Western Resources Announces Fiscal 2001 Results and Impact of

  Adoption of New Accounting Standards and  Maintains 2002 Targets   Business Editors   TOPEKA, Kan.--(BUSINESS WIRE)--Feb. 18, 2002--Western Resources  (NYSE: WR) today announced financial results for the fiscal year ended  Dec. 31, 2001, and the amount of a charge to be recorded in the first  quarter of 2002 as a result of the adoption of new accounting  standards related to accounting for goodwill and intangible assets.   Consolidated Results   Western Resources reported a consolidated net loss of $0.31 per  share in 2001, compared to net earnings of $1.96 per share in 2000. A  discussion of results by business line follows.   Westar Energy   Westar Energy contributed operating earnings of $0.50 per share in  2001, compared to $1.12 per share in 2000. The decrease in earnings  resulted principally from less favorable weather, the reduction in  retail rates ordered by the Kansas Corporation Commission in July 2001  and a net charge of approximately $14 million ($0.20 per share) in the  fourth quarter related to a work force reduction.   For the year ended Dec. 31, 2001, earnings before interest and  taxes (EBIT) and earnings before interest, taxes, depreciation and  amortization (EBITDA) totaled $287 million and $473 million,  respectively, before the fourth quarter charge related to a work force  reduction. Westar Energy is expected to contribute EBIT and EBITDA of  approximately $325 million and approximately $525 million,  respectively, in 2002.   Westar Industries   Westar Industries reported a loss of $0.81 per share in 2001,  compared to earnings of $0.84 per share in 2000.    Monitored Services   Monitored services reported a loss of $1.38 per Western Resources  share in 2001, compared to a loss of $0.88 per share in 2000. The  increased loss resulted principally from a 21 percent decrease in  revenues from the prior year (both Protection One and Protection One  Europe sold certain operations during the year), one-time expenses of  $9.7 million pre-tax at Protection One in 2001 primarily related to  efforts to consolidate and streamline operations, and reduced gains,  $34.5 million in 2001 compared to $49.3 million in 2000, from the  retirement of Protection One debt.   Westar Industries currently owns approximately 86.1 million shares  of Protection One common stock, representing 80.4 percent ownership on  a fully diluted basis. Protection One may from time to time repurchase  shares of its common stock in the open market or privately negotiated  transactions. In this event, Westar Industries will sell shares to  Protection One to maintain its proportionate ownership interest in  Protection One.   ONEOK   The investment in ONEOK contributed $0.51 per share to 2001  earnings, compared to $0.56 per share in the prior year. ONEOK's  earnings were adversely impacted by their exposure to Enron Corp. and  an order from the Oklahoma Corporation Commission that denied the  recovery of certain gas costs.   International Generation/Guardian/Miscellaneous    Other unregulated holdings contributed $0.06 per share to 2001  earnings, compared to $1.16 per share in the prior year. The prior  year earnings included gains from the sale of investments.   Adoption of New Accounting Standards   In 2001, the U.S. Financial Accounting Standards Board issued  Statement of Financial Accounting Standards No. 142 (SFAS No. 142),  "Goodwill and Other Intangible Assets" and SFAS No. 144, "Accounting  for the Impairment or Disposal of Long-Lived Assets." Under SFAS No.  142, effective Jan. 1, 2002, goodwill is no longer amortized as was  required under past accounting standards and goodwill is required to  be separately tested for impairment using a fair-value based approach  as opposed to the undiscounted cash flow approach used under past  accounting standards.    In accordance with these new standards, Western Resources will  record a net charge of approximately $654 million in the first quarter  of 2002. Approximately $465 million of the charge is related to the  impairment of Protection One and Protection One Europe goodwill, which  will be reflected in the statement of income as a cumulative effect of  a change in accounting principle. The balance, $189 million, is  related to the impairment of Protection One customer accounts and will  be reflected in the statement of income as an operating cost. An  independent appraisal firm was engaged to assist in the determination  of estimated fair values. This non-cash charge will not result in any  violation of debt covenants and is not expected to affect liquidity.   In 2001, Protection One and Protection One Europe charged a total  of approximately $57 million of goodwill amortization. After January  1, 2002, goodwill will no longer be amortized to income. However, the  new accounting rule requires that goodwill be tested for impairment on  an annual basis.   Other   Westar Energy had approximately 1,921 employees at February 1,  2002. A net charge of approximately $24 million will be recorded in  the first quarter of 2002 related to a voluntary separation program  completed in January 2002.   Western Resources (NYSE: WR) is a consumer services company with  interests in monitored services and energy. The company has total  assets of more than $7.5 billion, including security company holdings  through ownership of Protection One (NYSE: POI) and Protection One  Europe, which have more than 1.2 million security customers. Western  Resources provides electric utility services as Westar Energy to about  640,000 customers in Kansas. Through its ownership in ONEOK, Inc.  (NYSE: OKE), a Tulsa-based natural gas company, Western Resources has  a 44.7 percent interest in one of the largest natural gas distribution  companies in the nation, serving more than 1.4 million customers.    For more information about Western Resources and its operating  companies, visit us on the Internet at http://www.wr.com.   Forward-looking statements: Certain matters discussed here and  elsewhere 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 we "believe,"  "anticipate," "expect" or words of similar meaning. Forward-looking  statements describe our future plans, objectives, expectations or  goals. Such statements address future events and conditions concerning  capital expenditures, earnings, liquidity and capital resources,  litigation, rate and other regulatory matters, possible corporate  restructurings, mergers, acquisitions, dispositions, including the  proposed separation of Westar Industries, Inc., from our electric  utility businesses and the consummation of the acquisition of our  electric operations by Public Service Company of New Mexico,  compliance with debt covenants, changes in accounting requirements and  other accounting matters, interest and dividends, Protection One's  financial condition and its impact on our consolidated results,  environmental matters, changing weather, nuclear operations, ability  to enter new markets successfully and capitalize on growth  opportunities in non-regulated businesses, events in foreign markets  in which investments have been made and the overall economy of our  service area. What happens in each case could vary materially from  what we expect because of such things as electric utility  deregulation; ongoing municipal, state and federal activities, such as  the Wichita municipalization efforts; future economic conditions;  legislative and regulatory developments; competitive markets; and  other circumstances affecting anticipated operations, sales and costs.                               2001 ANNUAL REPORT                          WESTERN RESOURCES, INC.                                         Twelve Months Ended December 31,                                           2001                2000                                           ----                ----    1. Sales                           $ 2,186,262,000     $ 2,368,476,000   2. Net Income                      $   (20,876,000)    $   136,481,000   3. Earnings Available for       Common Stock                   $   (21,771,000)    $   135,352,000   4. Average Common Shares       Outstanding                         70,650,000(a)       68,962,000  5. Basic Earnings per Share        $         (0.31)(a) $          1.96   6. EBITDA                          $   538,265,000     $   853,048,000   7. Net Utility Plant (after       depreciation)                  $ 3,982,647,000     $ 3,933,624,000     (a) Excludes shares held by Westar Industries.                                2001 ANNUAL REPORT                          WESTERN RESOURCES, INC.                                Year Ended                  Earnings(1)  Adj. Earnings(2)  Cash Flow(3)  December 31,               2001   2000      2001  2000     2001   2000  ------------               ----   ----      ----  ----     ----   ----  Electric Operations:   Electric                $ 0.86 $ 1.24    $ 1.15 $ 1.53  $ 3.48 $ 3.79    COLI Excess/Shortfall   $(0.08)$(0.11)   $(0.08)$(0.11) $(0.08)$(0.11)                            ---------------------------------------------    Total Operations       $ 0.78 $ 1.13    $ 1.07 $ 1.42  $ 3.40 $ 3.68    Other                   $(0.28)$(0.01)   $(0.28)$(0.01) $(0.29)$(0.01)                            ---------------------------------------------    Total Electric      Operations            $ 0.50 $ 1.12    $ 0.79 $ 1.41  $ 3.11 $ 3.67                            ---------------------------------------------  Westar Industries:   Monitored Services      $(1.38)$(0.88)   $(0.51)$(0.13) $ 0.09 $ 0.10    ONEOK                   $ 0.51 $ 0.56    $ 0.51 $ 0.56  $ 0.48 $ 0.52    Other                   $ 0.06 $ 1.16    $ 0.35 $ 1.19  $ 0.52 $ 1.17                            ---------------------------------------------   Total Westar Industries $(0.81)$ 0.84    $ 0.35 $ 1.62  $ 1.09 $ 1.79                             ---------------------------------------------   Total Western Resources $(0.31)$ 1.96    $ 1.14 $ 3.03  $ 4.20 $ 5.46                            =============================================    (1) Line of business reporting does not reflect intercompany      eliminations.    (2) Earnings + amortization of goodwill and KGE acquisition premium.    (3) Earnings + depreciation and amortization + ONEOK dividends +      Unregulated Generation Services dividends - Extraordinary Gain on      Retirement of Debt - Equity Loss on Subsidiaries    
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