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8-K - 8-K - WESTAR ENERGY INC /KSwr_12312017-earningsreleas.htm
EX-99.1 - EXHIBIT 99.1 - WESTAR ENERGY INC /KSa123120178-kexhibit991.htm


Exhibit 99.2
Westar Energy, Inc.
Fourth Quarter and Year-end 2017 Earnings
Released February 21, 2018

















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, 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.
Consolidated Statements of Income
(Unaudited)

 
Three Months Ended December 31,
 
2017
 
2016
 
Change
 
% Change
 
(In Thousands, Except Per Share Amounts)
 
 
REVENUES:
 
 
 
 
 
 
 
Residential
$
178,773


$
174,598

 
$
4,175

 
2.4

Commercial
172,511


168,819

 
3,692

 
2.2

Industrial
99,393


98,575

 
818

 
0.8

Other retail
(6,258
)

7,989

 
(14,247
)
 
(178.3
)
Total Retail Revenues
444,419

 
449,981

 
(5,562
)
 
(1.2
)
Wholesale
70,418


84,351

 
(13,933
)
 
(16.5
)
Transmission
70,348


64,717

 
5,631

 
8.7

Other
9,596


7,486

 
2,110

 
28.2

Total Revenues
594,781

 
606,535

 
(11,754
)
 
(1.9
)
OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
126,086


135,135

 
(9,049
)
 
(6.7
)
SPP network transmission costs
62,867

 
58,838

 
4,029

 
6.8

Operating and maintenance
85,711


96,178

 
(10,467
)
 
(10.9
)
Depreciation and amortization
94,424


85,681

 
8,743

 
10.2

Selling, general and administrative
67,202


68,689

 
(1,487
)
 
(2.2
)
Taxes other than income
41,209

 
46,133

 
(4,924
)
 
(10.7
)
Total Operating Expenses
477,499

 
490,654

 
(13,155
)
 
(2.7
)
INCOME FROM OPERATIONS
117,282

 
115,881

 
1,401

 
1.2

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
2,309

 
2,097

 
212

 
10.1

Other income
2,679

 
8,369

 
(5,690
)
 
(68.0
)
Other expense
(4,600
)
 
(3,672
)
 
(928
)
 
(25.3
)
Total Other Income
388

 
6,794

 
(6,406
)
 
(94.3
)
Interest expense
42,768

 
40,715

 
2,053

 
5.0

INCOME BEFORE INCOME TAXES
74,902

 
81,960

 
(7,058
)
 
(8.6
)
Income tax expense
38,596

 
24,165

 
14,431

 
59.7

NET INCOME
36,306

 
57,795

 
(21,489
)
 
(37.2
)
Less: Net income attributable to noncontrolling interests
2,418

 
3,863

 
(1,445
)
 
(37.4
)
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
33,888

 
$
53,932

 
$
(20,044
)
 
(37.2
)
Earnings per common share, basic
$
0.24

 
$
0.38

 
$
(0.14
)
 
(36.8
)
Diluted earnings per common share
$
0.24

 
$
0.38

 
$
(0.14
)
 
(36.8
)
Weighted average equivalent common shares outstanding – basic (in thousands)
142,479

 
142,152

 
327

 
0.2

Weighted average equivalent common shares outstanding – diluted (in thousands)
142,585

 
142,659

 
(74
)
 
(0.1
)
DIVIDENDS DECLARED PER COMMON SHARE
$
0.40

 
$
0.38

 
$
0.02

 
5.3

Effective income tax rate
52
%
 
29
%
 
 
 
 
 
 
 
 
 
 
 
 







The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2017 should be read in conjunction with this financial information.
Page 2



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

 
Twelve Months Ended December 31,
 
2017
 
2016
 
Change
 
% Change
 
(In Thousands, Except Per Share Amounts)
 
 
REVENUES:
 
 
 
 
 
 
 
Residential
$
821,222


$
838,998

 
$
(17,776
)
 
(2.1
)
Commercial
729,743


741,066

 
(11,323
)
 
(1.5
)
Industrial
423,620


413,298

 
10,322

 
2.5

Other retail
(28,551
)

(15,013
)
 
(13,538
)
 
(90.2
)
Total Retail Revenues
1,946,034

 
1,978,349

 
(32,315
)
 
(1.6
)
Wholesale
312,942


304,871

 
8,071

 
2.6

Transmission
279,446


253,713

 
25,733

 
10.1

Other
32,581


25,154

 
7,427

 
29.5

Total Revenues
2,571,003

 
2,562,087

 
8,916

 
0.3

OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
541,535

 
509,496

 
32,039

 
6.3

SPP network transmission costs
247,882

 
232,763

 
15,119

 
6.5

Operating and maintenance
333,923

 
346,313

 
(12,390
)
 
(3.6
)
Depreciation and amortization
371,747

 
338,519

 
33,228

 
9.8

Selling, general and administrative
249,567

 
261,451

 
(11,884
)
 
(4.5
)
Taxes other than income
167,630

 
191,662

 
(24,032
)
 
(12.5
)
Total Operating Expenses
1,912,284

 
1,880,204

 
32,080

 
1.7

INCOME FROM OPERATIONS
658,719

 
681,883

 
(23,164
)
 
(3.4
)
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
10,693

 
9,013

 
1,680

 
18.6

Other income
8,351

 
34,582

 
(26,231
)
 
(75.9
)
Other expense
(19,055
)
 
(18,012
)
 
(1,043
)
 
(5.8
)
Total Other Income
(11
)
 
25,583

 
(25,594
)
 
(100.0
)
Interest expense
171,001

 
161,726

 
9,275

 
5.7

INCOME BEFORE INCOME TAXES
487,707

 
545,740

 
(58,033
)
 
(10.6
)
Income tax expense
151,155

 
184,540

 
(33,385
)
 
(18.1
)
NET INCOME
336,552

 
361,200

 
(24,648
)
 
(6.8
)
Less: Net income attributable to noncontrolling interests
12,632

 
14,623

 
(1,991
)
 
(13.6
)
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
323,920

 
$
346,577

 
$
(22,657
)
 
(6.5
)
Earnings per common share, basic
$
2.27

 
$
2.43

 
$
(0.16
)
 
(6.6
)
Diluted earnings per common share
$
2.27

 
$
2.43

 
$
(0.16
)
 
(6.6
)
Weighted average equivalent common shares outstanding – basic (in thousands)
142,464

 
142,068

 
396

 
0.3

Weighted average equivalent common shares outstanding – diluted (in thousands)
142,560

 
142,475

 
$
85

 
0.1

DIVIDENDS DECLARED PER COMMON SHARE
$
1.60

 
$
1.52

 
$
0.08

 
5.3

Effective income tax rate
31
%
 
34
%
 
 
 
 
 
 
 
 
 
 
 
 



The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2017 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, 2017
 
December 31, 2016
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
3,432

 
$
3,066

Accounts receivable, net of allowance for doubtful accounts of $6,716 and $6,667, respectively
290,652

 
288,579

Fuel inventory and supplies
293,562

 
300,125

Taxes receivable

 
13,000

Prepaid expenses
16,425

 
16,528

Regulatory assets
99,544

 
117,383

Other
23,435

 
29,701

Total Current Assets
727,050

 
768,382

PROPERTY, PLANT AND EQUIPMENT, NET
9,553,755

 
9,248,359

PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET
176,279

 
257,904

OTHER ASSETS:
 
 
 
Regulatory assets
685,355

 
762,479

Nuclear decommissioning trust
237,102

 
200,122

Other
244,827

 
249,828

Total Other Assets
1,167,284

 
1,212,429

TOTAL ASSETS
$
11,624,368

 
$
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
275,700

 
366,700

Accounts payable
204,186

 
220,522

Accrued dividends
53,830

 
52,885

Accrued taxes
87,727

 
85,729

Accrued interest
72,693

 
72,519

Regulatory liabilities
11,602

 
15,760

Other
89,445

 
81,236

Total Current Liabilities
823,717

 
1,047,193

LONG-TERM LIABILITIES:
 
 
 
Long-term debt, net
3,687,555

 
3,388,670

Long-term debt of variable interest entities, net
81,433

 
111,209

Deferred income taxes
815,743

 
1,752,776

Unamortized investment tax credits
257,093

 
210,654

Regulatory liabilities
1,093,974

 
223,693

Accrued employee benefits
541,364

 
512,412

Asset retirement obligations
379,989

 
323,951

Other
83,063

 
83,326

Total Long-Term Liabilities
6,940,214

 
6,606,691

COMMITMENTS AND CONTINGENCIES (See Notes 14 and 16)
 
 
 
EQUITY:
 
 
 
Westar Energy, Inc. Shareholders’ Equity:
 
 
 
Common stock, par value $5 per share; authorized 275,000,000 shares; issued and outstanding 142,094,275 shares and 141,791,153 shares, respective to each date
710,471

 
708,956

Paid-in capital
2,024,396

 
2,018,317

Retained earnings
1,173,255

 
1,078,602

Total Westar Energy, Inc. Shareholders’ Equity
3,908,122

 
3,805,875

Noncontrolling Interests
(47,685
)
 
27,315

Total Equity
3,860,437

 
3,833,190

TOTAL LIABILITIES AND EQUITY
$
11,624,368

 
$
11,487,074


The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2017 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,
 
2017
 
2016
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
 
 
 
Net income
$
336,552

 
$
361,200

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
371,747

 
338,519

Amortization of nuclear fuel
32,167

 
26,714

Amortization of deferred regulatory gain from sale leaseback
(5,495
)
 
(5,495
)
Gain on lease modification
(3,500
)
 

Amortization of corporate-owned life insurance
20,601

 
18,042

Non-cash compensation
8,985

 
9,353

Net deferred income taxes and credits
149,568

 
185,229

Allowance for equity funds used during construction
(1,996
)
 
(11,630
)
Payments for asset retirement obligations
(16,026
)
 
(5,372
)
Changes in working capital items:
 
 
 
Accounts receivable
(2,073
)
 
(30,294
)
Fuel inventory and supplies
7,182

 
1,790

Prepaid expenses and other
64,744

 
(7,431
)
Accounts payable
10,023

 
(8,149
)
Accrued taxes
9,155

 
(5,942
)
Other current liabilities
(118,018
)
 
(86,359
)
Changes in other assets
29,295

 
18,872

Changes in other liabilities
19,527

 
23,373

Cash Flows from Operating Activities
912,438

 
822,420

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 
 
 
Additions to property, plant and equipment
(764,645
)
 
(1,086,970
)
Purchase of securities - trust
(41,033
)
 
(46,581
)
Sale of securities - trust
41,245

 
47,026

Investment in corporate-owned life insurance
(13,875
)
 
(14,648
)
Proceeds from investment in corporate-owned life insurance
1,420

 
92,677

Investment in affiliated company

 
(655
)
Other investing activities
(3,546
)
 
(3,609
)
Cash Flows used in Investing Activities
(780,434
)
 
(1,012,760
)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 
 
 
Short-term debt, net
(91,328
)
 
116,162

Proceeds from long-term debt
296,215

 
396,290

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
(3,530
)
 
(3,104
)
Borrowings against cash surrender value of corporate-owned life insurance
55,094

 
57,850

Repayment of borrowings against cash surrender value of corporate-owned life insurance
(1,008
)
 
(89,284
)
Issuance of common stock
659

 
2,439

Distributions to shareholders of noncontrolling interests
(5,760
)
 
(2,550
)
Cash dividends paid
(223,117
)
 
(204,340
)
Other financing activities
(7,023
)
 
(4,979
)
Cash Flows (used in) from Financing Activities
(131,638
)
 
190,175

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
366

 
(165
)
CASH AND CASH EQUIVALENTS:
 
 
 
Beginning of period
3,066

 
3,231

End of period
$
3,432

 
$
3,066


The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2017 should be read in conjunction with this financial information.
Page 5




Westar Energy, Inc.
4th Quarter 2017 vs. 2016

Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2016 earnings attributable to common stock
 
 
 
$
53,932

 
 
 
$
0.38

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Gross Margin
 
 
 
(6,734
)
 
A
 
 
 
Operating and maintenance
 
 
 
10,467

 
B
 
 
 
Depreciation and amortization
 
 
 
(8,743
)
 
C
 
 
 
Selling, general and administrative
 
 
 
1,487

 
 
 
 
 
Taxes other than income taxes
 
 
 
4,924

 
D
 
 
 
Other income (expense)
 
 
 
(6,406
)
 
E
 
 
 
Interest expense
 
 
 
(2,053
)
 
 
 
 
 
Income tax expense
 
 
 
(14,431
)
 
F
 
 
 
Net income attributable to noncontrolling interests
 
 
 
1,445

 
 
 
 
 
Change in shares outstanding
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017 earnings attributable to common stock
 
 
 
$
33,888

 
 
 
$
0.24

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to decreased property tax surcharge revenue, which is offset by lower property tax amortization expense




 
 
 
 
 
 
 
 
 
 
B
Due primarily to: lower operating and maintenance costs at our coal fired plants primarily due to planned JEC outage in 2016 -- $6.5M; lower transmission and distribution operating and maintenance costs due in part to higher grid resiliency costs in 2016 and assisting other utilities with mutual aid -- $6.1M; partially offset by higher operating expense due to start of Western Plains Wind Farm -- ($2.6M)

 
 
 
 
 
 
 
 
 
 
C
Due principally to property additions from completion of Western Plains Wind Farm in March 2017


 
 
 
 
 
 
 
 
 
 
D
Due primarily to decreased property tax amortization expense that is largely offset by decreased prices --$5.3M



 
 
 
 
 
 
 
 
 
 
E
Due primarily to: lower COLI benefit -- ($2.8M); a decrease in equity AFUDC -- ($2.8M)




 
 
 
 
 
 
 
 
 
 
F
Due primarily to write-off of excess non-regulated deferred income tax assets due to the TCJA -- ($12.2M)
 
 
 
 
 
 
 
 
 
 

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2017 should be read in conjunction with this financial information.
Page 6



Westar Energy, Inc.
YTD December 2017 vs. 2016
Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2016 earnings attributable to common stock
 
 
 
$
346,577

 
 
 
$
2.43

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Margin
 
 
 
(38,242
)
 
A
 
 
 
Operating and maintenance
 
 
 
12,390

 
B
 
 
 
Depreciation and amortization
 
 
 
(33,228
)
 
C
 
 
 
Selling, general and administrative
 
 
 
11,884

 
D
 
 
 
Taxes other than income
 
 
 
24,032

 
E
 
 
 
Other income (expense)
 
 
 
(25,594
)
 
F
 
 
 
Interest expense
 
 
 
(9,275
)
 
G
 
 
 
Income tax expense
 
 
 
33,385

 
H
 
 
 
Net income attributable to noncontrolling interests
 
 
 
1,991

 
 
 
 
 
Change in shares outstanding
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017 earnings attributable to common stock
 
 
 
$
323,920

 
 
 
$
2.27

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to lower residential and commercial sales primarily attributable to mild weather; partially offset by increased industrial sales, lower property tax surcharge revenue, which is offset by lower property tax amortization expense, and lower tariff-based wholesale revenue
 
 
 
 
 
 
 
 
 
 
B
Due primarily to: lower transmission and distribution operating and maintenance costs due in part to higher grid resiliency costs in 2016 and assisting other utilities with mutual aid -- $8.6M; a decrease in nuclear operating and maintenance costs primarily due to offset from receipt of legal settlement proceeds at Wolf Creek -- $5.8M; lower operating and maintenance costs at our coal fired plants primarily due to planned JEC outage in 2016 -- $4.9M; partially offset by higher operating expense due to start of Western Plains Wind Farm -- ($8.8M)

 
 
 
 
 
 
 
 
 
 
C
Due principally to property additions from completion of Western Plains Wind Farm in March 2017


 
 
 
 
 
 
 
 
 
 
D
Due primarily to recording less variable employee compensation -- $7.1M



 
 
E
Due primarily to decreased property tax amortization expense that is largely offset by decreased prices --
$24.2M


 
 
 
 
 
 
 
 
 
 
F
Due primarily to: lower COLI benefit -- ($19.5M); a decrease in equity AFUDC -- ($9.6M); partially offset by
deconsolidation of the trust holding our 8% interest in JEC -- $3.5

 
 
 
 
 
 
 
 
 
 
G
Due primarily to: an increase in interest expense of long-term debt primarily from the issuances of FMBs
in excess of retirements -- ($4.9M); decrease in debt AFUDC -- ($4.4M)
 
 
 
 
 
 
 
 
 
 
H
Due primarily to; an increase in production tax credits largely from Western Plains Wind Farm - $24.0M; reduction in income tax expense from lower income before income tax -- $22.9M; partially offset by write-off of excess unregulated deferred income tax assets due to the TCJA -- ($12.2M)

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2017 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,
 
2017
 
2016
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
178,773

 
$
174,598

 
$
4,175

 
2.4

Commercial
172,511

 
168,819

 
3,692

 
2.2

Industrial
99,393

 
98,575

 
818

 
0.8

Other retail
4,035

 
3,923

 
112

 
2.9

Provision for rate refunds
(10,293
)
 
4,066

 
(14,359
)
 
(353.1
)
Total Retail Revenues
444,419

 
449,981

 
(5,562
)
 
(1.2
)
Tariff-based wholesale
54,680

 
63,141

 
(8,461
)
 
(13.4
)
Market-based wholesale
15,738

 
21,210

 
(5,472
)
 
(25.8
)
Transmission
70,348

 
64,717

 
5,631

 
8.7

Other
9,596

 
7,486

 
2,110

 
28.2

Total Revenues
$
594,781

 
$
606,535

 
$
(11,754
)
 
(1.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
1,336

 
1,337

 
(1
)
 
(0.1
)
Commercial
1,780

 
1,780

 

 

Industrial
1,370

 
1,361

 
9

 
0.7

Other retail
16

 
19

 
(3
)
 
(15.8
)
Total Retail
4,502

 
4,497

 
5

 
0.1

Tariff-based wholesale
952

 
1,100

 
(148
)
 
(13.5
)
Market-based wholesale
1,781

 
1,239

 
542

 
43.7

Total wholesale
2,733

 
2,339

 
394

 
16.8

Total Electricity Sales
7,235

 
6,836

 
399

 
5.8

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
98.72

 
$
100.06

 
$
(1.34
)
 
(1.3
)
Tariff-based wholesale
$
57.44

 
$
57.40

 
$
0.04

 
0.1

Market-based wholesale
$
8.84

 
$
17.12

 
$
(8.28
)
 
(48.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
95,989

 
$
98,206

 
$
(2,217
)
 
(2.3
)
Purchased power
40,093

 
47,430

 
(7,337
)
 
(15.5
)
Subtotal
136,082

 
145,636

 
(9,554
)
 
(6.6
)
RECA recovery and other
(9,996
)
 
(10,501
)
 
505

 
4.8

Total fuel and purchased power expense
$
126,086

 
$
135,135

 
$
(9,049
)
 
(6.7
)
 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
385

 
397

 
(12
)
 
(3.0
)
                    Coal
3,472

 
3,988

 
(516
)
 
(12.9
)
                    Nuclear
1,270

 
542

 
728

 
134.3

                    Wind
422

 
115

 
307

 
267.0

Subtotal electricity generated
5,549

 
5,042

 
507

 
10.1

Purchased
1,878

 
1,923

 
(45
)
 
(2.3
)
Total Electricity Supply
7,427

 
6,965

 
462

 
6.6

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
17.30

 
$
19.48

 
$
(2.18
)
 
(11.2
)
Average cost of purchased power
$
21.35

 
$
24.66

 
$
(3.31
)
 
(13.4
)
Average cost of fuel and purchased power
$
18.32

 
$
20.91

 
$
(2.59
)
 
(12.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2016/
 
 
 
 
 
2017
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
69

 
97

 
(28
)
 
(28.9
)
Actual compared to 20 year average
69

 
39

 
30

 
76.9

Heating
 
 
 
 
 
 
 
Actual compared to last year
1,654

 
1,498

 
156

 
10.4

Actual compared to 20 year average
1,654

 
1,808

 
(154
)
 
(8.5
)
 
 
 
 
 
 
 
 

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2017 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,
 
2017
 
2016
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
821,222

 
$
838,998

 
$
(17,776
)
 
(2.1
)
Commercial
729,743

 
741,066

 
(11,323
)
 
(1.5
)
Industrial
423,620

 
413,298

 
10,322

 
2.5

Other retail
16,673

 
15,683

 
990

 
6.3

Provision for rate refunds
(45,224
)
 
(30,696
)
 
(14,528
)
 
(47.3
)
Total Retail Revenues
1,946,034

 
1,978,349

 
(32,315
)
 
(1.6
)
Tariff-based wholesale
232,834

 
249,344

 
(16,510
)
 
(6.6
)
Market-based wholesale
80,108

 
55,527

 
24,581

 
44.3

Transmission
279,446

 
253,713

 
25,733

 
10.1

Other
32,581

 
25,154

 
7,427

 
29.5

Total Revenues
$
2,571,003

 
$
2,562,087

 
$
8,916

 
0.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
6,163

 
6,434

 
(271
)
 
(4.2
)
Commercial
7,368

 
7,544

 
(176
)
 
(2.3
)
Industrial
5,689

 
5,499

 
190

 
3.5

Other retail
73

 
77

 
(4
)
 
(5.2
)
Total Retail
19,293

 
19,554

 
(261
)
 
(1.3
)
Tariff-based wholesale
4,038

 
4,391

 
(353
)
 
(8.0
)
Market-based wholesale
6,308

 
3,908

 
2,400

 
61.4

Total wholesale
10,346

 
8,299

 
2,047

 
24.7

Total Electricity Sales
29,639

 
27,853

 
1,786

 
6.4

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
100.87

 
$
101.17

 
$
(0.30
)
 
(0.3
)
Tariff-based wholesale
$
57.66

 
$
56.79

 
$
0.87

 
1.5

Market-based wholesale
$
12.70

 
$
14.21

 
$
(1.51
)
 
(10.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
397,066

 
$
403,214

 
$
(6,148
)
 
(1.5
)
Purchased power
175,877

 
164,007

 
11,870

 
7.2

Subtotal
572,943

 
567,221

 
5,722

 
1.0

RECA recovery and other
(31,408
)
 
(57,725
)
 
26,317

 
45.6

Total fuel and purchased power expense
$
541,535

 
$
509,496

 
$
32,039

 
6.3

 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
1,712

 
1,724

 
(12
)
 
(0.7
)
                    Coal
14,855

 
15,903

 
(1,048
)
 
(6.6
)
                    Nuclear
5,005

 
3,876

 
1,129

 
29.1

                    Wind
1,412

 
422

 
990

 
234.6

Subtotal electricity generated
22,984

 
21,925

 
1,059

 
4.8

Purchased
7,643

 
6,607

 
1,036

 
15.7

Total Electricity Supply
30,627

 
28,532

 
2,095

 
7.3

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
17.28

 
$
18.39

 
$
(1.11
)
 
(6.0
)
Average cost of purchased power
$
23.01

 
$
24.82

 
$
(1.81
)
 
(7.3
)
Average cost of fuel and purchased power
$
18.71

 
$
19.88

 
$
(1.17
)
 
(5.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2016/
 
 
 
 
 
2017
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
1,730

 
1,978

 
(248
)
 
(12.5
)
Actual compared to 20 year average
1,730

 
1,621

 
109

 
6.7

Heating
 
 
 
 
 
 
 
Actual compared to last year
3,871

 
3,880

 
(9
)
 
(0.2
)
Actual compared to 20 year average
3,871

 
4,668

 
(797
)
 
(17.1
)
 
 
 
 
 
 
 
 

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2017 should be read in conjunction with this financial information.
Page 9





Westar Energy, Inc.
Capitalization
 
 
December 31, 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
 
3,687,555

 
 
 
3,388,670

 
 
Long-term debt of variable interest entities, net
 
81,433

 
 
 
111,209

 
 
Total debt
 
3,797,522

 
49.6
 %
 
3,651,721

 
48.8
%
Common equity
 
3,908,122

 
51.0
 %
 
3,805,875

 
50.8
%
Noncontrolling interests
 
(47,685
)
 
(0.6
)%
 
27,315

 
0.4
%
Total capitalization
 
$
7,657,959

 
100.0
 %
 
$
7,484,911

 
100.0
%
 
 
 
 
 
 
 
 
 
GAAP Book value per share
 
$
27.50

 
 
 
$
26.84

 


Period end shares outstanding (in thousands)
 
142,094

 
 
 
141,791

 
 
 
 
 
 
 
 
 
 
 
Outstanding Long-Term Debt
 
 
 
 
 
 
 
 
 
 
CUSIP
December 31, 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

 
 
3.250% Series due December 2025
95709TAL4
250,000

 
 
 
250,000

 
 
2.550% Series due June 2026
95709TAN0
350,000

 
 
 
350,000

 
 
3.10% Series due April 2027
95709TAP5
300,000

 
 
 

 
 
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

 
 
 
300,000

 
 
 
 
2,680,000

 
 
 
2,505,000

 
 
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
 
2,755,500

 
 
 
2,580,500

 
 
 
 
 
 
 
 
 
 
 
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

 
 
2.50% Series due June 2031
 
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
 
(10,925
)
 
 
 
(10,358
)
 
 
Unamortized debt issuance expense
 
(28,460
)
 
 
 
(27,912
)
 
 
Long-term debt due within one year
 

 
 
 
(125,000
)
 
 
Total long-term debt, net
 
$
3,687,555

 
 
 
$
3,388,670

 
 

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2017 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, a non-GAAP measure, 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 December 31, 2017 and 2016, are shown in the table below. The table also includes a reconciliation of income from operations to gross margin 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,
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
(Dollars in Thousands)
Revenues
$
594,781

 
$
606,535


$
(11,754
)

$
2,571,003

 
$
2,562,087


$
8,916

Less: Fuel and purchased power expense
126,086

 
135,135

 
(9,049
)
 
541,535

 
509,496

 
32,039

 SPP network transmission costs
62,867

 
58,838

 
4,029

 
247,882

 
232,763

 
15,119

Gross Margin
$
405,828

 
$
412,562


$
(6,734
)

$
1,781,586

 
$
1,819,828


$
(38,242
)
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
$
117,282

 
$
115,881

 
$
1,401

 
$
658,719

 
$
681,883

 
$
(23,164
)
Plus: Operating and maintenance expense
85,711

 
96,178

 
(10,467
)
 
333,923

 
346,313

 
(12,390
)
Depreciation and amortization expense
94,424

 
85,681

 
8,743

 
371,747

 
338,519

 
33,228

Selling, general and administrative expense
67,202

 
68,689

 
(1,487
)
 
249,567

 
261,451

 
(11,884
)
Taxes other than income tax
41,209

 
46,133

 
(4,924
)
 
167,630

 
191,662

 
(24,032
)
Gross Margin
$
405,828

 
$
412,562


$
(6,734
)

$
1,781,586

 
$
1,819,828

 
$
(38,242
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2017 should be read in conjunction with this financial information.
Page 11




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