Exhibit 99.1
 | Media contact: Karla Olsen, director, corporate communications Phone: 316.299.7463 karla.olsen@WestarEnergy.com
Investor contact: Bruce Burns, director, investor relations Phone: 785.575.8227 bruce.burns@WestarEnergy.com
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WESTAR ENERGY ANNOUNCES THIRD QUARTER EARNINGS
Third quarter earnings decline driven by coolest summer in over 40 years
TOPEKA, Kan., Oct. 29, 2009 — Westar Energy, Inc. (NYSE:WR) today announced earnings of $81 million, or $0.73 per share, for the third quarter 2009 compared with earnings of $88 million, or $0.80 per share, for the third quarter 2008. Earnings for the nine months ended Sept. 30, 2009 were $163 million, or $1.48 per share, compared with earnings of $155 million, or $1.50 per share, for the same period last year.
The decrease in earnings for the quarter was due primarily to lower retail revenues resulting from extremely cool summer weather and the effects of the soft economy on industrial sales. Wholesale revenues too declined due principally to lower average market prices.
The increase in earnings for the nine months ended Sept. 30, 2009 was due primarily to price increases authorized for capital investments and higher operating costs. The effects of higher prices were partially offset by reduced energy sales and higher operating and maintenance, depreciation and interest expenses. The earnings for the nine months ended Sept. 30 for both years include substantial federal income tax adjustments related to prior period activity.
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| Westar Energy announces third quarter 2009 results | Page 2 of 8 |
Per share results for both periods also reflect more shares outstanding as a result of the company having issued additional shares to fund capital investments.
Revenues
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2009 | 2008 | Change | % Change | 2009 | 2008 | Change | % Change | |||||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||||
Retail | $ | 417,399 | $ | 422,314 | $ | (4,915 | ) | (1.2 | ) | $ | 1,063,101 | $ | 1,021,478 | $ | 41,623 | 4.1 | ||||||||||
Wholesale | 70,383 | 114,566 | (44,183 | ) | (38.6 | ) | 221,779 | 305,490 | (83,711 | ) | (27.4 | ) | ||||||||||||||
Energy marketing | 2,013 | 8,845 | (6,832 | ) | (77.2 | ) | 15,720 | 12,539 | 3,181 | 25.4 | ||||||||||||||||
Other | 38,739 | 29,128 | 9,611 | 33.0 | 117,513 | 93,392 | 24,121 | 25.8 | ||||||||||||||||||
Total Revenues | $ | 528,534 | $ | 574,853 | $ | (46,319 | ) | (8.1 | ) | $ | 1,418,113 | $ | 1,432,899 | $ | (14,786 | ) | (1.0 | ) | ||||||||
Retail revenues for the quarter decreased due to lower kilowatt-hour (KWh) sales reflecting extremely cool weather and the effects of the soft economy on industrial sales. The impact of lower KWh sales was offset partially by price increases earlier this year. Retail revenues for the nine months ended Sept. 30, 2009 increased due primarily to higher prices, more than offsetting a 5 percent decline in KWh sales.
Wholesale revenues decreased for both periods due principally to lower average market prices resulting from reduced demand.
Energy marketing gross margins decreased for the quarter due primarily to lower market prices and lower demand. For the nine months ended Sept. 30, 2009 energy marketing gross margins increased due primarily to the settlement of forward contracts for the sale of electricity on favorable terms. Excluding the gains from forward contracts, gross margins decreased $6 million for the period. These forward contracts related to sales that produced margins for the benefit of retail customers. The energy for the contracts was initially intended to be produced by the company, but was later satisfied by favorable open market purchases.
| Westar Energy announces third quarter 2009 results | Page 3 of 8 |
Fuel and Purchased Power Expense
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2009 | 2008 | Change | % Change | 2009 | 2008 | Change | % Change | |||||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||||
Fuel and purchased power | $ | 141,470 | $ | 220,140 | $ | (78,670 | ) | (35.7 | ) | $ | 402,622 | $ | 557,944 | $ | (155,322 | ) | (27.8 | ) | ||||||||
Fuel and purchased power expense for both periods decreased due to lower demand for electricity and lower unit costs for both fuel and purchased power. The decrease in fuel and purchased power expense was largely reflected in lower prices to customers and did not significantly serve to increase earnings.
Operating and Maintenance Expense
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| 2009 | 2008 | Change | % Change | 2009 | 2008 | Change | % Change | |||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||
Operating and maintenance | $ | 130,295 | $ | 107,672 | $ | 22,623 | 21.0 | $ | 392,272 | $ | 354,656 | $ | 37,616 | 10.6 | ||||||||
Operating and maintenance expense increased for both periods due primarily to higher network transmission expense (which is largely offset by higher transmission revenues), the amortization of previously deferred storm costs and additional maintenance expense principally at generating facilities.
Depreciation and Amortization Expense
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| 2009 | 2008 | Change | % Change | 2009 | 2008 | Change | % Change | |||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||
Depreciation and amortization | $ | 64,516 | $ | 51,966 | $ | 12,550 | 24.2 | $ | 186,544 | $ | 150,467 | $ | 36,077 | 24.0 | ||||||||
Depreciation expense increased for both periods primarily as a result of last year’s large construction projects having been completed and placed in service.
| Westar Energy announces third quarter 2009 results | Page 4 of 8 |
Selling, General and Administrative Expense
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
| 2009 | 2008 | Change | % Change | 2009 | 2008 | Change | % Change | |||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||
Selling, general and administrative | $ | 41,920 | $ | 50,802 | $ | (8,882 | ) | (17.5 | ) | $ | 143,540 | $ | 136,712 | $ | 6,828 | 5.0 | ||||||||
Selling, general and administrative expense decreased for the quarter due primarily to a $7 million decrease in pension and other employee benefit costs. The decrease was attributed principally to the company having recorded a $5 million credit to expense in accordance with a recent regulatory order that authorizes the deferral of pension and employee benefit costs for future recovery.
For nine months ended Sept. 30, 2009 selling, general and administrative expense increased due principally to an increase in pension and other employee benefit expenses. The increase in pension expense was attributable primarily to the lower than expected returns on pension assets last year.
Other Income (Expense)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2009 | 2008 | Change | % Change | 2009 | 2008 | Change | % Change | |||||||||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||||||||
Investment income (loss) | $ | 3,986 | $ | (2,986 | ) | $ | 6,972 | 233.5 | $ | 8,516 | $ | (2,902 | ) | $ | 11,418 | 393.5 | ||||||||||||||
Other income | 1,217 | 12,796 | (11,579 | ) | (90.5 | ) | 5,627 | 22,956 | (17,329 | ) | (75.5 | ) | ||||||||||||||||||
Other expense | (4,539 | ) | (4,517 | ) | (22 | ) | (0.5 | ) | (11,441 | ) | (11,179 | ) | (262 | ) | (2.3 | ) | ||||||||||||||
Total Other Income | $ | 664 | $ | 5,293 | $ | (4,629 | ) | (87.5 | ) | $ | 2,702 | $ | 8,875 | $ | (6,173 | ) | (69.6 | ) | ||||||||||||
Investment income increased for both periods due principally to gains on investments compared with losses on those investments in the same periods last year.
Other income for both periods decreased due principally to recording less equity AFUDC and corporate-owned life insurance (COLI) proceeds. The decrease in equity AFUDC is attributable to the completion of several large construction projects in the past year, at which time further accrual of AFUDC for these projects ceased. There have been no COLI proceeds recorded in 2009 compared with $6 million in COLI proceeds the third quarter last year.
| Westar Energy announces third quarter 2009 results | Page 5 of 8 |
Interest Expense
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| 2009 | 2008 | Change | % Change | 2009 | 2008 | Change | % Change | |||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||
Interest expense | $ | 41,599 | $ | 31,920 | $ | 9,679 | 30.3 | $ | 116,769 | $ | 72,920 | $ | 43,849 | 60.1 | ||||||||
Interest expense increased for the third quarter due primarily to the company having issued additional debt to fund capital investments.
Interest expense for the nine months ended Sept. 30, 2009 increased due primarily to the reversal in 2008 of $18 million of accrued interest associated with uncertain income tax liabilities (which reduced 2008 interest expense) and also as a result of the company having issued additional debt to fund capital investments. The increase was partially offset by lower interest rates on variable rate debt and less short-term borrowing.
Income Tax Expense
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
| 2009 | 2008 | Change | % Change | 2009 | 2008 | Change | % Change | |||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||
Income tax expense (benefit) | $ | 28,256 | $ | 29,361 | $ | (1,105 | ) | (3.8 | ) | $ | 48,354 | $ | 13,808 | $ | 34,546 | 250.2 | ||||||||
Income tax expense for the nine months ended Sept. 30, 2009 increased due primarily to the reversal in 2008 of $29 million of income tax reserves (which reduced 2008 income tax expense) as a result of completing a federal income tax audit for prior years.
Discontinued Operations
In January 2009 the company reached a settlement with the IRS that permitted it to utilize operating losses generated from the divestiture of former non-regulated businesses. This settlement resulted in a first quarter 2009 net earnings benefit from discontinued operations of $33 million, or $0.30 per share.
| Westar Energy announces third quarter 2009 results | Page 6 of 8 |
Earnings Guidance
The company affirmed its full-year 2009 earnings guidance of $1.35 to $1.45 per share. 2009 earnings guidance excludes a $0.30 per share benefit related to the tax settlement associated with its former non-regulated businesses, and includes $0.10 per share for COLI proceeds, none of which have been realized to date. The company has posted to its Web site a summary of the principal earnings drivers and adjustments used in arriving at 2009 earnings guidance. The summary is located under Investor Presentations within the Investors section of the company Web site at www.WestarEnergy.com.
Conference Call and Additional Company Information
Westar Energy management will host a conference call Friday, October 30 with the investment community at 12 p.m. ET (11 a. m. CT). Investors, media and the public may listen to the conference call by dialing 888-679-8038, participant code 26742216. A Web cast of the live conference call will be available atwww.WestarEnergy.com.
Members of media are invited to listen to the conference call and then contact Karla Olsen with any follow-up questions.
This earnings announcement, a package of detailed third quarter 2009 financial information, the company’s third quarter report on Form 10-Q for the period ended Sept. 30, 2009 filed with the Securities and Exchange Commission October 29, 2009 and other filings the company has made with the Securities and Exchange Commission are available on the company’s Web site atwww.WestarEnergy.com.
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Westar Energy, Inc. (NYSE: WR) is the largest electric utility in Kansas, providing electric service to about 684,000 customers in the state. Westar Energy has about 6,800 megawatts of electric generation capacity and operates and coordinates more than 35,000 miles of electric distribution and transmission lines.
For more information about Westar Energy, visit us on the Internet athttp://www.WestarEnergy.com.
| Westar Energy announces third quarter 2009 results | Page 7 of 8 |
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. Therefore, actual results could vary materially from what we expect. Please review our Form 10-K for the period ended Dec. 31, 2008 and our Form 10-Q for the period ended Sept. 30, 2009 for important risk factors that could cause results to differ materially from those in any such forward-looking statements. 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 except as required by applicable laws or regulations.
| Westar Energy announces third quarter 2009 results | Page 8 of 8 |
Attachment 1
WESTAR ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| 2009 | 2008 | Change | 2009 | 2008 | Change | |||||||||||||||
Revenues | $ | 528,534 | $ | 574,853 | $ | (46,319 | ) | $ | 1,418,113 | $ | 1,432,899 | $ | (14,786 | ) | ||||||
Fuel and purchased power | 141,470 | 220,140 | (78,670 | ) | 402,622 | 557,944 | (155,322 | ) | ||||||||||||
Operating and maintenance | 130,295 | 107,672 | 22,623 | 392,272 | 354,656 | 37,616 | ||||||||||||||
Depreciation and amortization | 64,516 | 51,966 | 12,550 | 186,544 | 150,467 | 36,077 | ||||||||||||||
Selling, general and administrative | 41,920 | 50,802 | (8,882 | ) | 143,540 | 136,712 | 6,828 | |||||||||||||
Total Operating Expenses | 378,201 | 430,580 | (52,379 | ) | 1,124,978 | 1,199,779 | (74,801 | ) | ||||||||||||
Income from Operations | 150,333 | 144,273 | 6,060 | 293,135 | 233,120 | 60,015 | ||||||||||||||
Other income | 664 | 5,293 | (4,629 | ) | 2,702 | 8,875 | (6,173 | ) | ||||||||||||
Interest expense | 41,599 | 31,920 | 9,679 | 116,769 | 72,920 | 43,849 | ||||||||||||||
Income tax expense (benefit) | 28,256 | 29,361 | (1,105 | ) | 48,354 | 13,808 | 34,546 | |||||||||||||
Income from Continuing Operations | 81,142 | 88,285 | (7,143 | ) | 130,714 | 155,267 | (24,553 | ) | ||||||||||||
Results of discontinued operations, net of tax | — | — | — | 32,978 | — | 32,978 | ||||||||||||||
Net Income | 81,142 | 88,285 | (7,143 | ) | 163,692 | 155,267 | 8,425 | |||||||||||||
Preferred dividends | 242 | 242 | — | 727 | 727 | — | ||||||||||||||
Net Income Attributable to Common Stock | $ | 80,900 | $ | 88,043 | $ | (7,143 | ) | $ | 162,965 | $ | 154,540 | $ | 8,425 | |||||||
Basic Earnings Per Share | $ | 0.73 | $ | 0.80 | $ | (0.07 | ) | $ | 1.48 | $ | 1.50 | $ | (0.02 | ) | ||||||
Average equivalent common shares outstanding | 109,753 | 108,715 | 109,543 | 102,312 | ||||||||||||||||
Dividends declared per share | $ | 0.30 | $ | 0.29 | $ | 0.01 | $ | 0.90 | $ | 0.87 | $ | 0.03 | ||||||||