SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Plan year ended December 31, 1998
OR
[ ] TRANSITION 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:
WESTERN RESOURCES, INC.
818 Kansas Avenue
Topeka, KS 66612
PROTECTION ONE, INC.
6011 Bristol Parkway
Culver City, CA 90230
PROTECTION ONE 401(k) PLAN
(formerly Protection One Employee Savings Plan)
TABLE OF CONTENTS
Page(s)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits with Fund
Information as of December 31, 1998 and 1997 2-5
Statement of Changes in Net Assets Available for Plan Benefits
with Fund Information for the Year Ended December 31, 1998 6-8
NOTES TO FINANCIAL STATEMENTS 9-15
SUPPLEMENTAL SCHEDULES:
Schedule I - Line 27a - Supplemental Schedule of Assets Held For
Investment Purposes as of December 31, 1998 16
Schedule II - Line 27d - Supplemental Schedule of Reportable
Transactions for the Year Ended December 31, 1998 17-18
Schedule III - Line 27e - Supplemental Schedule of Nonexempt
Transactions for the Year Ended December 31, 1998 19
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 20
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees of theProtection One 401(k) Plan:
We have audited the accompanying statements of net assets
available for plan benefits of Protection One 401(k) Plan
(formerly Protection One Employee Savings Plan) (the "Plan") as
of December 31, 1998 and 1997, and the related statement of
changes in net assets available for plan benefits for the year
ended December 31, 1998. These financial statements, and the
supplemental schedules referred to below, are the responsibility
of the Plan's management. Our responsibility is to express an
opinion on these financial statements and schedules 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 that
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 net assets
available for plan benefits of the Plan as of December 31, 1998
and 1997, and the changes in its net assets available for plan
benefits for the year ended December 31, 1998, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental
schedules, Line 27a - Supplemental Schedule of Assets Held for
Investment Purposes, Line 27d - Supplemental Schedule of
Reportable Transactions and Line 27e - Supplemental Schedule of
Nonexempt Transactions, are presented for purposes of additional
analysis and are not a required part of the basic financial
statements but are supplementary information required by the
Department of Labor Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of
1974. The Fund Information in the statements of net assets
available for plan benefits and the statement of changes in net
assets available for plan benefits is presented for purposes of
additional analysis rather than to present the net assets
available for plan benefits and changes in net assets available
for plan benefits of each fund. The supplemental schedules and
Fund Information have been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in
our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
Arthur Andersen
Dallas, Texas,
June 28, 1999
PROTECTION ONE 401(k) PLAN
(formerly Protection One Employee Savings Plan)
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION
AS OF DECEMBER 31, 1998
Participant Directed
Vanguard Vanguard Vanguard
Vanguard International Prime Vanguard Total Bond Vanguard
500 Index Growth Money Market PRIMECAP Market Index Wellington
Fund Fund Fund Fund Fund Fund
ASSETS:
Investments at fair value (Note 3)-
Common trust funds-
Stock funds $2,017,238 $406,066 $ - $1,388,763 $ - $ -
Stock/bond/money
market funds - - - - 346,402 929,207
Money market fund - - 977,573 - - -
Participant loans - - - - - -
Protection One, Inc.
common stock - - - - - -
Western Resources, Inc.
common stock - - - - - -
Total investments 2,017,238 406,066 977,573 1,388,763 346,402 929,207
Contributions receivable-
Employer - - - - - -
Participant - - - - - -
Receivable related to
Comsec Narrangansett
Security, Inc. Profit
Sharing Savings and
Retirement Plan merger - - - - - -
Net receivables - - - - - -
Total assets 2,017,238 406,066 977,573 1,388,763 346,402 929,207
LIABILITIES - - - - - -
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $2,017,238 $406,066 $977,573 $1,388,763 $346,402 $929,207
The accompanying notes are an integral part of this financial statement.
(continued)
PROTECTION ONE 401(k) PLAN
(formerly Protection One Employee Savings Plan)
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION
AS OF DECEMBER 31, 1998
(continued)
Participant Directed
Protection Western
One Resources
Vanguard Common Common
Windsor Stock Stock Participant
Fund Fund Fund Loans Other Total
ASSETS:
Investments at fair value (Note 3)-
Common trust funds
Stock funds $1,234,572 $ - $ - $ - $ - $5,046,639
Stock/bond/money
market funds - - - - - 1,275,609
Money market fund - - - - - 977,573
Participant loans - - - 187,059 - 187,059
Protection One, Inc.
common stock - 223,875 - - - 223,875
Western Resources, Inc.
common stock - - 353,771 - - 353,771
Total investments 1,234,572 223,875 353,771 187,059 - 8,064,526
Contributions receivable-
Employer - - - - 211,370 211,370
Participant - - - - 270,491 270,491
Receivable related to
Comsec Narrangansett
Security, Inc. Profit
Sharing Savings and
Retirement Plan merger - - - - 2,712,216 2,712,216
Net receivables - - - - 3,194,077 3,194,077
Total assets 1,234,572 223,875 353,771 187,059 3,194,077 11,258,603
LIABILITIES - - - - (141,606) (141,606)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $1,234,572 $223,875 $353,771 $187,059 $3,052,471 $11,116,997
The accompanying notes are an integral part of this financial statement.
PROTECTION ONE 401(k) PLAN
(formerly Protection One Employee Savings Plan)
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION
AS OF DECEMBER 31, 1997
Participant Directed
Growth
Fund For
Capital Global Investment Special Retirement
Investment Allocation and Value Preservation
Fund Fund Retirement Fund Trust
ASSETS:
Investments at fair value-
Common trust funds
Stock funds $ - $ - $ 539,695 $255,803 $ -
Stock/bond/money
market funds 318,217 248,583 - - -
Money market fund - - - - 191,740
Protection One, Inc.
common stock - - - - -
Total investments 318,217 248,583 539,695 255,803 191,740
Contributions receivable-
Participant - - - - -
Employer - - - - -
Total contributions
receivable - - - - -
Total assets 318,217 248,583 539,695 255,803 191,740
LIABILITIES:
Refund payable - - - - -
Total liabilities - - - - -
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $318,217 $248,583 $539,695 $255,803 $191,740
The accompanying notes are an integral part of this financial statement.
(continued)
PROTECTION ONE 401(k) PLAN
(formerly Protection One Employee Savings Plan)
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION
AS OF DECEMBER 31, 1997
Participant Directed
Protection One Participant
Stock Loans Other Total
ASSETS:
Investments at fair value-
Common trust funds
Stock funds $ - $ - $ - $ 795,498
Stock/bond/money
market funds - - - 566,800
Money market fund - - - 191,740
Protection One, Inc.
common stock 128,192 - - 128,192
Participant loans - 53,033 - 53,033
Total investments 128,192 53,033 - 1,735,263
Contributions receivable-
Participant - - 72,196 72,196
Employer - - 34,098 34,098
Total contributions
receivable - - 106,294 106,294
Total assets 128,192 53,033 106,294 1,841,557
LIABILITIES:
Refund payable - - (14,325) (14,325)
Total liabilities - - (14,325) (14,325)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $128,192 $53,033 $ 91,969 $1,827,232
The accompanying notes are an integral part of this financial statement.
PROTECTION ONE 401(k) PLAN
(formerly Protection One Employee Savings Plan)
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
Participant Directed
Vanguard Vanguard Vanguard
Vanguard International Prime Vanguard Total Bond
500 Index Growth Money Market PRIMECAP Market Index
Fund Fund Fund Fund Fund
ADDITIONS:
Investment income (loss):
Interest and dividend
income $ 18,329 $ 7,334 $ 15,274 $ 38,185 $ 7,564
Net appreciation
(depreciation) in
fair value of
investments 140,420 8,673 - 105,728 1,190
Total investment
income (loss) 158,749 16,007 15,274 143,913 8,754
Contributions:
Employer 59,096 11,606 11,081 40,399 11,199
Participant 455,179 87,161 142,228 305,372 118,850
Participant loan
repayments 4,850 1,814 957 4,182 932
519,125 100,581 154,266 349,953 130,981
Total additions 677,874 116,588 169,540 493,866 139,735
DEDUCTIONS:
Payment of benefits 80,731 25,427 14,848 40,220 19,655
Participant loan
withdrawals 19,750 3,875 2,786 19,450 1,241
Other deductions - - - - -
Excess contributions - - - - -
Total deductions 100,481 29,302 17,634 59,670 20,896
Net increase (decrease)
prior to interfund
transfers 577,393 87,286 151,906 434,196 118,839
Interfund transfers 419,326 61,606 485,605 224,569 74,802
Transfer of Westar
Security Services
401(k) Plan assets 1,020,519 257,174 340,062 729,998 152,761
Transfer of Comsec
Narrangansett Security,
Inc. Profit Sharing,
Savings and Retirement
Plan assets - - - - -
Net increase (decrease) 2,017,238 406,066 977,573 1,388,763 346,402
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of period - - - - -
End of period $2,017,238 $406,066 $977,573 $1,388,763 $346,402
The accompanying notes are an integral part of this financial statement.
(continued)
PROTECTION ONE 401(k) PLAN
(formerly Protection One Employee Savings Plan)
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
(continued)
Participant Directed
Growth
Fund for
Vanguard Vanguard Capital Investment Special Retirement
Wellington Windsor Investment and Value Preservation
Fund Fund Fund Retirement Fund Trust
ADDITIONS:
Investment income (loss):
Interest and
dividend income $72,112 $ 83,444 $13,059 $ 2,155 $ 15,613 $ 10,148
Net appreciation
(depreciation)
of fair value
of investments (43,507) (125,820) (24,849) (148,524) (76,901) -
Total investment
income (loss) 28,605 (42,376) (11,790) (146,369) (61,288) 10,148
Contributions:
Employer 30,427 37,072 21,764 30,883 15,150 12,779
Participant 235,279 282,022 88,497 139,082 54,961 42,668
Participant
loan repayments 2,806 2,865 5,703 9,584 6,125 2,084
268,512 321,959 115,964 179,549 76,236 57,531
Total additions 297,117 279,583 104,174 33,180 14,948 67,679
DEDUCTIONS:
Payment of benefits 50,451 63,000 22,123 43,258 20,534 11,624
Participant loan
withdrawals 11,999 8,568 8,590 10,239 8,837 4,840
Other deductions - - - - - 24,625
Excess contributions - - - - - -
Total deductions 62,450 71,568 30,713 53,497 29,371 41,089
Net increase (decrease)
prior to interfund
transfers 234,667 208,015 73,461 (20,317) (14,423) 26,590
Interfund transfers 153,847 138,860 (391,678) (519,378) (241,380) (218,330)
Transfer of Westar
Security Services
401(k) Plan assets 540,693 887,697 - - - -
Transfer of Comsec
Narrangansett Security,
Inc. Profit Sharing,
Savings and Retirement
Plan assets - - - - - -
Net increase
(decrease) 929,207 1,234,572 (318,217) (539,695) (255,803) (191,740)
NET ASSETS AVAILABLE FOR PLAN
BENEFITS:
Beginning of period - - 318,217 539,695 255,803 191,740
End of period $929,207 $1,234,572 $ - $ - $ - $ -
The accompanying notes are an integral part of this financial statement.
(continued)
PROTECTION ONE 401(k) PLAN
(formerly Protection One Employee Savings Plan)
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
(continued)
Participant Directed
Western
Protection Resources
Global One Common
Allocation Common Stock Stock Participant
Fund Fund Fund Loans Other Total
ADDITIONS:
Investment income (loss):
Interest and
dividend income $ 6,217 $ 469 $ 8,693 $ 2,701 $ - $ 301,297
Net appreciation
(depreciation) in
fair value of
investments (28,909) (65,604) (44,663) - - (302,766)
Total investment
income (loss) (22,692) (65,135) (35,970) 2,701 - (1,469)
Contributions:
Employer 17,623 22,926 11,864 - 177,272 511,141
Participant 75,457 93,756 79,960 - 198,295 2,398,767
Participant loan
repayments 5,846 4,803 1,336 (53,887) - -
98,926 121,485 93,160 (53,887) 375,567 2,909,908
Total additions 76,234 56,350 57,190 (51,186) 375,567 2,908,439
DEDUCTIONS:
Payment of benefits 14,294 11,011 32,024 7,406 - 456,606
Participant loan
withdrawals 4,441 3,837 1,907 (110,360) - -
Other deductions - - - - - 24,625
Excess contributions - - - - 127,281 127,281
Total deductions 18,735 14,848 33,931 (102,954) 127,281 608,512
Net increase
(decrease) prior
to transfers 57,499 41,502 23,259 51,768 248,286 2,299,927
Interfund transfers (306,082) 54,181 64,052 - - -
Transfer of Westar
Security Services
401(k) Plan assets - - 266,460 82,258 - 4,277,622
Transfer of Comsec
Narrangansett Security,
Inc. Profit Sharing,
Savings and Retirement
Plan assets - - - - 2,712,216 2,712,216
Net increase
(decrease) (248,583) 95,683 353,771 134,026 2,960,502 9,289,765
NET ASSETS AVAILABLE FOR
PLAN BENEFITS:
Beginning of
period 248,583 128,192 - 53,033 91,969 1,827,232
End of period $ - $223,875 $353,771 $187,059 $3,052,471 $11,116,997
The accompanying notes are an integral part of this financial statement.
PROTECTION ONE 401(k) PLAN
(formerly Protection One Employee Savings Plan)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
1. DESCRIPTION OF THE PLAN:
General
The Protection One 401(k) Plan (formerly Protection One Employee
Savings Plan) (the "Plan") was adopted to provide eligible
employees of Protection One Alarm Monitoring, Inc. (the
"Employer") a method to provide for retirement and other related
benefits. The Plan was amended and restated effective July 1,
1998 concurrent with the merger of the Westar Security Services
401(k) Plan (the "Westar Plan") into the Plan. The Plan is
administered by the retirement committee (the "Committee")
appointed by the Employer. The following summary description of
the Plan is for general information purposes only. Participants
should refer to the Plan agreement for more complete information.
The Plan is a defined contribution, contributory employee benefit
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 after attaining age 21 and completion of six
months of service.
Contributions
During each plan year, contributions include the total amount of
the salary reductions elected by the participants (not to exceed
16% of the participant's individual compensation), subject to
certain limits, and a match of the participant contributions by
the Employer at a rate up to 25% of the participant's
contribution. Such matching contributions will be allocated to
the participants ' accounts in the same ratio as participant
contributions. During 1998, the Employer made matching
contributions in the amount of $511,141. The Employer may also
make an additional contribution at its discretion.
Vesting and Forfeitures
Each participant has a fully vested and nonforfeitable interest
in all amounts attributable to voluntary contributions, rollover
contributions, and income earned thereon.
Participants who terminate service for reasons other than
retirement, death, or full and 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 Vesting
Service Percentage
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
Forfeitures of terminated participants' nonvested accounts are
used to reduce future Employer contributions. In 1998, total
forfeitures were $24,625, which were used to reduce employer
contributions.
Participant Loans
Participants may borrow from their fund accounts an amount equal
to the lesser of one-half of the participant's vested account
balance or $50,000. Loan transactions are treated as transfers
to/(from) mutual fund investments and (from)/to the participant
loans fund. 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 as
determined by the Employer. The loans are secured by up to 50%
of the participant's vested account balance and bear interest at
a rate based on the prime rate published in the Wall Street
Journal at the beginning of the calendar quarter plus 1 percent.
Principal and interest are paid through payroll deductions.
Interest rates on outstanding participant loans ranged from 3.92%
to 10.50% during 1998.
Administration
All funds in the Plan are held with the Trustee. The Plan
changed its trustee effective July 1, 1998. The plan
administrator is the Employer and is responsible for
administration of the Plan, including the costs of administering
the Plan. Records are maintained in the form of individual
accounts, and credits and charges are made to such accounts.
When appropriate, a participant shall have two separate accounts,
an Employer matching contribution account and a participant
contribution account. Each participant's account is credited
with the participant's contribution, the Employer's matching
contribution, and an allocation of plan earnings based on account
balances. The benefit to which a participant is entitled is the
vested benefit that can be provided from the participant's
account. Certain administrative expenses of the Plan are paid by
the Employer. The Employer paid expenses of approximately
$140,000 on behalf of the Plan for the year ended December 31,
1998 which includes legal fees related to other plans maintained
by the Employer.
Investment Options
During the year ended December 31, 1997, and for the period from
January 1, 1998, through June 30, 1998, participants were able to
allocate their contributions among the following investment
options:
Merrill Lynch Capital Investment Fund: Seeks to provide the
highest total investment return consistent with prudent risk by
investing in equity, debt, convertible, and money market
securities based on fund management's evaluation of changes in
economic and market trends.
Merrill Lynch Global Allocation Fund: Seeks to provide the
highest total investment return consistent with prudent risk by
investing in U.S. and foreign equities, U.S. and foreign bonds,
and money market instruments based on financial models and
analysis to determine the optimal distribution of portfolio
holdings.
Merrill Lynch Growth Fund for Investment and Retirement: Seeks
to provide long-term growth of capital and, secondarily, income
by investing in equity securities with emphasis on equity
securities believed to be undervalued.
Merrill Lynch Special Value Fund: Seeks long-term growth by
emphasizing securities of relatively small market capitalization
companies that demonstrate long-term potential for expanding
their size and profitability in upcoming years.
Merrill Lynch Retirement Preservation Trust: Seeks high current
income consistent with preservation of capital and liquidity by
investing in U.S. Government Agency Securities, Guaranteed
Investment Contracts, and a lessor portion in high-quality money
market instruments. As of and for the year-ended December 31,
1997, Plan assets invested in this fund consisted of only high-
quality money market instruments.
Protection One Common Stock Fund: Seeks to provide for long-term
growth through increases in the value of the Employer's stock and
reinvestment of its dividends.
During the six months ended December 31, 1998, participants were
able to allocate their contributions among the following
investment options:
Vanguard 500 Index Fund: Seeks to provide long-term growth of
capital and income from dividend and investment results that
correspond to the price and yield performance of publicly traded
stocks, in the aggregate, as represented by the Standard & Poor's
Composite Stock Price Index.
Vanguard International Growth Fund: Seeks to provide long-term
growth of capital by investing in the stocks of about 200
companies located in roughly 30 countries around the world.
Vanguard Prime Money Market Fund: Seeks to provide the highest
level of income consistent with maintaining a stable share price
of $1 by investing in high-quality money market obligations
issued by financial institutions, nonfinancial corporations, U.S.
and other governmental agencies, and repurchase agreements
collateralized by such securities.
Vanguard PRIMECAP Fund: Seeks to provide long-term growth of
capital by investing principally in a portfolio of common stocks.
Vanguard Total Bond Index Fund-Total Bond Market Portfolio: Seeks
to provide a high level of interest income by investing in about
1,500 bonds from a variety of industries in an attempt to match
the performance and risk characteristics of the unmanaged Lehman
Brothers Aggregate Bond Index. The investments range from short-
term bonds that mature in approximately one year to long-term
bonds that mature in 20 to 30 years, giving the Fund an average
maturity of about nine years.
Vanguard Wellington Fund: Seeks to provide income and long-term
growth of capital without undue risk to capital by investing in
stocks for potential capital growth and dividend income and in
bonds for current income potential and conservation of principal.
Vanguard Windsor Fund: Seeks to provide long-term growth of
capital and income by investing in equity securities that provide
dividend and capital appreciation income.
Protection One Common Stock Fund: Seeks to provide
for long-term growth through increases in the value of the
Employer's stock and reinvestment of its dividends.
Western Resources Common Stock Fund: Seeks to provide for long-
term growth through increases in the value of stock and the
reinvestment of dividends by investing primarily in the common
stock of Western Resources, Inc., holder of approximately 82% of
the outstanding common stock of Protection One.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting
The Plan's financial statements have been prepared on the accrual
basis of accounting.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make 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.
Payment of Benefits
Benefits are recorded when paid. At December 31, 1998, all
benefit claims submitted prior to year-end were paid. On
termination of service due to death, full and permanent
disability, or normal retirement, a participant will be entitled
to 100% of the value of his/her account balance. Payment of
benefits may be in the form of lump-sum distributions or an
annuity contract payable, and will begin as soon as
administratively feasible following the termination date.
For termination of service due to other reasons, a participant
may receive the value of the vested interest in his/her account
as a lump-sum distribution. 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.
Investment Valuation and Income Recognition
Investments of the Plan are presented at fair market value.
Shares of common trust funds are valued at quoted market prices,
which represent the net asset value of shares held by the Plan at
year-end. The Protection One, Inc. and Western Resources, Inc.,
common stock is valued at its year-end unit closing price
(comprised of year-end market price plus uninvested cash
position). Participant loans are valued at cost, which
approximates fair market value. Purchases and sales of
investments are recorded on the trade date. Interest income is
accrued when earned. Dividend income is recorded on the ex-
dividend date. Capital gain distributions are included in
dividend income.
Refunds Payable and Excess Contributions
Refunds payable included in liabilities in the accompanying
statement of net assets and excess contributions represent
amounts deferred from the salaries of participants in excess of
those allowed by ERISA, as well as the related matching Employer
contributions, that will be returned to the participants and the
Employer.
3. INVESTMENTS:
The following investments individually represent 5% or more of
the net assets available for plan benefits at December 31, 1998
and 1997, respectively:
1998 1997
Common trust funds-
Vanguard 500 Index Fund $2,017,238 $ -
Vanguard PRIMECAP Fund 1,388,763 -
Vanguard Wellington Fund 929,207 -
Vanguard Windsor Fund 1,234,572 -
Capital Investment Fund - 318,217
Global Allocation Fund - 248,583
Growth Fund for Investment
and Retirement - 539,695
Special Value Fund - 255,803
Protection One, Inc. common stock - 128,192
Short-term investments-
Vanguard Prime Money
Market Retirement 977,573 -
Merrill Lynch Retirement
Preservation Trust - 191,740
The net change in realized and unrealized appreciation
(depreciation) in fair value of investments included in the
statement of changes in net assets available for plan benefits
for the year ended December 31, 1998, consisted of the following:
Common Trust Funds-
Stock funds $ (19,523)
Stock/bond/money market funds (172,976)
Protection One, Inc. common stock (65,604)
Westar Resources, Inc. common stock (44,663)
Net depreciation in fair value
of investments $ (302,766)
As of December 31, 1998, the net asset value of investments
included in the financial statement consists of the following:
Net Asset Shares
Value (Unit)
Vanguard 500 Index Fund $113.95 17,703
Vanguard PRIMECAP Fund 47.66 29,139
Vanguard Wellington Fund 29.35 31,660
Vanguard Windsor Fund 15.57 79,292
Vanguard Prime Money Market Fund 1.00 977,573
Vanguard International Growth Fund 18.77 21,634
Vanguard Total Bond Index Fund 10.27 33,730
Protection One Common Stock Fund 15.68 14,278
Western Resources Common Stock Fund 10.65 33,218
The net asset value for the Protection One Common Stock Fund and
the Western Resources Common Stock Fund represents the unit value
established for the individual funds and not the stock price of
the underlying shares of stock.
4. TAX STATUS:
The Employer received a favorable determination letter dated
August 5, 1996, from the Internal Revenue Service (IRS) stating
that the Plan and the related trust are qualified and exempt from
federal income taxes under Sections 401(a) and 501(a) of the IRC,
as amended. The Plan has been amended and restated since the latest
determination letter was received. In the opinion of the Plan
Administrator, the Plan is currently designed and being operated
in compliance with the applicable requirements of the IRC.
5. RELATED-PARTY TRANSACTIONS:
The Plan invests in shares of mutual funds managed by an
affiliate of the Trustee. Transactions in such investments
qualify as party-in-interest transactions which are exempt from
the prohibited transaction rules.
6. TERMINATION OF THE PLAN:
The Employer has the right to terminate the Plan at any time by
delivering to the Trustee and administrator written notice of
such termination. In the event of Plan termination, participants
will become fully vested and assets will be distributed to
participants in a manner consistent with plan provisions and
ERISA regulations. The Employer currently has no intent to
terminate the Plan.
7.COMSEC NARRAGANSETT SECURITY, INC. PROFIT SHARING
SAVINGS AND RETIREMENT PLAN MERGER:
The Comsec Narragansett Security, Inc. Profit Sharing Savings and
Retirement Plan (Comsec Plan) was merged into the Plan effective
December 22, 1998. The assets of the Comsec Plan were
transferred prior to December 31, 1998 but the funds were not
invested until after December 31, 1998. The assets of the Comsec
Plan are presented as a receivable on the accompanying statement
of net assets available for benefits with fund information.
8.PURCHASE OF WESTERN RESOURCES, INC. COMMON STOCK:
The Plan purchased approximately 9,000 shares of Western
Resources, Inc. Common Stock in the period from July 1, 1998 to
March 31, 1999 which may not have been registered under the
Securities Act of 1933. The Employer is collecting data and is
considering what further steps should be taken, if any. Such
steps could include the making of a rescission offer to each Plan
participant who elected to allocate some of his or her pay
deferral contributions to the Western Resources, Inc. Common
Stock Fund under the Plan between July 1, 1998 and March 31,
1999.
9. NON EXEMPT TRANSACTIONS:
The Employer remitted to the Plan on July 6, 1998 certain
contributions in the amount of approximately $28,000 in respect
of April 1998. This remittance was later than the maximum
allowable time for transmitting participant contributions under
regulations of the U.S. Department of Labor and may have
constituted a prohibited transaction under the Employee
Retirement Income Security Act of 1974, as amended, and Section
4975 of the Internal Revenue Code of 1986, as amended. The
Employer is collecting data and is considering what further steps
should be taken, if any.
10. SUBSEQUENT EVENT:
The price of Protection One, Inc. Common Stock declined from a
price of $8.56 per share at December 31, 1998 to $5.19 per share
as of June 25, 1999.
PROTECTION ONE EMPLOYEE SAVINGS PLAN
(formerly Protection One Employee Savings Plan)
LINE 27a - SUPPLEMENTAL SCHEDULE OF ASSETS HELD FOR INVESTMENT
PURPOSES
AS OF DECEMBER 31, 1998
EIN: 93-1064579
PLAN #: 001
(a) (b) (c) (d) (e)
Identity Current
of Issuer Description of Investment Cost Value
* Vanguard 500 Index Fund Registered Investment Company $1,758,817 $2,017,238
* Vanguard International
Growth Fund Registered Investment Company 389,375 406,066
* Vanguard Prime Money
Market Fund Registered Investment Company 977,573 977,573
* Vanguard PRIMECAP Fund Registered Investment Company 1,239,575 1,388,763
* Vanguard Total Bond
Market Index Registered Investment Company 343,666 346,402
* Vanguard Wellington Fund Registered Investment Company 954,754 929,207
* Vanguard Windsor Fund Registered Investment Company 1,361,061 1,234,572
* Protection One Common
Stock Fund Company Stock Fund 273,627 223,875
* Western Resources
Stock Fund Company Stock Fund 389,651 353,771
* Participant loans Participant Loans interest rates
3.92% to 10.50% - 187,059
Total Assets Held For Investment Purposes $7,688,099 $8,064,526
(*) Column (a) indicates each person/entity known to be a party-in-interest.
This supplemental schedule lists assets held for investment
purposes as of December 31, 1998, as required by the Department
of Labor Rules and Regulations for Reporting and Disclosure.
PROTECTION ONE EMPLOYEE SAVINGS PLAN
(formerly Protection One Employee Savings Plan)
LINE 27d - SUPPLEMENTAL SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
EIN: 93-1064579
PLAN #: 001
(a) (b) (c) (d) (g)
Identity of Party Purchase Selling Cost of
Involved Description of Asset Price Price Asset
INDIVIDUAL TRANSACTIONS:
Merrill Lynch Trust Company Merrill Lynch Growth Fund $623,740 $515,923 $623,740
Merrill Lynch Trust Company Merrill Lynch Global
Allocation Fund 337,555 297,255 337,555
Merrill Lynch Trust Company Merrill Lynch Capital Fund 390,991 383,678 390,991
Merrill Lynch Trust Company Merrill Lynch Special
Value Fund 300,496 231,811 300,496
SERIES OF TRANSACTIONS:
Merrill Lynch Trust Company Merrill Lynch Capital Fund 131,688 - 131,688
Merrill Lynch Trust Company Merrill Lynch Capital Fund - 439,421 444,002
Merrill Lynch Trust Company Merrill Lynch Global
Allocation Fund 106,352 - 106,352
Merrill Lynch Trust Company Merrill Lynch Global
Allocation Fund - 335,168 377,090
Merrill Lynch Trust Company Merrill Lynch Growth Fund 191,469 - 191,469
Merrill Lynch Trust Company Merrill Lynch Growth Fund - 593,011 703,586
Merrill Lynch Trust Company Merrill Lynch Special
Value Fund 94,552 - 94,552
Merrill Lynch Trust Company Merrill Lynch Special
Value Fund - 270,668 341,553
Merrill Lynch Trust Company Merrill Lynch Retirement
Preservation Trust - 307,115 307,115
The Vanguard Group Vanguard 500 Index Fund 1,062,656 - 1,062,656
The Vanguard Group Vanguard 500 Index Fund - 143,233 133,365
The Vanguard Group Vanguard International
Growth Fund 195,821 - 195,821
The Vanguard Group Vanguard International
Growth Fund - 38,046 38,983
The Vanguard Group Vanguard Prime Money
Market Fund 719,946 - 719,946
The Vanguard Group Vanguard Prime Money
Market Fund - 62,771 62,771
The Vanguard Group Vanguard PRIMECAP Fund 707,617 - 707,617
The Vanguard Group Vanguard PRIMECAP Fund - 101,692 99,728
The Vanguard Group Vanguard Total Bond
Market Index 241,544 - 241,544
The Vanguard Group Vanguard Total Bond
Market Index - 37,958 37,252
The Vanguard Group Vanguard Wellington Fund 542,244 - 542,244
The Vanguard Group Vanguard Wellington Fund - 73,914 73,397
The Vanguard Group Vanguard Windsor Fund 656,613 - 656,613
The Vanguard Group Vanguard Windsor Fund - 124,665 142,716
The Vanguard Group Protection One Common
Stock Fund 274,345 - 274,345
The Vanguard Group Protection One Common
Stock Fund - 671 718
Western Resources, Inc. Western Resources Stock
Fund 194,884 - 194,884
Western Resources, Inc. Western Resources Stock
Fund - 45,266 42,108
Columns (e) Lease Rental and (f) Expense Incurred with
Transaction are not applicable to this Plan and have been omitted
accordingly.
PROTECTION ONE EMPLOYEE SAVINGS PLAN
(formerly Protection One Employee Savings Plan)
LINE 27d - SUPPLEMENTAL SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
EIN: 93-1064579
PLAN #: 001
(a) (h) (i)
Net
Identity of Party Current Value of Asset Gain/
Involved on Transaction Date (Loss)
INDIVIDUAL TRANSACTIONS:
Merrill Lynch Trust Company $ 623,740 $(107,817)
Merrill Lynch Trust Company 337,555 (40,300)
Merrill Lynch Trust Company 390,991 (7,313)
Merrill Lynch Trust Company 300,396 (68,685)
SERIES OF TRANSACTIONS:
Merrill Lynch Trust Company 131,688 -
Merrill Lynch Trust Company 439,421 (4,581)
Merrill Lynch Trust Company 106,352 -
Merrill Lynch Trust Company 335,168 (41,922)
Merrill Lynch Trust Company 191,469 -
Merrill Lynch Trust Company 593,011 (110,575)
Merrill Lynch Trust Company 94,552 -
Merrill Lynch Trust Company 270,668 (70,885)
Merrill Lynch Trust Company 307,115 -
The Vanguard Group 1,062,656 -
The Vanguard Group 143,233 9,868
The Vanguard Group 195,821 -
The Vanguard Group 38,046 (937)
The Vanguard Group 719,946 -
The Vanguard Group 62,771 -
The Vanguard Group 707,617 -
The Vanguard Group 101,692 1,964
The Vanguard Group 241,544 -
The Vanguard Group 37,958 706
The Vanguard Group 542,244 -
The Vanguard Group 73,914 517
The Vanguard Group 656,613 -
The Vanguard Group 124,665 (18,051)
The Vanguard Group 274,345 -
The Vanguard Group 671 (47)
The Vanguard Group 194,884 -
The Vanguard Group 45,266 3,158
This supplemental schedule lists individual and series of
transactions in excess of 5% of the fair market value of Plan
assets at the beginning of the year as required by the Department
of Labor Rules and Regulations for Reporting and Disclosure.
PROTECTION ONE 401(K) PLAN
(formerly Protection One Employee Savings Plan)
LINE 27e - SUPPLEMENTAL SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
Amount Amount
of of
Identity of Party Description of Transaction Loan Interest
Involved
Protection One Deemed loan to the Company
Alarm Monitoring, dated June 23, 1998, maturity $28,395 $71
Inc. July 6, 1998, interest rate
6%
PROTECTION ONE 401(K) PLAN
(formerly Protection One Employee Savings Plan)
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:
Signature Title Date
/s/ John E. Mack III Chief Executive Officer June 30, 1999
/s/ Patrick L. Sumner Member June 30, 1999
PROTECTION ONE 401(K) PLAN
(formerly Protection One Employee Savings Plan)
EXHIBIT INDEX
Exhibit
Number Description of Documents Page
23 Consent of Independent Public Accountants
(filed electronically)