- imposing fines on alarm customers for
false alarms,
- imposing limitations on the number
of times the police will respond to alarms at a particular location
after a specified number of false alarms,
- requiring further verification of an
alarm signal before the police will respond, and
- subjecting alarm monitoring companies
to fines or penalties for transmitting false alarms.
Monitored services operations are subject to a variety of other
laws, regulations and licensing requirements of both domestic and
foreign federal, state and local authorities. In certain jurisdictions,
Protection One and Protection One Europe are required to obtain
licenses or permits to comply with standards governing employee
selection and training and to meet certain standards in the conduct
of their business.
The alarm industry is also subject to requirements imposed by various
insurance, approval, listing and standards organizations. Depending
upon the type of customer served, the type of security service provided
and the requirements of the applicable local governmental jurisdiction,
adherence to the requirements and standards of such organizations
is mandatory in some instances and voluntary in others.
Protection One’s advertising and sales practices are regulated
in the United States by both the Federal Trade Commission and state
consumer protection laws. In addition, certain administrative requirements
and laws of the jurisdictions in which Protection One and Protection
One Europe operate also regulate such practices. Such laws and regulations
include restrictions on the manner in which the sale of security
alarm systems is promoted and the obligation to provide purchasers
of its alarm systems with certain rescission rights.
The alarm monitoring business utilizes wired and wireless telephones
and radio frequencies to transmit alarm signals. The cost of telephone
lines and the type of equipment, which may be used in telephone
line transmission, are currently regulated by both federal and state
governments. The Federal Communications Commission and state public
utilities commissions regulate the operation and utilization of
radio frequencies. In addition, the laws of certain foreign jurisdictions
in which Protection One Europe operates regulate the telephone communications
with the local authorities.
Risk Management
The nature of providing monitored services potentially exposes
Protection One and Protection One Europe
to greater risks of liability for employee
acts or omissions, or system failure,
than may be inherent in other businesses.
Substantially all alarm monitoring agreements,
and other agreements, pursuant to which
products and services are sold, contain
provisions limiting liability to customers
in an attempt to
Protection One and Protection One Europe carry insurance of various
types, including general liability and
errors and
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omissions insurance
in amounts considered adequate and customary
for the industry and business. Loss
experience, and the loss experiences
at other security services companies,
may affect the availability and cost
of such insurance. Some insurance policies,
and the laws of some states and countries,
may limit or prohibit insurance coverage
for punitive or certain other types
of damages or liability arising from
gross negligence.
SEGMENT INFORMATION
Financial information with respect to
business segments is set forth in Note 32 of the Notes to Consolidated
Financial Statements, “Segments of Business.”
GEOGRAPHIC INFORMATION
Geographic information is set forth in
Note 32 of the Notes to Consolidated Financial Statements, “Segments
of Business.”
EMPLOYEES
As of February 28, 2003, we had approximately
5,500 employees, including 1,900 utility employees and 3,600 employees
of Protection One and Protection One Europe. Our current contract
with the International Brotherhood of Electrical Workers extends
through June 30, 2003. The contract covered approximately 1,100
utility employees as of February 28, 2003. We are currently discussing
modifications to our existing contract with union representatives
and expect these discussions to result in an agreement. We anticipate
that formal bargaining will begin in April 2003 if these discussions
are unsuccessful.
ACCESS TO COMPANY INFORMATION
We electronically file our Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K with the SEC. The public may read and copy any of the
reports that are filed with the SEC at the SEC’s Public Reference
Room at 450 Fifth Street, NW, Washington, D.C. 20549. The public
may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site at www.sec.gov that contains reports, proxy and information
statements and other information regarding issuers that file electronically.
We make available, free of charge, through
our website and by responding to requests addressed to our investor
relations department, our Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. These reports
are available as soon as reasonably practicable after such material
is electronically filed with or furnished to the SEC. Our website
address is www.wr.com. The information contained on our website
is not part of this document.
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