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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) February 22, 2017

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:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ 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 February 22, 2017, we issued a press release announcing our earnings for the period ended December 31, 2016. A copy of our February 22, 2017 press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. We are also including our 2016 Fourth Quarter and Year-End 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

We are furnishing our updated 2017-2021 Capital Forecast, which is included in Exhibit 99.2 attached hereto and is incorporated herein by reference. This information is available to the public on our website, http://www.WestarEnergy.com. The information furnished pursuant to this Item 7.01, including Exhibit 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 9.01. Financial Statements and Exhibits

Exhibit 99.1    Press Release dated February 22, 2017
Exhibit 99.2    2016 Fourth Quarter and Year-End Earnings package






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:
 
February 22, 2017
 
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 February 22, 2017
Exhibit 99.2
 
2016 Fourth Quarter and Year-End Earnings package




Exhibit
Exhibit 99.1
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WESTAR ENERGY ANNOUNCES 2016 RESULTS
TOPEKA, Kan., Feb. 22, 2017 - Westar Energy, Inc. (NYSE:WR) today announced earnings of $347 million, or $2.43 per share, for 2016 compared with earnings of $292 million, or $2.11 per share, for 2015. Fourth quarter 2016 earnings were $54 million, or $0.38 per share, compared with earnings of $39 million, or $0.28 per share, for the fourth quarter 2015.
    
“As we work to combine with KCP&L, we’ve managed expenses by keeping numerous positions vacant as people have retired while still delivering safe, reliable energy for our customers. We’ve also slowed other projects as we evaluate those plans in a combined electric company,” said Mark Ruelle, president and chief executive officer. “The merger is integral to maintaining these savings.”

Net income for 2016, compared with the prior year, was driven by recent price adjustments, an increase in corporate-owned life insurance income, and decreased costs from power plant retirements in late 2015. The higher revenue was partially offset by higher depreciation due to air quality control additions at La Cygne, higher costs at coal-fired plants from scheduled outages, and merger-related expenses.

Net income for the fourth quarter 2016, compared with 2015, increased primarily from favorable weather over prior year, recent price adjustments, and an increase in corporate-owned life insurance income. The higher revenue was partially offset by higher expenses due to improving long-term grid reliability.
Dividend Declaration
    
The Board of Directors today declared a quarterly dividend of 40 cents per share payable April 3, 2017, on the company's common stock payable to shareholders of record as of March 9, 2017. The new dividend reflects a 5 percent increase over the company's previous quarterly dividend of 38 cents per share, and results in an indicated annual dividend of $1.60 per share.
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.


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WESTAR ENERGY NEWS RELEASE    Page 1 of 3

Westar Energy announces 2016 results


This earnings announcement, a package of detailed fourth quarter and year-end 2016 financial information, the company's annual report on Form 10-K for the period ended Dec. 31, 2016 and other filings the company 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 7,800 MW of electric generation capacity fueled by coal, uranium, natural gas, wind and landfill gas. We are also a leader in electric transmission in Kansas. Our innovative customer service programs include mobile-enabled customer care, smart meter deployment 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, 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 14 and 16; and (2) 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 2016 results


Westar Energy, Inc.
Consolidated Statements of Income
(Unaudited)
 
Three Months Ended Dec. 31,
 
Twelve Months Ended Dec. 31,
 
2016
 
2015
 
Change
 
% Change
 
2016
 
2015
 
Change
 
% Change
 
(In Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
$
174,598

 
$
157,843

 
$
16,755

 
10.6
 
$
838,998

 
$
768,618

 
$
70,380

 
9.2
Commercial
168,819

 
161,640

 
7,179

 
4.4
 
741,066

 
712,400

 
28,666

 
4.0
Industrial
98,575

 
95,751

 
2,824

 
2.9
 
413,298

 
400,687

 
12,611

 
3.1
Other retail
7,989

 
(11,654
)
 
19,643

 
168.6
 
(15,013
)
 
(17,155
)
 
2,142

 
12.5
Total Retail Revenues
449,981

 
403,580

 
46,401

 
11.5
 
1,978,349

 
1,864,550

 
113,799

 
6.1
Wholesale
84,351

 
68,869

 
15,482

 
22.5
 
304,871

 
318,371

 
(13,500
)
 
(4.2)
Transmission
64,717

 
60,765

 
3,952

 
6.5
 
253,713

 
241,835

 
11,878

 
4.9
Other
7,486

 
12,751

 
(5,265
)
 
(41.3)
 
25,154

 
34,408

 
(9,254
)
 
(26.9)
Total Revenues
606,535

 
545,965

 
60,570

 
11.1
 
2,562,087

 
2,459,164

 
102,923

 
4.2
OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Fuel and purchased power
135,135

 
101,561

 
33,574

 
33.1
 
509,496

 
561,065

 
(51,569
)
 
(9.2)
SPP network transmission costs
58,838

 
57,392

 
1,446

 
2.5
 
232,763

 
229,043

 
3,720

 
1.6
Operating and maintenance
96,178

 
82,026

 
14,152

 
17.3
 
346,313

 
330,289

 
16,024

 
4.9
Depreciation and amortization
85,681

 
82,062

 
3,619

 
4.4
 
338,519

 
310,591

 
27,928

 
9.0
Selling, general and administrative
68,689

 
70,711

 
(2,022
)
 
(2.9)
 
261,451

 
250,278

 
11,173

 
4.5
Taxes other than income tax
46,133

 
43,854

 
2,279

 
5.2
 
191,662

 
156,901

 
34,761

 
22.2
Total Operating Expenses
490,654

 
437,606

 
53,048

 
12.1
 
1,880,204

 
1,838,167

 
42,037

 
2.3
INCOME FROM OPERATIONS
115,881

 
108,359

 
7,522

 
6.9
 
681,883

 
620,997

 
60,886

 
9.8
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Investment earnings
2,097

 
3,372

 
(1,275
)
 
(37.8)
 
9,013

 
7,799

 
1,214

 
15.6
Other income
8,369

 
866

 
7,503

 
866.4
 
34,582

 
19,438

 
15,144

 
77.9
Other expense
(3,672
)
 
(3,899
)
 
227

 
5.8
 
(18,012
)
 
(17,636
)
 
(376
)
 
(2.1)
Total Other Income (Expense)
6,794

 
339

 
6,455

 
nm
 
25,583

 
9,601

 
15,982

 
166.5
Interest expense
40,715

 
42,682

 
(1,967
)
 
(4.6)
 
161,726

 
176,802

 
(15,076
)
 
(8.5)
INCOME BEFORE INCOME TAXES
81,960

 
66,016

 
15,944

 
24.2
 
545,740

 
453,796

 
91,944

 
20.3
Income tax expense
24,165

 
24,190

 
(25
)
 
(0.1)
 
184,540

 
152,000

 
32,540

 
21.4
NET INCOME
57,795

 
41,826

 
15,969

 
38.2
 
361,200

 
301,796

 
59,404

 
19.7
Less: Net income attributable to noncontrolling interests
3,863

 
2,591

 
1,272

 
49.1
 
14,623

 
9,867

 
4,756

 
48.2
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
53,932

 
39,235

 
14,697

 
37.5
 
346,577

 
291,929

 
54,648

 
18.7
Earnings per common share, basic
$
0.38

 
$
0.28

 
$
0.10

 
35.7
 
$
2.43

 
$
2.11

 
$
0.32

 
15.2
Average equivalent common shares outstanding
142,152

 
141,713

 
439

 
0.3
 
142,068

 
137,958

 
4,110

 
3.0
DIVIDENDS DECLARED PER COMMON SHARE
$
0.38

 
$
0.36

 
$
0.02

 
5.6
 
$
1.52

 
$
1.44

 
$
0.08

 
5.6
Effective income tax rate
29.5
%
 
36.6
%
 
 
 
 
 
33.8
%
 
33.5
%
 
 
 
 
___________________
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
nm - not meaningful
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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WESTAR ENERGY NEWS RELEASE    Page 3 of 3

Exhibit


Exhibit 99.2
Westar Energy, Inc.
Fourth Quarter and Year-end 2016 Earnings
Released February 22, 2017





Contents
Page
 
 
Supplemental Slides
 












Cody VandeVelde
Director Investor Relations
785-575-8227
cody.vandevelde@WestarEnergy.com
NOTE:
The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K for the period ended December 31, 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.
Consolidated Statements of Income
(Unaudited)

 
Three Months Ended December 31,
 
2016
 
2015
 
Change
 
% Change
 
(In Thousands, Except Per Share Amounts)
 
 
REVENUES:
 
 
 
 
 
 
 
Residential
$
174,598


$
157,843

 
$
16,755

 
10.6

Commercial
168,819


161,640

 
7,179

 
4.4

Industrial
98,575


95,751

 
2,824

 
2.9

Other retail
7,989


(11,654
)
 
19,643

 
168.6

Total Retail Revenues
449,981

 
403,580

 
46,401

 
11.5

Wholesale
84,351


68,869

 
15,482

 
22.5

Transmission
64,717


60,765

 
3,952

 
6.5

Other
7,486


12,751

 
(5,265
)
 
(41.3
)
Total Revenues
606,535

 
545,965

 
60,570

 
11.1

OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
135,135


101,561

 
33,574

 
33.1

SPP network transmission costs
58,838

 
57,392

 
1,446

 
2.5

Operating and maintenance
96,178


82,026

 
14,152

 
17.3

Depreciation and amortization
85,681


82,062

 
3,619

 
4.4

Selling, general and administrative
68,689


70,711

 
(2,022
)
 
(2.9
)
Taxes other than income
46,133

 
43,854

 
2,279

 
5.2

Total Operating Expenses
490,654

 
437,606

 
53,048

 
12.1

INCOME FROM OPERATIONS
115,881

 
108,359

 
7,522

 
6.9

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
2,097

 
3,372

 
(1,275
)
 
(37.8
)
Other income
8,369

 
866

 
7,503

 
866.4

Other expense
(3,672
)
 
(3,899
)
 
227

 
5.8

Total Other Income
6,794

 
339

 
6,455

 
nm

Interest expense
40,715

 
42,682

 
(1,967
)
 
(4.6
)
INCOME BEFORE INCOME TAXES
81,960

 
66,016

 
15,944

 
24.2

Income tax expense
24,165

 
24,190

 
(25
)
 
(0.1
)
NET INCOME
57,795

 
41,826

 
15,969

 
38.2

Less: Net income attributable to noncontrolling interests
3,863

 
2,591

 
1,272

 
49.1

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
53,932

 
$
39,235

 
$
14,697

 
37.5

Earnings per common share, basic
$
0.38

 
$
0.28

 
$
0.10

 
35.7

Diluted earnings per common share
$
0.38

 
$
0.28

 
$
0.10

 
35.7

Weighted average equivalent common shares outstanding – basic (in thousands)
142,152

 
141,713

 
439

 
0.3

Weighted average equivalent common shares outstanding – diluted (in thousands)
142,659

 
142,057

 
602

 
0.4

DIVIDENDS DECLARED PER COMMON SHARE
$
0.38

 
$
0.36

 
$
0.02

 
5.6

Effective income tax rate
29
%
 
37
%
 
 
 
 
 
 
 
 
 
 
 
 
nm - not meaningful
 
 
 
 
 
 
 






The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2016 should be read in conjunction with this financial information.
Page 2



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

 
Twelve Months Ended December 31,
 
2016
 
2015
 
Change
 
% Change
 
(In Thousands, Except Per Share Amounts)
 
 
REVENUES:
 
 
 
 
 
 
 
Residential
$
838,998


$
768,618

 
$
70,380

 
9.2

Commercial
741,066


712,400

 
28,666

 
4.0

Industrial
413,298


400,687

 
12,611

 
3.1

Other retail
(15,013
)

(17,155
)
 
2,142

 
12.5

Total Retail Revenues
1,978,349

 
1,864,550

 
113,799

 
6.1

Wholesale
304,871


318,371

 
(13,500
)
 
(4.2
)
Transmission
253,713


241,835

 
11,878

 
4.9

Other
25,154


34,408

 
(9,254
)
 
(26.9
)
Total Revenues
2,562,087

 
2,459,164

 
102,923

 
4.2

OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
509,496

 
561,065

 
(51,569
)
 
(9.2
)
SPP network transmission costs
232,763

 
229,043

 
3,720

 
1.6

Operating and maintenance
346,313

 
330,289

 
16,024

 
4.9

Depreciation and amortization
338,519

 
310,591

 
27,928

 
9.0

Selling, general and administrative
261,451

 
250,278

 
11,173

 
4.5

Taxes other than income
191,662

 
156,901

 
34,761

 
22.2

Total Operating Expenses
1,880,204

 
1,838,167

 
42,037

 
2.3

INCOME FROM OPERATIONS
681,883

 
620,997

 
60,886

 
9.8

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
9,013

 
7,799

 
1,214

 
15.6

Other income
34,582

 
19,438

 
15,144

 
77.9

Other expense
(18,012
)
 
(17,636
)
 
(376
)
 
(2.1
)
Total Other Income
25,583

 
9,601

 
15,982

 
166.5

Interest expense
161,726

 
176,802

 
(15,076
)
 
(8.5
)
INCOME BEFORE INCOME TAXES
545,740

 
453,796

 
91,944

 
20.3

Income tax expense
184,540

 
152,000

 
32,540

 
21.4

NET INCOME
361,200

 
301,796

 
59,404

 
19.7

Less: Net income attributable to noncontrolling interests
14,623

 
9,867

 
4,756

 
48.2

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
346,577

 
$
291,929

 
$
54,648

 
18.7

Earnings per common share, basic
$
2.43

 
$
2.11

 
$
0.32

 
15.2

Diluted earnings per common share
$
2.43

 
$
2.09

 
$
0.34

 
16.3

Weighted average equivalent common shares outstanding – basic (in thousands)
142,068

 
137,958

 
4,110

 
3.0

Weighted average equivalent common shares outstanding – diluted (in thousands)
142,475

 
139,278

 
$
3,197

 
2.3

DIVIDENDS DECLARED PER COMMON SHARE
$
1.52

 
$
1.44

 
$
0.08

 
5.6

Effective income tax rate
34
%
 
33
%
 
 
 
 
 
 
 
 
 
 
 
 



The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2016 should be read in conjunction with this financial information.
Page 3


Westar Energy, Inc.
Consolidated Balance Sheets
(Dollars in Thousands, Except Par Values)
(Unaudited)
 
December 31, 2016
 
December 31, 2015
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
3,066

 
$
3,231

Accounts receivable, net of allowance for doubtful accounts of $6,667 and $5,294, respectively
288,579

 
258,286

Fuel inventory and supplies
300,125

 
301,294

Taxes receivable
13,000

 
—

Prepaid expenses
16,528

 
16,864

Regulatory assets
117,383

 
109,606

Other
29,701

 
27,860

Total Current Assets
768,382

 
717,141

PROPERTY, PLANT AND EQUIPMENT, NET
9,248,359

 
8,524,902

PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET
257,904

 
268,239

OTHER ASSETS:
 
 
 
Regulatory assets
762,479

 
751,312

Nuclear decommissioning trust
200,122

 
184,057

Other
249,828

 
260,015

Total Other Assets
1,212,429

 
1,195,384

TOTAL ASSETS
$
11,487,074

 
$
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
366,700

 
250,300

Accounts payable
220,522

 
220,969

Accrued dividends
52,885

 
49,829

Accrued taxes
85,729

 
83,773

Accrued interest
72,519

 
71,426

Regulatory liabilities
15,760

 
25,697

Other
81,236

 
106,632

Total Current Liabilities
1,047,193

 
836,935

LONG-TERM LIABILITIES:
 
 
 
Long-term debt, net
3,388,670

 
3,163,950

Long-term debt of variable interest entities, net
111,209

 
138,097

Deferred income taxes
1,752,776

 
1,591,430

Unamortized investment tax credits
210,654

 
209,763

Regulatory liabilities
223,693

 
267,114

Accrued employee benefits
512,412

 
462,304

Asset retirement obligations
323,951

 
275,285

Other
83,326

 
88,825

Total Long-Term Liabilities
6,606,691

 
6,196,768

COMMITMENTS AND CONTINGENCIES (See Notes 14 and 16)
 
 
 
EQUITY:
 
 
 
Westar Energy, Inc. Shareholders’ Equity:
 
 
 
Common stock, par value $5 per share; authorized 275,000,000 shares; issued and outstanding 141,791,153 shares and 141,353,426 shares, respective to each date
708,956

 
706,767

Paid-in capital
2,018,317

 
2,004,124

Retained earnings
1,078,602

 
945,830

Total Westar Energy, Inc. Shareholders’ Equity
3,805,875

 
3,656,721

Noncontrolling Interests
27,315

 
15,242

Total Equity
3,833,190

 
3,671,963

TOTAL LIABILITIES AND EQUITY
$
11,487,074

 
$
10,705,666


The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2016 should be read in conjunction with this financial information.
Page 4



Westar Energy, Inc.
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)

 
Twelve Months Ended December 31,
 
2016
 
2015
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
 
 
 
Net income
$
361,200

 
$
301,796

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
338,519

 
310,591

Amortization of nuclear fuel
26,714

 
26,974

Amortization of deferred regulatory gain from sale leaseback
(5,495
)
 
(5,495
)
Amortization of corporate-owned life insurance
18,042

 
19,850

Non-cash compensation
9,353

 
8,345

Net deferred income taxes and credits
185,229

 
151,332

Allowance for equity funds used during construction
(11,630
)
 
(2,075
)
Changes in working capital items:
 
 
 
Accounts receivable
(30,294
)
 
9,042

Fuel inventory and supplies
1,790

 
(53,263
)
Prepaid expenses and other
(7,431
)
 
(23,145
)
Accounts payable
(8,149
)
 
6,636

Accrued taxes
(5,942
)
 
13,073

Other current liabilities
(86,359
)
 
(80,396
)
Changes in other assets
18,346

 
2,199

Changes in other liabilities
18,527

 
30,386

Cash Flows from Operating Activities
822,420

 
715,850

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 
 
 
Additions to property, plant and equipment
(1,086,970
)
 
(700,228
)
Purchase of securities - trust
(46,581
)
 
(37,557
)
Sale of securities - trust
47,026

 
37,930

Investment in corporate-owned life insurance
(14,648
)
 
(14,845
)
Proceeds from investment in corporate-owned life insurance
92,677

 
66,794

Investment in affiliated company
(655
)
 
(575
)
Other investing activities
(3,609
)
 
(1,223
)
Cash Flows used in Investing Activities
(1,012,760
)
 
(649,704
)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 
 
 
Short-term debt, net
116,162

 
(7,300
)
Proceeds from long-term debt
396,290

 
543,881

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

 
—

Retirements of long-term debt
(50,000
)
 
(635,891
)
Retirements of long-term debt of variable interest entities
(190,357
)
 
(27,933
)
Repayment of capital leases
(3,104
)
 
(2,591
)
Borrowings against cash surrender value of corporate-owned life insurance
57,850

 
59,431

Repayment of borrowings against cash surrender value of corporate-owned life insurance
(89,284
)
 
(64,593
)
Issuance of common stock
2,439

 
257,998

Distributions to shareholders of noncontrolling interests
(2,550
)
 
(1,076
)
Cash dividends paid
(204,340
)
 
(186,120
)
Other financing activities
(4,979
)
 
(3,277
)
Cash Flows from (used in) Financing Activities
190,175

 
(67,471
)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(165
)
 
(1,325
)
CASH AND CASH EQUIVALENTS:
 
 
 
Beginning of period
3,231

 
4,556

End of period
$
3,066

 
$
3,231


The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2016 should be read in conjunction with this financial information.
Page 5



Westar Energy, Inc.
4th Quarter 2016 vs. 2015

Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2015 earnings attributable to common stock
 
 
 
$
39,235

 
 
 
$
0.28

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Gross Margin
 
 
 
25,550

 
A
 
 
 
Operating and maintenance
 
 
 
(14,152
)
 
B
 
 
 
Depreciation and amortization
 
 
 
(3,619
)
 
C
 
 
 
Selling, general and administrative
 
 
 
2,022

 
 
 
 
 
Taxes other than income taxes
 
 
 
(2,279
)
 
 
 
 
 
Other income (expense)
 
 
 
6,455

 
D
 
 
 
Interest expense
 
 
 
1,967

 
 
 
 
 
Income tax expense
 
 
 
25

 
 
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(1,272
)
 
 
 
 
 
Change in shares outstanding
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016 earnings attributable to common stock
 
 
 
$
53,932

 
 
 
$
0.38

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to: general rate case increase of $78.0M (annual); annual transmission margin increase of $13.7M; and a 9% increase in heating degree days due to mild weather in 2015



 
 
 
 
 
 
 
 
 
 
B
Due primarily to: higher transmission and distribution operating and maintenance costs partially due to improving long-term reliability -- ($6.9M); higher costs at coal-fired plants primarily due to planned outages -- ($6.8M); partially offset by decrease in costs resulting from power plant retirements in late 2015 -- $1.9M

 
 
 
 
 
 
 
 
 
 
C
Due primarily to property additions

 
 
 
 
 
 
 
 
 
 
D
Due primarily to: higher COLI benefit -- $4.1M; and an increase in equity AFUDC -- $3.7M


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2016 should be read in conjunction with this financial information.
Page 6


Westar Energy, Inc.
YTD December 2016 vs. 2015
Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2015 earnings attributable to common stock
 
 
 
$
291,929

 
 
 
$
2.11

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Margin
 
 
 
150,772

 
A
 
 
 
Operating and maintenance
 
 
 
(16,024
)
 
B
 
 
 
Depreciation and amortization
 
 
 
(27,928
)
 
C
 
 
 
Selling, general and administrative
 
 
 
(11,173
)
 
D
 
 
 
Taxes other than income
 
 
 
(34,761
)
 
E
 
 
 
Other income (expense)
 
 
 
15,982

 
F
 
 
 
Interest expense
 
 
 
15,076

 
G
 
 
 
Income tax expense
 
 
 
(32,540
)
 
H
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(4,756
)
 
 
 
 
 
Change in shares outstanding
 
(0.08
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016 earnings attributable to common stock
 
 
 
$
346,577

 
 
 
$
2.43

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to: general rate case increase of $78.0M (annual); annual transmission margin
increase of $13.7M; and a 10% increase in cooling degree days due to warmer summer weather

 
 
 
 
 
 
 
 
 
 
B
Due primarily to: higher costs at coal fired plants due to scheduled outages -- ($14.1M); higher transmission and distribution operating and maintenance costs partially due to improving long-term reliability -- ($4.3M); and higher decommissioning costs for Wolf Creek which is offset in retail revenues -- ($3.0M); partially offset by decrease in costs resulting from power plant retirements in late 2015 -- $9.8M

 
 
 
 
 
 
 
 
 
 
C
Due primarily to property additions

 
 
 
 
 
 
 
 
 
 
D
Due primarily to: merger-related expenses -- ($10.2M); increase in allowance for uncollectible accounts -- ($3.5M); and an increase in outside services related principally to technology services -- ($2.7M); partially offset by decrease in employee benefit costs due primarily to reduced post-retirement medical costs -- $7.6M


 
 
E
Due primarily to higher property tax expense that is largely offset by increased prices -- ($36.1M)

 
 
 
 
 
 
 
 
 
 
F
Due primarily to: an increase in equity AFUDC -- $9.6M; and higher COLI benefit -- $7.2M
 
 
 
 
 
 
 
 
 
 
G
Due primarily to: increase in debt AFUDC -- $6.5M; decrease in interest expense of long-term debt of VIEs due to refinancing -- $5.7M; and decrease in interest expense of long-term debt due to refinancing -- $4.8M
 
 
 
 
 
 
 
 
 
 
H
Due primarily to higher income before income taxes

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2016 should be read in conjunction with this financial information.
Page 7


Westar Energy, Inc.
Revenue, Sales and Energy Supply
Supplemental Data
Three Months Ended December 31,
 
2016
 
2015
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
174,598

 
$
157,843

 
$
16,755

 
10.6

Commercial
168,819

 
161,640

 
7,179

 
4.4

Industrial
98,575

 
95,751

 
2,824

 
2.9

Other retail
3,923

 
3,675

 
248

 
6.7

Provision for rate refunds
4,066

 
(15,329
)
 
19,395

 
126.5

Total Retail Revenues
449,981

 
403,580

 
46,401

 
11.5

Tariff-based wholesale
63,141

 
57,425

 
5,716

 
10.0

Market-based wholesale
21,210

 
11,444

 
9,766

 
85.3

Transmission
64,717

 
60,765

 
3,952

 
6.5

Other
7,486

 
12,751

 
(5,265
)
 
(41.3
)
Total Revenues
$
606,535

 
$
545,965

 
$
60,570

 
11.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
1,337

 
1,257

 
80

 
6.4

Commercial
1,780

 
1,713

 
67

 
3.9

Industrial
1,361

 
1,307

 
54

 
4.1

Other retail
19

 
20

 
(1
)
 
(5.0
)
Total Retail
4,497

 
4,297

 
200

 
4.7

Tariff-based wholesale
1,100

 
913

 
187

 
20.5

Market-based wholesale
1,239

 
763

 
476

 
62.4

Total wholesale
2,339

 
1,676

 
663

 
39.6

Total Electricity Sales
6,836

 
5,973

 
863

 
14.4

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
100.06

 
$
93.92

 
$
6.14

 
6.5

Tariff-based wholesale
$
57.40

 
$
62.90

 
$
(5.50
)
 
(8.7
)
Market-based wholesale
$
17.12

 
$
15.00

 
$
2.12

 
14.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
98,206

 
$
80,475

 
$
17,731

 
22.0

Purchased power
47,430

 
40,232

 
7,198

 
17.9

Subtotal
145,636

 
120,707

 
24,929

 
20.7

RECA recovery and other
(10,501
)
 
(19,146
)
 
8,645

 
45.2

Total fuel and purchased power expense
$
135,135

 
$
101,561

 
$
33,574

 
33.1

 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
397

 
181

 
216

 
119.3

                    Coal
3,988

 
3,139

 
849

 
27.0

                    Nuclear
542

 
1,267

 
(725
)
 
(57.2
)
                    Wind
115

 
121

 
(6
)
 
(5.0
)
Subtotal electricity generated
5,042

 
4,708

 
334

 
7.1

Purchased
1,923

 
1,585

 
338

 
21.3

Total Electricity Supply
6,965

 
6,293

 
672

 
10.7

 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
19.48

 
$
17.09

 
$
2.39

 
14.0

Average cost of purchased power
$
24.66

 
$
25.38

 
$
(0.72
)
 
(2.8
)
Average cost of fuel and purchased power
$
20.91

 
$
19.18

 
$
1.73

 
9.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2015/
 
 
 
 
 
2016
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
97

 
57

 
40

 
70.2

Actual compared to 20 year average
97

 
40

 
57

 
142.5

Heating
 
 
 
 
 
 
 
Actual compared to last year
1,497

 
1,372

 
125

 
9.1

Actual compared to 20 year average
1,497

 
1,808

 
(311
)
 
(17.2
)
 
 
 
 
 
 
 
 

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2016 should be read in conjunction with this financial information.
Page 8


Westar Energy, Inc.
Revenue, Sales and Energy Supply

Supplemental Data
Twelve Months Ended December 31,
 
2016
 
2015
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
838,998

 
$
768,618

 
$
70,380

 
9.2

Commercial
741,066

 
712,400

 
28,666

 
4.0

Industrial
413,298

 
400,687

 
12,611

 
3.1

Other retail
15,683

 
14,113

 
1,570

 
11.1

Provision for rate refunds
(30,696
)
 
(31,268
)
 
572

 
1.8

Total Retail Revenues
1,978,349

 
1,864,550

 
113,799

 
6.1

Tariff-based wholesale
249,344

 
244,949

 
4,395

 
1.8

Market-based wholesale
55,527

 
73,422

 
(17,895
)
 
(24.4
)
Transmission
253,713

 
241,835

 
11,878

 
4.9

Other
25,154

 
34,408

 
(9,254
)
 
(26.9
)
Total Revenues
$
2,562,087

 
$
2,459,164

 
$
102,923

 
4.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
6,434

 
6,364

 
70

 
1.1

Commercial
7,544

 
7,500

 
44

 
0.6

Industrial
5,499

 
5,502

 
(3
)
 
(0.1
)
Other retail
77

 
84

 
(7
)
 
(8.3
)
Total Retail
19,554

 
19,450

 
104

 
0.5

Tariff-based wholesale
4,391

 
4,631

 
(240
)
 
(5.2
)
Market-based wholesale
3,908

 
3,861

 
47

 
1.2

Total wholesale
8,299

 
8,492

 
(193
)
 
(2.3
)
Total Electricity Sales
27,853

 
27,942

 
(89
)
 
(0.3
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
101.17

 
$
95.86

 
$
5.31

 
5.5

Tariff-based wholesale
$
56.79

 
$
52.89

 
$
3.90

 
7.4

Market-based wholesale
$
14.21

 
$
19.02

 
$
(4.81
)
 
(25.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
403,214

 
$
427,164

 
$
(23,950
)
 
(5.6
)
Purchased power
164,007

 
156,234

 
7,773

 
5.0

Subtotal
567,221

 
583,398

 
(16,177
)
 
(2.8
)
RECA recovery and other
(57,725
)
 
(22,333
)
 
(35,392
)
 
(158.5
)
Total fuel and purchased power expense
$
509,496

 
$
561,065

 
$
(51,569
)
 
(9.2
)
 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
1,724

 
1,302

 
422

 
32.4

                    Coal
15,903

 
17,352

 
(1,449
)
 
(8.4
)
                    Nuclear
3,876

 
4,056

 
(180
)
 
(4.4
)
                    Wind
422

 
422

 
—

 
—

Subtotal electricity generated
21,925

 
23,132

 
(1,207
)
 
(5.2
)
Purchased
6,607

 
5,727

 
880

 
15.4

Total Electricity Supply
28,532

 
28,859

 
(327
)
 
(1.1
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
18.39

 
$
18.47

 
$
(0.08
)
 
(0.4
)
Average cost of purchased power
$
24.82

 
$
27.28

 
$
(2.46
)
 
(9.0
)
Average cost of fuel and purchased power
$
19.88

 
$
20.22

 
$
(0.34
)
 
(1.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2015/
 
 
 
 
 
2016
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
1,977

 
1,801

 
176

 
9.8

Actual compared to 20 year average
1,977

 
1,622

 
355

 
21.9

Heating
 
 
 
 
 
 
 
Actual compared to last year
3,879

 
4,079

 
(200
)
 
(4.9
)
Actual compared to 20 year average
3,879

 
4,668

 
(789
)
 
(16.9
)
 
 
 
 
 
 
 
 

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2016 should be read in conjunction with this financial information.
Page 9




Westar Energy, Inc.
Capitalization
 
 
December 31, 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
 
3,388,670

 
 
 
3,163,950

 
 
Long-term debt of variable interest entities, net
 
111,209

 
 
 
138,097

 
 
Total debt
 
3,651,721

 
48.8
%
 
3,330,356

 
47.6
%
Common equity
 
3,805,875

 
50.8
%
 
3,656,721

 
52.2
%
Noncontrolling interests
 
27,315

 
0.4
%
 
15,242

 
0.2
%
Total capitalization
 
$
7,484,911

 
100.0
%
 
$
7,002,319

 
100.0
%
 
 
 
 
 
 
 
 
 
GAAP Book value per share
 
$
26.84

 
 
 
$
25.87

 


Period end shares outstanding (in thousands)
 
141,791

 
 
 
141,353

 
 
 
 
 
 
 
 
 
 
 
Outstanding Long-Term Debt
 
 
 
 
 
 
 
 
 
 
CUSIP
December 31, 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

 
 
3.250% Series due December 2025
95709TAL4
250,000

 
 
 
250,000

 
 
2.550% Series due June 2026
95709TAN0
350,000

 
 
 
—

 
 
4.125% Series due December 2042
95709TAH3
550,000

 
 
 
550,000

 
 
4.10% Series due March 2043
95709TAJ9
430,000

 
 
 
430,000

 
 
4.625% Series due August 2043
95709TAK6
250,000

 
 
 
250,000

 
 
4.250% Series due December 2045
95709TAM2
300,000

 
 
 
300,000

 
 
 
 
2,505,000

 
 
 
2,155,000

 
 
Pollution control bond series:
 
 
 
 
 
 
 
 
Variable series due April 2032 (St Marys)
792609AF6
45,000

 
 
 
45,000

 
 
Variable series due April 2032 (Wamego)
933623BN9
30,500

 
 
 
30,500

 
 
 
 
75,500

 
 
 
75,500

 
 
Total Westar Energy
 
2,580,500

 
 
 
2,230,500

 
 
 
 
 
 
 
 
 
 
 
KGE
 
 
 
 
 
 
 
 
First mortgage bond series:
 
 
 
 
 
 
 
 
6.70%Series due June 2019
U24448AB5
300,000

 
 
 
300,000

 
 
6.15% Series due May 2023
485260B@1
50,000

 
 
 
50,000

 
 
6.53% Series due December 2037
485260BJ1
175,000

 
 
 
175,000

 
 
6.64%Series due May 2038
485260B#9
100,000

 
 
 
100,000

 
 
4.30% Series due July 2044
485260BM4
250,000

 
 
 
250,000

 
 
 
 
875,000

 
 
 
875,000

 
 
Pollution control bond series:
 
 
 
 
 
 
 
 
Variable rate series due April 2027 (LaCygne)
502828AJ5
21,940

 
 
 
21,940

 
 
4.85% Series due June 2031
121825CB7
—

 
 
 
50,000

 
 
2.50% Series due June 2031
 
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
 
(10,358
)
 
 
 
(10,374
)
 
 
Unamortized debt issuance expense
 
(27,912
)
 
 
 
(27,616
)
 
 
Long-term debt due within one year
 
(125,000
)
 
 
 
—

 
 
Total long-term debt, net
 
$
3,388,670

 
 
 
$
3,163,950

 
 

The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2016 should be read in conjunction with this financial information.
Page 10



Westar Energy, Inc.
GAAP to Non-GAAP Reconciliation

Fuel and purchased power costs fluctuate with electricity sales and unit costs. As permitted by regulators, prices are adjusted to reflect changes in the costs of fuel and purchased power. Fuel and purchased power costs for wholesale customers are recovered at prevailing market prices or based on a predetermined formula with a price adjustment approved by FERC. As a result, changes in fuel and purchased power costs are offset in revenues with minimal impact on net income. In addition, SPP network transmission costs fluctuate due primarily to investments by us and other members of the SPP for upgrades to the transmission grid within the SPP RTO. As with fuel and purchased power costs, changes in SPP network transmission costs are mostly reflected in the prices we charge customers with minimal impact on net income. For this reason, Westar management believes that gross margin is useful for understanding and analyzing changes in operating performance from one period to the next. Gross margin is calculated as total revenues, including transmission revenues, less the sum of fuel and purchased power costs and amounts billed by the SPP for network transmission costs (SPP NITS). Accordingly, gross margin reflects transmission revenues and costs on a net basis.

The calculations of gross margin for the three and twelve months ended 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 December 31,
 
Twelve Months Ended December 31,
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
 
(Dollars in Thousands)
Revenues
$
606,535

 
$
545,965


$
60,570


$
2,562,087

 
$
2,459,164


$
102,923

Less: Fuel and purchased power expense
135,135

 
101,561

 
33,574

 
509,496

 
561,065

 
(51,569
)
 SPP network transmission costs
58,838

 
57,392

 
1,446

 
232,763

 
229,043

 
3,720

Gross Margin
$
412,562

 
$
387,012


$
25,550


$
1,819,828

 
$
1,669,056


$
150,772

 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
$
115,881

 
$
108,359

 
$
7,522

 
$
681,883

 
$
620,997

 
$
60,886

Plus: Operating and maintenance expense
96,178

 
82,026

 
14,152

 
346,313

 
330,289

 
16,024

Depreciation and amortization expense
85,681

 
82,062

 
3,619

 
338,519

 
310,591

 
27,928

Selling, general and administrative expense
68,689

 
70,711

 
(2,022
)
 
261,451

 
250,278

 
11,173

Taxes other than income tax
46,133

 
43,854

 
2,279

 
191,662

 
156,901

 
34,761

Gross Margin
$
412,562

 
$
387,012


$
25,550


$
1,819,828

 
$
1,669,056

 
$
150,772

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Consolidated Financial Statements in the company's Annual Report on Form 10-K
for the period ended December 31, 2016 should be read in conjunction with this financial information.
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