Protection One (POIX) 11-K Annual report of employee stock purchases

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 11-K

(Mark One)

ýANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Plan year ended December 31, 2004

OR

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

For the transition period from                                 to                                

Commission file number

A.Full title of the plan and the address of the plan, if different from that of the issuer named below:

Protection One 401(k) Plan

B.Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

PROTECTION ONE, INC.

1035 N. 3^rd Street, Suite 101

Lawrence, KS  66044

PROTECTION ONE 401(k) PLAN

TABLE OF CONTENTS

SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2004 -

All other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure Under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees of

Protection One 401(k) Plan:

We have audited the accompanying statements of net assets available for benefits of Protection One 401(k) Plan (the “Plan”) as of December 31, 2004 and 2003, and the related statement of changes in net assets available for benefits for the year ended December 31, 2004.  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 standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2004 and 2003, and the changes in net assets available for benefits for the year ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole.  The supplemental schedule listed in the Table of Contents is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  This schedule is the responsibility of the Plan’s management.  The supplemental schedule has been subjected to the auditing procedures applied in our audit of the basic 2004 financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.

/s/ DELOITTE & TOUCHE LLP

Kansas City, Missouri

June 20, 2005

PROTECTION ONE 401(k) PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2004 AND 2003

	2004		2003
ASSETS:
Investments, at fair value (Note 3):
Mutual Funds	$	23,519,492	$	20,093,325
Protection One Common Stock Fund	89,900		115,160
Loan Fund	976,089		744,143
Total investments	24,585,481		20,952,628
Contributions receivable:
Employer	20,405		13,588
Participant	52,307		35,004
Total receivables	72,712		48,592
Total assets	24,658,193		21,001,220
LIABILITIES -
Excess contributions payable	46,704		—
NET ASSETS AVAILABLE FOR BENEFITS	$	24,611,489	$	21,001,220

See notes to financial statements.

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PROTECTION ONE 401(k) PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 2004

ADDITIONS:
Investment income:
Interest and dividend income	$	556,579
Net appreciation in fair value of investments	1,930,255
Total investment income	2,486,834
Contributions:
Employer	963,800
Participant	2,607,307
Rollovers	12,393
Total contributions	3,583,500
Total additions	6,070,334
DEDUCTIONS:
Benefits paid to participants	2,392,892
Administrative expenses	53,129
Transfers from the plan (Note 6)	14,044
Total deductions	2,460,065
Net Increase	3,610,269
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year	21,001,220
End of year	24,611,489

See notes to financial statements.

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PROTECTION ONE 401(k) PLAN

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003

1.DESCRIPTION OF PLAN

General - - The Protection One 401(k) Plan (the “Plan”), was adopted to provide eligible employees of Protection One Alarm Monitoring, Inc. (the “Employer”) and other participating employers a method to provide for retirement and other related benefits. The Plan is administered by the retirement committee (the “Committee”) appointed by the Employer.  Vanguard Fiduciary Trust Company serves as the trustee of the Plan. The following description of the Plan provides only general information. Participants should refer to the Plan Document for a more complete description of the Plan’s provisions.

The Plan is a defined contribution plan established in accordance with Section 401(a) of the Internal Revenue Code (“IRC”) and is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). All Protection One Alarm Monitoring, Inc., employees become eligible to participate at the beginning of any calendar month after completion of 90 days of service.

On February 17, 2004, Westar Energy, Inc., the Parent of the Employer, sold approximately 87 percent of the issued and outstanding shares of the Employer’s common stock to POI Acquisition I, Inc., a wholly owned subsidiary of POI Acquisition, L.L.C.

Contributions - - Participants may contribute up to 50 percent of pretax compensation, as defined in the Plan. In addition, all employees who are eligible to make elective deferrals under this Plan and have attained age 50 shall be eligible to make catch-up contributions in accordance with the Plan Document. Catch-up contributions shall not be taken into account for purposes of Employer matching contributions. Participants may also contribute amounts representing distributions from other qualified employee benefit Plans.

Participants direct the investment of their contributions and Employer contributions into various investment options offered by the Plan. In 2004, the Plan offered nine mutual funds as investment options for participants.  Effective September 15, 2003, contributions and allocations into the Protection One Common Stock Fund were suspended until further notice.  Contributions currently being allocated to the Protection One Common Stock Fund will automatically be invested in the Vanguard Prime Money Market Fund, until such time as a change in the contribution election is made.  Funds contributed or allocated into the Protection One Common Stock Fund prior to September 15, 2003, are not affected by this action, and will remain invested in the Protection One Common Stock Fund until such time as the participant elects to reallocate that balance.  Effective December 1, 2003, the Westar Energy Common Stock Fund was closed and removed as an investment option under the Plan.  Participants had the option of reallocating their balance in the Westar Energy Common Stock Fund prior to the funds closure.  Any funds remaining in the Westar Energy Common Stock Fund on December 1, 2003 were automatically transferred to the Vanguard Prime Money Market Fund.

The Employer will make a matching contribution to the Plan equal to a percentage (to be determined by the Board of Directors of the Employer in its discretion) of the pre-tax contributions made to the Plan for such pay period (disregarding any portion of such pre-tax contributions in excess of 6 percent of such participant’s base compensation, as defined by the Plan for such pay period). Matching contributions may be made in the form of either cash or common stock of the Employer. Additional amounts may be contributed at the option of the Employer. Contributions are subject to certain limitations.

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Vesting - - Each participant has a fully vested and nonforfeitable interest in all voluntary contributions, rollover contributions, and income earned thereon. Participants transferring accounts from the Westar Energy, Inc. Employees’ 401(k) Savings Plan shall be 100 percent vested in their Employer Matching Account.  In addition, if any amounts are directly transferred for a participant to this Plan by merger from the Safeguard Alarms, Inc. 401(k) Profit Sharing Plan and the Centennial Security Holdings 401(k) Profit Sharing Plan, the participant’s Employer Matching Account shall be 100 percent vested. Participants who terminate service for reasons other than normal retirement, death, or permanent disability prior to the completion of five years of service will forfeit the nonvested portion of Employer contributions to their account. Participants vest in Employer contributions according to the following schedule:

Years of Service	Vesting Percentage
Less than 1	0	%
1	20	%
2	40	%
3	60	%
4	80	%
5 or more	100	%

Forfeited Accounts - At December 31, 2004 and 2003 forfeited non-vested accounts totaled $28,838 and $30,461, respectively. The balances in these accounts will be used to restore any forfeited employer matching accounts, reduce future employer contributions or to pay administrative expenses of the Plan. During 2004, the Employer utilized $18,549 of forfeited account balances to reduce its contributions and $50,004 was used to pay Plan expenses.

Participant Loans - Participants may borrow from their fund accounts an amount equal to the lesser of 50 percent of the participant’s vested account balance or $50,000. All loans must be repaid in equal installments on not less than a quarterly basis over a five-year period or in excess of five years for the purchase of a primary residence. The loans are collateralized by up to 50 percent of the participant’s vested account balance and bear interest at a rate consistent with interest rates charged by commercial entities for loans, which would be made under similar circumstances. Principal and interest are paid through payroll deductions. Interest rates on outstanding participant loans ranged from 5 percent to 10.5 percent as of December 31, 2004.

Participant Accounts - Each participant’s account is credited with the participant’s contribution, the Employer’s matching contribution, and an allocation of plan earnings, any additional Employer contributions and charged with an allocation of administrative expenses, if paid by the Plan. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Administrative Expenses – The Plan or the Plan Sponsor, as provided in the Plan Document, pay administrative expenses of the Plan.

Payments of Benefits - Benefits are recorded when paid.  On termination of service due to death, permanent disability, or normal retirement, a participant will be entitled to 100 percent of the value of their account balance, including employer contributions and earnings thereon. Effective December 15, 2003, any benefit payment made to a participant upon termination of employment or to the beneficiary of a deceased participant, will only be made in the form of a lump sum distribution.  Thus participants or participant’s beneficiaries can no longer receive payments in the form of annuities or installments.  In addition, if the participant’s account has ever exceeded $5,000, the participant (and spouse, if applicable) must give written consent before the distribution may be made.

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2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting – The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires Plan management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein. Actual results could differ from those estimates. The Plan utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements. There is a possibility that changes in the Protection One common stock could occur and affect the amounts reported in the statements of net assets available for benefits.

Investment Valuation and Income Recognition - Investments of the Plan are stated at fair value. Quoted market prices are used to value investments. Shares of mutual funds are valued at the net asset value of shares held by the Plan at year-end. The Protection One Common Stock Fund is valued at its respective year-end unit closing price (comprised of year-end market price plus uninvested cash). Participant loans are carried at cost, which approximates fair value. Purchases and sales of investments are recorded on a trade-date basis. Interest income is accrued when earned. Dividend income is recorded on the ex-dividend date.

Excess Contributions Payable - The Plan is required to return contributions received during the Plan year in excess of the IRS limits.

3.INVESTMENTS

The following investments represent 5 percent or more of the net assets available for benefits at December 31:

	As of December 31,
	2004		2003
Vanguard 500 Index Fund	$	5,352,281	$	4,592,518
Vanguard International Growth Fund	1,252,119		973,746
Vanguard PRIMECAP Fund	5,163,392		4,333,233
Vanguard Prime Money Market Fund	2,691,552		2,659,557
Vanguard Total Bond Market Index Fund	1,671,962		1,545,718
Vanguard Wellington Fund	3,136,993		2,695,085
Vanguard Windsor Fund	3,382,450		2,864,522

During 2004, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $1,930,255 as follows:

Mutual funds	$	1,930,078
Protection One Common Stock Fund	177
	$	1,930,255

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4.FEDERAL INCOME TAX STATUS

The Internal Revenue Service has determined and informed the Employer by a letter dated March 7, 2005 that the Plan and related trust are designed in accordance with applicable sections of the IRC. The Employer and the Plan administrator believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC and the Plan and related trust continue to be tax-exempt. Therefore, no provision for income taxes has been included in the Plan’s financial statements.

5.PLAN TERMINATION

Although it has not expressed any intent to do so, the Employer has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their Employer contributions.

6.TRANSFERS FROM THE PLAN

On January 1, 2003 and March 19, 2003, Protection One Data Services, Inc. and AVOne, Inc., respectively, were sold back to Westar Energy, Inc.  These participants will have a balance under this Plan until they elect to transfer it to the Westar Energy, Inc. Employees’ 401(k) Savings Plan.  During 2004, participants elected to transfer $14,044 to the Westar Energy, Inc. Employees’ 401(k) Savings Plan.

7.RELATED-PARTY TRANSACTION

The Plan invests in shares of mutual funds sponsored and managed by Vanguard. Vanguard Fiduciary Trust Company is the trustee of the Plan and, therefore, these transactions qualify as party-in-interest transactions. Also, the Protection One Common Stock Fund holds shares of the Employer. These transactions also qualify as party-in-interest transactions.

8.SUBSEQUENT EVENTS

Effective March 21, 2005, the Plan added the following 6 new funds for Employee’s to invest in:

•Vanguard Target Retirement 2045 Fund

•Vanguard Target Retirement 2035 Fund

•Vanguard Target Retirement 2025 Fund

•Vanguard Target Retirement 2015 Fund

•         ��        Vanguard Target Retirement 2005 Fund

•Vanguard Target Retirement Income Fund

* * * * * *

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PROTECTION ONE 401(k) PLAN

FORM 5500, SCHEDULE H, PART IV, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2004

		Description of Investment Including
Identity of Issue, Borrower, Lessor,		Maturity Date, Rate of Interest,
or Similar Party		Collateral, Par, or Maturity Value	Shares/Units	Current Value
	Franklin Balance Sheet Investment Fund	Registered Investment Company	7,139	$	415,912
*	Vanguard 500 Index Fund	Registered Investment Company	47,942	5,352,281
*	Vanguard Explorer Fund	Registered Investment Company	6,073	452,831
*	Vanguard International Growth Fund	Registered Investment Company	66,390	1,252,119
*	Vanguard Prime Money Market Fund	Registered Investment Company	2,691,552	2,691,552
*	Vanguard PRIMECAP Fund	Registered Investment Company	82,879	5,163,392
*	Vanguard Total Bond Market Index Fund	Registered Investment Company	162,801	1,671,962
*	Vanguard Wellington Fund	Registered Investment Company	103,908	3,136,993
*	Vanguard Windsor Fund	Registered Investment Company	187,186	3,382,450
*	Protection One Common Stock Fund	Company Stock Fund	121,486	89,900
*	Loan Fund	Loans to participants with interest rates ranging from 5%-10.5%, various maturity dates		976,089
	Total			24,585,481

*Represents a party-in-interest to the Plan.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Retirement Committee for the Protection One 401(k) Plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

Protection One 401(k) Plan
By:	/s/ Eric A. Devin	VP, Treasurer, Controller & Asst Secretary	Date:	June 23, 2005
	Eric A. Devin

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