UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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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, 1996 Commission file number: 1-5529

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Borg-Warner Security 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)

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Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
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Common Stock, par value $.01 per share New York Stock Exchange
9-1/8% Senior Subordinated Notes due 2003 New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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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 7, 1997 was
approximately $163 million. As of March 7, 1997, the registrant had 22,266,956
shares of Common Stock and 1,149,600 shares of Series I Non-Voting 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
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The Company's annual report to stockholders Parts I, II and IV
for the year ended December 31, 1996

The Company's proxy statement for the 1997 Part III
annual meeting of stockholders

BORG-WARNER SECURITY CORPORATION
FORM 10-K
YEAR ENDED DECEMBER 31, 1996
INDEX

PART I

Item Number Page
- ----------- ----

1. Business 3
2. Properties 10
3. Legal Proceedings 10
4. Submission of Matters to a Vote of Security Holders 12

PART II

5. Market for the Registrant's Common Stock
and Related Stockholder Matters 12
6. Selected Financial Data 13
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
8. Financial Statements and Supplementary Data 13
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 14

PART III

10. Directors and Executive Officers of the Registrant 14
11. Executive Compensation 14
12. Security Ownership of Certain Beneficial
Owners and Management 14
13. Certain Relationships and Related Transactions 15

PART IV

14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 15

PART I

Item 1. Business

The Company is the nation's largest supplier of contract guard services and
is a leading provider of electronic security services. As a result of its
significant market presence and breadth of product offerings, the Company is
well positioned to service local, multi-location and national accounts and
provide "Total Security Solutions" to its customers.

The Company's protective services business is divided into two business
units: physical security services and electronic security services. Information
concerning the revenues, operating profit or loss and identifiable assets
attributable to each of the Company's business units is incorporated herein by
reference to Note 9 of the Notes to Consolidated Financial Statements.

In January 1997 the Company combined its armored transport business with
Loomis Armored Inc. The Company received a 49% equity interest in the combined
entity and approximately $105 million (net of transaction expenses, but subject
to certain adjustments), and retained casualty and employee liabilities of its
armored transport unit incurred prior to closing. The Company accounts for its
investment in the combined entity under the equity method.

In the third quarter of 1996, the Company elected to treat its courier
business as a discontinued operation. The Company incurred a non-cash charge of
$25 million to provide for anticipated future losses and liabilities.

Physical Security Services

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, the United Kingdom and South America. The Company
services these clients with approximately 73,000 employees in approximately 280
offices under the Wells Fargo(R), Burns(R), Globe(R) and other service marks.

The physical security services unit 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, mailroom services, staffing
services and investigative services, including background investigations of
prospective employees.

The physical security services unit employs approximately 70,600 security
officers. 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
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 physical security services unit markets guard services through
approximately 153 sales representatives nationwide and in Canada, the United
Kingdom and South America. Sales personnel operate out of local branch and
sales offices. The physical security services unit also bids on contracts with
governmental agencies.

Physical security services 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.

Electronic Security Services

The Company provides integrated electronic security systems, including
intrusion and fire detection, sprinkler and critical industrial process
monitoring, closed circuit television and access control. The Company designs,
installs, monitors and services electronic security systems located on the
premises of approximately 83,000 commercial and 31,000 residential customers
in the United States and Canada under the Wells Fargo(R) and Pony Express(R)
service marks. The Company also provides, under the Bel-Air Patrol trade name,
an integrated guard, patrol and alarm service to approximately 12,000
customers in Bel Air, Beverly Hills and other Los Angeles communities. The
unit has approximately 2,200 employees.

Commercial. The Company's electronic security services unit designs,
installs, monitors and services electronic detection systems located at
customers' premises. These systems are tailored to customers' needs and may
include intrusion and fire detection, critical process and sprinkler
monitoring, access control and closed-circuit television monitoring systems.
The Company's alarm systems and devices may be monitored on the premises of
the customer by the customer's own personnel or linked through telephone lines
or long range radio to one of 12 central stations operated by the Company in
the United States and Canada. The Company also services its installed
systems.

The electronic security services unit services approximately 83,000
security systems in financial institutions, industrial and commercial
businesses and complexes, warehouses, facilities of federal, state and local
governments, defense installations, and health care and educational
facilities.

The majority of the Company's monitoring contracts are for an initial
five-year period with automatic renewal for additional one-year terms, unless
terminated by either party. Upon installation, a customer pays an installation
fee and agrees to pay an annual service charge for ordinary maintenance and
monitoring during the life of the contract. It has been the unit's experience
that its customers generally continue the service after expiration of the
initial term of the contract and enter into new five-year monitoring
contracts.

The electronic security services unit conducts its sales, installation
and service operations from 40 branch offices in the United States and Canada,
some of which are on the same premises as a monitoring station, and additional
satellite offices. The alarm services unit has a nationwide sales force that
is separated into broad-based commercial groups, as well as specialized sales
teams that address the specific needs of the financial community, engineered
systems market and other high growth segments of the industry. One group, for
example, focuses on multi-location companies such as national retail chains
and fast food outlets that require a single point of control for planning,
servicing, monitoring and reporting for all locations.

The Company also makes direct sales of security equipment to government
and commercial users (including other companies in the alarm business) and
designs, assembles and sells engineered systems for commercial fire
suppression.

Residential. The electronic security services unit also installs fire and
intrusion protection systems for residential customers under the Pony
Express(R) service mark. Residential customer sales and service are generally
performed from the same facilities as for commercial accounts. Residential
systems are installed by the Company with monitoring agreements and often with
maintenance agreements. The majority of the residential monitoring contracts
are for an initial period of three to five years with automatic renewal for
additional one-year terms, unless terminated by either party. The unit
services approximately 31,000 residential security systems.

Bel-Air Patrol. The Company also provides a complete protective package,
including central station alarm service and surveillance systems, security
guards and day and night patrols, to residents in Bel Air and Beverly Hills
and other nearby communities of Los Angeles. The Company provides these
services to approximately 12,000 customers under the trade name Bel-Air
Patrol.

The electronic security services unit purchases electronic equipment and
component parts for systems from a number of suppliers, and is not dependent
upon any single source for such equipment or parts.

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

shareholders of Loomis Holding Corporation ("Loomis") contributed all of the
Loomis common stock to Loomis Fargo in exchange for 51% of Loomis Fargo's
outstanding common stock, a $6 million promissory note and a cash payment of
approximately $15 million. In addition, Loomis Fargo repaid existing Loomis
indebtedness and redeemed outstanding shares of Loomis preferred stock. Among
the liabilities of the Company's armored transport unit that were retained are
casualty and employee claims incurred prior to the closing.

The Company agreed to indemnify Loomis Fargo for environmental
liabilities associated with existing underground storage tanks and other known
and identified environmental liabilities. Such indemnification obligation will
continue until the earlier of December 31, 1998 or the first anniversary of an
initial public offering of Loomis Fargo common stock. The Company has also
agreed to indemnify Loomis Fargo against certain other claims, including
claims relating to receivables and taxes.

The Company and the former Loomis shareholders entered into a
stockholders agreement providing that Loomis Fargo's board of directors
initially will consist of seven directors: three directors nominated by the
Company; three directors nominated by the former Loomis shareholders and
Loomis Fargo's chief executive officer. The number of directors that may be
designated pursuant to the stockholder agreement may adjust 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. The Company has nominated Messrs. Adorjan, O'Brien and Wood, its
executive officers, to Loomis Fargo's board of directors.

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 over 150 branches, employs approximately 8,700
persons and uses a fleet of approximately 2,700 armored vehicles nationwide 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 5,800 employees. The collective bargaining
agreements expire at various dates from 1997 to 1999 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,
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 physical security services unit competes with major national 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.

The electronic security services unit competes with major national firms
and numerous smaller regional and local companies. Competition in the alarm
services industry is based on price in relation to the quality of service, the
scope of alarm installation and service, and the level of technological and
engineering sophistication.

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. The Company believes that its operations are in
substantial compliance with those laws, regulations and requirements.

The Company's physical security services operations are subject to a
variety of city, county and state firearm and occupational licensing laws. 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. 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 affect on
its physical security services operations.

The Company's electronic security services operations are subject to
regulatory requirements of federal, state and local authorities. In addition,
this unit relies upon the use of telephone lines to transmit signals, and the
cost of such lines and the type of equipment which may be used are currently

regulated by both federal and state governments. In some instances, the
Company contracts with the local government to permit it to link a customer's
business or home directly into the local police or fire department station for
which it may pay a fee to such local government. As a result of a high
incidence of false alarms in some communities, some local governments have
imposed assessments, fines and penalties on customers based on the number of
false alarms reported, or have restricted police response to systems producing
excessive false alarms.

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 potentially exposes it
to 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 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 and transportation routes
and employee screening, training, supervision and evaluation.

Discontinued Operations

The Company has treated its courier services unit as a discontinued
operation since September 1996. As a result of this decision, a non-cash
charge of $25 million was incurred to provide for anticipated future losses
and liabilities. The unit transports time-sensitive packages for commercial
businesses and non-negotiable financial documents for Federal Reserve banks
and financial institutions in 32 states under the Pony Express(R) service
mark. The unit employs approximately 3,800 persons and leases from its
employees approximately 65% of its fleet of approximately 3,025 vehicles. The
courier services unit operates both as a common and contract carrier and uses
a combination of tariffs and shipping contracts to control the terms,
conditions and rates applicable to the transportation of

shipments. Rates are dependent upon many factors, including the weight and
type of the shipped item, the distance and urgency of the shipment and the
geographical location.

Trademarks and Patents

The Wells Fargo(R), Pony Express(R) and Burns(R) service marks are
especially important 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.

Executive Officers

Set forth below are the names, ages, positions and certain other
information concerning the executive officers of the Company as of March 1,
1997.

Name Age Position with Company

J. Joe Adorjan........ 58 Chairman of the Board, Chief Executive Officer
and President; Director

John D. O'Brien....... 54 Senior Vice President

Timothy M. Wood....... 49 Vice President, Finance

Mr. Adorjan has been a director of the Company since 1993, Chairman of
the Board (since January 1996), Chief Executive Officer (since October 1995)
and President (since April 1995). Mr. Adorjan was President of Emerson
Electric Co. from 1992 to 1995 and Chairman and Chief Executive Officer of
ESCO Electronics Corporation from 1990 to 1992. Mr. Adorjan is also a director
of California Microwave, Inc, The Earthgrains Company, ESCO Electronics
Corporation, Goss Graphic Systems, Inc. and Loomis, Fargo & Co.

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 Borg-Warner Protective Services Corporation and a director of
Loomis, Fargo & Co.

Mr. Wood has been Vice President, Finance of the Company since 1994 and
was Vice President and Controller of the Company from 1987 to 1994 and is also
a director of Loomis, Fargo & Co.

Each of the executive officers named above was elected by the Board of
Directors to serve in the office indicated until his successor is elected and
qualified.

Item 2. Properties

The Company and its subsidiaries maintain courier terminals, central
alarm stations, plants and general offices in various cities in the United
States, Canada, the United Kingdom and South America. At December 31, 1996,
the physical security services unit occupied approximately 283 branch and
satellite offices, all but one of which were leased. At December 31, 1996, the
electronic security services unit operated 12 central stations, of which 4
were leased, 28 additional branch and headquarters offices, 12 of which were
owned and 47 additional branch and satellite offices, all of which were
leased. The Company leases approximately 57,000 square feet of office space in
Chicago, Illinois for its executive offices. 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 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

Centaur Insurance Company ("Centaur"), a discontinued property and
casualty insurance subsidiary, ceased writing insurance in 1984 and has been
operating under rehabilitation since September 1987. Rehabilitation is a
process supervised by the Illinois Director of Insurance to attempt to
compromise liabilities at an aggregate level that is not in excess of
Centaur's assets. In rehabilitation, Centaur's assets are currently being used
to satisfy claim liabilities under direct insurance policies written by
Centaur. Any remaining assets will be applied to Centaur's obligations to
other insurance companies under reinsurance contracts. The foregoing has
resulted in one pending lawsuit against the Company for recovery of alleged
damages from the failure of Centaur to satisfy its reinsurance obligations.
Certain former officers and directors of the Company's current and former
subsidiaries have been named as defendants in such lawsuit and the Company has
agreed to indemnify

such individuals. Centaur is not a defendant in this lawsuit against the
Company. Although the Illinois Director of Insurance has not made any claims
against the Company for any of Centaur's liabilities, the Illinois Director of
Insurance has requested, and the Company has agreed to, an extension of the
statute of limitations for any such claims.

As of December 31, 1995, Centaur's total liabilities were $137.1 million
and its deficit in net worth was $56.1 million, according to financial
statements submitted on behalf of the Illinois Director of Insurance. Such
financial statements were presented on a liquidating basis with assets carried
at their market value or estimated realizable value and liabilities carried at
their present value through the provision of a present value discount.
Although Centaur is a subsidiary of the Company, the Company does not operate
Centaur and has no responsibility for, nor does it participate in the
preparation of, such financial statements. Centaur's financial results, assets
and liabilities are not reflected in the Company's financial statements.

In June 1988, the Insurance Commissioner of the State of California as
trustee of Mission Insurance Trust and four other affiliated insurance
companies filed a complaint in the Superior Court of the State of California,
County of Los Angeles, against the Company and certain of its current and
former subsidiaries alleging damages resulting from the failure of Centaur to
satisfy its reinsurance obligations. This lawsuit alleges damages to
plaintiff, as Trustee of Mission Insurance Company, Mission National Insurance
Company, Enterprise Insurance Company, Holland-America Insurance Company and
Mission Reinsurance Corporation, based on (i) conduct justifying piercing the
corporate veil, (ii) fraud and (iii) negligent misrepresentation. The
complaint was amended in 1989 to add 11 former officers and directors of the
Company's current and former subsidiaries as defendants and to allege
additional causes of action based on (i) breach of fiduciary duty and
imposition of personal liability, (ii) fraudulent conveyance, (iii)
constructive trust and (iv) conspiracy. The complaint was amended again in
1995 to allege additional causes of action based on negligence and breach of
the covenant of good faith and fair dealing. Plaintiff seeks judgment in
excess of $100 million for current losses, future losses and other damages and
also seeks punitive damages.

In 1989, the Company filed a motion to dismiss or stay the action,
pending resolution of Centaur's rehabilitation in Illinois. The court declined
to dismiss the action, but entered an order staying the action until the
rehabilitation proceeding is resolved, except that the parties may pursue
discovery to preserve evidence. In 1992, the Centaur rehabilitator filed a
motion to intervene and dismiss the complaint on the grounds that the
plaintiff lacked standing and that its claims were not ripe for adjudication.
The motion is pending. In 1993, six of the 11 individual defendants were
dismissed from the lawsuit. In September 1994, the court effectively lifted
its stay. The liability phase of the trial was held in 1996 and the court has
set a schedule for hearing the parties' closing arguments in such phase. The
Company intends to defend this lawsuit vigorously.

The Company believes that any damages for failure to satisfy reinsurance
obligations are solely the responsibility of Centaur and that the resolution
of the lawsuit relating to Centaur, including the Company's indemnification
obligations to former officers and directors, will not have a material adverse
effect on its financial position or future operating results; however, no
assurance can be given as to the ultimate outcome with respect to such
lawsuit.

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 a number
of 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. In addition, the Company has or may have liability for
environmental matters at properties it presently or previously owned or
leased.

Based on currently available information, the Company believes that none
of these matters individually or in the aggregate will have a material adverse
affect 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 its financial statements in the aggregate amount of
approximately $9 million (relating to environmental matters with respect to
discontinued operations of the Company). While estimates of liability for
environmental matters can vary over time due to, among other things, changes
in laws, technology or available information, the Company believes that such
provisions for indicated environmental liabilities have been established on a
basis consistent with generally accepted accounting principles.

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 1996.

PART II

Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters.

As of March 7, 1997, there were approximately 183 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 1995 and 1996
were:

Quarter ended High Low
------------- ------- --------

1995 March 31 $ 9 7/8 $ 5 1/2
June 30 9 1/2 6 7/8
September 30 9 3/8 8 3/8
December 31 13 7 1/8

1996 March 31 $12 3/4 $10 1/4
June 30 13 1/8 9 5/8
September 30 9 7/8 8 1/4
December 31 11 3/8 9 3/8

Item 6. Selected Financial Data

The selected financial data for the five years ended December 31, 1996,
with respect to the following line items shown under the "Consolidated
Statistical Review" (set forth on page 14) in the Annual Report is
incorporated herein by reference and made a part of this report: Net service
revenues; earnings (loss) from continuing operations; earnings (loss) from
continuing operations per share; total assets and total debt.

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

The Management's Discussion and Analysis of Results of Operations and
Financial Condition (set forth on pages 16 through 18) in the Annual Report
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 19 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, 1996 and 1995 is set forth in Note 14 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.

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 and 3 of the
Company's proxy statement for the 1997 annual meeting of stockholders.
Information with respect to executive officers of the Company is set forth in
part I of this report. 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 6 of
the Company's proxy statement for the 1997 annual meeting of stockholders.

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 7 through 9,
and "Compensation of Directors" on pages 4 and 5, of the Company's proxy
statement for the 1997 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 5 and 6 of the Company's proxy statement for the 1997 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 pages 12 and 13 of
the Company's proxy statement for the 1997 annual meeting of stockholders.

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 19 through 40 of the
Annual Report, are incorporated herein by reference:

Consolidated Balance Sheet--December 31, 1996 and 1995

Consolidated Statement of Operations--three years ended December 31,
1996

Consolidated Statement of Cash Flows--three years ended December 31,
1996

Consolidated Statement of Stockholders' Equity--three years ended
December 31, 1996

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

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.

No reports on Form 8-K were filed by the Company during the
three-month period ended December 31, 1996.

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Borg-Warner Security Corporation

We have audited the consolidated financial statements of Borg-Warner Security
Corporation (the "Company") as of December 31, 1996 and 1995, and for each of
the three years in the period ended December 31, 1996, and have issued our
report thereon dated February 4, 1997; such consolidated financial statements
and report are included in your 1996 Annual Report to Stockholders and are
incorporated herein by reference. Our audits also included the financial
statement schedule of Borg-Warner Security Corporation 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.

DELOITTE & TOUCHE LLP

Chicago, Illinois
February 4, 1997

SCHEDULE II

Borg-Warner Security Corporation
Valuation and Qualifying Accounts
(millions of dollars)

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- -------- ------------------- -------- --------

Years ended December 31, ADDITIONS
---------
(1) (2)

Balance at Charged to Charged to Balance
Beginning Costs and Other at Close
of Period Expenses Accounts Deductions of Period
---------- -------- -------- ---------- ---------

Description
- -----------

1994

Allowance for Doubtful Accounts $8.4 $5.5 $1.4 $7.9 $7.4
==== ==== ==== ==== ====
1995

Allowance for Doubtful Accounts $7.4 $4.4 $2.3 $7.3 $6.8
==== ==== ==== ==== ====
1996

Allowance for Doubtful Accounts $6.8 $2.7 $3.1 $6.3 $6.3
==== ==== ==== ==== ====

EXHIBIT INDEX

Exhibit
Number Document Description
------ --------------------

*3.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992).

*3.2 Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992).

*4.1 Credit Agreement dated as of January 27, 1993 ("Credit Agreement")
among the Company, the lenders party thereto and the administrative
agent named therein (incorporated by reference to Exhibit 4.3 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1992), as amended by the First Amendment thereto (incorporated by
reference to Exhibit 4.1 to the Company's Quarterly Report on Form
10-Q for the quarterly period ending June 30, 1994), as amended by
the Second Amendment and Consent to Credit Agreement dated as of
March 15, 1995 (incorporated by reference to Exhibit 4.8 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1994), as amended by the Third Amendment to Credit Agreement and
Consent dated as of October 16, 1995 (incorporated by reference to
Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995), and as amended by the Fourth
Amendment to Credit Agreement and Consent dated as of March 14, 1996
(incorporated by reference to Exhibit 4.2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996).

*4.2 Credit Agreement dated as of January 27, 1993 ("L/C Agreement")
among the Company, the banks party thereto and the agent named
therein (incorporated by reference to Exhibit 4.4 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992), as
amended by the First Amendment thereto (incorporated by reference to
Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ending June 30, 1994), as amended by the Fifth
Amendment to L/C Agreement dated as of March 15, 1995 (incorporated
by reference to Exhibit 4.9 to the Company's Annual Report on Form
10-K for the year ended December 31, 1994), as amended by Amendment
No. 6 dated as of October 16, 1995 (incorporated by reference to
Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995), and as amended

B-1

Exhibit
Number Document Description
------ --------------------

by the Amendment No. 8 to Credit Agreement and Consent dated as of
March 14, 1996 (incorporated by reference to Exhibit 4.3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1996).

*4.3 Credit Agreement dated as of October 16, 1995 ("Term Loan
Agreement") among the Company, various lenders and Bankers Trust
Company, as agent (incorporated by reference to Exhibit 4.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995), as amended by the First Amendment to Credit
Agreement and Consent dated as of March 14, 1996 (incorporated by
reference to Exhibit 4.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996).

*4.4 Indenture dated as of April 1, 1986 by and between Borg-Warner and
Harris Trust and Savings Bank, entered into in connection with the
registration of up to $150,000,000 of Debt Securities and Warrants
to Purchase Debt Securities for issuance under a shelf registration
on Form S-3 (incorporated by reference to Registration Statement No.
33-4670).

*4.5 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).

+*10.1 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, 1988).

+*10.2 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, 1992).

+*10.3 Borg-Warner Security Corporation 1993 Stock Incentive Plan
(incorporated by reference to Exhibit 10.19 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992).

+*10.4 Employment Agreement dated as of March 28, 1995 for J.J. Adorjan
(incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995).

+*10.5 Form of Employment Agreement for Messrs. O'Brien and Wood
(incorporated by reference to Exhibit 10.26 to Registration
Statement No. 33-15419), as amended by

B-2

Exhibit
Number Document Description
------ --------------------

Form of Amendment of Employment Agreement dated January 19, 1989
(incorporated by reference to Exhibit 10.11 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1988).

*10.6 Form of Indemnification Agreement dated September 23, 1986 between
the Company and Messrs. O'Brien and Wood (incorporated by reference
to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1986).

*10.7 Agreement dated as of March 28, 1995 with D.C. Trauscht
(incorporated by reference to Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995).

+*10.8 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).

+*10.9 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).

*10.10 Consulting Agreement dated as of September 1, 1993 between the
Company and H. Norman Schwarzkopf (incorporated by reference to
Exhibit 10.20 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1993).

* 10.11 Consulting Agreement dated as of January 1, 1996 between the Company
and D.C. Trauscht (incorporated by reference to Exhibit 10.12 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995).

*10.12 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.

B-3

Exhibit
Number Document Description
------ --------------------

11 Computation of earnings per share.

13 Portions of the 1996 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).

B-4

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.

BORG-WARNER SECURITY CORPORATION

By /s/ J. Joe Adorjan
-------------------
J. Joe Adorjan
Chairman of the Board, Chief Executive Officer
and President

Date: March 28, 1997

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 28, 1997.

Signature Title
--------- ------

/s/ J. Joe Adorjan Chairman of the Board, Chief
------------------ Executive Officer and President and
J. Joe Adorjan Director (Principal Executive Officer)

/s/ Timothy M. Wood Vice President, Finance
------------------- (Principal Financial and Accounting Officer)
Timothy M. Wood

/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

Director
-----------------
Dale W. Lang

/s/ Robert A. McCabe Director
--------------------
Robert A. McCabe

/s/ Andrew McNally IV Director
---------------------
Andrew McNally IV

Director
--------------------
Alexis P. Michas

/s/ H. Norman Schwarzkopf Director
--------------------------
H. Norman Schwarzkopf

/s/ Donald C. Trauscht Director
--------------------------
Donald C. Trauscht