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

Attached files

file	filename
8-K - 8-K - WESTAR ENERGY INC /KS	wr-03312013xearningsreleas.htm
EX-99.1 - PRESS RELEASE DATED MAY 8, 2013 - WESTAR ENERGY INC /KS	wr-03312013x8xkexhibit991.htm

Exhibit 99.2

Westar Energy, Inc.

First Quarter 2013 Earnings

Released May 8, 2013



Contents	Page

Consolidated Statements of Income	1
Consolidated Balance Sheets	2
Consolidated Statements of Cash Flows	3
Earnings Variances	4
Supplemental Data	5
Capitalization & Long-Term Debt Table	6
GAAP to Non-GAAP Reconciliation	7

Bruce Burns

Director Investor Relations

785-575-8227

bruce.burns@WestarEnergy.com

NOTE:

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q for the period ended March 31, 2013 should be read in conjunction with this financial information. The enclosed statements have been prepared for the purpose of providing information concerning the Company and not in connection with any sale, offer for sale, or solicitation to buy any securities.

Westar Energy, Inc.

Consolidated Statements of Income

(Unaudited)



	Three Months Ended March 31,
	2013			2012			Change			% Change
	(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
Residential	$	165,375		$	138,418		$	26,957		19.5
Commercial	147,956			129,651			18,305			14.1
Industrial	90,925			85,420			5,505			6.4
Other retail	(3,171		)	(2,920		)	(251		)	(8.6	)
Total Retail Revenues	401,085			350,569			50,516			14.4
Wholesale	86,469			71,212			15,257			21.4
Transmission	51,510			45,963			5,547			12.1
Other	7,148			7,933			(785		)	(9.9	)
Total Revenues	546,212			475,677			70,535			14.8
OPERATING EXPENSES:
Fuel and purchased power	151,752			127,654			24,098			18.9
Operating and maintenance	158,729			156,044			2,685			1.7
Depreciation and amortization	66,846			73,280			(6,434		)	(8.8	)
Selling, general and administrative	48,945			47,334			1,611			3.4
Total Operating Expenses	426,272			404,312			21,960			5.4
INCOME FROM OPERATIONS	119,940			71,365			48,575			68.1
OTHER INCOME (EXPENSE):
Investment earnings	4,059			4,324			(265		)	(6.1	)
Other income	3,715			13,590			(9,875		)	(72.7	)
Other expense	(5,361		)	(5,553		)	192			3.5
Total Other Income	2,413			12,361			(9,948		)	(80.5	)
Interest expense	44,284			42,046			2,238			5.3
INCOME BEFORE INCOME TAXES	78,069			41,680			36,389			87.3
Income tax expense	24,813			12,443			12,370			99.4
NET INCOME	53,256			29,237			24,019			82.2
Less: Net income attributable to noncontrolling interests	2,112			1,713			399			23.3
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.	51,144			27,524			23,620			85.8
Preferred dividends	—			242			(242		)	(100.0	)
NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	51,144		$	27,282		$	23,862		87.5
Earnings per common share, basic	$	0.40		$	0.21		$	0.19		90.5
Average equivalent common shares outstanding, basic	127,196			126,495			701			0.6
DIVIDENDS DECLARED PER COMMON SHARE	$	0.34		$	0.33		$	0.01		3.0
Effective income tax rate	31.78		%	29.85		%

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

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

Page 1

Westar Energy, Inc.

Consolidated Balance Sheets

(Dollars in Thousands, Except Par Values)

(Unaudited)



	March 31, 2013		December 31, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	5,643	$	5,829
Restricted cash	513		573
Accounts receivable, net of allowance for doubtful accounts of $6,353 and $4,916, respectively	226,250		224,439
Fuel inventory and supplies	236,991		249,016
Prepaid expenses	18,046		15,847
Regulatory assets	111,555		114,895
Other	24,680		32,476
Total Current Assets	623,678		643,075
PROPERTY, PLANT AND EQUIPMENT, NET	7,115,482		7,013,765
PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET	319,095		321,975
OTHER ASSETS:
Regulatory assets	903,472		887,777
Nuclear decommissioning trust	160,869		150,754
Other	267,888		247,885
Total Other Assets	1,332,229		1,286,416
TOTAL ASSETS	$	9,390,484	$	9,265,231
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt of variable interest entities	$	27,721	$	25,942
Short-term debt	143,065		339,200
Accounts payable	199,196		180,825
Accrued dividends	43,109		41,743
Accrued taxes	89,868		58,624
Accrued interest	88,076		77,891
Regulatory liabilities	43,413		37,557
Other	91,801		84,359
Total Current Liabilities	726,249		846,141
LONG-TERM LIABILITIES:
Long-term debt, net	3,068,481		2,819,271
Long-term debt of variable interest entities, net	195,472		222,743
Deferred income taxes	1,207,234		1,197,837
Unamortized investment tax credits	190,722		191,512
Regulatory liabilities	290,184		285,618
Accrued employee benefits	559,839		564,870
Asset retirement obligations	154,667		152,648
Other	74,014		74,336
Total Long-Term Liabilities	5,740,613		5,508,835
COMMITMENTS AND CONTINGENCIES (See Notes 10 and 11)
EQUITY:
Westar Energy, Inc. Shareholders’ Equity:
Common stock, par value $5 per share; authorized 275,000,000 shares; issued and outstanding 126,801,458 shares and 126,503,748 shares, respective to each date	634,007		632,519
Paid-in capital	1,659,271		1,656,972
Retained earnings	614,118		606,649
Total Westar Energy, Inc. Shareholders’ Equity	2,907,396		2,896,140
Noncontrolling Interests	16,226		14,115
Total Equity	2,923,622		2,910,255
TOTAL LIABILITIES AND EQUITY	$	9,390,484	$	9,265,231

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

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

Page 2

Westar Energy, Inc.

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)



	Three Months Ended March 31,
	2013			2012
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income	$	53,256		$	29,237
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	66,846			73,280
Amortization of nuclear fuel	2,857			1,378
Amortization of deferred regulatory gain from sale leaseback	(1,374		)	(1,374		)
Amortization of corporate-owned life insurance	3,522			7,375
Non-cash compensation	2,221			2,028
Net deferred income taxes and credits	22,387			3,958
Stock-based compensation excess tax benefits	(202		)	(1,381		)
Allowance for equity funds used during construction	(2,746		)	(3,940		)
Changes in working capital items:
Accounts receivable	(2,313		)	28,603
Fuel inventory and supplies	12,180			(25,294		)
Prepaid expenses and other	7,641			(7,395		)
Accounts payable	28,214			(5,453		)
Accrued taxes	31,431			34,047
Other current liabilities	(7,251		)	(7,843		)
Changes in other assets	(31,259		)	(40,643		)
Changes in other liabilities	8,224			(22,620		)
Cash Flows from Operating Activities	193,634			63,963
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Additions to property, plant and equipment	(181,987		)	(189,966		)
Purchase of securities within trusts	(32,582		)	(7,160		)
Sale of securities within trusts	33,305			8,023
Proceeds from trust	498			—
Proceeds from investment in corporate-owned life insurance	79,508			16,177
Proceeds from federal grant	876			2,461
Investment in affiliated company	—			(2,502		)
Other investing activities	(258		)	(1,031		)
Cash Flows used in Investing Activities	(100,640		)	(173,998		)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Short-term debt, net	(196,318		)	(4,633		)
Proceeds from long-term debt	246,179			246,656
Retirements of long-term debt	—			(70,563		)
Retirements of long-term debt of variable interest entities	(25,368		)	(5,088		)
Repayment of capital leases	(802		)	(614		)
Borrowings against cash surrender value of corporate-owned life insurance	—			1,074
Repayment of borrowings against cash surrender value of corporate-owned life insurance	(78,655		)	(18,131		)
Stock-based compensation excess tax benefits	202			1,381
Issuance of common stock	1,546			1,811
Distributions to shareholders of noncontrolling interests	—			(2,787		)
Cash dividends paid	(39,964		)	(38,884		)
Cash Flows (used in) from Financing Activities	(93,180		)	110,222
NET CHANGE IN CASH AND CASH EQUIVALENTS	(186		)	187
CASH AND CASH EQUIVALENTS:
Beginning of period	5,829			3,539
End of period	$	5,643		$	3,726

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

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

Page 3

Westar Energy, Inc.

1st Quarter 2013 vs. 2012

Earnings Variances

Change

($ per share)

(Dollars in Thousands)

($ per share)

2012 earnings attributable to common stock

27,282

0.21

Favorable/(Unfavorable)

Retail

50,516

Wholesale

15,257

Transmission

5,547

Other revenues

(785

)

Fuel and purchased power

(24,098

)

SPP network transmission costs

(4,434

)

Gross Margin

42,003

Operating and maintenance w/o SPP NITS

1,749

Depreciation and amortization

6,434

Selling, general and administrative

(1,611

)

Other income (expense)

(9,948

)

Interest expense

(2,238

)

Income tax expense

(12,370

)

Net income attributable to noncontrolling interests

(399

)

Preferred dividends

242

Change in shares outstanding

$0.00

2013 earnings attributable to common stock

51,144

0.40

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

Due to increased average retail prices; retail MWh sales increased 3% (see page 5 for changes by customer class)

Due to 21% increase in MWh sales (see page 5 for changes by customer class)

Due primarily to increased MWhs generated offset by reduced MWhs purchased

Due principally to decreased unplanned outage expense at Wolf Creek -- $6.6M; increased property tax expense (this is largely offset in revenues through property tax surcharge) -- ($5.2M)

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

Due primarily to higher pension costs -- ($9.1M); lower other employee and benefit costs -- $7.0M

Due primarily to recording in 2012 COLI proceeds -- ($9.2 M)

Due primarily to higher income before income taxes

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

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

Page 4

Westar Energy, Inc.

Revenue, Sales and Energy Supply



Supplemental Data	Three Months Ended March 31,
	2013			2012			Change			% Change
Revenues	(Dollars In Thousands)
Residential	$	165,375		$	138,418		$	26,957		19.5
Commercial	147,956			129,651			18,305			14.1
Industrial	90,925			85,420			5,505			6.4
Other retail	3,198			3,054			144			4.7
Provision for rate refunds	(6,369		)	(5,974		)	(395		)	(6.6	)
Total Retail Revenues	401,085			350,569			50,516			14.4
Tariff-based wholesale	71,749			62,532			9,217			14.7
Market-based wholesale	14,720			8,680			6,040			69.6
Transmission	51,510			45,963			5,547			12.1
Other	7,148			7,933			(785		)	(9.9	)
Total Revenues	$	546,212		$	475,677		$	70,535		14.8


Electricity Sales	(Thousands of MWh)
Residential	1,543			1,415			128			9.0
Commercial	1,703			1,649			54			3.3
Industrial	1,312			1,361			(49		)	(3.6	)
Other retail	21			21			—			—
Total Retail	4,579			4,446			133			3.0
Tariff-based wholesale	1,479			1,349			130			9.6
Market-based wholesale	566			344			222			64.5
Total wholesale	2,045			1,693			352			20.8
Total Electricity Sales	6,624			6,139			485			7.9

	(Dollars per MWh)
Total retail	$	87.59		$	78.85		$	8.74		11.1
Tariff-based wholesale	$	48.51		$	46.35		$	2.16		4.7
Market-based wholesale	$	26.01		$	25.23		$	0.78		3.1


Fuel and Purchased Power	(Dollars In Thousands)
Fuel used for generation	$	127,653		$	99,635		$	28,018		28.1
Purchased power	29,016			37,410			(8,394		)	(22.4	)
Subtotal	156,669			137,045			19,624			14.3
RECA recovery and other	(4,917		)	(9,391		)	4,474			47.6
Total fuel and purchased power expense	$	151,752		$	127,654		$	24,098		18.9

Electricity Supply	(Thousands of MWh)
Generated - Gas	350			453			(103		)	(22.7	)
Coal	5,185			4,129			1,056			25.6
Nuclear	454			201			253			125.9
Wind	104			125			(21		)	(16.8	)
Subtotal electricity generated	6,093			4,908			1,185			24.1
Purchased	857			1,571			(714		)	(45.4	)
Total Electricity Supply	6,950			6,479			471			7.3

	(Dollars per MWh)
Average cost of fuel used for generation	$	20.95		$	20.30		$	0.65		3.2
Average cost of purchased power	$	33.86		$	23.81		$	10.05		42.2
Average cost of fuel and purchased power	$	22.54		$	21.15		$	1.39		6.6


Degree Days				2011/
	2013			20 yr Avg			Change			% Change
Cooling
Actual compared to last year	—			45			(45		)	(100.0	)
Actual compared to 20 year average	—			2			(2		)	(100.0	)
Heating
Actual compared to last year	2,511			1,825			686			37.6
Actual compared to 20 year average	2,511			2,428			83			3.4

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

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

Page 5

Westar Energy, Inc.



Capitalization
		March 31, 2013					December 31, 2012
		(Dollars in Thousands)
Current maturities of long-term debt of VIEs		$	27,721				$	25,942
Long-term debt, net		3,068,481					2,819,271
Long-term debt of variable interest entities, net		195,472					222,743
Total long-term debt		3,291,674			52.9	%	3,067,956			51.4	%
Common equity		2,907,396			46.8	%	2,896,140			48.4	%
Noncontrolling interests		16,226			0.3	%	14,115			0.2	%
Total capitalization		$	6,215,296		100.0	%	$	5,978,211		100.0	%

GAAP Book value per share		$	22.93				$	22.89
Period end shares outstanding (in thousands)		126,801					126,504

Outstanding Long-Term Debt

	CUSIP	March 31, 2013					December 31, 2012
Westar Energy:		(Dollars in Thousands)
First Mortgage Bond series:
6.00% Series due July 2014	95709TAA8	$	250,000				$	250,000
5.15% Series due January 2017	95709TAB6	125,000					125,000
5.95% Series due January 2035	95709TAC4	125,000					125,000
5.10% Series due July 2020	95709TAD2	250,000					250,000
5.875% Series due July 2036	95709TAE0	150,000					150,000
8.625% Series due December 2018	95709TAG5	300,000					300,000
4.125% Series due March 2042	95709TAH3	550,000					550,000
4.10% Series due April 2043	95709TAJ9	250,000					—
		2,000,000					1,750,000
Pollution control bond series:
Variable series due April 2032 (Wamego)	933623BN9	30,500					30,500
Variable series due April 2032 (St Marys)	792609AF6	45,000					45,000
		75,500					75,500
Total Westar Energy		2,075,500					1,825,500

KGE
First mortgage bond series:
6.53% Series due December 2037	485260BJ1	175,000					175,000
6.15% Series due May 2023	485260B@1	50,000					50,000
6.64%Series due May 2038	485260B#9	100,000					100,000
6.70%Series due June 2019	U24448AB5	300,000					300,000
		625,000					625,000
Pollution control bond series:
Variable rate series due April 2027 (LaCygne)	502828AJ5	21,940					21,940
5.3% Series due June 2031	121825BW2	108,600					108,600
5.3% Series due June 2031	933623BR0	18,900					18,900
4.85% Series due June 2031	121825CB7	50,000					50,000
5.6% Series due June 2031	121825CD3	50,000					50,000
6.0% Series due June 2031	121825CE1	50,000					50,000
5.0% Series due June 2031	121825CF8	50,000					50,000
Variable rate series due April 2032 (St Marys)	792609AE9	14,500					14,500
Variable rate series due April 2032 (Wamego)	933623BM1	10,000					10,000
		373,940					373,940
Total KGE		998,940					998,940

Total long-term debt		3,074,440					2,824,440
Unamortized debt discount		(5,959		)			(5,169		)
Long-term debt due within one year		—					—
Total long-term debt, net		$	3,068,481				$	2,819,271

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

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

Page 6

Westar Energy, Inc.

GAAP to Non-GAAP Reconciliation

Fuel and purchased power costs fluctuate with electricity sales and unit costs. As permitted by regulators, prices are adjusted to reflect changes in the costs of fuel and purchased power. Fuel and purchased power costs for wholesale customers are recovered at prevailing market prices or based on a predetermined formula with a price adjustment approved by FERC. As a result, changes in fuel and purchased power costs are offset in revenues with minimal impact on net income. For this reason, Westar management believes that gross margin is useful for understanding and analyzing changes in operating performance from one period to the next. Gross margin is calculated as total revenues, including transmission revenues, less the sum of fuel and purchased power costs and amounts billed by the SPP for network transmission costs (SPP NITS). Accordingly, gross margin reflects transmission revenues and costs on a net basis. However, transmission costs are recorded as operating and maintenance expense on Westar's consolidated statements of income.

The calculations of gross margin and operating and maintenance expense w/o SPP NITS for the three months ended March 31, 2013 and 2012 are shown in the table below. The table also includes a reconciliation of gross margin to income from operations for both periods. Income from operations is the GAAP financial measure most directly comparable to gross margin. Operating and maintenance expense is the GAAP financial measure most directly comparable to operating and maintenance expense w/o SPP NITS.



	Three Months Ended March 31,
	2013			2012			Change
	(Dollars in Thousands)
Revenues
Residential	$	165,375		$	138,418		$	26,957
Commercial	147,956			129,651			18,305
Industrial	90,925			85,420			5,505
Other retail	(3,171		)	(2,920		)	(251		)
Total Retail Revenues	401,085			350,569			50,516
Wholesale	86,469			71,212			15,257
Transmission	51,510			45,963			5,547
Other	7,148			7,933			(785		)
Total Revenues	546,212			475,677			70,535
Less: Fuel and purchased power expense	151,752			127,654			24,098
SPP network transmission costs	43,796			39,362			4,434
Gross Margin	$	350,664		$	308,661		$	42,003

Gross margin	$	350,664		$	308,661		$	42,003
Add: SPP network transmission costs	43,796			39,362			4,434
Less: Operating and maintenance expense	158,729			156,044			2,685
Depreciation and amortization expense	66,846			73,280			(6,434		)
Selling, general and administrative expense	48,945			47,334			1,611
Income from operations	$	119,940		$	71,365		$	48,575


Operating and maintenance expense	$	158,729		$	156,044		$	2,685
Less: SPP network transmission costs	43,796			39,362			4,434
Operating and maintenance expense w/o SPP NITS	$	114,933		$	116,682		$	(1,749	)

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

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

Page 7

WESTAR ENERGY INC /KS - FORM 8-K - EX-99.2 - 2013 FIRST QUARTER EARNINGS PACKAGE - May 8, 2013

Attached files

WESTAR ENERGY INC /KS Reports