|
As of December
31, 2002, $215.5 million was drawn under
the facility. The remaining availability
under this facility as of December 31,
2002 was $64.5 million. At March 14,
2003, Protection One had outstanding
borrowings of $215.5 million and $12.9
million of remaining capacity. Amounts
outstanding, accrued interest and facility
fees have been eliminated in our consolidated
financial statements.
Purchases
of Securities
Purchases of Securities Westar Industries, Protection One and we have
purchased our and Protection One debt securities and preferred stock
in the open market. These repurchases have been accounted for as retirements
on a consolidated basis. The table below summarizes these transactions
for the years ended December 31, 2002, 2001 and 2000.
(a)Represents
the fair value of a call option associated with our putable/callable
notes (see Note 14 of the Notes to Consolidated Financial Statements,
“Call Option”).
(b)In
2001, $37.9 million of these bonds were purchased by Westar Industries
and $27.6 million of these were transferred to Protection One in
exchange for cash.
(c)In
2000, $170.0 million of these bonds were purchased by Westar Industries
and $103.9 million of these were transferred to Protection One in
exchange for cash and the settlement of certain intercompany payables
and receivables.
See Note 26 of
the Notes to Consolidated Financial
Statements, “Gain on Debt Retirements,”
for information about a change in accounting
treatment that requires that gains and
losses arising from the purchases and
sales of these securities be recorded
as other income rather than as an extraordinary
item. See Note 34 of the Notes to Consolidated
Financial Statements, “Subsequent Events
— Purchase of Stock from Protection
One” and “Subsequent Events — Purchases
of Debt Securities,” for information
regarding purchases of securities that
have occurred during 2003.
|
|
Tax
Sharing Agreement
We have a tax
sharing agreement with Protection One.
This pro rata tax sharing agreement
allows Protection One to be reimbursed
for current tax benefits utilized in
our consolidated tax return. We and
Protection One are eligible to file
on a consolidated basis for tax purposes
so long as we maintain an 80% ownership
interest in Protection One. We reimbursed
Protection One $13.5 million for tax
year 2001 and $7.4 million for tax year
2000. On March 11, 2003, the KCC issued
an order that allows us to make a cash
payment to Protection One of approximately
$20 million for tax year 2002.
Financial
Advisory Services
Protection One
entered into an agreement pursuant to
which it paid a quarterly fee to Westar
Industries for financial advisory services
equal to 0.125% of its consolidated
total assets at the end of each quarter.
This agreement was approved by the independent
members of Protection One’s board of
directors. Protection One incurred approximately
$3.6 million of such fees during the
year ended December 31, 2002. These
amounts have been eliminated in our
consolidated financial statements. This
agreement was terminated effective September
30, 2002.
Loans
to Officers
During 2001 and
2002, we extended loans to our officers
for the purpose of purchasing shares
of our common stock. The officers are
personally liable for the repayment
of the loans, which are unsecured and
bear interest, payable quarterly, at
a variable rate equal to our short-term
borrowing rate. The loans mature on
December 4, 2004. The aggregate balance
outstanding at December 31, 2002 was
approximately $1.8 million, which is
classified as a reduction to shareholders’
equity in the accompanying consolidated
balance sheets. For the year ended December
31, 2002, we recorded approximately
$97,000 in interest income on these
loans. No additional loans will be made
as a result of federal legislation that
became effective July 30, 2002.
Transactions
Between Westar Energy and KGE
We perform KGE’s
cash management function, including
cash receipts and disbursements. An
intercompany account is used to record
net receipts and disbursements between
us and KGE. KGE’s net amount payable
from affiliates approximated $24.1 million
at December 31, 2002, and the net amount
receivable from affiliates approximated
$17.3 million at December 31, 2001.
These intercompany charges have been
eliminated in consolidation.
We provide all
employees utilized by KGE. We allocate
certain operating expenses to KGE. These
expenses are allocated, depending on
the nature of the expense, based on
allocation studies, net investment,
number of customers, and/or other appropriate
factors. We believe such allocation
procedures are reasonable.
Transactions
with Protection One
During the fourth quarter of 2001, KGE
entered into an option agreement to sell an office building located
in downtown Wichita, Kansas, to Protection One for approximately
$0.5 million. The sales price was determined by management based
on three independent appraisers’ findings. This transaction was
completed during June 2002. We recognized a loss of $2.6 million
on this transaction and
|
