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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996.]
For the fiscal year ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________________ to ______________
Commission file number 0-24780
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below: Protection One, Inc. Employee
Stock Purchase Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office: Protection One, Inc.,
6011 Bristol Parkway, Culver City, California 90230
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PROTECTION ONE, INC.
EMPLOYEE STOCK PURCHASE PLAN
REPORT ON AUDIT OF FINANCIAL STATEMENTS
for the years ended September 30, 1996 and 1997
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Protection One, Inc. Employee Stock Purchase Plan
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Accountants ................................................................ 1
Financial Statements
Statements of Net Assets Available For Plan Benefits
as of September 30, 1996 and 1997 .................................................. 2
Statements of Changes in Net Assets Available for Plan Benefits
for the years ended September 30, 1996 and 1997...................................... 3
Notes to Financial Statements .......................................................... 4
Exhibit Index..................................................................................... 7
</TABLE>
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Protection One, Inc.
Culver City, California
We have audited the accompanying statements of net assets available for plan
benefits of Protection One, Inc. Employee Stock Purchase Plan as of September
30, 1996 and 1997 and the related statements of changes in net assets available
for plan benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Plan as of September 30,
1996 and 1997 and the results of its operations for the years then ended in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Portland, Oregon
November 26, 1997
1
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Protection One, Inc. Employee Stock Purchase Plan
Statements of Net Assets Available for Plan Benefits
As of September 30, 1996 and 1997
<TABLE>
<CAPTION>
1996 1997
--------- -------
<S> <C> <C>
Receivable from Protection One, Inc. $16,963 $ 5,906
------- -------
Less:
Excess participant contributions refundable 8,554 946
-------- ------
Net assets available for plan benefits $ 8,409 $ 4,960
======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
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Protection One, Inc. Employee Stock Purchase Plan
Statements of Changes in Net Assets Available for Plan Benefits
For the years ended September 30, 1996 and 1997
<TABLE>
<CAPTION>
1996 1997
--------- -------
<S> <C> <C>
Additions:
Employee contributions $149,429 $117,994
-------- --------
Less:
Purchases of shares of Protection One, Inc. 132,466 120,497
Contributions refundable 8,554 946
-------- --------
Total deductions 141,020 121,443
-------- --------
Changes in net assets available for plan benefits 8,409 <3,499>
Net assets available for plan benefits:
Beginning of year -- 8,409
-------- --------
End of year $ 8,409 $ 4,960
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
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Protection One, Inc. Employee Stock Purchase Plan
Notes to Financial Statements
1. PLAN DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following description of the Protection One, Inc. (the Company)
Employee Stock Purchase Plan (the Plan) provides only general
information. The Plan covers qualifying employees of the Company, its
wholly owned subsidiary, Protection One Alarm Monitoring, Inc.
(Monitoring) and Monitoring's former wholly-owned subsidiary,
Protection One Alarm Services, Inc., which was merged into Monitoring
in May 1996. Participants should refer to the Plan document or the
Summary Plan Description for a more complete description of the Plan's
provisions.
PLAN DESCRIPTION
The Plan, established by the Company on August 2, 1995, with an
effective date of October 1, 1995, is designed to promote the interests
of the Company by providing eligible employees with the opportunity to
acquire a proprietary interest in the Company through participation in
a payroll-deduction based employee stock purchase plan.
The Company has authorized 650,000 shares of its Common Stock as the
maximum amount of shares to be issued over the term of the Plan. Shares
of Common Stock shall be offered for purchase under the Plan through a
series of successive purchase periods until the earliest to occur of
(i) the date on which the maximum number of shares available have been
sold, (ii) the Plan has been terminated by the Plan Administrator,
(iii) all purchase rights are exercised in connection with an
Acquisition (as defined by the Plan) or (iv) the last business day of
September 2005. The purchase periods have a duration of six months
running from the first business day in October to the last business day
in March and from the first business day in April to the last business
day in September.
The purchase price per share at which Common Stock will be purchased on
the participants behalf at the end of each purchase period (the
Purchase Date) shall be equal to eighty-five percent (85%) of the lower
of (i) the Fair Market Value per share of Common Stock on the start
date of the purchase period or (ii) the Fair Market Value per share of
Common Stock on that Purchase Date. "Fair Market Value" is defined by
the Plan as the closing sales price of the Common Stock on the Nasdaq
National Market. Participant's purchases are limited to the lessor of
(i) twenty-five percent (25%) of their earnings or (ii) $25,000 in one
calendar year. Purchases of the Company's stock are immediately
distributed to participants.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make significant
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
EXPENSES
Under the Plan agreement, administrative expenses of the Plan are paid
by the Company.
RECEIVABLE FROM PROTECTION ONE, INC.
Contributions from employees are passed through to the Company and are
reflected as a receivable by the Plan until such funds are used to
purchase the Company's shares on each Purchase Date.
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Protection One, Inc. Employee Stock Purchase Plan
Notes to Financial Statements (cont.)
RECLASSIFICATIONS
Certain amounts in the September 30, 1996 financial statements have
been reclassified to conform to the current year presentation.
2. PURCHASES OF PROTECTION ONE, INC. COMMON STOCK:
During the years ended September 30, 1996 and 1997, the total shares of
Protection One, Inc. common stock purchased and distributed to
participants were as follows:
<TABLE>
<CAPTION>
1996 1997
------ ------
<S> <C> <C>
March 29, and March 31, respectively 7,623 6,979
September 30, 6,761 6,523
------ ------
Total 14,384 13,502
====== ======
</TABLE>
Shares were acquired at the Fair Market Value per share of $9.25,
$12.625, $10.50 for the six month purchase periods ending March 31,
1996, September 30, 1996, March 31, 1997 and September 30, 1997,
respectively.
3. INCOME TAXES
The Plan was designed to qualify as being exempt from federal income
taxes, under Section 423 of the Internal Revenue Code.
4. CORPORATION PARTICIPATING IN PLAN
Employee contributions by participating employer for the years ended
September 30, 1996 and 1997 were as follows:
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Protection One Alarm Monitoring, Inc. $128,460 $117,994
Protection One Alarm Services, Inc. 20,969
-------- --------
$149,429 $117,994
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</TABLE>
5
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SIGNATURES
The Plan. Pursuant to the requirements of the Securities
Exchange Act of 1934, the trustees (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
PROTECTION ONE, INC. EMPLOYEE
STOCK PURCHASE PLAN
Date: December 29, 1997 By: /s/ John W. Hesse
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John W. Hesse, Executive Vice President
and Chief Financial Officer of
Protection One, Inc., as Authorized
Signatory of the Compensation Committee
of the Board of Directors of Protection
One, Inc.
6
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EXHIBIT INDEX
Exhibit Number
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99.1 Consent of Coopers & Lybrand, L.L.P.
7
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EXHIBIT 99.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Protection One, Inc. Employee Stock Purchase Plan on Form S-8 (No. 33-97542) of
our report dated November 26, 1997, on our audits of the financial statements of
Protection One, Inc. Employee Stock Purchase Plan for the years ended September
30, 1996 and 1997, which report is included in the Annual Report of Form 11-K.
Coopers & Lybrand L.L.P.
Portland, Oregon
December 29, 1997
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