UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_______________
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999 Commission file number: 1-5529
______________
Burns International Services Corporation
(Exact name of registrant as specified in its charter)
Delaware 13-3408028
(State of incorporation) (I.R.S. Employer
Identification No.)
200 South Michigan Avenue
Chicago, Illinois 60604
(312) 322-8500
(Address and telephone number of principal executive offices)
__________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, par value $.01 per share New York Stock Exchange
9-5/8% Senior Subordinated Notes due 2007 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
___________________
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock of the registrant held by
stockholders, not including voting stock held by directors and executive
officers of the registrant and affiliates of Merrill Lynch & Co., Inc. (the
exclusion of such stock shall not be deemed an admission by the registrant that
such person is an affiliate of the registrant), on March 6, 2000 was
approximately $182.9 million. As of March 6, 2000, the registrant had 19,910,642
shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated herein by reference into
the Part of the Form 10-K indicated.
Document Part of Form 10-K into which
-------- ----------------------------
incorporated
------------
The Company's annual report to stockholders Parts I, II and IV
for the year ended December 31, 1999
The Company's proxy statement for the 2000 Part III
annual meeting of stockholders
BURNS INTERNATIONAL SERVICES CORPORATION
FORM 10-K
YEAR ENDED DECEMBER 31, 1999
INDEX
Item Number Page
- ----------- ----
PART I
1. Business 3
2. Properties 7
3. Legal Proceedings 7
4. Submission of Matters to a Vote of Security Holders 9
PART II
5. Market for the Registrant's Common Stock
and Related Stockholder Matters 10
6. Selected Financial Data 10
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
7A. Quantitative and Qualitative Disclosures
About Market Risk 11
8. Financial Statements and Supplementary Data 11
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 11
PART III
10. Directors and Executive Officers of the Registrant 12
11. Executive Compensation 13
12. Security Ownership of Certain Beneficial
Owners and Management 13
13. Certain Relationships and Related Transactions 13
PART IV
14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 14
PART I
Item 1. Business
The Company is North America's premier supplier of contract guard and
related security services. As a result of its significant market presence,
breadth of product offerings and strategic alliances, the Company is well
positioned to service local, multi-location and national accounts and provide
total security solutions to its customers.
The Company provides guard services, as well as background screening,
contract employment and investigative services, to approximately 14,000 clients
in the United States, Canada, England, Scotland, Ireland and Colombia. The
Company services these clients with approximately 75,000 employees in
approximately 320 offices under the Burns, Globe and other service marks.
The Company supplies contract uniformed and plainclothes security officers,
who may or may not be armed, to perform a wide variety of tasks. These security
officers patrol and monitor commercial, financial, industrial, residential and
governmental facilities providing deterrence against crime and breach of
governmental security regulations and detection of fire, accidents and other
casualties. The security officers also monitor electronic systems and control
public and employee access to facilities. Specialized assignments include
nuclear and conventional electric power plant security, pre-departure screening
of passengers and luggage at airports, access control at health care and
educational facilities, background screening, investigative services and
contract staffing services.
The Company employs approximately 68,000 security officers, 4,000 employees
in the temporary employee leasing operation and 3,000 executive and
administrative employees. Domestic security officers undergo a standardized pre-
employment screening program that features mandatory drug screening, criminal
record checks at the county and municipal court level and verification of
consumer credit reports, social security information and drivers' license
records. Security officers in foreign jurisdictions are screened according to
local requirements. Security officers receive classroom orientation and field
training in safety, first aid and security techniques and in the handling of
specific problems applicable to particular industries or situations.
The Company markets guard services through approximately 200 sales
representatives nationwide and in Canada, England, Scotland, Ireland and
Colombia. Sales personnel operate out of local branch and sales offices. The
Company also bids on contracts with governmental agencies.
Physical security service contracts generally provide for such services on
a continuing basis and generally are terminable by either party upon 30 to 60
days notice. Charges for services are negotiated with customers and are based
upon payment of a specified amount per service hour. Typically, such charges
are adjusted for any change in any law, ruling or collective bargaining
agreement causing a change in work hours, wage rates, working conditions or
other costs. Investigative services are generally provided under specific
arrangements, with charges varying according to the nature of the assignment.
3
Financial information concerning the Company's segments, and information
concerning the revenues and identifiable assets of the Company is incorporated
herein by reference to Note 11 of the Notes to Consolidated Financial
Statements.
Loomis, Fargo & Co.
In January 1997, the Company's armored transport unit contributed
substantially all of its assets and assigned certain of its liabilities to
Loomis, Fargo & Co. ("Loomis Fargo"), a newly established corporation, in
exchange for 49% of Loomis Fargo's outstanding common stock and a cash payment
of approximately $105 million (net of transaction costs, but subject to certain
adjustments).
The Company and the former Loomis shareholders entered into a stockholders
agreement providing that Loomis Fargo's board of directors consists of seven
directors: three directors nominated by the Company; three directors nominated
by the former Loomis shareholders; and the Loomis Fargo chief executive officer.
The number of directors that may be designated pursuant to the stockholder
agreement may be adjusted if either the Company or the former Loomis
shareholders reduce their ownership stake in Loomis Fargo. The stockholder
agreement provides that the vote of five of the seven directors is required for
Loomis Fargo to engage in certain specified activities.
In addition, the stockholder agreement prohibits the transfer of Loomis
Fargo common stock by either party for three years following the closing without
the prior consent of the other party. After such period Loomis Fargo common
stock may be transferred only in accordance with the provisions of the
stockholder agreement, which include rights of first refusal and co-sale rights.
The current stockholders also have certain preemptive and registration rights
with respect to equity issuances by Loomis Fargo.
Loomis Fargo operates in all 50 states and Puerto Rico to provide armored
ground transportation services, ATM services and cash vault and related services
to financial institutions and commercial customers.
Employees
The Company's business is labor intensive and, accordingly, is affected by
the availability of qualified personnel and the cost of labor. Although the
protective services industry is characterized generally by high turnover, the
Company believes its experience compares favorably with that of the industry.
The Company has not experienced any material difficulty in employing suitable
numbers of qualified security guards and other employees. The Company considers
its relations with its employees to be generally satisfactory.
The Company is a party to collective bargaining agreements with various
local unions covering approximately 5,200 employees. The collective bargaining
agreements expire at various dates from 2000 to 2005 and relate, among other
things, to wages, hours and conditions of employment. Under section 9(b)(3) of
the National Labor Relations Act, if a union admits to membership, or is
affiliated directly or indirectly with a union that admits to membership of
4
employees other than guards, an employer of guards can refuse to bargain with
such union and such union cannot be certified as the representative of a unit of
guards. As a result, the Company has in many instances refused to recognize or
withdrawn recognition of labor organizations that admit as members employees
other than guards.
Competition
The Company competes with major national and international firms and
numerous smaller regional and local companies providing similar services.
Competition in the security guard industry is based on price in relation to the
quality of service, the scope of services performed, the extent and quality of
guard supervision, recruiting and training and name recognition.
Regulation
Due to the nature of the Company's business, its operations are subject to
a variety of federal, state, county and municipal laws, regulations and
licensing requirements. In addition, many states have laws requiring training
and registration of security officers, regulating the use of badges,
identification cards and uniforms and imposing minimum bond surety and insurance
requirements. The Company believes that its operations are in substantial
compliance with those laws, regulations and requirements. Federal legislation
has been introduced relating to security officer qualification and training.
Similar legislation is pending in several states. The Company generally supports
the creation of standards for the industry and does not expect that the
establishment of such standards will have a material effect on its physical
security services operations.
From time to time, in the ordinary course of business, the Company is
subjected to penalties or fines as the result of licensing irregularities or the
misconduct of one or more of its agents or employees. In addition, under
principles of common law, the Company can generally be held liable for acts or
omissions of its agents or employees performed in the course and scope of their
employment. In addition, some states have statutes that expressly impose on the
Company legal responsibility for the conduct of its employees.
Risk Management
The nature of the services provided by the Company exposes it to
potentially greater risks of liability for employee acts, injuries (including
workers' compensation claims) or omissions than may be posed by other service
businesses.
The Company generally obtains customer indemnification or liability
limitations in its contracts to mitigate this risk exposure. The Company carries
insurance of various types, including workers' compensation, automobile and
general liability coverage. These policies include deductibles per occurrence
for which the Company is self-insured. The Company obtains its insurance at
rates and upon terms negotiated periodically with various underwriters. The loss
experience of the Company and, to some extent, other protective services
companies affects premium rates charged to the Company. The Company does not
believe that limitations on, or the uncertainty of, insurance coverage for
punitive damages in certain states in which it operates is
5
likely to be material, based upon the Company's prior experience with punitive
damages claims. The Company also attempts to manage its risk liability through
analysis of customer facilities, customer profiles and employee screening,
training, supervision and evaluation.
In 1999, the Company combined efforts with a major insurance carrier and
transferred responsibility for the strategic management and administration of
certain of the Company's casualty risks to a newly formed subsidiary of the
Company. The Company remains liable for the casualty risk programs should the
new subsidiary be unable to satisfy its obligations.
Discontinued Operations
On May 29, 1998, the Company sold its electronic security services
business, Wells Fargo Alarm Services ("Alarm"), to ADT Security Services, a
subsidiary of Tyco International, Ltd. ("ADT"), for approximately $425 million
plus the assumption of approximately $6 million of debt by the buyer. The
Company recorded a net after-tax gain of $42.5 million for the transaction in
the second quarter. As a result of the sale, the division's results have been
restated and reflected as discontinued operations for all periods presented.
Through Alarm, the Company provided integrated electronic security systems,
including intrusion and fire detection, sprinkler and critical industrial
process monitoring, closed circuit television and access control. Alarm
designed, installed, monitored and serviced electronic security systems located
on the premises of commercial and residential customers in the United States and
Canada under the Wells Fargo(R) and Pony Express(R) service marks. Alarm also
provided, under the Bel-Air Patrol trade name, an integrated guard, patrol and
alarm service to customers in Bel-Air, Beverly Hills and other Los Angeles
communities. The unit had approximately 2,200 employees. The Company and ADT
have a strategic alliance agreement for the furnishing of electronic and
physical security services to their respective clients.
On May 29, 1998, the Company sold its courier services business, Pony
Express Delivery Services, Inc. In the first quarter of 1998, the Company
recorded a $15.9 million after-tax charge to reduce its investment in this
business and to provide for costs associated with its disposition. The Company
did not record a gain or loss as a result of completing the sale.
Since September 1996, the Company had treated its courier services unit as
a discontinued operation. The unit transported time-sensitive packages for
commercial businesses and non-negotiable financial documents for Federal Reserve
banks and financial institutions in 36 states under the Pony Express(R) service
mark. The unit employed approximately 3,600 persons and used a fleet of
approximately 3,000 vehicles, many of which were vehicles provided by the unit's
employees. The courier services unit operated both as a common and contract
carrier and used a combination of tariffs and shipping contracts to control the
terms, conditions and rates applicable to the transportation of shipments. Rates
were dependent upon many factors, including the weight and type of the shipped
item, the distance and urgency of the shipment and the geographical location.
6
Trademarks and Patents
The Company maintains several service marks of importance to the Company's
business. The Company believes that its rights in these marks are adequately
protected and of unlimited duration. While the Company has patents it considers
to be important to the overall conduct of its business, it does not consider any
particular patent, or group of related patents, essential to its operations.
For both the United States and foreign patents, their expiration, individually
or in the aggregate, is not expected to have any material effect on the
Company's financial condition or results of operations.
The Company entered into an agreement with BorgWarner Inc. ("Automotive")
effective July 31, 1998 whereby the Company sold its rights to the "Borg-Warner"
name and mark in the security field. Automotive granted the Company an
exclusive, royalty-free license to use the "Borg Warner" name and mark in the
security field for a four-year period.
On July 2, 1999, shareholder approval was received to change the Company's
corporate name to Burns International Services Corporation. The change is part
of an overall strategy, announced May 4, 1999, to unify under one brand name the
broad range of services offered by the Company. The brand unification should
eliminate existing market confusion with Wells Fargo & Company ("Wells Fargo")
and Borg-Warner Automotive, Inc.
As part of its brand unification strategy, the Company entered into an
agreement on March 30, 1999 (the "Agreement") with Wells Fargo to relinquish a
royalty-free license to the Wells Fargo name in the security field. In addition,
Wells Fargo granted the Company a royalty-free license to use the Wells Fargo
name and mark for a two-year period commencing on the date of the Agreement.
Under the Agreement, Wells Fargo has reimbursed the Company for costs associated
with the brand unification.
Item 2. Properties
The Company and its subsidiaries maintain general offices in various cities
in the United States, Canada, England, Scotland, Ireland and Colombia. At
December 31, 1999, the Company had leased and occupied approximately 320 branch
and satellite offices. The Company owns and occupies an office building in
Parsippany, New Jersey, with approximately 160,000 square feet. The building is
used for executive, administrative and support functions. The Company leases
approximately 57,000 square feet of office space in Chicago, Illinois for its
executive offices. However, it currently subleases 23,000 square feet of such
office space to third parties. The Company believes that its properties are in
good condition and are adequate to meet its current and reasonably anticipated
needs.
Item 3. Legal Proceedings
The Company is presently, and is from time to time, subject to claims and
suits arising in the ordinary course of its business. In certain of such
actions, plaintiffs request punitive or other
7
damages that may not be covered by insurance. In addition, the Company has been
subject to claims and suits relating to certain discontinued operations. The
most important of these legal proceedings are discussed below. The Company
believes that the various asserted claims and litigation in which it is
currently involved will not materially affect its financial position or future
operating results, although no assurance can be given with respect to the
ultimate outcome for any such claim or litigation. The Company believes that it
has established adequate provisions for litigation liabilities in its financial
statements in accordance with generally accepted accounting principles. These
provisions include both legal fees and possible outcomes of legal proceedings
(including the environmental matters discussed below).
Centaur Litigation
On April 28, 1999, the Mission Trust and the Company settled a lawsuit
against the Company related to the Company's discontinued property and casualty
insurance subsidiary, Centaur Insurance Company, which ceased writing insurance
in 1984. The suit had alleged damages in excess of $100 million against the
Company due to Centaur's failure to satisfy its reinsurance obligations to
Mission. As part of the settlement, the Company paid the Mission Trust $4
million in the second quarter of 1999, and agreed to pay one-third of any future
dividend or other distribution that may be paid to the Company after
rehabilitation of Centaur.
Environmental Proceedings
The Company and certain of its current and former subsidiaries have been
identified by the U.S. Environmental Protection Agency and certain state
environmental agencies as potentially responsible parties ("PRPs") at several
hazardous waste disposal sites under the Comprehensive Environmental Response,
Compensation and Liability Act ("Superfund") and equivalent state laws and, as
such, may be liable for the cost of cleanup and other remedial activities at
these sites. Responsibility for cleanup and other remedial activities at a
Superfund site is typically shared among PRPs based on an allocation formula.
The Company believes that none of these matters individually or in the aggregate
will have a material adverse effect on its financial position or future
operating results, generally either because the maximum potential liability at a
site is not large or because liability will be shared with other PRPs, although
no assurance can be given with respect to the ultimate outcome of any such
liability. Based on its estimate of allocations of liability among PRPs, the
probability that other PRPs, many of whom are large, solvent public companies,
will fully pay the costs allocated to them, currently available information
concerning the scope of contamination at such sites, estimated remediation costs
at such sites, indemnification obligations in favor of the Company from the
current owners of certain sold or discontinued operations, estimated legal fees
and other factors, the Company has made provisions for indicated environmental
liabilities in the aggregate amount of approximately $2 million. Additionally,
the Company will be indemnified by its former subsidiary, BorgWarner Inc.,
against certain future costs relating to environmental liabilities associated
with certain former automotive operations.
Loomis, Fargo Indemnification Claims
In November and December, 1998, Loomis, Fargo & Company ("Loomis, Fargo")
made various claims against the Company for indemnification, under the
Contribution Agreement dated
8
November 28, 1996 under which Loomis, Fargo was formed, for certain cargo losses
and environmental losses. The Company and Loomis, Fargo resolved all such
matters in 1999 without a material adverse effect on the Company.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to the security holders of the Company
during the fourth quarter of 1999.
9
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters
As of March 6, 2000, there were approximately 188 holders of record of
Common Stock.
The Company has neither paid nor declared any cash dividends on its Common
Stock during the last two years. The payment of dividends by the Company is
prohibited under the terms of the Company's indebtedness. The Company currently
intends to retain earnings for acquisitions, working capital, capital
expenditures, general corporate purposes and reduction of outstanding
indebtedness. Accordingly, the Company does not expect to be able to nor does it
expect to pay cash dividends in the foreseeable future.
High and low sales prices (as reported on the New York Stock Exchange
composite tape) for the Common Stock for each quarter during 1998 and 1999 were:
Quarter Ended High Low
------------------------------- ---------------------- -------------------
1998 March 31 $19 7/16 $15 5/16
June 30 24 3/4 17 7/8
September 30 23 1/16 13 1/4
December 31 20 1/16 13 1/16
1999 March 31 $20 11/16 $14 11/16
June 30 22 15 3/8
September 30 21 1/2 12 5/16
December 31 16 1/16 8 1/4
Item 6. Selected Financial Data
The selected financial data for the five years ended December 31, 1999,
with respect to the following line items shown under the "Consolidated
Statistical Review" on page 21 of the Annual Report, are incorporated herein by
reference and made a part of this Report: net service revenues; earnings from
continuing operations; earnings from continuing operations per share; total
assets; total debt; and, a discussion of dispositions of business operations
that affect the comparability of information between years.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Management's Discussion and Analysis of Financial Condition and Results
of Operations (set forth on pages 22 through 25) in the Annual Report are
incorporated herein by reference and made a part of this Report.
10
An anticipated amendment to certain financial covenants in the Company's
senior credit facility was discussed in Management's Discussion and Analysis of
Financial Condition and Results of Operations. The Company completed the
amendment, dated March 3, 2000 and effective March 15, 2000, to maintain
continued borrowing capacity.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Disclosures about market risk are contained within pages 24 and 25 of the
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Annual Report, and are incorporated herein by reference and
made a part of this report.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements (including the notes thereto) of the
Company (set forth on pages 26 through 40) in the Annual Report are incorporated
herein by reference and made a part of this report. Supplementary financial
information regarding quarterly results of operations (unaudited) for the years
ended December 31, 1999 and 1998 is set forth in Note 17 of the Notes to
Consolidated Financial Statements. For a list of financial statements and
schedules filed as part of this report, see Item 14.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Inapplicable.
11
PART III
Item 10. Directors and Executive Officers of the Registrant
Information with respect to directors and nominees for election as
directors of the Company is incorporated herein by reference to the information
under the caption "Election of Directors" on pages 2 through 5 of the Company's
Proxy Statement for the 2000 Annual Meeting of Stockholders. Information
concerning compliance with Section 16(a) of the Exchange Act is incorporated by
reference to the information under the caption "Section 16(a) Beneficial
Ownership Reporting Compliance" on page 8 of the Company's Proxy Statement for
the 2000 Annual Meeting of Stockholders.
Executive Officers
Set forth below are the names, ages, positions and certain other
information concerning the executive officers of the Company as of March 6,
2000:
Name Age Position With Company
John A. Edwardson 50 Chairman of the Board, President and Chief Executive Officer
John D. O'Brien 57 Senior Vice President
James M. Froisland 49 Vice President and Chief Financial Officer
Robert E. T. Lackey 51 Vice President, General Counsel and Corporate Secretary
James F. McNulty 50 Vice President and President, Total Security Solutions
Nancy E. Kittle 47 Vice President, Human Resources
Mr. Edwardson has been Chairman of the Board since June 1999 and Chief
Executive Officer and President since March 1999. Mr. Edwardson was President
from 1994 to 1998 and Chief Operating Officer from 1995 to 1998 of United
Airlines, Inc. and was Executive Vice President and Chief Financial Officer from
1991 to 1994 of Ameritech Corp. Mr. Edwardson is also a director of Household
International and Focal Communications Corporation.
Mr. O'Brien has been Senior Vice President of the Company since 1993 and
was Vice President of the Company from 1987 to 1993. Mr. O'Brien is also
President of Burns International Security Services Corporation and a director of
Loomis, Fargo & Co.
Mr. Froisland joined the Company in February 2000 as Vice President and
Chief Financial Officer. Prior to that, and starting in 1996, Mr. Froisland was
Vice President, Corporate Controller of Anixter International, Inc. He served as
Vice President, Corporate Controller for Budget Rent A Car Corporation from 1992
to 1996, and Chief Financial Officer of Allsteel, Inc. from 1990 to 1992.
Mr. Lackey has been Vice President, General Counsel and Secretary of the
Company since 1997 and was Vice President, General Counsel and Secretary of
Transamerica Commercial Finance Corp. from 1991 to 1995.
12
Mr. McNulty has been President of Burns International Total Security
Solutions since 1997, and was Executive Vice President of Burns International
Security Services Corporation from 1995 to 1997 and President, Burns
International Security Services North Central business unit from 1987 to 1995.
Ms. Kittle has been Vice President, Human Resources since 1996 and was
Senior Vice President, Human Resources for Forte Hotels, Inc. from 1991 to 1995.
Each of the executive officers named above was elected by the Board of
Directors to serve in the office indicated until his/her successor is elected
and qualified.
Item 11. Executive Compensation
Information with respect to compensation of executive officers and
directors of the Company is incorporated herein by reference to the information
under the captions "Executive Compensation" on pages 8 and 9, and "Compensation
of Directors" on pages 5 and 6, of the Company's Proxy Statement for the 2000
Annual Meeting of Stockholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information with respect to security ownership by persons known to the
Company to beneficially own more than five percent of the Company's common
stock, by directors and nominees for director of the Company and by all
directors and executive officers of the Company as a group is incorporated
herein by reference to the information under the caption "Stock Ownership" on
pages 6 through 8 of the Company's Proxy Statement for the 2000 Annual Meeting
of Stockholders.
Item 13. Certain Relationships and Related Transactions
Information with respect to certain relationships and related transactions
is incorporated herein by reference to the information under the caption
"Certain Relationships and Related Transactions" on page 19 of the Company's
Proxy Statement for the 2000 Annual Meeting of Stockholders.
13
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) The following consolidated financial statements of the registrant
and its consolidated subsidiaries, set forth on pages 26 through 40 of the
Annual Report, and the Independent Auditors' Report, set forth on page 41 of the
Annual Report, are incorporated herein by reference:
Consolidated Statement of Operations--three years ended December 31, 1999
Consolidated Balance Sheet--December 31, 1999 and 1998
Consolidated Statement of Cash Flows--three years ended December 31, 1999
Consolidated Statement of Shareholders' Equity--three years ended
December 31, 1999
Notes to Consolidated Financial Statements
(a)(2) The following report of independent auditors and financial statement
schedule of the registrant and its consolidated subsidiaries are included
herein:
Report of Deloitte & Touche LLP, independent auditors
Schedule II - Valuation and Qualifying Accounts
Certain schedules for which provisions are made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore have
been omitted.
(a)(3) The exhibits listed in the "Exhibit Index."
(b) Reports on Form 8-K:
The Company filed a Form 8-K on November 5, 1999, under Item 5, Other
Events, that reported the declaration of a dividend of preferred stock
purchase rights under a new Shareholder Rights Plan.
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BURNS INTERNATIONAL SERVICES CORPORATION
By /s/ John A. Edwardson
----------------------
John A. Edwardson
Chairman of the Board, Chief Executive Officer
and President
Date: March 27, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on this day of March 27, 2000:
Signature Title
- --------- -----
/s/ John A. Edwardson Chairman of the Board, Chief Executive
- --------------------- Officer and President and Director
John A. Edwardson (Principal Executive Officer)
/s/ Brian S. Cooper Treasurer
- ------------------- (Principal Financial and
Brian S. Cooper Accounting Officer)
/s/ James .J. Burke, Jr. Director
- ------------------------
James J. Burke, Jr.
/s/ Albert J. Fitzgibbons, III Director
- ------------------------------
Albert J. Fitzgibbons, III
/s/ Arthur F. Golden Director
- ------------------------------
Arthur F. Golden
/s/ Dale W. Lang Director
- ----------------
Dale W. Lang
/s/ Terry L. Lengfelder Director
- -----------------------
Terry L. Lengfelder
/s/ Robert A. McCabe Director
- --------------------
Robert A. McCabe
/s/ Andrew McNally, IV Director
- ----------------------
Andrew McNally IV
s/ Alexis P. Michas Director
- -------------------
Alexis P. Michas
/s/ H. Norman Schwarzkopf Director
- -------------------------
H. Norman Schwarzkopf
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Burns International Services Corporation
We have audited the consolidated financial statements of Burns International
Services Corporation and subsidiaries, ("the Company") as of December 31, 1999
and 1998, and for each of the three years in the period ended December 31, 1999,
and have issued our report thereon dated March 1, 2000; such consolidated
financial statements and report are included in your 1999 Annual Report to
Stockholders and are incorporated herein by reference. Our audits also included
the financial statement schedule of Burns International Services Corporation and
subsidiaries listed in Item 14 of this Annual Report on Form 10-K. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits. In our opinion,
the financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Chicago, Illinois
March 1, 2000
SCHEDULE II
BURNS INTERNATIONAL SERVICES CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
($ MILLIONS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------ ---------------- --------------------------------- ---------------- -----------------
Years Ended December 31,
Additions
----------------------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other Close of
Description of Period Expenses Accounts Deductions Period
---------------- -------------------- ------------ ------------- -----------------
1997
Allowance for Doubtful Accounts $5.4 $3.1 $0.4 $4.9 $4.0
==== ==== ==== ==== ====
1998
Allowance for Doubtful Accounts $4.0 $5.1 $0.3 $2.4 $7.0
==== ==== ==== ==== ====
1999
Allowance for Doubtful Accounts $7.0 $5.4 $0.1 $4.5 $8.0
==== ==== ==== ==== ====
The above table sets forth the valuation and qualifying accounts for the
previous three years. Previously reported amounts have been restated to reflect
the discontinued operations related to the May 29, 1998 sales of the Company's
electronic security unit and the Company's courier services unit.
EXHIBIT INDEX
Exhibit
Number Document Description
- ------- --------------------
3.1 Amended and Restated Certificate of Incorporation of the Company.
3.2 Amended and Restated Bylaws of the Company.
*4.1 Indenture dated as of May 3, 1993 by and between the Company and The
First National Bank of Chicago (incorporated by reference to Exhibit 4.1
to the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1993).
*4.2 Indenture dated as of March 24, 1997 by and between the Company and The
Bank of New York, as trustee (incorporated by reference to Exhibit 4.3
to Registration Statement No. 333-26573).
*4.3 Stockholder Rights Plan dated as of October 29, 1999 between the Company
and The Bank of New York, as Rights Agent (incorporated by reference to
Exhibit 1 to the Form 8-A filed November 5, 1999).
+*10.1 Borg-Warner Corporation Management Stock Option Plan, as amended through
January 19, 1993 (incorporated by reference to Exhibit 10.7 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1988).
+*10.2 Borg-Warner Security Corporation Directors Stock Appreciation Rights
Plan (incorporated by reference to Exhibit 10.5 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992).
+*10.3 Borg-Warner Security Corporation 1993 Stock Incentive Plan, conformed to
include amendments thereto (incorporated by reference to Exhibit 10.3 to
the Company's Annual Report on Form 10-K for the year ended December 31,
1997).
+*10.4 Borg-Warner Security Corporation Performance Share Plan, conformed to
include amendments thereto (incorporated by reference to Exhibit 10.4 to
the Company's Annual Report on Form 10-K for the year ended December 31,
1997).
+*10.5 Borg-Warner Security Corporation Executive Officer Incentive Plan.
(incorporated by reference to Exhibit 10.5 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997).
+*10.6 Noncompetition Agreement dated as of September 5, 1997 by and between
the Company and J.J. Adorjan. (incorporated by reference to Exhibit 10.8
to the Company's Annual Report on Form 10-K for the year ended December
31, 1997).
+*10.7 Employment Agreement dated September 5, 1997 for J.D. O'Brien
(incorporated by
reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997).
+*10.8 Noncompetition Agreement dated as of September 5, 1997 by and between
the Company and J.D. O'Brien (incorporated by reference to Exhibit 10.10
to the Company's Annual Report on Form 10-K for the year ended December
31, 1997)
+*10.9 Employment Agreement dated September 5, 1997 for T.M. Wood (incorporated
by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-
K for the year ended December 31, 1997).
+*10.10 Noncompetition Agreement dated as of September 5, 1997 by and between
the Company and T.M. Wood (incorporated by reference to Exhibit 10.12 to
the Company's Annual Report on Form 10-K for the year ended December 31,
1997).
+*10.11 Borg-Warner Security Corporation Retirement Savings Excess Benefit Plan,
as amended and restated through January 1, 1995 (incorporated by
reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994).
+*10.12 Borg-Warner Security Corporation Supplemental Benefits Compensation
Program (incorporated by reference to Exhibit 10.10 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994).
+*10.13 Consulting Agreement amended as of August 31, 1998 between the Company
and H. Norman Schwarzkopf. (incorporated by reference to Exhibit 10.15
to the Company's Annual Report on Form 10-K for the year ended December
31, 1998).
*10.14 Contribution Agreement dated as of November 28, 1996 by and among the
Company, Wells Fargo Armored Service Corporation, Loomis-Wells
Corporation (now known as Loomis, Fargo & Co.), Loomis Holding
Corporation and Loomis Stockholders Trust (incorporated by reference to
Exhibit 2.1 to the Company's Current Report on Form 8-K dated February
7, 1997).
+10.15 Amended and Restated Employment Agreement dated March 26, 1999 for J. A.
Edwardson.
+10.16 Change in Control Agreement dated July 13, 1999 for R. E. T. Lackey.
*10.17 Stock Purchase Agreement, dated as of April 17, 1998, among ADT Security
Services, Inc., Tyco International (US) Inc. and the Company relating to
the purchase and sale of the common stock of Wells Fargo Alarm Services,
Inc., BW-Canada Alarm (Wells Fargo) Corporation and Wells Fargo Pyro
Technologies, Inc. (incorporated by reference to Exhibit 10.19 to the
Company's Annual Report on Form 10-K for the December 31, 1998).
*10.18 Stock Purchase Agreement, dated as of April 22, 1998, by and between the
Company and Mustang Holdings, Inc. relating to the purchase and sale of
the common stock of Pony Express Delivery Services, Inc. (incorporated
by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-
K for the year ended December 31, 1998).
*10.19 Amended and Restated Credit Agreement dated as of June 30, 1998 among
the Company, Lenders listed therein, Canadian Imperial Bank of Commerce,
as Documentation Agent, NationsBank N.A., as Syndication Agent, and
Bankers Trust Company, as Administrative Agent related to the Company's
receivables facility (incorporated by reference to Exhibit 4 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998).
10.20 Second Amendment, dated May 10, 1999, to the Amended and Restated Credit
Agreement and Consent dated as of June 30, 1998 among the Company,
Lenders listed therein, Canadian Imperial Bank of Commerce, as
Documentation Agent, Nations Bank, N.A., as Syndication Agent, and
Bankers Trust Company, as Administrative Agent related to the Company's
receivables facility
*10.21 Third Amendment, dated December 16, 1999, to the Amended and Restated
Credit Agreement dated as of June 30, 1998 among the Company, Lenders
listed therein, Canadian Imperial Bank of Commerce, as Documentation
Agent, Bank of America, N.A., as Syndication Agent, and Bankers Trust
Company, as Administrative Agent related to the Company's receivables
facility (incorporated by reference to Exhibit 10.1 to Form 8-K filed
January 10, 2000).
*10.22 Line of Credit Agreement dated January 3, 2000 between the Company and
Bankers Trust Company (incorporated by reference to Exhibit 10.2 to Form
8-K filed January 10, 2000).
10.23 Fourth Amendment, dated March 3, 2000, to the Amended and Restated
Credit Agreement dated as of June 30, 1998 among the Company, Lenders
listed therein, Canadian Imperial Bank of Commerce, as Documentation
Agent, Bank of America, N.A., as Syndication Agent, and Bankers Trust
Company, as Administrative Agent related to the Company's receivables
facility.
+10.24 Change in Control Agreement dated February 1, 2000 for James M.
Froisland.
+10.25 Change in Control Agreement dated July 13, 1999 for James F. McNulty.
+10.26 Change in Control Agreement dated July 13, 1999 for Nancy E. Kittle.
+*10.27 Borg-Warner Security Corporation's 1999 Stock Incentive Plan
(incorporated by reference to Appendix A of the Company's Proxy
Statement dated March 19, 1999).
13 Portions of the Annual Report to Stockholders.
21 Subsidiaries of the Company.
23 Consent of Deloitte & Touche LLP.
27 Financial Data Schedule.
99 Cautionary Statement.
_________
* Incorporated by reference.
+ Indicates a management contract or compensatory plan or arrangement required
to be filed pursuant to Item 14(c)