Protection One restates earnings for two quarters
TOPEKA, Kan. - An error in applying a new accounting standard to Protection One's financial results has caused the company to restate its first and second quarter earnings results, but officials said the restatement will have no impact on the company's ability to meet its debt covenants.
Protection One's new accounting firm, Deloitte & Touche, whom the company hired in May to replace Arthur Andersen LLP, noticed errors had been made in applying SFAS 142 to the first quarter financials when reviewing the security company's 2002 results. That accounting principle changes the way companies record the amortization of goodwill.
"This has nothing to do with a deterioration in the value of our business," said Darius Nevin, chief financial officer of the Protection One. "It's strictly an error in applying SFAS 142."
The restatement will result in the recording of a non-cash impairment charge of $105.9 million or $1.08 per stabilizing recurring revenue, reducing debt and lowering attrition.
"Our attrition continues to go downÃ¢â‚¬Â¦and our debt is being reduced," Ginsburg said. "Attrition is a good indicator of how the company is doing."