The ratings on Protection One Alarm Monitoring Inc. take into consideration a highly leveraged financial profile and the management challenge of improving subpar operating performance. These concerns are only partially offset by the stability and predictability associated with the security alarm monitoring business, which yields a recurring revenue stream. Operating performance deteriorated in 2001 as new management struggled to stem high customer attrition rates and reduce operating costs while revamping its customer-acquisition strategy. Revenues have declined nearly 15% over the past year as the subscriber base declined, hampering profitability and credit measures. The company's annualized customer attrition rate for the first nine months of 2001 remained high at nearly 16%. Efforts to streamline operations through customer service facility consolidation and
