<PAGE> 1
Rule 424(b)(3)
File No. 33-83494
PROSPECTUS SUPPLEMENT
dated February 7, 1997
to
Prospectus dated July 12, 1995
The cover page of the accompanying Prospectus and the
information included therein under the caption "Plan of Distribution" are
hereby amended and supplemented as follows:
Holders of Warrant Shares may from time to time offer
and sell the Warrant Shares by or for their respective accounts at
prices and on terms to be determined at the time of sale, to
purchasers directly or through underwriters, brokers, dealers, or
agents, who may receive compensation in the form of underwriting
discounts, concessions or commissions. From time to time the holders
of Warrant Shares may engage in short sales, short sales versus the
box, puts and calls and other transactions in securities of the
Company, or derivatives thereof, and may sell and redeliver Warrant
Shares in connection therewith. To the extent required, the purchase
price, the name of any such underwriter, dealer or agent and the
applicable underwriter's discount, dealer's purchase price or agent's
commission with respect to a particular offering, if any, will be set
forth in an accompanying supplement to this Prospectus.
Holders of Warrant Shares and all broker-dealers and
agents, if any, that participate in a distribution of any of the
Warrant Shares may be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act, in which event all discounts,
concessions or commissions, if any, received by such brokers, dealers,
agents or underwriters and all profits, if any, on the resale of the
Warrant Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The aggregate net
proceeds to the holders of Warrant Shares from the sale of Warrant
Shares offered by such holders hereby will be the purchase price of
such Warrant Shares, less all commissions, if any, and other expenses
of issuance and distribution not borne by the Company.
The information contained in the table on pages 21 and 22 of
the accompanying Prospectus captioned "Warrant Shares Issuable Upon Exercise of
Noteholder Warrants" is hereby supplemented by adding to such table the
following:
<TABLE>
<CAPTION>
Noteholder Warrant
Warrants Shares
----------- ---------
<S> <C> <C>
Morgan Stanley & Co. Incorporate2 210,000 126,000 (subject to
adjustment)
</TABLE>
and by amending footnote 2 to such table to read in full as follows:
2 Morgan Stanley & Co. Incorporated ("MS&Co.")
is a wholly owned subsidiary of Morgan Stanley Group Inc. Morgan
Stanley Group Inc., through its affiliates, was the beneficial owner
(as such term is defined in Rule 13d-3 of the Rules and Regulations of
the Securities Exchange Act of 1934, as amended) on January 23, 1997
of 171,593 shares of Common Stock and warrants to purchase an
additional 244,400 shares (subject to adjustment) of Common Stock.
In May 1995, MS&Co., an affiliate of Morgan Stanley
Venture Partners L.P., the sole general partner of Morgan Stanley
Venture Capital Fund L.P. ("MSVCF"), acted as dealer-manager for the
tender offer by the Company's wholly owned subsidiary Protection One
Alarm Monitoring, Inc. ("Monitoring") for the $50 million principal
amount of Monitoring's 12% Series B Senior Subordinated Notes due 2003
then outstanding; in addition, MS&Co. together with another investment
banker (the "Placement Agents") acted as initial purchasers of an
aggregate of
S-1
<PAGE> 2
$166 million principal amount of the Discount Notes and warrants to
purchase an aggregate of 531,200 shares (subject to adjustment) of
Common Stock from the Company at a price of $6.60 per share (the "1995
Warrants"), which notes and warrants were subsequently resold by the
Placement Agents pursuant to Rule 144A to a number of financial
institutions. MS&Co. received from the Company and Monitoring a fee
of $125,000 for MS&Co.'s services as dealer-manager and compensation
of approximately $3.5 million in connection with the Rule 144A
transaction. Pursuant to a Prospectus dated January 11, 1996 and the
related Prospectus Supplement dated February 7, 1997 relating to an
aggregate of 531,200 shares of Common Stock offered by certain
stockholders, including 61,600 shares (subject to adjustment) of
Common Stock offered by MS&Co., the shares of Common Stock underlying
the 1995 Warrants were registered by the Company with the Commission
for resale.
MS&Co. was the managing underwriter of an offering made
pursuant to a registration statement dated February 6, 1996 filed by
the Company with the Commission for an underwritten public offering of
2,500,000 shares of Common Stock offered by the Company and an
aggregate of 1,500,000 shares offered by certain stockholders,
including 382,447 shares offered by MSVCF. MS&Co. received
underwriting discounts and commissions of approximately $880,000 as
managing underwriter of the public offering.
In addition, MS&Co. was the managing underwriter of a public
offering made pursuant to a registration statement dated September 16,
1996 by Monitoring of $90 million principal amount of 6-3/4%
Convertible Senior Subordinated Notes due 2003, which notes are
convertible into Common Stock and unconditionally guaranteed by the
Company. MS&Co. received underwriting discounts and commissions
aggregating $2,173,500 (including fees and commissions resulting from
the underwriters' purchase of all of the additional notes available
from Monitoring under the offering to cover over-allotments) as
managing underwriter of the public offering.
Andrew C. Cooper, a Principal of MS&Co., was formerly a member
of the Company's Board of Directors.
All capitalized terms used but not defined in this Prospectus
Supplement are used as defined in the accompanying Prospectus.
S-2
