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Westar Energy's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: WR

With that I'll turn the call over to Tony.

Tony Somma

Thanks Bruce. Good morning. We had a very good second-quarter with the growth in earnings resulting largely from recent price adjustments, warm weather and COLI income. Net income was $61 million compared to $44 million last year. EPS were $0.48, up $0.10 from last year.

Keep in mind when comparing the two periods that last year included about $0.03, a one-time legal expenses while this quarter reflects about 10% more shares outstanding to fund utility plants. Gross margin was up $37 million or 11% due largely to higher prices and a 3% increase in retail sales.

As measured by cooling degree days, weather for the quarter was significantly warmer than normal and about 20% warmer than last year although a good portion of that was in April and May which doesn’t have the same effect on sales as hot summer weather does. .

On the expense side, combined O&M and SG&A was up about $22 million or 14%, excluding a $10 million increase in SPP transmission cost, most of which has a revenue offset. Also excluded from this increase was $6 million of one-time legal expenses incurred last year.

Principal reasons for higher expenses most of which are already reflected in the recently authorized revenue requirement price adjustments were: $11 million more for pension employee benefit costs, $3 million for increased tree trimming and related line maintenance, a $3 million increase in property taxes, which has a revenue offset and $2 million for increased maintenance at our coastal plant.

Depreciation was $5 million lower than last year due primarily to the adaption of lower depreciation rates as part of the recent rate order. We recorded $3 million of COLI income which was the primary driver of the increase in other income.

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