<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 13, 1997
--------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------------- --------------------------
Commission File Number: 1-11841
PINKERTON'S, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-5318100
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
15910 Ventura Boulevard, Suite 900, Encino, California 91436-2810
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 380-8800
Not Applicable
(Former name, former address, and formal fiscal year, if changed since last
report.)
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
---- ----
The number of shares of the Registrant's Common Stock, par value $.001 per
share, outstanding on July 11, 1997 was 8,375,427.
================================================================================
<PAGE>
PINKERTON'S, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
--------
<S> <C>
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets-
June 13, 1997 and December 27, 1996......................................... 3
Consolidated Statements of Earnings-
For the Quarters and Six Periods Ended June 13, 1997 and June 14, 1996...... 4
Consolidated Statements of Cash Flows-
For the Six Periods Ended June 13, 1997 and June 14, 1996................... 5
Notes to Consolidated Financial Statements.................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................. 7-9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.................... 10
Item 6. Exhibits and Reports on Form 8-K....................................... 10
Signatures....................................................................... 11
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PINKERTON'S, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 13,
1997 DECEMBER 27,
ASSETS (UNAUDITED) 1996
--------------------- ---------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 22,119 $ 33,761
Investment in marketable securities 2,007 8,460
Accounts receivable (includes unbilled amounts of
$31,958 in 1997 and $30,196 in 1996) 147,007 137,055
Less allowance for doubtful receivables 3,154 2,572
-------- --------
143,853 134,483
-------- --------
Inventory 3,629 3,799
Prepaid expenses and taxes 9,178 11,566
Deferred income taxes 7,500 7,121
-------- --------
Total current assets 188,286 199,190
-------- --------
Equipment and leasehold improvements, net of
accumulated depreciation and amortization of
$30,218 in 1997 and $26,818 in 1996 15,504 14,977
Other assets:
Intangible assets, net 73,876 57,311
Deferred income taxes 24,700 23,467
Other 23,720 20,336
-------- --------
122,296 101,114
-------- --------
$326,086 $315,281
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,640 $ 9,790
Accrued liabilities 85,810 76,366
Income taxes payable 2,286 -
Current maturities of long-term debt 8,575 8,575
-------- --------
Total current liabilities 106,311 94,731
-------- --------
Accrued retirement benefits and other non-current liabilities 50,084 52,856
Long-term debt, less current maturities 35,759 37,313
Commitments and contingencies
Stockholders' equity:
Common stock 8 8
Additional paid-in capital 75,040 74,887
Other adjustments (6,739) (5,441)
Retained earnings 65,623 60,927
-------- --------
133,932 130,381
-------- --------
$326,086 $315,281
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
PINKERTON'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED FOR THE SIX PERIODS ENDED
------------------------------- -------------------------------
JUNE 13, 1997 JUNE 14, 1996 JUNE 13, 1997 JUNE 14, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Service revenues $230,789 $200,918 $451,257 $400,954
Cost of services 203,191 176,928 397,524 353,778
-------- -------- -------- --------
Gross profit 27,598 23,990 53,733 47,176
Operating expenses 19,900 17,207 38,850 34,239
Amortization of intangible assets 1,824 2,114 4,444 4,250
-------- -------- -------- --------
Operating profit 5,874 4,669 10,439 8,687
Other (income) deductions:
Interest income (360) (565) (693) (1,075)
Interest expense 1,111 1,258 2,272 2,372
Other - (1,962) - (1,962)
-------- -------- -------- --------
751 (1,269) 1,579 (665)
-------- -------- -------- --------
Income before income taxes 5,123 5,938 8,860 9,352
Provision for income taxes 2,408 2,891 4,164 4,596
-------- -------- -------- --------
Net income $ 2,715 $ 3,047 $ 4,696 $ 4,756
======== ======== ======== ========
Net income per common share $ .31 $ .36 $ .54 $ .56
======== ======== ======== ========
Weighted average common shares and
common share equivalents outstanding 8,655 8,563 8,638 8,485
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
PINKERTON'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX PERIODS ENDED
------------------------------------------------------
JUNE 13, 1997 JUNE 14, 1996
-------------------------- -------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 4,696 $ 4,756
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of intangible assets 4,444 4,250
Depreciation and other amortization 3,399 3,402
Provision for losses on doubtful receivables 290 582
Deferred income taxes (1,612) (2,020)
Changes in assets, liabilities and stockholders' equity:
Accounts receivable (5,728) (5,122)
Inventory 701 671
Prepaid expenses and taxes 2,678 7,642
Other assets (3,845) (1,909)
Accounts payable (1,028) (1,704)
Accrued and other non-current liabilities 548 4,172
Income taxes payable 2,286 2,290
Foreign currency revaluation of net assets (340) (350)
-------- --------
Net cash provided by operating activities 6,489 16,660
-------- --------
INVESTING ACTIVITIES:
Purchase of marketable securities (3,081) (10,925)
Sales/redemptions of marketable securities 9,534 8,914
Purchase of equipment and leasehold improvements (2,692) (2,616)
Payments for net assets of acquired businesses, net
of cash acquired (21,453) (2,484)
-------- --------
Net cash used in investing activities (17,692) (7,111)
-------- --------
FINANCING ACTIVITIES:
Principal repayment of long-term debt (592) -
Exercise of stock options 153 95
Redemption of preferred stock - (15)
-------- --------
Net cash (used in) provided by financing activities (439) 80
-------- --------
Net (decrease) increase in cash (11,642) 9,629
Cash and cash equivalents at beginning of year 33,761 20,215
-------- --------
Cash and cash equivalents at end of period $ 22,119 $ 29,844
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
PINKERTON'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) PRESENTATION OF FINANCIAL INFORMATION
The consolidated financial statements included herein have been prepared by the
Company and include all adjustments which are, in the opinion of management,
necessary for a fair presentation of the results of operations for the fiscal
quarters and six periods ended June 13, 1997 and June 14, 1996. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted, although the Company believes the disclosures in these
consolidated financial statements are adequate to make the information presented
not misleading.
The following material is written with the presumption that the users of the
interim financial statements have read or have access to the Company's Form 10-K
filed with the Securities and Exchange Commission for the fiscal year ended
December 27, 1996 and the Company's 1996 Annual Report to Stockholders. The
1996 Annual Report contains the latest audited consolidated financial statements
and notes thereto, together with Management's Discussion and Analysis of
Financial Condition and Results of Operations as of December 27, 1996 and for
the year then ended. The results of operations for the fiscal quarters and six
periods ended June 13, 1997 and June 14, 1996 are not necessarily indicative of
the results for a full year.
(2) ACCOUNTING CYCLE
Pinkerton's fiscal year comprises the 52-week (or 53-week) period ending on the
Friday closest to December 31, within the reporting year. The Company's
quarterly reporting periods generally consist of three four-week periods for the
first, second and third quarters, and four four-week periods for the fourth
quarter.
(3) OTHER INCOME
During the second quarter of 1996, the Company entered into an agreement with
the previous owner related to the acquisition of Pinkerton's, Inc. by California
Plant Protection, Inc. in 1988. As a result of this agreement, the Company
received a cash payment of $5.2 million in the second quarter of 1996. Of this
amount, $3.2 million represents a recovery of income and other taxes paid on
behalf of the previous owner and recorded in the balance sheet; the remaining
amount of $2.0 million was recorded as other income in the second quarter of
1996.
(4) NEWLY ISSUED ACCOUNTING STANDARDS
The Company will implement the provisions of Financial Accounting Standards
Board No. 128, Earnings Per Share, effective December 26, 1997. The Company
expects that the implementation of this new accounting standard will not have a
material impact on the reported earnings per share.
(5) STOCK SPLIT
The Company's Board of Directors approved a three-for-two stock split effected
in the form of a 50 percent stock dividend to stockholders of record on August
7, 1997, with the stock split to be recorded and distributed on August 27, 1997.
The Bank of New York will act as the transfer agent in the transaction.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE QUARTERS AND SIX PERIODS ENDED JUNE 13, 1997 AND JUNE 14,
1996.
Pinkerton's fiscal year comprises the 52-week (or 53-week) period ending on the
Friday closest to December 31, within the reporting year. The Company's
quarterly reporting periods consist of three four-week periods for the first,
second and third quarters, and four four-week periods for the fourth quarter.
RESULTS OF OPERATIONS
Service Revenues -
The Company's service revenues increased by $29.9 million, or 14.9%, from $200.9
million in the second quarter of 1996 to $230.8 million in the second quarter of
1997. For the six periods ended June 13, 1997 and June 14, 1996, service
revenues increased by $50.3 million, or 12.5%, from $401.0 million in 1996 to
$451.3 million in 1997.
Domestic Service Revenues -
The Company's domestic service revenues increased by $18.1 million, or 10.8%,
from $167.8 million in the second quarter of 1996 to $185.9 million in the
second quarter of 1997. For the six periods ended June 13, 1997 and June 14,
1996, domestic service revenues increased by $25.6 million, or 7.6%, from $337.0
million in 1996 to $362.6 million in 1997. The increase in the second quarter
reflects the revenues of acquired systems integration businesses of $3.8 million
and service revenue increases of $14.3 million. The increase in the six periods
reflects the revenues of acquired systems integration businesses of $8.3 million
and service revenue increases of $17.3 million.
International Service Revenues -
Service revenues of the Company's international operations increased by $11.8
million, or 35.6%, from $33.1 million in the second quarter of 1996 to $44.9
million in the second quarter of 1997. For the six periods ended June 13, 1997
and June 14, 1996, service revenues of the Company's international operations
increased by $24.7 million, or 38.6%, from $64.0 million in 1996 to $88.7
million in 1997. The increase in the second quarter reflects the revenues of
acquired businesses of $7.8 million and $4.0 million of additional business.
The increase for the six periods reflects the revenues of acquired businesses of
$15.8 million, $8.6 million of additional business and foreign currency exchange
increases of $0.3 million.
Cost of Services and Gross Profit -
The Company's cost of services increased by $26.3 million, or 14.9%, from $176.9
million in the second quarter of 1996 to $203.2 million in the second quarter of
1997. Cost of services in the first six periods of 1996 increased by $43.7
million, or 12.4%, from $353.8 million in 1996 to $397.5 million in 1997. These
increases were primarily due to payroll and related expenses accompanying the
acquired businesses and the increase in service revenues, as described above,
reduced by cost efficiencies resulting from the Company's ongoing efforts to
reduce certain costs of services.
Gross profit as a percentage of service revenues increased from 11.9% in the
second quarter of 1996 to 12.0% in the second quarter of 1997. For the six
periods ended June 13, 1997 and June 14, 1996, the gross profit percentage
increased from 11.8% in 1996 to 11.9% in 1997. These increases reflect in part
the cost efficiencies described above. Gross profit was also favorably impacted
by the inclusion of the Company's security systems integration operations
acquired after June 14, 1996, which typically experience higher gross margins
than the Company's security service operations, and the operations of WKD
Security GmbH, acquired on January 1, 1997. WKD
7
<PAGE>
has historically experienced higher gross margins than the Company's domestic
security service operations.
Operating Expenses -
Operating expenses increased by $2.7 million, or 15.7%, from $17.2 million in
the second quarter of 1996 to $19.9 million in the second quarter of 1997. For
the six periods ended June 13, 1997 and June 14, 1996, operating expenses
increased by $4.7 million, or 13.7%, from $34.2 million in 1996 to $38.9 million
in 1997. As a percentage of service revenues, operating expenses were 8.6% for
both the quarter and six periods ended June 13, 1997, and 8.6% and 8.5%,
respectively, for the comparable 1996 periods.
Amortization -
Amortization of intangible assets decreased by $0.3 million from $2.1 million in
the second quarter of 1996 to $1.8 million in the second quarter of 1997,
primarily reflecting a change in amortization related to an adjustment to a
preliminary estimate of intangible assets related to the WKD acquisition. For
the six periods ended June 13, 1997 and June 14, 1996, amortization increased
$0.1 million, from $4.3 million in 1996 to $4.4 million in 1997. This reflects
additional amortization of intangible assets arising from 1996 and 1997
acquisitions less the amortization adjustment discussed above.
Operating Profit -
Operating profit was $5.9 million, or 2.5% of service revenues, for the second
quarter of 1997 as compared to $4.7 million, or 2.3% of service revenues, for
the same period last year. For the six periods ended June 13, 1997, operating
profit was $10.4 million, or 2.3%, of service revenues, as compared to $8.7
million, or 2.2% of service revenues, in the corresponding 1996 period.
Operating profit increased as a percentage of revenues due to improved gross
profit margins, partially offset by an increase in operating expenses discussed
above.
Other Income -
During the second quarter of 1996, the Company entered into an agreement with
the previous owner related to the acquisition of Pinkerton's, Inc. by California
Plant Protection, Inc. in 1988. As a result of this agreement, the Company
received a cash payment of $5.2 million in the second quarter of 1996. Of this
amount, $3.2 million represents a recovery of income and other taxes paid on
behalf of the previous owner and recorded in the balance sheet; the remaining
amount of $2.0 million was recorded as other income in the second quarter of
1996.
Income Taxes -
The effective tax rate for the six periods ended June 13, 1997 was 47.0% as
compared to 49.1% in 1996. The lower tax rate in 1997 is primarily attributable
to the recognition of job-related tax credits that are newly available to the
Company.
FINANCIAL CONDITION
CAPITAL RESOURCES AND LIQUIDITY
At June 13, 1997, the Company had $22.1 million in cash, a decrease of $11.6
million from December 27, 1996; and $2.0 million in marketable securities, a
$6.5 million decrease from December 27, 1996. Net cash provided by operating
activities of $6.5 million was reduced by $17.7 million of net cash payments
relating to investing activities and $0.4 million of net cash payments relating
to financing activities. The Company's principal investing activities during
the first six periods of 1997 were acquisitions ($21.5 million), net redemptions
of marketable securities ($6.5 million), and purchases of computer and other
equipment ($2.7 million). The Company's
8
<PAGE>
principal financing activities during the first six periods of 1997 were a $0.6
million payment on the revolving line of credit and $0.2 million of cash
receipts related to the exercise of stock options.
The Company has an acquisitions program intended to implement its strategy to
become a world-class, global security solutions provider. The Company also has
an ongoing program to replace capital equipment as required. Both of these
activities will continue for the foreseeable future.
Pinkerton's cash needs during the first six months of each year are greater
because of higher payroll taxes. In addition, the Company is required to make
annual principal payments of approximately $8.6 million (in the month of June)
through the year 2000 in repayment of its Senior Notes. Semi-annual interest
payments of approximately $1.8 million and $1.3 million related to the Senior
Notes are due in June and December 1997, respectively. The principal and
interest payments described above to be made in June 1997 occur in the Company's
third fiscal quarter.
The Company has an unsecured revolving credit facility with a group of banks.
On June 27, 1997, the facility was amended to increase the available borrowings
from up to $70.0 million to up to $100.0 million, of which $50.0 million may be
letters of credit. No cash borrowings have been made during the first six
periods of 1997. At June 13, 1997 there were DM 17.0 million ($10.1 million) of
cash borrowings outstanding under the revolving line of credit and $34.5 million
in letters of credit had been issued by the Company to secure obligations under
the Company's self-insurance programs.
The Company believes existing liquid resources, cash generated from operations
and funds available under the revolving credit facility are sufficient for
regular operating and capital requirements during the next 12 months. The
Company also has access to capital markets, if necessary, to raise funds for
acquisitions and other investments for business growth.
9
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The 1997 Annual Meeting of Stockholders of the Company was held on April
24, 1997. At the Annual Meeting the stockholders elected three directors
of the Company for a term of three years, approved the annual incentive
compensation plan for the President and Chief Executive Officer, and
ratified the selection of the Company's independent auditors for the
current fiscal year.
The votes for the election of directors were:
<TABLE>
<CAPTION>
Shares Voted "FOR" Shares "WITHHELD"
--------------------------------- ----------------------------------
<S> <C> <C>
John A. Gavin 7,439,943 11,842
Robert H. Smith 7,440,693 11,092
Thomas W. Wathen 7,440,543 11,242
</TABLE>
The votes for the approval of the annual incentive compensation plan for
the President and Chief Executive Officer were:
<TABLE>
<CAPTION>
Shares Voted "FOR" Shares voted "AGAINST" Abstentions/ Non-Votes
-------------------------------------- ------------------------------------- ----------------------------------
<S> <C> <C>
7,397,182 40,775 13,828
</TABLE>
The votes for the ratification of the selection of independent auditors
were:
<TABLE>
<CAPTION>
Shares Voted "FOR" Shares voted "AGAINST" Abstentions/ Non-Votes
-------------------------------------- ------------------------------------- ----------------------------------
<S> <C> <C>
7,442,192 1,366 8,227
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Amendment No. 5 to the Employment Agreement between Denis R.
Brown and the Registrant, dated as of February 18, 1997.
11. Computation of Earnings Per Share (Unaudited)
27. Financial Data Schedule
(b) Reports on Form 8-K
None.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
<TABLE>
<CAPTION>
PINKERTON'S, INC.
<S> <C>
Date: July 25, 1997 BY: /S/ JAMES P. McCLOSKEY
-----------------------------------------------
James P. McCloskey
ITS: Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: July 25, 1997 BY: /S/ STEVEN A. LINDSEY
-----------------------------------------------
Steven A. Lindsey
ITS: Vice President and Controller
(Principal Accounting Officer)
</TABLE>
11
<PAGE>
EXHIBIT 10.1
AMENDMENT NO. 5 TO THE
EMPLOYMENT AGREEMENT DATED AS OF APRIL 20, 1994
BETWEEN DENIS R. BROWN AND PINKERTON'S, INC.
The Employment Agreement (the "Agreement") dated as of April 20, 1994
between Denis R. Brown (the "Executive") and Pinkerton's, Inc., a Delaware
corporation (the "Company") is hereby amended as follows:
1. Section 2.02 of the Agreement shall be amended to read in its entirety as
follows:
Section 2.02 Incentive Compensation
----------------------
The following annual incentive compensation plan will be provided to the
Executive for fiscal 1996 and, if approved by the Company's stockholders at
their 1997 annual meeting, for fiscal 1997 and through the term of this
agreement (subject to reapproval by the Company's stockholders when
required to qualify the annual incentive compensation plan described in
this section as "performance-based" compensation under Internal Revenue
Code Section 162(m)).
(A) Formula for Determining. In addition to his Base Salary, the Company
shall pay to the Executive as incentive compensation ("Incentive
Compensation"), in respect of each fiscal year of the Company or portion
thereof included within the Employment Period, a cash bonus determined as
follows:
(1) The Compensation Committee of the Board of Directors, in
consultation with the Executive, shall establish annually, and shall
communicate to the Executive prior to the beginning of each fiscal year of
the Company, one or more "critical corporate goals" and one or more "major
corporate goals." Each "critical corporate goal" and "major corporate
goal" shall (x) relate to the Company's financial and operational
performance, (y) be measured by any method or combination of methods deemed
by the Compensation Committee to be fair and equitable and (z) have
assigned to it a numerical percentage which, when added together, total an
aggregate of 50% (the "Incentive Percentage").
(2) The Executive shall be entitled to receive Incentive Compensation
equal to the product obtained by multiplying the amount of Base Salary
earned during the relevant fiscal year by the sum of percentages assigned
to the "critical corporate goals" and the "major corporate goals" achieved
during such fiscal year. The Executive shall also be entitled to earn
Incentive Compensation (without duplication) in a lesser or greater amount
than the Incentive Percentage as follows: (i) if 80% of the performance
required to achieve any "critical corporate goal" or "major corporate goal"
is achieved, then 50% of the percentage assigned to such goal shall be used
in performing the calculation under the immediately preceding sentence;
(ii) for each additional 1% of actual performance achieved between 80% and
100% of the performance required to
<PAGE>
achieve any "critical corporate goal" or "major corporate goal," there
shall be added to 50% an additional 2.50% to arrive at the percentage
assigned to the goal in performing the calculation under the immediately
preceding sentence; and (iii) if greater than 100% of the performance
required to achieve any "critical corporate goal" or "major corporate goal"
is achieved, then for each 1% of actual performance over 100% of the
performance required to achieve such goal the percentage assigned to such
goal shall be increased by 2.50% to arrive at the percentage assigned to
the goal in performing the calculation under the immediately preceding
sentence; provided, however that the maximum percentage assigned to any
"critical corporate goal" or "major corporate goal" in performing the
calculation under the immediately preceding sentence shall not exceed 200%
of the percentage initially assigned to such goal and the total Incentive
Compensation payable in any year shall not exceed 100% of Base Salary.
Notwithstanding the foregoing, the Compensation Committee in its sole
discretion may increase Incentive Compensation if the effect of the
foregoing "proviso" is to place a limitation on the amount payable in
respect of any "critical corporate goal" or "major corporate goal." The
corporate goals shall be established so that the Executive will have a
reasonable opportunity, through diligent performance of his duties, to earn
Incentive Compensation.
(3) Incentive Compensation for any fiscal year shall not exceed
$1,250,000 regardless of the amount of Base Salary or the results of the
calculations described above.
(B) Time of Payment; Proration. The amount of Incentive Compensation
earned hereunder shall be determined by the Compensation Committee as soon
as reasonably practicable following the end of each fiscal year of the
Company and shall be paid promptly thereafter to the Executive. When
computing the amount of Incentive Compensation payable for periods of
employment of less than one full fiscal year, the percentages established
pursuant to Section 2.02 (A)(2) shall be applied to the actual amount of
Base Salary earned during the relevant period.
2. Capitalized terms herein shall have the meanings ascribed to them in the
Agreement. Except as amended hereby, the remaining provisions of the Agreement,
as amended to date, shall remain in full force and effect.
1
<PAGE>
IN WITNESS THEREOF, the Executive and the undersigned duly authorized
officer of the Company have executed and delivered this amendment as of February
18, 1997.
PINKERTON'S, INC.
BY: /S/ C. MICHAEL CARTER
-----------------------------------
C. Michael Carter
Executive Vice President, General
Counsel and Corporate Secretary
Denis R. Brown
/S/ DENIS R. BROWN
-----------------------------------
2
<PAGE>
EXHIBIT 11
PINKERTON'S, INC.
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED FOR THE SIX PERIODS ENDED
----------------------------- -----------------------------
JUNE 13, 1997 JUNE 14, 1996 JUNE 13, 1997 JUNE 14, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income $2,715 $3,047 $4,696 $4,756
====== ====== ====== ======
Weighted average number of
common shares outstanding 8,366 8,347 8,365 8,347
Dilutive effect of outstanding
stock options 289 216 273 138
------ ------ ------ ------
Weighted average number of
common shares, as adjusted,
for calculation of earnings
per share 8,655 8,563 8,638 8,485
====== ====== ====== ======
Net income per common share $ .31 $ .36 $ .54 $ .56
====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-27-1996 JUN-13-1997
<PERIOD-START> DEC-30-1995 DEC-28-1996
<PERIOD-END> DEC-27-1996 JUN-13-1997
<CASH> 33,761 22,119
<SECURITIES> 8,460 2,007
<RECEIVABLES> 137,055 147,007
<ALLOWANCES> 2,572 3,154
<INVENTORY> 3,799 3,629
<CURRENT-ASSETS> 199,190 188,286
<PP&E> 41,795 45,722
<DEPRECIATION> 26,818 30,218
<TOTAL-ASSETS> 315,281 326,086
<CURRENT-LIABILITIES> 94,731 106,311
<BONDS> 37,313 35,759
0 0
0 0
<COMMON> 74,895 75,048
<OTHER-SE> 55,486 58,884
<TOTAL-LIABILITY-AND-EQUITY> 315,281 326,086
<SALES> 906,247 451,257
<TOTAL-REVENUES> 906,247 451,257
<CGS> 791,877 397,524
<TOTAL-COSTS> 791,877 397,524
<OTHER-EXPENSES> 86,994 43,004
<LOSS-PROVISION> 1,635 290
<INTEREST-EXPENSE> 2,253 1,579
<INCOME-PRETAX> 23,488 8,860
<INCOME-TAX> 11,038 4,164
<INCOME-CONTINUING> 12,450 4,696
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 12,450 4,696
<EPS-PRIMARY> 1.46 .54
<EPS-DILUTED> 1.46 .54
</TABLE>
