Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 31, 2017
WESTAR ENERGY, INC.
(Exact name of registrant as specified in its charter)
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| | | | |
KANSAS | | 1-3523 | | 48-0290150 |
(State or other jurisdiction of incorporation or organization) | | (Commission File Number) | | (IRS Employer Identification No.) |
| | | | |
818 South Kansas Avenue, Topeka, Kansas | | 66612 |
(Address of principal executive offices) | | (Zip Code) |
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| |
Registrant’s telephone number, including area code | (785) 575-6300 |
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
T Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
WESTAR ENERGY, INC.
Item 2.02. Results of Operations and Financial Condition.
On October 31, 2017, we issued a press release announcing our earnings for the period ended September 30, 2017. A copy of our October 31, 2017 press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. We are also including our 2017 Third Quarter Earnings package, which is attached hereto as Exhibit 99.2 and is incorporated herein by reference. The information furnished pursuant to this Item 2.02, including Exhibits 99.1 and 99.2, will not be incorporated by reference into any registration statement filed by us under the Securities Act of 1933, as amended (the “Securities Act”), unless specifically identified therein as being incorporated by reference.
Item 7.01. Regulation FD Disclosure.
On October 31, 2017, we also released an investor presentation. A copy of that investor presentation is attached hereto as Exhibit 99.3. This information is also available to the public on our website, http://www.WestarEnergy.com. Investors should note that we announce material financial information in Securities and Exchange Commission (“SEC”) filings and press releases, and on public conference calls. In accordance with SEC guidance, we may also use the Investor Relations section of our website to communicate with investors about us. It is possible that the financial and other information we post there could be deemed to be material information.
The information furnished pursuant to this Item 7.01, except for the portions included in Item 8.01 and Exhibit 99.4 as set forth below, will not be incorporated by reference into any registration statement filed by us under the Securities Act, unless specifically identified therein as being incorporated by reference.
Item 8.01. Other Events.
As previously reported, on July 9, 2017 we entered into an Amended and Restated Agreement and Plan of Merger with Great Plains Energy Incorporated (“Great Plains Energy”), Monarch Energy Holding, Inc. (“Monarch Energy”), and King Energy, Inc., and for certain limited purposes, GP Star, Inc. The portions of the investor presentation that relate to our pending merger with Great Plains Energy are being filed herewith as Exhibit 99.4 in compliance with Rule 425 of the Securities Act.
Item 9.01. Financial Statements and Exhibits.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any proxy, vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed transactions, Monarch Energy has filed with the SEC a Registration Statement on Form S-4 (Registration No. 333-220465), which was declared effective by the SEC, Great Plains Energy and Westar Energy have each filed a definitive joint proxy statement, which also constitutes a prospectus of Monarch Energy, each of which is publicly available, and Great Plains Energy, Westar Energy and Monarch Energy have filed and may file other documents regarding the proposed transactions with the SEC. Great Plains Energy and Westar Energy mailed the definitive joint proxy statement/prospectus in connection with the transactions to their respective shareholders on or around October 13, 2017. WE URGE INVESTORS TO READ THE REGISTRATION STATEMENT AND DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND THESE OTHER MATERIALS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT GREAT PLAINS ENERGY, WESTAR ENERGY, MONARCH ENERGY AND THE PROPOSED TRANSACTIONS.
Investors can obtain free copies of the Registration Statement and definitive joint proxy statement/prospectus and other documents filed by Monarch Energy, Great Plains Energy and Westar Energy with the SEC at http://www.sec.gov, the SEC’s website. These documents filed by Great Plains Energy and Monarch Energy are also available free of charge from Great Plains Energy’s website (http://www.greatplainsenergy.com) under the tab, “Investor Relations” and then under the heading “SEC Filings,” or by contacting Great Plains Energy’s Investor Relations Department at 1-800-245-5275. These documents filed by Westar Energy are also available free of charge from Westar Energy’s website (http://www.westarenergy.com) under the tab “Investors” and then under the heading “SEC Filings,” or by contacting Westar Energy’s Investor Relations Department at 785-575-8227.
Participants in Proxy Solicitation
Great Plains Energy, Westar Energy and their respective directors and certain of their executive officers and employees may be deemed, under SEC rules, to be participants in the solicitation of proxies from Great Plains Energy’s and Westar Energy’s shareholders with respect to the proposed transactions. Information regarding the officers and directors of Great Plains Energy is included in its definitive proxy statement for its 2017 annual meeting filed with the SEC on March 23, 2017. Information regarding the officers and directors of Westar Energy is included in its definitive proxy statement for its 2017 annual meeting filed with the SEC on September 14, 2017. Additional information regarding the identity of potential participants, and their direct or indirect interests, by securities, holdings or otherwise, is set forth in the Registration Statement and definitive joint proxy statement/prospectus and other materials filed with SEC in connection with the proposed merger. Free copies of these documents may be obtained as described in the paragraphs above.
Forward Looking Statements
Certain matters discussed in this communication are “forward-looking statements.” The Private Securities Litigation Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like “believe,” “anticipate,” “target,” “expect,” “pro forma,” “estimate,” “intend,” “guidance” or words of similar meaning. Forward-looking statements describe future plans, objectives, expectations or goals. Although Westar Energy believes that its expectations are based on reasonable assumptions, all forward-looking statements involve risk and uncertainty. The factors that could cause actual results to differ materially from these forward-looking statements include those discussed herein as well as (1) those discussed in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2016 (a) under the heading, “Forward-Looking Statements,” (b) in ITEM 1. Business, (c) in ITEM 1A. Risk Factors, (d) in ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (e) in ITEM 8. Financial Statements and Supplementary Data: Notes 3, 14 and 16; (2) those discussed in the company’s Quarterly Reports on Form 10-Q filed on May 9, 2017, Aug. 8, 2017 and Oct. 31, 2017, (a) under the heading “Forward-Looking Statements,” (b) in ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, (c) in Part I, Financial Information, ITEM 1. Financial Statements: Notes 3, 11, 12 (in the Form 10-Q filed on May 9, 2017), and 13 (in the Form 10-Q filed on Aug. 8, 2017 and Oct. 31, 2017), and (d) ITEM 1A. Risk Factors; and (3) other factors discussed in the company’s filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date such statement was made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement was made.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | | WESTAR ENERGY, INC. |
| | | | | | |
Date: | | October 31, 2017 | | By: | | /s/ Larry D. Irick |
| | | | Name: | | Larry D. Irick |
| | | | Title: | | Vice President, General Counsel and Corporate Secretary |
Exhibit
Westar Energy announces 3rd quarter 2017 results.
TOPEKA, Kan., Oct. 31, 2017 - Westar Energy, Inc. (NYSE:WR) today announced earnings of $158 million, or $1.11 per share, for the third quarter 2017 compared with earnings of $155 million, or $1.09 per share, for the third quarter 2016. Earnings for the nine months ended Sept. 30, 2017 were $290 million, or $2.03 per share, compared with $293 million, or $2.06 per share, for the same period in 2016.
Higher earnings per share for the third quarter were driven by lower income tax expense. Partially offsetting the lower income tax expense were lower residential and commercial sales due primarily to mild weather, a decrease in corporate-owned life insurance income, and an increase in depreciation related to Western Plains Wind Farm.
Lower earnings per share for the nine months ended Sept. 30, 2017 were driven by the effect of mild weather resulting in lower residential and commercial sales. Also contributing to lower earnings was a decrease in corporate-owned life insurance income and increased depreciation due to Western Plains Wind Farm. Partially offsetting lower sales was lower income tax expense.
Conference Call and Additional Company Information
Westar Energy management will host a conference call Wednesday, Nov. 1 with the
investment community at 10:00 a.m. ET (9:00 a.m. CT). Investors, media and the public may
listen to the conference call by dialing (844) 646-4526, conference ID 96033428. A webcast of the live conference call will be available at www.WestarEnergy.com.
Members of the media are invited to listen to the conference call and then contact Gina
Penzig with any follow-up questions.
This earnings announcement, a package of detailed third-quarter financial information, the company’s quarterly report on Form 10-Q for the period ended Sept. 30, 2017 and other filings the company has made with the Securities and Exchange Commission are available on the company’s website at www.WestarEnergy.com.
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As Kansas’ largest electric utility, Westar Energy, Inc. (NYSE:WR) provides customers the safe, reliable electricity
needed to power their businesses and homes. We have 7,800 MW of electric generation capacity that includes renewables and
traditional power sources with half the electricity supplied to our more than 700,000 customers from emissions free sources:
nuclear, wind and solar, with a third coming from renewables. We are a leader in electric transmission in Kansas coordinating a
network of lines and substations that supports one of the largest consolidations of wind energy in the nation. Our employees live,
volunteer and work in the communities we serve.
For more information about Westar Energy, visit us on the Internet at http://www.WestarEnergy.com.
WESTAR ENERGY NEWS RELEASE Page 1 of 3
Westar Energy announces 3rd quarter results
Forward-looking statements: Certain matters discussed in this news release are “forward-looking statements.” The Private Securities Litigation Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like “believe,” “anticipate,” “target,” “expect,” “pro forma,” “estimate,” “intend,” “guidance” or words of similar meaning. Forward-looking statements describe future plans, objectives, expectations or goals. Although Westar Energy believes that its expectations are based on reasonable assumptions, all forward-looking statements involve risk and uncertainty. The factors that could cause actual results to differ materially from these forward-looking statements include those discussed herein as well as (1) those discussed in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2016 (a) under the heading, “Forward-Looking Statements,” (b) in ITEM 1. Business, (c) in ITEM 1A. Risk Factors, (d) in ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (e) in ITEM 8. Financial Statements and Supplementary Data: Notes 3, 14 and 16; (2) those discussed in the company’s Quarterly Reports on Form 10-Q filed on May 9, 2017, Aug. 8, 2017 and Oct. 31, 2017, (a) under the heading “Forward-Looking Statements.” (b) in ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, (c) in Part I, Financial Information, ITEM 1. Financial Statements: Notes 3, 11, 12 (in the Form 10-Q filed on May 9, 2017), and 13 (in the Form 10-Q filed on Aug. 8, 2017 and Oct. 31, 2017), and (d) ITEM 1A. Risk Factors; and (3) other factors discussed in the company’s filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date such statement was made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement was made.
Media Contact:
Gina Penzig
Media Relations Manager
Phone: 785-575-8089
Gina.Penzig@westarenergy.com
Media line: 888-613-0003
Investor Contact:
Cody VandeVelde
Director, Investor Relations
Phone: 785-575-8227
Cody.VandeVelde@westarenergy.com
WESTAR ENERGY NEWS RELEASE Page 2 of 3
Westar Energy announces 3rd quarter results
Westar Energy, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | Change | | % Change | | 2017 | | 2016 | | Change | | % Change |
| (Dollars In Thousands, Except Per Share Amounts) |
REVENUES: | | | | | | | | | | | | | | | |
Residential | $ | 278,138 |
| | $ | 282,272 |
| | $ | (4,134 | ) | | (1.5 | ) | | $ | 642,449 |
| | $ | 664,400 |
| | $ | (21,951 | ) | | (3.3 | ) |
Commercial | 219,414 |
| | 218,377 |
| | 1,037 |
| | 0.5 |
| | 557,232 |
| | 572,247 |
| | (15,015 | ) | | (2.6 | ) |
Industrial | 117,721 |
| | 106,021 |
| | 11,700 |
| | 11.0 |
| | 324,227 |
| | 314,723 |
| | 9,504 |
| | 3.0 |
|
Other retail | 149 |
| | 7,883 |
| | (7,734 | ) | | (98.1 | ) | | (22,293 | ) | | (23,002 | ) | | 709 |
| | 3.1 |
|
Total Retail Revenues | 615,422 |
| | 614,553 |
| | 869 |
| | 0.1 |
| | 1,501,615 |
| | 1,528,368 |
| | (26,753 | ) | | (1.8 | ) |
Wholesale | 102,113 |
| | 86,421 |
| | 15,692 |
| | 18.2 |
| | 242,524 |
| | 220,520 |
| | 22,004 |
| | 10.0 |
|
Transmission | 69,504 |
| | 58,462 |
| | 11,042 |
| | 18.9 |
| | 209,097 |
| | 188,996 |
| | 20,101 |
| | 10.6 |
|
Other | 7,288 |
| | 5,218 |
| | 2,070 |
| | 39.7 |
| | 22,986 |
| | 17,668 |
| | 5,318 |
| | 30.1 |
|
Total Revenues | 794,327 |
| | 764,654 |
| | 29,673 |
| | 3.9 |
| | 1,976,222 |
| | 1,955,552 |
| | 20,670 |
| | 1.1 |
|
OPERATING EXPENSES: | | | | | | | | | | | | | | |
|
|
Fuel and purchased power | 189,804 |
| | 155,673 |
| | 34,131 |
| | 21.9 |
| | 415,449 |
| | 374,361 |
| | 41,088 |
| | 11.0 |
|
SPP network transmission costs | 62,578 |
| | 57,939 |
| | 4,639 |
| | 8.0 |
| | 185,015 |
| | 173,925 |
| | 11,090 |
| | 6.4 |
|
Operating and maintenance | 79,856 |
| | 86,758 |
| | (6,902 | ) | | (8.0 | ) | | 248,211 |
| | 250,135 |
| | (1,924 | ) | | (0.8 | ) |
Depreciation and amortization | 94,668 |
| | 84,972 |
| | 9,696 |
| | 11.4 |
| | 277,322 |
| | 252,838 |
| | 24,484 |
| | 9.7 |
|
Selling, general and administrative | 65,630 |
| | 60,582 |
| | 5,048 |
| | 8.3 |
| | 182,367 |
| | 192,762 |
| | (10,395 | ) | | (5.4 | ) |
Taxes other than income tax | 41,815 |
| | 48,154 |
| | (6,339 | ) | | (13.2 | ) | | 126,421 |
| | 145,529 |
| | (19,108 | ) | | (13.1 | ) |
Total Operating Expenses | 534,351 |
| | 494,078 |
| | 40,273 |
| | 8.2 |
| | 1,434,785 |
| | 1,389,550 |
| | 45,235 |
| | 3.3 |
|
INCOME FROM OPERATIONS | 259,976 |
| | 270,576 |
| | (10,600 | ) | | (3.9 | ) | | 541,437 |
| | 566,002 |
| | (24,565 | ) | | (4.3 | ) |
OTHER INCOME (EXPENSE): | | | | | | | | | | | | | | |
|
|
Investment earnings | 2,593 |
| | 2,619 |
| | (26 | ) | | (1.0 | ) | | 8,384 |
| | 6,916 |
| | 1,468 |
| | 21.2 |
|
Other income | 3,849 |
| | 13,353 |
| | (9,504 | ) | | (71.2 | ) | | 5,672 |
| | 26,212 |
| | (20,540 | ) | | (78.4 | ) |
Other expense | (6,493 | ) | | (5,887 | ) | | (606 | ) | | (10.3 | ) | | (14,457 | ) | | (14,338 | ) | | (119 | ) | | (0.8 | ) |
Total Other (Expense) Income | (51 | ) | | 10,085 |
| | (10,136 | ) | | (100.5 | ) | | (401 | ) | | 18,790 |
| | (19,191 | ) | | (102.1 | ) |
Interest expense | 43,458 |
| | 40,897 |
| | 2,561 |
| | 6.3 |
| | 128,232 |
| | 121,011 |
| | 7,221 |
| | 6.0 |
|
INCOME BEFORE INCOME TAXES | 216,467 |
| | 239,764 |
| | (23,297 | ) | | (9.7 | ) | | 412,804 |
| | 463,781 |
| | (50,977 | ) | | (11.0 | ) |
Income tax expense | 55,743 |
| | 81,211 |
| | (25,468 | ) | | (31.4 | ) | | 112,559 |
| | 160,376 |
| | (47,817 | ) | | (29.8 | ) |
NET INCOME | 160,724 |
| | 158,553 |
| | 2,171 |
| | 1.4 |
| | 300,245 |
| | 303,405 |
| | (3,160 | ) | | (1.0 | ) |
Less: Net income attributable to noncontrolling interests | 2,418 |
| | 3,833 |
| | (1,415 | ) | | (36.9 | ) | | 10,213 |
| | 10,760 |
| | (547 | ) | | (5.1 | ) |
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC. | $ | 158,306 |
| | $ | 154,720 |
| | $ | 3,586 |
| | 2.3 |
| | $ | 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 | $ | 1.11 |
| | $ | 1.09 |
| | $ | 0.02 |
| | 1.8 |
| | $ | 2.03 |
| | $ | 2.06 |
| | $ | (0.03 | ) | | (1.5 | ) |
Diluted earnings per common share | $ | 1.11 |
| | $ | 1.08 |
| | $ | 0.03 |
| | 2.8 |
| | $ | 2.03 |
| | $ | 2.05 |
| | $ | (0.02 | ) | | (1.0 | ) |
AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands): | | | | | | | | | | | | | | | |
Basic | 142,473 |
| | 142,091 |
| | 382 |
| | 0.3 |
| | 142,459 |
| | 142,039 |
| | 420 |
| | 0.3 |
|
Diluted | 142,516 |
| | 142,578 |
| | (62 | ) | | — |
| | 142,496 |
| | 142,413 |
| | 83 |
| | 0.1 |
|
DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.40 |
| | $ | 0.38 |
| | $ | 0.02 |
| | 5.3 |
| | $ | 1.20 |
| | $ | 1.14 |
| | $ | 0.06 |
| | 5.3 |
|
Effective income tax rate | 26 | % | | 34 | % | | | | | | 27 | % | | 35 | % | | | | |
WESTAR ENERGY NEWS RELEASE Page 3 of 3
Exhibit 99.2
Westar Energy, Inc.
Third Quarter 2017 Earnings
Released October 31, 2017
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 | ) | | A | | |
| Operating and maintenance | | | | 6,902 |
| | B | | |
| Depreciation and amortization | | | | (9,696 | ) | | C | | |
| Selling, general and administrative | | | | (5,048 | ) | | D | | |
| Taxes other than income tax | | | | 6,339 |
| | E | | |
| Other income (expense) | | | | (10,136 | ) | | F | | |
| Interest expense | | | | (2,561 | ) | | G | | |
| Income tax expense | | | | 25,468 |
| | H | | |
| 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) |
| |
A | Due primarily to lower residential and commercial sales primarily attributable to mild weather; partially offset by increase in industrial sales
|
| | | | | | | | | |
B | 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) |
| | | | | | | | | |
C | Due principally to property additions at Western Plains Wind Farm in March 2017 |
| | | | | | | | | |
D | Due primarily to: increase in merger-related expense -- ($5.9M); partially offset by decrease in outside services -- $1.8M
|
| | | | | | | | | |
E | Due primarily to decreased property tax amortization expense that is largely offset by decreased prices -- $6.3M
|
| | | | | | | | | |
F | 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
|
| | | | | | | | | |
G | Due primarily to: a decrease in debt AFUDC -- ($1.3M) |
| | | | | | | | | |
H | 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 | ) | | A | | |
| Operating and maintenance | | | | 1,924 |
| | B | | |
| Depreciation and amortization | | | | (24,484 | ) | | C | | |
| Selling, general and administrative | | | | 10,395 |
| | D | | |
| Taxes other than income tax | | | | 19,108 |
| | E | | |
| Other income (expense) | | | | (19,191 | ) | | F | | |
| Interest expense | | | | (7,221 | ) | | G | | |
| Income tax expense | | | | 47,817 |
| | H | | |
| 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) |
| |
A | Due primarily to lower residential and commercial sales primarily attributable to mild weather; partially offset by increase in industrial sales
|
| | | | | | | | | |
B | 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)
|
| | | | | | | | | |
C | Due principally to property additions at Western Plains Wind Farm in March 2017
|
| | | | | | | | | |
D | 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
|
| | | | | | | | | |
E | Due primarily to decreased property tax amortization expense that is largely offset by decreased prices -- $18.9M
|
| | | | | | | | | |
F | 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
|
| | | | | | | | | |
G | 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)
|
| | | | | | | | | |
H | 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
Investor Update – October 31, 2017
Exhibit 99.3
Forward-Looking Disclosures
OCTOBER 31, 2017 INVESTOR UPDATE 2
Forward Looking Statements
Certain matters discussed in this presentation are “forward-looking statements.” The Private Securities Litigation Reform Act of 1995 has
established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like “believe,”
“anticipate,” “target,” “expect,” “pro forma,” “estimate,” “intend,” “guidance” or words of similar meaning. Forward-looking statements describe
future plans, objectives, expectations or goals. Although Westar Energy believes that its expectations are based on reasonable assumptions, all
forward-looking statements involve risk and uncertainty. The factors that could cause actual results to differ materially from these forward-looking
statements include those discussed herein as well as (1) those discussed in the company’s Annual Report on Form 10-K for the year ended Dec.
31, 2016 (a) under the heading, “Forward-Looking Statements,” (b) in ITEM 1. Business, (c) in ITEM 1A. Risk Factors, (d) in ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (e) in ITEM 8. Financial Statements and
Supplementary Data: Notes 3, 14 and 16; (2) those discussed in the company’s Quarterly Reports on Form 10-Q filed on May 9, 2017, Aug. 8,
2017 and Oct. 31, 2017, (a) under the heading “Forward-Looking Statements,” (b) in ITEM 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations, (c) in Part I, Financial Information, ITEM 1. Financial Statements: Notes 3, 11, 12 (in the Form
10-Q filed on May 9, 2017), and 13 (in the Form 10-Q filed on Aug. 8, 2017 and Oct. 31, 2017), and (d) ITEM 1A. Risk Factors; and (3) other
factors discussed in the company’s filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the
date such statement was made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement was made.
Additional Information
The information in this investor update is not complete, and is intended to be read in conjunction with Westar Energy, Inc.’s full earnings package
for the quarter ended September 30, 2017 as well as other information regarding the company that is filed with the Securities and Exchange
Commission. The full earnings package is available is available under Supplemental Materials within the investor section of the company website
at www.WestarEnergy.com, and the company’s filings with the Securities and Exchange Commission can be found in the same section under SEC
Filings.
Company Update
3 OCTOBER 31, 2017 INVESTOR UPDATE
Recent Announcements & Focus
Reported Q3 2017 EPS of $1.11
Compared to Q3 2016 EPS of $1.09
Upcoming Rate Review
Expect to file for general rate review in 1st quarter 2018
Merger with Great Plains Energy
100% stock-for-stock, tax-free exchange
Westar: exchange 1 WR share for 1 share of new company stock
Great Plains: exchange 1 GXP share for .5981 shares of new company stock
Targeted EPS CAGR at 6-8% (off WR’s ’16 EPS of $2.43)
Immediate 15% WR dividend boost at closing
Adjustment maintains GXP dividend
Targeted dividend CAGR at 6-8% thereafter
Improved credit profile; strong investment grade credit
Continued focus on clean, affordable, reliable and safe power
4 OCTOBER 31, 2017 INVESTOR UPDATE
Clean Energy Leader
5 OCTOBER 31, 2017 INVESTOR UPDATE
In 2017, more than half of retail sales
will come from emission-free sources –
renewables and nuclear power.
* Emissions and water reduction change since 2005
Earnings Update
6 OCTOBER 31, 2017 INVESTOR UPDATE
Year Over Year Earnings Variance
$1.09 $1.11
$2.06 $2.03
3Q16 3Q17 YTD 16 YTD 17
EPS
2016 vs 2017
7
Q3 Variance Drivers
Lower income tax expense ~ $25M
Lower O&M~ $7M
11% decrease in CDD
Higher depreciation expense ~ ($10M)
Decrease in COLI benefit ~ ($10M)
Increase in merger-related expenses ~ ($6M)
YTD Variance Drivers
12% decrease in CDD
Higher depreciation expense ~ ($24M)
Lower COLI benefit ~ ($17M)
Higher interest expense ~ ($7M)
Lower income tax expense ~ $48M
Lower property tax amortization expense ~ $19M
Lower O&M/SG&A ~ $12M
Full Earnings Package is available under Supplemental
Materials within the investor section of the company
website at www.WestarEnergy.com.
OCTOBER 31, 2017 INVESTOR UPDATE
Additional Earnings Detail
Merger Expenses
2016 – $10.2M
Q3 2017 – $7.8M
YTD 2017 – $8.6M
Expected total upon closing – $40M to 45M
Weather EPS Estimate
Q3 – $0.05 unfavorable to 2016 – $0.03 unfavorable to normal
2017 – $0.09 unfavorable to 2016 – $0.09 unfavorable to normal
COLI
Actual:
Q3 – $0M
2017 – $0M
2017 annual assumption – $20M
Transmission Margin Increase
2017 annual assumption – $18M
8 OCTOBER 31, 2017 INVESTOR UPDATE
Merger Update
9 OCTOBER 31, 2017 INVESTOR UPDATE
Merger Value
10 OCTOBER 31, 2017 INVESTOR UPDATE
Expected stronger EPS growth
New company EPS CAGR of 6-8%1 vs
WR stand-alone EPS CAGR of 4-6%2
Merger savings – Improve “slope” of EPS growth
Share buybacks – Upward “shift” of EPS growth
Immediate ≈15% dividend increase
Not at expense of credit or payout ratio
Tax-free exchange
Structured to address regulatory order
Not as dependent on future ongoing
rate relief
2016 2022e
Westar Stand Alone Plan, Guidance 4%-6%, Middle of Range
Merger, Opportunities for Additional Synergies/Buy-back Shares
Merger, Modest Synergies
Merger, No Synergies, Excess Cash Used to Buy-back Approximately 30 Million
Shares
EPS Growth Targets
6%
7%
8%
Merger Close
2018e
1New company expected EPS CAGR based off ‘16 WR EPS of $2.43/sh.
2 WR stand-alone expected EPS CAGR based off normalized ‘15 WR EPS of $2.21/sh.
Strong Growth Targets
11 OCTOBER 31, 2017 INVESTOR UPDATE
$2.19
$1.44
$1.52
$1.60
$1.84
$2.32
2015A 2016A 2017 Pro Forma
2018E
Pro Forma
2021E
$2.43
$3.57
2016A Pro Forma 2021E
$3.25
Targeted EPS Growth 6-8%1 Targeted Dividend Growth 6-8%1
1Indicated annual earnings per share and dividend per share are historical Westar Energy and targeted combined company.
Merger Expected To Close In 1st Half 2018
12 OCTOBER 31, 2017 INVESTOR UPDATE
STAKEHOLDER FILED
APPROVAL
ANTICIPATED ADDITIONAL INFO.
GXP and WR shareholders √ 4Q17
Special shareholder meetings for Westar and
Great Plains to be held on November 21, 2017
KCC √ 2Q18 Docket: 18-KCPE-095-MER
MPSC √ 2Q18 Docket: EM-208-0012
FERC √ 1Q18 – 2Q18 Docket: EC-171-000
NRC √ 1Q18 – 2Q18 Docket: 50-482
U.S. DOJ/FTC (HSR) 4Q17 4Q17 – 1Q18
FCC 1Q18 – 2Q18 1Q18 – 2Q18
Merger Summary
13 OCTOBER 31, 2017 INVESTOR UPDATE
Transaction
Structure
• All stock merger of equals (100% stock-for-stock, tax-free exchange); combined equity value of
~$14 billion
• New company to be jointly named prior to close
Exchange Ratio
• Westar Energy: 1:1
• Great Plains Energy: 0.5981:1
Approximate Pro
Forma Ownership
• Westar Energy 52.5%
• Great Plains Energy 47.5%
Pro Forma Dividend
• Results in 15% dividend uplift for Westar Energy
• Adjust to maintain current Great Plains Energy dividend
Termination Fee
• Reverse break-up fee of $190 million in favor of Westar Energy
• Mutual fiduciary out break-up fees of $190 million in favor of the other
• Great Plains Energy no-vote fee of $80 million in favor of Westar Energy
Governance
• Mark Ruelle, Westar Energy CEO to become non-executive chairman
• Terry Bassham, Great Plains Energy President & CEO to remain President & CEO
• Tony Somma (Westar Energy CFO) to be CFO; Kevin Bryant (Great Plains Energy CFO) to be COO
• Equal board representation from each company, including Bassham and Ruelle
Headquarters
• Corporate Headquarters – Kansas City, Missouri
• Operating Headquarters – Topeka, Kansas; Kansas City, Missouri
Timing / Approvals
• Expected to close first half 2018
• Shareholders, federal and state regulators
Additional Information
OCTOBER 31, 2017 INVESTOR UPDATE 14
Additional Information and Where to Find It
This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any proxy, vote or approval,
nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. In connection with the proposed transactions, Monarch Energy has filed with the SEC a Registration
Statement on Form S-4 (Registration No. 333-220465), which was declared effective by the SEC, Great Plains Energy and Westar Energy have each
filed a definitive joint proxy statement, which also constitutes a prospectus of Monarch Energy, each of which is publicly available, and Great Plains
Energy, Westar Energy and Monarch Energy have filed and may file other documents regarding the proposed transactions with the SEC. Great Plains
Energy and Westar Energy mailed the definitive joint proxy statement/prospectus in connection with the transactions to their respective shareholders on
or around October 13, 2017. WE URGE INVESTORS TO READ THE REGISTRATION STATEMENT AND DEFINITIVE JOINT PROXY
STATEMENT/PROSPECTUS AND THESE OTHER MATERIALS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION
ABOUT GREAT PLAINS ENERGY, WESTAR ENERGY, MONARCH ENERGY AND THE PROPOSED TRANSACTIONS.
Investors can obtain free copies of the Registration Statement and definitive joint proxy statement/prospectus and other documents filed by Monarch
Energy, Great Plains Energy and Westar Energy with the SEC at http://www.sec.gov, the SEC’s website. These documents filed by Great Plains Energy
and Monarch Energy are also available free of charge from Great Plains Energy’s website (http://www.greatplainsenergy.com) under the tab, “Investor
Relations” and then under the heading “SEC Filings,” or by contacting Great Plains Energy’s Investor Relations Department at 1-800-245-5275. These
documents filed by Westar Energy are also available free of charge from Westar Energy’s website (http://www.westarenergy.com) under the tab
“Investors” and then under the heading “SEC Filings,” or by contacting Westar Energy’s Investor Relations Department at 785-575-8227.
Participants in Proxy Solicitation
Great Plains Energy, Westar Energy and their respective directors and certain of their executive officers and employees may be deemed, under SEC
rules, to be participants in the solicitation of proxies from Great Plains Energy’s and Westar Energy’s shareholders with respect to the proposed
transactions. Information regarding the officers and directors of Great Plains Energy is included in its definitive proxy statement for its 2017 annual
meeting filed with the SEC on March 23, 2017. Information regarding the officers and directors of Westar Energy is included in its definitive proxy
statement for its 2017 annual meeting filed with the SEC on September 14, 2017. Additional information regarding the identity of potential participants,
and their direct or indirect interests, by securities, holdings or otherwise, is set forth in the Registration Statement and definitive joint proxy
statement/prospectus and other materials filed with SEC in connection with the proposed merger. Free copies of these documents may be obtained as
described in the paragraphs above.
a20171031ex994
Westar Energy
Investor Update – October 31, 2017
Exhibit 99.4
Filed by: Westar Energy, Inc.
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Westar Energy, Inc.
Commission File Number: 001-03523
Subject Company: Great Plains Energy Incorporated
Commission File Number: 001-32206
Subject Company: Monarch Energy Holding, Inc.
Commission File Number: 132-02816
Date: October 31, 2017
{Merger Excerpts}
Forward-Looking Disclosures
OCTOBER 31, 2017 INVESTOR UPDATE 2
Forward Looking Statements
Certain matters discussed in this presentation are “forward-looking statements.” The Private Securities Litigation Reform Act of 1995 has
established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like “believe,”
“anticipate,” “target,” “expect,” “pro forma,” “estimate,” “intend,” “guidance” or words of similar meaning. Forward-looking statements describe
future plans, objectives, expectations or goals. Although Westar Energy believes that its expectations are based on reasonable assumptions, all
forward-looking statements involve risk and uncertainty. The factors that could cause actual results to differ materially from these forward-looking
statements include those discussed herein as well as (1) those discussed in the company’s Annual Report on Form 10-K for the year ended Dec.
31, 2016 (a) under the heading, “Forward-Looking Statements,” (b) in ITEM 1. Business, (c) in ITEM 1A. Risk Factors, (d) in ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (e) in ITEM 8. Financial Statements and
Supplementary Data: Notes 3, 14 and 16; (2) those discussed in the company’s Quarterly Reports on Form 10-Q filed on May 9, 2017, Aug. 8,
2017 and Oct. 31, 2017, (a) under the heading “Forward-Looking Statements,” (b) in ITEM 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations, (c) in Part I, Financial Information, ITEM 1. Financial Statements: Notes 3, 11, 12 (in the Form
10-Q filed on May 9, 2017), and 13 (in the Form 10-Q filed on Aug. 8, 2017 and Oct. 31, 2017), and (d) ITEM 1A. Risk Factors; and (3) other
factors discussed in the company’s filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the
date such statement was made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement was made.
Additional Information
The information in this investor update is not complete, and is intended to be read in conjunction with Westar Energy, Inc.’s full earnings package
for the quarter ended September 30, 2017 as well as other information regarding the company that is filed with the Securities and Exchange
Commission. The full earnings package is available is available under Supplemental Materials within the investor section of the company website
at www.WestarEnergy.com, and the company’s filings with the Securities and Exchange Commission can be found in the same section under SEC
Filings.
Recent Announcements & Focus
Merger with Great Plains Energy
100% stock-for-stock, tax-free exchange
Westar: exchange 1 WR share for 1 share of new company stock
Great Plains: exchange 1 GXP share for .5981 shares of new company stock
Targeted EPS CAGR at 6-8% (off WR’s ’16 EPS of $2.43)
Immediate 15% WR dividend boost at closing
Adjustment maintains GXP dividend
Targeted dividend CAGR at 6-8% thereafter
Improved credit profile; strong investment grade credit
3 OCTOBER 31, 2017 INVESTOR UPDATE
Merger Update
4 OCTOBER 31, 2017 INVESTOR UPDATE
Merger Value
5 OCTOBER 31, 2017 INVESTOR UPDATE
Expected stronger EPS growth
New company EPS CAGR of 6-8%1 vs
WR stand-alone EPS CAGR of 4-6%2
Merger savings – Improve “slope” of EPS growth
Share buybacks – Upward “shift” of EPS growth
Immediate ≈15% dividend increase
Not at expense of credit or payout ratio
Tax-free exchange
Structured to address regulatory order
Not as dependent on future ongoing
rate relief
2016 2022e
Westar Stand Alone Plan, Guidance 4%-6%, Middle of Range
Merger, Opportunities for Additional Synergies/Buy-back Shares
Merger, Modest Synergies
Merger, No Synergies, Excess Cash Used to Buy-back Approximately 30 Million
Shares
EPS Growth Targets
6%
7%
8%
Merger Close
2018e
1New company expected EPS CAGR based off ‘16 WR EPS of $2.43/sh.
2 WR stand-alone expected EPS CAGR based off normalized ‘15 WR EPS of $2.21/sh.
Strong Growth Targets
6 OCTOBER 31, 2017 INVESTOR UPDATE
$2.19
$1.44
$1.52
$1.60
$1.84
$2.32
2015A 2016A 2017 Pro Forma
2018E
Pro Forma
2021E
$2.43
$3.57
2016A Pro Forma 2021E
$3.25
Targeted EPS Growth 6-8%1 Targeted Dividend Growth 6-8%1
1Indicated annual earnings per share and dividend per share are historical Westar Energy and targeted combined company.
Merger Expected To Close In 1st Half 2018
7 OCTOBER 31, 2017 INVESTOR UPDATE
STAKEHOLDER FILED
APPROVAL
ANTICIPATED ADDITIONAL INFO.
GXP and WR shareholders √ 4Q17
Special shareholder meetings for Westar and
Great Plains to be held on November 21, 2017
KCC √ 2Q18 Docket: 18-KCPE-095-MER
MPSC √ 2Q18 Docket: EM-208-0012
FERC √ 1Q18 – 2Q18 Docket: EC-171-000
NRC √ 1Q18 – 2Q18 Docket: 50-482
U.S. DOJ/FTC (HSR) 4Q17 4Q17 – 1Q18
FCC 1Q18 – 2Q18 1Q18 – 2Q18
Merger Summary
8 OCTOBER 31, 2017 INVESTOR UPDATE
Transaction
Structure
• All stock merger of equals (100% stock-for-stock, tax-free exchange); combined equity value of
~$14 billion
• New company to be jointly named prior to close
Exchange Ratio
• Westar Energy: 1:1
• Great Plains Energy: 0.5981:1
Approximate Pro
Forma Ownership
• Westar Energy 52.5%
• Great Plains Energy 47.5%
Pro Forma Dividend
• Results in 15% dividend uplift for Westar Energy
• Adjust to maintain current Great Plains Energy dividend
Termination Fee
• Reverse break-up fee of $190 million in favor of Westar Energy
• Mutual fiduciary out break-up fees of $190 million in favor of the other
• Great Plains Energy no-vote fee of $80 million in favor of Westar Energy
Governance
• Mark Ruelle, Westar Energy CEO to become non-executive chairman
• Terry Bassham, Great Plains Energy President & CEO to remain President & CEO
• Tony Somma (Westar Energy CFO) to be CFO; Kevin Bryant (Great Plains Energy CFO) to be COO
• Equal board representation from each company, including Bassham and Ruelle
Headquarters
• Corporate Headquarters – Kansas City, Missouri
• Operating Headquarters – Topeka, Kansas; Kansas City, Missouri
Timing / Approvals
• Expected to close first half 2018
• Shareholders, federal and state regulators
Additional Information
OCTOBER 31, 2017 INVESTOR UPDATE 9
Additional Information and Where to Find It
This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any proxy, vote or approval,
nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. In connection with the proposed transactions, Monarch Energy has filed with the SEC a Registration
Statement on Form S-4 (Registration No. 333-220465), which was declared effective by the SEC, Great Plains Energy and Westar Energy have each
filed a definitive joint proxy statement, which also constitutes a prospectus of Monarch Energy, each of which is publicly available, and Great Plains
Energy, Westar Energy and Monarch Energy have filed and may file other documents regarding the proposed transactions with the SEC. Great Plains
Energy and Westar Energy mailed the definitive joint proxy statement/prospectus in connection with the transactions to their respective shareholders on
or around October 13, 2017. WE URGE INVESTORS TO READ THE REGISTRATION STATEMENT AND DEFINITIVE JOINT PROXY
STATEMENT/PROSPECTUS AND THESE OTHER MATERIALS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION
ABOUT GREAT PLAINS ENERGY, WESTAR ENERGY, MONARCH ENERGY AND THE PROPOSED TRANSACTIONS.
Investors can obtain free copies of the Registration Statement and definitive joint proxy statement/prospectus and other documents filed by Monarch
Energy, Great Plains Energy and Westar Energy with the SEC at http://www.sec.gov, the SEC’s website. These documents filed by Great Plains Energy
and Monarch Energy are also available free of charge from Great Plains Energy’s website (http://www.greatplainsenergy.com) under the tab, “Investor
Relations” and then under the heading “SEC Filings,” or by contacting Great Plains Energy’s Investor Relations Department at 1-800-245-5275. These
documents filed by Westar Energy are also available free of charge from Westar Energy’s website (http://www.westarenergy.com) under the tab
“Investors” and then under the heading “SEC Filings,” or by contacting Westar Energy’s Investor Relations Department at 785-575-8227.
Participants in Proxy Solicitation
Great Plains Energy, Westar Energy and their respective directors and certain of their executive officers and employees may be deemed, under SEC
rules, to be participants in the solicitation of proxies from Great Plains Energy’s and Westar Energy’s shareholders with respect to the proposed
transactions. Information regarding the officers and directors of Great Plains Energy is included in its definitive proxy statement for its 2017 annual
meeting filed with the SEC on March 23, 2017. Information regarding the officers and directors of Westar Energy is included in its definitive proxy
statement for its 2017 annual meeting filed with the SEC on September 14, 2017. Additional information regarding the identity of potential participants,
and their direct or indirect interests, by securities, holdings or otherwise, is set forth in the Registration Statement and definitive joint proxy
statement/prospectus and other materials filed with SEC in connection with the proposed merger. Free copies of these documents may be obtained as
described in the paragraphs above.
