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, 1998
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, 1998 AND 1997
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, 1998 and 1997, and the related statements of changes in net
assets available for benefits for the years ended December 31, 1998 and 1997.
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, 1998 and 1997, and the changes in net assets available for
benefits for the years ended December 31, 1998 and 1997, 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, 1998, 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.
Arthur Andersen
Kansas City, Missouri,
June 25, 1999
EIN: 48-1123483
PN: 001
WESTAR SECURITY SERVICES, INC.
401(k) PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998 AND 1997
ASSETS 1998 1997
INVESTMENTS:
Investment Vanguard Contract Fund $ 4,991 $ 4,548
Vanguard Windsor Fund 114,278 78,445
Vanguard Prime Money Market Fund 19,777 6,886
Western Resources, Inc. Common
Stock Fund 97,675 78,263
Loan Fund 16,962 -
Vanguard Wellington Fund 31,325 30,999
Vanguard 500 Index Fund 49,921 40,462
Vanguard PRIMECAP Fund 105,159 61,319
Fidelity Magellan Fund 97,381 34,235
Vanguard International Growth Fund 20,968 12,764
Vanguard-Total Bond Market
Index Fund 3,217 2,513
Total Investments 561,654 350,434
DIVIDENDS RECEIVABLE 1,564 954
NET ASSETS AVAILABLE FOR BENEFITS $563,218 $351,388
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
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
NET ASSETS AVAILABLE FOR
BENEFITS, beginning of period $351,388 $166,560
ADDITIONS:
INVESTMENT INCOME-
Net Appreciation in Fair
Value of Investments 1,834 48,214
Interest 1,811 580
Dividends 26,540 24,659
Total Investment Income 30,185 73,453
PARTICIPANT CONTRIBUTIONS 37,108 82,331
Total Additions 67,293 155,784
DEDUCTIONS:
Benefits Paid (9,381) (3,337)
Total Deductions (9,381) (3,337)
TRANSFERS FROM OTHER PLANS 153,918 32,381
NET INCREASE 211,830 184,828
NET ASSETS AVAILABLE FOR
BENEFITS, end of period $563,218 $351,388
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, 1998 AND 1997
(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 percent and 14 percent 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 five-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 nonelective
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 Prime Money Market Fund is a money market fund invested in
high-quality money market obligations issued by financial institutions,
nonfinancial corporations, U.S. and other governmental agencies, and
repurchase agreements collateralized by such securities.
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 500 Index Fund is a growth and income fund which seeks to
provide long-term capital growth. The Vanguard 500 Index Fund 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 Fund invests in the stocks of about
200 companies located in 30 countries around the world.
Vanguard Total Bond Market Index Fund 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 a year to
long-term bonds that mature in 20 or 30 years, giving the Fund an
average maturity of 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 Prime Money Market Fund
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 the Plan, as
then designed, was in compliance with the applicable requirements of the
Internal Revenue Code. The plan administrator believes 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. On July 1, 1998, the Westar Security Services 401(k)
Plan was merged into Protection One 401(k) Plan (formerly Protection One
Employees Savings Plan). In April, 1999 the account balances for these
employees totaling $284,289 were transferred to the Protection One 401(k)
Plan.
(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, 1998
Prime Company
Investment Money Common
Contract Windsor Market Stock Loans
ADDITIONS
Investment income:
Net appreciation
(depreciation) in fair
value of investments $ - $ (13,030) $ - $ (23,295) $ -
Interest 289 - 720 51 751
Dividends - 9,710 - 3,225 -
289 (3,320) 720 (20,019) 751
Participant contributions 154 8,587 - 4,778 -
Total additions 443 5,267 720 (15,241) 751
DEDUCTIONS
Benefits paid - (842) (236) (3,452) -
Total deductions - (842) (236) (3,452) -
Net increase (decrease)
prior to transfers 443 4,425 484 (18,693) 751
TRANSFERS
Interfund transfers - (5,918) 12,407 23,233 (3,513)
Transfers-Other plans - 37,326 - 14,872 19,724
Total transfers - 31,408 12,407 38,105 16,211
Net increase 443 35,833 12,891 19,412 16,962
Net assets available
for benefits:
Beginning of period 4,548 78,445 6,886 78,263 -
End of period $ 4,991 $ 114,278 $ 19,777 $ 97,675 $ 16,962
(continued)
(4) Fund Information (continued):
Year Ended December 31, 1998
500
Wellington Index PRIMECAP Magellan
ADDITIONS
Investment income:
Net appreciation
(depreciation) in fair
value of investments $ (59) $ 10,020 $ 13,676 $ 12,300
Interest - - - -
Dividends 3,491 763 3,822 3,372
3,432 10,783 17,498 15,672
Participant contributions 689 1,255 12,038 3,514
Total additions 4,121 12,038 29,536 19,186
DEDUCTIONS
Benefits paid (1,979) (831) (1,941) (100)
Total deductions (1,979) (831) (1,941) (100)
Net increase (decrease)
prior to transfers 2,142 11,207 27,595 19,086
TRANSFERS
Interfund transfers (1,816) (1,748) (23,197) 1,506
Transfers-Other plans - - 39,442 42,554
Total transfers (1,816) (1,748) 16,245 44,060
Net increase 326 9,459 43,840 63,146
Net assets available
for benefits:
Beginning of period 30,999 40,462 61,319 34,235
End of period $ 31,325 $ 49,921 $ 105,159 $ 97,381
(continued)
(4) Fund Information (continued):
Year Ended December 31, 1998
Total Bond
International Market
Growth Index Other Total
Investment income:
Net appreciation
(depreciation) in fair
value of investments $ 2,176 $ 46 $ - $ 1,834
Interest - - - 1,811
Dividends 414 179 1,564 26,540
2,590 225 1,564 30,185
Participant contributions 5,614 479 - 37,108
Total additions 8,204 704 - 67,293
DEDUCTIONS
Benefits paid - - - (9,381)
Total deductions - - - (9,381)
Net increase (decrease)
prior to transfers 8,204 704 1,564 57,912
TRANSFERS
Interfund transfers - - (954) -
Transfers-Other plans - - - 153,918
Total transfers - - (954) 153,918
Net increase 8,204 704 610 211,830
Net assets available
for benefits:
Beginning of period 12,764 2,513 954 351,388
End of period $ 20,968 $ 3,217 $ 1,564 $ 563,218
(4) Fund Information (continued):
Year Ended December 31, 1997
Prime Company
Investment Money Common
Contract Windsor Market 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 $ -
(continued)
(4) Fund Information (continued):
Year Ended December 31, 1997
500
Wellington Index 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
(continued)
(4) Fund Information:
Year Ended December 31, 1997
Total Bond
International Market
Growth Index 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 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
EIN: 48-1123483
PN: 001
WESTAR SECURITY SERVICES, INC.
401(k) PROFIT SHARING PLAN
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
Number Current
Description of Units Cost Value
Vanguard Windsor Fund 7,339.6051 $125,105 $ 114,278
Vanguard Prime Money Market Fund 19,777.2400 19,777 19,777
Vanguard Wellington Fund 1,067.2988 28,781 31,325
Vanguard 500 Index Fund 438.0989 33,249 49,921
Vanguard PRIMECAP Fund 2,206.4474 88,808 105,159
Fidelity Magellan Fund 806.0001 80,330 97,381
Vanguard International Growth Fund 1,117.1064 19,146 20,968
Vanguard Total Bond Market Index Fund 313.2373 3,059 3,217
Vanguard Investment Contract Trust 4,990.5200 4,864 4,991
*Western Resources, Inc. Common
Stock Fund 2,937.6003 104,566 97,675
* Participant Loan, at interest rate
of 7.5% 16,962 16,962
Total investments $524,647 $561,654
*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, 1998
Type of Dollar Net Gain
Investment Transaction Number Value (Loss)
Series of Transactions in Excess of 5% (1)
Fidelity Magellan Fund Purchases 45 $20,836 $ -
Sales 4 11,347 (582)
Vanguard PRIMECAP Fund Purchases 45 27,897 -
Sales 6 37,299 5,022
Vanguard Windsor Fund Purchases 40 22,410 -
Sales 6 9,808 (302)
Vanguard Prime Money Market Fund Purchases 44 75,590 -
Sales 29 62,676 -
Vanguard 500 Index Fund Purchases 42 16,814 -
Sales 5 17,537 4,104
Western Resources, Inc. Stock Fund Purchases 35 61,626 -
Sales 8 30,880 3,709
Single Transactions in Excess of 5%
Fidelity Magellan Fund Purchase 1 41,178 -
Vanguard Prime Money Market Fund Purchase 1 24,262 -
Sale 1 19,135 -
(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/William B. Moore Chairman June 29, 1999
/s/Ira W. McKee, Jr. Member June 29, 1999
/s/Carl M. Koupal, Jr. Member June 29, 1999
/s/Richard D. Terrill Member June 29, 1999
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 25, 1999, 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.
333-59673, 33-49467, 33-49553, 333-02023, 33-50069, 33-62375, and 333-26115
of Western Resources, Inc. on Form S-3; Nos. 333-02711 and 333-56369 of
Western Resources, Inc. on Form S-4; Nos. 333-70891, 33-57435, 333-13229,
333-06887, 333-20393, 333-20413 and 333-75395 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 25, 1999
