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) August 4, 2015

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 August 4, 2015, we issued a press release announcing our earnings for the period ended June 30, 2015. A copy of our August 4, 2015 press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. We are also including our 2015 Second 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 9.01. Financial Statements and Exhibits

Exhibit 99.1    Press Release dated August 4, 2015
Exhibit 99.2
2015 Second Quarter 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:
 
August 4, 2015
 
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 August 4, 2015
Exhibit 99.2
 
2015 Second Quarter Earnings Package






Exhibit 99.1


Westar Energy announces 2nd quarter 2015 results.
TOPEKA, Kan., Aug. 4, 2015 - Westar Energy, Inc. (NYSE:WR) today announced earnings of $64 million, or $0.47 per share, for the second quarter 2015 compared with earnings of $53 million, or $0.41 per share, for the second quarter 2014. Earnings for the six months ended June 30, 2015 were $115 million, or $0.85 per share, compared with $122 million, or $0.95 per share, for the same period in 2014.

Higher net income for the three months ended June 30, 2015 was driven by lower operating and maintenance costs at the company’s power plants and higher COLI income. The lower expenses and higher COLI income were offset by a decrease in retail sales due largely to mild weather compared with last year and a $3 million estimated refund obligation for transmission revenue.
    
Lower net income for the six months ended June 30, 2015 reflects mild weather, which reduced both energy marketing margins and retail energy sales, and a $9 million estimated refund obligation for transmission revenue. Lower operating expenses and receipt of COLI income partially offset the lower revenues.

Earnings Guidance
    
The company affirmed its 2015 earnings guidance of $2.18 to $2.33 per share. The earnings guidance drivers are located under Supplemental Materials within the investor section of the company website at www.WestarEnergy.com.

Conference Call and Additional Company Information

Westar Energy management will host a conference call Wednesday, Aug. 5 with the investment community at 10:00 a.m. ET (9:00 a.m. CT). Investors, media and the public may listen to the conference call by dialing 800-884-5695, participant code 71187505. A webcast of the live conference call will be available at www.WestarEnergy.com.

Members of the media are invited to listen to the conference call and then contact Gina Penzig with any follow-up questions.

This earnings announcement, a package of detailed second-quarter financial information, the company's quarterly report on Form 10-Q for the period ended June 30, 2015 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 NEWS RELEASE    Page 1 of 3
Westar Energy announces 2nd quarter results


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 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.

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, 2014 (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 Report on Form 10-Q filed Aug. 4, 2015, (a) under the heading "Forward-Looking Statements." (b) in ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and (c) in Part I, Financial Information, ITEM 1. Financial Statements: Notes 10 and 12; 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:
Bruce Burns
Director, Investor Relations
Phone: 785-575-8227
Bruce.Burns@westarenergy.com


WESTAR ENERGY NEWS RELEASE    Page 2 of 3
Westar Energy announces 2nd quarter results

Westar Energy, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
 
Three Months Ended Jun. 30,
 
Six Months Ended Jun. 30,
 
2015
 
2014
 
Change
 
% Change
 
2015
 
2014
 
Change
 
% Change
 
(Dollars In Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
$
173,677

 
$
175,671

 
$
(1,994
)
 
(1.1
)
 
$
354,970

 
$
367,958

 
$
(12,988
)
 
(3.5
)
Commercial
175,994

 
178,194

 
(2,200
)
 
(1.2
)
 
337,300

 
339,294

 
(1,994
)
 
(0.6
)
Industrial
103,151

 
106,984

 
(3,833
)
 
(3.6
)
 
199,630

 
201,480

 
(1,850
)
 
(0.9
)
Other retail
(7,660
)
 
(3,033
)
 
(4,627
)
 
(152.6
)
 
(7,122
)
 
(11,557
)
 
4,435

 
38.4

Total Retail Revenues
445,162

 
457,816

 
(12,654
)
 
(2.8
)
 
884,778

 
897,175

 
(12,397
)
 
(1.4
)
Wholesale
74,828

 
82,434

 
(7,606
)
 
(9.2
)
 
161,584

 
193,047

 
(31,463
)
 
(16.3
)
Transmission
61,295

 
63,700

 
(2,405
)
 
(3.8
)
 
119,880

 
125,166

 
(5,286
)
 
(4.2
)
Other
8,278

 
8,718

 
(440
)
 
(5.0
)
 
14,128

 
25,836

 
(11,708
)
 
(45.3
)
Total Revenues
589,563

 
612,668

 
(23,105
)
 
(3.8
)
 
1,180,370

 
1,241,224

 
(60,854
)
 
(4.9
)
OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Fuel and purchased power
140,080

 
164,779

 
(24,699
)
 
(15.0
)
 
295,561

 
338,618

 
(43,057
)
 
(12.7
)
SPP network transmission costs
57,352

 
55,533

 
1,819

 
3.3

 
114,164

 
107,491

 
6,673

 
6.2

Operating and maintenance
82,739

 
101,839

 
(19,100
)
 
(18.8
)
 
167,819

 
193,629

 
(25,810
)
 
(13.3
)
Depreciation and amortization
76,759

 
70,882

 
5,877

 
8.3

 
151,345

 
140,992

 
10,353

 
7.3

Selling, general and administrative
63,663

 
62,168

 
1,495

 
2.4

 
119,082

 
118,653

 
429

 
0.4

Taxes other than income tax
37,494

 
34,738

 
2,756

 
7.9

 
75,365

 
69,571

 
5,794

 
8.3

Total Operating Expenses
458,087

 
489,939

 
(31,852
)
 
(6.5
)
 
923,336

 
968,954

 
(45,618
)
 
(4.7
)
INCOME FROM OPERATIONS
131,476

 
122,729

 
8,747

 
7.1

 
257,034

 
272,270

 
(15,236
)
 
(5.6
)
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Investment earnings
1,634

 
3,175

 
(1,541
)
 
(48.5
)
 
4,113

 
5,553

 
(1,440
)
 
(25.9
)
Other income
15,121

 
5,658

 
9,463

 
167.2

 
17,935

 
11,575

 
6,360

 
54.9

Other expense
(2,633
)
 
(2,287
)
 
(346
)
 
(15.1
)
 
(8,345
)
 
(7,952
)
 
(393
)
 
(4.9
)
Total Other Income
14,122

 
6,546

 
7,576

 
115.7

 
13,703

 
9,176

 
4,527

 
49.3

Interest expense
45,516

 
47,303

 
(1,787
)
 
(3.8
)
 
89,814

 
93,543

 
(3,729
)
 
(4.0
)
INCOME BEFORE INCOME TAXES
100,082

 
81,972

 
18,110

 
22.1

 
180,923

 
187,903

 
(6,980
)
 
(3.7
)
Income tax expense
33,839

 
26,150

 
7,689

 
29.4

 
61,517

 
61,111

 
406

 
0.7

NET INCOME
66,243

 
55,822

 
10,421

 
18.7

 
119,406

 
126,792

 
(7,386
)
 
(5.8
)
Less: Net income attributable to noncontrolling interests
2,533

 
2,349

 
184

 
7.8

 
4,716

 
4,365

 
351

 
8.0

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
63,710

 
$
53,473

 
$
10,237

 
19.1

 
$
114,690

 
$
122,427

 
$
(7,737
)
 
(6.3
)
BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
$
0.47

 
$
0.41

 
$
0.06

 
14.6

 
$
0.85

 
$
0.95

 
$
(0.10
)
 
(10.5
)
Diluted earnings per common share
$
0.46

 
$
0.40

 
$
0.06

 
15.0

 
$
0.84

 
$
0.93

 
$
(0.09
)
 
(9.7
)
AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
135,939

 
129,363

 
6,576

 
5.1

 
134,177

 
129,185

 
4,992

 
3.9

Diluted
137,412

 
131,973

 
5,439

 
4.1

 
136,330

 
131,779

 
4,551

 
3.5

DIVIDENDS DECLARED PER COMMON SHARE
$
0.36

 
$
0.35

 
$
0.01

 
2.9

 
$
0.72

 
$
0.70

 
$
0.02

 
2.9

Effective income tax rate
33.81
%
 
31.90
%
 
 
 
 
 
34.00
%
 
32.52
%
 
 
 
 


WESTAR ENERGY NEWS RELEASE    Page 3 of 3




Exhibit 99.2
Westar Energy, Inc.
Second Quarter 2015 Earnings
Released August 4, 2015


















Bruce Burns
Director Investor Relations
785-575-8227
bruce.burns@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 June 30, 2015 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 June 30,
 
2015
 
2014
 
Change
 
% Change
 
(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
173,677

 
$
175,671

 
$
(1,994
)
 
(1.1
)
Commercial
175,994

 
178,194

 
(2,200
)
 
(1.2
)
Industrial
103,151

 
106,984

 
(3,833
)
 
(3.6
)
Other retail
(7,660
)
 
(3,033
)
 
(4,627
)
 
(152.6
)
Total Retail Revenues
445,162

 
457,816

 
(12,654
)
 
(2.8
)
Wholesale
74,828

 
82,434

 
(7,606
)
 
(9.2
)
Transmission
61,295

 
63,700

 
(2,405
)
 
(3.8
)
Other
8,278

 
8,718

 
(440
)
 
(5.0
)
Total Revenues
589,563

 
612,668

 
(23,105
)
 
(3.8
)
OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
140,080

 
164,779

 
(24,699
)
 
(15.0
)
SPP network transmission costs
57,352

 
55,533

 
1,819

 
3.3

Operating and maintenance
82,739

 
101,839

 
(19,100
)
 
(18.8
)
Depreciation and amortization
76,759

 
70,882

 
5,877

 
8.3

Selling, general and administrative
63,663

 
62,168

 
1,495

 
2.4

Taxes other than income tax
37,494

 
34,738

 
2,756

 
7.9

Total Operating Expenses
458,087

 
489,939

 
(31,852
)
 
(6.5
)
INCOME FROM OPERATIONS
131,476

 
122,729

 
8,747

 
7.1

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
1,634

 
3,175

 
(1,541
)
 
(48.5
)
Other income
15,121

 
5,658

 
9,463

 
167.2

Other expense
(2,633
)
 
(2,287
)
 
(346
)
 
(15.1
)
Total Other Income
14,122

 
6,546

 
7,576

 
115.7

Interest expense
45,516

 
47,303

 
(1,787
)
 
(3.8
)
INCOME BEFORE INCOME TAXES
100,082

 
81,972

 
18,110

 
22.1

Income tax expense
33,839

 
26,150

 
7,689

 
29.4

NET INCOME
66,243

 
55,822

 
10,421

 
18.7

Less: Net income attributable to noncontrolling interests
2,533

 
2,349

 
184

 
7.8

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
63,710

 
$
53,473

 
$
10,237

 
19.1

BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
0.47

 
$
0.41

 
$
0.06

 
14.6

Diluted earnings per common share
$
0.46

 
$
0.40

 
$
0.06

 
15.0

AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
135,939

 
129,363

 
6,576

 
5.1

Diluted
137,412

 
131,973

 
5,439

 
4.1

DIVIDENDS DECLARED PER COMMON SHARE
$
0.36

 
$
0.35

 
$
0.01

 
2.9

Effective income tax rate
33.81
%
 
31.90
%
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended June 30, 2015 should be read in conjunction with this financial information.
Page 1




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

 
Six Months Ended June 30,
 
2015
 
2014
 
Change
 
% Change
 
(Dollars in Thousands, Except Per Share Amounts)
REVENUES:
 
 
 
 
 
 
 
Residential
$
354,970

 
$
367,958

 
$
(12,988
)
 
(3.5
)
Commercial
337,300

 
339,294

 
(1,994
)
 
(0.6
)
Industrial
199,630

 
201,480

 
(1,850
)
 
(0.9
)
Other retail
(7,122
)
 
(11,557
)
 
4,435

 
38.4

Total Retail Revenues
884,778

 
897,175

 
(12,397
)
 
(1.4
)
Wholesale
161,584

 
193,047

 
(31,463
)
 
(16.3
)
Transmission
119,880

 
125,166

 
(5,286
)
 
(4.2
)
Other
14,128

 
25,836

 
(11,708
)
 
(45.3
)
Total Revenues
1,180,370

 
1,241,224

 
(60,854
)
 
(4.9
)
OPERATING EXPENSES:
 
 
 
 
 
 
 
Fuel and purchased power
295,561

 
338,618

 
(43,057
)
 
(12.7
)
SPP network transmission costs
114,164

 
107,491

 
6,673

 
6.2

Operating and maintenance
167,819

 
193,629

 
(25,810
)
 
(13.3
)
Depreciation and amortization
151,345

 
140,992

 
10,353

 
7.3

Selling, general and administrative
119,082

 
118,653

 
429

 
0.4

Taxes other than income tax
75,365

 
69,571

 
5,794

 
8.3

Total Operating Expenses
923,336

 
968,954

 
(45,618
)
 
(4.7
)
INCOME FROM OPERATIONS
257,034

 
272,270

 
(15,236
)
 
(5.6
)
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Investment earnings
4,113

 
5,553

 
(1,440
)
 
(25.9
)
Other income
17,935

 
11,575

 
6,360

 
54.9

Other expense
(8,345
)
 
(7,952
)
 
(393
)
 
(4.9
)
Total Other Income
13,703

 
9,176

 
4,527

 
49.3

Interest expense
89,814

 
93,543

 
(3,729
)
 
(4.0
)
INCOME BEFORE INCOME TAXES
180,923

 
187,903

 
(6,980
)
 
(3.7
)
Income tax expense
61,517

 
61,111

 
406

 
0.7

NET INCOME
119,406

 
126,792

 
(7,386
)
 
(5.8
)
Less: Net income attributable to noncontrolling interests
4,716

 
4,365

 
351

 
8.0

NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC.
$
114,690

 
$
122,427

 
$
(7,737
)
 
(6.3
)
BASIC AND DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. (See 10-Q Note 2):
 
 
 
 
 
 
 
Basic earnings per common share
$
0.85

 
$
0.95

 
$
(0.10
)
 
(10.5
)
Diluted earnings per common share
$
0.84

 
$
0.93

 
$
(0.09
)
 
(9.7
)
AVERAGE EQUIVALENT COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
 
 
 
Basic
134,177

 
129,185

 
4,992

 
3.9

Diluted
136,330

 
131,779

 
4,551

 
3.5

DIVIDENDS DECLARED PER COMMON SHARE
$
0.72

 
$
0.70

 
$
0.02

 
2.9

Effective income tax rate
34.00
%
 
32.52
%
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended June 30, 2015 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)

 
June 30, 2015
 
December 31, 2014
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
2,266

 
$
4,556

Accounts receivable, net of allowance for doubtful accounts of $4,569 and $5,309, respectively
266,330

 
267,327

Fuel inventory and supplies
279,026

 
247,406

Deferred tax assets
20,073

 
29,636

Prepaid expenses
18,147

 
15,793

Regulatory assets
123,961

 
105,549

Other
43,729

 
30,655

Total Current Assets
753,532

 
700,922

PROPERTY, PLANT AND EQUIPMENT, NET
8,340,478

 
8,162,908

PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET
273,406

 
278,573

OTHER ASSETS:
 
 
 
Regulatory assets
726,923

 
754,229

Nuclear decommissioning trust
191,934

 
185,016

Other
261,886

 
265,353

Total Other Assets
1,180,743

 
1,204,598

TOTAL ASSETS
$
10,548,159

 
$
10,347,001

LIABILITIES AND EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Current maturities of long-term debt of variable interest entities
$
28,315

 
$
27,933

Short-term debt
307,100

 
257,600

Accounts payable
185,307

 
219,351

Accrued dividends
49,736

 
44,971

Accrued taxes
87,792

 
74,356

Accrued interest
48,036

 
79,707

Regulatory liabilities
60,860

 
55,142

Other
77,779

 
90,571

Total Current Liabilities
844,925

 
849,631

LONG-TERM LIABILITIES:
 
 
 
Long-term debt, net
3,091,655

 
3,215,539

Long-term debt of variable interest entities, net
138,173

 
166,565

Deferred income taxes
1,511,299

 
1,475,487

Unamortized investment tax credits
209,520

 
211,040

Regulatory liabilities
283,451

 
288,343

Accrued employee benefits
524,191

 
532,622

Asset retirement obligations
283,194

 
230,668

Other
77,287

 
75,799

Total Long-Term Liabilities
6,118,770

 
6,196,063

COMMITMENTS AND CONTINGENCIES (See 10-Q Notes 10 and 12)
 
 
 
EQUITY:
 
 
 
Westar Energy, Inc. Shareholders’ Equity:
 
 
 
Common stock, par value $5 per share; authorized 275,000,000 shares; issued and outstanding 141,178,618 shares and 131,687,454 shares, respective to each date
705,893

 
658,437

Paid-in capital
1,997,661

 
1,781,120

Retained earnings
870,820

 
855,299

Total Westar Energy, Inc. Shareholders’ Equity
3,574,374

 
3,294,856

Noncontrolling Interests
10,090

 
6,451

Total Equity
3,584,464

 
3,301,307

TOTAL LIABILITIES AND EQUITY
$
10,548,159

 
$
10,347,001


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended June 30, 2015 should be read in conjunction with this financial information.
Page 3


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

 
Six Months Ended June 30,
 
2015
 
2014
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
 
 
 
Net income
$
119,406

 
$
126,792

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
151,345

 
140,992

Amortization of nuclear fuel
10,085

 
10,304

Amortization of deferred regulatory gain from sale leaseback
(2,748
)
 
(2,748
)
Amortization of corporate-owned life insurance
9,042

 
8,712

Non-cash compensation
4,241

 
3,945

Net deferred income taxes and credits
54,740

 
58,097

Stock-based compensation excess tax benefits
(1,178
)
 
544

Allowance for equity funds used during construction
(2,041
)
 
(9,718
)
Changes in working capital items:
 
 
 
Accounts receivable
998

 
(10,586
)
Fuel inventory and supplies
(31,307
)
 
(16,248
)
Prepaid expenses and other
(40,195
)
 
(4,891
)
Accounts payable
(2,873
)
 
(16,199
)
Accrued taxes
16,893

 
8,293

Other current liabilities
(65,908
)
 
(32,477
)
Changes in other assets
(9,712
)
 
1,828

Changes in other liabilities
21,046

 
16,674

Cash Flows from Operating Activities
231,834

 
283,314

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 
 
 
Additions to property, plant and equipment
(334,905
)
 
(427,124
)
Purchase of securities - trusts
(9,980
)
 
(4,410
)
Sale of securities - trusts
10,263

 
5,552

Investment in corporate-owned life insurance
(14,845
)
 
(15,903
)
Proceeds from investment in corporate-owned life insurance
1,192

 
1,773

Investment in affiliated company
—

 
1,418

Other investing activities
(653
)
 
(1,544
)
Cash Flows used in Investing Activities
(348,928
)
 
(440,238
)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 
 
 
Short-term debt, net
49,500

 
208,533

Proceeds from long-term debt
—

 
171,785

Retirements of long-term debt
(125,000
)
 
(177,500
)
Retirements of long-term debt of variable interest entities
(27,925
)
 
(27,305
)
Repayment of capital leases
(1,721
)
 
(1,628
)
Borrowings against cash surrender value of corporate-owned life insurance
56,622

 
56,577

Repayment of borrowings against cash surrender value of corporate-owned life insurance
(899
)
 
(1,123
)
Stock-based compensation excess tax benefits
1,178

 
(544
)
Issuance of common stock
256,394

 
20,699

Distributions to shareholders of noncontrolling interests
(1,076
)
 
—

Cash dividends paid
(89,035
)
 
(84,419
)
Other financing activities
(3,234
)
 
(1,887
)
Cash Flows from Financing Activities
114,804

 
163,188

NET CHANGE IN CASH AND CASH EQUIVALENTS
(2,290
)
 
6,264

CASH AND CASH EQUIVALENTS:
 
 
 
Beginning of period
4,556

 
4,487

End of period
$
2,266

 
$
10,751


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended June 30, 2015 should be read in conjunction with this financial information.
Page 4


Westar Energy, Inc.
2nd Quarter 2015 vs. 2014
Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2014 basic earnings attributable to common stock
 
 
 
$
53,473

 
 
 
$
0.41

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Retail
 
 
 
(12,654
)
 
A
 
 
 
Wholesale
 
 
 
(7,606
)
 
B
 
 
 
Transmission
 
 
 
(2,405
)
 
C
 
 
 
Other revenues
 
 
 
(440
)
 
 
 
 
 
Fuel and purchased power
 
 
 
24,699

 
D
 
 
 
SPP network transmission costs
 
 
 
(1,819
)
 
 
 
 
 
Gross Margin
 
 
 
(225
)
 
 
 
 
 
Operating and maintenance
 
 
 
19,100

 
E
 
 
 
Depreciation and amortization
 
 
 
(5,877
)
 
F
 
 
 
Selling, general and administrative
 
 
 
(1,495
)
 
 
 
 
 
Taxes other than income tax
 
 
 
(2,756
)
 
G
 
 
 
Other income (expense)
 
 
 
7,576

 
H
 
 
 
Interest expense
 
 
 
1,787

 
 
 
 
 
Income tax expense
 
 
 
(7,689
)
 
I
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(184
)
 
 
 
 
 
Change in shares outstanding
 
(0.02
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 basic earnings attributable to common stock
 
 
 
$
63,710

 
 
 
$
0.47

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to mild weather, CDD 3% lower than last year
 
 
 
 
 
 
 
 
 
 
B
Due principally to a 11% decrease in average wholesale prices (see page 7 for changes by customer class)

 
 
 
 
 
 
 
 
 
 
C
Due primarily to estimated refund obligation for transmission revenues -- ($2.6M)
 
 
 
 
 
 
 
 
 
 
D
Due primarily to a decrease in quantity and average price of purchased power
 
 
 
 
 
 
 
 
 
 
E
Due primarily to: lower costs at coal-fired plants primarily due to planned outages -- $11.3M; lower costs for scheduled outage at Wolf Creek in 2014 -- $5.3M
 
 
 
 
 
 
 
 
 
 
F
Due principally to property additions
 
 
 
 
 
 
 
 
 
 
G
Due primarily to higher property tax expense that is largely offset by increased prices -- ($3.0M)
 
 
 
 
 
 
 
 
 
 
H
Due primarily to COLI benefits this year -- $13.8M; partially offset by decrease in equity AFUDC -- ($4.6M)

 
 
 
 
 
 
 
 
 
 
I
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 June 30, 2015 should be read in conjunction with this financial information.
Page 5


Westar Energy, Inc.
YTD June 2015 vs. 2014
Earnings Variances
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
 
 
 
 
 
 
($ per share)
 
(Dollars in Thousands)
 
 
 
($ per share)
2014 basic earnings attributable to common stock
 
 
 
$
122,427

 
 
 
$
0.95

 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
 
 
 
 
 
Retail
 
 
 
(12,397
)
 
A
 
 
 
Wholesale
 
 
 
(31,463
)
 
B
 
 
 
Transmission
 
 
 
(5,286
)
 
C
 
 
 
Other revenues
 
 
 
(11,708
)
 
D
 
 
 
Fuel and purchased power
 
 
 
43,057

 
E
 
 
 
SPP network transmission costs
 
 
 
(6,673
)
 
 
 
 
 
Gross Margin
 
 
 
(24,470
)
 
 
 
 
 
Operating and maintenance
 
 
 
25,810

 
F
 
 
 
Depreciation and amortization
 
 
 
(10,353
)
 
G
 
 
 
Selling, general and administrative
 
 
 
(429
)
 
 
 
 
 
Taxes other than income tax
 
 
 
(5,794
)
 
H
 
 
 
Other income (expense)
 
 
 
4,527

 
I
 
 
 
Interest expense
 
 
 
3,729

 
 
 
 
 
Income tax expense
 
 
 
(406
)
 
 
 
 
 
Net income attributable to noncontrolling interests
 
 
 
(351
)
 
 
 
 
 
Change in shares outstanding
 
(0.04
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 basic earnings attributable to common stock
 
 
 
$
114,690

 
 
 
$
0.85

 
 
 
 
 
 
 
 
 
 
 
Major factors influencing the period to period change in EPS -- Favorable/(Unfavorable)
A
Due primarily to mild weather; partially offset by increased average retail prices (see page 8 for changes by customer class)
 
 
 
 
 
 
 
 
 
 
B
Due to a 19% decrease in average wholesale prices (see page 8 for changes by customer class)
 
 
 
 
 
 
 
 
 
 
C
Due primarily to estimated refund obligation for transmission revenues -- ($8.6M)

 
 
 
 
 
 
 
 
 
 
D
Due primarily to lower energy marketing margins reflecting 2014 favorable market conditions -- ($13.1M)

 
 
 
 
 
 
 
 
 
 
E
Due primarily to a 6% decrease in MWh generated, and a 31% decrease in the average cost of purchased MWhs

 
 
 
 
 
 
 
 
 
 
F
Due primarily to: lower costs at coal-fired plants primarily due to planned outages -- $9.7M; lower costs at Wolf Creek principally the result of scheduled outage in 2014 -- $10.9M
 
 
 
 
 
 
 
 
 
 
G
Due principally to property additions
 
 
 
 
 
 
 
 
 
 
H
Due primarily to higher property tax expense that is largely offset by increased prices -- ($5.9M)

 
 
 
 
 
 
 
 
 
 
I
Due primarily to COLI benefits this year -- $13.8M; partially offset by decrease in equity AFUDC -- ($7.7 M)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended June 30, 2015 should be read in conjunction with this financial information.
Page 6


Westar Energy, Inc.
Revenue, Sales and Energy Supply
Supplemental Data
Three Months Ended June 30,
 
2015
 
2014
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
173,677

 
$
175,671

 
$
(1,994
)
 
(1.1
)
Commercial
175,994

 
178,194

 
(2,200
)
 
(1.2
)
Industrial
103,151

 
106,984

 
(3,833
)
 
(3.6
)
Other retail
3,503

 
3,521

 
(18
)
 
(0.5
)
Provision for rate refunds
(11,163
)
 
(6,554
)
 
(4,609
)
 
(70.3
)
Total Retail Revenues
445,162

 
457,816

 
(12,654
)
 
(2.8
)
Tariff-based wholesale
56,688

 
63,976

 
(7,288
)
 
(11.4
)
Market-based wholesale
18,140

 
18,458

 
(318
)
 
(1.7
)
Transmission
61,295

 
63,700

 
(2,405
)
 
(3.8
)
Other
8,278

 
8,718

 
(440
)
 
(5.0
)
Total Revenues
$
589,563

 
$
612,668

 
$
(23,105
)
 
(3.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
1,386

 
1,416

 
(30
)
 
(2.1
)
Commercial
1,835

 
1,842

 
(7
)
 
(0.4
)
Industrial
1,408

 
1,447

 
(39
)
 
(2.7
)
Other retail
22

 
21

 
1

 
4.8

Total Retail
4,651

 
4,726

 
(75
)
 
(1.6
)
Tariff-based wholesale
1,097

 
1,191

 
(94
)
 
(7.9
)
Market-based wholesale
949

 
813

 
136

 
16.7

Total wholesale
2,046

 
2,004

 
42

 
2.1

Total Electricity Sales
6,697

 
6,730

 
(33
)
 
(0.5
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
95.71

 
$
96.87

 
$
(1.16
)
 
(1.2
)
Tariff-based wholesale
$
51.68

 
$
53.72

 
$
(2.04
)
 
(3.8
)
Market-based wholesale
$
19.11

 
$
22.70

 
$
(3.59
)
 
(15.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
106,169

 
$
115,813

 
$
(9,644
)
 
(8.3
)
Purchased power
33,514

 
59,071

 
(25,557
)
 
(43.3
)
Subtotal
139,683

 
174,884

 
(35,201
)
 
(20.1
)
RECA recovery and other
397

 
(10,105
)
 
10,502

 
103.9

Total fuel and purchased power expense
$
140,080

 
$
164,779

 
$
(24,699
)
 
(15.0
)
 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
237

 
321

 
(84
)
 
(26.2
)
                    Coal
4,542

 
4,459

 
83

 
1.9

                    Nuclear
756

 
633

 
123

 
19.4

                    Wind
105

 
116

 
(11
)
 
(9.5
)
Subtotal electricity generated
5,640

 
5,529

 
111

 
2.0

Purchased
1,318

 
1,501

 
(183
)
 
(12.2
)
Total Electricity Supply
6,958

 
7,030

 
(72
)
 
(1.0
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
18.82

 
$
20.95

 
$
(2.13
)
 
(10.2
)
Average cost of purchased power
$
25.43

 
$
39.35

 
$
(13.92
)
 
(35.4
)
Average cost of fuel and purchased power
$
20.08

 
$
24.88

 
$
(4.80
)
 
(19.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2014/
 
 
 
 
 
2015
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
537

 
553

 
(16
)
 
(2.9
)
Actual compared to 20 year average
537

 
457

 
80

 
17.5

Heating
 
 
 
 
 
 


Actual compared to last year
269

 
392

 
(123
)
 
(31.4
)
Actual compared to 20 year average
269

 
385

 
(116
)
 
(30.1
)


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended June 30, 2015 should be read in conjunction with this financial information.
Page 7


Westar Energy, Inc.
Revenue, Sales and Energy Supply
Supplemental Data
Six Months Ended June 30,
 
2015
 
2014
 
Change
 
% Change
Revenues
(Dollars In Thousands)
Residential
$
354,970

 
$
367,958

 
$
(12,988
)
 
(3.5
)
Commercial
337,300

 
339,294

 
(1,994
)
 
(0.6
)
Industrial
199,630

 
201,480

 
(1,850
)
 
(0.9
)
Other retail
7,006


6,982

 
24

 
0.3

Provision for rate refunds
(14,128
)
 
(18,539
)
 
4,411

 
23.8

Total Retail Revenues
884,778

 
897,175

 
(12,397
)
 
(1.4
)
Tariff-based wholesale
117,023

 
131,870

 
(14,847
)
 
(11.3
)
Market-based wholesale
44,561

 
61,177

 
(16,616
)
 
(27.2
)
Transmission
119,880

 
125,166

 
(5,286
)
 
(4.2
)
Other
14,128

 
25,836

 
(11,708
)
 
(45.3
)
Total Revenues
$
1,180,370

 
$
1,241,224

 
$
(60,854
)
 
(4.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity Sales
(Thousands of MWh)
Residential
2,940

 
3,125

 
(185
)
 
(5.9
)
Commercial
3,567

 
3,602

 
(35
)
 
(1.0
)
Industrial
2,732

 
2,786

 
(54
)
 
(1.9
)
Other retail
41

 
42

 
(1
)
 
(2.4
)
Total Retail
9,280

 
9,555

 
(275
)
 
(2.9
)
Tariff-based wholesale
2,381

 
2,563

 
(182
)
 
(7.1
)
Market-based wholesale
2,236

 
1,918

 
318

 
16.6

Total wholesale
4,617

 
4,481

 
136

 
3.0

Total Electricity Sales
13,897

 
14,036

 
(139
)
 
(1.0
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Total retail
$
95.34

 
$
93.90

 
$
1.44

 
1.5

Tariff-based wholesale
$
49.15

 
$
51.45

 
$
(2.30
)
 
(4.5
)
Market-based wholesale
$
19.93

 
$
31.90

 
$
(11.97
)
 
(37.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel and Purchased Power
(Dollars In Thousands)
Fuel used for generation
$
214,418

 
$
254,463

 
$
(40,045
)
 
(15.7
)
Purchased power
79,041

 
98,522

 
(19,481
)
 
(19.8
)
Subtotal
293,459

 
352,985

 
(59,526
)
 
(16.9
)
RECA recovery and other
2,102

 
(14,367
)
 
16,469

 
114.6

Total fuel and purchased power expense
$
295,561

 
$
338,618

 
$
(43,057
)
 
(12.7
)
 
 
 
 
 
 
 
 
Electricity Supply
(Thousands of MWh)
Generated - Gas
550

 
625

 
(75
)
 
(12.0
)
                    Coal
8,994

 
9,640

 
(646
)
 
(6.7
)
                    Nuclear
1,550

 
1,527

 
23

 
1.5

                    Wind
211

 
229

 
(18
)
 
(7.9
)
Subtotal electricity generated
11,305

 
12,021

 
(716
)
 
(6.0
)
Purchased
2,941

 
2,546

 
395

 
15.5

Total Electricity Supply
14,246

 
14,567

 
(321
)
 
(2.2
)
 
 
 
 
 
 
 
 
 
(Dollars per MWh)
Average cost of fuel used for generation
$
18.97

 
$
21.17

 
$
(2.20
)
 
(10.4
)
Average cost of purchased power
$
26.88

 
$
38.70

 
$
(11.82
)
 
(30.5
)
Average cost of fuel and purchased power
$
20.60

 
$
24.23

 
$
(3.63
)
 
(15.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Degree Days
 
 
2014/
 
 
 
 
 
2015
 
20 yr Avg
 
 Change
 
 % Change
Cooling
 
 
 
 
 
 
 
Actual compared to last year
537

 
553

 
(16
)
 
(2.9
)
Actual compared to 20 year average
537

 
459

 
78

 
17.0

Heating
 
 
 
 
 
 
 
Actual compared to last year
2,703

 
3,196

 
(493
)
 
(15.4
)
Actual compared to 20 year average
2,703

 
2,814

 
(111
)
 
(3.9
)
 

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended June 30, 2015 should be read in conjunction with this financial information.
Page 8


Westar Energy, Inc.
Capitalization
 
 
June 30, 2015
 
 
 
December 31, 2014
 
 
 
 
(Dollars in Thousands)
 
 
Current maturities of long-term debt of VIEs
 
$
28,315

 
 
 
$
27,933

 
 
Long-term debt, net
 
3,091,655

 
 
 
3,215,539

 
 
Long-term debt of variable interest entities, net
 
138,173

 
 
 
166,565

 
 
Total long-term debt
 
3,258,143

 
47.7
%
 
3,410,037

 
50.8
%
Common equity
 
3,574,374

 
52.2
%
 
3,294,856

 
49.1
%
Noncontrolling interests
 
10,090

 
0.1
%
 
6,451

 
0.1
%
Total capitalization
 
$
6,842,607

 
100.0
%
 
$
6,711,344

 
100.0
%
 
 
 
 
 
 
 
 
 
GAAP Book value per share
 
$
25.32

 
 
 
$
25.02

 


Period end shares outstanding (in thousands)
 
141,179

 
 
 
131,687

 
 
 
 
 
 
 
 
 
 
 
Outstanding Long-Term Debt
 
 
 
 
 
 
 
 
 
 
CUSIP
June 30, 2015
 
 
 
December 31, 2014
 
 
Westar Energy:
 
(Dollars in Thousands)
 
 
First Mortgage Bond series:
 
 
 
 
 
 
 
 
5.15% Series due January 2017
95709TAB6
125,000

 
 
 
125,000

 
 
8.625% Series due December 2018
95709TAG5
300,000

 
 
 
300,000

 
 
5.10% Series due July 2020
95709TAD2
250,000

 
 
 
250,000

 
 
5.95% Series due January 2035
95709TAC4
—

 
 
 
125,000

 
 
5.875% Series due July 2036
95709TAE0
150,000

 
 
 
150,000

 
 
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

 
 
 
 
2,055,000

 
 
 
2,180,000

 
 
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
 
2,130,500

 
 
 
2,255,500

 
 
 
 
 
 
 
 
 
 
 
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

 
 
4.3% 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

 
 
 
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
 
3,101,940

 
 
 
3,226,940

 
 
Unamortized debt discount
 
(10,285
)
 
 
 
(11,401
)
 
 
Total long-term debt, net
 
$
3,091,655

 
 
 
$
3,215,539

 
 

The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended June 30, 2015 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 six months ended June 30, 2015 and 2014 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 June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
Change
 
2015
 
2014
 
Change
 
(Dollars in Thousands)
Revenues
$
589,563

 
$
612,668


$
(23,105
)

$
1,180,370


$
1,241,224


$
(60,854
)
Less: Fuel and purchased power expense
140,080

 
164,779

 
(24,699
)
 
295,561

 
338,618

 
(43,057
)
 SPP network transmission costs
57,352

 
55,533

 
1,819

 
114,164

 
107,491

 
6,673

Gross Margin
$
392,131


$
392,356


$
(225
)

$
770,645


$
795,115


$
(24,470
)
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
$
392,131

 
$
392,356

 
$
(225
)
 
$
770,645

 
$
795,115

 
$
(24,470
)
Less: Operating and maintenance expense
82,739

 
101,839

 
(19,100
)
 
167,819

 
193,629

 
(25,810
)
Depreciation and amortization expense
76,759

 
70,882

 
5,877

 
151,345

 
140,992

 
10,353

Selling, general and administrative expense
63,663

 
62,168

 
1,495

 
119,082

 
118,653

 
429

Taxes other than income tax
37,494

 
34,738

 
2,756

 
75,365

 
69,571

 
5,794

Income from operations
$
131,476

 
$
122,729


$
8,747


$
257,034


$
272,270


$
(15,236
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


The Notes to the Condensed Consolidated Financial Statements in the company's Quarterly Report on Form 10-Q
for the period ended June 30, 2015 should be read in conjunction with this financial information.
Page 10
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