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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) November 1, 2016

WESTAR ENERGY, INC.

(Exact name of registrant as specified in its charter)

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)

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:

o 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))





WESTAR ENERGY, INC.

Item 2.02. Results of Operations and Financial Condition.

On November 1, 2016, we issued a press release announcing our earnings for the period ended September 30, 2016. A copy of our November 1, 2016 press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. We are also including our 2016 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, unless specifically identified therein as being incorporated by reference.


Item 7.01. Regulation FD Disclosure

On November 1, 2016, we also released an investor presentation. A copy of that investor presentation is attached hereto as Exhibit 99.3 and is 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 filings, press releases and public conference calls. In accordance with Securities and Exchange Commission 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, including information on our website, will not be incorporated by reference into any registration statement filed by us under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference.


Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1
Press Release dated November 1, 2016
Exhibit 99.2
2016 Third Quarter Earnings Package
Exhibit 99.3
Investor Update dated November 1, 2016








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.

 
 
 
 
WESTAR ENERGY, INC.
 
 
 
 
 
 
 
Date:
 
November 1, 2016
 
By:
 
/s/ Larry D. Irick
 
 
 
 
Name:
 
Larry D. Irick
 
 
 
 
Title:
 
Vice President, General Counsel and Corporate Secretary







EXHIBIT INDEX

Exhibit Number
 
Description of Exhibit
Exhibit 99.1
 
Press Release dated November 1, 2016
Exhibit 99.2
 
2016 Third Quarter Earnings Package
 Exhibit 99.3
 
 Investor Update dated November 1, 2016




Exhibit
Exhibit 99.1

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Westar Energy announces 3rd quarter 2016 results.
TOPEKA, Kan., Nov. 1, 2016 - Westar Energy, Inc. (NYSE:WR) today announced earnings of $155 million, or $1.09 per share, for the third quarter 2016 compared with earnings of $138 million, or $0.97 per share, for the third quarter 2015. Earnings for the nine months ended Sept. 30, 2016 were $293 million, or $2.06 per share, compared with $253 million, or $1.84 per share, for the same period in 2015.

Higher net income for the third quarter, compared with last year, was driven by better cost recovery through recent rate adjustments and an increase in corporate-owned life insurance income. The higher revenue was partially offset by a Southwest Power Pool assessment and higher expenses due to improving long-term grid reliability.
    
Net income for the nine months ended September 30, 2016 also increased primarily from better cost recovery and lower interest expense. The higher revenue was partially offset by merger related-expenses and the Southwest Power Pool assessment.

Earnings Guidance
    
The company affirmed its 2016 earnings guidance of $2.38 to $2.53 per share with a bias towards the upper end of the range. The earnings guidance drivers are located under Supplemental Materials within the investor section of the company website at www.WestarEnergy.com.

Additional Information

Due to the pending transaction with Great Plains Energy, Westar Energy will no longer host a quarterly webcast and conference call. Investors may continue to contact our Investor Relations Department at (785) 575-8227.

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, 2016 and other filings the company has made with the Securities and Exchange Commission are available on the company's website at www.WestarEnergy.com.
- 30 -

Westar Energy, Inc. (NYSE: WR) is Kansas' largest electric utility. For more than a century, we have provided Kansans the safe, reliable electricity needed to power their businesses and homes. Every day our team of professionals takes on projects to generate and deliver electricity, protect the environment and provide excellent service to our nearly 700,000 customers. Westar has 7,200 MW of electric generation capacity fueled by coal, uranium, natural gas, wind and landfill gas. We are also a leader in

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WESTAR ENERGY NEWS RELEASE    Page 1 of 3
Westar Energy announces 3rd quarter results

electric transmission in Kansas. Our innovative customer service programs include mobile-enabled customer care, digital meters and paving the way for electric vehicle adoption. 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 is on Facebook: www.Facebook.com/westarenergy and Twitter: www.Twitter.com/WestarEnergy.


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, 2015 (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 13 and 15; (2) those discussed in the company's Quarterly Reports on Form 10-Q filed on Aug. 2, 2016 and Nov. 1, 2016, (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 and 12, 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


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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,
 
2016
 
2015
 
Change
 
% Change
 
2016
 
2015
 
Change
 
% Change
 
(Dollars In Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
$
282,272

 
$
255,804

 
$
26,468

 
10.3

 
$
664,400

 
$
610,775

 
$
53,625

 
8.8

Commercial
218,377

 
213,461

 
4,916

 
2.3

 
572,247

 
550,761

 
21,486

 
3.9

Industrial
106,021

 
105,307

 
714

 
0.7

 
314,723

 
304,937

 
9,786

 
3.2

Other retail
7,883

 
1,620

 
6,263

 
386.6

 
(23,002
)
 
(5,503
)
 
(17,499
)
 
(318.0
)
Total Retail Revenues
614,553

 
576,192

 
38,361

 
6.7

 
1,528,368

 
1,460,970

 
67,398

 
4.6

Wholesale
86,421

 
87,918

 
(1,497
)
 
(1.7
)
 
220,520

 
249,502

 
(28,982
)
 
(11.6
)
Transmission
58,462

 
61,190

 
(2,728
)
 
(4.5
)
 
188,996

 
181,070

 
7,926

 
4.4

Other
5,218

 
7,529

 
(2,311
)
 
(30.7
)
 
17,668

 
21,657

 
(3,989
)
 
(18.4
)
Total Revenues
764,654

 
732,829

 
31,825

 
4.3

 
1,955,552

 
1,913,199

 
42,353

 
2.2

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Fuel and purchased power
155,673

 
163,943

 
(8,270
)
 
(5.0
)
 
374,361

 
459,504

 
(85,143
)
 
(18.5
)
SPP network transmission costs
57,939

 
57,487

 
452

 
0.8

 
173,925

 
171,651

 
2,274

 
1.3

Operating and maintenance
86,758

 
80,444

 
6,314

 
7.8

 
250,135

 
248,263

 
1,872

 
0.8

Depreciation and amortization
84,972

 
77,184

 
7,788

 
10.1

 
252,838

 
228,529

 
24,309

 
10.6

Selling, general and administrative
60,582

 
60,485

 
97

 
0.2

 
192,762

 
179,567

 
13,195

 
7.3

Taxes other than income tax
48,154

 
37,682

 
10,472

 
27.8

 
145,529

 
113,047

 
32,482

 
28.7

Total Operating Expenses
494,078

 
477,225

 
16,853

 
3.5

 
1,389,550

 
1,400,561

 
(11,011
)
 
(0.8
)
INCOME FROM OPERATIONS
270,576

 
255,604

 
14,972

 
5.9

 
566,002

 
512,638

 
53,364

 
10.4

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Investment earnings
2,619

 
314

 
2,305

 
734.1

 
6,916

 
4,427

 
2,489

 
56.2

Other income
13,353

 
637

 
12,716

 
nm

 
26,212

 
18,572

 
7,640

 
41.1

Other expense
(5,887
)
 
(5,392
)
 
(495
)
 
(9.2
)
 
(14,338
)
 
(13,737
)
 
(601
)
 
(4.4
)
Total Other Income (Expense)
10,085

 
(4,441
)
 
14,526

 
327.1

 
18,790

 
9,262

 
9,528

 
102.9

Interest expense
40,897

 
44,306

 
(3,409
)
 
(7.7
)
 
121,011

 
134,120

 
(13,109
)
 
(9.8
)
INCOME BEFORE INCOME TAXES
239,764

 
206,857

 
32,907

 
15.9

 
463,781

 
387,780

 
76,001

 
19.6

Income tax expense
81,211

 
66,293

 
14,918

 
22.5

 
160,376

 
127,810

 
32,566

 
25.5

NET INCOME
158,553

 
140,564

 
17,989

 
12.8

 
303,405

 
259,970

 
43,435

 
16.7

Less: Net income attributable to noncontrolling interests
3,833

 
2,561

 
1,272

 
49.7

 
10,760

 
7,277

 
3,483

 
47.9

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
154,720

 
$
138,003

 
$
16,717

 
12.1

 
$
292,645

 
$
252,693

 
$
39,952

 
15.8

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
$
1.09

 
$
0.97

 
$
0.12

 
12.4

 
$
2.06

 
$
1.84

 
$
0.22

 
12.0

Diluted earnings per common share
$
1.08

 
$
0.97

 
$
0.11

 
11.3

 
$
2.05

 
$
1.82

 
$
0.23

 
12.6

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
142,091

 
141,623

 
468

 
0.3

 
142,039

 
136,686

 
5,353

 
3.9

Diluted
142,578

 
141,838

 
740

 
0.5

 
142,413

 
138,182

 
4,231

 
3.1

DIVIDENDS DECLARED PER COMMON SHARE
$
0.38

 
$
0.36

 
$
0.02

 
5.6

 
$
1.14

 
$
1.08

 
$
0.06

 
5.6

Effective income tax rate
34
%
 
32
%
 
 
 
 
 
35
%
 
33
%
 
 
 
 
nm - not meaningful

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WESTAR ENERGY NEWS RELEASE    Page 3 of 3
Exhibit


Exhibit 99.2
Westar Energy, Inc.
Third Quarter 2016 Earnings
Released November 1, 2016





Contents
Page
 
 











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, 2016 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,
 
2016
 
2015
 
Change
 
% Change
 
(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
282,272

 
$
255,804

 
$
26,468

 
10.3

Commercial
218,377

 
213,461

 
4,916

 
2.3

Industrial
106,021

 
105,307

 
714

 
0.7

Other retail
7,883

 
1,620

 
6,263

 
386.6

Total Retail Revenues
614,553

 
576,192

 
38,361

 
6.7

Wholesale
86,421

 
87,918

 
(1,497
)
 
(1.7
)
Transmission
58,462

 
61,190

 
(2,728
)
 
(4.5
)
Other
5,218

 
7,529

 
(2,311
)
 
(30.7
)
Total Revenues
764,654

 
732,829

 
31,825

 
4.3

OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
155,673

 
163,943

 
(8,270
)
 
(5.0
)
SPP network transmission costs
57,939

 
57,487

 
452

 
0.8

Operating and maintenance
86,758

 
80,444

 
6,314

 
7.8

Depreciation and amortization
84,972

 
77,184

 
7,788

 
10.1

Selling, general and administrative
60,582

 
60,485

 
97

 
0.2

Taxes other than income tax
48,154

 
37,682

 
10,472

 
27.8

Total Operating Expenses
494,078

 
477,225

 
16,853

 
3.5

INCOME FROM OPERATIONS
270,576

 
255,604

 
14,972

 
5.9

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
2,619

 
314

 
2,305

 
734.1

Other income
13,353

 
637

 
12,716

 
nm

Other expense
(5,887
)
 
(5,392
)
 
(495
)
 
(9.2
)
Total Other Income (Expense)
10,085

 
(4,441
)
 
14,526

 
327.1

Interest expense
40,897

 
44,306

 
(3,409
)
 
(7.7
)
INCOME BEFORE INCOME TAXES
239,764

 
206,857

 
32,907

 
15.9

Income tax expense
81,211

 
66,293

 
14,918

 
22.5

NET INCOME
158,553

 
140,564

 
17,989

 
12.8

Less: Net income attributable to noncontrolling interests
3,833

 
2,561

 
1,272

 
49.7

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
154,720

 
$
138,003

 
$
16,717

 
12.1

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
1.09

 
$
0.97

 
$
0.12

 
12.4

Diluted earnings per common share
$
1.08

 
$
0.97

 
$
0.11

 
11.3

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
142,091

 
141,623

 
468

 
0.3

Diluted
142,578

 
141,838

 
740

 
0.5

DIVIDENDS DECLARED PER COMMON SHARE
$
0.38

 
$
0.36

 
$
0.02

 
5.6

Effective income tax rate
34
%
 
32
%
 
 
 
 
 
 
 
 
 
 
 
 
nm - not meaningful
 
 
 
 
 
 
 

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2016 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,
 
2016
 
2015
 
Change
 
% Change
 
(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
664,400

 
$
610,775

 
$
53,625

 
8.8

Commercial
572,247

 
550,761

 
21,486

 
3.9

Industrial
314,723

 
304,937

 
9,786

 
3.2

Other retail
(23,002
)
 
(5,503
)
 
(17,499
)
 
(318.0
)
Total Retail Revenues
1,528,368

 
1,460,970

 
67,398

 
4.6

Wholesale
220,520

 
249,502

 
(28,982
)
 
(11.6
)
Transmission
188,996

 
181,070

 
7,926

 
4.4

Other
17,668

 
21,657

 
(3,989
)
 
(18.4
)
Total Revenues
1,955,552

 
1,913,199

 
42,353

 
2.2

OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
374,361

 
459,504

 
(85,143
)
 
(18.5
)
SPP network transmission costs
173,925

 
171,651

 
2,274

 
1.3

Operating and maintenance
250,135

 
248,263

 
1,872

 
0.8

Depreciation and amortization
252,838

 
228,529

 
24,309

 
10.6

Selling, general and administrative
192,762

 
179,567

 
13,195

 
7.3

Taxes other than income tax
145,529

 
113,047

 
32,482

 
28.7

Total Operating Expenses
1,389,550

 
1,400,561

 
(11,011
)
 
(0.8
)
INCOME FROM OPERATIONS
566,002

 
512,638

 
53,364

 
10.4

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
6,916

 
4,427

 
2,489

 
56.2

Other income
26,212

 
18,572

 
7,640

 
41.1

Other expense
(14,338
)
 
(13,737
)
 
(601
)
 
(4.4
)
Total Other Income (Expense)
18,790

 
9,262

 
9,528

 
102.9

Interest expense
121,011

 
134,120

 
(13,109
)
 
(9.8
)
INCOME BEFORE INCOME TAXES
463,781

 
387,780

 
76,001

 
19.6

Income tax expense
160,376

 
127,810

 
32,566

 
25.5

NET INCOME
303,405

 
259,970

 
43,435

 
16.7

Less: Net income attributable to noncontrolling interests
10,760

 
7,277

 
3,483

 
47.9

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
292,645

 
$
252,693

 
$
39,952

 
15.8

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
2.06

 
$
1.84

 
$
0.22

 
12.0

Diluted earnings per common share
$
2.05

 
$
1.82

 
$
0.23

 
12.6

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
142,039

 
136,686

 
5,353

 
3.9

Diluted
142,413

 
138,182

 
4,231

 
3.1

DIVIDENDS DECLARED PER COMMON SHARE
$
1.14

 
$
1.08

 
$
0.06

 
5.6

Effective income tax rate
35
%
 
33
%
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2016 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, 2016
 
December 31, 2015
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
3,937

 
$
3,231

Accounts receivable, net of allowance for doubtful accounts of $4,175 and $5,294, respectively
322,386

 
258,286

Fuel inventory and supplies
290,080

 
301,294

Prepaid expenses
15,625

 
16,864

Regulatory assets
91,999

 
109,606

Other
38,276

 
27,860

Total Current Assets
762,303

 
717,141

PROPERTY, PLANT AND EQUIPMENT, NET
9,038,197

 
8,524,902

PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET
260,488

 
268,239

OTHER ASSETS:
 
 
 
Regulatory assets
731,859

 
751,312

Nuclear decommissioning trust
198,796

 
184,057

Other
252,775

 
260,015

Total Other Assets
1,183,430

 
1,195,384

TOTAL ASSETS
$
11,244,418

 
$
10,705,666

LIABILITIES AND EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Current maturities of long-term debt
$
125,000

 
$
—

Current maturities of long-term debt of variable interest entities
26,842

 
28,309

Short-term debt
182,900

 
250,300

Accounts payable
228,046

 
220,969

Accrued dividends
52,822

 
49,829

Accrued taxes
119,938

 
83,773

Accrued interest
61,833

 
71,426

Regulatory liabilities
22,547

 
25,697

Other
97,100

 
106,632

Total Current Liabilities
917,028

 
836,935

LONG-TERM LIABILITIES:
 
 
 
Long-term debt, net
3,388,221

 
3,163,950

Long-term debt of variable interest entities, net
111,218

 
138,097

Deferred income taxes
1,737,359

 
1,591,430

Unamortized investment tax credits
207,595

 
209,763

Regulatory liabilities
243,754

 
267,114

Accrued employee benefits
445,442

 
462,304

Asset retirement obligations
283,941

 
275,285

Other
85,442

 
88,825

Total Long-Term Liabilities
6,502,972

 
6,196,768

COMMITMENTS AND CONTINGENCIES (See 10-Q Notes 4, 11 and 12)
 
 
 
EQUITY:
 
 
 
Westar Energy, Inc. Shareholders’ Equity:
 
 
 
Common stock, par value $5 per share; authorized 275,000,000 shares; issued and outstanding 141,743,883 shares and 141,353,426 shares, respective to each date
708,719

 
706,767

Paid-in capital
2,013,449

 
2,004,124

Retained earnings
1,078,799

 
945,830

Total Westar Energy, Inc. Shareholders’ Equity
3,800,967

 
3,656,721

Noncontrolling Interests
23,451

 
15,242

Total Equity
3,824,418

 
3,671,963

TOTAL LIABILITIES AND EQUITY
$
11,244,418

 
$
10,705,666


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2016 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,
 
2016
 
2015
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
 
 
 
Net income
$
303,405

 
$
259,970

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
252,838

 
228,529

Amortization of nuclear fuel
22,518

 
18,528

Amortization of deferred regulatory gain from sale leaseback
(4,121
)
 
(4,121
)
Amortization of corporate-owned life insurance
13,779

 
15,309

Non-cash compensation
7,025

 
6,280

Net deferred income taxes and credits
160,429

 
126,602

Allowance for equity funds used during construction
(7,894
)
 
(2,034
)
Changes in working capital items:
 
 
 
Accounts receivable
(64,100
)
 
(21,437
)
Fuel inventory and supplies
11,680

 
(28,814
)
Prepaid expenses and other
(385
)
 
(22,742
)
Accounts payable
9,736

 
(4,979
)
Accrued taxes
40,711

 
51,867

Other current liabilities
(61,879
)
 
(66,000
)
Changes in other assets
(4,377
)
 
1,394

Changes in other liabilities
13,208

 
26,512

Cash Flows from Operating Activities
692,573

 
584,864

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 
 
 
Additions to property, plant and equipment
(821,936
)
 
(486,515
)
Purchase of securities - trusts
(43,252
)
 
(20,752
)
Sale of securities - trusts
44,326

 
20,957

Investment in corporate-owned life insurance
(14,648
)
 
(14,845
)
Proceeds from investment in corporate-owned life insurance
24,242

 
65,962

Investment in affiliated company
(655
)
 
—

Other investing activities
(3,095
)
 
(781
)
Cash Flows used in Investing Activities
(815,018
)
 
(435,974
)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 
 
 
Short-term debt, net
(67,402
)
 
46,000

Proceeds from long-term debt
396,472

 
—

Proceeds from long-term debt of variable interest entities
162,048

 
—

Retirements of long-term debt
(50,000
)
 
(275,000
)
Retirements of long-term debt of variable interest entities
(190,357
)
 
(27,933
)
Repayment of capital leases
(2,327
)
 
(1,759
)
Borrowings against cash surrender value of corporate-owned life insurance
55,952

 
57,726

Repayment of borrowings against cash surrender value of corporate-owned life insurance
(22,921
)
 
(63,894
)
Issuance of common stock
2,003

 
257,169

Distributions to shareholders of noncontrolling interests
(2,551
)
 
(1,076
)
Cash dividends paid
(152,787
)
 
(137,616
)
Other financing activities
(4,979
)
 
(3,234
)
Cash Flows from (used in) Financing Activities
123,151

 
(149,617
)
NET CHANGE IN CASH AND CASH EQUIVALENTS
706

 
(727
)
CASH AND CASH EQUIVALENTS:
 
 
 
Beginning of period
3,231

 
4,556

End of period
$
3,937

 
$
3,829


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2016 should be read in conjunction with this financial information.
Page 4


Westar Energy, Inc.
3rd Quarter 2016 vs. 2015
Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
September 30, 2015 basic earnings attributable to common stock
 
 
 
$
138,003

 
 
 
$
0.97

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Gross Margin
 
 
 
39,643

 
A
 
 
 
Operating and maintenance
 
 
 
(6,314
)
 
B
 
 
 
Depreciation and amortization
 
 
 
(7,788
)
 
C
 
 
 
Selling, general and administrative
 
 
 
(97
)
 
 
 
 
 
Taxes other than income tax
 
 
 
(10,472
)
 
D
 
 
 
Other income (expense)
 
 
 
14,526

 
E
 
 
 
Interest expense
 
 
 
3,409

 
F
 
 
 
Income tax expense
 
 
 
(14,918
)
 
G
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(1,272
)
 
 
 
 
 
Change in shares outstanding
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2016 basic earnings attributable to common stock
 
 
 
$
154,720

 
 
 
$
1.09

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
 
 
A
Due primarily to: general rate case increase of $78.0M (annual); and estimated annual transmission margin
increase of $19.1M, which includes an SPP assessment of $(7.0M)

 
 
 
 
 
 
 
 
 
 
B
Due primarily to: higher distribution operating and maintenance expense partially due to improving long-term reliability in 2016 -- ($3.9M); higher operating and maintenance costs at coal fired plants due primarily to scheduled outages -- ($2.4M); partially offset by decrease in operating and maintenance expenses resulting from power plant retirements in late 2015 -- $4.2M
 
 
 
 
 
 
 
 
 
 
C
Due principally to property additions
 
 
 
 
 
 
 
 
 
 
D
Due primarily to higher property tax expense that is largely offset by increased prices -- ($10.6M)
 
 
 
 
 
 
 
 
 
 
E
Due primarily to: higher COLI benefit -- $10.4M; and an increase in equity AFUDC -- $2.7M

 
 
 
 
 
 
 
 
 
 
F
Due primarily to: increase in debt AFUDC -- $2.1M; and decrease in interest expense of long-term debt of VIEs due to refinancing -- $1.5M
 
 
 
 
 
 
 
 
 
 
G
Due primarily to higher income before income taxes


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2016 should be read in conjunction with this financial information.
Page 5


Westar Energy, Inc.
YTD September 2016 vs. 2015
Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
September 30, 2015 basic earnings attributable to common stock
 
 
 
$
252,693

 
 
 
$
1.84

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Gross Margin
 
 
 
125,222

 
A
 
 
 
Operating and maintenance
 
 
 
(1,872
)
 
 
 
 
 
Depreciation and amortization
 
 
 
(24,309
)
 
B
 
 
 
Selling, general and administrative
 
 
 
(13,195
)
 
C
 
 
 
Taxes other than income tax
 
 
 
(32,482
)
 
D
 
 
 
Other income (expense)
 
 
 
9,528

 
E
 
 
 
Interest expense
 
 
 
13,109

 
F
 
 
 
Income tax expense
 
 
 
(32,566
)
 
G
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(3,483
)
 
 
 
 
 
Change in shares outstanding
 
(0.07
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2016 basic earnings attributable to common stock
 
 
 
$
292,645

 
 
 
$
2.06

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
 
 
A
Due primarily to: general rate case increase of $78.0M (annual); estimated annual transmission margin
increase of $19.1M which includes an SPP assessment of $(7.0M)

 
 
 
 
 
 
 
 
 
 
B
Due principally to property additions

 
 
 
 
 
 
 
 
 
 
C
Due primarily to: merger-related expenses -- ($9.8M); increase in outside services related principally to technology services -- ($4.2M); partially offset by decrease in employee benefit costs -- $4.5M

 
 
 
 
 
 
 
 
 
 
D
Due primarily to higher property tax expense that is largely offset by increased prices -- ($33.4M)



 
 
 
 
 
 
 
 
 
 
E
Due primarily to: an increase in equity AFUDC -- $5.9M; and higher COLI benefit -- $3.1M


 
 
 
 
 
 
 
 
 
 
F
Due primarily to: decrease in interest expense of long-term debt due to refinancing -- $6.5M; decrease in interest expense of long-term debt of VIEs due to refinancing -- $4.1M; and increase in debt AFUDC -- $3.8M


 
 
 
 
 
 
 
 
 
 
G
Due primarily to higher income before income taxes


 
 
 
 
 
 
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2016 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,
 
2016
 
2015
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
282,272

 
$
255,804

 
$
26,468

 
10.3

Commercial
218,377

 
213,461

 
4,916

 
2.3

Industrial
106,021

 
105,307

 
714

 
0.7

Other retail
3,908

 
3,430

 
478

 
13.9

Provision for rate refunds
3,975

 
(1,810
)
 
5,785

 
319.6

Total Retail Revenues
614,553

 
576,192

 
38,361

 
6.7

Tariff-based wholesale
70,923

 
70,501

 
422

 
0.6

Market-based wholesale
15,498

 
17,417

 
(1,919
)
 
(11.0
)
Transmission
58,462

 
61,190

 
(2,728
)
 
(4.5
)
Other
5,218

 
7,529

 
(2,311
)
 
(30.7
)
Total Revenues
$
764,654

 
$
732,829

 
$
31,825

 
4.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
2,209

 
2,168

 
41

 
1.9

Commercial
2,230

 
2,221

 
9

 
0.4

Industrial
1,444

 
1,463

 
(19
)
 
(1.3
)
Other retail
19

 
21

 
(2
)
 
(9.5
)
Total Retail
5,902

 
5,873

 
29

 
0.5

Tariff-based wholesale
1,380

 
1,337

 
43

 
3.2

Market-based wholesale
1,009

 
863

 
146

 
16.9

Total wholesale
2,389

 
2,200

 
189

 
8.6

Total Electricity Sales
8,291

 
8,073

 
218

 
2.7

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
104.13

 
$
98.11

 
$
6.02

 
6.1

Tariff-based wholesale
$
51.39

 
$
52.73

 
$
(1.34
)
 
(2.5
)
Market-based wholesale
$
15.36

 
$
20.18

 
$
(4.82
)
 
(23.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
131,390

 
$
132,272

 
$
(882
)
 
(0.7
)
Purchased power
43,676

 
36,960

 
6,716

 
18.2

Subtotal
175,066

 
169,232

 
5,834

 
3.4

RECA recovery and other
(19,393
)
 
(5,289
)
 
(14,104
)
 
(266.7
)
Total fuel and purchased power expense
$
155,673

 
$
163,943

 
$
(8,270
)
 
(5.0
)
 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
631

 
571

 
60

 
10.5

                    Coal
5,254

 
5,220

 
34

 
0.7

                    Nuclear
840

 
1,240

 
(400
)
 
(32.3
)
                    Wind
84

 
90

 
(6
)
 
(6.7
)
Subtotal electricity generated
6,809

 
7,121

 
(312
)
 
(4.4
)
Purchased
1,673

 
1,201

 
472

 
39.3

Total Electricity Supply
8,482

 
8,322

 
160

 
1.9

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
19.30

 
$
18.57

 
$
0.73

 
3.9

Average cost of purchased power
$
26.11

 
$
30.77

 
$
(4.66
)
 
(15.1
)
Average cost of fuel and purchased power
$
20.64

 
$
20.34

 
$
0.30

 
1.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2015/
 
 
 
 
 
2016
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
1,285

 
1,205

 
80

 
6.6

Actual compared to 20 year average
1,285

 
1,123

 
162

 
14.4

Heating
 
 
 
 
 
 


Actual compared to last year
15

 
4

 
11

 
275.0

Actual compared to 20 year average
15

 
44

 
(29
)
 
(65.9
)


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2016 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,
 
2016
 
2015
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
664,400

 
$
610,775

 
$
53,625

 
8.8

Commercial
572,247

 
550,761

 
21,486

 
3.9

Industrial
314,723

 
304,937

 
9,786

 
3.2

Other retail
11,761


10,436

 
1,325

 
12.7

Provision for rate refunds
(34,763
)
 
(15,939
)
 
(18,824
)
 
(118.1
)
Total Retail Revenues
1,528,368

 
1,460,970

 
67,398

 
4.6

Tariff-based wholesale
186,203

 
187,524

 
(1,321
)
 
(0.7
)
Market-based wholesale
34,317

 
61,978

 
(27,661
)
 
(44.6
)
Transmission
188,996

 
181,070

 
7,926

 
4.4

Other
17,668

 
21,657

 
(3,989
)
 
(18.4
)
Total Revenues
$
1,955,552

 
$
1,913,199

 
$
42,353

 
2.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
5,097

 
5,108

 
(11
)
 
(0.2
)
Commercial
5,763

 
5,787

 
(24
)
 
(0.4
)
Industrial
4,137

 
4,195

 
(58
)
 
(1.4
)
Other retail
60

 
63

 
(3
)
 
(4.8
)
Total Retail
15,057

 
15,153

 
(96
)
 
(0.6
)
Tariff-based wholesale
3,290

 
3,718

 
(428
)
 
(11.5
)
Market-based wholesale
2,670

 
3,099

 
(429
)
 
(13.8
)
Total wholesale
5,960

 
6,817

 
(857
)
 
(12.6
)
Total Electricity Sales
21,017

 
21,970

 
(953
)
 
(4.3
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
101.51

 
$
96.41

 
$
5.10

 
5.3

Tariff-based wholesale
$
56.60

 
$
50.44

 
$
6.16

 
12.2

Market-based wholesale
$
12.85

 
$
20.00

 
$
(7.15
)
 
(35.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
305,008

 
$
346,689

 
$
(41,681
)
 
(12.0
)
Purchased power
116,577

 
116,002

 
575

 
0.5

Subtotal
421,585

 
462,691

 
(41,106
)
 
(8.9
)
RECA recovery and other
(47,224
)
 
(3,187
)
 
(44,037
)
 
nm

Total fuel and purchased power expense
$
374,361

 
$
459,504

 
$
(85,143
)
 
(18.5
)
 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
1,328

 
1,121

 
207

 
18.5

                    Coal
11,915

 
14,213

 
(2,298
)
 
(16.2
)
                    Nuclear
3,334

 
2,790

 
544

 
19.5

                    Wind
306

 
301

 
5

 
1.7

Subtotal electricity generated
16,883

 
18,425

 
(1,542
)
 
(8.4
)
Purchased
4,683

 
4,142

 
541

 
13.1

Total Electricity Supply
21,566

 
22,567

 
(1,001
)
 
(4.4
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
18.07

 
$
18.82

 
$
(0.75
)
 
(4.0
)
Average cost of purchased power
$
24.89

 
$
28.01

 
$
(3.12
)
 
(11.1
)
Average cost of fuel and purchased power
$
19.55

 
$
20.50

 
$
(0.95
)
 
(4.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2015/
 
 
 
 
 
2016
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
1,882

 
1,744

 
138

 
7.9

Actual compared to 20 year average
1,882

 
1,583

 
299

 
18.9

Heating
 
 
 
 
 
 
 
Actual compared to last year
2,382

 
2,707

 
(325
)
 
(12.0
)
Actual compared to 20 year average
2,382

 
2,859

 
(477
)
 
(16.7
)
nm - not meaningful
 
 
 
 
 
 
 
 

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2016 should be read in conjunction with this financial information.
Page 8


Westar Energy, Inc.
Capitalization
 
 
September 30, 2016
 
 
 
December 31, 2015
 
 
 
 
(Dollars in Thousands)
 
 
Current maturities of long-term debt
 
$
125,000

 
 
 
$
—

 
 
Current maturities of long-term debt of VIEs
 
26,842

 
 
 
28,309

 
 
Long-term debt, net
 
3,388,221

 
 
 
3,163,950

 
 
Long-term debt of variable interest entities, net
 
111,218

 
 
 
138,097

 
 
Total long-term debt
 
3,651,281

 
48.9
%
 
3,330,356

 
47.6
%
Common equity
 
3,800,967

 
50.8
%
 
3,656,721

 
52.2
%
Noncontrolling interests
 
23,451

 
0.3
%
 
15,242

 
0.2
%
Total capitalization
 
$
7,475,699

 
100.0
%
 
$
7,002,319

 
100.0
%
 
 
 
 
 
 
 
 
 
GAAP Book value per share
 
$
26.82

 
 
 
$
25.87

 


Period end shares outstanding (in thousands)
 
141,744

 
 
 
141,353

 
 
 
 
 
 
 
 
 
 
 
Outstanding Long-Term Debt
 
 
 
 
 
 
 
 
 
 
CUSIP
September 30, 2016
 
 
 
December 31, 2015
 
 
Westar Energy:
 
(Dollars in Thousands)
 
 
First Mortgage Bond series:
 
 
 
 
 
 
 
 
5.15% Series due January 2017
95709TAB6
$
125,000

 
 
 
$
125,000

 
 
5.10% Series due July 2020
95709TAD2
250,000

 
 
 
250,000

 
 
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

 
 
3.25% Series due December 2025
95709TAL4
250,000

 
 
 
250,000

 
 
4.25% Series due December 2045
95709TAM2
300,000

 
 
 
300,000

 
 
2.55% Series due July 2026
95709TAN0
350,000

 
 
 
—

 
 
 
 
2,505,000

 
 
 
2,155,000

 
 
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
 
2,580,500

 
 
 
2,230,500

 
 
 
 
 
 
 
 
 
 
 
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

 
 
4.85% Series due June 2031
121825CB7
—

 
 
 
50,000

 
 
2.50% Series due June 2031
N/A
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
 
3,551,940

 
 
 
3,201,940

 
 
Unamortized debt discount
 
(10,491
)
 
 
 
(10,374
)
 
 
Unamortized debt issuance expense
 
(28,228
)
 
 
 
(27,616
)
 
 
Long-term debt due within one year
 
(125,000
)
 
 
 
—

 
 
Total long-term debt, net
 
$
3,388,221

 
 
 
$
3,163,950

 
 

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2016 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, 2016 and 2015 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,
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
 
(Dollars in Thousands)
Revenues
$
764,654

 
$
732,829


$
31,825


$
1,955,552


$
1,913,199


$
42,353

Less: Fuel and purchased power expense
155,673

 
163,943

 
(8,270
)
 
374,361

 
459,504

 
(85,143
)
 SPP network transmission costs
57,939

 
57,487

 
452

 
173,925

 
171,651

 
2,274

Gross Margin
$
551,042


$
511,399


$
39,643


$
1,407,266


$
1,282,044


$
125,222

 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
$
551,042

 
$
511,399

 
$
39,643

 
$
1,407,266

 
$
1,282,044

 
$
125,222

Less: Operating and maintenance expense
86,758

 
80,444

 
6,314

 
250,135

 
248,263

 
1,872

Depreciation and amortization expense
84,972

 
77,184

 
7,788

 
252,838

 
228,529

 
24,309

Selling, general and administrative expense
60,582

 
60,485

 
97

 
192,762

 
179,567

 
13,195

Taxes other than income tax
48,154

 
37,682

 
10,472

 
145,529

 
113,047

 
32,482

Income from operations
$
270,576

 
$
255,604


$
14,972


$
566,002


$
512,638


$
53,364

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended September 30, 2016 should be read in conjunction with this financial information.
Page 10
wr-09302016x8xkexhibit99
Westar Energy Investor Update – November 1, 2016

 
Forward-Looking Disclosures NOVEMBER 1, 2016 INVESTOR UPDATE 2 Forward Looking Statements 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, 2015 (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 13 and 15; (2) those discussed in the company's Quarterly Reports on Form 10-Q filed on Aug. 2, 2016 and Nov. 1, 2016, (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 and 12, 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.

 
Year Over Year Earnings Variance $0.97 $1.09 $1.84 $2.06 Q3 2015 Q3 2016 YTD Q3 2015 YTD Q3 2016 EPS 2015 vs 2016 NOVEMBER 1, 2016 INVESTOR UPDATE 3  Q3 Earnings Variance Drivers Gross Margin Higher revenues from regulatory rate review SPP Assessment – ($7M) Higher COLI – $10M Higher distribution O&M for improving long-term grid reliability – ($4M)  YTD Q3 Variance Drivers Gross Margin Higher revenues from regulatory rate review SPP Assessment – ($7M) Lower interest expense – $13M Merger expenses – ($10M) Full Earnings Package is available under Supplemental Materials within the investor section of the company website at www.WestarEnergy.com.

 
Additional Earnings Detail  Merger Related Expenses  Q3 -- $1.9M  YTD Q3 -- $9.8M  Weather Estimate  Q3 -- $0.01 /share weather compared to 2015 -- $0.02/share compared to normal  YTD Q3 – ($0.03)/share weather compared to 2015 -- ($0.01)/share compared to normal  COLI  Q3 -- $10.2M  YTD Q3 -- $16.7M  Will record at least an additional $4.7M of COLI in Q4  Sales  ≈50% of industrial decline is due to chemical and oil sector down both for the year and quarter  Top 3 customers of sector showed 2.5% growth in the Q3  Construction & pet products sectors are up for the quarter and year  Reaffirm 2016 Guidance $2.38 - $2.53, with a bias towards the upper end  O&M/SGA guidance driver does not include the merger related expenses for the year NOVEMBER 1, 2016 INVESTOR UPDATE 4

 
Status of Approval Process NOVEMBER 1, 2016 INVESTOR UPDATE Successful Execution 5 Approval Process Stakeholder Filing Approval Add’l Info KCC FERC NRC SEC HSR Act  FCC Docket No. 16-KCPE-593-ACQ Docket No. 50-482 Docket No. EC16-146 WR Shareholders GXP Shareholders   Declared effective August 19, 2016 Shareholders Approved - September 26, 2016 ≈92% of votes cast approved Shareholders Approved - September 26, 2016 ≈96% of votes cast approved  Early termination of HSR waiting period     MPSC Settlement w/ Staff & OPC reached awaiting MPSC approval (Case No. EE-2017-0113) DOJ Voluntary antitrust inquiry closed 10/21/16

 
Timeline of Approval Process NOVEMBER 1, 2016 INVESTOR UPDATE 6 5/31/16 Announcement 6/28/16 KCC Filing 7/11/16 FERC Filing 7/14/16 SEC S-4 Filing 7/22/16 NRC Filing 8/19/16 SEC S-4 Declared Effective 9/26/16 Shareholder Meetings HSR Filing 10/21/16 Early Term HSR KCC Review Process 2nd Quarter – 2017 Expected Close