AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 21, 2000

REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

THE O'GARA COMPANY
(Exact name of registrant as specified in its charter)

OHIO 3711 31-1726886
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)

9113 LeSaint Drive
Fairfield, Ohio 45014
(513) 881-9800

(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

Wilfred T. O'Gara
Chief Executive Officer
The O'Gara Company
9113 LeSaint Drive
Fairfield, Ohio 45014
(513) 881-9800

(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
Copies to:
ABRAM S. GORDON, ESQ.
Vice President and General Counsel
The O'Gara Company
9113 LeSaint Drive
Fairfield, Ohio 45014
(513) 881-9800
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
------------------------

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) FEE

- ---------------------------------------------------------------------------------------------------------------------------
Common Stock, $0.01 par value per
share................................. 6,000,000 shares $7.785 $46,712,000.00 $12,332.00
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(2) based on the book value per share of the
registrant's common stock as of June 30, 2000.
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2

SUBJECT TO COMPLETION OR AMENDMENT, DATED SEPTEMBER 21, 2000

PROSPECTUS

6,000,000 SHARES

[LOGO]

THE O'GARA COMPANY

COMMON STOCK
------------------------

This prospectus covers shares of the common stock of The O'Gara Company
that will be issued in a reorganization and split-up of The Kroll-O'Gara
Company. The O'Gara Company currently is a wholly owned subsidiary of
Kroll-O'Gara. After the split-up, The O'Gara Company will be an independent
public company that continues Kroll-O'Gara's security products and services
business.

As part of the split-up you will receive a distribution of approximately
0.27 shares of O'Gara Company common stock for each share of Kroll-O'Gara common
stock owned by you on the record date for the distribution. You will receive
only whole shares of O'Gara Company common stock and cash in payment for any
fractional share. In the split-up you also will receive shares of the common
stock of Kroll Risk Consulting Services, Inc., as described in KRCS' separate
prospectus.

There currently is no public market for O'Gara Company common stock. We
have applied to list the common stock on the Nasdaq National Market under the
symbol "OGAR."

OWNERSHIP OF O'GARA COMPANY COMMON STOCK INVOLVES RISKS. PLEASE SEE THE
INFORMATION UNDER "RISK FACTORS" BEGINNING ON PAGE 7 IN THIS PROSPECTUS.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

, 2000.
3

TABLE OF CONTENTS

Prospectus Summary.................. 3
Risk Factors........................ 7
Forward-Looking Statements.......... 10
The Split-Up........................ 11
Dividend Policy..................... 14
Financing........................... 14
Use of Proceeds..................... 14
Capitalization...................... 15
Selected Historical and Unaudited
Pro Forma Financial Information... 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations..................... 19
Business............................ 31
Management.......................... 43
Executive Compensation and Benefit
Plans............................. 45
Certain Relationships and Related
Party Transactions................ 49
Relationship With KRCS.............. 51
Principal Shareholders and Holdings
of Management..................... 53
Description of Capital Stock........ 54
Legal Matters....................... 57
Independent Public Accountants...... 57
Where You Can Find More
Information....................... 57
Financial Statements................ F-1

2
4

PROSPECTUS SUMMARY

This summary highlights information from this prospectus. It may not
contain all the information that is important to you. You should read this
entire prospectus carefully, including the financial statements and related
notes. For additional information, see "Where You Can Find More Information" on
page 57.

THE COMPANY

The O'Gara Company is a leading provider of armored products, including
ballistic and blast protected armoring systems for commercial and military
vehicles, aircraft and missile components, and security services. Our
O'Gara-Hess & Eisenhardt Armoring Company subsidiary has a long and
distinguished history dating back to 1876 as a horse-drawn carriage builder. In
the 1940s, OHE designed and built one of the earliest armored presidential
limousines, which was used by President Harry S Truman. Since then, OHE's
armored commercial vehicles have been used by U.S. Presidents, other heads of
state, business executives and VIPs worldwide. OHE also has been the sole source
provider of armoring systems for the U.S. Military's Up-Armored High Mobility
Multi-Purpose Wheeled Vehicles, commonly known as HMMWVs, since their
introduction in 1994. Additionally, through ITI, our International Training,
Incorporated subsidiary, The O'Gara Company offers driver training, firearms
training, threat recognition and avoidance training and other security related
services.

In 1996 our predecessor, also then named The O'Gara Company, completed an
initial public offering and embarked on a strategy of rapid growth, primarily
through acquisitions. In late 1997, a subsidiary of that company merged into
Kroll Holdings, Inc. and the parent company's name was changed to The
Kroll-O'Gara Company. Kroll-O'Gara continued the strategy of rapid growth;
however, early in 1999, management disagreements arose over the appropriate
method of managing Kroll-O'Gara and the strategic directions in which the
company should proceed. When it became evident that these disagreements could
not be eliminated, Kroll-O'Gara's Board of Directors directed management to
explore alternatives for the company to improve operations and thereby enhance
shareholder value. Ultimately this led to the decision by Kroll-O'Gara's Board
to reorganize the company and to split it into two new public companies which
will continue separately the principal historical Kroll and O'Gara businesses.

The O'Gara Company is the new corporation organized to become the public
holding company for, and to continue, Kroll-O'Gara's security products and
services business.

BUSINESS STRATEGY

The key elements of The O'Gara Company's business strategy will be to:

Continue to expand armored passenger vehicle sales in the U.S. and foreign
markets. We intend to increase sales in countries where we already have
manufacturing locations by expanding our product offering, growing our dealer
networks, expanding our relationships and armoring agreements with original
vehicle manufacturers, expanding our involvement in the market for used armored
vehicles and offering alternative financing arrangements for our vehicles. Also,
we intend to continue to review opportunities to acquire or establish
manufacturing operations in additional countries.

Expand our cash-in-transit vehicle sales. The money transport industry has
been consolidating and increasingly is served by a few large and global
companies. We believe that our ability to produce armored commercial vehicles in
several countries around the world will appeal to the major companies involved
in the money transport industry as they seek operating efficiencies through
fleet standardization and volume purchasing on a global, rather than a local,
basis. Additionally, we are exploring the
3
5

feasibility of high technology non-armor security solutions as an addition or a
replacement to traditional means of protecting cash shipments.

Expand our services to armored vehicle customers in each of our geographic
locations. The installed base of our armored commercial and passenger vehicles
continues to increase. As this trend continues, we intend to expand our
after-sale service offerings. Additionally, we intend to offer our customers
other services such as vehicle tracking, incident response and, for our
commercial customers, logistics and information system supports as they pertain
to fleet management.

Grow our training and security services. Through ITI we offer driver
training, firearms training, threat recognition and avoidance training and
various other security related services. We intend to increase our sales in this
area to the U.S. Government, capitalizing on its practice of increasingly
outsourcing services to proven suppliers, and aggressively to expand our
offering of these services in foreign markets where we have a presence as well
as in countries in which personal safety concerns are the highest.

Expand military sales. We are working with AM General, the manufacturer of
the HMMWV, and with manufacturers of other tactical wheeled vehicles to market a
variety of armored tactical wheeled vehicles to the U.S. Government as well as
foreign governments. We also are expanding our efforts to work with the U.S.
Government and with other government contractors to develop armoring solutions
for vehicles that traditionally have been unprotected. Additionally, as the
fleet of fielded Up-Armored HMMWVs grows, the requirements for spare parts and
technical support will continue to expand. Finally, we are developing and
implementing sophisticated integrations of hardware and electronic components
for the HMMWV as well as other vehicles.

Improve efficiencies. As we increase our sales around the world, we intend
continually to increase our efficiencies by leveraging our global purchasing
capabilities, standardizing our production and engineering efforts and taking
advantage of economies of scale.

The O'Gara Company's principal executive offices are located at 9113
LeSaint Drive, Fairfield, Ohio 45014. Our telephone number is (513) 881-9800.
4
6

SUMMARY FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

You should read the following summary data in conjunction with our combined
financial statements and related notes, including the unaudited interim and pro
forma combined financial information, and other financial information which
appear later in this prospectus. The pro forma information gives effect to the
split-up of Kroll-O'Gara.

THE O'GARA COMPANY SELECTED COMBINED FINANCIAL INFORMATION(1)

SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1999 2000
------- ------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Net sales............................. $30,773 $75,008 $100,739 $131,690 $118,507 $ 56,962 $ 53,335
Cost of sales......................... 23,579 55,865 72,383 95,290 83,620 38,434 40,347
------- ------- -------- -------- -------- -------- --------
Gross profit........................ 7,194 19,143 28,356 36,400 34,887 18,528 12,988
Selling, general and administrative
expenses, including amortization.... 6,783 11,167 16,668 20,738 29,438 11,119 16,039
Restructuring expenses................ -- -- -- -- 292 292 --
Failed merger related costs........... -- -- -- -- 704 -- 830
Separation expenses................... -- -- -- -- -- -- 280
Merger related expenses............... -- -- 2,933 1,137 145 36 --
------- ------- -------- -------- -------- -------- --------
Operating income (loss)............. 411 7,976 8,755 14,525 4,309 7,081 (4,161)
Interest expense...................... (779) (1,077) (2,967) (2,415) (1,995) (799) (1,167)
Other income (expense), net........... (78) (56) (249) 53 (158) 28 (134)
------- ------- -------- -------- -------- -------- --------
Income (loss) before minority
interest, provision for income
taxes, extraordinary item and
cumulative effect of change in
accounting principle.............. (446) 6,843 5,538 12,163 2,156 6,310 (5,462)
Minority interest..................... -- -- (156) -- -- -- --
------- ------- -------- -------- -------- -------- --------
Income (loss) before provision for
income taxes, extraordinary item
and cumulative effect of change in
accounting principle.............. (446) 6,843 5,382 12,163 2,156 6,310 (5,462)
Provision for income taxes............ -- 518 2,822 5,016 2,303 2,454 327
------- ------- -------- -------- -------- -------- --------
Income (loss) before extraordinary
item and cumulative effect of
change in accounting principle.... (446) 6,325 2,560 7,147 (147) 3,856 (5,789)
Extraordinary item, net of tax
benefit............................. -- -- (194) -- -- -- --
------- ------- -------- -------- -------- -------- --------
Income (loss) before cumulative
effect of change in accounting
principle......................... (446) 6,325 2,366 7,147 (147) 3,856 (5,789)
Cumulative effect of change in
accounting principle................ -- -- -- -- (778) (778) --
------- ------- -------- -------- -------- -------- --------
Net income (loss)..................... $ (446) $ 6,325 $ 2,366 $ 7,147 $ (925) $ 3,078 $ (5,789)
======= ======= ======== ======== ======== ======== ========
Basic and diluted earnings (loss) per
share............................... $ (0.07) $ 1.05 $ 0.39 $ 1.19 $ (0.15) $ 0.51 $ (0.96)
======= ======= ======== ======== ======== ======== ========
Basic and diluted weighted average
shares outstanding.................. 6,000 6,000 6,000 6,000 6,000 6,000 6,000
======= ======= ======== ======== ======== ======== ========

AS OF DECEMBER 31, AS OF JUNE 30,
---------------------------------------------- -------------------
1995 1996 1997 1998 1999 1999 2000
------- ------ ------- ------- ------- -------- --------
(IN THOUSANDS)

BALANCE SHEET DATA:
Working capital (deficit)................. $(2,036) $6,266 $19,102 $49,685 $36,443 $ 42,049 $ 26,496
Net property, plant and equipment......... 3,171 4,925 10,292 13,318 19,159 16,464 19,818
Total assets.............................. 24,674 41,872 77,743 120,802 118,272 119,101 111,028
Long-term debt, including line-of-credit
and current portion..................... 10,529 12,241 26,202 17,155 27,628 28,151 34,014
Shareholder's equity...................... 665 12,749 23,171 68,771 58,098 60,076 46,712

- ---------------

(1) See Note 1 to our combined financial statements for discussion regarding the
basis of presentation.
5
7

THE O'GARA COMPANY
SUMMARY UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION(1)

YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1999 JUNE 30, 2000
----------------- ----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Net sales................................................ $118,507 $ 53,335
Cost of sales............................................ 83,620 40,347
-------- --------
Gross profit........................................... 34,887 12,988
Selling and marketing expenses........................... 8,854 4,390
General and administrative expenses...................... 20,584 11,649
Restructuring expenses................................... 292 --
Separation expenses...................................... -- 280
Merger related expenses.................................. 145 --
Failed merger related costs.............................. 704 830
-------- --------
Operating income (loss)................................ 4,308 (4,161)
Interest expense......................................... (1,995) (1,167)
Other income (expense)................................... (157) (134)
-------- --------
Income (loss) from continuing operations before
minority interest, provision for income taxes,
extraordinary item and cumulative effect of change
in accounting principle............................. 2,156 (5,462)
Minority interest........................................ 719 1,881
-------- --------
Income (loss) from continuing operations before
provision for income taxes, extraordinary item and
cumulative effect of change in accounting
principle........................................... 2,875 (3,581)
Provision for income taxes............................... 2,591 327
-------- --------
Income (loss) from continuing operations............... $ 284 $ (3,908)
======== ========
Basic and diluted earnings (loss) per share from
continuing operations.................................. $ 0.05 $ (0.65)
======== ========
Basic and diluted weighted average shares outstanding.... 6,000 6,000
======== ========

AS OF
JUNE 30, 2000
----------------

BALANCE SHEET DATA:
Working capital............................................................. $ 25,727
Net property, plant and equipment........................................... 19,818
Total assets................................................................ 109,997
Long-term debt, including line-of-credit and current portion................ 34,014
Shareholders' equity........................................................ 44,202

- ----------------

(1) See the unaudited pro forma combining condensed financial statements
beginning on page F-44 for information regarding basis of presentation for
our unaudited pro forma financial data as well as for a discussion of
applicable pro forma entries.
6
8

RISK FACTORS

You should carefully consider the following risks relating to the shares of
O'Gara Company common stock that you will receive as a result of the split-up of
Kroll-O'Gara. Some of the risks relate principally to establishing The O'Gara
Company as independent from Kroll-O'Gara. Others relate principally to our
business. The risks and uncertainties described below are not the only ones
facing our company. Additional risks and uncertainties not presently known to us
or that we currently believe to be immaterial also may adversely affect our
business. If any of the following risks and uncertainties develop into actual
events, it could have a material adverse effect on our business, financial
condition or results of operations. In that case, the trading price of our
common stock could decline.

THE RISKS INHERENT IN OUR BUSINESS WILL BE ACCENTUATED AFTER THE SPLIT-UP.
DOWNTURNS IN OUR BUSINESS WILL BE MORE LIKELY TO AFFECT NEGATIVELY OUR FINANCIAL
RESULTS AND CONDITION.

The O'Gara Company will have a narrower business focus and business base
after the split-up than does Kroll-O'Gara. Because Kroll-O'Gara carries on a
wide variety of risk-management activities, business fluctuations in any one
area have tended to be smoothed out by opposite fluctuations in another. Similar
fluctuations in the business of The O'Gara Company after the split-up will have
a much more significant impact on our results of operations and cash flows than
previously.

WE MAY BE UNSUCCESSFUL IN DEVELOPING AND IMPLEMENTING A GROWTH STRATEGY AFTER
THE SPLIT-UP.

The O'Gara Company will be substantially smaller than Kroll-O'Gara and will
need to grow after the split-up. Therefore, we will need to develop and
implement successfully a strategy of internal and/or external growth. To the
extent that our strategy involves acquisitions, we may not be able to integrate
or manage the acquired businesses so as to produce returns that justify the
investment and issues relating to acquisitions may divert management's attention
from existing operations. Additionally, acquisitions using our common stock will
be limited for two years following the split-up in order to preserve the
split-up's tax-free status. If we cannot generate growth, or manage our growth,
there could be a material adverse effect on our operations and earnings.

THE O'GARA COMPANY WILL NEED CAPITAL FOR GROWTH. WE CANNOT BE SURE THAT WE WILL
BE ABLE TO SECURE THE CAPITAL WE WILL NEED OR TO SECURE THAT CAPITAL ON
ACCEPTABLE TERMS.

In order to grow, we eventually will require additional capital. The O'Gara
Company may not be able to generate adequate cash from operations or obtain
adequate financing from external sources for this purpose. Because we will be
smaller than Kroll-O'Gara was before the split-up, the financing available to us
is likely to be more limited and also may be more expensive. The issuance of
additional common stock by us to raise capital or to finance acquisitions may
result in dilution to holders of our common stock. Additionally, issuances of
common stock by either company will be limited for two years following the
split-up in order to preserve the split-up's tax-free status. Any debt financing
by The O'Gara Company may increase significantly our leverage and may impose
restrictive covenants which limit our operations or ability to make future
acquisitions.

THE O'GARA COMPANY WILL NEED TO USE A SIGNIFICANT PORTION OF OUR CASH FLOW TO
SERVICE OUR DEBT.

After the split-up, and based on its June 30, 2000 pro forma balance sheet,
The O'Gara Company expects to have total indebtedness of approximately $34
million and total shareholders' equity of approximately $44 million, resulting
in a debt to equity ratio of approximately 0.77. We will have to use a
significant percentage of our cash flow from operations to pay the principal and
interest on this debt, which will limit the cash available for existing
operations and future growth and will make it more difficult for us to obtain
additional debt financing for these purposes. This, in turn, may adversely
affect the price of our common stock. Additionally, current credit agreements
contain, and future credit

7
9

agreements will contain, financial and operating covenants that will limit our
ability to take various corporate actions. These restrictions may limit our
ability to pursue future growth plans.

OUR STOCK PRICE MAY BE HIGHLY VOLATILE AFTER THE SPLIT-UP. YOU MAY LOSE ALL OR
PART OF THE VALUE OF YOUR O'GARA COMPANY COMMON STOCK.

There currently is no public market for O'Gara Company common stock. After
the split-up, trading prices for our common stock will be established by the
public markets, and an active trading market may not develop or be sustained.
The market price of our common stock may fluctuate significantly due to a number
of factors, some of which may be beyond our control, including:

- sale of our common stock by shareholders immediately after the split-up
because our business profile does not fit their investment objectives;

- actual or anticipated fluctuations in our operating results;

- changes in earnings estimated by securities analysts or our ability to
meet those estimates;

- the operating and stock price performance of other comparable companies;

- developments and publicity regarding our industry; and

- general economic conditions.

In addition, the stock market in general has experienced extreme volatility
that has often been unrelated to the operating performance of individual
companies. These broad market fluctuations may adversely affect the trading
price of our common stock, regardless of our actual performance, and could
enhance the effect of any fluctuations that do relate to our operating results.

OUR STOCK PRICE MAY BE DEPRESSED BECAUSE OF OUR SMALLER CAPITALIZATION.

Because we will have a smaller market capitalization after the split-up
than did Kroll-O'Gara, it is possible that we will be less widely followed by
analysts and disfavored by institutional investors. The lack of a significant
following by either or both of these two groups may result in lower trading
volumes and depressed or stagnant stock prices for these companies, which may be
unrelated to operating performance.

THE LOSS OF, OR A SIGNIFICANT REDUCTION IN, THE O'GARA COMPANY'S U.S. MILITARY
BUSINESS WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS.

U.S. Military contracts account for a significant portion of our business.
On a pro forma basis, these contracts represented 43%, 45% and 33% of net sales
for 1997, 1998 and 1999, respectively. The U.S. Military funds these contracts
in annual increments, and the contracts require subsequent authorization and
appropriation which may not occur or which may provide less than the total
amount of the contract. Fluctuations in spending by the U.S. Government for
national defense could adversely affect our ability to receive future contracts.
Also, the U.S. Government generally may cancel its contracts unilaterally, at
its convenience.

WE ARE DEPENDENT ON SINGLE SOURCE SUPPLIERS OF COMPONENTS FOR OUR UP-ARMORED
HMMWVs, WHICH ACCOUNT FOR ALMOST 33% OF OUR NET SALES.

We are the prime contractor to the U.S. Military for the supply of armoring
and blast protection for High Mobility Multi-Purpose Wheeled Vehicles, commonly
known as HMMWVs. HMMWVs armored by us are manufactured by AM General Corporation
under separate U.S. Military contracts. Should deliveries of HMMWVs be
significantly interrupted, or should other single source suppliers significantly
interrupt deliveries of components for the Up-Armored HMMWV, we probably would
not be able to deliver Up-Armored HMMWVs to the U.S. Military on schedule, which
could have a material adverse effect on our company.

8
10

THE O'GARA COMPANY'S OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY FROM PERIOD
TO PERIOD BECAUSE OF THE LARGE PERCENTAGE OF OUR NET SALES THAT COME FROM
GOVERNMENTAL CONTRACTS.

We derived approximately 33% of our pro forma net sales for 1999 from U.S.
Military contracts and an additional 14% from commercial contracts with U.S.
governmental agencies or foreign governments. Because these contracts generally
are awarded on a periodic and/or sporadic basis, we have significant
fluctuations from time to time in our business. Period-to-period comparisons
within a given year or between years may not be meaningful or indicative of
operating results over a full year.

Additionally, most of these contracts are fixed price contracts. We attempt
to cover anticipated increases in labor, material and other costs in the
original prices of these contracts. However, due to unexpected events over the
life of a fixed-price contract, the results actually realized often will vary
from that originally expected. Depending on the size of a contract, these
variations from estimated contract performance could have a material adverse
effect on our results of operations for any quarter or year.

OUR BUSINESS OUTSIDE THE UNITED STATES EXPOSES US TO NUMEROUS RISKS WHICH,
SINGLY OR TOGETHER, COULD MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS.

In addition to our U.S. facilities, we have operations and assets in
Brazil, Colombia, France, Hungary, Italy, Mexico, the Philippines, Russia and
Switzerland. We also sell our products and services in other foreign countries
and will seek to increase our level of international business activity. Our
international business exposes us to various risks. These include exchange rate
fluctuations, foreign currency restrictions, expropriation of assets, war, civil
uprisings and riots, government instability, the vagaries of foreign legal
systems, and unanticipated taxes, duties or other governmental assessments. Any
of these could result in a loss of business, significant unexpected write-offs
of assets or other unexpected costs, which could have a material adverse effect
on our company.

THE O'GARA COMPANY'S FAILURE TO COMPLY WITH GOVERNMENTAL REGULATIONS COULD HAVE
A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

As a government contractor, our operations are subject to routine audit to
assure compliance with a variety of regulations. We may be subject to
investigations as a result of an audit or for other causes. Adverse findings in
an audit or other investigation, including violations of environmental or labor
laws, could result in fines or other penalties up to and including
disqualification as a U.S. Government contractor. Our subsidiary, O'Gara-Hess &
Eisenhardt Armoring Company, currently is the subject of a qui tam suit, which
is described under "Legal Proceedings" and which will be our responsibility
after the split-up.

THE O'GARA COMPANY'S EARNINGS MAY BE AFFECTED ADVERSELY BY OUR SUBSTANTIAL
OWNERSHIP PERCENTAGE IN SECURIFY INC., WHICH HAS A HISTORY OF SIGNIFICANT
LOSSES.

After the split-up, we will own 60% of the portion of the common stock of
Securify previously held by Kroll-O'Gara and will be required to include a
percentage of any losses incurred by Securify in reporting its income. Securify
had net losses of approximately $1.1 million in 1999 and approximately $4.7
million in the first six months of 2000. On a pro forma basis, after giving
effect to the split-up, our portion of these losses would have been $0.6
million, or $(0.11) per share, for 1999 and $2.8 million, or $(0.47) per share,
for the first six months of 2000.

THE LOSS OF ANY OF OUR EXECUTIVE OFFICERS AFTER THE SPLIT-UP COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR COMPANY.

The efforts of our executive officers, particularly Wilfred T. O'Gara, our
President and Chief Executive Officer, will be especially important to ensure a
smooth transition after the reorganization. Our business could be materially and
adversely affected if any of our executive officers unexpectedly become unable
or decide not to continue in their present positions.

9
11

MANAGEMENT'S VOTING POWER WILL INFLUENCE SIGNIFICANTLY THE RESULTS OF
SHAREHOLDER VOTES AFTER THE SPLIT-UP. THIS COULD IMPEDE A CHANGE IN CONTROL AND
COULD LIMIT THE PRICE INVESTORS ARE WILLING TO PAY FOR OUR STOCK.

After the split-up, our executive officers and directors will control
approximately 29% of The O'Gara Company's voting power. Therefore, management
will be able to influence significantly most matters requiring shareholder
approval, including the election of directors. The Board of Directors, in turn,
has authority to issue 100,000 shares of preferred stock and to determine the
rights, preference and other terms of those shares without shareholder approval.
In addition, Ohio law contains provisions that may discourage takeover bids that
have not been negotiated with the Board. Singly or together these factors could
delay or prevent a change in control of the company and have an adverse effect
on our stock price.

WE DO NOT EXPECT TO PAY DIVIDENDS ON OUR COMMON STOCK IN THE FORESEEABLE FUTURE.

We expect to retain any future earnings to finance our operations and for
the growth and development of our business. Additionally, the terms of our
financing arrangements after the reorganization will limit the funds available
for cash dividends.

IF THE SPLIT-UP IS NOT TAX-FREE, WE COULD BE LIABLE TO KRCS FOR THE RESULTING
TAXES, WHICH WOULD SIGNIFICANTLY HARM OUR BUSINESS.

The O'Gara Company and KRCS have agreed to enter into a tax sharing
agreement under which each company will indemnify the other in the event the
split-up is not tax-free as a result of various actions taken by or with respect
to that company or the company's failure to take various actions. KRCS and The
O'Gara Company may not be able to control some of the events that could trigger
this liability. In particular, any acquisition of us by a third party within two
years of the split-up could result in the split-up becoming a taxable
transaction and give rise to our obligation to indemnify KRCS for any resulting
tax liability. If we were to become obligated to indemnify KRCS for this tax
liability, our financial condition and business would be affected materially and
adversely. In addition, if the split-up otherwise failed to qualify for tax-free
treatment, we would be subject to a substantial tax liability and our financial
condition and business would be affected materially and adversely.

FORWARD-LOOKING STATEMENTS

Some of the statements in this prospectus, including some statements in
"Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business," are
forward-looking statements about what may happen in the future. They include
statements regarding our current beliefs, goals and expectations and address
many topics, including our expected financial position and operating results,
our business strategy and our financial plans. These statements can sometimes be
identified by our use of forward-looking words such as "anticipate," "believe,"
"estimate," "expect," "intend," "may," "will" and similar expressions. We cannot
guarantee that our forward-looking statements will turn out to be correct or
that our beliefs, goals and expectations will not change. Our actual results
could be very different from and worse than our expectations for various
reasons, including those discussed in "Risk Factors."

Our fiscal year ends on December 31st. Our consolidated financial
statements and other financial information contained in this prospectus have
been prepared from the records maintained by Kroll-O'Gara and are not
necessarily indicative of the conditions or results that would have existed if
we had been operated as an unaffiliated company during the periods indicated.
Portions of certain transactions during the periods covered by these financial
statements and other financial information represent allocations made from
Kroll-O'Gara for items applicable to Kroll-O'Gara and its subsidiaries as a
whole.

10
12

THE SPLIT-UP

The information given below highlights the principal features of the
split-up of The Kroll-O'Gara Company. The split-up is described in detail in
Kroll-O'Gara's proxy statement, which has been sent to shareholders of
Kroll-O'Gara and also has been filed with the SEC. You should read the proxy
statement with care.

Parent Company................ The Kroll-O'Gara Company, an Ohio corporation

Separated Companies........... The O'Gara Company, an Ohio corporation
Kroll Risk Consulting Services, Inc., a
Delaware corporation

Reasons for the Split-up...... The purpose of the split-up is to resolve
internal management conflicts by separating the
principal historical O'Gara and Kroll
businesses into two new public companies: The
O'Gara Company, which will be led by Thomas M.
and Wilfred T. O'Gara, and KRCS, which will be
led by Jules B. Kroll. Kroll-O'Gara's board of
directors believes that the separation of these
businesses will permit the management of each
company to focus exclusively on its business
plan and that it is the best available means to
enhance the future success and efficiency of
each business.

Mechanics of the Split-Up..... In the reorganization, Kroll-O'Gara will
transfer its security products and services
business to The O'Gara Company and its
investigations and intelligence and its voice
and data communications businesses to KRCS.
Each of The O'Gara Company and KRCS will assume
and then repay a portion of Kroll-O'Gara's
indebtedness and assume a portion of its
liabilities that are not attributable to a
particular business group.

Messrs. O'Gara and two other members of The
O'Gara Company's management will exchange all
of their Kroll-O'Gara common stock for O'Gara
Company common stock. Mr. Kroll and sixteen
other members of management of KRCS and its
subsidiaries will exchange all of their
Kroll-O'Gara common stock for KRCS common
stock.

Kroll-O'Gara then will distribute, on a pro
rata basis, all remaining shares of O'Gara
Company common stock and KRCS common stock to
the remaining holders of Kroll-O'Gara common
stock, and The O'Gara Company and KRCS will
become separate, independent publicly-held
companies.

As a result of the split-up, Mr. Kroll will
have no interest in The O'Gara Company and
Messrs. O'Gara will have no interest in KRCS.
Kroll-O'Gara's public shareholders will own
approximately 71% of each of The O'Gara Company
and KRCS, the same percentage they now own of
Kroll-O'Gara.

After the split-up, Kroll-O'Gara will be
dissolved.

What You Will Receive in the
Distribution................ You will receive approximately 0.27 shares of
O'Gara Company common stock and approximately
0.38 shares of KRCS

11
13

common stock for each share of Kroll-O'Gara
common stock owned by you on the record date
for the distribution.

Record Date for the
Distribution.................. We currently expect that the record date for
the distribution will be the close of business,
New York time, on , 2000, although
the actual record date could be different.

Mailing of Share
Certificates.................. We expect to begin mailing certificates for the
shares of O'Gara Company common stock and KRCS
common stock distributed approximately ten
business days after the record date.

No Fractional Shares.......... We will not issue any fractional shares in the
distribution. If you are entitled to receive a
fractional share of O'Gara Company common stock
or KRCS common stock, you will receive cash in
payment for that fractional share.

Total Shares to be Outstanding
After the Split-up............ The O'Gara Company -- 6,000,000
KRCS -- 8,500,000

Trading Market and Listings... There currently is no trading market for O'Gara
Company common stock or KRCS common stock. Each
company has applied for listing of its common
stock on the Nasdaq National Market, with the
following proposed symbols:
O'Gara Company Common Stock -- "OGAR"
KRCS Common Stock -- "KRCS"

Trading of O'Gara Company common stock and KRCS
common stock is expected to begin on a
"when-issued" basis on the record date for the
distribution.

Tax Consequences.............. We expect that you will not recognize any gain
or loss for U.S. federal income tax purposes as
a result of the split-up, except in connection
with any cash that you receive instead of a
fractional share. Kroll-O'Gara has requested a
tax ruling from the Internal Revenue Service
that this is the case. Your tax treatment will
depend on your specific situation, however, and
you should consult your tax advisor for a full
understanding of the tax consequences of the
split-up to you.

Relationship with KRCS after
the Split-up.................. As a part of the split-up, Kroll-O'Gara, The
O'Gara Company and KRCS have entered into an
agreement for the reorganization and
dissolution of Kroll-O'Gara and will enter into
a cross-indemnification agreement. In addition,
The O'Gara Company, KRCS and Securify Inc. (a
subsidiary of Kroll-O'Gara) will enter into a
tax sharing agreement. The ongoing relationship
between The O'Gara Company and KRCS will be
governed by these agreements.

Management of The O'Gara
Company..................... Thomas M. O'Gara -- Chairman of the Board
Wilfred T. O'Gara -- President and Chief
Executive Officer

12
14

Nicholas P. Carpinello -- Vice President and
Chief Financial Officer
Abram S. Gordon -- Vice President, General
Counsel and Secretary

Management of KRCS............ Jules B. Kroll -- Chairman of the Board
Michael G. Cherkasky -- President and Chief
Executive Officer
Michael Shmerling -- Chief Operating Officer
Nazzareno E. Paciotti -- Chief Financial
Officer

Distribution Agent............ Fifth Third Bank, Cincinnati, Ohio

Transfer Agents and
Registrars.................... The O'Gara Company common stock -- Fifth Third
Bank
KRCS common stock --

13
15

DIVIDEND POLICY

We anticipate that any future earnings will be retained to finance The
O'Gara Company's operations and for the growth and development of our business.
Accordingly, we do not anticipate paying cash dividends on our shares of common
stock in the foreseeable future. Additionally, the terms of the credit agreement
with our bank require maintenance of specific financial ratios and other
covenants which may limit the funds available for cash dividends. The payment of
any future dividends will be subject to the discretion of the Board of Directors
and will depend on our results of operations, financial position and capital
requirements, general business conditions, restrictions imposed by financing
arrangements, if any, legal restrictions on the payment of dividends and other
factors our Board deems relevant.

FINANCING

We expect to obtain debt funding prior to completion of the split-up to
repay the portion of Kroll-O'Gara's third party financing obligations we assumed
as well as a working capital and letter of credit facility.

USE OF PROCEEDS

Our common stock is being issued in connection with the split-up of
Kroll-O'Gara. Neither Kroll-O'Gara nor The O'Gara Company will receive any
proceeds from the distribution of our stock.

14
16

CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2000 (1)
on an historical basis and (2) as adjusted to give pro forma effect to the
split-up. This information should be read in conjunction with "Selected
Historical and Unaudited Pro Forma Financial Information", our "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our audited combined financial statements and related notes included elsewhere
in this prospectus.

AT JUNE 30, 2000
----------------------
ACTUAL AS ADJUSTED
------- -----------
(DOLLARS IN THOUSANDS)

Cash and cash equivalents................................... $ 2,597 $ 2,597
======= =======
Short-term debt and current maturities of long-term
debt(1)................................................... $ 1,671 $ 1,671
Current portion of allocated Kroll-O'Gara long-term debt.... 15,652 15,652
Long-term debt, less current maturities(1).................. 966 966
Allocation of Kroll-O'Gara long-term debt................... 15,725 15,725
Shareholders' equity:
Preferred Stock, 1,000,000 shares authorized; no shares
issued or outstanding................................. -- --
Common Stock, $0.01 par value, 15,000,000 shares
authorized; 6,000,000 shares issued and outstanding on
June 30, 2000, as adjusted............................ -- 60
Additional paid-in capital............................. -- 48,722
Retained earnings (deficit)............................ -- (1,465)
Advances from Kroll-O'Gara............................. 50,653 --
Deferred compensation.................................. (826) --
Accumulated other comprehensive income (loss).......... (3,115) (3,115)
------- -------
Total shareholders' equity........................ 46,712 44,202
------- -------
Total capitalization.............................. $80,726 $78,216
======= =======

- ---------------

(1) For a description of our debt, see our "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

15
17

SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL INFORMATION

INFORMATION PRESENTED

The following pages contain tables which present historical selected
financial information and unaudited summary pro forma financial information for
The O'Gara Company. The pro forma financial information gives effect to the
split-up of Kroll-O'Gara.

The historical selected financial information, except as discussed below,
is derived from the audited financial statements and notes set forth elsewhere
in this prospectus. You should read the selected historical financial
information for The O'Gara Company together with its full historical financial
statements and their notes. The selected unaudited pro forma financial
information, except as discussed below, is derived from the unaudited pro forma
financial statements and notes set forth elsewhere in this prospectus. You
should read the selected unaudited pro forma financial information for The
O'Gara Company together with the full unaudited pro forma financial statements
and their notes, beginning on page F-44.

Some of the financial information presented in the following tables is
derived from financial statements that are not included in this prospectus.
Specifically, the selected historical financial information for The O'Gara
Company as of December 31, 1995, 1996 and 1997 and for the years ended December
31, 1995 and 1996 is derived from The O'Gara Company's unaudited financial
statements.

You also should read our selected historical financial information together
with our "Management's Discussion and Analysis of Financial Condition and
Results of Operations" which is included elsewhere in this prospectus.

The unaudited pro forma combining condensed financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the operating results or financial position that would have been achieved if the
split-up had been consummated as of the beginning of the periods indicated, nor
are they indicative of future financial position or results of operations.

16
18

THE O'GARA COMPANY SELECTED COMBINED FINANCIAL INFORMATION(1)

- ---------------

(1) See Note 1 to our combined financial statements for discussion regarding the
basis of presentation.

17
19

THE O'GARA COMPANY
SUMMARY UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION(1)

YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1999 JUNE 30, 2000
----------------- ----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

AS OF
JUNE 30, 2000
----------------

- ----------------

18
20

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion of results of operations and financial condition
is based upon and should be read in conjunction with The O'Gara Company's
Combined Financial Statements and Notes. As a result of the acquisitions made by
The O'Gara Company's parent, The Kroll-O'Gara Company, in 1997 and 1998,
financial results from period-to-period may lack comparability.

RECENT DEVELOPMENTS

In the third quarter of 2000, The O'Gara Company began implementation of a
plan to reduce costs and anticipates incurring a total non-recurring pre-tax
restructuring charge of less than $1.0 million. The primary component of the
restructuring charge is severance related to the termination of employees.

GENERAL

We are a wholly owned holding company subsidiary of The Kroll-O'Gara
Company and currently operate most of the businesses formerly in Kroll-O'Gara's
Security Products and Services Group as well as Kroll-O'Gara's Information
Security Group, operating as Securify.

In April 2000, Kroll-O'Gara decided to explore the split-up of its
principal businesses into two independent public companies; we are a newly
incorporated company organized in preparation for the split-up. Under an
agreement and plan of reorganization and dissolution of Kroll-O'Gara adopted by
Kroll-O'Gara's Board of Directors on August 30, 2000, the completion of which is
subject to a number of conditions including the receipt of a favorable tax
ruling and the approval by Kroll-O'Gara's shareholders, we will receive
substantially all of the assets and liabilities of Kroll-O'Gara's Security
Products and Services Group, and 60% of Kroll-O'Gara's ownership interest in the
common stock of Securify, as well as a portion of Kroll-O'Gara's assets and
liabilities that are not attributable to a particular business group. The
remaining business of Kroll-O'Gara, primarily the Investigations and
Intelligence Group, the Voice and Data Communications Group and 40% of
Kroll-O'Gara's ownership interest in the common stock of Securify, as well as
the other assets and liabilities that are not attributable to a particular
business group, will be transferred to and assumed by another newly incorporated
company, Kroll Risk Consulting Services, Inc. After these transfers, certain
management shareholders of Kroll-O'Gara will exchange all of their shares of
Kroll-O'Gara common stock for shares of our common stock and other management
shareholders of Kroll-O'Gara will exchange all their shares of Kroll-O'Gara
common stock for shares of KRCS common stock. Kroll-O'Gara then will distribute,
on a pro rata basis, all remaining shares of our common stock and KRCS common
stock held by it to the remaining holders of Kroll-O'Gara common stock. The
exchanging management shareholders will not participate in this distribution.
Concurrent with the completion of these transactions, we and KRCS will become
separate publicly-traded companies. Subsequent to the reorganization and
split-up, Kroll-O'Gara will be dissolved. In the six months ended June 30, 2000,
costs associated with this separation were approximately $0.3 million ($0.05 per
diluted share) and consisted primarily of fees for attorneys, accountants and
other related charges. We anticipate additional expenses will be incurred in the
second half of 2000.

We are a leading provider of a broad range of specialized products and
services that are designed to provide solutions to a variety of security needs.
We report our revenue from operations through two groups. The Security Products
and Services Group markets ballistic and blast protected vehicles and security
services. Securify offers information and computer security services, including
network and system security review and repair.

19
21

Failed Merger. On November 15, 1999, Kroll-O'Gara announced that it had
entered into a definitive agreement with Blackstone Capital Partners III
Merchant Banking Fund L.P. pursuant to which shares held by all Kroll-O'Gara
shareholders, other than certain members of management, would be acquired by
Blackstone for $18.00 per share in cash. On April 12, 2000, Kroll-O'Gara
announced that Blackstone had withdrawn its offer to acquire Kroll-O'Gara
shares. Costs associated with this separation that have been allocated from
Kroll-O'Gara to The O'Gara Company for the year ended December 31, 1999 and the
six months ended June 30, 2000 were approximately $0.7 million and $0.8 million,
respectively, and consisted primarily of fees for attorneys, accountants and
other related charges.

Other Acquisitions. Kroll-O'Gara has pursued a strategy of aggressive
growth and has completed several acquisitions in 1997 and 1998 which benefited
us, one of which was accounted for as a pooling of interest and others of which
have been accounted for as purchases. These acquisitions are listed in the chart
which follows.

POOLINGS(1)

COMPANY BUSINESS GROUP DATE ACQUIRED PRICE
------- -------- ----- ------------- -----

Securify Inc. Information Information December 31, 1998 1,430,936 shares
security services Security

PURCHASES(2)

COMPANY BUSINESS GROUP DATE ACQUIRED PRICE
------- -------- ----- ------------- -----

Labbe, S.A. Armors commercial Security Products January 1, 1997 $10.7 million in
vehicles and builds and Services cash and 376,597
truck bodies in shares
France

International Advanced security Security Products March 1, 1997 $0.5 million in
Training, training and Services cash, 68,086 shares
Incorporated and $1.2 million in
financing

ZAO IMEA Armors cash-in Security Products December 1, 1997 $0.6 million in
transit vehicles and Services cash and 138,889
and distributes shares
commercial bank
equipment in Russia

Protec S.A. Armors cars in Security Products September 30, 1998 $3.2 million in
Colombia and Services cash and 38,788
shares

- ---------------

(1) Pooling of interest accounting requires the restating of all prior period
financial information as though the acquired entity had always been a part
of The O'Gara Company.

(2) The O'Gara Company's combined financial statements include the reported
results of each entity from its effective date of acquisition forward.

Revenue recognition. We recognize net sales from most military and certain
commercial armoring contracts using the percentage-of-completion method
calculated utilizing the cost-to-cost approach. Under this method, we accrue
estimated contract revenues based generally on the percentage that costs to date
bear to total estimated costs and recognizes estimated contract losses in full
when it becomes likely that a loss will occur. Accordingly, we periodically
review and revise contract revenues and total cost estimates as the work
progresses and as change orders are approved. We reflect adjustments in contract
revenues, based upon the percentage of completion, in the period when the
estimates are revised. To the extent that these adjustments result in an
increase, a reduction or an elimination of

20
22

previously reported contract revenues, we recognize a credit or a charge against
current earnings, which could be material. Contract costs include all direct
material and labor costs, along with certain direct overhead costs related to
contract production. We record provisions for any estimated total contract
losses on uncompleted contracts in the period in which it concludes that the
losses will occur. Changes in estimated total contract costs result in revisions
to contract revenue. The revisions are recognized when determined.

We recognize information security service revenues, which consist of
consulting fees on information security projects, ratably over the period of the
agreement or according to the completed contract method of accounting for
contract revenues, depending on the nature of the agreement.

RESTRUCTURING OF OPERATIONS

Due to the acquisitions Kroll-O'Gara completed in 1997 and 1998,
integration of the operations of the acquired companies with existing operations
was a strategic initiative for Kroll-O'Gara's management. As part of this
initiative, The O'Gara Company's management evaluated its business to ensure
that its core businesses were operating efficiently and concluded that a cost
savings initiative was required and would be achieved largely through operating
process improvements and a corresponding decrease in personnel.

In the first quarter of 1999, we began implementation of a plan to reduce
costs and improve operating efficiencies and recorded a non-recurring pre-tax
restructuring charge of approximately $0.2 million. In the second quarter of
1999, we completed the restructuring plan with an additional non-recurring
pre-tax restructuring charge of $0.1 million. The principal elements of the
restructuring plan were the elimination of approximately 55 employees. The
primary components of the restructuring charge were severance costs. See Note 4
to the Notes to Combined Financial Statements for more information.

21
23

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the items noted
as a percentage of net sales:

FOR THE
SIX MONTHS ENDED
FOR THE YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------- ----------------
1997 1998 1999 1999 2000
------- ------- ------- ----- -----

Security Products and Services
Military................................. 43.4% 45.4% 33.4% 31.4% 28.7%
Commercial............................... 56.6% 54.5% 62.9% 64.3% 67.9%
Information Security....................... -- 0.1% 3.7% 4.4% 3.4%
----- ----- ----- ----- -----
Total net sales.................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.............................. 71.9 72.4 70.6 67.5 75.6
----- ----- ----- ----- -----
Gross profit.......................... 28.1 27.6 29.4 32.5 24.4

Operating expenses:
Selling and marketing.................... 6.5 5.8 7.5 7.2 8.2
General and administrative............... 10.1 9.9 17.4 12.3 21.8
Spin-off expenses........................ -- -- -- -- 0.5
Failed merger expenses................... -- -- 0.6 -- 1.6
Merger expenses.......................... 2.9 0.9 0.1 0.1 --
Restructuring charge..................... -- -- 0.2 0.5 --
----- ----- ----- ----- -----
Operating income (loss)............... 8.7 11.0 3.6 12.4 (7.8)

Other income (expense):
Interest expense......................... (2.9) (1.8) (1.7) (1.4) (2.2)
Other, net............................... (0.4) -- (0.1) -- (0.3)
----- ----- ----- ----- -----
Income (loss) before provision for income
taxes, extraordinary item and cumulative
effect of accounting change.............. 5.3 9.2 1.8 11.1 (10.2)
Provision (benefit) for income taxes..... 2.8 3.8 (1.9) 4.3 0.6
----- ----- ----- ----- -----
Income (loss) before extraordinary item and
cumulative effect of accounting change... 2.5 5.4 (0.1) 6.8 (10.9)
Extraordinary item......................... (0.2) -- -- -- --
Cumulative effect of accounting change, net
of tax benefit........................... -- -- (0.7) (1.4) --
----- ----- ----- ----- -----
Net income (loss).......................... 2.3% 5.4% (0.8)% 5.4% (10.9)%
===== ===== ===== ===== =====

Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999

NET SALES. Net sales for the six months ended June 30, 2000 decreased $3.6
million, or 6%, from $57.0 million in 1999 to $53.3 million in 2000.

Security Products and Services Group. Net sales for the Security Products
and Services Group for the six months ended June 30, 2000 decreased $3.0
million, or 5%, from $54.5 million in 1999 to $51.5 million in 2000. The
decrease results from a decrease in net sales of military products and services
of $2.6 million, or 14%, from $17.9 million in 1999 to $15.3 million in 2000.
The decrease in net sales of military products and services was a result of the
completion in the fourth quarter of 1999 of a contract with the U.S. Military to
supply 738 armored High Mobility Multi-Purpose Wheeled Vehicles ("HMMWVs") to
the U.S. Army and the U.S. Air Force (the "738 Contract"). The 738 Contract,
which began in 1998, resulted in higher levels of production and net sales as a
result of an

22
24

aggressive delivery schedule required by the U.S. Air Force. In 2000, our
military product sales were based solely on a newer contract for 245 Up-Armored
HMMWVs, which does not provide for an aggressive delivery schedule.

Also included in net sales for the Security Products and Services Group are
sales of commercial armoring products and services, which decreased $0.4
million, or 1%, from $36.6 million in 1999 to $36.2 million in 2000. Commercial
armoring sales decreased approximately $2.7 million from $34.8 million in 1999
to $32.1 million in 2000. In one foreign location, net sales of armoring
products in the second quarter of 2000 decreased because base units needed to
start production on signed contracts were not available due to recalls by the
original equipment manufacturer in order to fix safety defects. However,
security service revenue increased $2.3 million from $1.8 million in 1999 to
$4.1 million in 2000. This increase was primarily related to increases in driver
training revenues in Texas and Virginia.

Securify. Net sales for Securify decreased $0.7 million, or 27%, from $2.5
million in 1999 to $1.8 million in 2000. Net sales decreased due to a continuing
focus on development of Securify's service capabilities and the related
inability to establish a firm customer base until the development of the
business is complete.

COST OF SALES AND GROSS PROFIT. Cost of sales for the six months ended June
30, 2000 increased $1.9 million, or 5%, from $38.4 million in 1999 to $40.3
million in 2000. Cost of sales increased approximately $1.1 million in the
Security Products and Services Group primarily as a result of increased
engineering costs associated with new vehicle models introduced by original
equipment manufacturers in 2000. Securify's cost of sales increased
approximately $0.8 million as a result of an increase in client consulting
personnel to prepare for future growth of Securify's service business.

Gross margin for the six months ended June 30, 2000 was 24.4% compared with
32.5% for the same period in 1999. Approximately 2.1 percentage points of this
decrease were the result of Securify's loss of $0.2 million included in gross
profit. Gross margin for the Security Products and Services Group decreased
approximately 6.0 percentage points from 31.7% in 1999 to 25.7% in 2000. In the
second quarter of 2000, new vehicle models caused additional costs as prototypes
for the new models had to be completed before full production could begin. All
prototype costs were expensed as incurred. In 1999, there were no substantial
prototype expenses. In addition, commercial armoring margins were impacted by
the previously mentioned original equipment manufacturer recalls as well as
competitive pricing pressures and pricing concessions necessitated by poor
foreign economic conditions in certain locations.

OPERATING EXPENSES. Operating expenses for the six months ended June 30,
2000 increased $5.7 million, or 50%, from $11.4 million in 1999 to $17.1 million
in 2000. This increase includes an increase in non-recurring expenses of $0.8
million, from $0.3 million in 1999 to $1.1 million in 2000. Non-recurring
charges in the first six months of 2000 consisted of approximately $0.8 million
of costs associated with the failed recapitalization merger with Blackstone
allocated to the Security Products and Services Group as well as $0.3 million of
costs associated with the split-up of Kroll-O'Gara allocated to the Security
Products and Services Group. In the first six months of 1999, non-recurring
expenses included a restructuring charge of $0.3 million.

Excluding non-recurring expenses, operating expenses increased $4.9
million. Included in this increase were $0.8 million for depreciation and
amortization of fixed and intangible assets, including goodwill. In addition,
Securify's operating expenses increased $3.3 million as a result of the
continuing focus on development of Securify's software products capabilities
including an increase in professional and administrative personnel to support
the increased development. The remaining increase relates to additional legal,
accounting, insurance and information system costs.

23
25

As a percent of net sales, operating expenses, before non-recurring
charges, increased from 19.5% in 1999 to 30.0% in 2000. As mentioned previously,
the increase in operating expenses as a percentage of net sales is primarily a
result of increased fixed costs to develop Securify's software products
capabilities and to administer the growth which we experienced due to the
acquisitions completed since 1998.

INTEREST EXPENSE. Interest expense for the six months ended June 30, 2000
increased $0.4 million, or 46%, from $0.8 million in 1999 to $1.2 million in
2000. This increase was the result of increased borrowings on the Security
Products and Services Group's allocated portion of Kroll-O'Gara's revolving
credit facility. For most of the first six months of 1999, Kroll-O'Gara had
excess funds as a result of a public offering of stock completed in May 1998. As
a result, we experienced lower allocated interest expense from Kroll-O'Gara
throughout 1999. However, in 2000, borrowings on the Kroll-O'Gara line of credit
increased partially as a result of funding the development of Securify's
software products capabilities. This resulted in an increase in the allocation
of interest to us from Kroll-O'Gara.

PROVISION FOR INCOME TAXES. The provision for income taxes for the six
months ended June 30, 2000 was $0.3 million compared to $2.5 million in 1999.
Despite a pre-tax loss in the first six months of 2000, The O'Gara Company
recorded a provision for income taxes for certain foreign subsidiaries which
generated income in the period. In addition, certain foreign jurisdictions
realized losses during the first six months of 2000 from which we were not able
to benefit for tax purposes due to the uncertainty relating to the future
realizability of the net operating loss carryforward.

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE. We had previously
capitalized costs associated with the start-up of activities, including
pre-operating costs, organization costs and other start-up costs. These
capitalized costs were amortized over periods ranging from one to five years.
The capitalized amount, $1.2 million before tax, was expensed in 1999 in
accordance with the American Institute of Certified Public Accountants Statement
of Position 98-5, "Reporting on the Cost of Start-Up Activities." The amount
expensed is shown net of applicable tax benefit of $0.4 million.

1999 COMPARED TO 1998

Net Sales. Net sales for the year ended December 31, 1999 decreased $13.2
million, or 10%, from $131.7 million in 1998 to $118.5 million in 1999.

Security Products and Services Group. Net sales for the Security Products
and Services Group decreased $17.4 million, or 13%, from $131.6 million in 1998
to $114.2 million in 1999. The decrease related to a decrease in net sales of
military products and services of $20.2 million, or 34%, from $59.8 million in
1998 to $39.6 million in 1999. In April 1998, we began work on the 738 Contract.
In addition, we continued work on a previous contract with the U.S. Military for
360 Up-Armored HMMWVs through July of 1998. The combination of production on the
two contracts as well as an aggressive delivery schedule required by the U.S.
Air Force relating to the 738 Contract resulted in unusually high levels of
production and net sales in 1998. In 1999, levels of production and net sales
more nearly approximated those of 1997.

Also included in net sales for the Security Products and Services Group are
sales of commercial armoring products and services, which increased $2.8
million, or 4%, from $71.7 million in 1998 to $74.6 million in 1999. Increases
in net sales for security services accounted for the increase in commercial net
sales as these services increased $2.7 million, or 65%, for the year ended
December 31, 1999 in comparison with 1998. The increase in net sales of security
services was primarily the result of increased sales associated with the
introduction of driver training operations in Texas and Mexico in 1999.

24
26

Securify. Net sales for Securify increased $4.2 million from $0.1 million
in 1998 to $4.3 million in 1999. Securify initiated operations in February 1998
but had minimal sales as it was involved in start-up activities for most of the
year.

COST OF SALES AND GROSS PROFIT. Cost of sales decreased $11.7 million, or
12%, from $95.3 million in 1998 to $83.6 million in 1999. The decrease in cost
of sales was due to the decrease in sales in the Security Products and Services
Group. Gross margin was 27.6% and 29.4% for 1998 and 1999, respectively. The
overall increase in gross profit as a percent of net sales was primarily the
result of a shift in sales mix in which higher margin Securify net sales
increased as a percentage of total net sales.

Gross margins for the Security Products and Services Group were 28.0% and
28.5% in 1998 and 1999, respectively. Gross margin increased as a result of a
planned shift in sales mix in the Security Products and Services Group's
domestic operations to increased commercial armoring sales and military spare
parts sales, both of which have higher margins. However, this gross margin
increase was partially offset by poor gross margin performance experienced in
all foreign operations as a result of competitive pricing pressures and pricing
concessions necessitated by foreign economic conditions. A transition to higher
levels of armoring in Latin and South America also slowed sales and required
some inventory writeoffs. Additionally, currency devaluations in South America
hurt margins and slowed sales.

Gross margin at Securify reflects a full year of operations and was 52.9%
in 1999.

OPERATING EXPENSES. Operating expenses increased $8.7 million, or 40%, to
$30.6 million in 1999 from $21.9 million in 1998. The increase is partially due
to the acquisition of Protec assets completed in 1998. Operating expenses of
this company represented $1.1 million of total operating expenses in 1999 and
$0.3 million of total operating expenses in 1998. Excluding operating expenses
of this acquisition and non-recurring charges, operating expenses increased $7.9
million. Included in this increase was $1.3 million for depreciation and
amortization of intangible assets, including goodwill. In addition,
approximately $2.7 million of the increase relates to increased operating
expenses at Securify as it was a start-up operation in 1998 and did not begin
full operations until 1999. An additional $2.1 million of the increase in
expenses relates to the additional legal, accounting, insurance and information
systems costs required to administer the growth which we have experienced since
the beginning of 1998. A key component of these costs was the implementation of
a new enterprise system at one of the Security Products and Services Group's
subsidiaries as well as new financial consolidation reporting software. The
implementation of additional modules of the new enterprise system is still in
process and is currently expected to be completed by December 31, 2000. The
remaining increase, $1.8 million, related to overall compensation and benefits
increases, an increase in the level of personnel working to administer the
growth which we have experienced since the beginning of 1998 and other
administrative, marketing and facility costs.

In 1998, we recorded approximately $1.1 million in non-recurring expenses
related to the merger with Securify. In 1999, we recorded approximately $1.1
million in non-recurring charges as well. Approximately, $0.1 million related to
merger expenses associated with the above mentioned merger. In addition, we
recorded approximately $0.7 million in failed merger expenses associated with
the failed recapitalization merger with Blackstone and an additional $0.3
million for a restructuring charge.

As a percent of net sales, operating expenses, before non-recurring
charges, were 15.8% in 1998 and 24.8% in 1999. As mentioned previously, the
increase in operating expenses as a percentage of net sales is primarily a
result of increased fixed costs to administer the growth which we have
experienced since the beginning of 1998.

INTEREST EXPENSE. Interest expense decreased $0.4 million, or 17%, to $2.0
million in 1999 from $2.4 million in 1998. With the completion of a stock
offering by Kroll-O'Gara in May 1998, a portion

25
27

of Kroll-O'Gara's debt was repaid. As a result, lower interest expense was
allocated to us from Kroll-O'Gara starting in the third quarter of 1998 and
continuing throughout 1999.

INTEREST INCOME. Interest income decreased $0.5 million, or 86%, to $0.1
million in 1999, compared to $0.6 million in 1998. Net proceeds of the May 1998
Kroll-O'Gara stock offering that were not used to repay debt were invested in
short-term instruments with maturities of three months or less. The return on
these investments was responsible for the increased allocation of interest
income to us in 1998. In 1999, the remaining investments were liquidated to fund
acquisitions by Kroll-O'Gara and increases in working capital needs as a result
of acquisitions and growth.

PROVISION FOR INCOME TAXES. The provision for income taxes was $2.3 million
in 1999 in comparison with $5.0 million in 1998. The effective tax rates for the
periods were 41% in 1998 and 107% in 1999. In 1999, we booked taxes at an
effective rate significantly higher than we had previously experienced largely
due to the non-deductibility of some of the merger related expenses incurred in
the period as well as increases in nondeductible goodwill and intangible
amortization. In 1998, we determined that certain of the Kroll Holdings merger
expenses qualified for future deductibility which favorably impacted the
effective tax rate in 1998.

NET INCOME. Net income decreased $8.1 million from $7.1 million in 1998 to
a loss of $0.9 million in 1999. The decrease was due primarily to an $8.7
million increase in operating expenses, as discussed above.

1998 COMPARED TO 1997

Net Sales. Net sales for the year ended December 31, 1998 increased $31.0
million, or 31%, from $100.7 million in 1997 to $131.7 million in 1998.

Security Products and Services Group. Net sales for the Security Products
and Services Group increased $30.8 million, or 31%, from $100.7 million in 1997
to $131.6 million in 1998. The increase includes net sales of commercial
products and security services, which increased $14.7 million, or 26%, from
$57.0 million in 1997 to $71.7 million in 1998. The increase in commercial net
sales was primarily due to continued growth in our international armoring
divisions. During 1996, 1997 and 1998, we initiated start-up armoring operations
in Mexico, Brazil and the Philippines, and acquired Labbe, IMEA and the assets
of Protec.

Increases in net sales for security services also contributed to the
increase in commercial net sales for the Security Products and Services Group.
Net sales of these services increased $1.7 million, or 67%, for the year ended
December 31, 1998 in comparison with 1997.

Net sales for the Security Products and Services Group include sales of
military products and services, which increased $16.1 million, or 37%, from
$43.7 million in 1997 to $59.8 million in 1998. In April 1998, we began work on
the 738 Contract. Production on our previous contract with the U.S. Military for
360 Up-Armored HMMWVs continued through July 1998. The combination of production
on the two contracts was a factor in the increase in net sales.

26
28

The U.S. Air Force dictated an aggressive delivery schedule for the 738
Contract. This delivery schedule required us to maintain an increased level of
production in 1998 for the Up-Armored HMMWV in comparison with production levels
in previous periods.

Securify. Securify initiated operations in 1998, recording net sales of
$0.1 million.

COST OF SALES AND GROSS PROFIT. Cost of sales increased $22.9 million, or
32%, from $72.4 million in 1997 to $95.3 million in 1998. The increase in cost
of sales was due to the increased level of business activity experienced in
1998. Gross margin was 28.1% and 27.6% for 1997 and 1998, respectively. The
slight decrease in gross margin is primarily the result of Securify's loss of
$0.4 million included in gross profit. This loss was a result of an increase in
client consulting personnel to prepare for future growth as Securify's service
business was developed.

Gross margins for the Security Products and Services Group were 28.1% and
28.0% in 1997 and 1998, respectively.

OPERATING EXPENSES. Operating expenses increased $2.3 million, or 12%, to
$21.9 million in 1998 from $19.6 million in 1997. Included in operating expenses
in 1997 were approximately $2.9 million in expenses related to the merger with
Kroll Holdings. In 1998, we recorded approximately $1.1 million in merger
related expenses primarily associated with the Securify merger.

Before merger related expenses, operating expenses increased $4.1 million,
or 24%, from $16.7 million in 1997 to $20.7 million in 1998. A portion of this
increase was attributable to the start-up of Securify in February 1998.
Operating expenses related to Securify were $1.8 million in 1998. The remaining
increase was primarily attributable to an increase in the level of personnel and
professional services required to administer the business growth which we
experienced in 1998.

As a percent of net sales, operating expenses, before merger related costs,
were 16.5% in 1997 and 15.7% in 1998. Although we did experience an increase in
fixed costs associated with Securify's start-up of operations, the increased
level of production and net sales in the Security Products and Services Group in
1998 caused operating expenses as a percentage of net sales to decline overall.

INTEREST EXPENSE. Interest expense decreased $0.6 million, or 19%, to $2.4
million in 1998 from $3.0 million in 1997. With the completion of the previously
mentioned stock offering by Kroll-O'Gara, a significant portion of
Kroll-O'Gara's indebtedness was repaid. As a result, interest expense allocated
to us from Kroll-O'Gara decreased starting in the third quarter of 1998.

The allocation of interest expense from Kroll-O'Gara was also affected by a
decrease in interest expense related to the Senior Notes. On May 30, 1997,
Kroll-O'Gara entered into an agreement with institutional investors to issue and
sell $35.0 million worth of Senior Notes. This agreement contained a provision
for a reduction of the interest rate if specified criteria were met.
Kroll-O'Gara complied with the criteria and the step down of rates commenced in
the second quarter of 1998. The reduction changed the interest rate from 9.56%
to 8.56% and contributed to the decrease in interest expense in 1998.

INTEREST INCOME. Interest income increased $0.6 million, or 600%, to $0.6
million in 1998. Net proceeds of the previously mentioned stock offering that
were not used to repay debt were invested in short-term instruments with
maturities of three months or less. The return on these investments was
responsible for the increase in allocated interest income from Kroll-O'Gara in
1998.

PROVISION FOR INCOME TAXES. The provision for income taxes was $5.0 million
for the year ended December 31, 1998 in comparison with $2.8 million for the
same period in 1997. The effective tax rates for the periods were 52% in 1997
and 41% in 1998. In 1997, we booked taxes at an effective rate significantly
higher than it had previously experienced largely due to the non-deductibility
of some of the merger related expenses incurred in the period. In 1998, we
determined that certain of the Kroll

27
29

Holdings merger expenses qualified for future deductibility which favorably
impacted the effective tax rate in 1998.

In addition, the 1998 tax provision also reflects the favorable impact of
foreign locations with statutory tax rates at levels below U.S. tax rates and
the reversal of the valuation allowance related to certain foreign net operating
loss carryforwards.

NET INCOME. Net income increased $4.8 million from $2.4 million in 1997 to
$7.1 million in 1998. The increase was due primarily to an $8.0 million increase
in gross profit, offset by $2.3 million in increased operating expenses and an
increased provision for income taxes, as discussed above.

LIQUIDITY AND CAPITAL RESOURCES

General. We historically have met our operating cash needs by utilizing
advances from Kroll-O'Gara to supplement cash provided by operations and other
financing activities, excluding non-cash charges such as depreciation and
amortization.

Financing. We expect to obtain debt funding prior to completion of the
split-up to repay the portion of Kroll-O'Gara's third party financing
obligations assumed by us as well as to establish a working capital and letter
of credit facility.

On September 14, 2000, Kroll-O'Gara amended its credit agreement to provide
for an extension of its temporary increase in its revolving line of credit from
$25.0 million to $40.0 million. Pursuant to the amended credit agreement, the
increase in the revolving line of credit is effective until January 1, 2001, at
which time all borrowings in excess of $25.0 million must be repaid. The credit
facility continues to provide for a letter of credit facility of approximately
$7.6 million. Both the letter of credit facility and the line of credit mature
on May 31, 2001. Advances under the revolving line of credit bear interest at
rates ranging from prime to prime plus 0.75%, or, at Kroll-O'Gara's option,
LIBOR plus 1.50% to LIBOR plus 2.50%, dependent upon a defined financial ratio.

Cash flows from operating activities. Cash which we used in operating
activities was $0.2 million in the first six months of 1999. Cash provided by
operating activities was $0.9 million in 2000. In the first six months of 1999,
cash was used primarily to fund working capital investments offset by net
income. In the first six months of 2000, cash was provided by working capital
investments but was partially offset by the net loss incurred by Securify.

Operating activities used $1.8 million in net cash in 1999 in comparison
with $11.4 million in net cash used in operating activities in 1998. From the
inception in 1993 of our contract with the U.S. Government to armor the HMMWV
through the first quarter of 1998, we were designated a Small Business according
to U.S. Government procurement regulations. Thereafter, our designation was
changed to Large Business for government procurement purposes.

The change in designation has affected contract progress payments from the
government, and our cash flow, in two ways. First, since the change, the
progress payments have been determined using a smaller percentage of total cost
committed than before. Second, we have been reimbursed for vendor invoices paid
instead of expenses incurred. Although these changes do not affect the total
amount

28
30

ultimately collected, they defer some of the amounts previously included as part
of a progress payment until the vehicles are delivered.

The majority of these adjustments to the way we are reimbursed for our
military business were applied to the HMMWV contracts in 1998. This resulted in
a significant increase in the balance of Cost and Estimated Earnings in Excess
of Billings on Uncompleted Contracts and its related effect on cash flows from
operating activities.

We will continue to absorb the effect of the change in procurement
designation throughout the life of the HMMWV contract. Although there will be no
effect on Cash Flows from Operating Activities on a cumulative basis, the change
in payment terms will impact accounts receivable and Cost and Estimated Earnings
in Excess of Billings on Uncompleted Contracts from period-to-period.

Cash used in operating activities decreased approximately $9.6 million in
1999 as compared to 1998. Unlike the large increase from 1997 to 1998 as a
result of the change in timing of progress payments for Kroll-O'Gara's HMMWV
contracts, Cost and Estimated Earnings in Excess of Billings on Uncompleted
Contracts account decreased slightly in 1999. This, combined with the increase
in non-cash expenses, partially offset by a $7.0 million increase in cash used
for accrued liabilities, long-term liabilities and customer deposits and the
overall net loss experienced in 1999, contributed to the decreased use of cash
from operating activities.

Cash flows from investing activities. In the six months ended June 30,
2000, we incurred $2.3 million of capital expenditures primarily for upgrades of
general information systems as well as additional capitalized internal software
development costs associated with Securify. In the six months ended June 30,
1999, we incurred capital expenditures of $4.2 million primarily related to the
acquisition and implementation of a new enterprise system at its Security
Products and Services Group. In the first six months of 1999, capital
expenditures were funded by the sale of $6.0 million of marketable securities.

In 1999, we incurred capital expenditures of $8.0 million. Approximately
$2.7 million related to the acquisition and implementation of a new enterprise
system at one of its locations, as well as upgrades of general information
systems unrelated to our Year 2000 compliance efforts. The Information Security
Group incurred approximately $1.3 million of internal use software development
costs which were capitalized in 1999. Additional capital expenditures of $4.0
million were made for machinery and equipment. In 1998, we incurred normal
periodic capital expenditures of $4.1 million. In 1999, we sold $6.6 million of
its marketable securities in order to fund its increased capital expenditure
requirements.

The levels of total capital expenditures made by Kroll-O'Gara in 1999 were
in excess of the amounts permitted by its credit agreement with KeyBank. KeyBank
has provided Kroll-O'Gara a waiver from the requirements of this covenant.

Cash flows from financing activities. Cash which we used in financing
activities for the first six months of 1999 was $0.9 million. In the first six
months of 2000, cash provided by financing activities was $0.7 million. In the
first six months of 2000, cash was provided by borrowings under Kroll-O'Gara's
credit agreement, net of repayments of advances from Kroll-O'Gara. In the first
six months of 1999, cash used to reduce advances from Kroll-O'Gara exceeded cash
provided by borrowings under Kroll-O'Gara's credit agreements.

Net cash provided to us by financing activities was $28.5 million and $0.4
million for the years ended December 31, 1998 and 1999, respectively. Cash
provided by financing activities for 1999 was primarily provided by borrowings
under Kroll-O'Gara's credit agreement, net of repayments of advances from
Kroll-O'Gara. Cash from financing activities in 1998 included proceeds from the
May offering. A portion of these proceeds, $5.2 million, were used to repay
indebtedness of Kroll-O'Gara.

29
31

Foreign operations. We attempt to mitigate the risks of doing business in
foreign countries by separately incorporating its operations in those countries;
maintaining reserves for credit losses; maintaining insurance on equipment to
protect against losses related to political risks and terrorism, and using
financial instruments to hedge our risk from translation gains and losses.

We utilize derivative financial instruments, in the form of forward
contracts, to hedge some of its exposure to foreign currency rate fluctuations.
At June 30, 2000, five such contracts, maturing between July 2000 and January
2002, were outstanding in connection with an intercompany demand note with a
subsidiary. These contracts are intended to hedge our exposure to deterioration
in the amount outstanding due to changes in currency translation rates. The
notional amount, together with amortized premium, and the fair market value
associated with these forward contracts were $14.6 million and $1.9 million,
respectively. Gains or losses on existing forward instruments are offset against
the translation effects reflected in shareholders' equity. The fair value of
forward contracts is not recognized in the consolidated financial statements
since they are accounted for as hedges. We do not hold or issue derivative
financial instruments for trading purposes.

Quarterly fluctuations. Our operations may fluctuate on a quarterly basis
as a result of the timing of contract costs and revenues, particularly from its
military and governmental contracts which are generally awarded in a periodic
and/or sporadic basis. Period-to-period comparisons within a given year or
between years may not be meaningful or indicative of operating results over a
full fiscal year.

Forward-looking Statements. This Management's Discussion and Analysis of
Financial Condition and Results of Operations contains statements which we
believe are forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934. These statements are based upon management's
estimates, assumptions and projections and are subject to substantial risks and
uncertainties. Factors that could cause actual results to differ materially from
those in the forward-looking statements include, among other things: contract
delays, reductions or cancellations; cost overruns with regard to fixed price
contracts; problems and costs associated with integrating past and future
business combinations; various political and economic risks of conducting
business outside the United States, including foreign economic conditions and
currency rate fluctuations; changes in laws and regulations; adjustments
associated with percentage-of-completion accounting; inability of subcontractors
to perform on schedule and meet demand; unexpected competitive pressures
resulting in lower margins and volumes; uncertainties in connection with
start-up operations and opening new offices; higher-than-anticipated costs of
financing the business; loss of senior personnel; and changes in the general
level of business activity.

30
32

BUSINESS

GENERAL

The O'Gara Company is a leading provider of armored products and security
services. Through facilities in 10 countries, The O'Gara Company provides:

- ballistic and blast protected armoring systems for commercial and
military vehicles, aircraft and missile components; and

- security services, including advanced driver training, threat recognition
and avoidance training and training in firearms safety and use.

Our O'Gara-Hess & Eisenhardt Armoring Company subsidiary (OHE) has a long
and distinguished history dating back to 1876 as a horse-drawn carriage builder.
In the 1940s, OHE designed and built one of the earliest armored presidential
limousines, which was used by President Harry S Truman. Since then, OHE's
armored commercial vehicles have been used by U.S. Presidents, other heads of
state, business executives and VIPs worldwide. OHE has also been the sole source
provider of armoring systems for the U.S. Military's Up-Armored High Mobility
Multi-Purpose Wheeled Vehicles, commonly known as HMMWVs, since their
introduction in 1994. Additionally, through ITI, our International Training,
Incorporated subsidiary, we offer driver training, firearms training, threat
recognition and avoidance training and other security related services.

BUSINESS STRATEGY

Continue to expand armored passenger vehicle sales in the U.S. and foreign
markets. We will continue to expand our domestic and foreign market position as
the leading provider of armored passenger vehicles by leveraging our well
recognized name, high quality reputation and global network of customer
relationships. Since 1996, we have established or acquired manufacturing
operations in Brazil, Colombia, France, Hungary, Mexico, the Philippines and
Russia. We have experienced significant growth as a result of these foreign
locations. We intend to increase sales in countries where we already have
manufacturing locations by expanding our product offering, growing our dealer
networks, expanding our relationships and armoring agreements with original
vehicle manufacturers (OEMs), expanding our involvement in the market for used
armored vehicles and offering alternative financing arrangements for our
vehicles. Also, we intend to continue to review opportunities to acquire or
establish manufacturing operations in additional countries.

Expand our cash-in-transit vehicle sales. We currently produce commercial
armored vehicles for the money transport industry in France, Hungary and Russia.
Our sales growth has been driven primarily by three factors. First, cash
transport transport industry has been consolidating and increasingly is served
by a few large and global companies. This has resulted in larger orders being
placed by fewer buyers who have focused on companies such as ours that can meet
their volume and quality specifications. Second, several countries in Europe,
most notable Belgium and France, have recently enacted laws requiring higher
levels of ballistic protection for cash-in-transit vehicles. This has caused the
major companies to upgrade their entire fleets to meet these new specifications.
Third, the economies of many underdeveloped countries are expanding, resulting
in a rapid increase of cash in circulation and a corresponding increase in the
need of banks and other merchants safely to move cash. We believe that our
ability to produce armored commercial vehicles in several countries around the
world will appeal to the major companies involved in the money transport
industry as they seek operating efficiencies through fleet standardization and
volume purchasing on a global, rather than a local, basis. Additionally, we are

31
33

exploring the feasibility of high technology non-armor security solutions as an
addition or a replacement to traditional means of protecting cash shipments.

Expand our services to armored vehicle customers in each of our geographic
locations. The installed base of our armored commercial and passenger vehicles
continues to increase. For instance, our installed base of armored passenger
vehicles in Sao Paulo, Brazil is now estimated at approximately 2,000 vehicles.
As this trend continues, we intend to expand our after-sale service offerings.
Due to the specialized nature of armored vehicles, many more of our customers as
well as customers of our competitors have begun to look to us to provide service
and parts. Additionally, we intend to offer our customers other services such as
vehicle tracking, incident response and, for our commercial customers, logistics
and information system supports as they pertain to fleet management.

Grow our training and security services. Through our International
Training, Incorporated subsidiary we offer driver training, firearms training,
surveillance detection training, executive protection training and various other
security related services. To date, most of our revenue in this area has been
derived from the U.S. Government and from U.S. corporations with personnel based
abroad. We intend to increase our sales to the U.S. Government, capitalizing on
its practice of increasingly outsourcing services to proven suppliers.
Additionally, we intend aggressively to expand our offering of these services in
foreign markets where we have a presence as well as in countries in which
personal safety concerns are high. We also will offer driver training for our
armored commercial cash-in-transit products.

Expand military sales. As the nature of armored conflicts has changed,
worldwide military budgets have been cut and high technology has become ever
present, we have seen at least three modifications to historical military
patterns. First, heavily armored tracked vehicles continue to be replaced with
lighter, more mobile and less expensive tactical wheeled vehicles, such as the
HMMWV and the U.S. Army's High Mobility Artillery Rocket System (HIMARS).
Second, wheeled vehicles, which traditionally have remained well behind the
front lines, now are being used in areas of conflict and thus are exposed to
hostile fire. Third, the military increasingly is looking for ways to integrate
sophisticated high technology communication, weapon and other systems into its
wheeled vehicles. To take advantage of these trends, we are working with AM
General, the manufacturer of the HMMWV, and with manufacturers of other tactical
wheeled vehicles to market a variety of armored tactical wheeled vehicles to the
U.S. Government as well as foreign governments. We also are expanding our
efforts to work with the U.S. Government and with other government contractors
to develop armoring solutions for wheeled vehicles that traditionally have been
unprotected. Additionally, as the fleet of fielded Up-Armored HMMWVs grows, the
requirements for spare parts and technical support will continue to expand.
Finally, we have greatly improved our engineering capabilities and are
developing and implementing sophisticated integrations of hardware and
electronic components for the HMMWV as well as other vehicles.

Pursue strategic acquisition opportunities. The fragmented nature of the
global security industry provides ample opportunities for strategic
acquisitions. We believe that we are well positioned to consolidate companies in
the armoring and security training sectors of the industry as well as to broaden
the scope of our business through acquisitions. However, our ability to use our
stock as consideration in potential acquisitions will be limited for two years
following the split-up in order to preserve the split-up's tax-free status.

32
34

PRODUCTS AND SERVICES

The following table presents the aggregate net sales for our product and
services categories for the periods indicated.

YEAR ENDED DECEMBER 31,
--------------------------------
1997 1998 1999
-------- -------- --------
(IN THOUSANDS)

Commercial products........................ $ 54,541 $ 67,594 $ 67,727
Military products.......................... 43,719 59,839 39,602
Security services.......................... 2,479 4,257 11,178
-------- -------- --------
$100,739 $131,690 $118,507
======== ======== ========

In addition to the information presented above, see the Notes to our Combined
Financial Statements, included elsewhere in this document, for business segment
data and for information concerning foreign and domestic operations and export
sales.

COMMERCIAL PRODUCTS

We armor a variety of vehicles, including limousines, sedans, sport utility
vehicles, commercial trucks and money transport vehicles, to protect against
varying degrees of ballistic and blast threats. The armoring process begins with
the disassembly of a new base vehicle. This disassembly normally involves the
removal of the interior trim, seats, doors and windows. The passenger
compartment then is armored with both opaque and transparent armor. Other
features, such as run flat tires and non-exploding gas tanks, also may be added.
Finally, the vehicle is reassembled as close to its original appearance as
possible. The types of commercial products produced are described below. During
1999, The O'Gara Company shipped approximately 2,720 commercial armored
vehicles.

Armored vehicles. We produce fully armored vehicles and light armored
vehicles. Fully armored vehicles, such as limousines, large sedans or sport
utility vehicles, typically are armored to protect against attacks from military
assault rifles such as AK-47s and M16s. These vehicles also can be blast
protected by enhancing the ballistic and underbody protection with proprietary
materials and installation methods that protect the occupants against a defined
blast threat. Blast protected vehicles defend against threats such as pipe bombs
attached to the exterior of the vehicle and nondirectional charges of 20 kg of
TNT detonated approximately five meters from the vehicle. Fully armored vehicles
typically sell for $70,000 to $200,000 exclusive of the cost of the base
vehicle.

Fully armored vehicles also include Parade Cars, which are formal
limousines used predominantly for official functions by a president or other
head of state. These vehicles are usually customized based upon a commercially
available chassis which The O'Gara Company essentially rebuilds from the ground
up. Because the threat of organized assassination attempts is greater for heads
of state, these vehicles normally incorporate more advanced armor and
sophisticated protection features. These features can include supplemental air
and oxygen systems, air purification systems to protect against chemical or
biological contamination, underbody fire suppressant systems, tear gas
launchers, anti-explosive self-sealing fuel tanks, electric deadbolt door locks,
gun ports and bomb scanners. Parade Cars normally sell for $300,000 to in excess
of $1.0 million inclusive of the cost of the base vehicle.

Light armored vehicles are similar in all respects to fully armored
vehicles except that substantially less total weight of armoring is added.
Therefore, it is possible to armor smaller vehicles such as the Volkswagen Jetta
and the General Motors Omega, as well as larger vehicles such as the Mercedes
Benz S600 and the Jeep Cherokee. Light armored vehicles are designed to protect
against attacks from

33
35

handguns, such as a 9 mm or .357 Magnum. The price of a light armored vehicle
ranges from $5,000 to $60,000 exclusive of the cost of the base vehicle.

Other vehicles. We also produce specialty vehicles, cash-in-transit money
transport vehicles and commercial truck bodies. Specialty vehicles are custom
built for a specific mission. Examples of specialty vehicles are Escort Cars,
usually convertibles, and Chase Cars, usually closed-top vehicles, in which
security personnel ride while in a head of state motorcade. Cash-in-transit
vehicles are used by banks or other businesses to transport currency and other
valuables. After starting with a van or small truck, we modify the base vehicle
to provide protection for the cargo and passengers from ballistic and blast
threats. We also build commercial truck bodies. The truck bodies are
manufactured primarily for 3.5 ton trucks and are installed on chassis produced
by a variety of manufacturers.

MILITARY PRODUCTS

Up-Armored HMMWVs. We are the prime contractor to the U.S. Military for the
supply of armoring and blast protection for HMMWVs. The HMMWV chassis are
produced by AM General Corporation and shipped directly to our facility in
Fairfield, Ohio where armor and blast protection components are added. A number
of these components are purchased from single source suppliers. The Up-Armored
HMMWVs provide exterior protection against various levels of armor-piercing
ammunition, overhead airburst protection and underbody blast protection against
anti-tank and anti-personnel mines. In addition, we install other features
designed to enhance crew safety, comfort and performance, such as air
conditioning, weapon turrets and mounts, door locks and shock-absorbing seats.
We charge $70,000 to $110,000 for these ballistic and blast protective systems.
During 1999, we shipped 557 Up-Armored HMMWVs. We also supply engineering design
and prototype services in support of the Up-Armored HMMWV Program, and supplies
spare parts and logistic support.

HIMARS. We are serving as a subcontractor to develop a ballistically
armored and sealed truck cab for the High Mobility Artillery Rocket System,
which will be used by the U.S. Army. The HIMARS truck is used to fire missiles
which are a part of either the Multiple Launch Rocket System (MLRS) or the Army
Tactical Missile System (ATACM).

Other armor systems. We market armor sub-systems for other tactical wheeled
vehicles, such as 2.5 ton and 5.0 ton trucks. We also produce various armor
systems as a subcontractor to larger defense contractors, such as Lockheed
Martin Corporation. These products include armor for containers for fuels and
missile launchers and for pilot protection, and typically involve the use of
materials or methods which are unique to us.

SECURITY SERVICES

We offer comprehensive security training programs in advanced driving,
ballistics, counterintelligence and surveillance both at our facilities near
Washington, D.C., San Antonio, Texas and Mexico City, Mexico and at customer
designated locations. We offer ballistics training in a progressive and
realistic shooting house, encompassing 6,800 square feet of training space, at
our facility near Washington, D.C. Ballistics training consists of a wide
spectrum of combat marksmanship skills which focuses on realistic situations,
exposing students to stress while under difficult firing situations. We also
offer security and counterintelligence training courses for both U.S. Government
agencies and clients in the private sector. The training includes instruction on
methods of recognizing and deterring security risks. Students learn
methodologies utilized by terrorists, what information is needed by terrorists
in order to plan an attack and how to block or manipulate this flow of
intelligence.

34
36

OWNERSHIP OF SECURIFY INC.

We will own approximately % of the stock of Securify Inc., which will
operate as a private company under separate management. Securify provides
objective information security services, including:

- network and system security assessment;

- product evaluation and assessment;

- security policy creation and implementation;

- security architecture and design; and

- public key infrastructure (PKI) consulting services.

Although we will not participate actively in the day-to-day management of
Securify, we will have one seat on Securify's Board of Directors.

CUSTOMERS

Commercial products

Our armored commercial vehicle customers include governmental and private
buyers. U.S. and foreign governmental buyers purchase both fully and
light-armored vehicles. Governmental buyers also comprise the market for Parade
Cars. Typically, governmental buyers consist of ministries of foreign affairs,
defense and internal affairs and offices of presidential security. These
customers are not constrained in their purchasing decisions by considerations
such as import duties and taxes and are free to search globally for the best
product available. The procurement cycles of governmental buyers can range from
relatively rapid, when the vehicles are for the use of the head of state or in
response to a particular crisis, to prolonged bureaucratic bids and evaluations
for normally budgeted items. Our private customers for armored commercial
vehicles include corporations and individuals. Private buyers are much more
sensitive to cost, of which import duties and taxes may be a substantial part,
and, therefore, often will buy a locally produced product, if one exists that
meets their needs. Local servicing of the vehicle is also a critical concern to
private buyers. Our customers for cash-in-transit vehicles are generally
financial institutions. Purchasing decisions for cash-in-transit vehicles depend
on many criteria including whether the financial institution is private or
governmental, insurance and regulatory requirements and cost. The geographic
distribution of 1999 sales of our commercial armored vehicles, as a percentage
of total 1999 sales for those products, was as follows:

PERCENTAGE OF 1999 COMMERCIAL SALES BY GEOGRAPHIC AREA

Europe...................................................... 43.4%
Central and South America................................... 27.6%
North America............................................... 21.9%
Middle East................................................. 2.4%
Far East.................................................... 3.4%
Other....................................................... 1.4%

35
37

Military Products

Our market for military hardware products is worldwide in scope, including
the U.S. Military and foreign defense forces. Our major contracts for delivery
of Up-Armored HMMWVs are with the U.S. Military. We also are serving as a
subcontractor to develop a ballistically armored and sealed truck cab for the
HIMARS, to be used by the U.S. Army. Additionally, we provide protected
container systems, typically used to protect missile systems from small arms
fire, to the U.S. Military under a subcontract with Lockheed Martin. We are
seeking to expand our sales of armored tactical wheeled vehicles to foreign
defense forces.

Training

We offer advanced driver training, firearms training and surveillance
detection training courses. Many private sector clients are drawn to our
training courses due to our reputation of providing these services to various
governmental agencies. Because the protection afforded by armored vehicles is
greatly enhanced by their proper operation, we market our various courses to our
armored commercial vehicle customers and vice versa.

MARKETING AND SALES

Commercial

On a worldwide basis, we have 25 full-time sales professionals, who operate
out of Washington, D.C.; Miami, Florida; Fairfield, Ohio; Sao Paulo, Brazil;
Lamballe, France; Paris, France; Mexico City, Mexico; Manila, the Philippines;
Moscow, Russia; Bogota, Colombia; and Geneva, Switzerland. All personnel have a
geographic and/or product-specific responsibility. In most cases, the sales
personnel also recruit and maintain sales agents or distributors. The agents or
distributors have geographic and product-specific agreements, and compensation
in most cases is based upon a commission arrangement. The sales personnel use a
consultative approach when offering solutions to customers' security problems.
Sales cycles for commercial physical security products can range from several
months to a matter of days, depending upon the product and the urgency
associated with the security problem being addressed. Physical security products
which are readily available, such as the fully armored Chevrolet Suburban, allow
us to assist customers who have, or believe they have, developed an immediate
threat. We are working with various cash transportation companies to create
joint ventures in order to supply all of these companies' armored
cash-in-transit vehicles in specific countries or regions.

Military

We have positioned ourselves in the marketplace as a commercial company
with a military production capability. As such, we emphasize our ability to
develop new products, or product adaptations, quickly and more cost-effectively
than traditional defense contractors. In marketing our products to the military,
we also place strong emphasis on our superior antitank and antipersonnel mine
protection for the occupants of tactical wheeled vehicles. We market our
military products through a combination of trade show exhibitions, print
advertising in military-related periodicals and direct customer visits. We
emphasize the cross-marketing of military and commercial products, which we
believe strengthens the image of each product group. We also have entered into
exclusive teaming and joint marketing agreements with AM General, the
manufacturer of the basic HMMWV, for sales in the military and commercial
arenas. These agreements designate us as the exclusive armorer to AM General for
HMMWVs and allow us to benefit from the AM General distribution network and save
on certain costs, such as exhibitions where AM General and we otherwise both
would show products. Additionally,

36
38

we currently are working with other military vehicle manufacturers whose
products are more popular in other areas of the world to develop armored
configurations for their vehicles.

Our military sales activities are directed toward identifying contract bid
opportunities with various U.S. Government agencies and private enterprises
acting as prime contractors on government contracts and to making sales through
the Foreign Military Sales Program and directly to foreign military
organizations. We have two full-time business development managers who are
responsible for this activity and also have contractual arrangements with
several outside consultants who assist the business development managers in
their activities. Proposal preparation and presentation for government projects
is done by a team which normally consists of program managers, a contracting
officer, a cost accountant and various manufacturing and engineering personnel.

ENGINEERING AND DEVELOPMENT

We emphasize engineering excellence and has an extensive engineering staff.
Design engineers use state-of-the-art two-dimensional and three-dimensional
computer aided design and engineering (CAD/ CAE) systems in conjunction with
coordinate measuring machines to develop electronic models which generally are
converted to solid models or prototypes. Manufacturing engineers concentrate on
improvements in the production process and on overall cost reductions from
better methods, fewer components and less expensive materials with equal or
superior quality. Applying these techniques, over the years we have been able to
reduce both the time and cost necessary to produce our armored vehicles. Our
ballistic engineer, in conjunction with our design and manufacturing engineers,
develops and tests new ballistic and blast protection systems that meet
ever-changing threats. Advanced engineering is responsible for new product
development in conjunction with design engineering, manufacturing engineering
and ballistic engineering.

We estimate that we expended approximately $2.9 million, $3.7 million and
$3.5 million in 1997, 1998 and 1999, respectively, on our engineering and
development efforts. These amounts include expensed amounts reimbursed under a
Systems Technical Support contract described below under "U.S. Government
Contracts."

U.S. GOVERNMENT CONTRACTS

We serve as the U.S. Military's sole source contractor for armoring the
HMMWV fleet. Since our initial contract in August 1993 to armor 59 HMMWVs, we
have been awarded contracts to armor a total of 2,297 HMMWVs. Of these, 2,055
Up-Armored HMMWVs have been shipped, as follows:

NUMBER OF
YEAR SHIPPED HMMWVs
------------ ---------

1993........................................................ 0
1994........................................................ 139
1995........................................................ 26
1996........................................................ 507
1997........................................................ 366
1998........................................................ 460
1999........................................................ 557
-----
Total............................................. 2,055
=====

Prior to March 2000, our most recent HMMWV contract with the U.S. Military
was entered into in 1998 and included an option for additional vehicles which
was exercised on April 30, 1999. The 245 Up-Armored HMMWVs for the U.S. Army and
the U.S. Navy covered by the option were delivered

37
39

through August 2000. On March 30, 2000 we were awarded a new contract by the
U.S. Military. The contract, with options, has a five-year duration with a
baseline quantity of 360 Up-Armored HMMWVs per year and a potential to reach
3,060 vehicles over the life of the contract. The range of the contract's total
value is between $125 million and $215 million. The initial order is for 360
Up-Armored HMMWVs with a value of approximately $25 million.

As the Up-Armored HMMWV fleet grows, we are experiencing continued growth
in fleet management activity and spare parts. The U.S. Military signed a
five-year spare parts contract with us in March 1999. This contract designates
us to provide HMMWV armor parts to all U.S. Military end users. The most recent
fleet management contract option with the U.S. Military was exercised in March
2000.

We are in the last year of a System Technical Support contract with the
U.S. Military to support continued research and development on the Up-Armored
HMMWV program. This contract, signed in 1997, has required us to provide up to
25,000 hours per year of engineering and development time to enhance and study
the Up-Armored HMMWV. The last option to the contract was exercised in August
1999 for year 2000, work on which will continue into 2001. The U.S. Military is
currently evaluating a further extension of this contract.

As a subcontractor to Lockheed Martin Corporation, we have provided
armoring for certain missile weapons systems. We were first engaged in September
1993 by Lockheed Martin to armor launch systems of missiles. We were most
recently engaged by Lockheed Martin in February 2000 to provide this armoring
and believe that we are well positioned for future engagements.

Stewart & Stevenson Services, Incorporated has subcontracted with us to
develop a ballistically armored and sealed HIMARS truck cab. Two phases of this
contract have been released to us, totaling $1.5 million. We anticipate that
this eventually will result in a multi-year production contract.

COMPETITION

The markets for our products and services are highly competitive. Our
competitors range from small businesses to multinational corporations.

We believe that our design, engineering and production expertise in
providing fully integrated ballistic and blast protected vehicles gives us a
competitive advantage over those competitors who provide protection against only
selected ballistic threats. The largest competitors on a worldwide basis in the
production of armored commercial vehicles are DaimlerChrysler AG, which sells
its armored Mercedes Benz products both on a special order basis as well as
through its world-wide distribution system, and BMW AG, which sells its products
through its worldwide dealer distribution system. In addition, there are a
number of other vehicle armorers in Europe, the Middle East and Latin America
which armor primarily locally manufactured automobiles. U.S.-based protected
passenger automobile armorers include the Pittston Company (owner of Brinks
armored vehicles), Moloney Coachbuilders, Inc., Armor Holdings, Inc., and Armet
Armored Vehicles, Inc. The principal competitive factors are price, quality of
engineering and design, production capability and capacity, ability to meet
delivery schedules and reputation in the industry. There are a large number of
companies that provide specific armoring packages for tactical wheeled vehicles,
helicopters and selected other military applications. We believe that, as the
size of the Up-Armored HMMWV requirement continues to grow, competition from
major defense contractors may develop.

SEASONALITY, BACKLOG AND RELATED MATTERS

Approximately 33% of our pro forma net sales during 1999 were derived from
U.S. Military contracts and an additional 14% were derived from commercial
contracts with U.S. governmental

38
40

agencies or foreign governments. For 1998, these percentages were 45% and 9%,
respectively. Military and governmental contracts generally are awarded on a
periodic or sporadic basis. We frequently receive substantial orders in one
quarter, the revenues from which are not recognized until one or more subsequent
quarters. As a result, we have significant fluctuations from time to time in our
business. Historically, these fluctuations have not been seasonal. We do not
believe that our business is seasonal overall, although historically the first
quarter has been weaker than the other three. Period-to-period comparisons
within a given year or between years may not be meaningful or indicative of
operating results over a full fiscal year.

Our backlog at December 31, 1998 and 1999 was approximately $21.6 million
and $18.2 million, respectively. Backlog consists of net sales value for firm
orders not previously included in net sales on the basis of
percentage-of-completion accounting. Because many timing and cost factors affect
the production and delivery of our products, there is no certainty as to when
net sales will be recognized from backlog. However, we expect to ship all of our
1999 backlog in 2000. Year-to-year comparisons of backlog are not necessarily
indicative of future operating results.

Our net sales from government contracts and most commercial contracts for
our armoring products are recognized using the percentage-of-completion method.
Under this method, contract revenues are reported based on the percentage that
costs to date bear to total estimated costs. Estimated contract losses are
recognized in full in the period in which it becomes likely that a loss will
occur. Accordingly, contract revenues and total cost estimates are reviewed and
revised periodically as the work progresses and as change orders are approved,
and adjustments based upon the percentage-of-completion are reflected in
contract revenues in the period when such estimates are revised. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

PROPERTIES AND FACILITIES

Our executive offices are located in Fairfield, Ohio. In addition, we
maintain three other domestic offices or facilities in three states and offices
or facilities in nine foreign countries. Our principal properties and facilities
are as follows:

BUILDING
LOCATION SQUARE FOOTAGE STATUS
-------- -------------- ------

Fairfield, Ohio................................... 130,000 Owned
Lamballe, France.................................. 125,000 Leased
Sao Paulo, Brazil................................. 50,000 Leased
Mexico City, Mexico............................... 20,000 Owned
Washington, D.C. area............................. n/a Leased
San Antonio, Texas................................ n/a Owned

FAIRFIELD, OHIO. In addition to executive offices, this facility contains
full production and assembly facilities for our armored commercial vehicles and
the manufacturing and distribution of Up-Armored HMMWVs. The facility is
financed through tax-exempt debt and is pledged to secure the repayment of the
debt. The facility includes a complete fabrication and machine shop equipped
with a computer controlled plasma cutter, a computer controlled press break,
mills, automated grinders, a robotic welder and two coordinate measuring
machines, paint booths and ancillary equipment for both military and commercial
painting.

LAMBALLE, FRANCE. The site contains facilities for production of armored
commercial and cash-in-transit vehicles, design studios for development of
prototypes, integrated computer systems, and areas for

39
41

parts, fabrication, painting and quality control. This facility also contains a
ballistics range. It currently is leased for a term expiring in September 2000.
We are in the process of constructing a replacement facility. For accounting
purposes, this is treated as an operating lease.

SAO PAULO, BRAZIL. This facility is used for manufacturing and sales of a
full product line of armored commercial vehicles. It currently is leased for a
term expiring in April 2002; however, either party can terminate the lease on 90
days written notice. For accounting purposes, this lease is treated as an
operating lease.

MEXICO CITY, MEXICO. This facility is used for manufacturing and sales of a
full product line of armored commercial vehicles. The facility was purchased in
1996.

WASHINGTON D.C. AREA. This facility is used for advanced security training
and includes a portion of an abandoned airport runway that is used for advanced
driver training. The facility is leased for a term expiring in May 2009. For
accounting purposes, this lease is treated as an operating lease.

SAN ANTONIO, TEXAS. This facility, which was acquired in 1997, consists of
165 acres of land used for advanced driver and force protection training.

Our manufacturing capabilities include fully integrated manufacturing
programs which link production control, materials control, quality control and
accounting. We believe that our facilities are adequate for our current needs
and that our properties, including machinery and equipment, are generally in
good condition, well maintained and suitable for intended current and
foreseeable uses.

EMPLOYEES

We have approximately 953 employees, comprised of 93 in marketing and
sales, 576 in operations, 68 in professional services, 61 in engineering and 155
in general and administrative. Our U.S. employees are not represented by any
union and are not covered by any collective bargaining agreements. Approximately
224 employees of our French subsidiary are employed under agreements with the
Confederation Francaise Democratique du Travail. Wage increase parameters are
set twice a year by local management in consultation with the union. We have not
experienced any work stoppages or employee related slowdowns and believe that
our relationship with our employees is good.

GOVERNMENT REGULATION

As a contractor with agencies of the U.S. Government, we are obligated to
comply with a variety of regulations governing our operations and the workplace.
Additionally, our contracts give the contracting agency the right to conduct
audits of our facilities and operations, and these audits occur routinely. An
audit involves a governmental agency's review of our compliance with the
prescribed procedures established in connection with the government contract.

Regulations promulgated by the U.S. Commerce Department require us to
obtain a general destination license in connection with the sale of certain
commercial products in foreign countries, and U.S. State Department regulations
require us to file an export license in connection with sales of military
equipment in foreign countries. Furthermore, the U.S. State Department prohibits
all sales of military equipment to certain countries, and the U.S. complies with
United Nations trade embargos. Additionally, foreign countries in which we do
business or into which we expect to expand have laws and regulations which may
restrict our business. We believe that we currently conduct our activities and
operations in substantial compliance with applicable governmental laws and
regulations.

40
42

ENVIRONMENTAL MATTERS

Our operations are subject to a number of environmental laws, regulations
and ordinances, both in the U.S. and foreign countries, governing activities
that may have adverse environmental effects, such as discharges to air and
water, as well as handling, storage and disposal practices for solid and
hazardous materials. These laws also impose liability for the cost of
remediating, and damages resulting from, sites of past releases of hazardous
materials. Environmental laws continue to change rapidly, and it is likely that
we will be subject to increasingly stringent environmental standards in the
future. We believe that we currently conduct our activities and operations in
substantial compliance with applicable environmental laws.

PATENTS, TRADEMARKS AND COPYRIGHTS

We currently have six issued U.S. patents relating to our armoring
business. We have several federally registered trademarks and copyrights and
have registered our trademarks in numerous foreign countries. Although we do not
believe that our ability to compete in any of our product markets is dependent
on our intellectual property, we do believe that the protection afforded by our
"Armoring Assembly" and "Vehicle Mine Protection Structure" patents, both of
which relate to vehicle underbody blast protection, provides us with important
technological advantages over our competitors. Although we have protected our
technologies to the extent that we believe appropriate, there can be no
assurance that the measures to protect our proprietary rights will deter or
prevent unauthorized use of our technologies. In other countries, proprietary
rights may not be protected to the same extent as in the United States.

LEGAL PROCEEDINGS

We have learned that an individual has filed a qui tam suit, which is under
seal, against OHE under the Civil False Claims Act, 31 U.S.C. sec. 3729 alleging
that OHE and three of its vendors knowingly violated their contractual
requirements with the U.S. Army. On January 18, 2000, an attorney for the U.S.
Department of Justice stated that it was his intention to recommend that the
Government intervene and take over the suit and estimated Kroll-O'Gara's
liability to be as high as $16,000,000 stemming from its vendors' alleged
failure to have certified welders. Although Kroll-O'Gara strongly disputes the
Government's contentions against it and will vigorously contest the Government's
claims, in September 2000, Kroll-O'Gara began settlement negotiations with the
U.S. Department of Justice. Kroll-O'Gara's management currently believes a
settlement of this matter is possible for approximately $1.1 million and
Kroll-O'Gara will accrue this expense in the third quarter of fiscal 2000. Any
liability and legal expenses arising from the qui tam proceeding will be The
O'Gara Company's sole responsibility after the split-up.

Kroll-O'Gara has been named as a defendant in eight lawsuits alleging that
its officers and directors breached their fiduciary duties in connection with
the now terminated proposed acquisition of a majority of Kroll-O'Gara's shares
by a company formed by Blackstone Capital Partners III Merchant Banking Fund
L.P. Five of the lawsuits were filed in the Court of Common Please, Butler
County, Ohio, and were consolidated on November 29, 1999. The remaining three
lawsuits were filed in the United States District Court for the Southern
District of New York and were consolidated on November 30, 1999. In the amended
complaints, plaintiffs allege that Kroll-O'Gara's officers and directors
breached their fiduciary duties by deferring acquisitions, by negotiating an
inadequate acquisition price, by failing to engage in arms-length negotiations
and by failing to seek redress from Blackstone after Blackstone terminated the
proposed transaction. The plaintiffs also allege that Blackstone and American
International Group, Inc. aided and abetted the directors' and officers' alleged
breaches of fiduciary duties. The plaintiffs seek to bring their claims
derivatively on behalf of Kroll-O'Gara and also seek class certification. On
behalf of Kroll-O'Gara and putative plaintiff classes of shareholders, they seek
a

41
43

declaration that the individual defendants breached their fiduciary duty and
seek damages and attorneys' fees in an unspecified amount. We have agreed to pay
approximately 41.5% of any liabilities and costs related to this lawsuit.

In addition to the matters discussed above, we are involved in litigation
from time to time in the ordinary course of our business. However, we do not
believe that there is any currently pending litigation, individually or in the
aggregate, that is likely to have a material adverse effect on our business,
financial condition, results of operations or cash flows.

42
44

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is information concerning our directors and executive
officers.

NAME AGE POSITION
---- --- --------------------------------------------

Thomas M. O'Gara............................. 49 Chairman of the Board
Wilfred T. O'Gara............................ 43 President and Chief Executive Officer,
Director
Abram S. Gordon.............................. 37 Vice President, General Counsel and
Secretary
Nicholas P. Carpinello....................... 50 Vice President and Chief Financial Officer

[directors to be added]

THOMAS M. O'GARA is Chairman of the Board of The O'Gara Company. He has
been Vice Chairman of the Board of Kroll-O'Gara since December 1997. Mr. O'Gara
served as Chairman of the Board of the former O'Gara Company from August 1996
until December 1997. Mr. O'Gara also has been Chairman of the Board of OHE since
1990 and was OHE's Chief Executive Officer from 1990 until 1995. He has been a
director of the former O'Gara Company or Kroll-O'Gara since August 1996 and a
director of OHE since 1988. Mr. O'Gara has held numerous executive officer and
director positions with the company, its subsidiaries and its predecessors since
1975. From 1984 until 1986, Mr. O'Gara also was Honorary Consul General for the
Sultanate of Oman. Thomas M. O'Gara and Wilfred T. O'Gara are brothers.

WILFRED T. O'GARA is President and Chief Executive Officer of The O'Gara
Company. He has served as Co-Chief Executive Officer of Kroll-O'Gara and Chief
Executive Officer of Kroll-O'Gara's Security Products and Services Group since
April 2000. Previously he had served as Kroll-O'Gara's President and Chief
Operating Officer since December 1997 and as the former O'Gara Company's Chief
Executive Officer from August 1996 until December 1997. Mr. O'Gara has been
associated with the company, its subsidiaries and its predecessors since 1983
and has held numerous executive officer and director positions, including
serving as Chief Executive Officer of OHE since January 1996, President and
Chief Operating Officer of OHE from 1991 through 1995 and Vice President--Sales
and Marketing of OHE from 1988 until 1991. Mr. O'Gara has been a director of the
former O'Gara Company or Kroll-O'Gara since August 1996 and a director of OHE
since 1991. Mr. O'Gara also is a director of LSI Industries, Inc.

ABRAM S. GORDON is Vice President, General Counsel and Secretary of The
O'Gara Company, positions he has held with the former O'Gara Company or
Kroll-O'Gara since January 1997. Prior to that time he was with the law firm of
Taft, Stettinius & Hollister LLP, Cincinnati, Ohio, from October 1987 until
December 1996.

NICHOLAS P. CARPINELLO initially is serving as Vice President and Chief
Financial Officer of The O'Gara Company. He has been Controller and Treasurer of
Kroll-O'Gara since December 1997. From August 1996 until December 1997 he served
as former O'Gara Company's Executive Vice President, Chief Financial Officer and
Treasurer, positions he also has held with OHE since 1993. Mr. Carpinello has
been associated with the former O'Gara Company or Kroll-O'Gara and its
predecessors since 1984. From 1975 until 1984, he was employed by Arthur
Andersen LLP where he served as a manager in the audit and small business
consulting divisions. Mr. Carpinello has advised the company that he currently
anticipates resigning from his employment as soon as practicable after the
split-up.

[directors to be added]

43
45

DIRECTORS' MEETINGS, FEES AND COMMITTEES

Our Board of Directors will hold regularly scheduled meetings, and will
hold special meetings as necessary to review significant matters affecting the
company and to act upon matters requiring Board approval.

After the split-up, our Board will have an Audit Committee and a
Compensation Committee. The Audit Committee will be composed of ,
, and . The Audit Committee will recommend the
appointment of independent accountants and review and discuss with the
independent accountants the scope of their examination, their proposed fee and
the overall approach to the audit. The Audit Committee also will review with the
independent accountants and the company's financial management the annual
financial statements and discuss the effectiveness of internal accounting
controls. The Compensation Committee will be composed of ,
, and . The Compensation Committee will be
responsible for establishing executive officers' compensation and fringe
benefits and administering the company's stock option and other executive
benefit plans. The Board will not have a Nominating Committee.

Directors who are not our employees will receive an annual retainer of
$15,000, plus options to purchase 2,000 shares of O'Gara Company common stock,
for serving as directors. These directors also will be paid $1,000 for each
Board meeting attended in person and $750 for attending Board meetings held by
telephone. Each Committee Chairman will receive an additional annual retainer of
$1,600 and committee members, including the Chairman, will receive $750 per
meeting attended, whether in person or by telephone, unless the meeting occurs
on the same day as a Board meeting, in which case no separate fee will be paid.
Employee directors will not be separately compensated for their services as
directors.

We expect to adopt an Outside Directors' Deferred Compensation Plan. Under
this plan each nonemployee director will be entitled to defer all or a portion
of his director's fees into a bookkeeping account. The account will be credited
with "phantom" units representing shares of O'Gara Company common stock
equivalent in value to the amount of each fee deferred, at the time earned.
Unless a later time is selected by a director, the value of the units in the
director's account will be paid in cash when the director's service on the Board
terminates or at the time of a "change in control" of The O'Gara Company as
defined in the plan.

44
46

EXECUTIVE COMPENSATION AND BENEFIT PLANS

HISTORICAL COMPENSATION INFORMATION

The following table describes the compensation paid by Kroll-O'Gara during
the last three years to Mr. Wilfred T. O'Gara, our Chief Executive Officer, and
to each of our other executive officers. These persons are sometimes referred to
as the "named executive officers."

SUMMARY COMPENSATION TABLE

LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -----------------------------
-------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING STOCK ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTION GRANTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)(1)
------------------ ---- ------- ------ ------------ ---------- ---------------- ------------

Thomas M. O'Gara...... 1999 275,000 -- -- -- -- 7,030
Chairman of the
Board 1998 275,000 -- -- -- -- 7,651
1997 252,083 -- -- -- 23,150 7,452

Wilfred T. O'Gara..... 1999 350,000 -- -- -- 17,000 8,675
President and 1998 350,000 -- -- -- -- 6,816
Chief Executive
Officer 1997 240,000 45,000 -- -- 98,150 6,590

Abram S. Gordon....... 1999 150,000 -- -- -- 5,000 5,813
Vice President 1998 135,000 35,000 -- -- -- 4,160
1997 97,237 25,000 -- -- 15,000 233
Nicholas P.
Carpinello.......... 1999 180,000 -- -- -- 10,000 10,024
Vice President...... 1998 140,000 -- -- -- -- 9,055
1997 140,000 40,000 -- -- 14,000 9,248

- ---------------

(1) For 1999 represents profit-sharing contributions of $2,400 for each person;
executive disability insurance plan benefits of $3,706 for Mr. Thomas M.
O'Gara, $5,708 for Mr. Wilfred T. O'Gara, $6,700 for Mr. Carpinello, and
$2,993 for Mr. Gordon; and group term life insurance benefits of $924 for
Mr. Thomas M. O'Gara, $567 for Mr. Wilfred T. O'Gara, $924 for Mr.
Carpinello and $420 for Mr. Gordon.

The following table presents information on option grants to the named
executive officers during 1999 pursuant to Kroll-O'Gara's 1996 Stock Option
Plan. The Plan does not provide for the grant of stock appreciation rights
("SARs").

OPTION GRANTS IN 1999

INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
---------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------ ----------- ---------- --------- ---------

Thomas M. O'Gara................... -- -- -- -- -- --
Wilfred T. O'Gara.................. 17,000 2.6 26.938 3/24/09 287,994 729,834
Abram S. Gordon.................... 5,000 0.8 26.938 3/24/09 84,704 214,657
Nicholas P. Carpinello............. 10,000 1.5 26.938 3/24/09 169,408 429,314

- ---------------

(1) All options vest one-third per year beginning one year after the date of
grant. The exercise price of all options may be paid in cash or by the
transfer of shares of Kroll-O'Gara's common stock valued at their fair
market value on the date of exercise. Under the terms of the Plan each
option became exercisable in full when the agreement for the reorganization
and dissolution of Kroll-O'Gara was signed.

45
47

With respect to each named executive officer, the following table sets
forth information concerning stock options exercised during 1999 and unexercised
stock options held at December 31, 1999.

AGGREGATED OPTION EXERCISES IN 1999
AND OPTION VALUES AS OF DECEMBER 31, 1999

NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
VALUE UNEXERCISED IN-THE-MONEY
REALIZED($) OPTIONS AT OPTIONS AT
---------------- FY-END(#) FY-END($)
SHARES (MARKET PRICE ON ------------- --------------
ACQUIRED ON EXERCISE LESS EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) EXERCISE PRICE) UNEXERCISABLE UNEXERCISABLE
---- ----------- ---------------- ------------- --------------

Thomas M. O'Gara................. -- -- 15,443/7,717 67,905/33,955
Wilfred T. O'Gara................ 14,703 341,240 62,730/49,717 86,612/42,444
Abram S. Gordon.................. -- -- 11,666/8,334 33,100/--
Nicholas P. Carpinello........... -- -- 24,332/14,668 127,163/7,337

EMPLOYMENT AGREEMENTS

Each of the named executive officers has an employment agreement with
Kroll-O'Gara which expires on November 30, 2000. These agreements will be
continued on a month-to-month basis until the split-up and will be terminated
after the split-up. Notwithstanding the terms of the agreements, each named
executive officer has waived his right to any severance or other payment when
his agreement terminates as a result of the split-up. Our Compensation Committee
will review executive officer compensation after the split-up and recommend
employment agreements to the Board as it deems appropriate.

The current agreements have the following terms: They provide for annual
base salaries for Mr. Thomas M. O'Gara, Mr. Wilfred T. O'Gara, Mr. Gordon and
Mr. Carpinello of $275,000, $350,000, $175,000 and $180,000, respectively. Each
executive officer also is entitled to participate in an annual bonus plan
established by the Compensation Committee of Kroll-O'Gara's Board and to receive
up to 50% of the bonus in shares of Kroll-O'Gara common stock. Pursuant to the
employment agreements, employment may be terminated by Kroll-O'Gara at any time
with or without cause, except that, in a case of termination without cause, the
employee is entitled to receive compensation for the greater of the balance of
the term of the agreement or one year. The agreements also provide that if
Kroll-O'Gara does not renew the agreement for one year or more at the end of the
term, the employee will receive an amount equal to one year's base salary. Each
employment agreement restricts the executive officer from competing with
Kroll-O'Gara during the term of the agreement, and for two years thereafter if
termination of employment is for cause or at the volition of the employee. In
addition, Messrs. Thomas M. and Wilfred T. O'Gara each has agreed that during
his employment and for a period of 10 years thereafter he will not directly or
indirectly own any interest in or perform any services for any entity which uses
the word "O'Gara" as a business or trade name and competes with Kroll-O'Gara.

STOCK PLANS

Employee Stock Purchase Plan

The O'Gara Company Employee Stock Purchase Plan provides our employees and
employees of our designated subsidiaries with an opportunity and an incentive to
acquire an ownership interest in our common stock.

46
48

A total of shares of common stock may be issued under the
plan. To participate in the plan, an employee must have been employed for at
least 90 continuous days and may not own stock possessing 5% or more of the
voting power or value of all classes of our stock. We estimate that
approximately employees currently are eligible to participate in
the plan. Appropriate adjustments in the number of shares issuable under the
plan will be made to reflect changes in our capitalization.

An employee who elects to participate in the plan must authorize regular
after-tax payroll deductions. The minimum deduction allowed by the plan is $5
per week. The maximum deduction permitted is 5% of the employee's W-2 earnings
per payroll. Deductions will be credited to the participant's stock purchase
account maintained by Fifth Third Bank, the plan's custodian. In addition to
payroll deduction amounts, a participant's account will be credited with any
dividends on shares held in the account. Participants will receive no interest
on accrued funds in their stock purchase accounts.

The plan establishes offering periods which initially will run from January
through June and July through December of each year, commencing July 1, 2001.
Immediately following the end of each offering period, Fifth Third Bank will
purchase whole shares of the our common stock with the funds available in a
participant's account. Purchases may be made on the open market or from us. The
purchase price to the participant will be 90% of the fair market value of the
stock at the beginning of the offering period or at the end of the offering
period, whichever is less. We will bear the remainder (10%) of the cost and the
brokerage fees on any open market purchases. The plan committee has the
authority to change the timing and/or length of the offering periods. For
purposes of the plan "fair market value" generally means the closing sale price
of the our common stock reported in The Wall Street Journal on an applicable
date.

In any calendar year, a participant may not purchase common stock under the
plan having a market value of more than $25,000, calculated based on the full
fair market value of the common stock at the beginning of each offering period
that year. Participants have the right to direct the voting of all shares held
in their accounts and to receive statements twice a year on the status of their
accounts. A participant may designate one or more beneficiaries to receive his
or her interest in the plan in the event of the participant's death.

Distributions from a participant's account will be made either on the
request of the participant or in accordance with the requirements of the plan. A
participant may request a withdrawal from his or her account at any time;
however, the participant then must withdraw everything in the account, must
cease payroll deductions under the plan and may not resume payroll deductions
under the plan until the start of an offering period beginning at least six
months after the withdrawal.

The plan requires that all shares of common stock and cash in a
participant's account be distributed (1) if the participant ceases to be
eligible to participate in the plan (for example, as the result of termination
of employment) or (2) if the plan is terminated.

The plan will be administered by a committee of at least two persons chosen
by our Board of Directors. Subject to the general control of the Board and the
terms of the plan, the committee has full power to adopt rules relating to the
plan and to administer and interpret the plan. The plan may be amended at any
time by the Board. The Board also has the power to terminate or suspend the plan
at any time.

2000 Stock Incentive Plan

The O'Gara Company 2000 Stock Incentive Plan is designed primarily to
provide employees with incentives and rewards to encourage them to continue
their association with us, and to maximize their

47
49

performance and to provide "performance-based compensation." The O'Gara Company
2000 Stock Incentive Plan specifically provides for the grant of (1) qualified
stock options, (2) non-qualified stock options, and (3) shares of restricted
stock which are known collectively as incentive awards. The O'Gara Company 2000
Stock Incentive Plan also provides that the compensation committee may grant
other types of stock-based awards in amounts, and on terms and conditions, as
the compensation committee will in its discretion determine.

The maximum number of shares of O'Gara Company common stock for which
incentive awards may be granted under The O'Gara Company 2000 Stock Incentive
Plan is 1,200,000. The maximum number of shares of The O'Gara Company common
stock for which any individual may be granted incentive awards during any
calendar year is 100,000. Our current employees and our affiliates will be
eligible to receive grants of incentive awards.

48
50

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

GENERAL

This section describes certain transactions and relationships during the
last three fiscal years between The O'Gara Company, as it will be constituted
after the split-up, and The O'Gara Company's executive officers, directors and
5% shareholders after the split-up. Except with respect to interest rates
charged on certain of the intercompany notes and accounts payable/receivable, we
believe that the material terms of the transactions described below were as
favorable as could have been obtained from unrelated third parties.

VICTORY AVIATION

Victory Aviation Services, Inc. is a Delaware corporation of which Messrs.
Thomas M. O'Gara, Wilfred T. O'Gara and Carpinello own approximately 92%, 1% and
1%, respectively, of the outstanding capital stock.

Lease agreements. We have a Master Equipment Lease with Victory Aviation,
entered into in July 1995, under which we lease various items of equipment from
Victory Aviation. As of December 31, 1999, we had approximately $1,250,000 of
equipment under lease. Rental expenses were $396,005, $396,005, $566,213 for the
years ended December 31, 1997, 1998 and 1999, respectively.

Supplier arrangements. During 1995 and 1996, we purchased the dual-hard
steel required for its vehicle armoring from Victory Aviation, which distributed
the steel for an unrelated third party. As a result of financing arrangements
entered into at the time, the company had receivables of $282,345 from Victory
Aviation at each of December 31, 1997, 1998 and 1999, which sum is guaranteed by
the shareholders of Victory Aviation. All other aspects of the arrangement have
been terminated.

Corporate aircraft. In February 1995, we entered into a lease for a
Gulfstream G-II aircraft owned by Victory Aviation. The lease later was amended
to provide us with a hourly discount from the normal commercial hourly rate on
future charters of corporate aircraft from Victory Aviation in order to amortize
the remaining portion of existing lease deposits from the original aircraft
lease. We had approximately $233,939, $484,000, $403,000 in unamortized lease
deposits with Victory Aviation as of December 31, 1997, 1998, and 1999
respectively. Rental expense related to the Gulfstream lease, including
amortization of the deposit, was $234,000, $292,000, $82,000 for 1997, 1998 and
1999, respectively.

In 1997, the company paid Victory Aviation $576,000 relating to use of the
G-II aircraft in connection with the merger with Kroll Holdings, Inc. In 1998,
we paid Victory Aviation $296,000 relating to use of the G-II aircraft during
the roadshow for a stock offering and $270,000 relating to use of another
corporate aircraft in connection with the merger with Securify. We believe that
the rates paid were equivalent to that charged by Victory Aviation to other
unrelated companies for similar services during 1997 and 1998 and compared
favorably to rates charged by another unrelated charter service for similar
aircraft.

INTERCOMPANY NOTES AND ACCOUNTS PAYABLE/RECEIVABLE AND CERTAIN LOANS

In 1998, Mr. Thomas M. O'Gara repaid a $120,191 advance made by us prior to
Kroll-O'Gara's initial public offering. This amount was not represented by a
promissory note. During 1998, Mr. Thomas M. O'Gara agreed to reimburse us for a
portion of general and administrative expenses, including outside professional
fees, office rent and travel expenses, which were incurred for the benefit

49
51

of both us and Mr. T. O'Gara. Amounts due to the company at December 31, 1998
and 1999 pursuant to this agreement were $429,953 and $0, respectively.

AIG

Since 1995, Kroll-O'Gara has purchased some of its liability insurance,
including Professional Errors and Omissions and Directors and Officers liability
insurance, from AIG's subsidiaries. AIG's subsidiaries billed the company
$814,154, $474,800, and $361,320 for this insurance during 1997, 1998, and 1999,
respectively. Kroll-O'Gara obtains the coverage through an independent insurance
broker and where possible obtains competitive proposals from unrelated third
parties.

BUILDING LEASE

OLG, Limited, an Ohio limited liability company of which Messrs. Thomas M.
O'Gara, Wilfred T. O'Gara and Carpinello own approximately 91%, 5%, and 1% of
the outstanding capital stock, was formed in March 1996 for the purpose of
acquiring and leasing to us a facility located at 4175 Mulhauser Road,
Fairfield, Ohio. OLG sold the building in August 1998. Total lease payments made
in 1998 by us to OLG, prior to its sale of the building, were $150,837.

50
52

RELATIONSHIP WITH KRCS

The O'Gara Company, Kroll O'Gara and KRCS have entered into an agreement
and plan of reorganization and dissolution, which provides for the split-up of
Kroll-O'Gara. As part of the split-up The O'Gara Company, KRCS and Securify will
enter into a tax sharing agreement and The O'Gara Company, Kroll-O'Gara and KRCS
will enter into a cross-indemnification agreement. These agreements have been
filed as exhibits to the registration statement of which this prospectus is a
part. See "Where You Can Find More Information." As a result of these
agreements, The O'Gara Company and KRCS will have an ongoing relationship after
the split-up.

TAX SHARING AGREEMENT

We and KRCS will enter into a tax sharing agreement regarding the payment
and refund of taxes that are attributable to periods beginning prior to and
including the date of the distribution and any taxes resulting from the
distribution. The agreement generally will provide that for any taxable period,
we and KRCS will make payments to each other so that, to the extent that either
company or any of its subsidiaries is included in (1) Kroll-O'Gara's
consolidated group for U.S. federal income tax purposes or (2) any consolidated,
combined or unitary group which includes Kroll-O'Gara or any of its subsidiaries
for state, local or foreign income tax purposes, that company will be
responsible for only a portion of the taxes. Each company's portion will be
based on that company's relative contribution to the group.

Each member of a consolidated group for U.S. federal income tax purposes is
jointly and severally liable for the federal income tax liability of each other
member of the consolidated group. Accordingly, although the agreement will
allocate tax liabilities between us and KRCS, for any period in which either
company or any of its subsidiaries was included in Kroll-O'Gara's consolidated
group, that company or any of its subsidiaries could be liable for any federal
tax liability that was incurred, but not discharged, by the other. Under the
agreement, each company will indemnify the other for those liabilities.

The agreement will prohibit us and KRCS from taking actions that could
jeopardize the tax treatment of the distribution.

For example, we will not take certain actions for two years following the
distribution unless we obtain either an IRS ruling or an opinion of counsel (to
be determined by KRCS in its reasonable discretion) to the effect that these
actions will not affect the tax-free nature of the distribution. These actions
include transactions with respect to:

- some issuances of stock (in connection with acquisitions or otherwise),
or any other instrument that could constitute equity for federal income
tax purposes, of The O'Gara Company (or any instruments or contracts,
including options, warrants, rights or securities exercisable for, or
convertible into, stock, or any instrument that could constitute equity
for federal income tax purposes, of The O'Gara Company);

- some transactions with respect to the capital stock of, or other equity
interest in, The O'Gara Company, including some redemptions, repurchases,
stock acquisitions or stock dispositions or the dissolution, merger,
consolidation or complete or partial liquidation of The O'Gara Company;
and

51
53

- some recapitalizations of The O'Gara Company, including some stock
splits, reverse stock splits, stock dividends or other changes in capital
structure.

The agreement will allocate responsibility for any taxes arising from
restructurings related to the split-up, and we and KRCS will indemnify each
other with respect to taxes allocated to it. In addition, the agreement will
provide that we and KRCS will indemnify each other for any taxes arising out of
the failure of the split-up to qualify as tax-free as a result of actions taken,
or the failure to take required actions, by it. The tax sharing agreement also
will provide that KRCS and we will cooperate in the preparation of tax returns
and will exchange information and retain records which may affect their income
tax liabilities.

CROSS-INDEMNIFICATION AGREEMENT

The O'Gara Company, Kroll-O'Gara and KRCS will enter into a
cross-indemnification agreement. Under the cross-indemnification agreement, KRCS
will indemnify Kroll-O'Gara and us against liabilities relating to the operation
of the investigations and intelligence and voice and data communications
businesses, whether those liabilities arise on, prior to or after the split-up.
We will indemnify Kroll-O'Gara and KRCS against liabilities relating to the
operation of the security products and services business, whether those
liabilities arise on, prior to or after the split- up and matters arising out of
our financial information included in KRCS' registration statement. If a
contingent liability does not exclusively relate to one business or the other,
it will be considered a shared contingent liability, and we will be responsible
for approximately 41.5% and KRCS will be responsible for approximately 58.5% of
that liability. The cross-indemnification agreement does not apply to tax claims
or liabilities, which are covered by the tax sharing agreement described above.

VOICE AND DATA COMMUNICATIONS BUSINESS

The KRCS subsidiaries that are involved in the voice and data
communications business will enter into a license agreement for the use of the
O'Gara name in their voice and data communications business and a strategic
alliance agreement with our subsidiary, O'Gara-Hess & Eisenhardt Armoring
Company, for the sale of their voice and data communications products and
services in or with our products and services.

SECURIFY

In the agreement and plan of reorganization and dissolution, we and KRCS
have entered into arrangements regarding the sale of our Securify common stock
and our respective registration rights.

52
54

PRINCIPAL SHAREHOLDERS AND HOLDINGS OF MANAGEMENT

The following table sets forth the anticipated beneficial ownership of our
common stock immediately after the split-up by (1) each beneficial owner of more
than five percent of the common stock, (2) each director and named executive
officer individually, and (3) all directors and executive officers as a group.
The actual holdings will vary based on the number of shares of Kroll-O'Gara
common stock outstanding immediately prior to the split-up; however the changes
will not be material. Unless otherwise indicated, all shares are owned directly
and the indicated owner has sole voting and dispositive power with respect to
the listed shares.

BENEFICIAL OWNERSHIP
--------------------
NAME NUMBER PERCENT
---- --------- -------

Thomas M. O'Gara(1).......................................... 1,546,572 25.8
Wilfred T. O'Gara............................................ 155,438 2.6
Abram S. Gordon.............................................. 64 *
Nicholas P. Carpinello....................................... 36,365 *
[directors to be added]......................................
All directors and executive officers as a group ( persons).. 1,738,439 29.0
American International Group, Inc.(1)........................

- ---------------

* Less than 1%.

(1) Messrs. O'Gara, Gordon and Carpinello's address is 9113 LeSaint Drive,
Fairfield, Ohio 45014. AIG's address is 70 Pine Street, New York, New York
10270.

53
55

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of The O'Gara Company, consists of 15,000,000
shares of common stock, $.01 par value per share, and 100,000 shares of
undesignated preferred stock, $.01 par value per share. After the split-up, we
will have 6,000,000 shares of common stock outstanding. There will be no
preferred stock outstanding. The following description summarizes the material
terms of our capital stock. Your rights as a shareholder of The O'Gara Company
will be governed by the provisions of our Articles of Incorporation and Code of
Regulations and by the provisions of Ohio law, including the Ohio General
Corporation Law ("OGCL").

COMMON STOCK

Common Stock. You will be entitled to one vote for each share held of
record by you on all matters submitted to a vote of shareholders. You will not
have the right to cumulate your votes in the election of directors.

Subject to preferences which may be granted to holders of any preferred
stock which is issued, you will be entitled to share in any dividends that the
Board of Directors, in its discretion, validly declares from funds legally
available. In the event of liquidation, each outstanding share of O'Gara Company
common stock entitles its holder to participate ratably in the assets remaining
after payment of liabilities and any preferred stock liquidation preferences.

You will have no preemptive or other rights to subscribe for or purchase
additional shares of any class of stock or any other securities of The O'Gara
Company. There are no redemption or sinking fund provisions with regard to the
O'Gara Company common stock. All outstanding shares of O'Gara Company common
stock will be fully paid, validly issued and nonassessable.

The vote of holders of a majority of all outstanding shares of O'Gara
Company common stock is required to amend the company's Articles and to approve
mergers, reorganizations and similar transactions.

PREFERRED STOCK

We may issue up to 100,000 authorized shares of preferred stock from time
to time in series having such designations, preferences and rights,
qualifications and limitations as the Board of Directors may determine, without
any need for your approval. Preferred stock could be given rights which would
adversely affect your equity and could have preference to your O'Gara Company
common stock with respect to dividends and liquidation, voting and other rights
and privileges. Issuance of preferred stock could have the effect of acting as
an anti-takeover device to prevent a change of control of The O'Gara Company.

PROVISIONS AFFECTING BUSINESS COMBINATIONS AND CHANGES IN CONTROL

Chapter 1704 of the Ohio Revised Code may be viewed as having an
anti-takeover effect. This statute, in general, prohibits an "issuing public
corporation," the definition of which will include The O'Gara Company, from
entering into a "Chapter 1704 Transaction" with the beneficial owner of 10% or
more of the outstanding shares of the corporation (an "interested shareholder")
for at least three years after the date on which the interested shareholder
attains a 10% ownership, unless the board of directors of the corporation
approves, prior to the person becoming an interested shareholder, either the
transaction or the acquisition of shares resulting in a 10% ownership position.
A "Chapter 1704 Transaction" includes, among other things, a merger or
consolidation with, a sale of substantial assets to, or the receipt of a loan,
guaranty or other financial benefit which is not proportionately received by

54
56

all shareholders, from the interested shareholder. After the three-year period,
a Chapter 1704 Transaction with the interested shareholder is permitted only if
either the transaction is approved by the holders of at least two-thirds of the
voting power of the corporation (or such different proportion as is required by
the corporation's articles of incorporation), including a majority of the shares
not owned by the interested shareholder, or the business combination results in
the shareholders other than the interested shareholder receiving a prescribed
"fair price" for their shares. One significant effect of Chapter 1704 is to
encourage a person to negotiate with the board of directors of a corporation
prior to becoming an interested shareholder.

In addition, Section 1707.043 of the Ohio Revised Code requires a person or
entity that makes a proposal to acquire the control of a corporation to repay to
that corporation any profits made from trades in the corporation's stock within
18 months after making the control proposal.

Section 1701.831 of the OGCL, Ohio's "Control Share Acquisition Statute,"
requires shareholder approval of any proposed "control share acquisition" of an
Ohio corporation. A "control share acquisition" is the acquisition, directly or
indirectly, by any person of shares of a corporation that, when added to all
other shares of the corporation that may be voted, directly or indirectly, by
the acquiring person, would entitle such person to exercise or direct the
exercise of

(a) 20% or more, but less than 33 1/3%, of the voting power of the
corporation in the election of directors, or

(b) 33 1/3% or more, but less than a majority, of such voting power, or

The control share acquisition must be approved in advance by the holders of
a majority of the outstanding voting shares represented at a meeting at which a
quorum is present and by the holders of a majority of the portion of the
outstanding voting shares represented at the meeting excluding the voting shares
owned by the acquiring shareholder and certain "interested shares," including
shares owned by officers elected or appointed by the directors of the
corporation and by directors of the corporation who are also employees of the
corporation.

The purpose of the Control Share Acquisition Statute is to give
shareholders of Ohio corporations a reasonable opportunity to express their
views on a proposed shift in control, thereby reducing the coercion inherent in
an unfriendly takeover The provisions of the Control Share Acquisition Statute
grant shareholders of The O'Gara Company the assurance that they will have
adequate time to evaluate the proposal of an acquiring person, that they will be
permitted to vote on the issue of authorizing the acquiring person's purchase
program to go forward in the same manner and with the same proxy information
that would be available to them if a proposed merger of the company were before
them and, most importantly, that the interests of all shareholders will be taken
into account and the probability will be increased that they will be treated
equally regarding the price to be offered for their common shares if the
proposal is approved.

The Control Share Acquisition Statute applies not only to traditional
offers but also to open market purchases, privately negotiated transactions and
original issuances by an Ohio corporation, whether friendly or unfriendly. The
procedural requirements of the Control Share Acquisition Statute could render
approval of any control share acquisition difficult in that the transaction must
be authorized at a special meeting of shareholders, at which a quorum is
present, by the affirmative vote of the majority of the voting power represented
and by a majority of the portion of that voting power excluding interested
shares. Any corporate defense against persons seeking to acquire control may
have the effect of discouraging or preventing offers which some shareholders
might find financially attractive. On the other hand, the need on the part of
the acquiring person to convince the shareholders of the company of the

55
57

value and validity of the person's offer may cause the offer to be more
financially attractive in order to gain shareholder approval.

In addition, Section 1701.59 of the OGCL provides that, in determining what
a director reasonably believes to be in the best interests of the corporation,
the director may consider, in addition to the interests of the corporation's
shareholders, any of the interests of the corporation's employees, suppliers,
creditors and customers, the economy of the State of Ohio and the U.S.,
community and societal considerations and the long-term as well as the
short-term interests of the corporation and its shareholders, including the
possibility that these interests may be best served by the continued
independence of the corporation.

Although we believe that these provisions are in The O'Gara Company's best
interests, you should be aware that the provisions could be disadvantageous to
you because the overall effect of these statutes may be to render more difficult
or discourage the removal of incumbent management or the assumption of effective
control by other persons.

TRANSFER AGENT AND REGISTRAR

The registrar and transfer agent for O'Gara Company common stock will be
Fifth Third Bank, Cincinnati, Ohio.

56
58

LEGAL MATTERS

The validity of the O'Gara Company common stock covered by this prospectus
will be passed upon by Taft, Stettinius & Hollister LLP, Cincinnati, Ohio.

INDEPENDENT PUBLIC ACCOUNTANTS

The combined financial statements of The O'Gara Company as of December 31,
1998 and 1999 and for each of the three years in the period ended December 31,
1999, included in this prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as set forth in their report. Reference is made
to said report, which includes an explanatory paragraph with respect to the
change in the method of accounting for costs of start-up activities in the first
quarter of 1999, as discussed in Note 2(q) to the combined financial statements.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the SEC to register
the O'Gara Company common stock that Kroll-O'Gara shareholders will receive in
the split-up. This prospectus is a part of that registration statement and does
not include all of the information you can find in the registration statement or
the exhibits to the registration statement. For additional information we refer
you to the registration statement and its exhibits. Statements in this
prospectus regarding the terms of any contract or document are not necessarily
complete and in each instance, if the contract or document is filed as an
exhibit to the registration statement, we refer you to the copy of the contract
or other document filed as an exhibit to the registration statement. Each
statement is qualified in all respects by the relevant reference.

After the split-up, we will file annual, quarterly and special reports,
proxy statements and other information with the SEC. We intend to furnish our
shareholders with annual reports containing consolidated financial statements
certified by an independent public accounting firm. The registration statement
is, and these future filings with the SEC will be, available to the public over
the Internet at the SEC's website at http://www.sec.gov. You may read and copy
any filed document at the SEC's public reference rooms in Washington, D.C., New
York, New York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information about the public reference rooms.

57
59

INDEX TO FINANCIAL STATEMENTS

PAGE
--------

THE O'GARA COMPANY
Report of Independent Public Accountants.................... F-2
Combined Balance Sheets as of December 31, 1998 and 1999.... F-3
Combined Statements of Operations for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-5
Combined Statements of Shareholders' Equity for the Years
Ended December 31, 1997, 1998 and 1999.................... F-6
Combined Statements of Cash Flows for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-7
Notes to Combined Financial Statements...................... F-8
Combined Balance Sheets as of December 31, 1999 and June 30,
2000 (unaudited).......................................... F-34
Combined Statements of Operations for the Six Months Ended
June 30, 1999 and 2000 (unaudited)........................ F-36
Combined Statements of Shareholders' Equity for the Period
Ended June 30, 2000 (unaudited)........................... F-37
Combined Statements of Cash Flows for the Six Months Ended
June 30, 1999 and 2000 (unaudited)........................ F-38
Notes to Combined Unaudited Financial Statements............ F-39
THE O'GARA COMPANY PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
Unaudited Pro Forma Combining Condensed Balance Sheet as of
June 30, 2000............................................. F-45
Unaudited Pro Forma Combining Condensed Statements of
Operations for the Six Months Ended June 30, 2000
(unaudited)............................................... F-47
Unaudited Pro Forma Combining Condensed Statements of
Operations for the Year Ended December 31, 1999........... F-49

F-1
60

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO THE KROLL-O'GARA COMPANY:

We have audited the accompanying combined balance sheets of THE O'GARA
COMPANY (Note 1) and subsidiaries as of December 31, 1998 and 1999 and the
related combined statements of operations, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of The O'Gara Company
and subsidiaries as of December 31, 1998 and 1999 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.

As explained in Note 2(q) to the combined financial statements, effective
in the first quarter of 1999, the Company changed its method of accounting for
costs of start-up activities.

Arthur Andersen LLP
Cincinnati, Ohio
September 14, 2000

F-2
61

THE O'GARA COMPANY

COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1999

1998 1999
------------ ------------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 6,416,652 $ 3,395,566
Marketable securities..................................... 6,563,054 --
Trade accounts receivable, net of allowance for doubtful
accounts of approximately $509,510 and $968,749 in 1998
and 1999, respectively (Notes 2 and 4)................. 21,480,116 24,314,173
Related party receivables (Note 6)........................ 381,534 334,934
Costs and estimated earnings in excess of billings on
uncompleted contracts (Note 4)......................... 26,408,097 24,159,724
Inventories (Note 4)...................................... 18,607,062 21,194,072
Prepaid expenses and other................................ 4,515,479 5,026,544
Deferred tax asset (Note 5)............................... 1,118,830 1,743,947
------------ ------------
Total current assets.............................. 85,490,824 80,168,960
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, at cost (Notes 2 and 7):
Land...................................................... 1,661,900 1,970,094
Buildings and improvements................................ 6,342,553 6,630,563
Leasehold improvements.................................... 656,189 1,109,421
Furniture and fixtures.................................... 3,384,034 6,243,522
Machinery and equipment................................... 6,974,724 12,521,171
Construction-in-progress.................................. 1,427,363 --
------------ ------------
20,446,763 28,474,771
Less-accumulated depreciation............................. (7,129,220) (9,315,376)
------------ ------------
13,317,543 19,159,395
------------ ------------
COSTS IN EXCESS OF ASSETS ACQUIRED AND OTHER INTANGIBLE
ASSETS, net of accumulated amortization of $1,694,922 and
$3,192,086 in 1998 and 1999, respectively (Notes 2 and
3)........................................................ 18,319,997 17,195,049
OTHER ASSETS:
Other assets (Note 4)..................................... 3,114,799 1,318,206
Deferred tax asset (Note 5)............................... 559,051 430,729
------------ ------------
21,993,847 18,943,984
------------ ------------
$120,802,214 $118,272,339
============ ============

The accompanying notes to combined financial statements
are an integral part of these combined balance sheets.
F-3
62

THE O'GARA COMPANY

COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1999

1998 1999
------------ ------------

LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt due to third-parties
(Note 7)............................................... $ 1,336,449 $ 2,245,927
Current portion of allocated Kroll-O'Gara long-term
debt................................................... -- 9,454,702
Trade accounts payable.................................... 20,653,939 22,588,044
Related party payables (Note 6)........................... 341,358 --
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 182,656 360,725
Accrued liabilities (Note 4).............................. 10,408,563 7,680,234
Income taxes currently payable (Note 5)................... 599,248 --
Customer deposits......................................... 2,283,312 1,395,984
------------ ------------
Total current liabilities......................... 35,805,525 43,725,616

OTHER LONG-TERM LIABILITIES................................. 406,606 521,787

ALLOCATION OF KROLL-O'GARA LONG-TERM DEBT................... 13,560,212 15,072,798

LONG-TERM DEBT DUE TO THIRD PARTIES, net of current portion
(Note 7).................................................. 2,258,976 853,639
------------ ------------
Total liabilities................................. 52,031,319 60,173,840
------------ ------------

COMMITMENTS AND CONTINGENCIES (Notes 8 and 11)
SHAREHOLDER'S EQUITY (Notes 1 and 4(e)):
Advances from Kroll-O'Gara, net........................... 70,926,669 58,868,241
Deferred compensation (Note 10)........................... (1,113,936) (1,030,079)
Accumulated other comprehensive income (loss)............. (1,041,838) 260,337
------------ ------------
Total shareholder's equity........................ 68,770,895 58,098,499
------------ ------------
$120,802,214 $118,272,339
============ ============

The accompanying notes to combined financial statements
are an integral part of these combined balance sheets.
F-4
63

THE O'GARA COMPANY

COMBINED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

1997 1998 1999
------------ ------------ ------------

NET SALES........................................ $100,738,987 $131,690,342 $118,507,042
COST OF SALES.................................... 72,383,397 95,290,444 83,619,864
------------ ------------ ------------
Gross profit................................ 28,355,590 36,399,898 34,887,178
OPERATING EXPENSES:
Selling and marketing.......................... 6,523,927 7,643,386 8,854,226
General and administrative..................... 10,144,436 13,094,713 20,583,388
Restructuring charge (Note 4).................. -- -- 291,757
Failed merger related costs (Note 2(s))........ -- -- 703,819
Merger related costs (Note 3).................. 2,932,674 1,136,554 145,429
------------ ------------ ------------
Operating expenses.......................... 19,601,037 21,874,653 30,578,619
------------ ------------ ------------
Operating income............................ 8,754,553 14,525,245 4,308,559
OTHER INCOME (EXPENSE):
Interest expense............................... (2,967,936) (2,415,307) (1,994,705)
Interest income................................ 535 600,325 86,826
Other, net..................................... (249,001) (547,593) (244,391)
------------ ------------ ------------
Income before minority interest, provision
for income taxes, extraordinary item and
cumulative effect of change in accounting
principle................................. 5,538,151 12,162,670 2,156,289
Minority interest.............................. 156,223 -- --
------------ ------------ ------------
Income before provision for income taxes,
extraordinary item and cumulative effect
of change in accounting principle......... 5,381,928 12,162,670 2,156,289
Provision for income taxes..................... 2,821,709 5,015,853 2,303,377
------------ ------------ ------------
Income (loss) before extraordinary item and
cumulative effect of change in accounting
principle................................. 2,560,219 7,146,817 (147,088)
Extraordinary loss, net of applicable tax
benefit of $129,250 (Note 2(r))............. (193,875) -- --
------------ ------------ ------------
Income (loss) before cumulative effect of
change in accounting principle............ 2,366,344 7,146,817 (147,088)
Cumulative effect of change in accounting
principle, net of applicable tax benefit of
$408,000 in 1999 (Note 2(q))................ -- -- (778,041)
------------ ------------ ------------
Net income (loss)...................... $ 2,366,344 $ 7,146,817 $ (925,129)
============ ============ ============
Earnings (Loss) Per Share (Note 2(n)):
Basic and diluted.............................. $ 0.39 $ 1.19 $ (0.15)
============ ============ ============
Weighted Average Shares Outstanding (Note 2 (n)):
Basic and diluted.............................. 6,000,000 6,000,000 6,000,000
============ ============ ============

The accompanying notes to combined financial statements
are an integral part of these combined statements.
F-5
64

THE O'GARA COMPANY

COMBINED STATEMENTS OF SHAREHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

ACCUMULATED
OTHER
COMPREHENSIVE ADVANCES FROM DEFERRED COMPREHENSIVE
INCOME (LOSS) KROLL-O'GARA COMPENSATION INCOME (LOSS) TOTAL
------------- ------------- ------------ ------------- ------------

BALANCE, December 31, 1996......... $ 12,793,403 $ -- $ (44,772) $ 12,748,631
Comprehensive income:
Net income....................... $2,366,344 2,366,344 -- -- 2,366,344
----------
Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustment, net of
$335,000 tax benefit...... (502,634) -- -- -- --
----------
Other comprehensive loss..... (502,634) -- -- (502,634) (502,634)
----------
Comprehensive income...... $1,863,710 -- -- -- --
==========
Change in advances from
Kroll-O'Gara..................... 12,086,918 -- -- 12,086,918
------------ ----------- ----------- ------------
BALANCE, December 31, 1997......... 27,246,665 -- (547,406) 26,699,259
Comprehensive income:
Net income....................... $7,146,817 7,146,817 -- -- 7,146,817
----------
Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustment, net of
$330,000 tax benefit...... (494,432) -- -- -- --
----------
Other comprehensive loss..... (494,432) -- --
----------
Comprehensive income...... $6,652,385 -- -- (494,432) (494,432)
==========
Change in advances from
Kroll-O'Gara..................... 35,341,091 -- -- 35,341,091
Deferred compensation related to
stock options of Kroll-O'Gara
(Note 10)........................ 1,192,096 (1,113,936) -- 78,160
------------ ----------- ----------- ------------
BALANCE, December 31, 1998......... 70,926,669 (1,113,936) (1,041,838) 68,770,895
Comprehensive income (loss):
Net loss......................... $ (925,129) (925,129) -- -- (925,129)
----------
Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustment, net of
$868,000 tax provision.... 1,302,175 -- -- -- --
----------
Other comprehensive income... 1,302,175 -- -- 1,302,175 1,302,175
----------
Comprehensive income...... $ 377,046 -- -- -- --
==========
Change in advances from
Kroll-O'Gara..................... (11,546,894) -- -- (11,546,894)
Deferred compensation related to
restricted stock of Kroll-O'Gara
(Note 10)........................ 413,595 83,857 -- 497,452
------------ ----------- ----------- ------------
BALANCE, December 31, 1999......... $ 58,868,241 $(1,030,079) $ 260,337 $ 58,098,499
============ =========== =========== ============

The accompanying notes to combined financial statements
are an integral part of these combined statements.
F-6
65

THE O'GARA COMPANY

COMBINED STATEMENTS OF CASH FLOWS (NOTE 14)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

1997 1998 1999
------------ ------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................. $ 2,366,344 $ 7,146,817 $ (925,129)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operations --
Depreciation and amortization................ 1,902,748 2,431,877 3,683,320
Bad debt expense............................. 582,377 337,203 1,144,722
Share in net income of joint ventures........ (121,650) -- --
Noncash compensation expense................. -- 78,160 497,452
Change in assets and liabilities, net of effects
of acquisitions --
Receivables-trade and unbilled............... (4,786,333) (6,859,225) (3,978,779)
Costs and estimated earnings in excess of
billings on uncompleted contracts......... 3,290,709 (14,510,296) 2,248,373
Inventories, prepaid expenses and other
assets.................................... (6,536,340) (5,048,018) (1,673,698)
Accounts payable and income taxes currently
payable................................... 4,365,566 2,462,800 1,334,857
Billings in excess of costs and estimated
earnings on uncompleted contracts......... (801,365) (68,214) 178,069
Amounts due to/from related parties.......... (28,162) (158,862) (294,758)
Deferred taxes............................... (926,239) (751,642) (496,795)
Accrued liabilities, long-term liabilities
and customer deposits..................... (916,387) 3,514,132 (3,500,476)
------------ ------------ ------------
Net cash used in operating activities..... (1,608,732) (11,425,268) (1,782,842)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net... (3,211,995) (4,051,921) (8,028,008)
Acquisitions, net of cash acquired (Note 3)....... (8,103,948) (3,200,000) --
Sale (purchases) of marketable securities, net.... -- (6,563,054) 6,563,054
------------ ------------ ------------
Net cash used in investing activities..... (11,315,943) (13,814,975) (1,464,954)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayments of) allocated
Kroll-O'Gara long-term debt.................... 20,812,083 (5,247,473) 10,967,288
Proceeds from third party debt.................... 278,979 1,066,585 --
Payments of third party debt...................... (797,658) (609,074) (495,859)
Increase (decrease) in advances from
Kroll-O'Gara................................... 4,184,942 34,451,091 (11,546,894)
Foreign currency translation...................... (473,947) (581,551) 1,481,562
Net repayments under revolving lines of credit.... (9,376,835) (559,112) --
------------ ------------ ------------
Net cash provided by financing
activities.............................. 14,627,564 28,520,466 406,097
------------ ------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS........... 1,702,889 3,280,223 (2,841,699)
Effects of foreign currency exchange rates on cash
and cash equivalents.............................. (28,687) 87,119 (179,387)
CASH AND CASH EQUIVALENTS, beginning of year........ 1,375,108 3,049,310 6,416,652
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, end of year.............. $ 3,049,310 $ 6,416,652 $ 3,395,566
============ ============ ============

The accompanying notes to combined financial statements
are an integral part of these combined statements.
F-7
66

THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

(1) BASIS OF PRESENTATION --

The O'Gara Company (O'Gara or the Company) is a wholly owned holding
company subsidiary of The Kroll-O'Gara Company (Kroll-O'Gara).

In April 2000, Kroll-O'Gara decided to explore the split-up of its
principal businesses into two independent public companies; O'Gara is a
newly incorporated company organized in preparation for the split-up. Under
an agreement and plan of reorganization and dissolution of Kroll-O'Gara
(which was executed effective September 8, 2000), adopted by Kroll-O'Gara's
Board of Directors on August 30, 2000, the completion of which is subject
to a number of conditions including the receipt of a favorable tax ruling
and the approval by Kroll-O'Gara's shareholders, O'Gara will receive
substantially all of the assets and liabilities of Kroll-O'Gara's Security
Products and Services Group, and 60% of Kroll-O'Gara's ownership interest
in the common stock of the entity comprising its Information Security
Group, as well as a portion of Kroll-O'Gara's assets and liabilities that
are not attributable to a particular business group. The remaining business
of Kroll-O'Gara, primarily the Investigations and Intelligence Group, the
Voice and Data Communications Group and 40% of Kroll-O'Gara's ownership
interest in the common stock of the entity comprising the Information
Security Group, as well as the other assets and liabilities that are not
attributable to a particular business group, will be transferred to and
assumed by another newly incorporated company, Kroll Risk Consulting
Services, Inc. (KRCS). After these transfers, certain management
shareholders of Kroll-O'Gara will exchange all of their shares of
Kroll-O'Gara common stock for shares of O'Gara common stock and other
management shareholders of Kroll-O'Gara will exchange all their shares of
Kroll-O'Gara common stock for shares of KRCS common stock. Kroll-O'Gara
then will distribute, on a pro rata basis, all remaining shares of O'Gara
common stock and KRCS common stock held by it to the remaining holders of
Kroll-O'Gara common stock. The exchanging management shareholders will not
participate in this distribution. Concurrent with the completion of these
transactions, O'Gara and KRCS will become separate publicly-traded
companies. Subsequent to the reorganization and split-up, Kroll-O'Gara will
be dissolved.

As part of the reorganization and split-up, Kroll-O'Gara will incur
approximately $2.8 million (net of tax benefit of $1.9 million) of charges
for the write off of certain intangibles and unamortized financing fees,
debt prepayment fees and compensation costs related to accelerated vesting
of stock option plans. KRCS and O'Gara have agreed to split these charges
on an agreed-upon basis.

The accompanying combined financial statements are presented on a carve-out
basis and include the historical results of operations and assets and
liabilities allocated to O'Gara, prior to the effects of the
reorganization, which includes most of the businesses that operate in
Kroll-O'Gara's Security Products and Services Group as well as 100% of the
business that operates in Kroll-O'Gara's Information Security Group. These
combined financial statements have been prepared from Kroll-O'Gara's
historical accounting records.

The newly incorporated O'Gara has its origins in the former O'Gara Company,
a holding company for previously affiliated companies. A wholly owned
subsidiary of the former O'Gara Company merged with Kroll Holdings, Inc. in
December 1997 in a transaction accounted for as a pooling of interests. At
the time of that merger the former O'Gara Company changed its name to The
Kroll-O'Gara Company. See Note 3 for a further discussion of this merger
transaction.

F-8
67
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

O'Gara was allocated $4.4 million and $5.4 million of overhead costs
related to Kroll-O'Gara's corporate administrative functions in 1998 and
1999, respectively. For the year ended December 31, 1997, the former O'Gara
Company operated on a standalone basis and, accordingly, no allocation of
overhead costs was recorded in the accompanying combined financial
statements. The allocations for 1998 and 1999 were based on a specific
identification of Kroll-O'Gara's administrative costs attributable to
O'Gara and, to the extent that such identification was not practicable, on
the basis of O'Gara's sales as a percentage of Kroll-O'Gara's sales. The
allocated costs are included in the various operating expense captions in
the accompanying combined statements of operations. Management believes
that such allocation methodology is reasonable. Subsequent to the split-up,
O'Gara will be required to manage these functions and will be responsible
for the expenses associated with the operations of a stand-alone public
company. Management does not believe these expenses on a stand-alone basis
will be significantly different from those reflected in the accompanying
statements of operations.

O'Gara's operations have been financed through its operating cash flows and
advances from Kroll-O'Gara. O'Gara's interest expense includes an
allocation of Kroll-O'Gara's interest expense based on Kroll-O'Gara's
weighted average interest rate applied to intercompany advances. Interest
expense allocated from Kroll-O'Gara was $2.0 million and $1.7 million for
the years ended December 31, 1998 and 1999, respectively. The historical
interest expense allocated to O'Gara may not be indicative of future
interest expense incurred. Income tax was calculated as if O'Gara had filed
separate income tax returns. O'Gara's future effective tax rate will depend
largely on its structure and tax strategies as a separate, independent
public company.

The O'Gara Company expects to obtain debt funding prior to completion of
the split-up to repay the portion of Kroll-O'Gara's third party financing
obligations assumed by it as well as to establish a working capital and
letter of credit facility.

On September 14, 2000, Kroll-O'Gara amended its credit agreement to provide
for an extension of its temporary increase in its revolving line of credit
from $25.0 million to $40.0 million. Pursuant to the amended credit
agreement, the increase in the revolving line of credit is effective until
January 1, 2001, at which time all borrowings in excess of $25.0 million
must be repaid. The credit facility continues to provide for a letter of
credit facility of approximately $7.6 million. Both the letter of credit
facility and the line of credit mature on May 31, 2001. Advances under the
revolving line of credit bear interest at rates ranging from prime to prime
plus 0.75%, or, at Kroll-O'Gara's option, LIBOR plus 1.50% to LIBOR plus
2.50%, dependent upon a defined financial ratio.

Kroll-O'Gara's currently existing credit agreements include certain
financial covenant restrictions. Kroll-O'Gara was not in compliance with
certain of these covenants as of December 31, 1999 and as of June 30, 2000.
All such events of non-compliance have been subsequently amended or waived
by the lenders. Had the lenders not provided a waiver or amendment, all
amounts outstanding under the credit agreements would have been subject to
acceleration by the lenders. Pending the separation, Kroll-O'Gara will
require additional sources of capital to supplement operating cash flow,
either through amending and increasing its credit facilities, through an
equity offering of one of its subsidiaries or both. In the absence of the
separation of the businesses, management is of the opinion that there will
be sufficient liquidity available from existing operations and credit
facilities, which can be supplemented, if necessary, with additional
secured or unsecured financing, to finance the continuing operations of
Kroll-O'Gara.

F-9
68
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

In addition, O'Gara and KRCS will enter into agreements, principally a tax
sharing and cross-indemnification agreement, governing the relationships
between the separated businesses of Kroll-O'Gara after the split-up.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --

(a) NATURE OF OPERATIONS AND BASIS OF COMBINATION -- The accompanying
combined financial statements include the accounts of all
majority-owned subsidiaries involved in most of the businesses that
operate in Kroll-O'Gara's Security Products and Services Group as well
as the Information Security Group. The Security Products and Services
Group markets ballistic and blast protected vehicles and security
services. The Information Security Group offers information and
computer security services, including network and system security
review and repair. All material intercompany accounts and transactions
are eliminated. Investments in 20% to 50% owned entities are accounted
for on the equity method and investments in less than 20% owned
entities are accounted for on the cost method. Affiliated entities are
not included in the accompanying combined financial statements, and
include entities that are directly or indirectly owned by current
shareholders or former shareholders.

(b) REVENUE RECOGNITION -- Revenue related to contracts for security
products (both government and commercial) results principally from
long-term fixed price contracts and is recognized on the
percentage-of-completion method calculated utilizing the cost-to-cost
approach. The percent deemed to be complete is calculated by comparing
the costs incurred to date to estimated total costs for each contract.
This method is used because management considers costs incurred to be
the best available measure of progress on these contracts. However,
adjustments to this measurement are made when management believes that
costs incurred materially exceed effort expended. Contract costs
include all direct material and labor costs, along with certain direct
overhead costs related to contract production.

Provisions for any estimated total contract losses on uncompleted
contracts are recorded in the period in which it becomes known that
such losses will occur. Changes in estimated total contract costs
result in revisions to contract revenue. These revisions are recognized
when determined.

Revenue from information security services is recognized as the
services are performed. O'Gara records either billed or unbilled
accounts receivable based on case-by-case invoicing determinations.

(c) CASH AND CASH EQUIVALENTS -- Cash equivalents consist of all highly
liquid debt instruments with an initial maturity of three months or
less at the date of purchase. O'Gara invests excess cash in overnight
repurchase agreements, which are government collateralized securities.
The carrying amount of cash and cash equivalents approximates fair
value of those instruments due to their short maturity.

(d) MARKETABLE SECURITIES -- Pursuant to the provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS 115), O'Gara must
classify its debt and marketable securities as either trading,
available-for-sale or held-to-maturity. O'Gara's marketable security
investments consist largely of available-for-

F-10
69
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

sale municipal obligations. These securities are valued at current
market value, which approximates cost.

Unrealized holding gains and losses, net of the related income tax
effect, on the available-for-sale securities are excluded from earnings
and are reported as a separate component of shareholders' equity until
realized. There were no such unrealized gains or losses as of December
31, 1997, 1998 and 1999.

(e) CONCENTRATIONS OF CREDIT RISK -- Financial instruments that subject
O'Gara to credit risk consist principally of trade receivables.
Concentrations of credit risk with respect to accounts receivable are
limited by the number of clients that comprise O'Gara's client base,
along with the different industries and geographic regions in which
O'Gara's clients operate. O'Gara does not generally require collateral
or other security to support client receivables, although O'Gara does
require retainers, up-front deposits or irrevocable letters-of-credit
in certain situations. O'Gara has established an allowance for doubtful
accounts based upon facts surrounding the credit risk of specific
clients and past history. Management does not anticipate incurring
losses on its trade receivables in excess of established allowances.

(f) PROPERTY, PLANT AND EQUIPMENT -- Property, plant and equipment are
stated at cost. Depreciation is computed on both straight-line and
accelerated methods over the estimated useful lives of the related
assets as follows:

Buildings and improvements................................. 5-40 years
Furniture and fixtures..................................... 4-10 years
Machinery and equipment.................................... 3-12 years
Leasehold improvements..................................... Life of lease

(g) IMPAIRMENT OF LONG-LIVED ASSETS -- Pursuant to the provisions of
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" (SFAS 121), long-lived assets, certain identifiable
intangibles and goodwill related to those assets must be reviewed for
impairment by asset group for which the lowest level of independent
cash flows can be identified. In accordance with this standard, O'Gara
periodically reviews the carrying value of these assets and impairments
are recognized when the expected undiscounted future cash flows are
less than the carrying amount of the asset. Based on its most recent
analysis, O'Gara believes no impairment existed at December 31, 1999.
However, it is possible, due to a change in circumstances, that
carrying values could become impaired in the future. Such impairment
could have a material effect on the results of operations in a
particular reporting period.

(h) COSTS IN EXCESS OF ASSETS ACQUIRED -- Costs in excess of assets
acquired represents the excess of the purchase cost over the fair value
of net assets acquired in a purchase business combination. Costs in
excess of assets acquired, net of accumulated amortization, as of
December 31, 1998 and 1999 were $16,867,312 and $15,911,000,
respectively. Amortization is recorded on a straight-line basis over
periods ranging from 15 to 30 years. Amortization of costs in excess of
assets acquired for the years ended December 31, 1997, 1998 and 1999
was $411,233, $641,673 and $1,058,549, respectively.

F-11
70
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(i) OTHER INTANGIBLE ASSETS -- Other intangible assets, comprised mainly of
customer lists and non-compete agreements, are amortized on a
straight-line basis. Customer lists are amortized over a fifteen year
period and the non-compete agreements are amortized over the lives of
the respective agreements, which range from two and one-half years to
five years. Other intangible assets, net of accumulated amortization,
as of December 31, 1998 and 1999 were $1,452,685 and $1,284,049,
respectively. Amortization of other intangible assets for the years
ended December 31, 1997, 1998 and 1999 was $32,222, $468,631 and
$438,615, respectively.

(j) FOREIGN CURRENCY TRANSLATION -- Assets and liabilities of foreign
operations are translated using year-end exchange rates and revenues
and expenses are translated using exchange rates prevailing during the
year, with gains or losses resulting from translation included in a
separate component of shareholders' equity.

Gains or losses resulting from foreign currency transactions are
translated to local currency at the rates of exchange prevailing at the
dates of the transactions. Amounts receivable or payable in foreign
currencies, other than the subsidiary's local currency, are translated
at the rates of exchange prevailing at the balance sheet date. The
effect of transactional gains or losses is included in other income
(expense) in the accompanying combined statements of operations.

(k) USE OF ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

(l) RESEARCH AND DEVELOPMENT -- Research and development costs are expensed
as incurred. O'Gara incurred approximately $136,000, $537,000 and
$297,000 for the years ended December 31, 1997, 1998 and 1999,
respectively, for research and development. These costs are included in
general and administrative expenses in the accompanying combined
statements of operations.

(m) ADVERTISING -- O'Gara expenses the cost of advertising as incurred.
Advertising expenses for the years ended December 31, 1997, 1998 and
1999 were approximately $681,000, $1,327,000 and $1,508,000,
respectively.

(n) EARNINGS PER SHARE -- In 1997, O'Gara adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" (SFAS 128). In
accordance with SFAS 128, basic earnings per share are computed by
dividing net income by the weighted average number of shares of common
stock outstanding during the year. Diluted earnings per share are
computed by dividing net income by the weighted average number of
shares of common stock and common stock equivalents outstanding during
the year.

O'Gara is expected to be capitalized initially with 6.0 million shares
of outstanding common stock. This number of shares was assumed to be
outstanding for all periods presented. To date, no common stock
equivalents of O'Gara have been issued. Therefore, basic and diluted
earnings per share are the same.

F-12
71
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Basic and diluted earnings per share based on income before
extraordinary item and cumulative effect of change in accounting
principle was $0.43 for the year ended December 31, 1997. The basic and
diluted per share impact of the extraordinary item was $0.03.

Basic and diluted loss per share based on loss before extraordinary
item and cumulative effect of change in accounting principle was $0.02
for the year ended December 31, 1999. The basic and diluted per share
impact of the cumulative effect of change in accounting principle was
$0.13.

(o) NEW ACCOUNTING PRONOUNCEMENTS -- In 1998, O'Gara adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" (SFAS 130), which established standards for reporting and
displaying comprehensive income and its components in a financial
statement that is displayed with the same prominence as other financial
statements. O'Gara has chosen to disclose comprehensive income, which
encompasses net income and foreign currency translation adjustments in
the combined statements of shareholders' equity. Prior years have been
restated to conform to the SFAS 130 requirements. The accumulated other
comprehensive income (loss) balances of ($0.5) million, ($1.0) million
and $0.3 million at December 31, 1997, 1998 and 1999, respectively,
consisted entirely of foreign currency translation adjustments.

In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133). SFAS 133
establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as either
an asset or liability measured at its fair value. SFAS 133 requires
that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. SFAS 133,
as amended, is effective for fiscal years beginning after June 15,
2000. O'Gara has several forward contracts in place in association with
demand notes from one of its subsidiaries. These instruments currently
qualify for hedge accounting. O'Gara has not yet quantified the impact
of adopting SFAS 133 on its financial statements and has not determined
the timing of or method of adoption of SFAS 133. However, SFAS 133
could increase volatility in earnings and other comprehensive income.

In March 2000, the FASB issued Financial Accounting Standards Board
Interpretation No. 44 ("Interpretation No. 44"), "Accounting for
Certain Transactions Involving Stock Compensation -- an interpretation
of APB Opinion 25." Interpretation No. 44 is effective July 1, 2000.
Interpretation No. 44 clarifies the application of APB Opinion 25 for
certain matters, specifically (a) the definition of an employee for
purposes of applying APB Opinion 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed
stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. Management does not
anticipate that the adoption of Interpretation No. 44 will have a
material impact on O'Gara's financial position or results of
operations.

(p) STOCK-BASED COMPENSATION -- O'Gara has elected to account for the cost
of its employee stock options and other forms of employee stock-based
compensation plans utilizing the intrinsic

F-13
72
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

value method prescribed in Accounting Principles Board Opinion No. 25
(APB 25) as allowed by Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (SFAS 123). APB 25
requires compensation cost for stock-based compensation plans to be
recognized based on the difference, if any, between the fair market
value of the stock on the date of grant and the option exercise price.
SFAS 123 established a fair value-based method of accounting for
compensation cost related to stock options and other forms of
stock-based compensation plans. SFAS 123 allows an entity to continue
to measure compensation cost using the principles of APB 25 if certain
pro forma disclosures are made. The pro forma disclosures required by
SFAS 123 are presented in Note 10(c).

(q) CHANGE IN ACCOUNTING PRINCIPLE -- In April 1998, the American Institute
of Certified Public Accountants released Statement of Position (SOP)
98-5 "Reporting on the Cost of Start-Up Activities." The SOP requires
costs of start-up activities, including preoperating costs,
organization costs and other start-up costs, to be expensed as
incurred. O'Gara's former practice was to capitalize certain of these
expenses and amortize them over periods ranging from one to five years.
Included in the accompanying December 31, 1998 combined balance sheet
is approximately $1.2 million of preoperating, organization and
start-up costs which would have been expensed had this statement
already been implemented. O'Gara adopted the provisions of this
statement in the first quarter of fiscal 1999 and recorded a cumulative
effect of a change in accounting principle of $0.8 million, net of a
tax benefit of $0.4 million.

(r) EXTRAORDINARY LOSS -- In connection with a refinancing in 1997 of
certain long-term debt, O'Gara fully amortized the remaining deferred
financing costs from a previous credit agreement, resulting in an
extraordinary charge to net income of $0.2 million, net of a tax
benefit of $0.1 million.

(s) FAILED MERGER RELATED COSTS -- On November 15, 1999 Kroll-O'Gara
announced that it had entered into a definitive agreement with
Blackstone Capital Partners III Merchant Banking Fund L.P. (Blackstone)
pursuant to which shares held by all Kroll-O'Gara shareholders, other
than certain members of management, would be acquired by Blackstone. On
April 12, 2000, Kroll-O'Gara announced that Blackstone had withdrawn
its offer to acquire Kroll-O'Gara shares. Costs allocated to O'Gara
associated with the failed merger through December 31, 1999 were
approximately $0.7 million ($0.4 million after taxes, or $0.07 per
diluted share) and consisted primarily of fees for attorneys,
accountants, travel and other related charges. O'Gara anticipates
additional expenses will be incurred in fiscal 2000.

(t) DERIVATIVE FINANCIAL INSTRUMENTS -- Financial instruments in the form
of foreign currency exchange contracts are utilized by O'Gara to hedge
its exposure to movements in foreign currency exchange rates. O'Gara
does not hold or issue derivative financial instruments for trading
purposes. Gains and losses on foreign exchange contracts are deferred
and amortized as an adjustment to the cumulative foreign currency
translation adjustment component of equity over the terms of the
agreements in accordance with hedge accounting standards. The fair
value of foreign currency exchange contracts is not recognized in the
combined financial statements since they are accounted for as hedges.

(u) RECLASSIFICATIONS -- Certain reclassifications have been reflected in
1997 and 1998 to conform with the current period presentation.

F-14
73
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(3) MERGERS AND ACQUISITIONS --

Kroll-O'Gara has completed numerous business combinations in the Security
Products and Services Group and the Information Security Group in the
periods presented. The transactions were accounted for as both purchase
business combinations and pooling of interests business combinations as
follows:

(a) POOLING OF INTERESTS TRANSACTIONS -- In December 1997, a wholly owned
subsidiary of the former O'Gara Company was merged with and into Kroll
Holdings, Inc. (Kroll). Effective upon the consummation of the merger
with Kroll, each then issued and outstanding share of Kroll common
stock, including shares subject to issuance under Kroll stock option
plans, were converted into shares, or options to acquire shares, of
common stock of the former O'Gara Company and the Company changed its
name to The Kroll-O'Gara Company. The merger constituted a tax-free
reorganization and was accounted for as a pooling of interests.

In connection with this merger, O'Gara recorded, in the fourth quarter
of 1997, a charge to operating expenses of approximately $2.9 million
($2.6 million after taxes, or $0.43 per diluted share) for direct and
other merger-related costs pertaining to the transaction. Merger
transaction costs were nonrecurring and consisted primarily of fees for
investment bankers, attorneys, accountants, financial printing, travel
and other related charges.

In December 1998, a wholly owned subsidiary of Kroll-O'Gara was merged
with and into Securify Inc. (Securify). Effective upon the consummation
of the merger, all of the outstanding preferred and common stock of
Securify was converted to shares of Kroll-O'Gara's common stock. In
addition, outstanding employee stock options of Securify were converted
at the same exchange factor as Securify common stock into options to
purchase 179,877 shares of Kroll-O'Gara common stock. Effective with
the consummation of the merger, Kroll-O'Gara created the Information
Security Group and Securify's results of operation and financial
position are reported in this group.

In 1998, Kroll-O'Gara allocated to O'Gara in the fourth quarter, a
charge to operating expenses of approximately $1.1 million ($0.8
million after taxes, or $0.13 per diluted share) for direct and other
merger and integration related costs. Merger transaction costs were
non-recurring and consisted primarily of fees for investment bankers,
attorneys, accountants, financial printing, travel and other related
charges.

In 1999, Kroll-O'Gara allocated to O'Gara a charge to operating
expenses of approximately $0.1 million for other merger and integration
costs related primarily to the Securify merger completed in the fourth
quarter of 1998.

(b) PURCHASE TRANSACTIONS -- Kroll-O'Gara completed three acquisitions in
1997 that were accounted for as purchase business combinations and were
included in the Security Products and Services Group. The aggregate
purchase price of these three acquisitions amounted to approximately
$19.5 million and consisted of $11.7 million in cash, $1.2 million in
seller-provided financing and 583,572 shares of Kroll-O'Gara common
stock (valued at approximately $6.6 million or an average of $11.31 per
share). In connection with these acquisitions, the Company entered into
various employment and non-compete agreements with officers and key

F-15
74
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

employees of the acquired companies with varying terms and conditions.
The results of operations of the acquired businesses are included in
the combined financial statements from the respective effective dates
of acquisition. The resulting goodwill from these transactions is being
amortized over periods ranging from fifteen to thirty years. In
addition to these 1997 acquisitions, Kroll-O'Gara also exercised its
option to acquire the minority interest in its O'Gara Brazilian
subsidiary for approximately 69,565 shares of common stock valued at
approximately $1.2 million.

Kroll-O'Gara made one significant acquisition in 1997 which is included
above. In February 1997, Labbe, S.A. (Labbe), a Company located in
France specializing in vehicle armoring systems, was acquired for
approximately $14.2 million, consisting of $10.7 million in cash and
376,597 shares of Kroll-O'Gara's common stock valued at approximately
$3.5 million or $9.29 per share. For accounting purposes, the
acquisition was effective on January 1, 1997 and results of operations
of Labbe are included in the combined financial statements of O'Gara
from that date forward.

Kroll-O'Gara completed one acquisition in the Security Products and
Services Group in 1998 that was accounted for as a purchase business
combination. In September 1998, Kroll-O'Gara, through its O'Gara-Hess &
Eisenhardt de Columbia (OHE-Columbia) subsidiary, completed the
acquisition of the assets of Protec, S.A., headquartered in Bogota,
Colombia, which specializes in vehicle armoring systems and
manufacturing bullet and smash resistant glass for its own use and for
sale to third parties. OHE-Columbia has been included in the Security
Products and Services Group. The purchase price of this acquisition
amounted to approximately $4.1 million and consisted of $3.2 million in
cash and 38,788 shares of Kroll-O'Gara common stock (valued at
approximately $0.9 million or an average of $22.95 per share). For
accounting purposes, the acquisition was effective on October 1, 1998
and the results of operations of OHE-Columbia are included in the
combined financial statements from that date forward. The resulting
goodwill from this transaction is being amortized over a 20 year
period.

In connection with the 1997 and 1998 purchase acquisitions, the
original assets acquired and liabilities assumed were as follows
(dollars in thousands):

OTHER 1997
LABBE ACQUISITIONS PROTEC
-------- ------------ -------

FAIR VALUE OF ASSETS ACQUIRED INCLUDING:
Cash............................... $ 3,501 $ 125 $ --
Accounts receivable................ 4,689 242 --
Inventories........................ 3,392 553 --
Other current assets............... 316 11 75
Property, plant and equipment...... 3,360 298 311
Other non-current assets........... 2,357 4 --
Costs in excess of assets acquired
and other intangible assets...... 7,802 5,348 3,917
-------- ------- -------
25,417 6,581 4,303

F-16
75
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

OTHER 1997
LABBE ACQUISITIONS PROTEC
-------- ------------ -------

Less: Cash paid for net assets..... (10,730) (1,000) (3,200)
Fair value of debt issued.......... -- (1,331) --
Fair value of Kroll-O'Gara stock
issued........................... (3,431) (3,178) (890)
-------- ------- -------
$ 11,256 $ 1,072 $ 213
======== ======= =======
LIABILITIES ASSUMED INCLUDING:
Liabilities assumed and acquisition
costs.............................. $ 9,287 $ 1,053 $ 99
Debt.................................. 1,969 19 114
-------- ------- -------
$ 11,256 $ 1,072 $ 213
======== ======= =======

(4) BALANCE SHEET ACCOUNTS --

(a) TRADE ACCOUNTS RECEIVABLE AND COSTS AND ESTIMATED EARNINGS IN EXCESS OF
BILLINGS ON UNCOMPLETED CONTRACTS -- The following summarizes the
components of trade accounts receivable and costs and estimated
earnings in excess of billings on uncompleted contracts:

DECEMBER 31,
--------------------------
1998 1999
----------- -----------

United States Military:
Billed receivables.......................... $ 3,225,664 $ 4,877,570
Costs and estimated earnings in excess of
billings on uncompleted contracts........ 21,042,185 13,827,929
----------- -----------
Total United States Military........ $24,267,849 $18,705,499
=========== ===========
Other contracts and receivables:
Billed receivables.......................... $18,254,452 $19,436,603
Costs and estimated earnings in excess of
billings on uncompleted contracts........ 5,365,912 10,331,795
----------- -----------
Total other contracts and
receivables....................... $23,620,364 $29,768,398
=========== ===========
Total trade accounts receivable, net.......... $21,480,116 $24,314,173
=========== ===========
Total costs and estimated earnings in excess
of billings on uncompleted contracts........ $26,408,097 $24,159,724
=========== ===========

Costs and estimated earnings in excess of billings on uncompleted
contracts are net of $107,374,834 and $131,582,751 of progress billings
to the United States Military at December 31, 1998 and 1999,
respectively.

Costs and estimated earnings in excess of billings on uncompleted
contracts represent revenue recognized on long-term contracts in excess
of billings because amounts were not billable at the balance sheet date.
It is anticipated such unbilled amounts attributable to the United
States Military will generally be billed over the next 180 days from the
balance sheet date as the contract is substantially completed. Amounts
receivable on other contracts are generally billed as shipments are
made. It is estimated that substantially all such amounts will be billed
within one year, although contract extensions may delay certain
collections beyond one year.

F-17
76
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The following summarizes activity in the allowance for doubtful accounts
on trade accounts receivable:

ADDITIONS
BALANCE CHARGED TO
BEGINNING OF COSTS AND BALANCE END
PERIOD EXPENSES DEDUCTIONS OF PERIOD
------------ ---------- ---------- --------------

Year ended December 31, 1997............ $149,253 $ 582,377 $ (74,376) $657,254
Year ended December 31, 1998............ 657,254 337,203 (484,947) 509,510
Year ended December 31, 1999............ 509,510 1,144,722 (685,483) 968,749

(b) INVENTORIES -- Inventories are stated at the lower cost or market using
the first-in, first-out (FIFO) method and include the following:

DECEMBER 31,
--------------------------
1998 1999
----------- -----------

Raw materials................................. $ 7,102,009 $14,494,953
Vehicle costs and work-in-process............. 11,505,053 6,699,119
----------- -----------
$18,607,062 $21,194,072
=========== ===========

The following summarizes activity in valuation reserves for inventory
obsolescence:

ADDITIONS
BALANCE CHARGED TO BALANCE
BEGINNING OF COSTS AND END OF
PERIOD EXPENSES DEDUCTIONS PERIOD
------------ ----------------- ---------- --------

Year ended December 31, 1997.............. $252,114 $112,000 $(23,782) $340,332
Year ended December 31, 1998.............. 340,332 9,668 -- 350,000
Year ended December 31, 1999.............. 350,000 116,752 -- 466,752

F-18
77
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(c) OTHER ASSETS -- Other assets are stated at cost less accumulated
amortization and are being amortized on a straight-line basis over
their estimated useful lives, as applicable. Other assets consist of
the following:

USEFUL DECEMBER 31,
LIFE ------------------------
DESCRIPTION (YEARS) 1998 1999
----------- ----------- ---------- ----------

Preoperating and start-up costs....... -- $1,185,574 $ --
Security deposits..................... -- 264,255 145,904
Long-term receivable.................. -- 380,000 --
Non-refundable deposit on an equipment
lease with a related party.......... 5 537,784 537,784
Deferred financing fees............... 7-30 514,729 460,719
Other long-term assets................ -- 366,096 411,941
---------- ----------
3,248,438 1,556,348
Less- accumulated amortization........ (133,639) (238,142)
---------- ----------
$3,114,799 $1,318,206
========== ==========

Preoperating and start-up costs in 1998 included costs applicable to
bids in process which were deferred when management believed it was
probable that future contracts would be obtained. These costs were
transferred to contract costs when contracts were awarded or were
expensed when the contract award was no longer considered probable.
Preoperating and start-up costs also included certain costs incurred in
connection with establishing operations in new locations. In accordance
with SOP 98-5, all such costs were expensed in the first quarter of
fiscal 1999 (See Note 2 (q)).

(d) ACCRUED LIABILITIES -- Accrued liabilities consist of the following at
December 31, 1998 and 1999:

DECEMBER 31,
-------------------------
DESCRIPTION 1998 1999
----------- ----------- ----------

Payroll and related benefits................... $ 5,713,201 $3,784,935
Accrued professional fees...................... 655,628 529,972
Property, sales and other taxes payable........ 1,614,652 400,306
Accrued hedge contract settlement.............. 699,820 --
Accrued medical costs.......................... 192,666 332,394
Accrued interest............................... 168,342 128,252
Accrued warranty reserve....................... 451,773 442,597
Other accruals................................. 912,481 2,061,778
----------- ----------
$10,408,563 $7,680,234
=========== ==========

(e) SHAREHOLDER'S EQUITY -- The combined advances from Kroll-O'Gara include
the respective contributed capital and retained earnings/deficit
accounts of the subsidiaries comprising the Security Products and
Services Group and the Information Security Group, in addition to

F-19
78
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

allocations made by Kroll-O'Gara to O'Gara. Included below in "Other
subsidiaries-retained deficit" as of December 31, 1998 and 1999 is
approximately $9.3 million and $11.1 million, respectively, of
allocated corporate overhead expenses. Included in "Other
subsidiaries-advances from Kroll-O'Gara" as of December 31, 1998 and
1999 is approximately $13.5 million and $7.2 million, respectively, of
allocated net corporate assets. The components of equity are summarized
as follows:

1998 1999
----------- -----------

O'Gara-Hess & Eisenhardt Armoring Co.
Contributed capital......................... $ 2,427,627 $ 2,427,627
Retained earnings........................... 12,443,149 18,005,640
Advances from Kroll-O'Gara.................. 19,502,881 13,149,269
----------- -----------
34,373,657 33,582,536
----------- -----------
Securify Inc.
Contributed capital......................... 6,889,001 6,889,001
Retained deficit............................ (2,061,261) (3,858,328)
Advances from Kroll-O'Gara.................. -- 678,119
----------- -----------
4,827,740 3,708,792
----------- -----------
Other subsidiaries
Contributed capital......................... -- --
Retained deficit............................ (5,483,578) (10,174,131)
Advances from Kroll-O'Gara.................. 37,208,850 31,751,044
----------- -----------
31,725,272 21,576,913
----------- -----------
Total............................... $70,926,669 $58,868,241
=========== ===========

(f) RESTRUCTURING OF OPERATIONS -- In the first quarter of 1999, O'Gara
began implementation of a restructuring plan (the "Plan") to reduce
costs and improve operating efficiencies. The Plan was substantially
completed by the end of the second quarter of 1999. The total
non-recurring pre-tax restructuring charge recorded pursuant to the
Plan was approximately $0.3 million. Total payments or write-offs made
pursuant to the Plan through December 31, 1999 were $0.3 million.
O'Gara does not expect to incur any other significant restructuring
charges in future periods related to this Plan. The principal element
of the restructuring plan was the elimination of approximately 55
employees. The primary components of the restructuring charge in 1999
were as follows:

DESCRIPTION EXPENSE
----------- --------

Severance and related costs................................. $195,095
Writedown of property, plant and equipment.................. 96,662
--------
$291,757
========

(5) INCOME TAXES --

O'Gara accounts for income taxes under the liability method pursuant to
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Under the liability method, deferred tax liabilities and assets are
determined based on the differences between the financial reporting and tax
bases of assets and liabilities using enacted tax rates.

F-20
79
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

O'Gara is a wholly owned subsidiary of Kroll-O'Gara and does not file an
individual tax return. Accordingly, for purposes of these separate combined
financial statements, O'Gara has computed deferred income tax assets and
liabilities using the separate return method as allowed by SFAS 109. Under
this method, the allocation of tax expense or tax benefit is based on what
O'Gara's current and deferred tax expense would have been had O'Gara filed
separate tax returns. This method also assumes that all net operating loss
carryforwards are available to be utilized by the respective subsidiaries.

O'Gara's provision for income taxes, excluding the cumulative effect of a
change in accounting principle and the extraordinary loss, for all periods
is summarized as follows:

1997 1998 1999
---------- ---------- ----------

Currently payable:
Federal.......................... $2,086,857 $3,225,141 $2,098,616
State and local.................. 368,269 569,142 370,344
Foreign.......................... 972,459 1,632,204 592,815
---------- ---------- ----------
3,427,585 5,426,487 3,061,775
---------- ---------- ----------
Deferred:
Federal.......................... (514,995) (349,039) (460,187)
State and local.................. (90,881) (61,595) (81,210)
Foreign.......................... -- -- (217,001)
---------- ---------- ----------
(605,876) (410,634) (758,398)
---------- ---------- ----------
$2,821,709 $5,015,853 $2,303,377
========== ========== ==========

A reconciliation between the statutory federal income tax rate and the
effective tax rate is summarized as follows:

1997 1998 1999
----------------- ----------------- ------------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
---------- ---- ---------- ---- ---------- -----

Provision for income
taxes at the federal
statutory rate......... $1,829,856 34.0% $4,135,308 34.0% $ 733,138 34.0%
State and local income
taxes, net of federal
benefit................ 339,435 6.3 571,796 4.7 269,532 12.5
Nondeductible expenses... 795,084 14.8 (199,811) (1.7) 476,670 22.1
Change in valuation
allowance.............. (504,962) (9.4) 107,206 0.9 661,620 30.7
Effect of foreign
(income) loss.......... 218,465 4.0 156,041 1.3 31,262 1.4
Other.................... 143,831 2.7 245,313 2.0 131,155 6.1
---------- ---- ---------- ---- ---------- -----
Provision for income
taxes............... $2,821,709 52.4% $5,015,853 41.2% $2,303,377 106.8%
========== ==== ========== ==== ========== =====

F-21
80
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The components of O'Gara's combined deferred income tax assets and
liabilities as of December 31 are summarized below:

1998 1999
---------- ----------

Deferred tax assets:
Allowance for doubtful accounts............... $ 94,847 $ 260,256
Depreciation and amortization................. 33,280 50,467
Net operating loss carryforwards.............. 606,466 1,268,086
Payroll and other benefits.................... 1,008,253 789,739
Other accruals................................ 522,891 439,823
Acquisition costs............................. 452,780 628,887
Other......................................... 112,206 521,239
---------- ----------
2,830,723 3,958,497
Valuation allowance........................... (492,657) (1,154,277)
---------- ----------
Net deferred tax assets.................... 2,338,066 2,804,220
---------- ----------
Deferred tax liabilities:
Percentage of completion on foreign
subsidiaries............................... (381,917) (201,148)
Foreign leasing transactions.................. (125,827) (147,146)
Other......................................... (152,441) (281,250)
---------- ----------
(660,185) (629,544)
---------- ----------
Net deferred tax asset.......................... $1,677,881 $2,174,676
========== ==========

O'Gara has certain foreign and domestic net operating loss carryforwards,
which approximated $0.6 million and $1.3 million at December 31, 1998 and
1999, respectively. The foreign net operating loss carryforwards relate
primarily to Mexico and the Philippines. The carryforwards expire beginning
in 2001. A valuation allowance for all existing foreign carryforwards has
been provided as it is not more likely than not that the tax benefit will
be realized in the foreseeable future. Adjustments to the valuation
allowance, if any, will be recorded in the periods in which it is
determined the asset is realizable.

In connection with the reorganization and split-up, O'Gara has entered into
a tax sharing agreement with KRCS whereby each member of the consolidated
group for U.S. tax purposes is jointly and severally liable for the federal
liability of each other member of the consolidated group. Accordingly, for
any period in which either company was included in Kroll-O'Gara's
consolidated group, that company could be liable for any federal tax
liability that was incurred, but not discharged, by the other.

F-22
81
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(6) RELATED PARTY TRANSACTIONS --

(a) SUMMARY OF RELATED PARTY TRANSACTIONS -- The following summarizes
transactions with related parties:

YEARS ENDED DECEMBER 31,
--------------------------------
1997 1998 1999
-------- ---------- -------

Purchases
from Kroll-O'Gara Shareholder.......... $ -- $ 118,700 $90,350
from affiliated entities............... -- 1,325,410 --
Lease expense to affiliated entities..... 813,000 838,597 566,213
Commission expense from Kroll-O'Gara..... -- -- 40,000
Non-interest bearing advances to a
Kroll-O'Gara shareholder............... 172,779 482,541 52,588
Air charter fees included in offering or
merger costs........................... 576,000 566,000 --

(b) BUILDING AND EQUIPMENT LEASES -- AFFILIATED ENTITIES -- Effective June
1, 1998, O'Gara reached an agreement to terminate the corporate
aircraft lease which originated in February 1995 with an affiliated
entity. The terms of the aircraft lease addendum provide O'Gara with a
future hourly discount from the normal commercial hourly rate in order
to amortize the remaining portion of existing lease deposits from the
original aircraft lease. Rental expense, including amortization
recognized, approximated $234,000, $292,000 and $82,000 for the years
ended December 31, 1997, 1998 and 1999, respectively. O'Gara also paid
this affiliated entity $576,000 in fiscal 1997 for usage of the
aircraft to consummate the merger with Kroll and included such amounts
in merger-related costs. O'Gara paid $296,000 in 1998 for usage of the
aircraft during the roadshow for a stock offering and included such
amount in stock issuance costs. O'Gara also paid $270,000 in fiscal
1998 for usage of the aircraft to consummate the merger with Securify
and included such amount in merger related costs. Management is of the
opinion that the hourly rate paid by O'Gara was equivalent to the rate
charged by the affiliated entity to other unrelated companies for
similar services and it was favorably comparable to rates charged by
another unrelated charter service for similar aircraft. As of December
31, 1998 and 1999, O'Gara had approximately $484,371 and $402,081,
respectively in unamortized lease deposits with this affiliated entity.

O'Gara is currently leasing various equipment from an affiliated entity
under various three year lease agreements. Rental expense approximated
$579,000, $547,000 and $484,000 for the years ended December 31, 1997,
1998 and 1999, respectively.

F-23
82
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(7) LONG-TERM DEBT DUE TO THIRD PARTIES --

The components of long-term debt due to third parties are as follows at:

DECEMBER 31,
--------------------------
1998 1999
----------- -----------

Economic Development Revenue Bonds, variable interest rate
approximating 85% of the bond equivalent yield of 13
week U.S. Treasury bills (not to exceed 12%), which
approximated 5.17% at December 31, 1999, payable in
scheduled installments through September 2016, subject
to optional tender by the bondholders and a
corresponding remarketing agreement, secured by certain
property, plant and equipment and a bank letter of
credit (Note 11)........................................ $ 1,357,224 $ 1,275,974
Notes payable to former shareholders of acquired
companies, interest at fixed rates ranging from 7% to
10%, payable in scheduled installments through July
1999.................................................... 912,424 250,000
Other notes payable, interest at 7% to 10.9% payable in
scheduled installments through September 2007, certain
notes secured by various equipment...................... 1,325,777 1,573,592
----------- -----------
3,595,425 3,099,566
Less -- current portion................................... (1,336,449) (2,245,927)
----------- -----------
$ 2,258,976 $ 853,639
=========== ===========

Scheduled maturities of long-term debt at December 31, 1999 are as follows:

2000....................................................... $2,245,927
2001....................................................... 229,073
2002....................................................... 135,656
2003....................................................... 108,192
2004....................................................... 112,109
Thereafter................................................. 268,609
----------
$3,099,566
==========

(8) OPERATING LEASES --

O'Gara leases office space and certain equipment and supplies under
agreements with terms from one to fifteen years. The following is a
schedule, by year, of approximate future minimum rental or usage payments
required under operating leases that have initial or non-cancelable lease
terms in excess of one year as of December 31, 1999:

2000....................................................... $1,846,783
2001....................................................... 1,647,572
2002....................................................... 782,076
2003....................................................... 442,814
2004....................................................... 216,125
Thereafter................................................. 823,493
----------
$5,758,863
==========

F-24
83
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Rental expense charged against current operations amounted to approximately
$1,517,992, $1,257,418 and $1,836,662, for the years ended December 31,
1997, 1998 and 1999, respectively.

(9) DEFINED CONTRIBUTION PLAN --

O'Gara and its subsidiaries participate in a Kroll-O'Gara sponsored profit
sharing/401(k) plan covering substantially all employees. Contributions to
the plan are discretionary. The plan includes a matching contribution
whereby O'Gara will contribute a percentage of the amount a participant
contributes, limited to certain maximum amounts. Plan contribution expense
charged against current operations amounted to approximately $125,000 and
$185,000, for the years ended December 31, 1997 and 1999, respectively.
There was no contribution expense for the year ended December 31, 1998.

(10) EQUITY ARRANGEMENTS --

(a) STOCK OPTION PLANS -- O'Gara employees were granted stock options under
Kroll-O'Gara's 1996 stock option plan (the 1996 Plan). Options for
243,600, 60,500 and 311,100 shares were granted during 1997, 1998 and
1999, respectively. Options granted under the 1996 plan have been
granted at fair market value at the date of grant and are exercisable
over periods not exceeding ten years. Additionally, effective with the
merger with Securify, each outstanding Securify stock option was
converted at the exchange factor into options to purchase Kroll-O'Gara
common stock. After conversion, total stock options granted under the
previously existing Securify stock option plan in 1998 were 210,756. No
options were granted under the previously existing Securify stock
option plan in 1999.

In connection with stock options granted by Securify during the year
ended December 31, 1998, O'Gara recorded deferred compensation of
$1,192,096, representing the difference between the deemed value of the
common stock for accounting purposes and the option exercise price of
such options at the date of grant. This amount is presented as a
reduction of shareholders' equity, to be expensed ratably over the
vesting periods of the applicable options. Approximately $78,000 and
$298,000 was expensed in 1998 and 1999, respectively, with the balance
to be expensed ratably over the next three years as the options vest.
These options will, however, fully vest in connection with the
reorganization and split-up, resulting in an acceleration of the
remaining unrecognized compensation expense.

(b) RESTRICTED STOCK PLAN -- Effective August 12, 1998, Kroll-O'Gara
adopted a stock incentive plan (the 1998 Stock Incentive Plan) for
employees. There were no shares granted under the plan during 1998;
however, during fiscal 1999, 12,500 shares were granted under the plan
to O'Gara employees. In connection with the shares granted under the
Stock Incentive Plan in 1999, O'Gara recorded deferred compensation of
$413,595 representing the difference between the fair market value of
Kroll-O'Gara common stock on the date of grant and the purchase price
of the shares. This amount is presented as a reduction of shareholders'
equity, to be expensed ratably over the vesting periods of the
applicable grants. Approximately $199,000 was expensed in 1999, with
the balance to be expensed ratably through March 2002 as the grants
vest. However, the remaining grants will vest in full at the time of
the reorganization, resulting in an acceleration of the remaining
unrecognized compensation expense.

F-25
84
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(c) STOCK BASED COMPENSATION DISCLOSURE -- SFAS 123 requires, at a minimum,
pro forma disclosures of expense for stock-based awards based on their
fair values. The pro forma amounts below are not necessarily
representative of the effects of stock-based awards on future pro forma
net income because the plans eventually adopted by O'Gara may differ
from Kroll-O'Gara stock option plans and accordingly (1) future grants
of employee stock options by O'Gara management may not be comparable to
awards made to employees while O'Gara was a part of Kroll-O'Gara, and
(2) the assumptions used to compute the fair value of any stock option
awards will be specific to O'Gara and, therefore, may not be comparable
to the Kroll-O'Gara assumptions used. If O'Gara had measured
compensation cost for the Kroll-O'Gara stock options granted to its
employees under the fair value method prescribed by SFAS 123, O'Gara's
net income (loss) for the years ended December 31, 1997, 1998 and 1999
would have been as follows:

1997 1998 1999
---------- ---------- -----------

Net income (loss):
As reported....................... $2,366,344 $7,146,817 $ (925,129)
Pro forma......................... $1,676,813 $6,518,404 $(2,167,758)
Diluted earnings (loss) per share:
As reported....................... $ 0.50 $ 1.52 $ (0.20)
Pro forma......................... $ 0.36 $ 1.39 $ (0.46)

The fair value of these options is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted
average assumptions used by Kroll-O'Gara for grants in 1997, 1998 and
1999:

YEAR ENDED DECEMBER 31,
-------------------------------------
1997 1998 1999
----------- ----------- -----------

Dividend yield................... -- -- --
Expected volatility.............. 40.5% 41.4% 41.4%
Risk-free interest rate.......... 5.96%-6.76% 4.61%-5.67% 5.29%-5.44%

Expected lives................... 7.5 years 2.5-7.5 years 7.5 years

Option grants by Kroll-O'Gara to O'Gara employees during 1997 have a
weighted-average exercise price of $15.52, a weighted-average fair value
of $10.28 and remaining contractual lives, on a weighted-average basis,
of 9.4 years. The 271,256 options granted by Kroll-O'Gara to O'Gara
employees during 1998 have a weighted-average exercise price of $4.71, a
weighted-average fair value of $6.70 and contractual lives, on a
weighted-average basis, of 9.4 years. The 311,100 options granted by
Kroll-O'Gara to O'Gara employees during 1999 have a weighted-average
exercise price of $27.70, a weighted-average fair value of $14.80 and
contractual lives, on a weighted-average basis, of 9.2 years.

F-26
85
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the status of Kroll-O'Gara stock options granted to O'Gara
employees at December 31, 1997, 1998 and 1999, and the change during the
years then ended is presented in the table below:

1997 1998 1999
------------------ ------------------ ------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------- -------- ------- -------- ------- --------

Outstanding,
beginning of
year............... 180,000 $ 5.79 381,449 $11.60 561,827 $ 9.24
Granted.............. 243,600 15.52 271,256 4.71 311,100 27.70
Exercised............ (4,200) 9.00 (88,378) 5.82 (63,906) 4.26
Forfeited/Expired/
Cancelled.......... (37,951) 9.46 (2,500) 17.50 (40,467) 22.10
------- ------ ------- ------ ------- -------
Outstanding, end of
year............... 381,449 $11.60 561,827 $ 9.24 768,554 $ 12.62
======= ====== ======= ====== ======= =======
Exercisable, end of
year............... 146,750 $ 6.16 351,777 $ 6.44 387,856 $ 8.77
======= ====== ======= ====== ======= =======

Of the options outstanding at December 31, 1999, 135,396 options are
exercisable at prices per share ranging from $0.52 to $0.84 per share,
355,513 options are exercisable at prices per share ranging from $9.00
to $20.75 per share and 277,645 options are exercisable at prices per
share ranging from $26.94 to $34.88 per share. All options that were
outstanding but not yet exercisable at December 31, 1999 become fully
vested in connection with the reorganization and split-up.

Effective May 12, 2000, Kroll-O'Gara established a new stock option plan
(the 2000 Plan). Pursuant to this plan, O'Gara employees were granted
291,400 stock options on May 12, 2000. Additionally, effective May 12,
2000, Kroll-O'Gara amended the 1996 Plan and granted options to certain
O'Gara employees for 82,000 shares of common stock under that plan. By
their terms, none of the May 12, 2000 options vest as a result of the
reorganization and split-up.

The stock option share data described above has not been modified to
give effect to anticipated changes to the capital structure of O'Gara.

(11) COMMITMENTS AND CONTINGENCIES --

(a) LETTERS OF CREDIT -- Under the terms of the Economic Development
Revenue Bonds Agreement, O'Gara is required to maintain a letter of
credit supporting the debt. As of December 31, 1999, O'Gara's lender
was committed to providing this letter of credit through May 31, 2000;
the letter of credit was subsequently amended to extend its maturity
through May 31, 2001. As of December 31, 1999, O'Gara had an
outstanding letter of credit in the amount of $1,437,625.

At December 31, 1999, O'Gara had standby and purchase letters of
credit, issued on its behalf by its primary lender, in the aggregate
amount of $1,330,710.

F-27
86
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(b) EMPLOYMENT AGREEMENTS -- Kroll-O'Gara and O'Gara have employment
agreements with O'Gara executive officers and management level
personnel with annual compensation ranging in value from $66,000 to
$350,000, over varying periods extending to April 2005. The agreements
generally provide for salary continuation in the event of termination
without cause for the greater of the remainder of the agreement or one
year. The agreements also contain certain non-competition clauses and
generally provide for one year's salary if the agreement is not
renewed.

As of December 31, 1999, the remaining aggregate commitment under these
employment agreements if all individuals were terminated without cause
was approximately $3.4 million. In conjunction with the reorganization
and split-up certain of these employment agreements will be terminated.

(c) LEGAL MATTERS -- Kroll-O'Gara has been named as a defendant in eight
lawsuits alleging that its officers and directors breached their
fiduciary duties in connection with the now terminated proposed
acquisition of a majority of Kroll-O'Gara's shares by a company formed
by Blackstone. Five of the lawsuits were filed in the Court of Common
Pleas, Butler County, Ohio, and were consolidated on November 29, 1999.
The remaining three lawsuits were filed in the United States District
Court for the Southern District of New York and were consolidated on
November 30, 1999. In amended complaints, plaintiffs allege that
Kroll-O'Gara's officers and directors breached their fiduciary duties
by deferring acquisitions, by negotiating an inadequate acquisition
price, by failing to engage in arms-length negotiations and by failing
to seek redress from Blackstone after Blackstone terminated the
proposed transaction. The plaintiffs also allege that Blackstone and
AIG aided and abetted the directors' and officers' alleged breaches of
fiduciary duties. The plaintiffs seek to bring their claims
derivatively on behalf of Kroll-O'Gara and also seek class
certification. On behalf of Kroll-O'Gara and putative plaintiff classes
of shareholders, they seek a declaration that the individual defendants
breached their fiduciary duty and seek damages and attorneys' fees in
an unspecified amount. The defendants believe that the allegations in
the complaints are wholly meritless and will defend the suits
vigorously. In accordance with the provisions of the reorganization
agreement, any liability and expenses relating to this matter will be
shared by KRCS and O'Gara on an approximate 58.5% and 41.5% basis,
respectively.

O'Gara has learned that an individual has filed a qui tam suit, which
is under seal, against OHE under the Civil False Claims Act, 31 U.S.C.
sec. 3729, alleging that OHE and three of its vendors knowingly
violated their contractual requirements with the Army. On January 18,
2000, an attorney for the U.S. Department of Justice stated that it was
his intention to recommend that the Government intervene and take over
the suit and estimated OHE's liability to be as high as $16,000,000
stemming from its vendors' alleged failure to have certified welders.
Though O'Gara strongly disputes the Government's contention and will
vigorously contest the Government's claims, in September 2000, O'Gara
began settlement negotiations with the U.S. Department of Justice.
Management currently believes a settlement of this matter is possible
for approximately $1.1 million and O'Gara will accrue this expense in
the third quarter of fiscal 2000. In accordance with the provisions of
the reorganization agreement, any liability and expenses relating to
this matter will be the responsibility of O'Gara.

F-28
87
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

In addition to the matters discussed above, O'Gara is involved in
litigation from time to time in the ordinary course of its business;
however, O'Gara does not believe that there is any currently pending or
threatened litigation, individually or in the aggregate, that is likely
to have a material adverse effect on its financial position, results of
operations or its cash flows.

(12) FAIR VALUE OF FINANCIAL INSTRUMENTS --

The fair values of significant current assets, current liabilities and
long-term debt approximate their respective historical carrying amounts.

O'Gara has entered into 5 foreign currency exchange contracts to
effectively hedge its exposure to certain foreign currency rate
fluctuations on demand loans to one subsidiary which are denominated in a
foreign currency. By virtue of these contracts, O'Gara has fixed the total
dollar amount which it will receive under the aforementioned subsidiary
loan through the maturity dates of the contracts regardless of the
fluctuations in the exchange rate. As of December 31, 1999, the total
notional amount of the contracts, which mature between January 2000 and
July 2001, was $14.8 million. O'Gara's cumulative foreign currency
translation adjustment component of shareholders' equity was decreased by
$1.0 million in 1998 and increased by $2.0 million in 1999 as a result of
these agreements.

O'Gara has estimated the fair value of its foreign exchange contracts based
on information obtained from the counterparty of the amount O'Gara would
receive at December 31, 1999 in order to terminate the agreements. As of
December 31, 1999, O'Gara would have received approximately $1.3 million
upon cancellation of all contracts.

(13) CUSTOMER AND SEGMENT DATA --

(a) SEGMENT DATA -- O'Gara operates in two business segments, the Security
Products and Services Group and the Information Security Group. The
following summarizes information about O'Gara's business segments:

SECURITY
PRODUCTS
AND INFORMATION
SERVICES SECURITY
GROUP GROUP OTHER COMBINED
-------- ----------- ------- --------

1997
- -----
Net sales to unaffiliated customers........... $100,739 $ -- $ -- $100,739
======== ======= ======= ========
Gross profit.................................. $ 28,356 $ -- $ -- $ 28,356
======== ======= ======= ========
Operating income.............................. $ 8,755 $ -- $ -- $ 8,755
======== ======= ======= ========
Identifiable assets at year-end............... $ 72,672 $ -- $ -- $ 72,672
======== ======= =======
Corporate assets.............................. 9,013
--------
Total assets at year-end...................... $ 81,685
========

F-29
88
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

SECURITY
PRODUCTS
AND INFORMATION
SERVICES SECURITY
GROUP GROUP OTHER COMBINED
-------- ----------- ------- --------

1998
- -----
Net sales to unaffiliated customers........... $131,574 $ 116 $ -- $131,690
======== ======= ======= ========
Gross profit (loss)........................... $ 37,120 $ (395) $ (325) $ 36,400
======== ======= ======= ========
Operating income (loss)....................... $ 20,626 $(2,194) $(3,907) $ 14,525
======== ======= ======= ========
Identifiable assets at year-end............... $103,134 $ 4,288 $ -- $107,422
======== ======= =======
Corporate assets.............................. 13,380
--------
Total assets at year-end...................... $120,802
========
1999
- -----
Net sales to unaffiliated customers........... $114,162 $ 4,345 $ -- $118,507
======== ======= ======= ========
Gross profit.................................. $ 32,587 $ 2,300 $ -- $ 34,887
======== ======= ======= ========
Operating income (loss)....................... $ 11,376 $(1,764) $(5,303) $ 4,309
======== ======= ======= ========
Identifiable assets at year-end............... $105,340 $ 3,359 $ -- $108,699
======== ======= =======
Corporate assets.............................. 9,573
--------
Total assets at year-end...................... $118,272
========

Total net sales by segment includes sales to unaffiliated customers.
Intersegment sales are nominal. Operating income (loss) is total net
sales less operating expenses. Operating income (loss) does not include
the following items: interest expense, other expenses and income taxes.
The Other column includes allocated corporate overhead costs.
Depreciation expense and capital expenditures for each of O'Gara's
business segments for the years ended December 31, 1997, 1998 and 1999
are as follows:

SECURITY
PRODUCTS
AND INFORMATION
SERVICES SECURITY
GROUP GROUP OTHER COMBINED
-------- ----------- ----- --------

1997
- -----
Depreciation expense.............................. $1,427 $ -- $ -- $1,427
====== ====== ==== ======
Capital expenditures.............................. $3,149 $ -- $ -- $3,149
====== ====== ==== ======
1998
- -----
Depreciation expense.............................. $1,282 $ 24 $ 6 $1,312
====== ====== ==== ======
Capital expenditures.............................. $3,427 $ 186 $313 $3,926
====== ====== ==== ======
1999
- -----
Depreciation expense.............................. $2,188 $ 93 $143 $2,424
====== ====== ==== ======
Capital expenditures.............................. $5,611 $1,673 $590 $7,874
====== ====== ==== ======

Identifiable assets by segment are those assets that are used in
O'Gara's operations in each segment. Corporate assets allocated to
O'Gara consist principally of cash, marketable

F-30
89
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

securities, computer software, deferred tax assets, certain intangible
assets and certain prepaid expenses.

The following summarizes information about O'Gara's different geographic
areas:

UNITED OTHER
STATES FRANCE FOREIGN ELIMINATIONS COMBINED
------- ------- ------- ------------ --------

1997
- -----
Net sales to unaffiliated customers... $62,015 $20,524 $18,200 $ -- $100,739
Intercompany.......................... 3,003 2,130 624 (5,757) --
------- ------- ------- ------- --------
Total net sales............. $65,018 $22,654 $18,824 $(5,757) $100,739
======= ======= ======= ======= ========
Operating income...................... $ 5,402 $ 1,813 $ 1,540 $ -- $ 8,755
======= ======= ======= ======= ========
Identifiable assets................... $34,117 $22,898 $15,657 $ -- $ 72,672
======= ======= ======= =======
Corporate assets...................... 9,013
--------
Total assets at year-end.... $ 81,685
========
1998
- -----
Net sales to unaffiliated customers... $77,766 $26,164 $27,760 $ -- $131,690
Intercompany.......................... 898 637 186 (1,721) --
------- ------- ------- ------- --------
Total net sales............. $78,664 $26,801 $27,946 $(1,721) $131,690
======= ======= ======= ======= ========
Operating income...................... $ 8,524 $ 2,185 $ 3,816 $ -- $ 14,525
======= ======= ======= ======= ========
Identifiable assets................... $57,493 $28,106 $21,823 $ -- $107,422
======= ======= ======= =======
Corporate assets...................... 13,380
--------
Total assets at year-end.... $120,802
========
1999
- -----
Net sales to unaffiliated customers... $69,446 $25,315 $23,746 $ -- $118,507
Intercompany.......................... 2,037 1,445 423 (3,905) --
------- ------- ------- ------- --------
Total net sales............. $71,483 $26,760 $24,169 $(3,905) $118,507
======= ======= ======= ======= ========
Operating income (loss)............... $ 4,104 $ 2,012 $(1,807) $ -- $ 4,309
======= ======= ======= ======= ========
Identifiable assets................... $63,683 $25,808 $19,208 $ -- $108,699
======= ======= ======= =======
Corporate assets...................... 9,573
--------
Total assets at year-end.... $118,272
========

O'Gara accounts for transfers between geographic areas at cost plus a
proportionate share of operating profit.

F-31
90
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The following summarizes O'Gara's sales in the United States and foreign
locations:

YEARS ENDED DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
(DOLLARS IN THOUSANDS)

Sales to unaffiliated customers:
U.S. Government.......................... $ 43,719 $ 62,059 $ 54,953
Other United States...................... 8,362 5,813 9,162
Middle East.............................. 5,887 3,998 1,618
Europe................................... 15,829 31,202 29,759
Central and South America................ 19,135 20,766 19,716
Other Foreign............................ 7,807 7,852 3,299
-------- -------- --------
$100,739 $131,690 $118,507
======== ======== ========

Export sales by O'Gara's domestic operations were approximately 12%, 11%
and 4% of net sales for the years ended December 31, 1997, 1998 and
1999, respectively.

O'Gara is subject to audit and investigation by various agencies which
oversee contract performance in connection with O'Gara's contracts with
the U.S. Government. Management believes that potential claims from such
audits and investigations will not have a material adverse effect on the
combined financial statements. In addition, contracts with the U.S.
Government may contain cost or performance incentives or both based on
stated targets or other criteria. Cost or performance incentives are
recorded at the time there is sufficient information to relate actual
performance to targets or other criteria.

O'Gara has foreign operations and assets in Brazil, Colombia, France,
Italy, Mexico, Russia and the Philippines. In addition, O'Gara sells its
products and services in other foreign countries and has continued to
increase its level of international activity. Accordingly, O'Gara is
subject to various risks including, among others, foreign currency
restrictions, exchange rate fluctuations, government instability and
complexities of local laws and regulations.

(b) MAJOR CUSTOMERS -- During the years ended December 31, 1997, 1998 and
1999 sales in the Security Products and Services Group to the U.S.
Government approximated 43%, 47% and 46% of O'Gara's net sales,
respectively.

F-32
91
THE O'GARA COMPANY

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(14) SUPPLEMENTAL CASH FLOWS DISCLOSURES --

The following is a summary of cash paid related to certain items:

1997 1998 1999
---------- ---------- ----------

SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid for interest.................. $2,951,794 $ 473,107 $ 212,277
========== ========== ==========
Cash paid for taxes..................... $2,599,000 $1,303,277 $2,455,459
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF
NON-CASH ACTIVITIES:
Deferred compensation related to options
and restricted stock.................. $ -- $1,192,096 $ 413,595
========== ========== ==========
Fair value of Kroll-O'Gara stock issued
in connection with acquisition of
businesses............................ $6,608,485 $ 890,185 $ --
========== ========== ==========
Notes issued in connection with
acquisition of businesses............. $1,331,513 $ -- $ --
========== ========== ==========
Fair value of stock issued in connection
with acquisition of minority
interest.............................. $1,243,474 $ -- $ --
========== ========== ==========

The supplemental cash flow disclosure information does not include
allocated interest and tax expense that was funded directly by
Kroll-O'Gara.

(15) SUBSEQUENT EVENT

In the third quarter of fiscal 2000, O'Gara began implementation of a plan
to reduce costs. O'Gara anticipates incurring a total non-recurring pre-tax
charge of less than $1.0 million in connection with this cost reduction
plan. The primary component of the restructuring charge is severance
related to the termination of employees.

F-33
92

THE O'GARA COMPANY

COMBINED BALANCE SHEETS (UNAUDITED)
AS OF DECEMBER 31, 1999 AND JUNE 30, 2000

DECEMBER 31, JUNE 30,
1999 2000
------------ --------
(DOLLARS IN THOUSANDS)

ASSETS
CURRENT ASSETS:
Cash and equivalents (Note 5)............................. $ 3,395 $ 2,597
Trade accounts receivable, net of allowance for doubtful
accounts of $969 and $750 at December 31, 1999 and June
30, 2000, respectively................................. 24,314 23,135
Related party receivables................................. 335 425
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. 24,160 15,241
Inventories (Note 6)...................................... 21,194 26,787
Prepaid expenses and other................................ 5,027 3,998
Deferred tax asset........................................ 1,744 1,744
-------- --------
Total current assets.............................. 80,169 73,927
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost
Land...................................................... 1,970 1,946
Buildings and improvements................................ 6,631 6,418
Leasehold improvements.................................... 1,109 1,057
Furniture and fixtures.................................... 6,243 5,847
Machinery and equipment................................... 12,521 15,296
-------- --------
28,474 30,564
Less: accumulated depreciation............................ (9,315) (10,746)
-------- --------
19,159 19,818
-------- --------
COSTS IN EXCESS OF ASSETS ACQUIRED AND OTHER INTANGIBLE
ASSETS, net of accumulated amortization of $3,192 and
$3,278 at December 31, 1999 and June 30, 2000,
respectively.............................................. 17,195 15,683
OTHER ASSETS:
Other assets.............................................. 1,318 1,169
Deferred tax asset........................................ 431 431
-------- --------
18,944 17,283
-------- --------
$118,272 $111,028
======== ========

The accompanying notes are an integral part of these combined balance sheets.
F-34
93

THE O'GARA COMPANY

COMBINED BALANCE SHEETS (UNAUDITED)
AS OF DECEMBER 31, 1999 AND JUNE 30, 2000

DECEMBER 31, JUNE 30,
1999 2000
------------ --------
(DOLLARS IN THOUSANDS)

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt due to third-parties.... $ 2,246 $ 1,671
Current portion of allocated Kroll-O'Gara long-term
debt................................................... 9,455 15,652
Trade accounts payable.................................... 22,588 20,943
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 361 486
Accrued liabilities....................................... 7,680 6,584
Customer deposits......................................... 1,396 2,085
Income taxes currently payable............................ -- 10
-------- --------
Total current liabilities......................... 43,726 47,431
-------- --------

OTHER LONG-TERM LIABILITIES................................. 522 194

ALLOCATION OF KROLL-O'GARA LONG-TERM DEBT................... 15,072 15,725

LONG-TERM DEBT DUE TO THIRD PARTIES, net of current
portion................................................... 854 966
-------- --------
Total liabilities................................. 60,174 64,316
SHAREHOLDERS' EQUITY (Note 1):
Advances from Kroll-O'Gara................................ 58,868 50,653
Deferred compensation..................................... (1,030) (826)
Accumulated other comprehensive income (loss)............. 260 (3,115)
-------- --------
Total shareholders' equity........................ 58,098 46,712
-------- --------
$118,272 $111,028
======== ========

The accompanying notes are an integral part of these combined balance sheets.
F-35
94

THE O'GARA COMPANY

COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)

SIX MONTHS ENDED JUNE 30,
--------------------------
1999 2000
------------ ----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)

NET SALES................................................... $ 56,962 $ 53,335
COST OF SALES............................................... 38,434 40,347
---------- ----------
Gross profit...................................... 18,528 12,988
OPERATING EXPENSES:
Selling and marketing expenses............................ 4,096 4,390
General and administrative expenses....................... 7,023 11,649
Separation expenses (Note 1).............................. -- 280
Failed merger expenses (Note 9)........................... -- 830
Merger expenses........................................... 36 --
Restructuring expense (Note 2)............................ 292 --
---------- ----------
Operating income (loss)........................... 7,081 (4,161)
---------- ----------
OTHER INCOME (EXPENSE):
Interest expense.......................................... (799) (1,167)
Other, net................................................ 28 (134)
---------- ----------
Income (loss) before provision for income taxes
and cumulative effect of change in accounting
principle....................................... 6,310 (5,462)
Provision for income taxes................................ 2,454 327
---------- ----------
Income (loss) before cumulative effect of change
in accounting principle......................... 3,856 (5,789)
Cumulative effect of change in accounting principle, net
of applicable tax benefit of $408 (Note 4)............. (778) --
---------- ----------
Net income (loss)......................................... $ 3,078 $ (5,789)
========== ==========
PER SHARE DATA:
EARNINGS (LOSS) PER SHARE (Note 3)
Basic and diluted......................................... $ 0.51 $ (0.96)
========== ==========
Weighted Average Shares Outstanding............... 6,000,000 6,000,000
========== ==========

The accompanying notes are an integral part of these combined financial
statements.
F-36
95

THE O'GARA COMPANY

COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE PERIOD ENDED JUNE 30, 2000

ACCUMULATED
OTHER
COMPREHENSIVE ADVANCES FROM DEFERRED COMPREHENSIVE
INCOME (LOSS) KROLL-O'GARA COMPENSATION INCOME (LOSS) TOTAL
------------- ------------- ------------ ------------- -------

BALANCE, December 31, 1999........ $58,868 $(1,030) $ 260 $58,098
Comprehensive loss
Net loss........................ $(5,789) (5,789) -- -- (5,789)
-------
Other comprehensive loss, net of
tax:
Foreign currency translation
adjustment, net of $2,250
tax benefit................ (3,375) -- -- -- --
-------
Other comprehensive loss..... (3,375) -- -- (3,375) (3,375)
-------
Comprehensive loss......... $(9,164) -- -- -- --
=======
Change in advances from
Kroll-O'Gara.................... (2,426) -- -- (2,426)
Deferred compensation related to
restricted stock of
Kroll-O'Gara.................... -- 204 -- 204
------- ------- ------- -------
BALANCE, June 30, 2000............ $50,653 $ (826) $(3,115) $46,712
======= ======= ======= =======

The accompanying notes to combined financial statements are an integral part of
these combined statements.
F-37
96

THE O'GARA COMPANY

COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 2000

SIX MONTHS ENDED
JUNE 30,
-----------------------
1999 2000
---------- ---------
(DOLLARS IN THOUSANDS)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ 3,078 $(5,789)
Adjustments to reconcile net income (loss) to net cash
used in operating activities --
Depreciation and amortization........................ 1,581 2,260
Bad debt expense..................................... 122 144
Noncash compensation expense......................... 245 204
Change in assets and liabilities, net of effects of
acquisitions and dispositions --
Receivables -- trade................................. 2,183 1,035
Costs and estimated earnings in excess of billings on
uncompleted contracts............................... 3,514 8,919
Inventories, prepaid expenses and other assets....... (7,040) (3,550)
Accounts payable and income taxes currently
payable............................................. (8,765) (1,670)
Billings in excess of costs and estimated earnings on
uncompleted contracts............................... (94) 125
Amounts due to/from related parties.................. (229) (56)
Customer deposits.................................... (1,037) 689
Accrued liabilities.................................. 6,610 (1,095)
Long-term liabilities................................ (343) (328)
--------- -------
Net cash provided by (used in) operating
activities...................................... (175) 888
--------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net........... (4,206) (2,272)
Sale of marketable securities............................. 6,032 --
--------- -------
Net cash provided by (used in) investing
activities...................................... 1,826 (2,272)
--------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (repayments) from allocated Kroll-O'Gara
long-term debt......................................... 2,165 653
Payments of third party debt.............................. (285) (255)
Increase (decrease) in advances from Kroll-O'Gara......... (9,450) (2,426)
Net borrowings (repayments) under revolving lines of
credit................................................. 9,116 5,989
Foreign currency translation.............................. (2,435) (3,244)
--------- -------
Net cash provided by (used in) financing
activities...................................... (889) 717
--------- -------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS............. 762 (667)
Effects of foreign currency exchange rates on cash.......... (132) (131)
--------- -------
CASH AND EQUIVALENTS, BEGINNING OF PERIOD................... 6,417 3,395
--------- -------
CASH AND EQUIVALENTS, END OF PERIOD......................... $ 7,047 $ 2,597
========= =======

The accompanying notes are an integral part of these combined financial
statements.
F-38
97

THE O'GARA COMPANY

NOTES TO COMBINED UNAUDITED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND JUNE 30, 2000

(1) GENERAL

The O'Gara Company (O'Gara or the Company) is a wholly owned holding
company subsidiary of The Kroll-O'Gara Company (Kroll-O'Gara) and currently
consists of most of the businesses that operate in Kroll-O'Gara's Security
Products and Services Group as well as the business that operates in
Kroll-O'Gara's Information Security Group.

In April 2000, Kroll-O'Gara decided to reorganize itself and split into two
separate companies; O'Gara is a newly incorporated company organized in
preparation for the split-up. Under an agreement and plan of
reorganization, the completion of which is pending receipt of favorable tax
rulings and the approval by Kroll-O'Gara's shareholders, O'Gara will
receive substantially all of the assets and liabilities of the Security
Products and Services Group and a 60% ownership interest in the common
stock of the entity comprising the Information Security Group, as well as
certain other assets and liabilities that are not assignable to a
particular business group. The remaining business of Kroll-O'Gara,
primarily the Investigation and Intelligence Group, the Voice and Data
Communication Group and a 40% ownership interest in the common stock of the
entity comprising the Information Security Group, as well as the remaining
other assets and liabilities that are not assignable to a particular
business group, will be spun off into a newly incorporated company, Kroll
Risk Consulting Services (KRCS). Concurrent with the completion of the
reorganization and spin-off, O'Gara and KRCS will become separate
publicly-traded companies. Also, in conjunction with the reorganization and
spinoff, certain management shareholders of O'Gara will exchange all of
their shares of Kroll-O'Gara common stock for shares of O'Gara prior to the
split-up. Therefore, these management shareholders will not participate in
the pro rata distribution of O'Gara common stock and will not receive any
stock in KRCS.

Costs associated with this separation in the six months ended June 30, 2000
were approximately $0.3 million ($0.05 per diluted share) and consisted
primarily of fees for attorneys, accountants and other related charges.
O'Gara anticipates additional expenses will be incurred in the second half
of 2000.

O'Gara was allocated $1.6 million and $4.5 million of overhead costs
related to Kroll-O'Gara's corporate administrative functions for the six
months ended June 30, 1999 and 2000, respectively. The allocation was based
on a specific identification of Kroll-O'Gara's administrative costs
attributable to O'Gara and, to the extent that such identification was not
practicable, on the basis of O'Gara's sales as a percentage of
Kroll-O'Gara's sales. The allocated costs are included in the various
operating expense captions in the accompanying combined statements of
operations. Management believes that such allocation methodology is
reasonable. Subsequent to the spin-off, O'Gara will be required to manage
these functions and will be responsible for the expenses associated with
the operations of a stand-alone public company.

F-39
98
THE O'GARA COMPANY

NOTES TO COMBINED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

On September 14, 2000, Kroll-O'Gara amended its credit agreement to provide
for an extension of its temporary increase in its revolving line of credit
from $25.0 million to $40.0 million. Pursuant to the amended credit
agreement, the increase in the revolving line of credit is effective until
January 1, 2001, at which time all borrowings in excess of $25.0 million
must be repaid. The credit facility continues to provide for a letter of
credit facility of approximately $7.6 million. Both the letter of credit
facility and the line of credit mature on May 31, 2001. Advances under the
revolving line of credit bear interest at rates ranging from prime to prime
plus 0.75%, or, at Kroll-O'Gara's option, LIBOR plus 1.50% to LIBOR plus
2.50%, dependent upon a defined financial ratio.

Kroll-O'Gara's currently existing credit agreements include certain
financial covenant restrictions. Kroll-O'Gara was not in compliance with
certain of these covenants as of December 31, 1999 and as of June 30, 2000.
All such events of non-compliance have been subsequently amended or waived
by the lenders. Had the lenders not provided a waiver or amendment, all
amounts outstanding under the credit agreements would have been subject to
acceleration by the lenders. In addition, O'Gara and KRCS will enter into
agreements governing the relationships between the separated businesses of
Kroll-O'Gara that are the result of the plan of reorganization. Such
agreements shall include a tax sharing and cross-indemnification agreement.
Subsequent to the reorganization and spin-off, Kroll-O'Gara will be
dissolved.

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) considered
necessary for fair presentation have been included. Operating results for
the six month period ended June 30, 2000, are not necessarily indicative of
the results that may be expected for the year ended December 31, 2000. The
accompanying financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in O'Gara's
audited financial statements contained elsewhere in this document for the
year ended December 31, 1999.

(2) RESTRUCTURING OF OPERATIONS

In the first quarter of 1999, O'Gara began implementation of a
restructuring plan (the "Plan") to reduce costs and improve operating
efficiencies. The Plan was substantially completed by the end of the second
quarter of 1999. Including the first quarter 1999 charge of $0.2 million,
the total non-recurring, pre-tax restructuring charge associated with the
Plan was $0.3 million. Total payments or writeoffs made pursuant to the
Plan through June 30, 2000 were $0.3 million. O'Gara does not

F-40
99
THE O'GARA COMPANY

NOTES TO COMBINED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

expect to incur any other significant restructuring charges in future
periods related to this Plan. The principal elements of the restructuring
plan are the elimination of approximately 55 employees. The primary
components of the restructuring charge as of June 30, 2000 are as follows:

DESCRIPTION EXPENSE
- ----------- -------

Severance and related costs................................. $195
Writedown of property, plant and equipment.................. 97
----
$292
====

(3) EARNINGS PER SHARE

In accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share", basic earnings per share are computed by dividing net
income by the weighted average number of shares of common stock outstanding
during the period. Diluted earnings per share are computed by dividing net
income by the weighted average number of shares of common stock and common
stock equivalents outstanding during the period. Dilutive common stock
equivalents represent shares issuable upon assumed exercise of stock
options and warrants and upon assumed issuance of restricted stock.

O'Gara is expected to be capitalized initially with 6.0 million shares of
common stock. This number of shares was assumed to be outstanding for all
periods presented. To date, no common stock equivalents of O'Gara have been
issued so basic and diluted earnings per share are the same.

Basic and diluted earnings per share based on income before cumulative
effect of change in accounting principle were $0.64 for the six months
ended June 30, 1999. The basic and diluted per share impact of the change
in accounting principle was $0.13.

(4) NEW PRONOUNCEMENTS

In April 1998, the American Institute of Certified Public Accountants
released Statement of Position (SOP) 98-5 "Reporting on the Cost of
Start-Up Activities". The SOP requires costs of start-up activities,
including pre-operating costs, organization costs and start-up costs to be
expensed as incurred. Kroll-O'Gara's practice was to capitalize these
expenses and amortize them over periods ranging from one to five years.
O'Gara adopted SOP 98-5 in the first quarter of 1999 and recorded a
cumulative effect of an accounting change of $0.8 million, net of a tax
benefit of $0.4 million.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). SFAS 133 establishes
accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. SFAS 133, as amended, is effective for
fiscal years beginning after June 15, 2000. O'Gara has five forward
contracts in place in association with a demand note from a subsidiary.
These instruments qualify for hedge accounting. O'Gara has not yet
quantified the impact of adopting SFAS 133 on its financial statements and
has not determined the timing of or method of adoption

F-41
100
THE O'GARA COMPANY

NOTES TO COMBINED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

of SFAS 133. However, SFAS 133 could increase volatility in earnings and
other comprehensive income.

In March 2000, the FASB issued Financial Accounting Standards Board
Interpretation No. 44 ("Interpretation No. 44"), "Accounting for Certain
Transactions involving Stock Compensation -- an interpretation of APB
Opinion 25." Interpretation No. 44 is effective July 1, 2000.
Interpretation No. 44 clarifies the application of APB Opinion 25 for
certain matters, specifically (a) the definition of an employee for
purposes of applying APB Opinion 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed
stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. Management does not
anticipate that the adoption of Interpretation No. 44 will have a material
impact on financial position or the results of operations.

(5) SUPPLEMENTAL CASH FLOW DISCLOSURE

Cash equivalents consist of all highly liquid debt instruments with an
initial maturity of three months or less at the date of purchase.
Kroll-O'Gara invests excess cash in overnight repurchase agreements, which
are government collateralized securities. The carrying amount of cash and
cash equivalents approximates fair value of those instruments due to their
short maturity.

1999 2000
------- -------
(DOLLARS IN THOUSANDS)

Cash paid for taxes....................................... $ 28 $224
Cash paid for interest.................................... $ 61 $ 52
Non-cash activity:
Deferred compensation related to options and restricted
stock................................................... $414 $ --

(6) INVENTORIES

Inventories are stated at the lower of cost or market using the first-in,
first-out (FIFO) method and include the following:

DECEMBER 31, JUNE 30,
INVENTORY CATEGORY 1999 2000
- ------------------ ------------ --------
(DOLLARS IN THOUSANDS)

Raw materials......................................... $14,495 $19,437
Vehicle costs and work-in-process..................... 6,699 7,350
------- -------
Total inventory............................. $21,194 $26,787
======= =======

(7) DERIVATIVE FINANCIAL INSTRUMENTS

Financial instruments in the form of foreign currency exchange contracts
are utilized by O'Gara to hedge its exposure to movements in foreign
currency exchange rates. O'Gara does not hold or issue derivative financial
instruments for trading purposes. Gains and losses on foreign exchange
contracts are deferred and amortized as an adjustment to the cumulative
foreign currency translation adjustment component of equity over the terms
of the agreements in accordance with hedge accounting standards.

F-42
101
THE O'GARA COMPANY

NOTES TO COMBINED UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

O'Gara has entered into five foreign currency exchange contracts to hedge
its exposure to certain foreign currency rate fluctuations on a demand loan
to a subsidiary that is denominated in the foreign currency. By virtue of
these contracts, O'Gara has fixed the total dollar amount that they will
receive under the aforementioned subsidiary loan through the maturity dates
of the contracts regardless of the fluctuations in the exchange rate. At
June 30, 2000, the total notional amount of the contracts, which mature
between July 2000 and January 2002, is $14.6 million. O'Gara's foreign
currency translation adjustment component of shareholder's equity was
increased by $0.8 million in the six months ended June 30, 2000 as a result
of these agreements.

O'Gara has estimated the fair value of the foreign exchange contracts based
on information obtained from the counterparty of the amount O'Gara would
receive at June 30, 2000 in order to terminate the agreements. As of June
30, 2000, O'Gara would have received approximately $1.9 million upon
cancellation of all contracts.

(8) SEGMENT DATA

During 1999 and 2000, O'Gara operated in two business segments, the
Security Products and Services Group and the Information Security Group.

The following summarizes information about the Company's business segments:

SECURITY INFORMATION
PRODUCTS AND SECURITY
SERVICES GROUP GROUP OTHER CONSOLIDATED
-------------- ----------- ------- ------------
(DOLLARS IN THOUSANDS)

SIX MONTHS ENDED JUNE 30, 1999
Net sales to unaffiliated
customers........................ $54,482 $ 2,480 $ -- $ 56,962
======= ======= ======= ========
Gross profit....................... $17,262 $ 1,266 $ -- $ 18,528
======= ======= ======= ========
Operating income (loss)............ $ 8,674 $ 152 $(1,745) $ 7,081
======= ======= ======= ========
SIX MONTHS ENDED JUNE 30, 2000
Net sales to unaffiliated
customers........................ $51,525 $ 1,810 $ -- $ 53,335
======= ======= ======= ========
Gross profit....................... $13,229 $ (241) $ -- $ 12,988
======= ======= ======= ========
Operating income (loss)............ $ 4,647 $(4,704) $(4,104) $ (4,161)
======= ======= ======= ========
Identifiable assets at June 30,
2000............................. $97,376 $ 4,907 $ -- $102,283
======= ======= =======
Corporate assets................... 8,745
--------
Total assets at June 30,
2000........................ $111,028
========

(9) FAILED MERGER COSTS

On November 15, 1999, Kroll-O'Gara announced that it had entered into a
definitive agreement with Blackstone Capital Partners III Merchant Banking
Fund L.P. (Blackstone) pursuant to which shares held by all Kroll-O'Gara
shareholders, other than certain members of management, would be acquired
by Blackstone. On April 12, 2000, Kroll-O'Gara announced that Blackstone
had withdrawn its offer to acquire Kroll-O'Gara shares. Allocated costs to
O'Gara associated with the failed recapitalization merger in the six months
ended June 30, 2000 were approximately $0.8 million ($0.14 per diluted
share) and consisted primarily of fees for attorneys, accountants, travel
and other related charges.
F-43
102

THE O'GARA COMPANY
UNAUDITED PRO FORMA COMBINING CONDENSED FINANCIAL STATEMENTS

The unaudited pro forma combining condensed financial statements of The
O'Gara Company give effect to the reorganization and split-up transaction and
have been prepared from The O'Gara Company audited combined financial statements
presented elsewhere in this document. These unaudited pro forma statements
should also be read in conjunction with the audited combined financial
statements of The O'Gara Company.

The unaudited pro forma combining condensed financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the operating results or financial position that would have been achieved if the
reorganization and split-up transaction had been consummated as of the beginning
of the periods indicated, nor are they indicative of future financial position
or results of operations.

F-44
103

THE O'GARA COMPANY

UNAUDITED PRO FORMA COMBINING CONDENSED BALANCE SHEET
AS OF JUNE 30, 2000

O'GARA PRO FORMA O'GARA
SPLIT-UP ADJUSTMENTS PRO FORMA
-------- ----------- ---------
(DOLLARS IN THOUSANDS)

ASSETS
CURRENT ASSETS
Cash................................................. $ 2,597 $ -- $ 2,597
Accounts receivable, net............................. 23,560 -- 23,560
Costs and estimated earnings in excess of billings on
uncompleted contracts.............................. 15,241 -- 15,241
Inventories.......................................... 26,787 -- 26,787
Other current assets................................. 5,742 -- 5,742
-------- -------- --------
Total current assets............................ 73,927 -- 73,927
Property, plant, and equipment, net..................... 19,818 -- 19,818
Costs in excess of assets acquired and other intangible
assets............................................... 15,683 (819)(2) 14,864
Other assets............................................ 1,600 (212)(3) 1,388
-------- -------- --------
Total assets.................................... $111,028 $ (1,031) $109,997
======== ======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of allocated Kroll-O'Gara long-term
debt............................................... $ 15,652 $ -- $ 15,652
Current portion of long-term debt due to third
parties............................................ 1,671 -- 1,671
Accounts payable..................................... 20,943 -- 20,943
Accrued liabilities.................................. 6,624 2,519(4) 9,143
Other current liabilities............................ 2,541 (1,750)(5) 791
-------- -------- --------
Total current liabilities....................... 47,431 769 48,200
Long-term debt due to third parties, net of current
portion.............................................. 966 -- 966
Allocation of Kroll-O'Gara long-term debt............... 15,725 -- 15,725
Other long-term liabilities............................. 194 -- 194
Minority interest in consolidated subsidiary............ -- 710(1) 710
-------- -------- --------
Total liabilities............................... 64,316 1,479 65,795
Shareholders' equity.................................... 46,712 (2,510)(6) 44,202
-------- -------- --------
Total liabilities and shareholders' equity...... $111,028 $ (1,031) $109,997
======== ======== ========

- ---------------

(1) To recognize KRCS' minority ownership interest of 40% in the Information
Security Group (ISG).
(2) To recognize write-off of certain intangibles that will not be utilizable by
Kroll-O'Gara as a result of the reorganization and split-up transaction.
(3) To recognize write-off of unamortized deferred financing costs resulting
from the anticipated prepayment of certain third party indebtedness as a
result of the reorganization and split-up transaction.
(4) To recognize transaction costs ($1,689) expected to be incurred associated
with the reorganization and split-up transaction, as well as to recognize
debt prepayment fees ($830) associated with the prepayment of certain third
party indebtedness.
(5) To recognize related tax benefit to be realized in conjunction with the
transactions discussed above.

F-45
104

(6) Reflects adjustments to shareholders' equity for transactions discussed
above as follows (in thousands):

Tax benefit of accelerated stock option compensation...... $ 330
Debt prepayment fee ($830) and financing cost write-off,
net of tax............................................. (625)
Transaction costs ($1,689), net of tax.................... (1,014)
Intangible asset write-offs ($819), net of tax............ (491)
KRCS' minority ownership interest of 40% in ISG........... (710)
--------
$ (2,510)
========

The accompanying notes to combined financial statements
are an integral part of these combined statements.
F-46
105

THE O'GARA COMPANY

UNAUDITED PRO FORMA COMBINING CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000

O'GARA PRO FORMA(3)(4)(5) O'GARA
SPLIT-UP ADJUSTMENTS(6)(7)(9) PRO FORMA
-------- --------------------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Net sales............................................ $53,335 $ -- $53,335
Cost of sales........................................ 40,347 -- 40,347
------- ------ -------
Gross profit.................................... 12,988 -- 12,988
Selling and marketing expenses....................... 4,390 -- 4,390
General and administrative expenses.................. 11,650 -- 11,650
Separation expenses.................................. 280 -- 280
Failed merger expenses............................... 829 -- 829
------- ------ -------
Operating loss.................................. (4,161) -- (4,161)
Interest expense..................................... (1,167) --(10) (1,167)
Other expense........................................ (134) -- (134)
------- ------ -------
Loss from continuing operations before minority
interest, provision for income taxes,
extraordinary item and cumulative effect of
change in accounting principle................ (5,462) -- (5,462)
Minority interest.................................... -- 1,881(1) 1,881
------- ------ -------
Loss from continuing operations before provision
for income taxes, extraordinary item and
cumulative effect of change in accounting
principle..................................... (5,462) 1,881 (3,581)
Provision for income taxes........................... 327 --(2) 327
------- ------ -------
Loss from continuing operations................. $(5,789) $1,881 $(3,908)
======= ====== =======
Basic and diluted loss per share from continuing
operations......................................... $ (0.96) $ (0.65)
======= =======
Basic and diluted weighted average shares
outstanding........................................ 6,000 6,000(8)
======= =======

- ---------------

(1) To reflect KRCS' minority ownership interest of 40% in the Information
Security Group (ISG).

(2) Pro forma adjustments exclude a benefit for income taxes on KRCS' share of
the ISG net loss as no benefit was recognized in the historical The O'Gara
Company results of operations for the six months ended June 30, 2000.

(3) Pro forma adjustments exclude the impact of compensation expense, if any,
that might result from the exchange of Kroll-O'Gara common shares by
certain management shareholders for shares of The O'Gara Company, based on
the respective fair values at the exchange date.

(4) Pro forma adjustments exclude the impact of compensation expense of
approximately $0.5 million, net of estimated tax benefit of approximately
$0.3 million, for a non-recurring charge associated with the accelerated
vesting of certain ISG stock option grants and certain restricted stock
grants resulting from the reorganization and split-up transaction.

(5) Pro forma adjustments exclude the allocation of an extraordinary charge
from Kroll-O'Gara that will occur in conjunction with the reorganization
and split-up transaction resulting from the anticipated prepayment of
certain third party indebtedness. The total allocated charge from Kroll-
O'Gara is estimated to be approximately $0.6 million, net of estimated tax
benefit of approximately $0.4 million, and includes a prepayment fee and
the write-off of unamortized deferred financing costs.

F-47
106

(6) The O'Gara Company expects to incur additional charges currently estimated
to be approximately $1.0 million, net of estimated tax benefit of
approximately $0.7 million, to reflect costs associated with the
reorganization and split-up transaction. These non-recurring charges are
not reflected in the unaudited pro forma combining condensed statements of
operations.

(7) Management does not believe that corporate overhead costs associated with
the operations of a stand-alone public company will be significantly
different from those expenses allocated from Kroll-O'Gara and reflected in
the historical statements of operations of The O'Gara Company above.

(8) The O'Gara Company is expected to be capitalized initially with 6.0 million
shares of common stock. This number of shares was assumed to be outstanding
for all periods presented. To date, no common stock equivalents of The
O'Gara Company have been issued so basic and diluted loss per share are the
same.

(9) Pro forma adjustments exclude a non-recurring charge estimated to be
approximately $0.5 million, net of estimated tax benefit of approximately
$0.3 million, associated with the write-off of certain assets (intangibles
and certain trademarks) that will not be utilizable by the company as a
result of the reorganization and split-up transaction.

(10) The pro forma statement of operations above does not give any effect to any
potential reductions or increases in interest expense relating to debt
being assumed by The O'Gara Company as part of the reorganization and
split-up.

F-48
107

THE O'GARA COMPANY

UNAUDITED PRO FORMA COMBINING CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999

O'GARA PRO FORMA(3)(4)(5) O'GARA
SPLIT-UP ADJUSTMENTS(6)(7)(9) PRO FORMA
-------- -------------------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Net sales......................................... $118,507 $ -- $118,507
Cost of sales..................................... 83,620 -- 83,620
-------- ---- --------
Gross profit................................. 34,887 -- 34,887
Selling and marketing expenses.................... 8,854 -- 8,854
General and administrative expenses............... 20,584 -- 20,584
Restructuring expenses............................ 292 -- 292
Merger related expenses........................... 145 -- 145
Failed merger expenses............................ 704 -- 704
-------- ---- --------
Operating income............................. 4,308 -- 4,308
Interest expense.................................. (1,995) --(10) (1,995)
Other expense..................................... (157) -- (157)
-------- ---- --------
Income from continuing operations before
minority interest, provision for income
taxes, extraordinary item and cumulative
effect of change in accounting principle... 2,156 -- 2,156
Minority interest................................. -- 719(1) 719
-------- ---- --------
Income from continuing operations before
provision for income taxes, extraordinary
item and cumulative effect of change in
accounting principle....................... 2,156 719 2,875
Provision for income taxes........................ 2,303 288(2) 2,591
-------- ---- --------
Income (loss) from continuing operations..... $ (147) $431 $ 284
======== ==== ========
Basic and diluted earnings (loss) per share from
continuing operations........................... $ (0.02) $ 0.05
======== ========
Basic and diluted weighted average shares
outstanding..................................... 6,000 6,000(8)
======== ========

- ---------------

(1) To reflect KRCS' minority ownership interest of 40% in the Information
Security Group (ISG).

(2) To recognize the provision/(benefit) for income taxes on pro forma
adjustments at an effective rate of 40%.

(4) Pro forma adjustments exclude the impact of compensation expense of
approximately $0.6 million, net of estimated tax benefit of approximately
$0.4 million, for a non-recurring charge associated with the accelerated
vesting of certain ISG stock option grants and certain restricted stock
grants resulting from the reorganization and split-up transaction.

(5) Pro forma adjustments exclude the allocation of an extraordinary charge
from Kroll-O'Gara that will occur in conjunction with the reorganization
and split-up transaction resulting from the prepayment of certain third
party indebtedness. The total allocated charge from Kroll-O'Gara is
estimated to be approximately $0.6 million, net of estimated tax benefit of
approximately $0.4 million, and includes a prepayment fee and the write-off
of unamortized deferred financing costs.

F-49
108

(6) The O'Gara Company expects to incur additional charges (in addition to the
$0.3 million of charges recognized for the six months ended June 30, 2000)
currently estimated to be approximately $1.0 million, net of estimated tax
benefit of approximately $0.7 million, to reflect costs associated with the
reorganization and split-up transaction. These non-recurring charges are
not reflected in the unaudited pro forma combining condensed statements of
operations.

(9) Pro forma adjustments exclude a non-recurring charge estimated to be
approximately $0.5 million, net of estimated tax benefit of approximately
$0.3 million, associated with the write-off of certain assets (certain
intangibles and trademarks) that will not be utilizable by the company as a
result of the reorganization and split-up transaction.

F-50
109

6,000,000 SHARES

[LOGO]

THE O'GARA COMPANY

COMMON STOCK

-------------------
PROSPECTUS
-------------------

, 2000

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR
OTHER DOCUMENTS TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANY OTHER
PERSON TO PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH
DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. WE ARE NOT
MAKING AN OFFER TO SELL THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR
SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS
PROSPECTUS IS ACCURATE AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS
ONLY. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS,
AMONG OTHER THINGS, MAY HAVE CHANGED SINCE THAT DATE.
110

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND SPLIT-UP.

The following table sets forth the various expenses in connection with the
issuance and distribution of the securities registered hereby. There are no
underwriting commissions or fees in connection with the split-up. All of such
amounts (except the SEC registration fee) are estimated.

SEC registration fee........................................ $ 12,332
Nasdaq National Market listing fee..........................
Accounting fees and expenses................................
Legal fees and expenses.....................................
Printing and engraving expenses.............................
Transfer agent and registrar fees and expenses..............
Miscellaneous...............................................
----------
Total.................................................. $
==========

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 1701.13(E) of the Ohio General Corporation Law allows
indemnification by the registrant to any person made or threatened to be made a
party to any proceedings, other than a proceeding by or in the right of the
registrant, by reason of the fact that he is or was a director, officer,
employee or agent of the registrant, against expenses, including judgments and
fines, if he acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the registrant and, with respect to
criminal actions, in which he had no reasonable cause to believe that his
conduct was unlawful. Similar provisions apply to actions brought by or in the
right of the registrant, except that no indemnification shall be made in such
cases when the person shall have been adjudged to be liable for negligence or
misconduct to the registrant unless determined by the court. The right to
indemnification is mandatory in the case of a director or officer who is
successful on the merits or otherwise in defense of any action, suit or
proceeding or any claim, issue or matter therein. Permissive indemnification is
to be made by a court of competent jurisdiction, the majority vote of a quorum
of disinterested directors, the written opinion of independent counsel or by the
shareholders.

The registrant's Code of Regulations provides that the registrant shall
indemnify such persons to the fullest extent permitted by law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The registrant issued 100 shares of its common stock to The Kroll-O'Gara
Company on August 25, 2000. The securities were issued without registration
under the Securities Act of 1933 in reliance upon the exemption provided by
Section 4(2) of that Act. No underwriting commission was paid in connection with
the issuance.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(A) Exhibits. The list of Exhibits is set forth beginning on page E-1 of
this Registration Statement and is incorporated by reference.

(B) Schedules have been omitted because they are either not applicable or
not required or the information has been furnished in the combined financial
statements.

II-1
111

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted as to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

II-2
112

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, The O'Gara
Company has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Fairfield, the
State of Ohio, as of the 20th day of September, 2000.

The O'Gara Company

By: /s/ WILFRED T. O'GARA
---------------------------------------
Wilfred T. O'Gara
Name: Wilfred T. O'Gara
Title: President and Chief Executive
Officer

POWERS OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Wilfred T. O'Gara and Abram S. Gordon, and each
of them, with full power to act without the other, such person's true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign this Registration Statement, any and all amendments thereto
(including post-effective amendments), any subsequent Registration Statements
pursuant to Rule 462 of the Securities Act of 1933, as amended, and any
amendments thereto and to file the same, with exhibits and schedules thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
necessary or desirable to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated as of the 20th day of September, 2000.

SIGNATURE TITLE
--------- -----

/s/ THOMAS M. O'GARA Chairman and Director
- ------------------------------------
Thomas M. O'Gara

/s/ WILFRED T. O'GARA Chief Executive Officer, President
- ------------------------------------ and Director (principal executive
Wilfred T. O'Gara officer)

/s/ NICHOLAS P. CARPINELLO Chief Financial Officer (principal
- ------------------------------------ financial and accounting officer)
Nicholas P. Carpinello

II-3
113

LIST OF EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
------- -----------

3.1 Amended and Restated Articles of Incorporation
3.2 Code of Regulations
5 Opinion of Taft, Stettinius & Hollister LLP (7)
10.1 Agreement to armor HMMWVs between The Kroll-O'Gara Company
and the United States Army Tank and Automotive Command,
dated May 12, 1994, as amended (1)
10.2 Systems Technical Support Agreement between The Kroll-O'Gara
Company and the United States Army, dated January 20, 1997
(2)
10.3 Supplemental Agreement Modification to acquire 360
additional armored HMMWVs between United States Army Tank
and Automotive Armaments Command and O'Gara-Hess and
Eisenhardt Armoring Company, dated March 31, 1997 (3)
10.4 Supplemental Agreement Modifications to acquire 738
additional armored HMMWVs between the United States Army
Tank and Automotive Armaments Command and O'Gara-Hess &
Eisenhardt Armoring Company, dated March 31, 1998 and April
13, 1998 (4)
10.5 Employment Agreement between The Kroll-O'Gara Company and
Thomas M. O'Gara, dated August 23, 1996 (1)*
10.6 Employment Agreement between The Kroll-O'Gara Company and
Wilfred T. O'Gara, dated August 23, 1996 (1)*
10.7 Employment Agreement between The Kroll-O'Gara Company and
Nicholas P. Carpinello dated August 23, 1996 (1)*
10.8 Employment Agreement, dated October 17, 1997, between The
Kroll-O'Gara Company and Abram S. Gordon (5)*
10.9 Amendment to Employment Agreement, dated October 17, 1997,
between The Kroll-O'Gara Company and Thomas M. O'Gara (5)*
10.10 Amendment to Employment Agreement, dated October 17, 1997,
between The Kroll-O'Gara Company and Wilfred T. O'Gara (5)*
10.11 Amendment to Employment Agreement, dated October 17, 1997,
between The Kroll-O'Gara Company and Nicholas P. Carpinello
(5)*
10.12 Form of Proposed Credit Agreement (7)
10.13 Employee Stock Purchase Plan (7)
10.14 2000 Stock Incentive Plan (7)
10.15 Agreement and Plan of Reorganization and Dissolution of The
Kroll-O'Gara Company dated as of September 8, 2000 (6)
10.16 Form of Tax Sharing Agreement between The O'Gara Company and
Kroll Risk Consulting Services, Inc. and Securify Inc. (6)
10.17 Form of Cross-Indemnification Agreement by and among
Kroll-O'Gara, Kroll Risk Consulting Services, Inc. and The
O'Gara Company (6)
21 Subsidiaries of the Registrant
23.1 Consent of Taft, Stettinius & Hollister LLP (contained in
Exhibit 5) (7)

E-1
114

EXHIBIT
NUMBER DESCRIPTION
------- -----------

23.2 Consent of Arthur Andersen LLP
24 Powers of Attorney (contained in Signature Page)
27.1-27.5 Financial Data Schedules

- ---------------

* Executive compensation agreement

(1) Filed as an Exhibit to The Kroll-O'Gara Company's Registration Statement on
Form S-1, No. 333-11093 and incorporated herein by reference.

(2) Filed as an Exhibit to The Kroll-O'Gara Company's Annual Report on Form 10-K
for the year ended December 31, 1996 and incorporated herein by reference.

(3) Filed as an Exhibit to The Kroll-O'Gara Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997 and incorporated herein by
reference.

(4) Filed as an Exhibit to The Kroll-O'Gara Company's Quarterly Report on Form
10-Q/A for the quarter ended March 31, 1998 and incorporated herein by
reference.

(5) Filed as an Exhibit to The Kroll-O'Gara Company's Registration Statement on
Form S-4, No. 333-35845 and incorporated herein by reference.

(6) Filed as an Appendix to The Kroll-O'Gara Company's Preliminary Proxy
Statement filed pursuant to Rule 14a-6 on September 19, 2000 and
incorporated herein by reference.

(7) To be filed by amendment.

E-2