SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 27, 1999
PROTECTION ONE, INC.
(Exact name of Registrant as specified in charter)
DELAWARE 0-24780 93-1063818
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
6011 BRISTOL PARKWAY 90230
CULVER CITY, CALIFORNIA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (310) 338-6930
<PAGE>
ITEM 5. OTHER EVENTS.
On January 27, 1999, Protection One, Inc. announced a summary
of its results of operations for the quarter and year ended December 31, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Press Release dated January 27, 1999.
2
<PAGE>
SIGNATURES
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 hereunto duly authorized.
PROTECTION ONE, INC.
(Registrant)
Date: February 1, 1999 By: /s/ John E. Mack
--------------------------------------
John E. Mack
Executive Vice President,
Acting Chief Financial Officer and
Chief Strategic Officer
3
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
99.1 Press Release dated January 27, 1999.
EXHIBIT 99.1
PROTECTION ONE
FOR FURTHER INFORMATION CONTACT:
- --------------------------------
John E. Mack, III, Executive Vice President,
Chief Strategic Officer and Acting Chief Financial Officer
(310) 342-6322
David M.V. Barnes, Vice President,
Strategic Planning and Investor Relations
(310) 342-6309
FOR IMMEDIATE RELEASE
PROTECTION ONE REPORTS STRONG RESULTS FOR FOURTH QUARTER
AND 1998 YEAR END RESULTS
Culver City, California, January 27, 1999 - Protection One, Inc. (NYSE:
POI), the second largest national provider of security alarm monitoring and
related services, today announced its results for the fourth quarter and year
end 1998.
In the fourth quarter, revenues increased to $144.0 million, reflecting
a full quarter contribution from several acquisitions that closed at the end of
the third quarter as well as a continued increase in the subscriber production
of the dealer program. The Company had 1.5 million subscribers and monthly
recurring revenue of $37.9 million at December 31, 1998. Earnings before
interest, taxes, depreciation and amortization (EBITDA) rose to $58.0 million,
or 40.3% of total revenues. The Company reported net income of $0.5 million or
$0.004 per share, for the fourth quarter. Cash flow, defined as net income plus
depreciation and amortization, was $39.3 million or $0.31 per share for the
quarter ended December 31, 1998.
For the fiscal year ended December 31, 1998, the Company generated
total revenues, EBITDA and cash flow, defined as net income plus depreciation
and amortization, of $421.1 million, $178.4 million and $132.0 million
respectively. The Company reported $10.4 million of net income, or $0.10 per
share for 1998.
James M. Mackenzie, president & chief executive officer, said "1998 was
an outstanding year for Protection One. Through various strategic acquisitions,
we established a major presence in the multifamily alarm business. We grew our
presence in the Canadian, United Kingdom and Continental European alarm markets
and continued to achieve strong growth in our North American alarm division.
Further, we will become the leader in the high-growth personal emergency
response services through our pending acquisition of Lifeline Systems, Inc. We
anticipate closing the Lifeline transaction in the second quarter of 1999."
Page 1 of 5
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Mr. Mackenzie continued, "During the year, our subscriber base more
than doubled to more than 1.5 million as a result of acquisitions and strong
organic growth through our dealer program. We also made significant strides in
integrating our acquisitions and strengthening our infrastructure. By
successfully accessing the capital markets on several occasions during 1998,
Protection One is well capitalized for 1999 and beyond."
Additionally, the Company announced that its chief financial
officer Monty Cornell has given notice of his intent to accept a position with
another company and relocate to his hometown of Chicago. Effective immediately,
the new acting CFO for the Company is John E. Mack, III who is currently
executive vice president and chief strategic officer. Mack is one of the
original founding partners of Protection One dating back to 1991. He has an
undergraduate degree from Stanford University and a Masters Degree in Business
Administration from The Anderson Graduate School of Management at UCLA.
Protection One, the second largest security alarm company in the United
States, provides monitoring and related security services to more that 1.5
million residential and commercial subscribers worldwide.
For more information about Protection One, Inc. and its operating
companies, visit us on the Internet at http://www.protectionone.com.
Statements contained in this press release concerning the Company's
outlook for continued growth, competitive position and other 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. These
risks and uncertainties include the ability of the Company to consummate the
acquisition of Lifeline Systems, Inc. in the second quarter of 1999 and other
factors described in the risk factors included in the Proxy
Statement/Information Statement/Registration Statement of Protection One
relating to the acquisition of Lifeline Systems, Inc. filed with the Securities
and Exchange Commission on December 10, 1998 (beginning on page 16), which
statements are incorporated herein by reference. Protection One disclaims any
obligation to update any forward-looking statement as a result of developments
occurring after the date of this press release.
- Table Follows -
Page 2 of 5
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PROTECTION ONE AND SUBSIDIARIES
SUMMARY INCOME STATEMENT
------------------------
(Dollars in thousands, except per share and subscriber amounts)
QUARTER ENDED DECEMBER 31,
--------------------------
1998 1997
---- ----
Revenues:
Monitoring and related services $121,091 $42,734
Installation and other 22,908 5,311
--------- ---------
Total revenues 143,999 48,045
Cost of revenues:
Monitoring and related services 31,607 7,009
Installation and other 12,157 36
--------- ---------
Total cost of revenues 43,764 7,045
--------- ---------
Gross profit 100,235 41,000
Selling, general and administrative expense 39,443 30,624
Acquisition and transition expense 2,799 1,307
Amortization of intangibles and
depreciation expense 38,806 13,782
Non-recurring charge (2,843) 40,144
--------- ---------
Operating income (loss) 22,030 (44,858)
Other income (expense):
Interest expense, net (18,660) (8,301)
Other income (expense) (216) 326
--------- ---------
Income (loss) before income taxes 3,154 (52,833)
Income tax (expense) benefit (2,665) 21,194
--------- ---------
Net income (loss) $ 489 $(31,639)
========= =========
Net income (loss) per common share $ 0.004 $(0.42)
========= =========
Other data:
EBITDA $57,993
Adjusted EBITDA $60,215
End of period MRR $37,920
End of period subscribers 1,542,000
Page 3 of 5
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PROTECTION ONE AND SUBSIDIARIES
SUMMARY INCOME STATEMENT
------------------------
(Dollars in thousands, except per share and subscriber amounts)
YEAR ENDED DECEMBER 31,
-----------------------
1998 1997
---- ----
Revenues:
Monitoring and related services $375,840 $126,630
Installation and other 45,255 18,143
--------- ---------
Total revenues 421,095 144,773
Cost of revenues:
Monitoring and related services 103,521 32,656
Installation and other 28,270 3,013
--------- ---------
Total cost of revenues 131,791 35,669
--------- ---------
Gross profit 289,304 109,104
Selling, general and administrative expense 100,744 77,203
Acquisition and transition expense 10,125 1,308
Amortization of intangibles and
depreciation expense 121,593 39,822
Non-recurring charges (2,843) 40,144
--------- ---------
Operating income (loss) 59,685 (49,373)
Other income (expense):
Interest expense, net (55,990) (32,900)
Other income (expense) 21,072 --
--------- ---------
Income (loss) before income taxes and
extraordinary gain 24,767 (82,273)
Income tax (expense) benefit (15,917) 32,970
--------- ---------
Net income (loss) before extraordinary gain 8,850 (49,303)
Extraordinary gain, net of taxes 1,591 --
--------- ---------
Net income (loss) $ 10,441 $(49,303)
========= =========
Earnings (loss) per common share:
Income (loss) before extraordinary gain
per common share $ 0.08 $ (0.70)
Extraordinary gain per common share 0.02 -
--------- ---------
Net income (loss) per common share $ 0.10 $ (0.70)
========= =========
Other data:
EBITDA $178,435
Adjusted EBITDA $192,554
Page 4 of 5
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PROTECTION ONE AND SUBSIDIARIES
SUMMARY BALANCE SHEET AND CASH FLOW DATA
----------------------------------------
(dollars in thousands)
<TABLE>
<CAPTION>
BALANCE SHEET DATA:
AT DECEMBER 31,
---------------
1998 1997
------------- ---------------
<S> <C> <C>
ASSETS
Current assets $ 131,297 $175,880
Property and equipment, net 46,959 14,934
Subscriber accounts and intangibles, net 1,025,821 538,318
Goodwill and patents, net 1,223,178 682,180
Other assets 155,209 35,332
----------- -----------
$2,582,464 $1,446,644
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 220,388 $ 142,248
Long term debt, including current portion 969,170 359,470
Other liabilities 41,943 10,951
----------- -----------
Total liabilities 1,231,501 512,669
----------- -----------
Stockholders' equity 1,350,963 933,975
----------- -----------
$2,582,464 $1,446,644
=========== ===========
<CAPTION>
CASH FLOW DATA:
YEAR ENDED DECEMBER 31,
-----------------------
1998 1997
---- ----
<S> <C> <C>
Net cash provided by (used in)
operating activities $97,138 $(4,928)
Net cash (used in) investing activities $(893,947) $(156,684)
Net cash provided by financing activities $744,479 $237,000
</TABLE>
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