased Power |
||||||||||||||||
| Fuel used for generation |
$ | 103,614 | $ | 116,186 | $ | (12,572 | ) | (10.8 | ) | |||||||
| Purchased power |
19,694 | 19,029 | 665 | 3.5 | ||||||||||||
| Subtotal |
123,308 | 135,215 | (11,907 | ) | (8.8 | ) | ||||||||||
| Emissions allowances, VIE and miscellaneous |
297 | (701 | ) | 998 | 142.4 | |||||||||||
| Fuel expense recovery (RECA) |
963 | (2,272 | ) | 3,235 | 142.4 | |||||||||||
| Total fuel and purchased power expense |
$ | 124,568 | $ | 132,242 | $ | (7,674 | ) | (5.8 | ) | |||||||
| (Thousands of MWh) | ||||||||||||||||
| Electricity Supply |
||||||||||||||||
| Generated - Gas/oil |
240 | 301 | (61 | ) | (20.3 | ) | ||||||||||
| Coal |
4,800 | 5,509 | (709 | ) | (12.9 | ) | ||||||||||
| Nuclear |
966 | 632 | 334 | 52.8 | ||||||||||||
| Wind |
117 | 105 | 12 | 11.4 | ||||||||||||
| Subtotal electricity generated |
6,123 | 6,547 | (424 | ) | (6.5 | ) | ||||||||||
| Purchased |
616 | 491 | 125 | 25.5 | ||||||||||||
| Total Electricity Supply |
6,739 | 7,038 | (299 | ) | (4.2 | ) | ||||||||||
| (Dollars per MWh) | ||||||||||||||||
| Average cost of fuel used for generation |
$ | 16.92 | $ | 17.75 | $ | (0.83 | ) | (4.7 | ) | |||||||
| Average cost of purchased power |
$ | 31.97 | $ | 38.76 | $ | (6.79 | ) | (17.5 | ) | |||||||
| Average cost of fuel and purchased power |
$ | 18.30 | $ | 19.21 | $ | (0.91 | ) | (4.7 | ) | |||||||
| Degree Days | ||||||||||||||||
| 2010 | 2009 / 20 yr Avg |
Change | % Change | |||||||||||||
| Cooling |
||||||||||||||||
| Actual compared to last year |
27 | 3 | 24 | 800.0 | ||||||||||||
| Actual compared to 20 year average |
27 | 34 | (7 | ) | (20.6 | ) | ||||||||||
| Heating |
||||||||||||||||
| Actual compared to last year |
1,714 | 2,026 | (312 | ) | (15.4 | ) | ||||||||||
| Actual compared to 20 year average |
1,714 | 1,889 | (175 | ) | (9.3 | ) | ||||||||||
| Westar Energy, Inc | ||||
| Supplemental Data | Revenue, Sales and Energy Supply |
| Twelve Months Ended December 31, | ||||||||||||||||
| 2010 | 2009 | Change | % Change | |||||||||||||
| (Dollars In Thousands) | ||||||||||||||||
| Revenues |
||||||||||||||||
| Residential |
$ | 661,177 | $ | 576,896 | $ | 84,281 | 14.6 | |||||||||
| Commercial |
572,062 | 529,847 | 42,215 | 8.0 | ||||||||||||
| Industrial |
318,249 | 291,754 | 26,495 | 9.1 | ||||||||||||
| Other retail |
11,961 | 11,521 | 440 | 3.8 | ||||||||||||
| Provision for rate refunds |
(24,664 | ) | (30,037 | ) | 5,373 | 17.9 | ||||||||||
| Total Retail Revenues |
1,538,785 | 1,379,981 | 158,804 | 11.5 | ||||||||||||
| Tariff-based wholesale |
246,195 | 232,003 | 14,192 | 6.1 | ||||||||||||
| Market-based wholesale |
88,474 | 76,266 | 12,208 | 16.0 | ||||||||||||
| Transmission |
144,513 | 132,450 | 12,063 | 9.1 | ||||||||||||
| Other |
38,204 | 37,531 | 673 | 1.8 | ||||||||||||
| Total Revenues |
$ | 2,056,171 | $ | 1,858,231 | $ | 197,940 | 10.7 | |||||||||
| (Thousands of MWh) | ||||||||||||||||
| Electricity Sales |
||||||||||||||||
| Residential |
6,957 | 6,404 | 553 | 8.6 | ||||||||||||
| Commercial |
7,519 | 7,235 | 284 | 3.9 | ||||||||||||
| Industrial |
5,468 | 5,145 | 323 | 6.3 | ||||||||||||
| Other retail |
89 | 88 | 1 | 1.1 | ||||||||||||
| Total Retail |
20,033 | 18,872 | 1,161 | 6.2 | ||||||||||||
| Tariff-based wholesale |
6,074 | 6,131 | (57 | ) | (0.9 | ) | ||||||||||
| Market-based wholesale |
2,638 | 2,657 | (19 | ) | (0.7 | ) | ||||||||||
| Total wholesale |
8,712 | 8,788 | (76 | ) | (0.9 | ) | ||||||||||
| Total Electricity Sales |
28,745 | 27,660 | 1,085 | 3.9 | ||||||||||||
| (Dollars per MWh) | ||||||||||||||||
| Total retail |
$ | 76.81 | $ | 73.12 | $ | 3.69 | 5.0 | |||||||||
| Tariff-based wholesale |
$ | 40.53 | $ | 37.84 | $ | 2.69 | 7.1 | |||||||||
| Market-based wholesale |
$ | 33.54 | $ | 28.70 | $ | 4.84 | 16.9 | |||||||||
| (Dollars In Thousands) | ||||||||||||||||
| Fuel and Purchased Power |
||||||||||||||||
| Fuel used for generation |
$ | 513,710 | $ | 470,885 | $ | 42,825 | 9.1 | |||||||||
| Purchased power |
79,492 | 60,874 | 18,618 | 30.6 | ||||||||||||
| Subtotal |
593,202 | 531,759 | 61,443 | 11.6 | ||||||||||||
| Emissions allowances, VIE and miscellaneous |
712 | (6,281 | ) | 6,993 | 111.3 | |||||||||||
| Fuel expense recovery (RECA) |
(10,553 | ) | 9,386 | (19,939 | ) | (212.4 | ) | |||||||||
| Total fuel and purchased power expense |
$ | 583,361 | $ | 534,864 | $ | 48,497 | 9.1 | |||||||||
| (Thousands of MWh) | ||||||||||||||||
| Electricity Supply |
||||||||||||||||
| Generated - Gas/oil |
1,922 | 1,878 | 44 | 2.3 | ||||||||||||
| Coal |
21,440 | 21,210 | 230 | 1.1 | ||||||||||||
| Nuclear |
4,491 | 4,121 | 370 | 9.0 | ||||||||||||
| Wind |
453 | 288 | 165 | 57.3 | ||||||||||||
| Subtotal electricity generated |
28,306 | 27,497 | 809 | 2.9 | ||||||||||||
| Purchased |
2,194 | 1,709 | 485 | 28.4 | ||||||||||||
| Total Electricity Supply |
30,500 | 29,206 | 1,294 | 4.4 | ||||||||||||
| (Dollars per MWh) | ||||||||||||||||
| Average cost of fuel used for generation |
$ | 18.15 | $ | 17.12 | $ | 1.03 | 6.0 | |||||||||
| Average cost of purchased power |
$ | 36.23 | $ | 35.62 | $ | 0.61 | 1.7 | |||||||||
| Average cost of fuel and purchased power |
$ | 19.45 | $ | 18.21 | $ | 1.24 | 6.8 | |||||||||
| Degree Days | ||||||||||||||||
| 2010 | 2009 / 20 yr Avg |
Change | % Change | |||||||||||||
| Cooling |
||||||||||||||||
| Actual compared to last year |
1,974 | 1,344 | 630 | 46.9 | ||||||||||||
| Actual compared to 20 year average |
1,974 | 1,579 | 395 | 25.0 | ||||||||||||
| Heating |
||||||||||||||||
| Actual compared to last year |
4,713 | 4,776 | (63 | ) | (1.3 | ) | ||||||||||
| Actual compared to 20 year average |
4,713 | 4,825 | (112 | ) | (2.3 | ) | ||||||||||
Westar Energy, Inc.
Capitalization
| December 31, 2010 |
December 31, 2009 |
|||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||
| Current maturities of long-term debt |
$ | 61 | $ | 1,345 | ||||||||||||
| Current maturities of long-term debt of VIEs |
30,155 | — | ||||||||||||||
| Long-term debt, net |
2,490,871 | 2,490,734 | ||||||||||||||
| Long-term debt of variable interest entities, net |
278,162 | — | ||||||||||||||
| Total debt |
2,799,249 | 53.7 | % | 2,492,079 | 52.4 | % | ||||||||||
| Preferred |
21,436 | 0.4 | % | 21,436 | 0.4 | % | ||||||||||
| Common equity |
2,382,867 | 45.8 | % | 2,245,349 | 47.2 | % | ||||||||||
| Noncontrolling interests |
6,070 | 0.1 | % | — | 0.0 | % | ||||||||||
| Total capitalization |
$ | 5,209,622 | 100.0 | % | $ | 4,758,864 | 100.0 | % | ||||||||
| GAAP Book value per share |
$ | 21.25 | $ | 20.59 | ||||||||||||
| Period end shares outstanding (in thousands) |
112,128 | 109,072 | ||||||||||||||
Outstanding long-term debt table
| CUSIP | December 31, 2010 |
December 31, 2009 |
||||||||||
| (Dollars in Thousands) | ||||||||||||
| Westar Energy: |
||||||||||||
| First Mortgage Bond series: |
||||||||||||
| 6.00% Series due July 2014 |
95709TAA8 | $ | 250,000 | $ | 250,000 | |||||||
| 5.15% Series due January 2017 |
95709TAB6 | 125,000 | 125,000 | |||||||||
| 5.95% Series due January 2035 |
95709TAC4 | 125,000 | 125,000 | |||||||||
| 5.10% Series due July 2020 |
95709TAD2 | 250,000 | 250,000 | |||||||||
| 5.875% Series due July 2036 |
95709TAE0 | 150,000 | 150,000 | |||||||||
| 6.10% Series due May 2047 |
95709T704 | 150,000 | 150,000 | |||||||||
| 8.625% Series due December 2018 |
95709TAG5 | 300,000 | 300,000 | |||||||||
| 1,350,000 | 1,350,000 | |||||||||||
| Pollution control bond series: |
||||||||||||
| Variable series due April 2032 (Wamego) |
933623BN9 | 30,500 | 30,500 | |||||||||
| Variable series due April 2032 (St Marys) |
792609AF6 | 45,000 | 45,000 | |||||||||
| 5.0% Series due February 2033 (Wamego) |
933623BQ2 | 57,530 | 57,760 | |||||||||
| 133,030 | 133,260 | |||||||||||
| Other long-term debt: |
||||||||||||
| 4.36% Equipment financing loan due 2011 |
61 | 1,406 | ||||||||||
| 61 | 1,406 | |||||||||||
| Total Westar Energy |
1,483,091 | 1,484,666 | ||||||||||
| KGE |
||||||||||||
| First mortgage bond series: |
||||||||||||
| 6.53% Series due December 2037 |
485260BJ1 | 175,000 | 175,000 | |||||||||
| 6.15% Series due May 2023 |
485260B@1 | 50,000 | 50,000 | |||||||||
| 6.64%Series due May 2038 |
485260B#9 | 100,000 | 100,000 | |||||||||
| 6.70%Series due June 2019 |
U24448AB5 | 300,000 | 300,000 | |||||||||
| 625,000 | 625,000 | |||||||||||
| Pollution control bond series: |
||||||||||||
| 5.3% Series due June 2031 |
121825BW2 | 108,600 | 108,600 | |||||||||
| 5.3% Series due June 2031 |
933623BR0 | 18,900 | 18,900 | |||||||||
| 4.85% Series due June 2031 |
121825CB7 | 50,000 | 50,000 | |||||||||
| 5.10% Series due March 2023 |
502828AH9 | 13,343 | 13,463 | |||||||||
| Variable rate series due April 2027 (LaCygne) |
502828AJ5 | 21,940 | 21,940 | |||||||||
| Variable rate series due April 2032 (St Marys) |
792609AE9 | 14,500 | 14,500 | |||||||||
| Variable rate series due April 2032 (Wamego) |
933623BM1 | 10,000 | 10,000 | |||||||||
| 5.6% Series due June 2031 |
121825CD3 | 50,000 | 50,000 | |||||||||
| 6.0% Series due June 2031 |
121825CE1 | 50,000 | 50,000 | |||||||||
| 5.0% Series due June 2031 |
121825CF8 | 50,000 | 50,000 | |||||||||
| 387,283 | 387,403 | |||||||||||
| Total KGE |
1,012,283 | 1,012,403 | ||||||||||
| Total long-term debt |
2,495,374 | 2,497,069 | ||||||||||
| Unamortized debt discount |
(4,442 | ) | (4,990 | ) | ||||||||
| Long-term debt due within one year |
(61 | ) | (1,345 | ) | ||||||||
| Total long-term debt, net |
$ | 2,490,871 | $ | 2,490,734 | ||||||||
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 fuel and purchased power costs, and accordingly changes to these costs have a minimal impact on net income. For this reason, Westar management believes that gross margin is a useful measure for understanding changes in operating performance from one period to the next. Gross margin is calculated as total revenues less the sum of fuel and purchased power costs and SPP network transmission costs. SPP network transmission costs are included as a component of gross margin because these costs reflect the costs of providing network transmission service, and a significant component of transmission revenue is recognized when providing this service.
Operating and maintenance expense includes SPP network transmission costs (SPP NITS). The SPP network transmission costs are included in gross margin for the reasons shown above, and are therefore excluded from operating and maintenance expense w/o SPP NITS used to reconcile earnings from the comparable prior year period to the earnings for the current period. Westar management believes this measurement is useful for understanding changes in operating performance from one period to the next. Operating and maintenance expense w/o SPP NITS is calculated by subtracting the SPP network transmission costs from operating and maintenance expense.
The calculations of gross margin and operating and maintenance expense w/o SPP NITS for the three and twelve months ended December 31, 2010 and 2009 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 December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||
| 2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||
| (Dollars In Thousands) | (Dollars In Thousands) | |||||||||||||||||||||||
| Revenues |
||||||||||||||||||||||||
| Residential |
$ | 130,957 | $ | 128,927 | $ | 2,030 | $ | 661,177 | $ | 576,896 | $ | 84,281 | ||||||||||||
| Commercial |
128,170 | 119,817 | 8,353 | 572,062 | 529,847 | 42,215 | ||||||||||||||||||
| Industrial |
75,637 | 68,332 | 7,305 | 318,249 | 291,754 | 26,495 | ||||||||||||||||||
| Other retail |
(2,240 | ) | (196 | ) | (2,044 | ) | (12,703 | ) | (18,516 | ) | 5,813 | |||||||||||||
| Total Retail Revenues |
332,524 | 316,880 | 15,644 | 1,538,785 | 1,379,981 | 158,804 | ||||||||||||||||||
| Wholesale |
78,804 | 86,490 | (7,686 | ) | 334,669 | 308,269 | 26,400 | |||||||||||||||||
| Transmission |
36,016 | 31,548 | 4,468 | 144,513 | 132,450 | 12,063 | ||||||||||||||||||
| Other |
9,379 | 5,200 | 4,179 | 38,204 | 37,531 | 673 | ||||||||||||||||||
| Total Revenues |
456,723 | 440,118 | 16,605 | 2,056,171 | 1,858,231 | 197,940 | ||||||||||||||||||
| Less: Fuel and purchased power expense |
124,568 | 132,242 | (7,674 | ) | 583,361 | 534,864 | 48,497 | |||||||||||||||||
| SPP network transmission costs |
29,703 | 26,089 | 3,614 | 116,449 | 105,401 | 11,048 | ||||||||||||||||||
| Gross Margin |
$ | 302,452 | $ | 281,787 | $ | 20,665 | $ | 1,356,361 | $ | 1,217,966 | $ | 138,395 | ||||||||||||
| Gross margin |
$ | 302,452 | $ | 281,787 | $ | 20,665 | $ | 1,356,361 | $ | 1,217,966 | $ | 138,395 | ||||||||||||
| Add: SPP network transmission costs |
29,703 | 26,089 | 3,614 | 116,449 | 105,401 | 11,048 | ||||||||||||||||||
| Less: Operating and maintenance expense |
150,825 | 124,658 | 26,167 | 520,409 | 516,930 | 3,479 | ||||||||||||||||||
| Depreciation and amortization expense |
69,982 | 64,990 | 4,992 | 271,937 | 251,534 | 20,403 | ||||||||||||||||||
| Selling, general and administrative expense |
63,108 | 56,421 | 6,687 | 207,607 | 199,961 | 7,646 | ||||||||||||||||||
| Income from operations |
$ | 48,240 | $ | 61,807 | $ | (13,567 | ) | $ | 472,857 | $ | 354,942 | $ | 117,915 | |||||||||||
| Operating and maintenance expense |
$ | 150,825 | $ | 124,658 | $ | 26,167 | $ | 520,409 | $ | 516,930 | $ | 3,479 | ||||||||||||
| Less: SPP Network transmission costs |
29,703 | 26,089 | 3,614 | 116,449 | 105,401 | 11,048 | ||||||||||||||||||
| Operating and maintenance expense w/o SPP NITS |
$ | 121,122 | $ | 98,569 | $ | 22,553 | $ | 403,960 | $ | 411,529 | $ | (7,569 | ) | |||||||||||
Westar Energy, Inc.
Capital Expenditure Forecast
2011 – 2013
| Actual | Forecast | |||||||||||||||||||
| 2010 | 2011 | 2012 | 2013 | 2011 - 2013 | ||||||||||||||||
| Generation replacements and other |
$ | 83,409 | $ | 130,400 | $ | 146,400 | $ | 150,600 | $ | 427,399 | ||||||||||
| Westar Environmental |
107,726 | 181,100 | 200,100 | 154,300 | 535,500 | |||||||||||||||
| La Cygne Environmental |
3,945 | 63,000 | 171,000 | 195,100 | 429,100 | |||||||||||||||
| Nuclear Fuel |
35,267 | 25,100 | 30,100 | 41,700 | 96,900 | |||||||||||||||
| Transmission (a) |
197,316 | 192,700 | 161,300 | 164,100 | 518,100 | |||||||||||||||
| Distribution |
— | |||||||||||||||||||
| New customer, replacements and other |
78,658 | 95,900 | 102,200 | 106,400 | 304,500 | |||||||||||||||
| Smart grid (b) |
10,295 | 13,600 | 13,600 | |||||||||||||||||
| Other |
23,460 | 19,800 | 15,000 | 11,000 | 45,800 | |||||||||||||||
| Total |
$ | 540,076 | $ | 721,600 | $ | 826,100 | $ | 823,200 | $ | 2,370,900 | ||||||||||
| (a) In 2011, 2012 and 2013, Westar plans to incur additional expenditures related to the Prairie Wind Transmission joint venture |
| |||||||||||||||||||
| $ | 2,700 | $ | 22,500 | $ | 13,800 | $ | 39,000 | |||||||||||||
| (b) net of DOE matching grant |
||||||||||||||||||||