SOURCE: Westar Energy

February 29, 2008 07:00 ET

Westar Energy Announces 2007 Results

TOPEKA, KS--(Marketwire - February 29, 2008) - Westar Energy, Inc. (NYSE: WR) today announced 2007 earnings of $167.4 million, or $1.85 per share, compared with 2006 earnings of $164.3 million, or $1.88 per share. The lower earnings per share reflects additional shares issued in 2007 to fund the company's growth plan. The company reported fourth quarter 2007 earnings of $13.5 million, or $0.15 per share, compared with fourth quarter 2006 earnings of $12.8 million, or $0.15 per share.

2007 Full Year Results Compared with 2006 Full Year Results

Westar Energy reported 2007 revenues of $1.7 billion, $121.1 million higher than 2006 revenues of $1.6 billion. Retail sales increased by $26.7 million, or 2.3 percent, due primarily to higher residential and commercial sales and a decrease in refund obligations. Wholesale sales increased $79.2 million, or 26.3 percent, due primarily to increased sales volumes because the company's generating facilities were operated in 2007 without restriction for coal conservation measures as was the case in 2006, and the company's nuclear plant operated without any planned or unplanned outages in 2007. Additionally, the company had higher sales from a long-term wholesale sale agreement entered into in April 2007.

Operating expenses increased $90.5 million, due primarily to increased fuel and purchased power expense and higher depreciation expense. Fuel and purchased power expense increased $60.5 million due principally to increased sales and higher unit cost of fuel and purchased power. The higher fuel and purchased power expense is largely recovered through a fuel adjustment clause, which allows the timely recovery of these costs. Depreciation expense increased $12.7 million due primarily to higher plant balances.

Other expense for 2007 was $1.3 million compared with other income of $13.5 million in 2006, a decrease of $14.8 million, due primarily to lower income from corporate-owned life insurance.

2007 Fourth Quarter Results Compared with 2006 Fourth Quarter Results

Westar Energy reported revenues of $392.9 million for the fourth quarter 2007, an increase of $49.7 million compared with $343.2 million in 2006. Retail revenues increased by $25.7 million, or 11.5 percent, principally due to smaller refund obligations in 2007 compared with the same period last year. Wholesale sales increased $19.0 million, or 22.9 percent, due primarily to increased sales volumes due to higher availability of the company's baseload generating facilities and a long-term wholesale sale agreement entered into in April 2007.

Operating expenses increased $50.1 million, reflecting primarily higher fuel and purchased power expense and higher depreciation expense. Fuel and purchased power expense increased $33.8 million, due primarily to increased sales and higher per unit cost of fuel. The $19.2 million increase in depreciation expense is due primarily to an $18.8 million reduction in the fourth quarter 2006 depreciation expense that resulted from the KCC reversing a portion its December 2005 rate order with regard to allowable depreciation expense.

Interest expense decreased by $5.3 million due primarily to the reversal of $9.3 million of tax-related interest expense due to a federal income tax settlement. The decrease was partially offset by higher interest expense associated with a capital lease related to the eight percent leasehold interest in Jeffrey Energy Center that the company acquired in April 2007 and increased long-term debt outstanding. Effective January 1, 2007, the company began recording interest related to income tax uncertainties as interest expense instead of as income tax expense.

2008 Earnings Guidance

The company announced earnings guidance for 2008 of $1.50 to $1.65 per share, excluding the possible affects of settlements of open prior period income tax audits. The company posted to its Web site a summary of the principal earnings drivers and adjustments used in arriving at 2008 earnings guidance. The summary can be 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 with the investment community Friday, Feb. 29 at 10 a.m. ET (9 a. m. CT). Investors, media and the public may listen to the conference call by dialing 888-680-0860, participant code 11864786. A Web cast of the live conference call will be available at www.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 year-end 2007 financial information, 2008 earnings guidance, the company's Annual Report on Form 10-K for the year ended Dec. 31, 2007 and other filings the company has made with the Securities and Exchange Commission are available on the company's Web site at www.WestarEnergy.com.

Westar Energy, Inc. (NYSE: WR) is the largest electric utility in Kansas, providing electric service to about 674,000 customers in the state. Westar Energy has about 6,100 megawatts of electric generation capacity and operates and coordinates approximately 33,000 miles of electric distribution and transmission lines.

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. Therefore, actual results could vary materially from what we expect. Please review our Annual Report on Form 10-K for the year ended Dec. 31, 2007 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, INC.
                    CONSOLIDATED STATEMENTS OF INCOME
                                (UNAUDITED)
                 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


                   Three Months Ended            Twelve Months Ended
                      December 31,                   December 31,
                 2007     2006    Change      2007       2006      Change
               -------- -------- --------  ----------  ---------- --------
Sales          $392,854 $343,152 $ 49,702  $1,726,834  $1,605,743 $121,091
               -------- -------- --------  ----------  ---------- --------

Fuel and
 purchased
 power          126,979   93,157   33,822     544,421     483,959   60,462
Operating and
 maintenance    122,726  119,690    3,036     473,525     463,785    9,740
Depreciation
 and
 amortization    51,232   31,988   19,244     192,910     180,228   12,682
Selling,
 general and
 administra-
 tive            45,800   51,826   (6,026)    178,587     171,001    7,586
               -------- -------- --------  ----------  ---------- --------
 Total
  Operating
  Expenses      346,737  296,661   50,076   1,389,443   1,298,973   90,470
               -------- -------- --------  ----------  ---------- --------

 Income from
  Operations     46,117   46,491     (374)    337,391     306,770   30,621

Other income
 (expense)        1,378    1,108      270      (1,315)     13,501  (14,816)
Interest
 expense         19,155   24,447   (5,292)    103,883      98,650    5,233
Income tax
 expense         14,575   10,079    4,496      63,839      56,312    7,527
               -------- -------- --------  ----------  ---------- --------

 Net Income      13,765   13,073      692     168,354     165,309    3,045

Preferred
 dividends          242      242        -         970         970        -
               -------- -------- --------  ----------  ---------- --------

 Earnings
  Available
  for Common
  Stock        $ 13,523 $ 12,831 $    692  $  167,384  $  164,339 $  3,045
               ======== ======== ========  ==========  ========== ========

 Basic
  Earnings Per
  Share        $   0.15 $   0.15 $      -  $     1.85  $     1.88 $  (0.03)
               ======== ======== ========  ==========  ========== ========

Average
 equivalent
 common shares
 outstanding     92,963   87,714               90,676      87,510

Contact Information

  • Media contact:
    Karla Olsen
    director, corporate communications
    Phone: 888.613.0003
    FAX: 316.261.6769
    Email Contact

    Investor contact:
    Bruce Burns
    director, investor relations
    Phone: 785.575.8227
    Email Contact