-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PZhRl+SFHLb5oCwFBgR5u72t4rjJZXMO/aVmAyxtZSXxkeWgTb7k8ChWO2g34uqZ btGKQyr175ztCjMdhfieSg== 0000950135-96-003108.txt : 19960718 0000950135-96-003108.hdr.sgml : 19960718 ACCESSION NUMBER: 0000950135-96-003108 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19960717 SROS: NONE GROUP MEMBERS: TWEEDY BROWNE CO L P GROUP MEMBERS: TWEEDY, BROWNE COMPANY L.P. GROUP MEMBERS: VANDERBILT PARTNERS, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PINKERTONS INC CENTRAL INDEX KEY: 0000078666 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-DETECTIVE, GUARD & ARMORED CAR SERVICES [7381] IRS NUMBER: 135318100 STATE OF INCORPORATION: DE FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43265 FILM NUMBER: 96596020 BUSINESS ADDRESS: STREET 1: 15910 VENTURE BOULEVARD SUITE 900 CITY: ENCINO STATE: CA ZIP: 91436-3095 BUSINESS PHONE: 8183808800 MAIL ADDRESS: STREET 1: 15910 VENTURA BLVD., SUITE 900 CITY: ENCINO STATE: CA ZIP: 91436-2810 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TWEEDY BROWNE CO L P CENTRAL INDEX KEY: 0000732905 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133381587 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 52 VANDERBILT AVE STREET 2: 8TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2129160600 MAIL ADDRESS: STREET 1: 52 VANDERBILT AVENUE STREET 2: 8TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 SC 13D/A 1 PINKERTON'S INC. AMENDMENT NO. 2 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Amendment No.2)* of Tweedy, Browne Company L.P. SCHEDULE 13D (Amendment No. 2)* of Vanderbilt Partners, L.P. Under the Securities Exchange Act of 1934 PINKERTON'S, INC. (Name of Issuer) Common Stock, Par Value $.001 per Share (Title of Class of Securities) 723429106 (CUSIP Number) John D. Spears 52 Vanderbilt Avenue New York, New York 10017 (212) 916-0600 (Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications) JULY 11, 1996 (Date of Event which Required Filing of this Statement) 2 If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is paid with the statement [ ]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act, but shall be subject to all the provisions of the Act (however, see the Notes). 3 SCHEDULE 13D CUSIP NO. 723429106 Page of Pages -------- -------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE PERSON Vanderbilt Partners, L.P. ("Vanderbilt") - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) /x/ - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS* WC AND BK - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(E) / / - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER 7,100 shares, except that the general parners in Vanderbilt, solely by reason of their positions as NUMBER OF such, may be deemed to have shared power to vote these shares SHARES ------------------------------------------------------------ BENEFICIALLY 8. SHARED VOTING POWER OWNED BY 0 shares ------------------------------------------------------------ EACH 9. SOLE DISPOSITIVE POWER 7,100 shares, except that the general partners in REPORTING Vanderbilt, solely by reason of their positions as such, may be deemed to have shared power to vote PERSON these shares. ------------------------------------------------------------ WITH 10. SHARED DISPOSITIVE POWER 0 shares - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,100 shares - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* /X/ - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.09% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! 4 SCHEDULE 13D CUSIP NO. 723429106 Page of Pages -------- -------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE PERSON Tweedy, Browne Company L.P. ("TBC") - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) /x/ - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS* 00 - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(E) / / - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER TBC has sole voting power with respect to 464,420 shares held in certain TBC Accounts (as hereinafter defined). Additionally, certain of the NUMBER OF general partners of TBC may be deemed to have sole power to vote certain shares as more fully set forth SHARES herein. ------------------------------------------------------------ BENEFICIALLY 8. SHARED VOTING POWER OWNED BY 0 shares ------------------------------------------------------------ EACH 9. SOLE DISPOSITIVE POWER 0 shares, except that certain of REPORTING the general partners of TBC may be deemed to have sole power to dispose of certain shares as more PERSON fully set forth herein. ------------------------------------------------------------ WITH 10. SHARED DISPOSITIVE POWER 528,635 shares held in accounts of TBC (as hereinafter defined) - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 528,635 shares - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* /X/ - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.33% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON* BD, IA & PN - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! 5 PRELIMINARY NOTE The persons filing this Amendment No. 2 are (i) Tweedy, Browne Company L.P. ("TBC"), a Delaware limited partnership, and (ii) Vanderbilt Partners, L.P. ("Vanderbilt"), a Delaware limited partnership. This Amendment No. 2 amends a Statement on Schedule 13D filed by TBC and Vanderbilt dated June 10, 1996 (the "Statement"). The filing of this Amendment No. 2 should not be deemed an admission that TBC, and Vanderbilt comprise a group within the meaning of Section 13(d)(3) of the Securities and Exchange Act of 1934, as amended (the"Act"). This Amendment No. 2 relates to the Common Stock, $.001 par value (the "Common Stock"), of Pinkerton's , Inc. (the "Company"), which, to the best knowledge of the persons filing this Amendment No. 2 is a company organized under the laws of Delaware, with its principal executive offices located at 15910 Ventura Boulevard, Suite 900, Encino, California 91436-2810. This Amendment No. 2 contains information regarding shares of Common Stock that may be deemed to be beneficially owned by TBC. Such shares are held in the accounts of various customers of TBC, with respect to which it has obtained sole or shared voting power. Other than as set forth below, to the best knowledge of TBC and Vanderbilt, there has been no material change in the information set forth in response to Items 1, 2, 3, 5 and 6 of the Statement, as amended. Accordingly, those Items are omitted from this Amendment No. 2. ITEM 4. PURPOSE OF TRANSACTION Each of TBC and Vanderbilt has acquired the shares of Common Stock owned by it for investment purposes and for none of the reasons enumerated in Item 4 of Schedule 13D, except that TBC and Vanderbilt may dispose of all or some of the TBC Shares and the Vanderbilt Shares, respectively, or may acquire additional shares of Common Stock from time to time, depending upon price and market conditions, evaluation of alternative investments, and other factors. Currently, TBC and Vanderbilt intend to acquire additional shares of Common Stock in the open market, depending upon the price of the Common Stock from time to time. On July 11, 1996, TBC sent a letter to the Company questioning adviseability of the Company's previously announced Common Stock offering. A copy of this letter is included herewith as Exhibit 99.2 and is hereby incorporated herein by this reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit 99.2 - - Letter to Pinkerton's, Inc. 6 SIGNATURE Each of Tweedy, Browne Company L.P. and Vanderbilt Partners, L.P., after reasonable inquiry and to the best of its knowledge and belief, hereby certifies that the information set forth in this Amendment No. 2 is true, complete and correct. TWEEDY, BROWNE COMPANY L.P. By --------------------- Christopher H. Browne General Partner VANDERBILT PARTNERS, L.P. By --------------------- Christopher H. Browne General Partner Dated: July 11, 1996 EX-99.2 2 LETTER TO PINKERTON'S INC. 1 {Tweedy, Browne Company L.P. letterhead} EXHIBIT 99.2 July 11, 1996 VIA FEDEX - --------- Mr. Denis R. Brown, President and Directors of Pinkerton's, Inc. Pinkerton's, Inc. 5910 Ventura Boulevard Suite 900 Encino, CA 91436-2810 Dear Mr. Brown and Directors of Pinkerton's, Inc.: We are writing to you on behalf of our clients, who are shareholders of Pinkerton's, Inc. Tweedy, Browne Company L.P. is a registered investment adviser and, as such, we exercise investment discretion and/or voting authority for our clients, who currently own 528,635 shares of common stock of Pinkerton's, Inc. In addition, one affiliated investment partnership, Vanderbilt Partners L.P. owns 7,100 shares of common stock. These share holdings represent an aggregate of 6.42% of the shares of Pinkerton's, Inc. common stock outstanding. We wish to thank you and Messrs. Wathen, Dailey, Gavin, Hall, Gerald Murphy, Kevin Murphy, Smith and Webster for serving as directors, and wish to congratulate management on Pinkerton's excellent financial performance over the last several years. We are writing to respectfully request that you reconsider the planned sale of 1.7 million new shares of common stock by the company. Our analysis indicates that a sale of shares of common stock by the company at $21.05 (the estimated net proceeds per share as outlined in the company's S-3 registration statement, assuming an offering price of $23.25 per share) would result in significant dilution of value for all shareholders. In our view, the value of Pinkerton's Inc. is determined by its "EBITA", i.e., earnings before interest, taxes, amortization, write-down of intangible assets, other special charges, 2 Mr. Denis R. Brown, President July 11, 1996 and Directors of Pinkerton's, Inc. Page 2 - -------------------------------------------------------------------------------- gain from litigation settlements, net, and provision for reserve against investment. EBITA is the real pre tax income of a corporation before the deduction of accounting asset-write downs, such as goodwill amortization, that are unlikely to ever require the use of cash for replacement of the asset that has been written down. According to the company's S-3 registration statement, EBITA for the year ended December 31, 1995 was $29,964,000, or $3.59 per share based on 8,350,269 shares of common stock currently outstanding. As of March 22, 1996, Pinkerton's essentially had no net debt: cash of $43,003,000 exceeded total debt of $42,850,000. Based on our experience and observations of acquisition valuations, highly profitable, cash generative, industry-leading companies similar to Pinkerton's have often been valued at 9x-11x EBITA, plus net cash, or minus net debt, in acquisitions. Without any assumption of future EBITA growth, EBITA multiples of 9x, 10x and 11x provide EBITA yields of, respectively, 11%, 10% and 9% to an acquiror. At an assumed valuation of 10x EBITA, Pinkerton's would be worth $35.90 per share based on 8,350,269 shares. A sale of 1.7 million new shares for net proceeds of $21.05 per share is highly dilutive to your existing shareholders. A net price of $21.05 is only 5.9x Pinkerton's EBITA of $3.59 per share. To not be dilutive, Pinkerton's must earn incremental EBITA of $3.59 per share for each of the 1.7 million new shares that would be issued. On the estimated proceeds of $21.05 per share, an EBITA return of 17.1% ($3.59 as a percent of $21.05 = 17.1%) must be earned to avoid dilution. If Pinkerton's management believes that 17% EBITA returns are available on incremental investments of capital, it would be better from a financial standpoint for Pinkerton's to use existing cash or borrow the money at a pre-tax cost of about 5% - 10%. The immediate effect of a sale of 1.7 million new shares of common stock will be to reduce EBITA per share to $2.98, a 17% reduction from $3.59 per share ($29,964,000 EBITA / 10,050,269 pro forma shares = $2.98). At the current market price, $22.75, Pinkerton's could earn a reliable EBITA return of 15.8% on each of its own shares that it bought back ($3.59 EBITA as a percent of $22.75 = 15.8%). At current price levels, Tweedy, Browne would be highly supportive of a stock buy-back program, including a repurchase of the 660,000 shares being offered by existing stockholders. The repurchase of stock would increase EBITA per share and underlying per share value. 3 Mr. Denis R. Brown, President July 11, 1996 and Directors of Pinkerton's, Inc. Page 3 - -------------------------------------------------------------------------------- The sale of 1.7 million new shares at a net price of $21.05 per share also seems too low in relation to "economic earnings," which is reported earnings plus after-tax purchase accounting goodwill amortization. We calculate "economic earnings" to be reported EPS, $1.26, + $.89/share of after-tax goodwill amortization, or $2.15/share, total. A net price of $21.05 is 9.8x economic earnings. The S & P 500 Index is about 19x earnings. In our database of 3,064 public companies in the United States with a market capitalization of $200 million or more, only 200 companies, or 7% of the universe, are trading today at under 9.8x earnings. 93% of the companies are more expensive. The immediate effect of a sale of 1.7 million new shares will be to reduce economic earnings from $2.15 to $1.92, an 11% decline (assuming a 6% pre-tax yield on cash proceeds from the sale of 1.7 million new shares at $21.05, net, and a 35% tax rate). In summary, we support corporate actions that increase per-share value and are opposed to actions that diminish per-share value. We do not see any benefit to existing shareholders from increases in the number of shares in the "float" when the effect of a float increase is a reduction in per-share value. Our experience as investors suggests that Pinkerton's share price is likely to rise if per-share value increases, irrespective of float. We believe it would be useful for you and your fellow directors to meet in one room with some of your largest stockholders (whose interests, we believe, are not dissimilar to the interests of your smallest stockholders). Would you and Messrs. Wathen, Dailey, Gavin, Hall, Gerald Murphy, Kevin Murphy, Smith and Webster meet with us and other large shareholders at our office or another mutually convenient place before proceeding with the planned share offering? I will telephone you tomorrow. Thank you for your consideration. Sincerely, /s/ John D. Spears ------------------ John D. Spears 4 Mr. Denis R. Brown, President July 11, 1996 and Directors of Pinkerton's, Inc. Page 4 - -------------------------------------------------------------------------------- COPIES TO: - --------- Peter H. Dailey John A. Gavin Gerald D. Murphy J. Kevin Murphy Robert H. Smith Thomas W. Wathen William H. Webster
% OF PINKERTON'S INC. OWNED STOCKHOLDERS: ACCORDING TO 3/31/96 13F - ------------ --------------------------- Southeastern Asset Management 10.29% Putnam Management 5.37% Neuberger & Berman 5.35% TCW Group 4.36% Wood Island Association 2.86% Morgan Guaranty Trust 2.22% HPB Associates 1.88% Quest Advisory 1.56% BZW Barclays Global 1.83% Dorchester Capital Corp.
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