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Archive for Saturday, November 2, 2002

Westar adjusts losses upward

Utility says accounting review necessitates restating of 1st, 2nd quarter reports

November 2, 2002

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— Westar Energy Inc. will record larger losses for the first six months of this year than previously announced because of accounting issues.

The company announced Friday that it would restate its earnings for the first and second quarters. It said losses for the first six months, originally reported at $8.94 a share, would increase by another $1.37 per share to $10.31.

However, the company said the changes in its earning statements wouldn't violate any agreements involving its debt or affect its cash flow. In addition, Westar said it would pay stockholders a dividend of 30 cents per share for the final quarter of this year.

In February, the company announced it was adding $654 million in expenses related to its interest in the Protection One security alarm business because of accounting issues. Westar owns 88 percent of the security firm.

On Friday, the company said a review of those expenses would require Westar to increase that figure by another $93 million, a total of $747 million.

The company also is increasing by $5.4 million the estimate for another accounting expense it announced in September that dealt with a potential liability to investors in some of its debt.

Westar announced its plans in a statement released before trading opened Friday on the New York Stock Exchange. It said it planned no further comment.

Westar's stock closed Friday down 20 cents a share, to $10.65.

Walker Hendrix, consumer counsel for the Citizens' Utility Ratepayers Board, wasn't overly concerned about the announcements.

"They're still going to be able to pay off their loans," he said. "They're just going to have to show a bigger loss in the first and second quarters. We didn't get too excited about it."

The company's announcements came as a review of its management is pending with the Kansas Corporation Commission, which regulates utilities.

The commission is expected to issue an order later this month setting out steps for Westar to reduce its $3.2 billion debt and improve its finances.

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