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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
Commission File Numbers 0-24780
33-73002-1
NOTIFICATION OF LATE FILING
(Check One):
[X] Form 10-K [ ] Form 11-K [ ] Form 20-F [ ] Form 10-Q [ ] Form N-SAR
For Period Ended: December 31, 1998
[ ] Transition Report on Form 10-K
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
[ ] Transition Report on Form 10-Q
[ ] Transition Report on Form N-SAR
For the Transition Period Ended:
-----------------------------------
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
If the notification relates to a portion of the filing checked above,
identify the Item(s) to which the notification relates:
=============================================================================
PART I
REGISTRANT INFORMATION
PROTECTION ONE, INC.
PROTECTION ONE ALARM MONITORING, INC.
(Full name of registrants)
N/A
(Former name if applicable)
600 Corporate Pointe, 12th Floor
(Address of principal executive office (street and number))
Culver City, California 90230
(City, state and zip code)
PART II
RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule 12b-25(b), the
following should be completed. (Check appropriate box.)
[X] (a) The reasons described in reasonable detail in Part III of this
form could not be eliminated without unreasonable effort or expense;
[X] (b) The subject annual report, semi-annual report, transition report
on Form 10-K, 20-F, 11-K or N-SAR, or portion thereof, will be filed
on or before the 15th calendar day following the prescribed due date;
or the subject quarterly report or transition report on Form 10-Q, or
portion thereof will be filed on or before the fifth calendar day
following the prescribed due date; and
[ ] (c) The accountant's statement or other exhibit required by Rule
12b-25(c) has been attached if applicable.
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PART III
NARRATIVE
State below in reasonable detail the reasons why Form 10-K, 11-K, 20-F,
10-Q, N-SAR, or the transition report or portion thereof, could not be filed
within the prescribed time period.
On April 1, 1999, Protection One, Inc. ("Protection One") announced in a
press release (included as an exhibit hereto), and in a report on Form 8-K filed
on April 1, 1999, that as a result of discussions with the staff of the
Securities and Exchange Commission ("SEC"), which continued through March 31,
1999, Protection One will restate its consolidated financial statements for the
year ended December 31, 1997 and the first three quarters of 1998. These
discussions with the staff of the SEC arose in connection with the staff's
review of Protection One's preliminary information statement on Schedule 14C and
the related filings relating to the proposed acquisition of Lifeline Systems,
Inc.
The registrants will not timely file their annual report on Form 10-K for
the year ended December 31, 1998 because of the work that will be required to
prepare and audit the restated consolidated financial statements, as well as to
complete pending discussions with the staff of the SEC regarding certain issues
relating to these restatements of the historical financial statements of
Protection One.
The SEC staff is also reviewing Protection One's amortization methodology
use on customer accounts and the timing of non-recurring gains relating to the
settlement of certain financial obligations. The company is working with the SEC
staff to resolve these open issues.
Due to the timing of the discussions with the SEC staff, the registrants
could not eliminate these issues so as to timely file their annual report on
Form 10-K without unreasonable effort or expense.
PART IV
OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
John E. Mack III (310) 342-6300
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of
the Securities Exchange Act of 1934 or Section 30 of the Investment Company Act
of 1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If answer is no,
identify report(s).
[X] Yes [ ] No
(3) Is it anticipated that any significant change in results of operation
for the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion thereof?
[X] Yes [ ] No
If so: attach an explanation of the anticipated change, both narratively and
quantitatively, and, if appropriate, state the reasons why a reasonable estimate
of the results cannot be made.
The largest adjustment results from a change in accounting treatment for
the replacement of residential yard signs which will require Protection One to
reverse an approximate $12.3 million acquisition-related expense recorded in
1997 and expense this amount in 1998. With the decision to exit the Westar trade
name and utilize the Protection One brand name on a nationwide basis, the
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former Westar yard signs became obsolete. Protection One considered these
charges to be exit costs and accrued the estimated costs of removing and
replacing the obsolete signage in the fourth quarter of 1997. The impact of this
change is to increase 1997 net income by approximately $7.4 million and to
reduce 1998 net income by the same amount.
Protection One also will restate 1997 and 1998 net income to expense the
costs of yard signs for accounts acquired in acquisitions which have been
capitalized. The impact of this adjustment will reduce 1997 net income by
approximately $0.5 million and 1998 net income by approximately $2.5 million.
Protection One management also determined a need to increase its 1998 expense
provision for uncollectible accounts, which will reduce net income by
approximately $3.6 million. In addition, Protection One will increase 1998 net
income by approximately $0.5 million to reflect adjustments to purchase price
allocations recorded in connection with its business acquisitions.
The overall effect of these adjustments increases 1997 net income by
approximately $6.9 million, or $0.10 per share, and decreases 1998 net income by
approximately $13 million, or $0.12 per share.
Protection One
Summary of Estimated Restatable Adjustments
1997 Adjustments:
Replace residential yard signs $ 7.4
Yard signs for acquired accounts (0.5)
Estimated Increase in Net Income $ 6.9
1998 Adjustments:
Replace residential yard signs $ (7.4)
Yard signs for acquired accounts (2.5)
Bad debt expense (3.6)
Purchase price allocations .5
Estimated Decrease in Net Income $ (13.0)
Note - All amounts in millions and presented net of tax.
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PROTECTION ONE, INC.
PROTECTION ONE ALARM MONITORING, INC.
(Name of Registrants as Specified in Charter)
have caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
Date: April 1, 1999 PROTECTION ONE, INC.
By: /s/ JOHN E. MACK III
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Name: John E. Mack III
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Title: Chief Executive Officer
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Date: April 1, 1999 PROTECTION ONE ALARM MONITORING, INC.
By: /s/ TOM K. RANKIN
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Name: Tom K. Rankin
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Title: President
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Instruction: The form may be signed by an executive officer of the
registrant or by any other duly authorized representative. The name and
title of the person signing the form shall be typed or printed beneath the
signature. If the statement is signed on behalf of the registrant by an
authorized representative (other than an executive officer), evidence of
the representative's authority to sign on behalf of the registrant shall be
filed with the form.
ATTENTION
Intentional misstatements or omissions of fact constitute Federal
criminal violations. (See 18 U.S.C. 1001)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
99.1 Press release issued April 1, 1999
</TABLE>
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EXHIBIT 99.1
CULVER CITY, California, April 1, 1999 -- Protection One, Inc. (NYSE:POI)
announced today that as a result of discussions with the staff of the Securities
and Exchange Commission (SEC), the company will restate its 1997 operating
results and its results for the first three quarters of 1998. These discussions
were related to the registration statement filed by Protection One in connection
with the proposed acquisition of Lifeline Systems, Inc. (Nasdaq:LIFE).
The company expects the release of additional and more definitive
information in its Form 10-K for 1998. As a result of this restatement, the
company has filed for a 15-day extension from the SEC of the filing of its 1998
10-K, to April 15, 1999.
The largest adjustment results from a change in accounting treatment for
the replacement of residential yard signs which will require Protection One to
reverse an approximate $12.3 million acquisition-related expense recorded in
1997 and expense this amount in 1998. With the decision to exit the Westar trade
name and utilize the Protection One brand name on a nationwide basis, the former
Westar yard signs became obsolete. Protection One considered these charges to be
exit costs and accrued the estimated costs of removing and replacing the
obsolete signage in the fourth quarter of 1997. The impact of this change is to
increase 1997 net income by approximately $7.4 million and to reduce 1998 net
income by the same amount.
Protection One also will restate 1997 and 1998 net income to expense the
costs of yard signs for accounts acquired in acquisitions which have been
capitalized. The impact of this adjustment will reduce 1997 net income by
approximately $0.5 million and 1998 net income by approximately $2.5 million.
Protection One management also determined a need to increase its 1998 expense
provision for uncollectible accounts, which will reduce net income by
approximately $3.6 million. In addition, Protection One will increase 1998 net
income by approximately $0.5 million to reflect adjustments to purchase price
allocations recorded in connection with its business acquisitions.
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The overall effect of these adjustments increases 1997 net income by
approximately $6.9 million, or $0.10 per share, and decreases 1998 net income by
approximately $13 million, or $0.12 per share.
The SEC staff is also reviewing Protection One's amortization methodology
use on customer accounts and the timing of non-recurring gains relating to the
settlement of certain financial obligations. The company is working with the SEC
staff to resolve these open issues.
Protection One currently amortizes customer acquisition costs on a straight
line method over a 10-year period. The SEC staff has questioned the
appropriateness of the current accounting method. Protection One believes its
amortization method is consistent with industry practices, but will work with
the SEC to complete their review. A significant change in the amortization
method would likely have a material effect on the company's results of
operations. Protection One expects to resolve this matter prior to filing its
first quarter results in 1999.
Until the 1998 10-K is filed, Protection One's financial statements and the
auditors' report for the year ended 1997 and the unaudited financial statements
for the first three quarters of 1998 should not be relied upon as they do not
reflect the adjustments discussed above.
Protection One, one of the leading residential security alarm
companies in the United States, provides monitoring and related security
services to more than 1.5 million residential and commercial subscribers in
North America and Europe.
For more information about Protection One and its operating companies,
visit us on the Internet at http://www.protectionone.com.
Statements contained in this press release concerning statements of
management's beliefs, goals and expectations are "forward-looking
statements" as that term is defined in the Private Securities Litigation
Reform Act of 1995, and are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed in or
implied by the statements. The information in this release regarding the
company's estimates of the amounts of restatement constitutes
forward-looking statements within the meaning of the Private Securities
Litigation Reform Acts of 1995, and is subject to the safe harbor
protections of that Act. These estimated amounts of restatements are
subject to completion and audit of the restated financial statements, as
well as to additional review by the SEC staff. Other risks and
uncertainties are described in Protection One's preliminary information
statement filed with the Securities and Exchange Commission on February 12,
1999. Protection One disclaims any obligation to update any forward-looking
statements as a result of developments occurring after the date of this
press release.
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Protection One
Summary of Estimated Restatable Adjustments
1997 Adjustments:
Replace residential yard signs $ 7.4
Yard signs for acquired accounts (0.5)
Estimated Increase in Net Income $ 6.9
1998 Adjustments:
Replace residential yard signs $ (7.4)
Yard signs for acquired accounts (2.5)
Bad debt expense (3.6)
Purchase price allocations .5
Estimated Decrease in Net Income $ (13.0)
Note - All amounts in millions and presented net of tax.
