Recurring revenue business model Favorable industry trends Highly leveraged financial profile Subpar operating performance Weak liquidity position Ratings on Protection One Alarm Monitoring Inc. are based on 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 modestly improved in the first half of 2002 from weak levels in 2001, as new management began to stem high customer-attrition rates and reduce operating costs while revamping its customer-acquisition strategy. Still, sales sequentially declined over the 10 consecutive quarters ended June 2002, as the subscriber base declined, hampering profitability and credit measures.
