Exhibit 99.1
Media contact:
Michel' J. Philipp
[LOGO] Western Resources Phone: 785.575.1927
making life a little easier FAX: 785.575.6399
michel_philipp@wr.com
Investor contact:
Jim Martin
Phone: 785.575.6549
FAX: 785.575.8160
jim_martin@wr.com
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WESTERN RESOURCES ANNOUNCES SEPARATION,
REPORTS 1999 RESULTS,
ANNOUNCES DIVIDEND POLICY
TOPEKA, Kansas, March 29, 2000 (6:30 a.m. CST) -- Western Resources
(NYSE:WR) announced today that it will separate its electric utility business,
to be called Westar Energy, from its non-electric business, which will be
renamed later and until then referred to as "Westar Capital." Both companies
will be public entities. The separation is expected to be accomplished by means
of a voluntary exchange offer and is expected to be completed prior to year-end
2000.
"We believe that Westar Energy, as a pure-play electric company, will
unlock the value associated with our electric assets by providing shareholders
an investment opportunity exclusively in our electric utility operations," said
David C. Wittig, Western Resources chairman of the board, president and chief
executive officer.
"While the businesses of the total company are strong, they have
different growth, financial, and business profiles and are evaluated differently
by investors," said Wittig. "Many of our shareholders have wanted greater
definition to the business, specifically a desire to have the company return to
its core business as strictly an electric utility. This strategy gives our
shareholders a choice of which business they wish to own, and gives the
financial community a
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clearer understanding of where the company's value lies. In fact, this is very
similar to the structure we would have built had the KCPL transaction been
completed."
Westar Energy will consist of two electric utilities, KPL and KGE,
that provide electric service to approximately 628,000 customers in Kansas. The
non-electric company, Westar Capital, will consist of the company's approximate
85% ownership interest in Protection One (NYSE:POI), a monitored security
company; its approximate 45% ownership interest in ONEOK Inc. (NYSE:OKE), a
Tulsa-based natural gas company; its 100% ownership interest in Protection One
Europe; its 40% ownership in Paradigm Direct LLC, a direct marketing company;
and other investments.
The exchange offer will provide Western Resources shareholders with
the opportunity to exchange some or all of their Western Resources common stock
for shares in Westar Capital. The terms of the offer, including the exchange
rate, will be determined and announced on commencement of the offer, expected to
be in the third quarter of 2000. The offer of shares in Westar Capital will be
made only by means of a prospectus.
Western Resources believes, without giving assurances, that the
separate companies will have per share market values above Western Resources'
current stock price levels. The exchange is expected to be a one-for-one
exchange with between 29 and 37 million shares exchanged for Westar Capital. Any
shares not subscribed will be held for possible later distribution or sale.
Upon completion of the transaction, Westar Energy intends to raise
approximately $300 million of equity. Proceeds will be used to repay debt.
"For the investor seeking the profile and income of a utility
investment, and the opportunity for a growing dividend, Westar Energy will have
two solidly performing electric
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utilities located in solid markets," said Wittig. "Investors in the non-electric
business, Westar Capital, will be able to evaluate and realize a different
risk/reward potential under this structure, one more focused on growth and
capital appreciation. The new corporate structure will allow the management team
of each business to focus its energies and abilities on maximizing the potential
and value of its assets."
For example, in the non-electric business area, Wittig said that
Protection One announced today that customer attrition for the fourth quarter
1999 had improved and Protection One expects attrition to be lower in the first
quarter 2000 than the fourth quarter 1999. Protection One also has made
significant progress in the last six months to enhance customer service, retain
customers and reduce debt.
Management Team
Wittig, 44, will serve as the chairman of the board, president and
chief executive officer of Westar Capital and will be the chairman of Westar
Energy. The balance of the management teams will be announced at a later date.
Each company will remain headquartered in Topeka, Kansas. Customers of KPL, KGE
and Protection One should see no changes as a result of this transaction.
Bond Ratings
The rating agencies previously indicated that they were reviewing
Western Resources' debt ratings with negative implications. With this
announcement, the company expects the rating agencies to take action, but has a
goal of maintaining an investment grade rating on its senior secured debt.
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1999 Earnings
Western Resources also announced today that operating earnings in its
electric utility business were $147 million, or $2.19 per share for 1999, versus
$133 million, or $2.03 per share for 1998.
For 1999, total operating earnings were $99 million, or $1.48 per
share, as compared with $127 million, or $1.94 per share for 1998. Total
operating earnings for 1999 include a $0.57 per share contribution from the
company's equity interest in ONEOK, a ($0.71) loss from Protection One, and a
$(0.57) loss associated with interest charges and other costs.
Net income for 1999 was $11.3 million, or $0.17 per share, versus
$44.2 million or $0.67 per share for 1998. Net income for 1999 includes one-
time and non-recurring charges associated with the marking to market of certain
investments, the write-off of the company's KCPL merger-related costs and
adoption of an accelerated amortization method at Protection One. The company
has been liquidating its investment portfolio in non-strategic businesses. Gains
resulting from the sale of these and other investments are approximately $100
million pre-tax, which will be reflected in the first quarter 2000.
(For complete details, see the attached Statement of Operations and
Consolidated Balance Sheets for the quarters and years ended December 31, 1999
and 1998 for Western Resources. Also see the 1999 results announcement of
Protection One released today.)
Dividend Action
Separately, Western Resources announced today that it will adopt a
policy of an annual cash dividend of $1.20 per share effective with the
anticipated dividend in July 2000. The $1.20
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annual dividend also is anticipated to be the annual dividend for Westar Energy.
The non-electric company, Westar Capital, does not anticipate paying a dividend.
New Western Resources Board Members
The company also announced today that Owen F. Leonard, president, KL
Industries, Inc., Saddle Brook, New Jersey, and John C. Nettels, Jr., partner,
Morrison & Hecker, L.L.P., Attorneys, Wichita, Kansas, have been elected to the
Western Resources board of directors.
Prior to joining KL Industries, Leonard served as chief financial
officer of The Pullman Company, was treasurer of Wheelabrator-Frye, Inc., and
served as a manager at Arthur Andersen & Co. Leonard received his bachelors of
business administration degree in accounting from Iona College. He also serves
as chairman of the board of OMX, Inc.
Nettels, who has been a partner at Morrison & Hecker since 1994,
joined the law firm in 1985. He received his bachelor's of arts degree and his
law degree from The University of Kansas. He has served on the Protection One
board of directors and is active in the Wichita Chamber of Commerce and the
University of Kansas Chancellor's Club.
In other board-related news, the company announced that David H.
Hughes, retired vice chairman, Hallmark Cards, Inc., retired from the Western
Resources board. Hughes had served on the company's board of directors since
1988.
"We continue to be fortunate to have such strong, solid and capable
board members," said Wittig. "David Hughes has seen a lot of change during his
tenure and has been a strong participant in guiding the direction and strategy
of this company. He always has put the interests
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of shareholders first in his decision making. We wish him happiness and health
in his well-deserved retirement.
"I also am pleased to welcome Owen and John to our board and know they
will provide valuable insight as we continue to move the company forward and
build shareholder value," Wittig said.
Annual Meeting Set
The company announced that its 2000 annual meeting of shareholders
will be June 15 at the Topeka Performing Arts Center, 214 S.E. 8th Street,
Topeka, Kansas. Shareholders of record on April 26 may attend and vote at the
meeting.
In addition, the company announced that its 1999 annual report to
shareholders will be mailed on or about April 15, 2000. The mailing of the
company's annual report has been delayed as a result of delays in finalizing
Protection One's year-end financials.
A copy of the company's Form 10-K is available on the Securities and
Exchange Commission's Edgar System, the company's internet site at www.wr.com,
or, prior to mailing of the annual report, may be obtained by shareholders from
the company by contacting the company's investor relations department at (785)
575-1898.
The exchange offer of Westar Capital shares for Western Resources
shares has not yet commenced. This press release does not constitute an offer to
sell or exchange any securities. Any offer will be made pursuant to a
registration statement and a tender offer statement to be filed with the
Securities and Exchange Commission. Western Resources shareholders are urged to
read the registration statement, and the tender offer statement when they are
available because
they will contain important information relating to the offer. A prospectus
relating to the offer will be disseminated to all Western Resources
shareholders. Shareholders will also be able to obtain the registration
statement, the tender offer statement and other filed documents for free at the
Internet website maintained by the Securities and Exchange Commission at
http://www.sec.gov. In addition, Western Resources will make the filed documents
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available for free to Western Resources shareholders.
Western Resources (NYSE: WR) is a consumer services company with
interests in monitored services and energy. The company has total assets of more
than $8 billion, including security company holdings through ownership of
Protection One (NYSE: POI), which has more than 1.4 million security customers
in 48 states. Its utilities, KPL and KGE, provide electric service to
approximately 628,000 customers in Kansas. Through its ownership in ONEOK Inc.
(NYSE: OKE), a Tulsa-based natural gas company, Western Resources has a 45
percent interest in the eighth largest natural gas distribution company 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.
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Forward-Looking Statements: Certain matters discussed 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, litigation, rate and other regulatory matters, the outcome of
Protection One accounting issues being reviewed by the SEC staff, possible
corporate restructurings, mergers, acquisitions, dispositions, liquidity and
capital resources, interest and dividend rates, environmental matters, changing
weather, nuclear operations, ability to enter new markets successfully and
capitalize on growth opportunities in nonregulated businesses, events in foreign
markets in which investments have been made, and accounting matters. Our actual
results may differ materially from those discussed here. See the company's and
Protection One's 1999 Annual Report on Form 10-K, and current reports on Form
8-K for further discussion of factors affecting the company's and Protection
One's performance. Western Resources disclaims any obligation to update any
forward-looking statements as a result of developments occurring after the date
of this news release.
Attachment 1
FOURTH QUARTER REPORT
WESTERN RESOURCES, INC.
Quarter Ended December 31, Year Ended December 31,
1999 1998 1999 1998
1. Sales $ 450,436,000 $ 487,008,000 $ 2,036,158,000 $ 2,034,054,000
2. Net Income $ (75,787,000) $ (84,484,000) $ 12,459,000 $ 47,756,000
3. Earnings Available
for Common Stock $ (76,070,000) $ (84,768,000) $ 11,330,000 $ 44,165,000
4. Average Common Shares
Outstanding 68,012,000 65,870,000 67,080,000 65,634,000
5. Basic Earnings per
Average Share
Outstanding $ (1.12) $ (1.29) $ 0.17 $ 0.67
6. EBITDA $ 28,158,000 $ 5,067,000 $ 668,464,000 $ 567,515,000
7. Net Utility Plant
(after depreciation) $ 3,826,438,000 $ 3,752,493,000
Attachment 2
1999 PER SHARE RESULTS
WESTERN RESOURCES, INC.
Earnings(1) Adj. Earnings(2) Cash Flow(3)
Year Ended December 31, 1999 1998 1999 1998 1999 1998
Utility(4) $ 2.19 $ 2.03 $ 2.49 $ 2.34 $ 4.68 $ 4.48
ONEOK 0.57 0.56 0.57 0.57 0.54 0.53
Protection One (0.71) (0.18) (0.34) 0.13 0.00 0.00
Other (Net of Interest on
Unallocated Debt) (0.57) (0.47) (0.55) (0.46) (0.55) (0.44)
Earnings Before Non-Operating
COLI and Non-Recurring Events $ 1.48 $ 1.94 $ 2.17 $ 2.58 $ 4.67 $ 4.57
Western Resources -
Non-Operating COLI (0.09) 0.18 (0.09) 0.18 (0.09) 0.18
Non-Recurring Events (0.88) (1.60) (0.88) (1.60) (1.08) (1.60)
Protection One -
Increased Amortization Expense (0.32) 0.00 (0.32) 0.00 0.00 0.00
Non-Recurring Events (0.02) 0.15 (0.02) 0.15 0.00 0.00
Total Earnings per Share $ 0.17 $ 0.67 $ 0.86 $ 1.31 $ 3.50 $ 3.15
(1) Line of business reporting does not reflect intercompany eliminations
(2) Earnings + goodwill amortization.
(3) Earnings + utility depreciation and amortization + ONEOK dividends.
(4) Interest expense is allocated on $1.9 billion of debt.