WESTAR ENERGY INC /KS - 10-Q Quarterly Report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-3523

Westar Energy, Inc.

(Exact name of registrant as specified in its charter)

Kansas		48-0290150
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

818 South Kansas Avenue

Topeka, Kansas 66612

(Address, including Zip code and telephone number, including area code, of registrant’s principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Common Stock, par value $5.00 per share		71,488,497 Shares
(Class)		(Outstanding at August 6, 2002)

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS

Certain matters discussed in this Form 10-Q 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,

liquidity and capital resources,

possible corporate restructurings, mergers, acquisitions and dispositions,

compliance with debt and other restrictive covenants,

interest and dividends,

Protection One, Inc.’s financial condition and its impact on our consolidated results,

impairment charges recorded during the first quarter of 2002,

environmental matters,

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 or re-regulation,

ongoing municipal, state and federal activities, such as the Wichita municipalization effort,

future economic conditions,

changes in accounting requirements and other accounting matters,

rate and other regulatory matters, including the impact of (i) the Kansas Corporation Commission’s order to reduce our rates issued on July 25, 2001 and (ii) the Kansas Corporation Commission’s order issued July 20, 2001 and related proceedings, with respect to the proposed separation of Westar Energy, Inc.’s electric utility businesses from Westar Industries, Inc.,

the impact of changes and downturns in the energy industry and the market for trading wholesale electricity,

the proposed sale of our interests in ONEOK, Inc.,

political, legislative and regulatory developments,

amendments or revisions to our current business and financial plans,

regulatory, legislative and judicial actions,

regulated and competitive markets and

other circumstances affecting anticipated operations, sales and costs.

These lists are not all-inclusive because it is not possible to predict all possible factors.

See “Item 1. Business—Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2001, for additional information on matters that could impact our operations and financial results. Any forward-looking statement speaks only as of the date such statement was made, and we do 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.

PART I. Financial Information

ITEM 1. FINANCIAL STATEMENTS

WESTAR ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

	June 30, 2002			December 31, 2001
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	97,743		$	96,388
Restricted cash		134,433			15,495
Accounts receivable, net		101,899			96,824
Inventories and supplies		147,790			145,000
Energy trading contracts		86,262			71,421
Deferred tax assets		7,820			23,284
Prepaid expenses and other		64,595			54,514

Total Current Assets		640,542			502,926

PROPERTY, PLANT AND EQUIPMENT, NET		4,017,197			4,044,366

OTHER ASSETS:
Restricted cash		175,202			38,515
Investment in ONEOK		702,461			598,929
Customer accounts, net		454,782			813,733
Goodwill, net		298,861			879,926
Regulatory assets		393,293			358,025
Energy trading contracts		19,318			15,247
Other		243,035			233,927

Total Other Assets		2,286,952			2,938,302

ASSETS OF DISCONTINUED OPERATIONS		19,410			22,938

TOTAL ASSETS	$	6,964,101		$	7,508,532

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	118,026		$	160,829
Short-term debt		8,768			222,300
Accounts payable		122,703			122,968
Accrued liabilities		244,073			216,017
Accrued income taxes		16,467			35,048
Deferred security revenues		47,353			47,891
Energy trading contracts		77,772			67,859
Other		24,295			24,570

Total Current Liabilities		659,457			897,482

LONG-TERM LIABILITIES:
Long-term debt, net		3,505,390			2,978,450
Western Resources obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely company subordinated debentures		219,280			220,000
Deferred income taxes and investment tax credits		844,487			924,178
Minority interests		83,189			166,850
Deferred gain from sale-leaseback		168,552			174,466
Energy trading contracts		9,739			16,500
Other		325,010			285,181

Total Long-Term Liabilities		5,155,647			4,765,625

LIABILITIES OF DISCONTINUED OPERATIONS		1,333			1,364

COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Cumulative preferred stock, par value $100 per share; authorized 600,000 shares; issued 248,576 shares; outstanding 214,503 shares and 239,364 shares, respectively		21,450			23,936
Common stock, par value $5 per share; authorized 150,000,000 shares; issued 91,888,770 shares and 86,205,417 shares, respectively		459,444			431,027
Paid-in capital		1,250,378			1,196,763
Unearned compensation		(13,066	)		(21,920	)
Loans to officers		(2,014	)		(1,973	)
Retained earnings (accumulated deficit)		(98,597	)		606,502
Treasury stock, at cost, 20,493,341 and 15,097,987 shares, respectively		(455,976	)		(364,901	)
Accumulated other comprehensive loss, net		(13,955	)		(25,373	)

Total Shareholders’ Equity		1,147,664			1,844,061

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,964,101		$	7,508,532

The accompanying notes are an integral part of these consolidated financial statements.

WESTAR ENERGY, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Dollars in Thousands, Except Per Share Amounts)

		Three Months Ended June 30,
		2002			2001
SALES:
Energy		$	417,896		$	412,466
Monitored Services			87,230			108,360

Total Sales			505,126			520,826

COST OF SALES:
Energy			178,247			198,146
Monitored Services			26,987			38,518

Total Cost of Sales			205,234			236,664

GROSS PROFIT			299,892			284,162

OPERATING EXPENSES:
Operating and maintenance			97,628			88,496
Depreciation and amortization			67,536			102,234
Selling, general and administrative			78,194			83,106
Loss on dispositions of monitored services operations			—			17,979

Total Operating Expenses			243,358			291,815

INCOME (LOSS) FROM OPERATIONS			56,534			(7,653	)

OTHER INCOME (EXPENSE):
Investment earnings			14,824			342
Minority interests			(240	)		4,451
Other			(1,372	)		(2,832	)

Total Other Income			13,212			1,961

INTEREST EXPENSE:
Interest expense on long-term debt			58,441			53,595
Interest expense on short-term debt and other			10,587			11,027
	&

		Page
PART I. Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheets	4
	Consolidated Statements of Income (Loss)	5-6
	Consolidated Statements of Comprehensive Income (Loss)	7
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

PART II. Other Information
Item 1.	Legal Proceedings	36
Item 2.	Changes in Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Submission of Matters to a Vote of Security Holders	36
Item 5.	Other Information	37
Item 6.	Exhibits and Reports on Form 8-K	37

Signature		39

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