SAI to close three centrals

Cost savings expected from the move
Tuesday, January 1, 2002

ARLINGTON HEIGHTS, Ill.-In a move that will provide cost savings and allow the company to embark on the first phase of a massive technological upgrade, Security Associates International announced in December that it would close three of its central stations and switch the majority of its accounts to two of its newer central stations.

The consolidation will mean the closing of central stations in Seattle, Dallas and Cleveland and the loss of about 80 full-time operators, said Ray Gross, SAI's chief executive officer. Equipment from the central stations will be moved from those locations to SAI's central station at its corporate headquarters here as well as to another facility in Pompano Beach, Fla. In all, about 150 employees will be affected by the consolidations, but relocation packages have been offered to operators and supervisors, he said.

Company officials have not yet decided on the fate of another central station in Utah, which monitors primarily the accounts of one large dealer, Gross said. The migration of accounts to the two central stations should be completed by the end of March.

The migration of the accounts to the company's consolidated central station network is the first phase of the company's overall strategy to strengthen its offering to dealers, Gross said. The company is also beginning an upgrade of its IT systems that will eventually allow dealers real-time access to information about customer accounts, everything a "dealer would have if they had a monitoring station in their back office," Gross said. The company will also post its own "report card" of how quickly and efficiently it responds to events on the dealer-accessible network, Gross said.

"Additional phases will create opportunities for dealers to have additional revenue generating opportunities, and let dealers know when customer have events, such as low batteries," Gross said. "Then the customer and the dealer will make arrangements for service calls."

Although the consolidation to two centrals will improve the company's expense run rate, Gross said the company is sinking a "few million" dollars into the technological upgrades. This stems from funds the company garnered last summer through the acquisition of Security Village and a $5-million infusion from Equity Group Investments.

"We operate on an elaborate, well-constructed technological network, butwe're redoing the IT network that carries our signals," Gross said. "So what we have today works, but it really is not what we believe will be best positioned for any monitoring business in the future."

SAI's new management team ­ a team led by Gross was appointed by the company's board of directors this summer ­ is apparently carrying out the wishes of shareholders to make the company more cost-efficient, said according to Joe Freeman of J.P. Freeman Co.
Freeman said it remains to be seen whether SAI is on the right track.

"The industry is in such a state of terrific flux in the monitoring field," he said. "Whether the old traditional ways of monitoring can be as profitable in the long term as they have in the past is yet undetermined because of so many technology changes that we're looking at."