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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): APRIL 1, 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.)
PROTECTION ONE ALARM MONITORING, INC.
(Exact name of Registrant as specified in charter)
DELAWARE 33-73002-1 93-1065479
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
600 CORPORATE POINTE, 12TH FLOOR 90230
CULVER CITY, CALIFORNIA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (310) 338-6930
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ITEM 5. OTHER EVENTS.
On April 1, 1999, Protection One, Inc. announced 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.
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
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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.
A complete copy of the press release is attached hereto as
Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Text of press release dated April 1, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
each registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROTECTION ONE, INC.
(Registrant)
Date: April 1, 1999 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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PROTECTION ONE ALARM MONITORING, INC.
(Registrant)
Date: April 1, 1999 By: /s/ TOM K. RANKIN
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Name: Tom K. Rankin
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Title: President
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EXHIBIT INDEX
Exhibit Description
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99.1 Press Release dated April 1, 1999.