The ratings on Protection One Alarm Monitoring Inc. reflect a highly leveraged financial profile, subpar operating performance, and near-term liquidity concerns, which are partially offset by the predictability of the recurring revenue stream associated with the security-alarm monitoring business. Topeka, Kan.-based Protection One is the second-largest security-alarm monitoring company in the nation. Revenues declined for the 10th straight quarter, ended June 2002, for a 12-month decline of more than 17%, hampering profitability and operating performance. Efforts to streamline operations by consolidating customer service facilities and rationalizing staff have reduced costs, but not fast enough to offset the decline in revenues. Operating performance has been weak, as new management struggles to stem high customer-attrition rates and reduce operating costs while revamping
