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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
Westar Industries, Protection One
and we have purchased our and Protection One’s 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).
(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 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 for
information regarding purchases of securities that have occurred
during 2003.
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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.
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