LOOMIS FARGO & CO, 10-K405, 1998-03-31

LOOMIS FARGO & CO
10-K405, 1998-03-31
DETECTIVE, GUARD & ARMORED CAR SERVICES

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

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FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the fiscal year ended December 31, 1997

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from to

Commission File No. 333-24689

LOOMIS, FARGO & CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 76-0521092
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)

FILE NO. 333- FILE NO. 333- FILE NO. 333- FILE NO. 333-
24689-01 24689-02 24689-03 24689-04

LFC HOLDING LFC ARMORED LOOMIS, FARGO &
CORPORATION LOOMIS, FARGO & OF TEXAS INC. CO. OF
(EXACT NAME OF CO. (EXACT NAME OF PUERTO RICO
REGISTRANT AS (EXACT NAME OF REGISTRANT AS (EXACT NAME OF
SPECIFIED IN REGISTRANT AS SPECIFIED IN REGISTRANT AS
ITS CHARTER) SPECIFIED IN ITS CHARTER) SPECIFIED IN
DELAWARE ITS CHARTER) TEXAS ITS CHARTER)
(STATE OR OTHER TEXAS (STATE OR OTHER TENNESSEE
JURISDICTION OF (STATE OR OTHER JURISDICTION OF (STATE OR OTHER
INCORPORATION JURISDICTION OF INCORPORATION JURISDICTION OF
OR INCORPORATION OR INCORPORATION
ORGANIZATION) OR ORGANIZATION) OR
75-2371825 ORGANIZATION) 58-1884701 ORGANIZATION)
(IRS EMPLOYER 75-0117200 (IRS EMPLOYER 66-0215016
IDENTIFICATION (IRS EMPLOYER IDENTIFICATION (IRS EMPLOYER
NO.) IDENTIFICATION NO.) IDENTIFICATION
NO.) NO.)

2500 Citywest Blvd., Suite 900, Houston, Texas 77042
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

Registrants' telephone number (713) 435-6700

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

<TABLE>
<CAPTION>
NAME OF EACH
EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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<S> <C>
None N/A
</TABLE>

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

Aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrants is zero.

As of March 27, 1998, 10,000,000 shares of the Common Stock, $0.01 par
value, of Loomis, Fargo & Co., 2,652,705 shares of the Class A Common Stock,
$0.01 par value, of LFC Holding Corporation, 1,000 shares of the Common Stock,
$10.00 par value, of Loomis, Fargo & Co. (a Texas Corporation), 100 shares of
Common Stock, $1.00 par value, of LFC Armored of Texas Inc., and 250 shares of
Common Stock, no par value, of Loomis, Fargo & Co. of Puerto Rico, were
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

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LOOMIS, FARGO & CO.
LFC HOLDING CORPORATION
LOOMIS, FARGO & CO. (TEXAS)
LFC ARMORED OF TEXAS INC.
LOOMIS, FARGO & CO. OF PUERTO RICO

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

INDEX

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<C> <S> <C>
PART I
Item 1. Business........................................................ 1
Item 2. Properties...................................................... 8
Item 3. Legal Proceedings............................................... 8
Item 4. Submission of Matters to a Vote of Security Holders............. 8
PART II
Market for Registrant's Common Equity and Related Stockholder
Item 5. Matters......................................................... 9
Item 6. Selected Financial Data......................................... 9
Management's Discussion and Analysis of Financial Condition and
Item 7. Results of Operations........................................... 9
Item 8. Financial Statements and Supplementary Data..................... 17
Changes in and Disagreements with Accountants on Accounting and
Item 9. Financial Disclosures........................................... 19
PART III
Item 10. Directors and Executive Officers of the Registrant.............. 19
Item 11. Executive Compensation.......................................... 20
Item 12. Security Ownership of Certain Beneficial Owners and Management.. 25
Item 13. Certain Relationships and Related Transactions.................. 26
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. 44
Signatures...................................................... 46
</TABLE>
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SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this report may constitute forward-
looking statements for purposes of the Securities Exchange Act of 1934 and as
such may involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. Important factors
that could cause the actual results, performance or achievements of the
Company to differ materially from the Company's expectations are disclosed in
this report ("Cautionary Statements"). Factors that could cause or contribute
to such differences include, but are not limited to, risks and uncertainties
relating to leverage and debt service, risks inherent in the armored transport
industry, general marketplace conditions, restrictions imposed by the bank
credit facility, issues concerning continued integration of the operations of
Wells Fargo Armored, the ability to attract and retain qualified employees,
environmental and other regulatory matters and future legal proceedings. All
written or oral forward-looking statements attributable to the Company are
expressly qualified in their entirety by the Cautionary Statements.
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PART I

ITEM 1. BUSINESS

GENERAL

Loomis, Fargo & Co. ("the Company") was created in January 1997 through the
combination of Loomis Armored Inc. ("Loomis Armored"), a wholly-owned
subsidiary of Loomis Holding Corporation ("Loomis"), and Wells Fargo Armored
Service Corporation ("Wells Fargo Armored"), a wholly-owned subsidiary of
Borg-Warner Security Corporation ("Borg-Warner"). One of the largest armored
transport companies in the United States, Loomis, Fargo & Co. operates
approximately 165 branches and 35 satellite sites, employs approximately 8,050
persons, and utilizes a fleet of approximately 2,600 armored and other
vehicles nationwide to provide armored ground transport services, automated
teller machine ("ATM") services, and cash vault and related services to
financial institutions and other commercial customers. Serving all 50 states
and Puerto Rico, the Company is one of only two armored transport companies in
the United States which provides these services on a national basis.
Management believes that large financial and retail institutions are
increasingly seeking vendors capable of providing an array of services on a
national basis and that the combination of Loomis Armored and Wells Fargo
Armored favorably positions the Company for additional revenue opportunities.
In addition, management believes the proliferation of ATMs and the trend of
banks and other financial and retail institutions towards outsourcing cash
vault and related services should contribute to the Company's growth
prospects. For the year ended December 31, 1997 the Company had revenues of
$370.8 million and EBITDA of $24.2 million.

The Company is implementing the management principles utilized by the Loomis
Armored management team, which have proven to be highly effective in reducing
employee turnover, increasing customer satisfaction and decreasing "cost of
risk," which consists of the cost of cargo and casualty losses, related
insurance costs and claims administration expenses. Management believes that
by combining the management strategy and risk management skills of Loomis
Armored with the larger customer base and leading ATM services position of
Wells Fargo Armored, the Company is well-positioned to capitalize on the
numerous opportunities developing in the armored transport industry.

THE INDUSTRY

The U.S. armored transport industry consists of two national companies and
over 100 regional and local companies. Management estimates that the ten
largest of these companies have aggregate annual revenues of approximately
$1.0 billion. The industry provides a variety of services which can be
categorized as (i) traditional armored ground transportation of cash and other
valuables, (ii) ATM services and (iii) cash vault and related services.

Traditional Armored Ground Transportation. Traditional armored ground
transportation is the largest sector of the armored transport industry and
represents the core service provided by the industry. Armored vehicles
transport currency and other valuables between commercial enterprises and
banks, between banks, and from the Federal Reserve Banks to commercial banks.
Management estimates that approximately one-half of ground transportation
revenues in the industry were generated from financial institutions. Other
customers of ground transportation services include a wide range of commercial
establishments as well as governmental entities.

Typically, ground transportation services have been provided by a two-person
crew, comprised of a driver and a guard, operating in an armored vehicle. At
each stop, the guard exits the vehicle to pick up or deliver cargo, usually
currency and/or coin, while the driver normally remains inside the vehicle.
The cargo typically is received by the guard in a sealed bag bearing a tag
indicating the amount of cash and other valuables the bag is said to contain.
The sealed bag is ultimately delivered to its destination without being opened
while in the custody of the armored carrier.

In effect, the armored transport industry provides customers a logistical
service in transporting valuables as well as a form of insurance by accepting
the risk of cargo and casualty losses. Until recent years, cash-in-transit
insurance for armored transport service providers was relatively easy to
obtain, in part because armored carriers
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were not frequently targeted by criminals, and carriers were able to pass most
of the risk to insurance companies. Accordingly, the economics of the industry
were based largely on routing efficiency or density and effective cost
control. Quality of service was measured primarily by timeliness of pick-up
and delivery. Generally, risk management, while important, was not a crucial
service differentiator as long as the carrier maintained adequate insurance.
By the early 1990s, however, armored vehicles had increasingly become targets
of armed robbery, particularly on the east and west coasts. As a result, cargo
loss insurers suffered substantial losses and the cost of cash-in-transit
insurance increased significantly for large carriers, forcing them to retain
greater risk and pay higher premiums.

Due to these changes, quality risk management has become increasingly
important from both a cost and marketing perspective. While the cost reduction
benefits of an effective risk management program are clear for the armored
carrier, they are even more significant to the customer, particularly banking
customers. In the event of an armed robbery at the customer's place of
business, the customer will suffer a business disruption and may be liable
should one of its employees or customers or a bystander become injured. An
armored carrier that can help prevent or avoid an incident may save its
customer from incurring a multi-million dollar liability. Consequently, the
strategy of establishing a risk management partnership between the armored
service provider and the customer becomes more appealing to the customer once
the customer recognizes the benefits of a comprehensive risk management
program.

ATM Services. ATM services represent the most dynamic growth sector of the
armored transport industry and are expected by the Company to grow
significantly over the next five years. This expected growth results from a
fundamental change in the retail delivery channel strategy of banks in the
United States as traditional, full service bank branches are being replaced by
ATMs, drive-through service centers and banks located in supermarkets and
other non-traditional locations. Each individual point of distribution
represents a potential service location and new revenue opportunity to the
armored transport industry. Additionally, many ATM owners have begun
outsourcing the servicing and maintenance of ATM locations formerly serviced
and maintained internally, resulting in further growth prospects for this
portion of the armored transport industry.

ATM services consist of cash replenishment, deposit pick-up and first-line
and second-line maintenance services. Cash replenishment and deposit pick-up
at ATM locations is substantially similar to normal ground transportation
services with respect to the transport of cash. However, the servicing of ATM
locations involves a greater degree of mechanical proficiency in that guards
are required to disarm and reset alarms, change bill cassettes and perform
various other administrative and mechanical tasks. First-line maintenance
services involve correction of simple non-technical problems such as
dislodging jammed bills and cards and refilling receipt paper and are
frequently provided by armored transport carriers. Second-line maintenance
services consist of more complex technical ATM repairs and often require
specialized training, diagnostic equipment and an inventory of parts.

BUSINESS STRATEGY

Management believes that Loomis, Fargo & Co. has several distinct
competitive strengths within the armored transport industry, including a
strong national presence, the leading ATM services operation, and a management
team experienced in reducing cost of risk and improving cash flow and
profitability. The Company's business strategy is to capitalize on its
competitive strengths by implementing the following initiatives:

Promote the National Presence of Loomis, Fargo & Co. The Company provides
its services to a much larger geographic area than either Loomis Armored or
Wells Fargo Armored serviced on a stand-alone

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basis. With services in all 50 states and Puerto Rico, the Company sees
opportunities to continue to expand its business with national financial
institutions and retail customers which require armored ground transport,
ATM services and/or cash vault and related services in numerous locations
across the country. Management believes that the ability to provide
nationwide service is becoming more important in the armored transport
industry as banks are expanding geographically through the continuing
consolidation of the banking industry and as many other institutions are
shifting toward centralized purchasing of goods and services. As one of
only two armored transport providers in the United States with nationwide
service, the Company is well-positioned to augment its base of customers
requiring broad geographic coverage. The Company has dedicated a segment of
its sales force to exclusively manage national account relationships.

Focus on Growing ATM Services Market. The Company provides ATM services
nationwide, making it the leading provider of ATM services in the United
States. The number of ATM locations continues to grow. Additionally, many
ATM owners have begun outsourcing the servicing and maintenance of ATM
locations formerly serviced and maintained internally. The Company
maintains a proprietary automated national dispatching system to coordinate
customer requests, provide service data to customers and dispatch service
technicians nationwide. With its broad range of services and automated
systems, the Company intends to build upon its leading position in the ATM
services market.

Reduce Cost of Risk and Emphasize Risk Management Partnership with
Customers. Management intends to increase profitability not only by
reducing the Company's overall cost of risk but also by using a risk
management partnership approach with its customers as a means of
differentiating the Company from its competitors. A comprehensive risk
management program which emphasizes incident avoidance and loss
minimization per incident has been implemented throughout all of the
Company's operations. The program focuses on (i) employee culture and
attitude, (ii) selectivity in hiring, (iii) operating procedures designed
to recognize and avoid potential danger or accidents, (iv) safety and
security procedures, including training in the proper use of firearms and
the operation of the Company's vehicles, (v) limits on the amounts of cash
or other valuables contained in a branch or vehicle or under the control of
an employee, (vi) utilization of three-person crews and surveillance or
chase cars in high-risk areas, and (vii) an extensive security oversight
program, including surveillance and evaluation by AMSEC International
("AMSEC"), an independent, international security firm. This risk
management program produced significant cost savings with respect to cargo
loss and casualty liability claims for Loomis Armored over the five years
prior to the consummation of the business combination with Wells Fargo
Armored and achieved similar successful results during 1997.

To provide the quality of service necessary to enhance customer loyalty in
support of this business strategy, the Company emphasizes an operating
philosophy dedicated to attracting and retaining quality, loyal employees.
Management believes that a loyal employee base directly contributes to
reducing cost of risk and improving customer service and that the combination
of selectivity in hiring, a commitment to employee training, responsibility
and safety, and competitive wage and benefit packages will enable the Company
to attract and retain quality, loyal employees. As a result of Loomis
Armored's commitment to these principles, employee turnover at Loomis Armored
decreased from 41% for the twelve months ended December 31, 1992 to 29% for
the twelve months ended December 31, 1996. For the year ended December 31,
1997, the Company's employee turnover rate was approximately 45%, which
reflects an improvement from the turnover rate of Wells Fargo Armored, which
was 62% for the year ended December 31, 1996.

SERVICES

The Company provides services in three business areas: traditional armored
transport; ATM services; and cash vault and related services.

Traditional Armored Transport. Traditional armored transport constitutes the
largest part of the Company's business and the overall armored transport
industry, representing approximately 59.8%, 74.7% and 80.5% of the Company's
gross revenues for the year ended December 31, 1997, the six months ended
December 31, 1996 and the year ended June 30, 1996, respectively. The
Company's ground transportation services primarily involve the secured
transport of currency, securities and other items of value between commercial
enterprises and banks, between banks, and from the Federal Reserve Banks to
commercial banks.

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The Company provides traditional armored transport services seven days per
week, 365 days per year. Most of the Company's armored vehicles use two-person
crews, with the driver remaining in the vehicle and the guard making the pick-
up or delivery. In higher risk areas, the Company utilizes several additional
security measures, including three-person crews and surveillance vehicles. In
addition, the Company strives to work closely with its customers to develop
safe procedures for transferring and transporting cargo. Typically, armored
vehicle routes are scheduled to provide for pick-up and delivery within
prescribed time periods which are most convenient for the customer, usually
during normal business hours. The Company schedules routes for each armored
vehicle to maximize efficiency, with armored vehicles generally leaving the
branch in the morning and not returning until the evening, making
approximately 40 to 50 service stops on average per day.

ATM Services. The ATM services business represents the Company's second
largest revenue generating division and is the most rapidly growing area of
the armored transport industry. ATM services represented approximately 28.9%,
16.5% and 11.0% of the Company's gross revenues for the year ended December
31, 1997, the six months ended December 31, 1996 and the year ended June 30,
1996, respectively. As ATMs and other remote banking services expand, the
Company is positioned to capitalize on business opportunities in this field.
As the leading provider of ATM services in the United States, the Company
believes that its experience, customer relationships, infrastructure, and
dominant position in this market will enable the Company to increase its
revenues.

The Company offers a wide range of ATM services to customers including cash
replenishment, deposit pick-up, and first-line maintenance. The Company
utilizes a proprietary centralized automated dispatch system to coordinate ATM
servicing nationwide. The dispatch center coordinates customer requests and
directs field technicians throughout the country. The automated system
provides detailed service confirmation data both internally and directly to
the customer. In addition, on certain ATMs, the automated system controls the
ATM security access codes and provides such codes to technicians upon receipt
of proper identification.

The frequency of cash replenishment of ATMs varies depending upon consumer
use of an ATM location. High traffic ATM locations may require cash
replenishment on a daily basis whereas low traffic locations may require
service once or twice per month. Deposit pick-ups at ATM locations that
process banking deposits are typically executed on a daily basis. First-line
maintenance calls are less predictable than cash replenishment and deposit
pick-ups, but require the same level of prompt attention as scheduled ATM
services.

Cash Vault and Related Services. Cash vault and related services cover a
wide array of activities from passive, secured storage of valuables such as
currency, securities and computer chips to active services such as deposit
processing and consolidation, change order preparation, coin wrapping and
storage and food stamp processing. Cash vault and related services represented
approximately 11.3%, 8.8% and 8.5% of the Company's gross revenues for the
year ended December 31, 1997, the six months ended December 31, 1996 and the
year ended June 30, 1996, respectively. While cash vault and related services
represent a relatively small portion of the Company's revenues and the armored
transport industry's revenues, this market is expected to expand over the next
several years as banks and other financial institutions continue the trend
toward outsourcing such services. The Company also provides contract security
officers to patrol and control access to customer facilities in Puerto Rico.

RISK MANAGEMENT

Management views the Company as a risk management partner rather than a
transportation company. Cost of risk, in the form of armed robberies, other
cargo losses, vehicular accidents or worker's compensation claims, represents
a key component of the Company's overall cost structure. The Company attempts
to control its cost of risk by integrating risk management into all phases of
its operations: corporate culture; hiring and training; customer and revenue
management; operating procedures; and insurance, administration and claims
management. This risk management program is an extension of the program
utilized by Loomis Armored over the five years prior to the business
combination with Wells Fargo Armored. As a result, Loomis Armored's cost of
risk decreased from 10.9% of revenues for the year ended June 30, 1992 to 7.4%
of revenues for the twelve months

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ended December 31, 1996. The Company has continued to control cost of risk
subsequent to the business combination with cost of risk at 7.2% of revenues
for the year ended December 31, 1997.

Corporate Culture. Management believes that the most important factor to
effective risk management for an armored transport company is that its
employees understand their safety is the primary concern of the Company. This
belief has been encouraged and consistently reinforced through all programs
and procedures of the Company and is a fundamental building block of the
Company.

Hiring and Training. The Company maintains an employee selection and
screening program which includes a series of tests and a detailed background
check. The Company emphasizes training and development at all levels. All
safety training stresses the importance of risk avoidance rather than
confrontation. The Company has implemented specialized training programs in
employee orientation, weapons safety, driving safety, back injury prevention
and virtually all other elements of operations. All training is reinforced
through a coordinated communications effort featuring posters, videotape
presentations, weekly security updates, payroll stuffers and other news
bulletins. These programs are further supported through incentive and other
employee recognition programs.

Customer and Revenue Management. The Company emphasizes its role as a risk
management partner with its customers and works closely with them to develop
safe procedures for transferring and transporting cargo. Customers in higher
risk locations or those that ship higher valued cargo pay premium prices to
support additional security costs necessary to safely provide the service and
minimize risk of loss. If the Company determines that the risk of providing
armored transport services in a given situation is too great, the Company will
decline the business.

Operating Procedures. The Company's operating procedures are designed to
avoid robberies or, in the event of a robbery, to minimize cargo losses and
worker's compensation claims. The Company has instituted many safety and
security procedures such as (i) use of three-person crews at many locations
considered high risk, (ii) utilization of chase cars and roving guards to
scout high risk locations in advance of servicing and to provide unmarked
surveillance, and (iii) adoption of "over the pavement" limits representing
the maximum cargo a guard may carry while out of the armored vehicle,
effectively limiting the amount of cargo which could be lost in the event of
robbery.

To ensure compliance with its operating procedures, the Company utilizes
AMSEC, an international security consulting firm, to evaluate the operating
security of branches. The AMSEC team is scheduled to review or audit the
operations of each branch at least once a year. AMSEC reports each month to a
committee of the Company comprised of executive officers and senior level
operations personnel, providing an effective third party quality control
function.

Insurance, Administration and Claims Management. The two primary risks for
which the Company carries insurance are cargo loss and casualty claims.
Insurance coverage underlies the Company's comprehensive risk management
program. The Company has a primary cash-in-transit insurance policy which
allows the Company to participate in potential savings by actively managing
claims with reduced fixed premiums and collateral costs, but affords the
Company protection for catastrophic claims. The policy is underwritten by an
insurance company rated A by the A.M. Best Company.

In the year ended December 31, 1997, the Company experienced several
material cargo losses. Significant recoveries have been made on some of the
losses, including substantial amounts of the largest losses. All remaining
losses are currently under investigation.

SALES AND MARKETING

The Company markets its services to a broad cross section of customer types
which can be classified as either depository or commercial institutions. The
Company further classifies these two categories into national and local
subgroups. Typically, national customers make decisions on the use of armored
transport carriers at

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the corporate office level. Conversely, local customers function at an
individual market level or within a fairly limited geographic area. To
optimize penetration of these customer groups, the Company has organized its
marketing effort and sales force around these general customer profiles.

National Accounts. To promote revenue growth from and maintain strong
customer relationships with national customers, the Company has a dedicated
staff of senior-level salespersons, each of whom individually manages a very
limited number of customers and prospects in this group. These sales personnel
promote a full range of ATM services, traditional armored transport services
and cash vault and related services. They work with senior-level officers of
the customers to ensure that the Company is maximizing opportunities with
these customers, maintaining a high quality of customer service, and
identifying changes in customer needs, priorities and business strategies.

The Company markets itself to financial institutions as the premier service
provider in the armored transport industry capable of providing a wide array
of services on a national basis. The rapid expansion of ATMs across the nation
as well as bank consolidation has compelled armored transport companies to be
increasingly flexible, dependable and consistent in the delivery of services.
Management believes that customers are placing greater emphasis on quality of
service when making their purchase decisions than they have in the past. The
Company views this development as a significant opportunity to expand and
enhance the Company's business relationships with financial institutions.

Local Customers. The local customer subgroups include community and regional
depository institutions as well as regional and local retail stores, hotels
and restaurants. The sale of the Company's services at the local market level
is primarily linked to the relationship established between the Company's
salesperson or branch manager and the customer's local decision maker. The
field sales force includes sales representatives located in all of the
Company's major markets who are responsible for an integral part of the
Company's growth plan. Such sales representatives are accountable for meeting
specific new revenue objectives, as established by individual markets, as well
as building relationships with key customers in the marketplace to maintain a
high degree of customer retention.

The Company's sales representatives receive extensive training both in basic
selling skills and product knowledge of all of the Company's services. The
Company's sales force positions the Company not only as an armored car service
provider, but more broadly as a provider of risk management services. Trust,
dependability and expertise are the main components in securing the customer
relationship. Senior management of the Company provides overall guidelines for
pricing, prioritizing sales calls and growth targets for the field sales
force; however, specific strategic plans are developed by the branch managers.

COMPETITION

The armored transport industry in the United States consists of two national
companies (Loomis, Fargo & Co. and Pittston Brink's) and numerous regional and
local companies. The Company competes with all of the above types of companies
in the markets it serves. However, because of the national presence and
substantial resources of Pittston Brink's, the Company believes that Pittston
Brink's is the Company's primary competitor for many national accounts. While
the Company believes its pricing of services is generally competitive, certain
of its competitors offer lower prices in certain markets primarily as a result
of lower employee wages and benefits, smaller crew complements and/or more
limited services.

GOVERNMENT REGULATION

Federal legislation became effective in 1995 that abolished all interstate
regulatory control over prices, routes and service to which the Company's
business had been previously subject. The Company's operations continue to be
subject to regulation by federal and state agencies with respect to safety of
employees, operations and equipment, vehicle emissions, and fuel storage
tanks.

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ENVIRONMENTAL MATTERS

The Company is subject to numerous and increasingly stringent federal, state
and local laws and regulations relating to the protection of the environment
as well as the storage, handling, use, emission, discharge, release or
disposal of hazardous materials and solid wastes into the environment and the
investigation and remediation of contamination associated with such materials.
These laws include, but are not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, the Water Pollution Control Act, the
Clean Air Act and the Resource Conservation and Recovery Act, as those laws
have been amended and supplemented, the regulations promulgated thereunder,
and any applicable state analogs. The Company's operations also are governed
by laws and regulations relating to employee health and safety. The Company
believes that it is in material compliance with such applicable laws and
regulations and that its current environmental controls are adequate to
address existing regulatory requirements.

As is the case with other companies engaged in similar businesses, the
Company could incur costs relating to environmental compliance, including
remediation costs related to historical hazardous materials handling and
disposal practices at certain facilities. In the past the Company has
undertaken remedial activities to address on-site soil contamination caused by
historical operations. None of these cleanups has resulted in any material
liability. Currently, the Company is involved with remedial/closure activities
at various locations, none of which is expected to have a material adverse
effect on the Company's operations, financial condition or competitive
position. As mentioned above, however, the risk of environmental liability and
remediation costs is present in the Company's business and, therefore, there
can be no assurance that material environmental costs, including remediation
costs, will not arise in the future. In addition, it is possible that future
developments (e.g., new regulations or stricter regulatory requirements) could
result in the Company incurring material costs to comply with applicable
environmental laws and regulations. In addition, the Company has not
undertaken an independent investigation of each facility; accordingly, there
can be no assurance that in the future additional conditions requiring
remediation will not be identified.

The Company had identified 42 fuel storage tanks (40 underground and two
above-ground tanks) on the properties owned or operated by it and acquired
from Wells Fargo Armored, of which 23 have been removed and 19 are scheduled
for removal during 1998. Additional remediation may be required for sites
where tanks have been removed prior to the business combination. Federal
governmental regulations require that by the end of 1998 all storage tanks
located within the United States must satisfy stricter safety standards or be
removed. If the Company fails to comply with these regulations, it could be
subject to fines, penalties or other governmental actions, the imposition of
which could have a material adverse effect on the Company's business,
financial condition and results of operations.

Pursuant to the terms of the business combination between Loomis Armored and
Wells Fargo Armored, the Company has been indemnified by the former owners of
the two companies for environmental liabilities associated with existing
storage tanks and other known and identified environmental liabilities. The
indemnification obligations will survive until December 31, 1998. To the
extent that there are remedial activities in process as of the date of
termination of such indemnification obligations, the Company will provide the
former owners, as applicable, with a written estimate describing in reasonable
detail the remaining costs and expenses expected to be incurred by the Company
which would otherwise have been covered by such indemnification. Such
estimated costs and expenses may be satisfied in cash (subject to a present
value discount rate) or pursuant to an irrevocable letter of credit issued in
the full amount of such estimated costs and expenses.

EMPLOYEES

As of March 20, 1998, the Company employed approximately 8,050 full-time and
part-time employees, most of whom are drivers and/or guards. Of these
employees, approximately 2,800 are represented by labor unions. The contracts
covering the Company's unionized work force will expire at varying times over
the next three years. The Company believes that its relations with its
employees are good.

7
<PAGE>

ITEM 2. PROPERTIES

The Company's corporate headquarters consists of leased office space located
in Houston, Texas. The Company's fleet of approximately 2,600 armored and
other vehicles operates out of 168 branch and divisional facilities which
provide service to all 50 states and Puerto Rico. Of these sites, 140 are
leased and 28 are owned. All of the Company's owned properties have been
pledged to secure the Company's indebtedness under the bank credit facility.
The Company believes that its properties are suitable and adequate for their
intended uses. However, two additional locations are under construction in
order to expand services in certain areas or to consolidate existing locations
for better geographic purposes. These new facilities are expected to be leased
with minimal capital requirements to the Company.

ITEM 3. LEGAL PROCEEDINGS

The Company is a party to various legal proceedings and administrative
actions, all of which are of an ordinary or routine nature incidental to the
operations of the Company. In the opinion of the Company's management, such
proceedings and actions should not, individually or in the aggregate, have a
material adverse effect on the Company's results of operations or financial
condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of 1997.

8
<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Common Stock of the Company is not publicly traded, and therefore has no
established market price. On March 20, 1998, there were two shareholders of
record of the Company's Common Stock. No cash dividends have been declared on
the Common Stock, and no retained earnings are available for the payment of
dividends as of December 31, 1997.

ITEM 6. SELECTED FINANCIAL DATA

The summary historical financial data of Loomis, Fargo & Co., successor to
Loomis, set forth below for each of the three fiscal years in the period ended
June 30, 1996, the six months ended December 31, 1996 and the year ended
December 31, 1997 has been derived from the consolidated financial statements
of Loomis, Fargo & Co. included elsewhere herein, which have been audited by
Ernst & Young LLP, independent auditors. The selected financial information
for the year ended June 30, 1993 is unaudited and in the opinion of Loomis,
Fargo & Co. management reflects all adjustments, consisting only of normal
recurring accruals, considered necessary for a fair presentation of such data.

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED JUNE 30 ENDED YEAR ENDED
-------------------------------------- DECEMBER 31, DECEMBER 31,
1993 1994 1995 1996 1996 1997(4)
-------- -------- -------- -------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $107,249 $106,447 $115,136 $119,455 $65,765 $370,791
Income (loss) before
extraordinary item..... (4,172) (1,486) (34) 1,127 2,196 (7,762)
Total assets............ 46,244 39,935 38,879 39,755 43,046 219,435
Long-term
obligations(1)......... 28,429 26,985 26,791 27,392 27,767 155,976
Other data:
EBITDA(2)............. 5,389 7,423 8,344 8,118 5,752 24,214
Cost of Risk(3)....... 12,232 10,578 10,134 10,210 3,974 26,790
</TABLE>
- --------
(1) Long-term obligations include debt, long-term capital lease obligations,
redeemable preferred stock and redeemable common stock options.
(2) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and excludes certain gains related to benefit plans of $1,677
in 1994 and $954 in 1996, the cumulative effect of a change in accounting
principle of $(453) in 1994, and a $124 extraordinary item during the year
ended December 31, 1997. EBITDA is presented because it is commonly used
by certain investors and analysts to analyze and compare companies on the
basis of operating performance and to determine a company's ability to
service and incur debt. EBITDA should not be considered in isolation from
or as a substitute for net income, cash flows from operating activities or
other consolidated income or cash flow statement data prepared in
accordance with generally accepted accounting principles or as a measure
of profitability or liquidity.
(3) Cost of risk is defined as the total cost of cash-in-transit insurance
coverage (cargo), casualty and other insurance (worker's compensation,
automobile liability, general liability and other coverage), and surety
and includes premiums, broker's fees, administration charges, payments
under deductibles provisions, collateral fees and insurance-related
incentive programs.
(4) The year ended December 31, 1997 includes the acquired operations of Wells
Fargo Armored beginning January 24, 1997, as discussed in Note 4 to the
consolidated financial statements of the Company and in Management's
Discussion and Analysis of Financial Condition and Results of Operations,
each included elsewhere herein.

9
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

A comparison of the Company's results of operations for the year ended
December 31, 1997 with Loomis Holding Corporation's (the predecessor to the
Company) results of operations for the year ended December 31, 1996 is
necessarily focused on the significant difference in the size of the Company
before and after the acquisition of certain assets and liabilities of Wells
Fargo Armored. For calendar year 1996, revenues of Wells Fargo Armored were
almost twice as large as those of Loomis, property and equipment over twice as
large, and net assets three times as large. While this increase in the
Company's size offers potential for future growth and profitability, the
business combination tends to dominate any financial comparison of periods
before and after the combination. Results of operations and related cash flows
for the year ended December 31, 1997 include 23 days of Loomis alone before
the combination, and 342 days of combined operations beginning with the
January 24, 1997 closing date. For a condensed comparison of year-to-date
operations of 1996 and 1997 on a pro forma basis, as if the companies had been
combined for the entirety of the two periods, see Note 4 to the consolidated
financial statements.

Certain of the matters discussed in this discussion and analysis may
constitute forward-looking statements for purposes of the Securities Exchange
Act of 1934 and as such may involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. Factors
that could cause or contribute to such differences include, but are not
limited to, risks and uncertainties relating to leverage and debt service,
risks inherent in the armored transport industry, general marketplace
conditions, restrictions imposed by the bank credit facility, issues
concerning continued integration of the operations of Wells Fargo Armored, the
ability to attract and retain qualified employees, environmental and other
regulatory matters and future legal proceedings.

RESULTS OF OPERATIONS

The following table sets forth the Company's consolidated results of
operations expressed as a percentage of revenue.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED
JUNE 30 DECEMBER 31 DECEMBER 31
------------ ------------ ------------
1995 1996 1995 1996 1996 1997
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues.......................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of operations:
Payroll and related expense..... 67.1 67.0 65.8 65.5 66.7 61.1
Vehicle expense................. 12.0 11.7 12.1 11.6 11.5 13.5
Facilities expense.............. 4.3 4.3 4.4 4.0 4.1 4.2
Other operating expenses........ 13.9 14.3 14.5 13.3 13.7 18.2
Expenses relating to the
business combination........... -- -- -- -- -- 0.9
Gains associated with benefit
plans.......................... -- (0.8) -- -- (0.7) --
----- ----- ----- ----- ----- -----
Operating income.................... 2.7 3.5 3.2 5.6 4.7 2.1
Interest expense.................... 2.7 2.5 2.6 2.2 2.2 4.2
----- ----- ----- ----- ----- -----
Income (loss) before income taxes
and extraordinary item............. 0.0 1.0 0.6 3.4 2.5 (2.1)
Income taxes........................ -- 0.1 0.1 0.1 0.1 --
----- ----- ----- ----- ----- -----
Income (loss) before extraordinary
item............................... 0.0 0.9 0.5 3.3 2.4 (2.1)
Extraordinary item.................. -- -- -- -- -- --
----- ----- ----- ----- ----- -----
Net income (loss)................... 0.0% 0.9% 0.5% 3.3% 2.4% (2.1)%
===== ===== ===== ===== ===== =====
</TABLE>

10
<PAGE>

Year ended December 31, 1996 compared with year ended December 31, 1997

Revenues. Revenues increased from $127.4 million for the year ended December
31, 1996 to $370.8 million for the year ended December 31, 1997, an increase
of $243.4 million or 191.0%. The increase is primarily due to the acquisition
of Wells Fargo Armored, which had revenue of $246 million in 1996 although
approximately 8.5% of the Wells Fargo Armored customer base was lost early in
1997 as a result of pre-merger service issues. Management has taken action to
address the cause of these issues and does not anticipate recurrence. The
success of the Company's quality-of-revenue improvement initiative, described
below, as well as other growth in the customer base, have offset these early
losses. The following table analyzes revenues by type of service.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
-------------
1996 1997 CHANGE PERCENT
------ ------ ------ -------
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C> <C>
Traditional armored transport services...... $ 97.1 $221.5 $124.4 128.1%
ATM services................................ 19.4 107.3 87.9 453.1%
Cash vault and related services............. 10.9 42.0 31.1 285.3%
------ ------ ------
$127.4 $370.8 $243.4 191.0%
====== ====== ======
</TABLE>

Although the business combination caused all of the revenue categories to
increase, the relative percentages of the three types of services changed
significantly. In the year ended December 31, 1996, traditional armored
transport services accounted for 76% of total revenues, with ATM and cash
vault and related services providing 15% and 9%, respectively. In the year
ended December 31, 1997, traditional armored transport services provided 60%
of total revenues, ATM services provided 29% and cash vault and related
services 11%.

The significant increase in ATM services revenue reflects both Loomis'
strategic decision to develop this growing market segment and the strong
presence of Wells Fargo Armored in the ATM services market. The number of ATMs
deployed by banks and other network owners continues to expand throughout the
United States. The increase in ATMs served has also benefited armored
transport and cash vault revenues as customers often prefer to use one risk
management service provider. Although the Company's revenues are generally
level throughout the year, revenues are favorably impacted slightly to the
extent that demand for money increases during the major holiday seasons late
in the year.

During the second and third quarters of 1997, the Company undertook an
initiative to improve the quality of revenue of acquired Wells Fargo Armored
contracts, concurrent with upgrades in service, crew complements and employee
compensation rates, as discussed below. A majority of the acquired contracts
were renegotiated by the end of 1997.

Payroll and related expense. Payroll and related expense increased from
$85.0 million for the year ended December 31, 1996 to $226.5 million for the
year ended December 31, 1997, an increase of $141.5 million or 166.5%. Payroll
and related expense as a percent of revenue decreased from 66.7% for the year
ended December 31, 1996 to 61.1% for the year ended December 31, 1997. The
increase in payroll and related expense was principally related to the Wells
Fargo Armored employee wage base of approximately $122.3 million. During 1996,
payroll and related expense at Wells Fargo Armored was approximately 55% of
revenue. Consistent with its business strategy, the Company improved the wages
and fringe benefits throughout the acquired operations and invested in
improved crew complements to enhance security. These investments were offset
somewhat by cost reductions achieved through reduced casualty costs,
consolidation of the previous corporate and division administrative offices as
well as ongoing efficiencies in operations in those markets previously served
by both Loomis Armored and Wells Fargo Armored. Continued emphasis on
improving employee compensation and benefits and increasing crew complements
on certain routes are expected to increase payroll and related expenses as a
percent of revenue in 1998.

Vehicle expense. Vehicle expense increased from $14.7 million for the year
ended December 31, 1996 to $49.9 million for the year ended December 31, 1997,
an increase of $35.2 million, or 239.5%, of which $31.2 million was related to
the fleet acquired from Wells Fargo Armored. Vehicle expense as a percent of
revenue

11
<PAGE>

increased from 11.5% for the year ended December 31, 1996 to 13.5% for the
year ended December 31, 1997. The increase as a percentage of revenues can be
attributed to the higher depreciation and lease expenses of the relatively
newer fleet of Wells Fargo Armored acquired in the business combination. The
number of armored vehicles in active service increased from approximately 950
to approximately 2,600 with the business combination.

Facilities expense. Facilities expense increased from $5.2 million for the
year ended December 31, 1996 to $15.5 million for the year ended December 31,
1997, an increase of $10.3 million, or 198.1%. Facilities expense as a percent
of revenue increased slightly from 4.1% for the year ended December 31, 1996
to 4.2% for the year ended December 31, 1997. The $10.3 million increase is
related to the increased number of operating sites, from 69 to 168 sites, and
the increased division and corporate facility space requirements associated
with the purchase of Wells Fargo Armored.

Other operating expenses. Other operating expenses increased from $17.5
million for the year ended December 31, 1996 to $67.6 million for the year
ended December 31, 1997, an increase of $50.1 million, or 286.3%. Other
operating expenses as a percent of revenue increased from 13.7% for the year
ended December 31, 1996 to 18.2% for the year ended December 31, 1997. Other
operating expenses include such expenses as cargo insurance premiums and
losses, costs of a centralized dispatch center, and the testing, recruiting
and training of employees. Other operating costs associated with the
operations acquired from Wells Fargo Armored were approximately $37.6 million.
Additionally, operating expense increased by $2.5 million for the amortization
of goodwill related to the business combination. The combined cash-in-transit
insurance premiums and cargo losses totaled $3.2 million and $17.0 million for
the years ended December 31, 1996 and 1997, respectively, primarily due to the
significant increase in cargo under coverage and the higher rate of cargo
losses at the acquired Wells Fargo Armored facilities.

Expenses relating to the business combination. Expenses of $3.2 million were
recorded in 1997 for items relating to the purchase of Wells Fargo Armored.
Included are the costs of maintaining the former Wells Fargo Armored corporate
headquarters in Atlanta, temporary personnel and consultants required to
convert the former Wells Fargo Armored systems and branches to the Company's
policies and costs of state registrations and surveys required by the new
business entity. The Company does not anticipate material additional costs
related to the business combination.

Interest expense. Interest expense increased from $2.9 million in the year
ended December 31, 1996 to $15.9 million in the year ended December 31, 1997,
an increase of $13.0 million, or 448.3%. This increase relates directly to the
Company's new bank credit facility and the issuance of the senior subordinated
notes in connection with the business combination.

Operating income. Operating income increased from $6.0 million for the year
ended December 31, 1996 to $8.1 million for the year ended December 31, 1997,
an increase of $2.1 million or 35%, for the reasons stated above.

Extraordinary item. An extraordinary item of $0.1 million was recorded in
the year ended December 31, 1997, resulting from the write-off of deferred
financing costs associated with the debt retired in January 1997.

Six months ended December 31, 1995 compared with six months ended December
31, 1996

Revenues. Revenues increased from $57.8 million for the six months ended
December 31, 1995 to $65.8 million for the six months ended December 31, 1996,
an increase of $8.0 million or 13.8%. The following table analyzes revenues by
type of service.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
-----------
1995 1996 CHANGE PERCENT
----- ----- ------ -------
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C> <C>
Traditional armored transport services........ $48.2 $49.1 $0.9 1.9%
ATM services.................................. 4.5 10.9 6.4 142.2%
Cash vault and related services............... 5.1 5.8 0.7 13.7%
----- ----- ----
$57.8 $65.8 $8.0 13.8%
===== ===== ====
</TABLE>

12
<PAGE>

ATM services expanded dramatically with additional service opportunities in
both the number of ATM locations and the additional items being dispensed
through ATMs. The significant improvement in ATM services revenue resulted
from Loomis' strategic decision to increase its efforts in developing this
market segment.

Payroll and related expense. Payroll and related expense increased from
$38.0 million for the six months ended December 31, 1995 to $43.0 million for
the six months ended December 31, 1996, an increase of $5.0 million or 13.2%.
Payroll and related expense as a percent of revenue decreased slightly from
65.8% for the six months ended December 31, 1995 to 65.5% for the six months
ended December 31, 1996. The increase in payroll and related expenses is
primarily attributable to additional personnel required to support the growing
market for ATM services.

Vehicle expense. Vehicle expense increased from $7.0 million for the six
months ended December 31, 1995 to $7.6 million for the six months ended
December 31, 1996, an increase of $0.6 million or 8.6%. Vehicle expense as a
percent of revenue decreased from 12.1% for the six months ended December 31,
1995 to 11.6% for the six months ended December 31, 1996. The primary reason
for the $0.6 million increase in vehicle expense was related to an increase in
the price of gasoline and diesel fuel. The reduction in vehicle expense as a
percent of revenue primarily resulted from reduced vehicle repair expense as
new armored vehicles have replaced older vehicles that had previously been
utilized at near full capacity. The reduction in vehicle repairs has more than
offset the increase in armored vehicle depreciation.

Facilities expense. Facilities expense increased from $2.5 million for the
six months ended December 31, 1995 to $2.7 million for the six months ended
December 31, 1996. Facilities expense as a percent of revenue decreased from
4.4% for the six months ended December 31, 1995 to 4.0% for the six months
ended December 31, 1996. No new facilities have been opened since December 31,
1995.

Other operating expenses. Other operating expenses increased from $8.4
million for the six months ended December 31, 1995 to $8.7 million for the six
months ended December 31, 1996. Other operating expenses as a percent of
revenue decreased from 14.5% for the six months ended December 31, 1995 to
13.3% for the six months ended December 31, 1996. Other operating expenses
include such expenses as cargo insurance premiums and losses; subcontracting
costs; and testing, recruiting, uniforming, and training of employees.
Included in other operating expenses is the amortization of a covenant not to
compete and the cost of purchased contracts which became fully amortized
during the fiscal year ended June 30, 1996. Consequently, amortization of
these intangible assets decreased by $0.5 million for the six months ended
December 31, 1996.

Operating income. Operating income increased from $1.9 million for the six
months ended December 31, 1995 to $3.7 million for the six months ended
December 31, 1996, an increase of $1.8 million or 94.7%, for the reasons
stated above.

Net Income. Net income increased from $0.3 million for the six months ended
December 31, 1995 to $2.2 million for the six months ended December 31, 1996,
an increase of $1.9 million or 633.3%, for the reasons stated above.

Fiscal Year Ended June 30, 1995 compared with fiscal year ended June 30, 1996

Revenues. Revenues increased from $115.1 million in fiscal 1995 to $119.5
million in fiscal 1996, an increase of $4.4 million or 3.8%. The following
table analyzes revenues by type of service.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
-------------
1995 1996 CHANGE PERCENT
------ ------ ------ -------
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C> <C>
Traditional armored transport services..... $ 98.5 $96.2 $(2.3) (2.3)%
ATM services............................... 7.2 13.1 5.9 80.6%
Cash vault and related services............ 9.4 10.2 0.8 8.5%
------ ------ -----
$115.1 $119.5 $4.4 3.8%
====== ====== =====
</TABLE>

13
<PAGE>

In fiscal 1995, Loomis implemented an improved revenue management system
which effectively identified those contracts which were inappropriately priced
relative to cost of service. As a result of this review, traditional armored
transport and cash vault and related services revenues in fiscal 1996
initially declined with the loss of certain high risk and low profitability
customers. By mid-1996 Loomis returned to building the customer base with a
higher quality of revenue and finished the fiscal year with significantly
improved revenue per fixed billing location served. Fixed billing revenue per
location served increased from $329 monthly at June 30, 1995 to $368 monthly
at June 30, 1996, an 11.8% increase. ATM services revenues were responsible
for most of the revenue growth during fiscal 1996, with an 81% increase over
fiscal 1995, which more than offset the decrease in revenues from traditional
armored transport services.

Payroll and related expense. Payroll and related expense increased from
$77.3 million in fiscal 1995 to $80.0 million in fiscal 1996, an increase of
$2.7 million or 3.5%. Payroll and related expense as a percent of revenue
decreased slightly from 67.1% in fiscal 1995 to 67.0% in fiscal 1996, which in
part reflects improvement in the customer mix. With the growth in ATM
services, Loomis' wage structure increased to support three-person crews which
are used on most ATM routes as well as on service locations with higher risk
profiles. The effect of the increased wages has been more than offset during
this period due to a change to subcontracting work related to some of Loomis'
coin operations that previously were performed in-house. These subcontracting
expenses, which increased by $0.8 million in fiscal 1996, are included in
other operating expenses. Loomis established a $0.3 million reserve in fiscal
1996 for discretionary bonuses that were unrelated to branch performance. An
additional expense of $0.2 million was incurred in fiscal 1996 to harmonize
branch specific vacation policies to a region standard vacation entitlement
program.

Vehicle expense. Vehicle expense increased from $13.8 million in fiscal 1995
to $14.0 million in fiscal 1996, an increase of $0.2 million or 1.6%. Vehicle
expense as a percent of revenue decreased slightly from 12.0% in fiscal 1995
to 11.7% in fiscal 1996. The decrease as a percent of revenue primarily
related to a reduction of over $0.4 million related to auto and general
liability insurance losses. Additionally, armored truck depreciation continued
to decline, by $0.2 million, between fiscal 1995 and fiscal 1996 as a portion
of Loomis' vehicles became fully depreciated.

Facilities expense. Facilities expense increased from $5.0 million in fiscal
1995 to $5.1 million in fiscal 1996, an increase of $0.1 million or 2.0%.
Facility expense as a percent of revenue remained constant for both fiscal
1995 and 1996 at 4.3%.

Other operating expenses. Other operating expenses increased from $15.9
million in fiscal 1995 to $17.1 million in fiscal 1996, an increase of $1.2
million or 7.4%. Other operating expenses as a percent of revenue increased
from 13.9% in fiscal 1995 to 14.3% in fiscal 1996. As noted above, the Company
shifted certain coin operation work previously performed in-house to
subcontractors. The shift resulted in an increase in subcontracting expense of
$0.8 million from fiscal 1995 to 1996. Excluding this shift in operational
strategy, other operating expense as a percent of revenue would have decreased
to 13.7%. Loomis established in fiscal 1996 a reserve of $0.3 million for a
potential settlement of a customer dispute and a reserve of $0.3 million for a
wrongful termination suit for an employee terminated in June 1994.

Gains associated with benefit plans. The $1.0 million gain associated with
benefit plans in fiscal 1996 related to the termination of Loomis'
postretirement benefit plan. See Note 8 to the audited financial statements
for further discussion.

Operating Income. Operating income increased from $3.1 million in fiscal
1995 to $4.2 million in fiscal 1996, an increase of $1.1 million or 34.0%, for
the reasons stated above.

Net Income. Net income increased from a slight loss in fiscal 1995 to $1.1
million net income in fiscal 1996, an increase of $1.2 million, for the
reasons stated above.

14
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity and capital resources changed significantly as a
result of the business reorganization described in Note 1 to the consolidated
financial statements and the acquisition of Wells Fargo Armored described in
Note 4 to the consolidated financial statements. Total cash and cash
equivalents at December 31, 1996 and 1997 were $2.5 million and $3.9 million,
respectively. Included in the amount for December 31, 1996 was $1.5 million in
restricted cash and cash equivalents. Changes in cash and cash equivalents are
described in the statements of cash flows, which are summarized below.

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1997
---------------- ------------
(IN MILLIONS)
<S> <C> <C>
Net cash provided by operating activities.. $ 1.1 $ 11.1
Net cash used in investing activities...... (2.1) (112.5)
Net cash provided by (used in) financing
activities................................ 0.1 104.1
----- ------
Net increase (decrease) in cash and cash
equivalents............................... $(0.9) $ 2.7
===== ======
</TABLE>

Operating Activities

Net cash was provided by operating activities in the year ended December 31,
1997 despite the net loss, primarily because the loss included $16.1 million
of noncash depreciation and amortization expense. Most of the increase in
these expenses was related to the business combination.

As discussed in Note 4 to the consolidated financial statements, the Company
recorded a $7.9 million liability for contracts acquired from Wells Fargo
Armored that generated revenues less than the Company's variable expenses
related to these contracts ("loss contracts"). The losses associated with
these contracts were incurred by December 31, 1997. Management has implemented
an aggressive program to increase billing rates to profitable levels on all
customer contracts.

The Company anticipates charges of $1,000,000 against purchase accounting
accruals in the next twelve months, all of which represent cash outflows.

Investing Activities

In the year ended December 31, 1997, cash used in investing activities was
primarily $105.1 million for the acquisition of the assets of Wells Fargo
Armored and $7.5 million for additional acquisitions of property and
equipment.

Planned capital expenditures for the next twelve months are $12 million,
which will depend largely on the growth rate experienced. These expenditures
will be financed primarily through operating cash flows.

Financing Activities

Cash provided by financing activities entered into in connection with the
January 1997 business combination were borrowings of $73.3 million drawn
against the Company's new credit facility, and $85.0 million of senior
subordinated notes sold in a private placement. Long-term obligations of $26.8
million were repaid, preferred stock of $3.5 million was redeemed and $8.7
million of cash distributions were made for the benefit of the stockholders of
Loomis Holding Corporation. Financing costs of $5.7 million were paid in 1997
in connection with the refinancing of the Company's debt. Net repayments of
$9.3 million were made on the credit facility

15
<PAGE>

during the period from the business combination through December 31, 1997.
Included in the net repayments was an $11.7 million payment resulting from the
recovery of a material cargo loss on December 31, 1997. This $11.7 million was
returned to the Company's insurance carrier on January 6, 1998, and resulted
in a corresponding increase in borrowings under the Company's credit facility
in January 1998.

The Company's balance sheet reflected working capital of $(5.4) million at
December 31, 1997. The Company is highly leveraged, with long-term liabilities
comprising 73% of total liabilities and common stockholders' deficit at
December 31, 1997.

The Company's revolving bank credit facility provided initial aggregate
commitments of $115 million through December 1997. Under the facility, funds
can be borrowed either for unspecified periods of time at a base rate tied to
the bank's prime rate, or for set periods of time under variable rates tied to
LIBOR. The facility includes guarantees of letters of credit, of which
approximately $14.9 million were outstanding at December 31, 1997. Remaining
commitments available under the facility at December 31, 1997 were $36.1
million.

The credit facility agreement includes a step-down of commitments over the
final four years of the facility, as described in Note 5 to the consolidated
financial statements. By December 1998, total commitments under the bank
credit facility will decrease to $105 million. It is anticipated that letters
of credit requirements, principally for casualty liabilities, should not
exceed $18 million by December 31, 1998, leaving $87 million in available
borrowing capacity. The cash-in-transit insurance currently contains no
requirements for letters of credit through 1998. The Company's management is
not certain if requirements will be added in 1999. Management believes that
the operating cash flow and this remaining financing commitment will be more
than adequate to fund future operating needs, capital expenditures, and any
repayment of the NOL note, which is expected to be substantially repaid in
1999. See Note 5 to the consolidated financial statements.

IMPACT OF YEAR 2000

The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. As a result, many
computer programs have time-sensitive software that recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions or engage in
similar normal business activities.

Based on a recent assessment, the Company determined that its accounting
software is Year 2000 compliant. However, the Company will be required to
modify portions of its Puerto Rican operations and billing software so that
its computer systems will function properly with respect to dates in the year
2000 and thereafter. The Company has decided to purchase the upgrade to this
software which is Year 2000 compliant. The cost is expected to be immaterial.

The Company has substantially completed its review of all operational
equipment, and believe there is no material Year 2000 impact.

The review and any necessary upgrades or replacements are estimated to be
completed not later than mid-1999. The Company presently believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer and
operational systems. However, if such modifications and conversions are not
made, or are not completed timely, the Year 2000 Issue could have a material
impact on operations of the Company.

The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources and other factors. However,
there can be no guarantee that these estimates will be achieved and actual
results could differ materially from those anticipated. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, the cost and extent of training
associated with needed conversions and similar uncertainties.

16
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX

<TABLE>
<S> <C>
Independent Auditors Report............................................... 18
Consolidated Balance Sheets as of December 31, 1996 and 1997.............. 28
Consolidated Statements of Operations for the years ended June 30, 1995
and 1996, the six months ended December 31, 1996 and the year ended
December 31, 1997........................................................ 29
Consolidated Statements of Cash Flows for the years ended June 30, 1995
and 1996, the six months ended December 31, 1996 and the year ended
December 31, 1997........................................................ 30
Consolidated Statement of Stockholders' Deficit for the years ended June
30, 1995 and 1996, the six months ended December 31, 1996 and the year
ended December 31, 1997.................................................. 31
Notes to Consolidated Financial Statements................................ 32
</TABLE>

17
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Loomis, Fargo & Co.

We have audited the accompanying consolidated balance sheets of Loomis,
Fargo & Co., successor to Loomis Holding Corporation, as of December 31, 1996
and 1997, and the related consolidated statements of operations, stockholders'
deficit and cash flows for each of the two years in the period ended June 30,
1996, the six months ended December 31, 1996, and the year ended December 31,
1997. Our audits also included the financial statement schedule listed in the
Index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Loomis, Fargo
& Co. at December 31, 1996 and 1997, and the consolidated results of its
operations and its cash flows for each of the two years in the period ended
June 30, 1996, the six months ended December 31, 1996, and the year ended
December 31, 1997, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.

/s/ Ernst & Young LLP

Houston, Texas
March 20, 1998

18
<PAGE>

LOOMIS, FARGO & CO.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1996 1997
------- --------
ASSETS (IN THOUSANDS)
<S> <C> <C>
Current assets:
Cash and cash equivalents, including restricted cash and
cash equivalents of $1,536 at December 31, 1996 (Note 2). $ 2,469 $ 3,659
Trade accounts receivable, net (Note 3)................... 10,235 44,339
Other receivables (Note 9)................................ 704 7,846
Parts and supplies........................................ 267 1,350
Prepaid expenses.......................................... 1,986 3,334
------- --------
Total current assets.................................... 15,661 60,528
Property and equipment:
Land...................................................... 1,865 5,486
Buildings................................................. 4,216 11,061
Armored trucks and other vehicles......................... 24,506 35,226
Other equipment........................................... 7,626 20,230
Leasehold improvements.................................... 2,655 6,853
------- --------
40,868 78,856
Less accumulated depreciation and amortization............ 24,052 37,199
------- --------
Property and equipment, net............................. 16,816 41,657
Intangible assets, net (Note 3)............................. 7,851 112,421
Other assets, net (Note 3).................................. 2,718 4,829
------- --------
Total assets................................................ $43,046 $219,435
======= ========
<CAPTION>
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
<S> <C> <C>
Current liabilities:
Accounts payable.......................................... $ 5,439 $ 20,499
Accrued expenses and other current liabilities (Note 3)... 11,759 44,754
Short-term debt........................................... 1,022 --
Current portion, long-term debt (Note 5).................. 1,500 --
Current portion, capital lease obligations (Note 6)....... 496 669
------- --------
Total current liabilities............................... 20,216 65,922
Long-term liabilities:
Long-term debt--affiliates (Note 5)....................... 7,569 5,796
Long-term debt--other (Note 5)............................ 13,381 149,000
Capital lease obligations (Note 6)........................ 966 511
Accrued management fees (Note 9).......................... 1,575 --
Other long-term liabilities............................... 3,838 5,474
------- --------
Total long-term liabilities............................. 27,329 160,781
Redeemable preferred stock (Note 11)........................ 3,500 --
Redeemable common stock warrants (Note 11).................. 355 --
Common stockholders' deficit:
Class A common stock (Note 11)............................ 15 --
Class B common stock (Note 11)............................ -- --
Common stock, par value $.01 per share: Authorized
shares--20,000,000; issued and outstanding shares--
10,00,000 (Note 11)...................................... -- 100
Common stock warrants (Note 11)........................... 304 --
Additional paid-in capital................................ 1,485 24,755
Accumulated deficit....................................... (10,158) (32,123)
------- --------
Total common stockholders' deficit...................... (8,354) (7,268)
------- --------
Total liabilities and common stockholders' deficit.......... $43,046 $219,435
======= ========
</TABLE>

See accompanying notes.

19
<PAGE>

LOOMIS, FARGO & CO.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED JUNE SIX MONTHS
30 ENDED YEAR ENDED
------------------ DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
-------- -------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues......................... $115,136 $119,455 $65,765 $370,791
Cost of operations:
Payroll and related expense.... 77,270 79,974 43,031 226,519
Vehicle expense................ 13,815 14,035 7,637 49,882
Facilities expense............. 4,991 5,094 2,661 15,510
Other operating expenses....... 15,936 17,120 8,745 67,578
Expenses relating to the
business combination.......... -- -- -- 3,167
Gains associated with benefit
plans (Note 8)................ -- (954) -- --
-------- -------- ------- --------
112,012 115,269 62,074 362,656
-------- -------- ------- --------
Operating income................. 3,124 4,186 3,691 8,135
Interest expense--affiliates..... 1,099 1,099 550 71
Interest expense--other.......... 2,059 1,882 895 15,826
-------- -------- ------- --------
3,158 2,981 1,445 15,897
-------- -------- ------- --------
Income (loss) before income taxes
and extraordinary item.......... (34) 1,205 2,246 (7,762)
Income taxes..................... -- 78 50 --
-------- -------- ------- --------
Income (loss) before
extraordinary item.............. (34) 1,127 2,196 (7,762)
Extraordinary item............... -- -- -- 124
-------- -------- ------- --------
Net income (loss)................ (34) 1,127 2,196 (7,886)
Increase in value of redeemable
warrants........................ -- 327 -- --
-------- -------- ------- --------
Net income (loss) available to
common stockholders............. $ (34) $ 800 $ 2,196 $ (7,886)
======== ======== ======= ========
</TABLE>

See accompanying notes.

20
<PAGE>

LOOMIS, FARGO & CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
JUNE 30 ENDED YEAR ENDED
---------------- DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
------- ------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................. $ (34) $ 1,127 $ 2,196 $ (7,886)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation expense............ 4,026 3,845 1,947 13,333
Amortization of goodwill........ 1,194 1,041 114 2,746
Amortization of financing costs. -- -- -- 898
(Gain) loss on disposal of
property and equipment......... (265) 92 3 89
Provision for allowance for
doubtful accounts.............. 117 14 68 5,369
Accrued management fees......... 262 175 88 23
Postretirement benefits other
than pensions.................. 340 (954) -- --
Change in restricted cash....... (1,500) (5) (31) 1,536
Changes in current assets and
liabilities, net of effect of
acquisitions:
Trade accounts receivable..... (935) (2,135) (1,788) (14,210)
Other receivables............. (155) (239) (127) (6,362)
Parts and supplies............ (133) (62) 55 (196)
Prepaid expenses.............. (461) 191 738 316
Accounts payable.............. 3,182 733 (2,091) 4,050
Accrued expenses and other
current liabilities.......... (4,073) (34) (63) 10,910
Deferred interest and
accretion of discounts....... (890) 48 16 454
------- ------- ------- ---------
Net cash provided by operating
activities....................... 675 3,837 1,125 11,070
------- ------- ------- ---------
INVESTING ACTIVITIES
Purchase of Wells Fargo Armored... -- -- (766) (105,116)
Acquisition of property and
equipment........................ (688) (1,930) (1,355) (7,523)
Proceeds from sale of property and
equipment........................ 295 162 1 117
------- ------- ------- ---------
Net cash used in investing
activities....................... (393) (1,768) (2,120) (112,522)
FINANCING ACTIVITIES
Net borrowings (repayments) of
debt............................. 69 (444) 272 39,528
Repayments of capital lease
obligations...................... (33) (76) (107) (960)
Issuance of senior subordinated
notes............................ -- -- -- 85,000
Payment of accrued management
fees............................. -- -- -- (1,598)
Financing costs related to debt... -- -- (76) (5,651)
Redemption of preferred stock..... -- -- -- (3,500)
Exercise of common stock warrants. -- -- -- 96
Distributions to stockholders..... -- -- -- (8,737)
Other............................. -- (80) (32) --
------- ------- ------- ---------
Net cash provided by (used in)
financing activities.............. 36 (600) 57 104,178
Net increase (decrease) in cash
and cash equivalents.............. 318 1,469 (938) 2,726
Cash and cash equivalents at
beginning of period*.............. 84 402 1,871 933
------- ------- ------- ---------
Cash and cash equivalents at end
of period*........................ $ 402 $ 1,871 $ 933 $ 3,659
======= ======= ======= =========
</TABLE>
- --------
* Excludes restricted cash and cash equivalents of $1,500, $1,505 and $1,536
at June 30, 1995, June 30, 1996 and December 31, 1996.

See accompanying notes.

21
<PAGE>

LOOMIS, FARGO & CO.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
COMMON COMMON COMMON ADDITIONAL
STOCK STOCK STOCK COMMON PAID-IN ACCUMULATED
CLASS A CLASS B WARRANTS STOCK CAPITAL DEFICIT
------- ------- -------- ------ ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balances at June 30,
1994................... $15 $-- $ 304 $ -- $ 1,485 $(13,120)
Net loss................ -- -- -- -- -- (34)
--- --- ----- ---- ------- --------
Balances at June 30,
1995................... 15 -- 304 -- 1,485 (13,154)
Net income.............. -- -- -- -- -- 1,127
Increase in value of
redeemable warrants.... -- -- -- -- -- (327)
--- --- ----- ---- ------- --------
Balances at June 30,
1996................... 15 -- 304 -- 1,485 (12,354)
Net income.............. -- -- -- -- 2,196
--- --- ----- ---- ------- --------
Balances at December 31,
1996................... 15 -- 304 -- 1,485 (10,158)
Exercise of common stock
warrants............... 9 3 (304) -- 743 --
Distribution to Loomis
Holding Corporation
stockholders........... -- -- -- -- -- (14,079)
Exchange common stock of
Loomis Holding
Corporation for common
stock of Loomis, Fargo
& Co................... (24) (3) -- 51 (24) --
Issuance of common stock
as part of the purchase
consideration for Wells
Fargo Armored.......... -- -- -- 49 22,551 --
Net loss................ -- -- -- -- -- (7,886)
--- --- ----- ---- ------- --------
Balance at December 31,
1997................... $-- $-- $ -- $100 $24,755 $(32,123)
=== === ===== ==== ======= ========
</TABLE>

See accompanying notes.

22
<PAGE>

LOOMIS, FARGO & CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1997

NOTE 1. BASIS OF PRESENTATION AND BACKGROUND

Loomis, Fargo & Co., (together with its subsidiaries, the "Company"), a
Delaware corporation, was incorporated in August 1996. On January 24, 1997,
Loomis Holding Corporation, a Delaware corporation, completed its
reorganization into Loomis, Fargo & Co. and the acquisition of certain assets
and the assumption of certain liabilities of Wells Fargo Armored Service
Corporation ("Wells Fargo Armored"), a wholly owned subsidiary of Borg-Warner
Security Corporation. The reorganization involved the exchange of all
outstanding common stock of Loomis Holding Corporation for 5,100,000 shares of
the common stock of the Company, which concurrently were transferred to a
business trust owned by the former shareholders of Loomis Holding Corporation
(the "Loomis Stockholders Trust").

The Company owns LFC Holding Corporation (formerly Loomis Holding
Corporation), which in turn owns Loomis, Fargo & Co., a Texas corporation,
(formerly Loomis Armored Inc. which was originally incorporated in 1928).
Loomis, Fargo & Co. (the Texas corporation) has two subsidiaries, LFC Armored
of Texas Inc., a Texas corporation, and Loomis, Fargo & Co. of Puerto Rico, a
Tennessee corporation. The common stock of these two subsidiaries was
contributed to the Company by Wells Fargo Armored as part of the assets
transferred by Wells Fargo Armored in the business combination.

The Company provides armored car transport services to a variety of
financial, commercial, industrial and retail establishments within the United
States and Puerto Rico. It offers secure, expedited transportation and
protection for a variety of valuable commodities such as coin and currency,
negotiable and nonnegotiable securities, precious metals, bullion, food
coupons, gems and works of art. In addition, Loomis provides extensive
automatic teller machine ("ATM") services, including cash replenishment,
deposit pick-up and first-line and second-line maintenance services. The
Company also offers several ancillary services including secured storage of
valuables, such as currency, securities and computer chips, deposit processing
and consolidation, change order preparation, coin wrapping and storage, and
food stamp processing. The Company also provides contract security officers to
patrol and control access to customer facilities in Puerto Rico.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. Intercompany accounts and transactions have
been eliminated.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original
maturity date of three months or less to be cash equivalents. Approximately
$1,536,000 of cash and cash equivalents at December 31, 1996 was held under
restricted arrangements as required by insurance agreements.

Revenue Recognition

Revenue on service contracts is recognized as services are provided.
Unearned revenues represent billings for recurring services to be performed in
months subsequent to year-end.

23
<PAGE>

LOOMIS, FARGO & CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997

Property and Equipment

Property and equipment, which include assets resulting from capital leases,
are recorded at cost and are depreciated on a straight-line basis over the
estimated useful lives of the assets as follows:

<TABLE>
<S> <C>
Buildings..................................................... 15-40 years
Armored trucks and other vehicles............................. 2-12 years
Other equipment............................................... 2-15 years
</TABLE>

Leasehold improvements are amortized over the terms of the related leases or
the useful lives of the improvements, whichever is less. Repairs and
maintenance are charged to expense as incurred.

The Company acquired $121,000, $301,000, $1,216,000 and $149,000 of assets
under capital lease agreements in the years ended June 30, 1995 and 1996, the
six months ended December 31, 1996 and the year ended December 31, 1997,
respectively, primarily for equipment and vehicles. The gross amount of assets
recorded under capital leases was approximately $1,669,000 and $1,851,000 at
December 31, 1996 and 1997, respectively. Accumulated depreciation related to
capital leases amounted to approximately $242,000 and $885,000 at December 31,
1996 and 1997, respectively.

Intangible Assets

Goodwill resulting from the purchase of Wells Fargo Armored, described in
Note 4, is being amortized on a straight-line basis over 40 years. Related
amortization expense of $2,517,000 was recorded in the year ended December 31,
1997.

Goodwill resulting from the 1991 purchase acquisition of Loomis Armored Inc.
is being amortized on a straight-line basis over 40 years. A related covenant
not to compete entered into with the Seller and certain service contracts
acquired by the Company in the state of Alaska subsequent to May 5, 1991 were
amortized on a straight-line basis over a five-year period and were fully
amortized at June 30, 1996. Amortization expense on these assets was
$1,194,000 for the year ended June 30, 1995, $1,041,000 for the year ended
June 30, 1996, $114,000 for the six months ended December 31, 1996 and
$229,000 for the year ended December 31, 1997.

Long-lived Assets

Under Statement of Financial Accounting Standards No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of (Statement 121), impairment losses are required to be recorded on long-
lived assets used in operations when indicators of impairment are present and
the undiscounted cash flows estimated to be generated by those assets are less
than the assets' respective carrying amounts. Goodwill associated with assets
acquired in purchase business combinations is included in impairment
evaluations. Statement 121 also addresses the accounting for long-lived assets
that are expected to be disposed of. The Company's adoption of Statement 121
in fiscal 1996 did not impact the Company's results of operations or financial
position.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

24
<PAGE>

LOOMIS, FARGO & CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997

Stock-Based Compensation

The Company grants stock options to employees for a fixed number of shares
with an exercise price no less than the fair value of the shares at the date
of grant. The Company has elected to follow Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and related
Interpretations in accounting for its employee stock options. Under APB 25,
because the exercise price of the Company's employee stock options is no less
than the fair value of the underlying stock on the date of grant, no
compensation expense is recognized.

Reclassifications

Certain reclassifications have been made in the prior periods' financial
statements to conform to the current year presentation.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable and
accounts payable approximate fair value due to the short-term maturities of
these instruments. The carrying amount of the Company's bank credit facility
approximates fair value because the debt arrangement accrues interest at
variable rates based on current market rates. The fair value of the Company's
10% senior subordinated notes is estimated at $85,425,000 based on the quoted
market price at December 31, 1997.

Fiscal Year

Effective July 1, 1996, the Company changed its fiscal year end from June 30
to December 31. Accordingly, the financial statements include a presentation
as of and for the six months ended December 31, 1996. Certain unaudited
comparative information for the six months ended December 31, 1995 are
presented below (in thousands):

<TABLE>
<S> <C>
Revenues.......................................................... $57,806
Operating income.................................................. $ 1,855
Net income........................................................ $ 302
</TABLE>

25
<PAGE>

LOOMIS, FARGO & CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997

NOTE 3. BALANCE SHEET DATA

Detailed balance sheet data are as follows:

<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1996 1997
------- --------
(IN THOUSANDS)
<S> <C> <C>
Trade accounts receivable:
Gross trade accounts receivable...................... $17,937 $ 69,018
Unearned revenues.................................... (7,394) (19,518)
Allowance for doubtful accounts receivable........... (308) (5,161)
------- --------
Net trade accounts receivable...................... $10,235 $ 44,339
======= ========
Intangible assets:
Goodwill............................................. $ 9,153 $116,469
Less accumulated amortization........................ (1,302) (4,048)
------- --------
Net intangible assets.............................. $ 7,851 $112,421
======= ========
Other assets:
Deferred financing costs............................. $ 2,718 $ 5,727
Less accumulated amortization........................ -- (898)
------- --------
Net other assets................................... $ 2,718 $ 4,829
======= ========
Accrued expenses and other current liabilities:
Cargo, casualty and other insurance expenses......... $ 2,257 $ 7,474
Cargo loss recoveries payable to insurer............. -- 16,200
Payroll and related expenses......................... 6,450 8,767
Interest............................................. 172 4,577
Other................................................ 2,880 7,736
------- --------
Total accrued expenses............................. $11,759 $ 44,754
======= ========
</TABLE>

NOTE 4. PURCHASE OF WELLS FARGO ARMORED SERVICE CORPORATION

On January 24, 1997, the Company purchased certain assets and assumed
certain liabilities of Wells Fargo Armored, a wholly-owned subsidiary of Borg-
Warner Security Corporation. (See Note 1.) The acquisition was accounted for
using the purchase method of accounting. The aggregate purchase price for the
assets acquired and the liabilities assumed was approximately $128,482,000,
which included cash payments of $105,882,000 and the issuance of 4,900,000
shares of the common stock of the Company. The purchase price has been
allocated to the net assets acquired and liabilities assumed. The excess of
the purchase price over the net tangible assets acquired, approximately
$107,316,000, has been allocated to goodwill, which is being amortized over 40
years.

The balance sheet reflects adjustments to record acquired assets and assumed
liabilities at their fair market values and to conform certain accounting
policies of Wells Fargo Armored to the policies of the Company. Accruals
totaling approximately $3,046,000 have been recorded for costs associated with
consolidating headquarters and certain branch facilities, related relocation
costs and severance payments, and obligations under noncancelable leases for
space, vehicles and equipment that extend beyond the expected periods of use
by the Company. At December 31, 1997, charges of $1,955,000 have been taken
against these accruals. Substantially all reorganization and consolidation
activities are complete at December 31, 1997.

26
<PAGE>

LOOMIS, FARGO & CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997

In connection with the allocation of the purchase price to assets and
liabilities acquired from Wells Fargo Armored, the Company reviewed all of the
acquired contracts to determine whether any contracts generated revenues that
were less than the direct variable costs associated with servicing the
contracts (e.g., payroll and related expense, vehicle expense). To the extent
that the Company was required to provide services under a contract where
direct variable costs exceeded revenues (a "loss contract"), the Company
recorded a liability which aggregated approximately $7,900,000. All services
required under such contracts were completed by December 31, 1997.

Concurrent with the acquisition, the Company repaid substantially all of the
long-term obligations of Loomis Holding Corporation, replaced its existing
lines of credit with a $115,000,000 revolving bank credit facility and issued
$85,000,000 of 10% unsecured subordinated notes due in 2004 in a private
placement. (See Note 5.)

The consolidated statements of operations and cash flows presented for the
years ended June 30, 1995 and 1996 and the six months ended December 31, 1996
are those of Loomis Holding Corporation, predecessor to the Company. The
statements of operations and cash flows presented for the year ended December
31, 1997 include the transactions of Loomis Holding Corporation for the
twenty-three days before the business combination on January 24, 1997, and
those of the Company for the remainder of the year.

The pro forma unaudited results of operations for the years ended December
31, 1996 and 1997, assuming consummation of the purchase and the restructuring
of the Company's debt and capital structure as of January 1, 1996, are as
follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------
1996 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Revenues............................................... $373,742 $386,120
======== ========
Net income (loss)...................................... $ 2,873 $ (7,933)
======== ========
</TABLE>

The net income (loss) presented above includes pro forma adjustments to (i)
interest expense to reflect the Company's revised capital structure after the
business combination and (ii) depreciation of property and equipment and
amortization of goodwill to reflect the effects of purchase accounting.

27
<PAGE>

LOOMIS, FARGO & CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997

NOTE 5. DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1997
------- --------
(IN THOUSANDS)
<S> <C> <C>
10% senior subordinated notes........................... $ -- $ 85,000
Bank credit facility.................................... -- 64,000
Non-interest bearing NOL note........................... -- 6,000
14% senior subordinated notes........................... 10,211 --
9% junior subordinated notes............................ 9,015 --
Term loan with commercial finance company............... 3,250 --
------- --------
22,476 155,000
Less discount........................................... 26 204
Less current portion.................................... 1,500 --
------- --------
$20,950 $154,796
======= ========
</TABLE>

Concurrent with the purchase of the assets of Wells Fargo Armored on January
24, 1997, the exchange of the Common Stock of Loomis Holding Corporation and
the financing transactions discussed in Note 4, substantially all of the then-
existing Loomis Holding Corporation indebtedness (other than capital leases)
was repaid. Deferred financing costs associated with the retired debt were
written off as an extraordinary item in the accompanying consolidated
statement of operations. The Company also entered into a five-year step-down
revolving bank credit facility agreement which provides for aggregate initial
commitments of up to $115 million. Aggregate commitments are reduced by $2.5
million per quarter in 1998, by an additional $3.75 million per quarter in
1999, by an additional $4.375 million per quarter in 2000 and for the first
two quarters of 2001, and $31.875 million per quarter for the final two
quarters of the agreement. The interest rate of the credit facility is a
variable rate based on either LIBOR or a base rate tied to the bank's prime
rate. At December 31, 1997, the interest rates on the Company's borrowings
were 9.75% on base-rate borrowings of $8.0 million, and 8.06-8.13% on LIBOR
borrowings totaling $56 million. Borrowings under the credit facility are
secured by substantially all of the assets of the Company and its
subsidiaries. The agreement contains restrictive covenants regarding the
issuance of additional debt, compensation of officers, the payment of
dividends, capital expenditures, new capital leases, and the maintenance of
certain financial ratios. At December 31, 1997 there were no retained earnings
available for the payment of dividends and the Company was in compliance with
the remaining covenants.

During the third quarter of 1997, the Company entered into an interest rate
cap agreement with the bank credit facility lender. The agreement limits the
maximum LIBOR base interest rate to 7% on borrowings of up to $30 million, and
expires on January 31, 1999. The cost of the agreement was not material to the
Company.

The 10% senior subordinated notes were issued on January 24, 1997 and mature
in January 2004. The notes are subordinated to borrowings under the credit
facility and contain certain restrictive covenants.

On January 24, 1997, the Company issued a $6,000,000 note to the Loomis
Stockholders Trust (the "NOL note"). The NOL note does not accrue interest and
has a term of fifteen years, subject to mandatory prepayments as, and to the
extent that, the Company realizes a tax benefit attributable to the
utilization of net operating losses of Loomis Holding Corporation available at
the date of the reorganization and acquisition of Wells Fargo Armored. The NOL
note was discounted at 10% over the Company's expected period of repayment of
the principal. The Company expects that its utilization of net operating
losses will result in the NOL note being substantially repaid in 1999.

28
<PAGE>

LOOMIS, FARGO & CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997

Under the Company's previous credit facility that was repaid in connection
with the January 24, 1997 business combination, $15,900,000 in letters of
credit were outstanding at December 31, 1996. Letters of credit of $14,900,000
are outstanding at December 31, 1997 under the Company's bank credit facility.
Remaining commitments available for borrowings or additional letters of credit
at December 31, 1997 were $36,100,000.

Interest of $4,000,000, $3,100,000, $1,300,000, and $10,200,000 was paid
during the years ended June 30, 1995 and 1996, the six months ended December
31, 1996 and the year ended December 31, 1997, respectively.

NOTE 6. LEASES

At December 31, 1997, the scheduled future minimum lease payments under
capital leases are as follows for years ending December 31 (in thousands):

<TABLE>
<S> <C>
1998.............................................................. $ 780
1999.............................................................. 492
2000.............................................................. 69
2001.............................................................. 26
2002.............................................................. 2
------
Total minimum lease payments...................................... 1,369
Less amount representing interest................................. 189
------
Present value of capital lease obligations........................ 1,180
Less current portion of capital lease obligations................. 669
------
Long-term capital lease obligations............................... $ 511
======
</TABLE>

The Company leases various office space and equipment under noncancelable
operating leases expiring on various dates through 2006. The following is a
schedule of future minimum lease payments under noncancelable operating leases
with terms exceeding one year for years ending December 31 (in thousands):

<TABLE>
<S> <C>
1998.............................................................. $12,782
1999.............................................................. 9,014
2000.............................................................. 6,598
2001.............................................................. 4,348
2002.............................................................. 2,465
Thereafter........................................................ 3,997
-------
$39,204
=======
</TABLE>

Rent expense was $2,993,000, $3,093,000, $1,765,000 and $14,521,000,
respectively, for the years ended June 30, 1995 and 1996, the six months ended
December 31, 1996, and the year ended December 31, 1997.

The Company has certain operating leases which contain (i) rent escalation
clauses, some of which are fixed annual increases with others tied to the
Consumer Price Index and (ii) the passthrough of operating expenses and
property taxes. In addition, certain leases contain renewal options.

29
<PAGE>

LOOMIS, FARGO & CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997

NOTE 7. INCOME TAXES

The Company accounts for income taxes using the liability method required by
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes.

Taxes on income from operations for the year ended June 30, 1996 and the six
months ended December 31, 1996 consisted of current federal tax expense.

The reconciliation of income tax attributable to income (loss) before
extraordinary item computed at the federal statutory tax rates to income tax
expense is:

<TABLE>
<CAPTION>
YEAR YEAR SIX MONTHS
ENDED ENDED ENDED YEAR ENDED
JUNE 30, JUNE 30, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
-------- -------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Tax (benefit) at statutory rate.... $ (12) $ 410 $ 764 $(2,639)
Change in valuation allowance...... 228 (418) (977) 1,450
Nondeductible goodwill amortization
and other......................... (216) 86 263 1,189
----- ----- ----- -------
$ -- $ 78 $ 50 $ --
===== ===== ===== =======
</TABLE>

Significant components of the Company's deferred tax assets and liabilities
are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1997
------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets
Net operating loss carryforward...................... $ 5,574 $ 7,491
Minimum and foreign tax credit carryforward.......... 119 535
Receivable valuations and reserves................... 123 2,732
Accrued vacation and bonuses......................... 1,038 2,266
Self-insurance reserve............................... 2,271 3,521
Deferred management fees............................. 630 --
Other accruals....................................... -- 1,188
Other, net........................................... 17 293
------- --------
Total deferred tax assets.......................... 9,772 18,026
Valuation allowance for deferred tax assets............ (6,967) (15,186)
------- --------
Net deferred tax assets................................ 2,805 2,840
Deferred tax liabilities:
Tax over book depreciation........................... 2,138 2,138
Prepaid pension cost................................. 404 456
Other................................................ 263 246
------- --------
Total deferred tax liabilities..................... 2,805 2,840
------- --------
Net deferred tax assets............................ $ -- $ --
======= ========
</TABLE>

The Company has federal net operating loss carryovers of $15,065,000 and
$20,247,000 at December 31, 1996 and 1997, respectively, which expire in 2007
through 2012.

30
<PAGE>

LOOMIS, FARGO & CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997

During the years ended June 30, 1995 and 1996, the six months ended December
31, 1996 and the year ended December 31, 1997, the Company paid income taxes
of $ 0, $84,000, $50,000, and $80,000, respectively.

Valuation allowances of $3,982,000 and $6,769,000 were recognized as of May
5, 1991 and January 24, 1997, respectively. Any subsequent reduction in these
valuation allowances will result in a reduction of the goodwill related to the
acquisitions on those dates. The increase in the valuation allowance results
from the additional net operating loss carryforward created in 1997 and
differences between book and tax accounting for the acquisition of assets and
assumption of liabilities of Wells Fargo Armored.

NOTE 8. BENEFIT PLANS

Employees of the Company participate in a qualified, defined-benefit pension
plan (the "Plan") sponsored by the Company, covering substantially all
employees who meet the eligibility requirements regarding age and length of
service and who are not participants in another plan to which the Company may
contribute. Plan assets are comprised of investments in equity and fixed
income securities. The Company froze future benefits under the Plan as of June
30, 1994. Funding is based on the accrued benefit cost method.

The following table sets forth the funded status of the Plan:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of accumulated benefit
obligations:
Vested............................................... $16,051 $17,109
Nonvested............................................ 78 18
------- -------
Total.............................................. 16,129 17,127
Plan assets at fair value.............................. 16,373 18,177
------- -------
Funded status.......................................... 244 1,050
Unrecognized net loss.................................. 798 90
------- -------
Prepaid pension cost................................... $ 1,042 $ 1,140
======= =======
</TABLE>

A summary of the components of the net periodic pension cost is as follows:

<TABLE>
<CAPTION>
YEAR YEAR SIX MONTHS
ENDED ENDED ENDED YEAR ENDED
JUNE 30, JUNE 30, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
-------- -------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest cost...................... $ 1,195 $ 1,120 $ 563 $ 1,171
Actual return on plan assets....... (1,826) (1,511) (1,444) (2,733)
Deferred gain on plan assets....... 849 362 848 1,464
------- ------- ------- -------
Net periodic pension cost
(income)........................ $ 218 $ (29) $ (33) $ (98)
======= ======= ======= =======
Assumptions:
Discount rate.................... 8.5% 8.0% 7.5% 7.0%
Expected long-term rate of return
on assets....................... 8.0% 8.0% 8.0% 8.0%
</TABLE>

The Company contributes to certain multiemployer, defined-benefit plans
covering certain employees under collective bargaining agreements. Total
expenses of these plans were $789,000, $1,029,000, $593,000 and $1,033,000 for
the years ended June 30, 1995 and 1996, the six months ended December 31, 1996
and the year ended December 31, 1997, respectively.

31
<PAGE>

LOOMIS, FARGO & CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997

The Company also contributes to a 401(k) defined-contribution plan.
Employees in Puerto Rico are currently not eligible to participate in the
401(k) plan; however, the plan covers approximately 90% of the remaining
employees of the Company. The Company matches 25% of employees' contributions
up to a maximum of $188 per employee. Total expenses of the plan were
$108,000, $109,000, $89,000 and $271,000 for the years ended June 30, 1995 and
1996, the six months ended December 31, 1996 and the year ended December 31,
1997, respectively.

In addition to providing pension benefits, the Company had a defined-benefit
postretirement plan that provided medical care to certain employees. The
postretirement plan was contributory and contained other cost-sharing features
such as deductibles and Medicare coordination. The funding policy was to pay
for these benefits as incurred. During the year ended June 30, 1996, the
Company terminated the postretirement benefit plan and made lump-sum payments
totaling approximately $89,000 to current retirees and certain employees,
incurred costs of approximately $150,000 associated with the plan termination
and recognized a gain of $954,000.

NOTE 9. TRANSACTIONS WITH AFFILIATES

The consolidated statements of operations include management fees charged by
affiliates of $350,000 for the years ended June 30, 1995 and 1996, $175,000
for the six months ended December 31, 1996 and $23,000 for the year ended
December 31, 1997. Cumulative management fees of $1,575,000 that had been
accrued and unpaid at December 31, 1996 were paid concurrent with the business
combination. In addition, the Company paid interest of $1,076,000, $1,076,000,
$542,000 and $71,000 to affiliates in the years ended June 30, 1995 and 1996,
the six months ended December 31, 1996 and the year ended December 31, 1997,
respectively.

In the ordinary course of business, the Company purchases services from
various other subsidiaries of Borg-Warner. During 1997, the Company paid
approximately $1.7 million for such services, including electronic security
installation, maintenance and monitoring, physical security, courier services,
and certain shared lease expenses.

Pursuant to the terms of the business combination between Loomis Holding
Corporation and Wells Fargo Armored, the Company has been indemnified by the
former owners of the two companies for environmental liabilities associated
with existing storage tanks and other known and identified environmental
liabilities. The indemnification obligations will survive until December 31,
1998. The Company does not believe that costs related to these environmental
liabilities will have a material impact on the future earnings or financial
position of the Company.

Included in the Company's other receivables are $400,000 receivable from
Borg-Warner and $100,000 receivable from an indemnity trust, (the "Loomis
Indemnity Trust").

NOTE 10. EMPLOYEE COMPENSATION PLANS

Before the reorganization of Loomis Holding Corporation into the Company,
certain key employees of Loomis Holding Corporation were compensated under a
Management Equity Growth and Appreciation Plan (the "MEGA Plan"), under which
Loomis Holding Corporation issued participation units representing unfunded,
unsecured, potential rights to receive deferred compensation. The units vested
over a five-year schedule and required the occurrence of a triggering event
(as defined) before they became exercisable.

Upon the reorganization of the Company and the acquisition of Wells Fargo
Armored, the MEGA Plan was terminated and all of its units canceled. The
Loomis, Fargo & Co. Unitholders Option Plan (the "Unitholders

32
<PAGE>

LOOMIS, FARGO & CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997

Plan") was established, under which options to purchase shares of the
Company's Common Stock were issued to the holders of units under the MEGA Plan
that were substantially equivalent to the canceled units. Options under the
Unitholders Plan are subject to vesting requirements and other limitations
that are substantially similar to those that existed under the MEGA Plan. The
Unitholders Plan also requires a triggering event before the options may be
exercised. A triggering event is the first to occur of (i) any sale or
disposition of more than 1,250,000 shares of Common Stock of the Company by
Wingate Partners to a non-affiliate, (ii) any sale or disposition of
substantially all of the assets of the Company to a non-affiliate, (iii) a
merger of the Company with or into a non-affiliated entity, or (iv) a public
offering or series of offerings producing aggregate gross proceeds of at least
$100 million.

As of December 31, 1997, there are 600,201 options outstanding under the
Unitholder Plan, 488,049 of which are vested. There are 10,978 additional
options outstanding to an employee that are exercisable upon 60 days notice.
The exercise price on both the Unitholders Plan and the additional options
will be approximately $1.96 per share, adjusted for contributions or
distributions to/from the Loomis Stockholders Trust.

On August 15, 1997, the Board of Directors and stockholders of the Company
adopted the Loomis, Fargo & Co. 1997 Stock Option Plan (the "Plan"), pursuant
to which options to purchase up to 1,000,000 shares of the Company's Common
Stock, $0.01 par value ("Common Stock") may be granted. Options granted under
the Plan may be subject to vesting requirements and exercisability
restrictions as may be determined by the Board of Directors or authorized
committee thereof.

As of December 31, 1997, options had been granted to purchase up to 665,000
shares of Common Stock (the "Initial Stock Options"), 645,000 of which were
outstanding. The Initial Stock Options have an exercise price of $7.50 per
share. This exercise price exceeded the fair value of the stock at the date of
grant, therefore no compensation expense has been recorded under the
provisions of APB 25. (See Note 2.) The Initial Stock Options are exercisable
on the tenth anniversary of the grant date, subject to the acceleration
provisions described below, and expire on the eleventh anniversary of such
grant date. The exercisability of the Initial Stock Options shall accelerate
as follows: (i) if, following the date that the Common Stock is first readily
tradable on a national securities exchange or other market system, the daily
closing price of the Common Stock is equal to or greater than a scale of
prices ranging from $10 to $30 for 80 out of 100 trading days, then a
percentage of the Initial Stock Options shall become exercisable based on such
daily closing prices on a sliding scale from January 24, 1998 to January 24,
2002, (ii) in the event of a Change of Control (as defined in the Plan) prior
to there being a public trading market for the Common Stock, a percentage of
the Initial Stock Options shall become exercisable based upon a $10 to $30
price range of the weighted average sale price of shares of Common Stock from
the date of grant to the date of the Change of Control, with the remainder (if
any) to be forfeited upon such Change of Control, and (iii) in the event of a
Change of Control after there is a public trading market for the Common Stock,
the Initial Stock Options shall be exercisable for a percentage equal to the
greater of (x) the then current exercisable percentage of such Initial Stock
Options as set forth in clause (i) above, or (y) the percentage that would
become exercisable upon the occurrence of a Change of Control as set forth in
clause (ii) above.

Statement No. 123 of the Financial Accounting Standards Board requires the
presentation of pro forma information regarding net income (loss) as if the
Company had accounted for its employee stock options under the fair value
method of that statement. Because the exercise prices on these options were
significantly in excess of the fair value of the Company's Common Stock on the
respective dates of grant, the fair value of these options was immaterial.

33
<PAGE>

LOOMIS, FARGO & CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997

NOTE 11. EQUITY TRANSACTIONS

The capital structure of the Company changed with the reorganization of
Loomis Holding Corporation into Loomis, Fargo & Co. and the acquisition of
certain assets and assumption of certain liabilities of Wells Fargo Armored on
January 24, 1997. The 3,500,000 outstanding shares of $.01 par value Loomis
Holding Corporation Series 1 Preferred Stock were redeemed out of the proceeds
of the new financing arrangements. The 2,383,911 outstanding shares of Class A
Loomis Holding Corporation Common Stock and the 268,794 outstanding shares of
Class B Loomis Holding Corporation Common Stock (both having a par value of
$0.01 per share) were exchanged for 5,100,000 shares of Common Stock of
Loomis, Fargo & Co., which were concurrently transferred to the Loomis
Stockholders Trust. (See Note 1.) Under certain circumstances, shares held by
the Loomis Stockholders Trust may be contributed to the Company to satisfy the
exercise of certain stock options. The remaining 4,900,000 outstanding shares
of Common Stock of the Company were issued to a Borg-Warner subsidiary as part
of the purchase price consideration.

The Common Stock of the Company consists of one class and has a $0.01 par
value. Twenty million shares are authorized, ten million of which are issued
and outstanding as described in the preceding paragraph. Ten million shares of
$0.01 Preferred Stock are authorized, but none have been issued at December
31, 1997.

In 1991 and 1992, warrants were issued to certain lenders and shareholders
of Loomis Holding Corporation to purchase an aggregate of 877,646 shares of
Loomis Holding Corporation's Class A Common Stock and 268,794 shares of Loomis
Holding Corporation's Class B Common Stock. On January 23, 1997, all warrant
holders exercised their warrants. The shares issued upon exercise of the
warrants were included in the January 24, 1997 exchange of Common Stock of
Loomis Holding Corporation for Common Stock of the Company.

Concurrent with the business combination on January 24, 1997, the non-
interest bearing NOL note described in Note 5, having a discounted value at
that date of approximately $5,342,000, and net cash consideration of
approximately $8,737,000 were distributed for the benefit of the shareholders
of Loomis Holding Corporation.

34
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Set forth below is certain information with respect to those individuals
who serve as members of the Board of Directors and as executive officers of
the Company. Each of the persons named below holds the positions set forth
opposite his name with each of the Co-Registrants, except that Messrs.
Adorjan, Mattly and Hegi are the only directors constituting the boards of
directors of LFC Armored of Texas Inc. and Loomis, Fargo & Co. of Puerto Rico.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
J. Joe Adorjan.............. 59 Chairman of the Board of Directors
James B. Mattly............. 56 Director, President and Chief Executive Officer
James T. Callier, Jr........ 63 Director
Frederick B. Hegi, Jr....... 54 Director
John D. O'Brien............. 55 Director
Jay I. Applebaum............ 35 Director
Timothy M. Wood............. 50 Director
James K. Jennings, Jr....... 56 Executive Vice President, Chief Financial
Officer and Secretary
Edward H. Hamlett........... 47 Executive Vice President--Sales and Marketing
</TABLE>

There is no family relationship between any of the directors or executive
officers of the Company. Officers of the Company are elected by the Board of
Directors and hold office until their respective successors are duly elected
and qualified.

J. Joe Adorjan has served as a director of Borg-Warner since 1993, Chairman
of the Board of Borg-Warner since January 1996, Chief Executive Officer of
Borg-Warner since October 1995, and President of Borg-Warner since April 1995,
and was elected to the Board of Directors of the Company in January 1997. Mr.
Adorjan was President of Emerson Electric Co. from 1992 to 1995 and Chairman
and Chief Executive Officer of ESCO Electronics Corporation from 1990 to 1992.
Mr. Adorjan also currently serves as a director of California Microwave, Inc.,
The Earthgrains Company, ESCO Electronics Corporation and Goss Graphic
Systems, Inc.

James B. Mattly served as a director and as President and Chief Executive
Officer of Loomis Armored from November 1991 to January 1997 and as a director
of Loomis from May 1991 to January 1997, and was elected to the Board of
Directors of the Company in January 1997. From 1979 to 1990, Mr. Mattly served
as Regional Vice President of Browning-Ferris Industries ("BFI") and as Chief
Operating Officer of its southwest region. Mr. Mattly has also served as Vice
President--Operations for Butler Aviation (1977-79) and Regional Vice
President of Wells Fargo Armored (1973-77).

James T. Callier, Jr. served as a director of Loomis and Loomis Armored from
May 1991 to January 1997, and was elected to the Board of Directors of the
Company in January 1997. Mr. Callier is an indirect general partner of Wingate
Partners and a general partner of Wingate Affiliates, L.P., and has served as
President of Callier Consulting, Inc. since 1985. From March 1995 to August
1997, Mr. Callier served as a director of United Stationers, Inc. and had
served as a director of Associated Stationers Inc., the predecessor to United
Stationers, Inc., from January 1992 through March 1995. Mr. Callier also
currently serves as Chairman of the Board of Century Products Company.

Frederick B. Hegi, Jr. served as Chairman of the Board of Loomis and Loomis
Armored from May 1991 to January 1997, and was elected to the Board of
Directors of the Company in August 1996. Mr. Hegi is an indirect general
partner of Wingate Partners and a general partner of Wingate Affiliates, L.P.
Since May 1982, Mr. Hegi

35
<PAGE>

has served as President of Valley View Capital Corporation. Mr. Hegi served as
a director of Associated Holdings, Inc. from January 1992 through March 1995,
a director of United Stationers Inc. since March 1995 and Chairman of the
Board since November 1996. Mr. Hegi also currently serves as Chairman of the
Board of ITCO Holding Company, Inc., Tahoka First Bancorp, Inc. and Cedar
Creek Bancshares, Inc. He also serves as a director of Lone Star Technologies,
Inc. and Cattle Resources, Inc.

John D. O'Brien has served as Senior Vice President of Borg-Warner since
1993 and was Vice President of Borg-Warner from 1987 to 1993, and was elected
to the Board of Directors of the Company in January 1997.

Timothy M. Wood has served as Vice President, Finance of Borg-Warner since
1994 and was Vice President and Controller of Borg-Warner from 1987 to 1994,
and was elected to the Board of Directors of the Company in January 1997.

Jay I. Applebaum served as Secretary for Loomis and Loomis Armored from May
1991 to January 1997 and was elected to the board of directors of the Company
in February 1997. Since June 1989, Mr. Applebaum has been associated with
Wingate Partners.

James K. Jennings, Jr. served as Chief Financial Officer of Loomis and
Loomis Armored from March 1994 to January 1997, and was elected to the offices
of Executive Vice President, Chief Financial Officer and Secretary of the
Company in January 1997. Prior to joining Loomis, Mr. Jennings held various
management positions at HWC Distribution Corporation (a distributor of
electrical and electronic wire and cable), including as President and as a
director from February 1990 to September 1993 and as Executive Vice President
and Chief Financial Officer from 1980 to February 1990.

Edward H. Hamlett served as a director of Loomis from February 1992 to
January 1997 and as Vice President of Sales and Marketing from February 1996
to January 1997, and was elected to the office of Executive Vice President of
the Company in January 1997. From May 1979 to May 1995, Mr. Hamlett served as
Vice President, Sales and Marketing of BFI. Prior to joining BFI, Mr. Hamlett
held regional sales and branch management positions with Wells Fargo Armored
from 1973 to 1977.

ITEM 11. EXECUTIVE COMPENSATION

Directors who are officers, employees or otherwise an affiliate of the
Company do not presently receive compensation for their services as directors.
Directors of the Company are entitled to reimbursement of their reasonable
out-of-pocket expenses in connection with their travel to and attendance at
meetings of the board of directors or committees thereof. No determination has
yet been made whether annual fees or board attendance fees, if any, will be
paid to future directors who are not also officers, employees, or otherwise an
affiliate of the Company.

Compensation Committee Interlocks and Insider Participation

John D. O'Brien and James T. Callier, Jr. comprise the compensation
committee of the Board of Directors of the Company. Mr. O'Brien is a director
and executive officer of Borg-Warner, which received certain benefits from the
transactions described in Item 13. Mr. Callier is an indirect general partner
of Wingate Partners and a general partner of Wingate Affiliates, L.P. Wingate
Partners received certain benefits from the transactions described in Item 13.

Benefit Plans

Before the business combination in January 1997, certain key employees of
Loomis were compensated under a Management Equity Growth and Appreciation Plan
(the "MEGA Plan"), under which Loomis issued participation units representing
unfunded, unsecured, potential rights to receive deferred compensation. The
units vested over a five-year schedule and required the occurrence of a
triggering event (as defined) before they became exercisable.

36
<PAGE>

Upon the business combination, the MEGA Plan was terminated and all of its
units canceled. The Loomis, Fargo & Co. Unitholders Option Plan (the
"Unitholders Plan") was established, under which options to purchase shares of
the Company's Common Stock were issued to the holders of units under the MEGA
Plan that were substantially equivalent to the canceled units. Options under
the Unitholders Plan are subject to vesting requirements and other limitations
that are substantially similar to those that existed with respect to the units
under the MEGA Plan. The Unitholders Plan also requires a triggering event
before the options may be exercised. A triggering event is the first to occur
of (i) any sale or disposition of more than 1,250,000 shares of Common Stock
of the Company by Wingate Partners to a non-affiliate, (ii) any sale or
disposition of substantially all of the assets of the Company to a non-
affiliate, (iii) a merger of the Company with or into a non-affiliated entity,
or (iv) a public offering or series of offerings producing aggregate gross
proceeds of at least $100 million. Any shares issued upon exercise of options
under the Unitholders Plan will be distributed to the Company by a business
trust, the beneficiaries of which are the former stockholders of Loomis (the
"Loomis Stockholders Trust").

As of March 20, 1998, there are 600,201 options outstanding under the
Unitholders Plan, 496,434 of which are vested. There are 10,978 additional
options outstanding to an employee that are exercisable upon 60 days notice.
The exercise price on both the Unitholders Plan and the additional options
will be approximately $1.96 per share, adjusted for contributions or
distributions to/from the Loomis Stockholders Trust.

On August 15, 1997, the Board of Directors and stockholders of the Company
adopted the Loomis, Fargo & Co. 1997 Stock Option Plan (the "Plan"), pursuant
to which the Board of Directors (or authorized committee thereof) is
authorized to grant options (the "Options") to purchase up to 1,000,000 shares
of the Company's Common Stock, $0.01 par value ("Common Stock"), subject to
adjustment upon stock splits, stock dividends, reclassifications and similar
changes to the capital structure of the Company. Options granted under the
Plan may be subject to vesting requirements and exercisability restrictions as
may be determined by the Board of Directors or authorized committee thereof.

As of March 20, 1998, options had been granted to purchase up to 665,000
shares of Common Stock (the "Initial Stock Options"), of which 635,000 remain
outstanding. The Initial Stock Options have an exercise price of $7.50 per
share. The Initial Stock Options are exercisable on the tenth anniversary of
the grant date, subject to the acceleration provisions described below, and
expire on the eleventh anniversary of such grant date. The exercisability of
the Initial Stock Options shall accelerate as follows: (i) if, following the
date that the Common Stock is first readily tradable on a national securities
exchange or other market system, the daily closing price of the Common Stock
is equal to or greater than a scale of prices ranging from $10 to $30 for 80
out of 100 trading days, then a percentage of the Initial Stock Options shall
become exercisable based on such daily closing prices on a sliding scale from
January 24, 1998 to January 24, 2002, (ii) in the event of a Change of Control
(as defined in the Plan) prior to there being a public trading market for the
Common Stock, a percentage of the Initial Stock Options shall become
exercisable based upon a $10 to $30 price range of the weighted average sale
price of shares of Common Stock from the date of grant to the date of the
Change of Control, with the remainder (if any) to be forfeited upon such
Change of Control, and (iii) in the event of a Change of Control, after there
is a public trading market for the Common Stock, the Initial Stock Options
shall be exercisable for a percentage equal to the greater of (x) the then
current exercisable percentage of such Initial Stock Options as set forth in
clause (i) above, or (y) the percentage that would become exercisable upon the
occurrence of a Change of Control as set forth in clause (ii) above.

37
<PAGE>

Summary of Compensation

The following table sets forth the compensation awarded to or earned by the
Chief Executive Officer of the Company and the other most highly compensated
executive officers (the "Named Executive Officers") of the Company. The
compensation was paid to such Named Executive Officers by Loomis Armored in
the years ended June 30, 1995 and 1996, the six months ended December 31, 1996
and the first twenty-three days of January 1997. The compensation was paid by
the Company for the remainder of 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND PRINCIPAL ---------------------- ALL OTHER AWARDS
POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($)(6) (SECURITIES)
------------------ ---- ---------- --------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
James B. Mattly......... 1996(1) 362,500 138 -- 49,963(7)
Director, President and 1996(2) 175,000 200 -- 16,950
Chief Executive Officer 1997(3) 443,974 250 -- 167,874
Edward H. Hamlett....... 1996(1) 66,667(4) -- 2,860 16,950
Executive Vice
President-- 1996(2) 80,000 -- 3,432 5,085
Sales and Marketing 1997(3) 196,987 250 7,462 50,743
Tommy E. Harden......... 1996(1) 100,000 2,938 6,864 --
Executive Vice
President-- 1996(2) 50,000 200 3,432 5,085
Fleet Management 1997(3) 146,987 250 7,462 30,924
James K. Jennings, Jr... 1996(1) 150,000 2,938 6,864 --
Executive Vice
President, Chief 1996(2) 75,000 200 3,452 5,085
Financial Officer and
Secretary 1997(3) 196,987 250 7,462 50,924
Bruce J. Magelky........ 1996(1) 100,000 2,938 6,864 --
Executive Vice
President-- 1996(2) 50,000 200 3,432 5,085
Security and Operations 1997(3) 146,987 250 7,462 40,924
Thomas L. Roth.......... 1997(3) 139,850(5) -- 22,190 30,000
Executive Vice
President--
Human Resources
Michael Tawney.......... 1996(1) 100,000 2,938 6,864 --
Executive Vice
President-- 1996(2) 50,000 200 3,432 5,085
Risk Management 1997(3) 146,987 250 7,462 30,924
</TABLE>
- --------
(1) Compensation paid by Loomis Armored for the year ended June 30, 1996.
(2) Compensation paid by Loomis Armored for the six months ended December 31,
1996.
(3) Compensation paid by the Company for the year ended December 31, 1997.
(4) Represents compensation for the period of February 2, 1996, when Mr.
Hamlett became employed by the Company, to June 30, 1996.
(5) Represents compensation for the period of January 24, 1997, when Mr. Roth
became employed by the Company, to December 31, 1997.
(6) Reflects automobile allowances paid to the executive vice presidents, and
a $20,003 moving allowance paid to Mr. Roth in 1997.
(7) Units shown were issuable to Mr. Mattly only upon the occurrence of
certain contingencies on or prior to June 30, 1998.

Mattly Employment Agreement. Mr. Mattly is a party to an employment
agreement with the Company pursuant to which he serves as President and Chief
Executive Officer. Mr. Mattly's employment agreement is subject to automatic
successive one-year renewal terms. Mr. Mattly's current base salary is
$450,000, subject to increase from time to time at the sole discretion of the
board of directors of the Company. In addition, Mr. Mattly may receive a bonus
generally recognizable following the end of the Company's fiscal year in an
amount up to

38
<PAGE>

100% of his then current base salary at the sole discretion of the board of
directors of the Company. The employment agreement also provides for
participation by Mr. Mattly in the Company's general life, health and
disability plans generally applicable to senior executives of the Company, as
well as reimbursement of reasonable business expenses. Mr. Mattly's employment
agreement includes certain noncompetition and confidentiality provisions.

In May 1996 and January 1997, the provisions of Mr. Mattly's employment
agreement were amended to provide for the issuance of 166,543 options under
the Unitholders Plan upon the occurrence of certain contingencies on or prior
to December 31, 1999.

The following table sets forth information on option grants to the Chief
Executive Officer of the Company and the Named Executive Officers in the
fiscal year ended 1997.
<TABLE>
<CAPTION>
POTENTIAL VALUE AT
ASSUMED ANNUAL RATE
OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(3)
-------------------------------------------------- ----------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR (%) ($/SHARE) DATE 5% ($) 10% ($)
---- ----------- --------------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
James B. Mattly......... 241,331(1) 38.7%(1) $1.96 (1) 1,097,823(4) 1,509,188(4)
160,000(2) 24.1%(2) 7.50 August 2008 -- --
Edward H. Hamlett....... 22,779(1) 3.7%(1) 1.96 (1) 103,622(4) 142,451(4)
50,000(2) 7.5%(2) 7.50 August 2008 -- --
Tommy E. Harden......... 28,317(1) 4.5%(1) 1.96 (1) 128,815(4) 177,083(4)
30,000(2) 4.5%(2) 7.50 August 2008 -- --
James K. Jennings, Jr... 28,317(1) 4.5%(1) 1.96 (1) 128,815(4) 177,083(4)
50,000(2) 7.5%(2) 7.50 August 2008 -- --
Bruce J. Magelky........ 28,317(1) 4.5%(1) 1.96 (1) 128,815(4) 177,083(4)
40,000(2) 6.0%(2) 7.50 August 2008 -- --
Thomas L. Roth.......... 30,000(2) 4.5%(2) 7.50 August 2008 -- --
Michael Tawney.......... 28,317(1) 4.5%(1) 1.96 (1) 128,815(4) 177,083(4)
30,000(2) 4.5%(2) 7.50 August 2008 -- --
</TABLE>

OPTION GRANTS IN LAST FISCAL YEAR

- --------
(1) These options were granted under the Unitholders Plan at the time of the
business combination. The units of the MEGA Plan were converted pro rata
into options to purchase Common Stock under the Unitholders Plan and the
MEGA Plan was terminated. Options converted from already-vested MEGA units
retained their vested status. Remaining options vest in five equal annual
installments commencing on the award date. These options have no
established expiration date and are exercisable only upon the occurrence
of certain events. See discussion under "Benefit Plans" in this Item.
(2) These options were granted under the 1997 Stock Option Plan. They vest in
August 2007.
(3) Because the Company's stock is not publicly traded, these values are based
on management's estimate of the fair value of the Company's Common Stock
at January 24, 1997.
(4) Values assume that a payment event (as defined in the Unitholders Option
Plan) occurs five years from January 24, 1997.

39
<PAGE>

The following table provides information on the value of unexercised options
held at December 31, 1997 by the Chief Executive Officer of the Company and
the Named Executive Officers.

AGGREGATE FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR END IN-THE-MONEY OPTIONS AT
(#) FISCAL YEAR END ($)(2)
---------------------------- ----------------------------
NAME EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE(1)
---- ---------------------------- ----------------------------
<S> <C> <C>
James B. Mattly......... --/401,331 --/--
Edward H. Hamlett....... 10,978/72,779 4,172/--
Tommy E. Harden......... --/58,317 --/--
James K. Jennings, Jr... --/78,317 --/--
Bruce J. Magelky........ --/68,317 --/--
Thomas L. Roth.......... --/30,000 --/--
Michael Tawney.......... --/58,317 --/--
</TABLE>
- --------
(1) No options under either the Unitholder Option Plan or the 1997 Stock
Option Plan are exercisable at December 31, 1997.
(2) Unexercised options are out-of-the-money at December 31, 1997. Because the
Company's stock is not publicly traded, these values are based on
management's estimate of the fair value of the Company's Common Stock at
December 31, 1997.

40
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the beneficial ownership of Common Stock as
of December 31, 1997 by (i) each person known to the Company to beneficially
own more than 5% of the Common Stock, (ii) each of the directors of the
Company, (iii) each of the Named Executive Officers, and (iv) all directors
and Named Executive Officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK
------------------
NUMBER OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF CLASS
------------------------------------ --------- --------
<S> <C> <C>
Loomis Stockholders Trust................................... 5,100,000 51.0%
c/o Wingate Partners, L.P.
750 N. St. Paul Street, Suite 1200
Dallas, Texas 75201
Wingate Partners, L.P.(1)(2)................................ 4,220,566 42.2%
750 N. St. Paul Street, Suite 1200
Dallas, Texas 75201
Key Capital Corporation(1).................................. 516,774 5.2%
127 Public Square, Fourth Floor
Cleveland, Ohio 44114
Wells Fargo Armored Service Corporation..................... 4,900,000 49.0%
200 South Michigan Avenue
Chicago, Illinois 60604
Borg-Warner Security Corporation(3)......................... 4,900,000 49.0%
200 South Michigan Avenue
Chicago, Illinois 60604
J. Joe Adorjan(4)........................................... -- *
James B. Mattly(1).......................................... 101,752 1.0%
James T. Callier, Jr.(5).................................... -- *
Frederick B. Hegi, Jr.(5)(6)................................ -- *
John D. O'Brien(4).......................................... -- *
Jay I. Applebaum(1)......................................... 12,318 *
Timothy M. Wood(4).......................................... -- *
Edward H. Hamlett(7)........................................ 10,978 *
Tommy E. Harden............................................. -- *
James K. Jennings, Jr....................................... -- *
Bruce J. Magelky............................................ -- *
Thomas L. Roth.............................................. -- *
Michael Tawney.............................................. -- *
All directors and executive officers as a group (13
persons)(8)................................................ 124,802 1.2%
</TABLE>
- --------
* Represents less than 1%.
(1) Reflects such holder's beneficial ownership of Common Stock in accordance
with its percentage interest of trust units in the Loomis Stockholders
Trust. All of such shares of Common Stock are held of record by the Loomis
Stockholders Trust pursuant to the Loomis Stockholders Trust Agreement
and, therefore, the number of shares and percentage of beneficial
ownership of the Company attributable to such holder is subject to change
upon the acquisition or disposition of shares of Common Stock held of
record by the Loomis Stockholders Trust.
(2) Includes the beneficial ownership of 4,141,126 shares by Wingate Partners
and 79,440 shares by Wingate Affiliates, L.P.
(3) Borg-Warner is the sole stockholder of Wells Fargo Armored and, therefore,
may be deemed to beneficially own all shares of Common Stock owned of
record by Wells Fargo Armored.
(4) Does not include 4,900,000 shares of Common Stock held of record by Wells
Fargo Armored, a wholly-owned subsidiary of Borg-Warner. Mr. Adorjan is a
director and each of Messrs. Adorjan, O'Brien and Wood are executive
officers of Borg-Warner and, therefore, may be deemed to be a beneficial
owner of some or all of such shares. Each of Messrs. Adorjan, O'Brien and
Wood disclaims beneficial ownership of all shares of Common Stock not held
of record by him.
(5) Does not include an aggregate of 4,220,566 shares of Common Stock
beneficially owned by Wingate Partners and Wingate Affiliates, L.P. Each
of Messrs. Callier and Hegi are indirect general partners of Wingate
Partners and general partners of Wingate Affiliates, L.P. and, therefore,
may be deemed to beneficially own some or all of the shares of Common
Stock owned by such entities. Each of Messrs. Callier and Hegi disclaims
beneficial ownership of all shares of Common Stock not held of record by
him.
(6) Does not include 5,100,000 shares of Common Stock held by the Loomis
Stockholders Trust. Mr. Hegi is the manager of the Loomis Stockholders
Trust and, therefore, may be deemed to beneficially own the shares of
Common Stock held by the Loomis Stockholders Trust. Mr. Hegi disclaims
beneficial ownership of all shares of Common Stock not held of record by
him.
(7) Includes options exercisable within 60 days to purchase up to 10,978
shares of Common Stock.
(8) Includes (i) 10,978 shares of Common Stock issuable to Mr. Hamlett
pursuant to an option exercisable within 60 days and (ii) 101,533 and
12,291 shares of Common Stock beneficially owned by Mr. Mattly and Mr.
Applebaum, respectively, through the Loomis Stockholders Trust following
the delivery to the Company of 10,978 shares of Common Stock by the Loomis
Stockholders Trust pursuant to a stock contribution agreement upon the
exercise of Mr. Hamlett's stock option.

41
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

THE BUSINESS COMBINATION

On November 28, 1996, Borg-Warner, Wells Fargo Armored, the Company, Loomis,
Loomis Armored and the Loomis Stockholders Trust entered into a Contribution
Agreement (the "Contribution Agreement"), pursuant to which, on January 24,
1997, the Loomis Stockholders Trust contributed all of the issued and
outstanding Common Stock of Loomis and Wells Fargo Armored contributed
substantially all of its assets and certain liabilities to the Company in
exchange for 51% and 49%, respectively, of the Common Stock of the Company.

STOCKHOLDERS AGREEMENT

In conjunction with the business combination, the Company, Wells Fargo
Armored, the Loomis Stockholders Trust and Wingate Partners entered into a
stockholders agreement (the "Stockholders Agreement"). The Stockholders
Agreement provides that the Board of Directors initially will consist of seven
directors: the Chief Executive Officer of the Company, three directors
nominated by the Loomis Stockholders Trust, and three directors nominated by
Wells Fargo Armored. The right to designate directors pursuant to the
Stockholders Agreement shall be adjusted as to Wells Fargo Armored or the
Loomis Stockholders Trust (each a "Designating Party"), as the case may be, as
follows: (i) if a Designating Party shall own beneficially less than 35% but
at least 15% of the fully diluted Common Stock, such Designating Party shall
be entitled to designate only two directors pursuant to the Stockholders
Agreement, (ii) if such Designating Party shall own beneficially less than 15%
but at least 10% of the fully diluted Common Stock, such Designating Party
shall be entitled to designate only one director and (iii) if such Designating
Party shall cease to own beneficially at least 10% of the fully diluted Common
Stock, the right of such Designating Party to designate directors pursuant to
the Stockholders Agreement shall terminate. The Board of Directors shall be
empowered to create an Executive Committee to act on behalf of the Board of
Directors, subject to any limitations under applicable law. The Executive
Committee shall consist of three directors, such committee to be comprised of
the Chief Executive Officer of the Company, one director designated by Wells
Fargo Armored and one director designated by the Loomis Stockholders Trust.
Pursuant to the Stockholders Agreement, the affirmative vote of at least five
of the seven directors, or the unanimous consent of the Executive Committee,
is required for the Company to engage in certain specified activities.

The Stockholders Agreement prohibits the sale, transfer or disposition of
any shares of Common Stock by Wells Fargo Armored or the Loomis Stockholders
Trust for a period of three years following the business combination without
the prior written consent of the other. After such three-year period, shares
of Common Stock may be sold, transferred or disposed of only in accordance
with the provisions of the Stockholders Agreement, which include rights of
first refusal and co-sale rights. The issuance by the Company of Common Stock
or securities exchangeable or convertible into Common Stock will also be
subject to certain preemptive rights of the stockholders.

Each time the Company proposes to register any Common Stock pursuant to the
Securities Act, the stockholders shall be entitled to include their shares of
Common Stock in such registered offering; provided, however, that the Company
may at any time withdraw or cease proceeding with such registration if it
shall at the same time withdraw or cease proceeding with the registration of
all other shares of Common Stock originally proposed to be registered;
provided, further, that if the managing underwriter in any such proposed
offering advises the Company in writing that the number of shares of Common
Stock requested to be included in the registration by all persons (including
the Company) exceeds the number of shares of Common Stock which can be sold in
such offering without having an adverse effect on such offering, including
without limitation, the price at which such shares can be sold (the "Maximum
Offering Size"), the Company will be obligated to include in such registration
only (i) first, any and all shares of Common Stock for sale by the Company,
(ii) second, to the extent the Maximum Offering Size exceeds the number of
shares to be offered by the Company, each of the Loomis Stockholders Trust, on
the one hand, and Wells Fargo Armored, on the other hand, shall be entitled to
include one-half of such available shares in the registration and (iii) third,
to the extent any remaining shares

42
<PAGE>

which may be sold in such offering, pro rata among any other shares of Common
Stock requested to be included pursuant to any other registration rights that
may have been, or may hereafter be, granted by the Company (on the basis of
the total number of shares of Common Stock that each holder has requested to
be registered). Pursuant to the terms of the Stockholders Agreement, the
Company has agreed to indemnify participating stockholders against certain
liabilities arising from a registration statement filed in connection with
such offering.

The Stockholders Agreement (except for certain limited provisions including
the registration rights described above, which survive indefinitely) shall
terminate upon the earliest to occur of (i) the consummation of an
underwritten public offering or series of offerings pursuant to an effective
registration statement under the Securities Act for cash of Common Stock
producing aggregate gross proceeds to the Company and any holders selling
shares of Common Stock thereunder of at least $100 million, (ii) the sale of
all or substantially all of the assets of the Company, or the merger or
consolidation of the Company with any person as a result of which the holders
hold less than 35% of the Common Stock, (iii) the date one year after the date
of a Change of Control (as defined in the Stockholders Agreement) of Borg-
Warner, (iv) the foreclosure on or forced sale of at least 50% of the Common
Stock held by Wells Fargo Armored as of the business combination by any lender
of Borg-Warner or Wells Fargo Armored, and (v) the date any holder and its
affiliates become the beneficial owners of all of the outstanding Common
Stock.

PAYMENTS TO AFFILIATES

At the business combination closing, the Company made certain payments to
the Loomis Stockholders Trust and related entities and to Wells Fargo Armored
and related entities, pursuant to the terms of the Contribution Agreement, and
Loomis redeemed $3.5 million aggregate principal amount of Loomis Preferred
Stock. All issued and outstanding shares of Loomis Preferred Stock were owned
of record and beneficially by Wingate Partners and its affiliates.
Additionally, at the closing Loomis Armored repaid all of its outstanding 14%
senior subordinated notes due September 30, 1999, of which approximately $7.5
million was paid to Wingate Partners and its affiliates, approximately $2.7
million was paid to Key Capital Corporation and approximately $175,000 was
paid to James B. Mattly, President and Chief Executive Officer of the Company.

FINANCIAL ADVISORY AGREEMENT

Pursuant to a Financial Advisory Agreement (the "Financial Advisory
Agreement") dated as of May 6, 1991 among Loomis, Loomis Armored and Wingate
Partners, Wingate Partners (i) provided certain financial advisory services to
Loomis and Loomis Armored in connection with the merger (the "Merger") of
Loomis Acquisition Corporation, a wholly-owned subsidiary of Loomis, with and
into Loomis Armored, in exchange for a one-time fee of $750,000 (which was
paid in May 1991 upon consummation of the Merger), and (ii) agreed to provide
additional financial advisory services to Loomis and Loomis Armored in
exchange for a fee of $350,000 per year. Loomis Armored was also obligated to
reimburse Wingate Partners for its out-of-pocket expenses and indemnify
Wingate Partners and its affiliates from losses incurred in connection with
the provision of these services. The Financial Advisory Agreement was
scheduled to expire on May 6, 2001 (the "Primary Term"), provided that it
would have continued in effect on a year-to-year basis thereafter unless
terminated in writing by one of the parties on or before the thirtieth day
prior to the expiration of the Primary Term or prior to the expiration of any
subsequent annual term. At the closing of the business combination, all
accrued management fees and expenses pursuant to the Financial Advisory
Agreement totalling $1,598,000 were paid to Wingate Partners for the period up
to and including the closing date and the Financial Advisory Agreement was
terminated.

43
<PAGE>

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) The following documents are filed as a part of this report:

(1) Consolidated Financial Statements of Loomis, Fargo & Co.: See Item 8
of this report.

(2) Financial Statement Schedules: Valuation and Qualifying Accounts--
See Schedule II to this report.

(3)Exhibits (numbered in accordance with Item 601 of Regulation S-K):

<TABLE>
<C> <S>
2.1 --Contribution Agreement, dated as of November 28, 1996, among the
Company, LFC Holding Corporation (formerly known as Loomis Holding
Corporation) ("LFC Holding") Loomis Fargo & Co. (Texas) (formerly known
as Loomis Armored Inc. ("Loomis, Fargo Texas"), Borg-Warner Security
Corporation, Wells Fargo Armored Service Corporation, and the Loomis
Stockholders Trust.*
2.2 --Business Trust Agreement, dated as of November 27, 1996, among Wingate
Partners, L.P. and Wingate Affiliates, L.P., as initial grantors,
Wilmington Trust Company, as trustee, Frederick B. Hegi, Jr., as
manager, and the Unitholders parties thereto.*
2.3 --Trust Unit Exchange Agreement, dated as of January 24, 1997, among the
Loomis Stockholders Trust and the Exchanging Shareholders parties
thereto.*
3.1 --Certificate of Incorporation of Loomis, Fargo & Co. (Delaware), as
amended.*
3.2 --Bylaws of Loomis, Fargo & Co. (Delaware).*
3.3 --Certificate of Incorporation of LFC Holding, as amended.*
3.4 --Bylaws of LFC Holding, as amended.*
3.5 --Articles of Incorporation of Loomis, Fargo Texas, as amended.*
3.6 --Restated Bylaws of Loomis, Fargo Texas.*
3.7 --Articles of Incorporation of LFC Armored of Texas Inc., as amended.*
3.8 --Bylaws of LFC Armored of Texas, Inc.*
3.9 --Amended and Restated Articles of Incorporation of Loomis, Fargo & Co.
of Puerto Rico, as amended.*
3.10 --Bylaws of Loomis, Fargo & Co. of Puerto Rico.*
4.1 --Indenture, dated as of January 24, 1997, among the Company, as Issuer,
LFC Holding, Loomis Fargo Texas, LFC Armored of Texas Inc. (formerly
known as Wells Fargo Armored Service Corporation of Texas) ("LFC of
Texas"), and Loomis, Fargo & Co of Puerto Rico (formerly known as Wells
Fargo Armored Service Corporation of Puerto Rico) ("LFC of Puerto
Rico"), as Guarantors, and Marine Midland Bank, as trustee.*
4.2 --[Intentionally Omitted.]
4.3 --Form of 10% Senior Subordinated Note (included in Exhibit 4.1, Exhibit
A-3).*
4.4 --Registration Rights Agreement, dated as of January 24, 1997, among
Loomis, the Company, LFC Holding, Loomis, Fargo Texas, LFC of Texas, LFC
of Puerto Rico and Lehman Brothers Inc. and NationsBanc Capital Markets,
Inc.*
4.5 --Purchase Agreement, dated as of January 17, 1997, among the Company,
LFC Holding, Loomis, Fargo Texas and Lehman Brothers Inc. and
NationsBanc Capital Markets, Inc., as initial purchasers.*
10.1 --Credit Agreement, dated as of January 24, 1997, among the Company, as
borrower, the several lenders parties thereto, Lehman Commercial Paper
Inc. ("LCPI") and NationsBank of Texas, N.A. ("NationsBank"), as
arrangers, LCPI and NationsBanc Capital Markets, Inc, as syndication
agents, LCPI as documentation agent, and NationsBank as administrative
agent.*
10.2 --Guarantee and Collateral Agreement made by the Company, LFC Holding,
Loomis, Fargo Texas, LFC of Texas and LFC of Puerto Rico, in favor of
NationsBank of Texas, N.A.*
</TABLE>

44
<PAGE>

<TABLE>
<C> <S>
10.3 --Stockholders Agreement dated as of January 24, 1997 among the Company,
Wells Fargo Armored Service Corporation, the Loomis Stockholders Trust
and Wingate Partners, L.P.*
10.4 --Loomis Indemnity Trust Agreement, dated as of January 24, 1997, among
the Company, the Loomis Stockholders Trust, and Frederick B. Hegi, Jr.,
as trustee.*
10.5 --Excess Claims Assumption Agreement, dated as of January 24, 1997,
among the Company, LFC Holding, Loomis, Fargo Texas, and the Loomis
Stockholders Trust.*
10.6 --Unitholders Option Plan and Agreement, dated as of January 24, 1997,
among the Company and the Unitholders signatories thereto.*+
10.7 --Stock Contribution Agreement, dated as of January 24, 1997, between
the Company and the Loomis Stockholders Trust.*
10.8 --NOL Promissory Note, dated as of January 24, 1997, of the Company in
the principal amount of $6,000,000, payable to the Loomis Stockholders
Trust.*
10.9 --Fleet Lease Agreement, dated as of December 2, 1996, between
Associates Leasing, Inc. and Wells Fargo Armored Service Corporation.*
10.10 --Transfer and Assumption Agreement, dated as of January 2, 1997, among
Wells Fargo Armored Service Corporation, Borg-Warner Security
Corporation, the Company and Associates Leasing, Inc.*
10.11 --Transition Services Agreement, dated as of January 24, 1997, between
the Company and Pony Express Courier Corp.*
10.12 --Employment Agreement, dated as of November 11, 1991, as amended,
between LFC Holding Corporation (formerly known as Loomis Holding
Corporation) and James B. Mattly.*+
10.13 --Loomis, Fargo & Co. 1997 Stock Option Plan.@+
21.1 --Subsidiaries of the Company.*
27.1 --Financial Data Schedule for Loomis, Fargo & Co.**
</TABLE>
- --------
* Incorporated by reference to the Registration Statement on Form S-1 (File
No. 333-24689) of Loomis, Fargo & Co. initially filed with the Securities
and Exchange Commission on April 7, 1997, as amended.
@ Incorporated by reference to the Quarterly Report on Form 10-Q of Loomis,
Fargo & Co. filed with the Securities and Exchange Commission on November
14, 1997.
** Filed herewith.
+ Management contract or compensatory plan or arrangement.

(b) Reports on Form 8-K

No reports on Form 8-K were filed by the Company during the most recent
quarter for which this report was filed.

45
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.

Loomis, Fargo & Co., a Delaware
corporation

/s/ James K. Jennings, Jr.
By: _________________________________
James K. Jennings, Jr.
Executive Vice President and
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<S> <C>
</TABLE>
SIGNATURE TITLE DATE

/s/ J. Joe Adorjan Chairman of the March 30, 1998
- ----------------------------------- Board, and Director
J. Joe Adorjan of the Registrant
listed above

/s/ James B. Mattly President, Chief March 30, 1998
- ----------------------------------- Executive Officer
James B. Mattly and Director of the
Registrant listed
above (Principal
Executive Officer)

/s/ James K. Jennings, Jr. Executive Vice March 30, 1998
- ----------------------------------- President, Chief
James K. Jennings, Jr. Financial Officer of
the Registrant listed
above (Principal
Financial and
Accounting Officer)

/s/ Frederick B. Hegi, Jr. Director of the March 30, 1998
- ----------------------------------- Registrant listed
Frederick B. Hegi, Jr. above

/s/ Timothy M. Wood Director of the March 30, 1998
- ----------------------------------- Registrant listed
Timothy M. Wood above

/s/ Jay I. Applebaum Director of the March 30, 1998
- ----------------------------------- Registrant listed
Jay I. Applebaum above

/s/ John D. O'Brien Director of the March 30, 1998
- ----------------------------------- Registrant listed
John D. O'Brien above

/s/James T. Callier, Jr. Director of the March 30, 1998
- ----------------------------------- Registrant listed
James T. Callier, Jr. above

46
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

LFC Holding Corporation

/s/ James K. Jennings, Jr.
By: _________________________________
James K. Jennings, Jr.
Executive Vice President and
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE

/s/ J. Joe Adorjan Chairman of the March 30, 1998
- ----------------------------------- Board, and Director
J. Joe Adorjan of the Registrant
listed above

/s/ James B. Mattly President, Chief March 30, 1998
- ----------------------------------- Executive Officer
James B. Mattly and Director of the
Registrant listed
above (Principal
Executive Officer)

/s/ James K. Jennings, Jr. Executive Vice March 30, 1998
- ----------------------------------- President and Chief
James K. Jennings, Jr. Financial Officer of
the Registrant listed
above (Principal
Financial and
Accounting Officer)

/s/ Frederick B. Hegi, Jr. Director of the March 30, 1998
- ----------------------------------- Registrant listed
Frederick B. Hegi, Jr. above

/s/ Timothy M. Wood Director of the March 30, 1998
- ----------------------------------- Registrant listed
Timothy M. Wood above

/s/ Jay I. Applebaum Director of the March 30, 1998
- ----------------------------------- Registrant listed
Jay I. Applebaum above

/s/ John D. O'Brien Director of the March 30, 1998
- ----------------------------------- Registrant listed
John D. O'Brien above

/s/ James T. Callier, Jr. Director of the March 30, 1998
- ----------------------------------- Registrant listed
James T. Callier, Jr. above

47
<PAGE>

SIGNATURES

Loomis, Fargo & Co., a Texas
corporation

/s/ James K. Jennings, Jr.
By: _________________________________
James K. Jennings, Jr.
Executive Vice President and
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<S> <C>
</TABLE>
SIGNATURE TITLE DATE

/s/ J. Joe Adorjan Chairman of the March 30, 1998
- ----------------------------------- Board, and Director
J. Joe Adorjan of the Registrant
listed above

/s/ James B. Mattly President, Chief March 30, 1998
- ----------------------------------- Executive Officer
James B. Mattly and Director of the
Registrant listed
above (Principal
Executive Officer)

/s/ Frederick B. Hegi, Jr. Director of the March 30, 1998
- ----------------------------------- Registrant listed
Frederick B. Hegi, Jr. above

/s/ Timothy M. Wood Director of the March 30, 1998
- ----------------------------------- Registrant listed
Timothy M. Wood above

/s/ Jay I. Applebaum Director of the March 30, 1998
- ----------------------------------- Registrant listed
Jay I. Applebaum above

/s/ John D. O'Brien Director of the March 30, 1998
- ----------------------------------- Registrant listed
John D. O'Brien above

/s/ James T. Callier, Jr. Director of the March 30, 1998
- ----------------------------------- Registrant listed
James T. Callier, Jr. above

48
<PAGE>

SIGNATURES

LFC Armored of Texas Inc.

/s/ James K. Jennings, Jr.
By: _________________________________
James K. Jennings, Jr.
Executive Vice President and
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE

/s/ J. Joe Adorjan Chairman of the March 30, 1998
- ----------------------------------- Board, and Director
J. Joe Adorjan of the Registrant
listed above

/s/ James B. Mattly President, Chief March 30, 1998
- ----------------------------------- Executive Officer
James B. Mattly and Director of the
Registrant listed
above (Principal
Executive Officer)

/s/ Frederick B. Hegi, Jr. Director of the March 30, 1998
- ----------------------------------- Registrant listed
Frederick B. Hegi, Jr. above

49
<PAGE>

SIGNATURES

Loomis, Fargo & Co. of Puerto Rico

/s/ James K. Jennings, Jr.
By: _________________________________
James K. Jennings, Jr.
Executive Vice President and
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE

/s/ J. Joe Adorjan Chairman of the March 30, 1998
- ----------------------------------- Board, and Director
J. Joe Adorjan of the Registrant
listed above

/s/ James B. Mattly President, Chief March 30, 1998
- ----------------------------------- Executive Officer
James B. Mattly and Director of the
Registrant listed
above (Principal
Executive Officer)

/s/ Frederick B. Hegi, Jr. Director of the March 30, 1998
- ----------------------------------- Registrant listed
Frederick B. Hegi, Jr. above

50
<PAGE>

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(D) OF THE SECURITIES ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE SECURITIES ACT.

No annual report or proxy material has been or will be sent to security
holders of the registrants.

51
<PAGE>

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONS
-----------------------
BALANCE CHARGED BALANCE
AT TO COSTS AT END
BEGINNING AND CHARGED TO DEDUCTIONS OF
OF PERIOD EXPENSES OTHER ACCOUNTS (1) PERIOD
--------- -------- -------------- ---------- -------
<S> <C> <C> <C> <C> <C>
Deducted from asset
account--allowance for
doubtful accounts:
Year ended June 30,
1995.................. $233 $ 117 $129 $ 221
Year ended June 30,
1996.................. $221 $ 13 $(12) $ 247
Six months ended
December 31, 1996..... $247 $ 68 $ 7 $ 308
Year ended December 31,
1997.................. $308 $5,369 $516 $5,161
</TABLE>
- --------
(1) Uncollectible accounts written off, net of recoveries

<PAGE>
<ARTICLE> 5
<CIK> 0001037120
<NAME> LOOMIS, FARGO & CO.
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,659
<SECURITIES> 0
<RECEIVABLES> 57,346
<ALLOWANCES> 5,161
<INVENTORY> 1,350
<CURRENT-ASSETS> 60,528
<PP&E> 78,856
<DEPRECIATION> 37,199
<TOTAL-ASSETS> 219,435
<CURRENT-LIABILITIES> 65,922
<BONDS> 155,307
0
0
<COMMON> 100
<OTHER-SE> (7,368)
<TOTAL-LIABILITY-AND-EQUITY> 219,435
<SALES> 370,791
<TOTAL-REVENUES> 370,791
<CGS> 0
<TOTAL-COSTS> 362,656
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,897
<INCOME-PRETAX> (7,762)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,762)
<DISCONTINUED> 0
<EXTRAORDINARY> 124
<CHANGES> 0
<NET-INCOME> (7,886)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>