<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d10q.txt
<DESCRIPTION>FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 2001
<TEXT>
<PAGE>

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2001
-------------

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission File Number 1-3523
------

Western Resources, Inc.
-----------------------
(Exact name of registrant as specified in its charter)

Kansas 48-0290150
------ ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)

818 Kansas Avenue
Topeka, Kansas 66612
(785) 575-6300
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)

------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No
--- ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Class Outstanding at August 8, 2001
----- -----------------------------
Common Stock, $5.00 par value 70,730,526 Shares
<PAGE>

WESTERN RESOURCES, INC.

INDEX

Page
----
<S> <C>
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets........................................................ 4
Consolidated Statements of Income.................................................. 5 - 6
Consolidated Statements of Comprehensive Income.................................... 7
Consolidated Statements of Cash Flows.............................................. 8
Notes to Consolidated Financial Statements......................................... 9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations......................................................................... 16

Item 3. Quantitative and Qualitative Disclosures About Market Risk......................... 27

PART II. Other Information

Item 1. Legal Proceedings.................................................................. 28

Item 2. Changes in Securities and Use of Proceeds.......................................... 28

Item 3. Defaults Upon Senior Securities.................................................... 28

Item 4. Submission of Matters to a Vote of Security Holders................................ 28

Item 5. Other Information.................................................................. 28

Item 6. Exhibits and Reports on Form 8-K................................................... 28

Signature....................................................................................... 30
</TABLE>

2
<PAGE>

WESTERN RESOURCES, INC.

FORWARD-LOOKING STATEMENTS

Certain matters discussed in this Form 10-Q 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, liquidity and
capital resources, litigation, rate and other regulatory matters, including the
impact of the order to reduce our rates issued on July 25, 2001 by the Kansas
Corporation Commission, and the impact of the Kansas Corporation Commission's
order issued July 20, 2001 with respect to the proposed separation of Western
Resources' electric utility businesses from Westar Industries, possible
corporate restructurings, mergers, acquisitions, dispositions, compliance with
debt and other restrictive covenants, changes in accounting requirements and
other accounting matters, interest and dividends, Protection One's financial
condition and its impact on our consolidated results, environmental matters,
changing weather, nuclear operations, ability to enter new markets successfully
and capitalize on growth opportunities in non-regulated businesses, events in
foreign markets in which investments have been made and the overall economy of
our service area. What happens in each case could vary materially from what we
expect because of such things as electric utility deregulation; ongoing
municipal, state and federal activities such as the Wichita municipalization
effort; future economic conditions; legislative and regulatory developments; the
consummation of the acquisition of the electric operations of Western Resources
by Public Service Company of New Mexico; regulatory and competitive markets; and
other circumstances affecting anticipated operations, sales and costs. See Risk
Factors in our Annual Report on Form 10-K for the year ended December 31, 2000,
for additional information on these and other matters that may affect our
business and financial results. Any forward-looking statement speaks only as of
the date such statement was made and we do not undertake any obligation to
update any forward-looking statement to reflect events or circumstances after
the date on which such statement was made.

3
<PAGE>

WESTERN RESOURCES, INC.

CONSOLIDATED BALANCE SHEETS
(In Thousands)

<TABLE>
<CAPTION>
June 30, December 31,
2001 2000
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................................. $ 66,766 $ 8,762
Restricted cash........................................................... 23,014 22,205
Accounts receivable, net.................................................. 130,071 152,165
Inventories and supplies, net............................................. 121,454 101,303
Energy trading contracts.................................................. 109,446 185,364
Prepaid expenses and other................................................ 70,609 44,449
---------- ----------
Total Current Assets................................................. 521,360 514,248
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, NET............................................ 4,021,234 3,993,438
---------- ----------
OTHER ASSETS:
Restricted cash........................................................... 34,924 35,878
Investment in ONEOK....................................................... 597,555 591,173
Customer accounts, net.................................................... 906,320 1,005,505
Goodwill, net............................................................. 915,091 976,102
Regulatory assets......................................................... 322,852 327,350
Other..................................................................... 309,409 323,514
---------- ----------
Total Other Assets................................................... 3,086,151 3,259,522
---------- ----------
TOTAL ASSETS.................................................................. $7,628,745 $7,767,208
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt...................................... $ 32,510 $ 41,825
Short-term debt........................................................... 146,380 35,000
Accounts payable.......................................................... 119,012 154,654
Accrued liabilities....................................................... 209,323 206,959
Accrued income taxes...................................................... 25,540 53,834
Deferred security revenues................................................ 62,157 73,585
Energy trading contracts.................................................. 103,506 191,673
Other..................................................................... 64,836 56,600
---------- ----------
Total Current Liabilities............................................ 763,264 814,130
---------- ----------
LONG-TERM LIABILITIES:
Long-term debt, net....................................................... 3,196,171 3,237,849
Western Resources obligated mandatorily redeemable preferred securities
of subsidiary trusts holding solely company subordinated debentures..... 220,000 220,000
Deferred income taxes and investment tax credits.......................... 909,955 920,083
Minority interests........................................................ 173,599 184,591
Deferred gain from sale-leaseback......................................... 180,380 186,294
Other..................................................................... 295,706 272,841
---------- ----------
Total Long-Term Liabilities.......................................... 4,975,811 5,021,658
---------- ----------
COMMITMENTS AND CONTINGENCIES (NOTE 5)

SHAREHOLDERS' EQUITY:
Cumulative preferred stock................................................ 24,858 24,858
Common stock, par value $5 per share; authorized 150,000,000 shares;
issued 85,046,342 shares and 70,082,314 shares, respectively............ 425,339 350,412
Paid-in capital........................................................... 1,152,991 850,100
Retained earnings......................................................... 644,625 714,454
Treasury stock, at cost, 14,577,427 and 0 shares, respectively............ (355,837) --
Accumulated other comprehensive loss, net................................. (2,306) (8,404)
---------- ----------
Total Shareholders' Equity........................................... 1,889,670 1,931,420
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................................... $7,628,745 $7,767,208
========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

4
<PAGE>

WESTERN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)

<TABLE>
<CAPTION>
Three Months Ended
June 30,
-----------------------------
2001 2000
----------- -----------
<S> <C> <C>
SALES:
Energy.................................................................. $ 412,803 $ 418,691
Monitored Services...................................................... 110,098 127,916
----------- -----------
Total Sales....................................................... 522,901 546,607
----------- -----------
COST OF SALES:
Energy.................................................................. 198,210 172,963
Monitored Services...................................................... 39,094 41,755
----------- -----------
Total Cost of Sales............................................... 237,304 214,718
----------- -----------
GROSS PROFIT................................................................ 285,597 331,889
----------- -----------
OPERATING EXPENSES:
Operating and maintenance expense....................................... 88,538 82,651
Depreciation and amortization........................................... 103,029 108,099
Selling, general and administrative expense............................. 83,761 76,916
Loss on dispositions of monitored services operations................... 17,979 --
----------- -----------
Total Operating Expenses.......................................... 293,307 267,666
----------- -----------
INCOME (LOSS) FROM OPERATIONS............................................... (7,710) 64,223
----------- -----------
OTHER INCOME (EXPENSE):
Investment earnings..................................................... 42 32,857
Minority interests...................................................... 4,451 1,059
Other................................................................... (284) 896
----------- -----------
Total Other Income................................................ 4,209 34,812
----------- -----------
EARNINGS (LOSS) BEFORE INTEREST AND TAXES................................... (3,501) 99,035
----------- -----------
INTEREST EXPENSE:
Interest expense on long-term debt...................................... 56,917 48,966
Interest expense on short-term debt and other........................... 9,949 23,346
----------- -----------
Total Interest Expense............................................ 66,866 72,312
----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES......................................... (70,367) 26,723
Income tax (benefit) expense................................................ (34,353) 3,158
----------- -----------
NET INCOME (LOSS) BEFORE EXTRAORDINARY GAIN................................. (36,014) 23,565
Extraordinary gain, net of tax of $3,137 and $9,340......................... 5,826 17,347
----------- -----------
NET INCOME (LOSS)........................................................... (30,188) 40,912
Preferred dividends......................................................... 282 282
----------- -----------
EARNINGS (LOSS) AVAILABLE FOR COMMON STOCK.................................. $ (30,470) $ 40,630
=========== ===========

Average common shares outstanding........................................... 70,409,093 68,731,435

BASIC AND DILUTED EARNINGS (LOSS) PER AVERAGE
COMMON SHARE OUTSTANDING:
Before extraordinary gain............................................... $ (0.51) $ 0.34
Extraordinary gain, net of tax.......................................... 0.08 0.25
----------- -----------
After extraordinary gain................................................ $ (0.43) $ 0.59
=========== ===========

DIVIDENDS DECLARED PER COMMON SHARE......................................... $ 0.30 $ 0.30
</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

5
<PAGE>

WESTERN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)

<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------
2001 2000
----------- -----------
SALES:
<S> <C> <C>
Energy.................................................................. $ 859,173 $ 753,521
Monitored Services...................................................... 224,467 274,786
----------- -----------
Total Sales....................................................... 1,083,640 1,028,307
----------- -----------
COST OF SALES:
Energy.................................................................. 427,041 300,588
Monitored Services...................................................... 79,867 89,069
----------- -----------
Total Cost of Sales............................................... 506,908 389,657
----------- -----------
GROSS PROFIT................................................................ 576,732 638,650
----------- -----------
OPERATING EXPENSES:
Operating and maintenance expense....................................... 181,220 168,293
Depreciation and amortization........................................... 205,515 215,878
Selling, general and administrative expense............................. 162,635 162,397
Loss on dispositions of monitored services operations................... 17,979 --
----------- -----------
Total Operating Expenses.......................................... 567,349 546,568
----------- -----------
INCOME FROM OPERATIONS...................................................... 9,383 92,082
----------- -----------
OTHER INCOME (EXPENSE):
Investment earnings..................................................... 13,062 150,925
Minority interests...................................................... 5,723 676
Other................................................................... (687) 1,410
----------- -----------
Total Other Income................................................ 18,098 153,011
----------- -----------
EARNINGS BEFORE INTEREST AND TAXES.......................................... 27,481 245,093
----------- -----------
INTEREST EXPENSE:
Interest expense on long-term debt...................................... 116,517 100,408
Interest expense on short-term debt and other........................... 19,557 41,930
----------- -----------
Total Interest Expense............................................ 136,074 142,338
----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES......................................... (108,593) 102,755
Income tax (benefit) expense................................................ (53,392) 39,389
----------- -----------
NET INCOME (LOSS) BEFORE EXTRAORDINARY GAIN AND
ACCOUNTING CHANGE........................................................... (55,201) 63,366
Extraordinary gain, net of tax of $5,799 and $19,298........................ 10,769 35,839
Cumulative effect of accounting change, net of tax of $12,347 and $1,097.... 18,694 (3,810)
----------- -----------
NET INCOME (LOSS)........................................................... (25,738) 95,395
Preferred dividends......................................................... 564 564
----------- -----------
EARNINGS (LOSS) AVAILABLE FOR COMMON STOCK.................................. $ (26,302) $ 94,831
=========== ===========

Average common shares outstanding........................................... 70,384,333 68,232,780

BASIC AND DILUTED EARNINGS (LOSS) PER AVERAGE
COMMON SHARE OUTSTANDING:
Before extraordinary gain and accounting change......................... $ (0.79) $ 0.92
Extraordinary gain, net of tax.......................................... 0.15 0.53
Accounting change, net of tax........................................... 0.27 (0.06)
----------- -----------
After extraordinary gain and accounting change.......................... $ (0.37) $ 1.39
=========== ===========

DIVIDENDS DECLARED PER COMMON SHARE......................................... $ 0.60 $ 0.835
</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

6
<PAGE>

WESTERN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)
(Unaudited)

<TABLE>
<CAPTION>
Three Months Ended
June 30,
--------------------------
2001 2000
-------- -------
<S> <C> <C>
NET INCOME (LOSS)......................................................... $(30,188) $40,912
-------- -------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized holding losses on marketable securities arising
during the period................................................... (345) (1,353)
Adjustment for losses/(gains) included in net income.................. 1,470 (17,369)
-------- -------
Net change in unrealized gain/(loss) on marketable securities..... 1,125 (18,722)
Foreign currency translation adjustment............................... 6,793 (1,338)
Income tax benefit.................................................... -- 11,315
-------- -------
Total other comprehensive gain/(loss), net of tax................ 7,918 (8,745)
-------- -------

COMPREHENSIVE INCOME (LOSS)............................................... $(22,270) $32,167
======== =======

Six Months Ended
June 30,
--------------------------
2001 2000
-------- -------
<S> <C> <C>
NET INCOME (LOSS)......................................................... $(25,738) $95,395
-------- -------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized holding (losses)/gains on marketable securities arising
during the period................................................... (587) 44,863
Adjustment for losses/(gains) included in net income.................. 3,331 (115,629)
-------- -------
Net change in unrealized gain/(loss) on marketable securities..... 2,744 (70,766)
Foreign currency translation adjustment............................... 4,047 (624)
Income tax (expense) benefit.......................................... (693) 31,668
-------- -------
Total other comprehensive gain/(loss), net of tax................ 6,098 (39,722)
-------- -------

COMPREHENSIVE INCOME (LOSS)............................................... $(19,640) $55,673
======== =======
</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

7
<PAGE>

WESTERN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)

<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------
2001 2000
---------- ---------
<S> <C> <C>
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income (loss).................................................. $ (25,738) $ 95,395
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Extraordinary gain................................................. (10,769) (35,839)
Cumulative effect of accounting change............................. (18,694) 3,810
Depreciation and amortization...................................... 205,515 215,878
Amortization of deferred gain from sale-leaseback.................. (5,914) (5,915)
Equity in earnings from investments................................ (5,163) (7,200)
Loss on dispositions of monitored services operations.............. 17,979 --
Impairment on investments.......................................... 11,075 --
(Gain) loss on sale of marketable securities....................... 1,861 (115,629)
Minority interests................................................. (10,992) (676)
Accretion of discount note interest................................ (1,602) (5,981)
Changes in working capital items, net of acquisitions and
dispositions:
Accounts receivable, net........................................ 19,983 (14,257)
Inventories and supplies, net................................... (21,015) (5,562)
Energy trading contracts........................................ 18,792 (11,075)
Prepaid expenses and other...................................... (24,476) (16,740)
Accounts payable................................................ (32,947) 13,559
Accrued liabilities............................................. 5,511 (24,046)
Accrued income taxes............................................ (28,294) 16,538
Deferred security revenues...................................... 4,826 148
Changes in other assets and liabilities............................ 7,218 (36,576)
---------- ---------
Cash flows from operating activities..................... 107,156 65,832
---------- ---------

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Additions to property, plant and equipment, net.................... (122,506) (170,357)
Customer account acquisitions...................................... (19,132) (20,943)
Proceeds from sale of marketable securities........................ 2,829 217,062
Proceeds from dispositions of monitored services operations........ 42,258 --
Proceeds from/purchase of other investments, net................... (1,328) 5,589
---------- ---------
Cash flows (used in) from investing activities........... (97,879) 31,351
---------- ---------

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Short-term debt, net............................................... 112,703 (496,421)
Proceeds of long-term debt......................................... 14,823 606,087
Retirements of long-term debt...................................... (46,768) (176,343)
Proceeds from accounts receivable sale, net........................ (5,000) --
Issuance of common stock, net...................................... 8,796 8,639
Cash dividends paid................................................ (42,611) (57,606)
Acquisition of treasury stock...................................... -- (9,187)
Reissuance of treasury stock....................................... 6,784 21,847
---------- ---------
Cash flows from (used in) financing activities........... 48,727 (102,984)
---------- ----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................... 58,004 (5,801)

CASH AND CASH EQUIVALENTS:
Beginning of period................................................ 8,762 12,444
---------- ---------
End of period...................................................... $ 66,766 $ 6,643
========== =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID FOR:
Interest on financing activities, net of amount capitalized........ $ 174,388 $ 179,660
Income taxes....................................................... 5,810 3,793
</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

8
<PAGE>

WESTERN RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business: Western Resources, Inc. (the company, we, us
or our) is a publicly traded, consumer services company. We provide electric
generation, transmission and distribution services to approximately 639,000
customers in Kansas, monitored security services to approximately 1.4 million
customers in North America and Europe, and natural gas transmission and
distribution services to approximately 1.4 million customers in Oklahoma and
Kansas.

KPL, one of our divisions, and Kansas Gas and Electric Company (KGE), a
wholly owned subsidiary, provide our rate regulated electric service.

Westar Industries, Inc., our wholly owned subsidiary, owns our
interests in Protection One, Inc., Protection One Europe, ONEOK, Inc. and other
non-utility businesses. Monitored security services are provided by Protection
One, a publicly traded, approximately 87%-owned subsidiary, and other wholly
owned subsidiaries collectively referred to as Protection One Europe. Natural
gas transmission and distribution services are provided through our approximate
45% ownership interest in ONEOK.

Consolidation Policy: We prepared the accompanying financial statements
in accordance with accounting principles generally accepted in the United States
(GAAP) for interim financial information and in accordance with the instructions
to Form 10-Q. This means that certain information and footnote disclosures
normally included in financial statements have been condensed or omitted and
that these statements have not been audited. Only normal recurring adjustments
considered necessary for a fair presentation of the financial statements have
been included. To gain a full understanding of our business, you should read the
information provided in this report in conjunction with the Consolidated
Financial Statements and the notes included in our Annual Report on Form 10-K
for the year ended December 31, 2000.

Many items, including such things as the weather, operating costs,
market conditions and generating availability, can have a great impact on our
results for interim periods. Therefore, the results of interim periods do not
necessarily represent results to be expected for the full year.

Reclassifications: Certain amounts in prior years have been
reclassified to conform to classifications used in the current year
presentation.

2. PNM MERGER AND SPLIT-OFF OF WESTAR INDUSTRIES

On November 8, 2000, we entered into an agreement under which Public
Service Company of New Mexico (PNM) is to acquire our electric utility
businesses in a stock-for-stock transaction. Under the terms of the agreement,
both PNM and we are to become subsidiaries of a new holding company, subject to
customary closing conditions including regulatory and shareholder approvals. The
split-off of Westar Industries to our shareholders immediately prior to closing
is a condition to closing the transaction. At the same time we entered into the
agreement with PNM, Westar Industries and we entered into an Asset Allocation
and Separation Agreement which, among other things, provides for the split-off
of Westar Industries and for a payable owed by us to Westar Industries to be
converted by Westar Industries into certain of our securities.

9
<PAGE>

order opening the investigation indicated that the investigation would focus on
whether the separation and other transactions involving our unregulated
businesses are consistent with our obligation to provide efficient and
sufficient electric service at just and reasonable rates to our electric utility
customers. The KCC staff was directed to investigate, among other matters, the
basis for and the effect of the Asset Allocation and Separation Agreement and
the payable owed by us to Westar Industries, the split-off of Westar Industries,
the effect of business difficulties faced by our unregulated businesses and
whether they should continue to be affiliated with our electric utility business
and our present and prospective capital structures. On May 22, 2001, the KCC
issued an order nullifying the Asset Allocation and Separation Agreement as not
having been filed with and approved by the KCC, prohibiting us and Westar
Industries from taking any action to complete a rights offering for common stock
of Westar Industries, which was to be a first step in the separation, and
scheduling a hearing to consider whether to make the order permanent.

On July 20, 2001, the KCC issued an order that, among other things, (1)
confirmed its May 22, 2001 order prohibiting us and Westar Industries from
taking any action to complete the proposed rights offering and nullifying the
Asset Allocation and Separation Agreement; (2) directed us and Westar Industries
not to take any action or enter into any agreement not related to normal utility
operations that would directly or indirectly increase the share of debt in our
capital structure applicable to our electric utility operations, which has the
effect of prohibiting us from borrowing to make a loan or capital contribution
to Westar Industries; and (3) directed us to present a plan by October 18, 2001,
consistent with parameters established by the KCC's order, to restore financial
health, achieve a balanced capital structure and protect ratepayers from the
risks of our non-utility businesses. In its order, the KCC also acknowledged
that we are presently operating efficiently and at reasonable cost and stated
that it was not disapproving the PNM transaction or a split-off of Westar. We
have filed a petition for general reconsideration of the order.

On July 26, 2001, PNM and we issued a joint press release announcing
our belief that, if recent orders issued by the KCC remain in effect, the
proposed transaction would be difficult to complete as currently structured and
that we intend to meet to discuss possible modifications to the transaction that
will make it possible to obtain necessary regulatory approvals. On August 13,
2001, PNM issued a press release announcing that we had discontinued discussions
with PNM about possible modifications to the proposed transaction and advising
us that PNM believes the KCC order reducing our rates would have a material
adverse effect on the financial condition of the proposed combined companies and
could result in the failure of a significant condition to the transaction. PNM's
press release acknowledged that we disagreed with its characterization of the
impact of the KCC's rate order. We have advised PNM that we also disagree
strongly with its characterization of our discussions about possible
modifications to the transaction.

While we are attempting to proceed with the PNM transaction, we are
unable to predict the outcome of these matters or their impact on our strategic
plans, including the PNM/split-off transaction, financial condition or results
of operations. No assurance can be given as to whether or when the PNM
transaction or a split-off may occur. We currently have approximately $7.9
million in deferred costs relating to the PNM transaction. Accounting rules
require that these costs be charged to income in the period in which we
determine the closing of the proposed transaction is not probable.

3. ACCOUNTING CHANGE

Effective January 1, 2001, we adopted Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by SFAS Nos. 137 and 138 (collectively, SFAS No. 133).
We use derivative instruments (primarily swaps, options and futures) to manage
the commodity price risk inherent in fuel purchases and electricity sales.

Under SFAS No. 133, all derivative instruments are recorded on
the balance sheet as either an asset or liability measured at fair value. Energy
trading contracts representing unrealized gain positions are reported as assets;
energy trading contracts representing unrealized loss positions are reported as
liabilities. Cash flows from derivative instruments are presented in net cash
flow from operating activities.

Prior to January 1, 2001, gains and losses on our derivatives used for
managing commodity price risk were deferred until settlement. These derivatives
had not been designated as hedges under SFAS No. 133. Accordingly, in the first
quarter of 2001, we recognized a net unrealized gain of $18.7 million, net of
$12.3 million tax, on these derivatives as a cumulative effect of a change in
accounting principle.

10
<PAGE>

derivative instruments. For the six months ended June 30, 2001, we recognized an
unrealized loss of $18.5 million, net of $12.2 million tax benefit (excluding
the cumulative effect of a change in accounting principle discussed above),
associated with these derivative instruments. Accounting for derivatives under
SFAS No. 133 will increase volatility of our future earnings.

4. RATE MATTERS AND REGULATION

KCC Rate Cases: On November 27, 2000, we and KGE filed applications
with the KCC for a change in retail rates. On July 25, 2001, the KCC ordered an
annual reduction in our combined electric rates of $22.7 million, consisting of
a $41.2 million reduction in KGE's rates and an $18.5 million increase in the
KPL division's rates. Effective the date of the order, we began to recognize a
liability for amounts currently being collected from customers that will be
subject to refund, with interest, pursuant to the order. The order requires that
we make a filing for rate design for all customer classes by September 20, 2001.
On August 9, 2001, we filed a petition with the KCC requesting reconsideration
of the July 25, 2001 order. The petition specifically asks for reconsideration
of changes in depreciation, reductions in rate base related to deferred income
taxes and a deferred gain, wholesale revenue imputation and several other
issues. We are unable to predict the outcome of our petition for
reconsideration.

KCC Investigation and Order: See Note 2 for a discussion of the order
issued by the KCC on July 20, 2001 in the KCC's docket investigating the
separation of our electric utility businesses from our non-utility businesses
and other aspects of our unregulated businesses.

FERC Proceeding: In September 1999, the City of Wichita filed a
complaint with the Federal Energy Regulatory Commission (FERC) against us
alleging improper affiliate transactions between our KPL division and KGE. The
City of Wichita asked that FERC equalize the generation costs between KPL and
KGE, in addition to other matters. After hearings on the case, a FERC
administrative law judge ruled in our favor confirming that no change in rates
was required. On December 13, 2000, the City of Wichita filed a brief with FERC
asking that the Commission overturn the judge's decision. On January 5, 2001, we
filed a brief opposing the City's position. We anticipate a decision by FERC in
2001. A decision requiring equalization of rates could have a material adverse
effect on our results of operations and financial position.

5. COMMITMENTS AND CONTINGENCIES

Potential Impairment Charge Relating to the Planned Adoption of a New
Accounting Standard Regarding the Treatment of Goodwill in a Business
Combination: In July 2001, the Financial Accounting Standards Board (FASB)
issued SFAS No. 142, "Goodwill and Other Intangible Assets," which establishes a
new accounting standard for the treatment of goodwill. The new standard
continues to require recognition of goodwill as an asset in a business
combination, but does not permit amortization as currently required by
Accounting Principles Board Opinion No. 17, "Intangible Assets." Effective
January 1, 2002, the new standard requires that goodwill be separately tested
for impairment using a fair-value based approach as opposed to the undiscounted
cash flow approach used under current accounting standards. If goodwill is found
to be impaired, we would be required to record a non-cash charge against income,
which would be recorded as a cumulative effect of a change in accounting
principle. The impairment charge would be equal to the amount by which the
carrying amount of the goodwill exceeds its estimated fair value. Also effective
January 1, 2002, goodwill will no longer be amortized as is required under
current accounting standards.

Under the new standard, any subsequent impairment test on our customer
accounts will be performed on the customer accounts alone rather than in
conjunction with goodwill utilizing an undiscounted cash flow test pursuant to
SFAS No. 121.

At June 30, 2001, our intangible assets included $915.1 million in
goodwill and $906.3 million in customer accounts. These intangible assets
together represented 24% of the book value of our total assets. We recorded
approximately $28.9 million in goodwill amortization expense for the six months
ended June 30, 2001.

11
<PAGE>

We have not yet performed impairment tests using the new standard. When
tests are performed, we believe it is probable that we will be required to
record a non-cash impairment charge. The amount will not be known until the
tests are performed, but we believe the amount will be material and could be a
substantial portion of our intangible assets. This impairment charge will have a
material adverse effect on our operating results in the period recorded. Until
the impairment charge is known we are unable to determine the impact upon our
retained earnings, dividends, financial condition or cost of borrowings.

Manufactured Gas Sites: We have been associated with 15 former
manufactured gas sites located in Kansas that may contain coal tar and other
potentially harmful materials. We and the Kansas Department of Health and
Environment entered into a consent agreement governing all future work at these
sites. The terms of the consent agreement will allow us to investigate these
sites and set remediation priorities based on the results of the investigations
and risk analyses. As of June 30, 2001, the costs incurred for preliminary site
investigation and risk assessment have not been material. In accordance with the
terms of the strategic alliance with ONEOK, ownership of 12 of these sites and
the responsibility for clean up of these sites were transferred to ONEOK. The
ONEOK agreement limits our future liability associated with these sites to an
immaterial amount. Our investment earnings from ONEOK could be impacted by these
costs.

Asset Retirement Obligations: In June 2001, the FASB issued SFAS No.
143, "Accounting for Asset Retirement Obligations." The standard requires
entities to record the fair value of a liability for an asset retirement
obligation in the period in which it is incurred. When it is initially recorded,
we will capitalize the estimated asset retirement obligation by increasing the
carrying amount of the related long-lived asset. The liability will be accreted
to its present value each period and the capitalized cost will be depreciated
over the life of the asset. The standard is effective for fiscal years beginning
after June 15, 2002, with earlier adoption encouraged. We are reviewing what
impact this pronouncement will have on our current accounting practices
including nuclear plant decommissioning.

Additional Information: For additional information on Commitments and
Contingencies, see Note 14 of the Notes to Consolidated Financial Statements in
our Annual Report on Form 10-K for the year ended December 31, 2000.

6. INVESTMENT EARNINGS

We own certain equity securities, the fair value of which has declined
below our cost basis. We believe the decline to be other than temporary. During
the second quarter of 2001, we wrote down the cost basis of these securities to
their fair value. The amount of the write-down is $11.1 million and is included
in other income (expense). Investment earnings also include $10.3 million
related to our investment in ONEOK.

During the six months ended June 30, 2000, we sold marketable
securities and realized a gain of $115.6 million.

7. EXTRAORDINARY GAIN ON EXTINGUISHMENT OF DEBT

In the second quarter of 2001, Protection One purchased $21.8 million
face value of its bonds in the open market. An extraordinary gain of $5.8
million, net of $3.1 million tax, was recognized on the retirement of these
bonds. For the six months ended June 30, 2001, Protection One purchased $39.3
million face value of its bonds in the open market. An extraordinary gain of
$10.8 million, net of $5.8 million tax, was recognized on the retirement of
these bonds.

12
<PAGE>

settlement of certain intercompany payables and receivables. Protection One also
purchased $24.5 million face value of its bonds in the open market in the second
quarter of 2000. An extraordinary gain of $17.3 million, net of $9.3 million
tax, was recognized on these retirements.

8. INCOME TAXES

We have recorded income tax benefits and expenses for the interim
periods using the effective tax rate method. Under this method, we compute the
tax related to year-to-date income, except for significant unusual or
extraordinary items, at an estimated annual effective tax rate. We individually
compute and recognize, when the transaction occurs, income tax expense related
to significant unusual extraordinary items. Our effective income tax rate for
the three and six months ended June 30, 2001 was a tax benefit of 49% for each
period compared to a tax expense of 12% and 38% for the comparable periods of
2000. The 2000 effective tax rates were significantly influenced by the tax
effect of the gain on the sale of securities.

The difference between our effective tax rate and the statutory rate is
primarily attributable to the tax benefit of excluding from taxable income, in
accordance with IRS rules, 70% of the dividends received from ONEOK, the income
from corporate-owned life insurance and certain expenses for depreciation,
amortization and state income taxes. The difference is also attributed to the
use of tax credits generated from affordable housing investments, the
amortization of prior year deferred investment tax credits and a tax benefit
associated with the loss on the disposition of some of our monitored services
operations and the write-down of certain of our equity securities.

9. DISPOSITIONS OF MONITORED SERVICES OPERATIONS

In the second quarter of 2001, we and Protection One disposed of
certain monitored security operations for approximately $42.3 million. We
recognized a loss of $7.7 million, net of tax, on these transactions.

10. LEGAL PROCEEDINGS

The SEC commenced a private investigation in 1997 relating to, among
other things, the timeliness and adequacy of disclosure filings with the SEC by
us with respect to securities of ADT Ltd. We have cooperated with the SEC staff
in this investigation.

We, our subsidiary Westar Industries, Protection One, its subsidiary
Protection One Alarm Monitoring, Inc. (Monitoring) and certain present and
former officers and directors of Protection One are defendants in a purported
class action litigation pending in the United States District Court for the
Central District of California, "Alec Garbini, et al v. Protection One, Inc., et
al," No. CV 99-3755 DT (RCx). Pursuant to an Order dated August 2, 1999, four
pending purported class actions were consolidated into a single action. On
February 27, 2001, plaintiffs filed a Third Consolidated Amended Class Action
Complaint (Amended Complaint). Plaintiffs purport to bring the action on behalf
of a class consisting of all purchasers of publicly traded securities of
Protection One, including common stock and notes, during the period of February
10, 1998, through February 2, 2001. The Amended Complaint asserts claims under
Section 11 of the Securities Act of 1933 and Section 10(b) of the Securities
Exchange Act of 1934 against Protection One, Monitoring, and certain present and
former officers and directors of Protection One based on allegations that
various statements concerning Protection One's financial results and operations
for 1997, 1998, 1999 and the first three quarters of 2000 were false and
misleading and not in compliance with generally accepted accounting principles.
Plaintiffs allege, among other things, that former employees of Protection One
have reported that Protection One lacked adequate internal accounting controls
and that certain accounting information was unsupported or manipulated by
management in order to avoid disclosure of accurate information. The Amended
Complaint further asserted claims against us and Westar Industries as
controlling persons under Sections 11 and 15 of the Securities Act of 1933 and
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. A claim was
also asserted under Section 11 of the Securities Act of 1933 against Protection
One's auditor, Arthur Andersen LLP. The

13
<PAGE>

Amended Complaint sought an unspecified amount of compensatory damages and an
award of fees and expenses, including attorneys' fees. On June 4, 2001, the
District Court dismissed plaintiffs' claims under Sections 10(b) and 20(a) of
the Securities Exchange Act. The Court granted plaintiffs leave to replead such
claims. The Court also dismissed all claims brought on behalf of bondholders
with prejudice. The Court also dismissed plaintiffs' claims against Arthur
Andersen with prejudice. The plaintiffs subsequently moved for reconsideration
of the Court's order insofar as it did not give plaintiffs permission to amend
their complaint to replead their claims against Arthur Andersen. After that
motion is decided by the Court, plaintiffs will file a new amended complaint. We
and Protection One intend to vigorously defend against this action. We and
Protection One cannot predict the impact of this litigation, which could be
material.

We and our subsidiaries are involved in various other legal,
environmental and regulatory proceedings. We believe that adequate provision has
been made and accordingly believe that the ultimate disposition of such matters
will not have a material adverse effect upon our overall financial position or
results of operations.

See also Notes 2 and 4 for discussion of the KCC regulatory proceedings
and FERC proceedings involving the City of Wichita.

11. SEGMENTS OF BUSINESS

We have segmented our business according to differences in products and
services, production processes and management responsibility. Based on this
approach, we have identified four reportable segments: Fossil Generation,
Nuclear Generation, Power Delivery and Monitored Services.

The first three segments comprise our electric utility business. Fossil
Generation produces power for sale internally to the Power Delivery segment and
externally to wholesale customers. A component of our Fossil Generation segment
is power marketing, which attempts to minimize market fluctuation risk
associated with fuel and purchased power requirements and to enhance system
reliability. Nuclear Generation represents our 47% ownership in the Wolf Creek
nuclear generating facility. This segment has only internal sales because it
provides all of its power to its co-owners. The Power Delivery segment consists
of the transmission and distribution of power to our retail customers in Kansas
and the customer service provided to these customers and the transportation of
wholesale energy. Monitored Services represents our security alarm monitoring
business in North America and continental Europe. Other represents our
non-utility operations and natural gas investment.

The accounting policies of the segments are the same as those described
in the summary of significant accounting policies in our Annual Report on Form
10-K for the year ended December 31, 2000. We evaluate segment performance based
on earnings before interest and taxes (EBIT).

14
<PAGE>

Three Months Ended June 30, 2001:
Eliminating/
Fossil Nuclear Power Monitored Reconciling
Generation Generation Delivery Services Other Items Total
---------- ------------ ------------- ------------ --------- ------------ --------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
External sales.............. $146,389 $ -- $266,078 $110,098 $ 337 $ (1) $ 522,901
Internal sales.............. 135,723 29,421 76,915 -- -- (242,059) --
Earnings (loss) before
interest and taxes........ 23,107 (2,996) 32,763 (56,856) 2,232 (1,751) (3,501)
Interest expense............ 66,866
Earnings (loss)
before income taxes....... (70,367)

Three Months Ended June 30, 2000:

<CAPTION>
Eliminating/
Fossil Nuclear Power Monitored Reconciling
Generation Generation Delivery Services Other Items Total
---------- ------------ ------------- ------------ --------- ----------- --------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
External sales.............. $157,509 $ -- $260,820 $127,916 $ 353 $ 9 $ 546,607
Internal sales.............. 135,433 29,313 70,533 -- -- (235,279) --
Earnings (loss) before
interest and taxes........ 65,489 (2,858) 29,555 (21,959) 32,365 (3,557) 99,035
Interest expense............ 72,312
Earnings before
income taxes.............. 26,723

Six Months Ended June 30, 2001:

Eliminating/
Fossil Nuclear Power Monitored Reconciling
Generation(a) Generation Delivery Services Other Items Total
------------- ---------- -------- -------- -------- ----------- ---------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
External sales.............. $347,142 $ -- $511,344 $224,467 $ 690 $ (3) $1,083,640
Internal sales.............. 267,362 58,363 150,400 -- -- (476,125) --
Earnings (loss) before
interest and taxes
and cumulative
effect of accounting
change.................... 65,744 (8,690) 47,813 (86,958) 16,933 (7,361) 27,481
Interest expense............ 136,074
Earnings (loss)
before income taxes....... (108,593)

Six Months Ended June 30, 2000:

Eliminating/
Fossil Nuclear Power Monitored Reconciling
Generation Generation Delivery Services Other Items Total
------------- ---------- -------- -------- --------- ----------- ---------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
External sales.............. $258,273 $ -- $494,551 $274,786 $ 686 $ 11 $1,028,307
Internal sales.............. 263,825 58,793 137,903 -- -- (460,521) --
Earnings (loss) before
interest and taxes........ 110,841 (8,204) 42,012 (41,683) 148,742 (6,615) 245,093
Interest expense............ 142,338
Earnings before
income taxes.............. 102,755
</TABLE>
-------------------------

(a) EBIT shown above for Fossil Generation does not include the unrecognized
gain on derivatives reported as a cumulative effect of a change in
accounting principle. If the effect had been included, EBIT for the Fossil
Generation segment for the six months ended June 30, 2001 would have been
$96,785.

15
<PAGE>

WESTERN RESOURCES, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
--------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------

INTRODUCTION

The following Management's Discussion and Analysis of Financial
Condition and Results of Operations updates the information provided in our
Annual Report on Form 10-K for the year ended December 31, 2000, and should be
read in conjunction with that report. In this section, we discuss the general
financial condition, significant changes and operating results for us and our
subsidiaries. We explain:

- What factors impact our business
- What our earnings and costs were for the three and six months
ended June 30, 2001 and 2000
- Why these earnings and costs differed from period to period
- How our earnings and costs affect our overall financial condition
- Any other items that particularly affect our financial condition
or earnings

SUMMARY OF SIGNIFICANT ITEMS

PNM Merger and Split-off of Westar Industries

On May 8, 2001, the Kansas Corporation Commission (KCC) opened an
investigation of the separation of our electric utility businesses from our non-
utility businesses and other aspects of our unregulated businesses. The order
opening the investigation indicated that the investigation would focus on
whether the separation and other transactions involving our unregulated
businesses are consistent with our obligation to provide efficient and
sufficient electric service at just and reasonable rates to our electric utility
customers. The KCC staff was directed to investigate, among other matters, the
basis for and the effect of the Asset Allocation and Separation Agreement and
the payable owed by us to Westar Industries, the split-off of Westar Industries,
the effect of business difficulties faced by our unregulated businesses and
whether they should continue to be affiliated with our electric utility business
and our present and prospective capital structures. On May 22, 2001, the KCC
issued an order nullifying the Asset Allocation and Separation Agreement as not
having been filed with and approved by the KCC, prohibiting us and Westar
Industries from taking any action to complete a rights offering for common stock
of Westar Industries, which was to be a first step in the separation, and
scheduling a hearing to consider whether to make the order permanent.

16
<PAGE>

protect ratepayers from the risks of our non-utility businesses. In its order,
the KCC also acknowledged that we are presently operating efficiently and at
reasonable cost and stated that it was not disapproving the PNM transaction or a
split-off of Westar. We have filed a petition for general reconsideration of the
order.

On July 26, 2001, PNM and we issued a joint press release announcing
our belief that, if recent orders issued by the KCC remain in effect, the
proposed transaction would be difficult to complete as currently structured and
that we intend to meet to discuss possible modifications to the transaction that
will make it possible to obtain necessary regulatory approvals. On August 13,
2001, PNM issued a press release announcing that we had discontinued discussions
with PNM about possible modifications to the proposed transaction and advising
us that PNM believes the KCC order reducing our rates would have a material
adverse effect on the financial condition of the proposed combined companies and
could result in the failure of a significant condition to the transaction. PNM's
press release acknowledged that we disagree with its characterization of the
KCC's rate order. We have advised PNM that we also disagree strongly with its
characterization of our discussions about possible modifications to the
transaction.

KCC Rate Cases

On November 27, 2000, we and KGE filed applications with the KCC for a
change in retail rates. On July 25, 2001, the KCC ordered an annual reduction in
our combined electric rates of $22.7 million, consisting of a $41.2 million
reduction in KGE's rates and an $18.5 million increase in the KPL division's
rates. Effective the date of the order, we began to recognize a liability for
amounts currently being collected from customers that will be subject to refund,
with interest, pursuant to the order. The order requires that we make a filing
for rate design for all customer classes by September 20, 2001. On August 9,
2001, we filed a petition with the KCC requesting reconsideration of the July
25, 2001 order. The petition specifically asks for the reconsideration of
changes in depreciation, reductions in rate base related to deferred income
taxes and a deferred gain, wholesale imputation and several other issues. We are
unable to predict the outcome of our petition for reconsideration.

We are currently evaluating the impact of the July 25, 2001 order,
including provisions relating to certain accounting matters which, among other
things, contemplate depreciation rates that effectively extend the estimated
lives of our primary electric generation assets. The reduction of our annual
rates by $22.7 million, or less than two percent of our total retail electric
sales in 2000, will reduce our cash flow. We are evaluating whether this
reduction in cash flow will require steps to reduce our capital needs or
operating expenses. The impact of the order on our net income has not yet been
determined.

Extraordinary Gain on Extinguishment of Debt

In the second quarter of 2000, Westar Industries purchased $45.1
million face value of Protection One bonds in the open market. These debt
securities were transferred to Protection One in exchange for cash and the
settlement of certain intercompany payables and receivables. Protection One also
purchased $24.5 million face value of its bonds in the open market in the second
quarter of 2000. An extraordinary gain of $17.3 million, net of tax of $9.3
million, was recognized on these retirements.

Potential Impairment Charge Relating to the Planned Adoption of a New Accounting
Standard Regarding the Treatment of Goodwill in a Business Combination

In July 2001, FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which establishes a new accounting standard for the treatment of
goodwill. The new standard continues to require recognition of goodwill as an
asset in a business combination, but does not permit amortization as currently
required by Accounting

17
<PAGE>

Principles Board Opinion No. 17, "Intangible Assets." Effective January 1, 2002,
the new standard requires that goodwill be separately tested for impairment
using a fair-value based approach as opposed to the undiscounted cash flow
approach used under current accounting standards. If goodwill is found to be
impaired, we would be required to record a non-cash charge against income, which
would be recorded as a cumulative effect of a change in accounting principle.
The impairment charge would be equal to the amount by which the carrying amount
of the goodwill exceeds its estimated fair value. Also effective January 1,
2002, goodwill will no longer be amortized as is required under current
accounting standards.

We have not yet performed impairment tests using the new standard.
When tests are performed, we believe it is probable that we will be required to
record a non-cash impairment charge. The amount will not be known until the
tests are performed, but we believe the amount will be material and could be a
substantial portion of our intangible assets. This impairment charge will have a
material adverse effect on our operating results in the period recorded. Until
the impairment charge is known we are unable to determine the impact upon our
retained earnings, dividends, financial condition or cost of borrowings.

Dispositions of Monitored Services Operations

Addition of New Capacity

In June 2001, we added 354 megawatts (MW) of additional generating
capacity. Construction of a 154 MW combustion turbine generating unit was
completed at the Gordon Evans Energy Center in Wichita, Kansas. Construction was
completed on combined cycle units at the State Line Power Plant in Joplin,
Missouri, a joint venture with The Empire District Electric Company, in which we
have an ownership interest of 200 MW of generating capacity.

OPERATING RESULTS

The following discussion explains significant changes in operating
results for the three and six months ended June 30, 2001 and 2000.

Western Resources Consolidated

Three Months Ended June 30, 2001, Compared to Three Months Ended June
30, 2000: Sales decreased $23.7 million, or 4%, primarily due to decreased
monitored security revenues caused by a decline in Monitored Services' customer
account base and decreased power marketing sales. See the "Overview of Utility
Operations" and "Business Segments" discussions below for additional
information.

Cost of sales increased $22.6 million, or 11%, primarily due to a $31.7
million non-cash mark-to-market adjustment on fuel derivatives as prescribed by
SFAS No. 133 and increased fuel and purchased power expenses of $9.1 million.
Partially offsetting these increases were decreases of $15.5 million in power
marketing expense and $2.7 million in Monitored Services cost of revenues due to
the decline in customer accounts. See the "Overview of Utility Operations" and
"Business Segments" discussions below for further information. Decreased sales
along with higher cost of sales were the primary reasons gross profit decreased
$46.3 million. Gross profit as a percentage of sales decreased from 61% to 55%.

18
<PAGE>

Operating expenses increased $25.6 million, or 10%, primarily due to
the loss from the dispositions of certain monitored security operations, a non-
recurring charge for Protection One's work force reduction and call center and
other office consolidations and an increase in maintenance expenses associated
with planned generating unit outages. Other income decreased $30.6 million, or
88%, primarily due to the significant investment earnings in 2000 from the sale
of marketable securities and the write-down of securities in 2001. As a result,
EBIT decreased $102.5 million. Excluding the mark-to-market adjustment on fuel
derivatives, EBIT would have decreased $70.8 million.

For the reasons discussed above, basic loss per share was $0.43 for the
second quarter of 2001, compared to basic earnings per share of $0.59 for the
same period of 2000.

Six Months Ended June 30, 2001, Compared to Six Months Ended June 30,
2000: Sales increased $55.3 million, or 5%, primarily due to higher power
marketing and wholesale sales in the first quarter of 2001. The increase in
energy sales was partially offset by a decrease in Monitored Services' revenues.
See the "Overview of Utility Operations" and "Business Segments" discussions
below for additional information.

Cost of sales increased $117.3 million, or 30%, primarily due to a
$30.7 million non-cash mark-to-market adjustment on fuel derivatives as
prescribed by SFAS No. 133, increased power marketing expense of $65.1 million
and increased fuel and purchased power expenses of $30.6 million as discussed
below under "Overview of Utility Operations." These increases were partially
offset by a lower cost of security revenues of $9.2 million, which declined
primarily due to the decline in customer accounts. The significant increase in
cost of sales was the primary reason gross profit decreased $61.9 million. Gross
profit as a percentage of sales decreased from 62% to 53%.

EBIT decreased $217.6 million primarily as a result of investment
earnings of $115.6 million in 2000 from the sale of marketable securities and
the $61.9 million decline in gross profit in 2001. EBIT also decreased as a
result of the $30.7 million mark-to-market adjustment for derivative instruments
in the second quarter of 2001. EBIT does not reflect a $31.0 million gain in the
first quarter of 2001 for the mark-to-market adjustment for derivative
instruments recorded as a cumulative effect of a change in accounting principle.
See Note 3 of the Notes to Consolidated Financial Statements for more
information on accounting for derivative instruments.

For the reasons discussed above, basic loss per share was $0.37 for the
six months ended June 30, 2001, compared to basic earnings per share of $1.39
for the same period of 2000.

19
<PAGE>

Overview of Utility Operations

The following table reflects the changes in electric sales volumes,
excluding power marketing, as measured by megawatt hours (MWh), for the three
and six months ended June 30, 2001, from the comparable periods of 2000.

<TABLE>
<CAPTION>
Three Months Ended June 30,
--------------------------------------------
2001 2000 % Change
--------- -------- --------
(Thousands of MWh)
<S> <C> <C> <C>
Residential 1,381 1,370 0.8
Commercial 1,566 1,548 1.2
Industrial 1,468 1,475 (0.5)
Other 26 27 (3.7)
-------- -------
Total retail 4,441 4,420 0.5
Wholesale 1,716 1,581 8.5
-------- -------
Total 6,157 6,001 2.6
======== =======

Six Months Ended June 30,
--------------------------------------------
2001 2000 % Change
--------- -------- --------
(Thousands of MWh)
<S> <C> <C> <C>
Residential 2,711 2,593 4.6
Commercial 3,044 2,967 2.6
Industrial 2,822 2,851 (1.0)
Other 54 54 --
-------- -------
Total retail 8,631 8,465 2.0
Wholesale 3,733 3,254 14.7
-------- -------
Total 12,364 11,719 5.5
======== =======
</TABLE>

Three Months Ended June 30, 2001, Compared to Three Months Ended June
30, 2000: Energy sales decreased $5.9 million, or 1%, primarily due to decreased
power marketing sales, which were partially offset by increases in retail and
wholesale sales. Power marketing sales were lower primarily due to a decrease in
market demand and prices. Retail and wholesale sales increased primarily due to
increased system demand for power because of warmer weather than in 2000.

Cost of sales increased $25.2 million, or 15%, primarily due to a $31.7
million non-cash mark-to-market adjustment on fuel derivatives as prescribed by
SFAS No. 133 and increased fuel and purchased power expenses of $9.1 million.
Fuel and purchased power expenses were higher primarily due to increased volumes
incurred to meet higher residential and commercial retail sales. A decrease in
power marketing expense of $15.5 million due to reduced market demand partially
offset the cost of sales increases. Primarily as a result of the increase in
cost of sales, gross profit decreased $31.1 million, or 13% and gross profit as
a percentage of electric sales decreased from 59% to 52%. Excluding the
mark-to-market adjustment on fuel derivatives, gross profit would have increased
$0.6 million.

Six Months Ended June 30, 2001, Compared to Six Months Ended June 30,
2000: Energy sales increased $105.7 million, or 14%, primarily due to increased
power marketing sales in the first quarter and higher retail and wholesale sales
caused by weather conditions as discussed below in the "Power Delivery" segment
discussion. Cost of sales increased $126.5 million, or 42%, primarily due to a
$30.7 million non-cash mark-to-market adjustment on fuel derivatives as
prescribed by SFAS No. 133 and increased power marketing, purchased power and
fuel expenses. Gross profit decreased $20.8 million, or 5%, and gross profit as
a percentage of electric sales decreased from 60% to 50% due to the cost of
sales increasing more than the increase in sales. Excluding the mark-to-market
adjustment on fuel derivatives, gross profit would have increased $9.9 million.

Power marketing expense increased $65.1 million as a result of the
corresponding increase in power marketing sales. Purchased power expense
increased $11.7 million and fuel expense increased $18.9 million primarily due
to increased demand from our retail customers and the need to replace power not
available as a result of planned generating unit maintenance outages. Our
average natural gas unit price has increased 71% during 2001 as compared

20
<PAGE>

to the same period of 2000. However, our average fossil fuel unit price
increased only 7% because we were able to mitigate our exposure through fuel
management efforts, such as burning significantly more oil and less gas. These
efforts enabled us to keep our fossil fuel average unit cost from increasing in
proportion to the average unit fuel prices experienced in the fossil fuel
commodity markets. Due to the volatility of fossil fuel unit prices and
commodity markets, similar efforts may not produce as favorable results in the
future.

Business Segments

Our business is segmented according to differences in products and
services, production processes and management responsibility. Based on this
approach, we have identified four reportable segments: Fossil Generation,
Nuclear Generation, Power Delivery and Monitored Services.

Our electric utility business is comprised of the Fossil Generation,
Nuclear Generation and Power Delivery segments. Fossil Generation produces power
for sale internally to the Power Delivery segment and externally to wholesale
customers. A component of our Fossil Generation segment is power marketing,
which attempts to minimize market fluctuation risk associated with fuel and
purchased power requirements and enhance system reliability. Nuclear Generation
represents our 47% ownership in the Wolf Creek nuclear generating facility. This
segment has only internal sales because it provides all of its power to its
co-owners. The Power Delivery segment consists of the transmission and
distribution of power to our retail customers in Kansas and the customer service
provided to these customers and the transmission of wholesale energy. Monitored
Services is comprised of our security alarm monitoring business in North America
and continental Europe.

The following table reflects key information for our three electric
utility business segments:

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -----------------------
2001 2000 2001 2000
--------- ---------- ---------- ----------
Fossil Generation:
<S> <C> <C> <C> <C>
External sales............... $ 146,389 $ 157,509 $ 347,142 $ 258,273
Internal sales............... 135,723 135,433 267,362 263,825
EBIT (a)..................... 23,107 65,489 65,744 110,841

Nuclear Generation (b):
Internal sales............... $ 29,421 $ 29,313 $ 58,363 $ 58,793
EBIT......................... (2,996) (2,858) (8,690) (8,204)

Power Delivery:
External sales............... $ 266,078 $ 260,820 $ 511,344 $ 494,551
Internal sales............... 76,915 70,533 150,400 137,903
EBIT......................... 32,763 29,555 47,813 42,012
</TABLE>

------------------
(a) EBIT shown above for Fossil Generation does not include the
unrecognized gain on derivatives reported as a cumulative effect
of a change in accounting principle. If the effect had been
included, EBIT for the Fossil Generation segment for the six
months ended June 30, 2001 would have been $96,785.
(b) Nuclear Generation amounts represent our 47% share of Wolf Creek's
operating results.

Fossil Generation

Fossil Generation's external sales consist of the power produced and
purchased for sale to wholesale customers. Internal sales consist of the power
produced for sale to Power Delivery, which delivers the power to our retail and
wholesale customers. The internal transfer price for these sales is set by us
based on estimates of what we believe would be competitive market prices for
capacity and energy at the time of sale.

21
<PAGE>

Three Months Ended June 30, 2001, Compared to Three Months Ended June
30, 2000: External sales decreased $11.1 million primarily due to a $15.8
million decrease in power marketing sales, which was partially offset by a $4.8
million increase in wholesale sales. The decrease in power marketing sales was
primarily due to lower market demand and prices. EBIT decreased $42.4 million
primarily due to a $31.7 million non-cash mark-to-market adjustment on fuel
derivatives as prescribed by SFAS No. 133 and increased fuel and purchased power
expenses. Excluding the mark-to-market adjustment on fuel derivatives, EBIT
would have decreased $10.7 million.

Six Months Ended June 30, 2001, Compared to Six Months Ended June 30,
2000: External sales increased $88.9 million primarily due to an increase in
power marketing sales of $64.7 million, or 44%, and an increase in wholesale
sales of $27.2 million, or 30%. During the first quarter of 2001, we experienced
significant increases in power marketing and wholesale sales, which were
partially offset by the decreases in the second quarter as discussed in the
paragraph above. EBIT decreased $45.1 million primarily due to a $30.7 million
non-cash mark-to-market adjustment on fuel derivatives, and increased fuel,
purchased power, power marketing and maintenance expenses. Excluding the
mark-to-market adjustment on fuel derivatives, EBIT would have decreased $14.4
million.

Nuclear Generation

Nuclear Generation has only internal sales because all of its power is
provided to its co-owners: KGE, Kansas City Power and Light Company and Kansas
Electric Power Cooperative, Inc. KGE owns 47% of Wolf Creek Nuclear Operating
Corporation (WCNOC), the operating company for Wolf Creek Generating Station
(Wolf Creek). Internal sales are priced at the internal transfer price that
Nuclear Generation charges to Power Delivery. Internal sales and EBIT did not
materially change because there were no Wolf Creek refueling outages in either
period. EBIT is negative because internal sales are less than Wolf Creek's
costs.

Power Delivery

Power Delivery's external sales consist of the transmission and
distribution of power to our electric retail and wholesale customers and the
customer service provided to them. Internal sales consist of the intra-segment
transfer price charged to Fossil Generation and Nuclear Generation for the use
of the distribution lines and transformers.

Three Months Ended June 30, 2001, Compared to Three Months Ended June
30, 2000: External sales increased $5.3 million, or 2%, and EBIT increased $3.2
million, or 11%. We experienced a 1% increase in residential sales volumes
primarily due to a 12% increase in cooling-degree days caused by warmer weather
than in 2000.

Six Months Ended June 30, 2001, Compared to Six Months Ended June 30,
2000: External sales increased $16.8 million, or 3%, and EBIT increased $5.8
million, or 14%. Weather conditions resulted in an approximate 5% increase in
residential sales volumes.

Monitored Services

Protection One and Protection One Europe comprise our monitored
services business. The results discussed below reflect Monitored Services on a
stand-alone basis. These results do not take into consideration Protection One's
minority interest of approximately 13% and 15% at June 30, 2001 and 2000,
respectively.

<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
----------------------------- ----------------------------
2001 2000 2001 2000
----------- ---------- ---------- ----------
(Dollars in Thousands)

<S> <C> <C> <C> <C>
External sales............. $ 110,098 $ 127,916 $ 224,467 $ 274,786
EBIT....................... (56,856) (21,959) (86,958) (41,683)
</TABLE>

22
<PAGE>

Three Months Ended June 30, 2001, Compared to Three Months Ended June
30, 2000: Sales decreased $17.8 million primarily due to a decline in Monitored
Services' average customer base. Monitored Services' net decline in customers in
the second quarter of 2001 was 94,745. This decrease included a decrease in
Protection One Europe's account base of 43,016 customers as a result of the
disposition of the United Kingdom operations, and a decrease of 24,972 customers
related to account dispositions and conversions by Protection One. The balance
of the decrease in customers is primarily attributable to the fact that
Protection One's customer acquisition strategies have not been able to generate
accounts in a sufficient volume at acceptable cost to replace accounts lost
through attrition. See "Monitored Services Business Attrition" below for
discussion regarding attrition. Protection One expects this trend will continue
until the efforts it is making to acquire new accounts and reduce attrition
become more successful than they have been to date. Until it is able to reverse
this trend, net losses of customer accounts will materially and adversely affect
its business, financial condition and results of operations. Protection One's
focus remains on the completion of its current infrastructure projects, cost
reductions, the development of cost effective marketing programs and the
generation of positive cash flow.

Six Months Ended June 30, 2001, Compared to Six Months Ended June 30,
2000: Sales decreased $50.3 million primarily due to a decline in Monitored
Services' average customer base. Monitored Services' experienced a net decline
of 115,734 customers in the six months ended June 30, 2001. This decrease in
customers is primarily attributable to the factors discussed in the paragraph
above and the significant decrease in the number of accounts being purchased
from dealers.

Other Income (Expense)

Other income for the second quarter of 2001 decreased $30.6 million
primarily due to lower investment earnings of $32.8 million. For the six months
ended June 30, 2001, other income decreased $134.9 million primarily due to
lower investment earnings of $137.9 million as compared to June 30, 2000. During
2000, our investment earnings were significantly higher because we recognized a
gain on the sale of our investment in a gas compression company and on the sale
of other marketable securities, which represented substantially all of our
investment portfolio. Additionally, during the second quarter of 2001, we wrote
down the cost basis of certain equity securities to their fair value. See Note 6
of the Notes to Consolidated Financial Statements for more information.

Interest Expense

Three Months Ended June 30, 2001, Compared to Three Months Ended June
30, 2000: Interest expense represents the interest we paid on outstanding debt.
On June 28, 2000, we entered into a $600 million, multi-year term loan that
increased our long-term debt balance (see the Liquidity and Capital Resources
section below for more information). As a result, long-term debt interest
expense increased $8.0 million, or 16%. However, interest expense on short-term
debt decreased $13.4 million, or 57%, due to repayments of short-term borrowings
under our credit facilities, which reduced our net interest expense by $5.4
million.

Six Months Ended June 30, 2001, Compared to Six Months Ended June 30,
2000: Our interest expense on long-term debt increased $16.1 million because of
increased long-term debt as discussed above. Short-term debt interest expense
was $22.4 million lower due to repayments of short-term borrowings. Our net
interest expense was $6.3 million lower in 2001 than in 2000.

Income Taxes

23
<PAGE>

expense of 12% and 38% for the comparable periods of 2000. The 2000 effective
tax rates were significantly influenced by the tax effect of the gain on the
sale of securities.

LIQUIDITY AND CAPITAL RESOURCES

We had $66.8 million in cash and cash equivalents at June 30, 2001. We
consider cash equivalents to be highly liquid debt instruments when purchased
with a maturity of three months or less. We also had $23.0 million of restricted
cash classified as a current asset. The current asset portion of our restricted
cash consists primarily of cash held in escrow as required by certain letters of
credit. In addition, we had $34.9 million of restricted cash classified as a
long-term asset, which consists primarily of cash held in escrow required by the
terms of a pre-paid capacity and transmission agreement.

At June 30, 2001, current maturities of long-term debt were $32.5
million and short-term debt outstanding was $146.4 million. At August 8, 2001,
our short-term debt outstanding was $142 million.

On June 28, 2000, we entered into a $600 million, multi-year term loan
that replaced two revolving credit facilities that matured on June 30, 2000. The
proceeds of the term loan were used to retire short-term debt. On January 2,
2001, we repaid $3 million, reducing the remaining balance to $597 million. The
term loan is secured by our and KGE's first mortgage bonds and has a maturity
date of March 17, 2003. The terms of the loan contain requirements for
maintaining certain consolidated leverage ratios, interest coverage ratios and
consolidated debt to capital ratios. We are in compliance with all of these
requirements.

We also have an arrangement with certain banks to provide a revolving
credit facility on a committed basis totaling $500 million. The facility is
secured by our and KGE's first mortgage bonds and expires on March 17, 2003. As
of June 30, 2001, borrowings under this facility were $146.1 million.

Future Cash Requirements: Our businesses require significant capital
investments. See our Annual Report on Form 10-K for the year ended December 31,
2000 for additional information about anticipated capital expenditures for years
2001 through 2003. Protection One anticipates capital expenditures of
approximately $20 million to acquire customer accounts and to purchase fixed
assets for the remainder of 2001. Protection One is re-evaluating its estimated
capital expenditures for 2002 and 2003. The KCC order reducing our combined
electric annual rates by $22.7 million will also reduce our annual cash flow. We
are evaluating the extent to which this reduction in cash flow will, among other
things, require us to take steps to reduce our currently planned capital needs
and operating expenses, or increase our cost of financing.

Credit Ratings: Standard & Poor's (S&P), Fitch Investors Service
(Fitch) and Moody's Investors Service (Moody's) are independent credit-rating
agencies that rate our debt securities. These ratings indicate the agencies'
assessment of our ability to pay interest and principal on these securities. On
July 25, 2001, S&P revised its CreditWatch listing on our and KGE's ratings to
"developing" from "positive".

24
<PAGE>

As of July 25, 2001, ratings with these agencies are as follows:

<TABLE>
<CAPTION>
Western Protection Protection
Resources Western KGE One One
Mortgage Resources Mortgage Senior Senior
Bond Unsecured Bond Unsecured Subordinated
Rating Debt Rating Debt Unsecured Debt
------ ---- ------ ---- --------------
<S> <C> <C> <C> <C> <C>
S&P............. BBB- BB- BB+ B+ B-
Fitch........... BB+ BB BB+ B CCC+
Moody's......... Ba1 Ba2 Ba1 B3 Caa2
</TABLE>

Cash Flows from (used in) Operating Activities

Cash provided by operations increased from $65.8 million for the six
months ended June 30, 2000, to $107.2 million for the same period of 2001. The
reason for this increase is primarily due to changes in working capital.

Cash Flows from (used in) Investing Activities

Investing activities used net cash flow of $97.9 million in the six
months ended June 30, 2001 compared to providing cash of $31.4 million for the
same period in 2000. The decrease is primarily due to proceeds of $217.1
received from the sale of marketable securities during the six months ended June
30, 2000. Additions to property, plant and equipment also decreased by $47.9
million for the six months ended June 30, 2001 as compared to the six months
ended June 30, 2000.

Cash Flows from (used in) from Financing Activities

Net cash from financing activities totaled $48.7 million for the six
months ended June 30, 2001 due primarily to additional short-term debt
borrowings.

Net cash used in financing activities totaled $103.0 million in the six
months ended June 30, 2000 primarily due to the retirements of long- and
short-term debt.

Our ability to issue additional debt and equity securities is
restricted under our Articles of Incorporation and our and KGE's mortgages and
other debt instruments.

Debt and Equity Repurchase Plans

We and Protection One may, from time to time, purchase our and
Protection One's debt and equity securities in the open market or through
negotiated transactions. We and Protection One will determine the timing and
terms of purchases and the amount of debt or equity actually purchased, based on
market conditions and other factors.

OTHER INFORMATION

FERC Proceeding

In September 1999, the City of Wichita filed a complaint with the FERC
against us alleging improper affiliate transactions between our KPL division and
KGE. The City of Wichita asked that FERC equalize the

25
<PAGE>

generation costs between KPL and KGE, in addition to other matters. After
hearings on the case, a FERC administrative law judge ruled in our favor
confirming that no change in rates was required. On December 13, 2000, the City
of Wichita filed a brief with FERC asking that the Commission overturn the
judge's decision. On January 5, 2001, we filed a brief opposing the City's
position. We anticipate a decision by FERC in 2001. A decision requiring
equalization of rates could have a material adverse effect on our results of
operations and financial position.

Monitored Services Business Attrition

Customer attrition has a direct impact on the results of our monitored
security operations since it affects its revenues, amortization expense and cash
flow. See "Operating Results - Monitored Services" for additional information
regarding customer attrition.

In the second quarter of 2001, the decrease in Protection One's
customer base included 7,878 accounts that were sold, 1,562 accounts that were
part of the patrol division that was discontinued in May, and 15,532 accounts
that were combined with related existing accounts in the conversion of the
Beaverton, Oregon customer service center to a new billing and monitoring
system referred to as MAS(R). Protection One's old billing and monitoring
systems reported accounts based on number of contracts. MAS(R) reports sites for
which Protection One provides service regardless of whether Protection One has
separate contracts to provide multiple services at that site. These decreases
were excluded in the calculation of attrition for the periods indicated below.

Customer attrition for the three months ended June 30, 2001 and 2000,
is summarized below:

<TABLE>
<CAPTION>
Customer Account Attrition
June 30, 2001 June 30, 2000
--------------------------- ---------------------------
Annualized Trailing Annualized Trailing
Second Twelve Second Twelve
Quarter Months Quarter Months
------- ------ ------- ------
<S> <C> <C> <C> <C>
Protection One................ 12.2% 13.9% 14.6% 14.4%
Protection One Europe......... 8.6% 9.3% 8.6% 8.2%
</TABLE>

Market Risk Disclosure

We are exposed to market risk, including changes in commodity prices,
equity instrument investment prices and interest rates. Since December 31, 2000,
we have not experienced any significant changes in our exposure to market risk
except for the impact of changes in our interest rate exposure on variable rate
debt and current maturities of fixed rate debt. For additional information on
our market risk, see our Annual Report on Form 10-K for the year ended December
31, 2000.

Interest Rate Exposure: Our variable rate debt and current maturities
of fixed rate debt increased from $156.9 million at December 31, 2000, to $268.3
million at June 30, 2001. Our weighted average interest rate decreased from
8.11% at December 31, 2000, to 5.83% at June 30, 2001. A 100 basis point change
in each debt series' benchmark rate used to set the rate for such series would
impact net income on an annual basis by approximately $2.0 million after tax.

Accounting Change

Effective January 1, 2001, we adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS Nos. 137 and
138 (collectively, SFAS No. 133). We use derivative instruments (primarily
swaps, options and futures) to manage the commodity price risk inherent in fuel
purchases and electricity sales.

Under SFAS No. 133, all derivative instruments are recorded on the
balance sheet as either an asset or liability measured at fair value. Energy
trading contracts representing unrealized gain positions are reported as assets;
energy trading contracts representing unrealized loss positions are reported as
liabilities. Cash flows from derivative instruments are presented in net cash
flow from operating activities.

26
<PAGE>

in the first quarter of 2001, we recognized a net unrealized gain of $18.7
million, net of $12.3 million tax, on these derivatives as a cumulative effect
of a change in accounting principle.

After January 1, 2001, changes in fair value of all derivative
instruments used for managing commodity price risk are recognized currently as a
cost of sales. For the quarter ended June 30, 2001, we recognized an unrealized
loss of $19.1 million, net of $12.6 million tax benefit, associated with these
derivative instruments. For the six months ended June 30, 2001, we recognized an
unrealized loss of $18.5 million, net of $12.2 million tax benefit (excluding
the cumulative effect of a change in accounting principle discussed above),
associated with these derivative instruments. Accounting for derivatives under
SFAS No. 133 will increase volatility of our future earnings.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
------- ----------------------------------------------------------

Information relating to the market risk disclosure is set forth in
Other Information of Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations included herein.

27
<PAGE>

WESTERN RESOURCES, INC.

Part II Other Information

ITEM 1. LEGAL PROCEEDINGS
------- -----------------

Information relating to legal proceedings is set forth in Note 10 of
the Notes to Consolidated Financial Statements included in Part I of this
report, which information is incorporated herein by reference.

See also Notes 2 and 4 of the Notes to Consolidated Financial Statments
for discussion of KCC regulatory proceedings and FERC proceedings involving
the City of Wichita, which are incorporated herein by reference.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
------- -----------------------------------------

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
------- -------------------------------

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------- ---------------------------------------------------

Our Annual Meeting of Shareholders was held on July 10, 2001. At the
meeting, the holders of 59,387,120 shares voted either in person or by proxy to
elect the following directors to serve a term of three years:

Votes
--------------------------------
For Withheld
------------ -------------
Gene A. Budig................ 56,238,684 3,148,436
John C. Nettels, Jr.......... 56,348,332 3,038,788
David C. Wittig.............. 53,838,662 5,548,458

The following directors will continue to serve their unexpired terms:
Frank J. Becker, Douglas T. Lake, John C. Dicus and Charles Q. Chandler, IV.

ITEM 5. OTHER INFORMATION
------- -----------------

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
------- --------------------------------

(a) Exhibits:

99.1 - Press release issued August 13, 2001 by PNM announcing that
talks to modify our transaction with PNM have been
discontinued.

99.2 - Press release issued August 13, 2001 by Western Resources
responding to PNM's announcment of discontinued talks.

(b) Reports on Form 8-K filed during the quarter ended June 30, 2001:

Form 8-K filed May 2, 2001 - Announcing that we and Westar
Industries had entered into an Amendment to the Asset Allocation
and Separation Agreement.

Form 8-K filed May 10, 2001 - Filing the KCC's order initiating an
investigation into the proposed

28
<PAGE>

separation of our electric utility businesses from our
unregulated businesses and our press release responding to the
order.

Form 8-K filed May 23, 2001 - Announcing a supplemental order from
the KCC declaring that the Asset Allocation and Separation
Agreement is of no force and legal effect and further ordering that
no action be taken on Westar Industries' rights offering.

29
<PAGE>

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

WESTERN RESOURCES, INC.

Date: August 14, 2001 By: /s/ James A. Martin
---------------- ----------------------------
James A. Martin
Senior Vice President
and Treasurer

</TEXT>
</DOCUMENT>