Western Resources 2000 Annual Report

Western Resources announced its intention a year ago to find a partner for its utility operations to help grow shareholder value, increase generation capacity and position the company for the future. The company sought a partner that would be committed to employees, customers, shareholders and Kansas communities. On Nov. 8, 2000, the company reached an agreement with Public Service Company of New Mexico (PNM) to combine with Western Resources’ utility companies, KGE and KPL.

A progressive company based in Albuquerque, PNM has a similar corporate philosophy with regard to power generation and wholesale marketing, a solid understanding of business energy concerns, a track record of charitable contributions, a strong environmental program and a commitment to diversity.

The new combined company will have the scale and scope to succeed in the evolving energy marketplace with:

More than one million retail electric customers in Kansas and New Mexico and 400,000 retail natural gas customers in New Mexico,
A generating capacity of more than 7,000 megawatts and
A combined work force of about 5,000 employees.

The new combined company will be headquartered in Albuquerque, but the Kansas utility headquarters will remain in Topeka.

TRANSACTION OVERVIEW

The alliance will provide the new combined company with a broader, more predictable cash flow; solid revenues and potential earnings growth; improved access to capital; and an opportunity to share the best practices of both organizations for the benefit of customers and shareholders.

The tax-free, stock-for-stock transaction should be completed during 2002, pending approvals from shareholders of both companies and regulatory agencies, including the Kansas Corporation Commission, the New Mexico Public Regulation Commission, the Securities and Exchange Commission, the Nuclear Regulatory Commission and the Federal Energy Regulatory Commission.

Each Western Resources share will be converted into a fraction of a share (to be determined at closing) in the new holding company. Each PNM share will be converted into one new holding company share.

Approximately 42 percent of the new holding company will be owned by former PNM shareholders. Former Western Resources shareholders and Westar Industries will own approximately 58 percent.

For more information about the transaction, please visit the companies’ joint website at www.pnmwr.com. For more information about PNM, please visit the company’s website at www.pnm.com.