##### Table of Contents

---

UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON,
D.C.   20549

FORM 10-Q

xQUARTERLY REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

OR

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

For the transition period from ________ to _________

Commission File Number 1-7324

|KANSAS GAS AND ELECTRIC COMPANY                                                                                     
|--------------------------------------------------------------------------------------------------------------------
|                                                                                                                    
|(Exact name of registrant as specified in its charter)                                                              
|                                                                                                                    
|Kansas                                                                                                              
|                                                                                                                    
|(State or other jurisdiction of incorporation or organization)                                                      
|                                                                                                                    
|P.O. BOX 208                                                                                                        
|Wichita, Kansas 67201                                                                                               
|(316) 261-6611                                                                                                      
|                                                                                                                    
|(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 | o
|--- | - | -- | -

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

|Common Stock, No par value |  | 1,000 Shares                     
|-------------------------- |  | ---------------------------------
|                           |  |                                  
|(Class)                    |  | (Outstanding at November 6, 2002)

Registrant meets the conditions of General Instruction H(1)(a) and (b) to Form 10-Q for certain wholly-owned subsidiaries and is therefore filing this form with a
reduced disclosure format.

---

1



---

##### Table of Contents



TABLE OF CONTENTS

|                               |         |                                                                                       | Page
|------------------------------ | ------- | ------------------------------------------------------------------------------------- | ----
|                               |         |                                                                                       |     
|PART I. 
Financial Information |        
|                               |        
|                               | Item 1. | Financial Statements                                                                  |     
|                               |         |                                                                                       |     
|                               |         | Consolidated Balance Sheets                                                           | 4   
|                               |         |                                                                                       |     
|                               |         | Consolidated Statements of Income (Loss) and Comprehensive Income                     | 5-6 
|                               |         |                                                                                       |     
|                               |         | Consolidated Statements of Cash Flows                                                 | 7   
|                               |         |                                                                                       |     
|                               |         | Notes to Consolidated Financial Statements                                            | 8   
|                               |         |                                                                                       |     
|                               | Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations | 19  
|                               |         |                                                                                       |     
|                               | Item 3. | Quantitative and Qualitative Disclosures About Market Risk                            | 27  
|                               |         |                                                                                       |     
|                               | Item 4. | Controls and Procedures                                                               | 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                      | 29     
|                               |         |                                                                                      
|Certifications                 | 30     

2



---

##### Table of Contents

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,                                                                                                                                                                                                                          
| |                                                                                               | possible corporate restructurings, mergers, acquisitions and dispositions,                                                                                                                                                           
| |                                                                                               | compliance with debt and other restrictive covenants,                                                                                                                                                                                
| |                                                                                               | interest and dividends,                                                                                                                                                                                                              
| |                                                                                               | the financial condition of other Westar Energy, Inc.s subsidiaries and their impact on Westar Energy, Inc.s results, including possible future impairment
charges,                                                                 
| |                                                                                               | environmental matters,                                                                                                                                                                                                               
| |                                                                                               | nuclear operations 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 or re-regulation,                                                                                                                                                                                      
| |                                                                                               | ongoing municipal, state and federal activities,                                                                                                                                                                                     
| |                                                                                               | future economic conditions,                                                                                                                                                                                                          
| |                                                                                               | changes in accounting requirements and other accounting matters,                                                                                                                                                                     
| |                                                                                               | changing weather,                                                                                                                                                                                                                    
| |                                                                                               | rate and other regulatory matters, including the impact of the November 8, 2002 order of the Kansas Corporation Commission requiring the financial and corporate restructuring of
Westar Energy, Inc.,                               
| |                                                                                               | the impact of changes and downturns in the energy industry and the market for trading wholesale electricity,                                                                                                                         
| |                                                                                               | the proposed sale of Westar Energy, Inc.s interests in ONEOK, Inc.,                                                                                                                                                                 
| |                                                                                               | the federal grand jury subpoena by the United States Attorneys Office seeking certain information fromWestar Energy, Inc.                                                                                                           
| |                                                                                               | the inquiry by the Securities and Exchange Commission into the restatement of Westar Energy, Inc.s financial statements and related announcement of the reaudit of Westar
Energy, Inc.s and our 2001 and 2000 financial statements,
| |                                                                                               | political, legislative and regulatory developments,                                                                                                                                                                                  
| |                                                                                               | amendments or revisions to Westar Energy, Inc.s current business and financial plans,                                                                                                                                               
| |                                                                                               | regulatory, legislative and judicial actions,                                                                                                                                                                                        
| |                                                                                               | regulated and competitive markets,                                                                                                                                                                                                   
| |                                                                                               | the impact of the indictment of Westar Energy, Inc.s Chief Executive Officer,                                                                                                                                                       
| |                                                                                               | the impact of changes in the London Interbank offer rate (LIBOR) on the fair value of our allocated share of Westar Energy, Inc.s energy swap transactions,                                                                         
| |                                                                                               | changes in the 10-year United States Treasury rates and the corresponding impact on the fair value of Westar Energy, Inc.s call option contract and                                                                                 
| |                                                                                               | other circumstances affecting anticipated operations, sales and costs.                                                                                                                                                               

These lists are not all-inclusive because it is not possible to predict all possible factors.

See Item 1.  Business  Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2001, for additional information on
matters that could impact our operations 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 except as required by applicable laws or regulations.

3



---

##### Table of Contents

PART I.  Financial Information

ITEM 1.  FINANCIAL STATEMENTS

KANSAS GAS AND ELECTRIC COMPANY

CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (Unaudited)

|                                           |                                                                     | September 30,2002 |           | December 31,2001 |  
|------------------------------------------ | ------------------------------------------------------------------- | ----------------- | --------- | ---------------- | -
|                                           |                                                                     |                   |           |                  |  
|ASSETS                                     |                                                                     |                   |           |                  |  
|CURRENT ASSETS:                            |                                                                     |                   |           |                  |  
|                                           | Cash and cash equivalents                                           |                   | $         | 9,089            |  
|                                           | Restricted cash                                                     |                   |           | 10,281           |  
|                                           | Accounts receivable, net                                            |                   |           | 70,757           |  
|                                           | Receivable from affiliates                                          |                   |           |                 |  
|                                           | Inventories and supplies                                            |                   |           | 63,646           |  
|                                           | Energy trading contracts                                            |                   |           | 6,334            |  
|                                           | Deferred tax assets                                                 |                   |           |                 |  
|                                           | Prepaid expenses and other                                          |                   |           | 33,926           |  
|                                           |                                                                     |                   |           |                  |  
|                                           | Total Current Assets                                                |                   |           | 194,033          |  
|                                           |                                                                     |                   |           |                  |  
|PROPERTY, PLANT AND EQUIPMENT, NET         |                                                                     |                   | 2,389,291 |                  |  
|                                           |                                                                     |                   |           |                  |  
|OTHER ASSETS:                              |                                                                     |                   |           |                  |  
|                                           | Restricted cash                                                     |                   |           | 140,130          |  
|                                           | Regulatory assets                                                   |                   |           | 252,248          |  
|                                           | Energy trading contracts                                            |                   |           | 2,293            |  
|                                           | Other                                                               |                   |           | 97,335           |  
|                                           |                                                                     |                   |           |                  |  
|                                           | Total Other Assets                                                  |                   |           | 492,006          |  
|                                           |                                                                     |                   |           |                  |  
|TOTAL ASSETS                               |                                                                     | $                 | 3,075,330 |                  | $
|                                           |                                                                     |                   |           |                  |  
|LIABILITIES AND SHAREHOLDERS EQUITY       |                                                                     |                   |           |                  |  
|CURRENT LIABILITIES:                       |                                                                     |                   |           |                  |  
|                                           | Accounts payable                                                    |                   | $         | 18,855           |  
|                                           | Payable to affiliates                                               |                   |           | 111,551          |  
|                                           | Accrued liabilities                                                 |                   |           | 77,469           |  
|                                           | Energy trading contracts                                            |                   |           | 5,511            |  
|                                           | Deferred tax liabilities                                            |                   |           | 11,345           |  
|                                           | Other                                                               |                   |           | 6,758            |  
|                                           |                                                                     |                   |           |                  |  
|                                           | Total Current Liabilities                                           |                   |           | 231,489          |  
|                                           |                                                                     |                   |           |                  |  
|LONG-TERM LIABILITIES:                     |                                                                     |                   |           |                  |  
|                                           | Long-term debt, net                                                 |                   |           | 684,455          |  
|                                           | Deferred income taxes and investment tax credits                    |                   |           | 712,136          |  
|                                           | Deferred gain from sale-leaseback                                   |                   |           | 165,594          |  
|                                           | Energy trading contracts                                            |                   |           | 438              |  
|                                           | Other                                                               |                   |           | 180,019          |  
|                                           |                                                                     |                   |           |                  |  
|                                           | Total Long-Term Liabilities                                         |                   |           | 1,742,642        |  
|                                           |                                                                     |                   |           |                  |  
|COMMITMENTS AND CONTINGENCIES              |                                                                     |                   |           |                  |  
|SHAREHOLDERS EQUITY:                      |                                                                     |                   |           |                  |  
|                                           | Common stock, without par value; authorized and issued 1,000 shares |                   |           | 1,065,634        |  
|                                           | Accumulated other comprehensive loss, net                           |                   |           | (2,205           | )
|                                           | Retained earnings (accumulated deficit)                             |                   |           | 37,770           |  
|                                           |                                                                     |                   |           |                  |  
|                                           | Total Shareholders Equity                                          |                   |           | 1,101,199        |  
|                                           |                                                                     |                   |           |                  |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |                                                                     | $                 | 3,075,330 |                  | $
|                                           |                                                                     |                   |           |                  |  
|                                           |                                                                     |                   |           |                  |  

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

4



---

##### Table of Contents

KANSAS GAS AND ELECTRIC COMPANY

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME  (Dollars in Thousands) (Unaudited)

|                                        |                                                                                 | Three Months Ended September 30, |        
|--------------------------------------- | ------------------------------------------------------------------------------- | -------------------------------- | -------
|                                        |                                                                                 |                                  |        
|                                        |                                                                                 | 2002                             |        
|                                        |                                                                                 |                                  |        
|SALES                                   |                                                                                 | $                                | 217,607
|COST OF SALES                           |                                                                                 |                                  | 47,091 
|                                        |                                                                                 |                                  |        
|GROSS PROFIT                            |                                                                                 |                                  | 170,516
|                                        |                                                                                 |                                  |        
|OPERATING EXPENSES:                     |                                                                                 |                                  |        
|                                        | Operating and maintenance                                                       |                                  |        
|                                        | Depreciation and amortization                                                   |                                  |        
|                                        | Selling, general and administrative                                             |                                  |        
|                                        |                                                                                 |                                  |        
|                                        | Total Operating Expenses                                                        |                                  |        
|                                        |                                                                                 |                                  |        
|INCOME FROM OPERATIONS                  |                                                                                 |                                  | 76,637 
|                                        |                                                                                 |                                  |        
|OTHER EXPENSE, NET                      |                                                                                 |                                  | 6,030  
|                                        |                                                                                 |                                  |        
|INTEREST EXPENSE:                       |                                                                                 |                                  |        
|                                        | Interest expense on long-term debt                                              |                                  |        
|                                        | Interest expense on short-term debt and other                                   |                                  |        
|                                        |                                                                                 |                                  |        
|                                        | Total Interest Expense                                                          |                                  |        
|                                        |                                                                                 |                                  |        
|EARNINGS BEFORE INCOME TAXES            |                                                                                 |                                  | 58,860 
|Income tax expense                      |                                                                                 |                                  | 21,130 
|                                        |                                                                                 |                                  |        
|NET INCOME                              |                                                                                 | $                                | 37,730 
|                                        |                                                                                 |                                  |        
|OTHER COMPREHENSIVE INCOME, NET OF TAX: |                                                                                 |                                  |        
|                                        | Unrealized holding gains (losses) on cash flow hedges arising during the period |                                  | $      
|                                        | Adjustment for losses (gains) included in net income                            |                                  |        
|                                        | Income tax benefit (expense)                                                    |                                  |        
|                                        |                                                                                 |                                  |        
|                                        | Total other comprehensive gain (loss), net of tax                               |                                  |        
|                                        |                                                                                 |                                  |        
|COMPREHENSIVE INCOME                    |                                                                                 | $                                | 35,575 
|                                        |                                                                                 |                                  |        
|                                        |                                                                                 |                                  |        

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

5



---

##### Table of Contents

KANSAS GAS AND ELECTRIC COMPANY

CONSOLIDATED
STATEMENTS OF INCOME  AND COMPREHENSIVE INCOME  (Dollars in Thousands) (Unaudited)

|                                                          |                                                                                 | Nine Months Ended September 30, |        
|--------------------------------------------------------- | ------------------------------------------------------------------------------- | ------------------------------- | -------
|                                                          |                                                                                 |                                 |        
|                                                          |                                                                                 | 2002                            |        
|                                                          |                                                                                 |                                 |        
|SALES                                                     |                                                                                 | $                               | 528,163
|COST OF SALES                                             |                                                                                 |                                 | 132,801
|                                                          |                                                                                 |                                 |        
|GROSS PROFIT                                              |                                                                                 |                                 | 395,362
|                                                          |                                                                                 |                                 |        
|OPERATING EXPENSES:                                       |                                                                                 |                                 |        
|                                                          | Operating and maintenance                                                       |                                 |        
|                                                          | Depreciation and amortization                                                   |                                 |        
|                                                          | Selling, general and administrative                                             |                                 |        
|                                                          |                                                                                 |                                 |        
|                                                          | Total Operating Expenses                                                        |                                 |        
|                                                          |                                                                                 |                                 |        
|INCOME FROM OPERATIONS                                    |                                                                                 |                                 | 101,278
|                                                          |                                                                                 |                                 |        
|OTHER EXPENSE, NET                                        |                                                                                 |                                 | 10,106 
|                                                          |                                                                                 |                                 |        
|INTEREST EXPENSE:                                         |                                                                                 |                                 |        
|                                                          | Interest expense on long-term debt                                              |                                 |        
|                                                          | Interest expense on short-term debt and other                                   |                                 |        
|                                                          |                                                                                 |                                 |        
|                                                          | Total Interest Expense                                                          |                                 |        
|                                                          |                                                                                 |                                 |        
|EARNINGS (LOSSES) BEFORE INCOME TAXES                     |                                                                                 |                                 | 56,146 
|Income tax expense                                        |                                                                                 |                                 | 12,154 
|                                                          |                                                                                 |                                 |        
|NET INCOME BEFORE ACCOUNTING CHANGE                       |                                                                                 |                                 | 43,992 
|Cumulative effect of accounting change, net of $8,520 tax |                                                                                 |                                 |       
|                                                          |                                                                                 |                                 |        
|NET INCOME                                                |                                                                                 | $                               | 43,992 
|                                                          |                                                                                 |                                 |        
|OTHER COMPREHENSIVE INCOME, NET OF TAX:                   |                                                                                 |                                 |        
|                                                          | Unrealized holding gains (losses) on cash flow hedges arising during the period |                                 | $      
|                                                          | Adjustment for losses (gains) included in net income                            |                                 |        
|                                                          | Income tax benefit (expense)                                                    |                                 |        
|                                                          |                                                                                 |                                 |        
|                                                          | Total other comprehensive gain (loss), net of tax                               |                                 |        
|                                                          |                                                                                 |                                 |        
|COMPREHENSIVE INCOME                                      |                                                                                 | $                               | 52,810 
|                                                          |                                                                                 |                                 |        
|                                                          |                                                                                 |                                 |        

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

6



---

##### Table of Contents

KANSAS GAS AND ELECTRIC COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)

|                                                     |                                                                                   | Nine Months Ended September 30, |      
|---------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------- | -----
|                                                     |                                                                                   |                                 |      
|                                                     |                                                                                   | 2002                            |      
|                                                     |                                                                                   |                                 |      
|CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:      |                                                                                   |                                 |      
|                                                     | Net income                                                                        |                                 | $    
|                                                     | Adjustments to reconcile net income to net cash provided by operating activities: |                                 |      
|                                                     | Cumulative effect of accounting change                                            |                                 |      
|                                                     | Depreciation and amortization                                                     |                                 |      
|                                                     | Amortization of nuclear fuel                                                      |                                 |      
|                                                     | Amortization of deferred gain from sale-leaseback                                 |                                 |      
|                                                     | Net deferred and accrued taxes                                                    |                                 |      
|                                                     | Net changes in energy trading assets and liabilities                              |                                 |      
|                                                     | Loss on sale of property                                                          |                                 |      
|                                                     | Changes in working capital items:                                                 |                                 |      
|                                                     | Restricted cash                                                                   |                                 |      
|                                                     | Accounts receivable, net                                                          |                                 |      
|                                                     | Inventories and supplies                                                          |                                 |      
|                                                     | Prepaid expenses and other                                                        |                                 |      
|                                                     | Accounts payable                                                                  |                                 |      
|                                                     | Accrued and other current liabilities                                             |                                 |      
|Changes in other assets and liabilities              |                                                                                   |                                 | 6,029
|                                                     |                                                                                   |                                 |      
|                                                     | Cash flows from operating activities                                              |                                 |      
|                                                     |                                                                                   |                                 |      
|CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:      |                                                                                   |                                 |      
|                                                     | Additions to property, plant and equipment                                        |                                 |      
|                                                     | Proceeds from disposition of property                                             |                                 |      
|                                                     |                                                                                   |                                 |      
|                                                     | Cash flows used in investing activities                                           |                                 |      
|                                                     |                                                                                   |                                 |      
|CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:      |                                                                                   |                                 |      
|                                                     | Funds in trust for debt repayment                                                 |                                 |      
|                                                     | Advances from parent company, net                                                 |                                 |      
|                                                     | Dividends to parent company                                                       |                                 |      
|                                                     |                                                                                   |                                 |      
|                                                     | Cash flows used in financing activities                                           |                                 |      
|                                                     |                                                                                   |                                 |      
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |                                                                                   |                                 | 3,525
|CASH AND CASH EQUIVALENTS:                           |                                                                                   |                                 |      
|                                                     | Beginning of period                                                               |                                 |      
|                                                     |                                                                                   |                                 |      
|                                                     | End of period                                                                     |                                 | $    
|                                                     |                                                                                   |                                 |      
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:   |                                                                                   |                                 |      
|                                                     | CASH PAID FOR:                                                                    |                                 |      
|                                                     | Interest on financing activities, net of amount capitalized                       |                                 | $    
|                                                     | Income taxes                                                                      |                                 |      
|                                                     |                                                                                   |                                 |      

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

7



---

##### Table of Contents

KANSAS GAS AND ELECTRIC COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2002 (Unaudited)

1.  DESCRIPTION OF
BUSINESS

Kansas Gas and Electric Company (KGE, the company, we, us or our) is a rate-regulated electric utility incorporated in 1990 in
the State of Kansas.  We are a wholly owned subsidiary of Westar Energy, Inc. (Westar Energy) and we provide rate-regulated electric service using the name Westar Energy.  We are engaged principally in the generation, purchase,
transmission, distribution and sale of electricity in southeastern Kansas, including the Wichita metropolitan area.

We own 47% of
Wolf Creek Nuclear Operating Corporation (WCNOC), the operating company for Wolf Creek Generating Station (Wolf Creek).  We record our proportionate share of all transactions of WCNOC as we do other jointly owned facilities.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim
financial information and in accordance with the instructions to Form 10-Q.  Accordingly, certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been condensed or
omitted.  The accompanying consolidated financial statements and notes should be read 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, 2001 (2001
Form 10-K).

Use of Managements Estimates

The preparation of consolidated
financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of our consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period.  In managements opinion, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation of the financial statements,
have been included.  The results of operations for the three and nine months ended September 30, 2002, are not necessarily indicative of the results to be expected for the full year.

Defeasance of Outstanding Debt

Under GAAP, we are required to continue reporting as outstanding debt on our
consolidated balance sheets the $135 million principal amount of our first mortgage bonds due December 15, 2003, until the funds deposited with the trustee are used to retire such bonds at maturity.  The cash deposited with the trustee is
included in restricted cash on our consolidated balance sheet and can only be used for the purpose of repaying this indebtedness and related interest.  See Note 8 for discussion of debt financings completed during the second quarter of
2002.

Cumulative Effect of Accounting Change

Effective January 1, 2001, we adopted
Statement of Financial Accounting Standard (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

8



---

##### Table of Contents

interest rate exposure and the commodity price risk inherent in fossil fuel purchases and electricity sales.  Under SFAS No.
133, all derivative instruments, including our energy trading contracts, are recorded on our consolidated balance sheets as either an asset or liability measured at fair value.  Changes in a derivatives fair value must be recognized
currently in earnings unless specific hedge accounting criteria are met.  Cash flows from derivative instruments are presented in net cash flows from operating activities.

Derivative instruments used to manage commodity price risk inherent in fuel purchases and electricity sales are classified as energy trading contracts on our
consolidated balance sheets.  Energy trading contracts representing unrealized gain positions are reported as assets; energy trading contracts representing unrealized loss positions are reported as liabilities.

Prior to January 1, 2001, gains and losses on our derivatives used for managing commodity price risk were deferred until settlement.  These derivatives were not
designated as hedges under SFAS No. 133.  Accordingly, on January 1, 2001, we recognized an unrealized gain of $12.9 million, net of $8.5 million of tax.  This gain is presented on our consolidated statement of income in our 2001 Form 10-K
as a cumulative effect of a change in accounting principle.  Accounting for derivatives under SFAS No. 133 will increase volatility of our future earnings.

Accounting Changes

On July 1, 2002, we began reporting mark-to-market gains and losses on energy trading contracts on a net basis, whether realized or unrealized, in our
consolidated income statements. Prior to July 1, 2002, we reported gains on these contracts in sales and losses in cost of sales in our consolidated  income statement.  Subsequent to July 1, 2002, all gains and losses are reported in
revenues.  See Note 3 for additional information on the effects of the accounting change.

Additionally, in October 2002, the Financial
Accounting Standards Board (FASB), through the Emerging Issues Task Force (EITF), rescinded Issue 98-10, Accounting for Contracts Involved in Energy Trading and Risk Management Activities.  As a result, all new contracts that would
otherwise have been accounted for under Issue 98-10 and that do not fall within the scope of SFAS No. 133 will no longer be marked-to-market and recorded in earnings beginning on October 25, 2002.  Effective January 1, 2003, a cumulative effect
of a change in accounting principle will be recorded related to any remaining contracts that were accounted for under Issue 98-10 and that do not fall within the scope of SFAS No. 133.  We are currently evaluating the potential effect of this
change in accounting principle.

Change in Depreciation Rates

In its rate order of
July 25, 2001, the Kansas Corporation Commission (KCC) extended the recovery period for certain of our generating assets for regulatory rate making purposes.  On April 1, 2002, we adopted the new depreciation rates as prescribed in the KCC
order for GAAP purposes, after exhausting the available appeals process to contest the extension of our recovery periods for our LaCygne 2 and Wolf Creek generating stations.  This change is expected to reduce our annual depreciation expense in
our GAAP financial statements by approximately $18 million.  See Note 4 for additional information.

Reclassifications

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

3.  FINANCIAL INSTRUMENTS, ENERGY TRADING AND RISK MANAGEMENT

Our operations are exposed to market
risks from changes in commodity prices and interest rates that could affect our results of operations and financial condition.  We manage our exposure to these market risks through our regular operating and financing activities and, when deemed
appropriate, hedge these risks through the use of derivative financial instruments.  We use the term hedge to mean a strategy designed to manage risks of volatility in

9



---

##### Table of Contents

prices or rate movements on certain assets, liabilities or anticipated transactions by creating a relationship in which gains or
losses on derivative instruments are expected to counterbalance the losses or gains on the assets, liabilities or anticipated transactions exposed to such market risks.  We use derivative instruments as risk management tools consistent with our
business plans and prudent business practices and for energy trading purposes.

Energy Trading Contracts

We engage in both trading and non-trading activities in our commodity price risk management activities.  We trade electricity, coal, natural gas and oil. 
We utilize a variety of financial instruments, including forward contracts involving cash settlements or physical delivery of an energy commodity, options, swaps requiring payments (or receipt of payments) from counterparties based on the
differential between specified prices for the related commodity and futures traded on electricity, natural gas and oil.

We are involved in
trading activities primarily to minimize risk from market fluctuations, capitalize on our market knowledge and enhance system reliability.  Net open positions exist or are established due to the origination of new transactions and our
assessment of, and response to, changing market conditions.  To the extent we have open positions, we are exposed to the risk that fluctuating market prices could adversely impact our financial position or results from operations.

We have considered a number of risks and costs associated with the future contractual commitments included in our energy portfolio.  These risks
include credit risks associated with the financial condition of counterparties, product location (basis) differentials and other risks.  The counterparties in our portfolio are primarily large energy marketers and major utility companies. 
The creditworthiness of our counterparties could positively or negatively impact our overall exposure to credit risk.  We maintain credit policies with regard to our counterparties that, in managements view, minimize overall credit
risk.

We are also exposed to commodity price changes outside of trading activities.  We use derivatives for non-trading purposes and a
mix of various fuel types primarily to reduce exposure relative to the volatility of market and commodity prices.  Due to the volatility of power market and gas prices, past prices cannot be used to predict future prices.

Additional factors that affect our commodity price exposure are the quantity and availability of fuel used for generation and the quantity of electricity
customers will consume.  Quantities of fossil fuel used for generation could vary dramatically year to year based on the particular fuels availability, price, deliverability, unit outages and nuclear refueling.  Our customers
electricity usage could also vary dramatically year to year based on the weather or other factors.

Hedging Activity

During the third quarter of 2001, Westar Energy entered into hedging relationships to manage commodity price risk associated with future natural gas purchases in
order to protect us and our customers from adverse price fluctuations in the natural gas market.  Initially, Westar Energy entered into futures and swap contracts with terms extending through July 2004 to hedge price risk for a portion of our
anticipated natural gas fuel requirements for our generation facilities.  We have designated these hedging relationships as cash flow hedges in accordance with SFAS No. 133.  Through the third quarter of 2002, we have burned 13,800,000
MMBtu.  In September 2002, we determined that we had overhedged approximately 8,280,000 MMBtu for the remaining period of the hedge and we recognized a gain in earnings of $2.8 million as a result of the discontinuance of this portion of the
cash flow hedge.  We are currently forecasting that we need a notional volume of 4,830,000 MMBtu for the remainder of the hedged period of October 2002 through July 2004.

Effective October 4, 2001, we entered into a $500 million interest rate swap agreement with a term of two years.  At that time, the effect of the swap agreement
was to fix the annual interest rate on the term loan at 6.18%.  In June 2002, we refinanced the term loan associated with this swap, which increased the effective rate of the swap to 6.43%.  At September 30, 2002, the variable rate in
effect for the term loan was 4.82%.  Changes in the fair value of this cash flow hedge are due to fluctuations in the variable interest rate.

10



---

##### Table of Contents

The following tables summarize the effects natural gas hedges had on our
financial position and results of operations for the three and nine months ended September 30, 2002:

|                                                                    |                        | Natural gas Hedges (a) |          
|------------------------------------------------------------------- | ---------------------- | ---------------------- | ---------
|                                                                    |                        |                        |          
|                                                                    |                        | (Dollars in Thousands) |          
|Three Months Ended September 30, 2002:                              |                        |                        |          
|Fair value of derivative instruments:                               |                        |                        |          
|                                                                    | Current                |                        | $        
|                                                                    | Long-term              |                        |          
|                                                                    |                        |                        |          
|                                                                    | Total                  |                        | $        
|                                                                    |                        |                        |          
|                                                                   
|Change in amounts in accumulated other comprehensive income         |                        | $                      | (1,591   
|Adjustment for losses included in net income                        |                        |                        | (114     
|Change in estimated income tax expense (benefit)                    |                        |                        | (450     
|                                                                    |                        |                        |          
|                                                                    | Net Comprehensive Gain |                        | $        
|                                                                    |                        |                        |          
|                                                                   
|Anticipated reclassifications to earnings in the next 12 months (b) |                        | $                      | 728      
|                                                                   
|Duration of hedge designation as of September 30, 2002              |                        |                        | 22 months
|                                                                    |                        |                        |          



|                                                                    |                        | Natural gas Hedges (a) |          
|------------------------------------------------------------------- | ---------------------- | ---------------------- | ---------
|                                                                    |                        |                        |          
|                                                                    |                        | (Dollars in Thousands) |          
|Nine Months Ended September 30, 2002:                               |                        |                        |          
|Fair value of derivative instruments:                               |                        |                        |          
|                                                                    | Current                |                        | $        
|                                                                    | Long-term              |                        |          
|                                                                    |                        |                        |          
|                                                                    | Total                  |                        | $        
|                                                                    |                        |                        |          
|                                                                   
|Change in amounts in accumulated other comprehensive income         |                        | $                      | 15,142   
|Adjustment for losses included in net income                        |                        |                        | 1,374    
|Change in estimated income tax expense                              |                        |                        | (7,698   
|                                                                    |                        |                        |          
|                                                                    | Net Comprehensive Gain |                        | $        
|                                                                    |                        |                        |          
|                                                                   
|Anticipated reclassifications to earnings in the next 12 months (b) |                        | $                      | 728      
|                                                                   
|Duration of hedge designation as of September 30, 2002              |                        |                        | 22 months
|                                                                    |                        |                        |          

---

|(a) | Natural gas hedge assets and liabilities are classified in the balance sheet as energy trading contracts.  Due to the volatility of gas commodity prices, it is probable that
gas prices will increase and decrease over the remaining 22 months that these relationships are in place.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | The actual amounts that will be reclassified to earnings could vary materially from this estimated amount due to changes in market conditions.                                                                                                                                         

11



---

##### Table of Contents

Fair Value of Energy Trading Contracts

The tables below show the fair value and the notional values of energy trading contracts outstanding for the nine months ended September 30, 2002, their sources and
maturity periods:

|                                                                       |  | Fair Value of Contracts |        
|---------------------------------------------------------------------- |  | ----------------------- | -------
|                                                                       |  |                         |        
|                                                                       |  | (In Thousands)          |        
|                                                                       |  |                         |        
|Net fair value of contracts outstanding at the beginning of the period |  | $                       | (11,213
|Less contracts realized or otherwise settled during the period         |  |                         | (599   
|Fair value of new contracts entered into during the period             |  |                         | 13,292 
|                                                                       |  |                         |        
|Fair value of contracts outstanding at the end of the period           |  | $                       | 2,678  
|                                                                       |  |                         |        

These contracts were valued through
market exchanges and, where necessary, broker quotes and industry publications.  The sources of the fair values of the financial instruments related to these contracts are summarized in the following table:

|                                                                               |  | Fair Value of Contracts at End of Period |      
|------------------------------------------------------------------------------ |  | ---------------------------------------- | -----
|                                                                               |  |                                          |      
|Source of Fair Value                                                           |  | Total Fair Value                         |      
|                                                                               |  |                                          |      
|                                                                               |  | (In Thousands)                           |      
|                                                                               |  |                                          |      
|Prices actively quoted (futures)                                               |  | $                                        | 1,447
|Prices provided by other external sources         (swaps and forwards)         |  |                                          | 1,115
|Prices based on the Black Option Pricing model         (options and other) (a) |  |                                          | 116  
|                                                                               |  |                                          |      
|Total fair value of contracts outstanding                                      |  | $                                        | 2,678
|                                                                               |  |                                          |      

---

Effects of Accounting Changes

On
July 1, 2002, we began reporting mark-to-market gains and losses on energy trading contracts on a net basis, whether realized or unrealized, in our consolidated income statements.  Prior to July 1, 2002, we reported gains on these contracts in
sales and losses in cost of sales in our consolidated income statements.  Subsequent to July 1, 2002, all gains and losses are reported in revenues.  The changes are reflected in our consolidated financial statements for the third quarter
of 2002.  Prior periods shown in our consolidated financial statements have been reclassified to reflect the effect of this change and to be comparable as required by GAAP.  As a result of the net presentation, we expect significant
reductions in our energy revenues and expenses from those reported in prior periods, which will not affect gross profit or net income.  A summary of the effects of this change for the three and nine months ended September 30, 2002 and 2001 is
as follows:

Changes to Income Statement

|              |  | Three Months Ended September 30, 2002           |         | Nine Months Ended September 30, 2002         |  
|------------- |  | ----------------------------------------------- | ------- | -------------------------------------------- | -
|              |  |                                                 |         |                                              |  
|              |  | Prior to Reclassifications for Net Presentation |         | After Reclassifications for Net Presentation |  
|              |  |                                                 |         |                                              |  
|              |  | (In Thousands)                                  |        
|              |  |                                                 |         |                                              |  
|Sales         |  | $                                               | 226,598 |                                              | $
|Cost of sales |  |                                                 | 56,082  |                                              |  
|              |  |                                                 |         |                                              |  
|Gross profit  |  | $                                               | 170,516 |                                              | $
|              |  |                                                 |         |                                              |  

12



---

##### Table of Contents

Changes to Income Statement

|              |  | Three Months Ended September 30, 2001           |         | Nine Months Ended September 30, 2001         |  
|------------- |  | ----------------------------------------------- | ------- | -------------------------------------------- | -
|              |  |                                                 |         |                                              |  
|              |  | Prior to Reclassifications for Net Presentation |         | After Reclassifications for Net Presentation |  
|              |  |                                                 |         |                                              |  
|              |  | (In Thousands)                                  |        
|              |  |                                                 |        
|Sales         |  | $                                               | 206,926 |                                              | $
|Cost of sales |  |                                                 | 58,958  |                                              |  
|              |  |                                                 |         |                                              |  
|Gross profit  |  | $                                               | 147,968 |                                              | $
|              |  |                                                 |         |                                              |  

Additionally, in October 2002, the FASB,
through the EITF, rescinded Issue 98-10.  As a result, all new contracts that would otherwise have been accounted for under Issue 98-10 and that do not fall within the scope of SFAS No. 133 will no longer be marked-to-market and recorded in
earnings beginning on October 25, 2002.  Effective January 1, 2003, a cumulative effect of a change in accounting principle will be recorded related to any remaining contracts that were accounted for under Issue 98-10 and that do not fall
within the scope of SFAS No. 133.  We are currently evaluating the potential effect of this change in accounting principle.

4.  RATE MATTERS AND REGULATION

KCC Rate Proceedings

On November 27, 2000, Westar Energy and we filed applications with the KCC for an
increase in retail rates.  On July 25, 2001, the KCC ordered an annual reduction in our electric rates of $41.2 million.

On
August 9, 2001, Westar Energy and we filed petitions with the KCC requesting reconsideration of the July 25, 2001 order.  The petitions specifically asked for reconsideration of changes in depreciation, reductions in rate base related to
deferred income taxes associated with the acquisition premium and a deferred gain on the sale and leaseback of our LaCygne 2 generating unit and several other issues.  On September 5, 2001, the KCC issued an order in response to our motion for
reconsideration, which did not change our rate reduction.  On November 9, 2001, we filed an appeal of the KCC decisions with the Kansas Court of Appeals in an action captioned Western Resources, Inc. and Kansas Gas and Electric Company
vs. The State Corporation Commission of the State of Kansas.  On March 8, 2002, the Court of Appeals upheld the KCC orders.  On April 8, 2002, Westar Energy and we filed a petition for review of the decision of the Court of Appeals
with the Kansas Supreme Court.  Our petition for review was denied on June 12, 2002.

KCC Investigations and Orders

See Note 5 for a discussion of the order issued by the KCC on July 20, 2001 in the KCCs docket investigating the proposed separation of Westar
Energys electric utility businesses (including us) from its non-utility businesses and other aspects of Westar Energys unregulated businesses.

Effective July 1, 2002, Westar Energy entered into an outsourcing agreement with a newly formed subsidiary of Protection One, named Protection One Data Services, Inc.
(PODS), pursuant to which Westar Energy outsourced to PODS a significant portion of the services and functions previously performed by Westar Energys internal information technology department.  On August 16, 2002, the KCC initiated an
investigation as to whether participation by Westar Energy and PODS in this transaction and relationship is consistent with Kansas law, including Westar Energys and our statutory obligation to provide efficient and reliable service to Kansas
customers

13



---

##### Table of Contents

at just and reasonable rates.  A technical hearing concerning this matter is scheduled for December 12, 2002.  Subject to
the outcome of the investigation, the KCC conditionally approved an accounting order to preserve the cost savings attributable under the agreement.

On November 8, 2002, the KCC issued an order, which requires Westar Energy and us to initiate a corporate and financial restructuring, among other things.  See Note 5
for additional information.

FERC Proceeding

On September 6, 2002, Westar Energy
filed an application with the FERC seeking authorization to issue unsecured long-term debt securities, on or before October 31, 2004, in an amount not to exceed $650 million at any one time.  The proposed debt securities will be issued to
retire currently outstanding securities and indebtedness related to Westar Energys electric operations, including our indebtedness and accrued and unpaid interest due at maturity.  On October 3, 2002, the KCC and MBIA Insurance
Corporation (MBIA) filed motions with the FERC to intervene.  Neither of the intervenors opposed the issuance of the requested borrowing authority.  The KCC stated that it did not oppose the application based on Westar Energys
continued action consistent with its declaration that the funds would be used to retire existing debt and not to add new debt or to increase the aggregate amount of Westar Energys or our outstanding debt.  We cannot predict what action
the FERC will take regarding this matter.

5.  PNM TRANSACTION

PNM Transaction

On May 28, 2002, Westar Energy gave notice to Public Service Company of New Mexico (PNM) of termination of the merger agreement with PNM.  On September 25, 2002,
PNM and Westar Energy announced that litigation between them had been settled without the payment of any damages or fees.  Each side agreed to release all of its claims and potential claims in connection with the transaction.

KCC Proceedings and Orders

The merger with PNM contemplated the completion of a rights
offering for shares of Westar Industries, Inc. (Westar Industries), a wholly owned subsidiary of Westar Energy, prior to closing.  On May 8, 2001, the KCC opened an investigation of the proposed separation of Westar Energys electric
utility businesses (including us) from its non-utility businesses, including the rights offering, and other aspects of its unregulated businesses.  The order opening the investigation indicated that the investigation would focus on whether the
separation and other transactions involving Westar Energys unregulated businesses are consistent with its obligation to provide efficient and sufficient electric service at just and reasonable rates to its 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 Westar Energy entered into with Westar Industries in connection with the proposed separation and the
intercompany payable owed by Westar Energy to Westar Industries, the separation of Westar Industries, the effect of the business difficulties faced by Westar Energys unregulated businesses and whether they should continue to be affiliated with
its electric utility business, and Westar Energys present and prospective capital structures.  On May 22, 2001, the KCC issued an order nullifying the Asset Allocation and Separation Agreement, prohibiting Westar Energy and Westar
Industries from taking any action to complete the rights offering for common stock of Westar Industries, which was to be a first step in the separation, and scheduled 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 Westar Energy and Westar
Industries from taking any action to complete the proposed rights offering and nullifying the Asset Allocation and Separation Agreement; (2) directed Westar Energy 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 Westar Energys capital structure applicable to its electric utility operations, which has the effect of prohibiting it from borrowing to make a loan
or capital contribution to Westar Industries; and (3) directed Westar Energy to present a financial plan 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 its non-utility businesses.  In its order, the KCC also acknowledged that Westar Energy and we are currently operating efficiently and at reasonable cost and stated that it was not disapproving the PNM transaction
or a split-off of Westar Industries.

14



---

##### Table of Contents

Westar Energy appealed the orders issued by the KCC to the District Court of Shawnee County, Kansas.  On February 5, 2002, the
District Court issued a decision finding that the KCC orders were not final orders and that the District Court lacked jurisdiction to consider the appeal.  Accordingly, the matter was remanded to the KCC for review of the financial plan Westar
Energy filed as ordered by the KCC as discussed below.

On February 11, 2002, the KCC issued an order primarily related to procedural
matters for the review of the financial plan.  In addition, the order required that Westar Energy and the KCC staff make filings addressing whether the filing of applications by Westar Energy and us at the Federal Energy Regulatory Commission
(FERC), seeking renewal of existing borrowing authority, violated the July 20, 2001 KCC order directing that Westar Energy not increase the share of debt in its capital structure applicable to its electric utility operations.  The KCC staff
subsequently filed comments asserting that the refinancing of existing indebtedness with new indebtedness secured by utility assets would in certain circumstances violate the July 20, 2001 KCC order.  The KCC filed a motion to intervene in the
proceeding at FERC asserting the same position.

On March 26, 2002, the KCC issued an order in which it acknowledged that Westar
Energys FERC filings technically did not violate the July 20, 2001 KCC order.  However, the KCC expressed concern that Westar Energys refinancing plans as described in the FERC filings could, when implemented, increase the share of
debt in the capital structure applicable to Westar Energys electric utility operations.  By agreement with the KCC staff and other intervenors, the FERC applications were amended so that the requested authority was limited to short-term
(12 months or less) borrowing authority and, as a result, the KCCs and certain other parties interventions were withdrawn.  On June 14, 2002, the FERC issued orders approving Westar Energys and our applications for short-term
borrowing authority.

The Financial Plan

The July 20, 2001 KCC order
directed Westar Energy to present a financial plan to the KCC.  Westar Energy presented a financial plan to the KCC on November 6, 2001, which it amended on January 29, 2002.  The principal objective of the financial plan was to reduce
Westar Energys total debt as calculated by the KCC to approximately $1.8 billion, a reduction of approximately $1.2 billion.  The financial plan contemplated that Westar Energy would proceed with a rights and warrants offering of Westar
Industries common stock to Westar Energys shareholders and that, in the event that the PNM merger and related split-off did not close, Westar Energy would use its best efforts to sell its shares of Westar Industries common stock, or shares of
its common stock, upon the occurrence of certain events.

On May 30, 2002, Westar Industries gave notice pursuant to a shareholder
agreement with ONEOK of its intention to sell all of the common stock and preferred stock of ONEOK owned by Westar Industries.  ONEOK had until August 28, 2002 to purchase the stock, but advised Westar Industries that it would not purchase the
stock.  Accordingly, Westar Industries is now free to pursue a sale of the stock and is free of certain restrictions (including percentage limitations on sales) contained in the shareholder agreement.  On August 29, 2002, Westar Industries
announced that it intends to sell its ownership in the common stock and preferred stock of ONEOK, which represents an approximate 45% ownership interest in ONEOK.  Westar Industries plans to sell outright, or sell an option to purchase, all or
a portion of the ONEOK stock it owns in privately negotiated transactions, or sales into the public market.  Under the shareholder agreement, ONEOK must take all commercially reasonable steps to assist Westar Industries in securing such
regulatory approvals as may be necessary to allow a sale of the stock provided such approvals would not reasonably be expected to have a material adverse effect on ONEOK.  Westar Industries has until September 30, 2003 to complete a sale of the
stock.  Westar Energy cannot predict the outcome of this proposed sale of ONEOK stock nor can they predict the net proceeds they would receive.  If the ONEOK stock is not sold, the original provisions of the shareholder agreement will
return in full force and effect.

A hearing at the KCC that reviewed the financial plan began on July 2, 2002 and concluded July 11,
2002.  In conjunction with the hearing, on July 9, 2002, the KCC approved the sale of Westar Industries interest in ONEOK subject to, among other things, the condition that the net proceeds be used to decrease utility debt.

15



---

##### Table of Contents

November 8, 2002 KCC Order

On November 8, 2002, the KCC issued an order addressing Westar Energys proposed financial plan. The order contained the following findings and
directions.

| | The order rejects Westar Energys proposed financial plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The order directs Westar Energy to reverse certain transactions, including reversing accounting entries so certain capital contributions by Westar Energy to Westar Industries are
reflected as an intercompany payable owed by Westar Industries to Westar Energy, and reversing all transactions in 2002 recorded as equity investments by Westar Energy in Westar Industries so such transactions are reflected as intercompany payables
owed by Westar Industries to Westar Energy. Westar Energy is required to submit a report within 30 days of the date of the order certified by its chief financial officer as to compliance with these requirements.                                                                                                                                                                                                                                                                                                                                                   
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The order directs Westar Energy to submit a plan within 90 days for restructuring its organizational structure so that its electric utility business operating as a division of Westar
Energy is placed in a separate subsidiary. The plan is required to include the process for restructuring, an analysis of whether the restructuring is consistent with Westar Energys present debt indentures and loan agreements, and if not, the
necessary amendments to proceed with the restructuring. The restructuring plan is required to be accompanied by an updated cost allocation manual to track costs and investments attributable to Westar Energys regulated electric utility and
non-regulated activities. Following approval of the restructuring plan and the updated cost allocation manual, Westar Energy will be required to provide the KCC with separate quarterly financial statements for Westar Energy and its electric utility
subsidiaries.                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The order directs Westar Energy to provide a written explanation if the amount of debt secured by utility assets which Westar Energy transfers to the new utility subsidiary exceeds
$1.5 billion. For the two years beginning on the date Westar Energy submits its restructuring plan, Westar Energy is required to reduce secured utility debt by at least $100 million each year from cash flow.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The order directs Westar Energy to reduce its consolidated debt, to consider certain actions for reducing its consolidated debt, and to provide expert testimony supporting any decision
to reject a suggested action. The suggested actions include payments of $100 million each year from cash flow, the issuance of common stock, the sale of ONEOK, Inc. stock, a reduction in, or elimination of, Westar Energys dividend, and the
sale of Protection One.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The order initiates an investigation into the appropriate type, quantity, structure and regulation of the nonutility businesses with which Westar Energys utility businesses may be
affiliated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The order establishes standstill protections requiring that Westar Energy seek KCC approval before Westar Energy takes certain actions including making any loan to, investment in or
transfer of cash in excess of $100,000 to a nonutility affiliate, entering into any agreement with a nonutility affiliate where the value of goods or services exchanged exceeds $100,000, investing, by Westar Energy or an affiliate, of more than
$100,000 in an existing or new nonutility business, transferring any non-cash assets or intellectual property to any non-utility affiliate, issuing any debt, or selling any ONEOK, Inc. stock without complying with the requirements of a July 9, 2002
KCC order. In addition, Westar Energy must charge interest to nonutility affiliates at the incremental cost of their debt on outstanding balances of any existing or future interaffiliate loans, receivables or other cash advances due Westar Energy.
These restrictions apply both to Westar Energy and us.

Westar Energy and we are in the process of reviewing and assessing the
order and its potential impact on its and our operations, financial condition and results of operations and Westar Energy expects to file a motion for reconsideration or clarification of some provisions of the order. Since the order was issued
recently and Westar Energy and we are still assessing it, there may be additional issues arising from the order not discussed here.



6.  INCOME TAXES

We have recorded income tax benefits for the interim periods using the federal statutory rate of 35%. The effective income tax rates set forth below are
computed by dividing total income taxes by earnings before income taxes.

|                                       |  | Three Months Ended September 30, |  | Nine Months Ended September 30, | 
|-------------------------------------- |  | -------------------------------- |  | ------------------------------- | 
|                                       |  |                                  |  |                                 | 
|                                       |  | 2002                             |  | 2001                            | 
|                                       |  |                                  |  |                                 | 
|Effective income tax expense (benefit) |  | 36%                              |  | 25%                             | 
|                                       |  |                                  |  |                                 | 

Other differences between our effective tax rate and the statutory rate include the tax benefit of excluding from
taxable income, in accordance with IRS rules, the income from corporate-owned life insurance; certain expenses for depreciation, compensation, amortization and state income taxes; and the loss of affordable housing tax credits.

7.  ICE STORM

In late January 2002, a severe ice storm swept through our service area
causing extensive damage and loss of power to numerous customers.  Through September 30, 2002, we incurred total costs of $12.5 million for restoration costs, a portion of which was capitalized.  We have deferred and recorded as a
regulatory asset on our September 30, 2002 consolidated balance sheet restoration costs of approximately $8.8 million.  We have received an accounting authority order from the KCC that allows us to accumulate and defer for potential future
recovery all operating and carrying costs related to storm restoration.

16



---

##### Table of Contents

8.  DEBT FINANCINGS

On May 10, 2002, Westar Energy completed offerings for $365 million of its first mortgage bonds and $400 million of its unsecured senior notes, both of which will be
due on May 1, 2007.  The first mortgage bonds bear interest at an annual rate of 7 7/8% and the unsecured senior notes bear interest at an annual rate of 9 3/4%.  Interest on the first mortgage bonds and unsecured senior notes is payable
semi-annually on May 1 and November 1 of each year, beginning on November 1, 2002.  The net proceeds from these offerings were used to repay outstanding indebtedness of $547 million under Westar Energys existing secured bank term loan,
provide for the repayment of $100 million of Westar Energys 7.25% first mortgage bonds due August 15, 2002 together with accrued interest, reduce the outstanding balance on Westar Energys existing secured revolving credit facility and
pay fees and expenses of the transactions.  In conjunction with the May 10, 2002 financing, Westar Energy amended its secured revolving credit facility to reduce the total commitment under the facility to $400 million from $500 million and to
release another $100 million of Westar Energys first mortgage bonds from collateral.

On June 6, 2002, Westar Energy entered
into a secured credit agreement providing for a $585 million term loan and a $150 million revolving credit facility, each maturing on June 6, 2005, provided that if Westar Energy has  not refinanced or provided for the payment of its 6.25%
senior unsecured notes, that are putable and callable on August 15, 2003, or its 6.875% senior unsecured notes due August 1, 2004, at least 60 days prior to either such date, the maturity date is the date 60 days prior to either such date.  As
of November 6, 2002, $146.4 million principal amount of Westar Energys senior unsecured notes and $278.3 million principal amount of Westar Energys 6.875% senior unsecured notes were outstanding.  All loans under the credit
agreement are secured by our first mortgage bonds.  The proceeds of the term loan were used to retire an existing $400 million revolving credit facility of Westar Energy with an outstanding principal balance of $380 million, to provide for the
repayment at maturity of $135 million principal amount of our first mortgage bonds due December 15, 2003 together with accrued interest, to repurchase approximately $45 million of Westar Energys outstanding unsecured notes and to pay customary
fees and expenses of the transactions.  There were no borrowings under the revolving credit facility at closing or as of November 6, 2002.

Under GAAP, we are required to continue reporting as outstanding debt on our consolidated balance sheets the $135 million principal amount of our first mortgage bonds
due December 15, 2003 until the funds deposited with the trustee are used to retire such bonds at maturity.  The cash deposited with the trustee is included in restricted cash on our consolidated balance sheet and can only be used for the
purpose of repaying this indebtedness and related interest.

9.  LEGAL PROCEEDINGS

We are involved in various legal, environmental and regulatory proceedings.  We believe that adequate provisions have 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 3 and 4 for discussions of FERC proceedings and KCC regulatory proceedings, and Note 11
for a discussion of a federal investigation of Westar Energy by the United States Attorneys Office and Note 12 for a discussion of the inquiry by the Securities and Exchange Commission and the indictment of our chief executive
officer.

10.  RELATED PARTY TRANSACTIONS

All employees we utilize are
provided by Westar Energy.  Certain operating expenses have been allocated to us from Westar Energy.  These expenses are allocated, depending on the nature of the expense, based on allocation studies, net investment, number of customers,
and/or other appropriate factors.  Management believes such allocation procedures are reasonable.

As of September 30, 2002, we
had received advances from Westar Energy of  $128.9 million, $150.4 million which represents funds used to defease $135 million principal amount of our first mortgage bonds due December 15, 2003, along with related interest.

17



---

##### Table of Contents

During the fourth quarter of 2001, we entered into an option agreement to
sell an office building located in downtown Wichita, Kansas, to Protection One, Inc., a subsidiary of Westar Industries, which is a wholly owned subsidiary of Westar Energy, for approximately $0.5 million.  The sales price was determined by
management based on three independent appraisers findings.  This transaction was completed during June 2002.  Although we recognized a loss of $2.6 million on this transaction, we expect to realize an annual operating cost savings of
approximately $0.9 million.  The cost savings will be treated as a regulatory liability in accordance with a March 26, 2002 KCC order.  For the nine months ended September 30, 2002, we recorded $0.2 million in cost savings as a regulatory
liability.

11.  GRAND JURY SUBPEONA

On September 17, 2002, Westar
Energy was served with a federal grand jury subpoena by the United States Attorneys Office concerning the use of aircraft leased by subsidiaries of Westar Energy and Westar Energys annual shareholder meetings.  Since that date, the
United States Attorneys Office has served additional information requests on Westar Energy and certain of its employees requesting further information concerning the use of aircraft, compensation arrangements with David C. Wittig and Douglas
T. Lake, the rights offering and Westar Energy generally.  Westar Energy is providing information in response to these requests.  Westar Energys board of directors appointed a Special Committee of directors to investigate certain
matters relating to the grand jury investigation.  The Special Committee has retained counsel and other advisors.

12.  SUBSEQUENT EVENTS

Securities and Exchange Commission Inquiry

Westar Energy, Protection One and Arthur Andersen LLP, Westar
Energys and our former independent auditor, were advised on November 1, 2002 by the Staff of the Securities and Exchange Commission that the Staff will be inquiring into Westar Energys accounting practices with respect to the restatement
of Westar Energys first and second quarter 2002 consolidated financial statements announced in November 2002 and the related announcement that Westar Energy, Protection One and our 2000 and 2001 financial statements will be reaudited.

Indictment of Westar Energys Chief Executive Officer

On November 7, 2002,
Westar Energys board of directors placed David C. Wittig, its Chairman of the Board, President and Chief Executive Officer, on administrative leave without pay from all of his positions with Westar Energy or any of its affiliates following his
indictment by a federal grand jury in Topeka, Kansas, for actions arising from his personal dealings with the former president of a Topeka, Kansas, bank.  Westar Energys board of directors intends to appoint an acting President and Chief
Executive Officer promptly.

18



---

##### Table of Contents

KANSAS GAS AND ELECTRIC COMPANY

|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, 2001 (2001 Form 10-K), and should be read in conjunction with that report.  In this section, we discuss our general financial
condition, significant changes and our operating results.  We explain:

| | what factors impact our business,                                                                
|- | -------------------------------------------------------------------------------------------------
| | what our earnings and costs were for the three and nine months ended September 30, 2002 and 2001,
| | why these earnings and costs differ from period to period,                                       
| | how our earnings and costs affect our overall financial condition and                            
| | any other items that particularly affect our financial condition or earnings.                    

SUMMARY OF SIGNIFICANT
ITEMS

November 8, 2002 KCC Order

On November 8, 2002, the KCC issued an order
addressing Westar Energys proposed financial plan. The order contained the following findings and directions.

| | The order rejects Westar Energys proposed financial plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The order directs Westar Energy to reverse certain transactions, including reversing accounting entries so certain capital contributions by Westar Energy to Westar Industries are
reflected as an intercompany payable owed by Westar Industries to Westar Energy, and reversing all transactions in 2002 recorded as equity investments by Westar Energy in Westar Industries so such transactions are reflected as intercompany payables
owed by Westar Industries to Westar Energy. Westar Energy is required to submit a report within 30 days of the date of the order certified by its chief financial officer as to compliance with these requirements.                                                                                                                                                                                                                                                                                                                                                   
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The order directs Westar Energy to submit a plan within 90 days for restructuring its organizational structure so that its electric utility business operating as a division of Westar
Energy is placed in a separate subsidiary. The plan is required to include the process for restructuring, an analysis of whether the restructuring is consistent with Westar Energys present debt indentures and loan agreements, and if not, the
necessary amendments to proceed with the restructuring. The restructuring plan is required to be accompanied by an updated cost allocation manual to track costs and investments attributable to Westar Energys regulated electric utility and
non-regulated activities. Following approval of the restructuring plan and the updated cost allocation manual, Westar Energy will be required to provide the KCC with separate quarterly financial statements for Westar Energy and its electric utility
subsidiaries.                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The order directs Westar Energy to provide a written explanation if the amount of debt secured by utility assets which Westar Energy transfers to the new utility subsidiary exceeds
$1.5 billion. For the two years beginning on the date Westar Energy submits its restructuring plan, Westar Energy is required to reduce secured utility debt by at least $100 million each year from cash flow.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The order directs Westar Energy to reduce its consolidated debt, to consider certain actions for reducing its consolidated debt, and to provide expert testimony supporting any decision
to reject a suggested action. The suggested actions include payments of $100 million each year from cash flow, the issuance of common stock, the sale of ONEOK, Inc. stock, a reduction in, or elimination of, Westar Energys dividend, and the
sale of Protection One.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The order initiates an investigation into the appropriate type, quantity, structure and regulation of the nonutility businesses with which Westar Energys utility businesses may be
affiliated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The order establishes standstill protections requiring that Westar Energy seek KCC approval before Westar Energy takes certain actions including making any loan to, investment in or
transfer of cash in excess of $100,000 to a nonutility affiliate, entering into any agreement with a nonutility affiliate where the value of goods or services exchanged exceeds $100,000, investing, by Westar Energy or an affiliate, of more than
$100,000 in an existing or new nonutility business, transferring any non-cash assets or intellectual property to any non-utility affiliate, issuing any debt, or selling any ONEOK, Inc. stock without complying with the requirements of a July 9, 2002
KCC order. In addition, Westar Energy must charge interest to nonutility affiliates at the incremental cost of their debt on outstanding balances of any existing or future interaffiliate loans, receivables or other cash advances due Westar Energy.
These restrictions apply both to Westar Energy and us.

Westar Energy and we are in the process of reviewing and assessing the
order and its potential impact on its and our operations, financial condition and results of operations and Westar Energy expects to file a motion for reconsideration or clarification of some provisions of the order. Since the order was issued
recently and Westar Energy and we are still assessing it, there may be additional issues arising from the order not discussed here.

Potential Changes in Westar Industries ONEOK
Ownership

On May 30, 2002, Westar Industries, Inc. (Westar Industries), a wholly-owned subsidiary of Westar Energy, Inc. (Westar
Energy), gave notice pursuant to a shareholder agreement with ONEOK, Inc. (ONEOK) of its intention to sell all of the common stock and preferred stock of ONEOK owned by Westar Industries.  ONEOK had until August 28, 2002 to purchase the stock,
but advised Westar Industries that it would not purchase the stock.  Accordingly, Westar Industries is now free to pursue a sale of the stock and is free of certain restrictions (including percentage limitations on sales) contained in the
shareholder agreement.  On August 29, 2002, Westar Industries announced that it intends to sell its ownership in the common stock and preferred stock of ONEOK, which represents an approximate 45% ownership interest in ONEOK.  Westar
Industries plans to sell outright, or sell an option to

19



---

##### Table of Contents

purchase, all or a portion of the ONEOK stock it owns in privately negotiated transactions, or sales into the public market. 
Under the shareholder agreement, ONEOK must take all commercially reasonable steps to assist Westar Industries in securing such regulatory approvals as may be necessary to allow a sale of the stock provided such approvals would not reasonably be
expected to have a material adverse effect on ONEOK.  Westar Industries has until September 30, 2003 to complete a sale of the stock.  Westar Energy cannot predict the outcome of this proposed sale of ONEOK stock nor can we predict the net
proceeds Westar Energy would receive.  If the ONEOK stock is not sold, the original provisions of the shareholder agreement will return in full force and effect.

Declines in Energy
Markets

During 2002, the energy trading market deteriorated due to the effects of overcapacity in our region, the impact of the
prolonged recessionary environment and a reduced number of creditworthy counter parties.  This deterioration has resulted in significant declines in volume and liquidity, influencing the wholesale power market, primarily in the forward
market.  As a result, numerous participants in the market for wholesale trading of electricity have recently suffered financial setbacks that have been reported in the media and in Securities and Exchange Commission (SEC) reports.  In
relation to illegal or inappropriate trading practices, the Federal Energy Regulatory Commission (FERC) and the SEC are investigating many of these same participants.  Market capitalization of these companies has been substantially reduced and
credit ratings have, in many cases, been downgraded.  Westar Energys power marketing group routinely does business with some of these companies and these companies may be counter parties to several other entities with whom Westar Energy
routinely does business.  These developments have adversely impacted Westar Energys power marketing business and Westar Energy is unable to predict if or when the business environment will improve.  Due to our efforts in executing
energy trading contracts and monitoring our exposure, we have not experienced any credit related losses with counterparties.

CRITICAL ACCOUNTING POLICIES

Since December 31, 2001, we have not experienced any significant changes in our critical accounting policies except for the impact of the defeasance of outstanding
debt and the change in depreciation rates as discussed below.  For additional information on our critical accounting policies, see our 2001 Form 10-K.

Defeasance of Outstanding
Debt

In accordance with accounting principles generally accepted in the United States of America (GAAP), we are required to continue
reporting as outstanding debt on our consolidated balance sheets the $135 million principal amount of our first mortgage bonds due December 15, 2003, until the funds deposited with the trustee are used to retire such bonds at maturity.  The
cash deposited with the trustee is included in restricted cash on our consolidated balance sheet and can be used for the sole purpose of repaying this indebtedness and related interest.

Change in
Depreciation Rates

In its rate order of July 25, 2001, the KCC extended the recovery period for certain of our generating assets for
regulatory rate making purposes.  On April 1, 2002, we adopted the new depreciation rates as prescribed in the KCC order for GAAP purposes after exhausting the available appeals process to contest the extension of our recovery periods for our
LaCygne 2 and Wolf Creek generating stations.  This change is expected to reduce our annual depreciation expense in our GAAP financial statements by approximately $18 million.  See Note 4 of the Notes to Consolidated Financial Statements,
Rate Matters and Regulation, for additional information.

20



---

##### Table of Contents

OPERATING RESULTS

The following discussion explains significant changes in operating results.  Our electric sales for the three and nine months ended September 30, 2002 and 2001
are as follows:

|                                          |              | Three Months Ended September 30, |       
|----------------------------------------- | ------------ | -------------------------------- | ------
|                                          |              |                                  |       
|                                          |              | 2002                             |       
|                                          |              |                                  |       
|                                          |              | (In Thousands)                   |       
|                                          |              |                                  |       
|Residential                               |              | $                                | 86,884
|Commercial                                |              |                                  | 53,132
|Industrial                                |              |                                  | 42,041
|Other                                     |              |                                  | 12,979
|                                          |              |                                  |       
|                                          | Total retail |                                  |       
|Power Marketing/Wholesale and Interchange |              |                                  | 22,571
|                                          |              |                                  |       
|                                          | Total        |                                  | $     
|                                          |              |                                  |       



|                                          |              | Nine Months Ended September 30, |        
|----------------------------------------- | ------------ | ------------------------------- | -------
|                                          |              |                                 |        
|                                          |              | 2002                            |        
|                                          |              |                                 |        
|                                          |              | (In Thousands)                  |        
|                                          |              |                                 |        
|Residential                               |              | $                               | 179,220
|Commercial                                |              |                                 | 132,642
|Industrial                                |              |                                 | 115,580
|Other                                     |              |                                 | 38,719 
|                                          |              |                                 |        
|                                          | Total retail |                                 |        
|Power Marketing/Wholesale and Interchange |              |                                 | 62,002 
|                                          |              |                                 |        
|                                          | Total        |                                 | $      
|                                          |              |                                 |        

The following tables reflect changes in
electric sales volumes, as measured by megawatt hours (MWh), for the three and nine months ended September 30, 2002 and 2001.  No sales volumes are included for power marketing sales because these sales are not based on electricity we
generate.

|                          |              | Three Months Ended September 30,
|------------------------- | ------------ | --------------------------------
|                          |              |                                 
|                          |              | 2002                            
|                          |              |                                 
|                          |              | (Thousands of MWh)              
|                          |              |                                 
|Residential               |              |                                 
|Commercial                |              |                                 
|Industrial                |              |                                 
|Other                     |              |                                 
|                          |              |                                 
|                          | Total retail |                                 
|Wholesale and Interchange |              |                                 
|                          |              |                                 
|                          | Total        |                                 
|                          |              |                                 

21



---

##### Table of Contents

|                          |              | Nine Months Ended September 30, |      
|------------------------- | ------------ | ------------------------------- | -----
|                          |              |                                 |      
|                          |              | 2002                            |      
|                          |              |                                 |      
|                          |              | (Thousands of MWh)              |      
|Residential               |              |                                 | 2,301
|Commercial                |              |                                 | 2,070
|Industrial                |              |                                 | 2,550
|Other                     |              |                                 | 33   
|                          |              |                                 |      
|                          | Total retail |                                 |      
|Wholesale and Interchange |              |                                 | 2,539
|                          |              |                                 |      
|                          | Total        |                                 |      
|                          |              |                                 |      

Three Months Ended September 30,
2002, Compared to Three Months Ended September 30, 2001:  Retail sales increased primarily due to increased residential sales volumes caused by warmer weather during September 2002 and increased other revenues caused by a new Southwest
Power Pool (SPP) network tariff.  The new tariff requires us to pay to the SPP all expenses associated with transporting our power from our generating stations.  The SPP then pays us for distributing power to our retail customers and these
payments are reflected in other revenues.  Prior to the implementation of the new tariff, we had offsetting revenues and expenses, because an internal allocation was used.  Power marketing, wholesale and interchange sales increased despite
lower wholesale energy prices primarily due increased volume.

Cost of sales is comprised of fuel used for generation and purchased
power expense.  Cost of sales decreased $5.6 million, or 11%, primarily due to a decrease of $8.4 million in fuel expenses and a $4.2 million decline in purchased power expense.  These decreases were partially offset by a $6.9 million
increase in costs associated with the dispatching of electric power.  Gross profit increased $22.5 million, or 15%.

Operating
expenses increased $3.8 million, or 4%, primarily due to a scheduling charge from the SPP as a result of the new SPP network tariff as discussed above.  Lower depreciation expense, as discussed above in  Critical Accounting Policies
 Change in Depreciation Rates, partially offset this increase.

Income from operations increased $18.8 million, or 32%, for the
reasons set forth above.

Nine Months Ended September 30, 2002, Compared to Nine Months Ended September 30, 2001:  Retail sales
increased due to an increase in other revenues, which is attributable to a new SPP network tariff as discussed above.  Residential and commercial revenues decreased as a result of the July 2001 rate decrease despite an increase in sales volumes
primarily due to weather conditions.  Lower industrial demand related to weak economic conditions caused the decline in industrial sales.  Power marketing, wholesale and interchange sales revenue increased primarily due to an increase in
wholesale and interchange sales volumes.

Cost of sales remained essentially unchanged for the period.  Fuel expense decreased
$12.2 million and purchased power costs decreased $7.4 million.  However partially offsetting these reductions were $19.3 million in higher costs associated with the dispatching of electric power, due in part to the maintenance outage at Wolf
Creek as discussed in the following paragraph.  Gross profit increased $29.4 million, or 8%.

Wolf Creek has a scheduled
refueling and maintenance outage approximately every 18 months.  Wolf Creek was shut down for 36 days for its 12th scheduled refueling and maintenance outage, which began on March 23, 2002 and ended on April 27, 2002.  Wolf Creek operated
the entire year of 2001 without any refueling outages.

Operating expenses increased $20.8 million, or 8%, primarily due to a scheduling
charge from the SPP as a result of the new SPP network tariff as discussed above and increased selling, general and administrative expenses due to allocated compensation charges.  Lower depreciation rates, as discussed in Note 2 of the Notes to
Consolidated Financial Statements, Summary of Significant Accounting Policies, partially offset this increase.  In addition, our maintenance expense has declined over the nine months ending September 30, 2002 due to the reduction of
the forced outage rates of our generating units.

Income from operations increased $8.6 million, or 9%, for the reasons set forth
above.

22



---

##### Table of Contents

Income Taxes

We
have recorded income tax expenses for the interim periods using the federal statutory rate of 35%. The effective income tax rates set forth below are computed by dividing total income taxes by earnings before income taxes.

|                             |  | Three Months Ended September 30, |     | Nine Months Ended September 30, | 
|---------------------------- |  | -------------------------------- | --- | ------------------------------- | 
|                             |  |                                  |     |                                 | 
|                             |  | 2002                             |     | 2001                            | 
|                             |  |                                  |     |                                 | 
|Effective income tax expense |  |                                  | 36% |                                 | 
|                             |  |                                  |     |                                 | 

Other differences between our effective tax rate and the statutory rate include the tax benefit of excluding from
taxable income, in accordance with IRS rules, the income from corporate-owned life insurance; certain expenses for depreciation, compensation, amortization and state income taxes; and the loss of affordable housing tax credits.

LIQUIDITY AND CAPITAL RESOURCES

Our internally generated cash is generally sufficient to fund
operations and debt service payments.  We do not maintain independent short-term credit facilities and rely on Westar Energy for short-term cash needs.  If Westar Energy is unable to borrow under its credit facilities, we could have a
short term liquidity issue, which could require us to obtain a credit facility for our short-term cash needs and that could result in higher borrowing costs.

On May 10, 2002, Westar Energy completed offerings for $365 million of its first mortgage bonds and $400 million of its unsecured senior notes, both of which will be
due on May 1, 2007.  The first mortgage bonds bear interest at an annual rate of 7 7/8% and the unsecured senior notes bear interest at an annual rate of 9 3/4%.  Interest on the first mortgage bonds and unsecured senior notes is payable
semi-annually on May 1 and November 1 of each year, beginning on November 1, 2002.  The net proceeds from these offerings were used to repay outstanding indebtedness of $547 million under Westar Energys existing secured bank term loan,
provide for the repayment of $100 million of Westar Energys 7.25% first mortgage bonds due August 15, 2002 together with accrued interest, reduce the outstanding balance on Westar Energys existing secured revolving credit facility and
pay fees and expenses of the transactions.  In conjunction with the May 10, 2002 financing, Westar Energy amended its secured revolving credit facility to reduce the total commitment under the facility to $400 million from $500 million and to
release another $100 million of Westar Energys first mortgage bonds from collateral.

On June 6, 2002, Westar Energy entered
into a secured credit agreement providing for a $585 million term loan and a $150 million revolving credit facility, each maturing on June 6, 2005, provided that if Westar Energy has not refinanced or provided for the payment of its 6.25% senior
unsecured notes that are putable and callable on August 15, 2003, or its 6.875% senior unsecured notes due August 1, 2004, at least 60 days prior to either such date, the maturity date is the date 60 days prior to either such date.  As of
November 6, 2002, $146.4 million principal amount of Westar Energys 6.25% senior unsecured notes and $278.3 million principal amount of Westar Energys 6.875% senior unsecured notes were outstanding.  All loans under the credit
agreement are secured by our first mortgage bonds.  The proceeds of the term loan were used to retire an existing $400 million revolving credit facility of Westar Energy with an outstanding principal balance of $380 million, to provide for the
repayment at maturity of $135 million principal amount of our first mortgage bonds due December 15, 2003 together with accrued interest, to repurchase approximately $45 million of Westar Energys outstanding unsecured notes and to pay customary
fees and expenses of the transactions.  There were no borrowings under the revolving credit facility at closing or as of November 6, 2002.

On July 25, 2002, Westar Energy and we entered into an amendment to the agreement related to our accounts receivable securitization that extended the term for an
additional year and eliminated Westar Energys right to increase from $125 million to $175 million the amount of the accounts receivable Westar Energy and we had a

23



---

##### Table of Contents

right to sell during certain periods.  See Note 4 of the Notes to Consolidated Financial Statements in our 2001 Form 10-K for
additional information about the accounts receivable securitization.

Under GAAP, we are required to continue reporting as
outstanding debt on our consolidated balance sheets the $135 million principal amount of our first mortgage bonds due December 15, 2003, until the funds deposited with the trustee are used to retire such bonds at maturity.  The cash deposited
with the trustee is included in restricted cash on our consolidated balance sheet and can only be used for the purpose of repaying this indebtedness and related interest.

Contractual Obligations
and Commercial Commitments

In the course of our business activities, we enter into a variety of contractual obligations and commercial
commitments.  Some of these result in direct obligations that are reflected in our consolidated balance sheets while others are commitments, some firm and some based on uncertainties, that are not reflected in our underlying consolidated
financial statements.  The obligations listed below do not include assumptions for on-going needs for which no contractual obligations existed as of September 30, 2002, and represent only amounts that we are currently contractually obligated to
meet.

Contractual Cash Obligations

The following table summarizes our contractual cash obligations by payment due date existing at September 30, 2002:

At September 30, 2002:

|Contractual Obligations                                                      |  | Total                  |           | October 1, 2002 through December 31, 2002 |   | 2003   |  | 2004 |          | 2005 - 2006 |   | Thereafter | 
|---------------------------------------------------------------------------- |  | ---------------------- | --------- | ----------------------------------------- | - | ------ |  | ---- | -------- | ----------- | - | ---------- | 
|                                                                             |  |                        |           |                                           |   |        |  |      |          |             |   |            | 
|                                                                             |  | (Dollars in Thousands) |          
|                                                                             |  |                        |          
|Long-term debt, net                                                          |  | $                      | 684,455   |                                           | $ |       |  | $    | 135,000  |             | $ |           | 
|Restricted cash deposited        with the trustee for        defeasance (a)  |  |                        | (135,000  | )                                         |   |       |  |      | (135,000 | )           |   |           | 
|                                                                             |  |                        |           |                                           |   |        |  |      |          |             |   |            | 
|Adjusted long-term debt                                                      |  | $                      | 549,455   |                                           | $ |       |  | $    |         |             | $ |           | 
|                                                                             |  |                        |           |                                           |   |        |  |      |          |             |   |            | 
|Operating leases                                                             |  | $                      | 627,150   |                                           | $ | 1,780  |  | $    | 45,839   |             | $ | 40,774     | 
|Fossil fuel                                                                  |  |                        | 586,485   |                                           |   | 8,201  |  |      | 41,891   |             |   | 37,173     | 
|Nuclear fuel                                                                 |  |                        | 176,141   |                                           |   | 1,111  |  |      | 22,560   |             |   | 13,480     | 
|Unconditional purchase       obligations                                     |  |                        | 1,363     |                                           |   | 1,175  |  |      | 185      |             |   |           | 
|                                                                             |  |                        |           |                                           |   |        |  |      |          |             |   |            | 
|Total contractual obligations,       including adjusted       long-term debt |  | $                      | 1,940,594 |                                           | $ | 12,267 |  | $    | 110,475  |             | $ | 91,427     | 
|                                                                             |  |                        |           |                                           |   |        |  |      |          |             |   |            | 



---

OTHER INFORMATION

Competition and Deregulation

As reported in our 2001 Form 10-K, the Southwest Power Pool (SPP) and the
Midwest Independent System Operator (MISO) agreed in October 2001 to consolidate and form a regional transmission organization (RTO).  On May 30, 2002, FERC approved the planned merger.  On November 4, 2002, MISO and SPP filed a revised
consolidated open-access transmission tariff as required by the merger agreement.  If approved by the FERC, the tariff will eliminate rate pancaking - the need to pay multiple rates to cross service territories - for transactions
that occur between MISO and SPP customers.

24



---

##### Table of Contents

The combined MISO/SPP will operate our transmission system as part of an
interconnected transmission system encompassing over 120,000 MW of generation capacity located in 20 states.  MISO collects revenues attributable to the use of each members transmission system, and each member is able to transmit power
purchased, generated for sale or bought for resale in the wholesale market, throughout the entire MISO system.  For additional information, see Managements Discussion and Analysis of Financial Condition and Results of Operations
 Other Information  Electric Utility  Competition and Deregulation, in our 2001 Form 10-K.

Nuclear Decommissioning

Decommissioning is a nuclear industry term for the permanent shutdown of a nuclear power plant.  The Nuclear Regulatory Commission (NRC) requires companies with
nuclear plants to prepare formal financial plans to fund decommissioning.  These plans are designed so that funds required for decommissioning will be accumulated during the estimated remaining life of the related nuclear power
plant.

Decommissioning costs are currently being charged to operating expense in accordance with the July 25, 2001 KCC rate order. 
Electric rates charged to customers provide for recovery of these decommissioning costs over the life of Wolf Creek as determined by the KCC, through 2045.  The NRC requires that funds to meet its decommissioning funding assurance requirement
be in our decommissioning fund by the time our license expires in 2025.  We are currently reviewing how to resolve this discrepancy and cannot predict the outcome at this time.  However, our results of operations would be materially
adversely affected should we not be able to recover the full amount of the funding requirement.

Market Risk Disclosure

We are exposed to market risk, including market changes, changes in commodity prices and interest rates.  Since December 31, 2001, we have not experienced any
significant changes in our exposure to market risk.  For additional information on our market risk, see our 2001 Form 10-K.

Hedging
Activity

During the third quarter of 2001, Westar Energy entered into hedging relationships to manage commodity price risk associated
with future natural gas purchases in order to protect us and our customers from adverse price fluctuations in the natural gas market.  Initially, Westar Energy entered into futures and swap contracts with terms extending through July 2004 to
hedge price risk for a portion of our anticipated natural gas fuel requirements for our generation facilities.  We have designated these hedging relationships as cash flow hedges in accordance with SFAS No. 133.  Through the third quarter
of 2002, we have burned 13,800,000 MMBtu.  In September 2002, we determined that we had overhedged approximately 8,280,000 MMBtu for the remaining period of the hedge and we recognized a gain in earnings of $2.8 million as a result of the
discontinuance of this portion of the cash flow hedge.  We are currently forecasting that we need a notional volume of 4,830,000 MMBtu for the remainder of the hedged period of October 2002 through July 2004.

Effective October 4, 2001, we entered into a $500 million interest rate swap agreement with a term of two years.  At that time, the effect of the swap agreement
was to fix the annual interest rate on the term loan at 6.18%.  In June 2002, we refinanced the term loan associated with this swap, which increased the effective rate of the swap to 6.43%.  At September 30, 2002, the variable rate in
effect for the term loan was 4.82%.  Changes in the fair value of this cash flow hedge are due to fluctuations in the variable interest rate.

The following tables summarize the effects natural gas hedges had on our financial position and results of operations for the three and nine months ended September
30, 2002:

25



---

##### Table of Contents

|                                       |                                                                     | Natural gas Hedges (a) |  
|-------------------------------------- | ------------------------------------------------------------------- | ---------------------- | -
|                                       |                                                                     |                        |  
|                                       |                                                                     | (Dollars in Thousands) |  
|                                       |                                                                     |                        |  
|Three Months Ended September 30, 2002: |                                                                     |                        |  
|                                       | Fair value of derivative instruments:                               |                        |  
|                                       | Current                                                             |                        | $
|                                       | Long-term                                                           |                        |  
|                                       |                                                                     |                        |  
|                                       | Total                                                               |                        | $
|                                       |                                                                     |                        |  
|                                       | Change in amounts in accumulated other comprehensive income         |                        | $
|                                       | Adjustment for losses included in net income                        |                        |  
|                                       | Change in estimated income tax expense (benefit)                    |                        |  
|                                       |                                                                     |                        |  
|                                       | Net Comprehensive Gain                                              |                        | $
|                                       |                                                                     |                        |  
|                                       | Anticipated reclassifications to earnings in the next 12 months (b) |                        | $
|                                       | Duration of hedge designation as of September 30, 2002              |                        |  
|                                       |                                                                     |                        |  



|                                      |                                                                     | Natural gas Hedges (a) |  
|------------------------------------- | ------------------------------------------------------------------- | ---------------------- | -
|                                      |                                                                     |                        |  
|                                      |                                                                     | (Dollars in Thousands) |  
|                                      |                                                                     |                        |  
|Nine Months Ended September 30, 2002: |                                                                     |                        |  
|                                      | Fair value of derivative instruments:                               |                        |  
|                                      | Current                                                             |                        | $
|                                      | Long-term                                                           |                        |  
|                                      |                                                                     |                        |  
|                                      | Total                                                               |                        | $
|                                      |                                                                     |                        |  
|                                      | Change in amounts in accumulated other comprehensive income         |                        | $
|                                      | Adjustment for losses included in net income                        |                        |  
|                                      | Change in estimated income tax expense                              |                        |  
|                                      |                                                                     |                        |  
|                                      | Net Comprehensive Gain                                              |                        | $
|                                      |                                                                     |                        |  
|                                      | Anticipated reclassifications to earnings in the next 12 months (b) |                        | $
|                                      | Duration of hedge designation as of September 30, 2002              |                        |  
|                                      |                                                                     |                        |  

---

|(a) | Natural gas hedge assets and liabilities are classified in the balance sheet as energy trading contracts.  Due to the volatility of gas commodity prices, it is probable that gas
prices will increase and decrease over the remaining 22 months that these relationships are in place.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | The actual amounts that will be reclassified to earnings could vary materially from this estimated amount due to changes in market conditions.                                                                                                                                         

Fair Value of Energy Trading Contracts

The tables below show the fair value of energy trading
contracts outstanding for the nine months ended September 30, 2002, their sources and maturity periods:

|                                                                       |  | Fair Value of Contracts |               
|---------------------------------------------------------------------- |  | ----------------------- | --------------
|                                                                       |  |                         |               
|                                                                       |  |                         | (In Thousands)
|                                                                       |  |                         |               
|Net fair value of contracts outstanding at the beginning of the period |  | $                       | (11,213       
|Less contracts realized or otherwise settled during the period         |  |                         | (599          
|Fair value of new contracts entered into during the period             |  |                         | 13,292        
|                                                                       |  |                         |               
|Fair value of contracts outstanding at the end of the period           |  | $                       | 2,678         
|                                                                       |  |                         |               

These contracts were valued through
market exchanges and, where necessary, broker quotes and industry publications.  The sources of the fair values of the financial instruments related to these contracts are summarized in the following table:

26



---

##### Table of Contents

|                                                                                       |  | Fair Value of Contracts at End of Period |      
|-------------------------------------------------------------------------------------- |  | ---------------------------------------- | -----
|                                                                                       |  |                                          |      
|Source of Fair Value                                                                   |  | Total Fair Value                         |      
|                                                                                       |  |                                          |      
|                                                                                       |  | (In Thousands)                           |      
|                                                                                       |  |                                          |      
|Prices actively quoted (futures)                                                       |  | $                                        | 1,447
|Prices provided by other external          sources (swaps and forwards)                |  |                                          | 1,115
|Prices based on the Black Option         Pricing model (options and         other)
(a) |  |                                          | 116  
|                                                                                       |  |                                          |      
|Total fair value of contracts         outstanding                                      |  | $                                        | 2,678
|                                                                                       |  |                                          |      



---

ITEM 3.  
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information relating to the market risk disclosure is
set forth in Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations  Other Information  Market Risk Disclosure, which is incorporated herein by reference.

ITEM 4.  
CONTROLS AND PROCEDURES

Within the 90-day period prior to the date of this report, an evaluation was carried out,
under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15
of the Securities Exchange Act of 1934.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, in all material respects, with respect to the
recordings, processing, summarizing and reporting, within the time periods specified in the SECs rules and forms, of information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date of
the evaluation described above.

27



---

##### Table of Contents

KANSAS GAS AND ELECTRIC COMPANY

PART II.  
Other Information

ITEM 1.  
LEGAL PROCEEDINGS

Information regarding regulatory and legal proceedings is set forth in Note 4 in the Notes to
Consolidated Financial Statements, Rate Matters and Regulation, and Note 9 in the Notes to Consolidated Financial Statements, Legal Proceedings, included in Part 1, Item 1 of this report.  The disclosures set forth in
Note 4 and Note 9 in the Notes to Consolidated Financial Statements 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

Information required by Item 4 is omitted pursuant to
General Instruction H(2)(b) to Form 10-Q.

ITEM 5.  
OTHER INFORMATION

None

ITEM 6.  
EXHIBITS AND REPORTS ON FORM 8-K

|(a) | Exhibits:                                                                          | 
|--- | ---------------------------------------------------------------------------------- | 
|    |                                                                                    | 
|    | 99.1  -   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|    |                                                                                   
|    | 99.2  -   Kansas Corporation Commission Order dated November 8, 2002.             
|    |                                                                                   
|(b) | Reports on Form 8-K filed during the three months ended September 30, 2002:  None 

28



---

##### Table of Contents

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.

|      |                   |  | KANSAS GAS AND ELECTRIC COMPANY
|----- | ----------------- |  | -------------------------------
|      |                   |  |                                
|      |                   |  |                                
|Date: | November 14, 2002 |  | By:                            
|      |                   |  |                                
|      |                   |  |                                

29



---

##### Table of Contents

CERTIFICATION PURSUANT TO RULE 13a-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Caroline A. Williams, certify
that:

|1. | I have reviewed this quarterly report for the period ended September 30, 2002 on Form 10-Q of Kansas Gas and Electric Company;                                                                                                                                                                                                                                                    
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|4. | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|   | a.                                                                                                                                                                                                                                                                                                                                                                                
|   | b.                                                                                                                                                                                                                                                                                                                                                                                
|   | c.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|5. | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent functions):                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|   | a.                                                                                                                                                                                                                                                                                                                                                                                
|   | b.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|6. | The registrants other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|   |                                                                                                                                                                                                                                                                                                                                                                                   

|      |                   |  |    
|----- | ----------------- |  | ---
|      |                   |  |    
|Date: | November 14, 2002 |  | By:
|      |                   |  |    
|      |                   |  |    



| |  |  | 
| |  |  | 

30



---

##### Table of Contents

CERTIFICATION PURSUANT TO RULE 13a-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Paul R.
Geist, certify that:

|1. | I have reviewed this quarterly report for the period ended September 30, 2002 on Form 10-Q of Kansas Gas and Electric Company;                                                                                                                                                                                                                                                    
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|4. | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|   | a.                                                                                                                                                                                                                                                                                                                                                                                
|   | b.                                                                                                                                                                                                                                                                                                                                                                                
|   | c.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|5. | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent functions):                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|   | a.                                                                                                                                                                                                                                                                                                                                                                                
|   | b.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|6. | The registrants other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

|      |                   |  |    
|----- | ----------------- |  | ---
|      |                   |  |    
|Date: | November 14, 2002 |  | By:
|      |                   |  |    
|      |                   |  |    



31