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SEC Questions Security Company

August 01, 2000|From Reuters

Protection One Inc. on Monday said it was cooperating with the Securities and Exchange Commission, which has concerns the Culver City-based company may have inflated its earnings after acquiring Westinghouse Security Systems in 1997. The case has been referred to the agency's enforcement section.

The SEC's Division of Corporation Finance "advised us orally that this matter had been referred to the SEC Enforcement Division for consideration," the company said in the SEC filing late on Friday. "We have not been contacted by the staff of the Division of Enforcement."

As a result, Protection One, which provides monitoring and related security services to about 1.2 million residential and commercial subscribers in North America, faces possible court action or administrative action by the SEC.

A company spokeswoman said the company has not inflated its earnings and said the firm disagrees with the SEC's finding of errors in past financial statements.

Protection One, which is 85% owned by Kansas utility Western Resources Inc., said the SEC was questioning its accounting practices regarding the acquisitions of Network Multifamily and Westinghouse Security Systems.

Making revisions the SEC is seeking "would result in a material adverse effect on our financial position and results of operations," the company said.

Protection One said it restated its financial statements for 1998 and for quarters ended March 31, 1999, and June 30, 1999. It said it will fully cooperate with the SEC and has requested a meeting with the SEC's Division of Corporation Finance.

Shares of Protection One fell 25 cents to close at $2 on the New York Stock Exchange.

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