SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Plan Year Ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ____ to _________________
Commission file number 1-3523
A. Full title of the Plan:
WESTAR SECURITY SERVICES, INC.
401(K) PROFIT SHARING PLAN
B. Name of issuer of the securities held
pursuant to the plan and the address
of its principal executive office:
WESTERN RESOURCES, INC.
818 Kansas Avenue
Topeka, Kansas 66612
EIN: 48-1123483
PN: 001
WESTAR SECURITY SERVICES, INC.
401(K) PROFIT SHARING PLAN
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1997 AND 1996
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Report of Independent Public Accountants
To the Investment and Benefits Committee of
Westar Security Services, Inc. 401(k) Profit Sharing Plan:
We have audited the accompanying statements of net assets available for
benefits of WESTAR SECURITY SERVICES, INC. 401(K) PROFIT SHARING PLAN as of
December 31, 1997 and 1996, and the related statements of changes in net
assets available for benefits for the year ended December 31, 1997 and for the
period from February 1, 1996 to December 31, 1996. These financial statements
and the schedules referred to below are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in net assets available for
benefits for the year ended December 31, 1997 and for the period from February
1, 1996 to December 31, 1996, in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes as of December 31, 1997 and reportable
transactions for the year then ended are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements, but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Kansas City, Missouri,
June 26, 1998
EIN: 48-1123483
PN: 001
WESTAR SECURITY SERVICES, INC.
401(K) PROFIT SHARING PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997 AND 1996
ASSETS 1997 1996
INVESTMENTS:
Vanguard Windsor Fund $ 78,445 $ 39,225
Western Resources, Inc. Common
Stock Fund 78,263 50,959
Vanguard Wellington Fund 30,999 15,176
Vanguard Index Trust 500 Portfolio Fund 40,462 20,619
Vanguard PRIMECAP Fund 61,319 17,810
Fidelity Magellan Fund 34,235 20,330
Vanguard International Growth Portfolio 12,764 -
Vanguard Bond Index Fund-Total Bond Market
Portfolio 2,513 -
Vanguard Investment Contract Fund 4,548 543
Vanguard Money Market Reserves, Prime Portfolio 6,886 303
Loan Fund - 484
Total Investments 350,434 165,449
DIVIDENDS RECEIVABLE 954 1,111
NET ASSETS AVAILABLE FOR BENEFITS $351,388 $166,560
The accompanying notes to financial statements
are an integral part of these statements.
EIN: 48-1123483
PN: 001
WESTAR SECURITY SERVICES, INC.
401(K) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDING DECEMBER 31, 1997 AND THE PERIOD
FROM FEBRUARY 1, 1996 TO DECEMBER 31, 1996
1997 1996
NET ASSETS AVAILABLE FOR
BENEFITS, beginning of period $166,560 $ -
ADDITIONS:
INVESTMENT INCOME-
Net Appreciation in Fair
Value of Investments 48,214 5,973
Interest 580 565
Dividends 24,659 9,692
Total Investment Income 73,453 16,230
PARTICIPANT CONTRIBUTIONS 82,331 45,190
Total Additions 155,784 61,420
DEDUCTIONS:
Benefits Paid (3,337) (2,697)
Other - (150)
Total Deductions (3,337) (2,847)
TRANSFERS FROM OTHER PLANS 32,381 107,987
NET INCREASE 184,828 166,560
NET ASSETS AVAILABLE FOR
BENEFITS, end of period $351,388 $166,560
The accompanying notes to financial statements
are an integral part of these statements.
WESTAR SECURITY SERVICES, INC.
401(K) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
(1) PLAN DESCRIPTION:
The following brief description of the Westar Security Services, Inc. 401(k)
Profit Sharing Plan (the Plan) is provided for general information purposes
only. Participants should refer to the plan document for more complete
information.
(a) General--In 1995, Western Resources, Inc. (WRI) acquired two
security service providers, Mobilfone Security of Topeka and
Communications & Signaling, Inc. (CSI), which together formed the WRI
subsidiary, Westar Security Services, Inc. (the Company). This defined
contribution plan was established for employees of the Company effective
February 1, 1996.
All employees are eligible to participate in the Plan after ninety days
of service. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA), as amended.
(b) Contributions--Participants are allowed to make elective deferral
contributions of between 1% and 14% of taxable wages subject to certain
Internal Revenue Code limits. These contributions effectively reduce a
participant's taxable wages because they are withheld from earnings on a
pre-tax basis. An employee may transfer a qualifying rollover
distribution to the Trustee under the Plan subject to terms and
conditions of the Plan.
The Company may make qualified nonelective employer contributions or
regular employer contributions at its discretion. In order to share in
either employer contribution, the eligible employee must be an employee
of the Company on the last day of the Plan year and must have completed
1,000 hours of service during the Plan year.
Participants are fully vested in elective deferral contributions,
qualified nonelective employer contributions, and amounts representing
qualifying rollover distributions. Participants vest in regular
employer contributions on a 5-year graded schedule. Upon retirement,
death, disability or termination of employment, all vested balances are
paid to the participant or his beneficiaries in accordance with Plan
terms.
(c) Investment Funds--Participants may elect to have their
contributions and the Company's qualified non-elective
contributions invested in the funds listed below, excluding the
Loan Fund.
The Vanguard Investment Contract Trust seeks to preserve the value of an
investment and provide an attractive level of interest by investing in
investment contracts issued by financial institutions and in contracts
backed by high-quality bonds and bond mutual funds.
The Vanguard/Windsor Fund is a diversified equity fund invested in
equity securities providing dividend and capital appreciation income.
The Vanguard Money Market Reserves, Prime Portfolio is a money market
fund invested in commercial paper and certificates of deposit.
The Western Resources, Inc. Common Stock Fund provides the possibility
of long-term growth through increases in the value of the stock and the
reinvestment of its dividends. A portion of the fund may also be
invested in cash reserves, such as money market instruments, to
accommodate daily transactions.
The Loan Fund is a conduit for the distribution and repayment of loan
proceeds. The investments in the fund represent loans due from
participants.
The Vanguard Wellington Fund is a balanced fund which invests in
stocks for potential capital growth and dividend income and in
bonds for current income potential and conservation of principal.
The Vanguard Index Trust-500 Portfolio is a growth and income fund which
seeks to provide long-term capital growth. The Vanguard Index Trust-500
Portfolio attempts to provide investment results that correspond to the
price and yield performance of publicly traded stocks, in the aggregate,
as represented by the Standard & Poor's Composite Stock Price Index.
The Vanguard PRIMECAP Fund is a growth fund seeking long-term growth of
capital by investing principally in a portfolio of common stocks.
The Fidelity Magellan Fund is a diversified equity fund invested
in equity securities providing long-term capital appreciation.
Vanguard International Growth Portfolio invests in the stocks of about
200 companies located in roughly 30 countries around the world.
Vanguard Bond Index Fund-Total Bond Market Portfolio invests in about
1,500 bonds from a variety of industries in an attempt to match the
performance and risk characteristics of the unmanaged Lehman Brothers
Aggregate Bond Index. The investments range from short-term bonds that
mature in about a year to long-term bonds that mature in 20 or 30 years,
giving the Fund an average maturity of about nine years.
The above funds are managed by Vanguard Fiduciary Trust Company
(Vanguard) except the Fidelity Magellan Fund which is managed by
Fidelity Investments Institutional Services Company. All investments
are stated at quoted market values, except as follows. Investments in
Vanguard Investment Contract Trust and Vanguard Money Market Reserves,
Prime Portfolio are stated at cost which approximates market value as
determined by Vanguard. Investments in the Loan Fund are stated at face
value.
(d) Loans to Participants--In accordance with Plan provisions
participants are permitted to borrow a specified portion of the vested
balances in their individual accounts. Loans are evidenced by
promissory notes payable to the Plan.
(e) Income Taxes--The Plan obtained a determination letter on March 27,
1998, in which the Internal Revenue Service stated that the Plan, as
then designed, was in compliance with the applicable requirements of the
Internal Revenue Code. The Plan Administrator believes that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Internal Revenue Code and, therefore, no provision
for income taxes has been included in these financial statements.
(f) Plan Termination--The Company is free to terminate the Plan at any
time.
(2) SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of Accounting--The Plan's financial statements are maintained
on the accrual basis. Employee contributions are accrued as the
employees' salaries are earned.
(b) Use of Estimates--The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(c) Participant Accounts--A separate account is maintained for each
participant. Allocations to participant accounts for employee
contributions are made when the contributions are received by the
trustee. Allocations to participant accounts for the net of interest
dividends, realized and unrealized changes in investment market value
and Plan expenses are made when such amounts are earned or incurred.
Forfeitures arise when participants leave the Plan before any
discretionary regular employer contributions become fully vested.
Forfeitures are reallocated to the accounts of all participants entitled
to share in the employer contribution.
(d) Administrative Expenses--All administrative expenses of the Plan are
paid by the Company with the exception of loan administrative charges
which will be paid by the participants. The Company has no continuing
obligation to pay these expenses.
(3) ASSET TRANSFERS:
The accounts of participants who change employment status and new employees
with assets in previous employers' qualified plans are transferred into the
Plan in accordance with Plan provisions.
(4) SECURITY ALARM MONITORING ACQUISITION:
As a result of the acquisition of Protection One, certain security service
employees were transferred to Protection One. At March 31, 1997, those
employees' contributions ceased although account balances continue to be
maintained in the Westar Security Services Inc. 401(k) Profit Sharing Plan.
These employees became participants in the Westar Security Services 401(k)
Plan at April 1, 1997.
(5) FUND INFORMATION:
The following tables present changes in net assets available for benefits in
fund detail.
(4) Fund Information (continued):
Year Ended December 31, 1997
Money Company
Investment Market Common
Contract Windsor Reserves Stock Loans
ADDITIONS
Investment Income:
Net appreciation
(depreciation) in fair
value of investments $ - $ 202 $ - $ 21,806 $ -
Interest 244 - 323 5 8
Dividends - 12,445 - 2,722 -
244 12,647 323 24,533 8
Participant Contributions 1,927 12,388 4,259 12,019 -
Total additions 2,171 25,035 4,582 36,552 8
DEDUCTIONS
Benefits Paid - (281) - (1,251) (400)
Other - - - - -
Total deductions - (281) - (1,251) (400)
Net increase (decrease)
prior to transfers 2,171 24,754 4,582 35,301 392
TRANSFERS
Interfund Transfers (91) 8,094 76 (11,236) (92)
Transfers-other plans 1,925 6,372 1,925 3,239 -
Total transfers 1,834 14,466 2,001 (7,997) (92)
Net Increase 4,005 39,220 6,583 27,304 (484)
Net assets available
for benefits:
Beginning of period 543 39,225 303 50,959 484
End of period $ 4,548 $ 78,445 $ 6,886 $ 78,263 $ 0
(Continued)
(4) Fund Information (continued):
Year Ended December 31, 1997
Index Trust
500
Wellington Portfolio PRIMECAP Magellan
ADDITIONS
Investment Income:
Net appreciation
(depreciation) in fair
value of investments $ 2,594 $ 8,724 $ 10,474 $ 4,706
Interest - - - -
Dividends 2,769 817 2,081 2,190
5,363 9,541 12,555 6,896
Participant Contributions 6,336 11,375 17,626 7,233
Total additions 11,699 20,916 30,181 14,129
DEDUCTIONS
Benefits paid (482) (235) (80) (424)
Other - - - -
Total deductions (482) (235) (80) (424)
Net increase (decrease)
prior to transfers 11,217 20,681 30,101 13,705
TRANSFERS
Interfund transfers 2,681 (838) 2,325 200
Transfers-other plans 1,925 - 11,083 -
Total transfers 4,606 (838) 13,408 200
Net increase 15,823 19,843 43,509 13,905
Net assets available
for benefits:
Beginning of period 15,176 20,619 17,810 20,330
End of period $ 30,999 $ 40,462 $ 61,319 $ 34,235
(4) Fund Information (continued):
Year Ended December 31, 1997
International Total
Growth Bond
Portfolio Market Other Total
Investment Income:
Net appreciation
(depreciation) in fair
value of investments $ (368) $ 76 $ - $ 48,214
Interest - - - 580
Dividends 544 137 954 24,659
176 213 954 73,453
Participant Contributions 6,676 2,492 - 82,331
Total additions 6,852 2,705 954 155,784
DEDUCTIONS
Benefits paid - (184) - (3,337)
Other - - - -
Total deductions - (184) - (3,337)
Net increase (decrease)
prior to transfers 6,852 2,521 954 152,447
TRANSFERS
Interfund transfers - (8) (1,111) -
Transfers-other plans 5,912 - - 32,381
Total transfers 5,912 (8) (1,111) 32,381
Net increase (decrease) 12,764 2,513 (157) 184,828
Net assets available
for benefits:
Beginning of period - - 1,111 166,560
End of period $ 12,764 $ 2,513 $ 954 $ 351,388
(4) Fund Information (continued):
Period From February 1, 1996 to December 31, 1996
Money Company
Investment Market Common
Contract Windsor Reserves Stock Loans
ADDITIONS
Investment Income:
Net appreciation
(depreciation) in fair
value of investments $ - $ 2,181 $ - $ 602 $ -
Interest 13 - 30 505 17
Dividends - 3,660 - 734 -
13 5,841 30 1,841 17
Participant Contributions 530 7,862 580 15,562 -
Total additions 543 13,703 610 17,403 17
DEDUCTIONS
Benefits Paid - (12) (1,193) (420) -
Other - - - - -
Total deductions - (12) (1,193) (420) -
Net increase (decrease)
prior to transfers 543 13,691 (583) 16,983 17
TRANSFERS
Interfund Transfers - - - (370) 467
Transfers-other plans - 25,534 886 34,346 -
Total transfers - 25,534 886 33,976 467
Net Increase 543 39,225 303 50,959 484
Net assets available
for benefits:
Beginning of period - - - - -
End of period $ 543 $ 39,225 $ 303 $ 50,959 $ 484
(Continued)
(4) Fund Information (continued):
Period From February 1, 1996 to December 31, 1996
Index Trust
500
Wellington Portfolio PRIMECAP Magellan
ADDITIONS
Investment Income:
Net appreciation
(depreciation) in fair
value of investments $ 427 $ 2,105 $ 1,451 $ (793)
Interest - - - -
Dividends 943 307 504 2,433
1,370 2,412 1,955 1,640
Participant Contributions 3,875 6,325 5,091 5,365
Total additions 5,245 8,737 7,046 7,005
DEDUCTIONS
Benefits paid (13) (12) (365) (682)
Other (150) - - -
Total deductions (163) (12) (365) (682)
Net increase (decrease)
prior to transfers 5,082 8,725 6,681 6,323
TRANSFERS
Interfund transfers (97) - - -
Transfers-other plans 10,191 11,894 11,129 14,007
Total transfers 10,094 11,894 11,129 14,007
Net increase 15,176 20,619 17,810 20,330
Net assets available
for benefits:
Beginning of period - - - -
End of period $ 15,176 $ 20,619 $ 17,810 $ 20,330
(4) Fund Information (continued):
Period From February 1, 1996 to December 31, 1996
Other Total
ADDITIONS
Investment Income:
Net appreciation
(depreciation) in fair
value of investments $ - $ 5,973
Interest - 565
Dividends 1,111 9,692
1,111 16,230
Participant Contributions - 45,190
Total additions 1,111 61,420
DEDUCTIONS
Benefits paid - (2,697)
Other - (150)
Total deductions - (2,847)
Net increase (decrease)
prior to transfers 1,111 58,573
TRANSFERS
Interfund Transfers - -
Transfers-other plans - 107,987
Total transfers - 107,987
Net increase 1,111 166,560
Net assets available
for benefits:
Beginning of period - -
End of period $ 1,111 $ 166,560
EIN: 48-1123483
PN: 001
PAGE 1 of 1
WESTAR SECURITY SERVICES, INC.
401(K) PROFIT SHARING PLAN
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
Number Current
Description of Units Cost Value
Vanguard/Windsor Fund 4,619.8328 $ 76,854 $ 78,445
Vanguard Money Market Reserves,
Prime Portfolio 6,886.4100 6,886 6,886
Vanguard/Wellington Fund 1,052.5859 27,843 30,999
Vanguard Index Trust 500 Portfolio 449.2303 29,763 40,462
Vanguard/PrimeCap Fund 1,549.6457 53,746 61,319
Fidelity Magellan Fund 359.3413 30,244 34,235
Vanguard International Growth Portfolio 778.7780 13,125 12,764
Vanguard Bond Index Fund-Total Bond
Market Portfolio 249.1331 2,438 2,513
Vanguard Investment Contract Trust 4,549.8300 4,548 4,548
*Western Resources, Inc. Common Stock 1,820.0683 57,282 78,263
Total Investments $302,729 $350,434
*Investment with party-in-interest to the Plan.
EIN: 48-1123483
PN: 001
WESTAR SECURITY SERVICES, INC.
401(K) PROFIT SHARING PLAN
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
Type of Dollar Net Gain
Investment Transaction Number Value (Loss)
(1)
Magellan Fund Purchases 46 $ 7,411 $ -
Sales 2 402 22
Vanguard/Wellington Fund Purchases 47 11,100 -
Sales 5 640 32
Vanguard/PrimeCap Fund Purchases 47 42,930 -
Sales 3 11,975 4,392
Vanguard/Windsor Fund Purchases 46 30,648 -
Sales 4 3,075 786
Vanguard Investment Contract Purchases 27 3,853 -
Trust Sale 3 90 -
Vanguard Money Market Reserves, Purchases 57 47,005 -
Prime Portfolio Sales 38 40,745 -
Vanguard Index Trust 500 Purchases 28 11,259 -
Portfolio Sales 3 957 182
Vanguard International Growth Portfolio Purchases 27 12,596 -
Sales 1 8 -
Vanguard Bond Index Fund-Total Bond Purchases 8 2,492 -
Market Portfolio Sales 2 190 1
Western Resources, Inc. Purchases 30 16,513 -
Stock Fund Sales 5 13,742 (170)
(1) Amount shown in this column is cost of purchases or proceeds from sales.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Investment and Benefits Committee for the Westar Security Services, Inc.
401(k) Profit Sharing Plan has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
WESTAR SECURITY SERVICES, INC.
401(K) PROFIT SHARING PLAN
By:
Signature Title Date
/s/ S. L. Kitchen Chairman June 26, 1998
/s/ Ira W. McKee, Jr. Member June 26, 1998
/s/ John K. Rosenberg Member June 26, 1998
/s/ Kenneth T. Wymore Member June 26, 1998
EXHIBIT INDEX
Exhibit
Number Description of Documents Page
23 Consent of Independent Public Accountants (filed
electronically)
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 26, 1998, included in the Form 11-K for the
Westar Security Services, Inc. 401(k) Profit Sharing Plan, into the Western
Resources, Inc. previously filed Registration Statements File Nos. 33-49467,
33-49553, 333-02023, 33-50069, 33-62375, and 333-26115 of Western Resources,
Inc. on Form S-3; Nos. 333-02711, 333-56369 and 333-56369-01 of Western
Resources, Inc. on Form S-4; Nos. 33-57435, 333-13229, 333-06887, 333-20393,
and 333-20413 of Western Resources, Inc. on Form S-8, and No. 33-50075 of
Kansas Gas and Electric Company on Form S-3.
Arthur Andersen LLP
Kansas City, Missouri,
June 26, 1998
