The ratings reflect Protection One's (PONE's) second-tier position in the highly competitive and fragmented U.S. security alarm monitoring industry and its highly leveraged financial profile. These are partly offset by its largely recurring revenue base, strong industry growth prospects, and the expectation for continued positive free operating cash flow generation, given management's track record of stabilizing revenue. PONE's reported consolidated revenues were $324 million for the 12 months ended Sept 30, 2007, over 90% was from its monitoring and maintenance contracts, which are recurring. Although PONE is No. 3 in the industry, ADT Security Services, Inc. is estimated to be over 10x larger in revenues. Unlike competitors, PONE relies primarily on its internal sales force and a marketing partnership with
